Mapalo vs. Mapalo, 17 SCRA 114, Nos.

L-21489 and L-21628, May 19, 1966
MIGUEL MAPALO, ET AL., petitioners,
vs.
MAXIMO MAPALO, ET AL., respondents.
Pedro P. Tuason for petitioners.
Primicias and Del Castillo for respondents.
The Mapalo spouses filed their answer with a counterclaim on March 17, 1965,
seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the
western half of the land, on the grounds that their (Mapalo spouses) signatures to
the deed of sale of 1936 was procured by fraud and that the Narcisos were buyers
in bad faith. They asked for reconveyance to them of the western portion of the
land and issuance of a Transfer Certificate of Title in their names as to said
portion.

BENGZON, J.P., J.:
The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were
registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635-
square-meter residential land in Manaoag, Pangasinan. Said spouses-owners, out
of love and affection for Maximo Mapalo a brother of Miguel who was about to
get married decided to donate the eastern half of the land to him. O.C.T. No.
46503 was delivered. As a result, however, they were deceived into signing, on
October 15, 1936, a deed of absolute sale over the entire land in his favor. Their
signatures thereto were procured by fraud, that is, they were made to believe by
Maximo Mapalo and by the attorney who acted as notary public who "translated"
the document, that the same was a deed of donation in Maximo's favor covering
one-half (the eastern half) of their land. Although the document of sale stated a
consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not
receive anything of value for the land. The attorney's misbehaviour was the
subject of an investigation but its result does not appear on record. However we
took note of the fact that during the hearing of these cases said notary public was
present but did not take the witness stand to rebut the plaintiffs' testimony
supporting the allegation of fraud in the preparation of the document.
Following the execution of the afore-stated document, the spouses Miguel Mapalo
and Candida Quiba immediately built a fence of permanent structure in the middle
of their land segregating the eastern portion from its western portion. Said fence
still exists. The spouses have always been in continued possession over the
western half of the land up to the present.
Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered
the deed of sale in his favor and obtained in his name Transfer Certificate of Title
No. 12829 over the entire land. Thirteen years later on October 20, 1951, he sold
for P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico and Miguel all
surnamed Narciso. The sale to the Narcisos was in turn registered on November
5, 1951 and Transfer Certificate of Title No. 11350 was issued for the whole land
in their names.
The Narcisos took possession only of the eastern portion of the land in 1951, after
the sale in their favor was made. On February 7, 1952 they filed suit in the Court
of First Instance of Pangasinan (Civil Case No. 1191) to be declared owners of
the entire land, for possession of its western portion; for damages; and for rentals.
It was brought against the Mapalo spouses as well as against Floro Guieb and
Rosalia Mapalo Guieb who had a house on the western part of the land with the
consent of the spouses Mapalo and Quiba.
In addition, the Mapalo spouses filed on December 16, 1957 their own complaint
in the Court of First Instance of Pangasinan (Civil Case No. U-133) against the
aforestated Narcisos and Maximo Mapalo. They asked that the deeds of sale of
1936 and of 1951 over the land in question be declared null and void as to the
western half of said land.
Judge Amado Santiago of the Court of First Instance of Pangasinan located in the
municipality of Urdaneta tried the two cases jointly. Said court rendered judgment
on January 18, 1961, as follows:
WHEREFORE, judgment is hereby rendered as follows, to wit:
(a) dismissing the complaint in Civil Case No. 11991;
(b) declaring Exhibit A, plaintiffs in Case No. 11991 and Exhibit 1, defendants in
Case No. U-133 as a donation only over the eastern half portion of the above-
described land, and as null and void with respect to the western half portion
thereof;
(c) declaring as null and void and without legal force and effect Transfer
Certificate of Title No. 12829 issued in favor of Maximo Mapalo as regards the
western half portion of the land covered therein;
(d) declaring as null and void Transfer Certificate of Title No. 11350 in the names
of the Narcisos insofar as the western half portion of the land covered therein is
concerned;
(e) ordering the spouses Mapalo and Quiba and the Narcisos to have the above-
described land be subdivided by a competent land surveyor and that the
expenses incident thereto be borne out by said parties pro rata;
(f) ordering the Register of Deeds of Pangasinan to issue in lieu of Transfer
Certificate of Title No. 11350 two new titles upon completion of the subdivision
plan, one in favor of the spouses Miguel Mapalo and Candida Quiba covering the
western half portion and another for the Narcisos covering the eastern half portion
of the said land, upon payment of the legal fees; meanwhile the right of the
spouses Mapalo and Quiba is hereby ordered to be annotated on the back of
Transfer Certificate of Title No. 11350; and
(g) sentencing Maximo Mapalo and the Narcisos to pay the costs.

IT IS SO ORDERED.

