THIRD DIVISION

[G.R. No. 173211. October 11, 2012.]

HEIRS OF DR. MARIO S. INTAC and ANGELINA MENDOZA-INTAC , petitioners, vs. COURT OF APPEALS and SPOUSES
MARCELO ROY,
JR. and JOSEFINA MENDOZA-ROY and SPOUSES DOMINADOR LOZADA and MARTINA MENDOZA-LOZADA, respondents.

DECISION

MENDOZA, J p:

This is a Petition for Review on Certiorari under Rule 45 assailing the February 16, 2006 Decision 1 of the Court of Appeals
(CA), in CA G.R. CV No. 75982, which modi ed the April 30, 2002 Decision 2 of the Regional Trial Court, Branch 220,
Quezon City (RTC), in Civil Case No. Q-94-19452, an action for cancellation of transfer certi cate of title and
reconveyance of property.

The Facts

From the records, it appears that Ireneo Mendoza (Ireneo), married to Salvacion Fermin (Salvacion), was the owner of
the subject property, presently covered by TCT No. 242655 of the Registry of Deeds of Quezon City and situated at No.
36, Road 8, Bagong Pag-asa, Quezon City, which he purchased in 1954. Ireneo had two children: respondents Jose na
and Martina (respondents), Salvacion being their stepmother. When he was still alive, Ireneo, also took care of his niece,
Angelina, since she was three years old until she got married. The property was then covered by TCT No. 106530 of the
Registry of Deeds of Quezon City. On October 25, 1977, Ireneo, with the consent of Salvacion, executed a deed of
absolute sale of the property in favor of Angelina and her husband, Mario (Spouses Intac) . Despite the sale, Ireneo and
his family, including the respondents, continued staying in the premises and paying the realty taxes. After Ireneo died
intestate in 1982, his widow and the respondents remained in the premises. 3 After Salvacion died, respondents still
maintained their residence there. Up to the present, they are in the premises, paying the real estate taxes thereon,
leasing out portions of the property, and collecting the rentals. 4

The Dispute

The controversy arose when respondents sought the cancellation of TCT No. 242655, claiming that the sale was only
simulated and, therefore, void. Spouses Intac resisted, claiming that it was a valid sale for a consideration.

On February 22, 1994, respondents led the Complaint for Cancellation of Transfer Certi cate of Title (TCT) No. 242655 5
against Spouses Intac before the RTC. The complaint prayed not only for the cancellation of the title, but also for its
reconveyance to them. Pending litigation, Mario died on May 20, 1995 and was substituted by his heirs, his surviving
spouse, Angelina, and their children, namely, Rafael, Kristina, Ma. Tricia Margarita, Mario, and Pocholo, all surnamed
Intac (petitioners).

Averments of the Parties

In their Complaint, respondents alleged, among others, that when Ireneo was still alive, Spouses Intac borrowed the title
of the property (TCT No. 106530) from him to be used as collateral for a loan from a nancing institution; that when Ireneo
informed respondents about the request of Spouses Intac, they objected because the title would be placed in the
names of said spouses and it would then appear that the couple owned the property; that Ireneo, however, tried to
appease them, telling them not to worry because Angelina would not take advantage of the situation considering that
he took care of her for a very long time; that during his lifetime, he informed them that the subject property would be
equally divided among them after his death; and that respondents were the ones paying the real estate taxes over said
property.

It was further alleged that after the death of Ireneo in 1982, a conference among relatives was held wherein both
parties were present including the widow of Ireneo, Salvacion; his nephew, Marietto Mendoza (Marietto); and his
brother, Aurelio Mendoza (Aurelio). In the said conference, it was said that Aurelio informed all of them that it was
Ireneo's wish to have the property divided among his heirs; that Spouses Intac never raised any objection; and that
neither did they inform all those present on that occasion that the property was already sold to them in 1977. 6

Respondents further alleged that sometime in 1993, after the death of Salvacion, rumors spread in the neighborhood
that the subject property had been registered in the names of Spouses Intac; that upon veri cation with the O ce of the
Register of Deeds of Quezon City, respondents were surprised to nd out that TCT No. 106530 had indeed been cancelled
by virtue of the deed of absolute sale executed by Ireneo in favor of Spouses Intac, and as a result, TCT No. 242655 was
issued in their names; that the cancellation of TCT No. 106530 and the subsequent issuance of TCT No. 242655 were null
and void and had no legal effect whatsoever because the deed of absolute sale was a ctitious or simulated document;
that the Spouses Intac were guilty of fraud and bad faith when said document was executed; that Spouses Intac never
informed respondents that they were already the registered owners of the subject property although they had never
taken possession thereof; and that the respondents had been in possession of the subject property in the concept of an
owner during Ireneo's lifetime up to the present.

In their Answer, 7 Spouses Intac countered, among others, that the subject property had been transferred to them
based on a valid deed of absolute sale and for a valuable consideration; that the action to annul the deed of absolute
sale had already prescribed; that the stay of respondents in the subject premises was only by tolerance during Ireneo's
lifetime because they were not yet in need of it at that time; and that despite respondents' knowledge about the sale
that took place on October 25, 1977, respondents still led an action against them.
Ruling of the RTC

On April 30, 2002, the RTC rendered judgment in favor of respondents and against Spouses Intac. The dispositive portion
of its Decision reads: EScAID

WHEREFORE, premises considered, judgment is hereby rendered:

(1) Declaring the Deed of Absolute Sale executed by Ireneo Mendoza in favor of Mario and Angelina Intac dated
October 25, 1977 as an equitable mortgage.
(2) Ordering the Register of Deeds of Quezon City to cancel Transfer Certi cate Title No. 242655 and, in lieu thereof,
issue a new Transfer Certificate of Title in the name of Ireneo Mendoza; and
(3) Ordering defendants to pay plaintiffs the amount of Thirty Thousand Pesos (PhP30,000.00) as and for attorney's
fees.

The other claims for damages are hereby denied for lack of merit.

SO ORDERED.

The RTC ruled, among others, that the sale between Ireneo and Salvacion, on one hand, and Spouses Intac was null
and void for being a simulated one considering that the said parties had no intention of binding themselves at all. It
explained that the questioned deed did not re ect the true intention of the parties and construed the said document to
be an equitable mortgage on the following grounds: [1] the signed document did not express the real intention of the
contracting parties because Ireneo signed the said document only because he was in urgent need of funds; [2] the
amount of P60,000.00 in 1977 was too inadequate for a purchase price of a 240-square meter lot located in Quezon
City; [3] Josefina and Martina continued to be in possession of the subject property from 1954 and even after the
alleged sale took place in 1977 until this case was led in 1994; and [4] the Spouses Intac started paying real estate taxes
only in 1999. The RTC added that the Spouses Intac were guilty of fraud because they effected the registration of the
subject property even though the execution of the deed was not really intended to transfer the ownership of the subject
property.

Ruling of the CA

On appeal, the CA modi ed the decision of the RTC. The CA ruled that the RTC erred in rst declaring the deed of
absolute sale as null and void and then interpreting it to be an equitable mortgage. The CA believed that Ireneo
agreed to have the title transferred in the name of the Spouses Intac to enable them to facilitate the processing of the
mortgage and to obtain a loan. This was the exact reason why the deed of absolute sale was executed. Marietto testi
ed that Ireneo never intended to sell the subject property to the Spouses Intac and that the deed of sale was executed
to enable them to borrow from a bank. This fact was con rmed by Angelina herself when she testi ed that she and her
husband mortgaged the subject property sometime in July 1978 to nance the construction of a small hospital in Sta.
Cruz, Laguna.

The CA further observed that the conduct of Spouses Intac belied their claim of ownership. When the deed of absolute
sale was executed, Spouses Intac never asserted their ownership over the subject property, either by collecting rents, by
informing respondents of their ownership or by demanding possession of the land from its occupants. It was not disputed
that it was respondents who were in possession of the subject property, leasing the same and collecting rentals. Spouses
Intac waited until Ireneo and Salvacion passed away before they disclosed the transfer of the title to respondents.
Hence, the CA was of the view that the veracity of their claim of ownership was suspicious. AHSEaD

Moreover, wrote the CA, although Spouses Intac claimed that the purchase of the subject property was for a valuable
consideration (P60,000.00), they admitted that they did not have any proof of payment. Marietto, whose testimony was
assessed by the RTC to be credible, testi ed that there was no such payment because Ireneo never sold the subject
property as he had no intention of conveying its ownership and that his only purpose in lending the title was to help
Spouses Intac secure a loan. Thus, the CA concluded that the deed of absolute sale was a simulated document and
had no legal effect.

