15.
Review: People’s Homesite vs CA
FACTS:
In February 1960, herein petitioner People’s Homesite & Housing Corporation (PHHC) passed a
resolution, subject to the approval of the Court Court Council of the PHHC’s consolidation subdivision
plan, awarding Lot 4 with an area of 4,182.2 square meters located at Diliman, Court City to
respondents Rizalino and Adelaida Mendoza (spouses Mendoza) at a price of twenty-one pesos
(P21.00) per square meter. The Court Court Council disapproved the consolidation subdivision plan in
August 1960 but approved in February 1964 its revised version where Lot 4 was reduced to an area of
2,608.7 square meters. Then in October 1965, the PHHC withdrew the tentative award of Lot 4 to the
spouses Mendoza for the latter’s failure neither to pay its price nor to make a 20% initial deposit, and
re-awarded said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio
Pinzon, Leonardo Redublo and Jose Fernandez, all of whom made the initial deposit. The subdivision
of Lot 4 into five lots was later approved by the Court council and the Bureau of Lands.
The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to Sto.
Domingo and four others, and at the same time filed an action for specific performance plus
damages. The trial court sustained the award but the Court of Appeals reversed the said decision,
declared void the re-award to Sto. Domingo and four others, and ordered the PHHC to sell Lot 4 with
an area of 2,608.7 square meters at P21.00 per square meter to spouses Mendoza.
ISSUE:
Was there a perfected sale of Lot 4, with its reduced area, between the parties?
COURT RULING:
The Supreme Court found that there was no perfected sale of Lot 4 because the said lot was
conditionally or contingently awarded to the Mendozas subject to the approval by the Court council
of the proposed consolidation subdivision plan and the approval of the award by the valuation
committee and higher authorities.
When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved in 1964, the
spouses Court should have manifested in writing their acceptance of the award for the purchase of
Lot 4 just to show that they were still interested in its purchase although the area was reduced.
Article 1475 of the Civil Court says “[t]he contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and upon the price. From that
moment, the parties may reciprocally demand performance, subject to the law governing the form of
contracts.” Indeed, there was a no meeting of the minds between the parties on the purchase of Lot
4 with an area of 2,608.7 square meters at P21 a square meter and the PHHC board of directors acted
within its rights in withdrawing the tentative award,
Romero vs CA
Facts:
Private respondent entered into a “Conditional Deed of Sale” with petitioner over a parcel of land in
Paranaque, the latter advancing P50,000 for the eviction of squatters therein. An ejectment suit was
then filed by the private respondent against the squatters. Although successful, private respondent
sought the return of the downpayment she received because “she could not get rid of the squatters”.
Issue:
May the vendor demand the rescission of a contract for the sale of a parcel of land for a cause
traceable to his own failure to have the squatters on the subject property evicted within the
contractually-stipulated period?
Held:
A perfected contract of sale may either be absolute or conditional depending on whether the
agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing to be
conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a
positive condition the breach of the condition will simply prevent the duty to convey title from
acquiring an obligatory force. If the condition is imposed on an obligation of a party which is not
complied with, the other party may either refuse to proceed or waive said condition. Where, of
course, the condition is imposed upon the perfection of the contract itself, the failure of such
condition would prevent the juridical relation itself from coming into existence.
In determining the real character of the contract, the title given to it by the parties is not as much
significant as its substance. For example, a deed of sale, although denominated as a deed of
conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in
the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on
the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. The term
"condition" in the context of a perfected contract of sale pertains, in reality, to the compliance by one
party of an undertaking the fulfillment of which would beckon, in turn, the demandability of the
reciprocal prestation of the other party. The reciprocal obligations referred to would normally be, in
the case of vendee, the payment of the agreed purchase price and, in the case of the vendor, the
fulfillment of certain express warranties (which, in the case at bench is the timely eviction of the
squatters on the property).
It would be futile to challenge the agreement here in question as not being a duly perfected contract.
A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver
and to transfer ownership of a specified thing or right to another (the buyer) over which the latter
agrees. From the moment the contract is perfected, the parties are bound not only to the fulfillment
of what has been expressly stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law. Under the agreement, private respondent
is obligated to evict the squatters on the property. Private respondent's failure "to remove the
squatters from the property" within the stipulated period gives petitioner the right to either refuse to
proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil
Code. This option clearly belongs to petitioner and not to private respondent.
In contracts of sale particularly, Article 1545 of the Civil Code allows the obligee to choose between
proceeding with the agreement or waiving the performance of the condition. Here, evidently,
petitioner has waived the performance of the condition imposed on private respondent to free the
property from squatters.
