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Part III.

FORMS OF CONTRACT
1. General (Art. 1356)
FORM OF CONTRACTS
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. However, when the law
requires that a contract be in some form in order that it may be valid or enforceable or that a
contract be proved in a certain way, that requirement is absolute and indispensable.
In such cases, the rights of the parties stated in the following article cannot be exercised.
2. Importance of Formalities (Arts. 1356-1358)
Art. 1357. If the law requires a document or other special form, as in the acts and contracts
enumerated in the following article, the contracting parties may compel each other to
observe that form, once the contract has been perfected. This right may be exercised
simultaneously with the action upon the contract.
Art. 1358. The following must appear in a public document:
(1) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales of real property or of an
interest therein are governed by Articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal
partnership of gains;
(3) The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in
writing, even a private one. But sales of goods, chattels or things in action are governed by
Articles 1403, No. 2 and 1405.
Cases:

G.R. No. L-27010

April 30, 1969

MARLENE DAUDEN-HERNAEZ, petitioner,
vs.

HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance of Quezon City,
HOLLYWOOD FAR EAST PRODUCTIONS, INC., and RAMON VALENZUELA, respondents.
R. M. Coronado and Associates for petitioner.
Francisco Lavides for respondent.
REYES, J.B.L., Acting C.J.:
Petition for a writ of certiorari to set aside certain orders of the Court of First Instance
of Quezon City (Branch IV), in its Civil Case No. Q-10288, dismissing a complaint for breach
of contract and damages, denying reconsideration, refusing to admit an amended complaint,
and declaring the dismissal final and unappealable.
The essential facts are the following:
Petitioner Marlene Dauden-Hernaez, a motion picture actress, had filed a complaint
against herein private respondents, Hollywood Far East Productions, Inc., and its President
and General Manager, Ramon Valenzuela, to recover P14,700.00 representing a balance
allegedly due said petitioner for her services as leading actress in two motion pictures
produced by the company, and to recover damages. Upon motion of defendants, the
respondent court (Judge Walfrido de los Angeles presiding) ordered the complaint
dismissed, mainly because the "claim of plaintiff was not evidenced by any written
document, either public or private", and the complaint "was defective on its face" for
violating Articles 1356 and 1358 of the Civil, Code of the Philippines, as well as for
containing defective allege, petitions. Plaintiff sought reconsideration of the dismissal and
for admission of an amended complaint, attached to the motion. The court denied
reconsideration and the leave to amend; whereupon, a second motion for reconsideration
was filed. Nevertheless, the court also denied it for being pro forma, as its allegations "are,
more or less, the same as the first motion", and for not being accompanied by an affidavit of
merits, and further declared the dismissal final and unappealable. In view of the attitude of
the Court of First Instance, plaintiff resorted to this Court.
The answer sets up the defense that "the proposed amended complaint did not vary in
any material respect from the original complaint except in minor details, and suffers from
the same vital defect of the original complaint", which is the violation of Article 1356 of the
Civil Code, in that the contract sued upon was not alleged to be in writing; that by Article
1358 the writing was absolute and indispensable, because the amount involved exceeds five
hundred pesos; and that the second motion for reconsideration did not interrupt the period
for appeal, because it was not served on three days' notice.
We shall take up first the procedural question. It is a well established rule in our
jurisprudence that when a court sustains a demurrer or motion to dismiss it is error for the
court to dismiss the complaint without giving the party plaintiff an opportunity to amend his
complaint if he so chooses. 1 Insofar as the first order of dismissal (Annex D, Petition) did
not provide that the same was without prejudice to amendment of the complaint, or reserve
to the plaintiff the right to amend his complaint, the said order was erroneous; and this error
was compounded when the motion to accept the amended complaint was denied in the
subsequent order of 3 October 1966 (Annex F, Petition). Hence, the petitioner-plaintiff was

the record shows that appellees had filed their opposition (in detail) to the second motion to reconsider (Answer. A motion to dismiss is not a "responsive pleading".. This argument is not tenable. As plaintiffs amended their complaint before it was answered. and this was a ground not invoked in the first motion for reconsideration. Moreover. without leave of court. p. Jaurigue 94 Phil. 179. in general. In the matter of formalities. It is true that the amendment was presented after the original complaint had been ordered dismissed. the contractual system of our Civil Code still follows that of the Spanish Civil Code of 1889 and of the "Ordenamiento de Alcala" 2 of upholding the spirit and intent of the parties over formalities: hence. vol. Amendments to pleadings are favored and should be liberally allowed in the furtherance of justice. as it was based on a different ground. since the ruling herein contested betrays a basic and lamentable misunderstanding of the role of the written form in contracts. the plaintiff-petitioner was entitled as of right to amend the original dismissed complaint. Thus. It is contended that the second motion for reconsideration was merely pro forma and did not suspend the period to appeal from the first order of dismissal (Annex D) because (1) it merely reiterated the first motion for reconsideration and (2) it was filed without giving the counsel for defendant-appellee the 3 days' notice provided by the rules. 1. 181. 1952. And as to the lack of 3 days' notice. under section 1 of Rule 17. But that order was not yet final for it was still under reconsideration. that is. The foregoing observations leave this Court free to discuss the main issue in this petition. Annex 4).00 was either invalid of unenforceable under the last paragraph of Article 1358 of the Civil Code of the Philippines? We hold that there was abuse. 913). (Moran on the Rules of Court. the motion to admit the amendment should not have been denied. at any time before a responsive pleading is served. 49 Phil. even if in its first part it set forth in greater detail the arguments against the correctness of the first order to dismiss.within her rights in filing her so-called second motion for reconsideration. ed. the claim that the first order of dismissal had become final and unappealable must be overruled. It is well to observe in this regard that since a motion to dismiss is not a responsive pleading. so that even if it were true that respondents were not given the full 3 days' notice they were not deprived of any substantial right. the second motion to reconsider was really not pro forma. Tomacruz. a party may amend his pleading once as a matter of course. this Court ruled as follows: Appellants contend that the lower court erred in not admitting their amended complaint and in holding that their action had already prescribed. for the reason that the second motion for reconsideration was addressed to the court' refusal to allow an amendment to the original complaint. Therefore. Appellants are right on both counts. (Torres vs. as ordained in the present Civil Code. Did the court below abuse its discretion in ruling that a contract for personal services involving more than P500. In Paeste vs. contracts are valid and . 376). Rules of Court. which was actually a first motion against the refusal to admit the amended complaint.

