Full Case (Part 2)

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Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-24732 April 30, 1968

PO SAN MELL!A, petitioner,vs.CT" O# LOLO, UN$ERST" O# T%E P%LPPNES &'( T%E COURT APPEALS, respondents.

Cornelio P. Ravena for petitioner.Office of the Solicitor General for respondents.

)ENG!ON, *.P., J.:

Juliana Melliza during her lifetie o!ned, aong other properties, three parcels of residential land in"loilo Cit# registered in her nae under $riginal Certificate of %itle No. &'(). *aid parcels of land !ere+no!n as ots Nos. ), - and )'. %he total area of ot No. )' !as )/,01& s2uare eters.

$n Noveber )1, /& she donated to the then Municipalit# of "loilo, /,000 s2uare eters of ot )',to serve as site for the unicipal hall. %he donation !as ho!ever revo+ed b# the parties for the reasonthat the area donated !as found inade2uate to eet the re2uireents of the developent plan of theunicipalit#, the so3called 4Arellano Plan4. )

*ubse2uentl#, ot No. )' !as divided b# Certeza *urve#ing Co., "nc. into ots )'3A and )'3B. Andstill later, ot )'3B !as further divided into ots )'3B3, ot )'3B3) and ot )'3B3&. Asapproved b# the Bureau of ands, ot )'3B3 !ith ',-() s2uare eters, becae +no!n as ot )'3B5ot )'3B3), !ith (,(-& s2uare eters, !as designated as ot )'3C5 and ot )'3B3&, !ith ',&-s2uare eters, becae ot )'36.

$n Noveber -, /&) Juliana Melliza e7ecuted an instruent !ithout an# caption containing thefollo!ing8

9ue en consideracion a la sua total de *E"* M" C:A%R$ C"EN%$* ;E"N%"6$* PE*$*<P(,')).00=, oneda filipina 2ue por la presente declaro haber recibido a i entera satisfacciondel >obierno Municipal de "loilo, cedo # traspaso en venta real # difinitiva a dicho >obiernoMunicipal de "loilo los lotes # porciones de los isos 2ue a continuacion se especifican asaber8 el lote No. - en toda su e7tension5 una porcion de 1((/ etros cuadrados del lote No.), cu#a porcion esta designada coo sub3lotes Nos. )3B # )3C del piano de subdivision dedichos lotes preparado por la Certeza *urve#ing Co., "nc., # una porcion de 0,1?? etroscuadrados del lote No. )' @ cu#a porcion esta designada coo sub3lotes Nos. )'3B3) #)'3B3& del iso plano de subdivision.

Asiiso nago constar 2ue la cesion # traspaso 2ue ariba se encionan es de venta difinitiva,# 2ue para la eor identificacion de los lotes # porciones de los isos 2ue son obeto de lapresente, hago constar 2ue dichos lotes # porciones son los 2ue necesita el >obierno Municipalde "loilo para la construccion de avenidas, par2ues # Cit# all site del Municipal >overnentCenter de iloilo, segun el plano Arellano.

$n Januar# ', /&? Juliana Melliza sold her reaining interest in ot )' to Reedios *ian ;illanueva!ho thereafter obtained her o!n registered title thereto, under %ransfer Certificate of %itle No. ?1?.Reedios in turn on Noveber ', /'( transferred her rights to said portion of land to Pio *ian Melliza,!ho obtained %ransfer Certificate of %itle No. )'/) thereover in his nae. Annotated at the bac+ of Pio*ian Mellizas title certificate !as the follo!ing8

... <a= that a portion of 0,1?? s2uare eters of ot )' no! designated as ots Nos. )'3B3) and )'3B3& of the subdivision plan belongs to the Municipalit# of "loilo as per instruentdated Noveber -, /&)....

$n August )', /'/ the Cit# of "loilo, !hich succeeded to the Municipalit# of "loilo, donated the cit# hallsite together !ith the building thereon, to the :niversit# of the Philippines <"loilo branch=. %he sitedonated consisted of ots Nos. )'3B, )'3C and )'36, !ith a total area of -,&-0 s2uare eters,ore or less.

*oetie in /-), the :niversit# of the Philippines enclosed the site donated !ith a !ire fence. Pio *ianMelliza thereupon ade representations, thru his la!#er, !ith the cit# authorities for pa#ent of thevalue of the lot <ot )'3B=. No recover# !as obtained, because as alleged b# plaintiff, the Cit# did nothave funds <p. /, Appellants Brief.=

%he :niversit# of the Philippines, ean!hile, obtained %ransfer Certificate of %itle No. 1-) covering thethree lots, Nos. )'3B, )'3C and )'36.

$n 6eceber 0, /-- Pio *ian Melliza filed an action in the Court of Dirst "nstance of "loilo against "loiloCit# and the :niversit# of the Philippines for recover# of ot )'3B or of its value.

%he defendants ans!ered, contending that ot )'3B !as included in the public instruent e7ecuted b#Juliana Melliza in favor of "loilo unicipalit# in /&). After stipulation of facts and trial, the Court of Dirst"nstance rendered its decision on August -, /-1, disissing the coplaint. *aid court ruled that theinstruent e7ecuted b# Juliana Melliza in favor of "loilo unicipalit# included in the conve#ance ot )'3B. "n support of this conclusion, it referred to the portion of the instruent stating8

Asiiso hago constar 2ue la cesion # traspaso 2ue arriba se encionan es de venta difinitiva,# 2ue para la aor identificacion de los lotes # porciones de los isos 2ue son obeto de lapresente, hago constar 2ue dichos lotes # porciones son los 2ue necesita el >obierno unicipalde "loilo para la construccion de avenidas, par2ues # Cit# all site del Municipal >overnentCenter de "loilo, segun el plano Arellano.

and ruled that this eant that Juliana Melliza not onl# sold ots )'3C and )'36 but also such other portions of lots as were necessary for the municipal hall site, such as Lot 121!". #nd thus it held that $loilo City had the ri%ht to donate Lot 121!" to the :.P.

Pio *ian Melliza appealed to the Court of Appeals. "n its decision on Ma# /, /(-, the Court of Appealsaffired the interpretation of the Court of Dirst "nstance, that the portion of ot )' sold b# JulianaMelliza !as not liited to the 0,1?? s2uare eters specificall# entioned but included !hatever !asneeded for the construction of avenues, par+s and the cit# hall site. Nonetheless, it ordered the reandof the case for reception of evidence to deterine the area actuall# ta+en b# "loilo Cit# for theconstruction of avenues, par+s and for cit# hall site.

%he present appeal therefro !as then ta+en to :s b# Pio *ian Melliza. Appellant aintains that thepublic instruent is clear that onl# ots Nos. )'3C and )'36 !ith a total area of 0,1?? s2uareeters !ere the portions of ot )' included in the sale5 that the purpose of the second paragraph,

relied upon for a contrar# interpretation, !as onl# to better identif# the lots sold and none other5 and thatto follo! the interpretation accorded the deed of sale b# the Court of Appeals and the Court of Dirst"nstance !ould render the contract invalid because the la! re2uires as an essential eleent of sale, a4deterinate4 obect <Art. ''-, no! ''?, Civil Code=.

Appellees, on the other hand, contend that the present appeal iproperl# raises onl# 2uestions of fact.And, further, the# argue that the parties to the docuent in 2uestion reall# intended to include ot )'3B therein, as sho!n b# the silence of the vendor after "loilo Cit# e7ercised o!nership thereover5 that notto include it !ould have been absurd, because said lot is contiguous to the others adittedl# included inthe conve#ance, l#ing directl# in front of the cit# hall, separating that building fro ots )'3C and)'36, !hich !ere included therein. And, finall#, appellees argue that the sales obect !as deterinate,because it could be ascertained, at the tie of the e7ecution of the contract, !hat lots !ere needed b#"loilo unicipalit# for avenues, par+s and cit# hall site 4according to the Arellano Plan4, since the Arellanoplan !as then alread# in e7istence.

%he appeal before :s calls for the interpretation of the public instruent dated Noveber -, /&). Andinterpretation of such contract involves a 2uestion of la!, since the contract is in the nature of la! asbet!een the parties and their successors3in3interest.



At the outset, it is !ell to ar+ that the issue is !hether or not the conve#ance b# Juliana Melliza to "loilounicipalit# included that portion of ot )' +no!n as ot )'3B. "f not, then the sae !as included,in the instruent subse2uentl# e7ecuted b# Juliana Melliza of her reaining interest in ot )' toReedios *ian ;illanueva, !ho in turn sold !hat she thereunder had ac2uired, to Pio *ian Melliza. "tshould be stressed, also, that the sale to Reedios *ian ;illanueva @ fro !hich Pio *ian Melliza derivedtitle @ did not specifically desi%nate Lot 121!", &ut only such portions of Lot 121 as were not included in the previous sale to $loilo municipality <*tipulation of Dacts, par. -, Record on Appeal, p. )&=. And thus,if said ot )'3B had been included in the prior conve#ance to "loilo unicipalit#, then it !as e7cludedfro the sale to Reedios *ian ;illanueva and, later, to Pio *ian Melliza.

%he point at issue here is then the true intention of the parties as to the obect of the public instruentE7hibit 464. *aid issue revolves on the paragraph of the public instruent afore2uoted and its purpose,i.e., !hether it !as intended erel# to further describe the lots alread# specificall# entioned, or!hether it !as intended to cover other lots not #et specificall# entioned.

Dirst of all, there is no 2uestion that the paraount intention of the parties !as to provide "loilounicipalit# !ith lots sufficient or ade2uate in area for the construction of the "loilo Cit# hall site, !ith itsavenues and par+s. Dor this atter, a previous donation for this purpose bet!een the sae parties !asrevo+ed b# the, because of inade2uac# of the area of the lot donated.

*econdl#, reading the public instruent in toto, !ith special reference to the paragraphs describing thelots included in the sale, sho!s that said instruent describes four parcels of land b# their lot nubersand area5 and then it goes on to further describe, not onl# those lots alread# entioned, but thelots o&'ect of the sale, b# stating that said lots are the ones needed for the construction of the cit# hallsite, avenues and par+s accordin% to the #rellano plan. "f the parties intended erel# to cover thespecified lots @ ots ), -, )'3C and )'36, there !ould scarcel# have been an# need for the ne7tparagraph, since these lots are alread# plainl# and ver# clearl# described b# their respective lot nuberand area. *aid ne7t paragraph does not reall# add to the clear description that !as alread# given to thein the previous one.

"t is therefore the ore reasonable interpretation, to vie! it as descri&in% those other portions of land conti%uous to the lots aforementioned that, b# reference to the Arellano plan, !ill be found needed for thepurpose at hand, the construction of the cit# hall site.

Appellant ho!ever challenges this vie! on the ground that the description of said other lots in theafore2uoted second paragraph of the public instruent !ould thereb# be legall# insufficient, because theobect !ould allegedl# not be deterinate as re2uired b# la!.

*uch contention fails on several counts. %he re2uireent of the la! that a sale ust have for its obect adeterinate thing, is fulfilled as long as, at the tie the contract is entered into, the obect of the sale iscapable of being ade deterinate !ithout the necessit# of a ne! or further agreeent bet!een theparties <Art. )1&, old Civil Code5 Art. '(0, Ne! Civil Code=. %he specific ention of soe of the lotsplus the stateent that the lots obect of the sale are the ones needed for cit# hall site, avenues and

par+s, accordin% to the #rellano plan, sufficientl# provides a basis, as of the tie of the e7ecution of thecontract, for rendering deterinate said lots !ithout the need of a ne! and further agreeent of theparties.

%he Arellano plan !as in e7istence as earl# as /)?. As stated, the previous donation of land for cit# hallsite on Noveber )1, /& !as revo+ed on March (, /&) for being inade2uate in area under saidArellano plan. Appellant clais that although said plan e7isted, its etes and bounds !ere not fi7ed until/&-, and thus it could not be a basis for deterining the lots sold on Noveber -, /&). Appellantho!ever fails to consider that thearea needed under that plan for cit# hall site !as then alread# +no!n5that the specific ention of soe of the lots covered b# the sale in effect fi7ed the corresponding locationof the cit# hall site under the plan5 that, therefore, considering the said lots specificall# entioned in thepublic instruent E7hibit 464, and the proected cit# hall site, !ith its area, as then sho!n in the Arellanoplan <E7hibit )=, it could be deterined !hich, and ho! uch of the portions of land contiguous to thosespecificall# naed, !ere needed for the construction of the cit# hall site.

And, oreover, there is no 2uestion either that ot )'3B is contiguous to ots )'3C and )'36,adittedl# covered b# the public instruent. "t is stipulated that, after e7ecution of the contract E7hibit464, the Municipalit# of "loilo possessed it together !ith the other lots sold. "t sits practicall# in the heartof the cit# hall site. Durtherore, Pio *ian Melliza, fro the stipulation of facts, !as the notar# public of the public instruent. As such, he !as a!are of its ters. *aid instruent !as also registered !ith the

Register of 6eeds and such registration !as annotated at the bac+ of the corresponding title certificate of Juliana Melliza. Dro these stipulated facts, it can be inferred that Pio *ian Melliza +ne! of the aforesaidters of the instruent or is chargeable !ith +no!ledge of the5 that +no!ing so, he should havee7ained the Arellano plan in relation to the public instruent E7hibit 4645 that, furtherore, he shouldhave ta+en notice of the possession first b# the Municipalit# of "loilo, then b# the Cit# of "loilo and later b#the :niversit# of the Philippines of ot )'3B as part of the cit# hall site conve#ed under that publicinstruent, and raised proper obections thereto if it !as his position that the sae !as not included inthe sae. %he fact reains that, instead, for twenty lon% years, Pio *ian Melliza and his predecessors3in3interest, did not obect to said possession, nor e7ercise an# act of possession over ot )'3B. Appl#ing,therefore, principles of civil la!, as !ell as laches, estoppel, and e2uit#, said lot ust necessaril# bedeeed included in the conve#ance in favor of "loilo unicipalit#, no! "loilo Cit#.

ERED$RE, the decision appealed fro is affired insofar as it affirs that of the Court of Dirst"nstance, and the coplaint in this case is disissed. No costs. *o ordered.

Reyes, (.".L., #ct%. C.(., )i*on, +aalintal, -aldivar, Sanche*, Castro, #n%eles and ernando, ((., concur.Concepcion , C.(., is on leave.

#oo+'o+


EN BANC

G.R. No. L-993 #/r&r 1, 191

"U TE &'( CO., plaintiff3appellant,vs.)ASLO GON!ALES, defendant3appellant.

"eaumont, /enney and errier for plaintiff."uencamino and Lonto for defendant.

TRENT, J.

%he basis of this action is a !ritten contract, E7hibit A, the pertinent paragraphs of !hich follo!8

. %hat Mr. Basilio >onzalez hereb# ac+no!ledges receipt of the su of P&,000 Philippine

currenc# fro Messrs. Fu %e+ and Co., and that in consideration of said su be obligateshiself to deliver to the said Fu %e+ and Co., (00 piculs of sugar of the first and second grade,according to the result of the polarization, !ithin the period of three onths, beginning on thest da# of Januar#, /), and ending on the &st da# of March of the sae #ear, /).

). %hat the said Mr. Basilio >onzales obligates hiself to deliver to the said Messrs. Fu %e+ andCo., of this cit# the said (00 piculs of sugar at an# place !ithin the said unicipalit# of *antaRosa !hich the said Messrs. Fu %e+ and Co., or a representative of the sae a# designate.

&. %hat in case the said Mr. Basilio >onzales does not deliver to Messrs. Fu %e+ and Co. the (00piculs of sugar !ithin the period of three onths, referred to in the second paragraph of thisdocuent, this contract !ill be rescinded and the said Mr. Basilio >onzales !ill then beobligated to return to Messrs. Fu %e+ and Co. the P&,000 received and also the su of P,)00b# !a# of indenit# for loss and daages.

Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to recoverthe P&,000. Plaintiff pra#ed for udgent for the P&,000 and, in addition, for P,)00 under paragraph ',supra. Judgent !as rendered for P&,000 onl#, and fro this udgent both parties appealed.



%he points raised b# the defendant !ill be considered first. e alleges that the court erred in refusing toperit parol evidence sho!ing that the parties intended that the sugar !as to be secured fro the crop!hich the defendant raised on his plantation, and that he !as unable to fulfill the contract b# reason of the alost total failure of his crop. %his case appears to be one to !hich the rule !hich e7cludes parolevidence to add to or var# the ters of a !ritten contract is decidedl# applicable. %here is not theslightest intiation in the contract that the sugar !as to be raised b# the defendant. Parties arepresued to have reduced to !riting all the essential conditions of their contract. hile parol evidence isadissible in a variet# of !a#s to e7plain the eaning of !ritten contracts, it cannot serve the purpose of incorporating into the contract additional conteporaneous conditions !hich are not entioned at all inthe !riting, unless there has been fraud or ista+e. "n an earl# case this court declined to allo! parolevidence sho!ing that a part# to a !ritten contract !as to becoe a partner in a fir instead of acreditor of the fir. <Pastor vs. >aspar, ) Phil. Rep., -/).= Again, in Eveland vs. Eastern Mining Co. <'Phil. Rep., -0/= a contract of eplo#ent provided that the plaintiff should receive fro the defendant astipulated salar# and e7penses. %he defendant sought to interpose as a defense to recover# that the

pa#ent of the salar# !as contingent upon the plaintiffs eplo#ent redounding to the benefit of thedefendant copan#. %he contract contained no such condition and the court declined to receive parolevidence thereof.

"n the case at bar, it is sought to sho! that the sugar !as to be obtained e7clusivel# fro the crop raisedb# the defendant. %here is no clause in the !ritten contract !hich even reotel# suggests such acondition. %he defendant undertoo+ to deliver a specified 2uantit# of sugar !ithin a specified tie. %hecontract placed no restriction upon the defendant in the atter of obtaining the sugar. e !as e2uall# atlibert# to purchase it on the ar+et or raise it hiself. "t a# be true that defendant o!ned a plantationand e7pected to raise the sugar hiself, but he did not liit his obligation to his o!n crop of sugar. $urconclusion is that the condition !hich the defendant see+s to add to the contract b# parol evidencecannot be considered. %he rights of the parties ust be deterined b# the !riting itself.

%he second contention of the defendant arises fro the first. e assues that the contract !as liited tothe sugar he ight raise upon his o!n plantation5 that the contract represented a perfected sale5 and

that b# failure of his crop he !as relieved fro copl#ing !ith his underta+ing b# loss of the thing due.<Arts. '-), 0/(, and ?), Civil Code.= %his arguent is fault# in assuing that there !as a perfectedsale. Article '-0 defines a perfected sale as follo!s8

%he sale shall &e perfected bet!een vendor and vendee and shall be binding on both of the, if the# have agreed upon the thing !hich is the obect of the contract and upon the price, even!hen neither has been delivered.

Article '-) reads8 4%he inur# to or the profit of the thing sold shall, after the contract has &een perfected , be governed b# the provisions of articles 0/( and ?).4

%his court has consistentl# held that there is a perfected sale !ith regard to the 4thing4 !henever thearticle of sale has been ph#sicall# segregated fro all other articles %hus, a particular tobacco factor#!ith its contents !as held sold under a contract !hich did not provide for either deliver# of the price or of the thing until a future tie. McCullough vs. Aenlle and Co. <& Phil. Rep., )/-=. 9uite siilar !as the

recent case of "arretto vs. Santa +arina<)( Phil. Rep., )00= !here specified shares of stoc+ in a tobaccofactor# !ere held sold b# a contract !hich deferred deliver# of both the price and the stoc+ until the latterhad been appraised b# an inventor# of the entire assets of the copan#. "n "orromeo vs. ranco <- Phil.Rep., '/= a sale of a specific house !as held perfected bet!een the vendor and vendee, although thedeliver# of the price !as !ithheld until the necessar# docuents of o!nership !ere prepared b# thevendee. "n /an Leonco vs. Go $n0ui <? Phil. Rep., -&= the plaintiff had delivered a 2uantit# of hep intothe !arehouse of the defendant. %he defendant dre! a bill of e7change in the su of P?00, representingthe price !hich had been agreed upon for the hep thus delivered. Prior to the presentation of the bill forpa#ent, the hep !as destro#ed. hereupon, the defendant suspended pa#ent of the bill. "t !as heldthat the hep having been alread# delivered, the title had passed and the loss !as the vendees. "t is ourpurpose to distinguish the case at bar fro all these cases.

"n the case at bar the underta+ing of the defendant !as to sell to the plaintiff (00 piculs of sugar of thefirst and second classes. as this an agreeent upon the 4thing4 !hich !as the obect of the contract!ithin the eaning of article '-0, supraG *ugar is one of the staple coodities of this countr#. Dor the

purpose of sale its bul+ is !eighed, the custoar# unit of !eight being denoinated a 4picul.4 %here !asno deliver# under the contract. No!, if called upon to designate the article sold, it is clear that thedefendant could onl# sa# that it !as 4sugar.4 e could onl# use this generic nae for the thing sold.%here !as no 4appropriation4 of an# particular lot of sugar. Neither part# could point to an# specific2uantit# of sugar and sa#8 4%his is the article !hich !as the subect of our contract.4 o! different is this

fro the contracts discussed in the cases referred to aboveH "n the McCullough case, for instance, thetobacco factor# !hich the parties dealt !ith !as specificall# pointed out and distinguished fro all othertobacco factories. *o, in the Barretto case, the particular shares of stoc+ !hich the parties desired totransfer !ere capable of designation. "n the %an eonco case, !here a 2uantit# of hep !as the subectof the contract, it !as sho!n that that 2uantit# had been deposited in a specific !arehouse, and thus setapart and distinguished fro all other hep.

A nuber of cases have been decided in the *tate of ouisiana, !here the civil la! prevails, !hichconfir our position. Perhaps the latest is itt *hoe Co. vs. *eegars and Co. <)) a., '-5 '1 *ou.,'''=. "n this case a contract !as entered into b# a traveling salesan for a 2uantit# of shoes, the saleshaving been ade b# saple. %he court said of this contract8

But it is !holl# iaterial, for the purpose of the ain 2uestion, !hether Mitchell !as

authorized to a+e a definite contract of sale or not, since the onl# contract that he !as in aposition to a+e !as an agreeent to sell or an e7ecutor# contract of sale. e sa#s thatplaintiff sends out &1- saples of shoes, and as he !as offering to sell b# saple shoes, partof !hich had not been anufactured and the rest of !hich !ere incorporated in plaintiffs stoc+in #nchburg, ;a., it !as ipossible that he and *eegars and Co. should at that tie haveagreed upon the specific obects, the title to !hich !as to pass, and hence there could havebeen no sale. e and *eegars and Co. ight have agreed, and did <in effect = agree, that theidentification of the obects and their appropriation to the contract necessar# to a+e a saleshould thereafter be ade b# the plaintiff, acting for itself and for *eegars and Co., and thelegend printed in red in+ on plaintiffs billheads <4$ur responsibilit# ceases !hen !e ta+etransportation Cos. receipt I"n good order4 indicates plaintiffs idea of the oent at !hichsuch identification and appropriation !ould becoe effective. %he 2uestion presented !ascarefull# considered in the case of *tate vs. *hields, et al. <0 a., -'1, &' *ou., (1&= <in!hich it !as absolutel# necessar# that it should be decided=, and it !as there held that inreceiving an order for a 2uantit# of goods, of a +ind and at a price agreed on, to be suppliedfro a general stoc+, !arehoused at another place, the agent receiving the order erel# enters

into an e7ecutor# contract for the sale of the goods, !hich does not divest or transfer the titleof an# deterinate obect, and !hich becoes effective for that purpose onl# !hen specificgoods are thereafter appropriated to the contract5 and, in the absence of a ore specificagreeent on the subect, that such appropriated ta+es place onl# !hen the goods as orderedare delivered to the public carriers at the place fro !hich the# are to be shipped, consigned tothe person b# !ho the order is given, at !hich tie and place, therefore, the sale is perfectedand the title passes.

%his case and *tate vs. *hields, referred to in the above 2uotation are apl# illustrative of the positionta+en b# the ouisiana court on the 2uestion before us. But !e cannot refrain fro referring to the caseof arue and Prevost vs. Rugel#, Blair and Co. <0 a. Ann., )')= !hich is suarized b# the court itself in the *hields case as follo!s8

. . . "t appears that the defendants had ade a contract for the sale, b# !eight, of a lot of cotton, had received &,000 on account of the price, and had given an order for its deliver#,

!hich had been presented to the purchaser, and recognized b# the press in !hich the cotton!as stored, but that the cotton had been destro#ed b# fire before it !as !eighed. "t !as heldthat it !as still at the ris+ of the seller, and that the bu#er !as entitled to recover the &,000paid on account of the price.

e conclude that the contract in the case at bar !as erel# an e7ecutor# agreeent5 a proise of saleand not a sale. At there !as no perfected sale, it is clear that articles '-), 0/(, and ?) are notapplicable. %he defendant having defaulted in his engageent, the plaintiff is entitled to recover theP&,000 !hich it advanced to the defendant, and this portion of the udgent appealed fro usttherefore be affired.

%he plaintiff has appealed fro the udgent of the trial court on the ground that it is entitled to recoverthe additional su of P,)00 under paragraph ' of the contract. %he court belo! held that this paragraph!as sipl# a liitation upon the aount of daages !hich could be recovered and not li2uidateddaages as conteplated b# the la!. 4"t also appears,4 said the lo!er court, 4that in an# event the

defendant !as prevented fro fulfilling the contract b# the deliver# of the sugar b# condition over !hichhe had no control, but these conditions !ere not sufficient to absolve hi fro the obligation of returningthe one# !hich he received.4



%he above 2uoted portion of the trial courts opinion appears to be based upon the proposition that thesugar !hich !as to be delivered b# the defendant !as that !hich he e7pected to obtain fro his o!nhacienda and, as the dr# !eather destro#ed his gro!ing cane, he could not copl# !ith his part of thecontract. As !e have indicated, this vie! is erroneous, as, under the contract, the defendant !as notliited to his gro!th crop in order to a+e the deliver#. e agreed to deliver the sugar and nothing issaid in the contract about !here he !as to get it.

e thin+ is a clear case of li2uidated daages. %he contract plainl# states that if the defendant fails todeliver the (00 piculs of sugar !ithin the tie agreed on, the contract !ill be rescinded and he !ill beobliged to return the P&,000 and pa# the su of P,)00 b# !a# of indenit# for loss and daages. %herecannot be the slightest doubt about the eaning of this language or the intention of the parties. %here isno roo for either interpretation or construction. :nder the provisions of article )-- of the Civil Codecontracting parties are free to e7ecute the contracts that the# a# consider suitable, provided the# arenot in contravention of la!, orals, or public order. "n our opinion there is nothing in the contract underconsideration !hich is opposed to an# of these principles.

Dor the foregoing reasons the udgent appealed fro is odified b# allo!ing the recover# of P,)00under paragraph ' of the contract. As thus odified, the udgent appealed fro is affired, !ithoutcosts in this instance.

#rellano, C.(., /orres, Carson and #raullo, ((., concur. (ohnson, (., dissents.

Republic of the PhilippinesSUPREME COURT

Manila

%"R6 6";"*"$N

G.R. No. 74470 M&r5 8, 1989

NATONAL GRANS AUT%ORT" &'( LLLAM CA)AL, petitionersvs.T%E NTERMEATE APPELLATE COURT &'( LEON SORANO, respondents.

Cordo&a, -apanta, Rola Garcia for petitioner ational Grains #uthority.

Plaridel +ar $srael for respondent Leon Soriano.

MEALEA, J.:

%his is a petition for revie! of the decision <pp. /3), Rollo= of the "nterediate Appellate Court <no!Court of Appeals= dated 6eceber )&, /?- in A.C. >.R. C; No. 0&?) entitled, 4eon *oriano, Plaintiff3Appellee versus National >rains Authorit# and illia Cabal, 6efendants Appellants4, !hich affired thedecision of the Court of Dirst "nstance of Caga#an, in Civil Case No. )1-' and its resolution <p. )?, Rollo=dated April 1, /?( !hich denied the Motion for Reconsideration filed therein.

%he antecedent facts of the instant case are as follo!s8

Petitioner National >rains Authorit# <no! National Dood Authorit#, NDA for short= is a governent agenc#created under Presidential 6ecree No. '. $ne of its incidental functions is the bu#ing of pala# grains fro2ualified farers.

$n August )&, /1/, private respondent eon *oriano offered to sell pala# grains to the NDA, throughillia Cabal, the Provincial Manager of NDA stationed at %uguegarao, Caga#an. e subitted thedocuents re2uired b# the NDA for pre32ualif#ing as a seller, nael#8 <= Darers "nforation *heetaccoplished b# *oriano and certified b# a Bureau of Agricultural E7tension <BAEK= technician, Napoleon

Callangan, <)= Kero7 copies of four <'= ta7 declarations of the riceland leased to hi and copies of thelease contract bet!een hi and Judge Concepcion *alud, and <&= his Residence %a7 Certificate. Privaterespondent *orianos docuents !ere processed and accordingl#, he !as given a 2uota of ),('0 cavansof pala#. %he 2uota noted in the Darers "nforation *heet represented the a7iu nuber of cavansof pala# that *oriano a# sell to the NDA.

"n the afternoon of August )&, /1/ and on the follo!ing da#, August )', /1/, *oriano delivered (&0cavans of pala#. %he pala# delivered during these t!o da#s !ere not rebagged, classified and !eighed.!hen *oriano deanded pa#ent of the (&0 cavans of pala#, he !as infored that its pa#ent !ill beheld in abe#ance since Mr. Cabal !as still investigating on an inforation he received that *oriano !asnot a bona tide farer and the pala# delivered b# hi !as not produced fro his farland but !as ta+enfro the !arehouse of a rice trader, Ben de >uzan. $n August )?, /1/, Cabal !rote *oriano advisinghi to !ithdra! fro the NDA !arehouse the (&0 cavans *oriano delivered stating that NDA cannotlegall# accept the said deliver# on the basis of the subse2uent certification of the BAEK technician,Napoleon Callangan that *oriano is not a bona fide farer.

"nstead of !ithdra!ing the (&0 cavans of pala#, private respondent *oriano insisted that the pala# grainsdelivered be paid. e then filed a coplaint for specific perforance andLor collection of one# !ithdaages on Noveber ), /1/, against the National Dood Authorit# and Mr. illia Cabal, ProvincialManager of NDA !ith the Court of Dirst "nstance of %uguegarao, and doc+eted as Civil Case No. )1-'.

Mean!hile, b# agreeent of the parties and upon order of the trial court, the (&0 cavans of pala# in2uestion !ere !ithdra!n fro the !arehouse of NDA. An inventor# !as ade b# the sheriff asrepresentative of the Court, a representative of *oriano and a representative of NDA <p. &, Rollo=.

$n *epteber &0, /?), the trial court rendered udgent ordering petitioner National Dood Authorit#, itsofficers and agents to pa# respondent *oriano <as plaintiff in Civil Case No. )1-'= the aount of P'1,)-0.00 representing the unpaid price of the (&0 cavans of pala# plus legal interest thereof <p. 3), CA

6ecision=. %he dispositive portion reads as follo!s8

ERED$RE, the Court renders udgent in favor of the plaintiff and against thedefendants National >rains Authorit#, and illia Cabal and hereb# orders8

. %he National >rains Authorit#, no! the National Dood Authorit#, its officers andagents, and Mr. illia Cabal, the Provincial Manager of the National >rainsAuthorit# at the tie of the filing of this case, assigned at %uguegarao, Caga#an,!hosoever is his successors, to pa# to the plaintiff eon %. *oriano, the aount of P'1,)-0.00, representing the unpaid price of the pala# deliveries ade b# theplaintiff to the defendants consisting of (&0 cavans at the rate Pl.-0 per +ilo of -0+ilos per cavan of pala#5

). %hat the defendants National >rains Authorit#, no! National Dood Authorit#, itsofficer andLor agents, and Mr. illia Cabal, the Provincial Manager of the National>rains Authorit#, at the tie of the filing of this case assigned at %uguegarao,Caga#an or !hosoever is his successors, are li+e!ise ordered to pa# the plaintiff eon %. *oriano, the legal interest at the rate of %E;E <)= percent per annu,of the aount of P '1,)-0.00 fro the filing of the coplaint on Noveber )0, /1/,up to the final pa#ent of the price of P '1,)-0.005

&. %hat the defendants National >rains Authorit#, no! National Dood Authorit#, ortheir agents and dul# authorized representatives can no! !ithdra! the total nuberof bags <(&0 bags !ith an e7cess of & bags= no! on deposit in the bonded!arehouse of Eng. Ben de >uzan at %uguegarao, Caga#an pursuant to the order of this court, and as appearing in the !ritten inventor# dated $ctober 0, /?0, <E7hibitD for the plaintiff and E7hibit )0 for the defendants= upon pa#ent of the price of P'1,)-0.00 and %E;E PERCEN% <)= legal interest to the plaintiff,

'. %hat the counterclai of the defendants is hereb# disissed5

-. %hat there is no pronounceent as to the a!ard of oral and e7eplar# daagesand attorne#s fees5 and



(. %hat there is no pronounceent as to costs.

*$ $R6ERE6 <pp. /30, Rollo=

Petitioners otion for reconsideration of the decision !as denied on 6eceber (, /?).

Petitioners appealed the trial courts decision to the "nterediate Appellate Court. "n a decisionproulgated on 6eceber )&, /?( <pp. /3), Rollo= the then "nterediate Appellate Court upheld thefindings of the trial court and affired the decision ordering NDA and its officers to pa# *oriano the priceof the (&0 cavans of rice plus interest. Petitioners otion for reconsideration of the appellate courtsdecision !as denied in a resolution dated April 1, /?( <p. )?, Rollo=.

ence, this petition for revie! filed b# the National Dood Authorit# and Mr. illia Cabal on Ma# -, /?(assailing the decision of the "nterediate Appellate Court on the sole issue of !hether or not there !as acontract of sale in the case at bar.

Petitioners contend that the (&0 cavans of pala# delivered b# *oriano on August )&, /1/ !as ade onl#for purposes of having it offered for sale. Durther, petitioners stated that the procedure then prevailing inatters of pala# procureent fro 2ualified farers !ere8 firstl#, there is a rebagging !herein the pala#is transferred fro a private sac+ of a farer to the NDA sac+5 secondl#, after the rebagging has beenunderta+en, classification of the pala# is ade to deterine its variet#5 thirdl#, after the deterination of its variet# and convinced that it passed the 2ualit# standard, the sae !ill be !eighed to deterine thenuber of +ilos5 and finall#, it !ill be piled inside the !arehouse after the preparation of the arehouse*toc+ Receipt <*P= indicating therein the nuber of +ilos, the variet# and the nuber of bags. :nderthis procedure, rebagging is the initial operative act signif#ing acceptance, and acceptance !ill beconsidered coplete onl# after the preparation of the arehouse *toc+ Receipt <*R=. hen the (&0cavans of pala# !ere brought b# *oriano to the Carig !arehouse of NDA the# !ere onl# offered for sale.

*ince the sae !ere not rebagged, classified and !eighed in accordance !ith the pala# procureentprogra of NDA, there !as no acceptance of the offer !hich, to petitioners ind is a clear case of solicitation or an unaccepted offer to sell.

%he petition is not ipressed !ith erit.

Article '-? of the Civil Code of the Philippines defines sale as a contract !hereb# one of the contractingparties obligates hiself to transfer the o!nership of and to deliver a deterinate thing, and the otherpart# to pa# therefore a price certain in one# or its e2uivalent. A contract, on the other hand, is aeeting of inds bet!een t!o <)= persons !hereb# one binds hiself, !ith respect to the other, to givesoething or to render soe service <Art. &0-, Civil Code of the Philippines=. %he essential re2uisites of contracts are8 <= consent of the contracting parties, <)= obect certain !hich is the subect atter of thecontract, and <&= cause of the obligation !hich is established <Art. &?, Civil Code of the Philippines.

"n the case at bar, *oriano initiall# offered to sell pala# grains produced in his farland to NDA. hen the

latter accepted the offer b# noting in *orianos Darers "nforation *heet a 2uota of ),('0 cavans, there!as alread# a eeting of the inds bet!een the parties. %he obect of the contract, being the pala#grains produced in *orianos farland and the NDA !as to pa# the sae depending upon its 2ualit#. %hefact that the e7act nuber of cavans of pala# to be delivered has not been deterined does not affect theperfection of the contract. Article &'/ of the Ne! Civil Code provides8 4. . .. %he fact that the 2uantit# isnot deterinate shall not be an obstacle to the e7istence of the contract, provided it is possible todeterine the sae, !ithout the need of a ne! contract bet!een the parties.4 "n this case, there !as noneed for NDA and *oriano to enter into a ne! contract to deterine the e7act nuber of cavans of pala#to be sold. *oriano can deliver so uch of his produce as long as it does not e7ceed ),('0 cavans.

"n its eorandu <pp. ((31, Rollo= dated 6eceber ', /?(, petitioners further contend that there!as no contract of sale because of the absence of an essential re2uisite in contracts, nael#, consent. "tcited *ection &/ of the Civil Code !hich states8 4Consent is anifested b# the eeting of the offer andthe acceptance of the thing and the cause !hich are to constitute the contract. ... 4 Dollo!ing this line,petitioners contend that there !as no consent because there !as no acceptance of the (&0 cavans of pala# in 2uestion.

%he above contention of petitioner is not correct *ale is a consensual contract, 4 ... , there is perfection!hen there is consent upon the subect atter and price, even if neither is delivered.4 <$bana vs. C.A., 3

&()'/, March )/, /?-, &- *CRA --1, -(0= %his is provided b# Article '1- of the Civil Code !hichstates8

Art. '1-. %he contract of sale is perfected at the oent there is a eeting of inds upon the thing !hich is the obect of the contract and upon the price.

7 7 7

%he acceptance referred to !hich deterines consent is the acceptance of the offer of one part# b# theother and not of the goods delivered as contended b# petitioners.

Dro the oent the contract of sale is perfected, it is incubent upon the parties to copl# !ith their

utual obligations or 4the parties a# reciprocall# deand perforance4 thereof. <Article '1-, CivilCode, )nd par.=.

%he reason !h# NDA initiall# refused acceptance of the (&0 cavans of pala# delivered b# *oriano is that it<NDA= cannot legall# accept the said deliver# because *oriano is allegedl# not a bona fide farer. %he trialcourt and the appellate court found that *oriano !as a bona fide farer and therefore, he !as 2ualifiedto sell pala# grains to NDA.

Both courts li+e!ise agree that NDAs refusal to accept !as !ithout ust cause. %he above factual findings!hich are supported b# the record should not be disturbed on appeal.

ACC$R6"N>F, the instant petition for revie! is 6"*M"**E6. %he assailed decision of the then"nterediate Appellate Court <no! Court of Appeals= is affired. No costs.

*$ $R6ERE6.

arvasa, Cru*, Gancayco and Gri3o!#0uino, ((., concur.


%"R6 6";"*"$N

G.R. No. 10387 No/r 11, 1993

*O%ANNES SC%U)AC : SONS P%LPPNE TRANG CORPORATON, petitioner,vs.T%E %ON. COURT O# APPEALS, RAMON SAN *OSE, *R., (oi'; /i' '(r +5 '& &'(+l <P%LPPNE S* NUSTRAL TRANG,< respondents.

4ernande*, 5elicaria, 5i&ar Santia%o for petitioner.

6rnesto +. /omanen% for private respondent.

ROMERO, J.:

"n this petition for revie! on certiorari , petitioner 2uestions the reversal b# the Court of Appeals 1 of thetrial courts ruling that a contract of sale had been perfected bet!een petitioner and private respondentover bus spare parts.



%he facts as 2uoted fro the decision of the Court of Appeals are as follo!s8

*oetie in /?, defendant 2 established contact !ith plaintiff 3 through thePhilippine Consulate >eneral in aburg, est >eran#, because he !anted topurchase MAN bus spare parts fro >eran#. Plaintiff counicated !ith its tradingpartner. Johannes *chubac+ and *ohne andelsgesellschaft .b.n. Co. <*chubac+aburg= regarding the spare parts defendant !anted to order.

$n $ctober (, /?, defendant subitted to plaintiff a list of the parts <E7hibit B=he !anted to purchase !ith specific part nubers and description. Plaintiff referredthe list to *chubac+ aburg for 2uotations. :pon receipt of the 2uotations, plaintiff sent to defendant a letter dated )- Noveber, /? <E7h. C= enclosing its offer onthe ites listed b# defendant.

$n 6eceber ', /?, defendant infored plaintiff that he preferred genuine toreplaceent parts, and re2uested that he be given - on all ites <E7h. 6=.

$n 6eceber 1, /?, plaintiff subitted its foral offer <E7h. E= containing theite nuber, 2uantit#, part nuber, description, unit price and total to defendant. $n6eceber, )', /?, defendant infored plaintiff of his desire to avail of the prices of the parts at that tie and enclosed Purchase $rder No. 00 dated ' 6eceber/? <E7h. D to D3'=. *aid Purchase $rder contained the ite nuber, part nuberand description. 6efendant proised to subit the 2uantit# per unit he !anted toorder on 6eceber )? or )/ <E7h. D=.

$n 6eceber )/, /?, defendant personall# subitted the 2uantities he !anted toMr. 6ieter Reichert, >eneral Manager of plaintiff, at the latters residence <t.s.n., &

6eceber, /?', p. &(=. %he 2uantities !ere !ritten in in+ b# defendant in the saePurchase $rder previousl# subitted. At the botto of said Purchase $rder,defendant !rote in in+ above his signature8 4N$%E8 Above P.$. !ill include a &discount. %he above !ill serve as our initial P.$.4 <E7hs. > to >3&3a=.

Plaintiff iediatel# ordered the ites needed b# defendant fro *chubac+aburg to enable defendant to avail of the old prices. *chubac+ aburg in turnordered <$rder No. ))0'= the ites fro N6O, a supplier of MAN spare parts inest >eran#. $n Januar# ', /?), *chubac+ aburg sent plaintiff a proforainvoice <E7hs. N3 to N3&= to be used b# defendant in appl#ing for a letter of credit.*aid invoice re2uired that the letter of credit be opened in favor of *chubac+aburg. 6efendant ac+no!ledged receipt of the invoice <t.s.n., / 6eceber /?',p. '0=.

An order confiration <E7hs. ", "3= !as later sent b# *chubac+ aburg to plaintiff !hich !as for!arded to and received b# defendant on Debruar# &, /? <t.s.n., &6ec. /?', p. ')=.

$n Debruar# (, /?), plaintiff reinded defendant to open the letter of credit toavoid dela# in shipent and pa#ent of interest <E7h. J=. 6efendant replied,entioning, aong others, the difficult# he !as encountering in securing8 there2uired dollar allocations and appl#ing for the letter of credit, procuring a loan andloo+ing for a partner3financier, and of finding !a#s to proceed !ith our orders4 <E7h.O=.

"n the eantie, *chubac+ aburg received invoices fro, N6O for partialdeliveries on $rder No.))0' <6irect "nterrogatories., 01 $ct, /?-, p. &=. *chubac+aburg paid N6O. %he latter confired receipt of pa#ents ade on Debruar# (,/?' <E7h.C36eposition=.

$n $ctober ?, /?), Plaintiff again reinded defendant of his order and advisedthat the case a# be endorsed to its la!#ers <E7h. =. 6efendant replied that he didnot a+e an# valid Purchase $rder and that there !as no definite contract bet!eenhi and plaintiff <E7h. M=. Plaintiff sent a reoinder e7plaining that there is a validPurchase $rder and suggesting that defendant either proceed !ith the order and

open a letter of credit or cancel the order and pa# the cancellation fee of &0 of D.$.B. value, or plaintiff !ill endorse the case to its la!#ers <E7h. N=.

*chubac+ aburg issued a *tateent of Account <E7h. P= to plaintiff enclosingthere!ith 6ebit Note <E7h. $= charging plaintiff &0 cancellation fee, storage andinterest charges in the total aount of 6M -,/1.?. *aid aount !as deductedfro plaintiffs account !ith *chubac+ aburg <6irect "nterrogatories, 01 $ctober,/?-=.

6eand letters sent to defendant b# plaintiffs counsel dated March )), /?& andJune /, /?& !ere to no avail <E7hs R and *=.

Conse2uentl#, petitioner filed a coplaint for recover# of actual or copensator# daages, unearnedprofits, interest, attorne#s fees and costs against private respondent.

"n its decision dated June &, /??, the trial court 4 ruled in favor of petitioner b# ordering privaterespondent to pa# petitioner, aong others, actual copensator# daages in the aount of 6M-,/1.?, unearned profits in the aount of 6M ',0(.01, or their peso e2uivalent.

%hereafter, private respondent elevated his case before the Court of Appeals. $n Debruar# ?, //), theappellate court reversed the decision of the trial court and disissed the coplaint of petitioner. "t ruledthat there !as no perfection of contract since there !as no eeting of the inds as to the price bet!eenthe last !ee+ of 6eceber /? and the first !ee+ of Januar# /?).

%he issue posed for resolution is !hether or not a contract of sale has been perfected bet!een theparties.

e reverse the decision of the Court of Appeals and reinstate the decision of the trial court. "t bearsephasizing that a 4contract of sale is perfected at the oent there is a eeting of inds upon thething !hich is the obect of the contract and upon the price. . . . 4

Article &/ of the Civil Code states8 4Consent is anifested b# the eeting of the offer and acceptanceupon the thing and the cause !hich are to constitute the contract. %he offer ust be certain and theacceptance absolute. A 2ualified acceptance constitutes a counter offer.4 %he facts presented to usindicate that consent on both sides has been anifested.

%he offer b# petitioner !as anifested on 6eceber 1, /? !hen petitioner subitted its proposalcontaining the ite nuber, 2uantit#, part nuber, description, the unit price and total to privaterespondent. $n 6eceber )', /?, private respondent infored petitioner of his desire to avail of theprices of the parts at that tie and siultaneousl# enclosed its Purchase $rder No. 0l0 dated 6eceber', /?. At this stage, a eeting of the inds bet!een vendor and vendee has occurred, the obect of

the contract8 being the spare parts and the consideration, the price stated in petitioners offer dated6eceber 1, /? and accepted b# the respondent on 6eceber )',/?.

Although said purchase order did not contain the 2uantit# he !anted to order, private respondent adegood, his proise to counicate the sae on 6eceber )/, /?. At this uncture, it should be pointedout that private respondent !as alread# in the process of e7ecuting the agreeent previousl# reachedbet!een the parties.

Belo! E7h. >3&, ar+ed as E7hibit >3&3A, there appears this stateent ade b# private respondent84Note. above P.$. !ill include a & discount. %he above !ill serve as our initial P.$.4 %his notation on thepurchase order !as another indication of acceptance on the part of the vendee, for b# re2uesting a &discount, he iplicitl# accepted the price as first offered b# the vendor. %he iediate acceptance b# thevendee of the offer !as ipelled b# the fact that on Januar# , /?), prices !ould go up, as in fact, thepetitioner infored hi that there !ould be a 1 increase, effective Januar# /?). $n the other hand,concurrence b# the vendor !ith the said discount re2uested b# the vendee !as anifested !hen

petitioner iediatel# ordered the ites needed b# private respondent fro *chubac+ aburg !hich inturn ordered fro N6O, a supplier of MAN spare parts in est >eran#.



hen petitioner for!arded its purchase order to N6O, the price !as still pegged at the old one. %hus, thepronounceent of the Court Appeals that there as no confired price on or about the last !ee+ of 6eceber /? andLor the first !ee+ of Januar# /?) !as erroneous.

hile !e agree !ith the trial courts conclusion that indeed a perfection of contract !as reached bet!eenthe parties, !e differ as to the e7act date !hen it occurred, for perfection too+ place, not on 6eceber)/, /?. Although the 2uantit# to be ordered !as ade deterinate onl# on 6eceber )/, /?,2uantit# is iaterial in the perfection of a sales contract. hat is of iportance is the eeting of theinds as to the o&'ect and cause, !hich fro the facts disclosed, sho! that as of 6eceber )', /?,these essential eleents had alread# occurred.

$n the part of the bu#er, the situation reveals that private respondent failed to open an irrevocable letterof credit !ithout recourse in favor of Johannes *chubac+ of aburg, >eran#. %his oission, ho!ever.

does not prevent the perfection of the contract bet!een the parties, for the opening of the letter of creditis not to be deeed a suspensive condition. %he facts herein do not sho! that petitioner reserved title tothe goods until private respondent had opened a letter of credit. Petitioner, in the course of its dealings!ith private respondent, did not incorporate an# provision declaring their contract of sale !ithout effectuntil after the fulfillent of the act of opening a letter of credit.

%he opening of a etter of credit in favor of a vendor is onl# a ode of pa#ent. "t is not aong theessential re2uireents of a contract of sale enuerated in Article &0- and '1' of the Civil Code, theabsence of an# of !hich !ill prevent the perfection of the contract fro ta+ing place.

%o adopt the Court of Appeals ruling that the contract of sale !as dependent on the opening of a letter of credit !ould be untenable fro a pragatic point of vie! because private respondent !ould not be ableto avail of the old prices !hich !ere open to hi onl# for a liited period of tie. %his e7plains !h#private respondent iediatel# placed the order !ith petitioner !hich, in turn proptl# contacted itstrading partner in >eran#. As succinctl# stated b# petitioner, 4it !ould have been ipossible for

respondent to avail of the said old prices since the perfection of the contract !ould arise uch later, orafter the end of the #ear /?, or !hen he finall# opens the letter of credit.4 6

ERED$RE, the petition is >RAN%E6 and the decision of the trial court dated June &, /?? isRE"N*%A%E6 !ith odification.

*$ $R6ERE6.

eliciano, "idin, +elo and 5itu%, ((., concur.

= #oo+'o+

Penned b# Justice Arteon 6. una and concurred in b# Justices *erafin E. Cailonand Celso . Magsino.