The right of resolution of a party to an obligation is predicated on a breach of faith by the other party
that violates the reciprocity between them. It is private respondent who has failed in her obligation
under the contract. Petitioner did not breach the agreement. He has agreed, in fact, to shoulder the
expenses of the execution of the judgment in the ejectment case and to make arrangements with the
sheriff to effect such execution.
16. Add: Lim vs CA
THE CASE:
CA having affirmed in toto on June 30, 1988 in CA-G.R. SP No. 13925, the decision of the RTC of
Manila, Branch XLVI in Civil Case No. 87-42719, entitled "Francisco Lao Lim vs. Benito Villavicencio
Dy," petitioner seeks the reversal of such affirmance in the instant petition.
FACTS:
The records show that Villavicencio entered into a contract of lease with petitioner for a period of
three (3) years, that is, from 1976 to 1979. After the stipulated term expired, Villavicencio refused to
vacate the premises, hence, petitioner filed an ejectment suit against the former in the City Court of
Manila, docketed therein as Civil Case No. 051063-CV.
The case was terminated by a judicially approved compromise agreement of the parties providing in
part:
“3. That the term of the lease shall be renewed every 3years retroacting from October 1979 to
October 1982; after which the abovenamed rental shall be raised automatically by 20% every three
years for as long as defendant needed the premises and can meet and pay the said increases, the
defendant to give notice of his intent to renew sixty (60) days before the expiration of the term;”
By reason of said compromise agreement the lease continued from 1979 to 1982, then from 1982 to
1985. On April 17, 1985, petitioner advised Villavicencio that he would no longer renew the contract
effective October, 1985.
However, on August 5, 1985, Villavicencio informed petitioner in writing of his intention to renew the
contract of lease for another term, commencing November, 1985 to October, 1988. In reply to said
letter, petitioner advised Villavicencio that he did not agree to a renewal of the lease contract upon
its expiration in October, 1985.
On January 15, 1986, because of Villavicencio's refusal to vacate the premises, petitioner filed
another ejectment suit, this time with the Metropolitan Trial Court of Manila. In its decision of
September 24, 1987, said court dismissed the complaint on the grounds that:
(1) the lease contract has not expired, being a continuous one the period whereof depended
upon the lessee's need for the premises and his ability to pay the rents; and
(2) the compromise agreement entered into in the aforesaid Civil Case No. 051063-CV
constitutes res judicata to the case before it.
Petitioner appealed to the RTC of Manila which, in its decision of January 28, 1988, affirmed the
decision of the lower court.
CA affirmed RTC and held that:
(1) the stipulation in the compromise agreement which, in its formulation, allows the lessee to
stay on the premises as long as he needs it and can pay rents is valid, being a resolutory condition
and, therefore, beyond the ambit of Article 1308 of the Civil Code; and
(2) that a compromise has the effect of res judicata.
ISSUE:
Was the stipulation in the compromise agreement which allows the lessee to stay on the premises as
long as he needs it and can pay rents is valid?
RULING:
No. The decision of respondent CA is REVERSED and SET ASIDE.
HELD:
The disputed stipulation "for as long as the defendant needed the premises and can meet and pay
said increases" is a purely potestative condition because it leaves the effectivity and enjoyment of
leasehold rights to the sole and exclusive will of the lessee.
It is likewise a suspensive condition because the renewal of the lease, which gives rise to a new lease,
depends upon said condition. It should be noted that a renewal constitutes a new contract of lease
although with the same terms and conditions as those in the expired lease.
It should also not be overlooked that said condition is not resolutory in nature because it is not a
condition that terminates the lease contract. The lease contract is for a definite period of three (3)
years upon the expiration of which the lease automatically terminates.
The invalidity of a condition in a lease contract similar to the one at bar has been resolved in
Encarnacion vs. Baldomar, et al. where we ruled that in an action for ejectment, the defense
interposed by the lessees that the contract of lease authorized them to continue occupying the
premises as long as they paid the rents is untenable, because it would leave to the lessees the sole
power to determine whether the lease should continue or not.
As stated therein, "(i)f this defense were to be allowed, so long as defendants elected to continue the
lease by continuing the payment of the rentals, the owner would never be able to discontinue it;
conversely, although the owner should desire the lease to continue, the lessees could effectively
thwart his purpose if they should prefer to terminate the contract by the simple expedient of
stopping payment of the rentals. This, of course, is prohibited by the aforesaid article of the Civil
Code.
The continuance, effectivity and fulfillment of a contract of lease cannot be made to depend
exclusively upon the free and uncontrolled choice of the lessee between continuing the payment of
the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not
obtain in such a contract of lease and no equality exists between the lessor and the lessee since the
life of the contract is dictated solely by the lessee.
