G.R. No.
132305 December 4, 2001 unusual and questionable that petitioner registered the deed of sale only on January
IDA C. LABAGALA, petitioner,
vs.
NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON. COURT OF
APPEALS, respondents.
QUISUMBING, J.:
This petition for review on certiorari seeks to annul the decision dated March 4,
1997,1 of the Court of Appeals in CA-G.R. CV No. 32817, which reversed and set
aside the judgment dated October 17, 1990, 2 of the Regional Trial Court of Manila,
Branch 54, in Civil Case No.87-41515, finding herein petitioner to be the owner of
1/3 pro indiviso share in a parcel of land. 1âwphi1.nêt
The pertinent facts of the case, as borne by the records, are as follows:
Jose T. Santiago owned a parcel of land covered by TCT No. 64729, located in Rizal
Avenue Extension, Sta. Cruz, Manila. Alleging that Jose had fraudulently registered it
in his name alone, his sisters Nicolasa and Amanda (now respondents herein) sued
Jose for recovery of 2/3 share of the property. 3 On April 20, 1981, the trial court in
that case decided in favor of the sisters, recognizing their right of ownership over
portions of the property covered by TCT No. 64729. The Register of Deeds of Manila
was required to include the names of Nicolasa and Amanda in the certificate of title to
said property.4
Jose died intestate on February 6, 1984. On August 5, 1987, respondents filed a
complaint for recovery of title, ownership, and possession against herein petitioner,
Ida C. Labagala, before the Regional Trial Court of Manila, to, recover from her the
1/3 portion of said property pertaining to Jose but which came into petitioner's sole
possession upon Jose's death.
Respondents alleged that Jose's share in the property belongs to them by operation
of law, because they are the only legal heirs of their brother, who died intestate and
without issue. They claimed that the purported sale of the property made by their
brother to petitioner sometime in March 19795 was executed through petitioner's
machinations and with malicious intent, to enable her to secure the corresponding
transfer certificate of title (TCT No. 1723346) in petitioner's name alone.7
Respondents insisted that the deed of sale was a forgery .The deed showed that
Jose affixed his thumbmark thereon but respondents averred that, having been able
to graduate from college, Jose never put his thumb mark on documents he executed
but always signed his name in full. They claimed that Jose could not have sold the
property belonging to his "poor and unschooled sisters who. ..sacrificed for his studies
and personal welfare."8Respondents also pointed out that it is highly improbable for
petitioner to have paid the supposed consideration of P150,000 for the sale of the
subject property because petitioner was unemployed and without any visible means
of livelihood at the time of the alleged sale. They also stressed that it was quite
26, 1987, or almost eight years after the execution of the sale. 9
On the other hand, petitioner claimed that her true name is not Ida C. Labagala as
claimed by respondent but Ida C. Santiago. She claimed not to know any person by
the name of Ida C. Labagala. She claimed to be the daughter of Jose and thus
entitled to his share in the subject property. She maintained that she had always
stayed on the property, ever since she was a child. She argued that the purported
sale of the property was in fact a donation to her, and that nothing could have
precluded Jose from putting his thumbmark on the deed of sale instead of his
signature. She pointed out that during his lifetime, Jose never acknowledged
respondents' claim over the property such that respondents had to sue to claim
portions thereof. She lamented that respondents had to disclaim her in their desire to
obtain ownership of the whole property.
Petitioner revealed that respondents had in 1985 filed two ejectment cases against
her and other occupants of the property. The first was decided in her and the other
defendants' favor, while the second was dismissed. Yet respondents persisted and
resorted to the present action.
Petitioner recognized respondents' ownership of 2/3 of the property as decreed by the
RTC. But she averred that she caused the issuance of a title in her name alone,
allegedly after respondents refused to take steps that would prevent the property from
being sold by public auction for their failure to pay realty taxes thereon. She added
that with a title issued in her name she could avail of a realty tax amnesty.
On October 17, 1990, the trial court ruled in favor of petitioner, decreeing thus:
WHEREFORE, judgment is hereby rendered recognizing the plaintiffs
[herein respondents] as being entitled to the ownership and possession each
of one-third (1/3) pro indiviso share of the property originally covered by
Transfer Certificate of Title No. 64729, in the name of Jose T. Santiago and
presently covered by Transfer Certificate of Title No. 172334, in the name of
herein defendant [herein petitioner] and which is located at No. 3075-A Rizal
Avenue Extension, Sta. Cruz, Manila, as per complaint, and the adjudication
to plaintiffs per decision in Civil Case No. 56226 of this Court, Branch VI,
and the remaining one-third (1/3) proindiviso share adjudicated in said
decision to defendant Jose T. Santiago in said case, is hereby adjudged and
adjudicated to herein defendant as owner and entitled to possession of said
share. The Court does not see fit to adjudge damages, attorney's fees and
costs. Upon finality of this judgment, Transfer Certificate of Title No. 172334
is ordered cancelled and a new title issued in the names of the two (2)
plaintiffs and the defendant as owners in equal shares, and the Register of
Deeds of Manila is so directed to effect the same upon payment of the
proper fees by the parties herein.
SO ORDERED.10
According to the trial court, while there was indeed no consideration for the deed of
sale executed by Jose in favor of petitioner, said deed constitutes a valid donation.
Even if it were not, petitioner would still be entitled to Jose's 1/3 portion of the
property as Jose's daughter. The trial court ruled that the following evidence shows
petitioner to be the daughter of Jose: (1) the decisions in the two ejectment cases
filed by respondents which stated that petitioner is Jose's daughter, and (2) Jose's
income tax return which listed petitioner as his daughter. It further said that
respondents knew of petitioner's existence and her being the daughter of Jose, per
records of the earlier ejectment cases they filed against petitioner. According to the
court, respondents were not candid with the court in refusing to recognize petitioner
as Ida C. Santiago and insisting that she was Ida C. Labagala, thus affecting their
credibility.
Respondents appealed to the Court of Appeals, which reversed the decision of the
trial court.
WHEREFORE, the appealed decision is REVERSED and one is entered
declaring the appellants Nicolasa and Amanda Santiago the co-owners in
equal shares of the one-third (1/3) pro indiviso share of the late Jose
Santiago in the land and building covered by TCT No. 172334. Accordingly,
the Register of Deeds of Manila is directed to cancel said title and issue in its
place a new one reflecting this decision.
SO ORDERED.
Apart from respondents' testimonies, the appellate court noted that the birth certificate
of Ida Labagala presented by respondents showed that Ida was born of different
parents, not Jose and his wife. It also took into account the statement made by Jose
in Civil Case No. 56226 that he did not have any child.
Hence, the present petition wherein the following issues are raised for consideration:
1. Whether or not petitioner has adduced preponderant evidence to prove that she is
the daughter of the late Jose T. Santiago, and
2. Whether or not respondents could still impugn the filiation of the petitioner as the
daughter of the late Jose T. Santiago.
Petitioner contends that the trial court was correct in ruling that she had adduced
sufficient evidence to prove her filiation by Jose Santiago, making her his sole heir
and thus entitled to inherit his 1/3 portion. She points out that respondents had,
before the filing of the instant case, previously "considered" 11 her as the daughter of
Jose who, during his lifetime, openly regarded her as his legitimate daughter. She
asserts that her identification as Jose's daughter in his ITR outweighs the "strange"
answers he gave when he testified in Civil Case No. 56226.
Petitioner asserts further that respondents cannot impugn her filiation collaterally,
citing the case of Sayson v. Court of Appeals12 in which we held that "(t)he legitimacy
of (a) child can be impugned only in a direct action brought for that purpose, by the
proper parties and within the period limited by law." 13 Petitioner also cites Article 263
of the Civil Code in support of this contention.14
For their part, respondents contend that petitioner is not the daughter of Jose, per her
birth certificate that indicates her parents as Leo Labagala and Cornelia Cabrigas,
instead of Jose Santiago and Esperanza Cabrigas. 15 They argue that the provisions
of Article 263 of the Civil Code do not apply to the present case since this is not an
action impugning a child's legitimacy but one for recovery of title, ownership, and
possession of property .
The issues for resolution in this case, to our mind, are (1) whether or not respondents
may impugn petitioner's filiation in this action for recovery of title and possession; and
(2) whether or not petitioner is entitled to Jose's 1/3 portion of the property he co-
owned with respondents, through succession, sale, or donation.
On the first issue, we find petitioner's reliance on Article 263 of the Civil Code to be
misplaced. Said article provides:
.Art. 263. The action to impugn the legitimacy of the child shall be brought
within one year from the recording of the birth in the Civil Register, if the
husband should be in the same place, or in a proper case, any of his heirs.
If he or his heirs are absent, the period shall be eighteen months if they
should reside in the Philippines; and two years if abroad. If the birth of the
child has been concealed, the term shall be counted from the discovery of
the fraud.
This article should be read in conjunction with the other articles in the same chapter
on paternity and filiation in the Civil Code. A careful reading of said chapter would
reveal that it contemplates situations where a doubt exists that a child is indeed a
man's child by his wife, and the husband (or, in proper cases, his heirs) denies the
child's filiation. It does not refer to situations where a child is alleged not to be the
child at all of a particular couple.16
Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove
that a person is not a man's child by his wife. However, the present case is not one
impugning petitioner's legitimacy. Respondents are asserting not merely that
petitioner is not a legitimate child of Jose, but that she is not a child of Jose at
all.17Moreover, the present action is one for recovery of title and possession, and thus
outside the scope of Article 263 on prescriptive periods.
Petitioner's reliance on Sayson is likewise improper. The factual milieu present
in Sayson does not obtain in the instant case. What was being challenged by
petitioners in Sayson was (1) the validity of the adoption of Delia and Edmundo by the
deceased Teodoro and Isabel Sayson, and (2) the legitimate status of Doribel
Sayson. While asserting that Delia and Edmundo could not have been validly adopted
since Doribel had already been born to the Sayson couple at the time, petitioners at
the same time made the conflicting claim that Doribel was not the child of the couple.
The Court ruled in that case that it was too late to question the decree of adoption
that became final years before. Besides, such a challenge to the validity of the
adoption cannot be made collaterally but in a direct proceeding. 18
In this case, respondents are not assailing petitioner's legitimate status but are,
instead, asserting that she is not at all their brother's child. The birth certificate
presented by respondents support this allegation.
We agree with the Court of Appeals that:
The Certificate. of Record of Birth (Exhibit H)19 plainly states that... Ida was
the child of the spouses Leon Labagala and [Cornelia] Cabrigas. This
document states that it was Leon Labagala who made the report to the Local
Civil Registrar and therefore the supplier of the entries in said Certificate.
Therefore, this certificate is proof of the filiation of Ida. Appellee however
denies that Exhibit H is her Birth Certificate. She insists that she is not Ida
Labagala but Ida Santiago. If Exhibit H is not her birth certificate, then where
is hers? She did not present any though it would have been the easiest thing
to do considering that according to her baptismal certificate she was born in
Manila in 1969. This court rejects such denials and holds that Exhibit H is
the certificate of the record of birth of appellee Ida...
Against such evidence, the appellee Ida could only present her testimony
and a baptismal certificate (Exhibit 12) stating that appellee's parents were
Jose Santiago and Esperanza Cabrigas. But then, a decisional rule in
evidence states that a baptismal certificate is not a proof of the parentage of
the baptized person. This document can only prove the identity of the
baptized, the date and place of her baptism, the identities of the baptismal
sponsors and the priest who administered the sacrament -- nothing
more.20 (Citations omitted.)
At the pre-trial conducted on August 11, 1988, petitioner's counsel admitted that
petitioner did not have a birth certificate indicating that she is Ida Santiago, though
she had been using this name all her life.21
Petitioner opted not to present her birth certificate to prove her relationship with Jose
and instead offered in evidence her baptismal certificate.22 However, as we held
in Heirs of Pedro Cabais v. Court of Appeals :
...a baptismal certificate is evidence only to prove the administration of the
sacrament on the dates therein specified, but not the veracity of the
declarations therein stated with respect to [a person's] kinsfolk. The same is
conclusive only of the baptism administered, according to the rites of the
Catholic Church, by the priest who baptized subject child, but it does not
prove the veracity of the declarations and statements contained in the
certificate concerning the relationship of the person baptized.23
A baptismal certificate, a private document, is not conclusive proof of filiation. 24 More
so are the entries made in an income tax return, which only shows that income tax
has been paid and the amount thereof.25
We note that the trial court had asked petitioner to secure a copy of her birth
certificate but petitioner, without advancing any reason therefor, failed to do so.
Neither did petitioner obtain a certification that no record of her birth could be found in
the civil registry, if such were the case. We find petitioner's silence concerning the
absence of her birth certificate telling. It raises doubt as to the existence of a birth
certificate that would show petitioner to be the daughter of Jose Santiago and
Esperanza Cabrigas. Her failure to show her birth certificate would raise the
presumption that if such evidence were presented, it would be adverse to her claim.
Petitioner's counsel argued that petitioner had been using Santiago all her life.
However, use of a family name certainly does not establish pedigree.
Further, we note that petitioner, who claims to be Ida Santiago, has the same
birthdate as Ida Labagala.26 The similarity is too uncanny to be a mere coincidence.
During her testimony before the trial court, petitioner denied knowing Cornelia
Cabrigas, who was listed as the mother in the birth certificate of Ida Labagala. In her
petition before this Court, however, she stated that Cornelia is the sister of her
mother, Esperanza. It appears that petitioner made conflicting statements that affect
her credibility and could cast along shadow of doubt on her claims of filiation.
Thus, we are constrained to agree with the factual finding of the Court of Appeals that
petitioner is in reality the child of Leon Labagala and Cornelia Cabrigas, and contrary
to her averment, not of Jose Santiago and Esperanza Cabrigas. Not being a child of
Jose, it follows that petitioner can not inherit from him through intestate succession. It
now remains to be seen whether the property in dispute was validly transferred to
petitioner through sale or donation.
On the validity of the purported deed of sale, however, we agree with the Court of
Appeals that:
...This deed is shot through and through with so many intrinsic defects that a
reasonable mind is inevitably led to the conclusion that it is fake. The
intrinsic defects are extractable from the following questions: a) If Jose
Santiago intended to donate the properties in question to Ida, what was the
big idea of hiding the nature of the contract in the facade of the sale? b) If
the deed is a genuine document, how could it have happened that Jose
Santiago who was of course fully aware that he owned only 1/3 pro
indiviso of the properties covered by his title sold or donated the whole
properties to Ida? c) Why in heaven's name did Jose Santiago, a college
graduate, who always signed his name in documents requiring his signature
(citation omitted) [affix] his thumbmark on this deed of sale? d) If Ida was
[the] child of Jose Santiago, what was the sense of the latter donating his
properties to her when she would inherit them anyway upon his death? e)
Why did Jose Santiago affix his thumbmark to a deed which falsely stated
that: he was single (for he was earlier married to Esperanza Cabrigas ); Ida
was of legal age (for [ s ]he was then just 15 years old); and the subject
properties were free from liens and encumbrances (for Entry No. 27261,
Notice of Adverse Claim and Entry No. 6388, Notice of Lis Pendens were
already annotated in the title of said properties). If the deed was executed in
 1979, how come it surfaced only in 1984 after the death of Jose Santiago
and of all people, the one in possession was the baptismal sponsor of Ida? 27
Clearly, there is no valid sale in this case. Jose did not have the right to transfer
ownership of the entire property to petitioner since 2/3 thereof belonged to his
sisters.28 Petitioner could not have given her consent to the contract, being a minor at
the time.29 Consent of the contracting parties is among the essential requisites of a
contract,30 including one of sale, absent which there can be no valid contract.
Moreover, petitioner admittedly did not pay any centavo for the property, 31 which
makes the sale void. Article 1471 of the Civil Code provides:
Art. 1471. If the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.
Neither may the purported deed of sale be a valid deed of donation. Again, as
explained by the Court of Appeals:
...Even assuming that the deed is genuine, it cannot be a valid donation. It
lacks the acceptance of the donee required by Art. 725 of the Civil Code.
Being a minor in 1979, the acceptance of the donation should have been
made by her father, Leon Labagala or [her] mother Cornelia Cabrigas or her
legal representative pursuant to Art. 741 of the same Code. No one of those
mentioned in the law - in fact no one at all - accepted the "donation" for
Ida.32
In sum, we find no reversible error attributable to the assailed decision of the Court of
Appeals, hence it must be upheld. 1âwphi1.nêt
WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals in
CA-G.R. CY No. 32817 isAFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 168220. August 31, 2005
SPS. rudy Paragas and Corazon B. Paragas, Petitioners,
vs.
Hrs. of Dominador Balacano, namely: Dominic, Rodolfo, Nanette and Cyric, all
surnamed Balacano, represented by NANETTE BALACANO and ALFREDO
BALACANO, Respondent.
RESOLUTION
CHICO-NAZARIO, J.:
This petition for review seeks to annul the Decision 1 dated 15 February 2005 of the
Court of Appeals in CA-G.R. CV No. 64048, affirming with modification the 8 March
1999 Decision2 of the Regional Trial Court (RTC), Branch 21, of Santiago City,
Isabela, in Civil Case No. 21-2313. The petition likewise seeks to annul the
Resolution3 dated 17 May 2005 denying petitioners’ motion for reconsideration.
The factual antecedents were synthesized by the Court of Appeals in its decision.
Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot
1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago
City, Isabela] covered by TCT No. T-103297 and TCT No. T-103298 of the Registry of
Deeds of the Province of Isabela.
Gregorio and Lorenza had three children, namely: Domingo, Catalino and Alfredo, all
surnamed Balacano. Lorenza died on December 11, 1991. Gregorio, on the other
hand, died on July 28, 1996.
Prior to his death, Gregorio was admitted at the Veterans General Hospital in
Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996.
He was transferred in the afternoon of July 19, 1996 to the Veterans Memorial
Hospital in Quezon City where he was confined until his death.
Gregorio purportedly sold on July 22, 1996, or barely a week prior to his death, a
portion of Lot 1175-E (specifically consisting of 15,925 square meters from its total
area of 22,341 square meters) and the whole Lot 1175-F to the Spouses Rudy
("Rudy") and Corazon Paragas (collectively, "the Spouses Paragas") for the total
consideration of ₱500,000.00. This sale appeared in a deed of absolute sale
notarized by Atty. Alexander V. de Guzman, Notary Public for Santiago City, on the
same date – July 22, 1996 – and witnessed by Antonio Agcaoili ("Antonio") and Julia
Garabiles ("Julia"). Gregorio’s certificates of title over Lots 1175-E and 1175-F were
consequently cancelled and new certificates of title were issued in favor of the
Spouses Paragas.
The Spouses Paragas then sold on October 17, 1996 a portion of Lot 1175-E
consisting of 6,416 square meters to Catalino for the total consideration of
₱60,000.00.
