Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. 107069 July 21, 1994HEIRS OF LEANDRO OLIVER, REPRESENTED BY PURITA OLIVER and REMOQUILLO,petitioners,vs.THE HONORABLE COURT OF APPEALS, JOSE SERADILLA, and NATIONAL HOUSING AUTHORITY,respondents.Rosendo O. Chaves for petitioners.Emmanuel P. Leonardo for private resondent.PUNO,J.:This is a petition for review oncertiorariof: (1) the Decision1of respondent Court Appeals in CA-G.R. CV No. 26735, entitled "Heirs of Leandro Oliver, represented by Purita Oliver and Pedro Remoquillo, Plaintiffs-Appellants, versus Jose Seradilla and National Housing Authority, Defendants-Appellees," which affirmed the Decision2of the Regional Trial Court of Bian, Laguna; and (2) the Resolution3denying the motion for reconsideration, for lack of merit.The findings of fact by the trial court which were adopted by respondent Court of Appeals are as follows:In August, 1939, the Republic of the Philippines acquired from Colegio de San Jose the whole of the Tunasan Homesite.In that same year, Engineer Honorato Maria, authorized by the Bureau of Lands, conducted a resurvey of the whole Tunasan Homesite, San Pedro, Laguna on the basis of the Bureau's 1939 Master List (Exhibit "20-A"; p. 13 TSN, June 22, 1989).On the basis of the 1939 resurvey, the relative positions of Lots 19, 20, 22, 23, 24, 25, 26 and 27 were plotted with the vacant lot adjoining the Landayan Creek having been designated as the Lot 24.On July 21, 1955, the government through Zoilo Castrillo, then Director of Lands, entered into and executed an Agreement to Sell (KASUNDUAN SA PAGBIBILI) with Patricio Seradilla, married to Rosa Catalan, covering several parcels of land denominated as Lots 9, 9-A, 22, 23, 25 and 26 of Blocks 61 and 87 of the Tunasan Homesite, San Pedro, Laguna (Exh. "1").During these times, Leandro Oliver, predecessor of plaintiffs and brother of Patricio Seradilla and thus an uncle of defendant Jose Seradilla, was said to have been occupying Lot 24, Block 87.On September 15, 1955, Patricio Seradilla died.On November 6, 1959, the heirs of Patricio Seradilla namely: Soledad, Paz, Esperanza, Pilar, all surnamed Seradilla, but without the participation of Jose Seradilla, allegedly for the good location and valuability of Lot 24, Block 87 to the use of Lots 25, 26 and 27, Block 87, entered into an agreement with their uncle Leandro Oliver, consolidating the latter's Lot 24 Block 87 with the lots left by Patricio Seradilla Lots 22, 23, 25 and 26 Block 87 of the Tunasan Homesite, San Pedro, Laguna, and dividing the same equally among them without, however, touching the part occupied by heir Jose Seradilla.On July 9, 1961, a sketch representing the agreed partition of the mentioned lots with the respective designation of each was executed and signed by all the heirs including Jose Seradilla and Leandro Oliver (Exh. "E-2").Apparently, pursuant to the Agreement of November 6, 1959 and the supplemental sketch drafted on July 9, 1961 (Exh. "E-2"), Leandro Oliver vacated his Lot 24, Block 87 and occupied portion of Lot 22, Block 87. This same lot was later designated as new Lot 26, Block 87 which was subdivided into two lots designated as Lots 26 and 30, Block 21 (Exh. "7").On September 19, 1961, relying on the Agreement of 1959, Leandro Oliver for a consideration of P500.00, sold to plaintiff Pedro Remoquillo one-half (1/2) portion of Lot 26, Block 87 (portion of old Lot 22 Block 87) which was henceforth designated as Lot 30 Block 21. This lot, therefore, originated and was a portion of old Lot 22, Block 87 (Exhs. "7" and "8").In May 1983, (sic 1963) and upon the request of the heirs of Patricio Seradilla, Engineer Honorato Sta. Maria made a resurvey of the lots recorded in the name of Patricio Seradilla (Exh. "18").On June 30, 1963, visibly discontented, Jose Seradilla urged his co-heirs to execute a new sketch based on the 1983 (sic 1963) resurvey of Engineer Sta. Maria excluding Leandro Oliver from the partition and adjudicating upon defendant Jose Seradilla Lots 14, 14-A Block 61, and Lots 26 and 29 Block 87.Thus, on July 5, 1963, the heirs of Patricio Seradilla formalized their agreement and executed an Agreement of Partition revoking the Agreement of 1959 and subdividing the parcels of land left by their parents in the following manner (Exhibit "18"):To Soledad Lot 24, Block 87Paz Lot 25, Block 87Jose Lots 14, 14-ABlock 61Lots 26 and 29,Block 87Rosario Lots 10 and 10-ABlock 61Lot 22, Block 87Esperanza Lots 23, Block 87Pilar (deceased) Lot 27, Block 87On July 6, 1966, pursuant to the survey conducted on September 2, 1951 to March 4, 1952, September 1, 1956 and July 31, 1958 to April 10, 1962, the Director of Lands approved the Subdivision Plan of the Tunasan Homesite and Block 87 was designated as Block 21 (Exh. "20-B").Several years later, on August 13, 1970, the heirs of Patricio Seradilla again executed an Extra-judicial Partition of the same parcels of land duly published for three (3) consecutive times in a newspaper (sic) of general circulation (Exh. "N-5") but omitted to include Lots 26 and 30 Block 21 (Exhs. "N"; "N-1" to "N-4") due to an alleged typographical error and they being unaware of the existence of Lot 30 (pp. 9 to 12, TSN, October 20, 1988).On January 16, 1980, on the basis of the representation of Jose Seradilla that Lots 26 and 30, Block 21 were included in the partition (Exh. "M"), the National Housing Authority through J.S. de Vera, Manager, Estate Management Department, sold to Jose Seradilla Lots 26 and 30, Block 21, Psd 74516 of the Tunasan Homesite, San Pedro, Laguna (Exh. "Q"; "Q-1" to "Q-5", inclusive, Exhs. "4"; "4-A"; "5" and "5-A").On January 25, 1980, Transfer of Certificates Title No. T-67081 and T-67082 covering Lots 30 and 26, respectively, were issued in favor of herein defendant Jose Seradilla (Exhs. "R" and "S").4On June 4, 1982, petitioners filed a complaint for Annulment of Title with Damages against respondents before the Regional Trial Court of Bian, Laguna, Branch XXV, docketed as Civil Case No. B-1863. They sought to annul two (2) administrative patents issued by respondent National Housing Authority (NHA) to respondent Jose Seradilla. They asserted preferential rights over the same as heirs and vendees of Leandro Oliver, respectively. These parcels of land were duly registered in the name of Jose Seradilla and recorded as Transfer Certificates of Title No. T-67081 and T-67082 in the Registry of Deeds of Calamba, Laguna.5Respondents answered the complaint. On February 16, 1990, the court rendered judgment against petitioners, the dispositive portion of which reads:IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered in favor of the defendants and against the plaintiffs dismissing the complaint and upholding the validity of Transfer of Certificates of Title No. T-67081 and T-67082 of the Registry of Deeds of Laguna covering Lots 30 and 26, respectively, of the Tunasan Homesite San Pedro, Laguna in the name of Jose Seradilla. Consequently, plaintiffs or their assigns are directed to vacate and surrender to defendant Seradilla possession of Lots 26 and 30, Block 21 of the Tunasan Homesite, San Pedro, Laguna covered by the above mentioned Transfer Certificates of Title.It appearing that the case was not filed with any malicious intention on the part of the plaintiffs, defendants' counterclaims are likewise dismissed for lack of merits. (sic)SO ORDERED.6On appeal, the respondent Court of Appeals affirmed the controverted decision of the trial court. On September 11, 1992, petitioners' motion for reconsideration was denied for lack of merit.Hence, this petition.Petitioners raise the following issues,viz:IIS A BILATERAL CONTRACT VOIDAB INITIOJUST BECAUSE ONLY 4 OUT OF 5 HEIRS PARTICIPATED THEREIN REPRESENTING THEIR SIDE?IICAN A BILATERAL CONTRACT BE SUPERSEDED BY A SUBSEQUENT UNILATERAL AGREEMENT EXECUTED BY ALL OF THE 5 HEIRS BUT WITHOUT THE PARTICIPATION OF THE OTHER PARTY?IIIFROM WHEN IS THE 5-YEAR RESTRICTION AGAINST TRANSFER IN ADMINISTRATIVE PATENT COUNTED?IVWHAT IS THE EFFECT OF PERSONAL DISQUALIFICATION TO BEING A PATENTEE OF PUBLIC DISPOSABLE LAND AND THE UTTER LACK OF BASIS OF THE GRANT OF A PATENT?We rule for private respondents.The petition at bench can succeed only by a showing that the Consolidation and Partition Agreement dated November 6, 1959 is valid. We uphold the respondent court in ruling that it is void on the ground that it was made within the five (5) year period prohibiting the sale, assignment, encumbrance, mortgage, or transfer of land acquired under free patent or homestead as mandated by C.A. 141, section 118, as amended by C.A. 496.7Indeed, this legal prohibition is expressly recited in the Agreement to Sell dated July 21, 19558between the government and the late Patricio Seradilla,viz:12. The Applicant shall not sell, assign, encumber, mortgage, transfer, or in any other manner affect his rights under this contract or in the property subject hereof without first obtaining the written consent of the Administration and this condition shall subsist until the lapse of five (5) years from the date of the execution of the final deed of sale in his favor and shall be annotated as an encumbrance on the certificate of title of the property that may be issued in his favor.13. This Agreement shall be binding upon the heirs, executors, administrators, successors, and assigns of the respective parties hereto.As the Consolidation and Partition Agreement contravened section 118, C.A. 141, as amended by C.A. 496, it is null and void pursuant to paragraph 7, Article 1409 of the Civil Code.9In this light, the reliance of the petitioners on the sketch of July 9, 1961 signed by private respondent Jose Seradilla allegedly confirming the Consolidation and Partition Agreement dated November 6, 1959 is hardly of any moment. As Article 1409 of the Civil Code,op. cit.,expressly states that void contracts cannot be ratified. Needless to state, the July 5, 1963 Agreement of the heirs of Patricio Seradilla revoking the void Consolidation and Partition Agreement dated November 6, 1959 cannot be faulted.Next, petitioners further allege that Lots 26 and 30 were not among those properties left by decedent Patricio Seradilla to his heirs. The grant of patents in favor of private respondent Seradilla covering these lots was therefore erroneous, it is urged.Again, we are not persuaded for as correctly observed by the respondent court:10The omission to specifically mention Lots 26 and Lot 30, Block 21, is more apparent than real, because, as we explained above, said Lots 26 and 30, Block 21 were the subdivided lots of new Lot 26, Block 87, which was formerly Lot 22, Block 21, as mentioned. Besides, said Lot 22, Block 87, was among the Lots which were awarded to Patricio Seradilla or were subject of the Contract to Sell of July 21, 1955 between Patricio and the government (Exhibit 1). Block 21 was formerly Block 87 (Exhibits 7 and 8).Lastly, petitioners contend that private respondent is disqualified from being a patentee of the lots in question. They contend that their predecessor-in-interest, Leandro Oliver, has better qualifications. This submission was rejected by the trial court which found and ruled:11FIRSTLY, Leandro Oliver failed to file the requisite application over either Lot 24 where he allegedly stayed originally but which was later identified as the vacant lot adjacent to the Landayan creek (Exh. "20-A") and was during the 1951-1962 survey, eroded by the Landayan creek (Exh. "20-B", p. 30, TSN, June 22, 1989; or Lot 26, Blocks 87) where he supposedly transferred in exchange for Lot 24 per the Agreement of 1959.xxx xxx xxxSECONDLY, the lots subject matter of the Agreement of November 6, 1959 were awarded to Patricio Seradilla, pursuant to an Agreement to Sell dated July 21, 1955 whereby the latter agreed to buy the parcels of land therein mentioned restricted by the conditions laid down in such contract, pertinent of which are paragraphs 12 and 13 (Exh. "1").xxx xxx xxxTHIRDLY, Leandro Oliver died on December 23, 1976, 13 years from the time he had learned of the revocation of their original agreement. Yet, he chose to remain silent; he did not move to protest his right and slept thereon. He must, therefore, suffer the ultimate effects of laches. The right of defendant Seradilla over Lots 26 and 30 (portion of lot 22) must be put to rest and be recognized.Obviously, petitioners are grasping on questions of fact. Our unbending jurisprudence forbids us to entertain questions of fact in a petition for review oncertiorariunder Rule 45 of the Rules of Court.12This rule finds stronger application in the petition at bench considering that it involves facts established in administrative proceedings and confirmed by both trial court and the respondent court.IN VIEW WHEREOF, the petition is DENIED there being no showing of any reversible error committed by the respondent court. Costs against petitioners.SO ORDERED.Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 97785 March 29, 1996PHILIPPINE COMMERCIAL INTERNATIONAL BANK,petitioner,vs.COURT OF APPEALS and RORY W. LIM,respondents.FRANCISCO,J.:pThis is a petition for review oncertiorariseeking the reversal of the Decision of the Court of Appeals in CA-G.R. No. 18843 promulgated on July 30, 1990, and the Resolution dated March 11, 1991, affirming with modification the judgment of the Regional Trial Court of Gingoog City which held petitioner Philippine Commercial International Bank (PCIB) liable for damages resulting from its breach of contract with private respondent Rory W. Lim.Disputed herein is the validity of the stipulation embodied in the standard application form/receipt furnished by petitioner for the purchase of a telegraphic transfer which relieves it of any liability resulting from loss caused by errors or delays in the course of the discharge of its services.The antecedent facts are as follows:On March 13, 1986, private respondent Rory Lim delivered to his cousin Lim Ong Tian PCIB Check No. JJJ 24212467 in the amount of P200,000.00 for the purpose of obtaining a telegraphic transfer from petitioner PCIB in the same amount. The money was to be transferred to Equitable Banking Corporation, Cagayan de Oro Branch, and credited to private respondent's account at the said bank. Upon purchase of the telegraphic transfer, petitioner issued the corresponding receipt dated March 13, 1986 [T/T No. 284]1which contained the assailed provision, to wit:A G R E E M E N Txxx xxx xxxIn case of fund transfer, the undersigned hereby agrees that such transfer will be made without any responsibility on the part of the BANK, or its correspondents, for any loss occasioned by errors, or delays in the transmission of message by telegraph or cable companies or by the correspondents or agencies, necessarily employed by this BANK in the transfer of this money, all risks for which are assumed by the undersigned.Subsequent to the purchase of the telegraphic transfer, petitioner in turn issued and delivered eight (8) Equitable Bank checks2to his suppliers in different amounts as payment for the merchandise that he obtained from them. When the checks were presented for payment, five of them bounced for insufficiency of funds,3while the remaining three were held overnight for lack of funds upon presentment.4Consequent to the dishonor of these checks, Equitable Bank charged and collected the total amount of P1,100.00 from private respondent. The dishonor of the checks came to private respondent's attention only on April 2, 1986, when Equitable Bank notified him of the penalty charges and after receiving letters from his suppliers that his credit was being cut-off due to the dishonor of the checks he issued.Upon verification by private respondent with the Gingoog Branch Office of petitioner PCIB, it was confirmed that his telegraphic transfer (T/T No. 284) for the sum of P200,000.00 had not yet been remitted to Equitable Bank, Cagayan de Oro branch. In fact, petitioner PCIB made the corresponding transfer of funds only on April 3, 1986, twenty one (21) days after the purchase of the telegraphic transfer on March 13, 1986.Aggrieved, private respondent demanded from petitioner PCIB that he be compensated for the resulting damage that he suffered due to petitioner's failure to make the timely transfer of funds which led to the dishonor of his checks. In a letter dated April 23, 1986, PCIB's Branch Manager Rodolfo Villarmia acknowledged their failure to transmit the telegraphic transfer on time as a result of their mistake in using the control number twice and the petitioner bank's failure to request confirmation and act positively on the disposition of the said telegraphic transfer.5Nevertheless, petitioner refused to heed private respondent's demand prompting the latter to file a complaint for damages with the Regional Trial Court of Gingoog City6on January 16, 1987. In his complaint, private respondent alleged that as a result of petitioner's total disregard and gross violation of its contractual obligation to remit and deliver the sum of Two Hundred Thousand Pesos (P200,000.00) covered by T/T No. 284 to Equitable Banking Corporation, Cagayan de Oro Branch, private respondent's checks were dishonored for insufficient funds thereby causing his business and credit standing to suffer considerably for which petitioner should be ordered to pay damages.7Answering the complaint, petitioner denied any liability to private respondent and interposed as special and affirmative defense the lack of privity between it and private respondent as it was not private respondent himself who purchased the telegraphic transfer from petitioner. Additionally, petitioner pointed out that private respondent is nevertheless bound by the stipulation in the telegraphic transfer application/form receipt8which provides:. . . . In case of fund transfer, the undersigned hereby agrees that such transfer will be made without any responsibility on the part of the BANK, or its correspondents, for any loss occasioned by errors or delays in the transmission of message by telegraph or cable companies or by correspondents or agencies, necessarily employed by this BANK in the transfer of this money, all risks for which are assumed by the undersigned.According to petitioner, they utilized the services of RCPI-Gingoog City to transmit the message regarding private respondent's telegraphic transfer because their telex machine was out of order at that time. But as it turned out, it was only on April 3, 1986 that petitioner's Cagayan de Oro Branch had received information about the said telegraphic transfer.9In its decision dated July 27, 198810the Regional Trial Court of Gingoog City held petitioner liable for breach of contract and struck down the aforecited provision found in petitioner's telegraphic transfer application form/receipt exempting it from any liability and declared the same to be invalid and unenforceable. As found by the trial court, the provision amounted to a contract of adhesion wherein the objectionable portion was unilaterally inserted by petitioner in all its application forms without giving any opportunity to the applicants to question the same and express their conformity thereto.11Thus, the trial court adjudged .petitioner liable to private respondent for the following amounts:WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant, ordering the latter to pay the former as follows:P 960,000.00 as moral damages;P 50,000.00 as exemplary damages;P 40,000.00 as attorney's fees; andP 1,100.00 as reimbursement for the surcharges paid by plaintiff to the Equitable Banking Corporation, plus costs, all with legal interest of 6% per annum from the date of this judgment until the same shall have been paid in full.12Upon appeal by petitioner to the Court of Appeals, respondent court affirmed with modifications the judgment of the trial court and ordered as follows:WHEREFORE, premises considered, judgment is hereby rendered affirming the appealed decision with modification, as follows:The defendant-appellant is ordered to pay to the plaintiff-appellee the following:1. The sum of Four Hundred Thousand (P400,000.00) Pesos as/for moral damages;2. The sum of Forty Thousand (P40,000.00) Pesos as exemplary damage to serve as an example for the public good;3. The sum of Thirty Thousand (P30,000.00) Pesos representing attorney's fees;4. The sum of One Thousand One Hundred (P1,100.00) Pesos as actual damage, and5. To pay the costs.SO ORDERED.13A motion for reconsideration was filed by petitioner but respondent Court of Appeals denied the same.14Still unconvinced, petitioner elevated the case to this Court through the instant petition for review oncertiorariinvoking the validity of the assailed provision found in the application form/receipt exempting it from any liability in case of loss resulting from errors or delays in the transfer of funds.Petitioner mainly argues that even assuming that the disputed provision is a contract of adhesion, such fact alone does not make it invalid because this type of contract is not absolutely prohibited. Moreover, the terms thereof are expressed clearly, leaving no room for doubt, and both contracting parties understood and had full knowledge of the same.Private respondent however contends that the agreement providing non-liability on petitioner's part in case of loss caused by errors or delays despite its recklessness and negligence is void for being contrary to public policy and interest.15A contract of adhesion is defined as one in which one of the parties imposes a ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify.16One party prepares the stipulation in the contract, while the other party merely affixes his signature or his "adhesion" thereto,17giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing.18Nevertheless, these types of contracts have been declared as binding as ordinary contracts, the reason being that the party who adheres to the contract is free to reject it entirely.19It is equally important to stress, though, that the Court is not precluded from ruling out blind adherence to their terms if the attendant facts and circumstances show that they should be ignored for being obviously too one-sided.20On previous occasions, it has been declared that a contract of adhesion may be struck down as void and unenforceable, for being subversive to public policy, only when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing.21And when it has been shown that the complainant is knowledgeable enough to have understood the terms and conditions of the contract, or one whose stature is such that he is expected to be more prudent and cautious with respect to his transactions, such party cannot later on be heard to complain for being ignorant or having been forced into merely consenting to the contract.22The factual backdrop of the instant case, however, militates against applying the aforestated pronouncements. That petitioner failed to discharge its obligation to transmit private respondent's telegraphic transfer on time in accordance with their agreement is already a settled matter as the same is no longer disputed in this petition. Neither is the finding of respondent Court of Appeals that petitioner acted fraudulently and in bad faith in the performance of its obligation, being contested by petitioner. Perforce, we are bound by these factual considerations.Having established that petitioner acted fraudulently and in bad faith, we find it implausible to absolve petitioner from its wrongful acts on account of the assailed provision exempting it from any liability. InGeraldez vs.Court of Appeals,23it was unequivocally declared that notwithstanding the enforceability of a contractual limitation, responsibility arising from a fraudulent act cannot be exculpated because the same is contrary to public policy. Indeed, Article 21 of the Civil Code is quite explicit in providing that "[a]ny person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage". Freedom of contract is subject to the limitation that the agreement must not be against public policy and any agreement or contract made in violation of this rule is not binding and will not be enforced.24The prohibition against this type of contractual stipulation is moreover treated by law as void which may not be ratified or waived by a contracting party. Article 1409 of the Civil Code states:Art. 1409. The following contracts are inexistent and void from the beginning:(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;xxx xxx xxxThese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.Undoubtedly, the services being offered by a banking institution like petitioner are imbued with public interest.25The use of telegraphic transfers have now become commonplace among businessmen because it facilitates commercial transactions. Any attempt to completely exempt one of the contracting parties from any liability in case of loss notwithstanding its bad faith, fault or negligence, as in the instant case, cannot be sanctioned for being inimical to public interest and therefore contrary to public policy. Resultingly, there being no dispute that petitioner acted fraudulently and in bad faith, the award of moral26and exemplary damages were proper.But notwithstanding petitioner's liability for the resulting loss and damage to private respondent, we find the amount of moral damages adjudged by respondent court in the sum of P400,000.00 exorbitant. Bearing in mind that moral damages are awarded, not to penalize the wrongdoer, but rather to compensate the claimant for the injuries that he may have suffered,27we believe that an award of Two Hundred Thousand Pesos (P200,000.00) is reasonable under the circumstances.WHEREFORE, subject to the foregoing modification reducing the amount awarded as moral damages to the sum of Two Hundred Thousand Pesos (P200,000.00), the appealed decision is hereby AFFIRMED.SO ORDERED.Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 111448 January 16, 2002AF REALTY & DEVELOPMENT, INC. and ZENAIDA R. RANULLO,petitioners,vs.DIESELMAN FREIGHT SERVICES, CO., MANUEL C. CRUZ, JR. and MIDAS DEVELOPMENT CORPORATION,respondents.SANDOVAL-GUTIERREZ,J.:Petition for review oncertiorariassailing the Decision dated December 10, 1992 and the Resolution (Amending Decision) dated August 5, 1993 of the Court of Appeals in CA-G.R. CV No. 30133.Dieselman Freight Service Co. (Dieselman for brevity) is a domestic corporation and a registered owner of a parcel of commercial lot consisting of 2,094 square meters, located at 104 E. Rodriguez Avenue, Barrio Ugong, Pasig City, Metro Manila. The property is covered by Transfer Certificate of Title No. 39849 issued by the Registry of Deeds of the Province of Rizal.1On May 10, 1988, Manuel C. Cruz, Jr., a member of the board of directors of Dieselman, issued a letter denominated as "Authority To Sell Real Estate"2to Cristeta N. Polintan, a real estate broker of the CNP Real Estate Brokerage. Cruz, Jr. authorized Polintan "to look for a buyer/buyers and negotiate the sale" of the lot at P3,000.00 per square meter, or a total of P6,282,000.00. Cruz, Jr. has no written authority from Dieselman to sell the lot.In turn, Cristeta Polintan, through a letter3dated May 19, 1988, authorized Felicisima ("Mimi") Noble4to sell the same lot.Felicisima Noble then offered for sale the property to AF Realty & Development, Inc. (AF Realty) at P2,500.00 per square meter.5Zenaida Ranullo, board member and vice-president of AF Realty, accepted the offer and issued a check in the amount of P300,000.00 payable to the order of Dieselman. Polintan received the check and signed an "Acknowledgement Receipt"6indicating that the amount of P300,000.00 represents the partial payment of the property but refundable within two weeks should AF Realty disapprove Ranullo's action on the matter.On June 29, 1988, AF Realty confirmed its intention to buy the lot. Hence, Ranullo asked Polintan for the board resolution of Dieselman authorizing the sale of the property. However, Polintan could only give Ranullo the original copy of TCT No. 39849, the tax declaration and tax receipt for the lot, and a photocopy of the Articles of Incorporation of Dieselman.7On August 2, 1988, Manuel F. Cruz, Sr., president of Dieselman, acknowledged receipt of the said P300,000.00 as "earnest money" but required AF Realty to finalize the sale atP4,000.00per square meter.8AF Realty replied that it has paid an initial down payment of P300,000.00 and is willing to pay the balance.9However, on August 13, 1988, Mr. Cruz, Sr. terminated the offer and demanded from AF Realty the return of the title of the lot earlier delivered by Polintan.10Claiming that there was a perfected contract of sale between them, AF Realty filed with the Regional Trial Court, Branch 160, Pasig City a complaint for specific performance (Civil Case No. 56278) against Dieselman and Cruz, Jr.. The complaint prays that Dieselman be ordered to execute and deliver a final deed of sale in favor of AF Realty.11In its amended complaint,12AF Realty asked for payment of P1,500,000.00 as compensatory damages; P400,000.00 as attorney's fees; and P500,000.00 as exemplary damages.In its answer, Dieselman alleged that there was no meeting of the minds between the parties in the sale of the property and that it did not authorize any person to enter into such transaction on its behalf.Meanwhile, on July 30, 1988, Dieselman and Midas Development Corporation (Midas) executed a Deed of Absolute Sale13of the same property. The agreed price was P2,800.00 per square meter. Midas delivered to Dieselman P500,000.00 as down payment and deposited the balance of P5,300,000.00 in escrow account with the PCIBank.Constrained to protect its interest in the property, Midas filed on April 3, 1989 a Motion for Leave to Intervene in Civil Case No. 56278. Midas alleged that it has purchased the property and took possession thereof, hence Dieselman cannot be compelled to sell and convey it to AF Realty. The trial court granted Midas' motion.After trial, the lower court rendered the challenged Decision holding that the acts of Cruz, Jr. bound