inotherpersonsnamestoitsrightfulandlegalowners,ortothosewhoclaimtohaveabetterright;there

isnospecialgroundforanactionforreconveyance.(HeirsofValerianoS.Concha,Sr.vs.Lumocso,540
SCRA1[2007])

o0o

G.R.No.176474.November27,2008.*
HEIRS OF ARTURO REYES, represented by Evelyn R. San Buenaventura, petitioners,vs.ELENA
SOCCOBELTRAN,respondent.

CivilLaw;Sales;Thelawspecificallyrequiresthatthevendormusthaveownershipofthepropertyatthetime
itisdelivered.UnderArticle1459oftheCivilCodeoncontractsofsale,Thethingmustbelicitandthevendor
musthavearighttotransferownershipthereofatthetimeitisdelivered.Thelawspecificallyrequiresthatthe
vendormusthaveownershipofthepropertyatthetimeitisdelivered.Petitionersclaimthatthepropertywas
constructivelydeliveredtothemin1954byvirtueoftheContracttoSell.However,asalreadypointedoutbythis
Court,itwasexplicitintheContractitselfthat,atthetimeitwasexecuted,MiguelR.Soccowasnotyettheowner
ofthepropertyandwasonlyexpectingtoinheritit.Hence,therewasnovalidsalefromwhichownershipofthe
subjectpropertycouldhavetransferredfromMiguelSoccotoArturoReyes.Withoutacquiringownershipofthe
subjectproperty,ArturoReyesalsocouldnothaveconveyedthesametohisheirs,hereinpetitioners.
Same; Public Lands; Land Registration; In San Miguel Corporation vs. Court of Appeals (185 SCRA 722
[1990]),theCourtreiteratedtherulethattheopen,exclusive,andundisputedpossessionofalienablepubliclandfor
theperiodprescribedbylawcreatesthelegalfictionwherebylandceasestobepubliclandandis,therefore,private
property.InSanMiguelCorporationvs.CourtofAppeals,185SCRA722(1990),theCourtreiteratedtherulethat
theopen,
exclusive, andundisputedpossessionofalienable publiclandforthe periodprescribed by law createsthelegal
fictionwhereby land ceases tobepublic land and is, therefore, private property. It stressed, however, that the
occupationofthelandfor30yearsmustbeconclusivelyestablished.Thus,theevidenceofferedbypetitionertherein
tax declarations, receipts, and the sole testimony of theapplicant for registration, petitioners predecessorin
interestwhoclaimedtohaveoccupiedthelandbeforesellingittothepetitionerwereconsideredinsufficientto
satisfythequantumofproofrequiredtoestablishtheclaimofpossessionrequiredforacquiringalienablepublic
land.
Same;Sales;LandTitles;Bythenatureofacontractoragreementtosell,thetitleoverthesubjectpropertyis
transferredtothevendeeuponthefullpaymentofthestipulatedconsideration.Itisonlyproperthatrespondents
claimoverthesubjectpropertybeupheld.ThisCourtmust,however,notethattheOrderoftheDARSecretary,
dated9November2001,whichgrantedthepetitionersrighttopurchasetheproperty,isflawedandmaybeassailed
intheproperproceedings.RecordsshowthattheDARaffirmedthatrespondentspredecessorsininterest,Marcelo
Laquian and Constancia Socco, having been identified as the original allocatee, have fully paid for the subject
propertyasprovidedunderanagreementtosell.Bythenatureofacontractoragreementtosell,thetitleoverthe
subjectpropertyistransferredtothevendeeuponthefullpaymentofthestipulatedconsideration.Uponthefull
paymentofthepurchaseprice,andabsentanyshowingthattheallocateeviolatedtheconditionsoftheagreement,
ownershipofthesubjectlandshouldbeconferredupontheallocatee.Sincetheextrajudicialpartitiontransferring
ConstanciaSoccosinterestinthesubjectlandtotherespondentisvalid,thereisclearlynoneedfortherespondent
to purchase the subject property, despite the application for the purchase of the property erroneously filed by
respondent.Theonlyactwhichremainstobeperformedistheissuanceofatitleinthenameofherlegalheirs,now
thatsheisdeceased.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
SanBuenaventuraLawOfficesforpetitioner.213

CHICONAZARIO,J.:
This is a Petition for Review onCertiorariunder Rule 45 of the Rules of Court, assailing the
Decision dated 31 January 2006 rendered by the Court of Appeals in CAG.R. SP No. 87066, which
1

affirmed theDecision dated 30 June 2003 of theOfficeof thePresident, in O.P. Case No. 02A007,
2

approvingtheapplicationofrespondentElenaSoccoBeltrantopurchasethesubjectproperty.
ThesubjectpropertyinthiscaseisaparceloflandoriginallyidentifiedasLotNo.6B,situatedin
ZamoraStreet,Dinalupihan,Bataan,withatotalareaof360squaremeters.Itwasoriginallypartofa
larger parcel of land, measuring1,022 squaremeters, allocated totheSpouses Marcelo Laquian and
ConstanciaSocco(SpousesLaquian),whopaidforthesamewithJapanesemoney.WhenMarcelodied,
thepropertywaslefttohiswifeConstancia.UponConstanciassubsequentdeath,shelefttheoriginal
parcelofland,alongwithherotherproperty,withherheirshersiblings,namely:FilomenaElizaSocco,
Isabel Socco de Hipolito, Miguel R. Socco, and Elena SoccoBeltran. Pursuant to an unnotarized
3
documententitledExtrajudicialSettlementoftheEstateoftheDeceasedConstanciaR.Socco,executed
byConstanciasheirssometimein1965,theparceloflandwaspartitionedintothreelotsLotNo.6A,
LotNo.6B,andLotNo.6C. Thesubjectproperty,LotNo.6B,wasadjudicatedtorespondent,butno
4

titlehadbeenissuedinhername.
_______________

1PennedbyAssociateJusticeBienvenidoL.ReyeswithAssociateJusticesArturoD.Brion(nowanAssociateJusticeoftheSupreme
Court)andMariflorPunzalanCastillo,concurring.Rollo,pp.3240.
2PennedbySeniorDeputyExecutiveSecretaryWaldoQ.Flores.Rollo,pp.8182.
3Records,p.113.
4Rollo,pp.5558.

214
On25June1998,respondentElenaSoccoBeltranfiledanapplicationforthepurchaseofLotNo.6B
beforetheDepartmentofAgrarianReform(DAR),allegingthatitwasadjudicatedinherfavorinthe
extrajudicialsettlementofConstanciaSoccosestate. 5

Petitionersherein,theheirsofthelateArturoReyes,filedtheirprotesttorespondentspetitionbefore
theDARonthegroundthatthesubjectpropertywassoldbyrespondentsbrother,MiguelR.Socco,in
favor of their father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5 September 1954,
stipulatingthat: 6

ThatIamoneofthecoheirsoftheEstateofthedeceasedConstanciaSocco;andthatIamtoinheritassucha
portionofherlotconsistingofFourHundredSquareMeters(400)moreorlesslocatedonthe(sic)ZamoraSt.,
MunicipalityofDinalupihan,ProvinceofBataan,boundedasfollows:
xxxx
That for or in consideration of the sum of FIVE PESOS (P5.00) per square meter, hereby sell, convey and
transferbywayofthisconditionalsalethesaid400sq.m.moreorlessuntoAtty.ArturoC.Reyes,hisheirs,
administratorandassignsxxx.(Emphasissupplied.)

Petitioners averred that they took physical possession of the subject property in 1954 and had been
uninterruptedintheirpossessionofthesaidpropertysincethen.
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform Office conducted an
investigation,theresultsofwhichwerecontainedinherReport/Recommendationdated15April1999.
Otherthanrecountingtheaforementionedfacts,LegalOfficerPinlacalsomadethefollowingfindingsin
herReport/Recommendation: 7

Furtherinvestigationwasconductedbytheundersignedandbasedonthedocumentaryevidencepresentedby
bothparties,thefollowingfactsweregathered:thatthehouseof[the]Reyesfamilyisadjacenttothelandholdingin
questionandportionofthesubjectpropertyconsistingofabout15meters[were]occupiedbytheheirsofArturo
Reyeswereakitchenandbathroom[were]constructedtherein;ontheremainingportionaskeletalformmadeof
hollowblock[s]iserectedandaccordingtotheheirsoflateArturoReyes,thiswasconstructedsincetheyear(sic)
70sattheirexpense;thatconstructionofthesaidskeletalbuildingwasnotcontinuedandleftunfinishedwhich
accordingtotheaffidavitofPatriciaHipolitotheReyesfamilywhere(sic)preventedbyElenaSoccointheirattempt
ofoccupancyofthesubjectlandholding;(affidavitofPatriciaHipolitoisheretoattachedasAnnexF);thatElena
Soccocannotphysicallyandpersonallyoccupythesubjectpropertybecauseoftheskeletalbuildingmadebythe
Reyes family who have been requesting that they be paid for the cost of the construction and the same be
demolishedattheexpenseofElenaSocco;thataccordingtoElenaSocco,[she]iswillingtowaiveherrightonthe
portionwhere[the]kitchenandbathroomis(sic)constructedbutnotthewholeofLot[No.]6Badjudicatedtoher;
thattheReyesfamilyincludedthesubjectpropertytotheswornstatementofvalueofrealpropertiesfiledbefore
themunicipalityofDinalupihan,Bataan,copiesofthedocumentsareheretoattachedasAnnexesGandH;that
likewiseElenaSoccohasbeencontinuouslyandreligiouslypayingtherealtytaxdueonthesaidproperty.

Intheend,LegalOfficerPinlacrecommendedtheapprovalofrespondentspetitionforissuanceoftitle
overthesubjectproperty,rulingthatrespondentwasqualifiedtoownthesubjectpropertypursuantto
Article1091oftheNewCivilCode. ProvincialAgrarianReformOfficer(PARO)RaynorTaroyconcurred
8

inthesaidrecommendationinhisIndorsementdated22April1999. 9

_______________

8Id.,atp.112.Art.1091oftheCivilCodeprovidesthat:
Art.1091.Apartitionlegallymadeconfersuponeachheirtheexclusiveownershipofthepropertyadjudicatedtohim.
9Id.,atp.114.

216
InanOrderdated15September1999,DARRegionalDirectorNestorR.Acosta,however,dismissed
respondentspetitionforissuanceoftitleoverthesubjectpropertyonthegroundthatrespondentwasnot
anactualtillerandhadabandonedthesaidpropertyfor40years;hence,shehadalreadyrenouncedher
righttorecoverthesame. ThedispositivepartoftheOrderreads:
10

1.DISMISSINGtheclaimsofElenaSoccoBeltran,dulyrepresentedbyMyrnaSoccoforlackofmerit;
2.ALLOCATINGLotNo.6BunderPsd003008565withanareaof360squaremeters,moreorless,situated
ZamoraStreet,Dinalupihan,Bataan,infavoroftheheirsofArturoReyes.
3.ORDERINGthecomplainanttorefrainfromanyacttendingtodisturbthepeacefulpossessionofherein
respondents.
4.DIRECTING the MARO of Dinalupihan, Bataan to process the pertinent documents for the issuance of
CLOAinfavoroftheheirsofArturoReyes. 11

Respondent filed a Motion for Reconsideration of the foregoing Order, which was denied by DAR
RegionalDirectorAcostainanotherOrderdated15September1999. 12

RespondentthenappealedtotheOfficeoftheDARSecretary.InanOrder,dated9November2001,the
DAR Secretary reversed the Decision of DAR Regional Director Acosta after finding that neither
petitionerspredecessorininterest,ArturoReyes,norrespondentwasanactualoccupantofthesubject
property.However,sinceitwasrespondentwhoappliedtopurchasethesubjectproperty,shewasbetter
qualifiedtoownsaidpropertyasopposedtopetitioners,whodidnotatallapplytopurchasethesame.
Petitioners were further disqualified from purchasing the subject property because they were not
landless.Finally,duringtheinvestigationofLegalOfficerPinlac,petitionersrequestedthatrespondent
paythemthecostoftheconstructionoftheskeletalhousetheybuiltonthesubjectproperty.Thiswas
construedbytheDARSecretaryasawaiverbypetitionersoftheirrightoverthesubjectproperty. Inthe 13

saidOrder,theDARSecretaryorderedthat:
WHEREFORE,premisesconsidered,theSeptember15,1999OrderisherebySETASIDEandanewOrderis
herebyissuedAPPROVINGtheapplicationtopurchaseLot[No.]6BofElenaSoccoBeltran. 14

PetitionerssoughtremedyfromtheOfficeofthePresidentbyappealingthe9November2001Decision
oftheDARSecretary.TheirappealwasdocketedasO.P.CaseNo.02A007.On30June2003,theOffice
of thePresident renderedits Decision denyingpetitioners appeal and affirming the DARSecretarys
Decision. ThefallooftheDecisionreads:
15

WHEREFORE, premises considered, judgment appealed from isAFFIRMEDand the instant

appealDISMISSED. 16

Petitioners Motion for Reconsideration was likewise denied by the Office of the President in a
Resolution dated 30 September 2004. In the said Resolution, the Office of the President noted that
17

petitionersfailedtoallegeintheirmotionthedatewhentheyreceivedtheDecisiondated30June2003.
SuchdatewasmaterialconsideringthatthepetitionersMotionforReconsiderationwasfiledonlyon14
April2004,oralmostninemonthsafterthepromulgationofthedecisionsoughttobereconsidered.Thus,
itruledthatpetitionersMotionforReconsideration,filedbeyondfifteendaysfromreceiptofthedecision
tobereconsidered,renderedthesaiddecisionfinalandexecutory.
Consequently,petitionersfiledanappealbeforetheCourtofAppeals,docketedasCAG.R.SPNo.
87066.Pendingtheresolutionofthiscase,theDARalreadyissuedon8July2005aCertificateofLand
OwnershipAward(CLOA)overthesubjectpropertyinfavoroftherespondentsnieceandrepresentative,
MyrnaSoccoBeltran. Respondentpassedawayon21March2001, buttherecordsdonotascertainthe
18 19

identityofherlegalheirsandherlegatees.
ActingonCAG.R.SPNo.87066,theCourtofAppealssubsequentlypromulgateditsDecision,dated
31January2006,affirmingtheDecisiondated30June2003oftheOfficeofthePresident.Itheldthat
petitionerscouldnothavebeenactualoccupantsofthesubjectproperty,sinceactualoccupancyrequires
the positive act of occupying and tilling the land, not just the introduction of an unfinished skeletal
structurethereon.TheContracttoSellonwhichpetitionersbasedtheirclaimoverthesubjectproperty
wasexecutedbyMiguelSocco,whowasnottheownerofthesaidpropertyand,therefore,hadnorightto
transfer the same. Accordingly, the Court of Appeals affirmed respondents right over the subject
property,whichwasderivedformtheoriginalallocateesthereof. ThefalloofthesaidDecisionreads:
20

WHEREFORE,premisesconsidered,theinstantPETITIONFORREVIEWisDISMISSED.Accordingly,the
Decisiondated30June2003andtheResolutiondated30December2004bothissuedbytheOfficeofthePresident
areherebyAFFIRMEDintoto. 21

TheCourtofAppealsdeniedpetitionersMotionforReconsiderationofitsDecisioninaResolution
dated16August2006. 22

Hence,thepresentPetition,whereinpetitionersraisethefollowingissues:
I
WHETHERORNOTTHEHONORABLECOURTOFAPPEALSERREDINAFFIRMINGTHEFINDINGSOF
THEOFFICEOFTHEPRESIDENTTHATTHESUBJECTLOTISVACANTANDTHATPETITIONERSARE
NOTACTUALOCCUPANTSTHEREOFBYDENYINGTHELATTERSCLAIMTHATTHEYHAVEBEENIN
OPEN,CONTINUOUS,EXCLUSIVE,NOTORIOUSANDAVDERSEPOSSESSIONTHEREOFSINCE1954OR
FORMORETHANTHIRTY(30)YEARS.
II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT PETITIONERS CANNOT
LEGALLY ACQUIRE THE SUBJECT PROPERTY AS THEY ARE NOT CONSIDERED LANDLESS AS
EVIDENCEDBYATAXDECLARATION.
III
WHETHERORNOTTHECOURTOFAPPEALSERREDINHOLDINGTHATWHATEVERRESERVATION
WEHAVEOVERTHERIGHTOFMYRNASOCCOTOSUCCEEDWASALREADYSETTLEDWHENNOLESS
THAN MIGUEL SOCCO (PREDECESSORININTEREST OF HEREIN PETITIONERS) EXECUTED HIS
WAIVEROFRIGHTDATEDAPRIL19,2005OVERTHESUBJECTPROPERTYINFAVOROFMYRNASOCCO.
IV
WHETHERORNOTTHECOURTOFAPPEALSERREDWHENITDENIEDPETITIONERSMOTIONFORNEW
TRIAL THEREBY BRUSHING ASIDE THE FACT THAT MYRNA V. SOCCOARIZO GROSSLY
MISREPRESENTED IN HER INFORMATION SHEET OF BENEFICIARIES AND APPLICATION TO
PURCHASELOTINLANDEDESTATESTHATSHEISAFILIPINOCITIZEN,WHEN
_______________

INTRUTHANDINFACT,SHEISALREADYANAMERICANNATIONAL. 23

Themainissueinthiscaseiswhetherornotpetitionershaveabetterrighttothesubjectproperty
over the respondent. Petitioners claim over the subject property is anchored on the Contract to Sell
executedbetweenMiguelSoccoandArturoReyeson5September1954.Petitionersadditionallyallege
thattheyandtheirpredecessorininterest,ArturoReyes,havebeeninpossessionofthesubjectlotsince
1954foranuninterruptedperiodofmorethan40years.
TheCourtisunconvinced.
Petitioners cannot derive title to the subject property by virtue of the Contract to Sell. It was
unmistakablystatedintheContractandmadecleartobothpartiestheretothatthevendor,MiguelR.
Socco,wasnotyettheownerofthesubjectpropertyandwasmerelyexpectingtoinheritthesameashis
shareasacoheirofConstanciasestate. ItwasalsodeclaredintheContractitselfthatMiguelR.Soccos
24

conveyanceofthesubjecttothebuyer,ArturoReyes,wasaconditionalsale.Itis,therefore,apparentthat
thesaleofthesubjectpropertyinfavorofArturoReyeswasconditionedupontheeventthatMiguelSocco
wouldactuallyinheritandbecometheownerofthesaidproperty.Absentsuchoccurrence,MiguelR.
SocconeveracquiredownershipofthesubjectpropertywhichhecouldvalidlytransfertoArturoReyes.
UnderArticle1459oftheCivilCodeoncontractsofsale,Thethingmustbelicitandthevendormust
havearighttotransferownershipthereofatthetimeitisdelivered.Thelawspecificallyrequiresthat
thevendormusthaveownershipofthepropertyatthetimeitisdelivered.Petitionersclaimthatthe
propertywasconstructivelydeliveredtothemin1954byvirtueoftheContracttoSell. However, as
alreadypointedoutbythisCourt,itwasexplicitintheContractitselfthat,atthetimeitwasexecuted,
MiguelR.Soccowasnotyettheownerofthepropertyandwasonlyexpectingtoinheritit.Hence,there
wasnovalidsalefromwhichownershipofthesubjectpropertycouldhavetransferredfromMiguelSocco
toArturoReyes.Withoutacquiringownershipofthesubjectproperty,ArturoReyesalsocouldnothave
conveyedthesametohisheirs,hereinpetitioners.
Petitioners,nevertheless,insistthattheyphysicallyoccupiedthesubjectlotformorethan30years
and, thus, they gained ownership of the propertythrough acquisitiveprescription, citingSandoval v.
InsularGovernment andSanMiguelCorporationv.CourtofAppeals.
25 26

InSandoval,petitionersthereinsoughttheenforcementofSection54,paragraph6ofActNo.926,
otherwiseknownastheLandRegistrationAct,whichrequiredfortheissuanceofacertificateoftitleto
agriculturalpubliclandstheopen,continuous,exclusive,andnotoriouspossessionandoccupationofthe
sameingoodfaithandunderclaimofownershipformorethantenyears.Afterevaluatingtheevidence
presented, consisting of the testimonies of several witnesses and proof that fences were constructed
aroundtheproperty,theCourtintheaforestatedcasedeniedthepetitiononthegroundthatpetitioners
failedtoprovethattheyexercisedactsofownershiporwereinopen,continuous,andpeacefulpossession
ofthewholeland,andhadcausedittobeenclosedtotheexclusionofotherpersons.Itfurtherdecreed
that whoever claims such possession shall exercise acts of dominion and ownership which cannot be
mistakenforthemomentaryandaccidentalenjoymentoftheproperty. 27

InSanMiguelCorporation,theCourtreiteratedtherulethattheopen,exclusive,andundisputed
possessionofalienablepubliclandfortheperiodprescribedbylawcreatesthelegalfictionwherebyland
ceasestobepubliclandandis,therefore,privateproperty.Itstressed,however,thattheoccupationofthe
landfor30yearsmustbeconclusivelyestablished.Thus,theevidenceofferedbypetitionerthereintax
declarations,receipts,andthesoletestimonyoftheapplicantforregistration,petitionerspredecessorin
interest who claimed to have occupied the land before selling it to the petitionerwere considered
insufficienttosatisfy thequantum of proof requiredtoestablishtheclaim ofpossession requiredfor
acquiringalienablepublicland. 28

Asinthetwoaforecitedcases,petitionershereinwereunabletoproveactualpossessionofthesubject
propertyfortheperiodrequiredbylaw.ItwasunderscoredinSanMiguelCorporationthattheopen,
continuous, exclusive, and notorious occupation of property for more than 30 years must be no less
thanconclusive, such quantum of proof being necessary to avoid the erroneous validation of actual
fictitiousclaimsofpossessionoverthepropertythatisbeingclaimed. 29

Inthepresentcase,theevidencepresentedbythepetitionersfallsshortofbeingconclusive.Apart
fromtheirselfservingstatementthattheytookpossessionofthesubjectproperty,theonlyproofoffered
to support their claim was a general statement made in the letter dated 4 February 2002
30

ofBarangayCaptainCarlosGapero,certifyingthatArturoReyeswastheoccupantofthesubjectproperty
sincepeacetimeandatpresent.Thestatementisrendereddoubtfulbythefactthatasearlyas1997,
whenrespondentfiledherpetitionforissuanceoftitlebeforetheDAR,ArturoReyeshadalreadydied
andwasalreadyrepresentedbyhisheirs,petitionersherein.
Moreover, the certification given byBarangayCaptain Gapero that Arturo Reyes occupied the
premisesforanunspecifiedperiodoftime,i.e.,sincepeacetimeuntilthepresent,cannotprevailover
Legal Officer Pinlacs more particular findings in her Report/Recommendation. Legal Officer Pinlac
reportedthatpetitionersadmittedthatitwasonlyinthe1970sthattheybuilttheskeletalstructure
found on the subject property. She also referred to the averments made by Patricia Hipolito in an
Affidavit, dated26February1999,thatthestructurewasleftunfinishedbecauserespondentprevented
31

petitioners from occupying the subject property. Such findings disprove petitioners claims that their
predecessorininterest, Arturo Reyes, had been in open, exclusive, and continuous possession of the
propertysince1954.TheadvertedfindingsweretheresultofLegalOfficerPinlacsinvestigationinthe
course of her official duties, of matters within her expertise which were later affirmed by the DAR
Secretary, the Office of the President, and the Court of Appeals. The factual findings of such
administrativeofficer,ifsupportedbyevidence,areentitledtogreatrespect. 32

In contrast, respondents claim over the subject property is backed by sufficient evidence. Her
predecessorsininterest,thespousesLaquian,havebeenidentifiedastheoriginalallocateeswhohave
fullypaidforthesubjectproperty.The subjectpropertywasallocatedtorespondentintheextrajudicial
settlementbytheheirsofConstanciasestate.ThedocumententitledExtrajudicialSettlementofthe
EstateoftheDeceasedConstanciaSoccowasnotnotarizedand,asaprivatedocument,canonlybindthe
partiesthereto.However,itsauthenticitywasneverputintoquestion,norwasitslegalityimpugned.
Moreover,executedin1965bytheheirsofConstanciaSocco,ormorethan30yearsago,itisanancient
document which appears to be genuine on its face and therefore its authenticity must be
upheld. Respondenthascontinuouslypaidfortherealtytaxdueonthesubjectproperty,afactwhich,
33

thoughnotconclusive,servedtostrengthenherclaimovertheproperty. 34

Fromtheforegoing,itisonlyproperthatrespondentsclaimoverthesubjectpropertybeupheld.This
Courtmust,however,notethattheOrderoftheDARSecretary,dated9November2001,whichgranted
thepetitionersrighttopurchasetheproperty,isflawedandmaybeassailedintheproperproceedings.
RecordsshowthattheDARaffirmedthatrespondentspredecessorsininterest,MarceloLaquianand
ConstanciaSocco,havingbeenidentifiedastheoriginalallocatee,havefullypaidforthesubjectproperty
asprovidedunderanagreementtosell.Bythenatureofacontractoragreementtosell,thetitleoverthe
subjectpropertyistransferredtothevendeeuponthefullpaymentofthestipulatedconsideration.Upon
thefullpaymentofthepurchaseprice,andabsentanyshowingthattheallocateeviolatedtheconditions
of the agreement, ownership of the subject land should be conferred upon the allocatee. Since the
35

extrajudicialpartitiontransferringConstanciaSoccosinterestinthesubjectlandtotherespondentis
valid,thereisclearlynoneedfortherespondenttopurchasethesubjectproperty,despitetheapplication
for the purchase of the property erroneously filed by respondent. The only act which remains to be
performedistheissuanceofatitleinthenameofherlegalheirs,nowthatsheisdeceased.
Moreover, the Court notes that the records have not clearly established the right of respondents
representative,MyrnaSoccoArizo,overthesubjectproperty.Thus,itisnotcleartothisCourtwhythe
DAR issued on 8 July 2005 a CLOA over the subject property in favor of Myrna SoccoArizo.
36

RespondentsdeathdoesnotautomaticallytransmitherrightstothepropertytoMyrnaSoccoBeltran.
RespondentonlyauthorizedMyrnaSoccoArizo,throughaSpecialPowerofAttorney dated10March 37

1999,torepresentherinthepresentcaseandtoadministerthesubjectpropertyforherbenefit.Thereis
nothingintheSpecialPowerofAttorneytotheeffectthatMyrnaSoccoArizocantakeoverthesubject
propertyasownerthereofuponrespondentsdeath.ThatMiguelV.Socco,respondentsonlynephew,the
sonofthelateMiguelR.Socco,andMyrnaSoccoArizosbrother,executedawaiverofhisrighttoinherit
fromrespondent,doesnotautomaticallymeanthatthesubjectpropertywillgotoMyrnaSoccoArizo,
absentanyproofthatthereisnootherqualifiedheirtorespondentsestate.Thus,thisDecisiondoesnot
inanywayconfirmthe issuanceoftheCLOAinfavorofMyrnaSoccoArizo,whichmaybeassailedin
appropriateproceedings.
INVIEWOFTHEFOREGOING,theinstantPetitionisDENIED.TheassailedDecisionoftheCourt
of Appeals in CAG.R. SP No. 87066, promulgated on 31 January 2006, is AFFIRMED with
MODIFICATION.ThisCourtwithholdstheconfirmationofthevalidityoftitleoverthesubjectproperty
in the name of Myrna SoccoArizo pending determination of respondents legal heirs in appropriate
proceedings.Nocosts.
SOORDERED.
YnaresSantiago(Chairperson),AustriaMartinez,NachuraandReyes,JJ.,concur.

Petitiondenied,assaileddecisionaffirmedwithmodification.

Notes.Theburdenofprooftoovercomethepresumptionofstateownershipoflandsofthepublic
domainliesonthepersonapplyingforregistrationtheevidencetoovercomethepresumptionmustbe
wellnighincontrovertible.(Republicvs.Barandiaran,538SCRA705[2007])
The applicant for confirmation of imperfect title must prove that a) the land forms part of the
disposableandalienableagriculturallandsofthepublicdomain;andb)hehasbeeninopen,continuous,
exclusiveandnotoriouspossessionandoccupationofthelandunderabonafideclaimofownershipeither
sincetimeimmemorialorsinceJune12,1945.(Republicvs.Sarmiento,518SCRA250[2007])
o0o

G.R.No.159578.July28,2008.*
ROGELIADACLAGandADELINODACLAG(deceased)SubstitutedbyRODELM.DACLAG
and ADRIAN M. DACLAG, petitioners,vs.ELINO MACAHILIG, ADELA MACAHILIG
CONRADOMACAHILIG,LORENZAHABERandBENITADELROSARIO,respondents.

Succession;ExtrajudicialPartitions;Theresolutionofthepresentcaseconcernsonlytheissuesbetweenthe
partiesbeforetheCourtandwillnotinanywayaffecttherightsoftheotherheirswhohavenotparticipatedinthe
extrajudicial partition since an extrajudicial settlement is not binding upon persons who have not participated
thereinorhadnonoticethereof.Recordsdonotshowthattherehasbeenanycasefiledbytheotherheirswhohad
notparticipatedintheDeedofExtrajudicialPartitionandwerequestioningthevalidityofsuchpartition.Thus,the
resolutionofthepresentcaseconcernsonlytheissuesbetweenthepartiesbeforeusandwillnotinanywayaffect
therightsoftheotherheirswhohavenotparticipatedinthepartition.
Same;Same;Appeals;ItisasettledrulethatintheexerciseoftheSupremeCourtspowerofreview,theCourtis
notatrieroffactsanddoesnotnormallyundertakethereexaminationoftheevidencepresentedbythecontending
partiesduringthetrialofthecase,consideringthatthefindingsoffactsoftheCourtofAppealsareconclusiveand
bindingontheCourt;Exceptions.Thefirsttwoissuesraisedforresolutionarefactual.Itisasettledrulethatin
the exercise of the Supreme Courts power of review, the Court is not a trier of facts and does not normally
undertake the reexamination of the evidence presented by thecontending parties during the trial of the case,
consideringthatthefindingsoffactsoftheCAareconclusiveandbindingontheCourt.Whilejurisprudencehas
recognizedseveralexceptionsinwhichfactualissuesmayberesolvedbythisCourt,namely:(1)whenthefindings
aregroundedentirelyonspeculation,surmisesorconjectures;(2)whentheinferencemadeismanifestlymistaken,
absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehensionoffacts;(5)whenthefindingsoffactsareconflicting;(6)whenin
_______________

*THIRDDIVISION.

138makingitsfindingstheCAwentbeyondtheissuesofthecase,oritsfindingsarecontrarytotheadmissions
ofboththeappellantandtheappellee;(7)whenthefindingsarecontrarytothoseofthetrialcourt;(8)whenthe
findingsareconclusionswithoutcitationofspecificevidenceonwhichtheyarebased;(9)whenthefactssetforthin
thepetitionaswellasinthepetitionersmainandreplybriefsarenotdisputedbytherespondent;(10)whenthe
findingsoffactarepremisedonthesupposedabsenceofevidenceandcontradictedbytheevidenceonrecord;and
(11) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered,couldjustifyadifferentconclusion,noneoftheseexceptionshasbeenshowntoapplytothepresentcase
and,hence,thisCourtmaynotreviewthefindingsoffactmadebythelowercourts.
Sales;Ownership;Onecansellonlywhatoneownsorisauthorizedtosell,andthebuyercanacquirenomore
thanwhatthesellercantransferlegally.Inacontractofsale,itisessentialthattheselleristheownerofthe
propertyheisselling.UnderArticle1458oftheCivilCode,theprincipalobligationofaselleristotransferthe
ownershipofthepropertysold.Also,Article1459oftheCivilCodeprovidesthatthethingmustbelicitandthe
vendormusthavearighttotransfertheownershipthereofatthetimeitisdelivered.Maximasexecutionofthe
DeedofSalesellingParcelOne,partofwhichisrespondentsonehalfnorthernportion,wasnotvalidanddidnot
transferownershipofthelandtopetitioners,asMaximahadnotitleorinteresttotransfer.Itisanestablished
principlethatnoonecangivewhatonedoesnothavenemodatquodnonhabet.Accordingly,onecansellonly
whatoneownsorisauthorizedtosell,andthebuyercanacquirenomorethanwhatthesellercantransferlegally.
Same;Same;TaxDeclarations;Ataxdeclaration,byitself,isnotconsideredconclusiveevidenceofownership
itismerelyanindiciumofaclaimofownership.WhilethelandwasdeclaredinMaximasnamefortaxation
purposes,itdidnotestablishMaximasownershipofthesame.Wehaveheldthatataxdeclaration,byitself,isnot
consideredconclusiveevidenceofownership.Itismerelyanindiciumofaclaimofownership.Becauseitdoesnotby
itselfgivetitle,itisoflittlevalueinprovingonesownership.PetitionersrelianceonMaximastaxdeclarationin
assumingthatsheownedParcelOneisanerroneousassumptionthatshouldnotprejudicetherightsofthereal
owners.139
LandRegistration;Evidence;DeclarationsAgainstInterest;Adeclarationagainstinterestisthebestevidence
whichaffordsthegreatestcertaintyofthefactsindispute;Ourlandregistrationlawsdonotgivetheholderany
bettertitlethanwhatheactuallyhas.Thefactthatamortgagewasconstitutedonthelandwhilethesamewasin
MaximasnamewouldnotmakeMaximatheownerthereof.MaximasnonownershipofParcelOnewasclearly
established by the Deed of Extrajudicial Partitionand the Statementof Conformity, wherein she categorically
declared that the land was actually owned by her deceased parents, to which she separately affixed her
thumbmarks.Bothdocumentsshoweddeclarationsagainstherinterestintheland.Adeclarationagainstinterestis
thebestevidencewhichaffordsthegreatestcertaintyofthefactsindispute.Whilepetitionerswereabletosecurea
certificateoftitlecoveringParcelOneinpetitionerRogeliasname,theirpossessionofacertificateoftitlealonedoes
notnecessarilymakethemthetrueownersofthepropertydescribedtherein.Ourlandregistrationlawsdonotgive
theholderanybettertitlethanwhatheactuallyhas.
Actions;LandTitlesandDeeds;Reconveyance;Theessenceofanactionforreconveyanceisthatthefreepatent
andcertificateoftitlearerespectedasincontrovertiblewhatissoughtisthetransferoftheproperty,whichhasbeen
wrongfullyorerroneouslyregisteredinanotherpersonsname,toitsrightfulownerortoonewithabetterright. We
findthatreconveyanceofthesubjectlandtorespondentsisproper.Theessenceofanactionforreconveyanceisthat
the free patent and certificate of title are respected as incontrovertible. What is sought is the transfer of the
property,whichhasbeenwrongfullyorerroneouslyregisteredinanotherpersonsname,toitsrightfulownerorto
onewithabetterright.Respondentshavespecificallyprayedthatpetitionersbeorderedtorestoreandreconveyto
themthesubjectland.Inanactionforreconveyance,theissueinvolvedisoneofownership;andforthispurpose,
evidenceoftitlemaybeintroduced.RespondentshadsufficientlyestablishedthatParcelOne,coveredbyOCTNo.
P13873,ofwhichrespondentsnorthernonehalfportionformedapart,wasnotownedbyMaximaatthetimeshe
soldthelandtopetitioners.Wehaveearlierdiscussedtheevidencepresentedbyrespondentsestablishingthat
Maximahadnoclaimofownershipoverthelandsoldbyhertopetitioners. 140Same;Same;Same;Prescription;An
actionforreconveyanceprescribesin10years,thepointofreferencebeingthedateofregistrationofthedeedorthe
dateofissuanceofthecertificateoftitleovertheproperty.Anactionforreconveyanceprescribesin10years,the
pointofreferencebeingthedateofregistrationofthedeedorthedateofissuanceofthecertificateoftitleoverthe
property.RecordsshowthatwhilethelandwasregisteredinthenameofpetitionerRogeliain1984,theinstant
complaintforreconveyancewasfiledbytherespondentsin1991,andwasthusstillwithinthetenyearprescriptive
period.
Same;Same;Same;Sales;BuyersinGoodFaith;Thedefenseofhavingpurchasedthepropertyingoodfaith
maybeavailedofonlywhereregisteredlandisinvolvedandthebuyerhadreliedingoodfaithonthecleartitleofthe
registeredowner.Petitionersclaimthattheywereinnocentbuyersingoodfaithandforvalue;thattherewasno
evidenceshowingthattheywereinbadfaithwhentheypurchasedthesubjectland;thatArticle526oftheCivil
Codeprovidesthatheisdeemedapossessoringoodfaithwhoisnotawarethatthereexistsinhistitleormodeof
acquisitionanyflawwhichinvalidatesit;andthatgoodfaithisalwayspresumed,anduponhimwhoallegesbad
faithonthepartofapossessorreststheburdenofproof.Notably,petitionersboughtthepropertywhenitwasstill
anunregisteredland.Thedefenseofhavingpurchasedthepropertyingoodfaithmaybeavailedofonlywhere
registeredlandisinvolvedandthebuyerhadreliedingoodfaithonthecleartitleoftheregisteredowner.x xx
Petitionersclaimthatthesubjectlandisapublicland,andthatpetitionerswereissuedtitleoverthislandin1984;
thatrespondentsdidnotpresentanyevidencetoprovethatthesubjectlandwasalreadyaprivatelandpriorto
theiracquisitionandtheissuanceofafreepatenttitletothem;thatthepresumptionthatthesubjectlandwas
formerly part of the mass of alienable lands of public domain under the Regalian doctrine, and was regularly
grantedtopetitionersbywayoffreepatentandcertificateoftitle,remainsincontrovertibleinfavorofpetitioner.
ThisissuewasonlyraisedforthefirsttimeinpetitionersMemorandumfiledwithus.Wellsettledistherulethat
issuesnotraisedand/orventilatedinthetrialcourtcannotberaisedforthefirsttimeonappealandcannotbe
consideredforreviewtoconsiderquestionsbelatedlyraisedtramplesonthebasicprinciplesoffairplay,justice
anddueprocess.
141
PETITIONforreviewoncertiorariofthedecisionandresolutionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
RomeoP.Inocencioforpetitioners.
AdolfoM.Iliganforrespondents.
AUSTRIAMARTINEZ,J.:
BeforeusisaPetitionforReviewonCertiorariunderRule45oftheRulesofCourtseekingtoannul
andsetasidetheDecision datedOctober17,2001andtheResolution datedAugust7,2003oftheCourt
1 2

ofAppeals(CA)inCAG.R.CVNo.48498.
Theantecedentfacts:
Duringtheirlifetime,thespousesCandidoandGregoriaMacahiligweretheownersofsevenparcelsof
land, all located in Numancia, Aklan. They had seven children, namely: Dionesio, Emeliano, Mario,
Ignacio,Eusebio,TarcelaandMaxima.
OnMarch18,1982,Maxima,adaughterofCandidoandGregoriaenteredintoaDeedofExtrajudicial
Partition withtheheirsofherdeceasedbrothers,MarioandEusebioMacahilig,overthesevenparcelsof
3

land.ThesamedeedstatedthatDionesiowasalreadydeceasedbutwassurvivedbyhisdaughter,Susana
Briones;Emelianowasoutofthecountry;IgnacioandTarcelawerealsobothdeceasedbutweresurvived
bythreechildreneach.
_______________

1PennedbyJusticeRamonMabutas,Jr.withtheconcurrenceofJusticesRobertoA.Barrios(retired)andEdgardoP.Cruz; Rollo,
pp.3544.
2PennedbyJusticeRobertoA.BarriosandconcurredinbyJusticesEdgardoP.CruzandEliezerR.delosSantos,pp.4647.
3Records,ExhibitA;pp.113116.

142
OneofthepropertiespartitionedintheDeedwasaparcelofirrigatedricelandlocatedatPoblacion,
Numancia, Aklan, with an area of 1,896 square meters declared in the name of Maxima under Tax
Declaration No. 644 which was denominated as Parcel One. This Parcel One was divided between
VicentaMacahiligGalvezfortheheirsofMarioMacahilig,whowasgiventheonehalfsouthernportionof
theland;andAdelaMacahiligfortheheirsofEusebioMacahilig,whogottheonehalfnorthernportion.
TheDeedwasnotarizedbyMunicipalJudgeFranciscoM.Uretainhiscapacityasexofficionotarypublic.
TheheirsofEusebioMacahiligarethehereinrespondents.
On March 19, 1982, Maxima executed a Statement of Conformity in which she confirmed the
4

execution of the Deed of Extrajudicial Partition and conformed to the manner of partition and
adjudicationmadetherein.Shealsoattestedthatfiveparcelsoflandinthedeedweredeclaredinher
name for taxation purposes, although said lands were actually the property of her deceased parents
CandidoandGregoriaMacahilig;thatshewaived,renouncedandrelinquishedallherrightstotheland
adjudicatedtoallhercoheirsinthedeed;andthatshehadalreadysoldoneparcelbeforethedeedwas
executed,whichwasconsideredasheradvanceshare.PedroDivison,Maximashusband,alsoaffixedhis
signaturetotheStatementofConformity.
OnMay23,1984,MaximasoldParcelOnetospousesAdelinoandRogeliaDaclag(petitioners)as
evidencedbyaDeedofSale. 5

OnJuly17,1984,OCTNo.P13873 wasissuedinthenameofpetitionerRogeliaM.Daclagbyvirtue
6

ofherfreepatentapplication.

On December16, 1991, ElinoMacahilig, Adela Macahilig, Conrado Macahilig, Lorenza Haber and
BenitadelRosario(respondents)filedwiththeRegionalTrialCourt(RTC)ofKalibo,Aklanacomplaint
forrecoveryofpossessionandownership,cancellationofdocumentsanddamagesagainstMaximaand
petitioners,docketedasCivilCaseNo.4334.
Respondents alleged that they were the lawful owners and previous possessors of the one half
northernportionofParcelOnebyvirtueofaDeedofExtrajudicialPartition;thatsincetheywereall
residents of Caloocan City, their land was possessed by their first cousin, Penicula Divison Quijano,
Maximasdaughter,astenantthereon,asshewasalsoinpossessionoftheonehalfsouthernportionas
tenantoftheheirsofMarioMacahilig;thatsometimein1983,uponrequestofMaximaandoutofpityfor
herasshehadnoshareintheproduceoftheland,PeniculaallowedMaximatofarmtheland;that
withouttheirknowledge,MaximaillegallysoldonMay23,1984,theentirericelandtopetitioners,who
arenowinpossessionoftheland,deprivingrespondentsofitsannualproducevaluedatP4,800.00.
In their Answer with CrossClaim, petitioners contended that: petitioner Rogelia had been the
registeredowneroftheentirericelandsince1984asevidencedbyOCTNo.P13873;hertitlehadbecome
incontrovertibleafteroneyearfromitsissuance;theypurchasedthesubjectlandingoodfaithandfor
valuefromcodefendantMaximawhowasinactualphysicalpossessionofthepropertyandwhodelivered
andconveyedthesametothem;theywerenowinpossessionandusufructofthelandsincethenuptothe
present;respondentswerebarredbylachesfortheunreasonabledelayinfilingthecase.Theyalsofileda
crossclaimagainstMaximaforwhatevercharges,penaltiesanddamagesthatrespondentsmaydemand
from them; and they prayed that Maxima be ordered to pay them damages for the fraud and
misrepresentationcommittedagainstthem.144
 RespondentssubsequentlyfiledanAmendedComplaint,uponlearningthatpetitionerswereissued
OCTNo.13873byvirtueoftheirfreepatentapplication,andaskedforthereconveyenceoftheonehalf
northernportionofthelandcoveredbysuchtitle.
ThelandinquestionwasdelimitedintheCommissionersReportandsketchsubmittedbyBernardo
G.Sualogastheonehalfnorthernportion,whichhadanareaof1178sq.meters.TheReportandthe
sketchwereapprovedbytheRTConJune22,1991.
ForfailureofMaximatofileananswer,theRTCdeclaredherindefaultbothinthecomplaintand
crossclaimagainsther.
Aftertrial,theRTCrendereditsDecision datedNovember18,1994,thedispositiveportionofwhich
7

reads:
WHEREFORE, finding preponderance of evidence in favor of plaintiffs [respondents], judgment is hereby
renderedasfollows:
1.ThedeedofsaledatedMay23,1984,executedbyMaximaDivisoninfavorofAdelinoDaclagandRogelia
DaclagbeforeNotaryPublicEdgarR.PeraltaanddocketedinhisnotarialregisterasDoc.No.137,PageNo.30,
BookNo.VII,Seriesof1984isdeclaredNULLandVOID;
2.Theplaintiffsareherebydeclaredthetrueandlawfulownersandentitledtothepossessionofthenorthern
onehalf(1/2)portionofthelanddescribedunderparagraph2oftheamendedcomplaintanddesignatedasExhibit
F1inthecommissionerssketchwithanareaof1,178squaremeters;
3.ThedefendantsspousesAdelinoandRogeliaDaclag[petitioners]areherebyorderedanddirectedtovacate
thelanddescribedintheprecedingparagraphandrestoreanddeliverthepossessionthereoftotheplaintiffs;
4.The defendants are ordered to execute a deed of reconveyance in favor of the plaintiffs over the land
describedinparagraph2hereof;
_______________

7PerJudgeSheilaY.MartelinoCortes,Records,pp.161167.

