G.R. No.

L-15113 January 28, 1961 National Internal Revenue Code and, therefore, imposed a tax assessment on
ANTONIO MEDINA, petitioner, vs. COLLECTOR OF INTERNAL REVENUE and THE
COURT OF TAX APPEALS respondents.
REYES, J.B.L. J.:
Petition to review a decision of the Court of Tax Appeals upholding a tax
assessment of the Collector of Internal Revenue except with respect to the
imposition of so-called compromise penalties, which were set aside.
The records show that on or about May 20, 1944, petitioning taxpayer Antonio
Medina married Antonia Rodriguez. Before 1946, the spouses had neither property
nor business of their own. Later, however, petitioner acquired forest, concessions in
the municipalities of San Mariano and Palanan in the Province of Isabela. From 1946
to 1948, the logs cut and removed by the petitioner from his concessions were sold
to different persons in Manila through his agent, Mariano Osorio.
petitioner, calling for the payment of P4,553.54 as deficiency sales taxes and
surcharges from 1949 to 1952. This same assessment of September 26, 1953 sought
also the collection of another sum of P643.94 as deficiency sales tax and surcharge
based on petitioner's quarterly returns from 1946 to 1952.
On November 30, 1953, petitioner protested the assessment; however, respondent
Collector insisted on his demand. On July 9, 1954, petitioner filed a petition for
reconsideration revealing for the first time the existence of an alleged premarital
agreement of complete separation of properties between him and his wife, and
contending that the assessment for the years 1946 to 1952 had already prescribed.
After one hearing, the Conference Staff of the Bureau of Internal Revenue
eliminated the 50% fraud penalty and held that the taxes assessed against him
before 1948 had already prescribed. Based on these findings, the Collector issued a
modified assessment, demanding the payment of only P3,325.68, computed as
follows:

Some time in 1949, Antonia R. Medina, petitioner's wife, started to engage in 5% tax due on P7,209.83 -1949 P 360.49
business as a lumber dealer, and up to around 1952, petitioner sold to her almost
all the logs produced in his San Mariano, concession. Mrs. Medina, In turn, sold in 5% tax due on 16,945.55 - 1950 847.28
Manila the logs bought from her husband through the same agent, Mariano Osorio.
The proceeds were, upon instructions from petitioner, either received by Osorio for 5% tax due on 16,874.52 - 1951 843.75
petitioner or deposited by said agent in petitioner's current account with the
Philippine National Bank. 5% tax due on 11,009.94 - 1952 550.50

On the thesis that the sales made by petitioner to his wife were null and void
TOTAL sales tax due P2,602.0
pursuant to the provisions of Article 1490 of the Civil Code of the Philippines
(formerly, Art. 1458, Civil Code of 1889), the Collector considered the sales made by
Mrs. Medina as the petitioner's original sales taxable under Section 186 of the
 25% Surcharge thereon 650.51
Short taxes per quarterly returns, 3rd quarter, 1950 58.52
25% Surcharge thereon 14.63
TOTAL AMOUNT due & collectible P3,325.68
Petitioner again requested for reconsideration, but respondent Collector, in his
letter of April 4, 1955, denied the same.
Petitioner appealed to the Court of Tax Appeals, which rendered judgment as
aforesaid. The Court's decision was based on two main findings, namely, (a) that
there was no premarital agreement of absolute separation of property between the
Medina spouse; and (b) assuming that there was such an agreement, the sales in
question made by petitioner to his wife were fictitious, simulated, and not bona
fide.
In his petition for review to this Court, petitioner raises several assignments of error
revolving around the central issue of whether or not the sales made by the
petitioner to his wife could be considered as his original taxable sales under the
provisions of Section 186 of the National Internal Revenue Code.
Relying mainly on testimonial evidence that before their marriage, he and his wife
executed and recorded a prenuptial agreement for a regime of complete separation
of property, and that all trace of the document was lost on account of the war,
petitioner imputes lack of basis for the tax court's factual finding that no agreement
of complete separation of property was ever executed by and between the spouses
before their marriage. We do not think so. Aside from the material inconsistencies
in the testimony of petitioner's witnesses pointed out by the trial court, the
circumstantial evidence is against petitioner's claim. Thus, it appears that at the
time of the marriage between petitioner and his wife, they neither had any
property nor business of their own, as to have really urged them to enter into the
supposed property agreement. Secondly, the testimony that the separation of
property agreement was recorded in the Registry of Property three months before
the marriage, is patently absurd, since such a prenuptial agreement could not be
effective before marriage is celebrated, and would automatically be cancelled if the
union was called off. How then could it be accepted for recording prior to the
marriage? In the third place, despite their insistence on the existence of the ante
nuptial contract, the couple, strangely enough, did not act in accordance with its
alleged covenants. Quite the contrary, it was proved that even during their taxable
years, the ownership, usufruct, and administration of their properties and business
were in the husband. And even when the wife was engaged in lumber dealing, and
she and her husband contracted sales with each other as aforestated, the proceeds
she derived from her alleged subsequent disposition of the logs incidentally, by
and through the same agent of her husband, Mariano Osorio were either
received by Osorio for the petitioner or deposited by said agent in petitioner's
current account with the Philippine National Bank. Fourth, although petitioner, a
lawyer by profession, already knew, after he was informed by the Collector on or
about September of 1953, that the primary reason why the sales of logs to his wife
could not be considered as the original taxable sales was because of the express
prohibition found in Article 1490 of the Civil Code of sales between spouses married
under a community system; yet it was not until July of 1954 that he alleged, for the
first time, the existence of the supposed property separation agreement. Finally,
the Day Book of the Register of Deeds on which the agreement would have been
entered, had it really been registered as petitioner insists, and which book was
among those saved from the ravages of the war, did not show that the document in
question was among those recorded therein.
We have already ruled that when the credibility of witnesses is the one at issue, the
trial court's judgment as to their degree of credence deserves serious consideration
by this Court (Collector vs. Bautista, et al., G.R. Nos. L-12250 & L-12259, May 27,
1959). This is all the more true in this case because not every copy of the supposed
agreement, particularly the one that was said to have been filed with the Clerk of
Court of Isabela, was accounted for as lost; so that, applying the "best evidence
rule", the court did right in giving little or no credence to the secondary evidence to
prove the due execution and contents of the alleged document (see Comments on
the Rules of Court, Moran, 1957 Ed., Vol. 3, pp. 10.12).
The foregoing findings notwithstanding, the petitioner argues that the prohibition
to sell expressed under Article 1490 of the Civil Code has no application to the sales
made by said petitioner to his wife, because said transactions are contemplated and
allowed by the provisions of Articles 7 and 10 of the Code of Commerce. But said
provisions merely state, under certain conditions, a presumption that the wife is
authorized to engage in business and for the incidents that flow therefrom when
she so engages therein. But the transactions permitted are those entered into with
strangers, and do not constitute exceptions to the prohibitory provisions of Article
1490 against sales between spouses.
Petitioner's contention that the respondent Collector can not assail the questioned
sales, he being a stranger to said transactions, is likewise untenable. The
government, as correctly pointed out by the Tax Court, is always an interested party
to all matters involving taxable transactions and, needless to say, qualified to
question their validity or legitimacy whenever necessary to block tax evasion.

Contracts violative of the provisions of Article 1490 of the Civil Code are null and
void (Uy Sui Pin vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca 45 Phil. 43). Being void
transactions, the sales made by the petitioner to his wife were correctly
disregarded by the Collector in his tax assessments that considered as the taxable
sales those made by the wife through the spouses' common agent, Mariano Osorio.
In upholding that stand, the Court below committed no error.

It is also the petitioner's contention that the lower court erred in using illegally
seized documentary evidence against him. But even assuming arguendo the truth of
petitioner's charge regarding the seizure, it is now settled in this jurisdiction that
illegally obtained documents and papers are admissible in evidence, if they are
found to be competent and relevant to the case (see Wong & Lee vs. Collector of
Internal Revenue, G.R. No. L-10155, August 30, 1958). In fairness to the Collector,
however, it should be stated that petitioner's imputation is vehemently denied by
him, and relying on Sections 3, 9, 337 and 338 of the Tax Code and the pertinent
portions of Revenue Regulations No. V-1 and citing this Court's ruling in U.S. vs.
Aviado, 38 Phil. 10, the Collector maintains that he and other internal revenue
officers and agents could require the production of books of accounts and other
records from a taxpayer. Having arrived at the foregoing conclusion, it becomes
unnecessary to discuss the other issues raised, which are but premised on the
assumption that a premarital agreement of total separation of property existed
between the petitioner and his wife.