The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963,
the Court of Appeals reversed the judgment of the Court of First Instance, solely
on the ground that the consent of the Mapalo spouses to the deed of sale of 1936
having been obtained by fraud, the same was voidable, not void ab initio, and,
therefore, the action to annul the same, within four years from notice of the fraud,
had long prescribed. It reckoned said notice of the fraud from the date of
registration of the sale on March 15, 1938. The Court of First Instance and the
Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba
were definitely the victims of fraud. It was only on prescription that they lost in the
Court of Appeals.
From said decision of the Court of Appeals, the Mapalo spouses appealed to this
Court.
And here appellants press the contention that the document dated October 15,
1936, purporting to sell the entire land in favor of Maximo Mapalo, is void, not
merely voidable, as to the western portion of the land for being absolutely
simulated or fictitious.
Starting with fundamentals, under the Civil Code, either the old or the new, for a
contract to exist at all, three essential requisites must concur: (1) consent, (2)
object, and (3) cause or consideration.1 The Court of Appeals is right in that the
element of consent is present as to the deed of sale of October 15, 1936. For
consent was admittedly given, albeit obtained by fraud. Accordingly, said consent,
although defective, did exist. In such case, the defect in the consent would provide
a ground for annulment of a voidable contract, not a reason for nullity ab initio.
The parties are agreed that the second element of object is likewise present in the
deed of October 15, 1936, namely, the parcel of land subject matter of the same.
Not so, however, as to the third element of cause or consideration. And on this
point the decision of the Court of Appeals is silent.
As regards the eastern portion of the land, the Mapalo spouses are not claiming
the same, it being their stand that they have donated and freely given said half of
their land to Maximo Mapalo. And since they did not appeal from the decision of
the trial court finding that there was a valid and effective donation of the eastern
portion of their land in favor of Maximo Mapalo, the same pronouncement has
become final as to them, rendering it no longer proper herein to examine the
existence, validity efficacy of said donation as to said eastern portion.1wph1.t
Now, as to the western portion, however, the fact not disputed herein is that no
donation by the Mapalo spouses obtained as to said portion. Accordingly, we start
with the fact that liberality as a cause or consideration does not exist as regards
the western portion of the land in relation to the deed of 1936; that there was no
donation with respect to the same.
It is reduced, then, to the question whether there was an onerous conveyance of
ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect
to said western portion. Specifically, was there a cause or consideration to support
the existence of a contrary of sale?
The rule under the Civil Code, again be it the old or the new, is that contracts
without a cause or consideration produce no effect whatsoever.2 Nonetheless,
under the Old Civil Code, the statement of a false consideration renders the
contract voidable, unless it is proven that it is supported by another real and licit
consideration.3 And it is further provided by the Old Civil Code that the action for
annulment of a contract on the ground of falsity of consideration shall last four
years, the term to run from the date of the consummation of the contract.4
Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it
should be asked whether its case is one wherein there is no consideration, or one
with a statement of a false consideration. If the former, it is void and inexistent; if
the latter, only voidable, under the Old Civil Code. As observed earlier, the deed
of sale of 1936 stated that it had for its consideration Five Hundred (P500.00)
Pesos. In fact, however, said consideration was totally absent. The problem,
therefore, is whether a deed which states a consideration that in fact did not exist,
is a contract without consideration, and therefore void ab initio, or a contract with a
false consideration, and therefore, at least under the Old Civil Code, voidable.
According to Manresa, what is meant by a contract that states a false
consideration is one that has in fact a real consideration but the same is not the
one stated in the document. Thus he says:
En primer lugar, nor interesa recordar la diferencia entre simulacion y el contrato
con proposito fraudulento. Este aunque ilicito es real; mas el primero es falso en
realidad, aunque se le presente como verdadero. (Manresa, Codigo Civil, Tomo
VIII, Vol. II, p. 354.)
And citing a decision of the Supreme Court of Spain on the matter, Manresa
further clarifies the difference of false cause and no cause, thus:
Insiste en el distingo con mas detenida descripcion la sentencia de 25 de mayo
de 1944, en la que se argumenta:
Si bien es elemento fundamental de todo negocio, la declaracion de voluntad
substracto de una voluntad efectiva, y la existencia de una causa que leconfiera
significado juridico sealando la finalidad que con este se persigue, no ha de
deducirse de esta doctrina, fundamentalmente recogida en el articulo 1.261 y
concordantes del Codigo civil, que cualquier falta de adecuacion entre cualquier
incongruencia entre la causa expresada y la verdadera, y, en general, entre la
estructuracion y la finalidad economica; hayan de producir la ineficacia del
negocio, pues por el contrario, puede este ser valido y producir sus efectos tanto
en el caso de la mera disonancia entre el medio juridico adoptado y el fin practico
perseguido, por utilizacion de una via oblicua o combinacion de formas juridicas
entrelazadas que permita la obtencion de un resultado no previsto en los cuadros
de la ley negocios indirectos y negocios fiduciarlos, validos cuando no
envuelven fraude de ley, como en el caso de la verdadera disconformidad entre la
apariencia del acto y su real contenido, preparada deliberadamente por las partes
 negocio simulado , ya que, cuando esta divergencia implica no una
ausencia total de voluntad y de acto real, sino mera ocultacion de un negocio
verdadero bajo la falsa apariencia de un negocio fingido "sirulacion relativa", la
ineficacia de la forma externa simulada, no es obstaculo para la posible validez
del negocio disimulado que contiene, en tanto este ultimo sea licito y reuna no
solo los requisitos generales, sino tambien los que corresponden a su naturaleza
especial, doctrina, en obligada aplicacion de los preceptos de nuestra Ley civil,
especialmente en su art. 1.276, que, al establecer el principio de nulidad de los
contratos en los que se hace expresion de una causa falsa, deja a salvo el caso
de que esten fundados en otra verdadera y licita. (Manresa, Codigo Civil, Tomo
VIII, Vol. II pp. 357-358)
Sanchez Roman says:
Ya hemos dicho que la intervencion de causa en los contratos es necesaria, y
que sin ellos son nulos; solo se concibe que un hombre perturbado en su razon
pueda contratar sin causa. ...
Por la misma razon de la necesidad de la intervencion de causa en el contrato, es
preciso que esta sea verdadera y no supuesta, aparente o figurada. Que la
falsedad de la causa vicia el consentimiento y anula el contrato, es, no solo
doctrina indudable de Derecho Cientifico sino tambien de antiguo Derecho de
Castilla, que en multitud de leyes asi lo declararon. (Sanchez Roman, Derecho
Civil, Tomo IV, p. 206.).
In a clearer exposition of the above distinction, Castan states:
2.. La causa ha de ser verdadera. La causa falsa puede ser erronea o simulada.
Es erronea como dice Giorgi, la causa que tiene por base la credulidad en un
hecho no existente; y simulada la que tiene lugar cuando se hace aparecer
artificiosamente una distinta de la verdadera. La erronea produce siempre la
inexistencia del contrato; la simulada no siempre produce este efecto, porque
puede suceder que la causa oculta, pero verdadera, baste para sostener el
contrato. De acuerdo con esta doctrina, dice el art. 1.276 de nuestro Codigo que
"la expresion de una causa falsa en los contratos dara lugar a la nulidad, si no se
probase que estaban fundados en otra verdadera y licita". (Castan Derecho Civil
Espaol, Tomo II, pp. 618-619)
From the foregoing it can be seen that where, as in this case, there was in fact no
consideration, the statement of one in the deed will not suffice to bring it under the
rule of Article 1276 of the Old Civil Code as stating a false consideration.
Returning to Manresa:
Figurando en nuestro Derecho positivo la causa, como un elemento esential del
contrato, es consecuencia ineludible, se reputar simulada la entrega del precio en
la compraventa de autos, el que haya que declararla nula por inexistente
haciendose aplicacion indebida de art. 1.276 por el Tribunal sentenciador al
cohonestar la falta de precio admitiendo se pueda tratar de una donacion, ya que
la recta aplicacion del citado precepto exige que los negocios simulados, o sea
con causa falsa, se justifique la verdadera y licita en que se funda el acto que las
partes han querido ocultar y el cumplimiento de las formalidades impuestas por la
Ley y, cual dice la sentencia de 3 de marzo de 1932, esta rigurosa doctrina ha de
ser especialmente impuesta en la donaciones puras y simples; de los que deduce
que la sentencia recurrida al no decretar la nulidad instada por falta de causa,
incide en la infraccion de los articulos 1.261, 1.274, 1.275 y 1.276 del Codigo
Civil. (Sentencia de 22 de febrero de 1940). (Manresa, Codigo Civil, Tomo VIII,
Vol. II, p. 356)
In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40
Phil. 921, is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and void and produces no effect whatsoever where the
same is without cause or consideration in that the purchase price which appears
thereon as paid has in fact never been paid by the purchaser to the vendor.
Needless to add, the inexistence of a contract is permanent and incurable and
cannot be the subject of prescription. In the words of Castan: "La inexistencia es
perpetua e insubsanable no pudiendo ser objecto de confirmacion ni prescripcion
(Op. cit., p. 644.) In Eugenio v. Perdido, 97 Phil. 41, 42-43, involving a sale dated
1932, this Court, speaking through Justice Cesar Bengzon, now Chief Justice,
stated:
Under the existing classification, such contract would be "inexisting" and "the
action or defense for declaration" of such inexistence "does not prescribe". (Art.
1410, New Civil Code). While it is true that this is a new provision of the New Civil
Code, it is nevertheless a principle recognized since Tipton vs. Velasco, 6 Phil. 67
that "mere lapse of time cannot give efficacy to contracts that are null and void".
Anent the matter of whether the Narcisos were purchasers in good faith, the trial
court in its decision resolved this issue, thus:
With regard to the second issue, the Narcisos contend that they are the owners of
the above-described property by virtue of the deed of sale (Exh. B, plaintiffs in
11991 and Exh. 2, defendants in U-133) executed in their favor by Maximo
Mapalo, and further claim that they are purchasers for value and in good faith.
This court, however, cannot also give weight and credit on this theory of the
Narcisos on the following reasons: Firstly, it has been positively shown by the
undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso
stayed for some days on the western side (the portion in question) of the above-
described land until their house was removed in 1940 by the spouses Mapalo and
Quiba; secondly, Pacifica Narciso admitted in his testimony in chief that when they
bought the property, Miguel Mapalo was still in the premises in question (western
part) which he is occupying and his house is still standing thereon; and thirdly,
said Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness
categorically declared that before buying the land in question he went to the
house of Miguel Mapalo and Candida Quiba and asked them if they will permit
their elder brother Maximo to sell the property.
Aside from the fact that all the parties in these cases are neighbors, except
Maximo Mapalo the foregoing facts are explicit enough and sufficiently reveal that
the Narcisos were aware of the nature and extent of the interest of Maximo
Mapalo their vendor, over the above-described land before and at the time the
deed of sale in their favor was executed.
Upon the aforestated declaration of Pacifico Narciso the following question arises:
What was the necessity, purpose and reason of Pacifico Narciso in still going to
the spouses Mapalo and asked them to permit their brother Maximo to dispose of
the above-described land? To this question it is safe to state that this act of
Pacifico Narciso is a conclusive manifestation that they (the Narcisos) did not only
have prior knowledge of the ownership of said spouses over the western half
portion in question but that they also have recognized said ownership. It also
conclusively shows their prior knowledge of the want of dominion on the part of
their vendor Maximo Mapalo over the whole land and also of the flaw of his title
thereto. Under this situation, the Narcisos may be considered purchasers in value
but certainly not as purchasers in good faith. ... (pp. 97-98, Record on Appeal.)
And said finding which is one of fact is found by us not a bit disturbed by the
Court of Appeals. Said the Court of Appeals:
In view of the conclusion thus reached, it becomes unnecessary to pass on the
other errors assigned. Suffice it to say that, on the merits the appealed decision
could have been upheld under Article 1332 of the new Civil Code and the
following authorities: Ayola vs. Valderrama Lumber Manufacturers Co., Inc., 49
O.G. 980, 982; Trasporte vs. Beltran, 51 O.G. 1434, 1435; Cortez vs. Cortez, CA-
G.R. No. 18451-R, August 8, 1961; Castillo vs. Laberinto, CA-G.R. No. 18118-R,
December 20, 1961; and 13 C.J. 372-373, as well as the several facts and
circumstances appreciated by the trial court as supporting appellees' case.
thereby in effect sustaining barring only its ruling on prescription the
judgment and findings of the trial court, including that of bad faith on the part of
the Narcisos in purchasing the land in question. We therefore see no need to
further remand this case to the Court of Appeals for a ruling on this point, as
appellees request in their brief in the event we hold the contract of 1936 to be
inexistent as regards the western portion of the land.
In view of defendants' bad faith under the circumstances we deem it just and
equitable to award, in plaintiffs' favor, attorneys' fees on appeal, in the amount of
P1,000.00 as prayed for in the counterclaim.
Wherefore, the decision of the Court of Appeals is hereby reversed and set aside,
and another one is hereby rendered affirming in toto the judgment of the Court of
First Instance a quo, with attorney's fees on appeal in favor of appellants in the
amount of P1,000.00, plus the costs, both against the private appellees. So
ordered.
[G.R. No. 83974. August 17, 1998]
SPOUSES NARCISO RONGAVILLA and DOLORES
RONGAVILLA, petitioners, vs. COURT OF APPEALS AND
MERCEDES DELA CRUZ AND FLORENCIA DELA
CRUZ, respondents.
DECISION
QUISUMBING, J.:
For review on appeal by certiorari are the Decision[1] of the Court of Appeals
in CA-G.R. CV No. 06543, promulgated on March 11, 1988, and the
Resolution[2] dated June 28, 1988, denying petitioner's motion for reconsideration.
The appealed decision affirmed in toto the judgment of the Regional Trial
Court of Pasay City in Civil Case No. LP-8790-P, which disposed of the
controversy as follows:
"WHEREFORE, judgment is hereby rendered declaring void and inexistent the
Deed of Absolute Sale (Exh. "I") dated June 3, 1976 allegedly executed by
plaintiffs in favor of defendant spouses, which document is now particulary
identified as Doc, No. 164; Page no. 34; Book No. I; Series of 1976 in the Notarial
Register of Arcadio Espiritu, a Notary Public for and in Province of Cavite. Further,
defendant spouses are hereby ordered -
a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property
covered by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for
the Province of Rizal;
b. . To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and
c. To pay the cost of the suit."[3]
As gleaned from the record, the private parties are closely related. Plaintiffs
below, now the private respondents, are the aunts of herein petitioner Dolores
Rongavilla. Both spinsters, they earn their livelihood as embroiderers
("magbuburda") and dressmakers; although unschooled in English, they are
however able to read and write in Tagalog. Since they are of advanced age
(Mercedes de la Cruz, 60 and Florencia de la Cruz, 71), their day to day activities
were confined mostly close to home.
The property subject of this controversy between kith and kin is a parcel of
land, located in Manuyo, Las Pias, Rizal (now Metro Manila) owned by private
respondents, in the proportion of one-half (1/2) pro-indiviso, with another niece
named Juanita Jimenez as co-owner of the other one-half. The whole parcel
consisted of 131 square meters and was covered by Original Certificate of Title
(OCT) No. 5415 of the Register of Deeds of the Province of Rizal. This OCT, as
well as the Transfer Certificate of Title (TCT) No. S-28903 after the parcel was
subdivided, was kept in the possession of Juanita Jimenez, who is the elder sister
of Dolores Rongavilla.
Although the basic fact situation here might appear all too familiar, the legal
controversy itself is notable for having passed through the entire channel of the
justice system.[4] The present petition before us was given due course per
Resolution[5] dated June 26, 1989; but it was denied on September 20, 1989, for
non-compliance with certain requirements;[6] although, upon motion for
reconsideration by the petitioners showing compliance, it was reinstated [7] on
September 2, 1991.
Considering the circumstances in this case, including the relationship of the
parties, it behooves this Court now to examine closely and carefully the
questioned judgment and the record below. For the Court could not but be mindful
of the codal admonition that:
"In all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age, or other handicap, the courts must vigilant for his
protection." (Art. 24, Civil Code)
From the facts found below, it appears that in the month of May, 1976, the
private respondents borrowed the amount of two thousand (P2,000) from the
petitioners for the purpose of having their (respondents') dilapidated rooftop
repaired.
A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez
visited their aunt's home, bringing with them a document for the signature of their
aunts. The document is admittedly typewritten in English. When asked in Tagalog
by one of the aunts, respondent Mercedes de la Cruz, what the paper was all
about, Dolores Rongavilla answered also in Tagalog, that it was just a document
to show that the private respondents had a debt amounting to P2,000. On account
of that representation, private respondent signed the document.
In September 1980, or after a lapse of over four years, petitioner Dolores
Rongavilla went to private respondents' place and asked them to vacate the
parcel in question, claiming that she and her husband were already the new
owners of the land.
Surprised by petitioners' moves, private respondents with the help of friends
went to the Office of the Register of Deeds of the Province of Rizal to verify the
matter. They discovered that their Certificate of Title had been cancelled and a
new one, Transfer Certificate of Title No. S-28903, had been issued in favor of
petitioners. They further discovered that said parcel of land had been mortgaged
with the Cavite Development Bank by the petitioners. It was only then that the
private respondents realized that the document they had previously been asked
by their nieces to sign was a deed of sale.
On February 3, 1981, private respondents filed with the Court of First
Instance, now Regional Trial Court, of Pasay City the sworn complaint [8] to have
the purported deed of sale declared void and inexistent, for being fictitious and
simulated, and secured by means of fraud and misrepresentation. They alleged
that they did not sell their property in question to the defendants; that they did not
receive any consideration on the supposed sale; that their Original Certificate of
Title was cancelled and TCT No. S-28903 was issued in favor of defendants
(herein petitioners), who thereafter mortgaged said title for a total of P40,000.00 to