Finally, the CA stated that even assuming that there was consent, the sale was still null and void because of lack of
consideration. The decretal portion of the CA Decision reads:

WHEREFORE, in view of the foregoing premises, the decision of the Regional Trial Court of Quezon City, Branch 220, is
AFFIRMED with modifications, as follows:

1. The Deed of Absolute Sale dated October 25, 1977 executed by Ireneo Mendoza and Salvacion Fermen in
favor of Spouses Mario and Angelina Intac is hereby declared NULL AND VOID.
2. the Register of Deed[s] of Quezon City is ordered to cancel TCT No. 242655 and, in lieu thereof, issue a new one
and reinstate Ireneo Mendoza as the registered owner;
3. The defendant appellants are hereby ordered to pay the plaintiff appellees the amount of thirty thousand pesos
(Php30,000.00) as and for attorney's fees; and
4. The other claims for damages are denied for lack of merit.

SO ORDERED.

Not in conformity, petitioners filed this petition for review anchored on the following

ASSIGNMENT OF ERRORS
I.THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT
DATED FEBRUARY 16, 2006 WHICH WAS CONTRARY TO THE APPLICABLE LAWS AND EXISTING JURISPRUDENCE.

II.THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT CLEARLY OVERLOOKED, MISUNDERSTOOD AND/OR
MISAPPLIED THE EVIDENCE PRESENTED IN THE COURT A QUO.

Petitioners' position

Petitioners primarily argue that the subject deed of sale was a valid and binding contract between the parties. They
claim that all the elements of a valid contract of sale were present, to wit: [a] consent or meeting of the minds, that is,
consent to transfer ownership in exchange of price; [b] determinate subject matter; and [c] price certain in money or its
equivalent.

Petitioners claim that respondents have validly gave their consent to the questioned sale of the subject property. In fact,
it was Ireneo and Salvacion who approached them regarding their intention to sell the subject property. Ireneo and
Salvacion a xed their signatures on the questioned deed and never brought any action to invalidate it during their
lifetime. They had all the right to sell the subject property without having to inform their children of their intention to sell
the same. Ordinary human experience dictates that a party would not a x his or her signature on any written instrument
which would result in deprivation of one's property right if there was really no intention to be bound by it. A party would
not keep silent for several years regarding the validity and due execution of a document if there was an issue on the real
intention of the vendors. The signatures of Ireneo and Salvacion meant that they had knowingly and willfully entered into
such agreement and that they were prepared for the consequences of their act.

Respondents' Position

Respondents are of the position that the RTC and the CA were correct in ruling that the questioned deed of absolute
sale was a simulated one considering that Ireneo and Salvacion had no intention of selling the subject property. The true
intention rather was that Spouses Intac would just borrow the title of the subject property and offer it as a collateral to
secure a loan. No money actually changed hands. cIEHAC

According to respondents, there were several circumstances which put in doubt the validity of the deed of absolute
sale. First, the parties were not on equal footing because Angelina was a doctor by profession while Ireneo and
Salvacion were less educated people who were just motivated by their trust, love and affection for her whom they
considered as their own child. Second, if there was really a valid sale, it was just and proper for Spouses Intac to divulge
the conveyance to respondents, being compulsory heirs, but they did not. Third, Ireneo and Salvacion did nothing to
protect their interest because they banked on the representation of Spouses Intac that the title would only be used to
facilitate a loan with a bank. Fourth, Ireneo and Salvacion remained in possession of the subject property without being
disturbed by Spouses Intac. Fifth, the price of the sale was inadequate and inequitable for a prime property located in
Pag-asa, Quezon City. Sixth, Ireneo and Salvacion had no intention of selling the subject property because they had
heirs who would inherit the same. Seventh, the Spouses Intac abused the trust and affection of Ireneo and Salvacion by
arrogating unto themselves the ownership of the subject property to the prejudice of his own children, Josefina and
Martina.

Finally, petitioners could not present a witness to rebut Marietto's testimony which was straightforward and truthful.

The Court's Ruling

Basically, the Court is being asked to resolve the issue of whether the Deed of Absolute Sale, 11 dated October 25, 1977,
executed by and between Ireneo Mendoza and Salvacion Fermin, as vendors, and Mario Intac and Angelina Intac, as
vendees, involving the subject real property in Pagasa, Quezon City, was a simulated contract or a valid agreement.

The Court finds no merit in the petition.

A contract, as de ned in the Civil Code, is a meeting of minds, with respect to the other, to give something or to render
some service. Article 1318 provides:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.

Accordingly, for a contract to be valid, it must have three essential elements: (1) consent of the contracting parties; (2)
object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. 12

All these elements must be present to constitute a valid contract. Consent is essential to the existence of a contract; and
where it is wanting, the contract is non-existent. In a contract of sale, its perfection is consummated at the moment there
is a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by
the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract.

In this case, the CA ruled that the deed of sale executed by Ireneo and Salvacion was absolutely simulated for lack of
consideration and cause and, therefore, void. Articles 1345 and 1346 of the Civil Code provide:
Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to
be bound at all; the latter, when the parties conceal their true agreement.

Art. 1346. An absolutely simulated or ctitious contract is void. A relative simulation, when it does not prejudice a third
person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds
the parties to their real agreement.

If the parties state a false cause in the contract to conceal their real agreement, the contract is only relatively simulated
and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present
and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and
enforceable between the parties and their successors in interest.

In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound
by it. "The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to
produce legal effect or in any way alter the juridical situation of the parties." 14 "As a result, an absolutely simulated or
ctitious contract is void, and the parties may recover from each other what they may have given under the contract."

In the case at bench, the Court is one with the courts below that no valid sale of the subject property actually took
place between the alleged vendors, Ireneo and Salvacion; and the alleged vendees, Spouses Intac. There was simply
no consideration and no intent to sell it.

Critical is the testimony of Marietto, a witness to the execution of the subject absolute deed of sale. He testi ed that
Ireneo personally told him that he was going to execute a document of sale because Spouses Intac needed to borrow
the title to the property and use it as collateral for their loan application. Ireneo and Salvacion never intended to sell or
permanently transfer the full ownership of the subject property to Spouses Intac. Marietto was characterized by the RTC
as a credible witness.

Aside from their plain denial, petitioners failed to present any concrete evidence to disprove Marietto's testimony. They
claimed that they actually paid P150,000.00 for the subject property. They, however, failed to adduce proof, even by
circumstantial evidence, that they did, in fact, pay it. Even for the consideration of P60,000.00 as stated in the contract,
petitioners could not show any tangible evidence of any payment therefor. Their failure to prove their payment only
strengthened Marietto's story that there was no payment made because Ireneo had no intention to sell the subject
property.

Angelina's story, except on the consideration, was consistent with that of Marietto. Angelina testi ed that she and her
husband mortgaged the subject property sometime in July 1978 to nance the construction of a small hospital in Sta.
Cruz, Laguna. Angelina claimed that Ireneo offered the property as he was in deep financial need.

Granting that Ireneo was in nancial straits, it does not prove that he intended to sell the property to Angelina. Petitioners
could not adduce any proof that they lent money to Ireneo or that he shared in the proceeds of the loan they had
obtained. And, if their intention was to build a hospital, could they still afford to lend money to Ireneo? And if Ireneo
needed money, why would he lend the title to Spouses Intac when he himself could use it to borrow money for his
needs? If Spouses Intac took care of him when he was terminally ill, it was not surprising for Angelina to reciprocate as he
took care of her since she was three (3) years old until she got married. Their caring acts for him, while they are deemed
services of value, cannot be considered as consideration for the subject property for lack of quantification and the
Filipino culture of taking care of their elders.