Dieselman in the sale of the lot to AF Realty.14Consequently, the perfected contract of sale between Dieselman and AF Realty bars Midas' intervention. The trial court also held that Midas acted in bad faith when it initially paid Dieselman P500,000.00 even without seeing the latter's title to the property. Moreover, the notarial report of the sale was not submitted to the Clerk of Court of the Quezon City RTC and the balance of P5,300,000.00 purportedly deposited in escrow by Midas with a bank was not established.1wphi1.ntThe dispositive portion of the trial court's Decision reads:"WHEREFORE, foregoing considered, judgment is hereby rendered ordering defendant to execute and deliver to plaintiffs the final deed of sale of the property covered by the Transfer Certificate of Title No. 39849 of the Registry of Deed of Rizal, Metro Manila District II, including the improvements thereon, and ordering defendants to pay plaintiffs attorney's fees in the amount of P50,000.00 and to pay the costs."The counterclaim of defendants is necessarily dismissed."The counterclaim and/or the complaint in intervention are likewise dismissed"SO ORDERED."15Dissatisfied, all the parties appealed to the Court of Appeals.AF Realty alleged that the trial court erred in not holding Dieselman liable for moral, compensatory and exemplary damages, and in dismissing its counterclaim against Midas.Upon the other hand, Dieselman and Midas claimed that the trial court erred in finding that a contract of sale between Dieselman and AF Realty was perfected. Midas further averred that there was no bad faith on its part when it purchased the lot from Dieselman.In its Decision dated December 10, 1992, the Court of Appeals reversed the judgment of the trial court holding that since Cruz, Jr. was not authorized in writing by Dieselman to sell the subject property to AF Realty, the sale was not perfected; and that the Deed of Absolute Sale between Dieselman and Midas is valid, there being no bad faith on the part of the latter. The Court of Appeals then declared Dieselman and Cruz, Jr. jointly and severally liable to AF Realty for P100,000.00 as moral damages; P100,000.00 as exemplary damages; and P100,000.00 as attorney's fees.16On August 5, 1993, the Court of Appeals, upon motions for reconsideration filed by the parties, promulgated an Amending Decision, the dispositive portion of which reads:"WHEREFORE, The Decision promulgated on October 10, 1992, is hereby AMENDED in the sense that only defendant Mr. Manuel Cruz, Jr. should be made liable to pay the plaintiffs the damages and attorney's fees awarded therein, plus the amount of P300,000.00 unless, in the case of the said P300,000.00, the same is still deposited with the Court which should be restituted to plaintiffs."SO ORDERED."17AF Realty now comes to this Court via the instant petition alleging that the Court of Appeals committed errors of law.The focal issue for consideration by this Court is who between petitioner AF Realty and respondent Midas has a right over the subject lot.The Court of Appeals, in reversing the judgment of the trial court, made the following ratiocination:"From the foregoing scenario, the fact that the board of directors of Dieselman never authorized, verbally and in writing, Cruz, Jr. to sell the property in question or to look for buyers and negotiate the sale of the subject property is undeniable."While Cristeta Polintan was actually authorized by Cruz, Jr. to look for buyers and negotiate the sale of the subject property, it should be noted that Cruz, Jr. could not confer on Polintan any authority which he himself did not have.Nemo dat quod non habet. In the same manner, Felicisima Noble could not have possessed authority broader in scope, being a mere extension of Polintan's purported authority, for it is a legal truism in our jurisdiction that a spring cannot rise higher than its source. Succinctly stated, the alleged sale of the subject property was effected through persons who were absolutely without any authority whatsoever from Dieselman."The argument that Dieselman ratified the contract by accepting the P300,000.00 as partial payment of the purchase price of the subject property is equally untenable. The sale of land through an agent without any written authority is void.x x x x x x x x x"On the contrary, anent the sale of the subject property by Dieselman to intervenor Midas, the records bear out that Midas purchased the same from Dieselman on 30 July 1988. The notice oflis pendenswas subsequently annotated on the title of the property by plaintiffs on 15 August 1988. However, this subsequent annotation of the notice oflis pendenscertainly operated prospectively and did not retroact to make the previous sale of the property to Midas a conveyance in bad faith. A subsequently registered notice oflis pendenssurely is not proof of bad faith. It must therefore be borne in mind that the 30 July 1988 deed of sale between Midas and Dieselman is a document duly certified by notary public under his hand and seal. x x x. Such a deed of sale being public document acknowledged before a notary public is admissible as to the date and fact of its execution without further proof of its due execution and delivery (Bael vs. Intermediate Appellate Court, 169 SCRA617; Joson vs. Baltazar, 194 SCRA 114) and to prove the defects and lack of consent in the execution thereof, the evidence must be strong and not merely preponderant x x x."18We agree with the Court of Appeals.Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall be exercised by the board of directors. Just as a natural person may authorize another to do certain acts in his behalf, so may the board of directors of a corporation validly delegate some of its functions to individual officers or agents appointed by it.19Thus, contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board.20Absent such valid delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of the corporation, but not in the course of, or connected with, the performance of authorized duties of such director, are held not binding on the corporation.21In the instant case, it is undisputed that respondent Cruz, Jr. has no written authority from the board of directors of respondent Dieselman to sell or to negotiate the sale of the lot, much less to appoint other persons for the same purpose. Respondent Cruz, Jr.'s lack of such authority precludes him from conferring any authority to Polintan involving the subject realty. Necessarily, neither could Polintan authorize Felicisima Noble. Clearly, the collective acts of respondent Cruz, Jr., Polintan and Noble cannot bind Dieselman in the purported contract of sale.Petitioner AF Realty maintains that the sale of land by an unauthorized agent may be ratified where, as here, there is acceptance of the benefits involved. In this case the receipt by respondent Cruz, Jr. from AF Realty of the P300,000.00 as partial payment of the lot effectively binds respondent Dieselman.22We are not persuaded.Involved in this case is a sale of landthrough an agent. Thus, the law on agency under the Civil Code takes precedence. This is well stressed inYao Ka Sin Trading vs. Court of Appeals:23"Since a corporation, such as the private respondent, can act only through its officers and agents, all acts within the powers of said corporationmay be performed by agents of its selection; and, except so far as limitations or restrictions may be imposed by special charter, by-law, or statutory provisions,thesame general principles of law which govern the relation of agency for a natural person govern the officer or agent of a corporation, of whatever status or rank, in respect to hispower to act for the corporation;and agents when once appointed,ormembers acting in their stead,are subject to thesame rules, liabilities, and incapacities as are agents of individuals and private persons." (Emphasis supplied)Pertinently, Article 1874 of the same Code provides:"ART. 1874. When asale of piece of landor any interest therein isthrough an agent, theauthorityof the lattershallbe in writing;otherwise,the sale shall be void." (Emphasis supplied)Considering that respondent Cruz, Jr., Cristeta Polintan and Felicisima Ranullo were not authorized by respondent Dieselman to sell its lot, the supposed contract is void. Being a void contract, it is not susceptible of ratification by clear mandate of Article 1409 of the Civil Code, thus:"ART. 1409. The followingcontractsareinexistent and void from the very beginning:x x x(7) Thoseexpressly prohibitedordeclared void by law."These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived." (Emphasis supplied)Upon the other hand, the validity of the sale of the subject lot to respondent Midas is unquestionable. As aptly noted by the Court of Appeals,24the sale was authorized by a board resolution of respondent Dieselman dated May 27, 1988.1wphi1.ntThe Court of Appeals awarded attorney's fees and moral and exemplary damages in favor of petitioner AF Realty and against respondent Cruz, Jr.. The award was made by reason of a breach of contract imputable to respondent Cruz, Jr. for having acted in bad faith. We are no persuaded. It bears stressing that petitioner Zenaida Ranullo, board member and vice-president of petitioner AF Realty who accepted the offer to sell the property, admitted in her testimony25that a board resolution from respondent Dieselman authorizing the sale is necessary to bind the latter in the transaction; and that respondent Cruz, Jr. has no such written authority. In fact, despite demand, such written authority was not presented to her.26This notwithstanding, petitioner Ranullo tendered a partial payment for the unauthorized transaction. Clearly, respondent Cruz, Jr. should not be held liable for damages and attorney's fees.WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are herebyAFFIRMEDwithMODIFICATIONin the sense that the award of damages and attorney's fees is deleted. Respondent Dieselman is ordered to return to petitioner AF Realty its partial payment of P300,000.00. Costs against petitioners.SO ORDERED.CUATON VS. SALUDOn January 5, 1993, respondent Rebecca Salud, joined by her husband Rolando Salud, instituted a suit for foreclosure of real estate mortgage with damages against petitioner Mansueto Cuaton and his mother, Conchita Cuaton, with the Regional Trial Court of General Santos City, Branch 35, docketed as SPL. Civil Case No. 359. The trial court rendered a decision declaring the mortgage constituted on October 31, 1991 as void, because it was executed by Mansueto Cuaton in favor of Rebecca Salud without expressly stating that he was merely acting as a representative of Conchita Cuaton, in whose name the mortgaged lot was titled. The court ordered petitioner to pay Rebecca Salud,inter alia, the loan secured by the mortgage in the amount of One Million Pesos plus a total P610,000.00 representing interests of 10% and 8% per month for the period February 1992 to August 1992.ISSUE: whether the 8% and 10% monthly interest rates imposed on the one-million-peso loan obligation of petitioner to respondent Rebecca Salud are valid? NO.RULING:InRuiz v. Court of Appeals,we declared that the Usury Law was suspended by Central Bank Circular No. 905, s. 1982, effective on January 1, 1983, and that parties to a loan agreement have been given wide latitude to agree on any interest rate. However, nothing in the said Circular grants lenderscarte blancheauthority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets. The stipulated interest rates are illegal if they are unconscionable.Thus, inMedel v. Court of Appeals, andSpouses Solangon v. Salazar,the Court annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00 loan and a 6% per month or 72% per annum interest on a P60,000.00 loan, respectively, for being excessive, iniquitous, unconscionable and exorbitant. In both cases, the interest rates were reduced to 12% per annum.In the present case, the 10% and 8% interest rates per month on the one-million-peso loan of petitioner are even higher than those previously invalidated by the Court in the above cases. Accordingly, the reduction of said rates to 12% per annum is fair and reasonable.Stipulations authorizing iniquitous or unconscionable interests are contrary to morals (contra bonos mores), if not against the law. Under Article 1409 of the Civil Code, these contracts are inexistent and void from the beginning. They cannot be ratified nor the right to set up their illegality as a defense be waived.OUANO VS. CAThe point of the controversy of this case is a parcel of land situated in Cebu registered in the name of the Development Bank of the Philippines (DBP). Adjoining the said Lot are lands belonging to PR Echavez and P, Ouano. What will have to be resolved are the conflicting claims over this lot by the vendee thereof, Echavez, and Ouano.The property was offered for sale by public bidding by the RFC.. Actually this was the second public bidding scheduled for the property. The first in which both Ouano and Echavez participated, together with others was nullified on account of a protest by Ouano.Now, it appears that prior to the second bidding, Ouano and Echavez orally agreed that only Echavez would make a bid, and that if it was accepted, they would divide the property in proportion to their adjoining properties. To ensure success of their enterprise, they also agreed to induce the only other party known to be interested in the property-a group headed by a Mrs. Bonsucan to desist from presenting a bid. They broached the matter to Mrs. Bonsucan's group. The latter agreed to withdraw, as it did in fact withdraw from the sale; and Ouano's wife paid it P2,000 as reimbursement for its expenses.As expected, the highest bid submitted, and thus accepted by the RFC, was that of Francisco Echavez, who offered P27,826.00 for the land .Echavez paid the sum of P5,565.00 representing 20% deposit of the prefferred price.A week later, Echavez sent a letter to Ouano regarding the P2,000.00 paid by the latter's wife to the Bonsucan group. The content of the letter stated that Echavez will give a 250sq. m. lot to Ouano in lieu of the 2k. Thereafter, the parties agreed and executed an Agreement. However, the RFC never approved the sharing agreement between Echavez and Ouano concerning Lot 3-A-1. It approved the sale of the lot to Echavez only, on May 9, 1958, on the condition that the purchase price of P27,825.00 be paid in cash. Apparently Echavez found great initial difficulty in complying with this condition. It took all of four years, and patient negotiation and diligent effort on his part, for him ultimately to acquire title to the property, which came about in December, 1963. Ouano, in his turn, tried to have DBP either accept and implement his sharing agreement with Echavez, or allow him to pay the full price of the lot in Echavez's behalf. By his own account, he sent a letter to the DBP, "handcarried by his wife," "requesting among others, that he be permitted to pay immediately either for his share but the Bank turned down his request.

