CONSENT .............................................................................................................

2
LABAGALA VS SANTIAGO.................................................................................. 2
FRANCISCO VS HERRERA .................................................................................. 8
PARAGAS VS HEIRS OF DOMINADOR BALACANO .............................................12
HEIRS OF REYES VS MIJARES ............................................................................20
GUIANG VS CA ................................................................................................27
AINZA VS SPS. PADUA .....................................................................................34
SPS. FUENTES VS ROCA ...................................................................................38
SPS. AGGABAO VS SPS. PARULAN ....................................................................46
PELAYO VS PEREZ ............................................................................................56
ABALOS VS MACATANGAY JR ..........................................................................66
CALIMLIM- CANULLAS VS FORTUN ..................................................................72
PHIL. TRUST CO. VS ROLDAN ...........................................................................75
DISTAJO VS CA ................................................................................................75
CUI VS CUI.......................................................................................................78
VALENCIA VS CABANTING ...............................................................................95
DIRECTOR OF LANDS VS ABABA .....................................................................101
CONJUGAL PART. OF SPS. CADAVEDO VS LACAYA..........................................109
PENA VS DELOS SANTOS................................................................................119
DAROY VS ABECIA .........................................................................................120
RAMOS VS NGASEO ......................................................................................126
GAN TIANGCO VS PABINGUIT ........................................................................129
MACARIOLA VS ASUNCION............................................................................133
AKANG VS MUNICIPALITY OF ISULAN ............................................................147

CONSENT
LABAGALA VS SANTIAGO
This petition for review on certiorari seeks to annul the decision dated
March 4, 1997,[1] of the Court of Appeals in CA-G.R. CV No. 32817, which
reversed and set aside the judgment dated October 17, 1990,[2] of the
Regional Trial Court of Manila, Branch 54, in Civil Case No. 87-41515,
finding herein petitioner to be the owner of 1/3 pro indiviso share in a
parcel of land.
The pertinent facts of the case, as borne by the records, are as follows:
Jose T. Santiago owned a parcel of land covered by TCT No. 64729,
located in Rizal Avenue Extension, Sta. Cruz, Manila. Alleging that Jose
had fraudulently registered it in his name alone, his sisters Nicolasa and
Amanda (now respondents herein), sued Jose for recovery of 2/3 share
of the property.[3] On April 20, 1981, the trial court in that case decided
in favor of the sisters, recognizing their right of ownership over portions
of the property covered by TCT No. 64729. The Register of Deeds of
Manila was required to include the names of Nicolasa and Amanda in the
certificate of title to said property.[4]
Jose died intestate on February 6, 1984. On August 5, 1987, respondents
filed a complaint for recovery of title, ownership, and possession against
herein petitioner, Ida C. Labagala, before the Regional Trial Court of
Manila, to recover from her the 1/3 portion of said property pertaining to
Jose but which came into petitioners sole possession upon Joses death.
Respondents alleged that Joses share in the property belongs to them by
operation of law, because they are the only legal heirs of their brother,
who died intestate and without issue. They claimed that the purported
sale of the property made by their brother to petitioner sometime in
March 1979[5] was executed through petitioners machinations and with
malicious intent, to enable her to secure the corresponding transfer
certificate of title (TCT No. 172334[6]) in petitioners name alone.[7]
Respondents insisted that the deed of sale was a forgery. The deed
showed that Jose affixed his thumbmark thereon but respondents averred
that, having been able to graduate from college, Jose never put his
thumbmark on documents he executed but always signed his name in
full. They claimed that Jose could not have sold the property belonging to
his poor and unschooled sisters who sacrificed for his studies and personal
welfare.[8] Respondents also pointed out that it is highly improbable for
petitioner to have paid the supposed consideration of P150,000 for the
sale of the subject property because petitioner was unemployed and
without any visible means of livelihood at the time of the alleged sale.
They also stressed that it was quite unusual and questionable that
petitioner registered the deed of sale only on January 26, 1987, or almost
eight years after the execution of the sale.[9]
On the other hand, petitioner claimed that her true name is not Ida C.
Labagala as claimed by respondent but Ida C. Santiago. She claimed not
to know any person by the name of Ida C. Labagala. She claimed to be
the daughter of Jose and thus entitled to his share in the subject property.
She maintained that she had always stayed on the property, ever since
she was a child. She argued that the purported sale of the property was
in fact a donation to her, and that nothing could have precluded Jose from
putting his thumbmark on the deed of sale instead of his signature. She
pointed out that during his lifetime, Jose never acknowledged
respondents claim over the property such that respondents had to sue to
claim portions thereof. She lamented that respondents had to disclaim
her in their desire to obtain ownership of the whole property.
Petitioner revealed that respondents had in 1985 filed two ejectment
cases against her and other occupants of the property. The first was
decided in her and the other defendants favor, while the second was
dismissed. Yet respondents persisted and resorted to the present action.

Petitioner recognized respondents ownership of 2/3 of the property as
decreed by the RTC. But she averred that she caused the issuance of a
title in her name alone, allegedly after respondents refused to take steps
that would prevent the property from being sold by public auction for their
failure to pay realty taxes thereon. She added that with a title issued in
her name she could avail of a realty tax amnesty.
On October 17, 1990, the trial court ruled in favor of petitioner, decreeing
thus:
constitutes a valid donation. Even if it were not, petitioner would still be
entitled to Joses 1/3 portion of the property as Joses daughter. The trial
court ruled that the following evidence shows petitioner to be the
daughter of Jose: (1) the decisions in the two ejectment cases filed by
respondents which stated that petitioner is Joses daughter, and (2) Joses
income tax return which listed petitioner as his daughter. It further said
that respondents knew of petitioners existence and her being the
daughter of Jose, per records of the earlier ejectment cases they filed
against petitioner. According to the court, respondents were not candid
with the court in refusing to recognize petitioner as Ida C. Santiago and
insisting that she was Ida C. Labagala, thus affecting their credibility.

Respondents appealed to the Court of Appeals, which reversed the

WHEREFORE, judgment is hereby rendered recognizing the plaintiffs decision of the trial court.
[herein respondents] as being entitled to the ownership and possession
each of one-third (1/3) pro indiviso share of the property originally
covered by Transfer Certificate of Title No. 64729, in the name of Jose T.
WHEREFORE, the appealed decision is REVERSED and one is entered
Santiago and presently covered by Transfer Certificate of Title No.
declaring the appellants Nicolasa and Amanda Santiago the co-owners in
172334, in the name of herein defendant [herein petitioner] and which is
equal shares of the one-third (1/3) pro indiviso share of the late Jose
located at No. 3075-A Rizal Avenue Extension, Sta. Cruz, Manila, as per
Santiago in the land and building covered by TCT No. 172334.
complaint, and the adjudication to plaintiffs per decision in Civil Case No.
Accordingly, the Register of Deeds of Manila is directed to cancel said title
56226 of this Court, Branch VI, and the remaining one-third (1/3) pro and issue in its place a new one reflecting this decision.
indiviso share adjudicated in said decision to defendant Jose T. Santiago
in said case, is hereby adjudged and adjudicated to herein defendant as
owner and entitled to possession of said share. The Court does not see fit
SO ORDERED.
to adjudge damages, attorneys fees and costs. Upon finality of this
judgment, Transfer Certificate of Title No. 172334 is ordered cancelled
and a new title issued in the names of the two (2) plaintiffs and the
defendant as owners in equal shares, and the Register of Deeds of Manila Apart from respondents testimonies, the appellate court noted that the
is so directed to effect the same upon payment of the proper fees by the birth certificate of Ida Labagala presented by respondents showed that
parties herein. Ida was born of different parents, not Jose and his wife. It also took into
account the statement made by Jose in Civil Case No. 56226 that he did
not have any child.
SO ORDERED.[10]

Hence, the present petition wherein the following issues are raised for
consideration:
According to the trial court, while there was indeed no consideration for
the deed of sale executed by Jose in favor of petitioner, said deed
1. Whether or not petitioner has adduced preponderant evidence to prove
that she is the daughter of the late Jose T. Santiago, and
2. Whether or not respondents could still impugn the filiation of the
petitioner as the daughter of the late Jose T. Santiago.
Petitioner contends that the trial court was correct in ruling that she had
adduced sufficient evidence to prove her filiation by Jose Santiago,
making her his sole heir and thus entitled to inherit his 1/3 portion. She
points out that respondents had, before the filing of the instant case,
previously considered[11] her as the daughter of Jose who, during his
lifetime, openly regarded her as his legitimate daughter. She asserts that
her identification as Joses daughter in his ITR outweighs the strange
answers he gave when he testified in Civil Case No. 56226.
Petitioner asserts further that respondents cannot impugn her filiation
collaterally, citing the case of Sayson v. Court of Appeals[12] in which we
held that (t)he legitimacy of (a) child can be impugned only in a direct
action brought for that purpose, by the proper parties and within the
period limited by law.[13] Petitioner also cites Article 263 of the Civil Code
in support of this contention.[14]
For their part, respondents contend that petitioner is not the daughter of
Jose, per her birth certificate that indicate her parents as Leo Labagala
and Cornelia Cabrigas, instead of Jose Santiago and Esperanza
Cabrigas.[15] They argue that the provisions of Article 263 of the Civil
Code do not apply to the present case since this is not an action
impugning a childs legitimacy but one for recovery of title, ownership,
and possession of property.
The issues for resolution in this case, to our mind, are (1) whether or not
respondents may impugn petitioners filiation in this action for recovery of
title and possession; and (2) whether or not petitioner is entitled to Joses
1/3 portion of the property he co-owned with respondents, through
succession, sale, or donation.
On the first issue, we find petitioners reliance on Article 263 of the Civil
Code to be misplaced. Said article provides:
Art. 263. The action to impugn the legitimacy of the child shall be brought
within one year from the recording of the birth in the Civil Register, if the
husband should be in the same place, or in a proper case, any of his heirs.
If he or his heirs are absent, the period shall be eighteen months if they
should reside in the Philippines; and two years if abroad. If the birth of
the child has been concealed, the term shall be counted from the
discovery of the fraud.
This article should be read in conjunction with the other articles in the
same chapter on paternity and filiation in the Civil Code. A careful reading
of said chapter would reveal that it contemplates situations where a doubt
exists that a child is indeed a mans child by his wife, and the husband
(or, in proper cases, his heirs) denies the childs filiation. It does not refer
to situations where a child is alleged not to be the child at all of a
particular couple.[16]
Article 263 refers to an action to impugn the legitimacy of a child, to
assert and prove that a person is not a mans child by his wife. However,
the present case is not one impugning petitioners legitimacy.
Respondents are asserting not merely that petitioner is not a legitimate
child of Jose, but that she is not a child of Jose at all.[17] Moreover, the
present action is one for recovery of title and possession, and thus outside
the scope of Article 263 on prescriptive periods.
Petitioners reliance on Sayson is likewise improper. The factual milieu
present in Sayson does not obtain in the instant case. What was being
challenged by petitioners in Sayson was (1) the validity of the adoption
of Delia and Edmundo by the deceased Teodoro and Isabel Sayson, and
(2) the legitimate status of Doribel Sayson. While asserting that Delia and
Edmundo could not have been validly adopted since Doribel had already
been born to the Sayson couple at the time, petitioners at the same time
made the conflicting claim that Doribel was not the child of the couple.
The Court ruled in that case that it was too late to question the decree of
adoption that became final years before. Besides, such a challenge to the
validity of the adoption cannot be made collaterally but in a direct
proceeding.[18]
In this case, respondents are not assailing petitioners legitimate status
but are, instead, asserting that she is not at all their brothers child. The
birth certificate presented by respondents support this allegation.
We agree with the Court of Appeals that::
The Certificate of Record of Birth (Exhibit H)[19] plainly states that Ida
was the child of the spouses Leon Labagala and [Cornelia] Cabrigas. This
document states that it was Leon Labagala who made the report to the
Local Civil Registrar and therefore the supplier of the entries in said
Certificate. Therefore, this certificate is proof of the filiation of Ida.
Appellee however denies that Exhibit H is her Birth Certificate. She insists
that she is not Ida Labagala but Ida Santiago. If Exhibit H is not her birth
certificate, then where is hers? She did not present any though it would
have been the easiest thing to do considering that according to her
baptismal certificate she was born in Manila in 1969. This court rejects
such denials and holds that Exhibit H is the certificate of the record of
birth of appellee Ida
Against such evidence, the appellee Ida could only present her testimony
and a baptismal certificate (Exhibit 12) stating that appellees parents
were Jose Santiago and Esperanza Cabrigas. But then, a decisional rule
in evidence states that a baptismal certificate is not a proof of the
parentage of the baptized person. This document can only prove the
identity of the baptized, the date and place of her baptism, the identities
of the baptismal sponsors and the priest who administered the sacrament
-- nothing more.[20] (Citations omitted.)
At the pre-trial conducted on August 11, 1988, petitioners counsel
admitted that petitioner did not have a birth certificate indicating that she
is Ida Santiago, though she had been using this name all her life.[21]
Petitioner opted not to present her birth certificate to prove her
relationship with Jose and instead offered in evidence her baptismal
certificate.[22] However, as we held in Heirs of Pedro Cabais v. Court of
Appeals:
a baptismal certificate is evidence only to prove the administration of the
sacrament on the dates therein specified, but not the veracity of the
declarations therein stated with respect to [a persons] kinsfolk. The same
is conclusive only of the baptism administered, according to the rites of
the Catholic Church, by the priest who baptized subject child, but it does
not prove the veracity of the declarations and statements contained in
the certificate concerning the relationship of the person baptized.[23]
A baptismal certificate, a private document, is not conclusive proof of
filiation.[24] More so are the entries made in an income tax return, which
only shows that income tax has been paid and the amount thereof.[25]
We note that the trial court had asked petitioner to secure a copy of her
birth certificate but petitioner, without advancing any reason therefor,
failed to do so. Neither did petitioner obtain a certification that no record
of her birth could be found in the civil registry, if such were the case. We
find petitioners silence concerning the absence of her birth certificate
telling. It raises doubt as to the existence of a birth certificate that would
show petitioner to be the daughter of Jose Santiago and Esperanza
Cabrigas. Her failure to show her birth certificate would raise the
presumption that if such evidence were presented, it would be adverse to
her claim. Petitioners counsel argued that petitioner had been using
Santiago all her life. However, use of a family name certainly does not
establish pedigree.
Further, we note that petitioner, who claims to be Ida Santiago, has the
same birthdate as Ida Labagala.[26] The similarity is too uncanny to be
a mere coincidence.
During her testimony before the trial court, petitioner denied knowing
Cornelia Cabrigas, who was listed as the mother in the birth certificate of
Ida Labagala. In her petition before this Court, however, she stated that
Cornelia is the sister of her mother, Esperanza. It appears that petitioner
made conflicting statements that affect her credibility and could cast a
long shadow of doubt on her claims of filiation.
Thus, we are constrained to agree with the factual finding of the Court of
Appeals that petitioner is in reality the child of Leon Labagala and Cornelia
Cabrigas, and contrary to her averment, not of Jose Santiago and
Esperanza Cabrigas. Not being a child of Jose, it follows that petitioner
can not inherit from him through intestate succession. It now remains to
be seen whether the property in dispute was validly transferred to
petitioner through sale or donation.
On the validity of the purported deed of sale, however, we agree with the
Court of Appeals that:
This deed is shot through and through with so many intrinsic defects that
a reasonable mind is inevitably led to the conclusion that it is fake. The
intrinsic defects are extractable from the following questions: a) If Jose
Santiago intended to donate the properties in question to Ida, what was
the big idea of hiding the nature of the contract in the faade of the sale?
b) If the deed is a genuine document, how could it have happened that
Jose Santiago who was of course fully aware that he owned only 1/3 pro
indiviso of the properties covered by his title sold or donated the whole
properties to Ida? c) Why in heavens name did Jose Santiago, a college
graduate, who always signed his name in documents requiring his
signature (citation omitted) [affix] his thumbmark on this deed of sale?
d) If Ida was [the] child of Jose Santiago, what was the sense of the latter
donating his properties to her when she would inherit them anyway upon
his death? e) Why did Jose Santiago affix his thumbmark to a deed which
falsely stated that: he was single (for he was earlier married to Esperanza
Cabrigas); Ida was of legal age (for [s]he was then just 15 years old);
and the subject properties were free from liens and encumbrances (for
Entry No. 27261, Notice of Adverse Claim and Entry No. 6388, Notice of
Lis Pendens were already annotated in the title of said properties). If the
deed was executed in 1979, how come it surfaced only in 1984 after the
death of Jose Santiago and of all people, the one in possession was the
baptismal sponsor of Ida?[27]
Clearly, there is no valid sale in this case. Jose did not have the right to
transfer ownership of the entire property to petitioner since 2/3 thereof
belonged to his sisters.[28] Petitioner could not have given her consent
to the contract, being a minor at the time.[29] Consent of the contracting
parties is among the essential requisites of a contract,[30] including one
of sale, absent which there can be no valid contract. Moreover, petitioner
admittedly did not pay any centavo for the property,[31] which makes
the sale void. Article 1471 of the Civil Code provides:
Art. 1471. If the price is simulated, the sale is void, but the act may be
shown to have been in reality a donation, or some other act or contract.
Neither may the purported deed of sale be a valid deed of donation. Again,
as explained by the Court of Appeals:
Even assuming that the deed is genuine, it cannot be a valid donation. It
lacks the acceptance of the donee required by Art. 725 of the Civil Code.
Being a minor in 1979, the acceptance of the donation should have been
made by her father, Leon Labagala or [her] mother Cornelia Cabrigas or
her legal representative pursuant to Art. 741 of the same Code. No one
of those mentioned in the law - in fact no one at all - accepted the
donation for Ida.[32]

In sum, we find no reversible error attributable to the assailed decision of

the Court of Appeals, hence it must be upheld.

WHEREFORE, the petition is DENIED, and the decision of the Court of

Appeals in CA-G.R. CV No. 32817 is AFFIRMED.

Costs against petitioner.

SO ORDERED.
FRANCISCO VS HERRERA
This is a petition for review on certiorari of the decision[1] of the Court of
Appeals, dated August 30, 1999, in CA-G.R. CV No. 47869, which affirmed
in toto the judgment[2] of the Regional Trial Court (RTC) of Antipolo City,
Branch 73, in Civil Case No. 92-2267. The appellate court sustained the
trial courts ruling which: (a) declared null and void the deeds of sale of
the properties covered by Tax Declaration Nos. 01-00495 and 01-00497;
and (b) directed petitioner to return the subject properties to respondent
who, in turn, must refund to petitioner the purchase price of P1,750,000.
The facts, as found by the trial court and affirmed by the Court of Appeals,
are as follows:
Eligio Herrera, Sr., the father of respondent, was the owner of two parcels
of land, one consisting of 500 sq. m. and another consisting of 451 sq.
m., covered by Tax Declaration (TD) Nos. 01-00495 and 01-00497,
respectively. Both were located at Barangay San Andres, Cainta, Rizal.[3]
On January 3, 1991, petitioner bought from said landowner the first
parcel, covered by TD No. 01-00495, for the price of P1,000,000, paid in
installments from November 30, 1990 to August 10, 1991.
On March 12, 1991, petitioner bought the second parcel covered by TD
No. 01-00497, for P750,000.
Contending that the contract price for the two parcels of land was grossly
inadequate, the children of Eligio, Sr., namely, Josefina Cavestany, Eligio
Herrera, Jr., and respondent Pastor Herrera, tried to negotiate with
petitioner to increase the purchase price. When petitioner refused, herein
respondent then filed a complaint for annulment of sale, with the RTC of
Antipolo City, docketed as Civil Case No. 92-2267. In his complaint,
respondent claimed ownership over the second parcel, which is the lot
covered by TD No. 01-00497, allegedly by virtue of a sale in his favor
since 1973. He likewise claimed that the first parcel, the lot covered by
TD No. 01-00495, was subject to the co-ownership of the surviving heirs
of Francisca A. Herrera, the wife of Eligio, Sr., considering that she died
intestate on April 2, 1990, before the alleged sale to petitioner. Finally,
respondent also alleged that the sale of the two lots was null and void on
the ground that at the time of sale, Eligio, Sr. was already incapacitated
to give consent to a contract because he was already afflicted with senile
dementia, characterized by deteriorating mental and physical condition
including loss of memory.
In his answer, petitioner as defendant below alleged that respondent was
estopped from assailing the sale of the lots. Petitioner contended that
respondent had effectively ratified both contracts of sales, by receiving
the consideration offered in each transaction.
On November 14, 1994, the Regional Trial Court handed down its
decision, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, this court hereby orders that:
1. The deeds of sale of the properties covered by Tax Dec. Nos. 01-00495
and 01-00497 are declared null and void;
2. The defendant is to return the lots in question including all
improvements thereon to the plaintiff and the plaintiff is ordered to
simultaneously return to the defendant the purchase price of the lots sold
totalling to P750,000.00 for lot covered by TD 01-00497 and
P1,000,000.00 covered by TD 01-00495;
3. The court also orders the defendant to pay the cost of the suit.
4. The counter-claim of the defendant is denied for lack of merit.
SO ORDERED.[4]
Petitioner then elevated the matter to the Court of Appeals in CA-G.R. CV
No. 47869. On August 30, 1999, however, the appellate court affirmed
the decision of the Regional Trial Court, thus:
WHEREFORE, premises considered, the decision appealed from is hereby
AFFIRMED in toto. Costs against defendant-appellant.
SO ORDERED.[5]
Hence, this petition for review anchored on the following grounds:
I. THE COURT OF APPEALS COMPLETELY IGNORED THE BASIC
DIFFERENCE BETWEEN A VOID AND A MERELY VOIDABLE CONTRACT
THUS MISSING THE ESSENTIAL SIGNIFICANCE OF THE ESTABLISHED
FACT OF RATIFICATION BY THE RESPONDENT WHICH EXTINGUISHED
WHATEVER BASIS RESPONDENT MAY HAVE HAD IN HAVING THE
CONTRACT AT BENCH ANNULLED.
II. THE DECISION OF THE COURT OF APPEALS ON SENILE DEMENTIA:
A. DISREGARDED THE FACTUAL BACKGROUND OF THE CASE;
B. WAS CONTRARY TO ESTABLISHED JURISPRUDENCE; AND
C. WAS PURELY CONJECTURAL, THE CONJECTURE BEING ERRONEOUS.
III. THE COURT OF APPEALS WAS IN GROSS ERROR AND IN FACT
VIOLATED PETITIONERS RIGHT TO DUE PROCESS WHEN IT RULED THAT
THE CONSIDERATION FOR THE QUESTIONED CONTRACTS WAS
GROSSLY INADEQUATE.[6]
The resolution of this case hinges on one pivotal issue: Are the assailed
contracts of sale void or merely voidable and hence capable of being
ratified?
Petitioner contends that the Court of Appeals erred when it ignored the
basic distinction between void and voidable contracts. He argues that the
contracts of sale in the instant case, following Article 1390[7] of the Civil
Code are merely voidable and not void ab initio. Hence, said contracts
can be ratified. Petitioner argues that while it is true that a demented
person cannot give consent to a contract pursuant to Article 1327,[8]
nonetheless the dementia affecting one of the parties will not make the
contract void per se but merely voidable. Hence, when respondent
accepted the purchase price on behalf of his father who was allegedly
suffering from senile dementia, respondent effectively ratified the
contracts. The ratified contracts then become valid and enforceable as
between the parties.
Respondent counters that his act of receiving the purchase price does not
imply ratification on his part. He only received the installment payments
on his senile fathers behalf, since the latter could no longer account for
the previous payments. His act was thus meant merely as a safety
measure to prevent the money from going into the wrong hands.
Respondent also maintains that the sales of the two properties were null
and void. First, with respect to the lot covered by TD No. 01-00497, Eligio,
Sr. could no longer sell the same because it had been previously sold to
respondent in 1973. As to lot covered by TD No. 01-00495, respondent
contends that it is co-owned by Eligio, Sr. and his children, as heirs of
Eligios wife. As such, Eligio, Sr. could not sell said lot without the consent
of his co-owners.
We note that both the trial court and the Court of Appeals found that
Eligio, Sr. was already suffering from senile dementia at the time he sold
the lots in question. In other words, he was already mentally
incapacitated when he entered into the contracts of sale. Settled is the
rule that findings of fact of the trial court, when affirmed by the appellate
court, are binding and conclusive upon the Supreme Court.[9]
Coming now to the pivotal issue in this controversy. A void or inexistent
contract is one which has no force and effect from the very beginning.
Hence, it is as if it has never been entered into and cannot be validated
either by the passage of time or by ratification. There are two types of
void contracts: (1) those where one of the essential requisites of a valid
contract as provided for by Article 1318[10] of the Civil Code is totally
wanting; and (2) those declared to be so under Article 1409[11] of the
Civil Code. By contrast, a voidable or annullable contract is one in which
the essential requisites for validity under Article 1318 are present, but
vitiated by want of capacity, error, violence, intimidation, undue
influence, or deceit.
Article 1318 of the Civil Code states that no contract exists unless there
is a concurrence of consent of the parties, object certain as subject
matter, and cause of the obligation established. Article 1327 provides that
insane or demented persons cannot give consent to a contract. But, if an
insane or demented person does enter into a contract, the legal effect is
that the contract is voidable or annullable as specifically provided in
Article 1390.[12]
In the present case, it was established that the vendor Eligio, Sr. entered
into an agreement with petitioner, but that the formers capacity to
consent was vitiated by senile dementia. Hence, we must rule that the
assailed contracts are not void or inexistent per se; rather, these are
contracts that are valid and binding unless annulled through a proper
action filed in court seasonably.
An annullable contract may be rendered perfectly valid by ratification,
which can be express or implied. Implied ratification may take the form
of accepting and retaining the benefits of a contract.[13] This is what
happened in this case. Respondents contention that he merely received
payments on behalf of his father merely to avoid their misuse and that
he did not intend to concur with the contracts is unconvincing. If he was
not agreeable with the contracts, he could have prevented petitioner from
delivering the payments, or if this was impossible, he could have
immediately instituted the action for reconveyance and have the
payments consigned with the court. None of these happened. As found
by the trial court and the Court of Appeals, upon learning of the sale,
respondent negotiated for the increase of the purchase price while
receiving the installment payments. It was only when respondent failed
to convince petitioner to increase the price that the former instituted the
complaint for reconveyance of the properties. Clearly, respondent was
agreeable to the contracts, only he wanted to get more. Further, there is
no showing that respondent returned the payments or made an offer to
do so. This bolsters the view that indeed there was ratification. One
cannot negotiate for an increase in the price in one breath and in the
same breath contend that the contract of sale is void.
Nor can we find for respondents argument that the contracts were void
as Eligio, Sr., could not sell the lots in question as one of the properties
had already been sold to him, while the other was the subject of a co-
ownership among the heirs of the deceased wife of Eligio, Sr. Note that it
was found by both the trial court and the Court of Appeals that Eligio, Sr.,
was the declared owner of said lots. This finding is conclusive on us. As
declared owner of said parcels of land, it follows that Eligio, Sr., had the
right to transfer the ownership thereof under the principle of jus
disponendi.
In sum, the appellate court erred in sustaining the judgment of the trial
court that the deeds of sale of the two lots in question were null and void.
WHEREFORE, the instant petition is GRANTED. The decision dated August
30, 1999 of the Court of Appeals in CA-G.R. CV No. 47869, affirming the
decision of the Regional Trial Court in Civil Case No. 92-2267 is
REVERSED. The two contracts of sale covering lots under TD No. 01-
00495 and No. 01-00497 are hereby declared VALID. Costs against
respondent.

SO ORDERED.
PARAGAS VS HEIRS OF DOMINADOR BALACANO
This petition for review seeks to annul the Decision[1] dated 15 February
2005 of the Court of Appeals in CA-G.R. CV No. 64048, affirming with
modification the 8 March 1999 Decision[2] of the Regional Trial Court
(RTC), Branch 21, of Santiago City, Isabela, in Civil Case No. 21-2313.
The petition likewise seeks to annul the Resolution[3] dated 17 May 2005
denying petitioners motion for reconsideration.
The factual antecedents were synthesized by the Court of Appeals in its
decision.
Gregorio Balacano, married to Lorenza Sumigcay, was the registered
owner of Lot 1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located
at Baluarte, Santiago City, Isabela] covered by TCT No. T-103297 and
TCT No. T-103298 of the Registry of Deeds of the Province of Isabela.
Gregorio and Lorenza had three children, namely: Domingo, Catalino and
Alfredo, all surnamed Balacano. Lorenza died on December 11, 1991.
Gregorio, on the other hand, died on July 28, 1996.
Prior to his death, Gregorio was admitted at the Veterans General Hospital
in Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until
July 19, 1996. He was transferred in the afternoon of July 19, 1996 to the
Veterans Memorial Hospital in Quezon City where he was confined until
his death.
Gregorio purportedly sold on July 22, 1996, or barely a week prior to his
death, a portion of Lot 1175-E (specifically consisting of 15,925 square
meters from its total area of 22,341 square meters) and the whole Lot
1175-F to the Spouses Rudy (Rudy) and Corazon Paragas (collectively,
the Spouses Paragas) for the total consideration of P500,000.00. This sale
appeared in a deed of absolute sale notarized by Atty. Alexander V. de
Guzman, Notary Public for Santiago City, on the same date July 22, 1996
and witnessed by Antonio Agcaoili (Antonio) and Julia Garabiles (Julia).
Gregorios certificates of title over Lots 1175-E and 1175-F were
consequently cancelled and new certificates of title were issued in favor
of the Spouses Paragas.
The Spouses Paragas then sold on October 17, 1996 a portion of Lot
1175-E consisting of 6,416 square meters to Catalino for the total
consideration of P60,000.00.
Domingos children (Dominic, Rodolfo, Nanette and Cyric, all surnamed
Balacano;) filed on October 22, 1996 a complaint for annulment of sale
and partition against Catalino and the Spouses Paragas. They essentially
alleged in asking for the nullification of the deed of sale that: (1) their
grandfather Gregorio could not have appeared before the notary public
on July 22, 1996 at Santiago City because he was then confined at the
Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged
execution of the deed of sale, Gregorio was seriously ill, in fact dying at
that time, which vitiated his consent to the disposal of the property; and
(3) Catalino manipulated the execution of the deed and prevailed upon
the dying Gregorio to sign his name on a paper the contents of which he
never understood because of his serious condition. Alternatively, they
alleged that assuming Gregorio was of sound and disposing mind, he
could only transfer a half portion of Lots 1175-E and 1175-F as the other
half belongs to their grandmother Lorenza who predeceased Gregorio
they claimed that Lots 1175-E and 1175-F form part of the conjugal
partnership properties of Gregorio and Lorenza. Finally, they alleged that
the sale to the Spouses Paragas covers only a 5-hectare portion of Lots
1175-E and 1175-F leaving a portion of 6,416 square meters that Catalino
is threatening to dispose. They asked for the nullification of the deed of
sale executed by Gregorio and the partition of Lots 1175-E and 1175-F.
They likewise asked for damages.
Instead of filing their Answer, the defendants Catalino and the Spouses
Paragas moved to dismiss the complaint on the following grounds: (1)
the plaintiffs have no legal capacity - the Domingos children cannot file
the case because Domingo is still alive, although he has been absent for
a long time; (2) an indispensable party is not impleaded that Gregorios
other son, Alfredo was not made a party to the suit; and (3) the complaint
states no cause of action that Domingos children failed to allege a ground
for the annulment of the deed of sale; they did not cite any mistake,
violence, intimidation, undue influence or fraud, but merely alleged that
Gregorio was seriously ill. Domingos children opposed this motion.
The lower court denied the motion to dismiss, but directed the plaintiffs-
appellees to amend the complaint to include Alfredo as a party. Alfredo
was subsequently declared as in default for his failure to file his Answer
to the Complaint.
The defendants-appellees filed their Answer with Counterclaim on May 7,
1997, denying the material allegations of the complaint. Additionally, they
claimed that: (1) the deed of sale was actually executed by Gregorio on
July 19 (or 18), 1996 and not July 22, 1996; (2) the Notary Public
personally went to the Hospital in Bayombong, Nueva Vizcaya on July 18,
1996 to notarize the deed of sale already subject of a previously
concluded covenant between Gregorio and the Spouses Paragas; (3) at
the time Gregorio signed the deed, he was strong and of sound and
disposing mind; (4) Lots 1175-E and 1175-F were Gregorios separate
capital and the inscription of Lorenzas name in the titles was just a
description of Gregorios marital status; (5) the entire area of Lots 1175-
E and 1175-F were sold to the Spouses Paragas. They interposed a
counterclaim for damages.
At the trial, the parties proceeded to prove their respective contentions.
Plaintiff-appellant Nanette Balacano testified to prove the material
allegations of their complaint. On Gregorios medical condition, she
declared that: (1) Gregorio, who was then 81 years old, weak and sick,
was brought to the hospital in Bayombong, Nueva Vizcaya on June 28,
1996 and stayed there until the afternoon on July 19, 1996; (2)
thereafter, Gregorio, who by then was weak and could no longer talk and
whose condition had worsened, was transferred in the afternoon of July
19, 1996 to the Veterans Memorial Hospital in Quezon City where
Gregorio died. She claimed that Gregorio could not have signed a deed of
sale on July 19, 1996 because she stayed at the hospital the whole of that
day and saw no visitors. She likewise testified on their agreement for
attorneys fees with their counsel and the litigation expenses they
incurred.
Additionally, the plaintiffs-appellees presented in evidence Gregorios
medical records and his death certificate.
Defendants-appellees, on the other hand, presented as witnesses Notary
Public de Guzman and instrumental witness Antonio to prove Gregorios
execution of the sale and the circumstances under the deed was
executed. They uniformly declared that: (1) on July 18, 1996, they went
to the hospital in Bayombong, Nueva Vizcaya where Gregorio was
confined with Rudy; (2) Atty. De Guzman read and explained the contents
of the deed to Gregorio; (3) Gregorio signed the deed after receiving the
money from Rudy; (4) Julia and Antonio signed the deed as witnesses.
Additionally, Atty. De Guzman explained that the execution of the deed
was merely a confirmation of a previous agreement between the Spouses
Paragas and Gregorio that was concluded at least a month prior to
Gregorios death; that, in fact, Gregorio had previously asked him to
prepare a deed that Gregorio eventually signed on July 18, 1996. He also
explained that the deed, which appeared to have been executed on July
22, 1996, was actually executed on July 18, 1996; he notarized the deed
and entered it in his register only on July 22, 1996. He claimed that he
did not find it necessary to state the precise date and place of execution
(Bayombong, Nueva Vizcaya, instead of Santiago City) of the deed of sale
because the deed is merely a confirmation of a previously agreed contract
between Gregorio and the Spouses Paragas. He likewise stated that of
the stated P500,000.00 consideration in the deed, Rudy paid Gregorio
P450,000.00 in the hospital because Rudy had previously paid Gregorio
P50,000.00. For his part, Antonio added that he was asked by Rudy to
take pictures of Gregorio signing the deed. He also claimed that there was
no entry on the date when he signed; nor did he remember reading
Santiago City as the place of execution of the deed. He described Gregorio
as still strong but sickly, who got up from the bed with Julias help.
 The lower court found the explanations of Atty. De Guzman regarding the
erroneous entries on the actual place and date of execution of the deed
Witness for defendants-appellants Luisa Agsalda testified to prove that
of sale as justifications for a lie. The lower court said
Lot 1175-E was Gregorios separate property. She claimed that Gregorios
father (Leon) purchased a two-hectare lot from them in 1972 while the
other lot was purchased from her neighbor. She also declared that
The Court cannot imagine an attorney to undertake to travel to another
Gregorio inherited these lands from his father Leon; she does not know,
province to notarize a document when he must certainly know, being a
however, Gregorios brothers share in the inheritance. Defendant-
lawyer and by all means, not stupid, that he has no authority to notarize
appellant Catalino also testified to corroborate the testimony of witness
a document in that province. The only logical thing that happened was
Luisa Agsalda; he said that Gregorio told him that he (Gregorio) inherited
Lots 1175-E and 1175-F from his father Leon. He also stated that a that Rudy Paragas brought the deed of sale to him on July 22, 1996
already signed and requested him to notarize the same which he did, not
portion of Lot 1175-E consisting of 6,416 square meters was sold to him
by the Spouses Paragas and that he will pay the Spouses Paragas knowing that at that time the vendor was already in a hospital and [sic]
Quezon City. Of course had he known, Atty. De Guzman would not have
P50,000.00, not as consideration for the return of the land but for the
notarized the document. But he trusted Rudy Paragas and moreover,
transfer of the title to his name.
Gregorio Balacano already informed him previously in June that he will
sell his lands to Paragas. In addition [sic, (,) was omitted] Rudy Paragas
also told him that Balacano received an advance of P50,000.00.
Additionally, the defendants-appellants presented in evidence the
pictures taken by Antonio when Gregorio allegedly signed the deed.[4]

The intention to sell is not actual selling. From the first week of June
when, according to Atty. De Guzman, Gregorio Balacano informed him
The lower court, after trial, rendered the decision declaring null and void
that he will sell his land to Rudy Paragas, enough time elapsed to the time
the deed of sale purportedly executed by Gregorio Balacano in favor of he was brought to the hospital on June 28, 1996. Had there been a
the spouses Rudy Paragas and Corazon Paragas. In nullifying the deed of
meeting of the minds between Gregorio Balacano and Rudy Paragas
sale executed by Gregorio, the lower court initially noted that at the time
regarding the sale, surely Gregorio Balacano would have immediately
Gregorio executed the deed, Gregorio was ill. The lower courts reasoning
returned to the office of Atty. De Guzman to execute the deed of sale. He
in declaring the deed of sale null and void and this reasonings premises
did not until he was brought to the hospital and diagnosed to have liver
may be summarized as follows: (1) the deed of sale was improperly
cirrhosis. Because of the seriousness of his illness, it is not expected that
notarized; thus it cannot be considered a public document that is usually Gregorio Balacano would be negotiating a contract of sale. Thus, Rudy
accorded the presumption of regularity; (2) as a private document, the
Paragas negotiated with Catalino Balacano, the son of Gregorio Balacano
deed of sales due execution must be proved in accordance with Section
with whom the latter was staying.[6]
20, Rule 132 of the Revised Rules on Evidence either: (a) by anyone who
saw the document executed or written; or (b) by evidence of the
genuineness of the signature or handwriting of the maker; and (3) it was
The lower court also did not consider Antonio Agcaoili, petitioner Rudy
incumbent upon the Spouses Paragas to prove the deed of sales due
Paragass driver, a convincing witness, concluding that he was telling a
execution but failed to do so the lower court said that witness Antonio
Agcaoili is not credible while Atty. Alexander De Guzman is not reliable.[5] rehearsed story. The lower court said
The only portion of his testimony that is true is that he signed the
document. How could the Court believe that he brought a camera with
WHEREFORE in the light of the foregoing considerations judgment is
him just to take pictures of the signing? If the purpose was to record the
hereby rendered:
proceeding for posterity, why did he not take the picture of Atty. De
Guzman when the latter was reading and explaining the document to
Gregorio Balacano? Why did he not take the picture of both Gregorio
Balacano and Atty. de Guzman while the old man was signing the 1. DECLARING as NULL and VOID the deed of sale purportedly executed
document instead of taking a picture of Gregorio Balacano alone holding by Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon
a ball pen without even showing the document being signed? Verily there Paragas over lots 1175-E and 1175-F covered by TCT Nos. T-103297 and
is a picture of a document but only a hand with a ball pen is shown with T-103298, respectively;
it. Why? Clearly the driver Antonio Agcaoili must have only been asked
by Rudy Paragas to tell a concocted story which he himself would not dare
tell in Court under oath.[7] 2. ORDERING the cancellation of TCT Nos. T-258042 and T-258041 issued
in the name of the spouses Rudy and Corazon Paragas by virtue of the
deed of sale; and
The lower court likewise noted that petitioner Rudy Paragas did not testify
about the signing of the deed of sale. To the lower court, Rudys refusal
or failure to testify raises a lot of questions, such as: (1) was he (Rudy) DECLARING the parcel of lands, lots 1175-E and 1175-F as part of the
afraid to divulge the circumstances of how he obtained the signature of estate of the deceased spouses Gregorio Balacano and Lorenza
Gregorio Balacano, and (2) was he (Rudy) afraid to admit that he did not Balacano.[11]
actually pay the P500,000.00 indicated in the deed of sale as the price of
the land?[8]
In the assailed Decision dated 15 February 2005, the Court of Appeals
affirmed the Decision of the trial court, with the modification that Lots
The lower court also ruled that Lots 1175-E and 1175-F were Gregorios 1175-E and 1175-F were adjudged as belonging to the estate of Gregorio
and Lorenzas conjugal partnership properties. The lower court found that Balacano. The appellate court disposed as follows:
these lots were acquired during the marriage because the certificates of
title of these lots clearly stated that the lots are registered in the name
Gregorio, married to Lorenza Sumigcay. Thus, the lower court concluded WHEREFORE, premises considered, the appeal is hereby DISMISSED. We
that the presumption of law (under Article 160 of the Civil Code of the AFFIRM the appealed Decision for the reasons discussed above, with the
Philippines) that property acquired during the marriage is presumed to MODIFICATION that Lots 1175-E and 1175-F belong to the estate of
belong to the conjugal partnership fully applies to Lots 1175-E and 1175- Gregorio Balacano.
F.[9]

Let a copy of this Decision be furnished the Office of the Bar Confidant for
Thus, on 8 March 1999, the RTC, Branch 21, of Santiago City, Isabela, whatever action her Office may take against Atty. De Guzman.[12]
rendered a Decision[10] in Civil Case No. 21-2313, the dispositive portion (Emphasis in the original.)
of which reads as follows:
Herein petitioners motion for reconsideration was met with similar lack of
success when it was denied for lack of merit by the Court of Appeals in
its Resolution[13] dated 17 May 2005.
Hence, this appeal via a petition for review where petitioners assign the
following errors to the Court of Appeals, viz:
A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN FINDING THAT THERE WAS NO
PERFECTED AND PARTIALLY EXECUTED CONTRACT OF SALE OVER LOTS
1175-E AND 1175-F PRIOR TO THE SIGNING OF THE DEED OF SALE.
B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY FAILED TO APPRECIATE THE SIGNIFICANCE OF
THE JUDICIAL ADMISSION ON THE AUTHENTICITY AND DUE EXECUTION
OF THE DEED OF SALE MADE BY THE RESPONDENTS DURING THE PRE-
TRIAL CONFERENCE.
C. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, BASED ITS CONCLUSION THAT GREGORIOS CONSENT TO
THE SALE OF THE LOTS WAS ABSENT MERELY ON SPECULATIONS AND
SURMISES.
D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF
RESPONDENTS LACK OF LEGAL CAPACITY TO SUE FOR NOT BEING THE
PROPER PARTIES IN INTEREST.
E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF
DISCRETION, SERIOUSLY ERRED IN DISMISSING ATTY. ALEXANDER DE
GUZMAN AND ANTONIO AGCAOILI AS NOT CREDIBLE WITNESSES.[14]
At bottom is the issue of whether or not the Court of Appeals committed
reversible error in upholding the findings and conclusions of the trial court
on the nullity of the Deed of Sale purportedly executed between
petitioners and the late Gregorio Balacano.
To start, we held in Blanco v. Quasha[15] that this Court is not a trier of
facts. As such, it is not its function to examine and determine the weight
of the evidence supporting the assailed decision. Factual findings of the
Court of Appeals, which are supported by substantial evidence, are
binding, final and conclusive upon the Supreme Court,[16] and carry even
more weight when the said court affirms the factual findings of the trial
court. Moreover, well- entrenched is the prevailing jurisprudence that
only errors of law and not of facts are reviewable by this Court in a petition
for review on certiorari under Rule 45 of the Revised Rules of Court.
The foregoing tenets in the case at bar apply with greater force to the
petition under consideration because the factual findings by the Court of
Appeals are in full agreement with that of the trial court.
Specifically, the Court of Appeals, in affirming the trial court, found that
there was no prior and perfected contract of sale that remained to be fully
consummated. The appellate court explained -
In support of their position, the defendants-appellants argue that at least
a month prior to Gregorios signing of the deed, Gregorio and the Spouses
Paragas already agreed on the sale of Lots 1175-E and 1175-F; and that,
in fact, this agreement was partially executed by Rudys payment to
Gregorio of P50,000.00 before Gregorio signed the deed at the hospital.
In line with this position, defendants-appellants posit that Gregorios
consent to the sale should be determined, not at the time Gregorio signed
the deed of sale on July 18, 1996, but at the time when he agreed to sell
the property in June 1996 or a month prior to the deeds signing; and in
June 1996, Gregorio was of sound and disposing mind and his consent to
the sale was in no wise vitiated at that time. The defendants-appellants
further argue that the execution or signing of the deed of sale, however,
irregular it might have been, does not affect the validity of the previously
agreed sale of the lots, as the execution or signing of the deed is merely
a formalization of a previously agreed oral contract.
...
In the absence of any note, memorandum or any other written instrument
evidencing the alleged perfected contract of sale, we have to rely on oral
testimonies, which in this case is that of Atty. de Guzman whose
testimony on the alleged oral agreement may be summarized as follows:
(1) that sometime in the first week of June 1996, Gregorio requested him
(Atty. de Guzman) to prepare a deed of sale of two lots; (2) Gregorio
came to his firms office in the morning with a certain Doming Balacano,
then returned in the afternoon with Rudy; (3) he (Atty. de Guzman) asked
Gregorio whether he really intends to sell the lots; Gregorio confirmed his
intention; (4) Gregorio and Rudy left the law office at 5:00 p.m., leaving
the certificates of title; (5) he prepared the deed a day after Rudy and
Gregorio came. With regard to the alleged partial execution of this
agreement, Atty. de Guzman said that he was told by Rudy that there
was already a partial payment of P50,000.00.
We seriously doubt too the credibility of Atty. de Guzman as a witness.
We cannot rely on his testimony because of his tendency to commit
falsity. He admitted in open court that while Gregorio signed the deed on
July 18, 1996 at Bayombong, Nueva Vizcaya, he nevertheless did not
reflect these matters when he notarized the deed; instead he entered
Santiago City and July 22, 1996, as place and date of execution,
respectively. To us, Atty. de Guzmans propensity to distort facts in the
performance of his public functions as a notary public, in utter disregard
of the significance of the act of notarization, seriously affects his
credibility as a witness in the present case. In fact, Atty. de Guzmans act
in falsifying the entries in his acknowledgment of the deed of sale could
be the subject of administrative and disciplinary action, a matter that we
however do not here decide.
Similarly, there is no conclusive proof of the partial execution of the
contract because the only evidence the plaintiffs-appellants presented to
prove this claim was Atty. de Guzmans testimony, which is hearsay and
thus, has no probative value. Atty. de Guzman merely stated that Rudy
told him that Rudy already gave P50,000.00 to Gregorio as partial
payment of the purchase price; Atty. de Guzman did not personally see
the payment being made.[17]

We do not consider Atty. de Guzmans testimony sufficient evidence to

establish the fact that there was a prior agreement between Gregorio and
But, did Gregorio give an intelligent consent to the sale of Lots 1175-E
the Spouses Paragas on the sale of Lots 1175-E and 1175-F. This and 1175-F when he signed the deed of sale? The trial court as well as
testimony does not conclusively establish the meeting of the minds
the appellate court found in the negative. In the Court of Appeals
between Gregorio and the Spouses Paragas on the price or consideration
rationale-
for the sale of Lots 1175-E and 1175-F Atty. de Guzman merely declared
that he was asked by Gregorio to prepare a deed; he did not clearly
narrate the details of this agreement. We cannot assume that Gregorio
It is not disputed that when Gregorio signed the deed of sale, Gregorio
and the Spouses Paragas agreed to a P500,000.00 consideration based
was seriously ill, as he in fact died a week after the deeds signing.
on Atty. de Guzmans bare assertion that Gregorio asked him to prepare
Gregorio died of complications caused by cirrhosis of the liver. Gregorios
a deed, as Atty. de Guzman was not personally aware of the agreed
death was neither sudden nor immediate; he fought at least a month-
consideration in the sale of the lots, not being privy to the parties
long battle against the disease until he succumbed to death on July 22,
agreement. To us, Rudy could have been a competent witness to testify
on the perfection of this prior contract; unfortunately, the defendants- 1996. Given that Gregorio purportedly executed a deed during the last
stages of his battle against his disease, we seriously doubt whether
appellants did not present Rudy as their witness.
Gregorio could have read, or fully understood, the contents of the dat quod non habet. Nobody can dispose of that which does not belong
documents he signed or of the consequences of his act. We note in this to him.[19]
regard that Gregorio was brought to the Veterans Hospital at Quezon City
because his condition had worsened on or about the time the deed was
allegedly signed. This transfer and fact of death not long after speak We likewise find to be in accord with the evidence on record the ruling of
volumes about Gregorios condition at that time. We likewise see no the Court of Appeals declaring the properties in controversy as
conclusive evidence that the contents of the deed were sufficiently paraphernal properties of Gregorio in the absence of competent evidence
explained to Gregorio before he affixed his signature. The evidence the on the exact date of Gregorios acquisition of ownership of these lots.
defendants-appellants offered to prove Gregorios consent to the sale
consists of the testimonies of Atty. de Guzman and Antonio. As discussed
above, we do not find Atty. de Guzman a credible witness. Thus, we fully
On the credibility of witnesses, it is in rhyme with reason to believe the
concur with the heretofore-quoted lower courts evaluation of the
testimonies of the witnesses for the complainants vis--vis those of the
testimonies given by Atty. de Guzman and Antonio because this is an
defendants. In the assessment of the credibility of witnesses, we are
evaluation that the lower court was in a better position to make.
guided by the following well-entrenched rules: (1) that evidence to be
believed must not only spring from the mouth of a credible witness but
must itself be credible, and (2) findings of facts and assessment of
Additionally, the irregular and invalid notarization of the deed is a falsity credibility of witness are matters best left to the trial court who had the
that raises doubts on the regularity of the transaction itself. While the front-line opportunity to personally evaluate the witnesses demeanor,
deed was indeed signed on July 18, 1996 at Bayombong, Nueva Vizcaya, conduct, and behavior while testifying.[20]
the deed states otherwise, as it shows that the deed was executed on
July 22, 1996 at Santiago City. Why such falsity was committed, and the
circumstances under which this falsity was committed, speaks volume
In the case at bar, we agree in the trial courts conclusion that petitioners
about the regularity and the validity of the sale. We cannot but consider
star witness, Atty. De Guzman is far from being a credible witness. Unlike
the commission of this falsity, with the indispensable aid of Atty. de
this Court, the trial court had the unique opportunity of observing the
Guzman, an orchestrated attempt to legitimize a transaction that
demeanor of said witness. Thus, we affirm the trial court and the Court
Gregorio did not intend to be binding upon him nor on his bounty.
of Appeals uniform decision based on the whole evidence in record holding
the Deed of Sale in question to be null and void.