WHEREFORE, the decision appealed from is affirmed, with costs against the
petitioner.
G.R. No. 165879 November 10, 2006
MARIA B. CHING, Petitioner, vs. JOSEPH C. GOYANKO, JR., EVELYN GOYANKO,
JERRY GOYANKO, IMELDA GOYANKO, JULIUS GOYANKO, MARY ELLEN GOYANKO
AND JESS GOYANKO, Respondents.
CARPIO MORALES, J.:
On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania)
were married.1 Out of the union were born respondents Joseph, Jr., Evelyn, Jerry,
Imelda, Julius, Mary Ellen and Jess, all surnamed Goyanko.
Respondents claim that in 1961, their parents acquired a 661 square meter
property located at 29 F. Cabahug St., Cebu City but that as they (the parents) were
Chinese citizens at the time, the property was registered in the name of their aunt,
Sulpicia Ventura (Sulpicia).
On May 1, 1993, Sulpicia executed a deed of sale 2 over the property in favor of
respondents father Goyanko. In turn, Goyanko executed on October 12, 1993 a
deed of sale3 over the property in favor of his common-law-wife-herein petitioner
Maria B. Ching. Transfer Certificate of Title (TCT) No. 138405 was thus issued in
petitioners name.
After Goyankos death on March 11, 1996, respondents discovered that ownership
of the property had already been transferred in the name of petitioner.
Respondents thereupon had the purported signature of their father in the deed of
sale verified by the Philippine National Police Crime Laboratory which found the
same to be a forgery.4
Respondents thus filed with the Regional Trial Court of Cebu City a complaint for
recovery of property and damages against petitioner, praying for the nullification of
the deed of sale and of TCT No. 138405 and the issuance of a new one in favor of
their father Goyanko.
In defense, petitioner claimed that she is the actual owner of the property as it was
she who provided its purchase price. To disprove that Goyankos signature in the
questioned deed of sale is a forgery, she presented as witness the notary public
who testified that Goyanko appeared and signed the document in his presence.
By Decision of October 16, 1998,5 the trial court dismissed the complaint against
petitioner, the pertinent portions of which decision read:
There is no valid and sufficient ground to declare the sale as null and void, fictitious
and simulated. The signature on the questioned Deed of Sale is genuine. The
testimony of Atty. Salvador Barrameda who declared in court that Joseph Goyanko,
Sr. and Maria Ching together with their witnesses appeared before him for
notarization of Deed of Sale in question is more reliable than the conflicting
testimonies of the two document examiners. Defendant Maria Ching asserted that
the Deed of Sale executed by Joseph Goyanko, Sr. in her favor is valid and genuine.
The signature of Joseph Goyanko, Sr. in the questioned Deed of Absolute Sale is
genuine as it was duly executed and signed by Joseph Goyanko, Sr. himself.
The parcel of lands known as Lot No. 6 which is sought to be recovered in this case
could never be considered as the conjugal property of the original Spouses Joseph
C. Goyanko and Epifania dela Cruz or the exclusive capital property of the husband.
The acquisition of the said property by defendant Maria Ching is well-elicited from
the aforementioned testimonial and documentary evidence presented by the
defendant. Although for a time being the property passed through Joseph Goyanko,
Sr. as a buyer yet his ownership was only temporary and transitory for the reason
that it was subsequently sold to herein defendant Maria Ching. Maria Ching claimed
that it was even her money which was used by Joseph Goyanko, Sr. in the purchase
of the land and so it was eventually sold to her. In her testimony, defendant Ching
justified her financial capability to buy the land for herself. The transaction
undertaken was from the original owner Sulpicia Ventura to Joseph Goyanko, Sr.
and then from Joesph Goyanko, Sr. to herein defendant Maria Ching.
The land subject of the litigation is already registered in the name of defendant
Maria Ching under TCT No. 138405. By virtue of the Deed of Sale executed in favor
of Maria Ching, Transfer Certificate of Title No. 138405 was issued in her favor. In
recognition of the proverbial virtuality of a Torrens title, it has been repeatedly held
that, unless bad faith can be established on the part of the person appearing as
owner on the certificate of title, there is no other owner than that in whose favor it
has been issued. A Torrens title is not subject to collateral attack. It is a well-known
doctrine that a Torrens title, as a rule, is irrevocable and indefeasible, and the duty
of the court is to see to it that this title is maintained and respected unless
challenged in a direct proceedings [sic].6 (Citations omitted; underscoring supplied)
Before the Court of Appeals where respondents appealed, they argued that the trial
court erred:
1. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the
subject property between Joseph, Sr. and the defendant-appellee, despite the
proliferation in the records and admissions by both parties that defendant-appellee
was the "mistress" or "common-law wife" of Joseph, Sr..
2. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the
subject property between Joseph, Sr. and the defendant-appellee, despite the fact
that the marriage of Joseph, Sr. and Epifania was then still subsisting thereby
rendering the subject property as conjugal property of Joseph, Sr. and Epifania.
3. . . . in dismissing the complaint a quo . . . , in effect, sustaining the validity of the
sale of the subject property between Joseph, Sr. and the defendant-appellee,
despite the clear findings of forgery and the non-credible testimony of notary
public.7
By Decision dated October 21, 2003,8 the appellate court reversed that of the trial
court and declared null and void the questioned deed of sale and TCT No. 138405.
Held the appellate court:
. . . The subject property having been acquired during the existence of a valid
marriage between Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to
belong to the conjugal partnership. Moreover, while this presumption in favor of
conjugality is rebuttable with clear and convincing proof to the contrary, we find no
evidence on record to conclude otherwise. The record shows that while Joseph Sr.
and his wife Epifania have been estranged for years and that he and defendant-
appellant Maria Ching, have in fact been living together as common-law husband
and wife, there has never been a judicial decree declaring the dissolution of his
marriage to Epifania nor their conjugal partnership. It is therefore undeniable that
the 661-square meter property located at No. 29 F. Cabahug Street, Cebu City
belongs to the conjugal partnership.
Even if we were to assume that the subject property was not conjugal, still we
cannot sustain the validity of the sale of the property by Joseph, Sr. to defendant-
appellant Maria Ching, there being overwhelming evidence on records that they
have been living together as common-law husband and wife. On this score, Art.
1352 of the Civil Code provides:
"Art. 1352. Contracts without cause, or with unlawful cause, produce no effect
whatsoever. The cause is unlawful if it is contrary to law, morals, good customs,
public order or public policy."
We therefore find that the contract of sale in favor of the defendant-appellant
Maria Ching was null and void for being contrary to morals and public policy. The
purported sale, having been made by Joseph Sr. in favor of his concubine,
undermines the stability of the family, a basic social institution which public policy
vigilantly protects. Furthermore, the law emphatically prohibits spouses from selling
property to each other, subject to certain exceptions. And this is so because
transfers or conveyances between spouses, if allowed during the marriage would
destroy the system of conjugal partnership, a basic policy in civil law. The
prohibition was designed to prevent the exercise of undue influence by one spouse
over the other and is likewise applicable even to common-law relationships
otherwise, "the condition of those who incurred guilt would turn out to be better
than those in legal union.9 (Underscoring supplied)
Hence, the present petition, petitioners arguing that the appellate court gravely
erred in:
I.
. . . APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND
TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES
ON THE SUBJECT PROPERTY, THE SAME BEING FOUND BY THE COURT A QUO, AS
THE EXCLUSIVE PROPERTY OF PETITIONER, AND THAT THE SAME WAS NEVER PART
OF THE CONJUGAL PROPERTY OF THE MARRIAGE BETWEEN RESPONDENTS
MOTHER EPIFANIA GOYANKO AND PETITIONERS COMMON LAW HUSBAND,
JOSEPH GOYANKO, SR., NOR THE EXCLUSIVE OR CAPITAL PROPERTY OF THE LATTER
AT ANYTIME BEFORE THE SAME WAS VALIDLY ACQUIRED BY PETITIONER.
II.
. . . NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR UNDER
ARTICLES 1448 AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN
COMMON LAW SPOUSES.
III.
. . . NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A TRUSTEE,
WHO BECAME AS SUCH IN CONTEMPLATION OF LAW, AND WHO HAPPENS TO BE A
COMMON LAW HUSBAND OF THE BENEFICIARY, IS NOT A VIOLATION OF A STATE
POLICY ON PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF PROPERTIES
BETWEEN LEGITIMATE AND COMMON LAW SPOUSES.
IV.
. . . ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF THEIR
CASE DURING APPEAL.10
The pertinent provisions of the Civil Code which apply to the present case read:
ART. 1352. Contracts without cause, or with unlawful cause, produce no effect
whatever. The cause is unlawful if it is contrary to law, morals, good customs, public
order or public policy.
ART. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.
ARTICLE 1490. The husband and wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under Article 191.
(Underscoring supplied)
The proscription against sale of property between spouses applies even to common
law relationships. So this Court ruled in Calimlim-Canullas v. Hon. Fortun, etc., et
al.:11
Anent the second issue, we find that the contract of sale was null and void for
being contrary to morals and public policy. The sale was made by a husband in
favor of a concubine after he had abandoned his family and left the conjugal
home where his wife and children lived and from whence they derived their
support. The sale was subversive of the stability of the family, a basic social
institution which public policy cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object,
or purposes is contrary to law, morals, good customs, public order, or public policy
are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause,
produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals,
good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to
each other subject to certain exceptions.1wphi1 Similarly, donations between
spouses during marriage are prohibited. And this is so because if transfers or
conveyances between spouses were allowed during marriage, that would destroy
the system of conjugal partnership, a basic policy in civil law. It was also designed to
prevent the exercise of undue influence by one spouse over the other, as well as to
protect the institution of marriage, which is the cornerstone of family law. The
prohibitions apply to a couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who incurred guilt would turn out to
be better than those in legal union." Those provisions are dictated by public
interest and their criterion must be imposed upon the will of the parties. . .
.12 (Italics in the original; emphasis and underscoring supplied)
For petitioners testimony that it was she who provided the purchase price is
uncorroborated. That she may have been considered the breadwinner of the family
and that there was proof that she earned a living do not conclusively clinch her
claim.
As to the change of theory by respondents from forgery of their fathers signature
in the deed of sale to sale contrary to public policy, it too does not persuade.
Generally, a party in a litigation is not permitted to freely and substantially change
the theory of his case so as not to put the other party to undue disadvantage by not
accurately and timely apprising him of what he is up against,13 and to ensure that
the latter is given the opportunity during trial to refute all allegations against him by
presenting evidence to the contrary. In the present case, petitioner cannot be said
to have been put to undue disadvantage and to have been denied the chance to
refute all the allegations against her. For the nullification of the sale is anchored on
its illegality per se, it being violative of the above-cited Articles 1352, 1409 and 1490
of the Civil Code.

As the conveyance in question was made by Goyangko in favor of his common- law- WHEREFORE, the petition is DENIED for lack of merit.
wife-herein petitioner, it was null and void.
Costs against petitioner. SO ORDERED
Petitioners argument that a trust relationship was created between Goyanko as
trustee and her as beneficiary as provided in Articles 1448 and 1450 of the Civil
Code which read:

ARTICLE 1448. There is an implied trust when property is sold, and the legal estate
is granted to one party but the price is paid by another for the purpose of having
the beneficial interest of the property. The former is the trustee, while the latter is
the beneficiary. However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of the sale, no trust is implied
by law, it being disputably presumed that there is a gift in favor of the child.

ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for
the benefit of another and the conveyance is made to the lender or payor to secure
the payment of the debt, a trust arises by operation of law in favor of the person to
whom the money is loaned or for whom it is paid. The latter may redeem the
property and compel a conveyance thereof to him.

does not persuade.

G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner, vs. HON. WILLELMO FORTUN,
Judge, Court of First instance of Pangasinan, Branch I, and CORAZON
DAGUINES, respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and
the Resolution on the Motion for Reconsideration, dated November 27, 1980, of
the then Court of First Instance of Pangasinan, Branch I, in Civil Case No. 15620
entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the sale
of a parcel of land in favor of DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES
Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962.
They begot five children. They lived in a small house on the residential land in
question with an area of approximately 891 square meters, located at Bacabac,
Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited
the land.
In 1978, FERNANDO abandoned his family and was living with private respondent
Corazon DAGUINES. During the pendency of this appeal, they were convicted of
concubinage in a judgment rendered on October 27, 1981 by the then Court of First
Instance of Pangasinan, Branch II, which judgment has become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon to
DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO described
the house as "also inherited by me from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint on
June 19, 1980 for quieting of title and damages against MERCEDES. The latter
resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with
conjugal funds and through her industry; that the sale of the land together with the
house and improvements to DAGUINES was null and void because they are conjugal
properties and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the
lawful owner of the land in question as well as the one-half () of the house erected
on said land." Upon reconsideration prayed for by MERCEDES, however,
respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on
October 6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question and the
10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on April 15,
1980 (Exhibit A) including the 3 coconut trees and other crops planted during the
conjugal relation between Fernando Canullas (vendor) and his legitimate wife,
herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a
conjugal house on the exclusive property of the husband ipso facto gave the land
the character of conjugal property; and (2) whether or not the sale of the lot
together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be given
to the second paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the marriage on land
belonging to one of the spouses also pertain to the partnership, but the value of the
land shall be reimbursed to the spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the building
belong to the conjugal partnership but the conjugal partnership is indebted to the
husband for the value of the land. The spouse owning the lot becomes a creditor of
the conjugal partnership for the value of the lot, 1 which value would be
reimbursed at the liquidation of the conjugal partnership. 2
In his commentary on the corresponding provision in the Spanish Civil Code (Art.
1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el matrimonio en
suelo propio de uno de los conjuges son gananciales, abonandose el valor del suelo
al conj uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent
Judge, it was held that the land belonging to one of the spouses, upon which the
spouses have built a house, becomes conjugal property only when the conjugal
partnership is liquidated and indemnity paid to the owner of the land. We believe
that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs.
Paterno, 3 SCRA 678, 691 (1961), where the following was explained:
As to the above properties, their conversion from paraphernal to conjugal assets
should be deemed to retroact to the time the conjugal buildings were first
constructed thereon or at the very latest, to the time immediately before the death
of Narciso A. Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the time their values were
paid to the estate of the widow Concepcion Paterno because by that time the
conjugal partnership no longer existed and it could not acquire the ownership of
said properties. The acquisition by the partnership of these properties was, under
the 1943 decision, subject to the suspensive condition that their values would be
reimbursed to the widow at the liquidation of the conjugal partnership; once paid,
the effects of the fulfillment of the condition should be deemed to retroact to the
date the obligation was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have
alienated the house and lot to DAGUINES since MERCEDES had not given her
consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being
contrary to morals and public policy. The sale was made by a husband in favor of a
concubine after he had abandoned his family and left the conjugal home where his
wife and children lived and from whence they derived their support. That sale was
subversive of the stability of the family, a basic social institution which public policy
cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object,
or purpose is contrary to law, morals, good customs, public order, or public policy
are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause,
produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals,
good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to
each other subject to certain exceptions.6 Similarly, donations between spouses
during marriage are prohibited. 7 And this is so because if transfers or con
conveyances between spouses were allowed during marriage, that would destroy
the system of conjugal partnership, a basic policy in civil law. It was also designed to
prevent the exercise of undue influence by one spouse over the other, 8 as well as to
protect the institution of marriage, which is the cornerstone of family law. The
prohibitions apply to a couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who incurred guilt would turn out to
be better than those in legal union." Those provisions are dictated by public interest
and their criterion must be imposed upon the wig of the parties. That was the ruling
in Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50 O.G. 3679,
and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent
dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code considers as void a
donation between the spouses during the marriage, policy considerations of the
most exigent character as wen as the dictates of morality require that the same
prohibition should apply to a common-law relationship.

