Sales Full Text

Necessaries
Labagala VS Santiago
371 SCRA 360
SECOND DIVISION
G.R. No. 132305 December 4, 2001
IDA C. LABAGALA, petitioner,

vs.
NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON. COURT OF APPEALS,
respondents.
QUISUMBING, J.:
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 19795 was executed through petitioner's machinations and with
malicious intent, to enable her to secure the corresponding transfer certificate of title (TCT
No. 1723346) 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 thumb mark 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
Page 1 of 115
Sales (Full Text of Cases): 8.1.19
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
Page 2 of 115
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 Amanda Santiago 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 Appeals12 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)
Page 3 of 115
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 Labagala and [Cornelia] Cabrigas. This document states that it was Leon
Labagala who made the report to the Local Civil Registrar and therefore the supplier of the
entries in said Certificate. Therefore, this certificate is proof of the filiation of Ida. Appellee
however denies that Exhibit H is her Birth Certificate. She insists that she is not Ida
Labagala but Ida Santiago. If Exhibit H is not her birth certificate, then where is hers? She
did not present any though it would have been the easiest thing to do considering that
according to her baptismal certificate she was born in Manila in 1969. This court rejects such
denials and holds that Exhibit H is the certificate of the record of birth of appellee Ida...
Page 4 of 115
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
along 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.
Page 5 of 115
On the validity of the purported deed of sale, however, we agree with the Court of Appeals
that:
...This deed is shot through and through with so many intrinsic defects that a reasonable
mind is inevitably led to the conclusion that it is fake. The intrinsic defects are extractable
from the following questions: a) If Jose Santiago intended to donate the properties in
question to Ida, what was the big idea of hiding the nature of the contract in the 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. CY
No. 32817 is AFFIRMED.
Costs against petitioner.
Page 6 of 115
SO ORDERED.
Senility and Serious Illness
Domingo VS Court of Appeals

367 SCRA 368
G.R. No. 104818 September 17, 1993
ROBERTO DOMINGO, petitioner,

vs.
COURT OF APPEALS and DELIA SOLEDAD AVERA represented by her Attorney-in-
Fact MOISES R. AVERA, respondents.
Jose P.O. Aliling IV for petitioner.
De Guzman, Meneses & Associates for private respondent.
ROMERO, J.:
The instant petition seeks the reversal of respondent court's ruling finding no grave abuse of
discretion in the lower court's order denying petitioner's motion to dismiss the petition for
declaration of nullity of marriage and separation of property.
On May 29, 1991, private respondent Delia Soledad A. Domingo filed a petition before the
Regional Trial Court of Pasig entitled "Declaration of Nullity of Marriage and Separation of
Property" against petitioner Roberto Domingo. The petition which was docketed as Special
Proceedings No. 1989-J alleged among others that: they were married on November 29,
1976 at the YMCA Youth Center Bldg., as evidenced by a Marriage Contract Registry No.
1277K-76 with Marriage License No. 4999036 issued at Carmona, Cavite; unknown to her,
he had a previous marriage with one Emerlina dela Paz on April 25, 1969 which marriage is
valid and still existing; she came to know of the prior marriage only sometime in 1983 when
Emerlina dela Paz sued them for bigamy; from January 23 1979 up to the present, she has
been working in Saudi Arabia and she used to come to the Philippines only when she would
avail of the one-month annual vacation leave granted by her foreign employer since 1983 up
to the present, he has been unemployed and completely dependent upon her for support
and subsistence; out of her personal earnings, she purchased real and personal properties
with a total amount of approximately P350,000.00, which are under the possession and
administration of Roberto; sometime in June 1989, while on her one-month vacation, she
discovered that he was cohabiting with another woman; she further discovered that he had
been disposing of some of her properties without her knowledge or consent; she confronted
him about this and thereafter appointed her brother Moises R. Avera as her attorney-in-fact
to take care of her properties; he failed and refused to turn over the possession and
administration of said properties to her brother/attorney-in-fact; and he is not authorized to
administer and possess the same on account of the nullity of their marriage. The petition
prayed that a temporary restraining order or a writ of preliminary injunction be issued
enjoining Roberto from exercising any act of administration and ownership over said
properties; their marriage be declared null and void and of no force and effect; and Delia
Soledad be declared the sole and exclusive owner of all properties acquired at the time of
their void marriage and such properties be placed under the proper management and
administration of the attorney-in-fact.
Page 7 of 115
Petitioner filed a Motion to Dismiss on the ground that the petition stated no cause of action.
The marriage being void ab initio, the petition for the declaration of its nullity is, therefore,
superfluous and unnecessary. It added that private respondent has no property which is in
his possession.
On August 20, 1991, Judge Maria Alicia M. Austria issued an Order denying the motion to
dismiss for lack of merit. She explained:
Movant argues that a second marriage contracted after a first marriage by a man with
another woman is illegal and void (citing the case of Yap v. Court of Appeals, 145 SCRA
229) and no judicial decree is necessary to establish the invalidity of a void marriage (citing
the cases of People v. Aragon, 100 Phil. 1033; People v. Mendoza, 95 Phil. 845). Indeed,
under the Yap case there is no dispute that the second marriage contracted by respondent
with herein petitioner after a first marriage with another woman is illegal and void. However,
as to whether or not the second marriage should first be judicially declared a nullity is not
an issue in said case. In the case of Vda. de Consuegra v. GSIS, the Supreme Court ruled in
explicit terms, thus:
And with respect to the right of the second wife, this Court observed that although the
second marriage can be presumed to be void ab initio as it was celebrated while the first
marriage was still subsisting, still there is need for judicial declaration of its nullity. (37 SCRA
316, 326)
The above ruling which is of later vintage deviated from the previous rulings of the Supreme
Court in the aforecited cases of Aragon and Mendoza.
Finally, the contention of respondent movant that petitioner has no property in his
possession is an issue that may be determined only after trial on the merits.1
A motion for reconsideration was filed stressing the erroneous application of Vda. de
Consuegra v. GSIS2 and the absence of justiciable controversy as to the nullity of the
marriage. On September 11, 1991, Judge Austria denied the motion for reconsideration and
gave petitioner fifteen (15) days from receipt within which to file his answer.
Instead of filing the required answer, petitioner filed a special civil action of certiorari and
mandamus on the ground that the lower court acted with grave abuse of discretion
amounting to lack of jurisdiction in denying the motion to dismiss.
On February 7, 1992, the Court of Appeals3 dismissed the petition. It explained that the
case of Yap v. CA4 cited by petitioner and that of Consuegra v. GSIS relied upon by the
lower court do not have relevance in the case at bar, there being no identity of facts
because these cases dealt with the successional rights of the second wife while the instant
case prays for separation of property corollary with the declaration of nullity of marriage. It
observed that the separation and subsequent distribution of the properties acquired during
the union can be had only upon proper determination of the status of the marital
relationship between said parties, whether or not the validity of the first marriage is denied
by petitioner. Furthermore, in order to avoid duplication and multiplicity of suits, the
declaration of nullity of marriage may be invoked in this proceeding together with the
partition and distribution of the properties involved. Citing Articles 48, 50 and 52 of the
Family Code, it held that private respondent's prayer for declaration of absolute nullity of
their marriage may be raised together with other incidents of their marriage such as the
Page 8 of 115
separation of their properties. Lastly, it noted that since the Court has jurisdiction, the
alleged error in refusing to grant the motion to dismiss is merely one of law for which the
remedy ordinarily would have been to file an answer, proceed with the trial and in case of
an adverse decision, reiterate the issue on appeal. The motion for reconsideration was
subsequently denied for lack of merit.5
Hence, this petition.
The two basic issues confronting the Court in the instant case are the following.
First, whether or not a petition for judicial declaration of a void marriage is necessary. If in
the affirmative, whether the same should be filed only for purposes of remarriage.
Second, whether or not SP No. 1989-J is the proper remedy of private respondent to recover
certain real and personal properties allegedly belonging to her exclusively.
Petitioner, invoking the ruling in People v. Aragon6 and People v. Mendoza,7 contends that
SP. No. 1989-J for Declaration of Nullity of Marriage and Separation of Property filed by
private respondent must be dismissed for being unnecessary and superfluous. Furthermore,
under his own interpretation of Article 40 of the Family Code, he submits that a petition for
declaration of absolute nullity of marriage is required only for purposes of remarriage. Since
the petition in SP No. 1989-J contains no allegation of private respondent's intention to
remarry, said petition should therefore, be dismissed.
On the other hand, private respondent insists on the necessity of a judicial declaration of the
nullity of their marriage, not for purposes of remarriage, but in order to provide a basis for
the separation and distribution of the properties acquired during coverture.
There is no question that the marriage of petitioner and private respondent celebrated while
the former's previous marriage with one Emerlina de la Paz was still subsisting, is bigamous.
As such, it is from the beginning.8 Petitioner himself does not dispute the absolute nullity of
their marriage.9
The cases of People v. Aragon and People v. Mendoza relied upon by petitioner are cases
where the Court had earlier ruled that no judicial decree is necessary to establish the
invalidity of a void, bigamous marriage. It is noteworthy to observe that Justice Alex Reyes,
however, dissented on these occasions stating that:
Though the logician may say that where the former marriage was void there would be
nothing to dissolve, still it is not for the spouses to judge whether that marriage was void or
not. That judgment is reserved to the courts. . . . 10
This dissenting opinion was adopted as the majority position in subsequent cases involving
the same issue. Thus, in Gomez v. Lipana, 11 the Court abandoned its earlier ruling in the
Aragon and Mendoza cases. In reversing the lower court's order forfeiting the husband's
share of the disputed property acquired during the second marriage, the Court stated that
"if the nullity, or annulment of the marriage is the basis for the application of Article 1417,
there is need for a judicial declaration thereof, which of course contemplates an action for
that purpose."
Citing Gomez v. Lipana, the Court subsequently held in Vda. de Consuegra v. Government
Service Insurance System, that "although the second marriage can be presumed to be void
Page 9 of 115
ab initio as it was celebrated while the first marriage was still subsisting, still there is need
for judicial declaration of such nullity."
In Tolentino v. Paras,12 however, the Court turned around and applied the Aragon and
Mendoza ruling once again. In granting the prayer of the first wife asking for a declaration
as the lawful surviving spouse and the correction of the death certificate of her deceased
husband, it explained that "(t)he second marriage that he contracted with private
respondent during the lifetime of his first spouse is null and void from the beginning and of
no force and effect. No judicial decree is necessary to establish the invalidity of a void
marriage."
However, in the more recent case of Wiegel v. Sempio-Diy 13 the Court reverted to the
Consuegra case and held that there was "no need of introducing evidence about the existing
prior marriage of her first husband at the time they married each other, for then such a
marriage though void still needs according to this Court a judicial declaration of such fact
and for all legal intents and purposes she would still be regarded as a married woman at the
time she contracted her marriage with respondent Karl Heinz Wiegel."
Came the Family Code which settled once and for all the conflicting jurisprudence on the
matter. A declaration of the absolute nullity of a marriage is now explicitly required either as
a cause of action or a ground for defense. 14 Where the absolute nullity of a previous
marriage is sought to be invoked for purposes of contracting a second marriage, the sole
basis acceptable in law for said projected marriage be free from legal infirmity is a final
judgment declaring the previous marriage void. 15
The Family Law Revision Committee and the Civil Code Revision Committee 16 which
drafted what is now the Family Code of the Philippines took the position that parties to a
marriage should not be allowed to assume that their marriage is void even if such be the
fact but must first secure a judicial declaration of the nullity of their marriage before they
can be allowed to marry again. This is borne out by the following minutes of the 152nd Joint
Meeting of the Civil Code and Family Law Committees where the present Article 40, then
Art. 39, was discussed.
B. Article 39. —
The absolute nullity of a marriage may be invoked only on the basis of a final judgment
declaring the marriage void, except as provided in Article 41.
Justice Caguioa remarked that the above provision should include not only void but also
voidable marriages. He then suggested that the above provision be modified as follows:
The validity of a marriage may be invoked only . . .
Justice Reyes (J.B.L. Reyes), however, proposed that they say:
The validity or invalidity of a marriage may be invoked

only . . .
On the other hand, Justice Puno suggested that they say:
The invalidity of a marriage may be invoked only . . .
Page 10 of 115
Justice Caguioa explained that his idea is that one cannot determine for himself whether or
not his marriage is valid and that a court action is needed. Justice Puno accordingly
proposed that the provision be modified to read:
The invalidity of a marriage may be invoked only on the basis of a final judgment annulling
the marriage or declaring the marriage void, except as provided in Article 41.
Justice Caguioa remarked that in annulment, there is no question. Justice Puno, however,
pointed out that, even if it is a judgment of annulment, they still have to produce the
judgment.
Justice Caguioa suggested that they say:
The invalidity of a marriage may be invoked only on the basis of a final judgment declaring
the marriage invalid, except as provided in Article 41.
Justice Puno raised the question: When a marriage is declared invalid, does it include the
annulment of a marriage and the declaration that the marriage is void? Justice Caguioa
replied in the affirmative. Dean Gupit added that in some judgments, even if the marriage is
annulled, it is declared void. Justice Puno suggested that this matter be made clear in the
provision.
Prof. Baviera remarked that the original idea in the provision is to require first a judicial
declaration of a void marriage and not annullable marriages, with which the other members
concurred. Judge Diy added that annullable marriages are presumed valid until a direct
action is filed to annul it, which the other members affirmed. Justice Puno remarked that if
this is so, then the phrase "absolute nullity" can stand since it might result in confusion if
they change the phrase to "invalidity" if what they are referring to in the provision is the
declaration that the marriage is void.
Prof. Bautista commented that they will be doing away with collateral defense as well as
collateral attack. Justice Caguioa explained that the idea in the provision is that there should
be a final judgment declaring the marriage void and a party should not declare for himself
whether or not the marriage is void, while the other members affirmed. Justice Caguioa
added that they are, therefore, trying to avoid a collateral attack on that point. Prof.
Bautista stated that there are actions which are brought on the assumption that the
marriage is valid. He then asked: Are they depriving one of the right to raise the defense
that he has no liability because the basis of the liability is void? Prof. Bautista added that
they cannot say that there will be no judgment on the validity or invalidity of the marriage
because it will be taken up in the same proceeding. It will not be a unilateral declaration
that, it is a void marriage. Justice Caguioa saw the point of Prof. Bautista and suggested
that they limit the provision to remarriage. He then proposed that Article 39 be reworded as
follows:
The absolute nullity of a marriage for purposes of remarriage may be invoked only on the
basis of final judgment . . .
Justice Puno suggested that the above be modified as follows:
The absolute nullity of a previous marriage may be invoked for purposes of establishing the
validity of a subsequent marriage only on the basis of a final judgment declaring such
previous marriage void, except as provided in Article 41.
Page 11 of 115
Justice Puno later modified the above as follows:
For the purpose of establishing the validity of a subsequent marriage, the absolute nullity of
a previous marriage may only be invoked on the basis of a final judgment declaring such
nullity, except as provided in Article 41.
Justice Caguioa commented that the above provision is too broad and will not solve the
objection of Prof. Bautista. He proposed that they say:
For the purpose of entering into a subsequent marriage, the absolute nullity of a previous
marriage may only be invoked on the basis of a final judgment declaring such nullity, except
as provided in Article 41.
Justice Caguioa explained that the idea in the above provision is that if one enters into a
subsequent marriage without obtaining a final judgment declaring the nullity of a previous
marriage, said subsequent marriage is void ab initio.
After further deliberation, Justice Puno suggested that they go back to the original wording
of the provision as follows:
The absolute nullity of a previous marriage may be invoked for purposes of remarriage only
on the basis of a final judgment declaring such previous marriage void, except as provided
in Article 41. 17
In fact, the requirement for a declaration of absolute nullity of a marriage is also for the
protection of the spouse who, believing that his or her marriage is illegal and void, marries
again. With the judicial declaration of the nullity of his or her first marriage, the person who
marries again cannot be charged with bigamy. 18
Just over a year ago, the Court made the pronouncement that there is a necessity for a
declaration of absolute nullity of a prior subsisting marriage before contracting another in
the recent case of Terre v. Terre. 19 The Court, in turning down the defense of respondent
Terre who was charged with grossly immoral conduct consisting of contracting a second
marriage and living with another woman other than complainant while his prior marriage
with the latter remained subsisting, said that "for purposes of determining whether a person
is legally free to contract a second marriage, a judicial declaration that the first marriage
was null and void ab initio is essential."
As regards the necessity for a judicial declaration of absolute nullity of marriage, petitioner
submits that the same can be maintained only if it is for the purpose of remarriage. Failure
to allege this purpose, according to petitioner's theory, will warrant dismissal of the same.
Article 40 of the Family Code provides:
Art. 40. The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring such previous marriage void. (n)
Crucial to the proper interpretation of Article 40 is the position in the provision of the word
"solely." As it is placed, the same shows that it is meant to qualify "final judgment declaring
such previous marriage void." Realizing the need for careful craftsmanship in conveying the
precise intent of the Committee members, the provision in question, as it finally emerged,
Page 12 of 115
did not state "The absolute nullity of a previous marriage may be invoked solely for
purposes of remarriage . . .," in which case "solely" would clearly qualify the phrase "for
purposes of remarriage." Had the phraseology been such, the interpretation of petitioner
would have been correct and, that is, that the absolute nullity of a previous marriage may
be invoked solely for purposes of remarriage, thus rendering irrelevant the clause "on the
basis solely of a final judgment declaring such previous marriage void."
That Article 40 as finally formulated included the significant clause denotes that such final
judgment declaring the previous marriage void need not be obtained only for purposes of
remarriage. Undoubtedly, one can conceive of other instances where a party might well
invoke the absolute nullity of a previous marriage for purposes other than remarriage, such
as in case of an action for liquidation, partition, distribution and separation of property
between the erstwhile spouses, as well as an action for the custody and support of their
common children and the delivery of the latters' presumptive legitimes. In such cases,
evidence needs must be adduced, testimonial or documentary, to prove the existence of
grounds rendering such a previous marriage an absolute nullity. These need not be limited
solely to an earlier final judgment of a court declaring such previous marriage void. Hence,
in the instance where a party who has previously contracted a marriage which remains
subsisting desires to enter into another marriage which is legally unassailable, he is required
by law to prove that the previous one was an absolute nullity. But this he may do on the
basis solely of a final judgment declaring such previous marriage void.
This leads us to the question: Why the distinction? In other words, for purposes of
remarriage, why should the only legally acceptable basis for declaring a previous marriage
an absolute nullity be a final judgment declaring such previous marriage void? Whereas, for
purposes other than remarriage, other evidence is acceptable?
Marriage, a sacrosanct institution, declared by the Constitution as an "inviolable social

institution, is the foundation of the family;" as such, it "shall be protected by the State."20
In more explicit terms, the Family Code characterizes it as "a special contract of permanent
union between a man and a woman entered into in accordance with law for the
establishment of conjugal, and family life." 21 So crucial are marriage and the family to the
stability and peace of the nation that their "nature, consequences, and incidents are
governed by law and not subject to stipulation . . ." 22 As a matter of policy, therefore, the
nullification of a marriage for the purpose of contracting another cannot be accomplished
merely on the basis of the perception of both parties or of one that their union is so
defective with respect to the essential requisites of a contract of marriage as to render it
void ipso jure and with no legal effect — and nothing more. Were this so, this inviolable
social institution would be reduced to a mockery and would rest on very shaky foundations
indeed. And the grounds for nullifying marriage would be as diverse and far-ranging as
human ingenuity and fancy could conceive. For such a social significant institution, an
official state pronouncement through the courts, and nothing less, will satisfy the exacting
norms of society. Not only would such an open and public declaration by the courts
definitively confirm the nullity of the contract of marriage, but the same would be easily
verifiable through records accessible to everyone.
That the law seeks to ensure that a prior marriage is no impediment to a second sought to
be contracted by one of the parties may be gleaned from new information required in the
Family Code to be included in the application for a marriage license, viz, "If previously
married, how, when and where the previous marriage was dissolved and annulled." 23
Page 13 of 115
Reverting to the case before us, petitioner's interpretation of Art. 40 of the Family Code is,
undoubtedly, quite restrictive. Thus, his position that private respondent's failure to state in
the petition that the same is filed to enable her to remarry will result in the dismissal of SP
No. 1989-J is untenable. His misconstruction of Art. 40 resulting from the misplaced
emphasis on the term "solely" was in fact anticipated by the members of the Committee.
Dean Gupit commented the word "only" may be misconstrued to refer to "for purposes of
remarriage." Judge Diy stated that "only" refers to "final judgment." Justice Puno suggested
that they say "on the basis only of a final judgment." Prof. Baviera suggested that they use
the legal term "solely" instead of "only," which the Committee approved. 24 (Emphasis
supplied)
Pursuing his previous argument that the declaration for absolute nullity of marriage is
unnecessary, petitioner suggests that private respondent should have filed an ordinary civil
action for the recovery of the properties alleged to have been acquired during their union. In
such an eventuality, the lower court would not be acting as a mere special court but would
be clothed with jurisdiction to rule on the issues of possession and ownership. In addition,
he pointed out that there is actually nothing to separate or partition as the petition admits
that all the properties were acquired with private respondent's money.
The Court of Appeals disregarded this argument and concluded that "the prayer for
declaration of absolute nullity of marriage may be raised together with the other incident of
their marriage such as the separation of their properties."
When a marriage is declared void ab initio, the law states that the final judgment therein
shall provide for "the liquidation, partition and distribution of the properties of the spouses,
the custody and support of the common children, and the delivery of their presumptive
legitimes, unless such matters had been adjudicated in previous judicial proceedings." 25
Other specific effects flowing therefrom, in proper cases, are the following:
Art. 43. xxx xxx xxx
(2) The absolute community of property or the conjugal partnership, as the case may
be, shall be dissolved and liquidated, but if either spouse contracted said marriage in bad
faith, his or her share of the net profits of the community property or conjugal partnership
property shall be forfeited in favor of the common children or, if there are none, the children
of the guilty spouse by a previous marriage or, in default of children, the innocent spouse;
(3) Donations by reason of marriage shall remain valid, except that if the donee
contracted the marriage in bad faith, such donations made to said donee are revoked by
operation of law;
(4) The innocent spouse may revoke the designation of the other spouse who acted in
bad faith as a beneficiary in any insurance policy, even if such designation be stipulated as
irrevocable; and
(5) The spouse who contracted the subsequent marriage in bad faith shall be
disqualified to inherit from the innocent spouse by testate and intestate succession. (n)
Art. 44. If both spouses of the subsequent marriage acted in bad faith, said marriage
shall be void ab initio and all donations by reason of marriage and testamentary disposition
made by one in favor of the other are revoked by operation of law. (n) 26
Page 14 of 115
Based on the foregoing provisions, private respondent's ultimate prayer for separation of
property will simply be one of the necessary consequences of the judicial declaration of
absolute nullity of their marriage. Thus, petitioner's suggestion that in order for their
properties to be separated, an ordinary civil action has to be instituted for that purpose is
baseless. The Family Code has clearly provided the effects of the declaration of nullity of
marriage, one of which is the separation of property according to the regime of property
relations governing them. It stands to reason that the lower court before whom the issue of
nullity of a first marriage is brought is likewise clothed with jurisdiction to decide the
incidental questions regarding the couple's properties. Accordingly, the respondent court
committed no reversible error in finding that the lower court committed no grave abuse of
discretion in denying petitioner's motion to dismiss SP No. 1989-J.
WHEREFORE, the instant petition is hereby DENIED. The decision of respondent Court dated
February 7, 1992 and the Resolution dated March 20, 1992 are AFFIRMED.
SO ORDERED.
Paragas VS Heirs of Balacano

468 SCRA 717,736
Republic of the Philippines

SUPREME COURT
SECOND DIVISION
G.R. No. 168220. August 31, 2005
SPS. rudy Paragas and Corazon B. Paragas, Petitioners,

vs.
Hrs. of Dominador Balacano, namely: Dominic, Rodolfo, Nanette and Cyric, all surnamed
Balacano, represented by NANETTE BALACANO and ALFREDO BALACANO, Respondent.
RESOLUTION
CHICO-NAZARIO, J.:
This petition for review seeks to annul the Decision dated 15 February 2005 of the Court of
1
Appeals in CA-G.R. CV No. 64048, affirming with modification the 8 March 1999 Decision of the
2
Regional Trial Court (RTC), Branch 21, of Santiago City, Isabela, in Civil Case No. 21-2313. The
petition likewise seeks to annul the Resolution dated 17 May 2005 denying petitioners’ motion for
3
reconsideration.
The factual antecedents were synthesized by the Court of Appeals in its decision.
Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot 1175-E and
Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago City, Isabela] covered by
TCT No. T-103297 and TCT No. T-103298 of the Registry of Deeds of the Province of Isabela.
Page 15 of 115
Gregorio and Lorenza had three children, namely: Domingo, Catalino and Alfredo, all surnamed
Balacano. Lorenza died on December 11, 1991. Gregorio, on the other hand, died on July 28,
1996.
Prior to his death, Gregorio was admitted at the Veterans General Hospital in Bayombong,
Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996. He was transferred in the
afternoon of July 19, 1996 to the Veterans Memorial Hospital in Quezon City where he was
confined until his death.
Gregorio purportedly sold on July 22, 1996, or barely a week prior to his death, a portion of Lot
1175-E (specifically consisting of 15,925 square meters from its total area of 22,341 square
meters) and the whole Lot 1175-F to the Spouses Rudy ("Rudy") and Corazon Paragas
(collectively, "the Spouses Paragas") for the total consideration of ₱500,000.00. This sale
appeared in a deed of absolute sale notarized by Atty. Alexander V. de Guzman, Notary Public
for Santiago City, on the same date – July 22, 1996 – and witnessed by Antonio Agcaoili
("Antonio") and Julia Garabiles ("Julia"). Gregorio’s certificates of title over Lots 1175-E and
1175-F were consequently cancelled and new certificates of title were issued in favor of the
Spouses Paragas.
The Spouses Paragas then sold on October 17, 1996 a portion of Lot 1175-E consisting of 6,416
square meters to Catalino for the total consideration of ₱60,000.00.
Domingo’s children (Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano;…) filed on
October 22, 1996 a complaint for annulment of sale and partition against Catalino and the
Spouses Paragas. They essentially alleged – in asking for the nullification of the deed of sale –
that: (1) their grandfather Gregorio could not have appeared before the notary public on July 22,
1996 at Santiago City because he was then confined at the Veterans Memorial Hospital in
Quezon City; (2) at the time of the alleged execution of the deed of sale, Gregorio was seriously
ill, in fact dying at that time, which vitiated his consent to the disposal of the property; and (3)
Catalino manipulated the execution of the deed and prevailed upon the dying Gregorio to sign
his name on a paper the contents of which he never understood because of his serious
condition. Alternatively, they alleged that assuming Gregorio was of sound and disposing mind,
he could only transfer a half portion of Lots 1175-E and 1175-F as the other half belongs to their
grandmother Lorenza who predeceased Gregorio – they claimed that Lots 1175-E and 1175-F
form part of the conjugal partnership properties of Gregorio and Lorenza. Finally, they alleged
that the sale to the Spouses Paragas covers only a 5-hectare portion of Lots 1175-E and 1175-F
leaving a portion of 6,416 square meters that Catalino is threatening to dispose. They asked for
the nullification of the deed of sale executed by Gregorio and the partition of Lots 1175-E and
1175-F. They likewise asked for damages.
Instead of filing their Answer, the defendants Catalino and the Spouses Paragas moved to
dismiss the complaint on the following grounds: (1) the plaintiffs have no legal capacity - the
Domingo’s children cannot file the case because Domingo is still alive, although he has been
absent for a long time; (2) an indispensable party is not impleaded – that Gregorio’s other son,
Alfredo was not made a party to the suit; and (3) the complaint states no cause of action – that
Domingo’s children failed to allege a ground for the annulment of the deed of sale; they did not
cite any mistake, violence, intimidation, undue influence or fraud, but merely alleged that
Gregorio was seriously ill. Domingo’s children opposed this motion.
The lower court denied the motion to dismiss, but directed the plaintiffs-appellees to amend the
complaint to include Alfredo as a party. Alfredo was subsequently declared as in default for his
failure to file his Answer to the Complaint.
The defendants-appellees filed their Answer with Counterclaim on May 7, 1997, denying the
material allegations of the complaint. Additionally, they claimed that: (1) the deed of sale was
actually executed by Gregorio on July 19 (or 18), 1996 and not July 22, 1996; (2) the Notary
Page 16 of 115
Public personally went to the Hospital in Bayombong, Nueva Vizcaya on July 18, 1996 to
notarize the deed of sale already subject of a previously concluded covenant between Gregorio
and the Spouses Paragas; (3) at the time Gregorio signed the deed, he was strong and of sound
and disposing mind; (4) Lots 1175-E and 1175-F were Gregorio’s separate capital and the
inscription of Lorenza’s name in the titles was just a description of Gregorio’s marital status; (5)
the entire area of Lots 1175-E and 1175-F were sold to the Spouses Paragas. They interposed a
counterclaim for damages.
At the trial, the parties proceeded to prove their respective contentions.
Plaintiff-appellant Nanette Balacano testified to prove the material allegations of their complaint.
On Gregorio’s medical condition, she declared that: (1) Gregorio, who was then 81 years old,
weak and sick, was brought to the hospital in Bayombong, Nueva Vizcaya on June 28, 1996 and
stayed there until the afternoon on July 19, 1996; (2) thereafter, Gregorio, who by then was weak
and could no longer talk and whose condition had worsened, was transferred in the afternoon of
July 19, 1996 to the Veterans Memorial Hospital in Quezon City where Gregorio died. She
claimed that Gregorio could not have signed a deed of sale on July 19, 1996 because she stayed
at the hospital the whole of that day and saw no visitors. She likewise testified on their
agreement for attorney’s fees with their counsel and the litigation expenses they incurred.
Additionally, the plaintiffs-appellees presented in evidence Gregorio’s medical records and his
death certificate.
Defendants-appellees, on the other hand, presented as witnesses Notary Public de Guzman and
instrumental witness Antonio to prove Gregorio’s execution of the sale and the circumstances
under the deed was executed. They uniformly declared that: (1) on July 18, 1996, they went to
the hospital in Bayombong, Nueva Vizcaya – where Gregorio was confined – with Rudy; (2) Atty.
De Guzman read and explained the contents of the deed to Gregorio; (3) Gregorio signed the
deed after receiving the money from Rudy; (4) Julia and Antonio signed the deed as witnesses.
Additionally, Atty. De Guzman explained that the execution of the deed was merely a
confirmation of a previous agreement between the Spouses Paragas and Gregorio that was
concluded at least a month prior to Gregorio’s death; that, in fact, Gregorio had previously asked
him to prepare a deed that Gregorio eventually signed on July 18, 1996. He also explained that
the deed, which appeared to have been executed on July 22, 1996, was actually executed on
July 18, 1996; he notarized the deed and entered it in his register only on July 22, 1996. He
claimed that he did not find it necessary to state the precise date and place of execution
(Bayombong, Nueva Vizcaya, instead of Santiago City) of the deed of sale because the deed is
merely a confirmation of a previously agreed contract between Gregorio and the Spouses
Paragas. He likewise stated that of the stated ₱500,000.00 consideration in the deed, Rudy paid
Gregorio ₱450,000.00 in the hospital because Rudy had previously paid Gregorio ₱50,000.00.
For his part, Antonio added that he was asked by Rudy to take pictures of Gregorio signing the
deed. He also claimed that there was no entry on the date when he signed; nor did he remember
reading Santiago City as the place of execution of the deed. He described Gregorio as still strong
but sickly, who got up from the bed with Julia’s help.
Witness for defendants-appellants Luisa Agsalda testified to prove that Lot 1175-E was
Gregorio’s separate property. She claimed that Gregorio’s father (Leon) purchased a two-hectare
lot from them in 1972 while the other lot was purchased from her neighbor. She also declared
that Gregorio inherited these lands from his father Leon; she does not know, however, Gregorio’s
brothers’ share in the inheritance. Defendant-appellant Catalino also testified to corroborate the
testimony of witness Luisa Agsalda; he said that Gregorio told him that he (Gregorio) inherited
Lots 1175-E and 1175-F from his father Leon. He also stated that a portion of Lot 1175-E
consisting of 6,416 square meters was sold to him by the Spouses Paragas and that he will pay
the Spouses Paragas ₱50,000.00, not as consideration for the return of the land but for the
transfer of the title to his name.
Page 17 of 115
Additionally, the defendants-appellants presented in evidence the pictures taken by Antonio when
Gregorio allegedly signed the deed. 4
The lower court, after trial, rendered the decision declaring null and void the deed of sale
purportedly executed by Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon
Paragas. In nullifying the deed of sale executed by Gregorio, the lower court initially noted that at
the time Gregorio executed the deed, Gregorio was ill. The lower court’s reasoning in declaring
the deed of sale null and void and this reasoning’s premises may be summarized as follows: (1)
the deed of sale was improperly notarized; thus it cannot be considered a public document that is
usually accorded the presumption of regularity; (2) as a private document, the deed of sale’s due
execution must be proved in accordance with Section 20, Rule 132 of the Revised Rules on
Evidence either: (a) by anyone who saw the document executed or written; or (b) by evidence of
the genuineness of the signature or handwriting of the maker; and (3) it was incumbent upon the
Spouses Paragas to prove the deed of sale’s due execution but failed to do so – the lower court
said that witness Antonio Agcaoili is not credible while Atty. Alexander De Guzman is not reliable. 5
The lower court found the explanations of Atty. De Guzman regarding the erroneous entries on
the actual place and date of execution of the deed of sale as justifications for a lie. The lower
court said –
The Court cannot imagine an attorney to undertake to travel to another province to notarize a
document when he must certainly know, being a lawyer and by all means, not stupid, that he has
no authority to notarize a document in that province. The only logical thing that happened was
that Rudy Paragas brought the deed of sale to him on July 22, 1996 already signed and
requested him to notarize the same which he did, not knowing that at that time the vendor was
already in a hospital and [sic] Quezon City. Of course had he known, Atty. De Guzman would not
have notarized the document. But he trusted Rudy Paragas and moreover, Gregorio Balacano
already informed him previously in June that he will sell his lands to Paragas. In addition [sic, (,)
was omitted] Rudy Paragas also told him that Balacano received an advance of ₱50,000.00.
The intention to sell is not actual selling. From the first week of June when, according to Atty. De
Guzman, Gregorio Balacano informed him that he will sell his land to Rudy Paragas, enough
time elapsed to the time he was brought to the hospital on June 28, 1996. Had there been a
meeting of the minds between Gregorio Balacano and Rudy Paragas regarding the sale, surely
Gregorio Balacano would have immediately returned to the office of Atty. De Guzman to execute
the deed of sale. He did not until he was brought to the hospital and diagnosed to have liver
cirrhosis. Because of the seriousness of his illness, it is not expected that Gregorio
Balacano would be negotiating a contract of sale. Thus, Rudy Paragas negotiated with
Catalino Balacano, the son of Gregorio Balacano with whom the latter was staying. 6
The lower court also did not consider Antonio Agcaoili, petitioner Rudy Paragas’s driver, a
convincing witness, concluding that he was telling a rehearsed story. The lower court said –
The only portion of his testimony that is true is that he signed the document. How could the Court
believe that he brought a camera with him just to take pictures of the signing? If the purpose was
to record the proceeding for posterity, why did he not take the picture of Atty. De Guzman when
the latter was reading and explaining the document to Gregorio Balacano? Why did he not take
the picture of both Gregorio Balacano and Atty. de Guzman while the old man was signing the
document instead of taking a picture of Gregorio Balacano alone holding a ball pen without even
showing the document being signed? Verily there is a picture of a document but only a hand with
a ball pen is shown with it. Why? Clearly the driver Antonio Agcaoili must have only been asked
by Rudy Paragas to tell a concocted story which he himself would not dare tell in Court under
oath.7
The lower court likewise noted that petitioner Rudy Paragas did not testify about the signing of
the deed of sale. To the lower court, Rudy’s refusal or failure to testify raises a lot of questions,
Page 18 of 115
such as: (1) was he (Rudy) afraid to divulge the circumstances of how he obtained the signature
of Gregorio Balacano, and (2) was he (Rudy) afraid to admit that he did not actually pay the
₱500,000.00 indicated in the deed of sale as the price of the land? 8
The lower court also ruled that Lots 1175-E and 1175-F were Gregorio’s and Lorenza’s conjugal
partnership properties. The lower court found that these lots were acquired during the marriage
because the certificates of title of these lots clearly stated that the lots are registered in the name
Gregorio, "married to Lorenza Sumigcay." Thus, the lower court concluded that the presumption
of law (under Article 160 of the Civil Code of the Philippines) that property acquired during the
marriage is presumed to belong to the conjugal partnership fully applies to Lots 1175-E and
1175-F.9
Thus, on 8 March 1999, the RTC, Branch 21, of Santiago City, Isabela, rendered a Decision in 10
Civil Case No. 21-2313, the dispositive portion of which reads as follows:
WHEREFORE in the light of the foregoing considerations judgment is hereby rendered:
1. DECLARING as NULL and VOID the deed of sale purportedly executed by Gregorio Balacano
in favor of the spouses Rudy Paragas and Corazon Paragas over lots 1175-E and 1175-F
covered by TCT Nos. T-103297 and T-103298, respectively;
2. ORDERING the cancellation of TCT Nos. T-258042 and T-258041 issued in the name of the
spouses Rudy and Corazon Paragas by virtue of the deed of sale; and
Declaring the parcel of lands, lots 1175-E and 1175-F as part of the estate of the deceased
spouses Gregorio Balacano and Lorenza Balacano. 11
In the assailed Decision dated 15 February 2005, the Court of Appeals affirmed the Decision of
the trial court, with the modification that Lots 1175-E and 1175-F were adjudged as belonging to
the estate of Gregorio Balacano. The appellate court disposed as follows:
Wherefore, premises considered, the appeal is hereby dismissed. We AFFIRM the appealed
Decision for the reasons discussed above, with the MODIFICATION that Lots 1175-E and 1175-F
belong to the estate of Gregorio Balacano.
Let a copy of this Decision be furnished the Office of the Bar Confidant for whatever action her
Office may take against Atty. De Guzman. (Emphasis in the original.)
12
Herein petitioners’ motion for reconsideration was met with similar lack of success when it was
denied for lack of merit by the Court of Appeals in its Resolution dated 17 May 2005.
13
Hence, this appeal via a petition for review where petitioners assign the following errors to the
Court of Appeals, viz:
A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