The interpretation made by respondent court cannot, therefore, be upheld. The compromise
agreement, read and interpreted in its entirety, is actually to the effect that the last portion thereof,
which gives the Villavicencio sixty (60) days before the expiration of the term the right to give notice
of his intent to renew, is subject to the first portion of said paragraph that "the term of the lease shall
be renewed every three (3) years," thereby requiring the mutual agreement of the parties.
The use of the word "renew" and the designation of the period of three (3) years clearly confirm that
the contract of lease is limited to a specific period and that it is not a continuing lease. The stipulation
provides for a renewal of the lease every three (3) years; there could not be a renewal if said lease
did not expire, otherwise there is nothing to renew.
The contract of lease should be and is hereby construed as providing for a definite period of three (3)
years and that the automatic increase of the rentals by twenty percent (20%) will take effect only if
the parties decide to renew the lease. A contrary interpretation will result in a situation where the
continuation and effectivity of the contract will depend only upon the will of the lessee, in violation of
Article 1308 of the Civil Code and the aforesaid doctrine in Encarnacion.
Moreover, perpetual leases are not favored in law, nor are covenants for continued renewals tending
to create a perpetuity, and the rule of construction is well settled that a covenant for renewal or for
an additional term should not be held to create a right to repeated grants in perpetuity, unless by
plain and unambiguous terms the parties have expressed such intention.
A lease will not be construed to create a right to perpetual renewals unless the language employed
indicates dearly and unambiguously that it was the intention and purpose of the parties to do so. A
portion in a lease giving the lessee and his assignee the right to perpetual renewals is not favored by
the courts, and a lease will be construed as not making such a provision unless it does so clearly.
As we have further emphasized:
It is also important to bear in mind that in a reciprocal contract like a lease, the period of the lease
must be deemed to have been agreed upon for the benefit of both parties, absent language showing
that the term was deliberately set for the benefit of the lessee or lessor alone. We are not aware of
any presumption in law that the term of a lease is designed for the benefit of the lessee alone. . .
In addition, even assuming that the clause "for as long as the defendant needed the premises and can
meet and pay, said increases" gives Villavicencio an option to renew the lease, the same will be
construed as providing for but one renewal or extension and, therefore, was satisfied when the lease
was renewed in 1982 for another three (3) years.
A general covenant to renew is satisfied by one renewal and will not be construed to confer the right
to more than one renewal unless provision is clearly and expressly made for further renewals.
16Leases which may have been intended to be renewable in perpetuity will nevertheless be
construed as importing but one renewal if there is any uncertainty in that regard.
The case of Buccat vs. Dispo et al., relied upon by respondent court, to support its holding that
respondent lessee can legally stay on the premises for as long as he needs it and can pay the rents, is
not in point. In said case, the lease contract provides for an indefinite period since it merely stipulates
"(t)hat the lease contract shall remain in full force and effect as long as the land will serve the
purpose for which it is intended as a school site of the National Business Institute, but the rentals
now stipulated shall be subject to review every after ten (10) years by mutual agreement of the
parties." This is in clear contrast to the case at bar wherein, to repeat, the lease is fixed at a period of
three (3) years although subject to renewal upon agreement of the parties, and the clause "for as
long as defendant needs the premises and can meet and pay the rents" is not an independent
stipulation but is controlled by said fixed term and the option for renewal upon agreement of both
parties.
Note: I did not include the 2nd issue anymore regarding res judicata. . .
WHEREFORE, the decision of respondent Court of Appeals is REVERSED and SET ASIDE. Villavicencio is
hereby ordered to immediately vacate and return the possession of the leased premises subject of
the present action to petitioner and to pay the monthly rentals due thereon in accordance with the
compromise agreement until he shall have actually vacated the same. This judgment is immediately
executory.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., Concur.
17. Guiang vs CA
FACTS:
The sale of a conjugal property requires the consent of both the husband and the wife. The absence
of the consent of one renders the sale null and void, while the vitiation thereof makes it merely
voidable. Only in the latter case can ratification cure the defect.
Over the objection of private respondent Gilda Corpuz and while she was in Manila seeking
employment (with the consent of her husband), her husband sold to the petitioners-spouses Antonio
and Luzviminda Guiang one half of their conjugal peoperty, consisting of their residence and the lot
on which it stood. Upon her return to Cotabato, respondent gathered her children and went back to
the subject property. Petitioners filed a complaint for trespassing. Later, there was an amicable
settlement between the parties. Feeling that she had the shorter end of the bargain, respondent filed
an Amended Complaint against her husband and petitioners. The said Complaint sought the
declaration of a certain deed of sale, which involved the conjugal property of private respondent and
her husband, null and void.
ISSUE: WON contract without the consent of wife is void
HELD:
Yes. Art 124 of the FC rules that 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.