Thus, the Court agrees with the courts below that the questioned contract of sale was only for the purpose of lending the
title of the property to Spouses Intac to enable them to secure a loan. Their arrangement was only temporary and could
not give rise to a valid sale. Where there is no consideration, the sale is null and void ab initio. In the case of Lequin v.
Vizconde, 16 the Court wrote:

There can be no doubt that the contract of sale or Kasulatan lacked the essential element of consideration. It is a well-
entrenched rule that 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. Moreover, Art. 1471 of the Civil Code, which
provides that "if the price is simulated, the sale is void," also applies to the instant case, since the price purportedly paid
as indicated in the contract of sale was simulated for no payment was actually made.

Consideration and consent are essential elements in a contract of sale. Where a party's consent to a contract of sale is
vitiated or where there is lack of consideration due to a simulated price, the contract is null and void ab initio.
[Emphases supplied]

More importantly, Ireneo and his family continued to be in physical possession of the subject property after the sale in
1977 and up to the present. They even went as far as leasing the same and collecting rentals. If Spouses Intac really
purchased the subject property and claimed to be its true owners, why did they not assert their ownership immediately
after the alleged sale took place? Why did they have to assert their ownership of it only after the death of Ireneo and
Salvacion? One of the most striking badges of absolute simulation is the complete absence of any attempt on the part
of a vendee to assert his right of dominion over the property. 17

On another aspect, Spouses Intac failed to show that they had been paying the real estate taxes of the subject
property. They admitted that they started paying the real estate taxes on the property for the years 1996 and 1997 only
in 1999. They could only show two (2) tax receipts (Real Property Tax Receipt No. 361105, dated April 21, 1999, and Real
Property Tax Receipt No. 361101, dated April 21, 1999). 18 Noticeably; petitioners' tax payment was just an afterthought.
The non-payment of taxes was also taken against the alleged vendees in the case of Lucia Carlos Aliño v. Heirs of
Angelica A. Lorenzo. 19 Thus,

Furthermore, Lucia religiously paid the realty taxes on the subject lot from 1980 to 1987. While tax receipts and
declarations of ownership for taxation purposes are not, in themselves, incontrovertible evidence of ownership, they
constitute at least proof that the holder has a claim of title over the property, particularly when accompanied by proof
of actual possession. They are good indicia of the possession in the concept of owner, for no one in his right mind would
be paying taxes for a property that is not in his actual or at least constructive possession. The voluntary declaration of a
piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property
and announces his adverse claim against the State and all other interested parties, but also the intention to contribute
needed revenues to the Government. Such an act strengthens one's bona fide claim of acquisition of ownership.

On the other hand, respondent heirs failed to present evidence that Angelica, during her lifetime, paid the realty taxes
on the subject lot. They presented only two tax receipts showing that Servillano, Sr. belatedly paid taxes due on the
subject lot for the years 1980-1981 and part of year 1982 on September 8, 1989, or about a month after the institution of
the complaint on August 3, 1989, a clear indication that payment was made as an afterthought to give the semblance
of truth to their claim.

Thus, the subsequent acts of the parties belie the intent to be bound by the deed of sale. [Emphases supplied]

The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a
contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined
not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the
parties. 20 As heretofore shown, the contemporaneous and subsequent acts of both parties in this case, point to the fact
that the intention of Ireneo was just to lend the title to the Spouses Intac to enable them to borrow money and put up a
hospital in Sta. Cruz, Laguna. Clearly, the subject contract was absolutely simulated and, therefore, void.

In view of the foregoing, the Court nds it hard to believe the claim of the Spouses Intac that the stay of Ireneo and his
family in the subject premises was by their mere tolerance as they were not yet in need of it. As earlier pointed out, no
convincing evidence, written or testimonial, was ever presented by petitioners regarding this matter. It is also of no
moment that TCT No. 106530 covering the subject property was cancelled and a new TCT (TCT No. 242655) 21 was
issued in their names. The Spouses Intac never became the owners of the property despite its registration in their names.
After all, registration does not vest title.

As a logical consequence, petitioners did not become the owners of the subject property even after a TCT had been
issued in their names. After all, registration does not vest title. Certi cates of title merely con rm or record title already
existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for
the commission of fraud, or to permit one to enrich oneself at the expense of others. Hence, reconveyance of the
subject property is warranted. 22

The Court does not nd acceptable either the argument of the Spouses Intac that respondents' action for cancellation of
TCT No. 242655 and the reconveyance of the subject property is already barred by the Statute of Limitations. The reason
is that the respondents are still in actual possession of the subject property. It is a well-settled doctrine that "if the person
claiming to be the owner of the property is in actual possession thereof, the right to seek reconveyance, which in effect
seeks to quiet title to the property, does not prescribe." 23 In Lucia Carlos Aliño, it was also written:

The lower courts fault Lucia for allegedly not taking concrete steps to recover the subject lot, demanding its return only
after 10 years from the registration of the title. They, however, failed to consider that Lucia was in actual possession of the
property.

It is well-settled that an action for reconveyance prescribes in 10 years, the reckoning point of which is the date of
registration of the deed or the date of issuance of the certi cate of title over the property. In an action for
reconveyance, the decree of registration is highly regarded as incontrovertible. What is sought instead is the transfer of
the property or its title, which has been erroneously or wrongfully registered in another person's name, to its rightful or
legal owner or to one who has a better right.

However, in a number of cases in the past, the Court has consistently ruled that if the person claiming to be the owner of
the property is in actual possession thereof, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be
the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.
The reason being, that his undisturbed possession gives him the continuing right to seek the aid of a court of equity to
ascertain the nature of the adverse claim of a third party and its effect on his title, which right can be claimed only by
one who is in possession. Thus, considering that Lucia continuously possessed the subject lot, her right to institute a suit to
clear the cloud over her title cannot be barred by the statute of limitations. 24 [Emphases supplied]

WHEREFORE, the petition is DENIED.

SO ORDERED.

Velasco, Jr., Peralta, Abad and Perez, *JJ., concur.

FIRST DIVISION
[G.R. No. 165420. June 30, 2005.]
 CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A. TULIAO, CORAZON A. JALECO and LILIA A.
OLAYON, petitioners, vs. SPOUSES ANTONIO PADUA and EUGENIA PADUA, respondents.

DECISION

YNARES-SANTIAGO, J p:

This petition for review on certiorari assails the February 24, 2004 decision of the Court of Appeals in CA-G.R. CV No.
70239, 1 and its September 28, 2004 resolution, denying reconsideration thereof. 2

In her complaint for partition of real property, annulment of titles with damages, 3 Concepcion Ainza (Concepcion)
alleged that respondent- spouses Eugenia (Eugenia) and Antonio Padua (Antonio) owned a 216.40 sq. m. lot with an un
nished residential house located at No. 85-A Durian corner Pajo Sts., Barangay Quirino 2 -C, Project 2, Quezon City,
covered by Transfer Certi cate of Title No. 271935. Sometime in April 1987, she bought one-half of an undivided portion of
the property from her daughter, Eugenia and the latter's husband, Antonio, for One Hundred Thousand Pesos
(P100,000.00).

No Deed of Absolute Sale was executed to evidence the transaction, but cash payment was received by the
respondents, and ownership was transferred to Concepcion through physical delivery to her attorney-in-fact and
daughter, Natividad Tuliao (Natividad). Concepcion authorized Natividad and the latter’s husband, Ceferino Tuliao
(Ceferino) to occupy the premises, and make improvements on the unfinished building.

Thereafter, Concepcion alleged that without her consent, respondents caused the subdivision of the property into three
portions and registered it in their names under TCT Nos. N- 155122, N-155123 and N-155124 in violation of the restrictions
annotated at the back of the title.

On the other hand, Antonio averred that he bought the property in 1980 and introduced improvements thereon.
Between 1989 and 1990, he and his wife, Eugenia, allowed Natividad and Ceferino to occupy the premises temporarily.
In 1994, they caused the subdivision of the property and three (3) separate titles were issued.

Thereafter, Antonio requested Natividad to vacate the premises but the latter refused and claimed that Concepcion
owned the property. Antonio thus led an ejectment suit on April 1, 1999. Concepcion, represented by Natividad, also led
on May 4, 1999 a civil case for partition of real property and annulment of titles with damages.

