MAPALO v.
MAPALO  It appears, however, that the first owner's duplicate of
x----------------------------------------------------------------x
[G.R. No. L-26572 | March 28, 1969]
MORALES DEVELOPMENT COMPANY, INC. v. THE
COURT OF APPEALS and HERMENEGILDO DESEO and
SOCORRO DESEO
CONCEPCION, C.J.:
Nature: Review on certiorari of a decision of the Court of
Appeals reversing that of the Court of First Instance of the
Province of Quezon.
 Deseo spouses (Hermenegildo and Socorro) brought
an action to annul a sale to Morales of lot No. 2488 of
the Cadastral Survey of Catanauan, Province of Quezon,
and to secure the registration of a deed of
conveyance of said lot in their (Deseos') favor.
 Lot in question used to belong to Enrique P. Montinola
and was covered by Transfer Certificate of Title No. T-
15687 of the Register of Deeds of said province, in his
name.
 Alleging that his owner's duplicate copy of said
certificate had been lost, Montinola succeeded in
securing, from the Court above mentioned, an order for
the issuance of a second owner's duplicate, with which
he managed to sell the lot, on September 24, 1954, to
Pio Reyes.
 Upon registration of the deed of sale to the latter, said
TCT No. T-15687 was cancelled and, in lieu thereof, TCT
No. 21036, in the name of Reyes, was issued on
November 18, 1954
 Lupo Abella, married to Felisa Aguilar — hereafter
referred to as the Abellas — purchased the land from
Reyes, whereupon the deed of conveyance, executed by
Reyes, was registered and the Abellas got TCT No.
21037 in their name, upon cancellation of said TCT No.
21036.
 About seven (7) months later, or on June 16, 1955, the
Abellas sold the land, for P7,000, — of which P4,500
was then paid — to the Deseos, who immediately took
possession of the property.
CA: reversed RTC, ruled in favor of Deseos
TCT No. T-15687 was either never lost or subsequently
found by Montinola, who, making use of it, mortgaged C,
the lot in question, before February 21, 1956, to the
Philippine National Bank, for P700.
 Then, on the date last mentioned, Montinola sold the
property to Morales, for P2,000, from which the sum
due to the Bank was deducted.
 Upon presentation of the deed of sale in favor of
Morales, the latter was advised by the office of the
Register of Deeds of Quezon that said TCT No. T-15687
had already been cancelled and the property sold, first,
to Pio Reyes, and, then, to the Abellas.
 Thereupon, Morales filed a petition for the annulment
and cancellation of the second owner's copy of TCT No.
T-15687. After due notice to Reyes and the Abellas, but
not to the Deseos, said petition was granted on March
12, 1956.
 Having been unable, in view of these developments,
to register the deed of conveyance executed by the
Abellas, the Deseos commenced the present action
against Morales, for the annulment of the
subsequent sale thereto by Montinola, and the
registration of said deed of conveyance in their
(Deseos’) favor, alleging that the same enjoys
preference over the sale to Morales, the Deseos
having, prior thereto, bought lot No. 2488 in good
faith and for value, and having been first in
possession of said lot, likewise, in good faith.
 Upon the other hand, Morales claimed to have a better
right upon the ground that it (Morales) had bought the
property in good faith and for value, relying upon the
first owner's duplicate copy of TCT No. T-15687, unlike
the Deseos, whose predecessor in interest, Pio Reyes,
had relied upon the second owner's duplicate, which —
Morales alleged had been secured fraudulently, and that
the sale to Reyes and that made by the latter to the
Abellas are null and void, because both sales took place
under suspicious circumstances, so that — Morales
concluded — they (Reyes and the Abellas) were not
purchasers in good faith and for value.
RTC: ruled in favor of MORALES
[1]
Hence, this petition by Morales.
ISSUE: Whether or not the Reyes and Abelleas were not
purchasers in good faith, thus making the sale of the land
as “null and void.”
HELD/RATIO: NO
 This syllogism is obviously faulty. 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 contract1 , 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
bar2. What is more, the aforementioned conveyance
may not be annulled, in the case at bar, inasmuch as
Reyes and the Abellas are not parties therein.
 Upon the other hand, the Deseos had bought the land
in question for value and in good faith, relying upon
the transfer certificate of title in the name of their
assignors, the Abellas. The sale by the latter to the
former preceded the purchase made by Morales, by
about eight (8) months, and the Deseos took
immediate possession of the land, which was
1 Article 1350, Civil Code
2 Articles 1318, 1355, 1381, and 1390, Civil Code
 actually held by them at the time of its conveyance
to Morales by Montinola, and is in the possession of
the Deseos, up to the present.
 Then, again TCT No. T-15687, in the name of Montinola,
had been cancelled over a year before he sold the
property to Morales, who, in turn, was informed of this
fact, what it sought to register the deed of conveyance in
its favor. It should be noted, also, that TCT No. 21037, in
the name of the Abellas, on which the Deseos had relied
in buying the lot in dispute, has not been ordered
cancelled.
 Since the object of this litigation is a registered land
and the two (2) buyers thereof have so far been
unable to register the deeds of conveyance in their
respective favor, it follows that "the ownership" of
said lot "pertain(s)" — pursuant to Article 1544 of
our Civil Code — to the Deseos, as the only party who
took possession thereof in good faith.
 Morales argues that it was not enough for the Deseos to
have gone to the office of the Register of Deeds and
found therein that there were no flaws in the title of the
Abellas, and that the Deseos should have, also,
ascertained why the Abellas had paid only P1.00 to
Reyes, and why the latter had paid the same amount to
Montinola.
 To begin with, the Deseos did not know that said sum
was the consideration paid by the Abellas to Reyes and
by Reyes to Montinola.
 Secondly, the Deseos were not bound to check the deeds
of conveyance by Reyes to the Abellas, and by Montinola
to Reyes. Having found that the owner's duplicate copy
of TCT No. 21037, in the name of the Abellas, was a
genuine copy of the original on file with the Office of the
Register of Deeds, the Deseos were fully justified in
relying upon said TCT No. 21037, and had no legal
obligation to make farther investigation.
 Thirdly, were we to adopt the process of reasoning
advocated by Morales, the result would still be adverse
thereto. Indeed, if it were not sufficient for the Deseos
to verify in said office the genuineness of the owner's
duplicate of TCT No. 21037, much less would Morales
have been justified in relying upon Montinola's copy of
TCT No, T-15687 in his name. In fact, had Morales, at
least gone to the Office of the Register of Deeds as the
Deseos did — before purchasing the property in
dispute, Morales would have found out, not only that
TCT No. T-15687 had long been cancelled, but, also, that
the property had been previously sold by Montinola to
Reyes and by Reyes to the Abellas. In short, the
negligence of Morales was the proximate cause of the
resulting wrong, and, hence, Morales should be the
party to suffer its consequences.
x----------------------------------------------------------------x
[Pangilinan v. CA in Syllabus]
SPOUSES REGALADO SANTIAGO and ROSITA
PALABYAB, JOSEFINA ARCEGA, petitioners, vs. THE
HON. COURT OF APPEALS; THE HON. CAMILO C.