SERIOUSLY ERRED IN FINDING THAT THERE WAS NO PERFECTED AND PARTIALLY
EXECUTED CONTRACT OF SALE OVER LOTS 1175-E AND 1175-F PRIOR TO THE SIGNING
OF THE DEED OF SALE.
B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

SERIOUSLY FAILED TO APPRECIATE THE SIGNIFICANCE OF THE JUDICIAL ADMISSION
ON THE AUTHENTICITY AND DUE EXECUTION OF THE DEED OF SALE MADE BY THE
RESPONDENTS DURING THE PRE-TRIAL CONFERENCE.
Page 19 of 115
C. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, BASED
ITS CONCLUSION THAT GREGORIO’S CONSENT TO THE SALE OF THE LOTS WAS
ABSENT MERELY ON SPECULATIONS AND SURMISES.
D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF RESPONDENTS’ LACK OF LEGAL
CAPACITY TO SUE FOR NOT BEING THE PROPER PARTIES IN INTEREST.
E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

SERIOUSLY ERRED IN DISMISSING ATTY. ALEXANDER DE GUZMAN AND ANTONIO
AGCAOILI AS NOT CREDIBLE WITNESSES. 14
At bottom is the issue of whether or not the Court of Appeals committed reversible error in
upholding the findings and conclusions of the trial court on the nullity of the Deed of Sale
purportedly executed between petitioners and the late Gregorio Balacano.
To start, we held in Blanco v. Quasha that this Court is not a trier of facts. As such, it is not its
15
function to examine and determine the weight of the evidence supporting the assailed decision.
Factual findings of the Court of Appeals, which are supported by substantial evidence, are
binding, final and conclusive upon the Supreme Court, and carry even more weight when the
16
said court affirms the factual findings of the trial court. Moreover, well- entrenched is the
prevailing jurisprudence that only errors of law and not of facts are reviewable by this Court in a
petition for review on certiorari under Rule 45 of the Revised Rules of Court.
The foregoing tenets in the case at bar apply with greater force to the petition under
consideration because the factual findings by the Court of Appeals are in full agreement with that
of the trial court.
Specifically, the Court of Appeals, in affirming the trial court, found that there was no prior and
perfected contract of sale that remained to be fully consummated. The appellate court explained
-
In support of their position, the defendants-appellants argue that at least a month prior to
Gregorio’s signing of the deed, Gregorio and the Spouses Paragas already agreed on the sale of
Lots 1175-E and 1175-F; and that, in fact, this agreement was partially executed by Rudy’s
payment to Gregorio of ₱50,000.00 before Gregorio signed the deed at the hospital. In line with
this position, defendants-appellants posit that Gregorio’s consent to the sale should be
determined, not at the time Gregorio signed the deed of sale on July 18, 1996, but at the time
when he agreed to sell the property in June 1996 or a month prior to the deed’s signing; and in
June 1996, Gregorio was of sound and disposing mind and his consent to the sale was in no
wise vitiated at that time. The defendants-appellants further argue that the execution or signing of
the deed of sale, however, irregular it might have been, does not affect the validity of the
previously agreed sale of the lots, as the execution or signing of the deed is merely a
formalization of a previously agreed oral contract.
...
In the absence of any note, memorandum or any other written instrument evidencing the alleged
perfected contract of sale, we have to rely on oral testimonies, which in this case is that of Atty.
de Guzman whose testimony on the alleged oral agreement may be summarized as follows: (1)
that sometime in the first week of June 1996, Gregorio requested him (Atty. de Guzman) to
prepare a deed of sale of two lots; (2) Gregorio came to his firm’s office in the morning with a
certain Doming Balacano, then returned in the afternoon with Rudy; (3) he (Atty. de Guzman)
asked Gregorio whether he really intends to sell the lots; Gregorio confirmed his intention; (4)
Gregorio and Rudy left the law office at 5:00 p.m., leaving the certificates of title; (5) he prepared
the deed a day after Rudy and Gregorio came. With regard to the alleged partial execution of this
Page 20 of 115
agreement, Atty. de Guzman said that he was told by Rudy that there was already a partial
payment of ₱50,000.00.
We do not consider Atty. de Guzman’s testimony sufficient evidence to establish the fact that
there was a prior agreement between Gregorio and the Spouses Paragas on the sale of Lots
1175-E and 1175-F. This testimony does not conclusively establish the meeting of the minds
between Gregorio and the Spouses Paragas on the price or consideration for the sale of Lots
1175-E and 1175-F – Atty. de Guzman merely declared that he was asked by Gregorio to prepare
a deed; he did not clearly narrate the details of this agreement. We cannot assume that Gregorio
and the Spouses Paragas agreed to a ₱500,000.00 consideration based on Atty. de Guzman’s
bare assertion that Gregorio asked him to prepare a deed, as Atty. de Guzman was not
personally aware of the agreed consideration in the sale of the lots, not being privy to the parties’
agreement. To us, Rudy could have been a competent witness to testify on the perfection of this
prior contract; unfortunately, the defendants-appellants did not present Rudy as their witness.
We seriously doubt too the credibility of Atty. de Guzman as a witness. We cannot rely on his
testimony because of his tendency to commit falsity. He admitted in open court that while
Gregorio signed the deed on July 18, 1996 at Bayombong, Nueva Vizcaya, he nevertheless did
not reflect these matters when he notarized the deed; instead he entered Santiago City and July
22, 1996, as place and date of execution, respectively. To us, Atty. de Guzman’s propensity to
distort facts in the performance of his public functions as a notary public, in utter disregard of the
significance of the act of notarization, seriously affects his credibility as a witness in the present
case. In fact, Atty. de Guzman’s act in falsifying the entries in his acknowledgment of the deed of
sale could be the subject of administrative and disciplinary action, a matter that we however do
not here decide.
Similarly, there is no conclusive proof of the partial execution of the contract because the only
evidence the plaintiffs-appellants presented to prove this claim was Atty. de Guzman’s testimony,
which is hearsay and thus, has no probative value. Atty. de Guzman merely stated that Rudy told
him that Rudy already gave ₱50,000.00 to Gregorio as partial payment of the purchase price;
Atty. de Guzman did not personally see the payment being made. 17
But, did Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-F when he
signed the deed of sale? The trial court as well as the appellate court found in the negative. In
the Court of Appeals’ rationale-
It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously ill, as he in
fact died a week after the deed’s signing. Gregorio died of complications caused by cirrhosis of
the liver. Gregorio’s death was neither sudden nor immediate; he fought at least a month-long
battle against the disease until he succumbed to death on July 22, 1996. Given that Gregorio
purportedly executed a deed during the last stages of his battle against his disease, we seriously
doubt whether Gregorio could have read, or fully understood, the contents of the documents he
signed or of the consequences of his act. We note in this regard that Gregorio was brought to the
Veteran’s Hospital at Quezon City because his condition had worsened on or about the time the
deed was allegedly signed. This transfer and fact of death not long after speak volumes about
Gregorio’s condition at that time. We likewise see no conclusive evidence that the contents of the
deed were sufficiently explained to Gregorio before he affixed his signature. The evidence the
defendants-appellants offered to prove Gregorio’s consent to the sale consists of the testimonies
of Atty. de Guzman and Antonio. As discussed above, we do not find Atty. de Guzman a credible
witness. Thus, we fully concur with the heretofore-quoted lower court’s evaluation of the
testimonies given by Atty. de Guzman and Antonio because this is an evaluation that the lower
court was in a better position to make.
Additionally, the irregular and invalid notarization of the deed is a falsity that raises doubts on the
regularity of the transaction itself. While the deed was indeed signed on July 18, 1996 at
Bayombong, Nueva Vizcaya, the deed states otherwise, as it shows that the deed was executed
Page 21 of 115
on July 22, 1996 at Santiago City. Why such falsity was committed, and the circumstances under
which this falsity was committed, speaks volume about the regularity and the validity of the sale.
We cannot but consider the commission of this falsity, with the indispensable aid of Atty. de
Guzman, an orchestrated attempt to legitimize a transaction that Gregorio did not intend to be
binding upon him nor on his bounty.
Article 24 of the Civil Code tells us that in all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral dependence, ignorance, indigence,
mental weakness, tender age or other handicap, the courts must be vigilant for his protection. 18
Based on the foregoing, the court of Appeals concluded that Gregorio’s consent to the sale of the
lots was absent, making the contract null and void. Consequently, the spouses Paragas could not
have made a subsequent transfer of the property to Catalino Balacano. Indeed, nemo dat quod
non habet. Nobody can dispose of that which does not belong to him. 19
We likewise find to be in accord with the evidence on record the ruling of the Court of Appeals
declaring the properties in controversy as paraphernal properties of Gregorio in the absence of
competent evidence on the exact date of Gregorio’s acquisition of ownership of these lots.
On the credibility of witnesses, it is in rhyme with reason to believe the testimonies of the
witnesses for the complainants vis-à-vis those of the defendants. In the assessment of the
credibility of witnesses, we are guided by the following well-entrenched rules: (1) that evidence to
be believed must not only spring from the mouth of a credible witness but must itself be credible,
and (2) findings of facts and assessment of credibility of witness are matters best left to the trial
court who had the front-line opportunity to personally evaluate the witnesses’ demeanor, conduct,
and behavior while testifying. 20
In the case at bar, we agree in the trial court’s conclusion that petitioners’ star witness, Atty. De
Guzman is far from being a credible witness. Unlike this Court, the trial court had the unique
opportunity of observing the demeanor of said witness. Thus, we affirm the trial court and the
Court of Appeals’ uniform decision based on the whole evidence in record holding the Deed of
Sale in question to be null and void.
In Domingo v. Court of Appeals, the Court declared as null and void the deed of sale therein
21
inasmuch as the seller, at the time of the execution of the alleged contract, was already of
advanced age and senile. We held –
. . . 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.
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: . . .
In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death bed in the
hospital. Gregorio was an octogenarian at the time of the alleged execution of the contract and
suffering from liver cirrhosis at that – circumstances which raise grave doubts on his physical and
mental capacity to freely consent to the contract. Adding to the dubiety of the purported sale and
further bolstering respondents’ claim that their uncle Catalino, one of the children of the
Page 22 of 115
decedent, had a hand in the execution of the deed is the fact that on 17 October 1996,
petitioners sold a portion of Lot 1175-E consisting of 6,416 square meters to Catalino for
₱60,000.00. One need not stretch his imagination to surmise that Catalino was in cahoots with
22
petitioners in maneuvering the alleged sale.
On the whole, we find no reversible error on the part of the appellate court in CA-G.R. CV No.
64048 that would warrant the reversal thereof.
WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision and the23
Resolution, dated 15 February 2005 and 17 May 2005, respectively, of the Court of Appeals in
24
CA-G.R. CV No. 64048 are hereby AFFIRMED. No costs.
SO ORDERED.
Sales by and between Spouses
1. Sales with Third Parties
Heirs of Ignacia VS Mijares

480 SCRA 97
G.R. No. 143826 August 28, 2003
HEIRS OF IGNACIA AGUILAR-REYES, Petitioners,

vs.
Spouses CIPRIANO MIJARES and FLORENTINA MIJARES, Respondents.
DECISION
YNARES-SANTIAGO, J.:
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 merely voidable and not void. The wife may, during the marriage and within ten years
1 2
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 and June 19,
4
2000, Resolution of the Court of Appeals in CA-G.R. No. 28464 which declared respondents as
5
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, approximately 396 square
6
meters, previously covered by Transfer Certificate of Title (TCT) No. 205445, located in
Balintawak, Quezon City and registered in the name of Spouses Vicente Reyes and Ignacia
Aguilar-Reyes. Said lot and the apartments built thereon were part of the spouses’ conjugal
7
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. Sometime in 1984, Ignacia learned that on March 1, 1983, Vicente sold Lot No. 4349-B-2
9
to respondent spouses Cipriano and Florentina Mijares for P40,000.00. As a consequence

10
thereof, TCT No. 205445 was cancelled and TCT No. 306087 was issued on April 19, 1983 in the
name of respondent spouses. She likewise found out that Vicente filed a petition for
11
Page 23 of 115
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. On September 29, 1983, the court
12
appointed Vicente as the guardian of their minor children. Subsequently, in its Order dated
13
October 14, 1983, the court authorized Vicente to sell the estate of Ignacia. 14
On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent spouses demanding
the return of her ½ share in the lot. Failing to settle the matter amicably, Ignacia filed on June 4,
1996 a complaint for annulment of sale against respondent spouses. The complaint was
15
thereafter amended to include Vicente Reyes as one of the defendants. 16
In their answer, respondent spouses claimed that they are purchasers in good faith and that the
sale was valid because it was duly approved by the court. Vicente Reyes, on the other hand,
17
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. He likewise
18
testified that respondent spouses, through the counsel they provided him, took advantage of his
illiteracy by filing a petition for the issuance of letters of administration and appointment of
guardian without his knowledge. 19
On February 15, 1990, the court a quo rendered a decision declaring the sale of Lot No. 4349-B-
2 void with respect to the share of Ignacia. It held that the purchase price of the lot was
P110,000.00 and ordered Vicente to return ½ thereof or P55,000.00 to respondent spouses. The
dispositive portion of the said decision, reads-
WHEREFORE, premises above considered, judgment is hereby rendered declaring the subject
Deed of Absolute Sale, dated March [1,] 1983 signed by and between defendants Vicente Reyes
and defendant Cipriano Mijares NULL AND VOID WITH RESPECT TO ONE-HALF (1/2) OF THE
SAID PROPERTY;
The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the
names of defendant spouses Cipriano Mijares and Florentina Mijares and to issue a new TCT in
the name of the plaintiff Ignacia Aguilar-Reyes as owner in fee simple of one-half (1/2) of said
property and the other half in the names of defendant spouses Cipriano Mijares and Florentin[a]
Mijares, upon payment of the required fees therefore;
Said defendant spouses Mijares are also ordered to allow plaintiff the use and exercise of rights,
as well as obligations, pertinent to her one-half (1/2) ownership of the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of interest
from the execution of the subject Deed of Absolute Sale on March 1, 1983, to the defendant
spouses Cipriano Mijares and Florentina Mijares which corresponds to the one-half (1/2) of the
actual purchase price by the said Mijares but is annulled in this decision (sic);
Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of P50,000.00 by
way of moral and exemplary damages, plus costs of this suit.
SO ORDERED. 20
Ignacia filed a motion for modification of the decision praying that the sale be declared void in its
entirety and that the respondents be ordered to reimburse to her the rentals they collected on the
apartments built on Lot No. 4349-B-2 computed from March 1, 1983. 1âwphi1
On May 31, 1990, the trial court modified its decision by declaring the sale void in its entirety and
ordering Vicente Reyes to reimburse respondent spouses the purchase price of P110,000, thus –
Page 24 of 115
WHEREFORE, premises considered, judgment is hereby rendered declaring the subject Deed of
Absolute Sale, dated March 1, 1983 signed by and between defendants Vicente Reyes and
defendant Cipriano Mijares as null and void ab initio, in view of the absence of the wife’s
conformity to said transaction.
Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to cancel TCT No.
306083 (sic) in the name of Cipriano Mijares and Florentin[a] Mijares and issue a new TCT in the
name of the plaintiff and defendant Ignacia Aguilar-Reyes and Vicente Reyes as owners in fee
simple, upon payment of required fees therefore.
Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten thousand
pesos (P110,000.00) with legal rate of interest at 12% per annum from the execution of the
subject Deed of Absolute Sale on March 1, 1983.
Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way of moral
and exemplary damages, plus costs of this suit.
SO ORDERED. 21
On motion of Ignacia, the court issued an Order dated June 29, 1990 amending the dispositive
22
portion of the May 31, 1990 decision by correcting the Transfer Certificate of Title of Lot No.
4349-B-2, in the name of Cipriano Mijares and Florentina Mijares, from TCT No. 306083 to TCT
No. 306087; and directing the Register of Deeds of Quezon City to issue a new title in the name
of Ignacia Aguilar-Reyes and Vicente Reyes. The Order likewise specified that Vicente Reyes
should pay Ignacia Aguilar-Reyes the amount of P50,000.00 as moral and exemplary damages. 23
Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the Court of
Appeals. Pending the appeal, Ignacia died and she was substituted by her compulsory heirs.
24 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 absence of Ignacia’s consent to the sale, the same
must be held valid in favor of respondents because they were innocent purchasers for
value. The decretal potion of the appellate court’s decision states –
26
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 of P30,000.00 as attorney’s fees
and legal expenses; and
3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.
No pronouncement as to costs.
SO ORDERED. 27
Undaunted by the denial of their motion for reconsideration, petitioners filed the instant petition
28
contending that the assailed sale of Lot No. 4392-B-2 should be annulled because respondent
spouses were not purchasers in good faith.
Page 25 of 115
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, the governing laws at the time the assailed sale was
29
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 of the husband entered into without her consent,
when such consent is required, or any act or contract of the husband which tends to defraud her
or impair her interest in the conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
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 the Court had ruled that such alienation or encumbrance by
30
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
31
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, it was categorically held that –
33
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, the Court quoted with approval the ruling of
35
the trial court that under the Civil Code, the encumbrance or alienation of a conjugal real property
by the husband absent the wife’s consent, is voidable and not void. Thus –
…Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any
real property of the conjugal partnership without the wife’s consent. The alienation or
encumbrance if so made however is not null and void. It is merely voidable. The offended wife
may bring an action to annul the said alienation or encumbrance. Thus, the provision of Article
173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned,
ask the courts for the annulment of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the husband which tends to defraud her
or impair her interest in the conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
This particular provision giving the wife ten (10) years x x x during [the] marriage to annul the
alienation or encumbrance was not carried over to the Family Code. It is thus clear that any
Page 26 of 115
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, a case involving the annulment of sale with assumption of
36
mortgages executed by the husband without the consent of the wife, it was held that the
alienation or encumbrance must be annulled in its entirety and not only insofar as the share of
the wife in the conjugal property is concerned. Although the transaction in the said case was
declared void and not merely voidable, the rationale for the annulment of the whole transaction is
the same thus –
The plain meaning attached to the plain language of the law is that the contract, in its entirety,
executed by the husband without the wife's consent, may be annulled by the wife. Had Congress
intended to limit such annulment in so far as the contract shall "prejudice" the wife, such
limitation should have been spelled out in the statute. It is not the legitimate concern of this Court
to recast the law. As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C. Puno of the
Court of First Instance correctly stated, "[t]he rule (in the first sentence of Article 173) revokes
Baello vs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430," in which cases
annulment was held to refer only to the extent of the one-half interest of the wife…
The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share
of the wife, is not without its basis in the common-sense rule. To be underscored here is that
upon the provisions of Articles 161, 162 and 163 of the Civil Code, the conjugal partnership is
liable for many obligations while the conjugal partnership exists. Not only that. The conjugal
property is even subject to the payment of debts contracted by either spouse before the
marriage, as those for the payment of fines and indemnities imposed upon them after the
responsibilities in Article 161 have been covered (Article 163, par. 3), if it turns out that the
spouse who is bound thereby, "should have no exclusive property or if it should be insufficient."
These are considerations that go beyond the mere equitable share of the wife in the property.
These are reasons enough for the husband to be stopped from disposing of the conjugal
property without the consent of the wife. Even more fundamental is the fact that the nullity is
decreed by the Code not on the basis of prejudice but lack of consent of an indispensable party
to the contract under Article 166. 37
With respect to the third issue, the Court finds that respondent spouses are not purchasers in
good faith. A purchaser in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price for the
same, at the time of such purchase, or before he has notice of the claim or interest of some other
persons in the property. He buys the property with the belief that the person from whom he
receives the thing was the owner and could convey title to the property. A purchaser cannot close
his eyes to facts which should put a reasonable man on his guard and still claim he acted in good
faith.
38
In the instant case, there existed circumstances that should have placed respondent spouses on
guard. The death certificate of Ignacia, shows that she died on March 22, 1982. The same death
certificate, however, reveals that – (1) it was issued by the Office of the Civil Registrar of Lubao
Pampanga on March 10, 1982; (2) the alleged death of Ignacia was reported to the Office of the
Page 27 of 115
Civil Registrar on March 4, 1982; and (3) her burial or cremation would be on March 8,
1982. These obvious flaws in the death certificate should have prompted respondents to
39
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. Moreover, respondent spouses had all the opportunity to verify the claim
40
of Vicente that he is a widower because it was their lawyer, Atty. Rodriguito S. Saet, who
represented Vicente in the special proceedings before the Metropolitan Trial Court.
Neither can respondent spouses rely on the alleged court approval of the sale. Note that the
Order issued by the Metropolitan Trial Court of Quezon City, Branch XXXI, appointing Vicente as
guardian of his 5 minor children, as well as the Order authorizing him to sell the estate of Ignacia
were issued only on September 29, 1983 and October 14, 1983, respectively. On the other hand,
the sale of the entire Lot No. 4349-B-2 to respondent spouses appears to have been made not
on March 1, 1983, but even as early as November 25, 1978. In the "Agreement" dated November
25, 1978, Vicente in consideration of the amount of P110,000.00, sold to Cipriano Mijares Lot No.
4349-B-2 on installment basis, with the first installment due on or before July 31, 1979. This was
41
followed by a "Memorandum of Understanding" executed on July 30, 1979, by Vicente and

Cipriano – (1) acknowledging Cipriano’s receipt of Vicente’s down payment in the amount of
P50,000.00; and (2) authorizing Florentina Mijares to collect rentals. On July 14, 1981, Vicente
42
and Cipriano executed another "Memorandum of Agreement," stating, among other, that out of
the purchase price of P110,000.00 Vicente had remaining balance of P19,000.00. Clearly
43
therefore, the special proceedings before the Metropolitan Trial Court of Quezon City, Branch
XXXI, could not have been the basis of respondent spouses’ claim of good faith because the sale
of Lot No. 4349-B-2 occurred prior thereto.
Respondent spouses cannot deny knowledge that at the time of the sale in 1978, Vicente was
married to Ignacia and that the latter did not give her conformity to the sale. This is so because
the 1978 "Agreement" described Vicente as "married" but the conformity of his wife to the sale
did not appear in the deed. Obviously, the execution of another deed of sale in 1983 over the
same Lot No. 4349-B-2, after the alleged death of Ignacia on March 22, 1982, as well as the
institution of the special proceedings were, intended to correct the absence of Ignacia’s consent
to the sale. Even assuming that respondent spouses believed in good faith that Ignacia really
died on March 22, 1982, after they purchased the lot, the fact remains that the sale of Lot No.
4349-B-2 prior to Ignacia’s alleged demise was without her consent and therefore subject to
annulment. The October 14, 1983 order authorizing the sale of the estate of Ignacia, could not
have validated the sale of Lot No. 4349-B-2 because said order was issued on the assumption
that Ignacia was already dead and that the sale dated March 1, 1983 was never categorically
approved in the said order.
The fact that the 5 minor children of Vicente represented by the latter, signed the March 1, 1983
44
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. The 45
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
Page 28 of 115
Mijares; and (2) the receipt duly signed by Vicente Reyes acknowledging receipt of the amount of
P110,000.00 from respondent spouses as payment of the sale of the controverted lot. 46
The trial court, however, erred in imposing 12% interest per annum on the amount due the
respondents. In Eastern Shipping Lines, Inc. v. Court of Appeals, it was held that interest on
47
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
48
first buyer against the seller and the second buyer, the Court, ruling in favor of the first buyer and
annulling the second sale, ordered the seller to refund to the second buyer (who was not a
purchaser in good faith) the purchase price of the lots. It was held therein that the 6% interest
should be computed from the date of the filing of the complaint by the first buyer. After the
judgment becomes final and executory until the obligation is satisfied, the amount due shall earn
interest at 12% per year, the interim period being deemed equivalent to a forbearance of credit. 49
Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined
with certainty at the time of the filing of the complaint shall earn 6% interest per annum from June
4, 1986 until the finality of this decision. If the adjudged principal and the interest (or any part
thereof) remain unpaid thereafter, the interest rate shall be twelve percent (12%) per annum
computed from the time the judgment becomes final and executory until it is fully satisfied.
Petitioner’s prayer for payment of rentals should be denied. Other than the allegation of Ignacia
in her Sinumpaang Salaysay that the apartments could be rented at P1,000.00 a month, no other
evidence was presented to substantiate her claim. In awarding rentals which are in the nature of
actual damages, the Court cannot rely on mere assertions, speculations, conjectures or
guesswork but must depend on competent proof and on the best evidence obtainable regarding
the actual amount of loss. None, having been presented in the case at bar, petitioner’s claim for
50
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. In51
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. Moral and exemplary damages are
52
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
53
moral, temperate, liquidated, or compensatory damages were likewise awarded by the court. 54
Hence, the trial court’s award of "P50,000.00 by way of moral and exemplary damages" should
be modified. Vicente Reyes should be ordered to pay the amounts of P25,000.00 as moral
damages and P25,000.00 as exemplary damages. Since Vicente Reyes was among the heirs
substituted to the late Ignacia Aguilar-Reyes, payment of moral and exemplary damages must be
made by Vicente to his children, petitioners in this case.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The January
26, 2000 Decision and June 19, 2002, Resolution of the Court of Appeals in CA-G.R. No. 28464
are REVERSED and SET ASIDE. The May 31, 1990 Order of the Regional Trial Court of Quezon
City, Branch 101, in Civil Case No. Q-48018, which annulled the March 1, 1983 Deed of Absolute
Sale over Lot No. 4349-B-2, and ordered the Register of Deeds of Quezon City to cancel TCT
No. 306087 in the name of respondent spouses Cipriano Mijares and Florentina Mijares covering
Page 29 of 115
the same property; as well as the June 29, 1990 Order correcting the typographical errors in the
order dated March 1, 1983, are REINSTATED, with the following modifications –
(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of title over
Lot No. 4349-B-2, in the name of petitioners as co-owners thereof;
(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of
P110,000.00 as purchase price of Lot No. 4349-B-2, with interest at 6% per annum from
June 4, 1986, until finality of this decision. After this decision becomes final, interest at
the rate of 12% per annum on the principal and interest (or any part thereof) shall be
imposed until full payment.
(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar-
Reyes, the amounts of P25,000.00 as moral damages and P25,000.00 as exemplary
damages.
SO ORDERED.
Guiang VS CA
291 SCRA 372
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA GUIANG, Petitioners, vs. COURT OF

APPEALS and GILDA COPUZ, Respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of both the husband and the wife. The
absence of the consent of one renders the sale null and void, while the vitiation thereof
makes it merely voidable. Only in the latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in deciding this petition for review of the
Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated
by the Court of Appeals in CA-GR CV No. 41758, affirming the Decision of the lower court
and denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against
her husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said
Complaint sought the declaration of a certain deed of sale, which involved the conjugal
property of private respondent and her husband, null and void. The case was raffled to the
Regional Trial Court of Koronadal, South Cotabato, Branch 25. In due course, the trial court
rendered a Decision 4 dated September 9, 1992, disposing as follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff and against the defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A") and
the "amicable settlement" dated March 16, 1990 (Exh. "B") as null void and of no effect;
Page 30 of 115
2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda
Corpuz over the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which has
been the subject of the Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang the

amount of NINE THOUSAND (P9,000.00) PESOS corresponding to the payment made by
defendants Guiangs to Manuel Callejo for the unpaid balance of the account of plaintiff in
favor of Manuel Callejo, and another sum of P379.62 representing one-half of the amount of
realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-165409, both with
legal interests thereon computed from the finality of the decision.
No pronouncement as to costs in view of the factual circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent

Court, in its challenged Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby AFFIRMED by
this Court. No costs considering plaintiff-appellee's failure to file her brief despite notice.
Reconsideration was similarly denied by the same court in its assailed Resolution: 7
Finding that the issues raised in defendants-appellants motion for reconsideration of Our
decision in this case of January 30, 1996, to be a mere rehash of the same issues which we
have already passed upon in the said decision, and there [being] no cogent reason to
disturb the same, this Court RESOLVED to DENY the instant motion for reconsideration for
lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and while she
was in Manila seeking employment, her husband sold to the petitioners-spouses one half of
their conjugal peoperty, consisting of their residence and the lot on which it stood. The
circumstances of this sale are set forth in the Decision of Respondent Court, which quoted
from the Decision of the trial court as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They
were married on December 24, 1968 in Bacolod City, before a judge. This is admitted by
defendants-spouses Antonio and Luzviminda Guiang in their answer, and also admitted by
defendant Judie Corpuz when he testified in court (tsn. p. 3, June 9, 1992), although the
latter says that they were married in 1967. The couple have three children, namely: Junie -
18 years old, Harriet - 17 years of age, and Jodie or Joji, the youngest, who was 15 years of
age in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with plaintiff-wife Gilda
Corpuz as vendee, bought a 421 sq. meter lot located in Barangay Gen. Paulino Santos (Bo.
1), Koronadal, South Cotabato, and particularly known as Lot 9, Block 8, (LRC) Psd-165409
from Manuel Callejo who signed as vendor through a conditional deed of sale for a total
consideration of P14,735.00. The consideration was payable in installment, with right of
cancellation in favor of vendor should vendee fail to pay three successive installments (Exh.
"2", tsn p. 6, February 14, 1990).
Page 31 of 115
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half portion
of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses Antonio and
Luzviminda Guiang. The latter have since then occupied the one-half portion [and] built
their house thereon (tsn. p. 4, May 22, 1992). They are thus adjoining neighbors of the
Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to look
for work abroad, in [the] Middle East. Unfortunately, she became a victim of an
unscrupulous illegal recruiter. She was not able to go abroad. She stayed for sometime in
Manila however, coming back to Koronadal, South Cotabato, . . . on March 11, 1990.
Plaintiff's departure for Manila to look for work in the Middle East was with the consent of
her husband Judie Corpuz (tsn. p. 16, Aug. 12, 1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz seldom went home to the
conjugal dwelling. He stayed most of the time at his place of work at Samahang Nayon
Building, a hotel, restaurant, and a cooperative. Daughter Herriet Corpuz went to school at
King's College, Bo. 1, Koronadal, South Cotabato, but she was at the same time working as
household help of, and staying at, the house of Mr. Panes. Her brother Junie was not
working. Her younger sister Jodie (Jojie) was going to school. Her mother sometimes sent
them money (tsn. p. 14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that her father intended to sell the
remaining one-half portion including their house, of their homelot to defendants Guiangs.
She wrote a letter to her mother informing her. She [Gilda Corpuz] replied that she was
objecting to the sale. Harriet, however, did not inform her father about this; but instead
gave the letter to Mrs. Luzviminda Guiang so that she [Guiang] would advise her father (tsn.
pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed
through the sale of the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409. On
March 1, 1990, he sold to defendant Luzviminda Guiang thru a document known as "Deed
of Transfer of Rights" (Exh. "A") the remaining one-half portion of their lot and the house
standing thereon for a total consideration of P30,000.00 of which P5,000.00 was to be paid
in June, 1990. Transferor Judie Corpuz's children Junie and Harriet signed the document as
witness.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in
defendant Judie Corpuz's title over the lot transferred, defendant Luzviminda Guiang as
vendee executed another agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh. "3"), this
time with Manuela Jimenez Callejo, a widow of the original registered owner from whom the
couple Judie and Gilda Corpuz originally bought the lot (Exh. "2"), who signed as vendor for
a consideration of P9,000.00. Defendant Judie Corpuz signed as a witness to the sale (Exh.
"3-A"). The new sale (Exh. "3") describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408
but it is obvious from the mass of evidence that the correct lot is Lot 8, Block 9, (LRC) Psd-
165409, the very lot earlier sold to the couple Gilda and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home. She found her children
staying with other households. Only Junie was staying in their house. Harriet and Joji were
with Mr. Panes. Gilda gathered her children together and stayed at their house. Her husband
was nowhere to be found. She was informed by her children that their father had a wife
already.
Page 32 of 115
6. For staying in their house sold by her husband, plaintiff was complained against by
defendant Luzviminda Guiang and her husband Antonio Guiang before the Barangay
authorities of Barangay General Paulino Santos (Bo. 1), Koronadal, South Cotabato, for
trespassing (tsn. p. 34, Aug. 17, 1990). The case was docketed by the barangay authorities
as Barangay Case No. 38 for "trespassing". On March 16, 1990, the parties thereat signed a
document known as "amicable settlement". In full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie, Hariet and Judie
to leave voluntarily the house of Mr. and Mrs. Antonio Guiang, where they are presently
boarding without any charge, on or before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff to the Barangay
Captain of Barangay Paulino Santos to question her signature on the amicable settlement.
She was referred however to the Office-In-Charge at the time, a certain Mr. de la Cruz. The
latter in turn told her that he could not do anything on the matter (tsn. p. 31, Aug. 17,
1990).
This particular point not rebutted. The Barangay Captain who testified did not deny that
Mrs. Gilda Corpuz approached him for the annulment of the settlement. He merely said he
forgot whether Mrs. Corpuz had approached him (tsn. p. 13, Sept. 26, 1990). We thus
conclude that Mrs. Corpuz really approached the Barangay Captain for the annulment of the
settlement. Annulment not having been made, plaintiff stayed put in her house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with a motion for
the execution of the amicable settlement, filing the same with the Municipal Trial Court of
Koronadal, South Cotabato. The proceedings [are] still pending before the said court, with
the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation
of the Deed of Transfer of Rights, Exh. "A", P9,000.00 as the amount they paid to Mrs.
Manuela Callejo, having assumed the remaining obligation of the Corpuzes to Mrs. Callejo
(Exh. "3"); P100.00 for the preparation of Exhibit "3"; a total of P759.62 basic tax and
special education fund on the lot; P127.50 as the total documentary stamp tax on the
various documents; P535.72 for the capital gains tax; P22.50 as transfer tax; a standard fee
of P17.00; certification fee of P5.00. These expenses particularly the taxes and other
expenses towards the transfer of the title to the spouses Guiangs were incurred for the
whole Lot 9, Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling that any alienation or
encumbrance by the husband of the conjugal propety without the consent of his wife is null
and void as provided under Article 124 of the Family Code. It also rejected petitioners'
contention that the "amicable sttlement" ratified said sale, citing Article 1409 of the Code
which expressly bars ratification of the contracts specified therein, particularly those
"prohibited or declared void by law."
Hence, this petition. 9
The Issues
Page 33 of 115
In their Memorandum, petitioners assign to public respondent the following errors: 10
Whether or not the assailed Deed of Transfer of Rights was validly executed.
II
Whether or not the Cour of Appeals erred in not declairing as voidable contract under Art.
1390 of the Civil Code the impugned Deed of Transfer of Rights which was validly ratified
thru the execution of the "amicable settlement" by the contending parties.
III
Whether or not the Court of Appeals erred in not setting aside the findings of the Court a
quo which recognized as lawful and valid the ownership and possession of private
respondent over the remaining one half (1/2) portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of
Rights) was merely voidable, and (2) such contract was ratified by private respondent when
she entered into an amicable sttlement with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the
parties-litigants in good faith and for valuable consideration. The absence of private
respondent's consent merely rendered the Deed voidable under Article 1390 of the Civil
Code, which provides:
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are
susceptible of ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2, refers to contracts visited
by vices of consent, i.e., contracts which were entered into by a person whose consent was
obtained and vitiated through mistake, violence, intimidation, undue influence or fraud. In
this instance, private respondent's consent to the contract of sale of their conjugal property
was totally inexistent or absent. Gilda Corpuz, on direct examination, testified thus: 11
Q Now, on March 1, 1990, could you still recall where you were?
Page 34 of 115
A I was still in Manila during that time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any problem which arose concerning
the ownership of your residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which arose regarding my
residential house and lot because it was sold by my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of the Family
Code, which was correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the conjugal partnerhip properly shall
belong to both spouses jointly. In case of disgreement, the husband's decision shall prevail,
subject recourse to the court by the wife for proper remedy, which must be availed of within
five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the other spouse. In
the absence of such authority or consent, the disposition or encumbrance shall be void.
However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors. (165a) (Emphasis supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly
explained the amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or encumbrance is void. It becomes still clearer
if we compare the same with the equivalent provision of the Civil Code of the Philippines.
Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any
real property of the conjugal partnershit without the wife's consent. The alienation or
encumbrance if so made however is not null and void. It is merely voidable. The offended
wife may bring an action to annul the said alienation or encumbrance. Thus the provision of
Article 173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property.
Should the wife fail to exercise this right, she or her heirs after the dissolution of the
marriage, may demand the value of property fraudulently alienated by the husband.(n)
Page 35 of 115
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.
Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners
were perpetrated in the execution of the document embodying the amicable settlement.
Gilda Corpuz alleged during trial that barangay authorities made her sign said document
through misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the deed of sale
between the husband and the petitioners-spouses, as will be discussed later. The fact
remains that such contract was entered into without the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private respondent's
consent. To constitute a valid contract, the Civil Code requires the concurrence of the
following elements: (1) cause, (2) object, and (3) consent, 14 the last element being
indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver that it was duly
ratified by the contending parties through the "amicable settlement" they executed on
March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved this issue in
favor of the private respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to Transfer of
Rights (Exh. "A") cannot be ratified, even by an "amicable settlement". The participation by
some barangay authorities in the "amicable settlement" cannot otherwise validate an invalid
act. Moreover, it cannot be denied that the "amicable settlement (Exh. "B") entered into by
plaintiff Gilda Corpuz and defendent spouses Guiang is a contract. It is a direct offshoot of
the Deed of Transfer of Rights (Exh. "A"). By express provision of law, such a contract is
also void. Thus, the legal provision, to wit:
Art. 1422. Acontract which is the direct result of a previous illegal contract, is also void
and inexistent. (Civil Code of the Philippines).
In summation therefore, both the Deed of transfer of Rights (Exh. "A") and the "amicable
settlement" (Exh. "3") are null and void.
Doctrinally and clearly, a void contract cannot be ratified. 16
Neither can the "amicable settlement" be considered a continuing offer that was accepted
and perfected by the parties, following the last sentence of Article 124. The order of the
pertinent events is clear: after the sale, petitioners filed a complaint for trespassing against
private respondent, after which the barangay authorities secured an "amicable settlement"
and petitioners filed before the MTC a motion for its execution. The settlement, however,
does not mention a continuing offer to sell the property or an acceptance of such a
continuing offer. Its tenor was to the effect that private respondent would vacate the
Page 36 of 115
property. By no stretch of the imagination, can the Court interpret this document as the
acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision
and Resolution. Costs against petitioners.
SO ORDERED.
Abalos VS Macatangay Jr.

439 SCRA 64
SECOND DIVISION
G.R. No. 155043 September 30, 2004
ARTURO R. ABALOS, petitioner,

vs.
DR. GALICANO S. MACATANGAY, JR., respondent.
DECISION
TINGA, J.:
The instant petition seeks a reversal of the Decision of the Court of Appeals in CA-G.R. CV No.
48355 entitled "Dr. Galicano S. Macatangay, Jr. v. Arturo R. Abalos and Esther Palisoc-Abalos,"
promulgated on March 14, 2002. The appellate court reversed the trial court’s decision which
dismissed the action for specific performance filed by respondent, and ordered petitioner and his
wife to execute in favor of herein respondent a deed of sale over the subject property.
Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with
improvements located at Azucena St., Makati City consisting of about three hundred twenty-
seven (327) square meters, covered by Transfer Certificate of Title (TCT) No. 145316 of the
Registry of Deeds of Makati.
Armed with a Special Power of Attorney dated June 2, 1988, purportedly issued by his wife,
Arturo executed a Receipt and Memorandum of Agreement (RMOA) dated October 17, 1989, in
favor of respondent, binding himself to sell to respondent the subject property and not to offer the
same to any other party within thirty (30) days from date. Arturo acknowledged receipt of a check
from respondent in the amount of Five Thousand Pesos (₱5,000.00), representing earnest
money for the subject property, the amount of which would be deducted from the purchase price
of One Million Three Hundred Three Hundred Thousand Pesos (₱1,300,000.00). Further, the
RMOA stated that full payment would be effected as soon as possession of the property shall
have been turned over to respondent.
Subsequently, Arturo’s wife, Esther, executed a Special Power of Attorney dated October 25,
1989, appointing her sister, Bernadette Ramos, to act for and in her behalf relative to the transfer
of the property to respondent. Ostensibly, a marital squabble was brewing between Arturo and
Esther at the time and to protect his interest, respondent caused the annotation of his adverse
claim on the title of the spouses to the property on November 14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and Esther informing them of his
readiness and willingness to pay the full amount of the purchase price. The letter contained a
demand upon the spouses to comply with their obligation to turn over possession of the property
to him. On the same date, Esther, through her attorney-in-fact, executed in favor of respondent, a
Contract to Sell the property to the extent of her conjugal interest therein for the sum of six
Page 37 of 115
hundred fifty thousand pesos (₱650,000.00) less the sum already received by her and Arturo.
Esther agreed to surrender possession of the property to respondent within twenty (20) days
from November 16, 1989, while the latter promised to pay the balance of the purchase price in
the amount of one million two hundred ninety thousand pesos (₱1,290,000.00) after being placed
in possession of the property. Esther also obligated herself to execute and deliver to respondent
a deed of absolute sale upon full payment.
In a letter dated December 7, 1989, respondent informed the spouses that he had set aside the
amount of One Million Two Hundred Ninety Thousand Pesos (₱1,290,000.00) as evidenced by
Citibank Check No. 278107 as full payment of the purchase price. He reiterated his demand
upon them to comply with their obligation to turn over possession of the property. Arturo and
Esther failed to deliver the property which prompted respondent to cause the annotation of
another adverse claim on TCT No. 145316. On January 12, 1990, respondent filed a complaint
for specific performance with damages against petitioners. Arturo filed his answer to the
complaint while his wife was declared in default.
The Regional Trial Court (RTC) dismissed the complaint for specific performance. It ruled that
the Special Power of Attorney (SPA) ostensibly issued by Esther in favor of Arturo was void as it
was falsified. Hence, the court concluded that the SPA could not have authorized Arturo to sell
the property to respondent. The trial court also noted that the check issued by respondent to
cover the earnest money was dishonored due to insufficiency of funds and while it was replaced
with another check by respondent, there is no showing that the second check was issued as
payment for the earnest money on the property.
On appeal taken by respondent, the Court of Appeals reversed the decision of the trial court. It
ruled that the SPA in favor of Arturo, assuming that it was void, cannot affect the transaction
between Esther and respondent. The appellate court ratiocinated that it was by virtue of the SPA
executed by Esther, in favor of her sister, that the sale of the property to respondent was
effected. On the other hand, the appellate court considered the RMOA executed by Arturo in
favor of respondent valid to effect the sale of Arturo’s conjugal share in the property.
Dissatisfied with the appellate court’s disposition of the case, petitioner seeks a reversal of its
decision alleging that:
I.
The Court of Appeals committed serious and manifest error when it decided on the
appeal without affording petitioner his right to due process.
II.
The Court of Appeals committed serious and manifest error in reversing and setting aside
the findings of fact by the trial court.
III.
The Court of Appeals erred in ruling that a contract to sell is a contract of sale, and in
ordering petitioner to execute a registrable form of deed of sale over the property in favor
of respondent.1
Petitioner contends that he was not personally served with copies of summons, pleadings, and
processes in the appeal proceedings nor was he given an opportunity to submit an appellee’s
brief. He alleges that his counsel was in the United States from 1994 to June 2000, and he never
received any news or communication from him after the proceedings in the trial court were
terminated. Petitioner submits that he was denied due process because he was not informed of
Page 38 of 115
the appeal proceedings, nor given the chance to have legal representation before the appellate
court.
We are not convinced. The essence of due process is an opportunity to be heard. Petitioner’s
failure to participate in the appeal proceedings is not due to a cause imputable to the appellate
court but because of petitioner’s own neglect in ascertaining the status of his case. Petitioner’s
counsel is equally negligent in failing to inform his client about the recent developments in the
appeal proceedings. Settled is the rule that a party is bound by the conduct, negligence and
mistakes of his counsel.2 Thus, petitioner’s plea of denial of due process is downright baseless.
Petitioner also blames the appellate court for setting aside the factual findings of the trial court
and argues that factual findings of the trial court are given much weight and respect when
supported by substantial evidence. He asserts that the sale between him and respondent is void
for lack of consent because the SPA purportedly executed by his wife Esther is a forgery and
therefore, he could not have validly sold the subject property to respondent.
Next, petitioner theorizes that the RMOA he executed in favor of respondent was not perfected
because the check representing the earnest money was dishonored. He adds that there is no
evidence on record that the second check issued by respondent was intended to replace the first
check representing payment of earnest money.
Respondent admits that the subject property is co-owned by petitioner and his wife, but he
objects to the allegations in the petition bearing a relation to the supposed date of the marriage
of the vendors. He contends that the alleged date of marriage between petitioner and his wife is
a new factual issue which was not raised nor established in the court a quo. Respondent claims
that there is no basis to annul the sale freely and voluntarily entered into by the husband and the
wife.
The focal issue in the instant petition is whether petitioner may be compelled to convey the
property to respondent under the terms of the RMOA and the Contract to Sell. At bottom, the
resolution of the issue entails the ascertainment of the contractual nature of the two documents
and the status of the contracts contained therein.
Contracts, in general, require the presence of three essential elements: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of
the obligation which is established.3
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a

binding juridical relation.4 In a contract of sale, the seller must consent to transfer ownership in
exchange for the price, the subject matter must be determinate, and the price must be certain in
money or its equivalent.5 Being essentially consensual, a contract of sale is perfected at the
moment there is a meeting of the minds upon the thing which is the object of the contract and
upon the price.6 However, ownership of the thing sold shall not be transferred to the vendee until
actual or constructive delivery of the property.7
On the other hand, an accepted unilateral promise which specifies the thing to be sold and the
price to be paid, when coupled with a valuable consideration distinct and separate from the price,
is what may properly be termed a perfected contract of option. 8 An option merely grants a
privilege to buy or sell within an agreed time and at a determined price. It is separate and distinct
from that which the parties may enter into upon the consummation of the option. 9 A perfected
contract of option does not result in the perfection or consummation of the sale; only when the
option is exercised may a sale be perfected.10 The option must, however, be supported by a
consideration distinct from the price.11
Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the property to respondent for a
price certain within a period of thirty days. The RMOA does not impose upon respondent an
Page 39 of 115
obligation to buy petitioner’s property, as in fact it does not even bear his signature thereon. It is
quite clear that after the lapse of the thirty-day period, without respondent having exercised his
option, Arturo is free to sell the property to another. This shows that the intent of Arturo is merely
to grant respondent the privilege to buy the property within the period therein stated. There is
nothing in the RMOA which indicates that Arturo agreed therein to transfer ownership of the land
which is an essential element in a contract of sale. Unfortunately, the option is not binding upon
the promissory since it is not supported by a consideration distinct from the price. 12
As a rule, the holder of the option, after accepting the promise and before he exercises his
option, is not bound to buy. He is free either to buy or not to buy later. In Sanchez v. Rigos13 we
ruled that in an accepted unilateral promise to sell, the promissor is not bound by his promise
and may, accordingly, withdraw it, since there may be no valid contract without a cause or
consideration. Pending notice of its withdrawal, his accepted promise partakes of the nature of
an offer to sell which, if acceded or consented to, results in a perfected contract of sale.
Even conceding for the nonce that respondent had accepted the offer within the period stated
and, as a consequence, a bilateral contract of purchase and sale was perfected, the outcome
would be the same. To benefit from such situation, respondent would have to pay or at least
make a valid tender of payment of the price for only then could he exact compliance with the
undertaking of the other party.14 This respondent failed to do. By his own admission, he merely
informed respondent spouses of his readiness and willingness to pay. The fact that he had set
aside a check in the amount of One Million Two Hundred Ninety Thousand Pesos
(₱1,290,000.00) representing the balance of the purchase price could not help his cause. Settled
is the rule that tender of payment must be made in legal tender. A check is not legal tender, and
therefore cannot constitute a valid tender of payment. 15 Not having made a valid tender of
payment, respondent’s action for specific performance must fail.
With regard to the payment of Five Thousand Pesos (₱5,000.00), the Court is of the view that the
amount is not earnest money as the term is understood in Article 1482 which signifies proof of
the perfection of the contract of sale, but merely a guarantee that respondent is really interested
to buy the property. It is not the giving of earnest money, but the proof of the concurrence of all
the essential elements of the contract of sale which establishes the existence of a perfected
sale.16 No reservation of ownership on the part of Arturo is necessary since, as previously stated,
he has never agreed to transfer ownership of the property to respondent.
Granting for the sake of argument that the RMOA is a contract of sale, the same would still be
void not only for want of consideration and absence of respondent’s signature thereon, but also
for lack of Esther’s conformity thereto. Quite glaring is the absence of the signature of Esther in
the RMOA, which proves that she did not give her consent to the transaction initiated by Arturo.
The husband cannot alienate any real property of the conjugal partnership without the wife’s
consent.17
However, it was the Contract to Sell executed by Esther through her attorney-in-fact which the
Court of Appeals made full use of. Holding that the contract is valid, the appellate court explained
that while Esther did not authorize Arturo to sell the property, her execution of the SPA
authorizing her sister to sell the land to respondent clearly shows her intention to convey her
interest in favor of respondent. In effect, the court declared that the lack of Esther’s consent to
the sale made by Arturo was cured by her subsequent conveyance of her interest in the property
through her attorney-in-fact.
We do not share the ruling.
The nullity of the RMOA as a contract of sale emanates not only from lack of Esther’s consent
thereto but also from want of consideration and absence of respondent’s signature thereon. Such
nullity cannot be obliterated by Esther’s subsequent confirmation of the putative transaction as
expressed in the Contract to Sell. Under the law, a void contract cannot be ratified 18 and the
Page 40 of 115
action or defense for the declaration of the inexistence of a contract does not prescribe. 19 A void
contract produces no effect either against or in favor of anyone–it cannot create, modify or
extinguish the juridical relation to which it refers.20
True, in the Contract to Sell, Esther made reference to the earlier RMOA executed by Arturo in
favor of respondent. However, the RMOA which Arturo signed is different from the deed which
Esther executed through her attorney-in-fact. For one, the first is sought to be enforced as a
contract of sale while the second is purportedly a contract to sell only. For another, the terms and
conditions as to the issuance of title and delivery of possession are divergent.
The congruence of the wills of the spouses is essential for the valid disposition of conjugal
property. Where the conveyance is contained in the same document which bears the conformity
of both husband and wife, there could be no question on the validity of the transaction. But when
there are two (2) documents on which the signatures of the spouses separately appear, textual
concordance of the documents is indispensable. Hence, in this case where the wife’s putative
consent to the sale of conjugal property appears in a separate document which does not,
however, contain the same terms and conditions as in the first document signed by the husband,
a valid transaction could not have arisen.
Quite a bit of elucidation on the conjugal partnership of gains is in order.
Arturo and Esther appear to have been married before the effectivity of the Family Code. There
being no indication that they have adopted a different property regime, their property relations
would automatically be governed by the regime of conjugal partnership of gains. 21
The subject land which had been admittedly acquired during the marriage of the spouses forms
part of their conjugal partnership. 22
Under the Civil Code, the husband is the administrator of the conjugal partnership. This right is
clearly granted to him by law.23 More, the husband is the sole administrator. The wife is not
entitled as of right to joint administration.24
The husband, even if he is statutorily designated as administrator of the conjugal partnership,

cannot validly alienate or encumber any real property of the conjugal partnership without the
wife’s consent.25 Similarly, the wife cannot dispose of any property belonging to the conjugal
partnership without the conformity of the husband. The law is explicit that the wife cannot bind
the conjugal partnership without the husband’s consent, except in cases provided by law. 26
More significantly, it has been held that prior to the liquidation of the conjugal partnership, the
interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes
neither a legal nor an equitable estate, and does not ripen into title until it appears that there are
assets in the community as a result of the liquidation and settlement. The interest of each spouse
is limited to the net remainder or "remanente liquido" (haber ganancial) resulting from the
liquidation of the affairs of the partnership after its dissolution. 27 Thus, the right of the husband or
wife to one-half of the conjugal assets does not vest until the dissolution and liquidation of the
conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after
settlement of conjugal obligations, there are net assets left which can be divided between the
spouses or their respective heirs.28
In not a few cases, we ruled that the sale by the husband of property belonging to the conjugal
partnership without the consent of the wife when there is no showing that the latter is
incapacitated is void ab initio because it is in contravention of the mandatory
requirements of Article 166 of the Civil Code.29 Since Article 166 of the Civil Code requires the
consent of the wife before the husband may alienate or encumber any real property of the
Page 41 of 115
conjugal partnership, it follows that acts or transactions executed against this mandatory
provision are void except when the law itself authorizes their validity. 30
Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals,31 we ruled
that neither spouse could alienate in favor of another, his or her interest in the partnership or in
any property belonging to it, or ask for partition of the properties before the partnership itself had
been legally dissolved. Nonetheless, alienation of the share of each spouse in the conjugal
partnership could be had after separation of property of the spouses during the marriage had
been judicially decreed, upon their petition for any of the causes specified in Article 191 32 of the
Civil Code in relation to Article 21433 thereof.
As an exception, the husband may dispose of conjugal property without the wife’s consent if such
sale is necessary to answer for conjugal liabilities mentioned in Articles 161 and 162 of the Civil
Code.34 In Tinitigan v. Tinitigan, Sr.,35the Court ruled that the husband may sell property belonging
to the conjugal partnership even without the consent of the wife if the sale is necessary to answer
for a big conjugal liability which might endanger the family’s economic standing. This is one
instance where the wife’s consent is not required and, impliedly, no judicial intervention is
necessary.
Significantly, the Family Code has introduced some changes particularly on the aspect of the
administration of the conjugal partnership. The new law provides that the administration of the
conjugal partnership is now a joint undertaking of the husband and the wife. In the event that one
spouse is incapacitated or otherwise unable to participate in the administration of the conjugal
partnership, the other spouse may assume sole powers of administration. However, the power of
administration does not include the power to dispose or encumber property belonging to the
conjugal partnership.36 In all instances, the present law specifically requires the written consent of
the other spouse, or authority of the court for the disposition or encumbrance of conjugal
partnership property without which, the disposition or encumbrance shall be void. 37
Inescapably, herein petitioner’s action for specific performance must fail. Even on the supposition
that the parties only disposed of their respective shares in the property, the sale, assuming that it
exists, is still void for as previously stated, the right of the husband or the wife to one-half of the
conjugal assets does not vest until the liquidation of the conjugal partnership. Nemo dat qui non
habet. No one can give what he has not.
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE. The complaint in
Civil Case No. 90-106 of the Regional Trial Court of Makati is ordered DISMISSED. No
pronouncement as to costs.
SO ORDERED.
2. Sales between spouses
Medina VS Collector
1 SCRA 302
EN BANC
G.R. No. L-15113 January 28, 1961
ANTONIO MEDINA, petitioner,

vs.
COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS respondents.
Page 42 of 115
Eusebio D. Morales for petitioner.
Office of the Solicitor General for respondents.
REYES, J.B.L. J.:
Petition to review a decision of the Court of Tax Appeals upholding a tax assessment of the
Collector of Internal Revenue except with respect to the imposition of so-called compromise
penalties, which were set aside.
The records show that on or about May 20, 1944, petitioning taxpayer Antonio Medina married
Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own.
Later, however, petitioner acquired forest, concessions in the municipalities of San Mariano and
Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and removed by the
petitioner from his concessions were sold to different persons in Manila through his agent,
Mariano Osorio.
Some time in 1949, Antonia R. Medina, petitioner's wife, started to engage in business as a
lumber dealer, and up to around 1952, petitioner sold to her almost all the logs produced in his
San Mariano, concession. Mrs. Medina, In turn, sold in Manila the logs bought from her husband
through the same agent, Mariano Osorio. The proceeds were, upon instructions from petitioner,
either received by Osorio for petitioner or deposited by said agent in petitioner's current account
with the Philippine National Bank.
On the thesis that the sales made by petitioner to his wife were null and void pursuant to the
provisions of Article 1490 of the Civil Code of the Philippines (formerly, Art. 1458, Civil Code of
1889), the Collector considered the sales made by Mrs. Medina as the petitioner's original sales
taxable under Section 186 of the National Internal Revenue Code and, therefore, imposed a tax
assessment on petitioner, calling for the payment of P4,553.54 as deficiency sales taxes and
surcharges from 1949 to 1952. This same assessment of September 26, 1953 sought also the
collection of another sum of P643.94 as deficiency sales tax and surcharge based on petitioner's
quarterly returns from 1946 to 1952.
On November 30, 1953, petitioner protested the assessment; however, respondent Collector
insisted on his demand. On July 9, 1954, petitioner filed a petition for reconsideration revealing
for the first time the existence of an alleged premarital agreement of complete separation of
properties between him and his wife, and contending that the assessment for the years 1946 to
1952 had already prescribed. After one hearing, the Conference Staff of the Bureau of Internal
Revenue eliminated the 50% fraud penalty and held that the taxes assessed against him before
1948 had already prescribed. Based on these findings, the Collector issued a modified
assessment, demanding the payment of only P3,325.68, computed as follows:
5% tax due on P7,209.83 -1949 P 360.49

5% tax due on 16,945.55 - 1950 847.28
5% tax due on 16,874.52 - 1951 843.75
5% tax due on 11,009.94 - 1952 550.50
TOTAL sales tax due P2,602.0
25% Surcharge thereon 650.51
Short taxes per quarterly returns, 3rd 58.52
quarter, 1950
25% Surcharge thereon 14.63
TOTAL AMOUNT due & collectible P3,325.68
Page 43 of 115
Petitioner again requested for reconsideration, but respondent Collector, in his letter of April 4,
1955, denied the same.
Petitioner appealed to the Court of Tax Appeals, which rendered judgment as aforesaid. The
Court's decision was based on two main findings, namely, (a) that there was no premarital
agreement of absolute separation of property between the Medina spouse; and (b) assuming
that there was such an agreement, the sales in question made by petitioner to his wife were
fictitious, simulated, and not bona fide.
In his petition for review to this Court, petitioner raises several assignments of error revolving
around the central issue of whether or not the sales made by the petitioner to his wife could be
considered as his original taxable sales under the provisions of Section 186 of the National
Internal Revenue Code.
Relying mainly on testimonial evidence that before their marriage, he and his wife executed and
recorded a prenuptial agreement for a regime of complete separation of property, and that all
trace of the document was lost on account of the war, petitioner imputes lack of basis for the tax
court's factual finding that no agreement of complete separation of property was ever executed
by and between the spouses before their marriage. We do not think so. Aside from the material
inconsistencies in the testimony of petitioner's witnesses pointed out by the trial court, the
circumstantial evidence is against petitioner's claim. Thus, it appears that at the time of the
marriage between petitioner and his wife, they neither had any property nor business of their
own, as to have really urged them to enter into the supposed property agreement. Secondly, the
testimony that the separation of property agreement was recorded in the Registry of Property
three months before the marriage, is patently absurd, since such a prenuptial agreement could
not be effective before marriage is celebrated, and would automatically be cancelled if the union
was called off. How then could it be accepted for recording prior to the marriage? In the third
place, despite their insistence on the existence of the ante nuptial contract, the couple, strangely
enough, did not act in accordance with its alleged covenants. Quite the contrary, it was proved
that even during their taxable years, the ownership, usufruct, and administration of their
properties and business were in the husband. And even when the wife was engaged in lumber
dealing, and she and her husband contracted sales with each other as aforestated, the proceeds
she derived from her alleged subsequent disposition of the logs — incidentally, by and through
the same agent of her husband, Mariano Osorio — were either received by Osorio for the
petitioner or deposited by said agent in petitioner's current account with the Philippine National
Bank. Fourth, although petitioner, a lawyer by profession, already knew, after he was informed by
the Collector on or about September of 1953, that the primary reason why the sales of logs to his
wife could not be considered as the original taxable sales was because of the express prohibition
found in Article 1490 of the Civil Code of sales between spouses married under a community
system; yet it was not until July of 1954 that he alleged, for the first time, the existence of the
supposed property separation agreement. Finally, the Day Book of the Register of Deeds on
which the agreement would have been entered, had it really been registered as petitioner insists,
and which book was among those saved from the ravages of the war, did not show that the
document in question was among those recorded therein.
We have already ruled that when the credibility of witnesses is the one at issue, the trial court's
judgment as to their degree of credence deserves serious consideration by this Court (Collector
vs. Bautista, et al., G.R. Nos. L-12250 & L-12259, May 27, 1959). This is all the more true in this
case because not every copy of the supposed agreement, particularly the one that was said to
have been filed with the Clerk of Court of Isabela, was accounted for as lost; so that, applying the
"best evidence rule", the court did right in giving little or no credence to the secondary evidence
to prove the due execution and contents of the alleged document (see Comments on the Rules
of Court, Moran, 1957 Ed., Vol. 3, pp. 10.12).
The foregoing findings notwithstanding, the petitioner argues that the prohibition to sell
expressed under Article 1490 of the Civil Code has no application to the sales made by said
Page 44 of 115
petitioner to his wife, because said transactions are contemplated and allowed by the provisions
of Articles 7 and 10 of the Code of Commerce. But said provisions merely state, under certain
conditions, a presumption that the wife is authorized to engage in business and for the incidents
that flow therefrom when she so engages therein. But the transactions permitted are those
entered into with strangers, and do not constitute exceptions to the prohibitory provisions of
Article 1490 against sales between spouses.
Petitioner's contention that the respondent Collector can not assail the questioned sales, he
being a stranger to said transactions, is likewise untenable. The government, as correctly pointed
out by the Tax Court, is always an interested party to all matters involving taxable transactions
and, needless to say, qualified to question their validity or legitimacy whenever necessary to
block tax evasion.
Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy Sui Pin
vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca 45 Phil. 43). Being void transactions, the sales
made by the petitioner to his wife were correctly disregarded by the Collector in his tax
assessments that considered as the taxable sales those made by the wife through the spouses'
common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.
It is also the petitioner's contention that the lower court erred in using illegally seized
documentary evidence against him. But even assuming arguendo the truth of petitioner's charge
regarding the seizure, it is now settled in this jurisdiction that illegally obtained documents and
papers are admissible in evidence, if they are found to be competent and relevant to the case
(see Wong & Lee vs. Collector of Internal Revenue, G.R. No. L-10155, August 30, 1958). In
fairness to the Collector, however, it should be stated that petitioner's imputation is vehemently
denied by him, and relying on Sections 3, 9, 337 and 338 of the Tax Code and the pertinent
portions of Revenue Regulations No. V-1 and citing this Court's ruling in U.S. vs. Aviado, 38 Phil.
10, the Collector maintains that he and other internal revenue officers and agents could require
the production of books of accounts and other records from a taxpayer. Having arrived at the
foregoing conclusion, it becomes unnecessary to discuss the other issues raised, which are but
premised on the assumption that a premarital agreement of total separation of property existed
between the petitioner and his wife.
WHEREFORE, the decision appealed from is affirmed, with costs against the petitioner.
Padilla, Bautista Angelo, Labrador, Barrera, Gutierrez David and Dizon, JJ., concur.
Separate Opinions
CONCEPCION, J., concurring:
I concur in the result. I do not share the view that documents and papers illegally obtained are
admissible in evidence, if competent and relevant to the case. In this connection, I believe in the
soundness of the following observations of the Supreme Court of the United States in Weeks v.
United States (232 US 383, 58 L. ed. 652, 34 S. Ct. 341):1
The effect of the Fourth Amendment is to put the courts of the United States and Federal
officials, in the exercise of their power and authority, under limitations and restraints as to
the exercise of such power and authority, an to forever secure the people, their persons,
houses, papers, and effects against all unreasonable searches and seizures under the
guise of law. This protection reaches all alike, whether accused of crime or not, and the
duty of giving to it force and effect is obligatory upon all entrusted under our Federal
system with the enforcement of the laws. The tendency of those who execute the criminal
Page 45 of 115
laws of the country to obtain conviction by means of unlawful seizures and enforced
confessions, the latter often obtained after subjecting accused persons to unwarranted
practices destructive of rights secured by the Federal Constitution, should find no
sanction in the judgments of the courts which are charged at all times with the support of
the Constitution and to which people of all conditions have a right to appeal for the
maintenance of such fundamental rights.
xxx xxx xxx
If letters and private documents can thus be seized and held and used in evidence,
against a citizen accused of an offense, the protection of the Fourth. Amendment
declaring his right to be secured against such searches and seizures is of no value, and,
so far as those thus placed are concerned well be stricken from the Constitution. The
efforts of the courts and their officials to bring the guilty to punishment, praiseworthy as
they are, are not to be aided by the sacrifice of those great principles established by
years of endeavor and suffering which have resulted in their embodiment in the
fundamental law of the land." as applied and amplified in Elkins v. United States (June
27, 1960), 4 L. ed. 1669.
Medina VS CA
317 SCRA 696
G.R. No. L-34760 September 28, 1973
SERAFIN MEDINA and ROSALIA M. DEL CARMEN, assisted by DOMINADOR DEL

