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COURT OF APPEALS At bar is a Petition for Review on Certiorari assailing the decision of the Court of Appeals in CA G.R. CV No. 26051 affirming the decision of the trial court in the case, entitled "Serafin Modina vs. Ernesto Hontarciego, Paulino Figueroa and Ramon Chiang vs. Merlinda Plana Chiang, intervenors", which declared as void and inexistent the deed of definite sale dated December 17, 1975 as well as the Certificates of Title Nos. T86912, T-86913, T-86914 in the name of Ramon Chiang.1âwphi1.nêt The facts that matter are as follows: The parcels of land in question are those under the name of Ramon Chiang (hereinafter referred to as CHIANG) covered by TCT Nos. T-86912, T-86913, and T-86914. He theorized that subject properties were sold to him by his wife, Merlinda Plana Chiang (hereinafter referred to as MERLINDA), as evidenced by a Deed of Absolute Sale dated December 17, 1975, 1 and were subsequently sold by CHIANG to the petitioner Serafin Modina (MODINA), as shown by the Deeds of Sale, dated August 3, 1979 and August 24, 1979, respectively. MODINA brought a Complaint for Recovery of Possession with Damages against the private respondents, Ernesto Hontarciego, Paul Figueroa and Teodoro Hipalla, docketed as Civil Case No. 13935 before the Regional Trial Court of Iloilo City. Upon learning the institution of the said case, MERLINDA presented a Complaint-inintervention, seeking the declaration of nullity of the Deed of Sale between her husband and MODINA on the ground that the titles of the parcels of land in dispute were never legally transferred to her husband. Fraudulent acts were allegedly employed by him to obtain a Torrens Title in his favor. However, she confirmed the validity of the lease contracts with the other private respondents. MERLINDA also admitted that the said parcels of land were those ordered sold by Branch 2 of the then Court of First Instance of Iloilo in Special Proceeding No. 2469 in "Intestate Estate of Nelson Plana" where she was appointed as the administratix, being the widow of the deceased, her first husband. An Authority to Sell was issued by the said Probate Court for the sale of the same properties. 2 After due hearing, the Trial Court decided in favor of MERLINDA, disposing thus: WHEREFORE, judgment is hereby rendered (1) declaring as void and inexistent the sale of Lots 10063, 10088, 10085 and 10089 of the Cadastral Survey of Sta. Barbara by Merlinda Plana in favor of Ramon Chiang as evidenced by the deed of definite sale dated December 17, 1975 (Exhibits "H"; "3"-Chiang; "9" Intervenor) as well as the Certificates of Title Nos. T-86912,
T-86913, T-86914 and T-86915 in the name of Ramon Chiang; (2) declaring as void and inexistent the sale of the same properties by Ramon Chiang in favor of Serafin Modina as evidenced by the deeds of sale (Exhibits "A", "B", "6" — Chiang and "7" — Chiang) dated August 3, and 24, 1979, as well as Certificates of Title Nos. T-102631, 102630, 102632 and 102890 in the name of Serafin Modina; (3) ordering the Register of Deeds of Iloilo to cancel said certificates of title in the names of Ramon Chiang and Serafin Modina and to reinstate the Certificates of Title Nos. T-57960, T-57962, T-57963 and T-57864 in the name of Nelson Plana; (4) ordering Serafin Modina to vacate and restore possession of the lots in question to Merlinda Plana Chiang; (5) ordering Ramon Chiang to restitute and pay to Serafin Modina the sum of P145,800.00 and; (6) ordering Serafin Modina to pay Ernesto Hontarciego the sum of P44,500.00 as actual and compensatory damages plus the sum of P5,000.00, for and as attorney's fees, with costs in favor of said defendants against the plaintiff. On appeal; the Court of Appeals affirmed the aforesaid decision in toto. Dissatisfied therewith, petitioner found his way to this Court via the present Petition for Review under the Rule 45 seeking to set aside the assailed decision of the Court of Appeals. Raised for resolution here are: (1) whether the sale of subject lots should be nullified, (2) whether petitioner was not a purchaser in good faith, (3) whether the decision of the trial court was tainted with excess of jurisdiction; and (4) whether or not only threefourths of subject lots should be returned to the private respondent. Anent the first issue, petitioner theorizes that the sale in question is null and void for being violative of Article 1490 3 of the New Civil Code prohibiting sales between spouses. Consequently, what is applicable is Article 1412 4 supra on the principle of in pari delicto, which leaves both guilty parties where they are, and keeps undisturbed the rights of third persons to whom the lots involved were sold; petitioner stressed.1âwphi1.nêt Petitioner anchors his submission on the following statements of the Trial Court which the Court of Appeals upheld, to wit: Furthermore, under Art. 1490, husband and wife are prohibited to sell properties to each other. And where, as in this case, the sale is inexistent for lack of consideration, the principle of in pari delicto non oritur actio does not apply. (Vasquez vs. Porta, 98 Phil 490), (Emphasis ours) Thus, Art. 1490 provides:
Art. 1490. The husband and the wife cannot sell property to each other, except: (1) when a separation of propety was agreed upon in the marriage settlements; or (2) when there has been a judicial separation of property under Art. 191. The exception to the rule laid down in Art. 1490 of the New Civil Code not having existed with respect to the property relations of Ramon Chiang and Merlinda Plana Chiang, the sale by the latter in favor of the former of the properties in question is invalid for being prohibited by law. Not being the owner of subject properties, Ramon Chiang could not have validly sold the same to plaintiff Serafin Modina. The sale by Ramon Chiang in favor of Serafin Modina is, likewise, void and inexistent. xxx xxx xxx The Court of Appeals, on the other hand, adopted the following findings a quo: that there is no sufficient evidence establishing fault on the part of MERLINDA, and therefore, the principle of in pari delicto is inapplicable and the sale was void for want of consideration. In effect, MERLINDA can recover the lots sold by her husband to petitioner MODINA. However, the Court of Appeals ruled that the sale was void for violating Article 1490 of the Civil Code, which prohibits sales between spouses. The principle of in pari delicto non oritur actio 6 denies all recovery to the guilty parties inter se. It applies to cases where the nullity arises from the illegality of the consideration or the purpose of the contract. 7 When two persons are equally at fault, the law does not relieve them. The exception to this general rule is when the principle is invoked with respect to inexistent contracts. 8 In the petition under consideration, the Trial Court found that subject Deed of Sale was a nullity for lack of any consideration. 9 This finding duly supported by evidence was affirmed by the Court of Appeals. Well-settled is the rule that this Court will not disturb such finding absent any evidence to the contrary. 10 Under Article 1409 11 of the New Civil Code, enumerating void contracts, a contract without consideration is one such void contract. One of the characteristics of a void or inexistent contract is that it produces no effect. So also, inexistent contracts can be invoked by any person whenever juridical effects founded thereon are asserted against him. A transferor can recover the object of such contract by accion reivindicatoria and
any possessor may refuse to deliver it to the transferee, who cannot enforce the transfer.
Thus, petitioner's insistence that MERLINDA cannot attack subject contract of sale as she was a guilty party thereto is equally unavailing. But the pivot of inquiry here is whether MERLINDA is barred by the principle of in pari delicto from questioning subject Deed of Sale. It bears emphasizing that as the contracts under controversy are inexistent contracts within legal contemplation. Articles 1411 and 1412 of the New Civil Code are inapplicable. In pari delicto doctrine applies only to contracts with illegal consideration or subject matter, whether the attendant facts constitute an offense or misdemeanor or whether the consideration involved is merely rendered illegal. 13 The statement below that it is likewise null and void for being violative of Article 1490 should just be treated as a surplusage or an obiter dictum on the part of the Trial Court as the issue of whether the parcels of land in dispute are conjugal in nature or they fall under the exceptions provided for by law, was neither raised nor litigated upon before the lower Court. Whether the said lots were ganancial properties was never brought to the fore by the parties and it is too late to do so now. Furthermore, if this line of argument be followed, the Trial Court could not have declared subject contract as null and void because only the heirs and the creditors can question its nullity and not the spouses themselves who executed the contract with full knowledge of the prohibition. 14 Records show that in the complaint-in-intervention of MERLINDA, she did not aver the same as a ground to nullify subject Deed of Sale. In fact, she denied the existence of the Deed of Sale in favor of her husband. In the said Complaint, her allegations referred to the want of consideration of such Deed of Sale. She did not put up the defense under Article 1490, to nullify her sale to her husband CHIANG because such a defense would be inconsistent with her claim that the same sale was inexistent.1âwphi1.nêt The Trial Court debunked petitioner's theory that MERLINDA intentionally gave away the bulk of her and her late husband's estate to defendant CHIANG as his exclusive property, for want of evidentiary anchor. They insist on the Deed of Sale wherein MERLINIDA made the misrepresentation that she was a widow and CHIANG was single, when at the time of execution thereof, they were in fact already married. Petitioner insists that this document conclusively established bad faith on the part of MERLINDA and therefore, the principle of in pari delicto should have been applied.
These issues are factual in nature and it is not for this Court to appreciate and evaluate the pieces of evidence introduced below. An appellate court defers to the factual findings of the Trial Court, unless petitioner can show a glaring mistake in the appreciation of relevant evidence. Since one of the characteristics of a void or inexistent contract is that it does not produce any effect, MERLINDA can recover the property from petitioner who never acquired title thereover. As to the second issue, petitioner stresses that his title should have been respected since he is a purchaser in good faith and for value. The Court of Appeals, however, opined that he (petitioner) is not a purchaser in good faith. It found that there were circumstances known to MODINA which rendered their transaction fraudulent under the attendant circumstances. As a general rule, in a sale under the Torrens system, a void title cannot give rise to a valid title. The exception is when the sale of a person with a void title is to a third person who purchased it for value and in good faith. A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price at the time of the purchase or before he has notice of the claim or interest of some other person in the property. In the case under scrutiny, petitioner cannot claim that he was a purchaser in good faith. There are circumstances which are indicia of bad faith on his part, to wit: (1) He asked his nephew, Placido Matta, to investigate the origin of the property and the latter learned that the same formed part of the properties of MERLINDA's first husband; (2) that the said sale was between the spouses; (3) that when the property was inspected, MODINA met all the lessees who informed that subject lands belong to MERLINDA and they had no knowledge that the same lots were sold to the husband. It is a well-settled rule that a purchaser cannot close his eyes to facts which would put a reasonable man upon his guard to make the necessary inquiries, and then claim that he acted in good faith. His mere refusal to believe that such defect exists, or his wilful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. 15 Thus, petitioner cannot claim that the sale between him and MODINA falls under the exception provided for by law.
With regard to the third issue posed by petitioner — whether the Trial Court's decision allowing recovery on the part of Merlinda Chiang of subject properties was void — petitioner's contention is untennable. It is theorized that as the sale by MERLINDA was by virtue of an Order to Sell issued in the Intestate Estate Proceedings of her late husband, Nelson Plana — to allow recovery will defeat the said order of the Probate Court. Petitioner equated the aforesaid Order to Sell as a judgment, which another court in a regular proceeding has no jurisdiction to reverse. Petitioner is under the mistaken impression that as the Order to Sell had become a judgment in itself as to the validity of the sale of the properties involved, any question as to its nullity should have been brought before the Court of Appeals on appeal when the said Order was issued. It is a well-settled rule that a Court of First Instance (now Regional Trial Court) has jurisdiction over a case brought to rescind a sale made upon prior authority of a Probate Court. This does not constitute an interference or review of the order of a co-equal Court since the Probate Court has no jurisdiction over the question of title to subject properties. Consequently, a separate action may be brought to determine the question of ownership. 16 Lastly, on the issue of whether only three-fourths of the property in question should have been returned to MERLINDA, petitioner's stance is equally unsustainable. It is a settled doctrine that an issue which was neither averred in the Complaint nor raised during the trial before the lower court cannot be raised for the first time on appeal, as such a recourse would be offensive to the basic rules of fair play, justice, and due process. 17 The issue of whether only three-fourths of subject property will be returned was never an issue before the lower court and therefore, the petitioner cannot do it now. A final word. In a Petition for Review, only questions of law may be raised. It is perceived by the Court that what petitioner is trying to, albeit subtly, is for the Court to examine the probative value or evidentiary weight of the evidence presented below 18. The Court cannot do that unless the appreciation of the pieces of evidence on hand is glaringly erroneous. But this is where petitioner utterly failed. WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals, dated September 30, 1992, in CA-G.R. CV No. 26051 AFFIRMED. No pronouncement as to costs. SO ORDERED.
GURREA Petitioners, vs. ENRIQUE SUPLICO, Respondent. Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1 of the Court of Appeals (CA) dated February 24, 2000 in CAG.R. CV No. 56210, which affirmed in toto the Decision2 dated July 5, 1996 of the Regional Trial Court (RTC) of Pasig City, Branch 268, in Civil Case No. 47543; and the CA Resolution3 dated August 7, 2000 which denied petitioners’ motion for reconsideration. The present petition arose from a complaint for annulment of title with prayer for preliminary injunction filed with the Court of First Instance (CFI) of Rizal, docketed as Civil Case No. 47543, by Rosalina Gurrea (plaintiff) in her capacity as attorney-in-fact of the heirs of Ricardo Gurrea (Ricardo), namely: Natividad, Carlos, Juliet and Ricardo, Jr., all surnamed Gurrea, and Teresa Gurrea Colemenares.4 The complaint was filed against Atty. Enrique Suplico (defendant), Gen. Gaudencio Tobias, in his capacity as General Manager of the National Housing Authority, and Joseph Estrada, in his capacity as Municipal Mayor of San Juan, Rizal.5 The CA adopted the facts of the case as summarized by the RTC, to wit: The lot in question situated at 245 Marne Street, San Juan, Metro Manila was originally owned by one of herein plaintiffs’ Attorney-in-Fact, Rosalina Gurrea, as evidence (sic) by TCT No. 49767 (Exhibit "A"). That sometime in 1958, Rosalina Gurrea transferred the ownership of said lot to Adelina Gurrea, whose ownership was evidenced by TCT No. 58253 (Exhibit "B"). That Adelina Gurrea continued to be the owner of the lot until her death. Thereafter, Special Proceedings No. 7185 was instituted to have the will she executed during her lifetime probated and to settle her estate. Under the said will, the San Juan lot was bequeathed to Pilar and Luis Gurrea, while 700,000 pesetas, ¼ of the lot in Baguio City and a one-hectare piece of land in Pontevedra, Negros Occidental were given to Ricardo Gurrea. Ricardo Gurrea, represented by and through his counsel Atty. Enrique Suplico (the defendant), filed an Opposition in Special Proc. No. 7185. In consideration of said representation, Ricardo Gurrea agreed to pay Atty. Suplico "a contingent fee of twenty (20%) of whatever is due me, either real or personal property" (Exhibit "5"). During the pendency of the proceedings and upon the oral instructions of Ricardo Gurrea, Atty. Suplico negotiated with the other heirs of Adelina Gurrea regarding the transfer of the piso (apartment building) in Spain to Ricardo Gurrea’s daughter, Juliet Gurrea de Melendres. Ricardo Gurrea further instructed Atty. Suplico not to enter into any settlement with the heirs unless the piso is transferred to his daughter. Finally, the transfer of the piso worth P64,000.00 was executed and the heirs arrived at an amicable settlement regarding the estate of Adelina Gurrea. Hence, Ricardo Gurrea withdrew his Opposition and the heirs then drew up a project of partition which was eventually approved by the probate court. Pursuant to the project of partition, the following
properties were adjudicated to Ricardo Gurrea: (1) the whole of the Baguio lot (with assessed value of P26,350.00); (2) the whole of the San Juan lot (with assessed value of P9,630.00); and (3) a parcel of land in Pontevedra, Negros Occidental (with assessed value of P300.00). (Exhibit "R" for plaintiff and exhibit "19" for defendant). As payment of his attorney’s fees, Ricardo Gurrea offered the San Juan lot to Atty. Suplico who was initially hesitant to accept the same as the property is occupied by squatters. However, in order not to antagonize his client, Atty. Suplico agreed to Ricardo Gurrea’s proposal with the further understanding that he will receive an additional commission of 5% if he sells the Baguio property. Thereafter, the deed of Transfer of Rights and Interest was drafted. The said deed was presented to Ricardo Gurrea for his signature. That before signing the same, the contents of the deed were first explained to Ricardo Gurrea by Atty. Suplico and Atty. Manuel Pama, the notary public. On August 20, 1975, the deed was finally signed by Ricardo Gurrea at the office of Atty. Pama, in the presence of the latter, Atty. Suplico, Victor Tupas and another person, the last two acting as witnesses. Later, on October 7, 1980, Atty. Suplico registered the deed and obtained a title/TCT to the San Juan property under his name. Ricardo Gurrea died on October 22, 1980. After his death, his heirs instituted Special Pro. No. 2722 for the settlement of Ricardo Gurrea’s estate. In the said proceedings, Atty. Suplico filed several claims for unpaid attorney’s fees (no claim was filed relative to Special Proc. No. 7185); however, all were dismissed with finality (Exhibits "I" and "J"). Also in the same case, the estate’s administrator, Carlos Gurrea, filed an Inventory of Properties left by the decedent, which did not initially include the property subject of this case. The said lot was included only subsequently in the Amended Inventory (Exhibit "G").6 On July 11, 1985, the RTC issued an Order dismissing the complaint on the ground that it does not state a cause of action because the plaintiff is not the real party-in-interest.7 The complaint-in-intervention was likewise dismissed. Plaintiff filed an appeal with the CA questioning the July 11, 1985 Order of the RTC.8 The case was docketed as CAG.R. CV No. 14790. Thereafter, defendant filed a Motion for Issuance of Writ of Execution Pending Appeal.9 In its Order dated May 20, 1986, the RTC granted defendant’s motion.10 Plaintiff then filed a petition for certiorari, prohibition and mandamus with the CA seeking to annul the trial court’s Order of May 20, 1986. The case was docketed as CAG.R. SP No. 09394. Subsequently, CA-G.R. CV No. 14790 and CA-G.R. SP No. 09394 were consolidated. On November 21, 1989, the CA promulgated its Decision in the consolidated cases, the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered, as follows:
The CA maintained the lower court’s ruling that the plaintiffs-appellants failed to present clear and convincing evidence that defendant-appellant defrauded and exerted undue influence on Ricardo in the latter’s execution of the deed of Transfer of Rights and Interest and in consequently transferring his ownership of the San Juan lot in his (defendant-appellant’s) favor. ASSUMING THAT THE ‘MANIFESTATION’ AND ‘TRANSFER OF RIGHTS AND INTERESTS’ ARE VALID. No pronouncement as to damages. Carlos Gurrea. hence. Gaudencio Tobias of the NHA and then Mayor Joseph Estrada of San Juan. granting the respondent Enrique Suplico’s motion for execution pending appeal (Annex C. ASSUMING WITHOUT ADMITTING. in not finding that defendant-appellant has been fully paid for all the services he had rendered for Ricardo. petition). On the other hand. petition). AND FURTHER ASSUMING THAT RESPONDENT-ATTORNEY HAS NOT YET BEEN PAID HIS ATTORNEY’S FEES IN SPECIAL PROCEEDINGS NO. in not declaring the payment of the subject lot as attorney’s fees to be unconscionable based on the guidelines for determining attorney’s fees. without regard to the facts and circumstances surrounding its execution. 2000.(1) REVERSING the order appealed from in CA-G. Jr.11 Accordingly. 2. hereby ANNULLING and SETTING ASIDE the respondent Court’s order dated May 20. . the San Juan lot may be considered as reasonable attorney’s fees for defendant-appellant. 2000. defendant-appellant asserted that the RTC erred in refusing to dismiss the complaint for lack of cause of action. de Gurrea. Ma. costs and attorney’s fees.R. On February 24. and that based on the evidence. and (2) GRANTING the petition for certiorari and prohibition in CA-G.12 Thereafter. In the course of the trial. to wit: Natividad Ariaga Vda. Victoria Gurrea Candel and Ramona Gurrea-Montinola. but the CA denied the same in a Resolution issued on August 7. the judgment of the RTC. taking all the foregoing into consideration. WHETHER OR NOT THE SUPPOSED CONTRACT FOR ATTORNEY’S FEES IN THE FORM OF THE ‘MANIFESTATION’ DATED JUNE 24. the trial court shall proceed to hear and decide the case accordingly. Hence. the CA did not discuss the issue of whether the contract of attorney’s fees between the late Ricardo and defendant-appellant and the consequent transfer of rights and interest in favor of the latter is invalid for being violative of Article 1491 of the Civil Code. THE PAYMENT OF SAID FEES BY WAY OF THE WHOLE PROPERTY SUBJECT MATTER OF THE INSTANT CASE IS UNCONSCIONABLE OR UNREASONABLE CONSIDERING THE GUIDELINES FOR FIXING ATTORNEY’S FEES. After trial. after compliance herewith by the appellant. 1999. in toto. THE SAME VIOLATES ARTICLE 1491 OF THE NEW CIVIL CODE AND. 09394. Julieta Gurrea. Plaintiffs-appellants (hereinafter petitioners).13 Plaintiffs and defendant appealed the case to the CA. with the exception of plaintiff-appellant Rosalina Gurrea. in limiting its evaluation of the transfer of rights and interests in defendant-appelant’s favor only on the basis of whether the deed evidencing said transfer of rights and interests was forged. THEREFORE. 1) WAS DULY EXECUTED BY RICARDO GURREA. 47543 the real parties-in-interest. and in refusing to award counterclaim in his favor. IS VALID. 7185. who died on June 2. an Amended Complaint was filed in the RTC impleading the heirs of Ricardo as additional plaintiffs. 1972 (EXHIBIT 5) PROVIDING FOR THE PAYMENT OF ATTORNEY’S FEES OUT OF THE PROPERTIES IN LITIGATION. WHETHER OR NOT. and the writ issued pursuant thereto (Annex D. However. 3. Teresa Gurrea-Rodriguez. trial ensued. the present petition raising the following issues: 1. Plaintiffs-appellants contended that the RTC erred: in upholding the validity of the supposed contract of attorney’s fees between Ricardo and defendant-appellant which provided for the payment of attorney’s fees in the form of real property because such an agreement is prohibited by Article 1491 of the Civil Code. NULL AND VOID. WHETHER OR NOT. the CA rendered its Decision affirming. SO ORDERED. Gen. the RTC rendered judgment the dispositive portion of which reads: WHEREFORE.R. filed a Motion for Reconsideration. 1986. SP No. THAT THE ‘TRANSFER OF RIGHTS AND INTERESTS’ (EXHIBIT E. SO ORDERED. 14790 and GRANTING the appellant Rosalina Gurrea a period of sixty (60) days from finality of this decision within which to implead in Civil Case No. the Court finds that the preponderance of evidence is in favor of the defendant and against the plaintiffs. Costs against the appellee and respondent Enrique Suplico in both cases.. orders the DISMISSAL of the above entitled case. were dropped as defendants upon motion of plaintiffs and without the objection of defendant. Ricardo Gurrea. CV No.
