SILVERIO V ALMEDA

The Facts and the Case

on February 24, 1984 Silverio executed a grant deed transferring ownership of the three lots to Silcor USA,
Inc. (Silcor),3 a company of which he was the president,4 "for a valuable consideration."5 After about 10
months or in December 1984, Silcor in turn sold the property to Lancaster Properties of Oregon
(Lancaster),6 a partnership that included Silverio,7 also "for a valuable consideration."8 The Almedas
apparently got wind of the sale of the lots and demanded payment of the additional sum due them from that
sale

In 1988, the Almedas sued Silverio and others with him for breach of contract before the Superior Court of
California for the County of Los Angeles. In 1990 the Almedas sued Silverio for sum of money before the
Regional Trial Court (RTC) of Makati City,13 alleging that Silverio still owed the Almedas $150,000.00 out of
the initial payment due the latter and that, although Silverio made a profit from reselling the three Meridian
County lots, he did not make the second promised payment which was equivalent to 20 percent of his profit
but not exceeding $100,000.00.14 In his defense,15 Silverio said that he already paid the principal amount
due; that the action was barred by a prior foreign judgment and by prescription; and that, at any rate, he
was unable to sell the lots for a substantial profit.

In its decision of July 27, 1998,17 the RTC dismissed the Almedas' complaint. It ruled that Silverio had paid
them the principal consideration due on the sale of the lots and that, as for the additional consideration,
they did not have a valid claim because they had been unable to prove that Silverio sold the properties to
Silcor for a profit.

On appeal,18 the Court of Appeals (CA) reversed the RTC decision insofar as the Almedas' second claim was
concerned

The Issue Presented

whether or not Silverio's conveyance of the subject three lots to Silcor and the latter's subsequent sale of
the same to Lancaster made him liable to the Almedas for their share in whatever profits he made.

The Court's Ruling

To justify its ruling against Silverio in the controversy regarding paragraph 4 of his agreement with the
Almedas that involved the payment of additional compensation based on any profit he would make in case
he resells the lots, the CA pointed out

a) that based on the "whereas clause" of the agreement, the lots were valued at far more than the
$200,000.00 stated in its paragraph 2;

b) that Silverio admitted in a letter to the Almedas' U.S. lawyer an obligation to pay more to the Almedas as
soon as he had received the proceeds of the sale;

c) that the U.S. court acknowledged in its order that Silverio owed the Almedas "the sum of $100,000.00 in
accordance with said paragraph 4 of the Agreement"; and

d) that the subsequent sale of the lots to Silcor and later to Lancaster were Silverio's attempts to defraud
the Almedas of their share of the profits from the resale.19

Actually, Silverio does not deny the full import of his. His main defense is that he had been unable to sell the
lots for a profit. It is said that when the buyer enters into a contract of sale, he assumes two obligations,
first, the payment of the consideration and, second, the performance of such first obligation in good faith, an
implied obligation but just as binding and as important as the first.26 Good faith is of course a matter of
intent.27 It means giving what one owes to the other without concealment and evasion. Since intent is a
state of mind, however, good faith needs a face that one can see. The steps that a party takes in fulfilling
his obligation usually constitute the face that expresses good faith or lack of it.28

This Court must, however, reduce the award of attorney's fees to the Almedas to the more reasonable
amount of P250,000.00 and fix the legal interest on the award of $100,000.00 in their favor to 6 percent per
annum from the time of the filing of this suit until the obligation is fully paid44 since it would not be fair for
the Almedas to earn interest for the delay brought about by the wrong remedy they pursued in the U.S.
court.
BARRIOS V CA
First Instance of Negros Occidental where they were tried jointly on the ground that the land in
controversy is the same, although different portions thereof were respectively claimed by the two (2)
sets of defendants, and the issues raised therein are Identical.
In a decision dated May 12, 1966 as modified on June 16, 1966, the trial court found the defendants
in the said two cases as possessors in bad faith and ordered them to vacate the premises and to
pay the plaintiff (petitioner herein) damages, which in the case of the present respondents is the sum
of P18,000.00 per year from 1964 until they vacate the property.

A certain Lorenzo Montano was the original registered owner of a large tract of land with an area of
188,212 sq. meters, more or less, situated in Barrio Mabini Cadiz, Negros Occidental. Her ownership
was evidenced b Original Certificate of Title No. F-1670 entered under her name pursuant to Free
Patent V-4415 issued to her on June 13, 1956.