Article 24 of the Civil Code tells us that in all contractual, property or

other relations, when one of the parties is at a disadvantage on account
In Domingo v. Court of Appeals,[21] the Court declared as null and void
of his moral dependence, ignorance, indigence, mental weakness, tender
the deed of sale therein inasmuch as the seller, at the time of the
age or other handicap, the courts must be vigilant for his protection.[18]
execution of the alleged contract, was already of advanced age and senile.
We held

Based on the foregoing, the Court of Appeals concluded that Gregorios

consent to the sale of the lots was absent, making the contract null and
. . . She died an octogenarian on March 20, 1966, barely over a year when
void. Consequently, the spouses Paragas could not have made a
the deed was allegedly executed on January 28, 1965, but before copies
subsequent transfer of the property to Catalino Balacano. Indeed, nemo
of the deed were entered in the registry allegedly on May 16 and June
10, 1966. The general rule is that a person is not incompetent to contract
merely because of advanced years or by reason of physical infirmities.
However, when such age or infirmities have impaired the mental faculties
so as to prevent the person from properly, intelligently, and firmly
protecting her property rights then she is undeniably incapacitated. The
unrebutted testimony of Zosima Domingo shows that at the time of the
alleged execution of the deed, Paulina was already incapacitated
physically and mentally. She narrated that Paulina played with her waste
and urinated in bed. Given these circumstances, there is in our view
sufficient reason to seriously doubt that she consented to the sale of and
the price for her parcels of land. Moreover, there is no receipt to show
that said price was paid to and received by her. Thus, we are in agreement
with the trial courts finding and conclusion on the matter: . . .

In the case at bar, the Deed of Sale was allegedly signed by Gregorio on
his death bed in the hospital. Gregorio was an octogenarian at the time
of the alleged execution of the contract and suffering from liver cirrhosis
at that circumstances which raise grave doubts on his physical and mental
capacity to freely consent to the contract. Adding to the dubiety of the
purported sale and further bolstering respondents claim that their uncle
Catalino, one of the children of the decedent, had a hand in the execution
of the deed is the fact that on 17 October 1996, petitioners sold a portion
of Lot 1175-E consisting of 6,416 square meters to Catalino for
P60,000.00.[22] One need not stretch his imagination to surmise that
Catalino was in cahoots with petitioners in maneuvering the alleged sale.

On the whole, we find no reversible error on the part of the appellate

court in CA-G.R. CV No. 64048 that would warrant the reversal thereof.

WHEREFORE, the present petition is hereby DENIED. Accordingly, the

Decision[23] and the Resolution,[24] dated 15 February 2005 and 17 May
2005, respectively, of the Court of Appeals in CA-G.R. CV No. 64048 are
hereby AFFIRMED. No costs.

SO ORDERED.
HEIRS OF REYES VS MIJARES
Under the regime of the Civil Code, the alienation or encumbrance of a
conjugal real property requires the consent of the wife. The absence of
such consent renders the entire transaction1 merely voidable and not
void.2 The wife may, during the marriage and within ten years from the
transaction questioned, bring an action for the annulment of the contract
entered into by her husband without her consent.3
Assailed in this petition for review on certiorari are the January 26, 2000
Decision4 and June 19, 2000, Resolution5 of the Court of Appeals in CA-
G.R. No. 28464 which declared respondents as purchasers in good faith
and set aside the May 31, 1990 and June 29, 1990 Orders of the Regional
Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018.
The controversy stemmed from a dispute over Lot No. 4349-B-2,6
approximately 396 square meters, previously covered by Transfer
Certificate of Title (TCT) No. 205445, located in Balintawak, Quezon City
and registered in the name of Spouses Vicente Reyes and Ignacia Aguilar-
Reyes.7 Said lot and the apartments built thereon were part of the
spouses’ conjugal properties having been purchased using conjugal funds
from their garments business.8
Vicente and Ignacia were married in 1960, but had been separated de
facto since 1974.9 Sometime in 1984, Ignacia learned that on March 1,
1983, Vicente sold Lot No. 4349-B-2 to respondent spouses Cipriano and
Florentina Mijares for P40,000.00.10 As a consequence thereof, TCT No.
205445 was cancelled and TCT No. 306087 was issued on April 19, 1983
in the name of respondent spouses.11 She likewise found out that Vicente
filed a petition for administration and appointment of guardian with the
Metropolitan Trial Court of Quezon City, Branch XXI. Vicente
misrepresented therein that his wife, Ignacia, died on March 22, 1982,
and that he and their 5 minor children were her only heirs.12 On
September 29, 1983, the court appointed Vicente as the guardian of their
minor children.13 Subsequently, in its Order dated October 14, 1983, the
court authorized Vicente to sell the estate of Ignacia.14
On August 9, 1984, Ignacia, through her counsel, sent a letter to
respondent spouses demanding the return of her ½ share in the lot.
Failing to settle the matter amicably, Ignacia filed on June 4, 1996 a
complaint15 for annulment of sale against respondent spouses. The
complaint was thereafter amended to include Vicente Reyes as one of the
defendants.16
In their answer, respondent spouses claimed that they are purchasers in
good faith and that the sale was valid because it was duly approved by
the court.17 Vicente Reyes, on the other hand, contended that what he
sold to the spouses was only his share in Lot No. 4349-B-2, excluding the
share of his wife, and that he never represented that the latter was
already dead.18 He likewise testified that respondent spouses, through
the counsel they provided him, took advantage of his illiteracy by filing a
petition for the issuance of letters of administration and appointment of
guardian without his knowledge.19
On February 15, 1990, the court a quo rendered a decision declaring the
sale of Lot No. 4349-B-2 void with respect to the share of Ignacia. It held
that the purchase price of the lot was P110,000.00 and ordered Vicente
to return ½ thereof or P55,000.00 to respondent spouses. The dispositive
portion of the said decision, reads-
WHEREFORE, premises above considered, judgment is hereby rendered
declaring the subject Deed of Absolute Sale, dated March [1,] 1983 signed
by and between defendants Vicente Reyes and defendant Cipriano Mijares
NULL AND VOID WITH RESPECT TO ONE-HALF (1/2) OF THE SAID
PROPERTY;
The Register of Deeds of Quezon City is hereby ordered to cancel TCT No.
306083 (sic) in the names of defendant spouses Cipriano Mijares and
Florentina Mijares and to issue a new TCT in the name of the plaintiff
Ignacia Aguilar-Reyes as owner in fee simple of one-half (1/2) of said
property and the other half in the names of defendant spouses Cipriano
Mijares and Florentin[a] Mijares, upon payment of the required fees
therefore;
Said defendant spouses Mijares are also ordered to allow plaintiff the use
and exercise of rights, as well as obligations, pertinent to her one-half
(1/2) ownership of the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with
legal rate of interest from the execution of the subject Deed of Absolute
Sale on March 1, 1983, to the defendant spouses Cipriano Mijares and
Florentina Mijares which corresponds to the one-half (1/2) of the actual
purchase price by the said Mijares but is annulled in this decision (sic);
Defendant Vicente Reyes is hereby further ordered to pay plaintiff the
amount of P50,000.00 by way of moral and exemplary damages, plus
costs of this suit.
SO ORDERED.20
Ignacia filed a motion for modification of the decision praying that the
sale be declared void in its entirety and that the respondents be ordered
to reimburse to her the rentals they collected on the apartments built on
Lot No. 4349-B-2 computed from March 1, 1983.1âwphi1
On May 31, 1990, the trial court modified its decision by declaring the
sale void in its entirety and ordering Vicente Reyes to reimburse
respondent spouses the purchase price of P110,000, thus –
WHEREFORE, premises considered, judgment is hereby rendered
declaring the subject Deed of Absolute Sale, dated March 1, 1983 signed
by and between defendants Vicente Reyes and defendant Cipriano Mijares
as null and void ab initio, in view of the absence of the wife’s conformity
to said transaction.
Consequent thereto, the Register of Deeds for Quezon City is hereby
ordered to cancel TCT No. 306083 (sic) in the name of Cipriano Mijares
and Florentin[a] Mijares and issue a new TCT in the name of the plaintiff
and defendant Ignacia Aguilar-Reyes and Vicente Reyes as owners in fee
simple, upon payment of required fees therefore.
Defendant Vicente Reyes is hereby ordered to pay the amount of one
hundred ten thousand pesos (P110,000.00) with legal rate of interest at
12% per annum from the execution of the subject Deed of Absolute Sale
on March 1, 1983.
Further, defendant Vicente Reyes is ordered to pay the amount of
P50,000.00 by way of moral and exemplary damages, plus costs of this
suit.
SO ORDERED.21
On motion22 of Ignacia, the court issued an Order dated June 29, 1990
amending the dispositive portion of the May 31, 1990 decision by
correcting the Transfer Certificate of Title of Lot No. 4349-B-2, in the
name of Cipriano Mijares and Florentina Mijares, from TCT No. 306083 to
TCT No. 306087; and directing the Register of Deeds of Quezon City to
issue a new title in the name of Ignacia Aguilar-Reyes and Vicente Reyes.
The Order likewise specified that Vicente Reyes should pay Ignacia
Aguilar-Reyes the amount of P50,000.00 as moral and exemplary
damages.23
Both Ignacia Aguilar-Reyes and respondent spouses appealed the
decision to the Court of Appeals.24 Pending the appeal, Ignacia died and
Undaunted by the denial of their motion for reconsideration,28 petitioners
she was substituted by her compulsory heirs.25
filed the instant petition contending that the assailed sale of Lot No. 4392-
B-2 should be annulled because respondent spouses were not purchasers
in good faith.
Petitioners contended that they are entitled to reimbursement of the
rentals collected on the apartment built on Lot No. 4349-B-2, while
respondent spouses claimed that they are buyers in good faith. On
The issues for resolution are as follows: (1) What is the status of the sale
January 26, 2000, the Court of Appeals reversed and set aside the
of Lot No. 4349-B-2 to respondent spouses? (2) Assuming that the sale
decision of the trial court. It ruled that notwithstanding the absence of
is annullable, should it be annulled in its entirety or only with respect to
Ignacia’s consent to the sale, the same must be held valid in favor of
the share of Ignacia? (3) Are respondent spouses purchasers in good
respondents because they were innocent purchasers for value.26 The
faith?
decretal potion of the appellate court’s decision states –

Articles 166 and 173 of the Civil Code,29 the governing laws at the time
WHEREFORE, premises considered, the Decision appealed from and the
the assailed sale was contracted, provide:
Orders dated May 31, 1990 and June 29, 1990, are SET ASIDE and in lieu
thereof a new one is rendered –

1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by
Vicente Reyes in favor of spouses Cipriano and [Florentina] Mijares valid
and lawful;
Art.166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium,
the husband cannot alienate or encumber any real property of the
conjugal partnership without the wife’s consent. If she refuses
unreasonably to give her consent, the court may compel her to grant the
same…

2. Ordering Vicente Reyes to pay spouses Mijares the amount of

P30,000.00 as attorney’s fees and legal expenses; and
3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral
damages.
No pronouncement as to costs.
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.

SO ORDERED.27 Pursuant to the foregoing provisions, the husband could not alienate or
encumber any conjugal real property without the consent, express or
implied, of the wife otherwise, the contract is voidable. Indeed, in several
cases30 the Court had ruled that such alienation or encumbrance by the
husband is void. The better view, however, is to consider the transaction
as merely voidable and not void.31 This is consistent with Article 173 of
the Civil Code pursuant to which the wife could, during the marriage and
within 10 years from the questioned transaction, seek its annulment.32
In the case of Heirs of Christina Ayuste v. Court of Appeals,33 it was
categorically held that –
There is no ambiguity in the wording of the law. A sale of real property of
the conjugal partnership made by the husband without the consent of his
wife is voidable. The action for annulment must be brought during the
marriage and within ten years from the questioned transaction by the
wife. Where the law speaks in clear and categorical language, there is no
room for interpretation — there is room only for application.34
Likewise, in Spouses Guiang v. Court of Appeals,35 the Court quoted with
approval the ruling of the trial court that under the Civil Code, the
encumbrance or alienation of a conjugal real property by the husband
absent the wife’s consent, is voidable and not void. Thus –
…Under Article 166 of the Civil Code, the husband cannot generally
alienate or encumber any real property of the conjugal partnership
without the wife’s consent. The alienation or encumbrance if so made
however is not null and void. It is merely voidable. The offended wife may
bring an action to annul the said alienation or encumbrance. Thus, the
provision of Article 173 of the Civil Code of the Philippines, to wit:
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.
This particular provision giving the wife ten (10) years x x x during [the]
marriage to annul the alienation or encumbrance was not carried over to
the Family Code. It is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by the husband of
the conjugal partnership property without the consent of the wife is null
and void…
In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal
property having been purchased using the conjugal funds of the spouses
during the subsistence of their marriage. It is beyond cavil therefore that
the sale of said lot to respondent spouses without the knowledge and
consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale
which was filed on June 4, 1986, before her demise is perfectly within the
10 year prescriptive period under Article 173 of the Civil Code. Even if we
reckon the period from November 25, 1978 which was the date when
Vicente and the respondent spouses entered into a contract concerning
Lot No. 4349-B-2, Ignacia’s action would still be within the prescribed
period.
Anent the second issue, the trial court correctly annulled the voidable sale
of Lot No. 4349-B-2 in its entirety. In Bucoy v. Paulino,36 a case involving
the annulment of sale with assumption of mortgages executed by the
husband without the consent of the wife, it was held that the alienation
or encumbrance must be annulled in its entirety and not only insofar as
the share of the wife in the conjugal property is concerned. Although the
transaction in the said case was declared void and not merely voidable,
the rationale for the annulment of the whole transaction is the same thus
–
The plain meaning attached to the plain language of the law is that the
contract, in its entirety, executed by the husband without the wife's
consent, may be annulled by the wife. Had Congress intended to limit
such annulment in so far as the contract shall "prejudice" the wife, such
limitation should have been spelled out in the statute. It is not the
legitimate concern of this Court to recast the law. As Mr. Justice Jose B.
L. Reyes of this Court and Judge Ricardo C. Puno of the Court of First
Instance correctly stated, "[t]he rule (in the first sentence of Article 173)
revokes Baello vs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca,
45 Phil. 430," in which cases annulment was held to refer only to the
extent of the one-half interest of the wife…
The necessity to strike down the contract of July 5, 1963 as a whole, not
merely as to the share of the wife, is not without its basis in the common-
sense rule. To be underscored here is that upon the provisions of Articles
161, 162 and 163 of the Civil Code, the conjugal partnership is liable for
many obligations while the conjugal partnership exists. Not only that. The
conjugal property is even subject to the payment of debts contracted by
either spouse before the marriage, as those for the payment of fines and
indemnities imposed upon them after the responsibilities in Article 161
have been covered (Article 163, par. 3), if it turns out that the spouse
who is bound thereby, "should have no exclusive property or if it should
be insufficient." These are considerations that go beyond the mere
equitable share of the wife in the property. These are reasons enough for
the husband to be stopped from disposing of the conjugal property
without the consent of the wife. Even more fundamental is the fact that
the nullity is decreed by the Code not on the basis of prejudice but lack
of consent of an indispensable party to the contract under Article 166.37
With respect to the third issue, the Court finds that respondent spouses
are not purchasers in good faith. A purchaser in good faith is one who
buys property of another, without notice that some other person has a
right to, or interest in, such property and pays full and fair price for the
same, at the time of such purchase, or before he has notice of the claim
or interest of some other persons in the property. He buys the property
with the belief that the person from whom he receives the thing was the
owner and could convey title to the property. A purchaser cannot close
his eyes to facts which should put a reasonable man on his guard and still
claim he acted in good faith.38
In the instant case, there existed circumstances that should have placed
respondent spouses on guard. The death certificate of Ignacia, shows that
she died on March 22, 1982. The same death certificate, however, reveals
that – (1) it was issued by the Office of the Civil Registrar of Lubao
Pampanga on March 10, 1982; (2) the alleged death of Ignacia was
reported to the Office of the Civil Registrar on March 4, 1982; and (3) her
burial or cremation would be on March 8, 1982.39 These obvious flaws in
the death certificate should have prompted respondents to investigate
further, especially so that respondent Florentina Mijares admitted on
cross examination that she asked for the death certificate of Ignacia
because she was suspicious that Ignacia was still alive.40 Moreover,
respondent spouses had all the opportunity to verify the claim of Vicente
that he is a widower because it was their lawyer, Atty. Rodriguito S. Saet,
who represented Vicente in the special proceedings before the
Metropolitan Trial Court.
Neither can respondent spouses rely on the alleged court approval of the
sale. Note that the Order issued by the Metropolitan Trial Court of Quezon
City, Branch XXXI, appointing Vicente as guardian of his 5 minor children,
as well as the Order authorizing him to sell the estate of Ignacia were
issued only on September 29, 1983 and October 14, 1983, respectively.
On the other hand, the sale of the entire Lot No. 4349-B-2 to respondent
spouses appears to have been made not on March 1, 1983, but even as
early as November 25, 1978. In the "Agreement" dated November 25,
1978, Vicente in consideration of the amount of P110,000.00, sold to
Cipriano Mijares Lot No. 4349-B-2 on installment basis, with the first
installment due on or before July 31, 1979.41 This was followed by a
"Memorandum of Understanding" executed on July 30, 1979, by Vicente
and Cipriano – (1) acknowledging Cipriano’s receipt of Vicente’s down
payment in the amount of P50,000.00; and (2) authorizing Florentina
Mijares to collect rentals.42 On July 14, 1981, Vicente and Cipriano
executed another "Memorandum of Agreement," stating, among other,
that out of the purchase price of P110,000.00 Vicente had remaining
balance of P19,000.00.43 Clearly therefore, the special proceedings
before the Metropolitan Trial Court of Quezon City, Branch XXXI, could
not have been the basis of respondent spouses’ claim of good faith
because the sale of Lot No. 4349-B-2 occurred prior thereto.
Respondent spouses cannot deny knowledge that at the time of the sale
in 1978, Vicente was married to Ignacia and that the latter did not give
her conformity to the sale. This is so because the 1978 "Agreement"
described Vicente as "married" but the conformity of his wife to the sale
did not appear in the deed. Obviously, the execution of another deed of
sale in 1983 over the same Lot No. 4349-B-2, after the alleged death of
Ignacia on March 22, 1982, as well as the institution of the special
proceedings were, intended to correct the absence of Ignacia’s consent
to the sale. Even assuming that respondent spouses believed in good faith
that Ignacia really died on March 22, 1982, after they purchased the lot,
the fact remains that the sale of Lot No. 4349-B-2 prior to Ignacia’s
alleged demise was without her consent and therefore subject to
annulment. The October 14, 1983 order authorizing the sale of the estate
of Ignacia, could not have validated the sale of Lot No. 4349-B-2 because
said order was issued on the assumption that Ignacia was already dead
and that the sale dated March 1, 1983 was never categorically approved
in the said order.
The fact that the 5 minor children44 of Vicente represented by the latter,
signed the March 1, 1983 deed of sale of Lot No. 4349-B-2 will not estop
them from assailing the validity thereof. Not only were they too young at
that time to understand the repercussions of the sale, they likewise had
no right to sell the property of their mother who, when they signed the
deed, was very much alive.
If a voidable contract is annulled, the restoration of what has been given
is proper. The relationship between parties in any contract even if
subsequently annulled must always be characterized and punctuated by
good faith and fair dealing. Hence, for the sake of justice and equity, and
in consonance with the salutary principle of non-enrichment at another’s
expense, the Court sustains the trial court’s order directing Vicente to
refund to respondent spouses the amount of P110,000.00 which they
have paid as purchase price of Lot No. 4349-B-2.45 The court a quo
correctly found that the subject of the sale was the entire Lot No. 4349-
B-2 and that the consideration thereof is not P40,000.00 as stated in the
March 1, 1983 deed of sale, but P110,000.00 as evidenced by the – (1)
"Agreement" dated November 25, 1978 as well as the July 30, 1979
"Memorandum of Understanding" and the July 14, 1981 "Memorandum
of Agreement" which served as receipts of the installment payments
made by respondent Cipriano Mijares; and (2) the receipt duly signed by
Vicente Reyes acknowledging receipt of the amount of P110,000.00 from
respondent spouses as payment of the sale of the controverted lot.46
The trial court, however, erred in imposing 12% interest per annum on
the amount due the respondents. In Eastern Shipping Lines, Inc. v. Court
of Appeals,47 it was held that interest on obligations not constituting a
loan or forbearance of money is six percent (6%) annually. If the
purchase price could be established with certainty at the time of the filing
of the complaint, the six percent (6%) interest should be computed from
the date the complaint was filed until finality of the decision. In Lui v.
Loy,48 involving a suit for reconveyance and annulment of title filed by
the first buyer against the seller and the second buyer, the Court, ruling
in favor of the first buyer and annulling the second sale, ordered the seller
to refund to the second buyer (who was not a purchaser in good faith)
the purchase price of the lots. It was held therein that the 6% interest
should be computed from the date of the filing of the complaint by the
first buyer. After the judgment becomes final and executory until the
obligation is satisfied, the amount due shall earn interest at 12% per year,
the interim period being deemed equivalent to a forbearance of credit.49
Accordingly, the amount of P110,000.00 due the respondent spouses
which could be determined with certainty at the time of the filing of the
complaint shall earn 6% interest per annum from June 4, 1986 until the
finality of this decision. If the adjudged principal and the interest (or any
part thereof) remain unpaid thereafter, the interest rate shall be twelve
percent (12%) per annum computed from the time the judgment
becomes final and executory until it is fully satisfied.
Petitioner’s prayer for payment of rentals should be denied. Other than
the allegation of Ignacia in her Sinumpaang Salaysay that the apartments
could be rented at P1,000.00 a month, no other evidence was presented
to substantiate her claim. In awarding rentals which are in the nature of
actual damages, the Court cannot rely on mere assertions, speculations,
conjectures or guesswork but must depend on competent proof and on
the best evidence obtainable regarding the actual amount of loss.50
None, having been presented in the case at bar, petitioner’s claim for
rentals must be denied.
While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court
below, law and jurisprudence authorize a tribunal to consider errors,
although unassigned, if they involve (1) errors affecting the lower court’s
jurisdiction over the subject matter, (2) plain errors not specified, and (3)
clerical errors.51 In this case, though defendant Vicente Reyes did not
appeal, the "plain error" committed by the court a quo as to the award of
moral and exemplary damages must be corrected. These awards cannot
be lumped together as was done by the trial court.52 Moral and
exemplary damages are different in nature, and require separate
determination. Moral damages are awarded where the claimant
experienced physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury as a result of the act complained of.53 The
award of exemplary damages, on the other hand, is warranted when
moral, temperate, liquidated, or compensatory damages were likewise
awarded by the court.54
Hence, the trial court’s award of "P50,000.00 by way of moral and
exemplary damages" should be modified. Vicente Reyes should be
ordered to pay the amounts of P25,000.00 as moral damages and
P25,000.00 as exemplary damages. Since Vicente Reyes was among the
heirs substituted to the late Ignacia Aguilar-Reyes, payment of moral and
exemplary damages must be made by Vicente to his children, petitioners
in this case.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY
GRANTED. The January 26, 2000 Decision and June 19, 2002, Resolution
of the Court of Appeals in CA-G.R. No. 28464 are REVERSED and SET
ASIDE. The May 31, 1990 Order of the Regional Trial Court of Quezon
City, Branch 101, in Civil Case No. Q-48018, which annulled the March 1,
1983 Deed of Absolute Sale over Lot No. 4349-B-2, and ordered the
Register of Deeds of Quezon City to cancel TCT No. 306087 in the name
of respondent spouses Cipriano Mijares and Florentina Mijares covering
the same property; as well as the June 29, 1990 Order correcting the
typographical errors in the order dated March 1, 1983, are REINSTATED,
with the following modifications –
(1) The Register of Deeds of Quezon City is ordered to issue a new
certificate of title over Lot No. 4349-B-2, in the name of petitioners as co-
owners thereof;
(2) Vicente Reyes is ordered to reimburse the respondent spouses the
amount of P110,000.00 as purchase price of Lot No. 4349-B-2, with
interest at 6% per annum from June 4, 1986, until finality of this decision.
After this decision becomes final, interest at the rate of 12% per annum
on the principal and interest (or any part thereof) shall be imposed until
full payment.
(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia
Aguilar-Reyes, the amounts of P25,000.00 as moral damages and
P25,000.00 as exemplary damages.
SO ORDERED.
GUIANG VS CA
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.
The Case
These were the principles that guided the Court in deciding this petition
for review of the Decision[1] dated January 30, 1996 and the
Resolution[2] dated May 28, 1996, promulgated by the Court of Appeals
in CA-GR CV No. 41758, affirming the Decision of the lower court and
denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended
Complaint[3] against her husband Judie Corpuz and Petitioners-Spouses
Antonio and Luzviminda Guiang. 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. The case was
raffled to the Regional Trial Court of Koronadal, South Cotabato, Branch
25. In due course, the trial court rendered a Decision[4] dated September
9, 1992, disposing as follows:[5]
ACCORDINGLY, judgment is rendered for the plaintiff and against the
defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990
(Exh. A) and the amicable settlement dated March 16, 1990 (Exh. B) as
null and void and of no effect;
2. Recognizing as lawful and valid the ownership and possession of
plaintiff Gilda Corpuz over the remaining one-half portion of Lot 9, Block
8, (LRC) Psd-165409 which has been the subject of the Deed of Transfer
of Rights (Exh. A);
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda
and Antonio Guiang the amount of NINE THOUSAND (P9,000.00) PESOS
corresponding to the payment made by defendants Guiangs to Manuel
Callejo for the unpaid balance of the account of plaintiff in favor of Manuel
Callejo, and another sum of P379.62 representing one-half of the amount
of realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-
165409, both with legal interests thereon computed from the finality of
the decision.
No pronouncement as to costs in view of the factual circumstances of the
case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals.
Respondent Court, in its challenged Decision, ruled as follows:[6]
WHEREFORE, the appealed decision of the lower court in Civil Case No.
204 is hereby AFFIRMED by this Court. No costs considering plaintiff-
appellees failure to file her brief, despite notice.
Reconsideration was similarly denied by the same court in its assailed
Resolution:[7]
Finding that the issues raised in defendants-appellants motion for
reconsideration of Our decision in this case of January 30, 1996, to be a
mere rehash of the same issues which We have already passed upon in
the said decision, and there [being] no cogent reason to disturb the same,
this Court RESOLVES to DENY the instant motion for reconsideration for
lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent
and while she was in Manila seeking employment, her husband sold to
the petitioners-spouses one half of their conjugal property, consisting of
their residence and the lot on which it stood. The circumstances of this
sale are set forth in the Decision of Respondent Court, which quoted from
the Decision of the trial court, as follows:[8]
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married
spouses. They were married on December 24, 1968 in Bacolod City,
before a judge. This is admitted by defendants-spouses Antonio and
Luzviminda Guiang in their answer, and also admitted by defendant Judie
Corpuz when he testified in court (tsn. p..3, June 9, 1992), although the
latter says that they were married in 1967. The couple have three
children, namely: Junie 18 years old, Harriet 17 years of age, and Jodie
or Joji, the youngest, who was 15 years of age in August, 1990 when her
mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with
plaintiff-wife Gilda Corpuz as vendee, bought a 421 sq. meter lot located
in Barangay Gen. Paulino Santos (Bo. 1), Koronadal, South Cotabato, and
particularly known as Lot 9, Block 8, (LRC) Psd-165409 from Manuel
Callejo who signed as vendor through a conditional deed of sale for a total
consideration of P14,735.00. The consideration was payable in
installment, with right of cancellation in favor of vendor should vendee
fail to pay three successive installments (Exh. 2, tsn. p. 6, February 14,
1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold
one-half portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the
defendants-spouses Antonio and Luzviminda Guiang. The latter have
since then occupied the one-half portion [and] built their house thereon
(tsn. p. 4, May 22, 1992). They are thus adjoining neighbors of the
Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was
trying to look for work abroad, in [the] Middle East. Unfortunately, she
became a victim of an unscrupulous illegal recruiter. She was not able to
go abroad. She stayed for sometime in Manila however, coming back to
Koronadal, South Cotabato, x x x on March 11, 1990. Plaintiffs departure
for Manila to look for work in the Middle East was with the consent of her
husband Judie Corpuz (tsn. p. 16, Aug.12, 1990; p. 10, Sept. 6, 1991).
After his wifes departure for Manila, defendant Judie Corpuz seldom went
home to the conjugal dwelling. He stayed most of the time at his place of
work at Samahang Nayon Building, a hotel, restaurant, and a cooperative.
Daughter Harriet Corpuz went to school at Kings College, Bo. 1,
Koronadal, South Cotabato, but she was at the same time working as
household help of, and staying at, the house of Mr. Panes. Her brother
Junie was not working. Her younger sister Jodie (Joji) was going to school.
Her mother sometimes sent them money (tsn. p. 14, Sept. 6, 1991).
Sometime in January 1990, Harriet Corpuz learned that her father
intended to sell the remaining one-half portion including their house, of
their homelot to defendants Guiangs. She wrote a letter to her mother
informing her. She [Gilda Corpuz] replied that she was objecting to the
sale. Harriet, however, did not inform her father about this; but instead
gave the letter to Mrs. Luzviminda Guiang so that she [Guiang] would
advise her father (tsn. pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie
Corpuz pushed through the sale of the remaining one-half portion of Lot
9, Block 8, (LRC) Psd-165409. On March 1, 1990, he sold to defendant
Luzviminda Guiang thru a document known as Deed of Transfer of Rights
(Exh. A) the remaining one-half portion of their lot and the house standing
thereon for a total consideration of P30,000.00 of which P5,000.00 was
to be paid in June , 1990. Transferor Judie Corpuzs children Junie and
Harriet signed the document as witnesses.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure
whatever defect in defendant Judie Corpuzs title over the lot transferred,
defendant Luzviminda Guiang as vendee executed another agreement
over Lot 9, Block 8, (LRC) Psd-165408 (Exh. 3), this time with Manuela
Jimenez Callejo, a widow of the original registered owner from whom the
couple Judie and Gilda Corpuz originally bought the lot (Exh. 2), who
signed as vendor for a consideration of P9,000.00. Defendant Judie
Corpuz signed as a witness to the sale (Exh. 3-A). The new sale (Exh. 3)
describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious
from the mass of evidence that the correct lot is Lot 8, Block 9, (LRC)
Psd-165409, the very lot earlier sold to the couple Gilda and Judie Corpuz.
5. Sometime on March 11, 1990, plaintiff returned home. She found her
children staying with other households. Only Junie was staying in their
house. Harriet and Joji were with Mr. Panes. Gilda gathered her children
together and stayed at their house. Her husband was nowhere to be
found. She was informed by her children that their father had a wife
already.
6. For staying in their house sold by her husband, plaintiff was complained
against by defendant Luzviminda Guiang and her husband Antonio Guiang
before the Barangay authorities of Barangay General Paulino Santos (Bo.
1), Koronadal, South Cotabato, for trespassing (tsn. p. 34, Aug. 17,
1990). The case was docketed by the barangay authorities as Barangay
Case No. 38 for trespassing. On March 16, 1990, the parties thereat
signed a document known as amicable settlement. In full, the settlement
provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie,
Hariet and Judie to leave voluntarily the house of Mr. and Mrs. Antonio
Guiang, where they are presently boarding without any charge, on or
before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff
went to the Barangay Captain of Barangay Paulino Santos to question her
signature on the amicable settlement. She was referred however to the
Officer-In-Charge at the time, a certain Mr. de la Cruz. The latter in turn
told her that he could not do anything on the matter (tsn. p. 31, Aug. 17,
1990).
This particular point was not rebutted. The Barangay Captain who
testified did not deny that Mrs. Gilda Corpuz approached him for the
annulment of the settlement. He merely said he forgot whether Mrs.
Corpuz had approached him (tsn. p. 13, Sept. 26, 1990). We thus
conclude that Mrs. Corpuz really approached the Barangay Captain for
the annulment of the settlement. Annulment not having been made,
plaintiff stayed put in her house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with
a motion for the execution of the amicable settlement, filing the same
with the Municipal Trial Court of Koronadal, South Cotabato. The
proceedings [are] still pending before the said court, with the filing of the
instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for
the preparation of the Deed of Transfer of Rights, Exh. A; P9,000.00 as
the amount they paid to Mrs. Manuela Callejo, having assumed the
remaining obligation of the Corpuzes to Mrs. Callejo (Exh. 3); P100.00 for
the preparation of Exhibit 3; a total of P759.62 basic tax and special
educational fund on the lot; P127.50 as the total documentary stamp tax
on the various documents; P535.72 for the capital gains tax; P22.50 as
Whether or not the Court of Appeals erred in not declaring as voidable
transfer tax; a standard fee of P17.00; certification fee of P5.00. These
contract under Art. 1390 of the Civil Code the impugned Deed of Transfer
expenses particularly the taxes and other expenses towards the transfer
of Rights which was validly ratified thru the execution of the amicable
of the title to the spouses Guiangs were incurred for the whole Lot 9,
Block 8, (LRC) Psd-165409. settlement by the contending parties.

III
Ruling of Respondent Court

Respondent Court found no reversible error in the trial courts ruling that
any alienation or encumbrance by the husband of the conjugal property
without the consent of his wife is null and void as provided under Article
124 of the Family Code. It also rejected petitioners contention that the
amicable settlement ratified said sale, citing Article 1409 of the Code
which expressly bars ratification of the contracts specified therein,
particularly those prohibited or declared void by law.
Hence, this petition.[9]
Whether or not the Court of Appeals erred in not setting aside the findings
of the Court a quo which recognized as lawful and valid the ownership
and possession of private respondent over the remaining one half (1/2)
portion of the subject property.
In a nutshell, petitioners-spouses contend that (1) the contract of sale
(Deed of Transfer of Rights) was merely voidable, and (2) such contract
was ratified by private respondent when she entered into an amicable
settlement with them.

This Courts Ruling

The Issues

The petition is bereft of merit.

In their Memorandum, petitioners assign to public respondent the
following errors:[10]

First Issue: Void or Voidable Contract?

I

Petitioners insist that the questioned Deed of Transfer of Rights was

validly executed by the parties-litigants in good faith and for valuable
Whether or not the assailed Deed of Transfer of Rights was validly
consideration. The absence of private respondents consent merely
executed.
rendered the Deed voidable under Article 1390 of the Civil Code, which
provides:

II
ART. 1390. The following contracts are voidable or annullable, even
though there may have been no damage to the contracting parties:
A That was on March 11, 1990, Maam.

xxxxxxxxx
Q Now, when you arrived at Koronadal, was there any problem which
arose concerning the ownership of your residential house at Callejo
Subdivision?
(2) Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.

A When I arrived here in Koronadal, there was a problem which arose

regarding my residential house and lot because it was sold by my husband
These contracts are binding, unless they are annulled by a proper action
without my knowledge.
in court. They are susceptible of ratification.(n)

This being the case, said contract properly falls within the ambit of Article
The error in petitioners contention is evident. Article 1390, par. 2, refers 124 of the Family Code, which was correctly applied by the two lower
to contracts visited by vices of consent, i.e., contracts which were entered
courts:
into by a person whose consent was obtained and vitiated through
mistake, violence, intimidation, undue influence or fraud. In this instance,
private respondents consent to the contract of sale of their conjugal
property was totally inexistent or absent. Gilda Corpuz, on direct ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement,
examination, testified thus:[11]
the husbands decision shall prevail, subject to recourse to the court by
the wife for proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.
Q Now, on March 1, 1990, could you still recall where you were?

In the event that one spouse is incapacitated or otherwise unable to

A I was still in Manila during that time.
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
xxxxxxxxx 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. However, the transaction shall be construed as a continuing
ATTY. FUENTES: offer on the part of the consenting spouse and the third person, and may
be perfected as a binding contract upon the acceptance by the other
spouse or authorization by the court before the offer is withdrawn by
Q When did you come back to Koronadal, South Cotabato? either or both offerors.(165a) (Italics supplied)

Comparing said law with its equivalent provision in the Civil Code, the
trial court adroitly explained the amendatory effect of the above provision
in this wise:[12]
The legal provision is clear. The disposition or encumbrance is void. It
becomes still clearer if we compare the same with the equivalent
provision of the Civil Code of the Philippines. Under Article 166 of the Civil
Code, the husband cannot generally alienate or encumber any real
property of the conjugal partnership without the wifes consent. The
alienation or encumbrance if so made however is not null and void. It is
merely voidable. The offended wife may bring an action to annul the said
alienation or encumbrance. Thus, the provision of Article 173 of the Civil
Code of the Philippines, to wit:
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.(n)
This particular provision giving the wife ten (10) years x x x during [the]
marriage to annul the alienation or encumbrance was not carried over to
the Family Code. It is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by the husband of
the conjugal partnership property without the consent of the wife is null
and void.
Furthermore, it must be noted that the fraud and the intimidation referred
to by petitioners were perpetrated in the execution of the document
embodying the amicable settlement. Gilda Corpuz alleged during trial that
barangay authorities made her sign said document through
misrepresentation and coercion.[13] In any event, its execution does not
alter the void character of the deed of sale between the husband and the
petitioners-spouses, as will be discussed later. The fact remains that such
contract was entered into without the wifes consent.
In sum, the nullity of the contract of sale is premised on the absence of
private respondents consent. To constitute a valid contract, the Civil Code
requires the concurrence of the following elements: (1) cause, (2) object,
and (3) consent,[14] the last element being indubitably absent in the case
at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver
that it was duly ratified by the contending parties through the amicable
settlement they executed on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have
resolved this issue in favor of the private respondent. The trial court
correctly held:[15]
By the specific provision of the law [Art. 1390, Civil Code] therefore, the
Deed of Transfer of Rights (Exh. A) cannot be ratified, even by an
amicable settlement. The participation by some barangay authorities in
the amicable settlement cannot otherwise validate an invalid act.
Moreover, it cannot be denied that the amicable settlement (Exh. B)
entered into by plaintiff Gilda Corpuz and defendant spouses Guiang is a
contract. It is a direct offshoot of the Deed of Transfer of Rights (Exh. A).
By express provision of law, such a contract is also void. Thus, the legal
provision, to wit:
Art. 1422. A contract which is the direct result of a previous illegal
contract, is also void and inexistent. (Civil Code of the Philippines).

In summation therefore, both the Deed of Transfer of Rights (Exh. A) and

the amicable settlement (Exh. 3) are null and void.

Doctrinally and clearly, a void contract cannot be ratified.[16]

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.

WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the
challenged Decision and Resolution. Costs against petitioners.

SO ORDERED.
AINZA VS SPS. PADUA
This petition for review on certiorari assails the February 24, 2004
decision of the Court of Appeals in CA-G.R. CV No. 70239,[1] and its
September 28, 2004 resolution, denying reconsideration thereof.[2]
Thereafter, Antonio requested Natividad to vacate the premises but the
latter refused and claimed that Concepcion owned the property. Antonio
thus filed an ejectment suit on April 1, 1999. Concepcion, represented by
Natividad, also filed on May 4, 1999 a civil case for partition of real
property and annulment of titles with damages.

In her complaint for partition of real property, annulment of titles with Antonio claimed that his wife, Eugenia, admitted that Concepcion offered
damages,[3] Concepcion Ainza (Concepcion) alleged that respondent- to buy one third (1/3) of the property who gave her small amounts over
spouses Eugenia (Eugenia) and Antonio Padua (Antonio) owned a 216.40 several years which totaled P100,000.00 by 1987 and for which she
sq. m. lot with an unfinished residential house located at No. 85-A Durian signed a receipt.
corner Pajo Sts., Barangay Quirino 2-C, Project 2, Quezon City, covered
by Transfer Certificate of Title No. 271935. Sometime in April 1987, she
bought one-half of an undivided portion of the property from her
On January 9, 2001, the Regional Trial Court of Quezon City, Branch 85,
daughter, Eugenia and the latters husband, Antonio, for One Hundred
rendered judgment[4] in favor of Concepcion, the dispositive portion of
Thousand Pesos (P100,000.00).
which states:

No Deed of Absolute Sale was executed to evidence the transaction, but

WHEREFORE, premises considered, judgment is hereby rendered in favor
cash payment was received by the respondents, and ownership was
of the plaintiff and against the defendants and ordering:
transferred to Concepcion through physical delivery to her attorney-in-
fact and daughter, Natividad Tuliao (Natividad). Concepcion authorized
Natividad and the latters husband, Ceferino Tuliao (Ceferino) to occupy
the premises, and make improvements on the unfinished building. 1. the subdivision of the subject property between the said plaintiff and
defendants in equal shares with one-half of the property, including the
portion occupied by the spouses Severino and Natividad Tuliao to be
awarded to the plaintiff;
Thereafter, Concepcion alleged that without her consent, respondents
caused the subdivision of the property into three portions and registered
it in their names under TCT Nos. N-155122, N-155123 and N-155124 in
violation of the restrictions annotated at the back of the title. 2. the cancellation of Transfer Certificates of Title Nos. N-155122, N-
155123, N-155124 of the Registry of Deeds of Quezon City;

On the other hand, Antonio averred that he bought the property in 1980
and introduced improvements thereon. Between 1989 and 1990, he and 3. the defendants to pay to the plaintiff P50,000.00 as attorneys fees.
his wife, Eugenia, allowed Natividad and Ceferino to occupy the premises
temporarily. In 1994, they caused the subdivision of the property and
three (3) separate titles were issued. SO ORDERED.[5]
The trial court upheld the sale between Eugenia and Concepcion. It ruled
that the sale was consummated when both contracting parties complied
with their respective obligations. Eugenia transferred possession by
delivering the property to Concepcion who in turn paid the purchase price.
It also declared that the transfer of the property did not violate the
Statute of Frauds because a fully executed contract does not fall within
its coverage.
On appeal by the respondents, the Court of Appeals reversed the decision
of the trial court, and declared the sale null and void. Applying Article 124
of the Family Code, the Court of Appeals ruled that since the subject
property is conjugal, the written consent of Antonio must be obtained for
the sale to be valid. It also ordered the spouses Padua to return the
amount of P100,000.00 to petitioners plus interest.[6]
The sole issue for resolution in this petition for review is whether there
was a valid contract of sale between Eugenia and Concepcion.
A contract of sale is perfected by mere consent, upon a meeting of the
minds on the offer and the acceptance thereof based on subject matter,
price and terms of payment.[7]
In this case, there was a perfected contract of sale between Eugenia and
Concepcion. The records show that Eugenia offered to sell a portion of
the property to Concepcion, who accepted the offer and agreed to pay
P100,000.00 as consideration. The contract of sale was consummated
when both parties fully complied with their respective obligations.
Eugenia delivered the property to Concepcion, who in turn, paid Eugenia
the price of One Hundred Thousand Pesos (P100,000.00), as evidenced
by the receipt which reads:
RECEIPT
Received the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00) as payment for the lot on 85-A Durian St., Project 2,
Quezon City, from Mrs. Concepcion R. Ainza, on April, 1987.
_______(Sgd.)______
Mrs.. Eugenia A. Padua[8]
The verbal contract of sale between Eugenia and Concepcion did not
violate the provisions of the Statute of Frauds that a contract for the sale
of real property shall be unenforceable unless the contract or some note
or memorandum of the sale is in writing and subscribed by the party
charged or his agent.[9] When a verbal contract has been completed,
executed or partially consummated, as in this case, its enforceability will
not be barred by the Statute of Frauds, which applies only to an executory
agreement.[10] Thus, where one party has performed his obligation, oral
evidence will be admitted to prove the agreement.[11]
In the instant case, the oral contract of sale between Eugenia and
Concepcion was evidenced by a receipt signed by Eugenia. Antonio also
stated that his wife admitted to him that she sold the property to
Concepcion.
It is undisputed that the subject property was conjugal and sold by
Eugenia in April 1987 or prior to the effectivity of the Family Code on
August 3, 1988, Article 254 of which repealed Title V, Book I of the Civil
Code provisions on the property relations between husband and wife.
However, Article 256 thereof limited its retroactive effect only to cases
where it would not prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws. In the case at bar, vested
rights of Concepcion will be impaired or prejudiced by the application of
the Family Code; hence, the provisions of the Civil Code should be
applied.
 consent to the contract of sale. The capacity to give consent belonged not
even to the husband alone but to both spouses.
In Felipe v. Heirs of Aldon, et al.,[12] the legal effect of a sale of conjugal
properties by the wife without the consent of the husband was clarified,
to wit:
The view that the contract made by Gimena is a voidable contract is
supported by the legal provision that contracts entered by the husband
without the consent of the wife when such consent is required, are
The legal ground which deserves attention is the legal effect of a sale of
annullable at her instance during the marriage and within ten years from
lands belonging to the conjugal partnership made by the wife without the
the transaction questioned. (Art. 173, Civil Code).
consent of the husband.

Gimenas contract is not rescissible for in such a contract all the essential
It is useful at this point to re-state some elementary rules: The husband
elements are untainted but Gimenas consent was tainted. Neither can the
is the administrator of the conjugal partnership. (Art. 165, Civil Code) contract be classified as unenforceable because it does not fit any of those
Subject to certain exceptions, the husband cannot alienate or encumber described in Art. 1403 of the Civil Code. And finally, the contract cannot
any real property of the conjugal partnership without the wifes consent.
be void or inexistent because it is not one of those mentioned in Art. 1409
(Art. 166, Idem.) And the wife cannot bind the conjugal partnership
of the Civil Code. By process of elimination, it must perforce be a voidable
without the husbands consent, except in cases provided by law. (Art. 172,
contract.
Idem.).

The voidable contract of Gimena was subject to annulment by her

In the instant case, Gimena, the wife, sold lands belonging to the conjugal
husband only during the marriage because he was the victim who had an
partnership without the consent of the husband and the sale is not interest in the contract. Gimena, who was the party responsible for the
covered by the phrase except in cases provided by law. The Court of
defect, could not ask for its annulment. Their children could not likewise
Appeals described the sale as invalid a term which is imprecise when used
seek the annulment of the contract while the marriage subsisted because
in relation to contracts because the Civil Code uses specific names in they merely had an inchoate right to the lands sold. (Emphasis supplied)
designating defective contracts, namely: rescissible (Arts. 1380 et seq.),
voidable (Arts. 1390 et seq.), unenforceable (Arts. 1403, et seq.), and
void or inexistent (Arts. 1409 et seq.).
The consent of both Eugenia and Antonio is necessary for the sale of the
conjugal property to be valid. Antonios consent cannot be presumed.[13]
Except for the self-serving testimony of petitioner Natividad, there is no
The sale made by Gimena is certainly a defective contract but of what evidence that Antonio participated or consented to the sale of the
category? The answer: it is a voidable contract.
conjugal property. Eugenia alone is incapable of giving consent to the
contract. Therefore, in the absence of Antonios consent, the disposition
made by Eugenia is voidable.[14]
According to Art. 1390 of the Civil Code, among the voidable contracts
are [T]hose where one of the parties is incapable of giving consent to the
contract. (Par. 1.) In the instant case Gimena had no capacity to give
The contract of sale between Eugenia and Concepcion being an oral
contract, the action to annul the same must be commenced within six
years from the time the right of action accrued.[15] Eugenia sold the
property in April 1987 hence Antonio should have asked the courts to
annul the sale on or before April 1993. No action was commenced by
Antonio to annul the sale, hence his right to seek its annulment was
extinguished by prescription.