Domingo’s children (Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano;…)
filed on October 22, 1996 a complaint for annulment of sale and partition against
Catalino and the Spouses Paragas. They essentially alleged – in asking for the
nullification of the deed of sale – that: (1) their grandfather Gregorio could not have
appeared before the notary public on July 22, 1996 at Santiago City because he was
then confined at the Veterans Memorial Hospital in Quezon City; (2) at the time of the
alleged execution of the deed of sale, Gregorio was seriously ill, in fact dying at that
time, which vitiated his consent to the disposal of the property; and (3) Catalino
manipulated the execution of the deed and prevailed upon the dying Gregorio to sign
his name on a paper the contents of which he never understood because of his
serious condition. Alternatively, they alleged that assuming Gregorio was of sound
and disposing mind, he could only transfer a half portion of Lots 1175-E and 1175-F
as the other half belongs to their grandmother Lorenza who predeceased Gregorio –
they claimed that Lots 1175-E and 1175-F form part of the conjugal partnership
properties of Gregorio and Lorenza. Finally, they alleged that the sale to the Spouses
Paragas covers only a 5-hectare portion of Lots 1175-E and 1175-F leaving a portion
of 6,416 square meters that Catalino is threatening to dispose. They asked for the
nullification of the deed of sale executed by Gregorio and the partition of Lots 1175-E
and 1175-F. They likewise asked for damages.
Instead of filing their Answer, the defendants Catalino and the Spouses Paragas
moved to dismiss the complaint on the following grounds: (1) the plaintiffs have no
legal capacity - the Domingo’s children cannot file the case because Domingo is still
alive, although he has been absent for a long time; (2) an indispensable party is not
impleaded – that Gregorio’s other son, Alfredo was not made a party to the suit; and
(3) the complaint states no cause of action – that Domingo’s children failed to allege a
ground for the annulment of the deed of sale; they did not cite any mistake, violence,
intimidation, undue influence or fraud, but merely alleged that Gregorio was seriously
ill. Domingo’s children opposed this motion.
The lower court denied the motion to dismiss, but directed the plaintiffs-appellees to
amend the complaint to include Alfredo as a party. Alfredo was subsequently
declared as in default for his failure to file his Answer to the Complaint.
The defendants-appellees filed their Answer with Counterclaim on May 7, 1997,
denying the material allegations of the complaint. Additionally, they claimed that: (1)
the deed of sale was actually executed by Gregorio on July 19 (or 18), 1996 and not
July 22, 1996; (2) the Notary Public personally went to the Hospital in Bayombong,
Nueva Vizcaya on July 18, 1996 to notarize the deed of sale already subject of a
previously concluded covenant between Gregorio and the Spouses Paragas; (3) at
the time Gregorio signed the deed, he was strong and of sound and disposing mind;
(4) Lots 1175-E and 1175-F were Gregorio’s separate capital and the inscription of
Lorenza’s name in the titles was just a description of Gregorio’s marital status; (5) the
entire area of Lots 1175-E and 1175-F were sold to the Spouses Paragas. They
interposed a counterclaim for damages.
At the trial, the parties proceeded to prove their respective contentions.
Plaintiff-appellant Nanette Balacano testified to prove the material allegations of their
complaint. On Gregorio’s medical condition, she declared that: (1) Gregorio, who was
then 81 years old, weak and sick, was brought to the hospital in Bayombong, Nueva
Vizcaya on June 28, 1996 and stayed there until the afternoon on July 19, 1996; (2)
thereafter, Gregorio, who by then was weak and could no longer talk and whose
condition had worsened, was transferred in the afternoon of July 19, 1996 to the
Veterans Memorial Hospital in Quezon City where Gregorio died. She claimed that
Gregorio could not have signed a deed of sale on July 19, 1996 because she stayed
at the hospital the whole of that day and saw no visitors. She likewise testified on their
agreement for attorney’s fees with their counsel and the litigation expenses they
incurred.
Additionally, the plaintiffs-appellees presented in evidence Gregorio’s medical records
and his death certificate.
Defendants-appellees, on the other hand, presented as witnesses Notary Public de
Guzman and instrumental witness Antonio to prove Gregorio’s execution of the sale
and the circumstances under the deed was executed. They uniformly declared that:
(1) on July 18, 1996, they went to the hospital in Bayombong, Nueva Vizcaya – where
Gregorio was confined – with Rudy; (2) Atty. De Guzman read and explained the
contents of the deed to Gregorio; (3) Gregorio signed the deed after receiving the
money from Rudy; (4) Julia and Antonio signed the deed as witnesses. Additionally,
Atty. De Guzman explained that the execution of the deed was merely a confirmation
of a previous agreement between the Spouses Paragas and Gregorio that was
concluded at least a month prior to Gregorio’s death; that, in fact, Gregorio had
previously asked him to prepare a deed that Gregorio eventually signed on July 18,
1996. He also explained that the deed, which appeared to have been executed on
July 22, 1996, was actually executed on July 18, 1996; he notarized the deed and
entered it in his register only on July 22, 1996. He claimed that he did not find it
necessary to state the precise date and place of execution (Bayombong, Nueva
Vizcaya, instead of Santiago City) of the deed of sale because the deed is merely a
confirmation of a previously agreed contract between Gregorio and the Spouses
Paragas. He likewise stated that of the stated ₱500,000.00 consideration in the deed,
Rudy paid Gregorio ₱450,000.00 in the hospital because Rudy had previously paid
Gregorio ₱50,000.00. For his part, Antonio added that he was asked by Rudy to take
pictures of Gregorio signing the deed. He also claimed that there was no entry on the
date when he signed; nor did he remember reading Santiago City as the place of
execution of the deed. He described Gregorio as still strong but sickly, who got up
from the bed with Julia’s help.
Witness for defendants-appellants Luisa Agsalda testified to prove that Lot 1175-E
was Gregorio’s separate property. She claimed that Gregorio’s father (Leon)
purchased a two-hectare lot from them in 1972 while the other lot was purchased
from her neighbor. She also declared that Gregorio inherited these lands from his
father Leon; she does not know, however, Gregorio’s brothers’ share in the
inheritance. Defendant-appellant Catalino also testified to corroborate the testimony
of witness Luisa Agsalda; he said that Gregorio told him that he (Gregorio) inherited
Lots 1175-E and 1175-F from his father Leon. He also stated that a portion of Lot
1175-E consisting of 6,416 square meters was sold to him by the Spouses Paragas
and that he will pay the Spouses Paragas ₱50,000.00, not as consideration for the
return of the land but for the transfer of the title to his name.
Additionally, the defendants-appellants presented in evidence the pictures taken by
Antonio when Gregorio allegedly signed the deed.4
The lower court, after trial, rendered the decision declaring null and void the deed of
sale purportedly executed by Gregorio Balacano in favor of the spouses Rudy
Paragas and Corazon Paragas. In nullifying the deed of sale executed by Gregorio,
the lower court initially noted that at the time Gregorio executed the deed, Gregorio
was ill. The lower court’s reasoning in declaring the deed of sale null and void and
this reasoning’s premises may be summarized as follows: (1) the deed of sale was
improperly notarized; thus it cannot be considered a public document that is usually
accorded the presumption of regularity; (2) as a private document, the deed of sale’s
due execution must be proved in accordance with Section 20, Rule 132 of the
Revised Rules on Evidence either: (a) by anyone who saw the document executed or
written; or (b) by evidence of the genuineness of the signature or handwriting of the
maker; and (3) it was incumbent upon the Spouses Paragas to prove the deed of
sale’s due execution but failed to do so – the lower court said that witness Antonio
Agcaoili is not credible while Atty. Alexander De Guzman is not reliable. 5
The lower court found the explanations of Atty. De Guzman regarding the erroneous
entries on the actual place and date of execution of the deed of sale as justifications
for a lie. The lower court said –
The Court cannot imagine an attorney to undertake to travel to another province to
notarize a document when he must certainly know, being a lawyer and by all means,
not stupid, that he has no authority to notarize a document in that province. The only
logical thing that happened was that Rudy Paragas brought the deed of sale to him
on July 22, 1996 already signed and requested him to notarize the same which he
did, not knowing that at that time the vendor was already in a hospital and [sic]
Quezon City. Of course had he known, Atty. De Guzman would not have notarized
the document. But he trusted Rudy Paragas and moreover, Gregorio Balacano
already informed him previously in June that he will sell his lands to Paragas. In
addition [sic, (,) was omitted] Rudy Paragas also told him that Balacano received an
advance of ₱50,000.00.
The intention to sell is not actual selling. From the first week of June when, according
to Atty. De Guzman, Gregorio Balacano informed him that he will sell his land to Rudy
Paragas, enough time elapsed to the time he was brought to the hospital on June 28,
1996. Had there been a meeting of the minds between Gregorio Balacano and Rudy
Paragas regarding the sale, surely Gregorio Balacano would have immediately
returned to the office of Atty. De Guzman to execute the deed of sale. He did not until
he was brought to the hospital and diagnosed to have liver cirrhosis. Because of the
seriousness of his illness, it is not expected that Gregorio Balacano would be
negotiating a contract of sale. Thus, Rudy Paragas negotiated with Catalino
Balacano, the son of Gregorio Balacano with whom the latter was staying.6
The lower court also did not consider Antonio Agcaoili, petitioner Rudy Paragas’s
driver, a convincing witness, concluding that he was telling a rehearsed story. The
lower court said –
The only portion of his testimony that is true is that he signed the document. How
could the Court believe that he brought a camera with him just to take pictures of the
signing? If the purpose was to record the proceeding for posterity, why did he not take
the picture of Atty. De Guzman when the latter was reading and explaining the
document to Gregorio Balacano? Why did he not take the picture of both Gregorio
Balacano and Atty. de Guzman while the old man was signing the document instead
of taking a picture of Gregorio Balacano alone holding a ball pen without even
showing the document being signed? Verily there is a picture of a document but only
a hand with a ball pen is shown with it. Why? Clearly the driver Antonio Agcaoili must
have only been asked by Rudy Paragas to tell a concocted story which he himself
would not dare tell in Court under oath.7
The lower court likewise noted that petitioner Rudy Paragas did not testify about the
signing of the deed of sale. To the lower court, Rudy’s refusal or failure to testify
raises a lot of questions, such as: (1) was he (Rudy) afraid to divulge the
circumstances of how he obtained the signature of Gregorio Balacano, and (2) was
he (Rudy) afraid to admit that he did not actually pay the ₱500,000.00 indicated in the
deed of sale as the price of the land?8
The lower court also ruled that Lots 1175-E and 1175-F were Gregorio’s and
Lorenza’s conjugal partnership properties. The lower court found that these lots were
acquired during the marriage because the certificates of title of these lots clearly
stated that the lots are registered in the name Gregorio, "married to Lorenza
Sumigcay." Thus, the lower court concluded that the presumption of law (under Article
160 of the Civil Code of the Philippines) that property acquired during the marriage is
presumed to belong to the conjugal partnership fully applies to Lots 1175-E and 1175-
F.9
Thus, on 8 March 1999, the RTC, Branch 21, of Santiago City, Isabela, rendered a
Decision10 in Civil Case No. 21-2313, the dispositive portion of which reads as
follows:
WHEREFORE in the light of the foregoing considerations judgment is hereby
rendered:
1. DECLARING as NULL and VOID the deed of sale purportedly executed by
Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon Paragas over
lots 1175-E and 1175-F covered by TCT Nos. T-103297 and T-103298, respectively;
2. ORDERING the cancellation of TCT Nos. T-258042 and T-258041 issued in the
name of the spouses Rudy and Corazon Paragas by virtue of the deed of sale; and
Declaring the parcel of lands, lots 1175-E and 1175-F as part of the estate of the
deceased spouses Gregorio Balacano and Lorenza Balacano.11
In the assailed Decision dated 15 February 2005, the Court of Appeals affirmed the
Decision of the trial court, with the modification that Lots 1175-E and 1175-F were
adjudged as belonging to the estate of Gregorio Balacano. The appellate court
disposed as follows:
Wherefore, premises considered, the appeal is hereby dismissed. We AFFIRM the
appealed Decision for the reasons discussed above, with the MODIFICATION that
Lots 1175-E and 1175-F belong to the estate of Gregorio Balacano.
Let a copy of this Decision be furnished the Office of the Bar Confidant for whatever
action her Office may take against Atty. De Guzman.12 (Emphasis in the original.)
Herein petitioners’ motion for reconsideration was met with similar lack of success
when it was denied for lack of merit by the Court of Appeals in its Resolution13 dated
17 May 2005.
Hence, this appeal via a petition for review where petitioners assign the following
errors to the Court of Appeals,viz:
A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN FINDING THAT THERE WAS NO
PERFECTED AND PARTIALLY EXECUTED CONTRACT OF SALE OVER LOTS
1175-E AND 1175-F PRIOR TO THE SIGNING OF THE DEED OF SALE.
B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY FAILED TO APPRECIATE THE SIGNIFICANCE OF
THE JUDICIAL ADMISSION ON THE AUTHENTICITY AND DUE EXECUTION OF
THE DEED OF SALE MADE BY THE RESPONDENTS DURING THE PRE-TRIAL
CONFERENCE.
C. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, BASED ITS CONCLUSION THAT GREGORIO’S CONSENT TO THE
SALE OF THE LOTS WAS ABSENT MERELY ON SPECULATIONS AND
SURMISES.
D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF
RESPONDENTS’ LACK OF LEGAL CAPACITY TO SUE FOR NOT BEING THE
PROPER PARTIES IN INTEREST.
E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN DISMISSING ATTY. ALEXANDER DE
GUZMAN AND ANTONIO AGCAOILI AS NOT CREDIBLE WITNESSES.14
At bottom is the issue of whether or not the Court of Appeals committed reversible
error in upholding the findings and conclusions of the trial court on the nullity of the
Deed of Sale purportedly executed between petitioners and the late Gregorio
Balacano.
To start, we held in Blanco v. Quasha15 that this Court is not a trier of facts. As such, it
is not its function to examine and determine the weight of the evidence supporting the
assailed decision. Factual findings of the Court of Appeals, which are supported by
substantial evidence, are binding, final and conclusive upon the Supreme Court, 16 and
carry even more weight when the said court affirms the factual findings of the trial
court. Moreover, well- entrenched is the prevailing jurisprudence that only errors of
law and not of facts are reviewable by this Court in a petition for review
on certiorari under Rule 45 of the Revised Rules of Court.
The foregoing tenets in the case at bar apply with greater force to the petition under
consideration because the factual findings by the Court of Appeals are in full
agreement with that of the trial court.
Specifically, the Court of Appeals, in affirming the trial court, found that there was no
prior and perfected contract of sale that remained to be fully consummated. The
appellate court explained -
In support of their position, the defendants-appellants argue that at least a month
prior to Gregorio’s signing of the deed, Gregorio and the Spouses Paragas already
agreed on the sale of Lots 1175-E and 1175-F; and that, in fact, this agreement was
partially executed by Rudy’s payment to Gregorio of ₱50,000.00 before Gregorio
signed the deed at the hospital. In line with this position, defendants-appellants posit
that Gregorio’s consent to the sale should be determined, not at the time Gregorio
signed the deed of sale on July 18, 1996, but at the time when he agreed to sell the
property in June 1996 or a month prior to the deed’s signing; and in June 1996,
Gregorio was of sound and disposing mind and his consent to the sale was in no wise
vitiated at that time. The defendants-appellants further argue that the execution or
signing of the deed of sale, however, irregular it might have been, does not affect the
validity of the previously agreed sale of the lots, as the execution or signing of the
deed is merely a formalization of a previously agreed oral contract.
...
In the absence of any note, memorandum or any other written instrument evidencing
the alleged perfected contract of sale, we have to rely on oral testimonies, which in
this case is that of Atty. de Guzman whose testimony on the alleged oral agreement
may be summarized as follows: (1) that sometime in the first week of June 1996,
Gregorio requested him (Atty. de Guzman) to prepare a deed of sale of two lots; (2)
Gregorio came to his firm’s office in the morning with a certain Doming Balacano,
then returned in the afternoon with Rudy; (3) he (Atty. de Guzman) asked Gregorio
whether he really intends to sell the lots; Gregorio confirmed his intention; (4)
Gregorio and Rudy left the law office at 5:00 p.m., leaving the certificates of title; (5)
he prepared the deed a day after Rudy and Gregorio came. With regard to the
alleged partial execution of this agreement, Atty. de Guzman said that he was told by
Rudy that there was already a partial payment of ₱50,000.00.
We do not consider Atty. de Guzman’s testimony sufficient evidence to establish the
fact that there was a prior agreement between Gregorio and the Spouses Paragas on
the sale of Lots 1175-E and 1175-F. This testimony does not conclusively establish
the meeting of the minds between Gregorio and the Spouses Paragas on the price or
consideration for the sale of Lots 1175-E and 1175-F – Atty. de Guzman merely
declared that he was asked by Gregorio to prepare a deed; he did not clearly narrate
the details of this agreement. We cannot assume that Gregorio and the Spouses
Paragas agreed to a ₱500,000.00 consideration based on Atty. de Guzman’s bare
assertion that Gregorio asked him to prepare a deed, as Atty. de Guzman was not
personally aware of the agreed consideration in the sale of the lots, not being privy to
the parties’ agreement. To us, Rudy could have been a competent witness to testify
on the perfection of this prior contract; unfortunately, the defendants-appellants did
not present Rudy as their witness.
We seriously doubt too the credibility of Atty. de Guzman as a witness. We cannot
rely on his testimony because of his tendency to commit falsity. He admitted in open
court that while Gregorio signed the deed on July 18, 1996 at Bayombong, Nueva
Vizcaya, he nevertheless did not reflect these matters when he notarized the deed;
instead he entered Santiago City and July 22, 1996, as place and date of execution,
respectively. To us, Atty. de Guzman’s propensity to distort facts in the performance
of his public functions as a notary public, in utter disregard of the significance of the
act of notarization, seriously affects his credibility as a witness in the present case. In
fact, Atty. de Guzman’s act in falsifying the entries in his acknowledgment of the deed
of sale could be the subject of administrative and disciplinary action, a matter that we
however do not here decide.
Similarly, there is no conclusive proof of the partial execution of the contract because
the only evidence the plaintiffs-appellants presented to prove this claim was Atty. de
Guzman’s testimony, which is hearsay and thus, has no probative value. Atty. de
Guzman merely stated that Rudy told him that Rudy already gave ₱50,000.00 to
Gregorio as partial payment of the purchase price; Atty. de Guzman did not
personally see the payment being made.17
But, did Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-F
when he signed the deed of sale? The trial court as well as the appellate court found
in the negative. In the Court of Appeals’ rationale-
It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously
ill, as he in fact died a week after the deed’s signing. Gregorio died of complications
caused by cirrhosis of the liver. Gregorio’s death was neither sudden nor immediate;
he fought at least a month-long battle against the disease until he succumbed to
death on July 22, 1996. Given that Gregorio purportedly executed a deed during the
last stages of his battle against his disease, we seriously doubt whether Gregorio
could have read, or fully understood, the contents of the documents he signed or of
the consequences of his act. We note in this regard that Gregorio was brought to the
Veteran’s Hospital at Quezon City because his condition had worsened on or about
the time the deed was allegedly signed. This transfer and fact of death not long after
speak volumes about Gregorio’s condition at that time. We likewise see no conclusive
evidence that the contents of the deed were sufficiently explained to Gregorio before
he affixed his signature. The evidence the defendants-appellants offered to prove
Gregorio’s consent to the sale consists of the testimonies of Atty. de Guzman and
Antonio. As discussed above, we do not find Atty. de Guzman a credible witness.
