Sales First Batch Cases

SALES FIRST BATCH CASES
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THIRD DIVISION
G.R. No. 170479 February 18, 2008
ANDRE T. ALMOCERA, petitioner,
vs.
JOHNNY ONG, respondent.
D E C I S I O N
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure which seeks to set aside the Decision
1
of the Court of Appeals dated 18 July
2005 in CA-G.R. CV No. 75610 affirming in toto the Decision
2
of Branch 11 of the
Regional Trial Court (RTC) of Cebu City in Civil Case No. CEB-23687 and its
Resolution
3
dated 16 November 2005 denying petitioners motion for reconsideration.
The RTC decision found petitioner Andre T. Almocera, Chairman and Chief Executive
Officer of First Builder Multi-Purpose Cooperative (FBMC), solidarily liable with FMBC
for damages.
Stripped of non-essentials, the respective versions of the parties have been summarized
by the Court of Appeals as follows:
Plaintiff Johnny Ong tried to acquire from the defendants a "townhome"
described as Unit No. 4 of Atrium Townhomes in Cebu City. As reflected in a
Contract to Sell, the selling price of the unit was P3,400,000.00 pesos, for a lot
area of eighty-eight (88) square meters with a three-storey building. Out of the
purchase price, plaintiff was able to pay the amount of P1,060,000.00. Prior to the
full payment of this amount, plaintiff claims that defendants Andre Almocera
and First Builders fraudulently concealed the fact that before and at the time of
the perfection of the aforesaid contract to sell, the property was already
mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In
addition, the construction of the house has long been delayed and remains
unfinished. On March 13, 1999, Lot 4-a covered by TCT No. 148818, covering the
unit was advertised in a local tabloid for public auction for foreclosure of
mortgage. It is the assertion of the plaintiff that had it not for the fraudulent
concealment of the mortgage and encumbrance by defendants, he would have
not entered into the contract to sell.
On the other hand, defendants assert that on March 20, 1995, First Builders
Multi-purpose Coop. Inc., borrowed money in the amount of P500,000.00 from
Tommy Ong, plaintiffs brother. This amount was used to finance the
documentation requirements of the LBP for the funding of the Atrium Town
Homes. This loan will be applied in payment of one (1) town house unit which
Tommy Ong may eventually purchase from the project. When the project was
under way, Tommy Ong wanted to buy another townhouse for his brother,
Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given as
additional partial payment. However, the particular unit was not yet identified.
It was only on January 10, 1997 that Tommy Ong identified Unit No. 4 plaintiffs
chosen unit and again tendered P350,000.00 as his third partial payment. When
the contract to sell for Unit 4 was being drafted, Tommy Ong requested that
another contract to sell covering Unit 5 be made so as to give Johnny Ong
another option to choose whichever unit he might decide to have. When the
construction was already in full blast, defendants were informed by Tommy Ong
that their final choice was Unit 5. It was only upon knowing that the defendants
will be selling Unit 4 to some other persons for P4million that plaintiff changed
his choice from Unit 5 to Unit 4.
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In trying to recover the amount he paid as down payment for the townhouse unit,
respondent Johnny Ong filed a complaint for Damages before the RTC of Cebu City,
docketed as Civil Case No. CEB-23687, against defendants Andre T. Almocera and
FBMC alleging that defendants were guilty of fraudulent concealment and breach of
contract when they sold to him a townhouse unit without divulging that the same, at
the time of the perfection of their contract, was already mortgaged with the Land Bank
of the Philippines (LBP), with the latter causing the foreclosure of the mortgage and the
eventual sale of the townhouse unit to a third person.
In their Answer, defendants denied liability claiming that the foreclosure of the
mortgage on the townhouse unit was caused by the failure of complainant Johnny Ong
to pay the balance of the price of said townhouse unit.
After the pre-trial conference was terminated, trial on the merits ensued. Respondent
and his brother, Thomas Y. Ong, took the witness stand. For defendants, petitioner
testified.
In a Decision dated 20 May 2002, the RTC disposed of the case in this manner:
WHEREFORE, in view of all the foregoing premises, judgment is hereby
rendered in this case in favor of the plaintiff and against the defendants:
(a) Ordering the defendants to solidarily pay to the plaintiff the sum
of P1,060,000.00, together with a legal interest thereon at 6% per annum from
April 21, 1999 until its full payment before finality of the judgment. Thereafter, if
the amount adjudged remains unpaid, the interest rate shall be 12% per annum
computed from the time when the judgment becomes final and executory until
fully satisfied;
(b) Ordering the defendants to solidarily pay to the plaintiff the sum
of P100,000.00 as moral damages, the sum of P50,000.00 as attorneys fee and the
sum of P15,619.80 as expenses of litigation; and
(c) Ordering the defendants to pay the cost of this suit.
5

The trial court ruled against defendants for not acting in good faith and for not
complying with their obligations under their contract with respondent. In the Contract
to Sell
6
involving Unit 4 of the Atrium Townhomes, defendants agreed to sell said
townhouse to respondent for P3,400,000.00. The down payment wasP1,000,000.00, while
the balance of P2,400,000.00 was to be paid in full upon completion, delivery and
acceptance of the townhouse. Under the contract which was signed on 10 January 1997,
defendants agreed to complete and convey to respondent the unit within six months
from the signing thereof.
The trial court found that respondent was able to make a down payment or partial
payment of P1,060,000.00 and that the defendants failed to complete the construction of,
as well as deliver to respondent, the townhouse within six months from the signing of
the contract. Moreover, respondent was not informed by the defendants at the time of
the perfection of their contract that the subject townhouse was already mortgaged to
LBP. The mortgage was foreclosed by the LBP and the townhouse was eventually sold
at public auction. It said that defendants were guilty of fraud in their dealing with
respondent because the mortgage was not disclosed to respondent when the contract
was perfected. There was also non-compliance with their obligations under the contract
when they failed to complete and deliver the townhouse unit at the agreed time. On the
part of respondent, the trial court declared he was justified in suspending further
payments to the defendants and was entitled to the return of the down payment.
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Aggrieved, defendants appealed the decision to the Court of Appeals assigning the
following as errors:
1. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF HAS A
VALID CAUSE OF ACTION FOR DAMAGES AGAINST DEFENDANT(S).
2. THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT ANDRE T.
ALMOCERA IS SOLIDARILY LIABLE WITH THE COOPERATIVE FOR THE
DAMAGES TO THE PLAINTIFF.
7

The Court of Appeals ruled that the defendants incurred delay when they failed to
deliver the townhouse unit to the respondent within six months from the signing of the
contract to sell. It agreed with the finding of the trial court that the nonpayment of the
balance of P2.4M by respondent to defendants was proper in light of such delay and the
fact that the property subject of the case was foreclosed and auctioned. It added that the
trial court did not err in giving credence to respondents assertion that had he known
beforehand that the unit was used as collateral with the LBP, he would not have
proceeded in buying the townhouse. Like the trial court, the Court of Appeals gave no
weight to defendants argument that had respondent paid the balance of the purchase
price of the townhouse, the mortgage could have been released. It explained:
We cannot find fault with the choice of plaintiff not to further dole out money for
a property that in all events, would never be his. Moreover, defendants could, if
they were really desirous of satisfying their obligation, demanded that plaintiff
pay the outstanding balance based on their contract. This they had not done. We
can fairly surmise that defendants could not comply with their obligation
themselves, because as testified to by Mr. Almocera, they already signified to
LBP that they cannot pay their outstanding loan obligations resulting to the
foreclosure of the townhouse.
8

Moreover, as to the issue of petitioners solidary liability, it said that this issue was
belatedly raised and cannot be treated for the first time on appeal.
On 18 July 2005, the Court of Appeals denied the appeal and affirmed in toto the
decision of the trial court. The dispositive portion of the decision reads:
IN LIGHT OF ALL THE FOREGOING, this appeal is DENIED. The assailed
decision of the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB-
23687 is AFFIRMED in toto.
9

In a Resolution dated 16 November 2005, the Court of Appeals denied defendants
motion for reconsideration.
Petitioner is now before us pleading his case via a Petition for Review
on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The petition raises the
following issues:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT DEFENDANT HAS INCURRED DELAY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
SUSTAINING RESPONDENTS REFUSAL TO PAY THE BALANCE OF THE
PURCHASE PRICE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH
THE DEFENDANT COOPERATIVE FOR DAMAGES TO PLAINTIFF.
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It cannot be disputed that the contract entered into by the parties was a contract to sell.
The contract was denominated as such and it contained the provision that the unit shall
be conveyed by way of an Absolute Deed of Sale, together with the attendant
documents of Ownership the Transfer Certificate of Title and Certificate of Occupancy
and that the balance of the contract price shall be paid upon the completion and
delivery of the unit, as well as the acceptance thereof by respondent. All these clearly
indicate that ownership of the townhouse has not passed to respondent.
In Serrano v. Caguiat,
11
we explained:
A contract to sell is akin to a conditional sale where the efficacy or obligatory
force of the vendors obligation to transfer title is subordinated to the happening
of a future and uncertain event, so that if the suspensive condition does not take
place, the parties would stand as if the conditional obligation had never existed.
The suspensive condition is commonly full payment of the purchase price.
The differences between a contract to sell and a contract of sale are well-settled in
jurisprudence. As early as 1951, in Sing Yee v. Santos [47 O.G. 6372 (1951)], we
held that:
"x x x [a] distinction must be made between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a contract to sell x
x x where by agreement the ownership is reserved in the seller and is not
to pass until the full payment of the purchase price is made. In the first
case, non-payment of the price is a negative resolutory condition; in the
second case, full payment is a positive suspensive condition. Being
contraries, their effect in law cannot be identical. In the first case, the
vendor has lost and cannot recover the ownership of the land sold until
and unless the contract of sale is itself resolved and set aside. In the
second case, however, the title remains in the vendor if the vendee does
not comply with the condition precedent of making payment at the time
specified in the contract."
In other words, in a contract to sell, ownership is retained by the seller
and is not to pass to the buyer until full payment of the price.
The Contract to Sell entered into by the parties contains the following pertinent
provisions:
4. TERMS OF PAYMENT:
4a. ONE MILLION PESOS (P1,000,000.00) is hereby acknowledged as
Downpayment for the above-mentioned Contract Price.
4b. The Balance, in the amount of TWO MILLION FOUR HUNDRED PESOS
(P2,400,000.00) shall be paid thru financing Institution facilitated by the SELLER,
preferably Landbank of the Philippines (LBP).
Upon completion, delivery and acceptance of the BUYER of the Townhouse Unit,
the BUYER shall have paid the Contract Price in full to the SELLER.
x x x x
6. COMPLETION DATES OF THE TOWNHOUSE UNIT:
The unit shall be completed and conveyed by way of an Absolute Deed of Sale
together with the attendant documents of Ownership in the name of the BUYER
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the Transfer Certificate of Title and Certificate of Occupancy within a period of
six (6) months from the signing of Contract to Sell.
12

From the foregoing provisions, it is clear that petitioner and FBMC had the obligation to
complete the townhouse unit within six months from the signing of the contract. Upon
compliance therewith, the obligation of respondent to pay the balance of P2,400,000.00
arises. Upon payment thereof, the townhouse shall be delivered and conveyed to
respondent upon the execution of the Absolute Deed of Sale and other relevant
documents.
The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -
- to complete and deliver the townhouse within the six-month period. With petitioner
and FBMCs non-fulfillment of their obligation, respondent refused to pay the balance
of the contract price. Respondent does not ask that ownership of the townhouse be
transferred to him, but merely asks that the amount or down payment he had made be
returned to him.
Article 1169 of the Civil Code reads:
Art. 1169. Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment
of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
(1) When the obligation or the law expressly so declares; or
(2) When from the nature and the circumstances of the obligation it appears that
the designation of the time when the thing is to be delivered or the service is to
be rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond
his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins.
The contract subject of this case contains reciprocal obligations which were to be
fulfilled by the parties, i.e., to complete and deliver the townhouse within six months
from the execution of the contract to sell on the part of petitioner and FBMC, and to pay
the balance of the contract price upon completion and delivery of the townhouse on the
part of the respondent.
In the case at bar, the obligation of petitioner and FBMC which is to complete and
deliver the townhouse unit within the prescribed period, is determinative of the
respondents obligation to pay the balance of the contract price. With their failure to
fulfill their obligation as stipulated in the contract, they incurred delay and are liable for
damages.
13
They cannot insist that respondent comply with his obligation. Where one of
the parties to a contract did not perform the undertaking to which he was bound by the
terms of the agreement to perform, he is not entitled to insist upon the performance of
the other party.
14

On the first assigned error, petitioner insists there was no delay when the townhouse
unit was not completed within six months from the signing of the contract inasmuch as
the mere lapse of the stipulated six (6) month period is not by itself enough to constitute
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delay on his part and that of FBMC, since the law requires that there must either be
judicial or extrajudicial demand to fulfill an obligation so that the obligor may be
declared in default. He argues there was no evidence introduced showing that a prior
demand was made by respondent before the original action was instituted in the trial
court.
We do not agree.
Demand is not necessary in the instant case. Demand by the respondent would be
useless because the impossibility of complying with their (petitioner and FBMC)
obligation was due to their fault. If only they paid their loans with the LBP, the
mortgage on the subject townhouse would not have been foreclosed and thereafter sold
to a third person.
Anent the second assigned error, petitioner argues that if there was any delay, the same
was incurred by respondent because he refused to pay the balance of the contract price.
We find his argument specious.
As above-discussed, the obligation of respondent to pay the balance of the contract
price was conditioned on petitioner and FBMCs performance of their obligation.
Considering that the latter did not comply with their obligation to complete and deliver
the townhouse unit within the period agreed upon, respondent could not have incurred
delay. For failure of one party to assume and perform the obligation imposed on him,
the other party does not incur delay.
15

Under the circumstances obtaining in this case, we find that respondent is justified in
refusing to pay the balance of the contract price. He was never in possession of the
townhouse unit and he can no longer be its owner since ownership thereof has been
transferred to a third person who was not a party to the proceedings below. It would
simply be the height of inequity if we are to require respondent to pay the balance of
the contract price. To allow this would result in the unjust enrichment of petitioner and
FBMC. The fundamental doctrine of unjust enrichment is the transfer of value without
just cause or consideration. The elements of this doctrine which are present in this case
are: enrichment on the part of the defendant; impoverishment on the part of the
plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the
expense of another. It is commonly accepted that this doctrine simply means a person
shall not be allowed to profit or enrich himself inequitably at another's expense.
16
Hence,
to allow petitioner and FBMC keep the down payment made by respondent amounting
to P1,060,000.00 would result in their unjust enrichment at the expense of the
respondent. Thus, said amount should be returned.
What is worse is the fact that petitioner and FBMC intentionally failed to inform
respondent that the subject townhouse which he was going to purchase was already
mortgaged to LBP at the time of the perfection of their contract. This deliberate
withholding by petitioner and FBMC of the mortgage constitutes fraud and bad faith.
The trial court had this say:
In the light of the foregoing environmental circumstances and milieu, therefore,
it appears that the defendants are guilty of fraud in dealing with the plaintiff.
They performed voluntary and willful acts which prevent the normal realization
of the prestation, knowing the effects which naturally and necessarily arise from
such acts. Their acts import a dishonest purpose or some moral obliquity and
conscious doing of a wrong. The said acts certainly gtive rise to liability for
damages (8 Manresa 72; Borrell-Macia 26-27; 3 Camus 34; OLeary v. Macondray
& Company, 454 Phil. 812; Heredia v. Salinas, 10 Phil. 157). Article 1170 of the
New Civil Code of the Philippines provides expressly that "those who in the
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performance of their obligations are guilty of fraud and those who in any
manner contravene the tenor thereof are liable for damages.
17

On the last assigned error, petitioner contends that he should not be held solidarily
liable with defendant FBMC, because the latter is a separate and distinct entity which is
the seller of the subject townhouse. He claims that he, as Chairman and Chief Executive
Officer of FBMC, cannot be held liable because his representing FBMC in its dealings is
a corporate act for which only FBMC should be held liable.
This issue of piercing the veil of corporate fiction was never raised before the trial court.
The same was raised for the first time before the Court of Appeals which ruled that it
was too late in the day to raise the same. The Court of Appeals declared:
In the case below, the pleadings and the evidence of the defendants are one and
the same and never had it made to appear that Almocera is a person distinct and
separate from the other defendant. In fine, we cannot treat this error for the first
time on appeal. We cannot in good conscience, let the defendant Almocera raise
the issue of piercing the veil of corporate fiction just because of the adverse
decision against him. x x x.
18

To allow petitioner to pursue such a defense would undermine basic considerations of
due process. Points of law, theories, issues and arguments not brought to the attention
of the trial court will not be and ought not to be considered by a reviewing court, as
these cannot be raised for the first time on appeal. It would be unfair to the adverse
party who would have no opportunity to present further evidence material to the new
theory not ventilated before the trial court.
19

As to the award of damages granted by the trial court, and affirmed by the Court of
Appeals, we find the same to be proper and reasonable under the circumstances.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18
July 2005 in CA-G.R. CV No. 75610 is AFFIRMED. Costs against the petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

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G.R. No. 124045 May 21, 1998
SPOUSES VIVENCIO BABASA and ELENA CANTOS
BABASA, petitioners,
vs.
COURT OF APPEALS, TABANGAO REALTY, INC., and SHELL GAS
PHILIPPINES, INC., respondents.