Shortly after his representation with the DBP were rebuffed more precisely on June 24, 1963, months before the deed of absolute sale was executed by the DBP in Echavez's favor Paterno J. Ouano filed suit for "specific performance and reconveyance" in the Court of First Instance of Cebu against Francisco Echavez and the Development Bank of the Philippines (DBP).

RULING:

Two material facts, however, about which Ouano and Echavez are in agreement, render these questions of academic interest only, said facts being determinative of this dispute on an altogether different ground. These facts are:1) that they bad both orally agreed that only Echavez would make a bid at the second bidding called by the RFC, and that if it was accepted, they would divide the property in proportion to their adjoining properties; and2) that to ensure success of their scheme, they had also agreed to induce the only other party known to be interested in the property a group headed by a Mrs. Bonsucan to desist from presenting a bid, as they did succeed in inducing Mrs. Bonsucan's group to withdraw from the sale, paying said group P2,000 as reimbursement for its expenses.These acts constitute a crime, as the Trial Court has stressed. Ouano and Echavez had promised to share in the property in question as a consideration for Ouano's refraining from taking part in the public auction, and they had attempted to cause and in fact succeeded in causing another bidder to stay away from the auction. in order to cause reduction of the price of the property auctioned In so doing, they committed the felony ofmachinations in public auctionsdefined and penalized in Article 185 of the Revised Penal Code,supra.That both Ouano and Echavez did these acts is a matter of record, as is the fact that thereby only one bid that of Echavez was entered for the 'land in consequence of which Echavez eventually acquired it. The agreement therefore being criminal in character, the parties not only have no action against each other but are both liable to prosecution and the things and price of their agreement subject to disposal according to the provisions of the criminal code. This, in accordance with the so-calledpari delictoprinciple set out in the Civil Code.Article 1409 of said Code declares as "inexistent and void from the beginning" those contracts, among others, "whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy," or "expressly prohibited ... by law." Such contracts "cannot be ratified "the right to set up the defense of illegality (cannot) be waived;" and, Article 1410 adds, the "action or defense for the declaration of the inexistence ... (thereof) does not prescribe." Furthermore, according to Article 1411 of the same Code ... When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover,the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract.xxx xxx xxxThe dismissal of Ouano's action by both the Trial Court and the Court of Appeals was thus correct, being plainly in accord with the Civil Code provisions just referred to. Article 1411 also dictates the proper disposition of the land involved, i.e., "the forfeiture of the proceeds of the crime and the instruments or tools with which it was committed," as mandated by the provisions of Article 45 of the Revised Penal Code, this being obviously the provision "of the Penal Code relative to the disposal of effects or instruments of a crime" that Article 1411 makes "applicable to the things or the price of the contract."The subject lot was forfeited in favor of the government.