) erein private respondent.

& erein petitioner.

' Regional %rial Court of Ma+ati, Metro Manila, Branch '(. <Penned b# Justice Jose .Coscolluela, Jr.=

- Civil Code, Article '1-, C C Coercial Corp. v. PNB, >.R. No. /)'//, Jul# -,/?/, 1- *CRA5 N>A v. "nterediate Appellate Court, >.R. No. 1//10, March ?,

/?/, 1 *CRA &.

( Rollo, p. '(.


D"R*% 6";"*"$N

G.R. No. 90 *&'&r 11, 199

EL)ERTO NOEL >'o? PNTO . MERCAO@ & AMNSTRATOR O# T%E NTESTATE ESTATEO# GREGORO NANAMAN &'( %LARA TA)UCLN, petitioner,

vs.COURT O# APPEALS &'( *OSE C. ELESTE, respondents.

G.R. No. 60636 *&'&r 11, 199

PNTO . MERCAO, & SPECAL AMNSTRATOR O# T%E NTESTATE ESTATE O# GREGORONANAMAN &'( %LARA TA)UCLN, petitioner,vs.%ONORA)LE COURT O# APPEALS &'( *OSE C. ELESTE, respondents.

UASON, J.:

%he consolidated cases, >.R. Nos. -/--0 and (0(&(, are petitions for revie! on certiorari under Rule '-of the Revised Rules of court of the Aended 6ecision dated Ma# ', /? of the Court of Appeals in CA3>.R. No. -(&0&3R, !hich affired in toto the decision of the Court of Dirst "nstance, Branch "", anao delNorte in *pecial Proceedings No. -/( <""3/'= in favor of Jose C. 6eleste, private respondent herein.

"

>regorio Nanaan and ilaria %abuclin <Nanaan spouses= !ere a childless, legall#3arried couple.>regorio, ho!ever, had a child naed ;irgilio Nanaan b# another !oan. *ince he !as t!o #ears old,;irgilio !as reared b# >regorio and ilaria. e !as sent to school b# the couple until he reached third#ear of the la! course.

6uring their arriage, >regorio and ilaria ac2uired certain propert# including a &'.13hectare land in

%abo, "ligan Cit# on !hich the# planted sugarcane, corn and bananas. %he# also lived there !ith ;irgilioand fifteen tenants.

$n $ctober ), /'-, >regorio died. ilaria then adinistered the propert# !ith the help of ;irgilioeno#ed the procedure of the land to the e7clusion of Juan Nanaan, the brother of >regorio, andEsperanza and Caridad Nanaan, >regorios daughters b# still another !oan. "n /-&, ;irgilio declaredthe propert# in his nae for ta7ation purposes under %a7 6eclaration No. --&' <E7hs. & &3A=. $nNoveber , /-), ilaria and ;irgilio, ortgaged the &'.13hectare land in favor of private respondent,in consideration of the aount of P',?00.00 <E7h. -=.

$n Debruar# (, /-', ilaria and ;irgilio e7ecuted a deed of sale over the sae tract of land also infavor of private respondent in consideration of the su of P(,000.00 <E7h. 1=. itnesses to the sale!ere the !ife of ;irgilio, Rosita *. Nanaan, Rufo C. *alas, the driver of private respondent, andReedios Pilotan. %he docuent !as notarized on Debruar# 1, /-' and !as registered !ith theRegister of 6eeds of "ligan cit# on March ), /-'. %he ta7 declaration in the nae of ;irgilio !as

cancelled and a ne! ta7 declaration !as issued in the nae of private respondent. aving discovered thatthe propert# !as in arrears in the pa#ent of ta7es fro /-), private respondent paid the ta7es for/-), /-& and /-' <E7hs. &3B, &3C '3B=. Dro then on, private respondent has paid the ta7es onthe propert#.



$n Ma# -, /-', ilaria died. $n $ctober )1, /-', Esperanza and Caridad Nanaan filed intestateestate proceedings concerning the estate of their father, >regorio. "ncluded in the list of propert# of theestate !as the &'.13hectare land. "nasuch as onl# Esperanza, Caridad and ;irgilio Nanaan !erenaed as heirs of >regorio in the petition, Juan Nanaan, >regorios brother, opposed it. $n Noveber)(, /-', the petition !as aended to include the estate of ilaria !ith Aleo %abuclin, ilarias brother,and Julio %abuclin, a son of ilarias deceased brother, Jose, as additional petitioners.

aving been appointed special adinistrator of the estate of the Nanaan couple, Juan Nanaanincluded the &'.13hectare land in the list of the assets of the estate.

Juan also reported that ;irgilio too+ the aount of P&-0.00 fro the procedure of the estate !ithout priorperission and that five tenants in contept of court. Accordingl#, in its $rder of Januar# &0, /-(, theprobate court re2uired private respondent and said tenants to appear before it and 4sho! cause !h# the#

should not be cited for contept for illegall# interfering in the land4 under special adinistration.

$n June (, /-(, !hen Edilberto Noel too+ over as regular adinistrator of the estate, he !as not ableto ta+e possession of the land in 2uestion because it !as in the possession of private respondent andsoe heirs of ilaria.

$n Jul# ?, /-1, private respondent and the heirs of the Nanaan spouses e7ecuted an aicablesettleent of the Nanaan estate. "n the docuent, private respondent agreed 4to relin2uish his rightsto one3half <L)= of the entire parcel of land in %abo, "ligan Cit#, indicated in ite under the Estate,sold to hi b# ilaria %abuclin, in favor of all the heirs of the aboveentioned intestate estateQ for thereason that not all of the heirs of >regorio Nanaan have signed and agreed4 <>.R. No. (0(&(, Rollo, p.(1=. %he court approved the aicable settleent but !hen it !as 2uestioned b# soe heirs, the court setaside its approval and declared it null and void <E7h. 3=.

%he court thereafter ordered Noel, as regular adinistrator, to file an action to recover the &'.13hectareland fro private respondent. Conse2uentl#, on April &0, /(&, Noel filed an action against privaterespondent for the version of title over the &'.13hectare land to the Nanaan estate and to order privaterespondent to pa# the rentals and attorne#s fees to the estate.

$n 6eceber ', /1&, the trial court rendered a decision, holding that the action for annulent of thedeed of sale had prescribed in /-? inasuch as the sale !as registered in /-' and that >regorios heirshad slept on their rights b# allo!ing ilaria to e7ercise rights of o!nership over >regorios share of theconugal propert# after his death in /'-. $n the issue that ilaria had no authorit# to dispose of one3half of the propert# pertaining to her husband, the trial court ruled8 <= that ilaria in effect acted asadinistratri7 over the estate of >regorio5 <)= that she sold the &'.13 hectare land in order to pa# thedebts of the conugal partnership5 and <&= that out of the purchase price of P(,000.00, P',000.00 !as inpa#ent to private respondent <!ho !as a doctor of edicine= for edical services rendered andedicine adinistered during >regorios ailent and P?00.00 !as used to pa# ta7es in arrears.

Noel appealed to the Court of Appeals. "n its 6ecision of Debruar# ?, /?0, the appellate court ruled thatthe transaction bet!een ilaria and ;irgilio on one hand and private respondent on the other, !as indeeda sale. "t found that no fraud, ista+e or isrepresentation attended in the e7ecution of the deed of saleand that no proof !as sho!n that the contract !as erel# a ortgage.

%he appellate court, ho!ever, agreed !ith Noel that ilaria could not validl# sell the &1.13hectare landbecause it !as conugal propert#, and ilaria could sell onl# her one3half share thereof.

$n the issue of prescription, the appellate court ruled that since no fraud, ista+e or isrepresentationattended the e7ecution of the deed of sale, the prescriptive period of ten #ears had not #et elapsed !henthe action to recover the propert# !as filed in /(&. Moreover, the appellate court held that in theabsence of proof of adverse possession b# ilaria, she should be considered as holding the propert#pursuant to her usufructuar# rights over the sae under the provisions of the *panish Civil Code of ??/,the la! in force at the tie of the death of >regorio.

Dinding that Noels clai for rentals of P-,000.00 per annum fro /-1 !as uncontroverted, theappellate court ruled that one3half thereof belonged to the estate of >regorio. %he dispositive portion of the decision states8

ERED$RE, the udgent appealed fro is set aside and another is hereb# entereddeclaring the intestate estate of >regorio Nanaan and the defendant3appellee co3o!ners of the land in 2uestion in the proportion of one3half <L)= interest each5ordering defendant3appellee Jose C. 6eleste to return to plaintiff3appellant, asadinistrator of >regorio Nanaans estate the land in 2uestion, and to pa# plaintiff as such adinistrator the su of P),-00.00 as rental of the L) interest of the estatefro the #ear /-1 until the land is returned to the estate !ith legal interest frothe filing of plaintiffs coplaint5 and, to, pa# the e7penses of litigation and attorne#sfees to plaintiff in the su of P&,000.00. Costs against the appellee, Jose C. 6eleste<>.R. No. (0(&(, Rollo, p. ')=.

Private respondent filed a otion for the reconsideration of said decision pra#ing for the total affiranceof the decision of the trial court. Noel also filed a otion for reconsideration pra#ing for the return of o!nership and possession of the entire tract of land to the estate of the &'.13hectare land.

%he appellate court too+ into account that since >regorios death, ilaria and ;irgilio too+ ph#sicalpossession of the propert# and eno#ed its fruits !hich !ere delivered to the b# the tenants5 that;irgilio instituted said tenants5 and that he declared the propert# in his o!n nae for ta7 purposes. %hecourt also ruled that the non3pa#ent of the real estate ta7es b# Juan constituted abandonent of thepropert# and his non3filing of an action to recover the sae fro the tie that private respondent4usurped4 the propert# until the filing of the coplaint in /(& b# Noel aounted to laches <>.R. No.(0(&(, Rollo, p. -0=.

ence, the appellate court tac+ed 4the ph#sical possession of ilaria and ;irgilio to the possession of thedefendant for another nine </= #ears up to the tie the coplaint !as filed.4 "t considered the 4change of conditions or relations4 !hich had transpired in the case such as private respondents registration of hisunient of title over the propert#5 the cancellation of ;irgilios ta7 declaration and the issuance of another ta7 declaration in the nae of private respondent5 private respondents pa#ent of ta7es fro/-) 4up to the present54 the e7ecution of a ne! tenanc# agreeent bet!een private respondent and the

tenants5 and private respondents purchase of plo!s, a carabao and insecticides for use in the ricefield.

*tating that it !as 4proscribed fro ta+ing a!a# propert# fro the alert and the industrious and dupingit into the hands and possession of one has previousl# slept on his rights,4 the appellate court in itsaended decision decreed8

ERED$RE, $ur decision of Debruar# ?, /?0 is hereb# affired and reiteratedinsofar as it upheld the regularit# and due e7ecution of the deed of sale <E7h. A or 1=and the transaction affecting the undivided one3half portion of the propert# describedin par. & of the coplaint appertaining to the share of ilaria %abuclin, as evidencedb# said E7h. A or 1, and is reconsidered and set aside and another one enteredaffiring the decision of the lo!er court in all its parts, including the a!ard of daages and the costs of suit. No costs in this instance <>.R. No.(0(&(, Rollo, p. 728.

""

Pinito . Mercado, as ne! adinistrator of the estate, appealed to this Court, 2uestioning the court of Appeals Aended 6ecision appl#ing the doctrine of laches and e2uating the said doctrine !ith ac2uisitiveprescription <>.R. No. -/--0=.

*ubse2uentl#, another petition for certiorari to declare the sale to private respondent as an e2uitableortgage, !as filed b# Att#. Bonifacio egaspi <>.R. No. (0(&(=. *aid counsel e7plained that herepresented the heirs of ilaria !hile the counsel in >.R. No. -/--0 represented the heirs of >regorio<>.R. No. (0(&(, Rollo, pp. 0'301=. %hese t!o cases, arising as the# do fro the sae decision of theCourt of Appeals, !ere consolidated in the resolution of *epteber ), // and are herein ointl#considered.

"""

%here are no cogent reasons to deviate fro the ruling of the Court of Appeals that the contract involvingthe &'.13hectare propert# !as one of sale and not of ortgage in the absence of a sho!ing that thefindings coplained of are totall# devoid of support in the record or that the# are so glaringl# erroneous



as to constitute serious abuse of discretion <Andres v. Manufacturers anover %rust Corporation, 11*CRA (? /?/Q=. "t should be noted that t!o contracts had been e7ecuted involving said propert# <theNoveber , /-) ortgage and the Debruar# (, /-' sale=. "n the absence of proof of grossinade2uac# of the price, that the sale !as ade !ith !hat ight appear as an inade2uate considerationdoes not a+e the contract one of ortgage <As+a# v. Cosalan, '( Phil. 1/ /)'Q=.

e find, ho!ever, that the resolution of these petitions hinges on !hether ilaria and ;irgilio coulddispose of the entire propert# sold to private respondent and assuing that the# did not have fullo!nership thereof, !hether the right of action to recover the share of the collateral heirs of >regorio hadprescribed or been lost through laches.

>regorio died in /'- long before the effectivit# of the Civil Code of the Philippines on August &0, /-0.:nder Article ))(& of the said Code, 4rights to the inheritance of a person !ho died, !ith or !ithout a

!ill, before the effectivit# of this Code, shall be governed b# the Civil Code of ??/, b# other previousla!s, and b# the rules of Court.4

%hus, succession to the estate of >regorio !as governed priaril# b# the provisions of the *panish CivilCode of ??/. :nder Article /-& thereof, a spouse li+e ilaria, !ho is survived b# brothers or sisters orchildren of brothers or sisters of the decedent, as is obtaining in this case, !as entitled to receive inusufruct the part of the inheritance pertaining to said heirs. ilaria, ho!ever, had full o!nership, noterel# usufruct, over the undivided half of the estate <*panish Civil Code of ??/, Art. '/&=. "t is onl#this undivided half3interest that she could validl# alienate.

$n the other hand, ;irgilio !as not an heir of >regorio under the *panish Civil Code of ??/. Although he!as treated as a child b# the Nanaan spouses, illegitiate children !ho !ere not natural !eredis2ualified to inherit under the said Code <Cid v. Burnaan, )' *CRA '&' /(?Q=. Article //? of theCivil Code of the Philippines, !hich gave an illegitiate child certain hereditar# rights, could not benefit;irgilio because the right of o!nership of the collateral heirs of >regorio had becoe vested upon his

death <Civil Code of the Philippines, Art. ))-&5 :son v. 6el Rosario, /) Phil. -&0 /-&Q=. %herefore,;irgilio had no right at all to transfer o!nership over !hich he did not o!n.

"n a contract of sale, it is essential that the seller is the o!ner of the propert# he is selling. %he principalobligation of a seller is 4to transfer the o!nership of4 the propert# sold <Civil Code of the Philippines, Art.'-?=. %his la! stes fro the principle that nobod# can dispose of that !hich does not belong to hi<Azcona v. Re#es, -/ Phil. ''( /&'Q5 Coronel v. $na, && Phil. '-( /(=. 6+O )#/ 9:#) O 4#"6/ .

hile it cannot be said that fraud attended the sale to private respondent, clearl# there !as a ista+e onthe part of ilaria and ;irgilio in selling an undivided interest in the propert# !hich belonged to thecollateral heirs of >regorio.

%he sale, having been ade in /-', !as governed b# the Civil Code of the Philippines. :nder Article'-( of said Code, an iplied trust !as created on the one3half undivided interest over the &'.13hectareland in favor of the real o!ners.

*aid Article provides8

"f propert# is ac2uired through ista+e or fraud, the person obtaining it is, b# forceof la!, considered a trustee of an iplied trust for the benefit of the person fro!ho the propert# coes.

"n )ia* v. Gorricho, 0& Phil. )( </-?=, the Court said that Article '-( erel# e7presses a rulerecognized inGayondato v. $nsular /reasurer , '/ Phil. )'' </)(=. Appl#ing said rule,the Gayondato court held that the bu#er of a parcel of land at a public auction to satisf# a udgentagainst a !ido! ac2uired onl# one3half interest the land corresponding to the share of the !indo! andthe other half belonging to the heirs of her husband becae ipressed !ith a constructive trust in behalf of said heirs.

$n the issue of prescription, !e hold that the action for recover# of title or possession over the &'.13hectare land had not #et prescribed !hen the coplaint !as filed on April &0, /(&.

"n its Aended 6ecision, the Court of Appeals rec+oned the prescriptive period fro the death of >regorio on $ctober ), /'-.

:nder the la! in force in /'-, the surviving spouse !as given the anageent of the conugal propert#until the affairs of the conugal partnership !ere terinated. %he surviving spouse becae the o!ner of one3half interest of the conugal estate in his o!n right. he also becae a trustee !ith respect to theother half for the benefit of !hoever a# be legall# entitled to inherit the said portion. 4e couldtherefore no ore ac2uire a title b# prescription against those for !ho he !as adinistering theconugal estate than could a guardian his !ard or a udicial adinistrator against the heirs of anestate. . . . %he surviving husband as the adinistrator and li2uidator of the conugal estate occupies theposition of a trustee of the highest order and is not peritted b# the la! to hold that estate or an#portion thereof adversel# to those for !hose benefit the la! iposes upon hi dut# of adinistration andli2uidation4 <Paittan v. asa, (0 Phil. /0? /&'Q=.

%he possession of ;irgilio, his registration of the land in his nae for ta7 purposes, his hiring of tenants totill the land, and his eno#ent of the produce of the tenants, appear ore as acts done to help ilaria inanaging the conugal propert#. %here is no evidence to prove indubitabl# that ;irgilio asserted a clai of o!nership over the propert# in his o!n right and adverse to all including ilaria.

"n the sae anner, the doctrine of laches does not appl#. :pon orders of the court in the intestateproceedings, Noel, the adinistrator of the estate of the Nanaan spouses, iediatel# filed an action torecover possession and o!nership of the propert#. %here is no evidence sho!ing an# failure or neglect onhis part, for an unreasonable and une7plained length of tie, to do that !hich, b# e7ercising duediligence, could or should have been done earlier <Cristobal v. Melchor, 1? *CRA 1- /11Q=. %hedoctrine of stale deands !ould appl# onl# !here b# reason of the lapse of tie, 4iQt !ould beine2uitable to allo! a part# to enforce his legal rights4 <.E. otho, "nc. v. "ce and cold *torage "ndustriesof the Philippines, "nc., & *CRA 1'' /(Q=. Moreover, this Court, e7cept for ever# strong reasons, is notdisposed to sanction the application of the doctrine of laches to preudice or defeat the right of an o!neror original transferee <Raneses v. "nterediate Appellate Court, ?1 *CRA &/1 //0Q=.

%he action to recover the undivided half3interest of the collateral heirs of >regorio prescribes in ten #ears.%he cause of action is based on Article '-( of the Civil Code of the Philippines, !hich ade privaterespondent a trustee of an iplied trust in favor of the said heirs. :nder Article '' of the Civil Code of the Philippines, actions based upon an obligation created b# la!, can be brought !ithin ten #ears frothe tie the right of action accrues <Rosario v. Auditor >eneral, 0& Phil. &) /-?Q= .

%he ten3#ear prescriptive period !ithin !hich the collateral heirs of >regorio could file an action torecover their share in the propert# sold to private respondent < prescripcion e;tintiva= accrued onl# onarch ), /-', !hen the deed of sale !as registered !ith the Register of 6eeds <Cf. Arradaza v. Court of Appeals, 10 *CRA ) /?1Q=. Dro arch ), /-' to April &0, /(&, !hen the coplaint for therecover# of the propert# !as filed, less than ten #ears had elapsed. %herefore, the action had not beenbarred b# prescription.

%he ten3#ear prescriptive period before title to real estate shall vest b# adverse possession < prescripcionad0uisitiva= is also rec+oned in the case of private respondent fro March ), /-' <Corporacion de PP.Agustinos Recoletos v. Crisostoo, &) Phil. ')1 /-Q=.

ERED$RE, the Aended 6ecision dated Ma# ', /? of the Court of Appeals is RE;ER*E6 and *E%A*"6E and the 6ecision dated Debruar# ?, /?0 is RE"N*%A%E6 and ADD"RME6 in toto.

*$ $R6ERE6.

Padilla, )avide, (r., "ellosillo and <apunan, ((., concur.

%"R6 6";"*"$N

BG.R. No. 11663. *l 24, 1997

CONC%TA NOOL &'( GAUENCO ALMO*ERA, petitioner, vs. COURT O# APPEALS, ANACLETO

NOOL &'( EMLA NE)RE, respondents.



E C S O N

PANGAN)AN, J .

A contract of repurchase arising out of a contract of sale !here the seller did not have an# title tothe propert# SsoldT is not valid. *ince nothing !as sold, then there is also nothing to repurchase.

S+&+'+ oD +5 C&

%his postulate is e7plained b# this Court as it resolves this petition for revie! on certiorari assailingthe Januar# )0, //& 6ecisionQ of Respondent Court of Appeals )Q in CA3>.R. C; No. &('1&, affiring thedecision&Q of the trial court 'Q !hich disposed as follo!s8-Q

SERED$RE, udgent is hereb# rendered disissing the coplaint for no cause of action,and hereb#8

. 6eclaring the private !riting, E7hibit UCV, to be an option to sell, notbinding and considered validl# !ithdra!n b# the defendants for !ant of consideration5

). $rdering the plaintiffs to return to the defendants the su of P&0,000.00plus interest thereon at the legal rate, fro the tie of filing of defendantsV counterclai until the sae is full# paid5

&. $rdering the plaintiffs to deliver peaceful possession of the t!o hectaresentioned in paragraph 1 of the coplaint and in paragraph & of defendantsV ans!er <counterclai=5

'. $rdering the plaintiffs to pa# reasonable rents on said t!o hectaresat P-,000.00 per annu or at P),-00.00 per cropping fro the tie of udicial deand entioned in paragraph ) of the dispositive portion of this decision, until the said t!o hectares shall have been delivered to thedefendants5 and

-. %o pa# the costs.

*$ $R6ERE6.T

T5 A'+('+ #&+

%he facts, !hich appear undisputed b# the parties, are narrated b# the Court of Appeals as follo!s8

S%!o <)= parcels of land are in dispute and litigated upon here. %he first has an area of hectare . "t !as forerl# o!ned b# ;ictorino Nool and covered b# %ransfer Certificate of %itle

No. %31'/-0. ith an area of &.0??0 hectares, the other parcel !as previousl# o!ned b#Drancisco Nool under %ransfer Certificate of %itle No. %300/'-. Both parcels are situated in*an Manuel, "sabela. %he plaintiff spouses, Conchita Nool and >audencio Aloera, no! theappellants, see+ recover# of the aforeentioned parcels of land fro the defendants, AnacletoNool, a #ounger brother of Conchita, and Eilia Nebre, no! the appellees.

"n their coplaint, plaintiff3appellants alleged inter alia that the# are the o!ners of subect parcels of land, and the# bought the sae fro ConchitaVs other brothers, ;ictorino Nool and Drancisco Nool5 thatas plaintiffs !ere in dire need of one#, the# obtained a loan fro the "ligan Branch of the 6evelopentBan+ of the Philippines, in "lagan, "sabela, secured b# a real estate ortgage on said parcels of land,!hich !ere still registered in the naes of ;ictorino Nool and Drancisco Nool, at the tie, and for thefailure of plaintiffs to pa# the said loan, including interest and surcharges, totaling P-(,000.00, theortgage !as foreclosed5 that !ithin the period of redeption, plaintiffs contacted defendant AnacletoNool for the latter to redee the foreclosed properties fro 6BP, !hich the latter did5 and as a result, thetitles of the t!o <)= parcels of land in 2uestion !ere transferred to Anacleto Nool5 that as part of theirarrangeent or understanding, Anacleto Nool agreed to bu# fro the plaintiff Conchita Nool the t!o <)=

parcels of land under controvers#, for a total price of P00,000.00, P&0,000.00 of !hich price !as paid toConchita, and upon pa#ent of the balance of P',000.00, plaintiffs !ere to regain possession of the t!o<)= hectares of land, !hich aounts defendants failed to pa#, and the sae da# the saidarrangeent(Q !as ade5 another covenant1Q !as entered into b# the parties, !hereb# defendantsagreed to return to plaintiffs the lands in 2uestion, at an#tie the latter have the necessar# aount5 that

plaintiffs as+ed the defendants to return the sae but despite the intervention of the Baranga# Captain of their place, defendants refused to return the said parcels of land to plaintiffs5 thereb# ipelling the<plaintiffs= to coe to court for relief.

"n their ans!er defendants3appellees theorized that the# ac2uired the lands in 2uestion frothe 6evelopent Ban+ of the Philippines, through negotiated sale, and !ere isled b#plaintiffs !hen defendant Anacleto Nool signed the private !riting agreeing to return subectlands !hen plaintiffs have the one# to redee the sae5 defendant Anacleto having beenade to believe, then, that his sister, Conchita, still had the right to redee the saidproperties.

%he pivot of in2uir# here, as aptl# observed belo!, is the nature and significance of theprivate docuent, ar+ed E7hibit U6V for plaintiffs, !hich docuent has not been denied b#the defendants, as defendants even averred in their Ans!er that the# gave an advancepa#ent of P&0,000.00 therefor, and ac+no!ledged that the# had a balance of P',000.00 to

coplete their pa#ent. $n this crucial issue, the lo!er court adudged the said private!riting <E7hibit U6V= as an option to sell not binding upon and considered the sae validl#!ithdra!n b# defendants for !ant of consideration5 and decided the case in the anneraboveentioned.

%here is no 2uibble over the fact that the t!o <)= parcels of land in dispute !ere ortgaged to the6evelopent Ban+ of the Philippines, to secure a loan obtained b# plaintiffs fro 6BP <"lagan Branch=,"lagan, "sabela. Dor the non3pa#ent of said loan, the ortgage !as foreclosed and in the process,o!nership of the ortgaged lands !as consolidated in 6BP <E7hibits & and ' for defendants=. After 6BPbecae the absolute o!ner of the t!o parcels of land, defendants negotiated !ith 6BP and succeeded inbu#ing the sae. B# virtue of such sale b# 6BP in favor of defendants, the titles of 6BP !ere cancelledand corresponding %ransfer Certificates of %itle <Anne7es UCV and U6V to the coplaint= issued to thedependants.T ?Q

"t should be stressed that Manuel *. Mallorca, authorized officer of 6BP, certified that the one3#earredeption period !as fro March (, /?) up to March -, /?& and that the MortgagorsV right of redeption !as not e7ercised !ithin this period. /Q ence, 6BP becae the absolute o!ner of said parcelsof land for !hich it !as issued ne! certificates of title, both entered on Ma# )&, /?& b# the Registr# of 6eeds for the Province of "sabela. 0Q About t!o #ears thereafter, on April , /?-, 6BP entered into a6eed of Conditional *aleQ involving the sae parcels of land !ith Private Respondent Anacleto Nool asvendee. *ubse2uentl#, the latter !as issued ne! certificates of title on Debruar# ?, /??. )Q

%he Court of Appeals ruled8&Q

SERED$RE, finding no reversible error infiring it, the appealed Judgent is hereb#ADD"RME6 in toto. No pronounceent as to costs.T

T5

Petitioners ipute to Respondent Court the follo!ing alleged SerrorsT8

S. %he onorable Court of Appeals, *econd 6ivision has isapplied the legal iportor eaning of E7hibit UCV in a !a# contrar# to la! and e7isting urisprudence in statingthat it has no binding effect bet!een the parties and considered validl# !ithdra!n b#defendants3appellees for !ant of consideration.

). %he onorable Court of Appeals, *econd 6ivision has iserabl# failed to givelegal significance to the actual possession and cultivation and appropriating e7clusivel#the pala# harvest of the t!o <)= hectares land pending the pa#ent of the reainingbalance of fourteen thousand pesos <P',000.00= b# defendants3appellees as indicatedin E7hibit UCV.

&. %he onorable Court of Appeals has seriousl# erred in affiring the decision of thelo!er court b# a!arding the pa#ent of rents per annu and the return of P&0,000.00 andnot allo!ing the plaintiffs3appellants to re3ac2uire the four <'= hectares, ore or less uponpa#ent of one hundred thousand pesos <P00,000.00= as sho!n in E7hibit U6V.T 'Q

T5 Cor+ Rli';

http://sc.judiciary.gov.ph/jurisprudence/1997/jul1997/116635.htm#_edn1

































%he petition is bereft of erit.

#ir+ Are Exhibits “C” and “D” Valid and Enforceable?

%he petitioner3spouses plead for the enforceent of their agreeent !ith private respondents ascontained in E7hibits SCT and S6,T and see+ daages for the latterVs alleged breach thereof. "n E7hibit C,!hich !as a private hand!ritten docuent labeled b# the parties as Resi&o ti <atula%an or Receipt of Agreeent, the petitioners appear to have SsoldT to private respondents the parcels of land in controvers#covered b# %C% No. %31'/-0 and %C% No. %300/'-. $n the other hand, E7hibit 6, !hich !as also aprivate hand!ritten docuent in "locano and labeled as <asuratan, private respondents agreed thatConchita Nool Scan ac2uire bac+ or repurchase later on said land !hen she has the one#.T -Q

"n see+ing to enforce her alleged right to repurchase the parcels of land, Conchita <oined b# herco3petitioner3husband= invo+es Article &10 of the Civil Code !hich andates that S<i=f the ters of acontract are clear and leave no doubt upon the intention of the contracting parties, the literal eaning of its stipulation shall control.T ence, petitioners contend that the Court of Appeals erred in affiring thetrial courtVs finding and conclusion that said E7hibits C and 6 !ere Snot erel# voidable but utterl# voidand ine7istent.T

e cannot sustain petitionersV vie!. Article &10 of the Civil Code is applicable onl# to valid and enforcea&le contracts. %he Regional %rial Court and the Court of Appeals ruled that the principal contractof sale contained in E7hibit C and the au7illiar# contract of repurchase in E7hibit 6 are both void. %hisconclusion of the t!o lo!er courts appears to find support in )i%nos vs. Court of #ppeals ,(Q !here theCourt held8

SBe that as it a#, it is evident that !hen petitioners sold said land to the Cabigas spouses,the# !ere no longer o!ners of the sae and the sale is null and void.T

"n the present case, it is clear that the sellers no longer had an# title to the parcels of land at the

tie of sale. *ince E7hibit 6, the alleged contract of repurchase, !as dependent on the validit# of E7hibitC, it is itself void. A void contract cannot give rise to a valid one.1Q ;eril#, Article ')) of the Civil Codeprovides that S<a= contract !hich is the direct result of a previous illegal contract, is also void andine7istent.T

e should ho!ever add that )i%nos did not cite its basis for ruling that a Ssale is null and voidT !here the sellers S!ere no longer the o!nersT of the propert#. *uch a situation <!here the sellers !ereno longer o!ners= does not appear to be one of the void contracts enuerated in Article '0/ of the CivilCode.?Q Moreover, the Civil Code/Q itself recognizes a sale !here the goods are to be Sac2uired 7 7 7 b#the seller after the perfection of the contract of sale,T clearl# ipl#ing that a sale is possible even if theseller !as not the o!ner at the tie of sale, provided he ac2uires title to the propert# later on.

"n the present case ho!ever, it is li+e!ise clear that the sellers can no longer deliver the obect of the sale to the bu#ers, as the bu#ers theselves have alread# ac2uired title and deliver# thereof fro therightful o!ner, the 6BP. %hus, such contract a# be deeed to be inoperative )0Q and a# thus fall, b#analog#, under ite no. - of Article '0/ of the Civil Code8 S%hose !hich conteplate an ipossibleservice.T Article '-/ of the Civil Code provides that Sthe vendor ust have a right to transfer the

o!nership thereof obect of the saleQ at the tie it is delivered.T ere, deliver# of o!nership is no longerpossible. "t has becoe ipossible.

Durtherore, Article -0- of the Civil Code provides that S!here goods are sold b# a person !ho isnot the o!ner thereof, and !ho does not sell the under authorit# or !ith consent of the o!ner, thebu#er ac2uires no better title to the goods than the seller had, unless the o!ner of the goods is b# hisconduct precluded fro den#ing the sellerVs authorit# to sell.T ere, there is no allegation at all thatpetitioners !ere authorized b# 6BP to sell the propert# to the private respondents. Jurisprudence, on theother hand, teaches us that Sa person can sell onl# !hat he o!ns or is authorized to sell5 the bu#er canas a conse2uence ac2uire no ore than !hat the seller can legall# transfer.T )Q No one can give !hat hedoes not have W neno dat 0uod non ha&et. $n the other hand, E7hibit 6 presupposes that petitionerscould repurchase the propert# that the# SsoldT to private respondents. As petitioners SsoldT nothing, itfollo!s that the# can also UrepurchaseT nothing. Nothing sold, nothing to repurchase. "n this light, thecontract of repurchase is also inoperative W and b# the sae analog#, void.

Contract of ReprchaseDependent on Validit! of "ale

As borne out b# the evidence on record, the private respondents bought the t!o parcels of landdirectl# fro 6BP on April , /?- after discovering that petitioners did not o!n said propert#, the subectof E7hibits C and 6 e7ecuted on Noveber &0, /?'. Petitioners, ho!ever, clai that the# can e7ercisetheir alleged right to SrepurchaseT the propert#, after private respondents had ac2uired the sae fro6BP.))Qe cannot accede to this, for it clearl# contravenes the intention of the parties and the nature of their agreeent. E7hibit 6 reads8

F R T N G

Nov. &0, /?'

%hat ", Anacleto Nool have bought fro # sister Conchita Nool a land an area of four

hectares <' has.= in the value of $ne undred %housand <00,000.00= Pesos. "t is ouragreeent as brother and sister that she canac2uire bac+ or repurchase later on said land!hen she has the one#. :nderscoring suppliedQ

As proof of this agreeent !e sign as brother and sister this !ritten docuent this da# of Nov. &0, /?', at 6istrict ', *an Manuel, "sabela.*gd ANACE%$ N$$ Anacleto Nool

*gd Eilio Paron itness

*gd ConchitaNool

ConchitaNoolT )&Q

$ne SrepurchasesT onl# !hat one has previousl# sold. "n other !ords, the right to repurchasepresupposes a valid contract of sale bet!een the same parties. :ndisputedl#, private respondentsac2uired title to the propert# fro 6BP, and not fro the petitioners.

Assuing ar%uendo that E7hibit 6 is separate and distinct fro E7hibit C and is not affected b# thenullit# of the latter, still petitioners do not thereb# ac2uire a right to repurchase the propert#. "n thatscenario, E7hibit 6 ceases to be a Sright to repurchaseT ancillar# and incidental to the contract of sale5rather, it becoes an accepted unilateral proise to sell. Article '1/ of the Civil Code, ho!ever,provides that San accepted unilateral proise to bu# or sell a deterinate thing for a price certain isbinding upon the proissor if the proise is supported b# a consideration distinct fro the price.T "n thepresent case, the alleged !ritten contract of repurchase contained in E7hibit 6 is bereft of an#consideration distinct fro the price. Accordingl#, as an independent contract, it cannot bind privaterespondents. %he ruling in)iamante vs. C#)'Q supports this. "n that case, the Court through Mr. Justice

ilario >. 6avide, Jr. e7plained8

SArticle (0 of the Civil Code provides8

UConventional redeption shall ta+e place !hen the vendor reserves the right torepurchase the thing sold, !ith the obligation to copl# !ith the provisions of article (( and other stipulations !hich a# have been agreed upon.T

"n ;illarica, et al . ;s. Court of Appeals, et al ., decided on )/ Noveber /(?, orbarel# seven <1= da#s before the respondent Court proulgated its decisions inthis case, this Court, interpreting the above Article, held8

S%he right of repurchase is not a right granted the vendor b# the vendee in asubse2uent instruent, but is a right reserved b# the vendor in the saeinstruent of sale as one of the stipulations of the contract. $nce the instruentof absolute sale is e7ecuted, the vendor can not longer reserve the right torepurchase, and an# right thereafter granted the vendor b# the vendee in aseparate instruent cannot be a right of repurchase but soe other right li+e theoption to bu# in the instant case. 7 7 7.T

"n the earlier case of Raos, et al . vs. "casiano, et al ., decided in /)1, this Courthad alread# ruled that San agreeent to repurchase becoes a proise to sell




























!hen ade after the sale, because !hen the sale is ade !ithout such anagreeent, the purchaser ac2uires the thing sold absolutel#, and if he after!ardsgrants the vendor the right to repurchase, it is a ne! contract entered into b# thepurchaser, as absolute o!ner alread# of the obect. "n that case the vendor hasnor reserved to hiself the right to repurchase.V

"n ;da. 6e Cruzo, et al . vs. Carriaga, et al . this Court found another occasion toappl# the foregoing principle.

ence, the $ption to Repurchase e7ecuted b# private respondent in the present case, !aserel# a proise to sell, !hich ust be governed b# Article '1/ of the Civil Code !hichreads as follo!s8

SArt. '1/. W A proise to bu# and sell a deterinate thing for a price certain isreciprocall# deandable.

UAn accepted unilateral proise to bu# or to sell a deterinate thing for a pricecertain is binding upon the proissor if the proise is supported b# aconsideration distinct fro the price.VT

Ri#ht to Reprchase $ased on

%o&estead or 'rst (on)Existent

Petitioners also base their alleged right to repurchase on <= *ec. / of the Public and Act )-Q and<)= an iplied trust relation as Sbrother and sister.T )(Q

%he Court notes that ;ictorino Nool and Drancisco Nool ortgaged the land to 6BP. %he brothers,together !ith Conchita Nool and Anacleto Nool, !ere all siblings and heirs 2ualified to repurchase the t!oparcels of land under *ec. / of the Public and Act !hich provides that S<e=ver# conve#ance of land

ac2uired under the free patent or hoestead provisions, !hen proper, shall be subect to repurchase b#the applicant, his !ido! or legal heirs, !ithin a period of five #ears fro the date of conve#ance.T Assuing the applicabilit# of this statutor# provision to the case at bar, it is indisputablethat Private Respondent Anacleto Nool alread# repurchased fro 6BP the contested properties. ence,there !as no ore right of repurchase that his sister Conchita or brothers ;ictorino and Drancisco coulde7ercise. %he properties !ere alread# o!ned b# an heir of the hoestead grantee and the rationale of the of the provision to +eep hoestead lands !ithin the fail# of the grantee !as thus fulfilled.)1Q

%he clai of a trust relation is li+e!ise !ithout erit. %he records sho! that private respondentsdid not purchase the contested properties fro 6BP in trust for petitioners. %he forer, as previousl#entioned, in fact bought the land fro 6BP upon realization that the latter could not validl# sell thesae. $bviousl#, petitioners bought it for theselves. %here is no evidence at all in the records thatthe# bought the land in trust for private respondents. %he fact that Anacleto Nool !as the #oungerbrother of Conchita Nool and that the# signed a contract of repurchase, !hich as discussed earlier !asvoid, does not prove the e7istence of an iplied trust in favor of petitioners.

So'( (o Estoppel in *&p#nin# theValidit! of Void Contracts

Petitioners argue that S!hen Anacleto Nool too+ the possession of the t!o hectares, ore or less,and let the other t!o hectares to be occupied and cultivated b# plaintiffs3appellants, Anacleto Nool cannotlater on disclai the ters or contions <sic= agreed upon and his actuation is !ithin the abit of estoppel7 7 7.T )?Q e disagree. %he private respondents cannot be estopped fro raising the defense of nullit# of contract, speciall# in this case !here the# acted in good faith, believing that indeed petitioners could sellthe t!o parcels of land in 2uestion. Article '0 of the Civil Code andates that S<t=he action or defensefor the declaration of the ine7istence of a contract does not prescribe.T "t is !ell3settled doctrine that Sasbet!een parties to a contract, validit# cannot be given to it b# estoppel if it is prohibited b# la! or it isagainst public polic# </ A. Jur. ?0)=. "t is not !ithin the copetence of an# citizen to barter a!a#!hat public polic# b# la! see+s to preserve.T )/Q %hus, it is iaterial that private respondents initiall#acted to ipleent the contract of sale, believing in good faith that the sae !as valid. e stress that acontract void at inception cannot be validated b# ratification or prescription and certainl# cannot be

binding on or enforceable against private respondents.&0Q

T5ir( Retrn of + -,---.-- ith *nterest

and +a!&ent of Rent

Petitioners further argue that it !ould be a Siscarriage of usticeT to order the <= to return thesu of P&0,000.00 to private respondents !hen allegedl# it !as Private Respondent Anacleto Nool !hoo!ed the forer a balance of P',000.00 and <)= to order petitioners to pa# rent !hen the# S!ereallo!ed to cultivate the said t!o hectares.T &Q

e are not persuaded. Based on the previous discussion, the balance of P',000.00 under the voidcontract of sale a# not be enforced. Petitioners are the ones !ho have an obligation to return !hatthe# undul# and iproperl# received b# reason of the invalid contract of sale. *ince the# cannot legall#give title to !hat the# Ssold,T the# cannot +eep the one# paid for the obect of the sale. "t is basic that S<e=ver# person !ho through an act of perforance b# another, or an# other eans, ac2uires or coesinto possession of soething at the e7pense of the latter !ithout ust or legal ground, shall return thesae.T &)Q%hus, if a void contract has alread# Sbeen perfored, the restoration of !hat has been given is

in order.T &&Q Corollaril# and as aptl# ordered b# respondent appellate court, interest thereon !ill run onl#fro the tie of private respondentsV deand for the return of this aount in their counterclai. &'Q "nthe sae vein, petitionersV possession and cultivation of the t!o hectares are anchored on privaterespondentsV tolerance. Clearl#, the latterVs tolerance ceased upon their counterclai and deand on theforer to vacate. ence, their right to possess and cultivate the land ipso facto ceased.

%ERE#ORE, the petition is 6EN"E6 and the assailed 6ecision of the Court of Appeals affiringthat of the trial court is hereb# ADD"RME6.

SO ORERE.

arvasa, C.(., =Chairman8, )avide, (r., +elo, and rancisco, ((., concur.

%"R6 6";"*"$N

BG.R. No. 9694. O+o/r 9, 1997

$CENTE $LLLA#LOR, /+i++( / 5i 5ir, petitioner, vs. COURT O# APPEALS &'( NASPTLUM)ER CO., NC., respondents.

E C S O N

PANGAN)AN ,J.

"n this rather factuall# coplicated case, the Court reiterates the binding force and effect of findingsof specialized adinistrative agencies as !ell as those of trial courts !hen affired b# the Court of Appeals5 reects petitionerVs theor# of siulation of contracts5 and passes upon the 2ualifications of private respondent corporation to ac2uire disposable public agricultural lands prior to the effectivit# of the/1& Constitution.

T5 C&

Before us is a petition for revie! on certiorari see+ing the reversal of the 6ecision Q of the Court of Appeals, dated *epteber )1, //0, in C.A. >.R. C; No. 0/0(), affiring the disissal b# the trial courtof Petitioner ;icente ;illaflorVs coplaint against Private Respondent Nasipit uber Co., "nc. %hedisposition of both the trial and the appellate courts are 2uoted in the stateent of facts belo!.

T5 #&+

%he facts of this case, as narrated in detail b# Respondent Court of Appeals, are as follo!s8 )Q

S%he evidence, testionial and docuentar#, presented during the trial sho! that on Januar# (, /'0,

Cirilo Piencenaves, in a 6eed of Absolute *ale <e7h. A=, sold to petitionerQ, a parcel of agricultural landcontaining an area of -0 hectares, &Q ore or less, and particularl# described and bounded as follo!s8















http://sc.judiciary.gov.ph/jurisprudence/1997/oct1997/95694.htm#_edn1



















UA certain parcel of agricultural land planted to abaca !ith visible concrete onuents ar+ing theboundaries and bounded on the N$R% b# Public and no! Private 6eeds on the East b# *erafin ;illaflor,on the *$:% b# Public and5 and on the est b# land claied b# . Patete, containing an area of (0hectares ore or less, no! under %a7 6ec. )/'- in the <sic= of said ;icente ;illaflor, the !hole parcel of !hich this particular parcel is onl# a part, is assessed at P)),--0.00 under the above said %a7 6ec.Nuber.V

%his deed states8

U%hat the above described land !as sold to the said ;"CEN%E ;"AD$R, 777 on June )), /&1, but noforal docuent !as then e7ecuted, and since then until the present tie, the said ;icente ;illaflor hasbeen in possession and occupation of <the sae=5 <and=

%hat the above described propert# !as before the sale, of # e7clusive propert# having inherited fro# long dead parents and # o!nership to it and that of # sicQ lasted for ore than fift# <-0= #ears,possessing and occup#ing sae peacefull#, publicl# and continuousl# !ithout interruption for that lengthof tie.V

Also on Januar# (, /'0, Claudio $tero, in a 6eed of Absolute *ale <e7h. C= sold to ;illaflor a parcel of agricultural land, containing an area of )' hectares, ore or less, and particularl# described and boundedas follo!s8

UA certain land planted to corn !ith visible concrete easureents ar+ing the boundaries and boundedon the North b# Public and and %ungao Cree+5 on the East b# Agusan River5 on the *outh b# *erafin;illaflor and Cirilo Piencenaves5 and on the est b# land of Derin Bacobo containing an area of )'hectares ore or less, under %a7 6eclaration No. )/'- in the nae alread# of ;icente ;illaflor, the !holeparcel of !hich this particular land is onl# a part, is assessed at P)),--0.00 under the above said %a76eclaration No. )/'-.V

%his deed states8

U%hat the above described land !as sold to the said ;"CEN%E ;"AD$R, 777 on June )), /&1, but nosound docuent !as then e7ecuted, ho!ever since then and until the present tie, the said ;icente;illaflor has been in open and continuous possession and occupation of said land5 <and=

%hat the above described land !as before the sale, # o!n e7clusive propert#, being inherited fro #deceased parents, and # o!nership to it and that of # predecessors lasted ore than fift# <-0= #ears,possessing and occup#ing the sae, peacefull#, openl# and continuousl# !ithout interruption for thatlength of tie.V

i+e!ise on Januar# (, /'0, erogenes Patete, in a 6eed of Absolute *ale <e7h. 6=, sold to ;illaflor, a

parcel of agricultural land, containing an area of )0 hectares, ore or less, and particularl# described andbounded as follo!s8

UA certain parcel of agricultural land planted to abaca and corn !ith visible concrete onuents ar+ingthe boundaries and bounded on the North b# Public and area3private Road5 on the East b# land claiedb# Cirilo Piencenaves5 on the *outh b# Public and containing an area of )0 hectares ore or less, no!under %a7 6eclaration No. )/'- in the nae of ;icente ;illaflor the !hole parcel of !hich this particularparcel, is assessed at P)),--0.00 for purposes of ta7ation under the above said %a7 6eclaration No.)/'-.V

%his deed states8

U777 <$=n June )), /&1 but the foral docuent !as then e7ecuted, and since then until the presenttie, the said ;"CEN%E ;"AD$R has been in continuous and open possession and occupation of thesae5 <and=

%hat the above described propert# !as before the sale, # o!n and e7clusive propert#, being inheritedfro # deceased parents and # o!nership to it and that of # predecessors lasted ore than fift#

<-0= #ears, possessing and occup#ing sae, peacefull#, openl# and continuousl# !ithout interruption forthat length of tie.V

$n Debruar# -, /'0, Derin Bocobo, in a 6eed of Absolute *ale <e7h. B=, sold to ;illaflor, a parcel of agricultural land, containing an area of ? hectares, ore or less, and particularl# described and boundedas follo!s8

UA certain parcel of agricultural land planted !ith abaca !ith visible part ar+ing the corners and boundedon the North b# the corners and bounded on the North b# Public and5 on the East b# Cirilo Piencenaves5on the *outh b# erogenes Patete and est b# Public and, containing an area of ? hectares ore orless no! under %a7 6eclaration No. )/'- in the nae of ;icente ;illaflor. %he !hole parcel of !hich thisparticular parcel is onl# a part is assessed as P)),--0.00 for purposes of ta7ation under the above said%a7 6eclaration Nuber <6eed of Absolute *ale e7ecuted b# Derin Bocobo date Deb. -, /'0=. %his

docuent !as annotated in Registr# of 6eeds on Debruar# (, /'0=.V

%his deed states8

U%hat the above described propert# !as before the sale of # o!n e7clusive propert#, being inheritedfro # deceased parents, and # o!nership to it and that of # predecessors lasted ore than fift#<-0= #ears, possessing and occup#ing the sae peacefull#, openl# and continuousl# !ithout interruptionfor that length of tie.V

$n Noveber ?, /'(, ;illaflor, in a ease Agreeent <e7h. 9= ,'Q leased to Nasipit uber Co., "nc. aparcel of land, containing an area of t!o <)= hectares, together !ith all the iproveents e7istingthereon, for a period of five <-= #ears fro June , /'( at a rental of P)00.00 per annu Uto cover theannual rental of house and building sites for thirt# three <&&= houses or buildings.V %his agreeent alsoprovides8-Q

U&. 6uring the ter of this lease, the essee is authorized and epo!ered to build and constructadditional houses in addition to the && houses or buildings entioned in the ne7t preceding paragraph,provided ho!ever, that for ever# additional house or building constructed the essee shall pa# unto theessor an aount of fift# centavos <X-0= per onth for ever# house or building. %he essee isepo!ered and authorized b# the essor to sublot <sic= the preises hereb# leased or assign the saeor an# portion of the land hereb# leased to an# person, fir and corporation5 <and=

'. %he essee is hereb# authorized to a+e an# construction andLor iproveent on thepreises hereb# leased as he a# dee necessar# and proper thereon, provided ho!ever, that an# andall such iproveents shall becoe the propert# of the essor upon the terination of this lease !ithoutobligation on the part of the latter to reiburse the essee for e7penses incurred in the construction of the sae.V

;illaflor claied having discovered that after the e7ecution of the lease agreeent, that Nasipit uber

Uin bad faith 7 7 7 surreptitiousl# grabbed and occupied a big portion of plaintiffVs propert# 7 7 7V5 thatafter a confrontation !ith the corporateVs <sic= field anager, the latter, in a letter dated 6eceber &,/1& <e7h. R=,(Q stated recalling having Uade soe sort of agreeent for the occupanc# <of the propert#at Acacia, *an Mateo=, but " no longer recall the details and " had forgotten !hether or not !e did occup##our land. But if, as #ou sa#, !e did occup# it, then <he is = sure that the copan# is obligated to pa# therental.V

$n Jul# 1, /'?, in an UAgreeent to *ellV <e7h. )=, ;illaflor conve#ed to Nasipit uber, t!o <)= parcelsof land 777 described as follo!s81Q

UPARCE $NE

Bounded on the North b# Public and and %ungao Cree+5 on the East b# Agusan River and *erafin;illaflor5 on the *outh b# Public and, on the est b# Public and. "proveents thereon consist of

abaca, fruit trees, coconuts and thirt# houses of i7ed aterials belonging to the Nasipit uberCopan#. 6ivided into ot Nos. -'), -'&, -'??, -'/0, -'/, -'/), -?-0, -?'/, -?(0, -?--, -?-,-?-', -?--, -?-/, -?-?, -?-1, -?-&, and -?-). Boundaries of this parcel of land are ar+ed b#concrete onuents of the Bureau of ands. Containing an area of ),000 hectares. Assessed atP1,(0.00 according to %a7 6eclaration No. ;3&- dated April ', /'(.