Thus, we fully concur with the heretofore-quoted lower court’s evaluation of the
testimonies given by Atty. de Guzman and Antonio because this is an evaluation that
the lower court was in a better position to make.
Additionally, the irregular and invalid notarization of the deed is a falsity that raises
doubts on the regularity of the transaction itself. While the deed was indeed signed on
July 18, 1996 at Bayombong, Nueva Vizcaya, the deed states otherwise, as it shows
that the deed was executed on July 22, 1996 at Santiago City. Why such falsity was
committed, and the circumstances under which this falsity was committed, speaks
volume about the regularity and the validity of the sale. We cannot but consider the
commission of this falsity, with the indispensable aid of Atty. de Guzman, an
orchestrated attempt to legitimize a transaction that Gregorio did not intend to be
binding upon him nor on his bounty.
Article 24 of the Civil Code tells us that in all contractual, property or other relations,
when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts
must be vigilant for his protection.18
Based on the foregoing, the court of Appeals concluded that Gregorio’s consent to
the sale of the lots was absent, making the contract null and void. Consequently, the
spouses Paragas could not have made a subsequent transfer of the property to
Catalino Balacano. Indeed, nemo dat quod non habet. Nobody can dispose of that
which does not belong to him.19
We likewise find to be in accord with the evidence on record the ruling of the Court of
Appeals declaring the properties in controversy as paraphernal properties of Gregorio
in the absence of competent evidence on the exact date of Gregorio’s acquisition of
ownership of these lots.
On the credibility of witnesses, it is in rhyme with reason to believe the testimonies of
the witnesses for the complainants vis-à-vis those of the defendants. In the
assessment of the credibility of witnesses, we are guided by the following well-
entrenched rules: (1) that evidence to be believed must not only spring from the
mouth of a credible witness but must itself be credible, and (2) findings of facts and
assessment of credibility of witness are matters best left to the trial court who had the
front-line opportunity to personally evaluate the witnesses’ demeanor, conduct, and
behavior while testifying.20
In the case at bar, we agree in the trial court’s conclusion that petitioners’ star
witness, Atty. De Guzman is far from being a credible witness. Unlike this Court, the
trial court had the unique opportunity of observing the demeanor of said witness.
Thus, we affirm the trial court and the Court of Appeals’ uniform decision based on
the whole evidence in record holding the Deed of Sale in question to be null and void.
In Domingo v. Court of Appeals,21 the Court declared as null and void the deed of sale
therein inasmuch as the seller, at the time of the execution of the alleged contract,
was already of advanced age and senile. We held –
. . . She died an octogenarian on March 20, 1966, barely over a year when the deed
was allegedly executed on January 28, 1965, but before copies of the deed were
entered in the registry allegedly on May 16 and June 10, 1966. The general rule is
that a person is not incompetent to contract merely because of advanced years or by
reason of physical infirmities. However, when such age or infirmities have impaired
the mental faculties so as to prevent the person from properly, intelligently, and firmly
protecting her property rights then she is undeniably incapacitated. The unrebutted
testimony of Zosima Domingo shows that at the time of the alleged execution of the
deed, Paulina was already incapacitated physically and mentally. She narrated that
Paulina played with her waste and urinated in bed. Given these circumstances, there
is in our view sufficient reason to seriously doubt that she consented to the sale of
and the price for her parcels of land. Moreover, there is no receipt to show that said
price was paid to and received by her. Thus, we are in agreement with the trial court’s
finding and conclusion on the matter: . . .
In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death
bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution
of the contract and suffering from liver cirrhosis at that – circumstances which raise
grave doubts on his physical and mental capacity to freely consent to the contract.
Adding to the dubiety of the purported sale and further bolstering respondents’ claim
that their uncle Catalino, one of the children of the decedent, had a hand in the
execution of the deed is the fact that on 17 October 1996, petitioners sold a portion of
Lot 1175-E consisting of 6,416 square meters to Catalino for ₱60,000.00.22 One need
not stretch his imagination to surmise that Catalino was in cahoots with petitioners in
maneuvering the alleged sale.
On the whole, we find no reversible error on the part of the appellate court in CA-G.R.
CV No. 64048 that would warrant the reversal thereof.
WHEREFORE, the present petition is hereby DENIED. Accordingly, the
Decision23 and the Resolution,24 dated 15 February 2005 and 17 May 2005,
respectively, of the Court of Appeals in CA-G.R. CV No. 64048 are hereby
AFFIRMED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,
vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
The sale of a conjugal property requires the consent of both the husband and the
wife. The absence of the consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable. Only in the latter case can ratification cure
the defect.
The Case
These were the principles that guided the Court in deciding this petition for review of
the Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996,
promulgated by the Court of Appeals in CA-GR CV No. 41758, affirming the
Decision of the lower court and denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended
Complainant 3 against her husband Judie Corpuz and Petitioner-Spouses
Antonio and Luzviminda Guiang. The said Complaint sought the declaration of
a certain deed of sale, which involved the conjugal property of private
respondent and her husband, null and void. The case was raffled to the
Regional Trial Court of Koronadal, South Cotabato, Branch 25. In due course,
the trial court rendered a Decision 4 dated September 9, 1992, disposing as
follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff and
against the defendants,
1. Declaring both the Deed of Transfer of Rights dated March
1, 1990 (Exh. "A") and the "amicable settlement" dated March
16, 1990 (Exh. "B") as null void and of no effect;
2. Recognizing as lawful and valid the ownership and
possession of plaintiff Gilda Corpuz over the remaining one-
half portion of Lot 9, Block 8, (LRC) Psd-165409 which has
been the subject of the Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants
Luzviminda Guiang the amount of NINE THOUSAND
(P9,000.00) PESOS corresponding to the payment made by
defendants Guiangs to Manuel Callejo for the unpaid balance
of the account of plaintiff in favor of Manuel Callejo, and
another sum of P379.62 representing one-half of the amount of
realty taxes paid by defendants Guiangs on Lot 9, Block 8,
(LRC) Psd-165409, both with legal interests thereon computed
from the finality of the decision.
 No pronouncement as to costs in view of the factual
circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals.
Respondent Court, in its challenged Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil Case No.
204 is hereby AFFIRMED by this Court. No costs considering
plaintiff-appellee's failure to file her brief despite notice.
Reconsideration was similarly denied by the same court in its assailed
Resolution: 7
Finding that the issues raised in defendants-appellants motion
for reconsideration of Our decision in this case of January 30,
1996, to be a mere rehash of the same issues which we have
already passed upon in the said decision, and there [being] no
cogent reason to disturb the same, this Court RESOLVED to
DENY the instant motion for reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and
while she was in Manila seeking employment, her husband sold to the
petitioners-spouses one half of their conjugal peoperty, consisting of their
residence and the lot on which it stood. The circumstances of this sale are set
forth in the Decision of Respondent Court, which quoted from the Decision of
the trial court as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are
legally married spouses. They were married on December 24,
1968 in Bacolod City, before a judge. This is admitted by
defendants-spouses Antonio and Luzviminda Guiang in their
answer, and also admitted by defendant Judie Corpuz when he
testified in court (tsn. p. 3, June 9, 1992), although the latter
says that they were married in 1967. The couple have three
children, namely: Junie — 18 years old, Harriet — 17 years of
age, and Jodie or Joji, the youngest, who was 15 years of age
in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie
Corpuz, with plaintiff-wife Gilda Corpuz as vendee, bought a
421 sq. meter lot located in Barangay Gen. Paulino Santos (Bo.
1), Koronadal, South Cotabato, and particularly known as Lot
9, Block 8, (LRC) Psd-165409 from Manuel Callejo who signed
as vendor through a conditional deed of sale for a total
consideration of P14,735.00. The consideration was payable in
installment, with right of cancellation in favor of vendor should
vendee fail to pay three successive installments (Exh. "2", tsn
p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie
Corpuz sold one-half portion of their Lot No. 9, Block 8, (LRC)
Psd-165409 to the defendants-spouses Antonio and
Luzviminda Guiang. The latter have since then occupied the
one-half portion [and] built their house thereon (tsn. p. 4, May
22, 1992). They are thus adjoining neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989.
She was trying to look for work abroad, in [the] Middle East.
Unfortunately, she became a victim of an unscrupulous illegal
recruiter. She was not able to go abroad. She stayed for
sometime in Manila however, coming back to Koronadal,
South Cotabato, . . . on March 11, 1990. Plaintiff's departure for
Manila to look for work in the Middle East was with the
consent of her husband Judie Corpuz (tsn. p. 16, Aug. 12,
1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz
seldom went home to the conjugal dwelling. He stayed most of
the time at his place of work at Samahang Nayon Building, a
hotel, restaurant, and a cooperative. Daughter Herriet Corpuz
went to school at King's College, Bo. 1, Koronadal, South
Cotabato, but she was at the same time working as household
help of, and staying at, the house of Mr. Panes. Her brother
Junie was not working. Her younger sister Jodie (Jojie) was
going to school. Her mother sometimes sent them money (tsn.
p. 14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that her
father intended to sell the remaining one-half portion including
their house, of their homelot to defendants Guiangs. She wrote
a letter to her mother informing her. She [Gilda Corpuz] replied
that she was objecting to the sale. Harriet, however, did not
inform her father about this; but instead gave the letter to Mrs.
Luzviminda Guiang so that she [Guiang] would advise her
father (tsn. pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant
Judie Corpuz pushed through the sale of the remaining one-
half portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1,
1990, he sold to defendant Luzviminda Guiang thru a
document known as "Deed of Transfer of Rights" (Exh. "A")
the remaining one-half portion of their lot and the house
standing thereon for a total consideration of P30,000.00 of
which P5,000.00 was to be paid in June, 1990. Transferor Judie
Corpuz's children Junie and Harriet signed the document as
witness.
Four (4) days after March 1, 1990 or on March 5, 1990,
obviously to cure whatever defect in defendant Judie Corpuz's
title over the lot transferred, defendant Luzviminda Guiang as
vendee executed another agreement over Lot 9, Block 8, (LRC)
Psd-165408 (Exh. "3"), this time with Manuela Jimenez Callejo,
a widow of the original registered owner from whom the
couple Judie and Gilda Corpuz originally bought the lot (Exh.
"2"), who signed as vendor for a consideration of P9,000.00.
Defendant Judie Corpuz signed as a witness to the sale (Exh.
"3-A"). The new sale (Exh. "3") describes the lot sold as Lot 8,
Block 9, (LRC) Psd-165408 but it is obvious from the mass of
evidence that the correct lot is Lot 8, Block 9, (LRC) Psd-
165409, the very lot earlier sold to the couple Gilda and Judie
Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home. She
found her children staying with other households. Only Junie
was staying in their house. Harriet and Joji were with Mr.
Panes. Gilda gathered her children together and stayed at their
house. Her husband was nowhere to be found. She was
informed by her children that their father had a wife already.
6. For staying in their house sold by her husband, plaintiff was
complained against by defendant Luzviminda Guiang and her
husband Antonio Guiang before the Barangay authorities of
Barangay General Paulino Santos (Bo. 1), Koronadal, South
Cotabato, for trespassing (tsn. p. 34, Aug. 17, 1990). The case
was docketed by the barangay authorities as Barangay Case
No. 38 for "trespassing". On March 16, 1990, the parties
thereat signed a document known as "amicable settlement". In
full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her
three children, namely: Junie, Hariet and
Judie to leave voluntarily the house of Mr.
and Mrs. Antonio Guiang, where they are
presently boarding without any charge, on or
before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE
LAW.
Believing that she had received the shorter end of the bargain,
plaintiff to the Barangay Captain of Barangay Paulino Santos
to question her signature on the amicable settlement. She was
referred however to the Office-In-Charge at the time, a certain
Mr. de la Cruz. The latter in turn told her that he could not do
anything on the matter (tsn. p. 31, Aug. 17, 1990).
This particular point not rebutted. The Barangay Captain who
testified did not deny that Mrs. Gilda Corpuz approached him
for the annulment of the settlement. He merely said he forgot
whether Mrs. Corpuz had approached him (tsn. p. 13, Sept. 26,
1990). We thus conclude that Mrs. Corpuz really approached
the Barangay Captain for the annulment of the settlement.
Annulment not having been made, plaintiff stayed put in her
house and lot.
7. Defendant-spouses Guiang followed thru the amicable
settlement with a motion for the execution of the amicable
settlement, filing the same with the Municipal Trial Court of
Koronadal, South Cotabato. The proceedings [are] still
pending before the said court, with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent
P600.00 for the preparation of the Deed of Transfer of Rights,
Exh. "A", P9,000.00 as the amount they paid to Mrs. Manuela
Callejo, having assumed the remaining obligation of the
Corpuzes to Mrs. Callejo (Exh. "3"); P100.00 for the
preparation of Exhibit "3"; a total of P759.62 basic tax and
special education fund on the lot; P127.50 as the total
documentary stamp tax on the various documents; P535.72 for
the capital gains tax; P22.50 as transfer tax; a standard fee of
P17.00; certification fee of P5.00. These expenses particularly
the taxes and other expenses towards the transfer of the title
to the spouses Guiangs were incurred for the whole Lot 9,
Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling that any
alienation or encumbrance by the husband of the conjugal propety without the
consent of his wife is null and void as provided under Article 124 of the Family
Code. It also rejected petitioners' contention that the "amicable sttlement"
ratified said sale, citing Article 1409 of the Code which expressly bars
ratification of the contracts specified therein, particularly those "prohibited or
declared void by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the following
errors: 10
I
 Whether or not the assailed Deed of Transfer of Rights was
validly executed.
II
Whether or not the Cour of Appeals erred in not declairing as
voidable contract under Art. 1390 of the Civil Code the
impugned Deed of Transfer of Rights which was validly ratified
thru the execution of the "amicable settlement" by the
contending parties.
III
Whether or not the Court of Appeals erred in not setting aside
the findings of the Court a quo which recognized as lawful and
valid the ownership and possession of private respondent
over the remaining one half (1/2) portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of
Transfer of Rights) was merely voidable, and (2) such contract was ratified by
private respondent when she entered into an amicable sttlement with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly
executed by the parties-litigants in good faith and for valuable consideration.
The absence of private respondent's consent merely rendered the Deed
voidable under Article 1390 of the Civil Code, which provides:
Art. 1390. The following contracts are voidable or annullable,
even though there may have been no damage to the
contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a
proper action in court. They are susceptible of ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2, refers to
contracts visited by vices of consent, i.e., contracts which were entered into by
a person whose consent was obtained and vitiated through mistake, violence,
intimidation, undue influence or fraud. In this instance, private respondent's
consent to the contract of sale of their conjugal property was totally inexistent
or absent. Gilda Corpuz, on direct examination, testified thus: 11
Q Now, on March 1, 1990, could you still recall
where you were?
A I was still in Manila during that time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to Koronadal,
South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was
there any problem which arose concerning
the ownership of your residential house at
Callejo Subdivision?
A When I arrived here in Koronadal, there was
a problem which arose regarding my
residential house and lot because it was sold
by my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124
of the Family Code, which was correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the conjugal
partnerhip properly shall belong to both spouses jointly. In
case of disgreement, the husband's decision shall prevail,
subject recourse to the court by the wife for proper remedy,
which must be availed of within five years from the date of the
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of
disposition or encumbrance which must have the authority of
the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be
construed as a continuing offer on the part of the consenting
 spouse and the third person, and may be perfected as a
binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by
either or both offerors. (165a) (Emphasis supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial
court adroitly explained the amendatory effect of the above provision in this
wise: 12
The legal provision is clear. The disposition or encumbrance is
void. It becomes still clearer if we compare the same with the
equivalent provision of the Civil Code of the Philippines. Under
Article 166 of the Civil Code, the husband cannot generally
alienate or encumber any real property of the conjugal
partnershit without the wife's consent. The alienation or
encumbrance if so made however is not null and void. It is
merely voidable. The offended wife may bring an action to
annul the said alienation or encumbrance. Thus the provision
of Article 173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage
and within ten years from the transaction
questioned, ask the courts for the annulment
of any contract of the husband entered into
without her consent, when such consent is
required, or any act or contract of the
husband which tends to defraud her or impair
her interest in the conjugal partnership
property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of
the marriage, may demand the value of
property fraudulently alienated by the
husband.(n)
This particular provision giving the wife ten (10) years . . .
during [the] marriage to annul the alienation or encumbrance
was not carried over to the Family Code. It is thus clear that
any alienation or encumbrance made after August 3, 1988
when the Family Code took effect by the husband of the
conjugal partnership property without the consent of the wife
is null and void.
Furthermore, it must be noted that the fraud and the intimidation referred to by
petitioners were perpetrated in the execution of the document embodying the
amicable settlement. Gilda Corpuz alleged during trial that barangay authorities
made her sign said document through misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the
deed of sale between the husband and the petitioners-spouses, as will be
discussed later. The fact remains that such contract was entered into without
the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private
respondent's consent. To constitute a valid contract, the Civil Code requires
the concurrence of the following elements: (1) cause, (2) object, and (3)
consent, 14 the last element being indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver that it
was duly ratified by the contending parties through the "amicable settlement"
they executed on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved
this issue in favor of the private respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code]
therefore, the Deed to Transfer of Rights (Exh. "A") cannot be
ratified, even by an "amicable settlement". The participation by
some barangay authorities in the "amicable settlement"
cannot otherwise validate an invalid act. Moreover, it cannot
be denied that the "amicable settlement (Exh. "B") entered into
by plaintiff Gilda Corpuz and defendent spouses Guiang is a
contract. It is a direct offshoot of the Deed of Transfer of
Rights (Exh. "A"). By express provision of law, such a contract
is also void. Thus, the legal provision, to wit:
Art. 1422. Acontract which is the direct result
of a previous illegal contract, is also void and
inexistent. (Civil Code of the Philippines).
In summation therefore, both the Deed of transfer of Rights
(Exh. "A") and the "amicable settlement" (Exh. "3") are null
and void.
16
Doctrinally and clearly, a void contract cannot be ratified.
Neither can the "amicable settlement" be considered a continuing offer that
was accepted and perfected by the parties, following the last sentence of
Article 124. The order of the pertinent events is clear: after the sale, petitioners
filed a complaint for trespassing against private respondent, after which the
barangay authorities secured an "amicable settlement" and petitioners filed
before the MTC a motion for its execution. The settlement, however, does not
mention a continuing offer to sell the property or an acceptance of such a
continuing offer. Its tenor was to the effect that private respondent would
vacate the property. By no stretch of the imagination, can the Court interpret
this document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the
challenged Decision and Resolution. Costs against petitioners.