Antonio claimed that his wife, Eugenia, admitted that Concepcion offered to buy one third (1/3) of the property who
gave her small amounts over several years which totaled P100,000.00 by 1987 and for which she signed a receipt.

On January 9, 2001, the Regional Trial Court of Quezon City, Branch 85, rendered judgment 4 in favor of Concepcion,
the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants and
ordering:

1. the subdivision of the subject property between the said plaintiff and defendants in equal shares with one-half
of the property, including the portion occupied by the spouses Severino and Natividad Tuliao to be awarded to the
plaintiff;
2. the cancellation of Transfer Certificates of Title Nos. N-155122, N-155123, N-155124 of the Registry of Deeds of
Quezon City;
3. the defendants to pay to the plaintiff P50,000.00 as attorney's fees.

SO ORDERED. 5

The trial court upheld the sale between Eugenia and Concepcion. It ruled that the sale was consummated when both
contracting parties complied with their respective obligations. Eugenia transferred possession by delivering the property
to Concepcion who in turn paid the purchase price. It also declared that the transfer of the property did not violate the
Statute of Frauds because a fully executed contract does not fall within its coverage.

On appeal by the respondents, the Court of Appeals reversed the decision of the trial court, and declared the sale null
and void. Applying Article 124 of the Family Code, the Court of Appeals ruled that since the subject property is conjugal,
the written consent of Antonio must be obtained for the sale to be valid. It also ordered the spouses Padua to return the
amount of P100,000.00 to petitioners plus interest. 6

The sole issue for resolution in this petition for review is whether there was a valid contract of sale between Eugenia and
Concepcion.

A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof
based on subject matter, price and terms of payment. 7

In this case, there was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia
offered to sell a portion of the property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as
consideration. The contract of sale was consummated when both parties fully complied with their respective obligations.
Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of One Hundred Thousand Pesos
(P100,000.00), as evidenced by the receipt which reads:

RECEIPT

Received the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as payment for the lot on 85-A Durian St.,
Project 2, Quezon City, from Mrs. Concepcion R. Ainza, on April, 1987.

(Sgd.)

Mrs. Eugenia A. Padua

The verbal contract of sale between Eugenia and Concepcion did not violate the provisions of the Statute of Frauds
that a contract for the sale of real property shall be unenforceable unless the contract or some note or memorandum of
the sale is in writing and subscribed by the party charged or his agent. 9 When a verbal contract has been completed,
executed or partially consummated, as in this case, its enforceability will not be barred by the Statute of Frauds, which
applies only to an executory agreement. 10 Thus, where one party has performed his obligation, oral evidence will be
admitted to prove the agreement. 11

In the instant case, the oral contract of sale between Eugenia and Concepcion was evidenced by a receipt signed by
Eugenia. Antonio also stated that his wife admitted to him that she sold the property to Concepcion.

It is undisputed that the subject property was conjugal and sold by Eugenia in April 1987 or prior to the effectivity of the
Family Code on August 3, 1988, Article 254 of which repealed Title V, Book I of the Civil Code provisions on the property
relations between husband and wife. However, Article 256 thereof limited its retroactive effect only to cases where it
would not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. In the case at
bar, vested rights of Concepcion will be impaired or prejudiced by the application of the Family Code; hence, the
provisions of the Civil Code should be applied. ACHEaI

In Felipe v. Heirs of Aldon, et al., 12 the legal effect of a sale of conjugal properties by the wife without the consent of the
husband was clarified, to wit:

The legal ground which deserves attention is the legal effect of a sale of lands belonging to the conjugal partnership
made by the wife without the consent of the husband.

It is useful at this point to re-state some elementary rules: The husband is the administrator of the conjugal partnership.
(Art. 165, Civil Code) Subject to certain exceptions, the husband cannot alienate or encumber any real property of the
conjugal partnership without the wife's consent. (Art. 166, Idem.) And the wife cannot bind the conjugal partnership
without the husband's consent, except in cases provided by law. (Art. 172, Idem.).

In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without the consent of the
husband and the sale is not covered by the phrase "except in cases provided by law." The Court of Appeals described
the sale as "invalid" — a term which is imprecise when used in relation to contracts because the Civil Code uses speci c
names in designating defective contracts, namely: rescissible (Arts. 1380 et seq. ) , voidable (Arts. 1390 et seq.),
unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 et seq.).

The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidable contract.

According to Art. 1390 of the Civil Code, among the voidable contracts are " [T]hose where one of the parties is
incapable of giving consent to the contract." (Par. 1.) In the instant case Gimena had no capacity to give consent to
the contract of sale. The capacity to give consent belonged not even to the husband alone but to both spouses.

The view that the contract made by Gimena is a voidable contract is supported by the legal provision that contracts
entered by the husband without the consent of the wife when such consent is required, are annullable at her instance
during the marriage and within ten years from the transaction questioned. (Art. 173, Civil Code).

Gimena's contract is not rescissible for in such a contract all the essential elements are untainted but Gimena's consent
was tainted. Neither can the contract be classi ed as unenforceable because it does not t any of those described in Art.
1403 of the Civil Code. And nally, the contract cannot be void or inexistent because it is not one of those mentioned in
Art. 1409 of the Civil Code. By process of elimination, it must perforce be a voidable contract.

The voidable contract of Gimena was subject to annulment by her husband only during the marriage because he was
the victim who had an interest in the contract. Gimena, who was the party responsible for the defect, could not ask for
its annulment. Their children could not likewise seek the annulment of the contract while the marriage subsisted because
they merely had an inchoate right to the lands sold. (Emphasis supplied)

The consent of both Eugenia and Antonio is necessary for the sale of the conjugal property to be valid. Antonio's
consent cannot be presumed. 13 Except for the self-serving testimony of petitioner Natividad, there is no evidence that
Antonio participated or consented to the sale of the conjugal property. Eugenia alone is incapable of giving consent to
the contract. Therefore, in the absence of Antonio's consent, the disposition made by Eugenia is voidable.

The contract of sale between Eugenia and Concepcion being an oral contract, the action to annul the same must be
commenced within six years from the time the right of action accrued. 15 Eugenia sold the property in April 1987 hence
Antonio should have asked the courts to annul the sale on or before April 1993. No action was commenced by Antonio
to annul the sale, hence his right to seek its annulment was extinguished by prescription.

Even assuming that the ten (10)-year prescriptive period under Art. 173 should apply, Antonio is still barred from instituting
an action to annul the sale because since April 1987, more than ten (10) years had already lapsed without any such
action being filed.

In sum, the sale of the conjugal property by Eugenia without the consent of her husband is voidable. It is binding unless
annulled. Antonio failed to exercise his right to ask for the annulment within the prescribed period, hence, he is now
barred from questioning the validity of the sale between his wife and Concepcion.

WHEREFORE, the petition is GRANTED. The decision dated February 24, 2004 of the Court of Appeals in CA- G.R. CV No.
70239 and its resolution dated September 28, 2004 are REVERSED and SET ASIDE. The decision dated January 9, 2001 of
the Regional Trial Court of Quezon City, Branch 85, in Civil Case No. Q-99-37529, is REINSTATED.

SO ORDERED.

Davide, Jr., C.J., Quisumbing, Carpio and Azcuna, JJ., concur.

THIRD DIVISION
[G.R. No. 157493. February 5, 2007.]
RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and
ENRIQUETA, all surnamed OESMER, petitioners, vs. PARAISO DEVELOPMENT CORPORATION, respondent.

DECISION

CHICO-NAZARIO, J p:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking
to reverse and set aside the Court of Appeals Decision 1 dated 26 April 2002 in CA-G.R. CV No. 53130 entitled, Rizalino,
Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed Oesmer vs. Paraiso Development
Corporation, as modi ed by its Resolution 2 dated 4 March 2003, declaring the Contract to Sell valid and binding with
respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners, namely:
Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); and ordering them to execute the
Deed of Absolute Sale concerning their 6/8 share over the subject parcels of land in favor of herein respondent Paraiso
Development Corporation, and to pay the latter the attorney's fees plus costs of the suit. The assailed Decision, as modi
ed, likewise ordered the respondent to tender payment to the petitioners in the amount of P3,216,560.00 representing
the balance of the purchase price of the subject parcels of land.