Respondent’s consent to the contract of sale of their conjugal property was totally inexistent or
absent. The nullity of the contract of sale is premised on the absence of private respondent’s consent.
To constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1)
cause, (2) object, and (3) consent, the last element being indubitably absent in the case at bar.
A void contract cannot be ratified.
Neither can the “amicable settlement” be considered a continuing offer that was accepted and
perfected by the parties, following the last sentence of Article 124. The order of the pertinent events
is clear: after the sale, petitioners filed a complaint for trespassing against private respondent, after
which the barangay authorities secured an “amicable settlement” and petitioners filed before the
MTC a motion for its execution. The settlement, however, does not mention a continuing offer to sell
the property or an acceptance of such a continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the imagination, can the Court interpret this
document as the acceptance mentioned in Article 124.
18. Antonio Medina v. CIR and CTA
Facts:
Subsequent to marriage, petitioners engaged in concessions with the government, while his wife
started to engage in business as a lumber dealer. From 1949 to 1952, petitioner sold logs to his wife.
On the thesis that the sales are null and void, CIR considered the sales by Mrs. Medina as the
petitioner’s original sales taxable under the NIRC. Petitioner filed a petition for reconsideration,
revealing for the first time the alleged premarital agreement of complete separation of property.
Issue:
Whether or not the sales made by the petitioner to his wife could be considered as his original
taxable sales
Held:
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. 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. 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.
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.
Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. 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.
19. Ching vs Goyangko Jr.
Facts:
Joseph Goyanko and Epifania dela Cruz were married. During the marriage, they acquire a certain
property in Cebu. In 1993, Joseph executed a deed of sale over the property in favor of his common-
law-wife Maria B. Ching. After Joseph's death, his children with Epifania discovered the sale. They
thus filed with the Regional Trial Court of Cebu City a complaint for recovery of property and
damages against Ching, praying for the nullification of the deed of sale and of the TCT and the
issuance of a new one in favor of their father Goyanko.
Issue:
Was the sale made by Joseph Goyanko in favor of his common-law wife valid?
Held:
No. The proscription against sale of property between spouses applies even to common law
relationships.
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. 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.”
As the conveyance in question was made by Goyangko in favor of his common- law-wife, it was null
and void. (Ching vs Goyanko, Jr., G.R. No. 165879, November 10, 2006 citing Calimlim-Canullas v.
Fortun, G.R. No. L-57499, June 22, 1984)
20. Cruz vs CA
Facts:
- Gloria R. Cruz: Owner of Lot 10, Blk. 565, PSD-38911 with an area of 747.7 sq. m, together with the
improvements situated at 22 Bituan St., Bgy. Doña Imelda, QC (TCT No. 242553 in her name)
- 1977: Cruz and Romeo V. Suzara lived together as husband and wife without benefit of marriage
- September 1982: Out of love and affection for Suzara, Cruz executed a deed of absolute sale over
Lot 10 in favor of Suzara without any monetary consideration
- Suzara registered the document in his favor and used the property as collateral for a bank loan of
P350,000.00
> He failed to pay the loan. After 4 years, the mortgage was foreclosed.
- Cruz paid the bank P40,638.88 to restructure the loan resulting in the extension of the redemption
period to 2 years.
- Without the knowledge of Cruz and before the expiration of the extended period, Suzara redeemed
the property.
- Cruz executed an Affidavit of Adverse Claim to protect her interest.
> She filed this with the Register the Deeds of QC asserting that her sale in favor of Suzara was null
and void for lack of consideration and being contrary to law and public policy.
- February 22, 1990: Cruz filed a complaint with the RTC of Manila against respondent Suzara for:
> Quieting of title, declaration of nullity of documents and damages with prayer for writ of
preliminary injunction
- Suzara’s claims:
> He was already the registered owner of the property as evidenced by TCT No. 295388, having
acquired the same from petitioner through a notarized deed of absolute sale
> The sale was for a valuable consideration and not tainted with fraud nor executed under duress
> Cruz was estopped from impugning the validity of the sale and questioning his title over the
property.
- March 22, 1990: RTC issued a temporary restraining order enjoining Suzara, his agents and/or any
person or persons acting in his behalf, from disposing and/or encumbering the litigated property until
further orders.
- April 3, 1990: Cruz filed an ex parte motion to admit her amended complaint:
> Impleading respondent Manuel R. Vizconde as additional defendant
> Praying that the Register of Deeds of QC be ordered to annotate her notice of lis pendens on
Suzara’s title
- RTC admitted the amended complaint and ordered the Register of Deeds to show cause why it was
refusing to annotate the notice of lis pendens filed by Cruz
- May 22, 1990: Register of Deeds filed a manifestation informing the trial court that the property had
been sold by respondent Suzara to his co-respondent Vizconde who was already the registered owner
and since Vizconde was not impleaded in the case the notice of lis pendens could not be annotated
on his title until the requirements of law were met and the annotation of the notice judicially
ordered.
