Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. Nos.L-46430-31 July 30, 1979 FRANCISCA ALSUA-BETTS, JOSEPH O. BETTS, JOSE MADARETA, ESTEBAN P. RAMIREZ, and THE REGISTER OF DEEDS FOR ALBAY PROVINCE, petitioners, vs. COURT OF APPEALS, AMPARO ALSUA BUENVIAJE, FERNANDO BUENVIAJE, FERNANDO ALSUA, represented by his guardian, CLOTILDE S. ALSUA and PABLO ALSUA, respondents. Rafael Triumfante for petitioners. Sabido-Sabido & Associates and Madrid Law Office for private respondents. GUERRERO, J.:1äwphï1.ñët This is an appeal by certiorari from the decision of the Court of Appeals in CA-G.R. Nos. 54492-R and 54493R which reversed the decision of the Court of First Instance of Albay allowing the probate of the win of Don Jesus Alsua in Special Proceedings No. 699 and dismissing the complaint in Civil Case 3068 after declaring the two deeds of sale executed by Don Jesus Alsua legal and valid. The respondent court 1 denied the probate of the will, declared null and void the two sales subject of the complaint and ordered the defendants, petitioners herein, to pay damages to the plaintiffs, now the private respondents, the sum of Five Thousand Pesos (P5,000.00), to render an accounting of the properties in their possession and to reimburse the latter the net gain in the proportion that appertains to them in the properties from the date of the firing of the complaint up to complete restoration plus Fifty Thousand Pesos (P50,000.00) as attorney's fees and costs. The antecedent events leading to the filing of these two consolidated actions are the following. On November 25, 1949, Don Jesus Alsua and his wife, Doñ;a Florentina Rella, both of Ligao, Albay, together with all their living children, Francisca Alsua-Betts, Pablo Alsua, Fernando Alsua thru this judicial guardian Clotilde Samson, and Amparo Alsua de Buenviaje, entered into a duly notarized agreement, Escritura de Particion Extrajudicial (Exhibit 8), over the then present and existing properties of the spouses Don Jesus and Doñ;a Florentina enumerated in a prepared inventory, Exhibit 8-A, the essential features of which are stated in private respondents' Brief, pp. 26-29, to wit: têñ.£îhqw⣠(1) Basis of the partition: Inventory (Annex A) of all the properties of the Alsua spouses, which inventory consists of 97 pages, all of them signed by the spouses and all the above named heirs in the left margin of every page (parafo primers). (2) An acknowledgment of the spouses that all the properties described in the inventory (Annex A) are conjugal properties with the exception of five parcels of land Identified with the figures of 1 to 5 and 30 shares of San Miguel Brewery stock which are paraphernal properties of the late Doñ;a Tinay (segundo parafo). (3) An acknowledgment that during their marriage, they had nine children but five of them died minors, unmarried (parafo tercero y cuatro). (4) An acknowledgment that on the basis of Article 1056 of the Civil Code (old) to avoid Possible misunderstanding among their children concerning the inheritance they are entitled to in the event of death of one of them they have decided to effectuate an extrajudicial partition of all the properties described in Annex "A" thereto under the following terms and conditions: (Parafo quinto): To Francisca Alsua, married to Joseph O. Betts were allotted or assigned all the real properties with the improvements thereon specifically described from pages 1-12 of said inventory or, 34 parcels of land with a total land area of 5,720,364 sq. meters, with a book or appraised value of P69,740.00. To Pablo Alsua, married to Teresa Locsin were allotted or assigned all the real properties with the improvements thereon specifically described from pages 12-20 of said inventory or, 26 parcels of land with a total land area of 5,679,262 sq. meters, with a book or appraised value of P55,940.00. To Fernando Alsua, married to Clotilde Samson were allotted or assigned all the real properties with the improvements thereon specifically described from pages 20-33 of said inventory or, 47 parcels of land with a total land area of 6,639,810 sq. meters, with a book or appraised value of P89,300.00. To Amparo Alsua, married to Fernando Buenviaje were allotted or assigned all the real properties with the improvements thereon specifically described from pages 33-47 of said inventory or, 47 parcels of land with a total land area of 5,630,715 sq. meters, with a book or appraised value of P58,830.00. têñ.£îhqw⣠(a) Each and every one of the heirs named above acknowledge and admit that the totality of the properties allotted and adjudicated to the heirs as described in the preceding paragraph, constitute one half of the properties described in Annex "A", including any amount of cash deposited. (b) That all the heirs acknowledge and admit that all the properties assigned to them as their hereditary portion represent one-half not only of the conjugal properties but includes the paraphernal properties — waiving now and forever any complaint or claim they have or they may have concerning the amount, value, extension and location of the properties that are allotted to each and everyone. They also waive any claim they have or they may have over the remaining portion of the properties, which spouses reserved for themselves. (c) That in case of death of one of the spouses, each and everyone of the heirs acknowledge that the properties which are left in the possession of the surviving spouse, including any amount in cash, are even less than the one- half that should correspond in absolute ownership as his legitimate participation in the conjugal properties. In consequence they waive any claim that they have or may have over said portion of said properties or any amount in cash during the lifetime of the surviving spouse, including any right or claim they have or they may have over the paraphernal properties of Doñ;a Tinay in the event the surviving spouse is Don Jesus. (d) The spouses on their part in case of death of any one of them, the surviving spouse waives any claim he or she may have over the properties assigned or adjudicated to the heirs under and by virtue of this deed. The properties which were reserved for them (the spouses) should be considered as his or her legitimate participation in the conjugal properties and the fair compensation of his or her usufruct on the properties that the surviving spouse reserved for himself or herself which shag be distributed in equal shares among the heirs upon his or her death unless said properties of some of them have been disposed of during the lifetime of the surviving spouse. (e) Any heir who may dare question the validity and legitimacy of the provision contained herein shall be under obligation to pay to the other heirs, in the concept of damages and prejudice, the sum of P5,000.00 plus attorney's fees. (f) The provisions of this deed shall bind the successors of the herein heirs. (g) In the event of death of one of the spouses, the properties assigned or adjudicated to each and everyone of the heirs shall be considered as his share or participation in the estate or as his inheritance left by the deceased and each heir shall become the absolute owner of the properties adjudicated to him under this deed. 1 On January 5, 1955, Don Jesus and Doñ;a Florentina, also known as Doñ;a Tinay separately executed their respective holographic wills (Exhs. 6-B and 7-B), the provisions of which were in conformity and in implementation of the extrajudicial partition of November 25, 1949. Their holographic wills similarly provided for the institution of the other to his or her share in the conjugal properties, the other half of the conjugal assets having been partitioned to constitute their legitime among their four living children in the Extrajudicial Partition of 1949. The wigs also declared that in the event of future acquisitions of other properties by either of them, one-half thereof would belong to the other spouse, and the other half shall be divided equally among the four children. The holographic will of Doñ;a Tinay written in Spanish reads, as translated: têñ.£îhqw⣠TESTAMENT I, FLORENTINA R. DE ALSUA, 67 years old, Filipina, married to Don Jesus Alsua, resident of and with postal address in the Municipality of Ligao, Province of Albay, Philippines, being in the full possession of my mental and physical faculties freely and spontaneously execute this my last will and testament in my handwriting and signed by me and expressed in the Spanish language which I speak, write and understand, this 5th day of January, 1955 in the Municipality of Ligao, Province of Albay, and in which I ordain and provide: First: That in or about the year 1906 I was married to my husband Don Jesus Alsua and begot nine (9) children with him, four (4) of whom are still living and they are Francisco Alsua, Pablo Alsua, Fernando Alsua and Amparo Alsua. The other five (5) died during their minority, single and without children. Second: That after my marriage to my husband Don Jesus Alsua and during our conjugal union, and as a result of our efforts and industry, we were able to acquire conjugal properties consisting of abaca (abales) and cacao lands and urban lands registered in the office of the Registry of Property of the Province of Albay and in the City of Manila. Third: That I institute as my heirs with right to inherit the following- my spouse Don Jesus Alsua, one-half (1/2) of my properties, real and personal, and the other half, to my children Francisco Alsua, married to Joseph O. Betts, Pablo Alsua, Fernando Alsua, married to Clotilde Samson, and Amparo Alsua, married to Fernando Buenviaje, in equal parts. It is to be understood, however, that the other half that corresponds as legitime to my above named children have already been given to them, pursuant to a document dated November 25, 1949 and ratified on the same day, month and year before Notary Public Segundo G. Flores (Reg. No. 525; Pag. 15; Lib. 11; Series of 1949) enjoining each and everyone of them to respect and faithfully comply with each and every clause contained in the said document. Fourth: That should I acquire new properties after the execution of this testament, the same shall be partitioned among my spouse and above named children or the children mentioned in above par. 3 in the same proportion that is, one-half (1 1/2) to my spouse; and the other half to my children in equal parts. Fifth: That I name as my executor my husband Don Jesus Alsua without having to post any bond. IN VIRTUE WHEREOF, I hereby sign in my own handwriting this testament on this 5th day of January, 1955 in the Municipality of Ligao, Province of Albay, Philippines. têñ.£îhqw⣠(Joint Record on appeal pp. 420-423, CA-G.R. No. 54492-R) As previously stated, Don Jesus Alsua executed a separate but similar holographic will on the same day, Jan. 5, 1955 in exactly the same terms and conditions as the above will of his wife. On May 21, 1956, the spouses Don Jesus and Doñ;a Tinay filed before the Court of First Instance of Albay their respective petitions for the probate of their respective holographic wins which were docketed as Special Proceedings No. 484 (Jesus Alsua, Petitioner) and Special Proceedings No. 485 (Doñ;a Florentina Ralla de Alsua, Petitioner). On August 14, 1956, the spouses Don Jesus and Doñ;a Tinay executed their mutual and reciprocal codicils amending and supplementing their respective holographic wins. Again, the codicils similarly acknowledged and provided that one-half of all the properties of the spouses, conjugal and paraphernal, had been disposed of, conveyed to and partitioned among their legitimate heirs in the "Escritura de Particion" of November 25, 1949, but that they reserved for themselves (the spouses Don Jesus and Doñ;a Tinay) the other half or those not disposed of to the said legitimate heirs under the above agreement of partition, and that they mutually and reciprocally bequeathed unto each other their participation therein as well as in all properties which might be acquired subsequently. Each spouse also declared that should she or he be the surviving spouse, whatever belongs to him or her or would pertain to him or her, would be divided equally among the four children. It was also declared in both codicils that upon the death of either of the spouses, the surviving spouse was designated mutually and reciprocally as the executor or administrator of all the properties reserved for themselves. The codicil executed by Doñ;a Tinay, written in Spanish reads, as translated: têñ.£îhqw⣠CODICIL This codicil supplements and amends the preceding testament. That my spouse and I have agreed to divide the properties which we have acquired into 2 parts. The 1/2 that would correspond to me covers all the properties that I have partitioned among my children in the Document of Partition dated November 25, 1949 before Notary Public Segundo G. Flores, Jr. (Doc. No. 525; Pag. No. 15; Lib. No. 11; Series of 1949) (and) even as the properties which by reason of this testament I leave to my husband as his share and the other half that corresponds to my husband constitutes an the properties that up to now have not been disposed of, particularly the urban lands situated in Legaspi, Albay, Ligao of the Province of Albay and in the City of Manila, with the exception of that portion that I bequeath to my husband as his inheritance and his legitimate. That I institute as my heirs with the right to inherit my husband Don Jesus Alsua and my children Francisco Alsua, Pablo Alsua, Fernando Alsua and Amparo Alsua. I leave to my aforecited children all the properties described in the above mentioned Document of Partition dated November 25, 1949 which correspond to each one of them and in the profits (fruits) expressed in the same, and in the event that the properties granted to one or any of my children should exceed in quantity or value those corresponding to another or others, I hereby declare that it is my will that the same be divided among my children as their inheritance from the free portion of my property. I leave to my spouse Don Jesus Alsua as his legitime and as Ws inheritance the part of the free portion of my property which have not been allocated in favor of my children in the Document of Partition aforecited and that which should exceed 1/2 of the conjugal property of gains that pertains to him as above stated, including all those properties which we shall acquire after the execution of this document. In case it should be God's will that I survive my spouse, I hereby declare that it is my will that any and all kinds of property that pertain to me or would pertain to me, which have not been disposed of pursuant to the partition, should be divided equally among my above-mentioned heirs after my death. Ligao, Albay, Philippines, August 14,1956. têñ.£îhqw⣠(joint Record on Appeal pp. 423-425, CA-G.R. No. 54492-R) 2 And as stated previously, on the same day, August 14, 1956, Don Jesus executed also a separate but similar codicil in exactly the same terms and conditions as the above codicil of his wife. Also on the same day of August 14, 1956, the spouses Don Jesus and Doñ;a Tinay both filed their respective supplemental petitions for the probate of their respective codicils in the probate proceedings earlier filed. On February 19, 1957, their respective holographic wins and the codicils thereto were duly admitted to probate. Upon the death of Doñ;a Tinay on October 2, 1959, Don Jesus was named executor to serve without bond in an order issued by the probate court on October 13, 1959. Letters testamentary having been issued in favor of Don Jesus, he took his oath of office and performed his duties as such until July 1, 1960. Thereafter in the early part of November, 1959, Don Jesus cancelled his holographic will in the presence of his bookkeeper and secretary, Esteban P. Ramirez, whom he instructed to make a list of all his remaining properties with their corresponding descriptions. His lawyer, Atty. Gregorio imperial Sr. was then instructed to draft a new will which was duly signed by Don Jesus and his attesting witnesses on November 14, 1959 at Ms home in Ligao, Albay. This notarial will and testament (Exh. A) of Don Jesus executed on November 14, 1959 had three essential features: (a) it expressly cancelled, revoked and annulled all the provisions of Don Jesus' holographic will of January 5, 1955 and his codicil of August 14, 1956; (b) it provided for the collation of all his properties donated to his four living children by virtue of the "Escritura de Particion Extra. judicial" of 1949, and that such properties be taken into account in the partition of his estate among the children; and (c) it instituted his children as legatees/devisees of certain specific properties, and as to the rest of the properties and whatever may be subsequently acquired in the future, before his death, were to be given to Francisca and Pablo, naming Francesca as executrix to serve without a bond. After all debts, funeral charges and other expenses of the estate of Doñ;a Tinay had been paid, all her heirs including Don Jesus, submitted to the probate court for approval a deed of partition executed on December 19, 1959 (Exh. 7-Q) and which essentially confirmed the provisions of the partition of 1949, the holographic will and codicil of Doñ;a Tinay. On July 6, 1960, the court approved the partition of 1959 and on January 6, 1961 declared the termination of the proceedings on the estate of Doñ;a Tinay. On May 6,1964, Don Jesus Alsua died. On May 20, 1964, petitioner herein Francisca Alsua Betts, as the executrix named in the will of November 14, 1959, filed a petition for the probate of said new will of Don Jesus Alsua before the Court of First Instance of Albay and was docketed as Special Proceedings No. 699. Oppositions thereto were filed by Pablo, Amparo and Fernando, thru his judicial guardian Clotilde Samson, on the following grounds: (a) that Don Jesus was not of sound and disposing mind at the time of the execution of the alleged will; (b) that the will was executed under duress or influence of fear or threats; or it was procured by undue and improper pressure and influence on the part of the main beneficiaries and of person or persons in collusion with them, or the signature of the testator was secured by or thru fraud; (c) that the will was not executed according to the formal requirements of the law; and (d) that the alleged will subject of probate contravened the Extrajudicial Partition of 1949 agreed upon by him, his deceased spouse, Doñ;a Tinay, and all his children, Francisco, Pablo, Amparo and Fernando thru his judicial guardian Clotilde Samson, and also contravened Don Jesus' own probated holographic will and codicil of 1955 and 1956, respectively, essentially confirming and implementing the said partition of 1949 which had already been partially executed by all the signatories thereto in the partition of the estate of Doñ;a Tinay in December, 1959. On the basis of Francisca's designation as executrix in the new will dated November 14, 1959, the Probate Court appointed her Administratrix of the estate of her late father, Don Jesus Alsua. She then filed with the Probate Court an inventory of the properties of the estate which, according to the oppositors therein (the private respondents now) did not include some properties appearing in the agreement of November 25. 1949 or in the inventory attached thereto as Annex "A" and in the "Escritura de Particion" of December 19, 1959 as belonging to or should pertain to Don Jesus. According to the oppositors, these properties consist of thirtythree (33) premium agricultural lots with a total land area of 1,187,970 square meters, or approximately 119 hectares and with a total assessed value of P48,410.00 or a probable total market value of P238,000.00 at only P2,000.00 per hectare, and four (4) commercial urban lots Ideally located in the business section of Legazpi City including the lot and the building presently occupied by the well-known "Mayon Hotel" with an assessed value of approximately P117,260.00 or a probable market value at the time of P469,040.00. It appearing from the new will that these properties were bequeathed to Pablo Alsua and Francisco Alsua-Betts, specifically, 3 parcels of the 33 agricultural lands to Pablo and the rest to Francisco, the oppositors also raised in issue the non-inclusion of said properties in the inventory of the estate of their late father. In answer, Francisco claimed ownership over the same, alleging that she bought the properties from their father and presenting the two Deeds of Sale now being assailed, one dated August 26, 1961 purporting to show the sale of the 33 parcels of agricultural land to Francisco by their father for the price of P70,000.00 and the other dated November 26, 1962 evidencing the sale of the four urban lots for the sum of P80,000.00. Claiming fraud in the sales, the oppositors filed Civil Case No. 3068, seeking the annulment of the aforesaid two deeds of sale, with damages, which upon agreement of the parties was then jointly heard and tried with Special Proceedings No. 699 for probate of the Last Will and Testament of Don Jesus executed on November 14, 1959. After a joint hearing of the merits of these two cases, the Court of First Instance of Albay promulgated a decision on January 15, 1973, the dispositive portion of which states: têñ.£îhqw⣠WHEREFORE, in view of all the foregoing, judgment is hereby rendered, to wit: 1. In Special Proceedings 699, the Court hereby APPROVES and ALLOWS the Will executed by Don Jesus Alsua at Ligao, Albay, on November 14, 1959, which had been marked as Exhibit A, consisting of nine (9) pages, and orders that the same be made the basis for division and distribution of the estate of said testator; 2. In Civil Case 3068, the Court hereby dismisses the complaint and holds that the sale on August 26, 1961 (Exh. U) and the sale on November 26, 1962 (Exh. W), are lawful and valid sales and accordingly conveyed title to the VENDEE thereof. The Plaintiffs in Civil Case 3068. are ordered jointly and severally to pay to the defendant, Francisco Alsua Betts Fifty Thousand Pesos (P50,000.00) as damages and Fifty Thousand (P50,000.00) Pesos for attorney's fees or a total of One Hundred Thousand Pesos (P100,000.00) and to pay the costs. On appeal by herein respondents to the Court of Appeals, the court reversed the appealed decision in a judgment rendered on April 4, 1977, the dispositive portion of which states, as translated, thus —têñ.£îhqw⣠IN VIEW OF THE FOREGOING, this Tribunal finds itself constrained to set aside as it hereby sets aside the decision appealed from in the following manner: (1) in Special Proceedings 699, the probate of the will, Exh. A, is hereby denied; (2) in Civil Case No. 3068, Exhs. U and W and the titles issued on the basis thereof are hereby declared null and void, ordering the appellees Francisco Alsua and Joseph Betts to pay to the plaintiffs in the concept of fixed damages, the sum of P5,000.00 and to render an accounting of properties in their possession and to reimburse the plaintiffs the net gain, in the proportion that appertains to them in the properties subject of litigation in Civil Case No. 3068 from the date of the filing of this complaint, up to the complete restoration of the properties pertaining to (plaintiffs) pursuant to Article 2208 of the New Civil Code, paragraph 11, ordering them in addition to pay to the plaintiffs and oppositors the sum of P50,000.00 as attorney's fees, and the costs. Hence, the petition at bar assailing the respondent court's decision on four assigned errors, to wit: têñ.£îhqw⣠I. The respondent Court of Appeals erred in not affirming the findings of the probate court (Special Proceedings No. 699) that private respondents, oppositors to the probate of the will, are in estoppel to question the competence of testator Don Jesus Alsua. II. The respondent Court of Appeals grossly erred in holding that testator Don Jesus Alsua cannot revoke his previous will. 3 III. The respondent court's finding is grounded entirely on speculation, surmises or conjectures resulting in a gross misapprehension of facts. IV. The respondent court grossly erred in annulling the sales of August 26, 1961 (Exh. U), and of November 26, 1962 (Exh. W). On the first issue of estoppel raised in the assignment of errors, We hold that the same is of no moment. The controversy as to the competency or incompetency of Don Jesus Alsua to execute his will cannot be determined by acts of the herein private respondents as oppositors to the will in formally agreeing in writing jointly with the petitioner Francisca Alsua de Betts that their father, Don Jesus Alsua, be appointed by the court executor of the will of their mother in Special Proceedings No. 485, Testate Estate of Doñ;a Florentina Ralla de Alsua and in subsequently petitioning the court not to require Don Jesus Alsua to file any accounting as executor in the proceedings, which petitioners claim and was upheld by the trial court as constituting estoppel on the part of the private respondents from questioning the competence of Don Jesus Alsua. The principle of estoppel is not applicable in probate proceedings, a ruling laid down in the case of Testate Estate of the Late Procopia Apostol Benedicta Obispo, et al vs. Remedios Obispo, 50 O.G. 614, penned by Justice J.B.L. Reyes, an eminent and recognized authority on Civil Law when he was still in the Court of Appeals, and We quote:têñ.£îhqw⣠Finally, probate proceedings involve public interest, and the application therein of the rile of estoppel, when it win block the ascertainment of the truth as to the circumstances surrounding the execution of a testament, would seem inimical to public policy. Over and above the interest of private parties is that of the state to see that testamentary dispositions be carried out if, and only if, executed conformably to law. The Supreme Court of New York aptly said in Re Canfield's Will, 300 N.Y.S., 502: têñ.£îhqw⣠'The primary purpose of the proceeding is not to establish the existence of the right of any living person, but to determine whether or not the decedent has performed the acts specified by the pertinent statutes, which are the essential prerequisites to personal direction of the mode of devolution of his property on death. There is no legal but merely a moral duty resting upon a proponent to attempt to validate the wishes of the departed, and he may and frequently does receive no personal benefit from the performance of the act. One of the most fundamental conceptions of probate law, is that it is the duty of the court to effectuate, in so far as may be compatible with the public interest, the devolutionary wishes of a deceased person (Matter of Watson's Wilt 262 N.Y., 284, 294, 186, N.E., 787; Matter of Marriman's Estate, 124 Misc. 320, 325, 208, N.Y.S., 672; Foley, S., affirmed 217 app. Div., 733, 216 N.Y.S., 126, Henderson, S., Matter of Draske's Estate, 160 Misc. 587, 593, 290, N.Y.S., 581). To that end, the court is, in effect, an additional party to every litigation affecting the disposal of the assets of the deceased. Matter of Van Valkenburgh's Estate, 164 Misc. 295, 298, N.Y.S., 219.' The next issue that commands Our attention is whether the respondent court erred in not allowing the probate of the last will and testament of Don Jesus Alsua. Petitioners claim that the disallowance was based on speculations, surmises or conjectures, disregarding the facts as found by the trial court. The Civil Court is very clear and explicit in providing the cases where a will may be disallowed under Article 839 which provides as follows: têñ.£îhqw⣠Art. 839. The will shall be disallowed in any of the following cases: (1) If the formalities required by law have not been complied with; (2) If the testator was insane, or otherwise mentally incapable of making a wilt at the time of its execution; (3) If it was executed through force or under duress, or the influence of fear, or threats; (4) If it was procured by undue and improper pressure and influence, on the part of the beneficiary or of some other person; (5) If the signature of the testator was procured by fraud, (6) If the testator acted by mistake or did not intend that the instrument he signed should be his will at the time of affixing his signature thereto. The issue under consideration appears to Us to have been answered by the respondent court itself when it accepted the findings of the trial court on the due execution of the questioned will and testament of Don Jesus, declaring: têñ.£îhqw⣠... and going back to the previous question, whether the questioned will and testament of November 14, 1959, Exh. A, was executed in accordance with Arts. 805-809 of the New Civil Code, this Tribunal from the very beginning accepts the findings of the inferior court concerning the question, têñ.£îhqw⣠On October 2, 1959, Doñ;a Florentina died at Ligao, Albay. About 2 weeks after said death of his wife, Don Jesus Alsua decided to make a new will, thereby revoking and cancelling his previous holographic will which he made on January 5, 1955 and also its codicil dated August 14, 1956. In the presence of his bookkeeper and secretary, Esteban P. Ramirez, he crossed out in ink each and every page of said page he wrote on each page the word "cancelado", and affixed his signature thereon (Exh V-5, V-6, consecutively up to and including Exh. V-14). He then instructed Ramirez to make a list of all s properties with their corresponding descriptions. Meanwhile, Don Jesus Alsua sent for his lawyer, Don Gregorio Imperial, Sr. and the latter came accompanied by his son, Atty. Jorge S, Imperial, who, incidentally, is now a judge of the Court of First Instance of Naga City, Camarines Sur. Don Jesus informed his lawyers that he wanted to make a new will, and accordingly gave more detailed instructions as to how he wanted to divide his properties among his four children. He handed to them a list and on the left he indicated the name of the child to whom the listed properties shall pertain. Atty. Jorge Imperial took notes of the instructions of Don Jesus Alsua. To Don Jesus, Spanish is his major language, as in fact his conversations with Don Gregorio are always in Spanish. A few days before November 14, 1959, Atty. Jorge S. Imperial showed to Don Jesus the semi-final draft of the will and after reading it Don Jesus said that it was as directed by him, and after making a few minor corrections, he instructed Atty. Jorge S. Imperial to put the win in final form. He further told Atty, Jorge Imperial that the signing of the will should be at his home in Ligao, in the morning of November 14, 1959, and that the witnesses should be Mr. Ramon Balana, the then Register of Deeds of Albay; Mr. Jose Madarieta who is a friend of 4 and Atty. Gaya that the Imperials had already arrived. notarized the wilt and sealed it with his notarial seat which seal he brought along that morning. Ramon Balana. without much delay. Jose Gaya who is a sort of employee of Don Jesus. No. there were now six people gathered in the living room. Jorge S. and Don Jesus invited all of them to lunch. After signing the original and the two other sets. Mr. — one on the margin of each of the nine pages. it was already about 12:30 P. 43-44. 