BELLOSILLO, J.:
On 11 April 1981 El contract of "Conditional Sale of Registered Lands" was
executed between the spouses Vivencio and Elena Babasa as vendors and
Tabangao Realty, Inc. (TABANGAO) as vendee over three (3) parcels of
land, Lots Nos. 17827-A, 17827-B and 17827-C, situated in Brgy. Libjo,
Batangas City. Since the certificates of title over the lots were in the name of
third persons who had already executed deeds of reconveyance and
disclaimer in favor of the BABASAS, it was agreed that the total purchase
price of P2,121,920.00 would be paid in the following manner: P300,000.00
upon signing of the contract, and P1,821,920.00 upon presentation by the
BABASAS of transfer certificates of titles in their name, free from all liens
and encumbrances, and delivery of registerable documents of sale in favor
of TABANGAO within twenty (20) months from the signing of the contract. In
the meantime, the retained balance of the purchase price would earn
interest at seventeen percent (17%) per annum or P20,648.43 monthly
payable to the BABASAS until 31 December 1982. It was expressly
stipulated that TABANGAO would have the absolute and unconditional
right to take immediate possession of the lots as well as introduce any
improvement thereon.
On 18 May 1981 TABANGAO leased the lots to Shell Gas Philippines, Inc.
(SHELL), which immediately started the construction thereon of a
Liquefied Petroleum Gas Terminal Project, an approved zone export
enterprise of the Export Processing Zone. TABANGAO is the real estate
arm of SHELL.
The parties substantially complied with the terms of the contract.
TABANGAO paid the first installment of P300,000.00 to the BABASAS
while the latter delivered actual possession of the lots to the former. In
addition, TABANGAO paid P379,625.00 to the tenants of the lots as
disturbance compensation and as payment for existing crops as well as
P334,700.00 to the owners of the houses standing thereon in addition to
granting them residential lots with the total area of 2,800 square meters.
TABANGAO likewise paid the stipulated monthly interest for the 20-
month period amounting to P408,580.80. Meanwhile, the BABASAS filed
Civil Case No. 519
1
and Petition No. 373
2
for the transfer of titles of the lots
in their name.
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However, two (2) days prior to the expiration of the 20-month period,
specifically on 31 December 1982, the BABASAS asked TABANGAO for an
indefinite extension within which to deliver clean titles over the lots. They
asked that TABANGAO continue paying the monthly interest of P20,648.43
starting January 1983 on the ground that Civil Case No. 519 and Petition
No. 373 had not yet been resolved with finality in their favor. TABANGAO
refused the request. In retaliation the BABASAS executed a notarized
unilateral rescission dated 28 February 1983 to which TABANGAO
responded by reminding the BABASAS that they were the ones who did
not comply with their contractual obligation to deliver clean titles within
the stipulated 20-month period, hence, had no right to rescind their
contract. The BABASAS insisted on the unilateral rescission and demanded
that SHELL vacate the lots.
On 19 July 1983 TABANGAO instituted an action for specific performance
with damages in the Regional Trial Court of Batangas City to compel the
spouses to comply with their obligation to deliver clean titles over the
properties.
3
TABANGAO alleged that the BABASAS were already in a
position to secure clean certificates of title and execute registerable
documents of sale since execution of judgment pending appeal had already
been granted in their favor in Civil Case No. 519, while an order directing
reconstitution of the original copies of TCT Nos. T-32565, T-32566 and T-
32567 covering the lots had been issued in Petition No. 373. The BABASAS
moved to dismiss the complaint on the ground that their contract with
TABANGAO became null and void with the expiration of the 20-month
period given them within which to deliver clean certificates of title. SHELL
entered the dispute as intervenor praying that its lease over the premises
be respected by the BABASAS.
Despite the pendency of the case the BABASAS put up several structures
within the area in litigation to impede the movements of persons and
vehicles therein, laid claim to twelve (12) heads of cattle belonging to
intervenor SHELL and threatened to collect levy from all buyers of
liquefied petroleum gas (LPG) for their alleged use of the BABASA estate
in their business transactions with intervenor SHELL. As a result, SHELL
applied for and was granted on 10 April 1990 a temporary restraining
order against the Babasa spouses and anyone acting for and in their behalf
upon filing of a P2-million bond.
4

Eventually, judgment was rendered in favor of TABANGAO and
SHELL.
5
The court a quo ruled that the 20-month period stipulated in the
contract was never meant to be its term such that upon its expiration the
respective obligations of the parties would be extinguished. On the
contrary, the expiration thereof merely gave rise to the right of
TABANGAO to either rescind the contract or to demand that the
BABASAS comply with their contractual obligation to deliver to it clean
titles and registerable documents of sale. The notarial rescission executed
by the BABASAS was declared void and of no legal effect
xxx xxx xxx
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0

1. The unilateral rescission of contract, dated February 28, 1983,
executed by the defendant-spouses is null and void, without
any legal force and effect on the agreement dated April 11,
1981, executed between the plaintiff and the defendant-spouses;
2. The lease contract, dated May 18, 1981, executed by the
plaintiff in favor of the intervenor is deemed legally binding on
the defendant-spouses insofar as it affects the three lots subject
of this case;
3. The defendant-spouses Vivencio Babasa and Elena Cantos
are hereby ordered to deliver to the plaintiff Tabangao Realty,
Inc., clean transfer certificates of title in their name and execute
all the necessary deeds and documents necessary for the
Register of Deeds of Batangas City to facilitate the issuance of
Transfer Certificates of Title in the name of plaintiff, Tabangao
Realty, Inc. In the event the defendant-spouses fail to do so, the
Register of Deeds of Batangas City is hereby directed to cancel
the present transfer certificates of title over the three lots
covered by the Conditional Sale of Registered Lands executed
by and between plaintiff, Tabangao Realty, Inc., and the
defendant-spouses Vivencio Babasa and Elena Cantos-Babasa
on April 11, 1981, upon presentation of credible proof that said
defendant-spouses have received full payment for the lots or
payment thereof duly consigned to the Court for the account of
the defendant-spouses;
4. Plaintiff Tabangao Realty, Inc., is directed to pay the
defendant-spouses Vivencio Babasa and Elena Cantos-Babasa
the remaining balance of P1,821,920.00 out of the full purchase
price for these three lots enumerated in the agreement dated
April 11, 1981 plus interest thereon of 17% per annumor
P20,648.43 a month compounded annually beginning January
1983 until fully paid;
5. The Order dated April 10, 1990 issued in favor of the
intervenor enjoining and restraining defendant-spouses
Vivencio Babasa and Elena Cantos-Babasa and/or anyone
acting for and in their behalf from putting up any structure on
the three lots or interfering in any way in the activities of the
intervenor, its employees and agents, is made permanent, and
the bond posted by the intervenor cancelled; and,
6. Defendant-spouses Vivencio Babasa and Elena Cantos-
Babasa shall pay the costs of this proceeding as well as the
premium the intervenor may have paid in the posting of the
P2,000,000.00 bond for the issuance of the restraining order of
April 10, 1990.
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The BABASAS appealed to the Court of Appeals
7
which on 29 February
1996 affirmed the decision of the trial court rejecting the contention of the
BABASAS that the contract of 11 April 1981 was one of lease, not of
sale;
8
and described it instead as one of absolute sale though denominated
"conditional." However, compounded interest was ordered paid from 19
July 1983 only, the date of filing of the complaint, not from January 1983 as
decreed by the trial court.
The BABASAS now come to us reiterating their contention that the contract
of 11 April 1981 was in reality a contract of lease, not of sale; but even
assuming that it was indeed a sale, its nature was conditional only, the
efficacy of which was extinguished upon the non-happening of the
condition, i.e., non-delivery of clean certificates of title and registerable
documents of sale in favor of TABANGAO within twenty (20) months from
the signing of the contract.
We find no merit in the petition. Respondent appellate court has correctly
concluded that the allegation of petitioners that the contract of 11 April
1981 is one of lease, not of sale, is simply incredible. First, the contract is
replete with terms and stipulations clearly indicative of a contract of sale.
Thus, the opening whereas clause states that the parties desire and mutually
"agreed on the sale and purchase of the . . . three parcels of land;" the
BABASAS were described as the "vendors" while TABANGAO as the
"vendee" from the beginning of the contract to its end; the amount of
P2,121,920.00 was stated as the purchase price of the lots; TABANGAO, as
vendee, was granted absolute and unconditional right to take immediate
possession of the premises while the BABASAS, as vendors, warranted
such peaceful possession forever; TABANGAO was to shoulder the capital
gains tax, and; lastly, the BABASAS were expected to execute a Final Deed of
Absolute Sale in favor of TABANGAO necessary for the issuance of transfer
certificates of title the moment they were able to secure clean certificates of
title in their name. Hence, with all the foregoing, we cannot give credence
to the claim of petitioners that subject contract was one of lease simply
because the word "ownership" was never mentioned therein. Besides, as
correctly pointed out by respondent court, the BABASAS did not object to
the terms and stipulations employed in the contract at the time of its
execution when they could have easily done so considering that they were
then ably assisted by their counsel, Atty. Edgardo M. Carreon, whose legal
training negates their pretended ignorance on the matter. Hence, it is too
late for petitioners to insist that the contract is not what they intended it to
be.
But the BABASAS lament that they never intended to sell their ancestral
lots but were merely forced to do so when TABANGAO dangled the threat
of expropriation by the government (through the Export Processing Zone
Authority) in the event voluntary negotiations failed. Although a cause to
commiserate with petitioners may be perceived, it is not enough to provide
them with an avenue to escape contractual obligations validly entered into.
We have already held that contracts are valid even though one of the
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parties entered into it against his own wish and desire, or even against his
better judgment.
9
Besides, a threat of eminent domain proceedings by the
government cannot be legally classified as the kind of imminent, serious
and wrongful injury to a contracting party as to vitiate his
consent.
10
Private landowners ought to realize, and eventually accept, that
property rights must yield to the valid exercise by the state of its all-
important power of eminent domain.
11

Finally, petitioners contend that ownership over the three (3) lots was
never transferred to TABANGAO and that the contract of 11 April 1981
was rendered lifeless when the 20-month period stipulated therein expired
without them being able to deliver clean certificates of title to TABANGAO
through no fault of their own. Consequently, their unilateral rescission
dated 28 February 1983 should have been upheld as valid.
We disagree. Although denominated "Conditional Sale of Registered
Lands," we hold, as did respondent court, that the 11 April 1981 between
petitioners and respondent TABANGAO is one of absolute sale. Aside
from the terms and stipulations used therein indicating such kind of sale,
there is absolutely no proviso reserving title in the BABASAS until full
payment of the purchase price, nor any stipulation giving them the right to
unilaterally rescind the contract in case of non-payment. A deed of sale is
absolute in nature although denominated a "conditional sale" absent such
stipulations.
12
In such cases, ownership of the thing sold passes to the
vendee upon the constructive or actual delivery thereof.
13
In the instant
case, ownership over Lots Nos. 17827-A, 17827-B and 17827-C passed to
TABANGAO both by constructive and actual delivery. Constructive
delivery was accomplished upon the execution of the contract of 11 April
1981 without any reservation of title on the part of the BABASAS while
actual delivery was made when TABANGAO took unconditional
possession of the lots and leased them to its associate company SHELL
which constructed its multi-million peso LPG Project thereon.
14

We do not agree with petitioners that their contract with TABANGAO lost
its efficacy when the 20-month period stipulated therein expired without
petitioners being able to deliver clean certificates of title such that
TABANGAO may no longer demand performance of their obligation.
In Romero v. Court of Appeals
15
and Lim v. Court of Appeals
16
the Court
distinguished between a condition imposed on the perfection of a contract
and a condition imposed merely on the performance of an obligation.
While failure to comply with the first condition results in the failure of a
contract, failure to comply with the second merely gives the other party the
option to either refuse to proceed with the sale or to waive the condition.
17

Here, a perfected contract of absolute sale exists between the BABASAS
and TABANGAO when they agreed on the sale of a determinate subject
matter, i.e., Lots No. 17827-A, 17827-B and 17827-C, and the price certain
therefor without any condition or reservation of title on the part of the
BABASAS. However, the obligation of TABANGAO as vendee to pay
the full amount of the purchase price was made subject to the condition
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that petitioners first deliver the clean titles over the lots within twenty (20)
months from the signing of the contract. If petitioners succeed in delivering
the titles within the stipulated 20-month period, they would get
P1,821,920.00 representing the entire balance of the purchase price retained
by TABANGAO. Otherwise, the deed of sale itself provides that
. . . upon the expiration of the 20-month period from the signing
of the contract the Vendee is hereby authorized to settle out of
the balance retained by the Vendee all legally valid and existing
obligations on the properties
. . . and whatever balance remaining after said settlement shall
be paid to the Vendor.
Clearly then, the BABASAS' act of unilaterally rescinding their contract
with TABANGAO is unwarranted. Even without the abovequoted
stipulation in the deed, the failure of petitioners to deliver clean titles
within twenty (20) months from the signing of the contract merely gives
TABANGAO the option to either refuse to proceed with the sale or to
waive the condition in consonance with Art. 1545 of the New Civil
Code.
18
Besides, it would be the height of inequity to allow the BABASAS
to rescind their contract of sale with TABANGAO by invoking as a ground
therefor their own failure to deliver the titles over the lots within the
stipulated period.
WHEREFORE, the petition is DENIED. The appealed decision of the Court
of Appeals in CA-G.R. CV No. 39554 affirming that of the Regional Trial
Court of Batangas City, Br. 4, is AFFIRMED. No costs.
SO ORDERED.
Davide, Jr., Vitug, Panganiban and Quisumbing, JJ., concur.

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G.R. No. 138018 July 26, 2002
RIDO MONTECILLO, petitioner,
vs.
IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA
ABUCAY, respondents.
CARPIO, J.:
The Case
On March 24, 1993, the Regional Trial Court of Cebu City, Branch 18,
rendered a Decision
1
declaring the deed of sale of a parcel of land in favor
of petitioner null and void ab initio. The Court of Appeals,
2
in its July 16,
1998 Decision
3
as well as its February 11, 1999 Order
4
denying petitioners
Motion for Reconsideration, affirmed the trial courts decision in toto.
Before this Court now is a Petition for Review on Certiorari
5
assailing the
Court of Appeals decision and order.
The Facts
Respondents Ignacia Reynes ("Reynes" for brevity) and Spouses Abucay
("Abucay Spouses" for brevity) filed on June 20, 1984 a complaint for
Declaration of Nullity and Quieting of Title against petitioner Rido
Montecillo ("Montecillo" for brevity). Reynes asserted that she is the owner
of a lot situated in Mabolo, Cebu City, covered by Transfer Certificate of
Title No. 74196 and containing an area of 448 square meters ("Mabolo Lot"
for brevity). In 1981, Reynes sold 185 square meters of the Mabolo Lot to
the Abucay Spouses who built a residential house on the lot they bought.
Reynes alleged further that on March 1, 1984 she signed a Deed of Sale of
the Mabolo Lot in favor of Montecillo ("Montecillos Deed of Sale" for
brevity). Reynes, being illiterate,
6
signed by affixing her thumb-mark
7
on
the document. Montecillo promised to pay the agreed P47,000.00 purchase
price within one month from the signing of the Deed of Sale. Montecillos
Deed of Sale states as follows:
"That I, IGNACIA T. REYNES, of legal age, Filipino, widow, with
residence and postal address at Mabolo, Cebu City, Philippines, for
and in consideration of FORTY SEVEN THOUSAND (P47,000.00)
PESOS, Philippine Currency, to me in hand paid by RIDO
MONTECILLO, of legal age, Filipino, married, with residence and
postal address at Mabolo, Cebu City, Philippines, the receipt hereof is
hereby acknowledged, have sold, transferred, and conveyed, unto
RIDO MONTECILLO, his heirs, executors, administrators, and
assigns, forever, a parcel of land together with the improvements
thereon, situated at Mabolo, Cebu City, Philippines, free from all
liens and encumbrances, and more particularly described as follows:
A parcel of land (Lot 203-B-2-B of the subdivision plan Psd-07-
01-00 2370, being a portion of Lot 203-B-2, described on plan
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(LRC) Psd-76821, L.R.C. (GLRO) Record No. 5988), situated in
the Barrio of Mabolo, City of Cebu. Bounded on the SE., along
line 1-2 by Lot 206; on the SW., along line 2-3, by Lot 202, both
of Banilad Estate; on the NW., along line 4-5, by Lot 203-B-2-A
of the subdivision of Four Hundred Forty Eight (448) square
meters, more or less.
of which I am the absolute owner in accordance with the provisions
of the Land Registration Act, my title being evidenced by Transfer
Certificate of Title No. 74196 of the Registry of Deeds of the City of
Cebu, Philippines. That This Land Is Not Tenanted and Does Not Fall
Under the Purview of P.D. 27."
8
(Emphasis supplied)
Reynes further alleged that Montecillo failed to pay the purchase price after
the lapse of the one-month period, prompting Reynes to demand from
Montecillo the return of the Deed of Sale. Since Montecillo refused to
return the Deed of Sale,
9
Reynes executed a document unilaterally
revoking the sale and gave a copy of the document to Montecillo.
Subsequently, on May 23, 1984 Reynes signed a Deed of Sale transferring to
the Abucay Spouses the entire Mabolo Lot, at the same time confirming the
previous sale in 1981 of a 185-square meter portion of the lot. This Deed of
Sale states:
"I, IGNACIA T. REYNES, of legal age, Filipino, widow and resident
of Mabolo, Cebu City, do hereby confirm the sale of a portion of Lot
No. 74196 to an extent of 185 square meters to Spouses Redemptor
Abucay and Elisa Abucay covered by Deed per Doc. No. 47, Page No.
9, Book No. V, Series of 1981 of notarial register of Benedicto Alo, of
which spouses is now in occupation;
That for and in consideration of the total sum of FIFTY THOUSAND
(P50,000) PESOS, Philippine Currency, received in full and receipt
whereof is herein acknowledged from SPOUSES REDEMPTOR
ABUCAY and ELISA ABUCAY, do hereby in these presents, SELL,
TRANSFER and CONVEY absolutely unto said Spouses Redemptor
Abucay and Elisa Abucay, their heirs, assigns and successors-in-
interest the whole parcel of land together with improvements thereon
and more particularly described as follows:
TCT No. 74196
A parcel of land (Lot 203-B-2-B of the subdivision plan psd-07-
01-002370, being a portion of Lot 203-B-2, described on plan
(LRC) Psd 76821, LRC (GLRO) Record No. 5988) situated in
Mabolo, Cebu City, along Arcilla Street, containing an area of
total FOUR HUNDRED FORTY EIGHT (448) Square meters.
of which I am the absolute owner thereof free from all liens and
encumbrances and warrant the same against claim of third persons
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and other deeds affecting said parcel of land other than that to the
said spouses and inconsistent hereto is declared without any effect.
In witness whereof, I hereunto signed this 23
rd
day of May, 1984 in
Cebu City, Philippines."
10

Reynes and the Abucay Spouses alleged that on June 18, 1984 they received
information that the Register of Deeds of Cebu City issued Certificate of
Title No. 90805 in the name of Montecillo for the Mabolo Lot.
Reynes and the Abucay Spouses argued that "for lack of consideration
there (was) no meeting of the minds"
11
between Reynes and Montecillo.
Thus, the trial court should declare null and void ab initio Montecillos
Deed of Sale, and order the cancellation of Certificate of Title No. 90805 in
the name of Montecillo.
In his Answer, Montecillo, a bank executive with a B.S. Commerce
degree,
12
claimed he was a buyer in good faith and had actually paid
the P47,000.00 consideration stated in his Deed of Sale. Montecillo,
however, admitted he still owed Reynes a balance of P10,000.00. He also
alleged that he paid P50,000.00 for the release of the chattel mortgage
which he argued constituted a lien on the Mabolo Lot. He further alleged
that he paid for the real property tax as well as the capital gains tax on the
sale of the Mabolo Lot.
In their Reply, Reynes and the Abucay Spouses contended that Montecillo
did not have authority to discharge the chattel mortgage, especially after
Reynes revoked Montecillos Deed of Sale and gave the mortgagee a copy
of the document of revocation. Reynes and the Abucay Spouses claimed
that Montecillo secured the release of the chattel mortgage through
machination. They further asserted that Montecillo took advantage of the
real property taxes paid by the Abucay Spouses and surreptitiously caused
the transfer of the title to the Mabolo Lot in his name.
During pre-trial, Montecillo claimed that the consideration for the sale of
the Mabolo Lot was the amount he paid to Cebu Ice and Cold Storage
Corporation ("Cebu Ice Storage" for brevity) for the mortgage debt of
Bienvenido Jayag ("Jayag" for brevity). Montecillo argued that the release
of the mortgage was necessary since the mortgage constituted a lien on the
Mabolo Lot.
Reynes, however, stated that she had nothing to do with Jayags mortgage
debt except that the house mortgaged by Jayag stood on a portion of the
Mabolo Lot. Reynes further stated that the payment by Montecillo to
release the mortgage on Jayags house is a matter between Montecillo and
Jayag. The mortgage on the house, being a chattel mortgage, could not be
interpreted in any way as an encumbrance on the Mabolo Lot. Reynes
further claimed that the mortgage debt had long prescribed since the
P47,000.00 mortgage debt was due for payment on January 30, 1967.
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The trial court rendered a decision on March 24, 1993 declaring the Deed of
Sale to Montecillo null and void. The trial court ordered the cancellation of
Montecillos Transfer Certificate of Title No. 90805 and the issuance of a
new certificate of title in favor of the Abucay Spouses. The trial court found
that Montecillos Deed of Sale had no cause or consideration because
Montecillo never paid Reynes the P47,000.00 purchase price, contrary to
what is stated in the Deed of Sale that Reynes received the purchase price.
The trial court ruled that Montecillos Deed of Sale produced no effect
whatsoever for want of consideration. The dispositive portion of the trial
courts decision reads as follows:
"WHEREFORE, in view of the foregoing consideration, judgment is
hereby rendered declaring the deed of sale in favor of defendant null
and void and of no force and effect thereby ordering the cancellation
of Transfer Certificate of Title No. 90805 of the Register of Deeds of
Cebu City and to declare plaintiff Spouses Redemptor and Elisa
Abucay as rightful vendees and Transfer Certificate of Title to the
property subject matter of the suit issued in their names. The
defendants are further directed to pay moral damages in the sum
of P20,000.00 and attorneys fees in the sum of P2,000.00 plus cost of
the suit.
xxx"
Not satisfied with the trial courts Decision, Montecillo appealed the same
to the Court of Appeals.
Ruling of the Court of Appeals
The appellate court affirmed the Decision of the trial court in toto and
dismissed the appeal
13
on the ground that Montecillos Deed of Sale is void
for lack of consideration. The appellate court also denied Montecillos
Motion for Reconsideration
14
on the ground that it raised no new
arguments.
Still dissatisfied, Montecillo filed the present petition for review on
certiorari.
The Issues
Montecillo raises the following issues:
1. "Was there an agreement between Reynes and Montecillo that the
stated consideration of P47,000.00 in the Deed of Sale be paid to Cebu
Ice and Cold Storage to secure the release of the Transfer Certificate
of Title?"
2. "If there was none, is the Deed of Sale void from the beginning or
simply rescissible?"
15

