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G.R. No. 144320 5). During the pendency of the proceedings and
Promulgated: upon the oral instructions of Ricardo Gurrea, Atty.
April 26, 2006 Suplico negotiated with the other heirs of Adelina
Gurrea regarding the transfer of the piso
(apartment building) in Spain to Ricardo Gurreas
NATIVIDAD ARIAGA VDA. DE GURREA, CARLOS daughter, Juliet Gurrea
GURREA, JULIETA GURREA, TERESA GURREA- de Melendres. Ricardo Gurrea further instructed
RODRIGUEZ, RICARDO GURREA, Jr., MA. VICTORIA
Atty. Suplico not to enter into any settlement with
GURREA-CANDEL, and RAMONA GURREA-
the heirs unless the piso is transferred to his
MONTINOLA,
daughter.Finally, the transfer of the piso worth
Petitioners,
P64,000.00 was executed and the heirs arrived at
an amicable settlement regarding the estate of
Adelina Gurrea. Hence, Ricardo Gurrea withdrew
his Opposition and the heirs then drew up a project
of partition which was eventually approved by the
- versus -
probate court. Pursuant to the project of partition,
the following properties were adjudicated to Ricardo
Gurrea: (1) the whole of the Baguio lot (with
assessed value of P26,350.00); (2) the whole of
ENRIQUE SUPLICO, the San Juan lot (with assessed value of
Respondent. P9,630.00); and (3) a parcel of land in Pontevedra,
Negros Occidental (with assessed value of
x------------------------x P300.00). (Exhibit R for plaintiff and exhibit 19 for
defendant).
DECISION
As payment of his attorneys fees, Ricardo
AUSTRIA-MARTINEZ, J.: Gurrea offered the San Juan lot to Atty. Suplico
who was initially hesitant to accept the same as the
Before us is a petition for review on certiorari under Rule 45 of property is occupied by squatters. However, in order
the Rules of Court assailing the Decision [1] of the Court of not to antagonize his client, Atty. Suplico agreed to
Appeals (CA) dated February 24, 2000 in CA-G.R. CV No.
Ricardo Gurreas proposal with the further
56210, which affirmed in toto the Decision[2] dated July 5, 1996
understanding that he will receive an additional
of the Regional Trial Court (RTC) of Pasig City, Branch 268, in
Civil Case No. 47543; and the CA Resolution [3] dated August 7, commission of 5% if he sells
2000 which denied petitioners motion for reconsideration. the Baguio property. Thereafter, the deed of
The present petition arose from a complaint for annulment of Transfer of Rights and Interest was drafted. The
title with prayer for preliminary injunction filed with the Court said deed was presented to Ricardo Gurrea for his
of First Instance (CFI) of Rizal, docketed as Civil Case No. signature. That before signing the same, the
47543, by Rosalina Gurrea (plaintiff) in her capacity as contents of the deed were first explained to Ricardo
attorney-in-fact of the heirs of Ricardo Gurrea (Ricardo),
Gurrea by Atty. Suplico and Atty. Manuel Pama, the
namely: Natividad, Carlos, Juliet and Ricardo, Jr., all surnamed
Gurrea, and Teresa Gurrea Colemenares. [4] The complaint was
notary public. On August 20, 1975, the deed was
filed against Atty. Enrique Suplico (defendant), Gen. Gaudencio finally signed by Ricardo Gurrea at the office of
Tobias, in his capacity as General Manager of the National Atty. Pama, in the presence of the latter, Atty.
Housing Authority, and Joseph Estrada, in his capacity as Suplico, Victor Tupas and another person, the last
Municipal Mayor of San Juan, Rizal.[5] two acting as witnesses. Later, on October 7, 1980,
Atty. Suplico registered the deed and obtained a
The CA adopted the facts of the case as summarized by the title/TCT to the San Juan property under his name.
RTC, to wit:
Ricardo Gurrea died on October 22, 1980. After his
The lot in question situated at 245 Marne
death, his heirs instituted Special Pro. No. 2722 for
Street, San Juan, Metro Manila was originally
the settlement of Ricardo Gurreas estate. In the
owned by one of herein plaintiffs Attorney-in-Fact,
said proceedings, Atty. Suplico filed several claims
Rosalina Gurrea, as evidence (sic) by TCT No.
for unpaid attorneys fees (no claim was filed relative
49767 (Exhibit A). That sometime in 1958, Rosalina
to Special Proc. No. 7185); however, all were
Gurrea transferred the ownership of said lot to
dismissed with finality (Exhibits I and J). Also in
Adelina Gurrea, whose ownership was evidenced by
the same case, the estates administrator, Carlos
TCT No. 58253 (Exhibit
Gurrea, filed an Inventory of Properties left by the
B). That Adelina Gurrea continued to be the owner
decedent, which did not initially include the
of the lot until her death. Thereafter, Special
property subject of this case. The said lot was
Proceedings No. 7185 was instituted to have the will
included only subsequently in the Amended
she executed during her lifetime probated and to
Inventory (Exhibit G).[6]
settle her estate. Under the said will, the San
Juan lot was bequeathed to Pilar and Luis Gurrea,
while 700,000 pesetas, of the lot in Baguio City and On July 11, 1985, the RTC issued an Order dismissing
a one-hectare piece of land in Pontevedra, Negros the complaint on the ground that it does not state a cause of
Occidental were given to Ricardo Gurrea. action because the plaintiff is not the real party-in-interest.
[7]
The complaint-in-intervention was likewise
Ricardo Gurrea, represented by and dismissed. Plaintiff filed an appeal with the CA questioning
through his counsel Atty. Enrique Suplico (the the July 11, 1985 Order of the RTC.[8] The case was docketed as
CA-G.R. CV No. 14790.
defendant), filed an Opposition in Special Proc. No.
7185. In consideration of said representation, Thereafter, defendant filed a Motion for Issuance of
Ricardo Gurrea agreed to pay Atty. Suplico a Writ of Execution Pending Appeal. [9] In its Order dated May 20,
contingent fee of twenty (20%) of whatever is due 1986, the RTC granted defendants motion. [10] Plaintiff then filed
a petition for certiorari, prohibition and mandamus with the CA
seeking to annul the trial courts Order of May 20, 1986. The On the other hand, defendant-appellant asserted that
case was docketed as CA-G.R. SP No. 09394. the RTC erred in refusing to dismiss the complaint for lack of
cause of action; and in refusing to award counterclaim in his
Subsequently, CA-G.R. CV No. 14790 and CA-G.R. SP favor.
