[G.R. No. 132305. December 4, 2001.

IDA C. LABAGALA, petitioner, vs. NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON.
COURT OF APPEALS, respondents.

Public Attorney's Office for petitioner.

Atty. Venancio B. Padilla for private respondents.

SYNOPSIS

Private respondents were judicially declared as pro-indiviso owners of a parcel of land covered by TCT No. 64729 and their
claim properly annotated on the title, registered only in the name of Jose. When Jose died intestate, private respondents,
Jose's sisters sued for recovery of property against petitioner. Petitioner, claiming to be the daughter of Jose, alleged that
her true surname is Santiago, and not Labagala, and that the deed of sale executed in her favor in March 1979 for P150,000
which was registered only on January 26, 1987 was really a donation, not having paid a centavo for the property. Private
respondents impugned petitioner's legitimacy. Petitioner, though enjoined to present her birth certificate, presented only
her baptismal certificate. Nonetheless, the trial court rendered judgment in favor of petitioner who was found to be the
daughter of Jose and ruled that the donation was valid. On appeal, the Court of Appeals reversed the trial court, declared
private respondents as pro-indiviso owners of the one-third share of Jose on the property and that petitioner failed to
prove her filiation with Jose. The appellate court took note of several badges of simulation: that the deed was not signed
by Jose who was a college graduate although a thumb print appeared thereon; that Jose who was already married was
described as single; that petitioner, then 15 years of age, was made to appear to be of legal age; that the property was free
of encumbrance; and the fact of its late registration. Hence, this recourse with petitioner asseverating that her legitimacy
cannot be impugned in the action to recover title and possession under Article 262 of the Civil Code.

It was held that the one-year period under Article 263 of the Civil Code to impugn legitimacy does not apply to situation
where a child is alleged NOT to be the child at all of a particular couple; that a baptismal certificate is not conclusive proof
of filiation; that petitioner's silence concerning the absence of her birth certificate raises doubts as to the existence thereof
that would show petitioner to be the daughter of Jose Santiago and Esperanza Cabrigas, this raising the presumption that
evidence willfully suppressed would be adverse if produced; that without consent, there can be no valid contract of sale;
and that without acceptance of the donee, the purported deed of sale cannot be a valid deed of donation.

SYLLABUS

1. CIVIL LAW; PATERNITY AND FILIATION; ONE-YEAR PERIOD TO IMPUGN LEGITIMACY; RULE DOES NOT
APPLY TO A SITUATION WHERE A CHILD IS ALLEGED NOT TO BE THE CHILD AT ALL OF A PARTICULAR
COUPLE. — On the first issue, we find petitioner's reliance on Article 263 of the Civil Code to be misplaced. 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
man's child by his wife, and the husband (or, in proper cases, his heirs) denies the child's filiation. It does not refer to
situations where a child is alleged not to be the child at all of a particular couple.

2. ID.; ID.; ID.; ID.; CASE AT BAR. — Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove
that a person is not a man's child by his wife. However, the present case is not one impugning petitioner's 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. Moreover, the present action is one for recovery of title and possession, and thus outside the scope of Article 263 on
prescriptive periods.

3. ID.; ID.; DOCTRINE IN SAYSON CASE (G.R. NOS. 89224-25, 205 SCRA 321) ON ADOPTION, NOT APPLICABLE TO
CASE AT BAR. — Petitioner's 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 challenged to the validity of the adoption cannot be made collaterally but in a direct proceeding. In this
case, respondents are not assailing petitioner's legitimate status but are, instead, asserting that she is not at all their
brother's child. The birth certificate presented by respondents support this allegation.

4. REMEDIAL LAW; EVIDENCE; BAPTISMAL CERTIFICATE, NOT CONCLUSIVE PROOF OF FILIATION. — A

baptismal certificate, a private document, is not conclusive proof of filiation. More so are the entries made in an income
tax return, which only shows that income tax has been paid and the amount thereof. DECcAS

5. ID.; ID.; PRESUMPTIONS; EVIDENCE WILLFULLY SUPPRESSED WOULD BE ADVERSE IF PRODUCED; CASE AT
BAR. — 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 petitioner's 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. Petitioner's counsel argued that petitioner had been
using Santiago all her life. However, use of a family name certainly does not establish pedigree.

6. ID.; ID.; FACTUAL FINDINGS OF THE COURT OF APPEALS, UPHELD ON APPEAL. — 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.

7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALES; WITHOUT CONSENT, THERE CAN BE NO VALID
CONTRACT. — Jose did not have the right to transfer ownership of the entire property to petitioner since 2/3 thereof
belonged to his sisters. Petitioner could not have given her consent to the contract, being a minor at the time. Consent of
the contracting parties is among the essential requisites of a contract, including one of sale, absent which there can be no
valid contract. Moreover, petitioner admittedly did not pay any centavo for the property, which makes the sale void.

DECISION

QUISUMBING, J p:

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 petitioner's sole possession upon Jose's death.
Respondents alleged that Jose's 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 petitioner's machinations and with malicious
intent, to enable her to secure the corresponding transfer certificate of title (TCT No. 172334 6 ) in petitioner's 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:

WHEREFORE, judgment is hereby rendered recognizing the plaintiffs [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. Santiago and
presently covered by Transfer Certificate of Title No 172334, in the name of herein defendant [herein
petitioner] and which is located at No. 3075-A Rizal Avenue Extension, Sta. Cruz, Manila, as per
complaint, and the adjudication to plaintiffs per decision in Civil Case No. 56226 of this Court, Branch
VI, and the remaining one-third (1/3) pro 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 to adjudge damages, attorney's 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 is so directed to effect the same upon payment of the proper fees by the
parties herein.

SO ORDERED. 10

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 constitutes a valid donation. Even if it were not, petitioner would still be entitled to Jose's 1/3 portion
of the property as Jose's 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 Jose's daughter, and
(2) Jose's income tax return which listed petitioner as his daughter. It further said that respondents knew of petitioner's
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 decision of the trial court.

WHEREFORE, the appealed decision is REVERSED and one is entered declaring the appellants
Nicolasa and AmandaSantiago the co-owners in equal shares of the one-third (1/3) pro indiviso share of
the late Jose Santiago in the land and building covered by TCT No. 172334. Accordingly, the Register of
Deeds of Manila is directed to cancel said title and issue in its place a new one reflecting this decision.

SO ORDERED.

Apart from respondents' testimonies, the appellate court noted that the birth certificate of Ida Labagala presented by
respondents showed that 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.

Hence, the present petition wherein the following issues are raised for consideration:

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 Jose's 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 indicates 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 child's
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 petitioner's filiation in
this action for recovery of title and possession; and (2) whether or not petitioner is entitled to Jose's 1/3 portion of the
property he co-owned with respondents, through succession, sale, or donation.

On the first issue, we find petitioner's 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 man's child by his wife, and the husband (or, in proper cases, his heirs) denies the child's 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 man's child by
his wife. However, the present case is not one impugning petitioner's 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.

Petitioner's 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 petitioner's legitimate status but are, instead, asserting that she is not at all their
brother's 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 Labagalaand [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 IdaLabagala 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 appellee's 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, petitioner's 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 person's]
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 petitioner's 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. Petitioner's 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 Santiagointended to donate the properties in question to Ida, what was the big idea
of hiding the nature of the contract in the facade 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
heaven's 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.
 [G.R. No. 127540. October 17, 2001.]

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners, vs.

HON. COURT OF APPEALS, FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL

CAPALUNGAN, petitioners, vs. HON. COURT OF APPEALS, THE DIRECTOR OF LANDS, and
FELIPE C. RIGONAN and CONCEPCION R. RIGONAN,respondents.

Herman D. Coloma for petitioners.

Eddie Tamondong for private respondents.

SYNOPSIS

Subject parcels of land were previously owned by Paulina Rigonan. Private respondents claimed that Paulina
sold them the lots in 1965. Petitioners, however, alleged that they are the closest surviving relatives of Paulina and
they inherited the lots from her when she died in 1966. Here in issue is the existence and due execution of the alleged
deed of sale.
The Court ruled in the negative on the issue posed. First, no original deed of sale was ever presented, only a
carbon copy thereof. No witness directly testified on the execution of the deed of sale and the carbon copy bore only
the alleged thumbprint of Paulina. Second, the carbon copy contained filled-in blanks and alterations; it showed
intercalations and discrepancies when compared to supposed copies in existence. Third, Paulina was never asked to
vacate the purportedly sold premises; in fact, they were still included in her will which was notarized by the same
notary public who allegedly notarized the supposed deed of sale. Fourth, at the purported execution of the deed, the
Court noted that Paulina was already incapacitated by impaired mental faculties due to advanced years. Lastly, the
consideration here is only P850 for 9 lots, a house and a bodega. The Court agreed that said amount was grossly
inadequate for a valid sale.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; THAT DECIDING JUDGE PRESIDED ONLY ONCE OVER THE
HEARINGS HAS NO ADVERSE EFFECT ON THE DECISION. — While the trial judge deciding the case presided over
the hearings of the case only once, this circumstance could not have an adverse effect on his decision. The continuity of a
court and the efficacy of its proceedings are not affected by the death, resignation or cessation from the service of the
presiding judge. A judge may validly render a decision although he has only partly heard the testimony of the witnesses.
After all, he could utilize and rely on the records of the case, including the transcripts of testimonies heard by the former
presiding judge.

2. ID.; ID.; CERTIFICATION AGAINST FORUM-SHOPPING; COMPLIANCE; PRESENT WHEN ONE WAS ATTACHED
IN THE COPY INTENDED FOR THE COURT. — On the matter of the certification against forum-shopping, petitioners
aver that they attached one in the copy intended for this Court. This is substantial compliance. A deviation from a rigid
enforcement of the rules may be allowed to attain their prime objective for, after all, the dispensation of justice is the core
reason for the court's existence.

3. ID.; ID.; APPEAL; REVIEW OF THE CONTRADICTORY FINDINGS OF THE TRIAL COURT AND COURT OF
APPEALS. — While the issues raised in this petition might appear to be mainly factual, this petition is properly given due
course because of the contradictory findings of the trial court and the Court of Appeals. Further, the latter court
apparently overlooked certain relevant facts which justify a different conclusion. Moreover, a compelling sense to make
sure that justice is done, and done rightly in the light of the issues raised herein, constrains us from relying on
technicalities alone to resolve this petition.

4. CIVIL LAW; CONTRACTS; DEED OF SALE; DOUBTFUL IN THE PRESENCE OF VARIOUS IRREGULARITIES. —
Irregularities abound regarding the execution and registration of the alleged deed of sale. The original was nowhere to be
found and none could be presented at the trial. The carbon copy on file, which is allegedly a duplicate original, shows
intercalations and discrepancies when compared to purported copies in existence. Furthermore, it appears that the
alleged vendor was never asked to vacate the premises she had purportedly sold. The alleged vendor's continued
possession of the property in this case throws an inverse implication, a serious doubt on the due execution of the deed of
sale. Noteworthy, the same parcels of land involved in the alleged sale were still included in the will subsequently
executed by Paulina and notarized by the same notary public, Atty. Tagatag. These circumstances, taken together, militate
against unguarded acceptance of the due execution and genuineness of the alleged deed of sale.

5. ID.; ID.; CONSIDERATION; NOT APPRECIATED WHEN AMOUNT THEREOF DUBIOUS. — We have to take into
account the element of consideration for the sale. The price allegedly paid by private respondents for nine (9) parcels,
including the three parcels in dispute, a house and a warehouse, raises further questions. Consideration is the why of a
contract, the essential reason which moves the contracting parties to enter into the contract. On record, there is unrebutted
testimony that Paulina as landowner was financially well off. She loaned money to several people. We see no apparent
and compelling reason for her to sell the subject parcels of land with a house and warehouse at a meager price of P850
only.