Even assuming that the ten (10)-year prescriptive period under Art. 173
should apply, Antonio is still barred from instituting an action to annul the
sale because since April 1987, more than ten (10) years had already
lapsed without any such action being filed.

In sum, the sale of the conjugal property by Eugenia without the consent
of her husband is voidable. It is binding unless annulled. Antonio failed to
exercise his right to ask for the annulment within the prescribed period,
hence, he is now barred from questioning the validity of the sale between
his wife and Concepcion.

WHEREFORE, the petition is GRANTED. The decision dated February 24,

2004 of the Court of Appeals in CA-G.R. CV No. 70239 and its resolution
dated September 28, 2004 are REVERSED and SET ASIDE. The decision
dated January 9, 2001 of the Regional Trial Court of Quezon City, Branch
85, in Civil Case No. Q-99-37529, is REINSTATED.

SO ORDERED.
SPS. FUENTES VS ROCA
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 P60,000.00 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
P140,000.00 or P160,000.00, 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 P140,000.00
mentioned in their agreement. A new title was issued in the name of the
spouses[5] 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]
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]
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 Finally, the RTC noted that Atty. Plagatas defective notarization of the
on ground of fraud had already lapsed. 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]

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
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA
the signatures were not written by the same person. Making the same
found sufficient evidence of forgery and did not give credence to Atty.
comparison, the spouses expert concluded that they were.[8]
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
On February 1, 2005 the RTC rendered judgment, dismissing the case. It since 1958 also reinforced the conclusion that her signature had been
ruled that the action had already prescribed since the ground cited by the forged.
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] 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
1. Whether or not Rosarios signature on the document of consent to her
in 1997 fell within 10 years of the January 11, 1989 sale.
husband Tarcianos sale of their conjugal land to the Fuentes spouses was
forged;

Considering, however, that the sale between the Fuentes spouses and
Tarciano was merely voidable, the CA held that its annulment entitled the
2. Whether or not the Rocas action for the declaration of nullity of that
spouses to reimbursement of what they paid him plus legal interest
computed from the filing of the complaint until actual payment. Since the sale to the spouses already prescribed; and
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]
3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.

Unsatisfied with the CA decision, the Fuentes spouses came to this court
by petition for review.[14]
The Courts Rulings

The Issues Presented

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 case presents the following issues:

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.[18] Further, 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.
In fairness to the Fuentes spouses, however, they should be entitled,
among other things, to recover from Tarcianos heirs, the Rocas, the
P200,000.00 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.
Further, the notarized document appears to have comforted the Fuentes
spouses that everything was already in order when Tarciano executed a
deed of absolute sale in their favor on January 11, 1989. In fact, they
paid the balance due him. And, acting on the documents submitted to it,
the Register of Deeds of Zamboanga City issued a new title in the names
of the Fuentes spouses. It was only after all these had passed that the
spouses entered the property and built on it. He is deemed a 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.
As possessor in good faith, the Fuentes spouses were under no obligation
to pay for their stay on the property prior to its legal interruption by a
final judgment against them.[24] What is more, they are entitled under
Article 448 to indemnity for the improvements they introduced into the
property with a right of retention until the reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built, sown
or planted in good faith, shall have the right to appropriate as his own the
works, sowing or 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 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)
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;
2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate
Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married
to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses
Manuel and Leticia Fuentes the P200,000.00 that the latter paid Tarciano
T. Roca, with legal interest from January 11, 1989 until fully paid,
chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are further ORDERED, at their option, to
indemnify petitioner spouses Manuel and Leticia Fuentes with their
expenses for introducing useful improvements on the subject land or pay
the increase in value which it may have acquired by reason of those
improvements, with the spouses entitled to the right of retention of the
land until the indemnity is made; and
5. The RTC of Zamboanga City from which this case originated is
DIRECTED to receive evidence and determine the amount of indemnity to
which petitioner spouses Manuel and Leticia Fuentes are entitled
SO ORDERED.
SPS. AGGABAO VS SPS. PARULAN
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati
City annulled the deed of absolute sale executed in favor of the petitioners
covering two parcels of registered land the respondents owned for want
of the written consent of respondent husband Dionisio Parulan, Jr. On July
2, 2004, in C.A.-G.R. CV No. 69044,[1] the Court of Appeals (CA) affirmed
the RTC decision.
Hence, the petitioners appeal by petition for review on certiorari, seeking
to reverse the decision of the CA. They present as the main issue whether
the sale of conjugal property made by respondent wife by presenting a
special power of attorney to sell (SPA) purportedly executed by
respondent husband in her favor was validly made to the vendees, who
allegedly acted in good faith and paid the full purchase price, despite the
showing by the husband that his signature on the SPA had been forged
and that the SPA had been executed during his absence from the country.
We resolve the main issue against the vendees and sustain the CAs
finding that the vendees were not buyers in good faith, because they did
not exercise the necessary prudence to inquire into the wifes authority to
sell. We hold that the sale of conjugal property without the consent of the
husband was not merely voidable but void; hence, it could not be ratified.
Antecedents
Involved in this action are two parcels of land and their improvements
(property) located at No. 49 Miguel Cuaderno Street, Executive Village,
BF Homes, Paraaque City and registered under Transfer Certificate of Title
(TCT) No. 63376[2] and TCT No. 63377[3] in the name of respondents
Spouses Maria Elena A. Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr.
(Dionisio), who have been estranged from one another.
In January 1991, real estate broker Marta K. Atanacio (Atanacio) offered
the property to the petitioners, who initially did not show interest due to
the rundown condition of the improvements. But Atanacios persistence
prevailed upon them, so that on February 2, 1991, they and Atanacio met
with Ma. Elena at the site of the property. During their meeting, Ma. Elena
showed to them the following documents, namely: (a) the owners original
copy of TCT No. 63376; (b) a certified true copy of TCT No. 63377; (c)
three tax declarations; and (d) a copy of the special power of attorney
(SPA) dated January 7, 1991 executed by Dionisio authorizing Ma. Elena
to sell the property.[4] Before the meeting ended, they paid P20,000.00
as earnest money, for which Ma. Elena executed a handwritten Receipt of
Earnest Money, whereby the parties stipulated that: (a) they would pay
an additional payment of P130,000.00 on February 4, 1991; (b) they
would pay the balance of the bank loan of the respondents amounting to
P650,000.00 on or before February 15, 1991; and (c) they would make
the final payment of P700,000.00 once Ma. Elena turned over the
property on March 31, 1991.[5]
On February 4, 1991, the petitioners went to the Office of the Register of
Deeds and the Assessors Office of Paraaque City to verify the TCTs shown
by Ma. Elena in the company of Atanacio and her husband (also a licensed who was then in Hongkong.[12] She assured them that the owners
broker).[6] There, they discovered that the lot under TCT No. 63376 had duplicate copy of TCT No. 63376 would be turned over after a week.
been encumbered to Banco Filipino in 1983 or 1984, but that the
encumbrance had already been cancelled due to the full payment of the
obligation.[7] They noticed that the Banco Filipino loan had been effected
through an SPA executed by Dionisio in favor of Ma. Elena.[8] They found
on TCT No. 63377 the annotation of an existing mortgage in favor of the
Los Baos Rural Bank, also effected through an SPA executed by Dionisio
On March 19, 1991, TCT No. 63377 was cancelled and a new one was
in favor of Ma. Elena, coupled with a copy of a court order authorizing Ma.
issued in the name of the petitioners.
Elena to mortgage the lot to secure a loan of P500,000.00.[9]

Ma. Elena did not turn over the duplicate owners copy of TCT No. 63376
The petitioners and Atanacio next inquired about the mortgage and the
as promised. In due time, the petitioners learned that the duplicate
court order annotated on TCT No. 63377 at the Los Baos Rural Bank.
owners copy of TCT No. 63376 had been all along in the custody of Atty.
There, they met with Atty. Noel Zarate, the banks legal counsel, who
Jeremy Z. Parulan, who appeared to hold an SPA executed by his brother
related that the bank had asked for the court order because the lot
Dionisio authorizing him to sell both lots.[13]
involved was conjugal property.[10]

At Atanacios instance, the petitioners met on March 25, 1991 with Atty.
Following their verification, the petitioners delivered P130,000.00 as
Parulan at the Manila Peninsula.[14] For that meeting, they were
additional down payment on February 4, 1991; and P650,000.00 to the
accompanied by one Atty. Olandesca.[15] They recalled that Atty. Parulan
Los Baos Rural Bank on February 12, 1991, which then released the
smugly demanded P800,000.00 in exchange for the duplicate owners
owners duplicate copy of TCT No. 63377 to them.[11]
copy of TCT No. 63376, because Atty. Parulan represented the current
value of the property to be P1.5 million. As a counter-offer, however, they
tendered P250,000.00, which Atty. Parulan declined,[16] giving them
only until April 5, 1991 to decide.

On March 18, 1991, the petitioners delivered the final amount of

P700,000.00 to Ma. Elena, who executed a deed of absolute sale in their
favor. However, Ma. Elena did not turn over the owners duplicate copy of
TCT No. 63376, claiming that said copy was in the possession of a relative
Hearing nothing more from the petitioners, Atty. Parulan decided to call
them on April 5, 1991, but they informed him that they had already fully
paid to Ma. Elena.[17]
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an
action (Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr.,
represented by Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena
Parulan, Sps. Rex and Coney Aggabao), praying for the declaration of the
nullity of the deed of absolute sale executed by Ma. Elena, and the
cancellation of the title issued to the petitioners by virtue thereof.
In turn, the petitioners filed on July 12, 1991 their own action for specific
performance with damages against the respondents.
Both cases were consolidated for trial and judgment in the RTC.[18]
Ruling of the RTC
After trial, the RTC rendered judgment, as follows:
WHEREFORE, and in consideration of the foregoing, judgment is hereby
rendered in favor of plaintiff Dionisio A. Parulan, Jr. and against
defendants Ma. Elena Parulan and the Sps. Rex and Concepcion Aggabao,
without prejudice to any action that may be filed by the Sps. Aggabao
against co-defendant Ma. Elena Parulan for the amounts they paid her for
the purchase of the subject lots, as follows:
1. The Deed of Absolute Sale dated March 18, 1991 covering the sale
of the lot located at No. 49 M. Cuaderno St., Executive Village, BF Homes,
Paraaque, Metro Manila, and covered by TCT Nos. 63376 and 63377 is
declared null and void.
2. Defendant Mrs. Elena Parulan is directed to pay litigation expenses
amounting to P50,000.00 and the costs of the suit.
SO ORDERED.[19]
The RTC declared that the SPA in the hands of Ma. Elena was a forgery, As stated, the CA affirmed the RTC, opining that Article 124 of the Family
based on its finding that Dionisio had been out of the country at the time Code applied because Dionisio had not consented to the sale of the
of the execution of the SPA;[20] that NBI Sr. Document Examiner Rhoda conjugal property by Ma. Elena; and that the RTC correctly found the SPA
B. Flores had certified that the signature appearing on the SPA purporting to be a forgery.
to be that of Dionisio and the set of standard sample signatures of Dionisio
had not been written by one and the same person;[21] and that Record
Officer III Eliseo O. Terenco and Clerk of Court Jesus P. Maningas of the The CA denied the petitioners motion for reconsideration.[25]
Manila RTC had issued a certification to the effect that Atty. Alfred
Datingaling, the Notary Public who had notarized the SPA, had not been
included in the list of Notaries Public in Manila for the year 1990-
1991.[22]

Issues

The RTC rejected the petitioners defense of being buyers in good faith
because of their failure to exercise ordinary prudence, including
demanding from Ma. Elena a court order authorizing her to sell the
properties similar to the order that the Los Baos Rural Bank had required The petitioners now make two arguments: (1) they were buyers in good
before accepting the mortgage of the property.[23] It observed that they faith; and (2) the CA erred in affirming the RTCs finding that the sale
had appeared to be in a hurry to consummate the transaction despite between Mrs. Elena and the petitioners had been a nullity under Article
Atanacios advice that they first consult a lawyer before buying the 124 of the Family Code.
property; that with ordinary prudence, they should first have obtained
the owners duplicate copies of the TCTs before paying the full amount of
the consideration; and that the sale was void pursuant to Article 124 of
the Family Code.[24]

The petitioners impute error to the CA for not applying the ordinary
prudent mans standard in determining their status as buyers in good
faith. They contend that the more appropriate law to apply was Article
173 of the Civil Code, not Article 124 of the Family Code; and that even
Ruling of the CA if the SPA held by Ma. Elena was a forgery, the ruling in Veloso v. Court
of Appeals[26] warranted a judgment in their favor.
Restated, the issues for consideration and resolution are as follows:

1.

1) Which between Article 173 of the Civil Code and Article 124 of the
Family Code should apply to the sale of the conjugal property executed
Article 124, Family Code, applies to sale of conjugal
without the consent of Dionisio?

properties made after the effectivity of the Family Code

2) Might the petitioners be considered in good faith at the time of their

purchase of the property?

The petitioners submit that Article 173 of the Civil Code, not Article 124
of the Family Code, governed the property relations of the respondents
because they had been married prior to the effectivity of the Family Code;
and that the second paragraph of Article 124 of the Family Code should
not apply because the other spouse held the administration over the
3) Might the ruling in Veloso v. Court of Appeals be applied in favor of the
conjugal property. They argue that notwithstanding his absence from the
petitioners despite the finding of forgery of the SPA?
country Dionisio still held the administration of the conjugal property by
virtue of his execution of the SPA in favor of his brother; and that even
assuming that Article 124 of the Family Code properly applied, Dionisio
ratified the sale through Atty. Parulans counter-offer during the March
25, 1991 meeting.
Ruling

We do not subscribe to the petitioners submissions.

The petition has no merit. We sustain the CA.

To start with, Article 254[27] the Family Code has expressly repealed
several titles under the Civil Code, among them the entire Title VI in which
the provisions on the property relations between husband and wife,
Article 173 included, are found.
Secondly, the sale was made on March 18, 1991, or after August 3, 1988,
the effectivity of the Family Code. The proper law to apply is, therefore,
Article 124 of the Family Code, for it is settled that any alienation or
encumbrance of conjugal property made during the effectivity of the
Family Code is governed by Article 124 of the Family Code.[28]
Article 124 of the Family Code provides:
Article 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement,
the husbands decision shall prevail, subject to recourse to the court by
the wife for proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.
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 disposition or encumbrance without 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. However, the
transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a
binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both
offerors.
Thirdly, according to Article 256[29] of the Family Code, the provisions of
the Family Code may apply retroactively provided no vested rights are
impaired. In Tumlos v. Fernandez,[30] the Court rejected the petitioners
argument that the Family Code did not apply because the acquisition of
the contested property had occurred prior to the effectivity of the Family
Code, and pointed out that Article 256 provided that the Family Code
could apply retroactively if the application would not prejudice vested or
acquired rights existing before the effectivity of the Family Code. Herein,
however, the petitioners did not show any vested right in the property
acquired prior to August 3, 1988 that exempted their situation from the
retroactive application of the Family Code.
Fourthly, the petitioners failed to substantiate their contention that
Dionisio, while holding the administration over the property, had
delegated to his brother, Atty. Parulan, the administration of the property,
considering that they did not present in court the SPA granting to Atty.
Parulan the authority for the administration.
Nonetheless, we stress that the power of administration does not include
acts of disposition or encumbrance, which are acts of strict ownership. As
such, an authority to dispose cannot proceed from an authority to
administer, and vice versa, for the two powers may only be exercised by
an agent by following the provisions on agency of the Civil Code (from
Article 1876 to Article 1878). Specifically, the apparent authority of Atty.
Parulan, being a special agency, was limited to the sale of the property in
question, and did not include or extend to the power to administer the
property.[31] 2.

Due diligence required in verifying not only vendors title,

Lastly, the petitioners insistence that Atty. Parulans making of a counter- but also agents authority to sell the property
offer during the March 25, 1991 meeting ratified the sale merits no
consideration. Under Article 124 of the Family Code, the transaction
executed sans the written consent of Dionisio or the proper court order
was void; hence, ratification did not occur, for a void contract could not
be ratified.[32]
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 the full and fair price for it at the time of such purchase or before
he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom
On the other hand, we agree with Dionisio that the void sale was a he receives the thing was the owner and could convey title to the
continuing offer from the petitioners and Ma. Elena that Dionisio had the property. He cannot close his eyes to facts that should put a reasonable
option of accepting or rejecting before the offer was withdrawn by either man on his guard and still claim he acted in good faith.[33] The status of
or both Ma. Elena and the petitioners. The last sentence of the second a buyer in good faith is never presumed but must be proven by the person
paragraph of Article 124 of the Family Code makes this clear, stating that invoking it.[34]
in the absence of the other spouses consent, the transaction should be
construed as a continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or upon authorization by the court before
the offer is withdrawn by either or both offerors.
Here, the petitioners disagree with the CA for not applying the ordinary
prudent mans standard in determining their status as buyers in good
faith. They insist that they exercised due diligence by verifying the status
of the TCTs, as well as by inquiring about the details surrounding the
mortgage extended by the Los Baos Rural Bank. They lament the holding
of the CA that they should have been put on their guard when they
learned that the Los Baos Rural Bank had first required a court order
before granting the loan to the respondents secured by their mortgage of
the property.
The petitioners miss the whole point.
Article 124 of the Family Code categorically requires the consent of both
spouses before the conjugal property may be disposed of by sale,
mortgage, or other modes of disposition. In Bautista v. Silva,[35] the
Court erected a standard to determine the good faith of the buyers
dealing with
a seller who had title to and possession of the land but whose capacity to
sell was restricted, in that the consent of the other spouse was required
before the conveyance, declaring that in order to prove good faith in such
a situation, the buyers must show that they inquired not only into the title
of the seller but also into the sellers capacity to sell.[36] Thus, the buyers
of conjugal property must observe two kinds of requisite diligence,
namely: (a) the diligence in verifying the validity of the title covering the
property; and (b) the diligence in inquiring into the authority of the
transacting spouse to sell conjugal property in behalf of the other spouse.
It is true that a buyer of registered land needs only to show that he has
relied on the face of the certificate of title to the property, for he is not
required to explore beyond what the certificate indicates on its face.[37]
In this respect, the petitioners sufficiently proved that they had checked
on the authenticity of TCT No. 63376 and TCT No. 63377 with the Office
of the Register of Deeds in Pasay City as the custodian of the land records;
and that they had also gone to the Los Baos Rural Bank to inquire about
the mortgage annotated on TCT No. 63377. Thereby, the petitioners
observed the requisite diligence in examining the validity of the TCTs
concerned.
Yet, it ought to be plain enough to the petitioners that the issue was
whether or not they had diligently inquired into the authority of Ma. Elena
to convey the property, not whether or not the TCT had been valid and
authentic, as to which there was no doubt. Thus, we cannot side with
them.
Firstly, the petitioners knew fully well that the law demanded the written
consent of Dionisio to the sale, but yet they did not present evidence to
show that they had made inquiries into the circumstances behind the
execution of the SPA purportedly executed by Dionisio in favor of Ma.
Elena. Had they made the appropriate inquiries, and not simply accepted
the SPA for what it represented on its face, they would have uncovered
soon enough that the respondents had been estranged from each other
and were under de facto separation, and that they probably held
conflicting interests that would negate the existence of an agency
between them. To lift this doubt, they must, of necessity, further inquire
into the SPA of Ma. Elena. The omission to inquire indicated their not
being buyers in good faith, for, as fittingly observed in Domingo v.
Reed:[38]
 a week because her relative having custody of it had gone to Hongkong,
but their passivity in such an essential matter was puzzling light of their
earlier alacrity in immediately and diligently validating the TCTs to the
extent of inquiring at the Los Baos Rural Bank about the annotated
mortgage. Yet, they could have rightly withheld the final payment of the
What was required of them by the appellate court, which we affirm, was balance. That they did not do so reflected their lack of due care in dealing
merely to investigate as any prudent vendee should the authority of Lolita with Ma. Elena.
to sell the property and to bind the partnership. They had knowledge of
facts that should have led them to inquire and to investigate, in order to
acquaint themselves with possible defects in her title. The law requires
them to act with the diligence of a prudent person; in this case, their only
prudent course of action was to investigate whether respondent had
indeed given his consent to the sale and authorized his wife to sell the
Lastly, another reason rendered the petitioners good faith incredible.
property.[39]
They did not take immediate action against Ma. Elena upon discovering
that the owners original copy of TCT No. 63376 was in the possession of
Atty. Parulan, contrary to Elenas representation. Human experience
would have impelled them to exert every effort to proceed against Ma.
Elena, including demanding the return of the substantial amounts paid to
her. But they seemed not to mind her inability to produce the TCT, and,
Indeed, an unquestioning reliance by the petitioners on Ma. Elenas SPA instead, they contented themselves with meeting with Atty. Parulan to
without first taking precautions to verify its authenticity was not a prudent negotiate for the possible turnover of the TCT to them.
buyers move.[40] They should have done everything within their means
and power to ascertain whether the SPA had been genuine and authentic.
If they did not investigate on the relations of the respondents vis--vis
each other, they could have done other things towards the same end, like
attempting to locate the notary public who had notarized the SPA, or
checked with the RTC in Manila to confirm the authority of Notary Public
Atty. Datingaling. It turned out that Atty. Datingaling was not authorized 3.
to act as a Notary Public for Manila during the period 1990-1991, which
was a fact that they could easily discover with a modicum of zeal.
Veloso v. Court of Appeals cannot help petitioners

Secondly, the final payment of P700,000.00 even without the owners

duplicate copy of the TCT No. 63376 being handed to them by Ma. Elena The petitioners contend that the forgery of the SPA notwithstanding, the
indicated a revealing lack of precaution on the part of the petitioners. It CA could still have decided in their favor conformably with Veloso v. Court
is true that she promised to produce and deliver the owners copy within of Appeals,[41] a case where the petitioner husband claimed that his
signature and that of the notary public who had notarized the SPA the
petitioner supposedly executed to authorize his wife to sell the property
had been forged. In denying relief, the Court upheld the right of the
vendee as an innocent purchaser for value.
Dionisio that his signature had been definitely forged, as borne out by the
entries in his passport showing that he was out of the country at the time
of the execution of the questioned SPA; and that the alleged notary
public, Atty. Datingaling, had no authority to act as a Notary Public for
Manila during the period of 1990-1991.

Veloso is inapplicable, however, because the contested property therein

was exclusively owned by the petitioner and did not belong to the
conjugal regime. Veloso being upon conjugal property, Article 124 of the
Family Code did not apply.
WHEREFORE, we deny the petition for review on certiorari, and affirm the
decision dated July 2, 2004 rendered by the Court of Appeals in C.A.-G.R.
CV No. 69044 entitled Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and
Sps. Rex and Concepcion Aggabao and Sps. Rex and Concepcion Aggabao
vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan.

In contrast, the property involved herein pertained to the conjugal

regime, and, consequently, the lack of the written consent of the husband
rendered the sale void pursuant to Article 124 of the Family Code. Costs of suit to be paid by the petitioners.
Moreover, even assuming that the property involved in Veloso was
conjugal, its sale was made on November 2, 1987, or prior to the
effectivity of the Family Code; hence, the sale was still properly covered
by Article 173 of the Civil Code, which provides that a sale effected
without the consent of one of the spouses is only voidable, not void.
However, the sale herein was made already during the effectivity of the
SO ORDERED.
Family Code, rendering the application of Article 124 of the Family Code
clear and indubitable.

The fault of the petitioner in Veloso was that he did not adduce sufficient
evidence to prove that his signature and that of the notary public on the
SPA had been forged. The Court pointed out that his mere allegation that
the signatures had been forged could not be sustained without clear and
convincing proof to substantiate the allegation. Herein, however, both the
RTC and the CA found from the testimonies and evidence presented by
PELAYO VS PEREZ
This resolves the petition for review on certiorari seeking the reversal of
the Decision[1] of the Court of Appeals (CA) promulgated on April 20,
1999 which reversed the Decision of the Regional Trial Court (RTC) of
Panabo, Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution
dated December 17, 1999 denying petitioners motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January
11, 1988, conveyed to Melki Perez (Perez) two parcels of agricultural land
(the lots) situated in Panabo, Davao which are portions of Lot 4192, Cad.
276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature
is illegible witnessed the execution of the deed.
Loreza, however, signed only on the third page in the space provided for
witnesses on account of which Perez application for registration of the
deed with the Office of the Register of Deeds in Tagum, Davao was
denied.
Perez thereupon asked Loreza to sign on the first and second pages of
the deed but she refused, hence, he instituted on August 8, 1991 the
instant complaint for specific performance against her and her husband
Pelayo (defendants).
The defendants moved to dismiss the complaint on the ground that it
stated no cause of action, citing Section 6 of RA 6656 otherwise known
as the Comprehensive Agrarian Reform Law which took effect on June 10,
1988 and which provides that contracts executed prior thereto shall be
valid only when registered with the Register of Deeds within a period of
three (3) months after the effectivity of this Act.
The questioned deed having been executed on January 10, 1988, the
defendants claimed that Perez had at least up to September 10, 1988
within which to register the same, but as they failed to, it is not valid and,
therefore, unenforceable.
The trial court thus dismissed the complaint. On appeal to this Court, the
dismissal was set aside and the case was remanded to the lower court for
further proceedings.
 the husband cannot alienate or encumber any real property of the
conjugal partnership without the wifes consent . . .

In their Answer, the defendants claimed that as the lots were occupied
illegally by some persons against whom they filed an ejectment case, they
and Perez who is their friend and known at the time as an activist/leftist,
hence feared by many, just made it appear in the deed that the lots were
sold to him in order to frighten said illegal occupants, with the intentional it is null and void.
omission of Lorezas signature so that the deed could not be registered;
and that the deed being simulated and bereft of consideration is
void/inexistent.

Perez countered that the lots were given to him by defendant Pelayo in
consideration of his services as his attorney-in-fact to make the necessary
representation and negotiation with the illegal occupants-defendants in
the ejectment suit; and that after his relationship with defendant Pelayo
became sour, the latter sent a letter to the Register of Deeds of Tagum
requesting him not to entertain any transaction concerning the lots title
to which was entrusted to Perez who misplaced and could [not] locate it.
The trial court, finding, among others, that Perez did not possess, nor pay
the taxes on the lots, that defendant Pelayo was indebted to Perez for
services rendered and, therefore, the deed could only be considered as
evidence of debt, and that in any event, there was no marital consent to
nor actual consideration for the deed, held that the deed was null and
void and accordingly rendered judgment the dispositive portion of which
reads:

WHEREFORE, judgment is hereby rendered ordering and directing the

Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March
19, 1996, that the deed was without his wife Lorezas consent, hence, in
light of Art. 166 of the Civil Code which provides:
defendants to pay plaintiff Melki Perez the sum of TEN THOUSAND
(P10,000.00) Pesos as principal with 12% interest per annum starting
from the date of filing of the complaint on August 1, 1991 until plaintiff is
fully paid.

The defendants shall likewise pay to plaintiff the sum of THREE

Article 166. Unless the wife has been declared a non compos mentis or a THOUSAND (P3,000.00) as attorneys fees.
spendthrift, or is under civil interdiction or is confined in a leprosarium,
 technicality, petitioners failed to present any ground bearing on the
merits of the case to justify a reversal or setting aside of the decision.

The court further orders that the Deed of Absolute Sale, (Annex A) of the
complaint and (Annex C) of the plaintiffs Motion for Summary Judgment
is declared null and void and without force and it is likewise removed as
Hence, this petition for review on certiorari on the following grounds:
a cloud over defendants title and property in suit. . . .[2]

1. The CA erred in ignoring the specific provision of Section 6, in relation

to Section 4 of R.A. No. 6657 otherwise known as the Comprehensive
Agrarian Reform Law of 1988 which took effect on June 15, 1988 and
which provides that contracts executed prior thereto shall be valid only
The RTC Decision was appealed by herein respondent Perez to the CA.
when registered with the Register of Deeds within a period of three (3)
Petitioners failed to file their appellees brief. The CA then promulgated its
months after the effectivity of this Act.
Decision on April 20, 1999 whereby it ruled that by Lorenzas signing as
witness to the execution of the deed, she had knowledge of the
transaction and is deemed to have given her consent to the same; that
herein petitioners failed to adduce sufficient proof to overthrow the
presumption that there was consideration for the deed, and that
petitioner David Pelayo, being a lawyer, is presumed to have acted with
due care and to have signed the deed with full knowledge of its contents 2. The CA erred in holding that the deed of sale was valid and considering
and import. The CA reversed and set aside the RTC Decision, declaring as the P10,000.00 adjudged by the trial court as Perezs remuneration as the
valid and enforceable the questioned deed of sale and ordering herein consideration for the deed of sale, instead of declaring the same as null
petitioner Lorenza Pelayo to affix her signature on all pages of said and void for being fictitious or simulated and on the basis of Art. 491, Par.
document. 2 of the New Civil Code which prohibits agents from acquiring by purchase
properties from his principal under his charge.

Petitioners moved for reconsideration of the decision but the same was
denied per Resolution dated December 17, 1999. The CA found said 3. The CA made a novel ruling that there was implied marital consent of
motion to have been filed out of time and ruled that even putting aside the wife of petitioner David Pelayo.

4. Petitioners should have been allowed to file their appellees brief to
ventilate their side, considering the existence of peculiar circumstances
which prevented petitioners from filing said brief.
Respondent likewise opines that the CA was right in denying petitioners
motion for reconsideration where they prayed that they be allowed to file
their appellees brief as their counsel failed to file the same on account of
said counsels failing health due to cancer of the liver. Respondent
emphasized that in petitioners motion for reconsideration, they did not
even cite any errors made by the CA in its Decision.

On the other hand, respondent points out that the CA, in resolving the
first appeal docketed as CA-G.R. SP No. 38700[3] brought by respondent
The issues boil down to the question of whether or not the deed of sale
assailing the RTC Order granting herein petitioners motion to dismiss,
was null and void on the following grounds: (a) for not complying with
already ruled that under R.A. No. 6657, the sale or transfer of private
the provision in R.A. No. 6657 that such document must be registered
agricultural land is allowed only when the area of the land being conveyed
with the Register of Deeds within three months after the effectivity of said
constitutes or is a part of, the landowner-seller retained area and when
law; (b) for lack of marital consent; (c) for being prohibited under Article
the total landholding of the purchaser-transferee, including the property 1491 (2) of the Civil Code; and (d) for lack of consideration.
sold, does not exceed five (5) hectares; that in this case, the land in
dispute is only 1.3 hectares and there is no proof that the transferees
(herein respondent) total landholding inclusive of the subject land will
We rule against petitioners.
exceed 5 hectares, the landholding ceiling prescribed by R.A. No. 6657;
that the failure of respondent to register the instrument was not due to
his fault or negligence but can be attributed to Lorenzas unjustified refusal
to sign two pages of the deed despite several requests of respondent;
and that therefore, the CA ruled that the deed of sale subject of this case
is valid under R.A. No. 6657.
The issue of whether or not the deed of sale is null and void under R.A.
No. 6657, for respondents failure to register said document with the
Register of Deeds within three months after the effectivity of R.A. No.
6657, had been resolved with finality by the CA in its Decision dated
November 24, 1994 in CA-G.R. SP No. 38700.[4] Herein petitioners no
longer elevated said CA Decision to this Court and the same became final
Respondent further maintains that the CA correctly held in its assailed
and executory on January 7, 1995.[5]
Decision that there was consideration for the contract and that Lorenza is
deemed to have given her consent to the deed of sale.
In said decision, the CA interpreted Section 4, in relation to Section 70 of
R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No. 6657,
the sale or transfer of a private agricultural land is allowed only when said
land area constitutes or is a part of the landowner-seller retained area
and only when the total landholdings of the purchaser-transferee,
including the property sold does not exceed five (5) hectares.
Aside from declaring that the failure of respondent to register the deed
was not of his own fault or negligence, the CA ruled that respondents
failure to register the deed of sale within three months after effectivity of
The Comprehensive Agrarian Reform Law did not invalidate the deed of
sale as the transaction over said property is not proscribed by R.A. No.
6657.
Thus, under the principle of law of the case, said ruling of the CA is now
binding on petitioners. Such principle was elucidated in Cucueco vs. Court
of Appeals,[6] to wit:
Law of the case has been defined as the opinion delivered on a former
appeal. It is a term applied to an established rule that when an appellate
court passes on a question and remands the case to the lower court for
further proceedings, the question there settled becomes the law of the
case upon subsequent appeal. It means that whatever is once irrevocably
established as the controlling legal rule or decision between the same
parties in the same case continues to be the law of the case, whether
correct on general principles or not, so long as the facts on which such
decision was predicated continue to be the facts of the case before the
court.
Petitioners not having questioned the Decision of the CA dated November
24, 1994 which then attained finality, the ruling that the deed of sale
subject of this case is not among the transactions deemed as invalid
under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her
signature to the Deed of Sale on the space provided for witnesses, is
deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which
may either be express or implied.[7] A wifes consent to the husbands
disposition of conjugal property does not always have to be explicit or set
forth in any particular document, so long as it is shown by acts of the wife
that such consent or approval was indeed given.[8] In the present case,
although it appears on the face of the deed of sale that Lorenza signed
only as an instrumental witness, circumstances leading to the execution
of said document point to the fact that Lorenza was fully aware of the
sale of their conjugal property and consented to the sale.
In their Pre-Trial Brief,[9] petitioners admitted that even prior to 1988,
they have been having serious problems, including threats to the life of
petitioner David Pelayo, due to conflicts with the illegal occupants of the
property in question, so that respondent, whom many feared for being a
leftist/activist, offered his help in driving out said illegal occupants.
Human experience tells us that a wife would surely be aware of serious
problems such as threats to her husbands life and the reasons for such
threats. As they themselves stated, petitioners problems over the subject
property had been going on for quite some time, so it is highly improbable
for Lorenza not to be aware of what her husband was doing to remedy
such problems. Petitioners do not deny that Lorenza Pelayo was present
during the execution of the deed of sale as her signature appears thereon.
Neither do they claim that Lorenza Pelayo had no knowledge whatsoever
about the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her
husband and respondent.
Under the rules of evidence, it is presumed that a person takes ordinary
care of his concerns.[10] Petitioners did not even attempt to overcome
the aforementioned presumption as no evidence was ever presented to
show that Lorenza was in any way lacking in her mental faculties and,
hence, could not have fully understood the ramifications of signing the
deed of sale. Neither did petitioners present any evidence that Lorenza
had been defrauded, forced, intimidated or threatened either by her own
husband or by respondent into affixing her signature on the subject
document. If Lorenza had any objections over the conveyance of the
disputed property, she could have totally refrained from having any part
in the execution of the deed of sale. Instead, Lorenza even affixed her
signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the New
Civil Code, which was still in effect on January 11, 1988 when the deed
in question was executed, the lack of marital consent to the disposition
of conjugal property does not make the contract void ab initio but merely
voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium,
the husband cannot alienate or encumber any real property of the
conjugal property without the wifes consent. If she refuses unreasonably entered into without Lorenzas consent, we find it quite puzzling why for
to give her consent, the court may compel her to grant the same. more than three and a half years, Lorenza did absolutely nothing to seek
the nullification of the assailed contract.

...
The foregoing circumstances lead the Court to believe that Lorenza knew
of the full import of the transaction between respondent and her

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 husband; and, by affixing her signature on the deed of sale, she, in effect,
consent is required, or any act or contract of the husband which tends to signified her consent to the disposition of their conjugal property.
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.

With regard to petitioners asseveration that the deed of sale is invalid

under Article 1491, paragraph 2 of the New Civil Code, we find such
argument unmeritorious. Article 1491 (2) provides:

Hence, it has been held that the contract is valid until the court annuls
the same and only upon an action brought by the wife whose consent was Art. 1491. The following persons cannot acquire by purchase, even at a
not obtained.[11] In the present case, despite respondents repeated public or judicial auction, either in person or through the mediation of
demands for Lorenza to affix her signature on all the pages of the deed another:
of sale, showing respondents insistence on enforcing said contract,
Lorenza still did not file a case for annulment of the deed of sale. It was
only when respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenzas alleged lack of
consent as an affirmative defense. Thus, if the transaction was indeed
...
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
...
In Distajo vs. Court of Appeals,[12] a landowner, Iluminada Abiertas,
designated one of her sons as the administrator of several parcels of her
land. The landowner subsequently executed a Deed of Certification of Sale
of Unregistered Land, conveying some of said land to her
son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not
absolute. It does not apply if the principal consents to the sale of the
property in the hands of the agent or administrator. In this case, the
deeds of sale signed by Iluminada Abiertas shows that she gave consent
to the sale of the properties in favor of her son, Rufo, who was the
administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2).[13]
The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are also
deemed to have given their consent to the sale of the subject property in
favor of respondent, thereby making the transaction an exception to the
general rule that agents are prohibited from purchasing the property of
their principals.
Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate courts ruling.
The element of consideration for the sale is indeed present. Petitioners,
in adopting the trial courts narration of antecedent facts in their
petition,[14] thereby admitted that they authorized respondent to
represent them in negotiations with the squatters occupying the disputed
property and, in consideration of respondents services, they executed the
subject deed of sale. Aside from such services rendered by respondent,
petitioners also acknowledged in the deed of sale that they received in
full the amount of Ten Thousand Pesos. Evidently, the consideration for
the sale is respondents services plus the aforementioned cash money.
Petitioners contend that the consideration stated in the deed of sale is
excessively inadequate, indicating that the deed of sale was merely
simulated. We are not persuaded. Our ruling in Buenaventura vs. Court
of Appeals[15] is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the exact
value of the subject matter of sale. . . . As we stated in Vales vs. Villa:
Courts cannot follow one every step of his life and extricate him from bad
bargains, protect him from unwise investments, relieve him from one-
sided contracts, or annul the effects of foolish acts. Courts cannot
constitute themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has been defeated
or overcome by another, but because he has been defeated or overcome
illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them indeed, all they have in the
world; but not for that alone can the law intervene and restore. There
must be, in addition, a violation of the law, the commission of what the
law knows as an actionable wrong, before the courts are authorized to lay
hold of the situation and remedy it.[16]
Verily, in the present case, petitioners have not presented proof that there
has been fraud, mistake or undue influence exercised upon them by
respondent. It is highly unlikely and contrary to human experience that a
layman like respondent would be able to defraud, exert undue influence,
or in any way vitiate the consent of a lawyer like petitioner David Pelayo
who is expected to be more knowledgeable in the ways of drafting
contracts and other legal transactions.
Furthermore, in their Reply to Respondents Memorandum,[17]
petitioners adopted the CAs narration of fact that petitioners stated in a
letter they sent to the Register of Deeds of Tagum that they have
entrusted the titles over subject lots to herein respondent. Such act is a
clear indication that they intended to convey the subject property to
herein respondent and the deed of sale was not merely simulated or
fictitious.
Lastly, petitioners claim that they were not able to fully ventilate their
defense before the CA as their lawyer, who was then suffering from cancer
of the liver, failed to file their appellees brief. Thus, in their motion for
reconsideration of the CA Decision, they prayed that they be allowed to
submit such appellees brief. The CA, in its Resolution dated December
17, 1999, stated thus:
By movant-defendant-appellees own information, his counsel received a
copy of the decision on May 5, 1999. He, therefore, had fifteen (15) days
from said date or up to May 20, 1999 to file the motion. The motion,
however, was sent through a private courier and, therefore, considered
to have been filed on the date of actual receipt on June 17, 1999 by the
addressee Court of Appeals, was filed beyond the reglementary period.
 Moreover, it is pointed out by the CA that said motion did not present any
defense or argument on the merits of the case that could have convinced
the CA to reverse or modify its Decision.
Technicality aside, movant has not proffered any ground bearing on the
merits of the case why the decision should be set aside.

We have consistently held that a petitioners right to due process is not

violated where he was able to move for reconsideration of the order or
decision in question.[19] In this case, petitioners had the opportunity to
fully expound on their defenses through a motion for reconsideration.
Petitioners did file such motion but they wasted such opportunity by
failing to present therein whatever errors they believed the CA had
Petitioners never denied the CA finding that their motion for
committed in its Decision. Definitely, therefore, the denial of petitioners
reconsideration was filed beyond the fifteen-day reglementary period. On
motion for reconsideration, praying that they be allowed to file appellees
that point alone, the CA is correct in denying due course to said motion.
brief, did not infringe petitioners right to due process as any issue that
The motion having been belatedly filed, the CA Decision had then attained
petitioners wanted to raise could and should have been contained in said
finality. Thus, in Abalos vs. Philex Mining Corporation,[18] we held that:
motion for reconsideration.

. . . Nothing is more settled in law than that once a judgment attains

IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of
finality it thereby becomes immutable and unalterable. It may no longer
the Court of Appeals dated April 20, 1999 and its Resolution dated
be modified in any respect, even if the modification is meant to correct
December 17, 1999 are hereby AFFIRMED.
what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the
court rendering it or by the highest court of the land.

SO ORDERED.
ABALOS VS MACATANGAY JR .
The instant petition seeks a reversal of the Decision of the Court of
Appeals in CA-G.R. CV No. 48355 entitled Dr. Galicano S. Macatangay,
Jr. v. Arturo R. Abalos and Esther Palisoc-Abalos, promulgated on March
14, 2002. The appellate court reversed the trial courts decision which
dismissed the action for specific performance filed by respondent, and
ordered petitioner and his wife to execute in favor of herein respondent a
deed of sale over the subject property.
Spouses Arturo and Esther Abalos are the registered owners of a parcel
of land with improvements located at Azucena St., Makati City consisting
of about three hundred twenty-seven (327) square meters, covered by
Transfer Certificate of Title (TCT) No. 145316 of the Registry of Deeds of
Makati.
Armed with a Special Power of Attorney dated June 2, 1988, purportedly
issued by his wife, Arturo executed a Receipt and Memorandum of
Agreement (RMOA) dated October 17, 1989, in favor of respondent,
binding himself to sell to respondent the subject property and not to offer
the same to any other party within thirty (30) days from date. Arturo
acknowledged receipt of a check from respondent in the amount of Five
Thousand Pesos (P5,000.00), representing earnest money for the subject
property, the amount of which would be deducted from the purchase price
of One Million Three Hundred Three Hundred Thousand Pesos
(P1,300,000.00). Further, the RMOA stated that full payment would be
effected as soon as possession of the property shall have been turned
over to respondent.
Subsequently, Arturos wife, Esther, executed a Special Power of Attorney
dated October 25, 1989, appointing her sister, Bernadette Ramos, to act
for and in her behalf relative to the transfer of the property to respondent.
Ostensibly, a marital squabble was brewing between Arturo and Esther at
the time and to protect his interest, respondent caused the annotation of
his adverse claim on the title of the spouses to the property on November
14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and Esther
informing them of his readiness and willingness to pay the full amount of
the purchase price. The letter contained a demand upon the spouses to
comply with their obligation to turn over possession of the property to
him. On the same date, Esther, through her attorney-in-fact, executed in
favor of respondent, a Contract to Sell the property to the extent of her
conjugal interest therein for the sum of six hundred fifty thousand pesos
(P650,000.00) less the sum already received by her and Arturo. Esther
agreed to surrender possession of the property to respondent within
twenty (20) days from November 16, 1989, while the latter promised to
pay the balance of the purchase price in the amount of one million two
hundred ninety thousand pesos (P1,290,000.00) after being placed in
possession of the property. Esther also obligated herself to execute and
deliver to respondent a deed of absolute sale upon full payment.
In a letter dated December 7, 1989, respondent informed the spouses
that he had set aside the amount of One Million Two Hundred Ninety
Thousand Pesos (P1,290,000.00) as evidenced by Citibank Check No.
278107 as full payment of the purchase price. He reiterated his demand
upon them to comply with their obligation to turn over possession of the
property. Arturo and Esther failed to deliver the property which prompted
respondent to cause the annotation of another adverse claim on TCT No.
145316. On January 12, 1990, respondent filed a complaint for specific
performance with damages against petitioners. Arturo filed his answer to
the complaint while his wife was declared in default.
The Regional Trial Court (RTC) dismissed the complaint for specific
performance. It ruled that the Special Power of Attorney (SPA) ostensibly
issued by Esther in favor of Arturo was void as it was falsified. Hence, the
court concluded that the SPA could not have authorized Arturo to sell the
property to respondent. The trial court also noted that the check issued
by respondent to cover the earnest money was dishonored due to
insufficiency of funds and while it was replaced with another check by
respondent, there is no showing that the second check was issued as
payment for the earnest money on the property.

On appeal taken by respondent, the Court of Appeals reversed the
decision of the trial court. It ruled that the SPA in favor of Arturo,
assuming that it was void, cannot affect the transaction between Esther
and respondent. The appellate court ratiocinated that it was by virtue of
the SPA executed by Esther, in favor of her sister, that the sale of the
property to respondent was effected. On the other hand, the appellate
court considered the RMOA executed by Arturo in favor of respondent
valid to effect the sale of Arturos conjugal share in the property.
Dissatisfied with the appellate courts disposition of the case, petitioner
seeks a reversal of its decision alleging that:
I.
The Court of Appeals committed serious and manifest error when it
decided on the appeal without affording petitioner his right to due
process.
II.
The Court of Appeals committed serious and manifest error in reversing
and setting aside the findings of fact by the trial court.
III.
The Court of Appeals erred in ruling that a contract to sell is a contract of
sale, and in ordering petitioner to execute a registrable form of deed of
sale over the property in favor of respondent.[1]
Petitioner contends that he was not personally served with copies of
summons, pleadings, and processes in the appeal proceedings nor was
he given an opportunity to submit an appellees brief. He alleges that his
counsel was in the United States from 1994 to June 2000, and he never
received any news or communication from him after the proceedings in
the trial court were terminated. Petitioner submits that he was denied due
process because he was not informed of the appeal proceedings, nor
given the chance to have legal representation before the appellate court.
We are not convinced. The essence of due process is an opportunity to
be heard. Petitioners failure to participate in the appeal proceedings is
not due to a cause imputable to the appellate court but because of
petitioners own neglect in ascertaining the status of his case. Petitioners
counsel is equally negligent in failing to inform his client about the recent
developments in the appeal proceedings. Settled is the rule that a party
is bound by the conduct, negligence and mistakes of his counsel.[2] Thus,
petitioners plea of denial of due process is downright baseless.
Petitioner also blames the appellate court for setting aside the factual
findings of the trial court and argues that factual findings of the trial court
are given much weight and respect when supported by substantial
evidence. He asserts that the sale between him and respondent is void
for lack of consent because the SPA purportedly executed by his wife
Esther is a forgery and therefore, he could not have validly sold the
subject property to respondent.
Next, petitioner theorizes that the RMOA he executed in favor of
respondent was not perfected because the check representing the earnest
money was dishonored. He adds that there is no evidence on record that
the second check issued by respondent was intended to replace the first
check representing payment of earnest money.
Respondent admits that the subject property is co-owned by petitioner
and his wife, but he objects to the allegations in the petition bearing a
relation to the supposed date of the marriage of the vendors. He contends
that the alleged date of marriage between petitioner and his wife is a new
factual issue which was not raised nor established in the court a quo.
Respondent claims that there is no basis to annul the sale freely and
voluntarily entered into by the husband and the wife.
The focal issue in the instant petition is whether petitioner may be
compelled to convey the property to respondent under the terms of the
RMOA and the Contract to Sell. At bottom, the resolution of the issue
entails the ascertainment of the contractual nature of the two documents
and the status of the contracts contained therein.
Contracts, in general, require the presence of three essential elements:
(1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation which is
established.[3]
Until the contract is perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation.[4] In a contract of sale,
the seller must consent to transfer ownership in exchange for the price,
the subject matter must be determinate, and the price must be certain in
money or its equivalent.[5] Being essentially consensual, a contract of
sale is perfected at the moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the price.[6] However,
ownership of the thing sold shall not be transferred to the vendee until
actual or constructive delivery of the property.[7]
On the other hand, an accepted unilateral promise which specifies the
thing to be sold and the price to be paid, when coupled with a valuable
consideration distinct and separate from the price, is what may properly
be termed a perfected contract of option.[8] An option merely grants a
privilege to buy or sell within an agreed time and at a determined price.
It is separate and distinct from that which the parties may enter into upon
the consummation of the option.[9] A perfected contract of option does
not result in the perfection or consummation of the sale; only when the
option is exercised may a sale be perfected.[10] The option must,
however, be supported by a consideration distinct from the price.[11]
Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the
property to respondent for a price certain within a period of thirty days.
The RMOA does not impose upon respondent an obligation to buy
petitioners property, as in fact it does not even bear his signature
thereon. It is quite clear that after the lapse of the thirty-day period,
without respondent having exercised his option, Arturo is free to sell the
property to another. This shows that the intent of Arturo is merely to
grant respondent the privilege to buy the property within the period
therein stated. There is nothing in the RMOA which indicates that Arturo
agreed therein to transfer ownership of the land which is an essential
element in a contract of sale. Unfortunately, the option is not binding
upon the promissory since it is not supported by a consideration distinct
from the price.[12]
As a rule, the holder of the option, after accepting the promise and before
he exercises his option, is not bound to buy. He is free either to buy or
not to buy later. In Sanchez v. Rigos[13] we ruled that in an accepted
unilateral promise to sell, the promissor is not bound by his promise and
may, accordingly, withdraw it, since there may be no valid contract
without a cause or consideration. Pending notice of its withdrawal, his
accepted promise partakes of the nature of an offer to sell which, if
acceded or consented to, results in a perfected contract of sale.
Even conceding for the nonce that respondent had accepted the offer
within the period stated and, as a consequence, a bilateral contract of
purchase and sale was perfected, the outcome would be the same. To
benefit from such situation, respondent would have to pay or at least
make a valid tender of payment of the price for only then could he exact
compliance with the undertaking of the other party.[14] This respondent
failed to do. By his own admission, he merely informed respondent
spouses of his readiness and willingness to pay. The fact that he had set
aside a check in the amount of One Million Two Hundred Ninety Thousand
Pesos (P1,290,000.00) representing the balance of the purchase price
could not help his cause. Settled is the rule that tender of payment must
be made in legal tender. A check is not legal tender, and therefore cannot
The nullity of the RMOA as a contract of sale emanates not only from lack
constitute a valid tender of payment.[15] Not having made a valid tender
of Esthers consent thereto but also from want of consideration and
of payment, respondents action for specific performance must fail.
absence of respondents signature thereon. Such nullity cannot be
obliterated by Esthers subsequent confirmation of the putative
transaction as expressed in the Contract to Sell. Under the law, a void
With regard to the payment of Five Thousand Pesos (P5,000.00), the
contract cannot be ratified[18] and the action or defense for the
Court is of the view that the amount is not earnest money as the term is
declaration of the inexistence of a contract does not prescribe.[19] A void
understood in Article 1482 which signifies proof of the perfection of the
contract produces no effect either against or in favor of anyoneit cannot
contract of sale, but merely a guarantee that respondent is really create, modify or extinguish the juridical relation to which it refers.[20]
interested to buy the property. It is not the giving of earnest money, but
the proof of the concurrence of all the essential elements of the contract
of sale which establishes the existence of a perfected sale.[16] No
reservation of ownership on the part of Arturo is necessary since, as True, in the Contract to Sell, Esther made reference to the earlier RMOA
previously stated, he has never agreed to transfer ownership of the executed by Arturo in favor of respondent. However, the RMOA which
Arturo signed is different from the deed which Esther executed through
property to respondent.
her attorney-in-fact. For one, the first is sought to be enforced as a
contract of sale while the second is purportedly a contract to sell only. For
another, the terms and conditions as to the issuance of title and delivery
Granting for the sake of argument that the RMOA is a contract of sale, of possession are divergent.
the same would still be void not only for want of consideration and
absence of respondents signature thereon, but also for lack of Esthers
conformity thereto. Quite glaring is the absence of the signature of Esther
in the RMOA, which proves that she did not give her consent to the The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property. Where the conveyance is contained in
transaction initiated by Arturo. The husband cannot alienate any real
the same document which bears the conformity of both husband and wife,
property of the conjugal partnership without the wifes consent.[17]
there could be no question on the validity of the transaction. But when
there are two documents on which the signatures of the spouses
separately appear, textual concordance of the documents is
However, it was the Contract to Sell executed by Esther through her
indispensable. Hence, in this case where the wifes putative consent to the
attorney-in-fact which the Court of Appeals made full use of. Holding that
sale of conjugal property appears in a separate document which does not,
the contract is valid, the appellate court explained that while Esther did however, contain the same terms and conditions as in the first document
not authorize Arturo to sell the property, her execution of the SPA
signed by the husband, a valid transaction could not have arisen.
authorizing her sister to sell the land to respondent clearly shows her
intention to convey her interest in favor of respondent. In effect, the court
declared that the lack of Esthers consent to the sale made by Arturo was
Quite a bit of elucidation on the conjugal partnership of gains is in order.
cured by her subsequent conveyance of her interest in the property
through her attorney-in-fact.

