Parties to a Contract of Sale

1) Domingo vs. CA ( 367 SCRA 368)

2) Medina vs. Collector of Internal revenue ( 1 SCRA 302)
3) Matabuena vs. Cervantes (38 SCRA 284)
4) Calimlim-Canullas vs. Fortun (129 SCRA 675)
5) Rubias vs. Batiller (51 SCRA 120)
6) Philtrust v. Roldan (99 Phil 392)
7) Valencia vs. Cabanting (196 SCRA 302)
8) Pichel v. Alonzo (111 SCRA 722)

Valencia vs Cabanting
EN BANC
A.M. Nos. 1302, 1391 and 1543
April 26, 1991
PAULINO VALENCIA, complainant,
vs.
ATTY. ARSENIO FER CABANTING, respondent.
CONSTANCIA L. VALENCIA, complainant,
vs.
ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO U. JOVELLANOS and
ATTY. ARSENIO FER. CABANTING, respondents.
LYDIA BERNAL, complainant,
vs.
ATTY. DIONISIO C. ANTINIW, respondent.
PER CURIAM:
These consolidated administrative cases seek to disbar respondents Dionisio
Antiniw, Arsenio Fer. Cabanting and Eduardo Jovellanos (the last named,
now an MCTC Judge) for grave malpractice and misconduct in the exercise
of their legal profession committed in the following manner:
1. Administrative Cases No. 1302 and 1391.
In 1933, complainant Paulino Valencia (Paulino in short) and his wife Romana
allegedly bought a parcel of land, where they built their residential house,
from a certain Serapia Raymundo, an heir of Pedro Raymundo the original
owner. However, they failed to register the sale or secure a transfer certificate
of title in their names.
Sometime in December, 1968, a conference was held in the house of Atty.
Eduardo Jovellanos to settle the land dispute between Serapia Raymundo

(Serapia in short) another heir of Pedro Raymundo, and the Valencia spouses
since both were relatives and distant kin of Atty. Jovellanos. Serapia was
willing to relinquish ownership if the Valencias could show documents
evidencing ownership. Paulino exhibited a deed of sale written in the Ilocano
dialect. However, Serapia claimed that the deed covered a different property.
Paulino and Serapia were not able to settle their differences. (Report of
Investigating Judge Catalino Castaneda, Jr., pp. 21-22).
On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer. Cabanting,
filed a complaint against Paulino for the recovery of possession with
damages. The case was docketed as Civil Case No. V-2170, entitled "Serapia
Raymundo, Plaintiff, versus Paulino Valencia, Defendant." (Report, p. 11).
Summoned to plead in Civil Case No. V-2170, the Valencias engaged the
services of Atty. Dionisio Antiniw. Atty. Antiniw advised them to present a
notarized deed of sale in lieu of the private document written in Ilocano. For
this purpose, Paulino gave Atty. Antiniw an amount of P200.00 to pay the
person who would falsify the signature of the alleged vendor (Complaint, p. 2;
Rollo, p. 7). A "Compraventa Definitiva" (Exh. B) was executed purporting to
be a sale of the questioned lot.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch V,
rendered a decision in favor of plaintiff, Serapia Raymundo. The lower court
expressed the belief that the said document is not authentic. (Report, p. 14)
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with
Preliminary Injunction before the Court of Appeals alleging that the trial court
failed to provide a workable solution concerning his house. While the petition
was pending, the trial court, on March 9, 1973, issued an order of execution
stating that "the decision in this case has already become final and
executory" (Exhibits 3 and 3-A). On March 14, 1973, a writ of execution was
issued.
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty.
Jovellanos and the remaining portion she sold to her counsel, Atty. Arsenio
Fer. Cabanting, on April 25, 1973. (Annex "A" of Administrative Case No.
1302).
On March 4, 1974, Paulino filed a disbarment proceeding (docketed as
Administrative Case No. 1302) against Atty. Cabanting on the ground that
said counsel allegedly violated Article 1491 of the New Civil Code as well as
Article II of the Canons of Professional Ethics, prohibiting the purchase of
property under litigation by a counsel.
On March 21, 1974 the appellate court dismissed the petition of Paulino.
On October 14, 1974, Constancia Valencia, daughter of Paulino, filed a
disbarment proceeding (docketed as Administrative Case No. 1391) against
Atty. Dionisio Antiniw for his participation in the forgery of "Compraventa
Definitiva" and its subsequent introduction as evidence for his client; and
also, against Attys. Eduardo Jovellanos and Arsenio Cabanting for purchasing
a litigated property allegedly in violation of Article 1491 of the New Civil Code;
and against the three lawyers, for allegedly rigging Civil Case No. V-2170

against her parents. On August 17, 1975, Constancia Valencia filed additional
charges against Atty. Antiniw and Atty. Jovellanos as follows:
1. AGAINST ATTY. DIONISIO ANTINIW:
In the year 1973 Atty. Dionisio Antiniw fraudulently and in confabulation with
one Lydia Bernal had a deed of sale, fabricated, executed and ratified before
him as Notary Public by one Santiago Bernal in favor of Lydia Bernal when as
a matter of fact said Santiago Bernal had died already about eight years
before in the year 1965.
2. AGAINST ATTY. EDUARDO JOVELLANOS:
In the year 1954 Atty. Eduardo Jovellanos, fraudulently and in bad faith, in
confabulation with Rosa de los Santos as vendee had, as Notary Public,
executed and ratified before him, two (2) deeds of sale in favor of said Rosa
de los Santos when as a matter of fact the said deeds were not in fact
executed by the supposed vendor Rufino Rincoraya and so Rufino Rincoraya
had filed a Civil Case in Court to annul and declare void the said sales (p. 7,
Report)
2. Administrative Case No. 1543.
A deed of donation propter nuptias involving the transfer of a piece of land by
the grandparents of Lydia Bernal (complainant,) in favor of her parents, was
lost during the last world war. For this reason, her grandmother (the living
donor) executed a deed of confirmation of the donation propter nuptias with
renunciation of her rights over the property. (Complaint, p. 1). Notwithstanding
the deed, her grandmother still offered to sell the same property in favor of
the complainant, ostensibly to strengthen the deed of donation (to prevent
others from claim-ing the property).
On consultation, Atty., Antiniw advised them to execute a deed of sale. Atty.
Antiniw allegedly prepared and notarized the deed of sale in the name of her
grandfather (deceased at the time of signing) with her grandmother's
approval.
Felicidad Bernal-Duzon, her aunt who had a claim over the property filed a
complaint against her (Lydia Bernal) and her counsel, Atty. Antiniw for
falsification of a public document. (Complaint, pp. 1-2) The fiscal exonerated
the counsel for lack of evidence, while a case was filed in court against Lydia
Bernal.
On October 3, 1975, Lydia Bernal filed a disbarment proceeding (docketed as
Administrative Case No.1543) against Atty. Antiniw for illegal acts and bad
advice.
Pursuant to the resolution of the First Division of this Court dated December
9, 1974, the resolution of the Second Division dated March 3, 1975 and the
two resolutions of the Second Division both dated December 3, 1975,
Administrative Cases Nos. 1302, 1391 and 1543 were referred to the Office
of the Solicitor General for investigation, report and recommendation.
Upon formal request of Constancia L. Valencia and Lydia Bernal dated March
3, 1976, all of these cases were ordered consolidated by Solicitor General
Estelito P. Mendoza per his handwritten directive of March 9, 1976.

On April 12, 1988, We referred the investigation of these cases to the

Integrated Bar of the Philippines. When Atty. Jovellanos was appointed as
Municipal Circuit Trial Court Judge of Alcala-Bautista, Pangasinan, We
referred the investigation of these cases to Acting Presiding Judge Cesar
Mindaro, Regional Trial Court, Branch 50, Villasis, Pangasinan, for further
investigation.
In view of the seriousness of the charge against the respondents and the
alleged threats against the person of complainant Constancia L. Valencia, We
directed the transfer of investigation to the Regional Trial Court of Manila.
The three administrative cases were raffled to Branch XVII of the Regional
Trial Court of Manila, under the sala of Judge Catalino Castaneda, Jr.
After investigation, Judge Catalino Castaeda, Jr., recommended the
dismissal of cases against Atty. Jovellanos and Atty. Arsenio Fer. Cabanting;
dismissal of Administrative Case No. 1543 and the additional charges in
Administrative Case No. 1391 against Antiniw and Judge Jovellanos;
however, he recommended the suspension of Atty. Antiniw from the practice
of law for six months finding him guilty of malpractice in falsifying the
"Compraventa Definitiva."
The simplified issues of these consolidated cases are:
I. Whether or not Atty. Cabanting purchased the subject property in violation
of Art. 1491 of the New Civil Code.
II. Whether or not Attys. Antiniw and Jovellanos are guilty of malpractice in
falsifying notarial documents.
III. Whether or not the three lawyers connived in rigging Civil Case No.
V-2170.
I
Under Article 1491 of the New Civil Code:
The following persons cannot acquire by purchase, even at a public of judicial
auction, either in person or through the mediation of another:
xxx
xxx
xxx
(5) . . . this prohibition includes the act of acquiring by assignment and shall
apply to lawyers, with respect to the property and rights which may be the
object of any litigation in which they make take part by virtue of their
profession.
Public policy prohibits the transactions in view of the fiduciary relationship
involved. It is intended to curtail any undue influence of the lawyer upon his
client. Greed may get the better of the sentiments of loyalty and
disinterestedness. Any violation of this prohibition would constitute
malpractice (In re: Attorney Melchor Ruste, 40 O.G. p. 78) and is a ground for
suspension. (Beltran vs. Fernandez, 70 Phil. 248).
Art. 1491, prohibiting the sale to the counsel concerned, applies only while
the litigation is pending. (Director of Lands vs. Adaba, 88 SCRA 513;
Hernandez vs. Villanueva, 40 Phil. 775).
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased
the lot after finality of judgment, there was still a pending certiorari
1wphi1

proceeding. A thing is said to be in litigation not only if there is some contest

or litigation over it in court, but also from the moment that it becomes subject
to the judicial action of the judge. (Gan Tingco vs. Pabinguit, 35 Phil. 81).
Logic indicates, in certiorari proceedings, that the appellate court may either
grant or dismiss the petition. Hence, it is not safe to conclude, for purposes
under Art. 1491 that the litigation has terminated when the judgment of the
trial court become final while a certiorari connected therewith is still in
progress. Thus, purchase of the property by Atty. Cabanting in this case
constitutes malpractice in violation of Art. 1491 and the Canons of
Professional Ethics. Clearly, this malpractice is a ground for suspension.
The sale in favor of Atty. Jovellanos does not constitute malpractice. There
was no attorney-client relationship between Serapia and Atty. Jovellanos,
considering that the latter did not take part as counsel in Civil Case No.
V-2170. The transaction is not covered by Art. 1491 nor by the Canons
adverted to.
II
It is asserted by Paulino that Atty. Antiniw asked for and received the sum of
P200.00 in consideration of his executing the document "Compraventa
Definitiva" which would show that Paulino bought the property. This charge,
Atty. Antiniw simply denied. It is settled jurisprudence that affirmative
testimony is given greater weight than negative testimony (Bayasen vs. CA,
L-25785, Feb. 26, 1981; Vda. de Ramos vs. CA, et al., L40804, Jan. 31,
1978). When an individual's integrity is challenged by evidence, it is not
enough that he deny the charges against him; he must meet the issue and
overcome the evidence for the relator and show proofs that he still maintains
the highest degree of morality and integrity which at all time is expected of
him. (De los Reyes vs. Aznar, Adm. Case No. 1334, Nov. 28, 1989).
Although Paulino was a common farmer who finished only Grade IV, his
testimony, even if not corroborated by another witness, deserves credence
and can be relied upon. His declaration dwelt on a subject which was so
delicate and confidential that it would be difficult to believe the he fabricated
his evidence.
There is a clear preponderant evidence that Atty. Antiniw committed
falsification of a deed of sale, and its subsequent introduction in court
prejudices his prime duty in the administration of justice as an officer of the
court.
A lawyer owes entire devotion to the interest of his client (Santos vs. Dichoso,
84 SCRA 622), but not at the expense of truth. (Cosmos Foundry
Shopworkers Union vs. La Bu, 63 SCRA 313). The first duty of a lawyer is not
to his client but to the administration of justice. (Lubiano vs. Gordalla, 115
SCRA 459) To that end, his client's success is wholly subordinate. His
conduct ought to and must always be scrupulously observant of law and
ethics. While a lawyer must advocate his client's cause in utmost earnestness
and with the maximum skill he can marshal, he is not at liberty to resort to
illegal means for his client's interest. It is the duty of an attorney to employ, for