1960. considered it an honor to be so asked. 1967. and informed the latter that Don Jesus was requesting him to be one of the attesting witnesses to his will.a Tinay was approved by the probate court on July 6. . After all the three sets were notarized. despues de lo he leido. Madarieta was already informed by Don Jesus himself about the fact of signing the will that morning. and this was followed by a more or less statement from Jesus. Balana. and they were ushered in by Mr. Mr. Both holographic wills and codicils having been probated thereafter and upon the death of Doñ. namely: Don Jesus Alsua. Jose Madarieta signed next as another attesting witness. Soon Don Jesus came down. Don Jesus. on being advised by Mr.'noting certain details which were a little bit difficult to reconcile with the ordinary course of things and of life. as translated). The original will was marked as Exh. review or revise the same.. Mr. Mr.a Tinay together with their four children Francisco. Balana. carrying with him the will to be signed placed inside a cartolina folder. A (or set A). 1959. On request of Don Jesus.R. Madarieta and Gaya) signed eleven times on each set. Madarieta. Jorge S. Don Gregorio and Atty. Ramon Balana who signed as attesting witness. The will which consisted of nine pages. 5 . Gaya were Identified by Mr." First was the fact that the spouses Don Jesus and Doñ.it is quite difficult to conclude that the same had not complied with the requirements of Arts. Jose Madarieta. Imperial assisting each person signing by indicating the proper place where the signature shall be written. Madarieta. and Mr. Balana. On each of the three sets. At 1 1:00 o'clock. there is no further need for Us to dwell on the matter as both the lower court and the respondent appellate court have declared that these are the facts and such facts are fully borne and supported by the records. Atty. This finding is conclusive upon this Tribunal and We cannot alter.n. A) which divided the conjugal properties of the spouses between the spouses themselves and the children under the terms and conditions and dispositions herein before stated and to implement its provisions. Como saben ustedes tengo cuatro (4) hijos todos egos. 804. He greeted Don Gregorio. 1955 and codicils dated August 14. the three sets were then passed to Mr. Balan. Madarieta and Atty. whose residence is just across the road from the house of Don Jesus. Jose Gaya who also signed as the third attesting witness. are supported by the evidence. signed first.. and triplicate was laid on the round table and the signing began. however. K (or set K) and the triplicate of Don Jesus. having a very high regard for Don Jesus. Imperial as Notary Public with commission for the entire province of Albay. with a duplicate. 474-480. t.. 54492-R) which findings are supported by the evidence. which invitation was gladly accepted by all of then-L (pp. the same were passed to Mr. Gregorio Imperial segun mis instrucciones cuyo documento tengo aqui conmigo y encuentro que. Jose Madarieta. Mr. Jorge S. Ramon Balana. Mr. denied probate of the will after . Imperial. and when Mr. Gaya were present and witnessed said signing. and Mr. and that when each of these three witnesses was signing. Mr. Jorge S. 1956 with the same terms and conditions as reproduced herein earlier. Amparo and Fernando had executed the Extrajudicial Partition of November 25. The signing by the testator and the attesting witnesses having been completed. riding in a sedan. (now Judge) imperial. who said: têñ. and gladly went with the Imperials. Don Jesus and Doñ. and the latter requested them to be seated at the usual receiving room on the ground floor while he announced their arrival to Don Jesus who was on the second floor. almost ten o'clock of that morning. Mr. We rule that the questioned last will and testament of Don Jesus Alsua fully complied with the formal requirements of the law. with Atty. Albay. pp. Don Gregorio made a remark that it is about time to do what they were there for.a Tinay subsequently executed separately their respective holographic wigs both dated January 5. stopped at the Legaspi residence of Mr. Don Jesus and the two other attesting witnesses were present and Witnessing said Signing.M. and so. (CA Decision. Madarieta finished signing all the three sets. We find no error in the conclusion arrived at that the contested will was duly executed in accordance with law. and at the end of the instrument proper. . Don Jesus signed ten times. all of them moved to the big round table on another part of the same sala for convenience in signing because there were chairs all around this table. Respondent court. esta satisfactoriamente hecho segun mis instrucciones. All the witnesses who testified for the petitioner declared that Don Jesus was in bright and lively conversation which ran from problems of farming and the merits of French-made wines. Sarte. Jose Gaya. It was also clearly established that when Don Jesus signed the will Mr. hearing of December 7. With the coming of Madarieta and the coming back of Gaya. the duplicate as Exh. Don Gregorio Imperial Atty. Joint Record on Appeal in CA-G. Gaya called for Mr. — one on the margin of each of the nine pages.£îhqw⣠'Preisamente es por lo que he Hamado a ustedes que esten presentes para ser testigos de rni ultimo voluntad y testamento que ha sido preparado por el abogado Sr. Thus in the morning of November 14. Mr. Imperial and immediately joined them in conversation.a Tinay. they were all given back to Don Jesus who placed them inside the same folder.the family. Balana. Jose Gaya. After Mr.806 of the New Civil Code. This cited portion of the appealed decision accepts as a fact that the findings of the lower court declaring the contested will as having been executed with all the formal requirements of a valid will.s. They arrived at the residence of Don Jesus at Ligao. At that moment. Madarieta proceeded to the residence of Don Jesus. Imperial Mr. and Mr.' (pp. Each of the three attesting witnesses (Balana. and Mr. Mr. as testator. one at the end of the instrument proper and one below the attestation clause. Hence. 13-16. 1949 (Exh. Balana. Don Jesus was appointed executor of the will and in due time the partition of the properties or estate of Doñ. Pablo. With these words. for without a will there can be no testator. 1959. barring him from revoking his holographic will of January 5. Verzosa. but of dividing those which already have been legally disposed of. Such a holding of the appellate court that a person who executes a will is permitted to partition his properties pursuant to the provisions of Article 1056 of the old Civil Code even before executing his will as long as he mentions this fact in the will. 1955 and his codicil of August 14. Article 1056 of the Civil Code provides: Art. The court further added that jurisprudence is to the effect that the partition presupposes the execution of the will that it ratifies or effectuates. which we shall hereafter examine.. 1271. 1056. All things. may be the subject-matter of contracts. A person who disposes of his property gratis inter vivos is not called a testator. in a decision rendered on June 13. and said act must necessarily appear in the testament because it is the expression of the testator's last will and must be surrounded by appropriate formalities. authorized. in article 1056 as well as in article 1057. We do not agree with this ruling of the Court of Appeals. therefore. In other words. and especially. Nevertheless. it erred in holding that Don Jesus being a party to the extrajudicial partition of 1949 was contractually bound by the provisions thereof and hence could not revoke his participation therein by the simple expedience of making a new will with contrary provisions or 6 . Manresa comments on the same article as follows: A distinction must be made between the disposition of property and its division. for. Art. even future ones. but a donor. by an act inter vivos.matter of contract. We hold that the Extrajudicial Partition of November 25. realities required in case of donations. in accordance with Article 1056. to wit. If the testator should make a partition of his property by an act inter vivos. now the subject of the probate proceedings elevated to this Court." the law evidently desired to distinguish between one who freely donates his property in life and one who disposes of it by will to take effect after his death. nor included in the chapter referring to testaments. that the respondent court erred in denying probate to the will of Don Jesus dated November 14. the law. These Articles provide as follows: têñ. which means that. and the provision of article 1056 authorizing the testator to dispose of his property by acts inter vivos or by last will. a partition thus made would be tantamount to making a will in a manner not provided for. 1949 is null and void under Article 1056 in relation to Article 1271 of the old Civil Code which are applicable hereto. speaks of the partition inter vivos made by a testator of his property. All services not contrary to law or to good morals may also be the subject. If the testator should make a partition of his property by an act inter vivos. inasmuch as the second paragraph of article 1271 makes reference to the aforesaid article.The respondent court ruled that the Extrajudicial Partition of November 25. Article 1056 being an exception cannot be given a wider scope as to include in the exception any person whether he has made a will or not. 776. Verzosa. makes allusion to the forms or manner of making the partition and not to the effects thereof. the defendants and appellants herein. 1956. laid down the following doctrine: Considering that the language of article 1056 cannot be interpreted to mean that a person may. otherwise. which. and We quote the pertinent portions of the decision: têñ. but he must first make a will with all the formalities provided for by law. without the authority of a testament containing an expression of his last will. was valid and enforceable. 1955 and in the codicil of August 14. 1955 and his codicil of August 14. 54 Phil. The Supreme Court of Spain. the Supreme Court categorically declared the necessity of a prior will before the testator can partition his properties among his heirs. Neither is it necessary to observe the special for. respondent court held the opinion that the extrajudicial partition of November 14. except those the object of which is to make a division inter vivos of an estate. it is evident that said difference likewise leads to the conclusion that a partition thus made should be on the basis of a testamentary or legal succession and should be made in conformity with the fundamental rules thereof and the order of the heirs entitled to the estate. and the testator may make this division in the same will or in another will. to the forms thereof. 5. or the authority of law. The Idea is to divide the estate among the heirs designated by the testator. It is thus seen that both the Spanish Supreme Court and the learned and authoritative commentator. We do not agree with this ruling of the respondent court. supra and the commentary of Manresa as quoted above. Then comes the second part. would have to be done upon the death of the testator in order to carry into effect the partition of the estate among the persons interested. therefore. and further barring him from executing his new will and testament of November 14. partition his property referred to in the section wherein said article is found. for purposes of partition the formal solemnities which must accompany every testament or last will are not necessary. when the law. This designation constitutes the disposition of the properties to take effect after his death. or by an act inter vivos. We rule. is not warranted under the ruling of Legasto vs. the division in conformity with that disposition.£îhqw⣠The first question to decide in the instant appeal is whether the partition made by Sabina Almadin of her property among her nieces. otherwise. such partition shall stand in so far as it does not prejudice the legitime of the forced heirs. or by will. must be understood in accordance with this distinction. 1056. 1903. And it could not be otherwise. 1956. supra. 1949 was an enforceable contract which was binding on Don Jesus Alsua as the surviving spouse. Considering that. barring him from violating said partition agreement. no contract may be entered into with respect to future inheritances. Finally. Respondent court citing the same Article concluded that under both the old and new Civil Code. 1949 which under the old Civil Code was expressly prohibited as against public policy had been validly ratified by the holographic will of Don Jesus executed on January 5. citing the case of Legasto vs. by acts inter vivos. 1956. . In Legasto vs. We are not in conformity with the holding of the respondent court that the extrajudicial partition of November 25. partition his property. which are not excluded from the commerce of man. because neither of the two provisions could be given a wider meaning or scope than that they simply provide for the division of the estate during the lifetime of the owner. Again. such partition shall stand in so far as it does not prejudice the legitime of the forced heirs. because it is not a matter of disposing gratuitously of properties. Verzosa.£îhqw⣠Art. are of opinion that a testator may. which is entirely different from the legal consequences of a free disposition made by parents during their lifetime. or by will. Manresa. 1949 was ratified in the holographic will executed by Don Jesus on Jan. to partition his properties pursuant to the provisions of Article 1056 of the old Civil Code. In employing the word "testator. in providing that no contracts may be entered into with respect to future inheritances except those the object of which is to make a division inter vivos of the estate in accordance with article 1056.. a person who executes a will is permitted at the same time or a little thereafter or even before as long as he mentions this fact in the will. whereby they give to their children the whole or a part of their property. 1959. Article 1056 specifically uses the word "testator" from which the clear intent of the law may be deduced that the privilege of partitioning one's estate by acts inter vivos is restricted only to one who has made a prior will or testament. it necessarily refers to that property which he has devised to his heirs. For purposes of clarity and convenience. We have carefully examined the provisions of the holographic will and codicil of Doñ. the other half remained entirely at the free disposal of the spouses with regards to their respective shares. it follows that all the properties of Doñ. 1959. Considering now the efficacy of Don Jesus' last will and testament executed on November 14. Que si yo adquieriese nuevase propiedades despues de otorgado este mi testamento seran las mismas repartados entre mi esposo o hijos arriba mencionada en el parrafo tercero su la misma proporcion o sea: la mitad (1/2) para is esposa.a Tinay. On the other hand. Respondents insist that Don Jesus was bound by the extrajudicial partition of November 25. 1955 and her codicil dated August 14.£îhqw⣠I leave to my spouse Don Jesus Alsua as his legitime and as his inheritance the part of the free portion of my property which have not been allocated in favor of my children in the Document of Partition aforecited and that which should exceed 1/2 of the conjugal property of gains that pertains to him as above stated.£îhqw⣠7 .a Tinay. Art. After clearly establishing that only Don Jesus was named as sole heir instituted to the remaining estate of Doñ. It must be stressed here that the distribution of her properties was subject to her holographic win and codicil. was to be divided equally among the children for the simple reason that the property or properties were not specifically described in the public instrument. The end result. in law. 1949. one. In her holographic will. this fourth clause provided that "Should I acquire new properties after the execution of this testament. revoke his previous holographic will and codicil. Again for purposes of clarity and convenience. New Civil Code). the extrajudicial partition of November 25.a Tinay in her holographic will and codicil resulting in all such properties becoming the properties of Don Jesus alone. I hereby declare that it is my will that any and all kinds of property that pertains to me or would pertain to me. to wit: têñ. This is fundamental because otherwise. however. passed upon the intrinsic validity of a will even before it had been authenticated. her share in the free portion was distributed in accordance with her holographic will dated January 25.half (1/2) to my spouse. would only receive equal shares in the remaining estate of Doñ. If the acceptance is made by separate public instrument. Likewise.a Tinay would acquire after the execution of her will.a Tinay. would remain revokable at his discretion. 106 Phil. For in the first place. which is not herein claimed for it is undisputed that only the free portion of the whole Alsua estate is being contested. The acceptance must be made in the deed of gift or in a separate public writing. Para el caso de que Dios dispusiera que yo sobreviviera a mi esposo declaro que es mi voluntad que todas las propiedades de todo genero que me pertenecen y me pudieran pertenecer. there could have been no valid donation to the children of the other half reserved as the free portion of Don Jesus and Doñ. Though the law and jurisprudence are clear that only questions about the extrinsic validity of the will may be entertained by the probate court. independently of the holographic will and codicil of Don Jesus executed by him on the same date. the Court had.£îhqw⣠Cuatro. To stress the point. neither is it a valid or enforceable contract because it involved future inheritance. 739).a Tinay in the event that she should be the surviving spouse. and the other half to my children in equal parts. Don Jesus retained the liberty of disposing of his property before his death to whomsoever he chose. and this proceeding shall be noted in both instruments. In order that a donation or real property be valid it must be made by public instrument in which the property donated must be specifically described and in the amount of the encumbrances to be assumed by the donee expressed. We rule that there was substantial compliance with the rules on donations inter vivos under the old Civil Code (Article 633). an essential requirement under Article 633 which provides as follows: têñ. the codicil of Doñ. Thus We declared inNuguid v. probate only authenticates the will and does not pass upon the efficacy of the dispositions therein. therefore.a Tinay which. the above portion states: têñ. In fine. it may only be given effect as a donation inter vivos of specific properties to the heirs made by the parents. provided the legitime of the forced heirs are not prejudiced.a Tinay instituted her husband as sole heir to her share in the free portion of the conjugal assets. but it shall produce no effect if not made during the lifetime of the donor. which respondent court sustained. including all those properties which we shall acquire after the execution of this document. in the Deed of 1949. the same shall be partitioned among my spouse and above named children or the children mentioned in above par. no dispuestas aun en la reparticion.a Tinay did not oblige her husband to give equally to the children.a Tinay bequeathed to Don Jesus under her holographic win and codicil became part of Don Jesus' estate unburdened by any condition obligation or proviso. This other half. se dividan por igual entre mis herederos mencionados despues de mi muerte.a Tinay's wig and codicil did not stipulate that Don Jesus will bestow the properties equally to the children. therefore. 1949 and had in fact conformed to said Partition by making a holographic will and codicil with exactly the same provisions as those of Doñ. therefore. And secondly. It is an error because the so-called extrajudicial partition of 1949 is void and inoperative as a partition. Considering that the document. that Don Jesus was not forever bound thereby for his previous holographic will and codicil as such. 828 of the new Civil Code is clear: "A win may be revoked by the testator at any time before his death. remained as the disposable free portion of the spouses which may be disposed of in such manner that either of the spouses would like in regards to his or her share in such portion. Palacios. 17 SCRA 499: têñ. which have not been disposed of pursuant to the partition.a Tinay and We find no indication whatsoever that Doñ. only her estate was being settled. Upon the death of Doñ. is that Don Jesus and Doñ. 3 in the same proportion. and not that of Don Jesus. unencumbered by the provision enjoining the last surviving spouse to give equally to the children what belongs or-would pertain to him or her. We rule. authentic notice thereof shall be given the donor. Doñ. the children would only inherit together with Don Jesus whatever new properties Doñ. on more than one occasion. The children.£îhqw⣠Dejo a mi esposo Jesus Alsua como su legitima y como herencia que se sacara de ni cuenta de libre disposicion todos aquellos bienes de los que no he dispuesto aun en favor de mis hijos en la escritura de reparticion precitada y que excedieran de la mitad de gananciales que le corresponds tal como arriba declare. incluyendo todos aquenos bienes que se adquiriesen por nosotros despues de otorgado por mi este testamento. made to their children valid donations of only one-half of their combined properties which must be charged against their legitime and cannot anymore be revoked unless inofficious. all such properties she was bequeathing him. 1956. should be divided equally among my above-mentioned heirs after my death. and after clearly pointing out that Don Jesus can.a Tinay on October 2. that is. and We quote that part of the codicil: têñ. This would still hold true even if such previous will had as in the case at baralready been probated (Palacios v. by making another win expressly cancelling and revoking the former. as stated in the deed. Nuguid. 633. In case it should be God's will that I survive my spouse. y la otra mitad (1/2) para mis hijos en partes iguales.dispositions. contained specific designation of properties allotted to each child. upon his death. Any waiver or restriction of this right is void.£îhqw⣠Art. the rights to the succession are transmitted only from the moment of the death of the decedent (Article 777. the next issue for the Court's resolution is the validity of the provisions of the contested will. mention of her children as heirs was made in the fourth clause but it only provided that." From the above-quoted provision. to consider both wills and codicils jointly would be to circumvent the prohibition of the Civil Code on joint wills (Art. 818) and secondly because upon the death of Doñ." There can be no restriction that may be made on his absolute freedom to revoke his holographic will and codicil previously made.a Tinay expressly or impliedly instituted both the husband and her children as heirs to her free portion of her share in the conjugal assets. 1959 in view of Our holding that Doñ. or unshattered by disease. or Pablo as in fact he was. and the other as one whose mental faculties or his possession of the same had been diminished considering that when the will was executed. The legitimes of the forced heirs were left unimpaired. the acceptance by the respondent court of the findings of fact of the trial court on the due execution of the last win and testament of Don Jesus has foreclosed any and all claim to the contrary that the will was not executed in accordance with the requirements of the law.. Mere weakness of mind or partial imbecility from disease of body or from age-does not render a person incapable of making a will. 1956. It would be a dangerous precedent to strain the interpretation of a will in order to effect what the court believes to be an equitable division of the estate of a deceased person. But more than that. The only functions of the courts in these cases is to carry out the intention of the deceased as manifested in the wig. The properties that were disposed of in the contested will belonged wholly to Don Jesus Alsua's free portion and may be diamond of by him to whomsoever he may choose. for his part received instructions from Francisco and her husband. têñ. this litigation win be protracted and for ought that appears in the record. it is essential that the testator be of sound mind at the time of its execution. This being so. in the event of probate or if the court rejects the will probability exists that the case win come up once again before us on the issue of the intrinsic validity or nullity of the wilt Result: waste of time. it is not necessary that the testator be in full possession of all his reasoning faculties. or partial imbecility from disease of body. According to the court. 1959 contained an express revocation of his holographic wig of January 5. or that his mind be wholly unbroken. a statement bequeathing the rest of his properties and all that may be acquired in the future. because as already stated. 73 Phil. a close scrutiny of the properties distributed to the children under the Deed of 1949 and those distributed under the contested will of Don Jesus does not show that the former had in fact been included in the latter. the alleged redundant and unnecessary proceedings undertaken by Don Jesus in the properties under question to petitioner Franciso Alsua-Betts when the same properties had already been bequeathed to her in the will of November 14. expense. (Bugnao vs. absolutely nothing.. as in fact. The Civil Code itself provides under Article 798 that in order to make a will. or from age. Under Article 799 of the New Civil Code which provides as follows: têñ. esta satisfactoriamente hecho segun mis ingtrucciones. it must be presumed that the intention of Don Jesus in his last win was not to revoke the donations already made in the Deed of 1949 but only to redistribute his remaining estate.. .. and the character of the testamentary act. the actual administration of his properties had been left to his assistant Madarieta who. .. 1959 is concerned. not one of said forced heirs claimed or intimated otherwise. he had no intention of seeking the probate thereof during his lifetime. The last Will and Testament of Don Jesus executed on November 14. to wit: têñ. in the words of the decision "are a little bit difficult to reconcile with the ordinary course of things and of fife" such as the fact that Don Jesus had sought the probate of his will of January 5.. Ubag. and that degrees of mental aberration generally known as insanity or Idiocy. there are numberless degrees of mental capacity or incapacity and while on one hand it has been held that mere weakness of mind. faced two alternatives-one. will not render a person incapable of making a will. to Pablo and Francesca.£îhqw⣠Precisamente es por lo que he Ilamado a ustedes que eaten presentes para ser testigos de mi ultima voluntad y testamento que ha sido preparado por el abogado Sr. "Don Jesus was in bright and lively spirits . We find that: (a) it was Don Jesus himself who gave detailed instructions to his lawyer as to how he wanted to divide his properties among his children by means of a list of his properties should pertain. Joseph Betts. he was already 84 years of age and in view of his weakness and advanced age. the proper objects of his bounty. to consider Don Jesus as a man of culture and honor and would not snow himself to violate the previous agreement. 799. Clearly then. Once that intention has been determined through a careful reading of the will or wills. the meat of the case is the intrinsic validity of the wilt Normally this comes only after the court has declared that the will has been duly authenticated. before his death. The test of testamentary capacity is at the time of the making of the win. (b) the semi-final draft of the contested will prepared by his lawyer w-as even corrected by Don Jesus. For them.. 163). Arevalo. (d) the signing of the will by Don Jesus and his attesting witnesses was made after a statement from Don Jesus of the purpose of their meeting or gathering.£îhqw⣠Art. If he now favored Francesca more. despues de lo he leido. Don Jesus knew exactly what his actions were and the fun implications thereof. provided he has understanding and memory sufficient to enable him to know what he is about to do and how or to whom he is disposing of his property. We have clearly laid down this rule in Bustamante v. or that portion of the conjugal assets totally left to his free disposal and that which he received as his inheritance from Doñ.a Tinay.. a statement requiring that all of his properties donated to his children in the Deed of 1949 be collated and taken into account in the partition of his estate. Considering these testamentary provisions. nothing in the law restrained her from disposing of her property in any manner she desired. gleaned from the quoted portions of the appealed decision. and secondly. . unimpaired. From these accepted facts. 14 Phil. . These are the practical considerations that induce us to a behalf that we might as well meet head-on the time of the validity of the provisions of the will in question. it is not necessary that the mind be unbroken or unimpaired or unshattered by disease or otherwise. Respondent court. first.. She was the sole judge of her own attitude toward those who expected her bounty. 1955 and his codicil of August 14.. the institution of all his children as devisees and legatees to certain specific properties. in trying to rationalize the will of Don Jesus which allegedly benefited and favored the petitioner to the prejudice of the other heirs who would have been entitled to an equal share under the extrajudicial partition of 1949. In the case at bar. . If the case were to be remanded for probate of the wilt nothing will be gained. In rejecting probate of the wilt respondent court further pointed out other details which.£îhqw⣠. 1956 during his lifetime but insofar as the will of November 14. We cannot and may not sit in judgment upon the motives and sentiments of Don Jesus in doing so.