6. ID.; ID.; CONSENT; NOT APPRECIATED WHEN THERE IS INCAPACITY DUE TO ADVANCED YEARS
IMPAIRING THE MENTAL FACULTY OF A PARTY. — 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.

DECISION

QUISUMBING, J p:

This petition 1 seeks to annul the decision of the Court of Appeals dated August 29, 1996, which set aside the decision of
the Regional Trial Court of Batac, Ilocos Norte, Branch 17, in Civil Case No. 582-17 for reivindicacion consolidated with
Cadastral Case No. 1. 2 The petition likewise seeks to annul the resolution dated December 11, 1996, denying petitioners'
motion for reconsideration.

The facts of this case, culled from the records, are as follows:

Paulina Rigonan owned three (3) parcels of land, located at Batac and Espiritu, Ilocos Norte, including the house and
warehouse on one parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion Rigonan,
who claim to be her relatives. In 1966, herein petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan,
who claim to be her closest surviving relatives, allegedly took possession of the properties by means of stealth, force and
intimidation, and refused to vacate the same. Consequently, on February 2, 1976, herein respondent Felipe Rigonan filed a
complaint for reivindicacion against petitioners in the Regional Trial Court of Batac, Ilocos Norte. On July 3, 1977, he
amended the complaint and included his wife as co-plaintiff. They alleged that they were the owners of the three parcels
of land through the deed of sale executed by Paulina Rigonan on January 28, 1965; that since then, they had been in
continuous possession of the subject properties and had introduced permanent improvements thereon; and that
defendants (now petitioners) entered the properties illegally, and they refused to leave them when asked to do so.
Herein petitioners, as defendants below, contested plaintiffs' claims. According to defendants, the alleged deed of
absolute sale was void for being spurious as well as lacking consideration. They said that Paulina Rigonan did not sell her
properties to anyone. As her nearest surviving kin within the fifth degree of consanguinity, they inherited the three lots
and the permanent improvements thereon when Paulina died in 1966. They said they had been in possession of the
contested properties for more than 10 years. Defendants asked for damages against plaintiffs. HAICTD

During trial, Juan Franco, Notary Public Evaristo P. Tagatag 3 and plaintiff Felipe Rigonan testified for plaintiffs (private
respondents now).

Franco testified that he was a witness to the execution of the questioned deed of absolute sale. However, when cross-
examined and shown the deed he stated that the deed was not the document he signed as a witness, but rather it was the
will and testament made by Paulina Rigonan.

Atty. Tagatag testified that he personally prepared the deed, he saw Paulina Rigonan affix her thumbprint on it and he
signed it both as witness and notary public. He further testified that he also notarized Paulina's last will and testament
dated February 19, 1965. The will mentioned the same lots sold to private respondents. When asked why the subject lots
were still included in the last will and testament, he could not explain. Atty. Tagatag also mentioned that he registered the
original deed of absolute sale with the Register of Deeds.

Plaintiff Felipe Rigonan claimed that he was Paulina's close relative. Their fathers were first cousins. However, he could
not recall the name of Paulina's grandfather. His claim was disputed by defendants, who lived with Paulina as their close
kin. He admitted the discrepancies between the Register of Deeds' copy of the deed and the copy in his possession. But he
attributed them to the representative from the Office of the Register of Deeds who went to plaintiffs' house after that
Office received a subpoena duces tecum. According to him, the representative showed him blanks in the deed and then the
representative filled in the blanks by copying from his (plaintiffs) copy.

Counsel for defendants (petitioners herein) presented as witnesses Jose Flores, the owner of the adjacent lot; Ruben
Blanco, then acting Registrar of Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio Domingo.

Jose Flores testified that he knew defendants, herein petitioners, who had lived on the land with Paulina Rigonan since he
could remember and continued to live there even after Paulina's death. He said he did not receive any notice nor any offer
to sell the lots from Paulina, contrary to what was indicated in the deed of sale that the vendor had notified all the
adjacent owners of the sale. He averred he had no knowledge of any sale between Paulina and private respondents.

Ruben Blanco, the acting Registrar of Deeds, testified that only the carbon copy, also called a duplicate original, of the
deed of sale was filed in his office, but he could not explain why this was so.

Zosima Domingo testified that her husband, Eugenio Domingo, was Paulina's nephew. Paulina was a first cousin of
Eugenio's father. She also said that they lived with Paulina and her husband, Jose Guerson, since 1956. They took care of
her, spent for her daily needs and medical expenses, especially when she was hospitalized prior to her death. She stated
that Paulina was never badly in need of money during her lifetime. aSEDHC

On March 23, 1994, the trial court rendered judgment in favor of defendants (now the petitioners). It disposed:

WHEREFORE, premises considered, judgment is hereby rendered in favor of defendants and against
the plaintiffs, and as prayed for, the Amended Complaint is hereby DISMISSED.

Defendants are hereby declared, by virtue of intestate succession, the lawful owners and possessors of
the house including the bodega and the three (3) parcels of land in suit and a Decree of Registration
adjudicating the ownership of the said properties to defendants is hereby issued.

The alleged deed of sale (Exhs. "A", "A-1", "1" and "1-a") is hereby declared null and void and fake and
the prayer for the issuance of a writ of preliminary injunction is hereby denied.

Plaintiffs are hereby ordered to pay defendants:

a) P20,000.00 as moral damages;

 b) P10,000.00 as exemplary damages;

c) P10,000.00 attorney's fees and other litigation expenses.

No pronouncement as to costs. 4

Private respondents herein appealed to the Court of Appeals.

On August 29, 1996, the CA reversed the trial court's decision, thus:

WHEREFORE, the decision dated March 23, 1994 is hereby SET ASIDE. The plaintiffs-appellants Felipe
Rigonan and Concepcion Rigonan are declared the owners of the properties under litigation and the
defendants-appellees are hereby ordered to VACATE the subject properties and SURRENDER the
possession thereof to the heirs of the plaintiffs-appellants.

Costs against the defendants-appellees. 5

Hence, this petition assigning the following as errors:

THE RESPONDENT COURT OF APPEALS HAS DECIDED QUESTIONS OF LEGAL SUBSTANCE AND
SIGNIFICANCE NOT IN ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE APPLICABLE DECISIONS
OF THIS HONORABLE COURT.

II

THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE CONTRARY TO THOSE OF THE TRIAL COURT
AND CLEARLY VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL COURTS ARE ENTITLED TO
GREAT WEIGHT AND RESPECT ON APPEAL, ESPECIALLY WHEN SAID FINDINGS ARE ESTABLISHED BY
UNREBUTTED TESTIMONIAL AND DOCUMENTARY EVIDENCE.

III

THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT COURT OF APPEALS ARE GROUNDED ENTIRELY
ON SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES MANIFESTLY MISTAKEN.

IV

THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS NOT
DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT
CONCLUSION.

THAT THE FINDINGS OF FACT OF RESPONDENT COURT OF APPEALS ARE PREMISED ON SUPPOSED ABSENCE
OF EVIDENCE BUT IS CONTRADICTED BY THE EVIDENCE ON RECORD THUS CONSTITUTES GRAVE ABUSE OF
DISCRETION. 6

The basic issue for our consideration is, did private respondents sufficiently establish the existence and due execution of
the Deed of Absolute and Irrevocable Sale of Real Property? Marked as Exhibits "A", "A-1", "1" and "1-a", this deed
purportedly involved nine (9) parcels of land, inclusive of the three (3) parcels in dispute, sold at the price of P850 by
Paulina Rigonan to private respondents on January 28, 1965, at Batac, Ilocos Norte. 7 The trial court found the deed "fake,"
being a carbon copy with no typewritten original presented; and the court concluded that the document's execution "was
tainted with alterations, defects, tamperings, and irregularities which render it null and void ab initio." 8

Petitioners argue that the Court of Appeals erred in not applying the doctrine that factual findings of trial courts are
entitled to great weight and respect on appeal, especially when said findings are established by unrebutted testimonial
and documentary evidence. They add that the Court of Appeals, in reaching a different conclusion, had decided the case
contrary to the evidence presented and the law applicable to the case. Petitioners maintain that the due execution of the
deed of sale was not sufficiently established by private respondents, who as plaintiffs had the burden of proving it.First,
the testimonies of the two alleged instrumental witnesses of the sale, namely, Juan Franco and Efren Sibucao, were
dispensed with and discarded when Franco retracted his oral and written testimony that he was a witness to the
execution of the subject deed. As a consequence, the appellate court merely relied on Atty. Tagatag's (the notary public)
testimony, which was incredible because aside from taking the double role of a witness and notary public, he was a paid
witness. Further his testimony, that the subject deed was executed in the house of Paulina Rigonan, was rebutted by
Zosima Domingo, Paulina's housekeeper, who said that she did not see Atty. Tagatag, Juan Franco and Efren Sibucao in
Paulina's house on the alleged date of the deed's execution.

Secondly, petitioners said that private respondents failed to account for the typewritten original of the deed of sale and
that the carbon copy filed with the Register of Deeds was only a duplicate which contained insertions and erasures.
Further, the carbon copy was without an affidavit of explanation, in violation of the Administrative Code as amended,
which requires that if the original deed of sale is not presented or available upon registration of the deed, the carbon copy
or so-called "duplicate original" must be accompanied by an affidavit of explanation, otherwise, registration must be
denied. 9

Thirdly, petitioners aver that the consideration of only P850 for the parcels of land sold, together with a house and a
warehouse, was another indication that the sale was fictitious because no person who was financially stable would sell
said property at such a grossly inadequate consideration.

Lastly, petitioners assert that there was abundant evidence that at the time of the execution of the deed of sale, Paulina
Rigonan was already senile. She could not have consented to the sale by merely imprinting her thumbmark on the deed.

In their comment, private respondents counter that at the outset the petition must be dismissed for it lacks a certification
against forum-shopping. Nonetheless, even disregarding this requirement, the petition must still be denied in due course
for it does not present any substantial legal issue, but factual or evidentiary ones which were already firmly resolved by
the Court of Appeals based on records and the evidence presented by the parties. Private respondents' claim that the
factual determination by the trial court lacks credibility for it was made by the trial judge who presided only in one
hearing of the case. The trial judge could not validly say that the deed of absolute sale was "fake" because no signature
was forged, according to private respondents; and indeed a thumbmark, said to be the seller's own, appears
thereon. ECcDAH

In their reply, petitioners said that the copy of the petition filed with this Court was accompanied with a certification
against forum-shopping. If private respondents' copy did not contain same certification, this was only due to
inadvertence. Petitioners ask for the Court's indulgence for anyway there was substantial compliance with Revised
Circular No. 28-91.

On the contention that here only factual issues had been raised, hence not the proper subject for review by this Court,
petitioners reply that this general rule admits of exceptions, as when the factual findings of the Court of Appeals and the
trial court are contradictory; when the findings are grounded entirely on speculations, surmises or conjectures; and when
the Court of Appeals overlooked certain relevant facts not disputed by the parties which if properly considered would
justify a different conclusion. All these, according to petitioners, are present in this case.

Before proceeding to the main issue, we shall first settle procedural issues raised by private respondents.