> The motion to admit amended complaint impleading respondent Vizconde was filed ex parte.
- September 24, 1990: Vizconde answered that:
> There was no privity of contract between him and petitioner.
> He was a purchaser for value in good faith
> The sale between him and Suzara was executed on long before the execution of the Affidavit of
Adverse Claim (December 22, 1989)
> The action was barred by laches, estoppel and prescription.
- May 24, 1993: RTC dismissed the complaint and the counterclaims as well as the cross claim of
Vizconde.
> The sale between Cruz and Suzara was valid with "love, affection and accommodation" being the
consideration for the sale.
> Vizconde was an innocent purchaser for value because at the time he purchased the property he
was unaware of the adverse claim of petitioner.
- CA: Affirmed the RTC judgment
- SC: Review on certiorari seeking to reverse and set aside the decision of the CA and RTC.
- Cruz contends:
> The lower courts erred in holding that the sale between her and Suzara was valid.
> She had no legal personality to question the legality of the sale in his favor, and, respondent
Vizconde was an innocent purchaser for value in good faith.
> There being a factual finding by the RTC and the CA that she and respondent Suzara were common-
law husband and wife, the sale between them was void and inexistent (Art. 1490 of the Civil Code).
> The consideration of "love, affection and accommodation" for the sale was not a valid cause for the
conveyance of the property as there was no price paid in money or its equivalent.
> Since her sale to Suzara was null and void the issue of its illegality cannot be waived or ratified.
Resultantly, the sale by Suzara to his co-respondent Vizconde must also be declared null and void the
latter being a purchaser in bad faith.
> Although she filed her adverse claim on January 22, 1990 or after the execution of the deed of sale
between the private respondents on December 22, 1989, the sale was nullified when it was
substituted by a second deed of sale on February 5, 1990 (registered March 6, 1990) to avoid
payment of fines and penalties for late registration.
Issue/s:
- W/N the sale between Suzara and Vizconde could be declared null and void. (No.)
Held / Ratio:
- Petition is denied. CA and RTC decision affirmed.
- Art. 1490 of the Civil Code
> Although under Art. 1490 CC the husband and wife cannot sell property to one another as a rule
which, for policy consideration and the dictates of morality require that the prohibition apply to
common-law relationships, Cruz can no longer seek reconveyance of the property to her as it has
already been acquired by respondent Vizconde in good faith and for value from her own transferee.
- Purchaser in good faith
> A purchaser in good faith is one who buys the property of another without notice that some other
person has a right to or interest in such property and pays a full and fair price for the same at the
time of such purchase or before he has notice of the claim of another person.
- Vizconde: Purchaser for value in good faith
> At the time respondent Suzara executed the deed of absolute sale in favor of respondent Vizconde,
which was acknowledged before a notary public, Suzara was the registered owner appearing in the
certificate of title.
> When the sale was executed, nothing was annotated in the certificate to indicate any adverse claim
of a third person or the fact that the property was the subject of a pending litigation.
> When Vizconde bought the property he had no knowledge that some other person had a right to or
an adverse interest in the property.
> Vizconde paid a full and fair price for the property at the time of the purchase and before he had
any notice of petitioner's claim or interest in the property.
> The allegation that there was a second deed of sale executed solely for the purpose of evading the
penalties resulting from late payment of taxes and registration is immaterial.
> Cruz herself admits that the actual sale of the property occurred on December 22, 1989.
- Contract of sale
> A contract of sale is consensual and is perfected once agreement is reached between the parties on
the subject matter and the consideration therefor.
- Torrens system of registration
> The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to
any question of legality of the title except claims which have been recorded in the certificate of title
at the time of registration or which may arise subsequent thereto.
> Where innocent third persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property the court cannot disregard such rights and order the total
cancellation of the certificate.
> The effect of such an outright cancellation would be to impair public confidence in the certificate of
title, for everyone dealing with property registered under the Torrens system would have to inquire
in every instance whether the title has been regularly or irregularly issued. This is contrary to the
evident purpose of the law.
> Every person dealing with registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go behind the certificate to determine
the condition of the property.
> Even if a decree in a registration proceeding is infected with nullity, still an innocent purchaser for
value relying on a Torrens title issued in pursuance thereof is protected.
21. Cook v Mc Micking
NELLIE LOUISE COOK vs. J. MCMICKING, sheriff of Manila
Facts:
On August 8, 1912, an injunction was granted by a judge of the Court of First Instance of the city of
Manila restraining the sale of certain property levied upon under an execution issued upon a
judgment rendered on April 30 by the Court of First Instance of the Province of Rizal in the case of
Johnson et al. vs. Edward Cook.