£îhqw⣠Between the highest degree of soundness of mind and memory which unquestionably carries with it full testamentary capacity. a weak or feebleminded person may make a valid will. and a statement naming Francesca as executrix without bond. It has been held that testamentary incapacity does not necessarily require that a person shall actually be insane or of unsound mind. To be of sound mind. the described behavior of Don Jesus is not that of a mentally incapacitated person nor one suffering from "senile dementia" as claimed by private respondents. it is beyond the place of judicial cognizance to inquire into the fairness or unfairness of any devise or bequeast. nevertheless it would be venturesome for the court to advance its own Idea of a just distribution of the property in the face of a different mode of disposition so clearly expressed by the testatrix in the latter will.. to wit: têñ. It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of. 635. The court should not sit in judgment upon the motives and sentiments of the testatrix. the law presumes that every person is of sound mind in the absence of proof to the contrary.. and under Article 800.The parties shunted aside the question of whether or not the will should be allowed to probate. as claimed by private respondents. plus added anxiety. Como saben ustedes tengo cuatro (4) hijos todos ellos.. effort. and provided the law on legitimes has not been violated. 1959 and that "nothing. the better explanation is the latter. because there are no adequate means of ascertaining the inward process of her conscience.. which is not legally tenable. To constitute a sound and disposing mind. On the contrary. could be made the 8 .. (c) on the day of the signing of the will at his house in Ligao. Gregorio Imperial segun mis instrucciones cuyo documents tengo aqui con migo y encuentro que. 1955 and the codicil of August 14. leading in the conversation which ran from problems of farming and the merits of French-made wines". injury or other cause. Pablo Alsua. It is true that the jurisprudence of this Court in cases brought to Us from the Court of Appeals is limited to reviewing and revising the errors of law imputed to it. Private respondents further insist that the sales were fraudulent because of the inadequacy of the given price. When the inference made is manifestly mistaken. (2) Exhibit "W".basis for finding that Don Jesus Alsua had regarded his other children with less favor. IN VIEW OF THE FOREGOING. not assailed as a forgery. 9 . again. to such an extreme as to violate his previous disposition consecrated in the previous extrajudicial partition.355. Such surmise. 699 and Civil Case No. 257). No. Navarro. which show that the checks of Francisco made payable to Don Jesus. a document dated August 26. and 6.00) for the sale of 33 parcels of agricultural land to Francisco under the same date. 74 Phil. When the Court of Appeals. A conjecture is always a conjecture. April 30. Linatok. absurd or impossible (Luna vs.000. We find and so declare that the respondent court's conclusion as to the nullity of the contested sales was not supported by the evidence on record and adduced during the trial. which document bears the signature of Don Jesus. (6) Exhibit "X-3 " and "X-5 ". Where there is a grave abuse of discretion (Buyco vs. The general rule laid down by the Supreme Court does not declare the absolute correctness of all the findings of fact made by the Court of Appeals. its findings of fact being conclusive. But what should not be ignored by lawyers and litigants alike is the more basic principle that the "findings of fact" described as "final" or "conclusive" are those borne out by the record or those which are based upon substantial evidence. which proved that Don Jesus actually used Exhibit "XI " to complete payment on the estate and inheritance tax on the estate of his wife to the Bureau of Internal Revenue. endorsements on the back of the last two checks by Don Jesus.. which document also bears the signature of Don Jesus. force or threat. Exh. Pablo did not deny the genuineness of his signature. a second Bank of Philippine Islands Check (No. Ramos vs. however. in the amount of P32. The only issue raised anent the civil case for annulment of the two Deeds of Sale executed by and between Don Jesus and petitioner Francisco is their validity or nullity. The two contracts of same executed by Don Jesus in favor of Francesca are evidenced by Exhibits "U" and "W". 5. On the other hand.00). a Bank of the Philippine Islands Check No. were in fact given to Don Jesus as he endorsed them on the back thereof. as a witness. drawn by Francisco and payable to Don Jesus. therefore. When the judgment is based on a misapprehension of facts (Cruz vs. that there was fraud. payable to Don Jesus. Francisca for the total consideration of P150.G. SO ORDERED. People. drawn and signed by Francesca. The fact that Don Jesus did not cause his will to be probated during his lifetime while his previous holographic win and codicil were duly probated when he was still alive is a mere speculation which depends entirely on the discretion of Don Jesus as the testator. 1958. 1962 in the amount of ?47. Don Jesus sold the subject properties to his daughter. 9. and this same principle applies even if the Court of Appeals was in disagreement with the lower court as to the weight of evidence with a consequent reversal of its findings of fact. the decision appealed from is hereby set aside. 1961 by Don Jesus in favor of Francisca for the consideration of Seventy Thousand Pesos (P70. 1962.000. 2347260) dated November 29. The claim of the private respondents that the sales were fictitious and void for being without cause or consideration is as weak and flimsy as the ground upon which the respondent court upheld said claim on the basis that there was no need for funds in Don Jesus' old age aside from the speculation that there was nothing in the evidence that showed what motivated Don Jesus to change his mind as to favor Francesca and discriminate against the other children.644. Private respondents mainly contend that the sales were fictitious or simulated.29 from Don Jesus Alsua in payment of Balance of Transfer of Tax Ass. Nov. The same thing can be said as to whatever reason Don Jesus had for selling the properties to his daughter Francisca when he had already assigned the same properties to her in his will. Among the exceptions to the rule that findings of fact by the Court of Appeals cannot be reviewed on appeals by certiorari are: 1. 0252 in the amount of Seventy Thousand Pesos (P70. 51 O. 93 Phil.000. 3068 is hereby reinstated. These are exceptions to the general rule. (Article 1355. Villaseca. acknowledging receipt of a Bank of Philippine Island Check No. (3) Exhibit "F". 27. petitioners herein maintain that it was error for the respondent court to set aside on appeal the factual findings of the trial court that the two sales were valid. Sosing. Co. speculation or conjecture is no valid and legal ground to reject allowance or disallowance of the wig. surmises or conjectures (Joaquin vs. 15). his signatures thereon were not assailed. 1953). Inadequacy of consideration does not vitiate a contract unless it is proven which in the case at bar was not. When the conclusion is a finding grounded entirely on speculation. in making its findings. there having been no actual consideration paid. New Civil Code). again not assailed as a forgery nor alleged as done thru fraud. and the signature of Pablo Alsua as an instrumental witness. Feb.355. (7) Exhibit "A" (in the annulment case)." We agree with the petitioner that these details which respondent court found difficult to reconcile with the ordinary course of things and of life are mere conjectures. 1962 with a notation acknowledging the receipt of BPI Check No. EA-35415-19 plus interest. and most specifically Exhibit "A" in the annulment case. 1967. mistake or undue influence. L-22533. 2927).000. also admittedly not a forgery. the genuineness of which were not at all assailed at any time during this long drawn-out litigation of 15 years standing. 19 SCRA 289). We are convinced and satisfied from this array of documentary evidence that in fact. 1962 for the consideration of Eighty Thousand Pesos (P80. L-11139. They further insist that the issue raised is a question of fact and. (5) Exhibit "X-1".29. 8.71.00). L-9590. Now. We do not find the stipulated price as so inadequate to shock the court's conscience. with costs against respondents. D-6980) also dated November 26. April 23. WHEREFORE. a deed of sale over urban lots executed on November 16. not reviewable in a certiorari proceeding before the Supreme Court. The decision of the Court of First Instance Of Albay in Special Proceedings No. D-6980 in the amount of P47. While We can speculate that Don Jesus desired to have possession of the properties transferred to Francisca after the sale instead of waiting for his death may be a reasonable explanation or speculation for the act of the testator and yet there is no certainty that such was actually the reason. Pepsi Cola. In the case at bar. surmises or speculations which. considering that the price paid was much higher than the assessed value of the subject properties and considering that the sales were effected by a father to her daughter in which case filial love must be taken into account. The latter cannot now deny the payment of the consideration And even of he now allege that in fact no transfer of money was involved. This is as good a conjecture as the respondents may offer or as difficult to accept which respondent court believes. L-4875. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee (Evangelists vs. We find his allegation belied by Exhibits "X-3 " and "X-5 ". Alto Surety & Ins. 1961 and signed by Don Jesus and Pablo Alsua as witness. 2. again. Evident from the records are the following documentary evidence: (1) Exhibit U. it can never be admitted as evidence. That the consideration stated in the contracts were paid is also sufficiently proved as the receipts thereof by Don Jesus were even signed by one of the private respondents. The law does not require that a will be probated during the lifetime of the testator and for not doing so there cannot arise any favorable or unfavorable consequence therefrom. (4) Exhibit "X". where We have reviewed and revised the findings of fact of the Court of Appeals. D-6979 dated November 26. 1957). a deed of sale over agricultural lands executed on August 26. When the findings of fact are conflicting (Casica vs. a Bureau of Internal Revenue Receipt (No.00. and that he was more sympathetic to Francisca so as to or forget the former depriving them of benefits already given to them and rewarding the latter with disproportionate advantages or benefits. do not warrant or justify disallowance of the probate of the win of Don Jesus. 4. 3. The parties cannot correctly guess or surmise the motives of the testator and neither can the courts. the annulment case. Tongoy died at the Lourdes Hospital in Manila. Tongoy and Norberto P. TONGOY. Juan Sonora and Patricio Tongoy executed an "Escritura de Venta" (Exh. 1958 that a release of real estate mortgage was executed by the bank in favor of Luis D. Tongoy. Sonora. and NORBERTO P. 1936. Named principally as defendants were Francisco A. containing an area of 163.: This is a petition for certiorari. 1975. Alleging in sum that plaintiffs and/or their predecessors transferred their interests on the two lots in question to Luis D. Tongoy. AMADO P. 1956. TONGOY. 6) executed in his favor by the owner Basilisa Cuaycong on June 22. pursuant to a trust arrangement whereby the latter would return such interests after the 10 . Bacolod Branch. Rosario Araneta Vda. one of the co-owners and mortgagors. Tongoy paid off all his obligations with the PNB. Tongoy left behind a son. Of the original registered co-owners of Hacienda Pulo. Tongoy by the first marriage.Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. the PNB Branch Manager in Bacolod advised Jose Tongoy by letter that the latter's proposal was rejected and that the foreclosure suit had to continue. otherwise known as Hacienda Pulo. Tongoy. W). 20). Tongoy by means of simulated sales. Ana Tongoy. on June 29. Jose Tongoy. 1957. under Transfer Certificate of "Title No.650 square meters and originally registered under Original Certificate of Title No.00. The antecedent facts which are not controverted are quoted in the questioned decision.R. though by no means equally submitted as the complete facts. On February 5. 1936. dated January 26. Bacolod Branch. RICARDO P. Mercedes Sonora. The first is Lot No.410. L-45645 June 28. 4 or Z) in favor of Luis D. Tongoy. 1935 of an Assignment of Rights (Exh.R. as security for a loan of P11. Hacienda Pulo was mortgaged by its registered co-owners to the Philippine National Bank (PNB). leaving as heirs his wife Maria Rosario Araneta and his son Francisco A. and a surviving spouse. Sonora. respondents. JESUS T.00. Jesus T. SONORA. Tongoy ** and Fernando P. on October 23. Tongoy. TONGOY. 1931. entitled "Mercedes T. However. 1918. Luis D. Tongoy. the case now before Us was instituted in the court below on complaint filed on June 2. 1949. which by its terms transferred for consideration their rights and interests over Hacienda Pulo in favor of Luis D. CRESENCIANO P. 21522. de Tongoy. Norberto P. Ama Tongoy. married to Maria Rosario Araneta. TONGOY. 1966. 1936 purportedly for P4. Three days thereafter. it was only on April 22. there is no question that Luis D. and Maria Rosario Araneta Vda. SONORA. No. Tongoy executed a real estate mortgage over the Cuaycong property in favor of the PNB. Tongoy by his second wife Antonina Pabello whom he subsequently married sometime after the birth of their children. SONORA. No. After two decades. vs. et al. Tongoy and Ma. the late Francisco Tongoy's aforesaid two children by his first marriage. SONORA. Jesus T. Teresa Tongoy and Jovita Tongoy in pro-indiviso equal shares. 1961. Tongoy. Francisco Tongoy. 1966.". petitioners. Sonora ** . 1935 and November 5. because of their unwillingness to join as plaintiffs were Amado P. Ma. Tongoy. TRINIDAD T. by virtue of an "Escritura de Venta" (Exh. 1935 in the name of Luis D. Tongoy by the Pacific Commercial Company as judgment lien-holder (subordinate to the PNB mortgage) of Jose Tongoy's share in Hacienda Pulo. But. 1926. and formerly covered by Original Certificate of Title No. TONGOY. Not long after the death of Luis D. as follows: The case is basically an action for reconveyance respecting two (2) parcels of land in Bacolod City. 1983 FRANCISCO A. who died on September 15. Tongoy and Cresenciano P. Tongoy left three acknowledged natural children named Fernando. Patricio D. 45336-R. Tongoy. Tongoy. Estrella and Salvacion. For her part.000. Luis D. The second is Lot No. On March 13. 1935 the decision of the CFI giving the PNB the right to foreclose the mortgage on Hacienda Pulo. 5 or AA) was preceded by the execution on October 14. THE HONORABLE COURT OF APPEALS. Tongoy. 2 or Exh. J. MERCEDES T. Amado P. Sonora. Trinidad Sonora. Tongoy. however. Jovita Tongoy (Jovita Tongoy de Sonora). Hacienda Pulo was placed on November 8. Ricardo P. Rosario Araneta Vda. 1966 by Mercedes T. Francisco Tongoy and Jovita Tongoy. 1395 of the Cadastral Survey of Bacolod. 1934. the suit was pursued to finality up to the Supreme Court which affirmed on July 31. married to Maria Rosario Araneta. Cresenciano P. had six children. Tanada & Tanada Law Office for petitioners.500. who died on May 14. Tongoy.00. de Tongoy. as a result of which the PNB instituted judicial foreclosure proceedings over Hacienda Pulo on June 18. Sonora and Trinidad T. Jose Tongoy. Tañada. Sonora. 20154 (Exh. Luis D. Sanchez.754 square meters.00 payable in ten (10) years at 8% interest per annum. Ana Tongoy. Tongoy. Tongoy. to review the decision of respondent Court of Appeals in CA-G. Said co-owners were all children of the late Juan Aniceto Tongoy. 3 or DD and 5 or AA) pertaining to their corresponding rights and interests over Hacienda Pulo in favor also of Luis D. promulgated on December 3. containing an area of 727. Francisco A. Ricardo P. As a matter of fact. 1933 a Declaration of Inheritance wherein they declared themselves as the only heirs of the late Francisco Tongoy and thereby entitled to the latter's share in Hacienda Pulo. Luis D. The other two registered co-owners. proposed to the PNB an amortization plan that would enable them to liquidate their account. amounting to a balance of P34. on December 23. namely. on April 17. The following antecedents are also undisputed. Tongoy. Also impleaded as defendants. demanding the return of the shares in the properties to the co-owners. three died without issue. Teresa Tongoy. and Teresa Tongoy who also died single on November 3. the execution of the "Escritura de Venta" (Exh. Patricio D. as security for loan of P4.000. the title of the adjacent Cuaycong property also came under the name of Luis D. By the time this case was commenced. all surnamed Tongoy. Sonora. Tongoy. Sonora. nor seen in Identical lights: On April 17. 1915. Just before his death. have themselves died. respectively. It is claimed that Patricio D. Tongoy and Luis D. The mortgagors however were unable to keep up with the yearly amortizations. per Transfer Certificate of Title No. Reyes & Pablo Law Office for respondents. who also died single on February 6. Sonora. Tongoy and Luis D. Juan T. On the basis of the foregoing documents. briefly referred to as Cuaycong property. were survived by children. namely: Jose Tongoy. et al. de Tongoy. 2674 in the name of Basilisa Cuaycong. On the other hand. Patricio D.00. 1935. JUAN T. payable for a period of fifteen (15) years at 8% per annum. Sonora. Jesus Sonora and Jose Tongoy followed suit by each executing a similar "Escritura de Venta" (Exhs. including the mortgage obligations on the Cuaycong property and Hacienda Pulo. To avoid foreclosure. for himself and as judicial administrator of the estate of the late Luis D. 2947 in the names of Francisco Tongoy. who died a widower on March 11. MAKASIAR. he also executed a real estate mortgage over Hacienda Pulo in favor of the same bank to secure an indebtedness of P21. had four children: Mercedes T. Trinidad T. Thereafter. Tongoy received a letter from Jesus T. 1397 of the Cadastral Survey of Bacolod. In the following year. On June 26. In the meantime. Juan T. for himself and as Judicial Administrator of the Estate of the Late Luis D. versus Francisco A. 1932. In the case of Jose Tongoy.000. Tongoy and Luis Tongoy executed on April 29. Tongoy. Tongoy. 1968 and the opposition thereto. respondent court rendered the questioned decision.T. — 1) To reconvey to Mercedes T. and maintaining. Tongoy and Ma. Pulo and the Cuaycong property.T. including the income thereof from 1958 to the present. de Tongoy not only refuted the errors assigned by plaintiffs-appellants. defendants also raised laches. Rosario Vda. a motion to intervene as defendants was filed by and was granted to Salvacion Tongoy and Estrella Tongoy. SO ORDERED. and that an execution was ordered pending appeal. The defendants Francisco Tongoy and Rosario Araneta Vda. de Tongoy and Francisco A. T-824 (RT-4049) (21522). Plaintiffs also pray for such other and further remedies just and equitable in the premises. Tongoy and the heirs of Norberto P. Plaintiffs-appellants Mercedes T. Juan. The dispositive portion of the decision reads: IN VIEW OF ALL THE FOREGOING considerations. and with the view to avoid further controversy with respect to the share of each heir. that their action had prescribed. Rosario Vda. No. all surnamed Tongoy in Hda. the lower court rendered its decision on October 15. with respect to Mercedes.C. and the former Cuaycong property. On December 3. the proportionate legal share of Amado P. Tongoy. de Tongoy filed separate answers. de Tongoy to render an accounting to the plaintiffs of the income of the above two properties from the year 1958 to the present and to deliver to each plaintiff his corresponding share with legal interest thereon from 1958 and until the same shall have been fully paid.. 26 thereof. Cresenciano P. and that no trust agreement of whatever nature existed between him and the plaintiffs. Tongoy in the latter's answer. Ricardo P. Tongoy. SO ORDERED. Jesus and Trinidad. 157-166.. Sonora. that the defendants-appellants were not ordered to render an accounting of the fruits and income of the properties in trust. Bacolod City. de Tongoy to pay to the plaintiffs as and for attorney's fees an amount equivalent to twenty-four per cent (24%) of the rightful shares of the plaintiffs over the original HACIENDA PULO and the Cuaycong property. Said intervenors filed an answer similarly admitting every allegation of the complaint. (c) Ordering the defendants Francisco A. that their shares in Hacienda Pulo and Cuaycong property should be reconveyed to them by defendants-appellants. Jesus T. Tongoy. Tongoy of the two lots in question was genuine and for a valuable consideration. Tongoy and Norberto P. 1969 in the following tenor: Considering the motion for clarification of decision dated November 7. leaving 1/5 of the same to the heirs of Luis D.mortgage obligations thereon had been settled. all surnamed Sonora. the dispositive portion of which is as follows: WHEREFORE. and assailed it insofar as it held that the agreement created among the Tongoy-Sonora family in 1931 was an implied. On the other hand. that Ricardo P.C. except in the case of Amado P. Tongoy. 29152. 2) To reconvey to Ricardo P. but after the case was submitted and was pending decision. 1968 finding the existence of an implied trust in favor of plaintiffs. the complaint prayed that 'judgment be rendered in favor of the plaintiffs and against the defendants(a) Declaring that the HACIENDA PULO.C. Rosario Araneta Vda. Sonora. Meanwhile. Tongoy as substituted and represented by his heirs each a 14/135th portion 11 . For their part. Lot 1397-B-3 now covered by T. 1975. Tongoy. and not an express. Trinidad T. rec. Amado P. prescription. After trial on the merits. as trust estate belonging to the plaintiffs and the defendants in the proportion set forth in Par. Ricardo P.C. Rosario Araneta Vda. No. Bacolod City. judgment is hereby rendered dismissing the complaint. Jesus T. Tongoy. I. and Norberto P. Sonora. Amado P. As affirmative defenses. (b) Ordering the Register of Deeds of Bacolod City to cancel T. Bacolod City. Answering defendants counter claimed for damages against plaintiffs for allegedly bringing an unfounded and malicious complaint.. Juan T. Pulo and Cuaycong property consist of 4/5 of the whole trust estate. Sonora and the heirs of Juan T. the foregoing dispositive portion of the decision was subsequently clarified by the trial court through its order of January 9. denying in effect plaintiffs' causes of action. Vol. and (e) Ordering the defendants Francisco A. For their part. Amado P. defendants-appellants Francisco A.T. judgment is hereby rendered modifying the judgment and Orders appealed from by ordering Maria Rosario Araneta Vda. alleging they were sisters of the full blood of Fernando Tongoy. Upon motion of plaintiffs. Cresenciano P. Tongoy and Ma. Cresenciano P. Sonora and Trinidad T. the dispositive portion of the decision is hereby clarified in the sense that. trust. Sonora questioned the lower court's decision dismissing their complaint on ground of prescription. Both parties appealed the decision of the lower court to respondent appellate court. Tongoy. admitting every allegation of the complaint. and not having otherwise signed any deed of transfer over such shares. Defendants Francisco A. Tongoy and Ma. among others. before the case went to trial. in Hda. estoppel. and that defendants were not ordered to pay the attorney's fees of plaintiffs. the former filed a verified answer also admitting every allegation of the complaint. Tongoy. based on the original area of HACIENDA PULO. Tongoy. Tongoy are the legitimate half-brothers of the late Luis D. 29152 and T. No. defendants Norberto Tongoy and Amado Tongoy filed an answer under oath. (d) Ordering the defendants Francisco Tongoy and Ma. Tongoy and Ma. Tongoy. Sonora (as substituted and represented by his heirs). but at the same time holding their action for reconveyance barred by prescription. No. who were adjudged entitled to reconveyance of their corresponding shares in the property left by their father Francisco Tongoy having been excluded therefrom in the partition had during their minority. Tongoy and Norberto P. that the sale to Luis D.T. Cresenciano P. based on their original shares. Tongoy.appellants. Rosario Araneta Vda. and to issue new ones in the names of the plaintiffs and defendants in the proportions set forth in Par. de Tongoy are hereby ordered to reconvey the proportionate shares of Ricardo P. 26 of this complaint. and Norberto P. but also assailed the findings that there was preponderance of evidence in support of the existence of an implied trust.). and the statute of frauds against plaintiffs. defendant Fernando Tongoy originally joined Francisco A. Without damages and costs. Lot 1395 now covered by T. Sonora each a 7/60th portion of both Hacienda Pulo and the Cuaycong property. (pp.. T-824 (RT-4049) (21522). de Tongoy to pay the costs of this suit. The first two issues indicated above will be considered together as a matter of logical necessity.of both Hacienda Pulo and the Cuaycong property. Luis Tongoy even gave Sonoras their shares in the "beneficacion" although the "beneficacion" were included in the deeds of sale. when proposals for amicable settlement with the Philippine National Bank were being formulated and considered. III. Tongoy supported the TongoySonora family. and 3) if the trust was not an express trust. the Court of Appeals erred in not finding that the rights of respondents have prescribed. Conceding. Yours. Tongoy would benefit with the profits of the hacienda. Pulo. Petitioners Francisco A. in the same manner that Jose Tongoy did. Tongoy.00) pesos only. the tenor of which is quoted hereunder: Dear Brother Jose: Herewith is the deed which the bank sent for us to sign. Simulated deeds of conveyance in favor of Luis D. This deed is for the purpose of dispensing with the transfer of title to the land in the name of the bank. I It appears to US that the first and second errors assigned by petitioners are questions of fact which are beyond OUR power to review. The Court of Appeals erred in ordering petitioners to pay attorney's fees of P 20. The Court of Appeals erred in finding that the respondents Tongoy are the legitimated children of Francisco Tongoy. Rosario Araneta Vda. Luis D. The Court of Appeals erred in finding that the purchase price for the Cuaycong property was paid by Jose Tongoy and that said property was also covered by a trust in favor of respondents. if any. 23-24. Vol. also based on their original shares. Tongoy was yet a neophite (sic) in the practice of law. as found by the respondent Court of Appeals: xxx xxx xxx We shall consider first the appeal interposed by plaintiffs-appellants.00 so as not to sell anymore the land in public auction. In releasing the second mortgage. Tongoy. Brief for Petitioners): I.). 207-208. 1935 (Exhibit 'BB-1') is very significant. arriving at this conclusion as follows: The Court finds that there is preponderance of evidence in support of the existence of constructive. Luis Tongoy paid only P100. who provided for his expenses when he studied law. Likewise the consideration of the sale of the interests of the Pacific Commercial Company is only P100. no matter how inadequate were the amounts so stated. the Court of Appeals erred in not finding that their action against petitioners has prescribed. with legal interest thereon from the date of filing of the complaint in this case. de Tongoy (defendants-appellants) have come before Us on petition for review on certiorari with the following assignments of errors (pp. Jesus Sonora and Atty. 1958 up to the time the reconveyances as herein directed are made. The hacienda could have been leased to third persons and the rentals would have been sufficient to liquidate the outstanding obligation in favor of the Philippine National Bank. The basic issues underlying the disputed errors raised suggest themselves as follows: 1) whether or not the conveyance respecting the questioned lots made in favor of Luis D. The amount of consideration of the one-fifth (15) share of Jose Tongoy is one hundred (P 100. VII.00. But the co-owners agreed to give the administration of the property to Atty. And of course. V. These 12 . and he was still a bachelor. IV. The Court of Appeals erred in declaring that execution pending appeal in favor of respondents Tongoys was justified. VI.000. in their studies.00. Tongoy in 1934 and 1935 were conceived pursuant to a trust agreement among the parties. the latter's property were leased and the rentals were not sufficient to cover all the considerations stated in the deeds of sale executed by the coowners of Hda. the trial court found and ruled that the transfers made in favor of Luis D. II. and to deliver or pay to each of said parties their proportionate shares of the income. Luis D. January 26. The bank made me pay the Pacific the sum of P100. Luis D. The letter of Luis D. The Court of Appeals erred in finding that there was a trust constituted on Hacienda Pulo. provided that the 12 hectares already reconveyed to them by virtue of the Order for execution pending appeal of the judgment shall be duly deducted. Tongoy and Ma. 1 above attorney's fees in the sum of P 20. 1. if the administration is successful. Ricardo P. SO ORDERED (pp. Pulo. This was done in order "to avoid many expenses " of both Jose and Luis as obviously referred to in the word "WE". 1 and 2 above with respect to the income of Hacienda Pulo and the Cuaycong property from May 5. Luis D. pay the amortization in favor of the Philippine National Bank. until the same is paid. defrayed the expenses of Dr. To begin with. Granting arguendo that respondents Tongoy are the legitimated children of Francisco Tongoy.00 despite the fact that Jose Tongoy paid in full his indebtedness in favor of said company. whether the trust created was an express or implied trust.000. implied or tacit trust. Tongoy dated November 5. Thus. Those two transactions with nominal considerations are irrefutable and palpable evidence of the existence of constructive or implied trust. for the sake of argument. that respondents have adequately proven an implied trust in their favor. 