However, prior to March 25, 1960, the area in controversy was part of the forestal zone. This
notwithstanding and before its release from the forestal zone, a certain Graciano Lamis entered the
same and from then on, was known to be in continuous and uninterrupted possession and
occupation thereof, continuing the cultivation of the land begun by the Alegres (defendants in Civil
Case No. 223). On September 6, 1962, Lorenzo Montano sold her land to the petitioner herein as a
consequence of which her Original Certificate of Title was cancelled and in lieu thereof Transfer
Certificate of Title No. T-33012 was issued in the name of petitioner, Jose O. Barrios, by the
Register of Deeds of Negros Occidental.

ISSUE:

WHETHER OR NOT the Court of Appeals erred in holding the respondent buyers and possessors in
good faith of the land in dispute.

HELD:

We must hold that there is no merit to the contention of the respondents Villacins that the aforesaid
issue is a question of fact, the finding of the Court of Appeals being binding on this Court. True,
except for some exceptions, findings of facts made by the Court of Appeals are conclusive on this
Court. But in the case at bar, whether or not the facts, as found by the Court of Appeals, are
constitutive of possession in good faith or possession in bad faith, is a question of law which may
properly be brought before Us.

When respondents bought the land from Lamis, the latter could not and did not at any time produce
any title or application to said land. Petitioner sent letters to the father of the respondents informing
him of the true ownership of the aforesaid land. The Court of Appeals in disregarding this fact.
Respondents herein knew of the case of forcible entry brought by petitioner against their father,
Mayor Villacin, Sr., under the impression that the latter was the vendee. Such knowledge was a
warning to them that the land they bought is subject to the claim of other parties, but again they
continued in their possession of the land and planting thereon.

As a special defense in the proceedings below, respondents Villacins alleged the non-efficacy and
nullity of the title of Lorenzo Montano from which the title of the petitioner stemmed. We need not
pass upon this. The Court of Appeals is correct in holding that this is a collateral attack on a Torrens
Title which under our laws and established jurisprudence is not permitted and cannot be legally
done.
SANTIAGO V CA

FACTS:

Paula Arcega was the registered owner of that certain parcel of land
covered by Transfer Certificate of Title No. T-115510. Her residential house
stood there until 1970 when it was destroyed by a strong typhoon.
On December 9, 1970, Paula Arcega executed what purported to be a deed
of conditional sale over the land in favor of Josefina Arcega and the spouses
Regalado Santiago and Rosita Palabyab, the petitioners herein, for and in
consideration of P20,000.00. The vendees were supposed to pay P7,000.00 as
downpayment. It was expressly provided that the vendor would execute and
deliver to the vendees an absolute deed of sale upon full payment by the
vendees of the unpaid balance of the purchase price of P13,000.00.
Subsequently, on July 18, 1971, supposedly upon payment of the remaining
balance, Paula Arcega executed a deed of absolute sale of the same parcel of
land in favor of petitioners. Thereupon, on July 20, 1971, TCT No. T-115510, in
the name of Paula Arcega, was cancelled and a new title, TCT No. T-148989
was issued in the name of petitioners.
Answering the complaint before the RTC, petitioner spouses averred that
private respondent's cause of action was already barred by the statute of
limitations considering that the disputed deed of absolute sale was executed in
their favor on July 18, 1971, by which TCT No. 148989 was issued on July 20,
1971, while private respondent's complaint was filed in court only on October
24, 1985 or more than fourteen (14) years from the time the cause of action
accrued. Petitioners also deny that the sale was fictitious. They maintain that
the purchase price was actually paid to Paula Arcega and that said amount was
spent by the deceased in the construction of her three-door apartment on the
parcel of land in question.
Josefina Arcega, the other petitioner, was declared in default for failure to
file her answer within the reglementary period.

ISSUE:

WHETHER OR NOT the following contracts are inexistent and void from the beginning

HELD: YES

Art. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men;

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained;

(7) Those expressly prohibited or declared void by law.

The fact that petitioners were able to secure a title in their names, TCT No. 148989, did not
operate to vest upon petitioners ownership over Paula Arcega's property. That act has never
been recognized as a mode of acquiring ownership. As a matter of fact, even the original
registration of immovable property does not vest title thereto.[12] The Torrens system does not
create or vest title. It only confirms and records title already existing and vested. It does not
protect a usurper from the true owner. It cannot be a shield for the commission of fraud. It does
not permit one to enrich himself at the expense of another.[13] Where one does not have any
rightful claim over a real property, the Torrens system of registration can confirm or record
nothing.