Arturo and Esther appear to have been married before the effectivity of
the Family Code. There being no indication that they have adopted a
We do not share the ruling.
different property regime, their property relations would automatically be
governed by the regime of conjugal partnership of gains.[21]
The subject land which had been admittedly acquired during the marriage
of the spouses forms part of their conjugal partnership.[22]
Under the Civil Code, the husband is the administrator of the conjugal
partnership. This right is clearly granted to him by law.[23] More, the
husband is the sole administrator. The wife is not entitled as of right to
joint administration.[24]
The husband, even if he is statutorily designated as administrator of the
conjugal partnership, cannot validly alienate or encumber any real
property of the conjugal partnership without the wifes consent.[25]
Similarly, the wife cannot dispose of any property belonging to the
conjugal partnership without the conformity of the husband. The law is
explicit that the wife cannot bind the conjugal partnership without the
husbands consent, except in cases provided by law.[26]
More significantly, it has been held that 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 title until it appears that there
are assets in the community as a result of the liquidation and settlement.
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]
In not a few cases, we ruled that the sale by the husband of property
belonging to the conjugal partnership without the consent of the wife
when there is no showing that the latter is incapacitated is void ab initio
because it is in contravention of the mandatory requirements of Article
166 of the Civil Code.[29] Since Article 166 of the Civil Code requires the
consent of the wife before the husband may alienate or encumber any
real property of the conjugal partnership, it follows that acts or
transactions executed against this mandatory provision are void except
when the law itself authorizes their validity.[30]
Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court
of Appeals,[31] we ruled that neither spouse could alienate in favor of
another, his or her interest in the partnership or in any property belonging
to it, or ask for partition of the properties before the partnership itself had
been legally dissolved. Nonetheless, alienation of the share of each
spouse in the conjugal partnership could be had after separation of
property of the spouses during the marriage had been judicially decreed,
upon their petition for any of the causes specified in Article 191[32] of
the Civil Code in relation to Article 214[33] thereof.
As an exception, the husband may dispose of conjugal property without
the wifes consent if such sale is necessary to answer for conjugal liabilities
mentioned in Articles 161 and 162 of the Civil Code.[34] In Tinitigan v.
Tinitigan, Sr.,[35] the Court ruled that the husband may sell property
belonging to the conjugal partnership even without the consent of the
wife if the sale is necessary to answer for a big conjugal liability which
might endanger the familys economic standing. This is one instance
where the wifes consent is not required and, impliedly, no judicial
intervention is necessary.
Significantly, the Family Code has introduced some changes particularly
on the aspect of the administration of the conjugal partnership. The new
law provides that the administration of the conjugal partnership is now a
joint undertaking of the husband and the wife. In the event that one
spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal partnership, the other spouse may assume
sole powers of administration. However, the power of administration does
not include the power to dispose or encumber property belonging to the
conjugal partnership.[36] In all instances, the present law specifically
requires the written consent of the other spouse, or authority of the court
for the disposition or encumbrance of conjugal partnership property
without which, the disposition or encumbrance shall be void.[37]

Inescapably, herein petitioners action for specific performance must fail.

Even on the supposition that the parties only disposed of their respective
shares in the property, the sale, assuming that it exists, is still 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. Nemo dat qui non habet. No one can give what he has not.

WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE.

The complaint in Civil Case No. 90-106 of the Regional Trial Court of
Makati is ordered DISMISSED. No pronouncement as to costs.

SO ORDERED.
CALIMLIM- CANULLAS VS FORTUN
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 demand that the disabilities attached to marriage should likewise attach
during marriage, that would destroy the system of conjugal partnership, to concubinage (Emphasis supplied),
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 WHEREFORE, the Decision of respondent Judge, dated October 6, 1980,
prohibitions apply to a couple living as husband and wife without benefit and his Resolution of November 27, 1980 on petitioner's Motion for
of marriage, otherwise, "the condition of those who incurred guilt would Reconsideration, are hereby set aside and the sale of the lot, house and
turn out to be better than those in legal union." Those provisions are improvements in question, is hereby declared null and void. No costs.
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
SO ORDERED.
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
PHIL. TRUST CO. VS ROLDAN of Lot No. 1047, all located in Capiz. On May 26, 1954, Teresita Abiertas
sold Lot No. 1001 in favor of Rufo Distajo.7 On June 2, 1965, Teresita
Abiertas, for herself and representing her sisters and brother, sold Lot
Nos. 1048, 1049, and a portion of Lot No. 1047 to Rufo Distajo.8

DISTAJO VS CA
After purchasing the above-mentioned parcels of land, Rufo Distajo took
The case under consideration is a petition for review on certiorari of a
possession of the property and paid the corresponding real estate taxes
decision of the Court of Appeals1 , which modified the ruling of the
thereon. Rhodora Distajo likewise paid for the real estate taxes of Lot No.
Regional Trial Court, Roxas City regarding seven parcels of land located
1057.
in Barangay Hipona, Pontevedra, Capiz.2

When Iluminada Abiertas died in 1971, Zacarias Distajo, Pilar Distajo-

During the lifetime of Iluminada Abiertas, she designated one of her sons,
Tapar, and Rizaldo Distajo,9 demanded possession of the seven parcels
Rufo Distajo, to be the administrator of her parcels of land denoted as Lot
of land from Lagrimas S. Distajo, and her husband, Rufo Distajo. The
Nos. 1018, 1046, 1047, and 1057 situated in Barangay Hipona,
latter refused.
Pontevedra, Capiz.

Consequently, on June 5, 1986, Ricardo Distajo, with the other heirs of

On May 21, 1954, Iluminada Abiertas sold a portion of Lot No. 1018
Iluminada Abiertas, namely, Ernesto Distajo, Raul Distajo, Federico
(1018-A) to her other children, namely, Raul Distajo, Ricardo Distajo,
Distajo, Zacarias Distajo, Eduardo Distajo, and Pilar Distajo, filed with the
Ernesto Distajo, Federico Distajo, and Eduardo Distajo.3
Regional Trial Court, Roxas City a complaint for recovery of possession
and ownership of Lot No. 1018, partition of Lot Nos. 1001, 1018-B, 1046,
1047, 1048, 1049, 1057, and damages.
On May 29, 1963, Iluminada Abiertas certified to the sale of Lot Nos. 1046
and 1047 in favor of Rufo Distajo.4

On September 4, 1986, private respondent Lagrimas Distajo10 filed an

answer with counterclaim.
On June 4, 1969, Iluminada Abiertas sold Lot No. 1057 to Rhodora
Distajo, the daughter of Rufo Distajo.5

On April 9, 1990, the trial court dismissed the complaint for lack of cause
of action, laches and prescription. The counterclaim was likewise
On July 12, 1969, Iluminada Abiertas sold Lot No. 1018 to Rufo Distajo.6 dismissed. The parties appealed to the Court of Appeals.11

Meanwhile, Justo Abiertas, Jr., the brother of Iluminada Abiertas, died On August 21, 1992, the Court of Appeals rendered its decision,12 the
leaving behind his children, Teresita, Alicia, Josefa and Luis Abiertas. dispositive portion of which states as follows:
Teresita paid for the real estate taxes of the following properties, which
she inherited from her father: Lot Nos. 1001, 1048, 1049, and a portion
"PREMISES CONSIDERED, the decision appealed from is hereby SET
ASIDE and a new judgment rendered, as follows:
WHEREFORE, the Court decides the case in favor of the defendant and
dismisses the plaintiffs’ complaint for lack of cause of action except with
regard to the plaintiffs’ claim over a 238 sq. m. portion of Lot No. 1018
(the portion adjoining the market site and measuring seventeen meters
and that adjoining the property of E. Rodriguez measuring 14 meters).
The Court hereby Orders the partition of Lot No. 1018 to conform to the
following: 238 sq. m. as above specified to belong to the plaintiffs as
prayed for by them while the rest is declared property of the defendant.
Upon partition of Lot No. 1018 in accordance with this Court’s Order, the
City Assessor of Roxas City is hereby Ordered to cancel Tax Declaration
2813 in the name of Rufo Distajo (or any subsequent tax declaration/s
issued relative to the above-cited Tax Declaration No. 2813) and forthwith
to issue the corresponding tax declarations in the names of the respective
parties herein.
SO ORDERED."
On September 10, 1992, Ricardo Distajo filed a motion for
reconsideration.13 On December 9, 1993, the Court of Appeals denied
the motion.14
Hence, this petition.15
Petitioner alleges that Iluminada Abiertas exclusively owns the seven
parcels of land delineated as Lot Nos. 1001, 1018, 1046, 1047, 1048,
1049, and 1057, all of which should be partitioned among all her heirs.
Furthermore, Rufo Distajo cannot acquire the subject parcels of land
owned by Iluminada Abiertas because the Civil Code prohibits the
administrator from acquiring properties under his administration.16 Rufo
Distajo merely employed fraudulent machinations in order to obtain the
consent of his mother to the sale, and may have even forged her
signature on the deeds of sale of the parcels of land.
In her comment dated May 13, 1994, private respondent Lagrimas S.
Distajo contends that Rufo Distajo rightfully owns the subject parcels of
land because of various deeds of sale executed by Iluminada Abiertas
selling Lot Nos. 1018-B, 1047 and 1046 in favor of Rufo Distajo and Lot
No. 1057 in favor of Rhodora Distajo. Private respondent also avers that
petitioner cannot claim any right over Lot Nos. 1001, 1048 and 1049,
considering that such lands belong to the brother of Iluminada Abiertas,
namely, Justo Abiertas, Jr., whose heirs sold said parcels of land to Rufo
Distajo.
The petition lacks merit.
Factual findings of the trial court will not be disturbed on appeal unless
the court has overlooked or ignored some fact or circumstance of
sufficient weight or significance, which, if considered, would alter the
result of the case.17 When there is no conflict between the findings of the
trial and appellate courts, a review of the facts found by the appellate
court is unnecessary.18
Since the trial court and the Court of Appeals agree that Iluminada
Abiertas owned Lot Nos. 1046, 1057 and a portion of Lot No. 1047, and
that Justo Abiertas Jr. owned Lot Nos. 1001, 1048, and 1049, such
findings are binding on this Court, which is not a trier of facts.19 However,
the record shows that Lot No. 1018 should be divided into Lot No. 1018-
A and 1018-B, the delineation of which the Court of Appeals clarified in
its decision.
The issues in this case, therefore, are limited to those properties which
were owned by Iluminada Abiertas, ascendant of petitioner, consisting of
Lot Nos. 1018-A, 1046, 1057, and a portion of 1047.
In his petition, Ricardo Distajo assails the genuineness of the signatures
of Iluminada Abiertas in the deeds of sale of the parcels of land, and
claims that Rufo Distajo forged the signature of Iluminada Abiertas.
However, no handwriting expert was presented to corroborate the claim
of forgery. Petitioner even failed to present a witness who was familiar
with the signature of Iluminada Abiertas. Forgery should be proved by
clear and convincing evidence, and whoever alleges it has the burden of
proving the same.20
Petitioner likewise contends that the sale transactions are void for having
been entered into by the administrator of the properties.1âwphi1 We
disagree. The pertinent Civil Code provision provides:
"Art. 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:
(1) The guardian, the property of the person or persons who may be
under guardianship;
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under
administration;" x x x
Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not
absolute. It does not apply if the principal consents to the sale of the
property in the hands of the agent or administrator. In this case, the
deeds of sale signed by Iluminada Abiertas shows that she gave consent
to the sale of the properties in favor of her son, Rufo, who was the
administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2).
Petitioner also alleges that Rufo Distajo employed fraudulent
machinations to obtain the consent of Iluminada Abiertas to the sale of
the parcels of land. However, petitioner failed to adduce convincing
evidence to substantiate his allegations.
In the absence of any showing of lack of basis for the conclusions made
by the Court of Appeals, this Court finds no cogent reason to reverse the
ruling of the appellate court.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of
the Court of Appeals in CA-G.R. CV No. 30063.
SO ORDERED.
CUI VS CUI
On May 25, 1948, Jesus Ma. Cui and Jorge Ma. Cui brought an action in
the Court of First Instance of Cebu against Antonio Ma. Cui and Mercedes
Cui de Ramos seeking the annulment of the sale of three parcels of land
against Antonio Ma. Cui and Mercedes Cui de Ramas of the latter and the
partition of the same among the heirs who should inherit them including
the plaintiffs. The Rehabilitation Finance Corporation was included as
party defendant because the lands above-mentioned were mortgaged to
it to secure a loan of P130,000, the object being to have the mortgage
declared null and void.
On March 19, 1949, Rosario Cui, daughter of Don Mariano Cui, filed in the
same court a petition for the appointment of a guardian of the person and
properties of her father on the ground of incompetency and, accordingly,
he was declared incompetent on March 31, 1949 and one Victorino
Reynes was appointed as his guardian.
On July 13, 1949, the complaint was amended by including as party
plaintiffs the guardian as party plaintiffs the guardian Victorino Reynes
and the other children and relatives of Don Mariano, namely, Jose Ma.
Cui, Serafin Ma. Cui, Rosario Cui, her husband Irineo Encarnacion,
Lourdes C. Velez, Priscilla Velez and Federico Tamayo.
Defendants in their answer set up the defense that the sale mentioned in
the complaint is valid because it was executed when Don Mariano Cui was
still in possession of his mental faculties and that, while the sale was at
first executed in favor of the defendants and their sister Rosario Cui, the
latter however resold her share to Don Mariano for reason stated in the
deed of resale executed to the effect. They prayed that the complaint be
dismissed.
On May 22, 1951, after due hearing and the presentation of voluminous
evidence on the part of both parties, the court rendered its decision
dismissing the complaint and which plaintiffs appealed in due time, and
because the value of the property involved exceeds the amount of
P50,000, the case was certified to us for decision by the Court of Appeals
under section 1 of Republic Act No. 296.
Plaintiffs and defendants, with the exception of the Rehabilitation Finance
Corporation, are the legitimate children of Don Mariano Cui and Doña
Antonia Perales who died intestate in the City of Cebu on March 20, 1939.
Plaintiffs in their complaint allege that during the marriage of Don Mariano
Cui and Doña Antonia Perales, the spouses acquired certain properties in
the City of Cebu, namely, Lots Nos. 2312, 2313 and 2319, with an
approximate area of 2,658 square meters, having an assessed value of
P159,480, and a market value of 120 per square meter; that upon the
death of Doña Antonia Perales, the conjugal partnership did not leave any
indebtedness and the conjugal properties were placed under the
administration of Don Mariano Cui; that while the latter was 84 years of
age and under the influence of defendants, the latter, by means of deceit,
secured the transfer to themselves of the aforementioned lots without
any pecuniary consideration; that in the deed of sale executed on March
8, 1946, Rosario Cui appeared as one of the vendees, but on learning of
this fact she subsequently renounced her rights under the sale and
returned her portion to Don Mariano Cui by executing a deed of resale in
his favor on October 11, 1946; that defendants, fraudulently and with the
desire of enriching themselves unjustly at the expense of their father,
Don Mariano Cui, and of their brothers and co-heirs, secured a loan of
P130,000 from the Rehabilitation properties, and with the loan thus
obtained, defendants contructed thereon an apartment building of strong
materials consisting of 14 doors, valued at approximately P130,000 and
another building on the same parcels of land, which buildings were leased
to some Cinese commercial firms a monthly rental of P7,600, which
defendants have collected and will continue to collect to the prejudice of
the plaintiffs; and because of this fraudulent and illegal transaction,
plaintiffs prayed that the sale and mortgage executed on the properties
in question, in so far as the shares of the plaintiffs are concerned, be
declared null and void and the defendants be ordered to pay the plaintiffs
their shares in the rentals of the properties at the rate of P7,600 a month
from November 1, 1947 up to the time of their full payment, together
with whatever interest may be thereon and the expenses of litigation.
Defendants, on the other hand, aver that while the properties in question
were acquired during the marriage of Don Mariano Cui and Doña Antonia
Perales, however, they were entirely the exclusive property of Don
Mariano Cui up to the time of their transfer to defendants under the deed
of Sale Exhibit A, having been acquired by him as a donation from his
uncle Don Pedro Cui and his aunt Doña Benigna Cui; that this fact was
known to the plaintiffs and to the guardian of Don Mariano, Victorino
Reynes, because in the extra-judicial partition executed between plaintiffs
and defendants on December 6, 1946 of the properties of the deceased
Antonia Perales, the three lots in question did not form part of the
conjugal properties of the spouses Don Mariano Cui and Doña Antonia
Perales; that Don Mariano Cui, for a consideration, voluntarily and without
deceit, pressure or influence on the part of defendants, executed and
signed the deed of sale Exhibit A; and that Don Cariano Cui was at that
time in full enjoyment of his mental faculties and only suffered loss of
memory several years later when he was declared by the court
incompetent to manage his properties.
Defendants denied that the building constructed on the three lots in
question consisted of 14 doors and alleged that it consisted of only 12
doors. They also denied that they received the sum of P7,600 as monthly
rental of said building because what they have been receiving was only a
monthly rental of P4,800. As a special defense, they aver that they are
the owners of the naked ownership of 2/3 of the three lots in question
subject to the usufruct over the rents of products thereof in favor of Don
Mariano Cui during his lifetime, with the exception of the rents from the
building constructed on the 2/3 portion belonging to them; that the 2/3
of the lots in question did not produce any rent at the time of their
acquisition by the defendants, for they produced rentals only after the
defendants had constructed the 12-door apartment now standing
thereon; that subsequently and by verbal agreement between Don
Mariano Cui and the defendants, the usufruct of the former over said 2/3
portion was fixed at P400 monthly, and this sum Don Mariano has been
receiving since then up to the present time. Defendants also aver that
they are the exclusive owner of the 12-door apartment constructed on
the 2/3 portion of the lots in question, having been constructed at their
expense and by virtue of the authorization given to them in the deed of
sale Exhibit A; that the loan of P130,000 obtained from the Rehabilitation
Finance Corporation was solicited personally by defendants Antonio Ma.
Cui and Mercedes Cui de Ramas for their exclusive benefit and for the
purpose of investing it in the construction of said building; that since the
property is undivided, Don Mariano Cui, as one of the co-owners,
consented to the execution of a mortgage thereon in favor of said
corporation to guarantee the payment of the loan jointly with his co-
owners, the aforesaid defendants, for the sole purpose of accommodating
the latter and to enable them to obtain the loan; that the plaintiffs are in
estoppel to claim that the lots in question belong to the conjugal
partnership of their parents Don Mariano Cui and Doña Antonia Perales,
and that plaintiffs instituted the present action because they do not like
the manner in which their father had disposed of said lots, especially
Jesus Ma. Cui who was unsuccessful in his request that the ¹/3 said lots
be sold to him. They prayed that the action be dismissed.
In this appeal, appellants now contended that the lower court erred: (1)
"In not declaring the deed of sale, Exhibit A, avoid or inexistent for lack
of valid consent and consideration"; (2) "In not declaring illegal the sale,
evidenced by Exhibit A, on the ground that it was a transaction between
principal and agent, which is prohibited by paragraph (2), Article 1959 of
the old Civil Code"; (3) "In not finding that the three lots conveyed by
means of the deed of sale, Exhibit A, belong to the unliquidated conjugal
partnership of Don Mariano Cui and his deceased wife Doña Antonia
Perales, and that entire property"; and (4) "In not finding that the
plaintiffs are entitled to seven-eights (7/8) of property in question and of
the rentals thereof beginning November 1, 1947." We will discuss these
issues separately.
In support of their contention that Don Mariano Cui did not and could not
have validly consented to the deed of sale in question, appellants
submitted the following proposition: (a) Don Mariano was incapacitated
to give his consent by reason of his age and ailment; (b) Don Mariano
acted under a mistake, and his signature was secured by means of deceit;
and (c) the sale Exhibit A is vatiated by undue influence.
In support of the first proposition, it is argued that Don Mariano, at the
time he signed the deed of sale Exhibit A on March 8, 1946, was already
83 years old, was sickly and infirm, and frequently complained of ill
health. It is also contended that six days before the sale, or on March 2,
1946, he had executed a general power of attorney in favor of defendant
Antonio Cui, which act could signify that Don Mariano himself realized
that he was longer capacitated to administer his properties and found it
necessary to relieve himself of the task of dealing with other persons in
connection therewith. It is also pointed out that his children, Jorge, Jesus
and Rosario Cui testified that he was ill, he was forgetful, he could not
read nor remember well what he read, and his letters show that he was
no longer familiar with the rules of orthography. In his letter he also
complained about his illness and he realized that his affections were due
to his old age. It is also emphasized that as early as August, 1944, Jesus
Cui noted that his father was "muy debil . . . en cuestiones negocios" and
that "en cuanto a su capacidad para administar sus bienes en que tenia
que producir o estudiar, el (Don Mariano) no se acordaba." Although he
was not in same when he signed the deed of sale Exhibit A, yet he was
admittedly "incompetente para manejar su dinero." (pp. 85-86, Brief for
plaintiffs and Appellants.)
As regards the second proportion, it is insinuated that if Don Mariano, by
reason of his advanced age, his weak mind and body and feeble will and
reason, was not capacitated to give his consent, it would follow as a
corollary that he could not fully understand the contents of the deed of
sale. He must have therefore labored under a mistake as to true nature
of the transaction especially when it was written in a language which he
did not understand. Other insinuation leading to the same result are: Don
Mariano must have erroneously thought that the only way to pay his debt
of P3,000 to Ramon Aboitiz was by executing the sale, just as he gave
consent to the sale of his conjugal property of San Jose St., Cebu City,
because he thought it was the only available way to pay his indebtedness
to the Insular Life Assurance Co. Or he must have thought that the
document he was made to sign by Antonio Cui was not a sale but a mere
authority to administer the property for purpose of revenue, or he must
have been induced to signing it after he was promised a life annuity in
the form of usufruct over the rents of the properties in question. In other
words the insinuation is made that Antonio Cui employed deceit in
securing the signature Don Mariano to the sale in question in order merely
to satisfy his selfish ends. There being, therefore, error and deceit, there
is no valid consent which can give validity to the sale on the sale on the
part of Don Mariano.
And with regard to the third proposition, the following circumstances are
pointed out: At the time of the sale, Don Mariano was already 83 years
old, was infirm and was living with the vendees, herein appellees. Antonio
Cui was his lawyer and attorney in fact and there was between them
confidential family and spiritual relations. Don Mariano was then in
financial as shown by the fact that he was worried about his debt to
Ramon Aboitiz, and way back in 1946 he had to borrow money from his
daughter Rosario Cui which remained unpaid even after the sale in
question. The presence of undue influence is further shown, appellants
contend, in the execution by Don Mariano of the Mortgage in favor of the
Rehabilitation Finance Corporation, the extrajudicial partition Exhibit 1-a,
the partition of the property in question, the alleged oral waiver of
usufrutuary rights, and the alleged explanatory statement Exhibit 34.
These acts, which were allegedly mastermined by Antonio Cui, show,
appellants contend, that Antonio Cui could get from father whatever he
wanted.
We do not believe the arguments advanced by appellants in an effort to
nullify the deed of sale Exhibit A sufficient in law to invalidate the same
on the ground of lack of valid consent on the part of Don Mariano for the
simple reason that they are merely based on surmises or conjectures or
circumstances which, though they may show inferentially that he was
sickly or forgetful because of his advanced age, do not however point
unremittingly to the conclusion that at the time he signed said deed of
sale he was not full enjoyment of his mental faculties as to disqualify him
to do so or that he was not aware of the nature of the transaction he was
then undertaking. Although at the time of the sale he was already 83
years old, he was sickly and forgetful, as contended, yet, according to the
authorities, weakness of mind alone, not caused by insanity, is not a
ground for avoiding a contract, for it is still necessary to show that the
person at the time of doing the act "is not capable of understanding with
reasonable clearness the nature and effect of the transaction in which he
is engaging" (Page on Contracts, Vol. III, p. 2810). Or, as well stated in able to settle. This letter, which shows how lucid, keen, clear and
the very case cited by counsel for appellants only when there is "great analytical his mind was, is herein reproduced for ready reference:
weakness of mind in a person executing a conveyance of land, arising
from age, sickness, or any other cause", can a person ask a court of
equity to interfere in order to set aside the conveyance (Allore vs. Jewell, Cebu, Mayo 31, 1946
24 Law Ed., 263-264). And here the evidence shows that such is not the
case, for the several letters and documents signed all executed by Don
Mariano many months after the execution of the deed of sale Exhibit A
Sr. DON RAMON ABOITIZ
clearly indicate that, while he was of an advanced age, he was however
still physically fit and his mind was keen and clear. This we will see in the CEBU
following discussion of the evidence.

One of such evidence is the testimony of Rosario Cui, one of the
appellants herein. It should be remembered that it was she who initiated
the proceedings for the declaration of incompetency of Don Mariano Cui
in order that he may be placed under guardianship and at the hearing
held for that purpose, she was the main witness. When called upon to
testify as to the state of health and mental condition of Don Mariano, she
stated that during the period she had been living with her father in
Calapan, Mindoro, which dates as for back as the Japanese occupation,
she had observed that the state of his mind was very good, he was not
yet so forgetful as he is now, and that she discovered his mental
weakness which makes him incompetent to manage his own affairs only
sometime in the month of January, 1949 (pp. 5 and 6, Exhibit 9; p. 136,
t.s.n). And on the strenght of her testimony, Don Mariano was declared
incompetent on March 31, 1949. This is an indication that, when the deed
of sale was executed on March 8, 1946, three years before his declaration
of incompetency, Don Mariano was still in the full enjoyment of his
mental-faculties. It should be stated that his testimony of Rosario Cui
stands undisputed.
A circumstance which strongly corroborates this testimony of Rosario Cui
is the letter Exhibit 26 which Don Mariano wrote to Don Ramon Aboitiz on
May 31, 1946, two months after the execution of the deed of sale Exhibit
A, in relation to the indebtedness he owed him by reason of his having
acted as the surety of his son Jesus Cui which the latter had not been
ESTIMADO AMIGO —
La portadora de la presente es mi hija Mercedes, esposa del Dr. Ramas,
a quien he dado el encargo de presentarse a Vd. con esta carta y pagarle
en mi nombre como fiador de mi hijo Jesus Cui el saldo resultante de
laliquidacion hecha por Vd. el 5 de Diciembre de 1941 de la deuda que
este contrajo, de Vd. por cierto prestamo en metalico que le dio bajo mi
garantia consistente en hipoteca.
Como Vd. trata de cobrar intereses sobre el mencionado saldo hasta la
fecha en que se pague el mismo a partir desde el 1.o de Enero de 1944,
permitame que le suplique encarecidamente apelando a su buen corazon
y reconocida generosidad, deje Vd. de cobrarme esos intereses. En apoyo
de esta suplica someto a su buen criterio lo siguiente: 1.o, mi
buenavoluntad, diligencia y prontitud en finiquitar al citado saldo; 2.o el
motivo, como Vd. lo sabe, se tuvo que contraer la citada deuda sin ningun
provecho para mi, antes bien me ha causada molestias y apuros para
pagarla completamente, y 3.o durante la ocupacion japonesa en Cebu y
estando yo ya refugiado en Manila le escribia de vez en cuando a mi dicho
hijo Jesusy siempre le recordaba que procurara hacerlo por todos los
medios, sabiendo yo que el disponia de bastante dinero; lo cual
demuestra a Vd. que la prealudida deuda me ha tenido en constante
preocupacion, realizandose porultimo mis temores de que al fin habria yo
que pagar casi a la deuda entera.
 Nbre. 11, 1945

Como Vd. muy pronto se va a marchar de este nuestro pais, concedame

Vd. lo que le pido en la precedente suplica como un recuerdo,
MI ESTIMADA MAMING —
imperecerederopara mi, de nuestra buena amistad. Le deseo un feliz
viaje, asi como una feliz estancia en el pais donde establecerse, con buen
exito ademas en susnegocios.
Recibi el 9 del actual tu carta, fechada el 21 de Obre. ppdo y me entere
desu contenido.
Disponga como gusto de affmo. amigo y servidor.

Empiezo dandote las expressivas gracias por su interes y buen deseo por
mi salud, que ya no es tan buena como antes; tengo ya mis achaques a
(Fdo.)
causa de mi vejez que va avanzando cada dia mas; no puedo esperar ya
buena salud.