1966.00 and the deed was in favor of Luis Tongoy. this way we will avoid many expenses. rec. Luis D. 3) To render an accounting to the parties named in pars. and 5) To pay the costs. the administrator of Hda. being so closely interlocked. when he married Maria Araneta. so that the latter can continue giving support to the TongoySonora family and at the same time. It was proven that it was Jose Tongoy. 2) if so. whether the action to enforce it has prescribed. Another significant factor in support of the existence of constructive trust is the fact that in 1933-34. 4) To pay unto the parties mentioned in par. Tongoy were executed to facilitate and expedite the transaction with the Philippine National Bank. Tongoy were clothed with an implied trust. or are barred by laches. Tongoy Jose Tongoy signed the deed because he incurred the obligation with the Pacific and paid it. Moreover. it did not go beyond the establishment of constructive or implied trust agreement. Arboleda did not even submit proposals for equitable arbitration of the case. the evidence presented by plaintiffs-appellants to prove an express trust agreement accompanying the aforesaid transfers of the lots are incompetent. on the representation of Luis D. Cuaycong. Sonora have testified with some vividness on the holding of a family conference in December 1931 among the co-owners of Hacienda Pulo to decide on steps to be taken vis-a-vis the impending foreclosure of the hacienda by the PNB upon the unpaid mortgage obligation thereon. instead of making five copies and furnished copy to each co-owner. While. Tongoy at that time was in no condition to pay the purchase price of the property sold. the impending foreclosure on the mortgage for P11. On the other hand. But. because he was not only the partner of the late Luis D. Tongoy? The revelation of the existence of a written trust agreement would have been a vital and controlling factor in the amicable settlement of the case.by which Luis D.00 for a 1/5 part of the hacienda. He is most qualified and in a knowable position to testify as to the truth of the existence of the trust agreement. Arboleda to Court to refute this fact. when the same counted so much in their subsistence and self-esteem. Tongoy upon a demand against the latter's estate. and its willingness to renew or restructure the same upon certain conditions. Arboleda invited Mrs. 1967. Atty. which Atty. according to Mrs. one side maintaining that no trust existed at all. Tongoy in their practice of law especially during the time he prepared and/or notarized the deeds of sale but he was also his colleague in the City Council. Only extreme necessity would have forced the co-owners to act in unison towards earnestly parting with their shares. Eduardo P. It was only during the trial on the merits when Atty. But the Court considers the evidence of execution of express trust agreement insufficient. the co-owners must have been posted on the attitude of the bank regarding the overdue mortgage loan. But however forceful would be the impact of his testimony. Accordingly. Tongoy that the bank wanted to deal with only one person it being inconvenient at time to transact with many persons. the other that the trust was an express trust. and did actually accede. 1197-1198). as it turned out. although from all the circumstances just indicated such a trust may be implied under the law (Art. It is strange that when Mrs. knowing as he should.000. And yet as the trial court noted. Tongoy by his coowners in 1933 and 1934 created an implied trust in favor of the latter. or at least one copy would have been kept by him? Why is it that when Atty. its form and the language it was written. Tongoy who had newly emerged as the lawyer in the family. To begin with. Tongoy to hold Hacienda Pulo in trust. We can hardly add to the sound observations of the trial court in rejecting the evidence to the effect as insufficient. Arboleda. Eduardo P. As the evidence stands. The parties. 21 SCRA 1192. the rigid requirements of proving the contents of a lost document. Tongoy supposedly delivered one copy to Jose Tongoy. if it is true that written trust agreement was prepared by him and signed by Luis D. binding the latter to make reconveyance of the co-owners' shares after the mortgage indebtedness on Hacienda Pulo has been discharged. December 11. Atty. Tongoy for the security of the vendor. Tongoy to save Hacienda Pulo from foreclosure for the benefit of the co-owners. The Court refuses to believe that Judge Arboleda was aware of the alleged intimations of Mrs. As a matter of fact. The plaintiffs evidently took such ungainly insinuations with levity so much so that they did not think it necessary to bring Mrs. Nevertheless. Thus it appears beyond doubt that Hacienda Pulo has been the source of livelihood to the co-owners and their dependents. more particularly where such occurrences consist of verbal agreements or statements made by or in the presence of the deceased. it is true that plaintiffs. Arboleda. Indeed the most formidable weapon the plaintiff could have used in destroying the "impregnable walls of the defense castle consisting of public documents" is testimony of Atty. Neither has the existence of the alleged contra-documento-. Arboleda state the precise context of the written agreement. Why did not Atty. Arboleda be taken in. The witnesses being themselves parties to the instant case. 20[a]. As it appears to Us. Sonora and Trinidad T. Mrs. one copy furnished Jose Tongoy and the other kept by Luis Tongoy. except to note further that at least plaintiffs-appellants Mercedes T. Maria Rosario Araneta Vda. there is on record enough convincing evidence not barred by the survivorship rule. Tongoy supposedly acknowledged the transfers to be simulated and bound himself to return the shares of his co-owners after the mortgage on the Hacienda had been discharged-been satisfactorily established to merit consideration as proof of the supposed express trust. de Tongoy and her son were in the house of Atty. Sonora. Sonora have testified having been apprised of the document and its contents when Luis D.00 could not have created such necessity. Tongoy. Ricardo P. whatever may be the nature of the trust suggested in the testimonies adverted to. including himself. Tongoy. Maria Rosario Araneta Vda. said witnesses are barred by the objections of defendants-appellees from testifying on matters of fact occurring before the death of the deceased (Sec. no express trust agreement was ever mentioned in plaintiffs-appellants' pleadings or at the pre-trial. We do not think the trial court erred in its ultimate conclusion that the transfers of the two lots in question made in favor of the late Luis D. Civil Code. Thereafter. Arboleda intimated her desire to have Atty. that the transfers made by the co-owners in favor of Luis D. thereby saving the hacienda from foreclosure. Under such 13 . Arboleda went on to testify that he prepared the deed of trust agreement. the record bears sufficiently clear and convincing evidence that the transfers were only simulated to enable Luis D. taking into account the meager considerations mentioned in the deeds of transfer which at their most generous gave to each co-owner only P2. Express trust agreement was never mentioned in the plaintiffs' pleadings nor its existence asserted during the pre-trial hearings. on one hand. on either side of this appeal take issue with the conclusion that there was an implied trust. if not inadequate. why is it that only two copies of the agreement were prepared. the same are incompetent as proof thereof anent the timely objections of defendants-appellees to the introduction of such testimonial evidence on the basis of the survivorship rule. in compliance with his invitation for the supposed friendly settlement of the case. Arboleda. Arboleda would have played an effective role as an unbiased mediator. to a restructuring of the mortgage loan in favor of Luis D. even if the same were competent. It is most unlikely that all of the several other co-owners should have come at the same time to one mind about disposing of their participation in the hacienda. it does not appear that there was an express agreement among the co-owners for Luis D. L-21616. otherwise he would not have tolerated or permitted her to indulge in such an embarrassing and uncalled for intrusion. Rule 130).appellants Jesus T. In the first place. the co-owners had agreed to entrust the administration and management of Hacienda Pulo to Luis D. Sonora and Trinidad T.circumstances fortified the assertion of Judge Arboleda that Luis D. Tongoy. de Tongoy and her son to see him in his house. Independent of testimony to the effect. specially when some had to be out of town the co-owners agreed to make simulated transfers of their participation in Hacienda Pulo to him. Arboleda did not reveal or mention the fact of the existence of a written trust agreement signed by the late Luis D. Tongoy were simulated and that an implied or resulting trust thereby came into existence. 1453. it is not hard to surmise that the hacienda could have been leased to others on terms that would have satisfied the mortgage obligation. when the subject transfers were made. Mercedes T.000. suing the representatives of the deceased Luis D. also see Cuaycong vs. the PNB was amenable. Referring in more detail to the evidence on the supposed express trust. that no consideration as recited in the deeds of transfer were ever paid in his presence. followed by Jose Tongoy. Comments on the Rules of Court. Art. Thus. Strongly supported the theory that the transfers were only simulated to enable Luis D. cited by Mora. Avoid contract produces no effect whatsoever either against or in favor of anyone. Tongoy (to) have effective control and management of the hacienda for the benefit of all the co-owners is preponderant evidence to the effect that he was in no financial condition at the time to purchase the hacienda. Vol. 1970 ed. Tongoy could not have produced the money required for the purchase from his law practice then. 5. 170-181. et al. Rodriguez. which were the subjects of simulated or fictitious transactions. Sonora and Trinidad T. I. The Court of Appeals found enough convincing evidence not barred by the aforecited survivorship rule to the effect that the transfers made by the co. A void or inexistent contract is one which has no force and effect from the very beginning. 20 SCRA 908. before Luis D. 4098-R. xxx xxx xxx These contracts cannot be ratified. 1966.]. vs.owners were only simulated. Sonora and Ricardo P. the deed of transfer is but a sham. have already prescribed. Agbulos. All the foregoing. W) as well as that by Jesus Sonora (Exh. Tongoy's income from his practice is belied by evidence that such properties were leased. supra). C. it does not create. Vol.owners in favor of Luis D. 54 Phil. rec. the letter ends with the clause-"this way we will avoid many expenses. with proof that the co-owners as transferors in the several deeds of sale did not receive the considerations stated therein. are conclusive upon US and beyond OUR power to review. In addition to the testimony of the notary public. as in this case. The proofs submitted by petitioners do not place the factual findings of the Court of Appeals under any of the recognized exceptions to the aforesaid general rule. Also of some significance is the fact that the deeds of transfer executed by Ana Tongoy. Said provisions state thus: Art. Thus. Alquiza. Tolentino. Tongoy himself took over the hacienda. Mercedes Sonora. Sonora-all denied having received the respective considerations allegedly given them. On the other hand. de Goitia. Furthermore. 33 SCRA 737. Witness Eduardo Arboleda who was a law partner of Luis D. Vda. all the transferors who testified including Jesus T. The action or defense for the declaration of the inexistence of a contract does not prescribe.. de Buencamino. That this was readily assented to in the anxiety to save and preserve Hacienda Pulo for all its coowners appears very likely anent undisputed evidence that the said co-owners had been used to entrusting the management thereof to one among them. Mendoza v.. simulates a transfer of it to another. 497). Tongoy were made for the benefit not only of himself but for the other co-owners as well. p. its findings of fact being conclusive as a matter of general principle (Chan vs. 174). In an honest-togoodness sale. De Matias. Tongoy were simulated. Tongoy as administrator of the common property. The financial incapacity of Luis D. 744. D. January 13. 1935 (Exhibit Bb-1). constitute clear and convincing evidence that the transfers made in favor of Luis D. Vol. 22 SCRA 494. as a general rule. and together gains strength. and the rentals collected in advance. Mercedes T. Sonora.. dating back to the time of Francisco Tongoy who once acted as administrator. Teresa Tongoy. the tenor of the letter from Luis D. In fact. Tongoy. as if it had never been entered into. Eduardo P. 594. as heretofore quoted with portions of the decision on appeal. without support from Luis D.). and which cannot be validated either by time or by ratification (p. Tongoy to Jose Tongoy. when they were not yet married. Tongoy is bound to hold title in trust for the benefit of his co-owners (cf. he does not really intend to divest himself of his title and control of the property. Juan Sonora. it has been held that the survivorship rule has no application where the testimony offered is to the effect that a thing did not occur (Natz vs. This characteristic of simulation was defined by this Court in the case of Rodriguez vs. it would have been most unlikely that the transferors would have paid no attention to this detail.A. Tolentino. et al. Tongoy when the transfers were made. C. CA-G. in order to place his property beyond the reach of his creditors. 1409. Finally. is very revealing of the fact that the steps taken to place Hacienda Pulo in the name of Luis D. it does not appear possible that Jesus T. and Patricio Tongoy (Exh. for eleven (11) crop years beginning 1931 (Exh. While said transferors are parties in this case. Tongoy to redeem the shares or participation of his co-owners. it is more reasonable to conclude that there was no compelling reason for the other co-owners to sell out their birthrights to Luis D. Tongoy. Tongoy intertwines. the transfers were apparently prompted by the inability of the co-owners to discharge the mortgage obligation and were being pressed for payment. No. the suggestion that his wife Ma. The following are the most fundamental characteristics of void or inexistent contracts: 14 . The following contracts are inexistent and void from the beginning: xxx xxx xxx 2) Those which are absolutely simulated or fictitious. L-19397. Tongoy by his co. IV. In fact. DD) did not even bother to clarify whether Luis D. July 31. where a person. and that the purported transfers were. Rosario Araneta had enough income from her landed properties to sufficiently augment Luis D. emphatically testified that Luis D. Tongoy could have finished medicine and law. 1951. 1967. Neither can the right to set up the defense of illegality be waived (emphasis supplied). as claimed by them in reality simulated pursuant to the suggestion that the bank wanted to deal with only one person. it is not without significance that the co-owners and their dependents continued to survive apparently from the sustenance from Hacienda Pulo for a long time following the alleged transfers in favor of Luis D. modify or extinguish the juridical relation to which it refers (p. 1410.circumstances.R. dated November 5. respectively. and who is not a party in this case. Tongoy as transferee of his co-owners' share was assuming the indebtedness owing to the PNB upon the mortgage on Hacienda Pulo. under circumstances giving rise to an implied or resulting trust whereby Luis D. 16 SCRA 849)" [pp. No. least of all where. Tongoy and Jose Tongoy. The characteristic of simulation is the fact that the apparent contract is not really desired nor intended to produce legal effects nor in any way alter the juridical situation of the parties. Civil Code of the Philippines. 557. The negative answer to the aforesaid query is found in Articles 1409 and 1410 of the New Civil Code. 592. L-23002. Trinidad Sonora. EEE). hence. Arboleda. April 30. hence. It has been well-settled that the jurisdiction of the Supreme Court in cases brought to IT from the Court of Appeals is limited to reviewing and revising errors of law imputed to it. All these findings of fact. 1973 Ed. Alquiza vs. considered together. AA) executed between Luis. I The initial crucial issue therefore is-whether or not the rights of herein respondents over subject properties. it appears that the series of transfers made in favor of the former by the co-owners of Hacienda Pulo followed and was made pursuant to a prior arrangement made with the PNB by Luis D. as recited in the Escritura de Venta (Exh. 97 Phil. Considering the law and jurisprudence on simulated or fictitious contracts as aforestated.. 190.B. No. and that actions against a trustee to recover trust property held by him are imprescriptible (Manalang vs. 1969 Ed. where the Court through then Mr. 20154 on November 8. from what time should such period be counted? The facts of the case at bar reveal that the title to Hacienda Pulo was registered in the name of Luis D. much less decisive. (61 SCRA 370. Tuazon and Co. 1958. L-11024. however. possession of thecestui que trust and. The nullity of these contracts is definite and cannot be cured by ratification. 387). Reyes (27 SCRA 1179. They further allege that possession of a trustee is. Court of Appeals. such contract would be "inexisting" and the "action or defense for declaration' of such inexistence "does not prescribe' (Art. Kintanar (Nos. whose statute of limitation would apply if there were an implied trust as in this case. this Court held that 11 where the sale of a homestead is nun and void. that petitioners had not earlier judicially moved to have the same annulled or set aside. this Court enunciated thus: It is of no consequence. January 31. et al. This doctrine has been reiterated in the latter case of Escay vs. contracts contemplated therein. in law. 4) The action or defense for the declaration of their inexistence or absolute nullity is imprescriptible. vs. even if the cause thereof has ceased to exist. and that the case for reconveyance was filed in the trial court on June 2. 1956. 1958. 88. vs. the action to recover the same does not prescribe because mere lapse of time cannot give efficacy to the contracts that are null and void and inexistent" (Angeles. apparently in ratification of the impugned agreement. Tolentino. Magdangal. Magdangal.M. 14 10 New Civil Code). As held in the case of Diaz vs. that petitioners. 261. Cortez vs.. 226). that the mortgage obligations to the PNB were fully paid on April 17. 106 SCRA 49). 1183). Tongoy for P4. special attention to footnotes). 70 SCRA 84. supra). see pp. 595. excepting only actions based on continuing or subsisting trusts that were considered by section 38 as imprescriptible. 1935. therefore. supra). it is nevertheless a principle recognized since Tipton vs. The properties were mortgaged in the year 1936 by said Luis D. Perdido. 1936.A. L-11229. Levantino. Canlas.L. it cannot be a good ground for title by prescription (Laguna vs. 5) The inexistence or absolute nullity of a contract cannot be invoked by a person whose interests are not directly affected (p. Municipality of Baliwag. private respondents contend that prescription cannot operate against the cestui que trust in favor of the trustee. without distinguishing between express and implied trusts. all actions for recovery of real property prescribe in ten years. On the other hand. No amount of time could accord validity or efficacy to such fictitious transactions. May 19. cited on p. 41. The nullity is permanent. as follows: Under Section 40 of the Old Code of Civil Procedure. March 29. The question. rec.. 1975. executed on August 21. L-7083. Jurado. No. for according to the same Article 1409. Cho Jan Ling. Reyes in J. Gorricho. as the one We are dealing with. however. July 25. Consistently. therefore. vs. Justice Makalintal. II But even assuming arguendo that such an implied trust exists between Luis Tongoy as trustee and the private respondents as cestui que trust. 71 Phil. still the rights of private respondents to claim reconveyance is not barred by prescription or laches. C. this Court thus reiterated: Under the existing classification. 2 SCRA 755. 1006). 15 .000. for a period of fifteen years. because being fictitious or simulated." 2) They are not susceptible of ratification." Neither it it material. that the release of mortgage was recorded in the Registry of Deeds on May 5. the longest period of extinctive prescription was only ten years (Salao vs. even conceding that respondents have adequately proven an implied trust in their favor.]. The rule now obtaining in this jurisdiction is aptly discussed in the case of Bueno vs. That which is inexistent cannot give life to anything at all. the deeds of transfer executed in favor of Luis Tongoy were from the very beginning absolutely simulated or fictitious. respectively. et al. the defect of which is permanent. is now a settled question in this jurisdiction. Oliva. 46. 50 OG 1980).. 21522 on June 22. Petitioners maintain that. 444. 480. 1966. "cannot be ratified nor the defense of its illegality be waived. 4 SCRA 84. Uy vs. et al. 102 Phil. Diaz vs. L-49634-36.1) As a general rule. (t)he action or defense for declaration of the inexistence of a contract does not prescribe. Brief for Respondents. 1955. There is no implied trust that was generated by the simulated transfers. The reason has been expressed by Mr. Velasco.M. their rights have already prescribed. Salao. Soler. Justice J. the better rule. held: While there are some decisions which hold that an action upon a trust is imprescriptible. Tongoy with the issuance of TCT No. the transfers were null and void ab initio-from the very beginning and thus vested no rights whatsoever in favor of Luis Tongoy or his heirs. both the trial court and respondent appellate court are correct in applying the ten-year prescriptive period. et al. 261. emphasis supplied). 1958. 38 of the Code of Civil Procedure referred only to express unrepudiated trusts. since actions to enforce an implied trust created under the old Civil Code prescribes in ten years. It prescribes in ten years" (Boñaga vs.00 and P 21. While it is true that this is a new provision of the New Civil Code. Tongoy with the issuance of TCT No. In the much later case of Guiang vs. 19 Phil.500. Brief for Respondents. that the title to the adjacent Cuaycong property was transferred to Luis D. 1981. as laid down by this Court in other decisions. the within action for reconveyance instituted by herein respondents which is anchored on the said simulated deeds of transfer cannot and should not be barred by prescription. 566. "The prescriptibility of an action for reconveyance based on implied or constructive trust. 4 SCRA 88.. Tuazon and Co. the deeds of sale covering the two lots already referred to and that petitioners actually received in part or in whole the money consideration stipulated therein. 258-259. Evidently. 33 Phil. p. since the same were made merely for the purpose of restructuring the mortgage over the subject properties and thus preventing the foreclosure by the PNB. is. In Eugenio vs. is that prescription does supervene where the trust is merely an implied one.. They also cite other pre-war cases to bolster this contention.00. or even when the parties have complied with the contract spontaneously (p. pursuant to the same article. where WE held that implied or constructive trusts prescribe in ten years. 103 Phil. 28 Phil. among which are: Camacho vs. they produce no legal effects whatsoever in accordance with the principle "quod nullum est nullum producit effectum. 6 Phil. 3) The right to set up the defense of inexistence or absolute nullity cannot be waived or renounced. Following such proposition that an action for reconveyance such as the instant case is subject to prescription in ten years. Comments and Jurisprudence on Obligations and Contracts. the continuing or subsisting trusts contemplated in Sec. the Guiang spouses. Under Article 1410 of the Civil Code. 67 that "mere lapse of time cannot give efficacy to contracts that are null and void. 398. and did not include constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at all. Under Act No. Gorricho and Aguado. Inc. Inc. J. 202 [pls. More precisely then the prescriptive period should be reckoned from May 5. Indeed. respectively. Ramos. the ten-year prescriptive period should not be counted from the date of registration in the name of the trustee. however. Agatona Tongoy. D). Siguiong vs. TT) of respondent Jesus T. since only by that time could plaintiffs-appellants be charged with constructive knowledge of the liquidation of the mortgage obligations. when it became incumbent upon them to expect and demand the return of their shares. the overwhelming evidence found by respondent Court of Appeals conclusively shows that respondents Amado. 738. rec. 113 SCRA 547.000. [Ramos vs. 4 Phil. as natural children of Martin Ramos. 283 [4] and 2666 [3]. Rubio. WE cannot but agree with the liberal view taken by respondent Court of Appeals when it said: . Tongoy. and Norberto. 5 Phil. Be that as it may. Hence. from the date of actual demand which has been determined to have been made on January 26. it held — Unacknowledged natural children have no rights whatsoever (Buenaventura vs. that everybody in Bacolod knew them to be part of the Tongoy-Sonora clan. that respondents Amado. Tongoy were born illegitimate to Antonina Pabello on August 19. all surnamed Tongoy. who were then still minors. p. Petitioners maintain that since the said respondents were never acknowledged by their father. Ricardo P. and that equity under all the circumstances so dictate. the predecessor-in-interest of Luis D. children.). WE find no evidence of abuse of discretion on the part of respondent Court of Appeals when it ordered such accounting from May 5. that shortly thereafter." Of course. Ricardo. Sonora to deceased Luis D. Under the circumstances. 5. December 1. Consequently. it is hardly to be expected of appellees. 1966 by the demand letter (Exh. The fact that the plaintiffs. the same appears to be well taken in the light of the findings WE have made considering that prevailing plaintiffs. that fact was wellknown in the community. on p. per se. Sarsosa Vda. 43 Phil. In the hitherto cited case of Ramos vs. Ricardo. when the only result is to unjustly deprive children who are otherwise entitled to hereditary rights. however. there being no proof that plaintiffs-appellants otherwise learned of the payment of the obligation earlier. hinges on the absence of an acknowledgment through any of the modes recognized by the Old Civil Code (please see Articles 131 and 135 of the Old Civil Code). 862).00 adequate for the purpose (p. received shares in his estate implied that they were acknowledged. the Supreme Court showed the way out of patent injustice and inequity that might result in some cases simply because of the implacable insistence on the technical amenities for acknowledgment. Bacolod. H). Cresenciano. and were treated as legitimate children not only by their parents but also by the entire clan. Infante vs. Ramos. Tongoy as administrator of Hacienda Pulo. 106 SCRA 393). The bone of contention. together with their grandmother... A). Tongoy. also spent for the education of Ricardo Tongoy until he became a lawyer. Cresenciano and Norberto. Tongoy and Norberto P. Urbano. 1966 (p. 35 of questioned Decision. Cresenciano P.A.00. Siguiong. de Barsobin vs. 36 of Decision. Figueras. Thus. as already indicated. as respondent Court of Appeals had correctly held: .. Rather. Obviously. Ricardo. having been reared as legitimate children by their parents and treated as such by everybody. We deem P20. 21 SCRA 1479. the attainment of the purpose for which the trust was constituted. it would not do to apply the theory of constructive notice resulting from the registration in the trustee's name. but when they went to school. Larena vs. 1. Zuñiga (4 SCRA 1221). August 12. 1958 — the cestui que trust were charged with the knowledge of the settlement of the mortgage obligation. Mar.1) and August 4. the ten-year prescriptive period for bringing the action to enforce the trust or for reconveyance of plaintiffs-appellants" shares should be toned from the registration of the release of the mortgage obligation. that Francisco Tongoy and Antonina Pabello were married sometime before his death on September 15. 191. 1958. Tongoy. C and C. 1926 (Exh. that they had lived in Hacienda Pulo with their parents. It is not in keeping with the more liberal attitude taken by the New Civil Code towards illegitimate children and the more compassionate trend of the New Society to insist on a very literal application of the law in requiring the formalities of compulsory acknowledgment. defendants Agustin Ramos and Granada Ramos and the late Jose Ramos and members of his family had treated them as his children. Tongoy and Patricio D. Luis D.. supra. 1922 (Exh. 1926. Indeed. IV The remaining assignement of error dwells on the question of whether or not respondents Amado. 1958. Cresenciano and Norberto have been in continuous possession of the status of natural. 1017). which in this case should be May 5. Presumably. supra]..appellants were forced to litigate to enforce their rights.1914 (Exh. as contemplated in the earlier case of Juan vs. 16 . they could not have been legitimated by the subsequent marriage of their parents. Tongoy as successor-in-interest and/or administrator of the estate of the late Luis D. rec. 8 Phil. the date of registration of the document of release of mortgage. and that Luis D. C. subsequent to their births and shortly before Francisco died on September 15. Air Lines vs. a sufficient acknowledgment but only a ground to compel recognition (Alabat vs. Pua vs. 21 SCRA 753. As pointed out in the questioned decision of the Court of Appeals: As for the claim for attorney's fees. Luis D. such that legitimation could not have taken place in view of the provisions of Art. as well as with the Sonoras and with Luis and Patricio Tongoy. that defendants-appellants stand on a purely technical point in the light of the overwhelming evidence that appellees were natural children of Francisco Tongoy and Antonina Pabello. From the very nature of things. Tongoy and Patricio D. leaving out their half-brothers Amado. may be considered legitimated by virtue of the marriage of their parents. Crisolo vs. 1958 when the release of the mortgage was recorded in the Registry of Deeds. to render an accounting of the fruits thereof from the time that the obligation to make a return arose. they stayed in the old family home at Washington Street. Cresenciano and Norberto were known and accepted by the whole clan as children of Francisco. Tongoy. to save the properties from foreclosure for the benefit of the coowners. New Civil Code). Luis D. or even legitimated. III With respect to the award of attorney's fees in the sum of P20. Tongoy. and that even petitioners admit the fact that they were half-brothers of the late Luis D. 1915 (Exhs. namely. 