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Republic of the Philippines

G.R. No. 179743 August 2, 2010
HADJA FATMA GAGU! MAGO"AG, #o$%&' () *&+ *us(,%', HADJ HASAN MAD!A-
ad!a "ati#a $a%uil Ma%o&a% and her husband ad!i asan Madla'i Ma%o&a% (petitioners), appeal
b& certiorari under Rule *+ of the Rules of Court the ,pril -., -//0 Decision
of the Court of ,ppeals
(C,) in C,2$.R. CV No. 3+30+, and the ,u%ust -., -//3 Resolution
den&in% its reconsideration.
4he antecedents5
On Dece#ber -/, 16.-, respondent ad!i ,bubacar Maruho# (respondent) 'as a'arded a #ar7et
stall at the Recla#ation ,rea b& the Isla#ic Cit& of Mara'i.
On Dece#ber 1, 16.+, respondent orall& sold his stall to petitioner for P-/,///.//. 9ater, on
Dece#ber 1/, 16.+, respondent e:ecuted a Deed of ,ssi%n#ent,
confir#in% the oral sale;
assi%nin%, sellin%, transferrin%, and conve&in% his #ar7et stall to petitioners for a consideration
of P-/,///.//. In the sa#e Deed of ,ssi%n#ent, petitioners leased the sub!ect stall to respondent
for a #onthl& rental of P-+/.//, be%innin% Dece#ber 1, 16.+, rene'able ever& &ear at the option of
petitioners. Respondent undertoo7 to pa& in advance the rentals for si: #onths a#ountin%
to P1,+//.// on or before Dece#ber 1, 16.+.
Respondent reli%iousl& paid the #onthl& rentals of P-+/.//, 'hich 'as increased to P8//.// on
Dece#ber 1, 16..; and to P*//.// be%innin% Dece#ber 1, 1661. o'ever, on <une 1, 1668,
respondent si#pl& stopped pa&in% the rentals. Respondent pro#ised to settle his unpaid account,
but he failed to #a7e %ood his pro#ise. Petitioner then de#anded that respondent vacate the
propert&, but the de#and !ust fell on deaf ears.
,ccordin%l&, on ,u%ust --, 166*, petitioners filed a co#plaint
for recover& of possession and
da#a%es, 'ith pra&er for issuance of a te#porar& restrainin% order (4RO), 'ith the Re%ional 4rial
Court (R4C) of Mara'i Cit&.
In his ,ns'er,
respondent ad#itted sellin% the sub!ect stall for P-/,///.// to petitioners, but
averred that the sale 'as 'ith ri%ht to repurchase; and on condition that he 'ould re#ain in
possession of the sub!ect stall as lon% as he 'ants. e si%ned the Deed of ,ssi%n#ent on
petitioners= assurance that the conditions the& earlier a%reed upon 'ere contained in the deed.
>ein% illiterate, he !ust relied on petitioners= assurances. Respondent denied that he refused to pa&
the a%reed #onthl& rentals; alle%in% that petitioners 'ere the ones 'ho refused to receive the rental
pa&#ents and instead de#anded pa&#ent of P1+/,///.//. 4he Deed of ,ssi%n#ent, he added,
failed to e:press the true intent and a%ree#ent of the parties; and his si%nature thereon 'as
procured b& fraud, deceit, and #isrepresentation; hence, void ab initio. Respondent further averred
that the co#plaint failed to state a cause of action, as petitioners failed to co#pl& 'ith the provisions
of Presidential Decree (P.D.) No. 1+/., or the ?atarun%an% Pa#baran%a& 9a', and the 9ocal
$overn#ent Code of 1661. e also assailed the !urisdiction of the R4C over the co#plaint, clai#in%
the !urisdiction falls 'ith the Municipal 4rial Court (M4C). "inall&, he averred that the co#plaint
lac7ed the re@uired verification and certification a%ainst foru# shoppin%. Respondent, therefore,
pra&ed for the dis#issal of the co#plaint.
On <une 1/, -//-, the R4C rendered a Decision,
,fter a careful e:a#ination of the fore%oin% facts and pieces of evidence as presented b& the
parties, this court is convinced that BpetitionersC spouses has (sic) proved and dul& established that
indeed BrespondentC have (sic) a%reed to sell to BpetitionersC spouses 'hatever ri%hts that he has
over the disputed stall. 4heir transaction 'as even ad#itted b& the BrespondentC 'hen he si%ned the
ac7no'led%#ent receipt (E:hs. D>D E D>21D) for P-/,///.// 'hich is the a%reed purchase price and
the notariAed Deed of ,ssi%n#ent (E:h. D,D to D,20). BRespondentC, ho'ever, clai#ed that the
contents of the Deed of ,ssi%n#ent 'as (sic) not even read E translated to hi#, he bein% illiterate
4he transaction 'as further supported b& Brespondent=sC counter2offer to bu& the stall for P./,///.//
(E:h. DDD) and the ac7no'led%#ent receipts of BrespondentC on the pa&#ent of rentals to the
BpetitionersC (E:hs. DD to D20D, E:h(s). DI21D to DI20D and E:h(s) D<D to D<28D.
4he onl& evidence presented b& the BrespondentC is his lone testi#on& and E:h. D1D a'ardin% BtheC
sub!ect stall b& the Cit& $overn#ent to hi#.
4he BrespondentC did not present an& evidence on his alle%ed o'nership over BtheC sub!ect stall
e:cept a certification (E:h. D1D) dated Dece#ber -/, 16.- fro# the Cit& $overn#ent a'ardin% BtheC
sa#e to hi# and sub!ect even to the condition that he cannot sell, donate or other'ise alienate the
sa#e 'ithout the consent of the Cit& $overn#ent.
It appears therefore that BtheC sub!ect stall is o'ned b& the Cit& $overn#ent of Mara'i and that
BrespondentC cannot even sell or dispose of the sa#e.
Not bein% the o'ner, the principle NEMO D,4 FGOD NON ,>E4 'hich #eans ONE C,NNO4
$IVE H,4 ONE DOES NO4 ,VE s@uarel& applies in this case.
,t #ost, 'hat BrespondentC can sell is 'hatever ri%hts that he has over the disputed stalls li7e his
continued possession over the sa#e for his business purposes. 4his is 'hat Bpetitioner2spousesC
ac@uired in the interest of !ustice.
4he R4C disposed, thus5
HERE"ORE, !ud%#ent is hereb& rendered in favor of Bpetitioner2spousesC and a%ainst the
BrespondentC as follo's5
1. Hhatever ri%hts that BrespondentC ad!i ,bubacar Maruho# has over stall No. C4D 1+.8
as described in the co#plaint as lessee or %rantee or even as the alle%ed o'ner are hereb&
transferred to Bpetitioner2spousesC ad!i "ati#a $a%uil Ma%o&a% and ad!i asan Madla'i
Man%o&a%. Said BrespondentC is ordered to vacate the stall in favor of BpetitionersC;
-. Orderin% BrespondentC to pa& unto petitioner the follo'in%5
(a) 4he unpaid rentals fro# <une 1, 1668 up to Ma& 81, -//- at 4hree undred
Pesos (P8//.//) a #onth or a total of P-*,6//.//;
(b) 4en 4housand (P1/,///.//) pesos I #oral and BeC:e#plar& BdCa#a%es;
(c) 4'ent& 4housand (P-/,///.//) pesos I ,ttorne&=s fees.
Respondent appealed to the C, faultin% the R4C for not dis#issin% the co#plaint. e ar%ued that
the co#plaint 'as filed in braAen violation of Supre#e Court Circular No. /*26* and the Rules of
Court re@uirin% a certification of non2foru# shoppin%. e added that the sub!ect stall is o'ned b& the
Cit& $overn#ent of Mara'i that cannot be leased or alienated. 4he Deed of ,ssi%n#ent that he
e:ecuted in favor of the petitioners is, therefore, null and void. e ur%ed the C, to appl& the civil la'
rule on pari delicto.
On ,pril -., -//0, the C, rendered the assailed Decision reversin% the R4C. 4he decretal portion of
the C, Decision reads5
HERE"ORE, the assailed decision of the Re%ional 4rial Court is hereb& REVERSED ,ND SE4
,SIDE and another one entered declarin% the Deed of ,ssi%n#ent dated Dece#ber 1/, 16.+ void
and BofC no effect and orderin% BrespondentC to pa& the loan a#ount of P-/,///.// plus P-+/.// as
#onthl& interest thereon fro# the date of de#and or ,u%ust 1, 166* until the sa#e shall have been
full& paid. No pronounce#ent as to costs.
Petitioners filed a #otion for reconsideration, but the C, denied it on ,u%ust -., -//3.
ence, this appeal b& petitioners, ascribin% reversible error on the part of the C, for reversin% the
R4C. Specificall&, the& ar%ue that the C, erred in declarin% that the transaction the& had 'ith
respondent 'as a loan 'ith #ort%a%e; and invalidatin% the Deed of ,ssi%n#ent. 4he& insist that
respondent alread& transferred his entire interest over the sub!ect stall in their favor. 4hus, the& are
entitled to the possession of the propert&.
In declarin% the transaction as loan 'ith #ort%a%e, the C, e:plains in this 'ise5
: : : BtChe evidence over'hel#in%l& sho'ed that the real intention of the BrespondentC 'as to have
the sub!ect #ar7et stall #ort%a%ed, in order to secure the pa&#ent of the loan of P-/,///.// fro#
BpetitionersC. 4here 'as no %enuine intention on his part to sell the propert&. In fact, even after the
e:ecution of the Deed of ,ssi%n#ent, BrespondentC re#ained in possession of the said propert& and
paid reli%iousl& the so2called D#onthl& rentalsD in the a#ount of t'o hundred fift& (P-+/.//) 'hich, in
realit&, 'as the a#ount the& had a%reed upon as interest on the loan. "or these reasons, He find
and so hold that the purported assi%n#ent 'as reall& #eant to be a contract of loan in the a#ount
of P-/,///.// 'ith interest thereon at the rate of P-+/.// per #onth. 4he propert& 'as intended to
serve as a collateral for the loan. It is fir#l& ensconced in !urisprudence that neither clarit& of contract
ter#s nor e:plicitness of the na#e %iven to it can bar Gs fro# deter#inin% the true intent of the
: : : :
He find the findin% of the C, contrar& to the evidence on record, if not outri%ht preposterous.
4he Deed of ,ssi%n#ent
reads in full5
?no' all #en b& these presents5
4his DEED O" ,SSI$NMEN4 #ade and e:ecuted b& and bet'een5
4he "IRS4 P,R4J5 ad!i ,bubacar Maruho#, of le%al a%e, #arried, business#an
b& occupation and a resident of Mara'i Cit&
4he SECOND P,R4J5 ad!i "ati#a $a%uil2Ma%o&a%, also of le%al a%e, #arried and
a %overn#ent e#plo&ee 'ith postal address at Moriatao >alindon%, 4ara7a, 9anao
del Sur
H I 4 N E S S E 4
4hat for and in consideration of the su# of 4HEN4J 4OGS,ND PESOS5 (P-/,///.//), Philippine
Currenc& 'hich a#ount has been paid b& the Second Part& and receipt hereof has been
ac7no'led%eBdC b& the "irst Part&, the said "irst BPCart& does hereb& assi%n, BsellC transfer and
conve& unto the Second Part& that certain t'o2store& Mar7et Stall No. C4D 1+.8 situated in the
Recla#ation ,rea, Mara'i Cit& 'hich is #ade of ce#ent, and lu#ber and #ore particularl&
described as follo's5
Stall No. 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 C4D 1+.8
9en%th 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 8 #eters
Hidth 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 - #eters
,d!acent Stall O'ner 2 2 2 2 2 2 2 2 2 2 Ra7i# >a&abao
"rontin% 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 ad!i Cosain Saripada
>ac7 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 ad!i ,la'i Pacati
of 'hich #ar7et stall the "irst Part& is the re%istered holderKo'ner under the follo'in%
ter#s and conditions5
1. 4he "IRS4 P,R4J is authoriAeBdC and e#po'erBedC to continue en%a%in% in business in
his o'n sole account on the said stall NBoC. C4D 1+.8 on a #onthl& rental of 4HO
GNDRED "I"4J PESOS5 (P-+/.//) to be paid b& said "IRS4 P,R4J to SECOND P,R4J
si: #onths in advance the #onthl& rental to start on Dece#ber 1, 16.+ rene'able ever&
&ear at the option of the SECOND P,R4J.
-. 4he "IRS4 P,R4J a%rees to pa& the SECOND P,R4J the first si:2#onth advance rental
in the a#ount of One 4housand "ive undred Pesos5 (P1,+//.//) on or before Dece#ber 1,
16.+, BaCnd the succeedin% #onthl& rental shall al'a&s be pa&able si:2#onthBsC in advance
on a pro%ressive rate rec7oned fro# the future rental of ad!oinin% stall holderKo'ner.
8. 4he "IRS4 P,R4J shall not directl& or indirectl& lease, assi%n or #ort%a%e or BinC an& 'a&
encu#ber said Mar7et Stall NBoC. 1+.8 or an& portion thereof 'ithout the 'ritten per#ission
of the Second Part&; an& contract or a%ree#ent #ade in violation thereof shall be null and
*. 4he "IRS4 P,R4J shall turnover the Mar7et Stall No. C4D 1+.8 to the SECOND P,R4J
should the "IRS4 P,R4J decide to abandon the said Mar7et Stall No. C4D 1+.8;
+. ,ll repairs 'ithin the pre#ises shall be at the sole account and e:pense of the "IRS4
P,R4J 'ithout ri%ht to rei#burse#ent.
0. 4he "IRS4 P,R4J shall use the said Mar7et Stall No. 1+.8 e:clusivel& for business and
shall not brin% into the said stall an& infla##able or e:plosive %oods or #aterials nor an&
article 'hich #a& e:pose the said stall fro# fire or increase the fire haAard.
3. 4hat all char%es for 'ater, li%ht, %as, telephone 'ithin the stall shall be at the sole account
of the "IRS4 'ithout ri%ht to rei#burse#ent;
.. 4he "IRS4 P,R4J shall be responsible for the pa&#ent of all ta:es on the said BSCtall No.
C4D 1+.8 and the co#pliance of all la's, ordinances and re%ulations or order of the
National or Cit& $overn#ent authorities arisin% fro# or re@uirin% the use, occupation and
utiliAation of the said Mar7et Stall No. C4D 1+.8. "ailure to co#pl& 'ith said la's,
ordinances, re%ulations or order shall be at the e:clusive ris7 and e:pense of the "IRS4
>& no stretch of i#a%ination can 'e construe the provisions of the Deed of ,ssi%n#ent as a contract
of loan 'ith #ort%a%e. Cr&stal clear in the Deed of ,ssi%n#ent are una#bi%uous provisions that
respondent assi%ned, sold, transferred, and conve&ed the sub!ect #ar7et stall to petitioners.
No'here in the Deed does it sa& that respondent obtained a loan of P-/,///.//, and #ort%a%ed the
sub!ect stall as securit&.
4he #ost funda#ental rule in the interpretation of contracts is that, if the ter#s are clear and leave
no doubt as to the intention of the contractin% parties, the literal #eanin% of the contract provisions
shall control.
Its #eanin% should be deter#ined 'ithout reference to e:trinsic facts or aids. 4he
intention of the parties #ust be %athered fro# that lan%ua%e, and fro# that lan%ua%e alone. Stated
differentl&, 'here the lan%ua%e of a 'ritten contract is clear and una#bi%uous, the contract #ust be
ta7en to #ean that 'hich, on its face, it purports to #ean, unless so#e %ood reason can be
assi%ned to sho' that the 'ords should be understood in a different sense. Courts cannot #a7e for
the parties better or #ore e@uitable a%ree#ents than the& the#selves have been satisfied to #a7e,
or re'rite contracts because the& operate harshl& or ine@uitabl& as to one of the parties, or alter
the# for the benefit of one part& and to the detri#ent of the other, or b& construction, relieve one of
the parties fro# the ter#s 'hich he voluntaril& consented to, or i#pose on hi# those 'hich he did
4hat respondent sold the sub!ect stall for P-/,///.// to petitioners 'as ad#itted b& respondent in
his ,ns'er,
althou%h he averred that the sale 'as 'ith a ri%ht to repurchase. Even the
of respondent points to no other transaction than a sale in favor of petitioners. 4he C,,
therefore, co##itted a serious blunder in #a7in% a ne' contract for the parties, and declarin% the
Deed of ,ssi%n#ent as a contract of loan 'ith #ort%a%e.
Indubitabl&, the transaction bet'een petitioners and respondent 'as a sale. ,s such, under ordinar&
circu#stances, petitioners could recover possession of the propert& fro# respondent. Gnfortunatel&
in this case, the Court cannot %rant petitioners the relief that the& are pra&in% for I recover& of
possession of the sub!ect stall.
4he records sho' that Mar7et Stall No. C4D 1+.8 is o'ned b& the Cit& $overn#ent of
Mara'i.1avvphi1 Indeed, the R4C and the C, correctl& held that it 'as the Cit& $overn#ent of Mara'i, not
respondent, that o'ned Mar7et Stall No. C4D 1+.8. Respondent, as a #ere %rantee of the sub!ect
stall, 'as prohibited fro# sellin%, donatin%, or other'ise alienatin% the sa#e 'ithout the consent of
the Cit& $overn#ent; violation of the condition shall auto#aticall& render the sale, donation, or
alienation null and void.
4hus, 'e sustain the C, in declarin% the Deed of ,ssi%n#ent null and
void, but 'e cannot abide b& the C,=s final disposition.
, void contract is e@uivalent to nothin%; it produces no civil effect. It does not create, #odif&, or
e:tin%uish a !uridical relation. Parties to a void a%ree#ent cannot e:pect the aid of the la'; the
courts leave the# as the& are, because the& are dee#ed in pari delicto or in e@ual fault.
4o this
rule, ho'ever, there are e:ceptions that per#it the return of that 'hich #a& have been %iven under a
void contract. One of the e:ceptions is found in ,rticle 1*1- of the Civil Code, 'hich states5
,rt. 1*1-. If the act in 'hich the unla'ful or forbidden cause consists does not constitute a cri#inal
offense, the follo'in% rules shall be observed5
(1) Hhen the fault is on the part of both contractin% parties, neither #a& recover 'hat he has
%iven b& virtue of the contract, or de#and the perfor#ance of the otherLs underta7in%;
(-) Hhen onl& one of the contractin% parties is at fault, he cannot recover 'hat he has %iven
b& reason of the contract, or as7 for the fulfill#ent of 'hat has been pro#ised hi#. 4he
other, 'ho is not at fault, #a& de#and the return of 'hat he has %iven 'ithout an& obli%ation
to co#pl& 'ith his pro#ise.
Respondent 'as 'ell a'are that as #ere %rantee of the sub!ect stall, he cannot sell it 'ithout the
consent of the Cit& $overn#ent of Mara'i. Jet, he sold the sa#e to petitioners. 4he records,
ho'ever, are bereft of an& alle%ation and proof that petitioners had actual 7no'led%e of the status of
respondent=s o'nership of the sub!ect stall. Petitioners can, therefore, recover the a#ount the& had
%iven under the contract.
In Cavite Develop#ent >an7 v. Spouses 9i#,
and Castillo, et al. v. ,bala&an,
'e held that in case
of a void sale, the seller has no ri%ht 'hatsoever to 7eep the #one& paid b& virtue thereof, and
should refund it, 'ith interest at the le%al rate, co#puted fro# the date of filin% of the co#plaint until
full& paid. Petitioners can, therefore, recover the a#ount of P-/,///.// fro# respondent 'ith interest
at 0M per annu# fro# the ti#e of the filin% of the co#plaint until the finalit& of this Decision, and
1-M per annu# thereafter until full pa&#ent.
-HEREFORE, the petition is PART!" GRANTED. 4he ,pril -., -//0 Decision and ,u%ust -.,
-//3 Resolution of the Court of ,ppeals in C, $.R. CV No. 3+30+ are ,""IRMED 'ith
MODI"IC,4ION. 4he Deed of ,ssi%n#ent dated Dece#ber 1/, 16.+ is declared /OD A. NTO.
Respondent ad!i ,bubacar Maruho# is ordered to return to petitioners ad!a "ati#a $a%uil
Ma%o&a% and ad!i asan Madla 'i Ma%o&a% the a#ount of P-/,///.// 'ith interest at 0M per
annu# fro# the ti#e of the filin% of the co#plaint until the finalit& of this Decision and 1-M per
annu# thereafter until full pa&#ent.
No pronounce#ent as to costs.
,ssociate <ustice
,ssociate <ustice
,ssociate <ustice
,ssociate <ustice
,ssociate <ustice
, 4 4 E S 4 , 4 I O N
I attest that the conclusions in the above Decision 'ere reached in consultation before the case 'as
assi%ned to the 'riter of the opinion of the Court=s Division.
,ssociate <ustice
Chairperson, Second Division
C E R 4 I " I C , 4 I O N
Pursuant to Section 18, ,rticle VIII of the Constitution and the Division ChairpersonLs ,ttestation, I
certif& that the conclusions in the above Decision had been reached in consultation before the case
'as assi%ned to the 'riter of the opinion of the Court=s Division.
Chief <ustice
Penned b& ,ssociate <ustice Ed%ardo ,. Ca#ello, 'ith ,ssociate <ustices Nor#andie >.
PiAarro and Ricardo R. Rosario, concurrin%; rollo, pp. 882**.