No. 09394 were consolidated.
On February 24, 2000, the CA rendered its Decision
On November 21, 1989, the CA promulgated its affirming, in toto, the judgment of the RTC. The CA maintained
Decision in the consolidated cases, the dispositive portion of the lower courts ruling that the plaintiffs-appellants failed to
which reads as follows: present clear and convincing evidence that defendant-appellant
defrauded and exerted undue influence on Ricardo in the latters
execution of the deed of Transfer of Rights and Interest and in
WHEREFORE, judgment is hereby consequently transferring his ownership of the San Juan lot in
rendered, as follows: his (defendant-appellants) favor; and that based on the
evidence, the San Juan lot may be considered as reasonable
(1) REVERSING the order appealed attorneys fees for defendant-appellant.
from in CA-G.R. CV No. 14790 and
GRANTING the appellant Rosalina Gurrea a However, the CA did not discuss the issue of whether
period of sixty (60) days from finality of this the contract of attorneys fees between the late Ricardo and
decision within which to implead in Civil defendant-appellant and the consequent transfer of rights and
Case No. 47543 the real parties-in-interest; interest in favor of the latter is invalid for being violative of
after compliance herewith by the appellant, Article 1491 of the Civil Code.
the trial court shall proceed to hear and
decide the case accordingly; and Plaintiffs-appellants (hereinafter petitioners), with the
exception of plaintiff-appellant Rosalina Gurrea, who died on
(2) GRANTING the petition for June 2, 1999, filed a Motion for Reconsideration, but the CA
certiorari and prohibition in CA-G.R. SP No. denied the same in a Resolution issued on August 7, 2000.
09394, hereby ANNULLING and SETTING
ASIDE the respondent Courts order dated Hence, the present petition raising the following
May 20, 1986, granting the respondent issues:
Enrique Suplicos motion for execution
pending appeal (Annex C, petition), and the
writ issued pursuant thereto (Annex D, 1. WHETHER OR NOT, ASSUMING
petition). WITHOUT ADMITTING, THAT THE
TRANSFER OF RIGHTS AND
Costs against the appellee and INTERESTS (EXHIBIT E; 1) WAS DULY
respondent Enrique Suplico in both cases. EXECUTED BY RICARDO GURREA, THE
SAME VIOLATES ARTICLE 1491 OF THE
SO ORDERED.[11] NEW CIVIL CODE AND, THEREFORE,
Accordingly, an Amended Complaint was filed in the NULL AND VOID.
RTC impleading the heirs of Ricardo as additional plaintiffs, to
wit: Natividad Ariaga Vda. de Gurrea, Carlos Gurrea, Julieta 2. WHETHER OR NOT THE SUPPOSED
Gurrea, Teresa Gurrea-Rodriguez, Ricardo Gurrea, Jr., Ma. CONTRACT FOR ATTORNEYS FEES IN
Victoria Gurrea Candel and Ramona Gurrea-Montinola. THE FORM OF THE MANIFESTATION
[12]
Thereafter, trial ensued. DATED JUNE 24, 1972 (EXHIBIT 5)
PROVIDING FOR THE PAYMENT OF
In the course of the trial, Gen. Gaudencio Tobias of the ATTORNEYS FEES OUT OF THE
NHA and then Mayor Joseph Estrada of San Juan, were PROPERTIES IN LITIGATION, IS VALID;
dropped as defendants upon motion of plaintiffs and without
the objection of defendant. 3. WHETHER OR NOT, ASSUMING THAT
THE MANIFESTATION AND TRANSFER
After trial, the RTC rendered judgment the dispositive OF RIGHTS AND INTERESTS ARE
portion of which reads: VALID, AND FURTHER ASSUMING THAT
RESPONDENT-ATTORNEY HAS NOT YET
WHEREFORE, taking all the BEEN PAID HIS ATTORNEYS FEES IN
foregoing into consideration, the Court finds SPECIAL PROCEEDINGS NO. 7185, THE
that the preponderance of evidence is in favor PAYMENT OF SAID FEES BY WAY OF
of the defendant and against the plaintiffs, THE WHOLE PROPERTY SUBJECT
hence, orders the DISMISSAL of the above MATTER OF THE INSTANT CASE IS
entitled case. No pronouncement as to UNCONSCIONABLE OR
damages, costs and attorneys fees. UNREASONABLE CONSIDERING THE
GUIDELINES FOR FIXING ATTORNEYS
SO ORDERED.[13] FEES;
Plaintiffs and defendant appealed the case to the CA. 4. WHETHER OR NOT PETITIONERS ARE
ENTITLED TO THE CANCELLATION OF
Plaintiffs-appellants contended that the RTC erred: in RESPONDENT ATTORNEYS TITLE OVER
upholding the validity of the supposed contract of attorneys fees THE SUBJECT PROPERTY AND THE
between Ricardo and defendant-appellant which provided for RECONVEYANCE THEREOF TO THE
the payment of attorneys fees in the form of real property HEREIN PETITIONERS OR TO THE
because such an agreement is prohibited by Article 1491 of the ESTATE OF THE LATE RICARDO
Civil Code; in limiting its evaluation of the transfer of rights and GURREA.
interests in defendant-appelants favor only on the basis of
whether the deed evidencing said transfer of rights and 5. WHETHER OR NOT PETITIONERS ARE
interests was forged, without regard to the facts and ENTITLED TO THE DAMAGES CLAIMED
circumstances surrounding its execution; in not finding that IN THE ACTION SUBSTANTIATED BY
defendant-appellant has been fully paid for all the services he THEIR EVIDENCE.[14]
had rendered for Ricardo; in not declaring the payment of the
subject lot as attorneys fees to be unconscionable based on the
guidelines for determining attorneys fees.