This is plain from Articles 1315 and 1356 of the present Civil Code. to wit: (a) Contracts for which the law itself requires that they be in some particular form (writing) in order to make themvalid and enforceable (the so-called solemn contracts).nêt To this general rule. 1773.. i. 1874 and 2134 of the present Civil Code. according to their nature. the first cited provision prescribes: ART. Contracts shall be obligatory in whatever form they may have been entered into. It is thus seen that to the general rule that the form (oral or written) is irrelevant to the binding effect inter partes of a contract that possesses the three validating elements of consent. and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. existing or binding.. Their existence not being provable by mere oral testimony (unless wholly or partly executed). as in those covered by the old Statute of Frauds. and (3) consideration or causa for the obligation assumed (Article 1318). these contracts are exceptional in requiring a writing embodying the terms thereof for their enforceability by action in court. now Article 1403(2) of the Civil Code. usage and law.binding from their perfection regardless of form whether they be oral or written. 1356. (Emphasis supplied) These essential requisites last mentioned are normally (1) consent (2) proper subject matter. the contract is generally valid and obligatory.. regardless of the form. the Code admits exceptions.e. last clause. and causa. when the law requires that a contract be in some form in order that it may be valid or enforceable. (Emphasis supplied) Concordantly. Thus. contracts to pay interest on loans (mutuum) that must be "expressly stipulated in writing" (Article 1956). 1315. that requirement is absolute and indispensable.000. oral or written. set forth in the second portion of Article 1356: However.00 which must be in writing. (b) Contracts that the law requires to be proved by some writing (memorandum) of its terms. may be in keeping with good faith. "otherwise the donation shall be void" (Article 748). and the agreements contemplated by Article 1744. Contracts are perfected by mere consent.. in which they are couched. The contract sued upon by petitioner herein (compensation for services) does not come under either exception.. the first part of Article 1356 of the Code Provides: ART..lawphi1. It is true that it appears included in Article 1358.. Other instances are the donation of movables worth more than P5. provided all the essential requisites for their validity are present. subject matter. . Article 1356 of the Code establishes only two exceptions. Of these the typical example is the donation of immovable property that the law (Article 749) requires to be embodied in a public instrument in order "that the donation may be valid". 3 So that once the three elements exist. or that a contract be proved in a certain way.

as it does in Article 1358. Teehankee and Barredo. If the law requires a document or other special form. Costs to be solidarity paid by private respondents Hollywood Far East Productions. Zaldivar. the order dismissing the complaint is set aside. concur. WHEREFORE.providing that "all other contracts where the amount involved exceeds five hundred pesos must appear in writing. or that her complaint should be dismissed for failure to state a cause of action because it did not plead any written agreement. Fernando. J. FIRST DIVISION . Sanchez. and Ramon Valenzuela. Inc. Concepcion. Article 1357 clearly indicates that contracts covered by Article 1358 are binding and enforceable by action or suit despite the absence of writing. (Emphasis supplied) . On the contrary.J.." But Article 1358 nowhere provides that the absence of written form in this case will make the agreement invalid or unenforceable.. 1357. This right may be exercised simultaneously with the action the contract. Makalintal. Dizon. JJ. It thus becomes inevitable to conclude that both the court a quo as well as the private respondents herein were grossly mistaken in holding that because petitioner Dauden's contract for services was not in writing the same could not be sued upon.. The law must further prescribe that without the writing the contract is not valid or not enforceable by action. even a private one. The basic error in the court's decision lies in overlooking that in our contractual system it is not enough that the law should require that the contract be in writing. and the case is ordered remanded to the court of origin for further proceedings not at variance with this decision. ART. once the contract has been perfected.. are on leave. J. took no part. and Castro. Capistrano. the contracting parties may compel each other to observe that form. as in the acts and contracts enumerated in the following article. C.