PARCE %$

Bounded on the North b# Pagudasan Cree+5 on the East b# Agusan River5 on the *outh b# %ungao Cree+5on the est b# Public and. Containing an area of '?,000 hectares ore or less. 6ivided into ot Nos.-', -'0, -'0/, and -&//. "proveents 00 coconut trees, productive, and &00 cacaotrees. Boundaries of said land are ar+ed b# concrete onuents of the Bureau pf <sic=ands. Assessed value 33 P(,)/0.00 according to %a7 No. &1, April ', /'(.V

%his Agreeent to *ell provides8

U&. %hat beginning toda#, the Part# of the *econd Part shall continue to occup# the propert# notan#ore in concept of lessee but as prospective o!ners, it being the sense of the parties hereto that thePart# of the *econd Part shall not in an# anner be under an# obligation to a+e an# copensation tothe Part# of the Dirst Part, for the use, and occupation of the propert# herein before described in suchconcept of prospective o!ner, and it li+e!ise being the sense of the parties hereto to terinate as the# dohereb# terinate, effective on the date of this present instruent, the Contract of ease, other!ise+no!n as 6oc. No. ')0, Page No. &(, Boo+ No. "", *eries of /'( of Notar# Public >abriel R. Banaag, of the Province of Agusan.

'. %hat the Part# of the *econd Part has bound as it does hereb# bind itself, its e7ecutors andadinistrators, to pa# unto the part# of the Dirst Part the su of Dive %housand Pesos <P-,000.00=,Philippine Currenc#, upon presentation b# the latter to the forer of satisfactor# evidence that8

<a= %he Bureau of ands !ill not have an# obection to the obtainent b# the Part# of the Dirst Part of aCertificate of %orrens %itle in his favor, either thru ordinar# land registration proceedings or thruadinistrative eans procedure.

<b= %hat there is no other private claiant to the properties hereinbefore described.

-. %hat the Part# of the Dirst Part has bound as he does hereb# bind to underta+e iediatel#after the e7ecution of these presents to secure and obtain, or cause to be secured and obtained, aCertificate of %orrens %itle in his favor over the properties described on Page <$ne= hereof, and afterobtainent of such Certificate of %orrens %itle, the said Part# of the Dirst Part shall e7ecute a <6=eed of Absolute *ale unto and in favor of the Part# of the *econd Part, its e7ecutors, adinistrators and assigns,it being the sense of the parties that the Part# of the *econd Part upon deliver# to it of such deed of absolute sale, shall pa# unto the Part# of the Dirst Part in cash, the su of %!elve %housand <P),000.00=Pesos in Philippine Currenc#, provided, ho!ever, that the Part# of the Dirst Part, shall be reibursed b#the Part# of the *econd Part !ith one half of the e7penses incurred b# the Part# of the Dirst Part forsurve# and attorne#Vs fees5 and other incidental e7penses not e7ceeding P&00.00.V

$n 6eceber ), /'?, ;illaflor filed *ales Application No. ;3?01?Q <e7h. = !ith the Bureau of ands,Manila, Uto purchase under the provisions of Chapter ;, K" or "K of Coon!ealth Act. No. ' <%he

Public ands Act=, as aended, the tract of public lands 7 7 7 and described as follo!s8 UNorth b# Publicand5 East b# Agusan River and *erafin ;illaflor5 *outh b# Public and and est b# public land <ot Nos.-&1/, -'?/, -'), -'/0, -'/, -'/), -?'/, -?-0, -?-, -'&, -'??, -'?/, -?-), -?-&, -?-', -?--,-?-(, -?-1, -?-?, -?-/ and -?(0 7 7 7 containing an area of '0 hectares 777.V Paragraph ( of theApplication, states8 U" understand that this application conve#s no right to occup# the land prior to itsapproval, and " recognized <sic= that the land covered b# the sae is of public doain and an# and allrights " a# have !ith respect thereto b# virtue of continuous occupation and cultivation are hereb#relin2uished to the >overnent.V /Q <e7h. 36=

$n 6eceber 1, /'?, ;illaflor and Nasipit uber e7ecuted an UAgreeentV <e7h &=. 0Q %his contractprovides8

U. %hat the Dirst Part# is the possessor since /&0 of t!o <)= parcels of land situated in sitio%ungao, Barrio of *an Mateo, Municipalit# of Butuan, Province of Agusan5

). %hat the first parcel of land aboveentioned and described in Plan P*3/1 filed in the office of the Bureau of ands is ade up of ots Nos. -'), -'&, -'??, -'/0, -'/, -'/), -?'/, -?-0, -?-,-?-), -?-&, -?-', -?--, -?-(, -?-1, -?-?, -?-/ and -?(0 and the second parcel of land is ade of ots Nos. -&//, -'0/, -'0 and -'5

&. %hat on Jul# 1, /'?, a contract of Agreeent to *ell !as e7ecuted bet!een the contractingparties herein, covering the said t!o parcels of land, cop# of said Agreeent to *ell is hereto attachedar+ed as Anne7 SAT and ade an integral part of this docuent. %he parties hereto agree that the saidAgreeent to *ell be aintained in full force and effect !ith all its ters and conditions of this presentagreeent and in no !a# be considered as odified.

'. %hat paragraph ' of the Contract of Agreeent to *ell, ar+ed as anne7, SAT stipulates asfollo!s8

UPar. '. %hat the Part# of the *econd Part has bound as it does hereb# bind itself, its e7ecutors andadinistrators, to pa# unto the Part# of the Dirst Part of the su of D";E %$:*AN6 PE*$*<P-,000.00= Philippine Currenc#, upon presentation b# the latter to the forer of satisfactor# evidencethat8

a= %he Bureau of ands !ill have an# obection to the obtainent b# Part# of the Dirst Part of a favor,either thru ordinar# land registration proceedings or thru adinistrative eans and procedure.

b= %hat there is no other private claiant to the properties hereinabove described.V

%hat the Dirst Part# has on 6eceber ), /'?, subitted to the Bureau of ands, a *ales Application forthe t!ent#3t!o <))= lots coprising the t!o aboveentioned parcels of land, the said *ales Application!as registered in the said Bureau under No. ;3?015

(. %hat in repl# to the re2uest ade b# the Dirst Part# to the Bureau of ands, in connection !iththe *ales Application No. ;3?01, the latter infored the forer that action on his re2uest !ill bee7pedited, as per letter of the Chief, Public and 6ivision, dated 6eceber ), /'?, cop# of !hich ishereto attached ar+ed as anne7 UBV and ade an integral part of this agreeent8

1. %hat for and in consideration of the preises above stated and the aount of %EN%F D$:R%$:*AN6 <P)',000.00= PE*$* that the *econd Part# shall pa# to the Dirst Part#, b# these presents,the Dirst Part# hereb# sells, transfers and conve#s unto the *econd Part#, its successors and assigns, hisright, interest and participation under an<d= b# virtue of the *ales Application No. ;3?01, !hich he has ora# have in the lots entioned in said *ales Application No. ;3?015

?. %hat the aount of %EN%F D$:R %$:*AN6 <P)',000.00= PE*$*, shall be paid b# the*econd Part# to the Dirst Part#, as follo!s8

a= %he aount of *E;EN %$:*AN6 <P1,000.00= PE*$*, has alread# been paid b# the *econd Part# tothe Dirst Part# upon the e7ecution of the Agreeent to *ell, on Jul# 1, /'?5

b= %he aount of D";E %$:*AN6 <P-,000.00= PE*$* shall be paid upon the signing of this present

agreeent5 and

c= %he balance of %E;E %$:*AN6 <P),000.00= PE*$*, shall be paid upon the e7ecution b# theDirst Part# of the Absolute 6eed of *ale of the t!o parcels of land in 2uestion in favor of the *econd Part#,and upon deliver# to the *econd Part# of the Certificate of $!nership of the said t!o parcels of land.

/. "t is speciall# understood that the ortgage constituted b# the Dirst Part# in favor of the*econd Part#, as stated in the said contract of Agreeent to *ell dated Jul# 1, /'?, shall cover not onl#the aount of *E;EN %$:*AN6 <P1,000.00= PE*$* as specified in said docuent, but shall also coverthe aount of D";E %$:*AN6 <P-,000.00= PE*$* to be paid as stipulated in paragraph ?, sub3paragraph <b= of this present agreeent, if the Dirst Part# should fail to copl# !ith the obligations asprovided for in paragraphs ), ', and - of the Agreeent to *ell5

0. "t is further agreed that the Dirst Part# obligates hiself to sign, e7ecute and deliver to and in

favor of the *econd Part#, its successors and assigns, at an#tie upon deand b# the *econd Part# suchother instruents as a# be necessar# in order to give full effect to this present agreeent5V












"n the Report dated 6eceber &, /'/ b# the public land inspector, 6istrict and $ffice, Bureau of ands, in Butuan, the report contains an "ndorseent of the aforesaid 6istrict and $fficer recoendingreection of the *ales Application of ;illaflor for having leased the propert# to another even before he hadac2uired transissible rights thereto.

"n a letter of ;illaflor dated Januar# )&, /-0, addressed to the Bureau of ands, he infored the Bureau6irector that he !as alread# occup#ing the propert# !hen the BureauVs Agusan River ;alle# *ubdivisionProect !as inaugurated, that the propert# !as forerl# claied as private properties <sic=, and thattherefore, the propert# !as segregated or e7cluded fro disposition because of the clai of privateo!nership. "n a letter of Nasipit uber dated Debruar# )), /-0 <e7h. K=Q addressed to the 6irector of ands, the corporation infored the Bureau that it recognized ;illaflor as the real o!ner, claiant andoccupant of the land5 that since June /'(, ;illaflor leased t!o <)= hectares inside the land to thecopan#5 that it has no other interest on the land5 and that the *ales Application of ;illaflor should begiven favorable consideration.

777 777777

$n Jul# )', /-0, the scheduled date of auction of the propert# covered b# the *ales Application, Nasipituber offered the highest bid of P'.00 per hectare, but since an applicant under CA ', is allo!ed toe2ual the bid of the highest bidder, ;illaflor tendered an e2ual bid, deposited the e2uivalent of 0 of thebid price and then paid the assessent in full.

777 777777

$n August (, /-0, ;illaflor e7ecuted a docuent, denoinated as a U6eed of Relin2uishent of RightsV <e7h. N=,)Q pertinent portion of !hich reads8

U-. %hat in vie! of # present business in Manila, and # change in residence fro Butuan, Agusan tothe Cit# of Manila, " cannot, therefore, develope <sic= or cultivate the land applied for as proected before5

(. %hat the Nasipit uber Copan#, "nc., a corporation dul# organized 777 is ver# uch interested inac2uiring the land covered b# the aforecited application 7775

1. %hat " believe the said copan# is 2ualified to ac2uire public land, and has the eans to develop <sic=the above3entioned land5

777 777777

ERED$RE, and in consideration of the aount of D";E %$:*AN6 PE*$* <P-,000.00= to bereibursed to e b# the aforeentioned Nasipit uber Copan#, "nc., after its receipt of the order of

a!ard, the said aount representing part of the purchase price of the land aforesaid, the value of theiproveents " introduced thereon, and the e7penses incurred in the publication of the Notice of *ale, ",the applicant, ;icente J. ;illaflor, hereb# voluntaril# renounce and relin2uish !hatever rights to, andinterests " have in the land covered b# # above3entioned application in favor of the Nasipit uberCopan#, "nc.V

Also on August (, /-0, Nasipit uber filed a *ales Application over the t!o <)= parcels of land,covering an area of '0 hectares, ore or less. %his application !as also nubered ;3?01 <e7h. F=.

$n August 1, /-0 the 6irector of ands issued an U$rder of A!ardV &Q in favor of Nasipit uberCopan#, "nc., pertinent portion of !hich reads8

U'. %hat at the auction sale of the land held on Jul# )', /-0 the highest bid received !as that of Nasipituber Copan#, "nc. !hich offered P'.00 per hectare or P-,1'0.00 for the !hole tract, !hich bid !ase2ualed b# applicant ;icente J. ;illaflor, !ho deposited the aount of P-1'.00 under $fficial Receipt No.B3&1&?)( dated Jul# )', /-0 !hich is e2uivalent to 0 of the bid. *ubse2uentl#, the said 777;illaflor paid the aount of P-,(0.00 in full pa#ent of the purchase price of the above3entioned landand for soe reasons stated in an instruent of relin2uishent dated August (, /-0, he <;icente J.

;illaflor= relin2uished his rights to and interest in the said land in favor of the Nasipit uber Copan#,"nc. !ho filed the corresponding application therefore.

"n vie! of the foregoing, and it appearing that the proceedings had 777 !ere in accordance !ith la! andin sicQ e7isting regulations, the land covered thereb# is hereb# a!arded to Nasipit uber Copan#, "nc.at P'.00 per hectare or P-,1'0.00 for the !hole tract.

%his application should be entered in the record of this $ffice as *ales Entr# No. ;3'01.V

"t is ;illaflorVs clai that he onl# learned of the $rder of A!ard on Januar# (, /1', or after his arrival tothe Philippines, coing fro "ndonesia, !here he sta#ed for ore than ten <0= #ears5 that he !ent toButuan Cit# in the latter part of /1& upon the call of his brother *erafin ;illaflor, !ho !as then sic+ andlearned that Nasipit uber <had= failed and refused to pa# the agreed rentals, although his brother !asable to collect during the earl# #ears5 and that *erafin died three da#s after his <;icenteVs= arrival, and sono accounting of the rentals could be ade5 that on Noveber )1, /1&, ;illaflor !rote a letter to Mr.>.E.C. Mears of Nasipit uber, reinding hi of their verbal agreeent in /-- 777 that Mr. Mears in aRepl# dated 6eceber &, /1&, appears to have referred the atter to Mr. Noriega, the corporate generalanager, but the ne! set of corporate officers refused to recognize <;illaflorVs= clai, for Mr. Dlorencio%aesis, the general anager of Nasipit uber, in a letter dated Debruar# /, /1', denied ;illaflorVsiteized clai dated Januar# -, /1' <e7h. ;= to be !ithout valid and legal basis. "n that -th Januar#,/1' letter, ;illaflor claied the total aount of P')1,000.00 7 7 7.

"n a foral protest dated Januar# &, /1' 'Q !hich ;illaflor filed !ith the Bureau of ands, he protestedthe *ales Application of Nasipit uber, claiing that the copan# has not paid hi P-,000.00 asprovided in the 6eed of Relin2uishent of Rights dated August (, /-0.

777 777777

7 7 7 <%=hat in a 6ecision dated August ?, /11 <e7h. ?=, the 6irector of ands found that the pa#ent of the aount of P-,000.00 in the 6eed 777 and the consideration in the Agreeent to *ell !ere dul#proven, and ordered the disissal of ;illaflorVs protest and gave due course to the *ales Application of Nasipit uber. Pertinent portion of the 6ecision penned b# 6irector of ands, Raon Casanova, in theMatter of *P No. ;3?01 <C3;3'01= 777 reads8

U777 777777

6uring the proceedings, ;illaflor presented another clai entirel# different fro his previous clai 33 thistie, for recover# of rentals in arrears arising fro a supposed contract of lease b# ;illaflor as lessor infavor of Nasipit as lessee, and indenit# for daages supposedl# caused iproveents on his otherpropert# 777 in the staggering aount of *eventeen Million <P1,000,000.00= Pesos. Earlier, he had alsodeanded fro NA*"P"% 777 <P')1,000.00= 777 also as indenit# for daages to iproveentssupposedl# caused b# NA*"P"% on his other real propert# as !ell as for reiburseent of realt# ta7esallegedl# paid b# hi thereon.

777 777777

"t !ould see that 777 ;illaflor has sought to inect so an# collaterals, if not e7traneous clais, intothis case. "t is the considered opinion of this $ffice that an# clai not !ithin the sphere or scope of itsadudicator# authorit# as an adinistrative as !ell as 2uasi3udicial bod# or an# issue !hich see+s todelve into the erits of incidents clearl# outside of the adinistrative copetence of this $ffice to decidea# not be entertained.

%here is no erit in the contention of ;illaflor that o!ing to NasipitVs failure to pa# the aount of 777<P-,000.00= 777 <assuing that Nasipit had failed= the deed of relin2uishent becae null and void forlac+ of consideration. 7777.

777 777777













7 7 7 %he records clearl# sho!, ho!ever, that since the e7ecution of the deed of relin2uishent 777;illaflor has al!a#s considered and recognized NA*"P"% as having the uridical personalit# to ac2uirepublic lands for agricultural purposes. 7777.

777 777777

Even this $ffice had not failed to recognize the uridical personalit# of NA*"P"% to appl# for the purchaseof public lands 777 !hen it a!arded to it the land so relin2uished b# ;illaflor <$rder of A!ard datedAugust 1, /-0= and accepted its application therefor. At an# rate, the 2uestion !hether an applicant is2ualified to appl# for the ac2uisition of public lands is a atter bet!een the applicant and this $ffice todecide and !hich a third part# li+e ;illaflor has no personalit# to 2uestion be#ond erel# calling theattention of this $ffice thereto.

777 777777

;illaflor offered no evidence to support his clai of non3pa#ent be#ond his o!n self3serving assertionsand e7pressions that he had not been paid said aount. As protestant in this case, he has theaffirative of the issue. e is obliged to prove his allegations, other!ise his action !ill fail. Dor, it is a!ell settled principle <U= that if plaintiff upon !ho rests the burden of proving his cause of action fails tosho! in a satisfactor# anner the facts upon !hich he bases his clai, the defendant is under noobligation to prove his e7ceptions or special defenses <Belen vs. Belen, & Phil. )0)5 Mendoza vs.Dulgencio, ? Phil. )'&=.

777 777777

Conse2uentl#, ;illaflorVs clai that he had not been paid ust perforce fail.

$n the other hand, there are strong and copelling reasons to presue that ;illaflor had alread# beenpaid the aount of Dive %housand <P-,000.00= Pesos.

Dirst, 777 hat is surprising, ho!ever, is not so uch his clais consisting of gigantic aounts as hishaving forgotten to adduce evidence to prove his clai of non3pa#ent of the Dive %housand <P-,000.00=Pesos during the investigation proceedings !hen he had all the tie and opportunit# to do so. 777 %hefact that he did not adduce or even attept to adduce evidence in support thereof sho!s either that hehad no evidence to offer 777 that NA*"P"% had alread# paid hi in fact. hat is !orse is that ;illaflor didnot even bother to coand pa#ent, orall# or in !riting, of the Dive %housand <P-,000.00= Pesos !hich!as supposed to be due hi since August 1, /-0, the date !hen the order of a!ard !as issued toNasipit, and !hen his cause of action to recover pa#ent had accrued. %he fact that he onl# ade acoand <sic= for pa#ent on Januar# &, /1', !hen he filed his protest or t!ent#3four <)'= #earslater is iediatel# nugator# of his clai for non3pa#ent.

But ;illaflor aintains that he had no +no!ledge or notice that the order of a!ard had alread# beenissued to NA*"P"% as he had gone to "ndonesia and he had been absent fro the Philippines during allthose t!ent#3four <)'= #ears. %his of course ta7es credulit#. 777.

*econd, it should be understood that the condition that NA*"P"% should reiburse ;illaflor the aount of Dive %housand <P-,000.00= Pesos upon its receipt of the order of a!ard !as fulfilled as said a!ard !asissued to NA*"P"% on August 1, /-0. %he said deed of relin2uishent !as prepared and notarized inManila !ith ;illaflor and NA*"P"% signing the instruent also in Manila on August (, /-0 <p.11,<sic==. %he follo!ing da# or barel# a da# after that, or on August 1, /-0, the order of a!ard !as issuedb# this $ffice to NA*"P"% also in Manila. No!, considering that ;illaflor is presued to be ore assiduousin follo!ing up !ith the Bureau of ands the e7peditious issuance of the order of a!ard as the pa#ent of the Dive %housand <P-,000.00= Pesos <consideration= !ould depend on the issuance of said order toa!ard NA*"P"%, !ould it not be reasonable to believe that ;illaflor !as at hand !hen the a!ard !asissued to NA*"P"% on August 1, /-0, or barel# a da# !hich <sic= he e7ecuted the deed of relin2uishent on August (, /-0, in ManilaG 777.

%hird, on the other hand, NA*"P"% has in his possession a sort of SorderT upon itself 33 <the deed of relin2uishent !herein he <sic= obligated itself to reiburse or pa# ;illaflor the 777 consideration of therelin2uishent upon its receipt of the order of a!ard= for the pa#ent of the aforesaid aount the

oent the order of a!ard is issued to it. "t is reasonable to presue that NA*"P"% has paid the Dive%housand <P-,000.00= Pesos to ;illaflor.

UA person in possession of an order on hiself for the pa#ent of one#, or the deliver# of an#thing, haspaid the one# or delivered the thing accordingl#. <*ection -<+= B3&3Revised Rules of Court.V

"t should be noted that NA*"P"% did not produce direct evidence as proof of its pa#ent of the Dive%housand <P-,000.00= Pesos to ;illaflor. NasipitVs e7planation on this point is found satisfactor#.

U7 7 7 <"=t !as virtuall# ipossible for NA*"P"%, after the lapse of the intervening )' #ears, to be able tocope up !ith all the records necessar# to sho! that the consideration for the deed of relin2uishent hadbeen full# paid. %o e7pect NA*"P"% to +eep intact all records pertinent to the transaction for the !hole2uarter of a centur# !ould be to re2uire !hat even the la! does not. "ndeed, even the applicable la!itself <*ec. &&1, National "nternal Revenue Code= re2uires that all records of corporations be preservedfor onl# a a7iu of five #ears.

NA*"P"% a# !ell have added that at an# rate !hile Uthere are transactions !here the proper evidence isipossible or e7treel# difficult to produce after the lapse of tie 777 the la! creates presuptions of regularit# in favor of such transactions <)0 A. Jur. )&)= so that !hen the basic fact is established in anaction the e7istence of the presued fact ust be assued b# force of la!. <Rule &, :nifor Rules of Evidence5 / igore, *ec. )'/=.

Anent ;illaflorVs clai that the '03hectare land relin2uished and a!arded to NA*"P"% is his privatepropert#, little <need= be said. 7777 %he trac+s of land referred to therein are not identical to the landsa!arded to NA*"P"%. Even in the assuption that the lands entioned in the deeds of transfer are thesae as the '03hectare area a!arded to NA*"P"%, their purchase b# ;illaflor <or= the latterVs occupationof the sae did not change the character of the land fro that of public land to a private propert#. %heprovision of the la! is specific that public lands can onl# be ac2uired in the anner provided for thereinand not other!ise <*ec. , C.A. No. ', as aended=. %he records sho! that ;illaflor had applied forthe purchase of the lands in 2uestion !ith this $ffice <*ales Application No. ;3?01= on 6eceber ), /'?.7777 %here is a condition in the sales application signed b# ;illaflor to the effect that he recognizes thatthe land covered b# the sae is of public doain and an# and all rights he a# have !ith respect theretob# virtue of continuous occupation and cultivation are relin2uished to the >overnent <paragraph (,*ales Application No. ;3?01 777= of !hich ;illaflor is ver# uch a!are. "t also appears that ;illaflor hadpaid for the publication fees appurtenant to the sale of the land. e participated in the public auction!here he !as declared the successful bidder. e had full# paid the purchase prive <sic= thereof <sic=. "t!ould be a <sic= height of absurdit# for ;illaflor to be bu#ing that !hich is o!ned b# hi if his clai of private o!nership thereof is to be believed. %he ost that can be said is that his possession !as erel#that of a sales applicant to !hen it had not been a!arded because he relin2uished his interest therein infavor of NA*"P"% !ho <sic= filed a sales application therefor.

777 777777

7 7 7 6uring the investigation proceedings, ;illaflor presented as his E7hibit U<sic=V <!hich NA*"P"%adopted as its o!n e7hibit and had it ar+ed in evidence as E7hibit UV= a dul# notarized Uagreeent to*ellV dated Jul# 1, /'?, b# virtue of !hich ;illaflor undertoo+ to sell to Nasipit the tracts of landentioned therein, for a consideration of %!ent#3Dour %housand <P)',000.00= Pesos. *aid tracts of landhave been verified to be identical to the parcels of land forerl# applied for b# ;illaflor and !hich thelatter had relin2uished in favor of NA*"P"% under a deed of relin2uishent e7ecuted b# hi on August (,/-0. "n another docuent e7ecuted on 6eceber 1, /'? 777 ;illaflor as UD"R*% PAR%FV and NA*"P"%as U*EC$N6 PAR%FV confired the UAgreeent to *ellV of Jul# 1, /'?, !hich !as aintained Uin full forceand effect !ith all its ters and conditions 7 7 7V <E7h. U&?3AV=5 and that Ufor and in consideration of 777%EN%F D$:R %$:*AN6 <P)',000.00= PE*$* that the *econd Part# shall pa# to the Dirst Part# 777 theDirst Part# hereb# sells, transfers and conve#s unto the *econd Part# 777 his right interest andparticipation under and b# virtue of the *ales Application No. ;3?01V and, in its paragraph ?, it adestipulations as to !hen part of the said consideration 777 !as paid and !hen the balance !as to be paid,to !it8

Ua= the aount of *E;EN %$:*AN6 777 PE*$* has alread# been paid b# the *econd Part# to the DirstPart# upon the e7ecution of the Agreeent to *ell, on Jul# 1, /'?5



b= the aount of D";E %$:*AN6 777 PE*$* shall be paid upon the signing of this present agreeent5and

c= the aount of %E;E %$:*AN6 777 PE*$*, shall be paid upon the e7ecution b# the Dirst Part# of the Absolute *ale of the %!o parcels of land in 2uestion in favor of the *econd Part# of the Certificate of $!nership of the said t!o parcels of land.V <E7h. &?3B=. <Ephasis ours=

"t is thus clear fro this subse2uent docuent ar+ed E7hibit V&? ANAC$V that of the consideration of the UAgreeent to *ellV dated Jul#1, /'?, involving the '03hectare area relin2uished b# ;illaflor in favorof NA*"P"%, in the aount of %!ent#3Dour %housand <P)',000.00= Pesos8

<= the aount of *even %housand <P1,000.00= Pesos !as alread# paid upon the e7ecution of the UAgreeent to *ellV on Jul# 1, /'?, receipt of !hich incidentall# !as aditted b# ;illaflor in thedocuent of 6eceber 1, /'?5

<)= the aount of Dive %housand <P-,000.00= Pesos !as paid !hen said docuent !as signed b#;icente J. ;illaflor as the Dirst Part# and Nasipit thru its President, as the *econd Part#, on 6eceber 1,/'?5 and

<&= the balance of %!elve %housand <P),000.00= Pesos to be paid upon the e7ecution b# the DirstPart# of the Absolute 6eed of *ale of the t!o parcels of land in favor of the *econd Part#, and upondeliver# to the *econd Part# of the Certificate of $!nership of the said t!o parcels of land.

;illaflor contends that NA*"P"% could not have paid ;illaflor the balance of %!elve %housand <P),000.00=Pesos 7 7 7 consideration in the Agreeent to *ell !ill onl# be paid to applicant3assignor <referring to;illaflor= upon obtaining a %orrens %itle in his favor over the '03hectare of land applied for and upone7ecution b# hi of a 6eed of Absolute *ale in favor of Nasipit uber Copan#, "nc. 7 7 7. "nasuch as

applicant3assignor !as not able to obtain a %orrens %itle over the land in 2uestion he could not e7ecute anabsolute 6eed of <sic= Nasipit uber Co., "nc. ence, the Agreeent to *ell !as not carried out and no%!elve %housand <P),000.00= Pesos !as overpaid either to the applicant3assignor, uch less to o!ardJ. Nell Copan#. <*ee MEM$RAN6:M D$R %E APP"CAN%3A**">N$R, dated Januar# -, /11=. 777.

777 ;illaflor did not adduce evidence in support of his clai that he had not been paid the 777<P),000.00= 777 consideration of the Agreeent to *ell dated Jul# 1, /'? <E7h. U&? NAC$V= be#ond hisere uncorroborated assertions. $n the other hand, there is strong evidence to sho! that said %!elve%housand <P),000.00= Pesos had been paid b# <private respondent= to Ed!ard J. Nell Copan# b# virtueof the 6eed of Assignent of Credit e7ecuted b# ;illaflor <E7h. U' NAC$V= for the credit of the latter.

Att#. >abriel Banaag, resident counsel of NA*"P"% !ho is in a position to +no! the facts, testified forNA*"P"%. e described that it !as he !ho notarized the UAgreeent to *ellU <E7h. UDV=5 that he +ne!about the e7ecution of the docuent of 6eceber 1, /'? <E7h. U&?V= confiring the said UAgreeent to*ellV having been previousl# consulted thereon b# Jose Dernandez, !ho signed said docuent on behalf of

NA*"P"% 777 that subse2uentl#, in Januar# /'/, ;illaflor e7ecuted a 6eed of Assignent of credit infavor of Ed!ard J. Nell Copan# <E7h. U' NAC$V= !hereb# ;illaflor ceded to the latter his receivable forNA*"P"% corresponding to the reaining balance in the aount of %!elve %housand 777 Pesos of thetotal consideration 777 stipulated in both the UAgreeent to *ellV <E7h. UDV= and the docuent dated6eceber 1, /'? <E7h. U&/V=5 777. e further testified that the said assignent of credit !ascounicated to <private respondent= under cover letter dated Januar# )', /'/ <E7h. U'3AV= and notlong thereafter, b# virtue of the said assignent of credit, <private respondent= paid the balance of %!elve%housand 777 due to ;illaflor to Ed!ard J. Nell Copan# 777. Att#. BanaagVs aforesaid testion# standunrebutted5 hence, ust be given full !eight and credit. 777 ;illaflor and his counsel !ere present !henAtt#. BanaagVs foregoing testion# !as given. Fet, ;illaflor did not deur, nor did he rebut the sae,despite having been accorded full opportunit# to do so.

777 777777

aving found that both the Dive %housand 777 consideration of the deed of Relin2uishent 777 and that

the reaining balance of 777 <P),000.00= to coplete the %!ent#3Dour %housand <P)',000.00= Pesosconsideration of both the Agreeent to *ell dated Jul# 1, /'?, and the docuent, dated 6eceber 1,/'?, e7ecuted b# the forer in favor of the latter, have been paid ;illaflor the issue on prescription andlaches becoes acadeic and needs no further discussion.

But ore than all the 2uestions thus far raised and resolved is the 2uestion !hether a sales patent can beissued to NA*"P"% for the '03hectare area a!arded to it in the light of *ection , Article K"; of the ne!Constitution !hich provides in its pertinent portion to !it8

U7 7 7 No private corporation or association a# hold alienable land of the public doain e7cept b# leasenot to e7ceed one thousand hectares in area 777.V

%he *ecretar# of Justice had previous occasion to rule on this point in his opinion No. '0, s. /1'. *aidthe onorable Justice *ecretar#8

U$n the second 2uestion, <referring to the 2uestions !hen a# a public land be considered to have beenac2uired b# purchase before the effectivit# of the ne! Constitution posed b# the 6irector of ands in his2uer# on the effect on pending applications for the issuance of sales patent in the light of *ection , Art.K"; of the Ne! Constitution aforecited=, #ou refer to this $fficeVs $pinion No. (' series of /1& in !hich "stated8

$n the other hand, !ith respect to sales applications read# for issuance of sales patent, it is # opinionthat !here the applicant had, before the Constitution too+ effect, full# coplied !ith all this obligationsunder the Public and Act in order to entitle hi to a *ales patent, there !ould be no legal or e2uitable ustification for refusing to issue or release the sales patent.V

ith respect to the point as to !hen the *ales applicant has coplied !ith all the ters and conditions!hich !ould entitle hi to a sales patent, the herein above *ecretar# of Justice !ent on8

U%hat as to !hen the applicant has coplied !ith all the ters and conditions !hich !ould entitle hi toa patent is a 2uestioned <sic= fact !hich #our office !ould be in the best position to deterine. o!ever,relating this to the procedure for the processing of applications entioned above, " thin+ that as

the applicant has fulfilled the constructionLcultivation re2uireents and has full# paid the purchase price,he should be deeed to have ac2uired b# purchase the particular tract of land and <sic= the area <sic= inthe provision in 2uestion of the ne! constitution !ould not appl#.V

Dro the decision of the 6irector of ands, ;illaflor filed a Motion for Reconsideration !hich !asconsidered as an Appeal M.N.R. Case '&', to the Ministr# of Natural Resources.

$n June (, /1/, the Minister of Natural Resources rendered a 6ecision <e7h. /=, -Q disissing the appealand affiring the decision of the 6irector of ands, pertinent portions of !hich reads8

UAfter a careful stud# of the records and the arguents of the parties, !e believe that the appeal is not!ell ta+en.

Dirstl#, the area in dispute is not the private propert# of appellant.

%he evidence adduced b# appellant to establish his clai of o!nership over the subect area consists of deeds of absolute sale e7ecuted in his favor on Januar# (, and Debruar# -, /'0, b# four <'= differentpersons, nael#, Cirilo Piencenaves, Derin Balobo, Claudio $tero and erogenes Patete.

o!ever, an e7aination of the technical descriptions of the tracts of land subect of the deeds of sale !illdisclose that said parcels are not identical to, and do not tall# !ith, the area in controvers#.

U"t is a basic assuption of our polic# that lands of !hatever classification belong to the state. :nlessalienated in accordance !ith la!, it retains its rights over the sae as doinus, <*antiago vs. de los*antos, 3)0)', Noveber )), /1', ( *CRA -)=.

Dor, it is !ell3settled that no public land can be ac2uired b# private persons !ithout an# grant, e7press oriplied fro the governent. "t is indispensable then that there be sho!ing of title fro the state or an#other ode of ac2uisition recognized b# la!.V <ee ong o+, et al. vs. 6avid, et al., 3&0&?/, 6eceber)1, /1), '? *CRA &1/.=





"t is !ell3settled that all lands reain part of the public doain unless severed therefro b# state grantor unless alienated in accordance !ith la!.

e, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence toestablish that the contested area is of private o!nership. ence, the propert# ust be held to be publicdoain.

U%here being no evidence !hatever that the propert# in 2uestion !as ever ac2uired b# the applicants ortheir ancestors either b# coposition title fro the *panish >overnent or b# possessor# inforationtitle or b# an# other eans for the ac2uisition of public lands, the propert# ust be held to be publicdoain.V <ee ong o+, et al., vs. 6avid , et al., 3&0&?/ 6eceber )1, /1), '? *CRA &1?3&1/ citingeirs of 6atu Pendatun vs. 6irector of ands5 see also 6irector of ands vs. Re#es, 3)1-/', Noveber)?, /1-, (? *CRA 11=.

Be that as it a#, appellant, b# filing a sales application over the controverted land, ac+no!ledgedune2uivocabl# sicQ that the sae is not his private propert#.

UAs such sales applicant, appellant anifestl# ac+no!ledged that he does not o!n the land and that thesae is a public land under the adinistration of the Bureau of ands, to !hich the application !assubitted, 777 All of its acts prior thereof, including its real estate ta7 declarations, characterized itspossessions of the land as that of a Usales applicantV and conse2uentl#, as one !ho e7pects to bu# it, buthas not as #et done so, and is not, therefore, its o!ner.V <Pala!an Agricultural and "ndustrial Co., "nc. vs.6irector of ands, 3)-/', March ), /1), '' *CRA )0, )=.

*econdl#, appellantVs alleged failure to pa# the consideration stipulated in the deed of relin2uishentneither converts said deed into one !ithout a cause or consideration nor ipso facto rescinds thesae. Appellant, though, has the right to deand pa#ent !ith legal interest for the dela# or to deandrescission.

777 777777

o!ever, appellantVs cause of action, either for specific perforance or rescission of contract, !ithdaages, lies !ithin the urisdiction of civil courts, not !ith adinistrative bodies.

777 777777

astl#, appellee has ac2uired a vested right to the subect area and, therefore, is deeed not affected b#the ne! constitutional provision that no private corporation a# hold alienable land of the public doaine7cept b# lease.

777 777

777

"pleenting the aforesaid $pinion No. (' of the *ecretar# of Justice, the then *ecretar# of Agricultureand Natural Resources issued a eorandu, dated Debruar# ?, /1', !hich pertinentl# reads asfollo!s8

U"n the ipleentation of the foregoing opinion, sales application of private individuals covering areas ine7cess of )' hectares and those of corporations, associations, or partnership !hich fall under an# of thefollo!ing categories shall be given due course and issued patents, to !it8

. *ales application for fishponds and for agricultural purposes <*DA, *A and ">P*A= !herein prior toJanuar# 1, /1&5

a. the land covered thereb# !as a!arded5

b. cultivation re2uireents of la! !ere coplied !ith as sho!n b# investigation reports subitted priorto Januar# 1, /1&5

c. land !as surve#ed and surve# returns alread# subitted to the 6irector of ands for verification andapproval5 and

d. purchase price !as full# paid.V

Dro the records, it is evident that the aforestated re2uisites have been coplied !ith b# appellee longbefore Januar# 1, /1&, the effectivit# of the Ne! Constitution. %o restate, the disputed area !asa!arded to appellee on August 1, /-0, the purchase price !as full# paid on Jul# )(, /-, thecultivation re2uireents !ere coplied !ith as per investigation report dated 6eceber &, /'/, andthe land !as surve#ed under Pls3/1.VT

$n Jul# (, /1?, petitioner filed a coplaint (Q in the trial court for S6eclaration of Nullit# of Contract <6eed of Relin2uishent of Rights=, Recover# of Possession <of t!o parcels of land subect of the

contract=, and 6aagesT at about the sae tie that he appealed the decision of the Minister of NaturalResources to the $ffice of the President.

$n Januar# )?, /?&, petitioner died. %he trial court ordered his !ido!, ourdes 6. ;illaflor, to besubstituted as petitioner. After trial in due course, the then Court of Dirst "nstance of Agusan del Norteand Butuan Cit#, Branch """,1Q disissed the coplaint on the grounds that8 <= petitioner aditted thedue e7ecution and genuineness of the contract and !as estopped fro proving its nullit#, <)= the verballease agreeents !ere unenforceable under Article '0& <)=<e= of the Civil Code, and <&= his causes of action !ere barred b# e7tinctive prescription andLor laches. "t ruled that there !as prescription andLorlaches because the alleged verbal lease ended in /((, but the action !as filed onl# on Januar# (,/1?. %he si73#ear period !ithin !hich to file an action on an oral contract per Article '- <= of theCivil Code e7pired in /1). %he decretal portion?Q of the trial courtVs decision reads8

SERED$RE, the foregoing preises dul# considered, udgent is hereb# rendered in favor of thedefendant and against the plaintiff. Conse2uentl#, this case is hereb# ordered 6"*M"**E6. %he defendantis hereb# declared the la!ful actual ph#sical possessor3occupant and having a better right of possession

over the t!o <)= parcels of land in litigation described in par. .) of the coplaint as Parcel " and Parcel"", containing a total area of $ne undred *i7t# <(0= hectares, and !as then the subect of the *alesApplication No. ;3?01 of the plaintiff <E7hibits , 3A, 3B, pp. ') to ')3A, Record=, and no! of the*ales Application No. ?01, Entr# No. ;3'01 of the defendant Nasipit uber Copan# <E7hibit F, pp. &-13&-?, Record=. %he Agreeents to *ell Real Rights, E7hibits ) to )3C, & to &3B, and the 6eed of Relin2uishent of Rights, E7hibits N to N3, over the t!o parcels of land in litigation are hereb# declaredbinding bet!een the plaintiff and the defendant, their successors and assigns.

6ouble the costs against the plaintiff.T

%he heirs of petitioner appealed to Respondent Court of Appeals/Q !hich, ho!ever, rendered udgent against petitioner via the assailed 6ecision dated *epteber )1, //0 finding petitionerVspra#ers 33 <= for the declaration of nullit# of the deed of relin2uishent, <)= for the eviction of privaterespondent fro the propert# and <&= for the declaration of petitionerVs heirs as o!ners W to be !ithoutbasis. %he decretal portion)0Q of the assailed '/3page, single3spaced 6ecision curtl# reads8

SERED$RE, the 6ecision appealed fro, is hereb# ADD"RME6, !ith costs against plaintiff3appellants.T

Not satisfied, petitionerVs heirs filed the instant -13page petition for revie! dated 6eceber 1,//0. "n a Resolution dated June )&, //, the Court denied this petition Sfor being late.T $nreconsideration 33 upon plea of counsel that petitioners !ere SpoorT and that a full decision on the eritsshould be rendered 33 the Court reinstated the petition and re2uired coent fro privaterespondent. Eventuall#, the petition !as granted due course and the parties thus filed their respectiveeoranda.

T5

Petitioner, through his heirs, attributes the follo!ing errors to the Court of Appeals8

S". Are the findings of the Court of Appeals conclusive and binding upon the *upree CourtG

"". Are the findings of the Court of Appeals fortified b# the siilar findings ade b# the 6irector of andsand the Minister of Natural Resources <as !ell as b# the $ffice of the President=G















""". as there Uforu shoppingGV

";. Are the findings of facts of the Court of Appeals and the trial court supported b# the evidence and thela!G

;. Are the findings of the Court of Appeals supported b# the ver# ters of the contracts !hich !ereunder consideration b# the said courtG

;". 6id the Court of Appeals, in construing the subect contracts, consider the conteporaneous andsubse2uent act of the parties pursuant to article &1 of the Civil CodeG

;"". 6id the Court of Appeals consider the fact and the unrefuted clai of ;illaflor that he never +ne! of

the a!ard in favor of NasipitG

;""". 6id the Court of Appeals correctl# appl# the rules on evidence in its findings that ;illaflor !as paidthe P-,000.00 consideration because ;illaflor did not adduce an# proof that he !as not paidG

"K. "s the Court of AppealsU conclusion that the contract is not siulated or fictitious sipl# because it isgenuine and dul# e7ecuted b# the parties, supported b# logic or the la!G

K. Ma# the prestations in a contract agreeing to transfer certain rights constitute estoppel !hen this ver#contract is the subect of an action for annulent on the ground that it is fictitiousG

K". "s the Court of AppealsU conclusion that the lease agreeent bet!een ;illaflor is verbal and therefore,unenforceable supported b# the evidence and the la!GT

After a revie! of the various subissions of the parties, particularl# those of petitioner, this Courtbelieves and holds that the issues can be condensed into three as follo!s8

<= 6id the Court of Appeals err in adopting or rel#ing on the factual findings of the Bureau of ands,especiall# those affired b# the Minister <no! *ecretar#= of Natural Resources and the trial courtG

<)= 6id the Court of Appeals err in upholding the validit# of the contracts to sell and the deed of relin2uishentG $ther!ise stated, did the Court of Appeals err in finding the deed of relin2uishent of rights and the contracts to sell valid, and not siulated or fictitiousG

<&= "s the private respondent 2ualified to ac2uire title over the disputed propert#G

T5 Cor+ Rli';

%he petition is bereft of erit. "t basicall# 2uestions the sufficienc# of the evidence relied upon b#the Court of Appeals, alleging that public respondentVs factual findings !ere based on speculations,surises and conectures. Petitioner insists that a revie! of those findings is in order because the# !ereallegedl# <= rooted, not on specific evidence, but on conclusions and inferences of the 6irector of ands!hich !ere, in turn, based on isapprehension of the applicable la! on siulated contracts5 <)= arrivedat !hisicall# 33 totall# ignoring the substantial and aditted fact that petitioner !as not notified of thea!ard in favor of private respondent5 and <&= grounded on errors and isapprehensions, particularl#those relating to the identit# of the disputed area.

#ir+ : +ri&ar! Jrisdiction of the Director of /ands and 0inalit! of 0actal 0indin#s of theCort of Appeals

:nderl#ing the rulings of the trial and appellate courts is the doctrine of priar# urisdiction5 i.e., courts cannot and !ill not resolve a controvers# involving a 2uestion !hich is !ithin the urisdiction of an adinistrative tribunal, especiall# !here the 2uestion deands the e7ercise of soundadinistrative discretion re2uiring the special +no!ledge, e7perience and services of the adinistrativetribunal to deterine technical and intricate atters of fact.)Q

"n recent #ears, it has been the urisprudential trend to appl# this doctrine to cases involvingatters that deand the special copetence of adinistrative agencies even if the 2uestion involved isalso udicial in character. "t applies S!here a clai is originall# cognizable in the courts, and coes intopla# !henever enforceent of the clai re2uires the resolution of issues !hich, under a regulator#schee, have been placed !ithin the special copetence of an adinistrative bod#5 in such case, the udicial process is suspended pending referral of such issues to the adinistrative bod# for its vie!.T ))Q

"n cases !here the doctrine of priar# urisdiction is clearl# applicable, the court cannot arrogateunto itself the authorit# to resolve a controvers#, the urisdiction over !hich is initiall# lodged !ith anadinistrative bod# of special copetence.)&Q "n +achete vs. Court of #ppeals, the Court upheld thepriar# urisdiction of the 6epartent of Agrarian Refor Adudicator# Board <6ARAB= in an agrariandispute over the pa#ent of bac+ rentals under a leasehold contract.)'Q "n Concerned Officials of the+etropolitan >aterwors and Sewera%e System vs. 5as0ue*, )-Q the Court recognized that the M** !asin the best position to evaluate and to decide !hich bid for a !ater!or+s proect !as copatible !ith itsdevelopent plan.

%he rationale underlyin% the doctrine of priar# urisdiction finds application in this case, since the2uestions on the identit# of the land in dispute and the factual 2ualification of private respondent as ana!ardee of a sales application re2uire a technical deterination b# the Bureau of ands as theadinistrative agenc# !ith the e7pertise to deterine such atters. Because these issues preclude prior udicial deterination, it behooves the courts to stand aside even !hen the# apparentl# have statutor#po!er to proceed, in recognition of the priar# urisdiction of the adinistrative agenc#.)(Q

S$ne thrust of the ultiplication of adinistrative agencies is that the interpretation of contracts and thedeterination of private rights thereunder is no longer a uni2uel# udicial function, e7ercisable onl# b#our regular courtsT )1Q

Petitioner initiated his action !ith a protest before the Bureau of ands and follo!ed it through inthe Ministr# of Natural Resources and thereafter in the $ffice of the President. Consistent !ith thedoctrine of priar# urisdiction, the trial and the appellate courts had reason to rel# on the findings of these specialized adinistrative bodies.

%he priar# urisdiction of the director of lands and the inister of natural resources over theissues regarding the identit# of the disputed land and the 2ualification of an a!ardee of a sales patent isestablished b# *ections & and ' of Coon!ealth Act No. ', also +no!n as the Public and Act8

S*ection &. %he *ecretar# of Agriculture and Coerce <no! *ecretar# of Natural Resources= shall be thee7ecutive officer charged !ith carr#ing out the provisions of this Act through the 6irector of ands, !hoshall act under his iediate control.T

S*ection '. *ubect to said control, the 6irector of ands shall have direct e7ecutive control of the surve#,classification, lease, sale or an# other for of concession or disposition and anageent of the lands of the public doain, and his decision as to 2uestions of fact shall be conclusive !hen approved b# the*ecretar# of Agriculture and Coerce.T

%hus, the 6irector of ands, in his decision, said8 )?Q

S7 7 7 "t is erel# !hether or not ;illaflor has been paid the Dive %housand <P-,000.00= Pesos stipulatedconsideration of the deed of relin2uishent ade b# hi !ithout touching on the nature of the deed of relin2uishent. %he adinistration and disposition of public lands is priaril# vested in the 6irector of ands and ultiatel# !ith the *ecretar# of Agriculture and Natural Resources <no! *ecretar# of NaturalResources=, and to this end33

U$ur *upree Court has recognized that the 6irector of ands is a 2uasi3udicial officer !ho passes onissues of i7ed facts and la! <$rtua vs. Bingson Encarnacion, -/ Phil ''0=. *ections & and ' of thePublic and a! thus ean that the *ecretar# of Agriculture and Natural Resources shall be the finalarbiter on 2uestions of fact in public land conflicts <eirs of ;arela vs. A2uino, 1 Phil (/5 Julian vs.Apostol, -) Phil '')=.U

%he ruling of this $ffice in its order dated *epteber 0, /1-, is !orth reiterating, thus8

U7 7 7 it is our opinion that in the e7ercise of his po!er of e7ecutive control, adinistrative disposition andallegation of public land, the 6irector of ands should entertain the protest of ;illaflor and conduct foralinvestigation 777 to deterine the follo!ing points8 <a= !hether or not the Nasipit uber Copan#, "nc.paid or reibursed to ;illaflor the consideration of the rights in the aount of P-,000.00 and !hat





















evidence the copan# has to prove pa#ent, the relin2uishent of rights being part of the adinistrativeprocess in the disposition of the land in 2uestion 777.