The facts of the case are as follows:

Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with Adolfo
Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and the co-owners of undivided shares of two
parcels of agricultural and tenanted land situated in Barangay Ulong Tubig, Carmona, Cavite, identi ed as Lot 720 with
an area of 40,507 square meters (sq. m.) and Lot 834 containing an area of 14,769 sq. m., or a total land area of 55,276
sq. m. Both lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who
declared the lots for taxation purposes under Tax Declaration No. 3438 3 (cancelled by I.D. No. 6064-A) for Lot 720 and
Tax Declaration No. 3437 4 (cancelled by I.D. No. 5629) for Lot 834. When the spouses Oesmer died, petitioners, together
with Adolfo and Jesus, acquired the lots as heirs of the former by right of succession.

Respondent Paraiso Development Corporation is known to be engaged in the real estate business.

Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought along
petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani
Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners' properties to respondent
corporation.

Pursuant to the said meeting, a Contract to Sell 5 was drafted by the Executive Assistant of Sotero Lee, Inocencia Almo.
On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the amount of
P100,000.00, payable to Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and
Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the document.
EcSCAD

On 5 April 1989, a duplicate copy of the instrument was returned to respondent corporation. On 21 April 1989,
respondent brought the same to a notary public for notarization.

In a letter 6 dated 1 November 1989, addressed to respondent corporation, petitioners informed the former of their
intention to rescind the Contract to Sell and to return the amount of P100,000.00 given by respondent as option money.

Respondent did not respond to the aforesaid letter. On 30 May 1991, herein petitioners, together with Adolfo and Jesus,
led a Complaint 7 for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with Damages
before the Regional Trial Court (RTC) of Bacoor, Cavite. The said case was docketed as Civil Case No. BCV-91-49.
During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court issued an Order, 8 dated 16 September
1992, to the effect that the deceased petitioner be substituted by his surviving spouse, Jose na O. Oesmer, and his
children, Rolando O. Oesmer and Fernando O. Oesmer. However, the name of Rizalino was retained in the title of the
case both in the RTC and the Court of Appeals.

After trial on the merits, the lower court rendered a Decision 9 dated 27 March 1996 in favor of the respondent, the
dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of herein [respondent] Paraiso Development
Corporation. The assailed Contract to Sell is valid and binding only to the undivided proportionate share of the signatory
of this document and recipient of the check, [herein petitioner] co-owner Ernesto Durumpili Oesmer. The latter is hereby
ordered to execute the Contract of Absolute Sale concerning his 1/8 share over the subject two parcels of land in favor
of herein [respondent] corporation, and to pay the latter the attorney's fees in the sum of Ten Thousand (P10,000.00)
Pesos plus costs of suit.

The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit. 10

Unsatisfied, respondent appealed the said Decision before the Court of Appeals. On 26 April 2002, the appellate court
rendered a Decision modifying the Decision of the court a quo by declaring that the Contract to Sell is valid and binding
with respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners,
namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The decretal portion of
the said Decision states that:

WHEREFORE, premises considered, the Decision of the court a quo is hereby MODIFIED. Judgment is hereby rendered in
favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with
respect to the undivided proportionate share of the six (6) signatories of this document, [herein petitioners], namely,
Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby
ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land and in
favor of herein [respondent] corporation, and to pay the latter the attorney's fees in the sum of Ten Thousand Pesos
(P10,000.00) plus costs of suit. 11

Aggrieved by the above-mentioned Decision, petitioners led a Motion for Reconsideration of the same on 2 July 2002.
Acting on petitioners' Motion for Reconsideration, the Court of Appeals issued a Resolution dated 4 March 2003,
maintaining its Decision dated 26 April 2002, with the modi cation that respondent tender payment to petitioners in the
amount of P3,216,560.00, representing the balance of the purchase price of the subject parcels of land. The dispositive
portion of the said Resolution reads:

WHEREFORE , premises considered, the assailed Decision is hereby modi ed. Judgment is hereby rendered in favor of
herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with respect to
the undivided proportionate shares of the six (6) signatories of this document, [herein petitioners], namely, Ernesto,
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered
to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land in favor of herein
[respondent] corporation, and to pay the latter attorney's fees in the sum of Ten Thousand Pesos (P10,000.00) plus costs
of suit. Respondent is likewise ordered to tender payment to the above-named [petitioners] in the amount of Three
Million Two Hundred Sixteen Thousand Five Hundred Sixty Pesos (P3,216,560.00) representing the balance of the purchase
price of the subject two parcels of land. 12

Hence, this Petition for Review on Certiorari.

Petitioners come before this Court arguing that the Court of Appeals erred:

I. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is not binding upon petitioner
Ernesto Oesmer's co-owners (herein petitioners Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora).

II. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is void altogether considering
that respondent itself did not sign it as to indicate its consent to be bound by its terms. Moreover, Exhibit D is really a
unilateral promise to sell without consideration distinct from the price, and hence, void.

Petitioners assert that the signatures of ve of them namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the
margins of the supposed Contract to Sell did not confer authority on petitioner Ernesto as agent to sell their respective
shares in the questioned properties, and hence, for lack of written authority from the above-named petitioners to sell
their respective shares in the subject parcels of land, the supposed Contract to Sell is void as to them. Neither do their
signatures signify their consent to directly sell their shares in the questioned properties. Assuming that the signatures
indicate consent, such consent was merely conditional. The effectivity of the alleged Contract to Sell was subject to a
suspensive condition, which is the approval of the sale by all the co-owners.

Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary to the findings of the Court of Appeals, is
not couched in simple language.

They further claim that the supposed Contract to Sell does not bind the respondent because the latter did not sign the
said contract as to indicate its consent to be bound by its terms. Furthermore, they maintain that the supposed Contract
to Sell is really a unilateral promise to sell and the option money does not bind petitioners for lack of cause or
consideration distinct from the purchase price.

The Petition is bereft of merit.

It is true that the signatures of the ve petitioners, namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the
Contract to Sell did not confer authority on petitioner Ernesto as agent authorized to sell their respective shares in the
questioned properties because of Article 1874 of the Civil Code, which expressly provides that:

Art. 1874. 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.

The law itself explicitly requires a written authority before an agent can sell an immovable. The conferment of such an
authority should be in writing, in as clear and precise terms as possible. It is worth noting that petitioners' signatures are
found in the Contract to Sell. The Contract is absolutely silent on the establishment of any principal-agent relationship
between the ve petitioners and their brother and co-petitioner Ernesto as to the sale of the subject parcels of land. Thus,
the Contract to Sell, although signed on the margin by the ve petitioners, is not su cient to confer authority on petitioner
Ernesto to act as their agent in selling their shares in the properties in question.

However, despite petitioner Ernesto's lack of written authority from the ve petitioners to sell their shares in the subject
parcels of land, the supposed Contract to Sell remains valid and binding upon the latter.

As can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who signed the said Contract to Sell;
the other ve petitioners also personally a xed their signatures thereon. Therefore, a written authority is no longer
necessary in order to sell their shares in the subject parcels of land because, by a xing their signatures on the Contract to
Sell, they were not selling their shares through an agent but, rather, they were selling the same directly and in their own
right. SCIcTD

The Court also nds untenable the following arguments raised by petitioners to the effect that the Contract to Sell is not
binding upon them, except to Ernesto, because: (1) the signatures of ve of the petitioners do not signify their consent to
sell their shares in the questioned properties since petitioner Enriqueta merely signed as a witness to the said Contract to
Sell, and that the other petitioners, namely: Librado, Rizalino, Leonora, and Bibiano, Jr., did not understand the
importance and consequences of their action because of their low degree of education and the contents of the
aforesaid contract were not read nor explained to them; and (2) assuming that the signatures indicate consent, such
consent was merely conditional, thus, the effectivity of the alleged Contract to Sell was subject to a suspensive
condition, which is the approval by all the co-owners of the sale.