145
5.The defendants are ordered, jointly and severally, to pay the plaintiffs ten (10) cavans of palay per
annumbeginningthesecondcroppingof1984untilthetimethepossessionofthelandinquestionisrestoredtothe
plaintiffs;and
6.The defendants are ordered, jointly and severally, to pay the plaintiffs reasonable attorneys fees in the
amountofP3,000.00pluscostofthesuit. 8

TheRTCfoundthatrespondentswereabletoestablishthatParcelOnewasdividedbetweentheheirs
ofMarioandtheheirsofEusebio,withtheformergettingtheonehalfsouthernportionandthelatterthe
one half northern portion embodied in a Deed of Extrajudicial partition, which bore Maximas
thumbmarks;thatnobodyquestionedtheDeedsvalidity,andnoevidencewaspresentedtoprovethat
the document was not validly and regularly executed; that Maxima also executed a duly notarized
StatementofConformitydatedMarch19,1982withtheconformityofherhusband,Pedro.TheRTC
concludedthatwhenMaximaexecutedtheDeedofSaleinfavorofpetitionersonMay23,1984,Maxima
hadnorighttosellthatlandasitdidnotbelongtoher;thatsheconveyednothingtopetitioners;andthat
thedeedofsaleshouldbedeclarednullandvoid.
Indisposingtheissueofwhetherpetitionerscouldbeconsideredinnocentpurchasersforvalue,the
RTCruledthatpetitionerscouldnotevenbeconsideredpurchasers,astheyneveracquiredownershipof
thelandsincethesaletothembyMaximawasvoid;andthatpetitionersactofreflectingonlythepriceof
P5,000.00intheDeedofSaletoavoidpayingtaxestotheBIRshouldbecondemnedfordefraudingthe
governmentandthusshouldnotbegivenprotectionfromthecourts.
TheRTCfurtherruledthatsincepetitionerswereabletoobtainafreepatentonthewholelandin
petitionerRogeliasname,reconveyancetorespondentsofthe1,178sq.meter
_______________

8Id.,atpp.166167.

146northernportionofthelandwasjustandproper;thattherespondentswereentitledtoashareinthe
harvestattwocroppingsperyearafterdeductingtheshareofthetenant;thatsinceMaximadiedin
October1993,whateverchargesandclaimspetitionersmayrecoverfromherexpiredwithher.
Aggrieved,petitionersfiledtheirappealwiththeCA.
OnOctober17,2001,theCAdismissedtheappealandaffirmedtheRTCdecision.
TheCAruledthat sinceMaximahad noright tosell thelandas she was nottherightful owner
thereof,nothingwasconveyedtopetitioners;thatapersonwhoacquiredpropertyfromonewhowasnot
theownerandhadnorighttodisposeofthesame,obtainedthepropertywithoutrightoftitle,andthe
realownermayrecoverthesamefromhim.
TheCAfoundthatsincerespondentswereunawareofthesale,itwasnotasurprisethattheydidnot
questionpetitionersapplicationforafreepatentonthesubjectland;thatthepossessionbyMaximaof
thesubjectlanddidnotvestownershipinher,asherpossessionwasnotintheconceptofanowner;and
thatpetitionerswerenotpurchasersingoodfaith.Italsofoundthattherighttoenjoyincludedtheright
toreceivetheproduceofthething;thatrespondentsastrueownersofthesubjectlandweredeprivedof
theirpropertywhenMaximaillegallysoldittopetitioners;andthus,equitydemandedthatrespondents
begivenwhatrightfullybelongedtothemundertheprinciplethatapersoncannotenrichhimselfatthe
expenseofanother.
Hence,hereinpetitiononthefollowinggrounds:
A.THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR WHEN IT DECLARED
THATHEREINPETITIONERSHADNOVALIDTITLEOVERTHELANDINQUESTION.
B.THEHONORABLECOURTOFAPPEALSGRAVELYERREDINHOLDINGTHATPETITIONERSARE
NOTPURCHASERSORBUYERSINGOODFAITH.147
C.THEHONORABLECOURTOFAPPEALSGRAVELYERREDWHENITAFFIRMEDTHEDECISIONOF
THE LOWER COURT IN ORDERING THE DEFENDANTSPETITIONERS JOINTLY AND SEVERALLY TO
PAYPERANNUMBEGINNINGTHESECONDCROPPINGOF1984UNTILTHETIMETHEPOSSESSIONOF
THELANDINQUESTIONISRESTOREDTOTHEPLAINTIFFS[respondents]. 9

The issues for resolution are (1) whether Maxima was the previous owner of Parcel One, which
includedrespondentsonehalfnorthernportion,nowcoveredbyOCTNo.P13873;2)whetherpetitioners
couldvalidlyinvokethedefenseofpurchasersingoodfaith;and(3)whetherreconveyanceistheproper
remedy.
Preliminarily,wewouldliketostatetheinescapablefactthattheExtrajudicialpartitionoftheestate
ofCandidoMacahiliginvolvingthesevenparcelsoflandwasmadeonlybetweenMaximaandtheheirsof
hertwodeceasedbrothersMarioandEusebio.
Section1ofRule74oftheRulesofCourtprovides:
Section1.Extrajudicialsettlementbyagreementbetweenheirs.Ifthedecedentleftnowillandnodebtsand
theheirsareallofage,ortheminorsarerepresentedbytheirjudicialorlegalrepresentativesdulyauthorizedfor
thepurpose,thepartiesmay,withoutsecuringlettersofadministration,dividetheestateamongthemselvesasthey
seefitbymeansofapublicinstrumentfiledintheofficeoftheregisterofdeeds,andshouldtheydisagree,theymay
dosoinanordinaryactionforpartition.xxx
The fact of the extrajudicial settlement or administration shall be published in a newspaper of general
circulationinthemannerprovidedinthenextsucceedingsection;butnoextrajudicialsettlementshallbebinding
uponanypersonwhohasnotparticipatedthereinorhadnonoticethereof.
_______________

9Rollo,pp.1718.

148Recordsdonotshowthattherehasbeenanycasefiledbytheotherheirswhohadnotparticipated
intheDeedofExtrajudicialPartitionandwerequestioningthevalidityofsuchpartition.Thus, the
resolutionofthepresentcaseconcernsonlytheissuesbetweenthepartiesbeforeusandwillnotinany
wayaffecttherightsoftheotherheirswhohavenotparticipatedinthepartition.
The first two issues raised for resolution are factual. It is a settled rule that in the exercise of the
SupremeCourtspowerofreview,theCourtisnotatrieroffactsanddoesnotnormallyundertakethere
examinationoftheevidencepresentedbythecontendingpartiesduringthetrialofthecase,considering
thatthefindingsoffactsoftheCAareconclusiveandbindingontheCourt. Whilejurisprudencehas 10

recognizedseveralexceptionsinwhichfactualissuesmayberesolvedbythisCourt,namely:(1)whenthe
findingsaregroundedentirelyonspeculation,surmisesorconjectures;(2)whentheinferencemadeis
manifestly mistaken, absurd orimpossible; (3) when thereis graveabuse of discretion; (4) when the
judgmentisbasedonamisapprehensionoffacts;(5)whenthefindingsoffactsareconflicting;(6)whenin
making its findings the CA went beyond the issues of the case, or its findings are contrary to the
admissionsofboththeappellantandtheappellee;(7)whenthefindingsarecontrarytothoseofthetrial
court;(8)whenthefindingsareconclusionswithoutcitationofspecificevidenceonwhichtheyarebased;
(9)whenthefactssetforthinthepetitionaswellasinthepetitionersmainandreplybriefsarenot
disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of
evidenceandcontradictedbytheevidenceonrecord;and(11)whentheCAmanifestlyoverlookedcertain
relevantfactsnotdisputedbytheparties,which,ifproperlyconsid
_______________

10HeirsofDicmanv.Cario,G.R.No.146459,June8,2006,490SCRA240,263.

149ered,couldjustifyadifferentconclusion, 11noneoftheseexceptionshasbeenshowntoapplytothe
presentcaseand,hence,thisCourtmaynotreviewthefindingsoffactmadebythelowercourts.
WefindnocogentreasontodepartfromthefindingsofboththetrialcourtandtheCAthatMaxima
wasnottheownerofthelandshesoldtopetitioners,andthattheonehalfnorthernportionofsuchland
wasownedbytherespondents;thatMaximahadnorighttodisposeofthelandand,thus,shehadno
righttoconveythesame.
Torepeat,recordsshowthatMaximaenteredintoaDeedofExtrajudicialPartitionwiththeheirsof
hertwodeceasedbrothers,namely:MarioandEusebio,oversevenparcelsoflandownedbyCandidoand
GregoriaMacahilig.Oneoftheselandswastheirrigatedricelandwithanareaof1,896sq.meterswhich,
pertheDeedofPartition,wasdividedbetweentheheirsofMarioandEusebio;andtheformergottheone
halfsouthernportion,whilethelattergottheonehalfnorthernportion.Maximaaffixedherthumbmark
totheDeed.ThisparcelofricelandwassoldbyMaximatopetitioners.However,Maxima,atthetimeof
theexecutionoftheDeedofSaleoverthisparceloflandinfavorofpetitioneronMay23,1984,hadno
righttosellthesameasshewasnottheownerthereof.
In fact, Maxima, with the conformity of her husband Pedro, had even executed a Statement of
Conformity,inwhichsheaffirmedtheexecutionoftheDeedofExtrajudicialPartitionandconformedto
themannerofthepartitionofsharestherein.Sheattestedtothefactthatthefiveparcelsoflandsubject
oftheDeedofExtrajudicialPartition,whichwere
_______________

11Id.,citingRiverav.Roman,G.R.No.142402,September20,2005,470SCRA276;TheInsularLifeAssuranceCompany,Ltd.v.Court
ofAppeals,G.R.No.126850,April28,2004,428SCRA79,86;Aguirrev.CourtofAppeals,G.R.No.122249,January29,2004,421SCRA
310,319;C&SFishfarmCorporationv.CourtofAppeals,442Phil.279;394SCRA82(2002).

150declared in her name under different tax declarations, were actually properties of her deceased
parents;andthatshewaivedallherrightsoverthelandsorportionsthereofadjudicatedtoallherco
heirs.
Neither Maxima nor any of her heirs ever questioned the validity of these two abovementioned
documents to which she affixed her thumbmarks. Notably, when the instant complaint was filed by
respondents against Maxima and petitioners in1991, in which respondents claimedas basis of their
ownership of the one half northern portion of the riceland was the Deed of Extrajudicial Partition,
Maxima,whilestilllivingatthattime,asshediedin1993,neverdeniedthesame.Asalreadystated,she
failedtofileananswerandwasdeclaredindefault.
Inacontractofsale,itisessentialthattheselleristheownerofthepropertyheisselling. Under 12

Article 1458oftheCivilCode,theprincipal obligationofaselleristotransfertheownershipofthe

propertysold. Also,Article1459oftheCivilCodeprovidesthatthethingmustbelicitandthevendor
13

musthavearighttotransfertheownershipthereofatthetimeitisdelivered.Maximasexecutionofthe
DeedofSalesellingParcelOne,partofwhichisrespondentsonehalfnorthernportion,wasnotvalidand
didnottransferownershipofthelandtopetitioners,asMaximahadnotitleorinteresttotransfer.Itis
an established principle that no one can give what one does not havenemo dat quod non habet.
Accordingly,onecansellonlywhatoneownsorisauthorized
_______________

12Noelv.CourtofAppeals,G.R.No.59550,January11,1995,240SCRA78,88.
13Art.1458.Bythecontractofsale,oneofthecontractingpartiesobligateshimselftotransfertheownershipofandtodelivera
determinatething,andtheothertopaythereforeapricecertaininmoneyoritsequivalent.

151tosell,andthebuyercanacquirenomorethanwhatthesellercantransferlegally. 14
Petitioners insist that Maxima owned the subject land as shown by her actual and continuous
possessionofthesame;thatitwasdeclaredinhernamefortaxationpurposes;thatthroughoutthetime
thatMaximaandherchildrenwereinpossessionoftheproperty,shenevergaveanyshareoftheproduce
torespondents;andthatMaximaevenmortgagedthelandtoabank.
Wearenotpersuaded.
MaximaspossessionofthesubjectlandwasbyreasonofherrequesttoherdaughterPenicula,who
wasinstalledbyrespondentsastenantaftertheexecutionoftheDeedofExtrajudicialPartition,as
Maximawantedtofarmthelandsothatshecouldhaveashareintheproduce,towhichPeniculaacceded
out of pity. It was also established that after the execution of the Deed of Extrajudicial Partition,
15

Peniculaastenantwasabletofarmthesubjectlandforonecroppingyearbeforesheallowedhermother
Maximatofarmthelandthereafter;and,atthattime,Peniculagavethecorrespondingshareofthe
produce of that one crop year to Adela, one of herein respondents, thus establishing respondents
16

ownershipofthesubjectland.Evidently,Maximaspossessionofthelandwasnotintheconceptofan
owner.
WhilethelandwasdeclaredinMaximasnamefortaxationpurposes,itdidnotestablishMaximas
ownership of the same. We have held that a tax declaration, by itself, is not considered conclusive
evidenceofownership. Itismerelyan
17

_______________
 14Navalv.CourtofAppeals,G.R.No.167412,February22,2006,483SCRA102,112citingConsolidatedRuralBank(Cagayan
Valley),Inc.v.CourtofAppeals,G.R.No.132161,January17,2005,448SCRA347,363.
15TSN,February24,1993,pp.45.
16TSN,March24,1993,p.7.
17Titongv.CourtofAppeals,G.R.No.111141,March6,1998,287SCRA102,115citingRiverav.CourtofAppeals,314Phil.57;

152indiciumofaclaimofownership. 18Becauseitdoesnotbyitselfgivetitle,itisoflittlevalueinproving
onesownership. PetitionersrelianceonMaximastaxdeclarationinassumingthatsheownedParcel
19

Oneisanerroneousassumptionthatshouldnotprejudicetherightsoftherealowners.
ThefactthatamortgagewasconstitutedonthelandwhilethesamewasinMaximasnamewouldnot
makeMaximatheownerthereof.MaximasnonownershipofParcelOnewasclearlyestablishedbythe
DeedofExtrajudicialPartitionandtheStatementofConformity,whereinshecategoricallydeclaredthat
thelandwasactuallyownedbyherdeceasedparents,towhichsheseparatelyaffixedherthumbmarks.
Bothdocumentsshoweddeclarationsagainstherinterestintheland.Adeclarationagainstinterestisthe
bestevidencewhichaffordsthegreatestcertaintyofthefactsindispute. 20

WhilepetitionerswereabletosecureacertificateoftitlecoveringParcelOneinpetitionerRogelias
name,theirpossessionofacertificateoftitlealonedoesnotnecessarilymakethemthetrueownersofthe
propertydescribedtherein.Ourlandregistrationlawsdonotgivetheholderanybettertitlethanwhathe
actuallyhas. 21

InNavalv.CourtofAppeals, weheld: 22

RegistrationofapieceoflandundertheTorrensSystemdoesnotcreateorvesttitle,becauseitisnotamodeof
acquiringowner
_______________

244SCRA218(1995);Republicv.IntermediateAppellateCourt,G.R.No.74380,July5,1993,224SCRA285,296;DeJesusv.CourtofAppeals,
G.R.No.57092,January21,1993,217SCRA307,317.

18Id.,citingDirectorofLandsv.IntermediateAppellateCourt,G.R.No.73246,March2,1993,219SCRA339,348.
19Id.;Sapuanv.CourtofAppeals,G.R.No.91869,October19,1992,214SCRA701.
20Nodav.CruzArnaldo,No.L57322,June22,1987,151SCRA227.
21HeirsofRomanaIngjugTirov.Casals,G.R.No.134718,August20,2001,363SCRA435,442.
22Supranote14,atp.113.

153ship. A certificate of title is merely an evidenceof ownership or title overthe particular property described
therein.Itcannotbeusedtoprotectausurperfromthetrueowner;norcanitbeusedasashieldforthecommission
offraud;neitherdoesitpermitonetoenrichhimselfattheexpenseofothers.Itsissuanceinfavorofaparticular
persondoesnotforeclosethepossibilitythattherealpropertymaybecoownedwithpersonsnotnamedinthe
certificate,orthatitmaybeheldintrustforanotherpersonbytheregisteredowner.
xxx notwithstanding theindefeasibility of the Torrenstitle, the registeredownermaystill becompelledto
reconveytheregisteredpropertytoitstrueowners.Therationalefortheruleisthatreconveyancedoesnotsetaside
orresubjecttoreviewthefindingsoffactoftheBureauofLands.Inanactionforreconveyance,thedecreeof
registrationisrespectedasincontrovertible.Whatissoughtinsteadisthetransferofthepropertyoritstitlewhich
hasbeenwrongfullyorerroneouslyregisteredinanotherpersonsname,toitsrightfulorlegalowner,ortotheone
withabetterright. 23

Wefindthatreconveyanceofthesubjectlandtorespondentsisproper.Theessenceofanactionfor
reconveyanceisthatthefreepatentandcertificateoftitlearerespectedasincontrovertible.Whatis
soughtisthetransferoftheproperty,whichhasbeenwrongfullyorerroneouslyregisteredinanother
personsname,toitsrightfulownerortoonewithabetterright. 24

Respondentshavespecificallyprayedthatpetitionersbeorderedtorestoreandreconveytothemthe
subjectland.Inanactionforreconveyance,theissueinvolvedisoneofownership;andforthispurpose,
evidenceoftitlemaybeintroduced.RespondentshadsufficientlyestablishedthatParcelOne,coveredby
OCT No. P13873, of which respondents northern onehalf portion formeda part, was not ownedby
Maximaatthetimeshesoldthelandtopetitioners.Wehaveearlierdiscussedtheevidencepresentedby
respondentsestablishing
_______________

23Id.
24Mendizabelv.Apao,G.R.No.143185,February26,2006,482SCRA587,608.

154thatMaximahadnoclaimofownershipoverthelandsoldbyhertopetitioners.
Anactionforreconveyanceprescribesin10years,thepointofreferencebeingthedateofregistration
ofthedeedorthedateofissuanceofthecertificateoftitleovertheproperty. Recordsshowthatwhile 25

thelandwasregisteredinthenameofpetitionerRogeliain1984,theinstantcomplaintforreconveyance
wasfiledbytherespondentsin1991,andwasthusstillwithinthetenyearprescriptiveperiod.
 Petitioners claim that they were innocent buyers in good faith and for value; that there was no
evidenceshowingthattheywereinbadfaithwhentheypurchasedthesubjectland;thatArticle526of
theCivilCodeprovidesthatheisdeemedapossessoringoodfaithwhoisnotawarethatthereexistsin
histitleormodeofacquisitionanyflawwhichinvalidatesit;andthatgoodfaithisalwayspresumed,and
uponhimwhoallegesbadfaithonthepartofapossessorreststheburdenofproof.
Notably,petitionersboughtthepropertywhenitwasstillanunregisteredland.Thedefenseofhaving
purchasedthepropertyingoodfaithmaybeavailedofonlywhereregisteredlandisinvolvedandthe
buyerhadreliedingoodfaithonthecleartitleoftheregisteredowner. 26

InOng v. Olasiman in which a claim of good faith was raised by petitioner who bought an
27

unregisteredland,weheld:
Finally,petitionersclaimofgoodfaithdoesnotlietooasitisirrelevant:
[T]heissueofgoodfaithorbadfaithofthebuyerisrelevantonlywherethesubjectofthesaleisregisteredlandand
thepur
_______________

25Leysonv.Bontuyan,G.R.No.156357,February18,2005,452SCRA94,113.
26Navalv.CourtofAppeals,supranote14,atp.111;Davidv.Bandin,No.L48322,April8,1987,149SCRA140,150.
27G.R.No.162045,March28,2006,485SCRA464.

155chaserisbuyingthesame from theregisteredowner whosetitleto theland iscleanx xxinsuchcasethe

purchaserwhoreliesonthecleantitleoftheregisteredownerisprotectedifheisapurchaseringoodfaithfor
value.Sincethepropertiesinquestionareunregisteredlands,petitionersassubsequentbuyersthereofdidsoat
theirperil.Theirclaimofhavingboughtthelandingoodfaith,i.e.,withoutnoticethatsomeotherpersonhasa
righttoorinterestintheproperty,wouldnotprotectthemifitturnsout,asitactuallydidinthiscase,thattheir
sellerdidnotownthepropertyatthetimeofthesale. 28

Petitionersclaimthatthesubjectlandisapublicland,andthatpetitionerswereissuedtitleoverthis
landin1984;thatrespondentsdidnotpresentanyevidencetoprovethatthesubjectlandwasalreadya
privatelandpriortotheiracquisitionandtheissuanceofafreepatenttitletothem;thatthepresumption
that the subject land was formerly part of the mass of alienable lands of public domain under the
Regaliandoctrine,andwasregularlygrantedtopetitionersbywayoffreepatentandcertificateoftitle,
remainsincontrovertibleinfavorofpetitioner.
ThisissuewasonlyraisedforthefirsttimeinpetitionersMemorandumfiledwithus.Wellsettledis
therulethatissuesnotraisedand/orventilatedinthetrialcourtcannotberaisedforthefirsttimeon
appealandcannotbeconsideredforreviewtoconsiderquestionsbelatedlyraisedtramplesonthebasic
principlesoffairplay,justiceanddueprocess. 29

_______________

28Ongv.Olasiman,supranote27,atp.472.
29Cruzv.Fernando,G.R.No.145470,December9,2005,477SCRA173,182;DepartmentofAgrarianReformv.Franco,G.R.No.
147479,September26,2005,471SCRA74,9293;Gualbertov.Go,G.R.No.139843,July21,2005,463SCRA671,678;Philippine
BankingCorporationv.CourtofAppeals,G.R.No.127469,January15,2004,419SCRA487,50304;DeRamav.CourtofAppeals,G.R.
No.131136,February28,2001,353SCRA94;Caltex(Phils.),Inc.v.CourtofAppeals,G.R.No.97753,August10,1992,212SCRA448,
461;BAFinanceCorporationv.CourtofAppeals,G.R.No.82040,27August1991,201SCRA157,164.

156Finally,wefindnoerrorcommittedbytheCAinaffirmingtheRTCsorderforpetitionerstopay
respondents their corresponding share in the produce of the subject land from the time they were
deprivedthereofuntilthepossessionisrestoredtothem.AsaptlystatedbytheCA,thus:
Itissaidthatoneoftheattributesofownershipistherighttoenjoyanddisposeofthethingowned.
Therighttoenjoyincludedtherighttoreceivetheproduceofthething.Theplaintiffsappellees,astrue
owners of the subject land were deprived of their property when Maxima Divison illegally sold it to
spousesDaclags.Assuch,equitydemandsthattheplaintiffappeelleesbegivenwhatrightfullybelonged
tothemunderthetimehonoredprinciplethatapersoncannotenrichhimselfattheexpenseofanother.
WHEREFORE, the petition for review is DENIED. The Decision dated October 17, 2001 and
ResolutiondatedAugust7,2003oftheCourtofAppealsareAFFIRMED.
Costsagainstpetitioners.
SOORDERED.
YnaresSantiago(Chairperson),ChicoNazario,NachuraandReyes,JJ.,concur.

Petitiondenied,judgmentandresolutionaffirmed.

Notes.WherethemainissuetoberesolvedistheauthenticityoftheDeedofExtrajudicialPartition
andSettlement,thesamepartakesofaquestionoffactratherthanoflaw.(Reyesvs.CourtofAppeals,
258SCRA651[1996])
 TheStatuteofFraudsunderArticle1403oftheNewCivilCodedoesnotapplytoanextrajudicial
partition among heirs for it is not legally deemed a conveyance of real property, considering that it
involvesnotatransferofpropertyfromonetotheotherbutrather,aconfirmationorratificationoftitle
orrightofpropertythatanheirinrenouncinginfavorofanotherheirwhoacceptsandreceivesthe
inheritance.(Castrovs.Miat,397SCRA271[2003])
o0o

G.R.No.135634.May31,2000. *

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA,

petitioners,vs.VICENTERODRIGUEZ,respondent.

Sales;Elements.Asthusdefined,theessentialelementsofsalearethefollowing:a)Consentormeetingofthe
minds,thatis,consenttotransferownershipinexchangefortheprice;b)Determinatesubjectmatter;and,c)Price
certaininmoneyoritsequivalent.

Same;Where thelotsoldis said to adjointhepreviously paid loton threesides thereofthe subjectlot is

capableofbeingdeterminedwithouttheneedofanynewcontract,andthefactthattheexactareaoftheadjoining
residential lots is subject to the result of a survey does not detract from the fact that they are determinate or
determinable.Petitionerscontentioniswithoutmerit.Thereisnodisputethatrespondentpurchasedaportionof
Lot1914B2consistingof345squaremeters.ThisportionislocatedinthemiddleofLot1914B2,whichhasa
totalareaof854squaremeters,andisclearlywhatwasreferredtointhereceiptasthepreviouslypaidlot.Since
thelotsubsequentlysoldtorespondentissaidtoadjointhepreviouslypaidlotonthreesidesthereof,thesubject
lot iscapableofbeing determinedwithout theneed ofany new contract. Thefactthattheexact area ofthese
adjoiningresidentiallotsissubjecttotheresultofasurveydoesnotdetractfromthefactthattheyaredeterminate
ordeterminate.
Same;AlthoughdenominatedaDeedofConditionalSale,asaleisstillabsolutewherethecontractisdevoid
ofanyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,e.g.,untilorunlessthepriceis
paid.There is a need, however, to clarify what the Court of Appeals said is a conditional contract of sale.
Apparently,theappellatecourtconsideredasaconditionthestipulationofthepartiesthatthefullconsideration,
basedonasurveyofthelot,wouldbedueandpayablewithinfive(5)yearsfromtheexecutionofaformaldeedof
sale.ItisevidentfromthestipulationsinthereceiptthatthevendorJuanSanAndressoldtheresidentiallotin
questiontorespondentandundertooktotransfertheownershipthereoftorespondentwithoutanyqualification,
reservationorcondition.InAngYuAsuncionv.CourtofAppeals,weheld:InDignosv.CourtofAppeals(158SCRA
375), we havesaid that, althoughdenominated a Deed of Conditional Sale, a sale is still absolute where the
contractisdevoidofanyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,e.g.,untilor
unlessthepriceispaid.Ownershipwillthenbetransferredtothebuyeruponactualorconstructivedelivery(e.g.,
bytheexecutionofapublicdocument)ofthepropertysold.Wheretheconditionisimposedupontheperfectionof
thecontractitself,thefailureoftheconditionwouldpreventsuchperfection.Iftheconditionisimposedonthe
obligationofapartywhichisnotfulfilled,theotherpartymayeitherwaivetheconditionorrefusetoproceedwith
thesale.(Art.1545,CivilCode).

Same;Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayablein
five(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyofthecontractof
sale.Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayableinfive
(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyofthecontractof
sale.Itmerelyprovidesthemannerbywhichthefullconsiderationistobecomputedandthetimewithinwhichthe
sameistobepaid.Butitdoesnotaffectinanymannertheeffectivityofthecontract.Consequently,thecontention
thattheabsenceofaformaldeedofsalestipulatedinthereceiptpreventsthehappeningofasalehasnomerit.

Consignation;Under Art. 1257 of this Civil Code, consignation is proper only in cases where an existing
obligationisdue.WithrespecttothecontentionthattheCourtofAppealserredinupholdingthevalidityofa
consignationofP7,035.00representingthebalanceofthepurchasepriceofthelot,nowhereinthedecisionofthe
appellatecourtisthereanymentionofconsignation.UnderArt.1257ofthisCivilCode,consignationisproperonly
incaseswhereanexistingobligationisdue.Inthiscase,however,thecontractingpartiesagreedthatfullpayment
ofpurchasepriceshallbedueandpayablewithinfive(5)yearsfromtheexecutionofaformaldeedofsale.Atthe
timerespondentdepositedtheamountofP7,035.00inthecourt,noformaldeedofsalehadyetbeenexecutedbythe
parties,and,therefore,thefiveyearperiodduringwhichthepurchasepriceshouldbepaidhadnotcommenced.In
short,thepurchasepricewasnotyetdueandpayable.

Contracts;Timeandagain,theSupremeCourthasstressedtherulethatacontractisthelawbetweenthe
parties,andcourtshavenochoicebuttoenforcesuchcontractsolongastheyarenotcontrarytolaw,morals,good
customsorpublicpolicy.TheclaimofpetitionersthatthepriceofP7,035.00isiniquitousisuntenable.Theamount
isbasedontheagreementofthepartiesasevidencedbythereceipt(Exh.2).Timeandagain,wehavestressedthe
rulethatacontractisthelawbetweentheparties,andcourtshavenochoicebuttoenforcesuchcontractsolongas
theyarenotcontrarytolaw,morals,goodcustomsorpublicpolicy.Otherwise,courtswouldbeinterferingwiththe
freedom of contract of the parties. Simply put, courts cannot stipulate for the parties nor amend the latters
agreement,fortodosowouldbetoaltertherealintentionsofthecontractingpartieswhenthecontraryfunctionof
courtsistogiveforceandeffecttotheintentionsoftheparties.

Same;Sales;PrescriptionandLaches;Art.1144oftheCivilCodehasnoapplicationwherethecontractofsale
hasbeenperfected,andthedeliveryofthesubjectlottorespondenthadeffectivelytransferredownershiptohim,and
thebuyerisnowonlyseekingtocomplywithhisobligationtopaythefullpurchaseprice,anactwhichwasnotdone
earlierbecausethedeedofsalewasyettobexecuted.Petitionersarguethatrespondentisbarredbyprescription
andlachesfromenforcingthecontract.Thiscontentionislikewiseuntenable.Thecontractofsaleinthiscaseis
perfected,andthedeliveryofthesubjectlottorespondenteffectivelytransferredownership tohim.Forthisreason,
respondentseekstocomplywithhisobligationtopaythefullpurchaseprice,butbecausethedeedofsaleisyetto
beexecuted,hedeemeditappropriatetodepositthebalanceofthepurchasepriceincourt.Accordingly,Art.1144of
the Civil Code has no application to the instant case. Considering that a survey of the lot has already been
conducted and approved by the Bureau of Lands, respondents heirs, assigns or successorsininterest should
reimbursetheexpensesincurredbyhereinpetitioners,pursuanttotheprovisionsofthecontract.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.
AntonioS.Triaforpetitioners.
SimandoandVillanuevaforprivaterespondent.

MENDOZA,J.:

ThisisapetitionforreviewoncertiorariofthedecisionoftheCourtofAppeals reversingthedecisionof 1

theRegionalTrialCourt,NagaCity,Branch19,inCivilCaseNo.871335,aswellastheappellatecourts
resolutiondenyingreconsideration.
Theantecedentfactsareasfollows:
JuanSanAndreswastheregisteredownerofLotNo.1914B2situatedinLiboton,NagaCity.On
September28,1964,hesoldaportionthereof,consistingof345squaremeters,torespondentVicenteS.
RodriguezforP2,415.00.ThesaleisevidencedbyaDeedofSale. 2

Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial
administrator of the decedents estate in Special Proceedings No. R21, RTC, Branch 19, Naga City.
RamonSanAndresengagedthe.servicesofageodeticengineer,JosePeero,toprepareaconsolidated
plan(Exh.A)oftheestate.EngineerPeeroalsopreparedasketchplanofthe345squaremeterlotsold
torespondent.Fromtheresultofthesurvey,itwasfoundthatrespondenthadenlargedtheareawhich
hepurchasedfromthelateJuanSanAndresby509squaremeters. 3

Accordingly,thejudicialadministratorsentaletter, datedJuly27,1987,torespondentdemanding
4

thatthelattervacatetheportionallegedlyencroachedbyhim.However,respondentrefusedtodoso,
claiminghehadpurchasedthesamefromthelateJuanSanAndres.Thereafter,onNovember24,1987,
thejudicialadministratorbroughtanaction,inbehalfoftheestateofJuanSanAndres,forrecoveryof
possessionofthe509squaremeterlot.
InhisReamendedAnswerfiledonFebruary6,1989,respondentallegedthatapartfromthe345
squaremeterlotwhichhadbeensoldtohimbyJuanSanAndresonSeptember28,1964,thelatter
likewisesoldtohimthefollowingdaytheremainingportionofthelotconsistingof509squaremeters,
with both parties treating the two lots as one whole parcel with a total area of 854 square meters.
Respondentallegedthatthefullpaymentofthe509squaremeterlotwouldbeeffectedwithinfive(5)
yearsfrom theexecutionof aformaldeedof saleafter asurveyis conductedover saidproperty.He
furtherallegedthatwiththeconsentoftheformerowner,JuanSanAndres,hetookpossessionofthe
sameandintroducedimprovementsthereonasearlyas1964.
Asproofofthesaletohimof509squaremeters,respondentattachedtohisanswerareceipt(Exh.
2) signedbythelateJuanSanAndres,whichreadsinfullasfollows:
5

ReceivedfromVicenteRodriguezthesumofFiveHundred(P500.00)Pesosrepresentinganadvancepaymentfora
residentiallotadjoininghispreviouslypaidlotonthreesidesexceptingonthefrontagewiththeagreedpriceof
Fifteen(15.00)Pesospersquaremeterandthepaymentofthefullconsiderationbasedonasurveyshallbedueand
payableinfive(5)yearsperiodfromtheexecutionoftheformaldeedofsale;anditisagreedthattheexpensesof
surveyanditsapprovalbytheBureauofLandsshallbebornebyMr.Rodriguez.
NagaCity,September29,1964.
(Sgd.)
JUANR.SANANDRES
Vendor
Noted:

(Sgd.)
VICENTERODRIGUEZ
Vendee

Respondent also attached to his answer a letter of judicial administrator Ramon San Andres (Exh.
3), askingpaymentofthebalanceofthepurchaseprice.Theletterreads:
6

DearInting,

PleaseaccommodatemyrequestforThreeHundred(P300.00)PesosasIaminneedoffundsasIintimatedtoyou
theotherday.
Wewilljustadjustitwithwhateverbalanceyouhavepayabletothesubdivision.
Thanks.
Sincerely,
(Sgd.)
RAMONSANANDRES

VicenteRodriguez
PenafranciaSubdivision,NagaCity

P.S.

YoucanletbearerEnriquedelCastillosignfortheamount.

ReceivedOneHundredOnly
(Sgd.)
RAMONSANANDRES
3/30/66

RespondentdepositedincourtthebalanceofthepurchasepriceamountingtoP7,035.00fortheaforesaid
509squaremeterlot.
While the proceedings were pending, judicial administrator Ramon San Andres died and was
substitutedbyhissonRicardoSanAndres.Ontheotherhand,respondentVicenteRodriguezdiedon
August15,1989andwassubstitutedbyhisheirs. 7

Petitioner,asplaintiff,presentedtwowitnesses.Thefirstwitness,Engr.JosePeero, testifiedthat 8

basedonhissurveyconductedsometimebetween1982and1985,respondenthadenlargedtheareawhich
he purchased from the late Juan San Andres by 509 square meters belonging to the latters estate.
AccordingtoPeero,thetitledproperty(Exh.A5)ofrespondentwasenclosedwithafencewithmetal
holes and barbed wire, while the expanded area was fenced withbarbed wireand bamboo and light
materials.
Thesecondwitness,RicardoSanAndres, administratoroftheestate,testifiedthatrespondenthadnot
9

filedanyclaimbeforeSpecialProceedingsNo.R21anddeniedknowledgeofExhibits2and3.However,
he recognized the signature in Exhibit 3 as similar to that of the former administrator, Ramon San
Andres. Finally, he declared that the expanded portion occupied by the family of respondent is now
enclosedwithbarbedwirefenceunlikebeforewhereitwasfoundwithoutfence.
Ontheotherhand,BibianaB.Rodriguez, widowofrespondentVicenteRodriguez,testifiedthatthey
10

hadpurchasedthesubjectlotfromJuanSanAndres,whowastheircompadre,onSeptember29,1964,at
P15.00persquaremeter.Accordingtoher,theygaveP500.00tothelateJuanSanAndreswholater
affixedhissignaturetoExhibit2.SheaddedthatonMarch30,1966,RamonSanAndreswrotethema
letter askingforP300.00aspartial payment for thesubjectlot, but theywereabletogivehim only
P100.00.SheaddedthattheyhadpaidthetotalpurchasepriceofP7,035.00onNovember21,1988by
depositingitincourt.BibianaB.Rodriquezstatedthattheyhadbeeninpossessionofthe509square
meterlotsince1964whenthelateJuanSanAndressignedthereceipt.(Exh.2)Lastly,shetestifiedthat
theydidnotknowatthattimetheexactareasoldtothembecausetheyweretoldthatthesamewouldbe
knownafterthesurveyofthesubjectlot.
OnSeptember20,1994,thetrialcourt renderedjudgmentinfavorofpetitioner.Itruledthatthere
11

wasnocontractofsaletospeakofforlackofavalidobjectbecausetherewasnosufficientindicationin
Exhibit2toidentifythepropertysubjectofthesale,hence,theneedtoexecuteanewcontract.
RespondentappealedtotheCourtofAppeals,whichonApril21,1998renderedadecisionreversing
thedecisionofthetrialcourt.Theappellatecourtheldthattheobjectofthecontractwasdeterminable,
andthattherewasaconditionalsalewiththebalanceofthepurchasepricepayablewithinfiveyears
fromtheexecutionofthedeedofsale.Thedispositiveportionofitsdecisionreads:
INVIEWOFALLTHEFOREGOING,thejudgmentappealedfromisherebyREVERSEDandSETASIDEanda
newoneenteredDISMISSINGthecomplaintandrenderingjudgmentagainsttheplaintiffappellee:

1. 1.to accept the P7,035.00 representing the balance of the purchase price of the portion and which is
depositedincourtunderOfficialReceiptNo.105754(page122,Records);

1. 2.toexecutetheformal deedof saleover the said509 square meter portionofLot 1914B2in favorof
appellantVicenteRodriguez;

2. 3.topaythedefendantappellanttheamountofP50,000.00asdamagesandP10,000.00attorneysfeesas
stipulatedbythemduringthetrialofthiscase;and

3. 4.topaythecostsofthesuit.

SOORDERED.

Hence,thispetition.Petitionerassignsthefollowingerrorsashavingbeenallegedlycommittedbythe
trialcourt:

1. I.THEHON.COURTOFAPPEALSERREDINHOLDINGTHATTHEDOCUMENT(EXHIBIT
2) IS A CONTRACT TO SELL DESPITE ITS LACKING ONE OF THE ESSENTIAL
ELEMENTS OF A CONTRACT, NAMELY, OBJECT CERTAIN AND SUFFICIENTLY
DESCRIBED.

2. II.THEHON.COURTOFAPPEALSERREDINHOLDINGTHATPETITIONERISOBLIGED
TO HONOR THE PURPORTED CONTRACT TO SELL DESPITE NONFULFILLMENT BY
RESPONDENTOFTHECONDITIONTHEREINOFPAYMENTOFTHEBALANCEOFTHE
PURCHASEPRICE.

3. III.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT CONSIGNATION WAS

VALID DESPITE NONCOMPLIANCE WITH THE MANDATORY REQUIREMENTS
THEREOF.

4. IV.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT LACHES AND

PRESCRIPTION DO NOT APPLY TO RESPONDENT WHO SOUGHT INDIRECTLY TO
ENFORCETHEPURPORTEDCONTRACTAFTERTHELAPSEOF24YEARS.

Thepetitionhasnomerit.
First.Art.1458oftheCivilCodeprovides:
Bythecontractofsaleoneofthecontractingpartiesobligateshimselftotransfertheownershipofandtodelivera
determinatething,andtheothertopaythereforapricecertaininmoneyoritsequivalent.
Acontractofsalemaybeabsoluteorconditional.
778
Asthusdefined,theessentialelementsofsalearethefollowing:

1. a)Consentormeetingoftheminds,thatis,consenttotransferownershipinexchangefortheprice;

2. b)Determinatesubjectmatter;and,

3. c)Pricecertaininmoneyoritsequivalent. 12

Asshowninthereceipt,datedSeptember29,1964,thelateJuanSanAndresreceivedP500.00from
respondentasadvancepaymentfortheresidentiallotadjoininghispreviouslypaidlotonthreesides
exceptingonthefrontage;theagreedpurchasepricewasP15.00persquaremeter;andthefullamountof
thepurchasepricewastobebasedontheresultsofasurveyandwouldbedueandpayableinfive(5)
yearsfromtheexecutionofadeedofsale.
Petitionercontends,however,thatthepropertysubjectofthesalewasnotdescribedwithsufficient
certaintysuchthatthereisanecessityofanotheragreementbetweenthepartiestofinallyascertainthe
identity,sizeandpurchasepriceofthepropertywhichistheobjectoftheallegedsale. Hearguesthat 13

thequantityoftheobjectisnotdeterminateasinfactasurveyisneededtodetermineitsexactsizeand
thefullpurchasepricetherefor. Insupportofhiscontention,petitionercitesthefollowingprovisionsof
14

theCivilCode:
Art. 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not
determinableshallnotbeanobstacletotheexistenceofacontract,provideditispossibletodeterminethesame
withouttheneedofanewcontractbetweentheparties.
Art.1460....Therequisitethatathingbedeterminateissatisfiedifatthetimethecontractisenteredinto,the
thingiscapableofbeingmadedeterminatewithoutthenecessityofanewandfurtheragreementbetweenthe
parties.
Petitionerscontentioniswithoutmerit.ThereisnodisputethatrespondentpurchasedaportionofLot
1914B2consistingof345squaremeters.ThisportionislocatedinthemiddleofLot1914B2,whichhas
atotalareaof854squaremeters,andisclearlywhatwasreferredtointhereceiptasthepreviously
paidlot.Sincethelotsubsequentlysoldtorespondentissaidtoadjointhepreviouslypaidlotonthree
sidesthereof,thesubjectlotiscapableofbeingdeterminedwithouttheneedofanynewcontract.Thefact
thattheexactareaoftheseadjoiningresidentiallotsissubjecttotheresultofasurveydoesnotdetract
fromthefactthattheyaredeterminateordeterminate.AstheCourtofAppealsexplained: 15

Concomitantly,theobjectofthesaleiscertainanddeterminate.UnderArticle1460oftheNewCivilCode,athing
soldisdeterminateifatthetimethecontractisenteredinto,thethingiscapableofbeingdeterminatewithout
necessityofaneworfurtheragreementbetweentheparties.Here,thisdefinitionfindsrealization.
AppelleesExhibitA(page4,Records)affirminglyshowsthattheoriginal345sq.m.portionearliersoldliesat
themiddleofLot1914B2surroundedbytheremainingportionofthesaidLot1914B2onthree(3)sides,inthe
east,inthewestandinthenorth.Thenorthernboundaryisa12meterroad.Conclusively,therefore,thisisthe
onlyremaining509sq.m.portionofLot1914B2surroundingthe345sq.m.lotinitiallypurchasedbyRodriguez.It
isquitedefined,determinateandcertain.Withal,thisisthesameportionadjunctivelyoccupiedandpossessedby
RodriguezsinceSeptember29,1964,unperturbedbyanyoneforovertwenty(20)yearsuntilappelleeinstitutedthis
suit.

Thus,alloftheessentialelementsofacontractofsalearepresent,i.e.,thattherewasameetingofthe
mindsbetweentheparties,byvirtueofwhichthelateJuanSanAndresundertooktotransferownership
ofandtodeliveradeterminatethingforapricecertaininmoney.AsArt.1475oftheCivilCodeprovides:
Thecontractofsaleisperfectedatthemomentthereisameetingofmindsuponthethingwhichistheobjectofthe
contractandupontheprice....

Thatthecontractofsaleisperfectedwasconfirmedbytheformeradministratoroftheestates,Ramon
SanAndres,whowrotealettertorespondentonMarch30,1966askingforP300.00aspartialpayment
forthesubjectlot.AstheCourtofAppealsobserved:
Withoutanydoubt,thereceiptprofoundlyspeaksofameetingofthemindbetweenSanAndresandRodriguezfor
thesaleofthepropertyadjoiningthe345squaremeterportionpreviouslysoldtoRodriguezonitsthree(3)sides
exceptingthefrontage.Thepriceiscertain,whichisP15.00persquaremeter.Evidently,thisisaperfectedcontract
ofsaleonadeferredpaymentofthepurchaseprice.Alltheprerequisiteelementsforavalidpurchasetransaction
arepresent.Saledoesnotrequireanyformaldocumentforitsexistenceandvalidity.Anddeliveryofpossessionof
landsoldisaconsummationofthesale(Galarvs.Husain,20SCRA186[1967]).Aprivatedeedofsaleisavalid
contractbetweentheparties(Carbonellv.CA,69SCRA99[1976]).
Inthesamevein,afterthelateJuanR.SanAndresreceivedtheP500.00downpaymentonMarch30,1966,
RamonR.SanAndreswrotealettertoRodriguezandreceivedfromRodrigueztheamountofP100.00(although
P300.00 was being requested) deductible from the purchase price of the subject portion. Enrique del Castillo,
Ramonsauthorizedagent,correspondinglysignedthereceiptfortheP100.00.Surely,thisisexplicitlyaveritable
proof of the sale over the remaining portion of Lot 1914B2 and a confirmation by Ramon San Andres of the
existencethereof. 16

Thereisaneed, however, toclarify what theCourtof Appeals saidisaconditional contract ofsale.