the purpose of maintaining the causes confided to him, such means as are
consistent with truth and honor. (Pangan vs. Ramos, 93 SCRA 87).
Membership in the Bar is a privilege burdened with conditions. By far, the
most important of them is mindfulness that a lawyer is an officer of the court.
(In re: Ivan T. Publico, 102 SCRA 722). This Court may suspend or disbar a
lawyer whose acts show his unfitness to continue as a member of the Bar.
(Halili vs. CIR, 136 SCRA 112). Disbarment, therefore, is not meant as a
punishment depriving him of a source of livelihood but is rather intended to
protect the administration of justice by requiring that those who exercise this
function should be competent, honorable and reliable in order that courts and
the public may rightly repose confidence in them. (Noriega vs. Sison, 125
SCRA 293). Atty. Antiniw failed to live up to the high standards of the law
profession.
The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos
should be dismissed for lack of evidence.
During the proceedings in Administrative Case No. 1543, Lydia Bernal
testified in full on direct examination, but she never submitted herself for
cross-examination. Several subpoenas for cross-examination were
unheeded. She eventually requested the withdrawal of her complaint.
Procedural due process demands that respondent lawyer should be given an
opportunity to cross-examine the witnesses against him. He enjoys the legal
presumption that he is innocent of the charges against him until the contrary
is proved. (Santos vs. Dichoso, 84 SCRA 622). The case must be established
by clear, convincing and satisfactory proof. (Camus vs. Diaz, Adm. Case No.
1616, February 9, 1989), Since Atty. Antiniw was not accorded this procedural
due process, it is but proper that the direct testimony of Lydia Bernal be
stricken out.
In view also of the affidavit of desistance executed by the complainant,
Administrative Case No. 1543 should be dismissed. Although the filing of an
affidavit of desistance by complainant for lack of interest does not ipso facto
result in the termination of a case for suspension or disbarment of an erring
lawyer (Munar vs. Flores, 122 SCRA 448), We are constrained in the case at
bar, to dismiss the same because there was no evidence to substantiate the
charges.
The additional charge against Atty. Antiniw in Administrative Case No. 1391 is
predicated on the information furnished by Lydia Bernal. It was not based on
the personal knowledge of Constancia L. Valencia: hence, hearsay. "Any
evidence, whether oral or documentary, is hearsay if its probative value is not
based on the personal knowledge of the witness but on the knowledge of
some other person not on the witness stand." (Regalado, Remedial Law
Compendium, 6th ed., vol. 2, 1989, p. 486). Being hearsay, the evidence
presented is inadmissible.
The additional charge filed by Constancia L. Valencia against Atty. Jovellanos
in Administrative Case No. 1391 was not proved at all. Complainant failed to
prove her additional charges.
1wphi1

III
There is no evidence on record that the three lawyers involved in these
administrative cases conspired in executing the falsified "Compraventa
Definitiva" and rigged the Civil Case No. V-2170.
Atty. Jovellanos is a distant kin of the Raymundos and Valencias. In fact, he
and the Valencias are neighbors and only two meters separate their houses.
It would not be believable that Atty. Jovellanos, a practicing lawyer, would
hold a meeting with the heirs of Pedro Raymundo in his house with the
intention of inducing them to sue the Valencias. Atty. Jovellanos even tried to
settle the differences between the parties in a meeting held in his house. He
appeared in Civil Case No. V-2170 as an involuntary witness to attest to the
holding of the conference.
Besides, the camaraderie among lawyers is not proof of conspiracy, but a
sign of brotherhood among them. One of the fourfold duties of a lawyer is his
duty to the Bar. A lawyer should treat the opposing counsel, and his brethren
in the law profession, with courtesy, dignity and civility. They may "do as
adversaries do in law: strive mightily but (they) eat and drink as friends." This
friendship does not connote conspiracy.
WHEREFORE, judgment is hereby rendered declaring: 1. Dionisio Antiniw
DISBARRED from the practice of law, and his name is ordered stricken off
from the roll of attorneys; 2. Arsenio Fer. Cabanting SUSPENDED from the
practice of law for six months from finality of this judgment; and 3.
Administrative Case No. 1391 against Attorney Eduardo Jovellanos and
additional charges therein, and Administrative Case No. 1543 DISMISSED.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea,
Regalado and Davide, Jr., JJ., concur.

Rubias vs Batiller
G.R. No. L-35702 May 29, 1973
DOMINGO D. RUBIAS, plaintiff-appellant,
vs.
ISAIAS BATILLER, defendant-appellee.
Gregorio M. Rubias for plaintiff-appellant.
Vicente R. Acsay for defendant-appellee.
TEEHANKEE, J.:

In this appeal certified by the Court of Appeals to this Court as involving

purely legal questions, we affirm the dismissal order rendered by the Iloilo
court of first instance after pre-trial and submittal of the pertinent documentary
exhibits.
Such dismissal was proper, plaintiff having no cause of action, since it was
duly established in the record that the application for registration of the land in
question filed by Francisco Militante, plaintiff's vendor and predecessor
interest, had been dismissed by decision of 1952 of the land registration court
as affirmed by final judgment in 1958 of the Court of Appeals and hence,
there was no title or right to the land that could be transmitted by the
purported sale to plaintiff.
As late as 1964, the Iloilo court of first instance had in another case of
ejectment likewise upheld by final judgment defendant's "better right to
possess the land in question . having been in the actual possession thereof
under a claim of title many years before Francisco Militante sold the land to
the plaintiff."
Furthermore, even assuming that Militante had anything to sell, the deed of
sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was
concededly his counsel of record in the land registration case involving the
very land in dispute (ultimately decided adversely against Militante by the
Court of Appeals' 1958 judgment affirming the lower court's dismissal of
Militante's application for registration) was properly declared inexistent and
void by the lower court, as decreed by Article 1409 in relation to Article 1491
of the Civil Code.
The appellate court, in its resolution of certification of 25 July 1972, gave the
following backgrounder of the appeal at bar:
On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to
recover the ownership and possession of certain portions of lot under
Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he
bought from his father-in-law, Francisco Militante in 1956 against its present
occupant defendant, Isaias Batiller, who illegally entered said portions of the
lot on two occasions in 1945 and in 1959. Plaintiff prayed also for
damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with
counter-claim defendant claims the complaint of the plaintiff does not state a
cause of action, the truth of the matter being that he and his predecessors-ininterest have always been in actual, open and continuous possession since
time immemorial under claim of ownership of the portions of the lot in
question and for the alleged malicious institution of the complaint he claims
he has suffered moral damages in the amount of P 2,000.00, as well as the
sum of P500.00 for attorney's fees. ...
On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial
conference between the parties and their counsel which order reads as
follows..

'When this case was called for a pre-trial conference today, the plaintiff
appeared assisted by himself and Atty. Gregorio M. Rubias. The defendant
also appeared, assisted by his counsel Atty. Vicente R. Acsay.
A. During the pre-trial conference, the parties have agreed that the following
facts are attendant in this case and that they will no longer introduced any
evidence, testimonial or documentary to prove them:
1. That Francisco Militante claimed ownership of a parcel of land located in
the Barrio of General Luna, municipality of Barotac Viejo province of Iloilo,
which he caused to be surveyed on July 18-31, 1934, whereby he was issued
a plan Psu-99791 (Exhibit "B"). (The land claimed contained an area of
171:3561 hectares.)
2. Before the war with Japan, Francisco Militante filed with the Court of First
Instance of Iloilo an application for the registration of the title of the land
technically described in psu-99791 (Exh. "B") opposed by the Director of
Lands, the Director of Forestry and other oppositors. However, during the war
with Japan, the record of the case was lost before it was heard, so after the
war Francisco Militante petitioned this court to reconstitute the record of the
case. The record was reconstituted on the Court of the First Instance of Iloilo
and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of
First Instance heard the land registration case on November 14, 1952, and
after the trial this court dismissed the application for registration. The
appellant, Francisco Militante, appealed from the decision of this Court to the
Court of Appeals where the case was docketed as CA-GR No. 13497-R..
3. Pending the disposal of the appeal in CA-GR No. 13497-R and more
particularly on June 18, 1956, Francisco Militante sold to the plaintiff,
Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The
sale was duly recorded in the Office of the Register of Deeds for the province
of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to
plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was "a parcel of
untitled land having an area Of 144.9072 hectares ... surveyed under Psu
99791 ... (and) subject to the exclusions made by me, under (case) CA-i3497,
Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of First
Instance of the province of Iloilo. These exclusions referred to portions of the
original area of over 171 hectares originally claimed by Militante as applicant,
but which he expressly recognized during the trial to pertain to some
oppositors, such as the Bureau of Public Works and Bureau of Forestry and
several other individual occupants and accordingly withdrew his application
over the same. This is expressly made of record in Exh. A, which is the Court
of Appeals' decision of 22 September 1958 confirming the land registration
court's dismissal of Militante's application for registration.)
4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R
promulgated its judgment confirming the decision of this Court in Land Case
No. R-695, GLRO Rec. No. 54852 which dismissed the application for
Registration filed by Francisco Militante (Exh. "I").

5. Domingo Rubias declared the land described in Exh. 'B' for taxation
purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533
(Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868
(Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No.
8585 and 9533 (Exh. "D", "D-1", "G-6").
6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has
also declared the land for taxation purposes under Tax Dec. No. 5172 in 1940
(Exh. "E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax
Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and
"G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh.
"G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5").
7. Tax Declaration No. 2434 in the name of Liberato Demontao for the land
described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of
Francisco Militante (Exh. "E"). Liberato Demontao paid the land tax under
Tax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959
(Exh. "H").
8. The defendant had declared for taxation purposes Lot No. 2 of the
Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2,
Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583
(Exh. "2") was revised by Tax Dec. No. 9498 in the name of the defendant
(Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec.
No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid
the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and
1946, for the year 1950, and for the year 1960 as shown by the certificate of
the treasurer (Exh. "3"). The defendant may present to the Court other land
taxes receipts for the payment of taxes for this lot.
9. The land claimed by the defendant as his own was surveyed on June 6
and 7,1956, and a plan approved by Director of Land on November 15, 1956
was issued, identified as Psu 155241 (Exh. "5").
10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case
against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo
Province of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled his
answer on August 29, 1960 (Exh. "4-A"). The Municipal Court of Barotac Viejo
after trial, decided the case on May 10, 1961 in favor of the defendant and
against the plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of
the Municipal Court of Barotac Viejo which was docketed in this Court as Civil
Case No. 5750 on June 3, 1961, to which the defendant, Isaias Batiller, on
June 13, 1961 filed his answer (Exh. "4-C"). And this Court after the trial.
decided the case on November 26, 1964, in favor of the defendant, Isaias
Batiller and against the plaintiff (Exh. "4-D").
(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of
26 November 1964 dismissing plaintiff's therein complaint for ejectment
against defendant, the iloilo court expressly found "that plaintiff's complaint is
unjustified, intended to harass the defendant" and "that the defendant, Isaias
Batiller, has a better right to possess the land in question described in Psu

155241 (Exh. "3"), Isaias Batiller having been in the actual physical
possession thereof under a claim of title many years before Francisco
Militante sold the land to the plaintiff-hereby dismissing plaintiff's complaint
and ordering the plaintiff to pay the defendant attorney's fees ....")
B. During the trial of this case on the merit, the plaintiff will prove by
competent evidence the following:
1. That the land he purchased from Francisco Militante under Exh. "A" was
formerly owned and possessed by Liberato Demontao but that on
September 6, 1919 the land was sold at public auction by virtue of a judgment
in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato Demontao
Francisco Balladeros and Gregorio Yulo, defendants", of which Yap Pongco
was the purchaser (Exh. "1-3"). The sale was registered in the Office of the
Register of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69
(Exh. "1"), and a definite Deed of Sale was executed by Constantino A.
Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco
(Exh. "I"), the sale having been registered in the Office of the Register of
Deeds of Iloilo on February 10, 1934 (Exh. "1-1").
2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante
as evidenced by a notarial deed (Exh. "J") which was registered in the
Registry of Deeds on May 13, 1940 (Exh. "J-1").
3. That plaintiff suffered damages alleged in his complaint.
C. Defendants, on the other hand will prove by competent evidence during
the trial of this case the following facts:
1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and
possessed by Felipe Batiller, grandfather of the defendant Basilio Batiller, on
the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his
father , Basilio Batiller, in the ownership and possession of the land in the
year 1930, and since then up to the present, the land remains in the
possession of the defendant, his possession being actual, open, public,
peaceful and continuous in the concept of an owner, exclusive of any other
rights and adverse to all other claimants.
2. That the alleged predecessors in interest of the plaintiff have never been in
the actual possession of the land and that they never had any title thereto.
3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the
defendant has been approved.
4. The damages suffered by the defendant, as alleged in his counterclaim."' 1
The appellate court further related the developments of the case, as follows:
On August 17, 1965, defendant's counsel manifested in open court that
before any trial on the merit of the case could proceed he would file a motion
to dismiss plaintiff's complaint which he did, alleging that plaintiff does not
have cause of action against him because the property in dispute which he
(plaintiff) allegedly bought from his father-in-law, Francisco Militante was the
subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was
brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in
which aforesaid case plaintiff was the counsel on record of his father-in-law,

Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which
reads:
'Art. 1409. The following contracts are inexistent and void from the beginning:
xxx xxx xxx
(7) Those expressly prohibited by law.
'ART. 1491. The following persons cannot acquire any purchase, even at a
public auction, either in person of through the mediation of another: .
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the administration of
justice, the property and rights of in litigation or levied upon an execution
before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring an
assignment and shall apply to lawyers, with respect to the property and rights
which may be the object of any litigation in which they may take part by virtue
of their profession.'
defendant claims that plaintiff could not have acquired any interest in the
property in dispute as the contract he (plaintiff) had with Francisco Militante
was inexistent and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly
opposed defendant's motion to dismiss claiming that defendant can not
invoke Articles 1409 and 1491 of the Civil Code as Article 1422 of the same
Code provides that 'The defense of illegality of contracts is not available to
third persons whose interests are not directly affected' (See pp. 32-35 Record
on Appeal).
On October 18, 1965, the lower court issued an order disclaiming plaintiffs
complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal
the lower court practically agreed with defendant's contention that the
contract (Exh. A) between plaintiff and Francism Militante was null and void.
In due season plaintiff filed a motion for reconsideration (pp. 50-56 Record on
Appeal) which was denied by the lower court on January 14, 1966 (p. 57,
Record on Appeal).
Hence, this appeal by plaintiff from the orders of October 18, 1965 and
January 14, 1966.
Plaintiff-appellant imputes to the lower court the following errors:
'1. The lower court erred in holding that the contract of sale between the
plaintiff-appellant and his father-in-law, Francisco Militante, Sr., now
deceased, of the property covered by Plan Psu-99791, (Exh. "A") was void,
not voidable because it was made when plaintiff-appellant was the counsel of
the latter in the Land Registration case.
'2. The lower court erred in holding that the defendant-appellee is an
interested person to question the validity of the contract of sale between
plaintiff-appellant and the deceased, Francisco Militante, Sr.
'3. The lower court erred in entertaining the motion to dismiss of the
defendant-appellee after he had already filed his answer, and after the

termination of the pre-trial, when the said motion to dismiss raised a collateral
question.
'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'
The appellate court concluded that plaintiffs "assignment of errors gives rise
to two (2) legal posers (1) whether or not the contract of sale between
appellant and his father-in-law, the late Francisco Militante over the property
subject of Plan Psu-99791 was void because it was made when plaintiff was
counsel of his father-in-law in a land registration case involving the property in
dispute; and (2) whether or not the lower court was correct in entertaining
defendant-appellee's motion to dismiss after the latter had already filed his
answer and after he (defendant) and plaintiff-appellant had agreed on some
matters in a pre-trial conference. Hence, its elevation of the appeal to this
Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference
held by the trial court at which the parties with their counsel agreed and
stipulated on the material and relevant facts and submitted their respective
documentary exhibits as referred to in the pre-trial order, supra, 2 practically
amounted to a fulldress trial which placed on record all the facts and exhibits
necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at

the-trial dealing with the source of the alleged right and title of Francisco
Militante's predecessors, supra, 3 actually are already made of record in the

stipulated facts and admitted exhibits. The chain of Militante's alleged title and right
to the land as supposedly traced back to Liberato Demontao was actually
asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the
land registration case and rejected by the Iloilo land registration court which
dismissed Militante's application for registration of the land. Such dismissal, as
already stated, was affirmed by the final judgment in 1958 of the Court of Appeals. 4

The four points on which defendant on his part reserved the presentation of
evidence at the trial dealing with his and his ancestors' continuous, open,
public and peaceful possession in the concept of owner of the land and the
Director of Lands' approval of his survey plan thereof, supra, 5 are likewise
already duly established facts of record, in the land registration case as well as in
the ejectment case wherein the Iloilo court of first instance recognized the
superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's

complaint upon defendant's motion after the pre-trial.
1. The stipulated facts and exhibits of record indisputably established
plaintiff's lack of cause of action and justified the outright dismissal of the
complaint. Plaintiff's claim of ownership to the land in question was predicated
on the sale thereof for P2,000.00 made in 1956 by his father-in- law,
Francisco Militante, in his favor, at a time when Militante's application for
registration thereof had already been dismissed by the Iloilo land registration
court and was pending appeal in the Court of Appeals.
With the Court of Appeals' 1958 final judgment affirming the dismissal of
Militante's application for registration, the lack of any rightful claim or title of

Militante to the land was conclusively and decisively judicially determined.

Hence, there was no right or title to the land that could be transferred or sold
by Militante's purported sale in 1956 in favor of plaintiff.
Manifestly, then plaintiff's complaint against defendant, to be declared
absolute owner of the land and to be restored to possession thereof with
damages was bereft of any factual or legal basis.
2. No error could be attributed either to the lower court's holding that the
purchase by a lawyer of the property in litigation from his client is
categorically prohibited by Article 1491, paragraph (5) of the Philippine Civil
Code, reproduced supra; 6 and that consequently, plaintiff's purchase of the
property in litigation from his client (assuming that his client could sell the same
since as already shown above, his client's claim to the property was defeated and
rejected) was void and could produce no legal effect, by virtue of Article 1409,
paragraph (7) of our Civil Code which provides that contracts "expressly prohibited
or declared void by law' are "inexistent and that "(T)hese contracts cannot be
ratified. Neither can the right to set up the defense of illegality be waived."
The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as
holding that a sale of property in litigation to the party litigant's lawyer "is not void
but voidable at the election of the vendor" was correctly held by the lower court to
have been superseded by the later 1929 case of Director of Lands vs. Abagat. 8 In
this later case of Abagat, the Court expressly cited two antecedent cases involving
the same transaction of purchase of property in litigation by the lawyer which was
expressly declared invalid under Article 1459 of the Civil Code of Spain (of which
Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge
thereof not by the vendor-client but by the adverse parties against whom the lawyer
was to enforce his rights as vendee thus acquired.

These two antecedent cases thus cited in Abagat clearly superseded (without
so expressly stating the previous ruling in Wolfson:
The spouses, Juan Soriano and Vicente Macaraeg, were the owners of
twelve parcels of land. Vicenta Macaraeg died in November, 1909, leaving a
large number of collateral heirs but no descendants. Litigation between the
surviving husband, Juan Soriano, and the heirs of Vicenta immediately arose,
and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On
May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of
land in favor of Sisenando Palarca and on the following day, May 3, 1918,
Palarca filed an application for the registration of the land in the deed. After
hearing, the Court of First Instance declared that the deed was invalid by
virtue of the provisions of article 1459 of the Civil Code, which prohibits
lawyers and solicitors from purchasing property rights involved in any
litigation in which they take part by virtue of their profession. The application
for registration was consequently denied, and upon appeal by Palarca to the
Supreme Court, the judgement of the lower court was affirmed by a decision
promulgated November 16,1925. (G.R. No. 24329, Palarca vs. Director of
Lands, not reported.)
In the meantime cadastral case No. 30 of the Province of Tarlac was
instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of

the estate of Vicente Macaraeg, filed claims for the parcels in question.
Buenaventura Lavitoria administrator of the estate of Juan Soriano, did
likewise and so did Sisenando Palarca. In a decision dated June 21, 1927,
the Court of First Instance, Judge Carballo presiding, rendered judgment in
favor of Palarea and ordered the registration of the land in his name. Upon
appeal to this court by the administration of the estates of Juan Soriano and
Vicente Macaraeg, the judgment of the court below was reversed and the
land adjudicated to the two estates as conjugal property of the deceased
spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May
21, 1928, not reported.) 9
In the very case of Abagat itself, the Court, again affirming the invalidity and
nullity of the lawyer's purchase of the land in litigation from his client, ordered
the issuance of a writ of possession for the return of the land by the lawyer to
the adverse parties without reimbursement of the price paid by him and other
expenses, and ruled that "the appellant Palarca is a lawyer and is presumed
to know the law. He must, therefore, from the beginning, have been well
aware of the defect in his title and is, consequently, a possessor in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article
1459 of the Civil Code of Spain then adopted here, until it was superseded on
August 30, 1950 by the Civil Code of the Philippines whose counterpart
provision is Article 1491.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code)
prohibits in its six paragraphs certain persons, by reason of the relation of
trust or their peculiar control over the property, from acquiring such property
in their trust or control either directly or indirectly and "even at a public or
judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4)
public officers and employees; judicial officers and employees, prosecuting
attorneys, and lawyers; and (6) others especially disqualified by law.
In Wolfson which involved the sale and assignment of a money judgment by
the client to the lawyer, Wolfson, whose right to so purchase the judgment
was being challenged by the judgment debtor, the Court, through Justice
Moreland, then expressly reserved decision on "whether or not the judgment
in question actually falls within the prohibition of the article" and held only that
the sale's "voidability can not be asserted by one not a party to the
transaction or his representative," citing from Manresa 10 that "(C)onsidering the
question from the point of view of the civil law, the view taken by the code, we must
limit ourselves to classifying as void all acts done contrary to the express prohibition
of the statute. Now then: As the code does not recognize such nullity by the mere
operation of law, the nullity of the acts hereinbefore referred to must be asserted by
the person having the necessary legal capacity to do so and decreed by a
competent
court." 11

The reason thus given by Manresa in considering such prohibited acquisitions

under Article 1459 of the Spanish Civil Code as merely voidable at the
instance and option of the vendor and not void "that the Code does not
recognize such nullity de pleno derecho" is no longer true and applicable

to our own Philippine Civil Code which does recognize the absolute nullity of
contracts "whose cause, object, or purpose is contrary to law, morals, good
customs, public order or public policy" or which are "expressly prohibited or
declared void by law" and declares such contracts "inexistent and void from
the beginning." 12
The Supreme Court of Spain and modern authors have likewise veered from
Manresa's view of the Spanish codal provision itself. In its sentencia of 11
June 1966, the Supreme Court of Spain ruled that the prohibition of Article
1459 of the Spanish Civil Code is based on public policy, that violation of the
prohibition contract cannot be validated by confirmation or ratification, holding
that:
... la prohibicion que el articulo 1459 del C.C. establece respecto a los
administradores y apoderados, la cual tiene conforme a la doctrina de esta
Sala, contendia entre otras, en S. de 27-5-1959, un fundamento de orden
moral lugar la violacion de esta a la nulidad de pleno derecho del acto o
negocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe
con efecto alguno la aludida retification ... 13
The criterion of nullity of such prohibited contracts under Article 1459 of the
Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order
and policy as applied by the Supreme Court of Spain to administrators and
agents in its above cited decision should certainly apply with greater reason
to judges, judicial officers, fiscals and lawyers under paragraph 5 of the codal
article.
Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros,
his "Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18,
affirms that, with respect to Article 1459, Spanish Civil Code:.
Que caracter tendra la compra que se realice por estas personas?
Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad
esabsoluta porque el motivo de la prohibicion es de orden publico. 14
Perez Gonzales in such view, stating that "Dado el caracter prohibitivo
delprecepto, la consequencia de la infraccion es la nulidad radical y ex lege."
15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este
precepto tan solo de guitar la ocasion al fraude; persiguese, ademasel
proposito de rodear a las personas que intervienen en la administrcionde
justicia de todos los retigios que necesitan pora ejercer su ministerio
librandolos de toda suspecha, que aunque fuere in fundada, redundura
endescredito de la institucion." 16 arrives at the contrary and now accepted view
that "Puede considerace en nuestro derecho inexistente 'o radicalmente nulo el
contrato en los siguentes cases: a) ...; b) cuando el contrato se ha celebrado en
violacion de una prescripcion 'o prohibicion legal, fundada sobre motivos de orden
publico (hipotesis del art. 4 del codigo) ..." 17