It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made
by the offeror. From that moment, the parties are bound

not only to the fulfilment of what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law. To produce a contract, the acceptance must not
qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to arise, the
acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it
is made known to the offeror. 13

In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of
their shares in the subject parcels of land by Fixing their signatures on the said contract. Such signatures show their
acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners' signatures.

As to petitioner Enriqueta's claim that she merely signed as a witness to the said contract, the contract itself does not say
so. There was no single indication in the said contract that she signed the same merely as a witness. The fact that her
signature appears on the right-hand margin of the Contract to Sell is insigni cant. The contract indisputably referred to
the "Heirs of Bibiano and Encarnacion Oesmer," and since there is no showing that Enriqueta signed the document in
some other capacity, it can be safely assumed that she did so as one of the parties to the sale.

Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta concurrently signed the Contract to Sell.
As the Court of Appeals mentioned in its Decision, the records of the case speak of the fact that petitioner Ernesto,
together with petitioner

Enriqueta, met with the representatives of the respondent in order to nalize the terms and conditions of the Contract to
Sell. Enriqueta a xed her signature on the said contract when the same was drafted. She even admitted that she
understood the undertaking that she and petitioner Ernesto made in connection with the contract. She likewise
disclosed that pursuant to the terms embodied in the Contract to Sell, she updated the payment of the real property
taxes and transferred the Tax Declarations of the questioned properties in her name. 15 Hence, it cannot be gainsaid
that she merely signed the Contract to Sell as a witness because she did not only actively participate in the negotiation
and execution of the same, but her subsequent actions also reveal an attempt to comply with the conditions in the said
contract.

With respect to the other petitioners' assertion that they did not understand the importance and consequences of their
action because of their low degree of education and because the contents of the aforesaid contract were not read
nor explained to them, the same cannot be sustained.
We only have to quote the pertinent portions of the Court of Appeals Decision, clear and concise, to dispose of this
issue. Thus,

First, the Contract to Sell is couched in such a simple language which is undoubtedly easy to read and understand. The
terms of the Contract, speci cally the amount of P100,000.00 representing the option money paid by [respondent]
corporation, the purchase price of P60.00 per square meter or the total amount of P3,316,560.00 and a brief description
of the subject properties are well-indicated thereon that any prudent and mature man would have known the nature
and extent of the transaction encapsulated in the document that he was signing. ISCcAT

Second, the following circumstances, as testi ed by the witnesses and as can be gleaned from the records of the case
clearly indicate the [petitioners'] intention to be bound by the stipulations chronicled in the said Contract to Sell.

As to [petitioner] Ernesto, there is no dispute as to his intention to effect the alienation of the subject property as he in
fact was the one who initiated the negotiation process and culminated the same by a xing his signature on the
Contract to Sell and by taking receipt of the amount of P100,000.00 which formed part of the purchase price.

xxx xxx xxx

As to [petitioner] Librado, the [appellate court] nds it preposterous that he willingly a xed his signature on a document
written in a language (English) that he purportedly does not understand. He testi ed that the document was just brought
to him by an 18 year old niece named Baby and he was told that the document was for a check to be paid to him. He
readily signed the Contract to Sell without consulting his other siblings. Thereafter, he exerted no effort in communicating
with his brothers and sisters regarding the document which he had signed, did not inquire what the check was for and
did not thereafter ask for the check which is purportedly due to him as a result of his signing the said Contract to Sell.
(TSN, 28 September 1993, pp. 22-23)

The [appellate court] notes that Librado is a 43 year old family man (TSN, 28 September 1993, p. 19). As such, he is
expected to act with that ordinary degree of care and prudence expected of a good father of a family. His unwitting
testimony is just divinely disbelieving.

The other [petitioners] (Rizalino, Leonora and Bibiano Jr.) are likewise bound by the said Contract to Sell. The theory
adopted by the [petitioners] that because of their low degree of education, they did not understand the contents of
the said Contract to Sell is devoid of merit. The [appellate court] also notes that Adolfo (one of the co-heirs who did not
sign) also possess the same degree of education as that of the signing co-heirs (TSN, 15 October 1991, p. 19). He,
however, is employed at the Provincial Treasury O ce at Trece Martirez, Cavite and has even accompanied Rogelio
Paular to the Assessor's O ce to locate certain missing documents which were needed to transfer the titles of the subject
properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the other co-heirs [petitioners], like Adolfo, are far from ignorant,
more so, illiterate that they can be extricated from their obligations under the Contract to Sell which they voluntarily and
knowingly entered into with the [respondent] corporation.

The Supreme Court in the case of Cecilia Mata v. Court of Appeals (207 SCRA 753 [1992]), citing the case of Tan Sua Sia
v. Yu Baio Sontua (56 Phil. 711), instructively ruled as follows:

"The Court does not accept the petitioner's claim that she did not understand the terms and conditions of the
transactions because she only reached Grade Three and was already 63 years of age when she signed the documents.
She was literate, to begin with, and her age did not make her senile or incompetent. . . . .

At any rate, Metrobank had no obligation to explain the documents to the petitioner as nowhere has it been proven
that she is unable to read or that the contracts were written in a language not known to her. It was her responsibility to
inform herself of the meaning and consequence of the contracts she was signing and, if she found them di cult to
comprehend, to consult other persons, preferably lawyers, to explain them to her. After all, the transactions involved not
only a few hundred or thousand pesos but, indeed, hundreds of thousands of pesos. TECcHA

As the Court has held:

. . . The rule that one who signs a contract is presumed to know its contents has been applied even to contracts
of illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to have the
contract read to them. If a person cannot read the instrument, it is as much his duty to procure some reliable persons to
read and explain it to him, before he signs it, as it would be to read it before he signed it if he were able to do and his
failure to obtain a reading and explanation of it is such gross negligence as will estop from avoiding it on the ground that
he was ignorant of its contents." 16

That the petitioners really had the intention to dispose of their shares in the subject parcels of land, irrespective of
whether or not all of the heirs consented to the said Contract to Sell, was unveiled by Adolfo's testimony as follows:

ATTY. GAMO:
This alleged agreement between you and your other brothers and sisters that unless everybody will agree, the properties
would not be sold, was that agreement in writing?
WITNESS:
No sir.
ATTY. GAMO:
What you are saying is that when your brothers and sisters except Jesus and you did not sign that agreement which had
been marked as [Exhibit] "D", your brothers and sisters were grossly violating your agreement.
WITNESS:
Yes, sir, they violated what we have agreed upon. 17
We also cannot sustain the allegation of the petitioners that assuming the signatures indicate consent, such consent was
merely conditional, and that, the effectivity of the alleged Contract to Sell was subject to the suspensive condition that
the sale be approved by all the co-owners. The Contract to Sell is clear enough. It is a cardinal rule in the interpretation
of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall control. 18 The terms of the Contract to Sell made no mention of the condition
that before it can become valid and binding, a unanimous consent of all the heirs is necessary. Thus, when the
language of the contract is explicit, as in the present case, leaving no doubt as to the intention of the parties thereto,
the literal meaning of its stipulation is controlling.

In addition, the petitioners, being owners of their respective undivided shares in the subject properties, can dispose of
their shares even without the consent of all the co-heirs. Article 493 of the Civil Code expressly provides:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits and bene ts pertaining thereto, and
he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. [Emphases
supplied.]

Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the Contract to Sell is still valid and
binding with respect to the 6/8 proportionate shares of the petitioners, as properly held by the appellate court.

Therefore, this Court nds no error in the ndings of the Court of Appeals that all the petitioners who were signatories in the
Contract to Sell are bound thereby.

The nal arguments of petitioners state that the Contract to Sell is void altogether considering that respondent itself did
not sign it as to indicate its consent to be bound by its terms; and moreover, the Contract to Sell is really a unilateral
promise to sell without consideration distinct from the price, and hence, again, void. Said arguments must necessarily
fail.

The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation.
Respondent corporation's consent to be bound by the terms of the contract is shown in the uncontroverted facts which
established that there was partial performance by respondent of its obligation in the said Contract to Sell when it
tendered the amount of P100,000.00 to form part of the purchase price, which was accepted and acknowledged
expressly by petitioners. Therefore, by force of law, respondent is required to complete the payment to enforce the
terms of the contract. Accordingly, despite the absence of respondent's signature in the Contract to Sell, the former
cannot evade its obligation to pay the balance of the purchase price.

As a nal point, the Contract to Sell entered into by the parties is not a unilateral promise to sell merely because it used
the word option money when it referred to the amount of P100,000.00, which also form part of the purchase price.

Settled is the rule that in the interpretation of contracts, the ascertainment of the intention of the contracting parties is to
be discharged by looking to the words they used to project that intention in their contract, all the words, not just a
particular word or two, and words in context, not words standing alone.

In the instant case, the consideration of P100,000.00 paid by respondent to petitioners was referred to as "option money."
However, a careful examination of the words used in the contract indicates that the money is not option money but
earnest money. "Earnest money" and "option money" are not the same but distinguished thus: (a) earnest money is part
of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b)
earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and,
(c) when earnest money is given, the buyer is bound to pay the balance, while when the would -be buyer gives option
money, he is not required to buy, but may even forfeit it depending on the terms of the option.

The sum of P100,000.00 was part of the purchase price. Although the same was denominated as "option money," it is
actually in the nature of earnest money or down payment when considered with the other terms of the contract.
Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial
court and the appellate court declared in their Decisions.

WHEREFORE, premises considered, the Petition is DENIED, and the Decision and Resolution of the Court of Appeals dated
26 April 2002 and 4 March 2003, respectively, are AFFIRMED, thus, (a) the Contract to Sell is DECLARED valid and binding
with respect to the undivided proportionate shares in the subject parcels of land of the six signatories of the said
document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); (b)
respondent is ORDERED to tender payment to petitioners in the amount of P3,216,560.00 representing the balance of the
purchase price for the latter's shares in the subject parcels of land; and (c) petitioners are further ORDERED to execute in
favor of respondent the Deed of Absolute Sale covering their shares in the subject parcels of land after receipt of the
balance of the purchase price, and to pay respondent attorney's fees plus costs of the suit. Costs against petitioners.

SO ORDERED.

Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur

FIRST DIVISION
[G.R. No. 147839. June 8, 2006.]
GAISANO CAGAYAN, INC., petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA, respondent.
 DECISION

AUSTRIA-MARTINEZ, J p:

Before the Court is a petition for review on certiorari of the Decision 1 dated October 11, 2000 of the Court of Appeals
(CA) in CA-G.R. CV No. 61848 which set aside the Decision dated August 31, 1998 of the Regional Trial Court, Branch 138,
Makati (RTC) in Civil Case No. 92-322 and upheld the causes of action for damages of Insurance Company of North
America (respondent) against Gaisano Cagayan, Inc. (petitioner); and the CA Resolution dated April 11, 2001 which
denied petitioner's motion for reconsideration.

The factual background of the case is as follows:

Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Levi Strauss (Phils.) Inc. (LSPI) is the local
distributor of products bearing trademarks owned by Levi Strauss & Co.. IMC and LSPI separately obtained from
respondent re insurance policies with book debt endorsements. The insurance policies provide for coverage on "book
debts in connection with ready-made clothing materials which have been sold or delivered to various customers and
dealers of the Insured anywhere in the Philippines." 2 The policies de ned book debts as the "unpaid account still
appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy." 3 The
policies also provide for the following conditions:

1. Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise sold and
delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6) months from the date
of the covering invoice or actual delivery of the merchandise whichever shall first occur.
2. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every
calendar month all amount shown in their books of accounts as unpaid and thus become receivable item from their
customers and dealers. . . .

Petitioner is a customer and dealer of the products of IMC and LSPI. On February 25, 1991, the Gaisano Superstore
Complex in Cagayan de Oro City, owned by petitioner, was consumed by re. Included in the items lost or destroyed in
the re were stocks of ready-made clothing materials sold and delivered by IMC and LSPI.

On February 4, 1992, respondent led a complaint for damages against petitioner. It alleges that IMC and LSPI led with
respondent their claims under their respective re insurance policies with book debt endorsements; that as of February 25,
1991, the unpaid accounts of petitioner on the sale and delivery of ready -made clothing materials with IMC was
P2,119,205.00 while with LSPI it was P535,613.00; that respondent paid the claims of IMC and LSPI and, by virtue thereof,
respondent was subrogated to their rights against petitioner; that respondent made several demands for payment upon
petitioner but these went unheeded. 5

In its Answer with Counter Claim dated July 4, 1995, petitioner contends that it could not be held liable because the
property covered by the insurance policies were destroyed due to fortuities event or force majeure; that respondent's
right of subrogation has no basis inasmuch as there was no breach of contract committed by it since the loss was due to
re which it could not prevent or foresee; that IMC and LSPI never communicated to it that they insured their properties;
that it never consented to paying the claim of the insured. 6

At the pre -trial conference the parties failed to arrive at an amicable settlement. 7 Thus, trial on the merits ensued.

On August 31, 1998, the RTC rendered its decision dismissing respondent's complaint. 8 It held that the re was purely
accidental; that the cause of the re was not attributable to the negligence of the petitioner; that it has not been
established that petitioner is the debtor of IMC and LSPI; that since the sales invoices state that "it is further agreed that
merely for purpose of securing the payment of purchase price, the above- described merchandise remains the property
of the vendor until the purchase price is fully paid", IMC and LSPI retained ownership of the delivered goods and must
bear the loss.

Dissatis ed, petitioner appealed to the CA. 9 On October 11, 2000, the CA rendered its decision setting aside the
decision of the RTC. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing, the appealed decision is REVERSED and SET ASIDE and a new one is entered
ordering defendant-appellee Gaisano Cagayan, Inc. to pay:

1. the amount of P2,119,205.60 representing the amount paid by the plaintiff-appellant to the insured Inter Capitol
Marketing Corporation, plus legal interest from the time of demand until fully paid;
2. the amount of P535,613.00 representing the amount paid by the plaintiff-appellant to the insured Levi Strauss
Phil., Inc., plus legal interest from the time of demand until fully paid.

With costs against the defendant-appellee.

SO ORDERED. 10

The CA held that the sales invoices are proofs of sale, being detailed statements of the nature, quantity and cost of the
thing sold; that loss of the goods in the re must be borne by petitioner since the proviso contained in the sales invoices is
an exception under Article 1504 (1) of the Civil Code, to the general rule that if the thing is lost by a fortuitous event, the
risk is borne by the owner of the thing at the time the loss under the principle of res perit domino; that petitioner's
obligation to IMC and LSPI is not the delivery of the lost goods but the payment of its unpaid account and as such the
obligation to pay is not extinguished, even if the re is considered a fortuitous event; that by subrogation, the insurer has
the right to go against petitioner; that, being a re insurance with book debt endorsements, what was insured was the
vendor's interest as a creditor. 11

Petitioner led a motion for reconsideration 12 but it was denied by the CA in its Resolution dated April 11, 2001. 13

Hence, the present petition for review on certiorari anchored on the following

Assignment of Errors:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE INSURANCE IN THE INSTANT CASE WAS ONE OVER CREDIT.
THE COURT OF APPEALS ERRED IN HOLDING THAT ALL RISK OVER THE SUBJECT GOODS IN THE INSTANT CASE HAD
TRANSFERRED TO PETITIONER UPON DELIVERY THEREOF.
THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS AUTOMATIC SUBROGATION UNDER ART. 2207 OF THE CIVIL
CODE IN FAVOR OF RESPONDENT.

Anent the rst error, petitioner contends that the insurance in the present case cannot be deemed to be over credit
since an insurance "on credit" belies not only the nature of re insurance but the express terms of the policies; that it was
not credit that was insured since respondent paid on the occasion of the loss of the insured goods to re and not
because of the non-payment by petitioner of any obligation; that, even if the insurance is deemed as one over credit,
there was no loss as the accounts were not yet due since no prior demands were made by IMC and LSPI against
petitioner for payment of the debt and such demands came from respondent only after it had already paid IMC and
LSPI under the fire insurance policies. 15

As to the second error, petitioner avers that despite delivery of the goods, petitioner-buyer IMC and LSPI assumed the risk
of loss when they secured re insurance policies over the goods.

Concerning the third ground, petitioner submits that there is no subrogation in favor of respondent as no valid insurance
could be maintained thereon by IMC and LSPI since all risk had transferred to petitioner upon delivery of the goods; that
petitioner was not privy to the insurance contract or the payment between respondent and its insured nor was its
consent or approval ever secured; that this lack of privity forecloses any real interest on the part of respondent in the
obligation to pay, limiting its interest to keeping the insured goods safe from fire.

For its part, respondent counters that while ownership over the ready-made clothing materials was transferred upon
delivery to petitioner, IMC and LSPI have insurable interest over said goods as creditors who stand to suffer direct
pecuniary loss from its destruction by re; that petitioner is liable for loss of the ready-made clothing materials since it
failed to overcome the presumption of liability under Article 1265 16 of the Civil Code; that the re was caused through
petitioner's negligence in failing to provide stringent measures of caution, care and maintenance on its property
because electric wires do not usually short circuit unless there are defects in their installation or when there is lack of
proper maintenance and supervision of the property; that petitioner is guilty of gross and evident bad faith in refusing to
pay respondent's valid claim and should be liable to respondent for contracted lawyer's fees, litigation expenses and
cost of suit. 17

As a general rule, in petitions for review, the jurisdiction of this Court in cases brought before it from the CA is limited to
reviewing questions of law which involves no examination of the probative value of the evidence presented by the
litigants or any of them. 18 The Supreme Court is not a trier of facts; it is not its function to analyze or weigh evidence all
over again. 19 Accordingly, ndings of fact of the appellate court are generally conclusive on the Supreme Court. 20

Nevertheless, jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court,
such as: (1) when the ndings are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the ndings of facts are con icting ; (6) when in making its ndings the CA
went beyond the issues of the case, or its ndings are contrary to the admissions of both the appellant and the appellee;

(7) when the ndings are contrary to the trial court ; (8) when the ndings are conclusions without citation of speci c
evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; (10) when the ndings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the CA manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different conclusion. 21 Exceptions (4), (5),
(7), and (11) apply to the present petition. cATDIH

At issue is the proper interpretation of the questioned insurance policy. Petitioner claims that the CA erred in construing a
re insurance policy on book debts as one covering the unpaid accounts of IMC and LSPI since such insurance applies to
loss of the ready-made clothing materials sold and delivered to petitioner.

The Court disagrees with petitioner's stand.

It is well-settled that when the words of a contract are plain and readily understood, there is no room for construction. 22
In this case, the questioned insurance policies provide coverage for "book debts in connection with ready-made
clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the
Philippines." 23 ; and de ned book debts as the "unpaid account still appearing in the Book of Account of the Insured 45
days after the time of the loss covered under this Policy." 24 Nowhere is it provided in the questioned insurance policies
that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured.

Indeed, when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any
alleged intention of the parties, the terms are to be understood literally just as they appear on the face of the contract.
25 Thus, what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days
after the loss through fire, and not the loss or destruction of the goods delivered.

Petitioner argues that IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in the
sales invoices that "[i]t is further agreed that merely for purpose of securing the payment of the purchase price the
above described merchandise remains the property of the vendor until the purchase price thereof is fully paid." 26

The Court is not persuaded.

The present case clearly falls under paragraph (1), Article 1504 of the Civil Code:

ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the
buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual
delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the
contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of
his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; (Emphasis supplied)

Thus, when the seller retains ownership only to insure that the buyer will pay its debt, the risk of loss is borne by the buyer.
27 Accordingly, petitioner bears the risk of loss of the goods delivered.

IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the
value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for
consideration of who bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but
whether insured has substantial economic interest in the property. 28

Section 13 of our Insurance Code de nes insurable interest as "every interest in property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the
insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an
existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing
interest in that out of which the expectancy arises.

Therefore, an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession
of, the subject matter of the insurance, and neither the title nor a bene cial interest is requisite to the existence of such
an interest, it is su cient that the insured is so situated with reference to the property that he would be liable to loss should
it be injured or destroyed by the peril against which it is insured. 29 Anyone has an insurable interest in property who
derives a bene t from its existence or would suffer loss from its destruction. 30 Indeed, a vendor or seller retains an
insurable interest in the property sold so long as he has any interest therein, in other words, so long as he would suffer by
its destruction, as where he has a vendor's lien. 31 In this case, the insurable interest of IMC and LSPI pertain to the
unpaid accounts appearing in their Books of Account 45 days after the time of the loss covered by the policies.

The next question is: Is petitioner liable for the unpaid accounts?

Petitioner's argument that it is not liable because the re is a fortuitous event under Article 1174 32 of the Civil Code is
misplaced. As held earlier, petitioner bears the loss under Article 1504 (1) of the Civil Code.

Moreover, it must be stressed that the insurance in this case is not for loss of goods by re but for petitioner's accounts with
IMC and LSPI that remained unpaid 45 days after the re. Accordingly, petitioner's obligation is for the payment of
money. As correctly stated by the CA, where the obligation consists in the payment of money, the failure of the debtor
to make the payment even by reason of a fortuitous event shall not relieve him of his liability. 33 The rationale for this is
that the rule that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds
true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even
in case of fortuitous event. It does not apply when the obligation is pecuniary in nature. 34

Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or destruction of anything of
the same kind does not extinguish the obligation." If the obligation is generic in the sense that the object thereof is
designated merely by its class or genus without any particular designation or physical segregation from all others of the
same class, the loss or destruction of anything of the same kind even without the debtor's fault and before he has
incurred in delay will not have the effect of extinguishing the obligation. 35 This rule is based on the principle that the
genus of a thing can never perish. Genus nunquan perit . 36 An obligation to pay money is generic; therefore, it is not
excused by fortuitous loss of any specific property of the debtor. 37

Thus, whether re is a fortuitous event or petitioner was negligent are matters immaterial to this case. What is relevant here
is whether it has been established that petitioner has outstanding accounts with IMC and LSPI. HcSETI

With respect to IMC, the respondent has adequately established its claim. Exhibits "C" to "C-22" 38 show that petitioner
has an outstanding account with IMC in the amount of P2,119,205.00. Exhibit "E" 39 is the check voucher evidencing
payment to IMC. Exhibit "F" 40 is the subrogation receipt executed by IMC in favor of respondent upon receipt of the
insurance proceeds. All these documents have been properly identi ed, presented and marked as exhibits in court. The
subrogation receipt, by itself, is su cient to establish not only the relationship of respondent as insurer and IMC as the
insured, but also the amount paid to settle the insurance claim. The right of subrogation accrues simply upon payment
by the insurance company of the insurance claim. 41 Respondent's action against petitioner is squarely sanctioned by
Article 2207 of the Civil Code which provides:

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the
injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated
to the rights of the insured against the wrongdoer or the person who has violated the contract. . . .

Petitioner failed to refute respondent's evidence.

As to LSPI, respondent failed to present su cient evidence to prove its cause of action. No evidentiary weight can be
given to Exhibit "F Levi Strauss", 42 a letter dated April 23, 1991 from petitioner's General Manager, Stephen S. Gaisano,
Jr., since it is not an admission of petitioner's unpaid account with LSPI. It only con rms the loss of Levi's products in the
amount of P535,613.00 in the re that razed petitioner's building on February 25, 1991.

Moreover, there is no proof of full settlement of the insurance claim of LSPI; no subrogation receipt was offered in
evidence. Thus, there is no evidence that respondent has been subrogated to any right which LSPI may have against
petitioner. Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of
P535,613.00.

WHEREFORE, the petition is partly GRANTED. The assailed Decision dated October 11, 2000 and Resolution dated April 11,
2001 of the Court of Appeals in CA- G.R. CV No. 61848 are AFFIRMED with the MODIFICATION that the order to pay the
amount of P535,613.00 to respondent is DELETED for lack of factual basis.

No pronouncement as to costs.

SO ORDERED.

Panganiban, C.J., Callejo, Sr. and Chico-Nazario, JJ., concur.

Ynares-Santiago, J., is on leave.