The complaint alleges that the plaintiff is the wife of Edward Cook; that she is the absolute owner of a
piece of square meters in area, and that the same is registered in her name under the Torrens Law by
certificate No. 130; that on the 15th of June 1912, a judgment was entered against Edward Cook,
plaintiff’s husband, for the sum of P10,000 in the Court of First Instance of the Province of Rizal; that
by virtue of said judgment an execution was issued on the 10th of July of that year and levied upon
the land described in the complaint as belonging to the plaintiff and that the same was advertised for
sale on the 8th of August at 9 o’ clock in the morning. After other allegations appropriate to an action
of this kind, plaintiff prays from an junction permanently prohibiting the defendants from selling the
said land.
The Torrens title introduced in evidence by the plaintiff was obtained in June 1904 in the name of
plaintiff’s husband, Edward Cook. Later, and sometime in August of the same year, the husband, by
an intrusment in writing in the form and manner required by Act No. 496, transferred to the plaintiff
the land in question. In 1911 the plaintiff’s husband Edward Cook, became indebted to Johnson, the
plaintiff in the action referred to, in the sum of P10,000, the purchase price of certain lands.
Judgement upon said indebtedness was procured in the year 1912 as aforesaid and a levy made upon
the lands described in the complaint.
It is claimed by the appellants that the so-called transfer from plaintiff’s husband to her was
completely void under article 1458 of the Civil Code and that, therefore, the property still remains the
property of Edward Cook and subject to levy under execution against him.
Issue:
Whether or not the claim by the appellants that the so-called transfer from plaintiff’s husband to her
was completely void under article 1458 of the Civil Code and that, therefore, the property still
remains the property of Edward Cook and subject to levy under execution against him?
Ruling:
In our opinion the position taken by appellants is untenable. They are not in the position the
challenge the validity of the transfer, if it may be called such. They bore absolutely no relation to the
parties to the transfer at the time it occurred and had no rights or interest inchoate, present, remote,
or otherwise, in the property in question at the time the transfer occurred. Although certain transfers
from husband to wife or from wife to husband are prohibited in the article referred to, such
prohibition can be taken advantage of only two person who bear such a relation to the parties
making the transfer with their rights or interest. Unless such a relationship appears the transfer
cannot be attacked.
So far as the record of this case demonstrates the property in question is owned by the plaintiff and is
not subject to levy and sale under the execution in this case.
The judgment appealed from affirmed, with costs against the appellants.
22. Matabuena v. Cervantes G.R. No. L-28771 (March 31, 1971)
FACTS:
Felix Matabuena cohabitated with Respondent. During this period, Felix Matabuena donated to
Respondent a parcel of land. Later the two were married. After the death of Felix Matabuena, his
sister, Petitioner, sought the nullification of the donation citing Art.133 of the Civil Code “Every
donation between the spouses during the marriage shall be void.”
The trial court ruled that this case was not covered by the prohibition because the donation was
made at the time the deceased and Respondent were not yet married and were simply cohabitating.
ISSUE:
W/N the prohibition applies to donations between live-in partners.
HELD:
Yes. It is a fundamental principle in statutory construction that what is within the spirit of the law is
as much a part of the law as what is written. Since the reason for the ban on donations between
spouses during the marriage is to prevent the possibility of undue influence and improper
pressure being exerted by one spouse on the other, there is no reason why this prohibition shall not
apply also to common-law relationships.The court, however, said that the lack of the donation
made by the deceased to Respondent does not necessarily mean that the Petitioner will have
exclusive rights to the disputed property because the relationship between Felix and Respondent
were legitimated by marriage.
23. Rubias v. Batiller
Facts:
Before the war with Japan, Francisco Militante filed an application for registration of the parcel of
land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the
land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent.
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.
Issue:
Whether or not the contract of sale between appellant and his father-in-law 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
Held:
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 made by his father-in- law 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.
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.
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."
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by
ratification. The public interest and public policy remain paramount and do not permit of compromise
or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians, agents and administrators
(Article 1491, Civil Code), as to whose transactions it had been 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."
24. Fornilda vs Br 164 Pasig RTC
ere part of the estate of the late Julio M. Catolossubject of
intestate estate proceedings, wherein Respondent Amonoy actedas counsel for some of the heirs
an
20 January 1965, or only eight (8) days thereafter, and while he was stillintervening in the case as
counsel, these properties were mortgaged by petitioners' predecessor-in-interest to Respondent
mortgage indebtedness was not paid, Respondent Amonoy instituted an action for judicial
foreclosure of mortgage on 21 January
short of the mortgage indebtedness, he applied for and further obtained a deficiency judgment.