1975. that the subject property is just. based on a contingent fee contract. (7) when the findings are contrary to the trial court.14 As to the first issue. On these bases. respondent contends that the issue as to whether Special Proceedings No. petitioners assert that even assuming that the above-mentioned Manifestation and Transfer of Rights and Interest are valid and that respondent had not yet been paid his attorney’s fees. the subject property is an unreasonable and unconscionable payment for the actual services that respondent had rendered for Ricardo. Respondent also contends that based on jurisprudence. reasonable and equitable payment for the services he rendered for the late Ricardo. may be paid only out of a certain percentage of the value of the real property in litigation. when the Transfer of Rights and Interest in favor of respondent was notarized on August 20. either real or personal property is invalid because based on jurisprudence.17 The Court finds the present case falling under the second exception for reasons discussed hereunder. (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.4. On his part. 7185 closed and terminated. there are recognized exceptions to this rule. as claimed before the trial court. respondent submits that there is sufficient evidentiary basis for the trial court’s conclusion that the Transfer of Rights and Interest was executed and entered into after the termination of Special Proceedings No. Petitioners contend that no evidence was presented to show that the probate court issued an order declaring Special Proceedings No. petitioners contend that the Manifestation dated June 24. (8) when the findings are conclusions without citation of specific evidence on which they are based. attorney’s fees. could justify a different conclusion. and that the real property itself may not be given as payment of attorney’s fees. which. (5) when the findings of facts are conflicting. absurd or impossible. and (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties. it should be stressed that the question as to whether the deed of Transfer of Rights and Interest was forged was resolved by the CA when it affirmed the ruling of the RTC that herein petitioners failed to present clear. In addition. involves the determination of factual matters and appreciation of pieces of evidence which cannot be raised in a petition for review on certiorari before this Court. At the outset. petitioners conclude that at the time the Transfer of Rights and Interest was notarized. 5. (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent. filing of an Opposition during the estate proceedings.16 However. Petitioners did not elaborate on the fourth issue while. The Court finds the petition meritorious. in the fifth issue. still the subject of litigation. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE CANCELLATION OF RESPONDENT ATTORNEY’S TITLE OVER THE SUBJECT PROPERTY AND THE RECONVEYANCE THEREOF TO THE HEREIN PETITIONERS OR TO THE ESTATE OF THE LATE RICARDO GURREA. the title over the subject lot was still in the name of Adelina Gurrea and that said title was transferred only in the name of Ricardo on October 7. or its findings are contrary to the admissions of both the appellant and the appellee. (3) when there is grave abuse of discretion. 7185 was already closed and terminated at the time of execution of the deed of Transfer of Rights and Interest. Hence. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE DAMAGES CLAIMED IN THE ACTION SUBSTANTIATED BY THEIR EVIDENCE. not of fact.15 The rationale of this rule is founded on the fact that the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. there is no dispute that the subject property still formed part of the estate of Adelina Gurrea and was. convincing and satisfactory evidence that respondent defrauded Ricardo. surmises or conjectures. Even assuming that petitioners may properly raise a factual issue in the present petition. taking into consideration the guidelines for fixing attorney’s fees. the transfer of rights and interest over the subject property in favor of Atty. such as the one at bar. is limited to reviewing only errors of law. as amended. petitioners argue on the premise that. Suplico (respondent) is null and void. they submitted to the discretion of the Court their entitlement to damages and attorney’s fees. It is a fundamental rule that the Supreme Court’s jurisdiction in a petition for review on certiorari as a mode of appeal under Rule 45 of the Rules of Court. (2) when the inference made is manifestly mistaken. Anent the second issue. estate proceedings shall be deemed closed and terminated when the court declares it to be so and only after delivery of the remaining estate to the heirs entitled to receive the same. (4) when the judgment is based on a misapprehension of facts. consisting of the signing of the Project of Partition. to wit: (1) when the findings are grounded entirely on speculation. 1972 executed by Ricardo providing for the payment in favor of respondent of a contingent fee of twenty percent (20%) of whatever is due to Ricardo. and negotiating with the other heirs which resulted in Ricardo’s recovery of three parcels of land. if properly considered. (6) when in making its findings the CA went beyond the issues of the case. 7185. As to the third issue. the Court has upheld the validity of contingency fee contracts providing for the payment of attorney’s fees out of a portion or part of the property subject of litigation. under the law. 1980. The CA also ruled that there is no . therefore.
and if so.20 The probate court loses jurisdiction of an estate under administration only after the payment of all the debts and the remaining estate delivered to the heirs entitled to receive the same. alleging in paragraphs 3 and 5 thereof. is registered in the corresponding Registry of Deeds. even at a public or judicial auction. this prohibition includes the act of acquiring by assignment and shall apply to lawyers. the RTC made the following disquisition: [A]ccording to the evidence for the defendant. prosecuting attorneys. that he had already turned over to the respective heirs and devisees all their respective shares in accordance with the project of partition duly approved by the probate court. inheritance and realty taxes. the title over the subject lot was still in the name of Adelina Gurrea and that it was only on October 7. the probate proceedings cannot be deemed closed and terminated. a Motion for Termination of Proceeding and Discharge of the Executor and Bond dated June 20. As correctly cited by petitioners. the Court held in Lucero v. while the subject lot was assigned as Ricardo’s share in the project of partition executed by the heirs of Adelina Gurrea. However. 7185 had been terminated. The usual practice is that. is still the object of litigation. The rule is that as long as the order for the distribution of the estate has not been complied with. it is necessary to resolve whether the subject property was still the object of litigation at the time the deed of Transfer of Rights and Interest in favor of respondent was executed. clerks of superior and inferior courts. 388. we agree with the petitioners’ undisputed contention that when the deed of Transfer of Rights and Interest was executed. 7185 had been terminated and the subject property no longer the object of litigation when no evidence was presented to show that when the Transfer of Rights and Interest was executed. the letters of administration and the certification as to the payment of the estate. Article 1491(5) of the Civil Code provides: 1491. Thereafter. the probate court had issued an order granting the Motion for Termination of Proceeding and Discharge of the Executor and Bond. judges. That deed. whether the same should be considered null and void for being violative of the provisions of Article 1491 of the Civil Code. the probate court had already issued an order declaring the estate proceedings closed and terminated? A thing is said to be in litigation not only if there is some contest or litigation over it in court. it follows that the subject property which is the subject matter of the deed of Transfer of Rights and Interest. The following persons cannot acquire by purchase. the title over the subject lot was still in the name of the latter and was not yet conveyed to Ricardo when the Transfer of Rights and Interest was executed. conveying the land to the distributee. the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions.evidence on record to show that the signature of the late Ricardo on the questioned deed is simulated or false. Since the judge has yet to act on the above-mentioned motion. Furthermore. The Court finds the trial court’s inference to be without sufficient basis. Ordoñez. the order approving it. despite having been specifically assigned as an error by petitioners in their appellant’s brief filed with the CA. Bañaga22 that: [t]he term "delivery" or tradition has two aspects: (1) the de jure delivery or the execution of deeds of conveyance and (2) the delivery of the material possession (Florendo vs. 1975 was filed in the case. 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. Anent the first issue. The property in San Juan is no longer the subject of a litigation and may be alienated by the client to his lawyer as payment of attorney’s fees rendered. the Transfer of Rights and Interest was executed on August 20. it may be concluded that Special Proceedings No. Ordoñez has already turned over to the respective heirs and devisees all their respective shares in accordance with the Project of Partition duly approved by the Court.19 In the present case. 7185. the appellate court failed to rule on the question of whether the subject Transfer of Rights and Interest was executed even before the estate proceedings were closed and terminated. together with the project of partition. Hence. and other officers and employees connected with the administration of justice. but also from the moment that it becomes subject to the judicial action of the judge.21 In the present case. the administrator or executor . Foz. there is no proof to show that at the time the deed of Transfer of Rights and Interest was executed. either in person or through the mediation of another: … (5) Justices. Angel E. if the land to be delivered is in the name of the decedent. Title would then be issued to the distributee. 1975 is the allegation of the executor. 393). 1980 that the title was transferred in the name of Ricardo. 1975. (emphasis supplied) It is clear from the above-quoted ruling of the trial court that its sole basis in concluding that Special Proceedings No. 20 Phil. This matter is not assailed in the present petition. … (emphasis supplied) In its Decision. that the executor Angel E. that is Special Proceedings No. at the time of the execution of the questioned document. in his Motion18 for Termination of Proceeding and Discharge of the Executor and Bond dated June 20. Thereafter. How can the trial court conclude that Special Proceedings No. the administrator executes a deed. more than one month from the filing thereof. 1975. 7185 had been terminated and that the subject property is no longer the object of litigation at the time the deed of Transfer of Rights and Interest was executed on August 20.
other than judicial costs. still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. Having been established that the subject property was still the object of litigation at the time the subject deed of Transfer of Rights and Interest was executed. 24473 in the name of Ricardo Gurrea. As to petitioners’ entitlement to other forms of damages. This is without prejudice. its basis cannot be left to speculation or conjecture. (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Anent the second issue. and there being no evidence to show that material possession of the property was given to Ricardo. while the complaint filed by herein petitioners with the trial court contains a general prayer for the grant of other reliefs.23 It follows that. that contracts which are expressly prohibited or declared void by law are considered inexistent and void from the beginning. the rule is that evidence should be taken of the damages claimed and the court should determine who are the persons entitled to such indemnity. even granting that petitioners were compelled to litigate and incur expenses to protect their interests. it being undisputed that he rendered legal services for the latter. attorney’s fees and expenses of litigation. since at the time of execution of the deed of Transfer of Rights and Interest.25 In the present case. no allegation. just and demandable claim. (10) When at least double judicial costs are awarded. Considering that the subject Transfer of Rights and Interest is null and void. the same to be distributed to the latter’s heirs. the Court is not persuaded by petitioners’ prayer for the grant of attorney’s fees in an amount as the Court may determine. 47543 are REVERSED and SET ASIDE.R. the probate proceedings concerning Adelina’s estate cannot be deemed to have been closed and terminated and the subject property still the object of litigation. evidence was presented by petitioners to prove that they are entitled to damages. in view of his erroneous belief and judgment that he has lawfully acquired the subject property.1avvphil. A new judgment is rendered canceling Transfer Certificate of Title No. may not be acquired by respondent pursuant to the provisions of Article 1491 of the Civil Code. it follows that respondent’s title over the subject property should be cancelled and the property reconveyed to the estate of Ricardo. the assailed Decision and Resolution of the Court of Appeals in CAG. Article 1409 of the same Code provides. except: (1) When exemplary damages are awarded. (8) In actions for indemnity under workmen’s compensation and employer’s liability laws. much less. however. No. the Court has already held that the said property is still the object of litigation at the time the subject Manifestation and Transfer of Rights and Interest were executed and. CV No. to respondent’s right to claim his attorney’s fees from the estate of Ricardo. WHEREFORE.net (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. SO ORDERED. The Court finds that the present case does not fall under any of the enumerated exceptions. attorney’s fees may not be awarded in their favor because there is no sufficient showing that respondent acted in gross and evident bad faith in refusing to satisfy their claim. (4) In case of a clearly unfounded civil action or proceeding against the plaintiff.24 Article 2208 of the Civil Code provides that in the absence of stipulation. As to the fourth issue. The general rule is that attorney’s fees cannot be recovered as part of damages because no premium should be placed on the right to litigate. the Court no longer finds it necessary to resolve the third issue. No pronouncement as to costs. thus. It is settled that even if a claimant is compelled to litigate with third persons or to incur expenses to protect its rights. 56210 together with the Decision dated July 5. (7) In actions for the recovery of wages of household helpers. (9) In a separate civil action to recover civil liability arising from a crime. . legal and equitable justification.27 In the present case. (3) In criminal cases of malicious prosecution against the plaintiff. 24474 in the name of respondent Enrique P. the assignment of rights and interest over the subject property in favor of respondent is null and void for being violative of the provisions of Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring property or rights which may be the object of any litigation in which they may take part by virtue of their profession. 1996 of the Regional Trial Court of Pasig City. (6) In actions for legal support.26 The power of the courts to grant damages and attorney’s fees demands factual. (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid.places him in material possession of the land if the same is in the custody of the former. laborers and skilled workers. among others. Anent the last issue. Suplico and reinstating Transfer Certificate of Title No. Branch 268 in Civil Case No. the subject property still formed part of the estate of Adelina. cannot be recovered.
and the duty of the court is to see to it that this title is maintained and respected unless challenged in a direct proceedings [sic]. in effect. 1993 a deed of sale  over the property in favor of his common-law-wife-herein petitioner Maria B. To disprove that Goyanko’s signature in the questioned deed of sale is a forgery. despite the proliferation in the records and admissions by both parties that defendant-appellee was the "mistress" or "common-law wife" of Joseph. . in her favor is valid and genuine. Sr. GOYANKO. . Jerry. in the purchase of the land and so it was eventually sold to her. 138405 was issued in her favor. when it dismissed the complaint a quo . Petitioner. The signature on the questioned Deed of Sale is genuine. despite the fact that the marriage of Joseph. Sr. the pertinent portions of which decision read: There is no valid and sufficient ground to declare the sale as null and void.  the trial court dismissed the complaint against petitioner. and Maria Ching together with their witnesses appeared before him for notarization of Deed of Sale in question is more reliable than the conflicting testimonies of the two document examiners. 1947.  Respondents thus filed with the Regional Trial Court of Cebu City a complaint for recovery of property and damages against petitioner. In turn. . The parcel of lands known as Lot No. petitioner claimed that she is the actual owner of the property as it was she who provided its purchase price. A Torrens title is not subject to collateral attack. . JOSEPH C. Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania) were married. CHING..  (Citations omitted. as a rule. unless bad faith can be established on the part of the person appearing as owner on the certificate of title.MARIA B. . it has been repeatedly held that. all surnamed Goyanko. The transaction undertaken was from the original owner Sulpicia Ventura to Joseph Goyanko. Sr. in dismissing the complaint a quo . Salvador Barrameda who declared in court that Joseph Goyanko. Respondents claim that in 1961. In defense.  Out of the union were born respondents Joseph. Defendant Maria Ching asserted that the Deed of Sale executed by Joseph Goyanko. defendant Ching justified her financial capability to buy the land for herself. . After Goyanko’s death on March 11. Cabahug St. Mary Ellen and Jess. in effect. and then from Joesph Goyanko. In recognition of the proverbial virtuality of a Torrens title. sustaining the sale of the subject property between Joseph. underscoring supplied) Before the Court of Appeals where respondents appealed. On December 30. Goyanko and Epifania dela Cruz or the exclusive capital property of the husband. when it dismissed the complaint a quo . there is no other owner than that in whose favor it has been issued. Sr. vs. Sulpicia Ventura (Sulpicia). The signature of Joseph Goyanko. Ching. On May 1. Sulpicia executed a deed of sale  over the property in favor of respondents’ father Goyanko. Sr. despite the clear findings of forgery and the non-credible testimony of notary public. . The acquisition of the said property by defendant Maria Ching is well-elicited from the aforementioned testimonial and documentary evidence presented by the defendant. .  . Respondents thereupon had the purported signature of their father in the deed of sale verified by the Philippine National Police Crime Laboratory which found the same to be a forgery. and Epifania. sustaining the sale of the subject property between Joseph. In her testimony. 1998. Sr. 2. The land subject of the litigation is already registered in the name of defendant Maria Ching under TCT No. to herein defendant Maria Ching. is irrevocable and indefeasible. and the defendant-appellee. Jr. and the defendant-appellee. in the questioned Deed of Absolute Sale is genuine as it was duly executed and signed by Joseph Goyanko. By virtue of the Deed of Sale executed in favor of Maria Ching. Sr. as a buyer yet his ownership was only temporary and transitory for the reason that it was subsequently sold to herein defendant Maria Ching. . Goyanko executed on October 12. Julius. and the defendant-appellee. they argued that the trial court erred: 1. 138405 was thus issued in petitioner’s name. It is a well-known doctrine that a Torrens title. Sr. Transfer Certificate of Title No. she presented as witness the notary public who testified that Goyanko appeared and signed the document in his presence.. . . respondents discovered that ownership of the property had already been transferred in the name of petitioner. 1993. himself. 138405 and the issuance of a new one in favor of their father Goyanko. . fictitious and simulated. Cebu City but that as they (the parents) were Chinese citizens at the time. Although for a time being the property passed through Joseph Goyanko. . 138405. The testimony of Atty. Sr. sustaining the validity of the sale of the subject property between Joseph. . 6 which is sought to be recovered in this case could never be considered as the conjugal property of the original Spouses Joseph C. 3. Sr. their parents acquired a 661 square meter property located at 29 F. Imelda. 1996. Sr. Evelyn. . in effect. Sr. By Decision of October 16. . . Sr. . and Epifania was then still subsisting thereby rendering the subject property as conjugal property of Joseph. Maria Ching claimed that it was even her money which was used by Joseph Goyanko. Sr. the property was registered in the name of their aunt. Transfer Certificate of Title (TCT) No.. praying for the nullification of the deed of sale and of TCT No.
Contracts without cause. (3) Those whose cause or object did not exist at the time of the transaction. still we cannot sustain the validity of the sale of the property by Joseph. . Sr. morals. object or purpose is contrary to law. or with unlawful cause. 138405. IV. 1352. Held the appellate court: . (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained. The following contracts are inexistent and void from the beginning: (1) Those whose cause. . the present petition. (2) Those which are absolutely simulated or fictitious. .  (Underscoring supplied) Hence. IS NOT A VIOLATION OF A STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES.  the appellate court reversed that of the trial court and declared null and void the questioned deed of sale and TCT No. or . good customs. and Epifania dela Cruz-Goyanko. Furthermore. is presumed to belong to the conjugal partnership. APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES ON THE SUBJECT PROPERTY. public order or public policy. AS THE EXCLUSIVE PROPERTY OF PETITIONER. SR. produce no effect whatever. THE SAME BEING FOUND BY THE COURT A QUO. except: (1) When a separation of property was agreed upon in the marriage settlements. the law emphatically prohibits spouses from selling property to each other. ARTICLE 1490.. (5) Those which contemplate an impossible service. 1352. AND THAT THE SAME WAS NEVER PART OF THE CONJUGAL PROPERTY OF THE MARRIAGE BETWEEN RESPONDENTS’ MOTHER EPIFANIA GOYANKO AND PETITIONER’S COMMON LAW HUSBAND. II. while this presumption in favor of conjugality is rebuttable with clear and convincing proof to the contrary. 2003. we find no evidence on record to conclude otherwise. if allowed during the marriage would destroy the system of conjugal partnership. (4) Those whose object is outside the commerce of men. Even if we were to assume that the subject property was not conjugal. The subject property having been acquired during the existence of a valid marriage between Joseph Sr. good customs. morals. Contracts without cause. public order or public policy. The record shows that while Joseph Sr. . a basic policy in civil law. Art. NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR UNDER ARTICLES 1448 AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN COMMON LAW SPOUSES. . subject to certain exceptions. The purported sale. The pertinent provisions of the Civil Code which apply to the present case read: ART. a basic social institution which public policy vigilantly protects. Neither can the right to set up the defense of illegality be waived. It is therefore undeniable that the 661-square meter property located at No." We therefore find that the contract of sale in favor of the defendant-appellant Maria Ching was null and void for being contrary to morals and public policy. ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF THEIR CASE DURING APPEAL. . or with unlawful cause. 1409. morals.. good customs. 1352 of the Civil Code provides: "Art.. have in fact been living together as common-law husband and wife. (7) Those expressly prohibited or declared void by law. undermines the stability of the family. .. The prohibition was designed to prevent the exercise of undue influence by one spouse over the other and is likewise applicable even to common-law relationships otherwise.By Decision dated October 21. 29 F. there being overwhelming evidence on records that they have been living together as common-law husband and wife. On this score. in favor of his concubine. . The cause is unlawful if it is contrary to law. having been made by Joseph Sr. produce no effect whatsoever. ART. NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A TRUSTEE. to defendant-appellant Maria Ching. . "the condition of those who incurred guilt would turn out to be better than those in legal union. Moreover. Cabahug Street. and his wife Epifania have been estranged for years and that he and defendant-appellant Maria Ching. petitioners arguing that the appellate court gravely erred in: I. The husband and wife cannot sell property to each other. These contracts cannot be ratified. JOSEPH GOYANKO. . III. Cebu City belongs to the conjugal partnership. public order or public policy. WHO BECAME AS SUCH IN CONTEMPLATION OF LAW. . there has never been a judicial decree declaring the dissolution of his marriage to Epifania nor their conjugal partnership. NOR THE EXCLUSIVE OR CAPITAL PROPERTY OF THE LATTER AT ANYTIME BEFORE THE SAME WAS VALIDLY ACQUIRED BY PETITIONER. And this is so because transfers or conveyances between spouses. AND WHO HAPPENS TO BE A COMMON LAW HUSBAND OF THE BENEFICIARY. The cause is unlawful if it is contrary to law.