the damage and prejudice of the plaintiffs. They also claimed moral and
exemplary damages, as the court might determine.
Petitioners duly filed their answer[9] after the denial of their motion to dismiss,
alleging that plaintiffs (now the private respondents) sold their parcel of land
voluntarily, that there was consent to the deed of sale, that there was sufficient
consideration therefor and that the document on the sale was complete in itself
and in due form, enabling the Register of deeds to cancel their old TCT and issue
a new one. Petitioners further stated that private respondent were fully appraised
by the Notary Public, Atty. Arcadio G. Espiritu, on what the document was all
about, and having understood the explanation made by said Notary Public, they
voluntarily affixed their signatures on said document. Petitioners also asserted as
affirmative and/or special defenses that prescription had set in and that private
respondents no longer had a cause of action, and that the deed of sale contained
all the pre-requisites of a contract, namely consent of the parties, consideration or
a price certain, and determinate thing or object; and could no longer be annulled.
They also claimed moral and exemplary damages.
The trial court's judgment, quoted at the outset, being adverse to the
petitioners, they seasonably appealed. And after their rebuff at the appellate level,
they come now to this Court oncertiorari under Rule 45 of the Rules of Court,
citing the following grounds for their petition:
"(1) It is clear and patent error of the Court of Appeals to declare as 'void and
inexistent the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976.
(2) The Court of Appeals committed grave error of law in holding that the action to
declare nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe.
(3) The Court of Appeals committed grave abuse of discretion in relying on a
purported Certificate of Bureau of Internal Revenue which was not offered in
evidence.
(4) The Court of Appeals committed grave error of law and abuse of discretion
and grave abuse of discretion amounting to lack or excess of jurisdiction in
ordering the petitioners to reconvey the subject parcel of land to the private
respondents."[10]
With a slight variation but consistent with the grounds they have relied on
petitioners raise in their Memorandum [11] the following:
"ISSUES
1. Did the Court of Appeals commit a clear and patent error in declaring as 'void
and inexistent' the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976?
2. Did the Court of Appeals commit grave error in holding that the action to annul
the Deed of Sale (Exhibit 1) does not prescribe?
3. Did the Court of Appeals commit grave abuse of discretion in relying on a
purported Certificate of the Bureau of Internal Revenue which was not
offered in evidence?
4. Did the Court of Appeals commit grave error of law and grave abuse of
discretion amounting to lack of jurisdiction or in excess of jurisdiction in
ordering petitioners to reconvey the subject parcel of land to the private
respondents?"
These issues may be synthesized into one: Did the respondent Court of
Appeals commit reversible error when it upheld the trial court's judgment that the
disputed Deed of Sale (Exhibit "1") is void and inexistent?
To resolve this pivotal issue, it must be noted that private respondents, as
plaintiffs below, based their complaint to declare the disputed deed void and
inexistent on two fundamental grounds: (1) lack of consent and (2) want of
consideration. Under oath, they strongly denied selling or even just agreeing to
sell, their parcel of land to their niece and nephew-in-law. During the hearing, they
also denied going to and appearing before the Notary Public who prepared the
deed of sale. They also vehemently denied receiving any consideration for the
alleged sale. They added that their signatures on the purported deed of sale were
obtained by fraud and misrepresentation as petitioners had misled them to believe
the document was just a paper to evidence a debt of P2,000 they obtained to buy
G.I sheets for the repair of their leaking roof. [12] Private respondents were shocked
and got sick when they were told by petitioners that they (respondents) were no
longer the owners of the land.[13]
On these two points of consent and consideration, the trial court found that:
"x x x. A careful analysis and meticulous evaluation of the evidence on record has
convinced the Court that the sale of their property to the defendants was farthest
from the plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed
the document which turned out to be a deed of sale, they were misled by
defendant Dolores Rongavilla and her sister Juanita Jimenez into believing that
what they signed was a document acknowledging the loan of P2,000.00 extended
them by said defendant.
"The Deed of Absolute Sale (Exh. "l") mentions a consideration of P2,000.00.
Three years after the alleged sale, the same property was mortgaged by
defendant spouses with the Cavite Development Bank for P40,000.00. Clearly
enough, the gross inadequacy and unconsciounableness [sic] of the consideration
deters the Court from subscribing to defendants' theory that plaintiffs sold the
property to them. It is more reasonable to assume that the amount of P2,000.00
mentioned in the deed refers to the loan defendants extended to plaintiffs for the
same amount.
"Plaintiffs are now of advanced age. Their only property is the lot in question and
the house erected thereon. x x x.
"As there is no indication that plaintiffs were in dire need of money, except for few
[sic] amount, except for few [sic] amount necessary for the repair of the roof of
their house for which they obtained a loan of P2,000.00 from defendants, there
was no reason for plaintiffs to dispose of their property. To do so would be
inconsistent with the regular norm of human conduct and the natural course of
events. It is not in accord with the natural promptings and instincts of human
nature."[14]
To these findings by thetrial court, the Court of Appelas in its own decision
asserted. In addition, it laid stress on the point of lack of consideration by quoting
agreeably the trial judge's holding thereon:
"By more than mere preponderance of evidence of evidence plaintiffs [herein
private respondents] have established the merit of their cause of action. The Court
is of the opinion and so holds that there was fraud exercised by defendant Dolores
Rongavilla and her sister Juanita Jimenez in securing the signature of the Deed of
Absolute Sale (Exh. 'l') and there was no consideration whatsoever dor the
alleged sale. Undoubtedly, the said deed of sale is simulated, fictitious and
void."[15]
And before concluding, the appellate court reiterated the proper
characterization of the deed of sale in question, not as an annullable contract, but
as a void and inexistent contract asfound by the trial court:
"x x x. In the case at bar, however, We are dealing not merely with a voidable
contract which is tainted with fraud, mistake, undue influence, violence or
intimidation which may justify the annulment of a contract, but with a contract that
is null and void ab initio.
"In the present case, plaintiffs-appellees declared under oath in their complaint
that they signed the alleged document without knowing that said document was a
deed of absolute sale. This means that plaintiffs-appelles consent was not only
vitiated, but that plaintiffs-appealles have not give their consent at all. And since
there was no consent, the deed of absolute sale is, therefore, null and void ab
initio. xxx'"[16]
Dissatisfied, petitioners now seek from this Court the reversal of the
judgment below. They insist in their petition before us that the deed is valid; and
that because of the statute of limitations, after the lapse of four years from its
execution and registration, it could no longer be annulled.
 They assert that "the presumption that contracts are presumed to be valid
and to be supported by lawful and good consideration of one dollar is just as
effectual and valuable as a larger sum stipulated or paid''.[17]
They further assert that since private respondents signed the Deed of Sale,
as a public instrument, the truth of the recitals therein embodied could only be
impugned and disproved, not by mere preponderance of evidence, but by
evidence of the "the clearest and most satisfactory character, convincing and
overwhelming.'"[18] Petitioners further state that since they have been the ones
paying real estate taxes on the property, rather than their aunts, the latter by their
acts had confirmed the deed executed by them.[19]
Despite the petitioners' insistence that the deed of sale is presumed valid
and, being registered, could not be disturbed anymore, we however find their
arguments and ratiocination less than persuasive. While petitioners would not
want the deed of sale to be impugned, they themselves contradict the recitals
therein. On the vital point of consideration, they and their witnesses, namely
Juanita Jimenez and Atty. Arcadio Espiritu repeatedly declared that the true
consideration paid for the sale of the land was not P2,000 as stated in their own
Exhibit "l", the Deed of Sale, but in fact P7,800.00.[20]
Petitioner Dolores Rongavilla herself on cross-examination testified as
follows:
"Atty. Rodriguez:
Q. You stated that you were present when this was explained by the notary public,
how did the notary public explain this deed of sale in English or Tagalog?
A. It was explained by the notary public that the property is being sold by them to
us and that the consideration was only P2,000.00 as appearing in the
document in order that we may be able to save for the payment of
taxes and documentary stamps.
Q. Did the plaintiffs not say anything when the notary public according to you
explained that instead of P7,800.00, P2,000.00 will be stated in the
document?
A. They did not say anything because we gave to them the amount of the
consideration agreed between us the sum of P7,800.00. (t.s.n., Sept. 2,
1982, pp. 9-10)"[21]
By their own testimony, the petitioners are pictured as not exactly averse to
bending the truth, particularly the purported consideration. Sadly, the irony of it is
that while they claimed they were regulary paying taxes on the land in question
they had no second thoughts stating at the trial and later on appeal that they had
resorted to doctoring the price stated in the disputed Deed of Sale, allegedly "to
save on taxes". That admission surely opens the door to questions on the
integrity, genuineness and veracity of said public instrument.
Thus, the trial court could not be said to err in asserting that "while it is true
that public documents are presumed genuine and regular under the provisions of
the Rules of Court, this presumption is a rebuttable presumption which may be
overcome by clear, strong and convincing evidence." [22]
Moreover, Exhibit "l", the deed itself, shows that contrary to the testimony of
the notary public, who appeared as a witness for petitioners, what was originally
typed therein was the amount of "Three Thousand Pesos (P3,000)", which later
on was substituted by the handwritten amount now of Two Thousand Pesos
(P2,000)."[23] There is no need to speculate on the motivation for this alteration.
The notary public might have just wanted to further save on taxes, rather than
short-change the coffers of the government. But, again, the whole fabric of
petitioners' claim to the sanctity of the deed as public instrument had thereby been
shredded.
If as petitioners claimed on trial, the price paid was P7,800 while their deed
showed only P2,000, after the amount of P3,000 in the deed was altered, one may
well inquire: which figure could this Court believe? Could one say that the trial and
the appellate courts both erred in holding that no consideration passed from the
buyer to the seller?
But petitioners herein would further take to task the appellate court for grave
abuse of discretion, as well as for a reversible error, in having relied on the
"purported Certification of the Bureau of Internal Revenue which was not offered
in evidence". Since this is a petition under Rule 45, however, we will not dwell on
the alleged grave abuse of discretion but limit our observation to the alleged error
of law. The BIR certificate was the subject of the testimony of witnesses at the
hearing where both parties took full advantage of the opportunity for direct and
cross-examination as well as rebuttal and sur-rebuttal.[24] On the witness stand,
private respondents as plaintiffs below denied that they had any tax account
number nor even residence certificates. They were supported by their witnesses,
testifying also under oath. They contradicted the claim of the petitioners' lawyer-
notary public, that the disputed deed of sale was complete and in due form and
was signed in his presence by the private respondents. They further denied even
having gone to the office of the lawyer-notary public in Bacoor, Cavite, on June 3,
1976, the date of execution shown in the deed, or on any other date. While indeed
the BIR certificate was not formally offered in evidence, hence no longer available
on review, the record would show that said BIR certificate was presented during
the testimony on rebuttal of respondent Mercedes de la Cruz:[25]
"ATTY. RODRIGUEZ:
According to the defendants, there was the alleged deed of sale executed by
you and your sister in favor of the defendants before Notary Public
Arcadio G. Espiritu. It appears you have presented Tax Account No.
(TAN) 2345-463-6 and your sister Florencia de la Cruz also presented
Tax Account No. (TAN) 2345-468-4. Now, do you have any tax account
number?
WITNESS:
None, sir.[26]
xxx
ATTY. RODRIGUEZ:
 I am showing to you this certification from the "Kawanihan ng Rentas, Quezon
City , dated June 16, 1982, addressed to Miss Florencia de la Cruz and
Miss Mercedes de la Cruz, Las Pias, Metro-Manila, issued by the
accounting chief, stating that in reply to you[r] request dated June 14,
1982, requesting certification of your TAN, the records of their office do
not show that you were issued any tax account number, what relation has
this document which for purposes of identification, we respectfully request
that the same be marked Exhibit "C" to the certification issued by the BIR?
WITNESS:
"Yes, this is the one."[27]
Now even if the matter of the official certification by the BIR is set aside, the
whole question of the TAN being fake or belonging to somebody else, would boil
down to one of credibility between the two camps. Unfortunately for the petitioners
herein, the trial court found them and their witnesses far from credible. As
remarked by the trial Judge, "the declarations of defendants [herein petitioners] do
not inspire rational belief."[28] It would thus appear that the trial court and the
appellate court committed no grave error of law, that would impel us on this point
to override their judgment.
Neither can we give assent to the assertion of petitioners that the appealed
Court of Appeals (CA) decision here as well as the judgment below is "contrary to
settled jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411
(1977) had occasion already to affirm a trial court's judgment declaring null and
void the questioned deed of sale where it found:
"The undisputed facts of record support the finding of the trial court that
the consent of Ana Concepcion to the deed of sale was obtained through
fraudulent misrepresentation of [her nephew] Jaime Rivero that the contract she
was signing was one of mortgage."
"The land in question is located in the municipality of Polo, Bulacan, very near
Manila. It has an area of 2 hectares, 32 ares and 45 centares.
The consideration for the sale of said land is only P5,000.00 which is not only
grossly inadequate but shocking to the conscience x x x"[29]
In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of
land in Tayabas, Quezon, the Court confronted a similar question:
"The first question presented is whether the contract of sale executed by Isabel
Flores in favor of Joaquin Bas is valid or not.
"By relying upon the documents executed in his favor by Isabel Flores evidencing
the contract of sale, Joaquin Bas insists that there has been a perfect and valid
contract of sale of real estate between them and that he paid to her the
consideration of P20,000 mentioned in said documents. x x x.
"Isabel Flores, on the other hand, maintained that there was neither a real sale nor
did she receive a centavo from the defendant, as the price of said sale, x x x."[30]
Concluded the Court, after reviewing the series of transactions on record:
"It is then evident that the contract of sale mentioned in the notarial document of
May 7, 1915, lacks cause or consideration and is therefore null and void and
without any effect whatsoever according to Article 1275 of the Civil Code, for it
has been satisfactorily and conclusively proven that the purchaser Joaquin Bas
has not paid Isabel Flores for the price of the lands that the latter has sold to him,
and after being contented with having for a long time given several promises
showing that he had no intention to comply with his contract, he concluded by
executing four promissory notes payable to the vendor, which recite the
aforementioned purchase price and which were not also paid, there appearing in
the record facts from which it can be inferred that fraud has been committed."[31]
This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:
"The rule under the Civil Code, again be it the old or the new, is that contracts
without a cause or consideration produce no effect whatsoever."[32]
The "problem" before the Court "is whether a deed which states a
consideration that in fact did not exist, is a contract, without consideration, and
therefore void ab initio, or a contract with a false consideration, and therefore, at
least under the Old Civil Code, voidable." This problem arose, as observed by the
Court, because the questioned "deed of sale" between the brothers Magpalo, in
1936, stated that it had for its consideration Five Hundred (P500.00) Pesos. In
fact, however, said "consideration was totally absent."[33]
Thus, the Court concluded:
"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40
Phil. 921 is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and null and void and produces no effect whatsoever
where the same is without cause or consideration in that the purchase price which
appears thereon as paid has in fact never been paid by the puchaser to
vendor."[34]
Turning now to the issue of prescription, it follows that once the disputed
deed is found to be inexistent and void, the statute of limitations cannot apply. As
the courts below ruled, the cause of action for its declaration as such is
imprescriptible.[35] Petitioners-spouses contend, however, that this is contrary to
settled jurisprudence because the applicable precedent should be Pangadil v. CFI
of Cotabato, 116 SCRA 347 (1982). But the fact situation of that case
differs radically from the present controversy. There the Court upheld the
dismissal of the action to declare a document known as "Ratificacion de Una
Venta" as inexistent and void after finding that it was "not a contract wherein the
parties do not intend to be bound at all;" that no circumstance was alleged to
sustain the contention "that the execution of the aforesaid document is contrary to
public policy;"[36] and that for 27 years the petitioners did not even care to verify of the sale. They would then become homeless, and the repaired roof would be
the status of the land in question. "Their inaction for such a considerable period of of no use to them."[41] Experience which is the life of the law -- as well as logic and
time reflects on the credibility of their pretense that they merely intended to common sense -- militates against the petitioners' cause.
confirm an oral mortgage, instead of sale of the land in question."[37]
WHEREFORE, the instant petition is hereby DENIED. The Decision and the
Here in the present case, there is no doubt about the credibility of plaintiffs Resolution of the Court of Appeals in CA-G.R. CV No. 06543 are hereby
below (herein private respondents) in pursuing their cause promptly and forcefully. AFFIRMED.
They never intended to sell, nor acceded to be bound by the sale of their land.
Public policy is also well served in defending the rights of the aged to legal Cost against petitioners.
protection, including their right to property that is their home, as against fraud, SO ORDERED.
misrepresentation, chicanery and abuse of trust and confidence by those who
owed them candor and respect.
More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987),
where this Court found that:

"This Civil Code provides in Article 1391 that an action to annul a contract on the
ground of vitiated consent must be filed within four years from the discovery of
the vice of consent. In the instant case, however, we are dealing not with a
voidable contract tainted with fraud, mistake, undue influence, violence or
intimidation that can justify its nullification, but with a contract that is null and
void ab initio

"Paulina Baranda declared under oath in her complaint that she signed the deeds
of sale without knowing what they were, which means that her consent was not
merely marred by the above-stated vices, so as to make the contracts voidable,
but that she had not given her consent at all. We are also satisfied that there
was no valid consideration either for the alleged transfers, for reasons already
discussed. Lack of consent and consideration made the deeds of sale void
altogether[38]and rendered them subject to attack at any time, conformably to the
rule in Article 1410 that an action to declare the inexistence of void contracts 'does
not prescribe'."[39]

And if the passage of time could not cure the fatal flaw in the inexistent and
void contract, neither could an alleged ratification or confirmation thereof. Further,
as in the case before us, reconveyance is proper. "The defect of inexistence of a
contract is permanent and incurable, hence it cannot be cured either by ratification
or by prescription. x x x There is no need of an action to set aside a void or
inexistent contract; in fact such action cannot logically exist. However, an action to
declare the non-existence of the contract can be maintained; and in the same
action, the plaintiff may recover what he has given by virtue of the contract." [40]
Given the circumstances of the case and there being no reversible error in
the challenged decision, we are in accord with the judgment below and find the
petitioners' appeal without merit. For as well said in the Court of Appeals' Decision
and Resolution under review, "We cannot contemplate of the rather absurd
situation, which defendants-appellants would ineluctably lead [u]s to, where
plaintiffs-appellees would sell their only house, in which they have lived for so
many years, in order to secure the measly sum of P2,000.00 to repair the roof of
their only house, which would all be lost to them anyway upon the consummation
 [G.R. No. 120724-25. May 21, 1998]
FERNANDO T. MATE, petitioner, vs. THE HONORABLE COURT OF
APPEALS and INOCENCIO TAN, respondents.
DECISION
MARTINEZ, J.:
In this petition for review, petitioner assails the Decision [1] of the Court of
Appeals dated August 29, 1994 in CA-G.R. CV No. 28225-26, which affirmed with
modification the decision of the trial court, the dispositive portion of which reads,
to wit:
WHEREFORE, this Court finds the Deed of Sale with Right of Repurchase
executed October 6, 1986 valid and binding between plaintiff and defendant (as
vendor and vendee-a-retro respectively); that as the period to redeem has
expired, ownership thereof was consolidated by operation of law, and the Register
of Deeds is hereby ordered to REGISTER this decision consolidating the
defendants ownership over the properties covered by Transfer Certificate of Title
No. T-90-71, covering Lot 8; Original Certificate of Title No. N-311 covering Lot
5370, all of the Tacloban Cadastre, and issuing to defendant Inocencio Tan his
titles after cancellation of the titles presently registered in plaintiff Fernando T.
Mates name and that of his wife.
The plaintiff Fernando Mate is further ordered to pay defendant the sum of ONE
HUNDRED FORTY THOUSAND (P140,000.00) PESOS, for and as attorneys
fees.
With costs against the plaintiff Fernando Mate.
SO ORDERED.[2]
The facts of this case, as summarized in the petition, are reproduced
hereunder:
On October 6, 1986 Josefina R. Rey (hereafter referred to as Josie for short) and
private respondent went to the residence of petitioner at Tacloban City. Josie
who is a cousin of petitioners wife solicited his help to stave off her and her
familys prosecution by private respondent for violation of B.P. 22 on account of
the rubber checks that she, her mother, sister and brother issued to private
respondent amounting to P4,432,067.00. She requested petitioner to cede to
private respondent his three (3) lots in Tacloban City in order to placate him. On
hearing Josies proposal, he immediately rejected it as he owed private respondent
nothing and he was under no obligation to convey to him his
properties. Furthermore, his lots were not for sale.Josie explained to him that he
was in no danger of losing his properties as he will merely execute a simulated
document transferring them to private respondent but they will be redeemed by
her with her own funds. After a long discussion, he agreed to execute a fictitious
deed of sale with right to repurchase covering his three (3) lots mentioned above
subject to the following conditions:
1. The amount to be stated in the document is P1,400,000.00 with
interest thereon at 5% a month;
2. The properties will be repurchased within six (6) months or on or
before April 4, 1987;
3. Although it would appear in the document that petitioner is the
vendor, it is Josie who will provide the money for the redemption
of the properties with her own funds;
4. Titles to the properties will be delivered to private respondent but the
sale will not be registered in the Register of Deeds and annotated
on the titles.
To assure petitioner that Josie will redeem the aforesaid properties, she issued to
him two (2) BPI checks both postdated December 15, 1986. One check was
for P1,400,000.00 supposedly for the selling price and the other was
for P420,000.00 corresponding to the interests for 6 months. Immediately
thereafter petitioner prepared the Deed of Sale with Right to Repurchase (Exh. A)
and after it has been signed and notarized, it was given to private respondent
together with the titles of the properties and the latter did not register the
transaction in the Register of Deeds as agreed upon.
On January 14, 1987, petitioner deposited the check for P1,400,000.00 (Exh. B) in
his account at the United Coconut Planters Bank and the other check
for P420,000.00 (Exh. D) in his account at METROBANK preparatory to the
redemption of his properties. However, both of them were dishonored by the
drawee bank for having been drawn against a closed account.Realizing that he
was swindled, he sent Josie a telegram about her checks and when she failed to
respond, he went to Manila to look for her but she could not be found. So he
returned to Tacloban City and filed Criminal Cases Nos. 8310 and 8312 against
her for violation of B.P. 22 but the cases were later archived as the accused
(Josie) could not be found as she went into hiding. To protect his interest, he filed
Civil Case No. 7396 of the Regional Trial Court of Leyte, Branch VII, entitled
`Fernando T. Mate vs. Josefina R. Rey and Inocencio Tan for Annulment of
Contract with Damages. Defendant Josefina R. Rey (Josie) was declared in
default and the case proceeded against private respondent. But during the trial the
RTC court asked private respondent to file an action for consolidation of
ownership of the properties subject of the sale and pursuant thereto he filed Civil
Case No. 7587 that was consolidated with the case he filed earlier which were
later decided jointly by the trial court in favor of private respondent and was
subsequently appealed to respondent Court that affirmed it with
modification. Thereupon, petitioner filed a motion to reconsider the decision but it
was denied. Hence, the instant petition for review.[3]
In this petition for review, the petitioner presents as the sole issue the validity
of the Deed of Sale with Right to Repurchase. He contends that it is null and void
for lack of consideration because allegedly no money changed hands when he
signed it and the checks that were issued for redemption of the properties
involved in the sale have been dishonored by the drawee bank for having been
drawn against a closed account.[4]
The contention is without merit.
There was a consideration. The respondent court aptly observed that -
In preparing and executing the deed of sale with right of repurchase and in
delivering to Tan the land titles, appellant actually accommodated Josefina so she
would not be charged criminally by Tan. To ensure that he could repurchase his
lots, appellant got a check of P1,400,000.00 from her. Also, by allowing his titles
to be in possession of Tan for a period of six months, appellant secured from her
another check for P420,000.00. With this arrangement, appellant was convinced
he had a good bargain. Unfortunately his expectation crumbled. For this tragic
incident, not only Josefina, but also Tan, according to appellant must be
answerable.
xxxxxxxxx
It is plain that consideration existed at the time of the execution of the deed of sale
with right of repurchase. It is not only appellants kindness to Josefina, being his
cousin, but also his receipt of P420,000.00 from her which impelled him to
execute such contract.[5]
Furthermore, while petitioner did not receive the P1.4 Million purchase price
from respondent Tan, he had in his possession a postdated check of Josie Rey in
an equivalent amount precisely to repurchase the two lots on or before the sixth
month.
As admitted by petitioner, by virtue of the sale with pacto de retro, Josie Rey
gave him, as vendor-a-retro, a postdated check in the amount of P1.4 Million,
which represented the repurchase price of the two (2) lots. Aside from the P1.4
Million check, Josie gave another postdated check to petitioner in the amount
of P420,000.00, ostensibly as interest for six (6) months but which apparently was
his fee for having executed the pacto de retro document. Josie thus assumed the
responsibility of paying the repurchase price on behalf of petitioner to private
respondent.
Unfortunately, the two checks issued by Josie Rey were worthless. Both
were dishonored upon presentment by petitioner with the drawee banks.
However, there is absolutely no basis for petitioner to file a complaint against
private respondent Tan and Josie Rey to annul the pacto de retro sale on the
ground of lack of consideration, invoking his failure to encash the two
checks. Petitioners cause of action was to file criminal actions against Josie Rey
under B.P. 22, which he did. The filing of the criminal cases was a tacit admission
by petitioner that there was a consideration of the pacto de retro sale.
Petitioner further claims that the pacto de retro sale was subject to the
condition that in the event the checks given by Josie Reyes to him for the
repurchase of the property were dishonored, then the document shall be declared
null and void for lack of consideration.
We are not persuaded.
Private respondent Tan was already poised to file criminal cases against
Josie Rey and her family. It would not be logical for respondent Tan to agree to
the conditions allegedly imposed by petitioner. Petitioner knew that he was bound
by the deed of sale with right to repurchase, as evidenced by his filing criminal
cases against Josie Rey when the two checks bounced.
The respondent court further made the candid but true observation that:
If there is anybody to blame for his predicament, it is appellant himself. He is a
lawyer. He was the one who prepared the contract. He knew what he was
entering into. Surely, he must have been aware of the risk involved. When
Josefinas checks bounced, he should have repurchased his lots with his own
money. Instead, he sued not only Josefina but also Tan for annulment of contract
on the ground of lack of consideration and false pretenses on their part.
Petitioner then postulates that it is not only illegal but immoral to require him
to repurchase his own properties with his own money when he did not derive any
benefit from the transaction. Thus, he invokes the case of Singson vs.
Isabela Sawmill, 88 SCRA 633, 643, where the Court said that where one or two
innocent persons must suffer, that person who gave occasion for the damages to
be caused must bear consequences. Petitioners reliance on this doctrine is
misplaced. He is not an innocent person. As a matter of fact, he gave occasion for
the damage caused by virtue of the deed of sale with right to repurchase which he
prepared and signed. Thus, there is the equitable maxim that between two
innocent parties, the one who made it possible for the wrong to be done should be
the one to bear the resulting loss.[6]
Petitioner further insinuates that private respondent deceived him into signing
the deed of sale with right to repurchase. This is not borne out by the evidence nor
by petitioners ownstatement of facts which we heretofore reproduced. As aptly
observed by the respondent court We are at a loss why herein appellant ascribes
false pretenses to Tan who merely signed the contract.[7] Contrary to petitioners
pretension, respondent Tan did not employ any devious scheme to make the
former sign the deed of sale. It is to be noted that Tan waived his right to collect
from Josefina Rey by virtue of the pacto de retro sale. In turn, Josefina gave
petitioner a postdated check in the amount of P1.4 Million to ensure that the latter
would not lose his two lots. Petitioner, a lawyer, should have known that the
transaction was fraught with risks since Josefina Rey and family had a checkered
history of issuing worthless checks. But had petitioner not agreed to the
arrangement, respondent Tan would not have agreed to waive prosecution of G.R. No. 144735 October 18, 2001
Josefina Rey.
Apparently, it was petitioners greed for a huge profit that impelled him to YU BUN GUAN, petitioner,
accede to the scheme of Josefina Rey even if he knew it was a dangerous vs.
undertaking. When he drafted thepacto de retro document, he threw caution to the ELVIRA ONG, respondent.
winds forgetting that prudence might have been the better course of action. We
can only sympathize with petitioners predicament.However, a contract is a PANGANIBAN, J.:
contract. Once agreed upon, and provided all the essential elements are present,
it is valid and binding between the parties. A simulated deed of sale has no legal effect, and the transfer certificate of title
issued in consequence thereof should be cancelled. Pari delicto does not apply to
Petitioner has no one to blame but himself for his misfortune. simulated sales.
WHEREFORE, the Decision of the Court of Appeals dated August 29, 1994
is hereby AFFIRMED. The petition for review is hereby DENIED DUE COURSE Statement of the Case
for lack of merit.
SO ORDERED. Before us is a Petition for Review under rule 45 of the Rules of Court, assailing
the April 25, 2000 Decision1 and the August 31, 2000 Resolution2 of the Court of
Appeals3 (CA) in CA-GR CV No. 61364. The decretal portion of the Decision
reads as follows:

"We cannot see any justification for the setting aside of the contested
Decision.

"THE FOREGOING CONSIDERED, the appealed Decision is hereby

AFFIRMED."4

The assailed Resolution denied petitioner's "Supplemental Motion for

Reconsideration with Leave to Submit [Newly] Discovered Evidence."

The CA sustained the Decision of the Regional Trial Court (RTC) of Makati City
(Branch 60), which had disposed as follows:5

"23. WHEREFORE, the Court hereby renders judgment as follows:

23.1 The Deed of Sale dated July 24, 1992 (Exh. EE on Exh. 3) is
declared VOID.

23.2 The plaintiff ELVIRA ONG is declared the OWNER of the

property covered by Transfer Certificate of Title No. 217614,
Registry of Deeds, Makati (Exh. DD).