While the trial judge deciding the case presided over the hearings of the case only once, this circumstance could not have
an adverse effect on his decision. The continuity of a court and the efficacy of its proceedings are not affected by the
death, resignation or cessation from the service of the presiding judge. A judge may validly render a decision although he
has only partly heard the testimony of the witnesses. 10 After all, he could utilize and rely on the records of the case,
including the transcripts of testimonies heard by the former presiding judge.

On the matter of the certification against forum-shopping, petitioners aver that they attached one in the copy intended for
this Court. This is substantial compliance. A deviation from a rigid enforcement of the rules may be allowed to attain their
prime objective for, after all, the dispensation of justice is the core reason for the court's existence. 11

While the issues raised in this petition might appear to be mainly factual, this petition is properly given due course
because of the contradictory findings of the trial court and the Court of Appeals. Further, the latter court apparently
overlooked certain relevant facts which justify a different conclusion. 12 Moreover, a compelling sense to make sure that
justice is done, and done rightly in the light of the issues raised herein, constrains us from relying on technicalities alone
to resolve this petition.

Now, on the main issue. Did private respondents establish the existence and due execution of the deed of sale? Our
finding is in the negative. First, note that private respondents as plaintiffs below presented only a carbon copy of this
deed. When the Register of Deeds was subpoenaed to produce the deed, no original typewritten deed but only a carbon
copy was presented to the trial court. Although the Court of Appeals calls it a "duplicate original," the deed contained
filled in blanks and alterations. None of the witnesses directly testified to prove positively and convincingly Paulina's
execution of the original deed of sale. The carbon copy did not bear her signature, but only her alleged thumbprint. Juan
Franco testified during the direct examination that he was an instrumental witness to the deed. However, when cross-
examined and shown a copy of the subject deed, he retracted and said that said deed of sale was not the document he
signed as witness. 13 He declared categorically he knew nothing about it. 14

We note that another witness, Efren Sibucao, whose testimony should have corroborated Atty. Tagatag's, was not
presented and his affidavit was withdrawn from the court, 15 leaving only Atty. Tagatag's testimony, which aside from
being uncorroborated, was self-serving.

Secondly, we agree with the trial court that irregularities abound regarding the execution and registration of the alleged
deed of sale. On record, Atty. Tagatag testified that he himself registered the original deed with the Register of
Deeds. 16Yet, the original was nowhere to be found and none could be presented at the trial. Also, the carbon copy on file,
which is allegedly a duplicate original, shows intercalations and discrepancies when compared to purported copies in
existence. The intercalations were allegedly due to blanks left unfilled by Atty. Tagatag at the time of the deed's
registration. The blanks were allegedly filled in much later by a representative of the Register of Deeds. In addition, the
alleged other copies of the document bore different dates of entry: May 16, 1966, 10:20 A.M. 17 and June 10, 1966, 3:16
P.M., 18 and different entry numbers: 66246, 74389 19 and 64369. 20 The deed was apparently registered long after its
alleged date of execution and after Paulina's death on March 20, 1966. 21 Admittedly, the alleged vendor Paulina Rigonan
was not given a copy. 22

Furthermore, it appears that the alleged vendor was never asked to vacate the premises she had purportedly sold. Felipe
testified that he had agreed to let Paulina stay in the house until her death. 23 In Alcos v. IAC, 162 SCRA 823 (1988), the
buyer's immediate possession and occupation of the property was deemed corroborative of the truthfulness and
authenticity of the deed of sale. The alleged vendor's continued possession of the property in this case throws an inverse
implication, a serious doubt on the due execution of the deed of sale. Noteworthy, the same parcels of land involved in
the alleged sale were still included in the will subsequently executed by Paulina and notarized by the same notary public,
Atty. Tagatag. 24 These circumstances, taken together, militate against unguarded acceptance of the due execution and
genuineness of the alleged deed of sale. CTIEac

Thirdly, we have to take into account the element of consideration for the sale. The price allegedly paid by private
respondents for nine (9) parcels, including the three parcels in dispute, a house and a warehouse, raises further questions.
Consideration is the why of a contract, the essential reason which moves the contracting parties to enter into the
contract. 25 On record, there is unrebutted testimony that Paulina as landowner was financially well off. She loaned
money to several people. 26 We see no apparent and compelling reason for her to sell the subject parcels of land with a
house and warehouse at a meager price of P850 only.

In Rongavilla vs. CA, 294 SCRA 289 (1998), private respondents were in their advanced years, and were not in dire need of
money, except for a small amount of P2,000 which they said were loaned by petitioners for the repair of their house's roof.
We ruled against petitioners, and declared that there was no valid sale because of lack of consideration.

In the present case, at the time of the execution of the alleged contract, Paulina Rigonan was already of advanced age and
senile. She died an octogenarian on March 20, 1966, barely over a year when the deed was allegedly executed on January
28, 1965, but before copies 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. 27 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 court's finding and conclusion on the matter:

The whole evidence on record does not show clearly that the fictitious P850.00 consideration was ever
delivered to the vendor. Undisputably, the P850.00 consideration for the nine (9) parcels of land
including the house and bodega is grossly and shockingly inadequate, and the sale is null and
void ab initio. 28

WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of Appeals dated August 29, 1996 and
December 11, 1996, respectively, are REVERSED and SET ASIDE. The decision of the Regional Trial Court of Batac, Ilocos
Norte, Branch 17, dated March 23, 1994, is REINSTATED.

Costs against private respondents.

SO ORDERED.
 [G.R. No. 143826. August 28, 2003.]

HEIRS OF IGNACIA AGUILAR-REYES, petitioners, vs. SPOUSES CIPRIANO MIJARES and

FLORENTINA MIJARES, respondents.

Renato T. Nuguid for petitioners.

Napoleon A. Espiritu for respondents.

SYNOPSIS

The spouses Vicente Reyes and Ignacia Aguilar-Reyes were the owners of Lot No. 4349-B-2 covered by Transfer
Certificate of Title which they purchased using conjugal funds. Sometime in 1984, Ignacia discovered that her spouse
Vicente sold the said property to respondent spouses on March 1, 1983. Alleging that the sale was without her consent,
Ignacia filed a complaint for annulment of sale against respondent spouses on June 4, 1986. The respondent spouses
opposed the complaint, claiming that the sale was valid and that they were purchasers in good faith. Vicente, on the other
hand, contended that he sold to the respondent spouses only his share in the lot. The trial court ruled in favor of Ignacia
and declared the sale void in its entirety. Pending the appeal, Ignacia died and she was substituted by her
compulsory heirs, herein petitioners. The Court of Appeals reversed and set aside the decision of the trial court. It ruled
that notwithstanding the absence of Ignacia's consent to the sale, the same must be held valid in favor of respondent
spouses because they were purchasers for value.

Hence, the instant petition.

The Supreme Court agreed with the annulment of the sale of the subject lot in its entirety, and not only insofar as the
share of the wife in the conjugal property is concerned. It held that the sale of the subject lot to respondent spouses
without the knowledge and consent of Ignacia was voidable. Her action to annul the March 1, 1993 sale, which was filed
on June 4, 1986, before her demise, was perfectly within the 10-year prescriptive period. According to the Court, under
the regime of the Civil Code, the alienation or encumbrance of a conjugal real property requires the consentof the wife.
The absence of such consent renders the entire transaction merely violable, and not void. The wife may, during the
marriage and within ten years from the transaction in question, bring an action for the annulment of the contract entered
into by her husband without her consent.

The Court further held that the respondent spouses were not purchasers in good faith. According to the Court, there
existed circumstances that should have placed the respondent spouses on guard. 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.

SYLLABUS

1. CIVIL LAW; PERSONS; PROPERTY RELATIONS; CONJUGAL PARTNERSHIP; ALIENATION OR

ENCUMBRANCE OF CONJUGAL REAL PROPERTY BY THE HUSBAND ABSENT WIFE'S CONSENT IS VOIDABLE.
— Pursuant to Articles 166 and 173 of the Civil Code, 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 cases
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. 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.
2. ID.; ID.; ID.; ID.; ID.; ACTION FOR ANNULMENT; PRESCRIPTIVE PERIOD. — 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.

3. ID.; ID.; ID.; ID.; CONTRACT EXECUTED BY THE HUSBAND WITHOUT THE WIFE'S CONSENT MAY BE
ANNULLED BY THE WIFE IN ITS ENTIRETY; RATIONALE. — 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, 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 ofFirst Instance correctly stated, "[t]he rule (in the first
sentence of Article 173) revokesBaello 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 ofthe 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 ofthe 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 ofthe 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 ofconsent of an indispensable party to the contract
under Article 166.

4. ID.; OBLIGATIONS AND CONTRACTS; SALES; PURCHASER IN GOOD FAITH; EXPLAINED. — 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 noticeof 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.

5. ID.; ID.; ID.; CONTRACT OF SALE; IF ANNULLED, RESTORATION OFWHAT HAS BEEN GIVEN IS PROPER; CASE
AT BAR. — 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. 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 ofAgreement" which served as
receipts of the installment payments made by respondent Cipriano Mijares; and (2) the receipt duly signed by
Vicente Reyesacknowledging receipt of the amount of P110,000.00 from respondent spouses as payment of the sale of the
controverted lot.

6. ID.; ID.; ID.; ID.; ID.; IMPOSITION OF INTEREST. — The trial court, however, erred in imposing 12% interest per
annum on the amount due the respondents. InEastern Shipping Lines, Inc. v. Court of Appeals, 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, 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.
Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined with certainty at the
time of the filingof the complaint shall earn 6% interest per annum from June 4, 1986 until the finalityof 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.

7. ID.; DAMAGES; ACTUAL DAMAGES; COURT CANNOT RELY ON MERE ASSERTIONS, SPECULATIONS,
CONJECTURES OR GUESSWORK BUT MUST DEPEND ON COMPETENT PROOF AND ON BEST EVIDENCE
OBTAINABLE REGARDING THE ACTUAL AMOUNT OF LOSS. — Petitioner's prayer for paymentof 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. None, having been presented in
the case at bar, petitioner's claim for rentals must be denied.

8. ID.; ID.; MORAL DAMAGES DISTINGUISHED FROM EXEMPLARY DAMAGES; CASE AT BAR. — 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. The award of exemplary
damages, on the other hand, is warranted when moral, temperate, liquidated, or compensatory damages were likewise
awarded by the court. Hence, the trial court's award of "P50,000.00 by wayof 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. ECTIcS

9. REMEDIAL LAW; APPEAL; A PARTY WHO HAS NOT APPEALED IS NOT ENTITLED TO AFFIRMATIVE RELIEF
OTHER THAN THAT GRANTED BY THE COURT; EXCEPTIONS. — 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. 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.

DECISION
YNARES-SANTIAGO, J p:

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 transaction 1 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 Decision 4and June 19, 2000, Resolution 5 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 VicenteReyes 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 1/2
share in the lot. Failing to settle the matter amicably, Ignacia filed on June 4, 1996 a complaint 15 for annulment of sale
against respondent spouses. The complaint was thereafter amended to include Vicente Reyes as one ofthe 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 VicenteReyes, 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 ofguardian
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 priceof the lot was P110,000.00 and ordered Vicente to return 1/2 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 MijaresNULL 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 IgnaciaAguilar-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 FlorentinaMijares 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 costsof 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.

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 nulland 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 ofP50,000.00 by way of moral and
exemplary damages, plus costs of this suit.

SO ORDERED. 21

On motion 22 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
FlorentinaMijares, from TCT No. 306083 to TCT No. 306087; and directing the Register ofDeeds 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 IgnaciaAguilar-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 she was substituted by her compulsory heirs. 25

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 January 26, 2000, the Court of Appeals
reversed and set aside the decision of the trial court. It ruled that notwithstanding the absenceof Ignacia's consent to the
sale, the same must be held valid in favor of respondents because they were innocent purchasers for value. 26 The
decretal portion of the appellate court's decision states —
 WHEREFORE, premises considered, the Decision appealed from and the 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;

2. Ordering Vicente Reyes to pay spouses Mijares the amount ofP30,000.00 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.