It is noteworthy that Caltan's rationale for his conclusion that fundamental

consideration of public policy render void and inexistent such expressly

prohibited purchase (e.g. by public officers and employees of government

property intrusted to them and by justices, judges, fiscals and lawyers of
property and rights in litigation and submitted to or handled by them, under
Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a
new article of our Civil Code, viz, Article 1409 declaring such prohibited
contracts as "inexistent and void from the beginning." 18
Indeed, the nullity of such prohibited contracts is definite and permanent and
cannot be cured by ratification. The public interest and public policy remain
paramount and do not permit of compromise or ratification. In his aspect, the
permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians,
agents and administrators (Article 1491, Civil Code), as to whose transactions
it had been opined that they may be "ratified" by means of and in "the form of
a new contact, in which cases its validity shall be determined only by the
circumstances at the time the execution of such new contract. The causes of
nullity which have ceased to exist cannot impair the validity of the new
contract. Thus, the object which was illegal at the time of the first contract,
may have already become lawful at the time of the ratification or second
contract; or the service which was impossible may have become possible; or
the intention which could not be ascertained may have been clarified by the
parties. The ratification or second contract would then be valid from its
execution; however, it does not retroact to the date of the first contract." 19
As applied to the case at bar, the lower court therefore properly acted upon
defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's
alleged purchase of the land, since its juridical effects and plaintiff's alleged
cause of action founded thereon were being asserted against defendantappellant. The principles governing the nullity of such prohibited contracts
and judicial declaration of their nullity have been well restated by Tolentino in
his treatise on our Civil Code, as follows:
Parties Affected. Any person may invoke the in existence of the contract
whenever juridical effects founded thereon are asserted against him. Thus, if
there has been a void transfer of property, the transferor can recover it by the
accion reinvindicatoria; and any prossessor may refuse to deliver it to the
transferee, who cannot enforce the contract. Creditors may attach property of
the debtor which has been alienated by the latter under a void contract; a
mortgagee can allege the inexistence of a prior encumbrance; a debtor can
assert the nullity of an assignment of credit as a defense to an action by the
assignee.
Action On Contract. Even when the contract is void or inexistent, an action
is necessary to declare its inexistence, when it has already been fulfilled.
Nobody can take the law into his own hands; hence, the intervention of the
competent court is necessary to declare the absolute nullity of the contract
and to decree the restitution of what has been given under it. The judgment,
however, will retroact to the very day when the contract was entered into.

If the void contract is still fully executory, no party need bring an action to
declare its nullity; but if any party should bring an action to enforce it, the
other party can simply set up the nullity as a defense. 20
ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with
costs in all instances against plaintiff-appellant. So ordered.
Makalintal, Zaldivar, Castro,. Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.

Calimlim vs Fortun
G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of
Pangasinan, Branch I, and CORAZON DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6,
1980, and the Resolution on the Motion for Reconsideration, dated November
27, 1980, of the then Court of First Instance of Pangasinan, Branch I, in Civil
Case No. 15620 entitled "Corazon DAGUINES vs. MERCEDES CalimlimCanullas," upholding the sale of a parcel of land in favor of DAGUINES but
not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES
Calimlim-Canullas and FERNANDO Canullas were married on December 19,
1962. They begot five children. They lived in a small house on the residential
land in question with an area of approximately 891 square meters, located at
Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in 1965,
FERNANDO inherited the land.
In 1978, FERNANDO abandoned his family and was living with private
respondent Corazon DAGUINES. During the pendency of this appeal, they
were convicted of concubinage in a judgment rendered on October 27, 1981
by the then Court of First Instance of Pangasinan, Branch II, which judgment
has become final.
On April 15, 1980, FERNANDO sold the subject property with the house
thereon to DAGUINES for the sum of P2,000.00. In the document of sale,
FERNANDO described the house as "also inherited by me from my deceased
parents."
Unable to take possession of the lot and house, DAGUINES initiated a
complaint on June 19, 1980 for quieting of title and damages against

MERCEDES. The latter resisted and claimed that the house in dispute where
she and her children were residing, including the coconut trees on the land,
were built and planted with conjugal funds and through her industry; that the
sale of the land together with the house and improvements to DAGUINES
was null and void because they are conjugal properties and she had not
given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as
the lawful owner of the land in question as well as the one-half () of the house
erected on said land." Upon reconsideration prayed for by MERCEDES,
however, respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court,
promulgated on October 6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question and
the 10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on
April 15, 1980 (Exhibit A) including the 3 coconut trees and other crops
planted during the conjugal relation between Fernando Canullas (vendor) and
his legitimate wife, herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a
conjugal house on the exclusive property of the husband ipso facto gave the
land the character of conjugal property; and (2) whether or not the sale of the
lot together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be
given to the second paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the marriage
on land belonging to one of the spouses also pertain to the partnership, but
the value of the land shall be reimbursed to the spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the
building belong to the conjugal partnership but the conjugal partnership is
indebted to the husband for the value of the land. The spouse owning the lot
becomes a creditor of the conjugal partnership for the value of the lot, 1 which
value would be reimbursed at the liquidation of the conjugal partnership. 2

In his commentary on the corresponding provision in the Spanish Civil Code

(Art. 1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el matrimonio
en suelo propio de uno de los conjuges son gananciales, abonandose el
valor del suelo al conj uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent
Judge, it was held that the land belonging to one of the spouses, upon which the
spouses have built a house, becomes conjugal property only when the conjugal
partnership is liquidated and indemnity paid to the owner of the land. We believe
that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs.
Paterno, 3 SCRA 678, 691 (1961), where the following was explained:

As to the above properties, their conversion from paraphernal to conjugal

assets should be deemed to retroact to the time the conjugal buildings were
first constructed thereon or at the very latest, to the time immediately before
the death of Narciso A. Padilla that ended the conjugal partnership. They can
not be considered to have become conjugal property only as of the time their
values were paid to the estate of the widow Concepcion Paterno because by
that time the conjugal partnership no longer existed and it could not acquire
the ownership of said properties. The acquisition by the partnership of these
properties was, under the 1943 decision, subject to the suspensive condition
that their values would be reimbursed to the widow at the liquidation of the
conjugal partnership; once paid, the effects of the fulfillment of the condition
should be deemed to retroact to the date the obligation was constituted (Art.
1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not
have alienated the house and lot to DAGUINES since MERCEDES had not
given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for
being contrary to morals and public policy. The sale was made by a husband
in favor of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence they
derived their support. That sale was subversive of the stability of the family, a
basic social institution which public policy cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause,
object, or purpose is contrary to law, morals, good customs, public order, or
public policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful
cause, produce no effect whatsoever. The cause is unlawful if it is contrary to
law, morals, good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property
to each other subject to certain exceptions. 6 Similarly, donations between
spouses during marriage are prohibited. 7 And this is so because if transfers or con
conveyances between spouses were allowed during marriage, that would destroy
the system of conjugal partnership, a basic policy in civil law. It was also designed
to prevent the exercise of undue influence by one spouse over the other, 8 as well
as to protect the institution of marriage, which is the cornerstone of family law. The
prohibitions apply to a couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who incurred guilt would turn out to be
better than those in legal union." Those provisions are dictated by public interest
and their criterion must be imposed upon the wig of the parties. That was the ruling
in Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50 O.G.
3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent
dissertation on this point:

We reach a different conclusion. While Art. 133 of the Civil Code considers as
void a donation between the spouses during the marriage, policy
considerations of the most exigent character as wen as the dictates of

morality require that the same prohibition should apply to a common-law

relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals decision,
Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the
old Civil Code speaks unequivocally. If the policy of the law is, in the
language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to
prohibit donations in favor of the other consort and his descendants because
of fear of undue influence and improper pressure upon the donor, a prejudice
deeply rooted in our ancient law, ..., then there is every reason to apply the
same prohibitive policy to persons living together as husband and wife
without benefit of nuptials. For it is not to be doubted that assent to such
irregular connection for thirty years bespeaks greater influence of one party
over the other, so that the danger that the law seeks to avoid is
correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32
ad Sabinum, fr. 1), "It would not be just that such donations should subsist,
lest the conditions of those who incurred guilt should turn out to be better." So
long as marriage remains the cornerstone of our family law, reason and
morality alike demand that the disabilities attached to marriage should
likewise attach to concubinage (Emphasis supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980,
and his Resolution of November 27, 1980 on petitioner's Motion for
Reconsideration, are hereby set aside and the sale of the lot, house and
improvements in question, is hereby declared null and void. No costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ.,
concur.

Domingo vs CA
G.R. No. 104818 September 17, 1993
ROBERTO DOMINGO, petitioner,
vs.
COURT OF APPEALS and DELIA SOLEDAD AVERA represented by her
Attorney-in-Fact MOISES R. AVERA, respondents.
Jose P.O. Aliling IV for petitioner.
De Guzman, Meneses & Associates for private respondent.
ROMERO, J.:
The instant petition seeks the reversal of respondent court's ruling finding no
grave abuse of discretion in the lower court's order denying petitioner's
motion to dismiss the petition for declaration of nullity of marriage and
separation of property.
On May 29, 1991, private respondent Delia Soledad A. Domingo filed a
petition before the Regional Trial Court of Pasig entitled "Declaration of Nullity
of Marriage and Separation of Property" against petitioner Roberto Domingo.

The petition which was docketed as Special Proceedings No. 1989-J alleged
among others that: they were married on November 29, 1976 at the YMCA
Youth Center Bldg., as evidenced by a Marriage Contract Registry No.
1277K-76 with Marriage License No. 4999036 issued at Carmona, Cavite;
unknown to her, he had a previous marriage with one Emerlina dela Paz on
April 25, 1969 which marriage is valid and still existing; she came to know of
the prior marriage only sometime in 1983 when Emerlina dela Paz sued them
for bigamy; from January 23 1979 up to the present, she has been working in
Saudi Arabia and she used to come to the Philippines only when she would
avail of the one-month annual vacation leave granted by her foreign employer
since 1983 up to the present, he has been unemployed and completely
dependent upon her for support and subsistence; out of her personal
earnings, she purchased real and personal properties with a total amount of
approximately P350,000.00, which are under the possession and
administration of Roberto; sometime in June 1989, while on her one-month
vacation, she discovered that he was cohabiting with another woman; she
further discovered that he had been disposing of some of her properties
without her knowledge or consent; she confronted him about this and
thereafter appointed her brother Moises R. Avera as her attorney-in-fact to
take care of her properties; he failed and refused to turn over the possession
and administration of said properties to her brother/attorney-in-fact; and he is
not authorized to administer and possess the same on account of the nullity
of their marriage. The petition prayed that a temporary restraining order or a
writ of preliminary injunction be issued enjoining Roberto from exercising any
act of administration and ownership over said properties; their marriage be
declared null and void and of no force and effect; and Delia Soledad be
declared the sole and exclusive owner of all properties acquired at the time of
their void marriage and such properties be placed under the proper
management and administration of the attorney-in-fact.
Petitioner filed a Motion to Dismiss on the ground that the petition stated no
cause of action. The marriage being void ab initio, the petition for the
declaration of its nullity is, therefore, superfluous and unnecessary. It added
that private respondent has no property which is in his possession.
On August 20, 1991, Judge Maria Alicia M. Austria issued an Order denying
the motion to dismiss for lack of merit. She explained:
Movant argues that a second marriage contracted after a first marriage by a
man with another woman is illegal and void (citing the case of Yap v. Court of
Appeals, 145 SCRA 229) and no judicial decree is necessary to establish the
invalidity of a void marriage (citing the cases of People v. Aragon, 100 Phil.
1033; People v. Mendoza, 95 Phil. 845). Indeed, under the Yap case there is
no dispute that the second marriage contracted by respondent with herein
petitioner after a first marriage with another woman is illegal and void.
However, as to whether or not the second marriage should first be judicially
declared a nullity is not an issue in said case. In the case of Vda. de
Consuegra v. GSIS, the Supreme Court ruled in explicit terms, thus:

And with respect to the right of the second wife, this Court observed that
although the second marriage can be presumed to be void ab initio as it was
celebrated while the first marriage was still subsisting, still there is need for
judicial declaration of its nullity. (37 SCRA 316, 326)
The above ruling which is of later vintage deviated from the previous rulings
of the Supreme Court in the aforecited cases of Aragon and Mendoza.
Finally, the contention of respondent movant that petitioner has no property in
his possession is an issue that may be determined only after trial on the
merits. 1
A motion for reconsideration was filed stressing the erroneous application of
Vda. de Consuegra v. GSIS 2 and the absence of justiciable controversy as to the
nullity of the marriage. On September 11, 1991, Judge Austria denied the motion for
reconsideration and gave petitioner fifteen (15) days from receipt within which to file
his answer.