1982. On February 10. Vice Mayor Wilfredo Palma replied that he is already the owner of the said property.[1] This donation was accepted by Gregorio Buendia. Respondent Leon Silim endeavored to stop the construction of the house on the donated property but Vice-Mayor Wilfredo Palma advised him to just file a case in court. to his surprise. which declared null and void the donation made by respondents of a parcel of land in favor of the Bureau of Public Schools. No. 43840. vs. Through a fund raising campaign spearheaded by the Parent-Teachers Association of Barangay Kauswagan. respondents. In its Decision dated 20 August 1993. the District Supervisor of BPS. The exchange is proper .R. Pursuant to this. Consequently. vs. the Bagong Lipunan school buildings were constructed on the new school site and the school building previously erected on the donated lot was dismantled and transferred to the new location.600 square meter parcel of land in favor of the Bureau of Public Schools. 2001] REPUBLIC OF THE PHILIPPINES. MANGUBAT. the trial court dismissed the complaint for lack of merit. To remedy this predicament. LEON SILIM and ILDEFONSA DECISION KAPUNAN. donated a 5. he asked the latter why he was building a house on the property he donated to BPS.. respondents filed a Complaint for Revocation and Cancellation of Conditional Donation. Teresita Palma. The antecedents of this case are as follows: On 17 December 1971.[G. respondents imposed the condition that the said property should be used exclusively and forever for school purposes only. Zamboanga del Sur (BPS). Branch 21. District Supervisor Buendia and Teresita Palma entered into a Deed of Exchange whereby the donated lot was exchanged with the bigger lot owned by the latter. et al.: Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision of the Court of Appeals in CA-G. through an Affidavit of Acceptance and/or Confirmation of Donation. et al. the Bagong Lipunan school building that was supposed to be allocated for the donated parcel of land in Barangay Kauswagan could not be released since the government required that it be built upon a one (1) hectare parcel of land. authorized District Supervisor Buendia to officially transact for the exchange of the one-half (1/2) hectare old school site of Kauswagan Elementary School to a new and suitable location which would fit the specifications of the government. J. However. Annulment of Deed of Exchange and Recovery of Possession and Ownership of Real Property with damages against Vice Mayor Wilfredo Palma. No. Sabdani Hadjirol. Wilfredo Palma. In the Deed of Donation. April 2. When respondent Leon Silim saw. it is the considered view of this Court that there was no breach or violation of the condition imposed in the subject Deed of Donation by the donee. respondents. petitioner. District Supervisor Buendia and the BPS before the Regional Trial Court of Pagadian City. Zamboanga del Sur. entitled Leon Silim. 140487.R. Municipality of Malangas. that Vice-Mayor Wilfredo Palma was constructing a house on the donated land. Municipality of Malangas. the Spouses Leon Silim and Ildefonsa Mangubat.[2] The pertinent portion of the decision reads: Thus. Assistant School Division Superintendent of the Province of Zamboanga del Sur. a school building was constructed on the donated land.

Civil Code).[4] Hence. Dismissing the counterclaim for the sake of harmony and reconciliation between the parties. is the donee. respondents elevated the case to the Court of Appeals. The Deed of Exchange is but a continuity of the desired purpose of the donation made by plaintiff Leon Silim. Dismissing the complaint for lack of merit. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN INVALID ACCEPTANCE BY THE DONEE. in view of all the foregoing. which in the instant case.[3] Not satisfied with the decision of the trial court. 3. A pure or simple donation is one where the underlying cause is plain gratuity. which services do not amount to a demandable debt. may be categorized as: (1) pure or simple. SO ORDERED. and (4) onerous. [8] This is donation in its truest form. The donee. (2) remuneratory or compensatory. Petitioner contends that the Court of Appeals erred in declaring the donation null and void for the reason that the acceptance was not allegedly done in accordance with Articles 745[6] and 749[7] of the New Civil Code. II. xxx WHEREFORE. 764. it may be safely stated that the aforesaid transaction of exchange is a (sic) exception to the law invoked by the plaintiffs (Art. being the State had the greater reciprocity of interest in the gratuitous and onerous contract of donation. such as the Deed of Donation in question. the doubt shall be settled in favor of the greatest reciprocity of interests. On the other hand.[5] The Court gives DUE COURSE to the petition.[9] A conditional or modal donation is one where the donation is made in . With costs against plaintiffs. according to its purpose or cause. 2. (3) conditional or modal. the present case where petitioner raises the following issues: I. a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services. But it is a well-settled rule that if the contract is onerous. In sum. judgement is hereby rendered: 1. In its Decision dated 22 October 1999.since it is still for the exclusive use for school purposes and for the expansion and improvement of the school facilities within the community. a paramount objective of the donee in promoting the general welfare and interests of the people of Barangay Kauswagan. the Court of Appeals reversed the decision of the trial court and declared the donation null and void on the grounds that the donation was not properly accepted and the condition imposed on the donation was violated. It would be illogical and selfish for the donor to technically preclude the donee from expanding its school site and improvement of its school facilities. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN ALLEGED VIOLATION OF A CONDITION IN THE DONATION. Donations. We agree.

Balanag. it is sufficient if it shows the intention to accept. We further examined the record if there is another document which embodies the acceptance. Although the Court found that in the offer of exhibits of the defendants. 78 SCRA 245). Donations with an onerous cause shall be governed by the rules on contracts. a noted civilist. marked as exhibit "8" appears to have been offered. the contract is not perfected contract. And according to Manresa. 749 of the Civil Code. supra. Assuming that there was such an exhibit. If the acceptance does not appear in the same document. Since the donation is not perfected. a supposed affidavit of acceptance and/or confirmation of the donation. the value of which is inferior than that of the donation given. II. limitations or charges upon the donee. Solemn words are not necessary. In this regard.).[13] . Civil Code of the Philippines by Tolentino. it must be made in another. we found one. the notation is one of the requirements of perfecting a donation. [11] Of all the foregoing classifications. [12] The Court of Appeals held that there was no valid acceptance of the donation because: xxx Under the law the donation is void if there is no acceptance." This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to determine whether there was acceptance of the donation. unlike the other forms of donation. Alejandro vs. This is because. 85. the contract is therefore not valid. the cost of which is equal to or more than the thing donated. "the donor shall be notified thereof in an authentic form. 37 Phils. But in this case. it is necessary that formal notice thereof be given to the donor and the fact that due notice has been given it must be noted in both instruments (that containing the offer to donate and that showing acceptance).consideration of future services or where the donor imposes certain conditions. and his step shall be noted in both instruments. In other words. without such a notation. This Court found none. the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts. to be more precise. there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibits appear on record. If the acceptance is in a separate instrument. Then and only then is the donation perfected. However. donations of the onerous type are the most distinct.[10] Finally. (11 Manresa 15511. 733. The acceptance may either be in the same document as the deed of donation or in a separate public instrument. and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed. this is the kind of donation made for a valuable consideration.(Abellera vs. Geraldez. the said supposed acceptance was not noted in the Deed of Donation as required under Art. cited in Vol. The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property. "Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly noticed thereof. an onerous donation is that which imposes upon the donee a reciprocal obligation or. Article 733 of the New Civil Code provides: Art.