23.3 The Register of Deeds, City of Makati is ordered to:

23.2.1. Cancel Transfer Certificate of Title No. 181033

(Exh. HH); and
 23.2.2. Issue in lieu thereof, a transfer certificate of title in
the name of ELVIRA A. ONG, of legal age, single,
Filipino';
23.[4]. The defendant YU BUN GUAN is ordered to pay to the
said plaintiff, the following:
23.[4].1. P48,631.00 As reimbursement of the capital
gains tax (Exh. FF);
23.[4].2. Six (6) percent of P48,631.00 per annum from
November 23, 1993, until the said P48,631.00 is paid
as damages;
23.[4].3. P100,000.00 as moral damages;
23.[4].4. P50,000.00 as exemplary damages;
23.[4].5. P100,000.00 as attorney's fees.
23.[5]. The COUNTERCLAIM is DISMISSED.
23.[6]. Cost is taxed against the defendant.
"24. In Chambers, City of Makati, June 23, 1998.
The Facts
The antecedents of the case are succinctly summarized by the Court of Appeals
in this wise:
'[Herein respondent] said that she and [petitioner] are husband and wife,
having been married according to Chinese rites on April 30, 1961. They
lived together until she and her children were abandoned by [petitioner]
on August 26, 1992, because of the latter's 'incurable promiscuity,
volcanic temper and other vicious vices'; out of the reunion were born
three (3) children, now living with her [respondent].
"She purchased on March 20, 1968, out of her personal funds, a parcel of
land, then referred to as the Rizal property, from Aurora Seneris, and
supported by Title No. 26795, then subsequently registered on April 17,
1968, in her name.1wphi1.nt
"Also during their marriage, they purchased, out of their conjugal funds, a
house and lot, in 1983, thereafter, registered in their names, under Title
No. 118884.
'Before their separation in 1992, she 'reluctantly agreed' to the
[petitioner's] 'importunings' that she execute a Deed of Sale of the J.P.
Rizal property in his favor, but on the promise that he would construct a
commercial building for the benefit of the children. He suggested that the
J.P. Rizal property should be in his name alone so that she would not be
involved in any obligation. The consideration for the 'simulated sale' was
that, after its execution in which he would represent himself as single, a
Deed of Absolute Sale would be executed in favor of the three (3) children
and that he would pay the Allied Bank, Inc. the loan he obtained.
"Because of the 'glib assurances' of [petitioner], [respondent] executed a
Deed of Absolute Sale in 1992, but then he did not pay the consideration
of P200,000.00, supposedly the 'ostensible' valuable consideration. On
the contrary, she paid for the capital gains tax and all the other
assessments even amounting to not less than P60,000.00, out of her
personal funds.
"Because of the sale, a new title (TCT No. 181033) was issued in his
name, but to 'insure' that he would comply with his commitment, she did
not deliver the owner's copy of the title to him.
"Because of the refusal of [petitioner] to perform his promise, and also
because he insisted on delivering to him the owner's copy of the title [to]
the JP Rizal property, in addition to threats and physical violence, she
decided executing an Affidavit of Adverse Claim.
Also to avoid burdening the JP Rizal property with an additional loan
amount, she wrote the Allied Bank, Inc. on August 25, 1992, withdrawing
her authority for [petitioner] to apply for additional loans.
"To save their marriage, she even sought the help of relatives in an
earnest effort [at] reconciliation, not to mention a letter to [petitioner] on
November 3, 1992.
"[Petitioner], on the other hand, filed with the RTC, Makati, in 1993 (Case
No. M-2905), a 'Petition for Replacement' of an owner's duplicate title.
"Attached to the Petition was the Affidavit of Loss dated March 26, 1993,
in which he falsely made it appear that the owner's copy of the title was
lost or misplaced, and that was granted by the court in an Order dated
September 17, 1993, following which a new owner's copy of the title was
issued to [petitioner].
"Upon discovery of the 'fraudulent steps' taken by the [petitioner],
[respondent] immediately executed an Affidavit of Adverse Claim on
November 29, 1993.
 "She precisely asked the court that the sale of the JP Rizal property be
declared as null and void; for the title to be cancelled; payment of actual,
moral and exemplary damages; and attorney's fees.
"It was, on the other hand, the version of [petitioner] that sometime in
1968 or before he became a Filipino, 'through naturalization' the JP Rizal
property was being offered to him for sale. Because he was not a Filipino,
he utilized [respondent] as his 'dummy' and agreed to have the sale
executed in the name of [respondent], although the consideration was his
own and from his personal funds.
"When he finally acquired a Filipino citizenship in 1972, he purchased
another property being referred to as the 'Juno lot' out of his own funds. If
only to reflect the true ownership of the JP Rizal property, a Deed of Sale
was then executed in 1972. Believing in good faith that his owner's copy
of the title was lost and not knowing that the same was surreptitiously
'concealed' by [respondent], he filed in 1993 a petition for replacement of
the owner's copy of the title, in court.
"[Petitioner] added that [respondent] could not have purchased the
property because she had no financial capacity to do so; on the other
hand, he was financially capable although he was financially capable
although he was disqualified to acquire the property by reason of his
nationality. [Respondent] was in pari delicto being privy to the simulated
sale.
"Before the court a quo, the issues were: who purchased the JP Rizal
property? [W]as the Deed of Sale void? and damages.6
Ruling of the Trial Court
After examining the evidence adduced by both parties, the RTC found that the JP
Rizal property was the paraphernal property of the respondent, because (1) the
title had been issued in her name; (2) petitioner had categorically admitted that the
property was in her name; (3) petitioner was estopped from claiming otherwise,
since he had signed the Deed of Absolute Sale that stated that she was the
"absolute and registered owner"; (4) she had paid the real property taxes
thereon.7
The trial court further held that the in pari delicto rule found in Articles 1411 and
1412 of the Civil Code was not applicable to the present case, because it would
apply only to existing contracts with an illegal cause or object, not to simulated or
fictitious contracts or to those that were inexistent due to lack of an essential
requisite such as cause or consideration.8 It likewise voided the Deed of Absolute
Sale of the JP Rizal property for having been simulated and executed during the
marriage of the parties.9
Ruling of the Court of Appeals
The Court of Appeals upheld the trial court's findings that the JP Rizal property
had been acquired by respondent alone, out of her own personal funds. It ruled
thus:
"x x x [T]he JP Rizal property was purchased by the [respondent] alone;
therefore it is a paraphernal property. As a matter of fact, the title was
issued in her name, Exh. 'DD' This was even admitted by [petitioner] in
the Answer that the sale was executed in her name alone. He also signed
the sale mentioning [respondent] to be an absolute owner; therefore he
should be estopped from claiming otherwise. She alone likewise did the
payment of the taxes.10
The CA debunked the contention of petitioner that he had purchased the property
out of his own funds and merely used respondent as his dummy.11 It also held that
the latter was not in pari delicto with him, because the contract was simulated or
fictitious due to the lack of consideration. The contract was deemed void for
having been executed during the couple's marriage.12 The CA likewise affirmed
the award of actual, moral and exemplary damages to respondent.13
Hence, this Petition.14
Issues
In his Memorandum, petitioner raises the following issues for the Court's
consideration:
I
"Whether or not the Court of Appeals gravely erred in not applying [the]
rules on co-ownership under Article 144 of the New Civil Code in
determining the proprietary rights of the parties herein even as
respondent herself expressly declared that the money with which she
allegedly bought the property in question in 1968 came from her funds,
salaries and savings at the time she and petitioner already lived as
husband and wife.
II
"Whether or not the Court of Appeals likewise palpably erred in declaring
the sale of the subject property to herein petitioner in 1992 to be fictitious,
simulated and inexistent.
III
"Whether or not the Court of Appeals further erred in not applying the '[in]
pari delicto' rule to the sale of the subject property in favor of the petitioner
in 1992 contrary to the express declaration to that effect in the very same
 case it cited (Rodriguez v. Rodriguez; 20 SCRA 908) in the decision
herein sought to be reviewed.
IV
"Whether or not the Court of Appeals gravely erred in annul[l]ing the title
(TCT No. 181033) to the subject property in the name of herein petitioner
in the absence of actual fraud."15 (Underscoring in the original.)
This Court's Ruling
The Petition is devoid of merit.
First Issue:
Nature of the Property
Petitioner contends that the JP Rizal property should be deemed as co-owned,
considering that respondent testified during trial that the money she used in
purchasing it had come from her income, salaries and savings, which are conjugal
in nature.
On the other hand, respondent maintains that the finding of the two lower courts
that the property was acquired using funds solely owned by her is binding and
supported by evidence. She further argues that the two defenses of petitioner are
contradictory to each other because, if the property is co-owned, he cannot claim
to own it in its entirety.
We find no reason to disturb the findings of the RTC and the CA that the source of
the money used to acquire the property was paraphernal. This issue is factual in
nature. It is axiomatic that "factual findings of the trial court, especially when
affirmed by the Court of Appeals, as in this case, are binding and conclusive on
the Supreme Court. It is not the function of this Court to reexamine the lower
courts' findings of fact. While there are exceptions to this rule, petitioner has not
shown its entitlement to any of them."16
The testimony of petitioner as to the source of the money he had supposedly used
to purchase the property was at best vague and unclear. At first he maintained
that the money came from his own personal funds. Then he said that it came from
his mother; and next, from his father. Time and time again, "we [have] held that
the unnatural and contradictory testimony of a witness, x x x makes him unreliable
x x x."17 His statement that the JP Rizal property was bought with his own money
can hardly be believed, when he himself was unsure as to the source of those
funds.
On the other hand, the capacity of respondent to purchase the subject property
cannot be questioned. It was sufficiently established during trial that she had the
means to do so. In fact, her testimony that she had purchased several other lots
using her personal funds was not disputed.
Equally without merit is the contention of petitioner that, because he was a
Chinese national at the time, respondent was merely used as a dummy in
acquiring the property; thus, she could not have legally acquired title thereto. He
testified that sometime during the last month of 1968, he had consulted a certain
Atty. Flores, who advised him that the property be registered in the name of
respondent. However, TCT No. 217614 had been issued earlier on April 17, 1968.
Thus, it appears that the subject property had already been bought and registered
in the name of respondent, long before Atty. Flores allegedly advised him to have
the property registered in her name.
We therefore agree with the CA's affirmation of the RTC's findings that the
property had been acquired using respondent's paraphernal property. The CA rule
thus:
"The fact however, is that Yu never refuted Elvira's testimony that: (a) the
money with which she acquired the JP Rizal property came from": (1) her
income as a cashier in the Hong Kiat Hardware: a (2) income from her
paraphernal property a lot in Guadalupe; (3) her savings from the
money which her parents gave her while she was still a student; and (4)
the money which her sister gave her for helping her run the beauty parlor;
(b) her parents were well off they had stores, apartments and beauty
parlors from which they derived income; (c) before her marriage she
bought lots in different places (p. 8, TSN, Jan. 26, 1998; pp. 22-23, TSN
March 10, 1998)."18
Second Issue:
Fictitious, Simulated and Inexistent Sale
Next, petitioner argues that there was a valid sale between the parties, and that
the consideration consisted of his promise to construct a commercial building for
the benefit of their three children and to pay the loan he had obtained from Allied
Bank.
We disagree. In Rongavilla v. Court of Appeals,19 the Court declared that a deed
of sale, in which the stated consideration had not in fact been paid, is null and
void:
"The 'problem' before the Court is whether a deed which states a
consideration that in fact did not exist, is a contract, without consideration,
and therefore void ab initio, or a contract with a false consideration, and
therefore, at least under the Old Civil Code, voidable. x x x."
"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs.
Flores, 40 Phil. 921[,] is squarely applicable herein. In that case we ruled
 that a contract of purchase and sale is null and null and void and
produces no effect whatsoever where the same is without cause or
consideration in that the purchase price which appears thereon as paid
has in fact never been paid by the purchaser to vendor."20
In the present case, it is clear from the factual findings of both lower courts that
the Deed of Sale was completely simulated and, hence, void and without effect.
No portion of the P200,000 consideration stated in the Deed was ever paid. And,
from the facts of the case, it is clear that neither party had any intention
whatsoever to pay that amount.
Instead, the Deed of Sale was executed merely to facilitate the transfer of the
property to petitioner pursuant to an agreement between the parties to enable him
to construct a commercial building and to sell the Juno property to their children.
Being merely a subterfuge, that agreement cannot be taken as the consideration
for the sale.
Third Issue:
Inapplicability of the in Pari Delicto Principle
The principle of in pari delicto provides that when two parties are equally at fault,
the law leaves them as they are and denies recovery by either one of them.
However, this principle does not apply with respect to inexistent and void
contracts. Said this Court in Modina v. Court of Appeals:21
"The principle of in pari delicto non oritur actio denies all recovery to the
guilty parties inter se. It applies to cases where the nullity arises from the
illegality of the consideration or the purpose of the contract. When two
persons are equally at fault, the law does not relieve them. The exception
to this general rule is when the principle is invoked with respect to
inexistent contracts."22
Fourth Issue:
Cancellation of TCT
Finally, based on the foregoing disquisition, it is quite obvious that the Court of
Appeals did not err in ordering the cancellation of TCT No. 181033, because the
Deed of Absolute Sale transferring ownership to petitioner was completely
simulated, void and without effect. In fact, there was no legal basis for the
issuance of the certificate itself.1wphi1.nt
WHEREFORE, the Petition is hereby DENIED and the assailed.
Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. L-67888 October 8, 1985
IMELDA ONG, ET AL., petitioners,
vs.
ALFREDO ONG, ET AL., respondents.
Faustino Y Bautista and Fernando M. Mangubat for private respondent.
RELOVA, J.:
This is a petition for review on certiorari of the decision, dated June 20, 1984, of
the Intermediate Appellate Court, in AC-G.R. No. CV-01748, affirming the
judgment of the Regional Trial Court of Makati, Metro Manila. Petitioner Imelda
Ong assails the interpretation given by respondent Appellate Court to the
questioned Quitclaim Deed.
Records show that on February 25, 1976 Imelda Ong, for and in consideration of
One (P1.00) Peso and other valuable considerations, executed in favor of private
respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she
transferred, released, assigned and forever quit-claimed to Sandra Maruzzo, her
heirs and assigns, all her rights, title, interest and participation in the ONE-HALF
() undivided portion of the parcel of land, particularly described as follows:
A parcel of land (Lot 10-B of the subdivision plan (LRC) Psd
157841, being a portion of Lot 10, Block 18, Psd-13288, LRC
(GLRC) Record No. 2029, situated in the Municipality of Makati,
Province of Rizal, Island of Luzon ... containing an area of ONE
HUNDRED AND TWENTY FIVE (125) SQUARE METERS, more
or less.
On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim
and, thereafter, on January 20, 1982 donated the whole property described above
to her son, Rex Ong-Jimenez.
On June 20, 1983, Sandra Maruzzo, through her guardian (ad litem) Alfredo Ong,
filed with the Regional Trial Court of Makati, Metro Manila an action against
petitioners, for the recovery of ownership/possession and nullification of the Deed
of Donation over the portion belonging to her and for Accounting.
In their responsive pleading, petitioners claimed that the Quitclaim Deed is null
and void inasmuch as it is equivalent to a Deed of Donation, acceptance of which
by the donee is necessary to give it validity. Further, it is averred that the donee,
Sandra Maruzzo, being a minor, had no legal personality and therefore incapable
of accepting the donation.
Upon admission of the documents involved, the parties filed their responsive
memoranda and submitted the case for decision.
On December 12, 1983, the trial court rendered judgment in favor of respondent
Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and,
hence, there was a valid conveyance in favor of the latter.
Petitioners appealed to the respondent Intermediate Appellate Court. They
reiterated their argument below and, in addition, contended that the One (P1.00)
Peso consideration is not a consideration at all to sustain the ruling that the Deed
of Quitclaim is equivalent to a sale.
On June 20, 1984, respondent Intermediate Appellate Court promulgated its
Decision affirming the appealed judgment and held that the Quitclaim Deed is a
conveyance of property with a valid cause or consideration; that the consideration
is the One (P1.00) Peso which is clearly stated in the deed itself; that the apparent
inadequacy is of no moment since it is the usual practice in deeds of conveyance
to place a nominal amount although there is a more valuable consideration given.
Not satisfied with the decision of the respondent Intermediate Appellate Court,
petitioners came to Us questioning the interpretation given by the former to this
particular document.
On March 15, 1985, respondent Sandra Maruzzo, through her guardian ad
litem Alfredo Ong, filed an Omnibus Motion informing this Court that she has
reached the age of majority as evidenced by her Birth Certificate and she prays
that she be substituted as private respondent in place of her guardian ad
litem Alfredo Ong. On April 15, 1985, the Court issued a resolution granting the
same.
A careful perusal of the subject deed reveals that the conveyance of the one- half
() undivided portion of the above-described property was for and in
consideration of the One (P 1.00) Peso and the other valuable
considerations (emphasis supplied) paid by private respondent Sandra Maruzzo
through her representative, Alfredo Ong, to petitioner Imelda Ong. Stated
differently, the cause or consideration is not the One (P1.00) Peso alone but also
the other valuable considerations. As aptly stated by the Appellate Court-
... although the cause is not stated in the contract it is presumed
that it is existing unless the debtor proves the contrary (Article
1354 of the Civil Code). One of the disputable presumptions is
that there is a sufficient cause of the contract (Section 5, (r), Rule
131, Rules of Court). It is a legal presumption of sufficient cause
or consideration supporting a contract even if such cause is not
stated therein (Article 1354, New Civil Code of the Philippines.)
This presumption cannot be overcome by a simple assertion of
lack of consideration especially when the contract itself states that
consideration was given, and the same has been reduced into a
public instrument with all due formalities and solemnities. To
overcome the presumption of consideration the alleged lack of
consideration must be shown by preponderance of evidence in a
proper action. (Samanilla vs, Cajucom, et al., 107 Phil. 432).
The execution of a deed purporting to convey ownership of a realty is in itself
prima facie evidence of the existence of a valuable consideration, the party
alleging lack of consideration has the burden of proving such allegation.
(Caballero, et al. vs. Caballero, et al., (CA), 45 O.G. 2536).
Moreover, even granting that the Quitclaim deed in question is a donation, Article
741 of the Civil Code provides that the requirement of the acceptance of the
donation in favor of minor by parents of legal representatives applies only to
onerous and conditional donations where the donation may have to assume
certain charges or burdens (Article 726, Civil Code). The acceptance by a legal
guardian of a simple or pure donation does not seem to be necessary (Perez vs.
Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan vs. Casilan and
Court of Appeals, (109 Phil. 889) that the donation to an incapacitated donee does
not need the acceptance by the lawful representative if said donation does not
contain any condition. In simple and pure donation, the formal acceptance is not
important for the donor requires no right to be protected and the donee neither
undertakes to do anything nor assumes any obligation. The Quitclaim now in
question does not impose any condition.
The above pronouncement of respondent Appellate Court finds support in the
ruling of this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which
states that "the major premise thereof is based upon the fact that the
consideration stated in the deeds of sale in favor of Reyes and the Abellas is
P1.00. It is not unusual, however, in deeds of conveyance adhering to the Anglo-
Saxon practice of stating that the consideration given is the sum of P1.00,
although the actual consideration may have been much more. Moreover,
assuming that said consideration of P1.00 is suspicious, this circumstance, alone,
does not necessarily justify the inference that Reyes and the Abellas were not
purchasers in good faith and for value. Neither does this inference warrant the
conclusion that the sales were null and void ab initio. Indeed, bad faith and
inadequacy of the monetary consideration do not render a conveyance inexistent,
for the assignor's liberality may be sufficient cause for a valid contract (Article
1350, Civil Code), whereas fraud or bad faith may render either rescissible or
voidable, although valid until annulled, a contract concerning an object certain
entered into with a cause and with the consent of the contracting parties, as in the
case at bar."
WHEREFORE. the appealed decision of the Intermediate Appellate Court should
be, as it is hereby AFFIRMED, with costs against herein petitioners.
SO ORDERED.
G.R. No. L-38498 August 10, 1989
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS MAXIMINA
BAGNAS, SIXTO BAGNAS and AGATONA ENCARNACION, petitioners,
vs.
HON. COURT OF APPEALS, ROSA L. RETONIL TEOFILO ENCARNACION,
and JOSE B. NAMBAYANrespondents.
Beltran, Beltran & Beltran for petitioners.
Jose M. Legaspi for private respondents.
NARVASA, J.:
The facts underlying this appeal by certiorari are not in dispute. Hilario Mateum of
Kawit, Cavite, died on March 11, 1964, single, without ascendants or
descendants, and survived only by collateral relatives, of whom petitioners herein,
his first cousins, were the nearest. Mateum left no will, no debts, and an estate
consisting of twenty-nine parcels of land in Kawit and Imus, Cavite, ten of which
are involved in this appeal. 1
On April 3, 1964, the private respondents, themselves collateral relatives of
Mateum though more remote in degree than the petitioners, 2 registered with the
Registry of Deeds for the Province of Cavite two deeds of sale purportedly
executed by Mateum in their (respondents') favor covering ten parcels of land.
Both deeds were in Tagalog, save for the English descriptions of the lands
conveyed under one of them; and each recited the reconsideration of the sale to
be" ... halagang ISANG PISO (Pl.00), salaping Pilipino, at mga naipaglingkod,
ipinaglilingkod sa aking kapakanan ..." ("the sum of ONE PESO Pl.00), Philippine
Currency, and services rendered, being rendered and to be rendered for my
benefit"). One deed was dated February 6,1963 and covered five parcels of land,
and the other was dated March 4, 1963, covering five other parcels, both,
therefore, antedating Mateum's death by more than a year. 3 It is asserted by the
petitioners, but denied by the respondents, that said sales notwithstanding,
Mateum continued in the possession of the lands purportedly conveyed until his
death, that he remained the declared owner thereof and that the tax payments
thereon continued to be paid in his name. 4 Whatever the truth, however, is not
crucial. What is not disputed is that on the strength of the deeds of sale, the
respondents were able to secure title in their favor over three of the ten parcels of
land conveyed thereby. 5
On May 22,1964 the petitioners commenced suit against the respondents in the
Court of First Instance of Cavite, seeking annulment of the deeds of sale as
fictitious, fraudulent or falsified, or, alternatively, as donations void for want of
acceptance embodied in a public instrument. Claiming ownership pro indiviso of
the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum,
the petitioners prayed for recovery of ownership and possession of said lands,
accounting of the fruits thereof and damages. Although the complaint originally
sought recovery of all the twenty-nine parcels of land left by Mateum, at the pre-
trial the parties agreed that the controversy be limited to the ten parcels subject of
the questioned sales, and the Trial Court ordered the exclusion of the nineteen
other parcels from the action. 6 Of the ten parcels which remained in litigation,
nine were assessed for purposes of taxation at values aggregating P10,500 00.