MONTESA, JR., Presiding Judge of the RTC of Malolos,
Bulacan, Branch 19, and QUIRICO ARCEGA,
respondents.
 Paula Arcega was the registered owner of the parcel of
land where her residential house stood until 1970 when
it was destroyed by a strong typhoon.
 On December 9, 1970, Paula Arcega executed what
purported to be a deed of conditional sale over the
land in favor of Josefina Arcega and the spouses
Regalado Santiago and Rosita Palabyab, the petitioners
herein, for and in consideration of P20,000.00. The
vendees were supposed to pay P7,000.00 as
downpayment. It was expressly provided that the
vendor would execute and deliver to the vendees an
absolute deed of sale upon full payment by the vendees
of the unpaid balance of the purchase price of
P13,000.00.
 On July 18, 1971, supposedly upon payment of the
remaining balance, Paula Arcega executed a deed of
absolute sale of the same parcel of land in favor of
petitioners. Thereupon, on July 20, 1971, TCT No. T-
115510, in the name of Paula Arcega, was cancelled and
[2]
a new title, TCT No. T-148989 was issued in the name of
petitioners.
 On April 10, 1985, Paula Arcega died single and without
issue, leaving as heirs her two brothers, Narciso Arcega
and PR Quirico Arcega.
 Before Paula Arcega died, a house of four bedrooms
with a total floor area of 225 sqm was built over the
parcel of land in question. The master's bedroom, with
toilet and bath, was occupied by Paula Arcega until her
death despite the execution of the alleged deed of
absolute sale. The three other bedrooms, smaller than
the master's bedroom, were occupied by the petitioners
who were the supposed vendees in the sale.
 Private respondent Quirico Arcega filed on October 24,
1985 a case before the RTC of Malolos, Bulacan, seeking
to declare null and void the deed of sale executed by his
sister during her lifetime on the ground that said deed
was fictitious since the purported consideration of
P20,000 was not actually paid by the vendees to his
sister.
 Petitioner spouses averred that private respondent's
cause of action was already barred by the statute of
limitations since the disputed deed of absolute sale was
executed on July 18, 1971, by which TCT No. 148989
was issued on July 20, 1971, while private respondent's
complaint was filed in court only on October 24, 1985
or more than fourteen (14) years from the time the
cause of action accrued. Petitioners also deny that the
sale was fictitious. They maintain that the purchase
price was actually paid to Paula Arcega and that said
amount was spent by the deceased in the construction
of her three-door apartment on the parcel of land in
question.
 Josefina Arcega, the other petitioner, was declared in
default for failure to file her answer within the
reglementary period.
RTC: decided in favor of private respondent Quirico
Arcega  (a) Declaring as null and void the 'Kasulatan
Ng Bilihang Tuluyan ng Lupa' dated July 18, 1971
executed by the deceased Paula Arcega in favor of the
defendants; (b) Declaring TCT No. T-148989 issued and
registered in the names of defendants Josefina Arcega and
spouses Regalado Santiago and Rosita Palabyab as null
and void; (c) Ordering the reconveyance of the
property including all improvements thereon covered by
TCT No. T-115510, now TCT No. T-148989, to the plaintiff,
subject to real estate mortgage with the SSS. The CA
Affirmed.
The RTC and CA found that:
 It appears that plaintiff Quirico Arcega and his brother
Narciso Arcega are the only surviving heirs of the
deceased Paula Arcega who died single and without
issue.
 Sometime in 1970, a strong typhoon destroyed the
house of Paula Arcega and the latter together with the
defendants decided to construct a new house. All the
defendants being members of the SSS, Paula deemed
it wise to lend her title to them for purposes of loan
with the SSS. She executed a deed of sale to effect the
transfer of the property in the name of the defendants
and thereafter the latter mortgaged the same for
P30,000.00 but the amount actually released was only
P25,000.00.
 Paula Arcega spent the initial amount of P30,000.00 out
of her savings for the construction of the house
sometime in 1971 and after the same and the proceeds
of the loan were exhausted, the same was not as yet
completed.
 Paula Arcega and her brothers sold the property which
they inherited for P45,000.00 and the same all went to
the additional construction of the house, however, the
said amount is not sufficient. Paula Arcega and her
brothers sold another property which they inherited for
P805,950.00 and one-third (1/3) thereof went to Paula
Arcega which she spent a portion of which for the
finishing touches of the house.
 The house as finally finished in 1983 is worth more
than P100,000.00 with a floor area of 225 square
meters consisting of four bedrooms . A big master's
bedroom complete with a bath and toilet was occupied
by Paula Arcega up to the time of her death on April 10,
1985 and the other three smaller bedrooms are occupied
by spouses, defendants Regalado Santiago and Rosita
Palabyab, and Josefina Arcega. After the death of Paula
Arcega defendant Josefina Arcega and Narciso Arcega
constructed their own house at back portion of the lot
in question.
 There is clear indication that the deed of sale, which
is unconscionably low for 937 square meters in favor
of the defendants sometime on July 18, 1971 who are
all members of SSS, is merely designed as an
accommodation for purposes of loan with the SSS.
Paula Arcega cognizant of the shortage of funds in her
possession in the amount of P30,000.00, deemed it wise
to augment her funds for construction purposes by way
of a mortgage with the SSS which only defendants could
possibly effect they being members of the SSS. Since
the SSS requires the collateral to be in the name of
the mortgagors, Paula Arcega executed a simulated
deed of sale (Kasulatan ng Bilihang Tuluyan ng
Lupa) for P20,000.00 dated July 18, 1971 in favor of
the defendants and the same was notarized by Atty.
Luis Cuvin who emphatically claimed that no money
was involved in the transaction as the parties have
other agreement.
 The allegations of the defendants that the property was
given to them (Kaloob) by the deceased has no
evidentiary value. While it is true that Rosita Palabyab
stayed with the deceased since childhood, the same
cannot be said with respect to defendant Josefina
Arcega, distant relative and a niece of the wife of
Narciso Arcega, who stayed with deceased sometime in
1966 at the age of 19 years and already working as a
saleslady in Manila. Defendant Josefina Arcega in her
unguarded moment unwittingly told the truth that
couple (Regalado Santiago and Rosita Palabyab) had
indeed borrowed the title and then mortgaged the same
with the SSS as shown in her direct testimony
ISSUE: WON the sale was valid
[3]
HELD: NO
 This case is on all fours with Suntay v. Court of
Appeals. There, Federico Suntay was the registered
owner of a parcel of land in Sto. Nino, Hagonoy, Bulacan.