94 Phil. 121 of the same Code which states that "children shall be considered legitimated by a subsequent marriage only when they have been acknowledged by the parents before or after the celebration thereof. who is admittedly the half brother of the said respondents. Macadaeg. Tongoy. considering that private respondents were unnecessarily compelled to litigate (Flordelis vs. Tongoy. it recognizes the fact that such continuous possession of status is not. Cuenco. it does not make much sense that appellees should be deprived of their hereditary rights as undoubted natural children of their father. It does seem equally manifest. Ricardo. until it is done. much less could they inherit from the estate of their father. Alabat. 114 SCRA 41. said plaintiffs-appellants should recover attorney's fees in a reasonable amount.). that said Francisco Tongoy had before them two legitimate children by his first wife. 11. petitioner Francisco A.Considering that the implied trust resulted from the simulated sales which were made for the purpose of enabling the transferee. as well as the imposition of legal interest on the fruits and income corresponding to the shares that should have been returned to the private respondents. Hence. Chan. B). that Francisco Tongoy was their father. it should be counted from the date of recording of the release of mortgage in the Registry of Deeds. Agustin Ramos and Granada Ramos and the heirs of Jose Ramos. which is to say that the present complaint was still filed within the period on June 4. on which date May 5. Both the trial court and the respondent appellate court have found overwhelming evidence to sustain the following conclusions: that Amado P. 1910 (Exh. 151. are estopped from attacking plaintiffs' status as acknowledged natural children (See Arts. Tongoy.000. Tongoy executed an Extra-Judicial Declaration of Heirs. Phil. Still. when the only plausible reason that the latter could have had in mind when he married his second wife Antonina Pabello just over a month before his death was to give legitimate status to their children. Francisco Tongoy and Antonina Pabello. the same appears to have been properly made. is under obligation to return the shares of his co-heirs and co-owners in the subject properties and. to bring an action to compel their parents to acknowledge them. too. to return the properties that the prescriptive period should begin to run. 1935 — An Escritura de Venta (Exh. 1931. considering that such transfer of the properties in the name of Luis D. At that time all the respondents-Tongoys were still minors (except Amado. 7272). et al. 1936 — Luis D. the provisions of the Spanish Civil Code is applicable to this case. 1. Alzona vs. and that "the action therefor may be filed within four years from the discovery of the fraud x x x". Tongoy on November 8. De los Angeles. thereby resulting in the issuance of TCT No. THE JUDGMENT APPEALED FROM IS HEREBY AFFIRMED IN TOTO. Neme (7 SCRA 27) where this Court. Tongoy. the distribution of her properties should be governed by said Code. It will be noted that the foreclosure on the original mortgage over Hacienda Pulo was instituted by PNB as early as June 18. said period may not be applied to this case in view of its peculiar circumstances. Tongoy married to Ma. L-12149. the said respondents were precluded from doing anything to assert their rights. 1935 — Hacienda Pulo was placed in the name of Luis D. 196-198. Gaz. The registration of the properties in the name of Luis D. SO ORDERED. and June 29. As a matter of fact. including Luis D. 51 Off. Gaz. 1935. Tongoy executed a real estate mortgage over the Cuaycong property in favor of the PNB to secure a loan of P4. Tongoy by the Pacific Commercial Company as judgment lien-holder [subordinate of the PNB mortgage] of Jose Tongoy on Hacienda Pulo November 5. and cases cited therein). as already indicated. 1966. 17 . 5 or AA) was also executed by Jose Tongoy in favor of Luis D. Still. as already explained in detail. 1962)". resulting from fraud. estoppel should also operate in this case in favor of appellees. (Note: This was preceded by the execution on October 14. wherein it is provided that between co-heirs. from which time the members of the Tongoy-Sonora clan had been in constant conference to save the property. Juan Sonora and Patricio Tongoy. The contention that the rights of the said respondents — Tongoys have prescribed. equity and justice (cf. precludes defendants-appellants from attacking appellees' status as acknowledged natural or legitimated children of Francisco Tongoy.00 payable for fifteen years. 30. as administrator and/or successor-in-interest of Luis D. Tongoy himself who had furnished sustenance to the clan in his capacity as administrator of Hacienda Pulo and had in fact supported the law studies of appellee Ricardo P. November 5. care and material support as are accorded to legitimate children. It was only upon failure of the herein petitioner. The right to participate in their father's inheritance should necessarily follow. following the doctrine laid down in Villaluz vs. who. 1936 — An Escritura de Venta was executed by Basilisa Cuaycong over the Cuaycong property in favor of Luis D. take a liberal view in favor of natural children who. October 23. the prescriptive period is ten year-from the date of recording on May 5.000. But estoppel. Tongoy married to Ma. and Ricardo Tongoy attained majority age on August 12. without their asking. through Mr. Tongoy. Tongoy by Ana Tongoy. 1935 cannot be considered as constructive notice to the whole world of the fraud. 1934 — An Escritura de Venta (Exh. 1965 [Old Civil Code]. if not unnecessary. 2 or W) was executed in favor of Luis D. 3 or DD) was executed by Jesus Sonora.00. When the mortgages were constituted. WHEREFORE. found it rather awkward. because they enjoy the blessings and privileges of an acknowledged natural child and even of a legitimated child. is without merit.500. the 3 living sisters were possessing the property as administratices of the other co-heirs. that they have always been treated as acknowledged and legitimated children of the second marriage of Francisco Tongoy. may be barred by the statute of limitations" (Candelaria vs. likewise transferring his rights and interests over Hacienda Pulo to Luis D. plaintiffs-appellants herein. In addition to estoppel. that are really children of Francisco Tongoy and Antonina Pabello. 1937) during the regime of the Spanish Civil Code. Baysa. Romero. L10220. Tongoy was made in pursuance of the master plan to save them from foreclosure. It is time that WE. June 22. respondents Cresenciano Tongoy and Norberto Tongoy were still minors. L-22070. 20).]. Ana vs. 1931. Tongoy for the same purpose. 53 Off. Mercedes Sonora. Rosario Araneta with the issuance of TCT 20154 (Exh. even defendants-appellants have not questioned the fact that appellees are half-brothers of Luis D. Baysa. Verily. 1935 — An Escritura de Venta (Exh. this is decidedly one instance when technicality should give way to conscience. As already pointed out. the act to demand the partition of the inheritance does not prescribe (Art. Sept. Vda. 1926. 5590. Tongoy in Manila. transferring their rights and interests over Hacienda Pulo to the former. and only the technicality that their acknowledgment as natural children has not been formalized in any of the modes prescribed by law appears to stand in the way of granting them their hereditary rights. Rosario Araneta. so that there could be truth to the allegation that their exclusion in the Declaration of Inheritance executed by Patricio and Luis Tongoy on April 29. while respondent Amado Tongoy became of age on August 19. Justice Paredes. 1958 of the release of mortgage in the Registry of Deeds. Sonora in his medical studies. Even following the more recent doctrine enunciated in Gerona vs. As above demonstrated. have been showering them with the same love. 1936 — Luis D. Trinidad Sonora. thus: March 13. the same way he did with Jesus T. October 29. Tongoy. 1935 of an Assignment of Rights [4 or Z) in favor of Luis D.18 SCRA 588) [pp. considering. de Guzman (11 SCRA 153) that "an action for reconveyance of real property based upon a constructive or implied trust.With the same logic. Vol. but also by the entire Tongoy-Sonora clan. Capunita. who was already 23 years old then). Teresa Tongoy. who have the right to vindicate their inheritance regardless of the lapse of time (Sevilla vs. Tongoy. not only by their presumed parents who raised them as their children. Tongoy executed a real estate mortgage over Hacienda Pulo to secure a loan of P21. 1960. de Sta. 21522 in the name of Luis D. 1933 was made to facilitate matters-as part of the general plan arrived at after the family conferences to transfer the administration of the property to the latter. L7745. to institute an action for recognition against their natural parents. 28. Feb. The events that followed were obviously in pursuance of such plan. held: Considering that Maria Rocabo died (on February 17. The death of Francisco Tongoy having occurred on September 15. Rivera. rec. vs. June 26. DECISION TINGA. LITONJUA.[3] in CA-G. which per another letter of the same date was increased to US$36 million. Swedish Match. Inc. made subject to final approval by the board. PETER HODGSON.000. an exchange of correspondence ensued between petitioners and respondents regarding the projected sale of the Phimco shares. the first being to sell its shares in Phimco Industries. the president and general manager of ALS. (SMNV). 35886. The other move was to sell at once or in one package all the SMNV companies worldwide which were engaged in match and lighter operations thru a global deal (hereinafter.” MASSIMO ROSSI and ED ENRIQUEZ.[7] Litonjua stressed that the bid amount could be adjusted subject to availability of additional information and audit verification of the company finances.). Sometime in 1988.[8] Litonjua in a letter dated 18 June 1990.00. AB. citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Inc. He pointed out that they submitted the best bid and they were already finalizing the terms of the sale. He criticized SMAB‘s decision to accept a new bidder who was not among those who participated in the 25 May 1990 bidding. 2004] SWEDISH MATCH. FRANCISCO RAPACON. that they would be able to finalize their bid on 17 July 1990 and that in case their bid would turn out better than any other proponent. RODRIGO ORTIZ. he asserted that. they would remit payment within ten (10) days from the execution of the contracts. Several interested parties tendered offers to acquire the Phimco shares. He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990. SMAB. SMAB would enter into negotiations with other buyers. Responding to Litonjua‘s offer.000. In his letter dated 3 November 1989. Vice-President of Swedish Match Sociedad Anonimas (SMSA)—the management company of the Swedish Match group—was commissioned and granted full powers to negotiate by SMNV. petitioners. Rossi made it clear that at the completion of the due diligence process. excluding the lighter division for US$30. JACOBUS NICOLAAS. lighter and shaving products operation to Eemland Management Services. October 20. he was advised that one final bidder would be selected from among the four contending groups as of that date and that the decision would be made by 6 June 1990. thanked respondents for their interest in the Phimco shares. Contrary to his prior manifestations. Additionally. Swedish Match. Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period. Litonjua promptly responded by letter dated 4 July 1990. JUANITO HERRERA. and OTT/Louie (Phils. considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been completed. a corporation organized and existing under the laws of Netherlands. FIEL SANTOS. among whom were the AFP Retirement and Separation Benefits System. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. SMAB would reimburse up to US$20.000. He told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September1990. now known as Swedish Match NV of Netherlands. expressed disappointment at the apparent change in SMAB‘s approach to the bidding process.[13] More than two months from receipt of Litonjua‘s last letter. However. RENE DIZON. all organized under Philippine laws. respondents. for all intents and purposes. JUAN ENRIQUEZ. vs.00 of ALS‘ costs related to the due diligence process. JOSEPH PEKELHARING (now Representing himself without court sanction as “ JOOST PEKELHARING).. global deal). Ed Enriquez (Enriquez).[9] Two days prior to the deadline for submission of the final bid. however. however.[6] Thereafter.[5] Through its Chief Executive Officer. 128120. in view of the tight loan covenants of SMNV. for the shares of SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. with the resulting transaction. SAMUEL PARTOSA. CV No. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990. Rossi informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares. Litonjua offered to buy the disputed shares.[14] 18 . entitled ―ALS Management et al. Provident Tree Farms. however. informing the former that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of Phimco at ALS‘ convenience. ALS should submit its final offer in US dollar terms not later than 30 June 1990. and a match company in Brazil. AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing business in the Philippines.). for the sum of P750. In his letter dated 21 May 1990. He pointed out that in their 4 June 1990 meeting.[10] Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view of Litonjua‘s failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June 1990. STORA. v. Enriquez sent a fax communication to the former. No. the US$36 million bid which he submitted on 21 May 1990 was their final bid based on the financial statements for the year 1989.R. to wit: Phimco Industries. and OTT/Louie (Phils. NICANOR ESCALANTE.6 million. Litonjua submitted to SMAB a firm offer to buy all of the latter‘s shares in Phimco and all of Phimco‘s shares in Provident Tree Farm. Rossi sent his letter dated 11 June 1990. ‖ The appellate court overturned the trial court‘s Order[4] dismissing the respondents‘ complaint for specific performance and remanded the case to the trial court for further proceedings. had three subsidiary corporations in the Philippines. Inc. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. Inc. SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business.SECOND DIVISION [G. the adjustments were brought about by SMAB‘s subsequent disclosures and validated accounts. Inc. Massimo Rossi (Rossi).[12] Apparently irked by SMAB‘s decision to junk his bid. AB et al. GLORIA REYES. in its letter dated 1 December 1989. with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares. they signed a conditional contract with a local group for the disposal of Phimco. Inc. He said. (Phimco).[11] In a letter dated 3 July 1990. however. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time. LAMBRTO DE LA EVA. BETH FLORES. HERMINDA ASUNCION. ALS MANAGEMENT & DEVELOPMENT CORPORATION and ANTONIO K. such as the aspect that only ninety-six percent (96%) of Phimco shares was actually being sold and not one-hundred percent (100%). Rossi informed Litonjua that on 2 July 1990. herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua). SMNV adopted a two-pronged strategy. retained for itself the packaging business. advising him that the proposed sale of SMAB‘s shares in Phimco with local buyers did not materialize. decided to sell SMAB of Sweden and the latter‘s worldwide match. He stressed that they were firmly committed to their bid of US$36 million and if ever there would be adjustments in the bid amount. COURT OF APPEALS.: Petitioners seek a reversal of the twin Orders[1] of the Court of Appeals dated 15 November 1996[2] and 31 January 1997.R. the then parent company of SMAB. J. Rossi added that in case the ―global deal‖ presently under negotiation for the Swedish Match Lights Group would materialize. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale. which proposed sale would stave-off defaults in the loan covenants of SMNV with its syndicate of lenders. Litonjua again advised Rossi that they would be unable to submit the final offer by 30 June 1990.. SMAB. STORA. the trial court noted. Respondents also asked that petitioners be ordered to execute all documents or instruments and perform all acts necessary to consummate the sales agreement in their favor. respondents‘ complaint should not have been dismissed on the ground that it was unenforceable under the Statute of Frauds. Further. or otherwise implementing the sale or transfer thereof. petitioners directed them to proceed with the acquisition audit and to submit a comfort letter from the United Coconut Planters‘ Bank (UCPB). respondents engaged the services of Laya. assigning the following errors: A. respondents maintain that the Court of Appeals correctly ruled that the Statute of Frauds does not apply to the instant case. filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages. HAVING BEEN SUFFICIENTLY PLEADED. overwhelmingly prove that the contract of sale of the Phimco shares was perfected. in favor of any person or entity other than respondents. against defendants.[18] Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares. Traversing the complaint. morals. In their Comment.[15] On 14 December 1990. Petitioners argue that the foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares. It ordered the remand of the case to the trial court for further proceedings. induced SMAB to violate its contract with respondents. the Court of Appeals reversed the trial court‘s decision. Hence. showed that petitioners did not accept the bid offer of respondents as the letter was a mere invitation for respondents to conduct a due diligence process or pre-acquisition audit of Phimco‘s match and forestry operations to enable them to submit their final offer on 30 June 1990. It ruled that the series of written communications between petitioners and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403 of the Civil Code. The appellate court opined that any document or writing. Salgado 19 . an independent auditing firm. petitioner corporation confirmed its previous verbal acceptance of their offer in a letter dated 11 June 1990. They alleged that with the prior approval of petitioners. to immediately proceed with the acquisition audit. they engaged the services of Laya. phrase. The individual defendants were sued in their respective capacities as officers of the corporations or entities involved in the aborted transaction. and that any such sale to third parties be annulled and set aside. that in this case.[16] Respondents claimed that the Phimco management maliciously and deliberately delayed the delivery of documents to Laya Manabat Salgado & Co. B. THE TRIAL COURT JUDGE ERRED IN FORSWEARING JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-APPELLEES BY MAKING UNFOUNDED FINDINGS. existed between them. taken together. Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares.000.00. Both parties agreed to adopt as their evidence in support of or against the motion to dismiss. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. there was no word. as the case may be.6 million to US$36 million.. the court noted that respondents failed to submit their final bid on the deadline set by petitioners. They point out that there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents‘ offer that consideration would be paid in Philippine pesos. Manabat. relied upon by respondents. respondents alleged that the Phimco management. In its Order dated 17 April 1991. Aside from the averments related to their principal cause of action for specific performance. The appellate court concluded that the letters exchanged by and between the parties. INDEPENDENTLY FOR THE OTHER CAUSES OF ACTION. with the prior approval of petitioners. WARRANTED A FULLBLOWN TRIAL. The court a quosaid that the letter dated 11 June 1990. which the trial court granted. whether formal or informal. in utter bad faith. Respondents assert that the sale of the subject shares to them was perfected as shown by the following circumstances. Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller. THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS‘ CAUSE OF ACTION BASED ON TORT WHICH. if any. at the same time stating that the broad terms and conditions described in their meeting were inadequate for them to make a response at that time so much so that he would have to await the corresponding specifics. whether verbal or written. ALL IN VIOLATION OF PLAINTIFFSAPPELLANTS‘ RIGHT TO DUE PROCESS. with a prayer for the issuance of a writ of preliminary injunction. the sale would be awarded to them and that they did in fact increase their previous bid of US$30.[20] After assessing the respective arguments of the parties. Petitioners added that respondents‘ cause of action. All these incidents. D. petitioners orally accepted their revised offer and the acceptance was relayed to them by Rene Dizon. petitioners alleged that respondents have no cause of action. namely: petitioners assured them that should they increase their bid. He intimated that he could not accept the new terms and conditions contained therein. was barred by the Statute of Frauds since there was no written instrument or document evidencing the alleged sale of the Phimco shares to respondents. Moreover. They contended that the Phimco management took an interest in acquiring for itself the Phimco shares and that petitioners conspired to thwart the closing of such sale by interposing various obstacles to the completion of the acquisition audit. according to respondents. now petitioners. HAVING BEEN SUFFICIENTLY PLEADED. as plaintiffs. The Court of Appeals clarified. Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds. Respondents appealed to the Court of Appeals. contending that no perfected contract. Manabat. respondents argued that there was partial performance of the perfected contract on their part. Salgado & Co.Shortly thereafter. which prevented them from completing the acquisition audit in time for the deadline on 30 June 1990 set by petitioners. and. the RTC dismissed respondents‘ complaint. but only that the case should not have been dismissed on the ground of unenforceability under the Statute of Frauds. the evidence which they adduced in support of their respective positions on the writ of preliminary injunction incident. were sufficient to establish that an agreement to sell the disputed shares to respondents was reached. good customs and public policy. this petition. THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-APPELLANTS‘ CAUSE OF ACTION BASED ON PROMISSORY ESTOPPEL WHICH. THE TRIAL COURT EXCEEDED ITS AUTHORITY AND JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY FOR ―LACK OF A VALID CAUSE OF ACTION‖ WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE MOTION TO DISMISS. Moreover. respondents. that two or more writings properly connected could be considered together. C. thus. that by reversing the appealed decision it was not thereby declaring that respondents are entitled to the reliefs prayed for in their complaint. Petitioners argue that the Court of Appeals erred in failing to consider that the Statute of Frauds requires not just the existence of any note or memorandum but that such note or memorandum should evidence an agreement to sell. petitioner corporation reiterated its commitment to be bound by the result of the acquisition audit and promised to reimburse respondents‘ cost to the extent of US$20. INDEPENDENTLY WARRANTED A FULLBLOWN TRIAL. Litonjua signified their inability to submit their final bid on 30 June 1990. such acceptance was merely preparatory to a formal acceptance by the SMAB—the acceptance that would eventually lead to the execution and signing of the contract of sale.[19] It ruled that there was no perfected contract of sale between petitioners and respondents. or statement in the letters exchanged between the two parties to show or even imply that an agreement had been reached for the sale of the shares to respondent. and. [17] Respondents added that SMAB‘s refusal to consummate the perfected sale of the Phimco shares amounted to an abuse of right and constituted conduct which is contrary to law. however. Assuming that respondent‘s bid was favored by an oral acceptance made in private by officers of SMAB. and. written either for the purpose of furnishing evidence of the contract or for another purpose which satisfies all the Statute‘s requirements as to contents and signature would be sufficient. They averred that petitioners agreed to be bound by the results of the audit and offered to reimburse the costs thereof to the extent of US$20. The note or memorandum must contain the names of the parties. Second. The Statute.[38] Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals.[31] Even if we were to consider the letters between the parties as a sufficient memorandum for purposes of taking the case out of the operation of the Statute the action for specific performance would still fail.[47] The acceptance of an offer must be unqualified and absolute to perfect the contract.[40] An offer would require. By law. provided all the essential requisites for their validity are present.[27] However. without any objection.[41] Quite obviously. when the law requires that a contract be in some form in order that it may be valid or enforceable. Litonjua‘s letter dated 21 May 1990.[46] Granting arguendo. required is the concurrence of three elements. (c) cause of the obligation which is established. Consent in a contract of sale should be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. by virtue of which one or more persons bind themselves in favor of another. it must be complete in itself and cannot rest partly in writing and partly in parol. the letter does not state the mode of payment of the price. respondents were supposed to submit their final offer in U. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. At any time prior to the perfection of the contract. or that a contract be proved in a certain way. this Court reiterated the long-standing doctrine that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.[43] With indubitable inconsistency. that is. the effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the requirement is complied with. ―is understood to be subject to adjustment on the basis of an audit of the assets.[44] There can be no sale without a price.00. for a note or memorandum to satisfy the Statute. it would be inane for Litonjua to state. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. This offer.[49] Respondents‘ attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile in the face of the overwhelming evidence on record that there was in the first place no meeting of the minds with respect to the price. The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected. that requirement is absolute and indispensable. in the case of a contract of sale. and (2) whether there was a perfected contract of sale between petitioners and respondents with respect to the Phimco shares. by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. it would remain as a mere offer in the absence of evidence of its acceptance.S. the exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. or not to do. a clear certainty on both the object and the cause or consideration of the envisioned contract. Rossi‘s letter dated 11 June 1990. for one essential element of a contract of sale was obviously wanting—the price certain in money or its equivalent. (b) determinate subject matter. to the fulfillment of a prestation to give. Litonjua repeatedly stressed in his letters that they would not be able to submit their final bid by 30 June 1990. However. in Litonjua‘s own words. culminating in the extinguishment thereof. it is then just as binding as if the Statute has been complied with.[21] The basic issues to be resolved are: (1) whether the appellate court erred in r eversing the trial court‘s decision dismissing the complaint for being unenforceable under the Statute of Frauds. simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. Respondents added that in compliance with their obligations under the contract. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. which may be express or implied. and consummation. (b) object certain which is the subject matter of the contract. there must be acceptance. contracts are obligatory in whatever form they may have been entered into.[25] Clearly. is not complete in itself. and (c) price certain in money or its equivalent. respondents later claimed that for all intents and purposes. Litonjua was supposed to indicate in his final offer how and where payment for the shares was planned to be made.[37] A negotiation is formally initiated by an offer. without resorting to parol evidence. either negotiating party may stop the negotiation.[48] In other words. dollar terms. but merely regulates the formalities of the contract necessary to render it enforceable. may be withdrawn. to wit: negotiation. in his letter dated 28 June 1990 that they would be in a position to submit their final bid only on 17 July 1990. as he did. or reciprocally. Respondents‘ failure to submit their final bid on the deadline set by petitioners prevented 20 . to wit: (a) consent or meeting of the minds. to conduct the acquisition audit. such as by its mailing and not necessarily when the offeree learns of the withdrawal. First. however. [34] Specifically.[33] Contracts are perfected by mere consent. [23] Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents. the trial court‘s dismissal of the complaint on the ground of unenforceability under the Statute of Frauds is warranted. A qualified acceptance constitutes a counter-offer. heavily relied upon by respondents. but it must not qualify the terms of the offer. the US$36 million was their final bid. that the amount of US$36 million was a definite offer.[30] Evidently. is a mere unaccepted offer. they have submitted a comfort letter from UCPB to show petitioners that the bank was willing to finance the acquisition of the Phimco shares. The Statute of Frauds embodied in Article 1403.