SO ORDERED. 27

Undaunted by the denial of their motion for reconsideration, 28 petitioners 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.

The issues for resolution are as follows: (1) What is the status of the sale of Lot No. 4349-B-2 to respondent spouses? (2)
Assuming that the sale is annullable, should it be annulled in its entirety or only with respect to the share of Ignacia? (3)
Are respondent spouses purchasers in good faith?

Articles 166 and 173 of the Civil Code, 29 the governing laws at the time the assailed sale was contracted, 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 partnership without the wife's consent. If she refuses unreasonably to give her
consent, the court may compel her to grant the same . . .

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 ofthe 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.

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 cases 30 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 ofa 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 173of the Civil Code of the
Philippines, to wit: HaAISC

Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment ofany 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 heirsafter the dissolution of the marriage, may
demand the value ofproperty fraudulently alienated by the husband.

This particular provision giving the wife ten (10) years . . . 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 ofanother, 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 MijaresLot 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 ofVicente's down payment in the
amount of P50,000.00; and (2) authorizing FlorentinaMijares 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 ofP110,000.00
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 ofLot 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 ofthe 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 children 44 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
VicenteReyes 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, 48involving 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 allegationof 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 ofloss. 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 amountsof 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 ofAppeals 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 oftitle 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 ofP110,000.00 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 IgnaciaAguilar-Reyes, the amounts of P25,000.00 as
moral damages and P25,000.00 as exemplary damages. TDCaSE

SO ORDERED.
 [G.R. No. L-28771. March 31, 1971.]

CORNELIA MATABUENA, plaintiff-appellant, vs. PETRONILA CERVANTES, defendant-appellee.

Alegre, Roces, Salazar & Sañez for plaintiff-appellant.

Fernando Gerona, Jr. for defendant-appellee.

SYLLABUS

1. CIVIL LAW; PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE; DONATIONS BY REASON OF
MARRIAGE; PROHIBITION AGAINST DONATION BETWEEN SPOUSES DURING MARRIAGE; APPLICABLE TO
COMMON LAW RELATIONSHIP. — 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 well as the dictates of morality require that
the same prohibition should apply to a common-law relationship. A 1954 Court of Appeals decision Buenaventura v.
Bautista, (50 O.G. 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 and improper pressure and influence upon the donor, a
prejudice deeply rooted in our ancient law; 'porque no se engañen despojandose el uno al otro por amor que han de
consuno,' [according to] the Partidas (Part. IV, Tit. Xl, LAW IV), reiterating the rationale 'Ne mutuato amore invicem
spoliarentur' of the Pandects (Bk 24, Tit. I, De donat, inter virum et uxorem); 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 already pointed out by Ulpian (in his lib. 32
ad Sabinum, fr. 1), it would not be just that such donations should subsist lest the condition of those who incurred guilt
should turn out to be better. So long as marriage remains the cornerstone of our family law, reason and morality alike
demand that the disabilities attached to marriage should likewise attach to concubinage.

2. ID.; SUCCESSION; INTESTATE SUCCESSION; SURVIVING SPOUSE; RULE WHERE A SISTER SURVIVES WITH
THE WIDOW. — The lack of validity of the donation made b~ the deceased to defendant Petronila Cervantes does not
necessarily result in plaintiff having exclusive right to the disputed property. Prior to the death of Felix Matabuena, the
relationship between him and the defendant was legitimated by their marriage on March 28. 1962. She is therefore his
widow. As provided in the Civil Code, she is entitled to one-half of the inheritance and the plaintiff, as the surviving
sister to the other half.

DECISION

FERNANDO, J p:

A question of first impression is before this Court in this litigation. We are called upon to decide whether the ban on a
donation between the spouses during a marriage applies to a common-law relationship. 1 The plaintiff, now appellant
Cornelia Matabuena, a sister to the deceased Felix Matabuena, maintains that a donation made while he was living
maritally without benefit of marriage to defendant, now appellee Petronila Cervantes, was void. Defendant would
uphold its validity. The lower court, after noting that it was made at a time before defendant was married to the donor,
sustained the latter's stand. Hence this appeal. The question, as noted, is novel in character, this Court not having had as
yet the opportunity of ruling on it. A 1954 decision of the Court of Appeals, Buenaventura v. Bautista, 2 by the then
Justice J. B. L. Reyes, who was appointed to this Court later that year, is indicative of the appropriate response that should
be given. The conclusion reached therein is that a donation between common-law spouses falls within the prohibition and
is "null and void as contrary to public policy." 3 Such a view merits fully the acceptance of this Court. The decision must
be reversed.

In the decision of November 23, 1965, the lower court, after stating that in plaintiff's complaint alleging absolute
ownership of the parcel of land in question, she specifically raised the question that the donation made by
FelixMatabuena to defendant Petronila Cervantes was null and void under the aforesaid article of the Civil Code and that
defendant on the other hand did assert ownership precisely because such a donation was made in 1956 and her marriage
to the deceased did not take place until 1962, noted that when the case was called for trial on November 19, 1965, there
was stipulation of facts which it quoted. 4 Thus: "The plaintiff and the defendant assisted by their respective counsels,
jointly agree and stipulate: (1) That the deceased Felix Matabuena owned the property in question; (2) That said
Felix Matabuena executed a Deed of Donation inter vivos in favor of Defendant, Petronila Cervantes over the parcel of
land in question on February 20, 1956, which same donation was accepted by defendant; (3) That the donation of the land
to the defendant which took effect immediately was made during the common law relationship as husband and wife
between the defendant-done and the now deceased donor and later said donor and done were married on March 28,
1962; (4) That the deceased Felix Matabuena died intestate on September 13, 1962; (5) That the plaintiff claims the
property by reason of being the only sister and nearest collateral relative of the deceased by virtue of an affidavit of self-
adjudication executed by her in 1962 and had the land declared in her name and paid the estate and inheritance taxes
thereon'" 5

The judgment of the lower court on the above facts was adverse to plaintiff. It reasoned out thus: "A donation under the
terms of Article 133 of the Civil Code is void if made between the spouses during the marriage. When the donation was
made by Felix Matabuena in favor of the defendant on February 20, 1956, Petronila Cervantes and Felix Matabuenawere
not yet married. At that time they were not spouses. They became spouses only when they married on March 28, 1962, six
years after the deed of donation had been executed." 6

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 well as the dictates of morality require that
the same prohibition should apply to a common-law relationship. We reverse.

1. As announced at the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura v. Bautista, 7interpreting a
similar provision of the old Civil Code 8 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 and improper pressure and influence upon the donor, a prejudice deeply rooted in our ancient law;
'porque no se engañen despojandose el uno al otro por amor que han de consuno [according to] the Partidas (Part IV, Tit.
XI, LAW IV), reiterating the rationale 'Ne mutuato amore invicem spoliarentur' of the Pandects (Bk. 24, Tit. 1, De donat,
inter virum et uxorem); then there is every reason to apply the same prohibitive policy to persons living together as
husband and wife without the 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 already pointed out by Ulpian (in his lib. 32 ad Sabinum,fr. 1), 'it would not be
just that such donations should subsist, lest the condition of those who incurred guilt should turn out to be better.' So long
as marriage remains the cornerstone of our family law, reason and morality alike demand that the disabilities attached to
marriage should likewise attach to concubinage." 9

2. It is hardly necessary to add that even in the absence of the above pronouncement, any other conclusion cannot stand
the test of scrutiny. It would be to indict the framers of the Civil Code for a failure to apply a laudable rule to a situation
which in its essentials cannot be distinguished. Moreover, if it is at all to be differentiated, the policy of the law which
embodies a deeply-rooted notion of what is just and what is right would be nullified if such irregular relationship instead
of being visited with disabilities would be attended with benefits. Certainly a legal norm should not be susceptible to such
a reproach. If there is ever any occasion where the principle of statutory construction that what is within the spirit of the
law is as much a part of it as what is written, this is it. Otherwise the basic purpose discernible in such codal provision
would not be attained. Whatever omission may be apparent in an interpretation purely literal of the language used must
be remedied by an adherence to its avowed objective. In the language of Justice Pablo: "El espiritu que informa la ley debe
ser la luz que ha de guiar a los tribunales en la aplicación de sus disposiciones.'' 10

3. The lack of validity of the donation made by the deceased to defendant Petronila Cervantes does not necessarily result
in plaintiff having exclusive right to the disputed property. Prior to the death of Felix Matabuena, the relationship
between him and the defendant was legitimated by their marriage on March 28, 1962. She is therefore his widow. As
provided for in the Civil Code, she is entitled to one-half of the inheritance and the plaintiff, as the surviving sister, to the
other half. 11

WHEREFORE, the lower court decision of November 23, 1965 dismissing the complaint with costs is reversed. The
questioned donation is declared void, with the rights of plaintiff and defendant as pro indiviso heirs to the property in
question recognized. The case is remanded to the lower court for its appropriate disposition in accordance with the above
opinion. Without pronouncement as to costs.
 [G.R. No. 133879. November 21, 2001.]

EQUATORIAL REALTY DEVELOPMENT, INC., petitioner, vs. MAYFAIR THEATER,

INC., respondent.

Estelito P. Mendoza for petitioner.

De Borja Medialdea Bello Guevarra & Gerodias Law Offices for private respondent.

SYNOPSIS

Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc. Their lease contracts
contained a provision granting Mayfair a right of first refusal to purchase the subject properties. However, before the
contracts ended, the subject properties were sold by Carmelo to Equatorial Realty Development, Inc. which prompted
Mayfair to file a case for the annulment of the Deed of Absolute Sale between Carmelo and Equatorial, specific
performance and damages. In 1996, the Court ruled in favor of Mayfair. Barely five months after Mayfair had submitted
its Motion for Execution, Equatorial filed an action for collection of sum of money against Mayfair claiming payment of
rentals or reasonable compensation for the defendant's use of the subject premises after its lease contracts had expired.
The lower court debunked the claim of Equatorial for unpaid back rentals, holding that the rescission of the Deed of
Absolute Sale in the mother case did not confer on Equatorial any vested or residual propriety rights, even in expectancy.
It further ruled that the Court categorically stated that the Deed of Absolute Sale had been rescinded subjecting the
present complaint to res judicata. Hence, Equatorial filed the present petition.

Theoretically, a rescissible contract is valid until rescinded. However, this general principle is not decisive to the issue of
whether Equatorial ever acquired the right to collect rentals. What is decisive is the civil law rule that ownership is
acquired, not by mere agreement, but by tradition or delivery. Under the factual environment of this controversy as found
by this Court in the mother case, Equatorial was never put in actual and effective control or possession of the property
because of Mayfair's timely objection. In the mother case, this Court categorically denied the payment of interest, a fruit of
ownership. By the same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's en
banc Decision, which had long become final.

SYLLABUS

1. CIVIL LAW; PROPERTY; CIVIL FRUIT OF OWNERSHIP; RENTALS. — Rent is a civil fruit that belongs to the owner
of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time of
the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property
during that period.

2. ID.; SALES; OWNERSHIP OF THE THING SOLD IS TRANSFERRED, NOT BY CONTRACT ALONE, BUT BY
TRADITION OR DELIVERY. — By a contract of sale, "one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent."
Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him "in any of the ways
specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from
the vendor to the vendee." This right is transferred, not by contract alone, but by tradition or delivery. Non nudis pactis sed
traditione dominia rerum transferantur.