A rice miller, Federico applied on September 30, 1960
as a miller-contractor of the then National Rice and
Corn Corporation (NARIC), but his application was
disapproved because he was tied up with several
unpaid loans. For purposes of circumvention, he
thought of allowing his nephew-lawyer, Rafael Suntay,
to make the application for him. To achieve this Rafael
prepared a notarized Absolute Deed of Sale whereby
Federico, for and in consideration of P20,000.00,
conveyed to Rafael said parcel of land with all its
existing structures. Upon the execution and registration
of said deed, Certificate of Title in the name of Federico
was cancelled and, in lieu thereof, TCT No. T-36714 was
issued in the name of Rafael. Sometime in the months
of June to August, 1969, Federico requested Rafael to
deliver back to him the owner's duplicate of the transfer
certificate of title over the properties in question for he
intended to use the property as collateral in securing a
bank loan to finance the expansion of his rice mill.
Rafael, however, without just cause, refused to deliver
the title insisting that said property was "absolutely
sold and conveyed [to him] xxx for a consideration of
P20,000.00, Philippine currency, and for other valuable
consideration." We therein ruled in favor of Federico
Suntay and found that the deed of sale in question
was merely an absolutely simulated contract for the
purpose of accommodation and therefore void. In
retrospect, we observed in that case:
"Indeed the most protuberant index of simulation is the
complete absence of an attempt in any manner on the part
of the late Rafael to assert his rights of ownership over the
land and rice mill in question. After the sale, he should
have entered the land and occupied the premises thereof.
He did not even attempt to. If he stood as owner, he would
have collected rentals from Federico for the use and
occupation of the land and its improvements. All that the
late Rafael had was a title in his name.
The fact that, notwithstanding the title transfer, Federico
remained in actual possession, cultivation and occupation
of the disputed lot from the time the deed of sale was
executed until the present, is a circumstance which is
unmistakably added proof of the fictitiousness of the said
transfer, the same being contrary to the principle of
ownership."
 In this case, while petitioners were able to occupy the
property in question, they were relegated to a small
bedroom without bath and toilet, while Paula Arcega
remained virtually in full possession of the completed
house and lot using the big master's bedroom with bath
and toilet up to the time of her death on April 10, 1985.
 If, indeed, the transaction entered into by the
petitioner's and the late Paula Arcega on July 18,
1971 was a veritable deed of absolute sale, as it was
purported to be, then Ms. Arcega had no business
whatsoever remaining in the property and, worse, to
still occupy the big master's bedroom with all its
amenities until her death on April 10, 1985.
 Any legitimate vendee of real property who paid for the
property with good money will not accede to an
arrangement whereby the vendor continues occupying
the most favored room in the house while he or she, as
new owner, endures the disgrace and absurdity of
having to sleep in a small bedroom without bath and
toilet as if he or she is a guest or a tenant in the house.
 If petitioners really stood as legitimate owners of
the property, they would have collected rentals from
Paula Arcega for the use and occupation of the
master's bedroom as she would then be a mere lessee of
the property in question. However, not a single piece of
evidence was presented to show that this was the case.
 All told, the failure of petitioners to take exclusive
possession of the property allegedly sold to them, or in
the alternative, to collect rentals from the alleged
vendee Paula Arcega, is contrary to the principle of
ownership and a clear badge of simulation that renders
the whole transaction void and without force and effect,
pursuant to Article 1409 of the New Civil Code:
The following contracts are inexistent and void from the
beginning:
(2) Those which are absolutely simulated or fictitious;
 The fact that subject deed of absolute sale executed by
Paula Arcega in favor of petitioners is a notarized
document does not justify the petitioners' desired
conclusion that said sale is undoubtedly a true
conveyance to which the parties thereto are irrevocably
and undeniably bound.
 Atty. Luis Cuvin who notarized the deed disclaimed the
truthfulness of the document when he testified that "NO
MONEY WAS INVOLVED IN THE TRANSACTION.”
 Though the notarization of the deed of sale in question
vests in its favor the presumption of regularity, it is not
the intention nor the function of the notary public
to validate and make binding an instrument never,
in the first place, intended to have any binding legal
effect upon the parties thereto.
 The fact that petitioners were able to secure a title in
their names, TCT No. 148989, did not operate to vest
upon petitioners ownership over Paula Arcega's
property. That act has never been recognized as a
mode of acquiring ownership. As a matter of fact,
even the original registration of immovable property
does not vest title thereto. The Torrens system does not
create or vest title. It only confirms and records title
already existing and vested.
Parole Evidence: Petitioners  the trial court and CA
should have followed the Parole Evidence Rule and
prevented evidence, like the testimony of Notary Public,
Atty. Luis Cuvin, private respondent Quirico Arcega,
among others, which impugned the two notarized
deeds of sale. The rule on parole evidence under Section
9, Rule 130 is qualified by the following exceptions:
[4]
However, a party may present evidence to modify, explain
or add to the terms of the written agreement if he puts in
issue in his pleading;
(a) An intrinsic ambiguity, mistake or imperfection in
the written agreement;
(b) The failure of the written agreement to express the
true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties
or their successors in interest after the execution of the
written agreement.
The term ‘agreement’ includes wills.”
Quirico Arcega was able to put in issue in his complaint
before the RTC the validity of the subject deeds of sale for
being a simulated transaction:
 The parol evidence rule may be waived by failure to
invoke it, as by failure to object to the introduction of
parol evidence. And, where a party who is entitled to
the benefit of the rule waives the benefit thereof by
allowing such evidence to be received without objection
and without any effort to have it stricken from the
minutes or disregarded by the trial court, he cannot,
after the trial has closed and the case has been decided
against him, invoke the rule in order to secure a reversal
of the judgment by an appellate court. Here, the records
are devoid of any indication that petitioners ever
objected to the admissibility of parole evidence
introduced by private respondent in open court. The
court cannot disregard evidence which would ordinarily
be incompetent under the rules but has been rendered
admissible by the failure of party to object thereto.
Petitioners have no one to blame but themselves in this
regard.
Statute of limitations: Petitioners  the complaint filed
before on October 24, 1985 is already barred by the
statute of limitations and laches considering that the deed
of absolute sale was executed on July 20, 1971.
 Indeed, more than fourteen (14) years had elapsed from
the time his cause of action accrued to the time that the
 complaint was filed. Articles 1144 and 1391 of the New
Civil Code provide:
ART. 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
ART. 1391. The action for annulment shall be brought
within four years.