G.R. No. 141323 June 8, 2005
DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,
vs.
MELKI E. PEREZ, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the reversal of the
Decision1 of the Court of Appeals (CA) promulgated on April 20, 1999 which reversed
the Decision of the Regional Trial Court (RTC) of Panabo, Davao, Branch 34, in Civil
Case No. 91-46; and the CA Resolution dated December 17, 1999 denying
petitioners’ motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988,
conveyed to Melki Perez (Perez) two parcels of agricultural land (the lots) situated in
Panabo, Davao which are portions of Lot 4192, Cad. 276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible
witnessed the execution of the deed.
Loreza, however, signed only on the third page in the space provided for witnesses
on account of which Perez’ application for registration of the deed with the Office of
the Register of Deeds in Tagum, Davao was denied.
Perez thereupon asked Loreza to sign on the first and second pages of the deed but
she refused, hence, he instituted on August 8, 1991 the instant complaint for specific
performance against her and her husband Pelayo (defendants).
The defendants moved to dismiss the complaint on the ground that it stated no cause
of action, citing Section 6 of RA 6656 otherwise known as the Comprehensive
Agrarian Reform Law which took effect on June 10, 1988 and which provides that
contracts executed prior thereto shall "be valid only when registered with the Register
of Deeds within a period of three (3) months after the effectivity of this Act."
The questioned deed having been executed on January 10, 1988, the defendants
claimed that Perez had at least up to September 10, 1988 within which to register the
same, but as they failed to, it is not valid and, therefore, unenforceable.
The trial court thus dismissed the complaint. On appeal to this Court, the dismissal
was set aside and the case was remanded to the lower court for further proceedings.
In their Answer, the defendants claimed that as the lots were occupied illegally by
some persons against whom they filed an ejectment case, they and Perez who is
their friend and known at the time as an activist/leftist, hence feared by many, just
made it appear in the deed that the lots were sold to him in order to frighten said
illegal occupants, with the intentional omission of Loreza’s signature so that the deed
could not be registered; and that the deed being simulated and bereft of consideration
is void/inexistent.
Perez countered that the lots were given to him by defendant Pelayo in consideration
of his services as his attorney-in-fact to make the necessary representation and
negotiation with the illegal occupants-defendants in the ejectment suit; and that after
his relationship with defendant Pelayo became sour, the latter sent a letter to the
Register of Deeds of Tagum requesting him not to entertain any transaction
concerning the lots title to which was entrusted to Perez who misplaced and could
[not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996,
that the deed was without his wife Loreza’s consent, hence, in light of Art. 166 of the
Civil Code which provides:
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift,
or is under civil interdiction or is confined in a leprosarium, the husband cannot
alienate or encumber any real property of the conjugal partnership without the wife’s
consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not possess, nor pay the taxes
on the lots, that defendant Pelayo was indebted to Perez for services rendered and,
therefore, the deed could only be considered as evidence of debt, and that in any
event, there was no marital consent to nor actual consideration for the deed, held that
the deed was null and void and accordingly rendered judgment the dispositive portion
of which reads:
WHEREFORE, judgment is hereby rendered ordering and directing the defendants to
pay plaintiff Melki Perez the sum of TEN THOUSAND (₱10,000.00) Pesos as
principal with 12% interest per annum starting from the date of filing of the complaint
on August 1, 1991 until plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND
(₱3,000.00) as attorney’s fees.
The court further orders that the Deed of Absolute Sale, (Annex ‘A’) of the complaint
and (Annex ‘C’) of the plaintiff’s Motion for Summary Judgment is declared null and
void and without force and it is likewise removed as a cloud over defendants’ title and
property in suit. . . ."2
The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners
failed to file their appellees’ brief. The CA then promulgated its Decision on April 20,
1999 whereby it ruled that by Lorenza’s signing as witness to the execution of the
deed, she had knowledge of the transaction and is deemed to have given her consent
to the same; that herein petitioners failed to adduce sufficient proof to overthrow the
presumption that there was consideration for the deed, and that petitioner David
Pelayo, being a lawyer, is presumed to have acted with due care and to have signed
the deed with full knowledge of its contents and import. The CA reversed and set
aside the RTC Decision, declaring as valid and enforceable the questioned deed of
sale and ordering herein petitioner Lorenza Pelayo to affix her signature on all pages
of said document.
Petitioners moved for reconsideration of the decision but the same was denied per
Resolution dated December 17, 1999. The CA found said motion to have been filed
out of time and ruled that even putting aside technicality, petitioners failed to present
any ground bearing on the merits of the case to justify a reversal or setting aside of
the decision.
Hence, this petition for review on certiorari on the following grounds:
1. The CA erred in ignoring the specific provision of Section 6, in relation to
Section 4 of R.A. No. 6657 otherwise known as the Comprehensive Agrarian
Reform Law of 1988 which took effect on June 15, 1988 and which provides
that contracts executed prior thereto shall "be valid only when registered with
the Register of Deeds within a period of three (3) months after the effectivity
of this Act."
2. The CA erred in holding that the deed of sale was valid and considering
the ₱10,000.00 adjudged by the trial court as Perez’s remuneration as the
consideration for the deed of sale, instead of declaring the same as null and
void for being fictitious or simulated and on the basis of Art. 491, Par. 2 of
the New Civil Code which prohibits agents from acquiring by purchase
properties from his principal under his charge.
3. The CA made a novel ruling that there was implied marital consent of the
wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their appellees’ brief to
ventilate their side, considering the existence of peculiar circumstances
which prevented petitioners from filing said brief.
On the other hand, respondent points out that the CA, in resolving the first appeal
docketed as CA-G.R. SP No. 387003 brought by respondent assailing the RTC Order
granting herein petitioners’ motion to dismiss, already ruled that under R.A. No. 6657,
the sale or transfer of private agricultural land is allowed only when the area of the
land being conveyed constitutes or is a part of, the landowner-seller retained area
and when the total landholding of the purchaser-transferee, including the property
sold, does not exceed five (5) hectares; that in this case, the land in dispute is only
1.3 hectares and there is no proof that the transferee’s (herein respondent) total
landholding inclusive of the subject land will exceed 5 hectares, the landholding
ceiling prescribed by R.A. No. 6657; that the failure of respondent to register the
instrument was not due to his fault or negligence but can be attributed to Lorenza’s
unjustified refusal to sign two pages of the deed despite several requests of
respondent; and that therefore, the CA ruled that the deed of sale subject of this case
is valid under R.A. No. 6657.
Respondent further maintains that the CA correctly held in its assailed Decision that
there was consideration for the contract and that Lorenza is deemed to have given
her consent to the deed of sale.
Respondent likewise opines that the CA was right in denying petitioners’ motion for
reconsideration where they prayed that they be allowed to file their appellees’ brief as
their counsel failed to file the same on account of said counsel’s failing health due to
cancer of the liver. Respondent emphasized that in petitioners’ motion for
reconsideration, they did not even cite any errors made by the CA in its Decision.
The issues boil down to the question of whether or not the deed of sale was null and
void on the following grounds: (a) for not complying with the provision in R.A. No.
6657 that such document must be registered with the Register of Deeds within three
months after the effectivity of said law; (b) for lack of marital consent; (c) for being
prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for
respondent’s failure to register said document with the Register of Deeds within three
months after the effectivity of R.A. No. 6657, had been resolved with finality by the CA
in its Decision dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein
petitioners no longer elevated said CA Decision to this Court and the same became
final and executory on January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No.
6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or
transfer of a private agricultural land is allowed only when said land area constitutes
or is a part of the landowner-seller retained area and only when the total landholdings
of the purchaser-transferee, including the property sold does not exceed five (5)
hectares.
Aside from declaring that the failure of respondent to register the deed was not of his
own fault or negligence, the CA ruled that respondent’s failure to register the deed of
sale within three months after effectivity of The Comprehensive Agrarian Reform Law
did not invalidate the deed of sale as "the transaction over said property is not
proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of the CA is now binding on
petitioners.1avvph!1 Such principle was elucidated in Cucueco vs. Court of
Appeals,6 to wit:
Law of the case has been defined as the opinion delivered on a former appeal. It is a
term applied to an established rule that when an appellate court passes on a question
and remands the case to the lower court for further proceedings, the question there
settled becomes the law of the case upon subsequent appeal. It means that whatever
is once irrevocably established as the controlling legal rule or decision between the
same parties in the same case continues to be the law of the case, whether correct
on general principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court.
Petitioners not having questioned the Decision of the CA dated November 24, 1994
which then attained finality, the ruling that the deed of sale subject of this case is not
among the transactions deemed as invalid under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the
Deed of Sale on the space provided for witnesses, is deemed to have given her
implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which may either be
express or implied.7 A wife’s consent to the husband’s disposition of conjugal property
does not always have to be explicit or set forth in any particular document, so long as
it is shown by acts of the wife that such consent or approval was indeed given. 8 In the
present case, although it appears on the face of the deed of sale that Lorenza signed
only as an instrumental witness, circumstances leading to the execution of said
document point to the fact that Lorenza was fully aware of the sale of their conjugal
property and consented to the sale.
In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been
having serious problems, including threats to the life of petitioner David Pelayo, due
to conflicts with the illegal occupants of the property in question, so that respondent,
whom many feared for being a leftist/activist, offered his help in driving out said illegal
occupants.
Human experience tells us that a wife would surely be aware of serious problems
such as threats to her husband’s life and the reasons for such threats. As they
themselves stated, petitioners’ problems over the subject property had been going on
for quite some time, so it is highly improbable for Lorenza not to be aware of what her
husband was doing to remedy such problems. Petitioners do not deny that Lorenza
Pelayo was present during the execution of the deed of sale as her signature appears
thereon. Neither do they claim that Lorenza Pelayo had no knowledge whatsoever
about the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her husband and
respondent.
Under the rules of evidence, it is presumed that a person takes ordinary care of his
concerns.10 Petitioners did not even attempt to overcome the aforementioned
presumption as no evidence was ever presented to show that Lorenza was in any
way lacking in her mental faculties and, hence, could not have fully understood the
ramifications of signing the deed of sale. Neither did petitioners present any evidence
that Lorenza had been defrauded, forced, intimidated or threatened either by her own
husband or by respondent into affixing her signature on the subject document. If
Lorenza had any objections over the conveyance of the disputed property, she could
have totally refrained from having any part in the execution of the deed of sale.
Instead, Lorenza even affixed her signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the New Civil Code,
which was still in effect on January 11, 1988 when the deed in question was
executed, the lack of marital consent to the disposition of conjugal property does not
make the contract void ab initio but merely voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or
is under civil interdiction or is confined in a leprosarium, the husband cannot alienate
or encumber any real property of the conjugal property without the wife’s consent. If
she refuses unreasonably to give her consent, the court may compel her to grant the
same.
...
Art. 173. The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered
into without her consent, when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs, after the
dissolution of the marriage, may demand the value of property fraudulently alienated
by the husband.
Hence, it has been held that the contract is valid until the court annuls the same and
only upon an action brought by the wife whose consent was not obtained. 11 In the
present case, despite respondent’s repeated demands for Lorenza to affix her
signature on all the pages of the deed of sale, showing respondent’s insistence on
enforcing said contract, Lorenza still did not file a case for annulment of the deed of
sale. It was only when respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenza’s alleged lack of consent as an
affirmative defense. Thus, if the transaction was indeed entered into without
Lorenza’s consent, we find it quite puzzling why for more than three and a half years,
Lorenza did absolutely nothing to seek the nullification of the assailed contract.
The foregoing circumstances lead the Court to believe that Lorenza knew of the full
import of the transaction between respondent and her
husband; and, by affixing her signature on the deed of sale, she, in effect, signified
her consent to the disposition of their conjugal property.
With regard to petitioners’ asseveration that the deed of sale is invalid under Article
1491, paragraph 2 of the New Civil Code, we find such argument unmeritorious.
Article 1491 (2) provides:
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
...
(2) Agents, the property whose administration or sale may have been entrusted to
them, unless the consent of the principal has been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of
her sons as the administrator of several parcels of her land. The landowner
subsequently executed a Deed of Certification of Sale of Unregistered Land,
conveying some of said land to her son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition against agents purchasing
property in their hands for sale or management is not absolute. It does not apply if the
principal consents to the sale of the property in the hands of the agent or
administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows that
she gave consent to the sale of the properties in favor of her son, Rufo, who was the
administrator of the properties. Thus, the consent of the principal Iluminada Abiertas
removes the transaction out of the prohibition contained in Article 1491(2). 13
The above-quoted ruling is exactly in point with this case before us. Petitioners, by
signing the Deed of Sale in favor of respondent, are also deemed to have given their
consent to the sale of the subject property in favor of respondent, thereby making the
transaction an exception to the general rule that agents are prohibited from
purchasing the property of their principals.
Petitioners also argue that the CA erred in ruling that there was consideration for the
sale. We find no error in said appellate court’s ruling. The element of consideration for
the sale is indeed present. Petitioners, in adopting the trial court’s narration of
antecedent facts in their petition,14 thereby admitted that they authorized respondent
to represent them in negotiations with the "squatters" occupying the disputed property
and, in consideration of respondent’s services, they executed the subject deed of
sale. Aside from such services rendered by respondent, petitioners also
acknowledged in the deed of sale that they received in full the amount of Ten
Thousand Pesos. Evidently, the consideration for the sale is respondent’s services
plus the aforementioned cash money.
Petitioners contend that the consideration stated in the deed of sale is excessively
inadequate, indicating that the deed of sale was merely simulated. We are not
persuaded. Our ruling in Buenaventura vs. Court of Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the exact value of the
subject matter of sale. . . . As we stated in Vales vs. Villa:
Courts cannot follow one every step of his life and extricate him from bad bargains,
protect him from unwise investments, relieve him from one-sided contracts, or annul
the effects of foolish acts. Courts cannot constitute themselves guardians of persons
who are not legally incompetent. Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them – indeed, all they have in the world; but
not for that alone can the law intervene and restore. There must be, in addition,
a violation of the law, the commission of what the law knows as an actionable wrong,
before the courts are authorized to lay hold of the situation and remedy it. 16
Verily, in the present case, petitioners have not presented proof that there has been
fraud, mistake or undue influence exercised upon them by respondent. It is highly
unlikely and contrary to human experience that a layman like respondent would be
able to defraud, exert undue influence, or in any way vitiate the consent of a lawyer
like petitioner David Pelayo who is expected to be more knowledgeable in the ways of
drafting contracts and other legal transactions.
Furthermore, in their Reply to Respondent’s Memorandum,17 petitioners adopted the
CA’s narration of fact that petitioners stated in a letter they sent to the Register of
Deeds of Tagum that they have entrusted the titles over subject lots to herein
respondent. Such act is a clear indication that they intended to convey the subject
property to herein respondent and the deed of sale was not merely simulated or
fictitious.
Lastly, petitioners claim that they were not able to fully ventilate their defense before
the CA as their lawyer, who was then suffering from cancer of the liver, failed to file
their appellees’ brief. Thus, in their motion for reconsideration of the CA Decision,
they prayed that they be allowed to submit such appellees’ brief. The CA, in its
Resolution dated December 17, 1999, stated thus:
By movant-defendant-appellee’s own information, his counsel received a copy of the
decision on May 5, 1999. He, therefore, had fifteen (15) days from said date or up to
May 20, 1999 to file the motion. The motion, however, was sent through a private
courier and, therefore, considered to have been filed on the date of actual receipt on
June 17, 1999 by the addressee – Court of Appeals, was filed beyond the
reglementary period.
Technicality aside, movant has not proffered any ground bearing on the merits of the
case why the decision should be set aside.1awphi1
Petitioners never denied the CA finding that their motion for reconsideration was filed
beyond the fifteen-day reglementary period. On that point alone, the CA is correct in
denying due course to said motion. The motion having been belatedly filed, the CA
Decision had then attained finality. Thus, in Abalos vs. Philex Mining
Corporation,18 we held that:
. . . Nothing is more settled in law than that once a judgment attains finality it thereby
becomes immutable and unalterable. It may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to
be made by the court rendering it or by the highest court of the land.
Moreover, it is pointed out by the CA that said motion did not present any defense or
argument on the merits of the case that could have convinced the CA to reverse or
modify its Decision.
We have consistently held that a petitioner’s right to due process is not violated where
he was able to move for reconsideration of the order or decision in question. 19 In this
case, petitioners had the opportunity to fully expound on their defenses through a
motion for reconsideration. Petitioners did file such motion but they wasted such
opportunity by failing to present therein whatever errors they believed the CA had
committed in its Decision. Definitely, therefore, the denial of petitioners’ motion for
reconsideration, praying that they be allowed to file appellees’ brief, did not infringe
petitioners’ right to due process as any issue that petitioners wanted to raise could
and should have been contained in said motion for reconsideration.
IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court
of Appeals dated April 20, 1999 and its Resolution dated December 17, 1999 are
hereby AFFIRMED.
SO ORDERED.
G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan,
Branch I, and CORAZON DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and
the Resolution on the Motion for Reconsideration, dated November 27, 1980, of the
then Court of First Instance of Pangasinan, Branch I, in Civil Case No. 15620 entitled
"Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the sale of a
parcel of land in favor of DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES
Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962.
They begot five children. They lived in a small house on the residential land in
question with an area of approximately 891 square meters, located at Bacabac,
Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited
the land.
In 1978, FERNANDO abandoned his family and was living with private respondent
Corazon DAGUINES. During the pendency of this appeal, they were convicted of
concubinage in a judgment rendered on October 27, 1981 by the then Court of First
Instance of Pangasinan, Branch II, which judgment has become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon to
DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO
described the house as "also inherited by me from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint on
June 19, 1980 for quieting of title and damages against MERCEDES. The latter
resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with conjugal
funds and through her industry; that the sale of the land together with the house and
improvements to DAGUINES was null and void because they are conjugal properties
and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the
lawful owner of the land in question as well as the one-half () of the house erected on
said land." Upon reconsideration prayed for by MERCEDES, however, respondent
Court resolved:
 WHEREFORE, the dispositive portion of the Decision of this Court,
promulgated on October 6, 1980, is hereby amended to read as
follows:
(1) Declaring plaintiff as the true and lawful owner of the land in
question and the 10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to
plaintiff on April 15, 1980 (Exhibit A) including the 3 coconut trees
and other crops planted during the conjugal relation between
Fernando Canullas (vendor) and his legitimate wife, herein
defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a conjugal
house on the exclusive property of the husband ipso facto gave the land the character
of conjugal property; and (2) whether or not the sale of the lot together with the house
and improvements thereon was valid under the circumstances surrounding the
transaction.