CARMEN, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE COURT OF FIRST INSTANCE
OF ZAMBALES and BEDA GONZALES, respondents.
Beltran, Beltran and Beltran for petitioners.
Jose S. Sarte and Felipe K. Medina for private respondent.
TEEHANKEE, J.:
In this review by certiorari of the appellate court's resolution dismissing the petition filed by
petitioners challenging the lower court's orders appointing private respondent Beda Gonzales as
special administrator of the intestate estate of the decedent Agustin Medina, the Court excludes
the said special administrator from interfering in the possession and enjoyment of the harvests of
the property known as "Bitukang Manok" by petitioner Rosalia M. del Carmen to whom the said
property had been sold, and full payment therefor received, by the estate through Gonzales'
predecessor with the approval of the lower court, which overruled Gonzales' opposition thereto
as an assignee of some heirs of the estate, and as one personally interested in the purchase of
the property for himself.
The Court's action is based on the established doctrine that a person with an adverse conflicting
interest is unsuitable for the trust reposed in an administrator of an estate. Respondent
Gonzales, whose appeal of the lower court's order of approval of the sale to the Court of Appeals
is pending, cannot be at the same time an appellant in his personal capacity opposing the sale of
the property and an appellee representing the estate and upholding the same sale as made by
the estate through Gonzales' predecessor as special administrator with the due approval and
Page 46 of 115
confirmation of the lower court. Since the estate proceedings have been pending for over 13
years now without the lower court once having appointed a regular administrator, said court is
directed to name a suitable person as regular administrator charged with the task of
accomplishing the administration of the estate with the utmost reasonable dispatch.
From the papers submitted with the petition, it appears that as noted by respondent court of first
instance of Zambales, presided by Judge Augusto M. Amores in an order dated March 6,
1970, wherein it approved and confirmed the deed of sale executed on May 8, 1969 by then
1
special administrator Demetrio Encarnacion of the intestate estate of the decedent Agustin
Medina covering the sale of its property known as "Bitukang Manok" for P24,000.00 to petitioner
Rosalia M. del Carmen, a daughter-heir of the decedent, the said intestate proceedings have
"already lasted for over ten (10) years now contrary to the spirit of the law in the settlement of
estates the most expeditious way", and the said court expressed its "desire ... to terminate the
proceedings once and for all."
Respondent lower court, through its said order, overruled the opposition of therein oppositor-heir
Uldarico S. Medina and of assignee Beda J. Gonzales, private respondent herein, who claimed
therein "to have an interest over the estate on the ground that certain heirs have already sold
their shares and/or interest over the same in his favor" as being "without merit." It found
Uldarico's interest as "confined solely to his desire to partake of whatever share he has in the
estate in the same way with that of the rest of the heirs." It further held that respondent Beda J.
Gonzales "could not ... claim a better right over that of the herein vendee Rosalia Medina del
Carmen in the deed of sale because the said Beda J. Gonzales is merely subrogated, if at all, to
the interests of the heirs concerned who according to the records, have received more benefits
from the estate even before its distribution as against that of the vendee, who according to the
records has never received anything yet from the estate." 2
In the same order, upon "suggestion and agreement of the parties" which the lower court
"considered to be well taken for the speedy termination of the instant proceedings," it designated
its clerk of court, Atty. Pastor de Castro, Jr. as "special administrator and to qualify immediately
as such in lieu of special administrator Demetrio Encarnacion." 3
No regular administrator to settle the estate once and for all appears to have ever been
appointed by respondent lower court during the period of over thirteen years that the estate has
been pending settlement.
Respondent Gonzales appealed respondent court's order of approval and confirmation of the
sale of the "Bitukang Manok" property as an interested party-assignee opposed to the sale
executed by the estate of the deceased Agustin Medina through its then special administrator
Demetrio Encarnacion, later replaced by the clerk of court, Atty. Pastor de Castro, Jr., as above
stated, on his assertion that he had bought the rights of the other heirs of the estate — those of a
majority of the heirs, according to his answer at bar. The appeal is now pending in the Court of
Appeals. 4
Almost a year later, in an order dated February 11, 1971, acting on the motion dated October 5,
1970 of respondent Gonzales for appointment as regular administrator of the estate, respondent
lower court appointed him "not as a regular administrator but only as special administrator for the
intestate estate of the deceased Agustin Medina" and he qualified as such upon posting of the
bond fixed in the amount of P5,000.00 and replaced "judicial administrator Pastor de Castro, Jr." 5
An urgent motion dated March 22, 1971 to revoke Gonzales' appointment as special
administrator on the ground that "by said order, Beda Gonzales is now assuming the inconsistent
positions of administering the estate especially the Bitukang Manok property and at the same
time appealing from the order approving the sale of that property only for the purpose of enabling
himself to buy and acquire that property to the loss and prejudice of the estate contrary to
law" was denied by respondent lower court in its order dated July 21, 1971.
6 7
Page 47 of 115
In the same order of July 21, 1971, said court also rejected the petitioner Rosalia's petition dated
May 5, 1971, for the appointment of a regular administrator as "very urgent and necessary" and
proposing that co-petitioner Serafin Medina, as heir and son and next of kin of the decedent, who
has no adverse interests in his favor and against the estate and is a qualified and competent
resident of Olongapo City be named as such, holding that:
... considering that whatever rights and interest the heirs may have over the
estate now under administration by Beda J. Gonzales could be amply protected
since the said special administrator has posted a bond in the amount of
P5,000.00; considering further that there is no showing that said administrator
has been remiss in the performance of his duties or violated the trust reposed on
him as administrator; and in order not to delay any further the termination of this
proceeding which has lagged long enough, the Court finds said petition of Serafin
Medina to be without merit and the same is hereby denied and the appointment
of said J. Gonzales as special administrator is hereby retained. 8
Reconsideration having been denied by respondent lower court under its order of September 28,
1971, petitioners instituted in the Court of Appeals an action for certiorari with preliminary
injunction under date of September 20, 1971, citing respondent Gonzales' conflicting interests as
special administrator and as "interested buyer ... persisting in objecting to the sale, in his desire
to be the buyer (of the Bitukang Manok property) despite Court approval, thereby causing the
estate unnecessary delay and expense to the prejudice of the other heirs" and his interference
with and collection of the harvests of the said property duly sold to petitioner Rosalia M. del
Carmen, as well as pressing for the appointment instead of petitioner Serafin Medina, as
disinterested heir and next of kin, as administrator of the estate.9
Respondent court of appeals, however, under its resolution of January 6, 1972, found the
"petition insufficient in substance to merit due course" and ordered the dismissal thereof, on the
ground "(1) that it is not disputed that the lower court has jurisdiction to appoint respondent Beda
J. Gonzales as special administrator; (2) that petitioners merely allege that the lower court had
gravely abused its discretion without any prima facie showing to this effect: (3) considering
further that the lower court had considered and resolved herein petitioners' objections to
respondent Gonzales' continuation as such administrator, to wit, [quoting the considerations
stated in the lower court's order dated July 21, 1971, already quoted hereinabove]; considering,
finally, that it is well-settled that the actuations of the trial court should not be disturbed except
upon showing of lack of jurisdiction or grave abuse of discretion on the part of the tribunal,
involving whimsical and/or capricious exercise of discretion."
Their motion for reconsideration of such dismissal having failed, petitioners instituted the present
action for review on February 23, 1972. The Court issued on February 29, 1972 a temporary
restraining order restraining respondent lower court and respondent Gonzales "from
implementing (the lower court's) orders dated February 11, 1971, July 21, 1971 and September
28, 1971 ... and from otherwise interfering in the possession by the petitioner Rosalia M. del
Carmen of a property known as "Bitukang Manok" of the intestate estate of the deceased Agustin
Medina ... and private respondent ... from interfering in the cultivation and harvests or otherwise
disturbing the possession of aforementioned property by said petitioner." Upon the Court's giving
due course to the petition per its resolution of March 24, 1972, it ordered the issuance of a writ of
preliminary injunction to the same effect upon the posting of an injunction bond of P2,000.00, and
such writ was issued on May 29, 1972.
Insofar as the petition assails the appointment of respondent Gonzales as special administrator
giving rise to the anomalous situation "where in an appealed intestate case to the Court of
Appeals (CA-G.R. No. 49439-R, entitled "Intestate Estate of the Deceased Agustin R. Medina;
Pastor de Castro, Jr. (now Beda Gonzales) Special Administrator, versus Uldarico Medina and
Beda J. Gonzales, Movant's) the appellate and the appellant are one and the same person," the
petition is manifestly meritorious and must be granted.The sale to Rosalia of the Bitukang Manok
Page 48 of 115
property having been approved and confirmed by respondent lower court over the personal
opposition of said respondent on March 6, 1970 which approval he appealed to the Court of
Appeals, his subsequent appointment as special administrator of the estate a year later under
respondent lower court's order of February 11, 1971 created a clear conflict of interest that could
cause grave damage and prejudice to the estate and subject it to unnecessary suits.
With specific reference to the Bitukang Manok property as sold by the estate through Gonzales'
predecessor as special administrator and confirmed by the lower court, the same has passed to
petitioner Rosalia's ownership and possession since the court's confirmation of the sale
on March 6, 1970 and the estate makes no further claim against the same but on the contrary
has defended the sale and Rosalia's title thereto as the vendee thereof as against Gonzales'
adverse opposition in the appeal brought by Gonzales in his personal capacity. Yet now, as
complained of by Rosalia, Gonzales by virtue of his appointment, as special administrator a year
later seeks in such other capacity to interfere with her in the harvests of the property purportedly
on behalf of the estate when in fact he is going against the official stand of the estate
which upholds the sale.
It is readily seen thereby that Gonzales has been placed in an unduly favored position where he
may use his position as special administrator to favor his personal interests as one interested in
the purchase of the property for himself, although he denies obliquely in his brief such personal
interest with the statement that "there is no evidence or pleading of record that (he) is interested
in the acquisition for himself of the Bitukang Manok property ... and it is a matter of record that
having acquired the rights and interests of the majority of the heirs, he had stepped into the
shoes of such heirs, hence, his concern and interest to protect the estate, as special
administrator" — which is to say, to protect his claimed majority interest in the estate, hence his
10
insistence on opposing the sale.
Grave prejudice may thus be inflicted by him on petitioner Rosalia's as an heir as well as the
other heirs such as petitioner Serafin Medina because of the further delay (13 years now) in their
receiving their distributive shares of their father's estate (as against their co-heirs who have sold
and assigned their rights and shares in the estate to Gonzales) as well as to Rosalia
as buyer because of Gonzales' interference with her enjoyment of the property paid for in full by
her since 1970.
Hence, the established doctrine that an administrator is deemed unsuitable and should be
removed where his personal interests conflict with his official duties, by virtue of the equally
established principle that an administrator is a quasi trustee, disqualified from acquiring
properties of the estate, and who should be indifferent between the estate and claimants of the
11
property except to preserve it for due administration, and who should be removed when his
interest conflicts with such right and duly.
12
As restated by the Court in Lim vs. Dias-Millares, "(I)n this jurisdiction, one is considered to be
13
unsuitable for appointment as administrator when he has adverse interest of some kind of
hostility to those immediately interested in the estate.".
The Court noted from the questioned order of February 11, 1971 that respondent Gonzales was
designated special administrator in replacement of the lower court's clerk of court, Atty. Pastor de
Castro, Jr., who had been appointed as such in the earlier order of March 6, 1970. The Court
does not look with favor on such practice of clerks of court or other court employees being
appointed as administrators of estates of decedents pending settlement before the probate court.
The objectivity and impartiality of such clerks of court or other employees so appointed as
administrators in discharging their regular functions may be easily compromised by extraneous
considerations. Furthermore, because of the administrator's fees and compensation payable to
them, it is not inconceivable that self-interest intrudes and consciously or unconsciously,
obstacles are placed against the prompt settlement and termination of the proceedings in
derogation of the primordial purpose of the law to strive to have the estate settled expeditiously
Page 49 of 115
and promptly so that the benefits that may flow therefrom may be immediately enjoyed by the
decedent's heirs and beneficiaries. Probate courts are therefore enjoined to desist from such
14
practice of appointing their clerks of court or other court employees as administrators or receivers
of estates or the like.
On this consideration (the replacement of the clerk of court) and on the further consideration of
the specific and limited powers of special administrators and that their appointment
merely temporary and subsists only until a regular administrator is duly appointed (since Rule 80,
section 1 provides for the appointment of a special administrator as a caretaker only "when there
is delay in granting letters testamentary or of administration by any cause") the Court has
15
resolved to allow the appointment of respondent Gonzales as special administrator to stand,

insofar as taking care of the other properties of the estate are concerned, to the exclusion of the
Bitukang Manok property already sold by the estate to petitioner Rosalia del Carmen. (The said
property shall pertain to said petitioner's possession and enjoyment as the vendee thereof and in
the event that the appellate courts find cause to set aside the lower court's confirmation of the
sale in her favor in the pending appeal of Gonzales in his personal capacity, then shall be the
time for the estate and/or the heirs to reclaim possession of the property upon return to her of the
purchase price paid by her).
The Court has finally noted that while the estate involved is not large and there seem to be no
complicated questions that have impeded its prompt settlement, and notwithstanding the lower
court's avowed desire to terminate the proceedings once and for all, the said estate proceedings
have been pending now for over thirteen years without the lower court once having appointed
a regular administrator in accordance with the Rules of Court to take charge of the settlement
thereof and the distribution and partition of the net estate to the heirs entitled thereto.
As time and again stated by the Court, while the provisions of the Rules of Court may be deemed
directory in nature, "the speedy settlement of the estates of deceased persons for the benefit of
creditors and those entitled to residue by way of inheritance or legacy after the debts and
expenses of administration have been paid, is the ruling spirit of our probate law" and "courts of
16
first instance should exert themselves to close up estate within twelve months from the time they
are presented, and they may refuse to allow any compensation to executors and
administrators who do not actively labor to that end, and they may even adopt harsher
measures." 17
As in the cited jurisprudence, therefore, respondent lower court is directed to name a suitable
person or entity, who is competent and qualified and doesnot suffer from any proscribed conflict
of interest, (and preferably upon the common agreement of the heirs, to avoid any further
bickerings) as regular administrator charged with the task of accomplishing and terminating the
administration of the estate with the utmost reasonable dispatch, with a view to an early
distribution of the net estate among the heirs and persons entitled thereto.
ACCORDINGLY, the dismissal resolution of the Court of Appeals is hereby modified and in lieu
thereof, judgment is entered allowing the appointment of respondent Gonzales special
administrator to stand, insofar as taking care temporarily of the other properties of the estate are
concerned, but to the exclusion of the Bitukang Manok property previously sold by the estate to
petitioner Rosalia M. del Carmen, who is entitled to the enjoyment of said property as the vendee
thereof.
The writ of preliminary injunction heretofore granted is hereby ordered liftedexcept as to the
portion thereof enjoining private respondent from interfering in the cultivation and harvests or
otherwise disturbing the possession of the Bitukang Manok property by petitioner Rosalia M. del
Carmen which is hereby made permanent.
Respondent lower court is ordered to implement the above directive of this Court to name a
suitable person as regular administrator charged with the task of accomplishing and terminating
Page 50 of 115
the administration of the estate with the utmost reasonable dispatch and to submit a report of his
action thereon to the Court within thirty (30) days from notice of entry of this judgment.
Without pronouncement as to costs. SO ORDERED.
Matabuena VS Cervantes
38 SCRA 284
[ G.R. No. L-28771, March 31, 1971 ]

CORNELIA MATABUENA, PLAINTIFF-APPELLANT, VS. PETRONILA CERVANTES,
DEFENDANT-APPELLEE.
DECISION
FERNANDO, J.:
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 of 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 Felix Matabuena 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 a 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-donee and the now deceased donor and later said
donor and donee 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]
Page 51 of 115
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
Matabuena were 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,[7] interpreting 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 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 aplicacion 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]
Page 52 of 115
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.
Manonsong VS Estimo
404 SCRA 683
G. R. No. 136773 June 25, 2003
MILAGROS MANONGSONG, joined by her husband, CARLITO MANONGSONG, Petitioners,

vs.
FELOMENA JUMAQUIO ESTIMO, EMILIANA JUMAQUIO, NARCISO ORTIZ, CELESTINO
ORTIZ, RODOLFO ORTIZ, ERLINDA O. OCAMPO, PASTOR ORTIZ, JR., ROMEO ORTIZ
BENJAMIN DELA CRUZ, SR., BENJAMIN DELA CRUZ, JR., AURORA NICOLAS, GLORIA
RACADIO, ROBERTO DELA CRUZ, JOSELITO DELA CRUZ and LEONCIA S. LOPEZ,
Respondents.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review1 assailing the Decision2 of 26 June 1998 and the
Resolution of 21 December 1998 of the Court of Appeals in CA-G.R. CV No. 51643. The
Court of Appeals reversed the Decision dated 10 April 1995 of the Regional Trial Court of
Makati City, Branch 135, in Civil Case No. 92-1685, partitioning the property in controversy
and awarding to petitioners a portion of the property.
Antecedent Facts
Spouses Agatona Guevarra ("Guevarra") and Ciriaco Lopez had six (6) children, namely: (1)
Dominador Lopez; (2) Enriqueta Lopez-Jumaquio, the mother of respondents Emiliana
Jumaquio Rodriguez and Felomena Jumaquio Estimo ("Jumaquio sisters"); (3) Victor Lopez,
married to respondent Leoncia Lopez; (4) Benigna Lopez-Ortiz, the mother of respondents
Narciso, Celestino, Rodolfo, Pastor Jr. and Romeo Ortiz, and Erlinda Ortiz Ocampo; (5)
Rosario Lopez-dela Cruz, married to respondent Benjamin dela Cruz, Sr. and the mother of
respondents Benjamin Jr., Roberto, and Joselito, all surnamed dela Cruz, and of Gloria dela
Cruz Racadio and Aurora dela Cruz Nicolas; and (6) Vicente Lopez, the father of petitioner
Milagros Lopez Manongsong ("Manongsong").
The contested property is a parcel of land on San Jose Street, Manuyo Uno, Las Piñas, Metro
Manila with an area of approximately 152 square meters ("Property"). The records do not
show that the Property is registered under the Torrens system. The Property is particularly
described in Tax Declaration No. B-001-003903 as bounded in the north by Juan Gallardo,
south by Calle Velay, east by Domingo Lavana and west by San Jose Street. Tax Declaration
No. B-001-00390 was registered with the Office of the Municipal Assessor of Las Piñas on 30
September 1984 in the name of "Benigna Lopez, et al".4 However, the improvements on the
portion of the Property denominated as No. 831 San Jose St., Manuyo Uno, Las Piñas were
Page 53 of 115
separately declared in the name of "Filomena J. Estimo" under Tax Declaration No. 90-001-
02145 dated 14 October 1991.5
Milagros and Carlito Manongsong ("petitioners") filed a Complaint6 on 19 June 1992,

alleging that Manongsong and respondents are the owners pro indiviso of the Property.
Invoking Article 494 of the Civil Code,7 petitioners prayed for the partition and award to
them of an area equivalent to one-fifth (1/5) of the Property or its prevailing market value,
and for damages.
Petitioners alleged that Guevarra was the original owner of the Property. Upon Guevarra’s
death, her children inherited the Property. Since Dominador Lopez died without offspring,
there were only five children left as heirs of Guevarra. Each of the five children, including
Vicente Lopez, the father of Manongsong, was entitled to a fifth of the Property. As Vicente
Lopez’ sole surviving heir, Manongsong claims her father’s 1/5 share in the Property by right
of representation.
There is no dispute that respondents, who are the surviving spouses of Guevarra’s children
and their offspring, have been in possession of the Property for as long as they can
remember. The area actually occupied by each respondent family differs, ranging in size
from approximately 25 to 50 square meters. Petitioners are the only descendants not
occupying any portion of the Property.
Most respondents, specifically Narciso, Rodolfo, Pastor Jr., and Celestino Ortiz, and Erlinda
Ortiz Ocampo ("Ortiz family"), as well as Benjamin Sr., Benjamin Jr., and Roberto dela Cruz,
Aurora dela Cruz Nicolas and Gloria Dela Cruz Racadio ("Dela Cruz family"), entered into a
compromise agreement with petitioners. Under the Stipulation of Facts and Compromise
Agreement8 dated 12 September 1992 ("Agreement"), petitioners and the Ortiz and Dela
Cruz families agreed that each group of heirs would receive an equal share in the Property.
The signatories to the Agreement asked the trial court to issue an order of partition to this
effect and prayed further that "those who have exceeded said one-fifth (1/5) must be
reduced so that those who have less and those who have none shall get the correct and
proper portion."9
Among the respondents, the Jumaquio sisters and Leoncia Lopez – who each occupy 50
square meter portions of the Property – and Joselito dela Cruz, did not sign the
Agreement.10 However, only the Jumaquio sisters actively opposed petitioners’ claim. The
Jumaquio sisters contended that Justina Navarro ("Navarro"), supposedly the mother of
Guevarra, sold the Property to Guevarra’s daughter Enriqueta Lopez Jumaquio.
The Jumaquio sisters presented provincial Tax Declaration No. 91111 for the year 1949 in
the sole name of Navarro. Tax Declaration No. 911 described a residential parcel of land
with an area of 172.51 square meters, located on San Jose St., Manuyo, Las Piñas, Rizal
with the following boundaries: Juan Gallardo to the north, I. Guevarra Street to the south,
Rizal Street to the east and San Jose Street to the west. In addition, Tax Declaration No.
911 stated that the houses of "Agatona Lopez" and "Enriquita Lopez" stood on the Property
as improvements.
The Jumaquio sisters also presented a notarized KASULATAN SA BILIHAN NG LUPA12

("Kasulatan") dated 11 October 1957, the relevant portion of which states:
AKO SI JUSTINA NAVARRO, sapat ang gulang, may asawa, Pilipino at naninirahan sa LAS
PIÑAS, ay siyang nagma-may-ari at nagtatangkilik ng isang lagay na lupa na matatagpuan
Page 54 of 115
sa Manuyo, Las Piñas, Rizal, lihis sa anomang pagkakautang lalong napagkikilala sa
pamamagitan ng mga sumusunod na palatandaan:
BOUNDARIES:
NORTH: JUAN GALLARDO SOUTH: I. GUEVARRA ST. EAST: RIZAL ST., WEST: SAN JOSE
ST.,
na may sukat na 172.51 metros cuadrados na may TAX DECLARATION BILANG 911.
NA DAHIL AT ALANG ALANG sa halagang DALAWANG DAAN LIMANGPUNG PISO (₱250.00),

SALAPING PILIPINO, na sa akin ay kaliwang iniabot at ibinayad ni ENRIQUETA LOPEZ, may
sapat na gulang, Pilipino, may asawa at naninirahan sa Las Piñas, Rizal, at sa karapatang ito
ay aking pinatutunayan ng pagkakatanggap ng nasabing halaga na buong kasiyahan ng
aking kalooban ay aking IPINAGBILI, ISINALIN AT INILIPAT sa nasabing, ENRIQUETA
LOPEZ, sa kanyang mga tagapagmana at kahalili, ang kabuuang sukat ng lupang nabanggit
sa itaas nito sa pamamagitan ng bilihang walang anomang pasubali. Ang lupang ito ay
walang kasama at hindi taniman ng palay o mais.
Simula sa araw na ito ay aking ililipat ang pagmamay-ari at pagtatangkilik ng nasabing lupa
kay ENRIQUETA LOPEZ sa kanilang/kanyang tagapagmana at kahalili x x x.
The Clerk of Court of the Regional Trial Court of Manila certified on 1 June 1994 that the
"‘KASULATAN SA BILIHAN NG LUPA’, between Justina Navarro (Nagbili) and Enriqueta Lopez
(Bumili), was notarized by Atty. Ruperto Q. Andrada on 11 October 1957 and entered in his
Notarial Register xxx."13 The certification further stated that Atty. Andrada was a duly
appointed notary public for the City of Manila in 1957.
Because the Jumaquio sisters were in peaceful possession of their portion of the Property
for more than thirty years, they also invoked the defense of acquisitive prescription against
petitioners, and charged that petitioners were guilty of laches. The Jumaquio sisters argued
that the present action should have been filed years earlier, either by Vicente Lopez when
he was alive or by Manongsong when the latter reached legal age. Instead, petitioners filed
this action for partition only in 1992 when Manongsong was already 33 years old.
The Ruling of the Trial Court
After trial on the merits, the trial court in its Decision14 of 10 April 1995 ruled in favor of
petitioners. The trial court held that the Kasulatan was void, even absent evidence attacking
its validity. The trial court declared:
It appears that the ownership of the estate in question is controverted. According to

defendants Jumaquios, it pertains to them through conveyance by means of a Deed of Sale
executed by their common ancestor Justina Navarro to their mother Enriqueta, which deed
was presented in evidence as Exhs. "4" to "4-A". Plaintiff Milagros Manongsong debunks the
evidence as fake. The document of sale, in the observance of the Court, is however duly
authenticated by means of a certificate issued by the RTC of the Manila Clerk of Court as
duly notarized public document (Exh. "5"). No countervailing proof was adduced by plaintiffs
to overcome or impugn the document’s legality or its validity.
xxx The conveyance made by Justina Navarro is subject to nullity because the property
conveyed had a conjugal character. No positive evidence had been introduced that it was
Page 55 of 115
solely a paraphernal property. The name of Justina Navarro’s spouse/husband was not
mentioned and/or whether the husband was still alive at the time the conveyance was made
to Justina Navarro. Agatona Guevarra as her compulsory heir should have the legal right to
participate with the distribution of the estate under question to the exclusion of others. She
is entitled to her legitime. The Deed of Sale [Exhs "4" & "4-1"(sic)] did not at all provide for
the reserved legitime or the heirs, and, therefore it has no force and effect against Agatona
Guevarra and her six (6) legitimate children including the grandchildren, by right of
representation, as described in the order of intestate succession. The same Deed of Sale
should be declared a nullity ab initio. The law on the matter is clear. The compulsory heirs
cannot be deprived of their legitime, except on (sic) cases expressly specified by law like for
instance disinheritance for cause. xxx (Emphasis supplied)
Since the other respondents had entered into a compromise agreement with petitioners, the
dispositive portion of the trial court’s decision was directed against the Jumaquio sisters
only, as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and

against the remaining active defendants, Emiliana Jumaquio and Felomena J. Estimo, jointly
and severally, ordering:
1. That the property consisting of 152 square meters referred to above be immediately
partitioned giving plaintiff Milagros Lopez-Manongsong her lawful share of 1/5 of the area in
square meters, or the prevailing market value on the date of the decision;
2. Defendants to pay plaintiffs the sum of ₱10,000.00 as compensatory damages for having
deprived the latter the use and enjoyment of the fruits of her 1/5 share;
3. Defendants to pay plaintiffs’ litigation expenses and attorney’s fee in the sum of
₱10,000.00; and
4. Defendants to pay the costs of suit.
SO ORDERED.15 (Emphasis supplied)
When the trial court denied their motion for reconsideration, the Jumaquio sisters appealed
to the Court of Appeals.
The Ruling of the Court of Appeals
Petitioners, in their appellee’s brief before the Court of Appeals, presented for the first time
a supposed photocopy of the death certificate16 of Guevarra, which stated that Guevarra’s
mother was a certain Juliana Gallardo. Petitioner also attached an affidavit17 from Benjamin
dela Cruz, Sr. attesting that he knew Justina Navarro only by name and had never met her
personally, although he had lived for some years with Agatona Guevarra after his marriage
with Rosario Lopez. On the basis of these documents, petitioners assailed the genuineness
and authenticity of the Kasulatan.
The Court of Appeals refused to take cognizance of the death certificate and affidavit
presented by petitioners on the ground that petitioners never formally offered these
documents in evidence.
Page 56 of 115
The appellate court further held that the petitioners were bound by their admission that
Navarro was the original owner of the Property, as follows:
Moreover, plaintiffs-appellees themselves admitted before the trial court that Justina
Navarro and not Juliana Gallardo was the original owner of the subject property and was the
mother of Agatona Navarro (sic). Plaintiffs-appellees in their Reply-Memorandum averred:
"As regards the existence of common ownership, the defendants clearly admit as follows:
xxx xxx xxx
‘History of this case tells us that originally the property was owned by JUSTINA NAVARRO
who has a daughter by the name of AGATONA GUEVARRA who on the other hand has six
children namely: xxx xxx xxx.’
which point-out that co-ownership exists on the property between the parties. Since this is
the admitted history, facts of the case, it follows that there should have been proper
document to extinguish this status of co-ownership between the common owners either by
(1) Court action or proper deed of tradition, xxx xxx xxx."
The trial court confirms these admissions of plaintiffs-appellees. The trial court held:
"x x x xxx xxx
With the parties’ admissions and their conformity to a factual common line of relationship of
the heirs with one another, it has been elicited ascendant Justina Navarro is the common
ancestor of the heirs herein mentioned, however, it must be noted that the parties failed to
amplify who was the husband and the number of compulsory heirs of Justina Navarro. xxx
xxx xxx"
Therefore, plaintiffs-appellees cannot now be heard contesting the fact that Justina Navarro
was their common ancestor and was the original owner of the subject property.
The Court of Appeals further held that the trial court erred in assuming that the Property
was conjugal in nature when Navarro sold it. The appellate court reasoned as follows:
However, it is a settled rule that the party who invokes the presumption that all property of
marriage belongs to the conjugal partnership, must first prove that the property was
acquired during the marriage. Proof of acquisition during the coveture is a condition sine
qua non for the operation of the presumption in favor of conjugal ownership.
In this case, not a single iota of evidence was submitted to prove that the subject property
was acquired by Justina Navarro during her marriage. xxx
The findings of the trial court that the subject property is conjugal in nature is not supported
by any evidence.
To the contrary, records show that in 1949 the subject property was declared, for taxation
purposes under the name of Justina Navarro alone. This indicates that the land is the
paraphernal property of Justina Navarro.
For these reasons, the Court of Appeals reversed the decision of the trial court, thus:
Page 57 of 115
WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED and SET
ASIDE. A new one is hereby rendered DISMISSING plaintiffs-appellees’ complaint in so far
as defendants-appellants are concerned.
Costs against plaintiffs-appellees.
SO ORDERED.18
Petitioners filed a motion for reconsideration, but the Court of Appeals denied the same in
its Resolution of 21 December 1998.19
On 28 January 1999, petitioners appealed the appellate court’s decision and resolution to
this Court. The Court initially denied the petition for review due to certain procedural
defects. The Court, however, gave due course to the petition in its Resolution of 31 January
2000.20
The Issues
Petitioners raise the following issues before this Court:
1. WHETHER PETITIONER HAS NO COUNTERVAILING EVIDENCE ON THE ALLEGED SALE