Instead of filing the required answer, petitioner filed a special civil action of
certiorari and mandamus on the ground that the lower court acted with grave
abuse of discretion amounting to lack of jurisdiction in denying the motion to
dismiss.
On February 7, 1992, the Court of Appeals 3 dismissed the petition. It explained
that the case of Yap v. CA 4 cited by petitioner and that of Consuegra v. GSIS relied
upon by the lower court do not have relevance in the case at bar, there being no
identity of facts because these cases dealt with the successional rights of the
second wife while the instant case prays for separation of property corollary with
the declaration of nullity of marriage. It observed that the separation and
subsequent distribution of the properties acquired during the union can be had only
upon proper determination of the status of the marital relationship between said
parties, whether or not the validity of the first marriage is denied by petitioner.
Furthermore, in order to avoid duplication and multiplicity of suits, the declaration of
nullity of marriage may be invoked in this proceeding together with the partition and
distribution of the properties involved. Citing Articles 48, 50 and 52 of the Family
Code, it held that private respondent's prayer for declaration of absolute nullity of
their marriage may be raised together with other incidents of their marriage such as
the separation of their properties. Lastly, it noted that since the Court has
jurisdiction, the alleged error in refusing to grant the motion to dismiss is merely one
of law for which the remedy ordinarily would have been to file an answer, proceed
with the trial and in case of an adverse decision, reiterate the issue on appeal. The
motion for reconsideration was subsequently denied for lack of merit. 5

Hence, this petition.

The two basic issues confronting the Court in the instant case are the
following.
First, whether or not a petition for judicial declaration of a void marriage is
necessary. If in the affirmative, whether the same should be filed only for
purposes of remarriage.
Second, whether or not SP No. 1989-J is the proper remedy of private
respondent to recover certain real and personal properties allegedly
belonging to her exclusively.

Petitioner, invoking the ruling in People v. Aragon 6 and People v. Mendoza, 7

contends that SP. No. 1989-J for Declaration of Nullity of Marriage and Separation
of Property filed by private respondent must be dismissed for being unnecessary
and superfluous. Furthermore, under his own interpretation of Article 40 of the
Family Code, he submits that a petition for declaration of absolute nullity of
marriage is required only for purposes of remarriage. Since the petition in SP No.
1989-J contains no allegation of private respondent's intention to remarry, said
petition should therefore, be dismissed.

On the other hand, private respondent insists on the necessity of a judicial

declaration of the nullity of their marriage, not for purposes of remarriage, but
in order to provide a basis for the separation and distribution of the properties
acquired during coverture.
There is no question that the marriage of petitioner and private respondent
celebrated while the former's previous marriage with one Emerlina de la Paz
was still subsisting, is bigamous. As such, it is from the beginning. 8 Petitioner
himself does not dispute the absolute nullity of their marriage. 9

The cases of People v. Aragon and People v. Mendoza relied upon by

petitioner are cases where the Court had earlier ruled that no judicial decree
is necessary to establish the invalidity of a void, bigamous marriage. It is
noteworthy to observe that Justice Alex Reyes, however, dissented on these
occasions stating that:
Though the logician may say that where the former marriage was void there
would be nothing to dissolve, still it is not for the spouses to judge whether
that marriage was void or not. That judgment is reserved to the courts. . . . 10
This dissenting opinion was adopted as the majority position in subsequent
cases involving the same issue. Thus, in Gomez v. Lipana, 11 the Court
abandoned its earlier ruling in the Aragon and Mendoza cases. In reversing the
lower court's order forfeiting the husband's share of the disputed property acquired
during the second marriage, the Court stated that "if the nullity, or annulment of the
marriage is the basis for the application of Article 1417, there is need for a judicial
declaration thereof, which of course contemplates an action for that purpose."

Citing Gomez v. Lipana, the Court subsequently held in Vda. de Consuegra v.

Government Service Insurance System, that "although the second marriage
can be presumed to be void ab initio as it was celebrated while the first
marriage was still subsisting, still there is need for judicial declaration of such
nullity."
In Tolentino v. Paras, 12 however, the Court turned around and applied the Aragon
and Mendoza ruling once again. In granting the prayer of the first wife asking for a
declaration as the lawful surviving spouse and the correction of the death certificate
of her deceased husband, it explained that "(t)he second marriage that he
contracted with private respondent during the lifetime of his first spouse is null and
void from the beginning and of no force and effect. No judicial decree is necessary
to establish the invalidity of a void marriage."
However, in the more recent case of Wiegel v. Sempio-Diy 13 the Court
reverted to the Consuegra case and held that there was "no need of introducing
evidence about the existing prior marriage of her first husband at the time they

married each other, for then such a marriage though void still needs according to
this Court a judicial declaration of such fact and for all legal intents and purposes
she would still be regarded as a married woman at the time she contracted her
marriage with respondent Karl Heinz Wiegel."

Came the Family Code which settled once and for all the conflicting
jurisprudence on the matter. A declaration of the absolute nullity of a marriage
is now explicitly required either as a cause of action or a ground for defense.

Where the absolute nullity of a previous marriage is sought to be invoked for

purposes of contracting a second marriage, the sole basis acceptable in law for
said projected marriage be free from legal infirmity is a final judgment declaring the
previous marriage void. 15
14

The Family Law Revision Committee and the Civil Code Revision Committee

which drafted what is now the Family Code of the Philippines took the position
that parties to a marriage should not be allowed to assume that their marriage is
void even if such be the fact but must first secure a judicial declaration of the nullity
of their marriage before they can be allowed to marry again. This is borne out by
the following minutes of the 152nd Joint Meeting of the Civil Code and Family Law
Committees where the present Article 40, then Art. 39, was discussed.
16

B. Article 39.
The absolute nullity of a marriage may be invoked only on the basis of a final
judgment declaring the marriage void, except as provided in Article 41.
Justice Caguioa remarked that the above provision should include not only
void but also voidable marriages. He then suggested that the above provision
be modified as follows:
The validity of a marriage may be invoked only . . .
Justice Reyes (J.B.L. Reyes), however, proposed that they say:
The validity or invalidity of a marriage may be invoked
only . . .
On the other hand, Justice Puno suggested that they say:
The invalidity of a marriage may be invoked only . . .
Justice Caguioa explained that his idea is that one cannot determine for
himself whether or not his marriage is valid and that a court action is needed.
Justice Puno accordingly proposed that the provision be modified to read:
The invalidity of a marriage may be invoked only on the basis of a final
judgment annulling the marriage or declaring the marriage void, except as
provided in Article 41.
Justice Caguioa remarked that in annulment, there is no question. Justice
Puno, however, pointed out that, even if it is a judgment of annulment, they
still have to produce the judgment.
Justice Caguioa suggested that they say:
The invalidity of a marriage may be invoked only on the basis of a final
judgment declaring the marriage invalid, except as provided in Article 41.
Justice Puno raised the question: When a marriage is declared invalid, does it
include the annulment of a marriage and the declaration that the marriage is
void? Justice Caguioa replied in the affirmative. Dean Gupit added that in

some judgments, even if the marriage is annulled, it is declared void. Justice

Puno suggested that this matter be made clear in the provision.
Prof. Baviera remarked that the original idea in the provision is to require first
a judicial declaration of a void marriage and not annullable marriages, with
which the other members concurred. Judge Diy added that annullable
marriages are presumed valid until a direct action is filed to annul it, which the
other members affirmed. Justice Puno remarked that if this is so, then the
phrase "absolute nullity" can stand since it might result in confusion if they
change the phrase to "invalidity" if what they are referring to in the provision is
the declaration that the marriage is void.
Prof. Bautista commented that they will be doing away with collateral defense
as well as collateral attack. Justice Caguioa explained that the idea in the
provision is that there should be a final judgment declaring the marriage void
and a party should not declare for himself whether or not the marriage is void,
while the other members affirmed. Justice Caguioa added that they are,
therefore, trying to avoid a collateral attack on that point. Prof. Bautista stated
that there are actions which are brought on the assumption that the marriage
is valid. He then asked: Are they depriving one of the right to raise the
defense that he has no liability because the basis of the liability is void? Prof.
Bautista added that they cannot say that there will be no judgment on the
validity or invalidity of the marriage because it will be taken up in the same
proceeding. It will not be a unilateral declaration that, it is a void marriage.
Justice Caguioa saw the point of Prof. Bautista and suggested that they limit
the provision to remarriage. He then proposed that Article 39 be reworded as
follows:
The absolute nullity of a marriage for purposes of remarriage may be invoked
only on the basis of final judgment . . .
Justice Puno suggested that the above be modified as follows:
The absolute nullity of a previous marriage may be invoked for purposes of
establishing the validity of a subsequent marriage only on the basis of a final
judgment declaring such previous marriage void, except as provided in Article
41.
Justice Puno later modified the above as follows:
For the purpose of establishing the validity of a subsequent marriage, the
absolute nullity of a previous marriage may only be invoked on the basis of a
final judgment declaring such nullity, except as provided in Article 41.
Justice Caguioa commented that the above provision is too broad and will not
solve the objection of Prof. Bautista. He proposed that they say:
For the purpose of entering into a subsequent marriage, the absolute nullity of
a previous marriage may only be invoked on the basis of a final judgment
declaring such nullity, except as provided in Article 41.
Justice Caguioa explained that the idea in the above provision is that if one
enters into a subsequent marriage without obtaining a final judgment
declaring the nullity of a previous marriage, said subsequent marriage is void
ab initio.

After further deliberation, Justice Puno suggested that they go back to the
original wording of the provision as follows:
The absolute nullity of a previous marriage may be invoked for purposes of
remarriage only on the basis of a final judgment declaring such previous
marriage void, except as provided in Article 41. 17
In fact, the requirement for a declaration of absolute nullity of a marriage is
also for the protection of the spouse who, believing that his or her marriage is
illegal and void, marries again. With the judicial declaration of the nullity of his
or her first marriage, the person who marries again cannot be charged with
bigamy. 18
Just over a year ago, the Court made the pronouncement that there is a
necessity for a declaration of absolute nullity of a prior subsisting marriage
before contracting another in the recent case of Terre v. Terre. 19 The Court, in
turning down the defense of respondent Terre who was charged with grossly
immoral conduct consisting of contracting a second marriage and living with
another woman other than complainant while his prior marriage with the latter
remained subsisting, said that "for purposes of determining whether a person is
legally free to contract a second marriage, a judicial declaration that the first
marriage was null and void ab initio is essential."

As regards the necessity for a judicial declaration of absolute nullity of

marriage, petitioner submits that the same can be maintained only if it is for
the purpose of remarriage. Failure to allege this purpose, according to
petitioner's theory, will warrant dismissal of the same.
Article 40 of the Family Code provides:
Art. 40. The absolute nullity of a previous marriage may be invoked for
purposes of remarriage on the basis solely of a final judgment declaring such
previous marriage void. (n)
Crucial to the proper interpretation of Article 40 is the position in the provision
of the word "solely." As it is placed, the same shows that it is meant to qualify
"final judgment declaring such previous marriage void." Realizing the need for
careful craftsmanship in conveying the precise intent of the Committee
members, the provision in question, as it finally emerged, did not state "The
absolute nullity of a previous marriage may be invoked solely for purposes of
remarriage . . .," in which case "solely" would clearly qualify the phrase "for
purposes of remarriage." Had the phraseology been such, the interpretation
of petitioner would have been correct and, that is, that the absolute nullity of a
previous marriage may be invoked solely for purposes of remarriage, thus
rendering irrelevant the clause "on the basis solely of a final judgment
declaring such previous marriage void."
That Article 40 as finally formulated included the significant clause denotes
that such final judgment declaring the previous marriage void need not be
obtained only for purposes of remarriage. Undoubtedly, one can conceive of
other instances where a party might well invoke the absolute nullity of a
previous marriage for purposes other than remarriage, such as in case of an
action for liquidation, partition, distribution and separation of property between

the erstwhile spouses, as well as an action for the custody and support of
their common children and the delivery of the latters' presumptive legitimes.
In such cases, evidence needs must be adduced, testimonial or documentary,
to prove the existence of grounds rendering such a previous marriage an
absolute nullity. These need not be limited solely to an earlier final judgment
of a court declaring such previous marriage void. Hence, in the instance
where a party who has previously contracted a marriage which remains
subsisting desires to enter into another marriage which is legally
unassailable, he is required by law to prove that the previous one was an
absolute nullity. But this he may do on the basis solely of a final judgment
declaring such previous marriage void.
This leads us to the question: Why the distinction? In other words, for
purposes of remarriage, why should the only legally acceptable basis for
declaring a previous marriage an absolute nullity be a final judgment
declaring such previous marriage void? Whereas, for purposes other than
remarriage, other evidence is acceptable?
Marriage, a sacrosanct institution, declared by the Constitution as an
"inviolable social institution, is the foundation of the family;" as such, it "shall
be protected by the State." 20 In more explicit terms, the Family Code
characterizes it as "a special contract of permanent union between a man and a
woman entered into in accordance with law for the establishment of conjugal, and
family life." 21 So crucial are marriage and the family to the stability and peace of the
nation that their "nature, consequences, and incidents are governed by law and not
subject to stipulation . . ." 22 As a matter of policy, therefore, the nullification of a
marriage for the purpose of contracting another cannot be accomplished merely on
the basis of the perception of both parties or of one that their union is so defective
with respect to the essential requisites of a contract of marriage as to render it void
ipso jure and with no legal effect and nothing more. Were this so, this inviolable
social institution would be reduced to a mockery and would rest on very shaky
foundations indeed. And the grounds for nullifying marriage would be as diverse
and far-ranging as human ingenuity and fancy could conceive. For such a social
significant institution, an official state pronouncement through the courts, and
nothing less, will satisfy the exacting norms of society. Not only would such an open
and public declaration by the courts definitively confirm the nullity of the contract of
marriage, but the same would be easily verifiable through records accessible to
everyone.

That the law seeks to ensure that a prior marriage is no impediment to a

second sought to be contracted by one of the parties may be gleaned from
new information required in the Family Code to be included in the application
for a marriage license, viz, "If previously married, how, when and where the
previous marriage was dissolved and annulled." 23
Reverting to the case before us, petitioner's interpretation of Art. 40 of the
Family Code is, undoubtedly, quite restrictive. Thus, his position that private
respondent's failure to state in the petition that the same is filed to enable her
to remarry will result in the dismissal of SP No. 1989-J is untenable. His

misconstruction of Art. 40 resulting from the misplaced emphasis on the term

"solely" was in fact anticipated by the members of the Committee.
Dean Gupit commented the word "only" may be misconstrued to refer to "for
purposes of remarriage." Judge Diy stated that "only" refers to "final
judgment." Justice Puno suggested that they say "on the basis only of a final
judgment." Prof. Baviera suggested that they use the legal term "solely"
instead of "only," which the Committee approved. 24 (Emphasis supplied)
Pursuing his previous argument that the declaration for absolute nullity of
marriage is unnecessary, petitioner suggests that private respondent should
have filed an ordinary civil action for the recovery of the properties alleged to
have been acquired during their union. In such an eventuality, the lower court
would not be acting as a mere special court but would be clothed with
jurisdiction to rule on the issues of possession and ownership. In addition, he
pointed out that there is actually nothing to separate or partition as the
petition admits that all the properties were acquired with private respondent's
money.
The Court of Appeals disregarded this argument and concluded that "the
prayer for declaration of absolute nullity of marriage may be raised together
with the other incident of their marriage such as the separation of their
properties."
When a marriage is declared void ab initio, the law states that the final
judgment therein shall provide for "the liquidation, partition and distribution of
the properties of the spouses, the custody and support of the common
children, and the delivery of their presumptive legitimes, unless such matters
had been adjudicated in previous judicial proceedings." 25 Other specific effects
flowing therefrom, in proper cases, are the following:

Art. 43. xxx xxx xxx

(2) The absolute community of property or the conjugal partnership, as the
case may be, shall be dissolved and liquidated, but if either spouse
contracted said marriage in bad faith, his or her share of the net profits of the
community property or conjugal partnership property shall be forfeited in favor
of the common children or, if there are none, the children of the guilty spouse
by a previous marriage or, in default of children, the innocent spouse;
(3) Donations by reason of marriage shall remain valid, except that if the
donee contracted the marriage in bad faith, such donations made to said
donee are revoked by operation of law;
(4) The innocent spouse may revoke the designation of the other spouse who
acted in bad faith as a beneficiary in any insurance policy, even if such
designation be stipulated as irrevocable; and
(5) The spouse who contracted the subsequent marriage in bad faith shall be
disqualified to inherit from the innocent spouse by testate and intestate
succession. (n)
Art. 44. If both spouses of the subsequent marriage acted in bad faith, said
marriage shall be void ab initio and all donations by reason of marriage and

testamentary disposition made by one in favor of the other are revoked by

operation of law. (n) 26
Based on the foregoing provisions, private respondent's ultimate prayer for
separation of property will simply be one of the necessary consequences of
the judicial declaration of absolute nullity of their marriage. Thus, petitioner's
suggestion that in order for their properties to be separated, an ordinary civil
action has to be instituted for that purpose is baseless. The Family Code has
clearly provided the effects of the declaration of nullity of marriage, one of
which is the separation of property according to the regime of property
relations governing them. It stands to reason that the lower court before
whom the issue of nullity of a first marriage is brought is likewise clothed with
jurisdiction to decide the incidental questions regarding the couple's
properties. Accordingly, the respondent court committed no reversible error in
finding that the lower court committed no grave abuse of discretion in denying
petitioner's motion to dismiss SP No. 1989-J.
WHEREFORE, the instant petition is hereby DENIED. The decision of
respondent Court dated February 7, 1992 and the Resolution dated March
20, 1992 are AFFIRMED.
SO ORDERED.
Bidin and Melo, JJ., concur.
Feliciano, J., is on leave.

Separate Opinions
VITUG, J., concurring:
I concur with the opinion so well expressed by Mme. Justice Flerida Ruth P.
Romero. I should like, however, to put in a modest observation.
Void marriages are inexistent from the very beginning and, I believe, no
judicial decree is required to establish their nullity, except in the following
instances:
(a) For purposes of remarriage pursuant to the provision of Article 40 of the
Family Code; viz.:
The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring such previous
marriage void. (n)
(b) A marriage celebrated prior to the effectivity of the Family Code in case a
party thereto was psychologically incapacitated to comply with the essential
marital obligations of marriage (Article 36, Family Code), where an action or
defense for the declaration of nullity prescribes ten (10) years after the Family
Code took effect (Article 39, Family Code); otherwise, the marriage is
deemed unaffected by the Family Code.
A void marriage, even without its being judicially declared a nullity, albeit the
preferability for, and justiciability (fully discussed in the majority opinion) of,

such a declaration, will not give it the status or the consequences of a valid
marriage, saving only specific instances where certain effects of a valid
marriage can still flow from the void marriage. Examples of these cases are
children of void marriages under Article 36 (due to psychological incapacity)
and Article 53, in relation to Article 52 (due to failure of partition, delivery of
presumptive legitimes of children and recording thereof following the
annulment or declaration of nullity a prior marriage), conceived or born before
the judicial declaration of nullity of such void marriages, who the law deems
as legitimate (Article 54, Family Code).
In most, if not in all, other cases, a void marriage is to be considered extant
per se. Neither the conjugal, partnership of gain under the old regime nor the
absolute community of property under the new Code (absent a marriage
settlement), will apply; instead, their property relations shall be governed by
the co-ownership rules under either Article 147 or Article 148 of the Family
Code. I must hasten to add as a personal view, however, that the exceptional
effects on children of a void marriage because of the psychological incapacity
of a party thereto should have been extended to cover even the personal and
property relations of the spouses. Unlike the other cases of void marriages
where the grounds therefor may be established by hard facts and with little
uncertainty, the term "psychological incapacity" is so relative and unsettling
that until a judicial declaration of nullity is made its interim effects can long
and literally hang on the balance not only insofar as the spouses themselves
are concerned but also as regards third persons with whom the spouses deal.
# Separate Opinions
VITUG, J., concurring:
I concur with the opinion so well expressed by Mme. Justice Flerida Ruth P.
Romero. I should like, however, to put in a modest observation.
Void marriages are inexistent from the very beginning and, I believe, no
judicial decree is required to establish their nullity, except in the following
instances:
(a) For purposes of remarriage pursuant to the provision of Article 40 of the
Family Code; viz.:
The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring such previous
marriage void. (n)
(b) A marriage celebrated prior to the effectivity of the Family Code in case a
party thereto was psychologically incapacitated to comply with the essential
marital obligations of marriage (Article 36, Family Code), where an action or
defense for the declaration of nullity prescribes ten (10) years after the Family
Code took effect (Article 39, Family Code); otherwise, the marriage is
deemed unaffected by the Family Code.
A void marriage, even without its being judicially declared a nullity, albeit the
preferability for, and justiciability (fully discussed in the majority opinion) of,

such a declaration, will not give it the status or the consequences of a valid
marriage, saving only specific instances where certain effects of a valid
marriage can still flow from the void marriage. Examples of these cases are
children of void marriages under Article 36 (due to psychological incapacity)
and Article 53, in relation to Article 52 (due to failure of partition, delivery of
presumptive legitimes of children and recording thereof following the
annulment or declaration of nullity a prior marriage), conceived or born before
the judicial declaration of nullity of such void marriages, who the law deems
as legitimate (Article 54, Family Code).
In most, if not in all, other cases, a void marriage is to be considered extant
per se. Neither the conjugal, partnership of gain under the old regime nor the
absolute community of property under the new Code (absent a marriage
settlement), will apply; instead, their property relations shall be governed by
the co-ownership rules under either Article 147 or Article 148 of the Family
Code. I must hasten to add as a personal view, however, that the exceptional
effects on children of a void marriage because of the psychological incapacity
of a party thereto should have been extended to cover even the personal and
property relations of the spouses. Unlike the other cases of void marriages
where the grounds therefor may be established by hard facts and with little
uncertainty, the term "psychological incapacity" is so relative and unsettling
that until a judicial declaration of nullity is made its interim effects can long
and literally hang on the balance not only insofar as the spouses themselves
are concerned but also as regards third persons with whom the spouses deal.

Medina vs CIR
G.R. No. L-15113
January 28, 1961
ANTONIO MEDINA, petitioner,
vs.
COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX
APPEALS respondents.
Eusebio D. Morales for petitioner.
Office of the Solicitor General for respondents.
REYES, J.B.L. J.:
Petition to review a decision of the Court of Tax Appeals upholding a tax
assessment of the Collector of Internal Revenue except with respect to the
imposition of so-called compromise penalties, which were set aside.
The records show that on or about May 20, 1944, petitioning taxpayer Antonio
Medina married Antonia Rodriguez. Before 1946, the spouses had neither
property nor business of their own. Later, however, petitioner acquired forest,
concessions in the municipalities of San Mariano and Palanan in the Province
of Isabela. From 1946 to 1948, the logs cut and removed by the petitioner
from his concessions were sold to different persons in Manila through his
agent, Mariano Osorio.

Some time in 1949, Antonia R. Medina, petitioner's wife, started to engage in

business as a lumber dealer, and up to around 1952, petitioner sold to her
almost all the logs produced in his San Mariano, concession. Mrs. Medina, In
turn, sold in Manila the logs bought from her husband through the same
agent, Mariano Osorio. The proceeds were, upon instructions from petitioner,
either received by Osorio for petitioner or deposited by said agent in
petitioner's current account with the Philippine National Bank.
On the thesis that the sales made by petitioner to his wife were null and void
pursuant to the provisions of Article 1490 of the Civil Code of the Philippines
(formerly, Art. 1458, Civil Code of 1889), the Collector considered the sales
made by Mrs. Medina as the petitioner's original sales taxable under Section
186 of the National Internal Revenue Code and, therefore, imposed a tax
assessment on petitioner, calling for the payment of P4,553.54 as deficiency
sales taxes and surcharges from 1949 to 1952. This same assessment of
September 26, 1953 sought also the collection of another sum of P643.94 as
deficiency sales tax and surcharge based on petitioner's quarterly returns
from 1946 to 1952.
On November 30, 1953, petitioner protested the assessment; however,
respondent Collector insisted on his demand. On July 9, 1954, petitioner filed
a petition for reconsideration revealing for the first time the existence of an
alleged premarital agreement of complete separation of properties between
him and his wife, and contending that the assessment for the years 1946 to
1952 had already prescribed. After one hearing, the Conference Staff of the
Bureau of Internal Revenue eliminated the 50% fraud penalty and held that
the taxes assessed against him before 1948 had already prescribed. Based
on these findings, the Collector issued a modified assessment, demanding
the payment of only P3,325.68, computed as follows:
5% tax due on P7,209.83 -1949
P 360.49
5% tax due on 16,945.55 - 1950
847.28
5% tax due on 16,874.52 - 1951
843.75
5% tax due on 11,009.94 - 1952
550.50
TOTAL sales tax due
P2,602.0
25% Surcharge thereon
650.51
Short taxes per quarterly returns, 3rd quarter, 1950
58.52
25% Surcharge thereon
14.63
TOTAL AMOUNT due & collectible
P3,325.68

Petitioner again requested for reconsideration, but respondent Collector, in

his letter of April 4, 1955, denied the same.
Petitioner appealed to the Court of Tax Appeals, which rendered judgment as
aforesaid. The Court's decision was based on two main findings, namely, (a)
that there was no premarital agreement of absolute separation of property
between the Medina spouse; and (b) assuming that there was such an
agreement, the sales in question made by petitioner to his wife were fictitious,
simulated, and not bona fide.
In his petition for review to this Court, petitioner raises several assignments of
error revolving around the central issue of whether or not the sales made by
the petitioner to his wife could be considered as his original taxable sales
under the provisions of Section 186 of the National Internal Revenue Code.
Relying mainly on testimonial evidence that before their marriage, he and his
wife executed and recorded a prenuptial agreement for a regime of complete
separation of property, and that all trace of the document was lost on account
of the war, petitioner imputes lack of basis for the tax court's factual finding
that no agreement of complete separation of property was ever executed by
and between the spouses before their marriage. We do not think so. Aside
from the material inconsistencies in the testimony of petitioner's witnesses
pointed out by the trial court, the circumstantial evidence is against
petitioner's claim. Thus, it appears that at the time of the marriage between
petitioner and his wife, they neither had any property nor business of their
own, as to have really urged them to enter into the supposed property
agreement. Secondly, the testimony that the separation of property
agreement was recorded in the Registry of Property three months before the
marriage, is patently absurd, since such a prenuptial agreement could not be
effective before marriage is celebrated, and would automatically be cancelled
if the union was called off. How then could it be accepted for recording prior
to the marriage? In the third place, despite their insistence on the existence of
the ante nuptial contract, the couple, strangely enough, did not act in
accordance with its alleged covenants. Quite the contrary, it was proved that
even during their taxable years, the ownership, usufruct, and administration of
their properties and business were in the husband. And even when the wife
was engaged in lumber dealing, and she and her husband contracted sales
with each other as aforestated, the proceeds she derived from her alleged
subsequent disposition of the logs incidentally, by and through the same
agent of her husband, Mariano Osorio were either received by Osorio for
the petitioner or deposited by said agent in petitioner's current account with
the Philippine National Bank. Fourth, although petitioner, a lawyer by
profession, already knew, after he was informed by the Collector on or about
September of 1953, that the primary reason why the sales of logs to his wife
could not be considered as the original taxable sales was because of the
express prohibition found in Article 1490 of the Civil Code of sales between
spouses married under a community system; yet it was not until July of 1954
that he alleged, for the first time, the existence of the supposed property

separation agreement. Finally, the Day Book of the Register of Deeds on

which the agreement would have been entered, had it really been registered
as petitioner insists, and which book was among those saved from the
ravages of the war, did not show that the document in question was among
those recorded therein.
We have already ruled that when the credibility of witnesses is the one at
issue, the trial court's judgment as to their degree of credence deserves
serious consideration by this Court (Collector vs. Bautista, et al., G.R. Nos.
L-12250 & L-12259, May 27, 1959). This is all the more true in this case
because not every copy of the supposed agreement, particularly the one that
was said to have been filed with the Clerk of Court of Isabela, was accounted
for as lost; so that, applying the "best evidence rule", the court did right in
giving little or no credence to the secondary evidence to prove the due
execution and contents of the alleged document (see Comments on the
Rules of Court, Moran, 1957 Ed., Vol. 3, pp. 10.12).
The foregoing findings notwithstanding, the petitioner argues that the
prohibition to sell expressed under Article 1490 of the Civil Code has no
application to the sales made by said petitioner to his wife, because said
transactions are contemplated and allowed by the provisions of Articles 7 and
10 of the Code of Commerce. But said provisions merely state, under certain
conditions, a presumption that the wife is authorized to engage in business
and for the incidents that flow therefrom when she so engages therein. But
the transactions permitted are those entered into with strangers, and do not
constitute exceptions to the prohibitory provisions of Article 1490 against
sales between spouses.
Petitioner's contention that the respondent Collector can not assail the
questioned sales, he being a stranger to said transactions, is likewise
untenable. The government, as correctly pointed out by the Tax Court, is
always an interested party to all matters involving taxable transactions and,
needless to say, qualified to question their validity or legitimacy whenever
necessary to block tax evasion.
Contracts violative of the provisions of Article 1490 of the Civil Code are null
and void (Uy Sui Pin vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca 45 Phil.
43). Being void transactions, the sales made by the petitioner to his wife were
correctly disregarded by the Collector in his tax assessments that considered
as the taxable sales those made by the wife through the spouses' common
agent, Mariano Osorio. In upholding that stand, the Court below committed no
error.
It is also the petitioner's contention that the lower court erred in using illegally
seized documentary evidence against him. But even assuming arguendo the
truth of petitioner's charge regarding the seizure, it is now settled in this
jurisdiction that illegally obtained documents and papers are admissible in
evidence, if they are found to be competent and relevant to the case (see
Wong & Lee vs. Collector of Internal Revenue, G.R. No. L-10155, August 30,
1958). In fairness to the Collector, however, it should be stated that

petitioner's imputation is vehemently denied by him, and relying on Sections

3, 9, 337 and 338 of the Tax Code and the pertinent portions of Revenue
Regulations No. V-1 and citing this Court's ruling in U.S. vs. Aviado, 38 Phil.
10, the Collector maintains that he and other internal revenue officers and
agents could require the production of books of accounts and other records
from a taxpayer. Having arrived at the foregoing conclusion, it becomes
unnecessary to discuss the other issues raised, which are but premised on
the assumption that a premarital agreement of total separation of property
existed between the petitioner and his wife.
WHEREFORE, the decision appealed from is affirmed, with costs against the
petitioner.
Padilla, Bautista Angelo, Labrador, Barrera, Gutierrez David and Dizon, JJ.,
concur.
Separate Opinions
CONCEPCION, J., concurring:
I concur in the result. I do not share the view that documents and papers
illegally obtained are admissible in evidence, if competent and relevant to the
case. In this connection, I believe in the soundness of the following
observations of the Supreme Court of the United States in Weeks v. United
States (232 US 383, 58 L. ed. 652, 34 S. Ct. 341):1
The effect of the Fourth Amendment is to put the courts of the United States
and Federal officials, in the exercise of their power and authority, under
limitations and restraints as to the exercise of such power and authority, an to
forever secure the people, their persons, houses, papers, and effects against
all unreasonable searches and seizures under the guise of law. This
protection reaches all alike, whether accused of crime or not, and the duty of
giving to it force and effect is obligatory upon all entrusted under our Federal
system with the enforcement of the laws. The tendency of those who execute
the criminal laws of the country to obtain conviction by means of unlawful
seizures and enforced confessions, the latter often obtained after subjecting
accused persons to unwarranted practices destructive of rights secured by
the Federal Constitution, should find no sanction in the judgments of the
courts which are charged at all times with the support of the Constitution and
to which people of all conditions have a right to appeal for the maintenance of
such fundamental rights.
xxx
xxx
xxx
If letters and private documents can thus be seized and held and used in
evidence, against a citizen accused of an offense, the protection of the
Fourth. Amendment declaring his right to be secured against such searches
and seizures is of no value, and, so far as those thus placed are concerned
well be stricken from the Constitution. The efforts of the courts and their
officials to bring the guilty to punishment, praiseworthy as they are, are not to
be aided by the sacrifice of those great principles established by years of
endeavor and suffering which have resulted in their embodiment in the

fundamental law of the land." as applied and amplified in Elkins v. United

States (June 27, 1960), 4 L. ed. 1669.

PIchel vs Alonzo
G.R. No. L-36902 January 30, 1982
LUIS PICHEL, petitioner,
vs.
PRUDENCIO ALONZO, respondent.
GUERRERO, J.:
This is a petition to review on certiorari the decision of the Court of First
Instance of Basilan City dated January 5, 1973 in Civil Case No. 820 entitled
"Prudencio Alonzo, plaintiff, vs. Luis Pichel, defendant."
This case originated in the lower Court as an action for the annulment of a
"Deed of Sale" dated August 14, 1968 and executed by Prudencio Alonzo, as
vendor, in favor of Luis Pichel, as vendee, involving property awarded to the
former by the Philippine Government under Republic Act No. 477. Pertinent
portions of the document sued upon read as follows:
That the VENDOR for and in consideration of the sum of FOUR THOUSAND
TWO HUNDRED PESOS (P4,200.00), Philippine Currency, in hand paid by
the VENDEE to the entire satisfaction of the VENDOR, the VENDOR hereby
sells transfers, and conveys, by way of absolute sale, all the coconut fruits of
his coconut land, designated as Lot No. 21 - Subdivision Plan No. Psd32465, situated at Balactasan Plantation, Lamitan, Basilan City, Philippines;
That for the herein sale of the coconut fruits are for all the fruits on the
aforementioned parcel of land presently found therein as well as for future
fruits to be produced on the said parcel of land during the years period; which
shag commence to run as of SEPTEMBER 15,1968; up to JANUARY 1, 1976
(sic);
That the delivery of the subject matter of the Deed of Sale shall be from time
to time and at the expense of the VENDEE who shall do the harvesting and
gathering of the fruits;
That the Vendor's right, title, interest and participation herein conveyed is of
his own exclusive and absolute property, free from any liens and
encumbrances and he warrants to the Vendee good title thereto and to
defend the same against any and all claims of all persons whomsoever. 1
After the pre-trial conference, the Court a quo issued an Order dated
November 9, 1972 which in part read thus:
The following facts are admitted by the parties:
Plaintiff Prudencio Alonzo was awarded by the Government that parcel of
land designated as Lot No. 21 of Subdivision Plan Psd 32465 of Balactasan,
Lamitan, Basilan City in accordance with Republic Act No. 477. The award
was cancelled by the Board of Liquidators on January 27, 1965 on the ground
that, previous thereto, plaintiff was proved to have alienated the land to

another, in violation of law. In 197 2, plaintiff's rights to the land were

reinstated.
On August 14, 1968, plaintiff and his wife sold to defendant an the fruits of the
coconut trees which may be harvested in the land in question for the period,
September 15, 1968 to January 1, 1976, in consideration of P4,200.00. Even
as of the date of sale, however, the land was still under lease to one, Ramon
Sua, and it was the agreement that part of the consideration of the sale, in the
sum of P3,650.00, was to be paid by defendant directly to Ramon Sua so as
to release the land from the clutches of the latter. Pending said payment
plaintiff refused to snow the defendant to make any harvest.
In July 1972, defendant for the first time since the execution of the deed of
sale in his favor, caused the harvest of the fruit of the coconut trees in the
land.
xxx xxx xxx
Considering the foregoing, two issues appear posed by the complaint and the
answer which must needs be tested in the crucible of a trial on the merits,
and they are:
First. Whether or nor defendant actually paid to plaintiff the full sum of
P4,200.00 upon execution of the deed of sale.
Second. Is the deed of sale, Exhibit 'A', the prohibited encumbrance
contemplated in Section 8 of Republic Act No. 477? 2
Anent the first issue, counsel for plaintiff Alonzo subsequently 'stipulated and
agreed that his client ... admits fun payment thereof by defendant. 3 The
remaining issue being one of law, the Court below considered the case submitted
for summary judgment on the basis of the pleadings of the parties, and the
admission of facts and documentary evidence presented at the pre-trial conference.