The Ruling of the Court
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The petition is devoid of merit.
First issue: manner of payment of the P47,000.00 purchase price.
Montecillos Deed of Sale does not state that the P47,000.00 purchase price
should be paid by Montecillo to Cebu Ice Storage. Montecillo failed to
adduce any evidence before the trial court showing that Reynes had
agreed, verbally or in writing, that the P47,000.00 purchase price should be
paid to Cebu Ice Storage. Absent any evidence showing that Reynes had
agreed to the payment of the purchase price to any other party, the
payment to be effective must be made to Reynes, the vendor in the sale.
Article 1240 of the Civil Code provides as follows:
"Payment shall be made to the person in whose favor the obligation
has been constituted, or his successor in interest, or any person
authorized to receive it."
Thus, Montecillos payment to Cebu Ice Storage is not the payment that
would extinguish
16
Montecillos obligation to Reynes under the Deed of
Sale.
It militates against common sense for Reynes to sell her Mabolo Lot
for P47,000.00 if this entire amount would only go to Cebu Ice Storage,
leaving not a single centavo to her for giving up ownership of a valuable
property. This incredible allegation of Montecillo becomes even more
absurd when one considers that Reynes did not benefit, directly or
indirectly, from the payment of the P47,000.00 to Cebu Ice Storage.
The trial court found that Reynes had nothing to do with Jayags mortgage
debt with Cebu Ice Storage. The trial court made the following findings of
fact:
"x x x. Plaintiff Ignacia Reynes was not a party to nor privy of the
obligation in favor of the Cebu Ice and Cold Storage Corporation, the
obligation being exclusively of Bienvenido Jayag and wife who
mortgaged their residential house constructed on the land subject
matter of the complaint. The payment by the defendant to release the
residential house from the mortgage is a matter between him and
Jayag and cannot by implication or deception be made to appear as
an encumbrance upon the land."
17

Thus, Montecillos payment to Jayags creditor could not possibly redound
to the benefit
18
of Reynes. We find no reason to disturb the factual findings
of the trial court. In petitions for review on certiorari as a mode of appeal
under Rule 45, as in the instant case, a petitioner can raise only questions of
law.
19
This Court is not the proper venue to consider a factual issue as it is
not a trier of facts.
Second issue: whether the Deed of Sale is void ab initio or only rescissible.
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Under Article 1318 of the Civil Code, "[T]here is no contract unless the
following requisites concur: (1) Consent of the contracting parties; (2)
Object certain which is the subject matter of the contract; (3) Cause of the
obligation which is established." Article 1352 of the Civil Code also
provides that "[C]ontracts without cause x x x produce no effect
whatsoever."
Montecillo argues that his Deed of Sale has all the requisites of a valid
contract. Montecillo points out that he agreed to purchase, and Reynes
agreed to sell, the Mabolo Lot at the price of P47,000.00. Thus, the three
requisites for a valid contract concur: consent, object certain and
consideration. Montecillo asserts there is no lack of consideration that
would prevent the existence of a valid contract. Rather, there is only non-
payment of the consideration within the period agreed upon for payment.
Montecillo argues there is only a breach of his obligation to pay the full
purchase price on time. Such breach merely gives Reynes a right to ask for
specific performance, or for annulment of the obligation to sell the Mabolo
Lot. Montecillo maintains that in reciprocal obligations, the injured party
can choose between fulfillment and rescission,
20
or more properly
cancellation, of the obligation under Article 1191
21
of the Civil Code. This
Article also provides that the "court shall decree the rescission claimed,
unless there be just cause authorizing the fixing of the period." Montecillo
claims that because Reynes failed to make a demand for payment, and
instead unilaterally revoked Montecillos Deed of Sale, the court has a just
cause to fix the period for payment of the balance of the purchase price.
These arguments are not persuasive.
Montecillos Deed of Sale states that Montecillo paid, and Reynes received,
the P47,000.00 purchase price on March 1, 1984, the date of signing of the
Deed of Sale. This is clear from the following provision of the Deed of Sale:
"That I, IGNACIA T. REYNES, x x x for and in consideration of
FORTY SEVEN THOUSAND (P47,000.00) PESOS, Philippine
Currency, to me in hand paid by RIDO MONTECILLO xxx, receipt of
which is hereby acknowledged, have sold, transferred, and conveyed,
unto RIDO MONTECILLO, x x x a parcel of land x x x."
On its face, Montecillos Deed of Absolute Sale
22
appears supported by a
valuable consideration. However, based on the evidence presented by both
Reynes and Montecillo, the trial court found that Montecillo never paid to
Reynes, and Reynes never received from Montecillo, the P47,000.00
purchase price. There was indisputably a total absence of consideration
contrary to what is stated in Montecillos Deed of Sale. As pointed out by
the trial court
"From the allegations in the pleadings of both parties and the oral
and documentary evidence adduced during the trial, the court is
convinced that the Deed of Sale (Exhibits "1" and "1-A") executed by
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plaintiff Ignacia Reynes acknowledged before Notary Public
Ponciano Alvinio is devoid of any consideration. Plaintiff Ignacia
Reynes through the representation of Baudillo Baladjay had executed
a Deed of Sale in favor of defendant on the promise that the
consideration should be paid within one (1) month from the
execution of the Deed of Sale. However, after the lapse of said period,
defendant failed to pay even a single centavo of the consideration.
The answer of the defendant did not allege clearly why no
consideration was paid by him except for the allegation that he had a
balance of only P10,000.00. It turned out during the pre-trial that
what the defendant considered as the consideration was the amount
which he paid for the obligation of Bienvenido Jayag with the Cebu
Ice and Cold Storage Corporation over which plaintiff Ignacia Reynes
did not have a part except that the subject of the mortgage was
constructed on the parcel of land in question. Plaintiff Ignacia Reynes
was not a party to nor privy of the obligation in favor of the Cebu Ice
and Cold Storage Corporation, the obligation being exclusively of
Bienvenido Jayag and wife who mortgaged their residential house
constructed on the land subject matter of the complaint. The payment
by the defendant to release the residential house from the mortgage
is a matter between him and Jayag and cannot by implication or
deception be made to appear as an encumbrance upon the land. "
23

Factual findings of the trial court are binding on us, especially if the Court
of Appeals affirms such findings.
24
We do not disturb such findings unless
the evidence on record clearly does not support such findings or such
findings are based on a patent misunderstanding of facts,
25
which is not the
case here. Thus, we find no reason to deviate from the findings of both the
trial and appellate courts that no valid consideration supported
Montecillos Deed of Sale.
This is not merely a case of failure to pay the purchase price, as Montecillo
claims, which can only amount to a breach of obligation with rescission as
the proper remedy. What we have here is a purported contract that lacks a
cause - one of the three essential requisites of a valid contract. Failure to
pay the consideration is different from lack of consideration. The former
results in a right to demand the fulfillment or cancellation of the obligation
under an existing valid contract
26
while the latter prevents the existence of
a valid contract
Where the deed of sale states that the purchase price has been paid but in
fact has never been paid, the deed of sale is null and void ab initio for lack
of consideration. This has been the well-settled rule as early as Ocejo Perez
& Co. v. Flores,
27
a 1920 case. As subsequently explained in Mapalo v.
Mapalo
28

"In our view, therefore, the ruling of this Court in Ocejo Perez & Co.
vs. Flores, 40 Phil. 921, is squarely applicable herein. In that case we
ruled that a contract of purchase and sale is null and void and
produces no effect whatsoever where the same is without cause or
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consideration in that the purchase price which appears thereon as
paid has in fact never been paid by the purchaser to the vendor."
The Court reiterated this rule in Vda. De Catindig v. Heirs of Catalina
Roque,
29
to wit
"The Appellate Courts finding that the price was not paid or that the
statement in the supposed contracts of sale (Exh. 6 to 26) as to the
payment of the price was simulated fortifies the view that the alleged
sales were void. "If the price is simulated, the sale is void . . ." (Art.
1471, Civil Code)
A contract of sale is void and produces no effect whatsoever where
the price, which appears thereon as paid, has in fact never been paid
by the purchaser to the vendor (Ocejo, Perez & Co. vs. Flores and Bas,
40 Phil. 921; Mapalo vs. Mapalo, L-21489, May 19, 1966, 64 O.G. 331,
17 SCRA 114, 122). Such a sale is non-existent (Borromeo vs.
Borromeo, 98 Phil. 432) or cannot be considered consummated
(Cruzado vs. Bustos and Escaler, 34 Phil. 17; Garanciang vs.
Garanciang, L-22351, May 21, 1969, 28 SCRA 229)."
Applying this well-entrenched doctrine to the instant case, we rule that
Montecillos Deed of Sale is null and voidab initio for lack of consideration.
Montecillo asserts that the only issue in controversy is "the mode and/or
manner of payment and/or whether or not payment has been
made."
30
Montecillo implies that the mode or manner of payment is
separate from the consideration and does not affect the validity of the
contract. In the recent case of San Miguel Properties Philippines, Inc. v.
Huang,
31
we ruled that
"In Navarro v. Sugar Producers Cooperative Marketing Association, Inc. (1
SCRA 1181 [1961]), we laid down the rule that the manner of
payment of the purchase price is an essential element before a valid
and binding contract of sale can exist. Although the Civil Code does
not expressly state that the minds of the parties must also meet on the
terms or manner of payment of the price, the same is needed,
otherwise there is no sale. As held in Toyota Shaw, Inc. v. Court of
Appeals (244 SCRA 320 [1995]), agreement on the manner of payment
goes into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price." (Emphasis
supplied)
One of the three essential requisites of a valid contract is consent of the
parties on the object and cause of the contract. In a contract of sale, the
parties must agree not only on the price, but also on the manner of
payment of the price. An agreement on the price but a disagreement on the
manner of its payment will not result in consent, thus preventing the
existence of a valid contract for lack of consent. This lack of consent is
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separate and distinct from lack of consideration where the contract states
that the price has been paid when in fact it has never been paid.
Reynes expected Montecillo to pay him directly the P47,000.00 purchase
price within one month after the signing of the Deed of Sale. On the other
hand, Montecillo thought that his agreement with Reynes required him to
pay the P47,000.00 purchase price to Cebu Ice Storage to settle Jayags
mortgage debt. Montecillo also acknowledged a balance of P10,000.00 in
favor of Reynes although this amount is not stated in Montecillos Deed of
Sale. Thus, there was no consent, or meeting of the minds, between Reynes
and Montecillo on the manner of payment. This prevented the existence of
a valid contract because of lack of consent.
In summary, Montecillos Deed of Sale is null and void ab initio not only
for lack of consideration, but also for lack of consent. The cancellation of
TCT No. 90805 in the name of Montecillo is in order as there was no valid
contract transferring ownership of the Mabolo Lot from Reynes to
Montecillo.
WHEREFORE, the petition is DENIED and the assailed Decision dated July
16, 1998 of the Court of Appeals in CA-G.R. CV No. 41349 is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Puno, Panganiban, and Sandoval-Gutierrez, JJ., concur.

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G.R. No. 103577 October 7, 1996
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL,
ANNABELLE C. GONZALES (for herself and on behalf of Florida C. Tupper, as
attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and
CATALINA BALAIS MABANAG, petitioners,
vs.
THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA
PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-
fact, respondents.

MELO, J.:p
The petition before us has its roots in a complaint for specific performance to compel
herein petitioners (except the last named, Catalina Balais Mabanag) to consummate the
sale of a parcel of land with its improvements located along Roosevelt Avenue in
Quezon City entered into by the parties sometime in January 1985 for the price of
P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et al.
(hereinafter referred to as Coronels) executed a document entitled
"Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona
Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced
hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 Total amount
50,000 Down payment