BY ONE JUSTINA NAVARRO;
2. WHETHER THERE IS PRETERITION AND THE ISSUES RAISED ARE REVIEWABLE;
3. WHETHER THERE IS CO-OWNERSHIP PRO INDIVISO;
4. WHETHER THE RULE OF THE MAJORITY CO-OWNERS ON THE LAND SHOULD PREVAIL;
5. WHETHER THE ALLEGED SALE IS VALID AND BINDS THE OTHER CO-HEIRS;
6. WHETHER PRESCRIPTION APPLIES AGAINST THE SHARE OF PETITIONERS.21
The fundamental question for resolution is whether petitioners were able to prove, by the
requisite quantum of evidence, that Manongsong is a co-owner of the Property and
therefore entitled to demand for its partition.
The Ruling of the Court
The petition lacks merit.
The issues raised by petitioners are mainly factual in nature. In general, only questions of
law are appealable to this Court under Rule 45. However, where the factual findings of the
trial court and Court of Appeals conflict, this Court has the authority to review and, if
necessary, reverse the findings of fact of the lower courts.22 This is precisely the situation in
this case.
We review the factual and legal issues of this case in light of the general rules of evidence
and the burden of proof in civil cases, as explained by this Court in Jison v. Court of Appeals
:23
Page 58 of 115
xxx Simply put, he who alleges the affirmative of the issue has the burden of proof, and
upon the plaintiff in a civil case, the burden of proof never parts. However, in the course of
trial in a civil case, once plaintiff makes out a prima facie case in his favor, the duty or the
burden of evidence shifts to defendant to controvert plaintiff's prima facie case, otherwise, a
verdict must be returned in favor of plaintiff. Moreover, in civil cases, the party having the
burden of proof must produce a preponderance of evidence thereon, with plaintiff having to
rely on the strength of his own evidence and not upon the weakness of the defendant’s. The
concept of "preponderance of evidence" refers to evidence which is of greater weight, or
more convincing, that which is offered in opposition to it; at bottom, it means probability of
truth.
Whether the Court of Appeals erred in affirming the validity of the Kasulatan sa Bilihan ng
Lupa
Petitioners anchor their action for partition on the claim that Manongsong is a co-owner or
co-heir of the Property by inheritance, more specifically, as the heir of her father, Vicente
Lopez. Petitioners likewise allege that the Property originally belonged to Guevarra, and that
Vicente Lopez inherited from Guevarra a 1/5 interest in the Property. As the parties claiming
the affirmative of these issues, petitioners had the burden of proof to establish their case by
preponderance of evidence.
To trace the ownership of the Property, both contending parties presented tax declarations
and the testimonies of witnesses. However, the Jumaquio sisters also presented a notarized
KASULATAN SA BILIHAN NG LUPA which controverted petitioners’ claim of co-ownership.
The Kasulatan, being a document acknowledged before a notary public, is a public

document and prima facie evidence of its authenticity and due execution. To assail the
authenticity and due execution of a notarized document, the evidence must be clear,
convincing and more than merely preponderant.24 Otherwise the authenticity and due
execution of the document should be upheld.25 The trial court itself held that "(n)o
countervailing proof was adduced by plaintiffs to overcome or impugn the document’s
legality or its validity."26
Even if the Kasulatan was not notarized, it would be deemed an ancient document and thus
still presumed to be authentic. The Kasulatan is: (1) more than 30 years old, (2) found in
the proper custody, and (3) unblemished by any alteration or by any circumstance of
suspicion. It appears, on its face, to be genuine.27
Nevertheless, the trial court held that the Kasulatan was void because the Property was
conjugal at the time Navarro sold it to Enriqueta Lopez Jumaquio. We do not agree. The trial
court’s conclusion that the Property was conjugal was not based on evidence, but rather on
a misapprehension of Article 160 of the Civil Code, which provides:
All property of the marriage is presumed to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband or to the wife.
As the Court of Appeals correctly pointed out, the presumption under Article 160 of the Civil
Code applies only when there is proof that the property was acquired during the marriage.
Proof of acquisition during the marriage is an essential condition for the operation of the
presumption in favor of the conjugal partnership.28
Page 59 of 115
There was no evidence presented to establish that Navarro acquired the Property during her
marriage. There is no basis for applying the presumption under Article 160 of the Civil Code
to the present case. On the contrary, Tax Declaration No. 911 showed that, as far back as in
1949, the Property was declared solely in Navarro’s name.29 This tends to support the
argument that the Property was not conjugal.
We likewise find no basis for the trial court’s declaration that the sale embodied in the
Kasulatan deprived the compulsory heirs of Guevarra of their legitimes. As opposed to a
disposition inter vivos by lucrative or gratuitous title, a valid sale for valuable consideration
does not diminish the estate of the seller. When the disposition is for valuable consideration,
there is no diminution of the estate but merely a substitution of values,30 that is, the
property sold is replaced by the equivalent monetary consideration.1âwphi1
Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1) consent
or meeting of the minds; (2) determinate subject matter and (3) price certain in money or
its equivalent.31 The presence of these elements is apparent on the face of the Kasulatan
itself. The Property was sold in 1957 for ₱250.00.32
Whether the Court of Appeals erred in not admitting the documents presented by petitioners
for the first time on appeal
We find no error in the Court of Appeals’ refusal to give any probative value to the alleged
birth certificate of Guevarra and the affidavit of Benjamin dela Cruz, Sr. Petitioners belatedly
attached these documents to their appellee’s brief. Petitioners could easily have offered
these documents during the proceedings before the trial court. Instead, petitioners
presented these documents for the first time on appeal without any explanation. For reasons
of their own, petitioners did not formally offer in evidence these documents before the trial
court as required by Section 34, Rule 132 of the Rules of Court.33 To admit these
documents now is contrary to due process, as it deprives respondents of the opportunity to
examine and controvert them.
Moreover, even if these documents were admitted, they would not controvert Navarro’s
ownership of the Property. Benjamin dela Cruz, Sr.’s affidavit stated merely that, although
he knew Navarro by name, he was not personally acquainted with her.34 Guevarra’s alleged
birth certificate casts doubt only as to whether Navarro was indeed the mother of Guevarra.
These documents do not prove that Guevarra owned the Property or that Navarro did not
own the Property.
Petitioners admitted before the trial court that Navarro was the mother of Guevarra.
However, petitioners denied before the Court of Appeals that Navarro was the mother of
Guevarra. We agree with the appellate court that this constitutes an impermissible change
of theory. When a party adopts a certain theory in the court below, he cannot change his
theory on appeal. To allow him to do so is not only unfair to the other party, it is also
offensive to the basic rules of fair play, justice and due process.35
If Navarro were not the mother of Guevarra, it would only further undermine petitioners’
case. Absent any hereditary relationship between Guevarra and Navarro, the Property would
not have passed from Navarro to Guevarra, and then to the latter’s children, including
petitioners, by succession. There would then be no basis for petitioners’ claim of co-
ownership by virtue of inheritance from Guevarra. On the other hand, this would not
undermine respondents’ position since they anchor their claim on the sale under the
Kasulatan and not on inheritance from Guevarra.
Page 60 of 115
Since the notarized Kasulatan is evidence of greater weight which petitioners failed to refute
by clear and convincing evidence, this Court holds that petitioners were not able to prove by
preponderance of evidence that the Property belonged to Guevarra’s estate. There is
therefore no legal basis for petitioners’ complaint for partition of the Property.
WHEREFORE, the Decision of 26 June 1998 of the Court of Appeals in CA-G.R. CV No.
51643, dismissing the complaint of petitioners against Felomena Jumaquio Estimo and
Emiliana Jumaquio, is AFFIRMED.
SO ORDERED.
3. Applicability of Incapacity to Common law Spouses
Calimlim-Canullas VS Fortun
129 SCRA 675
G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner,

vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and
CORAZON DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the
Resolution on the Motion for Reconsideration, dated November 27, 1980, of the then Court of
First Instance of Pangasinan, Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES vs.
MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land in favor of DAGUINES
but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas

and FERNANDO Canullas were married on December 19, 1962. They begot five children. They
lived in a small house on the residential land in question with an area of approximately 891
square meters, located at Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in
1965, FERNANDO inherited the land.
In 1978, FERNANDO abandoned his family and was living with private respondent Corazon
DAGUINES. During the pendency of this appeal, they were convicted of concubinage in a
judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan,
Branch II, which judgment has become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES
for the sum of P2,000.00. In the document of sale, FERNANDO described the house as "also
inherited by me from my deceased parents."
Page 61 of 115
Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19,
1980 for quieting of title and damages against MERCEDES. The latter resisted and claimed that
the house in dispute where she and her children were residing, including the coconut trees on
the land, were built and planted with conjugal funds and through her industry; that the sale of the
land together with the house and improvements to DAGUINES was null and void because they
are conjugal properties and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of
the land in question as well as the one-half () of the house erected on said land." Upon
reconsideration prayed for by MERCEDES, however, respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court, promulgated

on October 6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question and the
10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on April
15, 1980 (Exhibit A) including the 3 coconut trees and other crops planted during
the conjugal relation between Fernando Canullas (vendor) and his legitimate
wife, herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a conjugal house on
the exclusive property of the husband ipso facto gave the land the character of conjugal property;
and (2) whether or not the sale of the lot together with the house and improvements thereon was
valid under the circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be given to the second
paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the marriage on

land belonging to one of the spouses also pertain to the partnership, but the
value of the land shall be reimbursed to the spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the building belong to the
conjugal partnership but the conjugal partnership is indebted to the husband for the value of the
land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of
the lot, 1 which value would be reimbursed at the liquidation of the conjugal partnership.
2
In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404),
Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el matrimonio en

suelo propio de uno de los conjuges son gananciales, abonandose el valor del
suelo al conj uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, relied upon by respondent Judge, it was held
3
that the land belonging to one of the spouses, upon which the spouses have built a house,
becomes conjugal property only when the conjugal partnership is liquidated and indemnity paid
to the owner of the land. We believe that the better rule is that enunciated by Mr. Justice J.B.L.
Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following was explained:
Page 62 of 115
As to the above properties, their conversion from paraphernal to conjugal assets
should be deemed to retroact to the time the conjugal buildings were first
constructed thereon or at the very latest, to the time immediately before the death
of Narciso A. Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the time their values
were paid to the estate of the widow Concepcion Paterno because by that time
the conjugal partnership no longer existed and it could not acquire the ownership
of said properties. The acquisition by the partnership of these properties was,
under the 1943 decision, subject to the suspensive condition that their values
would be reimbursed to the widow at the liquidation of the conjugal partnership;
once paid, the effects of the fulfillment of the condition should be deemed to
retroact to the date the obligation was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have alienated the
house and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived and from
whence they derived their support. That sale was subversive of the stability of the family, a basic
social institution which public policy cherishes and protects.5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from
the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public
order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to each other
subject to certain exceptions. Similarly, donations between spouses during marriage are
6
prohibited. And this is so because if transfers or con conveyances between spouses were
7
allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in
civil law. It was also designed to prevent the exercise of undue influence by one spouse over the
other, as well as to protect the institution of marriage, which is the cornerstone of family law. The
8
prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise,
"the condition of those who incurred guilt would turn out to be better than those in legal union."
Those provisions are dictated by public interest and their criterion must be imposed upon the wig
of the parties. That was the ruling in Buenaventura vs. Bautista, also penned by Justice JBL
Reyes (CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. We quote hereunder the
9
pertinent dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code considers as
void a donation between the spouses during the marriage, policy considerations
of the most exigent character as wen as the dictates of morality require that
the same prohibition should apply to a common-law relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals decision,

Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the old
Civil Code speaks unequivocally. If the policy of the law is, in the language of the
opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in
favor of the other consort and his descendants because of fear of undue
influence and improper pressure upon the donor, a prejudice deeply rooted in our
ancient law, ..., then there is every reason to apply the same prohibitive policy to
persons living together as husband and wife without benefit of nuptials. For it is
Page 63 of 115
not to be doubted that assent to such irregular connection for thirty years
bespeaks greater influence of one party over the other, so that the danger that
the law seeks to avoid is correspondingly increased'. Moreover, as pointed out by
Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would not be just that such donations —
should subsist, lest the conditions of those who incurred guilt should turn out to
be better." So long as marriage remains the cornerstone of our family law, reason
and morality alike demand that the disabilities attached to marriage should
likewise attach to concubinage (Emphasis supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of
November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the sale
of the lot, house and improvements in question, is hereby declared null and void. No costs.
SO ORDERED.
Cruz VS CA
281 SCRA 491
Specific Incapacity Mandated by Law
Legal Status of Contracts in violation of Articles 1491 and 1492
Olaguer VS Purugganan
G.R. No. 158907 February 12, 2007
EDUARDO B. OLAGUER, Petitioner,

vs.
EMILIO PURUGGANAN, JR. AND RAUL LOCSIN, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the
Decision,1 dated 30 June 2003, promulgated by the Court of Appeals, affirming the Decision
of the Regional Trial Court, dated 26 July 1995, dismissing the petitioner’s suit.
The parties presented conflicting accounts of the facts.
EDUARDO B. OLAGUER’S VERSION
Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of stock of
Businessday Corporation (Businessday) with a total par value of ₱600,000.00, with
Certificates of Stock No. 005, No. 028, No. 034, No. 070, and No. 100.2 At the time he was
employed with the corporation as Executive Vice-President of Businessday, and President of
Businessday Information Systems and Services and of Businessday Marketing Corporation,
petitioner, together with respondent Raul Locsin (Locsin) and Enrique Joaquin (Joaquin),
was active in the political opposition against the Marcos dictatorship.3 Anticipating the
possibility that petitioner would be arrested and detained by the Marcos military, Locsin,
Page 64 of 115
Joaquin, and Hector Holifeña had an unwritten agreement that, in the event that petitioner
was arrested, they would support the petitioner’s family by the continued payment of his
salary.4 Petitioner also executed a Special Power of Attorney (SPA), on 26 May 1979,
appointing as his attorneys-in-fact Locsin, Joaquin and Hofileña for the purpose of selling or
transferring petitioner’s shares of stock with Businessday. During the trial, petitioner testified
that he agreed to execute the SPA in order to cancel his shares of stock, even before they
are sold, for the purpose of concealing that he was a stockholder of Businessday, in the
event of a military crackdown against the opposition.5 The parties acknowledged the SPA
before respondent Emilio Purugganan, Jr., who was then the Corporate Secretary of
Businessday, and at the same time, a notary public for Quezon City.6
On 24 December 1979, petitioner was arrested by the Marcos military by virtue of an Arrest,
Search and Seizure Order and detained for allegedly committing arson. During the
petitioner’s detention, respondent Locsin ordered fellow respondent Purugganan to cancel
the petitioner’s shares in the books of the corporation and to transfer them to respondent
Locsin’s name.7
As part of his scheme to defraud the petitioner, respondent Locsin sent Rebecca Fernando,
an employee of Businessday, to Camp Crame where the petitioner was detained, to pretend
to borrow Certificate of Stock No. 100 for the purpose of using it as additional collateral for
Businessday’s then outstanding loan with the National Investment and Development
Corporation. When Fernando returned the borrowed stock certificate, the word "cancelled"
was already written therein. When the petitioner became upset, Fernando explained that
this was merely a mistake committed by respondent Locsin’s secretary.8
During the trial, petitioner also agreed to stipulate that from 1980 to 1982, Businessday
made regular deposits, each amounting to ₱10,000.00, to the Metropolitan Bank and Trust
Company accounts of Manuel and Genaro Pantig, petitioner’s in-laws. The deposits were
made on every 15th and 30th of the month.9 Petitioner alleged that these funds consisted
of his monthly salary, which Businessday agreed to continue paying after his arrest for the
financial support of his family.10 After receiving a total of ₱600,000.00, the payments
stopped. Thereafter, respondent Locsin and Fernando went to ask petitioner to endorse and
deliver the rest of his stock certificates to respondent Locsin, but petitioner refused. 11
On 16 January 1986, petitioner was finally released from detention. He then discovered that
he was no longer registered as stockholder of Businessday in its corporate books. He also
learned that Purugganan, as the Corporate Secretary of Businessday, had already recorded
the transfer of shares in favor of respondent Locsin, while petitioner was detained. When
petitioner demanded that respondents restore to him full ownership of his shares of stock,
they refused to do so. On 29 July 1986, petitioner filed a Complaint before the trial court
against respondents Purugganan and Locsin to declare as illegal the sale of the shares of
stock, to restore to the petitioner full ownership of the shares, and payment of damages.12
RESPONDENT RAUL LOCSIN’S VERSION
In his version of the facts, respondent Locsin contended that petitioner approached him and
requested him to sell, and, if necessary, buy petitioner’s shares of stock in Businessday, to
assure support for petitioner’s family in the event that something should happen to him,
particularly if he was jailed, exiled or forced to go underground.13 At the time petitioner was
employed with Businessday, respondent Locsin was unaware that petitioner was part of a
group, Light-a-Fire Movement, which actively sought the overthrow of the Marcos
Page 65 of 115
government through an armed struggle.14 He denied that he made any arrangements to
continue paying the petitioner’s salary in the event of the latter’s imprisonment.15
When petitioner was detained, respondent Locsin tried to sell petitioner’s shares, but
nobody wanted to buy them. Petitioner’s reputation as an oppositionist resulted in the poor
financial condition of Businessday and discouraged any buyers for the shares of stock.16 In
view of petitioner’s previous instructions, respondent Locsin decided to buy the shares
himself.1awphi1.net Although the capital deficiency suffered by Businessday caused the
book value of the shares to plummet below par value, respondent Locsin, nevertheless,
bought the shares at par value.17 However, he had to borrow from Businessday the funds
he used in purchasing the shares from petitioner, and had to pay the petitioner in
installments of ₱10,000.00 every 15th and 30th of each month.18
The trial court in its Decision, dated 26 July 1995, dismissed the Complaint filed by the
petitioner. It ruled that the sale of shares between petitioner and respondent Locsin was
valid. The trial court concluded that petitioner had intended to sell the shares of stock to
anyone, including respondent Locsin, in order to provide for the needs of his family should
he be jailed or forced to go underground; and that the SPA drafted by the petitioner
empowered respondent Locsin, and two other agents, to sell the shares for such price and
under such terms and conditions that the agents may deem proper. It further found that
petitioner consented to have respondent Locsin buy the shares himself. It also ruled that
petitioner, through his wife, received from respondent Locsin the amount of ₱600,000.00 as
payment for the shares of stock.19 The dispositive part of the trial court’s Decision reads:
WHEREFORE, for failure of the [herein petitioner] to prove by preponderance of evidence,

his causes of action and of the facts alleged in his complaint, the instant suit is hereby
ordered DISMISSED, without pronouncement as to costs.
[Herein respondents’] counterclaims, however, are hereby DISMISSED, likewise, for dearth
of substantial evidentiary support.20
On appeal, the Court of Appeals affirmed the Decision of the trial court that there was a
perfected contract of sale.21 It further ruled that granting that there was no perfected
contract of sale, petitioner, nevertheless, ratified the sale to respondent Locsin by his receipt
of the purchase price, and his failure to raise any protest over the said sale.22 The Court of
Appeals refused to credit the petitioner’s allegation that the money his wife received
constituted his salary from Businessday since the amount he received as his salary,
₱24,000.00 per month, did not correspond to the amount he received during his detention,
₱20,000.00 per month (deposits of ₱10,000.00 on every 15th and 30th of each month in the
accounts of the petitioner’s in-laws). On the other hand, the total amount received,
₱600,000.00, corresponds to the aggregate par value of petitioner’s shares in Businessday.
Moreover, the financial condition of Businessday prevented it from granting any form of
financial assistance in favor of the petitioner, who was placed in an indefinite leave of
absence, and, therefore, not entitled to any salary. 23
The Court of Appeals also ruled that although the manner of the cancellation of the
petitioner’s certificates of stock and the subsequent issuance of the new certificate of stock
in favor of respondent Locsin was irregular, this irregularity will not relieve petitioner of the
consequences of a consummated sale.24
Finally, the Court of Appeals affirmed the Decision of the trial court disallowing respondent
Locsin’s claims for moral and exemplary damages due to lack of supporting evidence.25
Page 66 of 115
Hence, the present petition, where the following issues were raised:
I.
THE APPELLATE COURT ERRED IN RULING THAT THERE WAS A PERFECTED CONTRACT OF
SALE BETWEEN PETITIONER AND MR. LOCSIN OVER THE SHARES;
II.
THE APPELLATE COURT ERRED IN RULING THAT PETITIONER CONSENTED TO THE

ALLEGED SALE OF THE SHARES TO MR. LOCSIN;
III.
THE APPELLATE COURT ERRED IN RULING THAT THE AMOUNTS RECEIVED BY

PETITIONER’S IN LAWS WERE NOT PETITIONER’S SALARY FROM THE CORPORATION BUT
INSTALLMENT PAYMENTS FOR THE SHARES;
IV.
THE APPELLATE COURT ERRED IN RULING THAT MR. LOCSIN WAS THE PARTY TO THE
ALLEGED SALE OF THE SHARES AND NOT THE CORPORATION; AND
V.
THE APPELLATE COURT ERRED IN RULING THAT THE ALLEGED SALE OF THE SHARES WAS
VALID ALTHOUGH THE CANCELLATION OF THE SHARES WAS IRREGULAR.26
The petition is without merit.
The first issue that the petitioner raised is that there was no valid sale since respondent
Locsin exceeded his authority under the SPA27 issued in his, Joaquin and Holifena’s favor.
He alleged that the authority of the afore-named agents to sell the shares of stock was
limited to the following conditions: (1) in the event of the petitioner’s absence and
incapacity; and (2) for the limited purpose of applying the proceeds of the sale to the
satisfaction of petitioner’s subsisting obligations with the companies adverted to in the
SPA.28
Petitioner sought to impose a strict construction of the SPA by limiting the definition of the
word "absence" to a condition wherein "a person disappears from his domicile, his
whereabouts being unknown, without leaving an agent to administer his property,"29 citing
Article 381 of the Civil Code, the entire provision hereunder quoted:
ART 381. When a person disappears from his domicile, his whereabouts being unknown,
and without leaving an agent to administer his property, the judge, at the instance of an
interested party, a relative, or a friend, may appoint a person to represent him in all that
may be necessary.
This same rule shall be observed when under similar circumstances the power conferred by
the absentee has expired.
Page 67 of 115
Petitioner also puts forward that the word "incapacity" would be limited to mean "minority,
insanity, imbecility, the state of being deaf-mute, prodigality and civil interdiction."30 He
cites Article 38 of the Civil Code, in support of this definition, which is hereunder quoted:
ART. 38 Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil
interdiction are mere restrictions on capacity to act, and do not exempt the incapacitated
person, from certain obligations, as when the latter arise from his acts or from property
relations, such as easements.
Petitioner, thus, claims that his arrest and subsequent detention are not among the
instances covered by the terms "absence or incapacity," as provided under the SPA he
executed in favor of respondent Locsin.
Petitioner’s arguments are unpersuasive. It is a general rule that a power of attorney must
be strictly construed; the instrument will be held to grant only those powers that are
specified, and the agent may neither go beyond nor deviate from the power of attorney.
However, the rule is not absolute and should not be applied to the extent of destroying the
very purpose of the power. If the language will permit, the construction that should be
adopted is that which will carry out instead of defeat the purpose of the appointment.
Clauses in a power of attorney that are repugnant to each other should be reconciled so as
to give effect to the instrument in accordance with its general intent or predominant
purpose. Furthermore, the instrument should always be deemed to give such powers as
essential or usual in effectuating the express powers.31
In the present case, limiting the definitions of "absence" to that provided under Article 381
of the Civil Code and of "incapacity" under Article 38 of the same Code negates the effect of
the power of attorney by creating absurd, if not impossible, legal situations. Article 381
provides the necessarily stringent standards that would justify the appointment of a
representative by a judge. Among the standards the said article enumerates is that no agent
has been appointed to administer the property. In the present case, petitioner himself had
already authorized agents to do specific acts of administration and thus, no longer
necessitated the appointment of one by the court. Likewise, limiting the construction of
"incapacity" to "minority, insanity, imbecility, the state of being a deaf-mute, prodigality and
civil interdiction," as provided under Article 38, would render the SPA ineffective. Article
1919(3) of the Civil Code provides that the death, civil interdiction, insanity or insolvency of
the principal or of the agent extinguishes the agency. It would be equally incongruous, if not
outright impossible, for the petitioner to require himself to qualify as a minor, an imbecile, a
deaf-mute, or a prodigal before the SPA becomes operative. In such cases, not only would
he be prevented from appointing an agent, he himself would be unable to administer his
property.
On the other hand, defining the terms "absence" and "incapacity" by their everyday usage
makes for a reasonable construction, that is, "the state of not being present" and the
"inability to act," given the context that the SPA authorizes the agents to attend
stockholders’ meetings and vote in behalf of petitioner, to sell the shares of stock, and other
related acts. This construction covers the situation wherein petitioner was arrested and
detained. This much is admitted by petitioner in his testimony.32
Petitioner’s contention that the shares may only be sold for the sole purpose of applying the
proceeds of the sale to the satisfaction of petitioner’s subsisting obligations to the company
is far-fetched. The construction, which will carry out the purpose, is that which should be
applied. Petitioner had not submitted evidence that he was in debt with Businessday at the
Page 68 of 115
time he had executed the SPA. Nor could he have considered incurring any debts since he
admitted that, at the time of its execution, he was concerned about his possible arrest,
death and disappearance. The language of the SPA clearly enumerates, as among those acts
that the agents were authorized to do, the act of applying the proceeds of the sale of the
shares to any obligations petitioner might have against the Businessday group of companies.
This interpretation is supported by the use of the word "and" in enumerating the authorized
acts, instead of phrases such as "only for," "for the purpose of," "in order to" or any similar
terms to indicate that the petitioner intended that the SPA be used only for a limited
purpose, that of paying any liabilities with the Businessday group of companies.
Secondly, petitioner argued that the records failed to show that he gave his consent to the
sale of the shares to respondent Locsin for the price of ₱600,000.00. This argument is
unsustainable. Petitioner received from respondent Locsin, through his wife and in-laws, the
installment payments for a total of ₱600,000.00 from 1980 to 1982, without any protest or
complaint. It was only four years after 1982 when petitioner demanded the return of the
shares. The petitioner’s claim that he did not instruct respondent Locsin to deposit the
money to the bank accounts of his in-laws fails to prove that petitioner did not give his
consent to the sale since respondent Locsin was authorized, under the SPA, to negotiate the
terms and conditions of the sale including the manner of payment. Moreover, had
respondent Locsin given the proceeds directly to the petitioner, as the latter suggested in
this petition, the proceeds were likely to have been included among petitioner’s properties
which were confiscated by the military. Instead, respondent Locsin deposited the money in
the bank accounts of petitioner’s in-laws, and consequently, assured that the petitioner’s
wife received these amounts. Article 1882 of the Civil Code provides that the limits of an
agent’s authority shall not be considered exceeded should it have been performed in a
manner more advantageous to the principal than that specified by him.
In addition, petitioner made two inconsistent statements when he alleged that (1)
respondent Locsin had not asked the petitioner to endorse and deliver the shares of stock,
and (2) when Rebecca Fernando asked the petitioner to endorse and deliver the certificates
of stock, but petitioner refused and even became upset.33 In either case, both statements
only prove that petitioner refused to honor his part as seller of the shares, even after
receiving payments from the buyer. Had the petitioner not known of or given his consent to
the sale, he would have given back the payments as soon as Fernando asked him to
endorse and deliver the certificates of stock, an incident which unequivocally confirmed that
the funds he received, through his wife and his in-laws, were intended as payment for his
shares of stocks. Instead, petitioner held on to the proceeds of the sale after it had been
made clear to him that respondent Locsin had considered the ₱600,000.00 as payment for
the shares, and asked petitioner, through Fernando, to endorse and deliver the stock
certificates for cancellation.
As regards the third issue, petitioner’s allegation that the installment payments he was
adjudged to have received for the shares were actually salaries which Businessday promised
to pay him during his detention is unsupported and implausible. Petitioner received
₱20,000.00 per month through his in-laws; this amount does not correspond to his monthly
salary at ₱24,000.00.34 Nor does the amount received correspond to the amount which
Businessday was supposed to be obliged to pay petitioner, which was only ₱45,000.00 to
₱60,000.00 per annum.35 Secondly, the petitioner’s wife did not receive funds from
respondent Locsin or Businessday for the entire duration of petitioner’s detention. Instead,
when the total amount received by the petitioner reached the aggregate amount of his
shares at par value -- ₱600,000.00 -- the payments stopped. Petitioner even testified that
when respondent Locsin denied knowing the petitioner soon after his arrest, he believed
Page 69 of 115
respondent Locsin’s commitment to pay his salaries during his detention to be nothing more
than lip-service.36
Granting that petitioner was able to prove his allegations, such an act of gratuity, on the
part of Businessday in favor of petitioner, would be void. An arrangement whereby
petitioner will receive "salaries" for work he will not perform, which is not a demandable
debt since petitioner was on an extended leave of absence, constitutes a donation under
Article 72637 of the Civil Code. Under Article 748 of the Civil Code, if the value of the
personal property donated exceeds ₱5,000.00, the donation and the acceptance shall have
to be made in writing. Otherwise, the donation will be void. In the present case, petitioner
admitted in his testimony38 that such arrangement was not made in writing and, hence, is
void.
The fact that some of the deposit slips and communications made to petitioner’s wife
contain the phrase "household expenses" does not disprove the sale of the shares. The
money was being deposited to the bank accounts of the petitioner’s in-laws, and not to the
account of the petitioner or his wife, precisely because some of his property had already
been confiscated by the military. Had they used the phrase "sale of shares," it would have
defeated the purpose of not using their own bank accounts, which was to conceal from the
military any transaction involving the petitioner’s property.
Petitioner raised as his fourth issue that granting that there was a sale, Businessday, and
not respondent Locsin, was the party to the transaction. The curious facts that the
payments were received on the 15th and 30th of each month and that the payor named in
the checks was Businessday, were adequately explained by respondent Locsin. Respondent
Locsin had obtained cash advances from the company, paid to him on the 15th and 30th of
the month, so that he can pay petitioner for the shares. To support his claim, he presented
Businessday’s financial records and the testimony of Leo Atienza, the Company’s Accounting
Manager. When asked why the term "shares of stock" was used for the entries, instead of
"cash advances," Atienza explained that the term "shares of stock" was more specific rather
than the broader phrase "cash advances."39 More to the point, had the entries been for
"shares of stock," the issuance of shares should have been reflected in the stock and
transfer books of Businessday, which the petitioner presented as evidence. Instead the stock
and transfer books reveal that the increase in respondent Locsin’s shares was a result of the
cancellation and transfer of petitioner’s shares in favor of respondent Locsin.
Petitioner alleges that the purported sale between himself and respondent Locsin of the
disputed shares of stock is void since it contravenes Article 1491 of the Civil Code, which
provides that:
ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
xxxx
(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given; x x x.
It is, indeed, a familiar and universally recognized doctrine that a person who undertakes to
act as agent for another cannot be permitted to deal in the agency matter on his own
account and for his own benefit without the consent of his principal, freely given, with full
knowledge of every detail known to the agent which might affect the transaction.40 The
Page 70 of 115
prohibition against agents purchasing property in their hands for sale or management is,
however, clearly, not absolute. It does not apply where the principal consents to the sale of
the property in the hands of the agent or administrator.>41
In the present case, the parties have conflicting allegations. While respondent Locsin
averred that petitioner had permitted him to purchase petitioner’s shares, petitioner
vehemently denies having known of the transaction. However, records show that petitioner’s
position is less credible than that taken by respondent Locsin given petitioner’s
contemporaneous and subsequent acts.42 In 1980, when Fernando returned a stock
certificate she borrowed from the petitioner, it was marked "cancelled." Although the
petitioner alleged that he was furious when he saw the word cancelled, he had not
demanded the issuance of a new certificate in his name. Instead of having been put on his
guard, petitioner remained silent over this obvious red flag and continued receiving, through
his wife, payments which totalled to the aggregate amount of the shares of stock valued at
par. When the payments stopped, no demand was made by either petitioner or his wife for
further payments.
From the foregoing, it is clear that petitioner knew of the transaction, agreed to the
purchase price of ₱600,000.00 for the shares of stock, and had in fact facilitated the
implementation of the terms of the payment by providing respondent Locsin, through
petitioner’s wife, with the information on the bank accounts of his in-laws. Petitioner’s wife
and his son even provided receipts for the payments that were made to them by respondent
Locsin,43 a practice that bespeaks of an onerous transaction and not an act of gratuity.
Lastly, petitioner claims that the cancellation of the shares and the subsequent transfer
thereof were fraudulent, and, therefore, illegal. In the present case, the shares were
transferred in the name of the buyer, respondent Locsin, without the petitioner delivering to
the buyer his certificates of stock. Section 63 of the Corporation Code provides that:
Sec.63. Certificate of stock and transfer of shares.— xxx Shares of stock so issued are
personal property and may be transferred by delivery of the certificate or certificates
indorsed by the owner or his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the parties, until the
transfer is recorded in the books of the corporation showing the names of the parties to the
transaction, the date of the transfer, the number of the certificate or certificates and the
number of shares transferred. (Emphasis provided.)
The aforequoted provision furnishes the procedure for the transfer of shares – the delivery
of the endorsed certificates, in order to prevent the fraudulent transfer of shares of stock.
However, this rule cannot be applied in the present case without causing the injustice
sought to be avoided. As had been amply demonstrated, there was a valid sale of stocks.
Petitioner’s failure to deliver the shares to their rightful buyer is a breach of his duty as a
seller, which he cannot use to unjustly profit himself by denying the validity of such sale.
Thus, while the manner of the cancellation of petitioner’s certificates of stock and the
issuance of the new certificates in favor of respondent Locsin was highly irregular, we must,
nonetheless, declare the validity of the sale between the parties. Neither does this
irregularity prove that the transfer was fraudulent. In his testimony, petitioner admitted that
they had intended to conceal his being a stockholder of Businessday.44 The cancellation of
his name from the stock and transfer book, even before the shares were actually sold, had
been done with his consent. As earlier explained, even the subsequent sale of the shares in
favor of Locsin had been done with his consent.
Page 71 of 115
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the
assailed Decision of the Court of Appeals, promulgated on 30 June 2003, affirming the
validity of the sale of the shares of stock in favor of respondent Locsin. No costs.
SO ORDERED.
Distajo VS CA
339 SCRA 52
G.R. No. 112954 August 25, 2000
RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO, ZACARIAS A.

DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO TAPAR, petitioners,
vs.
COURT OF APPEALS and LAGRIMAS SORIANO DISTAJO, respondents.
DECISION
PARDO, J.:
The case under consideration is a petition for review on certiorari of a decision of the Court
of Appeals1 , which modified the ruling of the Regional Trial Court, Roxas City regarding
seven parcels of land located in Barangay Hipona, Pontevedra, Capiz.2
During the lifetime of Iluminada Abiertas, she designated one of her sons, Rufo Distajo, to
be the administrator of her parcels of land denoted as Lot Nos. 1018, 1046, 1047, and 1057
situated in Barangay Hipona, Pontevedra, Capiz.
On May 21, 1954, Iluminada Abiertas sold a portion of Lot No. 1018 (1018-A) to her other
children, namely, Raul Distajo, Ricardo Distajo, Ernesto Distajo, Federico Distajo, and
Eduardo Distajo.3
On May 29, 1963, Iluminada Abiertas certified to the sale of Lot Nos. 1046 and 1047 in favor
of Rufo Distajo.4
On June 4, 1969, Iluminada Abiertas sold Lot No. 1057 to Rhodora Distajo, the daughter of
Rufo Distajo.5
On July 12, 1969, Iluminada Abiertas sold Lot No. 1018 to Rufo Distajo.6
Meanwhile, Justo Abiertas, Jr., the brother of Iluminada Abiertas, died leaving behind his
children, Teresita, Alicia, Josefa and Luis Abiertas. Teresita paid for the real estate taxes of
the following properties, which she inherited from her father: Lot Nos. 1001, 1048, 1049,
and a portion of Lot No. 1047, all located in Capiz. On May 26, 1954, Teresita Abiertas sold
Lot No. 1001 in favor of Rufo Distajo.7 On June 2, 1965, Teresita Abiertas, for herself and
representing her sisters and brother, sold Lot Nos. 1048, 1049, and a portion of Lot No.
1047 to Rufo Distajo.8
After purchasing the above-mentioned parcels of land, Rufo Distajo took possession of the
property and paid the corresponding real estate taxes thereon. Rhodora Distajo likewise
paid for the real estate taxes of Lot No. 1057.
Page 72 of 115
When Iluminada Abiertas died in 1971, Zacarias Distajo, Pilar Distajo-Tapar, and Rizaldo
Distajo,9 demanded possession of the seven parcels of land from Lagrimas S. Distajo, and
her husband, Rufo Distajo. The latter refused.
Consequently, on June 5, 1986, Ricardo Distajo, with the other heirs of Iluminada Abiertas,
namely, Ernesto Distajo, Raul Distajo, Federico Distajo, Zacarias Distajo, Eduardo Distajo,
and Pilar Distajo, filed with the Regional Trial Court, Roxas City a complaint for recovery of
possession and ownership of Lot No. 1018, partition of Lot Nos. 1001, 1018-B, 1046, 1047,
1048, 1049, 1057, and damages.
On September 4, 1986, private respondent Lagrimas Distajo10 filed an answer with

counterclaim.
On April 9, 1990, the trial court dismissed the complaint for lack of cause of action, laches
and prescription. The counterclaim was likewise dismissed. The parties appealed to the
Court of Appeals.11
On August 21, 1992, the Court of Appeals rendered its decision,12 the dispositive portion of
which states as follows:
"PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE and a new
judgment rendered, as follows:
WHEREFORE, the Court decides the case in favor of the defendant and dismisses the
plaintiffs’ complaint for lack of cause of action except with regard to the plaintiffs’ claim over
a 238 sq. m. portion of Lot No. 1018 (the portion adjoining the market site and measuring
seventeen meters and that adjoining the property of E. Rodriguez measuring 14 meters).
The Court hereby Orders the partition of Lot No. 1018 to conform to the following: 238 sq.
m. as above specified to belong to the plaintiffs as prayed for by them while the rest is
declared property of the defendant.
Upon partition of Lot No. 1018 in accordance with this Court’s Order, the City Assessor of
Roxas City is hereby Ordered to cancel Tax Declaration 2813 in the name of Rufo Distajo (or
any subsequent tax declaration/s issued relative to the above-cited Tax Declaration No.
2813) and forthwith to issue the corresponding tax declarations in the names of the
respective parties herein.
SO ORDERED."
On September 10, 1992, Ricardo Distajo filed a motion for reconsideration.13 On December
9, 1993, the Court of Appeals denied the motion.14
Hence, this petition.15
Petitioner alleges that Iluminada Abiertas exclusively owns the seven parcels of land
delineated as Lot Nos. 1001, 1018, 1046, 1047, 1048, 1049, and 1057, all of which should
be partitioned among all her heirs. Furthermore, Rufo Distajo cannot acquire the subject
parcels of land owned by Iluminada Abiertas because the Civil Code prohibits the
administrator from acquiring properties under his administration.16 Rufo Distajo merely
employed fraudulent machinations in order to obtain the consent of his mother to the sale,
and may have even forged her signature on the deeds of sale of the parcels of land.
Page 73 of 115
In her comment dated May 13, 1994, private respondent Lagrimas S. Distajo contends that
Rufo Distajo rightfully owns the subject parcels of land because of various deeds of sale
executed by Iluminada Abiertas selling Lot Nos. 1018-B, 1047 and 1046 in favor of Rufo
Distajo and Lot No. 1057 in favor of Rhodora Distajo. Private respondent also avers that
petitioner cannot claim any right over Lot Nos. 1001, 1048 and 1049, considering that such
lands belong to the brother of Iluminada Abiertas, namely, Justo Abiertas, Jr., whose heirs
sold said parcels of land to Rufo Distajo.
The petition lacks merit.
Factual findings of the trial court will not be disturbed on appeal unless the court has
overlooked or ignored some fact or circumstance of sufficient weight or significance, which,
if considered, would alter the result of the case.17 When there is no conflict between the
findings of the trial and appellate courts, a review of the facts found by the appellate court
is unnecessary.18
Since the trial court and the Court of Appeals agree that Iluminada Abiertas owned Lot Nos.
1046, 1057 and a portion of Lot No. 1047, and that Justo Abiertas Jr. owned Lot Nos. 1001,
1048, and 1049, such findings are binding on this Court, which is not a trier of facts.19
However, the record shows that Lot No. 1018 should be divided into Lot No. 1018-A and
1018-B, the delineation of which the Court of Appeals clarified in its decision.
The issues in this case, therefore, are limited to those properties which were owned by
Iluminada Abiertas, ascendant of petitioner, consisting of Lot Nos. 1018-A, 1046, 1057, and
a portion of 1047.
In his petition, Ricardo Distajo assails the genuineness of the signatures of Iluminada
Abiertas in the deeds of sale of the parcels of land, and claims that Rufo Distajo forged the
signature of Iluminada Abiertas. However, no handwriting expert was presented to
corroborate the claim of forgery. Petitioner even failed to present a witness who was familiar
with the signature of Iluminada Abiertas. Forgery should be proved by clear and convincing
evidence, and whoever alleges it has the burden of proving the same.20
Petitioner likewise contends that the sale transactions are void for having been entered into
by the administrator of the properties.1âwphi1 We disagree. The pertinent Civil Code
provision provides:
"Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;" x x x
Under paragraph (2) of the above article, the prohibition against agents purchasing property
in their hands for sale or management is not absolute. It does not apply if the principal
consents to the sale of the property in the hands of the agent or administrator. In this case,
the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of
the properties in favor of her son, Rufo, who was the administrator of the properties. Thus,
Page 74 of 115
the consent of the principal Iluminada Abiertas removes the transaction out of the
prohibition contained in Article 1491(2).
Petitioner also alleges that Rufo Distajo employed fraudulent machinations to obtain the
consent of Iluminada Abiertas to the sale of the parcels of land. However, petitioner failed to
adduce convincing evidence to substantiate his allegations.
In the absence of any showing of lack of basis for the conclusions made by the Court of
Appeals, this Court finds no cogent reason to reverse the ruling of the appellate court.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of
Appeals in CA-G.R. CV No. 30063.
SO ORDERED.
Director of Lands VS Abagat
G.R. No. L-30514 March 27, 1929
THE DIRECTOR OF LANDS, applicant,

vs.
CRISTOBAL ABAGAT, ET AL., claimants.
SISENADO PALARCA, ET AL., appellants.
Palarca, Azanza, and Ealdama for appellants.