3. ID.; ID.; ID.; THERE IS DELIVERY WHEN THE THING SOLD IS PLACED UNDER THE CONTROL AND
POSSESSION OF THE VENDEE. — [T]here is said to be delivery if and when the thing sold "is placed in the control and
possession of the vendee." Thus, it has been held that while the execution of a public instrument of sale is recognized by
law as equivalent to the delivery of the thing sold, such constructive or symbolic delivery, being merely presumptive, is deemed
negated by the failure of the vendee to take actual possession of the land sold. Delivery has been described as a composite act, a
thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the
title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural
sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law
on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of
the control and custody of the property on the part of the vendor, and the assumption of the same by the
vendee." aHDTAI

4. ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. — [T]heoretically, a rescissible contract is valid until rescinded.
However, this general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals.
What is decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery.
Under the factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in
actual and effective control or possession of the property because of Mayfair's timely objection.

5. ID.; ID.; ID.; EXECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE DELIVERY HOLDS TRUE
ONLY WHEN THERE IS NO IMPEDIMENT THAT MAY PREVENT THE PASSING OF THE PROPERTY FROM THE
VENDOR TO THE VENDEE. — From the peculiar facts of this case, it is clear that petitioner never took actual
control and possession of the property sold, in view of respondent's timely objection to the sale and the continued actual
possession of the property. The objection took the form of a court action impugning the sale which, as we know, was
rescinded by a judgment rendered by this Court in the mother case. It has been held that the execution of a contract of sale
as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent the
passing of the property from the hands of the vendor into those of the vendee. When there is such impediment, "fiction
yields to reality — the delivery has not been effected." Hence, respondent's opposition to the transfer of the property by
way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into
the latter's hands.

6. ID.; ID.; EXECUTION OF PUBLIC INSTRUMENT GIVES RISE ONLY TO A PRIMA FACIE PRESUMPTION OF
DELIVERY. — The execution of a public instrument gives rise, . . . only to a prima facie presumption of delivery. Such
presumption is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by other
means it is shown that such delivery was not effected, because a third person was actually in possession of the thing. In the latter
case, the sale cannot be considered consummated.

7. ID.; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; NOT ONLY THE LAND AND BUILDING
SOLD SHALL BE RETURNED TO THE SELLER BUT ALSO THE RENTAL PAYMENTS PAID, IF ANY. — [T]he point
may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a right to the fruits of the thing sold
from the time the obligation to deliver the property to petitioner arose. That time arose upon the perfection of the
Contract of Sale on July 30, 1978, from which moment the laws provide that the parties to a sale may reciprocally demand
performance. Does this mean that despite the judgment rescinding the sale, the right to the fruits belonged to, and
remained enforceable by, Equatorial? Article 1385 of the Civil Code answers this question in the negative, because
"[r]escission creates the obligation to return the things which were the object of the contract, together with their fruits, and
the price with its interest; . . . ." Not only the land and building sold, but also the rental payments paid, if any, had to be returned by
the buyer.

8. ID.; SALES; CONTRACT OF SALE; RENTAL PAYMENTS MADE SHOULD NOT BE CONSTRUED AS A
RECOGNITION OF THE BUYER AS NEW ORDER BUT MERELY TO AVOID IMMINENT EVICTION; CASE AT BAR.
— The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean either actual
delivery or ipso factorecognition of Equatorial's title. The CA Records of the mother case show that Equatorial — as alleged
buyer of the disputed properties and as alleged successor-in-interest of Carmelo's rights as lessor — submitted two
ejectment suits against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed as Civil Case No.
121570 on July 9, 1987; and the second, as Civil Case No. 131944 on May 28, 1990. Mayfair eventually won them both.
However, to be able to maintain physical possession of the premises while awaiting the outcome of the mother case, it
had no choice but to pay the rentals. The rental payments made by Mayfair should not be construed as a recognition of
Equatorial as the new owner. They were made merely to avoid imminent eviction.

9. STATUTORY CONSTRUCTION; GENERAL PROPOSITIONS DO NOT DECIDE SPECIFIC CASES. — As pointed out
by Justice Holmes, general propositions do not decide specific cases. Rather, "laws are interpreted in the context of the
peculiar factual situation of each case. Each case has its own flesh and blood and cannot be decided on the basis of
isolated clinical classroom principles."
10. CIVIL LAW; SALES; VALID FROM INCEPTION BUT JUDICIALLY RESCINDED BEFORE IT COULD BE
CONSUMMATED; CASE AT BAR. — [T]he sale to Equatorial may have been valid from inception, but it was judicially
rescinded before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as
erroneously claimed by the trial court, but because the sale was not consummated by a legally effective delivery of the
property sold.

11. ID.; ID.; BUYER IN BAD FAITH; NOT ENTITLED TO ANY BENEFIT; ENTITLED SOLELY TO THE RETURN OF
THE PURCHASE PRICE; MUST BEAR ANY LOSS. — [A]ssuming for the sake of argument that there was valid delivery,
petitioner is not entitled to any benefits from the "rescinded" Deed of Absolute Sale because of its bad faith. This being the
law of the mother case decided in 1996, it may no longer be changed because it has long become final and executory. . . .
Thus, petitioner was and still is entitled solely to the return of the purchase price it paid to Carmelo; no more, no less. This
Court has firmly ruled in the mother case that neither of them is entitled to any consideration of equity, as both "took
unconscientious advantage of Mayfair." In the mother case, this Court categorically denied the payment of interest, a fruit of
ownership. By the same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's en banc Decision,
which has long become final. Petitioner's claim of reasonable compensation for respondent's use and occupation of the
subject property from the time the lease expired cannot be countenanced. If it suffered any loss, petitioner must bear it in
silence, since it had wrought that loss upon itself.Otherwise, bad faith would be rewarded instead of punished. ICaDHT

12. REMEDIAL LAW; CIVIL PROCEDURE; EFFECT OF FINALITY OF JUDGMENT; RES JUDICATA; ELUCIDATED. —
Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a court of competent
jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between
the same parties and for the same cause. Thus, "[a] final judgment on the merits rendered by a court of competent
jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent
actions involving the same claim, demand, or cause of action." Res judicata is based on the ground that "the party to be
affected, or some other with whom he is in privity, has litigated the same matter in a former action in a court of competent
jurisdiction, and should not be permitted to litigate it again." It frees the parties from undergoing all over again the rigors
of unnecessary suits and repetitive trials. At the same time, it prevents the clogging of court dockets. Equally important, it
stabilizes rights and promotes the rule of law.

13. ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. — Suffice it to say that, clearly, our ruling in the mother case bars
petitioner from claiming back rentals from respondent. Although the court a quo erred when it declared "void from
inception" the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion supports the grant of the
Motion to Dismiss on the ground that our prior judgment in GR No. 106063 has already resolved the issue of back rentals.
On the basis of the evidence presented during the hearing of Mayfair's Motion to Dismiss, the trial court found that the
issue of ownership of the subject property has been decided by this Court in favor of Mayfair. . . . Hence, the trial court
decided the Motion to Dismiss on the basis of res judicata, even if it erred in interpreting the meaning of "rescinded" as
equivalent to "void." In short, it ruled on the ground raised; namely, bar by prior judgment. By granting the Motion,
it disposed correctly, even if its legal reason for nullifying the sale was wrong.

MELO, J., concurring opinion:

1. REMEDIAL LAW; CIVIL PROCEDURE; FINAL AND EXECUTORY DECISION SHOULD BE RESPECTED. —
Equatorial profited from the use of the building for all the years when it had no right or, as stated in our decision, had an
inferior right over the property. Mayfair, which had the superior right, continued to pay rent but it was the rate fixed in
the lease contract with Carmelo. We see no reason for us to now deviate from the reasoning given in our main decision.
The decision has been final and executory for five (5) years and petitioner has failed to present any valid and reasonable
ground to reconsider, modify or reverse it. Let that which has been fairly adjudicated remain final.

2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; REMAINS VALID AND BINDING
UPON THE PARTIES UNTIL THE SAME IS RESCINDED; NOT APPLICABLE TO A PERSON WHO IS NOT A PRIVY
TO A CONTRACT. — Equatorial relies on the Civil Code provision on rescissible contracts to bolster its claim. Its
argument is that a rescissible contract remains valid and binding upon the parties thereto until the same is rescinded in an
appropriate judicial proceeding. Equatorial conveniently fails to state that the July 31, 1978 Deed of Absolute Sale was
between Equatorial and Carmelo only. Respondent Mayfair was not a party to the contract. The deed of sale was
surreptitiously entered into between Carmelo and Equatorial behind the back and in violation of the rights of Mayfair.
Why should the innocent and wronged party now be made to bear the consequences of an unlawful contract to which it
was not privy? Insofar as Equatorial and Carmelo are concerned, their 1978 contract may have validly transferred
ownership from one to the other. But not as far as Mayfair is concerned.

3. ID.; ID.; ID.; NON-EXISTENT OR VOID FROM ITS INCEPTION AS FAR AS THE INJURED THIRD PARTY IS
CONCERNED. — Mayfair starts its arguments with a discussion of Article 1381 of the Civil Code that contracts entered
into in fraud of creditors are rescissible. There is merit in Mayfair's contention that the legal effects are not restricted to the
contracting parties only. On the contrary, the rescission is for the benefit of a third party, a stranger to the contract.
Mayfair correctly states that as far as the injured third party is concerned, the fraudulent contract, once rescinded, is non-
existent or void from its inception. Hence, from Mayfair's standpoint, the deed of absolute sale which should not have
been executed in the first place by reason of Mayfair's superior right to purchase the property and which deed was
cancelled for that reason by this Court, is legally non-existent. There must be a restoration of things to the condition prior
to the celebration of the contract[.]

4. ID.; ID.; ID.; INJURED THIRD PARTY SHOULD NOT BE GIVEN AN EMPTY OR VACUOUS VICTORY. — [The]
Court emphasized in the main case that the contract of sale between Equatorial and Carmelo was characterized by bad
faith. The Court described the sale as "fraudulent" in its 1996 decision. It stated that the damages which Mayfair suffered
are in terms of actual injury and lost opportunities, emphasizing that Mayfair should not be given an empty or vacuous
victory. Moreover, altogether too many suits have been filed in this case. Four separate petitions have come before us,
necessitating full length decisions in at least 3 of them. The 1996 decision stressed that the Court has always been against
multiplicity of suits. TADIHE

5. ID.; ID.; ID.; BAD FAITH OF THE PRIVIES ON THE EXECUTION OF THE DEED OF SALE WAS PRESENT. — There
was bad faith from the execution of the deed of sale because Equatorial and Carmelo affirmatively operated with furtive
design or with some motive of self-interest or ill-will or for ulterior purposes (Air France vs. Carrascoso, 18 SCRA 166
[1966]). There was breach of a known duty by the two parties to the unlawful contract arising from motives of interests or
ill-will calculated to cause damages to another (Lopez vs. Pan American World Airways, 123 Phil. 264 [1966]).

6. ID.; ID.; ID.; ID.; PRIVIES COULD NOT AVAIL OF ANY CONSIDERATIONS BASED ON EQUITY. — We ruled that
because of bad faith, neither may Carmelo and Equatorial avail themselves of considerations based on equity which
might warrant the grant of interests and, in this case, unconscionably increased rentals. . . . Considering the judgments in
our 3 earlier decisions, Mayfair is under no obligation to pay any interests, whether based on law or equity, to Carmelo or
Equatorial. Mayfair is the wronged entity, the one which has suffered injury since 1978 or for the 23 years it was deprived
of the property. Equatorial has received rentals and other benefits from the use of the property during these 23 years,
rents and benefits which would have accrued to Mayfair if its rights had not been violated. There is no obligation on the
part of respondent Mayfair to pay any increased, additional, back or future rentals or interests of any kind to petitioner
Equatorial under the circumstances of this case.