The record does not disclose the assessed value of the tenth parcel, which has an
area of 1,443 square meters. 7
In answer to the complaint, the defendants (respondents here) denied the alleged
fictitious or fraudulent character of the sales in their favor, asserting that said sales
were made for good and valuable consideration; that while "... they may have the
effect of donations, yet the formalities and solemnities of donation are not required
for their validity and effectivity, ... that defendants were collateral relatives of
Hilario Mateum and had done many good things for him, nursing him in his last
illness, which services constituted the bulk of the consideration of the sales; and
(by way of affirmative defense) that the plaintiffs could not question or seek
annulment of the sales because they were mere collateral relatives of the
deceased vendor and were not bound, principally or subsidiarily, thereby. 8
After the plaintiffs had presented their evidence, the defendants filed a motion for
dismissal in effect, a demurrer to the evidence reasserting the defense set up in
their answer that the plaintiffs, as mere collateral relatives of Hilario Mateum, had
no light to impugn the latter's disposition of his properties by means of the
questioned conveyances and submitting, additionally, that no evidence of fraud
maintaining said transfers had been presented. 9
The Trial Court granted the motion to dismiss, holding (a) on the authority of
Armentia vs. Patriarca, 10 that the plaintiffs, as mere collateral relatives, not forced
heirs, of Hilario Mateum, could not legally question the disposition made by said
deceased during his lifetime, regardless of whether, as a matter of objective
reality, said dispositions were valid or not; and (b) that the plaintiffs evidence of
alleged fraud was insufficient, the fact that the deeds of sale each stated a
consideration of only Pl.00 not being in itself evidence of fraud or simulation. 11
On appeal by the plaintiffs to the Court of Appeals, that court affirmed, adverting
with approval to the Trial Court's reliance on the Armentia ruling which, it would
appear, both courts saw as denying, without exception, to collaterals, of a
decedent, not forced heirs, the right to impugn the latter's dispositions inter
vivos of his property. The Appellate Court also analyzed the testimony of the
plaintiffs' witnesses, declared that it failed to establish fraud of any kind or that
Mateum had continued paying taxes on the lands in question even after executing
the deeds conveying them to the defendants, and closed with the statement that
"... since in duly notarized and registered deeds of sale consideration is
presumed, we do not and it necessary to rule on the alternative allegations of the
appellants that the said deed of sale were (sic) in reality donations. 12
One issue clearly predominates here. It is whether, in view of the fact that, for
properties assuredly worth in actual value many times over their total assessed
valuation of more than P10,000.00, the questioned deeds of sale each state a
price of only one peso (P1.00) plus unspecified past, present and future services
to which no value is assigned, said deeds were void or inexistent from the
beginning ("nulo") or merely voidable, that is, valid until annulled. If they were only
voidable, then it is a correct proposition that since the vendor Mateum had no
forced heirs whose legitimes may have been impaired, and the petitioners, his
collateral relatives, not being bound either principally or subsidiarily to the terms of
said deeds, the latter had and have no actionable right to question those transfers.
On the other hand, if said deeds were void ab initio because to all intents and
purposes without consideration, then a different legal situation arises, and quite
another result obtains, as pointed out by the eminent civil law authority, Mr.
Justice J.B.L. Reyes who, in his concurring opinion in Armentia, said:
I ... cannot bring myself to agree to the proposition that the heirs
intestate would have no legal standing to contest the conveyance
made by the deceased if the same were made without any
consideration, or for a false and fictitious consideration. For under
the Civil Code of the Philippines, Art. 1409, par. 3, contracts with
a cause that did not exist at the time of the transaction are
inexistent and void from the beginning. The same is true of
contracts stating a false cause (consideration) unless the persons
interested in upholding the contract should prove that there is
another true and lawful consideration therefor. (lbid., Art. 1353).
If therefore the contract has no causa or consideration, or
the causa is false and fictitious (and no true hidden causa is
proved) the property allegedly conveyed never really leaves the
patrimony of the transferor, and upon the latter's death without a
testament, such property would pass to the transferor's heirs
intestate and be recoverable by them or by the Administrator of
the transferor's estate. In this particular regard, I think Concepcion
vs. Sta. Ana, 87 Phil. 787 and Sobs vs. Chua Pua Hermanos, 50
Phil. 536, do not correctly state the present law, and must be
clarified.
To be sure the quoted passage does not reject and is not to be construed as
rejecting the Concepcion and Solisrulings 13 as outrightly erroneous, far from it.
On the contrary, those rulings undoubtedly read and applied correctly the law
extant in their time: Art. 1276 of the Civil Code of 1889 under which the statement
of a false cause in a contract rendered it voidable only, not void ab initio. In
observing that they "... do not correctly state the present law and must be
clarified," Justice Reyes clearly had in mind the fact that the law as it is now (and
already was in the time Armentia) no longer deems contracts with a false cause,
or which are absolutely simulated or fictitious, merely voidable, but declares them
void, i.e., inexistent ("nulo") unless it is shown that they are supported by another
true and lawful cause or consideration. 14 A logical consequence of that change is
the juridical status of contracts without, or with a false, cause is that conveyances
of property affected with such a vice cannot operate to divest and transfer
ownership, even if unimpugned. If afterwards the transferor dies the property
descends to his heirs, and without regard to the manner in which they are called
to the succession, said heirs may bring an action to recover the property from the
purported transferee. As pointed out, such an action is not founded on fraud, but
on the premise that the property never leaves the estate of the transferor and is
transmitted upon his death to heirs, who would labor under no incapacity to
maintain the action from the mere fact that they may be only collateral relatives
and bound neither principally or subsidiarily under the deed or contract of
conveyance.
In Armentia the Court determined that the conveyance questioned was merely
annullable not void ab initio, and that the plaintiff s action was based on fraud
vitiating said conveyance. The Court said:
Hypothetically admitting the truth of these allegations (of plaintiffs
complaint), the conclusion is irresistible that the sale is merely
voidable. Because Marta Armentia executed the document, and
this is not controverted by plaintiff. Besides, the fact that the
vendees were minors, makes the contract, at worst, annullable by
them, Then again, inadequacy of consideration does not imply
total want of consideration. Without more, the parted acts of Marta
Armentia after the sale did not indicate that the said sale was void
from the being.
The sum total of all these is that, in essence, plaintiffs case is
bottomed on fraud, which renders the contract voidable.
It therefore seems clear that insofar as it may be considered as setting or
reaffirming precedent, Armentia only ruled that transfers made by a decedent in
his lifetime, which are voidable for having been fraudulently made or obtained,
cannot be posthumously impugned by collateral relatives succeeding to his estate
who are not principally or subsidiarily bound by such transfers. For the reasons
already stated, that ruling is not extendible to transfers which, though made under
closely similar circumstances, are void ab initio for lack or falsity of consideration.
The petitioners here argue on a broad front that the very recitals of the questioned
deeds of sale reveal such want or spuriousness of consideration and therefore the
void character of said sales. They:
1. advert to a decision of the Court of Appeals in Montinola vs. Herbosa (59 O.G.
No. 47, pp, 8101, 8118) holding that a price of P l.00 for the sale of things worth at
least P20,000.00 is so insignificant as to amount to no price at all, and does not
satisfy the law which, while not requiring for the validity of a sale that the price be
adequate, prescribes that it must be real, not fictitious, stressing the obvious
parallel between that case and the present one in stated price and actual value of
the property sold;
2. cite Manresa to the same effect: that true price, which is essential to the validity
of a sale, means existent, real and effective price, that which does not consist in
an insignificant amount as, say, P.20 for a house; that it is not the same as the
concept of a just price which entails weighing and measuring, for economic
equivalence, the amount of price against all the factors that determine the value of
the thing sold; but that there is no need of such a close examination when the
immense disproportion between such economic values is patent a case of
insignificant or ridiculous price, the unbelievable amount of which at once points
out its inexistence; 15
3. assert that Art. 1458 of the Civil Code, in prescribing that a sale be for a ... price
certain in money or its equivalent ... requires that "equivalent" be something
representative of money, e.g., a check or draft, again citing Manresa 16 to the
effect that services are not the equivalent of money insofar as said requirement is
concerned and that a contract is not a true sale where the price consists of
services or prestations;
4. once more citing Manresa 17 also point out that the "services" mentioned in the
questioned deeds of sale are not only vague and uncertain, but are unknown and
not susceptible of determination without the necessity of a new agreement
between the parties to said deeds.
Without necessarily according all these assertions its full concurrence, but upon
the consideration alone that the apparent gross, not to say enormous,
disproportion between the stipulated price (in each deed) of P l.00 plus
unspecified and unquantified services and the undisputably valuable real estate
allegedly sold worth at least P10,500.00 going only by assessments for tax
purposes which, it is well-known, are notoriously low indicators of actual value
plainly and unquestionably demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause having been shown, the Court
finds both said deeds, insofar as they purport to be sales, not merely voidable, but
void ab initio.
Neither can the validity of said conveyances be defended on the theory that their
true causa is the liberality of the transferor and they may be considered in reality
donations 18 because the law 19 also prescribes that donations of immovable
property, to be valid, must be made and accepted in a public instrument, and it is
not denied by the respondents that there has been no such acceptance which
they claim is not required. 20
The transfers in question being void, it follows as a necessary consequence and
conformably to the concurring opinion in Armentia, with which the Court fully
agrees, that the properties purportedly conveyed remained part of the estate of
Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs,
the petitioners herein, whose status as such is not challenged.
The private respondents have only themselves to blame for the lack of proof that
might have saved the questioned transfers from the taint of invalidity as being
fictitious and without ilicit cause; proof, to be brief, of the character and value of
the services, past, present, and future, constituting according to the very terms of
said transfers the principal consideration therefor. The petitioners' complaint (par.
6) 21 averred that the transfers were "... fraudulent, fictitious and/or falsified and
(were) ... in reality donations of immovables ...," an averment that the private
respondents not only specifically denied, alleging that the transfers had been
made "... for good and valuable consideration ...," but to which they also
interposed the affirmative defenses that said transfers were "... valid, binding and
effective ...," and, in an obvious reference to the services mentioned in the deeds,
that they "... had done many good things to (the transferor) during his lifetime,
nursed him during his ripe years and took care of him during his previous and last
illness ...," (pars. 4, 6, 16 and 17, their answer).lwph1.t 22 The onus, therefore,
of showing the existence of valid and illicit consideration for the questioned
conveyances rested on the private respondents. But even on a contrary
assumption, and positing that the petitioners initially had the burden of showing
that the transfers lacked such consideration as they alleged in their complaint, that
burden was shifted to the private respondents when the petitioners presented the
deeds which they claimed showed that defect on their face and it became the duty
of said respondents to offer evidence of existent lawful consideration.
As the record clearly demonstrates, the respondents not only failed to offer any
proof whatsoever, opting to rely on a demurrer to the petitioner's evidence and
upon the thesis, which they have maintained all the way to this Court, that
petitioners, being mere collateral relatives of the deceased transferor, were
without right to the conveyances in question. In effect, they gambled their right to
adduce evidence on a dismissal in the Trial Court and lost, it being the rule that
when a dismissal thus obtained is reversed on appeal, the movant loses the right
to present evidence in his behalf. 23
WHEREFORE, the appealed Decision of the Court of Appeals is reversed. The
questioned transfers are declared void and of no force or effect. Such certificates
of title as the private respondents may have obtained over the properties subject
of said transfers are hereby annulled, and said respondents are ordered to return
to the petitioners possession of an the properties involved in tills action, to account
to the petitioners for the fruits thereof during the period of their possession, and to
pay the costs. No damages, attorney's fees or litigation expenses are awarded,
there being no evidence thereof before the Court.
SO ORDERED.
G.R. No. L-10141 January 31, 1958
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
PHILIPPINE RESOURCES DEVELOPMENT CORPORATION and the COURT
OF APPEALS, respondents.
Office of the Solicitor General Ambrosio Padilla, and Solicitor Frine C. Zaballero
for petitioner.
Vicente L. Santiago for respondent Corporation.
PADILLA, J.:
This is a petition under Rule 46 to review a judgment rendered by the Court of
Appeals,in CA-GR No. 15767-R, Philippine Resources Development Corporation
vs. The Hon. Judge Magno Gatmaitan et al.
The findings of the Court of Appeals are, as follows.
It appears that on May 6, 1955, the Republic of the Philippines in
representation of the Bureau of Prisons instituted against Macario Apostol
and the Empire Insurance Co. a complaint docketed as Civil Case No.
26166 of the Court of First instance of Manila. The complaint alleges as
the first cause of action, that defendant Apostol submitted the highest bid
the amount P450.00 per ton for the purchase of 100 tons of Palawan
Almaciga from the Bureau of Prisons; that a contract therefor was drawn
and by virtue of which, Apostol obtained goods from the Bureau of
Prisons valued P15,878.59; that of said account, Apostol paid only
P691.10 leaving a balane obligation of P15,187.49. The complaint further
averes, as second cause of action, that Apostol submitted the best bid
with the Bureau of Prisons for the purchase of three million board feet of
logs at P88.00 per 1,000 board feet; that a contract was executed
between the Director of Prisons and Apostol pursuant to which contract
Apostol obtained deliveries of logs valued at P65.830.00, and that Apostol
failed to pay a balance account Of P18,827.57. All told, for the total
demand set forth in complaint against Apostol is for P34,015.06 with legal
interests thereon from January 8, 1952. The Empire lnsurance Company
was included in the complaint having executed a performance bond of
P10,000.00 in favor of Apostol.
In his answer, Apostol interposed payment as a defense and sought the
dismissal of the complaint.
On July 19, 1955, the Philippine Resources Development Corporation
moved to intervene, appending to its motion, the complaint in the
intervention of even date. The complaint recites that for sometime prior to
Apostol's transactions the corporate had some goods deposited in a
warehouse at 1201 Herran, Manila; that Apostol, then the president of the
corporation but without the knowledge or consent of the stockholders
thereof, disposed of said goods by delivering the same to the Bureau of
Prisons of in an attempt to settle his personal debts with the latter entity;
that upon discovery of Apodol's act, the corporation took steps to recover
said goods by demanding from the Bureau of Prisons the return thereof;
and that upon the refusal of the Bureau to return said goods, the
corporation sought leave to intervene in Civil Case No. 26166.
As aforestated, His Honor denied the motion for intervention and thereby
issued an order to this effect on July 23, 1955. A motion for the
reconsideration of said order was filed by the movant corporation and the
same was likewise denied by His Honor on August 18, 1955 . . . (Annex
L.).
On 3 September 1955, in a petition for a writ of certiorari filed in the Court of
Appeals, the herein respondent corporation prayed for the setting aside of the
order of the Court of First Instance that had denied the admission of its complaint-
in-intervention and for an order directing the latter Court to allow the herein
respondent corporation to intervene in the action (Annex G). On 12 December
1955 the Court of Appeals set aside the order denying the motion to intervene and
ordered the respondent court to admit the herein respondent corporation's
complaint-in-intervention with costs against Macario Apostol.
On 9 January 1956 the Republic of the Philippines filed this petition in this Court
for the purpose stated at the beginning of this opinion.
The Goverment contends that the intervenor has no legal interest in the matter in
litigation, because the action brought in the Court of First Instance of Manila
against Macario Apostol and the Empire Insurance Company (Civil Case No.
26166, Annex A) is just for the collection from the defendant Apostol of a sum of
money, the unpaid balance of the purchase price of logs and almaciga bought by
him from the Bureau of Prisons, whereas the intervenor seeks to recover
ownership and possession of G. I. sheets, black sheets, M. S. plates, round bars
and G. I. pipes that it claims its owns-an intervention which would change a
personal action into one ad rem and would unduly delay the disposition of the
case.
The Court of Appeals held that:
Petitioner ardently claims that the reason behind its motion to intervene is
the desire to protect its rights and interests over some materials
purportedly belonging to it; that said material were unauthorizedly and
illegally assigned and delivered to the Bureau of Prisons by petitioning
corporation's president Macario Apostol in payment of the latter's personal
accounts with the said entity; and that the Bureau of Prisons refused to
return said materials despite petitioner's demands to do so.
Petitioner refers to the particulars recited in Apostol's answer dated July
12, 1955 to the effect that Apostol had paid unto the Bureau of Prisons his
accounts covered, among others, by BPPO 1077 for the sum of
P4,638.40 and BPPO 1549 for the amount of P4,398.54. Petitioner
moreover, points to the State of Paid and Unpaid accounts of Apostol
dated January 16, 1954 prepared by the accounting of officer of the
Bureau of Prisons (Annex B. Complaint in Intervention), wherein it
appears that the aforementioned accounts covered respectively by BPPO
Nos. 1077 for 892 pieces of GI sheets and 1549 for 399 pieces of GI
pipes in the total sum of P9,036.94 have not been credited to Apostol's
account in view of lack of supporting papers; and that according to the
reply letter of the Undersecretary of Justice, said GI sheets and pipes
were delivered by Macario Apostol to the Bureau of Prisons allegedly in
Apostol's capacity as owner and that the black iron sheets were delivered
by Apostol as President of the petitioner corporation.
Respondents, on the other hand, assert that the subject matter of the
original litigation is a sum of money allegedly due to the Bureau of Prisons
from Macario Apostol and not the goods or the materials reportedly turned
over by Apostol as payment of his private debts to the Bureau of Prisons
and the recovery of which is sought by the petitioner; and that for this
reason, petitioner has no legal interest in the very subject matter in
litigation as to entitle it to intervene.
We find no merit in respondents' contention. It is true that the very subject
matter of the original case is a sum of money. But it is likewise true as
borne out by the records, that the materials purportedly belonging to the
petitioner corporation have been assessed and evaluated and their price
equivalent in terms of money have been determined; and that said
materials for whatever price they have been assigned by defendant now
respondent Apostol as tokens of payment of his private debts with the
Bureau of Prisons. In view of these considerations, it becomes
enormously plain in the event the respondent judge decides to credit
Macario Apostol with the value of the goods delivered by the latter to the
Bureau of Prisons, the petitioner corporation stands to be adversely
affected by such judgment. The conclusion, therefore, is inescapable that
the petitioner possesses a legal interest in the matter in litigation and that
such interest is of an actual, material, direct and immediate nature as to
entitle petitioner to intervene.
xxx xxx xxx
Section 3 of Rule 13 of the Rules of Court endows the lower Court with
discretion to allow or disapprove the motion for intrvention (Santarromana
et al. vs. Barrios, 63 Phil. 456); and that in the exercise of such discretion,
the court shall consider whether or not the intervention will unduly delay or
prejudice the adjudicatio of the rights of the original parties and whether or
not the intervenors the rights may be fully protected in a separate
proceeding. The petitioner in the instant case positively authorized to a
separate action against any of all the respondents. But considering that
the resolution of the issues raised in and enjoined by the pleadings in the
main case, would virtally affect the rights not only the original parties but
also of the berein petitioner: that far from unduly delaying or prejudicing
the adjudication of the rights of the original parties or bringing about
confusion in the original case, the adnission of the complaint in
intervention would help clarify the vital issue of the true and real
ownership of the materials involved, besides preventing an abhorrent
munltiplicity of suit, we believe that the motion to intervene should be
given due to cause.
We find no reason for disturbing the foregoing pronouncements. The Government
argues that "Price . . . is always paid in terms of money and the supposed
payment beeing in kind, it is no payment at all, "citing Article 1458 of the new Civil
Code. However, the same Article provides that the purschaser may pay "a price
certain in money orits equivalent," which means that they meant of the price need
not be in money. Whether the G.I. sheets, black sheets, M. S. Plates, round bars
and G. I. pipes claimed by the respondent corporation to belong to it and delivered
to the Bureau of Prison by Macario Apostol in payment of his account is sufficient
payment therefore, is for the court to pass upon and decide after hearing all the
parties in the case. Should the trial court hold that it is as to credit Apostol with the
value or price of the materials delivered by him, certainly the herein respondent
corporation would be affected adversely if its claim of ownership of such sheets,
plates, bars and pipes is true.
The Government reiterates in its original stand that counsel appearing for the
respondent corporation has no authority to represent it or/and sue in its behalf, the
Court of Appeals held that:
Respondents aver also that petitioner lacks legal capacity to sue and that
its counsel is acting merely in an individual capacity without the benefit of
the corporate act authorizing him to bring sue. In this connection,
respondents invoked among others section 20 of Rule 127 which
provision, in our opinion, squarely disproves their claim as by virtue
thereof, the authority of petitioner's counsel is pressumed. Withal, the
claim of the counsel for the petitioner that a resolution to proceed against
Apostol, had been unanonimously adopted by the stockholders of the
corporation, has not been refuted.
Evidently, petitioner is a duly organized corporation with offices at the
Samanillo Building and that as such, it is endowed with a personality
distinct and separate from that of its president or stockholders. It has the
right to bring suit to safeguard its interests and ordinarily, such right is
exercised at the instance of the president. However, under the
circumstance now obtaining, such right properly devolves upon the other
officers of the corporations as said right is sought to be exercised against
the president himself who is the very object of the intended suit.
The power of a corporation to sue and be sued in any court1 is lodged in the board FIRST DIVISI0N
of directors which exercises it corporater powers,2 and not in the president, as
contended by the Government. The "motion for admission of complaint in SPS. JORGE NAVARRA and G.R. No. 172674
intervention" (Annex C) and the "complaint in intervention" attached thereto, CARMELITA BERNARDO NAVARRA
signed by counsel and filed in the Court of First Instance begin with the following and RRRC DEVELOPMENT Present:
statement: "COMES NOW the above-name Intervenor, by its undersigned CORPORATION,
counsel, . . . , "and underneath his typewritten name is affixed the description" Petitioners, PUNO, C.J., Chairperson,
Counsel for the Intervenor." As counsels authority to appeal for the respondent *SANDOVAL-GUTIERREZ,