The determination of the first issue revolves around the interpretation to be given to
the second paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the
marriage on land belonging to one of the spouses also pertain to
the partnership, but the value of the land shall be reimbursed to the
spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the building belong
to the conjugal partnership but the conjugal partnership is indebted to the husband for
the value of the land. The spouse owning the lot becomes a creditor of the conjugal
partnership for the value of the lot, 1 which value would be reimbursed at the
liquidation of the conjugal partnership. 2
In his commentary on the corresponding provision in the Spanish Civil Code (Art.
1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el
matrimonio en suelo propio de uno de los conjuges son
gananciales, abonandose el valor del suelo al conj uge a quien
pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge,
it was held that the land belonging to one of the spouses, upon which the spouses
have built a house, becomes conjugal property only when the conjugal partnership is
liquidated and indemnity paid to the owner of the land. We believe that the better rule
is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678,
691 (1961), where the following was explained:
As to the above properties, their conversion from paraphernal to
conjugal assets should be deemed to retroact to the time the
conjugal buildings were first constructed thereon or at the very
latest, to the time immediately before the death of Narciso A.
Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the time
their values were paid to the estate of the widow Concepcion
Paterno because by that time the conjugal partnership no longer
existed and it could not acquire the ownership of said properties.
The acquisition by the partnership of these properties was, under
the 1943 decision, subject to the suspensive condition that their
values would be reimbursed to the widow at the liquidation of the
conjugal partnership; once paid, the effects of the fulfillment of the
condition should be deemed to retroact to the date the obligation
was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have
alienated the house and lot to DAGUINES since MERCEDES had not given her
consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being
contrary to morals and public policy. The sale was made by a husband in favor of a
concubine after he had abandoned his family and left the conjugal home where his
wife and children lived and from whence they derived their support. That sale was
subversive of the stability of the family, a basic social institution which public policy
cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or
purpose is contrary to law, morals, good customs, public order, or public policy
are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause,
produce no effect whatsoever.The cause is unlawful if it is contrary to law, morals,
good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to each
other subject to certain exceptions.6 Similarly, donations between spouses during
marriage are prohibited. 7 And this is so because if transfers or con conveyances
between spouses were allowed during marriage, that would destroy the system of
conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, 8 as well as to protect the
institution of marriage, which is the cornerstone of family law. The prohibitions apply
to a couple living as husband and wife without benefit of marriage, otherwise, "the
condition of those who incurred guilt would turn out to be better than those in legal
union." Those provisions are dictated by public interest and their criterion must be
imposed upon the wig of the parties. That was the ruling in Buenaventura vs.
Bautista, also penned by Justice JBL Reyes (CA) 50 O.G. 3679, and cited
in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent dissertation on this
point:
We reach a different conclusion. While Art. 133 of the Civil Code
considers as void a donation between the spouses during the
marriage, policy considerations of the most exigent character as
wen as the dictates of morality require that the same prohibition
should apply to a common-law relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals
decision, Buenaventura vs. Bautista, 50 OG 3679, interpreting a
similar provision of the old Civil Code speaks unequivocally. If the
policy of the law is, in the language of the opinion of the then
Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor of
the other consort and his descendants because of fear of undue
influence and improper pressure upon the donor, a prejudice
deeply rooted in our ancient law, ..., then there is every reason to
apply the same prohibitive policy to persons living together as
husband and wife without benefit of nuptials. For it is not to be
doubted that assent to such irregular connection for thirty years
bespeaks greater influence of one party over the other, so that the
danger that the law seeks to avoid is correspondingly increased'.
Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1),
"It would not be just that such donations — should subsist, lest the
conditions of those who incurred guilt should turn out to be better."
So long as marriage remains the cornerstone of our family law,
reason and morality alike demand that the disabilities attached to
marriage should likewise attach to concubinage (Emphasis
supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his
Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are
hereby set aside and the sale of the lot, house and improvements in question, is
hereby declared null and void. No costs.
SO ORDERED.
G.R. No. L-35702 May 29, 1973
DOMINGO D. RUBIAS, plaintiff-appellant,
vs.
ISAIAS BATILLER, defendant-appellee.
Gregorio M. Rubias for plaintiff-appellant.
Vicente R. Acsay for defendant-appellee.
TEEHANKEE, J.:
In this appeal certified by the Court of Appeals to this Court as involving purely legal
questions, we affirm the dismissal order rendered by the Iloilo court of first instance
after pre-trial and submittal of the pertinent documentary exhibits.
Such dismissal was proper, plaintiff having no cause of action, since it was duly
established in the record that the application for registration of the land in question
filed by Francisco Militante, plaintiff's vendor and predecessor interest, had been
dismissed by decision of 1952 of the land registration court as affirmed by final
judgment in 1958 of the Court of Appeals and hence, there was no title or right to the
land that could be transmitted by the purported sale to plaintiff.
As late as 1964, the Iloilo court of first instance had in another case of ejectment
likewise upheld by final judgment defendant's "better right to possess the land in
question . having been in the actual possession thereof under a claim of title many
years before Francisco Militante sold the land to the plaintiff."
Furthermore, even assuming that Militante had anything to sell, the deed of sale
executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly
his counsel of record in the land registration case involving the very land in dispute
(ultimately decided adversely against Militante by the Court of Appeals' 1958
judgment affirming the lower court's dismissal of Militante's application for
registration) was properly declared inexistent and void by the lower court, as decreed
by Article 1409 in relation to Article 1491 of the Civil Code.
The appellate court, in its resolution of certification of 25 July 1972, gave the following
backgrounder of the appeal at bar:
On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a
suit to recover the ownership and possession of certain portions of
lot under Psu-99791 located in Barrio General Luna, Barotac Viejo,
Iloilo which he bought from his father-in-law, Francisco Militante in
1956 against its present occupant defendant, Isaias Batiller, who
illegally entered said portions of the lot on two occasions — in 1945
and in 1959. Plaintiff prayed also for damages and attorneys fees.
(pp. 1-7, Record on Appeal). In his answer with counter-claim
defendant claims the complaint of the plaintiff does not state a
cause of action, the truth of the matter being that he and his
predecessors-in-interest have always been in actual, open and
continuous possession since time immemorial under claim of
ownership of the portions of the lot in question and for the alleged
malicious institution of the complaint he claims he has suffered
moral damages in the amount of P 2,000.00, as well as the sum of
P500.00 for attorney's fees. ...
On December 9, 1964, the trial court issued a pre-trial order, after a
pre-trial conference between the parties and their counsel which
order reads as follows..
'When this case was called for a pre-trial
conference today, the plaintiff appeared assisted
by himself and Atty. Gregorio M. Rubias. The
defendant also appeared, assisted by his counsel
Atty. Vicente R. Acsay.
A. During the pre-trial conference, the parties
have agreed that the following facts are
attendant in this case and that they will no longer
introduced any evidence, testimonial or
documentary to prove them:
1. That Francisco Militante claimed ownership of a parcel of land
located in the Barrio of General Luna, municipality of Barotac Viejo
province of Iloilo, which he caused to be surveyed on July 18-31,
1934, whereby he was issued a plan Psu-99791 (Exhibit "B"). (The
land claimed contained an area of 171:3561 hectares.)
2. Before the war with Japan, Francisco Militante filed with the
Court of First Instance of Iloilo an application for the registration of
the title of the land technically described in psu-99791 (Exh.
"B")opposed by the Director of Lands, the Director of Forestry and
other oppositors. However, during the war with Japan, the record of
the case was lost before it was heard, so after the war Francisco
Militante petitioned this court to reconstitute the record of the case.
The record was reconstituted on the Court of the First Instance of
Iloilo and docketed as Land Case No. R-695, GLRO Rec. No.
54852. The Court of First Instance heard the land registration case
on November 14, 1952, and after the trial this court dismissed the
application for registration. The appellant, Francisco Militante,
appealed from the decision of this Court to the Court of Appeals
where the case was docketed as CA-GR No. 13497-R..
3. Pending the disposal of the appeal in CA-GR No. 13497-R and
more particularly on June 18, 1956, Francisco Militante sold to the
plaintiff, Domingo Rubias the land technically described in psu-
99791 (Exh. "A"). The sale was duly recorded in the Office of the
Register of Deeds for the province of Iloilo as Entry No. 13609 on
July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold
to plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was
"a parcel of untitled land having an area Of 144.9072 hectares ...
surveyed under Psu 99791 ... (and) subject to the exclusions made
by me, under (case) CA-i3497, Land Registration Case No. R-695,
G.L.R.O. No. 54852, Court of First Instance of the province of Iloilo.
These exclusions referred to portions of the original area of over
171 hectares originally claimed by Militante as applicant, but which
he expressly recognized during the trial to pertain to some
oppositors, such as the Bureau of Public Works and Bureau of
Forestry and several other individual occupants and accordingly
withdrew his application over the same. This is expressly made of
record in Exh. A, which is the Court of Appeals' decision of 22
September 1958 confirming the land registration
court's dismissal of Militante's application for registration.)
4. On September 22,1958 the Court of appeals in CA-G.R. No.
13497-R promulgated its judgment confirming the decision of this
Court in Land Case No. R-695, GLRO Rec. No. 54852 which
dismissed the application for Registration filed by Francisco
Militante (Exh. "I").
5. Domingo Rubias declared the land described in Exh. 'B' for
taxation purposes under Tax Dec. No. 8585 (Exh. "C") for 1957;
Tax Dec. Nos. 9533 (Exh. "C-1") and 10019 (Exh. "C-3")for the year
1961; Tax Dec. No. 9868 (Exh. "C-2") for the year 1964, paying the
land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-
6").
6. Francisco Militante immediate predecessor-in-interest of the
plaintiff, has also declared the land for taxation purposes under Tax
Dec. No. 5172 in 1940 (Exh. "E") for 1945; under Tax Dec. No. T-
86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122 (Exh. "2"), and
paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46
(Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for
1948 (Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5").
7. Tax Declaration No. 2434 in the name of Liberato Demontaño for
the land described therein (Exh. "F") was cancelled by Tax. Dec.
No. 5172 of Francisco Militante (Exh. "E"). Liberato Demontaño
paid the land tax under Tax Dec. No. 2434 on Dec. 20, 1939 for the
years 1938 (50%) and 1959 (Exh. "H").
8. The defendant had declared for taxation purposes Lot No. 2 of
the Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of
Lot No. 2, Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-
A" Tax No. 8583 (Exh. "2") was revised by Tax Dec. No. 9498 in
 the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584
(Exh. "2-A") was cancelled by Tax Dec. No. 9584 also in the name
of the defendant (Exh. "2-C"). The defendant paid the land taxes for
Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946,
for the year 1950, and for the year 1960 as shown by the certificate
of the treasurer (Exh. "3"). The defendant may present to the Court
other land taxes receipts for the payment of taxes for this lot.
9. The land claimed by the defendant as his own was surveyed on
June 6 and 7,1956, and a planapproved by Director of Land on
November 15, 1956 was issued, identified as Psu 155241 (Exh.
"5").
10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer
case against Isaias Batiller in the Justice of the Peace Court of
Barotac Viejo Province of Iloilo (Exh. "4") to which the defendant
Isaias Batiller riled his answer on August 29, 1960 (Exh. "4-A").
The Municipal Court of Barotac Viejo after trial, decided the case on
May 10, 1961 in favor of the defendant and against the
plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of the
Municipal Court of Barotac Viejo which was docketed in this Court
as Civil Case No. 5750 on June 3, 1961, to which the defendant,
Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C").
And this Court after the trial. decided the case on November 26,
1964, in favor of the defendant, Isaias Batiller and against the
plaintiff (Exh. "4-D").
(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance
decision of 26 November 1964dismissing plaintiff's therein
complaint for ejectment against defendant, the iloilo court expressly
found "that plaintiff's complaint is unjustified, intended to harass the
defendant" and "that the defendant, Isaias Batiller, has a better
right to possess the land in question described in Psu 155241 (Exh.
"3"), Isaias Batiller having been in the actual physical
possession thereof under a claim of title many years before
Francisco Militante sold the land to the plaintiff-hereby dismissing
plaintiff's complaint and ordering the plaintiff to pay the defendant
attorney's fees ....")
B. During the trial of this case on the merit, the plaintiff will prove by competent
evidence the following:
1. That the land he purchased from Francisco Militante under Exh.
"A" was formerly owned and possessed by Liberato Demontaño but
that on September 6, 1919 the land was sold at public auction by
virtue of a judgment in a Civil Case entitled "Edw J. Pflieder plaintiff
vs. Liberato Demontaño Francisco Balladeros and Gregorio Yulo,
defendants", of which Yap Pongco was the purchaser (Exh. "1-3").
The sale was registered in the Office of the Register of Deeds of
Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and
a definite Deed of Sale was executed by Constantino A. Canto,
provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco
(Exh. "I"), the sale having been registered in the Office of the
Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").
2. On September 22, 1934, Yap Pongco sold this land to Francisco
Militante as evidenced by a notarial deed (Exh. "J") which was
registered in the Registry of Deeds on May 13, 1940 (Exh. "J-1").
3. That plaintiff suffered damages alleged in his complaint.
C. Defendants, on the other hand will prove by competent evidence during the trial of
this case the following facts:
1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned
and possessed by Felipe Batiller, grandfather of the defendant
Basilio Batiller, on the death of the former in 1920, as his sole heir.
Isaias Batiller succeeded his father , Basilio Batiller, in the
ownership and possession of the land in the year 1930, and since
then up to the present, the land remains in the possession of the
defendant, his possession being actual, open, public, peaceful and
continuous in the concept of an owner, exclusive of any other rights
and adverse to all other claimants.
2. That the alleged predecessors in interest of the plaintiff have
never been in the actual possession of the land and that they never
had any title thereto.
3. That Lot No. 2, Psu 155241, the subject of Free Patent
application of the defendant has beenapproved.
4. The damages suffered by the defendant, as alleged in his
counterclaim."'1
The appellate court further related the developments of the case, as follows:
On August 17, 1965, defendant's counsel manifested in open court
that before any trial on the merit of the case could proceed he
would file a motion to dismiss plaintiff's complaint which he did,
alleging that plaintiff does not have cause of action against
him because the property in dispute which he (plaintiff) allegedly
bought from his father-in-law, Francisco Militante was the subject
matter of LRC No. 695 filed in the CFI of Iloilo, which case was
brought on appeal to this Court and docketed as CA-G.R. No.
13497-R in which aforesaid case plaintiff was the counsel on record
of his father-in-law, Francisco Militante. Invoking Arts. 1409 and
1491 of the Civil Code which reads:
 'Art. 1409. The following contracts are inexistent
and void from the beginning:
xxx xxx xxx
(7) Those expressly prohibited by law.
'ART. 1491. The following persons cannot
acquire any purchase, even at a public auction,
either in person of through the mediation of
another: .
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with
the administration of justice, the property and rights of in litigation or
levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition
includes the act of acquiring an assignment and shall apply
tolawyers, with respect to the property and rights which may be the
object of any litigation in which they may take part by virtue of their
profession.'
defendant claims that plaintiff could not have acquired any interest
in the property in dispute as the contract he (plaintiff) had with
Francisco Militante was inexistent and void. (See pp. 22-31, Record
on Appeal). Plaintiff strongly opposed defendant's motion to dismiss
claiming that defendant can not invoke Articles 1409 and 1491 of
the Civil Code as Article 1422 of the same Code provides that 'The
defense of illegality of contracts is not available to third persons
whose interests are not directly affected' (See pp. 32-35 Record on
Appeal).
On October 18, 1965, the lower court issued an order disclaiming
plaintiffs complaint (pp. 42-49, Record on Appeal.) In the aforesaid
order of dismissal the lower court practically agreed with
defendant's contention that the contract (Exh. A) between plaintiff
and Francism Militante was null and void. In due season plaintiff
filed a motion for reconsideration (pp. 50-56 Record on Appeal)
which was denied by the lower court on January 14, 1966 (p. 57,
Record on Appeal).
Hence, this appeal by plaintiff from the orders of October 18, 1965
and January 14, 1966.
Plaintiff-appellant imputes to the lower court the following errors:
'1. The lower court erred in holding that the
contract of sale between the plaintiff-appellant
and his father-in-law, Francisco Militante, Sr.,
now deceased, of the property covered by Plan
Psu-99791, (Exh. "A") was void, not voidable
because it was made when plaintiff-appellant was
the counsel of the latter in the Land Registration
case.
'2. The lower court erred in holding that the
defendant-appellee is an interested person to
question the validity of the contract of sale
between plaintiff-appellant and the deceased,
Francisco Militante, Sr.
'3. The lower court erred in entertaining the
motion to dismiss of the defendant-appellee after
he had already filed his answer, and after the
termination of the pre-trial, when the said motion
to dismiss raised a collateral question.
'4. The lower court erred in dismissing the
complaint of the plaintiff-appellant.'
The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2)
legal posers — (1) whether or not the contract of sale between appellant and his
father-in-law, the late Francisco Militante over the property subject of Plan Psu-99791
was void because it was made when plaintiff was counsel of his father-in-law in a land
registration case involving the property in dispute; and (2) whether or not the lower
court was correct in entertaining defendant-appellee's motion to dismiss after the
latter had already filed his answer and after he (defendant) and plaintiff-appellant had
agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal
to this Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference held by
the trial court at which the parties with their counsel agreed and stipulated on the
material and relevant facts and submitted their respective documentary exhibits as
referred to in the pre-trial order, supra,2 practically amounted to a fulldress trial which
placed on record all the facts and exhibits necessary for adjudication of the case.
The three points on which plaintiff reserved the presentation of evidence at the-trial
dealing with the source of the alleged right and title of Francisco Militante's
predecessors, supra,3 actually are already made of record in thestipulated
facts and admitted exhibits. The chain of Militante's alleged title and right to the land
as supposedly traced back to Liberato Demontaño was actually asserted by Militante
(and his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case
and rejected by the Iloilo land registration court which dismissedMilitante's application
for registration of the land. Such dismissal, as already stated, was affirmed by the
final judgment in 1958 of the Court of Appeals.4
The four points on which defendant on his part reserved the presentation of evidence
at the trial dealing with his and his ancestors' continuous, open, public and peaceful
possession in the concept of owner of the land and the Director of Lands' approval of
his survey plan thereof, supra,5 are likewise already duly established facts of record,
in the land registration case as well as in the ejectment case wherein the Iloilo court
of first instance recognized the superiority of defendant's right to the land as against
plaintiff.
No error was therefore committed by the lower court in dismissing plaintiff's complaint
upon defendant's motion after the pre-trial.
1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of
cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of
ownership to the land in question was predicated on the sale thereof for P2,000.00
made in 1956 by his father-in- law, Francisco Militante, in his favor, at a time when
Militante's application for registration thereof had already been dismissed by the Iloilo
land registration court and was pending appeal in the Court of Appeals.
With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's
application for registration, the lack of any rightful claim or title of Militante to the land
was conclusively and decisively judicially determined. Hence, there was no right or
title to the land that could be transferred or sold by Militante's purported sale in 1956
in favor of plaintiff.
Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner
of the land and to be restored to possession thereof with damages was bereft of any
factual or legal basis.