P1,190,000.00 Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City,
the sum of Fifty Thousand Pesos purchase price of our inherited house
and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon
City, in the total amount of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased
father, Constancio P. Coronel, the transfer certificate of title immediately
upon receipt of the down payment above-stated.
On our presentation of the TCT already in or name, We will immediately
execute the deed of absolute sale of said property and Miss Ramona
Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00)
Pesos upon execution of the document aforestated;
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2. The Coronels will cause the transfer in their names of the title of the
property registered in the name of their deceased father upon receipt of
the Fifty Thousand (P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the Coronels
will execute the deed of absolute sale in favor of Ramona and the latter
will pay the former the whole balance of One Million One Hundred
Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D.
Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid
the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh.
"2").
On February 6, 1985, the property originally registered in the name of the
Coronels' father was transferred in their names under TCT
No. 327043 (Exh. "D"; Exh. "4")
On February 18, 1985, the Coronels sold the property covered by TCT No.
327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred
to as Catalina) for One Million Five Hundred Eighty Thousand
(P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand
(P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")
For this reason, Coronels canceled and rescinded the contract (Exh. "A")
with Ramona by depositing the down payment paid by Concepcion in the
bank in trust for Ramona Patricia Alcaraz.
On February 22, 1985, Concepcion, et al., filed a complaint for specific
performance against the Coronels and caused the annotation of a notice
of lis pendens at the back of TCT No. 327403 (Exh. "E"; Exh. "5").
On April 2, 1985, Catalina caused the annotation of a notice of adverse
claim covering the same property with the Registry of Deeds of Quezon
City (Exh. "F"; Exh. "6").
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the
subject property in favor of Catalina (Exh. "G"; Exh. "7").
On June 5, 1985, a new title over the subject property was issued in the
name of Catalina under TCT No. 351582 (Exh. "H"; Exh. "8").
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the
parties agreed to submit the case for decision solely on the basis of documentary
exhibits. Thus, plaintiffs therein (now private respondents) proffered their documentary
evidence accordingly marked as Exhibits "A" through "J", inclusive of their
corresponding submarkings. Adopting these same exhibits as their own, then
defendants (now petitioners) accordingly offered and marked them as Exhibits "1"
through "10", likewise inclusive of their corresponding submarkings. Upon motion of
the parties, the trial court gave them thirty (30) days within which to simultaneously
submit their respective memoranda, and an additional 15 days within which to submit
their corresponding comment or reply thereof, after which, the case would be deemed
submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura,
who was then temporarily detailed to preside over Branch 82 of the RTC of Quezon
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City. On March 1, 1989, judgment was handed down by Judge Roura from his regular
bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered
ordering defendant to execute in favor of plaintiffs a deed of absolute sale
covering that parcel of land embraced in and covered by Transfer
Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of
Deeds for Quezon City, together with all the improvements existing
thereon free from all liens and encumbrances, and once accomplished, to
immediately deliver the said document of sale to plaintiffs and upon
receipt thereof, the said document of sale to plaintiffs and upon receipt
thereof, the plaintiffs are ordered to pay defendants the whole balance of
the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate
of Title No. 331582 of the Registry of Deeds for Quezon City in the name
of intervenor is hereby canceled and declared to be without force and
effect. Defendants and intervenor and all other persons claiming under
them are hereby ordered to vacate the subject property and deliver
possession thereof to plaintiffs. Plaintiffs' claim for damages and
attorney's fees, as well as the counterclaims of defendants and intervenors
are hereby dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioner before the new presiding judge of
the Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and
to render anew decision by the undersigned Presiding Judge should be
denied for the following reasons: (1) The instant case became submitted
for decision as of April 14, 1988 when the parties terminated the
presentation of their respective documentary evidence and when the
Presiding Judge at that time was Judge Reynaldo Roura. The fact that they
were allowed to file memoranda at some future date did not change the
fact that the hearing of the case was terminated before Judge Roura and
therefore the same should be submitted to him for decision; (2) When the
defendants and intervenor did not object to the authority of Judge
Reynaldo Roura to decide the case prior to the rendition of the decision,
when they met for the first time before the undersigned Presiding Judge at
the hearing of a pending incident in Civil Case No. Q-46145 on November
11, 1988, they were deemed to have acquiesced thereto and they are now
estopped from questioning said authority of Judge Roura after they
received the decision in question which happens to be adverse to them; (3)
While it is true that Judge Reynaldo Roura was merely a Judge-on-detail
at this Branch of the Court, he was in all respects the Presiding Judge with
full authority to act on any pending incident submitted before this Court
during his incumbency. When he returned to his Official Station at
Macabebe, Pampanga, he did not lose his authority to decide or resolve
such cases submitted to him for decision or resolution because he
continued as Judge of the Regional Trial Court and is of co-equal rank
with the undersigned Presiding Judge. The standing rule and supported
by jurisprudence is that a Judge to whom a case is submitted for decision
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has the authority to decide the case notwithstanding his transfer to
another branch or region of the same court (Sec. 9, Rule 135, Rule of
Court).
Coming now to the twin prayer for reconsideration of the Decision dated
March 1, 1989 rendered in the instant case, resolution of which now
pertains to the undersigned Presiding Judge, after a meticulous
examination of the documentary evidence presented by the parties, she is
convinced that the Decision of March 1, 1989 is supported by evidence
and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or
to Annul Decision and Render Anew Decision by the Incumbent Presiding
Judge" dated March 20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of
Appeals (Buena, Gonzaga-Reyes, Abad Santos (P), JJ.) rendered its decision fully
agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last pleading, private
respondents' Reply Memorandum, was filed on September 15, 1993. The case was,
however, re-raffled to undersigned ponente only on August 28, 1996, due to the
voluntary inhibition of the Justice to whom the case was last assigned.
While we deem it necessary to introduce certain refinements in the disquisition of
respondent court in the affirmance of the trial court's decision, we definitely find the
instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of the other
issues in the case at bar is the precise determination of the legal significance of the
document entitled "Receipt of Down Payment" which was offered in evidence by both
parties. There is no dispute as to the fact that said document embodied the binding
contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio
P. Coronel on the other, pertaining to a particular house and lot covered by TCT No.
119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as
follows:
Art. 1305. A contract is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or to
render some service.
While, it is the position of private respondents that the "Receipt of Down Payment"
embodied a perfected contract of sale, which perforce, they seek to enforce by means of
an action for specific performance, petitioners on their part insist that what the
document signified was a mere executory contract to sell, subject to certain suspensive
conditions, and because of the absence of Ramona P. Alcaraz, who left for the United
States of America, said contract could not possibly ripen into a contract absolute sale.
Plainly, such variance in the contending parties' contentions is brought about by the
way each interprets the terms and/or conditions set forth in said private instrument.
Withal, based on whatever relevant and admissible evidence may be available on
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record, this, Court, as were the courts below, is now called upon to adjudge what the
real intent of the parties was at the time the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing,
and the other to pay therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent.
The essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership
in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale
because the first essential element is lacking. In a contract to sell, the prospective seller
explicity reserves the transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present purposes we shall
take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill is promise to sell the subject property when the entire amount of the
purchase price is delivered to him. In other words the full payment of the purchase
price partakes of a suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and thus, ownership is retained by the prospective seller
without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741
[1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the
respondent was a contract to sell where the ownership or title is retained
by the seller and is not to pass until the full payment of the price, such
payment being a positive suspensive condition and failure of which is not
a breach, casual or serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, the prospective seller's obligation to sell the subject
property by entering into a contract of sale with the prospective buyer becomes
demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain
is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported by
a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively to
the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
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A contract to sell as defined hereinabove, may not even be considered as a conditional
contract of sale where the seller may likewise reserve title to the property subject of the
sale until the fulfillment of a suspensive condition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the suspensive
condition is not fulfilled, the perfection of the contract of sale is completely abated
(cf. Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However,
if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that
if there had already been previous delivery of the property subject of the sale to the
buyer, ownership thereto automatically transfers to the buyer by operation of law
without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, ownership will not automatically transfer to the buyer
although the property may have been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer by entering into a contract of
absolute sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale
specially in cases where the subject property is sold by the owner not to the party the
seller contracted with, but to a third person, as in the case at bench. In a contract to sell,
there being no previous sale of the property, a third person buying such property
despite the fulfillment of the suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective
buyer cannot seek the relief of reconveyance of the property. There is no double sale in
such case. Title to the property will transfer to the buyer after registration because there
is no defect in the owner-seller's title per se, but the latter, of course, may be used for
damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive
condition, the sale becomes absolute and this will definitely affect the seller's title
thereto. In fact, if there had been previous delivery of the subject property, the seller's
ownership or title to the property is automatically transferred to the buyer such that,
the seller will no longer have any title to transfer to any third person. Applying Article
1544 of the Civil Code, such second buyer of the property who may have had actual or
constructive knowledge of such defect in the seller's title, or at least was charged with
the obligation to discover such defect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer, the
first buyer may seek reconveyance of the property subject of the sale.
With the above postulates as guidelines, we now proceed to the task of deciphering the
real nature of the contract entered into by petitioners and private respondents.
It is a canon in the interpretation of contracts that the words used therein should be
given their natural and ordinary meaning unless a technical meaning was intended
(Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the
said "Receipt of Down Payment" that they
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City,
the sum of Fifty Thousand Pesos purchase price of our inherited house and lot,
covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in
the total amount of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price,
the natural and ordinary idea conveyed is that they sold their property.
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When the "Receipt of Down Payment" is considered in its entirety, it becomes more
manifest that there was a clear intent on the part of petitioners to transfer title to the
buyer, but since the transfer certificate of title was still in the name of petitioner's father,
they could not fully effect such transfer although the buyer was then willing and able to
immediately pay the purchase price. Therefore, petitioners-sellers undertook upon
receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the
issuance of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to execute the
deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the
purchase price.
The agreement could not have been a contract to sell because the sellers herein made no
express reservation of ownership or title to the subject parcel of land. Furthermore, the
circumstance which prevented the parties from entering into an absolute contract of sale
pertained to the sellers themselves (the certificate of title was not in their names) and
not the full payment of the purchase price. Under the established facts and
circumstances of the case, the Court may safely presume that, had the certificate of title
been in the names of petitioners-sellers at that time, there would have been no reason
why an absolute contract of sale could not have been executed and consummated right
there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely
promise to sell the properly to private respondent upon the fulfillment of the
suspensive condition. On the contrary, having already agreed to sell the subject
property, they undertook to have the certificate of title changed to their names and
immediately thereafter, to execute the written deed of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the sellers, after
compliance by the buyer with certain terms and conditions, promised to sell the
property to the latter. What may be perceived from the respective undertakings of the
parties to the contract is that petitioners had already agreed to sell the house and lot
they inherited from their father, completely willing to transfer full ownership of the
subject house and lot to the buyer if the documents were then in order. It just happened,
however, that the transfer certificate of title was then still in the name of their father. It
was more expedient to first effect the change in the certificate of title so as to bear their
names. That is why they undertook to cause the issuance of a new transfer of the
certificate of title in their names upon receipt of the down payment in the amount of
P50,000.00. As soon as the new certificate of title is issued in their names, petitioners
were committed to immediately execute the deed of absolute sale. Only then will the
obligation of the buyer to pay the remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly entered into
so as to protect the seller against a buyer who intends to buy the property in installment
by withholding ownership over the property until the buyer effects full payment
therefor, in the contract entered into in the case at bar, the sellers were the one who
were unable to enter into a contract of absolute sale by reason of the fact that the
certificate of title to the property was still in the name of their father. It was the sellers in
this case who, as it were, had the impediment which prevented, so to speak, the
execution of an contract of absolute sale.
What is clearly established by the plain language of the subject document is that when
the said "Receipt of Down Payment" was prepared and signed by petitioners Romeo A.
Coronel, et al., the parties had agreed to a conditional contract of sale, consummation of
which is subject only to the successful transfer of the certificate of title from the name of
petitioners' father, Constancio P. Coronel, to their names.
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The Court significantly notes this suspensive condition was, in fact, fulfilled on
February 6, 1985 (Exh. "D"; Exh. "4"). Thus, on said date, the conditional contract of sale
between petitioners and private respondent Ramona P. Alcaraz became obligatory, the
only act required for the consummation thereof being the delivery of the property by
means of the execution of the deed of absolute sale in a public instrument, which
petitioners unequivocally committed themselves to do as evidenced by the "Receipt of
Down Payment."
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to
the case at bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and
upon the price.
From the moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as
the extinguishment or loss of those already acquired, shall depend upon
the happening of the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of a certificate of
title in petitioners' names was fulfilled on February 6, 1985, the respective obligations of
the parties under the contract of sale became mutually demandable, that is, petitioners,
as sellers, were obliged to present the transfer certificate of title already in their names
to private respondent Ramona P. Alcaraz, the buyer, and to immediately execute the
deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their petition,
petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves "to effect the transfer
in our names from our deceased father Constancio P. Coronel, the transfer
certificate of title immediately upon receipt of the downpayment above-
stated". The sale was still subject to this suspensive condition. (Emphasis
supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale subject to a
suspensive condition. Only, they contend, continuing in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first
transferring the title to the property under their names, there could be no
perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they set their own trap for themselves, for Article 1186 of the Civil
Code expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more controlling than these
mere hypothetical arguments is the fact that the condition herein referred to was actually
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and indisputably fulfilled on February 6, 1985, when a new title was issued in the names of
petitioners as evidenced by TCT No. 327403 (Exh. "D"; Exh. "4").
The inevitable conclusion is that on January 19, 1985, as evidenced by the document
denominated as "Receipt of Down Payment" (Exh. "A"; Exh. "1"), the parties entered into
a contract of sale subject only to the suspensive condition that the sellers shall effect the
issuance of new certificate title from that of their father's name to their names and that,
on February 6, 1985, this condition was fulfilled (Exh. "D"; Exh. "4").
We, therefore, hold that, in accordance with Article 1187 which pertinently provides
Art. 1187. The effects of conditional obligation to give, once the condition
has been fulfilled, shall retroact to the day of the constitution of the
obligation . . .
In obligation to do or not to do, the courts shall determine, in each case,
the retroactive effect of the condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract of
sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point in
time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January 19, 1985
because they were then not yet the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring ownership as
follows:
Art. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to be extent and value of the inheritance
of a person are transmitted through his death to another or others by his
will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the decedent
Constancio P. Coronel are compulsory heirs who were called to succession by
operation of law. Thus, at the point their father drew his last breath, petitioners
stepped into his shoes insofar as the subject property is concerned, such that any
rights or obligations pertaining thereto became binding and enforceable upon
them. It is expressly provided that rights to the succession are transmitted from
the moment of death of the decedent (Article 777, Civil Code; Cuison vs.
Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners' claim that succession may not be declared unless the
creditors have been paid is rendered moot by the fact that they were able to effect the
transfer of the title to the property from the decedent's name to their names on February
6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack of capacity
to enter into an agreement at that time and they cannot be allowed to now take a
posture contrary to that which they took when they entered into the agreement with
private respondent Ramona P. Alcaraz. The Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved
as against the person relying thereon.
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Having represented themselves as the true owners of the subject property at the
time of sale, petitioners cannot claim now that they were not yet the absolute
owners thereof at that time.
Petitioners also contend that although there was in fact a perfected contract of sale
between them and Ramona P. Alcaraz, the latter breached her reciprocal obligation
when she rendered impossible the consummation thereof by going to the United States
of America, without leaving her address, telephone number, and Special Power of
Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the
Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they
were correct in unilaterally rescinding rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the contract of sale
in the instant case. We note that these supposed grounds for petitioners' rescission, are
mere allegations found only in their responsive pleadings, which by express provision
of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11,
Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting
evidence to substantiate petitioners' allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil.
882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]. Mere allegation is not an evidence
(Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on
February 6, 1985, we cannot justify petitioner-sellers' act of unilaterally and extradicially
rescinding the contract of sale, there being no express stipulation authorizing the sellers
to extarjudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988];
Taguba vs. Vda. de Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of Ramona P.
Alcaraz because although the evidence on record shows that the sale was in the name of
Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D.
Alcaraz, Ramona's mother, who had acted for and in behalf of her daughter, if not also
in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz
with her own personal check (Exh. "B"; Exh. "2") for and in behalf of Ramona P. Alcaraz.
There is no evidence showing that petitioners ever questioned Concepcion's authority
to represent Ramona P. Alcaraz when they accepted her personal check. Neither did
they raise any objection as regards payment being effected by a third person.
Accordingly, as far as petitioners are concerned, the physical absence of Ramona P.
Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her
obligation to pay the full purchase price is concerned. Petitioners who are precluded
from setting up the defense of the physical absence of Ramona P. Alcaraz as above-
explained offered no proof whatsoever to show that they actually presented the new
transfer certificate of title in their names and signified their willingness and readiness to
execute the deed of absolute sale in accordance with their agreement. Ramona's
corresponding obligation to pay the balance of the purchase price in the amount of
P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot
be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal
obligations may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from
the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation.
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xxx xxx xxx
In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfill his obligation, delay
by the other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale between
petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag,
gave rise to a case of double sale where Article 1544 of the Civil Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should if be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in Registry of
Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in the possession; and, in the absence thereof
to the person who presents the oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as
proof of the second contract of sale was registered with the Registry of Deeds of Quezon
City giving rise to the issuance of a new certificate of title in the name of Catalina B.
Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to pass to the first
buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale
ahead of the first buyer, and (b) should there be no inscription by either of the two
buyers, when the second buyer, in good faith, acquires possession of the property ahead
of the first buyer. Unless, the second buyer satisfies these requirements, title or
ownership will not transfer to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the subject, now a
distinguished member of the Court, Justice Jose C. Vitug, explains:
The governing principle is prius tempore, potior jure (first in time, stronger
in right). Knowledge by the first buyer of the second sale cannot defeat the
first buyer's rights except when the second buyer first registers in good
faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely,
knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register, since knowledge taints his registration with
bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26
December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it has held that it is essential, to merit the protection of Art.
1544, second paragraph, that the second realty buyer must act in good
faith in registering his deed of sale (citing Carbonell vs. Court of Appeals,
69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).
(J. Vitug Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioner point out that the notice of lis pendens in the case at bar was annoted on the
title of the subject property only on February 22, 1985, whereas, the second sale between
petitioners Coronels and petitioner Mabanag was supposedly perfected prior thereto or
on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the
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second buyer, bought the property under a clean title, she was unaware of any adverse
claim or previous sale, for which reason she is buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not whether or not the
second buyer was a buyer in good faith but whether or not said second buyer registers
such second sale in good faith, that is, without knowledge of any defect in the title of
the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag could not have in
good faith, registered the sale entered into on February 18, 1985 because as early as
February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate of
title in the names of petitioners, whereas petitioner Mabanag registered the said sale
sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag knew
that the same property had already been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous buyer is claiming title to the
same property. Petitioner Mabanag cannot close her eyes to the defect in petitioners'
title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a third
party or that another person claims said property in a pervious sale, the
registration will constitute a registration in bad faith and will not confer
upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing
Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil.
554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz,
perfected on February 6, 1985, prior to that between petitioners and Catalina B.
Mabanag on February 18, 1985, was correctly upheld by both the courts below.
Although there may be ample indications that there was in fact an agency between
Ramona as principal and Concepcion, her mother, as agent insofar as the subject
contract of sale is concerned, the issue of whether or not Concepcion was also acting in
her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such
assumption disputed between mother and daughter. Thus, We will not touch this issue
and no longer disturb the lower courts' ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the
appealed judgment AFFIRMED.
SO ORDERED.

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[G.R. No. 132161. January 17, 2005]
CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC., petitioner, vs. THE
HONORABLE COURT OF APPEALS and HEIRS OF TEODORO DELA
CRUZ, respondents.
D E C I S I O N
TINGA, J.:
Petitioner Consolidated Rural Bank, Inc. of Cagayan Valley filed the instant Petition
for Certiorari
[1]
under Rule 45 of the Revised Rules of Court, seeking the review of the
Decision
[2]
of the Court of Appeals Twelfth Division in CA-G.R. CV No. 33662,
promulgated on 27 May 1997, which reversed the judgment
[3]
of the lower court in
favor of petitioner; and the Resolution
[4]
of the Court of Appeals, promulgated on 5
January 1998, which reiterated its Decision insofar as respondents Heirs of Teodoro dela
Cruz (the Heirs) are concerned.
From the record, the following are the established facts:
Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid (hereafter
the Madrid brothers), were the registered owners of Lot No. 7036-A of plan Psd-10188,
Cadastral Survey 211, situated in San Mateo, Isabela per Transfer Certificate of Title
(TCT) No. T-8121 issued by the Register of Deeds of Isabela in September 1956.
[5]

On 23 and 24 October 1956, Lot No. 7036-A was subdivided into several lots under
subdivision plan Psd- 50390. One of the resulting subdivision lots was Lot No. 7036-A-
7 with an area of Five Thousand Nine Hundred Fifty-Eight (5,958) square meters.
[6]

On 15 August 1957, Rizal Madrid sold part of his share identified as Lot No. 7036-
A-7, to Aleja Gamiao (hereafter Gamiao) and Felisa Dayag (hereafter, Dayag) by virtue
of a Deed of Sale,
[7]
to which his brothers Anselmo, Gregorio, Filomeno and Domingo
offered no objection as evidenced by their Joint Affidavit dated 14 August 1957.
[8]
The
deed of sale was not registered with the Office of the Register of Deeds of Isabela.
However, Gamiao and Dayag declared the property for taxation purposes in their
names on March 1964 under Tax Declaration No. 7981.
[9]

On 28 May 1964, Gamiao and Dayag sold the southern half of Lot No. 7036-A-7,
denominated as Lot No. 7036-A-7-B, to Teodoro dela Cruz,
[10]
and the northern half,
identified as Lot No. 7036-A-7-A,
[11]
to Restituto Hernandez.
[12]
Thereupon, Teodoro
dela Cruz and Restituto Hernandez took possession of and cultivated the portions of
the property respectively sold to them.
[13]

Later, on 28 December 1986, Restituto Hernandez donated the northern half to his
daughter, Evangeline Hernandez-del Rosario.
[14]
The children of Teodoro dela Cruz
continued possession of the southern half after their fathers death on 7 June 1970.
In a Deed of Sale
[15]
dated 15 June 1976, the Madrid brothers conveyed all their rights
and interests over Lot No. 7036-A-7 to Pacifico Marquez (hereafter, Marquez), which
the former confirmed
[16]
on 28 February 1983.
[17]
The deed of sale was registered with
the Office of the Register of Deeds of Isabela on 2 March 1982.
[18]

Subsequently, Marquez subdivided Lot No. 7036-A-7 into eight (8) lots, namely: Lot
Nos. 7036-A-7-A to 7036-A-7-H, for which TCT Nos. T-149375 to T-149382 were issued
to him on 29 March 1984.
[19]
On the same date, Marquez and his spouse, Mercedita
Mariana, mortgaged Lots Nos. 7036-A-7-A to 7036-A-7-D to the Consolidated Rural
Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan of One Hundred
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Thousand Pesos (P100,000.00).
[20]
These deeds of real estate mortgage were registered
with the Office of the Register of Deeds on 2 April 1984.
On 6 February 1985, Marquez mortgaged Lot No. 7036-A-7-E likewise to the Rural
Bank of Cauayan (RBC) to secure a loan of Ten Thousand Pesos (P10,000.00).
[21]

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the
mortgages in its favor and the lots were sold to it as the highest bidder on 25 April
1986.
[22]

On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto
(Calixto).
[23]

Claiming to be null and void the issuance of TCT Nos. T-149375 to T-149382; the
foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-D; the mortgage to RBC; and the
sale to Calixto, the Heirs-now respondents herein-represented by Edronel dela Cruz,
filed a case
[24]
for reconveyance and damages the southern portion of Lot No. 7036-A
(hereafter, the subject property) against Marquez, Calixto, RBC and CRB in December
1986.
Evangeline del Rosario, the successor-in-interest of Restituto Hernandez, filed with
leave of court a Complaint in Intervention
[25]
wherein she claimed the northern portion of
Lot No. 7036-A-7.
In the Answer to the Amended Complaint,
[26]
Marquez, as defendant, alleged that apart
from being the first registrant, he was a buyer in good faith and for value. He also
argued that the sale executed by Rizal Madrid to Gamiao and Dayag was not binding
upon him, it being unregistered. For his part, Calixto manifested that he had no interest
in the subject property as he ceased to be the owner thereof, the same having been
reacquired by defendant Marquez.
[27]

CRB, as defendant, and co-defendant RBC insisted that they were mortgagees in
good faith and that they had the right to rely on the titles of Marquez which were free
from any lien or encumbrance.
[28]

After trial, the Regional Trial Court, Branch 19 of Cauayan, Isabela (hereafter, RTC)
handed down a decision in favor of the defendants, disposing as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby
rendered:
1. Dismissing the amended complaint and the complaint in intervention;
2. Declaring Pacifico V. Marquez the lawful owner of Lots 7036-A-7 now
Lots 7036-A-7-A to 7036-A-7-H, inclusive, covered by TCT Nos. T-149375 to T-
149382, inclusive;
3. Declaring the mortgage of Lots 7036-A-7-A, 7036-A-7-B, 7036-A-7-C
and 7036-A-7-D in favor of the defendant Consolidated Rural Bank (Cagayan
Valley) and of Lot 7036-A-7-E in favor of defendant Rural Bank of Cauayan by
Pacifico V. Marquez valid;
4. Dismissing the counterclaim of Pacifico V. Marquez; and
5. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the
lots covered by TCT Nos. T-33119, T-33220 and T-7583.
SO ORDERED.
[29]

In support of its decision, the RTC made the following findings:
With respect to issues numbers 1-3, the Court therefore holds that the sale
of Lot 7036-A-7 made by Rizal Madrid to Aleja Gamiao and Felisa Dayag and
the subsequent conveyances to the plaintiffs and intervenors are all valid and
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the Madrid brothers are bound by said contracts by virtue of the confirmation
made by them on August 14, 1957 (Exh. B).
Are the defendants Pacifico V. Marquez and Romeo B. Calixto buyers in
good faith and for value of Lot 7036-A-7?
It must be borne in mind that good faith is always presumed and he who
imputes bad faith has the burden of proving the same (Art. 527, Civil Code).
The Court has carefully scrutinized the evidence presented but finds nothing to
show that Marquez was aware of the plaintiffs and intervenors claim of
ownership over this lot. TCT No. T-8121 covering said property, before the
issuance of Marquez title, reveals nothing about the plaintiffs and intervenors
right thereto for it is an admitted fact that the conveyances in their favor are not
registered.
The Court is therefore confronted with two sales over the same property.
Article 1544 of the Civil Code provides:
ART. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be movable
property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of
Property. x x x (Underscoring supplied).
From the foregoing provisions and in the absence of proof that Marquez
has actual or constructive knowledge of plaintiffs and intervenors claim, the
Court has to rule that as the vendee who first registered his sale, Marquez
ownership over Lot 7036-A-7 must be upheld.
[30]

The Heirs interposed an appeal with the Court of Appeals. In their Appellants
Brief,
[31]
they ascribed the following errors to the RTC: (1) it erred in finding that
Marquez was a buyer in good faith; (2) it erred in validating the mortgage of the
properties to RBC and CRB; and (3) it erred in not reconveying Lot No. 7036-A-7-B to
them.
[32]

Intervenor Evangeline del Rosario filed a separate appeal with the Court of
Appeals. It was, however, dismissed in a Resolution dated 20 September 1993 for her
failure to pay docket fees. Thus, she lost her standing as an appellant.
[33]

On 27 May 1997, the Court of Appeals rendered its assailed Decision
[34]
reversing
the RTCs judgment. The dispositive portion reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET
ASIDE. Accordingly, judgment is hereby rendered as follows:
1. Declaring the heirs of Teodoro dela Cruz the lawful owners of the
southern half portion and Evangeline Hernandez-del Rosario the northern half
portion of Lot No. 7036-A-7, now covered by TCT Nos. T-149375 to T-149382,
inclusive;
2. Declaring null and void the deed of sale dated June 15, 1976 between
Pacifico V. Marquez and the Madrid brothers covering said Lot 7036-A-7;
3. Declaring null and void the mortgage made by defendant Pacifico V.
Marquez of Lot Nos. 7036-A-7-A, 7036-A-7-B, 7036-A-7-C and 7036-A-7-D in
favor of the defendant Consolidated Rural Bank and of Lot 7036-A-7-E in favor
of defendant Rural Bank of Cauayan; and
4. Ordering Pacifico V. Marquez to reconvey Lot 7036-A-7 to the heirs of
Teodoro dela Cruz and Evangeline Hernandez-del Rosario.
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SO ORDERED.
[35]