Apparently,theappellatecourtconsideredasaconditionthestipulationofthepartiesthatthefull
consideration,basedona surveyof thelot,wouldbedueandpayablewithinfive(5)yearsfromthe
executionofaformaldeedofsale.ItisevidentfromthestipulationsinthereceiptthatthevendorJuan
SanAndressoldtheresidentiallotinquestiontorespondentandundertooktotransfertheownership
thereoftorespondentwithoutanyqualification,reservationorcondition.InAngYuAsuncionv.Courtof
Appeals, weheld:
17

InDignosv.CourtofAppeals(158SCRA375),wehavesaidthat,althoughdenominatedaDeedofConditional
Sale, a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to
unilaterallyrescindisstipulated,e.g.,untilorunlessthepriceispaid.Ownershipwillthenbetransferredtothe
buyeruponactualorconstructivedelivery(e.g.,bytheexecutionofapublicdocument)ofthepropertysold.Where
theconditionisimposedupontheperfectionofthecontractitself,thefailureoftheconditionwouldpreventsuch
perfection.Iftheconditionisimposedontheobligationofapartywhichisnotfulfilled,theotherpartymayeither
waivetheconditionorrefusetoproceedwiththesale.(Art.1545,CivilCode)
Thus, in one case, when the sellers declared in a Receipt of Down Payment that they received an
amountaspurchasepriceforahouseandlotwithoutanyreservationoftitleuntilfullpaymentofthe
entire purchase price, the implication was that they sold their property. InPeoples Industrial and
18

CommercialCorporationv.CourtofAppeals, itwasstated: 19

Adeedofsaleisconsideredabsoluteinnaturewherethereisneitherastipulationinthedeedthattitletothe
property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to
unilaterallyresolvethecontractthemomentthebuyerfailstopaywithinafixedperiod.

Applyingtheseprinciplestothiscase,itcannotbegainsaidthatthecontractofsalebetweentheparties
is absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a
unilateralrescissionbyeitherparty.Infact,thesalewasconsummateduponthedeliveryofthelotto
respondent. Thus,Art.1477providesthattheownershipofthethingsoldshallbetransferredtothe
20

vendeeupontheactualorconstructivedeliverythereof.
Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayable
infive(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyof
thecontractofsale.Itmerelyprovidesthemannerbywhichthefullconsiderationistobecomputedand
thetimewithinwhichthesameistobepaid.Butitdoesnotaffectinanymannertheeffectivityofthe
contract.Consequently,thecontentionthattheabsenceofaformaldeedofsalestipulatedinthereceipt
preventsthehappeningofasalehasnomerit.
Second.WithrespecttothecontentionthattheCourtofAppealserredinupholdingthevalidityofa
consignation of P7,035.00 representing the balance of the purchase price of the lot, nowhere in the
decisionoftheappellatecourtisthereanymentionofconsignation.UnderArt.1257ofthisCivilCode,
consignation is proper only in cases where an existing obligation is due. In this case, however, the
contractingpartiesagreedthatfullpaymentofpurchasepriceshallbedueandpayablewithinfive(5)
years from the execution of a formal deed of sale. At the time respondent deposited the amount of
P7,035.00inthecourt,noformaldeedofsalehadyetbeenexecutedbytheparties,and,therefore,the
fiveyear period during which the purchase price should be paid had not commenced. In short, the
purchasepricewasnotyetdueandpayable.
Thisisnottosay,however,thatthedepositofthepurchasepriceinthecourtiserroneous.TheCourt
ofAppealscorrectlyorderedtheexecutionofadeedofsaleandpetitionerstoaccepttheamountdeposited
byrespondent.
Third.TheclaimofpetitionersthatthepriceofP7,035.00isiniquitousisuntenable.Theamountis
basedontheagreementofthepartiesasevidencedbythereceipt(Exh.2).Timeandagain,wehave
stressedtherulethatacontractisthelawbetweentheparties,andcourtshavenochoicebuttoenforce
suchcontractsolongastheyarenotcontrarytolaw,morals,goodcustomsorpublicpolicy.Otherwise,
courts would be interfering with the freedom of contract of the parties. Simply put, courts cannot
stipulate for the parties nor amend the latters agreement, for to do so would be to alter the real
intentionsofthecontractingpartieswhenthecontraryfunctionofcourtsistogiveforceandeffecttothe
intentionsoftheparties.
Fourth.Finally,petitionersarguethatrespondentisbarredbyprescriptionandlachesfromenforcing
thecontract.Thiscontentionislikewiseuntenable.Thecontractofsaleinthiscaseisperfected,andthe
delivery of the subject lot to respondent effectively transferred ownership to him. For this reason,
respondentseekstocomplywithhisobligationtopaythefullpurchaseprice,butbecausethedeedofsale
isyettobeexecuted,hedeemeditappropriatetodepositthebalanceofthepurchasepriceincourt.
Accordingly,Art.1144oftheCivilCodehasnoapplicationtotheinstantcase. Consideringthatasurvey 21

ofthelothasalreadybeenconductedandapprovedbytheBureauofLands,respondentsheirs,assignsor
successorsininterest should reimburse the expenses incurred by herein petitioners, pursuant to the
provisionsofthecontract.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that
respondentisORDEREDtoreimbursepetitionersfortheexpensesofthesurvey.
SOORDERED.
Bellosillo(Chairman)andBuena,JJ.,concur.
QuisumbingandDeLeon,Jr.,JJ.,Onleave.

Judgmentaffirmedwithmodification.
Notes.Consignationordepositofrentalsshouldbemadewiththecourtand/or,underBPBlg.25,in
thebankandnotelsewhere.(Medinavs.CourtofAppeals,225SCRA607[1993])
To avail of the right of redemption, what is essential is to make an offer to redeem within the
prescribed period, either through a formal tender withconsignationor by filing a complaint incourt
coupled with consignation of the redemption price within the prescribed period. (Lee Chuy Realty
Corporationvs.CourtofAppeals,250SCRA596[1995])

G.R.No.135634.May31,2000. *

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA,

petitioners,vs.VICENTERODRIGUEZ,respondent.

Sales;Elements.Asthusdefined,theessentialelementsofsalearethefollowing:a)Consentormeetingofthe
minds,thatis,consenttotransferownershipinexchangefortheprice;b)Determinatesubjectmatter;and,c)Price
certaininmoneyoritsequivalent.

Same;Where thelotsoldis said to adjointhepreviously paid loton threesides thereofthe subjectlot is

capableofbeingdeterminedwithouttheneedofanynewcontract,andthefactthattheexactareaoftheadjoining
residential lots is subject to the result of a survey does not detract from the fact that they are determinate or
determinable.Petitionerscontentioniswithoutmerit.Thereisnodisputethatrespondentpurchasedaportionof
Lot1914B2consistingof345squaremeters.ThisportionislocatedinthemiddleofLot1914B2,whichhasa
totalareaof854squaremeters,andisclearlywhatwasreferredtointhereceiptasthepreviouslypaidlot.Since
thelotsubsequentlysoldtorespondentissaidtoadjointhepreviouslypaidlotonthreesidesthereof,thesubject
lot iscapableofbeing determinedwithout theneed ofany new contract. Thefactthattheexact area ofthese
adjoiningresidentiallotsissubjecttotheresultofasurveydoesnotdetractfromthefactthattheyaredeterminate
ordeterminate.
Same;AlthoughdenominatedaDeedofConditionalSale,asaleisstillabsolutewherethecontractisdevoid
ofanyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,e.g.,untilorunlessthepriceis
paid.There is a need, however, to clarify what the Court of Appeals said is a conditional contract of sale.
Apparently,theappellatecourtconsideredasaconditionthestipulationofthepartiesthatthefullconsideration,
basedonasurveyofthelot,wouldbedueandpayablewithinfive(5)yearsfromtheexecutionofaformaldeedof
sale.ItisevidentfromthestipulationsinthereceiptthatthevendorJuanSanAndressoldtheresidentiallotin
questiontorespondentandundertooktotransfertheownershipthereoftorespondentwithoutanyqualification,
reservationorcondition.InAngYuAsuncionv.CourtofAppeals,weheld:InDignosv.CourtofAppeals(158SCRA
375), we havesaid that, althoughdenominated a Deed of Conditional Sale, a sale is still absolute where the
contractisdevoidofanyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,e.g.,untilor
unlessthepriceispaid.Ownershipwillthenbetransferredtothebuyeruponactualorconstructivedelivery(e.g.,
bytheexecutionofapublicdocument)ofthepropertysold.Wheretheconditionisimposedupontheperfectionof
thecontractitself,thefailureoftheconditionwouldpreventsuchperfection.Iftheconditionisimposedonthe
obligationofapartywhichisnotfulfilled,theotherpartymayeitherwaivetheconditionorrefusetoproceedwith
thesale.(Art.1545,CivilCode).

Same;Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayablein
five(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyofthecontractof
sale.Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayableinfive
(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyofthecontractof
sale.Itmerelyprovidesthemannerbywhichthefullconsiderationistobecomputedandthetimewithinwhichthe
sameistobepaid.Butitdoesnotaffectinanymannertheeffectivityofthecontract.Consequently,thecontention
thattheabsenceofaformaldeedofsalestipulatedinthereceiptpreventsthehappeningofasalehasnomerit.

Consignation;Under Art. 1257 of this Civil Code, consignation is proper only in cases where an existing
obligationisdue.WithrespecttothecontentionthattheCourtofAppealserredinupholdingthevalidityofa
consignationofP7,035.00representingthebalanceofthepurchasepriceofthelot,nowhereinthedecisionofthe
appellatecourtisthereanymentionofconsignation.UnderArt.1257ofthisCivilCode,consignationisproperonly
incaseswhereanexistingobligationisdue.Inthiscase,however,thecontractingpartiesagreedthatfullpayment
ofpurchasepriceshallbedueandpayablewithinfive(5)yearsfromtheexecutionofaformaldeedofsale.Atthe
timerespondentdepositedtheamountofP7,035.00inthecourt,noformaldeedofsalehadyetbeenexecutedbythe
parties,and,therefore,thefiveyearperiodduringwhichthepurchasepriceshouldbepaidhadnotcommenced.In
short,thepurchasepricewasnotyetdueandpayable.

Contracts;Timeandagain,theSupremeCourthasstressedtherulethatacontractisthelawbetweenthe
parties,andcourtshavenochoicebuttoenforcesuchcontractsolongastheyarenotcontrarytolaw,morals,good
customsorpublicpolicy.TheclaimofpetitionersthatthepriceofP7,035.00isiniquitousisuntenable.Theamount
isbasedontheagreementofthepartiesasevidencedbythereceipt(Exh.2).Timeandagain,wehavestressedthe
rulethatacontractisthelawbetweentheparties,andcourtshavenochoicebuttoenforcesuchcontractsolongas
theyarenotcontrarytolaw,morals,goodcustomsorpublicpolicy.Otherwise,courtswouldbeinterferingwiththe
freedom of contract of the parties. Simply put, courts cannot stipulate for the parties nor amend the latters
agreement,fortodosowouldbetoaltertherealintentionsofthecontractingpartieswhenthecontraryfunctionof
courtsistogiveforceandeffecttotheintentionsoftheparties.
 Same;Sales;PrescriptionandLaches;Art.1144oftheCivilCodehasnoapplicationwherethecontractofsale
hasbeenperfected,andthedeliveryofthesubjectlottorespondenthadeffectivelytransferredownershiptohim,and
thebuyerisnowonlyseekingtocomplywithhisobligationtopaythefullpurchaseprice,anactwhichwasnotdone
earlierbecausethedeedofsalewasyettobexecuted.Petitionersarguethatrespondentisbarredbyprescription
andlachesfromenforcingthecontract.Thiscontentionislikewiseuntenable.Thecontractofsaleinthiscaseis
perfected,andthedeliveryofthesubjectlottorespondenteffectivelytransferredownershiptohim.Forthisreason,
respondentseekstocomplywithhisobligationtopaythefullpurchaseprice,butbecausethedeedofsaleisyetto
beexecuted,hedeemeditappropriatetodepositthebalanceofthepurchasepriceincourt.Accordingly,Art.1144of
the Civil Code has no application to the instant case. Considering that a survey of the lot has already been
conducted and approved by the Bureau of Lands, respondents heirs, assigns or successorsininterest should
reimbursetheexpensesincurredbyhereinpetitioners,pursuanttotheprovisionsofthecontract.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.
AntonioS.Triaforpetitioners.
SimandoandVillanuevaforprivaterespondent.

MENDOZA,J.:

ThisisapetitionforreviewoncertiorariofthedecisionoftheCourtofAppeals reversingthedecisionof 1

theRegionalTrialCourt,NagaCity,Branch19,inCivilCaseNo.871335,aswellastheappellatecourts
resolutiondenyingreconsideration.
Theantecedentfactsareasfollows:
JuanSanAndreswastheregisteredownerofLotNo.1914B2situatedinLiboton,NagaCity.On
September28,1964,hesoldaportionthereof,consistingof345squaremeters,torespondentVicenteS.
RodriguezforP2,415.00.ThesaleisevidencedbyaDeedofSale. 2

Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial
administrator of the decedents estate in Special Proceedings No. R21, RTC, Branch 19, Naga City.
RamonSanAndresengagedthe.servicesofageodeticengineer,JosePeero,toprepareaconsolidated
plan(Exh.A)oftheestate.EngineerPeeroalsopreparedasketchplanofthe345squaremeterlotsold
torespondent.Fromtheresultofthesurvey,itwasfoundthatrespondenthadenlargedtheareawhich
hepurchasedfromthelateJuanSanAndresby509squaremeters. 3

Accordingly,thejudicialadministratorsentaletter, datedJuly27,1987,torespondentdemanding
4

thatthelattervacatetheportionallegedlyencroachedbyhim.However,respondentrefusedtodoso,
claiminghehadpurchasedthesamefromthelateJuanSanAndres.Thereafter,onNovember24,1987,
thejudicialadministratorbroughtanaction,inbehalfoftheestateofJuanSanAndres,forrecoveryof
possessionofthe509squaremeterlot.
InhisReamendedAnswerfiledonFebruary6,1989,respondentallegedthatapartfromthe345
squaremeterlotwhichhadbeensoldtohimbyJuanSanAndresonSeptember28,1964,thelatter
likewisesoldtohimthefollowingdaytheremainingportionofthelotconsistingof509squaremeters,
with both parties treating the two lots as one whole parcel with a total area of 854 square meters.
Respondentallegedthatthefullpaymentofthe509squaremeterlotwouldbeeffectedwithinfive(5)
yearsfrom theexecutionof aformaldeedof saleafter asurveyis conductedover saidproperty.He
furtherallegedthatwiththeconsentoftheformerowner,JuanSanAndres,hetookpossessionofthe
sameandintroducedimprovementsthereonasearlyas1964.
Asproofofthesaletohimof509squaremeters,respondentattachedtohisanswerareceipt(Exh.
2) signedbythelateJuanSanAndres,whichreadsinfullasfollows:
5

ReceivedfromVicenteRodriguezthesumofFiveHundred(P500.00)Pesosrepresentinganadvancepaymentfora
residentiallotadjoininghispreviouslypaidlotonthreesidesexceptingonthefrontagewiththeagreedpriceof
Fifteen(15.00)Pesospersquaremeterandthepaymentofthefullconsiderationbasedonasurveyshallbedueand
payableinfive(5)yearsperiodfromtheexecutionoftheformaldeedofsale;anditisagreedthattheexpensesof
surveyanditsapprovalbytheBureauofLandsshallbebornebyMr.Rodriguez.
NagaCity,September29,1964.
(Sgd.)
JUANR.SANANDRES
Vendor

Noted:
(Sgd.)
VICENTERODRIGUEZ
Vendee

Respondent also attached to his answer a letter of judicial administrator Ramon San Andres (Exh.
3), askingpaymentofthebalanceofthepurchaseprice.Theletterreads:
6

DearInting,

PleaseaccommodatemyrequestforThreeHundred(P300.00)PesosasIaminneedoffundsasIintimatedtoyou
theotherday.
Wewilljustadjustitwithwhateverbalanceyouhavepayabletothesubdivision.
Thanks.
Sincerely,
(Sgd.)
RAMONSANANDRES

VicenteRodriguez
PenafranciaSubdivision,NagaCity

P.S.

YoucanletbearerEnriquedelCastillosignfortheamount.

ReceivedOneHundredOnly
(Sgd.)
RAMONSANANDRES
3/30/66

RespondentdepositedincourtthebalanceofthepurchasepriceamountingtoP7,035.00fortheaforesaid
509squaremeterlot.
While the proceedings were pending, judicial administrator Ramon San Andres died and was
substitutedbyhissonRicardoSanAndres.Ontheotherhand,respondentVicenteRodriguezdiedon
August15,1989andwassubstitutedbyhisheirs. 7

Petitioner,asplaintiff,presentedtwowitnesses.Thefirstwitness,Engr.JosePeero, testifiedthat 8

basedonhissurveyconductedsometimebetween1982and1985,respondenthadenlargedtheareawhich
he purchased from the late Juan San Andres by 509 square meters belonging to the latters estate.
AccordingtoPeero,thetitledproperty(Exh.A5)ofrespondentwasenclosedwithafencewithmetal
holes and barbed wire, while the expanded area was fenced withbarbed wireand bamboo and light
materials.
Thesecondwitness,RicardoSanAndres, administratoroftheestate,testifiedthatrespondenthadnot
9

filedanyclaimbeforeSpecialProceedingsNo.R21anddeniedknowledgeofExhibits2and3.However,
he recognized the signature in Exhibit 3 as similar to that of the former administrator, Ramon San
Andres. Finally, he declared that the expanded portion occupied by the family of respondent is now
enclosedwithbarbedwirefenceunlikebeforewhereitwasfoundwithoutfence.
Ontheotherhand,BibianaB.Rodriguez, widowofrespondentVicenteRodriguez,testifiedthatthey
10

hadpurchasedthesubjectlotfromJuanSanAndres,whowastheircompadre,onSeptember29,1964,at
P15.00persquaremeter.Accordingtoher,theygaveP500.00tothelateJuanSanAndreswholater
affixedhissignaturetoExhibit2.SheaddedthatonMarch30,1966,RamonSanAndreswrotethema
letter askingforP300.00aspartial payment for thesubjectlot, but theywereabletogivehim only
P100.00.SheaddedthattheyhadpaidthetotalpurchasepriceofP7,035.00onNovember21,1988by
depositingitincourt.BibianaB.Rodriquezstatedthattheyhadbeeninpossessionofthe509square
meterlotsince1964whenthelateJuanSanAndressignedthereceipt.(Exh.2)Lastly,shetestifiedthat
theydidnotknowatthattimetheexactareasoldtothembecausetheyweretoldthatthesamewouldbe
knownafterthesurveyofthesubjectlot.
OnSeptember20,1994,thetrialcourt renderedjudgmentinfavorofpetitioner.Itruledthatthere
11

wasnocontractofsaletospeakofforlackofavalidobjectbecausetherewasnosufficientindicationin
Exhibit2toidentifythepropertysubjectofthesale,hence,theneedtoexecuteanewcontract.
RespondentappealedtotheCourtofAppeals,whichonApril21,1998renderedadecisionreversing
thedecisionofthetrialcourt.Theappellatecourtheldthattheobjectofthecontractwasdeterminable,
andthattherewasaconditionalsalewiththebalanceofthepurchasepricepayablewithinfiveyears
fromtheexecutionofthedeedofsale.Thedispositiveportionofitsdecisionreads:
INVIEWOFALLTHEFOREGOING,thejudgmentappealedfromisherebyREVERSEDandSETASIDEanda
newoneenteredDISMISSINGthecomplaintandrenderingjudgmentagainsttheplaintiffappellee:
 2. 1.to accept the P7,035.00 representing the balance of the purchase price of the portion and which is
depositedincourtunderOfficialReceiptNo.105754(page122,Records);

4. 2.toexecutetheformal deedof saleover the said509 square meter portionofLot 1914B2in favorof
appellantVicenteRodriguez;

5. 3.topaythedefendantappellanttheamountofP50,000.00asdamagesandP10,000.00attorneysfeesas
stipulatedbythemduringthetrialofthiscase;and

6. 4.topaythecostsofthesuit.

SOORDERED.

Hence,thispetition.Petitionerassignsthefollowingerrorsashavingbeenallegedlycommittedbythe
trialcourt:

5. I.THEHON.COURTOFAPPEALSERREDINHOLDINGTHATTHEDOCUMENT(EXHIBIT
2) IS A CONTRACT TO SELL DESPITE ITS LACKING ONE OF THE ESSENTIAL
ELEMENTS OF A CONTRACT, NAMELY, OBJECT CERTAIN AND SUFFICIENTLY
DESCRIBED.

6. II.THEHON.COURTOFAPPEALSERREDINHOLDINGTHATPETITIONERISOBLIGED
TO HONOR THE PURPORTED CONTRACT TO SELL DESPITE NONFULFILLMENT BY
RESPONDENTOFTHECONDITIONTHEREINOFPAYMENTOFTHEBALANCEOFTHE
PURCHASEPRICE.

7. III.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT CONSIGNATION WAS

VALID DESPITE NONCOMPLIANCE WITH THE MANDATORY REQUIREMENTS
THEREOF.

8. IV.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT LACHES AND

PRESCRIPTION DO NOT APPLY TO RESPONDENT WHO SOUGHT INDIRECTLY TO
ENFORCETHEPURPORTEDCONTRACTAFTERTHELAPSEOF24YEARS.

Thepetitionhasnomerit.
First.Art.1458oftheCivilCodeprovides:
Bythecontractofsaleoneofthecontractingpartiesobligateshimselftotransfertheownershipofandtodelivera
determinatething,andtheothertopaythereforapricecertaininmoneyoritsequivalent.
Acontractofsalemaybeabsoluteorconditional.

Asthusdefined,theessentialelementsofsalearethefollowing:

4. a)Consentormeetingoftheminds,thatis,consenttotransferownershipinexchangefortheprice;

5. b)Determinatesubjectmatter;and,

6. c)Pricecertaininmoneyoritsequivalent. 12

Asshowninthereceipt,datedSeptember29,1964,thelateJuanSanAndresreceivedP500.00from
respondentasadvancepaymentfortheresidentiallotadjoininghispreviouslypaidlotonthreesides
exceptingonthefrontage;theagreedpurchasepricewasP15.00persquaremeter;andthefullamountof
thepurchasepricewastobebasedontheresultsofasurveyandwouldbedueandpayableinfive(5)
yearsfromtheexecutionofadeedofsale.
Petitionercontends,however,thatthepropertysubjectofthesalewasnotdescribedwithsufficient
certaintysuchthatthereisanecessityofanotheragreementbetweenthepartiestofinallyascertainthe
identity,sizeandpurchasepriceofthepropertywhichistheobjectoftheallegedsale. Hearguesthat 13

thequantityoftheobjectisnotdeterminateasinfactasurveyisneededtodetermineitsexactsizeand
thefullpurchasepricetherefor. Insupportofhiscontention,petitionercitesthefollowingprovisionsof
14

theCivilCode:
Art. 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not
determinableshallnotbeanobstacletotheexistenceofacontract,provideditispossibletodeterminethesame
withouttheneedofanewcontractbetweentheparties.
 Art.1460....Therequisitethatathingbedeterminateissatisfiedifatthetimethecontractisenteredinto,the
thingiscapableofbeingmadedeterminatewithoutthenecessityofanewandfurtheragreementbetweenthe
parties.
Petitionerscontentioniswithoutmerit.ThereisnodisputethatrespondentpurchasedaportionofLot
1914B2consistingof345squaremeters.ThisportionislocatedinthemiddleofLot1914B2,whichhas
atotalareaof854squaremeters,andisclearlywhatwasreferredtointhereceiptasthepreviously
paidlot.Sincethelotsubsequentlysoldtorespondentissaidtoadjointhepreviouslypaidlotonthree
sidesthereof,thesubjectlotiscapableofbeingdeterminedwithouttheneedofanynewcontract.Thefact
thattheexactareaoftheseadjoiningresidentiallotsissubjecttotheresultofasurveydoesnotdetract
fromthefactthattheyaredeterminateordeterminate.AstheCourtofAppealsexplained: 15

Concomitantly,theobjectofthesaleiscertainanddeterminate.UnderArticle1460oftheNewCivilCode,athing
soldisdeterminateifatthetimethecontractisenteredinto,thethingiscapableofbeingdeterminatewithout
necessityofaneworfurtheragreementbetweentheparties.Here,thisdefinitionfindsrealization.
AppelleesExhibitA(page4,Records)affirminglyshowsthattheoriginal345sq.m.portionearliersoldliesat
themiddleofLot1914B2surroundedbytheremainingportionofthesaidLot1914B2onthree(3)sides,inthe
east,inthewestandinthenorth.Thenorthernboundaryisa12meterroad.Conclusively,therefore,thisisthe
onlyremaining509sq.m.portionofLot1914B2surroundingthe345sq.m.lotinitiallypurchasedbyRodriguez.It
isquitedefined,determinateandcertain.Withal,thisisthesameportionadjunctivelyoccupiedandpossessedby
RodriguezsinceSeptember29,1964,unperturbedbyanyoneforovertwenty(20)yearsuntilappelleeinstitutedthis
suit.

Thus,alloftheessentialelementsofacontractofsalearepresent,i.e.,thattherewasameetingofthe
mindsbetweentheparties,byvirtueofwhichthelateJuanSanAndresundertooktotransferownership
ofandtodeliveradeterminatethingforapricecertaininmoney.AsArt.1475oftheCivilCodeprovides:
Thecontractofsaleisperfectedatthemomentthereisameetingofmindsuponthethingwhichistheobjectofthe
contractandupontheprice....

Thatthecontractofsaleisperfectedwasconfirmedbytheformeradministratoroftheestates,Ramon
SanAndres,whowrotealettertorespondentonMarch30,1966askingforP300.00aspartialpayment
forthesubjectlot.AstheCourtofAppealsobserved:
Withoutanydoubt,thereceiptprofoundlyspeaksofameetingofthemindbetweenSanAndresandRodriguezfor
thesaleofthepropertyadjoiningthe345squaremeterportionpreviouslysoldtoRodriguezonitsthree(3)sides
exceptingthefrontage.Thepriceiscertain,whichisP15.00persquaremeter.Evidently,thisisaperfectedcontract
ofsaleonadeferredpaymentofthepurchaseprice.Alltheprerequisiteelementsforavalidpurchasetransaction
arepresent.Saledoesnotrequireanyformaldocumentforitsexistenceandvalidity.Anddeliveryofpossessionof
landsoldisaconsummationofthesale(Galarvs.Husain,20SCRA186[1967]).Aprivatedeedofsaleisavalid
contractbetweentheparties(Carbonellv.CA,69SCRA99[1976]).
Inthesamevein,afterthelateJuanR.SanAndresreceivedtheP500.00downpaymentonMarch30,1966,
RamonR.SanAndreswrotealettertoRodriguezandreceivedfromRodrigueztheamountofP100.00(although
P300.00 was being requested) deductible from the purchase price of the subject portion. Enrique del Castillo,
Ramonsauthorizedagent,correspondinglysignedthereceiptfortheP100.00.Surely,thisisexplicitlyaveritable
proof of the sale over the remaining portion of Lot 1914B2 and a confirmation by Ramon San Andres of the
existencethereof. 16

Thereisaneed, however, toclarify what theCourtof Appeals saidisaconditional contract ofsale.

Apparently,theappellatecourtconsideredasaconditionthestipulationofthepartiesthatthefull
consideration,basedona surveyof thelot,wouldbedueandpayablewithinfive(5)yearsfromthe
executionofaformaldeedofsale.ItisevidentfromthestipulationsinthereceiptthatthevendorJuan
SanAndressoldtheresidentiallotinquestiontorespondentandundertooktotransfertheownership
thereoftorespondentwithoutanyqualification,reservationorcondition.InAngYuAsuncionv.Courtof
Appeals, weheld:
17

InDignosv.CourtofAppeals(158SCRA375),wehavesaidthat,althoughdenominatedaDeedofConditional
Sale, a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to
unilaterallyrescindisstipulated,e.g.,untilorunlessthepriceispaid.Ownershipwillthenbetransferredtothe
buyeruponactualorconstructivedelivery(e.g.,bytheexecutionofapublicdocument)ofthepropertysold.Where
theconditionisimposedupontheperfectionofthecontractitself,thefailureoftheconditionwouldpreventsuch
perfection.Iftheconditionisimposedontheobligationofapartywhichisnotfulfilled,theotherpartymayeither
waivetheconditionorrefusetoproceedwiththesale.(Art.1545,CivilCode)

Thus, in one case, when the sellers declared in a Receipt of Down Payment that they received an
amountaspurchasepriceforahouseandlotwithoutanyreservationoftitleuntilfullpaymentofthe
entire purchase price, the implication was that they sold their property. InPeoples Industrial and
18

CommercialCorporationv.CourtofAppeals, itwasstated: 19
Adeedofsaleisconsideredabsoluteinnaturewherethereisneitherastipulationinthedeedthattitletothe
property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to
unilaterallyresolvethecontractthemomentthebuyerfailstopaywithinafixedperiod.

Applyingtheseprinciplestothiscase,itcannotbegainsaidthatthecontractofsalebetweentheparties
is absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a
unilateralrescissionbyeitherparty.Infact,thesalewasconsummateduponthedeliveryofthelotto
respondent. Thus,Art.1477providesthattheownershipofthethingsoldshallbetransferredtothe
20

vendeeupontheactualorconstructivedeliverythereof.
Thestipulationthatthepaymentofthefullconsiderationbasedonasurveyshallbedueandpayable
infive(5)yearsfromtheexecutionofaformaldeedofsaleisnotaconditionwhichaffectstheefficacyof
thecontractofsale.Itmerelyprovidesthemannerbywhichthefullconsiderationistobecomputedand
thetimewithinwhichthesameistobepaid.Butitdoesnotaffectinanymannertheeffectivityofthe
contract.Consequently,thecontentionthattheabsenceofaformaldeedofsalestipulatedinthereceipt
preventsthehappeningofasalehasnomerit.
Second.WithrespecttothecontentionthattheCourtofAppealserredinupholdingthevalidityofa
consignation of P7,035.00 representing the balance of the purchase price of the lot, nowhere in the
decisionoftheappellatecourtisthereanymentionofconsignation.UnderArt.1257ofthisCivilCode,
consignation is proper only in cases where an existing obligation is due. In this case, however, the
contractingpartiesagreedthatfullpaymentofpurchasepriceshallbedueandpayablewithinfive(5)
years from the execution of a formal deed of sale. At the time respondent deposited the amount of
P7,035.00inthecourt,noformaldeedofsalehadyetbeenexecutedbytheparties,and,therefore,the
fiveyear period during which the purchase price should be paid had not commenced. In short, the
purchasepricewasnotyetdueandpayable.
Thisisnottosay,however,thatthedepositofthepurchasepriceinthecourtiserroneous.TheCourt
ofAppealscorrectlyorderedtheexecutionofadeedofsaleandpetitionerstoaccepttheamountdeposited
byrespondent.
Third.TheclaimofpetitionersthatthepriceofP7,035.00isiniquitousisuntenable.Theamountis
basedontheagreementofthepartiesasevidencedbythereceipt(Exh.2).Timeandagain,wehave
stressedtherulethatacontractisthelawbetweentheparties,andcourtshavenochoicebuttoenforce
suchcontractsolongastheyarenotcontrarytolaw,morals,goodcustomsorpublicpolicy.Otherwise,
courts would be interfering with the freedom of contract of the parties. Simply put, courts cannot
stipulate for the parties nor amend the latters agreement, for to do so would be to alter the real
intentionsofthecontractingpartieswhenthecontraryfunctionofcourtsistogiveforceandeffecttothe
intentionsoftheparties.
Fourth.Finally,petitionersarguethatrespondentisbarredbyprescriptionandlachesfromenforcing
thecontract.Thiscontentionislikewiseuntenable.Thecontractofsaleinthiscaseisperfected,andthe
delivery of the subject lot to respondent effectively transferred ownership to him. For this reason,
respondentseekstocomplywithhisobligationtopaythefullpurchaseprice,butbecausethedeedofsale
isyettobeexecuted,hedeemeditappropriatetodepositthebalanceofthepurchasepriceincourt.
Accordingly,Art.1144oftheCivilCodehasnoapplicationtotheinstantcase. Consideringthatasurvey 21

ofthelothasalreadybeenconductedandapprovedbytheBureauofLands,respondentsheirs,assignsor
successorsininterest should reimburse the expenses incurred by herein petitioners, pursuant to the
provisionsofthecontract.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that
respondentisORDEREDtoreimbursepetitionersfortheexpensesofthesurvey.
SOORDERED.
Bellosillo(Chairman)andBuena,JJ.,concur.
_______________

QuisumbingandDeLeon,Jr.,JJ.,Onleave.

Judgmentaffirmedwithmodification.
Notes.Consignationordepositofrentalsshouldbemadewiththecourtand/or,underBPBlg.25,in
thebankandnotelsewhere.(Medinavs.CourtofAppeals,225SCRA607[1993])
To avail of the right of redemption, what is essential is to make an offer to redeem within the
prescribed period, either through a formal tender withconsignationor by filing a complaint incourt
coupled with consignation of the redemption price within the prescribed period. (Lee Chuy Realty
Corporationvs.CourtofAppeals,250SCRA596[1995])

o0o
 G.R.No.48194.March15,1990. *

JOSE M. JAVIER and ESTRELLA F. JAVIER, petitioners, vs.COURT OF APPEALS and

LEONARDOTIRO,respondents.

CivilProcedure;PleadingsandPractice;Litigationsshouldasmuchaspossiblebedecidedontheirmeritsand
notontechnicalities.Theone(1)daydelayinthefilingofthesaidmotionforextensioncanjustifiablybeexcused,
consideringthatasidefromthechangeofcounsel,thelastdayforfilingthesaidmotionfellonaholidayfollowing
another holiday, hence, under such circumstances, an outright dismissal of the petition would be too harsh.
Litigationsshould,asmuchaspossible,bedecidedontheirmeritsandnotontechnicalities.Inanumberofcases,
thisCourt,intheexerciseofequityjurisdiction,hasrelaxedthestringentapplicationoftechnicalrulesinorderto
resolvethecaseonitsmerits.Rulesofprocedureareintendedtopromote,nottodefeat,substantialjusticeand,
therefore,theyshouldnotbeappliedinaveryrigidandtechnicalsense.
CivilLaw;Contracts;Itissettledthatthepreviousandsimultaneousandsubsequentactsofthepartiesare
properly cognizable indicia of their true intention.The aforesaid contemporaneous and subsequent acts of
petitionersandprivaterespondentrevealthatthecausestatedinthequestioneddeedofassignmentisfalse.Itis
settledthatthepreviousandsimultaneousandsubsequentactsofthepartiesareproperlycognizableindiciaof
theirtrueintention.Wherethepartiestoacontracthavegivenitapracticalconstructionbytheirconductasbyacts
inpartialperformance,suchconstructionmaybeconsideredbythecourtinconstruingthecontract,determiningits
meaningandascertainingthemutualintentionofthepartiesatthetimeforcontracting.Thepartiespractical
constructionoftheircontracthasbeencharacterizedasaclueorindexto,orasevidenceof,theirintentionor
meaningandasanimportant,significant,convincing,persuasive,orinfluentialfactorindeterminingtheproper
constructionoftheagreement.
Same;Same;Acontractwithafalseconsiderationisnullandvoidperse.ThedeedofassignmentofFebruary
15,1966isarelativelysimulatedcontractwhichstatesafalsecauseorconsideration,oronewheretheparties
concealtheirtrueagreement.Acontractwithafalseconsiderationisnotnullandvoidperse.UnderArticle1346of
theCivilCode,arelativelysimulatedcontract,whenitdoesnotprejudiceathirdpersonandisnotintendedforany
purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real
agreement.
Same;Same;Whenacontractissubjecttoasuspensivecondition,itsbirthoreffectivitycantakeplaceonlyif
and when the event which constitutes the condition happens or is fulfilled.As to the alleged nullity of the
agreementdatedFebruary28,1966,weagreewithpetitionersthattheycannotbeheldliablethereon.Theefficacy
ofsaiddeedofassignmentissubjecttotheconditionthattheapplicationofprivaterespondentforanadditional
area forforestconcessionbe approvedbytheBureauof Forestry. Sinceprivate respondentdidnotobtain that
approval,saiddeedproducesnoeffect.Whenacontractissubjecttoasuspensivecondition,itsbirthoreffectivity
cantakeplaceonlyifandwhentheeventwhichconstitutestheconditionhappensorisfulfilled.Ifthesuspensive
conditiondoesnottakeplace,thepartieswouldstandasiftheconditionalobligationhadneverexisted.

PETITIONtoreviewthedecisionoftheCourtofAppeals.Pascual,J.

ThefactsarestatedintheopinionoftheCourt.
EddieTamondongforpetitioners.
LopeAdrianoandEmmanuelPelaez,Jr.forprivaterespondent.

REGALADO,J.:

PetitionersprayforthereversalofthedecisionofrespondentCourtofAppealsinCAG.R.No.52296R,
datedMarch6,1978, thedispositiveportionwhereofdecrees:
1

WHEREFORE,thejudgmentappealedfromisherebysetasideandanotheroneenteredorderingthedefendants
appellees,jointlyandsolidarily,topayplaintiffappellantthesumofP79,338.15withlegalinterestthereonfromthe
filingofthecomplaint,plusattorneysfeesintheamountofP8,000.00.Costsagainstdefendantsappellees. 2

As found by respondent court or disclosed by the records, this case was generated by the following
3

antecedentfacts.PrivaterespondentisaholderofanordinarytimberlicenseissuedbytheBureauof
Forestrycovering2,535hectaresinthetownofMedina,MisamisOriental.OnFebruary15,1966he
executed a Deed of Assignment in favor of herein petitioners the material parts of which read as
4

follows:
xxx
I, LEONARDO A. TIRO, of legal age, married and a resident of Medina, Misamis Oriental, for and in
considerationofthesumofONEHUNDREDTWENTYTHOUSANDPESOS(P120,000.00),PhilippineCurrency,do
by these presents, ASSIGN, TRANSFER AND CONVEY, absolutely and forever unto JOSE M. JAVIER and
ESTRELLAF.JAVIER,spouses,oflegalageandaresident(sic)of2897F.B.Harrison,PasayCity,mysharesof
stocksintheTIMBERWEALTHCORPORATIONinthetotalamountofP120,000.00,paymentofwhichshallbe
madeinthefollowingmanner:
 1. 1.Twentythousand(P20,000.00)Pesosuponsigningofthiscontract;

2. 2.ThebalanceofP100,000.00shallbepaidP10,000,00everyshipmentofexportlogsactuallyproduced
fromtheforestconcessionofTimberwealthCorporation.

ThatIherebyagreetosignandendorsethestockcertificateinfavorofMr.&Mrs.JoseM.Javier,assoonas
stockcertificatesareissued.
xxx

Atthetimethesaiddeedofassignmentwasexecuted,privaterespondenthadapendingapplication,
datedOctober21,1965,foranadditionalforestconcessioncoveringanareaof2,000hectaressouthwestof
andadjoiningtheareaoftheconcessionsubjectofthedeedofassignment.Hence,onFebruary28,1966,
privaterespondentandpetitionersenteredintoanotherAgreement withthefollowingstipulations:
5

xxx

1. 1.ThatLEONARDOTIROherebyagreesandbindshimselftotransfer,cedeandconveywhateverrights
he may acquire, absolutely and forever, to TIMBERWEALTH CORPORATION, a corporation duly
organizedandexistingunderthelawsofthePhilippines,overaforestconcessionwhichisnowpending
application and approval as additional area to his existing licensed area under O.T. License No. 391
103166,situatedatMedina,MisamisOriental;

2. 2.That for and in consideration of the aforementioned transfer of rights over said additional area to
TIMBERWEALTHCORPORATION,ESTRELLAF.JAVIERandJOSEM.JAVIER,bothdirectorsand
stockholdersofsaidcorporation,doherebyundertaketopayLEONARDOTIRO,assoonassaidadditional
areaisapprovedandtransferredtoTIMBERWEALTHCORPORATIONthesumofTHIRTYTHOUSAND
PESOS (P30,000.00), which amount of money shall form part of their paid up capital stock in
TIMBERWEALTHCORPORATION;

3. 3.That this Agreement is subject to the approval of the members of the Board of Directors of the
TIMBERWEALTHCORPORATION.

xxx

On November 18, 1966, the Acting Director of Forestry wrote private respondent that his forest
concession was renewed up to May 12, 1967 under O.T.L. No. 39151267, but since the concession
consistedofonly2,535hectares,hewasthereininformedthat:
InpursuanceofthePresidentialdirectiveofMay13,1966,youareherebygivenuntilMay12,1967toforman
organizationsuchasacooperative,partnershiporcorporationwithotheradjoininglicenseessoastohaveatotal
holdingareaofnotlessthan20,000hectaresofcontiguousandcompactterritoryandanaggregateallowableannual
cutofnotlessthan25,000cubicmeters,otherwise,yourlicensewillnotbefurtherrenewed. 6

Consequently, petitioners, now acting as timber license holders by virtue of the deed of assignment
executedbyprivaterespondentintheirfavor,enteredintoaForestConsolidationAgreement onApril10, 7

1967withotherordinarytimberlicenseholdersinMisamisOriental,namely,VicenteL.DeLara,Jr.,
SalustianoR.OcaandSanggayaLoggingCompany.Underthisconsolidationagreement,theyallagreed
topooltogetherandmergetheirrespectiveforestconcessionsintoaworkingunit,asenvisionedbythe
aforementioneddirectives.ThisconsolidationagreementwasapprovedbytheDirectorofForestryonMay
10,1967. TheworkingunitwassubsequentlyincorporatedastheNorthMindanaoTimberCorporation,
8

with the petitioners and the other signatories of the aforesaid Forest Consolidation Agreement as
incorporators. 9

OnJuly16,1968,forfailureofpetitionerstopaythebalancedueunderthetwodeedsofassignment,
privaterespondentfiledanactionagainstpetitioners,basedonthesaidcontracts,forthepaymentofthe
amount of P83,138.15 with interest at 6% per annum from April 10, 1967 until full payment, plus
P12,000.00forattorneysfeesandcosts.
OnSeptember23,1968,petitionersfiledtheiransweradmittingthedueexecutionofthecontractsbut
interposing the special defense of nullity thereof since private respondent failed to comply with his
contractualobligationsand,further,thattheconditionsfortheenforceabilityoftheobligationsofthe
partiesfailedtomaterialize.Asacounterclaim,petitionerssoughtthereturnofP55,586.00whichprivate
respondenthadreceivedfromthempursuanttoanallegedmanagementagreement,plusattorneysfees
andcosts.
OnOctober7,1968,privaterespondentfiledhisreplyrefutingthedefenseofnullityofthecontractsin
thiswise:
Whatwereactuallytransferredandassignedtothedefendantswereplaintiffsrightsandinterestinalogging
concessiondescribedinthedeedofassignment,attachedtothecomplaintandmarkedasAnnexA,andagreement
AnnexE;thatthesharesofstocksreferredtoinparagraphIIofthecomplaintaretermsusedthereinmerelyto
designateoridentifythoserightsandinterestsinsaidloggingconcession.Thedefendantsactuallymadeuseofor
enjoyednotthesharesofstocksbuttheloggingconcessionitself;thatsincetheproposedTimberwealthCorporation
wasownedsolelyandentirelybydefendants,thepersonalitiesoftheformerandthelatterareoneandthesame.
Besides,beforetheloggingconcessionoftheplaintifforthelattersrightsandintereststhereinwereassignedor
transferredtodefendants,theyneverbecamethepropertyorassetsoftheTimberwealthCorporationwhichisat
mostonlyanassociationofpersonscomposedofthedefendants. 10

andcontendingthatthecounterclaimofpetitionersintheamountofP55,586.39isactuallyonlyapartof
thesumofP69,661.85paidbythelattertotheformerinpartialsatisfactionofthelattersclaim. 11

Aftertrial,thelowercourtrenderedjudgmentdismissingprivaterespondentscomplaintandordering
himtopaypetitionersthesumofP33,161.85withlegalinterestatsixpercentperannumfromthedateof
thefilingoftheansweruntilcompletepayment. 12

As earlier stated, an appeal was interposed by private respondent to the Court of Appeals which
reversedthedecisionofthecourtofaquo.
OnMarch28,1978,petitionersfiledamotioninrespondentcourtforextensionoftimetofileamotion
forreconsideration,forthereasonthattheyneededtochangecounsel. Respondentcourt,initsresolution
13

datedMarch31,1978,gavepetitionersfifteen(15)daysfromMarch28,1978withinwhichtofilesaid
motionforreconsideration,providedthatthesubjectmotionforextensionwasfiledontime. OnApril11, 14

1978,petitionersfiledtheirmotionforreconsiderationintheCourtofAppeals. OnApril21,1978,private
15

respondent filed a consolidated opposition to said motion for reconsideration on the ground that the
decisionofrespondentcourthadbecomefinalonMarch27,1978,hencethemotionforextensionfiledon
March28,1978wasfiledoutoftimeandtherewasnomoreperiodtoextend.However,thiswasnotacted
uponbytheCourtofAppealsforthereasonthatonApril20,1978,priortoitsreceiptofsaidopposition,a
resolutionwasissueddenyingpetitionersmotionforreconsideration,thus:
ThemotionforreconsiderationfiledonApril11,1978bycounselfordefendantsappelleesisdenied.Theydidnot
fileanybriefinthiscase.Asamatteroffactthiscasewassubmittedfordecisionwithoutappelleesbrief.Intheir
saidmotion,theymerelytriedtorefutetherationaleoftheCourtindecidingtoreversetheappealedjudgment. 16

Petitioners then sought relief in this Court in the present petition for review on certiorari. Private
respondentfiledhiscomment,reiteratinghisstandthatthedecisionoftheCourtofAppealsunderreview
isalreadyfinalandexecutory.
Petitioners countered in their reply that their petition for review presents substantive and
fundamental questions of law that fully merit judicial determination, instead of being suppressed on
technicalandinsubstantialreasons.Moreover,theaforesaidone(1)daydelayinthefilingoftheirmotion
forextensionisexcusable,consideringthatpetitionershadtochangetheirformercounselwhofailedto
filetheirbriefintheappellatecourt,whichsubstitutionofcounseltookplaceatatimewhentherewere
manysuccessiveinterveningholidays.
OnJuly26,1978,weresolvedtogiveduecoursetothepetition.
The one (1) day delay in the filing of the said motion for extension can justifiably be excused,
consideringthatasidefromthechangeofcounsel,thelastdayforfilingthesaidmotionfellonaholiday
followinganotherholiday,hence,undersuchcircumstances,anoutrightdismissalofthepetitionwould
betooharsh.Litigationsshould,asmuchaspossible,bedecidedontheirmeritsandnotontechnicalities.
In a number of cases, this Court, in the exercise of equity jurisdiction, has relaxed the stringent
applicationoftechnicalrulesinordertoresolvethecaseonitsmerits. Rulesofprocedureareintendedto
17

promote,nottodefeat,substantialjusticeand,therefore,theyshouldnotbeappliedinaveryrigidand
technicalsense.
Wenowproceedtotheresolutionofthiscaseonthemerits.
Theassignmentoferrorsofpetitionershingesonthecentralissueofwhetherthedeedofassignment
datedFebruary15,1966andtheagreementofFebruary28,1966arenullandvoid,theformerfortotal
absenceofconsiderationandthelatterfornonfulfillmentoftheconditionsstatedtherein.
Petitioners contend that the deed of assignment conveyed to them the shares of stocks of private
respondentinTimberwealthCorporation,asstatedinthedeeditself.Sincesaidcorporationnevercame
intoexistence,noshareofstockswasevertransferredtothem,hencethesaiddeedisnullandvoidfor
lackofcauseorconsideration.
Wedonotagree.AsfoundbytheCourtofAppeals,thetruecauseorconsiderationofsaiddeedwas
thetransferoftheforestconcessionofprivaterespondenttopetitionersforP120,000.00.Thisfindingis
supportedbythefollowingconsiderations,viz:

1. 1.Bothparties,atthetimeoftheexecutionofthedeedofassignmentknewthattheTimberwealth
Corporationstatedthereinwasnonexistent. 18
 2. 2.Intheirsubsequentagreement,privaterespondent conveyedtopetitionershisinchoateright
overaforestconcessioncoveringanadditionalareaforhisexistingforestconcession,whicharea
hehadappliedfor,andhisapplicationwasthenpendingintheBureauofForestryforapproval.

3. 3.Petitioners,aftertheexecutionofthedeedofassignment,assumedtheoperationofthelogging
concessionsofprivate

1. respondent. 19

2. 4.Thestatementofadvancestorespondentpreparedbypetitionersstated:P55,186.39advancesto
L.A.Tirobeappliedtosucceedingshipments.Basedontheagreement,wepayP10,000.00every
after(sic)shipment.Wehadonly2shipments. 20

3. 5.Petitioners entered into a Forest Consolidation Agreement with other holders of forest
concessionsonthestrengthofthequestioneddeedofassignment. 21

Theaforesaidcontemporaneousandsubsequentactsofpetitionersandprivaterespondentrevealthatthe
cause stated in the questioned deed of assignment is false. It is settled that the previous and
simultaneous and subsequent acts of the parties are properly cognizable indicia of their true
intention. Wherethepartiestoacontracthavegivenitapracticalconstructionbytheirconductasby
22

actsinpartialperformance,suchconstructionmaybeconsideredbythecourtinconstruingthecontract,
determining its meaning and ascertaining the mutual intention of the parties at the time of
contracting. Thepartiespracticalconstructionoftheircontracthasbeencharacterizedasaclueorindex
23

to,orasevidenceof,theirintentionormeaningandasanimportant,significant,convincing,persuasive,
orinfluentialfactorindeterminingtheproperconstructionoftheagreement. 24

ThedeedofassignmentofFebruary15,1966isarelativelysimulatedcontractwhichstatesafalse
causeorconsideration,oronewherethepartiesconcealtheirtrueagreement. Acontractwithafalse 25

considerationisnotnullandvoidperse. UnderArticle1346oftheCivilCode,arelativelysimulated
26

contract,whenitdoesnotprejudiceathirdpersonandisnot
________________

19
Ibid.,54.
20
FolderofOriginalExhibitsforDefendants,Exh.9.
21
FolderofOriginalExhibitsforPlaintiff,Exh.D.
22
Velasquez,etal.vs.Teodoro,etal.,16Phil.757(1923);Bacordovs.Alcantara,etal.,14SCRA730(1965).
23
17AC.J.S.228.
24
Op.cit.,233231.
25
Art.1345,CivilCode.
26
Concepcionvs.Sta.Ana,87Phil.787(1950).

180
180 SUPREME COURT
REPORTS ANNOTATED
Javier vs. Court of Appeals
intendedforanypurposecontrarytolaw,morals,goodcustoms,publicorderorpublicpolicybindsthe
partiestotheirrealagreement.
TheCourtofAppeals,therefore,didnoterrinholdingpetitionersliableunderthesaiddeedandin
rulingthat
xxxInviewoftheanalysisofthefirstandsecondassignmentoferrors,thedefendantsappelleesareliabletothe
plaintiffappellantforthesaleandtransferintheirfavorofthelattersforestconcessions.Underthetermsofthe
contract,thepartiesagreedonaconsiderationofP120,000.00.P20,000.00ofwhichwaspaid,uponthesigningofthe
contractand the balanceofP100,000.00 tobepaidattherateofP10,000.00forevery shipment ofexportlogs
actuallyproducedfromtheforestconcessionsoftheappellantsoldtotheappellees.Sinceplaintiffappellantsforest
concessionswereconsolidatedormergedwiththoseoftheothertimberlicenseholdersbyappelleesvoluntaryact
undertheForestConsolidationAgreement(ExhibitD),approvedbytheBureauofForestry(ExhibitD3),thenthe
unpaidbalanceofP49,338.15(theamountofP70,661.85havingbeenreceivedbytheplaintiffappellantfromthe
defendantsappellees)becamedueanddemandable. 27

AstotheallegednullityoftheagreementdatedFebruary28,1966,weagreewithpetitionersthatthey
cannotbeheldliablethereon.Theefficacyofsaiddeedofassignmentissubjecttotheconditionthatthe
applicationofprivaterespondentforanadditionalareaforforestconcessionbeapprovedbytheBureauof
Forestry.Sinceprivaterespondentdidnotobtainthatapproval,saiddeedproducesnoeffect.Whena
contractissubjecttoasuspensivecondition,itsbirthoreffectivitycantakeplaceonlyifandwhenthe
eventwhichconstitutestheconditionhappensorisfulfilled. Ifthesuspensiveconditiondoesnottake
28

place,thepartieswouldstandasiftheconditionalobligationhadneverexisted. 29

The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the
obligationofprivaterespon
________________

Rollo,5859.
27

Art.1181,CivilCode;Aranetavs.RuralProgressAdministration,92Phil.98(1952).
28

Gaitevs.Fonacier,etal.,2SCRA830(1961).
29

181
VOL. 183, MARCH 15, 181
1990
Javier vs. Court of Appeals
denttotransferhisrightsintheforestconcessionovertheadditionalareaand,ontheotherhand,the
obligationofpetitionerstopayP30,000.00.Thedemandabilityoftheobligationofonepartydependsupon
thefulfillmentoftheobligationoftheother.Inthiscase,thefailureofprivaterespondenttocomplywith
his obligation negates his right to demand performance from petitioners. Delivery and payment in a
contractofsale,aresointerrelatedandintertwinedwitheachotherthatwithoutdeliveryofthegoods
thereisnocorrespondingobligationtopay.Thetwocomplementeachother. 30

Moreover,underthesecondparagraphofArticle1461oftheCivilCode,theefficacyofthesaleofa
merehopeorexpectancyisdeemedsubjecttotheconditionthatthethingwillcomeintoexistence.Inthis
case,sinceprivaterespondentneveracquiredanyrightovertheadditionalareaforfailuretosecurethe
approvaloftheBureauofForestry,theagreementexecutedtherefor,whichhadforitsobjectthetransfer
ofsaidrighttopetitioners,neverbecameeffectiveorenforceable.
WHEREFORE,thedecisionofrespondentCourtofAppealsisherebyMODIFIED.Theagreementof
thepartiesdatedFebruary28,1966isdeclaredwithoutforceandeffectandtheamountofP30,000.00is
herebyorderedtobedeductedfromthesumawardedbyrespondentcourttoprivaterespondent.Inall
otherrespects,saiddecisionofrespondentcourtisaffirmed.
SOORDERED.
MelencioHerrera(Chairman),Paras,PadillaandSarmiento,JJ.,concur.

Decisionmodified.
Note.Defectorinexistenceof acontract is permanent andcannot becuredbyratificationorby
prescription.(TejaMarketingvs.IntermediateAppellateCourt,148SCRA347.)

o0o

________________

PioBarrettoSons,Inc.vs.CompaniaMaritima,62SCRA147(1975).
30

182

VOL. 218, FEBRUARY 281

1, 1993
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
G.R.No.90707.February1,1993. *

ONAPAL PHILIPPINES COMMODITIES, INC., petitioner,vs.THE HONORABLE COURT OF

APPEALSANDSUSANCHUA,respondents.

Civil Law;Aleatory contracts;Gambling;CommodityFutures Trading contractisnot illegalbuttransaction

betweenpartiestoimplementcontractisinthenatureofagamblingagreement.Thetradingcontractsignedby
private respondent and Albert Chiam, representing petitioner, is a contract for the sale of products for future
delivery,inwhicheithersellerorbuyermayelecttomakeordemanddeliveryofgoodsagreedtobeboughtandsold,
butwherenosuchdeliveryisactuallymade.Bydeliveryismeanttheactbywhichtheresorsubjectisplacedinthe
actualorconstructivepossessionorcontrolofanother.Itmaybeactualaswhenphysicalpossessionisgiventothe
vendee or his representative; or constructive which takes place without actual transfer of goods, but includes
symbolicdeliveryorsubstituteddeliveryaswhentheevidenceoftitletothegoods,thekeytothewarehouseorbill
oflading/warehousereceiptisdelivered.Asacontractinprintedform,preparedbypetitionerandservedonprivate
respondent,forthelatter'ssignature,thetradingcontractbearsalltheindiciaofavalidtradingcontractbecauseit
complieswiththeRulesandRegulationsonCommodityFuturesTradingasprescribedbytheSEC.Butwhenthe
transactionwhichwascarriedouttoimplementthewrittencontractdeviatesfromthetrueimportoftheagreement
aswhennosuchdelivery,actualorconstructive,ofthecommodityorgoodsismade,andfinalsettlementismadeby
paymentandreceiptofonlythedifferenceinpricesatthetimeofdeliveryfromthatprevailingatthetimethesale
ismade,thedealingsinfuturesbecomemerespeculativecontractsinwhichthepartiesmerelygambleontheriseor
fallinprices.Acontractforthesaleorpurchaseofgoods/commoditytobedeliveredatfuturetime,ifenteredinto
withouttheintentionofhavinganygoods/commoditypassfromonepartytoanother,butwithanunderstanding
thatattheappointedtime,thepurchaserismerelytoreceiveorpaythedifferencebetweenthecontractandthe
marketprices,isatransactionwhichthelawwillnotsanction,forbeingillegal.Thewrittentradingcontractin
question is not illegal but the transaction between the petitioner and the private respondent purportedly to
implement
________________

*
SECONDDIVISION.

282

282 SUPREME
COURT REPORTS
ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
thecontractisinthenatureofagamblingagreementandfallswithintheambitofArticle2018oftheNew
CivilCode.xxx

PETITIONforcertioraritoannulandsetasidethedecisionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
Zosa&QuijanoLawOfficesforprivaterespondent.

CAMPOS,JR.,J.:

ThisisanappealbywayofaPetitionforCertiorariunderRule45oftheRulesofCourttoannulandset
asidethefollowingactionsoftheCourtofAppeals:
a)Decision inCaseCAG.R.CVNo.08924;and
**

b) Resolution denying a Motion for Reconsideration on the ground of grave abuse of discretion
***

amountingtolackorexcessofjurisdictionandfurthergroundthatthedecisioniscontrarytolawand
evidence.Thequestioneddecisionupheldthetrialcourt'sfindingsthattheTradingContract on"futures" 1

isaspecieofgamblingandthereforenullandvoid.Accordingly,thepetitioner(asdefendantinlower
court)wasorderedtorefundtotheprivaterespondent(asplaintiff)thelossesincurredinthetrading
transactions.
Insupportofthepetition,thegroundsallegedare:
1) Article 2018 of the New Civil Code is inapplicable to the factual milieu of the instant case
consideringthatinacommodityfuturestransactionthebrokerisnotthedirectparticipantandcannotbe
considered as winner or loser and the contract itself, from its very nature, cannot be considered as
gambling.
2)Acommodityfuturescontract,beingaspecieofsecurities,isvalidandenforceableasitstermsare
governedbyspeciallaws,notablytheRevisedSecuritiesActandtheRe
_________________

**
PromulgatedonJune30,1989;AssociateJusticeOscarM.Herrera,ponente.AssociateJusticesLornaS.LombosdelaFuenteand
FernandoA.Santiago,concurring.
***
PromulgatedonOctober24,1989.
1
AnnexAofPetition;Rollo,pp.2529.

283
VOL. 218, FEBRUARY 283
1, 1993
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
vised Rules and Regulations on Commodity Futures Trading issued by the Securities and Exchange
Commission(SEC)andapprovedbytheMonetaryBoardoftheCentralBank;hence,theCivilCodeisnot
thecontrollingpieceoflegislation.
Fromtherecords,Wegatherthefollowingantecedentfactsandproceedings.
 The petitioner, ONAPAL Philippines Commodities, Inc. (petitioner), a duly organized and existing
corporation,waslicensedascommissionmerchant/brokerbytheSEC,toengageincommodityfutures
tradinginCebuCityunderCertificateofRegistrationNo.CEB182.OnApril27,1983,petitionerand
private respondent concluded a "Trading Contract". Like all customers of the petitioner, private
respondentwasfurnishedregularlywith"CommoditiesDailyQuotations"showingdailymovementsof
pricesof commodityfuturestradedandofmarket reports indicatingthe volumeoftradeindifferent
futuresexchangesinHongkong,Tokyoandothercenters.Everytimeacustomerentersintoatrading
transaction with petitioner as broker, the trading order is communicated by telex to its principal,
FrankwellEnterprisesofHongkong.Ifthetransaction,eitherbuyingorsellingcommodityfutures,is
consummatedbytheprincipal,thepetitionerissuesadocumentknownas"ConfirmationofContractand
BalanceSheet"tothecustomer.Anorderofacustomerofthepetitionerissupposedtobetransmitted
fromCebutopetitioner'sofficeinManila.FromManila,itshouldbeforwardedtoHongkongandfrom
there,transmittedtotheCommodityFuturesExchangeinJapan.
TherewereonlytwopartiesinvolvedasfarasthetransactionscoveredbytheTradingContractsare
concernedthe petitioner and the private respondents. We quote hereunder the respondent Court's
detailedfindingsofthetransactionsbetweentheparties:
"It appears from plaintiff s testimony that sometime in April of 1983, she was invited by defendant's Account
ExecutiveElizabethDiaztoinvestinthecommodityfuturestradingbydepositingtheamountofP500,000.00(Exh.
"A");Shewasfurthertoldthatthebusinessis"profitable"andthatshecouldwithdrawhermoneyanytime;shewas
furthermoreinstructedtogototheOnapalOfficewhereshemettheManager,Mr.Ciam,andtheAccountExecutive
ElizabethDiazwhotoldherthattheywouldtakecareofhowtotrade
284
284 SUPREME COURT
REPORTS ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
businessandheraccount.ShewasthenmadetosigntheTradingContractandotherdocumentswithoutmaking
heraware/understandtherisksinvolved;thatatthetimetheylethersign"thosepapers"theyweretellingherthat
thosepaperswerefor"formalitysake";thatwhenshewastoldlateronthatshemadeprofitofP20,480.00inaspan
ofthreedaysinthefirsttransaction,theytoldherthatthebusinessis"veryprofitable"(tsn,Francisco,March14,
1985,p.11).
On June 2, 1983, plaintiff was informed by Miss Diaz that she had to deposit an additional amount of
P300,000.00"topaythedifference"inprices,otherwiseshewillloseheroriginaldepositofP500,000.00;Fearingthe
lossofheroriginaldeposit,plaintiffwasconstrainedtodepositanadditionalamountofP300,000.00(Exh."B");
Sinceshewasmadetounderstandthatshecouldwithdrawherdeposit/investmentanytime,shenotknowinghow
thebusinessisoperated/managedasshewasnotmadetounderstandwhatthebusinesswasallabout,shewanted
to withdraw her investment; but Elizabeth Diaz, defendant's Account Executive, told her shecould notgetout
becausetherearesomeaccountshangingonthetransactions.
Plaintifffurthertestifiedthatsheunderstoodthetransactionofbuyingandsellingasspeculatinginprices,and
herpayingthedifferencebetweengainsandlosseswithoutactualdeliveryofthegoodstobegambling,andshe
wouldliketowithdrawfromthiskindofbusiness,theriskofwhichshewasnotmadeawareof.Plaintifffurther
testifiedthatshestoppedtradingincommodityfuturesinSeptember,1983whensherealizedthatshewasengaged
ingambling.ShewasabletogetonlyP470,000.00outofhertotaldepositofP800,000.00.Inordertorecoverherloss
ofP330,000.00,shefiledthiscaseandengagedtheservicesofcounselforP40,000.00andexpectstoincurexpenses
oflitigationinthesumofP20,000.00." 2

Acommodityfuturescontractisaspecieofsecuritiesincludedinthebroaddefinitionofwhatconstitutes
securitiesunderSection2oftheRevisedSecuritiesAct. 3

"Sec.2.xxx:
(a)Securitiesshallincludebonds.xxx,commodityfuturescontracts,xxx."
_______________

2
Rollo,pp.4546.
3
BatasPambansaBlg.178.

285
VOL. 218, FEBRUARY 285
1, 1993
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
TheRevisedRulesandRegulationsonCommodityFuturesTradingissuedbytheSECandapprovedby
theMonetaryBoardoftheCentralBankdefinessuchcontractsasfollows:
"Commodity Futures Contract" shall refer to an agreement to buy or sell a specified quantity and grade of a
commodityatafuturedateatapriceestablishedattheflooroftheexchange.

The petitioner is a duly licensed commodity futures broker as defined under the Revised Rules and
RegulationsonCommodityFuturesTradingasfollows:
"FuturesCommissionMerchant/Broker"shallrefertocorporationorpartnership,whichmustberegisteredand
licensed as a Futures Commission Merchant/Broker and is engaged in soliciting or in accepting orders for the
purchaseorsaleofanycommodityforfuturedeliveryonorsubjecttotherulesofanycontractmarketandthat,in
connectionwithsuchsolicitationoracceptanceoforders,acceptsanymoney,securitiesorproperty(orextendscredit
inlieuthereof)tomargin,guaranteeorsecureanytradeorcontractthatresultsormayresulttherefrom."

Atthetimeprivaterespondententeredintothetransactionwiththepetitioner,shesignedadocument
denominated as "Trading Contract" in printed form as prepared by the petitioner represented by its
BranchManager,AlbertChiam,incorporatingtheRulesforCommodityTrading.Acopyofsaidcontract
wasfurnishedtotheprivaterespondentbutthecontentsthereofwerenotexplainedtotheformer,beyond
whatwastoldherbythepetitioner'sAccountExecutiveElizabethDiaz.Privaterespondentwasalsotold
that the petitioner's principal was Frankwell Enterprises with offices in Hongkong but the private
respondent'smoneywhichwassupposedtohavebeentransmittedtoHongkong,waskeptbypetitionerin
aseparateaccountinalocalbank.
Petitioner now contends that commodity futures trading is a legitimate business practiced in the
United States, recognized by the SEC and permitted under the Civil Code, specifically Article 1462
thereof,quotedasfollows:
286
286 SUPREME COURT
REPORTS ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
"Thegoodswhichformthesubjectofacontractofsalemaybeeitherexistinggoods,ownedorpossessedbythe
seller,orgoodstobemanufactured,raised,oracquiredbytheselleraftertheperfectionofthecontractofsale,in
thisTitlecalled"futuregoods".
Theremaybeacontractofsaleofgoods,whoseacquisitionbythesellerdependsuponacontingencywhichmay
ormaynothappen."

Petitioner further argues that the SEC, in the exercise of its powers, authorized the operation of
commodityexchangestosuperviseandregulatecommodityfuturestrading. 4

Thecontractbetweenthepartiesfallsunderthekindcommonlycalled"futures".Inthelate1880's,
tradinginfuturesbecamerampantinthepurchaseandsaleofcottonandgrainintheUnitedStates,
givingrisetounregulatedtradingexchangesknownas"bucketshops".ThesewerecommoninChicago
andNewYorkCitywherecottonfromtheSouthandgrainfromtheMidwestwereconstantlytradedin.
Thenameofthepartytowhomthesellerwastomakedeliverywhenthefuturecontractofsalewas
closedorfromwhomhewastoreceivedeliveryincaseofpurchaseisnotgiveninthememorandum
(contract).Thebusinessdealingsbetweenthepartieswereterminatedbytheclosingofthetransactionof
purchase and sale of commodities without directions of the buyer because his margins were
exhausted. Undertherulesofthetradingexchanges,weeklysettlementswererequirediftherewasany
5

differenceinthepricesofcottonbetweenthoseobtainingatthetimeofthecontractandatthedateof
deliverysothatunderthecontractmadebythepurchaser,ifthepriceofcottonhadadvanced,hewould
have received in cash from the seller each week the advance (increase) in price and if cotton prices
declined,thepurchaserhadtomakelikepaymentstotheseller.Intheterminologyoftheexchange,these
paymentsarecalled"margins". Eitherthesellerorthebuyermayelecttomakeordemanddeliveryof
6

thecottonagreedtobesoldandbought,butingeneral,itseemspracticallyauniformcustomthatsettle
_________________

4
SeeP.D.No.902A.
5
Lemonius,etal.vs.Mayer,etal.,14So.33(1893).
6
Ibid.,p.34.

287
VOL. 218, FEBRUARY 287
1, 1993
Onapal Philippines
Commodities, Inc. vs. Court of
 Appeals
ments are made by payments and receipts of difference in prices at the time of delivery from that
prevailingatthetimeofpaymentofthelastweekly"margins".Thesesettlementsaremadeby"closing
out"thecontracts. Wherethebrokerrepresentedthebuyerinbuyingandsellingcottonforfuturedelivery
7

withhimselfextendingcreditmargins,andsomeofthetransactionswereclosedataprofitwhileothers
ataloss,paymentsbeingmadeofthedifferenceinpricesarisingoutoftheirriseorfallaboveorbelow
the contract price, and the facts showed that no actual delivery of cotton was contemplated, such
contracts are of the kind commonly called "futures". Making contracts for the purchase and sale of
8

commoditiesforfuturedelivery,thepartiesnotintendinganactualdelivery,orcontractsofthekind
commonlycalledfutures,areunenforceable. 9

Theterm"futures"hasgrownoutofthosepurelyspeculativetransactionsinwhichtherearenominal
contractstosellforfuturedelivery,butwhereinfactnodeliveryisintendedorexecuted.Thenominal
sellerdoesnothaveorexpecttohaveastockofmerchandisehepurportstosellnordoesthenominal
buyerexpecttoreceiveitortopayfortheprice.Insteadofthat,apercentageormarginispaid,whichis
increasedordiminishedasthemarketratesgoupanddown,andaccountedfortothebuyer.Thisis
simplespeculation,gamblingorwageringonpriceswithinagiventime;itisnotbuyingandsellingandis
illegalasagainstpublicpolicy. 10

Thefactsasdisclosedbytheevidenceonrecordshowthatprivaterespondentmadearrangements
withElizabethDiaz,AccountExecutiveofpetitionerforhertoseeMr.AlbertChiam,petitioner'sBranch
Manager.Thecontractsignedbyprivaterespondentpurportstobeforthedeliveryofgoodswiththe
intentionthatthedifferencebetweenthepricestipulatedandtheexchangeormarketpriceatthetimeof
thepretended
____________________

7
Ibid.,p.34.
8
S.M.Weld&Co.vs.Austin,107Miss.279,65So.247(1914).
9
Ibid.
10
Kingvs.Quidwicks,14R.Is.131,138;Andersonvs.State,58S.E.401(1907);HenryHentz&Co.vs.Booz,70S.E.108(1911).

288
288 SUPREME COURT
REPORTS ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
deliveryshallbepaidbythelosertothewinner.Wequotewithapprovalthefollowingfindingsofthetrial
courtascitedintheCourtofAppealsdecision:
"Theevidenceoftheplaintifftendtoshowthatinhertransactionswiththedefendant,thepartiesneverintendedto
makeoracceptdeliveryofanyparticularcommoditybutthepartiesmerelymadeaspeculationontheriseorfallin
themarketofthecontractpriceofthecommodity,subjectofthetransaction,onthepretendeddateofdeliveryso
thatiftheforecastwascorrect,onepartywouldmakeaprofit,butiftheforecastwaswrong,onepartywouldlose
money.Underthisscheme,plaintiffwasonlyabletorecoverP470,000.00outofheroriginaland"additional"deposit
ofP800,000.00withthedefendant.
The defendant admits that in all the transactions that it had with the plaintiff, there was (sic) no actual
deliveriesandthatithasmadenoarrangementswiththeCentralBankfortheremittanceofitscustomers'money
abroadbutdefendantcontendsinitsdefensethatthemerefactthattherewerenoactualdeliveriesmadeinthe
transactionswhichplaintiffhadwiththedefendant,didnotmeanthatnosuchactualdeliverieswereintendedby
thepartiessinceparagraph10oftherulesforcommoditytrading,attachedtothetradingcontractwhichplaintiff
signedbeforeshetradedwiththedefendant,amplyprovidesforactualdeliveryofthecommoditysubjectofthe
transaction.
Thecourthas,therefore,tofindoutfromallthefactsandcircumstancesofthiscase,whetherthepartiesreally
intendedtomakeoracceptdeliveriesofthecommoditiestradedorwhetherthedefendantmerelyplacedaprovision
fordeliveryinitsrulesforcommodityfuturestradingsoastoescapefrombeingcalledabucketshop,xxx.
xxxxxx
xxxthecourtisconvincedthatthepartiesneverreallyintendedtomakeoracceptdeliveryofanycommodity
beingtradedas,infact,theunrebuttedtestimonyofMr.Goistotheeffectthatallthedefendant'scustomerswere
merespeculatorswhomerelyforecasttheriseorfallinthemarketofthecommodity,subjectofthetransaction,
beloworabovethecontractpriceonthepretendeddateofdeliveryand,infact,thedefendantevendiscouragesits
customersfromtakingoracceptingdeliveryofanycommoditybymakingithard,ifnotimpossible,forthemtomake
oracceptdeliveryofanycommodity.Proofofthisisparagraph10(d)ofdefendant'srulesforcommoditytrading
whichprovidesthatthecustomershallapplyforthenecessarylicensesanddocumentswiththepropergovernment
289
VOL. 218, FEBRUARY 289
1, 1993
 Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
agencyfortheimportationandexportationofanyparticularcommodity." 11

The trading contract signed by private respondent and Albert Chiam, representing petitioner, is a
contractforthesaleofproductsforfuturedelivery,inwhicheithersellerorbuyermayelecttomakeor
demanddeliveryofgoodsagreedtobeboughtandsold,butwherenosuchdeliveryisactuallymade.By
deliveryismeanttheactbywhichtheresorsubjectisplacedintheactualorconstructivepossessionor
control of another. It may be actual as when physical possession is given to the vendee or his
representative;orconstructivewhichtakesplacewithoutactualtransferofgoods,butincludessymbolic
deliveryorsubstituteddeliveryaswhentheevidenceoftitletothegoods,thekeytothewarehouseorbill
oflading/warehousereceiptisdelivered. Asacontractinprintedform,preparedbypetitionerandserved
12

on private respondent, for the latter's signature, the trading contract bears all the indicia of a valid
tradingcontractbecauseitcomplieswiththeRulesandRegulationsonCommodityFuturesTradingas
prescribed by the SEC. But when the transaction which was carried out to implement the written
contractdeviatesfromthetrueimportoftheagreementaswhennosuchdelivery,actualorconstructive,
ofthecommodityorgoodsismade,andfinalsettlementismadebypaymentandreceiptofonlythe
differenceinpricesatthetimeofdeliveryfromthatprevailingatthetimethesaleismade,thedealings
infuturesbecomemerespeculativecontractsinwhichthepartiesmerelygambleontheriseorfallin
prices.Acontractforthesaleorpurchaseofgoods/commoditytobedeliveredatfuturetime,ifentered
intowithouttheintentionofhavinganygoods/commoditypassfromonepartytoanother,butwithan
understanding that at the appointed time, the purchaser is merely to receive or pay the difference
betweenthecontractandthemarketprices,isatransactionwhichthelawwillnotsanction,forbeing
illegal. 13

__________________

11
Rollo,pp.4950;5152;Records,pp.180181,182.
12
Black'sLawDictionary515516(4thed.).
13
Plankvs.Jackson,26N.E.568(1891);Lemonius,etal.vs.Mayer,etal.,supra,note5.

290
290 SUPREME COURT
REPORTS ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
Thewrittentradingcontractinquestionisnotillegalbutthetransactionbetweenthepetitionerandthe
privaterespondentpurportedlytoimplementthecontractisinthenatureofagamblingagreementand
fallswithintheambitofArticle2018oftheNewCivilCode,whichisquotedhereunder:
"Ifacontractwhichpurportstobeforthedeliveryofgoods,securitiesorsharesofstockisenteredintowiththe
intentionthat thedifference betweenthe pricestipulatedand the exchangeormarketprice atthetimeofthe
pretendeddeliveryshallbepaidbythelosertothewinner,thetransactionisnullandvoid.Thelosermayrecover
whathehaspaid."

Thefactsclearlyestablishthatthepetitionerisadirectparticipantinthetransaction,actingthroughits
authorizedagents.Itreceivedthecustomers'ordersandprivaterespondent'smoney.Aspertermsofthe
trading contract, customers' orders shall be directly transmitted by the petitioner as broker to its
principal, Frankwell Enterprises Ltd. of Hongkong, being a registered member of the International
CommodityClearingHouse,whichinturnmustplacethecustomers'orderswiththeTokyoExchange.
ThereisnoevidencethattheordersandmoneyweretransmittedtoitsprincipalFrankwellEnterprises
Ltd.inHongkongnorweretheordersforwardedtotheTokyoExchange.Wedrawtheconclusionthatno
actualdeliveryofgoodsandcommoditywasintendedandevermadebytheparties.Intherealitiesofthe
transaction,thepartiesmerelyspeculatedontheriseorfallinthepriceofthegoods/commoditysubject
matterofthetransaction.Ifprivaterespondent'sspeculationwascorrect,shewouldbethewinnerand
thepetitioner,theloser,sopetitionerwouldhavetopayprivaterespondentthe"margin".Butifprivate
respondent waswronginherspeculationthenshewouldemergeastheloserandthepetitioner,the
winner.Thepetitionerwouldkeepthemoneyorcollectthedifferencefromtheprivaterespondent.Thisis
clearlyaformofgamblingprovidedforwithunmistakeablecertaintyunderArticle2018abovestated.It
shouldthusbegovernedbytheNewCivilCodeandnotbytheRevisedSecuritiesActnortheRulesand
RegulationsonCommodityFuturesTradinglaiddownbytheSEC.
291
VOL. 218, FEBRUARY 291
 1, 1993
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
Article1462oftheNewCivilCodedoesnotgovernthiscasebecausethesaidprovisioncontemplatesa
contract of sale of specific goods where one of the contracting parties binds himself to transfer the
ownershipofanddeliveradeterminatethingandtheothertopaythereforeapricecertaininmoneyor
its equivalent. The said articlerequires that there bedeliveryof goods, actual or constructive, to be
14

applicable.Inthetransactioninquestion,therewasnosuchdelivery;neitherwasthereanyintentionto
deliveradeterminatething.
Thetransactionisnotwhatthepartiescallitbutwhatthelawdefinesittobe. 15

Afterconsideringalltheevidenceinthiscase,itappearsthatpetitionerandprivaterespondentdid
notintend,inthedealsofpurchasingandsellingforfuturedelivery,theactualorconstructivedeliveryof
thegoods/commodity, despitethepaymentof thefull pricetherefor. Thecontract betweenthemfalls
underthedefinitionofwhatiscalled"futures".Thepaymentsmadeundersaidcontractwerepaymentsof
differenceinpricesarisingoutoftheriseorfallinthemarketpriceaboveorbelowthecontractpricethus
makingitpurelygamblinganddeclarednullandvoidbylaw. 16

InEnglandandAmericawherecontractscommonlycalledfuturesoriginated,suchcontractswereat
firstheldvalidandcouldbeenforcedbyresorttocourts.Laterthesecontractswereheldinvalidforbeing
speculative,andinsomestatesinAmerica,itwasunlawfultomakecontractscommonlycalled"futures".
Suchcontractswerefoundtobemeregamblingorwageringagreementscoveredandprotectedbythe
rules and regulations of exchange in which they were transacted under devices which rendered it
impossibleforthecourtstodiscovertheirtruecharacter. Theevilsoughttobesuppressedbylegislation
17

isthespeculativedealingsbymeansofsuchtradingcontracts,whichdegeneratedintomeregamblingin
thefuture
_________________

14
CIVILCODE,Art.1458.
15
Schmid&Oberly,Inc.vs.R.J.L.MartinezFishingCorporation,166SCRA493(1988).
16
Supra,note7.
17
Supra,note5.

292
292 SUPREME COURT
REPORTS ANNOTATED
Onapal Philippines
Commodities, Inc. vs. Court of
Appeals
priceofgoods/commoditiesostensiblybutnotactually,boughtorsold. 18

UnderArticle2018,theprivaterespondentisentitledtorefundfromthepetitionerwhatshepaid.
Thereisnoevidencethattheordersofprivaterespondentwereactuallytransmittedtothepetitioner's
principalinHongkongandTokyo.TherewasnoarrangementmadebypetitionerwiththeCentralBank
forthepurposeofremittingthemoneyofitscustomersabroad.Themoneywhichwassupposedtobe
remittedtoFrankwellEnterprisesofHongkongwaskeptbypetitionerinaseparateaccountinalocal
bank.Havingreceivedthemoneyandordersofprivaterespondentunderthetradingcontract,petitioner
hastheburdenofprovingthatsaidordersandmoneyofprivaterespondenthadbeentransmitted.But
petitionerfailedtoprovethispoint.
Forreasonsindicatedandconstruedinthelightoftheapplicablerulesandundertheplainlanguage
ofthestatute,WefindnoreversibleerrorcommittedbytherespondentCourtthatwouldjustifythe
settingasideofthequestioneddecisionandresolution.Forlackofmerit,thepetitionisDISMISSEDand
thejudgmentsoughttobereversedisherebyAFFIRMED.Withcostsagainstpetitioner.
SOORDERED.
Narvasa,(C.J.,Chairman),Feliciano,RegaladoandNocon,JJ.,concur.

Petitiondismissed.Judgmentaffirmed.
Note.Contemporaneousandsubsequentconductofthepartiesmaybetakenintoaccountbyacourt
which must interpret and apply a contract entered into by them (Universal Textile Mills, Inc. vs.
NLRC,184SCRA273).

o0o

__________________
 Ibid.,p.35.
18

293

2 SUPREME COURT
2 REPORTS ANNOTATED
Danguilan vs. Intermediate
Appellate Court
No.L69970.November28,1988. *

FELIX DANGUILAN, petitioner,vs.INTERMEDIATE APPELLATE COURT, APOLONIA MELAD,

assistedbyherhusband,JOSETAGACAY,respondents.

CivilLaw;Donations;Theconveyancesinthecaseatbarbeingonerousdonationsarenotcoveredbytherulein
Article749oftheCivilCoderequiringdonationsofrealpropertiestobeeffectedthroughapublicinstrument.Itis
ourview,consideringthelanguageofthetwoinstruments,thatDomingoMeladdidintendtodonatetheproperties
tothepetitioner,astheprivaterespondentcontends.Wedonotthink,however,thatthedoneewasmovedbypure
liberality. While truly donations, the conveyances were onerous donations as the properties were given to the
petitionerinexchangeforhisobligationtotakecareofthedoneefortherestofhislifeandprovideforhisburial.
Hence,itwasnotcoveredbytheruleinArticle749oftheCivilCoderequiringdonationsofrealpropertiestobe
effectedthroughapublicinstrument.

Same;Same;Same;Contrarytotheargumentsofprivaterespondent,therewasafairexchangebetweenthe
donorandthedoneethatmadethetransactionanonerousdonation.Theprivaterespondentarguesthatasthere
wasnoequivalencebetweenthevalueofthelandsdonatedandtheservicesforwhichtheywerebeingexchanged,
thetwotransactionsshouldbeconsideredpureorgratuitousdonationsofrealrights,hence,theyshouldhavebeen
effectedthroughapublicinstrumentandnotmereprivatewritings.However,noevidencehasbeenadducedto
supporthercontentionthatthevaluesexchangedweredisproportionateorunequal.Ontheotherhand,boththe
trial court and the respondent court have affirmed the factual allegation that the petitioner did take care of
DomingoMeladandlaterarrangedforhisburialinaccordancewiththeconditionimposedbythedonor.Itisalleged
andnotdeniedthathediedwhenhewasalmostonehundredyearsold,whichwouldmeanthatthepetitioner
farmedthelandpracticallybyhimselfandsoprovidedforthedonee(andhiswife)duringthelatterpartofDomingo
Melads life. We may assume that there was a fair exchange between the donor and the donee that made the
transactionanonerousdonation.
_______________

*
FIRSTDIVISION.

23

VOL. 168, 23
NOVEMBER 28, 1988
Danguilan vs.
Intermediate Appellate Court
Same;Sale;Presumption of due execution of a public instrument is disputable and will yield to contrary
evidence.The deed of sale was allegedly executed when the respondent was only three years old and the
considerationwassupposedlypaidbyhermother,MariaYedan,fromherearningsasawageworkerinafactory.
Thiswasitselfasuspiciouscircumstanceonemaywellwonderwhythetransferwasnotmadetothemotherherself,
whowasafteralltheonepayingforthelands.ThesalewasmadeoutinfavorofApoloniaMeladalthoughshehad
beenusingthesurnameYedan,hermotherssurname,beforethatinstrumentwassignedandinfactevenaftershe
gotmarried.TheavermentwasalsomadethatthecontractwassimulatedandpreparedafterDomingoMelads
death in 1945. It was also alleged that even after the supposed execution of the said contract, the respondent
consideredDomingoMeladtheownerofthepropertiesandthatshehadneveroccupiedthesame.Consideringthese
serious challenges, theappellatecourtcouldhavedevoted alittlemoretimetoexamining ExhibitEandthe
circumstancessurroundingitsexecutionbeforepronouncingitsvalidityinthemannerdescribedabove.Whileitis
truethatthedueexecutionofapublicinstrumentispresumed,thepresumptionisdisputableandwillyieldto
contradictoryevidence,whichinthiscasewasnotrefuted.

Same;Same;Delivery;Privaterespondentfailedtoshowthatsheconsummatedthecontractofsalebyactual
deliveryofthepropertiestoher.Atanyrate,evenassumingthevalidityofthedeedofsale,therecordshowsthat
theprivaterespondentdidnottakepossessionofthedisputedpropertiesandindeedwaiteduntil1962tofilethis
actionforrecoveryofthelandsfromthepetitioner.Ifshedidhavepossession,shetransferredthesametothe
petitionerin1946,byherownswornadmission,andmovedouttoanotherlotbelongingtoherstepbrother.Her
claimthatthepetitionerwashertenant(laterchangedtoadministrator)wasdisbelievedbythetrialcourt,and
properlyso,foritsinconsistency.Inshort,shefailedtoshowthatsheconsummatedthecontractofsalebyactual
deliveryofthepropertiestoherandheractualpossessionthereofinconceptofpurchaserowner.
 Same;Same;Same;Same;Itisafundamentalandelementaryprinciplethatownershipdoesnotpassbymere
stipulation but only by delivery.Since in this jurisdiction it is a fundamental and elementary principle that
ownershipdoesnotpassbymerestipulationbutonlybydelivery(CivilCode,Art.1095;FidelityandSuretyCo.v.
Wilson,8Phil.51),andtheexecutionofapublicdocumentdoesnot
24

24 SUPREME
COURT REPORTS
ANNOTATED
Danguilan vs.
Intermediate Appellate Court
constitute sufficient delivery where the property involved is in the actual and adverse possession of third
persons(Addisonvs.Felix,38Phil.404;Masallovs.Cesar,39Phil.134),itbecomesincontestablethatevenif
includedinthecontract,theownershipofthepropertyindisputedidnotpasstherebytoMarianoGarchitorena.Not
havingbecometheownerforlackofdelivery,MarianoGarchitorenacannotpresumetorecoverthepropertyfromits
present possessors. His action, therefore, is not one of revindicacion, but one against his vendor for specific
performanceofthesaletohim.

Same;Same;Same;Same;Same;In order that symbolic delivery may produce the effect of tradition, it is
necessarythatthevendorshallhavecontroloverthethingsoldthat,atthemomentofthesale,itsmaterialdelivery
couldhavebeenmade.Asfortheargumentthatsymbolicdeliverywasaffectedthroughthedeedofsale,whichwas
apublicinstrument,theCourthasheld:TheCodeimposesuponthevendortheobligationtodeliverthethingsold.
Thethingisconsideredtobedeliveredwhenitisplacedinthehandsandpossessionofthevendee.(CivilCode,art.
1462).Itistruethatthesamearticledeclaresthattheexecutionofapublicinstrumentisequivalenttothedelivery
ofthethingwhichistheobjectofthecontract,but,inorderthatthissymbolicdeliverymayproducetheeffectof
tradition,itisnecessarythatthevendorshallhavehadsuchcontroloverthethingsoldthat,atthemomentofthe
sale,itsmaterialdeliverycouldhavebeenmade.Itisnotenoughtoconferuponthepurchasertheownershipand
therightofpossession.Thethingsoldmustbeplacedinhiscontrol.Whenthereisnoimpedimentwhateverto
preventthethingsoldpassingintothetenancyofthepurchaserbythesolewillofthevendor,symbolicdelivery
throughtheexecutionofapublicinstrumentissufficient.Butif,notwithstandingtheexecutionoftheinstrument,
thepurchasercannothavetheenjoymentandmaterialtenancyofthethingandmakeuseofithimselforthrough
anotherinhisname,becausesuchtenancyandenjoymentareopposedbytheinterpositionofanotherwill,then
fictionyieldstorealitythedeliveryhasnotbeeneffected.

Same;Possession;Rule where respective claimsof thepartieswerebothtobediscardedasbeing inherently

weak.Thereisnodisputethatitisthepetitionerandnottheprivaterespondentwhoisinactualpossessionofthe
litigatedproperties.Eveniftherespectiveclaimsofthepartieswerebothtobediscardedasbeinginherentlyweak,
thedecisionshouldstillinclineinfavorofthepetitionerpursuanttothedoctrineannouncedinSantos&Espinosa
v.Estejada,wheretheCourtannounced:Iftheclaimofboththeplaintiffandthe
25

VOL. 168, 25
NOVEMBER 28, 1988
Danguilan vs.
Intermediate Appellate Court
defendantareweak,judgmentmustbeforthedefendant,forthelatterbeinginpossessionispresumedtobe
theowner,andcannotbeobligedtoshoworproveabetterright.

PETITIONtoreviewthedecisionofthethenIntermediateAppellateCourt.

ThefactsarestatedintheopinionoftheCourt.
PedroR.Perez,Jr.forpetitioner.
TeodoroB.Mallongaforprivaterespondent.

CRUZ,J.:

The subject of this dispute is the two lots owned by Domingo Melad which is claimed by both the
petitionerandtherespondent.Thetrialcourtbelievedthepetitionerbuttherespondentcourt,onappeal,
upheldtherespondent.Thecaseisnowbeforeusforaresolutionoftheissuesonceandforall.
OnJanuary29,1962,therespondentfiledacomplaintagainstthepetitionerinthethenCourtofFirst
InstanceofCagayanforrecoveryofafarmlotandaresidentiallotwhichsheclaimedshehadpurchased
fromDomingoMeladin1943andwerenowbeingunlawfullywithheldbythedefendant. Inhisanswer, 1

thepetitionerdeniedtheallegationandaverredthathewastheownerofthesaidlotsofwhichhehad
beeninopen,continuousandadversepossession,havingacquiredthemfromDomingoMeladin1941and
1943. Thecasewasdismissedforfailuretoprosecutebutwasrefiledin1967.
2 3
 At thetrial, theplaintiff presentedadeedofsaledatedDecember4, 1943,purportedlysigned by
DomingoMeladanddulynotarized,whichconveyedthesaidpropertiestoherforthesumofP80.00. She 4

saidtheamountwasearnedbyhermotherasaworkerattheTabacalerafactory.Sheclaimedtobethe
illegitimatedaughterofDomingoMelad,withwhomsheandhermotherwerelivingwhenhediedin
1945.Shemovedoutofthefarmonlywhenin1946FelixDanguilan
_______________

1
Exh.I(Orig.Records,p.11).
2
Exh.G(Orig.Records,p.7).
3
Exh.J(Orig.Records,p.13).
4
Exh.E(Orig.Records,p.5).

26
2 SUPREME COURT
6 REPORTS ANNOTATED
Danguilan vs. Intermediate
Appellate Court
approached her and asked permission to cultivate the land and to stay therein. She had agreed on
conditionthathewoulddeliverpartoftheharvestfromthefarmtoher,whichhedidfromthatyearto
1958.Thedeliverieshavingstopped,shethenconsultedthemunicipaljudgewhoadvisedhertofilethe
complaintagainstDanguilan.Theplaintiffsmother,heronlyotherwitness,corroboratedthistestimony. 5

Forhispart,thedefendanttestifiedthathewasthehusbandofIsidraMelad,Domingosniece,whom
heandhiswifeJuanaMalupanghadtakenintotheirhomeastheirwardastheyhadnochildrenoftheir
own.HeandhiswifelivedwiththecoupleintheirhouseontheresidentiallotandhelpedDomingowith
thecultivationofthefarm.DomingoMeladsignedin1941aprivateinstrumentinwhichhegavethe
defendantthefarmandin1943anotherprivateinstrumentinwhichhealsogavehimtheresidentiallot,
on the understanding that the latter would take care of the grantor and would bury him upon his
death. Danguilanpresentedthreeotherwitnesses tocorroboratehisstatementsandtoprovethathehad
6 7

beenlivinginthelandsincehismarriagetoIsidraandhadremainedinpossessionthereofafterDomingo
Meladsdeathin1945.Twoofsaidwitnessesdeclaredthatneithertheplaintiffnorhermotherlivedin
thelandwithDomingoMelad. 8

Thedecisionofthetrialcourtwasbasedmainlyontheissueofpossession.Weighingtheevidence
presentedbytheparties,thejudge heldthatthedefendantwasmorebelievableandthattheplaintiffs
9

evidencewasunpersuasiveandunconvincing.Itwasheldthattheplaintiffsowndeclarationthatshe
movedoutofthepropertyin1946andleftitinthepossessionofthedefendantwascontradictorytoher
claimofownership.Shewasalsoinconsistentwhenshetestifiedfirstthatthedefendantwashertenant
andlaterinrebuttalthathewasheradministrator.Thedecisionconcludedthatwheretherewas
_______________

5
TSN,April25,1972,pp.5758,70.
6
TSN,Dec.7,1943,pp.19.
7
JuanitoMarallag,NarcisoFugganandAbelardoCalebag.
8
TSN,March29,1973(J.Marallag),pp.76,78,80;Oct.26,1973,p.35(N.Fuggan).
9
Hon.BonifacioA.Cacdac.

27
VOL. 168, NOVEMBER 27
28, 1988
Danguilan vs. Intermediate
Appellate Court
doubtastotheownershipoftheproperty,thepresumptionwasinfavoroftheoneactuallyoccupyingthe
same,whichinthiscasewasthedefendant. 10

Thereviewbytherespondentcourt ofthisdecisionwasmanifestlylessthanthorough.Forthemost
11

partitmerelyaffirmedthefactualfindingsofthetrialcourtexceptforanirrelevantmodification,andit
wasonlytowardtheendthatitwenttoandresolvedwhatitconsideredthelonedecisiveissue.The
respondentcourtheldthatExhibits2band3a,byvirtueofwhichDomingoMeladhadconveyedthetwo
parcelsoflandtothepetitioner,werenullandvoid.Thereasonwasthattheyweredonationsofreal
property and as such should have been effected through a public instrument. It then set aside the
appealeddecisionanddeclaredtherespondentsthetrueandlawfulownersofthedisputedproperty.
Thesaidexhibitsreadasfollows:
EXHIBIT2bisquotedasfollows: 12

I,DOMINGOMELAD,oflegalage,married,doherebydeclareinthisreceiptthetruthofmygivingtoFelix
Danguilan, my agricultural land located at Barrio FuguMacusi, Penablanca, Province of Cagayan, Philippine
Islands;thatthislandisregisteredundermyname;thatIherebydeclareandbindmyselfthatthereisnooneto
whomIwilldeliverthislandexcepttohimashewillbetheoneresponsibleformeintheeventthatIwilldieand
alsoforallotherthingsneededandnecessaryforme,hewillberesponsiblebecauseofthislandIamgivingtohim;
thatitistruethatIhaveniecesandnephewsbuttheyarenotlivingwithusandthereisnoonetowhomIwillgive
mylandexcepttoFelixDanguilanforheliveswithmeandthisisthelength175m.andthewidthis150m.
INWITNESSWHEREOF,Iherebysignmynamebelowandalsothosepresentintheexecutionofthisreceipt
this14thdayofSeptember1941.
Penablanca,Cagayan,September14,1941.
(SGD.)DOMINGOMELAD
_______________

TrialCourtsDecision,pp.911(Orig.Records,pp.140142).
10

ThroughJusticeMarcelinoR.Veloso,withtheconcurrenceofJusticesPorfirioV.Sison,AbdulwahidA.BidinandDesiderioP.
11

Jurado.
Orig.Records,p.17.
12

28
2 SUPREME COURT
8 REPORTS ANNOTATED
Danguilan vs. Intermediate
Appellate Court
WITNESSES:
1.(T.M.)ISIDROMELAD
2.(SGD.)FELIXDANGUILAN
3.(T.M.)ILLEGIBLE
EXHIBIT3aisquotedasfollows: 13

I,DOMINGOMELAD,aresidentofCentro,Penablanca,ProvinceofCagayan,doherebyswearanddeclarethe
truththatIhavedeliveredmyresidentiallotatCentro,Penablanca,Cagayan,toFelixDanguilan,mysoninlaw
becauseIhavenochild;thatIhavethoughtofgivinghimmylandbecausehewillbetheonetotakecareof
SHELTERINGmeorburymewhenIdieandthisiswhyIhavethoughtofexecutingthisdocument;thatthe
boundariesofthislotisontheeast,CresencioDanguilan;onthenorth,ArellanoStreet;onthesouthbyPastor
Lagundiandonthewest,PabloPelagioandtheareaofthislotis35metersgoingsouth;widthandlengthbeginning
westtoeastis40meters.
INWITNESSHEREOF,Iherebysignthisreceiptthis18thdayofDecember1943.
(SGD.)DOMINGOMELAD

WITNESSES:

(SGD.)ILLEGIBLE
(SGD.)DANIELARAO

Itisourview,consideringthelanguageofthetwoinstruments,thatDomingoMeladdidintendtodonate
thepropertiestothepetitioner,astheprivaterespondentcontends.Wedonotthink,however,thatthe
doneewasmovedbypureliberality.Whiletrulydonations,theconveyanceswereonerousdonationsas
thepropertiesweregiventothepetitionerinexchangeforhisobligationtotakecareofthedoneeforthe
restofhislifeandprovideforhisburial.Hence,itwasnotcoveredbytheruleinArticle749oftheCivil
Coderequiringdonationsofrealpropertiestobeeffectedthroughapublicinstrument.Thecaseatbar
comessquarelyunderthedoctrinelaiddowninManalov.DeMesa, wheretheCourtheld:
14

_______________

Ibid.,p.19.
13

29Phil.495.
14

29
VOL. 168, NOVEMBER 29
28, 1988
Danguilan vs. Intermediate
Appellate Court
Therecanbenodoubtthatthedonationinquestionwasmadeforavaluableconsideration,sincethedonorsmade
itconditionaluponthedoneesbearingtheexpensesthatmightbeoccasionedbythedeathandburialofthedonor
PlacidaManalo,aconditionandobligationwhichthedoneeGregoriodeMesacarriedoutinhisownbehalfandfor
hiswifeLeonciaManalo;therefore,inordertodeterminewhetherornotsaiddonationisvalidandeffectiveit
shouldbesufficienttodemonstratethat,asacontract,itembracestheconditionsthelawrequiresandisvalidand
effective,althoughnotrecordedinapublicinstrument.

Theprivaterespondentarguesthatastherewasnoequivalencebetweenthevalueofthelandsdonated
andtheservicesforwhichtheywerebeingexchanged,thetwotransactionsshouldbeconsideredpureor
gratuitousdonationsofrealrights,hence,theyshouldhavebeeneffectedthroughapublicinstrument
andnotmereprivatewritings.However,noevidencehasbeenadducedtosupporthercontentionthatthe
valuesexchangedweredisproportionateorunequal.
Ontheotherhand,boththetrialcourtandtherespondentcourthaveaffirmedthefactualallegation
thatthepetitionerdidtakecareofDomingoMeladandlaterarrangedforhisburialinaccordancewith
theconditionimposedbythedonor.Itisallegedandnotdeniedthathediedwhenhewasalmostone
hundredyearsold, whichwouldmeanthatthepetitionerfarmedthelandpracticallybyhimselfandso
15

providedforthedonee(andhiswife)duringthelatterpartofDomingoMeladslife.Wemayassumethat
there was a fair exchange between the donor and the donee that made the transaction an onerous
donation.
Regardingtheprivaterespondentsclaimthatshehadpurchasedthepropertiesbyvirtueofadeedof
sale,therespondentcourthadonlythefollowingtosay:ExhibitEtakentogetherwiththedocumentary
andoralevidenceshowsthatthepreponderanceofevidenceisinfavoroftheappellants.Thiswas,we
think,arathersuperficialwayofresolvingsuchabasicandimportantissue.
_______________

TSN,Nov.29,1973(J.Marallag),p.78;Sept.13,1974(A.Calebag),p.4.
15

30
3 SUPREME COURT
0 REPORTS ANNOTATED
Danguilan vs. Intermediate
Appellate Court
The deed of sale was allegedly executed when the respondent was only three years old and the
considerationwassupposedlypaidbyhermother,MariaYedan,fromherearningsasawageworkerina
factory. Thiswasitselfasuspiciouscircumstance,onemaywellwonderwhythetransferwasnotmade
16

tothemotherherself,whowasafteralltheonepayingforthelands.Thesalewasmadeoutinfavorof
ApoloniaMeladalthoughshehadbeenusingthesurnameYedan,hermotherssurname,beforethat
instrumentwassignedandinfactevenaftershegotmarried. Theavermentwasalsomadethatthe
17

contractwassimulatedandpreparedafterDomingoMeladsdeathin1945. Itwasalsoallegedthateven 18

afterthesupposedexecutionofthesaidcontract,therespondentconsideredDomingoMeladtheownerof
thepropertiesandthatshehadneveroccupiedthesame. 19

Considering these serious challenges, theappellate court couldhave devoteda littlemoretime to

examiningExhibitEandthecircumstancessurroundingitsexecutionbeforepronouncingitsvalidityin
themannerdescribedabove.Whileitistruethatthedueexecutionofapublicinstrumentispresumed,
thepresumptionisdisputableandwillyieldtocontradictoryevidence,whichinthiscasewasnotrefuted.
At any rate, even assuming the validity of the deed of sale, the record shows that the private
respondentdidnottakepossessionofthedisputedpropertiesandindeedwaiteduntil1962tofilethis
actionforrecoveryofthelandsfromthepetitioner.Ifshedidhavepossession,shetransferredthesameto
thepetitionerin1946,byherownswornadmission,andmovedouttoanotherlotbelongingtoherstep
brother. Herclaimthatthepetitionerwashertenant(laterchangedtoadministrator)wasdisbelievedby
20

thetrialcourt,andproperlyso,foritsinconsistency.Inshort,shefailedtoshowthatsheconsummated
thecontractofsalebyactualdeliveryofthepropertiestoherandheractualpossessionthereofinconcept
ofpur
______________

TSN,April6,1972,pp.18&20.
16

Ibid.,pp.1516.
17

MemorandumofPetitioner,p.18.
18

Ibid.,pp.1822.
19

TSN,April6,1972,p.47.
20

31
VOL. 168, NOVEMBER 31
28, 1988
Danguilan vs. Intermediate
Appellate Court
chaserowner.
AswasheldinGarchitorenav.Almeda: 21

Since in this jurisdiction it is a fundamental and elementary principle that ownership does not pass by mere
stipulation but only by delivery (Civil Code, Art. 1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the
executionofapublicdocumentdoesnotconstitutesufficientdeliverywherethepropertyinvolvedisintheactual
andadversepossessionofthirdpersons(Addisonvs.Felix,38Phil.404;Masallovs.Cesar,39Phil.134),itbecomes
incontestablethatevenifincludedinthecontract,theownershipofthepropertyindisputedidnotpasstherebyto
MarianoGarchitorena.Nothavingbecometheownerforlackofdelivery,MarianoGarchitorenacannotpresumeto
recoverthepropertyfromitspresentpossessors.Hisaction,therefore,isnotoneofrevindicacion,butoneagainst
hisvendorforspecificperformanceofthesaletohim.

IntheaforecitedcaseofFidelityandDepositCo.v.Wilson, JusticeMapadeclaredfortheCourt:
22

Therefore,inourCivilCodeitisafundamentalprincipleinallmattersofcontractsandawellknowndoctrineof
law that non mudis pactis, sed traditione dominia rerum transferuntur. In conformity with said doctrine as
establishedinparagraph2ofarticle609ofsaidcode,thattheownershipandotherpropertyrightsareacquiredand
transmittedbylaw,bygift,bytestateorintestatesuccession,and,inconsequenceofcertaincontracts,bytradition.
Andasthelogicalapplicationofthisdispositionarticle1095prescribesthefollowing:Acreditorhastherightsto
thefruitsofathingfromthetimetheobligationtodeliveritarises.However,heshallnotacquirearealright(and
theownershipissurelysuch)untilthepropertyhasbeendeliveredtohim.
In accordance with such disposition and provisions the delivery of a thing constitutes a necessary and
indispensablerequisiteforthepurposeofacquiringtheownershipofthesamebyvirtueofacontract.AsManresa
statesinhisCommentariesontheCivilCode,volume10,pages339and340:Ourlawdoesnotadmitthedoctrineof
thetransferofpropertybymereconsentbutlimitstheeffectoftheagreementtothedueexecutionofthecontract.x
xx.Theownership,thepropertyright,isonlyderivedfromthedeliveryofathingxxx.
_______________

48O.G.3432.
21

8Phil.51.
22

32
3 SUPREME COURT
2 REPORTS ANNOTATED
Danguilan vs. Intermediate
Appellate Court
Asfortheargumentthatsymbolicdeliverywaseffectedthroughthedeedofsale,whichwasapublic
instrument,theCourthasheld:
TheCodeimposesuponthevendortheobligationtodeliverthethingsold.Thethingisconsideredtobedelivered
whenitisplacedinthehandsandpossessionofthevendee.(CivilCode,art.1462).Itistruethatthesamearticle
declaresthattheexecutionofapublicinstrumentisequivalenttothedeliveryofthethingwhichistheobjectofthe
contract,but,inorderthatthissymbolicdeliverymayproducetheeffectoftradition,itisnecessarythatthevendor
shallhavehadsuchcontroloverthethingsoldthat,atthemomentofthesale,itsmaterialdeliverycouldhavebeen
made.Itisnotenoughtoconferuponthepurchasertheownershipandtherightofpossession.Thethingsoldmust
beplacedinhiscontrol.Whenthereisnoimpedimentwhatevertopreventthethingsoldpassingintothetenancyof
thepurchaser by the solewillof thevendor, symbolicdeliverythrough theexecutionofapublic instrumentis
sufficient.Butif,notwithstandingtheexecutionoftheinstrument,thepurchasercannothavetheenjoymentand
materialtenancyofthethingandmakeuseofithimselforthroughanotherinhisname,becausesuchtenancyand
enjoymentareopposedbytheinterpositionofanotherwill,thenfictionyieldstorealitythedeliveryhasnotbeen
effected. 23

Thereisnodisputethatitisthepetitionerandnottheprivaterespondentwhoisinactualpossessionof
thelitigatedproperties.Eveniftherespectiveclaimsofthepartieswerebothtobediscardedasbeing
inherently weak, the decision should still incline in favor of the petitioner pursuant to the doctrine
announcedinSantos&Espinosav.Estejada, wheretheCourtannounced:
24

Iftheclaimofboththeplaintiffandthedefendantareweak,judgmentmustbeforthedefendant,forthelatter
beinginpossessionispresumedtobetheowner,andcannotbeobligedtoshoworproveabetterright.
_______________

Addisonv.FelixandTioco,38Phil.404.
23

26Phil.399.
24

33
VOL. 168, NOVEMBER 33
28, 1988
People vs. Mejias
WHEREFORE, the decision of the respondent court is SET ASIDE and that of the trial court
REINSTATED,withcostsagainsttheprivaterespondent.Itissoordered.
Narvasa,(Chairman),Gancayco,GrioAquinoandMedialdea,JJ.,concur.

Decisionsetaside.
Note.Athingsoldisunderstoodasdeliveredwhenitisplacedinthecontrolandpossessionofthe
vendee.Deliveryproducesitsnaturaleffectsinlawoneofwhichbeingtheconveyanceofownership.
(MunicipalityofVictoriasvs.CourtofAppeals,149SCRA32).
 o0o

G.R.No.126376.November20,2003. *

SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO

EDRAandNORAJOAQUIN,SPOUSESRUFINOVALDOZandEMMAJOAQUIN,andNATIVIDAD
JOAQUIN,petitioners,vs.COURTOFAPPEALS,SPOUSESLEONARDOJOAQUINandFELICIANA
LANDRITO,SPOUSESFIDELJOAQUINandCONCHITABERNARDO,SPOUSESTOMASJOAQUIN
and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES, SPOUSES
ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES TELESFORO CARREON and
FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO
JOAQUINandLEAASIS,respondents.

Remedial Law;Actions;PartyinInterests;Petitioners are interestedin the properties subject oftheDeeds of

Sale,buttheyhavefailedtoshowanylegalrighttotheproperties;Anactionmustbeprosecutedinthenameofthe
realpartyininterest.Itisevidentfromtherecordsthatpetitionersareinterestedinthepropertiessubjectofthe
DeedsofSale,buttheyhavefailedtoshowanylegalrighttotheproperties.Thetrialandappellatecourtsshould
havedismissedtheactionforthisreasonalone.Anactionmustbeprosecutedinthenameoftherealpartyin
interest.
CivilLaw;Contracts;Sale;Ifthereisameetingofthemindsofthepartiesastotheprice,thecontractofsaleis
validdespitethemannerofpayment,oreventhebreachofthatmannerofpayment .Acontractofsaleisnotareal
contract,butaconsensualcontract.Asaconsensualcontract,acontractofsalebecomesabindingandvalidcontract
uponthemeetingofthemindsastoprice.Ifthereisameetingofthemindsofthepartiesastotheprice,the
contractofsaleisvalid,despitethemannerofpayment,oreventhebreachofthatmannerofpayment.Ifthereal
priceisnotstatedinthecontract,thenthecontractofsaleisvalidbutsubjecttoreformation.Ifthereisnomeeting
ofthemindsofthepartiesastotheprice,becausethepricestipulatedinthecontractissimulated,thenthecontract
isvoid.Article1471oftheCivilCodestatesthatifthepriceinacontractofsaleissimulated,thesaleisvoid.
Same;Same;Same;Itisnottheactofpaymentofpricethatdeterminesthevalidityofacontractofsale;Failure
topaytheconsiderationisdifferentfromlackofconsideration;Failuretopaytheconsiderationresultsinarightto
demandthefulfillmentorcancellationoftheobligationunder
_______________

*
FIRSTDIVISION.

264

26 SUPREME
4 COURT REPORTS
ANNOTATED
Buenaventura vs. Court of
Appeals
anexistingvalidcontractwhilelackofconsiderationpreventstheexistenceofavalidcontract.Itisnottheact
ofpaymentofpricethatdeterminesthevalidityofacontractofsale.Paymentofthepricehasnothingtodowiththe
perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the
considerationisdifferentfromlackofconsideration.Theformerresultsinarighttodemandthefulfillmentor
cancellationoftheobligationunderanexistingvalidcontractwhilethelatterpreventstheexistenceofavalid
contract.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.
ZosimoG.Linatoforpetitioners.
GregorioM.Velasquezforprivaterespondents.

CARPIO,J.:

TheCase
This is a petition for review oncertiorari to annul the Decision dated 26 June 1996 of the Court of
1 2

AppealsinCAG.R.CVNo.41996.TheCourtofAppealsaffirmedtheDecision dated18February1993 3

renderedbyBranch65oftheRegionalTrialCourtofMakati(trialcourt)inCivilCaseNo.895174.The
trial court dismissed the case after it found that the parties executed the Deeds of Sale for valid
considerationandthattheplaintiffsdidnothaveacauseofactionagainstthedefendants.
TheFacts
TheCourtofAppealssummarizedthefactsofthecaseasfollows:
DefendantspousesLeonardoJoaquinandFelicianaLandritoaretheparentsofplaintiffsConsolacion,Nora,Emma
andNatividadaswellasofdefendantsFidel,Tomas,Artemio,Clarita,Felicitas,Fe,andGavino,all
_______________

1
UnderRule45oftheRulesofCourt.
2
PennedbyAssociateJusticeArtemioG.Tuquero,withAssociateJusticesCancioC.GarciaandRomeoJ.Callejo,Sr.,concurring.
3
PennedbyJudgeSalvadorS.AbadSantos.

265
VOL. 416, NOVEMBER 265
20, 2003
Buenaventura vs. Court of
Appeals
surnamedJOAQUIN.ThemarriedJoaquinchildrenarejoinedinthisactionbytheirrespectivespouses.
Soughttobedeclarednullandvoidabinitioarecertaindeedsofsaleofrealpropertyexecutedbydefendant
parentsLeonardoJoaquinandFelicianaLandritoinfavoroftheircodefendantchildrenandthecorresponding
certificatesoftitleissuedintheirnames,towit:

1. 1.DeedofAbsoluteSalecoveringLot168C7ofsubdivisionplan(LRC)Psd256395executedon11July
1978,infavorofdefendantFelicitasJoaquin,foraconsiderationofP6,000.00(Exh.C),pursuanttowhich
TCTNo.[36113/T172]wasissuedinhername(Exh.C1);

2. 2.DeedofAbsoluteSalecoveringLot168I3ofsubdivisionplan(LRC)Psd256394executedon7June1979,
infavorofdefendantClaritaJoaquin,foraconsiderationofP1[2],000.00(Exh.D),pursuanttowhichTCT
No.S109772wasissuedinhername(Exh.D1);

3. 3.DeedofAbsoluteSalecoveringLot168I1ofsubdivisionplan(LRC)Psd256394executedon12May1988,
infavorofdefendantspousesFidelJoaquinandConchitaBernardo,foraconsiderationofP54,[3]00.00
(Exh.E),pursuanttowhichTCTNo.155329wasissuedtothem(Exh.E1);

4. 4.DeedofAbsoluteSalecoveringLot168I2ofsubdivisionplan(LRC)Psd256394executedon12May1988,
infavorofdefendantspousesArtemioJoaquinandSocorroAngeles,foraconsiderationofP[54,3]00.00
(Exh.F),pursuanttowhichTCTNo.155330wasissuedtothem(Exh.F1);and

5. 5.AbsoluteSaleofRealPropertycoveringLot168C4ofsubdivisionplan(LRC)Psd256395executedon9
September1988,infavorofTomasJoaquin,foraconsiderationofP20,000.00(Exh.G),pursuanttowhich
TCTNo.157203wasissuedinhername(Exh.G1).

6. [6.DeedofAbsoluteSalecoveringLot168C1ofsubdivisionplan(LRC)Psd256395executedon7October
1988,infavorofGavinoJoaquin,foraconsiderationofP25,000.00(Exh.K),pursuanttowhichTCTNo.
157779wasissuedinhisname(Exh.K1).]

Inseekingthedeclarationofnullityoftheaforesaiddeedsofsaleandcertificatesoftitle,plaintiffs,intheir
complaint,aver:
XX

The deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they are, are NULL AND VOID AB
INITIObecause

266
266 SUPREME COURT
REPORTS ANNOTATED
Buenaventura vs. Court of
Appeals

1. a.Firstly,therewasnoactualvalidconsiderationforthedeedsofsalexxxoverthepropertiesinlitis;

2. b)Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the
propertiesaremorethanthreefoldtimesmorevaluablethanthemeaslysumsappearingtherein;

3. c)Thirdly,thedeedsofsaledonotreflectandexpressthetrueintentoftheparties(vendorsandvendees);
and

4. d)Fourthly,thepurportedsaleofthepropertiesinlitiswastheresultofadeliberateconspiracydesignedto
unjustlydeprivetherestofthecompulsoryheirs(plaintiffsherein)oftheirlegitime.
 XXI

Necessarily,andasaninevitableconsequence,TransferCertificatesofTitleNos.36113/T172,S109772,155329,155330,157203
[and157779]issuedbytheRegistrarofDeedsoverthepropertiesinlitisxxxareNULLANDVOIDABINITIO.

Defendants,ontheotherhandaver(1)thatplaintiffsdonothaveacauseofactionagainstthemaswellasthe
requisitestandingandinteresttoassailtheirtitlesoverthepropertiesinlitis;(2)thatthesaleswerewithsufficient
considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the
consequencesoftheirdeedsofsale;and(3)thatthecertificatesoftitlewereissuedwithsufficientfactualandlegal
basis. (Emphasisintheoriginal)
4

TheRulingoftheTrialCourt
Before the trial, the trial court ordered the dismissal of the case against defendant spouses Gavino
JoaquinandLeaAsis. InsteadoffilinganAnswerwiththeircodefendants,GavinoJoaquinandLeaAsis
5

filedaMotiontoDismiss. IngrantingthedismissaltoGavinoJoaquinandLeaAsis,thetrialcourtnoted
6

that compulsory heirs have the right to a legitime but such right is contingent since said right
commencesonlyfromthemomentofdeathofthedecedentpursuanttoArticle777oftheCivilCodeofthe
Philippines. 7

_______________

4
Rollo,pp.2931.
5
Records,pp.189,204.
6
Ibid.,pp.170175.
7
Ibid.,p.189.

267
VOL. 416, NOVEMBER 267
20, 2003
Buenaventura vs. Court of
Appeals
Aftertrial,thetrialcourtruledinfavorofthedefendantsanddismissedthecomplaint.Thetrialcourt
stated:
Inthefirstplace,thetestimonyofthedefendants,particularlythatofthexxxfatherwillshowthattheDeedsof
Sale were all executed for valuable consideration. This assertion must prevail over the negative allegation of
plaintiffs.
Andthenthereistheargumentthatplaintiffsdonothaveavalidcauseofactionagainstdefendantssincethere
can be no legitime to speak of prior to the death of their parents. The court finds this contention tenable. In
determiningthelegitime,thevalueofthepropertyleftatthedeathofthetestatorshallbeconsidered(Art.908of
the New Civil Code). Hence, the legitime of a compulsory heir is computed as of the time of the death of the
decedent.Plaintiffsthereforecannotclaimanimpairmentoftheirlegitimewhiletheirparentslive.
Alltheforegoingconsidered,thiscaseisDISMISSED.
Inordertopreservewhateverisleftofthetiesthatshouldbindfamiliestogether,thecounterclaimislikewise
DISMISSED.
Nocosts.
SOORDERED. 8

TheRulingoftheCourtofAppeals
TheCourtofAppealsaffirmedthedecisionofthetrialcourt.Theappellatecourtruled:
TothemindoftheCourt,appellantsareskirtingtherealanddecisiveissueinthiscase,whichis,whetherxxx
theyhaveacauseofactionagainstappellees.
Uponthispoint,thereisnoquestionthatplaintiffsappellants,liketheirdefendantbrothersandsisters,are
compulsoryheirsofdefendantspouses,LeonardoJoaquinandFelicianaLandrito,whoaretheirparents.However,
theirrighttothepropertiesoftheirdefendantparents,ascompulsoryheirs,ismerelyinchoateandvestsonlyupon
thelattersdeath.Whilestillalive,defendantparentsarefreetodisposeoftheirproperties,providedthatsuch
dispositionsarenotmadeinfraudofcreditors.
Plaintiffsappellants are definitely not parties to the deeds of sale in question. Neither do they claim to be
creditorsoftheirdefendantparents.Consequently,theycannotbeconsideredasrealpartiesininteresttoassailthe
validityofsaiddeedseitherforgrossinadequacyorlackofconsiderationorforfailuretoexpressthetrueintentof
theparties.In
_______________

8
Ibid.,pp.355356.

268
268 SUPREME COURT
REPORTS ANNOTATED
Buenaventura vs. Court of
 Appeals
pointistherulingoftheSupremeCourtinVelarde,etal.vs.Paez,etal.,101SCRA376,thus:
Theplaintiffsarenotpartiestotheallegeddeedofsaleandarenotprincipallyorsubsidiarilyboundthereby;hence,theyhaveno
legalcapacitytochallengetheirvalidity.

Plaintiffsappellantsanchortheiractiononthesupposedimpairmentoftheirlegitimebythedispositionsmade
bytheirdefendantparentsinfavoroftheirdefendantbrothersandsisters.But,ascorrectlyheldbythecourt aquo,
thelegitimeofacompulsoryheiriscomputedasofthetimeofthedeathofthedecedent.Plaintiffsthereforecannot
claimanimpairmentoftheirlegitimewhiletheirparentslive.
With this posture taken by the Court, consideration of the errors assigned by plaintiffsappellants is
inconsequential.
WHEREFORE,thedecisionappealedfromisherebyAFFIRMED,withcostsagainstplaintiffsappellants.
SOORDERED. 9

Hence,theinstantpetition.
Issues
PetitionersassignthefollowingaserrorsoftheCourtofAppeals:

1. 1.THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN

QUESTIONHADNOVALIDCONSIDERATION.

2. 2.THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT
THEREWASACONSIDERATION,THESAMEISGROSSLYINADEQUATE.

3. 3.THECOURTOF APPEALSERRED IN NOTHOLDINGTHATTHEDEEDSOFSALEDO

NOTEXPRESSTHETRUEINTENTOFTHEPARTIES.

4. 4.THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS
PARTANDPARCELOFACONSPIRACYAIMEDATUNJUSTLYDEPRIVINGTHERESTOF
THECHILDRENOFTHESPOUSESLEONARDOJOAQUINANDFELICIANALANDRITOOF
THEIRINTERESTOVERTHESUBJECTPROPERTIES.

_______________

9
Rollo,pp.3233.

269
VOL. 416, NOVEMBER 269
20, 2003
Buenaventura vs. Court of
Appeals

1. 5.THECOURTOFAPPEALSERREDINNOTHOLDINGTHATPETITIONERSHAVEAGOOD,
SUFFICIENTANDVALIDCAUSEOFACTIONAGAINSTTHEPRIVATERESPONDENTS. 10

TheRulingoftheCourt
Wefindthepetitionwithoutmerit.
We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before
discussingtheissuesonthepurportedlackofconsiderationandgrossinadequacyofthepricesofthe
DeedsofSale.
Whether Petitioners have a legal interest over
thepropertiessubjectoftheDeedsofSale
PetitionersComplaintbetraystheirmotiveforfilingthiscase.IntheirComplaint,petitionersasserted
thatthepurportedsaleofthepropertiesinlitiswastheresultofadeliberateconspiracydesignedto
unjustlydeprivetherestofthecompulsoryheirs(plaintiffsherein)oftheirlegitime.Petitionersstrategy
wastohavetheDeedsofSaledeclaredvoidsothatownershipofthelotswouldeventuallyreverttotheir
respondentparents.Iftheirparentsdiestillowningthelots,petitionersandtheirrespondentsiblings
willthencoowntheirparentsestatebyhereditarysuccession. 11

ItisevidentfromtherecordsthatpetitionersareinterestedinthepropertiessubjectoftheDeedsof
Sale,buttheyhavefailedtoshowanylegalrighttotheproperties.Thetrialandappellatecourtsshould
havedismissedtheactionforthisreasonalone.Anactionmustbeprosecutedinthenameofthereal
partyininterest. 12
[T]hequestionastorealpartyininterestiswhetherheisthepartywhowouldbebenefittedorinjuredbythe
judgment,orthepartyentitledtotheavailsofthesuit.
_______________

Ibid.,pp.1617.
10

Article1078oftheCivilCodeofthePhilippinesstates:Wheretherearetwoormoreheirs,thewholeestateofthedecedentis,
11

beforeitspartition,ownedincommonbysuchheirs,subjecttothepaymentofdebtsofthedeceased.
Section2,Rule3,1997RulesofCivilProcedure.
12

270
270 SUPREME COURT
REPORTS ANNOTATED
Buenaventura vs. Court of
Appeals
xxx
Inactionsfortheannulmentofcontracts,suchasthisaction,therealpartiesarethosewhoarepartiestothe
agreementorareboundeitherprincipallyorsubsidiarilyorareprejudicedintheirrightswithrespecttooneofthe
contractingpartiesandcanshowthedetrimentwhichwouldpositivelyresulttothemfromthecontracteventhough
theydidnotinterveneinit(Ibaezv.Hongkong&ShanghaiBank,22Phil.572[1912])xxx.
These are parties with a present substantial interest, as distinguished from a mere expectancy or future,
contingent,subordinate,orconsequentialinterest....Thephrasepresentsubstantialinterestmoreconcretelyis
meantsuchinterestofapartyinthesubjectmatteroftheactionaswillentitlehim,underthesubstantivelaw,to
recoveriftheevidenceissufficient,orthathehasthelegaltitletodemandandthedefendantwillbeprotectedina
paymenttoorrecoverybyhim. 13

PetitionersdonothaveanylegalinterestoverthepropertiessubjectoftheDeedsofSale.Astheappellate
courtstated,petitionersrighttotheirparentspropertiesismerelyinchoateandvestsonlyupontheir
parentsdeath.Whilestillliving,theparentsofpetitionersarefreetodisposeoftheirproperties.Intheir
overzealousnesstosafeguardtheirfuturelegitime,petitionersforgetthattheoretically,thesaleofthelots
totheirsiblingsdoesnotaffectthevalueoftheirparentsestate.Whilethesaleofthelotsreducedthe
estate,cashofequivalentvaluereplacedthelotstakenfromtheestate.
Whether the Deeds of Sale are void
forlackofconsideration
PetitionersassertthattheirrespondentsiblingsdidnotactuallypaythepricesstatedintheDeedsof
Saletotheirrespondentfather.Thus,petitionersaskthecourttodeclaretheDeedsofSalevoid.
Acontractofsaleisnotarealcontract,butaconsensualcontract.Asaconsensualcontract,acontract
ofsalebecomesabindingandvalidcontractuponthemeetingofthemindsastoprice.Ifthereisa
meetingofthemindsofthepartiesastotheprice,thecontractofsaleisvalid,despitethemannerof
payment,oreventhebreachofthatmannerofpayment.Iftherealpriceisnot
_______________

13
Kilosbayanv.Morato,316Phil.652;246SCRA540(1995).

271
VOL. 416, NOVEMBER 271
20, 2003
Buenaventura vs. Court of
Appeals
statedinthecontract,thenthecontractofsaleisvalidbutsubjecttoreformation.Ifthereisnomeeting
ofthemindsofthepartiesastotheprice,becausethepricestipulatedinthecontractissimulated,then
the contract is void. Article 1471 of the Civil Code states that if the price in a contract of sale is
14

simulated,thesaleisvoid.
Itisnottheactofpaymentofpricethatdeterminesthevalidityofacontractofsale.Paymentofthe
pricehasnothingtodowiththeperfectionofthecontract.Paymentofthepricegoesintotheperformance
ofthecontract.Failuretopaytheconsiderationisdifferentfromlackofconsideration.Theformerresults
inarighttodemandthefulfillmentorcancellationoftheobligationunderanexistingvalidcontract
whilethelatterpreventstheexistenceofavalidcontract. 15

PetitionersfailedtoshowthatthepricesintheDeedsofSalewereabsolutelysimulated.Toprove
simulation,petitionerspresentedEmmaJoaquinValdozstestimonystatingthattheirfather,respondent
LeonardoJoaquin,toldherthathewouldtransferalottoherthroughadeedofsalewithoutneedforher
paymentofthepurchaseprice. Thetrialcourtdidnotfindtheallegationofabsolutesimulationofprice
16

credible.Petitionersfailuretoproveabsolutesimulationofpriceismagnifiedbytheirlackofknowledge
oftheirrespondentsiblingsfinancialcapacitytobuythequestionedlots. Ontheotherhand,theDeeds
17

ofSalewhichpetitionerspresentedasevidenceplainlyshowedthecostofeachlotsold.Notonlydid
respondentsmindsmeetastothepurchaseprice,buttherealpricewasalsostatedintheDeedsofSale.
Asofthefilingofthecomplaint,respondentsiblingshavealsofullypaidthepricetotheirrespondent
father. 18

_______________

SeeLadanga,etal.v.CourtofAppeals,etal.,216Phil.332;131SCRA361(1984).CESARL.VILLANUEVA,PHILIPPINELAW
14

ONSALES54(1998).
RidoMontecillov.IgnaciaReynesandSpousesRedemptorandElisaAbucay,G.R.No.138018,26July2002,385SCRA244.
15

TSN,17May1991,pp.497498.
16

SeeEmbradov.CourtofAppeals,G.R.No.51457,27June1994,233SCRA335;TSN,17May1991,497498(EmmaJoaquin
17

Valdoz);TSN,22May1991,pp.1112,2021(NoraJoaquinEdra).
TSN,14June1991,p.19(LeonardoJoaquin);TSN,30October1991,p.6(FidelJoaquin);TSN,27November1991,p.10(Felicitas
18

Joa

272
272 SUPREME COURT
REPORTS ANNOTATED
Buenaventura vs. Court of
Appeals
Whether the Deeds of Sale are void
forgrossinadequacyofprice
Petitionersaskthatassumingthatthereisconsideration,thesameisgrosslyinadequateastoinvalidate
theDeedsofSale.
Articles1355oftheCivilCodestates:
Art.1355.Exceptincasesspecifiedbylaw,lesionorinadequacyofcauseshallnotinvalidateacontract,unlessthere
hasbeenfraud,mistakeorundueinfluence.(Emphasissupplied)

Article1470oftheCivilCodefurtherprovides:
Art.1470.Grossinadequacyofpricedoesnotaffectacontractofsale,exceptasmayindicateadefectintheconsent,
orthatthepartiesreallyintendedadonationorsomeotheractorcontract.(Emphasissupplied)

PetitionersfailedtoproveanyoftheinstancesmentionedinArticles1355and1470oftheCivilCode
whichwouldinvalidate,orevenaffect,theDeedsofSale.Indeed,thereisnorequirementthattheprice
beequaltotheexactvalueofthesubjectmatterofsale.Alltherespondentsbelievedthattheyreceived
thecommutativevalueofwhattheygave.AswestatedinValesv.Villa: 19

Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise
investments, relieve himfromonesided contracts, or annul the effects of foolish acts. Courts cannotconstitute
themselvesguardiansofpersonswhoarenotlegallyincompetent.Courtsoperatenotbecauseonepersonhasbeen
defeatedorovercomebyanother,butbecausehehasbeendefeatedorovercomeillegally.Menmaydofoolishthings,
makeridiculouscontracts,usemiserablejudgment,andlosemoneybythemindeed,alltheyhaveintheworld;but
not for that alone can the law intervene and restore. There must be, in addition, aviolationof the law, the
commission of what the law knows as anactionablewrong, before the courts are authorized to lay hold of the
situationandremedyit.(Emphasisintheoriginal)

Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater
weightwhentheycoincide
_______________

quinCarreon);TSN,7January1992,pp.56(ArtemioJoaquin);TSN,31January1992,p.12(ClaritaJoaquinMendoza);TSN,11
March1992,pp.1617(TomasJoaquin).
35Phil.769(1916).
19

273
VOL. 416, NOVEMBER 273
20, 2003
Tolentino vs. Natanauan
withthefactualfindingsofthetrialcourt.ThisCourtwillnotweightheevidencealloveragainunless
therehasbeenashowingthatthefindingsofthelowercourtaretotallydevoidofsupportorareclearly
erroneoussoastoconstituteseriousabuseofdiscretion. Intheinstantcase,thetrialcourtfoundthatthe
20

lotsweresoldforavalidconsideration,andthatthedefendantchildrenactuallypaidthepurchaseprice
stipulatedintheirrespectiveDeedsofSale.Actualpaymentofthepurchasepricebythebuyertothe
sellerisafactualfindingthatisnowconclusiveuponus.
WHEREFORE,weAFFIRMthedecisionoftheCourtofAppealsintoto.
SOORDERED.
Davide,Jr.(C.J.,Chairman),Panganiban,YnaresSantiagoandAzcuna,JJ.,concur.
 Judgmentaffirmedintoto.
Note.Acontractofsaleisperfectedatthemomentthereisameetingofmindsuponthethingwhich
istheobjectofthecontractandupontheprice.(DelosReyesvs.CourtofAppeals,313SCRA632[1999])

o0o

G.R.No.130115.July16,2008.*
FELIXTINGHO,JR.,MERLATINGHOBRADEN,JUANATINGHO&LYDIATINGHOBELENZO,
petitioners,vs.VICENTETENGGUI,respondent.

PoliticalLaw;PublicLands;LandRegistration;Therighttoacquirelandsofthepublicdomainisreservedfor
Filipino citizens or corporations at least sixty percent of the capital of which is owned by Filipinos.Our
fundamentallawcannotbeanyclearer.TherighttoacquirelandsofthepublicdomainisreservedforFilipino
citizensorcorporationsatleastsixtypercentofthecapitalofwhichisownedbyFilipinos.Thus,in Krivenkov.
RegisterofDeeds,79Phil.461(1947),theCourtenunciatedthat:...Perhapstheeffectofourconstructionisto
precludealiens,admittedfreelyintothePhilippinesfromowningsiteswheretheymaybuildtheirhomes.Butifthis
is the solemn mandate of the Constitution, we will not attempt to compromise it even in the name of amity or
equity.Wearesatisfied,however,thataliensarenotcompletelyexcludedbytheConstitutionfromtheuseoflands
forresidential purposes. Sincetheir residence in thePhilippines is temporary, they may be granted temporary
rightssuchasaleasecontractwhichisnotforbiddenbytheConstitution.Shouldtheydesiretoremainhereforever
andshareourfortunesandmisfortunes,Filipinocitizenshipisnotimpossibletoacquire.
PublicLands;LandRegistration;ThegrantofmiscellaneoussalespatentbytheSecretaryofNaturalResources,
andthecorrespondingissuanceoftheoriginalcertificateoftitleinhisname,showthattherespondentpossessesall
thequalificationsandnoneofthedisqualificationstoacquirealienableanddisposablelandsofthepublicdomain.
TherespondentbecametheownerofLotNo.418,Ts308whenhewasgrantedMiscellaneousSalesPatentNo.7457
onJanuary3,1978,bytheSecretaryofNaturalResourcesByAuthorityofthePresidentofthePhilippines,and
when Original Certificate of Title No. P1064 was correspondingly issued in his name. The grant of the
miscellaneoussalespatentbytheSecretaryofNaturalResources,andthecorrespondingissuanceoftheoriginal
certificateoftitleinhisname,showthattherespondentpossessesallthequali
_______________

*FIRSTDIVISION.

422

42 SUPREME
2 COURT REPORTS
ANNOTATED
Ting Ho, Jr. vs. Teng Gui
ficationsandnoneofthedisqualificationstoacquirealienableanddisposablelandsofthepublicdomain.These
issuancesbearthepresumptionofregularityintheirperformanceintheabsenceofevidencetothecontrary.
Same;Same;Theeffectoftheregistrationofapatentandtheissuanceofacertificateoftitletothepatenteeisto
vestinhimanincontestabletitletotheland,inthesamemannerasifownershiphadbeendeterminedbyfinaldecree
ofthecourt,andthetitlesoissuedisabsolutelyconclusiveandindisputable,andisnotsubjecttocollateralattack.
Underthelaw,acertificateoftitleissuedpursuanttoanygrantorpatentinvolvingpubliclandisasconclusiveand
indefeasible as any other certificate of title issued to private lands in the ordinary or cadastral registration
proceeding.Theeffectoftheregistrationofapatentandtheissuanceofacertificateoftitletothepatenteeistovest
inhimanincontestabletitletotheland,inthesamemannerasifownershiphadbeendeterminedbyfinaldecreeof
thecourt,andthetitlesoissuedisabsolutelyconclusiveandindisputable,andisnotsubjecttocollateralattack.
Same; Same; Ownership; Save for the exception provided in cases of hereditary succession, respondents
disqualificationfromowninglandsinthePhilippinesisabsolutenotevenanownershipintrustisallowed.Inthe
case ofMuller v. Muller, 500 SCRA 65 (2006), wherein the respondent, a German national, was seeking
reimbursement offundsclaimed byhimtobegiven intrustto hispetitionerwife,a Philippine citizen,for the
purchase of a property in Antipolo, the Court, in rejecting the claim, ruled that: Respondent wasaware of the
constitutionalprohibitionandexpresslyadmittedhisknowledgethereoftothisCourt.Hedeclaredthathehadthe
Antipolopropertytitledinthenameofthepetitionerbecauseofthesaidprohibition.Hisattemptatsubsequently
assertingorclaimingarightonthesaidpropertycannotbesustained.TheCourtofAppealserredinholdingthatan
impliedtrustwascreatedandresultedbyoperationoflawinviewofpetitionersmarriagetorespondent.Saveforthe
exception provided in cases of hereditary succession, respondents disqualification from owning lands in the
Philippinesisabsolute.Notevenanownershipintrustisallowed.Besides,wherethepurchaseismadeinviolation
ofanexistingstatuteandinevasionofitsexpressprovision,notrustcanresultinfavorofthepartywhois 423
 VOL. 558, JULY 423
16, 2008
Ting Ho, Jr. vs. Teng Gui
guiltyofthefraud.Toholdotherwisewouldallowcircumventionoftheconstitutionalprohibition.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
MarioO.Leyco&SegundoE.Mangohigforpetitioners.
AlreuelaM.BundangOrtizandEdmundoS.Legaspiforrespondent.

PUNO,C.J.:
ThisisaPetitionforReviewonCertiorari assailingtheDecision oftheCourtofAppeals(CA)inCA
1 2

G.R. CV No. 42993 which reversed and set aside the Decision of the Regional Trial Court (RTC) of
OlongapoCity,Branch74,inCivilCaseNo.558088.
TheinstantcasetracesitsorigintoanactionforpartitionfiledbypetitionersFelixTingHo,Jr.,Merla
TingHoBraden,JuanaTingHoandLydiaTingHoBelenzoagainsttheirbrother,respondentVicente
TengGui,beforetheRTC,Branch74ofOlongapoCity.Thecontroversyrevolvesaroundaparcelofland,
andtheimprovementsestablishedthereon,which,accordingtopetitioners,shouldformpartoftheestate
oftheirdeceasedfather,FelixTingHo,andshouldbepartitionedequallyamongeachofthesiblings.
IntheircomplaintbeforetheRTC,petitionersallegedthattheirfatherFelixTingHodiedintestateon
June26,1970,andleftuponhisdeathanestateconsistingofthefollowing:
_______________

1UnderRule45ofthe1997RulesofCivilProcedure.
2Rollo,pp.4962;pennedbyAssociateJusticeEduardoG.Montenegro,concurredinbyAssociateJusticesAntonioM.Martinezand
CeliaLipanaReyes.

424
424 SUPREME COURT
REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
a)Acommerciallandconsistingof774squaremeters,moreorless,locatedatNos.16and18Afable
St., East BajacBajac, Olongapo City, covered by Original Certificate of Title No. P1064 and Tax
DeclarationNo.0022451;
b)Atwostoreyresidentialhouseontheaforesaidlot;
c)Atwostoreycommercialbuilding,thefirstfloorrentedtodifferentpersonsandthesecondfloor,
BonanzaHotel,operatedbythedefendantalsolocatedontheabovedescribedlot;and
d)Asarisaristore(formerlyabakery)alsolocatedontheabovedescribedlot. 3

Accordingtopetitioners,thesaidlotandpropertiesweretitledandtaxdeclaredundertrustinthename
ofrespondentVicenteTengGuiforthebenefitofthedeceasedFelixTingHowho,beingaChinesecitizen,
wasthendisqualifiedtoownpubliclandsinthePhilippines;andthatuponthedeathofFelixTingHo,
therespondenttookpossessionofthesameforhisownexclusiveuseandbenefittotheirexclusionand
prejudice. 4

Inhisanswer,therespondentcounteredthatonOctober11,1958,FelixTingHosoldthecommercial
and residential buildings to his sisterinlaw, Victoria Cabasal, and the bakery to his brotherinlaw,
GregorioFontela. HeallegedthatheacquiredsaidpropertiesfromtherespectivebuyersonOctober28,
5

1961andhassincethenbeeninpossessionofsubjectpropertiesintheconceptofanowner;andthaton
January24,1978, Original CertificateofTitleNo.P1064coveringthesubjectlotwas issued tohim
pursuanttoamiscellaneoussalespatentgrantedtohimonJanuary3,1978. 6

_______________

3Id.,atp.78.
4Id.,atpp.7879.
5Id.,atp.79.
6Id.,atp.80.

425
VOL. 558, JULY 16, 2008 425
Ting Ho, Jr. vs. Teng Gui
Theundisputedfactsasfoundbythetrialcourt(RTC),andaffirmedbytheappellatecourt(CA),are
asfollows:
[T]heplaintiffsandthedefendantareallbrothersandsisters,thedefendantbeingtheoldest.Theyaretheonly
legitimatechildrenofthedeceasedSpousesFelixTingHoandLeonilaCabasal.FelixTingHodiedonJune26,1970
whilethewifeLeonilaCabasaldiedonDecember7,1978.ThedefendantVicenteTengGuiistheoldestamongthe
childrenashewasbornonApril5,1943.ThefatheroftheplaintiffsandthedefendantwasaChinesecitizen
althoughtheirmotherwasFilipino.Thatsometimein1947,thefatheroftheplaintiffsanddefendant,FelixTing
Ho,whowasalreadythenmarriedtotheirmotherLeonilaCabasal,occupiedaparceloflandidentifiedto( sic)as
LotNo.18BrillwhichwasthereafteridentifiedasLotNo.16situatedatAfableStreet,EastBajacBajac,Olongapo
City,byvirtueofthepermissiongrantedhimbythethenU.S.NavalReservationOffice,Olongapo,Zambales.The
couplethereafterintroducedimprovementsontheland.Theybuiltahouseofstrongmaterialat16AfableStreet
whichisacommercialandresidentialhouseandanotherbuildingofstrongmaterialat18AfableStreetwhichwas
aresidentialhouseandabakery.Thecouple,aswellastheirchildren,livedandresidedinthesaidpropertiesuntil
theirdeath.Thefather,FelixTingHohadmanagedthebakerywhilethemothermanagedthesarisaristore. Long
beforethedeathofFelixTingHo,whodiedonJune26,1970,heexecutedonOctober11,1958aDeedof
AbsoluteSaleofahouseofstrongmateriallocatedat16AfableStreet,Olongapo,Zambales,specifically
describedinTaxDec.No.5432,infavorofVictoriaCabasalhissisterinlaw(Exh.C).ThisDeedofSale
cancelledtheTaxDec.ofFelixTingHooverthesaidbuilding(Exh.C1)andthebuildingwasregisteredinthe
nameofthebuyerVictoriaCabasal,asperTaxDec.No.7579(Exh.C2).Onthesamedate,October11,1958
thesaidFelixTingHoalsosoldabuildingofstrongmateriallocatedat18AfableStreet,describedin
Tax Dec. No. 5982, in favor of Gregorio Fontela, of legal age, an American citizen, married (Exh.
D).ThisDeedofSale,ineffect,cancelledTaxDec.No.5982andthesamewasregisteredinthenameofthebuyer
GregorioFontela,asperTaxDec.No.7580(Exh.D2).InturnVictoriaCabasalandherhusbandGregorio
FontelasoldtoVicenteTengGuionOctober28,1961thebuildingswhichwereboughtbythemfrom
FelixTingHoandtheirtaxdecla426

426 SUPREME COURT

REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
rationsforthebuildingtheybought(Exhs.C2andD2)wereaccordinglycancelledandthesaid
buildingswereregisteredinthenameofthedefendantVicenteTengGui(Exhs.C3andD3). On
October25,1966thefatherofthepartiesFelixTingHoexecutedanAffidavitofTransfer,Relinquishmentand
RenouncementofRightsandInterestincludingImprovementsonLandinfavorofhiseldestsonthedefendant
VicenteTengGui.OnthebasisofthesaiddocumentthedefendantwhothenchoseFilipinocitizenshipfileda
miscellaneoussalesapplicationwiththeBureauofLands.MiscellaneousSalesPatentNo.7457oftheland
whichwasthenidentifiedtobeLotNo.418,Ts308consistingof774squaremeterswasissuedtothe
applicantVicenteTengGuiandaccordinglyonthe24thofJanuary,1978OriginalCertificateofTitle
No. P1064 covering the lot in question was issued to the defendant Vicente Teng Gui.Although the
buildingsandimprovementsonthelandinquestionweresoldbyFelixTingHotoVictoriaCabasalandGregorio
Fontelain1958andwhointurnsoldthebuildingstothedefendantin1961thesaidFelixTingHoandhiswife
remainedinpossessionofthepropertiesasFelixTingHocontinuedtomanagethebakerywhilethewifeLeonila
Cabasalcontinuedtomanagethesarisaristore.Duringallthetimethattheallegedbuildingsweresoldtothe
spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to the defendant
VicenteTengGuiinOctoberof1961theplaintiffsandthedefendantcontinuedtoliveandwereunderthecustodyof
their parents until their father Felix Ting Ho died in 1970 and their mother Leonila Cabasal died in
1978. (Emphasissupplied)
7

Inlightofthesefactualfindings,theRTCfoundthatFelixTingHo,beingaChinesecitizenandthe
father of the petitioners and respondent, resorted to a series of simulated transactions in order to
preservetherighttothelotandthepropertiesthereoninthehandsofthefamily.Asstatedbythetrial
court:
Afteraseriousconsiderationofthetestimoniesgivenbybothoneoftheplaintiffsandthedefendantaswellas
thedocumentary
_______________

7Id.,atpp.5355.

427

VOL. 558, JULY 16, 2008 427

Ting Ho, Jr. vs. Teng Gui
exhibitspresentedinthecase,theCourtisinclinedtobelievethatFelixTingHo,thefatheroftheplaintiffsandthe
defendant,andthehusbandofLeonilaCabasalthoughtofpreservingthepropertiesinquestionbytransferringthe
saidpropertiestohiseldestsonashethoughtthathecannotacquirethepropertiesashewasaChinesecitizen.To
transfertheimprovementsonthelandtohiseldestsonthedefendantVicenteTengGui,hefirstexecutedsimulated
DeedsofSalesinfavorofthesisterandbrotherinlawofhiswifein1958andafterthree(3)yearsitwasmadeto
appearthatthesevendeeshadsoldtheimprovementstothedefendantVicenteTengGuiwhowasthen18yearsold.
TheCourtfindsthatthesetransaction(sic)weresimulatedandthatnoconsiderationwaseverpaidbythevendees.
xxxxxxxxx
Withregards(sic)tothetransferandrelinquishmentofFelixTingHosrighttothelandinquestioninfavorof
thedefendant,theCourtbelieves,thatalthoughfromthefaceofthedocumentitisstatedinabsolutetermsthat
withoutanyconsiderationFelixTingHowastransferringandrenouncinghisrightinfavorofhisson,thedefendant
VicenteTengGui,stilltheCourtbelievesthatthetransactionwasoneofimpliedtrustexecutedbyFelixTingHofor
thebenefitofhisfamily... 8

Notwithstanding such findings, the RTC considered the Affidavit of Transfer, Relinquishment and
RenouncementofRightsandInterestsoverthelandasadonationwhichwasacceptedbythedonee,the
hereinrespondent.Withrespecttothepropertiesinthelot,thetrialcourtheldthatalthoughthesales
weresimulated,pursuanttoArticle1471oftheNewCivilCode itcanbeassumedthattheintentionof
9

FelixTingHoinsuchtransactionwastogiveanddonatesuchpropertiestotherespondent.Asaresult,it
awardedtheentireconjugalshareofFelixTingHointhesubjectlotandpropertiestothe
_______________

8Id.,atpp.8485.
9Article1471oftheCivilCodeprovides:
Art.1471.Ifthepriceissimulated,thesaleisvoid,buttheactmaybeshowntohavebeeninrealityadonation,orsomeotheract
orcontract.

428
428 SUPREME COURT
REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
respondentanddividedonlytheconjugalshareofhiswifeamongthesiblings.Thedispositiveportionof
theRTCdecisiondecreed:
WHEREFORE,judgmentisherebyrenderedinfavoroftheplaintiffsandagainstthedefendantastheCourt
ordersthepartitionandtheadjudicationofthesubjectproperties,Lot418,Ts308,specificallydescribedinoriginal
CertificateofTitleNo.P1064andtheresidentialandcommercialhousesstandingonthelotspecificallydescribed
inTaxDecs.Nos.9179and9180inthenameofVicenteTengGuiinthefollowingmanner,towit:Tothedefendant
VicenteTengGuiisadjudicatedanundividedsixtenth(6/10)oftheaforementionedpropertiesandtoeachofthe
plaintiffsFelixTingHo,Jr.,MerlaTingHoBraden,JuanaTingandLydiaTingHoBelenzoeachanundividedone
tenth(1/10)oftheproperties... 10

Fromthisdecision,bothpartiesinterposedtheirrespectiveappeals.Thepetitionersclaimedthatthe
RTC erred in awarding respondent the entire conjugal share of their deceased father in the lot and
propertiesinquestioncontrarytoitsownfindingthatanimpliedtrustexistedbetweentheparties.The
respondent,ontheotherhand,assertedthattheRTCerredinnotrulingthatthelotandpropertiesdo
notformpartoftheestateofFelixTingHoandareownedentirelybyhim.
Onappeal,theCAreversedandsetasidethedecisionoftheRTC.Theappellatecourtheldthatthe
deceasedFelixTingHowasnevertheownerandneverclaimedownershipofthesubjectlotsinceheis
disqualifiedunderPhilippinelawsfromowningpubliclands,andthatrespondentVicenteTengGuiwas
therightfulowneroversaidlotbyvirtueofMiscellaneousSalesPatentNo.7457issuedinhisfavor,viz.:
ThedeceasedFelixTingHo,plaintiffsanddefendantslatefather,wasnevertheownerofthesubject
lot,nowidentifiedasLotNo.418,Ts308coveredbyOCTNo.P1064(Exh.A;Record,p.104).Asstated
byFelixTingHonolessinthe
_______________

10Rollo,p.86.

429

VOL. 558, JULY 16, 2008 429

Ting Ho, Jr. vs. Teng Gui
Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interestetc. (Exh. B;
Record,p.107),executedonOctober25, 1966he,thelateFelixTingHo,was merelyapossessoror
occupantofthesubjectlotbyvirtueofapermissiongranted...bythethenU.S.NavalReservation
Office,Olongapo,Zambales.ThelateFelixTingHowasnevertheownerandneverclaimedownershipofthe
land.(Emphasissupplied)
Theaffidavit,ExhibitB,wassubscribedandsworntobeforeaLandInvestigatoroftheBureauofLandsandin
thesaidaffidavit,thelateFelixTingHoexpresslyacknowledgedthatbecauseheisaChinesecitizenheisnot
qualifiedtopurchasepubliclandsunderPhilippinelawsforwhichreasonhetherebytransfers,relinquishesand
renouncesallhisrightsandinterestsinthesubjectland,includingalltheimprovementsthereontohisson,the
defendantVicenteTengGui,whoisoflegalage,single,Filipinocitizenandqualifiedunderthepubliclandlawto
acquirelands.
xxxxxxxxx
Defendant Vicente Teng Gui acquired the subject land by sales patent or purchase from the
governmentandnotfromhisfather,thelateFelixTingHo.Itcannotbesaidthatheacquiredorboughtthe
landintrustforhisfatherbecauseonDecember5,1977whenthesubjectlandwassoldtohimbythegovernment
andonJanuary3,1978whenMiscellaneousSalesPatentNo.7457wasissued,thelateFelixTingHowasalready
dead,havingdiedonJune6,1970(TSN,January10,1990,p.4). 11

Regardingthepropertieserectedoverthesaidlot,theCAheldthatthefindingthatthesalesofthe
twostorey commercial and residential buildings and sarisari store to Victoria Cabasal and Gregorio
Fontela and subsequently to respondent were without consideration and simulated is supported by
evidence,whichclearlyestablishesthatthesepropertiesshouldformpartoftheestateofthelatespouses
FelixTingHoandLeonilaCabasal.
Thus, while the appellate court dismissed the complaint for partition with respect to the lot in
question,itawardedthe
_______________

11Id.,atpp.5557(emphasissupplied).

430
430 SUPREME COURT
REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
petitionersafourfifths(4/5)shareofthesubjectpropertieserectedonthesaidlot.Thedispositiveportion
oftheCArulingreadsasfollows:
WHEREFORE, premises considered, thedecision appealed from isREVERSED and SET ASIDE and NEW
JUDGMENTrendered:
1.DISMISSINGplaintiffappellantscomplaintwithrespecttothesubjectparcelofland,identifiedasLotNo.
418,Ts308,coveredbyOCTNo.P1064,inthenameofplaintiffappellants[shouldbedefendantappellant];
2.DECLARINGthatthetwostoreycommercialbuilding,thetwostoreyresidentialbuildingandsarisaristore
(formerlyabakery),allerectedonthesubjectlotNo.418,Ts308,formpartoftheestateofthedeceasedspouses
Felix Ting Ho and Leonila Cabasal, and that plaintiffappellants are entitled to fourfifths (4/5) thereof, the
remainingonefifth(1/5)beingtheshareofthedefendantappellant;
3.DIRECTING the courta quoto partition the said twostorey commercial building, twostorey residential
building and sarisari store (formerly a bakery) in accordance with Rule 69 of the Revised Rules of Court and
pertinentprovisionsoftheCivilCode;
4.Lettherecordsofthiscaseberemandedtothecourtoforiginforfurtherproceedings;
5.LetacopyofthisdecisionbefurnishedtheOfficeoftheSolicitorGeneral;and
6.Thereisnopronouncementastocosts.
SOORDERED. 12

Bothpetitionersandrespondentfiledtheirrespectivemotionsforreconsiderationfromthisruling,
whichweresummarilydeniedbytheCAinitsResolution datedAugust5,1997.Hence,thispetition.
13

_______________

12Rollo,pp.6061.
13CARecords,p.235.

431
VOL. 558, JULY 16, 2008 431
Ting Ho, Jr. vs. Teng Gui
Accordingtothepetitioners,theCAerredindeclaringthatLotNo.418,Ts308doesnotformpartof
theestateofthedeceasedFelixTingHoandisownedalonebyrespondent.Respondent,ontheother
hand,contendsthatheshouldbedeclaredthesoleownernotonlyofLotNo.418,Ts308butalsoofthe
properties erected thereon and that the CA erred in not dismissing the complaint for partition with
respecttothesaidproperties.
TheprimaryissueforconsiderationiswhetherbothLotNo.418,Ts308andthepropertieserected
thereonshouldbeincludedintheestateofthedeceasedFelixTingHo.
WeaffirmtheCAruling.
WithregardtoLotNo.418,Ts308,ArticleXIII,Section1ofthe1935Constitutionstates:
Section1.All agricultural timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy and other natural resources of the
PhilippinesbelongtotheState,andtheirdisposition,exploitation,development,orutilizationshallbe
limitedtocitizensofthePhilippinesortocorporationsorassociationsatleastsixtypercentumofthe
capitalofwhichisownedbysuchcitizens,subjecttoanyexistingright,grant,lease,orconcessionatthetime
oftheinaugurationoftheGovernmentestablishedunderthisConstitution...(Emphasissupplied)

Our fundamental law cannot be any clearer. The right to acquire lands of the public domain is
reservedforFilipinocitizensorcorporationsatleastsixtypercentofthecapitalofwhichisownedby
Filipinos.Thus,inKrivenkov.RegisterofDeeds, theCourtenunciatedthat:
14
 ...Perhapstheeffectofourconstructionistoprecludealiens,admittedfreelyintothePhilippines
from owning sites where they may build their homes. But if this is the solemn mandate of the
Constitution,wewillnotattempttocompro
_______________

1479Phil.461(1947).

432

432 SUPREME COURT

REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
miseiteveninthenameofamityorequity.Wearesatisfied,however,thataliensarenotcompletelyexcluded
by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is
temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the
Constitution.Shouldtheydesiretoremainhereforeverandshareourfortunesandmisfortunes,Filipinocitizenship
isnotimpossibletoacquire. 15

Inthepresentcase,thefatherofpetitionersandrespondentwasaChinesecitizen;therefore,hewas
disqualifiedfromacquiringandowningrealpropertyinthePhilippines.Infact,hewasonlyoccupying
thesubjectlotbyvirtueofthepermissiongrantedhimbythethenU.S.NavalReservationOfficeof
Olongapo,Zambales.AscorrectlyfoundbytheCA,thedeceasedFelixTingHowasnevertheownerofthe
subjectlotinlightoftheconstitutionalproscriptionandtherespondentdidnotatanyinstanceactasthe
dummyofhisfather.
Ontheotherhand,therespondentbecametheownerofLotNo.418,Ts308whenhewasgranted
Miscellaneous SalesPatentNo.7457onJanuary3,1978, bytheSecretaryofNaturalResources By
AuthorityofthePresidentofthePhilippines,andwhenOriginalCertificateofTitleNo.P1064was
correspondingly issued in his name. The grant of the miscellaneous sales patent by the Secretary of
NaturalResources,andthecorrespondingissuanceoftheoriginalcertificateoftitleinhisname,show
thattherespondentpossessesallthequalificationsandnoneofthedisqualificationstoacquirealienable
anddisposablelandsofthepublicdomain.Theseissuancesbearthepresumptionofregularityintheir
performanceintheabsenceofevidencetothecontrary.
RegistrationofgrantsandpatentsinvolvingpubliclandsisgovernedbySection122ofActNo.496,
whichwassubsequentlyamendedbySection103ofPresidentialDecreeNo.1529,viz.:
_______________

15Id.,atp.474(emphasissupplied).

433
VOL. 558, JULY 16, 2008 433
Ting Ho, Jr. vs. Teng Gui
Sec.103.Certificateoftitlepursuanttopatents.WheneverpubliclandisbytheGovernmentalienated,
grantedorconveyedtoanyperson,thesameshallbebroughtforthwithundertheoperationofthisDecree.Itshall
be the duty of the official issuing the instrument of alienation, grant, patent or conveyance in behalf of the
GovernmenttocausesuchinstrumenttobefiledwiththeRegisterofDeedsoftheprovinceorcitywheretheland
lies,andtobethereregisteredlikeotherdeedsandconveyance,whereuponacertificateoftitleshallbeenteredas
in other cases of registered land, and an owners duplicate issued to the grantee. The deeds, grant, patent or
instrumentofconveyancefromtheGovernmenttothegranteeshallnottakeeffectasaconveyanceorbindtheland,
butshalloperateonlyasacontractbetweentheGovernmentandthegranteeandasevidenceofauthoritytothe
RegisterofDeedstomakeregistration.Itistheactofregistrationthatshallbetheoperativeacttoaffectand
conveytheland,andinallcasesunderthisDecreeregistrationshallbemadeintheofficeoftheRegisterofDeedsof
the province or city where the land lies. The fees for registration shall be paid by the grantee. After due
registrationandissuanceofthecertificateoftitle,suchlandshallbedeemedtoberegisteredlandto
allintentsandpurposesunderthisDecree. (Emphasissupplied)
16

Underthelaw,acertificateoftitleissuedpursuanttoanygrantorpatentinvolvingpubliclandisas
conclusiveand indefeasibleasanyothercertificateof titleissued toprivatelands intheordinary or
cadastral registration proceeding. The effect of the registration of a patent and the issuance of a
certificateoftitletothepatenteeistovestinhimanincontestabletitletotheland,inthesamemanner
asifownershiphadbeendeterminedbyfinaldecreeofthecourt,andthetitlesoissuedisabsolutely
conclusiveandindisputable,andisnotsubjecttocollateralattack. 17

_______________

16PropertyRegistrationDecree,P.D.No.1529,103.
17ThisruledoesnotapplywherethelandcoveredbyapatentissuedbytheGovernmenthadpreviouslybeendeterminedina
registrationproceedingandadjudicatedinfavorofaprivateindividualotherthanthepatentee,whichsituationisnotpresentinthis
case.
 434
434 SUPREME COURT
REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
Nonetheless,petitionersinvokeequityconsiderationsandclaimthattherulingoftheRTCthatan
impliedtrustwascreatedbetweenrespondentandtheirfatherwithrespecttothesubjectlotshouldbe
upheld.
Thiscontentionmustfailbecausetheprohibitionagainstanalienfromowninglandsofthepublic
domainisabsoluteandnotevenanimpliedtrustcanbepermittedtoariseonequityconsiderations.
In the case ofMuller v. Muller, wherein the respondent, a German national, was seeking
18

reimbursementoffundsclaimedbyhimtobegivenintrusttohispetitionerwife,aPhilippinecitizen,for
thepurchaseofapropertyinAntipolo,theCourt,inrejectingtheclaim,ruledthat:
Respondentwasawareoftheconstitutionalprohibitionandexpresslyadmittedhisknowledgethereoftothis
Court. He declared that he had the Antipolo property titled in the name of the petitioner because of the said
prohibition.Hisattemptatsubsequentlyassertingorclaimingarightonthesaidpropertycannotbesustained.
TheCourtofAppealserredinholdingthatanimpliedtrustwascreatedandresultedbyoperationof
law in view of petitioners marriage to respondent. Save for the exception provided in cases of
hereditarysuccession,respondentsdisqualificationfromowninglandsinthePhilippinesisabsolute.
Notevenanownershipintrustisallowed.Besides,wherethepurchaseismadeinviolationofanexisting
statuteandinevasionofitsexpressprovision,notrustcanresultinfavorofthepartywhoisguiltyofthefraud.To
holdotherwisewouldallowcircumventionoftheconstitutionalprohibition.
Invokingtheprinciplethatacourtisnotonlyacourtoflawbutalsoacourtofequity,islikewisemisplaced.It
hasbeenheldthatequityasarulewillfollowthelawandwillnotpermitthattobedoneindirectlywhich,because
ofpublicpolicy,cannotbedonedirectly... 19

_______________

18G.R.No.149615,August29,2006,500SCRA65.
19Id.,atp.68.

435
VOL. 558, JULY 16, 2008 435
Ting Ho, Jr. vs. Teng Gui
Comingnowtotheissueofownershipofthepropertieserectedonthesubjectlot,theCourtagrees
withthefindingofthetrial court,asaffirmed bytheappellatecourt,that theseriesoftransactions
resortedtobythedeceasedweresimulatedinordertopreservethepropertiesinthehandsofthefamily.
TherecordsshowthatduringallthetimethatthepropertieswereallegedlysoldtothespousesVictoria
CabasalandGregorioFontelain1958andthesubsequentsaleofthesametorespondentin1961,the
petitionersandrespondent,alongwiththeirparents,remainedinpossessionandcontinuedtoliveinsaid
properties.
However,thetrialcourtconcludedthat:
Infairnesstothedefendant,althoughtheDeedsofSaleexecutedbyFelixTingHoregardingthe
improvementsinfavorofVictoriaCabasalandGregorioFontelaandthesubsequenttransferofthesame
byGregorioFontelaandVictoriaCabasaltothedefendantareallsimulated,yet,pursuanttoArticle
1471 of the New Civil Code itcan be assumed that theintention of FelixTing Ho insuch
transactionwastogiveanddonatetheimprovementstohiseldestsonthedefendantVicente
TengGui... 20

ItsfindingwasbasedonArticle1471oftheCivilCode,whichprovidesthat:
Art.1471.If thepriceis simulated, thesale is void, but the act may be shown to have been inreality a
donation,orsomeotheractorcontract. 21

TheCourtholdsthattherelianceofthetrialcourtontheprovisionsofArticle1471oftheCivilCodeto
concludethatthesimulatedsaleswereavaliddonationtotherespondentismisplacedbecauseitsfinding
wasbasedonamereassumptionwhenthelawrequirespositiveproof.
_______________

20Rollo,pp.8586(emphasissupplied).
21CivilCode,Art.1471.

436
436 SUPREME COURT
REPORTS ANNOTATED
Ting Ho, Jr. vs. Teng Gui
Therespondentwasunabletoshow,andtherecordsarebereftofanyevidence,thatthesimulated
salesofthepropertieswereintendedbythedeceasedtobeadonationtohim.Thus,theCourtholdsthat
thetwostoreyresidentialhouse,twostoreyresidentialbuildingandsarisaristoreformpartoftheestate
ofthelatespousesFelixTingHoandLeonilaCabasal,entitlingthepetitionerstoafourfifths(4/5)share
thereof.
INVIEWWHEREOF,thepetitionisDENIED.TheassailedDecisiondatedDecember27,1996ofthe
CourtofAppealsinCAG.R.CVNo.42993isherebyAFFIRMED.
SOORDERED.
Carpio,Corona,AzcunaandLeonardoDeCastro,JJ.,concur.

Petitiondenied,assaileddecisionaffirmed.

Note.WhileitisanacknowledgedpolicyoftheStatetopromotethedistributionofalienablepublic
landsasaspurtoeconomicgrowthandinlinewiththeidealofsocialjustice,thelawimposesstringent
safeguardsuponthegrantofsuchresourceslesttheyfallintothewronghandstotheprejudiceofthe
nationalpatrimony.TheCourt,mustnot,therefore,relaxthestringentsafeguardstotheregistrationof
imperfecttitles.(Republicvs.TriPlusCorporation,503SCRA91[2006])
o0o

360 SUPREME COURT

REPORTS ANNOTATED
Labagala vs. Santiago
G.R.No.132305.December4,2001. *

IDA C. LABAGALA, petitioner,vs.NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON.

COURTOFAPPEALS,respondents.

Actions;Filiation;Legitimacy;Prescription;Article 263 of the Civil Code refers to an action to impugn the

legitimacyofachild,toassertandprovethatapersonisnotamanschildbyhiswifeitdoesnotrefertosituations
whereachildisallegednottobethechildatallofaparticularcouple;Anactionforrecoveryoftitleandpossession
isoutsidethescopeofArticle263onprescriptiveperiods.Article263oftheCivilCodeshouldbereadinconjunction
withtheotherarticlesinthesamechapteronpaternityandfiliationintheCivilCode.Acarefulreadingofsaid
chapterwouldrevealthatitcontemplatessituationswhereadoubtexiststhatachildisindeedamanschildbyhis
wife,andthehusband(or,inpropercases,hisheirs)deniesthechildsfiliation.Itdoesnotrefertosituationswhere
a child is alleged not to be the child at all of a particular couple. Article 263 refers to an action to impugn
thelegitimacyofachild,toassertandprovethatapersonisnotamanschildbyhiswife.However,thepresentcase
is
_______________

*
SECONDDIVISION.

361

VOL. 371, 361

DECEMBER 4, 2001
Labagala vs. Santiago
not one impugning petitioners legitimacy. Respondents are asserting not merely that petitioner is not a
legitimatechildofJose,butthatsheisnotachildofJoseatall.Moreover,thepresentactionisoneforrecoveryof
titleandpossession,andthusoutsidethescopeofArticle263onprescriptiveperiods.
Same;Same;BaptismalCertificates;Abaptismalcertificateisevidenceonlytoprovetheadministrationofthe
sacramentonthedatesthereinspecified,butnottheveracityofthedeclarationsthereinstatedwithrespecttoa
persons kinsfolk.Petitioner opted not to present her birth certificate to prove her relationship with Jose and
insteadofferedin evidence herbaptismal certificate. However, asweheldinHeirsofPedro Cabais v.Courtof
Appeals:...abaptismalcertificateisevidenceonlytoprovetheadministrationofthesacramentonthedates
thereinspecified,butnottheveracityofthedeclarationsthereinstatedwithrespectto[apersons]kinsfolk.The
sameisconclusiveonlyofthebaptismadministered,accordingtotheritesoftheCatholicChurch,bythepriestwho
baptized subject child, but it does not prove the veracity of the declarations and statements contained in the
certificateconcerningtherelationshipofthepersonbaptized.
Same;Same;Same;IncomeTaxReturns;Ifabaptismalcertificate,aprivatedocument,isnotconclusiveproof
offiliation,moresoaretheentriesinanincometaxreturn.Abaptismalcertificate,aprivatedocument,isnot
conclusiveproofoffiliation.Moresoaretheentriesmadeinanincometaxreturn,whichonlyshowsthatincometax
hasbeenpaidandtheamountthereof.
Same;Same;BirthCertificates;Thefailureofapartyclaimingfiliationtoshowherbirthcertificateraisesthe
presumptionthatifsuchevidencewerepresented,itwouldbeadversetoherclaim;Useofafamilynamecertainly
does not establish pedigree.We note that the trial court had asked petitioner to secure a copy of her birth
certificatebutpetitioner,withoutadvancinganyreasontherefor,failedtodoso.Neitherdidpetitionerobtaina
certificationthatnorecordofherbirthcouldbefoundinthecivilregistry,ifsuchwerethecase.Wefindpetitioners
silenceconcerningtheabsenceofherbirthcertificatetelling.Itraisesdoubtastotheexistenceofabirthcertificate
thatwouldshowpetitionertobethedaughterofJoseSantiagoandEsperanzaCabrigas.Herfailuretoshowher
birthcertificatewouldraisethepresumptionthatifsuchevidencewerepresented,itwouldbeadversetoherclaim.
PetitionerscounselarguedthatpetitionerhadbeenusingSantiagoallherlife.However,useofafamilyname
certainlydoesnotestablishpedigree.
362

36 SUPREME
2 COURT REPORTS
ANNOTATED
Labagala vs. Santiago
Contracts;Simulated Contracts;Admission by the vendee that he did not pay any centavo for the property,
makesthesalevoid.Clearly,thereisnovalidsaleinthiscase.Josedidnothavetherighttotransferownershipof
theentirepropertytopetitionersince2/3thereofbelongedtohissisters.Petitionercouldnothavegivenherconsent
tothecontract,beingaminoratthetime.Consentofthecontractingpartiesisamongtheessentialrequisitesofa
contract,includingoneofsale,absentwhichtherecanbenovalidcontract.Moreover,petitioneradmittedlydidnot
payanycentavofortheproperty,whichmakesthesalevoid.Article1471oftheCivilCodeprovides:Art.1471.If
thepriceissimulated,thesaleisvoid,buttheactmaybeshowntohavebeeninrealityadonation,orsomeother
actorcontract.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.
PublicAttorneysOfficeforpetitioner.
VenancioB.Padillaforprivaterespondents.

QUISUMBING,J.:

ThispetitionforreviewoncertiorariseekstoannulthedecisiondatedMarch4,1997, oftheCourtof 1

AppealsinCAG.R.CVNo.32817,whichreversedandsetasidethejudgmentdatedOctober17,1990, of 2

theRegionalTrialCourtofManila,Branch54,inCivilCaseNo.8741515,findinghereinpetitionertobe
theownerof1/3proindivisoshareinaparcelofland.
Thepertinentfactsofthecase,asbornebytherecords,areasfollows:
JoseT.SantiagoownedaparceloflandcoveredbyTCTNo.64729,locatedinRizalAvenueExtension,
Sta. Cruz, Manila. Alleging that Jose had fraudulently registered it in his name alone, his sisters
NicolasaandAmanda(nowrespondentsherein)sued
_______________

1
Rollo,pp.5156.
2
Id.,at2333.

363
VOL. 371, DECEMBER 363
4, 2001
Labagala vs. Santiago
Joseforrecoveryof2/3shareoftheproperty. OnApril20,1981,thetrialcourtinthatcasedecidedin
3

favorofthesisters,recognizingtheirrightofownershipoverportionsofthepropertycoveredbyTCTNo.
64729.TheRegisterofDeedsofManilawasrequiredtoincludethenamesofNicolasaandAmandainthe
certificateoftitletosaidproperty. 4

JosediedintestateonFebruary6,1984.OnAugust5,1987,respondentsfiledacomplaintforrecovery
oftitle,ownership,andpossessionagainsthereinpetitioner,IdaC.Labagala,beforetheRegionalTrial
CourtofManila,torecoverfromherthe1/3portionofsaidpropertypertainingtoJosebutwhichcame
intopetitionerssolepossessionuponJosesdeath.
RespondentsallegedthatJosesshareinthepropertybelongstothembyoperationoflaw,because
theyaretheonlylegalheirsoftheirbrother,whodiedintestateandwithoutissue.Theyclaimedthatthe
purportedsaleofthepropertymadebytheirbrothertopetitionersometimeinMarch1979 wasexecuted 5

throughpetitionersmachinationsandwithmaliciousintent,toenablehertosecurethecorresponding
transfercertificateoftitle(TCTNo.172334 )inpetitionersnamealone.
6 7

Respondents insisted that the deed of sale was a forgery. The deed showed that Jose affixed his
thumbmarkthereonbutrespondentsaverredthat,havingbeenabletograduatefromcollege,Josenever
puthisthumbmarkondocumentsheexecutedbutalwayssignedhisnameinfull.TheyclaimedthatJose
couldnothavesoldthepropertybelongingtohispoorandunschooledsisterswho...sacrificedforhis
studiesandpersonalwelfare. Respondentsalso
8

_______________

3
CivilCaseNo.56226,lodgedbeforethethenCourtofFirstInstanceofManila,Branch6(Records,p.9).IntheTSN,thecaseNo.is
listedas56626.SeeExhibitGtoG11,records,pp.165176.
4
Records,p.17.
5
Thepurporteddeedofsaleisdated___dayofFebruary,1979butwasnotarizedonMarch19,1979.Seerecords,pp.147148;
TSN,June29,1989,p.19.
6
Records,p.161.
7
Id.,at3,18.
8
Id.,at4.

364
364 SUPREME COURT
REPORTS ANNOTATED
Labagala vs. Santiago
pointedoutthatitishighlyimprobableforpetitionertohavepaidthesupposedconsiderationofP150,000
forthesaleofthesubjectpropertybecausepetitionerwasunemployedandwithoutanyvisiblemeansof
livelihoodatthetimeoftheallegedsale.Theyalsostressedthatitwasquiteunusualandquestionable
that petitionerregisteredthe deed of saleonly on January 26, 1987, or almost eight years after the
executionofthesale. 9

On the other hand, petitioner claimed that her true name is not Ida C. Labagala as claimed by
respondentbutIdaC.Santiago.SheclaimednottoknowanypersonbythenameofIdaC.Labagala.She
claimedtobethedaughterofJoseandthusentitledtohisshareinthesubjectproperty.Shemaintained
thatshehadalwaysstayedontheproperty,eversinceshewasachild.Shearguedthatthepurported
saleof the property was in fact adonation to her, and that nothingcouldhave precluded Josefrom
puttinghisthumbmarkonthedeedofsaleinsteadofhissignature.Shepointedoutthatduringhis
lifetime,Joseneveracknowledgedrespondentsclaimoverthepropertysuchthatrespondentshadtosue
toclaimportionsthereof.Shelamentedthatrespondentshadtodisclaimherintheirdesiretoobtain
ownershipofthewholeproperty.
Petitioner revealed that respondents had in 1985 filed two ejectment cases against her and other
occupantsoftheproperty.Thefirstwasdecidedinherandtheotherdefendantsfavor,whilethesecond
wasdismissed.Yetrespondentspersistedandresortedtothepresentaction.
Petitionerrecognizedrespondentsownershipof2/3ofthepropertyasdecreedbytheRTC.Butshe
averredthatshecausedtheissuanceofatitleinhernamealone,allegedlyafterrespondentsrefusedto
takestepsthatwouldpreventthepropertyfrombeingsoldbypublicauctionfortheirfailuretopayrealty
taxesthereon.Sheaddedthatwithatitleissuedinhernameshecouldavailofarealtytaxamnesty.
OnOctober17,1990,thetrialcourtruledinfavorofpetitioner,decreeingthus:
_______________

9
Id.,at34,18.

365
VOL. 371, DECEMBER 365
4, 2001
Labagala vs. Santiago
WHEREFORE,judgmentisherebyrenderedrecognizingtheplaintiffs[hereinrespondents]asbeingentitledtothe
ownershipandpossessioneachofonethird(1/3)proindivisoshareofthepropertyoriginallycoveredbyTransfer
CertificateofTitleNo.64729,inthenameofJoseT.SantiagoandpresentlycoveredbyTransferCertificateofTitle
No.172334,inthenameofhereindefendant[hereinpetitioner]andwhichislocatedatNo.3075ARizalAvenue
Extension,Sta.Cruz,Manila,aspercomplaint,andtheadjudicationtoplaintiffsperdecisioninCivilCaseNo.
56226ofthisCourt,BranchVI,andtheremainingonethird(1/3)proindivisoshareadjudicatedinsaiddecisionto
defendantJoseT.Santiagoinsaidcase,isherebyadjudgedandadjudicatedtohereindefendantasownerand
entitledtopossessionofsaidshare.TheCourtdoesnotseefittoadjudgedamages,attorneysfeesandcosts.Upon
finalityofthisjudgment,TransferCertificateofTitleNo.172334isorderedcancelledandanewtitleissuedinthe
namesofthetwo(2)plaintiffsandthedefendantasownersinequalshares,andtheRegisterofDeedsofManilais
sodirectedtoeffectthesameuponpaymentoftheproperfeesbythepartiesherein.
SOORDERED. 10

Accordingtothetrialcourt,whiletherewasindeednoconsiderationforthedeedofsaleexecutedbyJose
infavorofpetitioner,saiddeedconstitutesavaliddonation.Evenifitwerenot,petitionerwouldstillbe
entitledtoJoses1/3portionofthepropertyasJosesdaughter.Thetrialcourtruledthatthefollowing
evidenceshowspetitionertobethedaughterofJose:(1)thedecisionsinthetwoejectmentcasesfiledby
respondentswhichstatedthatpetitionerisJosesdaughter,and(2)Josesincometaxreturnwhichlisted
petitionerashisdaughter.Itfurthersaidthatrespondentsknewofpetitionersexistenceandherbeing
thedaughterofJose,perrecordsoftheearlierejectmentcasestheyfiledagainstpetitioner.Accordingto
the court, respondents were not candid with the court in refusing to recognize petitioner as Ida C.
SantiagoandinsistingthatshewasIdaC.Labagala,thusaffectingtheircredibility.
RespondentsappealedtotheCourtofAppeals,whichreversedthedecisionofthetrialcourt.
_______________

10
Rollo,pp.3233.

366
366 SUPREME COURT
REPORTS ANNOTATED
Labagala vs. Santiago
WHEREFORE, the appealed decision is REVERSED and one is entered declaring the appellants Nicolasa and
AmandaSantiagothecoownersinequalsharesoftheonethird(1/3)proindivisoshareofthelateJoseSantiagoin
thelandandbuildingcoveredbyTCTNo.172334.Accordingly,theRegisterofDeedsofManilaisdirectedtocancel
saidtitleandissueinitsplaceanewonereflectingthisdecision.
SOORDERED.

Apartfromrespondentstestimonies,theappellatecourtnotedthatthebirthcertificateofIdaLabagala
presentedbyrespondentsshowedthatIdawasbornofdifferentparents,notJoseandhiswife.Italso
tookintoaccountthestatementmadebyJoseinCivilCaseNo.56226thathedidnothaveanychild.
Hence,thepresentpetitionwhereinthefollowingissuesareraisedforconsideration:

1. 1.Whetherornotpetitionerhasadducedpreponderantevidencetoprovethatsheisthedaughter
ofthelateJoseT.Santiago,and

2. 2.Whetherornotrespondentscouldstillimpugnthefiliationofthepetitionerasthedaughterof
thelateJoseT.Santiago.

Petitionercontendsthatthetrialcourtwascorrectinrulingthatshehadadducedsufficientevidenceto
proveherfiliationbyJoseSantiago,makingherhissoleheirandthusentitledtoinherithis1/3portion.
Shepointsoutthatrespondentshad,beforethefilingoftheinstantcase,previouslyconsidered heras 11

thedaughterofJosewho,duringhislifetime,openlyregardedherashislegitimatedaughter.Sheasserts
thatheridentificationasJosesdaughterinhisITRoutweighsthestrangeanswershegavewhenhe
testifiedinCivilCaseNo.56226.
Petitionerassertsfurtherthatrespondentscannotimpugnherfiliationcollaterally,citingthecase
ofSaysonv.CourtofAppeals inwhichweheldthat(t)helegitimacyof(a)childcanbeimpugnedonlyin
12

adirectactionbroughtforthatpurpose,bytheproperpar
_______________

11
Id.,at17.
12
G.R.Nos.8922425,205SCRA321(1992).

367
VOL. 371, DECEMBER 367
4, 2001
Labagala vs. Santiago
tiesandwithintheperiodlimitedbylaw. PetitioneralsocitesArticle263oftheCivilCodeinsupportof
13

thiscontention. 14

Fortheirpart,respondentscontendthatpetitionerisnotthedaughterofJose,perherbirthcertificate
that indicates her parents as Leo Labagala and Cornelia Cabrigas, instead of Jose Santiago and
EsperanzaCabrigas. TheyarguethattheprovisionsofArticle263oftheCivilCodedonotapplytothe
15

present case since this is not an action impugning a childs legitimacy but one for recovery of title,
ownership,andpossessionofproperty.
Theissuesforresolutioninthiscase,toourmind,are(1)whetherornotrespondentsmayimpugn
petitionersfiliationinthisactionforrecoveryoftitleandpossession;and(2)whetherornotpetitioneris
entitledtoJoses1/3portionofthepropertyhecoownedwithrespondents,throughsuccession,sale,or
donation.
Onthefirstissue,wefindpetitionersrelianceonArticle263oftheCivilCodetobemisplaced.Said
articleprovides:
Art.263.Theactiontoimpugnthelegitimacyofthechildshallbebroughtwithinoneyearfromtherecordingofthe
birthintheCivilRegister,ifthehusbandshouldbeinthesameplace,orinapropercase,anyofhisheirs.
 Ifheorhisheirsareabsent,theperiodshallbeeighteenmonthsiftheyshouldresideinthePhilippines;andtwo
yearsifabroad.Ifthebirthofthechildhasbeenconcealed,thetermshallbecountedfromthediscoveryofthe
fraud.

Thisarticleshouldbereadinconjunctionwiththeotherarticlesinthesamechapteronpaternityand
filiationintheCivilCode.Acarefulreadingofsaidchapterwouldrevealthatitcontemplatessituations
whereadoubtexiststhatachildisindeedamanschildbyhiswife,andthehusband(or,inpropercases,
hisheirs)denies
_______________

13
Rollo,p.18.Saysonv.CourtofAppeals,supra,at328.
14
ThepresentcontroversyarosepriortotheeffectivityoftheFamilyCode.
15
EsperanzaandCorneliaweresisters.Seerollo,p.16.

368
368 SUPREME COURT
REPORTS ANNOTATED
Labagala vs. Santiago
thechildsfiliation.Itdoesnotrefertosituationswhereachildisallegednottobethechildatallofa
particularcouple. 16

Article263referstoanactiontoimpugnthelegitimacyofachild,toassertandprovethatapersonis
notamanschildbyhiswife.However,thepresentcaseisnotoneimpugningpetitionerslegitimacy.
RespondentsareassertingnotmerelythatpetitionerisnotalegitimatechildofJose,butthatsheisnota
childofJoseatall. Moreover,thepresentactionisoneforrecoveryoftitleandpossession,andthus
17

outsidethescopeofArticle263onprescriptiveperiods.
Petitioners reliance onSaysonis likewise improper. The factual milieu present inSaysondoes not
obtainintheinstantcase.WhatwasbeingchallengedbypetitionersinSaysonwas(1)thevalidityofthe
adoptionofDeliaandEdmundobythedeceasedTeodoroandIsabelSayson,and(2)thelegitimatestatus
ofDoribelSayson.WhileassertingthatDeliaandEdmundocouldnothavebeenvalidlyadoptedsince
DoribelhadalreadybeenborntotheSaysoncoupleatthetime,petitionersatthesametimemadethe
conflictingclaimthatDoribelwasnotthechildofthecouple.TheCourtruledinthatcasethatitwastoo
latetoquestionthedecreeofadoptionthatbecamefinalyearsbefore.Besides,suchachallengetothe
validityoftheadoptioncannotbemadecollaterallybutinadirectproceeding. 18

Inthiscase,respondentsarenotassailingpetitionerslegitimatestatusbutare,instead,asserting
thatsheisnotatalltheirbrotherschild.Thebirthcertificatepresentedbyrespondentssupportthis
allegation.
WeagreewiththeCourtofAppealsthat:
_______________

16
SeeBenitezBaduav.CourtofAppeals,G.R.No.105625,229SCRA468,473(1994).ThiscasedealswithArticles164,166,170,and
171oftheFamilyCode.Article263oftheCivilCodeisnowArticle170oftheFamilyCode.
17
CabatbatLimv.IntermediateAppellateCourt,No.L69679,166SCRA451,457(1988).
18
Saysonv.CourtofAppeals,supra,note12,at326328.

369
VOL. 371, DECEMBER 369
4, 2001
Labagala vs. Santiago
TheCertificateofRecordofBirth(ExhibitH) plainlystatesthat...IdawasthechildofthespousesLeonLabagala
19

and[Cornelia]Cabrigas.ThisdocumentstatesthatitwasLeonLabagalawhomadethereporttotheLocalCivil
Registrar and therefore the supplier of theentries in said Certificate. Therefore, this certificate is proof of the
filiationofIda.AppelleehoweverdeniesthatExhibitHisherBirthCertificate.SheinsiststhatsheisnotIda
LabagalabutIdaSantiago.IfExhibitHisnotherbirthcertificate,thenwhereishers?Shedidnotpresentany
thoughitwouldhavebeentheeasiestthingtodoconsideringthataccordingtoherbaptismalcertificateshewas
borninManilain1969.ThiscourtrejectssuchdenialsandholdsthatExhibitHisthecertificateoftherecordof
birthofappelleeIda...
Againstsuchevidence,theappelleeIdacouldonlypresenthertestimonyandabaptismalcertificate(Exhibit12)
statingthatappelleesparentswereJoseSantiagoandEsperanzaCabrigas.Butthen,adecisionalruleinevidence
statesthatabaptismalcertificateisnotaproofoftheparentageofthebaptizedperson.Thisdocumentcanonly
provetheidentityofthebaptized,thedateandplaceofherbaptism,theidentitiesofthebaptismalsponsorsandthe
priestwhoadministeredthesacramentnothingmore. (Citationsomitted.)
20

AtthepretrialconductedonAugust11,1988,petitionerscounseladmittedthatpetitionerdidnothavea
birthcertificateindicatingthatsheisIdaSantiago,thoughshehadbeenusingthisnameallherlife. 21
 PetitioneroptednottopresentherbirthcertificatetoproveherrelationshipwithJoseandinstead
offeredinevidenceherbaptismalcertificate. However,asweheldinHeirsofPedroCabaisv.Courtof
22

Appeals:
. . . a baptismal certificate isevidence only to prove the administration of the sacrament on the dates therein
specified,butnottheveracityofthedeclarationsthereinstatedwithrespectto[apersons]kinsfolk.Thesameis
conclusive only of the baptism administered, according to the rites of the Catholic Church, by the priest who
baptizedsubjectchild,butitdoesnot
_______________

19
Records,p.179.
20
Rollo,pp.5253.
21
TSN,August11,1988,p.10.
22
Exhibit10.

370
370 SUPREME COURT
REPORTS ANNOTATED
Labagala vs. Santiago
provetheveracityofthedeclarationsandstatementscontainedinthecertificateconcerningtherelationshipofthe
personbaptized. 23

Abaptismalcertificate,aprivatedocument,isnotconclusiveproofoffiliation. Moresoaretheentries 24

madeinanincometaxreturn,whichonlyshowsthatincometaxhasbeenpaidandtheamountthereof. 25

Wenotethatthetrialcourthadaskedpetitionertosecureacopyofherbirthcertificatebutpetitioner,
withoutadvancinganyreasontherefor,failedtodoso.Neitherdidpetitionerobtainacertificationthatno
recordofherbirthcouldbefoundinthecivilregistry,ifsuchwerethecase.Wefindpetitionerssilence
concerning the absence of her birth certificate telling. It raises doubt as to the existence of a birth
certificatethatwouldshowpetitionertobethedaughterofJoseSantiagoandEsperanzaCabrigas.Her
failuretoshowherbirthcertificatewouldraisethepresumptionthatifsuchevidencewerepresented,it
wouldbeadversetoherclaim.PetitionerscounselarguedthatpetitionerhadbeenusingSantiagoallher
life.However,useofafamilynamecertainlydoesnotestablishpedigree.
Further, we note that petitioner, who claims to be Ida Santiago, has the same birthdate as Ida
Labagala. Thesimilarityistoouncannytobeamerecoincidence.
26

Duringhertestimonybeforethetrialcourt,petitionerdeniedknowingCorneliaCabrigas,whowas
listedasthemotherinthebirthcertificateofIdaLabagala.InherpetitionbeforethisCourt,however,
she stated that Cornelia is the sister of her mother, Esperanza. It appears that petitioner made
conflictingstatementsthataffecthercredibilityandcouldcastalongshadowofdoubtonherclaimsof
filiation.
_______________

Heirs ofPedro Cabaisv. Court ofAppeals,G.R. Nos.10631415,316 SCRA 338, 344 (1999),citingMacadangdangv. Court of
23

Appeals,etal.,No.L49542,100SCRA73,84(1980).
Id.,at343.
24

Exhibit11.
25

TSN,June29,1989,p.3.
26

371
VOL. 371, DECEMBER 371
4, 2001
Labagala vs. Santiago
Thus,weareconstrainedtoagreewiththefactualfindingoftheCourtofAppealsthatpetitionerisin
realitythechildof LeonLabagalaandCorneliaCabrigas, andcontrary toher averment, notofJose
SantiagoandEsperanzaCabrigas.NotbeingachildofJose,itfollowsthatpetitionercannotinheritfrom
himthroughintestatesuccession.Itnowremainstobeseenwhetherthepropertyindisputewasvalidly
transferredtopetitionerthroughsaleordonation.
Onthevalidityofthepurporteddeedofsale,however,weagreewiththeCourtofAppealsthat:
...Thisdeedisshotthroughandthroughwithsomanyintrinsicdefectsthatareasonablemindisinevitablyledto
theconclusionthatitisfake.Theintrinsicdefectsareextractablefromthefollowingquestions:a)IfJoseSantiago
intendedtodonatethepropertiesinquestiontoIda,whatwasthebigideaofhidingthenatureofthecontractinthe
facadeofthesale?b)Ifthedeedisagenuinedocument,howcouldithavehappenedthatJoseSantiagowhowasof
coursefullyawarethatheownedonly1/3proindivisoofthepropertiescoveredbyhistitlesoldordonatedthewhole
propertiestoIda?c)WhyinheavensnamedidJoseSantiago,acollegegraduate,whoalwayssignedhisnamein
documentsrequiringhissignature(citationomitted)[affix]histhumbmarkonthisdeedofsale?d)IfIdawas[the]
childofJoseSantiago,whatwasthesenseofthelatterdonatinghispropertiestoherwhenshewouldinheritthem
anywayuponhisdeath?e)WhydidJoseSantiagoaffixhisthumbmarktoadeedwhichfalselystatedthat:hewas
single(forhewasearliermarriedtoEsperanzaCabrigas);Idawasoflegalage(for[s]hewasthenjust15yearsold);
andthesubjectpropertieswerefreefromliensandencumbrances(forEntryNo.27261,NoticeofAdverseClaimand
Entry No. 6388, Notice ofLis Pendens were already annotated in thetitle of saidproperties). If the deed was
executedin1979,howcomeitsurfacedonlyin1984afterthedeathofJoseSantiagoandofallpeople,theonein
possessionwasthebaptismalsponsorofIda? 27

Clearly,thereisnovalidsaleinthiscase.Josedidnothavetherighttotransferownershipoftheentire
propertytopetitionersince2/3thereofbelongedtohissisters. Petitionercouldnothave 28

_______________

Rollo,pp.5455.
27

CIVILCODEOFTHEPHILIPPINES,Article1459.
28

372
372 SUPREME COURT
REPORTS ANNOTATED
Labagala vs. Santiago
givenherconsenttothecontract,beingaminoratthetime. Consentofthecontractingpartiesisamong29

theessentialrequisitesofacontract, includingoneofsale,absentwhichtherecanbenovalidcontract.
30

Moreover,petitioneradmittedlydidnotpayanycentavofortheproperty, whichmakesthesalevoid. 31

Article1471oftheCivilCodeprovides:
Art.1471.Ifthepriceissimulated,thesaleisvoid,buttheactmaybeshowntohavebeeninrealityadonation,or
someotheractorcontract.

Neithermaythepurporteddeedofsalebeavaliddeedofdonation.Again,asexplainedbytheCourtof
Appeals:
...Evenassumingthatthedeedisgenuine,itcannotbeavaliddonation.Itlackstheacceptanceofthedonee
requiredbyArt.725oftheCivilCode.Beingaminorin1979,theacceptanceofthedonationshouldhavebeenmade
byherfather,LeonLabagalaor[her]motherCorneliaCabrigasorherlegalrepresentativepursuanttoArt.741of
thesameCode.NooneofthosementionedinthelawinfactnooneatallacceptedthedonationforIda. 32

Insum,wefindnoreversibleerrorattributabletotheassaileddecisionoftheCourtofAppeals,henceit
mustbeupheld.
WHEREFORE,thepetitionisDENIED,andthedecisionoftheCourtofAppealsinCAG.R.CVNo.
32817isAFFIRMED.
Costsagainstpetitioner.
_______________

CIVILCODEOFTHEPHILIPPINES,Article1327.
29

CIVILCODEOFTHEPHILIPPINES,Article1318.
30

TSN,June29,1989,pp.17,25.
31

Rollo,pp.5455.Articles725and741oftheCivilCodestate:
32

Art.725.Donationisanactofliberalitywherebyapersondisposesgratuitouslyofathingorrightinfavorofanother,whoacceptsit.
Art. 741. Minors and others who cannot enter into a contract may become donees but acceptance shall be done through their parents or legal
representatives.

373
VOL. 371, DECEMBER 373
4, 2001
Adiong vs. Court of Appeals
SOORDERED.
Bellosillo(Chairman),MendozaandDeLeon,Jr.,JJ.,concur.
Buena,J.,Onofficialleave.

Petitiondenied,judgmentaffirmed.
Notes.Whenaputativefathermanifestsopenlythroughwordsanddeedshisrecognitionofachild,
the courts can do no less than confirm said acknowledgment. (Lim vs. Court of Appeals,270 SCRA
1[1997])
Questionsastowhoaretheheirsofthedecedent,proofoffiliationofillegitimatechildrenandthe
determinationoftheestateofthelatterandclaimstheretoshouldbeventilatedintheproperprobate
courtorinaspecialproceedinginstitutedforthepurposeandcannotbeadjudicatedinanordinarycivil
actionforrecoveryofownershipandpossession.(Agapayvs.Palang,276SCRA340[1997])

o0o

G.R.No.173881.December1,2010.*
HYATT ELEVATORS and ESCALATORS CORPORATION, petitioner,vs.CATHEDRAL HEIGHTS
BUILDINGCOMPLEXASSOCIATION,INC.,respondent.

RemedialLaw;CivilProcedure;Appeals;ThejurisdictionoftheSupremeCourtincasesbroughtbeforeitfrom
theCourtofAppealsbyvirtueofRule45oftheRevisedRulesofCourtislimitedtoreviewingerrorsoflaw. Itis
alreadyawellsettledrulethatthejurisdictionofthisCourtincasesbroughtbeforeitfromtheCAbyvirtueofRule
45oftheRevisedRulesofCourtislimitedtoreviewingerrorsoflaw.FindingsoffactoftheCAareconclusiveupon
this Court. There are, however, recognized exceptions to the foregoing rule, namely: (1) when the findings are
groundedentirelyonspeculation,surmises,orconjectures;(2)whentheinference made ismanifestlymistaken,
absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehensionoffacts;(5)whenthefindingsoffactareconflicting;(6)when,inmakingitsfindings,theCourtof
Appealswentbeyondtheissuesofthecase,oritsfindingsarecontrarytotheadmissionsofboththeappellantand
the appellee; (7)when the findings are contrary to those of the trial court;(8) when the findings are
conclusionswithoutcitationofspecificevidenceonwhichtheyarebased;(9)whenthefactssetforthinthepetition,
aswellasinthepetitionersmainandreplybriefs,arenotdisputedbytherespondent;and(10)whenthefindingsof
factarepremisedonthesupposedabsenceofevidenceandcontradictedbytheevidenceonrecord.
Civil Law; Contracts; Sales;By the contract of sale, one of the contracting parties obligates himself to
transfertheownershipofanddeliveradeterminatething,andtheothertopaythereforapricecertaininmoneyorits
equivalent.Bythecontractofsale,oneofthecontractingpartiesobligateshimselftotransfertheownershipofand
deliveradeterminatething,andtheothertopaythereforapricecertaininmoneyoritsequivalent.Theabsenceof
anyoftheessentialelementswillnegatetheexistenceofaperfectedcontractofsale.
_______________

*SECONDDIVISION.

402

402 SUPREME
COURT REPORTS
ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
Same;NaturalObligations;SolutioIndebiti;UnjustEnrichment;UnderArticle2142oftheCivilCode,such
actsgiverisetothejuridicalrelationofquasicontracttotheendthatnooneshallbeunjustlyenrichedorbenefited
attheexpenseofanother.Withal,itisindisputablethattherepairsmadeontheelevatorsultimatelyredoundedto
thebenefitofrespondentforwithoutsaidrepairs,theelevatorswouldnotbeoperational.UnderArticle2142ofthe
CivilCode,suchactsgiverisetothejuridicalrelationofquasicontracttotheendthatnooneshallbeunjustly
enrichedorbenefitedattheexpenseofanother.Itwouldcertainlybeunjustforrespondenttobenefitfromthe
repairsdonebypetitioneronlytorefusepaymentbecausethepaperssubmittedwerenotinorder.

PETITIONforreviewoncertiorariofthedecisionandresolutionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
AlanA.Leynesforpetitioner.
Quasha,Ancheta,Pea&Nolascoforrespondent.

PERALTA,J.:
BeforethisCourtisapetitionforreviewoncertiorari, underRule45oftheRulesofCourt,seekingto
1

setasidetheApril20,2006Decision andJuly31,2006Resolution oftheCourtofAppeals(CA),inCA

2 3

G.R.CVNo.80427.
Thefactsofthecaseareasfollows:
On October 1, 1994, petitioner Hyatt Elevators and Escalators Corporation entered into an
Agreement to Service Elevators (Service Agreement) with respondent Cathedral Heights Building
4

ComplexAssociation,Inc.,wherepetitioner
_______________

1Rollo,pp.822.
2Pennedby AssociateJustice Rosmari D.Carandang, withAssociate Justices Andres B.Reyes, Jr.and Japar B.Dimaampao,
concurring;id.,atpp.2739.
3Id.,atpp.4142.
4Id.,atpp.4649.

403
VOL. 636, DECEMBER 403
 1, 2010
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
wascontractedtomaintainfourpassengerelevatorsinstalledinrespondentsbuilding.UndertheService
Agreement, the duties and obligations of petitioner included monthly inspection, adjustment and
lubrication of machinery, motors, control parts and accessory equipments, including switches and
electrical wirings. Section D (2) of the ServiceAgreement provides that respondent shall pay for the
5

additionalchargesincurredinconnectionwiththerepairandsupplyofparts.
Petitioner claims that during the period of April 1997 to July 1998, it had incurred expenses
amounting toPhp1,161,933.47 in the maintenance andrepair of the four elevators as itemized in a
statement of account. Petitioner demanded from respondent the payment of the aforesaid amount
6

allegedlythroughaseriesofdemandletters,thelastonesentonJuly18,2000. Respondent,however,
7

refusedtopaytheamount.
PetitionerfiledwiththeRegionalTrialCourt(RTC),Branch100,QuezonCity,aComplaintforsumof
moneyagainstrespondent.SaidcomplaintwasdocketedasCivilCaseNo.Q0143055.
OnMarch5,2003,theRTCrenderedJudgment rulinginfavorofpetitioner,thedispositiveportionof
8

whichreads:
WHEREFORE, premises considered, JUDGMENTIS HEREBYRENDERED IN FAVOROFTHE
PLAINTIFFANDAGAINSTTHEDEFENDANTorderingthelattertopayPlaintiffasfollows:
1.ThesumofP1,161,933.27representingthecostsoftheelevatorpartsused,andforservicesand
maintenance,withlegalrateofinterestfromthefilingofthecomplaint;
2.ThesumofP50,000.00asattorneysfees;
_______________

5Id.,atp.47.
6Id.,atpp.5051.
7Id.,atp.52.
8Id.,atpp.6264

404

404 SUPREME COURT

REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
3.Thecostsofsuit.
SOORDERED.9

TheRTCheldthatbasedonthesalesinvoicespresentedbypetitioner,acontractofsaleofgoodswas
enteredintobetweentheparties.Sincepetitionerwasabletofulfillitsobligation,theRTCruledthatit
was incumbent on respondent to pay for the services rendered. The RTC did not give credence to
respondentsclaimthattheelevatorpartswereneverdeliveredandthattherepairswerequestionable,
holdingthatsuchdefensewasamereafterthoughtandwasneverraisedbyrespondentagainstpetitioner
atanearliertime.
RespondentfiledaMotionforReconsideration. OnAugust17,2003,theRTCissuedaResolution
10 11

denyingrespondentsmotion.RespondentthenfiledaNoticeofAppeal. 12

OnApril20,2006,theCArenderedaDecisionfindingmeritinrespondentsappeal,thedispositive
portionofwhichreads:
WHEREFORE, premises considered, theinstant appeal is GRANTED. The Judgment of the Regional Trial
Court,Branch100,QuezonCity,datedMarch5,2003,isherebyREVERSEDandSETASIDE.Thecomplaintbelow
isdismissed.
SOORDERED. 13

InreversingtheRTC,theCAruledthatrespondentdidnotgiveitsconsenttothepurchaseofthe
sparepartsallegedlyinstalledinthedefectiveelevators.Asidefromtheabsenceofconsent,theCAalso
heldthattherewasnoperfectedcontractofsalebecausetherewasnomeetingofmindsupontheprice.
Onthisnote,theCAruledthattheServiceAgreementdidnot
_______________

9Id.,atp.64.
 10Records,pp.141153.
11Id.,atp.160.
12Id.,atpp.164165.
13Rollo,p.38.

405
VOL. 636, DECEMBER 405
1, 2010
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
givepetitionertheunbridledlicensetopurchaseandinstallanysparepartsanddemand,afterthelapse
ofaconsiderablelengthoftime,paymentofthesepricesfromrespondentaccordingtoitsowndictated
price.
Aggrieved,petitionerfiledaMotionforReconsideration, whichwas,however,deniedbytheCAina
14

ResolutiondatedJuly31,2006.
Hence,hereinpetition,withpetitionerraisingaloneissueforthisCourtsresolution,towit:
WHETHER OR NOT THERE IS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONER AND
RESPONDENTWITHREGARDTOTHESPAREPARTSDELIVEREDANDINSTALLEDBYPETITIONERON
THE FOUR ELEVATORS OF RESPONDENT AT ITS HOSPITAL UNDER THE AGREEMENT TO SERVICE
ELEVATORSASTORENDERRESPONDENTLIABLEFORTHEIRPRICES? 15

Before anything else, this Court shall address a procedural issue raised by respondent in its
Comment thatthepetitionshouldbedeniedduecourseforraisingquestionsoffact.
16

Thedeterminationofwhetherthereexistsaperfectedcontractofsaleisessentiallyaquestionoffact.
ItisalreadyawellsettledrulethatthejurisdictionofthisCourtincasesbroughtbeforeitfromtheCA
byvirtueofRule45oftheRevisedRulesofCourtislimitedtoreviewingerrorsoflaw.Findingsoffactof
theCAareconclusiveuponthisCourt.Thereare,however,recognizedexceptionstotheforegoingrule,
namely:(1)whenthefindingsaregroundedentirelyonspeculation,surmises,orconjectures;(2)when
theinference made ismanifestlymistaken, absurd, or impossible; (3)whenthereisgraveabuseof
discretion;(4)whenthejudgmentisbasedonamisapprehensionoffacts;(5)whenthefindingsof
_______________

14CARollo,pp.7683.
15Rollo,p.15.
16Id.,atpp.67105.

406
406 SUPREME COURT
REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
factareconflicting;(6)when,inmakingitsfindings,theCourtofAppealswentbeyondtheissuesofthe
case,oritsfindingsarecontrarytotheadmissionsofboththeappellantandtheappellee;(7) whenthe
findings are contrary to those of the trial court;(8) when the findings are conclusions without
citationofspecificevidenceonwhichtheyarebased;(9)whenthefactssetforthinthepetition,aswellas
inthepetitionersmainandreplybriefs,arenotdisputedbytherespondent;and(10)whenthefindings
offactarepremisedonthesupposedabsenceofevidenceandcontradictedbytheevidenceonrecord. 17

Thepresentcasefallsunderthe7thexception,astheRTCandtheCAarrivedatconflictingfindings
offact.
Havingresolvedtheproceduralaspect,thisCourtshallnowaddressthesubstantiveissueraisedby
petitioner.PetitionercontendsthattheCAerredwhenitruledthattherewasnoperfectedcontractof
salebetweenpetitionerandrespondentwithregardtothesparepartsdeliveredandinstalled.
It is undisputed that a Service Agreement was entered into by petitioner and respondent where
petitionerwascommissionedtomaintainrespondentsfourelevators.EmbodiedintheServiceAgreement
isastipulationrelatingtoexpensesincurredontopofregularmaintenanceoftheelevators,towit:
SERVICEANDINSPECTIONFEE:
xxxx
(2)Inadditiontotheservicefeementionedintheprecedingparagraphunderthisarticle,the Customershall
paywhateveradditionalchargesinconnectionwiththerepair,supplyof
_______________
 17Citibank, N.A. (Formerly First National City Bank) v. Sabeniano,G.R. No. 156132, October 16, 2006, 504 SCRA 378, 409;Herbosa
v.CourtofAppeals,425Phil.431,444;374SCRA578,591(2002).

407

VOL. 636, DECEMBER 407

1, 2010
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
partsother than those specifically mentioned in ARTICLE A.2., or servicing of the elevator/s subject of this
contract. 18

Petitioner claims that during the period of April 1997 to July 1998, it had used parts in the
maintenance and repair of the four elevators in the total amount of P1,161,933.47 as itemized in a
statement of account and supported by sales invoices, delivery receipts, trouble call reports and
19

maintenanceandcheckingreports.Respondent,however,refusestopaythesaidamountarguingthat
petitionerhadnotcompliedwiththeStandardOperatingProcedure(SOP)followingabreakdownofan
elevator.
AstestifiedtobyrespondentswitnessCelestinoAguilar,theSOPfollowinganelevatorbreakdownis
asfollows:(a)they(respondent)willnotifypetitionerstechnician;(b)thetechnicianwillevaluatethe
problemandiftheproblemismanageabletherepairwasdonerightthereandthen;(c)ifsomepartshave
tobereplaced,petitionerwillpresentthedefectivepartstothebuildingadministratorandaquotationis
made;(d)thequotationisthenindorsedtorespondentsFinanceDepartment;and(e)apurchaseorderis
thenpreparedandsubmittedtotheBoardofDirectorsforapproval. 20

Basedontheforegoingprocedure,respondentcontendsthatpetitionerhadfailedtofollowtheSOP
since no purchase orders from respondents Finance Manager, or Board of Directors relating to the
supposedpartsusedweresecuredpriortotherepairs.
Attheoutset,thisCourtobservesthattheSOPisnotembodiedintheServiceAgreementnorwasa
documentevidencingthe samepresentedintheRTC. TheSOP appears,however,tobetheindustry
practiceandassuchwasnotcontestedbypetitioner.Nevertheless,petitioneroffersanexcuse
_______________

18Rollo,p.48.(EmphasisSupplied).
19Id.,atpp.5051.
20TSN,March18,2002,p.11.

408
408 SUPREME COURT
REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
fornoncompliancewiththeSOPonitsclaimthattheSOPwasnotfolloweduponthebehestandrequest
ofrespondent.
Inordertoproveitsallegations,petitionerpresentedWilson Sua,itsfinancemanager,asitssole
witness.Suatestifiedtotheprocedurefollowedbypetitionerinservicingrespondentselevators,towit:
Q:CanyoutellusMr.witness,whatistheprocedureactuallyfollowedwheneverthereisaneedfortroublecallmaintenanceorrepair?
A:TheSt.LukesCathedralspersonnel,whichincludestheadministrativeofficers,theguardonduty,orthereceptionist,willcallus
throughthephoneiftheirelevatorsbrake(sic)down.
Q:Then,whathappened?
A:Immediately,wedispatchedourtechnicianstocheckthetrouble.
Q:And who were these technicians whom you normally or regularly dispatched to attend to the trouble of the elevators of the
defendant?
A:WithregardtothisSt.Lukes,wedispatchedSunnyJonesandGilbertCinamin.
Q:Andwhathappenedafterdispatchingthesetechnicians?
A:Theycomebackimmediatelytotheofficetorequestthepartsneededforthetroubleshootingoftheelevators.
Q:Thenwhathappened?
A:Apartwillbebroughttotheprojectciteandtheywillinstallitandnoteitinthetroublecallreportandhaveitreceivedproperlyby
thebuildingguardorthereceptionistorbythebuildingengineers,andtheywilltestitforacoupleofweekstodetermineifthe
partsarethecorrectpartneededforthatelevatorandwewillsecuretheirapproval,thereafterwewillissueourinvoicesand
deliveryreceipts.
Q:Thistroublecallreports,aretheseinwriting?
A:Yes,sir.Theseareinwritingandthesearebeingwrittenwithinthatday.409

VOL. 636, 409

 DECEMBER 1,
2010
HYATT Elevators and
Escalators
Corporation vs.
Cathedral Heights
Building Complex
Association, Inc.
Q:Withinthedayof?
A:Ofthetrouble.AndhaveitreceivedbythedulypersonnelofSt.LukesCathedral.
Q:Andwhopreparedthistroublecallreports?
A:Thetechnicianwhoactuallycheckedtheelevator.
Q:Whendothepartsbeinginstalled?
A:Onthesamedatetheybroughtthepartsontheprojectcite.
Q:Youmentionedsalesinvoiceanddeliveryreceipts.Whopreparedtheseinvoice?
A:Thosewerepreparedbyourinventoryclerkundermysupervision?
Q:Howaboutthedeliveryreceipts?
A:Justthesame.
Q:Whenwouldthesalesinvoicebeprepared?
A:Aftertheapprovalofthebuildingengineer.
Q:Butatthetimethatthesalesinvoiceanddeliveryreceiptswerebeingpreparedaftertheapprovalofthebuildingengineer,what
happenedtotheparts?Weretheyalreadyinstalledorwhat?
A:Theywerealreadyinstalled.
Q:Now,whywouldthepartsbeinstalledbeforethepreparationofthesalesinvoiceandthedeliveryreceipts?
A:There was an agreement between the building engineer and our servicemanager that the elevator should be running in good
conditionatalltimes,breakdownshouldbeatleastonedayonly.Itcannotstopformorethanaday. 21

On cross examination, Sua testified that the procedure was followed on the authority of a verbal
agreementbetweenpetitionersservicemanagerandrespondentsengineer,thus:
_______________

21TSN,January25,2002,pp.79.

410
410 SUPREME COURT
REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
Q:So,youmeantosaythatdespitethefactthatmaterialareexpensiveyouimmediatelyinstalledtheseequipmentswithouttheprior
approvaloftheboard?
A:ThereisnoneedfortheapprovaloftheboardsincethereisaverbalagreementbetweenthebuildingengineerandtheHyattservice
managertohavetheelevatorrun.
Q:Asidefromthebuildingengineer,thereisabuildingadministrator?
A:No,maam.Heisalreadythebuildingadministratorandthebuildingengineer.ThatisengineerTisor.
Q:Andwithregardtothefactthatthedeliveryreceiptswereacknowledgedbytheengineer,isthattrue?
A:Yes,maam.
Q:Youalsomentionedearlierthatasidefromthebuildingengineer,thereceptionistandguardsarealsoauthorized.Areyousurethat
theyareauthorizedtoreceivethedeliveryreceipts?
A:Yes,maam.ItwasaninstructiongivenbyEngineerTisor,thebuildingengineerandalsothebuildingadministratortohaveit
received.
Q:So,alltheseagreementsareonlyverbally,itisnotinwriting?
A:Yes,maam. 22

In its petition, petitioner claimsthat because of the special circumstances of thebuilding being a
hospital,theprocedureactuallyfollowedsinceOctober1,1994wasasfollows:
1.Wheneveranyofthefourelevatorsbrokedown,theadministrativeofficers,securityguardorthe
receptionistofrespondentcalledpetitionerbytelephone;
2.PetitionerdispatchedimmediatelyatechniciantotheSt.LukesCathedralHeightsBuildingto
checkthetrouble;
3.Ifthebreakdowncouldberepairedwithoutinstallationofparts,repairwasdoneonthespot;
4.Iftherepairneededreplacementofdamagedparts,thetechnicianwentbacktopetitionersoffice
togetthenecessaryreplacementparts;
_______________

22Id.,atpp.1617.
411

VOL. 636, DECEMBER 411

1, 2010
 HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
5.The technician then returned to the St. Lukes Cathedral Heights Building and installed the
replacementpartsandfinishedtherepair;
6.The placement parts, which were installed in the presence of the security guard, building
engineersorreceptionistofrespondentswhoeverwasavailable,wereindicatedinthetroublecall
report or sometimes in the delivery receipt and copy of the said trouble call report or delivery
receipt was then given to the blue security guard, building engineers or receptionist, who duly
acknowledgedthesame;
7.Basedonthetroublecallreportorthedeliveryreceipts,whichalreadyindicatedthereplacement
partsinstalledandtheservicesrendered,respondentshouldpreparethepurchaseorder,butthis
stepwasneverfollowedbyrespondentforwhateverreason;
8.Inthemeantime,theelevatorwastestedforacoupleofweekstoseeifthereplacementpartswere
correctandtheapprovalofthebuildingengineerswassecured;
9.Afterthebuildingengineersgavetheirapprovalthatthereplacementpartswerecorrectorafter
thelapseoftwoweeksandnothingwasheardornocomplaintwaslodged,thenthecorresponding
salesinvoicesanddeliveryreceipts,ifnothinghadbeenissuedyet,werepreparedbypetitionerand
giventorespondent,thruitsreceptionistsorsecurityguards;
10.Foritspurposes,respondentshouldcomparethetroublecallreportsordeliveryreceiptswhich
indicatedthereplacementpartsinstalledorwiththesalesinvoicesanddeliveryreceiptstoconfirm
thecorrectnessofthetransaction;
11.Ifrespondenthadanycomplaintthatthepartswerenotactuallyinstalledordeliveredordidnot
agreewiththepriceofthepartsindicatedinthesalesinvoices,thenitshouldbringitscomplaintor
dis
412

412 SUPREME COURT

REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
agreementtotheattentionofpetitioner.Inthisregard,nocomplaintordisagreementastothepricesof
thesparepartshasbeenlodgedbyrespondent.23

Invaryinglanguage,ourRulesofCourt,inspeakingofburdenofproofincivilcases,statesthateach
partymustprovehisownaffirmativeallegationsandthattheburdenofproofliesonthepartywhowould
bedefeatedifnoevidenceweregivenoneitherside.Thus,incivilcases,theburdenofproofisgenerally
ontheplaintiff,withrespecttohiscomplaint. Inthecaseatbar,itispetitionersburdentoprovethatit
24

isentitledtoitsclaimsduringtheperiodindispute.
ThisCourtfindsthatthetestimonyofSuaaloneisinsufficienttoprovetheexistenceoftheverbal
agreement,especiallyinviewofthefactthatrespondentinsiststhattheSOPshouldhavebeenfollowed.
Itisanageoldruleincivilcasesthatonewhoallegesafacthastheburdenofprovingitandamere
allegationisnotevidence. 25

ThetestimonyofSua,atbest,onlyallegesbutdoesnotprovetheexistenceoftheverbalagreement.It
mayevenbehearsay.Itbearsstressing,thattheagreementwassupposedlyenteredintobypetitioners
servicemanagerandrespondentsbuildingengineer.ItbehoovesthisCourtastowhypetitionerdidnot
presenttheirservicemanagerandEngineerTisor,respondentsbuildingengineer,thetwoindividuals
whowereprivytothetransactionsandwhocouldultimatelylaythebasisfortheexistenceofthealleged
verbal agreement. It should have occurred to petitioner during the course of the trial that said
testimonies would haveproved vital and crucial to its cause. Therefore, absent suchtestimonies, the
existenceoftheverbalagreementcannotbesustainedbythisCourt.
_______________

23Rollo,pp.1819.
24Villanuevav.Balaguer,G.R.No.180197,June23,2009,590SCRA661,670.
25HeirsofCiprianoReyesv.Calumpang,G.R.No.138463,October30,2006,506SCRA56,72.

413
VOL. 636, DECEMBER 413
 1, 2010
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
Moreover,evenassumingarguendo,thatthisCourtweretobelievetheprocedureoutlinedbySua,his
testimony clearlymentionsthatpriortothepreparationofthesalesinvoicesanddeliveryreceipts,the
26

parts delivered and installed must have been accepted by respondents engineer or building
administrator.However,again,petitionerofferednoevidenceofsuchacceptancebyrespondentsengineer
priortothepreparationofthesalesinvoicesanddeliveryreceipts.
Bythecontractofsale,oneofthecontractingpartiesobligateshimselftotransfertheownershipof
anddeliveradeterminatething,andtheothertopaythereforapricecertaininmoneyoritsequivalent. 27

Theabsenceofanyoftheessentialelementswillnegatetheexistenceofaperfectedcontractofsale.In
the case at bar, the CA ruled that there was no perfected contract of sale between petitioner and
respondent,towit:
Asidefromtheabsenceofconsent,therewasnoperfectedcontractofsalebecausetherewasnomeetingof
mindsupontheprice.Asthelawprovides,thefixingofthepricecanneverbelefttothediscretionofoneofthe
contractingparties.Inthiscase,theabsenceofagreementastothepriceisevidencedbythelackofpurchase
_______________

26Q:Thenwhathappened?
A:Apartwillbebroughttotheprojectciteandtheywillinstallitandnoteitinthetroublecallreportandhaveitreceivedproperlyby
thebuildingguardorthereceptionistorbythebuildingengineers,andtheywilltestitforacoupleofweekstodetermineifthepartsarethe
correctpartneededforthatelevatorandwewillsecuretheirapproval,thereafterwewillissueourinvoicesanddeliveryreceipts.
xxxx
Q:Howaboutthedeliveryreceipts?
A:Justthesame.
Q:Whenwouldthesalesinvoicebeprepared?
A:Aftertheapprovalofthebuildingengineer.(TSN,January25,2002,pp.79)(Emphasissupplied.)
27NewCivilCode,Art.1458.

414

414 SUPREME COURT

REPORTS ANNOTATED
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
ordersissuedbyCHBCAIwherethequantity,qualityandpriceofthesparepartsneededfortherepairofthe
elevatorsarestated.Inthesepurchaseorders,itwouldshowthatthequotationofthecostofthesparepartsearlier
informedbyHyattisacceptabletoCHBCAI.However,asrevealedbytherecords,itwasonlyHyattwhodetermined
theprice,withouttheacceptanceorconformityofCHBCAI.Fromthemomentthedeterminationofthepriceisleft
tothejudgmentofoneofthecontractingparties,itcannotbesaidthattherehasbeenanarrangementontheprice
sinceitisnotpossiblefortheothercontractingpartytoagreeonsomethingofwhichhedoesnotknowbeforehand. 28

BasedontheevidencepresentedintheRTC,itiscleartothisCourtthatpetitionerhadfailedto
secure the necessary purchase orders from respondents Board of Directors, or Finance Manager, to
signifytheirassenttothepriceofthepartstobeusedintherepairoftheelevators.InBostonBankofthe
Philippinesv.Manalo, thisCourtexplainedthatthefixingofthepricecanneverbelefttothedecision
29

ofoneofthecontractingparties,towit:
Adefiniteagreementastothepriceisanessentialelementofabindingagreementtosellpersonalorreal
propertybecauseitseriouslyaffectstherightsandobligationsoftheparties.Priceisanessentialelementinthe
formation of a binding and enforceable contract of sale.The fixing of the price can never be left to the
decision of one of the contracting parties.But a price fixed by one of the contracting parties, if
acceptedbytheother,givesrisetoaperfectedsale. 30

Therewould havebeenaperfectedcontractof salehadrespondent accepted thepricedictatedby

petitionerevenifsuchassentwasgivenaftertheserviceswererendered.Thereis,however,noproofof
suchacceptanceonthepartofrespon
_______________

28Rollo,pp.3637.
29G.R.No.158149,February9,2006,482SCRA108.
30Id.,atp.129.(Emphasissupplied.)

415
 VOL. 636, DECEMBER 415
1, 2010
HYATT Elevators and
Escalators Corporation vs.
Cathedral Heights Building
Complex Association, Inc.
dentand,consequently,noperfectedcontractofsalebetweentheparties.
Theforegoingfindingsnotwithstanding,thisCourtrulesthattodenypetitionersclaimwouldunjustly
enrichrespondentwhohadbenefitedfromtherepairsoftheirfourelevators.
ThisCourtfindsthatrespondentisalsopartlytobeblamedforallowingpetitionertoconductthe
repairs without the necessary purchase orders. It would certainly be absurd for respondent to feign
knowledgeoftherepairs,especiallysincethesameweredonewithintheirpremisesandinthepresence
oftheirbuildingengineer,clerkandguardonduty.Itbearstopointoutthatseveralrepairsweremade
from1997to1998.Duringthistime,respondentanditsemployeesneveroncequestionedtheauthorityof
petitionertoinstallreplacementpartsduringtherepairs.Hadtheydoneso,thenitwouldhavebeen
likelythatthingswouldnothavegoneoutofhandandpetitionerwouldhavebeenremindedtofollowthe
SOPifsuchwasthecase.
Inaddition,aperusalofthetestimonyofrespondentswitnessMr.PerfectoCruz(Cruz)showsthatits
securityguardswereawareoftheinstallationofpartsdonebypetitioner,towit:
Q:Mr.witness,isitnotafactthatinthetroublecallreportthepartswerealreadyinstalledbythetechnicianwhichisindicatedinthe
documentmarkedasExh.U?Thiswasdulyacknowledgedbyyoursecurityguard.
A:Yes,sir.
Q:Anditisnotafactthatinthistroublecallreport,7piecesofregenerativeresistorswerealreadyinstalledbythetechnicianas
admittedbyyou?
A:WhatIknowis,thatisfollowuptroubleandnotinitial.Itinsistedpriortotheservicing.
Q:Itappears,Mr.witness,thatthereisindicatedinthetroublecallreportdulyacknowledgedbyyour
416

416 SUPREME COURT

REPORTS
ANNOTATED
HYATT Elevators and
Escalators
Corporation vs.
Cathedral Heights
Building Complex
Association, Inc.
securityguard,asyouadmitted,thereisalreadyinstallationof7regenerativeresistors,correct?
A:Yes,sir.
Q:Now,Mr.witness,willyouagreewithmethatthese7piecesofregenerativeresistorswereinstalledevenpriortothe
issuanceofthepurchaseorder?
A:Yes,sir. 31

Moreover,areviewofthetroublecallreports,salesinvoicesanddeliveryreceiptswouldshowthatall
weresignedbyrespondentsemployees.ThisCourtcannotagreewiththeobservationoftheCAthatthe
signaturesofreceiptbytheinformationclerkortheguardondutyonthesalesinvoicesanddelivery
receiptsmerelypertaintothephysicalreceiptofthepapersandthatthesamedoesnotindicatethatthe
partsstatedwereactuallydeliveredandinstalled. WhenconfrontedwithExhibitUforexample,Cruz
32

admittedthatthepartsstatedinthereceiptwerealreadyinstalled.Likewise,onrecrossexamination,
whenconfrontedwithExhibitsOOandSS,Cruzadmittedthattheiremployeereceivedthedefective
partsreplacedbypetitioner,towit:
Q:Mr.Witness,youmentionedthepartsthatweredamagedandreplacedweretobesurrenderedtothedefendant,correct?
A:Yes,sir.
Q:Haveyouexaminedthetroublecallreportsubmittedbytheplaintiffinthiscase?
A:Yes,sir.
Q:Andhaveyounotnoticedthatinthetroublecallreportthedefectivepartsreplacedweredulyturnedoverbytheplaintifftothe
defendantasacknowledgedbyyoursecurityguard?
A:No,sir.
_______________

31TSN,April19,2002,pp.3637.(Emphasissupplied).
32SeeTSN,April19,2002,p.38.

417

VOL. 636, 417

DECEMBER 1,
2010
HYATT Elevators and
 Escalators
Corporation vs.
Cathedral Heights
Building Complex
Association, Inc.
Q:So,Mr.witness,Illjust[show]toyouthistroublecallreportdatedMay22,1997.Willyoupleasereadthenotationhereattheback
oftheacknowledgmentreceiptofthesecurityguard?
A:Returndefective1unitBDCTCBserialnumber9546.
Q:Thisisexhibit?
A:Exh.00.
Q:Dated?
A:May10,1997.
Q:Willyoupleasereadthewordshereatthebottom?
A:AlldefectivepartsturnovertoJanet?
Q:DoyouknowwhoisJanet?
A:Theclerk.
Q:Ofthedefendant?
A:Yes,sir.
Q:ThisisExh?
A:Exh.SS.
Q:IamshowingtoyouthistroublecallreportdatedMay16,1997.Canyoupleasereadthewrittennotationabovetheacknowledgment
receiptofthesecurityguard?
A:TurnoverdefectiveAURtoJanet.
Q:AndthisJanetisanemployeeofthedefendant?
A:Yes,sir. 33

Lastly,uponinquiryfromthepresidingjudge,Cruzadmittedthatrespondentsinformationclerkwas
authorizedtoacceptdeliveriesandthatthepartsreceivedwereusedtorepairtheirelevators,thus:
Q:Whatdoyouthinkistheimportoftheirsigningthedeliveryreceipts?Whatisthesignificancesincesheisyoursubordinate?
A:ThesedocumentsseemsnotinorderbecauseIhavenoticedandobservedthatthedateofthedeliveryreceipts
_______________

33Id.,atpp.4243.

418

418 SUPREME COURT

REPORTS
ANNOTATED
HYATT Elevators and
Escalators
Corporation vs.
Cathedral Heights
Building Complex
Association, Inc.
weremadeatthetimeitwassignedbytheinformationclerkaretoolong.
Q:Whatareyousuggesting?AreyousuggestinganomalybyIvyGumisad?
A:No,thedelivery.
Q:ButGumisad,youremployeesignedthese,youresuggestingthatsheisananomaly?
A:Thelengthoftime.
Q:Areyousuggestingthatsheisdoingthiscommittinganomaly,irregularlyorwhat?Isshedoingdishonesty?
A:No,yourHonor.
Q:Thenwhatisthebusinessofsigningandreceivingthesewhensheisyouremployee?Unlesssheseekpermindshe
shouldnotbereceivingthese?Whatwashermotiveofreceivingthis?YouhavetoconvincetheCourtthatthereisa
reasonwhy,otherwise,youhavetopaythecontractor.Thatswhatthepointthere.
A:YourHonor,sheisauthorizedtoacceptdeliveries.
Q:Thesepartswhichwereacceptedfirstreceiptcostingfifteenthousand(P15,000.00)pesos.Doyouhavethereceipt?
Theotheristwentyonethousand(P21,000.00)pesos,andtheotherisfourteenthousand(P14,000.00)pesosworthof
parts,anotheristhreethousandfivehundred(P3,500.00)pesos,anotherisfiftythreethousand(P53,000.00)pesos,
anotheristhreethousandfivehundred(P3,500.00)pesos.Whatdidyouusewiththeseparts.
A:Theywereusedtorepairourelevators.
Q:Andthesewasreceivedbyyourcoemployee,IvyGumisad,howcouldyouexplainthat?
A:YourHonor,youcanseethedifferenceintimeasrequiredandthedatethedeliveryreceiptwassignedbythe...
Q:Correct,butsheisyouremployeehere.Thereisnosuggestionofanomaly.Youshouldknowwhatyourem
419

VOL. 636, 419

DECEMBER 1,
2010
HYATT Elevators and
Escalators
Corporation vs.
Cathedral Heights
Building Complex
 Association, Inc.
ployeeisdoing.Youshouldhaveterminatedyouremployeeaftertheprocess.Whatkindofemployeeareyou?Youhavetoconvincethe
CourtbecausewewilldecidethecaseinyourfavorifyouareabletoconvincetheCourt.
A:YourHonor,thesepaperswereonlypresentedwhentheyfiledclaims.Therewerepartsinthedocumentthatwerepresentedbythe
HyattElevatorsandEscalatorsCorporationwhentheyareclaimingfortherepairs.
Q:Okay,thesignatureofGumisad,isithersignaturebeingyouremployee?
A:Yes,yourHonor. 34

Onafinalnote,thisCourtdisagreeswiththefindingsoftheCAthattheclaimsofpetitionerare
questionable, becausethedate of thesales invoice andthe date stated in the corresponding delivery
receiptaretoofarapart.Itisnotanuncommonpracticeforcontractorstodelivermaterialsandtobillthe
clientatalaterdate,speciallysincethepartiesinthepresentactionhaveanexistingServiceAgreement.
Withal,itisindisputablethattherepairsmadeontheelevatorsultimatelyredoundedtothebenefitof
respondentforwithoutsaidrepairs,theelevatorswouldnotbeoperational.UnderArticle2142ofthe
CivilCode,suchactsgiverisetothejuridicalrelationofquasicontracttotheendthatnooneshallbe
unjustlyenrichedorbenefitedattheexpenseofanother.Itwouldcertainlybeunjustforrespondentto
benefitfromtherepairsdonebypetitioneronlytorefusepaymentbecausethepaperssubmittedwerenot
inorder.
WHEREFORE,premisesconsidered,thepetitionisGRANTED.TheApril20,2006DecisionandJuly
31,2006ResolutionoftheCourtofAppeals,inCAG.R.CVNo.80427,areREVERSEDandSETASIDE.
_______________

34Id.,atpp.1921.(Emphasisandunderscoringsupplied.)

602 SUPREME COURT

REPORTS ANNOTATED
Ang Yu Asuncion vs. Court of
Appeals
G.R.No.109125.December2,1994. *

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,vs.THE HON. COURT OF

APPEALSandBUENREALTYDEVELOPMENTCORPORATION,respondents.

Obligations;Essentialelementsofanobligation.Anobligationisajuridicalnecessitytogive,todoornottodo
(Art.1156,CivilCode).Theobligationisconstitutedupontheconcurrenceoftheessentialelementsthereof,viz:(a)
Thevinculumjurisorjuridicaltiewhichistheefficientcauseestablishedbythevarioussourcesofobligations(law,
contracts,quasicontracts,delictsandquasidelicts);(b)theobjectwhichistheprestationorconduct,requiredtobe
observed (to give, to do or not to do); and (c) thesubjectpersonswho, viewed from the demandability of the
obligation,aretheactive(obligee)andthepassive(obligor)subjects.
Same;Contracts;Variousstagesofacontract.Amongthesourcesofanobligationisacontract(Art.1157,
CivilCode),whichisameetingofmindsbetweentwopersonswherebyonebindshimself,withrespecttotheother,
togivesomethingortorendersomeservice(Art.1305,CivilCode).Acontractundergoesvariousstagesthatinclude
itsnegotiationorpreparation,itsperfectionand,finally,itsconsummation.Negotiationcoverstheperiodfromthe
time the prospective contracting parties indicate interest in the contract to the time the contract is concluded
(perfected). Theperfectionof the contract takes place upon the concurrence of the essential elements thereof. A
contractwhichisconsensualastoperfectionissoestablisheduponameremeetingofminds,i.e.,theconcurrenceof
offerandacceptance,ontheobjectandonthecausethereof.Acontractwhichrequires,inadditiontotheabove,the
deliveryoftheobjectoftheagreement,asinapledgeorcommodatum,iscommonlyreferredtoasarealcontract.In
asolemncontract,compliancewithcertainformalitiesprescribedbylaw,suchasinadonationofrealproperty,is
essentialinordertomaketheactvalid,theprescribedformbeingtherebyanessentialelementthereof.Thestage
ofconsummationbeginswhenthepartiesperformtheirrespectiveundertakingsunderthecontractculminatingin
theextinguishmentthereof.
_______________

*
ENBANC.

603

VOL. 238, 603

DECEMBER 2, 1994
Ang Yu Asuncion vs. Court
of Appeals
Same;Same;Sales;Insales,thecontractisperfectedwhenthesellerobligateshimself,forapricecertain,to
deliverandtotransferownershipofathingorrighttothebuyer,overwhichthelatteragrees. Untilthecontractis
perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales,
particularly,towhichthetopicfordiscussionaboutthecaseatbenchbelongs,thecontractisperfectedwhena
person,calledtheseller,obligateshimself,forapricecertain,todeliverandtotransferownershipofathingorright
toanother,calledthebuyer,overwhichthelatteragrees.
Same;Same;Same;Whenthesaleisnotabsolutebutconditional,thebreachoftheconditionwillpreventthe
obligationtoconveytitlefromacquiringanobligatoryforce.Whenthesaleisnotabsolutebutconditional,suchas
inaContracttoSellwhereinvariablytheownershipofthethingsoldisretaineduntilthefulfillmentofapositive
suspensivecondition(normally,thefullpaymentofthepurchaseprice),thebreachoftheconditionwillpreventthe
obligationtoconveytitlefromacquiringanobligatoryforce.InDignosvs.CourtofAppeals(158SCRA375),wehave
saidthat,althoughdenominatedaDeedofConditionalSale,asaleisstillabsolutewherethecontractisdevoidof
anyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,e.g.,untilorunlessthepriceis
paid.Ownershipwillthenbetransferredtothebuyeruponactualorconstructivedelivery(e.g.,bytheexecutionofa
publicdocument)ofthepropertysold.Wheretheconditionisimposedupontheperfectionofthecontractitself,the
failureoftheconditionwouldpreventsuchperfection.Iftheconditionisimposedontheobligationofapartywhich
isnotfulfilled,theotherpartymayeitherwaivetheconditionorrefusetoproceedwiththesale(Art.1545,Civil
Code).
Same;Same;Same;Anunconditionalmutualpromisetobuyandsell,withanobjectthatisdeterminateand
thepricefixed,canbeobligatoryontheparties.Anunconditionalmutualpromisetobuyandsell,aslongasthe
objectismadedeterminateandthepriceisfixed,canbeobligatoryontheparties,andcompliancetherewithmay
accordinglybeexacted.
Same;Same;Same;Options;Anacceptedunilateralpromisewhichspecifiesthethingtobesoldandthepriceto
bepaid,whencoupledwithavaluableconsiderationdistinctandseparatefromtheprice,maybetermedaperfected
contractofoption.Anacceptedunilateralpromisewhichspecifiesthethingtobesoldandthepricetobepaid,
whencoupledwithavaluableconsiderationdistinctand
604

60 SUPREME
4 COURT REPORTS
ANNOTATED
Ang Yu Asuncion vs. Court
of Appeals
separatefromtheprice,iswhatmayproperlybetermedaperfectedcontractofoption.Thiscontractislegally
binding,andinsales,itconformswiththesecondparagraphofArticle1479oftheCivilCode.Observe,however,
thattheoptionisnotthecontractofsaleitself.Theoptioneehastheright,butnottheobligation,tobuy.Oncethe
optionisexercisedtimely,i.e.,theofferisacceptedbeforeabreachoftheoption,abilateralpromisetosellandto
buyensuesandbothpartiesarethenreciprocallyboundtocomplywiththeirrespectiveundertakings.
Same;Same;Same;Same;Rulesapplicablewhereaperiodisgiventotheoffereewithinwhichtoacceptthe
offer.Whereaperiodisgiventotheoffereewithinwhichtoaccepttheoffer,thefollowingrulesgenerallygovern:
(1)Iftheperiodisnotitselffoundeduponorsupportedbyaconsideration,theofferorisstillfreeandhastheright
towithdrawtheofferbeforeitsacceptance,or,ifanacceptancehasbeenmade,beforetheofferorscomingtoknow
of such fact, by communicating that withdrawal to the offeree. The right to withdraw, however, must not be
exercisedwhimsicallyorarbitrarily;otherwise,itcouldgiverisetoadamageclaimunderArticle19oftheCivil
Code;(2)Iftheperiodhasaseparateconsideration,acontractofoptionisdeemedperfected,anditwouldbea
breachofthatcontracttowithdrawtheofferduringtheagreedperiod.Theoption,however,isanindependent
contractbyitself,anditistobedistinguishedfromtheprojectedmainagreement(subjectmatteroftheoption)
whichisobviouslyyettobeconcluded.If,infact,theoptionerofferorwithdrawstheofferbeforeitsacceptance
(exerciseoftheoption)bytheoptioneeofferee,thelattermaynotsueforspecificperformanceontheproposed
contract(objectoftheoption)sinceithasfailedtoreachitsownstageofperfection.Theoptioneeofferor,however,
rendershimselfliablefordamagesforbreachoftheoption.Inthesecases,careshouldbetakenontherealnatureof
theconsiderationgiven,forif,infact,ithasbeenintendedtobepartoftheconsiderationforthemaincontractwith
arightofwithdrawalonthepartoftheoptionee,themaincontractcouldbedeemedperfected;asimilarinstance
wouldbeanearnestmoneyinacontractofsalethatcanevidenceitsperfection(Art.1482,CivilCode).
Same;Same;Same;Same;WordsandPhrases;RightofFirstRefusal,Explained;Inthelawonsales,theso
calledrightoffirstrefusalisaninnovativejuridicalrelation,butitcannotbedeemedaperfectedcontractofsale
underArticle1458oftheCivilCode.Inthelawonsales,thesocalledrightoffirstrefusalisaninnovative
juridicalrelation.Needlesstopointout,itcannotbedeemedaperfectedcontractofsaleunderArticle1458ofthe
CivilCode,Neithercantherightoffirstrefusal,understoodinitsnormalconcept,persebebrought
605

VOL. 238, 605

DECEMBER 2, 1994
Ang Yu Asuncion vs. Court
of Appeals
withinthepurviewofanoptionunderthesecondparagraphofArticle1479,aforequoted,orpossiblyofanoffer
underArticle1319ofthesameCode.Anoptionoranofferwouldrequire,amongotherthings,aclearcertaintyon
boththeobjectandthecauseorconsiderationoftheenvisionedcontract.Inarightoffirstrefusal,whiletheobject
might be made determinate, the exercise of the right, however, would be dependent not only on the grantors
eventualintentiontoenterintoabindingjuridicalrelationwithanotherbutalsoonterms,includingtheprice,that
obviouslyareyettobelaterfirmedup.Priorthereto,itcanatbestbesodescribedasmerelybelongingtoaclassof
preparatoryjuridicalrelationsgovernednotbycontracts(sincetheessentialelementstoestablishthevinculum
juriswould still be indefinite and inconclusive) but by, among other laws of general application, the pertinent
scatteredprovisionsoftheCivilCodeonhumanconduct.
Same;Same;Same;Same;Same;Same;Breachofarightoffirstrefusaldecreedunderafinaljudgmentdoes
notentitletheaggrievedpartytoawritofexecutionofthejudgmentbuttoanactionfordamages.Evenonthe
premisethatsuchrightoffirstrefusalhasbeendecreedunderafinaljudgment,likehere,itsbreachcannotjustify
correspondinglyanissuanceofawritofexecutionunderajudgmentthatmerelyrecognizesitsexistence,norwould
itsanctionanactionforspecificperformancewithouttherebynegatingtheindispensableelementofconsensuality
intheperfectionofcontracts.Itisnottosay,however,thattherightoffirstrefusalwouldbeinconsequentialfor,
suchasalreadyintimatedabove,anunjustifieddisregardthereof,given,forinstance,thecircumstancesexpressed
inArticle19oftheCivilCode,canwarrantarecoveryfordamages.ThefinaljudgmentinCivilCaseNo.8741058,
itmustbestressed,hasmerelyaccordedarightoffirstrefusalinfavorofpetitioners.Theconsequenceofsucha
declarationentailsnomorethanwhathasheretoforebeensaid.Infine,if,asitisheresoconveyedtous,petitioners
areaggrievedbythefailureofprivaterespondentstohonortherightoffirstrefusal,theremedyisnotawritof
executiononthejudgment,sincethereisnonetoexecute,butanactionfordamagesinaproperforumforthe
purpose.
DueProcess;Actions;Apartynotimpleadedinanactioncannotbeheldsubjecttothewritofexecutionissued
therein.Furthermore,whetherprivaterespondentBuenRealtyDevelopmentCorporation,theallegedpurchaserof
theproperty,hasactedingoodfaithorbadfaithandwhetherornotitshould,inanycase,beconsideredboundto
respect the registration of thelis pendensin Civil Case No. 8741058 are matters that must be independently
addressedinappropriateproceedings.BuenRealty,nothavingbeenimpleadedinCivilCaseNo.
606

60 SUPREME
6 COURT REPORTS
ANNOTATED
Ang Yu Asuncion vs. Court
of Appeals
8741058,cannotbeheldsubjecttothewritofexecutionissuedbyrespondentJudge,letaloneoustedfromthe
ownershipandpossessionoftheproperty,withoutfirstbeingdulyaffordeditsdayincourt.

PETITIONforreviewofadecisionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
AntonioM.Albanoforpetitioners.
Umali,Soriano&Associatesforprivaterespondent.

VITUG,J.:

Assailed,inthispetitionforreview,isthedecisionoftheCourtofAppeals,dated04December1991,in
CAG.R.SPNo.26345settingasideanddeclaringwithoutforceandeffecttheordersofexecutionofthe
trialcourt,dated30August1991and27September1991,inCivilCaseNo.8741058.
Theantecedentsarerecitedingooddetailbytheappellatecourtthusly:
OnJuly29,1987aSecondAmendedComplaintforSpecificPerformancewasfiledbyAnnYuAsuncionandKeh
Tiong,etal.,againstBobbyCuUnjieng,RoseCuUnjiengandJoseTanbeforetheRegionalTrialCourt,Branch31,
ManilainCivilCaseNo.8741058,alleging,amongothers,thatplaintiffsaretenantsorlesseesofresidentialand
commercialspacesownedbydefendantsdescribedasNos.630638OngpinStreet,Binondo,Manila;thattheyhave
occupiedsaidspacessince1935andhavebeenreligiouslypayingtherentalandcomplyingwithalltheconditionsof
theleasecontract;thatonseveraloccasionsbeforeOctober9,1986,defendantsinformedplaintiffsthattheyare
offeringtosellthepremisesandaregivingthemprioritytoacquirethesame;thatduringthenegotiations,Bobby
CuUnjiengofferedapriceofP6millionwhileplaintiffsmadeacounterofferofP5million;thatplaintiffsthereafter
askedthedefendantstoputtheirofferinwritingtowhichrequestdefendantsacceded;thatinreplytodefendants
letter,plaintiffswrotethemonOctober24,1986askingthattheyspecifythetermsandconditionsoftheofferto
sell;thatwhenplaintiffsdidnotreceiveanyreply,theysentanotherletterdatedJanuary28,1987withthesame
request; that since defendants failed to specify the terms and conditions of the offer to sell and because of
informationreceivedthatdefendantswereabouttoselltheproperty,plaintiffswerecompelledtofilethecomplaint
tocompeldefendantstosellthepropertytothem.
607
VOL. 238, DECEMBER 607
2, 1994
 Ang Yu Asuncion vs. Court of
Appeals
Defendantsfiledtheiranswerdenyingthematerialallegationsofthecomplaintandinterposingaspecialdefenseof
lackofcauseofaction.
Aftertheissueswerejoined,defendantsfiledamotionforsummaryjudgmentwhichwasgrantedbythelower
court.Thetrialcourtfoundthatdefendantsoffertosellwasneveracceptedbytheplaintiffsforthereasonthatthe
partiesdidnotagreeuponthetermsandconditionsoftheproposedsale,hence,therewasnocontractofsaleatall.
Nonetheless,thelowercourtruledthatshouldthedefendantssubsequentlyoffertheirpropertyforsaleatapriceof
P11millionorbelow,plaintiffswillhavetherightoffirstrefusal.Thusthedispositiveportionofthedecisionstates:
WHEREFORE,judgmentisherebyrenderedinfavorofthedefendantsandagainsttheplaintiffssummarilydismissingthe
complaintsubjecttotheaforementionedconditionthatifthedefendantssubsequentlydecidetooffertheirpropertyforsalefora
purchasepriceofElevenMillionPesosorlower,thentheplaintiffshastheoptiontopurchasethepropertyoroffirstrefusal,
otherwise,defendantsneednotofferthepropertytotheplaintiffsifthepurchasepriceishigherthanElevenMillionPesos.
SOORDERED.

Aggrievedbythedecision,plaintiffsappealedtothisCourtinCAG.R.CVNo.21123.Inadecisionpromulgated
onSeptember21,1990(pennedbyJusticeSegundinoG.ChuaandconcurredinbyJusticesVicenteV.Mendozaand
FernandoA.Santiago),thisCourtaffirmedwithmodificationthelowercourtsjudgment,holding:
In resume, there was no meeting of the minds between the parties concerning the sale of the property. Absent such
requirement,theclaimforspecificperformancewillnotlie.Appellantsdemandforactual,moralandexemplarydamageswill
likewisefailasthereexistsnojustifiablegroundforitsaward.Summaryjudgmentfordefendantswasproperlygranted.Courts
mayrendersummaryjudgmentwhenthereisnogenuineissueastoanymaterialfactandthemovingpartyisentitledtoa
judgmentasamatteroflaw(Garciavs.CourtofAppeals,176SCRA815).Allrequisitesobtaining,thedecisionofthecourta
quoislegallyjustifiable.
WHEREFORE,findingtheappealunmeritorious,thejudgmentappealedfromisherebyAFFIRMED,butsubjecttothe
followingmodification:Thecourtaquointheaforestateddecisiongavetheplaintiffsappellantstherightoffirstrefusalonlyif
the

608
608 SUPREME COURT
REPORTS ANNOTATED
Ang Yu Asuncion vs. Court of
Appeals
propertyissoldforapurchasepriceofElevenMillionpesosorlower;however,consideringthemercurialanduncertainforcesin
ourmarketeconomytoday.Wefindnoreasonnottograntthesamerightoffirstrefusaltohereinappellantsintheeventthat
thesubjectpropertyissoldforapriceinexcessofElevenMillionpesos.Nopronouncementastocosts.
SOORDERED.

ThedecisionofthisCourtwasbroughttotheSupremeCourtbypetitionforreviewoncertiorari.TheSupreme
CourtdeniedtheappealonMay6,1991forinsufficiencyinformandsubstance(AnnexH,Petition).
OnNovember15,1990,whileCAG.R.CVNo.21123waspendingconsiderationbythisCourt,theCuUnjieng
spousesexecutedaDeedofSale(AnnexD,Petition)transferringthepropertyinquestiontohereinpetitionerBuen
RealtyandDevelopmentCorporation,subjecttothefollowingtermsandconditions:
1.ThatforandinconsiderationofthesumofFIFTEENMILLIONPESOS(P15,000,000.00),receiptofwhichinfullishereby
acknowledged, the VENDORS hereby sells, transfers and conveys for and in favor of the VENDEE, his heirs, executors,
administratorsorassigns,theabovedescribedpropertywithalltheimprovementsfoundthereinincludingalltherightsand
interestinthesaidpropertyfreefromallliensandencumbrancesofwhatevernature,exceptthependingejectmentproceeding;
2.ThattheVENDEEshallpaytheDocumentaryStampTax,registrationfeesforthetransferoftitleinhisfavorandother
expensesincidentaltothesaleofabovedescribedpropertyincludingcapitalgainstaxandaccruedrealestatetaxes.

Asaconsequenceofthesale,TCTNo.105254/T881inthenameoftheCuUnjiengspouseswascancelledand,
inlieuthereof,TCTNo.195816wasissuedinthenameofpetitioneronDecember3,1990.
OnJuly1,1991,petitionerasthenewownerofthesubjectpropertywrotealettertothelesseesdemanding
thatthelattervacatethepremises.
OnJuly16,1991,thelesseeswroteareplytopetitionerstatingthatpetitionerbroughtthepropertysubjectto
thenoticeoflispendensregardingCivilCaseNo.8741058annotatedonTCTNo.105254/T881inthenameofthe
CuUnjiengs.
ThelesseesfiledaMotionforExecutiondatedAugust27,1991ofthedecisioninCivilCaseNo.8741058as
modifiedbytheCourtofAppealsinCAG.R.CVNo.21123.
OnAugust30,1991,respondentJudgeissuedanorder(AnnexA,Petition)quotedasfollows:
609
VOL. 238, DECEMBER 609
2, 1994
Ang Yu Asuncion vs. Court of
Appeals
PresentedbeforetheCourtisaMotionforExecutionfiledbyplaintiffrepresentedbyAtty.AntonioAlbano.Both
defendantsBobbyCuUnjiengandRoseCuUnjiengrepresentedbyAtty.VicenteSisonandAtty.AnacletoMagno
respectively were duly notified in todays consideration of the motion as evidenced by the rubber stamp and
signaturesuponthecopyoftheMotionforExecution.
ThegistofthemotionisthattheDecisionoftheCourtdatedSeptember21,1990asmodifiedbytheCourtof
AppealsinitsdecisioninCAG.R.CV21123,andelevatedtotheSupremeCourtuponthepetitionforreviewand
thatthesamewasdeniedbythehighesttribunalinitsresolutiondatedMay6,1991inG.R.No.L97276,hadnow
becomefinalandexecutory.Asaconsequence,therewasanEntryofJudgmentbytheSupremeCourtasofJune6,
1991,statingthattheaforesaidmodifieddecisionhadalreadybecomefinalandexecutory.
ItistheobservationoftheCourtthatthispropertyindisputewasthesubjectoftheNoticeofLisPendensand
thatthemodifieddecisionofthisCourtpromulgatedbytheCourtofAppealswhichhadbecomefinaltotheeffect
thatshouldthedefendantsdecidetoofferthepropertyforsaleforapriceofP11Millionorlower,andconsidering
the mercurial and uncertain forces in our market economy today, the same right of first refusal to herein
plaintiffs/appellantsintheeventthatthesubjectpropertyissoldforapriceinexcessofElevenMillionpesosor
more.
WHEREFORE,defendantsareherebyorderedtoexecutethenecessaryDeedofSaleofthepropertyinlitigation
infavor ofplaintiffsAngYuAsuncion,KehTiongandArthurGofor theconsiderationofP15Millionpesos in
recognitionofplaintiffsrightoffirstrefusalandthatanewTransferCertificateofTitlebeissuedinfavorofthe
buyer.
AllprevioustransactionsinvolvingthesamepropertynotwithstandingtheissuanceofanothertitletoBuen
RealtyCorporation,isherebysetasideashavingbeenexecutedinbadfaith.
SOORDERED.
OnSeptember22,1991respondentJudgeissuedanotherorder,thedispositiveportionofwhichreads:

WHEREFORE,lettherebeWritofExecutionissueintheaboveentitledcasedirectingtheDeputySheriff
RamonEnriquezofthisCourttoimplementsaidWritofExecutionorderingthedefendantsamongotherstocomply
withtheaforesaidOrderof
610
610 SUPREME COURT
REPORTS ANNOTATED
Ang Yu Asuncion vs. Court of
Appeals
thisCourtwithinaperiodofone(1)weekfromreceiptofthisOrderandfordefendantstoexecutethenecessaryDeedofSaleof
the property in litigation in favor of the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of
P15,000,000.00andorderingtheRegisterofDeedsoftheCityofManila,tocancelandsetasidethetitlealreadyissuedinfavor
ofBuenRealtyCorporationwhichwaspreviouslyexecutedbetweenthelatteranddefendantsandtoregisterthenewtitlein
favoroftheaforesaidplaintiffsAngYuAsuncion,KehTiongandArthurGo.
SOORDERED.

Onthesameday,September27,1991thecorrespondingwritofexecution(AnnexC,Petition)wasissued. 1

On04December1991,theappellatecourt,onappealtoitbyprivaterespondent,setasideanddeclared
withoutforceandeffecttheabovequestionedordersofthecourtaquo.
Inthispetitionforreviewoncertiorari,petitionerscontendthatBuenRealtycanbeheldboundbythe
writofexecutionbyvirtueofthenoticeoflispendens,carriedoveronTCTNo.195816issuedinthename
ofBuenRealty,atthetimeofthelatterspurchaseofthepropertyon15November1991fromtheCu
Unjiengs.
Weaffirmthedecisionoftheappellatecourt.
Anottoorecentdevelopmentinrealestatetransactionsistheadoptionofsucharrangementsasthe
rightoffirstrefusal,apurchaseoptionandacontracttosell.Forreadyreference,wemightpointout
somefundamentalpreceptsthatmayfindsomerelevancetothisdiscussion.
Anobligationisajuridicalnecessitytogive,todoornottodo( Art.1156,CivilCode).Theobligationis
constitutedupontheconcurrenceoftheessentialelementsthereof,viz:(a)Thevinculumjurisorjuridical
tiewhich is the efficient cause established by the various sources of obligations (law, contracts,
quasicontracts,delictsandquasidelicts);(b)theobjectwhichistheprestationorconduct,requiredtobe
observed(togive,todoornottodo);and(c)thesubjectpersonswho,viewedfromthedemandabilityof
theobligation,aretheactive(obligee)andthepassive(obligor)subjects.
_______________

1
Rollo,pp.3238.

611
VOL. 238, DECEMBER 611
2, 1994
Ang Yu Asuncion vs. Court of
Appeals
Amongthesourcesofanobligationisacontract(Art.1157,CivilCode),whichisameetingofminds
betweentwopersonswherebyonebindshimself,withrespecttotheother,togivesomethingortorender
someservice(Art.1305,CivilCode).Acontractundergoesvariousstagesthatincludeitsnegotiationor
preparation,itsperfectionand,finally,itsconsummation.Negotiationcoverstheperiodfromthetimethe
prospective contracting parties indicate interest in the contracttothe time the contract is concluded
(perfected). Theperfectionof the contract takes place upon the concurrence of the essential elements
thereof.Acontractwhichisconsensualastoperfectionissoestablisheduponameremeetingofminds,
i.e.,theconcurrenceofofferandacceptance,ontheobjectandonthecausethereof.Acontractwhich
requires, in addition to the above, the delivery of the object of the agreement, as in a pledge
orcommodatum,iscommonlyreferredtoasarealcontract.Inasolemncontract,compliancewithcertain
formalitiesprescribedbylaw,suchasinadonationofrealproperty,isessentialinordertomaketheact
valid,theprescribedformbeingtherebyanessentialelementthereof.Thestageofconsummationbegins
when the parties perform their respective undertakings under the contract culminating in the
extinguishmentthereof.
Untilthecontractisperfected,itcannot,asanindependentsourceofobligation,serveasabinding
juridicalrelation.Insales,particularly,towhichthetopicfordiscussionaboutthecaseatbenchbelongs,
thecontractisperfectedwhenaperson,calledtheseller,obligateshimself,forapricecertain,todeliver
andtotransferownershipofathingorrighttoanother,calledthebuyer,overwhichthelatteragrees.
Article1458oftheCivilCodeprovides:
Art.1458.Bythecontractofsaleoneofthecontractingpartiesobligateshimselftotransfertheownershipofandto
deliveradeterminatething,andtheothertopaythereforapricecertaininmoneyoritsequivalent.
Acontractofsalemaybeabsoluteorconditional.

When the sale isnot absolutebutconditional,such as in a Contract to Sell where invariably the
ownershipofthethingsoldisretaineduntilthefulfillmentofapositivesuspensive
612
612 SUPREME COURT
REPORTS ANNOTATED
Ang Yu Asuncion vs. Court of
Appeals
condition(normally,thefullpaymentofthepurchaseprice),thebreachoftheconditionwillpreventthe
obligationtoconveytitlefromacquiringanobligatoryforce. InDignosvs.CourtofAppeals(158SCRA
2

375),wehavesaidthat,althoughdenominatedaDeedofConditionalSale,asaleisstillabsolutewhere
thecontractisdevoidofanyprovisothattitleisreservedortherighttounilaterallyrescindisstipulated,
e.g.,untilorunlessthepriceispaid.Ownershipwillthenbetransferredtothebuyeruponactualor
constructive delivery (e.g., by the execution of a public document) of the property sold. Where the
conditionisimposedupontheperfectionofthecontractitself,thefailureoftheconditionwouldprevent
suchperfection. Iftheconditionisimposedontheobligationofapartywhichisnotfulfilled,theother
3

partymayeitherwaivetheconditionorrefusetoproceedwiththesale(Art.1545,CivilCode). 4

Anunconditionalmutualpromisetobuyandsell,aslongastheobjectismadedeterminateandthe
priceisfixed,canbeobligatoryontheparties,andcompliancetherewithmayaccordinglybeexacted. 5

Anaccepted unilateral promisewhichspecifiesthething to be sold and the price to bepaid,when

coupled with a valuable consideration distinctandseparate from the price, is what may properly be
termedaperfectedcontractofoption.Thiscontractislegallybinding,andinsales,itconformswiththe
secondparagraphofArticle1479oftheCivilCode,viz:
ART.1479.xxx.
Anacceptedunilateralpromisetobuyortoselladeterminatethingforapricecertainisbindinguponthe
promissorifthepromiseissupportedbyaconsiderationdistinctfromtheprice.(1451a). 6

_______________

2
Roquevs.Lapuz,96SCRA741;Agustinvs.CA,186SCRA375.
3
SeePeoplesHomesiteandHousingCorp.vs.CourtofAppeals,133SCRA777.
4
DeltaMotorCorporationvs.Genuino,170SCRA29.
5
SeeArt.1459;Atkins,KrollandCo.,Inc.vs.CuaHianTek,102Phil.948.
6
Itiswelltonotethatwhentheconsiderationgiven,forwhatotherwisewouldhavebeenanoption,partakesthenatureinrealityof
apartpaymentofthepurchaseprice(termedasearnestmoneyand

613
VOL. 238, DECEMBER 613
2, 1994
Ang Yu Asuncion vs. Court of
 Appeals
Observe,however,thattheoptionisnotthecontractofsaleitself. Theoptioneehastheright,butnotthe
7

obligation,tobuy.Oncetheoptionisexercisedtimely,i.e.,theofferisacceptedbeforeabreachofthe
option,abilateral promisetosell andtobuyensues andbothpartiesarethenreciprocallyboundto
complywiththeirrespectiveundertakings. 8

Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise

(policitacion) is merely an offer. Public advertisements or solicitations and the like are ordinarily
construedasmereinvitationstomakeoffersoronlyasproposals.Theserelations,untilacontractis
perfected, are not considered binding commitments. Thus, at any time prior to the perfection of the
contract,eithernegotiatingpartymaystopthenegotiation.Theoffer,atthisstage,maybewithdrawn;
thewithdrawaliseffectiveimmediatelyafteritsmanifestation,suchasbyitsmailingandnotnecessarily
whentheoffereelearnsofthewithdrawal(Laudicovs.Arias,43Phil.270).Whereaperiodisgiventothe
offereewithinwhichtoaccepttheoffer,thefollowingrulesgenerallygovern:
(1)Iftheperiodisnotitselffoundeduponorsupportedbyaconsideration,theofferorisstillfreeand
hastherighttowithdrawtheofferbeforeitsacceptance,or,ifanacceptancehasbeenmade,beforethe
offerorscomingtoknowofsuchfact,bycommunicatingthatwithdrawaltotheofferee(seeArt.1324,
CivilCode;seealsoAtkins,Kroll&Co.vs.Cua,102Phil.948,holdingthatthisruleisapplicabletoa
unilateralpromisetosellunderArt.1479,modifyingthepreviousdecisioninSouthWesternSugarvs.
Atlantic Gulf,97 Phil. 249; see alsoArt. 1319, Civil Code;Rural Bank of Paraaque, Inc. vs.
Remolado,135SCRA409;Sanchezvs.Rigos,45SCRA368).Therighttowithdraw,however,mustnotbe
exercisedwhimsicallyorarbitrarilyotherwise,itcouldgiverisetoadamageclaimunderArticle19ofthe
CivilCodewhichordainsthateverypersonmust,intheexerciseofhisrightsandintheperformanceof
hisduties,act
_______________

consideredasaninitialpaymentthereof),anactualcontractofsaleisdeemedenteredintoandenforceableassuch.
EnriquezdelaCavadavs.Diaz,37Phil.982.
7

Atkins,Kroll&Co.,Inc.vs.CuaHianTek,102Phil.948.
8

614
614 SUPREME COURT
REPORTS ANNOTATED
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withjustice,giveeveryonehisdue,andobservehonestyandgoodfaith.
(2)Iftheperiodhasaseparateconsideration,acontractofoptionisdeemedperfected,anditwould
beabreachofthatcontracttowithdrawtheofferduringtheagreedperiod.Theoption,however,isan
independentcontractbyitself,anditistobedistinguishedfromtheprojectedmainagreement(subject
matteroftheoption)whichisobviouslyyettobeconcluded.If,infact,theoptionerofferor withdrawsthe
offerbeforeitsacceptance(exerciseoftheoption)bytheoptioneeofferee,thelattermaynotsueforspecific
performanceontheproposedcontract(objectoftheoption)sinceithasfailedtoreachitsownstageof
perfection.Theoptionerofferor,however,rendershimselfliablefordamagesforbreachoftheoption.In
thesecases,careshouldbetakenoftherealnatureoftheconsiderationgiven,forif,infact,ithasbeen
intendedtobepartoftheconsiderationforthemaincontractwitharightofwithdrawalonthepartofthe
optionee,themaincontractcouldbedeemedperfected;asimilarinstancewouldbeanearnestmoneyin
acontractofsalethatcanevidenceitsperfection(Art.1482,CivilCode).
Inthelawonsales,thesocalledrightoffirstrefusalisaninnovativejuridicalrelation.Needlessto
pointout,itcannotbedeemedaperfectedcontractofsaleunderArticle1458oftheCivilCode.Neither
cantherightoffirstrefusal,understoodinitsnormalconcept,persebebroughtwithinthepurviewofan
optionunder the secondparagraph of Article 1479, aforequoted, or possibly of an offer under Article
1319 ofthesameCode.Anoptionoranofferwouldrequire,amongotherthings, aclear
9 10

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9
Article1319,CivilCode,provides:
Art.1319.Consentismanifestedbythemeetingoftheofferandtheacceptanceuponthethingandthecausewhicharetoconstitutethecontract. The
offermustbecertainandtheacceptanceabsolute.Aqualifiedacceptanceconstitutesacounteroffer.(Emphasissupplied.)

Itisalsoessentialforanoptiontobebindingthatvaluableconsiderationdistinctfromthepriceshouldbegiven(seeMontillavs.
10

CourtofAppeals,161SCRA167;Sps.Natinovs.IAC,197SCRA323;Cronicovs.J.M.Tuason&Co.,Inc.,78SCRA331).

615
VOL. 238, DECEMBER 615
 2, 1994
Ang Yu Asuncion vs. Court of
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certaintyonboththeobjectandthecauseorconsiderationoftheenvisionedcontract.Inarightoffirst
refusal, while the object might be made determinate, the exercise of the right, however, would be
dependentnotonlyonthegrantorseventualintentiontoenterintoabindingjuridicalrelationwith
anotherbutalsoonterms,includingtheprice,thatobviouslyareyettobelaterfirmedup.Priorthereto,
itcanatbestbesodescribedasmerelybelongingtoaclassofpreparatoryjuridicalrelationsgovernednot
bycontracts(sincetheessentialelementstoestablishthevinculumjuriswouldstillbeindefiniteand
inconclusive)butby,amongotherlawsofgeneralapplication,thepertinentscatteredprovisionsofthe
CivilCodeonhumanconduct.
Evenonthepremisethatsuchrightoffirstrefusalhasbeendecreedunderafinaljudgment,likehere,
itsbreachcannotjustifycorrespondinglyanissuanceofawritofexecutionunderajudgmentthatmerely
recognizesitsexistence,norwoulditsanctionanactionforspecificperformancewithouttherebynegating
theindispensableelementofconsensualityintheperfectionofcontracts. Itisnottosay,however,that 11

therightoffirstrefusalwouldbeinconsequentialfor,suchasalreadyintimatedabove,anunjustified
disregardthereof,given,forinstance,thecircumstancesexpressedinArticle19 oftheCivilCode,can 12

warrantarecoveryfordamages.
ThefinaljudgmentinCivilCaseNo.8741058,itmustbestressed,hasmerelyaccordedarightof
firstrefusalinfavorofpetitioners.Theconsequenceofsuchadeclarationentailsnomorethanwhathas
heretoforebeensaid.Infine,if,asitisheresoconveyedtous,petitionersareaggrievedbythefailureof
private respondents to honor the right of first refusal, the remedy is not a writ of execution on the
judgment,sincethereisnonetoexecute,butanactionfordamagesinaproperforumforthepurpose.
Furthermore, whether private respondent Buen Realty Development Corporation, the alleged
purchaseroftheproperty,
_______________

SeeArticle1315and1318,CivilCode;Madrigal&Co.vs.Stevenson&Co.,15Phil.38;Salongavs.Farrales,105SCRA359.
11

Art.19.Everypersonmust,intheexerciseofhisrightsandintheperformanceofhisduties,actwithjustice,giveeveryonehisdue,
12

andobservehonestyandgoodfaith.

616
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Ang Yu Asuncion vs. Court of
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hasactedingoodfaithorbadfaithandwhetherornotitshould,inanycase,beconsideredboundto
respect the registration of thelis pendensinCivil Case No. 8741058are matters that must be
independentlyaddressedinappropriateproceedings.BuenRealty,nothavingbeenimpleadedinCivil
CaseNo.8741058,cannotbeheldsubjecttothewritofexecutionissuedbyrespondentJudge,letalone
oustedfromtheownershipandpossessionoftheproperty,withoutfirstbeingdulyaffordeditsdayin
court.
WearealsounabletoagreewithpetitionersthattheCourtofAppealshaserredinholdingthatthe
writofexecutionvariesthetermsofthejudgmentinCivilCaseNo.8741058,lateraffirmedinCAG.R.
CV21123.TheCourtofAppeals,inthisregard,hasobserved:
Finally,thequestionedwritofexecutionisinvariancewiththedecisionofthetrialcourtasmodifiedbythisCourt.
Asalreadystated,therewasnothinginsaiddecision thatdecreedtheexecutionofadeedofsalebetweentheCu
13

Unjiengsandrespondentlessees,orthefixingofthepriceofthesale,orthecancellationoftitleinthenameof
petitioner(Limpinvs.IAC,147SCRA516;PamantasanngLungsodngMaynila
_______________

13
Thedecisionreferredtoreads:
Inresume,therewasnomeetingofthemindsbetweenthepartiesconcerningthesaleoftheproperty.Absentsuchrequirement,theclaimforspecificperformance
willnotlie.Appellantsdemandforactual,moralandexemplarydamageswilllikewisefailasthereexistsnojustifiablegroundforitsaward.Summaryjudgmentfor
defendantswasproperlygranted.Courtsmayrendersummaryjudgmentwhenthereisnogenuineissueastoanymaterialfactandthemovingpartyisentitledtoa
judgmentasamatteroflaw(Garciavs.CourtofAppeals,176SCRA815).Allrequisitesobtaining,thedecisionofthecourtaquoislegallyjustifiable.
WHEREFORE,findingtheappealunmeritorious,thejudgmentappealedfromisherebyAFFIRMED,butsubjecttothefollowingmodification:Thecourta
quointheaforestateddecision,gavetheplaintiffsconsideringthemercurialanduncertainforcesinourmarketeconomytoday.Wefindnoreasonnottograntthe
samerightoffirstrefusaltohereinappellantsintheeventthatthesubjectpropertyissoldforapriceinexcessofElevenMillionpesos.Nopronouncementasto
costs.

617
VOL. 238, DECEMBER 617
2, 1994
Ang Yu Asuncion vs. Court of
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vs.IAC,143SCRA311;DeGuzmanvs.CA,137SCRA730;Pastorvs.CA,122SCRA885).

ItislikewisequiteobvioustousthatthedecisioninCivilCaseNo.8741058couldnothavedecreedat
thetimetheexecutionofanydeedofsalebetweentheCuUnjiengsandpetitioners.
WHEREFORE,weUPHOLDtheCourtofAppealsinultimatelysettingasidethequestionedOrders,
dated30August1991and27September1991,ofthecourtaquo.Costsagainstpetitioners.
SOORDERED.
Narvasa(C.J.),Padilla,Bidin,Regalado,Davide,
Jr.,Romero,Bellosillo,Melo,Quiason,PunoandMendoza,JJ.,concur.
Feliciano,J.,Onleave.
Kapunan,J.,Nopart,beingtheponenteoftheCourtofAppealsdecisionsoughttobesetasidein
thiscase.

Judgmentaffirmed.
Note.Unilateralcancellationofacontracttosellisnotwarrantedifthebreachisslightorcasual.
(SiskaDevelopmentCorporationvs.OfficeofthePresidentofthePhilippines,231SCRA674[1994])

o0o

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