7. ID.; ID.; ID.; ID.; NATURAL PERSON AFFECTED IS EVEN ENTITLED TO MORAL DAMAGES. — [I]f Mayfair were a
natural person, it could very well have asked for moral damages instead of facing a lengthy and expensive suit to pay
rentals many times higher than those stipulated in the contract of lease. Under the Civil Code, Mayfair is the victim in a
breach of contract where Carmelo and Equatorial acted fraudulently and in bad faith.

VITUG, J., dissenting opinion:

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CLASSIFICATION OF DEFECTIVE CONTRACTS. — Civil Law, in
its usual sophistication, classifies defective contracts (unlike the seemingly generic treatment in Common Law), into, first,
the rescissible contracts, which are the least infirm; followed by, second, the voidable contracts; then, third, the
unenforceable contracts; and, finally, fourth, the worst of all or the void contracts.

2. ID.; ID.; RESCISSIBLE CONTRACTS; VALID, BINDING AND EFFECTIVE UNTIL RESCINDED. — In terms of their
efficaciousness, rescissible contracts are regarded, among the four, as being the closest to perfectly executed contracts. A
rescissible contract contains all the requisites of a valid contract and are considered legally binding, but by reason of
injury or damage to either of the contracting parties or to third persons, such as creditors, it is susceptible to rescission at
the instance of the party who may be prejudiced thereby. A rescissible contract is valid, binding and effective until it is
rescinded. The proper way by which it can be assailed is by an action for rescission based on any of the causes expressly
specified by law.

3. ID.; ID.; ID.; VALIDLY TRANSFERRED OWNERSHIP OF THE PROPERTY TO THE BUYER FROM THE TIME THE
DEED OF SALE WAS EXECUTED. — [W]hen the Court held the contract to be "deemed rescinded" in G.R. No. 106063,
the Court did not mean a "declaration of nullity" of the questioned contract. The agreement between petitioner and
Carmelo, being efficacious until rescinded, validly transferred ownership over the property to petitioner from the time the
deed of sale was executed in a public instrument on 30 July 1978 up to the time that the decision in G.R. No. 106063
became final on 17 March 1997. It was only from the latter date that the contract had ceased to be efficacious. The fact that
the subject property was in the hands of a lessee, or for that matter of any possessor with a juridical title derived from an
owner, would not preclude a conferment of ownership upon the purchaser nor be an impediment from the transfer of
ownership from the seller to the buyer.

4. ID.; ID.; ID.; ID.; GOOD FAITH AND BAD FAITH PLAY NO ROLE; BUYER IS ENTITLED TO ALL INCIDENTS OF
OWNERSHIP INCLUSIVE OF THE RIGHT TO THE FRUITS OF THE PROPERTY; APPLICABLE IN CASE AT BAR. —
Petitioner, being the owner of the property (and none other) until the judicial rescission of the sale in its favor, was
entitled to all incidents of ownership inclusive of, among its other elements, the right to the fruits of the property. Rentals
or rental value over that disputed property from 30 July 1978 up to 17 March 1997 should then properly pertain to
petitioner. In this respect, the much abused terms of "good faith" or "bad faith" play no role; ownership, unlike other
concepts, is never described as being either in good faith or in bad faith.

5. ID.; ID.; RESCISSION OF CONTRACTS DIFFERENTIATED FROM THE RESOLUTION OF RECIPROCAL

OBLIGATIONS. — The remedy of rescission in the case of rescissible contracts under Article 1381 is not to be confused
with the remedy of rescission, or more properly termed "resolution," of reciprocal obligations under Article 1191 of the
Civil Code. While both remedies presuppose the existence of a juridical relation that, once rescinded, would require
mutual restitution, it is basically, however, in this aspect alone when the two concepts coincide. Resolution under Article
1191 would totally release each of the obligors from compliance with their respective covenants. It might be worthwhile
to note that in some cases, notably Ocampo vs. Court of Appeals, and Velarde vs. Court of Appeals, where the Court referred to
rescission as being likened to contracts which are deemed "void at inception" the focal point is the breach of the obligation
involved that would allow resolution pursuant to Article 1191 of the Civil Code. The obvious reason is that when parties
are reciprocally bound, the refusal or failure of one of them to comply with his part of the bargain should allow the other
party to resolve their juridical relationship rather than to leave the matter in a state of continuing uncertainty. The result
of the resolution, when decreed, renders the reciprocal obligations inoperative "at inception." Upon the other hand, the
rescission of a rescissible contract under Article 1381, taken in conjunction with Article 1385, is a relief which the law
grants for the protection of a contracting party or a third person from injury and damage that the contract may cause, or
to protect some incompatible and preferential right created by the contract. Rescissible contracts are not void ab initio, and
the principle, "quod nullum est nullum producit effectum," in void and inexistent contracts is inapplicable. Until set aside in
an appropriate action rescissible contracts are respected as being legally valid, binding and in force. It would be wrong to
say that rescissible contracts produce no legal effects whatsoever and that no acquisition or loss of rights could meanwhile
occur and be attributed to the terminated contract. The effects of the rescission, prospective in nature, can come about
only upon its proper declaration as such. cHCaIE

SANDOVAL-GUTIERREZ, J., dissenting opinion:

1. CIVIL LAW; SALES; OWNERSHIP IS TRANSFERRED TO THE VENDEE BY MEANS OF DELIVERY. — Firmly
incorporated in our Law on Sales is the principle that ownership is transferred to the vendee by means of delivery, actual
or constructive. There is actual delivery when the thing sold is placed in the control and possession of the vendee. Upon
the other hand, there is constructive delivery when the delivery of the thing sold is represented by other signs or acts
indicative thereof. Article 1498 of the Civil Code is in point. It provides that "When the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred."

2. ID.; ID.; ID.; PRESENT IN CASE AT BAR. — To say that this Court found no transfer of ownership between Equatorial
and Carmelo is very inaccurate. For one, this Court, in disposing of G.R. No. 106063 explicitly ordered Equatorial to
"execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the disputed lots." I suppose this
Court would not have made such an order if it did not recognize the transfer of ownership from Carmelo to Equatorial
under the contract of sale. For why would the Court order Equatorial to execute the deeds and documents necessary to
return ownership to Carmelo if, all along, it believed that ownership remained with Carmelo? Furthermore, this Court
explicitly stated in the Decision that Equatorial received rentals from Mayfair during the pendency of the case. . . .
Obviously, this Court acknowledged the delivery of the property from Carmelo to Equatorial. As aptly described by
Justice Panganiban himself, the sale between Carmelo and Equatorial had not only been "perfected" but also
"consummated."

3. ID.; PROPERTY; RECEIVING RENTALS IS AN EXERCISE OF ACTUAL POSSESSION. — That actual possession of the
property was turned over by Carmelo to Equatorial is clear from the fact that the latter received rents from Mayfair.
Significantly, receiving rentals is an exercise of actual possession. Possession, as defined in the Civil Code, is the holding of a
thing or the enjoyment of a right. It may either be by material occupation or by merely subjecting the thing or right to the
action of our will. Possession may therefore be exercised through one's self or through another. It is not necessary that the
person in possession should himself be the occupant of the property, the occupancy can be held by another in the name of
the one who claims possession. In the case at bench, Equatorial exercised possession over the disputed property through
Mayfair. When Mayfair paid its monthly rentals to Equatorial, the said lessee recognized the superior right of Equatorial
to the possession of the property. And even if Mayfair did not recognize Equatorial's superior right over the disputed property, the
fact remains that Equatorial was then enjoying the fruits of its possession.

4. ID.; ID.; DEGREES OF POSSESSION. — [I]t will be of aid to lay down the degrees of possession. The first degree is the
mere holding, or possession without title whatsoever, and in violation of the right of the owner. Here, both the possessor
and the public know that the possession is wrongful. An example of this is the possession of a thief or a usurper of land.
The second is possession with juridical title, but not that of ownership. This is possession peaceably acquired, such that of a
tenant, depositary, or pledge. The third is possession with a just title, or a title sufficient to transfer ownership, but not
from the true owner. An example is the possession of a vendee of a piece of land from one who pretends to be the owner
but is in fact not the owner thereof. And the fourth is possession with a just title from the true owner. This is possession that
springs from ownership. Undoubtedly, Mayfair's possession is by virtue of juridical title under the contract of lease, while
that of Equatorial is by virtue of its right of ownership under the contract of sale.

5. ID.; SALES; TIMELY OBJECTION AND CONTINUED ACTUAL POSSESSION OF THE PROPERTY OF THE INJURED
THIRD PARTY DID NOT PREVENT THE PASSING OF THE PROPERTY FROM THE SELLER TO THE BUYER; CASE
AT BAR. — The fact that Mayfair has remained in "actual possession of the property," after the perfection of the contract
of sale between Carmelo and Equatorial up to the finality of this Court's Decision in G.R. No. 106063 (and even up to the
present), could not prevent the consummation of such contract. As I have previously intimated, Mayfair's possession is
not under a claim of ownership. It cannot in any way clash with the ownership accruing to Equatorial by virtue of the
sale. The principle has always been that the one who possesses as a mere holder acknowledges in another a superior right
or right of ownership. A tenant possession of the thing leased as a mere holder, so does the usufructuary of the thing in
usufruct; and the borrower of the thing loaned in commodatum. None of these holders asserts a claim of ownership in
himself over the thing. Similarly, Mayfair does not claim ownership, but only possession as a lessee with the prior right to
purchase the property. In G.R. No. 106063, Mayfair's main concern in its action for specific performance was the
recognition of its right of first refusal. Hence, the most that Mayfair could secure from the institution of its suit was to be
allowed to exercise its right to buy the property upon rescission of the contract of sale. Not until Mayfair actually exercised
what it was allowed to do by this Court in G.R. No. 106063, specifically to buy the disputed property for P11,300,000.00, would it
have any right of ownership. How then, at that early stage, could Mayfair's action be an impediment in the consummation of
the contract between Carmelo and Equatorial? Pertinently, it does not always follow that, because a transaction is
prohibited or illegal, title, as between the parties to the transaction, does not pass from the seller, donor, or transferor to
the vendee, donee or transferee.

6. ID.; ID.; ID.; BUYER HAS THE RIGHT TO BE PAID WHATEVER MONTHLY RENTALS DURING THE EXISTENCE
OF THE CONTRACT. — [C]onformably to the foregoing disquisition, I maintain that Equatorial has the right to be paid
whatever monthly rentals during the period that the contract of sale was in existence minus the rents already paid.
In Guzman vs.Court of Appeals, this Court decreed that upon the purchase of the leased property and the proper notice by
the vendee, the lessee must pay the agreed monthly rentals to the new owner since, by virtue of the sale, the vendee steps
into the shoes of the original lessor to whom the lessee bound himself to pay. His belief that the subject property should
have been sold to him does not justify the unilateral withholding of rental payments due to the new owner of the
property. It must be stressed that under Article 1658 of the Civil Code, there are only two instances wherein the lessee
may suspend payment of rent, namely: in case the lessor fails to make the necessary repairs or to maintain the lessee in
peaceful and adequate enjoyment of the property leased. In this case, the fact remains that Mayfair occupied the leased
property. It derived benefit from such occupation, thus it should pay the corresponding rentals due. Nemo cum alterius
detrimento locupletari potest. No one shall enrich himself at the expense of another. TcHCIS

7. ID.; CONTRACTS; PRESENCE OF BAD FAITH DOES NOT PREVENT THE AWARD OF RENT. — Neither should the
presence of bad faith prevent the award of rent to Equatorial. While Equatorial committed bad faith in entering into the
contract with Carmelo, it has been equitably punished when this Court rendered the contract rescissible. That such bad
faith was the very reason why the contract was declared rescissible is evident from the Decision itself. To utilize it again,
this time, to deprive Equatorial of its entitlement to the rent corresponding to the period during which the contract was
supposed to validly exist, would not only be unjust, it would also disturb the very nature of a rescissible contract.