[39] The offer. A contract is defined as a juridical convention manifested in legal form. The offer must be certain and the acceptance absolute. and a description of the property sufficient to render it capable of identification. at this stage. liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves.[24] Consequently. among other things. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract.[26] The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses.& Co. The term ―Statute of Frauds‖ is descriptive of statutes which require certain classes of contracts to be in writing. or others.[28] Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself. on the other hand. [36] In general. at that after the completion of the due diligence process. it does not indicate at what price the shares were being sold. In paragraph (5) of the letter. the withdrawal is effective immediately after its manifestation. The price must be certain. to do. Hence.[29] Contrary to the Court of Appeals‘ conclusion.000.[45] Quite recently. In fact.[35] Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. paragraph (2). or some other writing to which it refers or within which it is connected. If this were so. To produce a contract. of the Civil Code[22] requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. An imperfect promise (policitacion). if the parties permit a contract to be proved.[32] There can be no contract unless the following requisites concur: (a) consent of the contracting parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. consent to transfer ownership in exchange for the price. otherwise there is no true consent between the parties. it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. proposing the acquisition of the Phimco shares for US$36 million was merely an offer. however. The Statute does not deprive the parties of the right to contract with respect to the matters therein involved. the terms and conditions of the contract. perfection or birth. the form required is for evidentiary purposes only.‖[42] Was the offer certain enough to satisfy the requirements of the Statute of Frauds? Definitely not. The paragraph undoubtedly proves that there was as yet no definite agreement as to the price. contracts undergo three distinct stages. 21 . Philippines. they indicated that the sale was far from concluded.. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA ABUCAY. responsibilities or liabilities assumed or contracted by him thereby. The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially. Since Montecillo refused to return the Deed of Sale. the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners. have sold. Montecillo promised to pay the agreed P47. my title being evidenced by Transfer Certificate of Title No. As there was no such perfected contract. both of Banilad Estate. Cebu City. failed to prove the perfection of the contract.. situated at Mabolo.[9] Reynes executed a document unilaterally revoking the sale and gave a copy of the document to Montecillo. DECISION CARPIO. J.the perfection of the contract of sale. the petition is in part GRANTED. of legal age. this cause of action would entitle respondents to the recovery of damages against the officers of the corporation responsible for the acts complained of. L. affirmed the trial court‘s decision in toto. more or less. not being based on the existence of the contract of sale. THIRD DIVISION [G. described on plan (LRC) Psd-76821. Philippines. from the procedural stand point. with residence and postal address at Mabolo.[6] signed by affixing her thumbmark[7] on the document. These averments are predicated on or at least interwoven with the existence or perfection of the contract of sale. executors. Reynes asserted that she is the owner of a lot situated in Mabolo. and assigns. 1993. and conveyed. petitioner. while the other is solely for damages. could stand independently of the action for specific performance and should not be deemed barred by the dismissal of the cause of action predicated on the failed contract.000. Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought. to me in hand paid by RIDO MONTECILLO. even if considered together. by Lot 203-B-2-A of the subdivision of Four Hundred Forty Eight (448) square meters. transferred. administrators. vs. the Court cannot forthwith order dismissal of the complaint without affording respondents an opportunity to substantiate their allegations with respect to its cause of action for damages against the officers of Phimco based on the latter‘s alleged self-serving dilatory maneuvers. along line 1-2 by Lot 206. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent.: The Case On March 24. That This Land Is Not Tenanted and Does Not Fall Under the Purview of P. Before this Court now is a Petition for Review on Certiorari[5] assailing the Court of Appeals‘ decision and order. the continuing objections raised by petitioners to the admission of parol evidence[50] on the alleged verbal acceptance of the offer rendered any evidence of acceptance inadmissible. Thus. Cebu City. SO ORDERED. Reynes alleged further that on March 1. The Facts Respondents Ignacia Reynes (―Reynes‖ for brevity) and Spouses Abucay (―Abucay Spouses‖ for brevity) filed on June 20. No. Filipino. Cebu City. predicated on the purported dilatory maneuvers executed by the Phimco management. the Regional Trial Court of Cebu City. Filipino. 74196 of the Registry of Deeds of the City of Cebu. 138018. along line 2-3.D. being illiterate. 27. Respondents insist that even on the assumption that the Statute of Frauds is applicable in this case. The case is ordered REMANDED to the trial court for further proceedings with respect to the cause of action for damages as above specified.00 purchase price within one month from the signing of the Deed of Sale. Quite the contrary. of which I am the absolute owner in accordance with the provisions of the Land Registration Act.. WHEREFORE. by Lot 202. 1984 she signed a Deed of Sale of the Mabolo Lot in favor of Montecillo (―Montecillo‘s Deed of Sale‖ for brevity). On the other hand. and more particularly described as follows: A parcel of land (Lot 203-B-2-B of the subdivision plan Psd-07-01-00 2370. Respondents‘ plea of partial performance should likewise fail. rendered a Decision[1] declaring the deed of sale of a parcel of land in favor of petitioner null and void ab initio.R.000. Cebu City. of legal age. In 1981. on the NW. Respondents claimed that petitioners were guilty of promissory estoppel.[55] warranty breaches[56] and tortious conduct[57] in refusing to honor the alleged contract of sale. 74196 and containing an area of 448 square meters (―Mabolo Lot‖ for brevity).[52] This rule. respondents‘ second cause of action due to the alleged malicious and deliberate delay of the Phimco management in the delivery of documents necessary for the completion of the audit on time. Philippines. respondents failed to prove that there was partial performance of the contract within the purview of the Statute. free from all liens and encumbrances. apart from petitioners‘ alleged refusal to honor the contract of sale—which has never been perfected in the first place—respondents made a number of averments in their complaint all in support of said cause of action. The acquisition audit and submission of a comfort letter. 1999 Order[4] denying petitioner‘s Motion for Reconsideration. married.R.C.[51] If a contract has been totally or partially performed. REYNES. however. The appealed Decision is hereby MODIFIED insofar as it declared the agreement between the parties enforceable under the Statute of Frauds. the trial court properly rejected the averments in conjunction with the dismissal of the complaint for specific performance. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer.00) PESOS. [54] With respect to the first cause of action for specific performance. the first is for specific performance[53] premised on the existence of the contract of sale. on the SW. However. or (2) by the acceptance of benefits under them. with residence and postal address at Mabolo. for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation. a parcel of land together with the improvements thereon. Philippine Currency. City of Cebu. and at the same time. The Court of Appeals. the exclusion of parol evidence would promote fraud or bad faith. Reynes. A close examination of the complaint reveals that it alleges two distinct causes of action. Montecillo‘s Deed of Sale states as follows: ―That I. 1984 a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo (―Montecillo‖ for brevity). IGNACIA T. respondents. along line 4-5. forever. being a portion of Lot 203-B-2. covered by Transfer Certificate of Title No. Bounded on the SE. his heirs. Philippines. the trial court erred in dismissing the complaint altogether. evade the obligations. 1998 Decision[3] as well as its February 11. Branch 18. At any rate. the receipt hereof is hereby acknowledged.[2] in its July 16. July 26. If substantiated. unto RIDO MONTECILLO.‖[8] (Emphasis supplied) Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of the one-month period. for and in consideration of FORTY SEVEN THOUSAND (P47. situated in the Barrio of Mabolo. prompting Reynes to demand from Montecillo the return of the Deed of Sale. 2002] RIDO MONTECILLO. is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same. (GLRO) Record No. In the instant case. widow. They point out that the complaint presents several causes of action. The complaint before the trial court is ordered DISMISSED insofar as the cause of action for specific performance is concerned. 5988). 00 purchase price should be paid by Montecillo to Cebu Ice Storage. Montecillo‘s Deed of Sale does not state that the P47. 90805 and the issuance of a new certificate of title in favor of the Abucay Spouses. In their Reply.[12] claimed he was a buyer in good faith and had actually paid the P47. 1984 in Cebu City. of legal age. Filipino. The appellate court also denied Montecillo‘s Motion for Reconsideration[14] on the ground that it raised no new arguments. widow and resident of Mabolo. or any person authorized to receive it. The trial court ruled that Montecillo‘s Deed of Sale produced no effect whatsoever for want of consideration. could not be interpreted in any way as an encumbrance on the Mabolo Lot. LRC (GLRO) Record No. 1984 they received information that the Register of Deeds of Cebu City issued Certificate of Title No. Montecillo filed the present petition for review on certiorari. verbally or in writing. No. During pre-trial. Article 1240 of the Civil Code provides as follows: ―Payment shall be made to the person in whose favor the obligation has been constituted. 74196 to an extent of 185 square meters to Spouses Redemptor Abucay and Elisa Abucay covered by Deed per Doc.‖ [10] Reynes and the Abucay Spouses alleged that on June 18. at the same time confirming the previous sale in 1981 of a 185-square meter portion of the lot. the vendor in the sale.00 and attorney‘s fees in the sum of P2. Book No. Still dissatisfied.000. They further asserted that Montecillo took advantage of the real property taxes paid by the Abucay Spouses and surreptitiously caused the transfer of the title to the Mabolo Lot in his name. containing an area of total FOUR HUNDRED FORTY EIGHT (448) Square meters. Montecillo claimed that the consideration for the sale of the Mabolo Lot was the amount he paid to Cebu Ice and Cold Storage Corporation (―Cebu Ice Storage‖ for brevity) for the mortgage debt of Bienvenido Jayag (―Jayag‖ for brevity). Absent any evidence showing that Reynes had agreed to the payment of the purchase price to any other party. 9. Montecillo. 90805 in the name of Montecillo. Montecillo failed to adduce any evidence before the trial court showing that Reynes had agreed. Montecillo argued that the release of the mortgage was necessary since the mortgage constituted a lien on the Mabolo Lot. The trial court ordered the cancellation of Montecillo‘s Transfer Certificate of Title No.000.000.00 mortgage debt was due for payment on January 30.000.000.000. their heirs. along Arcilla Street. Montecillo‘s payment to Cebu Ice Storage is not the payment that would extinguish [16] Montecillo‘s obligation to Reynes under the Deed of Sale. especially after Reynes revoked Montecillo‘s Deed of Sale and gave the mortgagee a copy of the document of revocation. Commerce degree. Reynes further stated that the payment by Montecillo to release the mortgage on Jayag‘s house is a matter between Montecillo and Jayag. that the P47. 1967. The trial court rendered a decision on March 24.00 plus cost of the suit. and order the cancellation of Certificate of Title No. stated that she had nothing to do with Jayag‘s mortgage debt except that the house mortgaged by Jayag stood on a portion of the Mabolo Lot. The Issues Montecillo raises the following issues: 1.000.00 purchase price should be paid to Cebu Ice Storage. This Deed of Sale states: ―I. ―Was there an agreement between Reynes and Montecillo that the stated consideration of P47. 47. however. Reynes. however. In witness whereof. He further alleged that he paid for the real property tax as well as the capital gains tax on the sale of the Mabolo Lot. Reynes and the Abucay Spouses claimed that Montecillo secured the release of the chattel mortgage through machination. in view of the foregoing consideration. assigns and successors-in-interest the whole parcel of land together with improvements thereon and more particularly described as follows: TCT No. The trial court found that Montecillo‘s Deed of Sale had no cause or consideration because Montecillo never paid Reynes the P47. The dispositive portion of the trial court‘s decision reads as follows: ―WHEREFORE. contrary to what is stated in the Deed of Sale that Reynes received the purchase price.000) PESOS.00 for the release of the chattel mortgage which he argued constituted a lien on the Mabolo Lot.00 consideration stated in his Deed of Sale. admitted he still owed Reynes a balance of P10. Cebu City. V.S. 1993 declaring the Deed of Sale to Montecillo null and void. I hereunto signed this 23rd day of May. a bank executive with a B.00 purchase price.Subsequently. Philippine Currency. ―If there was none.00 if this entire amount would only go to Cebu Ice Storage.‖ Thus. The mortgage on the house. Cebu City. being a chattel mortgage.000. Philippines. Thus. judgment is hereby rendered declaring the deed of sale in favor of defendant null and void and of no force and effect thereby ordering the cancellation of Transfer Certificate of Title No. do hereby in these presents. 90805 of the Register of Deeds of Cebu City and to declare plaintiff Spouses Redemptor and Elisa Abucay as rightful vendees and Transfer Certificate of Title to the property subject matter of the suit issued in their names. TRANSFER and CONVEY absolutely unto said Spouses Redemptor Abucay and Elisa Abucay. 1984 Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot.000. REYNES.000. Montecillo appealed the same to the Court of Appeals. received in full and receipt whereof is herein acknowledged from SPOUSES REDEMPTOR ABUCAY and ELISA ABUCAY. Reynes and the Abucay Spouses argued that ―for lack of consideration there (was) no meeting of the minds‖[11] between Reynes and Montecillo. First issue: manner of payment of the P47. In his Answer. on May 23. of which spouses is now in occupation. IGNACIA T. the trial court should declare null and void ab initio Montecillo‘s Deed of Sale. 5988) situated in Mabolo. That for and in consideration of the total sum of FIFTY THOUSAND (P50.000.00. being a portion of Lot 203-B-2. Montecillo. SELL. He also alleged that he paid P50. of which I am the absolute owner thereof free from all liens and encumbrances and warrant the same against claim of third persons and other deeds affecting said parcel of land other than that to the said spouses and inconsistent hereto is declared without any effect. 74196 A parcel of land (Lot 203-B-2-B of the subdivision plan psd-07-01-002370. xxx‖ Not satisfied with the trial court‘s Decision. 90805 in the name of Montecillo for the Mabolo Lot. Series of 1981 of notarial register of Benedicto Alo. Reynes further claimed that the mortgage debt had long prescribed since the P47. or his successor in interest. Page No. leaving not a single centavo to her for giving up ownership of a 22 .00 in the Deed of Sale be paid to Cebu Ice and Cold Storage to secure the release of the Transfer Certificate of Title?‖ 2.00 purchase price.000. Ruling of the Court of Appeals The appellate court affirmed the Decision of the trial court in toto and dismissed the appeal[13] on the ground that Montecillo‘s Deed of Sale is void for lack of consideration. Reynes and the Abucay Spouses contended that Montecillo did not have authority to discharge the chattel mortgage. is the Deed of Sale void from the beginning or simply rescissible?‖[15] The Ruling of the Court The petition is devoid of merit. The defendants are further directed to pay moral damages in the sum of P20. described on plan (LRC) Psd 76821. do hereby confirm the sale of a portion of Lot No. the payment to be effective must be made to Reynes. It militates against common sense for Reynes to sell her Mabolo Lot for P47. In petitions for review on certiorari as a mode of appeal under Rule 45. There was indisputably a total absence of consideration contrary to what is stated in Montecillo‘s Deed of Sale. 1969. 1471. Flores and Bas. defendant failed to pay even a single centavo of the consideration. This Article also provides that the ―court shall decree the rescission claimed. the deed of sale is null and void ab initio for lack of consideration. is squarely applicable herein. Mapalo. 17. Plaintiff Ignacia Reynes through the representation of Baudillo Baladjay had executed a Deed of Sale in favor of defendant on the promise that the consideration should be paid within one (1) month from the execution of the Deed of Sale. x x x for and in consideration of FORTY SEVEN THOUSAND (P47. and instead unilaterally revoked Montecillo‘s Deed of Sale. Montecillo argues there is only a breach of his obligation to pay the full purchase price on time. May 19. Although the Civil Code does not expressly state that the minds of the 23 .000. ―[T]here is no contract unless the following requisites concur: (1) Consent of the contracting parties. Mapalo vs.[20] or more properly cancellation.[29] to wit – ―The Appellate Court‘s finding that the price was not paid or that the statement in the supposed contracts of sale (Exh. the P47. the Mabolo Lot at the price ofP47. Montecillo‘s payment to Jayag‘s creditor could not possibly redound to the benefit [18] of Reynes. (3) Cause of the obligation which is established. . Such a sale is nonexistent (Borromeo vs. the date of signing of the Deed of Sale. IGNACIA T. a petitioner can raise only questions of law. This incredible allegation of Montecillo becomes even more absurd when one considers that Reynes did not benefit.[25] which is not the case here. we rule that Montecillo‘s Deed of Sale is null and void ab initio for lack of consideration. vs. the trial court found that Montecillo never paid to Reynes. REYNES.one of the three essential requisites of a valid contract. 40 Phil. unto RIDO MONTECILLO. the P47. We find no reason to disturb the factual findings of the trial court. Montecillo points out that he agreed to purchase. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract[26] while the latter prevents the existence of a valid contract Where the deed of sale states that the purchase price has been paid but in fact has never been paid. (1 SCRA 1181 [1961]).‖ On its face. Under Article 1318 of the Civil Code. 122). the sale is void .‖[30] Montecillo implies that the mode or manner of payment is separate from the consideration and does not affect the validity of the contract.00 to Cebu Ice Storage. These arguments are not persuasive. as Montecillo claims. 921. receipt of which is hereby acknowledged.000. Bustos and Escaler. from the payment of the P47.000. transferred. as in the instant case. the court has a just cause to fix the period for payment of the balance of the purchase price.‖ Montecillo claims that because Reynes failed to make a demand for payment. L-22351. and Reynes never received from Montecillo. Thus. and Reynes agreed to sell.‖ Article 1352 of the Civil Code also provides that ―[C]ontracts without cause x x x produce no effect whatsoever. 1984. we laid down the rule that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. (2) Object certain which is the subject matter of the contract. or for annulment of the obligation to sell the Mabolo Lot.[31] we ruled that – ―In Navarro v. In that case we ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. v. Thus.[27] a 1920 case.‖ The Court reiterated this rule in Vda. of the obligation under Article 1191 [21] of the Civil Code. the ruling of this Court in Ocejo Perez & Co. the obligation being exclusively of Bienvenido Jayag and wife who mortgaged their residential house constructed on the land subject matter of the complaint. The trial court found that Reynes had nothing to do with Jayag‘s mortgage debt with Cebu Ice Storage. What we have here is a purported contract that lacks a cause . 432) or cannot be considered consummated (Cruzado vs. 331.valuable property. unless there be just cause authorizing the fixing of the period.‖[17] Thus. Montecillo‘s Deed of Absolute Sale[22] appears supported by a valuable consideration. Borromeo. which appears thereon as paid. 28 SCRA 229). based on the evidence presented by both Reynes and Montecillo. Huang.[24] We do not disturb such findings unless the evidence on record clearly does not support such findings or such findings are based on a patent misunderstanding of facts. Rather. and conveyed. the court is convinced that the Deed of Sale (Exhibits ―1‖ and ―1-A‖) executed by plaintiff Ignacia Reynes acknowledged before Notary Public Ponciano Alvinio is devoid of any consideration. [19] This Court is not the proper venue to consider a factual issue as it is not a trier of facts. 98 Phil.00 purchase price.‖ Applying this well-entrenched doctrine to the instant case. therefore. Failure to pay the consideration is different from lack of consideration. This is not merely a case of failure to pay the purchase price. Such breach merely gives Reynes a right to ask for specific performance. the three requisites for a valid contract concur: consent. and Reynes received. x x x a parcel of land x x x. Mapalo[28]– ―In our view. May 21.00) PESOS. Flores.G. Plaintiff Ignacia Reynes was not a party to nor privy of the obligation in favor of the Cebu Ice and Cold Storage Corporation.000. ―[23] Factual findings of the trial court are binding on us.00.000. As pointed out by the trial court – ―From the allegations in the pleadings of both parties and the oral and documentary evidence adduced during the trial. 34 Phil. to me in hand paid by RIDO MONTECILLO xxx. This is clear from the following provision of the Deed of Sale: ―That I. 17 SCRA 114. Inc. has in fact never been paid by the purchaser to the vendor (Ocejo. Garanciang. The answer of the defendant did not allege clearly why no consideration was paid by him except for the allegation that he had a balance of only P10. 64 O. As subsequently explained in Mapalo v. Plaintiff Ignacia Reynes was not a party to nor privy of the obligation in favor of the Cebu Ice and Cold Storage Corporation. Civil Code) A contract of sale is void and produces no effect whatsoever where the price. vs. Montecillo‘s Deed of Sale states that Montecillo paid. Heirs of Catalina Roque. ―If the price is simulated.‖ Montecillo argues that his Deed of Sale has all the requisites of a valid contract. The payment by the defendant to release the residential house from the mortgage is a matter between him and Jayag and cannot by implication or deception be made to appear as an encumbrance upon the land. Philippine Currency. It turned out during the pre-trial that what the defendant considered as the consideration was the amount which he paid for the obligation of Bienvenido Jayag with the Cebu Ice and Cold Storage Corporation over which plaintiff Ignacia Reynes did not have a part except that the subject of the mortgage was constructed on the parcel of land in question.‖ (Art. 6 to 26) as to the payment of the price was simulated fortifies the view that the alleged sales were void. Second issue: whether the Deed of Sale is void ab initio or only rescissible. Garanciang vs. object certain and consideration. However. especially if the Court of Appeals affirms such findings. De Catindig v. 40 Phil. Flores. which can only amount to a breach of obligation with rescission as the proper remedy.00. Sugar Producers Cooperative Marketing Association. However. 1966. L-21489.00 purchase price on March 1. This has been the well-settled rule as early as Ocejo Perez & Co. Perez & Co. have sold. In the recent case of San Miguel Properties Philippines. the obligation being exclusively of Bienvenido Jayag and wife who mortgaged their residential house constructed on the land subject matter of the complaint. Montecillo maintains that in reciprocal obligations. v. Inc. Montecillo asserts there is no lack of consideration that would prevent the existence of a valid contract. . Montecillo asserts that the only issue in controversy is ―the mode and/o r manner of payment and/or whether or not payment has been made. The payment by the defendant to release the residential house from the mortgage is a matter between him and Jayag and cannot by implication or deception be made to appear as an encumbrance upon the land. directly or indirectly. 921. there is only nonpayment of the consideration within the period agreed upon for payment. we find no reason to deviate from the findings of both the trial and appellate courts that no valid consideration supported Montecillo‘s Deed of Sale. The trial court made the following findings of fact: ―x x x. after the lapse of said period. the injured party can choose between fulfillment and rescission.000. docketed as CA-G. the spouses Ramos caused her to sign a Deed of Absolute Sale purporting to show that she sold the property in question to them for the sum of P31.000. the parties must agree not only on the price. The balance of P16. The facts. Manila. On the other hand. Court of Appeals (244 SCRA 320 [1995]). that the balance ofP8.00 purchase price within one month after the signing of the Deed of Sale. WHEREFORE. but also for lack of consent. between Reynes and Montecillo on the manner of payment.R.000. 41349 is AFFIRMED.00 purchase price to Cebu Ice Storage to settle Jayag‘s mortgage debt. who asked for the subject property as collateral. Branch 54. They then demanded that Lagrimas vacate the subject premises. 2004] LAGRIMAS A. the petition is DENIED and the assailed Decision dated July 16. Lagrimas alleged that the demand for her to pay the sum of P6. she realized that it did not contain the true facts of the situation since they had already purchased the subject property and were. CV No. 1986. Lagrimas was summoned by the Punong Barangay for conciliation. 125088. in order to accommodate her brother‘s need for a placement fee to work abroad.000 to complete the full consideration of P31. Boy (Lagrimas). No. Hence. but the promise was never fulfilled. 90805 in the name of Montecillo is in order as there was no valid contract transferring ownership of the Mabolo Lot from Reynes to Montecillo. v. The MeTC stated that while Erlinda Ramos admitted the existence of said document. together with the upper portion of the house thereon.[2] and reinstated the decision[3] of the Metropolitan Trial Court of Manila. refused to give her 24 . April 14. Inc.[8] Lagrimas admitted that the counsel of the spouses Ramos sent her a letter demanding that she vacate the premises.000. SO ORDERED. the spouses Ramos alleged that they are the owners of a parcel of land with an area of 55. Montecillo also acknowledged a balance of P10. the same is needed.R. petitioner herein.parties must also meet on the terms or manner of payment of the price. are as follows: On September 24. they initiated this action for ejectment against Lagrimas. In their Complaint. Costs against petitioner. the owners thereof. Singalong.[10] The MeTC held that the Kasunduan. In summary. As held in Toyota Shaw.500 would be paid on the last week of August 1988. DECISION AZCUNA. An agreement on the price but a disagreement on the manner of its payment will not result in consent. Thus. and they agreed thereto. and that possession of the property would be transferred to the spouses Ramos only upon full payment of the purchase price. The cancellation of TCT No. Ramos and Erlinda Gasingan Ramos. which Lagrimas attached to her Answer. Erlinda Ramos and Lagrimas executed an agreement (Kasunduan)[7] acknowledging that the subject parcel of land. situated at 1151 Florentino Torres St. respondents. agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Lagrimas alleged that sometime in September 1984. thus preventing the existence of a valid contract for lack of consent. Sometime in May 1988.: Before us is a petition for review on certiorari of the decision of the Court of Appeals in an ejectment case.000 cash loan plus P7.000 was nowhere to be found in the Deed of Absolute Sale. as stated by the Court of Appeals. but also on the manner of payment of the price. 1986. which reversed and set aside the decision[1]of the Regional Trial Court of Manila. or meeting of the minds. Erlinda Ramos claimed that after signing and reading the document.R. thereafter.000 per month has no legal basis.500 as interest from September 1984 to May 1988) had been paid. This prevented the existence of a valid contract because of lack of consent. However.000.[5] which was executed on June 4. but no settlement was reached. The MeTC observed that Lagrimas‘ defense that the spouses Ramos still had to pay the amount of P16.00 in favor of Reynes although this amount is not stated in Montecillo‘s Deed of Sale. BOY. FIRST DIVISION [G. the sum of P22.000 from the spouses Ramos. petitioner. Erlinda Ramos. with the Metropolitan Trial Court of Manila. private respondents herein. Time came when they needed the said house as they were only renting their own residence. the spouses Isagani P. and the house existing thereon. ISAGANI P. but she refused to do so. SP No. 1993. that of the said price. RAMOS and ERLINDA GASINGAN RAMOS.” (Emphasis supplied) One of the three essential requisites of a valid contract is consent of the parties on the object and cause of the contract. she thought that Lagrimas was only asking for an additional amount.500 (representing P15. therefore. In a contract of sale.000.