Teotimo Duque for intestate for Soriano.
OSTRAND, J.:
The spouses, Juan Soriano and Vicenta Macaraeg, were the owners of twelve parcels of
land. Vicenta Macaraeg died in November, 1909, leaving a large number of collateral heirs
but no descents. Litigation between the surviving husband, Juan Soriano, and the heirs of
Vicenta Macaraeg immediately arose, and the herein appellant Sisenado Palarca acted as
Soriano's lawyer. On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels
of land in favor of Sisenado Palarca, and on the following day, May 3, 1918, Palarca filed an
application for the registration of the land described in the deed. After hearing, the Court of
First Instance declared that the deed was invalid by virtue of the provisions of article 1459
of the Civil Code, which prohibits lawyers and solicitors from purchasing property or rights
involved in any litigation in which they may take part by virtue of their profession. The
application for registration was consequently denied, and upon appeal by Palarca to the
Supreme Court, the judgment of the lower court was affirmed by a decision promulgated
November 16, 1925.1
In the meantime cadastral case No. 30 of the Province of Tarlac, was instituted, and on
August 21, 1923, Eleuteria Macaraeg, as administratix of the estate of Vicente Macaraeg,
filed claims for the parcels in question. Buenaventura Lavitoria, administrator of the estate
of Juan Soriano, did likewise and so did Sisenado Palarca. In a decision dated June 21,
1927, the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of
Palarca and ordered the registration of the land in his name. Upon appeal to this court by
the administrators of the estates of Juan Soriano and Vicenta Macaraeg, the judgment of
the court below was reversed and the land adjudicated to the two estates as conjugal;
property of the deceased spouses.2
Page 75 of 115
Upon the return of the record to the Court of First Instance, the administrators filed a
motion asking that a writ of possession for the land be issued in their favor and against
Sisenado Palarca. Palarca opposed the motion on the ground that he could not legally be
ejected until he had been reimbursed for the consideration stated in the deed hereinbefore,
the total amount of the reimbursement being P16,250.
The opposition of Palarca was overruled by the court, and the motion of the administrators
granted. Palarca thereupon brought the present appeal.
We can find no error in the appealed orders. The appellant Palarca is a lawyer and is
presumed to know the law. He must, therefore, from the beginning, have been well aware
of the defect in his title and is, consequently, a possessor in bad faith. In cases of judgment
only the possessor in good faith may retain the land until the necessary expenses have been
refunded (art. 453, Civil Code). The appellant has been a possessor in bad faith for many
years and is bound to account for the fruits received and for those which the lawful
possessor might have received (art. 455, Civil Code.) The probability is that the fruits are
much more than the equivalent to the expenditures and improvements made by the
appellant. We may say further that, under the circumstances of the case, we find if difficult
to believe that the appellant Palarca ever paid any part of the consideration stated in the
deed executed in his favor by Juan Soriano, and there is room for more than a suspicion
that the deed was purely fictitious, and in our opinion, article 1308 of the Civil Code has no
application to this case. It may also be noted that the appellant has made no offer to
indemnify the appellees for the fruits received by him from the lands in question. The orders
appealed from are therefore affirmed with the costs against the appellant, So ordered.
Rubias VS Batiller
51 SCRA 120
G.R. No. L-35702 May 29, 1973
DOMINGO D. RUBIAS, plaintiff-appellant,

vs.
ISAIAS BATILLER, defendant-appellee.
Gregorio M. Rubias for plaintiff-appellant.
Vicente R. Acsay for defendant-appellee.
TEEHANKEE, J.:
In this appeal certified by the Court of Appeals to this Court as involving purely legal
questions, we affirm the dismissal order rendered by the Iloilo court of first instance after
pre-trial and submittal of the pertinent documentary exhibits.
Such dismissal was proper, plaintiff having no cause of action, since it was duly established
in the record that the application for registration of the land in question filed by Francisco
Militante, plaintiff's vendor and predecessor interest, had been dismissed by decision of
1952 of the land registration court as affirmed by final judgment in 1958 of the Court of
Appeals and hence, there was no title or right to the land that could be transmitted by the
purported sale to plaintiff.
Page 76 of 115
As late as 1964, the Iloilo court of first instance had in another case of ejectment likewise
upheld by final judgment defendant's "better right to possess the land in question . having
been in the actual possession thereof under a claim of title many years before Francisco
Militante sold the land to the plaintiff."
Furthermore, even assuming that Militante had anything to sell, the deed of sale executed in
1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of
record in the land registration case involving the very land in dispute (ultimately decided
adversely against Militante by the Court of Appeals' 1958 judgment affirming the lower
court's dismissal of Militante's application for registration) was properly declared inexistent
and void by the lower court, as decreed by Article 1409 in relation to Article 1491 of the Civil
Code.
The appellate court, in its resolution of certification of 25 July 1972, gave the following
backgrounder of the appeal at bar:
On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the
ownership and possession of certain portions of lot under Psu-99791 located in Barrio
General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco
Militante in 1956 against its present occupant defendant, Isaias Batiller, who illegally
entered said portions of the lot on two occasions — in 1945 and in 1959. Plaintiff prayed
also for damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with
counter-claim defendant claims the complaint of the plaintiff does not state a cause of
action, the truth of the matter being that he and his predecessors-in-interest have always
been in actual, open and continuous possession since time immemorial under claim of
ownership of the portions of the lot in question and for the alleged malicious institution of
the complaint he claims he has suffered moral damages in the amount of P 2,000.00, as
well as the sum of P500.00 for attorney's fees. ...
On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial conference
between the parties and their counsel which order reads as follows..
'When this case was called for a pre-trial conference today, the plaintiff appeared assisted
by himself and Atty. Gregorio M. Rubias. The defendant also appeared, assisted by his
counsel Atty. Vicente R. Acsay.
A. During the pre-trial conference, the parties have agreed that the following facts are
attendant in this case and that they will no longer introduced any evidence, testimonial or
documentary to prove them:
1. That Francisco Militante claimed ownership of a parcel of land located in the Barrio of
General Luna, municipality of Barotac Viejo province of Iloilo, which he caused to be
surveyed on July 18-31, 1934, whereby he was issued a plan Psu-99791 (Exhibit "B"). (The
land claimed contained an area of 171:3561 hectares.)
2. Before the war with Japan, Francisco Militante filed with the Court of First Instance
of Iloilo an application for the registration of the title of the land technically described in
psu-99791 (Exh. "B") opposed by the Director of Lands, the Director of Forestry and other
oppositors. However, during the war with Japan, the record of the case was lost before it
was heard, so after the war Francisco Militante petitioned this court to reconstitute the
record of the case. The record was reconstituted on the Court of the First Instance of Iloilo
Page 77 of 115
and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of First Instance
heard the land registration case on November 14, 1952, and after the trial this court
dismissed the application for registration. The appellant, Francisco Militante, appealed from
the decision of this Court to the Court of Appeals where the case was docketed as CA-GR
No. 13497-R..
3. Pending the disposal of the appeal in CA-GR No. 13497-R and more particularly on
June 18, 1956, Francisco Militante sold to the plaintiff, Domingo Rubias the land technically
described in psu-99791 (Exh. "A"). The sale was duly recorded in the Office of the Register
of Deeds for the province of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-appellant, his
son-in-law, for the sum of P2,000.00 was "a parcel of untitled land having an area Of
144.9072 hectares ... surveyed under Psu 99791 ... (and) subject to the exclusions made by
me, under (case) CA-i3497, Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of
First Instance of the province of Iloilo. These exclusions referred to portions of the original
area of over 171 hectares originally claimed by Militante as applicant, but which he expressly
recognized during the trial to pertain to some oppositors, such as the Bureau of Public
Works and Bureau of Forestry and several other individual occupants and accordingly
withdrew his application over the same. This is expressly made of record in Exh. A, which is
the Court of Appeals' decision of 22 September 1958 confirming the land registration court's
dismissal of Militante's application for registration.)
4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R promulgated its
judgment confirming the decision of this Court in Land Case No. R-695, GLRO Rec. No.
54852 which dismissed the application for Registration filed by Francisco Militante (Exh. "I").
5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes under
Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1") and 10019 (Exh.
"C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the year 1964, paying the land
taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-6").
6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also

declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh. "E") for
1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122 (Exh. "2"),
and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947
(Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949
(Exh. "G-5").
7. Tax Declaration No. 2434 in the name of Liberato Demontaño for the land described
therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco Militante (Exh. "E").
Liberato Demontaño paid the land tax under Tax Dec. No. 2434 on Dec. 20, 1939 for the
years 1938 (50%) and 1959 (Exh. "H").
8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-155241
under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-155241, for 1945 under
Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was revised by Tax Dec. No. 9498 in
the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled
by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid
the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946, for the
year 1950, and for the year 1960 as shown by the certificate of the treasurer (Exh. "3"). The
Page 78 of 115
defendant may present to the Court other land taxes receipts for the payment of taxes for
this lot.
9. The land claimed by the defendant as his own was surveyed on June 6 and 7,1956,
and a plan approved by Director of Land on November 15, 1956 was issued, identified as
Psu 155241 (Exh. "5").
10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against Isaias
Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo (Exh. "4") to
which the defendant Isaias Batiller riled his answer on August 29, 1960 (Exh. "4-A"). The
Municipal Court of Barotac Viejo after trial, decided the case on May 10, 1961 in favor of the
defendant and against the plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of
the Municipal Court of Barotac Viejo which was docketed in this Court as Civil Case No. 5750
on June 3, 1961, to which the defendant, Isaias Batiller, on June 13, 1961 filed his answer
(Exh. "4-C"). And this Court after the trial. decided the case on November 26, 1964, in favor
of the defendant, Isaias Batiller and against the plaintiff (Exh. "4-D").
(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26 November
1964 dismissing plaintiff's therein complaint for ejectment against defendant, the iloilo court
expressly found "that plaintiff's complaint is unjustified, intended to harass the defendant"
and "that the defendant, Isaias Batiller, has a better right to possess the land in question
described in Psu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical
possession thereof under a claim of title many years before Francisco Militante sold the land
to the plaintiff-hereby dismissing plaintiff's complaint and ordering the plaintiff to pay the
defendant attorney's fees ....")
B. During the trial of this case on the merit, the plaintiff will prove by competent
evidence the following:
1. That the land he purchased from Francisco Militante under Exh. "A" was formerly
owned and possessed by Liberato Demontaño but that on September 6, 1919 the land was
sold at public auction by virtue of a judgment in a Civil Case entitled "Edw J. Pflieder plaintiff
vs. Liberato Demontaño Francisco Balladeros and Gregorio Yulo, defendants", of which Yap
Pongco was the purchaser (Exh. "1-3"). The sale was registered in the Office of the Register
of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a definite
Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19,
1934 in favor of Yap Pongco (Exh. "I"), the sale having been registered in the Office of the
Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").
2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as
evidenced by a notarial deed (Exh. "J") which was registered in the Registry of Deeds on
May 13, 1940 (Exh. "J-1").
3. That plaintiff suffered damages alleged in his complaint.
C. Defendants, on the other hand will prove by competent evidence during the trial of
this case the following facts:
1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed by
Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of the former in
1920, as his sole heir. Isaias Batiller succeeded his father , Basilio Batiller, in the ownership
and possession of the land in the year 1930, and since then up to the present, the land
Page 79 of 115
remains in the possession of the defendant, his possession being actual, open, public,
peaceful and continuous in the concept of an owner, exclusive of any other rights and
adverse to all other claimants.
2. That the alleged predecessors in interest of the plaintiff have never been in the
actual possession of the land and that they never had any title thereto.
3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the defendant
has been approved.
4. The damages suffered by the defendant, as alleged in his counterclaim."'1
The appellate court further related the developments of the case, as follows:
On August 17, 1965, defendant's counsel manifested in open court that before any trial on
the merit of the case could proceed he would file a motion to dismiss plaintiff's complaint
which he did, alleging that plaintiff does not have cause of action against him because the
property in dispute which he (plaintiff) allegedly bought from his father-in-law, Francisco
Militante was the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was
brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid
case plaintiff was the counsel on record of his father-in-law, Francisco Militante. Invoking
Arts. 1409 and 1491 of the Civil Code which reads:
'Art. 1409. The following contracts are inexistent and void from the beginning:
xxx xxx xxx
(7) Those expressly prohibited by law.
'ART. 1491. The following persons cannot acquire any purchase, even at a public auction,
either in person of through the mediation of another: .
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the property and
rights of in litigation or levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition includes the act of
acquiring an assignment and shall apply to lawyers, with respect to the property and rights
which may be the object of any litigation in which they may take part by virtue of their
profession.'
defendant claims that plaintiff could not have acquired any interest in the property in
dispute as the contract he (plaintiff) had with Francisco Militante was inexistent and void.
(See pp. 22-31, Record on Appeal). Plaintiff strongly opposed defendant's motion to dismiss
claiming that defendant can not invoke Articles 1409 and 1491 of the Civil Code as Article
1422 of the same Code provides that 'The defense of illegality of contracts is not available to
third persons whose interests are not directly affected' (See pp. 32-35 Record on Appeal).
On October 18, 1965, the lower court issued an order disclaiming plaintiffs complaint (pp.
42-49, Record on Appeal.) In the aforesaid order of dismissal the lower court practically
agreed with defendant's contention that the contract (Exh. A) between plaintiff and
Page 80 of 115
Francism Militante was null and void. In due season plaintiff filed a motion for
reconsideration (pp. 50-56 Record on Appeal) which was denied by the lower court on
January 14, 1966 (p. 57, Record on Appeal).
Hence, this appeal by plaintiff from the orders of October 18, 1965 and January 14, 1966.
Plaintiff-appellant imputes to the lower court the following errors:
'1. The lower court erred in holding that the contract of sale between the plaintiff-
appellant and his father-in-law, Francisco Militante, Sr., now deceased, of the property
covered by Plan Psu-99791, (Exh. "A") was void, not voidable because it was made when
plaintiff-appellant was the counsel of the latter in the Land Registration case.
'2. The lower court erred in holding that the defendant-appellee is an interested person
to question the validity of the contract of sale between plaintiff-appellant and the deceased,
Francisco Militante, Sr.
'3. The lower court erred in entertaining the motion to dismiss of the defendant-
appellee after he had already filed his answer, and after the termination of the pre-trial,
when the said motion to dismiss raised a collateral question.
'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'
The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal
posers — (1) whether or not the contract of sale between appellant and his father-in-law,
the late Francisco Militante over the property subject of Plan Psu-99791 was void because it
was made when plaintiff was counsel of his father-in-law in a land registration case involving
the property in dispute; and (2) whether or not the lower court was correct in entertaining
defendant-appellee's motion to dismiss after the latter had already filed his answer and after
he (defendant) and plaintiff-appellant had agreed on some matters in a pre-trial conference.
Hence, its elevation of the appeal to this Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference held by the
trial court at which the parties with their counsel agreed and stipulated on the material and
relevant facts and submitted their respective documentary exhibits as referred to in the pre-
trial order, supra,2 practically amounted to a fulldress trial which placed on record all the
facts and exhibits necessary for adjudication of the case.
The three points on which plaintiff reserved the presentation of evidence at the-trial dealing
with the source of the alleged right and title of Francisco Militante's predecessors, supra,3
actually are already made of record in the stipulated facts and admitted exhibits. The chain
of Militante's alleged title and right to the land as supposedly traced back to Liberato
Demontaño was actually asserted by Militante (and his vendee, lawyer and son-in-law,
herein plaintiff) in the land registration case and rejected by the Iloilo land registration court
which dismissed Militante's application for registration of the land. Such dismissal, as already
stated, was affirmed by the final judgment in 1958 of the Court of Appeals.4
The four points on which defendant on his part reserved the presentation of evidence at the
trial dealing with his and his ancestors' continuous, open, public and peaceful possession in
the concept of owner of the land and the Director of Lands' approval of his survey plan
thereof, supra,5 are likewise already duly established facts of record, in the land registration
Page 81 of 115
case as well as in the ejectment case wherein the Iloilo court of first instance recognized the
superiority of defendant's right to the land as against plaintiff.
No error was therefore committed by the lower court in dismissing plaintiff's complaint upon
defendant's motion after the pre-trial.
1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of
cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of
ownership to the land in question was predicated on the sale thereof for P2,000.00 made in
1956 by his father-in- law, Francisco Militante, in his favor, at a time when Militante's
application for registration thereof had already been dismissed by the Iloilo land registration
court and was pending appeal in the Court of Appeals.
With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's
application for registration, the lack of any rightful claim or title of Militante to the land was
conclusively and decisively judicially determined. Hence, there was no right or title to the
land that could be transferred or sold by Militante's purported sale in 1956 in favor of
plaintiff.
Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner of

the land and to be restored to possession thereof with damages was bereft of any factual or
legal basis.
2. No error could be attributed either to the lower court's holding that the purchase by
a lawyer of the property in litigation from his client is categorically prohibited by Article
1491, paragraph (5) of the Philippine Civil Code, reproduced supra;6 and that consequently,
plaintiff's purchase of the property in litigation from his client (assuming that his client could
sell the same since as already shown above, his client's claim to the property was defeated
and rejected) was void and could produce no legal effect, by virtue of Article 1409,
paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or
declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither
can the right to set up the defense of illegality be waived."
The 1911 case of Wolfson vs. Estate of Martinez7 relied upon by plaintiff as holding that a
sale of property in litigation to the party litigant's lawyer "is not void but voidable at the
election of the vendor" was correctly held by the lower court to have been superseded by
the later 1929 case of Director of Lands vs. Abagat.8 In this later case of Abagat, the Court
expressly cited two antecedent cases involving the same transaction of purchase of property
in litigation by the lawyer which was expressly declared invalid under Article 1459 of the
Civil Code of Spain (of which Article 1491 of our Civil Code of the Philippines is the
counterpart) upon challenge thereof not by the vendor-client but by the adverse parties
against whom the lawyer was to enforce his rights as vendee thus acquired.
These two antecedent cases thus cited in Abagat clearly superseded (without so expressly
stating the previous ruling in Wolfson:
The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve parcels of
land. Vicenta Macaraeg died in November, 1909, leaving a large number of collateral heirs
but no descendants. Litigation between the surviving husband, Juan Soriano, and the heirs
of Vicenta immediately arose, and the herein appellant Sisenando Palarca acted as Soriano's
lawyer. On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of land in
favor of Sisenando Palarca and on the following day, May 3, 1918, Palarca filed an
Page 82 of 115
application for the registration of the land in the deed. After hearing, the Court of First
Instance declared that the deed was invalid by virtue of the provisions of article 1459 of the
Civil Code, which prohibits lawyers and solicitors from purchasing property rights involved in
any litigation in which they take part by virtue of their profession. The application for
registration was consequently denied, and upon appeal by Palarca to the Supreme Court,
the judgement of the lower court was affirmed by a decision promulgated November
16,1925. (G.R. No. 24329, Palarca vs. Director of Lands, not reported.)
In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and on
August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of Vicente Macaraeg,
filed claims for the parcels in question. Buenaventura Lavitoria administrator of the estate of
Juan Soriano, did likewise and so did Sisenando Palarca. In a decision dated June 21, 1927,
the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of Palarea
and ordered the registration of the land in his name. Upon appeal to this court by the
administration of the estates of Juan Soriano and Vicente Macaraeg, the judgment of the
court below was reversed and the land adjudicated to the two estates as conjugal property
of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May
21, 1928, not reported.)9
In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of the
lawyer's purchase of the land in litigation from his client, ordered the issuance of a writ of
possession for the return of the land by the lawyer to the adverse parties without
reimbursement of the price paid by him and other expenses, and ruled that "the appellant
Palarca is a lawyer and is presumed to know the law. He must, therefore, from the
beginning, have been well aware of the defect in his title and is, consequently, a possessor
in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article 1459 of the Civil
Code of Spain then adopted here, until it was superseded on August 30, 1950 by the Civil
Code of the Philippines whose counterpart provision is Article 1491.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six
paragraphs certain persons, by reason of the relation of trust or their peculiar control over
the property, from acquiring such property in their trust or control either directly or
indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3)
administrators; (4) public officers and employees; judicial officers and employees,
prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.
In Wolfson which involved the sale and assignment of a money judgment by the client to
the lawyer, Wolfson, whose right to so purchase the judgment was being challenged by the
judgment debtor, the Court, through Justice Moreland, then expressly reserved decision on
"whether or not the judgment in question actually falls within the prohibition of the article"
and held only that the sale's "voidability can not be asserted by one not a party to the
transaction or his representative," citing from Manresa 10 that "(C)onsidering the question
from the point of view of the civil law, the view taken by the code, we must limit ourselves
to classifying as void all acts done contrary to the express prohibition of the statute. Now
then: As the code does not recognize such nullity by the mere operation of law, the nullity
of the acts hereinbefore referred to must be asserted by the person having the necessary
legal capacity to do so and decreed by a competent
court." 11
Page 83 of 115
The reason thus given by Manresa in considering such prohibited acquisitions under Article
1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor
and not void — "that the Code does not recognize such nullity de pleno derecho" — is no
longer true and applicable to our own Philippine Civil Code which does recognize the
absolute nullity of contracts "whose cause, object, or purpose is contrary to law, morals,
good customs, public order or public policy" or which are "expressly prohibited or declared
void by law" and declares such contracts "inexistent and void from the beginning." 12
The Supreme Court of Spain and modern authors have likewise veered from Manresa's view
of the Spanish codal provision itself. In its sentencia of 11 June 1966, the Supreme Court of
Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public
policy, that violation of the prohibition contract cannot be validated by confirmation or
ratification, holding that:
... la prohibicion que el articulo 1459 del C.C. establece respecto a los administradores y
apoderados, la cual tiene conforme a la doctrina de esta Sala, contendia entre otras, en S.
de 27-5-1959, un fundamento de orden moral lugar la violacion de esta a la nulidad de
pleno derecho del acto o negocio celebrado, ... y prohibicion legal, afectante orden publico,
no cabe con efecto alguno la aludida retification ... 13
The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish Civil
Code (Article 1491 of our Civil Code) as a matter of public order and policy as applied by the
Supreme Court of Spain to administrators and agents in its above cited decision should
certainly apply with greater reason to judges, judicial officers, fiscals and lawyers under
paragraph 5 of the codal article.
Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso de
Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to
Article 1459, Spanish Civil Code:.
Que caracter tendra la compra que se realice por estas personas? Porsupuesto no cabe
duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el motivo de la
prohibicion es de orden publico. 14
Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la
consequencia de la infraccion es la nulidad radical y ex lege." 15
Castan, quoting Manresa's own observation that.
"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de
guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personas que
intervienen en la administrcionde justicia de todos los retigios que necesitan pora ejercer su
ministerio librandolos de toda suspecha, que aunque fuere in fundada, redundura
endescredito de la institucion." 16 arrives at the contrary and now accepted view that
"Puede considerace en nuestro derecho inexistente 'o radicalmente nulo el contrato en los
siguentes cases: a) ...; b) cuando el contrato se ha celebrado en violacion de una
prescripcion 'o prohibicion legal, fundada sobre motivos de orden publico (hipotesis del art.
4 del codigo) ..." 17
It is noteworthy that Caltan's rationale for his conclusion that fundamental consideration of
public policy render void and inexistent such expressly prohibited purchase (e.g. by public
officers and employees of government property intrusted to them and by justices, judges,
Page 84 of 115
fiscals and lawyers of property and rights in litigation and submitted to or handled by them,
under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new
article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent
and void from the beginning." 18
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be
cured by ratification. The public interest and public policy remain paramount and do not
permit of compromise or ratification. In his aspect, the permanent disqualification of public
and judicial officers and lawyers grounded on public policy differs from the first three cases
of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions
it had been opined that they may be "ratified" by means of and in "the form of a new
contact, in which cases its validity shall be determined only by the circumstances at the time
the execution of such new contract. The causes of nullity which have ceased to exist cannot
impair the validity of the new contract. Thus, the object which was illegal at the time of the
first contract, may have already become lawful at the time of the ratification or second
contract; or the service which was impossible may have become possible; or the intention
which could not be ascertained may have been clarified by the parties. The ratification or
second contract would then be valid from its execution; however, it does not retroact to the
date of the first contract." 19
As applied to the case at bar, the lower court therefore properly acted upon defendant-
appellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase of the
land, since its juridical effects and plaintiff's alleged cause of action founded thereon were
being asserted against defendant-appellant. The principles governing the nullity of such
prohibited contracts and judicial declaration of their nullity have been well restated by
Tolentino in his treatise on our Civil Code, as follows:
Parties Affected. — Any person may invoke the in existence of the contract whenever
juridical effects founded thereon are asserted against him. Thus, if there has been a void
transfer of property, the transferor can recover it by the accion reinvindicatoria; and any
prossessor may refuse to deliver it to the transferee, who cannot enforce the contract.
Creditors may attach property of the debtor which has been alienated by the latter under a
void contract; a mortgagee can allege the inexistence of a prior encumbrance; a debtor can
assert the nullity of an assignment of credit as a defense to an action by the assignee.
Action On Contract. — Even when the contract is void or inexistent, an action is necessary to
declare its inexistence, when it has already been fulfilled. Nobody can take the law into his
own hands; hence, the intervention of the competent court is necessary to declare the
absolute nullity of the contract and to decree the restitution of what has been given under
it. The judgment, however, will retroact to the very day when the contract was entered into.
If the void contract is still fully executory, no party need bring an action to declare its nullity;
but if any party should bring an action to enforce it, the other party can simply set up the
nullity as a defense. 20
ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs in all
instances against plaintiff-appellant. So ordered.
Phil. Trust Co. VS Roldan
EN BANC
Page 85 of 115
[G.R. No. L-8477. May 31, 1956.]
THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of the minor, MARIANO L.
BERNARDO, Petitioner, vs. SOCORRO ROLDAN, FRANCISCO HERMOSO, FIDEL C. RAMOS
and EMILIO CRUZ, Respondents.
DECISION
BENGZON, J.:
As guardian of the property of the minor Mariano L. Bernardo, the Philippine Trust Company
filed in the Manila court of first instance a complaint to annul two contracts regarding 17
parcels of land:chanroblesvirtuallawlibrary (a) sale thereof by Socorro Roldan, as guardian of
said minor, to Fidel C. Ramos; chan roblesvirtualawlibraryand (b) sale thereof by Fidel C.
Ramos to Socorro Roldan personally. The complaint likewise sought to annul a conveyance
of four out of the said seventeen parcels by Socorro Roldan to Emilio Cruz.
The action rests on the proposition that the first two sales were in reality a sale by the
guardian to herself — therefore, null and void under Article 1459 of the Civil Code. As to the
third conveyance, it is also ineffective, because Socorro Roldan had acquired no valid title to
convey to Cruz.
The material facts of the case are not complicated. These 17 parcels located in Guiguinto,
Bulacan, were part of the properties inherited by Mariano L. Bernardo from his father,
Marcelo Bernardo, deceased. In view of his minority, guardianship proceedings were
instituted, wherein Socorro Roldan was appointed his guardian. She was the surviving
spouse of Marcelo Bernardo, and the stepmother of said Mariano L. Bernardo.
On July 27, 1947, Socorro Roldan filed in said guardianship proceedings (Special Proceeding
2485, Manila), a motion asking for authority to sell as guardian the 17 parcels for the sum of
P14,700 to Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest the money
in a residential house, which the minor desired to have on Tindalo Street, Manila. The
motion was granted.
On August 5, 1947 Socorro Roldan, as guardian, executed the proper deed of sale in favor
of her brother-in-law Dr. Fidel C. Ramos (Exhibit A-1), and on August 12, 1947 she asked
for, and obtained, judicial confirmation of the sale. On August 13, 1947, Dr. Fidel C. Ramos
executed in favor of Socorro Roldan, personally, a deed of conveyance covering the same
seventeen parcels, for the sum of P15,000 (Exhibit A-2). And on October 21, 1947 Socorro
Roldan sold four parcels out of the seventeen to Emilio Cruz for P3,000, reserving to herself
the right to repurchase (Exhibit A-3).
The Philippine Trust Company replaced Socorro Roldan as guardian, on August 10, 1948.
And this litigation, started two months later, seeks to undo what the previous guardian had
done. The step-mother in effect, sold to herself, the properties of her ward, contends the
Plaintiff, and the sale should be annulled because it violates Article 1459 of the Civil Code
prohibiting the guardian from purchasing “either in person or through the mediation of
another” the property of her ward.
Page 86 of 115
The court of first instance, following our decision in Rodriguez vs. Mactal, 60 Phil. 13 held
the article was not controlling, because there was no proof that Fidel C. Ramos was a mere
intermediary or that the latter had previously agreed with Socorro Roldan to buy the parcels
for her benefit.
However, taking the former guardian at her word - she swore she had repurchased the
lands from Dr. Fidel C. Ramos to preserve it and to give her protege opportunity to redeem
— the court rendered judgment upholding the contracts but allowing the minor to
repurchase all the parcels by paying P15,000, within one year.
The Court of Appeals affirmed the judgment, adding that the minor knew the particulars of,
and approved the transaction, and that “only clear and positive evidence of fraud or bad
faith, and not mere insinuations and inferences will overcome the presumptions that a sale
was concluded in all good faith for value”.
At first glance the resolutions of both courts accomplished substantial

justice:chanroblesvirtuallawlibrary the minor recovers his properties. But if the conveyances
are annulled as prayed for, the minor will obtain a better deal:chanroblesvirtuallawlibrary he
receives all the fruits of the lands from the year 1947 (Article 1303 Civil Code) and will
return P14,700, not P15,000.
To our minds the first two transactions herein described couldn’t be in a better juridical
situation than if this guardian had purchased the seventeen parcels on the day following the
sale to Dr. Ramos. Now, if she was willing to pay P15,000 why did she sell the parcels for
less? In one day (or actually one week) the price could not have risen so suddenly.
Obviously when, seeking approval of the sale she represented the price to be the best
obtainable in the market, she was not entirely truthful. This is one phase to consider.
Again, supposing she knew the parcels were actually worth P17,000; chan
roblesvirtualawlibrarythen she agreed to sell them to Dr. Ramos at P14,700; chan
roblesvirtualawlibraryand knowing the realty’s value she offered him the next day P15,000
or P15,500, and got it. Will there be any doubt that she was recreant to her guardianship,
and that her acquisition should be nullified? Even without proof that she had connived with
Dr. Ramos. Remembering the general doctrine that guardianship is a trust of the highest
order, and the trustee cannot be allowed to have any inducement to neglect his ward’s
interest and in line with the court’s suspicion whenever the guardian acquires the ward’s
property 1 we have no hesitation to declare that in this case, in the eyes of the law, Socorro
Roldan took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of the
Civil Code applies.
She acted it may be true without malice; chan roblesvirtualawlibrarythere may have been no
previous agreement between her and Dr. Ramos to the effect that the latter would buy the
lands for her. But the stubborn fact remains that she acquired her protege’s properties,
through her brother-in-law. That she planned to get them for herself at the time of selling
them to Dr. Ramos, may be deduced from the very short time between the two sales (one
week). The temptation which naturally besets a guardian so circumstanced, necessitates the
annulment of the transaction, even if no actual collusion is proved (so hard to prove)
between such guardian and the intermediate purchaser. This would uphold a sound principle
of equity and justice. 2
Page 87 of 115
We are aware of course that in Rodriguez vs. Mactal, 60 Phil. p. 13 wherein the guardian
Mactal sold in January 1926 the property of her ward to Silverio Chioco, and in March 1928
she bought it from Chioco, this Court said:chanroblesvirtuallawlibrary
“In order to bring the sale in this case within the part of Article 1459, quoted above, it is
essential that the proof submitted establish some agreement between Silverio Chioco and
Trinidad Mactal to the effect that Chioco should buy the property for the benefit of Mactal. If
there was no such agreement, either express or implied, then the sale cannot be set aside
cralaw . (Page 16; chan roblesvirtualawlibraryItalics supplied.)”
However, the underlined portion was not intended to establish a general principle of law
applicable to all subsequent litigations. It merely meant that the subsequent purchase by
Mactal could not be annulled in that particular case because there was no proof of a
previous agreement between Chioco and her. The court then considered such proof
necessary to establish that the two sales were actually part of one scheme — guardian
getting the ward’s property through another person — because two years had elapsed
between the sales. Such period of time was sufficient to dispel the natural suspicion of the
guardian’s motives or actions. In the case at bar, however, only one week had elapsed. And
if we were technical, we could say, only one day had elapsed from the judicial approval of
the sale (August 12), to the purchase by the guardian (Aug. 13).
Attempting to prove that the transaction was beneficial to the minor, Appellee’s attorney
alleges that the money (P14,700) invested in the house on Tindalo Street produced for him
rentals of P2,400 yearly; chan roblesvirtualawlibrarywhereas the parcels of land yielded to
his step-mother only an average of P1,522 per year. 3 The argument would carry some
weight if that house had been built out of the purchase price of P14,700 only. 4 One thing
is certain:chanroblesvirtuallawlibrary the calculation does not include the price of the lot on
which the house was erected. Estimating such lot at P14,700 only, (ordinarily the city lot is
more valuable than the building) the result is that the price paid for the seventeen parcels
gave the minor an income of only P1,200 a year, whereas the harvest from the seventeen
parcels netted his step-mother a yearly profit of P1,522.00. The minor was thus on the
losing end.
Hence, from both the legal and equitable standpoints these three sales should not be
sustained:chanroblesvirtuallawlibrary the first two for violation of article 1459 of the Civil
Code; chan roblesvirtualawlibraryand the third because Socorro Roldan could pass no title to
Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation of Socorro
Roldan to return the 17 parcels together with their fruits and the duty of the minor, through
his guardian to repay P14,700 with legal interest.
Judgment is therefore rendered:chanroblesvirtuallawlibrary
a. Annulling the three contracts of sale in question; chan roblesvirtualawlibraryb. declaring

the minor as the owner of the seventeen parcels of land, with the obligation to return to
Socorro Roldan the price of P14,700 with legal interest from August 12, 1947; chan
roblesvirtualawlibraryc. Ordering Socorro Roldan and Emilio Cruz to deliver said parcels of
land to the minor; chan roblesvirtualawlibraryd. Requiring Socorro Roldan to pay him
beginning with 1947 the fruits, which her attorney admits, amounted to P1,522 a year; chan
roblesvirtualawlibrarye. Authorizing the minor to deliver directly to Emilio Cruz, out of the
price of P14,700 above mentioned, the sum of P3,000; chan roblesvirtualawlibraryand f.
charging Appellees with the costs. SO ORDERED.
Page 88 of 115
4. Agents
Schmid & Oberly VS RJL Martinez