ARTICLE 1450. if the person to whom the title is conveyed is a child. public order. the law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. which is the cornerstone of family law. Similarly. it being disputably presumed that there is a gift in favor of the child. no trust is implied by law. does not persuade. The former is the trustee. or with unlawful cause. If the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to the lender or payor to secure the payment of the debt. while the latter is the beneficiary. otherwise. it was null and void. Generally." Those provisions are dictated by public interest and their criterion must be imposed upon the will of the parties. In the present case. Article 1409 of the Civil Code states inter alia that: contracts whose cause." Additionally. good customs. As to the change of theory by respondents from forgery of their father’s signature in the deed of sale to sale contrary to public policy. That she may have been considered the breadwinner of the family and that there was proof that she earned a living do not conclusively clinch her claim. or public policy. a trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid.lawwife-herein petitioner. it too does not persuade. donations between spouses during marriage are prohibited. Costs against petitioner. There is an implied trust when property is sold. the petition is DENIED for lack of merit. . object. The sale was subversive of the stability of the family. etc. 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. SO ORDERED . it being violative of the above-cited Articles 1352. a basic policy in civil law. morals.  (Italics in the original. Article 1352 also provides that: "Contracts without cause. good customs. The prohibitions apply to a couple living as husband and wife without benefit of marriage. So this Court ruled in Calimlim-Canullas v. For petitioner’s testimony that it was she who provided the purchase price is uncorroborated. It was also designed to prevent the exercise of undue influence by one spouse over the other. . legitimate or illegitimate. (Underscoring supplied) The proscription against sale of property between spouses applies even to common law relationships. Hon. of the one paying the price of the sale. and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. "the condition of those who incurred guilt would turn out to be better than those in legal union. And this is so because if transfers or conveyances between spouses were allowed during marriage.  and to ensure that the latter is given the opportunity during trial to refute all allegations against him by presenting evidence to the contrary.:  Anent the second issue. petitioner cannot be said to have been put to undue disadvantage and to have been denied the chance to refute all the allegations against her. . a basic social institution which public policy cherishes and protects. as well as to protect the institution of marriage. The cause is unlawful if it is contrary to law. The latter may redeem the property and compel a conveyance thereof to him.(2) When there has been a judicial separation of property under Article 191. we find that the contract of sale was null and void for being contrary to morals and public policy. emphasis and underscoring supplied) As the conveyance in question was made by Goyangko in favor of his common. For the nullification of the sale is anchored on its illegality per se. et al. or purposes is contrary to law. Fortun. produce no effect whatsoever. WHEREFORE. Petitioner’s argument that a trust relationship was created between Goyanko as trustee and her as beneficiary as provided in Articles 1448 and 1450 of the Civil Code which read: ARTICLE 1448. a party in a litigation is not permitted to freely and substantially change the theory of his case so as not to put the other party to undue disadvantage by not accurately and timely apprising him of what he is up against. However. public order. that would destroy the system of conjugal partnership. or public policy are void and inexistent from the very beginning. morals.. 1409 and 1490 of the Civil Code.
Petitioner’s sublease contract with R. 1991. 1988.C. RTC-Branch 78 directed the issuance of a writ of execution pending appeal since petitioner failed to file a supersedeas bond and periodically deposit the rentals due during the pendency of the appeal. docketed as CA-G. several sub-lessees including petitioner.R.16 Two months later. 1989. Quezon City (MeTC-Branch 39). Petitioner. 23275.7 In the compromise settlement. MeTC-Branch 39 rendered a Decision in favor of R. Branch 41. 1996.5 R.C.C. Nicolas had been lawfully terminated because of the latter’s non-payment of rent.C. (R. petitioner made repeated demands on respondent for the restoration of his possession of the commercial space leased to him to no avail. as well as several other sub-lessees of R. since his eviction in November 1990. 1990. Jerry Yu. The factual background of the case is as follows: On January 31. manifesting to the MeTC-Branch 41 that they entered into a compromise settlement and moved that the names of the sub-lessees as parties-defendants be dropped and excluded. 52933. 1996 of the Regional Trial Court. Nicolas.14 Petitioner assailed the Order dated October 4. Capitol Development Corporation (respondent) leased its commercial building and lot located at 1194 EDSA. Nicolas to pay its unpaid rentals from September 1986 until October 1988. Nicolas filed a complaint for ejectment and collection of unpaid rentals against petitioner before the Metropolitan Trial Court.C. filed a Joint Manifestation and Motion in Civil Case No. entered into a compromise settlement with respondent. 52933 in favor of respondent and ordered R. 1990 a writ of execution was issued. docketed as Civil Case No.C.10 On April 18. In an Order dated October 4. Nicolas. Branch 78. Inc.C. Bercero (petitioner). 1991. 1988. for failure to pay rent. 1993 with the option for the latter to make additional improvements in the property to suit its business and to sublease portions thereof to third parties. Nicolas Merchandising.C. on October 22. Nicolas filed a Motion for Execution Pending Appeal which was opposed by petitioner.11 Dissatisfied. or on November 13. CAPITOL DEVELOPMENT CORPORATION. 1990..C. Julio Acuin. CV No. 56484 which set aside the Decision3 dated May 27.17 Meanwhile. Q-92-11732. on March 24. 52933. vs. and to confirm respondent’s right of possession to the premises in the light of the ejectment case filed by R. petitioner filed a complaint for sum of money with attachment and mandatory injunction with damages against the respondent before the RTC-Branch 88. respondent filed an ejectment case against R. petitioner was evicted from the leased premises. Respondent also impleaded the sub-lessees of R. and the CA Resolution4 dated August 29. During the pendency of Civil Case No. Nicolas against petitioner. Quezon City (MeTC-Branch 41).8 On October 21. Nicanor Bas. respondent filed a Manifestation in Civil Case No.1 Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the Decision2 dated February 11. and that the sub-lessees voluntarily surrendered possession of the premises to respondent. 2002 which denied petitioner’s Motion for Reconsideration. MeTC-Branch 41 rendered a Decision in Civil Case No. and Pedro T. R. 0668.BERCERO. respondent and petitioner.C. Nicolas as parties-defendants. 1988. 1990 in a petition for certiorari with the CA. Romeo Tolentino. Nicolas and ordered the eviction of petitioner from the leased premises. Petitioner entered into a lease contract with respondent for a three-year period. SP No.R. Branch 88. 52933 urging MeTC-Branch 41 to order R.13 Sometime in November 1990. Nicolas before the Metropolitan Trial Court. docketed as Civil Case No. that the sub-lessees directly executed lease contracts with respondent considering the termination of leasehold rights of R.C.9 On November 14. the sub-lessees recognized respondent as the lawful and absolute owner of the property and that the contract between respondent and R.C. petitioner filed an appeal before the Regional Trial Court. 2002 of the Court of Appeals (CA) in CA-G. from August 16. 18 Thus.C. the dispositive portion of which reads: .6 Meanwhile. R. 1988 to August 31. Quezon City (RTC-Branch 88) in Civil Case No.12 Accordingly. Nicolas converted the space into a bowling and billiards center and subleased separate portions thereof to Midland Commercial Corporation. Quezon City to R. RTC-Branch 88 rendered its Decision20 in favor of petitioner. Nicolas) for a 10-year period or until January 31.15 On September 3. docketed as Civil Case No. Branch 39. 52933.C.C.19 On May 27. Nicolas to desist from harassing respondent and petitioner. but the petition was denied due course and dismissed by the CA in a Decision dated December 28. Quezon City (RTC-Branch 78). Nicolas was for a three-year period or until August 16. Q-92-11732. 1983. 1992. 1991.
Dissatisfied. that he is entitled to damages since respondent did not even lift a finger to protect him when R. 2002.00 – attorney’s fees 3) to pay the costs.26 To . the present Petition anchored on the following grounds: I . to wit: WHEREFORE. On March 5.C. 2002. the CA rendered its Decision22 setting aside the Decision of RTC-Branch 88. SO ORDERED. generator. Nicolas was already terminated at the time he contracted with the latter. and that petitioner knew that at the time he contracted with respondent.00 – moral damages c. Nicolas filed an ejectment case against him. No pronouncement as to costs.WHEREFORE. Under Article 1654 (3) of the New Civil Code. and that petitioner was well aware that respondent had a 10-year lease contract with R. and that respondent acted in utter bad faith when it still refused to restore his possession after he was evicted in November 1990. liable for the restoration of petitioner’s possession and the payment of actual damages corresponding to lost profit.C. cash.R. this Court finds for the plaintiff and orders the defendant: 1) to restore plaintiff’s possession of the rented building located at 1194 EDSA.C.C. On February 11. that respondent assured him that it had a valid and legal right to enter into a new lease contract with him. Nicolas over the subject premise had yet to be judicially terminated. P480. Branch 88. respondent filed an appeal with the CA.THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR BY DISREGARDING THE LAW.THE HONORABLE COURT OF APPEALS CLEARLY COMMITTED GRAVE ERROR AND ABUSE OF DISCRETION IN APPLYING THE PRINCIPLE OF ESTOPPEL TO PETITIONER II . Nicolas relating to their sub-lease agreement. notwithstanding that his lease contract with respondent was valid until August 31. petitioner filed his Motion for Reconsideration.000. counters that the CA correctly applied the principle of estoppel since petitioner voluntarily entered into a lease agreement with respondent despite full knowledge that the latter’s lease with R. he still had existing obligations to R.21 The RTC held that respondent miserably failed to comply with its obligation under Article 1654 of the New Civil Code due to its apathy and failure to extend any assistance to the petitioner and was. therefore. premises considered. to wit: Art. Q-92-11732. the CA issued its Resolution denying petitioner’s Motion for Reconsideration. in Civil Case No.C. as well as moral and exemplary damages and attorney’s fees.000. The lessor is obliged: xxxx (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. P 50. CV No. 2002. it is the duty of the lessor to place the lessee in the legal possession of the premises and to maintain the peaceful possession thereof during the entire term of the lease. Nicolas which was subject of an ejectment suit that was still pending litigation when petitioner executed a lease contract with respondent. on the other hand. JURISPRUDENCE AND EVIDENCE IN DELETING THE AWARD MADE BY THE LOWER COURT OF DAMAGES AND REVERSING THE THREE (3) YEAR POSSESSION OF THE SUBJECT PROPERTY GIVEN TO THE PETITIONER25 Petitioner argues that the principle of estoppel is inapplicable because he dealt with respondent in good faith and relied upon the latter’s representations that the lease of R.00 – actual damages b. the Decision dated May 27.23 On August 29. P 50. 2) to pay the plaintiff the following: a. docketed as CA-G. P 50.000. Respondent.00 – exemplary damages d. Accordingly. 1654. 56484. the latter is not entitled to damages since he was aware of the facts which led to his ouster from the subject premises. premises rendered.000. the counterclaim filed by the defendant Capitol Development Corporation is hereby DISMISSED. is hereby REVERSED and SET ASIDE. Applying the equitable principle of estoppel. 1996 of the Regional Trial Court of Quezon City. the CA held that although respondent as lessor failed to ensure the peaceful possession of petitioner as its lessee in the subject premises. 1991. Quezon City for the next three years effective from receipt of the copy of this decision. and other items petitioner lost due to the eviction.24 Hence.
Petitioner’s Complaint and respondent’s Counterclaim in Civil Case No. Nicolas had a lease contract with respondent which was subject of a pending litigation. and by others’ acts.C. It is well-settled that parties to a void agreement cannot expect the aid of the law. for he is obligated to give warranty in the manner we have set forth in our commentary on article 1553. Nicolas was still valid and subsisting. in which case the lessor is obligated to answer for said act of trespass. A void or inexistent contract is equivalent to nothing. either by others’ acts x x x or by his own. even through technicalities of law. Petitioner was fully aware that R. because he must guarantee the right he created. albeit pending litigation.30 Petitioner claims that respondent as lessor was obliged to restore his possession following his eviction from the premises. Respondent’s unilateral rescission of its lease contract with R. the courts leave them as they are. in this sense. In sum. By his own acts. Q-92-11732 are DISMISSED. or to recover the property agreed to be sold or delivered. SO ORDERED.33 an honest intention to abstain from taking any unconscientious advantage of another.28 The lessee has the right to be respected in his possession and should he be disturbed therein. because. his right of action being anchored on a contract which. or damages for its violation. Nicolas.C. Nicolas since he was impleaded as a party-defendant in said ejectment case. he shall be restored to said possession by the means established by the law or by the Rules of Court. A lease is a reciprocal contract and its continuance. Good faith is ordinarily used to describe that state of mind denoting "honesty of intention. Having granted to R. CV No. the present petition is DENIED for lack of merit. it cannot be the basis of actions to enforce compliance.C.fully appreciate the importance of this provision. respondent could not grant that same right to petitioner in 1988.C. Nicolas the right to use and enjoy its property from 1983 to 1993. notice. in going back on his agreement. There is no merit to petitioner’s claim of good faith in dealing with respondent.38 WHEREFORE. the lease contract between petitioner and respondent is void for having an inexistent cause . petitioner cannot feign innocence of the existence thereof. disturb. 56484 are AFFIRMED. is unlawful. is void.27 The obligation of the lessor arises only when acts. he would openly violate it if. or the money agreed to be paid. the latter was still obliged to maintain R. because they are deemed in pari delicto or "in equal fault". it is absolutely wanting in civil effects.C. Nicolas. Void are all contracts in which the cause or object does not exist at the time of the transaction. the lease contract entered into between petitioner and respondent. the comment of Manresa on said article is worth mentioning: The lessor must see that the enjoyment is not interrupted or disturbed. and.36 Each must bear the consequences of his own acts.29 Possession is not protection against a right but against the exercise of a right by one’s own authority.C.35 No suit can be maintained for its specific performance. Costs against petitioner. dispute. The assailed Decision and Resolution of the Court of Appeals in CA-G. it is incumbent upon him to protect the lessee in the latter’s peaceful enjoyment.respondent did not have the right to lease the property to petitioner considering that its lease contract with R. has no legal existence and effect from the start. he should attempt to render ineffective in practice the right in the thing he had granted to the lessee. .37 They will be left where they have placed themselves since they did not come into court with clean hands. object to."34 Being privy to the pendency of the ejectment case involving the leasehold rights of R. The Court disagrees. the underlying case for sum of money filed by petitioner against respondent cannot prosper. without waiting for the final outcome of the ejectment case it filed against the latter. Nicolas’s peaceful and adequate possession and enjoyment of its lease for the 10-year duration of the contract. When petitioner entered into a lease contract with respondent. being the person principally obligated by the contract. for all intents and purposes.R. during the pendency of the lease contract with R. and freedom from knowledge of circumstances which ought to put the holder upon inquiry. together with absence of all information.31 In the present case.32 Thus. termed as legal trespass (perturbacion de derecho). and no affirmative relief of any kind will be given to one against the other. or benefit or belief of facts which render the transaction unconscientious. effectivity or fulfillment cannot be made to depend exclusively upon the free and uncontrolled choice of just one party to a lease contract.C. or place difficulties in the way of the lessee’s peaceful enjoyment of the premises that in some manner or other cast doubt upon the right of the lessor by virtue of which the lessor himself executed the lease.
the HLURB Arbiter issued an Alias Writ of Execution. Dutch nationals. 1999. However. 1997.6 Sheriff Jaime B. representing the purchase price paid by the complainants to P.00 per sq m is P83. Batangas. Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the Decision1 dated October 30. the Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer Certificates of Title (TCT)9 in Barangay Niyugan.JACOBUS BERNHARD HULST. INC.00. Batangas directing the latter to execute its judgment. of the same day. judgment is hereby rendered in favor of the complainant.000. The disparity between the two valuations are [sic] so .00 as exemplary damages. 2000. upon petitioner's motion.m.00. When respondent failed to comply with its verbal promise to complete the project by June 1995.450. The sum of P5. requiring the Sheriff to levy first on respondent's personal properties. Laurel. the HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of the Regional Trial Court of Tanauan. 2) Pay complainant the sum of P297. PR BUILDERS. 1997.500. he received the Order dated April 28. spouses Hulst divorced. 2000. plus interest thereon at the rate of twelve percent (12%) per annum from the time complaint was filed.. damages and attorney's fees. 3) Pay complainant the sum of P100. while the Sheriff was at the HLURB office to remit the legal fees relative to the auction sale and to submit the Certificates of Sale15 for the signature of HLURB Director Belen G.864.616. vs. The facts: Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida).313. the Ex-Officio Sheriff proceeded to implement the Writ of Execution. 1998. Ceniza (HLURB Director).000.7 On January 26.11 Two days before the scheduled public auction or on April 26. Batangas. 1996.000.17 reasoning as follows: While we are not making a ruling that the fair market value of the levied properties is PhP6. IV6-071196-0618. SP No.040. On April 22.4 From then on. or on August 28. the HLURB Arbiter and HLURB Director issued an Order setting aside the sheriff's levy on respondent's real properties.R.. Inc. premises considered. Holly Properties Realty Corporation was the winning bidder for all 15 parcels of land for the total amount of P5. Ida assigned her rights over the purchased property to petitioner.m.000.00 by way of moral damages.616. entered into a Contract to Sell with PR Builders. 60981.33. HLURB Arbiter Ma. rescinding the Contract to Sell and ordering respondent to: 1) Reimburse complainant the sum of P3..00-square meter levied properties is only around PhP6. 2000.00) as indicated in the Hunter Baynes Appraisal Report. the Sheriff set the public auction of the levied properties on April 28. SO ORDERED. the Sheriff proceeded to sell the 15 parcels of land. upon complaint of respondent with the CA on a Petition for Certiorari and Prohibition. and 6) Cost of suit.500.653. Aquino (HLURB Arbiter) rendered a Decision2 in favor of spouses Hulst.00 as actual damages. the spouses Hulst filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with interest. Absent any restraining order from the HLURB. which is over and above the judgment award.13 At 10:15 a.00. 1999. (respondent).R. 2000 issued by the HLURB Arbiter to suspend the proceedings on the matter.00 per square meter (or an aggregate value of PhP83. we definitely cannot agree with the position of the Complainants and the Sheriff that the aggregate value of the 12.m.000.000.16 Four months later. 2000 at 10:00 a. for the purchase of a 210-sq m residential unit in respondent's townhouse project in Barangay Niyugan. Inc.. Perpetua Y.00 was turned over to the petitioner in satisfaction of the judgment award after deducting the legal fees. respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB on the ground that the Sheriff made an overlevy since the aggregate appraised value of the levied properties at P6. dated December 11. based on the Appraisal Report12 of Henry Hunter Bayne Co. the dispositive portion of which reads: WHEREFORE. of the scheduled auction date of April 28. docketed as HLRB Case No. 2002 of the Court of Appeals (CA) in CA-G. 2000.3 Meanwhile. On August 21. Builders. Laurel. petitioner. 5) P50.000. 4) Pay complainant the sum of P150.14 At 4:15 p.500. petitioner alone pursued the case. respondent's counsel objected to the conduct of the public auction on the ground that respondent's Urgent Motion to Quash Writ of Levy was pending resolution.8 On March 23.00 as attorney's fees and for other litigation expenses.187. the levy made by the Sheriff was set aside.000.5 On April 13. Ozaeta (Sheriff) tried to implement the writ as directed but the writ was returned unsatisfied.10 In a Notice of Sale dated March 27.
Sheriff's Return) and the auction sale proceedings was timely objected by Respondent's counsel (par. 2000.616. the current value of like Before resolving the question whether the CA erred in affirming the Order of the HLURB setting aside the levy made by the sheriff. the HOLLY PROPERTIES REALTY CORPORATION represented by Ma. taking into consideration not only the value of the properties as indicated in their respective tax declarations. Sheriff's Return) due to the pendency of the Urgent Motion to Quash the Writ of Levy which was filed prior to the execution sale.000. However. 378). 6. petitioner filed a Petition for Certiorari and Prohibition with the CA on September 27. or associations qualified to acquire or hold lands of the public domain. their size.00 which shockingly exceeded the judgment debt of only around P6.000. SO ORDERED.000. Macaraeg. even during levy. and in the particular case of lands.00 and it definitely invites our attention to look into the proceedings had especially so when there was only one bidder. The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. development and utilization of lands of the public domain for Filipino citizens25 or corporations at least 60 percent of the capital of which is owned by Filipinos. On October 30.26 Aliens.23 petitioner took the present recourse on the sole ground that: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ARBITER'S ORDER SETTING ASIDE THE LEVY MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES. Atty. mere inadequacy of the price is not a sufficient ground to annul the sale. (Emphasis supplied). Section 7 of Article XII of the 1987 Constitution provides: Sec. 7 & 8. 83 Phil. The dispositive portion of the Order reads: WHEREFORE. the Sheriff has to consider the fair market value of the properties levied upon to determine whether they are sufficient to satisfy the judgment. Batangas. 7.00.egregious that the Sheriff should have looked into the matter first before proceeding with the execution sale of the said properties.000. Macaraeg21 does not apply since said case stated that "when there is a right to redeem inadequacy of price should not be material" holds no water as what is obtaining in this case is not "mere inadequacy. the CA rendered herein assailed Decision20 dismissing the petition. .24 It is very clear from the foregoing that. especially when the auction sale proceedings was seasonably objected by Respondent's counsel. but also all the other determinants at arriving at a fair market value.19 A motion for reconsideration being a prohibited pleading under Section 1(h). Sheriff's Return). The difference between PhP83. The CA held that petitioner's insistence that Barrozo v. Chandra Cacho (par. and the tax declarations thereon.000." but an inadequacy that shocks the senses. Rule IV of the 1996 HLURB Rules and Procedure. Save in cases of hereditary succession. posthaste. Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain. Besides. that Buan v. issued the corresponding Certificate of Sale even prior to the payment of the legal fees (pars. 2002. this time. shape or location.616." The 1987 Constitution reserved the right to participate in the disposition.00 and Php6. it behooves this Court to address a matter of public and national importance which completely escaped the attention of the HLURB Arbiter and the CA: petitioner and his wife are foreign nationals who are disqualified under the Constitution from owning real property in their names. corporations. and any levy in excess of the judgment award is void (Buan v. While we agree with the Complainants that what is material in an execution sale proceeding is the amount for which the properties were bidded and sold during the public auction and that. Noel Mingoa. exploitation.616. 7.000. is hereby SET ASIDE and the said Sheriff is hereby directed to levy instead Respondent's real properties that are reasonably sufficient to enforce its final and executory judgment. xxxx properties. namely: the cost of acquisition. x x x x18 (Emphasis supplied). Without filing a motion for reconsideration. Court of Appeals. Sheriff Ozaete totally disregarded the objection raised and. its actual or potential uses. no private lands shall be transferred or conveyed except to individuals. the levy on the subject properties made by the Ex-Officio Sheriff of the RTC of Tanauan. what is at issue is not the value of the subject properties as determined during the auction sale. Mingoa.00 is PhP77. instead of resolving first the objection timely posed by Atty. 235 SCRA 424). the court is justified to intervene where the inadequacy of the price shocks the conscience (Barrozo vs. Court of Appeals22 properly applies since the questioned levy covered 15 parcels of land posited to have an aggregate value of P83. but the determination of the value of the properties levied upon by the Sheriff taking into consideration Section 9(b) of the 1997 Rules of Civil Procedure x x x.000.