2. No error could be attributed either to the lower court's holding that the purchase by
a lawyer of the property in litigation from his client is categorically prohibited by Article
1491, paragraph (5) of the Philippine Civil Code, reproduced supra;6 and that
consequently, plaintiff's purchase of the property in litigation from his client (assuming
that his client could sell the same since as already shown above, his client's claim to
the property was defeated and rejected) was void and could produce no legal effect,
by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts
"expressly prohibited or declared void by law' are "inexistent and that "(T)hese
contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived."
The 1911 case of Wolfson vs. Estate of Martinez7 relied upon by plaintiff as holding
that a sale of property in litigation to the party litigant's lawyer "is not void but voidable
at the election of the vendor" was correctly held by the lower court to have been
superseded by the later 1929 case of Director of Lands vs. Abagat.8 In this later case
of Abagat, the Court expressly cited two antecedent cases involving the same
transaction of purchase of property in litigation by the lawyer which was expressly
declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of
our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the
vendor-client but by the adverse parties against whom the lawyer was to enforce his
rights as vendee thus acquired.
These two antecedent cases thus cited in Abagat clearly superseded (without so
expressly stating the previous ruling in Wolfson:
The spouses, Juan Soriano and Vicente Macaraeg, were the
owners of twelve parcels of land. Vicenta Macaraeg died in
November, 1909, leaving a large number of collateral heirs but no
descendants. Litigation between the surviving husband, Juan
Soriano, and the heirs of Vicenta immediately arose, and the herein
appellant Sisenando Palarca acted as Soriano's lawyer. On May 2,
1918, Soriano executed a deed for the aforesaid twelve parcels of
land in favor of Sisenando Palarca and on the following day, May 3,
1918, Palarca filed an application for the registration of the land in
the deed. After hearing, the Court of First Instance declared that the
deed was invalid by virtue of the provisions of article 1459 of the
Civil Code, which prohibits lawyers and solicitors from purchasing
property rights involved in any litigation in which they take part by
virtue of their profession. The application for registration was
consequently denied, and upon appeal by Palarca to the Supreme
Court, the judgement of the lower court was affirmed by a decision
promulgated November 16,1925. (G.R. No. 24329, Palarca vs.
Director of Lands, not reported.)
In the meantime cadastral case No. 30 of the Province of Tarlac
was instituted, and on August 21, 1923, Eleuteria Macaraeg, as
administratrix of the estate of Vicente Macaraeg, filed claims for the
parcels in question. Buenaventura Lavitoria administrator of the
estate of Juan Soriano, did likewise and so did Sisenando Palarca.
In a decision dated June 21, 1927, the Court of First Instance,
Judge Carballo presiding, rendered judgment in favor of Palarea
and ordered the registration of the land in his name. Upon appeal to
this court by the administration of the estates of Juan Soriano and
Vicente Macaraeg, the judgment of the court below was reversed
and the land adjudicated to the two estates as conjugal property of
the deceased spouses. (G.R. No. 28226, Director of Lands vs.
Abagat, promulgated May 21, 1928, not reported.) 9
In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of
the lawyer's purchase of the land in litigation from his client, ordered the issuance of a
writ of possession for the return of the land by the lawyer to the adverse parties
without reimbursement of the price paid by him and other expenses, and ruled that
"the appellant Palarca is a lawyer and is presumed to know the law. He must,
therefore, from the beginning, have been well aware of the defect in his title and is,
consequently, a possessor in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article 1459 of
the Civil Code of Spain then adopted here, until it was superseded on August 30,
1950 by the Civil Code of the Philippines whose counterpart provision is Article 1491.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in
its six paragraphs certain persons, by reason of the relation of trust or their peculiar
control over the property, from acquiring such property in their trust or control either
directly or indirectly and "even at a public or judicial auction," as follows: (1)
guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial
officers and employees, prosecuting attorneys, and lawyers; and (6) others especially
disqualified by law.
In Wolfson which involved the sale and assignment of a money judgment by the client
to the lawyer, Wolfson, whose right to so purchase the judgment was being
challenged by the judgment debtor, the Court, through Justice Moreland, then
expressly reserved decision on "whether or not the judgment in question actually falls
within the prohibition of the article" and held only that the sale's "voidability can not be
asserted by one not a party to the transaction or his representative," citing from
Manresa 10 that "(C)onsidering the question from the point of view of the civil law, the
view taken by the code, we must limit ourselves to classifying as void all acts done
contrary to the express prohibition of the statute. Now then: As the code does not
recognize such nullity by the mere operation of law, the nullity of the acts
hereinbefore referred to must be asserted by the person having the necessary legal
capacity to do so and decreed by a competent
court." 11
The reason thus given by Manresa in considering such prohibited acquisitions under
Article 1459 of the Spanish Civil Code as merely voidable at the instance and option
of the vendor and not void — "that the Code does not recognize such nullity de pleno
derecho" — is no longer true and applicable to our own Philippine Civil Code
whichdoes recognize the absolute nullity of contracts "whose cause, object, or
purpose is contrary to law, morals, good customs, public order or public policy" or
which are "expressly prohibited or declared void by law" and declares such contracts
"inexistent and void from the beginning." 12
The Supreme Court of Spain and modern authors have likewise veered from
Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June 1966,
the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish
Civil Code is based on public policy, that violation of the prohibition contract cannot
be validated by confirmation or ratification, holding that:
... la prohibicion que el articulo 1459 del C.C. establece respecto a
los administradores y apoderados, la cual tiene conforme a la
doctrina de esta Sala, contendia entre otras, en S. de 27-5-1959,
un fundamento de orden moral lugar la violacion de esta a la
nulidad de pleno derecho del acto o negocio celebrado, ... y
prohibicion legal, afectante orden publico, no cabe con efecto
alguno la aludida retification ... 13
The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish
Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy as
applied by the Supreme Court of Spain to administrators and agents in its above cited
decision should certainly apply with greater reason to judges, judicial officers, fiscals
and lawyers under paragraph 5 of the codal article.
Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his
"Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that,
with respect to Article 1459, Spanish Civil Code:.
Que caracter tendra la compra que se realice por estas personas?
Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la
nulidad esabsoluta porque el motivo de la prohibicion es de orden
publico. 14
Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la
consequencia de la infraccion es la nulidad radical y ex lege." 15
Castan, quoting Manresa's own observation that.
"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan
solo de guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las
personas que intervienen en la administrcionde justicia de todos los retigios que
necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere
in fundada, redundura endescredito de la institucion." 16 arrives at the contrary and
now accepted view that "Puede considerace en nuestro derecho inexistente 'o
radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se
ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre
motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17
It is noteworthy that Caltan's rationale for his conclusion that fundamental
consideration of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public officers and employees of government property intrusted to
them and by justices, judges, fiscals and lawyers of property and rights in litigation
and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of
our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409
declaring such prohibited contracts as "inexistent and void from the beginning." 18
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot
be cured by ratification. The public interest and public policy remain paramount and
do not permit of compromise or ratification. In his aspect, the permanent
disqualification of public and judicial officers and lawyers grounded on public
policy differs from the first three cases of guardians, agents and administrators
(Article 1491, Civil Code), as to whose transactions it had been opined that they may
be "ratified" by means of and in "the form of a new contact, in which cases its validity
shall be determined only by the circumstances at the time the execution of such new
contract. The causes of nullity which have ceased to exist cannot impair the validity of
the new contract. Thus, the object which was illegal at the time of the first contract,
may have already become lawful at the time of the ratification or second contract; or
the service which was impossible may have become possible; or the intention which
could not be ascertained may have been clarified by the parties. The ratification or
second contract would then be valid from its execution; however, it does not retroact
to the date of the first contract." 19
As applied to the case at bar, the lower court therefore properly acted upon
defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's alleged
purchase of the land, since its juridical effects and plaintiff's alleged cause of action
founded thereon were being asserted against defendant-appellant. The principles
governing the nullity of such prohibited contracts and judicial declaration of their
nullity have been well restated by Tolentino in his treatise on our Civil Code, as
follows:
Parties Affected. — Any person may invoke the in existence of the
contract whenever juridical effects founded thereon are asserted
against him. Thus, if there has been a void transfer of property, the
transferor can recover it by the accion reinvindicatoria; and any
prossessor may refuse to deliver it to the transferee, who cannot
enforce the contract. Creditors may attach property of the debtor
which has been alienated by the latter under a void contract; a
mortgagee can allege the inexistence of a prior encumbrance; a
debtor can assert the nullity of an assignment of credit as a defense
to an action by the assignee.
Action On Contract. — Even when the contract is void or inexistent,
an action is necessary to declare its inexistence, when it has
already been fulfilled. Nobody can take the law into his own hands;
hence, the intervention of the competent court is necessary to
declare the absolute nullity of the contract and to decree the
restitution of what has been given under it. The judgment, however,
will retroact to the very day when the contract was entered into.
If the void contract is still fully executory, no party need bring an
action to declare its nullity; but if any party should bring an action to
enforce it, the other party can simply set up the nullity as a
defense. 20
ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs
in all instances against plaintiff-appellant. So ordered.
Makalintal, Zaldivar, Castro,. Fernando, Barredo, Makasiar, Antonio and Esguerra,
JJ., concur.
[G.R. No. L-8477. May 31, 1956.]
THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of the minor, MARIANO L.
BERNARDO, Petitioner, vs. SOCORRO ROLDAN, FRANCISCO HERMOSO, FIDEL C. RAMOS and
EMILIO CRUZ, Respondents.
DECISION
BENGZON, J.:
As guardian of the property of the minor Mariano L. Bernardo, the Philippine Trust Company
filed in the Manila court of first instance a complaint to annul two contracts regarding 17
parcels of land:ch(a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C.
Ramos; chand (b) sale thereof by Fidel C. Ramos to Socorro Roldan personally. The complaint
likewise sought to annul a conveyance of four out of the said seventeen parcels by Socorro
Roldan to Emilio Cruz.
The action rests on the proposition that the first two sales were in reality a sale by the
guardian to herself — therefore, null and void under Article 1459 of the Civil Code. As to the
third conveyance, it is also ineffective, because Socorro Roldan had acquired no valid title to
convey to Cruz.
The material facts of the case are not complicated. These 17 parcels located in Guiguinto,
Bulacan, were part of the properties inherited by Mariano L. Bernardo from his father,
Marcelo Bernardo, deceased. In view of his minority, guardianship proceedings were
instituted, wherein Socorro Roldan was appointed his guardian. She was the surviving spouse
of Marcelo Bernardo, and the stepmother of said Mariano L. Bernardo.
On July 27, 1947, Socorro Roldan filed in said guardianship proceedings (Special Proceeding
2485, Manila), a motion asking for authority to sell as guardian the 17 parcels for the sum of
P14,700 to Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest the money in
a residential house, which the minor desired to have on Tindalo Street, Manila. The motion
was granted.
On August 5, 1947 Socorro Roldan, as guardian, executed the proper deed of sale in favor of
her brother-in-law Dr. Fidel C. Ramos (Exhibit A-1), and on August 12, 1947 she asked for,
and obtained, judicial confirmation of the sale. On August 13, 1947, Dr. Fidel C. Ramos
executed in favor of Socorro Roldan, personally, a deed of conveyance covering the same
seventeen parcels, for the sum of P15,000 (Exhibit A-2). And on October 21, 1947 Socorro
Roldan sold four parcels out of the seventeen to Emilio Cruz for P3,000, reserving to herself
the right to repurchase (Exhibit A-3).
The Philippine Trust Company replaced Socorro Roldan as guardian, on August 10, 1948. And
this litigation, started two months later, seeks to undo what the previous guardian had done.
The step-mother in effect, sold to herself, the properties of her ward, contends the Plaintiff,
and the sale should be annulled because it violates Article 1459 of the Civil Code prohibiting
the guardian from purchasing “either in person or through the mediation of another” the
property of her ward.
The court of first instance, following our decision in Rodriguez vs. Mactal, 60 Phil. 13 held the
article was not controlling, because there was no proof that Fidel C. Ramos was a mere
intermediary or that the latter had previously agreed with Socorro Roldan to buy the parcels
for her benefit.
However, taking the former guardian at her word - she swore she had repurchased the lands
from Dr. Fidel C. Ramos to preserve it and to give her protege opportunity to redeem — the
court rendered judgment upholding the contracts but allowing the minor to repurchase all
the parcels by paying P15,000, within one year.
The Court of Appeals affirmed the judgment, adding that the minor knew the particulars of,
and approved the transaction, and that “only clear and positive evidence of fraud or bad
faith, and not mere insinuations and inferences will overcome the presumptions that a sale
was concluded in all good faith for value”.
At first glance the resolutions of both courts accomplished substantial justice:chthe minor
recovers his properties. But if the conveyances are annulled as prayed for, the minor will
obtain a better deal:chhe receives all the fruits of the lands from the year 1947 (Article 1303
Civil Code) and will return P14,700, not P15,000.
To our minds the first two transactions herein described couldn’t be in a better juridical
situation than if this guardian had purchased the seventeen parcels on the day following the
sale to Dr. Ramos. Now, if she was willing to pay P15,000 why did she sell the parcels for
less? In one day (or actually one week) the price could not have risen so suddenly. Obviously
when, seeking approval of the sale she represented the price to be the best obtainable in the
market, she was not entirely truthful. This is one phase to consider.
Again, supposing she knew the parcels were actually worth P17,000; chythen she agreed to
sell them to Dr. Ramos at P14,700; cand knowing the realty’s value she offered him the next
day P15,000 or P15,500, and got it. Will there be any doubt that she was recreant to her
guardianship, and that her acquisition should be nullified? Even without proof that she had
connived with Dr. Ramos. Remembering the general doctrine that guardianship is a trust of
the highest order, and the trustee cannot be allowed to have any inducement to neglect his
ward’s interest and in line with the court’s suspicion whenever the guardian acquires the
ward’s property 1 we have no hesitation to declare that in this case, in the eyes of the law,
Socorro Roldan took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of
the Civil Code applies.
She acted it may be true without malice; cythere may have been no previous agreement
between her and Dr. Ramos to the effect that the latter would buy the lands for her. But the
stubborn fact remains that she acquired her protege’s properties, through her brother-in-
law. That she planned to get them for herself at the time of selling them to Dr. Ramos, may
be deduced from the very short time between the two sales (one week). The temptation
which naturally besets a guardian so circumstanced, necessitates the annulment of the
transaction, even if no actual collusion is proved (so hard to prove) between such guardian
and the intermediate purchaser. This would uphold a sound principle of equity and justice. 2
We are aware of course that in Rodriguez vs. Mactal, 60 Phil. p. 13 wherein the guardian
Mactal sold in January 1926 the property of her ward to Silverio Chioco, and in March 1928
she bought it from Chioco, this Court said:c
“In order to bring the sale in this case within the part of Article 1459, quoted above, it is
essential that the proof submitted establish some agreement between Silverio Chioco and
Trinidad Mactal to the effect that Chioco should buy the property for the benefit of Mactal. If
there was no such agreement, either express or implied, then the sale cannot be set aside c
(Page 16; cItalics supplied.)”
However, the underlined portion was not intended to establish a general principle of law
applicable to all subsequent litigations. It merely meant that the subsequent purchase by
Mactal could not be annulled in that particular case because there was no proof of a previous
agreement between Chioco and her. The court then considered such proof necessary to
establish that the two sales were actually part of one scheme — guardian getting the ward’s
property through another person — because two years had elapsed between the sales. Such
period of time was sufficient to dispel the natural suspicion of the guardian’s motives or
actions. In the case at bar, however, only one week had elapsed. And if we were technical,
we could say, only one day had elapsed from the judicial approval of the sale (August 12), to
the purchase by the guardian (Aug. 13).
Attempting to prove that the transaction was beneficial to the minor, Appellee’s attorney
alleges that the money (P14,700) invested in the house on Tindalo Street produced for him
rentals of P2,400 yearly; chwhereas the parcels of land yielded to his step-mother only an
average of P1,522 per year. 3 The argument would carry some weight if that house had been
built out of the purchase price of P14,700 only. 4 One thing is certain:chthe calculation does
not include the price of the lot on which the house was erected. Estimating such lot at
P14,700 only, (ordinarily the city lot is more valuable than the building) the result is that the
price paid for the seventeen parcels gave the minor an income of only P1,200 a year,
whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of
P1,522.00. The minor was thus on the losing end.
Hence, from both the legal and equitable standpoints these three sales should not be
sustained:cthe first two for violation of article 1459 of the Civil Code; chanand the third
because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries with is
(Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together
with their fruits and the duty of the minor, through his guardian to repay P14,700 with legal
interest.
Judgment is therefore rendered:
a. Annulling the three contracts of sale in question; cb. declaring the minor as the owner of
the seventeen parcels of land, with the obligation to return to Socorro Roldan the price of
P14,700 with legal interest from August 12, 1947; chc. Ordering Socorro Roldan and Emilio
Cruz to deliver said parcels of land to the minor; chyd. Requiring Socorro Roldan to pay him
beginning with 1947 the fruits, which her attorney admits, amounted to P1,522 a year; che.
Authorizing the minor to deliver directly to Emilio Cruz, out of the price of P14,700 above
mentioned, the sum of P3,000; chand f. charging Appellees with the costs. SO ORDERED.
Paras, C.J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., and
Endencia, JJ., concur.
G.R. No. L-26096 February 27, 1979 IN WITNESS WHEREOF, I have caused my right thumb. mark to
be affixed hereto this 10th of June, 1961, at the City of Cebu.
THE DIRECTOR OF LANDS, petitioner,
vs.
SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL, MARTA C. DE
LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS, petitioners-
appellants, ALBERTO FERNANDEZ, adverse claimant-appellee.

Juanito Ll. Abao for petitioners-appellants.

Alberto R Fernandez in his own behalf.

MAKASIAR, J.:

This is an appeal from the order of the Court of First Instance of Cebu dated March
19, 1966 denying the petition for the cancellation of an adverse claim registered by
the adverse claimant on the transfer certificate of title of the petitioners.

The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel by

petitioner, Maximo Abarquez, in Civil Case No. R-6573 of the Court of First Instance
of Cebu, entitled "Maximo Abarquez vs. Agripina Abarquez", for the annulment of a
contract of sale with right of repurchase and for the recovery of the land which was
the subject matter thereof. The Court of First Instance of Cebu rendered a decision on
May 29, 1961 adverse to the petitioner and so he appealed to the Court of Appeals.
Litigating as a pauper in the lower court and engaging the services of his lawyer on a
contingent basis, petitioner, liable to compensate his lawyer whom he also retained
for his appeal executed a document on June 10, 1961 in the Cebuano-Visayan dialect
whereby he obliged himself to give to his lawyer one-half (1/2) of whatever he might
recover from Lots 5600 and 5602 should the appeal prosper. The contents of the
document as translated are as follows:
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R-6573 of the
Court of First Instance of Cebu, make known through this
agreement that for the services rendered by Atty. Alberto B.