As announced in the outset of this opinion, a 1954 Court of Appeals decision,

Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the old
Civil Code speaks unequivocally. If the policy of the law is, in the language of the
opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor
of the other consort and his descendants because of fear of undue influence
and improper pressure upon the donor, a prejudice deeply rooted in our ancient
law, ..., then there is every reason to apply the same prohibitive policy to persons
living together as husband and wife without benefit of nuptials. For it is not to be
doubted that assent to such irregular connection for thirty years bespeaks greater
influence of one party over the other, so that the danger that the law seeks to avoid
is correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad
Sabinum, fr. 1), "It would not be just that such donations should subsist, lest the
conditions of those who incurred guilt should turn out to be better." So long as
marriage remains the cornerstone of our family law, reason and morality alike
demand that the disabilities attached to marriage should likewise attach
to concubinage (Emphasis supplied),

WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his
Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are
hereby set aside and the sale of the lot, house and improvements in question, is
hereby declared null and void. No costs.

SO ORDERED
G.R. No. 185063 July 23, 2009
SPS. LITA DE LEON and FELIX RIO TARROSA, Petitioners, vs. ANITA B. DE LEON,
DANILO B. DE LEON, and VILMA B. DE LEON, Respondents.
VELASCO, JR., J.:
The Case
Before us is a Petition for Review on Certiorari under Rule 45 assailing and seeking
to set aside the Decision1 and Resolution2 dated August 27, 2008 and October 20,
2008, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 88571. The CA
affirmed with modification the October 4, 2006 Decision3 in Civil Case No. Q04-
51595 of the Regional Trial Court (RTC), Branch 22 in Quezon City.
The Facts
On July 20, 1965, Bonifacio O. De Leon, then single, and the Peoples Homesite and
Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the
purchase on installment of a 191.30 square-meter lot situated in Fairview, Quezon
City. Subsequently, on April 24, 1968, Bonifacio married Anita de Leon in a civil rite
officiated by the Municipal Mayor of Zaragosa, Nueva Ecija. To this union were born
Danilo and Vilma.
Following the full payment of the cost price for the lot thus purchased, PHHC
executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio. Accordingly,
Transfer Certificate of Title (TCT) No. 173677 was issued on February 24, 1972 in the
name of Bonifacio, "single."
Subsequently, Bonifacio, for PhP 19,000, sold the subject lot to her sister, Lita, and
husband Felix Rio Tarrosa (Tarrosas), petitioners herein. The conveying Deed of Sale
dated January 12, 1974 (Deed of Sale) did not bear the written consent and
signature of Anita.
Thereafter, or on May 23, 1977, Bonifacio and Anita renewed their vows in a church
wedding at St. John the Baptist Parish in San Juan, Manila.
On February 29, 1996, Bonifacio died.
Three months later, the Tarrosas registered the Deed of Sale and had TCT No.
173677 canceled. They secured the issuance in their names of TCT No. N-173911
from the Quezon City Register of Deeds.
Getting wind of the cancellation of their fathers title and the issuance of TCT No. N-
173911, Danilo and Vilma filed on May 19, 2003 a Notice of Adverse Claim before
the Register of Deeds of Quezon City to protect their rights over the subject
property. Very much later, Anita, Danilo, and Vilma filed a reconveyance suit before
the RTC in Quezon City. In their complaint, Anita and her children alleged, among
other things, that fraud attended the execution of the Deed of Sale and that
subsequent acts of Bonifacio would show that he was still the owner of the parcel
of land. In support of their case, they presented, inter alia, the following
documents:
a. A Real Estate Mortgage execution by Bonifacio in favor of spouses Cesar
Diankinay and Filomena Almero on July 22, 1977.
b. A Civil Complaint filed by Bonifacio against spouses Cesar Diankinay and Filomena
Almero on November 27, 1979 for nullification of the Real Estate Mortgage.
c. The Decision issued by the Court of First Instance of Rizal, Quezon City,
promulgated on July 30, 1982, nullifying the Real Estate Mortgage.4
The Tarrosas, in their Answer with Compulsory Counterclaim, averred that the lot
Bonifacio sold to them was his exclusive property inasmuch as he was still single
when he acquired it from PHHC. As further alleged, they were not aware of the
supposed marriage between Bonifacio and Anita at the time of the execution of the
Deed of Sale.
After several scheduled hearings, both parties, assisted by their respective counsels,
submitted a Joint Stipulation of Facts with Motion, to wit:
1. The parties have agreed to admit the following facts:
a. Bonifacio O. De Leon, while still single x x x, purchased from the [PHHC] through a
Conditional Contract to Sell on July 20, 1965 a parcel of land with an area of 191.30
square meters situated in Fairview, Quezon City for P841.72;
b. On April 24, 1968, Bonifacio O. De Leon married plaintiff Anita B. De Leon before
the Municipal Mayor of Zaragosa, Nueva Ecija. Both parties stipulate that said
marriage is valid and binding under the laws of the Philippines;
c. On June 22, 1970, Bonifacio O. De Leon paid [PHHC] the total amount of
P1,023.74 x x x. The right of ownership over the subject parcel of land was
transferred to the late Bonifacio O. De Leon on June 22, 1970, upon the full
payment of the total [price] of P1,023.74 and upon execution of the Final Deed of
Sale;
d. After full payment, Bonifacio O. De Leon was issued [TCT] No. 173677 on
February 24, 1972;
e. On January 12, 1974, Bonifacio O. De Leon executed a Deed of Sale in favor of
defendants-spouses Felix Rio Tarrosa and Lita O. De Leon disposing the parcel of
land under TCT No. 173677 for valuable consideration amount of P19,000.00 and
subscribed before Atty. Salvador R. Aguinaldo who was commissioned to [notarize]
documents on said date. The parties stipulate that the Deed of Sale is valid and
genuine. However, plaintiff Anita De Leon was not a signatory to the Deed of Sale
executed on January 12, 1974;
f. That plaintiff Anita B. De Leon and the late Bonifacio O. De Leon were married in
church rites on May 23, 1977 x x x;
g. The late Bonifacio O. De Leon died on February 29, 1996 at the UST Hospital,
Espaa, Manila;
h. The said "Deed of Sale" executed on January 12, 1974 was registered on May 8,
1996 before the Office of the Register of Deeds of Quezon City and [TCT] No. N-
173911 was issued to Lita O. De Leon and Felix Rio Tarrosa. 5
The Ruling of the Trial Court
On October 4, 2006, the RTC, on the finding that the lot in question was the
conjugal property of Bonifacio and Anita, rendered judgment in favor of Anita and
her children. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
plaintiffs and against defendants in the following manner:
(1) Declaring the Deed of Sale dated January 12, 1974 executed by the late
Bonifacio O. De Leon in favor of defendants-spouses Lita De Leon and Felix Rio
Tarrosa void ab initio;
(2) Directing the Register of Deed of Quezon City to cancel Transfer Certificate of
Title No. N-173911 in the name of "Lita O. De Leon, married to Felix Rio Tarrosa"
and restore Transfer Certificate of Title No. 173667 in the name of "Bonifacio O. De
Leon";
(3) Ordering the defendants-spouses to pay plaintiffs the following sums:
(a) P25,000.00 as moral damages;
(b) P20,000.00 as exemplary damages;
(c) P50,000.00 as attorneys fees plus appearance fee of P2,500.00 per court
appearance;
(d) Costs of this suit.
SO ORDERED.
Aggrieved, the Tarrosas appealed to the CA. As they would submit, the RTC erred:
(1) in finding for the plaintiffs-appellees by declaring that the land subject matter of
the case is conjugal property;
(2) in not declaring the land as the exclusive property of Bonifacio O. De Leon when
sold to defendant-appellants;
(3) in ruling that defendant-appellants did not adduce any proof that the property
was acquired solely by the efforts of Bonifacio O. De Leon;
(4) in declaring that one-half of the conjugal assets does not vest to Bonifacio O. De
Leon because of the absence of liquidation;
(5) in cancelling TCT No. N-173911 and restored TCT No. [173677] in the name of
Bonifacio O. De Leon;
(6) in awarding moral and exemplary damages and attorneys fees to the plaintiffs-
appellees.6
The Ruling of the Appellate Court
On August 27, 2008, the CA rendered a decision affirmatory of that of the RTC, save
for the award of damages, attorneys fees, and costs of suit which the appellate
court ordered deleted. The fallo of the CA decision reads:
WHEREFORE, in view of the foregoing, the assailed decision dated October 4, 2006,
of the Regional Trial Court, Branch 22, Quezon City in Civil Case No. Q-04-51595 is
hereby AFFIRMED with MODIFICATION, in that the award of moral and exemplary
damages as well as attorneys fees, appearance fee and costs of suit are hereby
DELETED.
SO ORDERED.
Just like the RTC, the CA held that the Tarrosas failed to overthrow the legal
presumption that the parcel of land in dispute was conjugal. The appellate court
held further that the cases they cited were inapplicable.
As to the deletion of the grant of moral and exemplary damages, the CA, in gist,
held that no evidence was adduced to justify the award. Based on the same reason,
it also deleted the award of attorneys fees and costs of suit.
The Tarrosas moved but was denied reconsideration by the CA in its equally
assailed resolution of October 20, 2008.
Hence, they filed this petition.
The Issues
I
Whether the [CA] gravely erred in concluding that the land purchased on
installment by Bonifacio O. De Leon before marriage although some installments
were paid during the marriage is conjugal and not his exclusive property.
II
Whether the [CA] gravely erred in ruling that the Lorenzo, et al. vs. Nicolas, et al.,
and Alvarez vs. Espiritu cases do not apply in the case at bar because in the latter
the land involved is not a friar land unlike in the former.
III
Whether the [CA] gravely erred in affirming the decision of the trial court a quo
which ruled that petitioners did not adduce any proof that the land was acquired
solely by the efforts of Bonifacio O. De Leon.
IV
Whether the court of appeals gravely erred in affirming the decision of the trial
court which ruled that one-half (1/2) of the conjugal assets do not vest to Bonifacio
O. De Leon because of the absence of liquidation.
Our Ruling
The petition lacks merit.
The Subject Property is the
Conjugal Property of Bonifacio and Anita
The first three issues thus raised can be summed up to the question of whether or
not the subject property is conjugal.
Petitioners assert that, since Bonifacio purchased the lot from PHHC on installment
before he married Anita, the land was Bonifacios exclusive property and not
conjugal, even though some installments were paid and the title was issued to
Bonifacio during the marriage. In support of their position, petitioners cite Lorenzo
v. Nicolas7 and Alvarez v. Espiritu.8
We disagree.
Article 160 of the 1950 Civil Code, the governing provision in effect at the time
Bonifacio and Anita contracted marriage, provides that all property of the marriage
is presumed to belong to the conjugal partnership unless it is proved that it pertains
exclusively to the husband or the wife. For the presumption to arise, it is not, as Tan
v. Court of Appeals9 teaches, even necessary to prove that the property was
acquired with funds of the partnership. Only proof of acquisition during the
marriage is needed to raise the presumption that the property is conjugal. In fact,
even when the manner in which the properties were acquired does not appear, the
presumption will still apply, and the properties will still be considered conjugal.10
In the case at bar, ownership over what was once a PHHC lot and covered by the
PHHC-Bonifacio Conditional Contract to Sell was only transferred during the
marriage of Bonifacio and Anita. It is well settled that a conditional sale is akin, if
not equivalent, to a contract to sell. In both types of contract, the efficacy or
obligatory force of the vendors obligation to transfer title is subordinated to the
happening of a future and uncertain event, usually the full payment of the purchase
price, so that if the suspensive condition does not take place, the parties would
stand as if the conditional obligation had never existed.11 In other words, in a
contract to sell ownership is retained by the seller and is not passed to the buyer
until full payment of the price, unlike in a contract of sale where title passes upon
delivery of the thing sold.12
Such is the situation obtaining in the instant case. The conditional contract to sell
executed by and between Bonifacio and PHHC on July 20, 1965 provided that
ownership over and title to the property will vest on Bonifacio only upon execution
of the final deed of sale which, in turn, will be effected upon payment of the full
purchase price, to wit:
14. Titles to the property subject of this contract remains with the CORPORATION
and shall pass to, and be transferred in the name of the APPLICANT only upon the
execution of the final Deed of Sale provided for in the next succeeding paragraph.
15. Upon the full payment by the APPLICANT of the price of the lot above referred
to together with all the interest due thereon, taxes and other charges, and upon his
faithful compliance with all the conditions of this contract the CORPORATION
agrees to execute in favor of the APPLICANT a final deed of sale of the aforesaid
land, and the APPLICANT agrees to accept said deed, as full performance by the
CORPORATION of its covenants and undertakings hereunder.13 x x x
Evidently, title to the property in question only passed to Bonifacio after he had
fully paid the purchase price on June 22, 1970. This full payment, to stress, was
made more than two (2) years after his marriage to Anita on April 24, 1968. In net
effect, the property was acquired during the existence of the marriage; as such,
ownership to the property is, by law, presumed to belong to the conjugal
partnership.
Such presumption is rebuttable only with strong, clear, categorical, and convincing
evidence.14 There must be clear evidence of the exclusive ownership of one of the
spouses,15 and the burden of proof rests upon the party asserting it. 16
Petitioners argument that the disputed lot was Bonifacios exclusive property, since
it was registered solely in his name, is untenable. The mere registration of a
property in the name of one spouse does not destroy its conjugal nature. 17 What is
material is the time when the property was acquired.
Thus, the question of whether petitioners were able to adduce proof to overthrow
the presumption is a factual issue best addressed by the trial court. As a matter of
long and sound practice, factual determinations of the trial courts, 18especially when
confirmed by the appellate court, are accorded great weight by the Court and, as
rule, will not be disturbed on appeal, except for the most compelling
reasons.19 Petitioners have not, as they really cannot, rebut the presumptive
conjugal nature of the lot in question. In this regard, the Court notes and quotes
with approval the following excerpts from the trial courts disposition:
The defendants, however, did not adduce any proof that the property in question
was acquired solely by the efforts of [Bonifacio]. The established jurisprudence on
the matter leads this Court to the conclusion that the property involved in this
dispute is indeed the conjugal property of the deceased [Bonifacio] De Leon.
In fact, defendant even admitted that [Bonifacio] brought into his marriage with
plaintiff Anita the said land, albeit in the concept of a possessor only as it was not
yet registered in his name. The property was registered only in 1972 during the
existence of the marriage. However, the absence of evidence on the source of
funding has called for the application of the presumption under Article 160 in favor
of the plaintiffs.20
The cases petitioners cited are without governing applicability to this case simply
because they involved a law specifically enacted to govern the disposition of and
ownership of friar lands. In Lorenzo, the Court held that the pervading legislative
intent of Act No. 1120 is "to sell the friar lands acquired by the Government to
actual settlers and occupants of the same." 21 The Court went on further to say in
Alvarez that "under the Friar Lands Act of 1120, the equitable and beneficial title to
the land passes to the purchaser the moment the first installment is paid and a
certificate of sale is issued."22 Plainly, the said cases are not applicable here
considering that the disputed property is not friar land.1awph!1
There can be no quibbling that Anitas conformity to the sale of the disputed lot to
petitioners was never obtained or at least not formally expressed in the conveying
deed. The parties admitted as much in their Joint Stipulation of Facts with Motion
earlier reproduced. Not lost on the Court of course is the fact that petitioners went
to the process of registering the deed after Bonifacios death in 1996, some 22
years after its execution. In the interim, petitioners could have had workbut did
nottowards securing Anitas marital consent to the sale.
It cannot be over-emphasized that the 1950 Civil Code is very explicit on the
consequence of the husband alienating or encumbering any real property of the
conjugal partnership without the wifes consent.23 To a specific point, the sale of a
conjugal piece of land by the husband, as administrator, must, as a rule, be with the
wifes consent. Else, the sale is not valid. So it is that in several cases we ruled that
the sale by the husband of property belonging to the conjugal partnership without
the consent of the wife is void ab initio, absent any showing that the latter is
incapacitated, under civil interdiction, or like causes. The nullity, as we have
explained, proceeds from the fact that sale is in contravention of the mandatory
requirements of Art. 166 of the Code.24 Since Art. 166 of the Code requires the
consent of the wife before the husband may alienate or encumber any real
property of the conjugal partnership, it follows that the acts or transactions
executed against this mandatory provision are void except when the law itself
authorized their validity.25
Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and
the Tarrosas covering the PHHC lot is void.
Interest in the Conjugal Partnership Is
Merely Inchoate until Liquidation
As a final consideration, the Court agrees with the CA that the sale of one-half of
the conjugal property without liquidation of the partnership is void. Prior to the
liquidation of the conjugal partnership, the interest of each spouse in the conjugal
assets is inchoate, a mere expectancy, which constitutes neither a legal nor an