7777 Besides, the authorit# of the 6irector of ands to pass upon and deterine 2uestions consideredinherent in or essential to the efficient e7ercise of his po!ers li+e the incident at issue, i.e. , !hether;illaflor had been paid or not, is conceded b# la!.UT

Reliance b# the trial and the appellate courts on the factual findings of the 6irector of ands and theMinister of Natural Resources is not isplaced. B# reason of the special +no!ledge and e7pertise of saidadinistrative agencies over atters falling under their urisdiction, the# are in a better position to pass udgent thereon5 thus, their findings of fact in that regard are generall# accorded great respect, if notfinalit#,)/Q b# the courts.&0Q %he findings of fact of an adinistrative agenc# ust be respected as long asthe# are supported b# substantial evidence, even if such evidence ight not be over!heling or evenpreponderant. "t is not the tas+ of an appellate court to !eigh once ore the evidence subitted before

the adinistrative bod# and to substitute its o!n udgent for that of the adinistrative agenc# inrespect of sufficienc# of evidence. &Q

o!ever, the rule that factual findings of an adinistrative agenc# are accorded respect and evenfinalit# b# courts adits of e7ceptions. %his is true also in assessing factual findings of lo!er courts.&)Q "tis incubent on the petitioner to sho! that the resolution of the factual issues b# the adinistrativeagenc# andLor b# the trial court falls under an# of the e7ceptions. $ther!ise, this Court !ill not disturbsuch findings.&&Q

e ention and 2uote e7tensivel# fro the rulings of the Bureau of ands and the Minister of Natural Resources because the points, 2uestions and issues raised b# petitioner before the trial court, theappellate court and no! before this Court are basicall# the sae as those brought up before the aforesaidspecialized adinistrative agencies. As held b# the Court of Appeals8&'Q

Se find that the contentious points raised b# appellant in this action, are substantiall# the sae attershe raised in B Clai No. ?1& <N=. "n both actions, he claied private o!nership over the land in

2uestion, assailed the validit# and effectiveness of the 6eed of Relin2uishent of Rights he e7ecuted inAugust (, /-0, that he had not been paid the P-,000.00 consideration, the value of the iproveentshe introduced on the land and other e7penses incurred b# hi.T

"n this instance, both the principle of priar# urisdiction of adinistrative agencies and thedoctrine of finalit# of factual findings of the trial courts, particularl# !hen affired b# the Court of Appealsas in this case, ilitate against petitionerVs cause. "ndeed, petitioner has not given us sufficient reason todeviate fro the.

L&'( i' ip+ P/li L&'(

Petitioner argues that even if the technical description in the deeds of sale and those in the salesapplication !ere not identical, the area in dispute reains his private propert#. e alleges that the deedsdid not contain an# technical description, as the# !ere e7ecuted prior to the surve# conducted b# the

Bureau of ands5 thus, the properties sold !ere erel# described b# reference to natural boundaries. isprivate o!nership thereof !as also allegedl# attested to b# private respondentVs forer field anager inthe latterVs Debruar# )), /-0 letter, !hich contained an adission that the land leased b# privaterespondent !as covered b# the sales application.

%his contention is specious. %he lac+ of technical description did not prove that the finding of the6irector of ands lac+ed substantial evidence. ere, the issue is not so uch !hether the subect land isidentical !ith the propert# purchased b# petitioner. %he issue, rather, is !hether the land covered b# thesales application is private or public land. "n his sales application, petitioner e7pressl# aditted that saidpropert# !as public land. %his is foridable evidence as it aounts to an adission against interest.

"n the e7ercise of his priar# urisdiction over the issue, 6irector of ands Casanova ruled that theland !as public8&-Q

S7 7 7 Even <o=n the assuption that the lands entioned in the deeds of transfer are the sae as the'03hectare area a!arded to Nasipit, their purchase b# ;illaflor <or= the latterVs occupation of the sae

did not change the character of the land fro that of public land to a private propert#. %he provision of the la! is specific that public lands can onl# be ac2uired in the anner provided for therein and notother!ise <*ec. , C.A. No. ', as aended=. %he records sho! that ;illaflor had applied for thepurchase of lands in 2uestion !ith this $ffice <*ales Application No. ;3?01= on 6eceber ), /'?. 777%here is a condition in the sales application 777 to the effect that he recognizes that the land covered b#

the sae is of public doain and an# and all rights he a# have !ith respect thereto b# virtue of continuous occupation and cultivation are relin2uished to the >overnent <paragraph (, *ales ApplicationNo. ;3?01 of ;icente J. ;illaflor, p. ), carpeta= of !hich ;illaflor is ver# uch a!are. "t also appears that;illaflor had paid for the publication fees appurtenant to the sale of the land. e participated in the publicauction !here he !as declared the successful bidder. e had full# paid the purchase prive <sic= thereor<sic=. "t !ould be a <sic= height of absurdit# for ;illaflor to be bu#ing that !hich is o!ned b# hi if hisclai of private o!nership thereof is to be believed. 777.T

%his finding !as affired b# the Minister of Natural Resources8 &(Q

SDirstl#, the area in dispute is not the private propert# of appellant <herein petitioner=.

%he evidence adduced b# <petitioner= to establish his clai of o!nership over the subect area consists of

deeds of absolute sale e7ecuted in his favor 777.

o!ever, an e7aination of the technical descriptions of the tracts of land subect of the deeds of sale !illdisclose that said parcels are not identical to, and do not tall# !ith, the area in controvers#.

U"t is a basic assuption of our polic# that lands of !hatever classification belong to the state. :nlessalienated in accordance !ith la!, it retains its rights over the sae as doinus. <*antiago vs. de los*antos, 3)0)', Noveber )), /1', ( *CRA -)=.

Dor it is !ell3settled that no public land can be ac2uired b# private persons !ithout an# grant, e7press oriplied fro the governent. "t is indispensable then that there be sho!ing of title fro the state or an#other ode of ac2uisition recognized b# la!. <ee ong o+, et al. vs. 6avid, et al., 3&0&?/, 6eceber)1, /1), '? *CRA &1/=.V

777 777

777 777

e, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence toestablish that the contested area is of private o!nership. ence, the propert# ust be held to be publicdoain.

U%here being no evidence !hatever that the propert# in 2uestion !as ever ac2uired b# the applicants ortheir ancestors either b# coposition title fro the *panish >overnent or b# possessor# inforationtitle or b# an# other eans for the ac2uisition of public lands, the propert# ust be held to be publicdoain.V

Be that as it a#, petitionerQ, b# filing a sales application over the controverted land, ac+no!ledgedune2uivocabl# sicQ that the sae is not his private propert#.

UAs such sales applicant anifestl# ac+no!ledged that he does not o!n the land and that the sae is apublic land under the adinistration of the Bureau of ands, to !hich the application !as subitted, 777All of its acts prior thereof, including its real estate ta7 declarations, characterized its possessions of theland as that of a Usales applicantV. And conse2uentl#, as one !ho e7pects to bu# it, but has not as #etdone so, and is not, therefore, its o!ner.V<Pala!an Agricultural and "ndustrial Co., "nc. vs. 6irector of ands, 3)-/', March ), /1), '' *CRA -=.T

Clearl#, this issue falls under the priar# urisdiction of the 6irector of ands because its resolutionre2uires Ssurve#, classification, 777 disposition and anageent of the lands of the public doain.T "tfollo!s that his rulings deserve great respect. As petitioner failed to sho! that this factual finding of the6irector of ands !as unsupported b# substantial evidence, it assues finalit#. %hus, both the trial andthe appellate courts correctl# relied on such finding.&1Q e can do no less.

So'( (o "i&lation of Contracts +roven

Petitioner insists that contrar# to Article &1&?Q of the Civil Code, Respondent Court erroneousl#ignored the conteporaneous and subse2uent acts of the parties5 hence, it failed to ascertain their trueintentions. o!ever, the rule on the interpretation of contracts that !as alluded to b# petitioner is usedin affiring, not negating, their validit#. %hus, Article &1&,&/Q !hich is a conunct of Article &1,




























provides that, if the instruent is susceptible of t!o or ore interpretations, the interpretation !hich !illa+e it valid and effectual should be adopted. "n this light, it is not difficult to understand that the legalbasis urged b# petitioner does not support his allegation that the contracts to sell and the deed of relin2uishent are siulated and fictitious. Properl# understood, such rules on interpretation evennegate petitionerVs thesis.

But let us indulge the peti tioner a!hile and deterine !hether the ci tedconteporaneous and subse2uent acts of the parties support his allegation of siulation. Petitionerasserts that the relin2uishent of rights and the agreeents to sell !ere siulated because, first , thelanguage and ters of said contracts negated private respondentVs ac2uisition of o!nership of the land inissue5 and second , conteporaneous and subse2uent counications bet!een hi and privaterespondent allegedl# sho!ed that the latter aditted that petitioner o!ned and occupied the t!oparcels5 i.e., that private respondent !as not appl#ing for said parcels but !as interested onl# in the t!ohectares it had leased, and that private respondent supported petitionerVs application for a patent.

Petitioner e7plains that the Agreeent to *ell dated 6eceber 1, /'? did not and could nottransfer o!nership because paragraph ? <c= thereof stipulates that the Sbalance of t!elve thousand pesos<P),000.00= shall be paid upon the e7ecution b# the Dirst Part# petitionerQ of the Absolute 6eed of *aleof the t!o parcels of land in 2uestion in favor of the *econd Part#, and upon deliver# to the *econd Part#private respondentQ of the Certificate of $!nership of the said t!o parcels of land.T %he ortgageprovisions in paragraphs ( and 1 of the agreeent state that the P1,000.00 and P-,000.00 !ere Searnestone# or a loan !ith antichresis b# the free occupanc# and use given to Nasipit of the '0 hectares of land not an#ore as a lessee.T "f the agreeent to sell transferred o!nership to Nasipit, then !h# !as itnecessar# to re2uire petitioner, in a second agreeent, to ortgage his propert# in the event of nonfulfillent of the prestations in the first agreeentG

%rue, the agreeent to sell did not absolutel# transfer o!nership of the land to privaterespondent. %his fact, ho!ever, does not sho! that the agreeent !as siulated. PetitionerVs deliver# of the Certificate of $!nership and e7ecution of the deed of absolute sale !ere suspensive conditions, !hichgave rise to a corresponding obligation on the part of the private respondent, i.e., the pa#ent of the lastinstallent of the consideration entioned in the 6eceber 1, /'? Agreeent. *uch conditions did not

affect the perfection of the contract or prove siulation. Neither did the ortgage.*iulation occurs !hen an apparent contract is a declaration of a fictitious !ill, deliberatel# ade

b# agreeent of the parties, in order to produce, for the purpose of deception, the appearance of a uridical act !hich does not e7ist or is different fro that !hich !as reall# e7ecuted. '0Q *uch an intentionis not apparent in the agreeents. %he intent to sell, on the other hand, is as clear as da#light.

Petitioner alleges further that the deed of relin2uishent of right did not give full effect to the t!oagreeents to sell, because the preliinar# clauses of the deed allegedl# served onl# to give privaterespondent an interest in the propert# as a future o!ner thereof and to enable respondent to follo! uppetitionerVs sales application.

e disagree. *uch an intention is not indicated in the deed. $n the contrar#, a real and factualsale is evident in paragraph ( thereof, !hich states8 S%hat the Nasipit uber Co., "nc., 777 is ver# uchinterested in ac2uiring the land covered b# the aforecited application to be used for purposes of echanized faringT and the penultiate paragraph stating8 S777 ;"CEN%E J. ;"AD$R, hereb#voluntaril# renounce and relin2uish !hatever rights to, and interests " have in the land covered b# #

above3entioned application in favor of the Nasipit uber Co., "nc.T

e also hold that no siulation is sho!n either in the letter, dated 6eceber &, /1&, of the forerfield anager of private respondent, >eorge Mear. A pertinent portion of the letter reads8

S<a=s regards #our propert# at Acacia, *an Mateo, " recall that !e ade soe sort of agreeent for theoccupanc#, but " no longer recall the details and " had forgotten !hether or not !e actuall# did occup##our land. But if, as #ou sa#, !e did occup# it, then " a sure that the Copan# is obligated to pa# arental.T

%he letter did not contain an# e7press adission that private respondent !as still leasing the landfro petitioner as of that date. According to Mear, he could no longer recall the details of his agreeent!ith petitioner. %his cannot be read as evidence of the siulation of either the deed of relin2uishent orthe agreeents to sell. "t is evidence erel# of an honest lac+ of recollection.

Petitioner also alleges that he continued to pa# realt# ta7es on the land even after the e7ecution of

said contracts. %his is iaterial because pa#ent of realt# ta7es does not necessaril# prove o!nership,uch less siulation of said contracts.'Q

(onpa!&ent of the Consideration

Did (ot +rove "i&lation

Petitioner insists that nonpa#ent of the consideration in the contracts proves their siulation. edisagree. Nonpa#ent, at ost, gives hi onl# the right to sue for collection. >enerall#, in a contract of sale, pa#ent of the price is a resolutor# condition and the reed# of the seller is to e7act fulfillent or,in case of a substantial breach, to rescind the contract under Article / of the Civil Code. ')Q o!ever,failure to pa# is not even a breach, but erel# an event !hich prevents the vendorVs obligation to conve#title fro ac2uiring binding force.'&Q

Petitioner also argues that Respondent Court violated evidentiar# rules in upholding the ruling of the 6irector of ands that petitioner did not present evidence to sho! private respondentVs failure to pa#hi. e disagree. Prior to the aendent of the rules on evidence on March ', /?/, *ection , Rule&, states that each part# ust prove his or her o!n affirative allegations. ''Q %hus, the burden of proof in an# cause rested upon the part# !ho, as deterined b# the pleadings or the nature of the case,

asserts the affirative of an issue and reains there until the terination of the action. '-Q Althoughnonpa#ent is a negative fact !hich need not be proved, the part# see+ing pa#ent is still re2uired toprove the e7istence of the debt and the fact that it is alread# due. '(Q

Petitioner sho!ed the e7istence of the obligation !ith the presentation of the contracts, but did notpresent an# evidence that he deanded pa#ent fro private respondent. %he deand letters datedJanuar# ) and -, /1' <E7hs. SJT and S:T=, adduced in evidence b# petitioner, !ere for the pa#ent of bac+ rentals, daages to iproveents and reiburseent of ac2uisition costs and realt# ta7es, notpa#ent arising fro the contract to sell.

%hus, !e cannot fault Respondent Court for adopting the finding of the 6irector of ands thatpetitioner Soffered no evidence to support his clai of nonpa#ent be#ond his o!n self3servingassertions,T as he did not even deand Spa#ent, orall# or in !riting, of the five thousand <P-,000.00=pesos !hich !as supposed to be due hi since August 1, /-0, the date !hen the order of a!ard !asissued to Nasipit, and !hen his cause of action to recover pa#ent had accrued.T Nonpa#ent of theconsideration in the contracts to sell or the deed of relin2uishent !as raised for the first tie in theprotest filed !ith the Bureau of ands on Januar# &, /1'. But this protest letter !as not the deandletter re2uired b# la!.

Petitioner alleges that the assignent of credit and the letter of the forer field anager of privaterespondent are conteporaneous and subse2uent acts revealing the nonpa#ent of theconsideration. e aintains that the P),000.00 credit assigned pertains to the P-,000.00and P1,000.00 initial pa#ents in the 6eceber 1, /'? Agreeent, because the balance of P),000.00!as not #et Sdue and accruing.T %his is consistent, he argues, !ith the representation that privaterespondent !as not interested in filing a sales application over the land in issue and that Nasipit !asinstead supporting petitionerVs application thereto in MearVs letter to the 6irector of ands dated Debruar#)), /-0 <E7h. SKT=.'1Q

%his arguent is too strained to be acceptable. %he assignent of credit did not establish thenondeliver# of these initial pa#ents of the total consideration. irst , the assignent of credit happenedon Januar# /, /'/, or a onth after the signing of the 6eceber 1, /'? Agreeent and alost si7onths after the Jul# 1, /'? Agreeent to *ell. Second , it does not overcoe the recitation in theAgreeent of 6eceber 1, /'?8 S777 a= %he aount of *E;EN %$:*AN6 <P1,000.00= PE*$* has

alread# been paid b# the *econd Part# to the Dirst Part# upon the e7ecution of the Agreeent to *ell, onJul# 1, /'?5 b= %he aount of D";E %$:*AN6 <P-,000.00= PE*$* shall be paid upon the signing of thispresent agreeent5 777.T

Aside fro these facts, the 6irector of ands found evidence of greater !eight sho!ing thatpa#ent !as actuall# ade8'?Q

S7 7 7 <%=here is strong evidence to sho! that said 777 <P),000.00= had been paid b# NA*"P"% toEd!ard J. Nell Copan# b# virtue of the 6eed of Assignent of Credit e7ecuted b# ;illaflor <E7h. S'NAC$T= for the credit of the latter.

Att#. >abriel Banaag, resident counsel of NA*"P"% 777 declared that it !as he !ho notarized the UAgreeent to *ellV <E7h. SDT=5 7777 that subse2uentl#, in Januar# /'/, ;illaflor e7ecuted a 6eed of Assignent of credit in favor of Ed!ard J. Nell Copan# <E7h. S' NAC$T= !hereb# ;illaflor ceded to thelatter his receivable for NA*"P"% corresponding to the reaining balance in the aount of 777<P),000.00= 777 of the total consideration 77775 e further testified that the said assignent 777 !ascounicated to NA*"P"% under cover letter dated Januar# )', /'/ <E7h. S'3AT= and not longthereafter, b# virtue of the said assignent of credit, NA*"P"% paid the balance 777 to Ed!ard J. NellCopan# <p. -?, bid=. Att#. BanaagVs aforesaid testion# stand unrebutted5 hence, ust be given full!eight and credit.























777 777777.T

%he 6irector of ands also found that there had been pa#ent of the consideration in therelin2uishent of rights8'/Q

S$n the other hand, there are strong and copelling reasons to presue that ;illaflor had alread# beenpaid the aount of Dive %housand <P-,000.00= Pesos.

Dirst, 7 7 7 hat is surprising, ho!ever, is not so uch his clais consisting of gigantic aounts as hishaving forgotten to adduce evidence to prove his clai of non3pa#ent of the Dive %housand <P-,000.00=Pesos during the investigation proceedings !hen he had all the tie and opportunit# to do so. 7777 %hefact that he did not adduce or even attept to adduce evidence in support thereof sho!s either that hehad no evidence to offer of that NA*"P"% had alread# paid hi in fact. hat is !orse is that ;illaflor didnot even bother to coand pa#ent, orall# or in !riting, of the Dive %housand <P-,000.00= Pesos !hich!as supposed to be due hi since August 1, /-0, the date !hen the order of a!ard !as issued toNasipit, and !hen his cause of action to recover pa#ent had accrued. %he fact that he onl# ade acoand for pa#ent on Januar# &, /1', !hen he filed his protest or t!ent#3four <)'= #ears later isiediatel# nugator# of his clai for non3pa#ent.

But ;illaflor aintains that he had no +no!ledge or notice that the order of a!ard had alread# beenissued to NA*"P"% as he had gone to "ndonesia and he had been absent fro the Philippines during allthose t!ent#3four <)'= #ears. %his of course ta7es credulit#.7777

U 7 7 7 "t is ore in +eeping !ith the ordinar# course of things that he should have ac2uired inforationas to !hat !as transpiring in his affairs in Manila 7 7 7.U

*econd, it should be understood that the condition that NA*"P"% should reiburse ;illaflor the aount of

Dive %housand <P-,000.00= Pesos upon its receipt of the order of a!ard !as fulfilled as said a!ard !asissued to NA*"P"% on August 1, /-0. %he said deed of relin2uishent !as prepared and notarized inManila !ith ;illaflor and NA*"P"% signing the instruent also in Manila. No!, considering that ;illaflor ispresued to be ore assiduous in follo!ing up !ith the Bureau of ands the e7peditious issuance of theorder of a!ard as the <consideration= !ould depend on the issuance of said order to a!ard NA*"P"%,!ould it not be reasonable to believe that ;illaflor !as at hand !hen the a!ard !as issued to NA*"P"% onAugust 1, /-0, or barel# a da# !hich he e7ecuted the deed of relin2uishent on August (, /-0, inManilaG 7777.

%hird, on the other hand, NA*"P"% has in his possession a sort of SorderT upon itself 33 <the deed of relin2uishent !herein he<sic= obligated itself to reiburse or pa# ;illaflor the 777 consideration of therelin2uishent upon its receipt of the order of a!ard= for the pa#ent of the aforesaid aount theoent the order of a!ard is issued to it. "t is reasonable to presue that NA*"P"% has paid the<consideration= to ;illaflor.

777 777

777

7 7 7 <"=t !as virtuall# ipossible for NA*"P"%, after the lapse of the intervening )' #ears, to be able tocope up !ith all the records necessar# to sho! that the consideration for the deed of relin2uishent hadbeen full# paid. %o e7pect NA*"P"% to +eep intact all records pertinent to the transaction for the !hole2uarter of a centur# !ould be to re2uire !hat even the la! does not. "ndeed, even the applicable la!itself <*ec. &&1, National "nternal Revenue Code= re2uires that all records of corporations be preservedfor onl# a a7iu of five #ears.

NA*"P"% a# !ell have added that at an# rate !hile there are transactions !here the proper evidence isipossible or e7treel# difficult to produce after the lapse of tie 777 the la! creates presuptions of regularit# in favor of such transactions <)0 A. Jur. )&)= so that !hen the basic fact is established in anaction the e7istence of the presued fact ust be assued b# force of la!. <Rule &, :nifor Rules of Evidence5 / igore, *ec. )'/=.T

%he Court also notes that MearVs letter of Debruar# )), /-0 !as sent si7 onths prior to thee7ecution of the deed of relin2uishent of right. At the tie of its !riting, private respondent had notperfected its o!nership of the land to be able to 2ualif# as a sales applicant. Besides, although he !as apart# to the Jul# 1, /'? Agreeent to *ell, Mear !as not a signator# to the 6eed of Relin2uishent orto the 6eceber 1, /'? Agreeent to *ell. %hus, he cannot be e7pected to +no! the e7istence of and

the aendents to the later contracts. %hese circustances e7plain the ista+en representations, notisrepresentations, in said letter.

/ac1 of (otice of the Aard

Petitioner insists that private respondent suppressed evidence, pointing to his not having beennotified of the $rder of A!ard dated August 1, /-0. -0Q At the botto of page ) of the order, petitioner!as not listed as one of the parties !ho !ere to be furnished a cop# b# 6irector of ands Jose P.6ans. Petitioner also posits that Public and "nspector *ulpicio A. %aeza irregularl# received the copies forboth private respondent and the cit# treasurer of Butuan Cit#. %he lac+ of notice for petitioner can beeasil# e7plained. Plainl#, petitioner !as not entitled to said notice of a!ard fro the 6irector of ands,because b# then, he had alread# relin2uished his rights to the disputed land in favor of private

respondent. "n the heading of the order, he !as referred to as sales applicant3assignor. "n paragraphnuber ', the order stated that, on August (, /-0, he relin2uished his rights to the land subect of thea!ard to private respondent. Dro such date, the sales application !as considered to be a atterbet!een the Bureau of ands and private respondent onl#. Considering these facts, the failure to givepetitioner a cop# of the notice of the a!ard cannot be considered as suppression of evidence.-Q Durtherore, this order !as in fact available to petitioner and had been referred to b# hi sinceJanuar# &, /1' !hen he filed his protest !ith the Bureau of ands. -)Q

T5ir( +rivate Respondent 2alified

for an Aard of +blic /and

Petitioner asserts that private respondent !as legall# dis2ualified fro ac2uiring the parcels of landin 2uestion because it !as not authorized b# its charter to ac2uire disposable public agricultural landsunder *ections ), )) and )& of the Public and Act, prior to its aendent b# P.6. No. 1(&. edisagree. %he re2uireents for a sales application under the Public and Act are8 <= the possession of the 2ualifications re2uired b# said Act <under *ection )/= and <)= the lac+ of the dis2ualificationsentioned therein <under *ections ), )), and )&=. o!ever, the transfer of o!nership via the t!oagreeents dated Jul# 1 and 6eceber 1, /'? and the relin2uishent of rights, being private contracts,!ere binding onl# bet!een petitioner and private respondent. %he Public and Act finds no relevancebecause the disputed land !as covered b# said Act onl# after the issuance of the order of a!ard in favorof private respondent. %hus, the possession of an# dis2ualification b# private respondent under said Actis iaterial to the private contracts bet!een the parties thereto. <e are not, ho!ever, suggesting adeparture fro the rule that la!s are deeed !ritten in contracts.= Consideration of said provisions of the Act !ill further sho! their inapplicabilit# to these contracts. *ection ) of the Act pertains toac2uisitions of public land b# a corporation fro a grantee, but petitioner never becae a grantee of thedisputed land. $n the other hand, private respondent itself !as the direct grantee. *ections )) and)& dis2ualif# corporations, !hich are not authorized b# their charter, fro ac2uiring public land5 therecords do not sho! that private respondent !as not so authorized under its charter.

Also, the deterination b# the 6irector of ands and the Minister of Natural Resources of the2ualification of private respondent to becoe an a!ardee or grantee under the Act is persuasive on

Respondent Court. "n 6spinosa vs. +aalintal ,-&Q

the Court ruled that, b# la!, the po!ers of the*ecretar# of Agriculture and Natural Resources regarding the disposition of public lands 33 including theapproval, reection, and reinstateent of applications W are of e7ecutive and adinistrativenature. <*uch po!ers, ho!ever, do not include the udicial po!er to decide controversies arising frodisagreeents in civil or contractual relations bet!een the litigants.= Conse2uentl#, the deterination of !hether private respondent is 2ualified to becoe an a!ardee of public land under C.A. ' b# salesapplication is included therein.

All told, the onl# dis2ualification that can be iputed to private respondent is the prohibition in the/1& Constitution against the holding of alienable lands of the public doain b# corporations. -'Q o!ever,this Court earlier settled the atter, ruling that said constitutional prohibition had no retroactive effectand could not prevail over a vested ri%ht to the land. "n #yo% vs. Cusi, (r.,--Q this Court declared8

Se hold that the said constitutional prohibition has no retroactive application to the sales application of BiYan 6evelopent Co., "nc. because it had alread# ac2uired a vested right to the land applied for at thetie the /1& Constitution too+ effect.

%hat vested right has to be respected. "t could not be abrogated b# the ne! Constitution. *ection ),Article K""" of the /&- Constitution allo!s private corporations to purchase public agricultural lands not

di h d d f h P i i V hibi i i i b d b h " l i h f id $ i i N (' h h * f A i l d N l R



















e7ceeding one thousand and t!ent#3four hectares. PetitionerVs prohibition action is barred b# thedoctrine of vested rights in constitutional la!.

UA right is vested !hen the right to eno#ent has becoe the propert# of soe particular person orpersons as a present interest.V <( C.J.*. 1&=. "t is Uthe privilege to eno# propert# legall# vested, toenforce contracts, and eno# the rights of propert# conferred b# e7isting la!V <) C.J. /--, Note '(, No.(= or Usoe right or interest in propert# !hich has becoe fi7ed and established and is no longer open todoubt or controvers#V <6o!ns vs. Blount, 10 Ded. -, )0, cited in Balboa vs. Darrales, - Phil. '/?, -0)=.

%he due process clause prohibits the annihilation of vested rights. UA state a# not ipair vested rightsb# legislative enactent, b# the enactent or b# the subse2uent repeal of a unicipal ordinance, or b# achange in the constitution of the *tate, e7cept in a legitiate e7ercise of the police po!erV <( C.J.*.1131?=.

"t has been observed that, generall#, the ter Uvested rightV e7presses the concept of present fi7edinterest, !hich in right reason and natural ustice should be protected against arbitrar# *tate action, or aninnatel# ust an iperative right !hich an enlightened free societ#, sensitive to inherent and irrefragableindividual rights, cannot den# <( C.J.*. 1', Note 1, No. -, citing Penns#lvania >re#hound ines, "nc.vs. Rosenthal, /) Atl. )nd -?1=.

*ecretar# of Justice Abad *antos in his /1& opinion ruled that !here the applicant, before theConstitution too+ effect, had full# coplied !ith all his obligations under the Public and Act in order toentitle hi to a sales patent, there !ould see to be no legal or e2uitable ustification for refusing toissue or release the sales patent <p. )-', Rollo=.

"n $pinion No. '0, series of /1', he held that as soon as the applicant had fulfilled the construction orcultivation re2uireents and has full# paid the purchase price, he should be deeed to have ac2uired b#purchase the particular tract of land and to hi the area liitation in the ne! Constitution !ould not

appl#.

"n $pinion No. ?-, series of /1(, *ecretar# Abad *antos held that !here the cultivation re2uireents!ere fulfilled before the ne! Constitution too+ effect but the full pa#ent of the price !as copletedafter Januar# 1, /1&, the applicant !as, nevertheless, entitled to a sales patent <p. )-(, Rollo=.

*uch a conteporaneous construction of the constitutional prohibition b# a high e7ecutive official carriesgreat !eight and should be accorded uch respect. "t is a correct interpretation of section of ArticleK";.

"n the instant case, it is incontestable that prior to the effectivit# of the /1& Constitution the right of thecorporation to purchase the land in 2uestion had becoe fi7ed and established and !as no longer open todoubt or controvers#.

"ts copliance !ith the re2uireents of the Public and a! for the issuance of a patent had the effect of segregating the said land fro the public doain. %he corporationVs right to obtain a patent for that landis protected b# la!. "t cannot be deprived of that right !ithout due process <6irector of ands vs. CA,)& Phil. //=.T

%he Minister of Natural Resources ruled, and !e agree, that private respondent !as siilarl#2ualified to becoe an a!ardee of the disputed land because its rights to it vested prior to the effectivit#of the /1& Constitution8-(Q

Sastl#, appellee has ac2uired a vested right to the subect area and, therefore, is deeed not affected b#the ne! constitutional provision that no private corporation a# hold alienable land of the public doaine7cept b# lease.

"t a# be recalled that the *ecretar# of Justice in his $pinion No. (', series of /1&, had declared, to !it8

U$n the other hand, !ith respect to sales application read# for issuance of sales patent, it is # opinionthat !here the applicant had, before, the constitution too+ effect, full# coplied !ith all his obligationsunder the Public and act in order to entitle hi to sales patent, there !ould see to be not legal ore2uitable ustification for refusing to issue or release the sales patent.V

"pleenting the aforesaid $pinion No. (' 777, the then *ecretar# of Agriculture and Natural Resourcesissued a eorandu, dated Debruar# ?, /1', !hich pertinentl# reads as follo!s8

U"n the ipleentation of the foregoing opinion, sales application of private individuals covering areas ine7cess of )' hectares and those of corporations, associations, or partnership !hich fall under an# of thefollo!ing categories shall be given due course and issued patents, to !it8

*ales application for fishponds and for agricultural purposes <*DA, *A and ">P*A= !herein prior toJanuar# 1, /1&,

a. the land covered thereb# !as a!arded5

b. cultivation re2uireents of la! !ere coplied !ith as sho!n b# investigation reports subitted priorto Januar# 1, /1&5

c. land !as surve#ed and surve# returns alread# subitted to the 6irector of ands for verification andapproval5 and

d. purchase price !as full# paid.U

Dro the records, it is evident that the aforestated re2uisites have been coplied !ith b# appellee longbefore Januar# 1, /1&, the effectivit# of the Ne! Constitution. %o restate, the disputed area !asa!arded to appellee on August 1, /-0, the purchase price !as full# paid on Jul# )(, /-, thecultivation re2uireents !ere coplied !ith as per investigation report dated 6eceber &, /'/, andthe land !as surve#ed under Pls3/1.T

%he sae finding !as earlier ade b# the 6irector of ands8-1Q

S"t is further contended b# ;illaflor that Nasipit has no uridical personalit# to appl# for the purchase of public lands for agricultural purposes. %he records clearl# sho!, ho!ever, that since the e7ecution of thedeed of relin2uishent of August (, /-0, in favor of Nasipit, ;illaflor has al!a#s considered andrecognized Nasipit as having the uridical personalit# to ac2uire public lands for agricultural purposes. "nthe deed of relin2uishent 777, it is stated8

U(. %hat the Nasipit uber Co., "nc., a corporation dul# organized in accordance !ith the la!s of thePhilippines, 7 7 7.V

Even this $ffice had not failed to recognize the uridical personalit# of Nasipit to appl# for the purchase of public lands 777 !hen it a!arded to it the land so relin2uished b# ;illaflor <$rder of A!ard dated August1, /-0= and accepted its application therefor. At an# rate, the 2uestion !hether an applicant is2ualified to appl# for the ac2uisition of public lands is a atter bet!een the applicant and this $ffice to

decide and !hich a third part# li+e ;illaflor has no personalit# to 2uestion be#ond erel# calling theattention of this $ffice thereto.T

Needless to sa#, !e also agree that the Noveber ?, /'( ease Agreeent bet!een petitionerand private respondent had been terinated b# the agreeents to sell and the relin2uishent of rights. B# the tie the verbal leases !ere allegedl# ade in /- and /--, -?Q the disputed land hadalread# been ac2uired and a!arded to private respondent. "n an# event, petitionerVs cause of action onthese alleged lease agreeents prescribed long before he filed Civil Case No. )01)3""", as correctl# foundb# the trial and appellate courts.-/Q %hus, it is no longer iportant, in this case, to pass upon the issue of !hether or not aendents to a lease contract can be proven b# parol evidence. %he sae holds true asregards the issue of foru3shopping.

All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of the6irector of ands, the Minister of Natural Resources, the trial court and the Court of Appeals.

%ERE#ORE, the petition is hereb# )$S+$SS6).

*$ $R6ERE6.arvasa, C.(., =Chairman8, Romero, and rancisco, ((., concur.+elo, (., no part.

%h l i tiff V l i d th d f ti i h b di i d th












*EC$N6 6";"*"$N

BG.R. No. 11734. #/r&r 23, 2000

RU)EN LO"OLA, CANELARA LO"OLA, LOREN!O LO"OLA, #LORA LO"OLA, NCANROLO"OLA, ROSARO LO"OLA, TERESTA LO"OLA &'( $CENTE LO"OLA, petitioners, vs. T%E

%ONORA)LE COURT O# APPEALS, NE$ES, ROMANA, ROMUALO, GULLERMO, LUCA,PUR#CACON, ANGELES, RO)ERTO, ESTRELLA, &ll r'&( !ARRAGA &'( T%E %ERS O#*OSE !ARRAGA, '&l AURORA, MARTA, *OSE, RONALO, $CTOR, LAURANO, &'( AREL,

&ll r'&( !ARRAGA, respondents.

E C S O N

USUM)NG, J .

Dor revie! on certiorari is the decision of the Court of Appeals in CA3>.R. No. C; &(0/0, proulgated onAugust &, //&, reversing the udgent of the Regional %rial Court of BiYan, aguna, Branch )', in CivilCase No. B3)/'. "n said decision, the appellate court decreed8

4PREM"*E* C$N*"6ERE6, the decision appealed fro is hereb# RE;ER*E6 and ane! udgent rendered as follo!s8

. 6isissing the plaintiffVs Coplaint5

). 6eclaring the 4"ilihan% /uluyan n% <alahati =1?28 n%$san% =18 La%ay na Lupa4 dated August )', /?0 <E7hibit = as!ell as %ransfer Certificate of %itle No. %3(0(1 of the Registr#of 6eeds for the Calaba Branch to be la!ful, valid, andeffective.

4*$ $R6ERE6.4Q

%he R%C decision reversed b# the Court of Appeals had disposed of the coplaint as follo!s8

4ERED$RE, preises considered, udgent is hereb# rendered in favor of theplaintiffs and against the defendants as follo!s8

. 6eclaring the siulated deed of absolute sale purportedl# e7ecuted b# the late>audencia arraga on August )', /?0 as !ell as the issuance of the correspondingcertificate of title in favor of the defendants null and void fro the beginning5

). $rdering the Register of 6eeds of aguna, Calaba Branch to cancel %ransferCertificate of %itle No. %3(0?1 issued in favor of the defendants and to issueanother one, if feasible, in favor of the plaintiffs and the defendants as co3o!ners andlegal heirs of the late >audencia arraga5

&. $rder<ing= the defendants to reconve# and deliver the possession of theshares of the plaintiff on <sic= the subect propert#5

'. $rdering the defendants to pa# the aount of P)0,000 as and for attorne#Vsfees and the costs of this suit.

-. As there is no preponderance of evidence sho!ing that the plaintiffs sufferedoral and e7eplar# daages, their clai for such daages is hereb# disissed.

%he plaintiffsV clai under the second cause of action is hereb# disissed on theground of prescription.

i+e!ise, the defendantsV counterclai is hereb# disissed for lac+ of erit.

4*$ $R6ERE6.4)Q

e shall no! e7aine the factual antecedents of this petition.

"n dispute here is a parcel of land in BiYan, aguna, particularl# described as follo!s8

4A PARCE $D AN6 <ot -3A3= of the subdivision plan <RC= Psd3&)1=, being aportion of ot -3A, described on Plan Psd3--))?, RC <>R$= Record No. ?&1'=,situated in the Poblacion, Municipalit# of BiYan, Province of aguna, "sland of uzon.Bounded on the NE., points & to ' b# the BiYan River5 on the *E., points ' to b# ot-3A3) of the subd. Plan5 on the *., points to ) b# the Road and on points ) to &b# ot -3B, Psd3--))? 7 7 7 containing an area of *E;EN :N6RE6 D"D%F %REE<1-&= *9. ME%ER*, ore or less 7 7 7.4 &Q

$riginall# o!ned in coon b# the siblings Mariano and >audencia arraga, !ho inherited it fro theirfather, the parcel is covered b# %ransfer Certificate of %itle <%C%= No. %3&)001. Mariano predeceased hissister !ho died single, !ithout offspring on August -, /?&, at the age of /1.

;ictorina arraga vda. de o#ola and Cecilia arraga, are sisters of >audencia and Mariano. ;ictorina diedon $ctober ?, /?/, !hile Civil Case No. B3)/' !as pending !ith the trial court. Cecilia died on August', //0, unarried and childless. ;ictorina and Cecilia !ere substituted b# petitioners as plaintiffs.

Private respondents, children of Mariano e7cepting those denoinated as the 4eirs of Jose arraga,4 arefirst cousins of petitioners. Respondents designated as the 4eirs of Jose arraga4 are first cousins oncereoved of the petitioners.

Private respondents allege that the# are the la!ful o!ners of ot -3A3, the one3half share inherited b#their father, Mariano and the other half purchased fro their deceased aunt, >audencia. %ransferCertificate of %itle No. (0(1 !as issued in their naes covering ot -3A3.

%he records sho! that the propert# !as earlier the subect of Civil Case No. B30/' before the then Courtof Dirst "nstance of aguna, Branch , entitled @Spouses Romualdo -arra%a, et al. v. Gaudencia -arra%a,et al.@ Roualdo arraga, one of the private respondents no!, !as the plaintiff in Civil Case No. B30/'.%he defendants !ere his siblings8 Nieves, Roana, >uillero, Purificacion, Angeles, Roberto, Estrella, andJose, all surnaed arraga, as !ell as his aunt, the late >audencia. %he trial court decided Civil Case No.B30/' in favor of the defendants. >audencia !as adudged o!ner of the one3half portion of ot -3A3.

Roualdo elevated the decision to the Court of Appeals and later the *upree Court. %he petition,doc+eted as >.R. No. -/-)/, !as denied b# this Court on March 1, /?).

%he present controvers# began on August )', /?0, nearl# three #ears before the death of >audencia!hile >.R. No. -/-)/ !as still pending before this Court. $n said date, >audencia allegedl# sold toprivate respondents her share in ot -3A3 for P&',000.00. %he sale !as evidenced b# a notarizeddocuent denoinated as @"ilihan% /uluyan n% <alahati =1?28 n% $san% La%ay na Lupa.@ AB Roualdo, thepetitioner in >.R. No. -/-)/, !as aong the vendees.

Mean!hile, the decision in Civil Case No. B30/' becae final. Private respondents filed a otion fore7ecution. $n Debruar# (, /?', the sheriff e7ecuted the corresponding deed of reconve#ance to>audencia. $n Jul# )&, /?', ho!ever, the Register of 6eeds of aguna, Calaba Branch, issued in favorof private respondents, %C% No. %3(0(1, on the basis of the sale on August )', /?0 b# >audencia tothe.

$n Januar# &, /?-, ;ictorina and Cecilia filed a coplaint, doc+eted as Civil Case No. B3)/', !ith theR%C of BiYan, aguna, for the purpose of annulling the sale and the %C%. %he trial court rendered udgent in favor of coplainants.

$n appeal the appellate court RE;ER*E6 the trial court $n *epteber - //& herein petitioners <as *iulation is 4the declaration of a fictitious !ill deliberatel# ade b# agreeent of the parties in order

http://sc.judiciary.gov.ph/jurisprudence/2000/feb2000/115734.html#_ftn1










$n appeal, the appellate court RE;ER*E6 the trial court. $n *epteber -, //&, herein petitioners <assubstitute parties for ;ictorina and Cecilia, the original plaintiffs= filed a otion for reconsideration, !hich!as denied on June (, //'.

ence, the instant petition.

Petitioners subit the follo!ing issues for resolution b# this Court8

. E%ER $R N$% %ERE ARE *%R$N> AN6 C$>EN% REA*$N<*= %$ 6"*%:RB%E D"N6"N>* AN6 C$NC:*"$N* $D %E %R"A C$:R% %A% %E C$N%RAC%6EN$M"NA%E6 A* 6EE6 $D AB*$:%E *AE "* *"M:A%E6 AN6 %ERED$RE N:AN6 ;$"6.

). E%ER %E AC%* $D PR";A%E RE*P$N6EN%* "* <*"C= C$N*"*%EN% "% %EAC%* $D ;EN6EE* EN %EF 6ED"E6 $>"C A* D$:N6 BF %E %R"A C$:R%...

&. E%ER %E AE>E6 ;EN6$R* <*"C= >A:6ENC"A ARRA>A $ A* %EN/' FEAR* $6, AREA6F EAO AN6 $ A* :N6ER %E CARE $D $NE $D %E;EN6EE* PR";A%E RE*P$N6EN% R$MANA ARRA>A, *"N>E AN6 "%$:% ANFC"6 B:% A* *"*%ER* AN6 $%ER NEPE* AN6 N"ECE* " *E ERPR$PER%F %EN $R% P??,)-0.00 "N /?0 D$R $NF P&',000, AN6 E%ER AC$N%RAC% $D *AE $D REA%F "* PERDEC%E6, ;A"6 AN6 >EN:"NE EN $NE $D%E ;EN6EE* R$M:A6$ ARRA>A 6$E* N$% ON$ $D %E %RAN*AC%"$N, %E$%ER ;EN6EE J$*E ARRA>A A* AREA6F $N> 6EA6 BED$RE %E EKEC:%"$N$D %E "$L$4# "N 9:E*%"$N AN6 FE% A* "NC:6E6 A* $NE $D %E ;EN6EE*,"OE"*E, $%ER *:PP$*E6 ;EN6EE* N"E;E* ARRA>A AN6 >:"ERM$ARRA>A A*"6E DR$M R$M:A6$ ERE N$% PRE*EN% EN %E %RAN*AC%"$N%$$O PACE.

'. %E E>A MEAN"N> AN6 "MP$R% $D *"M:A%E6 C$N%RAC% $D *AE "C"N;A"6A%E* A %RAN*AC%"$N "* A*$ A E>A "**:E %$ BE %RE*E6 $:% "N%"* CA*E A% BAR.

-. E%ER PE%"%"$NER* A;E %E E>A PER*$NA"%F %$ *:E. -Q

Not!ithstanding petitionersV forulation of the issues, !e find the onl# issue for resolution in this case is!hether or not the deed of absolute sale is valid.

Petitioners vigorousl# assail the validit# of the e7ecution of the deed of absolute sale suggesting thatsince the notar# public !ho prepared and ac+no!ledged the 2uestioned "ilihan did not personall# +no!>audencia, the e7ecution of the deed !as suspect. o!ever, the notar# public testified that heintervie!ed >audencia prior to preparing the deed of sale.(Q Petitioners failed to rebut this testion#. %herule is that a notarized docuent carries the evidentiar# !eight conferred upon it !ith respect to its duee7ecution,1Q and docuents ac+no!ledged before a notar# public have in their favor the presuption of regularit#.?Q B# their failure to overcoe this presuption, !ith clear and convincing evidence, petitionersare estopped fro 2uestioning the regularit# of the e7ecution of the deed. /Q

Petitioners also charge that one of the vendees, Jose arraga, !as alread# dead at the tie of the sale.o!ever, the records reveal that Jose died on Jul# )/, /?.0Q e !as still alive on August )', /?0,!hen the sale too+ place.

Petitioners then contend that three of the vendees included in the deed, nael#, Roualdo, >uillero,and Nieves, !ere not a!are of the transaction, !hich casts doubt on the validit# of the e7ecution of thedeed. Curiousl#, Roualdo !ho 2uestioned >audenciaVs o!nership in Civil Case No. B30/', !as one of those included as bu#er in the deed of sale. Roana, ho!ever, testified that Roualdo reall# had no+no!ledge of the transaction and he !as included as a bu#er of the land onl# because he !as a brother.

Petitioners suggest that all the aforecited circustances lead to the conclusion that the deed of sale !assiulated.

*iulation is 4the declaration of a fictitious !ill, deliberatel# ade b# agreeent of the parties, in orderto produce, for the purposes of deception, the appearances of a uridical act !hich does not e7ist or isdifferent !hat that !hich !as reall# e7ecuted.4Q Characteristic of siulation is that the apparentcontract is not reall# desired or intended to produce legal effect or in an# !a# alter the uridical situationof the parties. Perusal of the 2uestioned deed !ill sho! that the sale of the propert# !ould convert theco3o!ners to vendors and vendees, a clear alteration of the uridical relationships. %his is contrar# to there2uisite of siulation that the apparent contract !as not reall# eant to produce an# legal effect. Also ina siulated contract, the parties have no intention to be bound b# the contract. But in this case, theparties clearl# intended to be bound b# the contract of sale, an intention the# did not den#.

%he re2uisites for siulation are8 <a= an out!ard declaration of !ill different fro the !ill of the parties5<b= the false appearance ust have been intended b# utual agreeent5 and <c= the purpose is todeceive third persons.)Q None of these are present in the assailed transaction.

Anent RoualdoVs lac+ of +no!ledge and participation in the sale, the rule is that contracts are bindingonl# upon the parties !ho e7ecute the. &Q Roualdo had no +no!ledge of the sale. e !as a strangerand not a part# to it. Article & of the Civil Code'Q clearl# covers this situation.

Petitioners fault the Court of Appeals for not considering that at the tie of the sale in /?0, >audencia!as alread# /' #ears old5 that she !as alread# !ea+5 that she !as living !ith private respondentRoana5 and !as dependent upon the latter for her dail# needs, such that under these circustances,fraud or undue influence !as e7ercised b# Roana to obtain >audenciaVs consent to the sale.

%he rule on fraud is that it is never presued, but ust be both alleged and proved. -Q Dor a contract tobe annulled on the ground of fraud, it ust be sho!n that the vendor never gave consent to itse7ecution. "f a copetent person has assented to a contract freel# and fairl#, said person is bound. %herealso is a disputable presuption, that private transactions have been fair and regular.(Q Applied tocontracts, the presuption is in favor of validit# and regularit#. "n this case, the allegations of fraud !asunsupported, and the presuption stands that the contract >audencia entered into !as fair and regular.

Petitioners also clai that since >audencia !as old and senile, she !as incapable of independent andclear udgent. o!ever, a person is not incapacitated to contract erel# because of advanced #ears orb# reason of ph#sical infirities.1Q $nl# !hen such age or infirities ipair his ental faculties to suche7tent as to prevent hi fro properl#, intelligentl#, and fairl# protecting his propert# rights, ?Q is heconsidered incapacitated. Petitioners sho! no proof that >audencia had lost control of her entalfaculties at the tie of the sale. %he notar# public !ho intervie!ed her, testified that !hen he tal+ed to>audencia before preparing the deed of sale, she ans!ered correctl# and he !as convinced that>audencia !as entall# fit and +ne! !hat she !as doing.

$n !hether or not >audencia !as under the undue influence of the private respondents, Article &&1 of the Civil Code states8

4%here is undue influence !hen a person ta+es iproper advantage of his po!er over

the !ill of another, depriving the latter of a reasonable freedo of choice. %hefollo!ing circustances shall be considered8 confidential, fail#, spiritual, and otherrelations bet!een the parties, or the fact that the person alleged to have been undul#influenced !as suffering fro ental !ea+ness, or !as ignorant or in financialdistress.4

:ndue influence depends upon the circustances of each case /Q and not on bare acadeic rules. )0Q Dorundue influence to be established to ustif# the cancellation of an instruent, three eleents ust bepresent8 <a= a person !ho can be influenced5 <b= the fact that iproper influence !as e7erted5 <c=subission to the over!heling effect of such unla!ful conduct. )Q "n the absence of a confidential orfiduciar# relationship bet!een the parties, the la! does not presue that one person e7ercised undueinfluence upon the other.))Q A confidential or fiduciar# relationship a# include an# relation bet!eenpersons, !hich allo!s one to doinate the other, !ith the opportunit# to use that superiorit# to theotherVs disadvantage.)&Q "ncluded are those of attorne# and client,)'Q ph#sician and patient,)-Q nurse andinvalid,)(Q parent and child,)1Q guardian and !ard,)?Q eber of a church or sect and spiritual adviser,)/Q a person and his confidential adviser,&0Q or !henever a confidential relationship e7ists as a fact .&Q %hat>audencia loo+ed after Roana in her old age is not sufficient to sho! that the relationship !asconfidential. %o prove a confidential relationship fro !hich undue influence a# arise, the relationshipust reflect a doinant, overastering influence !hich controls over the dependent person. &)Q "n thepresent case, petitioners failed to sho! that Roana used her auntVs reliance upon her to ta+e advantage

or doinate her and dictate that she sell her land :ndue influence is not to be inferred fro age $n / March //) petitioners filed before the Regional %rial Court <R%C= of 9uezon Cit# a Coplaint













































































or doinate her and dictate that she sell her land. :ndue influence is not to be inferred fro age,sic+ness, or debilit# of bod#, if sufficient intelligence reains. &&Q Petitioners never rebutted the testion#of the notar# public that he observed >audencia still alert and sharp.