This period shall begin:
In cases of intimidation, violence or undue influence, from
the time the defect of the consent ceases.
In cases of mistake or fraud, from the time of the
discovery of the same.
And when the action refers to contracts entered into by
minors or other incapacitated persons, from the time the
guardianship ceases.
 However, Article 1410 of the New Civil Code provides
that “[T]he action or defense for the declaration of
the inexistence of a contract does not prescribe.”
 As for laches, its essence is the failure or neglect, for an
unreasonable and unexplained length of time to do that
which, by exercising due diligence, could or should have
been done earlier; it is the negligence or omission to
assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either
has abandoned it or declined to assert it.
 But there is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be
determined according to its particular circumstances.
The question of laches is addressed to the sound
discretion of the court, and since laches is an equitable
doctrine, its application is controlled by equitable
considerations. It cannot be worked to defeat justice or
to perpetrate fraud and injustice
x-----------------------------------------------------------------------x
Rongavilla v. Court of Appeals
J. Quisumbing (1998)
 Mercedes dela Cruz, 60, and Florencia dela Cruz, 71, are
the aunts of Dolores Rongavilla. Mercedes and Florencia
are unschooled in English but are able to read and to
write in Tagalog. In the month of May 1976, they
borrowed Php2000 from Rongavilla to have their
rooftop repaired.
 A month later, Rongavilla, together with her sister
Juanita Jimenez brought a document to the home of the
dele Cruzes to ask them to sign it. It being in English,
Mercedes asked Rongavilla what it was about, and the
latter answered that it was just an acknowledgment of
their debt. The dela Cruzes then signed the document.
 Four years later, Rongavilla went to the house and asked
them to vacate the parcel in question, claiming that she
and her husband were already the new owners of the
land.
 The dela Cruzes found out that the title had been
registered to Rongavilla and that the land has been
mortgaged. It was mortgaged for P40,000. It was at this
point that they realized that the document they signed
was a Deed of Sale.
 Private respondents filed with the Regional Trial Court
of Pasay City a complaint to have the purported deed
of sale declared void and inexistent, for being
fictitious, simulated, and secured by means of fraud and
misrepresentation. They alleged that there was lack of
consent and want of consideration.
 Rongavilla denied the claims of the dela Cruzes and
even claimed that the dela Cruzes were apprised by a
Notary Public on what the document was about (which
the dela Cruzes denied). They alleged that all the
elements of a contract of sale are present.
 The Trial Court declared the document void. The Court
of Appeals affirmed.
ISSUE: WON the Deed of Absolute Sale was void and
inexistent
HELD/RATIO: YES
 On consent: When the dela Cruzes 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
[5]
signed was a document acknowledging the loan of
P2,000.00 extended them by said defendant.
 They 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-appellees consent was not only vitiated, but
that plaintiffs-appellees have not given their consent at
all. And since there was no consent, the deed of absolute
sale is, therefore, null and void ab initio
 On consideration: 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.
 As there is no indication that plaintiffs were in dire
need of money, except for a 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.
 More: Rongavilla claimed that the consideration was
actually 7,800 and not 2,000, and that they lowered it
on paper to save on taxes. The Court thought it
destroyed her credibility because it meant that she was
not averse to bending the truth
 On prescription: Contract is void and inexistent. The
statute of limitations does not apply.
Note: "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
be vigilant for his protection." (Art. 24, Civil Code)
x-----------------------------------------------------------------------x
Republic v. Phil. Resources Development Corp
J. Padilla (1958)
 Macario Apostol submitted the highest bid (P450) for
the purchase of 100 tons of Palawan Almaciga and 3
million board feet of logs from the Bureau of Prisons.
 A contract was drawn wherein Apostol obtained the
Almaciga valued at P15,878.59 but he only paid
P691.10, and also obtained logs valued at P65,830 but
failed to pay P18,827.57. Total demand from Apostol
was P34,015.06.
 The Republic, in representation of the Bureau of
Prisons, instituted a complaint against Macario Apostol
and the Empire Insurance Co. (since it executed a
P10,000 performance bond in favor of Apostol).
 Apostol interposed payment as a defense and sought
dismissal of the complaint.
 The Phil. Resources Dev. Corp. moved to intervene
saying that prior to Apostol’s transactions, the
corporation had some goods deposited in a warehouse
in Manila; that Apostol, then the president of the
corporation but without the knowledge or consent of
the stockholders, disposed of said goods by delivering
the same to the Bureau of Prisons in an attempt to settle
his personal debts with the latter; that upon discovery
of Apostol’s act, the corporation took steps to recover
said goods by demanding from the Bureau the return
thereof; and that upon the refusal of the Bureau to
return said goods, the corporation sought leave to
intervene.
 The CFI denied the motion for intervention.
 The CA set aside the order denying the motion to
intervene.
 Government’s contention:
o The intervenor has no legal interest in the matter in
litigation because the action brought in the CFI is
just for the collection from Apostol of a sum of
money, the unpaid balance of the purchase price of
logs and almaciga bought by him from the Bureau,
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 it
owns – an intervention which would change a
personal action into one ad rem and would unduly
delay the disposition of the case.
o Price is always paid in terms of money and the
supposed payment being in kind, it is no payment at
all. (Art. 1458)
Issue: W/N the intervenor has legal interest in the matter
in litigation considering that it is only seeking recovery of
ownership and possession of the goods?
Held/Ratio: Yes, the intervenor has legal interest in the
matter in litigation.
 The subject matter of the case is a sum of money. The
materials belonging to the corporation have been
assessed and evaluated and their price equivalent in
terms of money have been determined; and said
materials have been assigned by Apostol as tokens of
payment of his private debts with the Bureau. In the
event the judge decides to credit Apostol with the value
of the goods delivered by him to the Bureau, the
corporation stands to be adversely affected by such
judgment. The corporation, therefore, has legal interest
in the matter in litigation, and such interest is of an
actual, material, direct and immediate nature as to
entitle the corporation to intervene.
 Art. 1458 also provides that the purchaser may pay “a
price certain in money or its equivalent,” which means
that payment of the price need not be in money.
 Side issue: Counsel’s authority to appear for the
corporation was never questioned in the CFI and the CA
was satisfied that counsel was duly authorized by his
client to file the complaint-in-intervention and to
appear in its behalf. Also, counsel, as stockholder and
director of the corporation, may sue in its behalf and file
the complaint-in-intervention in the proper court.
x-----------------------------------------------------------------------x
IMELDA ONG, ET AL., vs. ALFREDO ONG, ET AL.
J. Relova (1985)
 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 quitclaimed to Sandra
[6]
Maruzzo, her heirs and assigns, all her rights, title,
interest and participation in the ONE-HALF (1/2)
undivided portion of the parcel of land
 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.
 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.