equitable estate, and does not ripen into a title until it appears that there are assets
in the community as a result of the liquidation and settlement. 26 The interest of
each spouse is limited to the net remainder or "remanente liquido" (haber
ganancial) resulting from the liquidation of the affairs of the partnership after its
dissolution.27 Thus, the right of the husband or wife to one-half of the conjugal
assets does not vest until the dissolution and liquidation of the conjugal
partnership, or after dissolution of the marriage, when it is finally determined that,
after settlement of conjugal obligations, there are net assets left which can be
divided between the spouses or their respective heirs.28
Therefore, even on the supposition that Bonifacio only sold his portion of the
conjugal partnership, the sale is still theoretically void, for, as previously stated, the
right of the husband or the wife to one-half of the conjugal assets does not vest
until the liquidation of the conjugal partnership.
Nevertheless, this Court is mindful of the fact that the Tarrosas paid a valuable
consideration in the amount of PhP 19,000 for the property in question. Thus, as a
matter of fairness and equity, the share of Bonifacio after the liquidation of the
partnership should be liable to reimburse the amount paid by the Tarrosas. It is a
well-settled principle that no person should unjustly enrich himself at the expense
of another.29
WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CV No. 88571 is
AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 178902 April 21, 2010
MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners, vs. CONRADO G. ROCA,
ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR
MALCAMPO,Respondents.
ABAD, J.:
This case is about a husbands sale of conjugal real property, employing a
challenged affidavit of consent from an estranged wife. The buyers claim valid
consent, loss of right to declare nullity of sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On
October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of
absolute sale.1 But Tarciano did not for the meantime have the registered title
transferred to his name.
Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and
Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of Atty.
Romulo D. Plagata whom they asked to prepare the documents of sale. They later
signed an agreement to sell that Atty. Plagata prepared 2 dated April 29, 1988, which
agreement expressly stated that it was to take effect in six months.
The agreement required the Fuentes spouses to pay Tarciano a down payment of
60,000.00 for the transfer of the lots title to him. And, within six months, Tarciano
was to clear the lot of structures and occupants and secure the consent of his
estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarcianos
compliance with these conditions, the Fuentes spouses were to take possession of
the lot and pay him an additional 140,000.00 or 160,000.00, depending on
whether or not he succeeded in demolishing the house standing on it. If Tarciano
was unable to comply with these conditions, the Fuentes spouses would become
owners of the lot without any further formality and payment.
The parties left their signed agreement with Atty. Plagata who then worked on the
other requirements of the sale. According to the lawyer, he went to see Rosario in
one of his trips to Manila and had her sign an affidavit of consent. 3 As soon as
Tarciano met the other conditions, Atty. Plagata notarized Rosarios affidavit in
Zamboanga City. On January 11, 1989 Tarciano executed a deed of absolute sale 4 in
favor of the Fuentes spouses. They then paid him the additional 140,000.00
mentioned in their agreement. A new title was issued in the name of the
spouses5 who immediately constructed a building on the lot. On January 28, 1990
Tarciano passed away, followed by his wife Rosario who died nine months
afterwards.
Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents
Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with
Tarcianos sister, Pilar R. Malcampo, represented by her son, John Paul M. Trinidad
(collectively, the Rocas), filed an action for annulment of sale and reconveyance of
the land against the Fuentes spouses before the Regional Trial Court (RTC) of
Zamboanga City in Civil Case 4707. The Rocas claimed that the sale to the spouses
was void since Tarcianos wife, Rosario, did not give her consent to it. Her signature
on the affidavit of consent had been forged. They thus prayed that the property be
reconveyed to them upon reimbursement of the price that the Fuentes spouses
paid Tarciano.6
The spouses denied the Rocas allegations. They presented Atty. Plagata who
testified that he personally saw Rosario sign the affidavit at her residence in Paco,
Manila, on September 15, 1988. He admitted, however, that he notarized the
document in Zamboanga City four months later on January 11, 1989. 7 All the same,
the Fuentes spouses pointed out that the claim of forgery was personal to Rosario
and she alone could invoke it. Besides, the four-year prescriptive period for
nullifying the sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the trial.
Comparing Rosarios standard signature on the affidavit with those on various
documents she signed, the Rocas expert testified that the signatures were not
written by the same person. Making the same comparison, the spouses expert
concluded that they were.8
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that
the action had already prescribed since the ground cited by the Rocas for annulling
the sale, forgery or fraud, already prescribed under Article 1391 of the Civil Code
four years after its discovery. In this case, the Rocas may be deemed to have notice
of the fraud from the date the deed of sale was registered with the Registry of
Deeds and the new title was issued. Here, the Rocas filed their action in 1997,
almost nine years after the title was issued to the Fuentes spouses on January 18,
1989.9
Moreover, the Rocas failed to present clear and convincing evidence of the fraud.
Mere variance in the signatures of Rosario was not conclusive proof of
forgery.10 The RTC ruled that, although the Rocas presented a handwriting expert,
the trial court could not be bound by his opinion since the opposing expert witness
contradicted the same. Atty. Plagatas testimony remained technically
unrebutted.11
Finally, the RTC noted that Atty. Plagatas defective notarization of the affidavit of
consent did not invalidate the sale. The law does not require spousal consent to be
on the deed of sale to be valid. Neither does the irregularity vitiate Rosarios
consent. She personally signed the affidavit in the presence of Atty. Plagata. 12
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found
sufficient evidence of forgery and did not give credence to Atty. Plagatas testimony
that he saw Rosario sign the document in Quezon City. Its jurat said differently.
Also, upon comparing the questioned signature with the specimen signatures, the
CA noted significant variance between them. That Tarciano and Rosario had been
living separately for 30 years since 1958 also reinforced the conclusion that her
signature had been forged.
Since Tarciano and Rosario were married in 1950, the CA concluded that their
property relations were governed by the Civil Code under which an action for
annulment of sale on the ground of lack of spousal consent may be brought by the
wife during the marriage within 10 years from the transaction. Consequently, the
action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January
11, 1989 sale.
Considering, however, that the sale between the Fuentes spouses and Tarciano was
merely voidable, the CA held that its annulment entitled the spouses to
reimbursement of what they paid him plus legal interest computed from the filing
of the complaint until actual payment. Since the Fuentes spouses were also builders
in good faith, they were entitled under Article 448 of the Civil Code to payment of
the value of the improvements they introduced on the lot. The CA did not award
damages in favor of the Rocas and deleted the award of attorneys fees to the
Fuentes spouses.13
Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition
for review.14
The Issues Presented
The case presents the following issues:
1. Whether or not Rosarios signature on the document of consent to her husband
Tarcianos sale of their conjugal land to the Fuentes spouses was forged;
2. Whether or not the Rocas action for the declaration of nullity of that sale to the
spouses already prescribed; and
3. Whether or not only Rosario, the wife whose consent was not had, could bring
the action to annul that sale.
The Courts Rulings
First. The key issue in this case is whether or not Rosarios signature on the
document of consent had been forged. For, if the signature were genuine, the fact
that she gave her consent to her husbands sale of the conjugal land would render
the other issues merely academic.
The CA found that Rosarios signature had been forged. The CA observed a marked
difference between her signature on the affidavit of consent 15 and her specimen
signatures.16 The CA gave no weight to Atty. Plagatas testimony that he saw
Rosario sign the document in Manila on September 15, 1988 since this clashed with
his declaration in the jurat that Rosario signed the affidavit in Zamboanga City on
January 11, 1989.
The Court agrees with the CAs observation that Rosarios signature strokes on the
affidavit appears heavy, deliberate, and forced. Her specimen signatures, on the
other hand, are consistently of a lighter stroke and more fluid. The way the letters
"R" and "s" were written is also remarkably different. The variance is obvious even
to the untrained eye.
Significantly, Rosarios specimen signatures were made at about the time that she
signed the supposed affidavit of consent. They were, therefore, reliable standards
for comparison. The Fuentes spouses presented no evidence that Rosario suffered
from any illness or disease that accounted for the variance in her signature when
she signed the affidavit of consent. Notably, Rosario had been living separately from
Tarciano for 30 years since 1958. And she resided so far away in Manila. It would
have been quite tempting for Tarciano to just forge her signature and avoid the risk
that she would not give her consent to the sale or demand a stiff price for it.
What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent.
That jurat declared that Rosario swore to the document and signed it in Zamboanga
City on January 11, 1989 when, as Atty. Plagata testified, she supposedly signed it
about four months earlier at her residence in Paco, Manila on September 15, 1988.
While a defective notarization will merely strip the document of its public character
and reduce it to a private instrument, that falsified jurat, taken together with the
marks of forgery in the signature, dooms such document as proof of Rosarios
consent to the sale of the land. That the Fuentes spouses honestly relied on the
notarized affidavit as proof of Rosarios consent does not matter. The sale is still
void without an authentic consent.
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this
case is the Family Code, not the Civil Code. Although Tarciano and Rosario got
married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on
January 11, 1989, a few months after the Family Code took effect on August 3,
1988.
When Tarciano married Rosario, the Civil Code put in place the system of conjugal
partnership of gains on their property relations. While its Article 165 made Tarciano
the sole administrator of the conjugal partnership, Article 166 17 prohibited him
from selling commonly owned real property without his wifes consent. Still, if he
sold the same without his wifes consent, the sale is not void but merely voidable.
Article 173 gave Rosario the right to have the sale annulled during the marriage
within ten years from the date of the sale. Failing in that, she or her heirs may
demand, after dissolution of the marriage, only the value of the property that
Tarciano fraudulently sold. Thus:
Art. 173. The wife may, during the marriage, and within ten years from the
transaction questioned, ask the courts for the annulment of any contract of the
husband entered into without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or impair her interest in
the conjugal partnership property. Should the wife fail to exercise this right, she or
her heirs, after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4
on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil
Code on Property Relations Between Husband and Wife.18Further, the Family Code
provisions were also made to apply to already existing conjugal partnerships
without prejudice to vested rights.19 Thus:
Art. 105. x x x The provisions of this Chapter shall also apply to conjugal
partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with
the Civil Code or other laws, as provided in Article 256. (n)
Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on
January 11, 1989, the law that governed the disposal of that lot was already the
Family Code.
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not
provide a period within which the wife who gave no consent may assail her
husbands sale of the real property. It simply provides that without the other
spouses written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:
Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse may
assume sole powers of administration. These powers do not include the powers of
disposition or encumbrance which must have the authority of the court or the
written consent of the other spouse. In the absence of such authority or consent,
the disposition or encumbrance shall be void. x x x
Under the provisions of the Civil Code governing contracts, a void or inexistent
contract has no force and effect from the very beginning. And this rule applies to
contracts that are declared void by positive provision of law, 20 as in the case of a
sale of conjugal property without the other spouses written consent. A void
contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot
be validated either by ratification or prescription.21
But, although a void contract has no legal effects even if no action is taken to set it
aside, when any of its terms have been performed, an action to declare its
inexistence is necessary to allow restitution of what has been given under it. 22 This
action, according to Article 1410 of the Civil Code does not prescribe. Thus:
Art. 1410. The action or defense for the declaration of the inexistence of a contract
does not prescribe.
Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment
of sale and reconveyance of the real property that Tarciano sold without their
mothers (his wifes) written consent. The passage of time did not erode the right to
bring such an action.
Besides, even assuming that it is the Civil Code that applies to the transaction as the
CA held, Article 173 provides that the wife may bring an action for annulment of
sale on the ground of lack of spousal consent during the marriage within 10 years
from the transaction. Consequently, the action that the Rocas, her heirs, brought in
1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe.
The Fuentes spouses of course argue that the RTC nullified the sale to them based
on fraud and that, therefore, the applicable prescriptive period should be that
which applies to fraudulent transactions, namely, four years from its discovery.
Since notice of the sale may be deemed given to the Rocas when it was registered
with the Registry of Deeds in 1989, their right of action already prescribed in 1993.
But, if there had been a victim of fraud in this case, it would be the Fuentes spouses
in that they appeared to have agreed to buy the property upon an honest belief
that Rosarios written consent to the sale was genuine. They had four years then
from the time they learned that her signature had been forged within which to file
an action to annul the sale and get back their money plus damages. They never
exercised the right.
If, on the other hand, Rosario had agreed to sign the document of consent upon a
false representation that the property would go to their children, not to strangers,
and it turned out that this was not the case, then she would have four years from
the time she discovered the fraud within which to file an action to declare the sale
void. But that is not the case here. Rosario was not a victim of fraud or
misrepresentation. Her consent was simply not obtained at all. She lost nothing
since the sale without her written consent was void. Ultimately, the Rocas ground
for annulment is not forgery but the lack of written consent of their mother to the
sale. The forgery is merely evidence of lack of consent.
Third. The Fuentes spouses point out that it was to Rosario, whose consent was not
obtained, that the law gave the right to bring an action to declare void her
husbands sale of conjugal land. But here, Rosario died in 1990, the year after the
sale. Does this mean that the right to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void from the beginning.
Consequently, the land remained the property of Tarciano and Rosario despite that
sale. When the two died, they passed on the ownership of the property to their
heirs, namely, the Rocas.23 As lawful owners, the Rocas had the right, under Article
429 of the Civil Code, to exclude any person from its enjoyment and
disposal.1avvphi1
In fairness to the Fuentes spouses, however, they should be entitled, among other
things, to recover from Tarcianos heirs, the Rocas, the 200,000.00 that they paid
him, with legal interest until fully paid, chargeable against his estate.
Further, the Fuentes spouses appear to have acted in good faith in entering the
land and building improvements on it. Atty. Plagata, whom the parties mutually
entrusted with closing and documenting the transaction, represented that he got
Rosarios signature on the affidavit of consent. The Fuentes spouses had no reason
to believe that the lawyer had violated his commission and his oath. They had no
way of knowing that Rosario did not come to Zamboanga to give her consent. There
is no evidence that they had a premonition that the requirement of consent
presented some difficulty. Indeed, they willingly made a 30 percent down payment
on the selling price months earlier on the assurance that it was forthcoming.
The Rocas shall of course have the option, pursuant to Article 546 of the Civil
Code,25 of indemnifying the Fuentes spouses for the costs of the improvements or
paying the increase in value which the property may have acquired by reason of
such improvements.
WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the
decision of the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as
follows:
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor
of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer
Certificate of Title T-90,981 that the Register of Deeds of Zamboanga City issued in
the names of the latter spouses pursuant to that deed of sale are DECLARED void;