However. according to them "there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibit appear on record. but it shall not take effect unless it is done during the lifetime of the donor." meaning the extrajudicial partition itself and the instrument of acceptance. But what they do contend is that such acceptance was not "noted in both instruments. The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly communicated to the donor. Nowhere in their brief did respondents question the validity of the donation on the basis of the alleged defect in the acceptance thereof. In order that the donation of an immovable may be laid. Even the petitioners cannot deny this. private respondents now question this exhibit because. Thus. as shown above. The written acceptance of the donation having been considered by the trial court in arriving at its decision. 745. or with a general and sufficient power. If there was such a defect. hence. 749. admit that in the offer of exhibits by the defendants in the trial court.[15] the Court held: There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors. marked as Exhibit "8. specifying therein the property donated and the value of the charge which the donee must satisfy. That is perfectly true. there is the presumption that this exhibit was properly offered and admitted by the court. or through an authorized person with a special power for the purpose.xxx We hold that there was a valid acceptance of the donation. Moreover.[14] Respondents further argue that assuming there was a valid acceptance of the donation. Intermediate Appellate Court. Private respondents. an affidavit of acceptance and/or confirmation of the donation. why did it take respondents more than ten (10) years from the date of the donation to question its validity? In the very least. and this step shall be noted in both instruments. the donor shall be notified thereof in an authentic form. they are guilty of estoppel. There is nothing in either of the two instruments showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe. ART. If the acceptance is made in a separate instrument. the acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil Code. as required by the Civil Code. the donation is void. it must be made in a public document. otherwise the donation shall be void. in Pajarillo vs. Sections 745 and 749 of the New Civil Code provide: ART. The acceptance may be made in the same deed of donation or in a separate public document. this issue was never raised in the Court of Appeals. The donee must accept the donation personally." Respondents' stance does not persuade. And while the first instrument contains the statement that "the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor." the only ." was offered in evidence.

Respondents had knowledge of the existence of the school building put up on the donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan. a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. control or use. etc. subdivisions. What does the phrase "exclusively used for school purposes" convey? "School" is simply an institution or place of education.Contracts or conveyances may be executed for and in behalf of the Government or of any of its branches. The actual knowledge by respondents of the construction and existence of the school building fulfilled the legal requirement that the acceptance of the donation by the donee be communicated to the donor. or aim.[18] . In the case at bar. an end. A strict interpretation of Article 633 can lead to no other conclusion that the annulment of the donation for being defective in form as urged by the petitioners. intention. In the case at bar. an intention. a school building was immediately constructed after the donation was executed. project.[16] "Purpose" is defined as "that which one sets before him to accomplish or attain. it is undisputed that the donation was made in favor of the Bureau of Public Schools. This would be in keeping with the unmistakable language of the above-quoted provision. or use). limiting or limited to possession. However. the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. it is respondents' submission that the donee. It is also a policy of the Court to avoid such as interpretation. in exchanging the donated lot with a bigger lot.signatories thereof were Felipe Balane and Juana Balane de Suterio. agencies. That was in fact the reason for the separate instrument of acceptance signed by Salud a month later. 1946. it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. On respondents' claim. which was upheld by the Court of Appeals. participation. Such being the case. It was when the school building was being dismantled and transferred to the new site and when Vice-Mayor Wilfredo Palma was constructing a house on the donated property that respondents came to know of the Deed of Exchange. 47. It would also disregard the clear reality of the acceptance of the donation as manifested in the separate instrument dated June 20. Contracts and Conveyances. or instrumentalities. The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. That would be placing too much stress on mere form over substance. Finally. whenever demanded by the exigency or exigencies of the service and as long as the same are not prohibited by law. we find that under the circumstances of the present case."[17] "Exclusive" means "excluding or having power to exclude (as by preventing entrance or debarring from possession. and as later acknowledged by Juan. object. Term is synonymous with the ends sought. that the acceptance by BPS District Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a special power of attorney from the Republic of the Philippines. an object to be attained. his acceptance was authorized under Section 47 of the 1987 Administrative Code which states: SEC. plan. . Given this significant evidence. violated the condition in the donation that the lot be exclusively used for school purposes only.

WHEREFORE. the condition for the donation was not in any way violated when the lot donated was exchanged with another one. INC.Without the slightest doubt. T-25334. vs. (Joy Training) is a non-stock. DECISION BRION. SO ORDERED. the decision of the Court of Appeals is hereby REVERSED and SET ASIDE and the decision of the Regional Trial Court is REINSTATED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation. non-profit religious educational institution. In fact. The purpose for the donation remains the same.R. 125-L and was covered by Transfer Certificate of Title (TCT) No. 2013 SALLY YOSHIZAKI. The parcel of land was designated as Lot No. The Factual Antecedents Respondent Joy Training Center of Aurora.: We resolve the petition for review on certiorari1 filed by petitioner Sally Yoshizaki to challenge the February 14. Respondent. 174978 July 31. JOY TRAINING CENTER OF AURORA. 2006 Decision2 and the October 3. Baler. Inc. 1. J. The exclusivity of the purpose was not altered or affected. 83773.. 2006 Resolution3 of the Court of Appeals (CA) in CA-G.4 .R. which is for the establishment of a school. Aurora. It was the registered owner of a parcel of land and the building thereon (real properties) located in San Luis Extension Purok No. No. The acquisition of the bigger lot paved the way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot. Petitioner. Barangay Buhangin. CV No.