In upholding the claim of the Heirs, the Court of Appeals held that Marquez failed
to prove that he was a purchaser in good faith and for value. It noted that while
Marquez was the first registrant, there was no showing that the registration of the deed
of sale in his favor was coupled with good faith. Marquez admitted having knowledge
that the subject property was being taken by the Heirs at the time of the sale.
[36]
The
Heirs were also in possession of the land at the time. According to the Decision, these
circumstances along with the subject propertys attractive locationit was situated
along the National Highway and was across a gasoline stationshould have put
Marquez on inquiry as to its status. Instead, Marquez closed his eyes to these matters
and failed to exercise the ordinary care expected of a buyer of real estate.
[37]

Anent the mortgagees RBC and CRB, the Court of Appeals found that they merely
relied on the certificates of title of the mortgaged properties. They did not ascertain the
status and condition thereof according to standard banking practice. For failure to
observe the ordinary banking procedure, the Court of Appeals considered them to have
acted in bad faith and on that basis declared null and void the mortgages made by
Marquez in their favor.
[38]

Dissatisfied, CRB filed a Motion for Reconsideration
[39]
pointing out, among others,
that the Decision promulgated on 27 May 1997 failed to establish good faith on the part
of the Heirs. Absent proof of possession in good faith, CRB avers, the Heirs cannot
claim ownership over the subject property.
In a Resolution
[40]
dated 5 January 1998, the Court of Appeals stressed its disbelief in
CRBs allegation that it did not merely rely on the certificates of title of the properties
and that it conducted credit investigation and standard ocular inspection. But recalling
that intervenor Evangeline del Rosario had lost her standing as an appellant, the Court
of Appeals accordingly modified its previous Decision, as follows:
WHEREFORE, the decision dated May 27, 1997, is hereby MODIFIED to
read as follows:
WHEREFORE, the decision appealed from is hereby REVERSED and SET
ASIDE insofar as plaintiffs-appellants are concerned. Accordingly, judgment is
hereby rendered as follows:
1. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the
southern half portion of Lot No. 7036-A-7;
2. Declaring null and void the deed of sale dated June 15, 1976 between
Pacifico V. Marquez and the Madrid brothers insofar as the southern half
portion of Lot NO. (sic) 7036-A-7 is concerned;
3. Declaring the mortgage made by defendant Pacifico V. Marquez in
favor of defendant Consolidated Rural Bank (Cagayan Valley) and defendant
Rural Bank of Cauayan as null and void insofar as the southern half portion of
Lot No. 7036-A-7 is concerned;
4. Ordering defendant Pacifico V. Marquez to reconvey the southern
portion of Lot No. 7036-A-7 to the Heirs of Teodoro dela Cruz.
SO ORDERED.
[41]

Hence, the instant CRB petition. However, both Marquez and RBC elected not to
challenge the Decision of the appellate court.
Petitioner CRB, in essence, alleges that the Court of Appeals committed serious
error of law in upholding the Heirs ownership claim over the subject property
considering that there was no finding that they acted in good faith in taking possession
thereof nor was there proof that the first buyers, Gamiao and Dayag, ever took
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possession of the subject property. CRB also makes issue of the fact that the sale to
Gamiao and Dayag was confirmed a day ahead of the actual sale, clearly evincing bad
faith, it adds. Further, CRB asserts Marquezs right over the property being its
registered owner.
The petition is devoid of merit. However, the dismissal of the petition is justified
by reasons different from those employed by the Court of Appeals.
Like the lower court, the appellate court resolved the present controversy by
applying the rule on double sale provided in Article 1544 of the Civil Code. They,
however, arrived at different conclusions. The RTC made CRB and the other
defendants win, while the Court of Appeals decided the case in favor of the Heirs.
Article 1544 of the Civil Code reads, thus:
ART. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
The provision is not applicable in the present case. It contemplates a case of double
or multiple sales by a single vendor. More specifically, it covers a situation where a
single vendor sold one and the same immovable property to two or more buyers.
[42]

According to a noted civil law author, it is necessary that the conveyance must have
been made by a party who has an existing right in the thing and the power to dispose of
it.
[43]
It cannot be invoked where the two different contracts of sale are made by two
different persons, one of them not being the owner of the property sold.
[44]
And even if
the sale was made by the same person, if the second sale was made when such person
was no longer the owner of the property, because it had been acquired by the first
purchaser in full dominion, the second purchaser cannot acquire any right.
[45]

In the case at bar, the subject property was not transferred to several purchasers by
a single vendor. In the first deed of sale, the vendors were Gamiao and Dayag whose
right to the subject property originated from their acquisition thereof from Rizal Madrid
with the conformity of all the other Madrid brothers in 1957, followed by their
declaration of the property in its entirety for taxation purposes in their names. On the
other hand, the vendors in the other or later deed were the Madrid brothers but at that
time they were no longer the owners since they had long before disposed of the
property in favor of Gamiao and Dayag.
Citing Manresa, the Court of Appeals in 1936 had occasion to explain the proper
application of Article 1473 of the Old Civil Code (now Article 1544 of the New Civil
Code) in the case of Carpio v. Exevea,
[46]
thus:
In order that tradition may be considered performed, it is necessary that the
requisites which it implies must have been fulfilled, and one of the
indispensable requisites, according to the most exact Roman concept, is that the
conveyor had the right and the will to convey the thing. The intention to
transfer is not sufficient; it only constitutes the will. It is, furthermore, necessary
that the conveyor could juridically perform that act; that he had the right to do
so, since a right which he did not possess could not be vested by him in the
transferee.
This is what Article 1473 has failed to express: the necessity for the
preexistence of the right on the part of the conveyor. But even if the article does
not express it, it would be understood, in our opinion, that that circumstance
constitutes one of the assumptions upon which the article is based.
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This construction is not repugnant to the text of Article 1473, and not only is
it not contrary to it, but it explains and justifies the same. (Vol. 10, 4
th
ed., p.
159)
[47]

In that case, the property was transferred to the first purchaser in 1908 by its
original owner, Juan Millante. Thereafter, it was sold to plaintiff Carpio in June 1929.
Both conveyances were unregistered. On the same date that the property was sold to
the plaintiff, Juan Millante sold the same to defendant Exevea. This time, the sale was
registered in the Registry of Deeds. But despite the fact of registration in defendants
favor, the Court of Appeals found for the plaintiff and refused to apply the provisions
of Art. 1473 of the Old Civil Code, reasoning that on the date of the execution of the
document, Exhibit 1, Juan Millante did not and could not have any right whatsoever to
the parcel of land in question.
[48]

Citing a portion of a judgment dated 24 November 1894 of the Supreme Court of
Spain, the Court of Appeals elucidated further:
Article 1473 of the Civil Code presupposes the right of the vendor to
dispose of the thing sold, and does not limit or alter in this respect the
provisions of the Mortgage Law in force, which upholds the principle that
registration does not validate acts or contracts which are void, and that
although acts and contracts executed by persons who, in the Registry, appear to
be entitled to do so are not invalidated once recorded, even if afterwards the
right of such vendor is annulled or resolved by virtue of a previous unrecorded
title, nevertheless this refers only to third parties.
[49]

In a situation where not all the requisites are present which would warrant the
application of Art. 1544, the principle of prior tempore, potior jure or simply he who is
first in time is preferred in right,
[50]
should apply.
[51]
The only essential requisite of this
rule is priority in time; in other words, the only one who can invoke this is the first
vendee. Undisputedly, he is a purchaser in good faith because at the time he bought the
real property, there was still no sale to a second vendee.
[52]
In the instant case, the sale to
the Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to
the sale by the Madrid brothers to Marquez. The Heirs also had possessed the subject
property first in time. Thus, applying the principle, the Heirs, without a scintilla of
doubt, have a superior right to the subject property.
Moreover, it is an established principle that no one can give what one does not
havenemo dat quod non habet. Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more than what the seller can transfer
legally.
[53]
In this case, since the Madrid brothers were no longer the owners of the
subject property at the time of the sale to Marquez, the latter did not acquire any right
to it.
In any event, assuming arguendo that Article 1544 applies to the present case, the
claim of Marquez still cannot prevail over the right of the Heirs since according to the
evidence he was not a purchaser and registrant in good faith.
Following Article 1544, in the double sale of an immovable, the rules of preference
are:
(a) the first registrant in good faith;
(b) should there be no entry, the first in possession in good faith; and
(c) in the absence thereof, the buyer who presents the oldest title in good faith.
[54]

Prior registration of the subject property does not by itself confer ownership or a
better right over the property. Article 1544 requires that before the second buyer can
obtain priority over the first, he must show that he acted in good faith throughout (i.e.,
in ignorance of the first sale and of the first buyers rights)from the time of acquisition
until the title is transferred to him by registration or failing registration, by delivery of
possession.
[55]

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In the instant case, the actions of Marquez have not satisfied the requirement of
good faith from the time of the purchase of the subject property to the time of
registration. Found by the Court of Appeals, Marquez knew at the time of the sale that
the subject property was being claimed or taken by the Heirs. This was a detail
which could indicate a defect in the vendors title which he failed to inquire into.
Marquez also admitted that he did not take possession of the property and at the time
he testified he did not even know who was in possession. Thus, he testified on direct
examination in the RTC as follows:
ATTY. CALIXTO
Q Can you tell us the circumstances to your buying the land in
question?
A In 1976 the Madrid brothers confessed to me their problems about
their lots in San Mateo that they were being taken by Teodoro dela
Cruz and Atty. Teofilo A. Leonin; that they have to pay the lawyers
fee of P10,000.00 otherwise Atty. Leonin will confiscate the land. So
they begged me to buy their properties, some of it. So that on June 3,
1976, they came to Cabagan where I was and gave them P14,000.00, I
think. We have talked that they will execute the deed of sale.
Q Why is it, doctor, that you have already this deed of sale, Exh. 14, why
did you find it necessary to have this Deed of Confirmation of a Prior
Sale, Exh. 15?
A Because as I said a while ago that the first deed of sale was submitted
to the Register of Deeds by Romeo Badua so that I said that because
when I became a Municipal Health Officer in San Mateo, Isabela, I
heard so many rumors, so many things about the land and so I
requested them to execute a deed of confirmation.
[56]

. . .
ATTY. CALIXTO-
Q At present, who is in possession on the Riceland portion of the lot in
question?
A I can not say because the people working on that are changing from
time to time.
Q Why, have you not taken over the cultivation of the land in question?
A Well, the Dela Cruzes are prohibiting that we will occupy the place.
Q So, you do not have any possession?
A None, sir.
[57]

One who purchases real property which is in actual possession of others should, at
least, make some inquiry concerning the rights of those in possession. The actual
possession by people other than the vendor should, at least, put the purchaser upon
inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide
purchaser as against such possessions.
[58]
The rule of caveat emptor requires the
purchaser to be aware of the supposed title of the vendor and one who buys without
checking the vendors title takes all the risks and losses consequent to such failure.
[59]

It is further perplexing that Marquez did not fight for the possession of the property
if it were true that he had a better right to it. In our opinion, there were circumstances at
the time of the sale, and even at the time of registration, which would reasonably
require a purchaser of real property to investigate to determine whether defects existed
in his vendors title. Instead, Marquez willfully closed his eyes to the possibility of the
existence of these flaws. For failure to exercise the measure of precaution which may be
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required of a prudent man in a like situation, he cannot be called a purchaser in good
faith.
[60]

As this Court explained in the case of Spouses Mathay v. Court of Appeals:
[61]

Although it is a recognized principle that a person dealing on a registered
land need not go beyond its certificate of title, it is also a firmly settled rule that
where there are circumstances which would put a party on guard and prompt
him to investigate or inspect the property being sold to him, such as the
presence of occupants/tenants thereon, it is, of course, expected from the
purchaser of a valued piece of land to inquire first into the status or nature of
possession of the occupants, i.e., whether or not the occupants possess the land
en concepto de dueo, in concept of owner. As is the common practice in the
real estate industry, an ocular inspection of the premises involved is a
safeguard a cautious and prudent purchaser usually takes. Should he find out
that the land he intends to buy is occupied by anybody else other than the seller
who, as in this case, is not in actual possession, it would then be incumbent
upon the purchaser to verify the extent of the occupants possessory rights. The
failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or
invoking the rights of a purchaser in good faith.
[62]

This rule equally applies to mortgagees of real property. In the case of Crisostomo
v. Court of Appeals,
[63]
the Court held:
It is a well-settled rule that a purchaser or mortgagee cannot close his eyes
to facts which should put a reasonable man upon his guard, and then claim that
he acted in good faith under the belief that there was no defect in the title of the
vendor or mortgagor. His mere refusal to believe that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect in the
vendors or mortgagors title, will not make him an innocent purchaser or
mortgagee for value, if it afterwards develops that the title was in fact defective,
and it appears that he had such notice of the defects as would have led to its
discovery had he acted with the measure of a prudent man in a like situation.
[64]

Banks, their business being impressed with public interest, are expected to exercise
more care and prudence than private individuals in their dealings, even those involving
registered lands. Hence, for merely relying on the certificates of title and for its failure
to ascertain the status of the mortgaged properties as is the standard procedure in its
operations, we agree with the Court of Appeals that CRB is a mortgagee in bad faith.
In this connection, Marquezs obstention of title to the property and the subsequent
transfer thereof to CRB cannot help the latters cause. In a situation where a party has
actual knowledge of the claimants actual, open and notorious possession of the
disputed property at the time of registration, as in this case, the actual notice and
knowledge are equivalent to registration, because to hold otherwise would be to
tolerate fraud and the Torrens system cannot be used to shield fraud.
[65]

While certificates of title are indefeasible, unassailable and binding against the
whole world, they merely confirm or record title already existing and vested. They
cannot be used to protect a usurper from the true owner, nor can they be used for the
perpetration of fraud; neither do they permit one to enrich himself at the expense of
others.
[66]

We also find that the Court of Appeals did not err in awarding the subject property
to the Heirs absent proof of good faith in their possession of the subject property and
without any showing of possession thereof by Gamiao and Dayag.
As correctly argued by the Heirs in their Comment,
[67]
the requirement of good faith
in the possession of the property finds no application in cases where there is no second
sale.
[68]
In the case at bar, Teodoro dela Cruz took possession of the property in 1964
long before the sale to Marquez transpired in 1976 and a considerable length of time
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eighteen (18) years in factbefore the Heirs had knowledge of the registration of said
sale in 1982. As Article 526 of the Civil Code aptly provides, (H)e is deemed a
possessor in good faith who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it. Thus, there was no need for the appellate
court to consider the issue of good faith or bad faith with regard to Teodoro dela Cruzs
possession of the subject property.
Likewise, we are of the opinion that it is not necessary that there should be any
finding of possession by Gamiao and Dayag of the subject property. It should be
recalled that the regularity of the sale to Gamiao and Dayag was never contested by
Marquez.
[69]
In fact the RTC upheld the validity of this sale, holding that the Madrid
brothers are bound by the sale by virtue of their confirmation thereof in the Joint
Affidavit dated 14 August 1957. That this was executed a day ahead of the actual sale on
15 August 1957 does not diminish its integrity as it was made before there was even any
shadow of controversy regarding the ownership of the subject property.
Moreover, as this Court declared in the case of Heirs of Simplicio Santiago v. Heirs of
Mariano E. Santiago,
[70]
tax declarations are good indicia of possession in the concept of
an owner, for no one in his right mind would be paying taxes for a property that is not
in his actual or constructive possession.
[71]

WHEREFORE, the Petition is DENIED. The dispositive portion of the Court of
Appeals Decision, as modified by its Resolution dated 5 January 1998, is AFFIRMED.
Costs against petitioner.
SO ORDERED.

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SECOND DIVISION
G.R. No. 161136 November 16, 2006
WILFREDO T. VAGILIDAD and LOLITA A. VAGILIDAD, Petitioners,
vs.
GABINO VAGILIDAD, Jr. and DOROTHY VAGILIDAD, Respondents.
D E C I S I O N
PUNO, J.:
This is a Petition for Review on Certiorari of the Decision
1
and Resolution
2
of the Court
of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13, 2003,
respectively, reversing and setting aside the decision of the Regional Trial Court of
Antique, Sixth Judicial Region, Branch II, in Civil Case No. 2825 dated January 26, 1999.
The facts are stated in the assailed Decision
3
of the appellate court, viz.:
A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique, measuring 4,280
square meters, was owned by Zoilo [Labiao] (hereafter ZOILO) as per Original
Certificate of Title No. RO-2301 issued on March 3, 1931. Sometime in 1931, ZOILO
died. Subsequently, on May 12, 1986, Loreto Labiao (hereafter LORETO), son of ZOILO,
sold to Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of Lot No. 1253 (hereafter
Lot 1253-B), measuring 1,604 square meters as evidenced by the Deed of Absolute Sale
executed by LORETO.
In view of the death of ZOILO, his children, LORETO, Efren Labiao (hereafter EFREN)
and Priscilla Espanueva (hereafter PRISCILLA) executed an Extrajudicial x x x
Settlement of Estate dated January 20, 1987, adjudicating the entire Lot No. 1253,
covering 4,280 square meters, to LORETO. On January 29, 1987, Transfer Certificate of
Title (TCT) No. T-16693 was issued in favor of LORETO, EFREN and PRISCILLA, but
on even date, TCT No. T-16693 was cancelled and TCT No. T-16694, covering the said
property, was issued in the name of LORETO alone.
On July 31, 1987, GABINO JR., as petitioner, filed a Petition for the Surrender of TCT
No. T-16694, covering Lot No. 1253, with the Regional Trial Court of San Jose City, Sixth
Judicial Region, against LORETO, docketed as Cadastral Case No. 87-731-A. The
plaintiff alleged that, being the owner of x x x Lot No. 1253-B, under TCT No. T-16694,
by virtue of the sale that took place on May 12, 1986, he is entitled to ask for the
surrender of the owners copy of TCT No. T-16694 to the Register of Deeds of Antique
in order to effect the transfer of title to the name of the petitioner. However, as per
motion of both counsels[,] since the parties seemed to have already reached an amicable
settlement without the knowledge of their counsels, the trial court issued an Order
dated March 21, 1994 sending the case to the archives.
On September 21, 1988, [GABINO JR.] paid real estate taxes on the land he bought from
LORETO as per Tax Declaration No. 1038 where the property was specified as Lot No.
1253-B. GABINO JR. thereafter sold the same lot to Wilfredo Vagilidad (hereafter
WILFREDO) as per Deed of Absolute Sale dated December 7, 1989. On even date, Deed
of Absolute Sale of a Portion of Land involving the opt-described property was also
executed by LORETO in favor of WILFREDO. The aforementioned deeds, which were
both executed on December 7, 1989 [and] notarized by Atty. Warloo Cardenal[,]
[appear] to have been given the same entry number in his notarial books as both
contained the designation "Document No. 236, Page No. 49, Book No. XI, Series of
1989[."]
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Corollarily, on February 14, 1990, the sale of Lot No. 1253-B to WILFREDO was
registered with the Registry of Deeds of the Province of Antique under Entry No.
180425. Consequently, TCT No. T-18023, cancelling TCT No. 16694, was issued in favor
of WILFREDO pursuant to the Deed of Absolute Sale dated December 7, 1989.
On October 24, 1991, spouses WILFREDO and LOLITA obtained a loan from the
Philippine National Bank (PNB for brevity) in the amount of P150,000.00 and
mortgaged Lot No. 1253-B as collateral of the said loan and the transaction was
inscribed at the back of TCT No. 18023 as Entry No. 186876. Subsequently, the xxx real
estate mortgage was cancelled under Entry No. 191053 as per inscription dated
November 17, 1992 in xxx TCT No. 18023.
Subsequently, WILFREDO obtained another loan from Development Bank of the
Philippines (DBP for brevity) in the amount of P200,000.00 and mortgaged Lot No.
1253-B as collateral of the xxx loan and the transaction was inscribed at the back of TCT
No. 18023 as Entry No. 196268. The said loan was paid and, consequently, the mortgage
was cancelled as Entry No. 202500.
On September 29, 1995, spouses GABINO and Ma. Dorothy Vagilidad (hereafter
DOROTHY), as plaintiffs, filed a Complaint for Annulment of Document,
Reconveyance and Damages, with the Regional Trial Court of Antique, Sixth Judicial
Region, Branch 11, against spouses WILFREDO and Lolita Vagilidad (hereafter
LOLITA), docketed as Civil Case No. 2825. The plaintiffs claimed that they are the
lawful owners of Lot No. 1253-B which was sold to him by LORETO in 1986. They
alleged that [GABINO JR.] is a nephew of defendant WILFREDO. They likewise raised
that when GABINO SR. died, defendant WILFREDO requested GABINO JR. to transfer
the ownership of Lot No. 1253-B in defendant WILFREDOs name for loaning purposes
with the agreement that the land will be returned when the plaintiffs need the same.
They added that, pursuant to the mentioned agreement, plaintiff GABINO JR., without
the knowledge and consent of his spouse, DOROTHY, executed the Deed of Sale dated
December 7, 1989 in favor of defendant WILFREDO receiving nothing as payment
therefor. They pointed out that after defendant WILFREDO was able to mortgage the
property, plaintiffs demanded the return of the property but the defendants refused to
return the same. The plaintiffs claimed that the same document is null and void for
want of consideration and the same does not bind the non-consenting spouse. They
likewise prayed that the defendant be ordered to pay the plaintiffs not less
than P100,000.00 as actual and moral damages, P10,000.00 as attorneys fees
and P5,000.00 as litigation expenses.
For their part, the defendants, on January 15, 1996, filed their Answer, denying the
material allegations of the plaintiffs. Defendants claimed that they are the lawful
owners of Lot No. 1253-B. They alleged that LORETO, with conformity of his wife, sold
to them Lot No. 1253 on December 7, 1989 for P5,000.00 and the transaction was
registered with the Register of Deeds of the Province of Antique under Entry No.
180425. They added that, subsequently, TCT No. T-18023, covering Lot No. 1253-B, was
issued in favor of the defendants. Hence, they claimed that the plaintiffs be directed to
pay the defendants P200,000.00 as moral damages, P50,000.00 as exemplary
damages, P20,000.00 as attorneys fees and P30,000.00 for litigation expenses.
4

