G.R. No.

L-21489 and L-21628 May 19, 1966 entire land, for possession of its western portion; for damages;
and for rentals. It was brought against the Mapalo spouses as
MIGUEL MAPALO, ET AL., petitioners, well as against Floro Guieb and Rosalia Mapalo Guieb who had
vs. a house on the western part of the land with the consent of the
MAXIMO MAPALO, ET AL., respondents. spouses Mapalo and Quiba.

Pedro P. Tuason for petitioners. The Mapalo spouses filed their answer with a counterclaim on
Primicias and Del Castillo for respondents. March 17, 1965, seeking cancellation of the Transfer Certificate
of Title of the Narcisos as to the western half of the land, on the
grounds that their (Mapalo spouses) signatures to the deed of
BENGZON, J.P., J.:
sale of 1936 was procured by fraud and that the Narcisos were
buyers in bad faith. They asked for reconveyance to them of the
The spouses Miguel Mapalo and Candida Quiba, simple western portion of the land and issuance of a Transfer
illiterate farmers, were registered owners, with Torrens title Certificate of Title in their names as to said portion.
certificate O.C.T. No. 46503, of a 1,635-square-meter residential
land in Manaoag, Pangasinan. Said spouses-owners, out of love
In addition, the Mapalo spouses filed on December 16, 1957
and affection for Maximo Mapalo — a brother of Miguel who was
their own complaint in the Court of First Instance of Pangasinan
about to get married — decided to donate the eastern half of the
(Civil Case No. U-133) against the aforestated Narcisos and
land to him. O.C.T. No. 46503 was delivered. As a result,
Maximo Mapalo. They asked that the deeds of sale of 1936 and
however, they were deceived into signing, on October 15, 1936,
of 1951 over the land in question be declared null and void as to
a deed of absolute sale over the entire land in his favor. Their
the western half of said land.
signatures thereto were procured by fraud, that is, they were
made to believe by Maximo Mapalo and by the attorney who
acted as notary public who "translated" the document, that the Judge Amado Santiago of the Court of First Instance of
same was a deed of donation in Maximo's favor covering one- Pangasinan located in the municipality of Urdaneta tried the two
half (the eastern half) of their land. Although the document of cases jointly. Said court rendered judgment on January 18,
sale stated a consideration of Five Hundred (P500.00) Pesos, 1961, as follows:
the aforesaid spouses did not receive anything of value for the
land. The attorney's misbehaviour was the subject of an WHEREFORE, judgment is hereby rendered as
investigation but its result does not appear on record. However follows, to wit:
we took note of the fact that during the hearing of these cases (a) dismissing the complaint in Civil Case No. 11991;
said notary public was present but did not take the witness (b) declaring Exhibit A, plaintiffs in Case No. 11991
stand to rebut the plaintiffs' testimony supporting the allegation and Exhibit 1, defendants in Case No. U-133 as a
of fraud in the preparation of the document. donation only over the eastern half portion of the
above-described land, and as null and void with
Following the execution of the afore-stated document, the respect to the western half portion thereof;
spouses Miguel Mapalo and Candida Quiba immediately built a (c) declaring as null and void and without legal force
fence of permanent structure in the middle of their land and effect Transfer Certificate of Title No. 12829
segregating the eastern portion from its western portion. Said issued in favor of Maximo Mapalo as regards the
fence still exists. The spouses have always been in continued western half portion of the land covered therein;
possession over the western half of the land up to the present. (d) declaring as null and void Transfer Certificate of
Title No. 11350 in the names of the Narcisos insofar
as the western half portion of the land covered therein
Not known to them, meanwhile, Maximo Mapalo, on March 15,
is concerned;
1938, registered the deed of sale in his favor and obtained in his
(e) ordering the spouses Mapalo and Quiba and the
name Transfer Certificate of Title No. 12829 over the entire
Narcisos to have the above-described land be
land. Thirteen years later on October 20, 1951, he sold for
subdivided by a competent land surveyor and that the
P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico
expenses incident thereto be borne out by said
and Miguel all surnamed Narciso. The sale to the Narcisos was
partiespro rata;
in turn registered on November 5, 1951 and Transfer Certificate
(f) ordering the Register of Deeds of Pangasinan to
of Title No. 11350 was issued for the whole land in their names.
issue in lieu of Transfer Certificate of Title No. 11350
two new titles upon completion of the subdivision plan,
The Narcisos took possession only of the eastern portion of the one in favor of the spouses Miguel Mapalo and
land in 1951, after the sale in their favor was made. On Candida Quiba covering the western half portion and
February 7, 1952 they filed suit in the Court of First Instance of another for the Narcisos covering the eastern half
Pangasinan (Civil Case No. 1191) to be declared owners of the portion of the said land, upon payment of the legal
 fees; meanwhile the right of the spouses Mapalo and same pronouncement has become final as to them, rendering it
Quiba is hereby ordered to be annotated on the back no longer proper herein to examine the existence, validity
of Transfer Certificate of Title No. 11350; and efficacy of said donation as to said eastern portion.1äwphï1.ñët
(g) sentencing Maximo Mapalo and the Narcisos to
pay the costs. Now, as to the western portion, however, the fact not disputed
IT IS SO ORDERED. herein is that no donation by the Mapalo spouses obtained as to
said portion. Accordingly, we start with the fact that liberality as
The Narcisos appealed to the Court of Appeals. In its decision a cause or consideration does not exist as regards the western
on May 28, 1963, the Court of Appeals reversed the judgment of portion of the land in relation to the deed of 1936; that there was
the Court of First Instance, solely on the ground that the consent no donation with respect to the same.
of the Mapalo spouses to the deed of sale of 1936 having been
obtained by fraud, the same was voidable, not void ab initio, It is reduced, then, to the question whether there was an
and, therefore, the action to annul the same, within four years onerous conveyance of ownership, that is, a sale, by virtue of
from notice of the fraud, had long prescribed. It reckoned said said deed of October 15, 1936, with respect to said western
notice of the fraud from the date of registration of the sale on portion. Specifically, was there a cause or consideration to
March 15, 1938. The Court of First Instance and the Court of support the existence of a contrary of sale?
Appeals are therefore unanimous that the spouses Mapalo and
Quiba were definitely the victims of fraud. It was only on
The rule under the Civil Code, again be it the old or the new, is
prescription that they lost in the Court of Appeals.
that contracts without a cause or consideration produce no
effect whatsoever.2 Nonetheless, under the Old Civil Code, the
From said decision of the Court of Appeals, the Mapalo spouses statement of a false consideration renders the contract voidable,
appealed to this Court. unless it is proven that it is supported by
another real and licit consideration.3 And it is further provided by
And here appellants press the contention that the document the Old Civil Code that the action for annulment of a contract on
dated October 15, 1936, purporting to sell the entire land in the ground of falsity of consideration shall last four years, the
favor of Maximo Mapalo, is void, not merely voidable, as to the term to run from the date of the consummation of the contract.4
western portion of the land for being absolutely simulated or
fictitious. Accordingly, since the deed of sale of 1936 is governed by the
Old Civil Code, it should be asked whether its case is one
Starting with fundamentals, under the Civil Code, either the old wherein there is no consideration, or one with a statement of
or the new, for a contract to exist at all, three essential requisites a false consideration. If the former, it is void and inexistent; if the
must concur: (1) consent, (2) object, and (3) cause or latter, only voidable, under the Old Civil Code. As observed
consideration.1 The Court of Appeals is right in that the element earlier, the deed of sale of 1936 stated that it had for its
of consent is present as to the deed of sale of October 15, 1936. consideration Five Hundred (P500.00) Pesos. In fact, however,
For consent was admittedly given, albeit obtained by fraud. said consideration was totally absent. The problem, therefore, is
Accordingly, said consent, although defective, did exist. In such whether a deed which states a consideration that in fact did not
case, the defect in the consent would provide a ground for exist, is a contract without consideration, and therefore void ab
annulment of a voidable contract, not a reason for nullity ab initio, or a contract with a false consideration, and therefore, at
initio. least under the Old Civil Code, voidable.

The parties are agreed that the second element of object is According to Manresa, what is meant by a contract that states a
likewise present in the deed of October 15, 1936, namely, the false consideration is one that has in fact a real consideration
parcel of land subject matter of the same. but the same is not the one stated in the document. Thus he
says:
Not so, however, as to the third element of cause or
consideration. And on this point the decision of the Court of En primer lugar, nor interesa recordar la diferencia entre
Appeals is silent. simulacion y el contrato con proposito fraudulento. Este aunque
ilicito es real; mas el primero es falso en realidad, aunque se le
As regards the eastern portion of the land, the Mapalo spouses presente como verdadero. (Manresa, Codigo Civil, Tomo VIII,
are not claiming the same, it being their stand that they have Vol. II, p. 354.)
donated and freely given said half of their land to Maximo
Mapalo. And since they did not appeal from the decision of the And citing a decision of the Supreme Court of Spain on the
trial court finding that there was a valid and effective donation of matter, Manresa further clarifies the difference of false cause
the eastern portion of their land in favor of Maximo Mapalo, the and no cause, thus:
Insiste en el distingo con mas detenida descripcion la sentencia simulada la que tiene lugar cuando se hace aparecer
de 25 de mayo de 1944, en la que se argumenta: artificiosamente una distinta de la verdadera. La erronea
produce siempre la inexistencia del contrato; la simulada no
Si bien es elemento fundamental de todo negocio, la siempre produce este efecto, porque puede suceder que la
declaracion de voluntad substracto de una voluntad efectiva, y causa oculta, pero verdadera, baste para sostener el contrato.
la existencia de una causa que leconfiera significado juridico De acuerdo con esta doctrina, dice el art. 1.276 de nuestro
señalando la finalidad que con este se persigue, no ha de Codigo que "la expresion de una causa falsa en los contratos
deducirse de esta doctrina, fundamentalmente recogida en el dara lugar a la nulidad, si no se probase que estaban fundados
articulo 1.261 y concordantes del Codigo civil, que cualquier en otra verdadera y licita". (Castan Derecho Civil Español,
falta de adecuacion entre cualquier incongruencia entre la Tomo II, pp. 618-619)
causa expresada y la verdadera, y, en general, entre la
estructuracion y la finalidad economica; hayan de producir la From the foregoing it can be seen that where, as in this case,
ineficacia del negocio, pues por el contrario, puede este ser there was in fact no consideration, the statement of one in the
valido y producir sus efectos tanto en el caso de la mera deed will not suffice to bring it under the rule of Article 1276 of
disonancia entre el medio juridico adoptado y el fin practico the Old Civil Code as stating a false consideration. Returning to
perseguido, por utilizacion de una via oblicua o combinacion de Manresa:
formas juridicas entrelazadas que permita la obtencion de un
resultado no previsto en los cuadros de la ley — negocios Figurando en nuestro Derecho positivo la causa, como un
indirectos y negocios fiduciarlos, validos cuando no envuelven elemento esential del contrato, es consecuencia ineludible, se
fraude de ley, como en el caso de la verdadera disconformidad reputar simulada la entrega del precio en la compraventa de
entre la apariencia del acto y su real contenido, preparada autos, el que haya que declararla nula por inexistente
deliberadamente por las partes — negocio simulado — , ya que, haciendose aplicacion indebida de art. 1.276 por el Tribunal
cuando esta divergencia implica no una ausencia total de sentenciador al cohonestar la falta de precio admitiendo se
voluntad y de acto real, sino mera ocultacion de un negocio pueda tratar de una donacion, ya que la recta aplicacion del
verdadero bajo la falsa apariencia de un negocio citado precepto exige que los negocios simulados, o sea con
fingido "sirulacion relativa", la ineficacia de la forma externa causa falsa, se justifique la verdadera y licita en que se funda el
simulada, no es obstaculo para la posible validez del negocio acto que las partes han querido ocultar y el cumplimiento de las
disimulado que contiene, en tanto este ultimo sea licito y reuna formalidades impuestas por la Ley y, cual dice la sentencia de 3
no solo los requisitos generales, sino tambien los que de marzo de 1932, esta rigurosa doctrina ha de ser
corresponden a su naturaleza especial, doctrina, en obligada especialmente impuesta en la donaciones puras y simples; de
aplicacion de los preceptos de nuestra Ley civil, especialmente los que deduce que la sentencia recurrida al no decretar la
en su art. 1.276, que, al establecer el principio de nulidad de nulidad instada por falta de causa, incide en la infraccion de los
los contratos en los que se hace expresion de una causa falsa, articulos 1.261, 1.274, 1.275 y 1.276 del Codigo Civil.
deja a salvo el caso de que esten fundados en otra verdadera y (Sentencia de 22 de febrero de 1940). (Manresa, Codigo Civil,
licita. (Manresa, Codigo Civil, Tomo VIII, Vol. II pp. 357-358) Tomo VIII, Vol. II, p. 356)

Sanchez Roman says: In our view, therefore, the ruling of this Court in Ocejo, Perez &
Co. vs. Flores, 40 Phil. 921, is squarely applicable herein. In that
Ya hemos dicho que la intervencion de causa en los contratos case we ruled that a contract of purchase and sale is null and
es necesaria, y que sin ellos son nulos; solo se concibe que un void and produces no effect whatsoever where the same is
hombre perturbado en su razon pueda contratar sin causa. ... without cause or consideration in that the purchase price which
appears thereon as paid has in fact never been paid by the
Por la misma razon de la necesidad de la intervencion purchaser to the vendor.
de causa en el contrato, es preciso que esta sea verdadera y no
supuesta, aparente o figurada. Que la falsedad de la causa vicia Needless to add, the inexistence of a contract is permanent and
el consentimiento y anula el contrato, es, no solo doctrina incurable and cannot be the subject of prescription. In the words
indudable de Derecho Cientifico sino tambien de antiguo of Castan: "La inexistencia es perpetua e insubsanable no
Derecho de Castilla, que en multitud de leyes asi lo declararon. pudiendo ser objecto de confirmacion ni prescripcion (Op. cit., p.
(Sanchez Roman, Derecho Civil, Tomo IV, p. 206.). 644.) In Eugenio v. Perdido, 97 Phil. 41, 42-43, involving a sale
dated 1932, this Court, speaking through Justice Cesar
In a clearer exposition of the above distinction, Castan states: Bengzon, now Chief Justice, stated:

2.º. La causa ha de ser verdadera. La causa falsa puede Under the existing classification, such contract would be
ser erronea o simulada. Es erronea como dice Giorgi, la causa "inexisting" and "the action or defense for declaration" of such
que tiene por base la credulidad en un hecho no existente; y inexistence "does not prescribe". (Art. 1410, New Civil Code).
While it is true that this is a new provision of the New Civil Code, In view of the conclusion thus reached, it becomes unnecessary
it is nevertheless a principle recognized since Tipton vs. to pass on the other errors assigned. Suffice it to say that, on
Velasco, 6 Phil. 67 that "mere lapse of time cannot give efficacy the merits the appealed decision could have been upheld under
to contracts that are null and void". Article 1332 of the new Civil Code and the following
authorities: Ayola vs. Valderrama Lumber Manufacturers Co.,
Anent the matter of whether the Narcisos were purchasers in Inc., 49 O.G. 980, 982; Trasporte vs. Beltran, 51 O.G. 1434,
good faith, the trial court in its decision resolved this issue, thus: 1435; Cortez vs. Cortez, CA-G.R. No. 18451-R, August 8,
1961; Castillo vs. Laberinto, CA-G.R. No. 18118-R, December
20, 1961; and 13 C.J. 372-373, as well as the several facts and
With regard to the second issue, the Narcisos contend that they
circumstances appreciated by the trial court as supporting
are the owners of the above-described property by virtue of the
appellees' case.
deed of sale (Exh. B, plaintiffs in 11991 and Exh. 2, defendants
in U-133) executed in their favor by Maximo Mapalo, and further
claim that they are purchasers for value and in good faith. This thereby in effect sustaining — barring only its ruling on
court, however, cannot also give weight and credit on this theory prescription — the judgment and findings of the trial court,
of the Narcisos on the following reasons: Firstly, it has been including that of bad faith on the part of the Narcisos in
positively shown by the undisputed testimony of Candida Quiba purchasing the land in question. We therefore see no need to
that Pacifico Narciso and Evaristo Narciso stayed for some days further remand this case to the Court of Appeals for a ruling on
on the western side (the portion in question) of the above- this point, as appellees request in their brief in the event we hold
described land until their house was removed in 1940 by the the contract of 1936 to be inexistent as regards the western
spouses Mapalo and Quiba; secondly, Pacifica Narciso admitted portion of the land.
in his testimony in chief that when they bought the property,
Miguel Mapalo was still in the premises in question (western In view of defendants' bad faith under the circumstances we
part) which he is occupying and his house is still standing deem it just and equitable to award, in plaintiffs' favor, attorneys'
thereon; and thirdly, said Pacifico Narciso when presented as a fees on appeal, in the amount of P1,000.00 as prayed for in the
rebuttal and sub-rebuttal witness categorically declared that counterclaim.
before buying the land in question he went to the house of
Miguel Mapalo and Candida Quiba and asked them if they will Wherefore, the decision of the Court of Appeals is hereby
permit their elder brother Maximo to sell the property. reversed and set aside, and another one is hereby rendered
affirming in toto the judgment of the Court of First Instance a
Aside from the fact that all the parties in these cases are quo, with attorney's fees on appeal in favor of appellants in the
neighbors, except Maximo Mapalo the foregoing facts are amount of P1,000.00, plus the costs, both against the private
explicit enough and sufficiently reveal that the Narcisos were appellees. So ordered.
aware of the nature and extent of the interest of Maximo Mapalo
their vendor, over the above-described land before and at the
time the deed of sale in their favor was executed.

Upon the aforestated declaration of Pacifico Narciso the

following question arises: What was the necessity, purpose and
reason of Pacifico Narciso in still going to the spouses Mapalo
and asked them to permit their brother Maximo to dispose of the
above-described land? To this question it is safe to state that
this act of Pacifico Narciso is a conclusive manifestation that
they (the Narcisos) did not only have prior knowledge of the
ownership of said spouses over the western half portion in
question but that they also have recognized said ownership. It
also conclusively shows their prior knowledge of the want of [G.R. No. 109355. October 29, 1999]
dominion on the part of their vendor Maximo Mapalo over the
whole land and also of the flaw of his title thereto. Under this
situation, the Narcisos may be considered purchasers in value
but certainly not as purchasers in good faith. ... (pp. 97-98, SERAFIN MODINA, petitioner vs. COURT OF APPEALS AND
Record on Appeal.) ERNESTO HONTARCIEGO, PAUL FIGUEROA,
TEODORO HIPALLA AND RAMON CHIANG,
MERLINDA CHIANG, respondents.
And said finding — which is one of fact — is found by us not a
bit disturbed by the Court of Appeals. Said the Court of Appeals:
DECISION
PURISIMA, J.: the deeds of sale (Exhibits A, B, 6 Chiang and 7 Chiang) dated
August 3, and 24, 1979, as well as. Certificates of Title Nos. T-
At bar is a Petition for Review on Certiorari assailing the 102631, 102630, 102632 and 102890 in the name of Serafin
decision of the Court of Appeals in CA - G.R. CV No. 26051 Modina; (3) ordering the Register of Deeds of Iloilo to cancel
affirming the decision of the trial court in the case, entitled said certificates of title in the names of Ramon Chiang and
Serafin Modina vs Ernesto Hontarciego, Paulino Figueroa and Serafin Modina and to reinstate the Certificates of Title Nos. T-
Ramon Chiang vs Merlinda Plana Chiang, intervenors, which 57960, T-57962, T-57963 and T-57864 in the name of Nelson
declared as void and inexistent the deed of definite sale dated Plana; (4) ordering Serafin Modina to vacate and restore
December 17, 1975 as well as the Certificates of Title Nos. T- possession of the lots in question to Merlinda Plana Chiang; (5)
86912, T-86913, T-86914 in the name of Ramon Chiang. ordering Ramon Chiang to restitute and pay to Serafin Modina
the sum of P145,800.00 and; (6) ordering Serafin Modina to pay
The facts that matter are as follows: Ernesto Hontarciego the sum of P44,500.00 as actual and
compensatory damages plus the sum of P5,000.00, for and as
The parcels of land in question are those under the name
attorneys fees, with costs in favor of said defendants against the
of Ramon Chiang (hereinafter referred to as CHIANG ) covered
plaintiff.
by TCT Nos. T-86912, T-86913, and T-86914. He theorized that
subject properties were sold to him by his wife, Merlinda Plana
Chiang (hereinafter referred to as MERLINDA), as evidenced by On appeal, the Court of Appeals affirmed the aforesaid
a Deed of Absolute Sale dated December 17, 1975,[1] and were decision in toto.
subsequently sold by CHIANG to the petitioner Serafin Modina Dissatisfied therewith, petitioner found his way to this
(MODINA), as shown by the Deeds of Sale, dated August 3, Court via the present Petition for Review under Rule 45 seeking
1979 and August 24, 1979, respectively. to set aside the assailed decision of the Court of Appeals.
MODINA brought a Complaint for Recovery of Possession Raised for resolution here are: (1) whether the sale of
with Damages against the private respondents, Ernesto subject lots should be nullified, (2) whether petitioner was not a
Hontarciego, Paul Figueroa and Teodoro Hipalla, docketed as purchaser in good faith, (3) whether the decision of the trial
Civil Case No. 13935 before the Regional Trial Court of Iloilo court was tainted with excess of jurisdiction; and (4) whether or
City. not only three-fourths of subject lots should be returned to the
Upon learning the institution of the said case, MERLINDA private respondent.
presented a Complaint-in-intervention, seeking the declaration Anent the first issue, petitioner theorizes that the sale in
of nullity of the Deed of Sale between her husband and question is null and void for being violative of Article 1490 [3] of
MODINA on the ground that the titles of the parcels of land in the New Civil Code prohibiting sales between
dispute were never legally transferred to her spouses.Consequently, what is applicable is Article
husband. Fraudulent acts were allegedly employed by him to 1412[4] supra on the principle of in pari delicto, which leaves
obtain a Torrens Title in his favor.However, she confirmed the both guilty parties where they are, and keeps undisturbed the
validity of the lease contracts with the other private respondents. rights of third persons to whom the lots involved were sold;
MERLINDA also admitted that the said parcels of land petitioner stressed.
were those ordered sold by Branch 2 of the then Court of First Petitioner anchors his submission on the following
Instance of Iloilo in Special Proceeding No. 2469 in Intestate statements of the Trial Court which the Court of Appeals upheld,
Estate of Nelson Plana where she was appointed as the to wit:
administratix, being the widow of the deceased, her first
husband. An Authority to Sell was issued by the said Probate
Furthermore, under Art. 1490, husband and wife are
Court for the sale of the same properties.[2]
prohibited to sell properties to each other. And where, as in
After due hearing, the Trial Court decided in favor of this case, the sale is inexistent for lack of consideration, the
MERLINDA, disposing thus: principle of in pari delicto non oritur actio does not
apply. (Vasquez vs Porta, 98 Phil 490). (Emphasis
WHEREFORE, judgment is hereby rendered (1) declaring as ours) Thus, Art. 1490 provides:
void and inexistent the sale of Lots 10063, 10088, 10085 and
10089 of the Cadastral Survey of Sta. Barbara by Merlinda Art. 1490. The husband and the wife cannot sell property to
Plana in favor of Ramon Chiang as evidenced by the deed of each other, except:
definite sale dated December 17, 1975 (Exhibits H; 3-Chiang; 9
Intervenor) as well as the Certificates of Title Nos. T-86912, T- (1) when a separation of property was agreed upon in the
86913, T-86914 and T-86915 in the name of Ramon Chiang; (2) marriage settlements; or
declaring as void and inexistent the sale of the same properties
by Ramon Chiang in favor of Serafin Modina as evidenced by
(2) when there has been a judicial separation of property under Articles 1411 and 1412 of the New Civil Code are
Art. 191. inapplicable. In pari delicto doctrine applies only to contracts
with illegal consideration or subject matter, whether the
The exception to the rule laid down in Art. 1490 of the New Civil attendant facts constitute an offense or misdemeanor or
Code not having existed with respect to the property relations of whether the consideration involved is merely rendered illegal.[13]
Ramon Chiang and Merlinda Plana Chiang, the sale by the The statement below that it is likewise null and void for
latter in favor of the former of the properties in question is invalid being violative of Article 1490 should just be treated as a
for being prohibited by law. Not being the owner of subject surplusage or an obiter dictum on the part of the Trial Court as
properties, Ramon Chiang could not have validly sold the same the issue of whether the parcels of land in dispute are conjugal
to plaintiff Serafin Modina. The sale by Ramon Chiang in favor in nature or they fall under the exceptions provided for by law,
of Serafin Modina is, likewise, void and inexistent. was neither raised nor litigated upon before the lower
Court. Whether the said lots were ganancial properties was
xxx xxx xxx[5] never brought to the fore by the parties and it is too late to do so
now.
The Court of Appeals, on the other hand, adopted the
following findings a quo: that there is no sufficient evidence Futhermore, if this line of argument be followed, the Trial
establishing fault on the part of MERLINDA, and therefore, the Court could not have declared subject contract as null and void
principle of in pari delicto is inapplicable and the sale was void because only the heirs and the creditors can question its nullity
for want of consideration. In effect, MERLINDA can recover the and not the spouses themselves who executed the contract with
lots sold by her husband to petitioner MODINA. However, the full knowledge of the prohibition.[14]
Court of Appeals ruled that the sale was void for violating Article
1490 of the Civil Code, which prohibits sales between spouses. Records show that in the complaint-in-intervention of
MERLINDA, she did not aver the same as a ground to nullify
The principle of in pari delicto non oritur actio[6] denies all subject Deed of Sale. In fact, she denied the existence of the
recovery to the guilty parties inter se. It applies to cases where Deed of Sale in favor of her husband. In the said Complaint, her
the nullity arises from the illegality of the consideration or the allegations referred to the want of consideration of such Deed of
purpose of the contract.[7] When two persons are equally at fault, Sale. She did not put up the defense under Article 1490, to
the law does not relieve them. The exception to this general rule nullify her sale to her husband CHIANG because such a
is when the principle is invoked with respect to inexistent defense would be inconsistent with her claim that the same sale
contracts.[8] was inexistent.
In the petition under consideration, the Trial Court found The Trial Court debunked petitioners theory that
that subject Deed of Sale was a nullity for lack of any MERLINDA intentionally gave away the bulk of her and her late
consideration.[9] This finding duly supported by evidence was husbands estate to defendant CHIANG as his exclusive
affirmed by the Court of Appeals. Well-settled is the rule that this property, for want of evidentiary anchor. They insist on the Deed
Court will not disturb such finding absent any evidence to the of Sale wherein MERLINDA made the misrepresentation that
contrary.[10] she was a widow and CHIANG was single, when at the time of
execution thereof, they were in fact already married. Petitioner
Under Article 1409[11] of the New Civil Code, enumerating
insists that this document conclusively established bad faith on
void contracts, a contract without consideration is one such void
the part of MERLINDA and therefore, the principle of in pari
contract. One of the characteristics of a void or inexistent
delicto should have been applied.
contract is that it produces no effect. So also, inexistent
contracts can be invoked by any person whenever juridical These issues are factual in nature and it is not for this
effects founded thereon are asserted against him. A transferor Court to appreciate and evaluate the pieces of evidence
can recover the object of such contract by accion introduced below. An appellate court defers to the factual
reivindicatoria and any possessor may refuse to deliver it to the findings of the Trial Court, unless petitioner can show a glaring
transferee, who cannot enforce the transfer.[12] mistake in the appreciation of relevant evidence.
Thus, petitioners insistence that MERLINDA cannot attack Since one of the characteristics of a void or inexistent
subject contract of sale as she was a guilty party thereto is contract is that it does not produce any effect, MERLINDA can
equally unavailing. recover the property from petitioner who never acquired title
thereover.
But the pivot of inquiry here is whether MERLINDA is
barred by the principle of in pari delicto from questioning subject As to the second issue, petitioner stresses that his title
Deed of Sale. should have been respected since he is a purchaser in good
faith and for value. The Court of Appeals, however, opined that
It bears emphasizing that as the contracts under
he (petitioner) is not a purchaser in good faith. It found that there
controversy are inexistent contracts within legal contemplation,
were circumstances known to MODINA which rendered their rescind a sale made upon prior authority of a Probate
transaction fraudulent under the attendant circumstances. Court. This does not constitute an interference or review of the
order of a co-equal Court since the Probate Court has no
As a general rule, in a sale under the Torrens system, a jurisdiction over the question of title to subject
void title cannot give rise to a valid title. The exception is when properties. Consequently, a separate action may be brought to
the sale of a person with a void title is to a third person who determine the question of ownership.[16]
purchased it for value and in good faith.
Lastly, on the issue of whether only three-fourths of the
A purchaser in good faith is one who buys the property of property in question should have been returned to MERLINDA,
another without notice that some other person has a right to or petitioners stance is equally unsustainable. It is a settled
interest in such property and pays a full and fair price at the time doctrine that an issue which was neither averred in the
of the purchase or before he has notice of the claim or interest Complaint nor raised during the trial before the lower court
of some other person in the property. cannot be raised for the first time on appeal, as such a recourse
In the case under scrutiny, petitioner cannot claim that he would be offensive to the basic rules of fair play, justice, and
was a purchaser in good faith. There are circumstances which due process.[17]
are indicia of bad faith on his part, to wit: (1) He asked his The issue of whether only three-fourths of subject property
nephew, Placido Matta, to investigate the origin of the property will be returned was never an issue before the lower court and
and the latter learned that the same formed part of the therefore, the petitioner cannot do it now. A final word. In a
properties of MERLINDAs first husband; (2) that the said sale Petition for Review, only questions of law may be raised. It is
was between the spouses; (3) that when the property was perceived by the Court that what petitioner is trying to, albeit
inspected, MODINA met all the lessees who informed that subtly, is for the Court to examine the probative value or
subject lands belong to MERLINDA and they had no knowledge evidentiary weight of the evidence presented below[18] The Court
that the same lots were sold to the husband. cannot do that unless the appreciation of the pieces of evidence
It is a well-settled rule that a purchaser cannot close his on hand is glaringly erroneous. But this is where petitioner
eyes to facts which would put a reasonable man upon his guard utterly failed.
to make the necessary inquiries, and then claim that he acted in WHEREFORE, the Petition is DENIED and the decision of
good faith. His mere refusal to believe that such defect exists, or the Court of Appeals, dated September 30, 1992, in CA-G.R.
his wilful closing of his eyes to the possibility of the existence of CV No. 26051 AFFIRMED. No pronouncement as to costs.
a defect in his vendors title, will not make him an innocent
purchaser for value, if it afterwards develops that the title was in SO ORDERED.
fact defective, and it appears that he had such notice of the
defect as would have led to its discovery had he acted with that
measure of precaution which may reasonably be required of a
prudent man in a like situation.[15]
Thus, petitioner cannot claim that the sale between him
and MODINA falls under the exception provided for by law.
With regard to the third issue posed by petitioner -
whether the Trial Courts decision allowing recovery on the part
of Merlinda Chiang of subject properties was void - petitioners
contention is untennable. It is theorized that as the sale by
MERLINDA was by virtue of an Order to Sell issued in the
Intestate Estate Proceedings of her late husband, Nelson Plana
- to allow recovery will defeat the said order of the Probate
Court. Petitioner equated the aforesaid Order to Sell as a
judgment, which another court in a regular proceeding has no
jurisdiction to reverse.
Petitioner is under the mistaken impression that as the
Order to Sell had become a judgment in itself as to the validity
of the sale of the properties involved, any question as to its
nullity should have been brought before the Court of Appeals on
appeal when the said Order was issued.
It is a well-settled rule that a Court of First Instance (now
Regional Trial Court) has jurisdiction over a case brought to
G.R. No. L-25777 November 26, 1976 The said fishpond, known as Lot No. 4626 of the Malolos
Cadastre, has an area of more than thirteen hectares. As shown
ASUNCION MENESES VDA. DE CATINDIG, petitioner- in Original Certificate of Title No. 7937, it is registered in the
appellant, names of the following persons:
vs.
The Heirs of CATALINA ROQUE, namely, ESCOLASTICO 1. Catalina Roque, married to Anastacio
CERVANTES, LEONCIA CERVANTES and EMERENCIANA Katipunan 6/16
CERVANTES, represented by her guardian ad
litem, DAMASO SANTOS; CARLOS KATIPUNAN; Heirs of 2. Roberto Roque, married to Gregoria
JORGE KATIPUNAN; Heirs of ROBERTO ROQUE, namely, Borlongan 2/16
MAGDALENA, GORGONIA and ELISA, all surnamed
ROQUE; INES ROQUE; Heirs of BARBARA ROQUE
3. Ines Roque, married to Lucio Adriano
VILLANUEVA, namely, MERCEDES VILLANUEVA
1/16
FAJARDO, VENANCIA VILLANUEVA, LIGAYA VILLANUEVA,
PEDRO VILLANUEVA, PABLO VILLANUEVA, LEONILA
VILLANUEVA, MARCIAL VILLANUEVA; Heirs of APOLONIO 4. Barbara Roque, married to Eusebio
ROQUE, namely, DOLORES, AURELIA, CONSTANCIO, Villanueva 1/16
GUILLERMO, JOSEFINA, all surnamed ROQUE, DEMETRIA
RAMIREZ; ENCARNACION CAMINGAL, as guardian ad 5. Apolonio Roque, married to Isabel
litem of RENATO and ERNESTO, both surnamed ROQUE; Borlongan 1/16
Heirs of IRENE BOLORAN, namely, HERMOGENA,
CIRIACO, VICENTE and DOMINADOR, all surnamed 6. Concordia Roque, single 2/16
TOLENTINO; Heirs of LEONILA DE GUZMAN, namely,
PETRONILA, MARCELINA and PEÑAFRANCIA, (all 7. German Ramirez 1/16
surnamed SANTIAGO, CIPRIANA) and PASTORA, both
surnamed SANTIAGO, both minors, represented by
8. Irene Boloran, married to Faustino
PETRONILA SANTIAGO, as guardian ad litem; GERMAN
Panganiban 1/16
RAMIREZ; Heirs of CONCORDIA ROQUE, namely, BELEN
and GUILLERMO, both surnamed
PAGSANJAN, respondents-appellees. 9. Leonila de Guzman, 12 years old, single
1/16
Tansinsin & Tansinsin for petitioner-appellant.
The co-owners of the fishpond leased it to Mrs. Catindig for a
term of ten years counted from October 1, 1941 for a total rental
Pablo, Diaz, Agosto & Palacio for respondent-appellees.
of six thousand pesos (Exh. C-1; Amendment to Decision, per
Resolution of February 22, 1966).