BUENAVENTURA VS. CAJulian Caia, was the occupant and tenant of a parcel of land, owned by the Republic of the Philippines but administered at first by the then Rural Progress Administration and later by the Peoples Homesite and Housing Corporation (PHHC).The Republic of the Philippines acquired the aforesaid lot, together with other lots in the Gonzales Estate by Expropriation to be resold to qualified and bonafide tenants-occupants and, to achieve this end, the President of the Philippines, designated the PHHC with the task of selling and transferring the said lots to qualified tenants concerned and/or their lawful heirs.Julian Caia had a brother, Justo Caia. The latter had three children, namely, Emeteria Buenaventura, Lorenzo Caia and Francisca Caia. Emeteria Buenaventura died and was survived by Maria Buenaventura and Narciso Buenaventura, the Private Respondents in this case.On November 4, 1965, the People Homesite and Housing Corporation executed a 'Deed of Absolutes Sale' over the said lot to Lorenzo Caia and Francisca Caia-Rivera, as the sole heirs and successor-in-interest of Julian Caia for and in consideration of the purchase price of P96,048.80. The following day Title were issued in the name of the latter.On January 26, 1966, Lorenzo Caia and Francisca Caia-Rivera executed a 'Deed of Absolutes Sale' over the said lot in favor of Francisco M. Custodio after which the latter was issued on January 26, 1966 a new TCT issued in his name as the owner.On January 26, 1966, Francisco Custodio executed a 'Deed of Absolute Sale' over the said lot in favor of the Petitioner for which the latter was issued on January 26, 1966.On December 24, 1976, Petitioner filed a complaint for Annulment of Titles, Contracts and/or Sales. Reconveyance and Damages.RTC ruled in favor of the PR. Aggrieved by the rules of the trial court, herein private respondents filed a petition with the Court of Appeals which later granted and ordered the dismissal of the complaint of then private respondents, now herein petitioners, on the ground that their action has already prescribed.ISSUE: WON Art. 1410 is applicable in the instant case? NO.RULING:The Court of Appeals, in directing the dismissal of the complaint filed by the petitioners in the court of origin, held that Article 1410 of the Civil Code on imprescriptibility of actions is not applicable because fraud in the transfer of the property was alleged in petitioner's complaint.Petitioners' allegation in their complaint filed in the court of origin, that fraud was employed in the execution of a deed of sale and subsequently, in the issuance of a transfer certificate of title, renders their action for reconveyance susceptible to prescription either within 4 years or 10 years.In the present case, even if one bends backwards and considers the circumstances alleged as having created an implied or constructive trust, such that the action for reconveyance would prescribed in the longer period of 10 years, still petitioners' action is plainly time-barred. Considering that the deed of sale executed by the Philippine Homesite and Housing Corporation in favor of Lorenzo Caia and Francisca Caia-Rivera was executed on November 4, 1965 and on the following day, Transfer Certificate of Title No. 21484 was issued in favor of the vendees (private respondents), the party allegedly defrauded in the transaction, herein petitioners, had only 10 years or until September 5, 1975 within which to file the appropriate action. In the instant case, the action was filed only on December 28, 1976, which was beyond the prescribed period set by law.Verily, the principle on prescription of actions is designed to cover situations such as the case at bar, where there have been a series of transfers to innocent purchasers for value. To set aside these transactions only to accommodate a party who has slept on his rights is anathema to good order.GOCHAN VS. HEIRS OF BABAThe facts show that Lot No. 3537, a conjugal property of spouses Raymundo Baba and Dorotea Inot. After Raymundos demise in 1947, an extrajudicial settlement of his estate, including Lot No. 3537, was executed among the heirs of Raymundo, namely, Dorotea Inot and his 2 children, Victoriano Baba and Gregorio Baba.One-half undivided portion of the lot was adjudicated in favor of Dorotea, and the other half divided between Victoriano and Gregorio.On December 28, 1966, Dorotea, Victoriano and Gregorio, in consideration of the amount of P2,346.70, sold Lot No. 3537 to petitioner Felix Gochan and Sons Realty Corporation (Gochan Realty).Sometime in 1995, Gocahn Realty entered into a joint venture agreement with Sta. Lucia Realty and Development Corporation Inc. for the development, among others, of Lot No. 3537, into a subdivision. On June 13, 1996, respondents Bestra, Maricel, Crecencia, Antonio and Petronila, all surnamed Baba, filed a complaint for quieting of title and reconveyance with damages against petitioners with the RTC of Lapu-Lapu City, they alleged that they are among the 7 children of Dorotea Inot and Raymundo Baba; that petitioners connived with Dorotea Inot, Victoriano and Gregorio Baba in executing the extrajudicial settlement and deed of sale which fraudulently deprived them of their hereditary share in Lot No. 3537; and that said transactions are void insofar as their respective shares are concerned because they never consented to the said sale and extrajudicial settlement, which came to their knowledge barely a year prior to the filing of the complaint. In its answer, petitioner Gochan Realty averred that respondents have no personality to sue because they are not children of Dorotea Inot and Raymundo Baba; that even assuming they are lawful heirs of the spouses, their action is barred by estoppel, laches and prescription for having been filed more than 28 years after the issuance of the transfer certificate of title in its name.ISSUE: Whether or not respondents complaint is dismissible on the ground of prescription? NO.RULING:Under Article 1318 of the Civil Code, there is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation. The absence of any of these essential requisites renders the contract inexistent and an action or defense to declare said contract voidab initiodoes not prescribe, pursuant to Article 1410 of the same Code.In actions for reconveyance of property predicated on the fact that the conveyance complained of was null and void ab initio, a claim of prescription of action would be unavailing. The action or defense for the declaration of the inexistence of a contract does not prescribeLikewise, in the cases of Solomon v. Intermediate Appellate Court,Vda. De Portugal v. Intermediate Appellate Court,Garanciang v. Garanciang,and Lacsamana v. Court of Appeals,the Court ruled that conveyances by virtue of a forged signature or a fictitious deed of sale are void ab initio. The absence of the essential requites of consent and cause or consideration in these cases rendered the contract inexistent and the action to declare their nullity is imprescriptible.ARROYO VS. CAThe Court summarized the facts of the case in this manner:Dr. Jorge B. Neri filed a criminal complaint for adultery before the Regional Trial Court (RTC) of Benguet against his wife, Ruby Vera Neri, and Eduardo Arroyo.The RTC convicted petitioner and Mrs. Ruby Vera Neri of adultery as defined under Article 333 of the Revised Penal Code.The essential facts of the case, as found by the trial court and the Court of Appeals, are as follows:... On November 2, 1982, accused, Mrs. Ruby Vera Neri in the company of Mrs. Linda Sare and witness Jabunan, took the morning plane to Baguio. Arriving at around 11:00 a.m., they dropped first at the house of Mrs. Vera, mother of Ruby Vera at Crystal Cave, Baguio City then proceeded to the Mines View Park Condominium of the Neri spouses. At around 7:00 o' clock in the evening, accused Eduardo Arroyo arrived at the Neris' condominium. Witness opened the door for Arroyo who entered, he went down to and knocked at the master's bedroom where accused Ruby Vera Neri and her companion Linda Sare were. On accused Ruby Vera Neri's request, Linda Sare left the master's bedroom and went upstairs to the sala leaving the two accused. About forty-five minutes later, Arroyo Jr. came up and told Linda Sare that she could already come down. Three of them, thereafter, went up to the sala then left the condominium. Petitioner Arroyo filed a Motion for Reconsideration of the Court of Appeals' Decision. Petitioner Ruby Vera Neri also moved for reconsideration or a new trial, contending that a pardon had been extended by her husband, private complainant Dr. Jorge B. Neri, and that her husband had later con traded marriage with another woman with whom he is presently co-habiting. Both motions were denied by the Court of Appeals.ISSUE: Whether or not Dr. Neri's extra-marital affair precludes him from filing the criminal complaint on the ground ofpari delicto? NO.RULING:We turn to the contention thatpari-delicto"is a valid defense to a prosecution for adultery and concubinage and that in such a case "it would be only a hypocritical pretense for such spouse to appear in court as the offended spouse."In the first place, the case cited does not support petitioner Neri's position. In theGuinucudcase, the Court found that the complaining husband, by entering into an agreement with his wife that each of them were to live separately and could marry other persons and by filing complaint only about a year after discovering his wife's infidelity, had "consented to, and acquiesced in, the adulterous relations existing between the accused, and he is, therefore, not authorized by law to institute the criminal proceedings." In fine, theGuinucudcase refers not to the notion ofpari delictobut to consent as a bar to the institution of the criminal proceedings.In the present case, no such acquiescence can be implied: the accused did not enter into any agreement with Dr. Neri allowing each other to marry or cohabit with other persons; and Dr. Neri promptly filed his complaint after discovering the illicit affair.Moreover, the concept ofpari delictois not found in the Revised Penal Code, but only in Article 1411 of the Civil Code. The Court notes that Article 1411 of the Civil Code relates only to contracts with illegal consideration. The case at bar does not involve any illegal contract which either of the contracting parties is now seeking to enforce.PAJUYO VS. CAIn June 1979, petitioner Pajuyo paidP400 to a certain Pedro Perez for the rights over a 250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house made of light materials on the lot. Pajuyo and his family lived in the house from 1979 to 7 December 1985.On 8 December 1985, Pajuyo and private respondent Eddie Guevarra executed aKasunduanor agreement. Pajuyo, as owner of the house, allowed Guevarra to live in the house for free provided Guevarra would maintain the cleanliness and orderliness of the house. Guevarra promised that he would voluntarily vacate the premises on Pajuyos demand.In September 1994, Pajuyo informed Guevarra of his need of the house and demanded that Guevarra vacate the house. Guevarra refused.Pajuyo filed an ejectment case against Guevarra with the MTC of Quezon City.In his Answer, Guevarra claimed that Pajuyo had no valid title or right of possession over the lot where the house stands because the lot is within the 150 hectares set aside by Proclamation No. 137 for socialized housing. Guevarra pointed out that from December 1985 to September 1994, Pajuyo did not show up or communicate with him. Guevarra insisted that neither he nor Pajuyo has valid title to the lot.ISSUE: WON the parties are in pari delicto being both squatters, therefore, illegal occupants over the contested parcel of land? NO.