The trial court ruled in favor of petitioners WILFREDO and LOLITA and held that
LORETO did not validly convey Lot No. 1253-B to GABINO, JR. on May 12, 1986 since
at that time, the heirs of ZOILO had not partitioned Lot No. 1253.
5
It ruled that
LORETO could only sell at that time his aliquot share in the inheritance. He could not
have sold a divided part thereof designated by metes and bounds. Thus, it held that
LORETO remained the owner of the subject lot when he sold it to WILFREDO on
December 7, 1989. It further found that there was no proof that WILFREDO knew of the
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sale that took place between LORETO and GABINO, JR. on May 12, 1986. The
dispositive portion of the decision states:
WHEREFORE, in view of the foregoing pronouncements and a preponderance of
evidence, judgment is hereby rendered:
1. FINDING the defendants WILFREDO VAGILIDAD and LOLITA
VAGILIDAD to have duly acquired ownership of Lot No. 1253-B containing an
area of 1,604 square meters, more or less, situated in San Jose, Antique;
2. SUSTAINING the validity of Transfer Certificate of Title No. T-18023 covering
the subject Lot No. 1253-B and issued in the name of the defendant WILFREDO
VAGILIDAD, married to the defendant LOLITA VAGILIDAD;
3. DISMISSING the complaint of the plaintiffs GABINO VAGILIDAD, JR. and
MA. DOROTHY VAGILIDAD, as well as the counterclaims of the defendants
WILFREDO VAGILIDAD and LOLITA VAGILIDAD and of the defendants
LORETO LABIAO and FRANCISCA LABIAO; and
4. PRONOUNCING no cost.
6

GABINO, JR. and DOROTHY filed an appeal with the Court of Appeals. The appellate
court reversed and set aside the decision of the court a quo, viz.:
WHEREFORE, premises considered, the Decision dated January 26, 1999 of the
Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, in Civil Case No.
2825, is hereby REVERSED and SET ASIDE and a new one is entered: (1) declaring the
Deed of Absolute Sale [of Portion of Land] dated December 7, 1989 executed by
appellee LORETO in favor of appellee WILFREDO null and void; (2) ordering the
defendants-appellees WILFREDO and LOLITA to reconvey Lot No. 1253-B to plaintiffs-
appellants GABINO, JR. and DOROTHY; and (3) ordering the defendants-appellees to
pay the plaintiffs-appellants P100,000.00 as moral damages, P10,000.00 as attorneys fees
and P5,000.00 as litigation expenses.
7

The appellate court ruled that the sale made by LORETO in favor of GABINO, JR. on
May 12, 1986 is valid. The rights of LORETO to succession are transmitted from the
moment of ZOILOs death in 1931. Thus, when LORETO sold the 1,604-square meter
portion of Lot No. 1253 to GABINO JR., he already had the right as co-owner to his
share to Lot No. 1253, even if at that time the property had not yet been partitioned.
Consequently, the sale made by LORETO in favor of WILFREDO on December 7, 1989
is void because LORETO and FRANCISCA were no longer the owners of Lot No. 1253-
B as of that time. The appellate court also held WILFREDO and LOLITA liable for moral
damages for falsifying the fictitious deeds of sale on December 7, 1989.
WILFREDO and LOLITA moved for reconsideration but the motion was denied in the
questioned Resolution dated November 13, 2003. Hence, this petition for review on
certiorari raising the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING
ARTICLE 1349 AND ARTICLE 1460 OF THE NEW CIVIL CODE IN THE CASE
AT BAR.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE
PROVISION OF ARTICLE 1544 OF THE NEW CIVIL CODE AND THE
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DOCTRINE OF DOUBLE SALE THAT THE BUYER WHO IS IN POSSESSION
OF THE TORRENS TITLE AND HAD THE DEED OF SALE REGISTERED
MUST PREVAIL.
III
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING
ARTICLE 1391 OF THE NEW CIVIL CODE AND THE DOCTRINE THAT IN
CASE OF FRAUD, ACTION FOR RECONVEYANCE MUST BE BROUGHT
WITHIN FOUR (4) YEARS FROM THE DISCOVERY OF THE FRAUD.
IV
THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PRIVATE
RESPONDENT MORAL DAMAGES, ATTORNEYS FEES AND LITIGATION
EXPENSES.
8

We deny the petition.
I
First, petitioners contend that the Deed of Absolute Sale between LORETO and
GABINO, JR. does not have a determinate object. They anchor their claim on the
following discrepancies: (1) the object of the Deed of Absolute Sale between LORETO
and GABINO, JR. is Lot No. 1253 with an area of 1,604 square meters; (2) the object of
the Deed of Absolute Sale of Portion of Land between LORETO and WILFREDO is
a portion of Lot No. 1253, known as Lot No. 1253-B, also with an area of 1,604 square
meters;
9
(3) the Deed of Absolute Sale between LORETO and GABINO, JR. shows that
its object, Lot No. 1253, is not registered under the Land Registration Act nor under the
Spanish Mortgage Law; and (4) the property subject of this action, Lot No. 1253-B, was
taken from Lot No. 1253 containing an area of 4,280 square meters
previously registered in the name of ZOILO under Original Certificate of Title (OCT)
No. RO-2301.
10
With these discrepancies, petitioners contend that either the Deed of
Absolute Sale between LORETO and GABINO, JR. does not have a determinate object
or that Lot No. 1253-B, the subject parcel, is not the object thereof. Hence, absent a
determinate object, the contract is void. They rely on Articles 1349 and 1460 of the Civil
Code, viz.:
Art. 1349. The object of every contract must be determinate, as to its kind. The fact that
the quantity is not determinate shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the need of a new contract
between the parties.
Art. 1460. A thing is determinate when it is particularly designated or physically
segregated from all others of the same class.
The requisite that a thing be determinate is satisfied if at the time the contract is entered
into, the thing is capable of being made determinate without the necessity of a new or
further agreement between the parties.
Petitioners err. The evidence on record shows that Lot No. 1253-B, the subject parcel,
and the lot described as Lot No. 1253 in the Deed of Absolute Sale of May 12, 1986
between LORETO and GABINO, JR., are the same. In the Deed of Absolute Sale, Lot
No. 1253 is described, viz.:
A parcel of land (Lot No. 1253 of the Cadastral Survey of San Jose), with the
improvements thereon. Bounded on the North [by] 1254 and 1255; on the South by
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road; on the East by 1253 and road on the West by 1240-Angel Salazar; containing an
area of 1,604 square meters more or less declared under Tax Declaration No. 4159.
11

In the Deed of Absolute Sale of Portion of Land of December 7, 1989 between LORETO
and WILFREDO, the subject parcel is described, viz.:
A parcel of land (Lot No. 1253. Ap-06-00271) of the Cadastral Survey of San Jose, LRC
Cad. Rec. No. 936), situated at Atabay, San Jose, Antique. Bounded on the N. and E.
along lines 1-2-3 by lot 1255; San Jose Cadastre; on the S. along line 3-4 by Road; on the
W. along line 4-5 by Lot 1240; San Jose Cadastre; and on the N. along line 5-1 by Lot
1254, San Jose Cadastre containing an area of [Four] Thousand Two Hundred Eighty
(4,280) square meters, more or less.
of which a portion of land subject of this sale is hereinbelow (sic) particularly described
as follows, to wit:
A portion of Lot No. 1253-B of the Cadastral Survey of San Jose, situated at Atabay, San
Jose, Antique. Bounded on the North by Lot No. 1254; South by Road; West by Lot
1253-A; and on the East by Lot No. 1253-C; containing an area of 1,604 square meters,
more or less.
12

The description of Lot No. 1253, the object of the Deed of Absolute Sale, as "not
registered under Act No. 196[,] otherwise known as the Land Registration Act, nor
under the Spanish Mortgage Law"
13
is a stray description of the subject parcel. It is
uncorroborated by any evidence in the records. This description solely appears on the
Deed of Absolute Sale and the discrepancy was not explained by LORETO who signed
the Deed of Absolute Sale as vendor. LORETO does not, in fact, deny the existence of
the Deed of Absolute Sale. He merely counters that the Deed of Absolute Sale was
purportedly a mortgage. However, LORETOs claim that it was one of mortgage is
clearly negated by a Certification
14
issued by the Bureau of Internal Revenue dated May
12, 1986. It certified that LORETO was not required to pay the capital gains tax on the
transfer of Lot No. 1253 to GABINO, JR. because the property was classified as an
ordinary asset.
To be sure, petitioners could have easily shown that LORETO owned properties other
than Lot No. 1253 to bolster their claim that the object of the Deed of Absolute Sale was
different from Lot No. 1253-B which is the object described in the Deed of Absolute Sale
of Portion of Land. They did not proffer any evidence.
The trial court itself comprehensively traced the origin of Lot No. 1253-B. It clearly
demonstrated that the subject parcel was originally part of the registered lot of ZOILO.
It also showed how the subject parcel was eventually bounded by Lot No. 1253-A on
the West and by Lot No. 1253-C on the East, as the lot would be later described in the
Deed of Absolute Sale of Portion of Land.
The trial court found that ZOILO previously owned Lot No. 1253 under OCT No. RO-
2301 issued on March 3, 1931. On November 14, 1986, Entry No. 167922 was inscribed in
the certificate of title, per Order dated March 30, 1978 of Judge Noli Ma. Cortes of the
then Court of First Instance of Antique, stating that it was a reconstituted certificate of
title.
15
Lot No. 1253 was subdivided by virtue of a subdivision plan dated June 19, 1987.
On January 20, 1987, an Extrajudicial Settlement of Estate executed by LORETO, EFREN
and PRISCILLA was entered as Entry No. 170722. The OCT of ZOILO was cancelled by
TCT No. T-16693 in the names of LORETO, EFREN and PRISCILLA on January 29,
1987. TCT No. T-16693 was cancelled on the same day by TCT No. T-16694 in the name
of LORETO alone. The TCT was partially cancelled by the issuance of TCTs covering
Lot Nos. 1253-A, 1253-C and 1253-D. The TCT of Lot No. 1253-B was issued in the name
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of WILFREDO married to LOLITA on February 15, 1990. WILFREDOs TCT No. T-
18023 appears to be a transfer from LORETOs TCT No. T-16694.
II
Next, petitioners contend that the appellate court should have upheld the title of
WILFREDO under Article 1544 of the Civil Code and the doctrine of double sale where
the buyer who is in possession of the Torrens Title must prevail.
16
First, petitioners title
was issued pursuant to the purported Deed of Absolute Sale of Portion of Land dated
December 7, 1989. Second, WILFREDO did not see any encumbrance at the back of the
title of the subject lot when he purchased it from LORETO on December 7, 1989. Thus,
since he is not bound to go beyond the certificate of title, he has acquired the subject
property in due course and in good faith.
We disagree. Article 1544 of the Civil Code states, viz.:
Art. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.
Petitioners reliance on Article 1544 is misplaced. While title to the property was issued
in WILFREDOs name on February 15, 1990, the following circumstances show that he
registered the subject parcel with evident bad faith.
First, the Deed of Absolute Sale of Portion of Land dated December 7, 1989 between
LORETO and WILFREDO is tainted with blatant irregularities. It is a fact that the Deed
of Absolute Sale of Portion of Land and the Deed of Absolute Sale between GABINO,
JR. and WILFREDO are of even date. Both Deeds had the same object Lot No. 1253-B.
Both deeds were notarized by Atty. Warloo Cardenal and bear the same entry in his
notarial register: Document No. 236, Page No. 49, Book No. XI, Series of 1989.
Second, the testimony of a disinterested witness, Febe Mabuhay, established the
irregularity. Mabuhay used to work as secretary for Atty. Cardenal and co-signed as
witness in both Deeds. She stated that Atty. Cardenal instructed her to prepare the two
documents in the last week of November 1989. She was present when GABINO, JR.
signed the Deed of Absolute Sale. She testified that after GABINO, JR. left, LORETO
and his wife FRANCISCA arrived and signed the Deed of Absolute Sale of Portion of
Land.
17
The Decision of the court a quo further states,viz.:
[Mabuhay testified that when she prepared the two documents, she] noticed the
similarity of Lot No. 1253 as technically described in both documents but she did not
call the attention of Atty. Warlo[o] Cardenal. [She likewise stated that Atty. Cardenal]
specifically instructed her to assign the same document number to the two documents
notarized on December 7, 1989.
18

Third, the testimony of Atty. Ernesto Estoya, then Clerk of Court of the Regional Trial
Court of Antique, supports the claim that there was bad faith in the execution of the
Deed of Absolute Sale of Portion of Land. Atty. Estoya brought the notarial record of
Atty. Cardenal for the year 1989 pursuant to a subpoena. He stated that he had not
brought both Deeds as required in the subpoena because "Doc. No. 236; Page No. 49;
Book No. XI; Series of 1989" as entered in the notarial register of Atty. Cardenal could
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not be found in the files. He further explained that the last document on page 48 of the
notarial register of Atty. Cardenal is Document No. 235, while the first document on
page 49 is Document No. 239, leaving three unexplained gaps for document numbers
236, 237 and 238. Atty. Estoya stated that he was not the one who received the 1989
notarial register of Atty. Cardenal when the latter surrendered it since he assumed
office only in 1994.
19

Fourth, we give credence to the testimony of GABINO, JR. that LORETO and
WILFREDO had employed the scheme to deprive him and his wife of their lawful title
to the subject property. The facts speak for themselves. WILFREDO knew that he could
not use the Deed of Absolute Sale executed in his favor by GABINO, JR. because the
latter had no title to transfer. Without a title, WILFREDO could not use the subject
property as collateral for a bank loan. Hence, LORETO, who had refused to surrender
the title to GABINO, JR. and in whose name the land remained registered, had to
execute the Deed of Absolute Sale of Portion of Land in favor of WILFREDO. Hence, it
was convenient for WILFREDO to deny the existence of the Deed of Absolute Sale of
December 7, 1989 between him and GABINO, JR. But the evidence on record shows that
after he was able to register the subject property in his name on February 15, 1990,
WILFREDO used the title as collateral in the loans that he contracted with the
Philippine National Bank on October 24, 1991 and the Development Bank of the
Philippines on December 1, 1993. This supports the claim of GABINO, JR. that
WILFREDO needed the lot for loaning purposes.
With these corroborating circumstances and the following irrefragable documents on
record, the evidence preponderates in favor of GABINO, JR. One, he acquired Lot
No.1253-B from LORETO on May 12, 1986
20
by virtue of the Deed of Absolute Sale.
Two, the Bureau of Internal Revenue issued a Certification, also on May 12, 1986, for the
exemption from the payment of capital gains tax when LORETO sold to him the subject
parcel. Three, GABINO, JR. paid the real estate tax on the subject parcel in 1987. Four,
he filed a Petition for the Surrender of LORETOs title on July 31, 1987 so he could
transfer the title of the property in his name.
Petitioners likewise err in their argument that the contract of sale between LORETO and
GABINO, JR. is void on the ground that at the time of the sale on May 12, 1986,
LORETO had a right to dispose only an aliquot part of the yet undivided property of
ZOILO. The subject parcel, being an inherited property, is subject to the rules of co-
ownership under the Civil Code.
Co-ownership is the right of common dominion which two or more persons have in a
spiritual part of a thing, not materially or physically divided.
21
Before the partition of
the property held in common, no individual or co-owner can claim title to any definite
portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate
share in the entire property.
22

LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner.
LORETO had a right, even before the partition of the property on January 19, 1987,
23
to
transfer in whole or in part his undivided interest in the lot even without the consent of
his co-heirs. This right is absolute in accordance with the well-settled doctrine that a co-
owner has full ownership of his pro-indiviso share and has the right to alienate, assign
or mortgage it, and substitute another person for its enjoyment.
24
Thus, what GABINO,
JR. obtained by virtue of the sale on May 12, 1986 were the same rights as the vendor
LORETO had as co-owner, in an ideal share equivalent to the consideration given under
their transaction.
25

LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently,
when LORETO purportedly sold to WILFREDO on December 7, 1989 the same portion
of the lot, he was no longer the owner of Lot No. 1253-B. Based on the principle that "no
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one can give what he does not have,"
26
LORETO could not have validly sold to
WILFREDO on December 7, 1989 what he no longer had. As correctly pointed out by
the appellate court, the sale made by LORETO in favor of WILFREDO is void as
LORETO did not have the right to transfer the ownership of the subject property at the
time of sale.
III
Petitioners contend that since the subdivision plan of Lot No. 1253 was only approved
on January 19, 1987, the appellate court can not presume
that the aliquot part of LORETO was the parcel designated as Lot 1253-B.
27

Petitioners err. The mere fact that LORETO sold a definite portion of the co-owned lot
by metes and bounds before partition does not, per se, render the sale a nullity. We held
in Lopez v. Vda. De Cuaycong
28
that the fact that an agreement purported to sell a
concrete portion of a co-owned property does not render the sale void, for it is well-
established that the binding force of a contract must be recognized as far as it is legally
possible to do so.
29

In the case at bar, the contract of sale between LORETO and GABINO, JR. on May 12,
1986 could be legally recognized.1wphi1 At the time of sale, LORETO had an aliquot
share of one-third of the 4,280-square meter property or some 1,426
30
square meters but
sold some 1,604 square meters to GABINO, JR. We have ruled that if a co-owner sells
more than his aliquot share in the property, the sale will affect only his share but not
those of the other co-owners who did not consent to the sale.
31
Be that as it may, the co-
heirs of LORETO waived all their rights and interests over Lot No. 1253 in favor of
LORETO in an Extrajudicial Settlement of Estate dated January 20, 1987. They declared
that they have previously received their respective shares from the other estate of their
parents ZOILO and PURIFICACION.
32
The rights of GABINO, JR. as owner over Lot
No. 1253-B are thus preserved. These rights were not effectively transferred by
LORETO to WILFREDO in the Deed of Absolute Sale of Portion of Land. Nor were
these rights alienated from GABINO, JR. upon the issuance of the title to the subject
property in the name of WILFREDO. Registration of property is not a means of
acquiring ownership.
33
Its alleged incontrovertibility cannot be successfully invoked by
WILFREDO because certificates of title cannot be used to protect a usurper from the
true owner or be used as a shield for the commission of fraud.
34