Scarcely four months before the execution of the deed of sale, Don
Mariano was residing in Calapan, Mindoro, in the house of Rosario Cui,
Me haces una apologia en favor de tu marido Chong, mi hijo, alabandole
and while there he received several letters from his daughter-in-law,
comoun buen hijo; comprendo que lo hagas, porque la pasion te ciega;
Carmen Gomez, wherein in a very expressive and persuasive manner she
pero no me lo digas a mi que conozco muy a-fondo a Chong. Nunca le he
asked her father-in-law, Don Mariano, to extend a helping hand to his son
conocido a Chong como buen hijo mio, pues me ha dado el los mayores
Jesus Cui, who was then confined in the stockade of the military
disgustos que he tenido en mi vida. Mes mijores amigos que esteban al
authorities in Leyte for collaboration, so that he may get his provisional
tanto de la vida de Chong y de sus fracasos en los negocios y con quienes
release by putting up a bail bond for him. Because Jesus Cui, his son, had
a veces me desahogaba, me echaban a mi la culpa porque era yo
embarked him into some commercial venture even before the war which
resulted in a disastrous failure and made him suffer a loss of nearly demasiado apasionado por el. Ahora que llegado a ser pobre, lo
comprendo y lo lamento, y me recuerda de lo que me dijo a mi tia
P25,000, aside from the undertaking he assumed as a surety for the
Benigna, ya difunta (q.e.p.d) un dia, muy formalmente y en serio, que
payment of a loan of P3,000 which Jesus had contracted from Don Ramon
Aboitiz on January 27, 1941 which Jesus failed to pay, all of which made presentia que yo a la vez me quedaria pobre y me aconsejo que tuviera
mucho cuidado en administrar mis bienes con prudencia..
him bitter and resentful against his own son, Don Mariano turned a deaf
ear to the plea of Carmen stating in a language as forceful as it is clear
the reasons for his attitude. These reasons were expressed by Don
Mariano in letters dated November 11, 1945 and November 22, 1945 Siento mucho tener que decirte que no me encuentro en condiciones para
which are also herein reproduced for ready reference, omitting the letters prestar la fianza que me pides en favor de Chong; primero, porque no
of Carmen, which are referred to therein, for being unnecessary for our dispongo de beienes inmuebles para constituir la fianza y segundo,
purpose. Note that the person named Chong appearing in the letters is porque si bien es verdad que me quedan solares en la calle Manalili de
the nickname given to Jesus, son of Don Mariano: esa Ciudad, pero el gravamen de hipoteca sobre estos solares esta sin
cancelarse aun en el registro de propiedad, lo cual tendra aun bastante
tiempo, y por otra parte, me reservo los mismos, siempre libres, para
poder disponer de ellos cuando fuere necesario, para atendar mis gastos.
Calapan, Mindoro
Dispensame, pues, que no pueda complacerte en lo que me pides. Ahora
le escribo a nene para que te envie esta carta como me lo pides.
En retorno Yre y Nenita te envian sus recuerdos.
Termino deseando a ti y Nene siempre beuna salud y enviando a este un
cariñoso beso y a ti.
En sincero afecto de tu suergo
MARIANO CUI
Calapan, Mindoro
Nbre. 22, 1945
ME APRECIABLE MAMING —
Recibi el 20 del actual por correo tu carta escrita ya alli en Manila y me
apresuro a contestartela.
Ya habras recibido y te habras enterado ya de mi carta, fecha 11 del
actual. Contestando la tuya anterior portador de aquella mi nieto Liling,
que semarcho de aqui para alli el sabado pasado.
Siento mucho tener que desirte que insisto en mi negativa de ser fiador
de Chong en la forma indirecta que se me propone por los que negocian
en prestar fianzas; yo que he sido juez conozco el alcance de esa fianza
queyo otorgue a favor de Don Ramon Aboitiz para garantir el prestamo,
que este hizo a Chong, de TRES MIL PESOS, que creo que estan sin pagar
aun y que yo como burro de carga tendre que pagarlos. Debes, pues
dejarme ya en pazporque tengo mala pata en ser fiador de Chong. Estoy
pidiendo a Dios que me de medios para poder ayudarle. Temo, ademas,
que Dios me castigue haciendomal uso de los pocos bienes que me ga
dejado para mantenerme durante los pocos anos de vida que me va
considiendo aun y para ni vivir pidiendo limosna, ya que de mis hijos poco
puedo esperar.
Agradezco mucho to oferta de que cuando os establicias alli en Manila
pararesidir permanentemente me distenares una habitacion para mi, y
me reservotal oferta para cuando sea conveniente aceptarla.
Sin otra cosa mas, afectuoso recuerdos a Chong y a ti mi aprecio sincero.
Tu suegro,
Rosario Cui not only testified that Don Mariano was still good and of sound
mind when he lived with her for eighteen months from September, 1944
up to February, 1946, and for another four months from July, 1946 to
October, 1946 in Calapan, Mindoro, but she also sustained
correspondence with Don Mariano even as late as the year 1947.
Hereunder we transcribe Don Mariano's letter to Rosario on July 14, 1947:
Cebu, Julio 14, 1947
Sra. ROSARIO C. DE ENCARNACION
CALAPAN, MINDOROMI
QUERIDISIMA HIJA —
Siento mucho que el no haber tu recibido carta mia desde que he llegado
aquios haya preocupado tanto artibuyendolo a mi falta de buena salud.
Gracias a Dios no fue asi.
A la semana despues de haber llegado he recibido una carta tuya,
disculpandote de no haber tu podido despedirnos abordo del barco en que
ibamos con motivo de las fuertes lluvias que entonces cayeron. Te
conteste que habias hecho muy bien, teniendo tu una salud muy delicada
para cogerte unas mojaduras de funestas consecuencias para ti.
A mediados de mayo ultimo calcule que estarias aun en Manila a
consequenciaaun de la operacion de tu matriz; pero no sabiendo que
direccion pner en micarta a ti desisti de escribirte.
Cuanta bondad y generosidad en el arreglo de mi cuarto o habitacion.
Aunqueno lo veo aun, os lo agradezco ya de todo corazon. Debe de estar
ya muy confortable, y sin las goteras que tanto me molestaban. Espero
poder volveraun alli en cuanto se termine estos asuntos.
Te deseo que se te desaperezca pronto la debilidad de tu corazon para
que notengas mas inveycciones de alcampor.
Envio mis mas afectuosos recuerdos a Yre y chiquillos.
Te da un fuerte abrazo tu padre que entranablamente te quiere.
Another interesting circumstance is the discussion which Jesus Ma. Cui
had with his father Don Mariano on April 20, 1946 relative to the sale of
the lots in question. It should be noted that when Jesus came to know of
that sale he could not refrain his anger feeling that he had been ignored
or the subject of discrimination on the part of his father and give vent to
his feeling he wrote to him on March 20, 1947 a letter, copy of which was
marked Exhibit M-2, wherein he appealed to him (his father) to give him
and his other children an opportunity to buy the properties in question,
to which letter Don Mariano answered with another date April 22, 1947
wherein he apparently gave in to the demand of Jesus subject to certain
condition. As the evidence shows, Don Mariano came to answer the letter
of Jesus in this manner: Don Mariano discussed the matter with his son
Antonio showing to him the letter of Jesus on which occasion Antonio
said: "Bueno papa, si tu crees que en eso el esta empeñado y si queres
darle a el y el ha dicho a ti que el va a hacer todos los medios para
conseguir dicho terreno, puedes hacer todo lo que quiera con tal de que
me devuelves mi dinero que yo habia pagado porque era dinero de mi
esposa." To this Don Mariano answered: "Vamos a ver primero, que es lo
que van a contestar a la carta que voy a mandar."
The letter thus referred to is the one sent by Don Mariano to Jesus, Exhibit
I, wherein the former made known to Jesus that he was willing to give to
all his children equal opportunity to buy the lots in question subject to the
condition that his son or daughter who is not able to pay his debt or
obligations or has no money with which to pay them would be
automatically excluded from the sale. The evidence also shows that
neither Jesus nor the other children who wanted to participate in the sale
took the trouble of answering the letter nor made known their desire as
to the proposition of their father, and such silence is undoubtedly due to
the fact that they were not in a financial condition to comply with the
condition imposed in the letter. In fact, according to Antonio Cui, such is
the predicament in which his brothers were situated as shown by the fact
that Jorge at that time was indebted to his father in the amount of P6,000,
Jesus in the amount of P18,000, Jose in the amount of P14,000, while his
other brothers did not have the necessary means to take part in the sale.
The fact unfolded in connection with this incident constitute a clear
indication of the state of mind then enjoyed by Don Mariano for he took
the precaution before answering the letter of Jesus of discussing the
matter first with his son Antonio who was the one mostly affected by the
decision he was about to make considering the menacing attitude and the
incessant demand of Jesus regarding the transaction. Only a person of
sound mind could have adopted such precaution and circumspections.
The deed of sale Exhibit A was executed by Don Mariano Cui, Antonio Cui
and Mercedes Cui de Ramas on March 8, 1946 in the city of Cebu, and by
Rosario Cui and her husband Dr. Ireneo Encarnacion in the City of Manila
on March 20, 1946. The consideration of the sale was P64,000 plus the
reservation of the right in favor of Don Mariano "to enjoy the fruits and
rents of the same" as long as he lives. It appears however that, while in
said deed of sale it is stated that Don Mariano has acknowledged receipt
of said consideration of P64,000, the same is not true with regard to the
share of Rosario Cui. So Don Mariano went to Calapan, Mindoro in July,
1946 to collect from Rosario her share of the purchase price amounting
to P20,000. Rosario then excused herself from going ahead with the sale
alleging as reason that she needed what money she had to rehabilitate
her electric plant in Calapan and also because Cebu was very far from
Mindoro where they had already their permanent residence. Not being
able to pay her share in the consideration of the sale, Don Mariano
demanded from her the resale of her interest. This was done when she
went to Manila on October 11, 1946 to execute the deed of resale in favor
of Don Mariano. This attitude of Don Mariano is very significant in so far
as his state of mind is concerned. It shows that he was fully conscious of
what was transpiring and of the transaction he was executing so much so
that he went to the extent of demanding from Rosario the resale of her
interest when she failed to pay her share in the consideration of the sale.
There are other letters and documents which Don Mariano had prepared
and executed in the neighborhood of the time the deed of sale in question
was executed which also depict the mental condition that he possessed
at the time, and to show this we can do no better than to quote what the
lower court said on this point:
Ademas de lo que ya dejamos expuesto, Don Mariano Cui ejecuto varios
actos que tambien impugnan la contension de que el ya estuvo
mentalmente incapacitado al otogar el Exh. A. Poco antes y tambien
despues de otogar dicha escritura, el escribo varias cartas a sus hijos y
otogo varios documentos. Entre las cartas figuran el Exh. 4, que esta
dirigida a Jorge, lleva la fecha 24 de marzo de 1945; Exh. 23, dirigida a
su hija Mercedes, fechada 9 de septiembre de 1946; Exh. 26, dirigida a
Don Ramon Aboitiz, fechada el 21 de mayo de 1946; Exhs. 36 y 40
dirigidas a su hijo Antonio, y fechadas 3 de julio p. 13 de agosto de 1945,
respectivamente; Exhs. 41 y 42, contestaciones de las cartas de Carmen,
esposa de Jesus, fechadas el 11 y 22 de noviembre de 1945,
respectivamente; y exh. 57, dirigida a su hija Rosario, fechada Julio 14,
1947. Entre los documentos figuran; Exh. 1-a, escitura de reparticion
extrajudicial, otorgada el 6 de deciembre de 1946; Exh. 3-b, un affidavit
de fecha 20 de febrero de 1945; Exh. 24, recibo a favor de Gil Ramas,
otorgado el 5 de marzo de 1946; Exh. 24, constanciaque fue suscrita y
jurada ante el Escribano de este Juzgado el 23 de febrerode 1948; Exh.
34, borrador de exhibit anterior con las correcciones hechas de puno y
letra de Don Mariano Cui; Exh. 44, autorizacion a Mercedes y Antonio
para hipotecar su participacion en los lotes en cuestion, fechadael 7 de
enero de 1947; Exh. 45, convenio entre Don Mariano, por una parte, y
Mercedes y Antonio, por otra parte, referente a los terrenos en cuestion,
que lleva fecha 30 de septiembre de 1947; Exh. C escritura de hipoteca
a favor de la RFC de fecha 15 de abril de 1947; y Exh. S, un memorandum
que contiene algunas notas de sus ingresos y gastos que comprende has
ta el mes de enero de 1949, poco antes de haber perdido su memoria.
Una lectura de las cartas arribas mencionadas dos lleva a la necesaria
conviccion de que durante el periodo en que se escibieron las mismas, o
sea hasta el mes de Julio de 1947, Don Mariano Cui aun tenia el pleno
goce de sus facultades mentales, pues de otro modo, el no podia
expresarsecon tanta claridad y precision en los asuntos que trataba en
dichas cartas. Con respecto a los documentos arriba referidos, los
mismos, son de tal naturaleza e importancia, que no se podian haber
otorgardo por Don Mariano si el no estaba en su cabal juicio. El Exh. S
fue presentado por los mismos demandantes, y esta circunstancia,
naturalmente, presupone que ellos admiten que Don Mariano Cui estuvo
mentalmente sano al anotar los asientos en dicho memorandum, muchos
de los cuales tuvieron lugar ya despues de otorgarse el documento en
cuestion Exh. A.
It is obvious from the foregoing discussion that Don Mariano signed and
executed the deed of sale Exhibit A not only at a time when he was still
in the full enjoyment of his mental faculties, but also under conditions
which indicate that he knew what he was doing and, as a consequence,
it cannot be said that he has entered into the transaction without his
consent or under a misapprehension that the document he was signing
was not the sale of the properties in question but one merely pertaining
to their administration.
In connection with the contention that the deed of sale Exhibit A was
executed by Don Mariano under circumstances which point out that he
has done so because of undue influence on the part of the defendants,
counsel for appellants mentions the following circumstances: (1) Don
Mariano was already 83 years old, he was the father of the vendees, and
at the time of the sale or long before it was consummated, he was living
with the vendees; (2) one of the vendees, Antonio Cui, was his attorney
in fact and lawyer; (3) the vendor and the vendees had obviously
confidential family and spiritual relations; (4) the vendor was suffering
from mental weakness; and (5) the vendor was in financial distress. The
presence of undue influence, according to appellants, is further shown by
the execution of the mortgage in favor of the Rehabilitation Finance
Corporation, the extra-judicial petition Exh. 1-a, the partition of the
properties in question, the alleged oral waiver of usufructuary rights, and
the explanatory statement Exhibit 34, which acts, it is claimed, in which
Don Mariano was supposed to have taken part and which were all
masterminded by Antonio Cui, show that Antonio Cui could get from his
father whatever he wanted.
There is however no concrete proof that may substantiate this claim of
undue influence. The only direct evidence on the matter is the testimony
of Jesus Cui which in the main is based on mere conjecture and not on
actual facts. The circumstance that Don Mariano Cui was then living in
the house of Mercedes Cui when the deed of sale was signed does not
necessarily imply that he was made to sign it under the insidious
machinations practiced on him by his daughter. On the contrary, the
evidence shows that Don Mariano lived most of the time before the
execution of the sale with his other children and not necessarily with
herein defendants. Thus, according to the testimony of Jesus Cui himself,
during the Japanese occupation, or from 1942 to 1943, his father lived in
the City of Cebu. During the month of September, 1943, he went to
Manila and lived in the house of his daughter Lourdes Cui de Velez, where
he stayed up to September, 1944. Then he went to Calapan, Mindoro to
live in the house of his daughter Rosario where he stayed up to February,
1946 when he returned to Cebu. It was only then that he began living in
the house of Mercedes Cui. In Mercedes Cui when the deed of sale was
executed on March 8, 1946. There is therefore no basis for concluding
that said deed of sale was executed simply under the undue influence of
Antonio Cui and Mercedes Cui. The fact that about six days before the
sale Antonio Cui was made by Don Mariano Cui his attorney in fact could
not mean anything unusual for he was then getting old and he needed
one who could help him administer the properties of his deceased spouse,
and the choice fell on Antonio because he was the only lawyer in the
family. And if to all this we add that Don Mariano was then in full
enjoyment of his mental faculties, as we have already pointed out
elsewhere, it would be presumptuous, if not unfair, on our part to affirm,
as appellants want us to do, that he allowed himself to do an act which is
not fully accord with his free and voluntary will.
We will not take up the claim that the deed of sale Exhibit A was executed
without mediating any consideration on the part of the vendees. if this
were true then said deed would be void and inexistent for it would then
be afictitious or simulated contract. This claim is merely predicated on the
documents Exhibits G and H and the declarations of Rosario Cui and Jesus
Ma. Cui. We will briefly discuss this evidence.
Exhibit G is an alleged written statement made by Don Mariano Cui on
January 24, 1949 which reads as follows:
A quien corresponde:
Habiendome enterado que hoy existe un lio entre mis hijos en el Juzgado
sobre mis propiedades t los de mi difunta esposa, y sobre todo porque el
transpaso de las misma a mi hijo Antonio Ma. Cui ya hija Mercedes Cui
de Ramas no se halla aun pagado por los mismos, es mi deseo que el
pleito entre mis hijos sea inmediatamente zanjadoy todas participen por
igual dichos bienes.
Y para que asi consta firmo esta declaracion en la Ciudad de Cebu, hoy a
24 de enero de 1949.
(Fdo.) MARIANO CUI
Rosario Cui, testifying on the circumstances surrounding the preparation
of said Exhibit G, said as follows:
Sr. PIMENTEL:
P. Ayer declaro usted sobre este Exhibit G que, segun usted, esta
firmadopor su Padres?
R. Si, señor.
P. Como llego a su poder este documento?
R. Esto me dio mi papa; sabe usted cuando estaba tratando con mi
hermano,este me insulto y estaba y llorando, y despues se fueron al cine;
y entoncesdijo el; Deja Vd. y mande preparar una orden mia de que yo
quiero se termineese asunto y que se arregle entre estedes y no me gusta
que haya pleito y yo voy a firmar y se preparo eso.
P. Usted mando preparar el exhibit G en la localidad?
R. Si, señor, con el S. Jayme.
P. Donde lo firmo este exhibit G?
R. En la casa de mi hermana Mercedes. Cuando lo firmo estabamos los
dos, mi marido y yo.
P. Su hermano de usted estaba presente?
R. Estaba en casa mi hermana Mercedes, pero no estaba delante. Mi
hermano estaba ausente. Cuando se hizo este, debla haberse firmado el
24, pero era por suplica de mi papa, y habia mucha gente, y ademas en
aquel dia noquiera dar disgustos, y cuando nos marchamos, le dije:
"Papa, esta aqui el papel que me ha entregado, que voy a hacer", y dijo:
"voy a firmarlo."
P. Eso fue cuando?
R. El enero 25.
P. Sabiendo usted que su padre vivia en la casa de Mercedes por que no
llamo usted a Mercedes para ser mas legal?
No me acuerdo de eso.
P. Ni siquiera el esposo de su hermana, el Doctor, llamo usted para que
preseciara la firma de este Exhibit G?
R. No me acorde de eso. (pags. 162-B, 163 y164, transcripcion,)
 faculties. Apparently, this is another scheme employed by Rosario Cui and
her husband to bolster up their case seeking the annulment of the sale.
If we would give credit to what document Exhibit G literally says, we
would indeed come to the conclusion that Antonio Ma. Cui and his sister
Mercedes, vendees of the property, have not as yet paid the consideration
But the most serious attempt to show that the defendants did not pay
of the sale to their father Don Mariano, but the testimony of Rosario Cui
any consideration for the sale of the lots in question is the story that is
itself belies that such was the real intention of Don Mariano when the
now being brought to bear on the sale of the San Jose property by Don
statement was allegedly made. According to Rosario Cui, when Don
Mariano to his daughter-in-law, Elisa Quintos, wife of Antonio Cui, on
Mariano was informed that a case was brought to court to seek the
August 31, 1944 which, it is alleged, does not show on its face the true
annulment of the sale of the Manalili property and she informed him of
the attitude of the other children, Don Mariano said: "Deje Vd. y mande consideration paid by Elisa to don Mariano regarding said property. In
relating the so try relative to this transaction, the picture which counsel
preparar una orden mia de que yo quieroque se termine el asunto y se
arregle entre ustedes y no me gusta que haya pleito, y yo voy a firmar y for appellants wants to portray is that the true consideration paid by Elisa
to Don Mariano is the sum of P125,000, and not simply P50,000 as it was
se preparo eso." Then she caused that statementto be prepared by Atty.
made to appear therein, and, therefore, when the deed of sale was
Jayme which was signed by Don Mariano in the house of Mercedes, If we
executed on March 8, 1946 no actual consideration passed from Antonio
were to believe the testimony of Rosario Cui, we would find that the only
Cui to Don Mariano because the latter was not then owing any amount
wish of Don Mariano was to have the litigation terminated and amicably
either to said Antonio or to his wife Elisa Quintos.
settled and that nothing was said about the alleged non-payment of the
consideration. And it is strange that the statement was signed in the
house of Mercedes Cui and the latter never came to know about it before
it was presented in court. It is apparent that the whole thing was a Before discussing the details concerning the sale of the San Jose property
concoction of some of those interested in winning the case which was as narrated by counsel for appellants, let us take note of the version of
already pending in court by inserting something that might serve as basis Antonio Cui as to how he came to pay the consideration of P21,333
for the nullification of the sale; and our suspicion is strengthened when assigned to him in the transaction. Antonio Cui testified that of the said
we consider that statement was allegedly signed at a time when, sum of P21,333 representing his share in the consideration of the sale,
according to Rosario Cui herself, her father was already mentally infirm, P1,333 was advanced in his favor by his sister Mercedes as shown by the
so much so that about one month thereafter he was declared incompetent receipt Exhibit 24 issued by Don Mariano in favor of the latter. The
and mentally incapacitated. balance of P20,000 represents settlement of the debt his father then owed
to his wife Elisa. This indebtedness, according to Antonio, arose in the
following manner: On June 10, 1935, the conjugal partnership of the
The document Exhibit H is an alleged letter of Don Mariano to his son-in- spouses Don Mariano Cui and Doña Antonia Perales contracted an
obligation of P80,000 with the Filipinas Life Assurance Co., Ltd. secured
law, Dr. Ireneo Encarnacion, husband of Rosario, dated January 30, 1949,
by a mortgaged on real estate belonging both to the conjugal partnership
wherein Don Mariano apparently added at the foot the following
and to the estate of Don Mariano. On March 23, 1942, the company made
statement: "PD. Quizas te podre pagar cuando me paguen ellos Nene los
a demand on Don Mariano for the payment of the obligation which was
solares de Manalili." If we will give credit to the above statement, we
then increasing in view of the accumulation of the interests. In order that
would also conclude that the vendees have not paid the consideration of
the sale of the Manalili property. Again we can say that such cannot he may settle this obligation, Don Mariano asked his son Jesus Cui to look
for a buyer of the San Jose property in Cebu City.
represent the clear will of Don Mariano if we want to be consistent with
our finding that at that time he was no longer in possession of his mental
Apparently, Jesus made efforts to look for a buyer as shown by several
letters and telegrams he sent to his father regarding the matter so much
so that Don Mariano, acknowledging said efforts, sent to him on October
5, 1943 a letter thanking him for the interest he was displaying and
stating that he could keep for himself whatever amount he might secure
in excess of the sum of P90,000 which at that time was the totality of the
obligation (Exh. 49). But since two years had passed and nothing concrete
came from the efforts exerted by Jesus, Don Mariano had to turn for help
to his son Antonio. Antonio agree to help and said that he would talk to
his wife about it. The best way he and his wife found to raise the money
was to sell the property his wife had in Malate, City of Manila, for the sum
P300,000. Of this amount, they gave to his father the sum of P125,000
to cover his needs and obligations. With this money, Don Mariano pay his
debt to the insurance company of P94,736.93, including interests,
deducted the sum of P5,000 representing the amount spent by him for
the wedding of Antonio and Elisa, and applied P50,000 as consideration
for the sale to Elisa Quintos of the house and lot at San Jose street in
Cebu City. And in recognition of the help extended to him by Antonio and
Elisa, Don Mariano acknowledged in their favor the sum of P70,000 as a
loan. The deed of sale of the San Jose property to Elisa Quintos was
executed by Don Mariano Cui on August 31, 1944 with two of his children,
Lourdes Cui de Velez and Jorge Cui as witnesses. And when the sale of
the lots in question came, it was agreed that the loan of P70,000 be
reduced to P20,000, Philippine currency, in deference to the request of
Don Mariano which amount, in addition to the sum of P1,333 advanced
by Mercedes, became the consideration paid by Antonio Cui for his share
in the transaction. This is the explanation given by Antonio of how he
came to pay the consideration of the sale, and apparently this is
supported by the same deed of sale wherein Don Mariano acknowledged
having received the total consideration (Exhibit A).
Appellants, however, do not seem to agree to this narration for they do
not give faith and credit to the explanation given by Antonio Cui as to
how he came to pay his share in the consideration of sale, and to show
that Antonio cannot be truthful and that the sale of the San Jose property,
as well as that of the lots in question, are but the product of his insidious
scheme and manipulations to serve his own selfish interests, they brought
forth in this case certain documents and telegrams tending to show that
Don Mariano could have intended to sell the San Jose property for less
than the amount of his obligation to the insurance company more so when
he had received offers for the purchase of said property in the amount of
not less than P150,000. Thus, an attempt was made to show that on
August 25, 1944, or five days before the sale to Elisa Quintos was
consummated, Paulino Gullas offered to buy the property for P150,000.
There was also an attempt to show that at about the time the sale was
being made to Elisa Quintos of that property, Sergio Osmeña, Jr. also
made an offer in the same amount of P150,000.
While these facts are true because they are supported by unrefuted
evidence, it is however also true that those offers came when the
negotiation between Don Mariano Cui and Elisa Quintos had already been
completed. It should be borne in mind that the authority given by Don
Mariano Cui to Jesus Cui to sell the property was given even as early as
1942 and despite the lapse of two years nothing concrete came out in
spite of the efforts made by Jesus to look for a buyer, and so Elisa Quintos
had to sell her property in Manila just to please and accommodate her
father-in-law, Don Mariano. The offer, therefore, of Paulino Gullas or of
Sergio Osmeña, Jr., even for the sum of P150,000, came late, and under
the circumstances, Don Mariano had no other alternative, as any other
decent man would have done, than to reject the offers and maintain the
sale he made to Elisa even at the sacrifice of some material advantage in
his favor. He wrote to Jesus on August 7, 1944 (Exhibit 52) and told him
that he had already sold the San Jose property to Elisa assuring him at
the same time that although the price paid for it was not high, still he
considered the sale to his advantage as Elisa and Antonio spontaneously
reserved in his favor the right to occupy for life any room he may choose
in the same house included in the transaction when he should return to
Cebu to live there, a privilege which Don Mariano knew no other buyer
would be in position to offer. This explains somewhat this apparent
incongruity in the transaction. This consideration may really appear low
especially when done in Japanese currency, but at the same time we
cannot overlook the fact that some moral factor has played an important
part in the transaction. At any rate, that is the consideration that appears
in the document (Exhibit R), and its genuineness and due execution is not
now disputed. We are, therefore, constrained to consider it on its face
value.
 Mercedes, as appellants now claim, has not paid his or her share in the
consideration, Don Mariano would have also demanded from any one of
The consideration paid by Mercedes Cui for her share in the sale in
them the resale of the property, in the same way that Rosario was
question is also disputed by appellants who claim that she has not paid
required. The fact that Don Mariano did not do so shows that both paid
any amount and that the explanation she has given as to how she came
their shares to his full satisfaction.
to pay said consideration is not worthy of credence. Mercedes Cui, on this
matter, testified that before her father Mariano left for Manila in the
month of July, 1943, he had been taking from her on several occasions
But appellants are not yet satisfied with this reasoning. They insist that
sum of money which reached a total of P140,000; that in February, 1946,
Mercedes has not paid any consideration because, they contend, if it were
her father returned to Cebu and she again gave him the sum of P2,000,
making a total of P16,000, the money taken by her father; that after true that she has given her father the different sums of money she claims
she has given, which amount to P16,000, the receipt of said amounts
receiving the sum of P2,000, her father offered to sell her ¹/3 of the
interest in the three lots in question, which she accepted; that days before would have been noted by Don Mariano in the diary Exhibit KK which was
kept by him during the years 1942 to 1945 wherein several entries appear
she signed the deed of sale Exhibit A, she gave her father the sum of
of different sums of money received and disbursed by him for sundry
P6,666, of which P1,333 were given for the account of her brother Antonio
expenses. When these alleged sums were not noted down in said diary,
Cui, and the sum of P5,333 was applied to cover the balance of her share
they contend, it is because they are not true.
in the consideration to complete the amount of P16,000 previously taken
by her father; that in acknowledgement of the receipt from her of said
amounts, her father executed the receipts Exhibit 24 in his own
handwriting, and days after, she was made to sign said deed of sale; and If we were to believe the testimony of Jesus Ma. Cui that his father had
that her father did not include in the sale her other brothers and sisters the habit of writing down in said diary all the receipts and expenses he
because he knew their precarious financial situation. makes daily up to the last centavo, the contention may be correct,
considering that the sums of money delivered by Mercedes do not appear
in said diary. But that statement of Jesus Cui is an exaggeration for, as
The weakness which appellants find in this explanation given by Mercedes affirmed by Antonio Cui, not all the entries appearing therein are in the
handwriting of Don Mariano, nor is it true that all the receipts and
Cui lies in that she has been able to produce any receipt showing the
expenses he makes everyday are noted down therein, for the truth is that
deliveries of money she claimed to have made to her father. This may be
true, but this was explained by her saying that it has never been her habit there are many money transactions and expenses made by Don Mariano
during the period of 1942 to 1945 that have not been recorded therein.
to ask for receipt from her father for any money she may have given him,
unlike her sister Rosario who has the habit of asking for receipts. On the Thus, the expenses and receipts had by Don Mariano while he was in
other hand, she claims that her payment of the consideration cannot be Manila, do not appear therein, nor those incurred by him in his travels
from Manila to Calapan, and vice-versa. Nor do they appear therein the
disputed for Don Mariano has expressly acknowledged having received it
expenses incurred by Don Mariano for his son Jorge and his family when
in a document written in his own handwriting, as evidence by Exhibit 24,
they went to Calapan; neither does it appear the loan of P3,000 made to
the genuineness of which is not disputed. And there is one circumstance
Miguel Ortigas. It does not also appear the sum of P18,000 borrowed from
that bolster up this claim, which also holds true with regard to Antonio
him by Jorge while they were in Manila as testified by the latter.
Cui, and that is the attitude shown by Don Mariano when Rosario Cui has
not paid her consideration in the sale. It should be recalled that when Don
Mariano came to know this fact, he went to Calapan, Mindoro, where
Rosario was residing, to demand payment from her, and when she failed, In connection with this diary, we may also point out the suspicious
he asked her to execute a deed of resale in his favor. If Antonio or circumstances surrounding its presentation in court as evidence. It
appears that this document was presented by Rosario Cui who testified
that she received it from her father after Mercedes had already testified
in this case, which was on September 30, 1949. According to her, Don
Mariano on that occasion gave her instruction as to where to get said
document and what to do with it. She said that when she talked with her
father about the claim of Antonio that the consideration he paid was
P70,000 which were reduced to P20,000 upon his request, her father
said: "despues me dijo mi papa quebuscara en sus libros, porque el tenia
un libro diario donde apuntaba susgastos y tenia varios cuadernos todavia
alli pero yo no quise sacar todo; entonses al me dijo que yo lo llevara y
lo utilizara para comprobar dos gastos y las entradas durante esos años."
(p. 112, Memorandum for Appellees)What Rosario has attributed to her
father as regards the use of the diary Exhibit KK is hard to believe
considering that by that time, September 30,1949, Don Mariano could no
longer hold such a coherent conversation and much less give instructions
as to the best way could make use of the diary, considering that Don
Mariano at that time has already been declared mentally incapacitated.
The presentation of said diary can have no other meaning than that it is
an eleventh hour attempt to bolster up the claim of appellants that the
deed of sale Exhibit A lacks consideration.
As an additional arguemen to nullify the deed of sale Exhibit A, even
partially, in the supposition that all their previous arguments would prove
of no avail, appellants raise the question that said sale should be
invalidated at least in so far as the portion of the property sold to Antonio
Cui is concerned, for the reason that when that sale was effected he was
then acting as the agent or administrator of the properties of Don Mariano
Cui. In advancing this argument, appellants lay stress on the power of
attorney Exhibit L which was executed by Don Mariano in favor of Antonio
Cui on March 2, 1946, wherein the former has constituted the latter as
his "true and lawful attorney" to perform in his name and that of the
intestate heirs of Doña Antonia Perales the following acts:
. . . to administer, sell, mortgage, lease, demand, claim, represent me
and the intestate heirs, in all meetings of corporations, associations, of
which my or their presence is required, sue for, collect, cash, indorse
checks drawn in my favor or of the intestate heirs against any person or
entity or bank, and sign all documents, that I and or the intestate heirs
to which I am the administrator are entitled to; giving and granting
untomy said attorney full power to perform and to make everything
necessary to be done or which he believes to be necessary or beneficial
for me and the said heirs as fully and to all intents and purposes as I
might or could do if personally present, with full power of substitution,
and revocation, hereby granting ratifying all that he or his substitutes
shall lawfully do or cause to be done by virtue of these presents.
While under article 1459 of the old Civil Code an agent or administrator
is disqualified from purchasing property in his hands for sale or
management, and, in this case, the property in question was sold to
Antonio Cui while he was already the agent or administrator of the
properties of Don Mariano Cui, we however believe that this question can
not now be raised or invoked for the following reasons.
(1) This contention is being raised in this appeal for the first time. It was
never raised in the trial court. An examination of the complaints, both
original as well as amended, will show that nowhere therein do they raise
the invalidity of the sale on that ground nor ask as an alternative relief
for the partial revocation of the sale in so far as Antonio's share is
concerned because of the alleged relation of principal and agent between
vendor and vendee. It is undoubtedly for this reason that the trial has not
passed upon this question in its decision. And considering that under
Section 19, Rule 48, of our Rules of Court, an appellant may only include
"In his assignment of error any question of law or fact that has been
raised in the court below and which is within the issues made by the
parties in their pleadings", it follows that appellants are now prevented
from raising this question for the first time in this instance.
(2) The power of attorney in question is couched in so general a language
that one cannot tell whether it refers to the properties of Don Mariano or
only to the conjugal properties of the spouses. However, considering that
the appointment was extended to Antonio Cui by Don Mariano so that he
may act as agent "for me and for the intestate heirs of the deceased
Antonia Perales", one is led to believe that the power refers to the
conjugal properties wherein he had one-half interest in the heirs of Doña
Antonia, the remaining half. Moreover, the power of attorney was
executed on March 2, 1946 while the deed of sale was executed on March
8, 1946. They were therefore executed practically at the same time,
which makes it doubtful as to whether such sale can be deemed to be
within the prohibition of the law.
(3) The prohibition of the law is contained in article 1459 of the old Civil
Code, but this prohibition has already been removed. Under the
provisions of article 1491, section 2, of the new Civil Code, an agent may
now buy property placed in his hands for sale or administration, provided
that the principal gives his consent thereto. While the new Code came
into effect only on August 30, 1950, however, since this is a right that is
declared for the first time, the same may be given retroactive effect if no
vested or acquired right is impaired (Article 2253, new Civil Code). During
the lifetime Don Mariano, and particularly on March 8, 1946, the herein
appellants could not claim any vested or acquired right in these
properties, for, as heirs, the most they had was a mere expentancy. We
may, therefore, invoke now this practical and liberal provision of our new
Civil Code even if the sale had taken place before its effectivity.
The remaining question to be determined refers to the nature of the
properties in question which appellants claim belong to the conjugal
partnership of Don Mariano Cui and Doña Antonia Perales while, on the
other hand, appellees contend belong exclusively to Don Mariano.
In support of their contention, appellants rely on the legal presumption
that said properties are conjugal because they were acquired by Don
Mariano and his wife during their marriage, and on the testimony of Jesus,
Jorge and Rosario Cui, three of the children of Don Mariano, who testified
that said properties are conjugal because they have always been of the
belief or impression that they belong to the conjugal partnership of their
parents. They have not presented any documentary evidence in support
of their contention.
It is true that the properties in question were acquired during the
marriage of Don Mariano Cui Doña Antonia Perales", and as much they
are presumed to be conjugal properties (Article 1407, old Civil Code), but
this presumption appears here rebutted by conclusive and strong
evidence to the contrary. It should be stated that these properties
originally belonged to Don Pedro Cui and Doña Benigna Cui, uncle and
aunt, respectively, of Don Mariano, which were donated by them to Don
Mariano on April 12, 1912 on condition that the latter renounce any
further inheritance he might have been in the intestate estate of the
donors. And while appellees have been able to introduce any copy of the
deed of donation because the same has already disappeared, the fact
however remains that it has been clearly established that such donation
has been actually made exclusively to Don Mariano by clear and
satisfactory evidence. The following is a discussion of such evidence which
consists in the testimony of Marta Cui and Generoso Vda. de Jakosalem,
both nieces of the donors, and in numerous documents the genuineness
of which is not disputed.
Marta Cui, a woman 81 years old, testified that since she was 10 years of
age she lived in the company of her uncle Pedro Cui and aunt Benigna
Cui; that during their lifetime these two made donations of their lands to
their nephews and nieces subject to the condition that they should
renounce whatever share they might have in their inheritance and among
the donees was Don Mariano Cui; that the donations were made
exclusively to their nephews and nieces, or without including their
respective spouses; that the donation made in her favor is contained in
the document Exhibit 21; and that the lots in question were donated to
Don Mariano Cui to the exclusion of his spouse Antonia Perales. Examining
said donation Exhibit 21 one would find that it was really made exclusive
in favor of Marta Cui subject to the condition that she would renounce
whatever inheritance she might have from the donors.
Generoso Vda. de Jakosalem, another woman of advanced age who
because of unexpected illness was not able to continue testifying, also
affirmed that the lots in question were donated to Don Mariano by her
uncle Pedro Cui and aunt Benigna Cui exclusively, and this she knows
personally because on the same date such donation was made, she also
received a donation from the same donors.
Antonia Ma. Cui, testifying on this matter, said: that while he was acting
as private secretary of his father Don Mariano before the was, he had an
opportunity to see a copy of the deed of donation of the lots in question
in his favor (his father), which copy was furnished by the clerk of court,
and at the foot thereof there appears a note to the effect that the original
of said deed was on file in the record of the cadastral case covering the
property; that said document appears signed by the donors Pedro Cui and
Benigna Cui, by the donee Mariano Cui and the instrumental witnesses
Victor Cui and Dionisio Jakosalem; that said copy having been lost, he
went to see the clerk of court to inquire about the original that was on file
in the record of the cadastral case but the clerk of court told him that the
record was destroyed during the last was; that he them went to the office
of the Bureau of Achives to see if he could get a copy of the document
but in said office he only found the notarial register of the notary public
Raymundo Enrique wherein the deed of donation appears recorded; that
at his request the chief of said office issued photastic copies of the pages
of the notarial register which contained the annotation relative not only
to the deed of donation in question but also to that which pertains to the
other deeds of donation executed by the donors Pedro Cui and Benigna
Cui (Exhibit 31-a and 31-b); that the entry No. 310 that appears in the
copy marked Exhibit 31-b refers to the deed of donation of the lots in
question in favor of his father because said entry refers to a property
situated in Plaza Washington, Cebu, where his father did not have any
other property except that donated to him by his relatives, which was
later divided into three lots, and that it is of common knowledge among
members of the Cui family that all the nephews of Pedro Cui and Benigna
Cui received from them by way of donation several pieces of lands subject
to the condition that they renounce their right to inherit from the donors.
Entry No. 310 which appears in photastic copy Exhibit 31-b contains
under the heading "Nature of Instrument" the following annotation:
"Donacion condicional que hacen Pedro Cui y Benigna Cui a favor de su
sobrino Mariano Cui de un solar con todas sus mejoras y edifficio en la
plaza de Washington, Cebu; y la aceptacion del donatario quien agradece
a los donantes." In the same entry there also appears that the document
was executed on April 12, 1912 by Pedro Cui, Benigna Cui, and attested
by Victor Cui and Dionisio Jakosalem.
In the photastic copy Exhibit 31-a, there appear entries Nos. 301, 303,
304 and 305 which refer to the deeds of donnation executed by Pedro Cui
and Benigna Cui in favor of their nephews and nieces Mauricio Cui, Marta
Cui, Victor Cui, Angel Cui and Felicidad Cui. Note that these donations
were made exclusively in favor of the nephews and nieces without
including their respective spouses and were all executed on April 11,
1912, or one day before the execution of the donation in favor of Don
Mariano Cui. The two photostatic copies Exhibits 31-a and 31-b
corroborate the testimony of Marta Cui and Generoso Vda. de Jakosalem
to the effect that all the donations made by Don Pedro Cui and Benigna
Cui in favor of their nephews and nieces were made to them exclusively
or without including their respective spouses, and subject to the condition
that they should renounce their right to inherit from the donors.
In addition to the foregoing evidence, there are other documents which
strenghten the contention that the lots in question were donated
exclusively to Don Mariano Cui. One of them is the inventory prepared by
Don Mariano of the properties which belonged to him exclusively and
those which belonged to the conjugal partnership, as a result of the death
of his wife Antonia Perales in 1939, copies of which were furnished to all
the children of Don Mariano. In this inventory marked Exhibit 8, under
the heading "Bienes del esposo superviviente Don Mariano Cui," the
following appears: "1.-Un solar compuesto de los lotes 2312, 2313 y
2319, del Catastro de Cebu, con sus mejoras consistentes en una casa de
pierda y madera con techo de teja y con una azotea tambien de pierda y
madera." In the same inventory under the heading "Bienes ganancials
habidos durante el matrimonio de Don Mariano Cui y Doña Antonia
Perales," there also appears the following statement: "1. Un edificio mixto
de concreto y madera con techo de hierro galvanizado . . . construido un
una porcion de terreno, de mildosientos cincuenta (1,250) metros
cuadrados de superficie, mas o menos, la cual forma parte de un solar de
mayor extention, situado entre las Calles Manalili y Calderon de la ciudad
de Cebu, Cebu . . . y pertenece en propiedad exclusiva al esposa
superviviente Don Mariano Cui." This property is the one known as lots
Nos. 2312, 2313, and 2319. This inventory was never objected to by the
heirs and shows clearly that while the land belongs exclusively to Don
Mariano Cui the building constructed thereon was considered as conjugal
property.
Another important document is the extra-judicial partition of the
properties pertaining to the conjugal partnership of Don Mariano Cui and
the deceased wife Antonia Perales, marked Exhibit 1-a, which was signed
by Don Mariano and all his children, with the exception of Jorge Cui, who
was then in Manila when the document was signed on December 6, 1946.
In said document mention is made of the inventory which was prepared
by Don Mariano of the conjugal properties belonging to him and his wife,
as well as the powers of attorney executed in favor of Don Mariano by his
children authorizing him to administer the properties belonging to the
conjugal partnership. It is interesting to note that in this deed of partition
a relation is made of the conjugal properties as well as of the debts and
obligation which were then existing against the partnership and the
disposition made of the properties to pay said debts and obligations. It is
also interesting to note that the three lots in question are not included in
this deed of partition. The fact that all the heirs, with the exception of
Jorge, signed this deeds of partition without any protest, is a clear proof
that they knew right along that said lots were exclusive property of their
father and did not belong to the conjugal partnership. It is true that
appellants Jesus Ma. Cui and Rosario Cui, while admitting the authenticity
and due execution of the above deed of partition, now contend that they
signed the same without being aware of its contents, but this contention
can hardly be given credit, for we can not suppose that, referring as it
does to an important document which concern precisely a partition of
inheritance, they should sign the same without first ascertaining or
satisfying themselves of the nature of the transaction.
Other important documents that may have a bearing on this matter are
inheritance tax return Exhibit 32 and the relation Exhibit 33 of the real
properties of Don Mariano Cui for the purpose required by law relative to
the issuance of the Residence Certificate B. The inheritance tax return
was filed by Don Mariano Cui in 1939 in connection with the hereditary
left by his wife Antonia Perales and in said the lots in question were not
included, while the relation Exhibit 33 includes said lots because they
were deemed by Don Mariano as his exclusive property and as such
should be included in the assessment to be made in connection with the
issuance of the Residence Certificate B. These two documents, which were
prepared by Don Mariano Cui, clearly indicate that the lots in question
were always considered by him as his exclusive property.
There can therefore be no doubt, in the light of the overhelming evidence,
testimonial as well as documentary, we have discussed in the preceeding
paragraphs, that these three lots in question have always been
considered not only by Don Mariano Cui, but by his children and other
relatives, him by his uncle Pedro Cui and aunt Benigna Cui to the
exclusion of his wife Antonia Perales. Consequently, the contention that,
in disposing of said property, Don Mariano Cui has appropriated what
belongs to his co-heirs, has completely no function in the evidence.
Having reached the conclusion that the lots in question were the exclusive
property of Don Mariano Cui and that the deed of sale Exhibit A was
executed by him freely, intelligently, and with sufficient pecuniary
consideration, we deem it unnecessary to dwell on the other points
discussed by both parties in their briefs and in their respective
memoranda. While these points, vehemently advocated by appellants'
counsel may throw could on the due execution of the sale, or may cast
doubt on the sufficiency of its consideration, we are however constrained
to uphold its validity if we are to be consistent with our conclusion that
Don Mariano has executed it while still in the full enjoyment of his mental
faculties, considering that he never lifted a finger to dispute it, in the
same manner he did with regard to Rosario Cui. No other conclusion is
plausible and proper, considering all the circumstances of the case.
Wherefore, we hereby affirm the decision appealed from, without
pronouncement as to costs.
VALENCIA VS CABANTING
These consolidated administrative cases seek to disbar respondents
Dionisio Antiniw, Arsenio Fer. Cabanting and Eduardo Jovellanos (the last
named, now an MCTC Judge) for grave malpractice and misconduct in the
exercise of their legal profession committed in the following manner:
1. Administrative Cases No. 1302 and 1391.
In 1933, complainant Paulino Valencia (Paulino in short) and his wife
Romana allegedly bought a parcel of land, where they built their
residential house, from a certain Serapia Raymundo, an heir of Pedro
Raymundo the original owner. However, they failed to register the sale or
secure a transfer certificate of title in their names.
Sometime in December, 1968, a conference was held in the house of Atty.
Eduardo Jovellanos to settle the land dispute between Serapia Raymundo
(Serapia in short) another heir of Pedro Raymundo, and the Valencia
spouses since both were relatives and distant kin of Atty. Jovellanos.
Serapia was willing to relinquish ownership if the Valencias could show
documents evidencing ownership. Paulino exhibited a deed of sale written
in the Ilocano dialect. However, Serapia claimed that the deed covered a
different property. Paulino and Serapia were not able to settle their
differences. (Report of Investigating Judge Catalino Castaneda, Jr., pp.
21-22).
On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer. Cabanting,
filed a complaint against Paulino for the recovery of possession with
damages. The case was docketed as Civil Case No. V-2170, entitled
"Serapia Raymundo, Plaintiff, versus Paulino Valencia, Defendant."
(Report, p. 11).
Summoned to plead in Civil Case No. V-2170, the Valencias engaged the
services of Atty. Dionisio Antiniw. Atty. Antiniw advised them to present
a notarized deed of sale in lieu of the private document written in Ilocano.
For this purpose, Paulino gave Atty. Antiniw an amount of P200.00 to pay
the person who would falsify the signature of the alleged vendor
(Complaint, p. 2; Rollo, p. 7). A "Compraventa Definitiva" (Exh. B) was
executed purporting to be a sale of the questioned lot.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch
V, rendered a decision in favor of plaintiff, Serapia Raymundo. The lower
court expressed the belief that the said document is not authentic.
(Report, p. 14)
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with
Preliminary Injunction before the Court of Appeals alleging that the trial
court failed to provide a workable solution concerning his house. While
the petition was pending, the trial court, on March 9, 1973, issued an
order of execution stating that "the decision in this case has already
become final and executory" (Exhibits 3 and 3-A). On March 14, 1973, a
writ of execution was issued.
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to
Atty. Jovellanos and the remaining portion she sold to her counsel, Atty.
Arsenio Fer. Cabanting, on April 25, 1973. (Annex "A" of Administrative
Case No. 1302).
On March 4, 1974, Paulino filed a disbarment proceeding (docketed as
Administrative Case No. 1302) against Atty. Cabanting on the ground that
said counsel allegedly violated Article 1491 of the New Civil Code as well
as Article II of the Canons of Professional Ethics, prohibiting the purchase
of property under litigation by a counsel.
On March 21, 1974 the appellate court dismissed the petition of Paulino.
On October 14, 1974, Constancia Valencia, daughter of Paulino, filed a
disbarment proceeding (docketed as Administrative Case No. 1391)
against Atty. Dionisio Antiniw for his participation in the forgery of
"Compraventa Definitiva" and its subsequent introduction as evidence for
his client; and also, against Attys. Eduardo Jovellanos and Arsenio
Cabanting for purchasing a litigated property allegedly in violation of
Article 1491 of the New Civil Code; and against the three lawyers, for
allegedly rigging Civil Case No. V-2170 against her parents. On August
17, 1975, Constancia Valencia filed additional charges against Atty.
Antiniw and Atty. Jovellanos as follows:
1. AGAINST ATTY. DIONISIO ANTINIW:
In the year 1973 Atty. Dionisio Antiniw fraudulently and in confabulation
with one Lydia Bernal had a deed of sale, fabricated, executed and ratified
before him as Notary Public by one Santiago Bernal in favor of Lydia
Bernal when as a matter of fact said Santiago Bernal had died already
about eight years before in the year 1965.
2. AGAINST ATTY. EDUARDO JOVELLANOS:
In the year 1954 Atty. Eduardo Jovellanos, fraudulently and in bad faith,
in confabulation with Rosa de los Santos as vendee had, as Notary Public,
executed and ratified before him, two (2) deeds of sale in favor of said
Rosa de los Santos when as a matter of fact the said deeds were not in
fact executed by the supposed vendor Rufino Rincoraya and so Rufino
Rincoraya had filed a Civil Case in Court to annul and declare void the
said sales (p. 7, Report)
2. Administrative Case No. 1543.
A deed of donation propter nuptias involving the transfer of a piece of
land by the grandparents of Lydia Bernal (complainant,) in favor of her
parents, was lost during the last world war. For this reason, her
grandmother (the living donor) executed a deed of confirmation of the
donation propter nuptias with renunciation of her rights over the property.
(Complaint, p. 1). Notwithstanding the deed, her grandmother still
offered to sell the same property in favor of the complainant, ostensibly
to strengthen the deed of donation (to prevent others from claim-ing the
property).
On consultation, Atty., Antiniw advised them to execute a deed of sale.
Atty. Antiniw allegedly prepared and notarized the deed of sale in the
name of her grandfather (deceased at the time of signing) with her
grandmother's approval.
Felicidad Bernal-Duzon, her aunt who had a claim over the property filed
a complaint against her (Lydia Bernal) and her counsel, Atty. Antiniw for
falsification of a public document. (Complaint, pp. 1-2) The fiscal
exonerated the counsel for lack of evidence, while a case was filed in court
against Lydia Bernal.
On October 3, 1975, Lydia Bernal filed a disbarment proceeding (docketed
as Administrative Case No.1543) against Atty. Antiniw for illegal acts and
bad advice.
Pursuant to the resolution of the First Division of this Court dated
December 9, 1974, the resolution of the Second Division dated March 3,
1975 and the two resolutions of the Second Division both dated December
3, 1975, Administrative Cases Nos. 1302, 1391 and 1543 were referred
to the Office of the Solicitor General for investigation, report and
recommendation.
Upon formal request of Constancia L. Valencia and Lydia Bernal dated
March 3, 1976, all of these cases were ordered consolidated by Solicitor
II. Whether or not Attys. Antiniw and Jovellanos are guilty of
General Estelito P. Mendoza per his handwritten directive of March 9,
malpractice in falsifying notarial documents.
1976.

III. Whether or not the three lawyers connived in rigging Civil Case
On April 12, 1988, We referred the investigation of these cases to the
No. V-2170.
Integrated Bar of the Philippines.1âwphi1 When Atty. Jovellanos was
appointed as Municipal Circuit Trial Court Judge of Alcala-Bautista,
Pangasinan, We referred the investigation of these cases to Acting
Presiding Judge Cesar Mindaro, Regional Trial Court, Branch 50, Villasis, I
Pangasinan, for further investigation.

Under Article 1491 of the New Civil Code:

In view of the seriousness of the charge against the respondents and the
alleged threats against the person of complainant Constancia L. Valencia,
We directed the transfer of investigation to the Regional Trial Court of The following persons cannot acquire by purchase, even at a public of
Manila. judicial auction, either in person or through the mediation of another:

The three administrative cases were raffled to Branch XVII of the Regional xxx xxx xxx
Trial Court of Manila, under the sala of Judge Catalino Castaneda, Jr.

(5) . . . this prohibition includes the act of acquiring by assignment

After investigation, Judge Catalino Castañeda, Jr., recommended the
dismissal of cases against Atty. Jovellanos and Atty. Arsenio Fer.
Cabanting; dismissal of Administrative Case No. 1543 and the additional
charges in Administrative Case No. 1391 against Antiniw and Judge
Jovellanos; however, he recommended the suspension of Atty. Antiniw
from the practice of law for six months finding him guilty of malpractice
in falsifying the "Compraventa Definitiva."
The simplified issues of these consolidated cases are:
and shall apply to lawyers, with respect to the property and rights which
may be the object of any litigation in which they make take part by virtue
of their profession.
Public policy prohibits the transactions in view of the fiduciary relationship
involved. It is intended to curtail any undue influence of the lawyer upon
his client. Greed may get the better of the sentiments of loyalty and
disinterestedness. Any violation of this prohibition would constitute
malpractice (In re: Attorney Melchor Ruste, 40 O.G. p. 78) and is a ground
for suspension. (Beltran vs. Fernandez, 70 Phil. 248).

I. Whether or not Atty. Cabanting purchased the subject property in

violation of Art. 1491 of the New Civil Code.
Art. 1491, prohibiting the sale to the counsel concerned, applies only
while the litigation is pending. (Director of Lands vs. Adaba, 88 SCRA
513; Hernandez vs. Villanueva, 40 Phil. 775).
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting
purchased the lot after finality of judgment, there was still a pending
certiorari proceeding. A thing is said to be in litigation not only if there is
some contest or litigation over it in court, but also from the moment that
it becomes subject to the judicial action of the judge. (Gan Tingco vs.
Pabinguit, 35 Phil. 81). Logic indicates, in certiorari proceedings, that the
appellate court may either grant or dismiss the petition. Hence, it is not
safe to conclude, for purposes under Art. 1491 that the litigation has
terminated when the judgment of the trial court become final while a
certiorari connected therewith is still in progress. Thus, purchase of the
property by Atty. Cabanting in this case constitutes malpractice in
violation of Art. 1491 and the Canons of Professional Ethics. Clearly, this
malpractice is a ground for suspension.
The sale in favor of Atty. Jovellanos does not constitute malpractice.
There was no attorney-client relationship between Serapia and Atty.
Jovellanos, considering that the latter did not take part as counsel in Civil
Case No. V-2170. The transaction is not covered by Art. 1491 nor by the
Canons adverted to.
II
It is asserted by Paulino that Atty. Antiniw asked for and received the
sum of P200.00 in consideration of his executing the document
"Compraventa Definitiva" which would show that Paulino bought the
property. This charge, Atty. Antiniw simply denied. It is settled
jurisprudence that affirmative testimony is given greater weight than
negative testimony (Bayasen vs. CA, L-25785, Feb. 26, 1981; Vda. de
Ramos vs. CA, et al., L40804, Jan. 31, 1978). When an individual's
integrity is challenged by evidence, it is not enough that he deny the
charges against him; he must meet the issue and overcome the evidence
for the relator and show proofs that he still maintains the highest degree
of morality and integrity which at all time is expected of him. (De los
Reyes vs. Aznar, Adm. Case No. 1334, Nov. 28, 1989).
Although Paulino was a common farmer who finished only Grade IV, his
testimony, even if not corroborated by another witness, deserves
credence and can be relied upon. His declaration dwelt on a subject which
was so delicate and confidential that it would be difficult to believe the he
fabricated his evidence.
There is a clear preponderant evidence that Atty. Antiniw committed
falsification of a deed of sale, and its subsequent introduction in court
prejudices his prime duty in the administration of justice as an officer of
the court.
A lawyer owes entire devotion to the interest of his client (Santos vs.
Dichoso, 84 SCRA 622), but not at the expense of truth. (Cosmos Foundry
Shopworkers Union vs. La Bu, 63 SCRA 313). The first duty of a lawyer
is not to his client but to the administration of justice. (Lubiano vs.
Gordalla, 115 SCRA 459) To that end, his client's success is wholly
subordinate. His conduct ought to and must always be scrupulously
observant of law and ethics. While a lawyer must advocate his client's
cause in utmost earnestness and with the maximum skill he can marshal,
he is not at liberty to resort to illegal means for his client's interest. It is
the duty of an attorney to employ, for the purpose of maintaining the
causes confided to him, such means as are consistent with truth and
honor. (Pangan vs. Ramos, 93 SCRA 87).
Membership in the Bar is a privilege burdened with conditions. By far, the
most important of them is mindfulness that a lawyer is an officer of the
court. (In re: Ivan T. Publico, 102 SCRA 722). This Court may suspend or
disbar a lawyer whose acts show his unfitness to continue as a member
of the Bar. (Halili vs. CIR, 136 SCRA 112). Disbarment, therefore, is not
meant as a punishment depriving him of a source of livelihood but is
rather intended to protect the administration of justice by requiring that
those who exercise this function should be competent, honorable and
reliable in order that courts and the public may rightly repose confidence
in them. (Noriega vs. Sison, 125 SCRA 293). Atty. Antiniw failed to live
up to the high standards of the law profession.
The other charges of malpractice against Atty. Antiniw and Atty.
Jovellanos should be dismissed for lack of evidence.
During the proceedings in Administrative Case No. 1543, Lydia Bernal
testified in full on direct examination, but she never submitted herself for
cross-examination. Several subpoenas for cross-examination were
unheeded. She eventually requested the withdrawal of her complaint.
Procedural due process demands that respondent lawyer should be given
an opportunity to cross-examine the witnesses against him.1âwphi1 He
enjoys the legal presumption that he is innocent of the charges against
him until the contrary is proved. (Santos vs. Dichoso, 84 SCRA 622). The
case must be established by clear, convincing and satisfactory proof.
(Camus vs. Diaz, Adm. Case No. 1616, February 9, 1989), Since Atty.
Antiniw was not accorded this procedural due process, it is but proper
that the direct testimony of Lydia Bernal be stricken out.
In view also of the affidavit of desistance executed by the complainant,
Administrative Case No. 1543 should be dismissed. Although the filing of
an affidavit of desistance by complainant for lack of interest does not ipso
facto result in the termination of a case for suspension or disbarment of
an erring lawyer (Munar vs. Flores, 122 SCRA 448), We are constrained
in the case at bar, to dismiss the same because there was no evidence to
substantiate the charges.
The additional charge against Atty. Antiniw in Administrative Case No.
1391 is predicated on the information furnished by Lydia Bernal. It was
not based on the personal knowledge of Constancia L. Valencia: hence,
hearsay. "Any evidence, whether oral or documentary, is hearsay if its
probative value is not based on the personal knowledge of the witness
but on the knowledge of some other person not on the witness stand."
(Regalado, Remedial Law Compendium, 6th ed., vol. 2, 1989, p. 486).
Being hearsay, the evidence presented is inadmissible.
The additional charge filed by Constancia L. Valencia against Atty.
Jovellanos in Administrative Case No. 1391 was not proved at all.
Complainant failed to prove her additional charges.
III
There is no evidence on record that the three lawyers involved in these
administrative cases conspired in executing the falsified "Compraventa
Definitiva" and rigged the Civil Case No. V-2170.
Atty. Jovellanos is a distant kin of the Raymundos and Valencias. In fact,
he and the Valencias are neighbors and only two meters separate their
houses. It would not be believable that Atty. Jovellanos, a practicing
lawyer, would hold a meeting with the heirs of Pedro Raymundo in his
house with the intention of inducing them to sue the Valencias. Atty.
Jovellanos even tried to settle the differences between the parties in a
meeting held in his house. He appeared in Civil Case No. V-2170 as an
involuntary witness to attest to the holding of the conference.
Besides, the camaraderie among lawyers is not proof of conspiracy, but
a sign of brotherhood among them. One of the fourfold duties of a lawyer
is his duty to the Bar. A lawyer should treat the opposing counsel, and
his brethren in the law profession, with courtesy, dignity and civility. They
may "do as adversaries do in law: strive mightily but (they) eat and drink
as friends." This friendship does not connote conspiracy.
WHEREFORE, judgment is hereby rendered declaring: 1. Dionisio Antiniw
DISBARRED from the practice of law, and his name is ordered stricken off
from the roll of attorneys; 2. Arsenio Fer. Cabanting SUSPENDED from
the practice of law for six months from finality of this judgment; and 3.
Administrative Case No. 1391 against Attorney Eduardo Jovellanos and
additional charges therein, and Administrative Case No. 1543
DISMISSED.