Fernandez who is my lawyer in this case, if the appeal is won up to
the Supreme Court, I Promise and will guarantee that I win give to
said lawyer one-half (1/2) of what I may recover from the estate of
my father in Lots No. 5600 and 5602 which are located at Bulacao
Pardo, City of Cebu. That with respect to any money which may be
adjudged to me from Agripina Abarquez, except 'Attorney's Fees',
the same shall pertain to me and not to said lawyer.
The real Property sought to be recovered in Civil Case No. R6573 was actually the
share of the petitioner in Lots 5600 and 5602, which were part of the estate of his
deceased parents and which were partitioned the heirs which included petitioner
Maximo Abarquez and his elder sister Agripina Abarquez, the defendant in said civil
case.
This partition was made pursuant to a project of partition approved by the Court which
provided am other that Lots Nos. 5600 and 5602 were to be divided into three equal
Parts, one third of which shall be given to Maximo Abarquez. However, Agripina
Abarquez the share of her brother stating that the latter executed an instrument
of pacto de retroprior to the partition conveying to her any or all rights in the estate of
their parents. Petitioner discovered later that the claim of his sister over his share was
based on an instrument he was believe all along to be a mere acknowledgment of the
receipt of P700.00 which his sister gave to him as a consideration for g care of their
father during the latter's illness and never an instrument of pacto de retro. Hence, he
instituted an action to annul the alleged instrument of pacto de retro.
The Court of Appeals in a decision promulgated on August 27, 1963 reversed the
decision of the lower court and annulled the dead of pacto de retro. Appellee Agripina
Abarquez filed a motion for reconsideration but the same was denied in a resolution
dated January 7, 1964 (p. 66, Record on Appeal; p. 13, Rec.) and the judgment
became final and executory on January 22,1964.
Subsequently, Transfer Certificate of Title No. 31841 was issued on May 19,1965 in
the name of Maximo Abarquez, married to Anastacia Cabigas, over his adjudged
share in Lots Nos. 5600 and 5602 containing an area of 4,085 square meters (p. 110,
ROA; p. 13, rec.). These parcels of land later by the subject matter of the adverse
claim filed by the claimant.
The case having been resolved and title having been issued to petitioner, adverse
claimant waited for petitioner to comply with ha obligation under the document
executed by him on June 10, 1961 by delivering the one-half (½) portion of the said
parcels of land.
Petitioner refused to comply with his obligation and instead offered to sell the whole
parcels of land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and
Marta C. de Larrazabal. Upon being informed of the intention of the petitioner,
adverse t claimant immediately took stops to protect his interest by filing with the trial
court a motion to annotate Ins attorney's lien on TCT No. 31841 on June 10, 1965
and by notifying the prospective buyers of his claim over the one-half portion of the
parcels of land.
Realizing later that the motion to annotate attorney's lien was a wrong remedy, as it
was not within the purview of Section 37, rule 138 of the Revised Rule of Court, but
before the same was by the trial court, adverse t by an affidavit of adverse claim on
July 19, 1965 with the Register of Deeds of Cebu (p. 14, ROA; p. 13, rec.). By virtue
of the petition of mid affidavit the adverse claim for one-half (½) of the lots covered by
the June 10, 1961 document was annotated on TCT No. 31841.
Notwithstanding the annotation of the adverse claim, petitioner-spouse Maximo
Abarquez and Anastacia Cabigas conveyed by deed of absolute sale on July 29,
1965 two-thirds (2/3) of the lands covered by TCT No. 31841 to petitioner-spouses
Juan Larrazabal and Marta C. de Larrazabal. When the new transfer certificate of title
No. 32996 was issued, the annotation of adverse claim on TCT No. 31841
necessarily had to appear on the new transfer certificate of title. This adverse claim
on TCT No. 32996 became the subject of cancellation proceedings filed by herein
petitioner-spouses on March 7, 1966 with the Court of First Instance of Cebu (p. 2
ROA; p. 13, rec.). The adverse claimant, Atty. Alberto B. Fernandez, filed his
opposition to the petition for cancellation on March 18, 1966 (p. 20, ROA; p. 13 rec.).
The trial court resolved the issue on March 19, 1966, when it declared that:
...the petition to cancel the adverse claim should be denied. The
admission by the petitioners that the lawyers (Attys. Fernandez and
Batiguin) are entitled to only one-third of the lot described in
Transfer Certificate of Title No. 32966 is the best proof of the
authority to maintain said adverse claim (p. 57, ROA; p. 13, rec.).
Petitioner-spouses decided to appeal the order of dismissal to this Court and
correspondingly filed the notice of appeal on April 1, 1966 with the trial court. On April
2, 1966, petitioner-spouses filed the appeal bond and subsequently filed the record
on appeal on April 6, 1966. The records of the case were forwarded to this Court
through the Land Registration Commission of Manila and were received by this Court
on May 5, 1966.
Counsel for the petitioner-spouses filed the printed record on appeal on July 12,
1966. Required to file the appellants' brief, counsel filed one on August 29, 1966 while
that of the appellee was filed on October 1, 1966 after having been granted an
extension to file his brief.
The case was submitted for decision on December 1, 1966. Counsel for the
petitioners filed a motion to expunge appellees' brief on December 8, 1966 for having
been filed beyond the reglementary period, but the same was denied by this Court in
a resolution dated February 13, 1967.
The pivotal issue to be resolved in the instant case is the validity or nullity of the
registration of the adverse claim of Atty. Fernandez, resolution of which in turn hinges
on the question of whether or not the contract for a contingent fee, basis of the
interest of Atty. Fernandez, is prohibited by the Article 1491 of the New Civil Code
and Canon 13 of the Canons of Professional Ethics.
Petitioners contend that a contract for a contingent fee violates Article 1491 because
it involves an assignment of a property subject of litigation. That article provides:
Article 1491. The following persons cannot acquire by purchase
even at a public or judicial auction, either in person or through the
petition of another.
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior and other o and employees connected with the
administration of justice, the property and rights in litigation or
levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions;this prohibition
includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the
object of any litigation in which they may take part by virtue of their
profession (Emphasis supplied).
This contention is without merit. Article 1491 prohibits only the sale or assignment
between the lawyer and his client, of property which is the subject of litigation. As WE
have already stated. "The prohibition in said article a only to applies stated: " The
prohibition in said article applies only to a sale or assignment to the lawyer by his
client of the property which is the subject of litigation. In other words, for the
prohibition to operate, the sale or t of the property must take place during the
pendency of the litigation involving the property" (Rosario Vda. de Laig vs. Court of
Appeals, et al., L-26882, November 21, 1978).
Likewise, under American Law, the prohibition does not apply to "cases where after
completion of litigation the lawyer accepts on account of his fee, an interest the
assets realized by the litigation" (Drinker, Henry S., Legal Ethics, p. 100 [1953], citing
App. A, 280; N.Y. Ciu 714). "There is a clear distraction between such cases and one
in which the lawyer speculates on the outcome of the matter in which he is employed"
(Drinker, supra, p. 100 citing A.B.A. Op. 279).
A contract for a contingent fee is not covered by Article 1491 because the tranfer or
assignment of the property in litigation takes effect only after the finality of a favorable
judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of
one-half (1/2) of whatever Maximo Abarquez might recover from his share in the lots
in question, is contingent upon the success of the appeal. Hence, the payment of the
attorney's fees, that is, the transfer or assignment of one-half (1/2) of the property in
litigation will take place only if the appeal prospers. Therefore, the tranfer actually
takes effect after the finality of a favorable judgment rendered on appeal and not
during the pendency of the litigation involving the property in question. Consequently,
the contract for a contingent fee is not covered by Article 1491.
While Spanish civilists differ in their views on the above issue — whether or not a
contingent fee contract (quota litis agreement) is covered by Article 1491 — with
Manresa advancing that it is covered, thus:
Se ha discutido si en la incapacidad de Ion Procumdam y
Abogados asta o el pecto de quota litis. Consiste este, como es
sabido, en la estipulacion de que el Abogado o el Procurador ban
de hacer suyos una parte alicuota de In cona que se li m la son es
favorable. Con es te concepto a la vista, es para nosortros que el
articulo que comentamos no menciona ese pacto; pero como la
incapacidad de los Abogados y Procuradores se extinede al acto
de adquirir por cesion; y la efectividad del pacto dequota
litis implica necesariamente una cesion, estimamos que con solo el
num. 5 del articulo 1459 podria con exito la nulidad de ese pacto
tradicionalmente considerado como ilicito.
xxx xxx xxx
Debe tenerse tambien en cuenta, respecto del ultimo parrafo del
articulo 1459, la sentencia del Tribunal Supreme de 25 Enero de
1902, que delcara que si bien el procurador no puede adquirir para
si los bienes, en cuanto a los cuales tiene incapacidad, puede
adquirirlos para otra persona en quien no concurra incapacidad
alguna (Manresa, Comentarios al Codigo Civil Español, Tomo X, p.
110 [4a ed., 1931] emphasis supplied).
Castan, maintaining that it is not covered, opines thus;
C. Prohibiciones impuestas a las personas encargadas, mas o
menos directamente, de la administracion de justicia.—El mismo
art. 1,459 del Codigo civil prohibe a los Magistrados, Jueces,
individuos del Minesterio fiscal, Secretarios de Tribunales y
Juzgados y Oficiales de Justicia adquirir por compra (aunque sea
en subasta publica o judicial, por si ni por persona alguna
intermedia). 'Los bienes y derechos que estuviesen en litigio ante el
Tribunal en cuya jurisdicion on teritorio ejercieran sus respectivas
funciones, extendiendo se esta prohibicion al acto de adquirir por
cesion', y siendo tambien extensiva ' Alos Abogados y
Procuradores respecto a los bienes y derecho que fueran objeto
del un litigio en que intervengan pos su profession y oficio.'
El fundamento de esta prohibicion es clarismo. No solo se trata—
dice Manresa—de quitar la ocasion al fraude; persiguese, ademas,
el proposito de rodear a las personas que intervienen en la
administracion de justicia de todos los prestigios que necesitan
para ejercer su ministerio, librando los de toda sospecha, que,
aunque fuere infundada, redundaria en descredito de la institucion.
Por no dor lugar a recelos de ninguna clase, admite el Codigo (en
el apartado penutimo del art. 1.459) algunos casos en que, por
excepcion, no se aplica el pricipio prohibitivo de que venimos
hablando. Tales son los de que se trate de acciones hereditarias
entre coheredero, de cesion en pago de creditos, o de garantia de
los bienes que posean los funcionarios de justicia.
Algunos autores (Goyena, Manresa, Valverde)
creen que en la prohibicion del art. 1.459 esta
comprendido el pacto de quota litis (o sea el
convenio por el cual se concede al Abogado o
Procurador, para el caso de obtener sentencia
favorable una parte alicuota de la cosa o
cantidad que se litiga), porque dicho pacto
supone la venta o cesion de una parte de la cosa
o drecho que es objecto del litigio. Pero Mucius
Scaevola oberva, conrazon, que en el repetido
pacto no hay propiamente caso de compraventa
ni de cesion de derechos, y bastan para
estimario nulo otros preceptos del Codigo como
los relativos a la ilicitud de la causa (Castan,
Derecho Civil Espñol, Tomo 4, pp. 68-69, [9a ed.,
1956], emphasis supplied).
The Supreme Court of Spain, in its sentencia of 12 November 1917, has ruled that
Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) does not apply
to a contract for a contingent fee because it is not contrary to morals or to law, holding
that:
... que no es susceptible de aplicarse el precepto contenido en el
num. 5 del art. 1.459 a un contrato en el que se restrigen los
honorarios de un Abogado a un tanto por ciento de lo que se
obtuviera en el litigio, cosa no repudiada por la moral ni por la ley
(Tolentino, Civil Code of the Philippines, p. 35, Vol. V [1959];
Castan, supra; Manresa, supra).
In the Philippines, among the Filipino commentators, only Justice Capistrano
ventured to state his view on the said issue, thus:
The incapacity to purchase or acquire by assignment, which the law
also extends to lawyers with t to the property and rights which may
be the object of any litigation in which they may take part by virtue
of their profession, also covers contracts for professional
services quota litis. Such contracts, however, have been declared
valid by the Supreme Court" (Capistrano, Civil Code of the
Philippines, p. 44, Vol. IV [1951]).
Dr. Tolentino merely restated the views of Castan and Manresa as well as the state of
jurisprudence in Spain, as follows:
Attorneys-at-law—Some writers, like Goyena, Manresa and
Valverde believe that this article covers quota litis agreements,
under which a lawyer is to be given an aliquot part of the property
or amount in litigation if he should win the case for his
client. Scaevola and Castan, however, believe that such a contract
does not involve a sale or assignment of right but it may be void
under other articles of the Code, such as those referring to illicit
cause- On the other hand the Spanish Supreme Court has held that
this article is not applicable to a contract which limits the fees of a
lawyer to a certain percentage of what may be recovered in
litigation, as this is not contrary to moral or to law. (Tolentino, Civil
Code of the Philippines, p. 35, Vol. V [1959]; Castan, supra,
Emphasis supplied).
Petitioners her contend that a contract for a contingent fee violates the Canons of
Professional Ethics. this is likewise without merit This posture of petitioners
overlooked Canon 13 of the Canons which expressly contingent fees by way of
exception to Canon 10 upon which petitioners relied. For while Canon 10 prohibits a
lawyer from purchasing ...any interest in the subject matter of the litigation which he is
conducting", Canon 13, on the other hand, allowed a reasonable contingent fee
contract, thus: "A contract for a con. tangent fee where sanctioned by law, should be
reasonable under all the circumstances of the ca including the risk and uncertainty of
the compensation, but should always be subject to the supervision of a court, as to its
reasonableness." As pointed out by an authority on Legal Ethics:
Every lawyer is intensely interested in the successful outcome of
his case, not only as affecting his reputation, but also his
compensation. Canon 13 specifically permits the lawyer to contract
for a con tangent fee which of itself, negatives the thought that the
Canons preclude the lawyer's having a stake in his litigation. As
pointed out by Professor Cheatham on page 170 n. of his Case
Book, there is an inescapable conflict of interest between lawyer
and client in the matter of fees. Nor despite some statements to the
con in Committee opinions, is it believed that, particularly in view of
Canon 13, Canon 10 precludes in every case an arrangement to
make the lawyer's fee payable only out of the results of the
litigation. The distinction is between buying an interest in the
litigation as a speculation which Canon 10 condemns and agreeing,
in a case which the lawyer undertakes primarily in his professional
capacity, to accept his compensation contingent on the
outcome (Drinker, Henry S Legal Ethics, p. 99, [1953], Emphasis
supplied).
These Canons of Professional Ethics have already received "judicial recognition by
being cited and applied by the Supreme Court of the Philippines in its opinion"
Malcolm, Legal and Judicial Ethics, p. 9 [1949]). And they have likewise been
considered sources of Legal Ethics. More importantly, the American Bar Association,
through Chairman Howe of the Ethics Committee, opined that "The Canons of
Professional Ethics are legislative expressions of professional opinion ABA Op. 37
[1912])" [See footnote 25, Drinker, Legal Ethics, p. 27]. Therefore, the Canons have
some binding effect
Likewise, it must be noted that this Court has already recognized this type of a
contract as early as the case ofUlanday vs. Manila Railroad Co. (45 PhiL 540 [1923]),
where WE held that "contingent fees are not prohibited in the Philippines, and since
impliedly sanctioned by law 'Should be under the supervision of the court in order that
clients may be protected from unjust charges' (Canons of Profession 1 Ethics)". The
same doctrine was subsequently reiterated in Grey vs. Insular Lumber Co. (97 PhiL
833 [1955]) and Recto vs. Harden (100 PhiL 427 [1956]).
In the 1967 case of Albano vs. Ramos (20 SCRA 171 [19671), the attorney was
allowed to recover in a separate action her attomey's fee of one-third (1/3) of the
lands and damages recovered as stipulated in the contingent fee contract. And this
Court in the recent case of Rosario Vda de Laig vs. Court of Appeals, et al. (supra),
which involved a contingent fee of one-half (½) of the property in question, held than
,contingent fees are recognized in this i jurisdiction (Canon 13 of the Canons of
Professional Ethics adopted by the Philippine Bar association in 1917 [Appendix B,
Revised Rules of Court)), which contingent fees may be a portion of the property in
litigation."
Contracts of this nature are permitted because they redound to the benefit of the poor
client and the lawyer "especially in cases where the client has meritorious cause of
action, but no means with which to pay for legal services unless he can, with the
sanction of law, make a contract for a contingent fee to be paid out of the proceeds of
the litigation" (Francisco, Legal Ethics, p. 294 [1949], citing Lipscomb vs. Adams 91
S.W. 1046, 1048 [1949]). Oftentimes, contingent fees are the only means by which
the poor and helpless can redress for injuries sustained and have their rights
vindicated. Thus:
The reason for allowing compensation for professional services
based on contingent fees is that if a person could not secure
counsel by a promise of large fees in case of success, to be
derived from the subject matter of the suit, it would often place the
poor in such a condition as to amount to a practical denial of
justice. It not infrequently happens that person are injured through
the negligence or willful misconduct of others, but by reason of
 poverty are unable to employ counsel to assert their rights. In such
event their only means of redress lies in gratuitous service, which is
rarely given, or in their ability to find some one who will conduct the
case for a contingent fee. That relations of this king are often
abused by speculative attorneys or that suits of this character are
turned into a sort of commercial traffic by the lawyer, does not
destroy the beneficial result to one who is so poor to employ
counsel (id, at p. 293, citing Warvelle, Legal Ethics, p. 92,
Emphasis supplied).
Justice George Malcolm, writing on contingent fees, also stated that:
... the system of contingent compensation has the merit of affording
to certain classes of persons the opportunity to procure the
prosecution of their claims which otherwise would be beyond their
means. In many cases in the United States and the Philippines, the
contingent fee is socially necessary (Malcolm, Legal and Judicial
Ethics, p. 55 [1949], emphasis supplied).
Stressing further the importance of contingent fees, Professor Max Radin of the
University of California, said that:
The contingent fee certainly increases the possibility that vexatious
and unfounded suits will be brought. On the other hand, it makes
possible the enforcement of legitimate claims which otherwise
would be abandoned because of the poverty of the claimants. Of
these two possibilities, the social advantage seems clearly on the
side of the contingent fee. It may in fact be added by way of reply to
the first objection that vexations and unfounded suits have been
brought by men who could and did pay substantial attorney's fees
for that purpose (Radin, Contingent Fees in California, 28 Cal. L.
Rev. 587, 589 [1940], emphasis supplied).
Finally, a contingent fee contract is always subject to the supervision of the courts
with respect to the stipulated amount and may be reduced or nullified. So that in the
event that there is any undue influence or fraud in the execution of the contract or that
the fee is excessive, the client is not without remedy because the court will amply
protect him. As held in the case of Grey vs. Insular Lumber Co., supra, citing the case
of Ulanday vs. Manila Railroad Co., supra:
Where it is shown that the contract for a contingent fee was
obtained by any undue influence of the attorney over the client, or
by any fraud or imposition, or that the compensation is so clearly
excessive as to amount to extortion, the court win in a proper case
protect the aggrieved party.