166 SCRA 493
G.R. No. 75198 October 18, 1988
SCHMID & OBERLY, INC., petitioner,

vs.
RJL MARTINEZ FISHING CORPORATION, respondent.
Sycip Salazar Hernandez & Gatmaitan Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for respondent.
CORTES, J.:
Petitioner seeks reversal of the decision and the resolution of the Court of Appeals, ordering
Schmid & Oberly Inc. (hereafter to be referred to simply as "SCHMID") to refund the
purchase price paid by RJL Martinez Fishing Corporation (hereafter to be referred to simply
as "RJL MARTINEZ") to D. Nagata Co., Ltd. of Japan (hereafter to be referred to simply as
NAGATA CO.") for twelve (12) defective "Nagata"-brand generators, plus consequential
damages, and attorneys fees.
The facts as found by the Court of Appeals, are as follows:
The findings of facts by the trial court (Decision, pp. 21-28, Record on Appeal) shows: that
the plaintiff RJL Martinez Fishing Corporation is engaged in deep-sea fishing, and in the
course of its business, needed electrical generators for the operation of its business; that
the defendant sells electrical generators with the brand of "Nagata", a Japanese product;
that the supplier is the manufacturer, the D. Nagata Co. Ltd., of Japan, that the defendant
Schmid & Oberly Inc. advertised the 12 Nagata generators for sale; that the plaintiff
purchased 12 brand new Nagata generators, as advertised by herein defendant; that
through an irrevocable line of credit, the D. Nagata Co., Ltd., shipped to the plaintiff 12
electric generators, and the latter paid the amount of the purchase price; that the 12
generators were found to be factory defective; that the plaintiff informed the defendant
herein that it shall return the 12 generators as in fact three of the 12 were actually returned
to the defendant; that the plaintiff sued the defendant on the warranty; asking for rescission
of the contract; that the defendant be ordered to accept the generators and be ordered to
pay back the purchase money; and that the plaintiff asked for damages. (Record on Appeal,
pp. 27-28) [CA Decision, pp. 34; Rollo, pp. 47-48.]
On the basis thereof, the Court of Appeals affirmed the decision of the trial court ordering
petitioner to refund to private respondent the purchase price for the twelve (12) generators
and to accept delivery of the same and to pay s and attorney's fees, with a slight
modification as to the amount to be refunded. In its resolution of the motion for
reconsideration, the Court of Appeals further modified the trial courts decision as to the
award of consequential damages.
Page 89 of 115
Ordinarily, the Court will not disturb the findings of fact of the Court of Appeals in petitions
to review the latter's decisions under Rule 45 of the Revised Rules of Court, the scope of the
Court's inquiry being limited to a review of the imputed errors of law [Chan v. Court of
Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 77; Tiongco v. De la Merced, G.R. No.
L-24426, July 25, 1974, 58 SCRA 89; Corona v. Court of Appeals, G.R. No. 62482, April 28,
1983, 121 SCRA 865; Baniqued v. Court of Appeals, G.R. No.
L-47531, January 30, 1984, 127 SCRA 596.] However, when, as in this case, it is the
petitioner's position that the appealed judgment is premised on a misapprehension of
facts, * the Court is compelled to review the Court of Appeal's factual findings [De la Cruz v.
Sosing, 94 Phil. 26 (1953); Castillo v. Court of Appeals, G.R. No. I,48290, September 29,
1983, 124 SCRA 808.]
Considering the sketchiness of the respondent court's narration of facts, whether or not the
Court of Appeals indeed misapprehended the facts could not be determined without a
thorough review of the records.
Thus, after a careful scrutiny of the records, the Court has found the appellate court's
narration of facts incomplete. It failed to include certain material facts.
The facts are actually as follows:
RJL MARTINEZ is engaged in the business of deep-sea fishing. As RJL MARTINEZ needed
electric generators for some of its boats and SCHMIID sold electric generators of different
brands, negotiations between them for the acquisition thereof took place. The parties had
two separate transactions over "Nagata"-brand generators.
The first transaction was the sale of three (3) generators. In this transaction, it is not
disputed that SCHMID was the vendor of the generators. The company supplied the
generators from its stockroom; it was also SCHMID which invoiced the sale.
The second transaction, which gave rise to the present controversy, involves twelve (12)
"Nagata"-brand generators. 'These are the facts surrounding this particular transaction:
As RJL MARTINEZ was canvassing for generators, SC gave RJL MARTINEZ its Quotation
dated August 19, 1975 [Exhibit 'A"] for twelve (12) "Nagata'-brand generators with the
following specifications:
"NAGATA" Single phase AC Alternators, 110/220 V, 60 cycles, 1800 rpm, unity power factor,
rectifier type and radio suppressor,, 5KVA (5KW) $546.75 @
It was stipulated that payment would be made by confirming an irrevocable letter of credit
in favor of NAGATA CO. Furthermore, among the General Conditions of Sale appearing on
the dorsal side of the Quotation is the following:
Buyer will, upon request, promptly open irrevocable Letter of Credit in favor of seller, in the
amount stated on the face of this memorandum, specifying shipment from any Foreign port
to Manila or any safe Philippine port, permitting partial shipments and providing that in the
event the shippers are unable to ship within the specified period due to strikes, lack of
shipping space or other circumstances beyond their reasonable control, Buyer agrees to
extend the said Letter of Credit for later shipment. The Letter of Credit shall otherwise be
subject to the conditions stated in this memorandum of contract. [Emphasis supplied.]
Page 90 of 115
Agreeing with the terms of the Quotation, RJL MARTINEZ opened a letter of credit in favor
of NAGATA CO. Accordingly, on November 20,1975, SCHMID transmitted to NAGATA CO. an
order [Exhibit "4"] for the twelve (12) generators to be shipped directly to RJL MARTINEZ.
NAGATA CO. thereafter sent RJL MARTINEZ the bill of lading and its own invoice (Exhibit
"B") and, in accordance with the order, shipped the generators directly to RJL MARTINEZ.
The invoice states that "one (1) case of 'NAGATA' AC Generators" consisting of twelve sets
was—bought by order and for account risk of Messrs. RJL Martinez Fishing Corporation.
For its efforts, SCHMID received from NAGATA CO. a commission of $1,752.00 for the sale
of the twelve generators to RJL MARTINEZ. [Exhibits "9", "9-A", "9-B" and "9-C".]
All fifteen (15) generators subject of the two transactions burned out after continuous use.
RJL MARTINEZ informed SCHMID about this development. In turn, SCHMID brought the
matter to the attention of NAGATA CO. In July 1976, NAGATA CO. sent two technical
representatives who made an ocular inspection and conducted tests on some of the burned
out generators, which by then had been delivered to the premises of SCHMID.
The tests revealed that the generators were overrated. As indicated both in the quotation
and in the invoice, the capacity of a generator was supposed to be 5 KVA (kilovolt amperes).
However, it turned out that the actual capacity was only 4 KVA.
SCHMID replaced the three (3) generators subject of the first sale with generators of a
different brand.
As for the twelve (12) generators subject of the second transaction, the Japanese
technicians advised RJL MARTINEZ to ship three (3) generators to Japan, which the
company did. These three (3) generators were repaired by NAGATA CO. itself and thereafter
returned to RJL MARTINEZ; the remaining nine (9) were neither repaired nor replaced.
NAGATA CO., however, wrote SCHMID suggesting that the latter check the generators,
request for spare parts for replacement free of charge, and send to NAGATA CO. SCHMID's
warranty claim including the labor cost for repairs [Exhibit "I".] In its reply letter, SCHMID
indicated that it was not agreeable to these terms [Exhibit "10".]
As not all of the generators were replaced or repaired, RJL MARTINEZ formally demanded
that it be refunded the cost of the generators and paid damages. SCHMID in its reply
maintained that it was not the seller of the twelve (12) generators and thus refused to
refund the purchase price therefor. Hence, on February 14, 1977, RJL MARTINEZ brought
suit against SCHMID on the theory that the latter was the vendor of the twelve (12)
generators and, as such vendor, was liable under its warranty against hidden defects.
Both the trial court and the Court of Appeals upheld the contention of RJL MARTINEZ that
SCHMID was the vendor in the second transaction and was liable under its warranty.
Accordingly, the courts a quo rendered judgment in favor of RJL MARTINEZ. Hence, the
instant recourse to this Court.
In this petition for review, SCHMID seeks reversal on the following grounds:
(i) Schmid was merely the indentor in the sale [of the twelve (12) generators] between
Nagata Co., the exporter and RJL Martinez, the importer;
(ii) as mere indentor, Schmid is not liable for the seller's implied warranty against hidden
defects, Schmid not having personally assumed any such warranty.
Page 91 of 115
(iii) in any event, conformably with Article 1563 of the Civil Code, there was no implied
warranty against hidden defects in the sale of these twelve (12) generators because these
were sold under their trade name "Nagata"; and
(iv) Schmid, accordingly, is not liable for the reimbursement claimed by RJL Martinez nor
for the latter's unsubstantiated claim of PI 10.33 operational losses a day nor for exemplary
damages, attorney's fees and costs. [Petition, p. 6.]
1. As may be expected, the basic issue confronting this Court is whether the second
transaction between the parties was a sale or an indent transaction. SCHMID maintains that
it was the latter; RJL MARTINEZ claims that it was a sale.
At the outset, it must be understood that a contract is what the law defines it to be,
considering its essential elements, and not what it is caged by the contracting parties
[Quiroga v. Parsons Hardware Co., 38 Phil. 501 (1918).]
The Civil Code defines a contract of sale, thus:
ART. 458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.
It has been said that the essence of the contract of sale is transfer of title or agreement to
transfer it for a price paid or promised [Commissioner of Internal Revenue v. Constantino,
G.R. No. L-25926, February 27, 1970, 31 SCRA 779, 785, citing Salisbury v. Brooks, 94 SE
117,118-19.] "If such transfer puts the transferee in the attitude or position of an owner and
makes him liable to the transferor as a debtor for the agreed price, and not merely as an
agent who must account for the proceeds of a resale, the transaction is, a sale." [Ibid.]
On the other hand, there is no statutory definition of "indent" in this jurisdiction. However,
the Rules and Regulations to Implement Presidential Decree No. 1789 (the Omnibus
Investments Code) lumps "indentors" together with "commercial brokers" and "commission
merchants" in this manner:
... A foreign firm which does business through the middlemen acting in their own names,
such as indentors, commercial brokers or commission merchants, shall not be deemed doing
business in the Philippines. But such indentors, commercial brokers or commission
merchants shall be the ones deemed to be doing business in the Philippines [Part I, Rule I,
Section 1, par. g (1).]
Therefore, an indentor is a middlemen in the same class as commercial brokers and

commission merchants. To get an Idea of what an indentor is, a look at the definition of
those in his class may prove helpful.
A broker is generally defined as one who is engaged, for others, on a commission,

negotiating contracts relative to property with the custody of which he has no concern; the
negotiator between other parties, never acting in his own name but in the name of those
who employed him; he is strictly a middleman and for some purpose the agent of both
parties. (1 9 Cyc 186; Henderson vs. The State, 50 Ind., 234; Black's Law Dictionary.) A
broker is one whose occupation it is to bring parties together to bargain, or to bargain for
them, in matters of trade, commerce or navigation. Mechem on Agency, sec. 13; Wharton
Page 92 of 115
on Agency, sec. 695.) Judge Storey, in his work on Agency, defines a broker as an agent
employed to make bargains and contracts between other persons, in matters of trade,
commerce or navigation, for compensation commonly called brokerage. (Storey on Agency,
sec. 28.) [Behn Meyer and Co., Ltd. v. Nolting and Garcia, 35 Phil. 274, 279-80 (1916).]
A commission merchant is one engaged in the purchase or sale for another of personal
property which, for this purpose, is placed in his possession and at his disposal. He
maintains a relation not only with his principal and the purchasers or vendors, but also with
the property which is subject matter of the transaction. [Pacific Commercial Co. v. Yatco, 68
Phil. 398, 401 (1939).]
Thus, the chief feature of a commercial broker and a commercial merchant is that in
effecting a sale, they are merely intermediaries or middle-men, and act in a certain sense as
the agent of both parties to the transaction.
Webster defines an indent as "a purchase order for goods especially when sent from a
foreign country." [Webster's Ninth New Collegiate Dictionary 612 (1986).] It would appear
that there are three parties to an indent transaction, namely, the buyer, the indentor, and
the supplier who is usually a non-resident manufacturer residing in the country where the
goods are to be bought [Commissioner of Internal Revenue v. Cadwallader Pacific Company,
G.R. No. L-20343, September 29, 1976, 73 SCRA 59.] An indentor may therefore be best
described as one who, for compensation, acts as a middleman in bringing about a purchase
and sale of goods between a foreign supplier and a local purchaser.
Coming now to the case at bar, the admissions of the parties and the facts appearing on
record more than suffice to warrant the conclusion that SCHMID was not a vendor, but was
merely an indentor, in the second transaction.
In its complaint, RJL MARTINEZ admitted that the generators were purchased "through
indent order" [Record on Appeal, p. 6.] In the same vein, it admitted in its demand letter
previously sent to SCHMID that twelve (12) of en (15) Nagata-brand generators "were
purchased through your company (SCHMID), by indent order and three (3) by direct
purchase." [Exhibit "D".] The evidence also show that RJL MARTINEZ paid directly NAGATA
CO, for the generators, and that the latter company itself invoiced the sale [Exhibit "B"], and
shipped the generators directly to the former. The only participation of SCHMID was to act
as an intermediary or middleman between NAGATA CO. and RJL MARTINEZ, by procuring
an order from RJL MARTINEZ and forwarding the same to NAGATA CO. for which the
company received a commission from NAGATA CO. [Exhibits "9", "9-A", "9-B" and "9-C".]
The above transaction is significantly different from the first transaction wherein SCHMID
delivered the goods from its own stock (which it had itself imported from NAGATA CO.),
issued its own invoice, and collected payment directly from the purchaser.
These facts notwithstanding, RJL MARTINEZ insists that SCHMID was the vendor of the
twelve generators on the following grounds:
First, it is contended that the Quotation and the General Conditions of Sale on the dorsal
side thereof do not necessarily lead to the conclusion that NAGATA CO., and not SCHMID,
was the real seller in the case of the twelve (12) generators in that:
Page 93 of 115
(i) the signing of the quotation, which was under SCHMID's letter-head, perfected the
contract of sale (impliedly, as between the signatories thereto—i.e., RJL MARTINEZ and
SCHMID);
(ii) the qualification that the letter of credit shall be in favor of NAGATA CO. constituted
simply the manner of payment requested by SCHMID (implying that SCHMID, as seller,
merely chose to waive direct payment, stipulating delivery of payment instead to NAGATA
CO. as supplier);
Second, it is asserted that the acts of SCHMID after it was informed of the defect in the
generators were indicative of its awareness that it was the vendor and acknowledgment of
its liability as such vendor. Attention is called to these facts: When RJL MARTINEZ
complained to SCHMID that the generators were defective, SCHMID immediately asked RJL
MARTINEZ to send the defective generators to its shop to determine what was wrong.
SCHMID likewise informed NAGATA CO. about the complaint of RJL MARTINEZ. When the
Japanese technicians arrived, SCHMID made available its technicians, its shop and its testing
equipment. After the generators were found to have factory defects, SCHMID facilitated the
shipment of three (3) generators to Japan and, after their repair, back to the Philippines
[Memorandum for the Respondent, p. 8.]
Third, it is argued that the contents of the letter from NAGATA CO. to SCHMID regarding the
repair of the generators indicated that the latter was "within the purview of a seller." [Ibid.]
Fourth, it is argued that if SCHMID is considered as a mere agent of NAGATA CO., a foreign
corporation not licensed to do business in the Philippines, then the officers and employees
of the former may be penalized for violation of the old Corporation Law which provided:
Sec. 69 ... Any officer or agent of the corporation or any person transacting business for any
foreign corporation not having the license prescribed shall be punished by imprisonment for
not less than six months nor more than two years or by a fine 'of not less than two hundred
pesos nor more than one thousand pesos or both such imprisonment and fine, in the
discretion of the Court.
The facts do not bear out these contentions.
The first contention disregards the circumstances surrounding the second transaction as
distinguished from those surrounding the first transaction, as noted above.
Neither does the solicitous manner by which SCHMID responded to RJL MARTINEZ's
complaint prove that the former was the seller of the generators. As aptly stated by counsel,
no indentor will just fold its hands when a client complains about the goods it has bought
upon the indentor's mediation. In its desire to promote the product of the seller and to
retain the goodwill of the buyer, a prudent indentor desirous of maintaining his business
would have to act considerably. towards his clients.
Note that in contrast to its act of replacing the three (3) generators subject of the first
transaction, SCHMID did not replace any of the twelve (12) generators, but merely rendered
assistance to both RJL TINES and NAGATA CO. so that the latter could repair the defective
generators.
The proposal of NAGATA CO. rejected by SCHMID that the latter undertake the repair of the
nine (9) other defective generators, with the former supplying the replacement parts free of
Page 94 of 115
charge and subsequently reimbursing the latter for labor costs [Exhibit "I"], cannot support
the conclusion that SCHMID is vendor of the generators of the second transaction or was
acting "within the purview of a seller."
Finally, the afore-quoted penal provision in the Corporation Law finds no application to
SCHMID and its officers and employees relative to the transactions in the instant case. What
the law seeks to prevent, through said provision, is the circumvention by foreign
corporations of licensing requirements through the device of employing local
representatives. An indentor, acting in his own name, is not, however, covered by the
above-quoted provision. In fact, the provision of the Rules and Regulations implementing
the Omnibus Investments Code quoted above, which was copied from the Rules
implementing Republic Act No. 5455, recognizes the distinct role of an indentor, such that
when a foreign corporation does business through such indentor, the foreign corporation is
not deemed doing business in the Philippines.
In view of the above considerations, this Court rules that SCHMID was merely acting as an
indentor in the purchase and sale of the twelve (12) generators subject of the second
transaction. Not being the vendor, SCHMID cannot be held liable for the implied warranty
for hidden defects under the Civil Code [Art. 1561, et seq.]
2. However, even as SCHMID was merely an indentor, there was nothing to prevent it from
voluntarily warranting that twelve (12) generators subject of the second transaction are free
from any hidden defects. In other words, SCHMID may be held answerable for some other
contractual obligation, if indeed it had so bound itself. As stated above, an indentor is to
some extent an agent of both the vendor and the vendee. As such agent, therefore, he may
expressly obligate himself to undertake the obligations of his principal (See Art. 1897, Civil
Code.)
The Court's inquiry, therefore, shifts to a determination of whether or not SCHMID expressly
bound itself to warrant that the twelve (12) generators are free of any hidden defects.
Again, we consider the facts.
The Quotation (Exhibit A is in writing. It is the repository of the contract between RJL
MARTINEZ and SCHMID. Notably, nowhere is it stated therein that SCHMID did bind itself to
answer for the defects of the things sold. There being no allegation nor any proof that the
Quotation does not express the true intent and agreement of the contracting parties,
extrinsic parol evidence of warranty will be to no avail [See Rule 123, Sec. 22.]
The trial court, however, relied on the testimony of Patrocinio Balagtas, the head of the
Electrical Department of RJL MARTINEZ, to support the finding that SCHMID did warrant the
twelve (12) generators against defects.
Upon careful examination of Balagtas' testimony, what is at once apparent is that Balagtas
failed to disclose the nature or terms and conditions of the warranty allegedly given by SC
Was it a warranty that the generators would be fit for the fishing business of the buyer?
Was it a warranty that the generators to be delivered would meet the specifications
indicated in the Quotation? Considering the different kinds of warranties that may be
contracted, unless the nature or terms and conditions of the warranty are known, it would
not be possible to determine whether there has been a breach thereof.
Page 95 of 115
Moreover, a closer examination of the statements allegedly made by the representative of
SCHMID reveals that they merely constituted an expression of opinion which cannot by any
means be construed as a warranty [See Art. 1546, Civil Code.]
We quote from Balagtas' testimony:
Atty. CATRAL:
Q Did you not say at the start of your cross examination, Mr. Balagtas, that the only
participation you had in the acquisition of those twelve (12) units [of] generators was your
having issued a purchase order to your own company for the purchase of the units?
ATTY. AQUINO:
Misleading, your Honor.
Atty. CATRAL:
I am asking the witness.
COURT:
He has the right to ask that question because he is on cross. Moreover, if I remember, he
mentioned something like that. Witness may answer.
A Yes, sir. Before I submitted that, we negotiated with Schmid and Oberly the beat
generators they can recommend because we are looking for generators. The representative
of Schmid and Oberly said that Nagata is very good. That is why I recommended that to the
management. [t.s.n., October 14, 1977, pp. 23-25.]
At any rate, when asked where SCHMID's warranty was contained, Balagtas testified initially
that it was in the receipts covering the sale. (At this point, it may be stated that the invoice
[Exhibit "B-l"] was issued by NAGATA CO. and nowhere is it stated therein that SCHMID
warranted the generators against defects.) When confronted with a copy of the invoice
issued by NAGATA CO., he changed his assertion and claimed that what he meant was that
the date of the commencement of the period of SCHMID's warranty would be based on the
date of the invoice. On further examination, he again changed his mind and asserted that
the warranty was given verbally [TSN, October 14, 1977, pp. 19-22.] But then again, as
stated earlier, the witness failed to disclose the nature or terms and conditions of the
warranty allegedly given by SCHMID.
On the other hand, Hernan Adad SCHMID's General Manager, was categorical that the
company does not warrant goods bought on indent and that the company warrants only the
goods bought directly from it, like the three generators earlier bought by RJL MARTINEZ
itself [TSN, December 19, 1977, pp. 63-64.] It must be recalled that SCHMID readily
replaced the three generators from its own stock. In the face of these conflicting
testimonies, this Court is of the view that RJL has failed to prove that SCHMID had given a
warranty on the twelve (12) generators subject of the second transaction. Even assuming
that a warranty was given, there is no way to determine whether there has been a breach
thereof, considering that its nature or terms and conditions have not been shown.
3. In view of the foregoing, it becomes unnecessary to pass upon the other issues.
Page 96 of 115
WHEREFORE, finding the Court of Appeals to have committed a reversible error, the petition
is GRANTED and the appealed Decision and Resolution of the Court of Appeals are
REVERSED. The complaint of RJL Martinez Fishing Corporation is hereby DISMISSED. No
costs.
SO ORDERED.
5. Guardians, Administrators and Executors
Naval vs Enriquez
3 Phil 669
EN BANC
G.R. No. 1318 April 12, 1904
PRISCA NAVAL, ET AL.,Plaintiffs-Appellees, vs. FRANCISCO ENRIQUEZ, ET AL.,Defendants-

Appellants.
MAPA, J.:
November 14, 1885, Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez
and Doña Ciriaca Villanueva, whose estates were at that time still undistributed, by public
instrument sold to Don Victoriano Reyes his interest in both estates, equivalent to a tenth
part thereof, for the sum of 7,000 pesos. The deed was executed in this city before Don
Enrique Barrera, a notary public, who certified in the document that the vendor received the
said consideration at the time of the execution of the instrument.chanrobles virtual law
library
By another instrument executed April 15, 1886, before the same notary, Don Enrique
Barrera y Caldes, Don Victoriano Reyes sold to Doña Carmen de la Cavada this interest in
the estate of Don Antonio Enriquez and Doña Ciriaca Villanueva, which by the deed above
referred to, he had acquired from Don Jorge Enriquez for the same consideration of 7,000
pesos, which money he received from the purchaser in the presence of the notary, who so
certifies in the deed itself.chanrobles virtual law library
The purchaser, Doña Carmen, was the wife of Don Francisco Enriquez, who was the
executor and administrator of the testamentary estate of Don Antonio Enriquez at the dates
of the execution of the two above mentioned.chanrobles virtual law library
The plaintiffs demand that these deeds be declared null and void, as well as the contracts
evidenced thereby, apparently solely so far as they refer to the estate of Don Antonio
Enriquez, no mention being made of the estate of Doña Ciriaca Villanueva in the complaint.
This relief is prayed for upon the following grounds: chanrobles virtual law library
(1) Because the said contracts were executed without consideration, it being alleged with
respect to this matter that Don Jorge Enriquez did not receive any consideration for the sale
made by him in favor of Don Victoriano Reyes, and that the latter did not receive any sum
whatever as a consideration for the sale in turn executed by him in favor of Doña Carmen
de la Cavada. Upon this ground the plaintiffs contend that the deeds in question were
Page 97 of 115
consummated and were executed for the purpose of deceiving and defrauding Don Jorge
Enriquez and his family.chanrobles virtual law library
(2) Because Don Victoriano Reyes, the purchaser under the first deed, merely acted as an
intermediary at the request and instance of Don Francisco Enriquez for the purpose of
subsequently facilitating the acquisition by Doña Carmen de la Cavada, his wife, of the
hereditary share of Don Jorge Enriquez, the real acquirer being Don Francisco Enriquez, the
executor and administrator of the estate of Don Antonio Enriquez. The conclusion of the
plaintiffs is that as such executor Don Francisco Enriquez was unable to acquire by his own
act or that of any intermediary the said hereditary portion of Don Jorge Enriquez under the
provisions of paragraph 3 of article 1459 of the Civil Code.chanrobles virtual law library
( a) The evidence introduced by the plaintiffs is not sufficient to authorize the conclusion
that there was no consideration for the sales referred to in the complaint. It is true that
Victoriano Reyes testified that he paid nothing to Don Jorge Enriquez, and received nothing
from Carmen de la Cavada as consideration for either of the sales. But against this
statement is the testimony of the notary, Don Enrique Barrera y Caldes, before whom both
contracts were executed, and that of the defendants Francisco Enriquez and Doña Carmen
de la Cavada, who expressly affirm the contrary; and more especially the statement is
contrary to the recitals of the deeds themselves, which confirm the statements of the
witnesses last referred to. The deeds clearly and expressly recite the fact of the receipt by
the respective purchasers of the stipulated price or consideration of 7,000 pesos at the time
and place of the execution of the deeds.chanrobles virtual law library
These instruments having been executed with all the formalities prescribed by the law, they
are admissible as evidence against the contracting parties and their successors with respect
to recitals made therein by the former (Art. 1218, Civil Code.) Their evidentiary force can
not be overcome except by other evidence of greater weight, sufficient to overcome the
legal presumption of the regularity of acts and contracts celebrated with all the legal
requisites under the safeguard of a notarial certificate. This presumption has not been
rebutted in the present case, in which the evidence against it, consisting of the sole
testimony of Don Victoriano Reyes, which, moreover, is expressly controverted by that of
the other witnesses at the trial, involves the improbable conclusion that the witness, as well
as Jorge Enriquez, from whom the plaintiffs derived title, the notary public, and the attesting
witnesses to both instruments consented to the commission of the grave crime of
falsification of public documents - for this would be the result were the statements of the
said Victoriano Reyes true - without having any interest in so doing or expecting to derive
any benefit from the commission of the crime, the plaintiffs not having alleged or proven the
existence of such an interest on their part. It appears, on the contrary, from the testimony
of Victoriano Reyes himself that he received no compensation for his participation in the
matter.chanrobles virtual law library
With respect to Jorge Enriquez, the conclusion, still more improbable if possible, would be
that he had voluntarily and spontaneously taken part in the commission of a grave crime,
which not only was not of the slightest benefit to himself, but the commission of which is
supposed to have had for its object the causing of harm to him. The allegation is that the
purpose of the crime was to deprive him, without the slightest compensation, of his paternal
and maternal inheritance, which according to the complaint was the only possession of
himself and his numerous family. This is the most inexplicable and improbable aspect of the
facts alleged in the complaint. It is beyond comprehension, and we can not believe that
Jorge Enriquez, who according to the plaintiffs was absolutely without means of support for
himself and his family, would convey to another his large interest in the estate without
Page 98 of 115
receiving any consideration therefor, and that to do this he would commit the grave crime of
falsification. To justify this conclusion it would be necessary to suppose that Jorge Enriquez
was absolutely devoid of intelligence or that he was the victim or error, violence,
intimidation, or fraud. But these are circumstances which counsel for the plaintiffs have not
demonstrated or even sought to demonstrate.chanrobles virtual law library
An examination of the evidence leads us to the conclusion that the payment of the
consideration of 7,000 pesos expressed in the two deeds in question was actually and really
made, and that the allegation of the plaintiffs that the contracts of sale evidenced by these
deeds were made without consideration is unfounded.chanrobles virtual law library
At all events the action of which the plaintiffs might have availed themselves for the purpose
of having those contracts declared void upon the ground, even admitting hypothetically that
there was no consideration, is barred by the statute of limitations, inasmuch as from the
date of those contracts down to the death of Jorge Enriquez, which occurred July 6, 1891,
more than five year had passed and more than fifteen before the filing of the complaint on
January 9, 1902, nothing having been done in the meantime on the part of the plaintiffs or
the person under whom they claim to interrupt the running of the statute. The action of
nullity only lasts four years, counted from the date of the consummation of the contract,
when the action is based, as in this case, upon the absence of consideration. (Art. 1301 of
the Civil Code.)chanrobles virtual law library
The contract of sale is consummated by the delivery of the purchase money and of the thing
sold. "When the sale is made by public instrument the execution of the instrument is
equivalent to the delivery of the thing which is the object of the contract, unless from the
instrument itself the contrary intention clearly appears." (Art. 1462, par. 2, Civil Code.) And
article 1464 provides that "With respect to incorporeal property [to which class the
hereditary right which was the object of the contracts in question pertains], the provisions of
paragraph 2 of article 1462 shall govern." In the deeds of sale executed by Victoriano Reyes
in favor of Doña Carmen de la Cavada we find the following: "In consequence he (the
vendor) by virtue of this title cedes and conveys all rights which he has or may have to the
part of the inheritance which is the object of this sale, to the end that the purchaser, in the
place and stead of the vendor, may exercise all the acts of ownership corresponding to her
right, to which end by means of the delivery of this instrument and of his other title deeds
he makes the transfer necessary to consummate the contract, which upon his part he
declares to be perfect and consummated from this date." chanrobles virtual law library
In view of this clause and for the legal provisions above cited, it is evident that the delivery
of the things sold was effected by the mere execution of the deed of sale; and it appearing
from the deed itself that the consideration was delivered to the vendor at the time, and the
contrary not having been sufficiently proven, the conclusion follows that the sale was
consummated them and there, and that from that time the period of four years fixed by law
for the prescription of the action of nullity must be counted in this case.chanrobles virtual
law library
( b) The thing sold in the two contracts of sale mentioned in the complained was the
hereditary right of Don Jorge Enriquez, which evidently was not in charge of the executor,
Don Francisco Enriquez. Executors, even in those cases in which they administer the
property pertaining to the estate, do not administer the hereditary rights of any heir. This
right is vested entirely in the heirs, who retain it or transmit it in whole or in part, as they
may deem convenient, to some other person absolutely independent of the executor, whose
authority, whatever powers the testator may have desired to confer upon him, do not and
Page 99 of 115
can not under any circumstances in the slightest degree limit the power of the heirs to
dispose of the said right at will. That right does not form part of the property delivered to
the executor for administration.chanrobles virtual law library
This conclusion having been reached, we are of the opinion that article 1459 of the Civil
Code, cited by the plaintiffs to show the alleged incapacity of Don Francisco Enriquez as
executor of the will of Don Antonio Enriquez, to acquire by purchase the hereditary right of
Jorge Enriquez, has no application to the present case. The prohibition which paragraph 3 of
that article imposes upon executors refers to the property confided to their care, and does
not extend, therefore, to property not falling within this class. Legal provisions of a
prohibitive character must be strictly construed, and should not be extended to cases not
expressly comprised within their text.chanrobles virtual law library
Consequently, even upon the supposition that the executor, Don Francisco Enriquez, was
the person who really acquired the hereditary rights of Jorge Enriquez, the sale in question
would not for that reason be invalid, the executor, Don Francisco Enriquez, not being legally
incapable of acquiring the hereditary right in question as the plaintiffs erroneously
suppose.chanrobles virtual law library
This being so, the question as to whether the money paid by Doña Carmen de la Cavada for
the purchase of the said right was her sole and exclusive property, or whether it was the
property of her husband Don Francisco Enriquez, or whether it was the property of the
community of goods existing between them, is absolutely unimportant, for, be the fact as it
may, the conclusion must always be that the incapacity to purchase, alleged as one of the
legal grounds upon which the complaint rests, does not exist.chanrobles virtual law library
Enough has been said to show that the action brought by the plaintiffs is devoid of
foundation. It is not, therefore, necessary to decide the other questions raised by the parties
at the trial.chanrobles virtual law library
The judgment of the court below is reversed and the complaint dismissed, without costs in
either instance. So ordered.
6. Judges, Justices and those involved in the administration of justice
Macariola VS Asuncion
EN BANC
A.M. No. 133-JMay 31, 1982
BERNARDITA R. MACARIOLA, complainant,

vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.
MAKASIAR, J:
Page 100 of 115