ISSUE: Whether or not the mortgage constituted on the Controverted Parcels in favor of Respondent
Amonoy comes within the scope of the prohibition in Article 1491 of theCivil Code.
ersons cannot
acquire by purchase even at a public or judicial or auction, either in person or through the mediation
of another:xxx xxx xxx(5) Justices, judges, prosecuting attorneys, ... the property and rights in
litigation or levied upon on execution before the court within whose junction or territory they
exercise their respective functions; this prohibition includes the act of acquitting by assignment and
shall apply to lawyers with respect to the property and rights which may be the object of any
liti
aforequoted provision, a lawyer is prohibited from acquiring either by purchase or assignment the
property or rights involved which are the object of the litigation in which they intervene by virtue of
their profession. The prohibition on purchase is all embracing to includenot only sales to private
relationship of lawyerand client still existed, the very relation of trust and confidence sought to
beprotected by the prohibition, when a lawyer occupies a vantage position topress upon or dictate
terms to a harassed client. From the time of theexecution of the mortgage in his favor, Respondent
Amonoy had alreadyasserted a title adverse to his clients' interests at a time when
contract, entered into in contravention ofArticle 1491 of the Civil Code is expressly prohibited by law,
the same mustbe held inexistent and void ab initio.
25. Lao vs Genato
FACTS :
Petitioner spouses were promises in a MutualAgreement of Promise to sell between them
andprivate respondent Sotero Dionisio, Jr., heir andadministrator of the intestate estate of
deceasedmother Rosenda Abuton. The promisor boundhimself to sell the subject ppty to
petitioners.Respodnnet administrator Sotero DIonisio, Jr. w/due notice to all co-heirs filed a
Motion forAuthority to sell certain ppties of the deceased tosettle the outstanding obligations of the
estate.Probate court: authorized administrator to sellpptiesRespondent admin. Pursuant to
saidauthorization, sold to his son, Sotero Dionisio III,a ppty the latter sold the same to William Go,title
was transferred.Florida Nuqui, filed a Motion for Annulment ofsale for the reasons that subseq
transfer fo titlewere made in violation of court’s order and thatconsideration was grossly
inadequate.Petitioner sps. filed Manifestation in Interventionof Interest that respondent-
adminstrator w/orevealing that ppty has already been soldentered into a Mutual Agreement
of Promise tosell w/ them. The latter paid earnest moneyimmediately upon execution of
contract.After several days, respondent Judge Genatoallowed bidding for the ppty Amicable
settlementwas agreed upon but petitioner spousesopposed as mortgagees.
HELD:The authorization was made to settleoutstanding obligations of the estate. But,
thesale to his very son for a grossly low price wasindubitable shown to be ficititious.
Theconsideration was never accounted for in theprobate courtThe sale to Go was illegal and
irregular whichwas confirmed by the respondent judg violativeof Art. 1409 w/c cannot work to
confirm nor ratifya ficititious contract nonexistent and void.RULING: AMICABLE SETTLEMENT NULL
ANDVOID; SALE TO GO NULL AND VOID; NEWPROCEEDINGS FOR SALE OF PPTYSARSOSA
26. MAHARLIKA PUBLISHING CORP V TAGLE
FACTS
GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was sold to
Maharlika in a Conditional Contract of Sale with the stipulation that if Maharlika failed to pay monthly
installments in 90 days, the GSIS would automatically cancel the contract. Because Maharlika failed to
pay several monthly installments, GSIS demanded that Maharlika vacate the premises. Even though
Maharlika refused to do so, the GSIS published an advertisement inviting the public to bid in a public
auction. A day before the scheduled bidding, Adolfo Calica, the President of Maharlika, gave the GSIS
head office 2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS General
Manager Roman Cruz gave a not to Maharlika saying “Hold Bidding. Discuss with me.” However, the
public bidding took place as scheduled and the property was subsequently awarded to Luz Tagle, the
wife of the GSIS Retirement Division Chief. Maharlika demanded that the sale be considered null and
void, as Mrs. Tagle should have been disqualified from bidding for the GSIS property. RTC and CA
both ruled that the Tagles were entitled to the property and Maharlika should vacate the premises.
ISSUE
Whether or not Tagle are entitled to the property ?
HELD
NO. The sale to them was against public policy. First of all, the GSIS head office was stopped from
claiming that they did not give the impression to Maharlika that they were accepting the proposal for
a compromise agreement. The act of the general manager is binding on GSIS. Second, Article 1491 (4)
of the CC provides that public officers and employees are prohibited from purchasing the property of
the state or any GOCC or institution, the administration of which has been entrusted to them cannot
purchase, even at public or judicial auction, either in person or through the mediation of another. The
SC held that as an employee of the GSIS, Edilberto Tagle and his wife are disqualified from bidding on
the property belonging to the GSIS because it gives the impression that there was politics involved in
the sale. It is not necessary that actual fraud be shown, for a contract which tends to injure the public
service is void although the parties entered into it honestly and proceeded under it in good faith.