Further, the notarized document appears to have comforted the Fuentes spouses 2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer
that everything was already in order when Tarciano executed a deed of absolute Certificate of Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel;
sale in their favor on January 11, 1989. In fact, they paid the balance due him. And,
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and
acting on the documents submitted to it, the Register of Deeds of Zamboanga City
Pilar Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes
issued a new title in the names of the Fuentes spouses. It was only after all these
the 200,000.00 that the latter paid Tarciano T. Roca, with legal interest from
had passed that the spouses entered the property and built on it. He is deemed a
January 11, 1989 until fully paid, chargeable against his estate;
possessor in good faith, said Article 526 of the Civil Code, who is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it. 4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and
Pilar Malcampo are further ORDERED, at their option, to indemnify petitioner
As possessor in good faith, the Fuentes spouses were under no obligation to pay for
spouses Manuel and Leticia Fuentes with their expenses for introducing useful
their stay on the property prior to its legal interruption by a final judgment against
improvements on the subject land or pay the increase in value which it may have
them.24 What is more, they are entitled under Article 448 to indemnity for the
acquired by reason of those improvements, with the spouses entitled to the right of
improvements they introduced into the property with a right of retention until the
retention of the land until the indemnity is made; and
reimbursement is made. Thus:
5. The RTC of Zamboanga City from which this case originated is DIRECTED to
Art. 448. The owner of the land on which anything has been built, sown or planted
receive evidence and determine the amount of indemnity to which petitioner
in good faith, shall have the right to appropriate as his own the works, sowing or
spouses Manuel and Leticia Fuentes are entitled.
planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who SO ORDERED.
sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the
terms thereof. (361a)