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent
Judge Elias B. Asuncion of the Court of First Instance of Leyte, now Associate Justice of the
Court of Appeals, with "acts unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then Associate
Justice Cecilia Muñoz Palma of the Court of Appeals now retired Associate Justice of the
Supreme Court, to whom this case was referred on October 28, 1968 for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed
by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and
Priscilla Reyes, plaintiffs, against Bernardita R. Macariola, defendant, concerning the
properties left by the deceased Francisco Reyes, the common father of the plaintiff and
defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged among other things
that; a) plaintiff Sinforosa R. Bales was not a daughter of the deceased Francisco Reyes; b)
the only legal heirs of the deceased were defendant Macariola, she being the only offspring
of the first marriage of Francisco Reyes with Felisa Espiras, and the remaining plaintiffs who
were the children of the deceased by his second marriage with Irene Ondez; c) the
properties left by the deceased were all the conjugal properties of the latter and his first
wife, Felisa Espiras, and no properties were acquired by the deceased during his second
marriage; d) if there was any partition to be made, those conjugal properties should first be
partitioned into two parts, and one part is to be adjudicated solely to defendant it being the
share of the latter's deceased mother, Felisa Espiras, and the other half which is the share
of the deceased Francisco Reyes was to be divided equally among his children by his two
marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of

evidence, finds and so holds, and hereby renders judgment (1) Declaring the plaintiffs Luz
R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes as the only
children legitimated by the subsequent marriage of Francisco Reyes Diaz to Irene Ondez; (2)
Declaring the plaintiff Sinforosa R. Bales to have been an illegitimate child of Francisco
Reyes Diaz; (3) Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of
Lot 1145 as belonging to the conjugal partnership of the spouses Francisco Reyes Diaz and
Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416 as belonging to the
spouses Francisco Reyes Diaz and Irene Ondez in common partnership; (5) Declaring that
1/2 of Lot No. 1184 as belonging exclusively to the deceased Francisco Reyes Diaz; (6)
Declaring the defendant Bernardita R. Macariola, being the only legal and forced heir of her
mother Felisa Espiras, as the exclusive owner of one-half of each of Lots Nos. 4474, 4475,
4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of said Lots Nos.
4474, 4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No.
1154 as belonging to the estate of Francisco Reyes Diaz; (7) Declaring Irene Ondez to be
the exclusive owner of one-half (1/2) of Lot No. 2304 and one-half (1/2) of one-fourth (1/4)
of Lot No. 3416; the remaining one-half (1/2) of Lot 2304 and the remaining one-half (1/2)
of one-fourth (1/4) of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8)
Directing the division or partition of the estate of Francisco Reyes Diaz in such a manner as
to give or grant to Irene Ondez, as surviving widow of Francisco Reyes Diaz, a hereditary
share of. one-twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation
to Art. 892, par 2, New Civil Code), and the remaining portion of the estate to be divided
Page 101 of 115

among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes,
Adela Reyes, Priscilla Reyes and defendant Bernardita R. Macariola, in such a way that the
extent of the total share of plaintiff Sinforosa R. Bales in the hereditary estate shall not
exceed the equivalent of two-fifth (2/5) of the total share of any or each of the other
plaintiffs and the defendant (Art. 983, New Civil Code), each of the latter to receive equal
shares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin vs. Bishop of
Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties, within thirty days after this judgment
shall have become final to submit to this court, for approval a project of partition of the
hereditary estate in the proportion above indicated, and in such manner as the parties may,
by agreement, deemed convenient and equitable to them taking into consideration the
location, kind, quality, nature and value of the properties involved; (10) Directing the
plaintiff Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the costs of this
suit, in the proportion of one-third (1/3) by the first named and two-thirds (2/3) by the
second named; and (I 1) Dismissing all other claims of the parties [pp 27-29 of Exh. C].
The decision in civil case 3010 became final for lack of an appeal, and on October 16, 1963,
a project of partition was submitted to Judge Asuncion which is marked Exh. A.
Notwithstanding the fact that the project of partition was not signed by the parties
themselves but only by the respective counsel of plaintiffs and defendant, Judge Asuncion
approved it in his Order dated October 23, 1963, which for convenience is quoted hereunder
in full:
The parties, through their respective counsels, presented to this Court for approval the
following project of partition:
COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this Honorable
Court respectfully submit the following Project of Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to Bernardita
Reyes Macariola;
2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern part of
the lot shall be awarded likewise to Bernardita R. Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western part of
the lot shall likewise be awarded to Sinforosa Reyes-Bales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares;
6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portions awarded
under item (2) and (4) above shall be awarded to Luz Reyes Bakunawa, Anacorita Reyes,
Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares, provided, however that the
remaining portion of Lot No. 3416 shall belong exclusively to Priscilla Reyes.
WHEREFORE, it is respectfully prayed that the Project of Partition indicated above which is
made in accordance with the decision of the Honorable Court be approved.
Tacloban City, October 16, 1963.
Page 102 of 115

(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City
While the Court thought it more desirable for all the parties to have signed this Project of
Partition, nevertheless, upon assurance of both counsels of the respective parties to this
Court that the Project of Partition, as above- quoted, had been made after a conference and
agreement of the plaintiffs and the defendant approving the above Project of Partition, and
that both lawyers had represented to the Court that they are given full authority to sign by
themselves the Project of Partition, the Court, therefore, finding the above-quoted Project of
Partition to be in accordance with law, hereby approves the same. The parties, therefore,
are directed to execute such papers, documents or instrument sufficient in form and
substance for the vesting of the rights, interests and participations which were adjudicated
to the respective parties, as outlined in the Project of Partition and the delivery of the
respective properties adjudicated to each one in view of said Project of Partition, and to
perform such other acts as are legal and necessary to effectuate the said Project of
Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November 11, 1963, only for the
purpose of giving authority to the Register of Deeds of the Province of Leyte to issue the
corresponding transfer certificates of title to the respective adjudicatees in conformity with
the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184 or rather one-half
thereof with an area of 15,162.5 sq. meters. This lot, which according to the decision was
the exclusive property of the deceased Francisco Reyes, was adjudicated in said project of
partition to the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla all surnamed Reyes in
equal shares, and when the project of partition was approved by the trial court the
adjudicatees caused Lot 1184 to be subdivided into five lots denominated as Lot 1184-A to
1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's court
(Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of 2,172.5556 sq. meters was
sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who was issued transfer certificate of
title No. 2338 of the Register of Deeds of the city of Tacloban (Exh. 12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an
area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria S. Asuncion (Exh.
11), which particular portion was declared by the latter for taxation purposes (Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their respective
shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc."
(Exit 15 & 16). At the time of said sale the stockholders of the corporation were Dominador
Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's wife,
Page 103 of 115

Victoria S. Asuncion, with Judge Asuncion as the President and Mrs. Asuncion as the
secretary (Exhs. E-4 to E-7). The Articles of Incorporation of "The Traders Manufacturing
and Fishing Industries, Inc." which we shall henceforth refer to as "TRADERS" were
registered with the Securities and Exchange Commission only on January 9, 1967 (Exh. E)
[pp. 378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated
August 6, 1968 alleging four causes of action, to wit: [1] that respondent Judge Asuncion
violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion
of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010 decided
by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of
Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act, Section 12, Rule XVIII of the Civil Service Rules, and Canon 25 of the
Canons of Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing
Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of
First Instance of Leyte; [3] that respondent was guilty of coddling an impostor and acted in
disregard of judicial decorum by closely fraternizing with a certain Dominador Arigpa Tan
who openly and publicly advertised himself as a practising attorney when in truth and in fact
his name does not appear in the Rolls of Attorneys and is not a member of the Philippine
Bar; and [4] that there was a culpable defiance of the law and utter disregard for ethics by
respondent Judge (pp. 1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was
filed on October 16, 1968 by herein complainant. In Our resolution of October 28, 1968, We
referred this case to then Justice Cecilia Muñoz Palma of the Court of Appeals, for
investigation, report and recommendation. After hearing, the said Investigating Justice
submitted her report dated May 27, 1971 recommending that respondent Judge should be
reprimanded or warned in connection with the first cause of action alleged in the complaint,
and for the second cause of action, respondent should be warned in case of a finding that
he is prohibited under the law to engage in business. On the third and fourth causes of
action, Justice Palma recommended that respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.),
complainant herein instituted an action before the Court of First Instance of Leyte, entitled
"Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al., defendants," which was
docketed as Civil Case No. 4235, seeking the annulment of the project of partition made
pursuant to the decision in Civil Case No. 3010 and the two orders issued by respondent
Judge approving the same, as well as the partition of the estate and the subsequent
conveyances with damages. It appears, however, that some defendants were dropped from
the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he was
no longer a real party in interest when Civil Case No. 4234 was filed, having already
conveyed on March 6, 1965 a portion of lot 1184-E to respondent Judge and on August 31,
1966 the remainder was sold to the Traders Manufacturing and Fishing Industries, Inc.
Similarly, the case against defendant Victoria Asuncion was dismissed on the ground that
she was no longer a real party in interest at the time the aforesaid Civil Case No. 4234 was
filed as the portion of Lot 1184 acquired by her and respondent Judge from Dr. Arcadio
Galapon was already sold on August 31, 1966 to the Traders Manufacturing and Fishing
industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus,
Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R.
Celestial and Pilar P. Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and
Enriqueta Anota and Atty. Zotico A. Tolete were dismissed with the conformity of
complainant herein, plaintiff therein, and her counsel.
Page 104 of 115

On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte,
who was directed and authorized on June 2, 1969 by the then Secretary (now Minister) of
Justice and now Minister of National Defense Juan Ponce Enrile to hear and decide Civil Case
No. 4234, rendered a decision, the dispositive portion of which reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction
to take cognizance of the issue of the legality and validity of the Project of Partition [Exhibit
"B"] and the two Orders [Exhibits "C" and "C- 3"] approving the partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B.
Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND
FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN —
(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of
the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo
Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WERE
PLAINTIFFS IN CIVIL CASE NO. 3010 —
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer, Priscilla
R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO —
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to the Court of
Appeals upon perfection of the appeal on February 22, 1971.
Page 105 of 115

WE find that there is no merit in the contention of complainant Bernardita R. Macariola,
under her first cause of action, that respondent Judge Elias B. Asuncion violated Article
1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No.
1184-E which was one of those properties involved in Civil Case No. 3010. 'That Article
provides:
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial
action, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property and rights
which may be the object of any litigation in which they may take part by virtue of their
profession [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of the property
which is the subject of litigation to the persons disqualified therein. WE have already ruled
that "... for the prohibition to operate, the sale or assignment of the property must take
place during the pendency of the litigation involving the property" (The Director of Lands vs.
Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86 SCRA
641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot
1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already
final because none of the parties therein filed an appeal within the reglementary period;
hence, the lot in question was no longer subject of the litigation. Moreover, at the time of
the sale on March 6, 1965, respondent's order dated October 23, 1963 and the amended
order dated November 11, 1963 approving the October 16, 1963 project of partition made
pursuant to the June 8, 1963 decision, had long become final for there was no appeal from
said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly
from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier
purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes,
Adela Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It
may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal
shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in
the project of partition, and the same was subdivided into five lots denominated as Lot
1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for
which he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March
6, 1965 he sold a portion of said lot to respondent Judge and his wife who declared the
same for taxation purposes only. The subsequent sale on August 31, 1966 by spouses
Asuncion and spouses Galapon of their respective shares and interest in said Lot 1184-E to
the Traders Manufacturing and Fishing Industries, Inc., in which respondent was the
president and his wife was the secretary, took place long after the finality of the decision in
Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the
project of partition.
Page 106 of 115

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action
before the Court of First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul
the project of partition and the two orders approving the same, as well as the partition of
the estate and the subsequent conveyances, the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-
E from Dr. Arcadio Galapon; hence, after the finality of the decision which he rendered on
June 8, 1963 in Civil Case No. 3010 and his two questioned orders dated October 23, 1963
and November 11, 1963. Therefore, the property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer
alter, change or affect the aforesaid facts — that the questioned sale to respondent Judge,
now Court of Appeals Justice, was effected and consummated long after the finality of the
aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place
over one year after the finality of the decision in Civil Case No. 3010 as well as the two
orders approving the project of partition, and not during the pendency of the litigation,
there was no violation of paragraph 5, Article 1491 of the New Civil Code.
It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr.
Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a mere
scheme to conceal the illegal and unethical transfer of said lot to respondent Judge as a
consideration for the approval of the project of partition. In this connection, We agree with
the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question whether or not the
acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer of the
whole lot to "TRADERS" of which respondent was the President and his wife the Secretary,
was intimately related to the Order of respondent approving the project of partition, Exh. A.
Respondent vehemently denies any interest or participation in the transactions between the
Reyeses and the Galapons concerning Lot 1184-E, and he insists that there is no evidence
whatsoever to show that Dr. Galapon had acted, in the purchase of Lot 1184-E, in mediation
for him and his wife. (See p. 14 of Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the record showing that
Dr. Arcadio Galapon acted as a mere "dummy" of respondent in acquiring Lot 1184-E from
the Reyeses. Dr. Galapon appeared to this investigator as a respectable citizen, credible and
sincere, and I believe him when he testified that he bought Lot 1184-E in good faith and for
valuable consideration from the Reyeses without any intervention of, or previous
understanding with Judge Asuncion (pp. 391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in approving
the project of partition although it was not signed by the parties, We quote with approval
the findings of the Investigating Justice, as follows:
1. I agree with complainant that respondent should have required the signature of the
parties more particularly that of Mrs. Macariola on the project of partition submitted to him
Page 107 of 115

for approval; however, whatever error was committed by respondent in that respect was
done in good faith as according to Judge Asuncion he was assured by Atty. Bonifacio Ramo,
the counsel of record of Mrs. Macariola, That he was authorized by his client to submit said
project of partition, (See Exh. B and tsn p. 24, January 20, 1969). While it is true that such
written authority if there was any, was not presented by respondent in evidence, nor did
Atty. Ramo appear to corroborate the statement of respondent, his affidavit being the only
one that was presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead
this investigator to believe that she knew the contents of the project of partition, Exh. A,
and that she gave her conformity thereto. I refer to the following documents:
1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban
Cadastral Survey in which the deceased Francisco Reyes holds a "1/4 share" (Exh. 9-a). On
tills certificate of title the Order dated November 11, 1963, (Exh. U) approving the project of
partition was duly entered and registered on November 26, 1963 (Exh. 9-D);
2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita Reyes

Macariola on October 22, 1963, conveying to Dr. Hector Decena the one-fourth share of the
late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee stated that she was
the absolute owner of said one-fourth share, the same having been adjudicated to her as
her share in the estate of her father Francisco Reyes Diaz as per decision of the Court of
First Instance of Leyte under case No. 3010 (Exh. 7-A). The deed of sale was duly registered
and annotated at the back of OCT 19520 on December 3, 1963 (see Exh. 9-e).
In connection with the abovementioned documents it is to be noted that in the project of

partition dated October 16, 1963, which was approved by respondent on October 23, 1963,
followed by an amending Order on November 11, 1963, Lot 1154 or rather 1/4 thereof was
adjudicated to Mrs. Macariola. It is this 1/4 share in Lot 1154 which complainant sold to Dr.
Decena on October 22, 1963, several days after the preparation of the project of partition.
Counsel for complainant stresses the view, however, that the latter sold her one-fourth
share in Lot 1154 by virtue of the decision in Civil Case 3010 and not because of the project
of partition, Exh. A. Such contention is absurd because from the decision, Exh. C, it is clear
that one-half of one- fourth of Lot 1154 belonged to the estate of Francisco Reyes Diaz
while the other half of said one-fourth was the share of complainant's mother, Felisa
Espiras; in other words, the decision did not adjudicate the whole of the one-fourth of Lot
1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant became the owner of
the entire one-fourth of Lot 1154 only by means of the project of partition, Exh. A.
Therefore, if Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no other reason
than that she was wen aware of the distribution of the properties of her deceased father as
per Exhs. A and B. It is also significant at this point to state that Mrs. Macariola admitted
during the cross-examination that she went to Tacloban City in connection with the sale of
Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can deduce that she
could not have been kept ignorant of the proceedings in civil case 3010 relative to the
project of partition.
Complainant also assails the project of partition because according to her the properties
adjudicated to her were insignificant lots and the least valuable. Complainant, however, did
not present any direct and positive evidence to prove the alleged gross inequalities in the
choice and distribution of the real properties when she could have easily done so by
presenting evidence on the area, location, kind, the assessed and market value of said
properties. Without such evidence there is nothing in the record to show that there were
inequalities in the distribution of the properties of complainant's father (pp. 386389, rec.).
Page 108 of 115

Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of
the New Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation
in his court, it was, however, improper for him to have acquired the same. He should be
reminded of Canon 3 of the Canons of Judicial Ethics which requires that: "A judge's official
conduct should be free from the appearance of impropriety, and his personal behavior, not
only upon the bench and in the performance of judicial duties, but also in his everyday life,
should be beyond reproach." And as aptly observed by the Investigating Justice: "... it was
unwise and indiscreet on the part of respondent to have purchased or acquired a portion of
a piece of property that was or had been in litigation in his court and caused it to be
transferred to a corporation of which he and his wife were ranking officers at the time of
such transfer. One who occupies an exalted position in the judiciary has the duty and
responsibility of maintaining the faith and trust of the citizenry in the courts of justice, so
that not only must he be truly honest and just, but his actuations must be such as not give
cause for doubt and mistrust in the uprightness of his administration of justice. In this
particular case of respondent, he cannot deny that the transactions over Lot 1184-E are
damaging and render his actuations open to suspicion and distrust. Even if respondent
honestly believed that Lot 1184-E was no longer in litigation in his court and that he was
purchasing it from a third person and not from the parties to the litigation, he should
nonetheless have refrained from buying it for himself and transferring it to a corporation in
which he and his wife were financially involved, to avoid possible suspicion that his
acquisition was related in one way or another to his official actuations in civil case 3010. The
conduct of respondent gave cause for the litigants in civil case 3010, the lawyers practising
in his court, and the public in general to doubt the honesty and fairness of his actuations
and the integrity of our courts of justice" (pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that respondent Judge
violated paragraphs 1 and 5, Article 14 of the Code of Commerce when he associated
himself with the Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a
ranking officer, said corporation having been organized to engage in business. Said Article
provides that:
Article 14 — The following cannot engage in commerce, either in person or by proxy, nor
can they hold any office or have any direct, administrative, or financial intervention in
commercial or industrial companies within the limits of the districts, provinces, or towns in
which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the department of public
prosecution in active service. This provision shall not be applicable to mayors, municipal
judges, and municipal prosecuting attorneys nor to those who by chance are temporarily
discharging the functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage in commerce in a
determinate territory.
It is Our considered view that although the aforestated provision is incorporated in the Code
of Commerce which is part of the commercial laws of the Philippines, it, however, partakes
Page 109 of 115

of the nature of a political law as it regulates the relationship between the government and
certain public officers and employees, like justices and judges.
Political Law has been defined as that branch of public law which deals with the organization
and operation of the governmental organs of the State and define the relations of the state
with the inhabitants of its territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be
recalled that political law embraces constitutional law, law of public corporations,
administrative law including the law on public officers and elections. Specifically, Article 14
of the Code of Commerce partakes more of the nature of an administrative law because it
regulates the conduct of certain public officers and employees with respect to engaging in
business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code of
Commerce of 1885, with some modifications made by the "Commission de Codificacion de
las Provincias de Ultramar," which was extended to the Philippines by the Royal Decree of
August 6, 1888, and took effect as law in this jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from the
United States to the Republic of the Philippines, Article 14 of this Code of Commerce must
be deemed to have been abrogated because where there is change of sovereignty, the
political laws of the former sovereign, whether compatible or not with those of the new
sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative
act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:
By well-settled public law, upon the cession of territory by one nation to another, either
following a conquest or otherwise, ... those laws which are political in their nature and
pertain to the prerogatives of the former government immediately cease upon the transfer
of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with the, laws of the new
sovereign continue in force without the express assent or affirmative act of the conqueror,
the political laws do not. (Halleck's Int. Law, chap. 34, par. 14). However, such political laws
of the prior sovereignty as are not in conflict with the constitution or institutions of the new
sovereign, may be continued in force if the conqueror shall so declare by affirmative act of
the commander-in-chief during the war, or by Congress in time of peace. (Ely's
Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In the case of American and
Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief
Justice Marshall said:
On such transfer (by cession) of territory, it has never been held that the relations of the
inhabitants with each other undergo any change. Their relations with their former sovereign
are dissolved, and new relations are created between them and the government which has
acquired their territory. The same act which transfers their country, transfers the allegiance
of those who remain in it; and the law which may be denominated political, is necessarily
changed, although that which regulates the intercourse and general conduct of individuals,
remains in force, until altered by the newly- created power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a
general principle of the public law that on acquisition of territory the previous political
relations of the ceded region are totally abrogated. "
Page 110 of 115

There appears no enabling or affirmative act that continued the effectivity of the aforestated
provision of the Code of Commerce after the change of sovereignty from Spain to the United
States and then to the Republic of the Philippines. Consequently, Article 14 of the Code of
Commerce has no legal and binding effect and cannot apply to the respondent, then Judge
of the Court of First Instance, now Associate Justice of the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated paragraph H, Section
3 of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act,
which provides that:
Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of public

officers already penalized by existing law, the following shall constitute corrupt practices of
any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any business, contract
or transaction in connection with which he intervenes or takes part in his official capacity, or
in which he is prohibited by the Constitution or by any Iaw from having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph because there is
no showing that respondent participated or intervened in his official capacity in the business
or transactions of the Traders Manufacturing and Fishing Industries, Inc. In the case at bar,
the business of the corporation in which respondent participated has obviously no relation or
connection with his judicial office. The business of said corporation is not that kind where
respondent intervenes or takes part in his capacity as Judge of the Court of First Instance.
As was held in one case involving the application of Article 216 of the Revised Penal Code
which has a similar prohibition on public officers against directly or indirectly becoming
interested in any contract or business in which it is his official duty to intervene, "(I)t is not
enough to be a public official to be subject to this crime; it is necessary that by reason of his
office, he has to intervene in said contracts or transactions; and, hence, the official who
intervenes in contracts or transactions which have no relation to his office cannot commit
this crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C.
Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained any undue
advantage in its business operations by reason of respondent's financial involvement in it, or
that the corporation benefited in one way or another in any case filed by or against it in
court. It is undisputed that there was no case filed in the different branches of the Court of
First Instance of Leyte in which the corporation was either party plaintiff or defendant
except Civil Case No. 4234 entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa O.
Bales, et al.," wherein the complainant herein sought to recover Lot 1184-E from the
aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on
November 9 or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D.
Nepomuceno when respondent Judge was no longer connected with the corporation, having
disposed of his interest therein on January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because there is no
provision in both the 1935 and 1973 Constitutions of the Philippines, nor is there an existing
law expressly prohibiting members of the Judiciary from engaging or having interest in any
lawful business.
Page 111 of 115

It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary
Act of 1948, does not contain any prohibition to that effect. As a matter of fact, under
Section 77 of said law, municipal judges may engage in teaching or other vocation not
involving the practice of law after office hours but with the permission of the district judge
concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in
commerce is, as heretofore stated, deemed abrogated automatically upon the transfer of
sovereignty from Spain to America, because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the
purchase by judges of a property in litigation before the court within whose jurisdiction they
perform their duties, cannot apply to respondent Judge because the sale of the lot in
question to him took place after the finality of his decision in Civil Case No. 3010 as well as
his two orders approving the project of partition; hence, the property was no longer subject
of litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the
Civil Service Act of 1959 prohibits an officer or employee in the civil service from engaging in
any private business, vocation, or profession or be connected with any commercial, credit,
agricultural or industrial undertaking without a written permission from the head of
department, the same, however, may not fall within the purview of paragraph h, Section 3
of the Anti-Graft and Corrupt Practices Act because the last portion of said paragraph speaks
of a prohibition by the Constitution or law on any public officer from having any interest in
any business and not by a mere administrative rule or regulation. Thus, a violation of the
aforesaid rule by any officer or employee in the civil service, that is, engaging in private
business without a written permission from the Department Head may not constitute graft
and corrupt practice as defined by law.
On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of
the Civil Service Rules, We hold that the Civil Service Act of 1959 (R.A. No. 2260) and the
Civil Service Rules promulgated thereunder, particularly Section 12 of Rule XVIII, do not
apply to the members of the Judiciary. Under said Section 12: "No officer or employee shall
engage directly in any private business, vocation, or profession or be connected with any
commercial, credit, agricultural or industrial undertaking without a written permission from
the Head of Department ..."
It must be emphasized at the outset that respondent, being a member of the Judiciary, is
covered by Republic Act No. 296, as amended, otherwise known as the Judiciary Act of 1948
and by Section 7, Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then vested in the
President of the Philippines, not in the Commissioner of Civil Service, and only on two
grounds, namely, serious misconduct and inefficiency, and upon the recommendation of the
Supreme Court, which alone is authorized, upon its own motion, or upon information of the
Secretary (now Minister) of Justice to conduct the corresponding investigation. Clearly, the
aforesaid section defines the grounds and prescribes the special procedure for the discipline
of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court
can discipline judges of inferior courts as well as other personnel of the Judiciary.
Page 112 of 115

It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for
... violation of the existing Civil Service Law and rules or of reasonable office regulations, or
in the interest of the service, remove any subordinate officer or employee from the service,
demote him in rank, suspend him for not more than one year without pay or fine him in an
amount not exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a
ground for disciplinary action against civil service officers and employees.
However, judges cannot be considered as subordinate civil service officers or employees

subject to the disciplinary authority of the Commissioner of Civil Service; for, certainly, the
Commissioner is not the head of the Judicial Department to which they belong. The Revised
Administrative Code (Section 89) and the Civil Service Law itself state that the Chief Justice
is the department head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under
the 1973 Constitution, the Judiciary is the only other or second branch of the government
(Sec. 1, Art. X, 1973 Constitution). Besides, a violation of Section 12, Rule XVIII cannot be
considered as a ground for disciplinary action against judges because to recognize the same
as applicable to them, would be adding another ground for the discipline of judges and, as
aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their removal,
namely, serious misconduct and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil
Service who has original and exclusive jurisdiction "(T)o decide, within one hundred twenty
days, after submission to it, all administrative cases against permanent officers and
employees in the competitive service, and, except as provided by law, to have final authority
to pass upon their removal, separation, and suspension and upon all matters relating to the
conduct, discipline, and efficiency of such officers and employees; and prescribe standards,
guidelines and regulations governing the administration of discipline" (emphasis supplied).
There is no question that a judge belong to the non-competitive or unclassified service of
the government as a Presidential appointee and is therefore not covered by the aforesaid
provision. WE have already ruled that "... in interpreting Section 16(i) of Republic Act No.
2260, we emphasized that only permanent officers and employees who belong to the
classified service come under the exclusive jurisdiction of the Commissioner of Civil Service"
(Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619 [1963]).
Although the actuation of respondent Judge in engaging in private business by joining the
Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, is
not violative of the provissions of Article 14 of the Code of Commerce and Section 3(h) of
the Anti-Graft and Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil Service
Rules promulgated pursuant to the Civil Service Act of 1959, the impropriety of the same is
clearly unquestionable because Canon 25 of the Canons of Judicial Ethics expressly declares
that:
A judge should abstain from making personal investments in enterprises which are apt to be
involved in litigation in his court; and, after his accession to the bench, he should not retain
such investments previously made, longer than a period sufficient to enable him to dispose
of them without serious loss. It is desirable that he should, so far as reasonably possible,
refrain from all relations which would normally tend to arouse the suspicion that such
relations warp or bias his judgment, or prevent his impartial attitude of mind in the
administration of his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife had
withdrawn on January 31, 1967 from the aforesaid corporation and sold their respective
Page 113 of 115

shares to third parties, and it appears also that the aforesaid corporation did not in anyway
benefit in any case filed by or against it in court as there was no case filed in the different
branches of the Court of First Instance of Leyte from the time of the drafting of the Articles
of Incorporation of the corporation on March 12, 1966, up to its incorporation on January 9,
1967, and the eventual withdrawal of respondent on January 31, 1967 from said
corporation. Such disposal or sale by respondent and his wife of their shares in the
corporation only 22 days after the incorporation of the corporation, indicates that
respondent realized that early that their interest in the corporation contravenes the
aforesaid Canon 25. Respondent Judge and his wife therefore deserve the commendation
for their immediate withdrawal from the firm after its incorporation and before it became
involved in any court litigation
III
With respect to the third and fourth causes of action, complainant alleged that respondent
was guilty of coddling an impostor and acted in disregard of judicial decorum, and that there
was culpable defiance of the law and utter disregard for ethics. WE agree, however, with
the recommendation of the Investigating Justice that respondent Judge be exonerated
because the aforesaid causes of action are groundless, and WE quote the pertinent portion
of her report which reads as follows:
The basis for complainant's third cause of action is the claim that respondent associated and
closely fraternized with Dominador Arigpa Tan who openly and publicly advertised himself as
a practising attorney (see Exhs. I, I-1 and J) when in truth and in fact said Dominador
Arigpa Tan does not appear in the Roll of Attorneys and is not a member of the Philippine
Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and claims
that all the time he believed that the latter was a bona fide member of the bar. I see no
reason for disbelieving this assertion of respondent. It has been shown by complainant that
Dominador Arigpa Tan represented himself publicly as an attorney-at-law to the extent of
putting up a signboard with his name and the words "Attorney-at Law" (Exh. I and 1- 1) to
indicate his office, and it was but natural for respondent and any person for that matter to
have accepted that statement on its face value. "Now with respect to the allegation of
complainant that respondent is guilty of fraternizing with Dominador Arigpa Tan to the
extent of permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M & M-
1), that fact even if true did not render respondent guilty of violating any canon of judicial
ethics as long as his friendly relations with Dominador A. Tan and family did not influence
his official actuations as a judge where said persons were concerned. There is no tangible
convincing proof that herein respondent gave any undue privileges in his court to
Dominador Arigpa Tan or that the latter benefitted in his practice of law from his personal
relations with respondent, or that he used his influence, if he had any, on the Judges of the
other branches of the Court to favor said Dominador Tan.
Of course it is highly desirable for a member of the judiciary to refrain as much as possible
from maintaining close friendly relations with practising attorneys and litigants in his court
so as to avoid suspicion 'that his social or business relations or friendship constitute an
element in determining his judicial course" (par. 30, Canons of Judicial Ethics), but if a
Judge does have social relations, that in itself would not constitute a ground for disciplinary
action unless it be clearly shown that his social relations be clouded his official actuations
with bias and partiality in favor of his friends (pp. 403-405, rec.).
Page 114 of 115

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of
Appeals, did not violate any law in acquiring by purchase a parcel of land which was in
litigation in his court and in engaging in business by joining a private corporation during his
incumbency as judge of the Court of First Instance of Leyte, he should be reminded to be
more discreet in his private and business activities, because his conduct as a member of the
Judiciary must not only be characterized with propriety but must always be above suspicion.
WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS

HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.
SO ORDERED.
Page 115 of 115


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Necessaries

G.R. No. 132305 December 4, 2001

IDA C. LABAGALA, petitioner,

WHEREFORE, judgment is hereby rendered recognizing the plaintiffs [herein respondents]

We agree with the Court of Appeals that:

A baptismal certificate, a private document, is not conclusive proof of filiation.24 More so

Costs against petitioner.

Senility and Serious Illness

Domingo VS Court of Appeals

G.R. No. 104818 September 17, 1993

ROBERTO DOMINGO, petitioner,

Jose P.O. Aliling IV for petitioner.

De Guzman, Meneses & Associates for private respondent.

Hence, this petition.

The validity of a marriage may be invoked only . . .

Justice Reyes (J.B.L. Reyes), however, proposed that they say:

The validity or invalidity of a marriage may be invoked

On the other hand, Justice Puno suggested that they say:

The invalidity of a marriage may be invoked only . . .

Justice Caguioa suggested that they say:

Justice Puno suggested that the above be modified as follows:

Article 40 of the Family Code provides:

Marriage, a sacrosanct institution, declared by the Constitution as an "inviolable social

Art. 43. xxx xxx xxx

Paragas VS Heirs of Balacano

Republic of the Philippines

G.R. No. 168220. August 31, 2005

SPS. rudy Paragas and Corazon B. Paragas, Petitioners,

At the trial, the parties proceeded to prove their respective contentions.

WHEREFORE in the light of the foregoing considerations judgment is hereby rendered:

A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION,

petitioners in maneuvering the alleged sale.

CA-G.R. CV No. 64048 are hereby AFFIRMED. No costs.

Sales by and between Spouses

1. Sales with Third Parties

Heirs of Ignacia VS Mijares

G.R. No. 143826 August 28, 2003

HEIRS OF IGNACIA AGUILAR-REYES, Petitioners,

to respondent spouses Cipriano and Florentina Mijares for P40,000.00. As a consequence

thereafter amended to include Vicente Reyes as one of the defendants. 16

3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.

investigate further, especially so that respondent Florentina Mijares admitted on cross

followed by a "Memorandum of Understanding" executed on July 30, 1979, by Vicente and

rentals must be denied.

G.R. No. 125172 June 26, 1998

Spouses ANTONIO and LUZVIMINDA GUIANG, Petitioners, vs. COURT OF

3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang the

No pronouncement as to costs in view of the factual circumstances of the case.

Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent

FAIL NOT UNDER THE PENALTY OF THE LAW.

Ruling of Respondent Court

Hence, this petition. 9

This Court's Ruling

The petition is bereft of merit.

First Issue: Void or Voidable Contract?

xxx xxx xxx

xxx xxx xxx

Q When did you come back to Koronadal, South Cotabato?

A That was on March 11, 1990, Ma'am.

Second Issue: Amicable Settlement