SO ORDERED.
DIRECTOR OF LANDS VS ABABA
This is an appeal from the order of the Court of First Instance of Cebu
dated March 19, 1966 denying the petition for the cancellation of an
adverse claim registered by the adverse claimant on the transfer
certificate of title of the petitioners.
The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel
by petitioner, Maximo Abarquez, in Civil Case No. R-6573 of the Court of
First Instance of Cebu, entitled "Maximo Abarquez vs. Agripina
Abarquez", for the annulment of a contract of sale with right of repurchase
and for the recovery of the land which was the subject matter thereof.
The Court of First Instance of Cebu rendered a decision on May 29, 1961
adverse to the petitioner and so he appealed to the Court of Appeals.
Litigating as a pauper in the lower court and engaging the services of his
lawyer on a contingent basis, petitioner, liable to compensate his lawyer
whom he also retained for his appeal executed a document on June 10,
1961 in the Cebuano-Visayan dialect whereby he obliged himself to give
to his lawyer one-half (1/2) of whatever he might recover from Lots 5600
and 5602 should the appeal prosper. The contents of the document as
translated are as follows:
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R-6573 of the Court of
First Instance of Cebu, make known through this agreement that for the
services rendered by Atty. Alberto B. Fernandez who is my lawyer in this
case, if the appeal is won up to the Supreme Court, I Promise and will
guarantee that I win give to said lawyer one-half (1/2) of what I may
recover from the estate of my father in Lots No. 5600 and 5602 which
are located at Bulacao Pardo, City of Cebu. That with respect to any
money which may be adjudged to me from Agripina Abarquez, except
'Attorney's Fees', the same shall pertain to me and not to said lawyer.
IN WITNESS WHEREOF, I have caused my right thumb. mark to be affixed
hereto this 10th of June, 1961, at the City of Cebu.
THUMBMARK
MAXIMO ABARQUEZ
(p. 5, Petitioner-Appellant's Brief, p. 26, rec.)
The real Property sought to be recovered in Civil Case No. R6573 was
actually the share of the petitioner in Lots 5600 and 5602, which were
part of the estate of his deceased parents and which were partitioned the
heirs which included petitioner Maximo Abarquez and his elder sister
Agripina Abarquez, the defendant in said civil case.
This partition was made pursuant to a project of partition approved by
the Court which provided am other that Lots Nos. 5600 and 5602 were to
be divided into three equal Parts, one third of which shall be given to
Maximo Abarquez. However, Agripina Abarquez the share of her brother
stating that the latter executed an instrument of pacto de retro prior to
the partition conveying to her any or all rights in the estate of their
parents. Petitioner discovered later that the claim of his sister over his
share was based on an instrument he was believe all along to be a mere
acknowledgment of the receipt of P700.00 which his sister gave to him
as a consideration for g care of their father during the latter's illness and
never an instrument of pacto de retro. Hence, he instituted an action to
annul the alleged instrument of pacto de retro.
The Court of Appeals in a decision promulgated on August 27, 1963
reversed the decision of the lower court and annulled the dead of pacto
de retro. Appellee Agripina Abarquez filed a motion for reconsideration
but the same was denied in a resolution dated January 7, 1964 (p. 66,
Record on Appeal; p. 13, Rec.) and the judgment became final and
executory on January 22,1964.
Subsequently, Transfer Certificate of Title No. 31841 was issued on May
19,1965 in the name of Maximo Abarquez, married to Anastacia Cabigas,
over his adjudged share in Lots Nos. 5600 and 5602 containing an area
of 4,085 square meters (p. 110, ROA; p. 13, rec.). These parcels of land
later by the subject matter of the adverse claim filed by the claimant.
The case having been resolved and title having been issued to petitioner,
adverse claimant waited for petitioner to comply with ha obligation under
the document executed by him on June 10, 1961 by delivering the one-
half (½) portion of the said parcels of land.
Petitioner refused to comply with his obligation and instead offered to sell
the whole parcels of land covered by TCT No. 31841 to petitioner-spouses
Juan Larrazabal and Marta C. de Larrazabal. Upon being informed of the
intention of the petitioner, adverse t claimant immediately took stops to
protect his interest by filing with the trial court a motion to annotate Ins
attorney's lien on TCT No. 31841 on June 10, 1965 and by notifying the
prospective buyers of his claim over the one-half portion of the parcels of
land.
Realizing later that the motion to annotate attorney's lien was a wrong
remedy, as it was not within the purview of Section 37, rule 138 of the
Revised Rule of Court, but before the same was by the trial court, adverse
t by an affidavit of adverse claim on July 19, 1965 with the Register of
Deeds of Cebu (p. 14, ROA; p. 13, rec.). By virtue of the petition of mid
affidavit the adverse claim for one-half (½) of the lots covered by the
June 10, 1961 document was annotated on TCT No. 31841.
Notwithstanding the annotation of the adverse claim, petitioner-spouse
Maximo Abarquez and Anastacia Cabigas conveyed by deed of absolute
sale on July 29, 1965 two-thirds (2/3) of the lands covered by TCT No.
31841 to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal.
When the new transfer certificate of title No. 32996 was issued, the
annotation of adverse claim on TCT No. 31841 necessarily had to appear
on the new transfer certificate of title. This adverse claim on TCT No.
32996 became the subject of cancellation proceedings filed by herein
petitioner-spouses on March 7, 1966 with the Court of First Instance of
Cebu (p. 2 ROA; p. 13, rec.). The adverse claimant, Atty. Alberto B.
Fernandez, filed his opposition to the petition for cancellation on March
18, 1966 (p. 20, ROA; p. 13 rec.). The trial court resolved the issue on
March 19, 1966, when it declared that:
...the petition to cancel the adverse claim should be denied. The
admission by the petitioners that the lawyers (Attys. Fernandez and
Batiguin) are entitled to only one-third of the lot described in Transfer
Certificate of Title No. 32966 is the best proof of the authority to maintain
said adverse claim (p. 57, ROA; p. 13, rec.).
Petitioner-spouses decided to appeal the order of dismissal to this Court
and correspondingly filed the notice of appeal on April 1, 1966 with the
trial court. On April 2, 1966, petitioner-spouses filed the appeal bond and
subsequently filed the record on appeal on April 6, 1966. The records of
the case were forwarded to this Court through the Land Registration
Commission of Manila and were received by this Court on May 5, 1966.
Counsel for the petitioner-spouses filed the printed record on appeal on
July 12, 1966. Required to file the appellants' brief, counsel filed one on
August 29, 1966 while that of the appellee was filed on October 1, 1966
after having been granted an extension to file his brief.
The case was submitted for decision on December 1, 1966. Counsel for
the petitioners filed a motion to expunge appellees' brief on December 8,
1966 for having been filed beyond the reglementary period, but the same
was denied by this Court in a resolution dated February 13, 1967.
The pivotal issue to be resolved in the instant case is the validity or nullity
of the registration of the adverse claim of Atty. Fernandez, resolution of
which in turn hinges on the question of whether or not the contract for a
contingent fee, basis of the interest of Atty. Fernandez, is prohibited by
the Article 1491 of the New Civil Code and Canon 13 of the Canons of
Professional Ethics.
Petitioners contend that a contract for a contingent fee violates Article
1491 because it involves an assignment of a property subject of litigation.
That article provides:
Article 1491. The following persons cannot acquire by purchase even at
a public or judicial auction, either in person or through the petition of
another.
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior and other o and employees connected with the administration of
justice, the property and rights 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 by
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 (Emphasis supplied).
This contention is without merit. Article 1491 prohibits only the sale or
assignment between the lawyer and his client, of property which is the
subject of litigation. As WE have already stated. "The prohibition in said
article a only to applies stated: " The prohibition in said article applies
only to a sale or assignment to the lawyer by his client of the property
which is the subject of litigation. In other words, for the prohibition to
operate, the sale or t of the property must take place during the pendency
of the litigation involving the property" (Rosario Vda. de Laig vs. Court of
Appeals, et al., L-26882, November 21, 1978).
Likewise, under American Law, the prohibition does not apply to "cases
where after completion of litigation the lawyer accepts on account of his
fee, an interest the assets realized by the litigation" (Drinker, Henry S.,
Legal Ethics, p. 100 [1953], citing App. A, 280; N.Y. Ciu 714). "There is
a clear distraction between such cases and one in which the lawyer
speculates on the outcome of the matter in which he is employed"
(Drinker, supra, p. 100 citing A.B.A. Op. 279).
A contract for a contingent fee is not covered by Article 1491 because the
tranfer or assignment of the property in litigation takes effect only after
the finality of a favorable judgment. In the instant case, the attorney's
fees of Atty. Fernandez, consisting of one-half (1/2) of whatever Maximo
Abarquez might recover from his share in the lots in question, is
contingent upon the success of the appeal. Hence, the payment of the
attorney's fees, that is, the transfer or assignment of one-half (1/2) of
the property in litigation will take place only if the appeal prospers.
Therefore, the tranfer actually takes effect after the finality of a favorable
judgment rendered on appeal and not during the pendency of the
litigation involving the property in question. Consequently, the contract
for a contingent fee is not covered by Article 1491.
While Spanish civilists differ in their views on the above issue — whether
or not a contingent fee contract (quota litis agreement) is covered by
Article 1491 — with Manresa advancing that it is covered, thus:
Se ha discutido si en la incapacidad de Ion Procumdam y Abogados asta
o el pecto de quota litis. Consiste este, como es sabido, en la estipulacion
de que el Abogado o el Procurador ban de hacer suyos una parte alicuota
de In cona que se li m la son es favorable. Con es te concepto a la vista,
es para nosortros que el articulo que comentamos no menciona ese
pacto; pero como la incapacidad de los Abogados y Procuradores se
extinede al acto de adquirir por cesion; y la efectividad del pacto de quota
litis implica necesariamente una cesion, estimamos que con solo el num.
5 del articulo 1459 podria con exito la nulidad de ese pacto
tradicionalmente considerado como ilicito.
xxx xxx xxx
Debe tenerse tambien en cuenta, respecto del ultimo parrafo del articulo
1459, la sentencia del Tribunal Supreme de 25 Enero de 1902, que
delcara que si bien el procurador no puede adquirir para si los bienes, en
cuanto a los cuales tiene incapacidad, puede adquirirlos para otra persona
en quien no concurra incapacidad alguna (Manresa, Comentarios al
Codigo Civil Español, Tomo X, p. 110 [4a ed., 1931] emphasis supplied).
Castan, maintaining that it is not covered, opines thus;
C. Prohibiciones impuestas a las personas encargadas, mas o menos
directamente, de la administracion de justicia.—El mismo art. 1,459 del
Codigo civil prohibe a los Magistrados, Jueces, individuos del Minesterio
fiscal, Secretarios de Tribunales y Juzgados y Oficiales de Justicia adquirir
por compra (aunque sea en subasta publica o judicial, por si ni por
persona alguna intermedia). 'Los bienes y derechos que estuviesen en
litigio ante el Tribunal en cuya jurisdicion on teritorio ejercieran sus
respectivas funciones, extendiendo se esta prohibicion al acto de adquirir
por cesion', y siendo tambien extensiva ' Alos Abogados y Procuradores
respecto a los bienes y derecho que fueran objeto del un litigio en que
intervengan pos su profession y oficio.'
El fundamento de esta prohibicion es clarismo. No solo se trata—dice
Manresa—de quitar la ocasion al fraude; persiguese, ademas, el proposito
de rodear a las personas que intervienen en la administracion de justicia
de todos los prestigios que necesitan para ejercer su ministerio, librando
los de toda sospecha, que, aunque fuere infundada, redundaria en
descredito de la institucion.
Por no dor lugar a recelos de ninguna clase, admite el Codigo (en el
apartado penutimo del art. 1.459) algunos casos en que, por excepcion,
no se aplica el pricipio prohibitivo de que venimos hablando. Tales son los
de que se trate de acciones hereditarias entre coheredero, de cesion en
pago de creditos, o de garantia de los bienes que posean los funcionarios
de justicia.
Algunos autores (Goyena, Manresa, Valverde) creen que en la prohibicion
del art. 1.459 esta comprendido el pacto de quota litis (o sea el convenio
por el cual se concede al Abogado o Procurador, para el caso de obtener
sentencia favorable una parte alicuota de la cosa o cantidad que se litiga),
porque dicho pacto supone la venta o cesion de una parte de la cosa o
drecho que es objecto del litigio. Pero Mucius Scaevola oberva, conrazon,
que en el repetido pacto no hay propiamente caso de compraventa ni de
cesion de derechos, y bastan para estimario nulo otros preceptos del
Codigo como los relativos a la ilicitud de la causa (Castan, Derecho Civil
Espñol, Tomo 4, pp. 68-69, [9a ed., 1956], emphasis supplied).
The Supreme Court of Spain, in its sentencia of 12 November 1917, has
ruled that Article 1459 of the Spanish Civil Code (Article 1491 of our Civil
Code) does not apply to a contract for a contingent fee because it is not
contrary to morals or to law, holding that:
... que no es susceptible de aplicarse el precepto contenido en el num. 5
del art. 1.459 a un contrato en el que se restrigen los honorarios de un
Abogado a un tanto por ciento de lo que se obtuviera en el litigio, cosa
no repudiada por la moral ni por la ley (Tolentino, Civil Code of the
Philippines, p. 35, Vol. V [1959]; Castan, supra; Manresa, supra).
In the Philippines, among the Filipino commentators, only Justice
Capistrano ventured to state his view on the said issue, thus:
The incapacity to purchase or acquire by assignment, which the law also
extends to lawyers with t to the property and rights which may be the
object of any litigation in which they may take part by virtue of their
profession, also covers contracts for professional services quota litis. Such
contracts, however, have been declared valid by the Supreme Court"
(Capistrano, Civil Code of the Philippines, p. 44, Vol. IV [1951]).
Dr. Tolentino merely restated the views of Castan and Manresa as well as
the state of jurisprudence in Spain, as follows:
Attorneys-at-law—Some writers, like Goyena, Manresa and Valverde
believe that this article covers quota litis agreements, under which a
lawyer is to be given an aliquot part of the property or amount in litigation
if he should win the case for his client. Scaevola and Castan, however,
believe that such a contract does not involve a sale or assignment of right
but it may be void under other articles of the Code, such as those referring
to illicit cause- On the other hand the Spanish Supreme Court has held
that this article is not applicable to a contract which limits the fees of a
lawyer to a certain percentage of what may be recovered in litigation, as
this is not contrary to moral or to law. (Tolentino, Civil Code of the
Philippines, p. 35, Vol. V [1959]; Castan, supra, Emphasis supplied).
Petitioners her contend that a contract for a contingent fee violates the
Canons of Professional Ethics. this is likewise without merit This posture
of petitioners overlooked Canon 13 of the Canons which expressly
contingent fees by way of exception to Canon 10 upon which petitioners
relied. For while Canon 10 prohibits a lawyer from purchasing ...any
interest in the subject matter of the litigation which he is conducting",
Canon 13, on the other hand, allowed a reasonable contingent fee
contract, thus: "A contract for a con. tangent fee where sanctioned by
law, should be reasonable under all the circumstances of the ca including
the risk and uncertainty of the compensation, but should always be
subject to the supervision of a court, as to its reasonableness." As pointed
out by an authority on Legal Ethics:
Every lawyer is intensely interested in the successful outcome of his case,
not only as affecting his reputation, but also his compensation. Canon 13
specifically permits the lawyer to contract for a con tangent fee which of
itself, negatives the thought that the Canons preclude the lawyer's having
a stake in his litigation. As pointed out by Professor Cheatham on page
170 n. of his Case Book, there is an inescapable conflict of interest
between lawyer and client in the matter of fees. Nor despite some
statements to the con in Committee opinions, is it believed that,
particularly in view of Canon 13, Canon 10 precludes in every case an
arrangement to make the lawyer's fee payable only out of the results of
the litigation. The distinction is between buying an interest in the litigation
as a speculation which Canon 10 condemns and agreeing, in a case which
the lawyer undertakes primarily in his professional capacity, to accept his
compensation contingent on the outcome (Drinker, Henry S Legal Ethics,
p. 99, [1953], Emphasis supplied).
These Canons of Professional Ethics have already received "judicial
recognition by being cited and applied by the Supreme Court of the
Philippines in its opinion" Malcolm, Legal and Judicial Ethics, p. 9 [1949]).
And they have likewise been considered sources of Legal Ethics. More
importantly, the American Bar Association, through Chairman Howe of
the Ethics Committee, opined that "The Canons of Professional Ethics are
legislative expressions of professional opinion ABA Op. 37 [1912])" [See
footnote 25, Drinker, Legal Ethics, p. 27]. Therefore, the Canons have
some binding effect
Likewise, it must be noted that this Court has already recognized this type
of a contract as early as the case of Ulanday vs. Manila Railroad Co. (45
PhiL 540 [1923]), where WE held that "contingent fees are not prohibited
in the Philippines, and since impliedly sanctioned by law 'Should be under
the supervision of the court in order that clients may be protected from
unjust charges' (Canons of Profession 1 Ethics)". The same doctrine was
subsequently reiterated in Grey vs. Insular Lumber Co. (97 PhiL 833 to one who is so poor to employ counsel (id, at p. 293, citing Warvelle,
[1955]) and Recto vs. Harden (100 PhiL 427 [1956]). Legal Ethics, p. 92, Emphasis supplied).

In the 1967 case of Albano vs. Ramos (20 SCRA 171 [19671), the
attorney was allowed to recover in a separate action her attomey's fee of
one-third (1/3) of the lands and damages recovered as stipulated in the
contingent fee contract. And this Court in the recent case of Rosario Vda
de Laig vs. Court of Appeals, et al. (supra), which involved a contingent
fee of one-half (½) of the property in question, held than ,contingent fees
are recognized in this i jurisdiction (Canon 13 of the Canons of
Professional Ethics adopted by the Philippine Bar association in 1917
[Appendix B, Revised Rules of Court)), which contingent fees may be a
portion of the property in litigation."
Justice George Malcolm, writing on contingent fees, also stated that:
... the system of contingent compensation has the merit of affording to
certain classes of persons the opportunity to procure the prosecution of
their claims which otherwise would be beyond their means. In many cases
in the United States and the Philippines, the contingent fee is socially
necessary (Malcolm, Legal and Judicial Ethics, p. 55 [1949], emphasis
supplied).

Stressing further the importance of contingent fees, Professor Max Radin

Contracts of this nature are permitted because they redound to the of the University of California, said that:
benefit of the poor client and the lawyer "especially in cases where the
client has meritorious cause of action, but no means with which to pay
for legal services unless he can, with the sanction of law, make a contract
The contingent fee certainly increases the possibility that vexatious and
for a contingent fee to be paid out of the proceeds of the litigation"
unfounded suits will be brought. On the other hand, it makes possible the
(Francisco, Legal Ethics, p. 294 [1949], citing Lipscomb vs. Adams 91
enforcement of legitimate claims which otherwise would be abandoned
S.W. 1046, 1048 [1949]). Oftentimes, contingent fees are the only means
because of the poverty of the claimants. Of these two possibilities, the
by which the poor and helpless can redress for injuries sustained and
social advantage seems clearly on the side of the contingent fee. It may
have their rights vindicated. Thus:
in fact be added by way of reply to the first objection that vexations and
unfounded suits have been brought by men who could and did pay
substantial attorney's fees for that purpose (Radin, Contingent Fees in
The reason for allowing compensation for professional services based on California, 28 Cal. L. Rev. 587, 589 [1940], emphasis supplied).
contingent fees is that if a person could not secure counsel by a promise
of large fees in case of success, to be derived from the subject matter of
the suit, it would often place the poor in such a condition as to amount to
Finally, a contingent fee contract is always subject to the supervision of
a practical denial of justice. It not infrequently happens that person are
the courts with respect to the stipulated amount and may be reduced or
injured through the negligence or willful misconduct of others, but by
nullified. So that in the event that there is any undue influence or fraud
reason of poverty are unable to employ counsel to assert their rights. In
in the execution of the contract or that the fee is excessive, the client is
such event their only means of redress lies in gratuitous service, which is
not without remedy because the court will amply protect him. As held in
rarely given, or in their ability to find some one who will conduct the case
the case of Grey vs. Insular Lumber Co., supra, citing the case of Ulanday
for a contingent fee. That relations of this king are often abused by
vs. Manila Railroad Co., supra:
speculative attorneys or that suits of this character are turned into a sort
of commercial traffic by the lawyer, does not destroy the beneficial result
Where it is shown that the contract for a contingent fee was obtained by
any undue influence of the attorney over the client, or by any fraud or
imposition, or that the compensation is so clearly excessive as to amount
to extortion, the court win in a proper case protect the aggrieved party.
In the present case, there is no iota of proof to show that Atty. Fernandez
had exerted any undue influence or had Perpetrated fraud on, or had in
any manner taken advantage of his client, Maximo Abarquez. And, the
compensation of one-half of the lots in question is not excessive nor
unconscionable considering the contingent nature of the attorney's fees.
With these considerations, WE find that the contract for a contingent fee
in question is not violative of the Canons of Professional Ethics.
Consequently, both under the provisions of Article 1491 and Canons 10
and 13 of the Canons of Profession Ethics, a contract for a contingent fee
is valid
In resolving now the issue of the validity or nullity for the registration of
the adverse claim, Section 110 of the Land Registration Act (Act 496)
should be considered. Under d section, an adverse claim may be
registered only by..
Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the o registration ...
if no other provision is made in this Act for registering the same ...
The contract for a contingent fee, being valid, vested in Atty Fernandez
an interest or right over the lots in question to the extent of one-half
thereof. Said interest became vested in Atty. Fernandez after the case
was won on appeal because only then did the assignment of the one-half
(½) portion of the lots in question became effective and binding. So that
when he filed his affidavit of adverse claim his interest was already an
existing one. There was therefore a valid interest in the lots to be
registered in favor of Atty. Fernandez adverse to Mo Abarquez.
Moreover, the interest or claim of Atty. Fernandez in the lots in question
arose long after the original petition which took place many years ago.
And, there is no other provision of the Land Registration Act under which
the interest or claim may be registered except as an adverse claim under
Section 110 thereof. The interest or claim cannot be registered as an
attorney's charging lien. The lower court was correct in denying the
motion to annotate the attomey's lien. A charging lien under Section 37,
Rule 138 of the Revised Rules of Court is limited only to money judgments
and not to judgments for the annulment of a contract or for delivery of
real property as in the instant case. Said Section provides that:
Section 37. An attorney shall have a lien upon the funds, documents
and papers of his client which have lawfully come into his oppossession
and may retain the same until his lawful fees and disbursements have
been paid, and may apply such funds to the satisfaction thereof. He shall
also have a lien to the same extent upon all judgments, for the payment
of money, and executions issued in pursuance of such judgments, which
he has secured in a litigation of his client ... (emphasis supplied).
Therefore, as an interest in registered land, the only adequate remedy
open to Atty. Fernandez is to register such interest as an adverse claim.
Consequently, there being a substantial compliance with Section 110 of
Act 496, the registration of the adverse claim is held to be valid. Being
valid, its registration should not be cancelled because as WE have already
stated, "it is only when such claim is found unmeritorious that the
registration thereof may be cancelled" (Paz Ty Sin Tei vs. Jose Lee Dy
Piao 103 Phil. 867 [1958]).
The one-half (½) interest of Atty. Fernandez in the lots in question should
therefore be respected. Indeed, he has a better right than petitioner-
spouses, Juan Larrazabal and Marta C. de Larrazabal. They purchased
their two-thirds (2/3) interest in the lots in question with the knowledge
of the adverse claim of Atty. Fernandez. The adverse claim was annotated
on the old transfer certificate of title and was later annotated on the new
transfer certificate of title issued to them. As held by this Court:

The annotation of an adverse claim is a measure designed to protect the

interest of a person over a piece of real property where the registration
of such interest or right is not otherwise provided for by the Land
Registration Act, and serves as a notice and warning to third parties
dealing with said property that someone is claiming an interest on the
same or a better right than the registered owner thereof (Sanchez, Jr. vs.
Court of Appeals, 69 SCRA 332 [1976]; Paz Ty Sin Tei vs. Jose Le Dy Piao
supra).

Having purchased the property with the knowledge of the adverse claim,
they are therefore in bad faith. Consequently, they are estopped from
questioning the validity of the adverse claim.

WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE

PETITION FOR THE CANCELLATION OF THE ADVERSE CLAIM SHOULD BE,
AS IT IS HEREBY AFFIRMED, WITH COSTS AGAINST PETITIONER-
APPELLANTS JUAN LARRAZABAL AND MARTA C. DE LARRAZABAL.

SO ORDERED.
CONJUGAL PART. OF SPS. CADAVEDO VS LACAYA complaint stated that the spouses Cadavedo hired Atty. Lacaya on a
contingency fee basis. The contingency fee stipulation specifically reads:
We solve in this Rule 45 petition for review on certiorari1 the challenge
to the October 11, 2005 decision2 and the May 9, 2006 resolution3 of the
Court of Appeals (CA) inPetitioners, CA-G.R. CV No. 56948. The CA
10. That due to the above circumstances, the plaintiffs were forced to hire
reversed and set aside the September 17, 1996 decision4 of the Regional
a lawyer on contingent basis and if they become the prevailing parties in
Trial Court (RTC), Branch 10, of Dipolog City in Civil Case No. 4038,
the case at bar, they will pay the sum of ₱2,000.00 for attorney’s fees.6
granting in part the complaint for recovery of possession of property filed
by the petitioners, the Conjugal Partnership of the Spouses Vicente
Cadavedo and Benita Arcoy-Cadavedo against Atty. Victorino (Vic) T.
Lacaya, married to Rosa Legados (collectively, the respondents). In a decision dated February 1, 1972, the RTC upheld the sale of the
subject lot to the spouses Ames. The spouses Cadavedo, thru Atty.
Lacaya, appealed the case to the CA.
The Factual Antecedents

On September 18, 1975, and while the appeal before the CAin Civil Case
No. 1721was pending, the spouses Ames sold the subject lot to their
The Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo (collectively,
children. The spouses Ames’ TCT No. T-4792 was subsequently cancelled
the spouses Cadavedo) acquired a homestead grant over a 230,765-
and TCT No. T-25984was issued in their children’s names. On October
square meter parcel of land known as Lot 5415 (subject lot) located in
11, 1976, the spouses Ames mortgaged the subject lot with the
Gumay, Piñan, Zamboanga del Norte. They were issued Homestead
Development Bank of the Philippines (DBP) in the names of their children.
Patent No. V-15414 on March 13, 1953andOriginal Certificate of Title No.
P-376 on July 2, 1953.On April30, 1955, the spouses Cadavedo sold the
subject lot to the spouses Vicente Ames and Martha Fernandez (the
spouses Ames) Transfer Certificate of Title (TCT) No. T-4792 was On August 13, 1980, the CA issued itsdecision in Civil Case No.
subsequently issued in the name of the spouses Ames. 1721,reversing the decision of the RTC and declaring the deed of sale,
transfer of rights, claims and interest to the spouses Ames null and void
ab initio. It directed the spouses Cadavedo to return the initial payment
and ordered the Register of Deeds to cancel the spouses Ames’ TCT No.
The present controversy arose when the spouses Cadavedo filed an
T-4792 and to reissue another title in the name of the spouses Cadavedo.
action5 before the RTC(then Court of First Instance) of Zamboanga City
The case eventually reached this Court via the spouses Ames’ petition for
against the spouses Ames for sum of money and/or voiding of contract of
review on certiorari which this Court dismissed for lack of merit.
sale of homestead after the latter failed to pay the balance of the
purchase price. The spouses Cadavedo initially engaged the services of
Atty. Rosendo Bandal who, for health reasons, later withdrew from the
case; he was substituted by Atty. Lacaya. Meanwhile, the spouses Ames defaulted in their obligation with the DBP.
Thus, the DBP caused the publication of a notice of foreclosure sale of the
subject lot as covered by TCT No. T-25984(under the name of the spouses
Ames’ children). Atty. Lacaya immediately informed the spouses
On February 24, 1969, Atty. Lacaya amended the complaint to assert the
Cadavedo of the foreclosure sale and filed an Affidavit of Third Party Claim
nullity of the sale and the issuance of TCT No. T-4792 in the names of the
with the Office of the Provincial Sheriff on September 14, 1981.
spouses Ames as gross violation of the public land law. The amended
 Meanwhile, on May 21, 1982, the spouses Cadavedo filed before the RTC
an action against the DBP for Injunction; it was docketed as Civil Case
With the finality of the judgment in Civil Case No. 1721,Atty. Lacaya filed
No. 3443 (Cadavedo v. DBP).The RTC subsequently denied the petition,
on September 21, 1981 a motion for the issuance of a writ of execution.
prompting the spouses Cadavedo to elevate the case to the CAvia a
petition for certiorari. The CA dismissed the petition in its decision of
January 31, 1984.
On September 23, 1981,and pending the RTC’s resolution of the motion
for the issuance of a writ of execution, the spouses Ames filed a
complaint7 before the RTC against the spouses Cadavedo for Quieting of
The records do not clearly disclose the proceedings subsequent to the CA
Title or Enforcement of Civil Rights due Planters in Good Faith with prayer
decision in Civil Case No. 3443. However, on August 18, 1988, TCT No.
for Preliminary Injunction. The spouses Cadavedo, thru Atty. Lacaya, filed
41051was issued in the name of the spouses Cadavedo concerning the
a motion to dismiss on the ground of res judicata and to cancel TCT No.
subject lot.
T-25984 (under the name of the spouses Ames’ children).

On August 9, 1988, the spouses Cadavedo filed before the RTC an action9
On October 16, 1981, the RTC granted the motion for the issuance of a
against the respondents, assailing the MTC-approved compromise
writ of execution in Civil Case No. 1721,andthe spouses Cadavedo were
agreement. The case was docketed as Civil Case No. 4038 and is the root
placed in possession of the subject lot on October 24, 1981. Atty. Lacaya
of the present case. The spouses Cadavedo prayed, among others, that
asked for one-half of the subject lot as attorney’s fees. He caused the
the respondents be ejected from their one-half portion of the subject lot;
subdivision of the subject lot into two equal portions, based on area, and
that they be ordered to render an accounting of the produce of this one-
selected the more valuable and productive half for himself; and assigned
half portion from 1981;and that the RTC fix the attorney’s fees on a
the other half to the spouses Cadavedo.
quantum meruit basis, with due consideration of the expenses that Atty.
Lacaya incurred while handling the civil cases.

Unsatisfied with the division, Vicente and his sons-in-law entered the
portion assigned to the respondents and ejected them. The latter
responded by filing a counter-suit for forcible entry before the Municipal
Trial Court (MTC); the ejectment case was docketed as Civil Case No.
215. This incident occurred while Civil Case No. 3352was pending.
During the pendency of Civil Case No. 4038, the spouses Cadavedo
executed a Deed of Partition of Estate in favor of their eight children.
Consequently, TCT No. 41051 was cancelled and TCT No. 41690 was
issued in the names of the latter. The records are not clear on the
proceedings and status of Civil Case No. 3352.

On May 13, 1982, Vicente andAtty. Lacaya entered into an amicable

settlement (compromise agreement)8 in Civil Case No. 215 (the
The Ruling of the RTC
ejectment case), re-adjusting the area and portion obtained by each.
Atty. Lacaya acquired 10.5383 hectares pursuant to the agreement. The
MTC approved the compromise agreementin a decision dated June 10,
1982. In the September 17, 1996 decision10 in Civil Case No. 4038, the RTC
declared the contingent fee of 10.5383 hectares as excessive and
unconscionable. The RTC reduced the land area to 5.2691 hectares and
ordered the respondents to vacate and restore the remaining
5.2692hectares to the spouses Cadavedo.
The RTC noted that, as stated in the amended complaint filed by Atty.
Lacaya, the agreed attorney’s fee on contingent basis was ₱2,000.00.
Nevertheless, the RTC also pointed out that the parties novated this
agreement when they executed the compromise agreement in Civil Case
No. 215 (ejectment case), thereby giving Atty. Lacaya one-half of the
subject lot. The RTC added that Vicente’s decision to give Atty. Lacaya
one-half of the subject lot, sans approval of Benita, was a valid act of
administration and binds the conjugal partnership. The RTC reasoned out
that the disposition redounded to the benefit of the conjugal partnership
as it was done precisely to remunerate Atty. Lacaya for his services to
recover the property itself.
These considerations notwithstanding, the RTC considered the one-half
portion of the subject lot, as Atty. Lacaya’s contingent fee,excessive,
unreasonable and unconscionable. The RTC was convinced that the issues
involved in Civil Case No. 1721were not sufficiently difficult and
complicated to command such an excessive award; neither did it require
Atty. Lacaya to devote much of his time or skill, or to perform extensive
research.
Finally, the RTC deemed the respondents’ possession, prior to the
judgment, of the excess portion of their share in the subject lot to be in
good faith. The respondents were thus entitled to receive its fruits.
On the spouses Cadavedo’s motion for reconsideration, the RTC modified
the decision in its resolution11 dated December 27, 1996. The RTC
ordered the respondents to account for and deliver the produce and
income, valued at ₱7,500.00 per annum, of the 5.2692hectares that the
RTC ordered the spouses Amesto restore to the spouses Cadavedo, from
October 10, 1988 until final restoration of the premises.
The respondents appealed the case before the CA.
The Ruling of the CA
In its decision12 dated October 11, 2005, the CA reversed and set aside
the RTC’s September 17, 1996 decision and maintained the partition and
distribution of the subject lot under the compromise agreement. In so
ruling, the CA noted the following facts: (1) Atty. Lacaya served as the
spouses Cadavedo’s counsel from 1969 until 1988,when the latter filed
the present case against Atty. Lacaya; (2) during the nineteen (19) years
of their attorney-client relationship, Atty. Lacaya represented the spouses
Cadavedo in three civil cases –Civil Case No. 1721, Civil Case No. 3352,
and Civil Case No. 3443; (3) the first civil case lasted for twelve years
and even reached this Court, the second civil case lasted for seven years,
while the third civil case lasted for six years and went all the way to the
CA;(4) the spouses Cadavedo and Atty. Lacaya entered into a
compromise agreement concerning the division of the subject lot where
Atty. Lacaya ultimately agreed to acquire a smaller portion; (5) the MTC
approved the compromise agreement; (6) Atty. Lacaya defrayed all of the
litigation expenses in Civil Case No. 1721; and (7) the spouses Cadavedo
expressly recognized that Atty. Lacaya served them in several cases.
Considering these established facts and consistent with Canon 20.01 of
the Code of Professional Responsibility (enumerating the factors that
should guide the determination of the lawyer’s fees), the CA ruled that
the time spent and the extent of the services Atty. Lacaya rendered for
the spouses Cadavedo in the three cases, the probability of him losing
other employment resulting from his engagement, the benefits resulting
to the spouses Cadavedo, and the contingency of his fees justified the
compromise agreement and rendered the agreed fee under the
compromise agreement reasonable.
The Petition
In the present petition, the petitioners essentially argue that the CA erred
in: (1) granting the attorney’s fee consisting of one-half or 10.5383
hectares of the subject lot to Atty. Lacaya, instead of confirming the
agreed contingent attorney’s fees of ₱2,000.00; (2) not holding the
respondents accountable for the produce, harvests and income of the
10.5383-hectare portion (that they obtained from the spouses Cadavedo)
from 1988 up to the present; and (3) upholding the validity of the
purported oral contract between the spouses Cadavedo and Atty. Lacaya
when it was champertous and dealt with property then still subject of Civil
Case No. 1721.13
The petitioners argue that stipulations on a lawyer’s compensation for
professional services, especially those contained in the pleadings filed in
courts, control the amount of the attorney’s fees to which the lawyer shall
be entitled and should prevail over oral agreements. In this case, the
spouses Cadavedo and Atty. Lacaya agreed that the latter’s contingent
attorney’s fee was ₱2,000.00 in cash, not one-half of the subject lot. This
agreement was clearly stipulated in the amended complaint filed in Civil
Case No. 1721. Thus, Atty. Lacaya is bound by the expressly stipulated
fee and cannot insist on unilaterally changing its terms without violating
their contract.
The petitioners add that the one-half portion of the subject lot as Atty.
Lacaya’s contingent attorney’s fee is excessive and unreasonable. They
highlight the RTC’s observations and argue that the issues involved in
Civil Case No. 1721, pursuant to which the alleged contingent fee of one-
half of the subject lot was agreed by the parties, were not novel and did
not involve difficult questions of law; neither did the case require much
of Atty. Lacaya’s time, skill and effort in research. They point out that the
two subsequent civil cases should not be considered in determining the
reasonable contingent fee to which Atty. Lacaya should be entitled for his
services in Civil Case No. 1721,as those cases had not yet been instituted
at that time. Thus, these cases should not be considered in fixing the
attorney’s fees. The petitioners also claim that the spouses Cadavedo
concluded separate agreements on the expenses and costs for each of
these subsequent cases, and that Atty. Lacaya did not even record any
attorney’s lien in the spouses Cadavedo’s TCT covering the subject lot.
The petitioners further direct the Court’s attention to the fact that Atty.
Lacaya,in taking over the case from Atty. Bandal, agreed to defray all of
the litigation expenses in exchange for one-half of the subject lot should
they win the case. They insist that this agreement is a champertous
contract that is contrary to public policy, prohibited by law for violation of
the fiduciary relationship between a lawyer and a client.
Finally, the petitioners maintain that the compromise agreement in Civil
Case No. 215 (ejectment case) did not novate their original stipulated
agreement on the attorney’s fees. They reason that Civil Case No. 215
did not decide the issue of attorney’s fees between the spouses Cadavedo
and Atty. Lacaya for the latter’s services in Civil Case No. 1721.
The Case for the Respondents
In their defense,14 the respondents counter that the attorney’s fee
stipulated in the amended complaint was not the agreed fee of Atty.
Lacaya for his legal services. They argue that the questioned stipulation
for attorney’s fees was in the nature of a penalty that, if granted, would
inure to the spouses Cadavedo and not to Atty. Lacaya.
The respondents point out that: (1) both Vicente and Atty. Lacaya caused
the survey and subdivision of the subject lot immediately after the
spouses Cadavedo reacquired its possession with the RTC’s approval of
their motion for execution of judgment in Civil Case No. 1721; (2) Vicente
expressly ratified and confirmed the agreement on the contingent
attorney’s fee consisting of one-half of the subject lot; (3) the MTC in Civil
Case No. 215 (ejectment case) approved the compromise agreement; (4)
Vicente is the legally designated administrator of the conjugal
partnership, hence the compromise agreement ratifying the transfer
bound the partnership and could not have been invalidated by the
absence of Benita’s acquiescence; and (5) the compromise agreement
merely inscribed and ratified the earlier oral agreement between the
spouses Cadavedo and Atty. Lacaya which is not contrary to law, morals, Civil Case No. 215 –Atty. Lacaya v. Vicente Cadavedo, et. al. (Ejectment
good customs, public order and public policy. Case), filed between the latter part of 1981 and early part of 1982. The
parties executed the compromise agreement on May 13, 1982.

While the case is pending before this Court, Atty. Lacaya died.15 He was
substituted by his wife -Rosa -and their children –Victoriano D.L. Lacaya, Civil Case No. 4038 –petitioners v. respondents (the present case).
Jr., Rosevic Lacaya-Ocampo, Reymar L. Lacaya, Marcelito L. Lacaya,
Raymundito L. Lacaya, Laila Lacaya-Matabalan, Marivic Lacaya-Barba,
Rosalie L. Lacaya and Ma. Vic-Vic Lacaya-Camaongay.16 The agreement on attorney’s fee

consisting of one-half of the subject

The Court’s Ruling lot is void; the petitioners are entitled

to recover possession
We resolve to GRANT the petition.

The core issue for our resolution is whether the attorney’s fee consisting
of one-half of the subject lot is valid and reasonable, and binds the
The subject lot was the core of four successive and overlapping cases
petitioners. We rule in the NEGATIVE for the reasons discussed below.
prior to the present controversy. In three of these cases, Atty. Lacaya
stood as the spouses Cadavedo’s counsel. For ease of discussion, we
summarize these cases (including the dates and proceedings pertinent to
each) as follows: A. The written agreement providing for

a contingent fee of ₱2,000.00 should prevail

Civil Case No. 1721 – Cadavedo v. Ames (Sum of money and/or voiding over the oral agreement providing for one-
of contract of sale of homestead), filed on January 10, 1967. The writ of
half of the subject lot
execution was granted on October 16, 1981.

The spouses Cadavedo and Atty. Lacaya agreed on a contingent fee of

Civil Case No. 3352 – Ames v. Cadavedo (Quieting of Title and/or
₱2,000.00 and not, as asserted by the latter, one-half of the subject lot.
Enforcement of Civil Rights due Planters in Good Faith with Application
The stipulation contained in the amended complaint filed by Atty. Lacaya
for Preliminary injunction), filed on September 23, 1981.
clearly stated that the spouses Cadavedo hired the former on a
contingency basis; the Spouses Cadavedo undertook to pay their lawyer
₱2,000.00 as attorney’s fees should the case be decided in their favor.
Civil Case No. 3443 – Cadavedo v. DBP (Action for Injunction with
Preliminary Injunction), filed on May 21, 1982.
Contrary to the respondents’ contention, this stipulation is not in the
nature of a penalty that the court would award the winning party, to be
paid by the losing party. The stipulation is a representation to the court
concerning the agreement between the spouses Cadavedo and Atty.
Lacaya, on the latter’s compensation for his services in the case; it is not
the attorney’s fees in the nature of damages which the former prays from
the court as an incident to the main action.
At this point, we highlight that as observed by both the RTC and the CA
and agreed as well by both parties, the alleged contingent fee agreement
consisting of one-half of the subject lot was not reduced to writing prior
to or, at most, at the start of Atty. Lacaya’s engagement as the spouses
Cadavedo’s counsel in Civil Case No. 1721.An agreement between the
lawyer and his client, providing for the former’s compensation, is subject
to the ordinary rules governing contracts in general. As the rules stand,
controversies involving written and oral agreements on attorney’s fees
shall be resolved in favor of the former.17 Hence, the contingency fee of
₱2,000.00 stipulated in the amended complaint prevails over the alleged
oral contingency fee agreement of one-half of the subject lot.
B. The contingent fee agreement between
the spouses Cadavedo and Atty. Lacaya,
awarding the latter one-half of the subject
lot, is champertous
Granting arguendo that the spouses Cadavedo and Atty. Lacaya indeed
entered into an oral contingent fee agreement securing to the latter one-
half of the subject lot, the agreement is nevertheless void.
In their account, the respondents insist that Atty. Lacaya agreed to
represent the spouses Cadavedo in Civil Case No. 1721 and assumed the
litigation expenses, without providing for reimbursement, in exchange for
a contingency fee consisting of one-half of the subject lot. This agreement
is champertous and is contrary to public policy.18
Champerty, along with maintenance (of which champerty is an
aggravated form), is a common law doctrine that traces its origin to the
medieval period.19 The doctrine of maintenance was directed "against
wanton and in officious intermeddling in the disputes of others in which
the intermeddler has no interest whatever, and where the assistance
rendered is without justification or excuse."20 Champerty, on the other
hand, is characterized by "the receipt of a share of the proceeds of the
litigation by the intermeddler."21 Some common law court decisions,
however, add a second factor in determining champertous contracts,
namely, that the lawyer must also, "at his own expense maintain, and
take all the risks of, the litigation."22
The doctrines of champerty and maintenance were created in response
"to medieval practice of assigning doubtful or fraudulent claims to persons
of wealth and influence in the expectation that such individuals would
enjoy greater success in prosecuting those claims in court, in exchange
for which they would receive an entitlement to the spoils of the
litigation."23 "In order to safeguard the administration of justice,
instances of champerty and maintenance were made subject to criminal
and tortuous liability and a common law rule was developed, striking
down champertous agreements and contracts of maintenance as being
unenforceable on the grounds of public policy."24
In this jurisdiction, we maintain the rules on champerty, as adopted from
American decisions, for public policy considerations.25 As matters
currently stand, any agreement by a lawyer to "conduct the litigation in
his own account, to pay the expenses thereof or to save his client
therefrom and to receive as his fee a portion of the proceeds of the
judgment is obnoxious to the law."26 The rule of the profession that
forbids a lawyer from contracting with his client for part of the thing in
litigation in exchange for conducting the case at the lawyer’s expense is
designed to prevent the lawyer from acquiring an interest between him
and his client. To permit these arrangements is to enable the lawyer to
"acquire additional stake in the outcome of the action which might lead
him to consider his own recovery rather than that of his client or to accept
a settlement which might take care of his interest in the verdict to the
sacrifice of that of his client in violation of his duty of undivided fidelity to
his client’s cause."27
In Bautista v. Atty. Gonzales,28 the Court struck down the contingent fee
agreement between therein respondent Atty. Ramon A. Gonzales and his
client for being contrary to public policy. There, the Court held that an
reimbursement of litigation expenses paid by the former is against public
policy, especially if the lawyer has agreed to carry on the action at his
expense in consideration of some bargain to have a part of the thing in
dispute. It violates the fiduciary relationship between the lawyer and his
client.29
In addition to its champertous character, the contingent fee arrangement
in this case expressly transgresses the Canons of Professional Ethics and,
impliedly, the Code of Professional Responsibility.30 Under Rule 42 of the
Canons of Professional Ethics, a lawyer may not properly agree with a
client that the lawyer shall pay or beat the expense of litigation.31 The
same reasons discussed above underlie this rule.
C. The attorney’s fee consisting of
one-half of the subject lot is excessive
and unconscionable
We likewise strike down the questioned attorney’s fee and declare it void
for being excessive and unconscionable.1âwphi1 The contingent fee of
one-half of the subject lot was allegedly agreed to secure the services of
Atty. Lacaya in Civil Case No. 1721.Plainly, it was intended for only one
action as the two other civil cases had not yet been instituted at that time.
While Civil Case No. 1721 took twelve years to be finally resolved, that
period of time, as matters then stood, was not a sufficient reason to
justify a large fee in the absence of any showing that special skills and
additional work had been involved. The issue involved in that case, as
observed by the RTC(and with which we agree), was simple and did not
require of Atty. Lacaya extensive skill, effort and research. The issue
simply dealt with the prohibition against the sale of a homestead lot within
five years from its acquisition.
That Atty. Lacaya also served as the spouses Cadavedo’s counsel in the
two subsequent cases did not and could not otherwise justify an
attorney’s fee of one-half of the subject lot. As assertedby the petitioners,
the spouses Cadavedo and Atty. Lacaya made separate arrangements for
the costs and expenses foreach of these two cases. Thus, the expenses
for the two subsequent cases had been considered and taken cared of
Based on these considerations, we therefore find one-half of the subject
lot as attorney’s fee excessive and unreasonable.
D. Atty. Lacaya’s acquisition of
the one-half portion contravenes
Article 1491 (5) of the Civil Code
Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by
purchase or assignment, the property that has been the subject of
litigation in which they have taken part by virtue of their profession.32
The same proscription is provided under Rule 10 of the Canons of
Professional Ethics.33
A thing is in litigation if there is a contest or litigation over it in court or
when it is subject of the judicial action.34 Following this definition, we
find that the subject lot was still in litigation when Atty. Lacaya acquired
the disputed one-half portion. We note in this regard the following
established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion
for the issuance of a writ of execution in Civil Case No. 1721; (2) on
September 23, 1981, the spouses Ames filed Civil Case No. 3352 against
the spouses Cadavedo; (3)on October 16, 1981, the RTC granted the
motion filed for the issuance of a writ of execution in Civil Case No. 1721
and the spouses Cadavedo took possession of the subject lot on October
24, 1981; (4) soon after, the subject lot was surveyed and subdivided
into two equal portions, and Atty. Lacaya took possession of one of the
subdivided portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya
executed the compromise agreement.
From these timelines, whether by virtue of the alleged oral contingent fee
agreement or an agreement subsequently entered into, Atty. Lacaya
acquired the disputed one-half portion (which was after October 24,
1981) while Civil Case No. 3352 and the motion for the issuance of a writ
of execution in Civil Case No. 1721were already pending before the lower
courts. Similarly, the compromise agreement, including the subsequent
judicial approval, was effected during the pendency of Civil Case No.
3352. In all of these, the relationship of a lawyer and a client still existed
between Atty. Lacaya and the spouses Cadavedo.
Thus, whether we consider these transactions –the transfer of the
disputed one-half portion and the compromise agreement –independently
of each other or resulting from one another, we find them to be prohibited
and void35 by reason of public policy.36 Under Article 1409 of the Civil
Code, contracts which are contrary to public policy and those expressly
prohibited or declared void by law are considered in existent and void
from the beginning.37
What did not escape this Court’s attention is the CA’s failure to note that
the transfer violated the provisions of Article 1491(5) of the Civil Code,
although it recognized the concurrence of the transfer and the execution
of the compromise agreement with the pendency of the two civil cases
subsequent to Civil Case No. 1721.38 In reversing the RTC ruling, the CA
gave weight to the compromise agreement and in so doing, found
justification in the unproved oral contingent fee agreement.
While contingent fee agreements are indeed recognized in this jurisdiction
as a valid exception to the prohibitions under Article 1491(5) of the Civil
Code,39 contrary to the CA’s position, however, this recognition does not
apply to the present case. A contingent fee contract is an agreement in
writing where the fee, often a fixed percentage of what may be recovered
in the action, is made to depend upon the success of the litigation.40 The
payment of the contingent fee is not made during the pendency of the
litigation involving the client’s property but only after the judgment has
been rendered in the case handled by the lawyer.41
In the present case, we reiterate that the transfer or assignment of the
disputed one-half portion to Atty. Lacaya took place while the subject lot
was still under litigation and the lawyer-client relationship still existed
between him and the spouses Cadavedo. Thus, the general prohibition
provided under Article 1491 of the Civil Code, rather than the exception
provided in jurisprudence, applies. The CA seriously erred in upholding
the compromise agreement on the basis of the unproved oral contingent
fee agreement.
Notably, Atty. Lacaya, in undertaking the spouses Cadavedo’s cause
pursuant to the terms of the alleged oral contingent fee agreement, in
effect, became a co-proprietor having an equal, if not more, stake as the
spouses Cadavedo. Again, this is void by reason of public policy; it
undermines the fiduciary relationship between him and his clients.42
E.The compromise agreement could not
validate the void oral contingent fee
agreement; neither did it supersede the
written contingent fee agreement
The compromise agreement entered into between Vicente and Atty.
Lacaya in Civil Case No. 215 (ejectment case) was intended to ratify and
confirm Atty. Lacaya’s acquisition and possession of the disputed one-half
portion which were made in violation of Article 1491 (5) of the Civil Code.
As earlier discussed, such acquisition is void; the compromise agreement,
which had for its object a void transaction, should be void.
A contract whose cause, object or purpose is contrary to law, morals,
good customs, public order or public policy is in existent and void from
the beginning.43 It can never be ratified44 nor the action or defense for
the declaration of the in existence of the contract prescribe;45 and any
contract directly resulting from such illegal contract is likewise void and
in existent.46
Consequently, the compromise agreement did not supersede the written
contingent fee agreement providing for attorney’s fee of ₱2,000.00;
neither did it preclude the petitioners from questioning its validity even
though Vicente might have knowingly and voluntarily acquiesced thereto
and although the MTC approved it in its June 10, 1982 decision in the
ejectment case. The MTC could not have acquired jurisdiction over the
subject matter of the void compromise agreement; its judgment in the
ejectment case could not have attained finality and can thus be attacked
at any time. Moreover, an ejectment case concerns itself only with the
issue of possession de facto; it will not preclude the filing of a separate
action for recovery of possession founded on ownership. Hence, contrary
to the CA’s position, the petitioners–in filing the present action and
praying for, among others, the recovery of possession of the disputed
one-half portion and for judicial determination of the reasonable fees due
Atty. Lacaya for his services –were not barred by the compromise
agreement.
Atty. Lacaya is entitled to receive attorney’s fees on a quantum meruit
basis
In view of their respective assertions and defenses, the parties, in effect,
impliedly set aside any express stipulation on the attorney’s fees, and the
petitioners, by express contention, submit the reasonableness of such
fees to the court’s discretion. We thus have to fix the attorney’s fees on
a quantum meruit basis.
"Quantum meruit—meaning ‘as much as he deserves’—is used as basis
for determining a lawyer’s professional fees in the absence of a contract
x x x taking into account certain factors in fixing the amount of legal
fees."47 "Its essential requisite is the acceptance of the benefits by one
sought to be charged for the services rendered under circumstances as
reasonably to notify him that the lawyer performing the task was
expecting to be paid compensation"48 for it. The doctrine of quantum
meruit is a device to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain benefit without paying for
it.49
Under Section 24, Rule 138 of the Rules of Court50 and Canon 20 of the
Code of Professional Responsibility,51 factors such as the importance of
the subject matter of the controversy, the time spent and the extent of
the services rendered, the customary charges for similar services, the
amount involved in the controversy and the benefits resulting to the client
from the service, to name a few, are considered in determining the
reasonableness of the fees to which a lawyer is entitled.
In the present case, the following considerations guide this Court in
considering and setting Atty. Lacaya’s fees based on quantum meruit: (1)
the questions involved in these civil cases were not novel and did not
require of Atty. Lacaya considerable effort in terms of time, skill or the
performance of extensive research; (2) Atty. Lacaya rendered legal
services for the Spouses Cadavedo in three civil cases beginning in 1969
until 1988 when the petitioners filed the instant case; (3) the first of these
civil cases (Cadavedo v. Ames) lasted for twelve years and reaching up
to this Court; the second (Ames v. Cadavedo) lasted for seven years; and
the third (Cadavedo and Lacaya v. DBP) lasted for six years, reaching up
to the CA; and (4) the property subject of these civil cases is of a
considerable size of 230,765 square meters or 23.0765 hectares.
All things considered, we hold as fair and equitable the RTC’s
considerations in appreciating the character of the services that Atty.
Lacaya rendered in the three cases, subject to modification on valuation.
We believe and so hold that the respondents are entitled to two (2)
hectares (or approximately one-tenth [1/10] of the subject lot), with the
fruits previously received from the disputed one-half portion, as
attorney’s fees. They shall return to the petitioners the remainder of the
disputed one-half portion.