IV
On the issue of prescription, petitioners contend that the appellate court failed to apply
the rule that an action for reconveyance based on fraud prescribes after the lapse of four
years.
35
They cite Article 1391
36
of the Civil Code and the case of Gerona v. De
Guzman.
37

We disagree. This Court explained in Salvatierra v. Court of Appeals,
38
viz.:
An action for reconveyance based on an implied or constructive trust must perforce
prescribe in ten years and not otherwise. A long line of decisions of this Court, and of
very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that
an action for reconveyance based on an implied or constructive trust prescribes in ten
years from the issuance of the Torrens title over the property. The only discordant note,
it seems, is Balbin v. Medalla, which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained by the
erroneous reliance on Gerona v. de Guzman. But in Gerona, the fraud was discovered
on June 25, 1948, hence Section 43(3) of Act No. 190 was applied, the New Civil Code
not coming into effect until August 30, 1950 xxx. It must be stressed, at this juncture,
that Article 1144 and Article 1456 are new provisions. They have no counterparts in
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the old Civil Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.
39

[Thus,] under the present Civil Code, xxx just as an implied or constructive trust is an
offspring of xxx Art. 1456, xxx so is the corresponding obligation to reconvey the
property and the title thereto in favor of the true owner. In this context, and vis--vis
prescription, Article 1144 of the Civil Code is applicable[, viz.:]
Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment.
40
(emphases supplied)
Thus, in the case at bar, although the TCT of WILFREDO became indefeasible after the
lapse of one year from the date of registration, the attendance of fraud in its issuance
created an implied trust in favor of GABINO, JR. under Article 1456
41
of the Civil Code.
Being an implied trust, the action for reconveyance of the subject property therefore
prescribes within a period of ten years from February 15, 1990. Thus, when respondents
filed the instant case with the court a quo on September 26, 1995, it was well within the
prescriptive period.
V
On the issue of damages, petitioners contend that the grant is erroneous and the alleged
connivance between Atty. Cardenal and WILFREDO lacks basis.
We disagree. The evidence on record is clear that petitioners committed bad faith in the
execution of the purported Deed of Absolute Sale of Portion of Land dated December 7,
1989 between LORETO and WILFREDO. As stated by the appellate court, viz.:
xxxx From the series of events, it can be reasonably inferred that appellees WILFREDO,
LORETO and Atty. Cardenal connived in attempting to deprive appellants of Lot No.
1253-B, hence, the appellants entitlement to moral damages. Further, it is a well-settled
rule that attorneys fees are allowed to be awarded if the claimant is compelled to
litigate with third persons or to incur expenses to protect his interest by reason of an
unjustified act or omission of the party for whom it is sought. xxxx To protect
themselves, the appellants engaged the services of counsel and incurred expenses in the
course of litigation. Hence, we deem it equitable to award attorneys fees to the
appellant xxx.
42

IN VIEW WHEREOF, the petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13,
2003, respectively, are AFFIRMED in toto. Costs against petitioners.
SO ORDERED.
REYNATO S. PUNO
Associate Justice

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FIRST DIVISION
G.R. No. L-46892 September 30, 1981
HEIRS OF AMPARO DEL ROSARIO, plaintiffs-appellees,
vs.
AURORA O. SANTOS, JOVITA SANTOS GONZALES, ARNULFO O. SANTOS,
ARCHIMEDES O. SANTOS, ERMELINA SANTOS RAVIDA, and ANDRES O.
SANTOS, JR., defendants-appellants.

GUERRERO, J.:
The Court of Appeals,
1
in accordance with Section 31 of the Judiciary Act of 1948, as
amended, certified to Us the appeal docketed as CA-G.R. No. 56674-R entitled "Amparo
del Rosario, plaintiff-appellee, vs. Spouses Andres Santos and Aurora Santos, defendants-
appellants," as only questions of law are involved.
On January 14, 1974, Amparo del Rosario filed a complaint against the spouses Andres
F. Santos and Aurora O. Santos, for specific performance and damages allegedly for
failure of the latter to execute the Deed of Confirmation of Sale of an undivided 20,000
square meters of land, part of Lot 1, Psu-206650, located at Barrio Sampaloc, Tanay,
Rizal, in malicious breach of a Deed of Sale (Exhibit A or 1) dated September 28, 1964.
Amparo del Rosario died on Sept. 21, 1980 so that she is now substituted by the heirs
named in her will still undergoing probate proceedings. Andres F. Santos also died, on
Sept. 5, 1980, and he is substituted by the following heirs: Jovita Santos Gonzales,
Arnulfo O. Santos, Archimedes O. Santos, Germelina Santos Ravida, and Andres O.
Santos, Jr.
The Deed of Sale (Exh. A or 1) is herein reproduced below:
DEED OF SALE
KNOW ALL MEN BY THESE PRESENTS:
I, ANDRES F. SANTOS, of legal age, married to Aurora 0. Santos, Filipino
and resident cf San Dionisio, Paranaque, Rizal, Philippines, for and in
consideration of the sum of TWO THOUSAND (P 2,000.00) PESOS,
Philippine Currency, the receipt whereof is hereby acknowledged, do
hereby SELLS, CONVEYS, and TRANSFERS (sic) unto Amparo del
Rosario, of legal age, married to Fidel del Rosario but with legal
separation, Filipino and resident of San Dionisio, Paranaque, Rizal,
Philippines that certain 20,000 square meters to be segregated from Lot 1
of plan Psu-206650 along the southeastern portion of said lot, which
property is more particularly described as follows:
A parcel of land (Lot 1 as shown on plan Psu-206650,
situated in the Barrio of Sampaloc, Municipality of Tanay,
Province of Rizal. Bounded on the SW., along lines 1-2-3, by
Lot 80 of Tanay Public Land Subdivision, Pls-39; on the NW.,
along lines 3-4-5, by Lot 2; and along lines 5-6-7-8-9-10-11, by
Lot 6; on the NE., along lines 11-12-13, by Lot 3: and along
lines 13-1415, by Lot 4, all of plan Psu-206650; and on the SE.,
along line 15-1, by Lot 5 of plan Psu- 206650 ... ; containing
an area of ONE HUNDRED EIGHTY ONE THOUSAND
FOUR HUNDRED TWENTY (181,420) SQUARE METERS.
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All points referred to are indicated on the plan and are
marked on the ground as follows: ...
of which above-described property, I own one-half (1/2) interest thereof
being my attorney's fee, and the said 20,000 square meters will be
transferred unto the VENDEE as soon as the title thereof has been released
by the proper authority or authorities concerned:
That the parties hereto hereby agree that the VENDOR shall execute a
Deed of Confirmation of Deed of Sale in favor of the herein VENDEE as
soon as the title has been released and the subdivision plan of said Lot 1
has been approved by the Land Registration Commissioner.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of
September, 1964, in the City of Manila, Philippines.
s/ ANDRES F. SANTOS t/ ANDRES F. SANTOS
With My Marital Consent:
s/ Aurora O. Santos (Wife) t/ Aurora O. Santos (Wife)
SIGNED IN THE PRESENCE OF: s/ Felicitas C. Moro s/ Corona C. Venal
REPUBLIC OF THE PHILIPPINES) ) SS.
BEFORE ME, a Notary Public for and in Rizal, Philippines, personally
appeared Andres F. Santos, with Res. Cert. No. 4500027 issued at
Paranaque, Rizal, on Jan. 9, 1964, B-0935184 issued at Paranaque, Rizal on
April 15, 1964, and Aurora 0. Santos, with Res. Cert. No. A-4500028 issued
at Paranaque, Rizal, on Jan. 9, 1964, giving her marital consent to this
instrument, both of whom are known to me and to me known to be the
same persons who executed the foregoing instruments and they
acknowledged to me that the same is their free act and voluntary deed.
IN WITNESS WHEREOF, I have hereunto signed this instrument and
affixed my notarial seal this lst day of October, 1964, in Pasig, Rizal,
Philippines.
Doc. No. 1792; Page No. 85; Book No. 19; Series of 1964.
s/ FLORENCIO LANDRITO t/ FLORENCIO LANDRITO
NOTARY PUBLIC Until December 31, 1965
2

Plaintiff claimed fulfillment of the conditions for the execution of the Deed of
Confirmation of Sale, namely: the release of the title of the lot and the approval of the
subdivision plan of said lot by the Land Registration Commission. She even
enumerated the titles with their corresponding land areas derived by defendants from
the aforesaid lot, to wit:
(a) TCT 203580 30,205 sq. meters
(b) TCT 203581 19, 790 sq. meters
(c) TCT 167568 40,775 sq. meters
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In a motion to dismiss, defendants pleaded, inter alia, the defenses of lack of jurisdiction
of the court a quo over the subject of the action and lack of cause of action allegedly
because there was no allegation as to the date of the approval of the subdivision plan,
no specific statement that the titles therein mentioned were curved out of Lot I and no
clear showing when the demands were made on the defendants. They likewise set up
the defense of prescription allegedly because the deed of sale was dated September 28,
1964 and supposedly ratified October 1, 1964 but the complaint was filed only on
January 14, 1974, a lapse of more than nine years when it should have been filed within
five years from 1964 in accordance with Article 1149, New Civil Code.
Defendant also claimed that the demand set forth in the complaint has been waived,
abandoned or otherwise extinguished. It is alleged that the deed of sale was "only an
accommodation graciously extended, out of close friendship between the defendants
and the plaintiff and her casual business partner in the buy and sell of real estate, one
Erlinda Cortez;"
3
that in order to allay the fears of plaintiff over the non-collection of
the debt of Erlinda Cortez to plaintiff in various sums exceeding P 2,000.00, defendants,
who were in turn indebted to Erlinda Cortez in the amount of P 2,000.00, voluntarily
offered to transfer to plaintiff their inexistent but expectant right over the lot in
question, the same to be considered as part payment of Erlinda Cortez' indebtedness;
that as Erlinda Cortez later on paid her creditor what was then due, the deed of sale had
in effect been extinguished. Defendants thereby characterized the said deed of sale as a
mere tentative agreement which was never intended nor meant to be ratified by and
acknowledged before a notary public. In fact, they claimed that they never appeared
before Notary Public Florencio Landrito.
Finally, defendants alleged that the claim on which the action or suit is founded is
unenforceable under the statute of frauds and that the cause or object of the contract did
not exist at the time of the transaction.
After an opposition and a reply were filed by the respective parties, the Court a
quo resolved to deny the motion to dismiss of defendants. Defendants filed their answer
with counterclaim interposing more or less the same defenses but expounding on them
further. In addition, they claimed that the titles allegedly derived by them from Lot 1 of
Annex A or I were cancelled and/or different from said Lot I and that the deed of sale
was simulated and fictitious, plaintiff having paid no amount to defendants; and that
the deed was entrusted to plaintiff's care and custody on the condition that the latter; (a)
would secure the written consent of Erlinda Cortez to Annex A or I as part payment of
what she owed to plaintiff; (b) would render to defendants true accounting of
collections made from Erlinda showing in particular the consideration of 2,000.00 of
Annex A or I duly credited to Erlinda's account.
4

Plaintiff filed a reply and answer to counterclaim and thereafter a motion for summary
judgment and/or judgment on the pleadings on the ground that the defenses of
defendants fail to tender an issue or the same do not present issues that are serious
enough to deserve a trial on the merits,
5
submitting on a later date the affidavit of
merits. Defendants filed their corresponding opposition to the motion for summary
judgment and/or judgment on the pleadings. Not content with the pleadings already
submitted to the Court, plaintiff filed a reply while defendants filed a supplemental
opposition.
With all these pleadings filed by the parties in support of their respective positions, the
Court a quo still held in abeyance plaintiff's motion for summary judgment or judgment
on the pleadings pending the pre-trial of the case. At the pre-trial, defendants offered by
way of compromise to pay plaintiff the sum of P2,000.00, the consideration stated in the
deed of sale. But the latter rejected the bid and insisted on the delivery of the land to
her. Thus, the pre-trial proceeded with the presentation by plaintiff of Exhibits A to Q
which defendants practically admitted, adopted as their own and marked as Exhibits 1
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to 17. In addition, the latter offered Exhibit 18, which was their reply to plaintiff's letter
of demand dated December 21, 1973.
From the various pleadings filed in this case by plaintiff, together with the annexes and
affidavits as well as the exhibits offered in evidence at the pre-trial, the Court a quo
found the following facts as having been duly established since defendant failed to meet
them with countervailing evidence:
In February, 1964, Teofilo Custodia owner of a parcel of unregistered land
with an area of approximately 220,000 square meters in Barrio Sampaloc,
Tanay, Rizal, hired Attorney Andres F. Santos "to cause the survey of the
above-mentioned property, to file registration proceedings in court, to
appear and represent him in all government office relative thereto, to
advance all expenses for surveys, taxes to the government, court fees,
registration fees ... up to the issuance of title in the name" of Custodia.
They agreed that after the registration of the title in Custodio's name, and
"after deducting all expenses from the total area of the property," Custodio
would assign and deliver to Santos "one-half (1/2) share of the whole
property as appearing in the certificate of title so issued." Exh. B or 2).
On March 22, 1964, Custodio's land was surveyed under plan Psu-226650
(Exh. D or 4). It was divided into six (6) lots, one of which was a road lot.
The total area of the property as surveyed was 211,083 square meters. The
respective areas of the lots were as follows:
Lot 1 181,420
square
meters
Lot 2 7,238
square
meters
Lot 3 7,305
square
meters
Lot 4 5,655
square
meters
Lot 5 5,235
square
meters
Road Lot 6 4,230
square
meters
TOTAL 211,083
square
meters
xxx xxx xxx
On December 27, 1965, a decree of registration No. N-108022 was issued in
Land Registration Case No. N-5023, of the Court of First Instance of Rizal,
LRC Record No. N-27513, in favor of Teofilo Custodia married to Miguela
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Perrando resident of Tanay, Rizal. On March 23, 1966, Original Certificate
of Title No. 5134 (Exh. Q or 17) was issued to Custodio for Lots 1, 2, 3, 4
and 5, Psu- 206650, with a total area of 206,853 square meters. The areas of
the five (5) lots were as follows:
Lot 1 181,420
square
meters
Lot 2 7,238
square
meters
Lot 3 7,305
square
meters
Lot 4 5,655
square
meters
Lot 5 5,235
square
meters
In April to May, 1966, a consolidation-subdivision survey (LRC) Pcs-5273
(Exh. E or 5) was made on the above lots converting them into six (6) new
lots as follows:
xxx xxx xxx
Lot 1 20,000
square
meters
Lot 2 40,775
square
meters
Lot 3 50,000
square
meters
Lot 4 40,775
square
meters
Lot 5 50,000
square
meters
Road Lot 6 5,303
square
meters
TOTAL 206,853
square
meters
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On June 22, 1966, the consolidation-subdivision plan (LRC) Pcs-5273 (Exh.
E or 5) was approved by the Land Registration Commission and by the
Court of First Instance of Rizal in an order dated July 2, 1966 (Entry No.
61037 T-167561, Exh. Q). Upon its registration, Custodio's O.C.T. No. 5134
(Exh. Q) was cancelled and TCT Nos. 167561, 167562, 167563, 167564 (Exh.
G), 167565 (Exh. H and 167566 were issued for the six lots in the name of
Custodio (Entry No. 61035, Exh. Q).
On June 23, 1966, Custodio conveyed to Santos Lots 4 and 5, Pcs-5273 with
a total area of 90,775 square meters (Exh. B or 2) described in Custodio's
TCT No. 167564 (Exh. G or 7) and TCT No. 167565 (Exh. H or 8), plus a
one-half interest in the Road Lot No. 6, as payment of Santos' attorney's
fees and advances for the registration of Custodio's land.
Upon registration of the deed of conveyance on July 5, 1966, Custodio's
TCT Nos. 167564 and 167565 (Exhs. G and H) were cancelled. TCT No.
167568 (Exh. I or 9) for Lot 4 and TCT No. 167585 (Exh. J or 10) for Lot 5
were issued to Santos.
On September 2, 1967, Santos' Lot 5, with an area of 50,000 square meters
was subdivided into two (2) lots, designated as Lots 5-A and 5-B in the
plan Psd-78008 (Exh. F or 6), with the following areas:
Lot 5-A 30,205
square
meters
Lot 5-B 19,795square
meters
TOTAL 50,000
square
meters
Upon registration of Psd-78008 on October 3, 1967, Santos' TCT No.
167585 (Exh. J) was cancelled and TCT No. 203578 for Lot 5- A and TCT
No. 203579 for Lot 5-B were supposed to have been issued to Santos (See
Entry 6311 in Exh. J or 10). Actually, TCT No. 203580 was issued for Lot 5-
A (Exh. K or 1 1), and TCT No. 203581 for Lot 5-B (Exh. L or 12), both in
the name of Andres F. Santos.
Out of Custodio's original Lot 1, Psu-206650, with an area of 181,420
square meters, Santos was given a total of 90,775 square meters, registered
in his name as of October 3, 1967 under three (3) titles, namely:

TCT No.
167585 for

Lot 4 Pcs-
5273
40,775 sq.
m.
(Exh. J or
10)

TCT No.
203580 for

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Lot 5-A Psd-
78008
30,205 sq.
m.
(Exh. K or
11)

TCT No.
203581 for

Lot 5-B Psd-
78008
19,795 sq.
m.
(Exh. L or
12)

90,775
sq.m.
plus one-half of the road lot, Lot 6, PCS-5273, with an area of 5,303 square
meters, which is registered jointly in the name of Santos and Custodio
(Exh. B & E)
6

The court a quo thereupon concluded that there are no serious factual issues involved so
the motion for summary judgment may be properly granted. Thereafter, it proceeded to
dispose of the legal issues raised by defendants and rendered judgment in favor of
plaintiff. The dispositive portion of the decision states as follows:
WHEREFORE, defendants Andres F. Santos and Aurora Santos are
ordered to execute and convey to plaintiff Amparo del Rosario, within ten
(10) days from the finality of this decision, 20,000 square meters of land to
be taken from the southeastern portion of either Lot 4, Pcs-5273, which has
an area of 40,775 square meters, described in TCT No. 167568 (Exh. I or 9)
of from their LOL 5-A. with an area of 30,205 square meters, described in
TCI No. 203; O (Exh. K or 11). The expenses of segregating the 20,000
square meters portion shall be borne fqually by the parties. rhe expenses
for the execution and registration of the sale shall be borne by the
defendants (Art. 1487, Civil Code). Since the defendants compelled the
plaintiff to litigate and they failed to heed plainliff's just demand, they are
further ordered to pay the plaintiff the sum of P2,000.00 as attorney's fees
and the costs of this action.
SO ORDERED.
7

Aggrieved by the aforesaid decision, the defendant's filed all appeal to the Court of
Appeals submitting for resolution seven assignments of errors, to wit:
I. The lower court erred in depriving the appellants of their right to the
procedural due process.
II. The lower court erred in holding that the appellee's claim has not been
extinguished.
III. The lower court erred in sustaining appellee's contention that there are
no other unwritten conditions between the appellants and the appellee
except those express in Exh. "1" or "A", and that Erlinda Cortez'
conformity is not required to validate the appellants' obligation.
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IV. The lower court erred in holding that Exh. "l" or "A" is not infirmed
and expressed the true intent of the parties.
V. The lower court erred in declaring that the appellants are co-owners of
the lone registered owner Teofilo Custodia.
VI. The lower court erred in ordering the appellants to execute and convey
to the appellee 20,000 sq. m. of land to be taken from the southeastern
portion of either their lot 4, Pcs-5273, which has an area of 40,775 sq.m.,
described in T.C.T. No. 167568 (Exh. 9 or 1), or from their lot No. 5-A, with
an area of 30,205 sq.m. described in T.C.T. No. 203580 (Exh. 11 or K), the
expenses of segregation to be borne equally by the appellants and the
appellee and the expenses of execution and registration to be borne by the
appellants.
VII. Thelowercourterredinorderingtheappellantstopayto the appellee the
sum of P2,000. 00 as attorney's fee and costs.
8