"n "a3e* v. Court of #ppeals, -/ *CRA - </1'=, !e had occasion to sa# that solicitation, iportunit#,arguent, and persuasion are not undue influence. A contract is not to be set aside erel# because onepart# used these eans to obtain the consent of the other. e have li+e!ise held in +artine* v.4on%on% and Shan%hai "an, - Phil. )-) </0=, that influence obtained b# persuasion, arguent, orb# appeal to the affections is not prohibited either in la! or orals, and is not obno7ious even in courts of e2uit#. Absent an# proof that Roana e7erted undue influence, the presuption is that she did not.

Petitioners also see+ the annulent of the sale due to gross inade2uac# of price. %he# contend that>audencia, in her right senses, !ould never have sold her propert# !orth P??,)-0.00 in /?0 for onl#

P&',000.00. %he records sho! that uch of petitionersV evidence !as eant to prove the ar+et value of the lot at the tie of the sale.&'Q A revie! of the records !ill sho! that lesion !as not an issue raisedbefore the lo!er courts. An issue !hich !as neither averred in the coplaint nor raised in the courtbelo!, cannot be raised for the first tie on appeal. %o do so !ould be offensive to the basic rules of fairpla#.

Petitioners see to be unsure !hether the# are assailing the sale of ot -3A3 for being absolutel#siulated or for inade2uac# of the price. %hese t!o grounds are irreconcilable. "f there e7ists an actualconsideration for transfer evidenced b# the alleged act of sale, no atter ho! inade2uate it be, thetransaction could not be a 4siulated sale.4 &-Q No reversible error !as thus coitted b# the Court of Appeals in refusing to annul the 2uestioned sale for alleged inade2uac# of the price.

%ERE#ORE, the petition is 6EN"E6, and the assailed decision of the Court of Appeals ADD"RME6 . Costsagainst petitioners.

SO ORERE.

"ellosillo, =Chairman8, +endo*a, and )e Leon, (r., ((., concur.

"uena, (., on leave.

D"R*% 6";"*"$N

BG.R. No. 12046. Sp+/r 9, 1999

LLAM U" &'( ROEL ROAS, petitioners, vs. COURT O# APPEALS, %ON. RO)ERT )ALAO &'(NATONAL %OUSNG AUT%ORT", respondents.

E C S O N

APUNAN, J .

Petitioners illia :# and Rodel Ro7as are agents authorized to sell eight parcels of land b# theo!ners thereof. B# virtue of such authorit#, petitioners offered to sell the lands, located in %uba,%adiangan, Benguet to respondent National ousing Authorit# <NA= to be utilized and developed as ahousing proect.

$n Debruar# ', /?/, the NA Board passed Resolution No. (&) approving the ac2uisition of saidlands, !ith an area of &.?)& hectares, at the cost of P)&.?(1 illion, pursuant to !hich the partiese7ecuted a series of 6eeds of Absolute *ale covering the subect lands. $f the eight parcels of land,ho!ever, onl# five !ere paid for b# the NA because of the report Q it received fro the and>eosciences Bureau of the 6epartent of Environent and Natural Resources <6ENR= that the reainingarea is located at an active landslide area and therefore, not suitable for developent into a housing

proect.

$n )) Noveber //, the NA issued Resolution No. )&-) cancelling the sale over the threeparcels of land. %he NA, through Resolution No. )&/', subse2uentl# offered the aount of P.))-illion to the lando!ners asda3os per'uicios.

$n / March //), petitioners filed before the Regional %rial Court <R%C= of 9uezon Cit# a Coplaintfor 6aages against NA and its >eneral Manager Robert Balao.

After trial, the R%C rendered a decision declaring the cancellation of the contract to be ustified. %he trial court nevertheless a!arded daages to plaintiffs in the su of P.)-- illion, thesae aount initiall# offered b# NA to petitioners as daages.

:pon appeal b# petitioners, the Court of Appeals reversed the decision of the trial court and entereda ne! one disissing the coplaint. "t held that since there !as Ssufficient ustifiable basisT in cancellingthe sale, Sit sa! no reasonT for the a!ard of daages. %he Court of Appeals also noted that petitioners!ere ere attorne#s3in3fact and, therefore, not the real parties3in3interest in the action before the trialcourt.

777 "n paragraph ' of the coplaint, plaintiffs alleged theselves to be SsellersV agentsT for several

o!ners of the ? lots subect atter of the case. $bviousl#, illia :# and Rodel Ro7as in filing this caseacted as attorne#s3in3fact of the lot o!ners !ho are the real parties in interest but !ho !ere oitted tobe pleaded as part#3plaintiffs in the case. %his oission is fatal. here the action is brought b# anattorne#3in3fact of a land o!ner in his nae, <as in our present action= and not in the nae of hisprincipal, the action !as properl# disissed <Derrer vs. ;illaor, (0 *CRA '0( /1'Q5 Marcelo vs. deeon, 0- Phil. 1-= because the rule is that ever# action ust be prosecuted in the nae of the realparties3in3interest <*ection ), Rule &, Rules of Court=.

hen plaintiffs :# and Ro7as sought pa#ent of daages in their favor in vie! of the partial rescission of Resolution No. (&) and the 6eed of Absolute *ale covering %C% Nos. 0//?, 0/// and )/) <Pra#ercoplaint, page -, R%C records=, it becoes obviousl# indispensable that the lot o!ners be included,entioned and naed as part#3plaintiffs, being the real part#3in3interest. :# and Ro7as, as attorne#s3in3fact or apoderados, cannot b# theselves la!full# coence this action, ore so, !hen the supposedspecial po!er of attorne#, in their favor, !as never presented as an evidence in this case. Besides, evenif herein plaintiffs :# and Ro7as !ere authorized b# the lot o!ners to coence this action, the saeust still be filed in the nae of the pricipal, <Dilipino "ndustrial Corporation vs. *an 6iego, )& *CRA 10(

/(?Q=. As such indispensable part#, their oinder in the action is andator# and the coplaint a# bedisissed if not so ipleaded <N6C vs. CA, ) *CRA ')) //)Q=.)Q

%heir otion for reconsideration having been denied, petitioners see+ relief fro this Courtcontending that8

". C$MPA"N% D"N6"N> %E RE*P$N6EN% CA ERRE6 "N 6ECAR"N> %A% RE*P$N6EN% NA A6 ANFE>A BA*"* D$R RE*C"N6"N> %E *AE "N;$;"N> %E A*% %REE <&= PARCE* C$;ERE6 BF NARE*$:%"$N N$. (&).

"". >RAN%"N> AR>:EN6$ %A% %E RE*P$N6EN% NA A6 E>A BA*"* %$ RE*C"N6 %E *:BJEC%*AE, %E RE*P$N6EN% CA N$NE%EE** ERRE6 "N 6ENF"N> ERE"N PE%"%"$NER*V CA"M %$6AMA>E*, C$N%RARF %$ %E PR$;"*"$N* $D AR%. / $D %E C";" C$6E.

""". %E RE*P$N6EN% CA ERRE6 "N 6"*M"**"N> %E *:BJEC% C$MPA"N% D"N6"N> %A% %EPE%"%"$NER* DA"E6 %$ J$"N A* "N6"*PEN*ABE PAR%F PA"N%"DD %E *E"N> $%3$NER*.&Q

e first resolve the issue raised in the third assignent of error.

Petitioners clai that the# lodged the coplaint not in behalf of their principles but in their o!nnae as agents directl# daaged b# the terination of the contract. %he daages pra#ed for !ereintended not for the benefit of their principals but to indenif# petitioners for the losses the# theselvesallegedl# incurred as a result of such terination. %hese daages consist ainl# of Sunearned incoeT and advances.'Q Petitioners, thus, attept to distinguish the case at bar fro those involving agentsor apoderados instituting actions in their o!n nae but in &ehalf of their principals.-Q Petitioners in thiscase purportedl# brought the action for daages in their o!n nae and in their own &ehalf .

e find this contention uneritorious.

*ection ), Rule & of the Rules of Court re2uires that ever# action ust be prosecuted and defendedin the nae of the real part#3in3interest. %he real part#3in3interest is the part# !ho stands to bebenefited or inured b# the udgent or the part# entitled to the avails of the suit. S"nterest,T !ithin theeaning of the rule, eans aterial interest, an interest in the issue and to be affected b# the decree, asdistinguished fro ere interest in the 2uestion involved, or a ere incidental interest.(Q Casesconstruing the real part#3in3interest provision can be ore easil# understood if it is borne in ind that the

true eaning of real part#3in3interest a# be suarized as follo!s8 An action shall be prosecuted in Petitioners ho!ever have not sho!n that the# are assignees of their principals to the subect







http://sc.judiciary.gov.ph/jurisprudence/1999/sept99/120465.htm#_edn1





















true eaning of real part#3in3interest a# be suarized as follo!s8 An action shall be prosecuted inthe nae of the part# !ho, b# the substantive la!, has the right sought to be enforced. 1Q

6o petitioners, under substantive la!, possess the right the# see+ to enforceG e rule in thenegative.

%he applicable substantive la! in this case is Article & of the Civil Code, !hich states8

Contracts ta+e effect onl# bet!een the p&r+i, their &i;', and 5ir, e7cept in case !here the rightsand obligations arising fro the contract are not transissible b# their nature, or b# stipulation, or b#provision of la!. 7 7 7.

"f a contract should contain soe stipulation in favor of a +5ir( pro' , he a# deand itsfulfillent provided he counicated his acceptance to the obligor before its revocation. A ere

incidental benefit or interest of a person is not sufficient. %he contracting parties ust have clearl# anddeliberatel# conferred a favor upon a third person. <:nderscoring supplied.=

Petitioners are not p&r+i to the contract of sale bet!een their principals and NA. %he# areere &;'+ of the o!ners of the land subect of the sale. As agents, the# onl# render soe service ordo soething in representationor on &ehalf of their principals.?Q %he rendering of such service did nota+e the parties to the contracts of sale e7ecuted in behalf of the latter. *ince a contract a# beviolated onl# b# the parties thereto as against each other, the real parties3in3interest, either as plaintiff ordefendant, in an action upon that contract ust, generall#, either be parties to said contract./Q

Neither has there been an# allegation, uch less proof, that petitioners are the 5ir of theirprincipals.

Are petitioners &i;' to the rights under the contracts of saleG "n +c+icin% vs. "anco6spa3ol!ilipino,0Q !e held that the rule re2uiring ever# action to be prosecuted in the nae of the realpart#3in3interest

7 7 7 recognizes the assignents of rights of action and also recognizes that !hen one has a right of action assigned to hi he is then the real part# in interest and a# aintain an action upon such clai orright. %he purpose of this ruleQ is to re2uire the plaintiff to be the real part# in interest, or, in other!ords, he ust be the person to !ho the proceeds of the action shall belong, and to prevent actions b#persons !ho have no interest in the result of the sae. 777

%hus, an agent, in his o!n behalf, a# bring an action founded on a contract ade for his principal,as an assignee of such contract. e find the follo!ing declaration in *ection &1) <= of the Restateentof the a! on Agenc# <*econd=8 Q

*ection &1). Agent as $!ner of Contract Right

<= :nless other!ise agreed, an agent !ho has or !ho ac2uires an interest in a contract !hich he a+eson behalf of his principal can, although not a proisee, aintain such action thereon as ight atransferee having a siilar interest.

%he Coent on subsection <= states8

a. #%ent a transferee. $ne !ho has ade a contract on behalf of another a# becoe an assignee of the contract and bring suit against the other part# to it, as an# other transferee. %he custos of businessor the course of conduct bet!een the principal and the agent a# indicate that an agent !ho ordinaril#has erel# a securit# interest is a transferee of the principals rights under the contract and as such isperitted to bring suit. "f the agent has settled !ith his principal !ith the understanding that he is tocollect the clai against the obligor b# !a# of reibursing hiself for his advances and coissions, theagent is in the position of an assignee !ho is the beneficial o!ner of the chose in action. e has anirrevocable po!er to sue in his principalVs nae. 7 7 7. And, under the statutes !hich perit the realpart# in interest to sue, he can aintain an action in his o!n nae. %his po!er to sue is not affected b#a settleent bet!een the principal and the obligor if the latter has notice of the agentVs interest. 7 77. Even though the agent has not settled !ith his principal, he a#, b# agreeent !ith the principal,have a right to receive pa#ent and out of the proceeds to reiburse hiself for advances andcoissions before turning the balance over to the principal. "n such a case, although there is no foral

assignent, the agent is in the position of a transferee of the !hole clai for securit#5 he has anirrevocable po!er to sue in his principalVs nae and, under statutes !hich perit the real part# ininterest to sue, he can aintain an action in his o!n nae.

Petitioners, ho!ever, have not sho!n that the# are assignees of their principals to the subectcontracts. hile the# alleged that the# ade advances and that the# suffered loss of coissions, the#have not established an# agreeent granting the Sthe right to receive pa#ent and out of the proceedsto reiburse theselvesQ for advances and coissions before turning the balance over to theprincipalsQ.T

Dinall#, it does not appear that petitioners are /'Dii&ri oD & +ipl&+io' por atri underthe second paragraph of Article & of the Civil Code. "ndeed, there is no stipulation in an# of the 6eedsof Absolute *ale Sclearl# and deliberatel#T conferring a favor to an# third person.

%hat petitioners did not obtain their coissions or recoup their advances because of the non3perforance of the contract did not entitle the to file the action belo! against respondent NA. *ection&1) <)= of the Restateent of the a! on Agenc# <*econd= states8

<)= An agent does not have such an interest in a contract as to entitle hi to aintain an action at la!upon it in his o!n nae erel# because he is entilted to a portion of the proceeds as copensation fora+ing it or because he is liable for its breach.

%he follo!ing Coent on the above subsection is illuinating8

%he fact that an agent !ho a+es a contract for his principal !ill gain or suffer loss b# the perforanceor nonperforance of the contract b# the principal or b# the other part# thereto does not entitle hi toaintain an action on his o!n behalf against the other part# for its breach. An agent entitled to receive acoission fro his principal upon the perforance of a contract !hich he has ade on his principalVsaccount does not, fro this fact alone, have an# clai against the other part# for breach of the contract,either in an action on the contract or other!ise. An agent !ho is not a proisee cannot aintain anaction at la! against a purchaser erel# because he is entitled to have his copensation or advancespaid out of the purchase price before pa#ent to the principal. 7 7 7.

%hus, in 4opins vs. $ves,)Q the *upree Court of Ar+ansas, citing *ection &1) <)= above, denied

the clai of a real estate bro+er to recover his alleged coission against the purchaser in an agreeentto purchase propert#.

"n Goduco vs. Court of #ppeals,&Q this Court held that8

7 7 7 granting that appellant had the authorit# to sell the propert#, the sae did not a+e the bu#erliable for the coission she claied. At ost, the o!ner of the propert# and the one !ho proised togive her a coission should be the one liable to pa# the sae and to !ho the clai should have beendirected. 777

As petitioners are not parties, heirs, assignees, or beneficiaries of a stipulation pour autrui underthe contracts of sale, the# do not, under substantive la!, possess the right the# see+ toenforce. %herefore, the# are not the real parties3in3interest in this case.

Petitioners not being the real parties3in3interest, an# decision rendered herein !ould be pointlesssince the sae !ould not bind the real parties3in3interest.'Q

Nevertheless, to forestall further litigation on the substantive aspects of this case, !e shall proceedto rule on the erits.-Q

Petitioners subit that respondent NA had no legal basis to SrescindT the sale of the subect threeparcels of land. %he e7istence of such legal basis, not!ithstanding, petitioners argue that the# are stillentitled to an a!ard of daages.

Petitioners confuse the cancellation of the contract b# the NA as a rescission of the contract underArticle / of the Civil Code. %he right of rescission or, ore accuratel#, resolution, of a part# to anobligation under Article / is predicated on a breach of faith b# the other part# that violates thereciprocit# bet!een the.(Q %he po!er to rescind, therefore, is given to the inured part#.1Q Article /states8

%he po!er to rescind obligations is iplied in reciprocal ones, in case one of the obligors should notcopl# !ith !hat is incubent upon hi.

%he inured part# a# choose bet!een the fulfillent and the rescission of the obligation, !ith thepa#ent of daages in either case. e a# also see+ rescission, even after he has chosen fulfillent, if the latter should becoe ipossible.

"n this case the NA did not rescind the contract "ndeed it did not have the right to do so for the "n %adiangan %uba the housing site is situated in an area of oderate topograph# %here areQ ore
































"n this case, the NA did not rescind the contract. "ndeed, it did not have the right to do so for theother parties to the contract, the vendors, did not coit an# breach, uch less a substantial breach,?Q of their obligation. %heir obligation !as erel# to deliver the parcels of land to the NA, an obligationthat the# fulfilled. %he NA did not suffer an# inur# b# the perforance thereof.

%he cancellation, therefore, !as not a rescission under Article /. Rather, the cancellation !asbased on the negation of the cause arising fro the realization that the lands, !hich !ere the obect of the sale, !ere not suitable for housing.

Cause is the essential reason !hich oves the contracting parties to enter into it./Q "n other!ords, the cause is the iediate, direct and pro7iate reason !hich ustifies the creation of anobligation through the !ill of the contracting parties. )0Q Cause, !hich is the essential reason for thecontract, should be distinguished fro otive, !hich is the particular reason of a contracting part# !hichdoes not affect the other part#.)Q

Dor e7aple, in a contract of sale of a piece of land, such as in this case, the cause of the vendor<petitionerVs principals= in entering into the contract is to obtain the price. Dor the vendee, NA, it is theac2uisition of the land.))Q%he motive of the NA, on the other hand, is to use said lands for housing. %hisis apparent fro the portion of the 6eeds of Absolute *ale)&Q stating8

EREA*, under the E7ecutive $rder No. /0 dated 6eceber 1, /?(, the ;EN6EE is andated tofocus and concentrate its efforts and resources in providing housing assistance to the lo!est thirt#percent <&0= of urban incoe earners, thru slu upgrading and developent of sites and servicesproects5

EREA*, etters of "nstructions Nos. --- and --1 asQ aended b# etter of "nstruction No. (&0,prescribed slu iproveent and upgrading, as !ell as the developent of sites and services as theprincipal housing strateg# for dealing !ith slu, s2uatter and other blighted counities5

7 7 7

EREA*, the ;EN6EE, in pursuit of and in copliance !ith the above3stated purposes offers to bu# andthe ;EN6$R*, in a gesture of their !illing to cooperate !ith the above polic# and coitents, agree tosell the aforesaid propert# together !ith all the e7isting iproveents there or belonging to the;EN6$R*5

N$, %ERED$RE, for and in consideration of the foregoing preises and the ters and conditionshereinbelo! stipulated, the ;EN6$R* hereb#, sell, transfer, cede and conve# unto the ;EN6EE, itsassigns, or successors3in3interest, a parcel of land located at Bo. %adiangan, %uba, Benguet containing atotal area of D"D%F *"K %$:*AN6 E">% :N6RE6 N"NE%EEN <-(,?/= *9:ARE ME%ER*, ore or less7 7 7.

$rdinaril#, a part#Vs otives for entering into the contract do not affect the contract. o!ever,!hen the otive predeterines the cause, the otive a# be regarded as the cause. "n Li%ue* vs.Court of #ppeals,)'Q this Court, spea+ing through Justice J.B.. Re#es, held8

777 "t is !ell to note, ho!ever, that Manresa hiself <;ol. ?, pp. ('3(')= !hile aintaining thedistinction and upholding the inoperativeness of the otives of the parties to deterine the validit# of thecontract, e7pressl# e7cepts fro the rule those contracts that are conditioned upon the attainent of theotives of either part#.

%he sae vie! is held b# the *upree Court of *pain, in its decisions of Debruar# ', /', and 6eceber', /'(, holding that the otive a# be regarded as causa !hen it predeterines the purpose of thecontract.

"n this case, it is clear, and petitioners do not dispute, that NA !ould not have entered into thecontract !ere the lands not suitable for housing. "n other !ords, the 2ualit# of the land !as an ipliedcondition for the NA to enter into the contract. $n the part of the NA, therefore, the otive !as thecause for its being a part# to the sale.

ere the lands indeed unsuitable for the housing as NA claiedG

e dee the findings contained in the report of the and >eosciences Bureau dated - Jul# //sufficient basis for the cancellation of the sale, thus8

"n %adiangan, %uba, the housing site is situated in an area of oderate topograph#. %here areQ oreareas of less sloping ground apparentl# habitable. %he site is underlain b# 7 7 7 thic+ slide deposits <'3'-= consisting of huge congloerate boulders <see Photo No. )= i7edQ !ith silt# cla#aterials. %hese cla# particles !hen saturated have soe s!elling characteristics !hich is dangerous foran# civil structures especiall# ass housing developent.)-Q

Petitioners content that the report !as erel# Spreliinar#,T and not conclusive, as indicated in itstitle8

MEM$RAN6:M

%$8 E6"N >. 6$M"N>$

Chief, ands >eolog# 6ivision

DR$M8 AR"*%$%E A. R"$N

>eologist ""

*:BJEC%8 Preliinar# Assessent of %adiangan ousing Proect in %uba, Benguet)(Q

%hus, page ) of the report states in part8

7 7 7

Actuall# there is a need to conduct further geottechnical sicQ studies in the NA propert#. *tandard

Penetration %est <*P%= ust be carried out to give an estiate of the degree of copaction <the relativedensit#= of the slide deposit and also the bearing capacit# of the soil aterials. Another thing to consideris the vulnerabilit# of the area to landslides and other ass oveents due to thic+ soilcover. Preventive ph#sical itigation ethods such as surface and subsurface drainage and regrading of the slope ust be done in the area. )1Q

e read the 2uoted portion, ho!ever, to ean onl# that further tests are re2uired to deterine the Sdegree of copaction,T Sthe bearing capacit# of the soil aterials,T and Svulnerabilit# of the area tolandslides,T since the tests alread# conducted !ere inade2uate to ascertain such geological attributes. "tis onl# in this sense that the assessent !as Spreliinar#.T

Accordingl#, !e hold that the NA !as ustified in cancelling the contract. %he realization of theista+e as regards the 2ualit# of the land resulted in the negation of the otiveLcause thus rendering thecontract ine7istent.)?QArticle &? of the Civil Code states that8

Art. &?. %here is no contract unless the follo!ing re2uisites concur8

<= Consent of the contracting parties5

<)= $bect certain !hich is the subect atter of the contract5

<&= Cause of the obligation !hich is established. <:nderscoring supplied.=

%herefore, assuing that petitioners are parties, assignees or beneficiaries to the contract of sale,the# !ould not be entitled to an# a!ard of daages.

%ERE#ORE, the instant petition is hereb# 6EN"E6.

SO ORERE.)avide, C.(., =Chairman8, on leave.Puno, Pardo, and nares!Santia%o, ((., concur.

Republic of the Philippines Judge Aado *antiago of the Court of Dirst "nstance of Pangasinan located in the unicipalit# of :rdaneta






























EN BANC

G.R. No. L-21489 &'( L-21628 M& 19, 1966

MGUEL MAPALO, ET AL., petitioners,vs.MAMO MAPALO, ET AL., respondents.

Pedro P. /uason for petitioners.Primicias and )el Castillo for respondents.

)ENG!ON, *.P., J.:

%he spouses Miguel Mapalo and Candida 9uiba, siple illiterate farers, !ere registered o!ners, !ith%orrens title certificate $.C.%. No. '(-0&, of a ,(&-3s2uare3eter residential land in Manaoag,Pangasinan. *aid spouses3o!ners, out of love and affection for Ma7io Mapalo @ a brother of Miguel !ho!as about to get arried @ decided to donate the eastern half of the land to hi. $.C.%. No. '(-0& !asdelivered. As a result, ho!ever, the# !ere deceived into signing, on $ctober -, /&(, a deed of absolutesale over the entire land in his favor. %heir signatures thereto !ere procured b# fraud, that is, the# !ereade to believe b# Ma7io Mapalo and b# the attorne# !ho acted as notar# public !ho 4translated4 thedocuent, that the sae !as a deed of donation in Ma7ios favor covering one3half <the eastern half= of their land. Although the docuent of sale stated a consideration of Dive undred <P-00.00= Pesos, theaforesaid spouses did not receive an#thing of value for the land. %he attorne#s isbehaviour !as the

subect of an investigation but its result does not appear on record. o!ever !e too+ note of the fact thatduring the hearing of these cases said notar# public !as present but did not ta+e the !itness stand torebut the plaintiffs testion# supporting the allegation of fraud in the preparation of the docuent.

Dollo!ing the e7ecution of the afore3stated docuent, the spouses Miguel Mapalo and Candida 9uibaiediatel# built a fence of peranent structure in the iddle of their land segregating the easternportion fro its !estern portion. *aid fence still e7ists. %he spouses have al!a#s been in continuedpossession over the !estern half of the land up to the present.

Not +no!n to the, ean!hile, Ma7io Mapalo, on March -, /&?, registered the deed of sale in hisfavor and obtained in his nae %ransfer Certificate of %itle No. )?)/ over the entire land. %hirteen #earslater on $ctober )0, /-, he sold for P),-00.00 said entire land in favor of Evaristo, Petronila Pacificoand Miguel all surnaed Narciso. %he sale to the Narcisos !as in turn registered on Noveber -, /-and %ransfer Certificate of %itle No. &-0 !as issued for the !hole land in their naes.

%he Narcisos too+ possession onl# of the eastern portion of the land in /-, after the sale in their favor!as ade. $n Debruar# 1, /-) the# filed suit in the Court of Dirst "nstance of Pangasinan <Civil Case No./= to be declared o!ners of the entire land, for possession of its !estern portion5 for daages5 andfor rentals. "t !as brought against the Mapalo spouses as !ell as against Dloro >uieb and Rosalia Mapalo>uieb !ho had a house on the !estern part of the land !ith the consent of the spouses Mapalo and9uiba.

%he Mapalo spouses filed their ans!er !ith a counterclai on March 1, /(-, see+ing cancellation of the%ransfer Certificate of %itle of the Narcisos as to the !estern half of the land, on the grounds that their<Mapalo spouses= signatures to the deed of sale of /&( !as procured b# fraud and that the Narcisos!ere bu#ers in bad faith. %he# as+ed for reconve#ance to the of the !estern portion of the land andissuance of a %ransfer Certificate of %itle in their naes as to said portion.

"n addition, the Mapalo spouses filed on 6eceber (, /-1 their o!n coplaint in the Court of Dirst"nstance of Pangasinan <Civil Case No. :3&&= against the aforestated Narcisos and Ma7io Mapalo. %he#

as+ed that the deeds of sale of /&( and of /- over the land in 2uestion be declared null and void as tothe !estern half of said land.

Judge Aado *antiago of the Court of Dirst "nstance of Pangasinan located in the unicipalit# of :rdanetatried the t!o cases ointl#. *aid court rendered udgent on Januar# ?, /(, as follo!s8

ERED$RE, udgent is hereb# rendered as follo!s, to !it8

<a= disissing the coplaint in Civil Case No. //5

<b= declaring E7hibit A, plaintiffs in Case No. // and E7hibit , defendants in Case No. :3&& as a donation onl# over the eastern half portion of the above3described land, and as nulland void !ith respect to the !estern half portion thereof5

<c= declaring as null and void and !ithout legal force and effect %ransfer Certificate of %itle No.

)?)/ issued in favor of Ma7io Mapalo as regards the !estern half portion of the land coveredtherein5

<d= declaring as null and void %ransfer Certificate of %itle No. &-0 in the naes of theNarcisos insofar as the !estern half portion of the land covered therein is concerned5

<e= ordering the spouses Mapalo and 9uiba and the Narcisos to have the above3described landbe subdivided b# a copetent land surve#or and that the e7penses incident thereto be borneout b# said parties pro rata5

<f= ordering the Register of 6eeds of Pangasinan to issue in lieu of %ransfer Certificate of %itleNo. &-0 t!o ne! titles upon copletion of the subdivision plan, one in favor of the spousesMiguel Mapalo and Candida 9uiba covering the !estern half portion and another for theNarcisos covering the eastern half portion of the said land, upon pa#ent of the legal fees5ean!hile the right of the spouses Mapalo and 9uiba is hereb# ordered to be annotated on thebac+ of %ransfer Certificate of %itle No. &-05 and

<g= sentencing Ma7io Mapalo and the Narcisos to pa# the costs.

"% "* *$ $R6ERE6.

%he Narcisos appealed to the Court of Appeals. "n its decision on Ma# )?, /(&, the Court of Appealsreversed the udgent of the Court of Dirst "nstance, solel# on the ground that the consent of the Mapalospouses to the deed of sale of /&( having been obtained b# fraud, the sae !as voidable, not void a&initio, and, therefore, the action to annul the sae, !ithin four #ears fro notice of the fraud, had longprescribed. "t rec+oned said notice of the fraud fro the date of registration of the sale on March -,/&?. %he Court of Dirst "nstance and the Court of Appeals are therefore unanious that the spousesMapalo and 9uiba !ere definitel# the victis of fraud. "t !as onl# on prescription that the# lost in theCourt of Appeals.

Dro said decision of the Court of Appeals, the Mapalo spouses appealed to this Court.

And here appellants press the contention that the docuent dated $ctober -, /&(, purporting to sellthe entire land in favor of Ma7io Mapalo, is void, not erel# voidable, as to the !estern portion of theland for being absolutel# siulated or fictitious.

*tarting !ith fundaentals, under the Civil Code, either the old or the ne!, for a contract to e7ist at all,three essential re2uisites ust concur8 <= consent, <)= obect, and <&= cause or consideration. %he Courtof Appeals is right in that the eleent of consent is present as to the deed of sale of $ctober -, /&(.Dor consent !as adittedl# given, albeit obtained b# fraud. Accordingl#, said consent, although defective,did e7ist. "n such case, the defect in the consent !ould provide a ground for annulent of a voidablecontract, not a reason for nullit# a& initio.

%he parties are agreed that the second eleent of obect is li+e!ise present in the deed of $ctober -,/&(, nael#, the parcel of land subect atter of the sae.

Not so, ho!ever, as to the third eleent of cause or consideration. And on this point the decision of the posible validez del negocio disiulado 2ue contiene, en tanto este ultio sea licito # reuna no



, , pCourt of Appeals is silent .

As regards the eastern portion of the land, the Mapalo spouses are not claiing the sae, it being theirstand that the# have donated and freel# given said half of their land to Ma7io Mapalo. And since the#did not appeal fro the decision of the trial court finding that there !as a valid and effective donation of the eastern portion of their land in favor of Ma7io Mapalo, the sae pronounceent has becoe final asto the, rendering it no longer proper herein to e7aine the e7istence, validit# efficac# of said donationas to said eastern portion.1DwphE1.3Ft

No!, as to the !estern portion, ho!ever, the fact not disputed herein is that no donation b# the Mapalospouses obtained as to said portion. Accordingl#, !e start !ith the fact that liberalit# as a cause orconsideration does not e7ist as regards the !estern portion of the land in relation to the deed of /&(5that there !as no donation !ith respect to the sae.

"t is reduced, then, to the 2uestion !hether there !as an onerous conve#ance of o!nership, that is, asale, b# virtue of said deed of $ctober -, /&(, !ith respect to said !estern portion. *pecificall#, !asthere a cause or consideration to support the e7istence of a contrar# of saleG

%he rule under the Civil Code, again be it the old or the ne!, is that contracts without a cause orconsideration produce no effect !hatsoever.) Nonetheless, under the $ld Civil Code, the stateent of afalse consideration renders the contract voidable, unless it is proven that it is supported b#another real and licit consideration.& And it is further provided b# the $ld Civil Code that the action forannulent of a contract on the ground of falsit# of consideration shall last four #ears, the ter to runfro the date of the consuation of the contract. '

Accordingl#, since the deed of sale of /&( is governed b# the $ld Civil Code, it should be as+ed !hetherits case is one !herein there is no consideration, or one !ith a stateent of a false consideration. "f the

forer, it is void and ine7istent5 if the latter, onl# voidable, under the $ld Civil Code. As observed earlier,the deed of sale of /&( stated that it had for its consideration Dive undred <P-00.00= Pesos. "n fact,ho!ever, said consideration !as totall# absent. %he proble, therefore, is !hether a deed !hich states aconsideration that in fact did not e7ist, is a contract !ithout consideration, and therefore void a& initio, ora contract !ith a false consideration, and therefore, at least under the $ld Civil Code, voidable.

According to Manresa, !hat is eant b# a contract that states a false consideration is one that has in facta real consideration but the sae is not the one stated in the docuent. %hus he sa#s8

En prier lugar, nor interesa recordar la diferencia entre siulacion # el contrato con propositofraudulento. Este aun2ue ilicito es real5 as el priero es falso en realidad, aun0ue se le presente como verdadero. <Manresa, Codigo Civil, %oo ;""", ;ol. "", p. &-'.=

And citing a decision of the *upree Court of *pain on the atter, Manresa further clarifies the difference

of false cause and no cause, thus8

"nsiste en el distingo con as detenida descripcion la sentencia de )- de a#o de /'', en la2ue se arguenta8

*i bien es eleento fundaental de todo negocio, la declaracion de voluntad substracto de unavoluntad efectiva, # la e7istencia de una causa 2ue leconfiera significado uridico seYalando lafinalidad 2ue con este se persigue, no ha de deducirse de esta doctrina, fundaentalenterecogida en el articulo .)( # concordantes del Codigo civil, 2ue cual2uier falta de adecuacionentre cual2uier incongruencia entre la causa e7presada # la verdadera, #, en general, entre laestructuracion # la finalidad econoica5 ha#an de producir la ineficacia del negocio, pues por elcontrario, puede este ser valido # producir sus efectos tanto en el caso de la era disonanciaentre el edio uridico adoptado # el fin practico perseguido, por utilizacion de una via oblicua ocobinacion de foras uridicas entrelazadas 2ue perita la obtencion de un resultado noprevisto en los cuadros de la le# @ negocios indirectos # negocios fiduciarlos, validos cuando no

envuelven fraude de le#, coo en el caso de la verdadera disconforidad entre la aparienciadel acto # su real contenido, preparada deliberadaente por las partes @ negocio siulado @ ,#a 2ue, cuando esta divergencia iplica no una ausencia total de voluntad y de acto real, sinomera ocultacion de un ne%ocio verdadero &a'o la falsa apariencia de un ne%ociofin%ido 4sirulacion relativa4, la ineficacia de la fora e7terna siulada, no es obstaculo para la

p g 2 , #solo los re2uisitos generales, sino tabien los 2ue corresponden a su naturaleza especial,doctrina, en obligada aplicacion de los preceptos de nuestra e# civil, especialente en su art..)1(, 2ue, al establecer el principio de nulidad de los contratos en los 0ue se hace e;presionde una causa falsa, de'a a salvo el caso de 0ue esten fundados en otra verdadera y licita .<Manresa, Codigo Civil, %oo ;""", ;ol. "" pp. &-13&-?=

*anchez Roan sa#s8

Fa heos dicho 2ue la intervencion de causa en los contratos es necesaria, # 2ue sin ellos sonnulos5 solo se concibe 2ue un hobre perturbado en su razon pueda contratar sin causa. ...

Por la isa razon de la necesidad de la intervencion de causa en el contrato, es preciso 2ue

esta seaverdadera # no supuesta, aparente o figurada. 9ue la falsedad de la causa vicia elconsentiiento # anula el contrato, es, no solo doctrina indudable de 6erecho Cientifico sinotabien de antiguo 6erecho de Castilla, 2ue en ultitud de le#es asi lo declararon. <*anchezRoan, 6erecho Civil, %oo ";, p. )0(.=.

"n a clearer e7position of the above distinction, Castan states8

).Z. a causa ha de ser verdadera. a causa falsa puede ser erronea o simulada. Es erroneacoo dice >iorgi, la causa 2ue tiene por base la credulidad en un hecho no e7istente5 #siulada la 2ue tiene lugar cuando se hace aparecer artificiosaente una distinta de laverdadera. a erronea produce siepre la ine7istencia del contrato5 la siulada no siepreproduce este efecto, por2ue puede suceder 2ue la causa oculta, pero verdadera, baste parasostener el contrato. 6e acuerdo con esta doctrina, dice el art. .)1( de nuestro Codigo 2ue 4lae7presion de una causa falsa en los contratos dara lugar a la nulidad, si no se probase 2ueestaban fundados en otra verdadera # licita4. <Castan 6erecho Civil EspaYol, %oo "", pp. (?3

(/=

Dro the foregoing it can be seen that !here, as in this case, there !as in fact no consideration, thestateent of one in the deed !ill not suffice to bring it under the rule of Article )1( of the $ld Civil Codeas stating a false consideration. Returning to Manresa8

Digurando en nuestro 6erecho positivo la causa, coo un eleento esential del contrato, esconsecuencia ineludible, se reputar siulada la entrega del precio en la copraventa de autos,el 2ue ha#a 2ue declararla nula por ine7istente haciendose aplicacion indebida de art. .)1( porel %ribunal sentenciador al cohonestar la falta de precio aditiendo se pueda tratar de unadonacion, #a 2ue la recta aplicacion del citado precepto e7ige 2ue los negocios siulados, o seacon causa falsa, se ustifi2ue la verdadera # licita en 2ue se funda el acto 2ue las partes han2uerido ocultar # el cupliiento de las foralidades ipuestas por la e# #, cual dice lasentencia de & de arzo de /&), esta rigurosa doctrina ha de ser especialente ipuesta enla donaciones puras # siples5 de los 2ue deduce 2ue la sentencia recurrida al no decretar la

nulidad instada por falta de causa, incide en la infraccion de los articulos .)(, .)1', .)1- #.)1( del Codigo Civil. <*entencia de )) de febrero de /'0=. <Manresa, Codigo Civil, %oo;""", ;ol. "", p. &-(=

"n our vie!, therefore, the ruling of this Court in Oce'o, Pere* Co. vs. lores, '0 Phil. /), is s2uarel#applicable herein. "n that case !e ruled that a contract of purchase and sale is null and void and producesno effect !hatsoever !here the sae is !ithout cause or consideration in that the purchase price !hichappears thereon as paid has in fact never been paid b# the purchaser to the vendor.

Needless to add, the ine7istence of a contract is peranent and incurable and cannot be the subect of prescription. "n the !ords of Castan8 4a ine7istencia es perpetua e insubsanable no pudiendo ser obectode confiracion ni prescripcion <$p. cit., p. (''.= "n 6u%enio v. Perdido, /1 Phil. ', ')3'&, involving asale dated /&), this Court, spea+ing through Justice Cesar Bengzon, no! Chief Justice, stated8

:nder the e7isting classification, such contract !ould be 4ine7isting4 and 4the action or defensefor declaration4 of such ine7istence 4does not prescribe4. <Art. '0, Ne! Civil Code=. hile it istrue that this is a ne! provision of the Ne! Civil Code, it is nevertheless a principle recognizedsince /ipton vs. 5elasco, ( Phil. (1 that 4ere lapse of tie cannot give efficac# to contractsthat are null and void4.

Anent the atter of !hether the Narcisos !ere purchasers in good faith, the trial court in its decision Republic of the Philippines



p g ,resolved this issue, thus8

ith regard to the second issue, the Narcisos contend that the# are the o!ners of the above3described propert# b# virtue of the deed of sale <E7h. B, plaintiffs in // and E7h. ),defendants in :3&&= e7ecuted in their favor b# Ma7io Mapalo, and further clai that the# arepurchasers for value and in good faith. %his court, ho!ever, cannot also give !eight and crediton this theor# of the Narcisos on the follo!ing reasons8 Dirstl#, it has been positivel# sho!n b#the undisputed testion# of Candida 9uiba that Pacifico Narciso and Evaristo Narciso sta#ed forsoe da#s on the !estern side <the portion in 2uestion= of the above3described land until theirhouse !as reoved in /'0 b# the spouses Mapalo and 9uiba5 secondl#, Pacifica Narcisoaditted in his testion# in chief that !hen the# bought the propert#, Miguel Mapalo !as stillin the preises in 2uestion <!estern part= !hich he is occup#ing and his house is still standingthereon5 and thirdl#, said Pacifico Narciso !hen presented as a rebuttal and sub3rebuttal

!itness categoricall# declared that before bu#ing the land in 2uestion he !ent to the house of Miguel Mapalo and Candida 9uiba and as+ed the if the# !ill perit their elder brother Ma7ioto sell the propert#.

Aside fro the fact that all the parties in these cases are neighbors, e7cept Ma7io Mapalo theforegoing facts are e7plicit enough and sufficientl# reveal that the Narcisos !ere a!are of thenature and e7tent of the interest of Ma7io Mapalo their vendor, over the above3described landbefore and at the tie the deed of sale in their favor !as e7ecuted.

:pon the aforestated declaration of Pacifico Narciso the follo!ing 2uestion arises8 hat !as thenecessit#, purpose and reason of Pacifico Narciso in still going to the spouses Mapalo and as+edthe to perit their brother Ma7io to dispose of the above3described landG %o this 2uestion itis safe to state that this act of Pacifico Narciso is a conclusive anifestation that the# <theNarcisos= did not onl# have prior +no!ledge of the o!nership of said spouses over the !esternhalf portion in 2uestion but that the# also have recognized said o!nership. "t also conclusivel#

sho!s their prior +no!ledge of the !ant of doinion on the part of their vendor Ma7io Mapaloover the !hole land and also of the fla! of his title thereto. :nder this situation, the Narcisosa# be considered purchasers in value but certainl# not as purchasers in good faith. ... <pp./13/?, Record on Appeal.=

And said finding @ !hich is one of fact @ is found b# us not a bit disturbed b# the Court of Appeals. *aidthe Court of Appeals8

"n vie! of the conclusion thus reached, it becoes unnecessar# to pass on the other errorsassigned.Suffice it to say that, on the merits the appealed decision could have &eenupheld under Article &&) of the ne! Civil Code and the follo!ing authorities8 #yola vs.5alderrama Lum&er +anufacturers Co., $nc., '/ $.>. /?0, /?)5 /rasporte vs. "eltran, - $.>.'&', '&-5 Corte* vs. Corte* , CA3>.R. No. ?'-3R, August ?, /(5 Castillo vs.La&erinto, CA3>.R. No. ??3R, 6eceber )0, /(5 and & C.J. &1)3&1&, as well as theseveral facts and circumstances appreciated &y the trial court as supportin% appellees case.

thereb# in effect sustaining @ barring onl# its ruling on prescription @ the udgent and findings of thetrial court, including that of bad faith on the part of the Narcisos in purchasing the land in 2uestion. etherefore see no need to further reand this case to the Court of Appeals for a ruling on this point, asappellees re2uest in their brief in the event !e hold the contract of /&( to be ine7istent as regards the!estern portion of the land.

"n vie! of defendants bad faith under the circustances !e dee it ust and e2uitable to a!ard, inplaintiffs favor, attorne#s fees on appeal, in the aount of P,000.00 as pra#ed for in the counterclai.

herefore, the decision of the Court of Appeals is hereb# reversed and set aside, and another one ishereb# rendered affiring in toto the udgent of the Court of Dirst "nstance a 0uo, !ith attorne#s feeson appeal in favor of appellants in the aount of P,000.00, plus the costs, both against the privateappellees. *o ordered.

"en%*on, C.(., "autista #n%elo, Concepcion, Reyes, (.".L., "arrera, )i*on, Re%ala, +aalintal, -aldivar and Sanche*, ((., concur.

p ppSUPREME COURTManila

D"R*% 6";"*"$N

G.R. No. 13206 O+o/r 23, 2006

ONG ENG AM &.H.&. LLAM ONG, petitioner,vs.LUCTA G. ONG, respondent.

6 E C " * " $ N

AUSTRA-MARTNE!, J .

Before this Court is a Petition for Revie! see+ing the reversal of the 6ecision of the Court of Appeals<CA= in CA >.R. C; No. -/'00 !hich affired in toto the 6ecision of the Regional %rial Court <R%C= Branch', 6agupan Cit# granting the petition for legal separation filed b# herein respondent, as !ell as theResolution) of the CA dated April )(, )00) !hich denied petitionerVs otion for reconsideration.

$ng Eng Oia, also +no!n as illia $ng <illia= and ucita >. $ng <ucita= !ere arried on Jul# &,/1- at the *an Agustin Church in Manila. %he# have three children8 Oingston, Charleston, and Princeton!ho are no! all of the age of aorit#.&

$n March ), //(, ucita filed a Coplaint for egal *eparation under Article -- par. <= of the Dail#

Code'before the Regional %rial Court <R%C= of 6agupan Cit#, Branch ' alleging that her life !ith illia!as ar+ed b# ph#sical violence, threats, intiidation and grossl# abusive conduct.-

ucita claied that8 soon after three #ears of arriage, she and illia 2uarreled alost ever# da#, !ithph#sical violence being inflicted upon her5 illia !ould shout invectives at her li+e 4 putan% ina mo4,4%a%o4, 4tan%a4, and he !ould slap her, +ic+ her, pull her hair, bang her head against concrete !all andthro! at her !hatever he could reach !ith his hand5 the causes of these fights !ere pett# thingsregarding their children or their business5 illia !ould also scold and beat the children at different partsof their bodies using the buc+le of his belt5 !henever she tried to stop illia fro hitting the children,he !ould turn his ire on her and bo7 her5 on 6eceber /, //-, after she protested !ith illiaVsdecision to allo! their eldest son Oingston to go to Bacolod, illia slapped her and said, 4it is none of #our business45 on 6eceber ', //-, she as+ed illia to bring Oingston bac+ fro Bacolod5 a violent2uarrel ensued and illia hit her on her head, left chee+, e#e, stoach, and ars5 !hen illia hit heron the stoach and she bent do!n because of the pain, he hit her on the head then pointed a gun at herand as+ed her to leave the house5 she then !ent to her sisterVs house in Binondo !here she !as fetchedb# her other siblings and brought to their parents house in 6agupan5 the follo!ing da#, she !ent to her

parentVs doctor, 6r. ;icente Elinzano for treatent of her inuries.(

illia for his part denied that he ever inflicted ph#sical har on his !ife, used insulting languageagainst her, or !hipped the children !ith the buc+le of his belt. hile he adits that he and ucita2uarreled on 6eceber /, //-, at their house in Jose Abad *antos Avenue, %ondo, Manila, he claiedthat he left the sae, sta#ed in their >reenhills condoiniu and onl# !ent bac+ to their %ondo house to!or+ in their office belo!. "n the afternoon of 6eceber ', //-, their laundr#!oan told hi thatucita left the house.1

$n Januar# -, //?, the R%C rendered its 6ecision decreeing legal separation, thus8

ERED$RE, preises considered, udgent is hereb# rendered decreeing the legal separationof plaintiff and defendant, !ith all the legal effects attendant thereto, particularl# thedissolution and li2uidation of the conugal partnership properties, for !hich purpose the parties

are hereb# ordered to subit a coplete inventor# of said properties so that the Court cana+e a ust and proper division, such division to be ebodied in a suppleental decision.

*$ $R6ERE6.?

%he R%C found that8 of their eplo#ees and friends, are enough to constitute grossl# abusive conduct. %he

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_153206_2006.html#fnt1




















"t is indubitable that plaintiff <ucita= and defendant <illia= had their fre2uent 2uarrels andisunderstanding !hich ade both of their lives iserable and hellish. %his is even adittedb# the defendant !hen he said that there !as no da# that he did not 2uarrel !ith his !ife.6efendant had regarded the plaintiff negligent in the perforance of her !ifel# duties and hadblaed her for not reporting to hi about the !rongdoings of their children. <citations oitted=

%hese 2uarrels !ere al!a#s punctuated b# acts of ph#sical violence, threats and intiidation b#the defendant against the plaintiff and on the children. "n the process, insulting !ords andlanguage !ere heaped upon her. %he plaintiff suffered and endured the ental and ph#sicalanguish of these arital fights until 6eceber ', //- !hen she had reached the liits of herendurance. %he ore than t!ent# #ears of her arriage could not have been put to !aste b#the plaintiff if the sae had been lived in an atosphere of love, haron# and peace. orst,their children are also suffering. As ver# !ell stated in plaintiffVs eorandu, 4it !ould beunthin+able for her to thro! a!a# this t!ent# #ears of relationship, abandon the coforts of her hoe and be separated fro her children, !ho she loves, if there e7ists no cause, !hichis alread# be#ond her endurance./

illia appealed to the CA !hich affired in toto the R%C decision. "n its 6ecision dated $ctober ?, )00,the CA found that the testionies for ucita !ere straightfor!ard and credible and the ground for legalseparation under Art. --, par. of the Dail# Code, i.e., ph#sical violence and grossl# abusive conductdirected against ucita, !ere ade2uatel# proven.0

As the CA e7plained8

%he straightfor!ard and candid testionies of the !itnesses !ere uncontroverted and credible.6r. ElinzanoVs testion# !as able to sho! that the ucitaQ suffered several inuries inflicted b#

illiaQ. "t is clear that on 6eceber ', //-, she sustained redness in her chee+, blac+ e#eon her left e#e, fist blo! on the stoach, blood clot and a blac+ish discoloration on bothshoulders and a 4bup4 or 4&uol@ on her head. %he presence of these inuries !as establishedb# the testionies of ucitaQ herself and her sister, inda i. %he MeoranduLMedicalCertificate also confired the evidence presented and does not deviate fro the doctorVs aintestion# 333 that ucitaQ suffered ph#sical violence on sicQ the hands of her husband, causedb# ph#sical traua, slapping of the chee+, bo7ing and fist blo!s. %he effect of the so3calledalterations in the MeoranduLMedical Certificate 2uestioned b# illiaQ does not departfro the ain thrust of the testion# of the said doctor.