petitioner is not entitled to actual as well as interests thereon. 1418-1419.42 Since the contract involved here is a Contract to Sell. was not the fact that he is not allowed to acquire private land under the Philippine Constitution. it produces no civil effect.36 (e) the party for whose protection the prohibition by law is intended if the agreement is not illegal per se but merely prohibited and if public policy would be enhanced by permitting recovery (Art. is subject to exceptions32 that permit the return of that which may have been given under a void contract to: (a) the innocent party (Arts. In a contract of sale. the courts leave them as they are.29 Generally. Civil Code). A distinction between the two is material in the determination of when ownership is deemed to have been transferred to the buyer or vendee and. as it was rendered by a tribunal with jurisdiction over the subject matter of the complaint. such violation of the law did not materialize because petitioner caused the rescission of the contract before the execution of the final deed transferring ownership.00. But even upon the fulfillment of the suspensive condition.whether individuals or corporations. A void contract is equivalent to nothing. Thus. The vendor has lost and cannot recover the ownership of the property until and unless the contract of sale is itself resolved and set aside."31 This rule.28 It does not create. But petitioner is entitled to the recovery only of the amount of P3.33 (b) the debtor who pays usurious interest (Art. Nothing is more settled in the law than that a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it was made by the court that rendered it or by the highest court of the land. and where the parties are in pari delicto. it is unequivocal that the Contract to Sell entered into by petitioner together with his wife and respondent is void. parties to a void agreement cannot expect the aid of the law.27 Since petitioner and his wife.37 and (f) the party for whose benefit the law has been intended such as in price ceiling laws (Art. and whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. in equity or at law. .187. Civil Code). The prospective seller still has to convey title to the prospective buyer by executing a contract of absolute sale. the resolution of the question on whether the constitutional proscription has been breached. being nonexistent. ownership has not yet transferred to the petitioner when he filed the suit for rescission. however. all contracts whose cause. or the money agreed to be paid. Petitioner received more than what he is entitled to recover under the circumstances. 1411-1412. no suit can be maintained for its specific performance. No damages may be recovered on the basis of a void contract. the title passes to the buyer upon the delivery of the thing sold. ownership does not automatically transfer to the buyer. or damages for its violation. Civil Code).45 The only recognized exceptions to the general rule are the correction of clerical errors. a contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain event. which was granted by the HLURB. ultimately."30 In pari delicto is "a universal doctrine which holds that no action arises. exception (c) finds application in this case. are proscribed under the Constitution from acquiring and owning real property.35 (d) the incapacitated party if the interest of justice so demands (Art. the prospective seller agrees to transfer ownership of the property to the buyer upon the happening of an event. 1417. although the basis of his claim for rescission. The HLURB decision cannot be considered a void judgment. Article 1410 of the same Code provides that the action or defense for the declaration of the inexistence of a contract does not prescribe. being Dutch nationals. object or purpose is contrary to law or public policy and those expressly prohibited or declared void by law are inexistent and void from the beginning.34 (c) the party repudiating the void contract before the illegal purpose is accomplished or before damage is caused to a third person and if public interest is subserved by allowing recovery (Art. Under Article 1414. the agreement produces no juridical tie between the parties involved. in a contract to sell. from an illegal contract. 1997 has long been final and executory.43 Further. The Court takes into consideration the fact that the HLURB Decision dated April 22. they have also been disqualified from acquiring private lands.41 In other words.47 Ineluctably. 1416. because they are deemed in pari delicto or "in equal fault.46 None of the exceptions is present in this case. no affirmative relief of any kind will be given to one against the other. Civil Code). Civil Code). representing the purchase price paid to respondent. hence. modify or extinguish a juridical relation.39 It is significant to note that the agreement executed by the parties in this case is a Contract to Sell and not a contract of sale.44 moral and exemplary damages and attorney's fees. one who repudiates the agreement and demands his money before the illegal act has taken place is entitled to recover. 1415.40 On the other hand. 1414. Under Article 1409 (1) and (7) of the Civil Code. void judgments. Petitioner is therefore entitled to recover what he has paid. Civil Code). or to recover the property agreed to be sold or delivered. the parties would stand as if the conditional obligation had never existed. which normally is the full payment of the purchase price.500. While the intent to circumvent the constitutional proscription on aliens owning real property was evident by virtue of the execution of the Contract to Sell. 1413. the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent. have been disqualified from acquiring public lands. the so-called nunc pro tunc entries which cause no prejudice to any party. Civil Code)38 and labor laws (Arts. so that if the suspensive condition does not take place.
500.000. the amount of the purchase price of the real property paid by petitioner to respondent under the Contract to Sell.00 representing the net proceeds (bidded amount is P5. Thus. and then on the real properties if the personal properties are insufficient to answer for the judgment.Article 22 of the Civil Code which embodies the maxim. that the Sheriff need not determine the fair market value of the subject properties before levying on the same since what is material is the amount for which the properties were bidded and sold during the public auction.187."50 The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. . by itself.616. .52 Petitioner is only entitled to P3.48 There is unjust enrichment when a person unjustly retains a benefit at the loss of another. If the judgment is for money. that reliance on the appraisal report was misplaced since the appraisal was based on the value of land in neighboring developed subdivisions and on the assumption that the residential unit appraised had already been built. how enforced. if any.The officer shall enforce an execution of a judgment for money by demanding from the judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. Respondent.125. The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor which has been levied upon. giving the latter the option to immediately choose which property or part thereof may be levied upon. The Court shall now proceed to resolve the single issue raised in the present petition: whether the CA seriously erred in affirming the HLURB Order setting aside the levy made by the Sheriff on the subject properties. Execution of judgments for money. through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases.000. 9.653. 22. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction. Rule 39 of the Revised Rules of Court. that the pendency of any motion is not a valid ground for the Sheriff to suspend the execution proceedings and.00 per sq m or P83. shall return the same to him. – (a) Immediate payment on demand. Rather.450. does not have the effect of restraining the Sheriff from proceeding with the execution.33) of the auction sale after deducting the legal fees in the amount of P137.00.313.33. said properties cannot just amount to P6.49 A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of entering into a contract to sell that violates the constitutional proscription. . the sheriff or other authorized officer must execute the same pursuant to the provisions of Section 9. viz: Sec. that the HLURB Arbiter and Director correctly held that the value indicated in the tax declaration is not the sole determinant of the value of the property. designed to indicate certain norms that spring from the fountain of good conscience.51 The sheriff delivered to petitioner the amount of P5. The above-quoted article is part of the chapter of the Civil Code on Human Relations. contends that while it is true that the HLURB Arbiter and Director did not categorically state the exact value of the levied properties. sufficient to satisfy the judgment. certified bank check or other mode of payment acceptable to the judgment obligee. the Court in the exercise of its equity jurisdiction may validly order petitioner to return the excess amount of P2. If the judgment obligor does not exercise the option.If the judgment obligor cannot pay all or part of the obligation in cash. states: Art. the officer shall first levy on the personal properties. acquires or comes into possession of something at the expense of the latter without just or legal ground. This is not a case of equity overruling or supplanting a positive provision of law or judicial rule. guides for human conduct that should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of justice. equity is exercised in this case "as the complement of legal jurisdiction [that] seeks to reach and to complete justice where courts of law. the provisions of which were formulated as basic principles to be observed for the rightful relationship between human beings and for the stability of the social order.000.540. or any other means.500.00. The petition is impressed with merit. on the other hand. nemo ex alterius incommode debet lecupletari (no man ought to be made rich out of another's injury). the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution. Petitioner avers that the HLURB Arbiter and Director had no factual basis for pegging the fair market value of the levied properties at P6. or when a person retains money or property of another against the fundamental principles of justice.040. are incompetent to do so.00.00.613. Every person who through an act of performance by another. x xx (b) Satisfaction by levy. equity and good conscience.
Anyway. and put it out of the power of the judgment debtor to divert it to any other use or purpose. and sell the same paying to the judgment creditor so much of the proceeds as will satisfy the amount of the judgment debt and costs. 57 Phil. in executing a money judgment against the property of the judgment debtor. Any excess in the proceeds shall be delivered to the judgment debtor unless otherwise directed by the judgment or order of the court. shares. in a prescribed manner. without regard for or the exercise of his own judgment upon the propriety or impropriety of the act done. Barrozo involved a judgment debtor who wanted to repurchase properties sold at execution beyond the one-year redemption period. The statement of the Court in Barrozo.53 Thus.54 Clearly. Real property. A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts. on Barrozo v. in obedience to the mandate of a legal authority. mere inadequacy of price – which was the complaint' allegation – is not sufficient ground to annul the sale. and thereby render it liable to the lien of the execution. stocks.000 only. where there is the right to redeem – as in this case – inadequacy of price should not be material because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale. Guerrero.62 . 45 Phil. sales which were left undisturbed by this Court. And even if the Court should go into the merits of the assailed Order. may be levied upon in like manner and with like effect as under a writ of attachment (Emphasis supplied). the petition is meritorious on the following grounds: Firstly. It is only where such inadequacy shocks the conscience that the courts will intervene. that "only where such inadequacy shocks the conscience the courts will intervene.59 In the present case. Gonzales. 693 and Guerrero v.. In fact. under Rule 39. credits.960 and the purchase price being in effect P1. the HLURB Arbiter and Director gravely abused their discretion in setting aside the levy conducted by the Sheriff for the reason that the auction sale conducted by the sheriff rendered moot and academic the motion to quash the levy.57 In the present case. the first thing to consider is that the stipulation contains no statement of the reasonable value of the properties. What was left to be done was only the issuance of the corresponding certificates of sale to the winning bidder.When there is more property of the judgment obligor than is sufficient to satisfy the judgment and lawful fees. Furthermore. Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the whole of a judgment debtor's property for the purpose of satisfying the command of the writ of execution. there are two stages in the execution of money judgments.864 (P464 sale price plus P1. all the requirements of auction sale under the Rules have been fully complied with to warrant the issuance of the corresponding certificates of sale. The winning bidder had already paid the winning bid. The judgment award had already been turned over to the judgment creditor. only the signature of the HLURB Director for that purpose was needed58 – a purely ministerial act. x x x x (Emphasis supplied). he must sell only so much of the personal or real property as is sufficient to satisfy the judgment and lawful fees. This declaration should be taken in the context of the other declarations of the Court in Barrozo. First. The HLURB Arbiter lost jurisdiction to act on the motion to quash the levy by virtue of the consummation of the auction sale.55 The object of a levy is to take property into the custody of the law. as well as the CA. to wit: Another point raised by appellant is that the price paid at the auction sale was so inadequate as to shock the conscience of the court. 445. The duty is ministerial only when the discharge of the same requires neither the exercise of official discretion nor judgment. The legal fees had already been remitted to the HLURB. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed.. or any interest in either real or personal property.56 On the other hand. the levy and then the execution sale. Court of Appeals61 is misplaced. The HLURB and the CA misconstrued the Court's pronouncements in Barrozo. debts. the sheriff rightfully proceeded with the auction sale. Supposing that this issue is open even after the one-year period has expired and after the properties have passed into the hands of third persons who may have paid a price higher than the auction sale money. such duty is discretionary and not ministerial. x x x Another consideration is that the assessed value being P3. the sheriff shall levy on all property belonging to the judgment debtor as is amply sufficient to satisfy the judgment and costs.400 mortgage lien which had to be discharged) the conscience is not shocked upon examining the prices paid in the sales in National Bank v. Macaraeg60 and Buan v.960 it also avers that their real market value was P2. an execution sale is a sale by a sheriff or other ministerial officer under the authority of a writ of execution of the levied property of the debtor. Absent any order from the HLURB suspending the auction sale. and although defendant' answer avers that the assessed value was P3. and other personal property. the reliance of the HLURB Arbiter and Director." is at best a mere obiter dictum.
for reason of equity. This is the contingency addressed by Section 9.In other words. Rule 57 of the Rules of Court. the subject matter in Barrozo is the auction sale. It involved the levy on two parcels of land owned by the judgment debtor. In an ordinary sale. The Sheriff has no authority. act with considerable dispatch so as not to unduly delay the administration of justice. to "sell only a sufficient portion" of the levied properties "as is sufficient to satisfy the judgment and the lawful fees. the decisions. no specific portion thereof should be isolated and resorted to. The Sheriff is mandated to sell so much only of such real property as is sufficient to satisfy the judgment and lawful fees. Holly Properties Realty Corporation successively bidded upon and bought each of the levied properties for the total amount of P5. Under Section 9. can be imputed to the Sheriff in proceeding with the auction sale despite the pending motion to quash the levy filed by the respondents with the HLURB. such that the levy and attempted execution of the second parcel of land was declared void for being in excess of and beyond the original judgment award granted in favor of the judgment creditor. The Appraiser in fact made this qualification in its Appraisal Report: "[t]he property subject of this appraisal has not been constructed. respondent's objection to the continuation of the conduct of the auction sale. much less resolve. In the absence of a restraining order. in conjunction with Section 7. as officers charged with the delicate task of the enforcement and/or implementation of judgments. The Report was based on the projected value of the townhouse project after it shall have been fully developed.450. The Appraisal Report is not the best proof to accurately show the value of the levied properties as it is clearly self-serving. endeavoring on the one hand to obtain sufficient property to satisfy the purposes of the writ.69 Because it is impossible to know the precise quantity of land or other property necessary to satisfy an execution. the Sheriff does not determine the exact valuation of the levied property. one after the other until the judgment debt and the lawful fees were fully satisfied. otherwise. the Rules of Court do not require that the value of the property levied be exactly the same as the judgment debt. or other processes of the courts of justice and the like would be futile. on his own. much less abuse of discretion. The Court does not sanction the piecemeal interpretation of a decision. Thus. a transaction may be invalidated on the ground of inadequacy of price. respondent stood to gain rather than be harmed by the low sale value of the auctioned properties because it possesses the right of redemption.72 In the determination of whether a levy of execution is excessive. The basis of the appraiser is on the existing model units. that is. the appraisal value cannot be equated with the fair market value."74 Since it is undisputed that the townhouse project did not push through. the Sheriff should be allowed a reasonable margin between the value of the property levied upon and the amount of the execution. Respondent only submitted an Appraisal Report. gross inadequacy of price does not nullify an execution sale. Rule 39 of the Revised Rules of Court. In the levy of property. To get the true intent and meaning of a decision. based merely on surmises. and must exercise the care which a reasonably prudent person would exercise under like conditions and circumstances.68 Records do not show that respondent alleged non-compliance by the Sheriff of said requisites. the price demanded for the property upon a private sale is not the standard for determining the excessiveness of the levy. and (b) leave with the occupant of the property copy of the same order. in the absence of a restraining order. Rule 39. no error. inadequacy of price should not be material because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale. the sheriff is required to do only two specific things to effect a levy upon a realty: (a) file with the register of deeds a copy of the order of execution. the HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. but the decision must be considered in its entirety. orders. it is proper to take into consideration encumbrances upon the property. the projected value did not become a reality. together with the description of the levied property and notice of execution. the easier it is for the owner to effect redemption. It is elementary that sheriffs.73 Here. description and notice.33 in full satisfaction of the judgment award and legal fees. it can be less or more than the amount of debt. In the present case.70 Section 9. he has no discretion to postpone the conduct of the auction sale. and on the other hand not to make an unreasonable and unnecessary levy.653.64 When there is a right to redeem. the Sheriff is left to his own judgment. He may exercise a reasonable discretion." Each of the 15 levied properties was successively bidded upon and sold. on the assumption that the residential units appraised had already been built.67 Secondly.65 Thus. not the levy made by the Sheriff. the Sheriff complied with the mandate of Section 9.66 As regards Buan. that is. More importantly. . to suspend the auction sale. His duty being ministerial. the fact that the Sheriff levies upon a little more than is necessary to satisfy the execution does not render his actions improper. such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction. and the sale at public auction of one was sufficient to fully satisfy the judgment. or when such inadequacy shocks one's conscience as to justify the courts to interfere. Rule 39 of the Rules of Court. it is cast under an entirely different factual milieu. in determining what amount of property is sufficient out of which to secure satisfaction of the execution.71 It is not within the jurisdiction of the Sheriff to consider. Rule 39. Thirdly. as well as the fact that a forced sale usually results in a sacrifice.63 upon the theory that the lesser the price. provides adequate safeguards against excessive levying. one who attacks a levy on the ground of excessiveness carries the burden of sustaining that contention. Finally. must.
60981 is REVERSED and SET ASIDE. the instant petition is GRANTED. HLURB Arbiter Aquino and Director Ceniza are directed to issue the corresponding certificates of sale in favor of the winning bidder. the Order dated August 28. . Petitioner is ordered to return to respondent the amount of P2.00. IV6-071196-0618 is declared NULL and VOID. was clearly issued with grave abuse of discretion. The Order dated August 28.540. without interest. 2000 of HLURB Arbiter Aquino and Director Ceniza in HLRB Case No. Perpetua Y.00 shall earn 6% interest until fully paid. Ceniza in HLRB Case No. Holly Properties Realty Corporation.540. Aquino and Director Belen G. The Decision dated October 30. 2002 of the Court of Appeals in CA-G. WHEREFORE. the amount of P2.125. SP No.Therefore. After the finality of herein judgment.125. SO ORDERED. IV6-071196-0618 which set aside the sheriff's levy on respondent's real properties.R. The CA erred in affirming said Order. in excess of the proceeds of the auction sale delivered to petitioner. 2000 of HLURB Arbiter Ma.
not being proved. claiming that he purchased these lands from Eustaquia in 1946. Anita and Helen. This Petition for Review on Certiorari assails the July 22. 56187. and the plaintiffs to execute their written agreement of partition with respect to parcel Nos. the possession and occupation of land by respondents Consuelo and Ireneo. likewise. lack of cause of action and prescription. and installed several tenants over their share in parcel IV. Marites Abad. Goa. Amelia. 2003 Resolution denying the motion for its reconsideration. became the administrator of the remaining undivided properties and of the shares of respondents Danilo. 1946 and December 2. Joaquin also refused to heed respondents’ demand for partition of parcels I and II. 1946. The RTC also sustained the oral partition among the heirs in 1966. and the October 16. Anita. both parcels are more particularly described in paragraph 7 of the complaint. as his special and affirmative defenses. declaring them as co-owners of all the properties left by Eustaquia. Amelia.R.Residential land situated at Abucayan.2 Eustaquia died intestate in 1948 leaving these parcels of land to her grandchild and great grandchildren.JOAQUIN QUIMPO.000. Amparo. I and II. On December 12. Danilo Abad. Consuelo and Ireneo occupied their respective shares in the San Jose property. IV also described in paragraph 7 of the complaint. The counterclaim. Eustaquia could not have possibly given her consent to the sale because she was already 91 years old at that time. Goa.3731 hectares. Anita and Helen. which shows that the deeds of sale state a false and fictitious consideration. Accordingly. 2. Joaquin Jr. In 1989. peaceful and adverse possession of these lots since 1946. Camarines Sur covering an area 42. Camarines Sur covering an area of 4. Marites. and therefore. Camarines Sur covering an area of 1. described as follows: Parcel I . explaining that prescription does not run against the heirs so long as the heirs. decision is hereby rendered in favor of the plaintiffs Consuelo Vda. prompting respondents to file a complaint for judicial partition and/or recovery of possession with accounting and damages with the Regional Trial Court (RTC) of Camarines Sur. Goa. evidenced by deeds of sale executed on August 23. The court found that at the time of the execution of these deeds. Joaquin was not gainfully employed and had no known source of income. all surnamed Quimpo (the Quimpos). because Joaquin refused to execute a deed. vs. as reasonable attorney’s fees and the sum of One Thousand Pesos (P1. de Beltran. Anita Abad and Helen Abad the owner of six (6) hectares a portion included in parcel No. Half of the properties was given to Joaquin and the other half to the respondents. Marites. and Joaquin’s acquiescence for 23 years.395 square meters. According to the trial court.. and Parcel IV – Abaca and coconut land situated at Abucayan. DE BELTRAN. Parcel III – Residential land situated at San Jose Street. the CA affirmed the RTC ruling. as follows: 1. Joy. who were still minors at that time. Ordering the above-named substituted defendants.4 During the pendency of the case. Anita Abad and Helen Abad and against defendant Joaquin Quimpo. Anita. Estela Tena-Quimpo and his children. CONSUELO ABAD VDA. the RTC rendered a Decision5 in favor of respondents. all surnamed Quimpo. Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of land in Goa. CV No. substituted by the latter’s wife Estela Tena and their children. The RTC disposed.00) also of Philippine Currency. namely.6 On appeal. furnish sufficient evidence that there was actual partition of the properties. for whose benefit prescription is invoked. claimed continuous. Angelita. the CA declared that it was plausible that Eustaquia’s consent was vitiated because she was then 91 years old and sickly. SO ORDERED. Danilo. Joaquin died. Joaquin. Anita and Helen wanted to take possession of the portions allotted to them. Camarines Sur. In 1966. Joaquin. have not . The CA also rejected petitioners’ argument that the action was barred by prescription and laches. Joaquin Quimpo and respondents Consuelo. and declared void the purported deeds of sale executed by Eustaquia for lack of consideration and consent.6127 hectares. Marites Abad. he was substituted by his wife. Camarines Sur covering an area of 684 square-meters. Jose. namely. It held that Joaquin and his heirs are now estopped from claiming ownership over the entire San Jose property as well as over parcel IV. Ireneo Abad.00). no document of partition was executed. Declaring the plaintiffs Danilo Abad. on the other hand. Likewise.. Philippine Currency. SR. but Joaquin prevented them from occupying the same. Ireneo. Danilo. thus: WHEREFORE. and averred. as litigation expenses and for the said defendants to pay the costs. He asserted absolute ownership over parcels III and IV.000. He. Marites. Joy and Aleli. Jose. It was bolstered by the fact that the deeds of sale only surfaced 43 years after its alleged execution and 23 years from the time of the oral partition. Adelia. Ordering the above-named substituted defendants to pay plaintiffs the sum of Six Thousand Pesos (P6. Arlene. 1996. Goa. Angelita and Aleli. However. Joaquin and respondents undertook an oral partition of parcel III (San Jose property) and parcel IV. and alleged that Consuelo’s occupation of the portion of the San Jose property was by mere tolerance. Arlene. 3. Parcel II – Coconut land situated at Abucayan. entitled to its possession and ordering the said substituted defendants to deliver that portion to them as their share thereto. and for them to execute an agreement of partition with respect to parcel Nos.3 Joaquin denied the material allegations in the complaint. all surnamed Abad. It rejected Joaquin’s claim of absolute ownership over parcels III and IV. III and IV more particularly described in paragraph 7 of the complaint. Sustaining the RTC. Adelia. the same is hereby ordered dismissed. 2003 Decision1 of the Court of Appeals in CA-G.