The allotted portion of the subject lot properly recognizes that litigation
should be for the benefit of the client, not the lawyer, particularly in a
legal situation when the law itself holds clear and express protection to
the rights of the client to the disputed property (a homestead lot).
Premium consideration, in other words, is on the rights of the owner, not
on the lawyer who only helped the owner protect his rights. Matters
cannot be the other way around; otherwise, the lawyer does indeed
effectively acquire a property right over the disputed property. If at all,
due recognition of parity between a lawyer and a client should be on the
fruits of the disputed property, which in this case, the Court properly
accords.

WHEREFORE, in view of these considerations, we hereby GRANT the

petition. We AFFIRM the decision dated September 17, 1996 and the
resolution dated December 27, 1996of the Regional Trial Court of Dipolog
City, Branch 10,in Civil Case No. 4038, with the MODIFICATION that the
respondents, the spouses Victorino (Vic) T. Lacaya and Rosa Legados, are
entitled to two (2) hectares (or approximately one-tenth [1/10] of the
subject lot) as attorney’s fees. The fruits that the respondents previously
received from the disputed one-half portion shall also form part of the
attorney’s fees. We hereby ORDER the respondents to return to the
petitioners the remainder of the 10.5383-hectare portion of the subject
lot that Atty. Vicente Lacaya acquired pursuant to the compromise
agreement.

SO ORDERED.
PENA VS DELOS SANTOS
DAROY VS ABECIA
This refers to the complaint for malpractice filed by Regalado Daroy (now
deceased) against Esteban Abecia, a member of the Bar. Complainant
Daroy accused respondent Abecia of having forged his signature in a deed
of absolute sale by means of which the latter was able to transfer a parcel
of land in Opol, Misamis Oriental, first to Jose Gangay and eventually to
his (respondents) wife Nena Abecia.
The facts of the instant case are as follows:
Respondent Abecia was counsel of complainant Daroy in a case for
forcible entry before the Municipal Trial Court of Opol, Misamis
Oriental.[1] Judgment was rendered in favor of complainant as plaintiff
in the ejectment case, ordering the defendants to pay damages, attorneys
fees, and the costs of the suit. To satisfy the judgment, the sheriff sold
at public auction on March 25, 1971 a parcel of land belonging to one of
the defendants to complainant Daroy as highest bidder for P1,250.00.
Upon failure of the defendants to redeem the land, its ownership was
consolidated in complainant Daroy.
Complainant Daroy claimed that respondent Abecia forged his signature
in a deed of absolute sale, dated March 31, 1971, transferring the subject
parcel of land to Jose Gangay purportedly for the sum of P1,250.00 and
that in a fictitious deed of absolute sale, dated April 17, 1971, it was made
to appear that Gangay in turn conveyed the land to Nena Abecia, wife of
respondent Abecia, for the sum of P1,350.00.[2] Complainant alleged
that he entrusted the title to the land (TCT No. T-315) to Abecia as his
counsel and allowed him to take possession of the land upon the latters
request. By means of the forged deed of sale, Abecia was able to obtain
new transfer certificates of title, first in the name of Gangay and then in
that of Mrs. Abecia, from the Registry of Deeds of Misamis Oriental.[3]
Daroy claimed he discovered the fraud only in 1984.
Daroy submitted in evidence a report of the National Bureau of
Investigation, which had examined the deed of sale in favor of Jose
Gangay, showing that Daroys signature in the deed of sale had been
written by a different hand. In addition, Daroy presented the affidavit,
executed on August 10, 1988, of Anita Gangay, wife of Jose Gangay, in
which she retracted an earlier affidavit executed on June 5, 1985. In the
first affidavit, she stated that she had bought the land in question from
Regalado Daroy and then sold it to her sister Nena Abecia, wife of
respondent Esteban. Now, in her present affidavit, it is stated that she
did not buy the land from Daroy nor later sell it to Nena Abecia and that
she really did not know anything about the controversy between Regalado
Daroy and Esteban Abecia, both of whom are her brothers-in-law. (It
appears that Mrs. Conchita Daroy, Mrs. Anita Gangay, and Mrs. Nena
Abecia are sisters, although Conchita Daroy and Regalado Daroy are not
married but lived together in a common-law relationship.)
A complaint for falsification of public document was also filed against
respondent Abecia in the Office of the City Prosecutor of Cagayan de Oro
which, however, dismissed the same.[4] On appeal, then Undersecretary
of Justice Silvestre H. Bello III reversed on May 6, 1988 the findings of
the City Prosecutor of Cagayan de Oro and consequently ordered the filing
of the corresponding information in court.[5] Accordingly, City Prosecutor
Rodolfo R. Waga filed an information for falsification of public document,
dated June 30, 1988, with the Regional Trial Court of Misamis Oriental.[6]
Respondent Abecia was unable to attend the hearings. He asked for their
transfer to Cagayan de Oro on the ground that he did not have the means
to travel, but his request was apparently denied sub silencio as the
Commission continued the hearings in Pasig, Metro Manila. As a result
only his counsel was present at the hearings.[7]
As respondent reiterated his request for the transfer of venue, it was
agreed at the hearing of January 30, 1989 that respondents answer,
dated August 3, 1987, and the affidavits of his witnesses as well as his
own would be considered as their direct testimonies.[8]

In his answer, respondent Esteban Abecia maintained that on March 31,
1971, Regalado Daroy sold the land in question to Jose Gangay, and the
latter in turn sold the land to Nena Abecia on April 17, 1971. He cited the
sheriffs return, dated August 6, 1973, in which it was stated that on
August 4, 1993 Regalado Daroy and his assignee Nena Abecia were . . .
placed in actual possession of the parcel of land subject matter of the
Deed of Conveyance and Possession.[9] He also referred to the resolution
of the Assistant Provincial Fiscal of Misamis Oriental, who dismissed the
complaint for grave coercion and malicious mischief filed by Gertrudes De
Bajuyo, one of the defendants in the ejectment case, against Regalado
Daroy and Nena Abecia for the demolition of her house, precisely on the
basis of the right of Mrs. Nena Abecia . . . as assignee to do whatever she
wants to do of the things she owns.[10]
On July 15, 1993, Commissioner Plaridel C. Jose rendered a report finding
respondent Abecia guilty of malpractice and recommending his
disbarment. In his report, Commissioner Jose stated:[11]
. . . In the course of his law practice, the respondent handled several
cases in behalf of the complainant Regalado Daroy, among which is Civil
Case No. 3288, wherein a parcel of land located at Opol, Misamis Oriental
covered by TCT No. T-15924 (TCT No. T-315) was the subject of litigation.
In the course of handling the same, the complainant entrusted to the
respondent the pertinent documents necessary in the said case which
included his said TCT No. T-15924.
In the year 1971, without the knowledge of the complainant, a document
entitled Deed of Sale dated March 31, 1971 was executed and notarized
by Notary Public Erasmo G. Damasing as Doc. No. 68, Page No. 16, Book
No. VIII, Series of 1971, which appears to have been signed by
complainant Regalado Daroy, thereby conveying the said property in
favor of a certain Jose Gangay, married to Anita Basmayor, by virtue of
which TCT No. T-15925 was issued in the name of Jose Gangay.
Two weeks thereafter, under date of April 17, 1971, the said Jose Gangay
executed a Deed of Sale of the same property in favor of Mrs. Nena
Abecia, the wife of the respondent, by virtue of which TCT No. T-15926
was issued in the name of Nena Abecia, married to Atty. Esteban Abecia,
the respondent.
Sometime in the year 1984, the complainant discovered that his said
property was already in the name of Mrs. Nena Abecia and Atty. Esteban
Abecia.
....
The foregoing evidence sufficiently proved respondents acts complained
of in the present case . . . . The significant fact is that the herein
respondent was instrumental and responsible for falsifying the signature
of his client, complainant Daroy, in the deed of conveyance in favor of
Jose Gangay, for which he is at present criminally charged in Criminal
Case No. 88-443 before the Regional Trial Court of Misamis Oriental.
In an unclear manner, respondent tried to justify his act by alleging that
the transfer of his clients property to his wife was proper because he
allegedly was not paid for his professional services. Such allegation, even
if true, would not exculpate him from liability. A lawyer who executed with
his client a deed transferring ownership over a parcel of land involved in
a pending litigation as his attorneys fees violates the rule prohibiting the
purchase of property in litigation by a lawyer from his client.
. . . What is saddening is the fact that he is presently an incumbent labor
arbiter of the National Labor Relations Commission with the delicate
responsibility of administering justice to the parties before him. . . . The
Commission has no alternative but to recommend his disbarment. It is
likewise recommended that the National Labor Relations Commission be
furnished with these findings for its guidance and appropriate action.

The Board of Governors of the Integrated Bar of the Philippines in
Resolution No. XI-94-072, dated March 26 1994,[12] approved the report
but reduced the penalty to indefinite suspension.
Respondent Abecia filed a Motion for Reconsideration and/or Appeal.
Among other things, he contends that:[13]
....
1. The Commission on Bar Discipline erred when it held that complainant
had no knowledge of the execution of the Deed of Absolute Sale on March
31, 1971 before Notary Public Erasmo G. Damasing.
Complainant very well knew of the execution of the deed of sale as shown
in the Sheriffs Return of Service (Respondents Annex 9) dated August 6,
1973, where he declared that he was accompanied by the complainant
and his assignee, Nena Abecia, in implementing the Deed of Conveyance
and Possession on August 4, 1973. The Deputy Sheriff even went as far
as declaring that the land was already in the name of complainants
assignee. Paragraph 2 of the said Sheriffs Return of Service is herein
quoted verbatim:
2. The undersigned then proceeded to the parcel of land which is the
subject matter of the Deed of Conveyance and Possession together with
purchaser Regalado Daroy, his assignee Nena Abecia, Atty. Esteban
Abecia, Ex-LTC Registrar Clemente Quiblat, P.M. Salazar, and the Police
Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado Daroy and his
assignee, Nena Abecia, were then formally placed in actual and physical
possession of the parcel of land subject matter of the Deed of Conveyance
and Possession. Regalado Daroy and his assignee, Nena Abecia, then
asserted their ownership of the parcel of land by making use of the
improvements found on the land such as the young coconuts and
bananas. As a matter of fact the parcel of land is already in the name of
Nena Abecia per Transfer Certificate of Title No. T-15926 entered in the
Register of Deeds of Cagayan de Oro City on June 18, 1973 at 1:00 P.M.
(Underscoring Ours).
Likewise, in Office File No. 419-74 of the Office of the Provincial Fiscal
(Respondents Annex 10) dated April 18, 1974, wherein complainant
Regalado Daroy was the accused, then 4th Asst. Fiscal Alejo G. Rola
referred to Nena Abecia as the owner of the subject property by virtue of
her being the assignee and/or transferee of the rights of Regalado Daroy.
Furthermore, in Criminal Case No. 88-443 before Branch 25 of the RTC
of Misamis Oriental, complainant testified in open court that he came to
know of the Deed of Absolute Sale (Exhibit A) when the sheriff awarded
the land to him (TSN, p. 3. Oct. 4, 1989). The Sheriffs Deed of
Conveyance and Possession, however, was executed by the Provincial
Sheriffs way back in April 11, 1972.
How indeed can complainant now have the temerity to claim that he
discovered that the subject property was transferred only in 1984? And
how could the Commission on Bar Discipline have overlooked the above
evidence and believed the complainant hook, line and sinker?
2. The Commission on Bar Discipline erred in not giving credence and
weight to the testimony/sworn statement of the Notary Public
(Respondents Annex 4) and the instrumental witnesses to the execution
of the questioned Deed of Absolute Sale (Respondents Annexes 5 and 6).
Between the Notary Public and the complainant, the Notary Public, who
is known for his unquestioned integrity, honesty and probity, is more
believable. In fact, Notary Public Erasmo G. Damasing, then the
incumbent vice-mayor, went on to become the congressman of Cagayan
de Oro City. And between the positive identification of the complainant as
the person who executed the instrument by the Notary Public (and the
instrumental witnesses) and the assertion of the alleged handwriting
expert, the positive identification must prevail especially since the
questioned signature of complainant has as many strokes as the sample
signatures in the documents submitted for comparison.
Respondents motion is well taken. As already stated, the land in question
was purchased by complainant at the sheriffs sale held on March 25,
1971. The land was owned by Gertrudes de Bajuyo, wife of one of the
defendants in the action for forcible entry. Upon the lapse of one year and
the failure of the owner to redeem the land, its ownership was
consolidated in the name of complainant Regalado Daroy. In his sheriffs
Return of Service issued on August 6, 1973 - long before the complaint
in this case was filed on May 25, 1987 Deputy Sheriff Eufrosino P. Castillo
stated that when he finally transferred the land to the buyer, he placed
in possession of the land not only the buyer, Regalado Daroy, but also
the latters assignee, Nena Abecia, in whose name the title to the land had
in fact been transferred. The Deputy Sheriff said in his report:[14]
2. The undersigned then proceeded to the parcel of land which is the
subject matter of the Deed of Conveyance and Possession together with
purchaser Regalado Daroy, his assignee Nena Abecia, Atty. Esteban
Abecia, Ex-LTC Registrar Clemente Quiblat, P.M. Salazar, and the Police
Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado Daroy and his
assignee, Nena Abecia, were then formally place in actual and physical
possession of the parcel of land subject of the Deed of Conveyance and
Possession. Regalado Daroy and his assignee, Nena Abecia, then asserted
their ownership of the parcel of land by making use of the improvements
found in the land such as the young coconuts and bananas. As a matter
of fact the parcel of land is already in the name of Nena Abecia per
Transfer Certificate of Title No. T-15926 entered in the Register of Deeds
at Cagayan de Oro City on June 18, 1973 at 1:00 P.M.
3. At about 2:00 P.M. of the same day, August 4, 1973, the undersigned
accompanied with police Sgt. Felex Abejuela of Opol Police Department
and P.M. Salazar went to the house of Restituto Bajuyo at Mulugan, Opol,
Mis. Or. The undersigned explained to Restituto Bajuyo that Regalado
Daroy and his assignee Nena Abecia were already placed in actual and
physical possession of the parcel of land subject matter of the Deed of
Conveyance and Possession and admonished him not to molest Regalado
Daroy and his assignee or anybody appointed by them to take care of the
aforecited parcel of land. He was warned that any violation will be
contrary to law and will subject him to court punishment.
It would appear, therefore, that as early as August 4, 1973 Daroy already
knew that title to the land had already been transferred in the name of
respondents wife. Complainants claim that he came to know of such
transfer only in 1984 is thus belied. Nor does it appear that the transfer
was made without his knowledge and consent. To the contrary, the
sheriffs return suggests that Daroy had agreed to such transfer. Hence,
the references to Mrs. Abecia as Daroys assignee.
It appears further that as a consequence of the demolition of the former
owners house, complainant and Mrs. Abecia were charged, together with
Deputy Sheriff Eufrosino P. Castillo, with grave coercion/malicious
mischief in the Office of the Provincial Fiscal of Misamis Oriental. In his
resolution, dated April 18, 1974, dismissing the charges, Assistant
Provincial Fiscal Alejo G. Rola stated, among other things:[15]
The undersigned despite the declaration of complainant Gertrudes de
Bajuyo corroborated by the testimony of Josefina Jaraula that she was
intimidated by a PC soldier, is of the opinion that such evidence is
insufficient to warrant a belief that such an act was in fact done by Sgt.
Abalos, because the other witnesses for the complainant namely, Lito
Ejina and Jose Jaime never mentioned that there was such intimidation
employed by Sgt. Abalos at the time despite the fact that these two (2)
aforenamed witnesses, were present at the time and on the date Josefina
Jaraula was around. The undersigned is however of the considered
opinion that the house occupied by complainant Gertrudes de Bajuyo was
demolished by respondents, but such an act is a right of Mrs. Nena Abecia
in her capacity as an assignee to do whatever she wants to do of the thing
she owns. Furthermore, the allegation of complainant regarding the
intimidation made against her by the PC Sgt. corroborated by the other
witness Josefina Jaraula is insufficient to offset the presumption of
regularity of performance of an official duty by a public officer, apart from
the fact that the testimony of Gertrudes Bajuyo and Josefina Jaraula are
of dubious credibility.
Like the sheriffs return made in 1973, this resolution of the Assistant
Provincial Fiscal rendered the following year (1974) belies complainants
allegation that the land in question was transferred to Mrs. Abecia without
his knowledge and consent and that he came to know about it only in
1984.
The aforementioned documents were attached to the answer of
respondent Esteban Abecia. However, despite the parties agreement
made at the hearing held on January 30, 1989, that the said documents
would be considered the evidence of respondent Abecia, they were not
even mentioned in the report of the Commissioner who investigated the
case.
Indeed, what appears to have happened in this case is that the parties
thought that because the land had been acquired by complainant at a
public sale held in order to satisfy a judgment in his favor in a case in
which respondent was complainants counsel, the latter could not acquire
the land. The parties apparently had in mind Art. 1491 of the Civil Code
which provides, in pertinent parts, as follows:
ART. 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:
....
(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 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 by 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.[16]
Of course, the parties were mistaken in thinking that respondent could
not validly acquire the land. In Guevara v. Calalang,[17] on facts similar
to those in this case, we held that the prohibition in Art. 1491 does not
apply to the sale of a parcel of land, acquired by a client to satisfy a
judgment in his favor, to his attorney as long as the property was not the
subject of the litigation. For indeed, while judges, prosecuting attorneys,
and others connected with the administration of justice are prohibited
from acquiring property or rights in litigation or levied upon in execution,
the prohibition with respect to attorneys in the case extends only to
property and rights which may be the object of any litigation in which
they may take part by virtue of their profession.
The point is, the parties in this case thought the transfer of the land to
respondent Abecia was prohibited and so they contrived a way whereby
the land would be sold to Jose Gangay, whose wife Anita is the sister of
Mrs. Nena Abecia, and then Gangay would sell the land to Mrs. Abecia.
As Jose Gangay stated in his affidavit of March 6, 1985:[18]
4. T - Ano ba ang iyong masasabi tungkol sa nangyari?
S - Sinabihan ako ni Atty. Esteban Abecia, sapagkat siya raw ang abogado
sa lupang pinagkaguluhan, hindi maari na siya ang nakalagay na nagbili
ng upa sa kanyang cliente na si Regalado Daroy, dahil laban raw sa
kanilang batas sa mga abogado, kaya sinabihan ako ni Atty. Esteban
Abecia na maari bang gamitin niya ang pangalan ko na ako raw ang
nakabili sa lupa ni Regalado Daroy at paglipas raw ng isang taon, ay
kanya ng ilipat sa pangalan sa documento at tituto hanggang sa pangalan
ng kanyang asawa na si Nena Abecia.

5.T - Sumagot ka ba sa hiling ni Atty. Esteban Abecia?
S - Opo, pumayag ako dahil silang dalawa, si Regalado Daroy at si Atty.
Esteban Abecia ay aking mga bilas, sapagkat ang isat-isa naming mga
asawa ay magkakapatid.
6. T - Ano man ang nangyari pagkatapos noon?
S - Isang araw, ay pumunta si Atty. Esteban Abecia sa amin at sinama
niya ako doon kay Atty. Wilfredo Linaac upang ipa tunayan ang aking
pangalan doon sa documento sa pagbili, at dahil doon, iyong documento
sa pabili ay na notariohan ni Atty. Wilfredo Linaac.
7. T - Binayaran ba kayo ni Nena Abecia at ni Atty. Esteban Abecia sa
pera na naghaga ng isang libo tatlong daan at limang[pung] pesos
(P1,350.00) na iyong ang halaga sa lupa.
S - Wala.
8. T - Ipakita ko sa iyo itong documento ng pagbili at may takda ng petsa
na Abril 17, 1971 notariadad ni Atty. Wilfredo Linaac Signes sa Doc. No.
333, Pahina 48, Aklat No. VI; taon series sa 1971; ano mang ang
kaugnayan nito sa documento ng pagbili?
S - Ang lahat na mga papiles sa sinasabi ninyo ay wala akong nalalaman,
ang nalaman ko lang noon akoy dinala ni Atty. Esteban Abecia sa oficina
ni Atty. Wilfredo Linaac tinanong ako kong aking pirma iyong sa sa
documento.
The sale of the land to Gangay may be fictitious and, therefore, void, but
that complainant Regalado Daroy intended to convey the land ultimately
to respondent Esteban Abecia appears to be the case.
It is true that the NBI found the signature of Regalado Daroy on the deed
of sale made in favor of Jose Gangay to have been forged. But Erasmo
Damasing, the notary public who notarized the deed, affirmed that Daroy
and his wife appeared before him on March 31, 1971 and, in his presence,
signed the document in question.[19] Daisy Felicilda likewise stated in an
affidavit executed on February 17, 1986 that she was a witness to the
execution of the deed of sale and that she saw Daroy signing the deed of
sale.[20]
Daroy never denied these claims of the notary public and a witness to the
execution of the deed of sale. Nor was the NBI writing expert ever called
to testify on his finding that the signature of Daroy in the deed of sale
appeared to have been signed by a different hand. The finding that the
deed of sale was forged was simply implied from the report of the NBI
writing expert. As complainant, Daroy had the burden of proving that
contrary to the recital in the jurat he and his wife never appeared before
the notary public and acknowledged the deed to be their voluntary act.
WHEREFORE, the resolution dated March 26, 1994, of the IBP Board of
Governors is RECONSIDERED and the complaint against respondent
Esteban Abecia is DISMISSED.
SO ORDERED.
RAMOS VS NGASEO
This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo
for violation of the Code of Professional Responsibility and Article 1491 of
the Civil Code by demanding from his client, complainant Federico N.
Ramos, the delivery of 1,000 square meters of land, a litigated property,
as payment for his appearance fees.
The facts as narrated by the complainant are as follows:
Sometime in 1998, complainant Federico Ramos went to respondent Atty.
Patricio Ngaseos Makati office to engage his services as counsel in a
case[1] involving a piece of land in San Carlos, Pangasinan. Respondent
agreed to handle the case for an acceptance fee of P20,000.00,
appearance fee of P1,000.00 per hearing and the cost of meals,
transportation and other incidental expenses. Complainant alleges that
he did not promise to pay the respondent 1,000 sq. m. of land as
appearance fees.[2]
On September 16, 1999, complainant went to the respondents office to
inquire about the status of the case. Respondent informed him that the
decision was adverse to them because a congressman exerted pressure
upon the trial judge. Respondent however assured him that they could
still appeal the adverse judgment and asked for the additional amount of
P3,850.00 and another P2,000.00 on September 26, 2000 as allowance
for research made.[3]
Although an appeal was filed, complainant however charges the
respondent of purposely failing to submit a copy of the summons and
copy of the assailed decision. Subsequently, complainant learned that the
respondent filed the notice of appeal 3 days after the lapse of the
reglementary period.
On January 29, 2003, complainant received a demand-letter from the
respondent asking for the delivery of the 1,000 sq. m. piece of land which
he allegedly promised as payment for respondents appearance fee. In the
same letter, respondent also threatened to file a case in court if the
complainant would not confer with him and settle the matter within 30
days.
Respondent alleged that sometime in the late 1997, a former client,
Federico Ramos and his brother, Dionisio, went to his Makati office to
engage his professional services in connection with a 2-hectare parcel of
land situated in San Carlos, Pangasinan which the complainants family
lost 7 years earlier through an execution sale in favor of one Alfredo T.
Castro. Complainant, who was deaf and could only speak conversational
Tagalog haltingly, was assisted by his brother Dionisio. They came all the
way from Pangasinan because no lawyer in San Carlos City was willing to
handle the case. Complainant, through Dionisio, avers that he has
consulted 2 local lawyers but did not engage their services because they
were demanding exorbitant fees. One local lawyer was willing to handle
the case for at least one-half of the land involved as his attorneys fee,
plus cash expenses, while the other asked for of the land in addition to a
large sum of money. Respondent agreed to handle the case for an
acceptance fee of P60,000.00 plus an appearance fee of P3,000.00 per
hearing. Complainant told him that he would consult his siblings on the
matter.
Six months later, i.e., in April 1998, complainant, assisted by one Jose
Castillo, went to respondents office to discuss the legal fees. Complainant,
through Castillo, told respondent that he was willing to pay an acceptance
fee of P40,000.00, P20,000.00 of which shall be paid upon engagement
and the remaining P20,000.00 to be paid after their treasure hunt
operations in Nueva Viscaya were terminated. Further, complainant
offered, in lieu of P3,000.00 per appearance, 1,000 sq. m. of land from
the land subject matter of the case, if they win, or from another piece of
property, if they lose. In addition, complainant also offered to defray the
expenses for transportation, meals and other incidental expenses.
Respondent accepted the complainants offer.

Respondent claims that after the trial court dismissed Civil Case No. SCC
2128, he filed a timely notice of appeal and thereafter moved to be
discharged as counsel because he had colon cancer. Complainant, now
assisted by one Johnny Ramos, implored respondent to continue handling
the case, with an offer to double the 1,000 sq. m. piece of land earlier
promised and the remaining balance of P20,000.00 acceptance fee.
Johnny Ramos made a written commitment and gave respondents
secretary P2,000.00 of the P3,850.00 expenses for the preparation of the
appellants brief.
Commissioner of the above-entitled case, herein made part of this
Resolution/Decision as Annex A; and, finding the recommendation fully
supported by the evidence on record and the applicable laws and rules,
with modification, and considering that respondent have violated the
Code of Professional Responsibility for grave misconduct and conduct
unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby SUSPENDED
from the practice of law for six (6) months.
On December 11, 2003, respondent filed a petition for review assailing
IBP Resolution No. XVI-2003-47 for having been issued without or in
excess of jurisdiction.[6]

On July 18, 2001, the Court of Appeals rendered a favorable decision

ordering the return of the disputed 2-hectare land to the complainant and
Respondent argues that he did not violate Article 1491 of the Civil Code
his siblings. The said decision became final and executory on January 18,
because when he demanded the delivery of the 1,000 sq. m. of land which
2002. Since then complainant allegedly failed to contact respondent,
was offered and promised to him in lieu of the appearance fees, the case
which compelled him to send a demand letter on January 29, 2003.
has been terminated, when the appellate court ordered the return of the
2-hectare parcel of land to the family of the complainant.

On February 14, 2003, complainant filed a complaint before the IBP

charging his former counsel, respondent Atty. Ngaseo, of violation of the
Code of Professional Responsibility for demanding the delivery of 1,000
sq. m. parcel of land which was the subject of litigation.
In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-
Maala found the respondent guilty of grave misconduct and conduct
unbecoming of a lawyer in violation of the Code of Professional
Responsibility and recommended that he be suspended from the practice
of law for 1 year.[4]
On August 30, 2003, the IBP Board of Governors passed Resolution No.
XVI-2003-47 the full text of which reads:[5]
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and
APPROVED, the Report and Recommendation of the Investigating
Respondent further contends that he can collect the unpaid appearance
fee even without a written contract on the basis of the principle of
quantum meruit. He claims that his acceptance and appearance fees are
reasonable because a Makati based legal practitioner, would not handle a
case for an acceptance fee of only P20,000.00 and P1,000.00 per court
appearance.
Under Article 1491(5) of the Civil Code, lawyers are 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.[7] The prohibition on purchase is all embracing
to include not only sales to private individuals but also public or judicial
sales. The rationale advanced for the prohibition is that public policy
disallows the transactions in view of the fiduciary relationship involved,
i.e., the relation of trust and confidence and the peculiar control exercised
by these persons.[8] It is founded on public policy because, by virtue of
his office, an attorney may easily take advantage of the credulity and
ignorance of his client and unduly enrich himself at the expense of his
client.[9] However, the said prohibition applies only if the sale or
assignment of the property takes place during the pendency of the
litigation involving the clients property. Consequently, where the property
is acquired after the termination of the case, no violation of paragraph 5,
Article 1491 of the Civil Code attaches.
and not proportionate to the offense committed by the respondent. The
power to disbar or suspend must be exercised with great caution. Only in
a clear case of misconduct that seriously affects the standing and
character of the lawyer as an officer of the Court and member of the bar
will disbarment or suspension be imposed as a penalty.[12] All
considered, a reprimand is deemed sufficient and reasonable.

Invariably, in all cases where Article 1491 was violated, the illegal WHEREFORE, in view of the foregoing, respondent Atty. Patricio A.
transaction was consummated with the actual transfer of the litigated Ngaseo is found guilty of conduct unbecoming a member of the legal
property either by purchase or assignment in favor of the prohibited profession in violation of Rule 20.04 of Canon 20 of the Code of
individual. In Biascan v. Lopez, respondent was found guilty of serious Professional Responsibility. He is REPRIMANDED with a warning that
misconduct and suspended for 6 months from the practice of law when repetition of the same act will be dealt with more severely.
he registered a deed of assignment in his favor and caused the transfer
of title over the part of the estate despite pendency of Special Proceedings
No. 98037 involving the subject property.[10] In the consolidated SO ORDERED.
administrative cases of Valencia v. Cabanting,[11] the Court suspended
respondent Atty. Arsenio Fer Cabanting for six (6) months from the
practice of law when he purchased his client's property which was still the
subject of a pending certiorari proceeding.

In the instant case, there was no actual acquisition of the property in

litigation since the respondent only made a written demand for its delivery
which the complainant refused to comply. Mere demand for delivery of
the litigated property does not cause the transfer of ownership, hence,
not a prohibited transaction within the contemplation of Article 1491.
Even assuming arguendo that such demand for delivery is unethical,
respondents act does not fall within the purview of Article 1491. The letter
of demand dated January 29, 2003 was made long after the judgment in
Civil Case No. SCC-2128 became final and executory on January 18,
2002.

We note that the report of the IBP Commissioner, as adopted by the IBP
Board of Governors in its Resolution No. XVI-2003-47, does not clearly
specify which acts of the respondent constitute gross misconduct or what
provisions of the Code of Professional Responsibility have been violated.
We find the recommended penalty of suspension for 6 months too harsh
GAN TIANGCO VS PABINGUIT
It is not disputed in these proceedings that Candida Acabo was the owner
of six parcels of land, all situated in the municipality of Jimalalud, Oriental
Negros, of the following dimensions: The first, 8 hectares; the second, 40
ares; the third and fourth, each 20 ares; the fifth, 40 ares; and the sixth
parcel, 20 ares.
According to the notarial instrument, Exhibit A, admitted in evidence
without objection, these lands were sold on June 12, 1911, by their owner
Candida Acabo, to one Gan Tingco, for P500. .
But the purchaser Gan Tingcowas unable to take possession of the six
parcels of land sold him by Acabo, for they were in the possession of
Silvino Pabinguit, who alleges certain rights therein. He claims to have
purchased them for P375 from Faustino Abad; that Abad yhad become
their owner through purchase from Henry Gardner; that the latter, in
turn, had owned tyhem by reason of having purchased them for P555 at
a public auctiona held in the barrio of Martelo, municipality of Tayasan,
on MArch 20, 1907. An effort was made to prove these facts by
documents Exhibits 1, 2, and 3. Exhibit 1 is a notarial instrument, dated
April 29, 1907, which purports to show that on this date Henry Gardner
sold to Faustino Abad seven parcels of land for P275. Exhibit 2 is a notarial
instrument which sets forth that Faustino Abad, on June 19, 1907, for the
sum of P375 sold to Silvino Pabinguit six parcels of land, the area,
situation and bounds of which are described in the document. Exhibit 3 is
a copy which the deputy sheriff said he kept of the proceedings had by
virtue of a writ of execution issued by the justice of the peace of
Guijulngan, in whcih the latter directed him to make a demand upon
Candida Acabo to comply with the judgment rendered against her as a
result of the complaint, filed by Silvestre Basaltos, and further ordering
him, in case of her failure to comply tehrewith, to levy upon "fixtures and
other chattels and to collect the amounts ordered, that is, P157.50, plus
P300 for losses damages, the proper costs and those of this execution."
The date of the writ appears to be (for it has been corrected in an illegible
manner) that of January 2, 1907, and the fist execution proceedings bear
the date of March 14, 1907. In the return the deputy sheriff begins by
saying that he made demand upon Candida Acabo and that the latter
stated that she had neither corn nor money; that he levied upon three
plow carabaos, one brood caraballa and the six parcles of land in question,
for their identity was expressly admitted; that their sale was announced
for the 20th of March, 1907 (but the return does not show the signature
of the woman upon whom the demand was made, nor does it disclose
any evidence whatever to show that the owner of this property had any
knowledge of this attachment or levy); that on March 20, 1907, he
proceeded to sell at public auction all the property levied upon; that the
jsutice of the peace who ordered the execution, Henry Gardner, himself
appeared as the highest bidder and offered P280 for the four carabaos
and P275 for all the coconut groves, that, is the six parcels of land
measuring nine hectares and a fraction in area, containing bearing fruit
trees, or a total sum of P555, which the said successful bidder then and
there paid over; and, finally, that the same justice of the peace, Gardner,
the highest bidder, himself received the sum of P157.50, the remainder
of the proceeds from the execution sale after deduction of the costs, as
the person authrized so to do by the plaintiff Silvestre Basaltos; and that
Gardner alone, not Basaltos nor the judgment debtor Candida Acabo,
signed the record of the proceedings. Afterwards the deputy sheriff
certified that the costs of the execution amounted to P52.50, and that
there was a surplus of P45 to Candida Acabo's credit, which was to be
delivered to her after settlement of the matter of the certificates of
ownership and the arrangment of the trabsfer of the carabaos. These
proceedings were signed only by the deputy sheriff and recite that "by
authorization of Candida Acabo I have delivered the sum of P29 as the
true balance in favor of the Said Candida Acabo, of the P45 mentione in
the precedeing statement, from which latter sum there has been
deducted the amount of P16 which was paid to the treasusrer of this
municipality on the following accounts: Fine, P8; certificate of ownership,
P4; and certificate of transfer, P4." In that manner was the record closed
and it was not signed by any other person than the deputy sheriff,
ALejandro Sanchez.
The jusrice of the peace, Gardner, and the deputy sheriff, Sanchez, were
summoned to appear in the trial court on March 18, 1914. Sanchez did
not put in an appearance, and on being required by telegraph to explain
the reason and show why he should not be punished for contempt of
court, he wired back, saying: "From 12th to 18th instant was making
investigations attempted rape and theft. Will arrive there Monday, 23d.
Will have enough time to finish investigation," and on the day for the
hearing he presented the document Exhibit 3, referred to in the preceding
paragragh.
Henry Gardner, in testifying for the defense, stated that the deputy sheriff
had executed in Gardner's favor a certificate of his purchase at auction
sale, but witness did not know where the document was and did not need
it because he, in turn, has sold everything he had purchased at that sale;
that he was formerly justice of the peace of the municipality of
Guijulngan, of Tayasan, and knew of a complaint by Silvestre Basaltos
against Candida Acabo; that afterwards when the auction was held, he
took part therein, but that as he subsequently learned that he was
forbidden to do so, he sold what he had purchased to Faustino Abad,
Candida Acabo's son, who was but a boy at the time; that the writ of
execution was returnmed to him and he made a record of that matter;
that he had it in the justice of the peace court and left it there when he
ceased to hold office, in 1909.
Faustino Abad testified that Henry Gardner did actually sell to him for
P275 the coconut groves which Gardner had purchased at auction; that it
was true that on April 29, 1907, witness was only 19 years old; that he
knew that the coconut groves were those that had belonged to his mother
Candida Acabo; and that he, in turn, sold the said coconut groves to
Silvino Pabinguit for P375, on June 19 of the same year. Both Gardner's
deed of sale to Abad and the latter's to Pabinguit were certified by the
same deputy sheriff ALejandro Sanchez as notary public of the
municipality of Tayasan.
This same Alejandro Sanchez, being then the justice of the peace of
Tayasan, testified as a witness for the defense. He began by recognizing
the aforesaid deeds as having been certified by him in his capacity of
notary public of Tayasan, and afterwards stated that he had something
to do with a writ of execution issued by the justice of the peace of
Guijulngan, Henry Gardner, upon certain real estate belonging to Candida
Acabo (it odes not so appear in the writ, wherein only fixtures and other
chattels are referred to); that, in consideration of the P555 which Gardner
paid at the time of the auction, witness, without any reservation
whatsoever, delivered to Gardner the carabaos and lands knocked down
to him at the sale; and that after he had received from Gardner the
purchase price he returned it to him, just as he would have delivered it
to the plaintiff Silvestre Basaltos, of whom Gardner claimed to be the
representative duly authorized as such by this plaintiff.
Candida Acabo testified that Alejandro Sanchez, while sheriff of Tayasan,
did not take possession of her lands by reason of the levy; that the only
property which he levied upon was four carabaos, and she did not know
whether they had been sold at auction; and that Sanchez had not told
her that he lands had been levied upon, or that they had been sold at
auction.
Silvino Pabinguit testified that in the month of February he was in
Guijilngan searching for the record of the auction sale of Candida Acabo's
property; that four persons made the search; and . . . the record was not
found. This last statement was made by Alejandro Sanchez.
The Court of First Instance of Oriental NEgros rendered judgment in
behalf of the plaintiff, Gan Tingco, declaring him the owner of the lands
described in the complaint, and ordered the defendant, Silvino Pabinguit,
to restore the plaintiff to their possession. No express finfding was made
as to the costs.
The defendant appealed, with the right to a review of the evidence. The
appeal was heard by this court, it having been brought it by bill of
exceptions.
The appellant alleges that the trial court erred in holding that,
notwithstanding the sale of the lands in question at public auction,
Candida Acabo did not cease to be the owner of these properties, because
there were certain irregularities and defects in the said auction.
In the judgment appealed from several of these defects are specified and
it is unnecessary to treat of them in detail. With respect to the legality of
the proceedings had up to the time of the sale of the lands, there is
certainly room for doubt. No evidence is found that Silvestre Basaltos filed
any complaint against Candida Acabo before the justice of the peace court
of Guijulngan and that any judgment was rendered on January 2, 1907,
enabling the plaintiff to recover from the defendant 150 cavanes of corn,
or in default thereof the sum of P157.50, and in addition P300 for losses
and damages and court costs. Only the writ of execution appears in the
record. The original copy of the return to the wirt of execution was not
presented, because it was not found; there was offered in evidence only
what the sheriff said was a copy of the return, and he delayed as long in
presenting it as he did in obeting the summons of the court to appear as
a witness. No copy of that judgment was delivered to the judgment
debtor, in violation of the provisions of section 446 of Act No. 190. The
sheriff sold lands belonging to the judgment debtor, and it does not
appear that the provisions of section 445 of the same Act were complied
with, to wit, that if real estate be levied upon and sold by virtue of the
execution, the clerk must record the execution and the officer's return
thereon and certify the same under his hand, as true copies, in a book to
be called the "Execution Book." The justice of peace, in his writ, certainly
did not order the levy upon ior sale of real estate, but only fixtures and
other chattles; but the sheriff's return includes real estate levied upon
and solt at public auction. The purchaser at public auction, the same
justice of the peace, could not exhibit the instrument which he said the
sheriff executed in his behalf, because, as he said, he did not know where
it was and that he did not need it. We are not sure that Candida Acabo,
a simple country woman, was not despoiled of her lands under the
pretexts of debt, judgment, and execution.
Leaving out of account that things which should have been proven at trial
were not proven, it is a positive fact that Henry Gardner, justice of peace
of Guijulngan, was the purchaser at public auction of Candida Acabo's
lands and carabaos levied upon as a result of the judgment, and that he
delivered the price of the sale, P555, to the sheriff; but hte latter returned
this sum to the justice of the peace, who said that he wea authorized by
Silvestre Basaltos, the supposed creditor, to receive the same. At the
finish the sheriff delivered nothing to the owner Acabo, all the proceeds
of the auction sale having been expended in one way or another without
the consent of the judgment debtor appearing of record.
Aside from everything else, the trial court was impressed by the
circumstance that in the public auction the purchaser was the justice of
the peace himself. This, in the judge's opinion, was unauthorized, because
article 1459, No. 5, of the Civil Code, prohibits judges from acquring by
purchase, even at pub;ic or judicial sale, either in person or by an agent,
any property or rights litigated in the court in the jurisdiction or territory
within which they exercise their respective duties; this prohibition
includes taking of property by assignment.
The appellant alleges that the property purchased by justice of the peace
Gardner was not the subject of litigation in the justice court; that the
action was to recover a certain sum of money, and that he had ordered
the property sold on execution.
This raises, therefore, a question as to the true meaning of paragraph 5
of article 1459 of the Civil Code. lawphil.net
The Ley de Bases, in accordance with which the Civil Code was enacted,
provides as follows, in Base No. 26:
The forms, requirements and conditions of each particular contract shall
be determined and defined subject to the general list of obligations and
their effects, with the understanding that the legislation in force and the
legal principles evolved therefrom by judicial decisions, etc., etc., shall
serve as basis.
One of the bodies of law which conastitute the legislation now in force in Sanchez, the sheriff, the sole notary who certified all these deeds of
the Novisima Recopilacion. In Law 4, Title 14, Book 5 of the same is found conveyance in order that Pabinguit might become owner of those coconut
the following provision: "We order that in public auctions held by direction lands with which his own lands adjoined, was in such a hurry that, as he
of our alcaldes, neither the latter nor any person whomsoever in their testified at the trial, on the very same day of the auction he had already
name shall bid in anything sold at such public auctions." The word alcaldes executed in behalf of Henry Gardner the final deed of sale of the said
means judges. The caption of Title 14 is "Alcaldes or Provincial Judges," lands, without allowing time for their possible redemption. Section 466 of
and the entire title deals with the exercise of judicial jurisdiction. Prior to Act No. 190 prescribes that if redemption has not been requested, this
the enactment of the Civil Code, the Penal Code was also in force. Article deed is to be executed within the twelve months subsequent to the sale.
400 of the latter prohinits, under penalty, any judge from taking part,
either directly, or indirectly, in any operation of exchange, trade or porfit
with respect to things not the product of his own property, within the This court finds no reason whatever why it should not affirm the judgment
territory over which he exercises jurisdiction. Judging from the legal appealed from. It is therefore hereby affirmed with the costs of this
oprecedents on which the Civil Code is based, it would not seem too much instance against the appellant. So ordered..
to conclude that the said article of the Civil Code does not make any
distinction between property in litigation. In effect, it appears to be as
delicate a matter for a judge to take part in the sale of property that had
been the subject of ligitgation in his court, as to intervene in auction of
property which, though not directly litigated in his court, is nevertheless
levied upon and sold as the result of a writ of execution issued by him.
What the law intends to avoid is the improper interference with an interest
of a judge in a thing levied upon and sold by his order.

If under the law Gardner was prohibited from acquiring the ownership of
Acabo's lands, then he could not have transmitted to Faustino Abad the
right of ownership that he did not possess; nor could Abad, to whom this
alleged ownership had not been transmitte, have conveyed the same to
Pabinguit. What Gardner should have done in view of the fact that the
sale, as he finally acknowledged, was void, was to claim the price that
had been deposited in court, and the justice of the peace of Guijulngan
should have declared the auction void and have ordered a new sale to be
held, besides correcting the errors that had been committed in the
proceedings. To the reasons already stated, there is to be added the
additional one, with respect to the sale made by Faustino Abad to Silvino
Pabinguit, that Abad was a minor at the time — a circumstance that
deprived him of capacity to sell (Civil Code, art. 1263). Abad had no
ownership to transmit to anyone and, besides, he had no personality to
enable him to contract by himself, on account of his lack of legal age.
MACARIOLA VS ASUNCION
In a verified complaint dated August 6, 1968 Bernardita R. Macariola
charged respondent Judge Elias B. Asuncion of the Court of First Instance
of Leyte, now Associate Justice of the Court of Appeals, with "acts
unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971
of then Associate Justice Cecilia Muñoz Palma of the Court of Appeals now
retired Associate Justice of the Supreme Court, to whom this case was
referred on October 28, 1968 for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint
for partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against
Bernardita R. Macariola, defendant, concerning the properties left by the
deceased Francisco Reyes, the common father of the plaintiff and
defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged
among other things that; a) plaintiff Sinforosa R. Bales was not a
daughter of the deceased Francisco Reyes; b) the only legal heirs of the
deceased were defendant Macariola, she being the only offspring of the
first marriage of Francisco Reyes with Felisa Espiras, and the remaining
plaintiffs who were the children of the deceased by his second marriage
with Irene Ondez; c) the properties left by the deceased were all the
conjugal properties of the latter and his first wife, Felisa Espiras, and no
properties were acquired by the deceased during his second marriage; d)
if there was any partition to be made, those conjugal properties should
first be partitioned into two parts, and one part is to be adjudicated solely
to defendant it being the share of the latter's deceased mother, Felisa
Espiras, and the other half which is the share of the deceased Francisco
Reyes was to be divided equally among his children by his two marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion
in Civil Case 3010, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a
preponderance of evidence, finds and so holds, and hereby renders
judgment (1) Declaring the plaintiffs Luz R. Bakunawa, Anacorita Reyes,
Ruperto Reyes, Adela Reyes and Priscilla Reyes as the only children
legitimated by the subsequent marriage of Francisco Reyes Diaz to Irene
Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an
illegitimate child of Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474,
4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging
to the conjugal partnership of the spouses Francisco Reyes Diaz and Felisa
Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416 as belonging
to the spouses Francisco Reyes Diaz and Irene Ondez in common
partnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging
exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the
defendant Bernardita R. Macariola, being the only legal and forced heir of
her mother Felisa Espiras, as the exclusive owner of one-half of each of
Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and the remaining
one-half (1/2) of each of said Lots Nos. 4474, 4475, 4892, 5265, 4803,
4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No. 1154 as
belonging to the estate of Francisco Reyes Diaz; (7) Declaring Irene
Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304 and
one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-
half (1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth
(1/4) of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz;
(8) Directing the division or partition of the estate of Francisco Reyes Diaz
in such a manner as to give or grant to Irene Ondez, as surviving widow
of Francisco Reyes Diaz, a hereditary share of. one-twelfth (1/12) of the
whole estate of Francisco Reyes Diaz (Art. 996 in relation to Art. 892, par
2, New Civil Code), and the remaining portion of the estate to be divided
among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes and defendant
Bernardita R. Macariola, in such a way that the extent of the total share
of plaintiff Sinforosa R. Bales in the hereditary estate shall not exceed the
equivalent of two-fifth (2/5) of the total share of any or each of the other
plaintiffs and the defendant (Art. 983, New Civil Code), each of the latter
to receive equal shares from the hereditary estate, (Ramirez vs. Bautista,
14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33); (9)
Directing the parties, within thirty days after this judgment shall have
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes
become final to submit to this court, for approval a project of partition of
Bales;
the hereditary estate in the proportion above indicated, and in such
manner as the parties may, by agreement, deemed convenient and
equitable to them taking into consideration the location, kind, quality,
nature and value of the properties involved; (10) Directing the plaintiff 4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along
Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the costs the western part of the lot shall likewise be awarded to Sinforosa Reyes-
of this suit, in the proportion of one-third (1/3) by the first named and Bales;
two-thirds (2/3) by the second named; and (I 1) Dismissing all other
claims of the parties [pp 27-29 of Exh. C].
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla
The decision in civil case 3010 became final for lack of an appeal, and on Reyes in equal shares;
October 16, 1963, a project of partition was submitted to Judge Asuncion
which is marked Exh. A. Notwithstanding the fact that the project of
partition was not signed by the parties themselves but only by the 6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking
respective counsel of plaintiffs and defendant, Judge Asuncion approved the portions awarded under item (2) and (4) above shall be awarded to
it in his Order dated October 23, 1963, which for convenience is quoted Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and
hereunder in full: Priscilla Reyes in equal shares, provided, however that the remaining
portion of Lot No. 3416 shall belong exclusively to Priscilla Reyes.