In the present case, there is no iota of proof to show that Atty. Fernandez had exerted
any undue influence or had Perpetrated fraud on, or had in any manner taken
advantage of his client, Maximo Abarquez. And, the compensation of one-half of the
lots in question is not excessive nor unconscionable considering the contingent
nature of the attorney's fees.
With these considerations, WE find that the contract for a contingent fee in question is
not violative of the Canons of Professional Ethics. Consequently, both under the
provisions of Article 1491 and Canons 10 and 13 of the Canons of Profession Ethics,
a contract for a contingent fee is valid
In resolving now the issue of the validity or nullity for the registration of the adverse
claim, Section 110 of the Land Registration Act (Act 496) should be considered.
Under d section, an adverse claim may be registered only by..
Whoever claims any part or interest in registered land adverse to
the registered owner, arising subsequent to the date of the o
registration ... if no other provision is made in this Act for registering
the same ...
The contract for a contingent fee, being valid, vested in Atty Fernandez an interest or
right over the lots in question to the extent of one-half thereof. Said interest became
vested in Atty. Fernandez after the case was won on appeal because only then did
the assignment of the one-half (½) portion of the lots in question became effective
and binding. So that when he filed his affidavit of adverse claim his interest was
already an existing one. There was therefore a valid interest in the lots to be
registered in favor of Atty. Fernandez adverse to Mo Abarquez.
Moreover, the interest or claim of Atty. Fernandez in the lots in question arose long
after the original petition which took place many years ago. And, there is no other
provision of the Land Registration Act under which the interest or claim may be
registered except as an adverse claim under Section 110 thereof. The interest or
claim cannot be registered as an attorney's charging lien. The lower court was correct
in denying the motion to annotate the attomey's lien. A charging lien under Section
37, Rule 138 of the Revised Rules of Court is limited only to money judgments and
not to judgments for the annulment of a contract or for delivery of real property as in
the instant case. Said Section provides that:
Section 37. An attorney shall have a lien upon the funds,
documents and papers of his client which have lawfully come into
his oppossession and may retain the same until his lawful fees and
disbursements have been paid, and may apply such funds to the
satisfaction thereof. He shall also have a lien to the same extent
upon all judgments, for the payment of money, and executions
issued in pursuance of such judgments, which he has secured in a
litigation of his client ... (emphasis supplied).
Therefore, as an interest in registered land, the only adequate remedy open to Atty.
Fernandez is to register such interest as an adverse claim. Consequently, there being
a substantial compliance with Section 110 of Act 496, the registration of the adverse
claim is held to be valid. Being valid, its registration should not be cancelled because
as WE have already stated, "it is only when such claim is found unmeritorious that the
registration thereof may be cancelled" (Paz Ty Sin Tei vs. Jose Lee Dy Piao 103 Phil.
867 [1958]).
The one-half (½) interest of Atty. Fernandez in the lots in question should therefore be
respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and
Marta C. de Larrazabal. They purchased their two-thirds (2/3) interest in the lots in
question with the knowledge of the adverse claim of Atty. Fernandez. The adverse
claim was annotated on the old transfer certificate of title and was later annotated on
the new transfer certificate of title issued to them. As held by this Court:
The annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property where
the registration of such interest or right is not otherwise provided for
by the Land Registration Act, and serves as a notice and warning to
third parties dealing with said property that someone is claiming an
interest on the same or a better right than the registered owner
thereof (Sanchez, Jr. vs. Court of Appeals, 69 SCRA 332 [1976];
Paz Ty Sin Tei vs. Jose Le Dy Piao supra).
Having purchased the property with the knowledge of the adverse claim, they are
therefore in bad faith. Consequently, they are estopped from questioning the validity
of the adverse claim.
WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE PETITION
FOR THE CANCELLATION OF THE ADVERSE CLAIM SHOULD BE, AS IT IS
HEREBY AFFIRMED, WITH COSTS AGAINST PETITIONER-APPELLANTS JUAN
LARRAZABAL AND MARTA C. DE LARRAZABAL.
SO ORDERED.
Teehankee (Chairman), Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ.,
concur.
G.R. No. L-68838 March 11, 1991
FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs Gregorio
Fabillo, Roman Fabillo, Cristeta F. Maglinte and Antonio Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case
Division) and ALFREDO MURILLO (substituted by his heirs Fiamita M. Murillo,
Flor M. Agcaoili and Charito M. Babol), respondents.
Francisco A. Tan for petitioners.
Von Kaiser P. Soro for private respondent.
FERNAN, C.J.:
In the instant petition for review on certiorari, petitioners seek the reversal of the
appellate court's decision interpreting in favor of lawyer Alfredo M. Murillo the contract
of services entered into between him and his clients, spouses Florencio Fabillo and
Josefa Taña.
In her last will and testament dated August 16, 1957, Justina Fabillo bequeathed to
her brother, Florencio, a house and lot in San Salvador Street, Palo, Leyte which was
covered by tax declaration No. 19335, and to her husband, Gregorio D. Brioso, a
piece of land in Pugahanay, Palo, Leyte. 1 After Justina's death, Florencio filed a
petition for the probate of said will. On June 2, 1962, the probate court approved the
project of partition "with the reservation that the ownership of the land declared under
Tax Declaration No. 19335 and the house erected thereon be litigated and
determined in a separate proceedings."2
Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo in
recovering the San Salvador property. Acquiescing to render his services, Murillo
wrote Florencio the following handwritten letter:
Dear Mr. Fabillo:
I have instructed my stenographer to prepare the complaint and file the same on
Wednesday if you are ready with the filing fee and sheriffs fee of not less than P86.00
including transportation expenses.
Considering that Atty. Montilla lost this case and the present action is a revival of a
lost case, I trust that you will gladly give me 40% of the money value of the house and
lot as a contigent (sic) fee in case of a success. When I come back I shall prepare the
contract of services for your signature.
Thank you.
Cordially yours,
(Sgd.) Alfredo M. Murillo
Aug. 9, 19643
Thirteen days later, Florencio and Murillo entered into the following contract:
CONTRACT OF SERVICES
KNOW ALL MEN BY THESE PRESENTS:
That I, FLORENCIO FABILLO, married to JOSEFA TANA, of legal
age, Filipino citizen and with residence and postal address at Palo,
Leyte, was the Petitioner in Special Proceedings No. 843, entitled
"In the Matter of the Testate Estate of the late Justina Fabillo,
Florencio Fabillo, Petitioner" of the Court of First Instance of Leyte;
That by reason of the Order of the Court of First Instance of Leyte
dated June 2, 1962, my claim for the house and lot mentioned in
paragraph one (1) of the last will and testament of the late Justina
Fabillo, was denied altho the will was probated and allowed by the
Court;
That acting upon the counsel of Atty. Alfredo M. Murillo, I have
cause(d) the preparation and filing of another case, entitled
"Florencio Fabillo vs. Gregorio D. Brioso," which was docketed as
Civil Case No. 3532 of the Court of First Instance of Leyte;
That I have retained and engaged the services of Atty. ALFREDO
M. MURILLO, married and of legal age, with residence and postal
address at Santa Fe, Leyte to be my lawyer not only in Social
Proceedings No. 843 but also in Civil Case No. 3532 under the
following terms and conditions;
That he will represent me and my heirs, in case of my demise in the
two cases until their successful conclusion or until the case is
settled to my entire satisfaction;
That for and in consideration for his legal services, in the two
cases, I hereby promise and bind myself to pay Atty. ALFREDO M.
MURILLO, in case of success in any or both cases the sum
equivalent to FORTY PER CENTUM (40%) of whatever benefit I
may derive from such cases to be implemented as follows:
If the house and lot in question is finally awarded to me or a part of
the same by virtue of an amicable settlement, and the same is sold,
Atty. Murillo, is hereby constituted as Atty. in-fact to sell and convey
the said house and lot and he shall be given as his compensation
for his services as counsel and as attorney-in-fact the sum
equivalent to forty per centum of the purchase price of the house
and lot;
If the same house and lot is just mortgage(d) to any person, Atty.
Murillo shall be given the sum equivalent to forty per centum (40%)
of the proceeds of the mortgage;
If the house and lot is leased to any person, Atty. Murillo shall be
entitled to receive an amount equivalent to 40% (FORTY PER
CENTUM) of the rentals of the house and lot, or a part thereof;
If the house and lot or a portion thereof is just occupied by the
undersigned or his heirs, Atty. Murillo shall have the option of either
occupying or leasing to any interested party FORTY PER CENT of
the house and lot.
Atty. Alfredo M. Murillo shall also be given as part of his
compensation for legal services in the two cases FORTY PER
CENTUM of whatever damages, which the undersigned can collect
in either or both cases, provided, that in case I am awarded
attorney's fees, the full amount of attorney's fees shall be given to
the said Atty. ALFREDO M. MURILLO;
That in the event the house and lot is (sic) not sold and the same is
maintained by the undersigned or his heirs, the costs of repairs,
maintenance, taxes and insurance premiums shall be for the
account of myself or my heirs and Attorney Murillo, in proportion to
our rights and interest thereunder that is forty per cent shall be for
the account of Atty. Murillo and sixty per cent shall be for my
account or my heirs.
IN WITNESS HEREOF, I hereby set unto my signature below this
22nd day of August 1964 at Tacloban City.
(Sgd.) FLORENCIO FABILLO
(Sgd.) JOSEFA T. FABILLO
WITH MY CONFORMITY:
(Sgd.) ALFREDO M. MURILLO
(Sgd.) ROMAN T. FABILLO (Sgd.) CRISTETA F. MAGLINTE
(Witness) (Witness)4
Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case No. 3532
against Gregorio D. Brioso to recover the San Salvador property. The case was
terminated on October 29, 1964 when the court, upon the parties' joint motion in the
nature of a compromise agreement, declared Florencio Fabillo as the lawful owner
not only of the San Salvador property but also the Pugahanay parcel of land.
Consequently, Murillo proceeded to implement the contract of services between him
and Florencio Fabillo by taking possession and exercising rights of ownership over
40% of said properties. He installed a tenant in the Pugahanay property.
Sometime in 1966, Florencio Fabillo claimed exclusive right over the two properties
and refused to give Murillo his share of their produce. 5 Inasmuch as his demands for
his share of the produce of the Pugahanay property were unheeded, Murillo filed on
March 23, 1970 in the then Court of First Instance of Leyte a complaint captioned
"ownership of a parcel of land, damages and appointment of a receiver" against
Florencio Fabillo, his wife Josefa Taña, and their children Ramon (sic) Fabillo and
Cristeta F. Maglinte.6
Murillo prayed that he be declared the lawful owner of forty per cent of the two
properties; that defendants be directed to pay him jointly and severally P900.00 per
annum from 1966 until he would be given his share of the produce of the land plus
P5,000 as consequential damages and P1,000 as attorney's fees, and that
defendants be ordered to pay moral and exemplary damages in such amounts as the
court might deem just and reasonable.
In their answer, the defendants stated that the consent to the contract of services of
the Fabillo spouses was vitiated by old age and ailment; that Murillo misled them into
believing that Special Proceedings No. 843 on the probate of Justina's will was
already terminated when actually it was still pending resolution; and that the
contingent fee of 40% of the value of the San Salvador property was excessive, unfair
and unconscionable considering the nature of the case, the length of time spent for it,
the efforts exerted by Murillo, and his professional standing.
They prayed that the contract of services be declared null and void; that Murillo's fee
be fixed at 10% of the assessed value of P7,780 of the San Salvador property; that
Murillo be ordered to account for the P1,000 rental of the San Salvador property
which he withdrew from the court and for the produce of the Pugahanay property from
1965 to 1966; that Murillo be ordered to vacate the portion of the San Salvador
property which he had occupied; that the Pugahanay property which was not the
subject of either Special Proceedings No. 843 or Civil Case No. 3532 be declared as
the exclusive property of Florencio Fabillo, and that Murillo be ordered to pay moral
damages and the total amount of P1,000 representing expenses of litigation and
attorney's fees.
In its decision of December 2, 1975,7 the lower court ruled that there was insufficient
evidence to prove that the Fabillo spouses' consent to the contract was vitiated. It
noted that the contract was witnessed by two of their children who appeared to be
highly educated. The spouses themselves were old but literate and physically fit.
In claiming jurisdiction over the case, the lower court ruled that the complaint being
one "to recover real property from the defendant spouses and their heirs or to enforce
a lien thereon," the case could be decided independent of the probate proceedings.
Ruling that the contract of services did not violate Article 1491 of the Civil Code as
said contract stipulated a contingent fee, the court upheld Murillo's claim for
"contingent attorney's fees of 40% of the value of recoverable properties." However,
the court declared Murillo to be the lawful owner of 40% of both the San Salvador and
Pugahanay properties and the improvements thereon. It directed the defendants to
pay jointly and severally to Murillo the amount of P1,200 representing 40% of the net
produce of the Pugahanay property from 1967 to 1973; entitled Murillo to 40% of the
1974 and 1975 income of the Pugahanay property which was on deposit with a bank,
and ordered defendants to pay the costs of the suit.
Both parties filed motions for the reconsideration of said decision: Fabillo, insofar as
the lower court awarded 40% of the properties to Murillo and the latter insofar as it
granted only P1,200 for the produce of the properties from 1967 to 1973. On January
29, 1976, the lower court resolved the motions and modified its decision thus:
ACCORDINGLY, the judgment heretofore rendered is modified to read as
follows:
(a) Declaring the plaintiff as entitled to and the true and lawful owner of forty
percent (40%) of the parcels of land and improvements thereon covered by
Tax Declaration Nos. 19335 and 6229 described in Paragraph 5 of the
complaint;
(b) Directing all the defendants to pay jointly and severally to the plaintiff the
sum of Two Thousand Four Hundred Fifty Pesos (P2,450.00) representing
40% of the net produce of the Pugahanay property from 1967 to 1973;
(c) Declaring the plaintiff entitled to 40% of the 1974 and 1975 income of
said riceland now on deposit with the Prudential Bank, Tacloban City,
deposited by Mr. Pedro Elona, designated receiver of the property;
(d) Ordering the defendants to pay the plaintiff the sum of Three Hundred
Pesos (P 300.00) as attorney's fees; and
(e) Ordering the defendants to pay the costs of this suit.
SO ORDERED.
In view of the death of both Florencio and Justina Fabillo during the pendency of the
case in the lower court, their children, who substituted them as parties to the case,
appealed the decision of the lower court to the then Intermediate Appellate Court. On
March 27, 1984, said appellate court affirmed in toto the decision of the lower court.8
The instant petition for review on certiorari which was interposed by the Fabillo
children, was filed shortly after Murillo himself died. His heirs likewise substituted him
in this case. The Fabillos herein question the appellate court's interpretation of the
contract of services and contend that it is in violation of Article 1491 of the Civil Code.
The contract of services did not violate said provision of law. Article 1491 of the Civil
Code, specifically paragraph 5 thereof, prohibits lawyers from acquiring by purchase
even at a public or judicial auction, properties and rights which are the objects of
litigation in which they may take part by virtue of their profession. The said prohibition,
however, applies only if the sale or assignment of the property takes place during the
pendency of the litigation involving the client's property. 9
Hence, a contract between a lawyer and his client stipulating a contingent fee is not
covered by said prohibition under Article 1491 (5) of the Civil Code because the
payment of said fee is not made during the pendency of the litigation but only after
judgment has been rendered in the case handled by the lawyer. In fact, under the
1988 Code of Professional Responsibility, a lawyer may have a lien over funds and
property of his client and may apply so much thereof as may be necessary to satisfy
his lawful fees and disbursements.10
As long as the lawyer does not exert undue influence on his client, that no fraud is
committed or imposition applied, or that the compensation is clearly not excessive as
to amount to extortion, a contract for contingent fee is valid and
enforceable.11 Moreover, contingent fees were impliedly sanctioned by No. 13 of the
Canons of Professional Ethics which governed lawyer-client relationships when the
contract of services was entered into between the Fabillo spouses and Murillo.12
However, we disagree with the courts below that the contingent fee stipulated
between the Fabillo spouses and Murillo is forty percent of the properties subject of
the litigation for which Murillo appeared for the Fabillos. A careful scrutiny of the
contract shows that the parties intended forty percent of the value of the properties as
Murillo's contingent fee. This is borne out by the stipulation that "in case of success of
any or both cases," Murillo shall be paid "the sum equivalent to forty per centum of
whatever benefit" Fabillo would derive from favorable judgments. The same
stipulation was earlier embodied by Murillo in his letter of August 9, 1964 aforequoted.
services rendered in the case which ended on a compromise agreement. In so ruling,
we uphold "the time-honored legal maxim that a lawyer shall at all times uphold the
integrity and dignity of the legal profession so that his basic ideal becomes one of
rendering service and securing justice, not money-making. For the worst scenario that
can ever happen to a client is to lose the litigated property to his lawyer in whom all
trust and confidence were bestowed at the very inception of the legal controversy." 16
WHEREFORE, the decision of the then Intermediate Appellate Court is hereby
reversed and set aside and a new one entered (a) ordering the petitioners to pay Atty.
Alfredo M. Murillo or his heirs the amount of P3,000.00 as his contingent fee with
legal interest from October 29, 1964 when Civil Case No. 3532 was terminated until
the amount is fully paid less any and all amounts which Murillo might have received
out of the produce or rentals of the Pugahanay and San Salvador properties, and (b)
ordering the receiver of said properties to render a complete report and accounting of
his receivership to the court below within fifteen (15) days from the finality of this
decision. Costs against the private respondent.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

Worth noting are the provisions of the contract which clearly states that in case the
properties are sold, mortgaged, or leased, Murillo shall be entitled respectively to 40%
of the "purchase price," "proceeds of the mortgage," or "rentals." The contract is
vague, however, with respect to a situation wherein the properties are neither sold,
mortgaged or leased because Murillo is allowed "to have the option of occupying or
leasing to any interested party forty per cent of the house and lot." Had the parties
intended that Murillo should become the lawful owner of 40% of the properties, it
would have been clearly and unequivocally stipulated in the contract considering that
the Fabillos would part with actual portions of their properties and cede the same to
Murillo.

The ambiguity of said provision, however, should be resolved against Murillo as it was
he himself who drafted the contract.13 This is in consonance with the rule of
interpretation that, in construing a contract of professional services between a lawyer
and his client, such construction as would be more favorable to the client should be
adopted even if it would work prejudice to the lawyer. 14 Rightly so because of the
inequality in situation between an attorney who knows the technicalities of the law on
the one hand and a client who usually is ignorant of the vagaries of the law on the
other hand.15

Considering the nature of the case, the value of the properties subject matter thereof,
the length of time and effort exerted on it by Murillo, we hold that Murillo is entitled to
the amount of Three Thousand Pesos (P3,000.00) as reasonable attorney's fees for