In other words. are conclusive on the parties.16 we held. therefore. AND 5) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS ARE ENTITLED TO ATTORNEY’S FEES. unless the factual findings complained of are devoid of support from the evidence on record or the assailed judgment is based on a misapprehension of facts. He was studying in Manila and Eustaquia was the one supporting him. Thus. correctly found this proof inadequate to establish Joaquin’s claim of absolute dominion. at the time the deeds of sale were executed. 3650. . Except for the incredible and unpersuasive testimony of Joaquin’s daughter. they contend that the notarized deeds of sale and the tax declarations should have adequately established Joaquin’s ownership of parcels III and IV. but enervate it instead. filed the instant petition for review on certiorari imputing the following errors to the CA: 1) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS DID NOT ACQUIRE OWNERSHIP OVER [THE] SUBJECT PARCELS OF LAND BY WAY OF DEEDS OF ABSOLUTE SALE EXECUTED IN THEIR FAVOR.15 The CA. The Quimpos. she was already mentally incapacitated by then. paid is a false contract. These unerringly point to the fact that there was indeed an oral partition of parcels III and IV. weak and senile. In Rongavilla v. in fact. be faulted for not giving credence to the deeds of sale in favor of Joaquin. 2) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT CO-OWNERSHIP EXISTS AMONG PETITIONERS AND RESPONDENTS OVER THE SUBJECT PARCELS OF LAND.expressly or impliedly repudiated the co-ownership. Joaquin was not able to continue his studies. no other testimonial or documentary evidence was offered to prove that Joaquin was duly employed and had the financial capacity to buy the subject properties in 1946. 3) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS HAVE PROVEN THEIR FILIATION TO THE ORIGINAL OWNER OF THE SUBJECT PARCELS OF LAND BY MERE SCANT EVIDENCE. Consuelo and Ireneo occupied their portions of the San Jose property and significantly. The contention has no merit. But we note that these tax declarations are all in the name of Eustaquia Perfecto-Abad.13 and 365914 to substantiate Joaquin’s claim of absolute dominion over parcels III and IV. Adelia Magsino. The CA found no repudiation on Joaquin’s part. nor did he assert his ownership over the same.00 and P6. Furthermore. viz. The RTC and CA cannot. Specifically. Petitioners also presented Tax Declaration Nos. Likewise. Maglucot. They also installed tenants in parcel IV. in which the stated consideration has not been. The Quimpos failed to override this. Ocejo v. Besides.: [P]artition may be inferred from circumstances sufficiently strong to support the presumption. thus.12 3708. therefore. Joaquin never disturbed their possession. do not support their claim of absolute dominion since 1946. For forty-three (43) years.00. or the purchase price which appears thereon as paid but which in fact has never been paid by the purchaser to the vendor.7 The stated consideration for the sale are P5. Factual findings of the trial court. Since such findings are generally not reviewable. therefore.000. and could no longer be expected to give her consent to the sale.10 we held that a deed of sale.9 reiterated in Cruz v. that when Eustaquia died two (2) years later.11 ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where it appears that the same is without cause or consideration which should have been the motive thereof. They assail the probative value and weight given by the RTC and the CA in favor of the respondents’ pieces of evidence while refusing to give credence or value to the documents they presented.000. a deed of partition The Quimpos insist on the validity of the deeds of sale between Joaquin and Eustaquia. both the trial court and the CA found that Eustaquia was 91 years old. this Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. therefore. respectively. These documents.8 Petitioners fail to convince us that the CA committed reversible error in affirming the trial court and in giving no weight to the pieces of evidence they presented. In Maglucot-aw v. concluded that respondents’ action could not be barred by prescription or laches. especially when affirmed by the Court of Appeals. and Joaquin did not prevent them from doing so. Flores. the fact that the disputed property may have been declared for taxation purposes in the name of Joaquin Quimpo does not necessarily prove ownership for it is well settled that a tax declaration or tax receipts are not conclusive evidence of ownership. after a long possession in severalty. Respondents established that at the time of the purported sale Joaquin Quimpo was not gainfully employed. Court of Appeals. It. an amount which was so difficult to raise in the year 1946. that it is void ab initio. 4) THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT LACHES HAS TIME–BARRED THE RESPONDENTS FROM ASSAILING THE ABSOLUTE OWNERSHIP OF PETITIONERS OVER THE SUBJECT PARCELS OF LAND. Bancom Finance Corp. Well-entrenched is the rule that the Supreme Court’s role in a petition under Rule 45 is limited to reviewing or reversing errors of law allegedly committed by the appellate court.
Regardless of whether a parol partition or agreement to partition is valid and enforceable at law. a daughter by the name of Amparo. Furthermore. Helen. it has been held or stated in a number of cases involving an oral partition under which the parties went into possession. Anita and also Joaquin Quimpo were Eustaquia’s great grandchildren.20 as in this case. Danilo. A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking possession in severalty. that Leon Abad has three (3) children namely: Anastacia. furnish sufficient evidence that there was an actual partition of land either by deed or by proceedings in the probate court. improvements made thereon for a long series of years. It may be awarded when a party is compelled to litigate or to incur expenses to protect its interest by reason of an unjustified act by the other. Marites.19 Finally. The CA. are AFFIRMED. x x x 18 Consuelo was the grandchild of Eustaquia. and the partition of parcels I and II.may be presumed. WHEREFORE. The Decision and Resolution of the Court of Appeals in CA-G. namely. petitioners challenge the attorney’s fees in favor of respondents. Joaquin Quimpo admitted that: Eustaquia Perfecto Abad and Diego Abad had two (2) children by the names of Leon Abad and Joaquin Abad. or otherwise partly performed the partition agreement. CV No. A number of cases have specifically applied the doctrine of part performance. courts of equity have enforced oral partition when it has been completely or partly performed. and acquiescence for 60 years. son Joaquin Quimpo. As such. respondents can rightfully ask for the confirmation of the oral partition over parcels III and IV. having inherited the same from a common ancestor – Eustaquia Perfecto-Abad. which had been lost and were not recorded. The grant of attorney’s fees depends on the circumstances of each case and lies within the discretion of the court. in Hernandez v. that Wilfredo has four (4) children. where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of the respective portions set off to each. the petition is DENIED. a court of equity would have regard to and enforce such partition agreed to by the parties.R. During the pre-trial. or have stated that a part performance is necessary. exercised acts of ownership. It has been held that recitals in deeds. we find no reversible error in the assailed rulings of the Court of Appeals. exercising acts of ownership with respect thereto. Similarly.17 we explained that: On general principle. independent and in spite of the statute of frauds. while respondents Danilo. we affirm the CA ruling that respondents are co-owners of the subject four (4) parcels of land. that equity will confirm such partition and in a proper case decree title in accordance with the possession in severalty. equity will in proper cases. possession and occupation of land. Helen. . In fine. Marites and Anita. And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between each other to hold their respective parts in severalty. that Joaquin Abad has only one (1) child. Andal. Jurisprudence is replete with rulings that any co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the co-ownership. In numerous cases it has been held or stated that parol partitions may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual ownership were exercised. and a part performance. Thus. to take a parol partition out of the operation of the statute of frauds. It has been held that where there was a partition in fact between tenants in common. committed no reversible error in sustaining the oral partition over parcels III and IV and in invalidating the deeds of sale between Eustaquia and Joaquin. Petitioners’ assertion that respondents failed to prove their relationship to the late Eustaquia deserves scant consideration. SO ORDERED. 56187. Wilfredo and Consuelo. or otherwise recognizing the existence of the partition. recognize and enforce such parol partition and the rights of the parties thereunder. all surnamed Abad. Amparo has one child. therefore. This action for partition does not prescribe and is not subject to laches.
Why his family would conspire to rob him at a time when life had struck him with a cruel blow in the form of a failed marriage that sent him plummeting to the depths of despair is not explained and likewise defies comprehension. thus.00 a month for the occupancy of plaintiffs' house. Plaintiffs have not proven their allegation that defendant spouses agreed to pay rent of P1. 1739411 covering Lot 896-B-9-B was issued in the name of respondent spouses. and the CA Resolution2 dated March 31. Lot 896-B-9-B was also foreclosed by the SSS and on November 17. 1989. 1993. Onesiforo alleges that he left blank papers with his signature on them to facilitate the administration of said properties. Transfer Certificate of Title (TCT) No. RBO's TCT over Lot 896-B-9-A was then cancelled and on February 22. pursuant to a Special Power of Attorney7 signed by Onesiforo in favor of Victor. finding that: 1. "N" & "O") with the use of his signatures in blank is not worthy of credence. TCT No. does not find that defendant spouses had schemed to obtain title to plaintiffs' properties or enriched themselves at the expense of plaintiffs. 2003. On March 15. 2. They left behind two lots identified as Lot 896-B-9-A with a bodega standing on it and Lot 896-B-9-B with petitioners' house. by virtue of said documents. a Certificate of Redemption8 was issued by the SSS. It was Valeria Alinas. ELENA ALINAS.12 with the following dispositive portion: . dated March 10. Plaintiff Onesiforo's allegation that defendants concocted deeds of conveyances (Exh. The factual antecedents of the case are as follows. Records show that after Lot 896-B-9-A was extra-judicially foreclosed.09. the RTC rendered its Decision dated November 13. the latter was able to redeem. 3. 1987. whom plaintiff Onesiforo requested/directed to "take care of everything and sell everything" and Teresita Nuñez. his elder sister. 1989 and captioned Agreement10 whereby petitioner Onesiforo acknowledged that his brother Victor used his own money to redeem Lot 896-B-9-B from the SSS and. vs. 1989. Onesiforo's signature also appears in an Absolute Deed of Sale9 likewise dated March 10. successors and assigns have or may have over the subject property. petitioners discovered that their two lots were already titled in the name of respondent spouses. "M".110.500. T-126645 covering said lot was issued in the name of respondent spouses. denying petitioners' motion for reconsideration. respondents. be reversed and set aside. the ExOficio City Sheriff of Ozamis City issued a Certificate of Sale6 over said property in favor of the SSS. 2002. and interests he or his heirs. Lot 896-B-9-B from the SSS for the sum of P111. the duly authorized representative of RBO executed a Deed of Installment Sale of Bank's Acquired Assets4 conveying Lot 896-B-9-A to respondent spouses. 1989. Victor became the owner of said lot. petitioner. petitioners filed with the Regional Trial Court (RTC) of Ozamis City a complaint for recovery of possession and ownership of their conjugal properties with damages against respondent spouses. which rent was to be remitted to the SSS and Rural Bank of Oroquieta to pay off plaintiffs' loan and to keep for plaintiffs the rest of the rent after the loans would have been paid in full. Sometime in 1993. On June 19. Spouses Onesiforo and Rosario Alinas (petitioners) separated sometime in 1982. On June 25. Lot 896-B-9-A with the bodega was mortgaged as security for the loan obtained from the RBO. After trial. In the same Agreeement. 1988. selling Lot 896-B-9-B to respondent spouses. praying that the Decision1 of the Court of Appeals (CA) dated September 25. Plaintiffs have not proven that they entrusted defendant spouses with the care and administration of their properties. 1989. with Rosario moving to Pagadian City and Onesiforo moving to Manila. TCT No. That his signatures appear exactly on the spot where they ought to be in Exhs. "M". their mother. The records also show a notarized document dated March 10. 1995. However. 1993. to whom he left a "verbal" authority to administer his properties. claims. "N" & "O" belies his pretension that he affixed them on blank paper only for the purpose of facilitating his sister Terry's acts of administration. This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court. as such rentals were believed sufficient to pay off petitioners' loans with said institutions. 1986. therefore. on the same date. Petitioner Onesiforo Alinas (Onesiforo) and respondent Victor Alinas (Victor) are brothers. petitioner Onesiforo waived whatever rights. This Court. T-118533 covering said property was issued in the name of mortgagee RBO on November 13. while Lot 896-B-9-B with the house was mortgaged to the SSS. On May 2.ROSARIO ALINAS. Petitioners allege that they entrusted their properties to Victor and Elena Alinas (respondent spouses) with the agreement that any income from rentals of the properties should be remitted to the Social Security System (SSS) and to the Rural Bank of Oroquieta City (RBO). These two lots are the subject of the present petition.
. Inc. The Honorable Court of Appeals manifestly abuse [sic] its discretion in declaring the respondents to be the owners of Lot 896-B-9-A with the building (bodega) standing thereon when they merely redeemed the property and are therefore mere trustees of the real owners of the property. 3 above. 2. who swore that the signatures appearing on various TCTs were not his own. Rule 39 of the 1997 Rules of Civil Procedure. SO ORDERED. T-7248 in the name of [petitioners] and cancelling TCT No. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to [respondents] in so far as Rosario Alinas.. and Elena Alinas the redemption sum of P111. both to be accomplished within sixty (60) days from finality of this judgment. failure of [petitioner] Rosario Alinas to reimburse the redemption price within sixty (60) days from the finality of this decision will render the conveyance and sale of her share by her husband to [respondents]. ordering [petitioners] Rosario Alinas to reimburse [respondents] the redemption amount of P55. ordering [petitioners] to reimburse [respondents] Victor Jr. of no force and effect. Hence. 3. paid by them to the SSS (without interest as it shall be compensated with the rental value of the house they occupy) within sixty days from the finality of this judgment. On September 25. Inc. declaring [respondents] Victor Jr. the present petition on the following grounds: The Honorable Court of Appeals abuse [sic] its discretion in disregarding the testimony of the Register of Deeds. 6.09. the CA promulgated herein assailed Decision. of full force and effect. Nerio Nuñez.14 Petitioners moved for reconsideration but the CA denied said motion per herein assailed Resolution dated March 31. declaring [respondents] Victor Jr. 2.13 Only respondent spouses appealed to the CA assailing the RTC's ruling that they acquired Lot 896-B-9-B from the SSS by mere redemption and not by purchase. [petitioner] Rosario Alinas may proceed against them under Section 10. on the other hand. No costs.WHEREFORE. 4. 4. in view of the foregoing disquisitions. which comprises her share on the property simultaneous to the tender of the above redemption price. They likewise question the reimbursement by petitioners of the redemption price without interest.00 with interest of 12% per annum from the time of redemption until fully paid. 2003. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta. declaring [petitioners] Onesiforo and Rosario Alinas owners of Lot 896-B-9-B with the house standing thereon. SO ORDERED. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta.100. in the event of failure of [respondents] to execute the acts as specified above. T-17394 in the name of [respondents]. reinstating TCT No. 5. 3. and 5. Atty.550. the dispositive portion of which reads: WHEREFORE. No costs. ordering the [respondents] to convey and transfer one half portion of Lot 896-B-9-B unto Rosario Alinas. ordering [respondents] to vacate the subject house within thirty days from receiving the reimbursement mentioned in No. plaintiff Onesiforo's sale thereof to defendants spouses without the consent of his wife being null and void and defendant spouses' redemption thereof from the SSS not having conferred its ownership to them. this Court renders judgment: 1. 2002. the first paragraph of the dispositive portion of the assailed decision is AFFIRMED and the rest MODIFIED as follows: 1. It was pure speculation and conjecture and surmise for the Honorable Court of Appeals to impose an obligation to reimburse upon petitioners without ordering . his wife's share of one half thereof is concerned.
Thus. and that there is an agreement between petitioners and respondent spouses regarding remittance to the SSS and the RBO of rental income from their properties. Furthermore. respondent spouses may not be held responsible for the non-payment of the loan with RBO and the eventual foreclosure of petitioners' Lot 896-B-9-A. T-11853 registered in its name. thus: Sec.17 (Emphasis supplied) As in De Pedro. correctly held that respondent spouses acquired their title over the lot from RBO and definitely not from petitioners. which is not allowed by law and jurisprudence. not having appealed from the RTC Decision. However. enlarged or diminished except in a direct proceeding permitted by law. or cancelled except in a direct proceeding in accordance with law. as shown by TCT No. It cannot be altered. However. changed. Necessarily. Although petitioners were married before the enactment of the Family Code on August 3.respondents to account for the rentals of the properties from the time they occupied the same up to the present time and thereafter credit one against the other whichever is higher. . the CA merely reiterated in the dispositive portion of its decision the RTC's ruling on respondent spouses' ownership of Lot 896-B-9-A. Romasan Development Corporation16 that: It has been held that a certificate of title. Certificate not subject to collateral attack. belied by evidence on record which shows that ownership over the lot had duly passed on to the RBO. With regard to the second issue.19 the Court categorically stated thus: In Guiang v. and subsequently. however. the present case is merely a collateral attack on TCT No. once registered. 1529 provides.15 The first issue raised by petitioners deserves scant consideration. Court of Appeals. such action is not a direct. their property relations are governed by Chapter IV on Conjugal Partnership of Gains of the Family Code. x x x (Underscoring and emphasis supplied) In Homeowners Savings & Loan Bank v. it was held that the sale of a conjugal property requires the consent of both the husband and wife.A certificate of title shall not be subject to collateral attack. the sale was made after the redemption period had lapsed. 1988. with regard to Lot 896-B-9-B (with house). but a collateral attack of TCT No. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly.18 Hence. since only the respondent spouses appealed to the CA. 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. the sale in question occurred in 1989. The CA ruling completely deviated from the clear dictate of Article 124 of the Family Code which provides: Art. Dailo. the Court finds it patently erroneous for the CA to have applied the principle of equity in sustaining the validity of the sale of Onesiforo’s one-half share in the subject property to respondent spouses. the CA did not commit any reversible error in affirming the trial court's factual findings as the records are indeed bereft of proof to support the petitioners’ allegations that they left the care and administration of their properties to respondent spouses. modified. In the absence of such authority or consent the disposition or encumbrance shall be void. 124. questioning the validity of the certificates. x x x The action of the petitioners against the respondents. the complaint filed by herein petitioners with the RTC is also one for recovery of possession and ownership. altered. in effect. Thus. therefore. petitioners can no longer seek the reversal or modification of the trial court's ruling that respondent spouses had acquired ownership of Lot 896-B-9-A by virtue of the sale of the lot to them by RBO. Needless to stress. the issue of ownership over Lot 896-B-9-A is not raised before the appellate court. the other spouse may assume sole powers of administration. In applying Article 124 of . based on the material allegations of the complaint. It was the RTC which ruled that respondent spouses are the owners of Lot 896-B-9-A and. It is a basic principle that no modification of judgment or affirmative relief can be granted to a party who did not appeal. The trial court. This is. Pursuant to said provision. modified. RBO sold the lot with its improvements to respondent spouses. petitioners’ claim that it was the CA which declared respondent spouses owners of Lot 896-B-9-A (with bodega) is misleading. therefore. is one for recovery of possession of the subject property and damages. Petitioners do not assail the validity of the foreclosure of said lot but argues that respondent spouses merely redeemed the property from RBO. 236044. Section 48 of Presidential Decree No. the Court ruled in De Pedro v. By assailing the authenticity of the Registrar of Deeds' signature on the certificates of title. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties. T-17394. 48. should not thereafter be impugned. Verily. they are.
namely: the Absolute Deed of Sale dated March 10. If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter. the amount due shall earn 12% interest per annum until the obligation is satisfied. It was held therein that the 6% interest should be computed from the date of the filing of the complaint by the first buyer.00 due the respondent spouses which could be determined with certainty at the time of the filing of the complaint shall earn 6% interest per annum from June 4. Spouses Mijares. the Court does not see how applying Article 124 of the Family Code would lead to injustice or absurdity.000.25 However. The fact that Onesiforo had to execute two documents. unfair and absurd results. and.22 "a purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted in good faith. it was ruled that an interest of 12% per annum on the purchase price to be refunded is not proper. If the purchase price could be established with certainty at the time of the filing of the complaint. As held in Heirs of Aguilar-Reyes v. the husband's sale of conjugal property without the consent of the wife was annulled but the spouses were ordered to refund the purchase price to the buyers. reveals that they had full knowledge of the severe infirmities of the sale. It is true that in a number of cases. it was . It should be noted that respondent spouses were well aware that Lot 896-B-9-B is a conjugal property of petitioners. the sale documents do not bear the signature of petitioner Rosario. 1989. and after the judgment becomes final and executory.26 Hence. the Court.21 In the present case. however. erred in imposing 12% interest per annum on the amount due the respondents. the interest rate shall be twelve percent (12%) per annum computed from the time the judgment becomes final and executory until it is fully satisfied. As to rentals for Lot 896-B-9-B and the house thereon. The Court elucidated as follows: The trial court."23 Such being the case. After the judgment becomes final and executory until the obligation is satisfied. the amount of P110. the Court has affirmed the ruling of the RTC that Lot 896-B-9-A with the bodega had been validly purchased by respondent spouses from the RBO and a TCT over said property was issued in the name of respondent spouses on February 22. 20 Thus. Accordingly. In Eastern Shipping Lines. Petitioners pray that said redemption price and interest be offset or compensated against the rentals for the house and bodega. 1986 until the finality of this decision. ruling in favor of the first buyer and annulling the second sale. 1989 and a notarized Agreement likewise dated March 10. herein petitioners should reimburse respondent spouses the redemption price plus interest at the rate of 6% per annum from the date of filing of the complaint. the sale of Lot 896-B-9-B to respondent spouses is entirely null and void. the Court agrees with the CA that petitioners should reimburse respondent spouses the redemption price paid for Lot 896-B-9-B in the amount of P111. However. Inc. the amount due shall earn interest at 12% per year. in the absence of (court) authority or written consent of the other spouse. this Court abstained from applying the literal import of a particular provision of law if doing so would lead to unjust. this Court declared that the absence of the consent of one renders the entire sale null and void. in consonance with the salutary principle of non-enrichment at another’s expense.24 Thus. They also knew that the disposition being made by Onesiforo is without the consent of his wife. x x x xxxx x x x By express provision of Article 124 of the Family Code. any rentals earned from the lease of said bodega rightfully belongs to respondent spouses and cannot be offset against petitioners' obligation to respondent spouses. Testimonial evidence shows that the bodega was leased out by respondent spouses only beginning January of 1990 when ownership had been transferred to them. In Lui vs. pursuant to Article 124 of the Family Code and jurisprudence. any disposition or encumbrance of the conjugal property shall be void. 1989. the sale of petitioners' conjugal property made by petitioner Onesiforo alone is void in its entirety. the six percent (6%) interest should be computed from the date the complaint was filed until finality of the decision. involving a suit for reconveyance and annulment of title filed by the first buyer against the seller and the second buyer. v. including the portion of the conjugal property pertaining to the husband who contracted the sale.09 with legal interest from the time of filing of the complaint.110. The records show that the testimonial evidence for rentals was only with regard to the bodega. the interim period being deemed equivalent to a forbearance of credit.the Family Code. Loy. In Heirs of Aguilar-Reyes. it was held that interest on obligations not constituting a loan or forbearance of money is six percent (6%) annually. no injustice is being foisted on respondent spouses as they risked transacting with Onesiforo alone despite their knowledge that the subject property is a conjugal property. as they knew that petitioners had separated. respondent Victor testified that they never agreed to rent the house and when they finally took over the same. Verily. Court of Appeals. ordered the seller to refund to the second buyer (who was not a purchaser in good faith) the purchase price of the lots.