After the termination of the lease on September 30, 1951, Mrs.

AQUINO, J.: Catindig remained in possession of the fishpond because she
was negotiating with the co-owners for the purchase thereof.
Asuncion Meneses Vda. de Catindig seeks the review of the She wanted to buy it for P52,000.
decision of the Court of Appeals dated December 31, 1965
which affirmed the judgment of the Court of First Instance On October 18, 1960 German Ramirez, one of the co-owners,
Bulacan. The lower court declared void certain documents of executed a deed wherein he sold his 2/16 share to Mrs. Catindig
sale regarding portions of the fishpond in litigation, ordered Mrs. for P6,500 (Exh. E). The sale was annotated on the title on
Catindig to deliver to the respondents (except German Ramirez) October 19, 1960. Two weeks later, Pedro Villanueva, one of
the possession of the said fishpond, to pay to them, as the the co-owners, learned of the sale executed by German
reasonable compensation for the use and enjoyment of the Ramirez. That sale retroacted to April 13, 1950.
fishpond, the sum of P6,000 per annum from October 1, 1951
until the possession of the fishpond is restored to the
On November 18, 1960 the respondents filed this action against
respondents, plus P1,000 as attorney's fees, and allowed the
Mrs. Catindig to compel her to allow them to redeem the portion
respondents to redeem from Mrs. Catindig the 2/16 portion of
sold by German Ramirez. In April, 1962 the respondents
the fishpond which German Ramirez had sold to her.
amended their complaint by including, inter alia, a prayer for the
recovery of the possession of the fishpond.
The facts are as follows:
The Court of Appeals found that: The alleged sales were absolutely simulated, fictitious or
inexistent contracts (Arts. 1346 and 1409[2], Civil Code). "The
1. The consideration of P52,000 was not paid by Mrs. Catindig action or defense for the declaration of the inexistence of a
to the co-owners because she was not able to obtain a loan, the contract does not prescribe" (Art. 1410, Ibid; Eugenio vs.
proceeds of which would have been used to pay the co-owners Perdido, 97 Phil. 41). Mere lapse of time cannot give efficacy to
who had executed simulated sales of their shares, as shown in a void contract (Tipton vs. Velasco, 6 Phil. 67).
the private documents, Exhibits 6 to 26. (The originals of those
documents were allegedly lost. Only photostatic copies thereof The Appellate Court's finding that the price was not paid or that
were presented in evidence). the statement in the supposed contracts of sale (Exh. 6 to 26)
as to the payment of the price was simulated fortifies the view
2. Because Mrs. Catindig did not pay the price of P52,000, the that the alleged sales were void. "If the price is simulated, the
projected sale, "which was in truth a simulated one so as to sale is void ..." (Art. 1471, Civil Code).
enable her just to mortgage the property in order to secure the
necessary amount with which to pay the consideration" was A contract of sale is void and produces no effect whatsoever
void ab initio. There was no notarized deed of sale because where the price, which appears thereon as paid, has in fact
Mrs. Catindig did not pay the price to the co-owners except never been paid by the purchaser to the vendor (Ocejo, Perez &
German Ramirez. Co. vs. Flores and Bas, 40 Phil. 921; Mapalo vs. Mapalo, L-
21489, May 19, 1966, 64 O. G. 331, 17 SCRA 114, 122). Such
3. Ines Roque and the heirs of Roberto Roque did not barter a sale is non-existent (Borromeo vs. Borromeo, 98 Phil. 432) or
their shares for the two parcels of land owned by Mrs. Catindig. cannot be considered consummated (Cruzado vs. Bustos and
What the said co-owners did was to possess the lands of Mrs. Escaler, 34 Phil. 17; Garanciang vs. Garanciang, L-22351, May
Catindig in exchange for the latter's possession of their shares 21, 1969, 28 SCRA 229).
in the fishpond.
The foregoing discussion disposes of whatever legal issues
4. Considering the area of the fishpond and the upward trend in were raised by appellant Catindig which are interwoven with her
values, the amount of P6,000 a year is the reasonable factual contentions, including the issue as to whether she is
compensation for its use and enjoyment (Resolution amending entitled to demand the execution of a notarized deed of sale for
the decision). the 14/16 pro indiviso portion of the fishpond. She is not entitled
because, as already held, the alleged sales in her favor are
void.
The fourteen assignments of error of Mrs. Catindig in this appeal
are overlapping and repetitious She argues that the Court of
Appeals erred in holding (1) that the sale of the fishpond to her And in view of the result arrived at in this case, the trial court
is void for nonpayment of the price; (2) that the price was not and the Court of Appeals did not err in awarding to the
paid because she did not obtain any loan; (3) that the annual respondents the sum of one thousand pesos as attorney's fees
rental value is P6,000; (4) that the transaction between Mrs. (See art. 2208, Civil Code).
Catindig, on one hand, and Ines Roque and the heirs of Roberto
Roque, on the other, was an exchange of possession and not Mrs. Catindig, in her thirteenth assignment of error, which is
"land for land", and (5) that German Ramirez sold his share on partly a reproduction of her ninth assignment of error in the
October 18, 1960 and not on April 13, 1950 Appellate Court, injected new matters not raised in that Court.

Those assignments of error involve factual issues which cannot She contends that inasmuch as the fishpond was placed under
be ventilated in a review of the decision of the Court of Appeals. receivership by virtue of the trial court's order of January 15,
Only legal questions may be raised (Sec. 29, Judiciary Law; 1964 (Annex D of her brief not included in the Record on
Sec. 2, Rule 45, Rules of Court). As a rule, the factual findings Appeal), she should not answer for the reasonable value of the
of the Court of Appeals are conclusive on this Court. use and compensation of the fishpond from the time it was
placed in the receiver's possession.
The conclusive factual finding of the Appellate Court that the
alleged sales on April 13 or 14, 1950 of respondents' shares are She also contends that she is entitled to the rental value of the
simulated and void ab initio (See Onglengco vs. Ozaeta, 70 Phil. 2/16 portion sold to her by German Ramirez and the 3/16 share
43) renders untenable appellant Catindig's contentions that the of Ines Roque and the heirs of Roberto Roque and that the latter
remedies available to the respondents, such as an action for should restore to her the possession of the two parcels of
annulment, rescission or reformation, are barred by prescription riceland located at Barrio Pitpitan, Bulacan, Bulacan, the
or laches. possession of which was provisionally exchanged for Mrs.
Catindig's possession of their 3/16 share.
She further contends that the land taxes paid by her should be land under lease or otherwise has to pay the taxes to prevent a
deducted from the annual rental of P6,000 (not P600 as seizure of the property by the government, the owner having
erroneously stated on page 88 of her brief). become delinquent in the payment of the land tax (p. 72, Report
of the Code Commission).
The respondents, in their reply brief and rejoinder, did not
answer those contentions. That silence or omission may be One last point should be resolved. The Court of Appeals and the
construed as an admission of their merit. trial court, in sanctioning the respondents' right to redeem from
Mrs. Catindig the 2/16 share sold to her by German Ramirez,
To do justice in this case, we have to resolve those alternative relied on article 1088 of the Civil Code which refers to the sale
points raised by the appellant. "It is a cherished rule of by any of the heirs of his hereditary rights to a stranger. That
procedure that a court should always strive to settle the entire article has no relevant application to this case.
controversy in a single proceeding leaving no root or branch to
bear the seeds of future litigation" (Marquez vs. Marquez, 73 Inasmuch as the fishpond is under co-ownership, not co-
Phil. 74, 78). heirship, and what are involved herein are the shares of co-
owners, not the hereditary rights of co-heirs, it is article 1620 of
We hold that, as a matter of fairness and equity or to avoid the Civil Code that is applicable. Article 1620 provides that "a
unjust enrichment, the liability of Mrs. Catindig for the co-owner of a thing may exercise the right of redemption in case
reasonable value of the use and occupation of the fishpond the shares of all the other co-owners or of any of them, are sold
should be limited to the period from October 1, 1951 up to the to a third person." The period for exercising the right of legal
time in January, 1964 when she turned over the fishpond to the redemption is that fixed in article 1623 of the Civil Code, not the
receiver, namely, the deputy clerk of court of the Court of First period fixed in article 1524 of the Spanish Civil Code.
Instance of Bulacan, Malolos Branch I.
WHEREFORE, the judgment of the trial court and the Court of
It is the receiver who should deliver to the respondents the Appeals is affirmed with the following modifications:
possession of the fishpond which apparently has been
in custodia legis. 1. The receiver (not Asuncion Meneses Vda. de Catindig)
should deliver the possession of the fishpond to the respondents
From the compensation of P6,000 per annum which Mrs. or their duly authorized representative, together with 14/16 of
Catindig is obligated to pay to the respondents, should be the net earnings of the fishpond from January 15, 1964 up to the
deducted the 2/16 portion of said compensation, corresponding time the possession is delivered to the respondents.
to the share of German Ramirez, from October 1, 1951 to
January, 1964. Thereafter, Mrs. Catindig is entitled to demand 2. The receiver should deliver to Mrs. Catindig a 2/16 share of
the 2/16 share in the net fruits or earnings of the fishpond from the net earnings of the fishpond, corresponding to the share of
the receiver until the said share is redeemed by the German Ramirez, from January 15, 1964 up to the time the said
respondents. share is redeemed from her.

Ines Roque and the heirs of Roberto Roque should deliver to 3. From the annual compensation of P6,000 a year due from
Mrs. Catindig the possession of the two parcels of riceland Mrs. Catindig for the use and enjoyment of the fishpond from
already mentioned and account for the fruits thereof beginning October 1, 1951 up to January 15, 1964 (when the fishpond was
January, 1964 when Mrs. Catindig ceased to have possession placed under receivership) should be deducted (a) 2/16 which
of their 3/16 share. The trial court should hold a hearing to correspond to the share of German Ramirez, (b) 3/16 which
determine the amount of the net fruits which Mrs. Catindig is correspond to the shares of Ines Roque and the heirs of
entitled to receive from the said co-owners. She has the right to Roberto Roque, and (c) 14/16 of the realty taxes on the fishpond
retain the 3/16 portion of the annual rental of P6,000 paid by Mrs. Catindig (See Exh. 27).
corresponding to the shares of Ines Roque and the heirs of
Roberto Roque. 4. Ines Roque and the heirs of Roberto Roque should deliver to
Mrs. Catindig the possession of her two parcels of riceland
Moreover, the respondents (except German Ramirez), as located at Barrio Pitpitan, Bulacan, Bulacan, render an
owners of the fishpond, should reimburse Mrs. Catindig for the accounting of the fruits thereof from January 15, 1964 up to the
amount of the land taxes advanced by her (See Exh. 27; Par. II time the possession is delivered and pay to her the value of the
[iii], Lease Contract, Exh. C-1). "Any person who is constrained net fruits thereof. For that purpose, the trial court should hold the
to pay the taxes of another shall be entitled to reimbursement appropriate hearing. No costs.
from the latter" (Art. 2175, Civil Code; See art. 597). One
situation envisaged in that provision is when the possessor of SO ORDERED
SPS. RAMON LEQUIN and VIRGINIA LEQUIN, Given this situation where petitioners house stood on
Petitioners, - versus - SPS. RAYMUNDO VIZCONDE and a portion of the lot allegedly owned by respondents, petitioners
SALOME LEQUIN VIZCONDE, consulted a lawyer, who advised them that the 1,012-square
meter lot be segregated from the subject lot whose title they
Respondents. own and to make it appear that they are selling to respondents
x------------------------------------------------------------------------------------ 512 square meters thereof.This sale was embodied in the
-----x February 12, 2000 Kasulatan where it was made to appear that
respondents paid PhP 15,000 for the purchase of the 512-
DECISION square meter portion of the subject lot. In reality, the
VELASCO, JR., J.: consideration of PhP 15,000 was not paid to
petitioners. Actually, it was petitioners who paid respondents
The Case PhP 50,000 for the 500-square meter portion where petitioners
built their house on, believing respondents representation that
This is an appeal under Rule 45 from the the latter own the 1,012-square meter lot.
Decision[1] dated July 20, 2006 of the Court of Appeals (CA) in
CA-G.R. CV No. 83595, which declared the Kasulatan ng In July 2000, petitioners tried to develop the dried up
Bilihang Tuluyan ng Lupa[2] (Kasulatan) valid as between the canal located between their 500-square meter lot and the public
parties, but required respondents to return the amount of PhP road. Respondents objected, claiming ownership of said dried
50,000 to petitioners. Also assailed is the March 30, 2007 CA up canal or sapang patay.
Resolution[3] denying petitioners motion for reconsideration.
This prompted petitioners to look into the ownership of
the dried up canal and the 1,012 square-meter lot claimed by
respondents. Carlito de Leon told petitioners that what he had
The Facts sold to respondents was the dried up canal or sapang patay and
that the 1,012-square meter lot claimed by respondents really
Petitioner Ramon Lequin, husband of petitioner belongs to petitioners.
Virginia Lequin, is the brother of respondent Salome L.
Vizconde and brother-in-law of respondent Raymundo Thus, on July 13, 2001, petitioners filed a
Vizconde. With this consanguine and affinity relation, the instant Complaint[4] for Declaration of Nullity of Contract, Sum of Money
case developed as follows: and Damages against respondents with the Regional Trial Court
(RTC), Branch 28 in Cabanatuan City, praying, among others,
In 1995, petitioners, residents of Diamond Court, for the declaration of the February 12, 2000 Kasulatan as null
Brixton Ville Subdivision, Camarin, Caloocan City, bought the and void ab initio, the return of PhP 50,000 they paid to
subject lot consisting of 10,115 square meters from one Carlito respondents, and various damages. The case was docketed as
de Leon (de Leon). The sale was negotiated by respondent Civil Case No. 4063.
Raymundo Vizconde. The subject lot is located near the
Sto. Rosario to Magsaysay road in Aliaga, Nueva The Ruling of the RTC
Ecija. Adjacent thereto and located in between the subject lot
and the road is a dried up canal (or sapang patay in the On July 5, 2004, after due trial on the merits with
native language). petitioners presenting three witnesses and respondents only
one witness, the trial court rendered a Decision[5]in favor of
In 1997, respondents represented to petitioners that petitioners. The decretal portion reads:
they had also bought from Carlito de Leon a 1,012-square meter
lot adjacent to petitioners property and built a house thereon. As
later confirmed by de Leon, however, the 1,012-square meter lot WHEREFORE, viewed from the
claimed by respondents is part of the 10,115-square meter lot foregoing, judgment is hereby rendered in
petitioners bought from him. Petitioners believed the story of favor of the plaintiffs and against the
respondents, since it was Raymundo who negotiated the sale of defendants as follows:
their lot with de Leon. With the consent of respondents,
petitioners then constructed their house on the 500-square 1. Declaring the
meter half-portion of the 1,012 square-meter lot claimed by KASULATAN NG
TULUYANG BILIHAN
respondents, as this was near the road.Respondents residence
dated February 12,
is on the remaining 512 square meters of the lot.
 2000 as NULL and respondents appeal and declaring as valid
VOID; and the Kasulatan. The fallo reads:

2. Ordering the WHEREFORE, premises

defendants: considered, the Appeal is GRANTED. The
Kasulatan ng Bilihang Tuluyan
(a) to return to dated February 12, 2000 is declared
the plaintiffs the amount valid. However, Spouses Raymundo
of FIFTY THOUSAND Vizconde and Salome Lequin Vizconde are
PESOS which they have hereby ordered to return to the plaintiffs the
paid in the simulated amount of P50,000.00 without interest.
deed of sale plus an
interest of 12% per SO ORDERED.[7]
annum to commence
from the date of the filing
of this case; In reversing and vacating the RTC Decision, the CA
found no simulation in the contract of sale, i.e., Kasulatan.
(b) To pay the Relying on Manila Banking Corporation v. Silverio,[8] the
plaintiffs moral damages appellate court pointed out that an absolutely simulated contract
in the amount of takes place when the parties do not intend at all to be bound by
Php50,000.00; it, and that it is characterized by the fact that the apparent
contract is not really desired or intended to produce legal effects
(c) To pay
or in any way alter the juridical situation of the parties. It read
exemplary damages of
the sale contract (Kasulatan) as clear and unambiguous, for
Php50,000.00;
respondents (spouses Vizconde) were the buyers and
(d) To pay petitioners (spouses Lequin) were the sellers.Such being the
attorneys fees in the case, petitioners are, to the CA, the owners of the 1,012-square
amount of meter lot, and as owners they conveyed the 512-square meter
Php10,000.00; and portion to respondents.

(e) To The CA viewed petitioners claim that they executed

pay the costs of suit. the sale contract to make it appear that respondents bought the
property as mere gratuitous allegation. Besides, the sale
SO ORDERED.[6] contract was duly notarized with respondents claiming the 512-
square meter portion they bought from petitioners and not the
whole 1,012-square meter lot as alleged by petitioners.
The RTC found the Kasulatan allegedly conveying
512 square meters to respondents to be null and void due to: (1) Moreover, the CA dismissed allegations of fraud and
the vitiated consent of petitioners in the execution of the machinations against respondents to induce petitioners to
simulated contract of sale; and (2) lack of consideration, since it execute the sale contract, there being no evidence to show how
was shown that while petitioners were ostensibly conveying to petitioners were defrauded and much less the machinations
respondents 512 square meters of their property, yet the used by respondents. It ratiocinated that the allegation of
consideration of PhP 15,000 was not paid to them and, in fact, respondents telling petitioners that they own the 1,012-square
they were the ones who paid respondents PhP 50,000. The meter lot and for which petitioners sold them 512 square meters
RTC held that respondents were guilty of fraudulent thereof does not fall in the concept of fraud. Anent the PhP
misrepresentation. 50,000 petitioners paid to respondents for the 500-square meter
portion of the 1,012-square meter lot claimed by respondents,
Aggrieved, respondents appealed the above RTC the CA ruled that the receipt spoke for itself and, thus, required
Decision to the CA. respondents to return the amount to petitioners.

The Ruling of the CA On March 30, 2007, the CA denied petitioners Motion
for Reconsideration of the above decision through the assailed
The appellate court viewed the case otherwise. On resolution. Hence, petitioners went to this Court.
July 20, 2006, it rendered the assailed Decision granting
 The Issues The issues boil down to two core questions: whether
or not the Kasulatan covering the 512 square-meter lot is a valid
contract of sale; and who is the legal owner of the other 500
I square-meter lot.

THE HONORABLE COURT OF APPEALS, We find for petitioners.

WITH ALL DUE RESPECT, ERRED IN NOT
CLEARLY STATING IN THE ASSAILED The trial court found, inter alia, lack of consideration in
DECISION AND RESOLUTION THE the contract of sale while the appellate court, in reversing the
FACTS AND LAW ON WHICH THE SAME decision of the trial court, merely ruled that the contract of sale
WERE BASED; is not simulated. With the contrary rulings of the courts a quo,
the Court is impelled to review the records to judiciously resolve
II the petition.

THE HONORABLE COURT OF APPEALS, It is true that this Court is not a trier of facts, but there
WITH ALL DUE RESPECT, ERRED IN NOT are recognized exceptions to this general rule, such as when the
GIVING DUE CREDENCE TO THE appellate court had ignored, misunderstood, or misinterpreted
FINDINGS OF FACTS OF THE TRIAL cogent facts and circumstances which, if considered, would
COURT AND HOW THE LATTER change the outcome of the case; or when its findings were
APPRECIATED THE TESTIMONIES GIVEN totally devoid of support; or when its judgment was based on a
BY THE WITNESSES; misapprehension of facts.[10]

III As may be noted, the CA, without going into details,

ruled that the contract of sale was not simulated, as it was duly
THE HONORABLE COURT OF APPEALS, notarized, and it clearly showed petitioners as sellers, and
WITH ALL DUE RESPECT, ERRED IN respondents as buyers, of the 512-square meter lot, subject
FINDING THAT THERE WAS NO FRAUD matter of the sale. But the CA misappreciated the evidence duly
ON THE PART OF THE RESPONDENT- adduced during the trial on the merits.
VIZCONDES;

IV
As established during the trial, petitioners bought the
THE HONORABLE COURT OF APPEALS, entire subject property consisting of 10,115 square meters from
WITH ALL DUE RESPECT, ERRED IN Carlito de Leon. The title of the subject property was duly
CONSIDERING THAT THE KASULATAN transferred to petitioners names. Respondents, on the other
NG BILIHANG TULUYAN IS A VALID hand, bought the dried up canal consisting of 1,012 square
CONTRACT OF SALE; meters from de Leon. This dried up canal is adjacent to the
subject property of petitioners and is the lot or area between the
V subject property and the public road (Sto. Rosario to
Magsaysay).
THE HONORABLE COURT OF APPEALS,
WITH ALL DUE RESPECT, ERRED IN NOT The affidavit or Sinumpaang Salaysay[11] of de Leon
CONSIDERING THAT THE attests to the foregoing facts. Moreover, de Leons testimony in
RESPONDENTS DID NOT HAVE THE court confirmed and established such facts. These were neither
FINANCIAL CAPACITY TO PURCHASE controverted nor assailed by respondents who did not present
THE SUBJECT LAND FROM THE any countervailing evidence.
PETITIONERS.[9]
Before this factual clarification was had, respondents,
however, made a claim against petitioners in 1997when subject
lot was re-surveyed by petitionersthat respondents also bought
a 1,012 square-meter lot from de Leon. Undeniably, the 1,012
The Courts Ruling square meters was a portion of the 10,115 square meters which
de Leon sold to petitioners.
The petition is meritorious. Obviously, petitioners respected respondents claimif
not, to maintain peace and harmonious relationsand segregated
the claimed portion. Whether bad faith or ill-will was involved or
an honest erroneous belief by respondents on their claim, the prejudiced party, as he is misled by a false appearance of facts,
records do not show. The situation was further complicated by thereby producing error on his part in deciding whether or not to
the fact that both parties built their respective houses on the agree to the offer.
1,012 square-meter portion claimed by respondents, it being
situated near the public road. One form of fraud is misrepresentation through
insidious words or machinations. Under Art. 1338 of the Civil
Code, there is fraud when, through insidious words or
machinations of one of the contracting parties, the other is
induced to enter into a contract which without them he would not
To resolve the impasse on respondents claim over have agreed to. Insidious words or machinations constituting
1,012 square meters of petitioners property and the latters deceit are those that ensnare, entrap, trick, or mislead the other
house built thereon, and to iron out their supposed respective party who was induced to give consent which he or she would
rights, petitioners consulted a notary public, who advised and not otherwise have given.
proposed the solution of a contract of sale which both parties
consented to and is now the object of the instant action. Thus, Deceit is also present when one party, by means of
the contract of sale was executed on February 12, 2000 with concealing or omitting to state material facts, with intent to
petitioners, being the title holders of the subject property who deceive, obtains consent of the other party without which,
were ostensibly selling to respondents 512 square meters of the consent could not have been given. Art. 1339 of the Civil Code
subject property while at the same time paying PhP 50,000 to is explicit that failure to disclose facts when there is a duty to
respondents for the other 500 square-meter portion. reveal them, as when the parties are bound by confidential
relations, constitutes fraud.
From the above considerations, we conclude that the
appellate courts finding that there was no fraud or fraudulent
machinations employed by respondents on petitioners is bereft
of factual evidentiary support. We sustain petitioners contention From the factual milieu, it is clear that actual fraud is
that respondents employed fraud and machinations to induce present in this case. The sale between petitioners and de Leon
them to enter into the contract of sale. As such, the CAs finding over the 10,115 square-meter lot was negotiated by respondent
of fact must give way to the finding of the trial court that Raymundo Vizconde. As such, Raymundo was fully aware that
the Kasulatan has to be annulled for vitiated consent. what petitioners bought was the entire 10,115 square meters
and that the 1,012-square meter lot which he claims he
Anent the first main issue as to whether also bought from de Leon actually forms part of petitioners lot. It
the Kasulatan over the 512-square meter lot is voidable for cannot be denied by respondents that the lot which they actually
vitiated consent, the answer is in the affirmative. bought, based on the unrebutted testimony and statement of de
Leon, is the dried up canal which is adjacent to petitioners
A contract, as defined in the Civil Code, is a meeting 10,115-square meter lot. Considering these factors, it is clear as
of minds, with respect to the other, to give something or to day that there was deception on the part of Raymundo when he
render some service.[12] For a contract to be valid, it must have misrepresented to petitioners that the 1,012-square meter lot he
three essential elements: (1) consent of the contracting parties; bought from de Leon is a separate and distinct lot from the
(2) object certain which is the subject matter of the contract; and 10,115-square meter lot the petitioners bought from de
(3) cause of the obligation which is established. Leon. Raymundo concealed such material fact from petitioners,
who were convinced to sign the sale instrument in question and,
The requisites of consent are (1) it should be worse, even pay PhP 50,000 for the 500 square-meter lot which
intelligent or with an exact notion of the matter to which it refers; petitioners actually own in the first place.
(2) it should be free; and (3) it should be spontaneous. In De
Jesus v. Intermediate Appellate Court,[13] it was explained that There was vitiated consent on the part of
intelligence in consent is vitiated by error, freedom by violence, petitioners. There was fraud in the execution of the contract
intimidation or undue influence, and spontaneity by fraud. used on petitioners which affected their consent.Petitioners
reliance and belief on the wrongful claim by respondents
Article (Art.) 1330 of the Civil Code provides that when operated as a concealment of a material fact in their agreeing to
consent is given through fraud, the contract is voidable. and in readily executing the contract of sale, as advised and
proposed by a notary public. Believing that Carlito de Leon
Tolentino defines fraud as every kind of deception indeed sold a 1,012-square meter portion of the subject property
whether in the form of insidious machinations, manipulations, to respondents, petitioners signed the contract of sale based on
concealments or misrepresentations, for the purpose of leading respondents representations. Had petitioners known, as they
another party into error and thus execute a particular eventually would sometime in late 2000 or early 2001 when they
act.[14] Fraud has a determining influence on the consent of the made the necessary inquiry from Carlito de Leon, they would
not have entered or signed the contract of sale, much less pay (b) The failure of the written
PhP 50,000 for a portion of the subject lot which they fully agreement to express the true intent and
own. Thus, petitioners consent was vitiated by fraud or agreement of the parties thereto;
fraudulent machinations of Raymundo. In the eyes of the law, (c) The validity of the written
petitioners are the rightful and legal owners of the subject 512 agreement; or
square-meter lot anchored on their purchase thereof from de (d) The existence of other terms
Leon. This right must be upheld and protected. agreed to by the parties or their successors
On the issue of lack of consideration, the contract of in interest after the execution of the written
sale or Kasulatan states that respondents paid petitioners PhP agreement.
15,000 for the 512-square meter portion, thus:
The term agreement includes
Na kaming magasawang Ramon wills.
Lequin at Virginia R. Lequin, nawang may The second exception provided for the acceptance of
sapat na gulang, pilipino at nakatira sa 9 parol evidence applies to the instant case. Lack of consideration
Diamond Court, Brixton Ville Subdivision, was proved by petitioners evidence aliunde showing that
Camarin, Kalookan City, alang-alang sa the Kasulatan did not express the true intent and agreement of
halagang LABINGLIMANG LIBONG PISO the parties. As explained above, said sale contract was
(P 15,000.00) salaping pilipino fraudulently entered into through the misrepresentations of
na binayaran sa amin ng buong respondents causing petitioners vitiated consent.
kasiyahang loob namin ng magasawang
Raymundo Vizconde at Salome Lequin, Moreover, the evidence of petitioners was
nawang may sapat na gulang, pilipino at uncontroverted as respondents failed to adduce any proof that
nakatira sa Sto. Rosario, Aliaga, Nueva they indeed paid PhP 15,000 to petitioners. Indeed, having
Ecija, ay amin naman ngayon inilipat, asserted their purchase of the 512-square meter portion of
ibinigay at ipinagbili ng bilihang tuluyan sa petitioners based on the Kasulatan, it behooves upon
naulit na magasawang Raymundo Vizconde respondents to prove such affirmative defense of
at Salome Lequin, at sa kanilang mga purchase. Unless the party asserting the affirmative defense of
tagapagmana ang x x x.[15] an issue sustains the burden of proof, his or her cause will not
succeed. If he or she fails to establish the facts of which the
matter asserted is predicated, the complainant is entitled to a
On its face, the above contract of sale appears to be verdict or decision in his or her favor.[16]
supported by a valuable consideration. We, however, agree with
the trial courts finding that this is a simulated sale and In the instant case, the record is bereft of any proof of
unsupported by any consideration, for respondents never paid payment by respondents and, thus, their affirmative defense of
the PhP 15,000 purported purchase price. the purported purchase of the 512-square meter portion
fails. Thus, the clear finding of the trial court:
Section 9 of Rule 130 of the Revised Rules on
Evidence gives both the general rule and exception as regards 2. x x x [I]t was established by the plaintiffs
written agreements, thus: [petitioners] that they were the ones who
paid the defendants the amount of FIFTY
SEC. 9. Evidence of written THOUSAND PESOS (Php50,000.00) and
agreements.When the terms of an execute a deed of sale also in favor of the
agreement have been reduced to writing, it defendants. In a simple logic, where can you
is considered as containing all the terms find a contract that a VENDOR will convey
agreed upon and there can be, between the his real property and at the same time pay
parties and their successors in interest, no the VENDEE a certain amount of money
evidence of such terms other than the without receiving anything in return?[17]
contents of the written agreement.