RULING:

The principle ofpari delicto will not applyto this case.Articles 1411 and 1412 of the Civil Code embody the principle ofpari delicto. We explained the principle of pari delicto in these words:The rule of pari delicto is expressed in the maxims ex dolo malo non eritur actio and in pari delicto potior est conditio defedentis. The law will not aid either party to an illegal agreement. It leaves the parties where it finds them.The application of the pari delicto principle is not absolute, as there are exceptions to its application. One of these exceptions is where the application of the pari delicto rule would violate well-established public policy.InDrilon v. Gaurana, the SC reiterated the basic policy behind the summary actions of forcible entry and unlawful detainer. The application of the principle ofpari delictoto a case of ejectment between squatters is fraught with danger. To shut out relief to squatters on the ground ofpari delictowould openly invite mayhem and lawlessness. A squatter would oust another squatter from possession of the lot that the latter had illegally occupied, emboldened by the knowledge that the courts would leave them where they are. Nothing would then stand in the way of the ousted squatter from re-claiming his prior possession at all cost.Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery of possession seek to prevent. Even the owner who has title over the disputed property cannot take the law into his own hands to regain possession of his property. The owner must go to court.Courts must resolve the issue of possession even if the parties to the ejectment suit are squatters. The determination of priority and superiority of possession is a serious and urgent matter that cannot be left to the squatters to decide. To do so would make squatters receive better treatment under the law. The law restrains property owners from taking the law into their own hands. However, the principle ofpari delictoas applied by the Court of Appeals would give squatters free rein to dispossess fellow squatters or violently retake possession of properties usurped from them. Courts should not leave squatters to their own devices in cases involving recovery of possession.