8. ID.; ID.; RESCISSIBLE CONTRACT AND VOID CONTRACT; DIFFERENTIATED. — Articles 1380 through 1389 of the
Civil Code deal with rescissible contracts. A rescissible contract is one that is validly entered into, but is subsequently
terminated or rescinded for causes provided for by law. . . . Necessarily, therefore, a rescissible contract remains valid and
binding upon the parties thereto until the same is rescinded in an appropriate judicial proceeding. On the other hand, a void
contract, which is treated in Articles 1490 through 1422 of the Civil Code, is inexistent and produces no legal effect
whatsoever. The contracting parties are not bound thereby and such contract is not subject to ratification.

9. ID.; ID.; RESCISSIBLE CONTRACT; VALIDLY TRANSFERRED OWNERSHIP OF THE SUBJECT PROPERTY TO THE
BUYER. — This Court did not declare the Deed of Absolute Sale between Carmelo and Equatorial void but merely
rescissible. Consequently, the contract was, at inception, valid and naturally, it validly transferred ownership of the subject
property to Equatorial. It bears emphasis that Equatorial was not automatically divested of its ownership. Rather, as clearly
directed in the dispositive portion of our Decision, Carmelo should return the purchase price to Equatorial which, in
turn, must execute such deeds and documents necessary to enable Carmelo to reacquire its ownership of the property.

10. ID.; ID.; ID.; ID.; BUYER HAS THE RIGHT TO DEMAND PAYMENT OF RENTALS FROM THE LESSEE WITH
RIGHT TO REPURCHASE. — I must reiterate that Equatorial purchased the subject property from Carmelo and became
its owner on July 31, 1978. While the contract of sale was "deemed rescinded" by this Court in G.R. No. 106063,
nevertheless the sale had remained valid and binding between the contracting parties until March 17, 1997 when the
Decision in G.R. No. 106063 became final. Consequently, being the owner, Equatorial has the right to demand from Mayfair
payment of rentals corresponding to the period from July 31, 1978 up to March 17, 1997.

DECISION

PANGANIBAN, J p:

General propositions do not decide specific cases. Rather, laws are interpreted in the context of the peculiar factual
situation of each proceeding. Each case has its own flesh and blood and cannot be ruled upon on the basis of isolated
clinical classroom principles.

While we agree with the general proposition that a contract of sale is valid until rescinded, it is equally true that
ownership of the thing sold is not acquired by mere agreement, but by tradition or delivery. The peculiar facts of the
present controversy as found by this Court in an earlier relevant Decision show that delivery was not actually effected; in
fact, it was prevented by a legally effective impediment. Not having been the owner, petitioner cannot be entitled to the
civil fruits of ownership like rentals of the thing sold. Furthermore, petitioner's bad faith, as again demonstrated by the
specific factual milieu of said Decision, bars the grant of such benefits. Otherwise, bad faith would be rewarded instead of
punished.
 The Case
Filed before this Court is a Petition for Review 1 under Rule 45 of the Rules of Court, challenging the March 11, 1998
Order 2 of the Regional Trial Court of Manila (RTC), Branch 8, in Civil Case No. 97-85141. The dispositive portion of the
assailed Order reads as follows:

"WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby GRANTED, and the
complaint filed by plaintiff Equatorial is hereby DISMISSED." 3

Also questioned is the May 29, 1998 RTC Order 4 denying petitioner's Motion for Reconsideration.

The Facts
The main factual antecedents of the present Petition are matters of record, because it arose out of an earlier case decided
by this Court on November 21, 1996, entitled Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. 5(henceforth
referred to as the "mother case"), docketed as GR No. 106063. IHEAcC

Carmelo & Bauermann, Inc. ("Carmelo") used to own a parcel of land, together with two 2-storey buildings constructed
thereon, located at Claro M. Recto Avenue, Manila, and covered by TCT No. 18529 issued in its name by the Register of
Deeds of Manila.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. ("Mayfair") for a period of 20 years.
The lease covered a portion of the second floor and mezzanine of a two-storey building with about 1,610 square meters of
floor area, which respondent used as a movie house known as Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Contract of Lease with Carmelo for the lease of another
portion of the latter's property — namely, a part of the second floor of the two-storey building, with a floor area of about
1,064 square meters; and two store spaces on the ground floor and the mezzanine, with a combined floor area of about 300
square meters. In that space, Mayfair put up another movie house known as Miramar Theater. The Contract of Lease was
likewise for a period of 20 years.

Both leases contained a provision granting Mayfair a right of first refusal to purchase the subject properties. However, on
July 30, 1978 — within the 20-year-lease term — the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. ("Equatorial") for the total sum of P11,300,000, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional Trial Court of
Manila (Branch 7) for (a) the annulment of the Deed of Absolute Sale between Carmelo and Equatorial, (b) specific
performance, and (c) damages. After trial on the merits, the lower court rendered a Decision in favor of Carmelo and
Equatorial. This case, entitled "Mayfair Theater, Inc. v. Carmelo and Bauermann, Inc., et al.," was docketed as Civil Case No.
118019.

On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA) completely reversed and set aside the
judgment of the lower court.

The controversy reached this Court via GR No. 106063. In this mother case, it denied the Petition for Review in this wise:

"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23, 1992, in
CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial
Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded; Carmelo &
Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The
latter is directed to execute the deeds and documents necessary to return ownership to Carmelo &
Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy
the aforesaid lots for P11,300,000.00." 6

The foregoing Decision of this Court became final and executory on March 17, 1997. On April 25, 1997, Mayfair filed a
Motion for Execution, which the trial court granted.

However, Carmelo could no longer be located. Thus, following the order of execution of the trial court, Mayfair deposited
with the clerk of court a quo its payment to Carmelo in the sum of P11,300,000 less P847,000 as withholding tax. The lower
court issued a Deed of Reconveyance in favor of Carmelo and a Deed of Sale in favor of Mayfair. On the basis of these
documents, the Registry of Deeds of Manila canceled Equatorial's titles and issued new Certificates of Title 7 in the name
of Mayfair. TAIaHE

Ruling on Equatorial's Petition for Certiorari and Prohibition contesting the foregoing manner of execution, the CA in its
Resolution of November 20, 1998, explained that Mayfair had no right to deduct the P847,000 as withholding tax. Since
Carmelo could no longer be located, the appellate court ordered Mayfair to deposit the said sum with the Office of the
Clerk of Court, Manila, to complete the full amount of P11,300,000 to be turned over to Equatorial.

Equatorial questioned the legality of the above CA ruling before this Court in GR No. 136221 entitled "Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc." In a Decision promulgated on May 12, 2000, 8 this Court directed the trial court
to follow strictly the Decision in GR No. 106063, the mother case. It explained its ruling in these words:

"We agree that Carmelo and Bauermann is obliged to return the entire amount of eleven million three
hundred thousand pesos (P11,300,000.00) to Equatorial. On the other hand, Mayfair may not deduct
from the purchase price the amount of eight hundred forty-seven thousand pesos (P847,000.00) as
withholding tax. The duty to withhold taxes due, if any, is imposed on the seller, Carmelo and
Bauermann, Inc." 9

Meanwhile, on September 18, 1997 — barely five months after Mayfair had submitted its Motion for Execution before the
RTC of Manila, Branch 7 — Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action for the collection
of a sum of money against Mayfair, claiming payment of rentals or reasonable compensation for the defendant's use of
the subject premises after its lease contracts had expired. This action was the progenitor of the present case.

In its Complaint, Equatorial alleged among other things that the Lease Contract covering the premises occupied by
Maxim Theater expired on May 31, 1987, while the Lease Contract covering the premises occupied by Miramar Theater
lapsed on March 31, 1989. 10 Representing itself as the owner of the subject premises by reason of the Contract of Sale on
July 30, 1978, it claimed rentals arising from Mayfair's occupation thereof.

Ruling of the RTC Manila, Branch 8

As earlier stated, the trial court dismissed the Complaint via the herein assailed Order and denied the Motion for
Reconsideration filed by Equatorial. 11

The lower court debunked the claim of petitioner for unpaid back rentals, holding that the rescission of the Deed of
Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary rights, even in
expectancy.

In granting the Motion to Dismiss, the court a quo held that the critical issue was whether Equatorial was the owner of the
subject property and could thus enjoy the fruits or rentals therefrom. It declared the rescinded Deed of Absolute Sale as
"void at its inception as though it did not happen." EScHDA

The trial court ratiocinated as follows:

"The meaning of rescind in the aforequoted decision is to set aside. In the case of Ocampo v. Court of
Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court held that, 'to rescind is to declare a contract
void in its inception and to put an end as though it never were. It is not merely to terminate it and
release parties from further obligations to each other but to abrogate it from the beginning and restore
parties to relative positions which they would have occupied had no contract ever been made.'

"Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial and Carmelo dated
July 31, 1978is void at its inception as though it did not happen.

"The argument of Equatorial that this complaint for back rentals as 'reasonable compensation for use of
the subject property after expiration of the lease contracts presumes that the Deed of Absolute Sale dated
July 30, 1978 from whence the fountain of Equatorial's alleged property rights flows is still valid and
existing.

xxx xxx xxx

 "The subject Deed of Absolute Sale having been rescinded by the Supreme Court, Equatorial is not the
owner and does not have any right to demand backrentals from the subject property. . . . ." 12

The trial court added: "The Supreme Court in the Equatorial case, G.R. No. 106063, has categorically stated that the Deed of
Absolute Sale dated July 31, 1978 has been rescinded subjecting the present complaint to res judicata." 13

Hence, the present recourse. 14

Issues
Petitioner submits, for the consideration of this Court, the following issues: 15

"A.

The basis of the dismissal of the Complaint by the Regional Trial Court not only disregards basic
concepts and principles in the law on contracts and in civil law, especially those on rescission and its
corresponding legal effects, but also ignores the dispositive portion of the Decision of the Supreme
Court in G.R. No. 106063 entitled 'Equatorial Realty Development, Inc. & Carmelo & Bauermann, Inc. vs.
Mayfair Theater, Inc.' cSITDa

"B.

The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor of petitioner by
Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises used and occupied by respondent,
having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063, is 'void at its inception as
though it did not happen.'

"C.

The Regional Trial Court likewise erred in holding that the aforesaid Deed of Absolute Sale, dated July
31, 1978, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063, petitioner 'is not
the owner and does not have any right to demand backrentals from the subject property,' and that the
rescission of the Deed of Absolute Sale by the Supreme Court does not confer to petitioner 'any vested
right nor any residual proprietary rights even in expectancy.'

"D.

The issue upon which the Regional Trial Court dismissed the civil case, as stated in its Order of March
11, 1998, was not raised by respondent in its Motion to Dismiss.

"E.

The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-85141 is not one of
the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the 1997 Rules of Civil Procedure."