 IMELDA ONG: 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.
 TRIAL COURT: 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.
 INTERMEDIATE APPELATE COURT: Affirmed 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.
 At the SC level, Sandra reached the age of majority and
was granted the motion to be the defendant in the case
ISSUE: WON THE QUITCLAIM DEED IS VALID [YES]
 A careful perusal of the subject deed reveals that the
conveyance of the one-half (1/2) undivided portion of
the above-described property was for and in
consideration of the One (P1.00) Peso and the other
valuable considerations 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)
 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." x----------------------------------------------x
[G.R. No. L-16590 | January 30, 1965]
LAPERAL v. ROGERS
J. Dizon
 Roberto Laperal - hereinafter referred to as appellee -
was the registered owner of a residential lot and
building situated at No. 1570 Arlegui St., San Miguel,
Manila, covered by Transfer Certificate of Title No.
41622 of the Register of Deeds of Manila.
 On April 12, 1944, for the sum of P500,000.00 in
Japanese Military War notes, he executed a deed of sale
[7]
conveying said property to the occupation Republic of
the Philippines. As a result, T.C.T. No. 41622 was
cancelled and T.C.T. No. 73102 was issued in the name
of the vendee.
 On April 22, 1946, the Alien Property Custodian of the
United States, acting under authority of the Trading
With the Enemy Act, as amended, and Executive Order
No. 9095 of the President of the United States, after
finding that the occupation Republic was an
instrumentality of the Japanese Army of occupation
during the war, issued Vesting Order No. P-28 divesting
the occupation Republic of its title to the
aforementioned property.
 However, on January 9, 1947, pursuant to Executive
Order No. 9818 of the President of the United States, the
property was transferred to the Philippine Alien
Property Administrator, to be held, used, administered,
liquidated, sold or otherwise dealt with by the latter in
accordance with the provisions of the Trading With the
Enemy Act, as amended, and the Philippine Property
Act of 1946.
 On April 2, 1947, appellee filed a claim for the return of
the property aforesaid with the Vested Property Claims
Committee of the Philippine Alien Property
Administrator. Because the latter failed to decide his
claim, one way or the other, appellee, on July 14, 1947,
commenced the Present action in the Court of First
Instance of Manila against James Mcl. Henderson, in his
capacity as Philippine Alien Administrator of the United
States, and the Register of Deeds of Manila, for the
annulment of the abovementioned deed of sale and the
issuance by the latter of the corresponding certificate of
title in his name.
 The main allegations of the complaint were that
appellee executed a deed of sale of April 12, 1944 in
favor of the occupation Republic of the Philippines
under duress and due to the threats employed by the
representatives of the Japanese Military Administration,
and that the consideration of P500,000.00 in
Japanese Military notes was grossly inadequate
 In his answer to the complaint, the Philippine Alien
Property Administrator denied, for lack of knowledge
and information, plaintiff's allegations concerning the
 circumstances under which the sale of the property was
allegedly made. The Register of Deeds of Manila was
declared in default due to his failure to answer the
complaint within the reglementary period.
 On December 29, 1947, the Republic of the Philippines
filed a motion to intervene as a party defendant on the
ground that the President of the United States had
authorized the transfer to it of the property in litigation,
albeit the transfer could not be effected pending the
final outcome of the present case under Section 9(a) of
the Trading with the Enemy Act (40 Stat. 411). Said
motion was granted on January 31, 1948, and
subsequently, the intervenor answered the complaint,
alleging that the sale of the property to the occupation
Republic was voluntary; that the conditions thereof
were favorable to the vendor because the property was
bought to be used as the official residence of the
Speaker of the National Assembly; that the sum of
P500,000.00 paid for the property was adequate
consideration; and that, in the event that the court
should order the return of the property to the plaintiff,
the expenses it had incurred for the rehabilitation and
repair of the building in question in the amount of
P24,030.75 be reimbursed.
 On August 23, 1949, the Philippine Alien Property
Administrator, with previous leave of court, filed an
amended answer wherein it alleged that the claim filed
by Laperal with its Vested Property Claims Committee
was disallowed by the latter on June 4, 1948, said
decision having been affirmed by the Philippine Alien
Property Administrator on November 26, 1948; that the
plaintiff had profited from the use of the purchase price
and is estopped from questioning the validity of the
sale. As an alternative, it asked that, in the event that
the deed of sale is declared null and void, plaintiff be
ordered to return the purchase price of P500,000.00
with interest thereon at the rate of 6% per annum from
April 12, 1944, and to pay the sum of P24,415.95 spent
for the maintenance and preservation of the property in
question.
ISSUES/HELD/RATIO:
1.) WON executed the Deed of Sale of April 12, 1944
under duress and due to the threats of the Japanese
army;
YES. The consideration paid for the property, namely, the
sum of P500,000.00 in Japanese military notes, was
grossly inadequate. It has been agreed, for the purpose of
this case, that at the time of the sale (April 1944), a pre-
war Philippine peso was worth fourteen Japanese military
pesos. On the other hand, the evidence of record shows
that the pre-war assessed value of the property in
question was P92,995.00. which, if reduced to its
equivalent value in terms of Japanese military notes as of
April 1944, would have amounted to around
P1,300,000.00 (Japanese military notes). We must also
consider the fact that the pre-war assessed value of the
property did not represent its real or actual value which
could easily be around P200,000.00. Reduced to its
equivalent in Japanese military notes, this would have
meant around P2,800,000.00. Instead, he was merely paid
P500,000.00 in Japanese military notes, or the equivalent
of something around P35,000.00, Philippine currency, at
the time.
2.) WON he had ratified the sale by making use of the
proceeds thereof.
NO appellants contend that appellee ratified the sale by
utilizing the proceeds thereof. To support this contention,
they represented the document marked as Exhibit 1
purporting to show the status of appellee's current
account with the Philippine National Bank.
However, the trial court said that this Exhibit 1 has no
probative value at all. It was not properly identified by any
witness of the defendant. The entries in said Exhibit were
supposedly made way back in 1944, while the employee
of the Philippine National Bank who testified on said
exhibit was not the one who made the entries on Exhibit 1
or kept the books. He was a new employee, without
sufficient personal knowledge of the matters he was made
to testify.
The ruling of the trial court is bolstered by the fact that
appellants failed to produce evidence sufficiently linking
[8]
the different sums of money appearing on Exhibit 1 as
having been withdrawn on different dates by appellee
from his account.