G.R. No. L-33048 April 16, 1982
EPIFANIA SARSOSA VDA. DE BARSOBIA and PACITA W. VALLAR, petitioners, vs.
VICTORIANO T. CUENCO, respondent.
MELENCIO-HERRERA, J.:
Sought to be reviewed herein is the judgment dated August 18, 1970, of the Court
of Appeals, 1 rendered in CA-G.R. No. 41318-R, entitled "Victoriano T. Cuenco,
Plaintiff-appellant, vs. Epifania Sarsosa Vda. de Barsobia and Pacita W. Vallar,
Defendants- appellees, " declaring Victoriano T. Cuenco (now the respondent) as
the absolute owner of the coconut land in question.
The lot in controversy is a one-half portion (on the northern side) of two adjoining
parcels of coconut land located at Barrio Mancapagao, Sagay, Camiguin, Misamis
Oriental (now Camiguin province), with an area of 29,150 square meters, more or
less. 2
The entire land was owned previously by a certain Leocadia Balisado, who had sold
it to the spouses Patricio Barsobia (now deceased) and Epifania Sarsosa, one of the
petitioners herein. They are Filipino citizens.
On September 5, 1936, Epifania Sarsosa then a widow, sold the land in controversy
to a Chinese, Ong King Po, for the sum of P1,050.00 (Exhibit "B"). Ong King Po took
actual possession and enjoyed the fruits thereof.
On August 5, 1961, Ong King Po sold the litigated property to Victoriano T. Cuenco
(respondent herein), a naturalized Filipino, for the sum of P5,000.00 (Exhibit "A").
Respondent immediately took actual possession and harvested the fruits
therefrom.
On March 6, 1962, Epifania "usurped" the controverted property, and on July 26,
1962, Epifania (through her only daughter and child, Emeteria Barsobia), sold a one-
half (1/2) portion of the land in question to Pacita W. Vallar, the other petitioner
herein (Exhibit "2"). Epifania claimed that it was not her intention to sell the land to
Ong King Po and that she signed the document of sale merely to evidence her
indebtedness to the latter in the amount of P1,050.00. Epifania has been in
possession ever since except for the portion sold to the other petitioner Pacita.
On September 19, 1962, respondent filed a Forcible Entry case against Epifania
before the Municipal Court of Sagay, Camiguin. The case was dismissed for lack of
jurisdiction since, as the laws then stood, the question of possession could not be
properly determined without first settling that of ownership.
On December 27, 1966, respondent instituted before the Court of First Instance of
Misamis Oriental a Complaint for recovery of possession and ownership of the
litigated land, against Epifania and Pacita Vallar (hereinafter referred to simply as
petitioners).
In their Answer below, petitioners insisted that they were the owners and
possessors of the litigated land; that its sale to Ong King Po, a Chinese, was
inexistent and/or void ab initio; and that the deed of sale between them was only
an evidence of Epifania's indebtedness to Ong King Po.
The trial Court rendered judgment:
1. Dismissing the complaint with costs against plaintiff (respondent herein).
2. Declaring the two Deeds of Sale, Exhibits A and B, respectively, inexistent and
void from the beginning; and
3. Declaring defendant Pacita W. Vallar as the lawful owner and possessor of the
portion of land she bought from Emeteria Barsobia (pp. 57, 67, Record.) 3
On appeal, the Court of Appeals reversed the aforementioned Decision and decreed
instead that respondent was the owner of the litigated property, thus:
xxx xxx xxx
In view of all the foregoing considerations, the judgment appealed from is hereby
reversed. In lieu thereof, we render judgment:
(a) Declaring the plaintiff-appellant Victoriano T. Cuenco the absolute owner of the
land in question, with the right of possession thereof;
(b) Ordering the defendants-appellees to restore the possession of said land to the
plaintiff;
(c) Dismissing the defendants' counterclaim;
(d) Condemning the defendants to pay to the plaintiff the sum of
P10,000.00 representing the latter's share from the sale of copra which he failed to
receive since March, 1962 when he was deprived of his possession over the land,
and which defendants illegally appropriated it to their own use and benefit, plus
legal interest from the filing of the complaint until fully paid; plus P2,000.00
representing expenses and attorney's fees;
(e) Sentencing the defendants to pay the costs.
SO ORDERED. 4
Following the denial of their Motion for Reconsideration, petitioners filed the
instant Petition for Review on certiorari with this Court on January 21, 1971.
Petitioners claim that the Court of Appeals erred:
I. ... when it reversed the judgment of the trial court declaring petitioner Pacita W.
Vallar as the lawful possessor and owner of the portion of land she purchased from
Emeteria Barsobia, not a party to this case, there being no evidence against her.
II ... when it included petitioner Pacita W. Vallar to pay P10,000.00, with legal
interest from the filing of the complaint, representing respondent's share in the
harvest and to pay the costs, there being no evidence against her.
III. ... when it condemned petitioners to pay P2,000.00 representing expenses and
attorney's fees, there being no factual, legal and equitable justification.
IV. ... in not applying the rule on pari delicto to the facts of the case or the doctrine
enunciated ... in the case of Philippine Banking Corporation vs. Lui She, L-17587,
September 12, 1967, to ... Petitioner Epifania Sarsosa Vda. de Barsobia.
V. ... in denying, for lack of sufficient merits, petitioners' motion for rehearing or
reconsideration of its decision. 5
As the facts stand, a parcel of coconut land was sold by its Filipino owner, petitioner
Epifania, to a Chinese, Ong King Po, and by the latter to a naturalized Filipino,
respondent herein. In the meantime, the Filipino owner had unilaterally repudiated
the sale she had made to the Chinese and had resold the property to another
Filipino. The basic issue is: Who is the rightful owner of the property?
There should be no question that the sale of the land in question in 1936 by
Epifania to Ong King Po was inexistent and void from the beginning (Art. 1409 [7],
Civil Code) 6 because it was a contract executed against the mandatory provision of
the 1935 Constitution, which is an expression of public policy to conserve lands for
the Filipinos. Said provision reads:
Save in cases of hereditary succession, no private agricultural land shall be
transferred or assigned except to individuals, corporations, or associations,
qualified to acquire or hold lands of the public domain. 7
Had this been a suit between Epifania and Ong King Po, she could have been
declared entitled to the litigated land on the basis, as claimed, of the ruling
in Philippine Banking Corporation vs. Lui She, 8 reading:
... For another thing, and this is not only cogent but also important. Article 1416 of
the Civil Code provides as an exception to the rule on pari delicto that when the
agreement is not illegal per se but is merely prohibited, and the prohibition by the
law is designed for the protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has sold or delivered. ...
But the factual set-up has changed. The litigated property is now in the hands of a
naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as
a naturalized citizen, was constitutionally qualified to own the subject property.
There would be no more public policy to be served in allowing petitioner Epifania to
recover the land as it is already in the hands of a qualified person. Applying by
analogy the ruling of this Court in Vasquez vs. Giap and Li Seng Giap & Sons: 9
... if the ban on aliens from acquiring not only agricultural but also urban lands, as
construed by this Court in the Krivenko case, is to preserve the nation's lands for
future generations of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization.
The award of attorney's fees and litigation expenses in the sum of P2,000.00 in
respondent's favor is in order considering that both petitioners compelled
respondent to litigate for the protection of his interests. Moreover, the amount is
reasonable. 10
WHEREFORE, except for that portion holding petitioner, Pacita W. Vallar, also liable
for damages of P10,000.00, the appealed judgment is hereby affirmed.
Costs against petitioners.
SO ORDERED.

While, strictly speaking, Ong King Po, private respondent's vendor, had no rights of
ownership to transmit, it is likewise inescapable that petitioner Epifania had slept
on her rights for 26 years from 1936 to 1962. By her long inaction or inexcusable
neglect, she should be held barred from asserting her claim to the litigated property
(Sotto vs. Teves, 86 SCRA 157 [1978]).

Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence could or
should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it. (Tijam, et al. vs. Sibonghanoy, et al., No. L-
21450, April 15, 1968, 23 SCRA 29, 35). (cited in Sotto vs. Teves, 86 SCRA 154
[1978]).

Respondent, therefore, must be declared to be the rightful owner of the property.

The award of actual damages in respondent's favor of P10,000.00, as well as of

attorney's fees and expenses of litigation of P2,000.00, is justified. Respondent was
deprived of the possession of his land and the enjoyment of its fruits from March,
1962. The Court of Appeals fixed respondent's share of the sale of copra at
P10,000.00 for eight years at four (4) harvests a year. The accuracy of this finding
has not been disputed.

However, we find merit in the assigned error that petitioner, Pacita Vallar, should
not be held also liable for actual damages to respondent. In the absence of contrary
proof, she, too, must be considered as a vendee in good faith of petitioner Epifania.
G.R. No. L-5970 October 13, 1911
JOSEPH N. WOLFSON, plaintiff-appellee, vs. THE ESTATE OF FRANCISCO
MARTINEZ, deceased, defendant-appellant.
MORELAND, J.:
This is an appeal by the defendant from a judgment of the Court of First Instance of
Manila, the Hon. A. S. Crossfield presiding, reversing the findings of certain
commissioners who rejected the claim of the plaintiff presented against the estate
of Francisco Martinez, deceased, and finding in favor of the plaintiff for the sum of
P12,000.
The learned trial court in the opinion which forms the basis of his judgment said:
From the evidence presented at the trial it appears that on the 29th day of January,
1906, a judgment was entered in this court by Hon. John C. Sweeney, one of the
judges thereof, in favor of Mariano Yap-Tuangco against the deceased Francisco
Martinez for the sum of twelve thousand pesos;
That there was a contract agreement between the plaintiff in that judgment and
the above mentioned Joseph N. Wolfson and one Basilio Regalado y Mapa should
have as their fees for prosecuting the case fifty per cent of whatever amount might
be obtained;
That subsequently said Mapa assigned his interest in said contract to the said
Wolfson;
That subsequently and on the 18th day of June, 1907, the plaintiff Mariano Yap-
Tuangco, for value received, sold and transferred and delivered to said Wolfson all
his right, title and interest in and o the aforementioned judgment.
The question raised on this appeal is whether or not under the provisions of article
1459 of the Civil Code the plaintiff, Joseph N. Wolfson, was prohibited from
purchasing the judgment of his client in such manner and to such extent that the
contract of which such purchase was a part was absolutely null and void and could
be attacked by a person not a party to the transaction. The article in question reads
as follows:
ART. 1459. The following persons can not acquire by purchase, even at public or
judicial auction, neither in person nor by an agent:
1. The guardian or protutor, the property of the person or persons who may be
under their guardianship.
2. Agents, the property the administration or sale of which may have been intrusted
to them.
3. Executors, the property intrusted to their care.
4. Public officials, the property of the State, municipalities, towns, and also of public
institutions, the administration of which has been intrusted to them.
This provision shall apply to judges and experts who, in any manner whatsoever,
take part in the sale.
5. Associate justices, judges, members of the department of public prosecution,
clerks of superior and inferior courts, and officials of justice, the property and rights
in litigation before the court in the jurisdiction or territory over which they exercise
their respective duties, this prohibition including the act of acquiring by assignment.
From this rule shall be excepted the cases in which hereditary actions among
coheirs are involved, or assignments in payment of debts, or security for the goods
they may possess.
The prohibition contained in this number shall include the lawyers and solicitors
with regard to the property and rights, which may be the object of the litigation, in
which they may take part by virtue of their profession and office.
On this appeal we do not discuss or decide the question whether or not the
judgment in question actually falls within the prohibition of the article, it being the
disposition of a majority of the court to place the decision wholly upon the
proposition that, even if it be conceded that the purchase of the judgment in
question was within the prohibition of the article quoted, nevertheless, the contract
of purchase and sale is not void but voidable at the election of the vendor. This
being so, its voidability can not be asserted by one not a party to the transaction, or
his representative.
Manresa, commenting on this section, says:
Considering the question from the point of view of the civil law, the view taken by
the code, we must limit our selves to classifiying as void all acts done contrary to
the express prohibition of the statute. Now then: As the code does not recognize
such nullity by the mere operation of law, the nullity of the acts hereinbefore
referred to must be asserted by the person having the necessary legal capacity to
do so and decreed by a competent court. Chapter 6, title 2, book of the code
contains the provisions applicable to the matter under consideration. (Manresa,
Spanish Civil Code, vol. 10, p. 108.)
Article 1257 of the Civil Code reads:
Contracts shall be valid only between the parties who execute them and their heirs,
except, with regard to the latter, the case in which the rights and obligations arising
from the contract are not transmissible, either by their nature, or by agreement, or
by provision of law.
Should the contract contain any stipulation in favor of a third person, he may
demand its fulfillment, provided he has given notice of his acceptance to the person
bound before it may have been revoked.
Commenting on articles 1457, 1458, and 1459 of the Civil Code, Manresa says:
From this statement of the rule and its relation to the succeeding articles, these
consequences logically follow: (1) That there are no incapacities except those
expressly mentioned in the law and that such incapacities can not be extended to
other cases by implication for the reason that such construction would be in conflict
with the very nature of the provision; (2) That as a general rule those who can bind
themselves have also legal capacity to buy and sell: (3) That there are certain
exceptions to this rule; (4) That the incapacity to buy or sell may be absolute or
relative; (5) that such incapacity is absolute in the case of persons who can not bind
themselves; (6) That relative incapacity may exist with reference to certain persons
or a certain class of property. (Manresa, Spanish Civil Code, vol. 10, p. 87.)
Article 1302 of the Civil Code reads:
The action for nullity of contracts may be brought by those who are principally or
subsidiarily obligated by virtue thereof. Persons with capacity can not, however,
allege the incapacity of those with whom they contracted; neither those who cased
the intimidation or violence, or employed deceit, or caused the error, can base their
actin on these defects of the contract.1awphil.net
Manresa, commenting on the latter article, says:
Two different requisites are required to confer the necessary capacity for the
exercise of such action. With each of the said requisites the two paragraphs of this
section deal separately. The first requisite is that the plaintiff must have an interest
in the contract. The second is that the victim and not the party responsible for the
defect is the person who must assert the same. (Manresa, Spanish Civil Code, vol. 8,
p. 737.) .
It was declared in a judgment of the 18th of April, 1901, in accordance with the rule
hereinbefore stated, that he who is not a party to a contract, or an assignee
thereunder, or does not represent those who took part therein, has, under articles
1257 and 1302 of the Civil Code, no legal capacity to challenge the validity of such
contract. (Manresa, Spanish Civil Code, vol. 8, p. 738.)
In relation to the same matter, the supreme court of Spain on the 23rd of
November, 1903, published a decision [p. 702.] in which appears the following:

The judgment appealed from in so far as it declares that the instrument of

dissolution of the partnership between A and B was null and void for the reason
that the plaintiff was not bound, either principally or subsidiarily, by the said
instrument, is contrary to the provisions of article 1302 of the Civil Code.