As to the first issue, petitioners argue on the premise However, there are recognized exceptions to this
that, under the law, estate proceedings shall be deemed closed rule, to wit:
and terminated when the court declares it to be so and only
after delivery of the remaining estate to the heirs entitled to
(1) when the findings are
receive the same. Petitioners contend that no evidence was
presented to show that the probate court issued an order
grounded entirely on speculation,
declaring Special Proceedings No. 7185 closed and surmises or conjectures; (2) when the
terminated. In addition, when the Transfer of Rights and inference made is manifestly mistaken,
Interest in favor of respondent was notarized on August 20, absurd or impossible; (3) when there is
1975, the title over the subject lot was still in the name of grave abuse of discretion; (4) when the
Adelina Gurrea and that said title was transferred only in the judgment is based on a
name of Ricardo on October 7, 1980. On these bases, misapprehension of facts; (5) when the
petitioners conclude that at the time the Transfer of Rights and
findings of facts are conflicting; (6) when
Interest was notarized, there is no dispute that the subject
property still formed part of the estate of Adelina Gurrea and
in making its findings the CA went
was, therefore, still the subject of litigation. Hence, the transfer beyond the issues of the case, or its
of rights and interest over the subject property in favor of Atty. findings are contrary to the admissions
Suplico (respondent) is null and void. of both the appellant and the appellee;
(7) when the findings are contrary to the
Anent the second issue, petitioners contend that the trial court; (8) when the findings are
Manifestation dated June 24, 1972 executed by Ricardo conclusions without citation of specific
providing for the payment in favor of respondent of a contingent
evidence on which they are based; (9)
fee of twenty percent (20%) of whatever is due to Ricardo, either
real or personal property is invalid because based on when the facts set forth in the petition
jurisprudence, attorneys fees, based on a contingent fee as well as in the petitioners main and
contract, may be paid only out of a certain percentage of the reply briefs are not disputed by the
value of the real property in litigation; and that the real respondent; (10) when the findings of
property itself may not be given as payment of attorneys fees. fact are premised on the supposed
absence of evidence and contradicted by
As to the third issue, petitioners assert that even
the evidence on record; and (11) when
assuming that the above-mentioned Manifestation and Transfer
the CA manifestly overlooked certain
of Rights and Interest are valid and that respondent had not yet
been paid his attorneys fees, the subject property is an relevant facts not disputed by the
unreasonable and unconscionable payment for the actual parties, which, if properly considered,
services that respondent had rendered for Ricardo, taking into could justify a different conclusion.[17]
consideration the guidelines for fixing attorneys fees.
The Court finds the present case falling under the
Petitioners did not elaborate on the fourth issue while, second exception for reasons discussed hereunder.
in the fifth issue, they submitted to the discretion of the Court
their entitlement to damages and attorneys fees, as claimed
At the outset, it should be stressed that the
before the trial court.
question as to whether the deed of Transfer of Rights and
On his part, respondent contends that the issue as to Interest was forged was resolved by the CA when it
whether Special Proceedings No. 7185 was already closed and affirmed the ruling of the RTC that herein petitioners
terminated at the time of execution of the deed of Transfer of failed to present clear, convincing and satisfactory
Rights and Interest, involves the determination of factual evidence that respondent defrauded Ricardo. The CA
matters and appreciation of pieces of evidence which cannot be also ruled that there is no evidence on record to show
raised in a petition for review on certiorari before this
that the signature of the late Ricardo on the questioned
Court. Even assuming that petitioners may properly raise a
deed is simulated or false. This matter is not assailed in
factual issue in the present petition, respondent submits that
there is sufficient evidentiary basis for the trial courts the present petition.
conclusion that the Transfer of Rights and Interest was
executed and entered into after the termination of Special However, despite having been specifically
Proceedings No. 7185. Respondent also contends that based on assigned as an error by petitioners in their appellants
jurisprudence, the Court has upheld the validity of contingency brief filed with the CA, the appellate court failed to rule
fee contracts providing for the payment of attorneys fees out of a on the question of whether the subject Transfer of Rights
portion or part of the property subject of litigation; that the
and Interest was executed even before the estate
subject property is just, reasonable and equitable payment for
proceedings were closed and terminated.
the services he rendered for the late Ricardo, consisting of the
signing of the Project of Partition, filing of an Opposition during
the estate proceedings, and negotiating with the other heirs Anent the first issue, it is necessary to resolve
which resulted in Ricardos recovery of three parcels of land. whether the subject property was still the object of
litigation at the time the deed of Transfer of Rights and
The Court finds the petition meritorious. Interest in favor of respondent was executed; and if so,
whether the same should be considered null and void for
It is a fundamental rule that the Supreme being violative of the provisions of Article 1491 of the
Courts jurisdiction in a petition for review Civil Code.
on certiorari as a mode of appeal under Rule 45 of the Article 1491(5) of the Civil Code provides:
Rules of Court, as amended, such as the one at bar, is
limited to reviewing only errors of law, not of fact. [15] The 1491. The following persons
rationale of this rule is founded on the fact that cannot acquire by purchase, even at a
the Court is not a trier of facts and does not normally public or judicial auction, either in
undertake the re-examination of the evidence presented person or through the mediation of
by the contending parties during the trial of the case another:
considering that the findings of facts of the CA are
conclusive and binding on the Court.[16]
(5) Justices, judges, prosecuting
attorneys, clerks of superior and inferior
courts, and other officers and employees judicial action of the judge.[19] In the present case, there
connected with the administration of is no proof to show that at the time the deed of Transfer
justice, the property and rights in of Rights and Interest was executed, the probate court
litigation or levied upon an execution had issued an order granting the Motion for Termination
before the court within whose of Proceeding and Discharge of the Executor and
jurisdiction or territory they exercise Bond. Since the judge has yet to act on the above-
their respective functions; this mentioned motion, it follows that the subject property
prohibition includes the act of which is the subject matter of the deed of Transfer of
acquiring by assignment and shall Rights and Interest, is still the object of litigation, that is
apply to lawyers, with respect to the Special Proceedings No. 7185.