T-260527 was issued in the name of the spouses Yoshizaki. they assailed the RTC’s jurisdiction over the case. Moreover.13 On the other hand. The RTC granted the motion on the same date. composed of the spouses Johnson and Alexander Abadayan. Reuben. as additional defendant. namely: the spouses Johnson.12 Cecilia and the spouses Johnson were declared in default for their failure to file an Answer within the reglementary period. 1998. represented by its Acting Chairperson Reuben V. and Abelardo Aquino. Rubio. filed an action for the Cancellation of Sales and Damages with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction against the spouses Yoshizaki and the spouses Johnson before the Regional Trial Court of Baler. Furthermore. 1999. Aurora. It averred that only a minority of the board. Joy Training alleged that the spouses Johnson sold its properties without the requisite authority from the board of directors. 1998.8 On January 4. a Wrangler jeep. On December 7. 17 Joy Training objected to the formal offer of the photocopied resolution and certification on the ground that they were not the best evidence of their contents. The spouses Johnson were members of Joy Training’s board of trustees at the time of sale. 1999.10 It assailed the validity of a board resolution dated September 1. However. TCT No. namely: the spouses Johnson. a majority of the board of trustees validly . 2004. On December 8. they highlighted that the Wrangler jeep and other personal properties were registered in the name of the spouses Johnson. It recognized that there were only five actual members of the board of trustees. 199811 which purportedly granted the spouses Johnson the authority to sell its real properties. the spouses Yoshizaki formally offered in evidence photocopies of the resolution and certification. Carmencita Isip. officerin-charge of the Register of Deeds of Baler. a Deed of Absolute Sale 5 and a Deed of Sale of Motor Vehicle6 were executed in favor of the spouses Yoshizaki. Reuben. authorized the sale through the resolution. Dominador Isip. Joy Training. Abordo. consequently. 1998. They posited that the case is an intra-corporate dispute cognizable by the Securities and Exchange Commission (SEC). 16 After the presentation of their testimonial evidence.On November 10. It found that Joy Training owned the real properties. Connie Dayot. On the same date. They asserted that a majority of the board of trustees approved the resolution. Aurora (RTC). and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki. the spouses Yoshizaki filed their Answer with Compulsory Counterclaims on June 23. It highlighted that the Articles of Incorporation provides that the board of trustees consists of seven members.9 In the complaint. They claimed that Joy Training authorized the spouses Johnson to sell the parcel of land. the corporate secretary. Alexander. among others. T-25334 was cancelled and TCT No. They maintained that the actual members of the board of trustees consist of five members. it held that the sale was valid because Joy Training authorized the spouses Johnson to sell the real properties. 15 Lastly. and Abelardo. Miraflor Bolante. issued a certification dated February 20. The RTC Ruling The RTC ruled in favor of the spouses Yoshizaki. 18 In an Order19 dated May 18. Joy Training filed a Motion to Amend Complaint with the attached Amended Complaint. 199814 authorizing the spouses Johnson to act on Joy Training’s behalf. the RTC denied the admission of the offered copies. the spouses Richard and Linda Johnson sold the real properties. The amended complaint impleaded Cecilia A.

Furthermore. She also argues that it is a basic principle that a party dealing with a registered land need not go beyond the certificate of title to determine the condition of the property. Moreover. It stated that the certification failed to indicate the date and the names of the trustees present in the meeting.25 The Case for the Respondent In its Comment26 and Memorandum. It stated that under Section 25 of the Corporation Code. the resolution and the certification are mere reiterations of the spouses Johnson’s authority in the title to sell the real properties. prompting Sally23 to file the present petition. In fact. It maintained that the present action is cognizable by the RTC because it involves recovery of ownership from third parties. The transfer of the SEC’s original and exclusive jurisdiction to the RTC24 does not have any retroactive application because jurisdiction is a substantive matter. the spouses Yoshizaki did not present the minutes that would prove that the certification had been issued pursuant to a board resolution. Seven trustees constitute the board since Joy Training did not hold an election after its incorporation. (PD) 1529 requires that the revocation of authority must be approved by a court of competent jurisdiction and no revocation was reflected in the certificate of title. It posits that the action is essentially for recovery of property and . She points out that the complaint was principally for the nullification of a corporate act. The Petition Sally avers that the RTC has no jurisdiction over the case.21 The CA also denied22 the spouses Yoshizaki’s motion for reconsideration. It also ruled that the sale of personal properties was valid because they were registered in the spouses Johnson’s name. Furthermore.27 Joy Training takes the opposite view that the RTC has jurisdiction over the case. the contract of agency was subsisting at the time of sale because Section 108 of Presidential Decree No. the basis for determining the composition of the board of trustees is the list fixed in the articles of incorporation. The CA Ruling The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect to the sale of real properties. She argues that the spouses Johnson were authorized to sell the parcel of land and that she was a buyer in good faith because she merely relied on TCT No. The title states that the spouses Johnson are Joy Training’s representatives.authorized the sale. 20 Joy Training appealed the RTC decision to the CA. The CA did not also give any probative value to the certification. It also ruled that the resolution is void because it was not approved by a majority of the board of trustees. Section 23 of the Corporation Code provides that the board of trustees shall hold office for one year and until their successors are elected and qualified. She further claims that the resolution and the certification are not even necessary to clothe the spouses Johnson with the authority to sell the disputed properties. T-25334.