The parties, through their respective counsels, presented to this Court for
approval the following project of partition: WHEREFORE, it is respectfully prayed that the Project of Partition
indicated above which is made in accordance with the decision of the
Honorable Court be approved.
COMES NOW, the plaintiffs and the defendant in the above-entitled case,
to this Honorable Court respectfully submit the following Project of
Partition: Tacloban City, October 16, 1963.

l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong (SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
exclusively to Bernardita Reyes Macariola;

(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City

2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along
the eastern part of the lot shall be awarded likewise to Bernardita R.
Macariola;
While the Court thought it more desirable for all the parties to have signed
this Project of Partition, nevertheless, upon assurance of both counsels of
the respective parties to this Court that the Project of Partition, as above-
quoted, had been made after a conference and agreement of the plaintiffs
and the defendant approving the above Project of Partition, and that both
lawyers had represented to the Court that they are given full authority to
sign by themselves the Project of Partition, the Court, therefore, finding
the above-quoted Project of Partition to be in accordance with law, hereby
approves the same. The parties, therefore, are directed to execute such
papers, documents or instrument sufficient in form and substance for the
vesting of the rights, interests and participations which were adjudicated
to the respective parties, as outlined in the Project of Partition and the
delivery of the respective properties adjudicated to each one in view of
said Project of Partition, and to perform such other acts as are legal and
necessary to effectuate the said Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November 11,
1963, only for the purpose of giving authority to the Register of Deeds of
the Province of Leyte to issue the corresponding transfer certificates of
title to the respective adjudicatees in conformity with the project of
partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184
or rather one-half thereof with an area of 15,162.5 sq. meters. This lot,
which according to the decision was the exclusive property of the
deceased Francisco Reyes, was adjudicated in said project of partition to
the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla all surnamed
Reyes in equal shares, and when the project of partition was approved by
the trial court the adjudicatees caused Lot 1184 to be subdivided into five
lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge
Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an
area of 2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio
Galapon (Exh. 2) who was issued transfer certificate of title No. 2338 of
the Register of Deeds of the city of Tacloban (Exh. 12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot
1184-E with an area of around 1,306 sq. meters to Judge Asuncion and
his wife, Victoria S. Asuncion (Exh. 11), which particular portion was
declared by the latter for taxation purposes (Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed
their respective shares and interest in Lot 1184-E to "The Traders
Manufacturing and Fishing Industries Inc." (Exit 15 & 16). At the time of
said sale the stockholders of the corporation were Dominador Arigpa Tan,
Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's
wife, Victoria S. Asuncion, with Judge Asuncion as the President and Mrs.
Asuncion as the secretary (Exhs. E-4 to E-7). The Articles of Incorporation
of "The Traders Manufacturing and Fishing Industries, Inc." which we shall
henceforth refer to as "TRADERS" were registered with the Securities and
Exchange Commission only on January 9, 1967 (Exh. E) [pp. 378-385,
rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant
complaint dated August 6, 1968 alleging four causes of action, to wit: [1]
that respondent Judge Asuncion violated Article 1491, paragraph 5, of the
New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which
was one of those properties involved in Civil Case No. 3010 decided by
him; [2] that he likewise violated Article 14, paragraphs I and 5 of the
Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII
of the Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics,
by associating himself with the Traders Manufacturing and Fishing
Industries, Inc., as a stockholder and a ranking officer while he was a
judge of the Court of First Instance of Leyte; [3] that respondent was
guilty of coddling an impostor and acted in disregard of judicial decorum
by closely fraternizing with a certain Dominador Arigpa Tan who openly
and publicly advertised himself as a practising attorney when in truth and
in fact his name does not appear in the Rolls of Attorneys and is not a
member of the Philippine Bar; and [4] that there was a culpable defiance
of the law and utter disregard for ethics by respondent Judge (pp. 1-7,
rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to
which a reply was filed on October 16, 1968 by herein complainant. In
Our resolution of October 28, 1968, We referred this case to then Justice
Cecilia Muñoz Palma of the Court of Appeals, for investigation, report and
recommendation. After hearing, the said Investigating Justice submitted
her report dated May 27, 1971 recommending that respondent Judge
should be reprimanded or warned in connection with the first cause of
action alleged in the complaint, and for the second cause of action,
respondent should be warned in case of a finding that he is prohibited
under the law to engage in business. On the third and fourth causes of
action, Justice Palma recommended that respondent Judge be
exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp.
481, 477, rec.), complainant herein instituted an action before the Court
of First Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff,
versus Sinforosa R. Bales, et al., defendants," which was docketed as Civil
Case No. 4235, seeking the annulment of the project of partition made
pursuant to the decision in Civil Case No. 3010 and the two orders issued
by respondent Judge approving the same, as well as the partition of the
estate and the subsequent conveyances with damages. It appears,
however, that some defendants were dropped from the civil case. For
one, the case against Dr. Arcadio Galapon was dismissed because he was
no longer a real party in interest when Civil Case No. 4234 was filed,
having already conveyed on March 6, 1965 a portion of lot 1184-E to
respondent Judge and on August 31, 1966 the remainder was sold to the
Traders Manufacturing and Fishing Industries, Inc. Similarly, the case
against defendant Victoria Asuncion was dismissed on the ground that
she was no longer a real party in interest at the time the aforesaid Civil
Case No. 4234 was filed as the portion of Lot 1184 acquired by her and
respondent Judge from Dr. Arcadio Galapon was already sold on August
31, 1966 to the Traders Manufacturing and Fishing industries, Inc.
Likewise, the cases against defendants Serafin P. Ramento, Catalina
Cabus, Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing
Industries, Inc., Alfredo R. Celestial and Pilar P. Celestial, Leopoldo Petilla
and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty.
Zotico A. Tolete were dismissed with the conformity of complainant
herein, plaintiff therein, and her counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First
Instance of Leyte, who was directed and authorized on June 2, 1969 by
the then Secretary (now Minister) of Justice and now Minister of National
Defense Juan Ponce Enrile to hear and decide Civil Case No. 4234,
rendered a decision, the dispositive portion of which reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte
has jurisdiction to take cognizance of the issue of the legality and validity
of the Project of Partition [Exhibit "B"] and the two Orders [Exhibits "C"
and "C- 3"] approving the partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant
Judge Elias B. Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for
moral damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for
exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal
damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN,
FOR HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO
VILLASIN —
(1) Dismissing the complaint against the defendants Mariquita Villasin
and the heirs of the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the
heirs of Gerardo Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES,
ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010 —
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela
R. Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and
Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO —
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost
of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was
elevated to the Court of Appeals upon perfection of the appeal on
February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita
R. Macariola, under her first cause of action, that respondent Judge Elias
B. Asuncion violated Article 1491, paragraph 5, of the New Civil Code in
acquiring by purchase a portion of Lot No. 1184-E which was one of those
properties involved in Civil Case No. 3010. 'That Article provides:
Article 1491. The following persons cannot acquire by purchase, even at
a public or judicial action, either in person or 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 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 by 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 [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or
assignment of the property which is the subject of litigation to the persons
disqualified therein. WE have already ruled that "... for the prohibition to
operate, the sale or assignment of the property must take place during
the pendency of the litigation involving the property" (The Director of
Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig
vs. Court of Appeals, 86 SCRA 641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6,
1965 a portion of Lot 1184-E, the decision in Civil Case No. 3010 which
he rendered on June 8, 1963 was already final because none of the parties
therein filed an appeal within the reglementary period; hence, the lot in
question was no longer subject of the litigation. Moreover, at the time of
the sale on March 6, 1965, respondent's order dated October 23, 1963
and the amended order dated November 11, 1963 approving the October
16, 1963 project of partition made pursuant to the June 8, 1963 decision,
had long become final for there was no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March
6, 1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr.
Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from
three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R.
Bakunawa after the finality of the decision in Civil Case No. 3010. It may
be recalled that Lot 1184 or more specifically one-half thereof was
adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz
Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition,
and the same was subdivided into five lots denominated as Lot 1184-A to
1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr.
Galapon for which he was issued TCT No. 2338 by the Register of Deeds
of Tacloban City, and on March 6, 1965 he sold a portion of said lot to
respondent Judge and his wife who declared the same for taxation
purposes only. The subsequent sale on August 31, 1966 by spouses
Asuncion and spouses Galapon of their respective shares and interest in
said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc.,
in which respondent was the president and his wife was the secretary,
took place long after the finality of the decision in Civil Case No. 3010 and
of the subsequent two aforesaid orders therein approving the project of
partition.
While it appears that complainant herein filed on or about November 9 or
11, 1968 an action before the Court of First Instance of Leyte docketed
as Civil Case No. 4234, seeking to annul the project of partition and the
two orders approving the same, as well as the partition of the estate and
the subsequent conveyances, the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a
portion of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality
of the decision which he rendered on June 8, 1963 in Civil Case No. 3010
and his two questioned orders dated October 23, 1963 and November 11,
1963. Therefore, the property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234
can no longer alter, change or affect the aforesaid facts — that the
questioned sale to respondent Judge, now Court of Appeals Justice, was
effected and consummated long after the finality of the aforesaid decision
or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge
having taken place over one year after the finality of the decision in Civil
Case No. 3010 as well as the two orders approving the project of partition,
and not during the pendency of the litigation, there was no violation of
paragraph 5, Article 1491 of the New Civil Code.
It is also argued by complainant herein that the sale on July 31, 1964 of
Lot 1184-E to Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and
Luz R. Bakunawa was only a mere scheme to conceal the illegal and
unethical transfer of said lot to respondent Judge as a consideration for
the approval of the project of partition. In this connection, We agree with
the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question whether
or not the acquisition by respondent of a portion of Lot 1184-E and the
subsequent transfer of the whole lot to "TRADERS" of which respondent
was the President and his wife the Secretary, was intimately related to
the Order of respondent approving the project of partition, Exh. A.
Respondent vehemently denies any interest or participation in the
transactions between the Reyeses and the Galapons concerning Lot 1184-
E, and he insists that there is no evidence whatsoever to show that Dr.
Galapon had acted, in the purchase of Lot 1184-E, in mediation for him
and his wife. (See p. 14 of Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the
record showing that Dr. Arcadio Galapon acted as a mere "dummy" of
respondent in acquiring Lot 1184-E from the Reyeses. Dr. Galapon
appeared to this investigator as a respectable citizen, credible and
sincere, and I believe him when he testified that he bought Lot 1184-E in
good faith and for valuable consideration from the Reyeses without any
intervention of, or previous understanding with Judge Asuncion (pp. 391-
394, rec.).
On the contention of complainant herein that respondent Judge acted
illegally in approving the project of partition although it was not signed
by the parties, We quote with approval the findings of the Investigating
Justice, as follows:
1. I agree with complainant that respondent should have required
the signature of the parties more particularly that of Mrs. Macariola on
the project of partition submitted to him for approval; however, whatever
error was committed by respondent in that respect was done in good faith
as according to Judge Asuncion he was assured by Atty. Bonifacio Ramo,
the counsel of record of Mrs. Macariola, That he was authorized by his
client to submit said project of partition, (See Exh. B and tsn p. 24,
January 20, 1969). While it is true that such written authority if there was
any, was not presented by respondent in evidence, nor did Atty. Ramo
appear to corroborate the statement of respondent, his affidavit being the
only one that was presented as respondent's Exh. 10, certain actuations
of Mrs. Macariola lead this investigator to believe that she knew the
contents of the project of partition, Exh. A, and that she gave her
conformity thereto. I refer to the following documents:
1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154
of the Tacloban Cadastral Survey in which the deceased Francisco Reyes
holds a "1/4 share" (Exh. 9-a). On tills certificate of title the Order dated
November 11, 1963, (Exh. U) approving the project of partition was duly
entered and registered on November 26, 1963 (Exh. 9-D);
2) Exh. 7 — Certified copy of a deed of absolute sale executed by
Bernardita Reyes Macariola on October 22, 1963, conveying to Dr. Hector
Decena the one-fourth share of the late Francisco Reyes-Diaz in Lot 1154.
In this deed of sale the vendee stated that she was the absolute owner
of said one-fourth share, the same having been adjudicated to her as her
share in the estate of her father Francisco Reyes Diaz as per decision of
the Court of First Instance of Leyte under case No. 3010 (Exh. 7-A). The
deed of sale was duly registered and annotated at the back of OCT 19520
on December 3, 1963 (see Exh. 9-e).
In connection with the abovementioned documents it is to be noted that
in the project of partition dated October 16, 1963, which was approved
by respondent on October 23, 1963, followed by an amending Order on
November 11, 1963, Lot 1154 or rather 1/4 thereof was adjudicated to
Mrs. Macariola. It is this 1/4 share in Lot 1154 which complainant sold to
Dr. Decena on October 22, 1963, several days after the preparation of
the project of partition.
Counsel for complainant stresses the view, however, that the latter sold
her one-fourth share in Lot 1154 by virtue of the decision in Civil Case
3010 and not because of the project of partition, Exh. A. Such contention
is absurd because from the decision, Exh. C, it is clear that one-half of
one- fourth of Lot 1154 belonged to the estate of Francisco Reyes Diaz
while the other half of said one-fourth was the share of complainant's
mother, Felisa Espiras; in other words, the decision did not adjudicate the
whole of the one-fourth of Lot 1154 to the herein complainant (see Exhs.
C-3 & C-4). Complainant became the owner of the entire one-fourth of
Lot 1154 only by means of the project of partition, Exh. A. Therefore, if
Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no other
reason than that she was wen aware of the distribution of the properties
of her deceased father as per Exhs. A and B. It is also significant at this
point to state that Mrs. Macariola admitted during the cross-examination
that she went to Tacloban City in connection with the sale of Lot 1154 to
Dr. Decena (tsn p. 92, November 28, 1968) from which we can deduce
that she could not have been kept ignorant of the proceedings in civil case
3010 relative to the project of partition.
Complainant also assails the project of partition because according to her
the properties adjudicated to her were insignificant lots and the least
valuable. Complainant, however, did not present any direct and positive
evidence to prove the alleged gross inequalities in the choice and
distribution of the real properties when she could have easily done so by
presenting evidence on the area, location, kind, the assessed and market
value of said properties. Without such evidence there is nothing in the
record to show that there were inequalities in the distribution of the
properties of complainant's father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph
5, Article 1491 of the New Civil Code in acquiring by purchase a portion
of Lot 1184-E which was in litigation in his court, it was, however,
improper for him to have acquired the same. He should be reminded of
Canon 3 of the Canons of Judicial Ethics which requires that: "A judge's
official conduct should be free from the appearance of impropriety, and
his personal behavior, not only upon the bench and in the performance
of judicial duties, but also in his everyday life, should be beyond
reproach." And as aptly observed by the Investigating Justice: "... it was
unwise and indiscreet on the part of respondent to have purchased or
acquired a portion of a piece of property that was or had been in litigation
in his court and caused it to be transferred to a corporation of which he
and his wife were ranking officers at the time of such transfer. One who
occupies an exalted position in the judiciary has the duty and
responsibility of maintaining the faith and trust of the citizenry in the
courts of justice, so that not only must he be truly honest and just, but
his actuations must be such as not give cause for doubt and mistrust in
the uprightness of his administration of justice. In this particular case of
respondent, he cannot deny that the transactions over Lot 1184-E are
damaging and render his actuations open to suspicion and distrust. Even
if respondent honestly believed that Lot 1184-E was no longer in litigation
in his court and that he was purchasing it from a third person and not
from the parties to the litigation, he should nonetheless have refrained
from buying it for himself and transferring it to a corporation in which he
and his wife were financially involved, to avoid possible suspicion that his
acquisition was related in one way or another to his official actuations in
civil case 3010. The conduct of respondent gave cause for the litigants in
civil case 3010, the lawyers practising in his court, and the public in
general to doubt the honesty and fairness of his actuations and the
integrity of our courts of justice" (pp. 395396, rec.).
II

With respect to the second cause of action, the complainant alleged that
respondent Judge violated paragraphs 1 and 5, Article 14 of the Code of
Commerce when he associated himself with the Traders Manufacturing
and Fishing Industries, Inc. as a stockholder and a ranking officer, said
corporation having been organized to engage in business. Said Article
provides that:
Article 14 — The following cannot engage in commerce, either in person
or by proxy, nor can they hold any office or have any direct,
administrative, or financial intervention in commercial or industrial
companies within the limits of the districts, provinces, or towns in which
they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the
department of public prosecution in active service. This provision shall
not be applicable to mayors, municipal judges, and municipal prosecuting
attorneys nor to those who by chance are temporarily discharging the
functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage
in commerce in a determinate territory.
It is Our considered view that although the aforestated provision is
incorporated in the Code of Commerce which is part of the commercial
laws of the Philippines, it, however, partakes of the nature of a political
law as it regulates the relationship between the government and certain
public officers and employees, like justices and judges.
Political Law has been defined as that branch of public law which deals
with the organization and operation of the governmental organs of the
State and define the relations of the state with the inhabitants of its
territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be
recalled that political law embraces constitutional law, law of public
corporations, administrative law including the law on public officers and
elections. Specifically, Article 14 of the Code of Commerce partakes more
of the nature of an administrative law because it regulates the conduct of
certain public officers and employees with respect to engaging in
business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish
Code of Commerce of 1885, with some modifications made by the
"Commission de Codificacion de las Provincias de Ultramar," which was
extended to the Philippines by the Royal Decree of August 6, 1888, and
took effect as law in this jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later
on from the United States to the Republic of the Philippines, Article 14 of
this Code of Commerce must be deemed to have been abrogated because
where there is change of sovereignty, the political laws of the former
sovereign, whether compatible or not with those of the new sovereign,
are automatically abrogated, unless they are expressly re-enacted by
affirmative act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311
[1912]) that:
By well-settled public law, upon the cession of territory by one nation to
another, either following a conquest or otherwise, ... those laws which
are political in their nature and pertain to the prerogatives of the former
government immediately cease upon the transfer of sovereignty.
(Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with
the, laws of the new sovereign continue in force without the express
assent or affirmative act of the conqueror, the political laws do not.
(Halleck's Int. Law, chap. 34, par. 14). However, such political laws of the
prior sovereignty as are not in conflict with the constitution or institutions
of the new sovereign, may be continued in force if the conqueror shall so
declare by affirmative act of the commander-in-chief during the war, or
by Congress in time of peace. (Ely's Administrator vs. United States, 171
U.S. 220, 43 L. Ed. 142). In the case of American and Ocean Ins. Cos.
vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief
Justice Marshall said:
On such transfer (by cession) of territory, it has never been held that the
relations of the inhabitants with each other undergo any change. Their
relations with their former sovereign are dissolved, and new relations are
created between them and the government which has acquired their
territory. The same act which transfers their country, transfers the
allegiance of those who remain in it; and the law which may be
denominated political, is necessarily changed, although that which
regulates the intercourse and general conduct of individuals, remains in
force, until altered by the newly- created power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court
stated that: "It is a general principle of the public law that on acquisition
of territory the previous political relations of the ceded region are totally
abrogated. "
There appears no enabling or affirmative act that continued the effectivity
of the aforestated provision of the Code of Commerce after the change of
sovereignty from Spain to the United States and then to the Republic of
the Philippines. Consequently, Article 14 of the Code of Commerce has no
legal and binding effect and cannot apply to the respondent, then Judge
of the Court of First Instance, now Associate Justice of the Court of
Appeals.
It is also argued by complainant herein that respondent Judge violated
paragraph H, Section 3 of Republic Act No. 3019, otherwise known as the
Anti-Graft and Corrupt Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. — In addition to acts or
omissions of public officers already penalized by existing law, the
following shall constitute corrupt practices of any public officer and are
hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any
business, contract or transaction in connection with which he intervenes
or takes part in his official capacity, or in which he is prohibited by the
Constitution or by any Iaw from having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph
because there is no showing that respondent participated or intervened
in his official capacity in the business or transactions of the Traders
Manufacturing and Fishing Industries, Inc. In the case at bar, the business
of the corporation in which respondent participated has obviously no
relation or connection with his judicial office. The business of said
corporation is not that kind where respondent intervenes or takes part in
his capacity as Judge of the Court of First Instance. As was held in one
case involving the application of Article 216 of the Revised Penal Code
which has a similar prohibition on public officers against directly or
indirectly becoming interested in any contract or business in which it is
his official duty to intervene, "(I)t is not enough to be a public official to
be subject to this crime; it is necessary that by reason of his office, he
has to intervene in said contracts or transactions; and, hence, the official
who intervenes in contracts or transactions which have no relation to his
office cannot commit this crime.' (People vs. Meneses, C.A. 40 O.G. 11th
Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal Code, p.
1174, Vol. 11 [1976]).

It does not appear also from the records that the aforesaid corporation
gained any undue advantage in its business operations by reason of
respondent's financial involvement in it, or that the corporation benefited
in one way or another in any case filed by or against it in court. It is
undisputed that there was no case filed in the different branches of the
Court of First Instance of Leyte in which the corporation was either party
plaintiff or defendant except Civil Case No. 4234 entitled "Bernardita R.
Macariola, plaintiff, versus Sinforosa O. Bales, et al.," wherein the
complainant herein sought to recover Lot 1184-E from the aforesaid
corporation. It must be noted, however, that Civil Case No. 4234 was filed
only on November 9 or 11, 1968 and decided on November 2, 1970 by
CFI Judge Jose D. Nepomuceno when respondent Judge was no longer
connected with the corporation, having disposed of his interest therein on
January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because
there is no provision in both the 1935 and 1973 Constitutions of the
Philippines, nor is there an existing law expressly prohibiting members of
the Judiciary from engaging or having interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known
as the Judiciary Act of 1948, does not contain any prohibition to that
effect. As a matter of fact, under Section 77 of said law, municipal judges
may engage in teaching or other vocation not involving the practice of
law after office hours but with the permission of the district judge
concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from
engaging in commerce is, as heretofore stated, deemed abrogated
automatically upon the transfer of sovereignty from Spain to America,
because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil
Code against the purchase by judges of a property in litigation before the
court within whose jurisdiction they perform their duties, cannot apply to
respondent Judge because the sale of the lot in question to him took place
after the finality of his decision in Civil Case No. 3010 as well as his two
orders approving the project of partition; hence, the property was no
longer subject of litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules
made pursuant to the Civil Service Act of 1959 prohibits an officer or
employee in the civil service from engaging in any private business,
vocation, or profession or be connected with any commercial, credit,
agricultural or industrial undertaking without a written permission from
the head of department, the same, however, may not fall within the
purview of paragraph h, Section 3 of the Anti-Graft and Corrupt Practices
Act because the last portion of said paragraph speaks of a prohibition by
the Constitution or law on any public officer from having any interest in
any business and not by a mere administrative rule or regulation. Thus,
a violation of the aforesaid rule by any officer or employee in the civil
service, that is, engaging in private business without a written permission
from the Department Head may not constitute graft and corrupt practice
as defined by law.
On the contention of complainant that respondent Judge violated Section
12, Rule XVIII of the Civil Service Rules, We hold that the Civil Service
Act of 1959 (R.A. No. 2260) and the Civil Service Rules promulgated
thereunder, particularly Section 12 of Rule XVIII, do not apply to the
members of the Judiciary. Under said Section 12: "No officer or employee
shall engage directly in any private business, vocation, or profession or
be connected with any commercial, credit, agricultural or industrial
undertaking without a written permission from the Head of Department
..."
It must be emphasized at the outset that respondent, being a member of
the Judiciary, is covered by Republic Act No. 296, as amended, otherwise
known as the Judiciary Act of 1948 and by Section 7, Article X, 1973
Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was
then vested in the President of the Philippines, not in the Commissioner
of Civil Service, and only on two grounds, namely, serious misconduct
and inefficiency, and upon the recommendation of the Supreme Court,
which alone is authorized, upon its own motion, or upon information of
the Secretary (now Minister) of Justice to conduct the corresponding
investigation. Clearly, the aforesaid section defines the grounds and
prescribes the special procedure for the discipline of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only
the Supreme Court can discipline judges of inferior courts as well as other
personnel of the Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The
Commissioner may, for ... violation of the existing Civil Service Law and
rules or of reasonable office regulations, or in the interest of the service,
remove any subordinate officer or employee from the service, demote
him in rank, suspend him for not more than one year without pay or fine
him in an amount not exceeding six months' salary." Thus, a violation of
Section 12 of Rule XVIII is a ground for disciplinary action against civil
service officers and employees.
However, judges cannot be considered as subordinate civil service officers
or employees subject to the disciplinary authority of the Commissioner of
Civil Service; for, certainly, the Commissioner is not the head of the
Judicial Department to which they belong. The Revised Administrative
Code (Section 89) and the Civil Service Law itself state that the Chief
Justice is the department head of the Supreme Court (Sec. 20, R.A. No.
2260) [1959]); and under the 1973 Constitution, the Judiciary is the only
other or second branch of the government (Sec. 1, Art. X, 1973
Constitution). Besides, a violation of Section 12, Rule XVIII cannot be
considered as a ground for disciplinary action against judges because to
recognize the same as applicable to them, would be adding another
ground for the discipline of judges and, as aforestated, Section 67 of the
Judiciary Act recognizes only two grounds for their removal, namely,
serious misconduct and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the
Commissioner of Civil Service who has original and exclusive jurisdiction
"(T)o decide, within one hundred twenty days, after submission to it, all
administrative cases against permanent officers and employees in the
competitive service, and, except as provided by law, to have final
authority to pass upon their removal, separation, and suspension and
upon all matters relating to the conduct, discipline, and efficiency of such
officers and employees; and prescribe standards, guidelines and
regulations governing the administration of discipline" (emphasis
supplied). There is no question that a judge belong to the non-competitive
or unclassified service of the government as a Presidential appointee and
is therefore not covered by the aforesaid provision. WE have already ruled
that "... in interpreting Section 16(i) of Republic Act No. 2260, we
emphasized that only permanent officers and employees who belong to
the classified service come under the exclusive jurisdiction of the
Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713
[1965], Ang-Angco vs. Castillo, 9 SCRA 619 [1963]).
Although the actuation of respondent Judge in engaging in private
business by joining the Traders Manufacturing and Fishing Industries, Inc.
as a stockholder and a ranking officer, is not violative of the provissions
of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft
and Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil
Service Rules promulgated pursuant to the Civil Service Act of 1959, the
impropriety of the same is clearly unquestionable because Canon 25 of
the Canons of Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in enterprises
which are apt to be involved in litigation in his court; and, after his
accession to the bench, he should not retain such investments previously
made, longer than a period sufficient to enable him to dispose of them
without serious loss. It is desirable that he should, so far as reasonably
possible, refrain from all relations which would normally tend to arouse
the suspicion that such relations warp or bias his judgment, or prevent
his impartial attitude of mind in the administration of his judicial duties.
...
WE are not, however, unmindful of the fact that respondent Judge and
his wife had withdrawn on January 31, 1967 from the aforesaid
corporation and sold their respective shares to third parties, and it
appears also that the aforesaid corporation did not in anyway benefit in
any case filed by or against it in court as there was no case filed in the
different branches of the Court of First Instance of Leyte from the time of
the drafting of the Articles of Incorporation of the corporation on March
12, 1966, up to its incorporation on January 9, 1967, and the eventual
withdrawal of respondent on January 31, 1967 from said corporation.
Such disposal or sale by respondent and his wife of their shares in the
corporation only 22 days after the incorporation of the corporation,
indicates that respondent realized that early that their interest in the
corporation contravenes the aforesaid Canon 25. Respondent Judge and
his wife therefore deserve the commendation for their immediate
withdrawal from the firm after its incorporation and before it became
involved in any court litigation
III
With respect to the third and fourth causes of action, complainant alleged
that respondent was guilty of coddling an impostor and acted in disregard
of judicial decorum, and that there was culpable defiance of the law and
utter disregard for ethics. WE agree, however, with the recommendation
of the Investigating Justice that respondent Judge be exonerated because
the aforesaid causes of action are groundless, and WE quote the pertinent
portion of her report which reads as follows:
The basis for complainant's third cause of action is the claim that
respondent associated and closely fraternized with Dominador Arigpa Tan
who openly and publicly advertised himself as a practising attorney (see
Exhs. I, I-1 and J) when in truth and in fact said Dominador Arigpa Tan
does not appear in the Roll of Attorneys and is not a member of the
Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an
"impostor" and claims that all the time he believed that the latter was a
bona fide member of the bar. I see no reason for disbelieving this
assertion of respondent. It has been shown by complainant that
Dominador Arigpa Tan represented himself publicly as an attorney-at-law
to the extent of putting up a signboard with his name and the words
"Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but
natural for respondent and any person for that matter to have accepted
that statement on its face value. "Now with respect to the allegation of
complainant that respondent is guilty of fraternizing with Dominador
Arigpa Tan to the extent of permitting his wife to be a godmother of Mr.
Tan's child at baptism (Exh. M & M-1), that fact even if true did not render
respondent guilty of violating any canon of judicial ethics as long as his
friendly relations with Dominador A. Tan and family did not influence his
official actuations as a judge where said persons were concerned. There
is no tangible convincing proof that herein respondent gave any undue
privileges in his court to Dominador Arigpa Tan or that the latter
benefitted in his practice of law from his personal relations with
respondent, or that he used his influence, if he had any, on the Judges of
the other branches of the Court to favor said Dominador Tan.
Of course it is highly desirable for a member of the judiciary to refrain as
much as possible from maintaining close friendly relations with practising
attorneys and litigants in his court so as to avoid suspicion 'that his social
or business relations or friendship constitute an element in determining
his judicial course" (par. 30, Canons of Judicial Ethics), but if a Judge does
have social relations, that in itself would not constitute a ground for
disciplinary action unless it be clearly shown that his social relations be
clouded his official actuations with bias and partiality in favor of his friends
(pp. 403-405, rec.).
In conclusion, while respondent Judge Asuncion, now Associate Justice of
the Court of Appeals, did not violate any law in acquiring by purchase a
parcel of land which was in litigation in his court and in engaging in
business by joining a private corporation during his incumbency as judge
of the Court of First Instance of Leyte, he should be reminded to be more
discreet in his private and business activities, because his conduct as a
member of the Judiciary must not only be characterized with propriety
but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF

APPEALS IS HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE
AND BUSINESS ACTIVITIES.

SO ORDERED.
AKANG VS MUNICIPALITY OF ISULAN administrators to have and to hold forevery (sic) and definitely, which portion
shall be utilized purposely and exclusively as a GOVERNMENT CENTER SITE x x
This case was originally filed as a petition for certiorari under Rule 65 of the Rules
x."7
of Court. In the Court's Resolution dated March 9, 2009, however, the petition
was treated as one for review under Rule.45.1 Assailed is the Decision2 dated
April 25, 2008 and Resolution3 dated October 29, 2008 of the Court of Appeals
The respondent immediately took possession of the property and began
Mindanao Station (CA) in CA-G.R. CV No. 00156, which reversed the Judgment4
construction of the municipal building.8
dated January 14, 2004 of the Regional Trial Court (RTC) of Isulan, Sultan Kudarat,
Branch 19 in Civil Case No. 1007 for Recovery of Possession of Subject Property
and/or Quieting of Title thereon and Damages.
Thirty-nine (39) years later or on October 26, 2001, the petitioner, together with
his wife, Patao Talipasan, filed a civil action for Recovery of Possession of Subject
Property and/or Quieting of Title thereon and Damages against the respondent,
The Facts
represented by its Municipal Mayor, et al.9

Ali Akang (petitioner) is a member of the national and cultural community

In his complaint, the petitioner alleged, among others, that the agreement was
belonging to the Maguindanaon tribe of Isulan, Province of Sultan Kudarat and
one to sell, which was not consummated as the purchase price was not paid.10
the registered owner of Lot 5-B-2-B-14-F (LRC) Psd 1100183 located at Kalawag III,
Isulan, Sultan Kudarat, covered by Transfer Certificate of Title (TCT) No. T-3653,5
with an area of 20,030 square meters.6
In its answer, the respondent denied the petitioner’s allegations, claiming, among
others: that the petitioner’s cause of action was already barred by laches; that the
Deed of Sale was valid; and that it has been in open, continuous and exclusive
Sometime in 1962, a two-hectare portion of the property was sold by the
possession of the property for forty (40) years.11
petitioner to the Municipality of Isulan, Province of Sultan Kudarat (respondent)
through then Isulan Mayor Datu Ampatuan under a Deed of Sale executed on July
18, 1962, which states:
After trial, the RTC rendered judgment in favor of the petitioner. The RTC
construed the Deed of Sale as a contract to sell, based on the wording of the
contract, which allegedly showed that the consideration was still to be paid and
"That for and in consideration of the sum of THREE THOUSAND PESOS
delivered on some future date – a characteristic of a contract to sell.12 In
([P]3,000.00), Philippine Currency, value to be paid and deliver to me, and of
addition, the RTC observed that the Deed of Sale was not determinate as to its
which receipt of which shall be acknowledged by me to my full satisfaction by the
object since it merely indicated two (2) hectares of the 97,163 sq m lot, which is
MUNICIPAL GOVERNMENT OF ISULAN, represented by the Municipal Mayor, Datu
an undivided portion of the entire property owned by the petitioner. The RTC
Sama Ampatuan, hereinafter referred to as the VENDEE, I hereby sell, transfer,
found that segregation must first be made to identify the parcel of land indicated
cede, convey and assign as by these presents do have sold, transferred, ceded,
in the Deed of Sale and it is only then that the petitioner could execute a final
conveyed and assigned, an area of TWO (2) hectares, more or less, to and in favor
deed of absolute sale in favor of the respondent.13
of the MUNICIPAL GOVERNMENT OF ISULAN, her (sic) heirs, assigns and
 entered into between plaintiff Ali Akang, an illiterate non-Christian, and the
defendant, Municipal Government of Isulan, in violation of Section 120 of C.A. No.
As regards the payment of the purchase price, the RTC found the same to have
141, said contract/agreement is hereby declared null and void;
not been made by the respondent. According to the RTC, the Municipal Voucher
is not a competent documentary proof of payment but is merely evidence of
admission by the respondent that on the date of the execution of the Deed of
b. Declaring the Deed of Sale (Exh. "1"-"E") dated July 18, 1962, null and void ab
Sale, the consideration stipulated therein had not yet been paid. The RTC also
initio, for having been executed in violation of Section 145 of the Administrative
ruled that the Municipal Voucher’s validity and evidentiary value is in question as
Code of Mindanao and Sulu, and of Section 120 of the Public Land Law, as
it suffers infirmities, that is, it was neither duly recorded, numbered, signed by
amended by R.A. No. 3872;
the Municipal Treasurer nor was it pre-audited.14

c. Ordering the defendants to pay plaintiffs, the value of the lot in question, Lot
The RTC also ruled that the Deed of Sale was not approved pursuant to Section
No. 5-B-2-B-14-F (LRC) Psd 110183, containing an area of 20,030 Square Meters,
145 of the Administrative Code for Mindanao and Sulu or Section 120 of the
at the prevailing market value, as may be reflected in its Tax Declaration, or in the
Public Land Act (PLA), as amended. Resolution No. 70,15 which was issued by the
alternative, to agree on the payment of monthly back rentals, retroactive to 1996,
respondent, appropriating the amount of ₱3,000.00 as payment for the property,
until defendants should decide to buy and pay the value of said lot as aforestated,
and Resolution No. 644 of the Provincial Board of Cotabato, which approved
with legal interest in both cases;
Resolution No. 70, cannot be considered proof of the sale as said Deed of Sale
was not presented for examination and approval of the Provincial Board.16
Further, since the respondent’s possession of the property was not in the concept
of an owner, laches cannot be a valid defense for claiming ownership of the d. Ordering the defendant, Municipal Government of Isulan, Sultan Kudarat, to
property, which has been registered in the petitioner’s name under the Torrens pay plaintiffs, by way of attorney’s fee, the equivalent of 30% of the value that
System.17 defendants would pay the plaintiffs for the lot in question; and to pay plaintiffs
the further sum of ₱100,000.00, by way of moral and exemplary damages;

The dispositive portion of the RTC Decision18 dated January 14, 2004 reads:
e. Ordering the defendants, members of the Sangguniang Bayan of Isulan, Sultan
Kudarat, to pass a resolution/ordinance for the appropriation of funds for the
payment of the value of plaintiffs’ Lot 5-B-2-B-14-F (LRC) Psd-110183, and of the
WHEREFORE, upon all the foregoing considerations, judgment is hereby
damages herein awarded to the plaintiffs; and
rendered:

f. Ordering the defendants to pay the costs of suit.

a. Declaring the contract entered into between the plaintiffs and the defendant,
Municipal Government of Isulan, Cotabato (now Sultan Kudarat), represented by
its former Mayor, Datu Suma Ampatuan, dated July 18, 1962, as a contract to sell,
without its stipulated consideration having been paid; and for having been
For lack of merit, the counterclaims of the defendants should be, as it is hereby,
dismissed.
IT IS SO ORDERED.19
By virtue of said RTC decision, proceedings for the Cancellation of Certificate of
Title No. T-49349 registered under the name of the respondent was instituted by
the petitioner under Miscellaneous Case No. 866 and as a result, the respondent’s
title over the property was cancelled and a new one issued in the name of the
petitioner.
The respondent appealed the RTC Decision dated January 14, 2004 and in the
Decision20 dated April 25, 2008, the CA reversed the ruling of the RTC and upheld
the validity of the sale. The dispositive portion of the CA Decision provides:
WHEREFORE, the assailed decision dated January 14, 2004 is hereby REVERSED
and a new one entered, upholding the contract of sale executed on July 18, 1962
between the parties.
SO ORDERED.21
The CA sustained the respondent’s arguments and ruled that the petitioner is not
entitled to recover ownership and possession of the property as the Deed of Sale
already transferred ownership thereof to the respondent. The CA held that the
doctrines of estoppel and laches must apply against the petitioner for the reasons
that: (1) the petitioner adopted inconsistent positions when, on one hand, he
invoked the interpretation of the Deed of Sale as a contract to sell but still
demanded payment, and called for the application of Sections 145 and 146 of the
Administrative Code for Mindanao and Sulu, on the other; and (2) the petitioner
did not raise at the earliest opportunity the nullity of the sale and remained
passive for 39 years, as it was raised only in 2001.22
The CA also ruled that the Deed of Sale is not a mere contract to sell but a
perfected contract of sale. There was no express reservation of ownership of title
by the petitioner and the fact that there was yet no payment at the time of the
sale does not affect the validity or prevent the perfection of the sale.23
As regards the issue of whether payment of the price was made, the CA ruled that
there was actual payment, as evidenced by the Municipal Voucher, which the
petitioner himself prepared and signed despite the lack of approval of the
Municipal Treasurer. Even if he was not paid the consideration, it does not affect
the validity of the contract of sale for it is not the fact of payment of the price that
determines its validity.24
In addition, the CA noted that there was an erroneous cancellation of the
certificate of title in the name of the respondent and the registration of the same
property in the name of the petitioner in Miscellaneous Case No. 866. According
to the CA, this does not affect in any way the ownership of the respondent over
the subject property because registration or issuance of a certificate of title is not
one of the modes of acquiring ownership.25
The petitioner sought reconsideration of the CA Decision, which was denied by
the CA in its Resolution26 dated October 29, 2008.
Hence, this petition.
Issue
WHETHER THE PETITIONER IS ENTITLED TO RECOVER OWNERSHIP AND The Court finds the petition devoid of merit.
POSSESSION OF THE PROPERTY IN DISPUTE.

Issue Raised for the First Time

Resolution of the above follows determination of these questions: (1) whether
on Appeal is Barred by Estoppel
the Deed of Sale dated July 18, 1962 is a valid and perfected contract of sale; (2)
whether there was payment of consideration by the respondent; and (3) whether
the petitioner’s claim is barred by laches.
The petitioner asserts that the Deed of Sale was notarized by Atty. Gualberto B.
Baclig who was not authorized to administer the same, hence, null and void. This
argument must be rejected as it is being raised for the first time only in this
The petitioner claims that the acquisition of the respondent was null and void
petition. In his arguments before the RTC and the CA, the petitioner focused
because: (1) he is an illiterate non-Christian who only knows how to sign his name
mainly on the validity and the nature of the Deed of Sale, and whether there was
in Arabic and knows how to read the Quran but can neither read nor write in both
payment of the purchase price. The rule is settled that issues raised for the first
Arabic and English; (2) the respondent has not paid the price for the property; (3)
time on appeal and not raised in the proceedings in the lower court are barred by
the Municipal Voucher is not admissible in evidence as proof of payment; (4) the
estoppel. To consider the alleged facts and arguments raised belatedly would
Deed of Sale was not duly approved in accordance with Sections 145 and 146 of
amount to trampling on the basic principles of fair play, justice, and due
the Administrative Code of Mindanao and Sulu, and Section 120 of the PLA, as
process.30 Accordingly, thepetitioner’s attack on the validity of the Deed of Sale
amended; and (4) the property is a registered land covered by a TCT and cannot
vis-à-vis its compliance with the 2004 New Notarial Law must be disregarded.31
be acquired by prescription or adverse possession.27 The petitioner also
explained that the delayed filing of the civil action with the RTC was due to
Martial Law and the Ilaga-Blackshirt Troubles in the then Province of Cotabato.28
The Deed of Sale is a Valid Contract of Sale

The respondent, however, counters that: (1) the petitioner is not an illiterate non-
Christian and he, in fact, was able to execute, sign in Arabic, and understand the
terms and conditions of the Special Power of Attorney dated July 23, 1996 issued
in favor of Baikong Akang (Baikong); (2) the Deed of Sale is valid as its terms and
conditions were reviewed by the Municipal Council of Isulan and the Provincial
Board of Cotabato; and (3) the Deed of Sale is a contract of sale and not a
contract to sell.29
The petitioner alleges that the Deed of Sale is merely an agreement to sell, which
was not perfected due to non-payment of the stipulated consideration.32 The
respondent, meanwhile, claims that the Deed of Sale is a valid and perfected
contract of absolute sale.33
A contract of sale is defined under Article 1458 of the Civil Code:

Ruling of the Court

By the contract of sale, one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay
therefore a price certain in money or its equivalent.
 immediately sought judicial recourse to prevent further construction of the
municipal building; or (2) taken legal action to contest the agreement.37 The
The elements of a contract of sale are: (a) consent or meeting of the minds, that
petitioner did not opt to undertake any of such recourses.
is, consent to transfer ownership in exchange for the price; (b) determinate
subject matter; and (c) price certain in money or its equivalent.34

Payment of consideration or purchase price

A contract to sell, on the other hand, is defined by Article 1479 of the Civil Code:

The petitioner’s allegation of non-payment is of no consequence taking into

account the Municipal Voucher presented before the RTC, which proves payment
A bilateral contract whereby the prospective seller, while expressly reserving the
by the respondent of Three Thousand Pesos (₱3,000.00). The petitioner,
ownership of the subject property despite delivery thereof to the prospective
notwithstanding the lack of the Municipal Treasurer’s approval, admitted that the
buyer, binds himself to sell the said property exclusively to the prospective buyer
signature appearing on the Municipal Voucher was his and he is now estopped
upon fulfillment of the condition agreed upon, that is, full payment of the
from disclaiming payment.
purchase price.

Even assuming, arguendo, that the petitioner was not paid, such non payment is
In a contract of sale, the title to the property passes to the buyer upon the
immaterial and has no effect on the validity of the contract of sale. A contract of
delivery of the thing sold, whereas in a contract to sell, the ownership is, by
sale is a consensual contract and what is required is the meeting of the minds on
agreement, retained by the seller and is not to pass to the vendee until full
the object and the price for its perfection and validity.38 In this case, the contract
payment of the purchase price.35
was perfected the moment the petitioner and the respondent agreed on the
object of the sale – the two-hectare parcel of land, and the price – Three
Thousand Pesos (₱3,000.00). Non-payment of the purchase price merely gave rise
The Deed of Sale executed by the petitioner and the respondent is a perfected to a right in favor of the petitioner to either demand specific performance or
contract of sale, all its elements being present. There was mutual agreement rescission of the contract of sale.39
between them to enter into the sale, as shown by their free and voluntary signing
of the contract. There was also an absolute transfer of ownership of the property
by the petitioner to the respondent as shown in the stipulation: "x x x I petitioner
Sections 145 and 146 of the Administrative Code of Mindanao and Sulu, and
hereby sell, transfer, cede, convey and assign as by these presents do have sold,
Section 120 of the PLA, as amended, are not applicable
transferred, ceded, conveyed and assigned, x x x."36 There was also a determine
subject matter, that is, the two-hectare parcel of land as described in the Deed of
Sale. Lastly, the price or consideration is at Three Thousand Pesos (₱3,000.00),
The petitioner relies on the foregoing laws in assailing the validity of the Deed of
which was to be paid after the execution of the contract. The fact that no express
Sale, claiming that the contract lacks executive approval and that he is an illiterate
reservation of ownership or title to the property can be found in the Deed of Sale
non-Christian to whom the benefits of Sections 145 and 146 of the Administrative
bolsters the absence of such intent, and the contract, therefore, could not be one
Code of Mindanao and Sulu should apply.
to sell. Had the intention of the petitioner been otherwise, he could have: (1)
 at the expense of another. More important, the law will not be applied so
stringently as to render ineffective a contract that is otherwise valid, except for
Section 145 of the Administrative Code of Mindanao and Sulu essentially provides
want of approval by the CNI. This principle holds, especially when the evils sought
for the requisites of the contracts entered into by a person with any Moro or
to be avoided are not obtaining.46
other non-Christian inhabitants.40 Section 146,41 meanwhile, provides that
contracts entered into in violation of Section 145 are void. These provisions aim
to safeguard the patrimony of the less developed ethnic groups in the Philippines
The Court must also reject the petitioner’s claim that he did not understand the
by shielding them against imposition and fraud when they enter into agreements
import of the agreement.1âwphi1 He alleged that he signed in Arabic the Deed of
dealing with realty.42
Sale, the Joint Affidavit and the Municipal Voucher, which were all in English, and
that he was not able to comprehend its contents. Records show the contrary. The
petitioner, in fact, was able to execute in favor of Baikong a Special Power of
Section 120 of the PLA (Commonwealth Act No. 141) affords the same
Attorney (SPA) dated July 23, 1996, which was written in English albeit signed by
protection.43 R.A. No. No. 387244 likewise provides that conveyances and
the petitioner in Arabic. Said SPA authorized Baikong, the petitioner’s sister, to
encumbrances made by illiterate non-Christian or literate non-Christians where
follow-up the payment of the purchase price. This raises doubt on the veracity of
the instrument of conveyance or encumbrance is in a language not understood by
the petitioner’s allegation that he does not understand the language as he would
said literate non-Christians shall not be valid unless duly approved by the
not have been able to execute the SPA or he would have prevented its
Chairman of the Commission on National Integration.
enforcement.

In Jandoc-Gatdula v. Dimalanta,45 however, the Court categorically stated that

The Petitioner’s Claim for Recovery of Possession and Ownership is Barred by
while the purpose of Sections 145 and 146 of the Administrative Code of
Laches
Mindanao and Sulu in requiring executive approval of contracts entered into by
cultural minorities is indeed to protect them, the Court cannot blindly apply that
law without considering how the parties exercised their rights and obligations. In
Laches has been defined as the failure or neglect, for an unreasonable and
this case, Municipality Resolution No. 70, which approved the appropriation of
unexplained length of time, to do that which, by exercising due diligence could or
₱3,000.00, was, in fact, accepted by the Provincial Board of Cotabato. In
should have been done earlier.47 It should be stressed that laches is not
approving the appropriation of ₱3,000.00, the Municipal Council of Isulan and the
concerned only with the mere lapse of time.48
Provincial Board of Cotabato, necessarily, scrutinized the Deed of Sale containing
the terms and conditions of the sale. Moreover, there is nothing on record that
proves that the petitioner was duped into signing the contract, that he was taken
advantage of by the respondent and that his rights were not protected. As a general rule, an action to recover registered land covered by the Torrens
System may not be barred by laches.49 Neither can laches be set up to resist the
enforcement of an imprescriptible legal right.50 In exceptional cases, however,
the Court allowed laches as a bar to recover a titled property. Thus, in Romero v.
The court’s duty to protect the native vendor, however, should not be carried out
Natividad,51 the Court ruled that laches will bar recovery of the property even if
to such an extent as to deny justice to the vendee when truth and justice happen
to be on the latter’s side. The law cannot be used to shield the enrichment of one
the mode of transfer was invalid. Likewise, in Vda. de Cabrera v. CA,52 the Court
ruled:
In our jurisdiction, it is an enshrined rule that even a registered owners of
property may be barred from recovering possession of property by virtue of
laches. Under the Land Registration Act (now the Property Registration Decree),
no title to registered land in derogation to that of the registered owner shall be
acquired by prescription or adverse possession. The same is not true with regard
to laches. x x x.53 (Citation omitted and emphasis supplied)
running of prescription in Development Bank of the Philippines v. Pundogar58 is
inapplicable because the Court's ruling therein pertained to prescription and not
laches. Consequently, the petitioner's lengthy inaction sufficiently warrants the
conclusion that he acquiesced or conformed to the sale.
Vigilantibus sed non dormientibus jura subverniunt. The law aids the vigilant, not
those who sleep on their rights. This legal percept finds application in the
petitioner's case.

WHEREFORE, the appeal is DENIED. The Decision dated April 25, 2008 and
More particularly, laches will bar recovery of a property, even if the mode of Resolution dated October 29, 2008 of the Court of Appeals Mindanao Station in
transfer used by an alleged member of a cultural minority lacks executive CA-G.R. CV No. 00156 are AFFIRMED.
approval.54 Thus, in Heirs of Dicman v. Cariño,55 the Court upheld the Deed of
Conveyance of Part Rights and Interests in Agricultural Land executed by Ting-el
Dicman in favor of Sioco Cariño despite lack of executive approval. The Court SO ORDERED.
stated that "despite the judicial pronouncement that the sale of real property by
illiterate ethnic minorities is null and void for lack of approval of competent
authorities, the right to recover possession has nonetheless been barred through
the operation of the equitable doctrine of laches."56 Similarly in this case, while
the respondent may not be considered as having acquired ownership by virtue of
its long and continued possession, nevertheless, the petitioner’s right to recover
has been converted into a stale demand due to the respondent’s long period of
possession and by the petitioner’s own inaction and neglect.57 The Court cannot
accept the petitioner’s explanation that his delayed filing and assertion of rights
was due to Martial Law and the Cotabato Ilaga-Black Shirt Troubles. The Martial
Law regime was from 1972 to 1986, while the Ilaga-Black Shirt Troubles were
from the 1970s to the 1980s. The petitioner could have sought judicial relief, or at
the very least made his demands to the respondent, as early as the third quarter
of 1962 after the execution of the Deed of Sale and before the advent of these
events. Moreover, even if, as the petitioner claims, access to courts were
restricted during these times, he could have immediately filed his claim after
Martial Law and after the Cotabato conflict has ended. The petitioner's reliance
on the Court's treatment of Martial Law as force majeure that suspended the