[9] The Metropolitan Trial Court (MeTC) noted the existence of a Deed of Absolute Sale executed by the spouses Ramos and Lagrimas on June 4.[4] ordering petitioner to vacate the disputed premises and to pay rent until the premises are vacated and possession is turned over to private respondents.75 square meters. Lagrimas requested for time to vacate the premises. she borrowed P15. 1986.. J. Reynes expected Montecillo to pay him directly the P47. 1998 of the Court of Appeals in CA-G. otherwise there is no sale. Branch 14. This lack of consent is separate and distinct from lack of consideration where the contract states that the price has been paid when in fact it has never been paid. On June 4. Montecillo thought that his agreement with Reynes required him to pay the P47. filed an action for ejectment against Lagrimas A. Montecillo‘s Deed of Sale is null and void ab initio not only for lack of consideration. had been sold by Lagrimas to the spouses Ramos for P31.000 was promised to be paid on that date. cannot be given binding effect. They acquired the said properties from Lagrimas who sold the same to them by virtue of a Deed of Absolute Sale. The Deed was duly acknowledged before a Notary Public and the parties therein did not deny its due execution.[6] In her Answer. COURT OF APPEALS. vs. because they were not in immediate need of the premises. 38716. there was no consent. Estacio handed to her a piece of paper and she was made to sign and she acceded and signed it without reading.200 from private respondents. Valera to the petitioners. They faulted the respondent Judge for giving credence to the Kasunduan and holding that it prevailed over the Deed of Absolute Sale. Affidavit of Lagrimas A.000. for the price of P31. SO ORDERED. She returned to Atty. Ramos.00. It appears from the foregoing that Marianita C. but admitted having sold the property to private respondents.00 (Annex 2. with the following assigned errors: I THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT INTERPRETING THAT THE ―KASUNDUAN‖ EXECUTED BY AND BETWEEN PETITIONER (DEFENDANT) AND PRIVATE 25 . However. It held that since the spouses Ramos.200. 1984. Hence. she borrowed the sum of P15. 19. Answer. pp. this Court hereby reverses the assailed Decision and dismisses the complaint. who were staying in a rented place. Atty. She [Erlinda Ramos] told Atty. p. would have made out a case for equitable mortgage. the private respondent executed a deed of absolute sale in which she sold the same property acquired from Marianita C. alleging only that they have not paid the purchase price in full. and paid its real estate taxes. the exact date of which she cannot recall. in which the vendor Ma. Manila. she sold the house and only her rights as tenant of the land to private respondent. she [Erlinda Ramos] go[t] it and read it. SO ORDERED.[14] The Regional Trial Court (RTC) held that the Kasunduan was binding between the parties and was the true agreement between them. these contracts coincide with certain events in the relationship between the petitioners [herein private respondents spouses Ramos] and private respondent. 7. The defendant is likewise ordered to pay plaintiffs the sum of P1.500 to petitioner since her indebtedness already reached P26. the RTC held that the MeTC should have dismissed the case because jurisdiction pertains to another tribunal. and the subsequent sale of the property to private respondents for P31. they were in need to take possession of their own property. After [Lagrimas] and her witnesses including her companion Lutgarda Bayas signed the paper. to secure a loan in the amount of P26.[16] The Court of Appeals found. [12] The MeTC thus rendered judgment in favor of private respondents. it cannot deprive the party in actual possession of the right to continue peacefully with said possession. Costs against the appellee. the private respondent executed a deed of real estate mortgage (Annex a to the Affidavit of Erlinda C. payable within three months. on June 4. She constructed a house on a 55. because the PNB had not yet sold the land to the residents. According to the Answer of private respondent. The Court of Appeals gave weight to the argument of private respondents that Erlinda Ramos was merely tricked into signing the Kasunduan.000. The Court of Appeals ruled in favor of private respondents. the decision of the respondent Judge herein appealed from is hereby REVERSED and SET ASIDE. The first one is a Deed of Sale dated September 27. sometime in September.000. 1986. the MeTC ruled that the continued occupation by Lagrimas of said property after the sale. 1984. the further sum of P5. the Court of Appeals did not give credence to the statement in the Kasunduan that private respondents paid onlyP22. In 1985. the dispositive portion of which reads: WHEREFORE. Record). Estacio at the City Hall. therefore. Lagrimas Boy went to their residence and pleaded that even if they have already fully paid the subject house and lot. which rendered judgment in her favor.000. [Lagrimas] arrive[d] ahead [of] Atty. to vendee Lagrimas A.200. One year later. Erlinda Ramos innocently failed to demand the said piece of paper which [Lagrimas] is now using. Since the question of ownership was inextricably woven with that of possession. without payment of rent. 68-69. 1985.” He said that Erlinda Ramos and [Lagrimas] should talk to each other again. Atty.000. to the vendee Lagrimas A. Valera was originally one of the tenants/residents of 669 square meters of land owned by the PNB. It. she sold the house and her rights and interests to the land to the private respondent. 54-55. Record).000 after non-payment of the loan. she was asking for an additional amount because she needed the money and there was no one for her to approach (walang ibang matatakbuhan). pp. 67. Boy. Estacio told her [Erlinda Ramos] that she will give an additional amount and she agreed without the knowledge of her husband. Ramos alleged in her affidavit that sometime in May. She [Erlinda Ramos] claimed she committed a mistake because she agreed to give an additional amount and went with [Lagrimas] to Atty. Boy for P31. The order previously issued granting execution pending appeal is accordingly recalled. Hence. SO ORDERED. Notary Public Estacio said that he cannot notarize the document (purported Kasunduan) because she [Erlinda Ramos] refused saying she was “Pumapalag.00. thus: In view of the foregoing.00 as attorney‘s fees plus the costs of the suit. the friend and companion of Lagrimas. Estacio to change (baguhin) the statement because she was not agreeable and she did not give her residence certificate (Cedula). it turned out that [Lagrimas] kept it which she is using now in this case. Singalong. It gave credence to the version of private respondents on how the Kasunduan came to be executed but not notarized. It ruled that pending the determination of the question of ownership. and the decision of the Metropolitan Trial Court is herebyREINSTATED. The second one is a deed of absolute sale and assignment of rights dated March 18. were asked to vacate the same. this petition. thus: x x x Erlinda G. Defendant‘s counterclaim is hereby dismissed for lack of merit.[15] Private respondents filed a petition for review of the decision of the RTC with the Court of Appeals. [17] Considering that petitioner borrowed P26. Valera sold a residential house and her rights and interests over a parcel of land in which it is located. Valera to the petitioners. which loan was covered by a real estate mortgage of the subject house and lot.00 per month as reasonable compensation for the use and occupation of the premises from the filing of this complaint until the premises is vacated and possession is turned over to the plaintiffs. for the price of P31. p.[11] Moreover. judgment is hereby rendered in favor of the plaintiffs [herein private respondents] and against the defendant [herein petitioner]. in which she mortgaged the properties she has acquired from Marianita C. Estacio in company with her friend Lutgarda Bayas. Boy. Estacio to get the piece of paper but he answered her saying naibasura na and she trusted him but this time. the sale of the land to the residents had already been accomplished. Valera sold a house of light wooden materials and her rights as a bonafide tenant of the land on which it stands. Record).[18] The Court of Appeals stated that the fact that petitioner has remained in possession of the property sold.000. Boy. It was at that point that she discovered that what were written thereon were not in accordance with the true and real fact and situation that the subject house and lot already belongs to them because they have purchased it already and {Lagrimas} only requested for an addition. In 1984. was by mere tolerance. 1985. Valera by virtue of two instruments. thus: WHEREFORE. it noted that petitioner did not raise this defense. Nita C. She [Erlinda Ramos] committed another mistake because she left the place leaving the piece of paper -purported “Kasunduan” without knowing that [Lagrimas] kept it.00 (Annex 1 to the Affidavit of Lagrimas A. 1988.residence certificate and asked the notary public not to notarize the document. Significantly. ordering the latter and the persons claiming rights under her to vacate the premises known as 1151 Florentino [Torres] Street. in which the vendor Marianita C. ruled that the preponderance of evidence is against petitioner. Said incident was attested to by way of affidavit by Lutgarda Reyes.00 from the petitioners to accommodate her brother‘s placement fee to work abroad (par. Record).[13] Petitioner appealed said decision to the Regional Trial Court. thus: A review of the records discloses that the private respondent [herein petitioner Lagrimas] acquired the subject property from one Marianita C.75 square meter portion of the said land. And on March 19. the subject property to private respondents (as vendees) after they paid the price of P31. with the resulting holding that it is not binding on the parties. 129 (The Judiciary Reorganization Act of 1980).[23] After reviewing the records herein. did not err in taking cognizance of the instant case. the issue of ownership shall be resolved only to determine the issue of possession. Article 1498 of the Civil Code provides that when the sale is made through a public instrument. Petitioner also contends that the Court of Appeals erred by misinterpreting and disregarding the Kasunduan. Jurisdiction of Metropolitan Trial Courts. supports private respondents‘ right of material possession over the subject property. thus: Sec. this Court finds no ground to change the factual finding of the Court of Appeals on the Kasunduan. 33. petitioner is asking this Court to review the factual finding of Court of Appeals on the true nature of the Kasunduan. the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Section 16. inferior courts were granted jurisdiction to resolve questions of ownership provisionally in order to determine the issue of possession. as ruled by the RTC.RESPONDENT (PLAINTIFF) SUPERSEDES THE DEED OF SALE WHICH HAS NOT BEEN CONSUMMATED. is that the continued occupation by petitioner of said property after the sale. by reason of which such jurisdiction was lost the moment it became apparent that the issue of possession was interwoven with that of ownership. is hereby AFFIRMED. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. FIRST DIVISION 26 . III THE RESPONDENT COURT ERRED AND ABUSED ITS DISCRETION IN REVERSING AND DISMISSING THE DECISION OF THE REGIONAL TRIAL COURT AND [IN REINSTATING] THE DECISION OF THE COURT A QUO. In the absence of stipulation to the contrary. 129. when private respondents were asked to vacate their rented residence.[24] the due execution of which was not controverted by petitioner.[20] Prior to the effectivity of Batas Pambansa Blg. 38716. That when in such cases. It has been established that petitioner sold the subject property to private respondents for the price of P31.[26] petitioner (as vendor). Petitioner asserts that the Kasunduan supersedes the Deed of Absolute Sale. which is actually a contract to sell.000. and to deliver. Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise: xxx (2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided. The remaining issue is whether the Court of Appeals correctly ruled that private respondents have a right of material possession over the disputed property.[27] The Deed of Absolute Sale. Thus.16. The contract is absolute in nature. without payment of rent. the issue of ownership shall be resolved only to determine the issue of possession. In this case. but petitioner refused to do so. Under Article 1477 of the Civil Code. As a rule.[25] By the contract of sale. if the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership. In addition. Private respondents claimed that petitioner requested for time to vacate the premises and they agreed thereto because they did not need the property at that time. therefore. without any contract between them.[19] Petitioner contends that. However. the ownership of the property sold passes to the vendee upon the actual or constructive delivery thereof. No costs. and reinstated the decision of the Metropolitan Trial Court.Metropolitan Trial Courts. the Deed of Absolute Sale does not contain any stipulation against the constructive delivery of the property to private respondents. II THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN MISINTERPRETING AND DISREGARDING THE ―KASUNDUAN‖ AS NOT APPLICABLE IN THE CASE AT BAR.R.[21] With the enactment of Batas Pambansa Blg. therefore. obligated herself to transfer the ownership of. the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership. failing which a summary action for ejectment is the proper remedy against him. in forcible entry and unlawful detainer cases. Resolving defense of ownership. In effect. which is binding between the parties and expressed their true intent. is bound by an implied promise that he will vacate the same upon demand. SP No. Rule 70 (Forcible Entry and Unlawful Detainer) of the Rules of Court. the inferior courts have the undoubted competence provisionally to resolve the issue of ownership for the sole purpose of determining the issue of possession. since the question of ownership in this case is interwoven with that of possession.. SO ORDERED. The finding of the MeTC. the findings of the fact of the Court of Appeals are final and cannot be reviewed on appeal by this Court. if from the deed the contrary does not appear or cannot clearly be inferred.000. as amended. without any provision that title to the property is reserved in the vendor until full payment of the purchase price. as evidenced by the Deed of Absolute Sale. A person who occupies the land of another at the latter‘s tolerance or permission. Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. the assailed decision of the Court of Appeals..[28] WHEREFORE. The contention is without merit. The only issue for resolution in an unlawful detainer case is physical or material possession of the property involved. sustained by the Court of Appeals. they demanded that petitioner vacate the subject property. independent of any claim of ownership by any of the party litigants. the jurisdiction of inferior courts was confined to receiving evidence of ownership in order to determine only the nature and extent of possession. which reversed and set aside the decision of the Regional Trial Court. the MeTC should have dismissed the case because jurisdiction pertains to another tribunal. was by mere tolerance.When the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership. as in this case. in CA-G.[22] The MeTC. similarly provides: Sec. provided they are borne out by the record or are based on substantial evidence. Inc. that the items forming part of the improvements will form as security for such an undertaking. valued at P9. and it was agreed. J: This case was certified to this Court by the Court of Appeals pursuant to the provisions of Section 17. (pp. That after the Sheriff of Quezon City made levy on the items above-stated in paragraph 3 hereof situated on the roofdeck of the Sampaguita Building.G. water. Inc.772. 1965. 1965. 1964. that any remodelling. Inc. 7. Plaintiff-Appellant.00 a month beginning December 15.531. Inc.chanrobles virtual law library On the other hand. without any obligation to reimburse the lessee of any sum spent for said improvements. Inc. 29-32. with the Court of First Instance of Rizal (Branch IV Quezon City).000. 1965. 5.. pp. Inc. Inc.09. to vacate the premises located at the Sampaguita Building and to pay the Sampaguita Pictures.09. 8. That after CAPITOL "300". made alterations on the leased premises. On June 1. acknowledged indebtedness in favor of JALWINDOR in the amount of P9. Inc. on August 30. Inc. 1964 to April 30.chanrobles virtual law library Plaintiff-appellant Sampaguita Pictures. Capitol "300" was not able to pay rentals to Sampaguita from March 1. paragraph (6) in relation to Section 31 of the Judiciary Act of 1948. 3. Civil Case No. that the premises shall be used by said club for social purposes exclusively for its members and guests. That due to non-compliance by CAPITOL "300". INC. filed an indemnity bond in favor of the Sheriff and the items were sold et public auction on August 30. Cubao. with a stipulation in the said Compromise Agreement. 1964. Quezon City. the Sheriff of Quezon City made levy on the glass and wooden jalousies in question. That CAPITOL "300". which shall not be less than P500.00.. Inc.. filed with the City Court of Quezon City. that it removed the then existing windows and replaced 'them with the following items bought on credit from the JALWINDOR MANUFACTURERS INC. that by virtue of a Compromise Agreement. considered itself paid to the amount of P6. INC. Inc. CAPITOL "300".00. exclusive of attorney's fees and interest.. That after the CAPITOL "300". that the parties to the lease contract agreed that all permanent improvements made by the lessee on the leased premises shall belong to the lessor without any obligation on the part of the lessor to reimburse the lessee for the sum spent for said improvements. The roofdeck of the building and all existing improvements thereon were leased by Sampaguita to Capitol "300" Inc. No actual hearing was held and the parties submitted the following stipulation of facts for the consideration of the court.chanrobles virtual law library In the meantime. 1964 to April 30. 11-14). the roofdeck of the Sampaguita building and all the existing improvements thereon for a monthly. an action for collection of a sum of money with a petition for preliminary attachment against Capitol for its failure to pay its purchases. DE CASTRO. 1965. defendantappellee. among other things. Inc.00. and pending liquidation of the said obligation. 1965. That plaintiff and defendant are both domestic corporations duly organized and existing by and under the laws of the Philippines: 2. alterations and/or addition to the premises shall be at the expense of the lessee and such improvements belong to the lessor. that it was agreed upon by the parties that the improvements made by the lessee have been considered as part of the consideration of the monthly rental. 1965. Inc. for the total amount of P 6. INC. v. Q-8040.00. water. as the highest bidder.000. that all permanent improvements made by the lessee on the leased premises shall belong to the lessor without any obligation on the part of the lessor to reimburse the lessee for the sum spent for said improvements. Quezon City. That the parties herein agree that the matter of attorney's fees be left to the sound discretion of the Court. payable in monthly installments of at least P300..chanrobles virtual law library Capitol "300" purchased on credit from defendant-appellee Jalwindor Manufacturers. to wit: J-21(lever-type) Solex Bluepane Glass Jaluosies 11 Sets 15'-1 3/4" x 47-7/8" (5 units) 4 Sets 13'-5 3/4" x 47-7/8" (5 units) 3 Sets 10'-9 3/4" x 47-7/7" (4 units) 2 Sets 18'-1 3/3" x 56-3/8" (6 units) 1 Set 9'-1 3/4" x 65-3/8" (3 units) 115 Pcs. and on July 31. (Capitol for short). 1979 SAMPAGUITA PICTURES. JALWINDOR MANUFACTURERS. JALWINDOR executed judgment that the Sheriff of Quezon City made levy on the items above-stated in paragraph 3 hereof and sold them at a public auction to JALWINDOR MANUFACTURERS. failed to pay the price of the items mentioned in the preceding paragraph. 13.. The parties submitted to the trial court a Compromise Agreement wherein Capitol acknowledged its indebtedness to Jalwindor in the amount of P9. rental of P650.90. being the highest bidder and the execution creditor. JALWINDOR MANUFACTURERS. 11-13161 for ejectment and collection of a sum of money against the CAPITOL "300". That plaintiff leased to the CAPITOL "300". Inc.00: 6. ordering the CAPITOL "300". (Record on Appeal. on June 8. and the Sheriff sold the items to the defendant.. that defendant filed a bond to indemnify the Sheriff against the claim. Inc.531. INC. Civil Case No. (hereinafter referred to as Jalwindor) glass and wooden jalousies which were delivered and installed in the leased premises by Jalwindor replacing the existing windows.531. 1. Record on Appeal). that the improvements made by lessee have been considered as part of the consideration of the monthly rental and said improvements belong to the lessor. that the JALWINDOR MANUFACTURERS. (hereinafter referred to as Sampaguita) is the owner of the Sampaguita Pictures Building located at the corner of General Araneta and General Roxas Streets. has no right or title whatsoever to the possession over said items. No. Branch IV of Quezon City. Jalwindor however. 27 . Capitol likewise failed to comply with the terms of the Compromise Agreement.chanrobles virtual law library Sampaguita filed with the Court of First Instance of Rizal. Jalwindor was ordered to maintain the status quo pending final determination of the case. (p.09. failed to pay the rentals in arrears from March 1. 1965 with Jalwindor as the highest bidder for P6.R. Roto Operators for J-21 MODEL J-21 (Roto-type) Glass and Wood Jalousies 8 Sets 32-1/2" x 60" Solex Bluepane 19 Sets 31-1/4" x 48" Solex Bluepane 18 Sets 34" x 48" Wood 4. Inc. that the City Court rendered judgment in favor of the Sampaguita Pictures. the plaintiff SAMPAGUITA PICTURES. Sampaguita filed a complaint for ejectment and for collection of a sum of money against Capitol and on June 8. plaintiff filed a Third Party Claim stated in its affidavit on the ground of its right and title to the possession of the items and that CAPITOL "300". Sampaguita filed a third party claim alleging that it is the owner of said materials and not Capitol. the City Court of Quezon City rendered judgment ordering Capitol to vacate the premises and to pay Sampaguita. filed a case for collection of a sum of money against CAPITOL "300". electric and telephone services. Jalwindor filed with the Court of First Instance of Rizal.000.. electric and telephone services amounting to P 10. an action to nullify the Sheriff's Sale and for the issuance of a writ of preliminary injunction against Jalwindor from detaching the glass and wooden jalousies. L-43059 October 11. all the materials purchased by Capitol will be considered as security for such undertaking. Record on Appeal). when a property levied upon by the sheriff pursuant to a writ of execution is claimed by a third person in a sworn statement of ownership thereof. Rule 39 of the Rules of Court. Ownership is acquired from the moment the thing sold was delivered to vendee. Agana. Inc. based on said Stipulation of Facts. Inc. Defendant-appellee Jalwindor is permanently enjoined from detaching said items from the roofdeck of the Sampaguita Pictures Building. Ramos. hence. the levy and auction sale are. III The lower court erred in not declaring as null and void the levy on execution and the Sheriff's sale at public auction of the glass and wooden jalousies. The power of the Court in execution of judgment extends only to properties unquestionably belonging to the judgment debtor.chanrobles virtual law library SO ORDERED. recignized in the case of Bayer Phil.chanrobles virtual law library The action taken by Sampaguita to protect its interest is sanctioned by Section 17. may not be taken up in the case where such claims are presented but in a separate and independent action instituted by claimants. . 1496 and 1497. vs. Since the items already belong to Sampaguita and not to Capitol. the judgment debtor. as prescribed by the rules. accordingly. Proceedings where property claimed by third person. Capitol became the owner thereof. the remedy contemplated by the rules in the filing by said party of a reinvicatiry action against the execution creditor or the purchaser of the property after the sale is completed or that a complaint for damages to be charged against the bond filed by the creditor in favor of the sheriff.) Capitol entered into a lease Contract with Sampaguita in 1964. (Arts.chanrobles virtual law library . et al. vs. the judgment debtor. and the purchaser in the auction sale acquires only the right as the debtor has at the time of sale. 1967. and should a third-party appear to claim is denied. .. (Arabay. et al.chanrobles virtual law library Petitioner-appellant raised the following assignment of errors: I The lower court erred in holding that Capitol "300" Inc. 1477. which reads: Section 17.00 as attorney's fees. 100). Ownership is not transferred by perfection of the contract but by delivery. as in the case at bar. 94. the lower court dismissed the complaint and ordered Sampaguita to pay Jalwindor the amount of P500. and is also ordered to pay plaintiff-appellant the sum of P1. Sampaguita filed a motion for reconsideration which was likewise denied. and should prosper.chanrobles virtual law library WHEREFORE. The complaint of Sampaguita to nullify the Sheriff's sale well-founded. and the latter became the owner of the items in question by virtue of the agreement in said contract "that all permanent improvements made by lessee shall belong to the lessor and that said improvements have been considered as part of the monthly rentals. Thus. the instant appeal.. was no longer the owner thereof.00 for and as attorney's fees. It is well-settled in this jurisdiction that the sheriff is not authorized to attach property not belonging to the judgment debtor. Payment of the purchase price is not essential to the transfer of ownership as long as the property sold has been delivered. 63 SCRA 358. 28 .. likewise. Execution sales affect the rights of judgment debtor only.. IV The lower court erred in holding that defendant-appellee became the rightful owner of the glass and wooden jalousies. The fact that Capitol failed to pay Jalwindor the purchase price of the items levied upon did not prevent the transfer of ownership to Capitol." When levy or said items was made on July 31.. 413 [1978]. 88 Phil.. Herald Publishing vs. It is. II The lower court erred in not holding that plaintiff-appellant was the rightful owner of the glass and wooden jalousies when they were sold by the Sheriff at the public auction. as when it is placed in his control and possession. When the glass and wooden jalousies in question were delivered and installed in the leased premises." The items in question were illegally levied upon since they do not belong to the judgemnt debtor. null and void. the decision appealed from is hereby reversed... The officer is not liable for damages for the taking or keeping of the property to any third-party claimant unless a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. could not legally transfer or assign the glass and wooden jalousies in question to the plaintiff-appellant. But nothing herein contained shall prevent claimant from vindicating his claim to the property by any action.On October 20. This is true even if the purchase has been made on credit. "that the rights of third party claimants over certain properties levied upon by the sheriff to satisfy the judgment. Salvador. and plaintiff-appellant Sampaguita is declared the lawful owner of the disputed glass and wooden jalousies.000. and costs. 3 PHILAJUR.. an entirely different matter calling for a new adjudication arises. wherein the Court declared. Capitol. either actual or constructive. Civil Code of the Phil. 1965. 1981. G. Union Motor Corporation shall further pay defendants spouses Bernals the sum of P20. No. Branch 150. The first issue to be resolved in the instant case is whether there has been a delivery. a deed of assignment. 1981. Inc. There is simply no evidence to speak of in appellant Union Motor‘s favor to cause a reversal of the lower court‘s decision. one who asserts the affirmative of the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable judgment: by preponderance of evidence in civil cases. the respondent Bernal spouses purchased from petitioner Union Motor Corporation one Cimarron Jeepney for Thirty Seven Thousand Seven Hundred Fifty Eight Pesos and Sixty Centavos (P37.60) to be paid in installments. and by proof beyond reasonable doubt in criminal cases. promised to deliver the subject jeepney. ownership has been transferred to the respondent spouses.507. of the subject motor vehicle.00 as moral damages.758. SPOUSES ALBIATO BERNAL and MILAGROS BERNAL. 6. judgment is hereby rendered ordering: 1. the respondent spouses filed their amended answer with cross-claim against the former and counterclaim against Jardine-Manila Finance. is the Decision[1] dated March 30. 2. 1994 and Resolution[2] dated September 14.A. petitioner-appellant.R.268. the respondent spouses executed a promissory note and a deed of chattel mortgage in favor of the petitioner. JR. Inc. Union Motor Corporation to pay defendants spouses Bernals the downpayment in the amount of P10.00) worth of installments before they discontinued paying on account of non-delivery of the subject motor vehicle.R. plus legal interest until fully paid. J. According to the petitioner.[4] The petitioner interposed an appeal before the Court of Appeals while the respondent spouses appealed to hold the petitioner solidarily liable with Jardine-Manila Finance. Jardine-Manila Finance. 77104. The appellate court denied both appeals and affirmed the trial court‘s decision by holding that: Now. against the respondent Bernal spouses before the then Court of First Instance of Manila. Inc. According to the respondent spouses. the respondent spouses presented as witnesses Albiato Bernal and Pacifico Tacub in support of their defense and counterclaim against the plaintiff and crossclaim against the petitioner. the respondent spouses were required to sign a notice of assignment. a sales invoice. 