" 31 Indeed. The Supreme Court may review questions of fact in a petition for review on certiorari when the findings of fact by the lower courts are conflicting We are aware that the issues at hand require us to review the pieces of evidence presented by the parties before the lower courts. T-25334 does not specifically grant the authority to sell the parcel of land to the spouses Johnson. It argues that the resolution is void for failure to comply with the voting requirements under Section 40 of the Corporation Code. 8799 which only took effect on August 3. whether or not there was a valid contract of sale of the real properties between Joy Training and the spouses Yoshizaki. Joy Training seeks to nullify the sale of the real properties on the ground that there was no contract of agency between Joy Training and the spouses Johnson. It also posits that the certification is void because it lacks material particulars. 3) As a consequence of the second issue. Sally is estopped from questioning the RTC’s jurisdiction because she seeks to reinstate the RTC ruling in the present case. no special skill requiring the SEC’s technical expertise is necessary for the disposition of this issue and of this case. Our Ruling We find the petition unmeritorious. This was beyond the ambit of the SEC’s original and exclusive jurisdiction prior to the enactment of Republic Act No. The Issues The case comes to us with the following issues: 1) Whether or not the RTC has jurisdiction over the present case. The RTC has jurisdiction over disputes concerning the application of the Civil Code Jurisdiction over the subject matter is the power to hear and determine cases of the general class to which the proceedings before a court belong. Joy Training maintains that it did not authorize the spouses Johnson to sell its real properties. a petition for review on certiorari .29 The same test applies in ascertaining whether a case involves an intra-corporate controversy. It is a well-settled rule that "disputes concerning the application of the Civil Code are properly cognizable by courts of general jurisdiction. The allegations in the complaint and the status or relationship of the parties determine which court has jurisdiction over the nature of an action. TCT No.30 The CA correctly ruled that the RTC has jurisdiction over the present case. 2000. It further asserts that the resolution and the certification should not be given any probative value because they were not admitted in evidence by the RTC. The determination of the existence of a contract of agency and the validity of a contract of sale requires the application of the relevant provisions of the Civil Code. and 2) Whether or not there was a contract of agency to sell the real properties between Joy Training and the spouses Johnson.is therefore a case cognizable by the RTC. 28 It is conferred by law. Furthermore. As a general rule.

They will follow guidelines set forth according to their appointment and ministerial and missionary training and in that. The purpose of the law in requiring a special power of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the putative agent. the present case falls under the recognized exception that a review of the facts is warranted when the findings of the lower courts are conflicting. they will formulate and come up with bylaws which will address and serve as governing papers over the center and corporation. or implied from the acts of the principal. Sally presents three pieces of evidence which allegedly prove that Joy Training specially authorized the spouses Johnson to sell the real properties: (1) TCT No. JOHNSON and LINDA S.O.S. They . the fifth paragraph of the certification provides: Further. Johnson were given FULL AUTHORITY for ALL SIGNATORY purposes for the corporation on ANY and all matters and decisions regarding the property and ministry here. states that special powers of attorney are necessary to convey real rights over immovable properties. we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the lower courts. The special power of attorney mandated by law must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the authorized act.. a contract of agency may be oral. However.precludes this Court from entertaining factual issues.32 Accordingly. no such construction shall be given the document. Rep. we will examine the relevant pieces of evidence presented to the lower court. We quote the pertinent portions of these documents for a thorough examination of Sally’s claim. Richard A. by Sps. with the consent or authority of the latter. U. knowing that another person is acting on his behalf without authority. and residents of P.36(emphasis ours) On the other hand. When there is any reasonable doubt that the language so used conveys such power. Otherwise. and Linda J. the sale shall be void. entered in the Registry of Deeds on March 5. it must be written when the law requires a specific form. (3) and the certification. As a general rule. Citizen. from his silence or lack of action. Box 3246." It may be express. states: A parcel of land x x x is registered in accordance with the provisions of the Property Registration Decree in the name of JOY TRAINING CENTER OF AURORA.S. Court of Appeals34 that a special power of attorneymust express the powers of the agent in clear and unmistakable language for the principal to confer the right upon an agent to sell real estate. Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the sale of a piece of land or any interest therein. INC. RICHARD A. We unequivocably declared in Cosmic Lumber Corporation v. U. Article 1878 of the Civil Code. or his failure to repudiate the agency. A related provision.A. T25334. However. Ks 66203. (2) the resolution.33 Specifically. 1998. JOHNSON. T-25334. Shawnee. both of legal age. TCT No. There is no contract of agency between Joy Training and the spouses Johnson to sell the parcel of land with its improvements Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself to render some service or to do something in representation or on behalf of another.35 In the present case.

These proceeds are going to pay outstanding loans against the project and the dissolution of the corporation shall follow the sale. non-profit corporation and no profits or stocks are issued. and Linda J. or even though the agency should authorize a general and unlimited management. even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate. JOHNSON"39 only means that the spouses Johnson represented Joy Training in land registration. 5102156 filed with the Province of Aurora last 5th day of March. The resolution which purportedly grants the spouses Johnson a special power of attorney is negated by the phrase "land and building owned by spouses Richard A. Sally cannot also claim that she was a buyer in good faith. the undersigned Board of Trustees (in majority) have authorized the sale of land and building owned by spouses Richard A. the phrase "Rep. Moreover. the general rule – that no evidence shall be admissible other than the original document itself when the subject of inquiry is the contents of a document – applies. T-25334 merely states that Joy Training is represented by the spouses Johnson. this Court will still arrive at the same conclusion. by Sps.are to issue monthly and quarterly statements to all members of the corporation. Rule 130 of the Rules of Court. we declare that even if we consider the photocopied resolution and certification.44Article 1877 of the Civil Code clearly states that "an agency couched in general terms comprises only acts of administration.1âwphi1 The spouses Yoshizaki did not produce the original documents during trial. JOHNSON and LINDA S. They also failed to show that the production of pieces of secondary evidence falls under the exceptions enumerated in Section 3. 40 Thus. Moreover. RICHARD A. The title does not explicitly confer to the spouses Johnson the authority to sell the parcel of land and the building thereon. if only to erase doubts on the issues surrounding this case. The lower courts should not have relied on the resolution and the certification in resolving the case. She misapprehended the rule that persons dealing with a registered land have the legal right to . We adhere to the CA’s position that the basis for determining the board of trustees’ composition is the trustees as fixed in the articles of incorporation and not the actual members of the board. and Linda J."45 The contract of sale is unenforceable Necessarily."42 Even if we disregard such phrase. the resolution must be given scant consideration.41 Nonetheless. the certification is a mere general power of attorney which comprises all of Joy Training’s business.38 (emphasis ours) The above documents do not convince us of the existence of the contract of agency to sell the real properties. The second paragraph of Section 25 43 of the Corporation Code expressly provides that a majority of the number of trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business.46 Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. the absence of a contract of agency renders the contract of sale unenforceable. This is a religious. 1998. TCT No. Johnson.37 (emphasis ours) The resolution states: We. Johnson (as described in the title SN No.