Even if the sale of the judgment in question is found comprehended within the
prohibition of article 1459, a question which we do not now decide, still the
defendant is not entitled to invoke the terms of said article for the reason, above
stated, that such prohibition is personal to the parties to the contract, being
available only to them or their representatives.

For these reasons the judgment of the court below is affirmed without special
finding as to costs.
G.R. No. L-35702 May 29, 1973
DOMINGO D. RUBIAS, plaintiff-appellant, vs. ISAIAS BATILLER, defendant-appellee.
TEEHANKEE, J.:
In this appeal certified by the Court of Appeals to this Court as involving purely legal
questions, we affirm the dismissal order rendered by the Iloilo court of first instance
after pre-trial and submittal of the pertinent documentary exhibits.
Such dismissal was proper, plaintiff having no cause of action, since it was duly
established in the record that the application for registration of the land in question
filed by Francisco Militante, plaintiff's vendor and predecessor interest, had been
dismissed by decision of 1952 of the land registration court as affirmed by final
judgment in 1958 of the Court of Appeals and hence, there was no title or right to
the land that could be transmitted by the purported sale to plaintiff.
As late as 1964, the Iloilo court of first instance had in another case of ejectment
likewise upheld by final judgment defendant's "better right to possess the land in
question . having been in the actual possession thereof under a claim of title many
years before Francisco Militante sold the land to the plaintiff."
Furthermore, even assuming that Militante had anything to sell, the deed of sale
executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly
his counsel of record in the land registration case involving the very land in dispute
(ultimately decided adversely against Militante by the Court of Appeals' 1958
judgment affirming the lower court's dismissal of Militante's application for
registration) was properly declared inexistent and void by the lower court, as
decreed by Article 1409 in relation to Article 1491 of the Civil Code.
The appellate court, in its resolution of certification of 25 July 1972, gave the
following backgrounder of the appeal at bar:
On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the
ownership and possession of certain portions of lot under Psu-99791 located in
Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law,
Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller,
who illegally entered said portions of the lot on two occasions in 1945 and in
1959. Plaintiff prayed also for damages and attorneys fees. (pp. 1-7, Record on
Appeal). In his answer with counter-claim defendant claims the complaint of the
plaintiff does not state a cause of action, the truth of the matter being that he and
his predecessors-in-interest have always been in actual, open and continuous
possession since time immemorial under claim of ownership of the portions of the
lot in question and for the alleged malicious institution of the complaint he claims
he has suffered moral damages in the amount of P 2,000.00, as well as the sum of
P500.00 for attorney's fees. ...
On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial
conference between the parties and their counsel which order reads as follows..
'When this case was called for a pre-trial conference today, the plaintiff appeared
assisted by himself and Atty. Gregorio M. Rubias. The defendant also appeared,
assisted by his counsel Atty. Vicente R. Acsay.
A. During the pre-trial conference, the parties have agreed that the following facts
are attendant in this case and that they will no longer introduced any evidence,
testimonial or documentary to prove them:
1. That Francisco Militante claimed ownership of a parcel of land located in the
Barrio of General Luna, municipality of Barotac Viejo province of Iloilo, which he
caused to be surveyed on July 18-31, 1934, whereby he was issued a plan Psu-
99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.)
2. Before the war with Japan, Francisco Militante filed with the Court of First
Instance of Iloilo an application for the registration of the title of the land
technically described in psu-99791 (Exh. "B") opposed by the Director of Lands, the
Director of Forestry and other oppositors. However, during the war with Japan, the
record of the case was lost before it was heard, so after the war Francisco Militante
petitioned this court to reconstitute the record of the case. The record was
reconstituted on the Court of the First Instance of Iloilo and docketed as Land Case
No. R-695, GLRO Rec. No. 54852. The Court of First Instance heard the land
registration case on November 14, 1952, and after the trial this court dismissed the
application for registration. The appellant, Francisco Militante, appealed from the
decision of this Court to the Court of Appeals where the case was docketed as CA-
GR No. 13497-R..
3. Pending the disposal of the appeal in CA-GR No. 13497-R and more particularly
on June 18, 1956, Francisco Militante sold to the plaintiff, Domingo Rubias the
land technically described in psu-99791 (Exh. "A"). The sale was duly recorded in
the Office of the Register of Deeds for the province of Iloilo as Entry No. 13609 on
July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-
appellant, his son-in-law,for the sum of P2,000.00 was "a parcel of untitled land
having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and) subject
to the exclusions made by me, under (case) CA-i3497, Land Registration Case No. R-
695, G.L.R.O. No. 54852, Court of First Instance of the province of Iloilo. These
exclusions referred to portions of the original area of over 171 hectares originally
claimed by Militante as applicant, but which he expressly recognized during the trial
to pertain to some oppositors, such as the Bureau of Public Works and Bureau of
Forestry and several other individual occupants and accordingly withdrew his
application over the same. This is expressly made of record in Exh. A, which is
the Court of Appeals' decision of 22 September 1958 confirming the land
registration court's dismissal of Militante's application for registration.)
4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R promulgated
its judgment confirming the decision of this Court in Land Case No. R-695, GLRO
Rec. No. 54852 which dismissed the application for Registration filed by Francisco
Militante (Exh. "I").
5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes
under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1") and
10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the year
1964, paying the land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-
6").
6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also
declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh. "E")
for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122
(Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46 (Exh.
"G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"),
and for 1948 and 1949 (Exh. "G-5").
7. Tax Declaration No. 2434 in the name of Liberato Demontao for the land
described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco
Militante (Exh. "E"). Liberato Demontao paid the land tax under Tax Dec. No. 2434
on Dec. 20, 1939 for the years 1938 (50%) and 1959 (Exh. "H").
8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-155241
under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-155241, for 1945
under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was revised by Tax Dec.
No. 9498 in the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-
A") was cancelled by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-
C"). The defendant paid the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for
the years 1945 and 1946, for the year 1950, and for the year 1960 as shown by the
certificate of the treasurer (Exh. "3"). The defendant may present to the Court other
land taxes receipts for the payment of taxes for this lot.
9. The land claimed by the defendant as his own was surveyed on June 6 and
7,1956, and a plan approved by Director of Land on November 15, 1956 was issued,
identified as Psu 155241 (Exh. "5").
10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against
Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo
(Exh. "4") to which the defendant Isaias Batiller riled his answer on August 29, 1960
(Exh. "4-A"). The Municipal Court of Barotac Viejo after trial, decided the case on
May 10, 1961 in favor of the defendant and against the plaintiff (Exh. "4-B"). The
plaintiff appealed from the decision of the Municipal Court of Barotac Viejo which
was docketed in this Court as Civil Case No. 5750 on June 3, 1961, to which the
defendant, Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And this
Court after the trial. decided the case on November 26, 1964, in favor of the
defendant, Isaias Batiller and against the plaintiff (Exh. "4-D").
(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26
November 1964 dismissing plaintiff's therein complaint for ejectment against
defendant, the iloilo court expressly found "that plaintiff's complaint is unjustified,
intended to harass the defendant" and "that the defendant, Isaias Batiller, has a
better right to possess the land in question described in Psu 155241 (Exh. "3"),
Isaias Batiller having been in the actual physical possession thereof under a claim of
title many years before Francisco Militante sold the land to the plaintiff-hereby
dismissing plaintiff's complaint and ordering the plaintiff to pay the defendant
attorney's fees ....")
B. During the trial of this case on the merit, the plaintiff will prove by competent
evidence the following:
1. That the land he purchased from Francisco Militante under Exh. "A" was formerly
owned and possessed by Liberato Demontao but that on September 6, 1919 the
land was sold at public auction by virtue of a judgment in a Civil Case entitled "Edw
J. Pflieder plaintiff vs. Liberato Demontao Francisco Balladeros and Gregorio Yulo,
defendants", of which Yap Pongco was the purchaser (Exh. "1-3"). The sale was
registered in the Office of the Register of Deeds of Iloilo on August 4, 1920, under
Primary Entry No. 69 (Exh. "1"), and a definite Deed of Sale was executed by
Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap
Pongco (Exh. "I"), the sale having been registered in the Office of the Register of
Deeds of Iloilo on February 10, 1934 (Exh. "1-1").
2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as
evidenced by a notarial deed (Exh. "J") which was registered in the Registry of
Deeds on May 13, 1940 (Exh. "J-1").
3. That plaintiff suffered damages alleged in his complaint.
C. Defendants, on the other hand will prove by competent evidence during the trial
of this case the following facts:
1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed by
Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of the
former in 1920, as his sole heir. Isaias Batiller succeeded his father , Basilio Batiller,
in the ownership and possession of the land in the year 1930, and since then up to
the present, the land remains in the possession of the defendant, his possession
being actual, open, public, peaceful and continuous in the concept of an owner,
exclusive of any other rights and adverse to all other claimants.
2. That the alleged predecessors in interest of the plaintiff have never been in the
actual possession of the land and that they never had any title thereto.
3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the
defendant has been approved.
4. The damages suffered by the defendant, as alleged in his counterclaim."'1
The appellate court further related the developments of the case, as follows:
On August 17, 1965, defendant's counsel manifested in open court that before any
trial on the merit of the case could proceed he would file a motion to
dismiss plaintiff's complaint which he did, alleging thatplaintiff does not have cause
of action against him because the property in dispute which he (plaintiff) allegedly
bought from his father-in-law, Francisco Militante was the subject matter of LRC
No. 695 filed in the CFI of Iloilo, which case was brought on appeal to this Court and
docketed as CA-G.R. No. 13497-R in which aforesaid case plaintiff was the counsel
on record of his father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of
the Civil Code which reads:
'Art. 1409. The following contracts are inexistent and void from the beginning:
xxx xxx xxx
(7) Those expressly prohibited by law.
'ART. 1491. The following persons cannot acquire any purchase, even at a public
auction, either in person of through the mediation of another: .
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property and rights of in litigation or levied upon an execution before the court
within whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring an assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.'
defendant claims that plaintiff could not have acquired any interest in the property
in dispute as the contract he (plaintiff) had with Francisco Militante was inexistent
and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly opposed defendant's
motion to dismiss claiming that defendant can not invoke Articles 1409 and 1491 of
the Civil Code as Article 1422 of the same Code provides that 'The defense of
illegality of contracts is not available to third persons whose interests are not
directly affected' (See pp. 32-35 Record on Appeal).
On October 18, 1965, the lower court issued an order disclaiming plaintiffs
complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal the
lower court practically agreed with defendant's contention that the contract (Exh.
A) between plaintiff and Francism Militante was null and void. In due season
plaintiff filed a motion for reconsideration (pp. 50-56 Record on Appeal) which was
denied by the lower court on January 14, 1966 (p. 57, Record on Appeal).
Hence, this appeal by plaintiff from the orders of October 18, 1965 and January 14,
1966.
Plaintiff-appellant imputes to the lower court the following errors:
'1. The lower court erred in holding that the contract of sale between the plaintiff-
appellant and his father-in-law, Francisco Militante, Sr., now deceased, of the
property covered by Plan Psu-99791, (Exh. "A") was void, not voidable because it
was made when plaintiff-appellant was the counsel of the latter in the Land
Registration case.
'2. The lower court erred in holding that the defendant-appellee is an interested
person to question the validity of the contract of sale between plaintiff-appellant
and the deceased, Francisco Militante, Sr.
'3. The lower court erred in entertaining the motion to dismiss of the defendant-
appellee after he had already filed his answer, and after the termination of the pre-
trial, when the said motion to dismiss raised a collateral question.
'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'
The appellate court concluded that plaintiffs "assignment of errors gives rise to two
(2) legal posers (1) whether or not the contract of sale between appellant and his
father-in-law, the late Francisco Militante over the property subject of Plan Psu-
99791 was void because it was made when plaintiff was counsel of his father-in-law
in a land registration case involving the property in dispute; and (2) whether or not
the lower court was correct in entertaining defendant-appellee's motion to dismiss
after the latter had already filed his answer and after he (defendant) and plaintiff-
appellant had agreed on some matters in a pre-trial conference. Hence, its
elevation of the appeal to this Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference held
by the trial court at which the parties with their counsel agreed and stipulated on
the material and relevant facts and submitted their respective documentary
exhibits as referred to in the pre-trial order, supra,2 practically amounted to a
fulldress trial which placed on record all the facts and exhibits necessary for
adjudication of the case.
The three points on which plaintiff reserved the presentation of evidence at the-
trial dealing with the source of the alleged right and title of Francisco Militante's
predecessors, supra,3 actually are already made of record in the stipulated
facts and admitted exhibits. The chain of Militante's alleged title and right to the
land as supposedly traced back to Liberato Demontao was actually asserted by
Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land
registration case and rejected by the Iloilo land registration court
which dismissed Militante's application for registration of the land. Such dismissal,
as already stated, was affirmed by the final judgment in 1958 of the Court of
Appeals.4
The four points on which defendant on his part reserved the presentation of
evidence at the trial dealing with his and his ancestors' continuous, open, public and
peaceful possession in the concept of owner of the land and the Director of Lands'
approval of his survey plan thereof, supra,5 are likewise already duly established
facts of record, in the land registration case as well as in the ejectment case
wherein the Iloilo court of first instance recognized the superiority of defendant's
right to the land as against plaintiff.
No error was therefore committed by the lower court in dismissing plaintiff's
complaint upon defendant's motion after the pre-trial.
1. The stipulated facts and exhibits of record indisputably established plaintiff's lack
of cause of action and justified the outright dismissal of the complaint. Plaintiff's
claim of ownership to the land in question was predicated on the sale thereof for
P2,000.00 made in 1956 by his father-in- law, Francisco Militante, in his favor, at a
time when Militante's application for registration thereof had already
been dismissed by the Iloilo land registration court and was pending appeal in the
Court of Appeals.
With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's
application for registration, the lack of any rightful claim or title of Militante to the
land was conclusively and decisively judicially determined. Hence, there was no
right or title to the land that could be transferred or sold by Militante's purported
sale in 1956 in favor of plaintiff.
Manifestly, then plaintiff's complaint against defendant, to be declared absolute
owner of the land and to be restored to possession thereof with damages was
bereft of any factual or legal basis.
2. No error could be attributed either to the lower court's holding that the purchase
by a lawyer of the property in litigation from his client is categorically prohibited by
Article 1491, paragraph (5) of the Philippine Civil Code, reproduced supra;6 and that
consequently, plaintiff's purchase of the property in litigation from his client
(assuming that his client could sell the same since as already shown above, his
client's claim to the property was defeated and rejected) was void and could
produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code
which provides that contracts "expressly prohibited or declared void by law' are
"inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to
set up the defense of illegality be waived."
The 1911 case of Wolfson vs. Estate of Martinez7 relied upon by plaintiff as holding
that a sale of property in litigation to the party litigant's lawyer "is not void but
voidable at the election of the vendor" was correctly held by the lower court to
have been superseded by the later 1929 case of Director of Lands vs. Abagat.8 In
this later case of Abagat, the Court expressly cited two antecedent cases involving
the same transaction of purchase of property in litigation by the lawyer which was
expressly declared invalid under Article 1459 of the Civil Code of Spain (of which
Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge
thereof not by the vendor-client but by the adverse parties against whom the
lawyer was to enforce his rights as vendee thus acquired.
These two antecedent cases thus cited in Abagat clearly superseded (without so
expressly stating the previous ruling in Wolfson:
The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve
parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large number
of collateral heirs but no descendants. Litigation between the surviving husband,
Juan Soriano, and the heirs of Vicenta immediately arose, and the herein appellant
Sisenando Palarca acted as Soriano's lawyer. On May 2, 1918, Soriano executed a
deed for the aforesaid twelve parcels of land in favor of Sisenando Palarca and on
the following day, May 3, 1918, Palarca filed an application for the registration of
the land in the deed. After hearing, the Court of First Instance declared that the
deed was invalid by virtue of the provisions of article 1459 of the Civil Code, which
prohibits lawyers and solicitors from purchasing property rights involved in any
litigation in which they take part by virtue of their profession. The application for
registration was consequently denied, and upon appeal by Palarca to the Supreme
Court, the judgement of the lower court was affirmed by a decision promulgated
November 16,1925. (G.R. No. 24329, Palarca vs. Director of Lands, not reported.)
In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and
on August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of Vicente
Macaraeg, filed claims for the parcels in question. Buenaventura Lavitoria
administrator of the estate of Juan Soriano, did likewise and so did Sisenando
Palarca. In a decision dated June 21, 1927, the Court of First Instance, Judge
Carballo presiding, rendered judgment in favor of Palarea and ordered the
registration of the land in his name. Upon appeal to this court by the administration
of the estates of Juan Soriano and Vicente Macaraeg, the judgment of the court
below was reversed and the land adjudicated to the two estates as conjugal
property of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat,
promulgated May 21, 1928, not reported.)9
In the very case of Abagat itself, the Court, again affirming the invalidity and nullity
of the lawyer's purchase of the land in litigation from his client, ordered the
issuance of a writ of possession for the return of the land by the lawyer to the
adverse parties without reimbursement of the price paid by him and other
expenses, and ruled that "the appellant Palarca is a lawyer and is presumed to
know the law. He must, therefore, from the beginning, have been well aware of the
defect in his title and is, consequently, a possessor in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article 1459
of the Civil Code of Spain then adopted here, until it was superseded on August 30,
1950 by the Civil Code of the Philippines whose counterpart provision is Article
1491.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits
in its six paragraphs certain persons, by reason of the relation of trust or their
peculiar control over the property, from acquiring such property in their trust or
control either directly or indirectly and "even at a public or judicial auction," as
follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and
employees; judicial officers and employees, prosecuting attorneys, and lawyers;
and (6) others especially disqualified by law.
In Wolfson which involved the sale and assignment of a money judgment by the
client to the lawyer, Wolfson, whose right to so purchase the judgment was being
challenged by the judgment debtor, the Court, through Justice Moreland, then
expressly reserved decision on "whether or not the judgment in question actually
falls within the prohibition of the article" and held only that the sale's "voidability
can not be asserted by one not a party to the transaction or his representative,"
citing from Manresa 10 that "(C)onsidering the question from the point of view of
the civil law, the view taken by the code, we must limit ourselves to classifying as
void all acts done contrary to the express prohibition of the statute. Now then: As
the code does not recognize such nullity by the mere operation of law, the nullity of
the acts hereinbefore referred to must be asserted by the person having the
necessary legal capacity to do so and decreed by a competent
court." 11
The reason thus given by Manresa in considering such prohibited acquisitions under
Article 1459 of the Spanish Civil Code as merely voidable at the instance and option
of the vendor and not void "that the Code does not recognize such nullity de
pleno derecho" is no longer true and applicable to our own Philippine Civil Code
which does recognize the absolute nullity of contracts "whose cause, object, or
purpose is contrary to law, morals, good customs, public order or public policy" or
which are "expressly prohibited or declared void by law" and declares such contracts
"inexistent and void from the beginning." 12
The Supreme Court of Spain and modern authors have likewise veered from
Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June
1966, the Supreme Court of Spain ruled that the prohibition of Article 1459 of the
Spanish Civil Code is based on public policy, that violation of the prohibition
contract cannot be validated by confirmation or ratification, holding that:
... la prohibicion que el articulo 1459 del C.C. establece respecto a los
administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala,
contendia entre otras, en S. de 27-5-1959, un fundamento de orden moral lugar la
violacion de esta a la nulidad de pleno derecho del acto o negocio celebrado, ... y
prohibicion legal, afectante orden publico, no cabe con efecto alguno la
aludida retification ... 13
The criterion of nullity of such prohibited contracts under Article 1459 of the
Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order and
policy as applied by the Supreme Court of Spain to administrators and agents in its
above cited decision should certainly apply with greater reason to judges, judicial
officers, fiscals and lawyers under paragraph 5 of the codal article.
Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his
"Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that,
with respect to Article 1459, Spanish Civil Code:.
Que caracter tendra la compra que se realice por estas personas? Porsupuesto no
cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el
motivo de la prohibicion es de orden publico. 14
Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto,
la consequencia de la infraccion es la nulidad radical y ex lege." 15
Castan, quoting Manresa's own observation that.
"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan
solo de guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las
personas que intervienen en la administrcionde justicia de todos los retigios que
necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere
in fundada, redundura endescredito de la institucion." 16 arrives at the contrary and
now accepted view that "Puede considerace en nuestro derecho inexistente 'o
radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se
ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre
motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17
It is noteworthy that Caltan's rationale for his conclusion that fundamental
consideration of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public officers and employees of government property intrusted
to them and by justices, judges, fiscals and lawyers of property and rights in
litigation and submitted to or handled by them, under Article 1491, paragraphs (4)
and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz,
Article 1409 declaring such prohibited contracts as "inexistent and void from the
beginning." 18
Parties Affected. Any person may invoke the in existence of the contract
whenever juridical effects founded thereon are asserted against him. Thus, if there
has been a void transfer of property, the transferor can recover it by the accion
reinvindicatoria; and any prossessor may refuse to deliver it to the transferee, who
cannot enforce the contract. Creditors may attach property of the debtor which has
been alienated by the latter under a void contract; a mortgagee can allege the
inexistence of a prior encumbrance; a debtor can assert the nullity of an assignment
of credit as a defense to an action by the assignee.
Action On Contract. Even when the contract is void or inexistent, an action is
necessary to declare its inexistence, when it has already been fulfilled. Nobody can
take the law into his own hands; hence, the intervention of the competent court is
necessary to declare the absolute nullity of the contract and to decree the
restitution of what has been given under it. The judgment, however, will retroact to
the very day when the contract was entered into.