The lower court rendered its decision now under review, holding that although
the agreement in question is denominated by the parties as a deed of sale of
fruits of the coconut trees found in the vendor's land, it actually is, for all legal
intents and purposes, a contract of lease of the land itself. According to the
Court:
... the sale aforestated has given defendant complete control and enjoyment
of the improvements of the land. That the contract is consensual; that its
purpose is to allow the enjoyment or use of a thing; that it is onerous because
rent or price certain is stipulated; and that the enjoyment or use of the thing
certain is stipulated to be for a certain and definite period of time, are
characteristics which admit of no other conclusion. ... The provisions of the
contract itself and its characteristics govern its nature. 4
The Court, therefore, concluded that the deed of sale in question is an
encumbrance prohibited by Republic Act No. 477 which provides thus:
Sec. 8. Except in favor of the Government or any of its branches, units, or
institutions, land acquired under the provisions of this Act or any permanent
improvements thereon shall not be thereon and for a term of ten years from
and after the date of issuance of the certificate of title, nor shall they become

liable to the satisfaction of any debt contracted prior to the expiration of such
period.
Any occupant or applicant of lands under this Act who transfers whatever
rights he has acquired on said lands and/or on the improvements thereon
before the date of the award or signature of the contract of sale, shall not be
entitled to apply for another piece of agricultural land or urban, homesite or
residential lot, as the case may be, from the National Abaca and Other Fibers
Corporation; and such transfer shall be considered null and void. 5
The dispositive portion of the lower Court's decision states:
WHEREFORE, it is the judgment of this Court that the deed of sale, Exhibit
'A', should be, as it is, hereby declared nun and void; that plaintiff be, as he is,
ordered to pay back to defendant the consideration of the sale in the sum of
P4,200.00 the same to bear legal interest from the date of the filing of the
complaint until paid; that defendant shall pay to the plaintiff the sum of
P500.00 as attorney's fees.
Costs against the defendant. 6
Before going into the issues raised by the instant Petition, the matter of
whether, under the admitted facts of this case, the respondent had the right or
authority to execute the "Deed of Sale" in 1968, his award over Lot No. 21
having been cancelled previously by the Board of Liquidators on January 27,
1965, must be clarified. The case in point is Ras vs. Sua 7 wherein it was
categorically stated by this Court that a cancellation of an award granted pursuant
to the provisions of Republic Act No. 477 does not automatically divest the awardee
of his rights to the land. Such cancellation does not result in the immediate
reversion of the property subject of the award, to the State. Speaking through Mr.
Justice J.B.L. Reyes, this Court ruled that "until and unless an appropriate
proceeding for reversion is instituted by the State, and its reacquisition of the
ownership and possession of the land decreed by a competent court, the grantee
cannot be said to have been divested of whatever right that he may have over the
same property." 8

There is nothing in the record to show that at any time after the supposed
cancellation of herein respondent's award on January 27, 1965, reversion
proceedings against Lot No. 21 were instituted by the State. Instead, the
admitted fact is that the award was reinstated in 1972. Applying the doctrine
announced in the above-cited Ras case, therefore, herein respondent is not
deemed to have lost any of his rights as grantee of Lot No. 21 under Republic
Act No. 477 during the period material to the case at bar, i.e., from the
cancellation of the award in 1965 to its reinstatement in 1972. Within said
period, respondent could exercise all the rights pertaining to a grantee with
respect to Lot No. 21.
This brings Us to the issues raised by the instant Petition. In his Brief,
petitioner contends that the lower Court erred:
1. In resorting to construction and interpretation of the deed of sale in
question where the terms thereof are clear and unambiguous and leave no
doubt as to the intention of the parties;

2. In declaring granting without admitting that an interpretation is

necessary the deed of sale in question to be a contract of lease over the
land itself where the respondent himself waived and abandoned his claim that
said deed did not express the true agreement of the parties, and on the
contrary, respondent admitted at the pre-trial that his agreement with
petitioner was one of sale of the fruits of the coconut trees on the land;
3. In deciding a question which was not in issue when it declared the deed of
sale in question to be a contract of lease over Lot 21;
4. In declaring furthermore the deed of sale in question to be a contract of
lease over the land itself on the basis of facts which were not proved in
evidence;
5. In not holding that the deed of sale, Exhibit "A" and "2", expresses a valid
contract of sale;
6. In not deciding squarely and to the point the issue as to whether or not the
deed of sale in question is an encumbrance on the land and its improvements
prohibited by Section 8 of Republic Act 477; and
7. In awarding respondent attorney's fees even granting, without admitting,
that the deed of sale in question is violative of Section 8 of Republic Act 477.
The first five assigned errors are interrelated, hence, We shall consider them
together. To begin with, We agree with petitioner that construction or
interpretation of the document in question is not called for. A perusal of the
deed fails to disclose any ambiguity or obscurity in its provisions, nor is there
doubt as to the real intention of the contracting parties. The terms of the
agreement are clear and unequivocal, hence the literal and plain meaning
thereof should be observed. Such is the mandate of the Civil Code of the
Philippines which provides that:
Art. 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall
control ... .
Pursuant to the afore-quoted legal provision, the first and fundamental duty of
the courts is the application of the contract according to its express terms,
interpretation being resorted to only when such literal application is
impossible. 9
Simply and directly stated, the "Deed of Sale dated August 14, 1968 is
precisely what it purports to be. It is a document evidencing the agreement of
herein parties for the sale of coconut fruits of Lot No. 21, and not for the lease
of the land itself as found by the lower Court. In clear and express terms, the
document defines the object of the contract thus: "the herein sale of the
coconut fruits are for an the fruits on the aforementioned parcel of land during
the years ...(from) SEPTEMBER 15, 1968; up to JANUARY 1, 1976."
Moreover, as petitioner correctly asserts, the document in question expresses
a valid contract of sale. It has the essential elements of a contract of sale as
defined under Article 1485 of the New Civil Code which provides thus:

Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
The subject matter of the contract of sale in question are the fruits of the
coconut trees on the land during the years from September 15, 1968 up to
January 1, 1976, which subject matter is a determinate thing. Under Article
1461 of the New Civil Code, things having a potential existence may be the
object of the contract of sale. And in Sibal vs. Valdez, 50 Phil. 512, pending
crops which have potential existence may be the subject matter of the sale.
Here, the Supreme Court, citing Mechem on Sales and American cases said
which have potential existence may be the subject matter of sale. Here, the
Supreme Court, citing Mechem on Sales and American cases said:
Mr. Mechem says that a valid sale may be made of a thing, which though not
yet actually in existence, is reasonably certain to come into existence as the
natural increment or usual incident of something already in existence, and
then belonging to the vendor, and the title will vest in the buyer the moment
the thing comes into existence. (Emerson vs. European Railway Co., 67 Me.,
387; Cutting vs. Packers Exchange, 21 Am. St. Rep. 63) Things of this nature
are said to have a potential existence. A man may sell property of which he is
potentially and not actually possess. He may make a valid sale of the wine
that a vineyard is expected to produce; or the grain a field may grow in a
given time; or the milk a cow may yield during the coming year; or the wool
that shall thereafter grow upon sheep; or what may be taken at the next case
of a fisherman's net; or fruits to grow; or young animals not yet in existence;
or the goodwill of a trade and the like. The thing sold, however, must be
specific and Identified. They must be also owned at the time by the vendor.
(Hull vs. Hull 48 Conn. 250 (40 Am. Rep., 165) (pp. 522-523).
We do not agree with the trial court that the contract executed by and
between the parties is "actually a contract of lease of the land and the
coconut trees there." (CFI Decision, p. 62, Records). The Court's holding that
the contract in question fits the definition of a lease of things wherein one of
the parties binds himself to give to another the enjoyment or use of a thing for
a price certain and for a period which may be definite or indefinite (Art. 1643,
Civil Code of the Philippines) is erroneous. The essential difference between
a contract of sale and a lease of things is that the delivery of the thing sold
transfers ownership, while in lease no such transfer of ownership results as
the rights of the lessee are limited to the use and enjoyment of the thing
leased.
In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme Court held:
Since according to article 1543 of the same Code the contract of lease is
defined as the giving or the concession of the enjoyment or use of a thing for
a specified time and fixed price, and since such contract is a form of
enjoyment of the property, it is evident that it must be regarded as one of the
means of enjoyment referred to in said article 398, inasmuch as the terms

enjoyment, use, and benefit involve the same and analogous meaning
relative to the general utility of which a given thing is capable. (104
Jurisprudencia Civil, 443)
In concluding that the possession and enjoyment of the coconut trees can
therefore be said to be the possession and enjoyment of the land itself
because the defendant-lessee in order to enjoy his right under the contract,
he actually takes possession of the land, at least during harvest time, gather
all of the fruits of the coconut trees in the land, and gain exclusive use thereof
without the interference or intervention of the plaintiff-lessor such that said
plaintiff-lessor is excluded in fact from the land during the period aforesaid,
the trial court erred. The contract was clearly a "sale of the coconut fruits."
The vendor sold, transferred and conveyed "by way of absolute sale, all the
coconut fruits of his land," thereby divesting himself of all ownership or
dominion over the fruits during the seven-year period. The possession and
enjoyment of the coconut trees cannot be said to be the possession and
enjoyment of the land itself because these rights are distinct and separate
from each other, the first pertaining to the accessory or improvements
(coconut trees) while the second, to the principal (the land). A transfer of the
accessory or improvement is not a transfer of the principal. It is the other way
around, the accessory follows the principal. Hence, the sale of the nuts
cannot be interpreted nor construed to be a lease of the trees, much less
extended further to include the lease of the land itself.
The real and pivotal issue of this case which is taken up in petitioner's sixth
assignment of error and as already stated above, refers to the validity of the
"Deed of Sale", as such contract of sale, vis-a-vis the provisions of Sec. 8,
R.A. No. 477. The lower Court did not rule on this question, having reached
the conclusion that the contract at bar was one of lease. It was from the
context of a lease contract that the Court below determined the applicability of
Sec. 8, R.A. No. 477, to the instant case.
Resolving now this principal issue, We find after a close and careful
examination of the terms of the first paragraph of Section 8 hereinabove
quoted, that the grantee of a parcel of land under R.A. No. 477 is not
prohibited from alienating or disposing of the natural and/or industrial fruits of
the land awarded to him. What the law expressly disallows is the
encumbrance or alienation of the land itself or any of the permanent
improvements thereon. Permanent improvements on a parcel of land are
things incorporated or attached to the property in a fixed manner, naturally or
artificially. They include whatever is built, planted or sown on the land which is
characterized by fixity, immutability or immovability. Houses, buildings,
machinery, animal houses, trees and plants would fall under the category of
permanent improvements, the alienation or encumbrance of which is
prohibited by R.A. No. 477. While coconut trees are permanent improvements
of a land, their nuts are natural or industrial fruits which are meant to be
gathered or severed from the trees, to be used, enjoyed, sold or otherwise
disposed of by the owner of the land. Herein respondents, as the grantee of

Lot No. 21 from the Government, had the right and prerogative to sell the
coconut fruits of the trees growing on the property.
By virtue of R.A. No. 477, bona fide occupants, veterans, members of guerilla
organizations and other qualified persons were given the opportunity to
acquire government lands by purchase, taking into account their limited
means. It was intended for these persons to make good and productive use
of the lands awarded to them, not only to enable them to improve their
standard of living, but likewise to help provide for the annual payments to the
Government of the purchase price of the lots awarded to them. Section 8 was
included, as stated by the Court a quo, to protect the grantees from
themselves and the incursions of opportunists who prey on their misery and
poverty." It is there to insure that the grantees themselves benefit from their
respective lots, to the exclusion of other persons.
The purpose of the law is not violated when a grantee sells the produce or
fruits of his land. On the contrary, the aim of the law is thereby achieved, for
the grantee is encouraged and induced to be more industrious and
productive, thus making it possible for him and his family to be economically
self-sufficient and to lead a respectable life. At the same time, the
Government is assured of payment on the annual installments on the land.
We agree with herein petitioner that it could not have been the intention of the
legislature to prohibit the grantee from selling the natural and industrial fruits
of his land, for otherwise, it would lead to an absurd situation wherein the
grantee would not be able to receive and enjoy the fruits of the property in the
real and complete sense.
Respondent through counsel, in his Answer to the Petition contends that even
granting arguendo that he executed a deed of sale of the coconut fruits, he
has the "privilege to change his mind and claim it as (an) implied lease," and
he has the "legitimate right" to file an action for annulment "which no law can
stop." He claims it is his "sole construction of the meaning of the transaction
that should prevail and not petitioner. (sic). 10 Respondent's counsel either
misapplies the law or is trying too hard and going too far to defend his client's
hopeless cause. Suffice it to say that respondent-grantee, after having received the
consideration for the sale of his coconut fruits, cannot be allowed to impugn the
validity of the contracts he entered into, to the prejudice of petitioner who
contracted in good faith and for a consideration.

The issue raised by the seventh assignment of error as to the propriety of the
award of attorney's fees made by the lower Court need not be passed upon,
such award having been apparently based on the erroneous finding and
conclusion that the contract at bar is one of lease. We shall limit Ourselves to
the question of whether or not in accordance with Our ruling in this case,
respondent is entitled to an award of attorney's fees. The Civil Code provides
that:
Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
We find that none of the legal grounds enumerated above exists to justify or
warrant the grant of attorney's fees to herein respondent.
IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby
set aside and another one is entered dismissing the Complaint. Without
costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez, Melencio-Herrera and Plana,
JJ., concur.