Also, the testion# of ucitaQ herself consistentl# and constantl# established that illiaQinflicted repeated ph#sical violence upon her during their arriage and that she had beensubected to grossl# abusive conduct !hen he constantl# hurled invectives at her even in frontof their custoers and eplo#ees, shouting !ords li+e, 4%a%a@, @putan% ina mo,@ tan%a,@ and4#ou donVt +no! an#thing.4

%hese !ere further corroborated b# several incidents narrated b# inda i !ho lived in theirconugal hoe fro /?/ to //. *he sa! her sister after the 6eceber ', //- incident!hen she <ucita= !as fetched b# the latter on the sae date. *he !as a !itness to the +ind of relationship her sister and illiaQ had during the three #ears she lived !ith the. *heobserved that illiaQ has an 4e7plosive teper, easil# gets angr# and becoes ver# violent.4*he cited several instances !hich proved that illia $ng indeed treated her !ife shabbil# anddespicabl#, in !ords and deeds.

7 7 7

%hat the ph#sical violence and grossl# abusive conduct !ere brought to bear upon ucitaQ b#illiaQ have been dul# established b# ucitaQ and her !itnesses. %hese incidents !ere note7plained nor controverted b# illiaQ, e7cept b# a+ing a general denial thereof.Conse2uentl#, as bet!een an affirative assertion and a general denial, !eight ust be

accorded to the affirative assertion.

%he grossl# abusive conduct is also apparent in the instances testified to b# ucitaQ and hersister. %he inurious invectives hurled at ucitaQ and his treatent of her, in its entiret#, in front

aggregate behavior of illiaQ !arrants legal separation under grossl# abusive conduct. 7 77

illia filed a otion for reconsideration !hich !as denied b# the CA on April )(, )00).)

ence the present petition !here illia clais that8

"

%E C$:R% $D APPEA* C$MM"%%E6 AN ERR$R $D A "N 6"*RE>AR6"N> CEAR E;"6ENCE%A% %E PE%"%"$N D$R E>A *EPARA%"$N A* "N*%"%:%E6 BF %E PR";A%E RE*P$N6EN%

D$R %E *$E P:RP$*E $D REM$;"N> DR$M PE%"%"$NER %E C$N%R$ AN6 $NER*"P $D%E"R C$NJ:>A PR$PER%"E* AN6 %$ %RAN*DER %E *AME %$ PR";A%E RE*P$N6EN%V*DAM"F.

""

%E C$:R% $D APPEA* C$MM"%%E6 AN ERR$R $D A "N 6"*RE>AR6"N> CEAR E;"6ENCEREP:6"A%"N> PR";A%E RE*P$N6EN%V* CA"M $D REPEA%E6 PF*"CA ;"$ENCE AN6>R$**F AB:*";E C$N6:C% $N %E PAR% $D PE%"%"$NER.&

illia argues that8 the real otive of ucita and her fail# in filing the case is to !rest control ando!nership of properties belonging to the conugal partnership5 these properties, !hich include realproperties in ong Oong, Metro Manila, Baguio and 6agupan, !ere ac2uired during the arriage throughhis <illiaVs= sole efforts5 the onl# parties !ho !ill benefit fro a decree of legal separation are ucitaVsparents and siblings !hile such decree !ould conden hi as a violent and cruel person, a !ife3beaterand child abuser, and !ill taint his reputation, especiall# aong the Dilipino3Chinese counit#5substantial facts and circustances have been overloo+ed !hich !arrant an e7ception to the general rulethat factual findings of the trial court !ill not be disturbed on appeal5 the findings of the trial court that hecoitted acts of repeated ph#sical violence against ucita and their children !ere not sufficientl#established5 !hat too+ place !ere disagreeents regarding the anner of raising and disciplining thechildren particularl# Charleston, ucitaVs favorite son5 arriage being a social contract cannot be ipairedb# ere verbal disagreeents and the coplaining part# ust adduce clear and convincing evidence to ustif# legal separation5 the CA erred in rel#ing on the testionies of ucita and her !itnesses, her sisterinda i, and their parentVs doctor, 6r. ;icente Elinzanzo, !hose testionies are tainted !ith relationshipand fraud5 in the )0 #ears of their arriage, ucita has not coplained of an# cruel behavior on the partof illia in relation to their arital and fail# life5 illia e7pressed his !illingness to receiverespondent unconditionall# ho!ever, it is ucita !ho abandoned the conugal d!elling on 6eceber ',//- and instituted the coplaint belo! in order to appropriate for herself and her relatives the conugalproperties5 the Constitution provides that arriage is an inviolable social institution and shall be protectedb# the *tate, thus the rule is the preservation of the arital union and not its infringeent5 onl# forgrounds enuerated in Art. -- of the Dail# Code, !hich grounds should be clearl# and convincingl#

proven, can the courts decree a legal separation aong the spouses.'

Respondent ucita in her Coent, ean!hile, asserts that8 the issues raised in the present petition arefactual5 the findings of both lo!er courts rest on strong and clear evidence borne b# the records5 thisCourt is not a trier of facts and factual findings of the R%C !hen confired b# the CA are final andconclusive and a# not be revie!ed on appeal5 the contention of illia that ucita filed the case forlegal separation in order to reove fro illia the control and o!nership of their conugal propertiesand to transfer the sae to ucitaVs fail# is absurd5 ucita !ill not ust thro! her arriage of )0 #earsand forego the copanionship of illia and her children ust to serve the interest of her fail#5 ucitaleft the conugal hoe because of the repeated ph#sical violence and grossl# abusive conduct of petitioner.-

Petitioner filed a Repl#, reasserting his clais in his petition,( as !ell as a Meorandu !here heaverred for the first tie that since respondent is guilt# of abandonent, the petition for legal separationshould be denied follo!ing Art. -(, par. <'= of the Dail# Code. 1 Petitioner argues that since respondent

herself has given ground for legal separation b# abandoning the fail# sipl# because of a 2uarrel andrefusing to return thereto unless the conugal properties !ere placed in the adinistration of petitionerVsin3la!s, no decree of legal separation should be issued in her favor.?

Respondent li+e!ise filed a Meorandu reiterating her earlier assertions./ As bet!een the detailed accounts given for ucita and the general denial for illia, the Court gives




























e resolve to den# the petition.

"t is settled that 2uestions of fact cannot be the subect of a petition for revie! under Rule '- of the Rulesof Court. %he rule finds ore stringent application !here the CA upholds the findings of fact of the trialcourt. "n such instance, this Court is generall# bound to adopt the facts as deterined b# the lo!ercourts.)0

%he onl# instances !hen this Court revie!s findings of fact are8

<= !hen the findings are grounded entirel# on speculation, surises or conectures5 <)= !hen

the inference ade is anifestl# ista+en, absurd or ipossible5 <&= !hen there is grave abuseof discretion5 <'= !hen the udgent is based on a isapprehension of facts5 <-= !hen thefindings of facts are conflicting5 <(= !hen in a+ing its findings the Court of Appeals !entbe#ond the issues of the case, or its findings are contrar# to the adissions of both theappellant and the appellee5 <1= !hen the findings are contrar# to that of the trial court5 <?=!hen the findings are conclusions !ithout citation of specific evidence on !hich the# are based5</= !hen the facts set forth in the petition as !ell as in the petitionerVs ain and repl# briefsare not disputed b# the respondent5 <0= !hen the findings of fact are preised on thesupposed absence of evidence and contradicted b# the evidence on record5 and <= !hen theCourt of Appeals anifestl# overloo+ed certain relevant facts not disputed b# the parties,!hich, if properl# considered, !ould ustif# a different conclusion.)

As petitioner failed to sho! that the instant case falls under an# of the e7ceptional circustances, thegeneral rule applies.

"ndeed, this Court cannot revie! factual findings on appeal, especiall# !hen the# are borne out b# therecords or are based on substantial evidence. )) "n this case, the findings of the R%C !ere affired b# theCA and are ade2uatel# supported b# the records.

As correctl# observed b# the trial court, illia hiself aditted that there !as no da# that he did not2uarrel !ith his !ife, !hich ade his life iserable, and he blaes her for being negligent of her !ifel#duties and for not reporting to hi the !rongdoings of their children.)&

ucita and her sister, inda i, also gave nuerous accounts of the instances !hen illia displa#edviolent teper against ucita and their children5 such as8 !hen illia thre! a steel chair atucita5)' thre! chairs at their children5)- slapped ucita and utter insulting !ords at her5 )( use the buc+leof the belt in !hipping the children5 )1pinned ucita against the !all !ith his strong ars alost stranglingher, and sashed the flo!er vase and bric+ roc+s and oldings leaving the bedroo indisarra#5)? shouted at ucita and thre! a director# at her, in front of inda and the eplo#ees of theirbusiness, because he could not find a draft letter on his table5 )/ got ad at Charleston for coo+ing stea+

!ith vetchin propting illia to sash the plate !ith stea+ and hit Charleston, then slapped ucita andshouted at her 4 putan% ina mo, %a%o, wala an% paialam, tarantado4 !hen she sided !ithCharleston5&0 and the 6eceber / and 6eceber ', //- incidents !hich forced ucita to leave theconugal d!elling.&

ucita also e7plained that the inuries she received on 6eceber ', //-, !ere not the first. As sherelated before the trial court8

2. Fou stated on cross e7aination that the inuries #ou sustained on 6eceber ', //- !erethe ost seriousG

a. :nli+e before " considered 6eceber ', //- the ver# serious because before it is onl# onthe ar and blac+ e#e, but on this 6eceber ', " suffered bruises in all parts of # bod#, sir.&)

%o these, all illia and his !itnesses, could offer are denials and attepts to do!npla# the saidincidents.&&

ore !eight to those of the forer. %he Court also gives a great aount of consideration to theassessent of the trial court regarding the credibilit# of !itnesses as trial court udges eno# the uni2ueopportunit# of observing the deportent of !itnesses on the stand, a vantage point denied appellatetribunals.&' "ndeed, it is settled that the assessent of the trial court of the credibilit# of !itnesses isentitled to great respect and !eight having had the opportunit# to observe the conduct and deeanor of the !itnesses !hile testif#ing.&-

"n this case, the R%C noted that8

illiaVs denial and that of his !itnesses of the iputation of ph#sical violence coitted b#hi could not be given uch credence b# the Court. *ince the office secretar# $felia Rosal andthe fail# laundr#!oan Rosalino Morco are dependent upon defendant for their livelihood,their testionies a# be tainted !ith bias and the# could not be considered as ipartial andcredible !itnesses. *o !ith Oingston $ng !ho lives !ith defendant and depends upon hi forsupport.&(

Parentheticall#, illia clais that that the !itnesses of ucita are not credible because of theirrelationship !ith her. e do not agree. Relationship alone is not reason enough to discredit and label a!itnessVs testion# as biased and un!orth# of credence&1 and a !itnessV relationship to one of the partiesdoes not autoaticall# affect the veracit# of his or her testion#.&? Considering the detailed andstraightfor!ard testionies given b# inda i and 6r. ;icente Elinzano, bolstered b# the credenceaccorded the b# the trial court, the Court finds that their testionies are not tainted !ith bias.

illia also posits that the real otive of ucita in filing the case for legal separation is in order for herside of the fail# to gain control of the conugal properties5 that ucita !as !illing to destro# hisreputation b# filing the legal separation case ust so her parents and her siblings could control theproperties he !or+ed hard for. %he Court finds such reasoning hard to believe. hat benefit !ould ucitapersonall# gain b# pushing for her parentsV and siblingsV financial interests at the e7pense of herarriageG hat is ore probable is that there trul# e7ists a ground for legal separation, a cause sostrong, that ucita had to see+ redress fro the courts. As aptl# stated b# the R%C,

...it !ould be unthin+able for her to thro! a!a# this t!ent# #ears of relationship, abandon thecoforts of her hoe and be separated fro her children !ho she loves, if there e7ists nocause, !hich is alread# be#ond her endurance.&/

%he clai of illia that a decree of legal separation !ould taint his reputation and label hi as a !ife3beater and child3abuser also does not elicit s#path# fro this Court. "f there !ould be such a sear onhis reputation then it !ould not be because of ucitaVs decision to see+ relief fro the courts, but becausehe gave ucita reason to go to court in the first place.

Also !ithout erit is the arguent of illia that since ucita has abandoned the fail#, a decree of legal separation should not be granted, follo!ing Art. -(, par. <'= of the Dail# Code !hich provides that

legal separation shall be denied !hen both parties have given ground for legal separation. %heabandonent referred to b# the Dail# Code is abandonent !ithout ustifiable cause for ore than one#ear.'0 As it !as established that ucita left illia due to his abusive conduct, such does not constituteabandonent conteplated b# the said provision.

As a final note, !e reiterate that our Constitution is coitted to the polic# of strengthening the fail#as a basic social institution.' %he Constitution itself ho!ever does not establish the paraeters of stateprotection to arriage and the fail#, as it reains the province of the legislature to define all legalaspects of arriage and prescribe the strateg# and the odalities to protect it and put into operation theconstitutional provisions that protect the sae.') ith the enactent of the Dail# Code, this has beenaccoplished as it defines arriage and the fail#, spells out the corresponding legal effects, iposesthe liitations that affect arried and fail# life, as !ell as prescribes the grounds for declaration of nullit# and those for legal separation.'& As ucita has ade2uatel# proven the presence of a ground for legalseparation, the Court has no reason but to affir the findings of the R%C and the CA, and grant her therelief she is entitled to under the la!.

ERED$RE, the petition is ENE for lac+ of erit.

Costs against petitioner.

*$ $R6ERE6. ilario Mateu and had done an# good things for hi, nursing hi in his last illness, !hich servicesi d h b l+ f h id i f h l d <b f ffi i d f = h h

























































Pan%ani&an, C.(. =Chairperson8, nares!Santia%o, Calle'o, Sr., and Chico!a*ario, ((., concur.


D"R*% 6";"*"$N

G.R. No. L-38498 A;+ 10, 1989

SAAC )AGNAS, ENCARNACON )AGNAS, SL$ESTRE )AGNAS MAMNA )AGNAS, STO)AGNAS &'( AGATONA ENCARNACON, petitioners,vs.%ON. COURT O# APPEALS, ROSA L. RETONL TEO#LO ENCARNACON, &'( *OSE ).NAM)A"ANrespondents.

"eltran, "eltran "eltran for petitioners.

(ose +. Le%aspi for private respondents.

NAR$ASA, J.:

%he facts underl#ing this appeal b# certiorari are not in dispute. ilario Mateu of Oa!it, Cavite, died on

March , /(', single, !ithout ascendants or descendants, and survived onl# b# collateral relatives, of !ho petitioners herein, his first cousins, !ere the nearest. Mateu left no !ill, no debts, and an estateconsisting of t!ent#3nine parcels of land in Oa!it and "us, Cavite, ten of !hich are involved in thisappeal. 1

$n April &, /(', the private respondents, theselves collateral relatives of Mateu though ore reotein degree than the petitioners, 2 registered !ith the Registr# of 6eeds for the Province of Cavite t!odeeds of sale purportedl# e7ecuted b# Mateu in their <respondents= favor covering ten parcels of land.Both deeds !ere in %agalog, save for the English descriptions of the lands conve#ed under one of the5and each recited the reconsideration of the sale to be4 ... halagang "*AN> P"*$ <Pl.00=, salaping Pilipino,at ga naipagling+od, ipinagliling+od sa a+ing +apa+anan ...4 <4the su of $NE PE*$ Pl.00=, PhilippineCurrenc#, and services rendered, being rendered and to be rendered for # benefit4=. $ne deed !asdated Debruar# (,/(& and covered five parcels of land, and the other !as dated March ', /(&, coveringfive other parcels, both, therefore, antedating Mateus death b# ore than a #ear. 3 "t is asserted b# thepetitioners, but denied b# the respondents, that said sales not!ithstanding, Mateu continued in thepossession of the lands purportedl# conve#ed until his death, that he reained the declared o!ner

thereof and that the ta7 pa#ents thereon continued to be paid in his nae.4

hatever the truth,ho!ever, is not crucial. hat is not disputed is that on the strength of the deeds of sale, the respondents!ere able to secure title in their favor over three of the ten parcels of land conve#ed thereb#.

$n Ma# )),/(' the petitioners coenced suit against the respondents in the Court of Dirst "nstance of Cavite, see+ing annulent of the deeds of sale as fictitious, fraudulent or falsified, or, alternativel#, asdonations void for !ant of acceptance ebodied in a public instruent. Claiing o!nership proindiviso of the lands subect of the deeds b# virtue of being intestate heirs of ilario Mateu, thepetitioners pra#ed for recover# of o!nership and possession of said lands, accounting of the fruits thereof and daages. Although the coplaint originall# sought recover# of all the t!ent#3nine parcels of land leftb# Mateu, at the pre3trial the parties agreed that the controvers# be liited to the ten parcels subectof the 2uestioned sales, and the %rial Court ordered the e7clusion of the nineteen other parcels fro theaction. 6 $f the ten parcels !hich reained in litigation, nine !ere assessed for purposes of ta7ation atvalues aggregating P0,-00 00. %he record does not disclose the assessed value of the tenth parcel,!hich has an area of ,''& s2uare eters. 7

"n ans!er to the coplaint, the defendants <respondents here= denied the alleged fictitious or fraudulentcharacter of the sales in their favor, asserting that said sales !ere ade for good and valuableconsideration5 that !hile 4... the# a# have the effect of donations, #et the foralities and solenities of donation are not re2uired for their validit# and effectivit#, ... that defendants !ere collateral relatives of

constituted the bul+ of the consideration of the sales5 and <b# !a# of affirative defense= that theplaintiffs could not 2uestion or see+ annulent of the sales because the# !ere ere collateral relatives of the deceased vendor and !ere not bound, principall# or subsidiaril#, thereb#. 8

After the plaintiffs had presented their evidence, the defendants filed a otion for disissal in effect, adeurrer to the evidence reasserting the defense set up in their ans!er that the plaintiffs, as erecollateral relatives of ilario Mateu, had no light to ipugn the latters disposition of his properties b#eans of the 2uestioned conve#ances and subitting, additionall#, that no evidence of fraud aintainingsaid transfers had been presented. 9

%he %rial Court granted the otion to disiss, holding <a= on the authorit# of Arentia vs.Patriarca, 10 that the plaintiffs, as ere collateral relatives, not forced heirs, of ilario Mateu, could notlegall# 2uestion the disposition ade b# said deceased during his lifetie, regardless of !hether, as aatter of obective realit#, said dispositions !ere valid or not5 and <b= that the plaintiffs evidence of alleged fraud !as insufficient, the fact that the deeds of sale each stated a consideration of onl# Pl.00 notbeing in itself evidence of fraud or siulation. 11

$n appeal b# the plaintiffs to the Court of Appeals, that court affired, adverting !ith approval to the%rial Courts reliance on the #rmentia ruling !hich, it !ould appear, both courts sa! as den#ing, !ithoute7ception, to collaterals, of a decedent, not forced heirs, the right to ipugn the latters dispositions inter vivos of his propert#. %he Appellate Court also anal#zed the testion# of the plaintiffs !itnesses,declared that it failed to establish fraud of an# +ind or that Mateu had continued pa#ing ta7es on thelands in 2uestion even after e7ecuting the deeds conve#ing the to the defendants, and closed !ith thestateent that 4... since in dul# notarized and registered deeds of sale consideration is presued, !e donot and it necessar# to rule on the alternative allegations of the appellants that the said deed of sale !ere<sic= in realit# donations. 12

$ne issue clearl# predoinates here. "t is !hether, in vie! of the fact that, for properties assuredl# !orthin actual value an# ties over their total assessed valuation of ore than P0,000.00, the 2uestioneddeeds of sale each state a price of onl# one peso <P.00= plus unspecified past, present and futureservices to !hich no value is assigned, said deeds !ere void or ine7istent fro the beginning <4nulo4= orerel# voidable, that is, valid until annulled. "f the# !ere onl# voidable, then it is a correct propositionthat since the vendor Mateu had no forced heirs !hose legities a# have been ipaired, and thepetitioners, his collateral relatives, not being bound either principall# or subsidiaril# to the ters of saiddeeds, the latter had and have no actionable right to 2uestion those transfers.

$n the other hand, if said deeds !ere void a& initio because to all intents and purposes !ithoutconsideration, then a different legal situation arises, and 2uite another result obtains, as pointed out b#the einent civil la! authorit#, Mr. Justice J.B.. Re#es !ho, in his concurring opinion in #rmentia, said8

" ... cannot bring #self to agree to the proposition that the heirs intestate !ouldhave no legal standing to contest the conve#ance ade b# the deceased if the sae!ere ade !ithout an# consideration, or for a false and fictitious consideration. Dor

under the Civil Code of the Philippines, Art. '0/, par. &, contracts !ith a cause thatdid not e7ist at the tie of the transaction are ine7istent and void fro thebeginning. %he sae is true of contracts stating a false cause <consideration= unlessthe persons interested in upholding the contract should prove that there is anothertrue and la!ful consideration therefor. <l&id ., Art. &-&=.

"f therefore the contract has no causa or consideration, or the causa is false andfictitious <and no true hidden causa is proved= the propert# allegedl# conve#ed neverreall# leaves the patrion# of the transferor, and upon the latters death !ithout atestaent, such propert# !ould pass to the transferors heirs intestate and berecoverable b# the or b# the Adinistrator of the transferors estate. "n thisparticular regard, " thin+ Concepcion vs. *ta. Ana, ?1 Phil. 1?1 and *obs vs. ChuaPua eranos, -0 Phil. -&(, do not correctl# state the present la!, and ust beclarified.

%o be sure the 2uoted passage does not reect and is not to be construed as reectingthe Concepcion and Solisrulings 13 as outrightl# erroneous, far fro it. $n the contrar#, those rulingsundoubtedl# read and applied correctl# the la! e7tant in their tie8 Art. )1( of the Civil Code of ??/under !hich the stateent of a false cause in a contract rendered it voidable onl#, not void a& initio. "n

observing that the# 4... do not correctl# state the present la! and ust be clarified,4 Justice Re#es clearl#h d i i d th f t th t th l it i < d l d i th ti A ti = l d

ithout necessaril# according all these assertions its full concurrence, but upon the consideration aloneth t th t t t di ti b t th ti l t d i <i h d d=



had in ind the fact that the la! as it is no! <and alread# !as in the tie Arentia= no longer deescontracts !ith a false cause, or !hich are absolutel# siulated or fictitious, erel# voidable, but declaresthe void, i.e., ine7istent <4nulo4= unless it is sho!n that the# are supported b# another true and la!fulcause or consideration. 14 A logical conse2uence of that change is the uridical status of contracts !ithout,or !ith a false, cause is that conve#ances of propert# affected !ith such a vice cannot operate to divestand transfer o!nership, even if unipugned. "f after!ards the transferor dies the propert# descends tohis heirs, and !ithout regard to the anner in !hich the# are called to the succession, said heirs a#bring an action to recover the propert# fro the purported transferee. As pointed out, such an action isnot founded on fraud, but on the preise that the propert# never leaves the estate of the transferor andis transitted upon his death to heirs, !ho !ould labor under no incapacit# to aintain the action frothe ere fact that the# a# be onl# collateral relatives and bound neither principall# or subsidiaril# underthe deed or contract of conve#ance.

"n #rmentia the Court deterined that the conve#ance 2uestioned !as erel# annullable not void a&initio, and that the plaintiff s action !as based on fraud vitiating said conve#ance. %he Court said8

#potheticall# aditting the truth of these allegations <of plaintiffs coplaint=, theconclusion is irresistible that the sale is erel# voidable. Because Marta Arentiae7ecuted the docuent, and this is not controverted b# plaintiff. Besides, the factthat the vendees !ere inors, a+es the contract, at !orst, annullable b# the,%hen again, inade2uac# of consideration does not ipl# total !ant of consideration.ithout ore, the parted acts of Marta Arentia after the sale did not indicate thatthe said sale !as void fro the being.

%he su total of all these is that, in essence, plaintiffs case is bottoed on fraud,!hich renders the contract voidable.

"t therefore sees clear that insofar as it a# be considered as setting or reaffiringprecedent, #rmentia onl# ruled that transfers ade b# a decedent in his lifetie, !hich are voidable forhaving been fraudulentl# ade or obtained, cannot be posthuousl# ipugned b# collateral relativessucceeding to his estate !ho are not principall# or subsidiaril# bound b# such transfers. Dor the reasonsalread# stated, that ruling is not e7tendible to transfers !hich, though ade under closel# siilarcircustances, are void a& initio for lac+ or falsit# of consideration.

%he petitioners here argue on a broad front that the ver# recitals of the 2uestioned deeds of sale revealsuch !ant or spuriousness of consideration and therefore the void character of said sales. %he#8

. advert to a decision of the Court of Appeals in +ontinola vs. 4er&osa <-/ $.>. No. '1, pp, ?0, ??=holding that a price of P l.00 for the sale of things !orth at least P)0,000.00 is so insignificant as toaount to no price at all, and does not satisf# the la! !hich, !hile not re2uiring for the validit# of a salethat the price be ade2uate, prescribes that it ust be real, not fictitious, stressing the obvious parallelbet!een that case and the present one in stated price and actual value of the propert# sold5

). cite Manresa to the sae effect8 that true price, !hich is essential to the validit# of a sale, eanse7istent, real and effective price, that !hich does not consist in an insignificant aount as, sa#, P.)0 for ahouse5 that it is not the sae as the concept of a ust price !hich entails !eighing and easuring, foreconoic e2uivalence, the aount of price against all the factors that deterine the value of the thingsold5 but that there is no need of such a close e7aination !hen the iense disproportion bet!eensuch econoic values is patent a case of insignificant or ridiculous price, the unbelievable aount of !hich at once points out its ine7istence5 1

&. assert that Art. '-? of the Civil Code, in prescribing that a sale be for a ... price certain in one# orits e2uivalent ... re2uires that 4e2uivalent4 be soething representative of one#, e.%., a chec+ or draft,again citing Manresa 16 to the effect that services are not the e2uivalent of one# insofar as saidre2uireent is concerned and that a contract is not a true sale !here the price consists of services orprestations5

'. once ore citing Manresa17

also point out that the 4services4 entioned in the 2uestioned deeds of sale are not onl# vague and uncertain, but are un+no!n and not susceptible of deterination !ithout thenecessit# of a ne! agreeent bet!een the parties to said deeds.

that the apparent gross, not to sa# enorous, disproportion bet!een the stipulated price <in each deed=of P l.00 plus unspecified and un2uantified services and the undisputabl# valuable real estate allegedl#sold !orth at least P0,-00.00 going onl# b# assessents for ta7 purposes !hich, it is !ell3+no!n, arenotoriousl# lo! indicators of actual value plainl# and un2uestionabl# deonstrates that the# state a falseand fictitious consideration, and no other true and la!ful cause having been sho!n, the Court finds bothsaid deeds, insofar as the# purport to be sales, not erel# voidable, but void a& initio.

Neither can the validit# of said conve#ances be defended on the theor# that their true causa is theliberalit# of the transferor and the# a# be considered in realit# donations 18 because the la! 19 alsoprescribes that donations of iovable propert#, to be valid, ust be ade and accepted in a publicinstruent, and it is not denied b# the respondents that there has been no such acceptance !hich the#clai is not re2uired. 20

%he transfers in 2uestion being void, it follo!s as a necessar# conse2uence and conforabl# to theconcurring opinion in #rmentia, !ith !hich the Court full# agrees, that the properties purportedl#conve#ed reained part of the estate of ilario Mateu, said transfers not!ithstanding, recoverable b#his intestate heirs, the petitioners herein, !hose status as such is not challenged.

%he private respondents have onl# theselves to blae for the lac+ of proof that ight have saved the2uestioned transfers fro the taint of invalidit# as being fictitious and !ithout ilicit cause5 proof, to bebrief, of the character and value of the services, past, present, and future, constituting according to thever# ters of said transfers the principal consideration therefor. %he petitioners coplaint <par.(= 21 averred that the transfers !ere 4... fraudulent, fictitious andLor falsified and <!ere= ... in realit#donations of iovables ...,4 an averent that the private respondents not onl# specificall# denied,alleging that the transfers had been ade 4... for good and valuable consideration ...,4 but to !hich the#also interposed the affirmative defenses that said transfers !ere 4... valid, binding and effective ...,4 and,in an obvious reference to the services entioned in the deeds, that the# 4... had done an# good thingsto <the transferor= during his lifetie, nursed hi during his ripe #ears and too+ care of hi during his

previous and last illness ...,4 <pars. ', (, ( and 1, their ans!er=. lHwphI1.3Jt22

%he onus, therefore, of sho!ing the e7istence of valid and illicit consideration for the 2uestioned conve#ances rested on theprivate respondents. But even on a contrar# assuption, and positing that the petitioners initiall# had theburden of sho!ing that the transfers lac+ed such consideration as the# alleged in their coplaint, thatburden !as shifted to the private respondents !hen the petitioners presented the deeds !hich the#claied sho!ed that defect on their face and it becae the dut# of said respondents to offer evidence of e7istent la!ful consideration.

As the record clearl# deonstrates, the respondents not onl# failed to offer an# proof !hatsoever, optingto rel# on a deurrer to the petitioners evidence and upon the thesis, !hich the# have aintained all the!a# to this Court, that petitioners, being ere collateral relatives of the deceased transferor, !ere!ithout right to the conve#ances in 2uestion. "n effect, the# gabled their right to adduce evidence on adisissal in the %rial Court and lost, it being the rule that !hen a disissal thus obtained is reversed onappeal, the ovant loses the right to present evidence in his behalf. 23

ERED$RE, the appealed 6ecision of the Court of Appeals is reversed. %he 2uestioned transfers aredeclared void and of no force or effect. *uch certificates of title as the private respondents a# haveobtained over the properties subect of said transfers are hereb# annulled, and said respondents areordered to return to the petitioners possession of an the properties involved in tills action, to account tothe petitioners for the fruits thereof during the period of their possession, and to pa# the costs. Nodaages, attorne#s fees or litigation e7penses are a!arded, there being no evidence thereof before theCourt.

*$ $R6ERE6.

Cru*, Gancayco, Gri3Ko!#0uino and +edialdea, ((., concur.

#oo+'o+

*EC$N6 6";"*"$N

BG.R. No. 120724-2. M& 21, 1998

#ERNANO T. MATE, petitioner, vs. T%E %ONORA)LE COURT O# APPEALS &'( NOCENCO

TAN respondents

ME%R$BANO preparator# to the redeption of his properties. o!ever, both of the !ere dishonored b#the dra!ee ban+ for having been dra!n against a closed account Realizing that he !as s!indled he



TAN, respondents.

E C S O N

MARTNE!, J .

"n this petition for revie!, petitioner assails the 6ecision Q of the Court of Appeals dated August )/,//' in CA3>.R. C; No. )?))-3)(, !hich affired !ith odification the decision of the trial court, thedispositive portion of !hich reads, to !it8

SERED$RE, this Court finds the 6eed of *ale !ith Right of Repurchase e7ecuted $ctober (, /?( validand binding bet!een plaintiff and defendant <as vendor and vendee3a3retro respectivel#=5 that as theperiod to redee has e7pired, o!nership thereof !as consolidated b# operation of la!, and the Register

of 6eeds is hereb# ordered to RE>"*%ER this decision consolidating the defendantVs o!nership over theproperties covered b# %ransfer Certificate of %itle No. %3/031, covering ot ?5 $riginal Certificate of %itleNo. N3& covering ot -&10, all of the %acloban Cadastre, and issuing to defendant "nocencio %an histitles after cancellation of the titles presentl# registered in plaintiff Dernando %. MateVs nae and that of his !ife.

S%he plaintiff Dernando Mate is further ordered to pa# defendant the su of $NE :N6RE6 D$R%F%$:*AN6 <P'0,000.00= PE*$*, for and as attorne#Vs fees.

Sith costs against the plaintiff Dernando Mate.

S*$ $R6ERE6.T )Q

%he facts of this case, as suarized in the petition, are reproduced hereunder8

S$n $ctober (, /?( Josefina R. Re# <hereafter referred to as SJosieT for short= and private respondent!ent to the residence of petitioner at %acloban Cit#. Josie !ho is a cousin of petitionerVs !ife solicited hishelp to stave off her and her fail#Vs prosecution b# private respondent for violation of B.P. )) on accountof the rubber chec+s that she, her other, sister and brother issued to private respondent aountingtoP','&),0(1.00. *he re2uested petitioner to cede to private respondent his three <&= lots in %aclobanCit# in order to placate hi. $n hearing JosieVs proposal, he iediatel# reected it as he o!ed privaterespondent nothing and he !as under no obligation to conve# to hi his properties. Durtherore, his lots!ere not for sale. Josie e7plained to hi that he !as in no danger of losing his properties as he !illerel# e7ecute a siulated docuent transferring the to private respondent but the# !ill be redeeedb# her !ith her o!n funds. After a long discussion, he agreed to e7ecute a fictitious deed of sale !ithright to repurchase covering his three <&= lots entioned above subect to the follo!ing conditions8

. %he aount to be stated in the docuent is P,'00,000.00 !ith interest thereon at- a onth5

). %he properties !ill be repurchased !ithin si7 <(= onths or on or before April ', /?15

&. Although it !ould appear in the docuent that petitioner is the vendor, it is Josie !ho!ill provide the one# for the redeption of the properties !ith her o!n funds5

'. %itles to the properties !ill be delivered to private respondent but the sale !ill not beregistered in the Register of 6eeds and annotated on the titles.

S%o assure petitioner that Josie !ill redee the aforesaid properties, she issued to hi t!o <)= BP" chec+sboth postdated 6eceber -, /?(. $ne chec+ !as for P,'00,000.00 supposedl# for the selling priceand the other !as for P')0,000.00 corresponding to the interests for ( onths. "ediatel# thereafterpetitioner prepared the 6eed of *ale !ith Right to Repurchase <E7h. A= and after it has been signed andnotarized, it !as given to private respondent together !ith the titles of the properties and the latter did

not register the transaction in the Register of 6eeds as agreed upon.

S$n Januar# ', /?1, petitioner deposited the chec+ for P,'00,000.00 <E7h. B= in his account at the:nited Coconut Planters Ban+ and the other chec+ for P')0,000.00 <E7h. 6= in his account at

the dra!ee ban+ for having been dra!n against a closed account. Realizing that he !as s!indled, hesent Josie a telegra about her chec+s and !hen she failed to respond, he !ent to Manila to loo+ for herbut she could not be found. *o he returned to %acloban Cit# and filed Criinal Cases Nos. ?&0 and ?&)against her for violation of B.P. )) but the cases !ere later archived as the accused <Josie= could not befound as she !ent into hiding. %o protect his interest, he filed Civil Case No. 1&/( of the Regional %rialCourt of e#te, Branch ;"", entitled IDernando %. Mate vs. Josefina R. Re# and "nocencio %anV forAnnulent of Contract !ith 6aages. 6efendant Josefina R. Re# <Josie= !as declared in default and thecase proceeded against private respondent. But during the trial the R%C court as+ed private respondentto file an action for consolidation of o!nership of the properties subect of the sale and pursuant theretohe filed Civil Case No. 1-?1 that !as consolidated !ith the case he filed earlier !hich !ere later decided ointl# b# the trial court in favor of private respondent and !as subse2uentl# appealed to respondentCourt that affired it !ith odification. %hereupon, petitioner filed a otion to reconsider the decisionbut it !as denied. ence, the instant petition for revie!.T &Q

"n this petition for revie!, the petitioner presents as the sole issue the validit# of the 6eed of *ale!ith Right to Repurchase. e contends that it is null and void for lac+ of consideration because allegedl#no one# changed hands !hen he signed it and the chec+s that !ere issued for redeption of theproperties involved in the sale have been dishonored b# the dra!ee ban+ for having been dra!n against aclosed account.'Q

%he contention is !ithout erit.

%here !as a consideration. %he respondent court aptl# observed that 3

S"n preparing and e7ecuting the deed of sale !ith right of repurchase and in delivering to %an the landtitles, appellant actuall# accoodated Josefina so she !ould not be charged criinall# b# %an. %oensure that he could repurchase his lots, appellant got a chec+ of P,'00,000.00 fro her. Also, b#allo!ing his titles to be in possession of %an for a period of si7 onths, appellant secured fro heranother chec+ forP')0,000.00. ith this arrangeent, appellant !as convinced he had a goodbargain. :nfortunatel# his e7pectation crubled. Dor this tragic incident, not onl# Josefina, but also %an,

according to appellant ust be ans!erable.

7 7 7 7 7 7 7 7 7

S"t is plain that consideration e7isted at the tie of the e7ecution of the deed of sale !ith right of repurchase. "t is not onl# appellantVs +indness to Josefina, being his cousin, but also his receiptof P')0,000.00 fro her !hich ipelled hi to e7ecute such contract.T -Q

Durtherore, !hile petitioner did not receive the P.' Million purchase price fro respondent %an,he had in his possession a postdated chec+ of Josie Re# in an e2uivalent aount precisel# to repurchasethe t!o lots on or before the si7th onth.

As aditted b# petitioner, b# virtue of the sale !ith pacto de retro, Josie Re# gave hi, as vendor!a!retro, a postdated chec+ in the aount of P.' Million, !hich represented the repurchase price of thet!o <)= lots. Aside fro the P.' Million chec+, Josie gave another postdated chec+ to petitioner in theaount of P')0,000.00, ostensibl# as interest for si7 <(= onths but !hich apparentl# !as his fee for

having e7ecuted the pacto de retro docuent. Josie thus assued the responsibilit# of pa#ing therepurchase price on behalf of petitioner to private respondent.

:nfortunatel#, the t!o chec+s issued b# Josie Re# !ere !orthless. Both !ere dishonored uponpresentent b# petitioner !ith the dra!ee ban+s. o!ever, there is absolutel# no basis for petitioner tofile a coplaint against private respondent %an and Josie Re# to annul the pacto de retro sale on theground of lac+ of consideration, invo+ing his failure to encash the t!o chec+s. PetitionerVs cause of action!as to file criinal actions against Josie Re# under B.P. )), !hich he did. %he filing of the criinal cases!as a tacit adission b# petitioner that there !as a consideration of the pacto de retro sale.

Petitioner further clais that the pacto de retro sale !as subect to the condition that in the eventthe chec+s given b# Josie Re#es to hi for the repurchase of the propert# !ere dishonored, then thedocuent shall be declared null and void for lac+ of consideration.

e are not persuaded.

Private respondent %an !as alread# poised to file criinal cases against Josie Re# and her fail#. "t

!ould not be logical for respondent %an to agree to the conditions allegedl# iposed b# petitioner.Petitioner +ne! that he !as bound b# the deed of sale !ith right to repurchase, as evidenced b# hisfiling criinal cases against Josie Re# !hen the t!o chec+s bounced.

%he respondent court further ade the candid but true observation that8

S"f there is an#bod# to blae for his predicaent, it is appellant hiself. e is a la!#er. e !as the one!ho prepared the contract e +ne! !hat he !as entering into *urel# he ust have been a!are of the

%he spouses *alvacion *errano and 6octor Agustin *. adanga appealed fro the decision of the Court of Appeals <affiring the decision of the Manila Court of Dirst "nstance= declaring void the sale to *alvacion

http://sc.judiciary.gov.ph/jurisprudence/1998/may1998/120724_25.htm#_edn1













!ho prepared the contract. e +ne! !hat he !as entering into. *urel#, he ust have been a!are of theris+ involved. hen JosefinaVs chec+s bounced, he should have repurchased his lots !ith his o!none#. "nstead, he sued not onl# Josefina but also %an for annulent of contract on the ground of lac+of consideration and false pretenses on their part.T

Petitioner then postulates that Sit is not only ille%al &ut immoral to re0uire him to repurchase hisown properties with his own money when he did not derive any &enefit from the transaction.T %hus, heinvo+es the case of Sin%son vs. $sa&ela Sawmill, SCR# MNN, MN, !here the Court said that whereone or two innocent persons must suffer, that person who %ave occasion for the dama%es to &e caused must &ear conse0uences. PetitionerVs reliance on this doctrine is isplaced. e is not an innocentperson. As a atter of fact, he gave occasion for the daage caused b# virtue of the deed of sale !ithright to repurchase !hich he prepared and signed. %hus, there is the e2uitable a7i that &etween twoinnocent parties, the one who made it possi&le for the wron% to &e done should &e the one to &ear theresultin% loss.(Q

Petitioner further insinuates that private respondent deceived hi into signing the deed of sale !ithright to repurchase. %his is not borne out b# the evidence nor b# petitionerVs o!n statement of facts !hich !e heretofore reproduced. As aptl# observed b# the respondent court >e are at a loss why herein appellant ascri&es false pretenses to /an who merely si%ned the contract.T 1Q Contrar# topetitionerVs pretension, respondent %an did not eplo# an# devious schee to a+e the forer sign thedeed of sale. "t is to be noted that %an !aived his right to collect fro Josefina Re# b# virtue of the pactode retrosale. "n turn, Josefina gave petitioner a postdated chec+ in the aount of P.' Million to ensurethat the latter !ould not lose his t!o lots. Petitioner, a la!#er, should have +no!n that the transaction!as fraught !ith ris+s since Josefina Re# and fail# had a chec+ered histor# of issuing !orthlesschec+s. But had petitioner not agreed to the arrangeent, respondent %an !ould not have agreed to!aive prosecution of Josefina Re#.

Apparentl#, it !as petitionerVs greed for a huge profit that ipelled hi to accede to the schee of Josefina Re# even if he +ne! it !as a dangerous underta+ing. hen he drafted the pacto deretrodocuent, he thre! caution to the !inds forgetting that prudence ight have been the better courseof action. e can onl# s#pathize !ith petitionerVs predicaent. o!ever, a contract is a

contract. $nce agreed upon, and provided all the essential eleents are present, it is valid and bindingbet!een the parties.

Petitioner has no one to blae but hiself for his isfortune.

%ERE#ORE, the 6ecision of the Court of Appeals dated August )/, //' is hereb#ADD"RME6. %he petition for revie! is hereb# 6EN"E6 6:E C$:R*E for lac+ of erit.

SO ORERE.Re%alado =Chairman8, +elo, Puno, and +endo*a, ((., concur.


*EC$N6 6";"*"$N

G.R. No. L-999 A;+ 24, 1984

SPOUSES SAL$ACON SERRANO LAANGA &'( AGUSTN S. LAANGA, petitioners,vs.COURT O# APPEALS &'( )ERNARO S. ASENETA, & G&r(i&' oD +5 'op+'+ CLEMENCAA. ASENETA, respondents.

5enusto P. rance and #m&rosia Padilla, +empia, Reyes 60uide* Law Office for petitioners.

#%rava, Lucero Gineta for private respondents.

AUNO, J.:

Appeals <affiring the decision of the Manila Court of Dirst "nstance=, declaring void the sale to *alvacionb# her aunt, Cleencia A. Aseneta, of the ((3s2uare3eter lot !ith a house located at )&? *ison*treet, Paco, Manila for non3pa#ent of the price of P)(,000. "t ordered the register of deeds of Manila toissue a ne! title to Cleencia.

%he said spouses !ere further ordered to pa# to Cleencias estate P),000 as oral and e7eplar#daages and attorne#s fees and to render to Bernardo an accounting of the rentals of the propert# froApril (, /1'.

%he Appellate Court and Judge Jose C. Cola#co found that Cleencia, a spinster !ho retired as divisionsuperintendent of public schools at (- in /(, had a nephe! naed Bernardo *. Aseneta, the child of her sister >loria, and a niece naed *alvacion, the daughter of her sister Dlora. *he legall# adoptedBernardo in /( <E7h. B=.

$n a single date, April (, /1' <!hen Cleencia !as about 1? #ears old=, she signed nine deeds of salein favor of Salvacion for various real properties. $ne deed of sale concerned the said Paco propert#<adinistered b# the adanga spouses= !hich purportedl# !as sold to *alvacion for P)(,000 <E7h. C=.%he total price involved in the nine deeds of sale and in the tenth sale e7ecuted on Noveber ?, /1'!as P/),)00.

$n the !itness stand, Cleencia denied having 4received even one centavo4 of the price of P)(,000 <-,(, &) tsn August (, /1(=, uch less the P/),000. *he considered the allegation that she received theprice as a he, e7claiing on the !itness stand8 4*usar#osepH P/),000H4 <-, )?3&0 tsn August (,/1(=. %his testion# !as corroborated b# *oledad . Maninang, (/, a dentist !ith !ho Cleencia hadlived for ore than thirt# #ears in Oauning, 9uezon Cit#.

%he notar# testified that the deed of sale for the Paco propert# !as signed in the office of the 9uezon Cit#

registr# of deeds. e did not see *alvacion giving an# one# to Cleencia.

"n Ma#, /1-, Bernardo as guardian of Cleencia, filed an action for reconve#ance of the Paco propert#,accounting of the rentals and daages. Cleencia !as not entall# incopetent but she !as placedunder guardianship because she !as an eas# pre# for e7ploitation and deceit.

Parentheticall#, it should be stated that she died on Ma# ), /11 at the age of ?0. *he allegedl#be2ueathed her properties in a holographic !ill dated ovem&er 2N, 1QN to 6octor Maninang. "n that !illshe disinherited Bernardo. %he !ill !as presented for probate <E7h. ))3A and ))3C=.

%he testate case !as consolidated !ith the intestate proceedin% filed b# Bernardo in the sala of JudgeRicardo . Pronove at Pasig, Rizal. e disissed the testate case. e appointed Bernardo as adinistratorin the intestate case <p. )&, Bernardos brief=.

As alread# stated, in the instant case, the trial court and the Appellate Court declared void the sale of thePaco propert#. %he adanga spouses contend that the Appellate Court disregarded the rule on burden of proof. %his contention is devoid of erit because Cleencia herself testified that the price of P)(,000 !asnot paid to her. %he burden of the evidence shifted to the adanga spouses. %he# !ere not able to provethe pa#ent of that aount. %he sale !as fictitious.

%he adanga spouses argue that the Appellate Court erred in not considering that inade2uac# of pricea# indicate a donation or soe other contract5 in disregarding the presuption that the sale !as fairand regular and for a sufficient consideration5 in overloo+ing iportant facts and in not holding thatBernardo had no right to file a coplaint to annul the sale.

As a rule, onl# iportant legal issues, as conteplated in section ', Rule '- of the Rules of Court, a# beraised in a revie! of the Appellate Courts decision. %his case does not fall !ithin an# of the e7ceptions tothat rule <) Morans Coents on the Rules of Court, /1/ Ed. p. '1-5 Raos vs. Pepsi3Cola BottlingCo., )- Phil. 10=.

%he 2uestions ventilated b# the adangas in their briefs and in their coent of April &, /?' a# bereduced to the issue of the validit# of the sale !hich the vendor Cleencia herself assailed in her

testion# on August ( and 6eceber &, /1( !hen she !as eight# #ears old. er testion# and that of the notar# leave no doubt that the price of P)( 000 !as never paid

%he records sho! the follo!ing factual antecedents8









the notar# leave no doubt that the price of P)(,000 !as never paid.

A contract of sale is void and produces no effect !hatsoever !here the price, !hich appears therein aspaid, has in fact never been paid b# the purchaser to the vendor <Meneses ;da. de Catindig vs. eirs of Catalina Ro2ue, 3)-111, Noveber )(, /1(, 1' *CRA ?&, ??5 Mapalo vs. Mapalo, )& Phil. /1/, /?15*#llabus, $ceo, Perez Co. vs. Dlores and Bas, '0 Phil. /)=.

*uch a sale is ine7istent and cannot be considered consuated <Borroeo vs. Borroeo, /? Phil. '&)5Cruzado vs. Bustos and Escaler, &' Phil. 15 >aranciang vs. >aranciang, 3))&-, Ma# ), /(/, )? *CRA))/=.

"t !as not sho!n that Cleencia intended to donate the Paco propert# to the adangas. er testion#

and the notar#s testion# destro#ed an# presuption that the sale !as fair and regular and for a trueconsideration.

Judge Cola#co concluded that the adangas abused Cleencias confidence and defrauded her of properties !ith a ar+et value of P&/&,--/.)- !hen she !as alread# 1? #ears old.

%he contention that Bernardo had no right to institute the instant action because he !as not a copulsor#heir of Cleencia cannot be sustained. Bernardo !as Cleencias adopted son. Moreover, Cleencia, b#testif#ing in this case, tacitl# approved the action brought in her behalf.

But the oral daages a!arded b# the trial court is not sanctioned b# articles ))1 to )))0 of the CivilCode. Cleencias o!n signature in the deed brought about the ess !ithin !hich she !as entangled.

ERED$RE, the udgent of the Appellate Court is affired !ith the odification that the adudication

for oral and e7eplar# daages is discarded. No costs.

*$ $R6ERE6.

Concepcion, (r., Guerrero, 6scolin and Cuevas, ((., concur.

+aasiar, (., =Chairman8 and #&ad Santos, ((., too no part.

*EC$N6 6";"*"$N

BG.R. No. 109410. A;+ 28, 1996

CLARA M. )ALAT)AT, petitioner, vs. COURT O# APPEALS &'( Spo *OSE REPU"AN &'(AURORA REPU"AN, respondents.

E C S O N

TORRES, *R., J .