SALE EXECUTED UNDER DURESS
With respect to the first issue, the lower court found, on
the basis of the evidence before it, that the sale was
executed under duress
 After a careful perusal of the record, we are constrained
to affirm such finding, not only (a) because of the well
settled rule and judicial appellate practice that in the
absence of evident error or abuse of discretion in the
evaluation of the evidence, or the failure or refusal of
the trial court to take into consideration some
important and material fact, its findings of fact must be
accepted Valdez vs. Pine, 76 Phil. 285; not only (b)
because appellants presented no evidence to disprove
the facts testified to by appellee and his witnesses - thus
making such facts virtually undisputed, but also (c)
because of the following circumstances:
(1) It is of common knowledge that, during the
second world war, the Japanese army of occupation in the
Philippines did occupy and take private properties in the
City of Manila and elsewhere in the country without the
consent of their respective owners, for their use in the
prosecution of the war, resorting in some cases to the
expedient of making the owners execute deeds of sale or
contracts of lease;
(2) It is not denied that appellee, before the war and
at the time of the execution of the questioned sale, was a
very rich man with extensive real estate holdings
principally in Manila. The record discloses in this
connection, that from 1914 up to the date of the sale, he
had not disposed of a single property by sale. The record
further shows that at the time of the sale, he was in
possession of a considerable amount of money, both in
genuine Philippine currency and in Japanese military
notes. Highly solvent as he was at the time, it was
improbable - to say the least - that he would dispose of
such a valuable property as the one in question. If he had
been in need of money at all he would probably have sold
some other much less desirable property. One may believe
that the sale in question was voluntary only by assuming
that Laperal sold the property involved to collaborate in
the attainment of the ends pursued by the Japanese army
of occupation - an assumption completely unjustified in
this case in view of the absolute absence of evidence,
direct or indirect, that Laperal collaborated or had ever
intended to collaborate with the enemy.
(3) The consideration paid for the property, namely,
the sum of P500,000.00 in Japanese military notes, was
grossly inadequate. It has been agreed, for the purpose of
this case, that at the time of the sale (April 1944), a pre-
war Philippine peso was worth fourteen Japanese military
pesos. On the other hand, the evidence of record shows
that the pre-war assessed value of the property in
question was P92,995.00. which, if reduced to its
equivalent value in terms of Japanese military notes as of
April 1944, would have amounted to around
P1,300,000.00 (Japanese military notes). We must also
consider the fact that the pre-war assessed value of the
property did not represent its real or actual value which
could easily be around P200,000.00. Reduced to its
equivalent in Japanese military notes, this would have
meant around P2,800,000.00. Instead, he was merely paid
P500,000.00 in Japanese military notes, or the equivalent
of something around P35,000.00, Philippine currency, at
the time.
The transaction involved in this case is not covered by the
theory of "collective" or "general" duress, according to
which, the general feeling of fear which Filipinos felt for
the Japanese during the years of occupation,
unaccompanied by any particular coercive act on the part
of the latter, does not invalidate a contract which would
otherwise be valid if entered into freely during peace
time.
NO RATIFICATION
Coming to the issue of "ratification", appellants contend
that appellee ratified the sale by utilizing the proceeds
thereof. To support this contention, they represented the
document marked as Exhibit 1 purporting to show the
status of appellee's current account with the Philippine
National Bank during the Japanese occupation. Aside from
several deposits, amongst them being the sum of
P500,048.66 deposited on April 28, 1944, it shows several
withdrawals, and a remaining balance of P4,189.27. They
also presented two deeds of sale executed in favor of
appellee, one for a consideration of P75,000.00 on May
29, 1944 covering a parcel of land in Licab, Nueva Ecija
(Exhibit 5), and another for a consideration of P250,000
executed on April 28, 1944 covering two lots situated in
Iloilo (Exhibit 6).
Because the document Exhibit 1 is incomplete and not
entirely reliable, the trial judge questioned the witness
presented by appellants to identify said exhibit
This Exhibit 1 has no probative value at all. It was not
properly identified by any witness of the defendant. The
entries in said Exhibit were supposedly made way back in
1944, while the employee of the Philippine National Bank
who testified on said exhibit was not the one who made
the entries on Exhibit 1 or kept the books. He was a new
employee, without sufficient personal knowledge of the
matters he was made to testify."
The above-quoted ruling of the trial court is bolstered by
the fact that appellants failed to produce evidence
sufficiently linking the different sums of money appearing
on Exhibit 1 as having been withdrawn on different dates
by appellee from his account, with the amounts allegedly
paid by him for the purchase of the properties subject
matter of the deeds of sale Exhibits 5, 6, 7 and 8. Not only
the dates of the withdrawals but the amounts withdrawn
do not tally with the dates of the sales and the different
amounts paid as consideration therefor - a circumstance
that demanded more imperatively the presentation of
evidence on the point adverted to. In the absence thereof,
we can not simply presume that the amounts withdrawn
were used by appellee for the purpose of buying other
properties.
We need not, however, go further discussing this point, for
this reason. Among the assignment of errors submitted in
the brief of appellant, the Honorable William P. Rogers, in
his capacity as Attorney General of the United States
(intervenor-appellant, Republic of the Philippines, filed no
brief of its own but merely adopted "as its own all the
errors assigned in the brief of its co-appellant"), we find
[9]
no one assailing and putting in issue this particular ruling
of the trial court. The same, therefore, may not now be
reviewed (Rule 51, sec. 7; Rule 56, sec. 1, Rules of Court).
x-----------------------------------------------------------------------x
DE LEON vs. SALVADOR
Teehankee (1970)
 In a civil case, Enrique De Leon was awarded damages
in the amount of P35,000. This was to be paid by
respondent Bernabe Eusebio. A writ of execution by
was issued as the judgment has become final and
executory. Judge Cruz of Branch XII handled the case.
 Two parcels of land of Bernabe’s were put in auction in
fulfillment of said judgment. The property was subject
to an existing mortgage lien worth P120K. Such was
sold to Aurora De Leon (sis of Enrique) as the highest
bidder. She got it for P30, 194.00.
 2 weeks before the expiration of the one year
redemption period, Bernabe instituted a separate civil
action for the annulment of the execution sale citing
anomaly and irregularity in the auction sale. Bernbae
said that the price (30K) was inadequate as the
properties could be easily sold for P385,000. He
moved that a new auction sale be instituted. This case
was transferred to Judge Salvador of Branch XIV.
 Salvador issued a writ of preliminary injunction
preventing Aurora from getting the deed of sale at the
expiration of the redemption period. He also allowed
Bernabe to redeem his two properties sold at public
auction more than two years ago. Bernebe was then
able to get a certificate of redemption.
 Aurora filed a complaint to set aside the order of
Salvador as well as the certificate of redemption. She
questioned Salvador’s jurisdiction (or the lack thereof)
over the case. She also asked that the sheriff issue her
the final deed of sale over the property.