1987. 47 This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested. the assailed Decision dated February 14.rely on the face of the title and to dispense with the need to inquire further. SEGUNDO DALION AND EPIFANIA SABESAJE-DALION. Southern Leyte. Gabriel N.R. 11148. she bears the risk of injury occasioned by her transaction with the spouses Johnson.49 The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover on his own peril the authority of the agent. for petitioners. No. petitioners. declared in the name of Segundo Dalion. premises considered. except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.48 A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney. Sogod. Francisco A.. MEDIALDEA. 1990 SPS. or the instructions as regards the agency. At this point. respondents.: This is a petition to annul and set aside the decision of the Court of Appeals rendered on May 26. but also the nature and extent of the agent’s authority. WHEREFORE. Puray. Sr. J. vs. SO ORDERED. Sally bought the real properties at her own risk. "Dalion") in favor of private respondent Ruperto Sabesaje. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. described thus: A parcel of land located at Panyawan. Duazo for private respondent. under Tax Declaration No. 2006 of the Court of Appeals are hereby AFFIRMED and the petition is hereby DENIED for lack of merit. THE HONORABLE COURT OF APPEALS AND RUPERTO SABESAJE. we reiterate the established principle that persons dealing with an agent must ascertain not only the fact of agency. 2006 and Resolution dated October 3. with an area of . JR. Jr. 78903 February 28. (hereafter. "Sabesaje"). upholding the validity of the sale of a parcel of land by petitioner Segundo Dalion (hereafter.50 Thus.

however denied the fact of sale. which he and his wife acquired in 1960 from Saturnina Sabesaje as evidenced by the "Escritura de Venta Absoluta" (Exhibit "B"). by Sergio Destriza and Titon Veloso. 36-37. (p. otherwise. East. and bounded on the North. the WHEREFORE. As to the controversy regarding the identity of the land. to be allowed to administer the land because Dalion did not have any means of livelihood. Sabesaje sued to recover ownership of a parcel of land. assessed at P 180. preempt and forestall Dalion's threat to sue for these unpaid commissions. however. We have no reason to dispute the Court of Appeals' findings as follows: To be sure. From the adverse decision of the trial court. to wit: . Rollo) The decision affirms in toto the ruling of the trial court dispositive portion of which provides as follows: 1 issued on January 17. (a) Ordering the defendants to deliver to the plaintiff the parcel of land subject of this case. 11148 and lately under Tax Declaration No.8947 hectares. the parcel of land described in Exhibit "A" is the same property deeded out in Exhibit "B". and (c) Dismissing the counter-claim. contending that the document sued upon is fictitious. by Feliciano Destriza. however. Both documents detail out the following boundaries. administering since 1958. declared in the name of Segundo Dalion previously under Tax Declaration No. (pp. were disregarded by the appellate court. Dalion appealed. grandfather of Sabesaje. they had pleaded with Sabesaje.00. they countered. not having been raised in the court below. Rollo) The facts of the case are as follows: On May 28. which belonged to Leonardo Sabesaje. The boundaries delineating it from adjacent lots are identical. assigning errors some of which. by Catalino Espina. was intended merely to harass.00 as attorney's fees and P 500. (b) Ordering the defendants to pay plaintiff the amount of P2. 38. 2297 (1974) and to execute the corresponding formal deed of conveyance in a public document in favor of the plaintiff of the said property subject of this case. the deed shall be executed in their behalf by the Provincial Sheriff or his Deputy. by Barbara Bonesa (sic). Sabesaje's suit. and that subject land is conjugal property. respectively. five (5) parcels of land in Sogod. allegedly executed by Dalion. They never received their agreed 10% and 15% commission on the sales of copra and abaca.000. should defendants for any reason fail to do so. based on a private document of absolute sale. 1973. IN VIEW OF THE FOREGOING. 1965 (Exhibit "A"). a forgery. dated July 1. and West.00 as litigation expenses. They admitted. who died in 1956. who. 1984. his signature thereon. and to pay the costs. We are not inclined to do so since a review of the case at bar reveals that the lower court has judicially decided the case on its merits. the Court hereby renders judgment. While the Court of Appeals duly recognizes Our authority to review matters even if not assigned as errors in the appeal. The spouses denied claims of Sabesaje that after executing a deed of sale over the parcel of land. their relative. Southern Leyte.