they be of the same kind. Rule 39 of the 1997 Rules of Civil Procedure. there is no credible proof to support respondent spouses' allegation that they spent more than P400. the petition is PARTLY GRANTED. That over neither of them there be any retention or controversy. That both debts consist in a sum of money. having knowledge of the flaw in their mode of acquisition. 4. declaring respondent spouses Victor Jr. No costs. Respondent spouses. interest at the rate of 12% per annum on the principal and interest (or any part thereof) shall be imposed until full payment. ordering petitioners to jointly and severally reimburse respondent spouses the redemption amount of P111. That the two debts be due. no definite amounts for rentals nor for expenses for repairs on subject house has been determined. The Decision of the Court of Appeals dated September 25. under paragraph 4 of the foregoing provision. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to respondent spouses null and void ab initio. 2002 is MODIFIED to read as follows: 1."30 In the present case.00 to repair and make the house habitable. While the courts are empowered to set an amount as reasonable compensation to the owners for the use of their property. Therefore. it is necessary: 1.27 There is absolutely no proof of the rental value for the house.. Inc. are deemed to be possessors in bad faith under Article 52628 of the Civil Code. However. . Thus. no compensation or setoff can take place between petitioners and respondent spouses.000.practically inhabitable and so they even incurred expenses to repair the house. In order that compensation may be proper. That they be liquidated and demandable. 5. 2. and that he be at the time a principal creditor of the other. compensation or set-off is allowed only if the debts of both parties against each other is already liquidated and demandable.09 with interest at 6% per annum from the date of filing of the complaint. Unfortunately. After this decision becomes final. and 5. 3. thus: Article 1279. in the event of failure of respondent spouses to execute the acts as specified above. ordering the respondent spouses to convey and transfer Lot 896-B-9-B to petitioners and vacate said premises within fifteen (15) days from finality of this Decision.110. 2. commenced by third persons and communicated in due time to the debtor. Set-off or compensation is governed by Article 1279 of the Civil Code which provides. they have a right to be refunded for necessary expenses on the property as provided under Article 54629 of the same Code. petitioners may proceed against them under Section 10. SO ORDERED. until finality of this decision. considering the condition it was in. To liquidate means "to make the amount of indebtedness or an obligation clear and settled in the form of money. 3. and Elena Alinas owners of Lot 896-B-9-A with the building (bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of Oroquieta. 4. and also of the same quality if the latter has been stated. as well as for the lot respondent spouses are occupying. in the absence of evidence upon which to base the amount of rentals. That each one of the obligors be bound principally. or if the things due are consumable. this Court cannot set such amount based on mere surmises and conjecture WHEREFORE.
residing at No. Pampanga. by: JESUS J. Inc. of legal age. Nunga III (Francisco III) were among the stockholders of RBA. and his nephew respondent Francisco N. Inc.] to retrieve all the corresponding Stocks (sic) Certificates as above indicated from the Apalit Rural Bank. single.150 out of the 35. Cecilia Viray and Dwight Nunga. Gonzale[z]. receipt of which is herein acknowledged by the purchaser. more particularly described as follows: Stock Cert. in Commercial Case No. JR. (sic) 28. 1994 July. Presented hereunder are the factual antecedents of the case. the purchaser will pay the amount of FIFTY THOUSAND PESOS (P50. located at Apalit. 1996. with Ma. NUNGA III. Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated 31 January 2007 and Resolution2 dated 4 June 2007 of the Court of Appeals in CA-G. of legal age. reversed the Decision3 dated 25 October 2002 of the Regional Trial Court (RTC) of the City of San Fernando. which ordered the registration of the transfer of ownership of the disputed shares of stock in the Rural Bank of Apalit. the Members. of Gonzalez’s intention to sell his shares. then instructed Victor to inquire from Gonzalez the terms of the sale.. hereinafter referred to as the VENDOR. in favor of FRANCISCO D. vs. Nunga[. .. Gonzalez ultimately agreed to sell his shares of stock to Francisco Jr. 1991 Nov. INC. 1991 Feb. Crame. Rosario Elena Nacario.. 1996. JR.NUNGA.. On 19 February 1996.00). No. Quezon City.000 will be paid in full on February.000. at Quezon City. Victor D. The appellate court.R. petitioner Francisco Jr. Francisco Jr.] hereinafter referred to as the "PURCHASER". his son petitioner Victor D. Nunga (Victor). Francisco Jr. After a series of negotiations. Masantol.. in its assailed decision. Filipino citizen.). 018.956 total outstanding shares of stock of RBA. married to Cristina D. Gonzalez executed a Contract to Sell5 in favor of Francisco Jr. the RBA conducted its Annual Stockholders’ Meeting at its principal office in San Vicente. Jr. at the date and place below stated and the remaining balance of P150. the stockholders proceeded with the election of the RBA Board of Directors to serve for the fiscal year 1996. WITNESSETH: That the VENDOR is the absolute registered owner of several shares of stocks of the RURAL BANK OF APALIT. Attending the said meeting were stockholders representing 28.. informed his father. Quorum having been established at the meeting. FRANCISCO N. Branch 42. Pampanga. CV No. (Francisco Jr. Ma. Pampanga. and in its resolution. 1994 Journal Folio N That the VENDOR has offered to sell the abovestated (sic) shares of stocks and the PURCHASER has agreed to purchase the same for a total consideration of P200. was not present at the meeting. denied the Motion for Reconsideration of the aforementioned decision. On 30 January 1996. (RBA) in favor of petitioners. 1993 Feb. GONZALE[Z]. Francisco III was voted the Chairman of the Board. Elena Rueda. stockholder Jesus Gonzalez (Gonzalez) made known his intention to sell his shareholdings. In the same meeting. However. 1978 Jan.. which pertinently provided: CONTRACT TO SELL KNOW ALL MEN BY THESE PRESENTS: This CONTRACT TO SELL. 10 2nd Ave. Victor.000. Nunga. (sic) NUNGA. 5 36 105 152 166 181 213 No.. That it is further agreed that the VENDOR will execute an authorization in favor of the herein purchaser or his representative. executed this 19th day of February. Pampanga[. and NUNGA. residing at Poblacion. That it is hereby agreed that out of the total consideration or contract price.. as he was then in the United States of America where he is a naturalized citizen. thereafter.4 Petitioner Francisco R. of Shares Represented 250 122 264 487 8 525 336 Date of Issue May. 78424. Apalit.
the supposed new owner of the shares. however.000 (sic) receipt in part of which is herein acknowledged in the amount of P50.11 demanding that Victor hand over the said stock certificates to Francisco III. of Shares 250 122 264 487 8 525 336 Amount P 25. (signed) JESUS J. cede and transfer all the above stated shares of stocks to the PURCHASER. Date May 24. Firme gave Victor Stock Certificate No. Francisco Jr. Gonzalez also executed a Deed of Absolute Sale13 in favor of Francisco Jr. all their rights. Francisco III paid in full the agreed purchase price of P300. 1991 November 10. assigns and transfers unto FRANCISCO N. 5 and No.00) per share. his heirs[. for and in consideration of the total amount of P200. the undersigned ASSIGNOR JESUS GONZALE[Z]. 1996 SC. informed them that he already sold his shares of stock to Francisco III.. and Victor could pay the balance of the contract price for Gonzalez’s RBA shares of stock. arrived from the United States of America.00 using a BPI (Bank of the Philippine Islands) Family Bank Check No.000. at Quezon City. Ermita 1000 Metro Manila. No.. of legal age. I have hereunto set my signature this 19th day of FEBRUARY. with par value of one hundred pesos only (P100. 1993 February 22.00 of the purchase price stated in their Contract to Sell with Gonzalez.000.00 to Gonzalez. on 28 February 1996. GONZALE[Z] Assignor At the same time the afore-quoted Deed was executed. free from all liens and encumbrances. It would appear that on 27 February 1996. 152 and No. which instructed the latter to turn over to Victor the remaining stock certificates in Gonzalez’s name.000. He and Victor then promptly proceeded to the residence of Gonzalez in order to pay the balance of P150. Gonzalez entered into another contract involving the very same shares. Victor gave the initial payment of P50. who duly acknowledged the same. the vendor hereby agrees to sell. IN WITNESS WHEREOF. 1969 January 02. 181. Before Francisco Jr. Gonzalez executed a Deed of Assignment9 of his RBA shares of stock in favor of Francisco III. 1975 February 19. that the same was only notarized on 28 February 1996. (signed) JESUS J. 105.. his assigns and successors. Filipino. Upon being presented with Gonzalez’s letter. Philippines.00. GONZALES Vendor On even date. (sic) 1996.50 33. CUBAO. 0347505 issued in favor of Gonzalez. 1994 July 25. Gonzalez handed Victor RBA Stock Certificates No. QUEZON CITY. the ASSIGNOR have (sic) cause (sic) these presents to be signed at Quezon City. but alleged that Stock Certificates No. Gonzalez immediately wrote Victor a letter.60 IN WITNESS WHEREOF. Gonzalez. 166. 36 could no longer be located in the files of RBA. and assigns. As to the four other certificates that were in the possession of the RBA.6 In exchange.70 80 52. 4 (sic) 36 105 152 166 181 213 No.WHEREFORE.8 A reading of the said Contract to Sell would reveal.10 Since the stock certificates covering the shares were already in Victor’s possession. No. the RBA Corporate Secretary. which states: DEED OF ABSOLUTE SALE KNOW ALL MEN BY THESE PRESENTS: . this 27 day of February. the relevant terms of which recite: DEED OF ASSIGNMENT KNOW ALL MEN BY THESE PRESENTS: For value (sic) consideration received. however. Gonzalez issued a letter7 addressed to Isabel Firme (Firme).] successors.40 48. Inc. Filipino and resident of #10 2ND AVENUE. Gonzalez evidenced the payment. titles and interests to the following shares of stocks owned by the ASSIGNOR in Apalit Rural Bank. absolutely free from any encumbrance and lien whatsoever. Gonzalez was somehow convinced to accept the balance of the purchase price and sign his name at the dorsal portion of the stock certificates to endorse the same to Francisco Jr.00 12. of legal age and with postal address at 1122 Alhambra St. The next day. 1996.000.20 26. An acknowledgment receipt signed by Gonzalez and witnessed by his wife Cristina D. Firme advised Victor to merely reconstitute the missing stock certificates. 1994 February 2.12 After discussing the matter. METRO MANILA hereby sells. NUNGA III (AS ASSIGNEE).
his heirs. receipt of which in full is herein acknowledged.000. thus. and Victor. residing at No. I have hereunto set my signature this 28 day of FEB (sic).This DEED OF ABSOLUTE SALE.15 Consequently. Francisco III delivered to Firme the Deed of Assignment which Gonzalez executed in his favor. cedes and transfers all the above stated shares of stocks to the PURCHASER.. hereinafter referred to as the VENDOR.] Inc.. damages and litigation expenses. alleging that Francisco III already bought Gonzalez’s shares. for and in consideration of the total amount of TWO HUNDRED THOUSAND PESOS (P 200. That Stock Certificate Nos. and a copy of Gonzalez’s letter to Victor dated 27 February 1996 demanding the latter to surrender the stock certificates in his possession to Francisco III. who were allegedly conspiring to oust him and the other members of the RBA Board of Directors. Victor prayed that the SEC declare null and void the Stockholders’ Meeting held on 30 January 1996 for lack of the required majority quorum. Teodorico R. namely. and Victor to desist from attempting to register the purported sale by Gonzales of his RBA shares of stock to Francisco Jr. 03-96-5288. MM. Victor additionally requested that the transfer of Gonzalez’s RBA shareholdings to Francisco Jr.000. residing at Poblacion. Gonzale[z]. 10 2nd Ave. Firme wrote Victor a letter14 requesting that the latter immediately comply with the enclosed 27 February 1996 letter of Gonzalez. . WHEREFORE. 03-965292. GONZALE[Z] Vendor Incidentally. Accordingly. on 28 February 1996 be entered into the Corporate Book of Transfer of RBA.. JR.] WITNESSETH: That the VENDOR is the absolute registered owner of several shares of stocks of the RURAL BANK OF APALIT. Firme. which was docketed as SEC Case No. at SAN JUAN. in turn. That the VENDOR has offered to sell the abovestated (sic) shares of stocks and the PURCHASER has agreed to purchase the same. 5 and 36 respectively representing 250 and 122 shares of the Rural Bank of Apalit[.00 as attorney’s fees. Victor finally pleaded that Francisco III and Firme be ordered to jointly pay him P50. 1996.. married. more particularly described as follows: Stock Cert. be annotated on the RBA Corporate Transfer Book and new stock certificates be issued in favor of Francisco Jr.. (signed) JESUS J. Filipino citizen. Masantol. 1 1 5 7 7 8 IN WITNESS WHEREOF. 1991 Nov. 1994 July.. which was docketed as SEC Case No. 1993 Feb. rejected Victor’s demand. in favor of FRANCISCO R. 1991 Feb.. were lost and is (sic) currently in the process of reconstitution. of legal age. located at Apalit. 1994 Journal Folio No. for judgment ordering (a) Victor to surrender Gonzalez’s stock certificates in order that the same may be transferred to Francisco III’s name. INC. 1978 Jan. M. Philippines. NUNGA. 5 36 105 152 166 181 213 No. Pampanga. 1996. No. Francisco III likewise filed a Complaint17 against Gonzalez. inter alia. Francisco Jr. of legal age. Nunga and Jesus Enrico N. by: JESUS J. as well as the votes cast for the shares of the deceased stockholders. successors. Carmencita N.] hereinafter referred to as the "PURCHASER"[. on 1 March 1996. Victor filed a Petition16 with the Securities and Exchange Commission (SEC) against Francisco III and Firme. executed this 28th day of February. disqualified from owning shares in RBA. and assigns. Pampanga[. married to Cristina D. Victor refused to comply with Firme’s request and instead demanded that the sale of shares of stock by Gonzalez in favor of Francisco Jr. and (b) Francisco Jr. who had already become a naturalized American citizen and was.00).M. Crame. Nunga. the VENDOR hereby sells. Francisco III also prayed. of Shares Represented 250 122 264 487 8 525 336 Date of Issue May. and Victor before the SEC. absolutely free from any encumbrance and lien whatsoever.. On the same date. at SAN JUAN. Nunga. Francisco III sought the issuance of a Temporary Restraining Order (TRO) against Francisco Jr. on that same day. Quezon City. GONZALE[Z]. on 14 March 1996.
] and[.] to bind third parties. Francisco Jr. Said Motion was granted in an Order22 dated 30 September 1996. 5980. former natural born citizens of the Philippines shall have the same investment rights of a Filipino citizen in Cooperatives under Republic Act No." Furthermore. 8179[. – For purposes of this Act.["] to wit: "SEC.] has a better right over the subject shares considering that the Contract to Sell was executed prior to the Deed of Assignment presented by the [herein respondent Francisco III]. 018. Victor’s Petition. Firme stating thereat the fact that the certificate of stock delivered for registration in the Corporate Transfer Book were mere xerox copies thus. Investment Rights of Former Natural-born Filipinos.) As regards Commercial Case No. however. clearly convinced the Court that the latter honored the transaction between him and [Victor] in (sic) behalf of his father [Francisco Jr. Thereafter. 03-96-5288 and No. After the parties submitted their respective Offers of Evidence. alleging that they involved common questions of fact and law. Nunga in (sic) behalf of deceased Teodorico R. xxxx Further. 018. 03-96-5292 were jointly heard. 00-11-0323 of the Supreme Court dated 21 November 2000. Firme who were constrained to hire the services of their counsel to protect their right (sic). after a careful study on the evidences on record finds that [herein petitioner Victor] failed to substantiate the allegation in the petition.A. 03-96-5288. valid there being a meeting of the mind (sic) between the parties. Del Carmen N. M-146127. while Francisco Jr. proved [Victor’s] lack of cause of action against [Francisco III] and as a result of which damages on the part of [Francisco III] and Isabel C.] known as "An Act to Further Liberalize Foreign Investment. Francisco Jr. 7906. showing the number of shares present in person or in proxy[.]. and Victor filed their Answer19 in SEC Case No. On 25 October 2002. the RTC ruled: The Court. the refusal. the cases were eventually turned over to the RTC pursuant to Administrative Circular AM No. and Victor subsequently filed a Motion to Resolve their Formal Offer of Exhibits.20 and Victor filed a Motion for Consolidation21 of the two cases pending before the SEC. the conclusion that the Deed of Assignment was executed with malice. (Emphasis ours. With respect to Commercial Case No. Firme. Thrift Banks and Private Development Banks under Republic Act No. therefore.] written Proxy in favor of Dwight N.24 In the RTC. the RTC promulgated its Decision. . the RTC admitted the formal offers of evidence in both cases. but before the SEC could rule on the same. (Emphasis ours.) In the end. 9. 001 and No. was considered in default in both SEC cases for failure to file his answers despite notice.28 Francisco III’s Complaint. insofar as (sic) [Gonzalez]. judgment is hereby rendered in Commercial Case No. the Court is inclined to give credence on (sic) the contention of the latter[. with respect to the issue on the citizenship of [Francisco Jr.Francisco III and Firme filed their joint Answer18 in SEC Case No. thus. 03-96-5288 and No. 001. 7353. 001 ordering the dismissal of the Petition filed by [herein petitioner Victor] against [herein respondent Francisco III] and Isabel C. Gonzalez. [Victor] failed to controvert the documentary evidences presented by [herein respondent Francisco III] to wit: Minutes of the Stockholders Meeting.] finds and holds that [herein petitioner Francisco Jr. In an Order25 dated 30 April 2002.] after a careful study on the aforementioned evidences (sic) on record[. in view of the foregoing. Eventually. which the SEC was not able to act upon. the RTC disposed of the two cases in this wise: WHEREFORE. SEC Cases No.] it being supported by R. 03-96-5292 were docketed as Commercial Cases No. Leveriza in her capacity as the Judicial Administratrix duly appointed by the RTC Branch 60. Thus further. Rural Banks under Republic Act No. The Court gleaned also from the evidences (sic) that the Deed of Assignment was executed in bad faith as [Francisco III] is aware of the transaction between [herein petitioner Victor] in (sic) behalf of his father and [Gonzalez]. the fact of transfer should be registered with the transfer book of the corporation. Makati[. Nunga by virtue of the Extrajudicial Settlement of estate in (sic) behalf of Carmencita Noel Nunga proxy executed by Ma. The Contract to Sell may not be a public instrument29 but being a consensual contract it is. SEC Cases No. there being no contention on (sic) the contrary.] Metro Manila in Special Proceedings No. respectively. the same was (sic) considered as in default for failure to appear and participate despite notice. Further. Affidavit of respondent Isabel C. 6938. which required the presentation of similar evidence. 03-96-5292. not being qualified to own such share (sic). the RTC decreed: 26 The Court[. on the validity of the Deed of Absolute Sale interposed by [Gonzalez] coupled with the proof of full payment and the endorsement of the Stock Certificate at the back by the owner[. and Financing Companies under Republic Act No.] which is the only operative act of valid transfer of shares of stock certificate provided for by law and jurisprudence.
the Court of Appeals rendered its assailed Decision favoring Francisco III.) equal investment rights in rural banks of the Philippines as Philippine citizens. 7353 specifically states that "the capital stock of any rural bank shall be fully owned and held directly or indirectly by citizens of the Philippines xxx.33 His appeal before the Court of Appeals was docketed as CA-G. provided that it does not prejudice another acquired right of the same origin. xxx Therefore. 213. the legislature would not have wasted time and effort in inserting a new provision granting to former natural-born citizens of the Philippines equal investment rights in Republic Act No. 1996 at the Manila Times and Malaya. cannot invoke the provisions of Republic Act No." x x x The fact that Republic Act No. Court of Appeals. 8179 based on the following ratiocination: In the instant case. 8179 expressly granted to former naturalborn citizens of the Philippines investment rights similar to those of citizens of the Philippines bolsters the view that Republic Act No. Republic Act No. Acts executed against the provisions of mandatory or prohibitory laws shall be void.] upon presentation of Stock Certificate Nos.Insofar as Commercial Case No. 181. already underscores the mandatory nature of the law. but it was denied by the RTC in an Order32 dated 31 January 2003.34 which grants former natural born citizens (such as Francisco Jr. . 416 SCRA 4. 8179 should be given a retroactive effect in accordance with the following rule: "The principle that a new law shall not have retroactive effect only governs rights arising from acts done under the rule of the former law.00 [for] attorneys (sic) fees and the cost of suit. Had it been necessarily implied from the provisions of Republic Act No. hence. 8179 that it or any of its provisions should be given a retroactive effect. Francisco III pointed out that Republic Act No.000. even though it has arisen from acts subject to the former laws. 5 and 36 duly endorsed by Jesus [Gonzalez]. (sic) requires adherence thereto. after Francisco Jr. 7353 that foreign nationals could own shares of stock in rural banks.] 4) The amount of P50..] 3) The amount of P100. Furthermore. Francisco III filed with the RTC a Notice of Appeal. but if a right be declared for the first time by a new law it shall take effect from the time of such declaration. It held that Francisco Jr. 1996. Inc. In relation to his third assignment of error. 78424. 105.] and to cancel Stock certificate (sic) in the name of Jesus [Gonzalez] and to issue a new one (sic) in the name of [Francisco Jr. a naturalized American citizen. 8179. 7353 [The Rural Banks Act of 1992]. had a better right over the disputed shares of stock. specifically to a former natural-born citizen of the Philippines.30 Francisco III filed a Motion for Partial Reconsideration31 of the afore-quoted Decision. inasmuch as it was not supported by any of the evidence presented by all the parties. On the contrary. and hence. 8179. the said statute cannot benefit Francisco Jr. Considering that Republic Act No. JR. and (3) giving retroactive effect to Republic Act No. applying the rule on statutory construction. which reads: "ART. 7353 indeed prohibited foreign nationals from owning shares of stock in rural banks.00 [for] exemplary damages[. the same should be deemed null and void pursuant to Article 5 of the Civil Code of the Philippines. considering that the prior contract which he had entered into with Gonzalez was a mere contract to sell. there is nothing in Republic Act No. CV No.000.] and against [Francisco III] ordering the following: 1) Ordering the Corporate Secretary of the Rural Bank of Apalit. (2) finding that the Deed of Assignment in Francisco III’s favor was executed in bad faith. except when the law itself authorizes their validity. 8179 was published on March 31. (sic) to register the fact of the transfer of ownership in favor of [Francisco Jr. and VICTOR that Republic Act No. there is an express provision in Republic Act No. On 31 January 2007. 152. 7353 did not contain any provision authorizing the validity of the sale and transfer of the shares of stock to a foreigner. 7353." x x x. it took effect on April 15." It bears stressing that the use of the word "shall" alone. 018[.] judgment is hereby rendered in favor of the [herein petitioners Victor and Francisco Jr." Being crystal clear on its prospective application. 13 ). Neither is it necessarily implied from Republic Act No.000. it is Our considered view that the sale and the subsequent transfer on February 28. it must be given its literal meaning and applied without further interpretation (BPI Leasing Corporation vs. Francisco III argued that the RTC erred in: (1) ruling that Francisco Jr. Republic Act No. Thus. were made in patent violation of Republic Act No.00 [for] moral damages[. 8179 took effect only on 16 April 1996. entered into the questionable contracts with Gonzalez. x x x. 1996 of the shares of stock of JESUS [Gonzalez] to FRANCISCO. 8179 [An Act to Further Liberalize Foreign Investment] which provides that it should retroact to the date of effectivity of Republic Act No. 8179 that it "shall take effect fifteen (15) days after publication in two (2) newspapers of general circulation in the Philippines. Before the Court of Appeals. there is no merit in the assertion of FRANCISCO JR. 5.] the amount of P100. hence.R. 2) The [respondent Francisco III] to pay the [petitioners Victor and Francisco Jr. 166.