Petitioner Clara M. Balatbat instituted this petition for revie! pursuant to Rule '- of the RevisedRules of Court see+ing to set aside the decision dated August ), //) of the respondent Court of Appeals in CA3>.R. C; No. )///' entitled SAleandro Balatbat and Clara Balatbat, plaintiffs3appellants, versus Jose Repu#an and Aurora Repu#an, defendants3appellees,T the dispositive portion of !hich reads8Q

SERED$RE, the udgent appealed fro is affired !ith the odification that the a!ards of P0,000.00 for attorne#Vs fees and P-,000.00 as costs of litigation are deleted.

*$ $R6ERE6.T

"t appears that on June -, /11, Aurelio A. Ro2ue filed a coplaint for partition doc+eted as CivilCase No. 0/0&) against Corazon Ro2ue, Alberto de los *antos, Deliciano Ro2ue, *evera Ro2ue and$sundo Ro2ue before the then Court of Dirst "nstance of Manila, Branch "K. )Q 6efendants therein !eredeclared in default and plaintiff presented evidence e;!parte. $n March )/, /1/, the trial court rendereda decision in favor of plaintiff Aurelio A. Ro2ue, the pertinent portion of !hich reads8&Q

SDro the evidence, it has been clearl# established that the lot in 2uestion covered b# %ransfer Certificateof %itle No. -&&0 !as ac2uired b# plaintiff Aurelio Ro2ue and Maria Mesina during their conugal unionand the house constructed thereon !as li+e!ise built during their arital union. $ut of their union,plaintiff and Maria Mesina had four children, !ho are the defendants in this case. hen Maria Mesinadied on August )?, /((, the onl# conugal properties left are the house and lot above stated of !hichplaintiff herein, as the legal spouse, is entitled to one3half share pro!indiviso thereof. ith respect to theone3half share pro!indiviso no! foring the estate of Maria Mesina, plaintiff and the four children, thedefendants here, are each entitled to one3fifth <L-= share pro!indiviso. %he deceased !ife left no debt.

herefore, udgent is hereb# rendered ordering the partition of the properties, subect atter of thiscase consisting of the house and lot, in the follo!ing anner8

. $f the house and lot foring the conugal properties, plaintiff is entitled to one3half share pro!indiviso thereof !hile the other half fors the estate of the deceased Maria Mesina5

). $f the Estate of deceased Maria Mesina, the sae is to be divided into five <-= shares and plaintiff andhis four children are entitled each to one3fifth share thereof pro!indiviso.

Plaintiff clai for oral, e7eplar# and actual daages and attorne#Vs fees not having been establishedto the satisfaction of the Court, the sae is hereb# denied.

ithout pronounceent as to costs.

*$ $R6ERE6.T

$n June ), /1/, the decision becae final and e7ecutor#. %he corresponding entr# of udgent!as ade on March )/, /1/. 'Q

$n $ctober -, /1/, the Register of 6eeds of Manila issued a %ransfer Certificate of %itle No.&-(1 in the nae of the follo!ing persons in the follo!ing proportions8 -Q

Aurelio A. Ro2ue (L0 share

*everina M. Ro2ue L0 share

$sundo M. Ro2ue L0 share

Deliciano M. Ro2ue L0 share

Corazon M. Ro2ue L0 share

$n April , /?0, Aurelio A. Ro2ue sold his (L0 share in %.C.%. No. &-(1 to spouses Aurora%uazon3Repu#an and Jose Repu#an as evidenced b# a S6eed of Absolute *ale.T (Q

$n Jul# ), /?0, Aurora %uazon Repu#an caused the annotation of her affidavit of adverseclai1Q on the %ransfer Certificate of %itle No. &-(1,?Q to !it8

SEntr# No. -()1L%3&-(1 3 N$%"CE $D A6;ER*E CA"M 3 Diled b# Aurora %uazon Repu#an, arried,

claiing aong others that she bought (L0 portion of the propert# herein described fro Aurelio Ro2uefor the aount of P-0,000.00 !ith a do!n pa#ent of P-,000.00 and the balance of P'-,000.00 to bepaid after the partition and subdivision of the propert# herein described, other clais set forth in 6oc. No./-', page ?, Boo+ /' of [[[[[[[[[[[[[[[[[[[[[ (' [[[[[[[[PE6R$ 6E CA*%R$, Notar# Public of Manila.

6ate of instruent 3 Jul# ), /?0 has the effect of being the la! bet!een the parties and should be coplied !ith. %he obligation of theplaintiff under the contract being to have the land covered b# %C% No &-(1 partitioned and subdivided

http://sc.judiciary.gov.ph/jurisprudence/1996/aug1996/109410.htm#_edn1




















6ate of inscription3 Jul# ), /?0 at &8&- p..

%ERE*"%A . N$BEJA*

Acting Register of 6eeds

B#8

RAM$N 6. MACAR"CAN

Acting *econd 6eput#T

$n August )0, /?0, Aurelio A. Ro2ue filed a coplaint for SRescission of ContractT doc+eted asCivil Case No. &'& against spouses Aurora %uazon3Repu#an and Jose Repu#an before Branch "; of thethen Court of Dirst "nstance of Manila. %he coplaint is grounded on spouses Repu#anVs failure to pa# thebalance of P'-,000.00 of the purchase price./Q $n *epteber -, /?0, spouses Repu#an filed theirans!er !ith counterclai.0Q

"n the eantie, the trial court issued an order in Civil Case No. 0/0&) <Partition case= datedDebruar# ), /?), to !it8Q

S"n vie! of all the foregoing and finding that the aount of P00,000.00 as purchase price for the sale of the parcel of land covered b# %C% No. -&&0 of the Registr# of 6eeds of Manila consisting of ?' s2uareeters situated in Calleon *ulu, 6istrict of *anta Cruz, Manila, to be reasonable and fair, and consideringthe opportunities given defendants to sign the deed of absolute sale voluntaril#, the Court has no

alternative but to order, as it hereb# orders, the 6eput# Cler+ of this Court to sign the deed of absolutesale for and in behalf of defendants pursuant to *ec. 0, Rule &/ of the Rules of Court, in order to effectthe partition of the propert# involved in this case.

*$ $R6ERE6.T

A deed of absolute sale !as e7ecuted on Debruar# ', /?) bet!een Aurelio *. Ro2ue, Corazon Ro2ue,Deliciano Ro2ue, *evera Ro2ue and $sundo Ro2ue and Clara Balatbat, arried to Aleandro Balatbat.)Q$n April ', /?), Clara Balatbat filed a otion for the issuance of a !rit of possession !hich !asgranted b# the trial court on *epteber ', /?) Ssubect, ho!ever, to valid rights and interest of thirdpersons over the sae portion thereof, other than vendor or an# other person or persons priv# to orclaiing an# rights or interest under it.T %he corresponding !rit of possession !as issued on *epteber)0, /?).&Q

$n Ma# )0, /?), petitioner Clara Balatbat filed a otion to intervene in Civil Case No.&'&'Q !hich !as granted as per courtVs resolution of $ctober ), /?). -Q o!ever, Clara Balatbat

failed to file her coplaint in intervention.(Q

$n April -, /?(, the trial court rendered a decisiondisissing the coplaint, the pertinent portion of !hich reads81Q

S%he rescission of contracts are provided for in the la!s and no!here in the provision of the Civil Codeunder the title Rescissible Contracts does the circustances in the case at bar appear to have occurred,hence, the pra#er for rescission is outside the abit for !hich rescissible sicQ could be granted.

S%he "ntervenor 3 Plaintiff, Clara Balatbat, although allo!ed to intervene, did not file her coplaint inintervention.

SConse2uentl#, the plaintiff having failed to prove !ith sufficient preponderance his action, the relief pra#ed for had to be denied. %he contract of sale denoinated as S6eed of Absolute *aleT <E7h. 1 andsub3ar+ings= being valid and enforceable, the sae pursuant to the provisions of Art. -/ of the CivilCode !hich sa#s8

S$bligations arising fro contracts have the force of la! bet!een the contracting parties and should becoplied !ith in good faith.T

plaintiff under the contract being to have the land covered b# %C% No. &-(1 partitioned and subdivided,and title issued in the nae of the defendant bu#er <see page ) par. C of E7h. 13A= plaintiff had to copl#thereto to give effect to the contract.

SERED$RE, udgent is rendered against the plaintiff, Aurelio A. Ro2ue, and the plaintiff inintervention, Clara Balatbat, and in favor of the defendants, disissing the coplaint for lac+ of erit,and declaring the 6eed of Absolute *ale dated April , /?0 as valid and enforceable and the plaintiff is,as he is hereb# ordered, to partition and subdivide the land covered b# %.C.%. No. &-(1, and toaggregate therefro a portion e2uivalent to (L0 thereof, and cause the sae to be titled in the nae of the defendants, and after !hich, the defendants to pa# the plaintiff the su of P'-,000.00. Consideringfurther that the defendants suffered daages since the# !ere forced to litigate unnecessaril#, b# !a# of their counterclai, plaintiff is hereb# ordered to pa# defendants the su of P-,000.00 as oraldaages, attorne#Vs fees in the aount of P-,000.00.

Costs against plaintiff.

*$ $R6ERE6.T

$n March &, /?1, petitioner Balatbat filed a notice of lis pendens in Civil Case No. 0/0&) beforethe Register of 6eeds of Manila.?Q

$n 6eceber /, /??, petitioner Clara Balatbat and her husband, Aleandro Balatbat filed theinstant coplaint for deliver# of the o!ners duplicate cop# of %.C.%. No. &-(1 doc+eted as Civil CaseNo. ??3'11( before Branch )' of the Regional %rial Court of Manila against private respondents JoseRepu#an and Aurora Repu#an./Q

$n Januar# )1, /?/, private respondents filed their ans!er !ith affirative defenses andcopulsor# counterclai.)0Q

$n Noveber &, /?/, private respondents filed their eorandu )Q !hile petitioners filed theireorandu on Noveber )&, /?/.))Q

$n August ), //0, the Regional %rial Court of Manila, Branch )', rendered a decision disissingthe coplaint, the dispositive portion of !hich reads8)&Q

SConsidering all the foregoing, this Court finds that the plaintiffs have not been able to establish theircause of action against the defendants and have no right to the reliefs deanded in the coplaint andthe coplaint of the plaintiff against the defendants is hereb# 6"*M"**E6. $n the counterclai, theplaintiff are ordered to pa# defendants the aount of %en %housand Pesos b# !a# of attorne#Vs fees, Dive%housand Pesos as costs of litigation and further to pa# the costs of the suit.

*$ $R6ERE6.T

6issatisfied, petitioner Balatbat filed on appeal before the respondent Court of Appeals !hich

rendered the assailed decision on August ), //), to !it8

)'Q

SERED$RE, the udgent appealed fro is affired !ith the odification that the a!ards of P0,000.00 for attorne#Vs fees and P-,000.00 as costs of litigation are deleted.

*$ $R6ERE6.T

$n March )), //&, the respondent Court of Appeals denied petitionerVs otion for reconsideration.)-Q

ence, this petition for revie!.

Petitioner raised the follo!ing issues for this CourtVs resolution8

E%ER $R N$% %E AE>E6 *AE %$ %E PR";A%E RE*P$N6EN%* A* MEREF EKEC:%$RF AN6N$% A C$N*:MMA%E6 %RAN*AC%"$NG

E%ER $R N$% %ERE A* A 6$:BE *AE A* C$N%EMPA%E6 :N6ER AR%. -'' $D %E C";"C$6EG

S*hould it be ovable propert#, the o!nership shall belong to the person ac2uiring it !ho in good faithfirst recorded it in the Registr# of Propert#.










































C$6EG

E%ER $R N$% PE%"%"$NER A* A B:FER "N >$$6 DA"% AN6 D$R ;A:EG

$

E%ER $R N$% %E C$:R% $D APPEA* ERRE6 "N >";"N> E">% AN6 C$N*"6ERA%"$N %$ %EE;"6ENCE $D %E PR";A%E RE*P$N6EN%* "C ERE N$% $DDERE6G

Petitioner asseverates that the respondent Court of Appeals coitted grave abuse of discretiontantaount to lac+ or e7cess of urisdiction in affiring the appealed udgent considering <= that the

alleged sale in favor of the private respondents Repu#an !as erel# e7ecutor#5 <)= that there is nodouble sale5 <&= that petitioner is a bu#er in good faith and for value5 and <'= that private respondentsdid not offer their evidence during the trial.

Contrar# to petitionerVs contention that the sale dated April , /?0 in favor of private respondentsRepu#an !as erel# e7ecutor# for the reason that there !as no deliver# of the subect propert# and thatconsiderationLprice !as not full# paid, !e find the sale as consuated, hence, valid and enforceable. "na decision dated April -, /?( of the Regional %rial Court of Manila, Branch "; in Civil Case No. &'&,the Court disissed vendorVs Aurelio Ro2ue coplaint for rescission of the deed of sale and declared thatthe sale dated April , /?0, as valid and enforceable. No appeal having been ade, the decision becaefinal and e7ecutor#. "t ust be noted that herein petitioner Balatbat filed a otion for intervention in thatcase but did not file her coplaint in intervention. "n that case !herein Aurelio Ro2ue sought to rescindthe April , /?0 deed of sale in favor of the private respondents for non3pa#ent of the P'-,000.00balance, the trial court disissed the coplaint for rescision. E7aining the ters and conditions of the S6eed of *aleT dated April , /?0, the P'-,000.00 balance is pa#able onl# Safter the propert# covered b#%.C.%. No. &-(1 has been partitioned and subdivided, and title issued in the nae of the B:FERT hence,vendor Ro2ue cannot deand pa#ent of the balance unless and until the propert# has been subdivided

and titled in the nae of the private respondents. 6evoid of an# stipulation that So!nership in the thingshall not pass to the purchaser until he has full# paid the price,T )(Q o!nership in the thing shall pass frothe vendor to the vendee upon actual or constructive deliver# of the thing sold even if the purchase pricehas not #et been full# paid. %he failure of the bu#er to a+e good the price does not, in la!, cause theo!nership to revest to the seller unless the bilateral contract of sale is first rescinded or resolvedpursuant to Article / of the Ne! Civil Code. )1Q Non3pa#ent onl# creates a right to deand thefulfillent of the obligation or to rescind the contract.

ith respect to the non3deliver# of the possession of the subect propert# to the privaterespondent, suffice it to sa# that o!nership of the thing sold is ac2uired onl# fro the tie of deliver#thereof, either actual or constructive. )?Q Article '/? of the Civil Code provides that 3 !hen the sale isade through a public instruent, the e7ecution thereof shall be e2uivalent to the deliver# of the thing!hich is the obect of the contract, if fro the deed the contrar# does not appear or cannot be inferred.)/Q %he e7ecution of the public instruent, !ithout actual deliver# of the thing, transfers the o!nershipfro the vendor to the vendee, !ho a# thereafter e7ercise the rights of an o!ner over the sae. &0Q "nthe instant case, vendor Ro2ue delivered the o!nerVs certificate of title to herein private respondent. "t is

not necessar# that vendee be ph#sicall# present at ever# s2uare inch of the land bought b# hi,possession of the public instruent of the land is sufficient to accord hi the rights of o!nership. %hus,deliver# of a parcel of land a# be done b# placing the vendee in control and possession of the land <real=or b# ebod#ing the sale in a public instruent <constructive=. %he provision of Article &-? on thenecessit# of a public docuent is onl# for convenience, not for validit# or enforceabilit#. "t is not are2uireent for the validit# of a contract of sale of a parcel of land that this be ebodied in a publicinstruent.&Q

A contract of sale being consensual, it is perfected b# the ere consent of the parties.&)Q 6eliver# of the thing brought or pa#ent of the price is not necessar# for the perfection of the contract5 and failureof the vendee to pa# the price after the e7ecution of the contract does not a+e the sale null and void forlac+ of consideration but results at ost in default on the part of the vendee, for !hich the vendor a#e7ercise his legal reedies.&&Q

Article -'' of the Ne! Civil Code provides8

S"f the sae thing should have been sold to different vendees, the o!nership shall be transferred to theperson !ho a# have first ta+en possession thereof in good faith, if it should be ovable propert#.

first recorded it in the Registr# of Propert#.

S*hould there be no inscription, the o!nership shall pertain to the person !ho in good faith !as first inthe possession and in the absence thereof, to the person !ho present the oldest title, provided there isgood faith.T

Article -'' of the Civil Code provides that in case of double sale of an iovable propert#,o!nership shall be transferred <= to the person ac2uiring it !ho in good faith first recorded it in theRegistr# of Propert#5 <)= in default thereof, to the person !ho in good faith !as first in possession5 and<&= in default thereof, to the person !ho presents the oldest title, provided there is good faith. &'Q

"n the case at bar, vendor Aurelio Ro2ue sold (L0 portion of his share in %C% No. &-(1 to privaterespondents Repu#an on April , /?0. *ubse2uentl#, the sae lot !as sold again b# vendor AurelioRo2ue <(L0= and his children <'L0=, represented b# the Cler+ of Court pursuant to *ection 0, Rule &/of the Rules of Court, on Debruar# ', /?). :ndoubtedl#, this is a case of double sale conteplatedunder Article -'' of the Ne! Civil Code.

%his is an instance of a double sale of an iovable propert# hence, the o!nership shall vests inthe person ac2uiring it !ho in good faith first recorded it in the Registr# of Propert#. Evidentl#, privaterespondents Repu#anVs caused the annotation of an adverse clai on the title of the subect propert#denoinated as Entr# No. -()1L%3&-(1 on Jul# ), /?0.&-Q %he annotation of the adverse clai on%C% No. &-(1 in the Registr# of Propert# is sufficient copliance as andated b# la! and serves noticeto the !hole !orld.

$n the other hand, petitioner filed a notice of lis pendens onl# on Debruar# ), /?). Accordingl#,private respondents !ho first caused the annotation of the adverse clai in good faith shall have a betterright over herein petitioner. Moreover, the ph#sical possession of herein petitioners b# virtue of a !rit of possession issued b# the trial court on *epteber )0, /?) is Ssubect to the valid rights and interest of third persons over the sae portion thereof, other than vendor or an# other person or persons priv# to orclaiing an# rights to interest under it.T &(Q As bet!een t!o purchasers, the one !ho has registered the

sale in his favor, has a preferred right over the other !ho has not registered his title even if the latter is inactual possession of the iovable propert#.&1Q Durther, even in default of the first registrant or first inpossession, private respondents have presented the oldest title.&?Q %hus, private respondents !hoac2uired the subect propert# in good faith and for valuable consideration established a superior right asagainst the petitioner.

Evidentl#, petitioner cannot be considered as a bu#er in good faith. "n the coplaint for rescissionfiled b# vendor Aurelio Ro2ue on August )0, /?0, herein petitioner filed a otion for intervention on Ma#)0, /?) but did not file her coplaint in intervention, hence, the decision !as rendered adversel#against her. "f petitioner did investigate before bu#ing the land on Debruar# ', /?), she should have+no!n that there !as a pending case and an annotation of adverse clai !as ade in the title of thepropert# before the Register of 6eeds and she could have discovered that the subect propert# !asalread# sold to the private respondents. "t is incubent upon the vendee of the propert# to as+ for thedeliver# of the o!nerVs duplicate cop# of the title fro the vendor. A purchaser of a valued piece of propert# cannot ust close his e#es to facts !hich should put a reasonable an upon his guard and thenclai that he acted in good faith and under the belief that there !ere no defect in the title of the vendor.&/Q $ne !ho purchases real estate !ith +no!ledge of a defect or lac+ of title in his vendor cannot clai

that he has ac2uired title thereto in good faith as against the true o!ner of the land or of an interesttherein5 and the sae rule ust be applied to one !ho has +no!ledge of facts !hich should have put hiupon such in2uir# and investigation as ight be necessar# to ac2uaint hi !ith the defects in the title of his vendor. >ood faith, or the !ant of it is not a visible, tangible fact that can be seen or touched, butrather a state or condition of ind !hich can onl# be udged of b# actual or fancied to+ens or signs. '0Q

"n fine, petitioner had nobod# to blae but herself in dealing !ith the disputed propert# for failureto in2uire or discover a fla! in the title to the propert#, thus, it is a7ioatic that 3 culpa lata doloae0uiparatur 3 gross negligence is e2uivalent to intentional !rong.

N $E O# T%E #OREGONG PREMSES, this petition for revie! is hereb# 6"*M"**E6 for lac+of erit. No pronounceent as to costs.

T S SO ORERE.Re%alado =Chairman8, Romero, Puno, and +endo*a, ((., concur.

%"R6 6";"*"$N

BG.R. No. 119777. O+o/r 23, 1997

T%E %ERS O# PERO ESCANLAR, #RANCSCO %OLGAO &'( +5 SPOUSES R. EN A.

*A"ME &'( ELSA TAN-*A"ME , petitioners, vs. T%E %ON. COURT O# APPEALS,

SEREA*, at the tie of the signing of the Contract, ;EN6EE* has <sic= onl# D"D%F %$:*AN6<P-0,000.00= Pesos available thereof, and !as not able to secure the entire aount5










































, p , ,GENEROSA MARTNE!, CARMEN CAR-AN, ROOL#O CAR-AN, NELL" C%UA CAR-AN,

Dor 5rlD &'( & ;&r(i&' ad lite& oD 5r i'or o', LEONELL C. CAR-AN,#RESMNA CAR-AN, +5 SPOUSES PAUTO C%UA &'( NE" SARROSA-C%UA &'(T%E REGSTER O# EES O# NEGROS OCCENTAL,respondents.

BG.R. No. 120690. O+o/r 23, 1997

#RANCSCO %OLGAO &'( %RS. O# PERO ESCANLAR, '&l )ERNARO, #EL", SONA, LL",

"ESE)EL &'( NOEM &ll r'&( ESCANLAR, petitioners, vs. %ON. COURT O#APPEALS, GENEROSA MARTNE!, CARMEN CAR-AN, ROOL#O CAR-AN, NELL" C%UA

CAR-AN, Dor 5rlD &'( & ;&r(i&' ad lite& oD 5r i'or o', LEONELL C. CAR-AN&'( #RESMNA CAR-AN, &'( SP. PAUTO C%UA &'( NE" SARROSA C%UA &'(REGSTER O# EES O# NEGROS OCCENTAL,respondents.

E C S ON

ROMERO, J .

Before us are consolidated petitions for revie! of the decision of the Court of Appeals in CA3>.R. C;No. &//1- !hich affired the trial courtVs pronounceent that the deed of sale of rights, interests andparticipation in favor of petitioners is null and void.

%he case arose fro the follo!ing facts8

*pouses >uillero Nobre and ;ictoriana Cari3an died !ithout issue in /)' and /&?,

respectivel#. NobreVs heirs include his nephe!s and grandnephe!s. ;ictoriana Cari3an !as succeededb# her late brotherVs son, >regorio Cari3an. %he latter !as declared as ;ictorianaVs heir in the estateproceedings for Nobre and his !ife <*pecial Proceeding No 131)1/=. Q After >regorio died in /1, his!ife, >enerosa Martinez, and children, Rodolfo, Caren, eonardo and Dredisinda, all surnaed Cari3an, !ere also adudged as heirs b# representation to ;ictorianaVs estate. )Q eonardo Cari3an passed a!a#,leaving his !ido!, Nell# Chua vda. de Cari3an and inor son eonell, as his heirs.

%!o parcels of land, denoinated as ot No. (( and (1 of the Oaban+alan Cadastre !ith an area of )/,&-0 s2uare eters and '(0,/'? s2uare eters, respectivel#, fored part of the estate of Nobreand Cari3an.

$n *epteber -, /1?, >regorio Cari3anVs heirs, herein collectivel# referred to as privaterespondents Cari3an, e7ecuted the 6eed of *ale of Rights, "nterests and Participation !orded as follo!s8

SN$, %ERED$RE, for and in consideration of the su of %$ :N6RE6 *E;EN%F3D";E %$:*AN6<P)1-,000.00= Pesos, Philippine Currenc#, to be paid b# the ;EN6EE* to the ;EN6$R*, e7cept the shareof the inor child of eonardo Cari3an, !hich should be deposited !ith the Municipal %reasurer of iaa#lan, Province of Negros $ccidental, b# the order of the Court of Dirst "nstance of Negros$ccidental, Branch ;", iaa#lan, b# those presents, do hereb# *E, CE6E, %RAN*DER and C$N;EFb# !a# of AB*$:%E *AE, all the R">%*, "N%ERE*%* and PAR%"C"PA%"$N of the ;endors as to the one3half <L)= portion pro3indiviso of ots Nos. (( and (1 <Dishpond=, of the Oaban+alan Cadastre,pertaining to the one3half <L)= portion pro3indiviso of the late ;ictoriana Cari3an unto and in favor of the;endees, their heirs, successors and assigns5

7 7 7 7 7 7 7 7 7

%hat this Contract of *ale of rights, interests and participations shall becoe effective onl# upon theapproval b# the onorable Court of Dirst "nstance of Negros $ccidental, Branch ;"3 iaa#lan.T <:nderscoring supplied.=

Pedro Escanlar and Drancisco olgado, the vendees, !ere concurrentl# the lessees of the lotsreferred to above.&Q %he# stipulated that the balance of the purchase price <P))-,000.00= shall be paid onor before Ma# /1/ in a 6eed of Agreeent e7ecuted b# the parties on the sae da#8

< , = , 5

EREA*, the ;endors and one of the ;endees b# the nae of Pedro Escanlar are relatives, and absolutefaith and trust e7ist bet!een the, !herein during econoic crisis, has not failed to give onetar#succor to the ;endors5

EREA*, ;endors herein understood the present scarcit# of securing available each <sic= in the aountstated in the contract5

N$ %ERED$RE, for and in consideration of the su of D"D%F %$:*AN6 <P-0,000.00= Pesos, PhilippineCurrenc#, the balance of %$ :N6RE6 %EN%F D";E %$:*AN6 < P ))-,000.00= Pesos to be paid b# the;endees on or before Ma#, /1/, the ;endors herein, b# these Presents, do hereb# C$ND"RM and ADD"RM

the 6eed of *ale of the Rights, "nterests and Participation dated *epteber -, /1?, over ots Nos.(( and (1 <fishpond= of the Oaban+alan Cadastre in favor of the ;EN6EE*, their heirs and assigns.

%hat pending the coplete pa#ent thereof, ;endees shall not assign, sell, lease, nor ortgage therights, interests and participation thereof5

%hat in the event the ;endees fail andL or oit to pa# the balance of said purchase price on Ma# &, /1/and the cancellation of said Contract of *ale is ade thereb#, the su of D"D%F %$:*AN6 <P-0,000.00=Pesos shall be deeed as daages thereof to ;endors.T <:nderscoring supplied='Q

Petitioners !ere unable to pa# the Cari3an heirsV individual shares, aounting to P--,000.00each, b# the due date. o!ever, said heirs received at least ) installents fro petitioners after Ma#/1/.-QRodolfo Cari3an !as full# paid b# June ), /1/. >enerosa Martinez, Caren Cari3an andDredisinda Cari3an !ere li+e!ise full# copensated for their individual shares, per receipts given inevidence.(Q %he inor eonellVs share !as deposited !ith the Regional %rial Court on *epteber 1, /?).1Q

Being forer lessees, petitioners continued in possession of ot Nos. (( and (1. "nterestingl#,the# continued to pa# rent based on their lease contract. $n *epteber 0, /?, petitioners oved tointervene in the probate proceedings of Nobre and Cari3an as the bu#ers of private respondent Cari3anVsshare in ot Nos. (( and (1. PetitionersV otion for approval of the *epteber -, /1? sale beforethe sae court, filed on Noveber 0, /?, !as opposed b# private respondents Cari3an on Januar# -,/?).?Q

$n *epteber (, /?), the probate court approved a otion filed b# the heirs of Cari3an andNobre to sell their respective shares in the estate. $n *epteber ), /?), private respondents Cari3an, in addition to soe heirs of >uillero Nobre, /Q sold their shares in eight parcels of land includingot Nos. (( and (1 to the spouses Ne# *arrosa Chua and Pa2uito Chua for P,?-0,000.00. $ne!ee+ later, the vendor3heirs, including private respondents Cari3an, filed a otion for approval of sale of hereditar# rights, i.e. the sale ade on *epteber ), /?) to the Chuas.

Private respondents Cari3an instituted this case for cancellation of sale against petitioners <Escanlar

and olgado= on Noveber &, /?).0Q

%he# coplained of petitionersV failure to pa# the balance of thepurchase price b# Ma# &, /1/ and alleged that the# onl# received a total of P&),--.00 in cash andgoods. Petitioners replied that the Cari3ans, having been paid, had no right to resell the subect lots5 thatthe Chuas !ere purchasers in bad faith5 and that the court approval of the sale to the Chuas !as subectto their e7isting clai over said properties.

$n April )0, /?&, petitioners also sold their rights and interests in the subect parcels of land <otNos. (( and (1= to Ed!in Ja#e for P1&-,000.00 Q and turned over possession of both lots to thelatter. %he Ja#es in turn, !ere included in the civil case as fourth3part# defendants.

$n 6eceber &, /?', the probate court approved the *epteber ), /?) sale S!ithout preudiceto !hatever rights, clais and interests over an# of those properties of the estate !hich cannot beproperl# and legall# ventilated and resolved b# the court in the sae intestate proceedings.T )Q %hecertificates of title over the eight lots sold b# the heirs of Nobre and Cari3an !ere later issued in thenae of respondents Ne# *arrosa Chua and Pa2uito Chua.

%he trial court allo!ed a third3part# coplaint against the third3part# defendants Pa2uito and Ne#

Chua on Januar# 1, /?( !here Escanlar and olgado alleged that the Cari3ans conspired !ith the Chuas!hen the# e7ecuted the second sale on *epteber ), /?) and that the latter sale is illegal and of noeffect. Respondents Chua countered that the# did not +no! of the earlier sale of one3half portion of thesubect lots to Escanlar and olgado. Both parties claied daages.&Q

$n April )?, /??, the trial court approved the ChuasV otion to file a fourth3part# coplaintagainst the spouses Ja#e. Respondents Chua alleged that the Ja#es refused to vacate said lots

'= $rdering the defendants Drancisco olgado and Pedro Escanlar and the fourth3part#defendants, spouses 6r. Ed!in Ja#e and Elisa %an Ja#e, to pa# ointl# and severall# the aount of $ne






































g p # p g #despite repeated deands5 and that b# reason of the illegal occupation of ot Nos. (( and (1 b# theJa#es, the# suffered ateriall# fro uncollected rentals.

Mean!hile, the Regional %rial Court of iaa#lan !hich too+ cognizance of *pecial Proceeding No.131)1/ <"ntestate Estate of >uillero Nobre and ;ictoriana Cari3an= had rendered its decision on$ctober &0, /?1.'Q %he probate court concluded that since all the properties of the estate !ere disposedof or sold b# the declared heirs of both spouses, the case is considered terinated and the intestateestate of >uillero Nobre and ;ictoriana Cari3an is closed. %he court held8

SAs regards the various incidents of this case, the Court finds no cogent reason to resolve the since thever# obect of the various incidents in this case is no longer in e7istence, that is to sa#, the properties of the estate of >uillero Nobre and ;ictoriana Cari3an had long been disposed of b# the rightful heirs of >uillero Nobre and ;ictoriana Cari3an. "n this respect, there is no need to resolve the Motion for*ubrogation of Movants Pedro Escanlar and Drancisco olgado to be subrogated to the rights of the heirsof ;ictoriana Cari3an since all the properties of the estate had been transferred and titled to in the naeof spouses Ne# *. Chua and 6r. Pa2uito Chua. *ince the nature of the proceedings in this case issuar#, this Court, being a Probate Court, has no urisdiction to pass upon the validit# or invalidit#of the sale of rights of the declared heirs of >uillero Nobre and ;ictoriana Cari3an to thirdparties. %his issue ust be raised in another action !here it can be properl# ventilated and resolved. 7 77 aving deterined, after e7hausted <sic= and length# hearings, the rightful heirs of >uillero Nobreand ;ictoriana Cari3an, the Court found out that the second issue has becoe oot and acadeicconsidering that there are no ore properties left to be partitioned aong the declared heirs as that hadlong ago been disposed of b# the declared heirs 7 7 7.T <:nderscoring supplied=

%he seinal case at bar !as resolved b# the trial court on 6eceber ?, // in favor of cancellation of the *epteber -, /1? sale. *aid transaction !as nullified because it !as not approvedb# the probate court as re2uired b# the contested deed of sale of rights, interests and participation andbecause the Cari3ans !ere not full# paid. Conse2uentl#, the 6eed of *ale e7ecuted b# the heirs of Nobre and Cari3an in favor of Pa2uito and Ne# Chua, !hich !as approved b# the probate court, !as

upheld. %he dispositive portion of the lo!er courtVs decision reads8

SERED$RE, preises considered, udgent is hereb# rendered as follo!s8

= 6eclaring the follo!ing contracts null and void and of no effect8

a= %he 6eed of *ale, dated *ept. -, /1?, e7ecuted b# the plaintiffs in favor of thedefendants Pedro Escanlar and Drancisco olgado <E7h. SA,T Plaintiffs=

b= %he 6eed of Agreeent, dated *ept. -, /1?, e7ecuted b# the plaintiffs in favor of the defendants, Pedro Escanlar and Drancisco olgado <E7h. SB,T Plaintiffs=

c= %he 6eed of *ale, dated April )0, /?&, e7ecuted b# the defendants in favor of the

fourth3part# defendants, 6r. Ed!in Ja#e and Elisa %an Ja#e

d= %he sale of leasehold rights e7ecuted b# the defendants in favor of the fourth3part#defendants

)= 6eclaring the aount of Dift# %housand Pesos <P-0,000.00= paid b# the defendants to theplaintiffs in connection !ith the *ept. -, /1? deed of sale, as forfeited in favor of the plaintiffs, butordering the plaintiffs to return to the defendants !hatever aounts the# have received fro the latterafter Ma# &, /1/ and the aount of %hirt# Dive %housand %!o undred Eighteen 1-L00<P&-,)?.1-=-Q deposited !ith the %reasurer of iaa#lan, Negros $ccidental, for the inor eonell C.Cari3an 3

&= 6eclaring the deed of sale, dated *epteber )&, /?), e7ecuted b# asaro Nobre, ;ictorioMadalag, 6oingo Capillanos, *ofronio Capillanos, >enerosa ;da. de Martinez, Caren Cari3an,Rodolfo Cari3an, Nell# Chua ;da. de Cari3an, for herself and as guardian ad litem of the inor eonell C.Cari3an, and Dredisinda Cari3an in favor of the third3part# defendants and fourth3part# plaintiffs,spouses 6r. Pa2uito Chua and Ne# *arrosa Chua <E7h. S)T3Chua= as legal, valid and enforceable providedthat the properties covered b# the said deed of sale are subect of the burdens of the estate, if the saehave not been paid #et.

, p # # , p # # #undred %housand Pesos <P00,000.00 as oral daages and the further su of %hirt# %housand Pesos<P&0,000.00= as attorne#Vs fees to the third3part# defendant spouses, 6r. Pa2uito Chua and Ne# *arrosa3Chua.

-= $rdering the fourth3part# defendant spouses, 6r. Ed!in Ja#e and Elisa %an Ja#e, to pa# tothe third3part# defendants and fourth3part# plaintiffs, spouses 6r. Pa2uito Chua and Ne# *arrosa3Chua,the su of $ne undred Dift# *even %housand Pesos <P-1,000.00= as rentals for the riceland and %hreeMillion %!o undred %housand Pesos <P&,)00,000.00= as rentals for the fishpond fro $ctober, /?- toJul# )', /?/ plus the rentals fro the latter date until the propert# shall have been delivered to thespouses 6r. Pa2uito Chua and Ne# *arrosa3Chua5

(= $rdering the defendants and the fourth3part# defendants to iediatel# vacate ots Nos.

(( and (1, Oaban+alan Cadastre5

1= $rdering the defendants and the fourth3part# defendants to pa# costs.

*$ $R6ERE6.T (Q

Petitioners raised the case to the Court of Appeals. 1Q Respondent court affired the decision of thetrial court on Debruar# 1, //- and held that the 2uestioned deed of sale of rights, interests andparticipation is a contract to sell because it shall becoe effective onl# upon approval b# the probatecourt and upon full pa#ent of the purchase price.?Q

PetitionersV otion for reconsideration !as denied b# respondent court on April &, //-. /Q ence,these petitions.)0Q

. e disagree !ith the Court of AppealsV conclusion that the *epteber -, /1? 6eed of *ale of

Rights, "nterests and Participation is a contract to sell and not one of sale.

%he distinction bet!een contracts of sale and contracts to sell !ith reserved title has beenrecognized b# this Court in repeated decisions, according to Justice J.B.. Re#es in uzon Bro+erage Co."nc. v. Maritie Building Co., "nc.,)Q upholding the po!er of proisors under contracts to sell in case of failure of the other part# to coplete pa#ent, to e7traudiciall# terinate the operation of the contract,refuse the conve#ance, and retain the sus of installents alread# received !here such rights aree7pressl# provided for.

"n contracts to sell, o!nership is retained b# the seller and is not to pass until the full pa#ent of the price. *uch pa#ent is a positive suspensive condition, the failure of !hich is not a breach of contract but sipl# an event that prevented the obligation of the vendor to conve# title fro ac2uiringbinding force.))Q %o illustrate, although a deed of conditional sale is denoinated as such, absenta proviso that title to the propert# sold is reserved in the vendor until full pa#ent of the purchase pricenor a stipulation giving the vendor the right to unilaterall# rescind the contract the oent the vendeefails to pa# !ithin a fi7ed period, b# its nature, it shall be declared a deed of absolute sale.)&Q

%he *epteber -, /1? sale of rights, interests and participation as to L) portion pro indiviso of the t!o subect lots is a contract of sale for the follo!ing reasons8 Dirst, private respondents as sellersdid not reserve unto theselves the o!nership of the propert# until full pa#ent of the unpaid balanceof P))-,000.00. *econd, there is no stipulation giving the sellers the right to unilaterall# rescind thecontract the oent the bu#er fails to pa# !ithin the fi7ed period. )'Q Prior to the sale, petitioners !ere inpossession of the subect propert# as lessees. :pon sale to the of the rights, interests and participationas to the L) portion pro indiviso, the# reained in possession, not in concept of lessees an#ore but aso!ners no! through s#bolic deliver# +no!n as traditio &revi manu.)-Q :nder Article '11 of the CivilCode, the o!nership of the thing sold is ac2uired b# the vendee upon actual or constructive deliver#thereof .)(Q

"n a contract of sale, the non3pa#ent of the price is a resolutor# condition !hich e7tinguishes thetransaction that, for a tie, e7isted and discharges the obligations created thereunder. %he reed# of anunpaid seller in a contract of sale is to see+ either specific perforance or rescission. )1Q

). Ne7t to be discussed is the stipulation in the disputed *epteber -, /1? 6eed of *ale of Rights, "nterests and Participation !hich reads8 S<t=his Contract of *ale of rights, interests and

participations shall becoe effective onl# upon the approval b# the onorable Court of Dirst "nstance of Negros $ccidental, Branch ;"3iaa#lan.T Notabl#, the trial court and the Court of Appeals both heldthat the deed of sale is null and void for not having been approved b# the probate court.

%here has arisen here a confusion in the concepts of validit# and the efficac# of a contract. :nderArt. &? of the Civil Code, the essential re2uisites of a contract are8 consent of the contracting parties5

S"n the sale of iovable propert#, even though it a# have been stipulated that upon failure to pa# theprice at the tie agreed upon the rescission of the contract shall of right ta+e place, the vendee a# pa#,








































obect certain !hich is the subect atter of the contract and cause of the obligation !hich isestablished. Absent one of the above, no contract can arise. Conversel#, !here all are present, the resultis a valid contract. o!ever, soe parties introduce various +inds of restrictions or odalities, the lac+ of !hich !ill not, ho!ever, affect the validit# of the contract.

"n the instant case, the 6eed of *ale, copl#ing as it does !ith the essential re2uisites, is a validone. o!ever, it did not bear the stap of approval of the court. %his not!ithstanding, the contractVsvalidit# !as not affected for in the !ords of the stipulation, S . . . this Contract of *ale of rights, interestsand participations shall becoe effective onl# upon the approval b# the onorable Court . . .T "n other!ords, onl# the effectivit# and not the validit# of the contract is affected.

%hen, too, petitioners are correct in sa#ing that the need for approval b# the probate court e7istsonl# !here specific properties of the estate are sold and not !hen onl# ideal and indivisible shares of an

heir are disposed of.

"n the case of 6illena v. Court of Appeals, )?Q the Court declared that it is !ithin the urisdiction of the probate court to approve the sale of properties of a deceased person b# his prospective heirs beforefinal adudication.)/Q "t is settled that court approval is necessar# for the validit# of an# disposition of thedecedentVs estate. o!ever, reference to udicial approval cannot adversel# affect the substantive rightsof the heirs to dispose of their ideal share in the co3heirship andLor co3o!nership aong the heirs. &0Q "tust be recalled that during the period of indivision of a decedentVs estate, each heir, being a co3o!ner,has full o!nership of his part and a# therefore alienate it. &Q But the effect of the alienation !ith respectto the co3o!ners shall be liited to the portion !hich a# be allotted to hi in the division upon theterination of the co3o!nership.&)Q

Dro the foregoing, it is clear that hereditar# rights in an estate can be validl# sold !ithout need of court approval and that !hen private respondents Cari3an sold their rights, interests and participation inot Nos. (( and (1, the# could legall# sell the sae !ithout the approval of the probate court.

As a general rule, the pertinent contractual stipulation <re2uiring court approval= should be

considered as the la! bet!een the parties. o!ever, the presence of t!o factors ilitate against thisconclusion. Dirst, the evident intention of the parties appears to be contrar# to the andator# character of said stipulation.&&Q hoever crafted the docuent of conve#ance, ust have been of the belief that thecontroversial stipulation !as a legal re2uireent for the validit# of the sale. But the conteporaneousand subse2uent acts of the parties reveal that the original obective of the parties !as to give effect tothe deed of sale even !ithout court approval. &'Q Receipt and acceptance of the nuerous installents onthe balance of the purchase price b# the Cari3ans and leaving petitioners in possession of ot Nos. ((and (1 reveal their intention to effect the utual transission of rights and obligations. "t !as onl#after private respondents Cari3an sold their shares in the subect lots again to the spouses Chua, in*epteber /?), that these sae heirs filed the case at bar for the cancellation of the *epteber /1?conve#ance. orth considering too is the fact that although the period to pa# the balance of thepurchase price e7pired in Ma# /1/, the heirs continued to accept pa#ents until late /1/ and did notsee+ udicial relief until late /?) or three #ears later.

*econd, !e hold that the re2uisite approval !as virtuall# rendered ipossible b# the Cari3ansbecause the# opposed the otion for approval of the sale filed b# petitioners &-Q and sued the latter for thecancellation of that sale. %he probate court e7plained8

S<e= hile it is true that Escanlar and olgado filed a siilar otion for the approval of 6eed of *alee7ecuted b# soe of the heirs in their favor concerning the one3half <L)= portions of ots (( and (1as earl# as Noveber 0, /?, #et the Court could not have favorabl# acted upon it, because theree7ists a pending case for the rescission of that contract, instituted b# the vendors therein against PedroEscanlar and Drancisco olgado and filed before another branch of this Court. :ntil no!, this case, !hichattac+s the ver# source of !hatever rights or interests olgado and Escanlar a# have ac2uired overone3half <L)= portions of ots Nos. (( and (1, is pending resolution b# another court. $ther!ise, if this Court eddles on these issues raised in that ordinar# civil action see+ing for the rescission of ane7isting contract, then, the act of this Court !ould be totall# ineffective, as the sae !ould be in e7cessof its urisdiction.T &(Q

aving provided the obstacle and the ustification for the stipulated approval not to be granted,private respondents Cari3an should not be allo!ed to cancel their first transaction !ith petitionersbecause of lac+ of approval b# the probate court, !hich lac+ is of their o!n a+ing.

&. ith respect to rescission of a sale of real propert#, Article -/) of the Civil Code governs8

even after the e7piration of the period, as long as no deand for rescission of the contract has beenade upon hi either udiciall# or b# a notarial act. After the deand, the court a# not grant hi ane! ter.T <:nderscoring added=

"n the instant case, the sellers gave the bu#ers until Ma# /1/ to pa# the balance of the purchaseprice. After the latter failed to pa# installents due, the forer ade no udicial deand for rescission of the contract nor did the# e7ecute an# notarial act deanding the sae, as re2uired under Article-/). Conse2uentl#, the bu#ers could la!full# a+e pa#ents even after the Ma# /1/ deadline, as infact the# paid several installents to the sellers !hich the latter accepted. %hus, upon the e7piration of the period to pa#, the sellers ade no ove to rescind but continued accepting late pa#ents, an act!hich cannot but be construed as a !aiver of the right to rescind. hen the sellers, instead of availing of their right to rescind, accepted and received dela#ed pa#ents of installents be#ond the periodstipulated, and the bu#ers !ere in arrears, the sellers in effect !aived and are no! estopped fro

e7ercising said right to rescind.&1Q

'. %he atter of full pa#ent is another issue ta+en up b# petitioners. An e7haustive revie! of the records of this case ipels us to arrive at a conclusion at variance !ith that of both the trial and theappellate courts.

%he sole !itness in the cancellation of sale case !as private respondent herein Dredisinda Cari3anBustaante. *he initiall# testified that after several installents, she signed a receipt for the fullpa#ent of her share in 6eceber /1/ but denied having actuall# received the P-,000.00 intended tocoplete her share. *he clais that Escanlar and olgado ade her sign the receipt late in theafternoon and proised to give the one# to her the follo!ing orning !hen the ban+s opened. *healso claied that !hile her brother Rodolfo Cari3anVs share had alread# been full# paid, her other>enerosa Martinez onl# received P)?,&&'.00 and her sister3in3la! Nell# Chua vda. de Cari3an receivedonl# P,&&'.00. Dredisinda also sued up all the installents and cae up !ith the totalof P&),--.00 fro the long list on a sheet of a calendar !hich !as transferred fro a sall bro!nnoteboo+. *he later aditted that her list a# not have been coplete for she gave the receipts forinstallents to petitioners Escanlar and olgado. *he thus claied that the# !ere defrauded because

petitioners are !ealth# and private respondents are poor.

o!ever, despite all her clais, DredisindaVs testion# fails to convince this Court that the# !erenot full# copensated b# petitioners. Dredisinda adits that her other and her sister signed theirindividual receipts of full pa#ent on their o!n and not in her presence. &?Q %he receipts presented inevidence sho! that >enerosa Martinez !as paid P'-,()-.005 Caren Cari3an, P'-,()-.005 Rodolfo Cari3an,P'1,-00.00 on June ), /1/5 Nell# Chua vda. de Cari3an, P,&&'.00 and the su of P&',)?.00!as consigned in court for the inor eonell Cari3an. &/Q Dredisinda insists that she signed a receipt forfull pa#ent !ithout receiving the one# therefor and adits that she did not obect to thecoputation. e find it incredible that a ature !oan li+e Dredisinda Cari3an, !ould sign a receiptfor one# she did not receive. Durtherore, her clais regarding the actual aount of the installentspaid to her and her +in are 2uite vague and unsupported b# copetent evidence. *he even adits thatall the receipts !ere ta+en b# petitioner Escanlar.'0Q orth noting too is the absence of supportingtestion# fro her co3heirs and siblings Caren Cari3an, Rodolfo Cari3an and Nell# Chua vda. de Cari3an.

%he trial court reasoned out that petitioners, in continuing to pa# the rent for the parcels of landthe# allegedl# bought, adit not having full# paid the Cari3ans. PetitionersV response, that the# paid rentuntil /?( in copliance !ith their lease contract, onl# proves that the# respected this contract and didnot ta+e undue advantage of the heirs of Nobre and Cari3an !ho benefited fro the lease. Moreover, itis to be stressed that petitioners purchased the hereditar# shares solel# of the Cari3ans and not the entirelot.

%he foregoing discussion ineluctabl# leads us to conclude that the Cari3ans !ere indeed paid thebalance of the purchase price, despite having accepted installents therefor belatedl#. %here is thus noground to rescind the contract of sale because of non3pa#ent.

-. Recapitulating, !e have held that the *epteber -, /1? deed of sale of rights, interests andparticipations is valid and that the sellers3private respondents Cari3an !ere full# paid the contractprice. o!ever, it ust be ephasized that !hat !as sold !as onl# the Cari3anVs hereditar# shares in otNos. (( and (1 being held pro indiviso b# the and is thus a valid conve#ance onl# of said idealshares. *pecific or designated portions of land !ere not involved.

Conse2uentl#, the subse2uent sale of ? parcels of land, including ot Nos. (( and (1, to the

spouses Chua is valid e7cept to the e7tent of !hat !as sold to petitioners in the *epteber -, /1?conve#ance. "t ust be noted ho!ever, that the probate court in *pecial Proceeding No. 131)1/ desistedfro a!arding the individual shares of each heir because all the properties belonging to the estate hadalread# been sold.'Q %hus it is not certain ho! uch private respondents Cari3an !ere entitled to !ithrespect to the t!o lots, or if the# !ere even going to be a!arded shares in said lots.

%he proceedings surrounding the estate of Nobre and Cari3an having attained finalit# for nearl# adecade no!, the sae cannot be re3opened. %he protracted proceedings !hich have undoubtedl# left the

P'-0.00 per ton for the purchase of 00 tons of Pala!an Alaciga fro the Bureau of Prisons5that a contract therefor !as dra!n and b# virtue of !hich, Apostol obtained goods fro the


































propert# under a cloud and the parties involved in a state of uncertaint# copels us to resolve itdefinitivel#.