In fact. Rollo) xxx xxx xxx . Ogsoc. Private writing. Handwriting. or proved to be genuine to the satisfaction of the judge. and has thus acquired knowledge of the handwriting of such person. Revised Rules of Court) And on the basis of the findings of fact of the trial court as follows: Here. its due execution and authenticity must be proved either: (a) By anyone who saw the writing executed. Gerardo M. or (c) By a subscribing witness xxx xxx xxx SEC. (b) By evidence of the genuineness of the handwriting of the maker. On the East-property of Feliciano Destriza. erroneously written as "Esmenia" in Exhibit "A" and "Esmenia" in Exhibit "B". made by the witness or the court.On the North-property of Sergio Destriza and Titon Veloso. (p. Ogsoc copied the bounderies thereof and the name of appellant Segundo Dalion's wife. how proved. 41. Evidence respecting the handwriting may also be given by a comparison. one of such witnesses. declared on the witness stand that he was the one who prepared said deed of sale and had copied parts thereof from the "Escritura De Venta Absoluta" (Exhibit B) by which one Saturnina Sabesaje sold the same parcel of land to appellant Segundo Dalion. 23. On the South-property of Barbara Boniza and On the West-Catalino Espina. how proved. or has seen writing purporting to be his upon which the witness has acted or been charged. people who witnessed the execution of subject deed positively testified on the authenticity thereof. its execution and authenticity. The appellate court upheld the validity of the sale on the basis of Secs. 21. 21 and 23 of Rule 132 of the Revised Rules of Court. and has seen the person write. — The handwriting of a person may be proved by any witness who believes it to be the handwriting of such person.-Before any private writing may be received in evidence. with writings admitted or treated as genuine by the party against whom the evidence is offered. SEC. Rollo) The issues in this case may thus be limited to: a) the validity of the contract of sale of a parcel of land and b) the necessity of a public document for transfer of ownership thereto. 41-42. (Rule 132. They categorically stated that it had been executed and signed by the signatories thereto. (pp.

Dalion appear on the face of the questioned document (Exh. A). transmission. Rules of Court). the positive testimonies of the instrumental Witnesses Ogsoc and Espina. . 1358. L-20395.).. 1974 (p. respectively. No. an unnecessary one. 54 & p. Idem). Court of Appeals. Each party must prove his own affirmative allegations (Section 1. p. It may be noted that two signatures of Segundo D. Rollo) as we reiterate that Appellate courts have consistently subscribed to the principle that conclusions and findings of fact by the trial courts are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons. A forger would not attempt to forge another signature. 56. NCC). 1973 and July 30. does not suffice to show forgery. but he never presented any witness or evidence to prove his claim of forgery. L-41605. May 13. 1983 (p. par 1. Furthermore. Rollo) We see no reason for deviating from the appellate court's ruling (p. 42-43.) readily reveal that the questioned signatures are the signatures of defendant Segundo Dalion. Buencamino. 44. to overcome the presumption of innocence. 138 SCRA 185) Assuming authenticity of his signature and the genuineness of the document. (Decision. Record). No. A2 and A-3) with the admitted signatures or specimens (Exhs. as well as to observe the demeanor of the witnesses while testifying in the case (Chase v. 235. a comparison of the questioned signatories or specimens (Exhs.). Ibid. 10) (pp. In addition. X and Y or 3-C) convinces the court that Exhs.Against defendant's mere denial that he signed the document.R. Pring v. A-2) and the other at the left hand margin thereof (Exh. for fear he may commit a revealing error or an erroneous stroke. must prevail. X and Y or 3-C are his signatures. August 19. A-2 or Z and A-3 were written by defendant Segundo Dalion who admitted that Exhs. G. Mere denial of having signed. 1985. The questioned signatures and the specimens are very similar to each other and appear to be written by one person. Rule 131. and defense should have come forward with clear and convincing evidence to show that plaintiff committed forgery or caused said forgery to be committed. A-3). and did not thus convey title or right to the lot in question since "acts and contracts which have for their object the creation. 25. Sr. 9. Defendant has affirmatively alleged forgery. and on the open court notice of April 13. Ibid.R. 136 SCRA 365. since it is undeniable that the trial court is in a more advantageous position to examine real evidence. Dalion nonetheless still impugns the validity of the sale on the ground that the same is embodied in a private document. back of the Court Orders dated December 17. on the return card (p. G. Dalion appeared at the back of the summons (p. The second signature is already a surplusage. Further comparison of the questioned signatures and the specimens with the signatures Segundo D. modification or extinction of real rights over immovable property must appear in a public instrument" (Art. it is presumed that a person is innocent of a crime or wrong (Section 5 (a). Ibid. 1974 and for October 7. one at the right corner bottom of the document (Exh. 1985. aside from the testimony of the plaintiff.

. merely seeks consummation of said contract.. the execution thereof is equivalent to the delivery of the thing. and to observe a particular form. We believe that the suit for recovery of ownership is proper. The trial court. if warranted. the parties may reciprocally demand performance (Art. which is premised on the binding effect and validity inter partes of the contract of sale. NCC). the vendee may compel transfer of ownership of the object of the sale. (p. No particular form is required for its validity. 1498. And a party may compel the other party to execute a public instrument embodying their contract affecting real rights once the contract appearing in a private instrument hag been perfected (See Art. when the sale is made through a public instrument. . .. .. (Art. 1357). Decision. Delivery may either be actual (real) or constructive. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. and the vendor may require the vendee to pay the thing sold (Art. .e. 1357). A contract of sale is a consensual contract. and the suit for recovery of ownership. i. 1458. SO ORDERED. Thus delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the sale in a public instrument (constructive). 1475.This argument is misplaced. Under Art. A sale of a real property may be in a private instrument but that contract is valid and binding between the parties upon its perfection.. 1358 on the necessity of a public document is only for convenience. aptly observed that Sabesaje's complaint sufficiently alleged a cause of action to compel Dalion to execute a formal deed of sale. the petition is DENIED and the decision of the Court of Appeals upholding the ruling of the trial court is hereby AFFIRMED. NCC. 12. Upon perfection of the contract. Records) ACCORDINGLY. not for validity or enforceability. NCC). 1475 of the Civil Code gives the parties to a perfected contract of sale the right to reciprocally demand performance. No costs. As earlier stated. . As regards petitioners' contention that the proper action should have been one for specific performance. Art. The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the parcel of land and to execute corresponding formal deed of conveyance in a public document. which means that the sale is perfected by mere consent. 272. The provision of Art. p.