property and rights which may be the
Furthermore, we agree with the petitioners
object of any litigation in which they
undisputed contention that when the deed of Transfer of
may take part by virtue of their
Rights and Interest was executed, the title over the
profession. subject lot was still in the name of Adelina Gurrea and
that it was only on October 7, 1980 that the title was
(emphasis supplied) transferred in the name of Ricardo. The rule is that as
long as the order for the distribution of the estate has
In its Decision, the RTC made the following not been complied with, the probate proceedings cannot
disquisition: be deemed closed and terminated.[20] The probate court
loses jurisdiction of an estate under administration only
after the payment of all the debts and the remaining
[A]ccording to the evidence for estate delivered to the heirs entitled to receive the same.
the defendant, a Motion for Termination [21]
In the present case, while the subject lot was assigned
of Proceeding and Discharge of the as Ricardos share in the project of partition executed by
Executor and Bond dated June 20, 1975 the heirs of Adelina Gurrea, the title over the subject lot
was filed in the case, alleging in was still in the name of the latter and was not yet
paragraphs 3 and 5 thereof, that the conveyed to Ricardo when the Transfer of Rights and
executor Angel E. Ordoez has already Interest was executed. As correctly cited by petitioners,
turned over to the respective heirs and the Court held in Lucero v. Baaga[22] that:
devisees all their respective shares in
accordance with the Project of Partition [t]he term delivery or tradition
duly approved by the Court. Thereafter, has two aspects: (1) the de jure delivery
more than one month from the filing
or the execution of deeds of conveyance
thereof, the Transfer of Rights and
and (2) the delivery of the material
Interest was executed on August 20,
possession (Florendo vs. Foz, 20 Phil.
1975. Hence, at the time of the 388, 393). The usual practice is that, if
execution of the questioned the land to be delivered is in the name of
document, it may be concluded that the decedent, the administrator executes
Special Proceedings No. 7185 had a deed, conveying the land to the
been terminated. The property in San distributee. That deed, together with the
Juan is no longer the subject of a project of partition, the order approving
litigation and may be alienated by the it, the letters of administration and the
client to his lawyer as payment of certification as to the payment of the
attorneys fees rendered. (emphasis estate, inheritance and realty taxes, is
supplied) registered in the corresponding Registry
of Deeds. Title would then be issued to
It is clear from the above-quoted ruling of the trial court the distributee. Thereafter, the
that its sole basis in concluding that Special Proceedings administrator or executor places him in
No. 7185 had been terminated and that the subject material possession of the land if the
property is no longer the object of litigation at the time same is in the custody of the former.[23]
the deed of Transfer of Rights and Interest was executed
on August 20, 1975 is the allegation of the executor, It follows that, since at the time of execution of the deed
Angel E. Ordoez, in his Motion[18] for Termination of of Transfer of Rights and Interest, the subject property
Proceeding and Discharge of the Executor and Bond still formed part of the estate of Adelina, and there being
dated June 20, 1975, that he had already turned over to no evidence to show that material possession of the
the respective heirs and devisees all their respective property was given to Ricardo, the probate proceedings
shares in accordance with the project of partition duly concerning Adelinas estate cannot be deemed to have
approved by the probate court. been closed and terminated and the subject property
still the object of litigation.
The Court finds the trial courts inference to be
without sufficient basis. How can the trial court Having been established that the subject
conclude that Special Proceedings No. 7185 had been property was still the object of litigation at the time the
terminated and the subject property no longer the object subject deed of Transfer of Rights and Interest was
of litigation when no evidence was presented to show executed, the assignment of rights and interest over the
that when the Transfer of Rights and Interest was subject property in favor of respondent is null and void
executed, the probate court had already issued an order for being violative of the provisions of Article 1491 of the
declaring the estate proceedings closed and Civil Code which expressly prohibits lawyers from
terminated? A thing is said to be in litigation not only if acquiring property or rights which may be the object of
there is some contest or litigation over it in court, but any litigation in which they may take part by virtue of
also from the moment that it becomes subject to the their profession.
the court should determine who are the persons entitled to
Article 1409 of the same Code provides, among such indemnity.[26] The power of the courts to grant damages
others, that contracts which are expressly prohibited or and attorneys fees demands factual, legal and equitable
justification; its basis cannot be left to speculation or
declared void by law are considered inexistent and void
conjecture.[27] In the present case, no allegation, much less,
from the beginning. evidence was presented by petitioners to prove that they are
entitled to damages.
Anent the second issue, the Court has already
held that the said property is still the object of litigation WHEREFORE, the assailed Decision and Resolution of
at the time the subject Manifestation and Transfer of the Court of Appeals in CA-G.R. No. CV No. 56210 together with
Rights and Interest were executed and, thus, may not be the Decision dated July 5, 1996 of the Regional Trial Court of
acquired by respondent pursuant to the provisions of Pasig City, Branch 268 in Civil Case No. 47543
Article 1491 of the Civil Code. are REVERSED and SET ASIDE. A new judgment is rendered
canceling Transfer Certificate of Title No. 24474 in the name of
respondent Enrique P. Suplico and reinstating Transfer
Considering that the subject Transfer of Rights
Certificate of Title No. 24473 in the name of Ricardo Gurrea.
and Interest is null and void, the Court no longer finds it
necessary to resolve the third issue. No pronouncement as to costs.
SO ORDERED.
As to the fourth issue, it follows that
respondents title over the subject property should be
cancelled and the property reconveyed to the estate of
Ricardo, the same to be distributed to the latters
heirs. This is without prejudice, however, to respondents
right to claim his attorneys fees from the estate of
Ricardo, it being undisputed that he rendered legal
services for the latter.
Obviously in response to the foregoing letter, private (5) Ordering the defendant to pay the
respondent decided to purchase a new distributor bar plaintiff the sum of One Thousand Pesos
and, on March 16, 1978, private respondent delivered (Pl,000.00) for attorney's fees.
this spare part to petitioner through one Pedro Candido.
However, when thereafter petitioner asked private Costs against the defendant. 15
respondent to pay for the price of the distributor bar, the
latter asked petitioner to share the cost with him. From this decision, private respondent appealed to the
Petitioner thus finally decided to indorse the matter to Intermediate Appellate Court which reversed the
his lawyer. judgment of the lower court and dismissed petitioner's
complaint, hence the present petition.
An expert witness for the petitioner, one Gil Legaspina,
declared that he inspected the linotype machine involved We find merit in petitioner's cause.
in this case at the instance of petitioner. In his
inspection thereof, he found the following defects: (1) the On the matter of venue, private respondent relies on the
vertical automatic stop lever in the casting division was aforementioned Sales Invoice No. 076A which allegedly
worn out; (2) the justification lever had a slight breach requires that the proper venue should be Iloilo City and
(balana in the dialect); (3) the distributor bar was worn not Bacolod City. We agree with petitioner that said
out; (4) the partition at the entrance channel had a tear; document is not the contract evidencing the sale of the
(5) there was no "pie stacker" tube entrance; and (6) the linotype machine, it being merely a preliminary
slouch arm lever in the driving division was worn out. memorandum of a proposal to buy one linotype machine,
using for such purpose a printed form used for printing
It turned out that the said linotype machine was the job orders in private respondent's printing business. As
same machine that witness Legaspina had previously hereinbefore explained, this issue on venue was brought
inspected for Sy Brothers, a firm which also wanted to to Us by private respondent in a special civil action for
buy a linotype machine for their printing establishment. prohibition with preliminary injunction in G.R. No.
Having found defects in said machine, the witness 49078. After considering the allegations contained, the
informed Sy Brother about his findings, hence the issues raised and the arguments adduced in said
purchase was aborted. In his opinion, major repairs were petition, as well as the comments thereto, the Court
needed to put the machine back in good running dismissed the petition for lack of merit. Respondent
condition. 14 court erred in reopening the same issue on appeal, with
a contrary ruling.
After trial, the court a quo rendered a decision the
dispositive portion of which reads: Furthermore, it was error for the respondent court, after
adopting the factual findings of the lower court, to
IN VIEW OF THE FOREGOING reverse the latter's holding that the sales invoice is
CONSIDERATIONS, judgment is hereby merely a pro forma memorandum. The records do not
rendered as follows: show that this finding is grounded entirely on
speculation, surmises or conjectures as to warrant a
(1) Decreeing the rescission of the reversal thereof. 16 In fact, as hereinbefore stated, private
contract of sale involving one linotype respondent expressly admitted in his official receipt No.
machine No. 14 between the defendant 0451, dated September 30, 1977, that the said sales
as seller and the plaintiff as buyer; invoice was merely a pro forma invoice. Consequently, the
printed provisions therein, especially since the printed
(2) Ordering the plaintiff to return to the form used was for purposes of other types of
defendant at the latter's place of transactions, could not have been intended by the
business in Iloilo City the linotype parties to govern their transaction on the printing
machine aforementioned together with machine. It is obvious that a venue stipulation, in order
all accessories that originally were to bind the parties, must have been intelligently and
delivered to the plaintiff; deliberately intended by them to exclude their case from
the reglementary rules on venue. Yet, even such
(3) Ordering the defendant to return to intended variance may not necessarily be given judicial
the plaintiff the sum of Forty Thousand approval, as, for instance, where there are no restrictive
Pesos (P40,000.00) representing the or qualifying words in the agreement indicating that
price of the linotype machine, plus venue cannot be laid in any place other than that agreed
17 18
interest at the legal rate counted from upon by the parties, and in contracts of adhesion.
May 17, 1978 when this action was
instituted, until fully paid; Now, when an article is sold as a secondhand item, a
question arises as to whether there is an implied
warranty of its quality or fitness. It is generally held that
in the sale of a designated and specific article sold as are required, and it appears that the
secondhand, there is no implied warranty as to its buyer relies on the seller's skill or
quality or fitness for the purpose intended, at least judgment ... there is an implied
where it is subject to inspection at the time of the sale. warranty that the goods shall be
On the other hand, there is also authority to the effect reasonably fit for such purpose.'
that in a sale of a secondhand articles there may be,
under some circumstances, an implied warranty of Furthermore, and of a more determinative role in this
fitness for the ordinary purpose of the article sold or for case, a perusal of past American decisions 24 likewise
19
the particular purpose of the buyer. reveals a uniform pattern of rulings to the effect that an
express warranty can be made by and also be binding on
In a line of decisions rendered by the United States the seller even in the sale of a secondhand article.
Supreme Court, it had theretofore been held that there is
no implied warranty as to the condition, adaptation, In the aforecited case of Markman vs. Hallbeck, while
fitness, or suitability for the purpose for which made, or holding that there was an express warranty in the sale of
the quality, of an article sold as and for a secondhand a secondhand engine, the court said that it was not
20
article. error to refuse an instruction that upon the sale of
secondhand goods no warranty was implied, since
Thus, in finding for private respondent, the respondent secondhand goods might be sold under such
court cited the ruling in Sison vs. Ago, et al. 21 to the circumstances as to raise an implied warranty.
effect that unless goods are sold as to raise an implied
warranty, as a general rule there is no implied warranty To repeat, in the case before Us, a certification to the
in the sale of secondhand articles. 22 effect that the linotype machine bought by petitioner was
in A-1 condition was issued by private respondent in
Said general rule, however, is not without exceptions. favor of the former. This cannot but be considered as an
Article 1562 of our Civil Code, which was taken from the express warranty. However, it is private respondent's
Uniform Sales Act, provides: submission, that the same is not binding on him, not
being a part of the contract of sale between them. This
contention is bereft of substance.
Art. 1562. In a sale of goods, there is an
implied warranty or condition as to the
quality or fitness of the goods, as It must be remembered that the certification was a
follows: condition sine qua non for the release of petitioner's loan
which was to be used as payment for the purchase price
of the machine. Private respondent failed to refute this
(1) Where the buyer, expressly or by
material fact. Neither does he explain why he made that
implication, makes known to the seller
express warranty on the condition of the machine if he
the particular purpose for which the
had not intended to be bound by it. In fact, the
goods are acquired, and it appears that
respondent court, in declaring that petitioner should
the buyer relies on the seller's skill or
have availed of the remedy of requiring repairs as
judgment (whether he be the grower or
provided for in said certification, thereby considered the
manufacturer or not), there is an
same as part and parcel of the verbal contract between
implied warranty that the goods shall be
the parties.
reasonably fit for such purpose;
At a belated stage of this appeal, private respondent came up The established facts of the case are as follows:
for the first time with the contention that the action for
rescission is barred by prescription. While it is true that Article
Desiring to have safe drinking water at home, herein
1571 of the Civil Code provides for a prescriptive period of six
months for a redhibitory action a cursory reading of the ten
petitioner Villostas and her husband decided to buy a
preceding articles to which it refers will reveal that said rule water purifier. At about this time, private respondent's
may be applied only in case of implied warranties. The present Electrolux sales agents were making door to door selling
case involves one with and express warranty. Consequently, the of its products in the subdivision where petitioner has
general rule on rescission of contract, which is four her residence. Because private respondent's sales agents
years 27 shall apply. Considering that the original case for had assured petitioner of the very special features of
rescission was filed only one year after the delivery of the their brand of water purifier, petitioner Villostas placed
subject machine, the same is well within the prescriptive
an order for one (1) unit of said water purifier. On
period. This is aside from the doctrinal rule that the defense of
September 13, 1986, an Electrolux Aqua Guard water
prescription is waived and cannot be considered on appeal if not
purifier was delivered and installed at petitioner's
raised in the trial court, 28 and this case does not have the
features for an exception to said rule. residence (Rollo, p. 38; 49). Consequently, petitioner
signed the Sales Order (Annex "B", p. 31) and the
WHEREFORE, the judgment of dismissal of the respondent Contract of Sale with Reservation of Title (Annex "A", p.
court is hereby REVERSED and SET ASIDE, and the decision of 31) in October 1986 (Rollo, p. 38, 22). A warranty
the court a quo is hereby REINSTATED. certificate, Exhibit "l", was issued by private respondent
which provides that:
SO ORDERED.
ELECTROLUX MARKETING,
INCORPORATED WARRANTS THIS
QUALITY ELECTROLUX PRODUCT TO
PERFORM EFFICIENTLY FOR ONE
FULL YEAR FROM DATE OF ORIGINAL
PURCHASE. (Rollo, p. 49)
ELECTROLUX MARKETING,
INCORPORATED WARRANTS THIS
QUALITY ELECTROLUX PRODUCT TO
PERFORM EFFICIENTLY FOR ONE
FULL YEAR FROM DATE OF ORIGINAL
PURCHASE.
DECISION
1. petitioners had a cause of action for
specific performance against respondents;
PUNO, J.:
The facts:
2. petitioners erroneously selected the
On October 8, 1996, spouses Michael and Bonita Uy,
parcels of land by some unfortunate turn
petitioners, purchased 200 square meters of the parcel of land
of events so that the portions selected
designated as Lot No. 3229-C-2-F, covered by Transfer
were not owned by respondents but the
Certificate of Title (TCT) No. T-20007, from respondents. The
Delgados; and
contract stipulated that petitioners had the right of choice to
designate which portion of Lot No. 3229-C-2-F would be the
subject of the sale.[1] 3. the parcels of land were owned by the
Delgados, a conclusion that was
premature considering that the case for
Petitioners exercised their right to choose within two to three the declaration of nullity of the Delgados
months from the sale, informing respondents that they have title covering the parcels was pending
selected and in fact occupied around 200 square meters of a before the trial court.
portion of land.[2]
It appears that the parcels of land petitioners had Petitioners now come before this Court on a petition
chosen and occupied were already titled in the names of the for review on the following issues:
Delgados, namely, Carlos, Allan and Antonio, Jr. Although
originally part of Lot No. 3229-C-2-F, the two parcels of land (1) whether the complaint filed in the RTC by
were part of some 3,500 square meters that were purportedly petitioners fails to state a cause of
sold by the respondents to the Delgados on July 31, 1985. This action for specific performance with
deed of sale to the Delgados was annotated on TCT No. T-20007 delivery of possession of real property
(covering Lot No. 3229-C-2-F) on June 10, 1993, and a new title and damages against respondents;
for the covered area was issued on April 21, 1994, which was and
likewise annotated on TCT No. T-20007 on the same date.
[4]
Thus, at the time of the first sale by the respondents to (2) whether the RTCs denial of the motion to
petitioners, the two parcels of land had been cancelled from Lot dismiss on lack of cause of action
No. 3229-C-2-F (covered by TCT No. T-20007), and were already was the proper subject of certiorari
part of Lot No. 3229-C-2-F-1 (covered by TCT No. T-39106). [5] before the Court of Appeals.
II.
A perusal of the third party complaint does not expressly
Whether or not the Court of Appeals erred in failing to find that
show any act or omission committed by the third party petitioner did not breach any warranty in the absence of proof that at the
defendant which violates a right of the third party time it sold the subject vehicle to Sy, petitioner was not the owner
complainant. The third party complaint failed to show that thereof.
the vehicle in question belongs to a person other than the
third party defendant at the time the said motor vehicle was III.
sold by the third party defendant to the third party plaintiff. Whether or not the Court of Appeals erred in failing to find that the
cause of action, if ever it existed, was already extinguished.[7]
On the contrary[,] the third party defendant has not denied
having sold to the third party plaintiff the said motor vehicle
which had been in its possession as owner from 1986 to
1996. The fact that the said motor vehicle was included by The foregoing issues actually point to one main question: did
the PNP in its alert status as stolen vehicle[,] resulted only the Third-Party Complaint state a cause of action against
following the report by the third party defendant that it was petitioner?
hijacked in 1986. But when the said motor vehicle was
recovered, the third party defendant informed the PNP about The Courts Ruling
the said recovery and requested the lifting of the alert status
on it as stolen vehicle.
The Petition has merit.
If the PNP has not removed the said vehicle from its alert
status as a stolen vehicle, [then] that does not make
[Goodyear] not the owner thereof. Hence, [Goodyear], the Main Issue:
third party defendant, is not guilty of any breach resulting
from any flaw in the title over the said vehicle. This is Whether a Cause of Action Was Stated in the Third-Party
confirmed by the allegation of the third party plaintiff as Complaint
answering defendant in paragraph 6 of its Answer with
Counterclaim and Affirmative Defenses dated January 9, A cause of action is a formal statement of the operative facts
1998, hereunder quoted as follows: that give rise to a remedial right. [8] The question of whether the
complaint states a cause of action is determined by its
averments regarding the acts committed by the defendant.
6. Defendant specifically denies the allegations contained [9]
Thus, it must contain a concise statement of the ultimate or
in paragraph 9 of [p]laintiffs complaint, the truth of the essential facts constituting the plaintiffs cause of action.
matter is that [d]efendant help[ed] plaintiff in removing the [10]
Failure to make a
impediments in the registration and transfer of ownership sufficient allegation of a cause of action in the complaint
and that defendant ha[d] no knowledge of any flaw [in] the warrants its dismissal.[11]
title of Goodyear Philippines, Inc.
Elements of a Cause of Action
The Deed of Sale between petitioner and Respondent Sy was The Third-Party Complaint did not allege that petitioner had a
attached as Annex A[19] to the Third-Party Complaint filed by the creditor with a legal right to or interest in the subject vehicle.
latter against the former. The Deed stated that petitioner was There was no indication either of any debt that was secured by
the absolute owner of the subject vehicle. No contrary assertion the vehicle. In fact, there was not even any claim, liability or
was made in the Complaint. Hence, the trial court correctly some other right attached to the vehicle that would lessen its
observed that the Complaint had failed to show that, at the time value. Its impoundment, as well as the refusal of its
of its sale to Respondent Sy, the vehicle belonged to a person registration, was not the hindrance or obstruction in the
other than petitioner.[20] contemplation of law that the vendor warranted against. Neither
of those instances arose from any liability or obligation that
To reiterate, the Third-Party Complaint absolutely
could be satisfied by a legal claim or charge on, or property
failed to state an act or omission of petitioner that had
right to -- other than an ownership interest in -- the subject
proximately caused injury or prejudice to Sy. Indeed, based on
vehicle.[33]
that pleading alone, the latters claim for relief against petitioner
does not appear to exist. No Notice of Any Breach of Warranty
Warranties Passed On By the Vendor to the Vendee Gratia argumenti that there was a breach of the implied
warranty against hidden encumbrances, notice of the breach
In a contract of sale, the vendor is bound to transfer the
was not given to petitioner within a reasonable time. Article
ownership of and to deliver the thing that is the object of the
1586 of the Civil Code requires that notice be given after the
sale.[21] Moreover, the implied warranties are as follows: first, the
breach, of which Sy ought to have known. In his Third-Party
vendor has a right to sell the thing at the time that its
Complaint against petitioner, there was no allegation at all that
ownership is to pass to the vendee, as a result of which the
respondent had given petitioner the requisite notice. [34]
latter shall from then on have and enjoy the legal and peaceful
possession of the thing; [22] and, second, the thing shall be free More important, an action for damages for a breach of implied
from any charge or encumbrance not declared or known to the warranties must be brought within six months from the delivery
vendee.[23] of the thing sold.[35] The vehicle was understood to have been
delivered to Sy when it was placed in his control or possession.
Upon the execution of the Deed of Sale, petitioner did transfer [36]
Upon execution of the Deed of Sale on September 12, 1996,
ownership of and deliver the vehicle to Respondent Sy. [24] No other
control and possession of the vehicle was transferred to
owner or possessor of the vehicle had been alleged, and the ownership
respondent. That the vehicle had been delivered is bolstered by
and possession rights of petitioner over it had never been contested.
the fact that no contrary allegation was raised in the Third-
The Deed of Sale executed on September 12, 1996 showed that
Party Complaint. Whether the period should be reckoned from
petitioner was the absolute owner. Therefore, at the time that
the actual or from the constructive delivery through a public
ownership passed to Sy, petitioner alone had the right to sell the
instrument, more than six months had lapsed before the filing
vehicle.
of the Third-Party Complaint.
In the same manner, when he sold the same truck to Jose L.
Finally, the argument that there was a breach of the implied
Lee,[25] Respondent Sy was exercising his right as absolute
warranty against eviction does not hold water, for there was
owner. Unfortunately, though, from the time Respondent Lee
never any final judgment based on either a right prior to the
attempted to register the truck in his name, he could not have
sale; or an act that could be imputed [37] to petitioner and deprive
or enjoy the legal and peaceful possession of the vehicle,
Sy of ownership or possession of the vehicle purchased.
because it had been impounded by the PNP, which also opposed
its registration.
WHEREFORE, the Petition is hereby GRANTED, and
The impoundment of the vehicle and the failure to register it
the assailed Decision and Resolution are REVERSED. The May
were clearly acts that were not deliberately caused by petitioner,
27, 1998 Order of the Regional Trial Court is REINSTATED. No
but that resulted solely from the failure of the PNP to lift the
latters own alarm over the vehicle. Pursuant to Republic Act costs.
6975,[26] these matters were purely administrative and
governmental in nature. Petitioner had no authority, much less
power, over the PNP. Hence, the former did not breach its
obligation as a vendor to Respondent Sy; neither did it violate
SO ORDERED.
his right for which he could maintain an action for the recovery
of damages. Without this crucial allegation of a breach or
violation, no cause of action exists.[27] EN BANC
SECOND DIVISION
All the trial, the court a quo rendered its decision,-
dismissing the complaint on the ground that the same
G.R. No. L-65425 November 5, 1987
was still premature considering that there was, as yet,
no sale nor any alienation equivalent to a sale. Not
IRENEO LEAL, JOSE LEAL, CATALINA LEAL, BERNABELA
satisfied with this decision, the private respondent
LEAL, VICENTE LEAL EUIOGIA LEAL PATERNO RAMOS,
appealed to the Court of Appeals and the latter, acting
MACARIO DEL ROSARIO, MARGARITA ALBERTO, VICTORIA
through the Fourth Division and with Justice Edgardo
TORRES, JUSTINA MANUEL, JULIAN MANUEL, MELANIA
Paras as ponente affirmed the decision of the court a
SANTOS, CLEMENTE SAMARIO, MARIKINA VALLEY, INC.,
quo.
MIGUELA MENDOZA, and REGISTER OF DEEDS OF
RIZAL, petitioners,
vs. The petitioners seasonably filed a motion to amend the
THE HONORABLE INTERMEDIATE APPELLATE COURT (4th dispositive portion of the decision so as to include an
Civil Cases Division), and VICENTE SANTIAGO (Substituted order for the cancellation of the annotations at the back
by SALUD M. SANTIAGO), respondents. of the Transfer certificates of Title issued in their favor.
The private respondent,-on the other hand, filed a-timely
motion for reconsideration of the above decision and an
opposition to petitioners' motion to amend. These
SARMIENTO, J.: incidents were not resolved until then Court of Appeals
was abolished and in lieu of which the Intermideate
In its resolution dated September 27, 1983, the respondent Appellate Court was established In view of the said
Intermediate Appellate Court, 1 speaking through Justice reorganization, case was reassigned to the Fourth Civil
Porfirio V, Sison, ordered, in part, the petitioners to accept the in this cases Division.
sum of P5,600.00 from the private respondent as repurchase
price of the lots described in the "Compraventa" and, thereafter,
Resolving the abovestated motion for reconsideration,
to execute a Deed of Repurchase to effect transfer over
the respondent court, in a resolution penned by Justice
ownership over the same properties to the private respondent.
Sison and promulgated on September 27, 1983, ruled,
as follows:
This ruling was a complete reversal of the earlier
decision, 2 dated June 28, 1.978, penned by Justice Paras, of
the Court of Appeals, in the same case, affirming the trial WHEREFORE, Our decision of June 28, 1978 is hereby
court's dismissal of the private respondent's complaint. reversed and set aside and another one is rendered
ordering: (1) defendants-appellees surnamed Leal to
The petitioners, feeling aggrieved and astonished by the accept the sum of P5,600.00 from plaintiff-appellant
complete turnaround of the respondent court, come to Us with (substituted by Salud M. Santiago) as repurchase price
this petition for review by certiorari. of the lots described in the "Compraventa" of March 21,
1941, and thereafter to execute a deed of repurchase
sufficient in law to transfer ownership of the properties Contracts are generally binding between the parties,
to appellant Salud M. Santiago, the same to be done their assigns and heirs; however, under Art. 1255 of the
within five (5) days from payment; (2) ordering the same Civil Code of Spain, which is applicable in this instance,
defendants Leals and defendant Clemente Samario to pacts, clauses, and conditions which are contrary to
indemnify appellant in the sum of P3,087.50 as rental public order are null and void, thus, without any binding
for the year 1967-1968 and the same amount every year effect.
thereafter; (3) ordering an the defendants jointly and
severally to pay the sum of Pl,500.00 as attorney's fees Parenthetically, the equivalent provision in the Civil Code
and other expenses of litigation; and (4) ordering of the Philippines is that of Art. 1306, which states:
defendant Register of Deeds of Rizal to cancel Transfer "That contracting parties may establish such
Certificate of Title No. 42535 in the names of Vicente stipulations, clauses, terms and conditions as they may
Santiago and Luis Santiago upon presentation of the deem convenient, provided they are not contrary to law,
deed of sale herein ordered to be executed by the morals, good customs, public order, or public policy.
appellees in favor of Salud M. Santiago and to issue Public order signifies the public weal public
thereof another Transfer Certificate of Title in the name policy. 5 Essentially, therefore, public order and public
alone of Salud M. Santiago. No costs here and in the policy mean one and the same thing. Public policy is
courts (sic) below. simply the English equivalent of "order publico" in Art.
6
1255 of the Civil Code of Spain.
SO ORDERED.
One such condition which is contrary to public policy is
Verily, the well-spring whence the present controversy the present prohibition to self to third parties, because
arose is the abovementioned "Compraventa," more the same virtually amounts to a perpetual restriction to
particularly paragraph (b) thereof, to wit: the right of ownership, specifically the owner's right to
freely dispose of his properties. This, we hold that any
xxx xxx xxx such prohibition, indefinite and stated as to time, so
much so that it shall continue to be applicable even
(b) En caso de venta, no podran vender a otros dichos beyond the lifetime of the original parties to the contract,
tres lotes de terreno sino al aqui vendedor Vicente is, without doubt, a nullity. In the light of this
Santiago, o los herederos o sucesores de este por el pronouncement, we grant the petitioners' prayer for the
niismo precio de CINCO MIL SEISCIENTOS PESOS cancellation of the annotations of this prohibition at the
(P5,600.00) siempre y cuando estos ultimos pueden back of their Transfer Certificates 'Title.
3
hacer la compra.
It will be noted, moreover, that the petitioners have never
xxx xxx xxx sold, or even attempted to sell, the properties subject of
the "Compraventa. "
which is now the subject of varying and conflicting
interpretations. We now come to what we believe is the very issue in this
case which is, whether or not under the aforequoted
xxx xxx xxx paragraph (b) of the "Compraventa" a right of repurchase
in favor of the private respondent exist.
It is admitted by both parties that the phrase "they shall
not sell to others these three lots but only to the seller The ruling of the Fourth Division (Justice Paras) is that
Vicente Santiago or to his heirs or successors" is an the said stipulation does not grant a right to repurchase.
express prohibition against the sale of the lots described Contrarily, the resolution of the Fourth Civil Cases
in the "Compraventa" to third persons or strangers to the Division (Justice P. V. Sison) interpreted the same
contract. However, while private respondent naturally provision as granting the right to repurchase subject to a
lauds the resolution of Justice Sison, which sustains the condition precedent.
validity of this prohibition, the petitioners, on the other
hand, endorse the decision penned by Justice Paras, Thus, the assailed Resolution, reversing the earlier
which states, in part: decision of the same respondent court, ruled
Finally, there is grave doubt re the validity of the The all-importartant phrase "en caso de venta," must
ostensible resolutory condition here, namely, the of necessity refer to the sale of the properties either by
prohibition to sell the lots to persons other than the Cirilo or his heirs to the Santiago brothers themselves
vendor (appellant); uncertainly, a prohibition to alienate or to their heirs, including appellants Vicente Santiago
should not exceed at most a period of twenty years, including appellants Vicente Santiago and Salud M
otherwise there would be subversion of public policy, Santiago, for the same sum of P5,600.00, "siempre y
which naturally frowns on unwarranted restrictions on cuando estos ultimos pueden hacer la compra" (when
the right of ownership. 4
the latter shall be able to buy it).
The conclusion of the respondent court to the effect that the private
xxx xxx xxx respondent had been paying interest to the petitioners on the
P179,000.00 loan has not been assailed in the instant petition.