CITY OF ANGELES VS. CAA Deed of Donation was executed where it stated that the private respondent donated to the City of Angeles, 51 parcels of land situated in Barrio Pampang, City of Angeles, with an aggregate area of 50,676 square meters, more or less, part of a bigger area also belonging to private respondent. The pertinent consitionds in the deedprovided, among others, that:2. The properties donated shall be devoted as a Sports Complex.3. No commercial building, commercial complex, market or any other similar complex, mass or tenament (sic) housing/building(s) shall be constructed in the properties donated nor shall cockfighting, be allowed in the premises.8. Any substantial breach of the foregoing provisos shall entitle the DONOR to revoke or rescind this Deed of Donation, and in such eventuality, the DONEE agrees to vacate and return the premises, together with all improvements, to the DONOR peacefully without necessity of judicial action.On July 19, 1988, petitioners started the construction of a drug rehabilitation center on a portion of the donated land. Upon learning thereof, private respondent protested such action for being violative of the terms and conditions of the amended deed and prejudicial to its interest and to those of its clients and residents. Private respondent also offered another site for the rehabilitation center. However, petitioners ignored the protest, maintaining that the construction was not violative of the terms of the donation. The alternative site was rejected because, according to petitioners, the site was too isolated and had no electric and water facilities.On August 8, 1988, private respondent filed a complaint with the RTC in Angeles City against the petitioners, alleging breach of the conditions imposed in the amended deed of donation and seeking the revocation of the donation and damages, with preliminary injunction and/or temporary restraining order to halt the construction of the said center.ISSUE: WON revocation of the donated property will prosper? NO.PRS DEFENSE: The private respondent contends that the building of said drug rehabilitation center is violative of the Deed of Donation. Therefore, under Article 764 of the New Civil Code and stipulation no. 8 of the deed, private respondent is empowered to revoke the donation when the donee has failed to comply with any of the conditions imposed in the deed.RULING:We disagree. Article 1412 of the Civil Code which provides that:If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking;comes into play here. Both petitioners and private respondents are in violation of P.D. 957 as amended, for donating and accepting a donation of open space less than that required by law, and for agreeing to build and operate a sports complex on the non-buildable open space so donated; and petitioners, for constructing a drug rehabilitation center on the same non-buildable area.Moreover, since the condition to construct a sport complex on the donated land has previously been shown to be contrary to law, therefore, stipulation no. 8 of the amended deed cannot be implemented because (1) novalid stipulation of the amended deed had been breached, and (2) it is highly improbable that the decree would have allowed the return of the donated land for open space under any circumstance, considering the non-alienable character of such open space, in the light of the second Whereas clause of P.D. 1216 which declares that . . . such open spaces, roads, alleys and sidewalks in residential subdivisions are for public use and are,therefore, beyond the commerce of men.Further, as a matter of public policy, private respondent cannot be allowed to evade its statutory obligation to donate the required open space through the expediency of invoking petitioners breach of the aforesaid condition. It is a familiar principle that the courts will not aid either party to enforce an illegal contract, but will leave them both where they find them. Neither party can recover damages from the other arising from the act contrary to law, or plead the same as a cause of action or as a defense. Each must bear the consequences of his own acts.There is therefore no legal basis whatsoever to revoke the donation of the subject open space and to return the donated land to private respondent. The donated land should remain with the donee as the law clearly intended such open spaces to be perpetually part of the public domain, non-alienable and permanently devoted to public use as such parks, playgrounds or recreation areas.

CDB VS. CYRUS LIMPetitioners Cavite Development Bank (CDB) and Far East Bank and Trust Company (FEBTC) are banking institutions duly organized and existing under Philippine laws.On or about June 15, 1983, a certain Rodolfo Guansing obtained a loan in the amount of P90,000.00 from CDB, to secure which he mortgaged a parcel of land registered in his name. As Guansing defaulted in the payment of his loan, CDB foreclosed the mortgage. At the foreclosure sale the mortgaged property was sold to CDB as the highest bidder. Guansing failed to redeem, and on March 2, 1987, CDB consolidated title to the property in its name.On June 16, 1988, private respondent Lolita Chan Lim, assisted by a broker named Remedios Gatpandan, offered to purchase the property from CDB. The written Offer to Purchase, signed by Lim and Gatpandan, states in part:We hereby offer to purchase your property at #63 Calavite and Retiro Sts., La Loma, Quezon City for P300,000.00 under the following terms and conditions:(1) 10% Option Money;(2) Balance payable in cash;(3) Provided that the property shall be cleared of illegal occupants or tenants.Pursuant to the foregoing terms and conditions of the offer, Lim paid CDB P30,000.00 as Option Money. However, after some time following up the sale, Lim discovered that the subject property was originally registered in the name of Perfecto Guansing, father of mortgagor Rodolfo Guansing. Rodolfo succeeded in having the property registered in his name, the same title he mortgaged to CDB and from which the latter's title was derived. It appears, however, that the father, Perfecto, instituted Civil Case No. Q-39732 in the Regional Trial Court, Branch 83, Quezon City, for the cancellation of his son's title.On March 23, 1984, the trial court rendered a decision2restoring Perfecto's previous title (TCT No. 91148) and cancelling TCT No. 300809 on the ground that the latter was fraudulently secured by Rodolfo. This decision has since become final and executory.

Aggrieved by what she considered a serious misrepresentation by CDB and its mother-company, FEBTC, on their ability to sell the subject property, Lim, joined by her husband, filed an action for specific performance and damages against petitioners in the Regional Trial Court of Quezon City.RTC ruled in favor of the Lim spouses and further ordered to pay the petitioners for damages.CA affirmed the decision of the RTC in toto.ISSUE: WON the Court of Appeals erred in ordering petitioners to pay moral damages, exemplary damages, attorney's fees and costs of suit? NO.RULING:In this case, the sale by CDB to Lim of the property mortgaged by Rodolfo Guansing is deemed a nullity for CDB did not have a valid title to the said property. CDB never acquired a valid title to the property because the foreclosure sale, by virtue of which, the property had been awarded to CDB as highest bidder, is likewise void since the mortgagor was not the owner of the property foreclosed.

We now come to the civil effects of the void contract of sale between the parties. Article 1412(2) of the Civil Code provides:If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:x x x x x x x x x(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise.Private respondents are thus entitled to recover the P30,000,00 option money paid by them. Moreover, since the filing of the action for damages against petitioners amounted to a demand by respondents for the return of their money, interest thereon at the legal rate should be computed from August 29, 1989, the date of filing of Civil Case No. Q-89-2863, not June 17, 1988, when petitioners accepted the payment. This is in accord with our ruling in Castillo v.Abalayan that in case of a void sale, the seller has no right whatsoever to keep the money paid by virtue thereof and should refund it, with interest at the legal rate, computed from the date of filing of the complaint until fully paid. Indeed, Art. 1412(2) which provides that the non-guilty party "may demand the return of what he has given" clearly implies that without such prior demand, the obligation to return what was given does not become legally demandable.Considering CDB's negligence, we sustain the award of moral damages on the basis of Arts. 21 and 2219 of the Civil Code and our ruling inTan v.Court of Appeals that moral damages may be recovered even if a bank's negligence is not attended with malice and bad faith.

DE LEON VS. CAOn October 18, 1969, private respondent Jose Vicente De Leon and petitioner Sylvia Lichauco De Leon were united in wedlock before the Municipal Mayor of Binangonan, Rizal. On August 28, 1971, a child named Susana L. De Leon was born from this union.Sometime in October, 1972, a de facto separation between the spouses occured due to irreconcilable marital differences, with Sylvia leaving the conjugal home. Sometime in March, 1973, Sylvia went to the United States where she obtained American citizenship.On November 23, 1973, Sylvia filed with the Superior Court of California, a petition for dissolution of marriage against Jose Vicente. In the said divorce proceedings, Sylvia also filed claims for support and distribution of properties. It appears, however, that since Jose Vicente was then a Philippine resident and did not have any assets in the United States, Sylvia chose to hold in abeyance the divorce proceedings, and in the meantime, concentrated her efforts to obtain some sort of property settlements with Jose Vicente in the Philippines.Thus, on March 16, 1977, Sylvia succeeded in entering into a Letter-Agreement with her mother-in-law, private respondent Macaria De Leon.On the same date, Macaria made cash payments to Sylvia in the amount of P100,000 and US$35,000.00 or P280,000.00, in compliance with her obligations as stipulated in the aforestated Letter-Agreement.On March 30, 1977, Sylvia and Jose Vicente filed before the then Court of First Instance of Rizal a joint petition for judicial approval of dissolution of their conjugal partnership.Afterex-partehearings, the trial court issued an Order dated February 19, 1980 approving the petition.On March 17, 1980, Sylvia moved for the execution of the above-mentioned order. However, Jose Vicente moved for a reconsideration of the order alleging that Sylvia made a verbal reformation of the petition as there was no such agreement for the payment of P4,500.00 monthly support to commence from the alleged date of separation and that there was no notice given to him that Sylvia would attempt verbal reformation of the agreement contained in the joint petition.