ISSUES/HELD/RATIO:
1. Who has jurisdiction over the case (Cruz or Salvador?)
Cruz
 The doctrine followed by the SC is this: a court or a
branch may not interfere with the proceedings before a
judge of another court or branch of the same court since
they are all courts of equal and co-ordinate jurisdiction.
Cruz’ judgment had become final and executory. Thus, it
retained jurisdiction over its judgment to the exclusion
of all other co-ordinate courts for its execution and all
incidents thereof.
 As to Bernabe redeeming the land, there was no record
of him making a timely valid offer of redemption to
safeguard his right prior to his filing a separate action
questioning the validity of the auction sale. It was
illogical for Salvador to rule as he did. SC said that what
Bernabe did was to extend the one year redemption
period by filing a separate civil case since he does not
yet have enough funds to recover the property.
Afterwards, when he had the funds to redeem the
property (but the period has already lapsed) he then
files for the dismissal of the case, conveniently
forgetting that he has already impugned irregularity to
the auction sale.
2. (Issue material to the discussion): W/N the gross
inadequacy to the price of the property could invalidate
the auction sale? No.
 The applicable rule on forced sales where the law gives
the owner the right of redemption was stated in
Velasquez vs. Coronel: "However, while in ordinary
sales for reasons of equity a transaction may be
invalidated on the ground of inadequacy of price, or
when such inadequacy shocks one's conscience as to
justify the courts to interfere, such does not follow
when the law gives to the owner the right to redeem, as
when a sale is made at public auction, upon the theory
that the lesser the price the easier it is for the owner to
effect the redemption. And so it was aptly said: 'When
there is the right to redeem, inadequacy of price should
not be material, because the judgment debtor may
reacquire the property or also sell his right to redeem
and thus recover the loss he claims to have suffered by
reason of the price obtained at the auction sale.' "
SALVADOR’S COURT IS DECLARED WITHOUT
JURISDICTION.
x-----------------------------------------------------------------------x
 On the issue of valid consideration:
Buenaventura v CA
J. Carpio (2003)
 Defendant spouses are the parents of the plaintiffs, all
surname Joaquin who are joined in this action by their
respective spouses.
 Plaintiffs seek that the deeds of sale executed by
defendant parents in favor of their co-defendant
children be declared null and void on the ground of lack
of sufficient consideration. Also, assuming that there
was consideration the value of the land is 3x more than
the sums appearing in the deed, that the deeds of sale
do not reflect the true intent of the parties and that the
sale was a conspiracy to deprive the heirs of their
legitime.
 Defendants aver that the sale was with sufficient
consideration and done with good faith.
 Before trial, the RTC ordered the dismissal of the case
against the defendant spouses
 RTC: ruled in favor of the defendant spouses and
dismissed the case. Said that the testimony showed that
the deed of sale was executed for valuable
consideration
 CA: affirmed the decision of the RTC. Said that the
legitime of the plaintiffs are still inchoate and that while
they are still alive the defendants are free to dispose of
their properties.
ISSUE: WON the deeds of sale are null and void.
HELD/RATIO: NO. The petition is without merit.
 The strategy of the petitioners is to have the deeds of
sale declared null and void so it will revert to their
respondent parents and when the parents die, they will
acquire it by succession. It is obvious that they have
interest over the property but they failed to show any
[10]
legal right over the property. They are not real parties-
in-interest because they are not parties to the sale.
Their right over the property will only be vested to
them upon the death of their parents.
o A contract of sale is a consensual contract, not a real
contract. As a consensual contract it becomes valid
only upon the meeting of the minds on the purchase
price. If the real price is not stated in the contract
then the contract of sale is valid but subject to
reformation
o If there is not meeting of the minds as to the price
because the price in the contract is simulated then
the contract is void (Art 1471).
o It is not the act of payment that determines the
validity of the contract. The act of payment is in the
performance of the contract. Payment has nothing to
do with the perfection of the contract. Failure to pay
the consideration different from lack of
consideration.
o Failure to pay the consideration  right to demand
fulfillment or cancellation under an existing valid
contract
o Lack of consideration  no existing contract
o Petitioners failed to show that the prices were
absolutely simulated. To prove simulation,
petitioners presented Emma Joaquin Valdoz’s
testimony stating that their father, respondent
Leonardo Joaquin, told her that he would transfer a
lot to her through a deed of sale without need for her
payment of the purchase price. The trial court did
not find the allegation of absolute simulation of price
credible
o Petitioners’ failure to prove absolute simulation of
price is magnified by their lack of knowledge of their
respondent siblings’ financial capacity to buy the
questioned lots. On the other hand, the Deeds of Sale
which petitioners presented as evidence plainly
showed the cost of each lot sold. Not only did
respondents’ minds meet as to the purchase price,
but the real price was also stated in the Deeds of
Sale. As of the filing of the complaint, respondent
 siblings have also fully paid the price to their
respondent father.
o On the argument that assuming there was
consideration, it was grossly inadequate:
- Art 1355: inadequacy will not invalidate
a contract unless there has been fraud, mistake or
undue influence
- the courts cannot extricate a person from
bad deals. There must be an actionable wrong
before the court can interfere.
x-----------------------------------------------------------------------x
Robles vs. Lizarraga Hermanos
Street, J. (1927)
- Hacienda ‘Nahalinan’ in Pontevedra, Negros Occidental
was originally owned by spouses Zacarias Robles, Sr.
and Anastacia de la Rama. When Zacarias Sr. died, his
widow Anastacia became the administratrix of the
estate. The Hacienda was then leased to their son,
Zacarias Jr., the plaintiff herein for the period of six
years from May 1915 to May 1920. It was agreed that
the lessee will bear all the expenses for the necessary
improvements. Because the hacienda was in a run-
down state, the lessee spent much by adding various
improvements such as: substitution of a new hydraulic
press, reconstruction of dwelling house, construction of
new houses for workmen, building of camarins,
construction of chimney, reconstruction of ovens,
installment of new coolers, purchase of farming tools
and many heads of carabaos, and other repairs and
improvements. The annual rent was fixed at Php2000.
- In 1916, Anastacia died leaving her heirs. Zacarias, Jose
and Evarista Robles acquired by purchase the shares of
their co-heirs. Lizarraga Hermanos then offered to buy
all of the property of the Robles estate including
Nahalinan hacienda. Because the lease of Zacarias had
not yet expired, it was proposed that he surrenders the
last 2 years of the lease. The plaintiff alleged that he
agreed to shorten the period of his lease upon
agreement with Lizarraga that the latter would pay him
the value of the improvements he had made on the
hacienda and to buy from him personally the crop of
1917-18, farming implements and equipment,
according to the valuation of the harvest. Because of this
agreement, the Robles siblings conveyed the property
to Lizarraga on Nov. 16, 1917. The plaintiff received
thousands more than his co-owners as he was a
creditor of his mother’s estate while the others were
debtors. From the stipulation (in Spanish) the plaintiff
conveyed his rights as heir but no reference to him
being the lessee. The alleged agreement of payment of
the improvements and purchase of his property as the
lessee was not reduced in writing. The defendant
denied the agreement. The defendant claimed that the
plaintiff offered to sell the crop of cane then existing
uncut, together with the carabao. There was an
agreement as to the carabao but there was no
agreement on the price of the other property. CFI ruled
for plaintiff to recover Php14, 194.42, hence this appeal
by defendant.