serious anxiety. was denied by the Court of Appeals in its assailed Resolution dated 4 June 2007.35 The Court of Appeals. as its application would prejudice the (sic) FRANCISCO III who had acquired vested right over the shares of stock prior to the effectivity of the said law. Francisco Jr. jointly and severally. wounded feelings and other emotional and mental sufferings by reason of the double sale.WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT FRANCISCO III HAS A VESTED RIGHT TO THE SHARES OF STOCK OF GONZALE[Z]. Hence. cured whatever legal infirmity there may have been in the purchase by Francisco Jr. and to issue new ones in the name of Francisco Nunga III.00 as attorney’s fees. or which declared such a transfer void.000. Moreover.000. NULL AND VOID AB INITIO ON THE BASIS OF THE ALLEGED DISQUALIFICATION OF FRANCISCO JR. Refusing to concede.39 which they anchor on the following assignment of errors: I . as to his claim for attorney’s fees and cost of suit. Undoubtedly. there was an implied recognition by the legislature that to declare the nullity of such acts would be more disadvantageous and harmful to the purposes of the law. and Victor. Jr. and. 3) Jesus Gonzale[z]. 7353? II .Republic Act No. 8179. filed a Motion for Reconsideration38 of the foregoing Decision.WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED [IN] AWARDING DAMAGES TO FRANCISCO III AND WITHDRAWING THE AWARD OF NOMINAL DAMAGES TO PETITIONERS BY THE TRIAL COURT? Essentially. the sum of P20. Inc. Their Motion. 1996. FRANCISCO III is not entitled to exemplary damages. was null and void for violating a mandatory provision of Republic Act No. x x x. FRANCISCO III failed to sufficiently prove his entitlement to moral. FRANCISCO III made no mention in his Complaint and during the hearing that he sustained mental anguish. 8179 cannot be applied retroactively insofar as the instant case is concerned. his claim for exemplary damages must similarly fail. and Victor filed the instant Petition. 7353. 1996. Francisco Jr. x x x. 2002 of Branch 42 of the Regional Trial Court of San Fernando. to register the assignment of shares of stock in favor of Francisco Nunga III. of the RBA shares of . and Victor contend that the consummated sale of the RBA shares of stock by Gonzalez to Francisco Jr. as well as the Deed of Absolute Sale and the subsequent transfer of the shares of stock to FRANCISCO JR. UNDER REPUBLIC ACT NO. the said Contract. As previously adverted to.. Francisco Jr. gives the latter a superior right over the same. We deem that the award of P20. and Victor claim that there was no provision in Republic Act No. and Victor Nunga to pay. Such right was vested to him when the Deed of Assignment was executed by Jesus in his favor on February 27. 2) [T]he Corporate Secretary of Rural Bank of Apalit. to cancel the stock certificates of Jesus Gonzale[z]. However. prior to its amendment. Inc. x x x In the instant case. together with Gonzalez.37 Francisco Jr. Likewise. the Decision dated October 25. which explicitly prohibited any transfer of shares to individuals who were not Philippine citizens. plus the cost of suit.00 as attorney’s fees is reasonable. We find it to be tenable as the records of the case clearly reveal that FRANCISCO III was compelled to litigate or to incur expenses to protect his interest because of the double sale.. on February 19. Contrary to the ruling of the Court of Appeals. Pampanga with respect to Commercial Case No. since the transaction complied with all the elements of a valid sale.36 The fallo of the Court of Appeals Decision thus reads: WHEREFORE. Francisco Nunga. Under the circumstances obtaining in the instant case. temperate or compensatory damages. FRANCISCO III had a better right over the shares of stock of JESUS inasmuch as the validity of the Deed of Assignment was not affected despite the prior execution of the Contract to Sell in favor of FRANCISCO JR. WHICH WOULD BE IMPAIRED BY THE RETROACTIVE APPLICATION OF REPUBLIC ACT NO. 7353... but not moral and exemplary damages: We hold that FRANCISCO III is not entitled to moral damages. however. and Victor contend that the passage of Republic Act No. 8179? III . the foregoing premises considered. 018 is hereby REVERSED and SET ASIDE.WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING THE SALE OF THE SHARES OF STOCK OF GONZALE[Z] TO FRANCISCO JR. An Act to Further Liberalize Foreign Investment. decided to award Francisco III only attorney’s fees and cost of suit. x x x. A new one is hereby rendered ORDERING the following: 1) Victor Nunga to surrender the stock certificates of Jesus Gonzalez to the Corporate Secretary of Rural Bank of Apalit. Hence. however. Francisco Jr. the fundamental issue that this Court is called upon to resolve is who among the parties to this case has a better right to the disputed RBA shares of stock.
There was. directly or indirectly. reckless. which was prohibited by Republic Act No.41 But there are settled exceptions to this general rule. Exemplary damages are imposed by way of example or correction for the public good. it is undisputed that when Gonzalez executed the Contract to Sell and the Deed of Absolute Sale covering his RBA shares of stock in favor of Francisco Jr. It intended to effect a transfer. It is even irrelevant that the terms of said Contract to Sell had been fully complied with and performed by the parties thereto.46 In contracts and quasi-contracts. such as when the statute is CURATIVE or REMEDIAL in nature. Francisco Jr. which the Court cannot countenance. and that a Deed of Absolute Sale was already executed by Gonzalez in favor of Francisco Jr. x x x With exception of shareholdings of corporations organized primarily to hold equities in rural banks as provided for under Section 12-C of Republic Act 337. oppressive or malevolent manner. prior to the Deed of Assignment in favor of Francisco III. As Republic Act No. The Deed was not only executed later in time. since it creates for the first time a substantive right in favor of natural-born citizens of the Philippines. 7353 explicitly provides: Section 4. Section 4 of Republic Act No. As established in the previous discussion. Republic Act No. was void and without force and effect for being contrary to law. the latter was already a naturalized citizen of the United States of America. 8179 cannot be applied retroactively to the present case. but it is not necessary that he prove the monetary value thereof. who is undeniably a citizen of the Philippines. 8179 cannot benefit Francisco Jr. temperate. the same can only be made possible if the new right does not prejudice or impair any vested right. (Emphasis ours. the Contract to Sell between Gonzalez and Francisco Jr. associations or cooperatives qualified under Philippine laws to own and hold such capital stock: x x x. Even the subsequent enactment of Republic Act No.) Otherwise stated. social humiliation. fright. wounded feelings. While it is true that a law creating new rights may be given retroactive effect. a foreigner. Francisco Jr. Consequently. temperate or compensatory damages. This was the very interpretation of Section 4 of Republic Act No. is both erroneous and unfounded. of the disputed RBA shares by virtue of the foregoing contracts is a violation of the clear and mandatory dictum of Republic Act No. Jr. unless the contrary is provided. overlooked the vital exception to the exception. Francisco III.stock from Gonzalez. but the check issued for its payment was also never encashed.48 Before the court may consider an award for exemplary damages. from owning capital stock in the Rural Bank of Parañaque. 7353. besmirched reputation. was disqualified from acquiring Gonzalez’s shares of stock in RBA. The argument of Francisco Jr. It would not matter that Gonzalez executed the Contract to Sell in favor of Francisco Jr. and Victor assert that. laws shall have no retroactive effect. 7353. mental anguish. fraudulent. A void agreement will not be rendered operative by the parties' alleged performance (partial or full) of their respective prestations. therefore. the capital stock of a rural bank. the court has to decide whether or not such damages should be adjudicated.40 on the basis of which the Court disqualified therein respondent Yasuma. 8179. 8179 may be retroactively applied. or when it CREATES NEW RIGHTS. liquidated or compensatory damages. however. making the said contract between Francisco III and Gonzalez inexistent. be considered as a matter of right. In the instant case. the Court agrees in the findings of the Court of Appeals that Francisco III failed to establish his entitlement to moral damages in view of the absence of proof that he endured physical suffering. The Court finds the Petition devoid of merit. in addition to moral. and who is fully qualified to own shares of stock in a Philippine rural bank. serious anxiety. and Victor. as an exception to the cardinal rule of prospective application of laws. temperate or compensatory damages.45 As regards the grant of exemplary damages. or any similar injury. had acquired vested rights to the disputed RBA shares of stock by virtue of the Deed of Assignment executed in his favor by Gonzalez. 7353 which prohibited the transfer of rural bank shares to individuals who were not Philippine citizens or declared such transfer void. A contract that violates the law is null and void ab initio and vests no rights and creates no obligations. and of Filipino-controlled domestic banks.42 Francisco Jr. the capital stock of any rural bank shall be fully owned and held directly or indirectly by citizens of the Philippines or corporations. 8179 expressly creates and declares for the first time a substantive right. the acquisition by Francisco Jr. the plaintiff must first show that he is entitled to moral.49 . subject only to the exception also clearly stated in the same provision. 7353 made by this Court in Bulos. the afore-quoted provision categorically provides that only citizens of the Philippines can own and hold. It produces no legal effect at all. As the Court of Appeals declared. however. Yasuma.47 It cannot. then it may be given retroactive effect.. we likewise uphold the ruling of the appellate court that the same was not warranted under the circumstances. It is true that under the Civil Code of the Philippines. The Deed of Assignment between Francisco III and Gonzalez did not confer upon Francisco III a vested interest that could be impaired by the retroactive application of Republic Act No. and Victor that there was no specific provision in Republic Act No.43 The Court upholds the finding of the Court of Appeals that Republic Act No. v. moral shock. a total absence of consideration. as FRANCISCO III was not able to prove that he was entitled to moral. as to do so would prejudice the vested rights of Francisco III to the disputed RBA shares of stock. as amended. exemplary damages may be awarded if the defendant acted in a wanton.44 With respect to the award of damages.
SO ORDERED. the Court finds the same to be utterly misleading.00 as attorney’s fees. WHEREFORE.50 the Court sustains the award by the Court of Appeals of P20. premises considered.As to the contention that the Court of Appeals erred in withdrawing the award of nominal damages to the petitioners by the RTC. No costs. as Francisco III was indeed compelled to litigate and incur expenses to protect his interests. the Petition for Review under Rule 45 of the Rules of Court is hereby DENIED. 78424 are hereby AFFIRMED in toto.000. However. . The appellate court did not decree any such withdrawal. as the RTC had not awarded any nominal damages in favor of the petitioners in the first place. The assailed Decision dated 31 January 2007 and Resolution dated 4 June 2007 of the Court of Appeals in CA-G. CV No. plus costs of suit.R.
Dumaguete City and covered by TCT No. obtained an agricultural loan of P350. Accordingly. TCT No. [Petitioners] failed to redeem the properties within the one-year redemption period. [respondent] averred that [petitioners] have absolutely no cause of action against it. 14) was issued in [respondent’s] name on November 8. [petitioners] gave [respondent] the sum of P250.m. The agreement reads in part: PROMISE TO SELL xxxx WITNESSETH: xxxx 2) That for and in consideration of SEVEN HUNDRED THIRTEEN THOUSAND AND THREE HUNDRED TWELVE & 72/100 PESOS (P713. recovery of possession of real property. the [RTC] rendered a Decision dismissing the complaint. which was subsequently registered with the Registry of Deeds of Dumaguete City.000. Thereafter. and that the complaint was filed only to force it to allow [petitioners] to reacquire the foreclosed properties under conditions unilaterally favorable to them. In resisting the complaint. follow. the CA affirmed with modification the RTC’s ruling. and convey unto the VENDEE. 1987. 9570. Inc. 12389 was cancelled and a new one. disposing as follows: "In the light of the foregoing. 12389. This petition for review on certiorari under Rule 45 of the Rules of Court assails the Court of Appeals (CA) Decision1 in CA-G. 1982.00 from [respondent] Rural Bank of Tanjay. Thereafter. Respondent. entered into an agreement denominated as "Promise to Sell. as summarized by the CA. this sale will become null and void and no further effect or validity. CV No. At the foreclosure sale. (Exh.00 (Philippine Currency) and the balance of P463. [respondent] and [petitioner] Joaquin Villegas. xxxx After trial on the merits. vs." whereby [respondent] promised to sell to [petitioners] the foreclosed properties for a total price of P713. TCT No. being the highest bidder. 19042. SO ORDERED. the VENDEE shall agree to make payment of P250. Upon the signing of the agreement.R. transfer. successors and assigns. interests and participations over the above parcel of land with all the improvements thereon and a residential house. repurchase of real estate] commenced on January 15. Sometime in June.596. spouses Joaquin and Emma Villegas.] Marilen Victoriano. the VENDOR do hereby promise to sell. The loan was secured by a real estate mortgage on [petitioners’] residential house and 5.312.72 payable in equal yearly installments plus interest based on the prevailing rate counting from the date of signing this Promise to Sell for a period of five (5) years. that payments made shall be reimbursed (returned) to the VENDEE less interest on the account plus additional 15% liquidated damages and charges. purchased the foreclosed properties for P367. 40613 which affirmed with modification the Regional Trial Court (RTC) Decision in Civil Case No."3 On appeal by both parties.00 as attorney’s fees and to pay costs without pronouncement as to counterclaim. INC. 1989.72). [Petitioners] are ordered to pay [respondent] the sum of P3.VILLEGAS. [respondent].229 – sq.2 The facts. through his attorney-infact[. their heirs. it is considered opinion of this Court. that in case of a delay in any yearly installment for a period of ninety (90) days. [petitioners].312. prompting [respondent] to consolidate its ownership over the properties.00 as down payment.72. payable within a period of five (5) years. the mortgage was extrajudicially foreclosed. the action by [petitioners for declaration of nullity of loan and mortgage contracts.. the Sheriff executed in favor of [respondent] a certificate of sale. failed to pay the first yearly installment.000. For failure of [petitioners] to pay the loan upon maturity. lot situated in Barrio Bantayan.312. [respondent] took possession of the properties. Hence. RURAL BANK OF TANJAY. in the alternative. Petitioners. thus: . and provided further.000. [Petitioners]. 1990. 3) That upon signing of this Promise To Sell. accounting and damages and. xxxx 5) Provided further.000. In May.16. however. all its rights. that [petitioners] failed to prove by preponderance of evidence their case and therefore the herein complaint is ordered dismissed.
00 in split amounts not exceeding P50. the Rural Banks Act.7 The ostensible act is the contract that the parties pretend to have executed while the hidden act is the true agreement between the parties. respondent made them sign promissory notes for P350. In this case. with an area of only one-half (1/2) hectare.4 Hence. therefore. the petitioners not having been notified beforehand of said implementation. Unabashedly. petitioners aver that the sugar crop loans were merely simulated contracts and. when it does not prejudice a third person and is not intended for any purpose contrary to law. (4) The Court of Appeals erred in not finding that the addendum on the promissory notes containing an escalation clause is null and void ab initio for being so worded that the implementation thereof would deprive petitioners due process guaranteed by [the] constitution. the latter. An absolutely simulated or fictitious contract is void.00 each – even if they were not – just so the respondent rural bank could grant and approve the same pursuant to Republic Act (R. the doctrine of estoppel does not apply in this case. Rural Banks Act. without any force and effect. petitioners admit that the loan (and mortgage) contracts were made to appear as several sugar crop loans not exceeding P50. and they unmistakably provide: Art.5 Notwithstanding petitioners’ formulation of the issues.8 To determine the enforceability of the actual agreement between the parties. located in the heart of Dumaguete City. The petition deserves scant consideration and ought to have been dismissed outright. The former takes place when the parties do not intend to be bound at all. (d) Petitioners were never required to execute any chattel mortgage on standing crops. there being a showing that the companion real estate mortgage involves conjugal property.000. (c) Petitioners never planted any sugar cane on this one-half (1/2) hectare parcel of land. they are likewise barred from recovering possession of the subject property. this appeal by certiorari raising the following issues: (1) The Court of Appeals erred in not holding that the loan and mortgage contracts are null and void ab initio for being against public policy.e.A. 720. 720.000. x x x.6 In short. i. (b) The mortgaged real estate is residential. Although these loan and mortgage contracts were concealed and made to appear as sugar crop loans to make . petitioners’ procurement of a loan from respondent. A relative simulation. the core issue for our resolution is whether petitioners may recover possession of the mortgaged properties. when the parties conceal their true agreement. it is obvious that the sugar crop loans were relatively simulated contracts and that both parties intended to be bound thereby. wife of petitioner Joaquin Villegas. (2) The Court of Appeals erred in not holding that. by reason of the fact that the loan and mortgage contracts are null and void ab initio for being against public policy. Given the factual antecedents of this case. good customs. the appealed Decision is hereby MODIFIED by (a) ORDERING [respondent] to reimburse [petitioners] their down payment of P250. Villegas. Simulation of a contract may be absolute or relative. public order or public policy binds the parties to their real agreement.WHEREFORE. 1346. the juridical act which binds the parties are the loan and mortgage contracts.00 each. Art. (e) To make it appear that the petitioners were entitled to avail themselves of loan benefits under Republic Act No. 1345. we must discern whether the concealed or hidden act is lawful and the essential requisites of a valid contract are present.. 720: (a) The petitioners never planted sugar cane on any parcel of agricultural land.A.000. (3) The Court of Appeals erred in not finding that the addendum on the promissory notes containing an escalation clause is null and void ab initio for not being signed by petitioner Emma M. Petitioners boldly enumerate the following circumstances that show that these loans were obtained in clear contravention of R. Petitioners are precluded from seeking a declaration of nullity of the loan and mortgage contracts. There are two juridical acts involved in relative simulation— the ostensible act and the hidden act. with a house.00 and (b) DELETING the award of attorney’s fees to [respondent]. morals. SO ORDERED. No.000. Articles 1345 and 1346 of the Civil Code are the applicable laws.) No.lavvphil Petitioners insist on the nullity of the loan and mortgage contracts.
appellant sold 70% of the subscribed and outstanding capital stock of a Philippine corporation.them fall within the purview of the Rural Banks Act. Petitioners readily participated in the ploy to circumvent the Rural Banks Act and offered no objection when their original loan of P350. the law. The public policy requiring rural banks to give preference to bona fide small farmers in the grant of loans will not be served if a party. such as petitioners. In arguing that the loan and mortgage contracts are null and void.000. petitioners readily and voluntarily accepted the proceeds of the loan. directly or indirectly.12 we held that when the parties are in pari delicto. 2.15 Thus. the following rules shall be observed: (1) When the fault is on the part of both contracting parties. because: The obligation to secure prior Department of Tourism approval devolved upon the defendant (herein appellant) for it was he as the owner vendor who had the duty to give clear title to the properties he was conveying. In turn. neither will obtain relief from the court as one who seeks equity and justice must come to court with clean hands. intended to circumvent the Rural Banks Act requirement in the procurement of loans. v. who had equal participation and equal guilt in the circumvention of the Rural Banks Act. . each paying the price for its deception. both Tala and the Bank will be left where they are. it does not always follow that both parties.00 was divided into small separate loans not exceeding P50. The following circumstances reveal the utter poverty of petitioners’ arguments and militate against their bid to recover the subject property: 1. We recognized as an exception a situation when courts must interfere and grant relief to one of the parties because public policy requires their intervention. and neither should be accorded affirmative relief as against the other. divided into small loans. petitioners would impute all fault therefor to respondent. the agreement is void and inexistent under Article 140911 of the Civil Code. the factual milieu of the present case does not compel us to grant relief to a party who is in pari delicto. However. Velayo.00 each. The clean hands doctrine will not allow the creation or the use of a juridical relation such as a trust to subvert.000. Clearly. neither will obtain relief from the court. to appellees without the required prior notice and approval of the Department of Tourism (DOT). petitioners’ averments evince an obvious knowledge and voluntariness on their part to enter into the simulated contracts. neither party can maintain an action against the other. neither may recover what he has given by virtue of the contract. even if it will result in a benefit derived by a plaintiff who is in equal guilt with defendant. In Tala Realty Services Corp. we declared that even assuming both parties were guilty of the violation. without question. As previously adverted to. Inc. Petitioners did not come to court with clean hands. It was he alone who was charged with knowing about rules attendant to a sale of the assets or shares of his tourist-oriented organization. Yet.13 Petitioners stubbornly insist that respondent cannot invoke the pari delicto doctrine. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense. We find that fault for the nullity of the contract does not lie at respondent’s feet alone. should be left where they are. Neither the bank nor Tala came to court with clean hands. The failure to secure this approval is attributable to him alone. Consequently.. both petitioners and respondent are in pari delicto. or demand the performance of the other’s undertaking.10 Consequently. he cannot recover what he has given by reason of the contract. 1412. He should have known that under said rules and regulations. Yet. thus: The Bank should not be allowed to dispute the sale of its lands to Tala nor should Tala be allowed to further collect rent from the Bank. may demand the return of what he has given without any obligation to comply with his promise. the purpose thereof is illicit. duly licensed as a tourist operator. as provided in Article 1412 of the Civil Code: Art. much less on the mortgaged property. v. ostensibly because of our obiter in Enrique T. They admit that they never planted sugarcane on any property. who is not at fault. all the essential requisites of a contract9 were present. on pain of nullity. After failing to redeem the mortgaged subject property. By not allowing Tala to collect from the Bank rent for the period during which the latter was arbitrarily closed. We specifically ruled therein that the pari delicto doctrine is not applicable.00. Yuchengco. The other. will be allowed to recover the subject property. Accordingly. Banco Filipino Savings and Mortgage Bank. but at petitioners’ as well.16 In stark contrast to Yuchengco.000. thereby allowing respondent to consolidate title thereto. (2) When only one of the contracting parties is at fault. being in pari delicto.17 petitioners then entered into a Promise to Sell and made a down payment of P250. shares of stock in his company could not be transferred without prior approval from the Department of Tourism. the DOT cancelled the corporation’s Local Tour Operator’s License. they eagerly accepted the proceeds of the simulated sugar crop loans. while the parties intended to be bound thereby. appellees asked for a rescission of the sale and demanded the return of the purchase price. et al.14 In Yuchengco. or ask for the fulfillment of what has been promised him.