%he decision of the probate court declares private respondents Cari3an as the sole heirs b#representation of ;ictoriana Cari3an !ho !as indisputabl# entitled to half of the estate.')Q %here being noe7act apportionent of the shares of each heir and no copetent proof that the heirs received une2ualshares in the disposition of the estate, it can be assued that the heirs of ;ictoriana Cari3an collectivel#are entitled to half of each propert# in the estate. More particularl#, private respondents Cari3an areentitled to half of ot Nos. (( and (1, i.e. ',(1- s2uare eters of ot No. (( and )&0,'1' s2uareeters of ot No. (1. Conse2uentl#, petitioners, as their successors3in3interest, o!n said half of thesubect lots and ought to deliver the possession of the other half, as !ell as pa# rents thereon, to theprivate respondents Ne# *arrosa Chua and Pa2uito Chua but onl# if the forer <petitioners= reained inpossession thereof.

%he rate of rental pa#ents to be ade !ere given in evidence b# Ne# *arrosa Chua in herunrebutted testion# on Jul# )', /?/8 Dor the fishpond <ot No. (1= 3 Dro /?) up to /?(, rentalpa#ent ofP&,000.00 per hectare5 fro /?(3/?/ <and succeeding #ears=, rental pa#entof P0,000.00 per hectare. Dor the riceland <ot No. ((= 3 - cavans per hectare per #ear5 fro /?)to /?(, P)-.00 per cavan5 /?13/??, P1-.00 per cavan5 and /?/ and succeeding #ears, P)00.00per cavan.'&Q

%ERE#ORE, the petitions are hereb# >RAN%E6. %he decision of the Court of Appeals underrevie! is hereb# RE;ER*E6 AN6 *E% A*"6E. %he case is REMAN6E6 to the Regional %rial Court of Negros $ccidental, Branch ( for petitioners and private respondents Cari3an or their successors3in3interest to deterine e7actl# !hich L) portion of ot Nos. (( and (1 !ill be o!ned b# each part#, atthe option of petitioners. %he trial court is 6"REC%E6 to order the issuance of the correspondingcertificates of title in the nae of the respective parties and to resolve the atter of rental pa#ents of the land not delivered to the Chua spouses subect to the rates specified above !ith legal interest frodate of deand.

SO ORERE.+elo, rancisco, and Pan%ani&an, ((., concur.arvasa, C.(., =Chairman8, on leave.


EN BANC

G.R. No. L-10141 *&'&r 31, 198

REPU)LC O# T%E P%LPPNES, petitioner,vs.

P%LPPNE RESOURCES E$ELOPMENT CORPORATON &'( +5 COURT O#APPEALS, respondents.

Office of the Solicitor General #m&rosio Padilla, and Solicitor rine C. -a&allero for petitioner.5icente L. Santia%o for respondent Corporation.

PALLA, J.

%his is a petition under Rule '( to revie! a udgent rendered b# the Court of Appeals,in CA3>R No.-1(13R, Philippine Resources 6evelopent Corporation vs. %he on. Judge Magno >ataitan et al.

%he findings of the Court of Appeals are, as follo!s.

"t appears that on Ma# (, /--, the Republic of the Philippines in representation of the Bureauof Prisons instituted against Macario Apostol and the Epire "nsurance Co. a coplaintdoc+eted as Civil Case No. )((( of the Court of Dirst instance of Manila. %he coplaint allegesas the first cause of action, that defendant Apostol subitted the highest bid the aount

Bureau of Prisons valued P-,?1?.-/5 that of said account, Apostol paid onl# P(/.0 leaving abalane obligation of P-,?1.'/. %he coplaint further averes, as second cause of action, thatApostol subitted the best bid !ith the Bureau of Prisons for the purchase of three illionboard feet of logs at P??.00 per ,000 board feet5 that a contract !as e7ecuted bet!een the6irector of Prisons and Apostol pursuant to !hich contract Apostol obtained deliveries of logsvalued at P(-.?&0.00, and that Apostol failed to pa# a balance account $f P?,?)1.-1. All told,for the total deand set forth in coplaint against Apostol is for P&',0-.0( !ith legal intereststhereon fro Januar# ?, /-). %he Epire lnsurance Copan# !as included in the coplainthaving e7ecuted a perforance bond of P0,000.00 in favor of Apostol.

"n his ans!er, Apostol interposed pa#ent as a defense and sought the disissal of thecoplaint.

$n Jul# /, /--, the Philippine Resources 6evelopent Corporation oved to intervene,appending to its otion, the coplaint in the intervention of even date. %he coplaint recitesthat for soetie prior to Apostols transactions the corporate had soe goods deposited in a!arehouse at )0 erran, Manila5 that Apostol, then the president of the corporation but!ithout the +no!ledge or consent of the stoc+holders thereof, disposed of said goods b#delivering the sae to the Bureau of Prisons of in an attept to settle his personal debts !iththe latter entit#5 that upon discover# of Apodols act, the corporation too+ steps to recover saidgoods b# deanding fro the Bureau of Prisons the return thereof5 and that upon the refusalof the Bureau to return said goods, the corporation sought leave to intervene in Civil Case No.)(((.

As aforestated, is onor denied the otion for intervention and thereb# issued an order tothis effect on Jul# )&, /--. A otion for the reconsideration of said order !as filed b# theovant corporation and the sae !as li+e!ise denied b# is onor on August ?, /-- . . .<Anne7 .=.

$n & *epteber /--, in a petition for a !rit of certiorari filed in the Court of Appeals, the hereinrespondent corporation pra#ed for the setting aside of the order of the Court of Dirst "nstance that haddenied the adission of its coplaint3in3intervention and for an order directing the latter Court to allo!the herein respondent corporation to intervene in the action <Anne7 >=. $n ) 6eceber /-- the Courtof Appeals set aside the order den#ing the otion to intervene and ordered the respondent court to aditthe herein respondent corporations coplaint3in3intervention !ith costs against Macario Apostol.

$n / Januar# /-( the Republic of the Philippines filed this petition in this Court for the purpose stated atthe beginning of this opinion.

%he >overent contends that the intervenor has no legal interest in the atter in litigation, because theaction brought in the Court of Dirst "nstance of Manila against Macario Apostol and the Epire "nsuranceCopan# <Civil Case No. )(((, Anne7 A= is ust f or the collection fro the defendant Apostol of a su of

one#, the unpaid balance of the purchase price of logs and alaciga bought b# hi fro the Bureau of Prisons, !hereas the intervenor see+s to recover o!nership and possession of >. ". sheets, blac+ sheets,M. *. plates, round bars and >. ". pipes that it clais its o!ns3an intervention !hich !ould change apersonal action into one ad rem and !ould undul# dela# the disposition of the case.

%he Court of Appeals held that8

Petitioner ardentl# clais that the reason behind its otion to intervene is the desire to protectits rights and interests over soe aterials purportedl# belonging to it5 that said aterial !ereunauthorizedl# and illegall# assigned and delivered to the Bureau of Prisons b# petitioningcorporations president Macario Apostol in pa#ent of the latters personal accounts !ith thesaid entit#5 and that the Bureau of Prisons refused to return said aterials despite petitionersdeands to do so.

Petitioner refers to the particulars recited in Apostols ans!er dated Jul# ), /-- to the effectthat Apostol had paid unto the Bureau of Prisons his accounts covered, aong others, b# BPP$011 for the su of P',(&?.'0 and BPP$ -'/ for the aount of P',&/?.-'. Petitioneroreover, points to the *tate of Paid and :npaid accounts of Apostol dated Januar# (, /-'prepared b# the accounting of officer of the Bureau of Prisons <Anne7 B. Coplaint in

"ntervention=, !herein it appears that the aforeentioned accounts covered respectivel# b#BPP$ Nos. 011 for ?/) pieces of >" sheets and -'/ for &// pieces of >" pipes in the total

f P/ 0&( /' h b di d A l i i f l + f i

resolution to proceed against Apostol, had been unanoniousl# adopted b# the stoc+holders of the corporation, has not been refuted.










su of P/,0&(./' have not been credited to Apostols account in vie! of lac+ of supportingpapers5 and that according to the repl# letter of the :ndersecretar# of Justice, said >" sheetsand pipes !ere delivered b# Macario Apostol to the Bureau of Prisons allegedl# in Apostolscapacit# as o!ner and that the blac+ iron sheets !ere delivered b# Apostol as President of thepetitioner corporation.

Respondents, on the other hand, assert that the subect atter of the original litigation is asu of one# allegedl# due to the Bureau of Prisons fro Macario Apostol and not the goodsor the aterials reportedl# turned over b# Apostol as pa#ent of his private debts to theBureau of Prisons and the recover# of !hich is sought b# the petitioner5 and that for thisreason, petitioner has no legal interest in the ver# subect atter in litigation as to entitle it tointervene.

e find no erit in respondents contention. "t is true that the ver# subect atter of theoriginal case is a su of one#. But it is li+e!ise true as borne out b# the records, that theaterials purportedl# belonging to the petitioner corporation have been assessed and evaluatedand their price e2uivalent in ters of one# have been deterined5 and that said aterials for!hatever price the# have been assigned b# defendant no! respondent Apostol as to+ens of pa#ent of his private debts !ith the Bureau of Prisons. "n vie! of these considerations, itbecoes enorousl# plain in the event the respondent udge decides to credit Macario Apostol!ith the value of the goods delivered b# the latter to the Bureau of Prisons, the petitionercorporation stands to be adversel# affected b# such udgent. %he conclusion, therefore, isinescapable that the petitioner possesses a legal interest in the atter in litigation and thatsuch interest is of an actual, aterial, direct and iediate nature as to entitle petitioner tointervene.

7 7 7 7 7 7 7 7 7

*ection & of Rule & of the Rules of Court endo!s the lo!er Court !ith discretion to allo! ordisapprove the otion for intrvention <*antarroana et al. vs. Barrios, (& Phil. '-(=5 and thatin the e7ercise of such discretion, the court shall consider !hether or not the intervention !illundul# dela# or preudice the adudicatio of the rights of the original parties and !hether or notthe intervenors the rights a# be full# protected in a separate proceeding. %he petitioner in theinstant case positivel# authorized to a separate action against an# of all the respondents. Butconsidering that the resolution of the issues raised in and enoined b# the pleadings in the aincase, !ould virtall# affect the rights not onl# the original parties but also of the bereinpetitioner8 that far fro undul# dela#ing or preudicing the adudication of the rights of theoriginal parties or bringing about confusion in the original case, the adnission of the coplaintin intervention !ould help clarif# the vital issue of the true and real o!nership of the aterialsinvolved, besides preventing an abhorrent unltiplicit# of suit, !e believe that the otion tointervene should be given due to cause.

e find no reason for disturbing the foregoing pronounceents. %he >overnent argues that 4Price . . .is al!a#s paid in ters of one# and the supposed pa#ent beeing in +ind, it is no pa#ent at all, 4citingArticle '-? of the ne! Civil Code. o!ever, the sae Article provides that the purschaser a# pa# 4aprice certain in one# or its e0uivalent ,4 !hich eans that the# eant of the price need not be in one#.hether the >.". sheets, blac+ sheets, M. *. Plates, round bars and >. ". pipes claied b# the respondentcorporation to belong to it and delivered to the Bureau of Prison b# Macario Apostol in pa#ent of hisaccount is sufficient pa#ent therefore, is for the court to pass upon and decide after hearing all theparties in the case. *hould the trial court hold that it is as to credit Apostol !ith the value or price of theaterials delivered b# hi, certainl# the herein respondent corporation !ould be affected adversel# if itsclai of o!nership of such sheets, plates, bars and pipes is true.

%he >overnent reiterates in its original stand that counsel appearing for the respondent corporation hasno authorit# to represent it orLand sue in its behalf, the Court of Appeals held that8

Respondents aver also that petitioner lac+s legal capacit# to sue and that its counsel is actingerel# in an individual capacit# !ithout the benefit of the corporate act authorizing hi tobring sue. "n this connection, respondents invo+ed aong others section )0 of Rule )1 !hichprovision, in our opinion, s2uarel# disproves their clai as b# virtue thereof, the authorit# of petitioners counsel is pressued. ithal, the clai of the counsel for the petitioner that a

Evidentl#, petitioner is a dul# organized corporation !ith offices at the *aanillo Building andthat as such, it is endo!ed !ith a personalit# distinct and separate fro that of its president orstoc+holders. "t has the right to bring suit to safeguard its interests and ordinaril#, such right ise7ercised at the instance of the president. o!ever, under the circustance no! obtaining,such right properl# devolves upon the other officers of the corporations as said right is soughtto be e7ercised against the president hiself !ho is the ver# obect of the intended suit.

%he po!er of a corporation to sue and be sued in an# court is lodged in the board of directors !hiche7ercises it corporater po!ers,) and not in the president, as contended b# the >overnent. %he 4otionfor adission of coplaint in intervention4 <Anne7 C= and the 4coplaint in intervention4 attachedthereto, signed b# counsel and filed in the Court of Dirst "nstance begin !ith the follo!ing stateent8

4C$ME* N$ the above3nae "ntervenor, b# its undersigned counsel, . . . , 4and underneath hist#pe!ritten nae is affi7ed the description4 Counsel for the "ntervenor.4 As counsels authorit# to appealfor the respondent corporation !as ne!er 2uestioned in the Court of Dirst "nstance, it is to be pressuedthat he !as properl# authorized to file the coplaint in intervention and appeal for his client. "t !as onl#in the Court of Appeals !here his authorit# to appear !as 2uestioned. As the Court of Appeals !assatisfied that counsel !as dul# authorized b# his client to file the coplaint does in intervention and toappear in its behalf, hte resolution of the Court of Appeals on this point should not be disturbed.

>ranting that counsel has not been actuall# authorized b# the board of directors to appear for and inbehalf of the respondent corporation, the fact that counsel is the secretar# treasurer of the respondentcorporation and eber of the board of directors5 and that the other ebers of the board, nael#,Macario Apostol, the president, and his !ife Pacita R. Apostol, !ho shuold norall# initiate the action toprotect the corporate properties and in interest are the ones to be adversel# affected thereb#, a singlestoc+holder under such circustances a# sue in behalf of the corporation. ) Counsel as a stoc+holder anddirector of the respondent corporation a# sue in its behalf and file the coplaint in intervention in theproper court.

%he udgent under revie! is affired, !ithout pronounceents as to costs.

"en%*on, Paras, C.(., +ontemayor, Reyes, #., "autista #n%elo, La&rador, Concepcion, Reyes, (.".L.,6ndencia, and eli;, ((., concur.

%"R6 6";"*"$N

BG.R. No. 1349. /r 9, 1999

ANTONA TORRES, &i+( / 5r 5/&'(, ANGELO TORRESI &'( EMETERA)ARNG, petitioners, vs. COURT O# APPEALS &'( MANUEL TORRES, respondents.

E C S O N

PANGAN)AN, J.:

Courts a# not e7tricate parties fro the necessar# conse2uences of their acts. %hat the ters of a contract turn out to be financiall# disadvantageous to the !ill not relieve the of their obligationstherein. %he lac+ of an inventor# of real propert# !ill not ipso facto release the contracting partners frotheir respective obligations to each other arising fro acts e7ecuted in accordance !ith their agreeent.

T5 C&

%he Petition for Revie! on Certiorari before us assails the March -, //? 6ecisionQ *econd

6ivision of the Court of Appeals

)Q

<CA= in CA3>R C; No. ')&1? and its June )-, //? Resolution den#ingreconsideration. %he assailed 6ecision affired the ruling of the Regional %rial Court <R%C= of Cebu Cit#in Civil Case No. R3))0?, !hich disposed as follo!s8

SERED$RE, for all the foregoing considerations, the Court, finding for the defendant and against theplaintiffs, orders the disissal of the plaintiffVs coplaint. %he counterclais of the defendant areli+ i d d di i d N t t t T&Q

Petitioners ipute to the Court of Appeals the follo!ing error8

http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/134559.htm#_edn1









li+e!ise ordered disissed. No pronounceent as to costs.T &Q

T5 #&+

*isters Antonia %orres and Eeteria Baring, herein petitioners, entered into a 4oint ventureagreeent4 !ith Respondent Manuel %orres for the developent of a parcel of land into asubdivision. Pursuant to the contract, the# e7ecuted a 6eed of *ale covering the said parcel of land infavor of respondent, !ho then had it registered in his nae. B# ortgaging the propert#, respondentobtained fro E2uitable Ban+ a loan of P'0,000 !hich, under the Joint ;enture Agreeent, !as to beused for the developent of the subdivision. 'Q All three of the also agreed to share the proceeds frothe sale of the subdivided lots.

%he proect did not push through, and the land !as subse2uentl# foreclosed b# the ban+.

According to petitioners, the proect failed because of SrespondentVs lac+ of funds or eans ands+ills.T %he# add that respondent used the loan not for the developent of the subdivision, but infurtherance of his o!n copan#, :niversal :brella Copan#.

$n the other hand, respondent alleged that he used the loan to ipleent the Agreeent. iththe said aount, he !as able to effect the surve# and the subdivision of the lots. e secured the apuapu Cit# CouncilVs approval of the subdivision proect !hich he advertised in a local ne!spaper. e alsocaused the construction of roads, curbs and gutters. i+e!ise, he entered into a contract !ith anengineering fir for the building of si7t# lo!3cost housing units and actuall# even set up a odel houseon one of the subdivision lots. e did all of these for a total e7pense of P?-,000.

Respondent claied that the subdivision proect failed, ho!ever, because petitioners and theirrelatives had separatel# caused the annotations of adverse clais on the title to the land, !hicheventuall# scared a!a# prospective bu#ers. 6espite his re2uests, petitioners refused to cause the

clearing of the clais, thereb# forcing hi to give up on the proect.-Q

*ubse2uentl#, petitioners filed a criinal case for estafa against respondent and his !ife, !ho !ereho!ever ac2uitted. %hereafter, the# filed the present civil case !hich, upon respondents otion, !aslater disissed b# the trial court in an $rder dated *epteber (, /?). $n appeal, ho!ever, theappellate court reanded the case for further proceedings. %hereafter, the R%C issued its assailed6ecision, !hich, as earlier stated, !as affired b# the CA.

ence, this Petition.(Q

Rli'; oD +5 Cor+ oD App&l

"n affiring the trial court, the Court of Appeals held that petitioners and respondent had fored apartnership for the developent of the subdivision. %hus, the# ust bear the loss suffered b# the

partnership in the sae proportion as their share in the profits stipulated in the contract. 6isagreeing!ith the trial courtVs pronounceent that losses as !ell as profits in a oint venture should be distributede2uall#,1Q the CA invo+ed Article 1/1 of the Civil Code !hich provides8

SArticle 1/1 3 %he losses and profits shall be distributed in conforit# !ith the agreeent. "f onl# theshare of each partner in the profits has been agreed upon, the share of each in the losses shall be in thesae proportion.T

%he CA elucidated further8

S"n the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to!hat he a# have contributed, but the industrial partner shall not be liable for the losses. As for theprofits, the industrial partner shall receive such share as a# be ust and e2uitable under thecircustances. "f besides his services he has contributed capital, he shall also receive a share in theprofits in proportion to his capital.T

T5

S7 7 7 %heQ Court of Appeals erred in concluding that the transaction 7 7 7 bet!een the petitioners andrespondent !as that of a oint ventureLpartnership, ignoring outright the provision of Article 1(/, andother related provisions of the Civil Code of the Philippines.T ?Q

T5 Cor+ Rli';

%he Petition is bereft of erit.

M&i' Existence of a +artnership

Petitioners den# having fored a partnership !ith respondent. %he# contend that the Joint ;entureAgreeent and the earlier 6eed of *ale, both of !hich !ere the bases of the appellate courtVs finding of apartnership, !ere void.

"n the sae breath, ho!ever, the# assert that under those ver# sae contracts, respondent isliable for his failure to ipleent the proect. Because the agreeent entitled the to receive (0 percentof the proceeds fro the sale of the subdivision lots, the# pra# that respondent pa# the daagese2uivalent to (0 percent of the value of the propert#./Q

%he pertinent portions of the Joint ;enture Agreeent read as follo!s8

SON$ A MEN BF %E*E PRE*EN%*8

S%his A>REEMEN%, is ade and entered into at Cebu Cit#, Philippines, this -th da# of March, /(/, b# andbet!een MR. MAN:E R. %$RRE*, 7 7 7 the D"R*% PAR%F, li+e!ise, MR*. AN%$N"A B. %$RRE*, and M"**EME%ER"A BAR"N>, 7 7 7 the *EC$N6 PAR%F8

" % N E * * E % 8

S%hat, !hereas, the *EC$N6 PAR%F, voluntaril# offered the D"R*% PAR%F, this propert# located at apu3apu Cit#, "sland of Mactan, under ot No. &(? covering %C% No. %30?' !ith a total area of 1,00/s2uare eters, to be sub3divided b# the D"R*% PAR%F5

Shereas, the D"R*% PAR%F had given the *EC$N6 PAR%F, the su of8 %EN%F %$:*AN6<P)0,000.00= Pesos, Philippine Currenc#, upon the e7ecution of this contract for the propert# entrusted b#the *EC$N6 PAR%F, for sub3division proects and developent purposes5

SN$ %ERED$RE, for and in consideration of the above covenants and proises herein contained therespective parties hereto do hereb# stipulate and agree as follo!s8

S$NE8 %hat the *EC$N6 PAR%F signed an absolute 6eed of *ale 7 7 7 dated March -, /(/, in theaount of %EN%F D";E %$:*AN6 D";E :N6RE6 %"R%EEN D"D%F C%;*. <P)-,-&.-0= PhilippineCurrenc#, for ,100 s2uare eters at $NE PE*$Q D"D%F C%;*. <P.-0= Philippine Currenc#, in favor of the D"R*% PAR%F, but the *EC$N6 PAR%F did not actuall# receive the pa#ent.

S*EC$N68 %hat the *EC$N6 PAR%F, had received fro the D"R*% PAR%F, the necessar# aount of %EN%F %$:*AN6 <P)0,000.00= pesos, Philippine currenc#, for their personal obligations and thisparticular aount !ill serve as an advance pa#ent fro the D"R*% PAR%F for the propert# entioned tobe sub3divided and to be deducted fro the sales.

S%"R68 %hat the D"R*% PAR%F, !ill not collect fro the *EC$N6 PAR%F, the interest and the principalaount involving the aount of %EN%F %$:*AN6 <P)0,000.00= Pesos, Philippine Currenc#, until thesub3division proect is terinated and read# for sale to an# interested parties, and the aount of %EN%F %$:*AN6 <P)0,000.00= pesos, Philippine currenc#, !ill be deducted accordingl#.

SD$:R%8 %hat all general e7pensesQ and all costsQ involved in the sub3division proect should be paidb# the D"R*% PAR%F, e7clusivel# and all the e7penses !ill not be deducted fro the sales after thedevelopent of the sub division proect

Alle#ed (llit! of the +artnership A#ree&ent

Petitioners argue that the Joint ;enture Agreeent is void under Article 11& of the Civil Code




















developent of the sub3division proect.

SD"D%8 %hat the sales of the sub3divided lots !ill be divided into *"K%F PERCEN%:M (0 for the*EC$N6 PAR%F and D$R%F PERCEN%:M '0 for the D"R*% PAR%F, and additional profits or !hateverincoe deriving fro the sales !ill be divided e2uall# according to the 7 7 7 percentage agreed uponQ b#both parties.

S*"K%8 %hat the intended sub3division proect of the propert# involved !ill start the !or+ and alliproveents upon the adacent lots !ill be negotiated in both partiesQ favor and all sales shall beQdecided b# both parties.

S*E;EN%8 %hat the *EC$N6 PAR%"E*, should be given an option to get bac+ the propert# entionedprovided the aount of %EN%F %$:*AN6 <P)0,000.00= Pesos, Philippine Currenc#, borro!ed b# the*EC$N6 PAR%F, !ill be paid in full to the D"R*% PAR%F, including all necessar# iproveents spent b# theD"R*% PAR%F, and the D"R*% PAR%F !ill be given a grace period to turnover the propert# entionedabove.

S%hat this A>REEMEN% shall be binding and obligator# to the parties !ho e7ecuted sae freel# andvoluntaril# for the uses and purposes therein stated.T 0Q

A reading of the ters ebodied in the Agreeent indubitabl# sho!s the e7istence of a partnershippursuant to Article 1(1 of the Civil Code, !hich provides8

SAR%. 1(1. B# the contract of partnership t!o or ore persons bind theselves to contribute one#,propert#, or industr# to a coon fund, !ith the intention of dividing the profits aong theselves.T

:nder the above32uoted Agreeent, petitioners !ould contribute propert# to the partnership in thefor of land !hich !as to be developed into a subdivision5 !hile respondent !ould give, in addition to hisindustr#, the aount needed for general e7penses and other costs. Durtherore, the incoe fro thesaid proect !ould be divided according to the stipulated percentage. Clearl#, the contract anifested theintention of the parties to for a partnership. Q

"t should be stressed that the parties ipleented the contract. %hus, petitioners transferred thetitle to the land to facilitate its use in the nae of the respondent. $n the other hand, respondent causedthe subect land to be ortgaged, the proceeds of !hich !ere used for the surve# and the subdivision of the land. As noted earlier, he developed the roads, the curbs and the gutters of the subdivision andentered into a contract to construct lo!3cost housing units on the propert#.

RespondentVs actions clearl# belie petitionersV contention that he ade no contribution to thepartnership. :nder Article 1(1 of the Civil Code, a partner a# contribute not onl# one# or propert#,but also industr#.

+etitioners $ond b! 'er&s of Contract

:nder Article &- of the Civil Code, contracts bind the parties not onl# to !hat has been e7pressl#stipulated, but also to all necessar# conse2uences thereof, as follo!s8

SAR%. &-. Contracts are perfected b# ere consent, and fro that oent the parties are bound notonl# to the fulfillent of !hat has been e7pressl# stipulated but also to all the conse2uences !hich,according to their nature, a# be in +eeping !ith good faith, usage and la!.T

"t is undisputed that petitioners are educated and are thus presued to have understood the tersof the contract the# voluntaril# signed. "f it !as not in consonance !ith their e7pectations, the# shouldhave obected to it and insisted on the provisions the# !anted.

Courts are not authorized to e7tricate parties fro the necessar# conse2uences of their acts, andthe fact that the contractual stipulations a# turn out to be financiall# disadvantageous !ill not relieve

parties thereto of their obligations. %he# cannot no! disavo! the relationship fored fro suchagreeent due to their supposed isunderstanding of its ters.

Petitioners argue that the Joint ;enture Agreeent is void under Article 11& of the Civil Code,!hich provides8

SAR%. 11&. A contract of partnership is void, !henever iovable propert# is contributed thereto, if aninventor# of said propert# is not ade, signed b# the parties, and attached to the public instruent.T

%he# contend that since the parties did not a+e, sign or attach to the public instruent aninventor# of the real propert# contributed, the partnership is void.

e clarif#. irst , Article 11& !as intended priaril# to protect third persons. %hus, the einentArturo M. %olentino states that under the aforecited provision !hich is a copleent of Article 11,)Q Sthe e7ecution of a public instruent !ould be useless if there is no inventor# of the propert#contributed, because !ithout its designation and description, the# cannot be subect to inscription in the

Registr# of Propert#, and their contribution cannot preudice third persons. %his !ill result in fraud tothose !ho contract !ith the partnership in the belief inQ the efficac# of the guarant# in !hich theiovables a# consist. %hus, the contract is declared void b# the la! !hen no such inventor# isade.T %he case at bar does not involve third parties !ho a# be preudiced.

Second , petitioners theselves invo+e the allegedl# void contract as basis for their clai thatrespondent should pa# the (0 percent of the value of the propert#. &Q %he# cannot in one breath den#the contract and in another recognize it, depending on !hat oentaril# suits their purpose. Partiescannot adopt inconsistent positions in regard to a contract and courts !ill not tolerate, uch lessapprove, such practice.

"n short, the alleged nullit# of the partnership !ill not prevent courts fro considering the Joint;enture Agreeent an ordinar# contract fro !hich the partiesV rights and obligations to each other a#be inferred and enforced.

+artnership A#ree&ent (ot the Reslt of an Earlier *lle#al Contract

Petitioners also contend that the Joint ;enture Agreeent is void under Article ')) 'Q of the CivilCode, because it is the direct result of an earlier illegal contract, !hich !as for the sale of the land!ithout valid consideration.

%his arguent is puerile. %he Joint ;enture Agreeent clearl# states that the consideration for thesale !as the e7pectation of profits fro the subdivision proect. "ts first stipulation states that petitionersdid not actuall# receive pa#ent for the parcel of land sold to respondent. Consideration, ore properl#denoinated as cause, can ta+e different fors, such as the prestation or proise of a thing or serviceb# another.-Q

"n this case, the cause of the contract of sale consisted not in the stated peso value of the land, butin the e7pectation of profits fro the subdivision proect, for !hich the land !as intended to be used. Ase7plained b# the trial court, Sthe land !as in effect given to the partnership as petitionerVsQ participationtherein. 7 7 7 %here !as therefore a consideration for the sale, the petitionersQ acting in the

e7pectation that, should the venture coe into fruition, the# !ouldQ get si7t# percent of the net profits.T

/iabilit! of the +arties

Claiing that respondent !as solel# responsible for the failure of the subdivision proect, petitionersaintain that he should be ade to pa# daages e2uivalent to (0 percent of the value of the propert#,!hich !as their share in the profits under the Joint ;enture Agreeent.

e are not persuaded. %rue, the Court of Appeals held that petitionersV acts !ere not the cause of the failure of the proect.(Q But it also ruled that neither !as respondent responsible therefor.1Q "niputing the blae solel# to hi, petitioners failed to give an# reason !h# !e should disregard thefactual findings of the appellate court relieving hi of fault. ;eril#, factual issues cannot be resolved in apetition for revie! under Rule '-, as in this case. Petitioners have not alleged, not to sa# sho!n, thattheir Petition constitutes one of the e7ceptions to this doctrine .?Q Accordingl#, !e find no reversible error

in the CAs ruling that petitioners are not entitled to daages.

%ERE#ORE, the Petition is hereb# )6$6) and the challenged 6ecision #$R+6). Costs againstpetitioners.

SO ORERE.

+elo, =Chairman8, 5itu%, Purisima, and Gon*a%a!Reyes, ((., concur.%he ne7t da#, - June /?/, *osa and >ilbert !ent to %o#ota to deliver the do!npa#ent of P00,000.00. %he# et Bernardo !ho then accoplished a printed ;ehicle *ales Proposal <;*P= No./)? 2 on !hich >ilbert signed under the subheading C$ND$RME %his docuent sho!s that the


























Republic of the PhilippinesSUPREME COURT

Manila

D"R*% 6";"*"$N

G.R. No. L-11660 M& 23, 199

TO"OTA S%A, NC., petitioner,vs.COURT O# APPEALS &'( LUNA L. SOSA, respondents.

A$E, *R., J.:

At the heart of the present controvers# is the docuent ar+ed E7hibit 4A4 1 for the private respondent,!hich !as signed b# a sales representative of %o#ota *ha!, "nc. naed Popong Bernardo. %he docuentreads as follo!s8' June /?/

A>REEMEN%* BE%EEN MR. *$*A P$P$N> BERNAR6$ $D %$F$%A*A, "NC.

. all necessar# docuents !ill be subitted to %$F$%A *A, "NC. <P$P$N>BERNAR6$= a !ee+ after, upon arrival of Mr. *osa fro the Province <Marindu2ue=!here the unit !ill be used on the /th of June.

). the do!npa#ent of P00,000.00 !ill be paid b# Mr. *osa on June -, /?/.

&. the %$F$%A *A, "NC. "%E ACE #ello!, !ill be pic+3up sic Q and released b#%$F$%A *A, "NC. on the 1th of June at 0 a.. ;er# trul# #ours, <*gd.= P$P$N>BERNAR6$.

as this docuent, e7ecuted and signed b# the petitioners sales representative, a perfected contract of sale, binding upon the petitioner, breach of !hich !ould entitle the private respondent to daages andattorne#s feesG %he trial court and the Court of Appeals too+ the affirative vie!. %he petitioner

disagrees. ence, this petition for revie! oncertiorari .

%he antecedents as disclosed in the decisions of both the trial court and the Court of Appeals, as !ell asin the pleadings of petitioner %o#ota *ha!, "nc. <hereinafter /oyota= and respondent una . *osa<hereinafter Sosa= are as follo!s. *oetie in June of /?/, una . *osa !anted to purchase a %o#otaite Ace. "t !as then a sellers ar+et and *osa had difficult# finding a dealer !ith an available unit forsale. But upon contacting %o#ota *ha!, "nc., he !as told that there !as an available unit. *o on ' June/?/, *osa and his son, >ilbert, !ent to the %o#ota office at *ha! Boulevard, Pasig, Metro Manila. %herethe# et Popong Bernardo, a sales representative of %o#ota.

*osa ephasized to Bernardo that he needed the ite Ace not later than 1 June /?/ because he, hisfail#, and a&ali&ayan guest !ould use it on ? June /?/ to go to Marindu2ue, his hoe province,!here he !ould celebrate his birthda# on the /th of June. e added that if he does not arrive in hishoeto!n !ith the ne! car, he !ould becoe a 4laughing stoc+.4 Bernardo assured *osa that a unit!ould be read# for pic+ up at 0800 a.. on 1 June /?/. Bernardo then signed the afore2uoted

4Agreeents Bet!een Mr. *osa Popong Bernardo of %o#ota *ha!, "nc.4 "t !as also agreed upon b# theparties that the balance of the purchase price !ould be paid b# credit financing through B.A. Dinance, andfor this >ilbert, on behalf of his father, signed the docuents of %o#ota and B.A. Dinance pertaining to theapplication for financing.

/)?, on !hich >ilbert signed under the subheading C$ND$RME. %his docuent sho!s that thecustoers nae is 4MR. :NA *$*A4 !ith hoe address at No. )&( >uio *treet, :nited ParaYa2ue ""5that the odel series of the vehicle is a 4ite Ace -004 described as 4' 6r inibus45 that pa#ent is b#4installent,4 to be financed b# 4B.A.,4 3 !ith the initial cash outla# of P00,000.00 bro+en do!n asfollo!s8

a= do!npa#ent @ P -&,'?.00

b= insurance @ P &,/10.00

c= B% registration fee @ P ,0(1.00

CM$ fee @ P ),1-.00

service fee @ P -00.00

accessories @ P )/,000.00

and that the 4BAANCE %$ BE D"NANCE64 is 4P)1',&1.00.4 %he spaces provided for 46eliver# %ers4!ere not filled3up. "t also contains the follo!ing pertinent provisions8

C$N6"%"$N* $D *AE*

. %his sale is subect to availabilit# of unit.

). *tated Price is subect to change !ithout prior notice, Price prevailing and in effectat tie of selling !ill appl#. . . .

Rodrigo 9uirante, the *ales *upervisor of Bernardo, chec+ed and approved the ;*P.

$n 1 June /?/, at around /8&0 a.., Bernardo called >ilbert to infor hi that the vehicle !ould notbe read# for pic+ up at 0800 a.. as previousl# agreed upon but at )800 p.. that sae da#. At )800p.., *osa and >ilbert et Bernardo at the latters office. According to *osa, Bernardo infored thethat the ite Ace !as being readied for deliver#. After !aiting for about an hour, Bernardo told the thatthe car could not be delivered because 4nasulot an% unit n% i&an% malaas.4

%o#ota contends, ho!ever, that the ite Ace !as not delivered to *osa because of the disapproval b# B.A.Dinance of the credit financing application of *osa. "t further alleged that a particular unit had alread#

been reserved and earar+ed for *osa but could not be released due to the uncertaint# of pa#ent of the balance of the purchase price. %o#ota then gave *osa the option to purchase the unit b# pa#ing thefull purchase price in cash but *osa refused.

After it becae clear that the ite Ace !ould not be delivered to hi, *osa as+ed that his do!npa#entbe refunded. %o#ota did so on the ver# sae da# b# issuing a Dar East Ban+ chec+ for the full aount of P00,000.00, 4 the receipt of !hich !as sho!n b# a chec+ voucher of %o#ota, !hich *osa signed !iththe reservation, 4!ithout preudice to our future clais for daages.4

%hereafter, *osa sent t!o letters to %o#ota. "n the first letter, dated )1 June /?/ and signed b# hi, hedeanded the refund, !ithin five da#s fro receipt, of the do!npa#ent of P00,000.00 plus interestfro the tie he paid it and the pa#ent of daages !ith a !arning that in case of %o#otas failure to doso he !ould be constrained to ta+e legal action. 6 %he second, dated ' Noveber /?/ and signed b# M.$. Caballes, *osas counsel, deanded one illion pesos representing interest and daages, again, !itha !arning that legal action !ould be ta+en if pa#ent !as not ade !ithin three da#s. 7 %o#otas counsel

ans!ered through a letter dated )1 Noveber /?/8

refusing to accede to the deands of *osa. Buteven before this ans!er !as ade and received b# *osa, the latter filed on )0 Noveber /?/ !ithBranch &? of the Regional %rial Court <R%C= of Marindu2ue a coplaint against %o#ota for daages underArticles / and ) of the Civil Code in the total aount of P,)&0,000.00. 9 e alleges, inter alia, that8

/. As a result of defendants failure andLor refusal to deliver the vehicle to plaintiff,plaintiff suffered ebarrassent, huiliation, ridicule, ental anguish and sleeplessnights because8 <i= he and his fail# !ere constrained to ta+e the public

6issatisfied !ith the trial courts udgent, %o#ota appealed to the Court of Appeals. %he case !asdoc+eted as CA3>.R. C; No. '00'&. "n its decision proulgated on )/ Jul# //', 17 the Court of Appealsaffired in toto the appealed decision



nights because8 <i= he and his fail# !ere constrained to ta+e the publictransportation fro Manila to ucena Cit# on their !a# to Marindu2ue5 <ii= hisbali+ba#an3guest canceled his scheduled first visit to Marindu2ue in order to avoidthe inconvenience of ta+ing public transportation5 and <iii= his relatives, friends,neighbors and other provinceates, continuousl# ir+ed hi about 4his Brand3Ne!%o#ota ite Ace @ that never !as.4 :nder the circustances, defendant should beade liable to the plaintiff for oral daages in the aount of $ne Million Pesos<P,000,000.00=. 10

"n its ans!er to the coplaint, %o#ota alleged that no sale !as entered into bet!een it and *osa, thatBernardo had no authorit# to sign E7hibit 4A4 for and in its behalf, and that Bernardo signed E7hibit 4A4 inhis personal capacit#. As special and affirative defenses, it alleged that8 the ;*P did not state date of deliver#5 *osa had not copleted the docuents re2uired b# the financing copan#, and as a atter of polic#, the vehicle could not and !ould not be released prior to full copliance !ith financingre2uireents, subission of all docuents, and e7ecution of the sales agreeentLinvoice5 theP00,000.00 !as returned to and received b# *osa5 the venue !as iproperl# laid5 and *osa did nothave a sufficient cause of action against it. "t also interposed copulsor# counterclais.

After trial on the issues agreed upon during the pre3trial session, 11 the trial court rendered on ?Debruar# //) a decision in favor of *osa. 12 "t ruled that E7hibit 4A,4 the 4A>REEMEN%* BE%EEN MR.*$*A AN6 P$P$N> BERNAR6$,4 !as a valid perfected contract of sale bet!een *osa and %o#ota !hichbound %o#ota to deliver the vehicle to *osa, and further agreed !ith *osa that %o#ota acted in bad faith inselling to another the unit alread# reserved for hi.

As to %o#otas contention that Bernardo had no authorit# to bind it through E7hibit 4A ,4 the trial court heldthat the e7tent of Bernardos authorit# 4!as not ade +no!n to plaintiff,4 for as testified to b# 9uirante,4the# do not volunteer an# inforation as to the copan#s sales polic# and guidelines because the# areinternal atters.4 13 Moreover, 4fQro the beginning of the transaction up to its consuation !hen thedo!npa#ent !as ade b# the plaintiff, the defendants had ade +no!n to the plaintiff the ipressionthat Popong Bernardo is an authorized sales e7ecutive as it peritted the latter to do acts !ithin thescope of an apparent authorit# holding hi out to the public as possessing po!er to do theseacts.4 14 Bernardo then 4!as an agent of the defendant %o#ota *ha!, "nc. and hence bound thedefendants.4 1

%he court further declared that 4una *osa proved his social standing in the counit# and sufferedbesirched reputation, !ounded feelings and sleepless nights for !hich he ought to becopensated.4 16 Accordingl#, it disposed as follo!s8

ERED$RE, vie!ed fro the above findings, udgent is hereb# rendered in favorof the plaintiff and against the defendant8

. ordering the defendant to pa# to the plaintiff the su of

P1-,000.00 for oral daages5

). ordering the defendant to pa# the plaintiff the su of P0,000.00 for e7eplar# daages5

&. ordering the defendant to pa# the su of P&0,000.00attorne#s fees plus P),000.00 la!#ers transportation fare pertrip in attending to the hearing of this case5

'. ordering the defendant to pa# the plaintiff the su of P),000.00 transportation fare per trip of the plaintiff in attendingthe hearing of this case5 and

-. ordering the defendant to pa# the cost of suit.

*$ $R6ERE6.

affired in toto the appealed decision.

%o#ota no! coes before this Court via this petition and raises the core issue stated at the beginning of the ponenciaand also the follo!ing related issues8 <a= !hether or not the standard ;*P !as the true anddocuented understanding of the parties !hich !ould have led to the ultiate contract of sale, <b=!hether or not *osa has an# legal and deandable right to the deliver# of the vehicle despite the non3pa#ent of the consideration and the non3approval of his credit application b# B.A. Dinance, <c= !hetheror not %o#ota acted in good faith !hen it did not release the vehicle to *osa, and <d= !hether or not%o#ota a# be held liable for daages.

e find erit in the petition.

Neither logic nor recourse to ones iagination can lead to the conclusion that E7hibit 4A4 is a perfected contract of sale.

Article '-? of the Civil Code defines a contract of sale as follo!s8

Art. '-?. B# the contract of sale one of the contracting parties obligates hiself totransfer the o!nership of and to deliver a deterinate thing, and the other to pa#therefor a price certain in one# or its e2uivalent.

A contract of sale a# be absolute or conditional.

and Article '1- specificall# provides !hen it is deeed perfected8

Art. '1-. %he contract of sale is perfected at the oent there is a eeting of inds upon the thing !hich is the obect of the contract and upon the price.

Dro that oent, the parties a# reciprocall# deand perforance, subect to theprovisions of the la! governing the for of contracts.

hat is clear fro E7hibit 4A4 is not !hat the trial court and the Court of Appeals appear to see. "t is nota contract of sale. No obligation on the part of %o#ota to transfer o!nership of a deterinate thing to*osa and no correlative obligation on the part of the latter to pa# therefor a price certain appears therein.%he provision on the do!npa#ent of P00,000.00 ade no specific reference to a sale of a vehicle. "f it!as intended for a contract of sale, it could onl# refer to a sale on installent basis, as the ;*P e7ecutedthe follo!ing da# confired. But nothing !as entioned about the full purchase price and the anner theinstallents !ere to be paid.

%his Court had alread# ruled that a definite agreeent on the anner of pa#ent of the price is anessential eleent in the foration of a binding and enforceable contract of sale. 18 %his is so because theagreeent as to the anner of pa#ent goes into the price such that a disagreeent on the anner of pa#ent is tantaount to a failure to agree on the price. 6efiniteness as to the price is an essentialeleent of a binding agreeent to sell personal propert#. 19

Moreover, E7hibit 4A4 sho!s the absence of a eeting of inds bet!een %o#ota and *osa. Dor one thing,*osa did not even sign it. Dor another, *osa !as !ell a!are fro its title, !ritten in bold letters, vi* .,

A>REEMEN%* BE%EEN MR. *$*A P$P$N> BERNAR6$ $D%$F$%A *A, "NC.

that he !as not dealing !ith %o#ota but !ith Popong Bernardo and that the latter did not isrepresentthat he had the authorit# to sell an# %o#ota vehicle. e +ne! that Bernardo !as onl# a sales

representative of %o#ota and hence a ere agent of the latter. "t !as incubent upon *osa to act !ithordinar# prudence and reasonable diligence to +no! the e7tent of Bernardos authorit# as anagent 20 in respect of contracts to sell %o#otas vehicles. A person dealing !ith an agent is put uponin2uir# and ust discover upon his peril the authorit# of the agent. 21

At the ost, E7hibit 4A4 a# be considered as part of the initial phase of the generation or negotiationstage of a contract of sale. %here are three stages in the contract of sale, nael#8

but isplaced pride and ego. e should not have announced his plan to bu# a %o#ota ite Ace +no!ingthat he ight not be able to pa# the full purchase price. "t !as he !ho brought ebarrassent uponhiself b# bragging about a thing !hich he did not o!n #et



<a= preparation, conception, or generation, !hich is the period of negotiation andbargaining, ending at the oent of agreeent of the parties5

<b= perfection or birth of the contract, !hich is the oent !hen the parties coe toagree on the ters of the contract5 and

<c= consuation or death, !hich is the fulfillent or perforance of the tersagreed upon in the contract. 22

%he second phase of the generation or negotiation stage in this case !as the e7ecution of the ;*P. "tust be ephasized that thereunder, the do!npa#ent of the purchase price !as P-&,'?.00 !hile thebalance to be paid on installent should be financed b# B.A. Dinance Corporation. "t is, of course, to beassued that B.A. Dinance Corp. !as acceptable to %o#ota, other!ise it should not have entioned B.A.Dinance in the ;*P.

Dinancing copanies are defined in *ection &<a= of R.A. No. -/?0, as aended b# P.6. No. '-' and P.6.No. 1/&, as 4corporations or partnerships, e7cept those regulated b# the Central Ban+ of the Philippines,the "nsurance Coission and the Cooperatives Adinistration $ffice, !hich are priaril# organized forthe purpose of e7tending credit facilities to consuers and to industrial, coercial, or agriculturalenterprises, either b# discounting or factoring coercial papers or accounts receivables, or b# bu#ingand selling contracts, leases, chattel ortgages, or other evidence of indebtedness, or b# leasing of otor vehicles, heav# e2uipent and industrial achiner#, business and office achines and e2uipent,appliances and other ovable propert#.4 23

Accordingl#, in a sale on installent basis !hich is financed b# a financing copan#, three parties are

thus involved8 the bu#er !ho e7ecutes a note or notes for the unpaid balance of the price of the thingpurchased on installent, the seller !ho assigns the notes or discounts the !ith a financing copan#,and the financing copan# !hich is subrogated in the place of the seller, as the creditor of the installentbu#er. 24 *ince B.A. Dinance did not approve *osas application, there !as then no eeting of inds onthe sale on installent basis.

e are inclined to believe %o#otas version that B.A. Dinance disapproved *osas application for !hichreason it suggested to *osa that he pa# the full purchase price. hen the latter refused, %o#ota cancelledthe ;*P and returned to hi his P00,000.00. *osas version that the ;*P !as cancelled because,according to Bernardo, the vehicle !as delivered to another !ho !as 4mas malaas4 does not inspirebelief and !as obviousl# a dela#ed afterthought. "t is claied that Bernardo said, 4Pasensiya ayo,nasulot an% unit n% i&an% malaas,4 !hile the *osas had alread# been !aiting for an hour for the deliver#of the vehicle in the afternoon of 1 June /?/. o!ever, in paragraph 1 of his coplaint, *osa solenl#states8

$n June 1, /?/ at around /8&0 ocloc+ in the orning, defendants salesrepresentative, Mr. Popong Bernardo, called plaintiffs house and infored theplaintiffs son that the vehicle !ill not be read# for pic+3up at 0800 a.. of June 1,/?/ but at )800 p.. of that da# instead. Plaintiff and his son went to defendantsoffice on (une 1 1QQ at 2TT p.m. in order to pic!up the vehicle &ut the defendant for reasons nown only to its representatives, refused and?or failed to release thevehicle to the plaintiff. Plaintiff demanded for an e;planation, &ut nothin% was%iven5 . . . <Ephasis supplied=. 2

%he ;*P !as a ere proposal !hich !as aborted in lieu of subse2uent events. "t follo!s that the ;*Pcreated no deandable right in favor of *osa for the deliver# of the vehicle to hi, and its non3deliver#did not cause an# legall# indenifiable inur#.

%he a!ard then of oral and e7eplar# daages and attorne#s fees and costs of suit is !ithout legalbasis. Besides, the onl# ground upon !hich *osa claied oral daages is that since it !as +no!n to his

friends, to!nates, and relatives that he !as bu#ing a %o#ota ite Ace !hich the# e7pected to see on hisbirthda# he suffered huiliation shae and sleepless nights !hen the van !as not delivered %he van

hiself b# bragging about a thing !hich he did not o!n #et.

*ince *osa is not entitled to oral daages and there being no a!ard for teperate, li2uidated, orcopensator# daages, he is li+e!ise not entitled to e7eplar# daages. :nder Article )))/ of the CivilCode, e7eplar# or corrective daages are iposed b# !a# of e7aple or correction for the public good,in addition to oral, teperate, li2uidated, or copensator# daages.

Also, it is settled that for attorne#s fees to be granted, the court ust e7plicitl# state in the bod# of thedecision, and not onl# in the dispositive portion thereof, the legal reason for the a!ard of attorne#sfees. 26 No such e7plicit deterination thereon !as ade in the bod# of the decision of the trial court. Noreason thus e7ists for such an a!ard.

ERED$RE, the instant petition is >RAN%E6. %he challenged decision of the Court of Appeals in CA3>.R.C; N$. '00'& as !ell as that of Branch &? of the Regional %rial Court of Marindu2ue in Civil Case No. ?/3' are RE;ER*E6 and *E% A*"6E and the coplaint in Civil Case No. ?/3' is 6"*M"**E6. %hecounterclai therein is li+e!ise 6"*M"**E6.

No pronounceent as to costs.

*$ $R6ERE6.

Padilla, "ellosillo and <apunan, ((., concur.

9uiason, (., is on leave.

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