Basically, the issues can be summarized into two: (1) the substantive issue of whether Equatorial is entitled to back
rentals; and (2) the procedural issue of whether the court a quo's dismissal of Civil Case No. 97-85141 was based on one of
the grounds raised by respondent in its Motion to Dismiss and covered by Rule 16 of the Rules of Court.

This Court's Ruling

The Petition is not meritorious.

First Issue:
Ownership of Subject Properties
We hold that under the peculiar facts and circumstances of the case at bar, as found by this Court en banc in its Decision
promulgated in 1996 in the mother case, no right of ownership was transferred from Carmelo to Equatorial in view of a
patent failure to deliver the property to the buyer.

Rental — a Civil
Fruit of Ownership
To better understand the peculiarity of the instant case, let us begin with some basic parameters. Rent is a civil fruit 16that
belongs to the owner of the property producing it 17 by right of accession. 18 Consequently and ordinarily, the rentals
that fell due from the time of the perfection of the sale to petitioner until its rescission by final judgment should belong to
the owner of the property during that period.

By a contract of sale, "one of the contracting parties obligates himself to transfer ownership of and to deliver a determinate
thing and the other to pay therefor a price certain in money or its equivalent." 19

Ownership of the thing sold is a real right, 20 which the buyer acquires only upon delivery of the thing to him "in any of the
ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred
from the vendor to the vendee." 21 This right is transferred, not by contract alone, but by tradition or delivery. 22 Non
nudis pactis sed traditione dominia rerum transferantur. And there is said to be delivery if and when the thing sold "is placed
in the control and possession of the vendee." 23 Thus, it has been held that while the execution of a public instrument of
sale is recognized by law as equivalent to the delivery of the thing sold, 24 such constructive or symbolic delivery, being
merely presumptive, is deemed negated by the failure of the vendee to take actual possession of the land sold. 25

Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties
concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the
right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of
property or title; it means transfer of possession. 26 In the Law on Sales, delivery may be either actual or constructive, but
both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the
vendor, and the assumption of the same by the vendee." 27

Possession Never
Acquired by Petitioner
Let us now apply the foregoing discussion to the present issue. From the peculiar facts of this case, it is clear that
petitioner never took actual control and possession of the property sold, in view of respondent's timely objection to the sale
and the continued actual possession of the property. The objection took the form of a court action impugning the sale
which, as we know, was rescinded by a judgment rendered by this Court in the mother case. It has been held that the
execution of a contract of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no
impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. 28When
there is such impediment, "fiction yields to reality — the delivery has not been effected." 29

Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient
impediment that effectively prevented the passing of the property into the latter's hands. IcAaSD

This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca, 30 in which the Court held as follows:

"The question that now arises is: Is there any stipulation in the sale in question from which we can infer
that the vendor did not intend to deliver outright the possession of the lands to the vendee? We find
none. On the contrary, it can be clearly seen therein that the vendor intended to place the vendee in
actual possession of the lands immediately as can be inferred from the stipulation that the vendee 'takes
actual possession thereof . . . with full rights to dispose, enjoy and make use thereof in such manner and
form as would be most advantageous to herself.' The possession referred to in the contract evidently
refers to actual possession and not merely symbolical inferable from the mere execution of the
document.

"Has the vendor complied with this express commitment? She did not. As provided in Article 1462, the
thing sold shall be deemed delivered when the vendee is placed in the control and possession thereof,
which situation does not here obtain because from the execution of the sale up to the present the
vendee was never able to take possession of the lands due to the insistent refusal of Martin Deloso to
surrender them claiming ownership thereof. And although it is postulated in the same article that the
execution of a public document is equivalent to delivery, this legal fiction only holds true when there is
no impediment that may prevent the passing of the property from the hands of the vendor into those of
the vendee. . . . ." 31
The execution of a public instrument gives rise, therefore, only to a prima facie presumption of delivery. Such presumption
is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by other means it is
shown that such delivery was not effected, because a third person was actually in possession of the thing. In the latter case, the sale
cannot be considered consummated. ESacHC

However, the point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a right to the
fruits of the thing sold from the time the obligation to deliver the property to petitioner arose. 32 That time arose upon the
perfection of the Contract of Sale on July 30, 1978, from which moment the laws provide that the parties to a sale may
reciprocally demand performance. 33 Does this mean that despite the judgment rescinding the sale, the right to the
fruits 34 belonged to, and remained enforceable by, Equatorial?

Article 1385 of the Civil Code answers this question in the negative, because "[r]escission creates the obligation to return
the things which were the object of the contract, together with their fruits, and the price with its interest; . . . ." Not only the
land and building sold, but also the rental payments paid, if any, had to be returned by the buyer.

Another point. The Decision in the mother case stated that "Equatorial . . . has received rents" from Mayfair "during all the
years that this controversy has been litigated." The Separate Opinion of Justice Teodoro Padilla in the mother case also
said that Equatorial was "deriving rental income" from the disputed property. Even herein ponente's Separate Concurring
Opinion in the mother case recognized these rentals. The question now is: Do all these statements concede actual
delivery? EDHCSI

The answer is "No." The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to
mean either actual delivery or ipso facto recognition of Equatorial's title.

The CA Records of the mother case 35 show that Equatorial — as alleged buyer of the disputed properties and as alleged
successor-in-interest of Carmelo's rights as lessor — submitted two ejectment suits against Mayfair. Filed in the
Metropolitan Trial Court of Manila, the first was docketed as Civil Case No. 121570 on July 9, 1987; and the second, as Civil
Case No. 131944 on May 28, 1990. Mayfair eventually won them both. However, to be able to maintain physical
possession of the premises while awaiting the outcome of the mother case, it had no choice but to pay the rentals.

The rental payments made by Mayfair should not be construed as a recognition of Equatorial as the new owner. They
were made merely to avoid imminent eviction. It is in this context that one should understand the aforequoted factual
statements in the ponencia in the mother case, as well as the Separate Opinion of Mr. Justice Padilla and the Separate
Concurring Opinion of the herein ponente.

At bottom, it may be conceded that, theoretically, a rescissible contract is valid until rescinded. However,
this generalprinciple is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is
decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the
factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual and
effective control or possession of the property because of Mayfair's timely objection.

As pointed out by Justice Holmes, general propositions do not decide specific cases. Rather, "laws are interpreted in the
context of the peculiar factual situation of each case. Each case has its own flesh and blood and cannot be decided on the
basis of isolated clinical classroom principles." 36

In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded before it could be
consummated. Petitioner never acquired ownership, not because the sale was void, as erroneously claimed by the trial
court, but because the sale was not consummated by a legally effective delivery of the property sold.

Benefits Precluded by
Petitioner's Bad Faith
Furthermore, assuming for the sake of argument that there was valid delivery, petitioner is not entitled to any benefits
from the "rescinded" Deed of Absolute Sale because of its bad faith. This being the law of the mother case decided in 1996,
it may no longer be changed because it has long become final and executory. Petitioner's bad faith is set forth in the
following pertinent portions of the mother case:
 "First and foremost is that the petitioners acted in bad faith to render Paragraph 8 'inutile.'

xxx xxx xxx

"Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question
rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial
was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As
such, Equatorial cannot tenably claim to be a purchaser in good faith, and, therefore, rescission lies.

xxx xxx xxx

"As also earlier emphasized, the contract of sale between Equatorial and Carmelo is characterized
by bad faith, since it was knowingly entered into in violation of the rights of and to the prejudice of
Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial admitted that its lawyers had
studied the contract of lease prior to the sale. Equatorial's knowledge of the stipulations therein should
have cautioned it to look further into the agreement to determine if it involved stipulations that would
prejudice its own interests.

xxx xxx xxx

"On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice
and full knowledge that Mayfair had a right to or interest in the property superior to its own. Carmelo
and Equatorial took unconscientious advantage of Mayfair." 37 (emphasis supplied)

Thus, petitioner was and still is entitled solely to the return of the purchase price it paid to Carmelo; no more, no less. This
Court has firmly ruled in the mother case that neither of them is entitled to any consideration of equity, as both "took
unconscientious advantage of Mayfair." 38

In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By the same token, rentals, another
fruit of ownership, cannot be granted without mocking this Court's en banc Decision, which has long become final. AEDHST

Petitioner's claim of reasonable compensation for respondent's use and occupation of the subject property from the time
the lease expired cannot be countenanced. If it suffered any loss, petitioner must bear it in silence, since it had wrought
that loss upon itself. Otherwise, bad faith would be rewarded instead of punished.

We uphold the trial court's disposition, not for the reason it gave, but for (a) the patent failure to deliver the property and
(b) petitioner's bad faith, as above discussed.

Second Issue:
Ground in Motion to Dismiss
Procedurally, petitioner claims that the trial court deviated from the accepted and usual course of judicial proceedings
when it dismissed Civil Case No. 97-85141 on a ground not raised in respondent's Motion to Dismiss. Worse, it allegedly
based its dismissal on a ground not provided for in a motion to dismiss as enunciated in the Rules of Court.

We are not convinced. A review of respondent's Motion to Dismiss Civil Case No. 97-85141 shows that there were two
grounds invoked, as follows:

"(A)

Plaintiff is guilty of forum-shopping.

"(B)

Plaintiff's cause of action, if any, is barred by prior judgment." 39

The court a quo ruled, inter alia, that the cause of action of petitioner (plaintiff in the case below) had been barred by a
prior judgment of this Court in GR No. 106063, the mother case.

Although it erred in its interpretation of the said Decision when it argued that the rescinded Deed of Absolute Sale was
"void," we hold, nonetheless, that petitioner's cause of action is indeed barred by a prior judgment of this Court. As
already discussed, our Decision in GR No. 106063 shows that petitioner is not entitled to back rentals, because it never
became the owner of the disputed properties due to a failure of delivery. And even assuming arguendo that there was a
valid delivery, petitioner's bad faith negates its entitlement to the civil fruits of ownership, like interest and rentals.

Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a court of competent
jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between
the same parties and for the same cause. 40 Thus, "[a] final judgment on the merits rendered by a court of competent
jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent
actions involving the same claim, demand, or cause of action." 41 Res judicata is based on the ground that "the party to be
affected, or some other with whom he is in privity, has litigated the same matter in a former action in a court of competent
jurisdiction, and should not be permitted to litigate it again." 42

It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive trials. At the same time, it
prevents the clogging of court dockets. Equally important, it stabilizes rights and promotes the rule of law.

We find no need to repeat the foregoing disquisitions on the first issue to show satisfaction of the elements of res judicata.
Suffice it to say that, clearly, our ruling in the mother case bars petitioner from claiming back rentals from respondent.
Although the court a quo erred when it declared "void from inception" the Deed of Absolute Sale between Carmelo and
petitioner, our foregoing discussion supports the grant of the Motion to Dismiss on the ground that our prior judgment in
GR No. 106063 has already resolved the issue of back rentals.

On the basis of the evidence presented during the hearing of Mayfair's Motion to Dismiss, the trial court found that the
issue of ownership of the subject property has been decided by this Court in favor of Mayfair. We quote the RTC:

"The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated that the Deed of
Absolute Sale dated July 31, 1978 has been rescinded subjecting the present complaint to res
judicata." 43 (Emphasis in the original)

Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in interpreting the meaning
of "rescinded" as equivalent to "void." In short, it ruled on the ground raised; namely, bar by prior judgment. By granting
the Motion, it disposed correctly, even if its legal reason for nullifying the sale was wrong. The correct reasons are given in
this Decision.

WHEREFORE, the Petition is hereby DENIED. Costs against petitioner. ADCTac

SO ORDERED.