Facts

are as follows: Alden sought to annul the TCT and

wants to declare the DAS null and void.
Vicentico Nuñez is the owner of a 429 However, during the pendency of the case,
square meters lot. In may 1992, he borrowed Norma and Alden reached a compromise
money from Rosita Moises with the amount agreement with respect to the share of
of 30,000 pesos, and as security for the loan, Alden in the subject lot.
they executed a real estate mortgage
involving the property of Vicentico. Since The petitioners, represented by their
Rosita had no money, the funds that were brother and their attorney in fact Alden, filed
used were Norma’s money, Rosita’s against Norma a case for Declaration of
daughter. Petitioner’s alleged that the Nullity of Deed of Adjudication and Sale,
30,000 pesos loan was already paid as Cancellation of TCT No. T-35460, Recovery
evidenced by the Affidavit Authorizing of Ownership and/or Possession of Lot No.
Release of Mortgage. Upon the death of 2159-A and Damages before the MTC. The
Vicentico on September 27, 1994, the MTC ruled in favor of siblings Nuñez saying
subject lot was transmitted to his heirs, that the DAS was null and void because the
namely the petitioners, and his surviving respondent never paid the purchase price to
spouse, Placida Nuñez. However, Placida the petitioners. Norma appealed the
died 3 years later and her shares were decision with the RTC. The RTC ruled in favor
inherited equally by her heirs. of Norma and said that the DAS was valid
because there was constructive delivery of
On June 28, 1995, Norma was able to the subject lot right after the execution of
make the petitioners, except Alden, to sign a the Deed of Adjudication, showing transfer
Deed of Adjudication and Sale, where of ownership. Nuñez appealed the case
petitioners allegedly sold their respective before the CA. The CA affirmed the RTC’s
pro indiviso shares in the subject lot to decision but said that it was not a contract of
Norma for 50,000 pesos. Norma, sale but a dacion en pago.
immediately took possession of the subject
lot after the execution of the DAS. Petitioners elevated the case to the
SC as a question of law under rule 45
Instead of paying cash, she executed because the decision of RTC and CA are
and promisory note (PN) in favor or divergent.
petitioners, whereby she obligated herself to
pay 50,000. Also, she executed an Issue: W/N the transaction between the
acknowledgment of debt (AOD) whereby parties is a dacion in payment or dacion en
she admitted that she owed petitioners pago.
50,000 representing the purchase price of
the DAS. Ruling: NO

Despite non-payment of the Under article 1245 of the Civil Code,
purchase price and absence of Alden’s there is dation in payment when property is
signature on the DAS, she still proceeded alienated to the creditor in satisfaction of a
with registering the said document to the debt in money and is governed by the law of
register of deeds of Capiz. sales.
 The DAS seems to suggest a dation in intended by the parties to be a dation in
payment, the subsequent actuations of the payment. And, even assuming that the DAS
parties, especially Norma, negates the same was dation in payment, the documents that
or the contemplated offset. If the DAS was were subsequently executed had the effect
intended to be a dation in payment, the of novating the same.
execution of the PN and the AOD by Norma
as well as the Compromise Agreement by Thus, the CA erred in finding that the
Alden and Norma, shows an opposite transaction between the parties is a dacion
declaration. There was no dation in en pago. The RTC and MTC were correct in
payment or offset. considering that the transaction was a
contract of sale.
If the intention of the parties was
that the heirs of Vicentico were ceding the
subject property to Norma as payment of the
30,000 pesos loan of their father to Rosita, it
would be out of the ordinary for Norma to
execute a PN 2 days after the DAS, which
she acknowledge her indebtedness to
them, promising to pay the same within a
specified period, and she declared against
her interest that the said amount
represented the “cost” of the land that she
bought from them.

Also, in 2007, it would be unlikely for
her to execute the AOD if the consideration
of the DAS was Vicentico’s indebtedness of
30,000.

Moreover, in the AARM, the heirs of
Rosita acknowledged that they are releasing
the Real Estate Mortgage because the late
Vicentico Nuñez had already paid his
indebtedness of 30,000 and they are
absolving the late Vicentico Nuñez of any
liabilities. Indeed, as claimed by the
petitioners, the 30,000 loan of their father
had already been paid as duly
acknowledged in a registered public
instrument by the heirs of Rosita, including
Norma.

Thus, there is preponderant evidence that
supports the finding that the DAS was not