The first four revolve on the issue of the propriety of the rendition of summary
judgment by the court a quo, which concededly is a question of law. The last three assail
the summary judgment itself. Accordingly, the Court of Appeals, with whom the
appeal was filed, certified the records of the case to this Court for final determination.
For appellants herein, the rendition of summary judgment has deprived them of their
right to procedural due process. They claim that a trial on the merits is indispensable in
this case inasmuch as they have denied under oath all the material allegations in
appellee's complaint which is based on a written instrument entitled "Deed of Sale",
thereby putting in issue the due execution of said deed.
Appellants in their opposition to the motion for summary judgment and/or judgment
on the pleadings, however, do not deny the genuineness of their signatures on the deed
of sale.
(Par. 3 of said Motion, p. 101, Record on Appeal). They do not contest the words and
figures in said deed except in the acknowledgment portion thereof where certain words
were allegedly cancelled and changed without their knowledge and consent and where,
apparently, they appeared before Notary Public Florencio Landrito when, in fact, they
claimed that they did not. In effect, there is an admission of the due execution and
genuineness of the document because by the admission of the due execution of a
document is meant that the party whose signature it bears admits that voluntarily he
signed it or that it was signed by another for him and with his authority; and the
admission of the genuineness of the document is meant that the party whose signature
it bears admits that at the time it was signed it was in the words and figures exactly as
set out in the pleading of the party relying upon it; and that any formal requisites
required by law, such as swearing and acknowledgment or revenue stamps which it
requires, are waived by him.
9

As correctly pointed out by the court a quo, the alleged false notarization of the deed of
sale is of no consequence. For a sale of real property or of an interest therein to be
enforceable under the Statute of Frauds, it is enough that it be in writing.
10
It need not
be notarized. But the vendee may avail of the right under Article 1357 of the New Civil
Code to compel the vendor to observe the form required by law in order that the
instrument may be registered in the Registry of Deeds.
11
Hence, the due execution and
genuineness of the deed of sale are not really in issue in this case. Accordingly, assigned
error I is without merit.
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1

What appellants really intended to prove through the alleged false notarization of the
deed of sale is the true import of the matter, which according to them, is a mere
tentative agreement with appellee. As such, it was not intended to be notarized and was
merely entrusted to appellee's care and custody in order that: first, the latter may secure
the approval of one Erlinda Cortez to their (appellants') offer to pay a debt owing to her
in the amount of P2,000.00 to appellee instead of paying directly to her as she was
indebted to appellee in various amounts exceeding P2,000.00; and second once the
approval is secured, appellee would render an accounting of collections made from
Erlinda showing in particular the consideration of P2,000.00 of the deed of sale duly
credited to Erlinda's account.
According to appellants, they intended to prove at a full dress trial the material facts: (1)
that the aforesaid conditions were not fulfilled; (2) that Erlinda Cortez paid her total
indebtedness to appellee in the amount of P14,160.00, the P2,000.00 intended to be paid
by appellant included; and (3) that said Erlinda decided to forego, renounce and refrain
from collecting the P2,000.00 the appellants owed her as a countervance reciprocity of
the countless favors she also owes them.
Being conditions which alter and vary the terms of the deed of sale, such conditions
cannot, however, be proved by parol evidence in view of the provision of Section 7,
Rule 130 of the Rules of Court which states as follows:
Sec. 7. Evidence of written agreements when the terms of an agreement
have been reduced to writing, it is to be considered as containing all such
terms, and, therefore, there can be, between the parties and their
successors in interest, no evidence of the terms of the agreement other
than the contents of the writing, except in the following cases:
(a) Where a mistake or imperfection of the writing, or its failure to express
the true intent and agreement of the parties, or the validity of the
agreement is put in issue by the pleadings;
(b) When there is an intrinsic ambiguity in the writing. The term
"agreement" includes wills."
The parol evidence rule forbids any addition to or contradiction of the terms of a
written instrument by testimony purporting to show that, at or before the signing of the
document, other or different terms were orally agreed upon by the parties.
12

While it is true, as appellants argue, that Article 1306 of the New Civil Code provides
that "the contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided that they are not contrary to law,
morals, good customs, public order, or public policy" and that consequently, appellants
and appellee could freely enter into an agreement imposing as conditions thereof the
following: that appellee secure the written conformity of Erlinda Cortez and that she
render an accounting of all collections from her, said conditions may not be proved as
they are not embodied in the deed of sale.
The only conditions imposed for the execution of the Deed of Confirmation of Sale by
appellants in favor of appellee are the release of the title and the approval of the
subdivision plan. Thus, appellants may not now introduce other conditions allegedly
agreed upon by them because when they reduced their agreement to writing, it is
presumed that "they have made the writing the only repository and memorial of truth,
and whatever is not found in the writing must be understood to have been waived and
abandoned."
13

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2

Neither can appellants invoke any of the exceptions to the parol evidence rule, more
particularly, the alleged failure of the writing to express the true intent and agreement
of the parties. Such an exception obtains where the written contract is so ambiguous or
obscure in terms that the contractual intention of the parties cannot be understood from
a mere reading of the instrument. In such a case, extrinsic evidence of the subject matter
of the contract, of the relations of the parties to each other, and of the facts and
circumstances surrounding them when they entered into the. contract may be received
to enable the court to make a proper interpretation of the instrumental.
14
In the case at
bar, the Deed of Sale (Exh. A or 1) is clear, without any ambiguity, mistake or
imperfection, much less obscurity or doubt in the terms thereof. We, therefore, hold and
rule that assigned errors III and IV are untenable.
According to the court a quo, "(s)ince Santos, in his Opposition to the Motion for
Summary Judgment failed to meet the plaintiff's evidence with countervailing evidence,
a circumstance indicating that there are no serious factual issues involved, the motion
for summary judgment may properly be granted." We affirm and sustain the action of
the trial court.
Indeed, where a motion for summary judgment and/or judgment on the pleadings has
been filed, as in this case, supporting and opposing affidavits shall be made on personal
knowledge, shall set forth such facts as may be admissible in evidence, and shall show
affirmatively that the affiant is competent to testify as to the matters stated therein.
Sworn or certified copies of all papers or parts thereof referred to in the
affidavitshalibeattachedtheretoorservedtherewith.
15

Examining the pleadings, affidavits and exhibits in the records, We find that appellants
have not submitted any categorical proof that Erlinda Cortez had paid the P2,000.00 to
appellee, hence, appellants failed to substantiate the claim that the cause of action of
appellee has been extinguished. And while it is true that appellants submitted a receipt
for P14,160.00 signed by appellee, appellants, however, have stated in their answer with
counterclaim that the P2,000.00 value of the property covered by the Deed of Sale,
instead of being credited to Erlinda Cortez, was conspicuously excluded from the
accounting or receipt signed by appellee totalling P14,160.00. The aforesaid receipt is no
proof that Erlinda Cortez subsequently paid her P2,000.00 debt to appellee. As correctly
observed by the court a quo, it is improbable that Cortez would still pay her debt to
appellee since Santos had already paid it.
Appellants' claim that their P2,000.00 debt to Erlinda Cortez had been waived or
abandoned is not also supported by any affidavit, document or writing submitted to the
court. As to their allegation that the appellee's claim is barred by prescription, the ruling
of the trial court that only seven years and six months of the ten-year prescription
period provided under Arts. 1144 and 155 in cases of actions for specific performance of
the written contract of sale had elapsed and that the action had not yet prescribed, is in
accordance with law and, therefore, We affirm the same.
The action of the court a quo in rendering a summary judgment has been taken in
faithful compliance and conformity with Rule 34, Section 3, Rules of Court, which
provides that "the judgment sought shall be rendered forthwith if the pleadings,
depositions, and admissions on file together with the affidavits, show that, except as to
the amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law. "
Resolving assignments of errors, V, VI, and VII which directly assail the summary
judgment, not the propriety of the rendition thereof which We have already resolved to
be proper and correct, it is Our considered opinion that the judgment of the court a
quo is but a logical consequence of the failure of appellants to present any bona
fidedefense to appellee's claim. Said judgment is simply the application of the law to the
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undisputed facts of the case, one of which is the finding of the court a quo, to which We
agree, that appellants are owners of one-half (1/2) interest of Lot I and, therefore, the
fifth assignment of error of appellants is without merit.
By the terms of the Deed of Sale itself, which We find genuine and not infirmed,
appellants declared themselves to be owners of one-half (1/2) interest thereof. But in
order to avoid appellee's claim, they now contend that Plan Psu-206650 where said Lot I
appears is in the exclusive name of Teofilo Custodio as the sole and exclusive owner
thereof and that the deed of assignment of one-half (1/2) interest thereof executed by
said Teofilo Custodio in their favor is strictly personal between them. Notwithstanding
the lack of any title to the said lot by appellants at the time of the execution of the deed
of sale in favor of appellee, the said sale may be valid as there can be a sale of an
expected thing, in accordance with Art. 1461, New Civil Code, which states:
Art. 1461. Things having a potential existence may be the object of the
contract of sale.

The efficacy of the sale of a mere hope or expectancy is deemed subject to
the condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
In the case at bar, the expectant right came into existence or materialized for the
appellants actually derived titles from Lot I .
We further reject the contention of the appellants that the lower court erred in ordering
the appellants to execute and convey to the appellee 20,000 sq.m. of land to be taken
from the southeastern portion of either their Lot 4, Pcs-5273, which has an area of 40,775
sq.m., described in T.C.T. No. 167568 (Exh. 9 or 1), or from their Lot No. 5-A, with an
area of 30,205 sq.m. described in T.C.T. No. 203580 (Exh. 11 or K), the expenses of
segregation to be borne equally by the appellants and the appellee and the expenses of
execution and registration to be borne by the appellants. Their argument that the
southeastern portion of Lot 4 or Lot 5-A is no longer the southeastern portion of the
bigger Lot 1, the latter portion belonging to the lone registered owner, Teofilo Custodia
is not impressed with merit. The subdivision of Lot I between the appellants and Teofilo
Custodio was made between themselves alone, without the intervention, knowledge
and consent of the appellee, and therefore, not binding upon the latter. Appellants may
not violate nor escape their obligation under the Deed of Sale they have agreed and
signed with the appellee b3 simply subdividing Lot 1, bisecting the same and
segregating portions to change their sides in relation to the original Lot 1.
Finally, considering the trial court's finding that the appellants compelled the appellee
to litigate and they failed to heed appellee's just demand, the order of the court
awarding the sum of P2,000.00 as attorney's fees is just and lawful, and We affirm the
same.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby
AFFIRMED in toto, with costs against the appellants.
SO ORDERED.

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4

SPECIAL FIRST DIVISION
G.R. No. 122544 January 28, 2003
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER
ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD
A. DIZON and JOSE A. DIZON, JR., petitioners,
vs.
COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents.
x---------------------------------------------------------x
G.R. No. 124741 January 28, 2003
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER
ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD
A. DIZON and JOSE A. DIZON, JR., petitioners,
vs.
COURT OF APPEALS HON. MAXIMIANO C. ASUNCION and OVERLAND
EXPRESS LINES, INC., respondents.
R E S O L U T I O N
YNARES-SANTIAGO, J.:
On January 28, 1999, this Court rendered judgment in these consolidated cases as
follows:
WHEREFORE, in view of the foregoing, both petitions are GRANTED. The
decision dated March 29, 1994 and the resolution dated October 19, 1995 in CA-
G.R. CV Nos. 25153-54, as well as the decision dated December 11, 1995 and the
resolution dated April 23, 1997 in CA-G.R. SP No. 33113 of the Court of Appeals
are hereby REVERSED and SET ASIDE.
Let the records of this case be remanded to the trial court for immediate
execution of the judgment dated November 22, 1982 in Civil Case No. VIII-29155
of the then City Court (now Metropolitan Trial Court) of Quezon City, Branch III
as affirmed in the decision dated September 26, 1984 of the then Intermediate
Appellate Court (now Court of Appeals) and in the resolution dated June 19,
1985 of this Court.
However, petitioners are ordered to REFUND to private respondent the amount
of P300,000.00 which they received through Alice A. Dizon on June 20, 1975.
SO ORDERED.
Private respondent filed a Motion for Reconsideration, Second Motion for
Reconsideration, and Motion to Suspend Procedural Rules in the Higher Interest of
Substantial Justice, all of which have been denied by this Court. This notwithstanding,
the cases were set for oral argument on March 21, 2001, on the following issues:
1. WHETHER THERE ARE CIRCUMSTANCES THAT WOULD JUSTIFY
SUSPENSION OF THE RULES OF COURT;
2. WHETHER THE SUM OF P300,000.00 RECEIVED BY ALICE DIZON FROM
PRIVATE RESPONDENT WAS INTENDED AS PARTIAL PAYMENT OF THE
PURCHASE PRICE OF THE PROPERTY, OR AS PAYMENT OF BACK
RENTALS ON THE PROPERTY;
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3. WHETHER ALICE DIZON WAS AUTHORIZED TO RECEIVE THE SUM OF
P300,000.00 ON BEHALF OF PETITIONERS;
4. (A) IF SO, WHETHER PETITIONERS ARE ESTOPPED FROM QUESTIONING
THE BELATED EXERCISE BY PRIVATE RESPONDENT OF ITS OPTION TO
BUY WHEN THEY ACCEPTED THE SAID PARTIAL PAYMENT;
(B) IF SO, WHETHER ALICE DIZON CAN VALIDLY BIND PETITIONERS IN
THE ABSENCE OF A WRITTEN POWER OF ATTORNEY;
5. (A) WHETHER THERE WAS A PERFECTED CONTRACT OF SALE
BETWEEN THE PARTIES;
(B) WHETHER THERE WAS A CONTRACT OF SALE AT LEAST WITH
RESPECT TO THE SHARES OF FIDELA AND ALICE DIZON; AND
6. WHETHER PRIVATE RESPONDENT'S ACTION FOR SPECIFIC
PERFORMANCE HAS PRESCRIBED.
In order to resolve the first issue, it is necessary to pass upon the other questions which
relate to the merits of the case. It is only where there exist strong compelling reasons,
such as serving the ends of justice and preventing a miscarriage thereof, that this Court
can suspend the rules.
1

After reviewing the records, we find that, despite all of private respondent's
protestations, there is absolutely no written proof of Alice Dizon's authority to bind
petitioners. First of all, she was not even a co-owner of the property. Neither was she
empowered by the co-owners to act on their behalf.
The acceptance of the amount of P300,000.00, purportedly as partial payment of the
purchase price of the land, was an act integral to the sale of the land. As a matter of fact,
private respondent invokes such receipt of payment as giving rise to a perfected
contract of sale. In this connection, Article 1874 of the Civil Code is explicit that: "When
a sale of a piece of land or any interest therein is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall be void."
When the sale of a piece of land or any interest thereon is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void. Thus
the authority of an agent to execute a contract for the sale of real estate must be
conferred in writing and must give him specific authority, either to conduct the
general business of the principal or to execute a binding contract containing
terms and conditions which are in the contract he did execute. A special power of
attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable
consideration. The express mandate required by law to enable an appointee of an
agency (couched) in general terms to sell must be one that expressly mentions a
sale or that includes a sale as a necessary ingredient of the act mentioned. For the
principal to confer the right upon an agent to sell real estate, a power of attorney
must so express the powers of the agent in clear and unmistakable language.
When there is any reasonable doubt that the language so used conveys such
power, no such construction shall be given the document.
2

It necessarily follows, therefore, that petitioners cannot be deemed to have received
partial payment of the supposed purchase price for the land through Alice Dizon. It
cannot even be said that Alice Dizon's acceptance of the money bound at least the share
of Fidela Dizon, in the absence of a written power of attorney from the latter. It should
be borne in mind that the Receipt dated June 20, 1975, while made out in the name of
Fidela Dizon, was signed by Alice Dizon alone.
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Moreover, there could not have been a perfected contract of sale. As we held in our
Decision dated January 28, 1999, the implied renewal of the contract of lease between
the parties affected only those terms and conditions which are germane to the lessee's
right of continued enjoyment of the property. The option to purchase afforded private
respondent expired after the one-year period granted in the contract. Otherwise stated,
the implied renewal of the lease did not include the option to purchase. We see no
reason to disturb our ruling on this point,viz:
In this case, there was a contract of lease for one (1) year with option to purchase.
The contract of lease expired without the private respondent, as lessee,
purchasing the property but remained in possession thereof. Hence, there was an
implicit renewal of the contract of lease on a monthly basis. The other terms of
the original contract of lease which are revived in the implied new lease under
Article 1670 of the New Civil Code are only those terms which are germane to
the lessee's right of continued enjoyment of the property leased. Therefore, an
implied new lease does not ipso facto carry with it any implied revival of private
respondent's option to purchase (as lessee thereof) the leased premises. The
provision entitling the lessee the option to purchase the leased premises is not
deemed incorporated in the impliedly renewed contract because it is alien to the
possession of the lessee. Private respondent's right to exercise the option to
purchase expired with the termination of the original contract of lease for one
year. The rationale of this Court is that:
"This is a reasonable construction of the provision, which is based on the
presumption that when the lessor allows the lessee to continue enjoying
possession of the property for fifteen days after the expiration of the
contract he is willing that such enjoyment shall be for the entire period
corresponding to the rent which is customarily paid in this case up to
the end of the month because the rent was paid monthly. Necessarily, if
the presumed will of the parties refers to the enjoyment of possession the
presumption covers the other terms of the contract related to such
possession, such as the amount of rental, the date when it must be paid,
the care of the property, the responsibility for repairs, etc. But no such
presumption may be indulged in with respect to special agreements
which by nature are foreign to the right of occupancy or enjoyment
inherent in a contract of lease."
3

There being no merit in the arguments advanced by private respondent, there is no
need to suspend the Rules of Court and to admit the motion for reconsideration. While
it is within the power of the Court to suspend its own rules, or to except a particular
case from its operation, whenever the interest of justice require it, however, the movant
must show strong compelling reasons such as serving the ends of justice and preventing
a grave miscarriage thereof,
4
none of which obtains in this case.
Litigation must end sometime and somewhere. An effective and efficient administration
of justice requires that, once a judgment has become final, the winning party be not,
through a mere subterfuge, deprived of the fruits of the verdict. Courts must, therefore,
guard against any scheme calculated to bring about that result. Constituted as they are
to put an end to controversies, courts should frown upon any attempt to prolong them.
5

ACCORDINGLY, the Motion to Suspend Procedural Rules in the Higher Interest of
Substantial Justice filed by private respondent is DENIED WITH FINALITY. No further
pleadings will be entertained in these cases.
SO ORDERED.
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Davide, Jr., C .J ., see separate opinion.
Puno, J., concur.

Separate Opinions
DAVIDE, JR., C.J., concurring:
After a meticulous evaluation of the antecedent facts in these cases I respectfully submit
that private respondent's submission that the sum of P3,000 was intended as partial
payment of the purchase price; it was received by Alice Dizon for and in behalf of
Fidela Dizon, mother of petitioners; and that Fidela Dizon ratified the at of Alice by
accepting the cashier's check representing that consideration drawn in favor of Fidela
Dizon, and in encashing it. Neither Alice nor Fidela returned the money.
Therefore, there was indeed, a perfected sale in favor of private respondent of, at the
very least, the rights, shares and participation in the property in question to private
respondent. Hence, private respondent became a co-owner of the property as regards
Fidela's co-owner.
That private respondent exercised its option to buy beyond the term of the original
terms of the lease contract is then rendered academic. For, by accepting the P300,000 as
partial payment of the land in question and using it for her own benefit and advantages
Fidela effectively estopped herself from insisting or a technicality.
I therefore vote to grant, pro hac vice, the second motion for reconsideration and to
modify the decision by now declaring that Fidela Dizon is bound by the perfected sale
to private respondent of, at least, her rights, participation, or share in the property in
question.

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