18 Neither can the parties demand performance of the contract. premises considered. petitioners explicitly recognized respondent’s ownership over the subject property and merely resorted to the void contract argument after they had failed to reacquire the property and a new title thereto in respondent’s name was issued. that in case of a delay in any yearly installment for a period of ninety (90) days. the Promise to Sell makes no reference whatsoever to petitioners’ previous ownership of the subject property and to the void loan and mortgage contracts.22 As stipulated in the Promise to Sell. which expressly designates respondent as the vendor and petitioners as the vendees.00 down payment. in denying petitioners’ appeal. the CA. If the words appear to be contrary to the evident intention of the parties. it did not ratify a void contract because void contracts cannot be ratified.20 Consequently. there is no more loan or account to speak of to justify the said imposition. Thus. the terms and conditions of the Promise to Sell are controlling.3. In all. WHEREFORE. cannot recover what they each has given by virtue of the contract. contrary to petitioners’ contention. 40613 is hereby AFFIRMED. the parties. Paragraph 5 of the Promise to Sell provides: 5) Provided further. originally co-owners and mortgagors of the subject property.000. the latter can enter into a separate and distinct contract for its alienation. petitioners. At this point. only then did petitioners invoke the nullity of the loan and mortgage contracts. an independent contract. is a separate and independent contract from that of the void loan and mortgage contracts. however. The "Promise to Sell" is separate and distinct from the loan and mortgage contracts earlier executed by the parties. . 1370. No remedy or affirmative relief can be afforded the parties because of their presumptive knowledge that the transaction was tainted with illegality. under the void loan and mortgage contracts. although it involves the same parties and subject matter. the literal meaning of its stipulations shall control. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties.00 and disallowed respondent’s claim for actual. To reiterate. Costs against petitioners. CV No. the Promise to Sell. did not purport to ratify the void loan and mortgage contracts. petitioners are entitled to reimbursement of the P250. the latter shall prevail over the former. The CA simply refused to grant the specific relief of recovering the subject property prayed for by petitioners. and possession and ownership of the subject property being ultimately vested in respondent. Article 1370 of the Civil Code reads: Art. We agree with the CA’s holding on this score: We note. being in pari delicto. the Promise to Sell simply intended to alienate to petitioners the subject property according to the terms and conditions contained therein. and provided further. Petitioners recognized respondent’s ownership of the subject property by entering into a Promise to Sell.R. it ordered respondent to reimburse petitioners for their down payment of P250. However. the petition is hereby DENIED. the parties having no cause of action against the other based on a void contract. Obviously. unequivocally acquiesced to their new status as buyers thereof. SO ORDERED. We are not unmindful of the fact that the Promise to Sell ultimately allows petitioners to recover the subject property which they were estopped from recovering under the void loan and mortgage contracts. Nonetheless.lawphi1 By its very terms. did not commit an error.21 On the whole. Failing anew to comply with the terms of the Promise to Sell and pay the first yearly installment. after the foreclosure. the Promise to Sell. this sale will become null and void [without] further effect or validity. In fact. The Decision of the Court of Appeals in CA-G. that payments made shall be reimbursed (returned to the VENDEE less interest on the account plus additional 15% liquidated damages and charges.19 The courts will not aid either party to an illegal agreement and will instead leave the parties where they find them.23 Finally.000. that there is no basis for the imposition of interest and additional 15% liquidated damages and charges on the amount to be thus reimbursed. moral and exemplary damages and attorney’s fees.
Carlito filed an agrarian case docketed as CAR Case No. executed a purely fictitious and simulated sale of their properties thereby ceding and transferring their ownership thereto to their children Rosemarie CamposBautista and Jesus Campos. Alleging that he was an agricultural lessee. maliciously and fraudulently. herein respondents filed the second case. spanning a period of close to three decades.00 and the agricultural lots (Lots 850 and 852) with a combined area of 7.CAMPOS vs.393 square meters. sensing that an unfavorable judgment might be rendered against them in Civil Case No. V-7028 (Nullity of Sale Case).600. While the appeal in the Agrarian Case was pending before the CA. They alleged that the contracts of sale between spouses Campos and petitioners were simulated for the sole purpose of evading the levy of the abovementioned properties in satisfaction of a money judgment that might be rendered in the Possession Case. Salvacion Buenvenida. Both were returned unsatisfied as per Sheriff’s Return of Service dated November 14. V-7028 On February 18.972 square meters. respondents instituted the third case.13 subject of this appeal. rendered a Decision4 finding Carlito to have retained possession of the fishpond notwithstanding the expiration of the contract of lease and ordering him to pay rentals. 1988. Capiz from Victorino Jumpay and defendant Rosemarie Campos .000. 2000. PASTRANA It sometimes happens that a creditor. Civil Case No. Civil Case No. herein petitioners. 1990. found that Carlito was not an agricultural tenant. 1995. to their daughter Rosemarie for P7.14 spouses Campos and petitioners averred that Rosemarie and Jesus Campos acquired the lots in question in good faith and for value because they were sold to them before they had any notice of the claims or interests of other persons thereover. the father of herein petitioners.3 Factual antecedents This is the third case between essentially the same parties and the second among those cases to reach this Court on appeal. A close scrutiny of the defendants’ documentary exhibits and testimonies showed that as early as 1981 defendant Jesus Campos was already leasing a fishpond in Brgy. When the respondents were about to levy these properties to satisfy the judgment in the Possession Case.8 respectively and 2. V-5417. Branch 14.15 It held that – In the Resolution of this case the issue is whether or not the spouses Carlito Campos and Margarita Arduo. the value of the produce and damages to the herein respondents. an Alias Writ of Execution6 was also issued. Branch 14. 1987 by the same plaintiffs for Recovery of Possession and Damages with Preliminary Mandatory Injunction. by virtue of Deeds of Absolute Sale dated October 18. On November 27. In their Answer with Counterclaim. after securing a judgment against a debtor. seeking to declare as null the aforesaid deeds of sale and the transfer certificates of title issued pursuant thereto. 68731 declaring as null the sale of several parcels of land made by their parents in their favor. Majanlud. despite the expiration of their contract of lease in 1980. for being absolutely simulated transactions. P-91999 and P-9200. Proceedings before the Regional Trial Court – Civil Case No. During the pendency of the Agrarian Case. in evident bad faith and wanton disregard of the law.R. The first case arose from the refusal of Carlito Campos (Carlito). finds that the debtor had transferred all his properties to another leaving nothing to satisfy the obligation to the creditor. with a total area of 1. they discovered that spouses Carlito and Margarita Campos transferred these lots to their children Rosemarie and Jesus Campos. He then appealed to the CA and subsequently to this Court. On August 21. the Regional Trial Court of Roxas City. to surrender the possession of a fishpond he leased from respondents’ mother. against Carlito for Recovery of Possession and Damages with Preliminary Mandatory Injunction (Possession Case) involving the same fishpond subject of the earlier agrarian case. 1995.10 respectively.00. but was unsuccessful. Carlito was the registered owner of the following properties: 1. 1995. 1997. the Regional Trial Court of Roxas City. After trial. Also assailed is the November 21.1 petitioners ask us to set aside the November 23. 2006 Resolution. 2005 Decision2 of the Court of Appeals (CA) in CA-G. spouses Campos sold the residential lots (Lots 3715-A and 3715-B-2). 198511 and November 2. 1196 (Agrarian Case) against his lessor. The Decision became final and executory and a Writ of Execution5 was issued on February 7. Branch 16. CV No. dismissed the complaint.12 Specifically. the Regional Trial Court of Roxas City. Sapi-an. Agricultural Lots 850 and 852 covered by Original Certificates of Title Nos. In this petition for review on certiorari. V-5417 filed in Branch 16 on July 17. Subsequently. on September 19. as well as prior to the filing of the Possession Case. 182057 and 18417. to their son Jesus for P5. Residential Lots 3715-A and 3715-B-2 covered by Transfer Certificates of Title Nos.
the CA found that the conveyances were made in 1990. The appellate court further observed that despite the sales.22 In addition. The Deed of Absolute Sale (Exh. except the parcels of land subject of the assailed transactions. The counter-claim of the defendants must also be DISMISSED as the case was not filed in evident bad faith and with malicious intent. this petition for review on certiorari raising the following errors: I .THE COURT OF APPEALS COMMITTED AN ERROR OF LAW OVERLOOKING THAT THE CAUSE OF ACTION HAD PRESCRIBED. 1985 and November 2. SO ORDERED. Only petitioners moved for reconsideration17 but the CA denied the same. WHO EXERCISED DOMINION OVER THE SUBJECT LOTS. and Transfer Certificates of Title Nos.THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN APPLYING ARTICLE 1409. FROM THE TIME THE TITLES WERE ISSUED IN 1990.19 Petitioners’ arguments Petitioners assail the application of Article 140920 of the Civil Code on void contracts as against Article 1381(3)21 of the Civil Code on rescissible contracts in fraud of creditors. respectively. 2000 in Civil Case No. INSTEAD OF ARTIcLE 1381 (3). Carlito Campos. On these bases. 1995 for which the Sheriff’s Return of Service was returned unsatisfied on November 14.THE COURT OF APPEALS ERRONEOUSLY ANCHORED ITS IMPUGNED JUDGMENT ON MISAPPREHENSION OF FACTS THAT THE SALE WERE ANTEDATED. The decision of the Regional Trial Court of Roxas City. Branch 14. 1988. petitioners allege that the CA . the instant appeal is GRANTED. 1995. the CA took note of the fact that the writ of execution and alias writ issued in the Possession Case remained unsatisfied as the lower court could not find any other property owned by the spouses Campos that could be levied upon to satisfy its judgment. "6" & "10") executed by the spouses Carlito Campos and Margarita Arduo to Rosemarie Campos and Jesus Campos were dated October 17.was engaged in the sari-sari store business starting 1985 so that they were able to purchase the properties of their parents out of their profits derived therefrom. V-5417 was filed on July 7. AND IN SPECULATING THAT A CAUSE OF ACTION OF SUPPOSED SALE IN FRAUD OF CREDITORS EXISTS DESPITE NON-EXHAUSTION OF REMEDIES TO ENFORCE THE JUDGMENT IN CIVIL CASE NO. spouses Campos retained possession of the properties in question. and not in 1985 or 1988. CIVIL CODE. Let a copy of this Decision be furnished to the Register of Deeds of the Province of Capiz who is hereby ordered to cancel Transfer Certificates of Title Nos. II . Finally. T-23248 and 23249 in the name of Jesus Campos and restore said titles in the name of the previous owner. IV . T-26092 and T-26093 in the name of Rosemarie Campos. Their claim for damages is likewise DISMISSED. considering that the questioned conveyances executed by the spouses Campos to their children were allegedly done to evade the enforcement of the writ of execution in the Possession Case. dated August 21. 1990. the complaint of the plaintiffs against the defendants is DISMISSED. WHICH IF PROPERLY CONSIDERED. It can readily [be] gleaned from the records that Civil Case No. III . 1987 and was decided on November 27. the CA ruled that the assailed contracts of sale were indeed absolutely simulated transactions and declared the same to be void ab initio. The CA likewise noted that the zonal value of the subject properties were much higher than the value for which they were actually sold. evidently to avoid the properties from being attached or levied upon by the respondents.18 Issues Hence. WHEREFORE. V-7028 is REVERSED and SET ASIDE. or just before their actual registration with the Registry of Deeds. V-5417.THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CASTING ASIDE OVERWHELMING EVIDENCE DULY APPRECIATED BY THE TRIAL COURT THAT PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE. CIVIL CODE. Furthermore. SO ORDERED. the alias writ of execution was issued only on July 5. HENCE SIMULATED DESPITE GLARING ABSENCE OF EVIDENCE IN SUPPORT THEREOF. SHALL WARRANT THE SINGULAR CONCLUSION THAT THE SALE AND TRANSFER OF TITLES ARE VALID. THE COMPLAINT HAVING BEEN FILED AFTER SEVEN (7) YEARS OR ONLY ON 14 OCTOBER 1997. The dispositive portion of the Decision of the CA reads: WHEREFORE.16 Proceedings before the Court of Appeals Upon review of the evidence presented.
Second.26 Indeed.900. (7) When the findings are contrary to those of the trial court. absurd or impossible. there was a wide disparity in the alleged consideration specified in the Deeds of Absolute Sale and the actual zonal valuation of the subject properties as per the BIR Certification. (4) When the judgment is based on a misappreciation of facts. Jesus Campos Market Value as per Tax Declaration P 83.0027 Computed Zonal Valuation (BIR Certification) P 417. 1990 and September 25. Rosemarie Campos Agricultural Lots: P 5. First. the Deeds of Absolute Sale were registered exactly one month apart from each other and about another one month from the time of the promulgation of the judgment in the Possession Case. The CA correctly held that the assailed Deeds of Absolute Sale were executed when the Possession Case was already pending. This conclusion is bolstered by the fact that the supposed notary public before whom the deeds of sale were acknowledged had no valid notarial commission at the time of the notarization of said documents. (8) When the findings of fact are conclusions without citation of specific evidence on which they are based. (3) Where there is a grave abuse of discretion. (6) When the CA in making its findings. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. the Deeds of Absolute Sale were executed for the purpose of putting the lots in question beyond the reach of creditors. consistent with the nature of the respondents’ cause of action which was for declaration of nullity of said contracts and the transfer certificates of titles issued pursuant thereto. Well-settled is the rule that this Court is not a trier of facts.00 Spouses Campos to daughter. We also agree with the findings of the CA that petitioners failed to explain the reasons for the delay in the registration of the sale. None of these exceptions is present in this case. the appraised value of the properties subject of this controversy may be lower at the time of the sale in 1990 but it could not go lower than P7.0028 P 25. The subject Deeds of Absolute Sale executed by the Spouses Campos to their children (herein petitioners) are absolutely simulated and fictitious. the same were registered with the Registry of Deeds only on October 25. as follows: Consideration specified in Deed of Absolute Sale Residential Lots: From P 7.600.000. 1988.000.00 and P5. the findings of fact of the CA are conclusive and binding. 1990.00 From Spouses Campos to son. When supported by substantial evidence. and (10) When the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record.misappreciated the facts of this case when it found that the questioned transactions were tainted with badges of fraud. (5) When the findings of fact are conflicting. evidently to avoid the properties subject thereof from being attached or levied upon by the respondents. unless the case falls under any of the following recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation. surmises and conjectures.00.23 Respondents’ arguments Respondents argue that the application of Article 1409 on void contracts was a natural and logical consequence of the CA’s finding that subject deeds of sale were absolutely simulated and fictitious. (2) When the inference made is manifestly mistaken. as reflected on the Deeds of Absolute Sale.000. leading the appellate court to conclude that the conveyances were made only in 1990 or sometime just before their actual registration and that the corresponding Deeds of Absolute Sale were antedated. We likewise find the considerations involved in the assailed .860.1929 P 39.580.600. (9) When the facts set forth in the petition as well as in the petitioners’ main and reply briefs are not disputed by the respondents. The Deeds of Absolute Sale were antedated and that the same were executed when the Possession Case was already pending. We find that the Decision of the CA is supported by the required quantum of evidence. 1985 and November 2. While the sales in question transpired on October 18. and are not reviewable by this Court.24 Respondents also stressed that the CA’s finding is conclusive upon us and that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court.0030 As correctly noted by the CA.25 Our Ruling The petition lacks merit.
41 In the instant case.39 we held that "the failure of petitioners to take exclusive possession of the property allegedly sold to them. 33 While in Spouses Santiago v. on cross. notwithstanding the title transfer. Thus. Jesus. 1995 remain unsatisfied. he confirmed that he had knowledge of the prior pending cases when he supposedly purchased his parents’ rice land stating that: Q: You never knew that your parents and the plaintiffs in this case have cases in the past prior to this case now. that case was a different case from the subject matter then [sic] the lot now in question. we cannot hold that Rosemarie Campos was an innocent buyer for value. to collect rentals from the alleged vendor x x x is contrary to the principle of ownership and a clear badge of simulation that renders the whole transaction void and without force and effect. spouses Campos continued to cultivate the rice lands which they purportedly sold to their son Jesus. Third. That act has never been recognized as a mode of acquiring ownership.000. her failure to take exclusive possession of the property allegedly sold. alternatively. Respondents have established through the unrebutted testimony of Rolando Azoro that spouses Campos have their house within Lot 3715-A and Lot 3715-B-2 and that they reside there together with their daughter Rosemarie. Court of Appeals. I knew about it. spouses Campos continue to be in actual possession of the properties in question. It does not protect a usurper from the true owner. On these grounds. Moreover.00) Your Honor. The issuance of transfer certificates of title to petitioners did not vest upon them ownership of the properties. Per Sheriff’s Service Return dated November 14. or until a month before the promulgation of the judgment in the Possession Case. cultivation and occupation of the disputed lot from the time the deed of sale was executed until the present. despite the transfer of the said properties to their children.40 The Torrens system does not create or vest title. for how much did you buy this [piece] of land consisting of 1. It only confirms and records title already existing and vested. Hence. 1995. petitioner Rosemarie Campos stated: Q: Can you tell us the total area of those two (2) lots that they sold to you? A: It consists of One Thousand (1. or until two months before the promulgation of the judgment in the Possession Case. you still purchased these two (2) lots 850 and 852 from your parents.393-square meter31 residential land could not recall the exact area of the two lots she purchased. is that right? A: Yes.42 Fourth. Likewise. we cannot believe that the buyer of the 1. Federico remained in actual possession. has relocated to Bulacan36 where he worked as a security guard. sir. the Alias Writ of Execution and Sheriff’s Demand for Payment dated September 19. is a circumstance which is unmistakably added proof of the fictitiousness of the said transfer. The fact that. Court of Appeals. pursuant to Article 1409 of the Civil Code". is that what you are telling us? A: All I knew was that. In addition.35 Meantime. we likewise affirm the finding of the CA that the purported deed was antedated.38 we held that: The failure of the late Rafael to take exclusive possession of the property allegedly sold to him is a clear badge of fraud. it appears on record that the money judgment in the Possession Case has not been discharged with. petitioner Jesus Campos supposedly bought the rice land from his parents in 1988 but did not have the assailed Deed of Absolute Sale registered with the proper Registry of Deeds for more than two years. the same being contrary to the principle of ownership.37 In other words.34 In addition. . In her cross-examination. petitioner Rosemarie Campos supposedly bought the residential properties in 1985 but did not have the assailed Deed of Absolute Sale registered with the proper Registry of Deeds for more than five years. or in the alternative. It cannot be a shield for the commission of fraud.32 xxxx Q: By the way. The fact that petitioners were able to secure titles in their names did not operate to vest upon them ownership over the subject properties. Neither have the petitioners shown if their parents are paying rent for the use of the properties which they already sold to their children. Finally.contracts of sale to be inadequate considering the market values presented in the tax declaration and in the BIR zonal valuation.000 square meters? A: Seven Thousand Pesos (P7. the latter have not exercised complete dominion over the same. to collect rentals is contrary to the principle of ownership and a clear badge of simulation. In Suntay v. or.000) Square Meters. we affirm the finding of the CA that the purported deed was antedated. Q: And in spite of your knowledge. the supposed new owner of said rice lands. that there was a pending case between your parents and the plaintiffs here.
As discussed above. Since the assailed Deeds of Absolute Sale are null and void. the Civil Code provisions on rescission have no application in the instant case. petitioner Jesus Campos cannot be considered as an innocent buyer and for value. are not innocent purchasers for value.44 In the instant case. Petitioners argue that respondents’ cause of action had prescribed when they filed the Nullity of the Sale Case on October 14. Consequently. The aforementioned badges must have been considered merely as grounds for holding that the sale is fictitious. WHEREFORE. petitioners’ contention that respondents’ cause of action is already barred by prescription is without legal basis.43 A contract which is null and void is no contract at all and hence could not be the subject of rescission. or seven years after the registration of the questioned sales in 1990. we find that the CA properly applied the governing law over the matter under consideration which is Article 1409 of the Civil Code on void or inexistent contracts. And under Article 1410 of the Civil Code. It is true that the CA cited instances that may constitute badges of fraud under Article 1387 of the Civil Code on rescissible contracts. Rosemarie and Jesus Campos. the sale of subject properties to herein petitioners are null and void. Since both the transferees. The action for the declaration of the inexistence of the assailed Deeds of Absolute Sale does not prescribe. we have declared the Deeds of Absolute Sale to be fictitious and inexistent for being absolutely simulated contracts. the subsequent registration procured by the presentation of the void deeds of absolute sale is likewise null and void. petitioners’ argument that the applicable law in this case is Article 1381(3) of the Civil Code on rescissible contracts and not Article 1409 on void contracts is not a question of first impression. . Costs against petitioners. 1997. the petition is DENIED.1avvphi1 We cannot agree. This issue had already been settled several decades ago when we held that "an action to rescind is founded upon and presupposes the existence of a contract". But there is nothing else in the appealed decision to indicate that rescission was contemplated under the said provision of the Civil Code. Hence. an action or defense for the declaration of the inexistence of a contract is imprescriptible. Finally. SO ORDERED.On these findings of fact.
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