28. Mercado v Espiritu
FACTS:
This case is about the signing of a deed of sale in which two of the four parties were minors with age
18, and 19. On the date of sale, these minors presented themselves that they were of legal age at the
time they signed it, and they made the same manifestation before the notary public.
ISSUE:
Whether or not the deed of sale is valid when the minors presented themselves that they were of
legal age.
RATIO:
The courts laid down that such sale of real estate was still valid since it was executed by minors, who
have passed the ages of puberty and adolescence, and are near the adult age, and that the minors
pretended that they had already reached their majority.
Article 38. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil-
interdiction are mere restrictions on the capacity to act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise from his acts or from property relations, such as
easements.
Also, these minors cannot be permitted afterwards to excuse themselves from compliance with the
obligation assumed by them or seek their annulment. This is in accordance with the provisions of the
law on estoppels.
This is in accordance with the provisions of the law on estoppel.
Art 1431 of Civil Code. Through estoppel, an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the person relying thereon.
This is also in accordance with the provisions of Rule 123, Sec 68, Par. A
Rule 123, sec 68, Par. A...”Whenever a party has, by his own declaration, act or omission,
intentionally and deliberately led another to believe a particular thing to be true, and to act upon
such belief, he cannot, in any litigation arising out of such declaration, act or omission, cannot be
permitted to falsify it.
29. Fabillo vs IAC
Juliana Fabillo, in her last will and testament dated Aug. 16, 1957, bequeathed to her
brother,Florencio, a house and lot in San Salvador, Palo, Leyte and to his husband Gregorio D. Brioso
a piece of land in Pugahanay, Palo, Leyte.
After Justina’s death, Florencio filed a petition for the probate of said will.
Florencio sought the assistance of Atty. Alfredo M. Murillo in recovering the San Salvador property.
Florencio and Murillo entered into a contract, stipulating therein that Murillo shall represent
Florencioin the conclusion of the two cases, and in consideration of Murillo’s legal services, he shall
be paid, incase of success 40% of what he may acquire from the favorable judgment.
In case that the properties are sold, mortgaged or leased, Murillo shall be entitled to 40% of the
purchase price, proceeds of the mortgage, or rentals, respectively.
Pursuant to the said contract, Murillo filed a civil case against Gregorio D. Brioso to recover the
SanSalvador property. However, the case was terminated when the parties entered into a
compromiseagreement declaring Florencio as the lawful owner of not only the San Salvador property
but also of the parcel of land located at Pugahanay.
As a result, Murillo proceeded to implement the contract of services between him and Florencio
bytaking possession and exercising rights of ownership over 40% of said properties.
In 1966, Florencio claimed exclusive right of ownership over the two properties and refused to give
toMurillo his share of the properties.
Murillo filed in the CFI a complaint for ownership of the parcel of land.
ISSUE: WON THE CONTRACT OF SERVICES VIOLATED THE PROVISION OF ART. 1491, NCC.
HELD:NO! The contract of services did not violate Art. 1491, NCC.
The said prohibition applies only if the sale or assignment of the property takes place during the
pendency of the litigation involving the client’s property.
Thus, the contract between the a lawyer and a client stipulating a contingent fee is not covered by
said prohibition under Art. 1491(5), CC because the payment of said fee is not made during the
pendency of the litigation but only after the judgment was rendered final.
As long as the lawyer did not exert undue influence on his client, that no fraud is committed or
implication applied, or that the compensation is clearly not excessive as to amount to extortion, a
contractfor contingent fee is valid and enforceable.
However, the Court disagrees that the contingent fee stipulated by the partiesis 40% of the
propertiessubject of the litigation.
A careful scrutiny of the contract shows that the parties intended 40% of the value of the properties
as Murillo’s contingent fee.
This is borne out by the stipulation that “in case of success of any or both cases,” Murilloshall be paid
“the sum equivalent to 40% of whatever benefit” Fasbillo would derive fromfavorable judgments.
Moreover, the herein contract was vague with respect to a situation wherein the properties are
neither sold, mortgaged nor leased because Murillo is allowed “to have the option of occupying or
leasing to anyinterested party 40% of the house and lot”.
Had the parties intended that Murillo should be the lawful owner of 40% of the properties, it
wouldhave been stipulated in the contract considering that the Fabillos would part with actual
portions of their properties and cede the same to Murillo.
The ambiguity of said provision should be resolved against Murillo as it was him pwho drafted
thecontract.