ISSUES:
1. WON there was an agreement between the parties as
to the payment of the improvements as well as the
crop.
2. WON the appraisal of the property created a
suspensive condition.
HELD:
1. [YES] By preponderance of evidence and finding of the
TC, there was an agreement that, in consideration of
shortening the lease period by nearly 2 years,
Lizarraga undertook to pay for the improvements and
to buy the personal property such as the carabao,
tools, and farming implements at a fair valuation, to be
made by appraisers. Evidence of plaintiff includes a
letter written on March 1, 1917 by Severino Lizarraga
to Zacarias in which reference is made to an appraisal
and liquidation as well as the direct testimony of his
brother Jose. Although the defendant acquired the
fixed improvements when it acquired the land, it was
upon the consideration of the promise of indemnity
that the plaintiff agreed to surrender his lease.
2. [NO] The true sense of the contract was that defendant
would take over the movables and the improvements
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at an appraised valuation, and the defendant obligated
itself to promote the appraisal in good faith. As the
defendant partially frustrated the appraisal, it violated
a term of the contract and made itself liable for the
true value of the things contracted bout, as such value
may be established in the usual course of proof.
Judgement AFFIRMED. x-------------------------------------x
G.R. No. L-12888 | 29 April 1961
Navarro v. Sugar Producers Cooperative Marketing
Association
Barrera, J.
- On September 19th, 1956, Sugar Producers formally
offered to Navarro the sale from 15,000 to 20,000
metric tons of molasses, 1st-degrees gravity, 60% sugar
by invert, at P50.00 per metric ton, ex-warehouse San
Carlos and Bais, Negros Occidental, giving him up to
noon of September 24th, 1956 within which to accept
the offer, with the admonition that upon its failure to
hear from him by then, Sugar Producers shall feel free
to negotiate the sale with other possible buyers
- At five minutes before noon of September 24, Navarro
formally accepted the Sugar Producers’ offer of sale by
informing the latter in writing that he binds himself to
purchase from the preferred 20,000 metric tons of
molasses in question for P50.00 per metric ton, and the
day after September 21st, 1956, plaintiff upon the
request of Sugar Producers, made the following
clarifications of his agreement to purchase the said
molasses, — (1) 20,000 metric tons of Philippine
molasses, 185-degrees specific gravity, 60% sugar by
invert; (2) Price — P50.00 Philippine currency, per
metric ton ex-warehouse; (3) shipments to be in
quantities of 3,000 or more metric tons every each
shipment during the month of February, March, April
and May until the whole amount has been completely
shipped; and (4)payment shall be by irrevocable,
divisible and assignable domestic letter of credit to be
opened in a local bank in Sugar Producers' favor;
- On the same day Navarro clarified his acceptance of the
sale, and Sugar Producers hurried advised plaintiff that
it committed a typographical error indicating the
 specific gravity of the molasses at 185-degrees which
should be only 85-degrees, the latter being the high for
molasses at 60% sugar by invert, and requesting plain
that the "specific gravity" be amended accordingly,
which correction and amendment plaintiff readily
agreed to and accepted.
- There was no showing that Sugar Producers’ offer, as
accepted by Navarro, was qualified in any way
whatsoever
- On September 28th, 1956, three days after an
agreement had been consummated on the price,
quantity and quality of said molasses and the manner of
payment thereof, Sugar Producers, belatedly and
abruptly advised plaintiff of its desire add certain
additional conditions to be incorporated in the formal
contract of purchase and sale then under preparation
by it for signature, — which were never even mentioned
nor hinted at in its original offer or proposal, on the
untenable pretext that they were 'standard conditions'
on all contracts for the sale said commodity, the most
onerous of which were, —
"(a) That upon the signing of the contract of purchased
and sale; plaintiff shall pay defendant in cash an amount
equivalent to 50% of the purchase value Of the molasses;
"(b) that to cover the remaining and unpaid balance of the
purchase price, plaintiff shall open with the Philippine
National Bank an irrevocable domestic letter of credit in
favor of defendant, which shall be assignable and
divisible; and
"(c) that in negotiating the said letter of credit, plaintiff
shall allow defendant immediately to withdraw from the
same the corresponding amount representing 50% of the
value of the molasses withdrawn from the central, upon
presentation of the requisite certificate thereof (certainly
a condition which, taken with (a) above, is most one-sided
in favor only of the seller);
- Claiming breach of contract, Navarro prayed that
judgment be rendered ordering Sugar Producers to
comply with and perform its contractual obligations,
pursuant to its agreement with plaintiff of September
19 and 24, 1956 and in case of failure to do so, to pay
plaintiff any and all damages he may suffer by reason of
such non-compliance, plus moral damages and to pay
plaintiff reasonable attorney's fees and actual costs of
the litigation.
- Trial Court: dismissed Navarro’s complaint. No cause of
action under NCC1479.
ISSUE: W/N there was a unilateral promise to sell (or
option) which requires a separate consideration or a
bilateral promise to sell and buy which requires no
consideration distinct from the selling price
HELD/RATIO:
- The acceptance made five minutes before noon of
September 24th by Navarro was one for an option. This
acceptance, without consideration, did not create an
enforceable obligation on the part of the defendant. The
offer as well as the acceptance, did not contemplate nor
produce an immediately binding and enforceable
contract of sale. Both lack a most essential element —
the manner of payment of the purchase price. In fact, it
was only after the exercise of the option or acceptance
of the unilateral promise to sell that the terms of
payment were first discussed. This was in connection
with the clarification of plaintiff's acceptance which
was transmitted to defendant on September 25, 1956.
(See last part of paragraph 6 of the complaint.)
Plaintiff's offer of a domestic letter of credit was not
accepted by Sugar Producers who insisted on a cash
payment of 50% of the purchase value, upon signing of
a contract. (See paragraphs 8 and 9 of the complaint.)
Navarro, on the other hand, agreed to accede to this
provided the price is reduced from P50.00 per metric
ton to 7132.00 Defendant rejected defendant's
alternative counter-offer. In the circumstance, there was
no complete meeting of the minds of the parties
necessary for the perfection of a contract of sale.
Consequently, Sugar Producers was justified in
withdrawing its offer to sell the molasses in question.
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