Indeed, the nullity of such prohibited contracts is definite and permanent and If the void contract is still fully executory, no party need bring an action to declare
cannot be cured by ratification. The public interest and public policy remain its nullity; but if any party should bring an action to enforce it, the other party can
paramount and do not permit of compromise or ratification. In his aspect, the simply set up the nullity as a defense. 20
permanent disqualification of public and judicial officers and lawyers grounded
on public policy differs from the first three cases of guardians, agents and ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs
administrators (Article 1491, Civil Code), as to whose transactions it had been in all instances against plaintiff-appellant. So ordered.
opined that they may be "ratified" by means of and in "the form of a new contact,
in which cases its validity shall be determined only by the circumstances at the time
the execution of such new contract. The causes of nullity which have ceased to exist
cannot impair the validity of the new contract. Thus, the object which was illegal at
the time of the first contract, may have already become lawful at the time of the
ratification or second contract; or the service which was impossible may have
become possible; or the intention which could not be ascertained may have been
clarified by the parties. The ratification or second contract would then be valid from
its execution; however, it does not retroact to the date of the first contract." 19

As applied to the case at bar, the lower court therefore properly acted upon
defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's
alleged purchase of the land, since its juridical effects and plaintiff's alleged cause of
action founded thereon were being asserted against defendant-appellant. The
principles governing the nullity of such prohibited contracts and judicial declaration
of their nullity have been well restated by Tolentino in his treatise on our Civil Code,
as follows: