JESUS SAN AGUSTIN, petitioner,

vs. HON. COURT OF APPEALS and MAXIMO MENEZ, respondents.

[G.R. No. 121940. December 4, 2001]

FACTS:

Government Service Insurance System (GSIS) sold to a certain Macaria Vda. de Caiquep a parcel of
residential land evidenced by a Deed of Absolute Sale. The following encumbrance was annotated at the
back of the title, not to sell, convey, lease or sublease, or otherwise encumber the property. A day after
the issuance of TCT Macaria Vda. de Caiquep sold the subject lot to private respondent, Maximo Menez,
Jr., as evidenced by a Deed of Absolute Sale. Said TCT was lost, but private respondent subsequently
obtained a duplicate after judicial proceedings. Petitioner was not notified. Both RTC and CA ruled in
favor of private respondent.

ISSUE:

Whether or not the petitioner is correct that Deed of Sale between Macaria Vda. de Caiquep and private
respondent is null and void in accordance with Par.7 Art.1409 of the New Civil Code.

RULING:

NO. Petitioner’s contention is less than meritorious. In this case, the GSIS, the proper party, has not filed
any action for the annulment of Deed of Sale between them and Macaria Vda. de Caiquep, nor for the
forfeiture of the lot in question. The contract of sale remains valid between the parties, unless and until
annulled in the proper suit filed by the rightful party, the GSIS. The said contract of sale is binding upon
the heirs of Macaria Vda. de Caiquep, including petitioner who alleges to be one of her heirs, in line with
the rule that heirs are bound by contracts entered into by their predecessors-in-interest. Since, both
were aware of the existence of the stipulated condition in favor of the original seller, GSIS, yet both
entered into an agreement violating said condition and nullifying its effects, said parties should be held
in estoppel to assail and annul their own deliberate acts.