corporation was newer questioned in the Court of First Instance, it is to be CORONA,

pressumed that he was properly authorized to file the complaint in intervention - versus - AZCUNA and
and appeal for his client.1 It was only in the Court of Appeals where his authority to GARCIA, JJ.
appear was questioned. As the Court of Appeals was satisfied that counsel was
duly authorized by his client to file the complaint does in intervention and to Promulgated:
appear in its behalf, hte resolution of the Court of Appeals on this point should not PLANTERS DEVELOPMENT BANK and
be disturbed. ROBERTO GATCHALIAN REALTY, July 12, 2007
INC.,
Granting that counsel has not been actually authorized by the board of directors to Respondents.
appear for and in behalf of the respondent corporation, the fact that counsel is the
secretary treasurer of the respondent corporation and member of the board of
directors; and that the other members of the board, namely, Macario Apostol, the
president, and his wife Pacita R. Apostol, who shuold normally initiate the action
to protect the corporate properties and in interest are the ones to be adversely
affected thereby, a single stockholder under such circumstances may sue in
behalf of the corporation.2 Counsel as a stockholder and director of the x--------------------------------------------------------------------------------------- x
respondent corporation may sue in its behalf and file the complaint in intervention
in the proper court. DECISION

The judgment under review is affirmed, without pronouncements as to costs. GARCIA, J.:

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

The facts:

The Navarras are the owners of five (5) parcels of land located at B.F.
Homes, Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-
58017, S-58011, S-51732, S-51733 and A-14574. All these five (5) parcels of land
are the subject of this controversy.
 On July 5, 1982, the Navarras obtained a loan of P1,200,000.00 from
Planters Bank and, by way of security therefor, executed a deed of mortgage over
theiraforementioned five (5) parcels of land. Unfortunately, the couple failed to pay
their loan obligation. Hence, Planters Bank foreclosed on the mortgage and the
mortgaged assets were sold to it for P1,341,850.00, it being the highest bidder in
the auction sale conducted on May 16, 1984. The one-year redemption period
expired without the Navarras having redeemed the foreclosed properties.
On the other hand, co-petitioner RRRC Development Corporation (RRRC)
is a real estate company owned by the parents of Carmelita Bernardo Navarra.
RRRC itself obtained a loan from Planters Bank secured by a mortgage over
another set of properties owned by RRRC. The loan having been likewise unpaid,
Planters Bank similarly foreclosed the mortgaged assets of RRRC. Unlike the
Navarras, however, RRRC was able to negotiate with the Bank for the redemption
of its foreclosed properties by way of a concession whereby the Bank allowed
RRRC to refer to it would-be buyers of the foreclosed RRRC properties who would
remit their payments directly to the Bank, which payments would then be
considered as redemption price for RRRC. Eventually, the foreclosed properties of
RRRC were sold to third persons whose payments therefor, directly made to the
Bank, were in excess by P300,000.00 for the redemption price.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to
repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be
given until August 31, 1985 to pay the down payment of P300,000.00. Dated July
18, 1985 and addressed to then Planters Bank President Jesus Tambunting, the
letter reads in full:
This will formalize my request for your kind consideration
in allowing my brother and me to buy back my house and lot and
my restaurant building and lot together with the adjacent road lot.
Since my brother, who is working in Saudi Arabia, has
accepted this arrangement only recently as a result of my urgent
offer to him, perhaps it will be safe for us to set August 31, 1985
as the last day for the payment of a P300,000.00 downpayment. I
hope you will grant us the opportunity to raise the funds within this
period, which includes an allowance for delays.
The purchase price, I understand, will be based on the
redemption value plus accrued interest at the prevailing rate up to
the date of our sales contract. Maybe you can give us a long term
payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home
leave.
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever
values I can still recover from the properties and to avoid any
legal complications that may arise as a consequence of the total
loss of the Balangay lot. I hope that you will extend to me your
favorable action on this grave matter.
In response, Planters Bank, thru its Vice-President Ma. Flordeliza
Aguenza, wrote back Navarra via a letter dated August 16, 1985, thus:
Regarding your letter dated July 18, 1985, requesting that we give
up to August 31, 1985 to buy back your house and lot and
restaurant and building subject to a P300,000.00 downpayment
on the purchase price, please be advised that the Collection
Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets
Unit, as soon as possible for the details of the transaction so that
they may work on the necessary documentation.
Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on
August 20, 1985, bringing with him a letter requesting that the excess payment
of P300,000.00 in connection with the redemption made by the RRRC be applied
as down payment for the Navarras repurchase of their foreclosed properties.
Because the amount of P300,000.00 was sourced from a different
transaction between RRRC and Planters Bank and involved different debtors, the
Bank required Navarra to submit a board resolution from RRRC authorizing him to
negotiate for and its behalf and empowering him to apply the excess amount
of P300,000.00 in RRRCs redemption payment as down payment for the
repurchase of the Navarras foreclosed properties.
Meanwhile, titles to said properties were consolidated in the name of
Planters Bank, and on August 27, 1985, new certificates of title were issued in its
name, to wit: TCT Nos. 97073, 97074, 97075, 97076 and 97077.
Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra
informing him that it could not proceed with the documentation of the proposed
repurchase of the foreclosed properties on account of his non- compliance with
the Banks request for the submission of the needed board resolution of RRRC.
In his reply-letter of January 28, 1987, Navarra claimed having already
delivered copies of the required board resolution to the Bank. The Bank, however,
did not receive said copies. Thus, on February 19, 1987, the Bank sent a notice to
the Navarrras demanding that they surrender and vacate the properties in
question for their failure to exercise their right of redemption.
Such was the state of things when, on June 31, 1987, in the RTC of
Makati City, the Navarras filed their complaint for Specific Performance with
Injunction against Planters Bank. In their complaint docketed in said court as Civil
Case No. 16917 and raffled to Branch 66 thereof, the Navarras, as plaintiffs,
alleged that a perfected contract of sale was made between them and Planters
Bank whereby they would repurchase the subject properties for P1,800,000.00
with a down payment of P300,000.00.

In its Answer, Planters Bank asserted that there was no perfected
contract of sale because the terms and conditions for the repurchase have not yet
been agreed upon.
On September 9, 1988, a portion of the lot covered by TCT No. 97077
(formerly TCT No. A-14574) was sold by Planters Bank to herein co-respondent
Roberto Gatchalian Realty, Inc. (Gatchalian Realty). Consequently, TCT No.
97077 was cancelled and TCT No. 12692 was issued in the name of Gatchalian
Realty. This prompted the Navarras to amend their complaint by impleading
Gatchalian Realty as additional defendant.
In a decision dated July 10, 1995, the trial court ruled that there was a
perfected contract of sale between the Navarras and Planters Bank, and
accordingly rendered judgment as follows:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered ordering:
a) the cancellation of the Deed of Absolute
Sale (Exh. 2) over lot 4137-C between defendant
Planters Development Bank and defendant
Roberto Gatchalian Realty Corporation (RGRI)
with the vendor bank refunding all the payments
made by the vendee RGRI without interest less
the five percent (5%) brokers commission:
b) the defendant Planters Development Bank
to execute the Deed of Absolute Sale over the
lots covered by TCT Nos. 97073, 97074, 97075,
97076, and 97077 in favor of all the plaintiffs for a
consideration of ONE MILLION EIGHT
HUNDRED THOUSAND (P1,800,000.00) less
the downpayment of P300,000.00 plus interest at
the rate of twenty five percent (25%) per year for
five (5) years to be paid in full upon the execution
of the contract;
c) the defendant Planters Development Bank
the amount of TEN THOUSAND PESOS
(P10,000.00) by way of attorneys fees.
d) No costs.
SO ORDERED.
Therefrom, Planters Bank and Gatchalian Realty separately went
on appeal to the CA whereat their appellate recourse were consolidated and
docketed as CA-G.R. CV No. 50002.
As stated at the threshold hereof, the appellate court, in its decision
of September 27, 2004, reversed that of the trial court and ruled that there was no
perfected contract of sale between the parties. Partly says the CA in its decision:
The Court cannot go along with the deduction of the trial court
that the response of Planters Bank was favorable to Jorge
Navarras proposal and that the P300,000.00 in its possession is a
down payment and as such sufficient bases to conclude that there
was a valid and perfected contract of sale. Based on the turn of
events and the tenor of the communications between the offerors
and the creditor bank, it appears that there was not even a
perfected contract to sell, much less a perfected contract of sale.
Article 1319 cited by the trial court provides that the acceptance to
an offer must be absolute. Simply put, there must be unqualified
acceptance and no condition must tag along. But Jorge Navarra
in trying to convince the bank to agree, had himself laid out terms
in offering (1) a downpayment of P300,000.00 and setting (2) as
deadline August 31, 1985 for the payment thereof. Under these
terms and conditions the bank indeed accepted his offer, and
these are essentially the contents of Exhibits J and K.
But was there compliance? According to the evidence on file the
P300,000.00, if at all, was given beyond the agreed period. The
court a quo missed the fact that the said amount came from the
excess of the proceeds of the sale to the Pea spouses which
Jorge Navarra made to appear was made before the deadline he
set of August 31, 1985. But this is athwart Exhibits M-1 and N, the
Contract to Sell and the Deed of Sale between RRRC and the
Peas, for these were executed only on September 13,
1985 and October 7, 1985 respectively.
xxx xxx xxx
There were two separate and independent loans secured by
distinct mortgages on different lots and their only commonality is
the relationship of the Navarras and Bernardo families. It is thus
difficult to conceive and to conclude that such Byzantine
arrangement was acquiesced to and provided for in that single
and simple letter of the bank.
With their motion for reconsideration having been denied by the CA in its
resolution of May 8, 2006, petitioners are now with this Court via this recourse on
their submission that the CA erred -
I
XXX IN CONCLUDING THAT THERE WAS NO PERFECTED
CONTRACT TO REPURCHASE THE FORECLOSED
 PROPERTIES BETWEEN THE PETITIONERS AND THE
PRIVATE RESPONDENT PLANTERS DEVELOPMENT BANK,
AS CORRECTLY FOUND BY THE TRIAL COURT.
II
XXX IN HOLDING THAT THE PARTIES NEVER GOT PAST THE
NEGOTIATION STAGE.
While the question raised is essentially one of fact, of which the Court
normally eschews from, yet, given the conflicting factual findings of the trial and
appellate courts, the Court shall go by the exception[3] to the general rule and
proceed to make its own assessment of the evidence.
We DENY.
Petitioners contend that a perfected contract of sale came into being
when respondent Bank, thru a letter dated August 16, 1985, formally accepted the
offer of the Navarras to repurchase the subject properties.
In general, contracts undergo three distinct stages, to wit: negotiation,
perfection or birth, and consummation. Negotiation begins from the time the
prospective contracting parties manifest their interest in the contract and ends at
the moment of their agreement. Perfection or birth of the contract takes place
when the parties agree upon the essential elements of the contract, i.e., consent,
object and price. Consummation occurs when the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment thereof. [4]
A negotiation is formally initiated by an offer which should be certain with
respect to both the object and the cause or consideration of the envisioned
contract. In order to produce a contract, there must be acceptance, which may be
express or implied, but it must not qualify the terms of the offer. The acceptance of
an offer must be unqualified and absolute to perfect the contract. In other words, it
must be identical in all respects with that of the offer so as to produce consent or
meeting of the minds.[5]
Here, the Navarras assert that the following exchange of correspondence
between them and Planters Bank constitutes the offer and acceptance, thus:
Letter dated July 18, 1985 of Jorge Navarra:
This will formalize my request for your kind consideration
in allowing my brother and me to buy back my house and lot and
my restaurant building and lot together with the adjacent road lot.
Since my brother, who is working in Saudi Arabia, has
accepted this arrangement only recently as a result of my urgent
offer to him, perhaps it will be safe for us to set August 31, 1985
as the last day for the payment of a P300,000.00 downpayment. I
hope you will grant us the opportunity to raise the funds within this
period, which includes an allowance for delays.
The purchase price, I understand, will be based on the
redemption value plus accrued interest at the prevailing rate up to
the date of our sales contract. Maybe you can give us a long term
payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home
leave.
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever
values I can still recover from the properties and to avoid any
legal complications that may arise as a consequence of the total
loss of the Balangay lot. I hope that you will extend to me your
favorable action on this grave matter.
Letter dated August 16, 1985 of Planters Bank
Regarding your letter dated July 18, 1985, requesting that we give
up to August 31, 1985 to buy back your house and lot and
restaurant and building subject to a P300,000.00 downpayment
on the purchase price, please be advised that the Collection
Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets
Unit, as soon as possible for the details of the transaction so
that they may work on the necessary documentation.
(Emphasis ours)
Given the above, the basic question that comes to mind is: Was the offer
certain and the acceptance absolute enough so as to engender a meeting of the
minds between the parties? Definitely not.
While the foregoing letters indicate the amount of P300,000.00 as down
payment, they are, however, completely silent as to how the succeeding
installment payments shall be made. At most, the letters merely acknowledge that
the down payment of P300,000.00 was agreed upon by the parties. However, this
fact cannot lead to the conclusion that a contract of sale had been perfected.
Quite recently, this Court held that before a valid and binding contract of sale can
exist, the manner of payment of the purchase price must first be established since
the agreement on the manner of payment goes into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the
price.[6]
Too, the Navarras letter/offer failed to specify a definite amount of the
purchase price for the sale/repurchase of the subject properties. It merely stated
that the purchase price will be based on the redemption value plus accrued
interest at the prevailing rate up to the date of the sales contract. The ambiguity of
this statement only bolsters the uncertainty of the Navarras so-called offer for it
leaves much rooms for such questions, as: what is the redemption value? what
prevailing rate of interest shall be followed: is it the rate stipulated in the loan
agreement or the legal rate? when will the date of the contract of sale be based,
shall it be upon the time of the execution of the deed of sale or upon the time
when the last installment payment shall have been made? To our mind, these
questions need first to be addressed, discussed and negotiated upon by the
parties before a definite purchase price can be arrived at.
Significantly, the Navarras wrote in the same letter the following:
Maybe you can give us a long-term payment scheme on
the basis of my brothers annual savings of roughly US$30,000.00
every time he comes home for his home leave.
Again, the offer was not clear insofar as concerned the exact number of
years that will comprise the long-term payment scheme. As we see it, the absence
of a stipulated period within which the repurchase price shall be paid all the more
adds to the indefiniteness of the Navarras offer.
Clearly, then, the lack of a definite offer on the part of the spouses could
not possibly serve as the basis of their claim that the sale/repurchase of their
foreclosed properties was perfected. The reason is obvious: one essential
element of a contract of sale is wanting: the price certain. There can be no
contract of sale unless the following elements concur: (a) consent or meeting of
the minds; (b) determinate subject matter; and (c) price certain in money or its
equivalent. Such contract is born or perfected from the moment there is a meeting
of minds upon the thing which is the object of the contract and upon the
price.[7] Here, what is dramatically clear is that there was no meeting of minds vis-
a-vis the price, expressly or impliedly, directly or indirectly.
even required the Navarras to submit a board resolution of RRRC before it could
proceed with the proposed sale/repurchase. The eventual failure of the spouses to
submit the required board resolution precludes the perfection of a contract of
sale/repurchase between the parties. As earlier mentioned, contracts are
perfected when there is concurrence of the parties wills, manifested by the
acceptance by one of the offer made by the other.[9] Here, there was no
concurrence of the offer and acceptance as would result in a perfected contract of
sale.
Evidently, what transpired between the parties was only a prolonged
negotiation to buy and to sell, and, at the most, an offer and a counter-offer with
no definite agreement having been reached by them. With the hard reality that no
perfected contract of sale/repurchase exists in this case, any independent
transaction between the Planters Bank and a third-party, like the one involving the
Gatchalian Realty, cannot be affected.
WHEREFORE, the petition is DENIED and the assailed decision and
resolution of the Court of Appeals are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

Further, the tenor of Planters Banks letter-reply negates the contention of

the Navarras that the Bank fully accepted their offer. The letter specifically stated
that there is a need to negotiate on the other details of the transaction[8] before the
sale may be formalized. Such statement in the Banks letter clearly manifests lack
of agreement between the parties as to the terms of the purported contract of
sale/repurchase, particularly the mode of payment of the purchase price and the
period for its payment. The law requires acceptance to be absolute and
unqualified. As it is, the Banks letter is not the kind which would constitute
acceptance as contemplated by law for it does not evince any categorical and
unequivocal undertaking on the part of the Bank to sell the subject properties to
the Navarras.

The Navarras attempt to prove the existence of a perfected contract of

sale all the more becomes futile in the light of the evidence that there was in the
first place no acceptance of their offer. It should be noted that aside from their first
letter dated July 18, 1985, the Navarras wrote another letter dated August 20,
1985, this time requesting the Bank that the down payment of P300,000.00 be
instead taken from the excess payment made by the RRRC in redeeming its own
foreclosed properties. The very circumstance that the Navarras had to make this
new request is a clear indication that no definite agreement has yet been reached
at that point. As we see it, this request constitutes a new offer on the part of the
Navarras, which offer was again conditionally accepted by the Bank as in fact it