While the said motion for reconsideration was pending resolution, Macaria filed with the trial court a motion for leave to intervene alleging that she is the owner of the properties involved in the case. The motion was granted.

On October 29, 1980, Macaria assisted by her husband filed her complaint in intervention. She assailed the validity and legality of the Letter-Agreement which had for its purpose, according to her, the termination of marital relationship between Sylvia and Jose Vicente.

ISSUE: WON the Letter-Agreement is valid? NO.

RULING:Article 1306 of the New Civil Code provides:Art. 1306. The contracting parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.If the stipulation is contrary to law, morals or public policy, the contract is void and inexistent from the beginning.Art. 1409. The following contracts are inexistent and void from the beginning:Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;xxx xxx xxx(7) Those expressly prohibited or declared void by law.These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

From the foregoing provisions of the New Civil Code, this court is of the considered opinion and so holds that the Letter-Agreement premised on the termination of marital relationship is not only contrary to law but contrary to Filipino morals and public Policy. As such, any agreement or obligations based on such unlawful consideration and which is contrary to public policy should be deemed null and void.

In the ultimate analysis, therefore, both parties acted in violation of the laws. However, thepari delictorule, expressed in the maxims "Ex dolo malo non oritur actio" and "In pari delicto potior est conditio defendentis," which refuses remedy to either party to an illegal agreement and leaves them where they are, does not apply in this case.Article 1414 of the Civil Code, which is an exception to thepari delictorule, is the proper law to be applied. It provides:When money is paid or property delivered for an illegal purpose, the contract may be repudiated by one of the parties before the purpose has been accomplished, or before any damage has been caused to a third person. In such case, the courts may, if the public interest wig thus be subserved, allow the party repudiating the contract to recover the money or property.Since the Letter-Agreement was repudiated before the purpose has been accomplished and to adhere to thepari delictorule in this case is to put a premium to the circumvention of the laws, positive relief should be granted to Macaria. Justice would be served by allowing her to be placed in the position in which she was before the transaction was entered into.

Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. 143958 July 11, 2003ALFRED FRITZ FRENZEL,petitioner,vs.EDERLINA P. CATITO,respondent.CALLEJO, SR.,J.:Before us is a petition for review of the Decision1of the Court of Appeals in CA-G.R. CV No. 53485 which affirmed the Decision2of the Regional Trial Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the petitioner's complaint, and the resolution of the Court of Appeals denying his motion for reconsideration of the said decision.The Antecedents3As gleaned from the evidence of the petitioner, the case at bar stemmed from the following factual backdrop:Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical engineer by profession, but worked as a pilot with the New Guinea Airlines. He arrived in the Philippines in 1974, started engaging in business in the country two years thereafter, and married Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresita separated from bed and board without obtaining a divorce.Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He went to King's Cross, a night spot in Sydney, for a massage where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred, she resided for a time in Germany and was married to Klaus Muller, a German national. She left Germany and tried her luck in Sydney, Australia, where she found employment as amasseusein the King's Cross nightclub. She was fluent in German, and Alfred enjoyed talking with her. The two saw each other again; this time Ederlina ended up staying in Alfred's hotel for three days. Alfred gave Ederlina sums of money for her services.4Alfred was so enamored with Ederlina that he persuaded her to stop working at King's Cross, return to the Philippines, and engage in a wholesome business of her own. He also proposed that they meet in Manila, to which she assented. Alfred gave her money for her plane fare to the Philippines. Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his proposal for Ederlina to stay in the Philippines and engage in business, even offering to finance her business venture. Ederlina was delighted at the idea and proposed to put up a beauty parlor. Alfred happily agreed.Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred proposed marriage to Ederlina, but she replied that they should wait a little bit longer.Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita, Manila, owned by one Atty. Jose Hidalgo who offered to convey his rights over the property for P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put up a beauty parlor on the property under the business name Edorial Beauty Salon, and had it registered with the Department of Trade and Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for his right over the property and gave P300,000.00 to Ederlina for the purchase of equipment and furniture for the parlor. As Ederlina was going to Germany, she executed a special power of attorney on December 13, 19835appointing her brother, Aser Catito, as her attorney-in-fact in managing the beauty parlor business. She stated in the said deed that she was married to Klaus Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and found it unsuitable for her. He decided to purchase a house and lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City, covered by Transfer Certificate of Title No. 218429 for US$20,000.00. Since Alfred knew that as an alien he was disqualified from owning lands in the Philippines, he agreed that only Ederlina's name would appear in the deed of sale as the buyer of the property, as well as in the title covering the same. After all, he was planning to marry Ederlina and he believed that after their marriage, the two of them would jointly own the property. On January 23, 1984, a Contract to Sell was entered into between Victoria Binuya Steckel as the vendor and Ederlina as the sole vendee. Alfred signed therein as a witness.6Victoria received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as partial payment, for which Victoria issued a receipt.7When Victoria executed the deed of absolute sale over the property on March 6, 1984,8she received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final and full payment. Victoria likewise issued a receipt for the said amount.9After Victoria had vacated the property, Ederlina moved into her new house. When she left for Germany to visit Klaus, she had her father Narciso Catito and her two sisters occupy the property.Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and sold his fiber glass pleasure boat to John Reid for $7,500.00 on May 4, 1984.10He also sold his television and video business in Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd.11He had his personal properties shipped to the Philippines and stored at No. 14 Fernandez Street, San Francisco del Monte, Quezon City. The proceeds of the sale were deposited in Alfred's account with the Hong Kong Shanghai Banking Corporation (HSBC), Kowloon Branch under Bank Account No. 018-2-807016.12When Alfred was in Papua New Guinea selling his other properties, the bank sent telegraphic letters updating him of his account.13Several checks were credited to his HSBC bank account from Papua New Guinea Banking Corporation, Westpac Bank of Australia and New Zealand Banking Group Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings account with HSBC, Manila, under Savings Account No. 01-725-183-01.14Once, when Alfred and Ederlina were in Hong Kong, they opened another account with HSBC, Kowloon, this time in the name of Ederlina, under Savings Account No. 018-0-807950.15Alfred transferred his deposits in Savings Account No. 018-2-807016 with the said bank to this new account. Ederlina also opened a savings account with the Bank of America Kowloon Main Office under Account No. 30069016.16On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany. Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and had a blissful married life until Alfred intruded therein. Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and discovered the same sometime in November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina alone and to return her to him, saying that Alfred could not possibly build his future on his (Klaus') misfortune.17Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was any truth to Klaus' statements and Sally confirmed that Klaus was married to Ederlina. When Alfred confronted Ederlina, she admitted that she and Klaus were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred was appeased. He agreed to continue the amorous relationship and wait for the outcome of Ederlina's petition for divorce. After all, he intended to marry her. He retained the services of Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed her of the progress of the proceedings.18Alfred paid for the services of the lawyer.In the meantime, Alfred decided to purchase another house and lot, owned by Rodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada, Davao City.19Alfred again agreed to have the deed of sale made out in the name of Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed of absolute sale over the said property in favor of Ederlina as the sole vendee for the amount of P80,000.00.20Alfred paid US$12,500.00 for the property.Alfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located in Moncado, Babak, Davao, covered by TCT No. 35251. Alfred once more agreed for the name of Ederlina to appear as the sole vendee in the deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of sale over the property for P65,000.00 in favor of Ederlina as the sole vendee.21Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and US$7,000.00, respectively, for which the vendor signed receipts.22On August 14, 1985, TCT No. 47246 was issued to Ederlina as the sole owner of the said property.23Meanwhile, Ederlina deposited on December 27, 1985, the total amount of US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-462341-145.24The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak, Davao, owned by spouses Enrique and Rosela Serrano. Alfred purchased the property from the spouses for P90,000.00, and the latter issued a receipt therefor.25A draftsman commissioned by the couple submitted a sketch of the beach resort.26Beach houses were forthwith constructed on a portion of the property and were eventually rented out by Ederlina's father, Narciso Catito. The rentals were collected by Narciso, while Ederlina kept the proceeds of the sale of copra from the coconut trees in the property. By this time, Alfred had already spent P200,000.00 for the purchase, construction and upkeep of the property.Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated January 21, 1985, she wrote about how Alfred had financed the purchases of some real properties, the establishment of her beauty parlor business, and her petition to divorce Klaus.27Because Ederlina was preoccupied with her business in Manila, she executed on July 8, 1985, two special powers of attorney28appointing Alfred as attorney-in-fact to receive in her behalf the title and the deed of sale over the property sold by the spouses Enrique Serrano.In the meantime, Ederlina's petition for divorce was denied because Klaus opposed the same. A second petition filed by her met the same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would agree to a divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.29Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, with Ederlina owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. Armando Dominguez to prepare the necessary documents. Ederlina changed her mind at the last minute when she was advised to insist on claiming ownership over the properties acquired by them during their coverture.Alfred and Ederlina's relationship started deteriorating. Ederlina had not been able to secure a d