However, a party may present There can be no doubt that the contract of sale
evidence to modify, explain or add to the or Kasulatan lacked the essential element of consideration. It is
terms of the written agreement if he puts in a well-entrenched rule that where the deed of sale states that
issue in his pleading: the purchase price has been paid but in fact has never been
paid, the deed of sale is null and void ab
(a) An intrinsic ambiguity, mistake initio for lack of consideration.[18] Moreover, Art. 1471 of the Civil
or imperfection in written agreement; Code, which provides that if the price is simulated, the sale is
void, also applies to the instant case, since the price purportedly [G.R. No. 109410. August 28, 1996]
paid as indicated in the contract of sale was simulated for no
payment was actually made.[19]

Consideration and consent are essential elements in a CLARA M. BALATBAT, petitioner, vs. COURT OF APPEALS
contract of sale. Where a partys consent to a contract of sale is and Spouses JOSE REPUYAN and AURORA
vitiated or where there is lack of consideration due to a REPUYAN, respondents.
simulated price, the contract is null and void ab initio.
DECISION
Anent the second issue, the PhP 50,000 paid by
petitioners to respondents as consideration for the transfer of TORRES, JR., J.:
the 500-square meter lot to petitioners must be restored to the
latter. Otherwise, an unjust enrichment situation ensues. The Petitioner Clara M. Balatbat instituted this petition for
facts clearly show that the 500-square meter lot is legally owned review pursuant to Rule 45 of the Revised Rules of Court
by petitioners as shown by the testimony of de Leon; therefore, seeking to set aside the decision dated August 12, 1992 of the
they have no legal obligation to pay PhP 50,000 therefor. Art. 22 respondent Court of Appeals in CA-G.R. CV No. 29994 entitled
of the Civil Code provides that every person who through an act Alejandro Balatbat and Clara Balatbat, plaintiffs-
or performance by another, or any other means, acquires or appellants, versus Jose Repuyan and Aurora Repuyan,
comes into possession of something at the expense of the latter defendants-appellees, the dispositive portion of which reads:[1]
without just or legal ground, shall return the same to
him. Considering that the 512 square-meter lot on which
WHEREFORE, the judgment appealed from is affirmed with the
respondents house is located is clearly owned by petitioners,
modification that the awards of P10,000.00 for attorneys fees
then the Court declares petitioners legal ownership over said
and P5,000.00 as costs of litigation are deleted.
512 square-meter lot. The amount of PhP 50,000 should only
earn interest at the legal rate of 6% per annum from the date of
filing of complaint up to finality of judgment and not 12% since SO ORDERED.
such payment is neither a loan nor a forbearance of
credit.[20] After finality of decision, the amount of PhP 50,000 The records show the following factual antecedents:
shall earn interest of 12% per annum until fully paid.
It appears that on June 15, 1977, Aurelio A. Roque filed a
complaint for partition docketed as Civil Case No. 109032
The award of moral and exemplary damages must be against Corazon Roque, Alberto de los Santos, Feliciano
Roque, Severa Roque and Osmundo Roque before the then
reinstated in view of the fraud or fraudulent machinations
Court of First Instance of Manila, Branch IX. [2] Defendants
employed by respondents on petitioners. The grant of damages
in the concept of attorneys fees in the amount of PhP 10,000 therein were declared in default and plaintiff presented
evidence ex-parte. On March 29, 1979, the trial court rendered a
must be maintained considering that petitioners have to incur
litigation expenses to protect their interest in conformity to Art. decision in favor of plaintiff Aurelio A. Roque, the pertinent
2208(2)[21] of the Civil Code. portion of which reads:[3]

Considering that respondents have built their house From the evidence, it has been clearly established that the lot in
over the 512-square meter portion legally owned by petitioners, question covered by Transfer Certificate of Title No. 51330 was
we leave it to the latter what course of action they intend to acquired by plaintiff Aurelio Roque and Maria Mesina during
pursue in relation thereto. Such is not an issue in this petition. their conjugal union and the house constructed thereon was
likewise built during their marital union. Out of their union,
WHEREFORE, the instant petition is plaintiff and Maria Mesina had four children, who are the
hereby GRANTED. Accordingly, the CA Decision dated July 20, defendants in this case. When Maria Mesina died on August 28,
2006 and Resolution dated March 30, 2007 in CA-G.R. CV No. 1966, the only conjugal properties left are the house and lot
83595 are hereby REVERSED and SET ASIDE. The Decision above stated of which plaintiff herein, as the legal spouse, is
of the RTC, Branch 28 in Cabanatuan City in Civil Case No. entitled to one-half share pro-indiviso thereof. With respect to
4063 is REINSTATED with the MODIFICATION that the amount the one-half share pro-indiviso now forming the estate of Maria
of fifty thousand pesos (PhP 50,000) which respondents must Mesina, plaintiff and the four children, the defendants here, are
return to petitioners shall earn an interest of 6% per annum from each entitled to one-fifth (1/5) share pro-indiviso. The deceased
the date of filing of the complaint up to the finality of this wife left no debt.
Decision, and 12% from the date of finality of this Decision until
fully paid.
No pronouncement as to costs. SO ORDERED.
Wherefore, judgment is hereby rendered ordering the partition of 94 of _____________________ 64 ________PEDRO DE
the properties, subject matter of this case consisting of the CASTRO, Notary Public of Manila.
house and lot, in the following manner:
Date of instrument - July 21, 1980
1. Of the house and lot forming the conjugal properties, plaintiff
is entitled to one-half share pro-indiviso thereof while the other Date of inscription- July 21, 1980 at 3:35 p.m.
half forms the estate of the deceased Maria Mesina;
TERESITA H. NOBLEJAS
2. Of the Estate of deceased Maria Mesina, the same is to be
divided into five (5) shares and plaintiff and his four children are
Acting Register of Deeds
entitled each to one-fifth share thereof pro-indiviso.
By:
Plaintiff claim for moral, exemplary and actual damages and
attorneys fees not having been established to the satisfaction of
the Court, the same is hereby denied. RAMON D. MACARICAN

Without pronouncement as to costs. Acting Second Deputy

SO ORDERED. On August 20, 1980, Aurelio A. Roque filed a complaint

for Rescission of Contract docketed as Civil Case No. 134131
against spouses Aurora Tuazon-Repuyan and Jose Repuyan
On June 2, 1979, the decision became final and
before Branch IV of the then Court of First Instance of
executory. The corresponding entry of judgment was made on
Manila. The complaint is grounded on spouses Repuyans failure
March 29, 1979.[4]
to pay the balance of P45,000.00 of the purchase price.[9] On
On October 5, 1979, the Register of Deeds of Manila September 5, 1980, spouses Repuyan filed their answer with
issued a Transfer Certificate of Title No. 135671 in the name of counterclaim.[10]
the following persons in the following proportions:[5]
In the meantime, the trial court issued an order in Civil
Case No. 109032 (Partition case) dated February 2, 1982, to
Aurelio A. Roque 6/10 share wit:[11]

Severina M. Roque 1/10 share In view of all the foregoing and finding that the amount of
P100,000.00 as purchase price for the sale of the parcel of land
Osmundo M. Roque 1/10 share covered by TCT No. 51330 of the Registry of Deeds of Manila
consisting of 84 square meters situated in Callejon Sulu, District
Feliciano M. Roque 1/10 share of Santa Cruz, Manila, to be reasonable and fair, and
considering the opportunities given defendants to sign the deed
of absolute sale voluntarily, the Court has no alternative but to
Corazon M. Roque 1/10 share
order, as it hereby orders, the Deputy Clerk of this Court to sign
the deed of absolute sale for and in behalf of defendants
On April 1, 1980, Aurelio A. Roque sold his 6/10 share in pursuant to Sec. 10, Rule 39 of the Rules of Court, in order to
T.C.T. No. 135671 to spouses Aurora Tuazon-Repuyan and effect the partition of the property involved in this case.
Jose Repuyan as evidenced by a Deed of Absolute Sale.[6]
On July 21, 1980, Aurora Tuazon Repuyan caused the SO ORDERED.
annotation of her affidavit of adverse claim[7] on the Transfer
Certificate of Title No. 135671,[8] to wit: A deed of absolute sale was executed on February 4, 1982
between Aurelio S. Roque, Corazon Roque, Feliciano Roque,
Entry No. 5627/T-135671 - NOTICE OF ADVERSE CLAIM - Severa Roque and Osmundo Roque and Clara Balatbat,
Filed by Aurora Tuazon Repuyan, married, claiming among married to Alejandro Balatbat.[12] On April 14, 1982, Clara
others that she bought 6/10 portion of the property herein Balatbat filed a motion for the issuance of a writ of possession
described from Aurelio Roque for the amount of P50,000.00 with which was granted by the trial court on September 14, 1982
a down payment of P5,000.00 and the balance of P45,000.00 to subject, however, to valid rights and interest of third persons
be paid after the partition and subdivision of the property herein over the same portion thereof, other than vendor or any other
described, other claims set forth in Doc. No. 954, page 18, Book person or persons privy to or claiming any rights or interest
under it. The corresponding writ of possession was issued on SO ORDERED.
September 20, 1982.[13]
On May 20, 1982, petitioner Clara Balatbat filed a motion On March 3, 1987, petitioner Balatbat filed a notice of lis
to intervene in Civil Case No. 134131[14] which was granted as pendens in Civil Case No. 109032 before the Register of Deeds
per courts resolution of October 21, 1982.[15]However, Clara of Manila.[18]
Balatbat failed to file her complaint in intervention.[16] On April On December 9, 1988, petitioner Clara Balatbat and her
15, 1986, the trial court rendered a decision dismissing the husband, Alejandro Balatbat filed the instant complaint for
complaint, the pertinent portion of which reads:[17] delivery of the owner's duplicate copy of T.C.T. No. 135671
docketed as Civil Case No. 88-47176 before Branch 24 of the
The rescission of contracts are provided for in the laws and Regional Trial Court of Manila against private respondents Jose
nowhere in the provision of the Civil Code under the title Repuyan and Aurora Repuyan.[19]
Rescissible Contracts does the circumstances in the case at bar
appear to have occurred, hence, the prayer for rescission is On January 27, 1989, private respondents filed their
outside the ambit for which rescissible [sic] could be granted. answer with affirmative defenses and compulsory
counterclaim.[20]
The Intervenor - Plaintiff, Clara Balatbat, although allowed to On November 13, 1989, private respondents filed their
intervene, did not file her complaint in intervention. memorandum[21] while petitioners filed their memorandum on
November 23, 1989.[22]
Consequently, the plaintiff having failed to prove with sufficient
On August 2, 1990, the Regional Trial Court of Manila,
preponderance his action, the relief prayed for had to be
Branch 24, rendered a decision dismissing the complaint, the
denied. The contract of sale denominated as Deed of Absolute
dispositive portion of which reads:[23]
Sale (Exh. 7 and sub-markings) being valid and enforceable, the
same pursuant to the provisions of Art. 1159 of the Civil Code
which says: Considering all the foregoing, this Court finds that the plaintiffs
have not been able to establish their cause of action against the
defendants and have no right to the reliefs demanded in the
Obligations arising from contracts have the force of law between
complaint and the complaint of the plaintiff against the
the contracting parties and should be complied with in good
defendants is hereby DISMISSED. On the counterclaim, the
faith.
plaintiff are ordered to pay defendants the amount of Ten
Thousand Pesos by way of attorneys fees, Five Thousand
has the effect of being the law between the parties and should Pesos as costs of litigation and further to pay the costs of the
be complied with. The obligation of the plaintiff under the suit.
contract being to have the land covered by TCT No. 135671
partitioned and subdivided, and title issued in the name of the
SO ORDERED.
defendant buyer (see page 2 par. C of Exh. 7-A) plaintiff had to
comply thereto to give effect to the contract.
Dissatisfied, petitioner Balatbat filed on appeal before the
respondent Court of Appeals which rendered the assailed
WHEREFORE, judgment is rendered against the plaintiff,
decision on August 12, 1992, to wit:[24]
Aurelio A. Roque, and the plaintiff in intervention, Clara
Balatbat, and in favor of the defendants, dismissing the
complaint for lack of merit, and declaring the Deed of Absolute WHEREFORE, the judgment appealed from is affirmed with the
Sale dated April 1, 1980 as valid and enforceable and the modification that the awards of P10,000.00 for attorneys fees
plaintiff is, as he is hereby ordered, to partition and subdivide and P5,000.00 as costs of litigation are deleted.
the land covered by T.C.T. No. 135671, and to aggregate
therefrom a portion equivalent to 6/10 thereof, and cause the SO ORDERED.
same to be titled in the name of the defendants, and after which,
the defendants to pay the plaintiff the sum of On March 22, 1993, the respondent Court of Appeals
P45,000.00. Considering further that the defendants suffered denied petitioners motion for reconsideration.[25]
damages since they were forced to litigate unnecessarily, by
way of their counterclaim, plaintiff is hereby ordered to pay Hence, this petition for review.
defendants the sum of P15,000.00 as moral damages, attorneys Petitioner raised the following issues for this Courts
fees in the amount of P5,000.00. resolution:

Costs against plaintiff. I

WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE thing shall pass from the vendor to the vendee upon actual or
RESPONDENTS WAS MERELY EXECUTORY AND NOT A constructive delivery of the thing sold even if the purchase price
CONSUMMATED TRANSACTION? has not yet been fully paid. The failure of the buyer to make
good the price does not, in law, cause the ownership to revest to
II the seller unless the bilateral contract of sale is first rescinded or
resolved pursuant to Article 1191 of the New Civil Code. [27]Non-
payment only creates a right to demand the fulfillment of the
WHETHER OR NOT THERE WAS A DOUBLE SALE AS
obligation or to rescind the contract.
CONTEMPLATED UNDER ART. 1544 OF THE CIVIL CODE?
With respect to the non-delivery of the possession of the
III subject property to the private respondent, suffice it to say that
ownership of the thing sold is acquired only from the time of
WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD delivery thereof, either actual or constructive.[28] Article 1498 of
FAITH AND FOR VALUE? the Civil Code provides that - when the sale is made through a
public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if
IV
from the deed the contrary does not appear or cannot be
inferred.[29] The execution of the public instrument, without
WHETHER OR NOT THE COURT OF APPEALS ERRED IN actual delivery of the thing, transfers the ownership from the
GIVING WEIGHT AND CONSIDERATION TO THE EVIDENCE vendor to the vendee, who may thereafter exercise the rights of
OF THE PRIVATE RESPONDENTS WHICH WERE NOT an owner over the same.[30] In the instant case, vendor Roque
OFFERED? delivered the owners certificate of title to herein private
respondent. It is not necessary that vendee be physically
Petitioner asseverates that the respondent Court of present at every square inch of the land bought by him,
Appeals committed grave abuse of discretion tantamount to lack possession of the public instrument of the land is sufficient to
or excess of jurisdiction in affirming the appealed judgment accord him the rights of ownership. Thus, delivery of a parcel of
considering (1) that the alleged sale in favor of the private land may be done by placing the vendee in control and
respondents Repuyan was merely executory; (2) that there is no possession of the land (real) or by embodying the sale in a
double sale; (3) that petitioner is a buyer in good faith and for public instrument (constructive). The provision of Article 1358 on
value; and (4) that private respondents did not offer their the necessity of a public document is only for convenience, not
evidence during the trial. for validity or enforceability. It is not a requirement for the validity
of a contract of sale of a parcel of land that this be embodied in
Contrary to petitioners contention that the sale dated April
a public instrument.[31]
1, 1980 in favor of private respondents Repuyan was merely
executory for the reason that there was no delivery of the A contract of sale being consensual, it is perfected by the
subject property and that consideration/price was not fully paid, mere consent of the parties.[32] Delivery of the thing brought or
we find the sale as consummated, hence, valid and payment of the price is not necessary for the perfection of the
enforceable. In a decision dated April 15, 1986 of the Regional contract; and failure of the vendee to pay the price after the
Trial Court of Manila, Branch IV in Civil Case No. 134131, the execution of the contract does not make the sale null and void
Court dismissed vendors Aurelio Roque complaint for rescission for lack of consideration but results at most in default on the part
of the deed of sale and declared that the sale dated April 1, of the vendee, for which the vendor may exercise his legal
1980, as valid and enforceable. No appeal having been made, remedies.[33]
the decision became final and executory. It must be noted that
herein petitioner Balatbat filed a motion for intervention in that Article 1544 of the New Civil Code provides:
case but did not file her complaint in intervention. In that case
wherein Aurelio Roque sought to rescind the April 1, 1980 deed If the same thing should have been sold to different vendees,
of sale in favor of the private respondents for non-payment of the ownership shall be transferred to the person who may have
the P45,000.00 balance, the trial court dismissed the complaint first taken possession thereof in good faith, if it should be
for rescision. Examining the terms and conditions of the Deed of movable property.
Sale dated April 1, 1980, the P45,000.00 balance is payable
only after the property covered by T.C.T. No. 135671 has been Should it be movable property, the ownership shall belong to the
partitioned and subdivided, and title issued in the name of the person acquiring it who in good faith first recorded it in the
BUYER hence, vendor Roque cannot demand payment of the Registry of Property.
balance unless and until the property has been subdivided and
titled in the name of the private respondents. Devoid of any Should there be no inscription, the ownership shall pertain to the
stipulation that ownership in the thing shall not pass to the person who in good faith was first in the possession and in the
purchaser until he has fully paid the price,[26] ownership in the
absence thereof, to the person who present the oldest title, the title of the property before the Register of Deeds and she
provided there is good faith. could have discovered that the subject property was already
sold to the private respondents. It is incumbent upon the vendee
Article 1544 of the Civil Code provides that in case of of the property to ask for the delivery of the owners duplicate
double sale of an immovable property, ownership shall be copy of the title from the vendor. A purchaser of a valued piece
transferred (1) to the person acquiring it who in good faith first of property cannot just close his eyes to facts which should put a
recorded it in the Registry of Property; (2) in default thereof, to reasonable man upon his guard and then claim that he acted in
the person who in good faith was first in possession; and (3) in good faith and under the belief that there were no defect in the
default thereof, to the person who presents the oldest title, title of the vendor.[39] One who purchases real estate with
provided there is good faith.[34] knowledge of a defect or lack of title in his vendor cannot claim
that he has acquired title thereto in good faith as against the true
In the case at bar, vendor Aurelio Roque sold 6/10 portion owner of the land or of an interest therein; and the same rule
of his share in TCT No. 135671 to private respondents Repuyan must be applied to one who has knowledge of facts which
on April 1, 1980. Subsequently, the same lot was sold again by should have put him upon such inquiry and investigation as
vendor Aurelio Roque (6/10) and his children (4/10), might be necessary to acquaint him with the defects in the title
represented by the Clerk of Court pursuant to Section 10, Rule of his vendor. Good faith, or the want of it is not a visible,
39 of the Rules of Court, on February 4, 1982.Undoubtedly, this tangible fact that can be seen or touched, but rather a state or
is a case of double sale contemplated under Article 1544 of the condition of mind which can only be judged of by actual or
New Civil Code. fancied tokens or signs.[40]
This is an instance of a double sale of an immovable In fine, petitioner had nobody to blame but herself in
property hence, the ownership shall vests in the person dealing with the disputed property for failure to inquire or
acquiring it who in good faith first recorded it in the Registry of discover a flaw in the title to the property, thus, it is axiomatic
Property. Evidently, private respondents Repuyans caused the that - culpa lata dolo aequiparatur - gross negligence is
annotation of an adverse claim on the title of the subject equivalent to intentional wrong.
property denominated as Entry No. 5627/T-135671 on July 21,
1980.[35] The annotation of the adverse claim on TCT No. IN VIEW OF THE FOREGOING PREMISES, this petition
135671 in the Registry of Property is sufficient compliance as for review is hereby DISMISSED for lack of merit. No
mandated by law and serves notice to the whole world. pronouncement as to costs.

On the other hand, petitioner filed a notice of lis IT IS SO ORDERED.

pendens only on February 2, 1982. Accordingly, private
respondents who first caused the annotation of the adverse
claim in good faith shall have a better right over herein
petitioner. Moreover, the physical possession of herein
petitioners by virtue of a writ of possession issued by the trial
court on September 20, 1982 is subject to the valid rights and
interest of third persons over the same portion thereof, other
than vendor or any other person or persons privy to or claiming
any rights to interest under it.[36] As between two purchasers, the
one who has registered the sale in his favor, has a preferred
right over the other who has not registered his title even if the
latter is in actual possession of the immovable
property.[37] Further, even in default of the first registrant or first
in possession, private respondents have presented the oldest
title.[38] Thus, private respondents who acquired the subject
property in good faith and for valuable consideration established
a superior right as against the petitioner.
Evidently, petitioner cannot be considered as a buyer in
good faith. In the complaint for rescission filed by vendor Aurelio
Roque on August 20, 1980, herein petitioner filed a motion for
intervention on May 20, 1982 but did not file her complaint in
intervention, hence, the decision was rendered adversely
against her. If petitioner did investigate before buying the land
on February 4, 1982, she should have known that there was a
pending case and an annotation of adverse claim was made in
G.R. No. L-38498 August 10, 1989 acceptance embodied in a public instrument. Claiming
ownership pro indiviso of the lands subject of the deeds by
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE virtue of being intestate heirs of Hilario Mateum, the petitioners
BAGNAS MAXIMINA BAGNAS, SIXTO BAGNAS and prayed for recovery of ownership and possession of said lands,
AGATONA ENCARNACION, petitioners, accounting of the fruits thereof and damages. Although the
vs. complaint originally sought recovery of all the twenty-nine
HON. COURT OF APPEALS, ROSA L. RETONIL TEOFILO parcels of land left by Mateum, at the pre-trial the parties agreed
ENCARNACION, and JOSE B. NAMBAYAN respondents. that the controversy be limited to the ten parcels subject of the
questioned sales, and the Trial Court ordered the exclusion of
the nineteen other parcels from the action. 6 Of the ten parcels
Beltran, Beltran & Beltran for petitioners.
which remained in litigation, nine were assessed for purposes of
taxation at values aggregating P10,500 00. The record does not
Jose M. Legaspi for private respondents. disclose the assessed value of the tenth parcel, which has an
area of 1,443 square meters. 7

In answer to the complaint, the defendants (respondents here)

NARVASA, J.: denied the alleged fictitious or fraudulent character of the sales
in their favor, asserting that said sales were made for good and
The facts underlying this appeal by certiorari are not in dispute. valuable consideration; that while "... they may have the effect of
Hilario Mateum of Kawit, Cavite, died on March 11, 1964, single, donations, yet the formalities and solemnities of donation are
without ascendants or descendants, and survived only by not required for their validity and effectivity, ... that defendants
collateral relatives, of whom petitioners herein, his first cousins, were collateral relatives of Hilario Mateum and had done many
were the nearest. Mateum left no will, no debts, and an estate good things for him, nursing him in his last illness, which
consisting of twenty-nine parcels of land in Kawit and Imus, services constituted the bulk of the consideration of the sales;
Cavite, ten of which are involved in this appeal. 1 and (by way of affirmative defense) that the plaintiffs could not
question or seek annulment of the sales because they were
On April 3, 1964, the private respondents, themselves collateral mere collateral relatives of the deceased vendor and were not
relatives of Mateum though more remote in degree than the bound, principally or subsidiarily, thereby. 8
petitioners, 2 registered with the Registry of Deeds for the
Province of Cavite two deeds of sale purportedly executed by After the plaintiffs had presented their evidence, the defendants
Mateum in their (respondents') favor covering ten parcels of filed a motion for dismissal in effect, a demurrer to the evidence
land. Both deeds were in Tagalog, save for the English reasserting the defense set up in their answer that the plaintiffs,
descriptions of the lands conveyed under one of them; and each as mere collateral relatives of Hilario Mateum, had no light to
recited the reconsideration of the sale to be" ... halagang ISANG impugn the latter's disposition of his properties by means of the
PISO (Pl.00), salaping Pilipino, at mga naipaglingkod, questioned conveyances and submitting, additionally, that no
ipinaglilingkod sa aking kapakanan ..." ("the sum of ONE PESO evidence of fraud maintaining said transfers had been
Pl.00), Philippine Currency, and services rendered, being presented. 9
rendered and to be rendered for my benefit"). One deed was
dated February 6,1963 and covered five parcels of land, and the The Trial Court granted the motion to dismiss, holding (a) on the
other was dated March 4, 1963, covering five other parcels, authority of Armentia vs. Patriarca, 10 that the plaintiffs, as mere
both, therefore, antedating Mateum's death by more than a collateral relatives, not forced heirs, of Hilario Mateum, could not
year. 3 It is asserted by the petitioners, but denied by the legally question the disposition made by said deceased during
respondents, that said sales notwithstanding, Mateum continued his lifetime, regardless of whether, as a matter of objective
in the possession of the lands purportedly conveyed until his reality, said dispositions were valid or not; and (b) that the
death, that he remained the declared owner thereof and that the plaintiffs evidence of alleged fraud was insufficient, the fact that
tax payments thereon continued to be paid in his the deeds of sale each stated a consideration of only Pl.00 not
name. 4 Whatever the truth, however, is not crucial. What is not being in itself evidence of fraud or simulation. 11
disputed is that on the strength of the deeds of sale, the
respondents were able to secure title in their favor over three of On appeal by the plaintiffs to the Court of Appeals, that court
the ten parcels of land conveyed thereby. 5 affirmed, adverting with approval to the Trial Court's reliance on
the Armentia ruling which, it would appear, both courts saw as
On May 22,1964 the petitioners commenced suit against the denying, without exception, to collaterals, of a decedent, not
respondents in the Court of First Instance of Cavite, seeking forced heirs, the right to impugn the latter's dispositions inter
annulment of the deeds of sale as fictitious, fraudulent or vivos of his property. The Appellate Court also analyzed the
falsified, or, alternatively, as donations void for want of testimony of the plaintiffs' witnesses, declared that it failed to
establish fraud of any kind or that Mateum had continued paying Sta. Ana, 87 Phil. 787 and Sobs vs. Chua
taxes on the lands in question even after executing the deeds Pua Hermanos, 50 Phil. 536, do not
conveying them to the defendants, and closed with the correctly state the present law, and must be
statement that "... since in duly notarized and registered deeds clarified.
of sale consideration is presumed, we do not and it necessary to
rule on the alternative allegations of the appellants that the said To be sure the quoted passage does not reject and is not to be
deed of sale were (sic) in reality donations. 12 construed as rejecting the Concepcion and Solisrulings 13 as
outrightly erroneous, far from it. On the contrary, those rulings
One issue clearly predominates here. It is whether, in view of undoubtedly read and applied correctly the law extant in their
the fact that, for properties assuredly worth in actual value many time: Art. 1276 of the Civil Code of 1889 under which the
times over their total assessed valuation of more than statement of a false cause in a contract rendered it voidable
P10,000.00, the questioned deeds of sale each state a price of only, not void ab initio. In observing that they "... do not correctly
only one peso (P1.00) plus unspecified past, present and future state the present law and must be clarified," Justice Reyes
services to which no value is assigned, said deeds were void or clearly had in mind the fact that the law as it is now (and already
inexistent from the beginning ("nulo") or merely voidable, that is, was in the time Armentia) no longer deems contracts with a
valid until annulled. If they were only voidable, then it is a correct false cause, or which are absolutely simulated or fictitious,
proposition that since the vendor Mateum had no forced heirs merely voidable, but declares them void, i.e., inexistent ("nulo")
whose legitimes may have been impaired, and the petitioners, unless it is shown that they are supported by another true and
his collateral relatives, not being bound either principally or lawful cause or consideration. 14 A logical consequence of that
subsidiarily to the terms of said deeds, the latter had and have change is the juridical status of contracts without, or with a false,
no actionable right to question those transfers. cause is that conveyances of property affected with such a vice
cannot operate to divest and transfer ownership, even if
On the other hand, if said deeds were void ab initio because to unimpugned. If afterwards the transferor dies the property
all intents and purposes without consideration, then a different descends to his heirs, and without regard to the manner in
legal situation arises, and quite another result obtains, as which they are called to the succession, said heirs may bring an
pointed out by the eminent civil law authority, Mr. Justice J.B.L. action to recover the property from the purported transferee. As
Reyes who, in his concurring opinion in Armentia, said: pointed out, such an action is not founded on fraud, but on the
premise that the property never leaves the estate of the
transferor and is transmitted upon his death to heirs, who would
I ... cannot bring myself to agree to the
labor under no incapacity to maintain the action from the mere
proposition that the heirs intestate would
fact that they may be only collateral relatives and bound neither
have no legal standing to contest the
principally or subsidiarily under the deed or contract of
conveyance made by the deceased if the
conveyance.
same were made without any consideration,
or for a false and fictitious consideration. For
under the Civil Code of the Philippines, Art. In Armentia the Court determined that the conveyance
1409, par. 3, contracts with a cause that did questioned was merely annullable not void ab initio, and that the
not exist at the time of the transaction are plaintiff s action was based on fraud vitiating said conveyance.
inexistent and void from the beginning. The The Court said:
same is true of contracts stating a false
cause (consideration) unless the persons Hypothetically admitting the truth of these
interested in upholding the contract should allegations (of plaintiffs complaint), the
prove that there is another true and lawful conclusion is irresistible that the sale is
consideration therefor. (lbid., Art. 1353). merely voidable. Because Marta Armentia
executed the document, and this is not
If therefore the contract has no causa or controverted by plaintiff. Besides, the fact
consideration, or the causa is false and that the vendees were minors, makes the
fictitious (and no true hidden causa is contract, at worst, annullable by them, Then
proved) the property allegedly conveyed again, inadequacy of consideration does not
never really leaves the patrimony of the imply total want of consideration. Without
transferor, and upon the latter's death more, the parted acts of Marta Armentia
without a testament, such property would after the sale did not indicate that the said
pass to the transferor's heirs intestate and sale was void from the being.
be recoverable by them or by the
Administrator of the transferor's estate. In
this particular regard, I think Concepcion vs.
 The sum total of all these is that, in essence, Without necessarily according all these assertions its full
plaintiffs case is bottomed on fraud, which concurrence, but upon the consideration alone that the apparent
renders the contract voidable. gross, not to say enormous, disproportion between the
stipulated price (in each deed) of P l.00 plus unspecified and
It therefore seems clear that insofar as it may be considered as unquantified services and the undisputably valuable real estate
setting or reaffirming precedent, Armentia only ruled that allegedly sold worth at least P10,500.00 going only by
transfers made by a decedent in his lifetime, which are voidable assessments for tax purposes which, it is well-known, are
for having been fraudulently made or obtained, cannot be notoriously low indicators of actual value plainly and
posthumously impugned by collateral relatives succeeding to his unquestionably demonstrates that they state a false and
estate who are not principally or subsidiarily bound by such fictitious consideration, and no other true and lawful cause
transfers. For the reasons already stated, that ruling is not having been shown, the Court finds both said deeds, insofar as
extendible to transfers which, though made under closely similar they purport to be sales, not merely voidable, but void ab initio.
circumstances, are void ab initio for lack or falsity of
consideration. Neither can the validity of said conveyances be defended on the
theory that their true causa is the liberality of the transferor and
The petitioners here argue on a broad front that the very recitals they may be considered in reality donations 18 because the
of the questioned deeds of sale reveal such want or law 19 also prescribes that donations of immovable property, to
spuriousness of consideration and therefore the void character be valid, must be made and accepted in a public instrument,
of said sales. They: and it is not denied by the respondents that there has been no
such acceptance which they claim is not required. 20
1. advert to a decision of the Court of Appeals in Montinola vs.
Herbosa (59 O.G. No. 47, pp, 8101, 8118) holding that a price of The transfers in question being void, it follows as a necessary
P l.00 for the sale of things worth at least P20,000.00 is so consequence and conformably to the concurring opinion
insignificant as to amount to no price at all, and does not satisfy in Armentia, with which the Court fully agrees, that the
the law which, while not requiring for the validity of a sale that properties purportedly conveyed remained part of the estate of
the price be adequate, prescribes that it must be real, not Hilario Mateum, said transfers notwithstanding, recoverable by
fictitious, stressing the obvious parallel between that case and his intestate heirs, the petitioners herein, whose status as such
the present one in stated price and actual value of the property is not challenged.
sold;
The private respondents have only themselves to blame for the
2. cite Manresa to the same effect: that true price, which is lack of proof that might have saved the questioned transfers
essential to the validity of a sale, means existent, real and from the taint of invalidity as being fictitious and without ilicit
effective price, that which does not consist in an insignificant cause; proof, to be brief, of the character and value of the
amount as, say, P.20 for a house; that it is not the same as the services, past, present, and future, constituting according to the
concept of a just price which entails weighing and measuring, very terms of said transfers the principal consideration therefor.
for economic equivalence, the amount of price against all the The petitioners' complaint (par. 6) 21 averred that the transfers
factors that determine the value of the thing sold; but that there were "... fraudulent, fictitious and/or falsified and (were) ... in
is no need of such a close examination when the immense reality donations of immovables ...," an averment that the private
disproportion between such economic values is patent a case of respondents not only specifically denied, alleging that the
insignificant or ridiculous price, the unbelievable amount of transfers had been made "... for good and valuable
which at once points out its inexistence; 15 consideration ...," but to which they also interposed
the affirmative defenses that said transfers were "... valid,
binding and effective ...," and, in an obvious reference to the
3. assert that Art. 1458 of the Civil Code, in prescribing that a
services mentioned in the deeds, that they "... had done many
sale be for a ... price certain in money or its equivalent ...
good things to (the transferor) during his lifetime, nursed him
requires that "equivalent" be something representative of
during his ripe years and took care of him during his previous
money, e.g., a check or draft, again citing Manresa 16 to the
and last illness ...," (pars. 4, 6, 16 and 17, their
effect that services are not the equivalent of money insofar as
answer).lâwphî1.ñèt 22 The onus, therefore, of showing the
said requirement is concerned and that a contract is not a true
existence of valid and illicit consideration for the questioned
sale where the price consists of services or prestations;
conveyances rested on the private respondents. But even on a
contrary assumption, and positing that the petitioners initially
4. once more citing Manresa 17 also point out that the "services" had the burden of showing that the transfers lacked such
mentioned in the questioned deeds of sale are not only vague consideration as they alleged in their complaint, that burden was
and uncertain, but are unknown and not susceptible of shifted to the private respondents when the petitioners
determination without the necessity of a new agreement presented the deeds which they claimed showed that defect on
between the parties to said deeds.
their face and it became the duty of said respondents to offer G.R. No. 153206 October 23, 2006
evidence of existent lawful consideration.
ONG ENG KIAM a.k.a. WILLIAM ONG, petitioner,
As the record clearly demonstrates, the respondents not only vs.
failed to offer any proof whatsoever, opting to rely on a demurrer LUCITA G. ONG, respondent.
to the petitioner's evidence and upon the thesis, which they
have maintained all the way to this Court, that petitioners, being
mere collateral relatives of the deceased transferor, were
without right to the conveyances in question. In effect, they
gambled their right to adduce evidence on a dismissal in the DECISION
Trial Court and lost, it being the rule that when a dismissal thus
obtained is reversed on appeal, the movant loses the right to
present evidence in his behalf. 23

WHEREFORE, the appealed Decision of the Court of Appeals is

reversed. The questioned transfers are declared void and of no AUSTRIA-MARTINEZ, J.:
force or effect. Such certificates of title as the private
respondents may have obtained over the properties subject of Before this Court is a Petition for Review seeking the reversal of
said transfers are hereby annulled, and said respondents are the Decision1 of the Court of Appeals (CA) in CA G.R. CV No.
ordered to return to the petitioners possession of an the 59400 which affirmed in toto the Decision of the Regional Trial
properties involved in tills action, to account to the petitioners for Court (RTC) Branch 41, Dagupan City granting the petition for
the fruits thereof during the period of their possession, and to legal separation filed by herein respondent, as well as the
pay the costs. No damages, attorney's fees or litigation Resolution2 of the CA dated April 26, 2002 which denied
expenses are awarded, there being no evidence thereof before petitioner’s motion for reconsideration.
the Court.
Ong Eng Kiam, also known as William Ong (William) and Lucita
SO ORDERED. G. Ong (Lucita) were married on July 13, 1975 at the San
Agustin Church in Manila. They have three children: Kingston,
Charleston, and Princeton who are now all of the age of
majority.3

On March 21, 1996, Lucita filed a Complaint for Legal

Separation under Article 55 par. (1) of the Family Code4before
the Regional Trial Court (RTC) of Dagupan City, Branch 41
alleging that her life with William was marked by physical
violence, threats, intimidation and grossly abusive conduct.5

Lucita claimed that: soon after three years of marriage, she and
William quarreled almost every day, with physical violence being
inflicted upon her; William would shout invectives at her like
"putang ina mo", "gago", "tanga", and he would slap her, kick
her, pull her hair, bang her head against concrete wall and throw
at her whatever he could reach with his hand; the causes of
these fights were petty things regarding their children or their
business; William would also scold and beat the children at
different parts of their bodies using the buckle of his belt;
whenever she tried to stop William from hitting the children, he
would turn his ire on her and box her; on December 9, 1995,
after she protested with William’s decision to allow their eldest
son Kingston to go to Bacolod, William slapped her and said, "it
is none of your business"; on December 14, 1995, she asked
William to bring Kingston back from Bacolod; a violent quarrel
ensued and William hit her on her head, left cheek, eye,
stomach, and arms; when William hit her on the stomach and
she bent down because of the pain, he hit her on the head then
pointed a gun at her and asked her to leave the house; she then of love, harmony and peace. Worst, their children are
went to her sister’s house in Binondo where she was fetched by also suffering. As very well stated in plaintiff’s
her other siblings and brought to their parents house in memorandum, "it would be unthinkable for her to
Dagupan; the following day, she went to her parent’s doctor, Dr. throw away this twenty years of relationship, abandon
Vicente Elinzano for treatment of her injuries.6 the comforts of her home and be separated from her
children, whom she loves, if there exists no cause,
William for his part denied that he ever inflicted physical harm which is already beyond her endurance.9
on his wife, used insulting language against her, or whipped the
children with the buckle of his belt. While he admits that he and William appealed to the CA which affirmed in toto the RTC
Lucita quarreled on December 9, 1995, at their house in Jose decision. In its Decision dated October 8, 2001, the CA found
Abad Santos Avenue, Tondo, Manila, he claimed that he left the that the testimonies for Lucita were straightforward and credible
same, stayed in their Greenhills condominium and only went and the ground for legal separation under Art. 55, par. 1 of the
back to their Tondo house to work in their office below. In the Family Code, i.e., physical violence and grossly abusive conduct
afternoon of December 14, 1995, their laundrywoman told him directed against Lucita, were adequately proven.10
that Lucita left the house.7
As the CA explained:
On January 5, 1998, the RTC rendered its Decision decreeing
legal separation, thus: The straightforward and candid testimonies of the
witnesses were uncontroverted and credible. Dr.
WHEREFORE, premises considered, judgment is Elinzano’s testimony was able to show that the
hereby rendered decreeing the legal separation of [Lucita] suffered several injuries inflicted by [William].
plaintiff and defendant, with all the legal effects It is clear that on December 14, 1995, she sustained
attendant thereto, particularly the dissolution and redness in her cheek, black eye on her left eye, fist
liquidation of the conjugal partnership properties, for blow on the stomach, blood clot and a blackish
which purpose the parties are hereby ordered to discoloration on both shoulders and a "bump" or
submit a complete inventory of said properties so that "bukol" on her head. The presence of these injuries
the Court can make a just and proper division, such was established by the testimonies of [Lucita] herself
division to be embodied in a supplemental decision. and her sister, Linda Lim. The Memorandum/Medical
Certificate also confirmed the evidence presented and
SO ORDERED.8 does not deviate from the doctor’s main testimony ---
that [Lucita] suffered physical violence on [sic] the
hands of her husband, caused by physical trauma,
The RTC found that:
slapping of the cheek, boxing and fist blows. The
effect of the so-called alterations in the
It is indubitable that plaintiff (Lucita) and defendant Memorandum/Medical Certificate questioned by
(William) had their frequent quarrels and [William] does not depart from the main thrust of the
misunderstanding which made both of their lives testimony of the said doctor.
miserable and hellish. This is even admitted by the
defendant when he said that there was no day that he
Also, the testimony of [Lucita] herself consistently and
did not quarrel with his wife. Defendant had regarded
constantly established that [William] inflicted repeated
the plaintiff negligent in the performance of her wifely
physical violence upon her during their marriage and
duties and had blamed her for not reporting to him
that she had been subjected to grossly abusive
about the wrongdoings of their children. (citations
conduct when he constantly hurled invectives at her
omitted)
even in front of their customers and employees,
shouting words like, "gaga", "putang ina mo,"
These quarrels were always punctuated by acts of tanga," and "you don’t know anything."
physical violence, threats and intimidation by the
defendant against the plaintiff and on the children. In
These were further corroborated by several incidents
the process, insulting words and language were
narrated by Linda Lim who lived in their conjugal
heaped upon her. The plaintiff suffered and endured
home from 1989 to 1991. She saw her sister after the
the mental and physical anguish of these marital fights
December 14, 1995 incident when she (Lucita) was
until December 14, 1995 when she had reached the
fetched by the latter on the same date. She was a
limits of her endurance. The more than twenty years of
witness to the kind of relationship her sister and
her marriage could not have been put to waste by the
[William] had during the three years she lived with
plaintiff if the same had been lived in an atmosphere
them. She observed that [William] has an "explosive
 temper, easily gets angry and becomes very violent." include real properties in Hong Kong, Metro Manila, Baguio and
She cited several instances which proved that William Dagupan, were acquired during the marriage through his
Ong indeed treated her wife shabbily and despicably, (William’s) sole efforts; the only parties who will benefit from a
in words and deeds. decree of legal separation are Lucita’s parents and siblings
while such decree would condemn him as a violent and cruel
xxx person, a wife-beater and child abuser, and will taint his
reputation, especially among the Filipino-Chinese community;
substantial facts and circumstances have been overlooked
That the physical violence and grossly abusive
which warrant an exception to the general rule that factual
conduct were brought to bear upon [Lucita] by
findings of the trial court will not be disturbed on appeal; the
[William] have been duly established by [Lucita] and
findings of the trial court that he committed acts of repeated
her witnesses. These incidents were not explained nor
physical violence against Lucita and their children were not
controverted by [William], except by making a general
sufficiently established; what took place were disagreements
denial thereof. Consequently, as between an
regarding the manner of raising and disciplining the children
affirmative assertion and a general denial, weight
particularly Charleston, Lucita’s favorite son; marriage being a
must be accorded to the affirmative assertion.
social contract cannot be impaired by mere verbal
disagreements and the complaining party must adduce clear
The grossly abusive conduct is also apparent in the and convincing evidence to justify legal separation; the CA erred
instances testified to by [Lucita] and her sister. The in relying on the testimonies of Lucita and her witnesses, her
injurious invectives hurled at [Lucita] and his treatment sister Linda Lim, and their parent’s doctor, Dr. Vicente
of her, in its entirety, in front of their employees and Elinzanzo, whose testimonies are tainted with relationship and
friends, are enough to constitute grossly abusive fraud; in the 20 years of their marriage, Lucita has not
conduct. The aggregate behavior of [William] warrants complained of any cruel behavior on the part of William in
legal separation under grossly abusive conduct. x x relation to their marital and family life; William expressed his
x11 willingness to receive respondent unconditionally however, it is
Lucita who abandoned the conjugal dwelling on December 14,
William filed a motion for reconsideration which was denied by 1995 and instituted the complaint below in order to appropriate
the CA on April 26, 2002.12 for herself and her relatives the conjugal properties; the
Constitution provides that marriage is an inviolable social
Hence the present petition where William claims that: institution and shall be protected by the State, thus the rule is
the preservation of the marital union and not its infringement;
I only for grounds enumerated in Art. 55 of the Family Code,
which grounds should be clearly and convincingly proven, can
the courts decree a legal separation among the spouses.14
THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW IN DISREGARDING CLEAR
EVIDENCE THAT THE PETITION FOR LEGAL Respondent Lucita in her Comment, meanwhile, asserts that:
SEPARATION WAS INSTITUTED BY THE PRIVATE the issues raised in the present petition are factual; the findings
RESPONDENT FOR THE SOLE PURPOSE OF of both lower courts rest on strong and clear evidence borne by
REMOVING FROM PETITIONER THE CONTROL the records; this Court is not a trier of facts and factual findings
AND OWNERSHIP OF THEIR CONJUGAL of the RTC when confirmed by the CA are final and conclusive
PROPERTIES AND TO TRANSFER THE SAME TO and may not be reviewed on appeal; the contention of William
PRIVATE RESPONDENT’S FAMILY. that Lucita filed the case for legal separation in order to remove
from William the control and ownership of their conjugal
properties and to transfer the same to Lucita’s family is absurd;
II
Lucita will not just throw her marriage of 20 years and forego the
companionship of William and her children just to serve the
THE COURT OF APPEALS COMMITTED AN interest of her family; Lucita left the conjugal home because of
ERROR OF LAW IN DISREGARDING CLEAR the repeated physical violence and grossly abusive conduct of
EVIDENCE REPUDIATING PRIVATE petitioner.15
RESPONDENT’S CLAIM OF REPEATED PHYSICAL
VIOLENCE AND GROSSLY ABUSIVE CONDUCT
Petitioner filed a Reply, reasserting his claims in his
ON THE PART OF PETITIONER.13
petition,16 as well as a Memorandum where he averred for the
first time that since respondent is guilty of abandonment, the
William argues that: the real motive of Lucita and her family in petition for legal separation should be denied following Art. 56,
filing the case is to wrest control and ownership of properties par. (4) of the Family Code.17 Petitioner argues that since
belonging to the conjugal partnership; these properties, which respondent herself has given ground for legal separation by
abandoning the family simply because of a quarrel and refusing of her wifely duties and for not reporting to him the wrongdoings
to return thereto unless the conjugal properties were placed in of their children.23
the administration of petitioner’s in-laws, no decree of legal
separation should be issued in her favor.18 Lucita and her sister, Linda Lim, also gave numerous accounts
of the instances when William displayed violent temper against
Respondent likewise filed a Memorandum reiterating her earlier Lucita and their children; such as: when William threw a steel
assertions.19 chair at Lucita;24 threw chairs at their children;25 slapped Lucita
and utter insulting words at her;26 use the buckle of the belt in
We resolve to deny the petition. whipping the children;27pinned Lucita against the wall with his
strong arms almost strangling her, and smashed the flower vase
and brick rocks and moldings leaving the bedroom in
It is settled that questions of fact cannot be the subject of a
disarray;28 shouted at Lucita and threw a directory at her, in front
petition for review under Rule 45 of the Rules of Court. The rule
of Linda and the employees of their business, because he could
finds more stringent application where the CA upholds the
not find a draft letter on his table;29 got mad at Charleston for
findings of fact of the trial court. In such instance, this Court is
cooking steak with vetchin prompting William to smash the plate
generally bound to adopt the facts as determined by the lower
with steak and hit Charleston, then slapped Lucita and shouted
courts.20
at her "putang ina mo, gago, wala kang pakialam, tarantado"
when she sided with Charleston;30 and the December 9 and
The only instances when this Court reviews findings of fact are: December 14, 1995 incidents which forced Lucita to leave the
conjugal dwelling.31
(1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the Lucita also explained that the injuries she received on
inference made is manifestly mistaken, absurd or December 14, 1995, were not the first. As she related before the
impossible; (3) when there is grave abuse of trial court:
discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of
q. You stated on cross examination that the injuries
facts are conflicting; (6) when in making its findings
you sustained on December 14, 1995 were the most
the Court of Appeals went beyond the issues of the
serious?
case, or its findings are contrary to the admissions of
both the appellant and the appellee; (7) when the
findings are contrary to that of the trial court; (8) when a. Unlike before I considered December 14, 1995 the
the findings are conclusions without citation of specific very serious because before it is only on the arm and
evidence on which they are based; (9) when the facts black eye, but on this December 14, I suffered bruises
set forth in the petition as well as in the petitioner’s in all parts of my body, sir.32
main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are To these, all William and his witnesses, could offer are denials
premised on the supposed absence of evidence and and attempts to downplay the said incidents.33
contradicted by the evidence on record; and (11)
when the Court of Appeals manifestly overlooked As between the detailed accounts given for Lucita and the
certain relevant facts not disputed by the parties, general denial for William, the Court gives more weight to those
which, if properly considered, would justify a different of the former. The Court also gives a great amount of
conclusion.21 consideration to the assessment of the trial court regarding the
credibility of witnesses as trial court judges enjoy the unique
As petitioner failed to show that the instant case falls under any opportunity of observing the deportment of witnesses on the
of the exceptional circumstances, the general rule applies. stand, a vantage point denied appellate tribunals.34 Indeed, it is
settled that the assessment of the trial court of the credibility of
Indeed, this Court cannot review factual findings on appeal, witnesses is entitled to great respect and weight having had the
especially when they are borne out by the records or are based opportunity to observe the conduct and demeanor of the
on substantial evidence.22 In this case, the findings of the RTC witnesses while testifying.35
were affirmed by the CA and are adequately supported by the
records. In this case, the RTC noted that:

As correctly observed by the trial court, William himself admitted William’s denial and that of his witnesses of the
that there was no day that he did not quarrel with his wife, which imputation of physical violence committed by him
made his life miserable, and he blames her for being negligent could not be given much credence by the Court. Since
 the office secretary Ofelia Rosal and the family As a final note, we reiterate that our Constitution is committed to
laundrywoman Rosalino Morco are dependent upon the policy of strengthening the family as a basic social
defendant for their livelihood, their testimonies may be institution.41 The Constitution itself however does not establish
tainted with bias and they could not be considered as the parameters of state protection to marriage and the family, as
impartial and credible witnesses. So with Kingston it remains the province of the legislature to define all legal
Ong who lives with defendant and depends upon him aspects of marriage and prescribe the strategy and the
for support.36 modalities to protect it and put into operation the constitutional
provisions that protect the same.42With the enactment of the
Parenthetically, William claims that that the witnesses of Lucita Family Code, this has been accomplished as it defines marriage
are not credible because of their relationship with her. We do and the family, spells out the corresponding legal effects,
not agree. Relationship alone is not reason enough to discredit imposes the limitations that affect married and family life, as well
and label a witness’s testimony as biased and unworthy of as prescribes the grounds for declaration of nullity and those for
credence37 and a witness’ relationship to one of the parties does legal separation.43 As Lucita has adequately proven the
not automatically affect the veracity of his or her presence of a ground for legal separation, the Court has no
testimony.38 Considering the detailed and straightforward reason but to affirm the findings of the RTC and the CA, and
testimonies given by Linda Lim and Dr. Vicente Elinzano, grant her the relief she is entitled to under the law.
bolstered by the credence accorded them by the trial court, the
Court finds that their testimonies are not tainted with bias. WHEREFORE, the petition is DENIED for lack of merit.

William also posits that the real motive of Lucita in filing the case Costs against petitioner.
for legal separation is in order for her side of the family to gain
control of the conjugal properties; that Lucita was willing to SO ORDERED.
destroy his reputation by filing the legal separation case just so
her parents and her siblings could control the properties he
worked hard for. The Court finds such reasoning hard to believe.
What benefit would Lucita personally gain by pushing for her
parents’ and siblings’ financial interests at the expense of her
marriage? What is more probable is that there truly exists a
ground for legal separation, a cause so strong, that Lucita had
to seek redress from the courts. As aptly stated by the RTC,

...it would be unthinkable for her to throw away this

twenty years of relationship, abandon the comforts of
her home and be separated from her children whom
she loves, if there exists no cause, which is already
beyond her endurance.39

The claim of William that a decree of legal separation would

taint his reputation and label him as a wife-beater and child-
abuser also does not elicit sympathy from this Court. If there
would be such a smear on his reputation then it would not be
because of Lucita’s decision to seek relief from the courts, but
because he gave Lucita reason to go to court in the first place.

Also without merit is the argument of William that since Lucita

has abandoned the family, a decree of legal separation should
not be granted, following Art. 56, par. (4) of the Family Code
which provides that legal separation shall be denied when both
parties have given ground for legal separation. The
abandonment referred to by the Family Code is abandonment
without justifiable cause for more than one year.40 As it was
established that Lucita left William due to his abusive conduct,
such does not constitute abandonment contemplated by the
said provision.
G.R. No. L-10141 January 31, 1958 intervention of even date. The complaint recites that
for sometime prior to Apostol's transactions the
REPUBLIC OF THE PHILIPPINES, petitioner, corporate had some goods deposited in a warehouse
vs. at 1201 Herran, Manila; that Apostol, then the
PHILIPPINE RESOURCES DEVELOPMENT CORPORATION president of the corporation but without the knowledge
and the COURT OF APPEALS, respondents. or consent of the stockholders thereof, disposed of
said goods by delivering the same to the Bureau of
Prisons of in an attempt to settle his personal debts
Office of the Solicitor General Ambrosio Padilla, and Solicitor
with the latter entity; that upon discovery of Apodol's
Frine C. Zaballero for petitioner.
act, the corporation took steps to recover said goods
Vicente L. Santiago for respondent Corporation.
by demanding from the Bureau of Prisons the return
thereof; and that upon the refusal of the Bureau to
PADILLA, J.: return said goods, the corporation sought leave to
intervene in Civil Case No. 26166.
This is a petition under Rule 46 to review a judgment rendered
by the Court of Appeals,in CA-GR No. 15767-R, Philippine As aforestated, His Honor denied the motion for
Resources Development Corporation vs. The Hon. Judge intervention and thereby issued an order to this effect
Magno Gatmaitan et al. on July 23, 1955. A motion for the reconsideration of
said order was filed by the movant corporation and the
The findings of the Court of Appeals are, as follows. same was likewise denied by His Honor on August 18,
1955 . . . (Annex L.).
It appears that on May 6, 1955, the Republic of the
Philippines in representation of the Bureau of Prisons On 3 September 1955, in a petition for a writ of certiorari filed in
instituted against Macario Apostol and the Empire the Court of Appeals, the herein respondent corporation prayed
Insurance Co. a complaint docketed as Civil Case No. for the setting aside of the order of the Court of First Instance
26166 of the Court of First instance of Manila. The that had denied the admission of its complaint-in-intervention
complaint alleges as the first cause of action, that and for an order directing the latter Court to allow the herein
defendant Apostol submitted the highest bid the respondent corporation to intervene in the action (Annex G). On
amount P450.00 per ton for the purchase of 100 tons 12 December 1955 the Court of Appeals set aside the order
of Palawan Almaciga from the Bureau of Prisons; that denying the motion to intervene and ordered the respondent
a contract therefor was drawn and by virtue of which, court to admit the herein respondent corporation's complaint-in-
Apostol obtained goods from the Bureau of Prisons intervention with costs against Macario Apostol.
valued P15,878.59; that of said account, Apostol paid
only P691.10 leaving a balane obligation of On 9 January 1956 the Republic of the Philippines filed this
P15,187.49. The complaint further averes, as second petition in this Court for the purpose stated at the beginning of
cause of action, that Apostol submitted the best bid this opinion.
with the Bureau of Prisons for the purchase of three
million board feet of logs at P88.00 per 1,000 board
The Goverment contends that the intervenor has no legal
feet; that a contract was executed between the
interest in the matter in litigation, because the action brought in
Director of Prisons and Apostol pursuant to which
the Court of First Instance of Manila against Macario Apostol
contract Apostol obtained deliveries of logs valued at
and the Empire Insurance Company (Civil Case No. 26166,
P65.830.00, and that Apostol failed to pay a balance
Annex A) is just for the collection from the defendant Apostol of
account Of P18,827.57. All told, for the total demand
a sum of money, the unpaid balance of the purchase price of
set forth in complaint against Apostol is for
logs and almaciga bought by him from the Bureau of Prisons,
P34,015.06 with legal interests thereon from January
whereas the intervenor seeks to recover ownership and
8, 1952. The Empire lnsurance Company was
possession of G. I. sheets, black sheets, M. S. plates, round
included in the complaint having executed a
bars and G. I. pipes that it claims its owns-an intervention which
performance bond of P10,000.00 in favor of Apostol.
would change a personal action into one ad rem and would
unduly delay the disposition of the case.
In his answer, Apostol interposed payment as a
defense and sought the dismissal of the complaint.
The Court of Appeals held that:
On July 19, 1955, the Philippine Resources
Petitioner ardently claims that the reason behind its
Development Corporation moved to intervene,
motion to intervene is the desire to protect its rights
appending to its motion, the complaint in the
and interests over some materials purportedly
belonging to it; that said material were unauthorizedly corporation stands to be adversely affected by such
and illegally assigned and delivered to the Bureau of judgment. The conclusion, therefore, is inescapable
Prisons by petitioning corporation's president Macario that the petitioner possesses a legal interest in the
Apostol in payment of the latter's personal accounts matter in litigation and that such interest is of an
with the said entity; and that the Bureau of Prisons actual, material, direct and immediate nature as to
refused to return said materials despite petitioner's entitle petitioner to intervene.
demands to do so.
xxx xxx xxx
Petitioner refers to the particulars recited in Apostol's
answer dated July 12, 1955 to the effect that Apostol Section 3 of Rule 13 of the Rules of Court endows the
had paid unto the Bureau of Prisons his accounts lower Court with discretion to allow or disapprove the
covered, among others, by BPPO 1077 for the sum of motion for intrvention (Santarromana et al. vs. Barrios,
P4,638.40 and BPPO 1549 for the amount of 63 Phil. 456); and that in the exercise of such
P4,398.54. Petitioner moreover, points to the State of discretion, the court shall consider whether or not the
Paid and Unpaid accounts of Apostol dated January intervention will unduly delay or prejudice the
16, 1954 prepared by the accounting of officer of the adjudicatio of the rights of the original parties and
Bureau of Prisons (Annex B. Complaint in whether or not the intervenors the rights may be fully
Intervention), wherein it appears that the protected in a separate proceeding. The petitioner in
aforementioned accounts covered respectively by the instant case positively authorized to a separate
BPPO Nos. 1077 for 892 pieces of GI sheets and action against any of all the respondents. But
1549 for 399 pieces of GI pipes in the total sum of considering that the resolution of the issues raised in
P9,036.94 have not been credited to Apostol's and enjoined by the pleadings in the main case, would
account in view of lack of supporting papers; and that virtally affect the rights not only the original parties but
according to the reply letter of the Undersecretary of also of the berein petitioner: that far from unduly
Justice, said GI sheets and pipes were delivered by delaying or prejudicing the adjudication of the rights of
Macario Apostol to the Bureau of Prisons allegedly in the original parties or bringing about confusion in the
Apostol's capacity as owner and that the black iron original case, the adnission of the complaint in
sheets were delivered by Apostol as President of the intervention would help clarify the vital issue of the
petitioner corporation. true and real ownership of the materials involved,
besides preventing an abhorrent munltiplicity of suit,
Respondents, on the other hand, assert that the we believe that the motion to intervene should be
subject matter of the original litigation is a sum of given due to cause.
money allegedly due to the Bureau of Prisons from
Macario Apostol and not the goods or the materials We find no reason for disturbing the foregoing pronouncements.
reportedly turned over by Apostol as payment of his The Government argues that "Price . . . is always paid in terms
private debts to the Bureau of Prisons and the of money and the supposed payment beeing in kind, it is no
recovery of which is sought by the petitioner; and that payment at all, "citing Article 1458 of the new Civil Code.
for this reason, petitioner has no legal interest in the However, the same Article provides that the purschaser may
very subject matter in litigation as to entitle it to pay "a price certain in money or its equivalent," which means
intervene. that they meant of the price need not be in money. Whether the
G.I. sheets, black sheets, M. S. Plates, round bars and G. I.
We find no merit in respondents' contention. It is true pipes claimed by the respondent corporation to belong to it and
that the very subject matter of the original case is a delivered to the Bureau of Prison by Macario Apostol in payment
sum of money. But it is likewise true as borne out by of his account is sufficient payment therefore, is for the court to
the records, that the materials purportedly belonging pass upon and decide after hearing all the parties in the case.
to the petitioner corporation have been assessed and Should the trial court hold that it is as to credit Apostol with the
evaluated and their price equivalent in terms of money value or price of the materials delivered by him, certainly the
have been determined; and that said materials for herein respondent corporation would be affected adversely if its
whatever price they have been assigned by defendant claim of ownership of such sheets, plates, bars and pipes is
now respondent Apostol as tokens of payment of his true.
private debts with the Bureau of Prisons. In view of
these considerations, it becomes enormously plain in The Government reiterates in its original stand that counsel
the event the respondent judge decides to credit appearing for the respondent corporation has no authority to
Macario Apostol with the value of the goods delivered represent it or/and sue in its behalf, the Court of Appeals held
by the latter to the Bureau of Prisons, the petitioner that:
 Respondents aver also that petitioner lacks legal director of the respondent corporation may sue in its behalf and
capacity to sue and that its counsel is acting merely in file the complaint in intervention in the proper court.
an individual capacity without the benefit of the
corporate act authorizing him to bring sue. In this The judgment under review is affirmed, without pronouncements
connection, respondents invoked among others as to costs.
section 20 of Rule 127 which provision, in our opinion,
squarely disproves their claim as by virtue thereof, the
authority of petitioner's counsel is pressumed. Withal,
the claim of the counsel for the petitioner that a
resolution to proceed against Apostol, had been
unanonimously adopted by the stockholders of the
corporation, has not been refuted.

Evidently, petitioner is a duly organized corporation

with offices at the Samanillo Building and that as such,
it is endowed with a personality distinct and separate
from that of its president or stockholders. It has the
right to bring suit to safeguard its interests and
ordinarily, such right is exercised at the instance of the
president. However, under the circumstance now
obtaining, such right properly devolves upon the other
officers of the corporations as said right is sought to
be exercised against the president himself who is the
very object of the intended suit.

The power of a corporation to sue and be sued in any court1 is

lodged in the board of directors which exercises it corporater
powers,2 and not in the president, as contended by the
Government. The "motion for admission of complaint in
intervention" (Annex C) and the "complaint in intervention"
attached thereto, signed by counsel and filed in the Court of
First Instance begin with the following statement: "COMES
NOW the above-name Intervenor, by its undersigned counsel, . .
. , "and underneath his typewritten name is affixed the
description" Counsel for the Intervenor." As counsels authority to
appeal for the respondent corporation was newer questioned in
the Court of First Instance, it is to be pressumed that he was
properly authorized to file the complaint in intervention and
appeal for his client.1 It was only in the Court of Appeals where
his authority to appear was questioned. As the Court of Appeals
was satisfied that counsel was duly authorized by his client to
file the complaint does in intervention and to appear in its behalf,
hte resolution of the Court of Appeals on this point should not be
disturbed.

Granting that counsel has not been actually authorized by the

board of directors to appear for and in behalf of the respondent
corporation, the fact that counsel is the secretary treasurer of
the respondent corporation and member of the board of
directors; and that the other members of the board, namely,
Macario Apostol, the president, and his wife Pacita R. Apostol,
who shuold normally initiate the action to protect the corporate
properties and in interest are the ones to be adversely affected
thereby, a single stockholder under such circumstances may
sue in behalf of the corporation.2 Counsel as a stockholder and
 G.R. No. 107624. January 28, 1997] showed interest in the property. As an initial step, defendant
Jose dela Cruz gave plaintiff Irene Villanueva a letter of
authority dated February 12, 1986 (Exhibit 'A') for her to inspect
the subject property. Because said property was in arrears in
GAMALIEL C. VILLANUEVA and IRENE C. the payment of the realty taxes, defendant Jose dela Cruz
VILLANUEVA, petitioners, vs. COURT OF approached plaintiff Irene Villanueva and asked for a certain
APPEALS, SPOUSES JOSE and LEONILA DELA amount to pay for the taxes so that the property would be
CRUZ, and SPOUSES GUIDO and FELICITAS cleared of any incumbrance (sic). Plaintiff Irene Villanueva
PILE, respondents. gave P10,000.00 on two occasions P5,000.00 on July 15, 1986
(Exhibit 'F') and another P5,000.00 on October 17, 1986 (Exhibit
DECISION 'D'). It was agreed by them that said P10,000.00 would form part
of the sale price of P550,000.00. Sometime thereafter,
PANGANIBAN, J.: defendant Jose dela Cruz went to plaintiff Irene Villanueva
bringing with him Mr. Ben Sabio, a tenant of one of the units in
The main issue here is whether a contract of sale has the 3-door apartment building located on the subject property,
been perfected under the attendant facts and circumstances. and requested her and her son to allow said Ben Sabio to
purchase one-half (1/2) of the property where the unit occupied
The petition filed on December 18, 1992 assails the by him pertained to which the plaintiffs consented, so that they
Decision [1] of respondent Court of Appeals promulgated on would just purchase the other half portion and would be paying
October 23, 1992 in CA-G.R. CV No. 30741 rendered by the only P265,000.00, they having already given an amount
Eleventh Division [2] dismissing the appeal of petitioners and of P10,000.00 used for paying the realty taxes in arrears.
affirming the decision in Civil Case No. Q-50844 dated Accordingly the property was subdivided and two (2) separate
December 28, 1990 of the Regional Trial Court, Branch 83 of titles were secured by defendants Dela Cruz. Mr. Ben Sabio
Quezon City, presided by Judge Estrella T. Estrada. The immediately made payments by installments.
dispositive portion of the affirmed decision of the RTC reads: [3]
Sometime in March, 1987 or more specifically on March 6, 1987,
"WHEREFORE, judgment is hereby rendered dismissing defendants Dela Cruz executed in favor of their co-defendants,
plaintiff's instant action for specific performance. However, the spouses Guido Pili (sic) and Felicitas Pili (sic), a Deed of
defendant Jose de la Cruz is hereby ordered to refund or Assignment of the other one-half portion of the parcel of land
reimburse the amount of Ten Thousand Pesos (P10,000.00) to wherein plaintiff Gamaliel Villanueva's apartment unit is situated,
plaintiff Irene Villanueva. designated as Lot 3-A of the Subdivision Plan (LRC) Psd-
337290, Block 24, Pcs-4865, with an area of 201.50 square
The parties' other claims for damages and attorney's fees are meters, more or less, and covered by Transfer Certificate of Title
also hereby dismissed for being necessary consequences of 332445, purportedly as full payment and satisfaction of an
litigation. indebtedness (sic) obtained from defendants Pili (sic) (Exhibit
'G'; Exhibit '3'). Consequently, Transfer Certificate of Title No.
No pronouncement as to costs." 356040 was issued in the name of defendants Pili (sic) also on
March 6, 1987. Immediately thereafter, the plaintiffs came to
know of such assignment and transfer and issuance of a new
certificate of title in favor of defendants Pili (sic) so that plaintiff
The Facts Gamaliel Villanueva complained to the barangay captain of
Bahay Turo, Quezon City, on the ground that there was already
an agreement between defendants Dela Cruz and themselves
The factual antecedents of this case as found by the trial that said portion of the parcel of land owned by defendants Dela
court were reproduced in the assailed Decision, [4] as follows: [5] Cruz would be sold to him. As there was no settlement arrived
at, the plaintiffs elevated their complaint to this Court through
"x x x plaintiff (and now petitioner) Gamaliel Villanueva has been the instant action."
a tenant-occupant of a unit in the 3-door apartment building
erected on a parcel of land owned by defendants-spouses (now The trial court rendered its decision in favor of private
private respondents) Jose Dela Cruz and Leonila dela Cruz, with respondents. An appeal was duly brought to public respondent
an area of 403 square meters, more or less, located at Short which as earlier stated affirmed the said decision. Hence, this
Horn, Project 8, Quezon City (Exhibit 'L'), having succeeded in petition for review on certiorari under Rule 45 of the Rules of
the occupancy of said unit from the previous tenant Lolita Court.
Santos sometime in 1985. About February of 1986, defendant
Jose dela Cruz offered said parcel of land with the 3-door
apartment building for sale and plaintiffs, son and mother,
 The Issues purchase one-half (1/2) of the property where the unit occupied
by him pertained to which plaintiffs consented, so they would
purchase the other half portion and would be paying
The following errors are alleged to have been committed only P265,000.00 they having already given an amount
by public respondent: [6] of P10,000,00 used for paying the realty taxes in arrears.x x x"
(Underscoring in the petition).
"I

The Court of Appeals erred in failing to find that there is a

perfected contract of sale of subject property between The Court's Ruling
petitioners and respondents spouses Dela Cruz
The arguments of petitioners do not persuade us. While it
II
is true that respondent Court adopted the recitation of facts of
the trial court, it nonetheless later corrected the relevant portions
The Court of Appeals erred in applying the Statute of Frauds in thereof as it found that no perfected contract of sale was agreed
this case when it is a contract of sale that was partly executed upon. Thus, public respondent explained: [10]

III "Appellants' theory of earnest money cannot be sustained in

view of the catena of circumstance showing that the P10,000.00
The Court of Appeals erred in not finding that this being a case given to appellees was not intended to form part of the purchase
of double sale of immovable property, although respondents price. As the great commentator Manresa observes that the
spouses Pili (sic) recorded the deed of assignment to them in delivery of part of the purchase price should not be understood
the Registry of Deeds they were not in good faith while (sic) as constituting earnest money unless it be shown that such was
petitioners as purchasers thereof were in prior possession in the intention of the parties (Manresa Commentaries on the Civil
good faith of the property. Code, 2d ed., Vol. 10, p. 85). Moreover, as can be gleaned from
the records there was no concrete agreement to the price and
IV manner of payment:

The Court of Appeals erred in failing to reverse and set aside 'Q Will you tell us why your transaction
the appealed judgment of the trial court and rendering a with plaintiffs (petitioners herein)
judgment for petitioners" did not materialize?
A Because I have been returning to
In the opinion of this Court, these four issues may be Mrs. Villanueva and in fact we
summed up in a single question: Under the factual have executed a Deed of Sale
circumstances of this case, was there a perfected contract of which was in fact not signed.
sale?
Q Why did you not sign the Deed of
Petitioners contend that the adopted findings of facts of Sale you mentioned?
public respondent are contradicted by its ruling that there is no
agreement as to the price of the apartments. They argue that on A The Villanuevas told me to prepare
the basis of the facts found by public respondent, "the the documents involved in this
conclusion is ineluctable that there was a perfected contract of transaction because according to
sale of the subject property." [7] According to petitioners, private her (sic) she (sic) was only
respondents had to secure their consent to enable "Sabio to buy waiting for the money to come
the one-half portion of the property where the unit Sabio was but because I was then being
renting pertains so that petitioners will pay only the balance pressed by Felicitas Pile for the
of P265,000.00 for the purchase of the other half after deducting payment of my loan. I was
the P10,000.00 petitioners advanced." [8] Public respondent's constrained to assign the
conclusion that the P10,000.00 paid to petitioners was not property to her.
intended as part of the purchase price allegedly "collides" with
Q What are your other reasons?
its quoted findings, as follows: [9]
A Aside from that we were still
"It was agreed by them that said P10,000.00 would form part of huggling (sic) for the purchase
the sale price of P550,000.00. x x x defendant Jose de la Cruz price then and since I was being
.x x x requested her and her son to allow said Ben Sabio to
 pressed by my creditor, I was mortgaged with the Development Bank of
forced to make the assignment.'" Rizal?
A Yes, sir.
The most that public respondent can be faulted with is its Q Can you recall the condition you offered to
failure to expressly state that although its conclusion of law was Sandiego (sic) to act as your agent in selling
correct, the trial court erred in its statement of the facts. the same?
A He will get certain commission for the same.
Q Will you state the price and conditions set forth in
Was There a Perfected Contract of Sale? selling the property?
A P575 thousand, sir.
Q That is the same offer that was given to you by
Petitioners contend that private respondents' counsel plaintiff Mrs. Villanueva?
admitted that "P10,000 is partial or advance payment of the A I can not recall, I think so.
property (TSN, June 14 [should be 15], 4 (sic) 1990, pages 6 to Q And you will agree with me that 1/2 of P575
7)." Necessarily then, there must have been an agreement as to thousand is how much (sic)?
price. They cite Article 1482 of the Civil Code which provides ATTY. MANZO:
that "(w)henever earnest money is given in a contract of sale, it There (is) nothing to agree with you counsel.
shall be considered as part of the price and as proof of the ATTY. GUPIT:
perfection of the contract." [11] And the offer to you, the agreed price between you
and Mrs. Villanueva is P275 thousand as
Private respondents contradict this claim with the stated in the agreement that was prepared?
argument that "(w)hat was clearly agreed (upon) between ATTY. MANZO:
petitioners and respondents Dela Cruz was that the P10,000.00 Counsel is again assuming that there was an
primarily intended as payment for realty tax was going to form agreement made already.
part of the consideration of the sale if and when the transaction (ATTY. GUPIT:)
would finally be consummated." [12] Private respondents insist He answered there is a document between
that there "was no clear agreement as to the true amount of Villanueva and Dela Cruz.
consideration." [13] ATTY. (MANZO):
Generally, the findings of fact of the lower courts are Let the witness be confronted by the document."
entitled to great weight and not disturbed except for cogent We are not unmindful of petitioner Irene Villanueva's claim
reasons. [14] Indeed, they should not be changed on appeal in that the parties agreed on the sum of P550,000.00, as
the absence of a clear showing that the trial court overlooked, follows: [17]
disregarded, or misinterpreted some facts of weight and "ATTY. GUPIT
significance, which if considered would have altered the result of What was the result of the negotiations?
the case. [15] In this case, and subject to the above clarification WITNESS (Irene Villanueva):
made by the appellate court, petitioners have failed to convince We agreed that he would sell the land to us for the
us to alter such findings. sum of, the amount of P550,000.00
xxx xxx xxx
In fact, a review of the evidence merely strengthens the WITNESS
conclusions of public respondent. We scoured the transcripts After the Deed of Sale relative to the purchase of the
but we found that respondent dela Cruz never testified that he property was prepared, Mr. dela Cruz (private
(or his spouse Leonila) had agreed to a definite price for the respondent Jose) came to me and told me that
subject property. In fact, his testimony during the cross- he talked with one of the tenants and he
examination firmly negated any price agreement with petitioners offered to buy the portion he was occupying if I
because he and his wife quoted the price of P575,000.00 and will agree and I will cause the partition of the
did not agree to reduce it to P550,000.00 as claimed by property between us.
petitioner: [16] ATTY. GUPIT
Did you agree with the proposal of Mr. dela Cruz
"Q And despite the fact that the property was
that the portion of the property will be sold to
mortgaged with Development Bank of Rizal
one of the tenants?
you still contrated (sic) Sandiego (sic) for the
WITNESS
purpose of selling the property?
Yes(,) sir. I agreed because we are (sic) both
A Yes, sir.
tenants.
Q And did Sandiego (sic) agree as agent in selling
ATTY. GUPIT
the property despite the fact that it was
 How about the price? How much are (sic) you Sale is a consensual contract. He who alleges it must
supposed to pay in order to complete your show its existence by competent proof. Here, the very essential
payments? element of price has not been proven.
WITNESS
We are (sic) supposed to divide the amount Lastly, petitioners' claim that they are ready to pay private
of P550,000.00." respondents [28] is immaterial and irrelevant as the latter cannot
be forced to accept such payment, there being no perfected
To settle the above conflicting claims of the parties, contract of sale in the first place.
petitioners could have presented the contract of sale allegedly
prepared by private respondent Jose dela Cruz. Unfortunately,
the contract was not presented in evidence. However,
Applicability of Statute of Frauds and the Law on Double
petitioners aver that even if the unsigned deed of sale was not
Sale
produced, private respondent Jose dela Cruz "admitted
preparing (said) deed in accordance with their
agreement." [18] This judicial admission" is allegedly the "best Petitioners contend that the statute of frauds does not
proof of its existence." [19] Further it was "impossible" for apply because such statute applies only to executory contracts
petitioners to produce the same "since it was and remained in whereas in this case the contract of sale had already been partly
the possession" of private respondent Jose dela Cruz. [20] executed. [29] Further, petitioners, citing Article 1544 of the Civil
We do not agree with petitioners. Assuming arguendo that Code asseverate that being in possession of the property in
such draft deed existed, it does not necessarily follow that there good faith therefore they should be deemed the lawful owners
was already a definite agreement as to the price. If there was, thereof. [30] On the other hand, private respondents counter that
why then did private respondent Jose de la Cruz not sign it? If the contract in this case is a "mere executory contract and not a
indeed the draft deed of sale was that important to petitioners' completed or executed contract." [31]
cause, they should have shown some effort to procure it. They Both contentions are inaccurate. True, the statute of
could have secured it through a subpoena duces tecum or thru frauds applies only to executory contracts and not to partially or
the use of one of the modes of discovery. But petitioners made completely executed ones. [32] However, there is no perfected
no such effort. And even if produced, it would not have contract in this case, therefore there is no basis for the
commanded any probative value as it was not signed. application of the statute of frauds. The application of such
As has been said in an old case, the price of the leased statute presupposes the existence of a perfected contract and
land not having been fixed, the essential elements which give requires only that a note or memorandum be executed in order
life to the contract were lacking. It follows that the lessee cannot to compel judicial enforcement thereof. Also, the civil law rule on
compel the lessor to sell the leased land to him. [21] The price double sale finds no application because there was no sale at all
must be certain, it must be real, not fictitious. [22] It is not to begin with.
necessary that the certainty of the price be actual or determined At bottom, what took place was only a prolonged
at the time of executing the contract. The fact that the exact negotiation to buy and to sell, and at most, an offer and a
amount to be paid therefor is not precisely fixed, is no bar to an counter-offer but no definite agreement was reached by the
action to recover such compensation, provided the contract, by parties. Hence, the rules on perfected contract of sale, statute of
its terms, furnishes a basis or measure for ascertaining the frauds and double sale find no relevance nor application.
amount agreed upon. [23] The price could be made certain by the
application of known factors; where, in a sale of coal, a basic WHEREFORE, the Petition is DENIED and the assailed
price was fixed, but subject to modification "in proportion to Decision is AFFIRMED. Costs against petitioners.
variations in calories and ash content, and not otherwise," the
price was held certain. [24] A contract of sale is not void for SO ORDERED.
uncertainty when the price, though not directly stated in terms of
pesos and centavos, can be made certain by reference to
existing invoices identified in the agreement. In this respect, the
contract of sale is perfected. [25] The price must be certain,
otherwise there is no true consent between the parties. [26] There
can be no sale without a price. [27] In the instant case, however,
what is dramatically clear from the evidence is that there was no
meeting of mind as to the price, expressly or impliedly, directly
or indirectly.
JOSE R. MORENO, JR., G.R. No. 159373 the floors of the building owned by defendant. At said meeting,
Petitioner,- versus - defendant informed plaintiff that the proposed purchase price for
PRIVATE MANAGEMENT OFFICE Promulgated: said floors was TWENTY[-]ONE MILLION PESOS
(formerly, ASSET PRIVATIZATION (P21,000,000.00);
TRUST),
Respondent. November 16, 2006 3. On February 22, 1993, defendant, in a letter signed by its
x--------------------------------------------- Trustee, Juan W. Moran, informed plaintiff thru Atty. Jose Feria,
---x Jr., that the Board of Trustees (BOT) of APT is in agreement
that Mr. Jose Moreno, Jr. has the right of first refusal and
requested plaintiff to deposit 10% of the suggested indicative
DECISION price of P21.0 million on or before February 26, 1993 which
letter is attached hereto as Annex A and made an integral part
of this pleading;
PUNO, J.: 4. Plaintiff paid the P2.1 million on February 26, 1993. A copy of
the Official Receipt issued by defendant to plaintiff is attached
hereto as Annex B and made an integral part of this pleading;
At bar is a Petition for Review on Certiorari of the
Decision and Resolution of the Court of Appeals in CA-G.R. CV 5. Then on March 12, 1993, defendant wrote plaintiff that its
No. 49227 dated January 30, 2003 and July 31, 2003, Legal Department has questioned the basis for the computation
respectively, reversing the decision of the Regional Trial Court of the indicative price for the said floors. A copy of the letter is
of Makati, Branch 62, in Civil Case No. 93-2756 dated August attached hereto as Annex C and made an integral part of this
10, 1994. pleading;

6. On April 2, 1993, defendant wrote plaintiff that the APT BOT

The bare facts are stated in the Joint Motion and has tentatively agreed on a settlement price of P42,274,702.17
Stipulation[1] dated March 11, 1994, viz.: for the said floors. A copy of this communication is attached
hereto as Annex D and made an integral part hereof;
COME NOW the parties, through the undersigned counsel, to
this Honorable Court respectfully make the following agreed 7. The questions to be resolved by this Honorable Court are:
statement of facts and issues:
7.01. Whether or not there was a perfected contract of sale over
1. The parties hereto hereby confirm the allegations contained in the said floors for the amount of P21.0 million, which will give
paragraphs 1, 2, 3 and 4 of the Complaint, to wit: rise to a right on the part of the plaintiff to demand that the said
floors be sold to him for said amount;
1. Plaintiff is of legal age, with residence at No. 700
Gen. Malvar St., Malate, Manila; while defendant is a juridical 7.02. Assuming that there was a perfected contract, whether or
entity with powers to sue and be sued under Proclamation No. not defendant can be bound by the price of P21.0 million;
50 with offices at the 10th floor, BA Lepanto Building,
8747 Paseo de Roxas, Makati, Metro Manila, where it may be 8. Both parties hereto hereby waive their respective claims for
served with summons, thru its Trustees. damages, attorneys fees and costs;
2. The subject-matter (sic) of this complaint is the J. Moreno
Building (formerly known as the North Davao Mining Building) or 9. Rule 30 of the Revised Rules of Court provides that:
more specifically, the 2nd, 3rd, 4th, 5th and 6th floors of the
building. SEC. 2. Agreed statement of facts. The parties to any action
may agree, in writing, upon the facts involved in the litigation,
3. Plaintiff is the owner of the Ground Floor, the 7th Floor and the and require the judgment of the court upon the facts agreed
Penthouse of the J. Moreno Building and the lot on which it upon, without the introduction of evidence.
stands.
10. Both parties have
4. Defendant is the owner of the 2nd, 3rd, 4th, 5th and 6th floors of agreed to submit this
the building, the subject-matter (sic) of this suit. stipulation and to
request that a decision
which were admitted in the Answer dated October 29, 1993; of this Honorable Court
be rendered on the
2. On February 13, 1993, the defendant called for a conference basis of the foregoing
for the purpose of discussing plaintiffs right of first refusal over stipulation of facts and
 issues, and after both WHEREFORE, the appeal is
parties have submitted hereby GRANTED. The assailed decision of
their respective the Regional Trial Court of Makati, Metro
memoranda. Manila, Branch 62, rendered in Civil Case
No. 93-2756 is hereby REVERSED and SET
PRAYER ASIDE and a new one is entered
DISMISSING the instant complaint.[10]
WHEREFORE, it is respectfully prayed that
judgment be rendered on the basis of the Petitioner moved for reconsideration but the motion
agreed stipulation of facts and issues, was denied by the appellate court in its questioned
without the introduction of evidence in Resolution[11] dated July 31, 2003. Hence, this Petition
accordance with Section 2, Rule 30 of the contending that:
Revised Rules of Court, and after the
submission of the parties of their respective IN REVERSING THE TRIAL COURTS DECISION DATED 10
Memoranda. AUGUST 1994, THE COURT OF APPEALS DECIDED ISSUES
xxx NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE
On August 10, 1994, the trial court ruled in favor of DECISIONS OF THE HONORABLE COURT CONSIDERING
petitioner Moreno, viz.: THAT:

WHEREFORE, judgment is hereby I

rendered in favor of plaintiff and against
defendant, ordering defendant to sell the GIVEN THE UNDISPUTED FACTS OF THE INSTANT CASE,
2nd, 3rd, 4th, 5th and 6th floors of the J. IT IS CLEAR THAT THERE WAS A PERFECTED, VALID AND
Moreno Building to plaintiff at the price of BINDING CONTRACT OF SALE BETWEEN
TWENTY[-]ONE MILLION (P21,000,000.00) PETITIONER MORENO AND RESPONDENT APT (NOW
PESOS; and ordering defendant to endorse PMO) WITH RESPECT TO THE SUBJECT PROPERTY.
the transaction to the Committee on
Privatization, without costs.[2] II

THE PRINCIPLE OF ESTOPPEL SHOULD HAVE BEEN

Respondent filed a Motion for APPLIED BY THE COURT OF APPEALS TO HOLD
Reconsideration.[3] On November 16, 1994, the trial court denied RESPONDENT APT (NOW PMO) TO ITS CONTRACT
the motion for lack of merit.[4] OF SALE WITH PETITIONER MORENO CONSIDERING
THAT:
Respondent appealed with the Court of Appeals. From
the time respondent filed its Notice of Appeal with the trial court, A. THERE IS NOTHING IRREGULAR OR UNCONSCIONABLE
the parties submitted numerous motions, including petitioners IN THE ACTS OF THE AGENTS OF RESPONDENT APT
Motion to Dismiss[5] dated July 8, 1996. Petitioner moved that (NOW PMO) IN CONNECTION WITH THE PERFECTED AND
the case be dismissed due to the failure of respondent to file its PARTIALLY EXECUTED CONTRACT OF SALE.
brief within the reglementary period.
B. RESPONDENT APT (NOW PMO) HAS DESCENDED TO
On December 18, 1997, the Eighth Division of the THE LEVEL OF A PRIVATE INDIVIDUAL OR ENTITY BOUND
appellate court granted[6] the motion to dismiss and BY VALID CONTRACTUAL OBLIGATIONS WHEN IT
denied[7] respondents motion for reconsideration. Respondent ENGAGED IN PROPRIETARY AND/OR COMMERCIAL
FUNCTIONS.
then filed a Petition for Review on Certiorari[8] with this Court to
reverse the dismissal of the appeal. On July 5, 1999, this Court,
through a Resolution[9]of the Third Division, reversed the
III
resolution dismissing the appeal on the ground that the appeal
raises substantial issues justifying a review of the case on the THE COURT OF APPEALS ERRED WHEN IT RULED THAT
merits. RESPONDENT APT (NOW PMO) TIMELY RAISED THE
ISSUES ON THE ALLEGED REQUIREMENT OF APPROVAL
On January 30, 2003, the appellate court found that FOR THE INDICATED PRICE AND THE ALLEGED
there was no perfected contract of sale over the subject floors UNCONSCIONABLY LOW PRICE FOR THE SALE OF THE
and reversed the ruling of the trial court, viz.: SUBJECT PROPERTY, CONSIDERING THAT SAID ISSUES
WERE NEVER RAISED IN THE PROCEEDINGS BEFORE
THE TRIAL COURT AND DO NOT BEAR RELEVANCE OR
CLOSE RELATION TO THE ISSUES RAISED IN THE 22 February 1993
PROCEEDINGS BEFORE THE COURT OF APPEALS.
ATTY. JOSE FERIA, JR.
IV FERIA, FERIA, LUGTU & LAO
Ferlaw Building, 336 Cabildo Stree
THE COURT OF APPEALS ERRED IN RULING THAT THE t
BRIEF FILED BY RESPONDENT APT (NOW PMO) DID NOT Intramuros, Manila
VIOLATE SECTION 1(F) OF THE RULES OF COURT WHICH
SHOULD HAVE WARRANTED A DISMISSAL OF
RESPONDENT APTS (NOW PMO) APPEAL.[12] Dear Atty. Feria:

During its meeting on February 19, 1993,

The hinge issue is whether there was a perfected contract our Board reviewed your letter of February
of sale over the subject floors at the price of P21,000,000.00. 18, 1993.

A contract of sale is perfected at the moment there is a We are pleased to inform you that the Board
meeting of minds upon the thing which is the object of the is in agreement that Mr. Jose Moreno, Jr.
contract and upon the price.[13] Consent is manifested by the has the right of first refusal. This will be
meeting of the offer and the acceptance upon the thing and the confirmed by our Board during the next
cause which are to constitute the contract. The offer must be board meeting on February 26, 1993. In the
certain and the acceptance absolute.[14] meantime, please advise Mr. Moreno that
the suggested indicative price for APTs five
(5) floors of the building in question is P21
To reach that moment of perfection, the parties must agree
Million.
on the same thing in the same sense,[15] so that their minds
meet as to all the terms.[16] They must have a distinct intention If Mr. Moreno is in agreement, he should
common to both and without doubt or difference; until all deposit with APT the amount of P2.1 Million
understand alike, there can be no assent, and therefore no equivalent to 10% of the price on or
contract.[17] The minds of parties must meet at every point; before February 26, 1993. The balance will
nothing can be left open for further arrangement.[18] So long as be due within fifteen (15) days after Mr.
there is any uncertainty or indefiniteness, or future negotiations Moreno receives the formal notice of
or considerations to be had between the parties, there is not a approval of the indicative price.
completed contract, and in fact, there is no contract at all.[19]
If you or Mr. Moreno have (sic) any
Contract formation undergoes three distinct stages question, please let me know.
preparation or negotiation, perfection or birth, and
consummation. Negotiation begins from the time the prospective Very truly yours,
contracting parties manifest their interest in the contract and
ends at the moment of agreement of the parties. The
perfection or birth of the contract takes place when the parties (Signed)
agree upon all the essential elements thereof. The last stage is JUAN W. MORAN
the consummation of the contract wherein the parties fulfill or Associate Executive Trustee
perform the terms agreed upon, culminating in its
extinguishment.[20] Once there is concurrence of the offer and
acceptance of the object and cause, the stage of negotiation is The letter clearly states that P21,000,000.00 is merely
finished. This situation does not obtain in the case at bar. The a suggested indicative price of the subject floors as it was yet to
letter of February 22, 1993 and the surrounding circumstances
clearly show that the parties are not past the stage of be approved by the Board of Trustees. Before the Board could
negotiation, hence there could not have been a perfected confirm the suggested indicative price, the Committee on
contract of sale. Privatization must first approve the terms of the sale or

The letter[21] is clear evidence that respondent did not disposition. The imposition of this suspensive condition finds
intend to sell the subject floors at the price certain basis under Proclamation No. 50[22] which vests in the
of P21,000,000.00, viz.:
Committee the power to approve the sale of government assets, Petitioner construes Section 12, Article III of the
Proclamation differently. He argues that what the law says is
including the price of the asset to be sold, viz.: that even before respondent sells or offers for sale a
government asset, the terms thereof have already been
ARTICLE II. COMMITTEE ON PRIVATIZATION
previously approved by the Committee,[23] i.e., [s]ubject to its
xxx
having received the prior written approval of the Committee to
sell such an asset at a price and on terms of payment and to a
SECTION 5. POWERS AND FUNCTIONS. The
Committee shall have the following powers and party disclosed to the Committee, to sell each asset referred to it
functions: by the Committee to such party and on such terms as in its
discretion are in the best interest of the National
(1) x x x x Provided, further, that any such Government.[24] Thus, the Committees approval of the
independent disposition shall be undertaken with the suggested indicative price of P21,000,000.00 is not necessary.
prior approval of the Committee and in accordance
with the general disposition guidelines as the We are not persuaded.
Committee may provide; Provided, finally, that in every
case the sale or disposition shall be approved by the
If we adopt the argument of petitioner, Section 12,
Committee with respect to the buyer and price only;
Article III would nullify the power granted to the Committee
under Section 5 (4), Article II of the same Proclamation. Under
xxx
Section 5 (4), the Committee has the power to approve or
(4) To approve or disapprove, on behalf of the disapprove, on behalf of the National Government and without
National Government and without need of any further need of any further approval or other action from any other
approval or other action from any other government government institution or agency, the sale or disposition of
institution or agency, the sale or disposition of such such assets, in each case on terms and to purchasers
assets, in each case on terms and to purchasers recommended by the Trust or the government institution, as
recommended by the Trust or the government the case may be, to whom the disposition of such assets may
institution, as the case may be, to whom the have been delegated; Provided that, the Committee shall not
disposition of such assets may have been delegated; itself undertake the marketing of any such assets, or participate
Provided that, the Committee shall not itself undertake in the negotiation of their sale.[25] The law is clear that the Trust
the marketing of any such assets, or participate in the shall recommend the terms for the Committees approval or
negotiation of their sale; disapproval, and not the other way around.
xxx
It is a basic canon of statutory construction that in
ARTICLE III. ASSET PRIVATIZATION TRUST interpreting a statute, care should be taken that every part
thereof be given effect, on the theory that it was enacted as an
xxx integrated measure and not as a hodge-podge of conflicting
provisions. The rule is that a construction that would render a
SECTION 12. POWERS. The Trust shall, in the
provision inoperative should be avoided; instead, apparently
discharge of its responsibilities, have the following
inconsistent provisions should be reconciled whenever possible
powers:
as parts of a coordinated and harmonious whole.[26]
xxx
To bolster the argument that the Committees approval
(2) Subject to its having received the prior written may be dispensed with, petitioner also cites Opinion No. 27,
approval of the Committee to sell such asset at a price Series of 1989, of the Secretary of Justice which recognizes a
and on terms of payment and to a party disclosed to case where the Committee may delegate to respondent the
the Committee, to sell each asset referred to it by the power to approve the sale or disposition of assets with a transfer
Committee to such party and on such terms as in its price not exceeding P60,000,000.00.[27]
discretion are in the best interest of the National
Government, and for such purpose to execute and The argument fails to impress. The Opinion involves a
deliver, on behalf and in the name of the National case where no material discretion is involved in the disposition
Government. Such deeds of sale, contracts and other of assets pursuant to the subject proposal and the act which
instruments as may be necessary or appropriate to could be delegated, as opined, is ministerial. The Opinion
convey title to such assets; further notes that the criteria and guidelines stated therein are
concrete and definite enough that once these criteria and
guidelines are present in a particular case, the APT is practically such a figure purely to define the ball-park.[33] The plain
left with no choice in the disposition of the assets involved and contention of petitioner that the transaction involves an
that all that the APT shall do in disposing off an asset ordinary armslength sale of property is unsubstantiated and
thereunder is ascertain whether a prospective buyer and the leaves much to be desired. This case sprung from a case of
price he offers satisfy such conditions. Petitioner failed to show specific performance initiated by petitioner who has the burden
that the case at bar is of the same nature that is, that the to prove that the case should be spared from the application of
disposition of the subject floors partakes of the nature of a the technical terms in the sale and disposition of assets under
ministerial act which has been defined as one performed under privatization. Petitioner failed to discharge the burden.
a given state of facts, in a prescribed manner, in obedience to
the mandate of legal authority, without regard to the exercise of It appears in the case at bar that petitioners
judgment upon the propriety or impropriety of the act done. construction of the letter of February 22, 1993 that his assent to
the suggested indicative price of P21,000,000.00 converted it as
Petitioner further argues that the suggested indicative the price certain, thus giving rise to a perfected contract of
price of P21,000,000.00 is not a proposed price, but the selling sale[34] is petitioners own subjective understanding. As such, it is
price indicative of the value at which respondent was willing to not shared by respondent. Under American jurisprudence,
sell.[28] Petitioner posits that under Section 14, Rule 130 of the mutual assent is judged by an objective standard, looking to
Revised Rules of Court, the term should be taken in its ordinary the express words the parties used in the contract.[35] Under the
and usual acceptation and should be taken to mean as a price objective theory of contract, understandings and beliefs are
which is indicated or specified which, if accepted, gives rise to a effective only if shared.[36] Based on the objective
meeting of minds.[29] This was the same construction adopted by manifestations of the parties in the case at bar, there was no
the trial court, viz.: meeting of the minds. That the letter constituted a definite,
complete and certain offer is the subjective belief of petitioner
Going to defendants main defense alone. The letter in question is a mere evidence of
that P21 Million was a suggested indicative a memorialization of inconclusive negotiations, or a mere
price we have to find out exactly what agreement to agree, in which material term is left for future
indicative means. Webster Comprehensive negotiations.[37] It is a mere evidence of the parties preliminary
Dictionary, International Edition, gives us a transactions which did not crystallize into a perfected contract.
graphic meaning that everybody can Preliminary negotiations or an agreement still involving future
understand, when it says that to indicate is negotiations is not the functional equivalent of a valid, subsisting
[t]o point out; direct attention[;] agreement.[38] For a valid contract to have been created, the
to indicate the correct page[.] Indicative is parties must have progressed beyond this stage of imperfect
merely the adjective of the verb to indicate.
negotiation. But as the records would show, the parties are yet
x x x when the price of P21 [M]illion was
undergoing the preliminary steps towards the formation of a
indicated then it becomes the indicative
valid contract. Having thus established that there is no perfected
price the correct price, no ifs[,] no
buts.[30] (emphases in the original) contract of sale in the case at bar, the issue on estoppel is now
moot and academic.

We do not agree. Finally, petitioner contends that the appellate court

Under the same section and rule invoked by should have dismissed the appeal of respondent on the
petitioner, the terms of a writing are presumed to have been procedural technicality that the Appellants Brief does not have
used in their primary and general acceptation, but evidence is page references to the record in its Statement of Facts,
admissible to show that they have a local, technical, or Statement of the Case and Arguments in the Appellants Brief.[39]
otherwise peculiar signification, and were so used and
understood in the particular instance, in which case the We find no reason to reverse the ruling of the
agreement must be construed accordingly.[31] appellate court which has judiciously explained why the appeal
should not be dismissed on this ground, viz.:
The reliance of the trial court in the Webster definition
of the term indicative, as also adopted by petitioner, is x x x x Procedural rules are
misplaced. The transaction at bar involves the sale of an asset required to be followed as a general rule, but
they may be relaxed to relieve a litigant of
under a privatization scheme which attaches a peculiar meaning
an injustice not commensurate with the
or signification to the term indicative price. Under No. 6.1 of the
degree of his noncompliance with the
General Bidding Procedures and Rules[32] of respondent, an
procedure required. In this case,
indicative price is a ball-park figure and [respondent] supplies [respondents] brief does not substantially
 violate our procedural rules. Besides, the SPS. JORGE NAVARRA and CARMELITA BERNARDO
merits of its arguments will show that the NAVARRA and RRRC DEVELOPMENT CORPORATION,
trial court seriously erred in issuing its Petitioners,
assailed decision.[40]

- versus -
IN VIEW WHEREOF, the assailed Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 49227
dated January 30, 2003 and July 31, 2003, respectively,
are AFFIRMED. PLANTERS DEVELOPMENT BANK and ROBERTO
GATCHALIAN REALTY, INC.,
SO ORDERED. Respondents.

GARCIA, J.:

Assailed and sought to be set aside in this petition for

review under Rule 45 of the Rules of Court is the
decision[1] dated September 27, 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 50002, as reiterated in its
resolution[2] dated May 8, 2006, denying reconsideration thereof.
The challenged decision reversed that of the Regional Trial
Court (RTC) of Makati City, Branch 66, in its Civil Case No.
16917, an action for Specific Performance and Injunction thereat
commenced by the herein petitioners against the respondents.
The Makati RTC ruled that a perfected contract of sale existed
in favor of Jorge Navarra and Carmelita Bernardo
Navarra (Navarras) over the properties involved in the suit and
accordingly ordered Planters Development Bank (Planters
Bank) to execute the necessary deed of sale therefor. The CA
reversed that ruling. Hence, this recourse by the petitioners.

The facts:

The Navarras are the owners of five (5) parcels of land

located at B.F. Homes, Paraaque and covered by Transfer
Certificates of Title (TCT) Nos. S-58017, S-58011, S-51732, S-
51733 and A-14574. All these five (5) parcels of land are the
subject of this controversy.

On July 5, 1982, the Navarras obtained a loan

of P1,200,000.00 from Planters Bank and, by way of security
therefor, executed a deed of mortgage over
their aforementioned five (5) parcels of land. Unfortunately, the
couple failed to pay their loan obligation. Hence, Planters Bank
foreclosed on the mortgage and the mortgaged assets were
sold to it for P1,341,850.00, it being the highest bidder in the
auction sale conducted on May 16, 1984. The one-year
redemption period expired without the Navarras having
redeemed the foreclosed properties.

On the other hand, co-petitioner RRRC Development

Corporation (RRRC) is a real estate company owned by the
parents of Carmelita Bernardo Navarra. RRRC itself obtained a
loan from Planters Bank secured by a mortgage over another
set of properties owned by RRRC. The loan having been extend to me your favorable action on this
grave matter.
likewise unpaid, Planters Bank similarly foreclosed the
mortgaged assets of RRRC. Unlike the Navarras, however,
RRRC was able to negotiate with the Bank for the redemption of In response, Planters Bank, thru its Vice-President
its foreclosed properties by way of a concession whereby the Ma. Flordeliza Aguenza, wrote back Navarra via a letter
Bank allowed RRRC to refer to it would-be buyers of the dated August 16, 1985, thus:
foreclosed RRRC properties who would remit their payments
directly to the Bank, which payments would then be considered Regarding your letter dated July 18, 1985,
as redemption price for RRRC. Eventually, the foreclosed requesting that we give up to August 31,
properties of RRRC were sold to third persons whose payments 1985 to buy back your house and lot and
restaurant and building subject to
therefor, directly made to the Bank, were in excess
a P300,000.00 downpayment on the
by P300,000.00 for the redemption price. purchase price, please be advised that the
Collection Committee has agreed to your
In the meantime, Jorge Navarra sent a letter to Planters Bank, request.
proposing to repurchase the five (5) lots earlier auctioned to the
Bank, with a request that he be given until August 31, 1985 to Please see Mr. Rene Castillo,
pay the down payment of P300,000.00. Dated July 18, 1985 and Head, Acquired Assets Unit, as soon as
addressed to then Planters Bank President Jesus Tambunting, possible for the details of the transaction so
the letter reads in full: that they may work on the necessary
This will formalize my request for documentation.
your kind consideration in allowing my
brother and me to buy back my house and
lot and my restaurant building and lot Accordingly, Jorge Navarra went to the Office of Mr.
together with the adjacent road lot.
Rene Castillo on August 20, 1985, bringing with him a letter
Since my brother, who is working requesting that the excess payment of P300,000.00 in
in Saudi Arabia, has accepted this connection with the redemption made by the RRRC be applied
arrangement only recently as a result of my as down payment for the Navarras repurchase of their
urgent offer to him, perhaps it will be safe for foreclosed properties.
us to set August 31, 1985 as the last day for
the payment of a P300,000.00
downpayment. I hope you will grant us the Because the amount of P300,000.00 was sourced
opportunity to raise the funds within this from a different transaction between RRRC and Planters Bank
period, which includes an allowance for and involved different debtors, the Bank required Navarra to
delays.
submit a board resolution from RRRC authorizing him to
The purchase price, I understand, negotiate for and its behalf and empowering him to apply the
will be based on the redemption value plus excess amount of P300,000.00 in RRRCs redemption payment
accrued interest at the prevailing rate up to as down payment for the repurchase of the Navarras foreclosed
the date of our sales contract. Maybe you properties.
can give us a long term payment scheme on
the basis of my brothers annual savings of Meanwhile, titles to said properties were consolidated
roughly US$30,000.00 everytime he comes in the name of Planters Bank, and on August 27, 1985, new
home for his home leave. certificates of title were issued in its name, to wit: TCT Nos.
97073, 97074, 97075, 97076 and 97077.
I realize that this is not a regular
transaction but I am seeking your favor to
give me a chance to reserve whatever Then, on January 21, 1987, Planters Bank sent a
values I can still recover from the properties letter to Jorge Navarra informing him that it could not proceed
and to avoid any legal complications that with the documentation of the proposed repurchase of the
may arise as a consequence of the total foreclosed properties on account of his non- compliance with the
loss of the Balangay lot. I hope that you will
Banks request for the submission of the needed board defendant Planters
Development Bank and
resolution of RRRC.
defendant Roberto
Gatchalian Realty
In his reply-letter of January 28, 1987, Navarra Corporation (RGRI) with
claimed having already delivered copies of the required board the vendor bank
resolution to the Bank. The Bank, however, did not receive said refunding all the
payments made by the
copies. Thus, on February 19, 1987, the Bank sent a notice to
vendee RGRI without
the Navarrras demanding that they surrender and vacate the interest less the five
properties in question for their failure to exercise their right of percent (5%) brokers
redemption. commission:

b) the
Such was the state of things when, on June 31, 1987, defendant Planters
in the RTC of Makati City, the Navarras filed their complaint Development Bank to
for Specific Performance with Injunctionagainst Planters execute the Deed of
Bank. In their complaint docketed in said court as Civil Case No. Absolute Sale over the
lots covered by TCT
16917 and raffled to Branch 66 thereof, the Navarras, as
Nos. 97073, 97074,
plaintiffs, alleged that a perfected contract of sale was made 97075, 97076, and
between them and Planters Bank whereby they would 97077 in favor of all the
repurchase the subject properties for P1,800,000.00 with a plaintiffs for a
down payment of P300,000.00. consideration of ONE
MILLION EIGHT
HUNDRED THOUSAND
In its Answer, Planters Bank asserted that there was (P1,800,000.00) less the
no perfected contract of sale because the terms and conditions downpayment of
for the repurchase have not yet been agreed upon. P300,000.00 plus
interest at the rate of
twenty five percent
On September 9, 1988, a portion of the lot covered by (25%) per year for five
TCT No. 97077 (formerly TCT No. A-14574) was sold by (5) years to be paid in
Planters Bank to herein co-respondent Roberto Gatchalian full upon the execution
Realty, Inc. (Gatchalian Realty). Consequently, TCT No. 97077 of the contract;
was cancelled and TCT No. 12692 was issued in the name of c) the defendant
Gatchalian Realty. This prompted the Navarras to amend their Planters Development
complaint by impleading Gatchalian Realty as additional Bank the amount of TEN
defendant. THOUSAND PESOS
(P10,000.00) by way of
attorneys fees.
In a decision dated July 10, 1995, the trial court ruled
that there was a perfected contract of sale between the d) No costs.
Navarras and Planters Bank, and accordingly rendered
judgment as follows: SO ORDERED.

Therefrom, Planters Bank and Gatchalian Realty

WHEREFORE, in view of the
separately went on appeal to the CA whereat their appellate
foregoing, judgment is hereby rendered
ordering: recourse were consolidated and docketed as CA-G.R. CV No.
50002.
a) the cancellation of
the Deed of Absolute As stated at the threshold hereof, the appellate court,
Sale (Exh. 2) over lot
in its decision of September 27, 2004, reversed that of the trial
4137-C between
court and ruled that there was no perfected contract of sale With their motion for reconsideration having been
between the parties. Partly says the CA in its decision: denied by the CA in its resolution of May 8, 2006, petitioners are
now with this Court via this recourse on their submission that the
The Court cannot go along with the
CA erred -
deduction of the trial court that the response
of Planters Bank was favorable to Jorge
Navarras proposal and that the P300,000.00
I
in its possession is a down payment and as
such sufficient bases to conclude that there
XXX IN CONCLUDING THAT THERE WAS
was a valid and perfected contract of sale.
NO PERFECTED CONTRACT TO
Based on the turn of events and the tenor of
REPURCHASE THE FORECLOSED
the communications between the offerors
PROPERTIES BETWEEN THE
and the creditor bank, it appears that there
PETITIONERS AND THE PRIVATE
was not even a perfected contract to sell,
RESPONDENT PLANTERS
much less a perfected contract of sale.
DEVELOPMENT BANK, AS CORRECTLY
FOUND BY THE TRIAL COURT.
Article 1319 cited by the trial court provides
that the acceptance to an offer must
II
be absolute. Simply put, there must be
unqualified acceptance and no condition
XXX IN HOLDING THAT THE PARTIES
must tag along. But Jorge Navarra in trying
NEVER GOT PAST THE NEGOTIATION
to convince the bank to agree, had himself
STAGE.
laid out terms in offering (1) a downpayment
of P300,000.00 and setting (2) as deadline
August 31, 1985 for the payment thereof. While the question raised is essentially one of fact, of
Under these terms and conditions the bank which the Court normally eschews from, yet, given the
indeed accepted his offer, and these are conflicting factual findings of the trial and appellate courts, the
essentially the contents of Exhibits J and K.
Court shall go by the exception[3] to the general rule and
But was there compliance? According to the proceed to make its own assessment of the evidence.
evidence on file the P300,000.00, if at all,
was given beyond the agreed period. The We DENY.
court a quo missed the fact that the said
amount came from the excess of the
proceeds of the sale to the Pea spouses Petitioners contend that a perfected contract of sale
which Jorge Navarra made to appear was came into being when respondent Bank, thru a letter
made before the deadline he set of August dated August 16, 1985, formally accepted the offer of the
31, 1985. But this is athwart Exhibits M-1 Navarras to repurchase the subject properties.
and N, the Contract to Sell and the Deed of
Sale between RRRC and the Peas, for
these were executed only on September 13, In general, contracts undergo three distinct stages, to
1985 and October 7, 1985respectively. wit: negotiation, perfection or birth, and
consummation. Negotiation begins from the time the
xxx xxx xxx prospective contracting parties manifest their interest in the
There were two separate and independent contract and ends at the moment of their
loans secured by distinct mortgages on agreement. Perfection or birth of the contract takes place when
different lots and their only commonality is the parties agree upon the essential elements of the
the relationship of the Navarras and contract, i.e., consent, object and price. Consummation occurs
Bernardo families. It is thus difficult to
when the parties fulfill or perform the terms agreed upon in the
conceive and to conclude that such
Byzantine arrangement was acquiesced to contract, culminating in the extinguishment thereof.[4]
and provided for in that single and simple
letter of the bank. A negotiation is formally initiated by an offer which
should be certain with respect to both the object and the cause
or consideration of the envisioned contract. In order to produce 1985 to buy back your house and lot and
restaurant and building subject to
a contract, there must be acceptance, which may be express or
a P300,000.00 downpayment on the
implied, but it must not qualify the terms of the offer. The purchase price, please be advised that the
acceptance of an offer must be unqualified and absolute to Collection Committee has agreed to your
perfect the contract. In other words, it must be identical in all request.
respects with that of the offer so as to produce consent or
Please see Mr. Rene Castillo,
meeting of the minds.[5]
Head, Acquired Assets Unit, as soon as
possible for the details of the transaction
Here, the Navarras assert that the following exchange so that they may work on the necessary
of correspondence between them and Planters Bank constitutes documentation. (Emphasis ours)
the offer and acceptance, thus:
Given the above, the basic question that comes to
Letter dated July 18, 1985 of Jorge Navarra: mind is: Was the offer certain and the acceptance absolute
enough so as to engender a meeting of the minds between the
This will formalize my request for parties? Definitely not.
your kind consideration in allowing my
While the foregoing letters indicate the amount
brother and me to buy back my house and
lot and my restaurant building and lot of P300,000.00 as down payment, they are, however,
together with the adjacent road lot. completely silent as to how the succeeding installment
payments shall be made. At most, the letters merely
Since my brother, who is working acknowledge that the down payment of P300,000.00 was
in Saudi Arabia, has accepted this
agreed upon by the parties. However, this fact cannot lead to
arrangement only recently as a result of my
urgent offer to him, perhaps it will be safe for the conclusion that a contract of sale had been perfected. Quite
us to set August 31, 1985 as the last day for recently, this Court held that before a valid and binding contract
the payment of a P300,000.00 of sale can exist, the manner of payment of the purchase price
downpayment. I hope you will grant us the
must first be established since the agreement on the manner of
opportunity to raise the funds within this
period, which includes an allowance for payment goes into the price such that a disagreement on the
delays. manner of payment is tantamount to a failure to agree on the
price.[6]
The purchase price, I understand,
will be based on the redemption value plus
Too, the Navarras letter/offer failed to specify a
accrued interest at the prevailing rate up to
the date of our sales contract. Maybe you definite amount of the purchase price for the sale/repurchase of
can give us a long term payment scheme on the subject properties. It merely stated that the purchase price
the basis of my brothers annual savings of will be based on the redemption value plus accrued interest at
roughly US$30,000.00 everytime he comes the prevailing rate up to the date of the sales contract. The
home for his home leave.
ambiguity of this statement only bolsters the uncertainty of the
I realize that this is not a regular Navarras so-called offer for it leaves much rooms for such
transaction but I am seeking your favor to questions, as: what is the redemption value? what prevailing
give me a chance to reserve whatever rate of interest shall be followed: is it the rate stipulated in the
values I can still recover from the properties
loan agreement or the legal rate? when will the date of the
and to avoid any legal complications that
may arise as a consequence of the total contract of sale be based, shall it be upon the time of the
loss of the Balangay lot. I hope that you will execution of the deed of sale or upon the time when the last
extend to me your favorable action on this installment payment shall have been made? To our mind, these
grave matter. questions need first to be addressed, discussed and negotiated
upon by the parties before a definite purchase price can be
Letter dated August 16, 1985 of Planters Bank arrived at.
Regarding your letter dated July 18, 1985,
requesting that we give up to August 31,
 Significantly, the Navarras wrote in the same letter the their offer. It should be noted that aside from their first letter
following: dated July 18, 1985, the Navarras wrote another letter
dated August 20, 1985, this time requesting the Bank that the
Maybe you can give us a long-
down payment of P300,000.00 be instead taken from the excess
term payment scheme on the basis of my
brothers annual savings of roughly payment made by the RRRC in redeeming its own foreclosed
US$30,000.00 every time he comes home properties. The very circumstance that the Navarras had to
for his home leave. make this new request is a clear indication that no definite
agreement has yet been reached at that point. As we see it, this
Again, the offer was not clear insofar as concerned request constitutes a new offer on the part of the Navarras,
the exact number of years that will comprise the long-term which offer was again conditionally accepted by the Bank as in
payment scheme. As we see it, the absence of a stipulated fact it even required the Navarras to submit a board resolution of
period within which the repurchase price shall be paid all the RRRC before it could proceed with the proposed
more adds to the indefiniteness of the Navarras offer. sale/repurchase. The eventual failure of the spouses to submit
the required board resolution precludes the perfection of a
Clearly, then, the lack of a definite offer on the part of contract of sale/repurchase between the parties. As earlier
the spouses could not possibly serve as the basis of their claim mentioned, contracts are perfected when there is concurrence
that the sale/repurchase of their foreclosed properties was of the parties wills, manifested by the acceptance by one of the
perfected. The reason is obvious: one essential element of a offer made by the other.[9] Here, there was no concurrence of
contract of sale is wanting: the price certain. There can be no the offer and acceptance as would result in a perfected contract
contract of sale unless the following elements concur: (a) of sale.
consent or meeting of the minds; (b) determinate subject matter;
and (c) price certain in money or its equivalent. Such contract is Evidently, what transpired between the parties was
born or perfected from the moment there is a meeting of minds only a prolonged negotiation to buy and to sell, and, at the most,
upon the thing which is the object of the contract and upon the an offer and a counter-offer with no definite agreement having
price.[7] Here, what is dramatically clear is that there was no been reached by them. With the hard reality that no perfected
meeting of minds vis-a-vis the price, expressly or impliedly, contract of sale/repurchase exists in this case, any independent
directly or indirectly. transaction between the Planters Bank and a third-party, like the
one involving the Gatchalian Realty, cannot be affected.
Further, the tenor of Planters Banks letter-reply
negates the contention of the Navarras that the Bank fully WHEREFORE, the petition is DENIED and the
accepted their offer. The letter specifically stated that there is a assailed decision and resolution of the Court of Appeals
need to negotiate on the other details of the transaction[8] before are AFFIRMED.
the sale may be formalized. Such statement in the Banks letter
clearly manifests lack of agreement between the parties as to No pronouncement as to costs.
the terms of the purported contract of sale/repurchase,
particularly the mode of payment of the purchase price and the SO ORDERED.
period for its payment. The law requires acceptance to be
absolute and unqualified. As it is, the Banks letter is not the kind
which would constitute acceptance as contemplated by law for it
does not evince any categorical and unequivocal undertaking on
the part of the Bank to sell the subject properties to the
Navarras.

The Navarras attempt to prove the existence of a

perfected contract of sale all the more becomes futile in the light
of the evidence that there was in the first place no acceptance of
ADELAIDA AMADO AND THE G. R. No . 17 140 1 property. Thereafter, Judge Amado allowed Salvador to take
HEIRS AND/OR ESTATE OF possession of the subject property and to build thereon a
THE LATE JUDGE NOE Present: residential structure, office, warehouse, perimeter fence and a
AMADO, deep well pump.[6] Salvador claims that by October 1980, he had
Petitioners, YNARES- already given Judge Amado total cash advances of P30,310.93
SANTIAGO, J., and delivered construction materials amounting to P36,904.45,
Chairperson, the total of which exceeded the agreed price for the subject
AUSTRIA-MARTINEZ, property.[7]
CHICO-NAZARIO, According to the petitioners, on the other hand,
- versus - NACHURA, and
Judge Amado let Salvador use the subject property, upon the
REYES, JJ.
request of the latters father and grandfather, who were
Judge Amados friends. Salvador used the subject property for
RENATO SALVADOR, Promulgated: his business of manufacturing hollow blocks.[8]
Re spo nde nt.
December 13, 2007 The petitioners maintain that the cash advances and
x--------------------------------------------- the various construction materials were received by
----x Judge Amado from Salvador in connection with a loan
agreement, and not as payment for the sale of the subject
property. Petitioners offered in evidence a loan agreement
DECISION executed on 15 August 1980 wherein Salvador and
Judge Amado and their respective spouses appeared as co-
borrowers with Capitol City Development Bank as lender. The
CHICO-NAZARIO, J.: property belonging to Judge Amado was used as collateral,
while Salvador undertook the obligation to construct a perimeter
fence over Judge Amados land covered by OCT No. N-191954-
This is a Petition for Review on Certiorari under Rule 45 of the A and to deliver hollow blocks to
Rules of Court, assailing the Decision dated 25 August Judge Amados son, Valeriano Amado. Petitioners aver
2005 rendered by the Court of Appeals in CA-G.R. CV No. that Salvador and Judge Amado agreed to divide the proceeds
71816.[1] In reversing the Decision,[2] dated 28 November 2000, of the loan among themselves.Since the bank delivered the
of the Regional Trial Court (RTC), Branch 76, of San proceeds of the loan to Salvador, Judge Amados share in the
Mateo, Rizal, the Court of Appeals declared that the late proceeds were paid to him in several installments, some of
Judge Noe Amado (Judge Amado), the petitioners predecessor- which Salvador alleged were payments for the sale of the
in-interest, already sold the subject property to subject property.[9]
respondent, RenatoSalvador (Salvador).
Petitioners assert that when Salvadors business
Petitioners are the heirs of the late Judge Amado, who was the folded up, he failed to pay his share of the monthly amortization
owner of a parcel of land situated at Barangay Burgos, of the loan with the bank. Judge Amado paid the loan to prevent
Rodriguez, Rizal, with an area of 5,928 square meters.[3] The the foreclosure of his mortgaged property. Salvador also allowed
property subject of the present controversy is a portion thereof, his brother Lamberto Salvador to occupy the premises without
consisting of 1,106 square meters and registered under Original the consent of Judge Amado.[10]
Certificate of Title (OCT) No. N-191954-A with the Registry of
Deeds of Rizal[4] in the name of Judge Amado. On 4 November 1983, Judge Amado sent a demand
letter to Salvador directing the latter to vacate the subject
Salvador alleges that in or around September 1979, property,[11] which Salvador merely ignored.[12]
Judge Amado agreed to sell to him the subject property
for P60.00 per square meter, or in the total sum of P66,360.00, Judge Amado filed an ejectment suit
payable in cash or construction materials which would be against Salvador before the Municipal Trial Court (MTC) of
delivered to Judge Amado, or to whomsoever the latter wished Rodriguez, Rizal, docketed as Civil Case No. 700. During the
during his lifetime.[5] Salvadorthough failed to state the terms of hearing before the MTC, Salvador and his
payment, such as the period within which the payment was brother, Lamberto Salvador, defendants therein, stated in their
supposed to be completed, or how much of the payment should Answer with Counterclaim that a balance of P4,040.62 from the
be made in cash. In view of the sale in his purchase price of the subject property was left unpaid due to the
favor, Salvador undertook the transfer and relocation of about failure of Judge Amado to execute and deliver a deed of
five squatter families residing on the subject sale.[13] In a Decision dated 16 July 1990, the MTC dismissed
the ejectment suit on the ground of lack of jurisdiction because and construction materials were intended as payment for the
of Salvadors claim of ownership over the subject subject property. It gave little probative value to tax declarations
property.[14] The case was appealed to the RTC and docketed as in the name of Salvador since they referred to the improvements
Civil Case No. 704. The RTC affirmed the dismissal of on the land and not the land itself. The testimonial evidence
Judge Amados ejectment suit by the MTC based on lack of given by Ismael Angeles was considered insufficient to prove
jurisdiction.[15] the fact of sale because the witness failed to categorically state
that a sale transaction had taken place between Salvador and
On 22 August 1996, Salvador filed before the RTC Judge Amado. Moreover, the RTC held that Salvador was
Civil Case No. 1252, an action for specific performance with disqualified under the Dead Mans Statute[22] from testifying on
damages against the petitioners.[16] As evidence that the sale of any matter of fact involving a transaction between him and
the subject property was perfected between Judge Amado and Judge Amadowhich occurred before the death of the latter.[23]
himself, Salvador presented a note written by Judge Amado,
which reads[17]: Salvador appealed the Decision of the RTC in Civil
Case No. 1252 before the Court of Appeals.
San Mateo
October 1, 1980 In reversing the decision of the RTC of San Mateo, the
Dear Reny, Court of Appeals found that Salvador paid for the subject land
with cash advances and construction materials, since petitioners
Meron naniningil sa akin ng P500.00 kayat ako failed to present any evidence showing that the construction
ay bigyan ng ganoong halaga ngayon. materials Salvador delivered to Judge Amado had been paid
for. It construed as adequate proof of the sale the handwritten
Hindi ko nilagdaan iyong papel na dala ni Kapit note of Judge Amado wherein the latter promised to sign an
an Maeng at ito ay nasa akin pa. unidentified deed after the subdivision of an unnamed property,
in light of Ismael Angeles testimony that Judge Amado had
Saka ko na ibabalik iyon pa
promised to sign a deed of sale over the subject property in
gang aking plano ay napaayos ko na. Ang lupa
favor of Salvador. According to the appellate court, the
ay gagawin kong dalawang lote.
testimony of Salvador was not barred by Section 23, Rule 130 of
Ako, the Rules of Court, also known as the Dead Mans Statute, and
Noe Amado was, therefore, admissible because the petitioners filed a
counterclaim against Salvador. It also gave great weight to the
tax declarations presented by Salvador and his efforts to
Salvador also offered in evidence the testimony relocate the five squatter families which previously resided on
of Ismael Angeles to prove that Judge Amado agreed to sell the the subject property as proof of ownership. Lastly, the Court of
subject property to him. Appeals awarded Salvador P100,000.00 as moral damages
and P100,000.00 as exemplary damages. The dispositive part of
To prove that he paid the purchase price, Salvador the said Decision reads:
submitted the following documents showing he paid cash and
delivered construction materials to Judge Amado: (1) a 1. Ordering [herein petitioners] to execute a
statement of account of cash advances made from 1 September Deed of Sale in favor of [herein respondent
1979 to 23 September 1980 in the total amount Salvador] covering the parcel of land with an
of P30,310.93[18]; (2) statements of account of construction area of 1,106 square meters located at
18 Amado-Liamzon Street, Brgy. Burgos,
materials delivered from 23 August 1979 to 20 October 1979
Rodriguez, Rizal which is a portion of the 5,928
with a total cost of P17,656.85, from 26 December 1979 to 25
square meter parcel of land in the name of
August 1980 with a total cost of P1,711.20, and from 26 August
Judge Noe Amado, married
1980 to 24 September 1980 with a total cost of P10,447.40[19]; to Adelaida A. Amado in the Registration Book
(3) Invoice No. 50 dated 8 December 1980 for construction as Original Certificate of Title No. ON-191954-
materials worth P924.00[20]; and (4) delivery receipts of A of the Register of Deeds
construction materials from 21 November 1979 to 6 January of Rizal, Marikina Branch;
1981 with a total cost of P1,665.00.[21]
2. Ordering the [petitioners] to deliver to
The RTC dismissed Salvadors complaint in Civil Case [Salvador] the Original Certificate of Title No.
No. 1252. The trial court observed that it was not indicated in the ON-191954-A of the Register of Deeds
documentary evidence presented by Salvador that the money of Rizal, Marikina Branch, bearing page
 number 54-A, Book A-6, and execute receipts exceptions,[27] such as when the findings of the trial court and
and other documents which may be necessary the Court of Appeals are conflicting or contradictory.[28]
for the registration and titling of the parcel of
land in [Salvador]s name; and A contract of sale is perfected by mere consent, upon
a meeting of the minds in the offer and the acceptance thereof
3. Ordering the [petitioners] to pay based on subject matter, price and terms of payment.[29] Until
[Salvador] P100,000.00 as moral the contract of sale is perfected, it cannot, as an independent
damages, P100,000.00 as exemplary source of obligation, serve as a binding juridical relation
damages, and costs of suits.[24] between the parties.[30]

Consent is essential for the existence of a contract,

Hence, the present petition. Petitioners rely on the
and where it is absent, the contract is non-existent. Consent in
following grounds:[25]
contracts presupposes the following requisites: (1) it should be
intelligent or with an exact notion of the matter to which it refers;
I
(2) it should be free; and (3) it should be
THE COURT A QUO ERRED ON A spontaneous.[31] Moreover, a definite agreement on the manner
QUESTION OF LAW IN REVERSING THE of payment of the price is an essential element in the formation
TRIAL COURTS DECISION AND HOLDING of a binding and enforceable contract of sale.[32] This is so
THAT RESPONDENT HAS because the agreement as to the manner of payment goes into
SUCCESSFULLY DISCHARGED THE the price such that a disagreement on the manner of payment is
BURDEN OF EVIDENCE THAT THERE tantamount to a failure to agree on the price or consideration.[33]
WAS A SALE OF LOT, THE
CONSIDERATION OF WHICH WAS TO BE In the present case, Salvador fails to allege the
PAID IN CASH AND CONSTRUCTION manner of payment of the purchase price on which the parties
MATERIALS should have agreed. No period was set within which the
payment must be made. Of the purchase price of P66,360.00,
II which the parties purportedly agreed upon, the amount which
should be paid in cash and the amount for construction
THE COURT A QUO ERRED ON A materials was not determined. This means that the parties had
QUESTION OF LAW IN HOLDING THAT no exact notion of the consideration for the contract to which
RESPONDENT WAS NOT DISQUALIFIED they supposedly gave their consent. Thus, such failure is fatal
TO TESTIFY UNDER THE DEAD MANS to Salvadors claim that a sale had been agreed upon by the
STATUTE AS PROVIDED IN SECTION 23, parties.
RULE 130 OF THE RULES OF COURT
Furthermore, after carefully examining the records,
III
serious doubts became apparent as to whether cash advances
and deliveries of construction materials evidenced by numerous
THE COURT A QUO ERRED ON A
QUESTION OF LAW IN RULING THAT statements of accounts and delivery receipts were actually
PETITIONERS ARE LIABLE FOR MORAL intended as payment for the land.
OR EXEMPLARY DAMAGES IN THE
TOTAL AMOUNT OF P200,000.00[26] First of all, the statements of accounts and the
delivery receipts do not indicate that the construction materials
or the cash advances were made in connection with the sale of
The petition at bar is meritorious. the subject property. Any doubt as to the real meaning of the
contract must be resolved against the person who drafted the
The main controversy in the petition is whether or not instrument and is responsible for the ambiguity
there was a perfected contract of sale of the subject property. In thereof.[34] Since Salvador prepared these statements of
resolving this issue, this Court would necessarily re-examine the accounts and therefore caused the ambiguity, he cannot benefit
factual findings of the Court of Appeals, as well as the contrary from the resulting ambiguity. Salvador is hardly an ignorant and
findings of the trial court. It is a recognized principle that while illiterate person; rather, he is a businessman engaged in
this Court is not a trier of facts and does not normally embark on manufacturing and distributing construction materials and
the evaluation of evidence adduced during trial, this rule allows operates no less than two branches. It should have been noted
in the statement of accounts, or even in another document, that
the cash advances and deliveries of construction materials were
made in connection with a transaction as important as a sale of
land. As they are, the statements of accounts and especially the Other than the statements of accounts and delivery
straightforward delivery receipts are insufficient proof that receipts scrutinized above, the other pieces of evidence
Judge Amado sold his property to Salvador. that Salvador offered are similarly inadequate to establish his
allegation of a perfected sale.
Secondly, one of the delivery receipts presented
by Salvador as Annex I of his Complaint in RTC Civil Case No. Salvador presented as evidence of a perfected sale a
1252 was partially paid.[35] If Judge Amadohad already agreed handwritten note dated 1 October 1980 as Annex GG of the
that the construction materials delivered to him and his family Complaint dated 16 August 1996, written by Judge Amado,
constituted the payment for the subject property, the act of wherein the latter asked Salvador for P500.00. In the same
partially paying for construction materials would be incongruous note, Judge Amado informed Salvador that he had not yet
to such intention. signed an unidentified document, which he promised to sign
after his plan to divide a certain parcel of land was
Thirdly, Salvador himself gave conflicting statements completed.[41] This note is not conclusive proof of the existence
on whether he has completed payment. Among the findings of of a perfected sale. What this note proves is that
fact made by the MTC in its Decision dated 16 July 1990 in Civil Judge Amado was hesitant to sign the unidentified document
Case No. 700, based on the very statements made by the and was still waiting for the completion of his plan to divide the
Salvador brothers in their Answer with Counterclaim, was that land referred to in the note. To say that the document is the
Salvador paid Judge Amado P62,319.38 in cash and deed of sale and the land is the subject property claimed
construction materials for the subject property, and a balance by Salvador would be based on pure surmise and conjecture
of P4,040.62 was left unpaid due to the failure of without a more specific reference to them in the note. Moreover,
Judge Amado to execute and deliver the deed of the P500.00 which Judge Amado was demanding
sale.[36] However, in the proceedings before the RTC in Civil from Salvador could not have been payment pursuant to the
Case No. 1252, Salvador claimed that he paid purported sale of the subject property. The list of cash
Judge Amado P67,215.38in cash and construction materials, advances, which were supposedly part of the payment for the
which was more than the purchase price of P66,360.00 upon subject property, made by Salvador to Judge Amado from 1
which they agreed.[37] September 1979 to 23 September 1980 and attached as
Annex D of his Complaint in Civil Case No. 1252, did not include
Lastly, Salvador again contradicts himself as to the the P500.00 which Judge Amado demanded from Salvador on 1
date he supposedly completed the payments for the subject October 1980.
property. In his Complaint in Civil Case No. 1252, he alleges
that by October 1980, he had already fully paid The testimony of Ismael Angeles is likewise
Judge Amado P67,215.38 in cash and construction insufficient to support the allegation that Judge Amado agreed
materials.[38] Yet in the same pleading, he included 11 separate to sell the subject property to Salvador. The factual findings of
deliveries of construction materials made from 8 December the trial court, especially as regards the credibility of witnesses,
1980 to 6 January 1981 as evidence of payment.[39] are conclusive upon this court.[42] The findings of fact and
assessment of credibility of witnesses is a matter best left to the
This Court cannot presume the existence of a sale of trial court because of its unique position of having observed that
land, absent any direct proof of it. The construction of the terms elusive and incommunicable evidence of the witnesses
of a contract, which would amount to impairment or loss of deportment on the stand while testifying, which opportunity is
rights, is not favored. Conservation and preservation, not waiver denied to the appellate courts. Only the trial judge can observe
or abandonment or forfeiture of a right, is the rule.[40] While it is the furtive glance, blush of conscious shame, hesitation, flippant
apparent that Salvador paid cash advances and delivered or sneering tone, calmness, sigh or the scant or full realization
construction materials to Judge Amado, this fact alone does not of an oath--all of which are useful for an accurate determination
attest to the existence of a sale of land. In truth, the inconsistent of a witness honesty and sincerity.[43] Thus, the assessment by
statements made by Salvador regarding the amount paid to the RTC of Angeles testimony, which it deemed insufficient, is
Judge Amado, the date when he was supposed to have entitled to great respect:
completed the payment, and the dissimilarity between the price
allegedly agreed upon and the amount supposedly paid show Moreover, [herein respondent
the absence of a uniform intention to apply these cash advances Salvador]s corroborative testimonial evidence,
and construction materials as payment for the purchase of the that is, the testimony of one Ismael Angeles, is
subject property. Absent any tangible connection with the sale of likewise deemed insufficient as even that
land, these transactions stand by themselves as loans and witness failed to categorically state any sale
purchases of construction materials. transaction of the lot between [respondent]
 Salvador and the late Judge Amado, as in fact, Until the contract is perfected, it
Mr. Angeles manifested uncertainty when he cannot, as an independent source of
said siguro nagkaroon sila ng bilihan. obligation, serve as a binding juridical
relation. In sales, particularly, to which the
topic for discussion about the case at bench
The findings of the trial court are well supported by the belongs, the contract is perfected when a
records of this case. At the time that person, called the seller, obligates himself, for
Judge Amado and Salvador allegedly entered into the sale a price certain, to deliver and to transfer
agreement, Ismael Angeles testified that I was inside the house, ownership of a thing or right to another, called
but I did not hear their conversation because I was far from the buyer, over which the latter agrees.[48]
them.[44]

Even if Ismael Angeles testimony was given full In the present case, the terms of payment have not even been
credence, it would still be insufficient to establish that a sale alleged. No positive proof was adduced that Judge Amado had
agreement was perfected between Salvador and fully accepted Salvadors sketchy proposal. Even if the
Judge Amado. His testimony that Judge Amado ordered the handwritten note actually referred to the subject property, it
preparation of the deed of sale only proves that merely points to the fact that the parties were, at best,
Judge Amado and Salvador were in the process of negotiating negotiating a contract of sale.At the time it was written, on 1
the sale of the subject property, not that they had already set October 1980, Judge Amado had not expressed his
and agreed to the terms and conditions of the sale. [45] In unconditional acceptance of Salvadors offer. He merely
fact, Ismael Angeles testimony that Judge Amado refused to expressed that he was considering the sale of the subject
sign the contract reinforces the fact that the latter had not property, but it was nevertheless clear that he still was
consented to the sale of the subject property.[46] unprepared to sign the contract. Salvador himself admitted
before the MTC in Civil Case No. 700 that the sale agreement
In addition, Salvadors act of relocating the squatter families did not push through as he testified that I considered that dead
formerly residing on the subject property[47] is not substantial investment because our sale did not materialize because he
proof of ownership. Such act is only consistent with the always made promises.[49]
petitioners allegations that Salvador was allowed to use the
subject property for his business, and it would redound to his Absent the valid sale agreement between Salvador and
benefit to relocate the squatters previously occupying it. Judge Amado, the formers possession of the subject property
hinges on the permission and goodwill of Judge Amado and the
From the evidence presented, an agreement of sale of petitioners, as his successors-in-interest. In the demand letter
the subject property between him and Judge Amado had not yet dated 4 November 1983, Judge Amado had already
reached the stage of perfection. The stages of a contract are, directed Salvador to vacate the subject property. Thus, there is
thus, explained: no more basis for Salvador and his brother, Lamberto Salvador,
to retain possession over it, and such possession must now be
A contract undergoes various stages fully surrendered to the petitioners.
that include its negotiation or preparation, its
perfection and, finally, its The Court of Appeals imposed moral damages and
consummation. Negotiation covers the exemplary damages in view of the petitioners refusal to execute
period from the time the prospective a Deed of Sale and the social humiliation suffered
contracting parties indicate interest in the by Salvador due to his ouster from the property.[50] Since
contract to the time the contract is concluded petitioners had no demandable obligation to deliver the subject
(perfected). The perfection of the contract property, the award of moral and exemplary damages, as well
takes place upon the concurrence of the as cost of suit, in favor of Salvador is without legal basis.
essential elements thereof. A contract which
is consensual as to perfection is so established Moral damages may be recovered if they were the
upon a mere meeting of the minds, i.e. the proximate result of defendants wrongful acts or
concurrence of offer and acceptance, on the omissions.[51] Two elements are required. First, the act or
object and on the cause thereof. x x x. The omission must be the proximate result of the physical suffering,
stage of consummation begins when the mental anguish, fright, serious anxiety, besmirched reputation,
parties perform their respective undertakings wounded feelings, moral shock, social humiliation and similar
under the contract culminating in the
injury. Second, the act must be wrongful.[52] In this case,
extinguishment thereof.
petitioners were not under any obligation to execute a Deed of
Sale or guarantee Salvadors possession of the property. Absent OSTON BANK OF THE G. R. No. 158149
any wrongful act which may be attributed to petitioners, an PHILIPPINES, (formerly BANK
award of moral damages is inappropriate. OF COMMERCE),
The award of exemplary damages is also Petitioner, Present:
improper. Exemplary damages are awarded only when a PANGANIBAN, J., Chairperson,
wrongful act is accompanied by bad faith or when the guilty YNARES-SANTIAGO,
party acted in a wanton, fraudulent, reckless or malevolent AUS
manner.[53] Moreover, where a party is not entitled to actual or TRIA-
moral damages, an award of exemplary damages is likewise MARTINEZ,
- versus - CALLEJO, SR., and
baseless.[54] As this Court has found, petitioners refusal to turn
CHICO-
over the subject property to Salvador is justified and cannot be
NAZARIO, JJ.
the basis for the award of exemplary damages.

IN VIEW OF THE FOREGOING, the instant Petition PERLA P. MANALO and CARLOS
is GRANTED and the assailed Decision of the Court of Appeals MANALO, JR.,
in CA-G.R. No. 71816, promulgated on 25 August 2005, Pro
is REVERSED AND SET ASIDE. The Order dated 28 mulgated:
November 2000 of the Rizal RTC
is REINSTATED. Renato Salvador and LambertoSalvador are Respondents. February 9, 2006
ordered to vacate the subject property. x---------------------------------------------
-
SO ORDERED.
-

DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari of the

Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No.
47458 affirming, on appeal, the Decision[2] of the Regional Trial
Court (RTC) of Quezon City, Branch 98, in Civil Case No. Q-89-
3905.

The Antecedents

The Xavierville Estate, Inc. (XEI) was the owner of parcels of

land in Quezon City, known as the Xavierville Estate
Subdivision, with an area of 42 hectares. XEI caused the
subdivision of the property into residential lots, which was then
offered for sale to individual lot buyers.[3]
 On September 8, 1967, XEI, through its General would be issued Torrens titles over the lots they had
Manager, Antonio Ramos, as vendor, and The Overseas Bank purchased.[8] The spouses Manalo were notified of the
of Manila (OBM), as vendee, executed a Deed of Sale of Real resumption of the selling operations of XEI.[9] However, they did
Estate over some residential lots in the subdivision, including not pay the balance of the downpayment on the lots because
Lot 1, Block 2, with an area of 907.5 square meters, and Lot 2, Ramos failed to prepare a contract of conditional sale and
Block 2, with an area of 832.80 square meters. The transaction transmit the same to Manalo for their signature. On August 14,
was subject to the approval of the Board of Directors of OBM, 1973, Perla Manalo went to the XEI office and requested that
and was covered by real estate mortgages in favor of the the payment of the amount representing the balance of the
Philippine National Bank as security for its account amounting downpayment be deferred, which, however, XEI rejected. On
to P5,187,000.00, and the Central Bank of the Philippines as August 10,
security for advances amounting 1973, XEI furnished her with a statement of their account as of
to P22,185,193.74.[4] Nevertheless, XEI continued selling the July 31, 1973, showing that they had a balance of P34,724.34
residential lots in the subdivision as agent of OBM.[5] on the downpayment of the two lots after deducting the account
of Ramos, plus P3,819.68[10] interest thereon from September 1,
Sometime in 1972, then XEI president Emerito 1972 to July 31, 1973, and that the interests on the unpaid
Ramos, Jr. contracted the services of Engr. Carlos Manalo, Jr. balance of the purchase price of P278,448.00 from September
who was in business of drilling deep water wells and installing 1, 1972 to July 31, 1973 amounted to P30,629.28.[11] The
pumps under the business name Hurricane Commercial, Inc. spouses were informed that they were being billed for said
For P34,887.66, Manalo, Jr. installed a water pump at Ramos unpaid interests.[12]
residence at the corner of Aurora Boulevard and Katipunan
Avenue, Quezon City. Manalo, Jr. then proposed to XEI, On January 25, 1974, the spouses Manalo received
through Ramos, to purchase a lot in the Xavierville subdivision, another statement of account from XEI, inclusive of interests on
and offered as part of the downpayment the P34,887.66 Ramos the purchase price of the lots.[13] In a letter dated April 6, 1974 to
owed him. XEI, through Ramos, agreed. In a letter XEI, Manalo, Jr. stated they had not yet received the notice of
dated February 8, 1972, Ramos requested Manalo, Jr. to resumption of Leis selling operations, and that there had been
choose which lots he wanted to buy so that the price of the lots no arrangement on the payment of interests; hence, they should
and the terms of payment could be fixed and incorporated in the not be charged with interest on the balance of the downpayment
conditional sale.[6] Manalo, Jr. met with Ramos and informed him on the property.[14] Further, they demanded that a deed of
that he and his wife Perla had chosen Lots 1 and 2 of Block 2 conditional sale over the two lots be transmitted to them for their
with a total area of 1,740.3 square meters. signatures. However, XEI ignored the demands. Consequently,
the spouses refused to pay the balance of the downpayment of
In a letter dated August 22, 1972 to Perla Manalo, the purchase price.[15]
Ramos confirmed the reservation of the lots. He also pegged
the price of the lots at P200.00 per square meter, or a total Sometime in June 1976, Manalo, Jr. constructed a
of P348,060.00, with a 20% down payment of the purchase business sign in the sidewalk near his house. In a letter
price amounting to P69,612.00 less the P34,887.66 owing from dated June 17, 1976, XEI informed Manalo, Jr. that business
Ramos, payable on or before December 31, 1972; the signs were not allowed along the sidewalk. It demanded that he
corresponding Contract of Conditional Sale would then be remove the same, on the ground, among others, that the
signed on or before the same date, but if the selling operations sidewalk was not part of the land which he had purchased on
of XEI resumed after December 31, 1972, the balance of the installment basis from XEI.[16] Manalo, Jr. did not respond. XEI
downpayment would fall due then, and the spouses would sign reiterated its demand on September 15, 1977.[17]
the aforesaid contract within five (5) days from receipt of the
notice of resumption of such selling operations. It was also Subsequently, XEI turned over its selling operations to
stated in the letter that, in the meantime, the spouses may OBM, including the receivables for lots already contracted and
introduce improvements thereon subject to the rules and those yet to be sold.[18] On December 8, 1977, OBM warned
regulations imposed by XEI in the subdivision. Perla Manalo Manalo, Jr., that putting up of a business sign is specifically
conformed to the letter agreement.[7] prohibited by their contract of conditional sale and that his failure
to comply with its demand would impel it to avail of the remedies
The spouses Manalo took possession of the property as provided in their contract of conditional sale.[19]
on September 2, 1972, constructed a house thereon, and
installed a fence around the perimeter of the lots. Meanwhile, on December 5, 1979, the Register of
Deeds issued Transfer Certificate of Title (TCT) No. T-265822
In the meantime, many of the lot buyers refused to over Lot 1, Block 2, and TCT No. T-265823 over Lot 2, Block 2,
pay their monthly installments until they were assured that they in favor of the OBM.[20] The lien in favor of the Central Bank of
the Philippines was annotated at the dorsal portion of said title, was forthcoming; they constructed their house
which was later cancelled on August 4, 1980.[21] worth P2,000,000.00 on the property in good faith; Manalo, Jr.,
informed the defendant, through its counsel, on October 15,
Subsequently, the Commercial Bank of Manila (CBM) 1988 that he would abide by the terms and conditions of his
acquired the Xavierville Estate from OBM. CBM wrote Edilberto original agreement with the defendants predecessor-in-interest;
Ng, the president of Xavierville Homeowners Association that, during the hearing of the ejectment case on October 16, 1988,
as of January 31, 1983, Manalo, Jr. was one of the lot buyers in they offered to pay P313,172.34 representing the balance on
the subdivision.[22] CBM reiterated in its letter to Ng that, as the purchase price of said lots; such tender of payment was
of January 24, 1984, Manalo was a homeowner in the rejected, so that the subject lots could be sold at considerably
subdivision.[23] higher prices to third parties.

In a letter dated August 5, 1986, the CBM requested Plaintiffs further alleged that upon payment of
Perla Manalo to stop any on-going construction on the property the P313,172.34, they were entitled to the execution and
since it (CBM) was the owner of the lot and she had no delivery of a Deed of Absolute Sale covering the subject lots,
permission for such construction.[24] She agreed to have a sufficient in form and substance to transfer title thereto free and
conference meeting with CBM officers where she informed them clear of any and all liens and encumbrances of whatever kind
that her husband had a contract with OBM, through XEI, to and nature.[33] The plaintiffs prayed that, after due hearing,
purchase the property. When asked to prove her claim, she judgment be rendered in their favor, to wit:
promised to send the documents to CBM. However, she failed
to do so.[25] On September 5, 1986, CBM reiterated its demand WHEREFORE, it is respectfully
that it be furnished with the documents promised,[26] but Perla prayed that after due hearing:
Manalo did not respond.
(a) The defendant should be
On July 27, 1987, CBM filed a complaint [27]
for ordered to execute and deliver a Deed of
unlawful detainer against the spouses with the Metropolitan Trial Absolute Sale over subject lots in favor of
Court of Quezon City. The case was docketed as Civil Case No. the plaintiffs after payment of the sum
51618. CBM claimed that the spouses had been unlawfully of P313,172.34, sufficient in form and
occupying the property without its consent and that despite its substance to transfer to them titles thereto
free and clear of any and all liens and
demands, they refused to vacate the property. The latter alleged
encumbrances of whatever kind or nature;
that they, as vendors, and XEI, as vendee, had a contract of
sale over the lots which had not yet been rescinded.[28]
(b) The defendant should be held
liable for moral and exemplary damages in
While the case was pending, the spouses Manalo the amounts of P300,000.00
wrote CBM to offer an amicable settlement, promising to abide and P30,000.00, respectively, for not
by the purchase price of the property (P313,172.34), per promptly executing and delivering to plaintiff
agreement with XEI, through Ramos. However, on July 28, the necessary Contract of Sale,
1988, CBM wrote the spouses, through counsel, proposing that notwithstanding repeated demands therefor
the price of P1,500.00 per square meter of the property was a and for having been constrained to engage
reasonable starting point for negotiation of the the services of undersigned counsel for
settlement.[29] The spouses rejected the counter which they agreed to pay attorneys fees in
proposal,[30] emphasizing that they would abide by their original the sum of P50,000.00 to enforce their rights
agreement with XEI. CBM moved to withdraw its in the premises and appearance fee
complaint[31] because of the issues raised.[32] of P500.00;

In the meantime, the CBM was renamed the Boston (c) And for such other and further
Bank of the Philippines. After CBM filed its complaint against the relief as may be just and equitable in the
spouses Manalo, the latter filed a complaint for specific premises.[34]
performance and damages against the bank before the
Regional Trial Court (RTC) of Quezon City on October 31, 1989.
In its Answer to the complaint, the defendant
The plaintiffs alleged therein that they had always interposed the following affirmative defenses: (a) plaintiffs had
been ready, able and willing to pay the installments on the lots no cause of action against it because the August 22, 1972 letter
sold to them by the defendants remote predecessor-in-interest, agreement between XEI and the plaintiffs was not binding on it;
as might be or stipulated in the contract of sale, but no contract and (b) it had no record of any contract to sell executed by it or
its predecessor, or of any statement of accounts from its
predecessors, or records of payments of the plaintiffs or of any (b) Ordering the defendant to pay
documents which entitled them to the possession of the moral and exemplary damages in the
lots.[35] The defendant, likewise, interposed counterclaims for amount of P150,000.00; and
damages and attorneys fees and prayed for the eviction of the
plaintiffs from the property.[36] (c) To pay attorneys fees in the
sum of P50,000.00 and to pay the costs.
Meanwhile, in a letter dated January 25, 1993,
plaintiffs, through counsel, proposed an amicable settlement of SO ORDERED.[43]
the case by paying P942,648.70, representing the balance of
the purchase price of the two lots based on the current market
The trial court ruled that under the August 22, 1972 letter
value.[37] However, the defendant rejected the same and insisted
agreement of XEI and the plaintiffs, the parties had a complete
that for the smaller lot, they pay P4,500,000.00, the current
contract to sell over the lots, and that they had already partially
market value of the property.[38] The defendant insisted that it
consummated the same. It declared that the failure of the
owned the property since there was no contract or agreement
defendant to notify the plaintiffs of the resumption of its selling
between it and the plaintiffs relative thereto.
operations and to execute a deed of conditional sale did not
prevent the defendants obligation to convey titles to the lots
During the trial, the plaintiffs adduced in evidence the
from acquiring binding effect. Consequently, the plaintiffs had a
separate Contracts of Conditional Sale executed between XEI
cause of action to compel the defendant to execute a deed of
and Alberto Soller;[39] Alfredo Aguila,[40] and Dra. Elena Santos-
sale over the lots in their favor.
Roque[41] to prove that XEI continued selling residential lots in
the subdivision as agent of OBM after the latter had acquired
Boston Bank appealed the decision to the CA, alleging
the said lots.
that the lower court erred in (a) not concluding that the letter of
XEI to the spouses Manalo, was at most a mere contract to sell
For its part, defendant presented in evidence the letter
subject to suspensive conditions, i.e., the payment of the
dated August 22, 1972, where XEI proposed to sell the two lots
balance of the downpayment on the property and the execution
subject to two suspensive conditions: the payment of the
of a deed of conditional sale (which were not complied with);
balance of the downpayment of the property, and the execution
and (b) in awarding moral and exemplary damages to the
of the corresponding contract of conditional sale. Since plaintiffs
spouses Manalo despite the absence of testimony providing
failed to pay, OBM consequently refused to execute the
facts to justify such awards.[44]
corresponding contract of conditional sale and forfeited
the P34,877.66 downpayment for the two lots, but did not notify
On September 30, 2002, the CA rendered a decision
them of said forfeiture.[42] It alleged that OBM considered the lots
affirming that of the RTC with modification. The fallo reads:
unsold because the titles thereto bore no annotation that they
had been sold under a contract of conditional sale, and the
WHEREFORE, the appealed
plaintiffs were not notified of XEIs resumption of its selling decision is AFFIRMED with
operations. MODIFICATIONS that (a) the
figure P942,978.70 appearing [in] par. (a) of
On May 2, 1994, the RTC rendered judgment in favor the dispositive portion thereof is changed
of the plaintiffs and against the defendant. The fallo of the to P313,172.34 plus interest thereon at the
decision reads: rate of 12% per annum from September 1,
1972 until fully paid and (b) the award of
WHEREFORE, judgment is moral and exemplary damages and
hereby rendered in favor of the plaintiffs and attorneys fees in favor of plaintiffs-appellees
against the defendant is DELETED.

(a) Ordering the latter to execute SO ORDERED.[45]

and deliver a Deed of Absolute Sale over
Lot 1 and 2, Block 2 of the Xavierville Estate
Subdivision after payment of the sum The appellate court sustained the ruling of the RTC
of P942,978.70 sufficient in form and that the appellant and the appellees had executed a Contract to
substance to transfer to them titles thereto Sell over the two lots but declared that the balance of the
free from any and all liens and purchase price of the property amounting to P278,448.00 was
encumbrances of whatever kind and nature.
payable in fixed amounts, inclusive of pre-computed interests,
from delivery of the possession of the property to the appellees Petitioner posits that, even on the assumption that
on a monthly basis for 120 months, based on the deeds of there was a perfected contract to sell between the parties,
conditional sale executed by XEI in favor of other lot nevertheless, it cannot be compelled to convey the property to
buyers.[46]The CA also declared that, while XEI must have the respondents because the latter failed to pay the balance of
resumed its selling operations before the end of 1972 and the the downpayment of the property, as well as the balance of 80%
downpayment on the property remained unpaid as of December of the purchase price, thus resulting in the extinction of its
31, 1972, absent a written notice of cancellation of the contract obligation to convey title to the lots to the respondents.
to sell from the bank or notarial demand therefor as required by
Republic Act No. 6552, the spouses had, at the very least, a 60- Another egregious error of the CA, petitioner avers, is
day grace period from January 1, 1973 within which to pay the the application of Republic Act No. 6552. It insists that such law
same. applies only to a perfected agreement or perfected contract to
sell, not in this case where the downpayment on the purchase
Boston Bank filed a motion for the reconsideration of price of the property was not completely paid, and no installment
the decision alleging that there was no perfected contract to sell payments were made by the buyers.
the two lots, as there was no agreement between XEI and the
respondents on the manner of payment as well as the other Petitioner also faults the CA for declaring that
terms and conditions of the sale. It further averred that its claim petitioner failed to serve a notice on the respondents of
for recovery of possession of the aforesaid lots in its cancellation or rescission of the contract to sell, or notarial
Memorandum dated February 28, 1994 filed before the trial demand therefor. Petitioner insists that its August 5, 1986 letter
court constituted a judicial demand for rescission that satisfied requiring respondents to vacate the property and its complaint
the requirements of the New Civil Code. However, the appellate for ejectment in Civil Case No. 51618 filed in the Metropolitan
court denied the motion. Trial Court amounted to the requisite demand for a rescission of
the contract to sell. Moreover, the action of the respondents
Boston Bank, now petitioner, filed the instant petition below was barred by laches because despite demands, they
for review on certiorari assailing the CA rulings. It maintains that, failed to pay the balance of the purchase price of the lots (let
as held by the CA, the records do not reflect any schedule of alone the downpayment) for a considerable number of years.
payment of the 80% balance of the purchase price,
or P278,448.00. Petitioner insists that unless the parties had For their part, respondents assert that as long as there
agreed on the manner of payment of the principal amount, is a meeting of the minds of the parties to a contract of sale as
including the other terms and conditions of the contract, there to the price, the contract is valid despite the parties failure to
would be no existing contract of sale or contract to agree on the manner of payment. In such a situation, the
sell.[47] Petitioner avers that the letter agreement to respondent balance of the purchase price would be payable on demand,
spouses dated August 22, 1972 merely confirmed their conformably to Article 1169 of the New Civil Code. They insist
reservation for the purchase of Lot Nos. 1 and 2, consisting of that the law does not require a party to agree on the manner of
1,740.3 square meters, more or less, at the price of P200.00 per payment of the purchase price as a prerequisite to a valid
square meter (or P348,060.00), the amount of the downpayment contract to sell. The respondents cite the ruling of this Court
thereon and the application of the P34,887.00 due from Ramos in Buenaventura v. Court of Appeals[48] to support their
as part of such downpayment. submission.

Petitioner asserts that there is no factual basis for the They argue that even if the manner and timeline for
CA ruling that the terms and conditions relating to the payment the payment of the balance of the purchase price of the property
of the balance of the purchase price of the property (as agreed is an essential requisite of a contract to sell, nevertheless, as
upon by XEI and other lot buyers in the same subdivision) were shown by their letter agreement of August 22, 1972 with the
also applicable to the contract entered into between the OBM, through XEI and the other letters to them, an agreement
petitioner and the respondents. It insists that such a ruling is was reached as to the manner of payment of the balance of the
contrary to law, as it is tantamount to compelling the parties to purchase price. They point out that such letters referred to the
agree to something that was not even discussed, thus, violating terms of the
their freedom to contract. Besides, the situation of the terms of the deeds of conditional sale executed by XEI in favor
respondents cannot be equated with those of the other lot of the other lot buyers in the subdivision, which contained
buyers, as, for one thing, the respondents made a partial uniform terms of 120 equal monthly installments (excluding the
payment on the downpayment for the two lots even before the downpayment, but inclusive of pre-computed interests). The
execution of any contract of conditional sale. respondents assert that XEI was a real estate broker and knew
that the contracts involving residential lots in the subdivision
contained uniform terms as to the manner and timeline of the of the case and the same is contrary to the
payment of the purchase price of said lots. admissions of both appellant and appellee;
(7) when the findings are contrary to those
Respondents further posit that the terms and of the trial court; (8) when the findings of fact
conditions to be incorporated in the corresponding contract of are conclusions without citation of specific
conditional sale to be executed by the parties would be the evidence on which they are based; (9) when
same as those contained in the contracts of conditional sale the facts set forth in the petition as well as in
executed by lot buyers in the subdivision. After all, they the petitioners main and reply briefs are not
maintain, the contents of the corresponding contract of disputed by the respondents; and (10) when
conditional sale referred to in the August 22, 1972 letter the findings of fact of the Court of Appeals
are premised on the supposed absence of
agreement envisaged those contained in the contracts of
evidence and contradicted by the evidence
conditional sale that XEI and other lot buyers executed.
on record.[50]
Respondents cite the ruling of this Court in Mitsui Bussan
Kaisha v. Manila E.R.R. & L. Co.[49]
We have reviewed the records and we find that,
indeed, the ruling of the appellate court dismissing petitioners
The respondents aver that the issues raised by the
appeal is contrary to law and is not supported by evidence. A
petitioner are factual, inappropriate in a petition for review
careful examination of the factual backdrop of the case, as well
on certiorari under Rule 45 of the Rules of Court. They assert
as the antecedental proceedings constrains us to hold that
that petitioner adopted a theory in litigating the case in the trial
petitioner is not barred from asserting that XEI or OBM, on one
court, but changed the same on appeal before the CA, and
hand, and the respondents, on the other, failed to forge a
again in this Court. They argue that the petitioner is estopped
perfected contract to sell the subject lots.
from adopting a new theory contrary to those it had adopted in
the trial and appellate courts. Moreover, the existence of a
It must be stressed that the Court may consider an
contract of conditional sale was admitted in the letters of XEI
issue not raised during the trial when there is plain
and OBM. They aver that they became owners of the lots upon
error.[51] Although a factual issue was not raised in the trial court,
delivery to them by XEI.
such issue may still be considered and resolved by the Court in
the interest of substantial justice, if it finds that to do so is
The issues for resolution are the following: (1) whether
necessary to arrive at a just decision,[52] or when an issue is
the factual issues raised by the petitioner are proper; (2)
closely related to an issue raised in the trial court and the Court
whether petitioner or its predecessors-in-interest, the XEI or the
of Appeals and is necessary for a just and complete resolution
OBM, as seller, and the respondents, as buyers, forged a
of the case.[53] When the trial court decides a case in favor of a
perfect contract to sell over the property; (3) whether
party on certain grounds, the Court may base its decision upon
petitioner is estopped from contending that no such contract
some other points, which the trial court or appellate court
was forged by the parties; and (4) whether respondents has a
ignored or erroneously decided in favor of a party.[54]
cause of action against the petitioner for specific performance.
In this case, the issue of whether XEI had agreed to
The rule is that before this Court, only legal issues
allow the respondents to pay the purchase price of the property
may be raised in a petition for review on certiorari. The reason is
was raised by the parties. The trial court ruled that the parties
that this Court is not a trier of facts, and is not to review and
had perfected a contract to sell, as against petitioners claim that
calibrate the evidence on record. Moreover, the findings of facts
no such contract existed. However, in resolving the issue of
of the trial court, as affirmed on appeal by the Court of Appeals,
whether the petitioner was obliged to sell the property to the
are conclusive on this Court unless the case falls under any of
respondents, while the CA declared that XEI or OBM and the
the following exceptions:
respondents failed to agree on the schedule of payment of the
(1) when the conclusion is a balance of the purchase price of the property, it ruled that XEI
finding grounded entirely on speculations, and the respondents had forged a contract to sell; hence,
surmises and conjectures; (2) when the petitioner is entitled to ventilate the issue before this Court.
inference made is manifestly mistaken,
absurd or impossible; (3) where there is a We agree with petitioners contention that, for a
grave abuse of discretion; (4) when the perfected contract of sale or contract to sell to exist in law, there
judgment is based on a misapprehension of must be an agreement of the parties, not only on the price of the
facts; (5) when the findings of fact are property sold, but also on the manner the price is to be paid by
conflicting; (6) when the Court of Appeals, in the vendee.
making its findings went beyond the issues
 Under Article 1458 of the New Civil Code, in a contract purchase price is an essential element in the
of sale, whether absolute or conditional, one of the contracting formation of a binding and enforceable
parties obliges himself to transfer the ownership of and deliver a contract of sale. The fact, therefore, that the
determinate thing, and the other to pay therefor a price certain in petitioners delivered to the respondent the
money or its equivalent. A contract of sale is perfected at the sum of P10,000.00 as part of the
moment there is a meeting of the minds upon the thing which is downpayment that they had to pay cannot
the object of the contract and the price. From the averment of be considered as sufficient proof of the
perfection, the parties are bound, not only to the fulfillment of perfection of any purchase and sale
what has been agreement between the parties herein under
article 1482 of the New Civil Code, as the
expressly stipulated, but also to all the consequences which,
petitioners themselves admit that some
according to their nature, may be in keeping with good faith,
essential matter the terms of payment still
usage and law.[55] On the other hand, when the contract of sale
had to be mutually covenanted.[60]
or to sell is not perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the
parties.[56] We agree with the contention of the petitioner that, as
held by the CA, there is no showing, in the records, of the
A definite agreement as to the price is an essential
schedule of payment of the balance of the purchase price on the
element of a binding agreement to sell personal or real property
property amounting to P278,448.00. We have meticulously
because it seriously affects the rights and obligations of the
reviewed the records, including Ramos February 8, 1972 and
parties. Price is an essential element in the formation of a
August 22, 1972 letters to respondents,[61] and find that said
binding and enforceable contract of sale. The fixing of the price
parties confined themselves to agreeing on the price of the
can never be left to the decision of one of the contracting
property (P348,060.00), the 20% downpayment of the purchase
parties. But a price fixed by one of the contracting parties, if
price (P69,612.00), and credited respondents for
accepted by the other, gives rise to a perfected sale.[57]
the P34,887.00 owing from Ramos as part of the 20%
downpayment. The timeline for the payment of the balance of
It is not enough for the parties to agree on the price of
the downpayment (P34,724.34) was also agreed upon, that is,
the property. The parties must also agree on the manner of
on or before XEI resumed its selling operations, on or
payment of the price of the property to give rise to a binding and
before December 31, 1972, or within five (5) days from written
enforceable contract of sale or contract to sell. This is so
notice of such resumption of selling operations. The parties had
because the agreement as to the manner of payment goes into
also agreed to incorporate all the terms and conditions relating
the price, such that a disagreement on the manner of payment
to the sale, inclusive of the terms of payment of the balance of
is tantamount to a failure to agree on the price.[58]
the purchase price and the other substantial terms and
In a contract to sell property by installments, it is not enough that
conditions in the corresponding contract of conditional sale, to
the parties agree on the price as well as the amount of
be later signed by the parties, simultaneously with respondents
downpayment. The parties must, likewise, agree on the manner
settlement of the balance of the downpayment.
of payment of the balance of the purchase price and on the
other terms and conditions relative to the sale. Even if the buyer
The February 8, 1972 letter of XEI reads:
makes a downpayment or portion thereof, such payment cannot Mr. Carlos T. Manalo, Jr.
be considered as sufficient proof of the perfection of any Hurricane Rotary Well Drilling
purchase and sale between the parties. Indeed, this Court ruled Rizal Avenue Ext.,Caloocan City
in Velasco v. Court of Appeals[59] that:
Dear Mr. Manalo:
It is not difficult to glean from the
aforequoted averments that the petitioners We agree with your verbal offer to exchange the proceeds of
themselves admit that they and the your contract with us to form as a down payment for a lot in our
respondent still had to meet and agree on Xavierville Estate Subdivision.
how and when the down-payment and the
installment payments were to be paid. Such Please let us know your choice lot so that we can fix the price
being the situation, it cannot, therefore, be and terms of payment in our conditional sale.
said that a definite and firm sales agreement Sincerely yours,
between the parties had been perfected
over the lot in question. Indeed, this Court XAVIERVILLE ESTATE, INC.
has already ruled before that a definite
agreement on the manner of payment of the (Signed)
EMERITO B. RAMOS, JR. when the parties sign the corresponding contract of conditional
President sale.

CONFORME: Jurisprudence is that if a material element of a

contemplated contract is left for future negotiations, the same is
(Signed) too indefinite to be enforceable.[64] And when an essential
CARLOS T. MANALO, JR. element of a contract is reserved for future agreement of the
Hurricane Rotary Well Drilling[62] parties, no legal obligation arises until such future agreement is
concluded.[65]

The August 22, 1972 letter agreement of XEI and the So long as an essential element entering into the
respondents reads: proposed obligation of either of the parties remains to be
determined by an agreement which they are to make, the
Mrs. Perla P. Manalo contract is incomplete and unenforceable.[66] The reason is that
1548 Rizal Avenue Extension
such a contract is lacking in the necessary qualities of
Caloocan City
definiteness, certainty and mutuality.[67]
Dear Mrs. Manalo:
There is no evidence on record to prove that XEI or
This is to confirm your reservation of Lot Nos. 1 and 2; Block 2 OBM and the respondents had agreed, after December 31,
of our consolidation-subdivision plan as amended, consisting of 1972, on the terms of payment of the balance of the purchase
1,740.3 square meters more or less, at the price of P200.00 per price of the property and the other substantial terms and
square meter or a total price of P348,060.00. conditions relative to the sale. Indeed, the parties are in
agreement that there had been no contract of conditional sale
It is agreed that as soon as we resume selling operations, you ever executed by XEI, OBM or petitioner, as vendor, and the
must pay a down payment of 20% of the purchase price of the respondents, as vendees.[68]
said lots and sign the corresponding Contract of Conditional
Sale, on or before December 31, 1972, provided, however, that The ruling of this Court in Buenaventura v. Court of
if we resume selling after December 31, 1972, then you must Appeals has no bearing in this case because the issue of the
pay the aforementioned down payment and sign the aforesaid manner of payment of the purchase price of the property was
contract within five (5) days from your receipt of our notice of not raised therein.
resumption of selling operations.
We reject the submission of respondents that they and
In the meanwhile, you may introduce such improvements on the Ramos had intended to incorporate the terms of payment
said lots as you may desire, subject to the rules and regulations contained in the three contracts of conditional sale executed by
of the subdivision. XEI and other lot buyers in the corresponding contract of
conditional sale, which would later be signed by them.[69] We
If the above terms and conditions are acceptable to you, please have meticulously reviewed the respondents complaint and find
signify your conformity by signing on the space herein below
no such allegation therein.[70] Indeed, respondents merely
provided.
alleged in their complaint that they were bound to pay the
Thank you. balance of the purchase price of the property in
installments. When respondent Manalo, Jr. testified, he was
never asked, on direct examination or even on cross-
Very truly yours, examination, whether the terms of payment of the balance of the
purchase price of the lots under the contracts of conditional sale
XAVIERVILLE ESTATE, INC. CONFORME: executed by XEI and other lot buyers would form part of the
By: corresponding contract of conditional sale to be signed by them
simultaneously with the payment of the balance of the
(Signed) (Signed) downpayment on the purchase price.
EMERITO B. RAMOS, JR. PERLA P. MANALO
President Buyer[63] We note that, in its letter to the respondents
Based on these two letters, the determination of the dated June 17, 1976, or almost three years from the execution
terms of payment of the P278,448.00 had yet to be agreed by the parties of their August 22, 1972 letter agreement, XEI
upon on or before December 31, 1972, or even afterwards, stated, in part, that respondents had purchased the property on
installment basis.[71] However, in the said letter, XEI failed to
state a specific amount for each installment, and whether such The bare fact that other lot buyers were allowed to pay
payments were to be made monthly, semi-annually, or the balance of the purchase price of lots purchased by them in
annually. Also, respondents, as plaintiffs below, failed to adduce 120 or 180 monthly installments does not constitute evidence
a shred of evidence to prove that they were obliged to pay that XEI also agreed to give the respondents the same mode
the P278,448.00 monthly, semi-annually or annually. The and timeline of payment of the P278,448.00.
allegation that the payment of the P278,448.00 was to be paid in
installments is, thus, vague and indefinite. Case law is that, for a Under Section 34, Rule 130 of the Revised Rules of
contract to be enforceable, its terms must be certain and Court, evidence that one did a certain thing at one time is not
explicit, not vague or indefinite.[72] admissible to prove that he did the same or similar thing at
another time, although such evidence may be received to prove
There is no factual and legal basis for the CA ruling habit, usage, pattern of conduct or the intent of the parties.
that, based on the terms of payment of the balance of the
purchase price of the lots under the contracts of conditional sale Similar acts as
executed by XEI and the other lot buyers, respondents were evidence. Evidence that one did or did not
obliged to pay the P278,448.00 with pre-computed interest of do a certain thing at one time is not
12% per annum in 120-month installments. As gleaned from the admissible to prove that he did or did not do
ruling of the appellate court, it failed to justify its use of the terms the same or a similar thing at another time;
of payment under the three contracts of conditional sale as but it may be received to prove a
basis for such ruling, to wit: specific intent or knowledge, identity, plan,
system, scheme, habit, custom or usage,
On the other hand, the records do and the like.
not disclose the schedule of payment of the
purchase price, net of the downpayment. However, respondents failed to allege and prove, in
Considering, however, the Contracts of the trial court, that, as a matter of business usage, habit or
Conditional Sale (Exhs. N, O and P) entered pattern of conduct, XEI granted all lot buyers the right to pay the
into by XEI with other lot buyers, it would balance of the purchase price in installments of 120 months of
appear that the subdivision lots sold by XEI, fixed amounts with pre-computed interests, and that XEI and the
under contracts to sell, were payable in 120 respondents had intended to adopt such terms of payment
equal monthly installments (exclusive of the relative to the sale of the two lots in question. Indeed,
downpayment but including pre-computed respondents adduced in evidence the three contracts of
interests) commencing on delivery of the lot conditional sale executed by XEI and other lot buyers merely to
to the buyer.[73] prove that XEI continued to sell lots in the subdivision as sales
agent of OBM after it acquired said lots, not to prove usage,
habit or pattern of conduct on the part of XEI to require all lot
By its ruling, the CA unilaterally supplied an essential buyers in the subdivision to pay the balance of the purchase
element to the letter agreement of XEI and the respondents. price of said lots in 120 months. It further failed to prive that the
Courts should not undertake to make a contract for the parties, trial court admitted the said deeds[77] as part of the testimony of
nor can it enforce one, the terms of which are in respondent Manalo, Jr.[78]
doubt.[74] Indeed, the Court emphasized in Chua v. Court of Habit, custom, usage or pattern of conduct must be
Appeals[75] that it is not the province of a court to alter a contract proved like any other facts. Courts must contend with the caveat
by construction or to make a new contract for the parties; its that, before they admit evidence of usage, of habit or pattern of
duty is confined to the interpretation of the one which they have conduct, the offering party must establish the degree of
made for themselves, without regard to its wisdom or folly, as specificity and frequency of uniform response that ensures more
the court cannot supply material stipulations or read into than a mere tendency to act in a given manner but rather,
contract words which it does not contain. conduct that is semi-automatic in nature. The offering party must
allege and prove specific, repetitive conduct that might
Respondents, as plaintiffs below, failed to allege in constitute evidence of habit. The examples offered in evidence
their complaint that the terms of payment of the P278,448.00 to to prove habit, or pattern of evidence must be numerous enough
be incorporated in the corresponding contract of conditional sale to base on inference of systematic conduct. Mere similarity of
were those contained in the contracts of conditional sale contracts does not present the kind of sufficiently similar
executed by XEI and Soller, Aguila and Roque.[76] They likewise circumstances to outweigh the danger of prejudice and
failed to prove such allegation in this Court. confusion.
 In determining whether the examples are numerous
enough, and sufficiently regular, the key criteria are adequacy of We have carefully reviewed the August 22, 1972 letter
sampling and uniformity of response. After all, habit means a agreement of the parties and find no direct or implied reference
course of behavior of a person regularly represented in like to the manner and schedule of payment of the balance of the
circumstances.[79] It is only when examples offered to establish purchase price of the lots covered by the deeds of conditional
pattern of conduct or habit are numerous enough to lose an sale executed by XEI and that of the other lot buyers[90] as basis
inference of systematic conduct that examples are admissible. for or mode of determination of the schedule of the payment by
The key criteria are adequacy of sampling and uniformity of the respondents of the P278,448.00.
response or ratio of reaction to situations.[80]
The ruling of this Court in Mitsui Bussan Kaisha v.
There are cases where the course of dealings to be Manila Electric Railroad and Light Company[91] is not applicable
followed is defined by the usage of a particular trade or market in this case because the basic price fixed in the contract
or profession. As expostulated by Justice Benjamin Cardozo of was P9.45 per long ton, but it was stipulated that the price was
the United States Supreme Court: Life casts the moulds of subject to modification in proportion to variations in calories and
conduct, which will someday become fixed as law. Law ash content, and not otherwise. In this case, the parties did not
preserves the moulds which have taken form and shape from fix in their letters-agreement, any method or mode of
life.[81] Usage furnishes a standard for the measurement of many determining the terms of payment of the balance of the
of the rights and acts of men.[82] It is also well-settled that parties purchase price of the property amounting to P278,448.00.
who contract on a subject matter concerning which known
usage prevail, incorporate such usage by implication into their It bears stressing that the respondents failed and
agreement, if nothing is said to be contrary.[83] refused to pay the balance of the downpayment and of the
purchase price of the property amounting to P278,448.00
However, the respondents inexplicably failed to despite notice to them of the resumption by XEI of its selling
adduce sufficient competent evidence to prove usage, habit or operations. The respondents enjoyed possession of the property
pattern of conduct of XEI to justify the use of the terms of without paying a centavo.On the other hand, XEI and OBM
payment in the contracts of the other lot buyers, and thus grant failed and refused to transmit a contract of conditional sale to
respondents the right to pay the P278,448.00 in 120 months, the respondents. The respondents could have at least
presumably because of respondents belief that the manner of consigned the balance of the downpayment after notice of the
payment of the said amount is not an essential element of a resumption of the selling operations of XEI and filed an action to
contract to sell. There is no evidence that XEI or OBM and all compel XEI or OBM to transmit to them the said contract;
the lot buyers in the subdivision, including lot buyers who pay however, they failed to do so.
part of the downpayment of the property purchased by them in
the form of service, had executed contracts of conditional sale As a consequence, respondents and XEI (or OBM for
containing uniform terms and conditions. Moreover, under the that matter) failed to forge a perfected contract to sell the two
terms of the contracts of conditional sale executed by XEI and lots; hence, respondents have no cause of action for specific
three lot buyers in the subdivision, XEI agreed to grant 120 performance against petitioner. Republic Act No. 6552 applies
months within which to pay the balance of the purchase price to only to a perfected contract to sell and not to a contract with no
two of them, but granted one 180 months to do so.[84] There is binding and enforceable effect.
no evidence on record that XEI granted the same right to buyers
of two or more lots. IN LIGHT OF ALL THE FOREGOING, the petition
is GRANTED. The Decision of the Court of Appeals in CA-G.R.
Irrefragably, under Article 1469 of the New Civil Code, CV No. 47458 is REVERSED andSET ASIDE. The Regional
the price of the property sold may be considered certain if it be Trial Court of Quezon City, Branch 98 is ordered to dismiss the
so with reference to another thing certain. It is sufficient if it can complaint. Costs against the respondents.
be determined by the stipulations of the contract made by the
parties thereto[85] or by reference to an agreement incorporated SO ORDERED.
in the contract of sale or contract to sell or if it is capable of
being ascertained with certainty in said contract;[86] or if the
contract contains express or implied provisions by which it may
be rendered certain;[87] or if it provides some method or criterion
by which it can be definitely ascertained.[88] As this Court held
in Villaraza v. Court of Appeals,[89] the price is considered
certain if, by its terms, the contract furnishes a basis or measure
for ascertaining the amount agreed upon.
 [G.R. No. 152658. July 29, 2005] Simona executed a General Power of Attorney (GPA) on
17 June 1966 appointing Mauricio as her attorney-in-fact. In the
GPA, Simona authorized Mauricio to mortgage or otherwise
hypothecate, sell, assign and dispose of any and all of my
LILY ELIZABETH BRAVO-GUERRERO, BEN MAURICIO P. property, real, personal or mixed, of any kind whatsoever and
BRAVO,[1] ROLAND P. BRAVO, JR., OFELIA wheresoever situated, or any interest therein xxx.[6] Mauricio
BRAVO-QUIESTAS, HEIRS OF CORPUSINIA subsequently mortgaged the Properties to the Philippine
BRAVO-NIOR namely: GERSON U. NIOR, MARK National Bank (PNB) and Development Bank of the Philippines
GERRY B. NIOR, CLIFF RICHARD B. NIOR, BRYAN (DBP) for P10,000 and P5,000, respectively.[7]
B. NIOR, WIDMARK B. NIOR, SHERRY ANNE B.
On 25 October 1970, Mauricio executed a Deed of Sale
NIOR, represented by LILY ELIZABETH BRAVO-
with Assumption of Real Estate Mortgage (Deed of Sale)
GUERRERO as their attorney-in-fact, and
conveying the Properties to Roland A. Bravo, Ofelia A. Bravo
HONORABLE FLORENTINO A. TUASON, JR.,
and Elizabeth Bravo[8] (vendees). The sale was conditioned on
Presiding Judge, Regional Trial Court, Branch 139,
the payment of P1,000 and on the assumption by the vendees
Makati City, petitioners, vs. EDWARD P. BRAVO,
of the PNB and DBP mortgages over the Properties.
represented by his attorney-in-fact FATIMA C.
BRAVO, respondent, and DAVID B. DIAZ, As certified by the Clerk of Court of the Regional Trial
JR., intervenor-respondent. Court of Manila, the Deed of Sale was notarized by Atty. Victorio
Q. Guzman on 28 October 1970 and entered in his Notarial
DECISION Register.[9] However, the Deed of Sale was not annotated on
TCT Nos. 58999 and 59000. Neither was it presented to PNB
CARPIO, J.: and DBP. The mortage loans and the receipts for loan payments
issued by PNB and DBP continued to be in Mauricios name
even after his death on 20 November 1973. Simona died in
The Case 1977.
On 23 June 1997, Edward, represented by his wife,
Fatima Bravo, filed an action for the judicial partition of the
Before the Court is a petition for review[2] assailing the
Properties. Edward claimed that he and the other grandchildren
Decision[3] of 21 December 2001 of the Court of Appeals in CA-
of Mauricio and Simona are co-owners of the Properties by
G.R. CV No. 67794. The Court of Appeals reversed the
succession. Despite this, petitioners refused to share with him
Decision[4] of 11 May 2000 of the Regional Trial Court of Makati,
the possession and rental income of the Properties. Edward
Branch No. 139, in Civil Case No. 97-1379 denying respondents
later amended his complaint to include a prayer to annul the
prayer to partition the subject properties.
Deed of Sale, which he claimed was merely simulated to
prejudice the other heirs.

Antecedent Facts In 1999, David Jr., whose parents died in 1944 and who
was subsequently raised by Simona, moved to intervene in the
case. David Jr. filed a complaint-in-intervention impugning the
Spouses Mauricio Bravo (Mauricio) and Simona[5] Andaya validity of the Deed of Sale and praying for the partition of the
Bravo (Simona) owned two parcels of land (Properties) Properties among the surviving heirs of Mauricio and Simona.
measuring 287 and 291 square meters and located along The trial court allowed the intervention in its Order dated 5 May
Evangelista Street, Makati City, Metro Manila. The Properties 1999.[10]
are registered under TCT Nos. 58999 and 59000 issued by the
Register of Deeds of Rizal on 23 May 1958. The Properties
contain a large residential dwelling, a smaller house and other The Ruling of the Trial Court
improvements.
Mauricio and Simona had three children - Roland, Cesar
The trial court upheld Mauricios sale of the Properties to
and Lily, all surnamed Bravo. Cesar died without issue. Lily
the vendees. The trial court ruled that the sale did not prejudice
Bravo married David Diaz, and had a son, David B. Diaz, Jr.
the compulsory heirs, as the Properties were conveyed for
(David Jr.). Roland had six children, namely, Lily Elizabeth
valuable consideration. The trial court also noted that the Deed
Bravo-Guerrero (Elizabeth), Edward Bravo (Edward), Roland
of Sale was duly notarized and was in existence for many years
Bravo, Jr. (Roland Jr.), Senia Bravo, Benjamin Mauricio Bravo,
without question about its validity.
and their half-sister, Ofelia Bravo (Ofelia).
 The dispositive portion of the trial courts Decision of 11 B. Plaintiff-appellant EDWARD BRAVO and
May 2000 reads: the rest of the five siblings, namely:
LILY ELIZABETH, EDWARD,
WHEREFORE, premises considered, the Court hereby DENIES ROLAND, JR., SENIA, BENJAMIN and
the JUDICIAL PARTITION of the properties covered by TCT OFELIA are entitled to one-sixth (1/6)
Nos. 58999 and 59000 registered with the Office of the Register representing the other half portion of
of Deeds of Rizal. the subject properties;

SO ORDERED.[11] C. Plaintiff-appellant Edward Bravo, intervenor

DAVID DIAZ, JR., SENIA and
BENJAMIN shall reimburse the
Dissatisfied, Edward and David Jr. (respondents) filed a
defendant-appellees LILY ELIZABETH,
joint appeal to the Court of Appeals.
OFELIA and ROLAND the sum of One
Thousand (P1,000.00) PESOS
representing the consideration paid on
The Ruling of the Court of Appeals the questioned deed of sale with
assumption of mortgage with interest of
six (6) percent per annum effective 28
Citing Article 166 of the Civil Code (Article 166), the Court October 1970 until fully paid.
of Appeals declared the Deed of Sale void for lack of Simonas
consent. The appellate court held that the GPA executed by SO ORDERED.[12]
Simona in 1966 was not sufficient to authorize Mauricio to sell
the Properties because Article 1878 of the Civil Code (Article
1878) requires a special power of attorney for such transactions.
The appellate court reasoned that the GPA was executed The Issues
merely to enable Mauricio to mortgage the Properties, not to sell
them.
Petitioners seek a reversal of the Decision of the Court of
The Court of Appeals also found that there was insufficient Appeals, raising these issues:
proof that the vendees made the mortgage payments on the
Properties, since the PNB and DBP receipts were issued in 1. WHETHER THE COURT OF APPEALS ERRED IN
Mauricios name. The appellate court opined that the rental NOT UPHOLDING THE VALIDITY AND
income of the Properties, which the vendees never shared with ENFORCEMENT OF THE DEED OF SALE WITH
respondents, was sufficient to cover the mortgage payments to ASSUMPTION OF MORTGAGE.
PNB and DBP.
The Court of Appeals declared the Deed of Sale void and 2. WHETHER THE COURT OF APPEALS ERRED IN
ordered the partition of the Properties in its Decision of 21 ORDERING THE PARTITION OF THE PROPERTY
December 2001 (CA Decision), as follows: IN QUESTION.[13]

WHEREFORE, the decision of the Regional Trial Court of At the least, petitioners argue that the subject sale is valid
Makati City, Metro-Manila, Branch 13[9] dated 11 May 2000[,] as to Mauricios share in the Properties.
review of which is sought in these proceedings[,] is REVERSED.
On the other hand, respondents maintain that they are co-
owners of the Properties by succession. Respondents argue
1. The Deed of Sale with Assumption of Real Estate that the sale of the conjugal Properties is void because: (1)
Mortgage (Exh. 4) dated 28 October 1970 is Mauricio executed the Deed of Sale without Simonas consent;
hereby declared null and void; and (2) the sale was merely simulated, as shown by the grossly
inadequate consideration Mauricio received for the Properties.
2. Judicial Partition on the questioned properties is
hereby GRANTED in the following manner: While this case was pending, Leonida Andaya Lolong
(Leonida), David Jr.s aunt, and Atty. Cendaa, respondents
counsel, informed the Court that David Jr. died on 14
A. In representation of his deceased mother,
September 2004. Afterwards, Leonida and Elizabeth wrote
LILY BRAVO-DIAZ, intervenor DAVID
separate letters asking for the resolution of this case. Atty.
DIAZ, JR., is entitled to one-half (1/2)
Cendaa later filed an urgent motion to annotate attorneys lien on
interest of the subject properties;
TCT Nos. 58999 and 59000. In its Resolution dated 10
November 2004,[14] the Court noted the notice of David Jr.s conditions before a sale of conjugal property can be annulled for
death, the letters written by Leonida and Elizabeth, and granted lack of the wifes consent, as follows:
the motion to annotate attorneys lien on TCT Nos. 58999 and
59000. Art. 173. The wife may, during the marriage and within ten
years from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without
The Ruling of the Court her consent, when such consent is required, or any act or
contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife
The petition is partly meritorious. fail to exercise this right, she or her heirs after the
dissolution of the marriage, may demand the value of
The questions of whether Simona consented to the Deed property fraudulently alienated by the husband. (Emphasis
of Sale and whether the subject sale was simulated are factual supplied)
in nature. The rule is factual findings of the Court of Appeals are
binding on this Court. However, there are exceptions, such as Under the Civil Code, only the wife can ask to annul a
when the factual findings of the Court of Appeals and the trial contract that disposes of conjugal real property without her
court are contradictory, or when the evidence on record does consent. The wife must file the action for annulment during the
not support the factual findings.[15] Because these exceptions marriage and within ten years from the questioned transaction.
obtain in the present case, the Court will consider these issues. Article 173 is explicit on the remedies available if the wife fails to
exercise this right within the specified period. In such case, the
wife or her heirs can only demand the value of the property
On the Requirement of the Wifes Consent provided they prove that the husband fraudulently alienated the
property. Fraud is never presumed, but must be established by
clear and convincing evidence.[20]
We hold that the Court of Appeals erred when it declared
the Deed of Sale void based on Article 166, which states: Respondents action to annul the Deed of Sale based on
Article 166 must fail for having been filed out of time. The
marriage of Mauricio and Simona was dissolved when Mauricio
Art. 166. Unless the wife has been declared a non compos died in 1973. More than ten years have passed since the
mentis or a spendthrift, or is under civil interdiction or is confined execution of the Deed of Sale.
in a leprosarium, the husband cannot alienate or encumber any
real property of the conjugal partnership without the wifes Further, respondents, who are Simonas heirs, are not the
consent. If she refuses unreasonably to give her consent, the parties who can invoke Article 166. Article 173 reserves that
court may compel her to grant the same. remedy to the wife alone. Only Simona had the right to have the
sale of the Properties annulled on the ground that Mauricio sold
This article shall not apply to property acquired by the conjugal the Properties without her consent.
partnerships before the effective date of this Code.
Simona, however, did not assail the Deed of Sale during
her marriage or even after Mauricios death. The records are
Article 166 expressly applies only to properties acquired bereft of any indication that Simona questioned the sale of the
by the conjugal partnership after the effectivity of the Civil Code Properties at any time. Simona did not even attempt to take
of the Philippines (Civil Code). The Civil Code came into force possession of or reside on the Properties after Mauricios death.
on 30 August 1950.[16] Although there is no dispute that the David Jr., who was raised by Simona, testified that he and
Properties were conjugal properties of Mauricio and Simona, the Simona continued to live in Pasay City after Mauricios death,
records do not show, and the parties did not stipulate, when the while her children and other grandchildren resided on the
Properties were acquired.[17] Under Article 1413 of the old Properties.[21]
Spanish Civil Code, the husband could alienate conjugal
partnership property for valuable consideration without the wifes We also agree with the trial court that Simona authorized
consent.[18] Mauricio to dispose of the Properties when she executed the
GPA. True, Article 1878 requires a special power of attorney for
Even under the present Civil Code, however, the Deed of an agent to execute a contract that transfers the ownership of
Sale is not void. It is well-settled that contracts alienating an immovable. However, the Court has clarified that Article 1878
conjugal real property without the wifes consent are merely refers to the nature of the authorization, not to its form.[22] Even if
voidable under the Civil Code that is, binding on the parties a document is titled as a general power of attorney, the
unless annulled by a competent court and not void ab initio.[19] requirement of a special power of attorney is met if there is a
Article 166 must be read in conjunction with Article 173 of clear mandate from the principal specifically authorizing the
the Civil Code (Article 173). The latter prescribes certain performance of the act.[23]
 In Veloso v. Court of Appeals,[24] the Court explained respondents claim is grossly inadequate compared to the actual
that a general power of attorney could contain a special power value of the Properties.
to sell that satisfies the requirement of Article 1878, thus:
Simulation of contract and gross inadequacy of price are
distinct legal concepts, with different effects. When the parties to
An examination of the records showed that the assailed power an alleged contract do not really intend to be bound by it, the
of attorney was valid and regular on its face. It was notarized contract is simulated and void.[28] A simulated or fictitious
and as such, it carries the evidentiary weight conferred upon it contract has no legal effect whatsoever[29] because there is no
with respect to its due execution. While it is true that it was real agreement between the parties.
denominated as a general power of attorney, a perusal thereof
revealed that it stated an authority to sell, to wit: In contrast, a contract with inadequate consideration may
nevertheless embody a true agreement between the parties. A
2. To buy or sell, hire or lease, mortgage or otherwise contract of sale is a consensual contract, which becomes valid
hypothecate lands, tenements and hereditaments or other forms and binding upon the meeting of minds of the parties on the
of real property, more specifically TCT No. 49138, upon such price and the object of the sale.[30] The concept of a simulated
terms and conditions and under such covenants as my said sale is thus incompatible with inadequacy of price. When the
attorney shall deem fit and proper. parties agree on a price as the actual consideration, the sale is
not simulated despite the inadequacy of the price.[31]
Thus, there was no need to execute a separate and special Gross inadequacy of price by itself will not result in a void
power of attorney since the general power of attorney had contract. Gross inadequacy of price does not even affect the
expressly authorized the agent or attorney in fact the power to validity of a contract of sale, unless it signifies a defect in the
sell the subject property. The special power of attorney can consent or that the parties actually intended a donation or some
be included in the general power when it is specified other contract.[32] Inadequacy of cause will not invalidate a
therein the act or transaction for which the special power is contract unless there has been fraud, mistake or undue
required. (Emphasis supplied) influence.[33] In this case, respondents have not proved any of
the instances that would invalidate the Deed of Sale.
In this case, Simona expressly authorized Mauricio in the
GPA to sell, assign and dispose of any and all of my Respondents even failed to establish that the
property, real, personal or mixed, of any kind whatsoever and consideration paid by the vendees for the Properties was
wheresoever situated, or any interest therein xxx as well as to grossly inadequate. As the trial court pointed out, the Deed of
act as my general representative and agent, with full authority to Sale stipulates that, in addition to the payment of P1,000, the
buy, sell, negotiate and contract for me and in my vendees should assume the mortgage loans from PNB and
behalf.[25] Taken together, these provisions constitute a clear DBP. The consideration for the sale of the Properties was
and specific mandate to Mauricio to sell the Properties. Even if it thus P1,000 in cash and the assumption of the P15,000
is called a general power of attorney, the specific provisions in mortgage.
the GPA are sufficient for the purposes of Article 1878. These Respondents argue that P16,000 is still far below the
provisions in the GPA likewise indicate that Simona consented actual value of the Properties. To bolster their claim,
to the sale of the Properties. respondents presented the following: (1) Tax Declarations No.
A-001-00905[34] and A-001-00906[35] for the year 1979, which
placed the assessed value of the Properties at P70,020 and
Whether the Sale of the Properties was Simulated their approximate market value at P244,290; and (2) a certified
or is Void for Gross Inadequacy of Price copy of the Department of Finances Department Order No. 62-
97[36] dated 6 June 1997 and attached guidelines[37] which
established the zonal value of the properties along Evangelista
We point out that the law on legitime does not bar the Street at P15,000 per square meter.
disposition of property for valuable consideration to descendants
The subject Deed of Sale, however, was executed in
or compulsory heirs. In a sale, cash of equivalent value replaces
1970. The valuation of the Properties in 1979 or 1997 is of little
the property taken from the estate.[26] There is no diminution of
relevance to the issue of whether P16,000 was a grossly
the estate but merely a substitution in values. Donations and
inadequate price to pay for the Properties in 1970. Certainly,
other dispositions by gratuitous title, on the other hand, must be
there is nothing surprising in the sharp increase in the value of
included in the computation of legitimes.[27]
the Properties nine or twenty-seven years after the sale,
Respondents, however, contend that the sale of the particularly when we consider that the Properties are located in
Properties was merely simulated. As proof, respondents point to the City of Makati.
the consideration of P1,000 in the Deed of Sale, which
More pertinent are Tax Declarations No. 15812[38] and No.
15813,[39] both issued in 1967, presented by petitioners. These
tax declarations placed the assessed value of both Properties The Deed of Sale was notarized and, as certified by the
at P16,160. Compared to this, the price of P16,000 cannot be Regional Trial Court of Manila, entered in the notarial books
considered grossly inadequate, much less so shocking to the submitted to that court. As a document acknowledged before a
conscience[40] as to justify the setting aside of the Deed of Sale. notary public, the Deed of Sale enjoys the presumption of
regularity[45] and due execution.[46] Absent evidence that is clear,
Respondents next contend that the vendees did not make convincing and more than merely preponderant, the
the mortgage payments on the Properties. Respondents allege presumption must be upheld.[47]
that the rents paid by the tenants leasing portions of the
Properties were sufficient to cover the mortgage payments to Respondents evidence in this case is not even
DBP and PNB. preponderant. Respondents allegations, testimony and bare
denials cannot prevail over the documentary evidence
Again, this argument does not help respondents cause. presented by petitioners. These documents the Deed of Sale
Assuming that the vendees failed to pay the full price stated in and the GPA which are both notarized, the receipts, the
the Deed of Sale, such partial failure would not render the sale Mortgage Release and the 1967 tax declarations over the
void. In Buenaventura v. Court of Appeals,[41] the Court held: Properties support petitioners account of the sale.

xxx If there is a meeting of the minds of the parties as to the As the parties challenging the regularity of the Deed of
price, the contract of sale is valid, despite the manner of Sale and alleging its simulation, respondents had the burden of
payment, or even the breach of that manner of payment. xxx proving these charges.[48] Respondents failed to discharge this
burden. Consequentially, the Deed of Sale stands.
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 On the Partition of the Property
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 Nevertheless, this Court finds it proper to grant the
an existing valid contract while the latter prevents the existence partition of the Properties, subject to modification.
of a valid contract. (Emphasis supplied.)
Petitioners have consistently claimed that their father is
one of the vendees who bought the Properties. Vendees
Neither was it shown that the rentals from tenants were Elizabeth and Ofelia both testified that the Roland A. Bravo in
sufficient to cover the mortgage payments. The parties to this the Deed of Sale is their father,[49] although their brother, Roland
case stipulated to only one tenant, a certain Federico M. Puno, Bravo, Jr., made some of the mortgage payments. Petitioners
who supposedly leased a room on the Properties for P300 per counsel, Atty. Paggao, made the same clarification before the
month from 1992 to 1994.[42] This is hardly significant, when we trial court.[50]
consider that the mortgage was fully paid by 1974. Indeed, the
fact that the Properties were mortgaged to DBP and PNB As Roland Bravo, Sr. is also the father of respondent
indicates that the conjugal partnership, or at least Mauricio, was Edward Bravo, Edward is thus a compulsory heir of Roland
short of funds. Bravo, and entitled to a share, along with his brothers and
sisters, in his fathers portion of the Properties. In short, Edward
Petitioners point out that they were duly employed and and petitioners are co-owners of the Properties.
had the financial capacity to buy the Properties in 1970.
Respondents did not refute this. Petitioners presented 72 As such, Edward can rightfully ask for the partition of the
receipts[43] showing the mortgage payments made to PNB and Properties. Any co-owner may demand at any time the partition
DBP, and the Release of the Real Estate Mortgage[44] (Mortgage of the common property unless a co-owner has repudiated the
Release) dated 5 April 1974. True, these documents all bear co-ownership.[51] This action for partition does not prescribe and
Mauricios name. However, this tends to support, rather than is not subject to laches.[52]
detract from, petitioner-vendees explanation that they initially
gave the mortgage payments directly to Mauricio, and then later WHEREFORE, we REVERSE the Decision of 21
directly to the banks, without formally advising the bank of the December 2001 of the Court of Appeals in CA-G.R. CV No.
sale. The last 3 mortgage receipts and the Mortgage Release 67794. We REINSTATE the Decision of 11 May 2000 of the
were all issued in Mauricios name even after his death in 1970. Regional Trial Court of Makati, Branch No. 139, in Civil Case
Obviously, Mauricio could not have secured the Mortgage No. 97-137, declaring VALID the Deed of Sale with Assumption
Release and made these last payments. of Mortgage dated 28 October 1970, with the following
MODIFICATIONS:
1. We GRANT judicial partition of the subject Properties in
Presumption of Regularity and Burden of Proof the following manner:
 a. Petitioner LILY ELIZABETH BRAVO-GUERRERO EN BANC
is entitled to one-third (1/3) of the Properties;
G.R. No. L-38581 December 18, 1934
b. Petitioner OFELIA BRAVO-QUIESTAS is entitled
to one-third (1/3) of the Properties; and THE DIRECTOR OF LANDS, applicant, vs. TIMOTEO
ABARCA, ET AL., claimant.
c. The remaining one-third (1/3) portion of the DATU BUALAN, ET AL. (Bagobos), JUAN A. SARENAS and
Properties should be divided equally between DOMINGO BRAGANZA, appellants.
the children of ROLAND BRAVO.
Cornelio Reta and Romualdo C. Quimpo for appellants Datu
2. The other heirs of ROLAND BRAVO must reimburse Bualan et al.
ROLAND BRAVO, JR. for whatever expenses the Celestino Chaves for appellants Sarenas and Braganza.
latter incurred in paying for and securing the release
of the mortgage on the Properties. ABAD SANTOS, J.:
SO ORDERED.
This appeal concerns lot No. 700 of cadastral No. 1 of the Court
of First Instance of Davao. This lot was claimed by Datu Bualan
and a number of other Bagobos, on the one side, and, on the
other, by Juan A. Sarenas and Domingo Braganza. The facts
and circumstances which gave rise to the conflicting claims of
the parties may be stated briefly as follows: About fourteen
years ago in civil case No. 346 of the court below, the lot now in
question was the subject of litigation between Datu Bualan and
his co-claimants, on the one hand, and Ciriaco Lizada, on the
other. Juan A. Sarenas and Domingo Braganza were the
attorneys for Datu Bualan and his co-claimants in that suit,
wherein a judgment was rendered declaring Datu Bualan and
his co-claimants the owners of the land involved in the litigation.
Subsequently, a controversy arose between the Bagobos and
their attorneys as to the amount of fees due the latter,
whereupon the attorneys took possession of the property now in
question. Action was brought by the Bagobos against their
former attorneys for the recovery of the land. In this action (civil
case No. 607) judgment was rendered ordering the attorneys to
return the property seized by them, and requiring the Bagobos
to pay their former attorneys the sum of P6,000 as fees. As a
result of this judgment Datu Bualan and his co-claimants paid
Sarenas and Braganza the sum of P5,126.13. They also paid to
the municipal treasurer of Davao in the name of Sarenas and
Braganza, for taxes and penalties due on the property in the
year 1926, while the same was in the possession of the latter,
the sum of P1,035.87. The Bagobos assumed that, by these
payments which amounted in all to P6,162, the judgment
rendered against them for P6,000 together with interests due
thereon, was fully
satisfied.chanroblesvirtualawlibrary chanrobles virtual law library

Claiming that the sum paid to the municipal treasurer of Davao

should not be credited on the amount of the judgment obtained
by them, Sarenas and Braganza caused the clerk of the court to
issue a writ of execution on the said judgment. By reason of the
writ of execution so issued, the sheriff levied on the property
here in question and sold it to Sarenas and Braganza for the
sum of P877.25. Upon the failure of the Bagobos to redeem the
property, they filed their claim in the present cadastral case,
alleging that they were the absolute owners of lot No.
700.chanroblesvirtualawlibrary chanrobles virtual law library

In view of the evidence presented by the parties, the lower court

dismissed the claim of Sarenas and Braganza, and ordered the
registration of the lot now in question in the names of Datu
Bualan and his co-claimants, subject, however, to a lien in favor
of Sarenas and Braganza for the sum of P877.25, with interest
at the rate of 12 per cent per annum from April 27, 1927. From
this order both parties appealed, Sarenas and Braganza
contending in substance that the court erred in dismissing their
claim; and Datu Bualan and his co-claimants claiming that the
court below erred in subjecting the property sought to be
registered to a lien in favor of Sarenas and Braganza for the
state amount.chanroblesvirtualawlibrary chanrobles virtual law
library

In dismissing the claim of Sarenas and Braganza, the lower

court held that the sale by the sheriff of the property in question
in favor of said claimants was null and void, because it was not
made in accordance with the requirements of the law, and also
because the amount of P877.25 paid by Sarenas and Braganza
was absolutely inadequate. In deciding this appeal we do not
deem it necessary to discuss all the questions raised by the
parties in their briefs. We believe that the lower court was right
in declaring the sheriff's sale null and void on the ground of the
inadequacy of the price paid. It appears that in 1927 the
assessed value of the contested property was more than
P60,000. A judicial sale of real property will be set aside when
the price is so inadequate as to shock the conscience of the
court. (National Bank vs. Gonzalez, 45 Phil., 693.)chanrobles
virtual law library

In the instant case there is another important consideration. In

fairness and equity, which after all are the true aims of the law,
the amount paid by Datu Bualan and his co-claimants for taxes
and penalties due on the contested property should be credited
on the judgment obtained by Sarenas and Braganza in civil case
No. 607. Such taxes and penalties accrued while the property
was in that possession under a claim of ownership. It follows
that the error assigned by Datu Bualan and his co-claimants
against the judgment below, to the effect that the lower court
erred in subjecting the property sought to be registered to a lien
in favor of Sarenas and Braganza for P877.25 with interests,
must be sustained.chanroblesvirtualawlibrary chanrobles virtual
law library

The order appealed from is affirmed in so far as it decrees the

registration of the property in question in the names of Datu
Bualan and his co-claimants, and reversed in so far as it
requires the notation of a lien in favor of Braganza and Sarenas.
Costs will be taxed against Sarenas and Braganza. So ordered.