117187. The Chattel Mortgage Contract signed by the respondent Bernal spouses in favor of the petitioner likewise proves that ownership has already been transferred to them for the reason that. For this purpose. The facts are as follows: On September 14.037. DECISION DE LEON. under Article 2085 of the New Civil Code. x x x‖. filed a complaint for a sum of money. Inc. Also. and the petitioner‘s acceptance of the same. 920 as well as its Resolution dated September 14. Inc. 2001] UNION MOTOR CORPORATION. Plaintiff to pay spouses Bernals the sum of P7. an affidavit. Metro Manila.: Before us on appeal. No. On this score. the petitioner entered into a contract of assignment of the promissory note and chattel mortgage with Jardine-Manila Finance. the instant petition anchored on the following assigned errors: I THE HONORABLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT FINDING THAT THE LOWER COURT A QUO‘S DECISION OF MARCH 6. the parties agreed that the respondent spouses would pay the amount of the promissory note to Jardine-Manila Finance. according to Sosmeña. Following the presentation of evidence of Jardine-Manila Finance. Inc. the appellate court erred in holding that no delivery was made by relying exclusively on the testimonial evidence of respondent Albiato Bernal without considering the other evidence on record. We cannot see how the absence of any evidence in favor of said defendant can result in favorable reliefs to its side on appeal.. and attorney‘s fees equivalent to 20% of the amount due to plaintiff. Inc. 1994 of the Court of Appeals[3] which affirmed the Decision dated March 6. 1979. the latter should pay Jardine-Manila Finance.00... The petitioner did not present any evidence inasmuch as the testimony of the witness it presented was ordered stricken off the record for his repeated failure to appear for crossexamination on the scheduled hearings.15 plus legal interest until fully paid. JARDINE-MANILA FINANCE. the reason being that if the respondent spouses‘ refusal to pay Jardine-Manila Finance.000. After the petitioner filed its answer. in Civil Case No. the Supreme Court reiterated that: ―As mandated by the Rules of Court. vs. Hence. the reason why the vehicle was not delivered was due to the fact that Sosmeña allegedly took the subject motor vehicle in his personal capacity. On November 10. respondentsappelles. what has been advanced to the petitioner.507. as to the appeal of defendant Union Motors. On March 6. docketed as Civil Case No. The respondent spouses continued paying the agreed installments even if the subject motor vehicle remained undelivered inasmuch as Jardine-Manila Finance. Meanwhile. 1992. like the sales invoice and delivery receipt which constitute an admission that there was indeed delivery of the subject motor vehicle.SECOND DIVISION [G. the dispositive portion of which reads: WHEREFORE. Inasmuch as there was already delivery of the subject motor vehicle. 1989 IS CONTRARY TO LAW AND THE EVIDENCE ON RECORD. the mortgagor must be the owner of the property. Inc. for the respondent spouses to accomplish all the said documents in order to have their application approved. i.e. the trial court rendered a decision. the complaint was amended to include petitioner Union Motor Corporation as alternative defendant. Nov.00 as attorney‘s fees and costs of suit. 1994 which denied the Motion for Reconsideration of the petitioner. each party must prove his own affirmative allegation. INC.00). THE COURT OF APPEALS. it was a requirement of petitioner Union Motor Corporation and Jardine-Manila Finance. was due to petitioner‘s non-delivery of the unit. the latter approved the sale.. The trial court deemed the presentation of the said witness as having been waived by the petitioner. Branch 150. it must be noted that said defendant had failed to adduce evidence in court to support its claim of non-liability. This case was later on transferred to the Regional Trial Court of Makati. Through Manuel Sosmeña. II THE HONORALBLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT FINDING THAT THE APPEALED DECISION WAS RENDERED IN DEPRIVATION AND IN DENIAL OF HEREIN PETITIOENR-APPELLANT‘S RIGHT TO DUE PROCESS. Upon the respondent spouses‘ tender of the downpayment worth Ten Thousand Thirty-Seven Pesos (P10. The respondent spouses were obliged to sign all these documents for the reason that. 1989 of the Regional Trial Court of Makati. an agent of the petitioner. 1989.29. there was a constructive delivery of the vehicle when respondent Albiato Bernal signed the registration certificate of the subject vehicle. Sosmeña required them to sign the receipt as a condition for the delivery of the vehicle. Union Motor Corporation to pay plaintiff P23. To effectuate the sale as well as the assignment of the promissory note and chattel mortgage.. July 20. On September 11. P10.037..000. Inc. petitioner Union Motor Corporation maintains that the respondent spouses are not entitled to a return of the downpayment for the reason that there was a delivery of the subject motor vehicle. the respondent Bernal spouses should bear the loss thereof in accordance with Article 1504 of the New Civil Code which provides that when 29 . by way of a petition for review on certiorari.[5] As owners of the jeepney. a registration certificate. and a disclosure statement. In the case of Tongson v. 3. Although the respondent spouses have not yet physically possessed the vehicle. C. the latter being the assignee of the petitioner. 42849. The respondent spouses have paid a total of Seven Thousand Five Hundred Seven Pesos (P7. plus legal interest until fully paid. Inc. physical or constructive. Like the receipt and the invoice. Ambrosio Balones. the petitioner claims that the trial court committed a violation of due process when it ordered the striking off of the testimony of the petitioner‘s witness as well as the declaration that petitioner has abandoned its right to present evidence. the signing of the said documents was qualified by the fact that it was a requirement of petitioner for the sale and financing contract to be approved. handed over the said document to Sosmeña.‖ (Civil Code. the goods are at the buyer‘s risk whethe r actual delivery has been made or not. on the other hand. an invoice is nothing more than a detailed statement of the nature. counsel for the respondents. the delays in the hearing of the case were neither unjust nor deliberate. Felix and Tioco[9] wherein we ruled that: The Code imposes upon the vendor the obligation to deliver the thing sold. then fiction yields to reality-the delivery has not been effected. apart from the fact that it has a different issue.[6] The registration certificate signed by the respondent spouses does not conclusively prove that constructive delivery was made nor that ownership has been transferred to the respondent spouses.. Undisputed is the fact that the respondent Bernal spouses did not come into possession of the subject Cimarron jeepney that was supposed to be delivered to them by the petitioner. In the instant case. to finish his testimony. was discontinued after Atty.[14] The petitioner attempts to shift the blame on the respondents for the failure of its witness. it is but appropriate that they be reimbursed by the petitioner of the initial payment which they made. is that they never came into possession of the subject motor vehicle. Anent the second issue. at the moment of the sale. which took possession thereof until Sosmeña requested the latter to hand over the said document to him. symbolic delivery through the execution of a public instrument is sufficient. 1462). The petitioner failed to refute that testimonial evidence considering that it waived its right to present evidence. We have ruled that the issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. Inc. respondent Albiato Bernal testified to the effect that they went several times to the office of the petitioner to demand the delivery of the subject motor vehicle. the fact that the circumstance of non-delivery was not shown and that the respondent spouses never made any demand for the possession of the vehicle.. Ambrosio Balones. Inc. On June 19.the ownership of goods is transferred to the buyer. (Italics supplied) The act of signing the registration certificate was not intended to transfer the ownership of the subject motor vehicle to respondent Bernal spouses inasmuch as the petitioner still needed the same for the approval of the financing contract with Jardine-Manila Finance. The thing is considered to be delivered when it is placed ―in the hands and possession of the vendee. its material delivery could have been made. the buyer took possession of the personal property and was able to sell the same to a third party. and its unhesitating move to give the same to Sosmeña just goes to show that the respondent spouses still had no complete control over the subject motor vehicle as they did not even possess the said certificate of registration nor was their consent sought when Jardine-Manila Finance. Without such signed documents. According to the petitioner. It is not enough to confer upon the purchaser the ownership and the right of possession. Inasmuch as there was neither physical nor constructive delivery of a determinate thing. was orderd stricken off the record in the hearing of June 19. no sale. but. the respondent spouses never acquired possession of the subject motor vehicle. whether constructive or actual. The fact that the registration certificate was still kept by JardineManila Finance. the said accessory contract of chattel mortgage has no legal effect whatsoever inasmuch as the respondent spouses are not the absolute owners thereof. that the testimony of petitioner‘s witness. The manifestations of ownership are control and enjoyment over the thing owned. then. But if. much less delivery. the witness did not appear whenever the case was called for hearing. witness Ambrosio Balones was not available due to gastro-enteritis as shown by a medical certificate. The petitioner had the duty to produce its witness when he was called to finish his testimony. For three (3) times. there is no tradition. all at the instance of petitioner Union Motor Corporation. Neither did the petitioner offer to present any other witness to testify on that day. ownership of the mortgagor being an essential requirement of a valid mortgage contract. should be coupled with the intention of delivering the thing. To place the blame on the respondent spouses is to put a 30 . because such tenancy and enjoyment are opposed by the interposition of another will. it is necessary that the vendor shall have had control over the thing sold that. The Carlos case[11] cited by the petitioner is not applicable to the case at bar for the reason that in the said case. is the actual intention of the vendor to deliver. the respondent spouses presented sufficient evidence to prove that Sosmeña took delivery and possession of that subject motor vehicle in his personal capacity as shown by a document [12] on which he (Sosmeña) personally acknowledged receipt of the registration certificate from Jardine-Manila Finance. The respondent spouses never became the actual owners of the subject motor vehicle inasmuch as they never had dominion over the same. Inc. 1986 up to June 19. however. The record shows that the registration certificate was submitted to Jardine-Manila Finance. 1986 up to June 1987. Tacub asked for a recess and later on for the postponement of the cross-examination of the said witness. According to testimonial evidence adduced by the respondent spouses during the trial of the case. The registration certificate. The main allegation of the respondent Bernal spouses. the continuation of the cross -examination was postponed and rescheduled for four (4) times from November 21. notwithstanding the execution of the instrument. We rule in favor of the respondent Bernal spouses. it is necessary that the act of delivery. 1987. Balones. Thus. The thing sold must be placed in his control. Inc. Inc. Art. receipt and sales invoice that the respondent Bernal spouses signed were explained during the hearing without any opposition by the petitioner. and the petitioner conspired to defraud and deprive them of the subject motor vehicle for which they suffered damages. Consequently. It just so happened that from August 5. the said documents were signed as a part of the processing and for the approval of their application to buy the subject motor vehicle. The act. the subject motor vehicle) the thing sold remained at the seller‘s risk. according to the petitioner. quantity and cost of the thing sold and has been considered not a bill of sale. Contrary to the petitioner‘s allegation. The appellate court assented to these findings by quoting the decision of the trial court. Petitioner‘s reliance on the Chattel Mortgage Contract executed by the respondent spouses does not help its assertion that ownership has been transferred to the latter since there was neither delivery nor transfer of possession of the subject motor vehicle to respondent spouses. when asked by the trial court why the witness was not present. It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the contract. Well-settled is the rule that ―factual findings of the Court of Appeals are conclusive on the parties and not reviewable by the Supreme Court – and they carry even more weight when the Court of Appeals affirms the factual findings of the trial court. The documents were not therefore an acknowledgment by respondent spouses of the physical acquisition of the subject motor vehicle but merely a requirement of petitioner so that the said subject motor vehicle would be delivered to them. It did not consider.[10] The petitioner should therefore bear the loss of the subject motor vehicle after Sosmeña allegedly stole the same. the trial court found that after the direct testimony of petitioner‘s witness. In all forms of delivery.‖[13] In the present case.[7] The critical factor in the different modes of effecting delivery which gives legal effect to the act. of the subject jeepney could be made. Also. Balones. are the contentions of the petitioner. and its acceptance by the vendee. without the intention.[8] Enlightening is Addison v. 1987. 1987. The petitioner also disputes the finding of the appellate court that there was no delivery. The Court further considered said defendant to have waived further presentation of evidence. for his continuous failure to appear on scheduled hearings. in order that this symbolic delivery may produce the effect of tradition. Without that intention. to wit: Defendant Union Motors Corporation has no evidence as the testimony of its only witness. During the last time the petitioner‘s counsel moved for the postponement of the case. These. It was at the instance of Atty. is insufficient. Tacub. Inc. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. (in this case. the petitioner‘s counsel could not give any good reason for his absence. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. They also claim that Jardine-Manila Finance. the designated counsel for the petitioner was either appointed to the government or was short of time to go over the records of the case inasmuch as he was a new substitute counsel. concentrating their pleadings on the invalidity of paragraph 8 alone. the allegations about connivance and fraudulent schemes by the petitioner and Manuel Sosmeña were merely general allegations and without any specific evidence to sustain the said claims. 2000] SPS.. The said document shows that Sosmeña acted only in his personal and private capacity. that both paragraphs "constitute a package". it is therefore coupled thereto and is thus similarly mired in its invalidity". COLOYAN in his capacity as Acting Registrar of the Register of Deeds of Quezon City thru Deputy Sheriff ROBERTO R. the legal terms of the contract. respondents. The respondents should not be prejudiced by the repeated failure of the petitioner to present its said witness for cross-examination. Hence. Exhibit ―1‖ which bears the name and signature of Sosmeña as the person who received the registration certificate militates against the respondent spouses‘ claim that the petitioner connived with its agent to deprive them of the possession of the subject motor vehicle. HAS NEVER BEEN INVOKED AS A DEFENSE BY RESPONDENT L & R CORPORATION. we cannot affirm that part of the ruling of the courts a quo awarding moral damages to the respondents. petitioners. Petitioners argue that our finding that the consideration for the pre-emptive right is incorporated in the amount of the loan is a presumption that enjoys no basis. The petitioner should not be held liable for the acts of its agent which were done by the latter in his personal capacity. which we held as void) and 9 (on the right of first refusal of respondent Corporation) should be "regarded as a tandem designed to subvert the sound public policy prohibiting pactum commissarium".: For resolution is petitioners‘ Motion for Partial Reconsideration of our December 9.. 1999 Decision on the following grounds: "I. No. LITONJUA and ERLINDA P.." Contrary to the suppositions of petitioners. For moral damages to be awarded in cases of breach of contract. WHITE HOUSE AUTO SUPPLY.R. the respondent spouses were forced to implead the petitioner Union Motor Corporation on account of the collection suit filed against them by Jardine-Manila Finance.. By presenting witness Balones on direct-examination. if the illegal terms can be separated from the legal ones. INC.. This is the first time. J. WHEREFORE.... GARCIA. petitioners have remained silent insofar as this provision is concerned. indeed. a case which was eventually won by the respondent spouses. petitioners‘ arguments must be brushed aside.THE RESCISSION OF THE DEED OF SALE DATED 6 AUGUST 1974 BETWEEN THE SPS. THUS. When a party is compelled to litigate with third persons or to incur expenses to protect his interest.[15] In the instant case. petitioners point out that the provision in paragraph 9 is not a perfected contract for lack of consideration as mandated by Article 1479.. II. Mayfair Theater.[1] Petitioners next argue that even if paragraph 9 is considered independently of paragraph 8. Such contention loses sight of the difference between a right of first refusal and an option contract where a separate consideration is. To be sure. the latter may be enforced. INC. petitioners cannot belatedly present their objections thereto at this stage...THE PROVISION OF PARAGRAPH NO... March 27. REYNALDO K. At any rate. LITONJUA AND PHIILIPPINE WHITEHOUSE AUTO SUPPLY. However. VICENTE M. L & R CORPORATION. the appealed Decision dated March 30.. that petitioners have raised the issue of invalidity of paragraph 9. III. the petitioner had the corresponding duty to make him available for cross-examination in accordance with fair play and due process. Petitioners‘ contention that absent a consideration therefor.. This distinction was set out in the analogous case of Equatorial Realty Development.[16] In the present case. 9 OF THE SUBJECT MORTGAGE CONTRACT IS NULL AND VOID AB INITIO. it is still unenforceable for being null and void ab initio..HATOL RESOLUTION YNARES-SANTIAGO. even if we were to entertain petitioners‘ objections. SO ORDERED. 130722. DEEMED WAIVED. including paragraph 9.. the right of first refusal embodied in paragraph 9 is void ab initio is misplaced.THE DECISION RESCINDING THE DEED OF SALE EXECUTED BY AND BETWEEN THE PETITIONERS IN EFFECT DEPRIVED THEM OF THEIR BASIC RIGHT TO DUE PROCESS. required. we affirm the award of attorney‘s fees. though. the plaintiff must prove bad faith or fraudulent act on the part of the defendant. In fact. With costs against the petitioner. Article 1420 of the New Civil Code holds that "(I)n case of a divisible contract.. can be enforced. This being so." Movants first theorize that paragraphs 8 (limiting the right of the mortgagor to sell the property. the trial court ordered that the unfinished testimony of said witness be stricken off the record.. Again. Inc. 1994 of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that the award of moral damages is deleted. While respondent Corporation has consistently invoked the provisions thereof. the invalid stipulation is independent from the rest of the terms of the agreement and can easily be separated therefrom without doing violence to the manifest intention of the parties. the same will still be held as without merit..[2] where it was held that – 31 .. attorney‘s fees should be awarded. In support of their argument. Indeed. LITONJUA and PHIL. petitioners argue that "(P)aragraph 9 being intended to support paragraph 8.. In particular. Inc. EN BANC [G. Inc.. Not having been timely objected to below.premium on the negligence of the petitioner to require its own witness to testify on cross-examination. However. vs. paragraphs 8 and 9 are separate provisions of the subject contract and the invalidity of one does not automatically render the other invalid. vs. thereby effectively excluding any alleged participation of the petitioner in depriving them of the possession of the subject motor vehicle. These relations. But it is not shown that there was any cause or consideration for that agreement. of the cause for the obligation to be established. the right to call for and receive lands if he elects. that the leased premises is sold to someone other than the LESSEE. the LESSOR is bound and obligated. This contract is legally binding. until a contract is perfected.500. As early as 1916. of the work ‗Words and Phrases. a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings. 420). in one other case we freed the landowner from her promise to sell her land if the prospective buyer could raise P4. in the very recent case of Ang Yu Asuncion vs. but he does sell something. 24 Am. Court of Appeals. An unconditional mutual promise to buy and sell. and in sales. is not without consideration for in reciprocal contracts. in the same vein in yet one other case. rather. i. to the case where there was cause or consideration for the obligation. that is.‘ But the two definitions abovecited refer to the contract of option. for a price certain. Rep. during the period of three months and for its assessed valuation.. the right or privilege to buy at the election or option of the other party. while in the case at bar there was no such cause or consideration. when coupled with a valuable consideration distinct and separate from the price. 71 N. 5. 1911. the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force. Salamon. St.. A negotiation is formally initiated by an offer. in consideration of the payment of a certain sum to B. called the buyer.510. the letter of December 4. x x x. which reads: ‗That if the LESSOR should desire to sell the leased premises. therefore.00 in three weeks because such option was not supported by a distinct consideration. or selling to B. The optionee has the right. however. indicate the definite price at which the person granting the option. and as an exception to the doctrine enumerated in the two preceding cases. The owner parts with his right to sell his lands. the offer is accepted before a breach of the option. Notably."Both contracts of lease in question provide the identically worded paragraph 8. the defendant Valdes granted to the plaintiff Borck the right to purchase the Nagtahan Hacienda belonging to Benito Legarda. The second party receives the right. the LESSEE shall be given 30-days exclusive option to purchase the same. x x x. It is simply a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time.‘ When the sale is not absolute but conditional. with regard to the stipulations made in the said document. for a limited period. 1479. are not considered binding commitments. obligates himself. is what may properly be termed a perfected contract of option. x x x. An accepted unilateral promise which specifies the thing to be sold and the price to be paid. thus.Y.e. x x x. we ruled that the option to buy the leased premises for P12. the obligation or promise of each party is the consideration for that of the other. in order to be valid and enforceable. An imperfect promise (policitacion) is merely an offer. We elucidated. in the following language: ‗A contract by virtue of which A. ‗ART.‘ From vol. what amounts to the same thing. except to the second party.000.. page 5001. particularly. He does not sell his land. and this omission is a bar which precludes our holding that the stipulations contained in Exhibit E is a contract of option. (Story vs. is willing to sell. Leiser (24 Pac. in the case of Beaumont vs. In all these cases. and compliance therewith may accordingly be exacted. it conforms with the second paragraph of Article 1479 of the Civil Code. or. there can be no contract without the requisite. There was. to which the topic for discussion about the case at bench belongs. a meeting of minds on the part of the one and the other. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. not lands. a grant which necessarily implied the offer or obligation on the part of the defendant Valdes to sell to Borck the said hacienda during the period and for the price mentioned. by means of the document Exhibit E.00 because of lack of consideration. 17) the following quotation has been taken: ‗An agreement in writing to give a person the option to purchase lands within a given time at a named price is neither a sale nor an agreement to sell. in another case.‘ Observe. as it hereby binds and obligates itself. over which the latter agrees. for. to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. as long as the object is made determinate and the price is fixed. In his Law Dictionary. certain securities or properties within a limited time at a specified price. It is not an option clause or an option contract. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. that the option is not the contract of sale itself. unequivocal was our characterization of an option contract as one necessarily involving the choice granted to another for a distinct and separate consideration as to whether or not to purchase a determinate thing at a predetermined fixed price. acquires the privilege of buying from. to deliver and to transfer ownership of a thing or right to another. Once the option is exercised timely. In the event. we also invalidated an instrument entitled. viz. among others. that is. A contract of sale may be absolute or conditional. The second party gets in praesenti. must. but he does get something of value. among other things.‘ citing the case of Ide vs. to buy. to wit. or..‘ The rule so early established in this jurisdiction is that the deed of option or the option clause in a contract. the contract is perfected when a person. he receives the right to elect to buy. that: ‗x x x. from his point of view.00 as stipulated in the lease contract. Bouvier defines an option as a contract. Prieto. 695. in one case we held that the lessee loses his right to buy the leased property for a named price per square meter upon failure to make the purchase within the time specified. but not the obligation. like lease. Article 1458 of the Civil Code provides: ‗Art. can be obligatory on the parties. and the other to pay therefor a price certain in money or its equivalent. It is a contract of a right of first refusal. In sales. quoted at the beginning of this decision.. Let us elucidate a little. 10 Mont. he does not then agree to sell it. An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. ‗Option to Purchase‘ a parcel of land for the sum of P1. the full payment of the purchase price). ‗It is unquestionable that. the selling price of the object thereof is always predetermined and specified in the option clause in the contract or in the separate deed of option. the subject of the agreement made by the parties. such as in a ‗Contract to Sell‘ where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally.‘ We agree with the respondent Court of Appeals that the aforecited contractual stipulation provides for a right of first refusal in favor of Mayfair. called the seller. not an agreement that he shall have lands. 6. however. 32 . edition of 1897. 1458. in fact. give everyone his due. Palarca. a contract of ‗option‘ is deemed perfected. aforequoted. petitioners‘ Motion for Partial Reconsideration is hereby DENIED for lack of merit. then. its validity and legality should be strictly interpreted against respondent Corporation. De Quirino vs. the requirement of a separate consideration for the option. ignorance. is an independent contract by itself. Again. however. the latter may not sue for specific performance on the proposed contract (‗object‘ of the option) since it has failed to reach its own stage of perfection.‘ (2). and it would be a breach of that contract to withdraw the offer during the agreed period. Mayfair is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that. rescission was the necessary relief arising out of the violation of the right of first refusal. It also correctly reasoned that as such. or. The option.. indigence.. has no applicability in the instant case. and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to be concluded. There is nothing in the identical Paragraphs ‗8‘ of the June 1... If the terms thereof are clear and leave no doubt upon the intention of the contracting parties. either negotiating party may stop the negotiation. renders himself liable for damages for breach of the option. Where a period is given to the offeree within which to accept the offer. premises considered. we also find no occasion to apply the aforesaid treatment called for by petitioners. For the same reason. 270). It is a separate and distinct contract from that which the parties may enter into upon the consummation of the option. in the exercise of his rights and in the performance of his duties. petitioners also complain that our Decision deprived them of due process since they were not given the opportunity to confront the issue of rescission. the literal meaning of its stipulations control.. The consideration is built into the reciprocal obligations of the parties. Thus. SO ORDERED 33 . by communicating that withdrawal to the offeree. in reciprocal contract. at any time prior to the perfection of the contract. The right to withdraw. The consideration for the lease includes the consideration for the right of first refusal. The stipulation is part and parcel of the entire contract of lease.. we so hold that no option to purchase in contemplation of the second paragraph of Article 1479 of the Civil Code. if an acceptance has been made. which leave no room for interpretation. property or other relations. To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is governed by Article 1324 on withdrawal of the offer or Article 1479 on promise to buy and sell would render ineffectual or ‗inutile‘ the provisions on right of first refusal so commonly inserted in leases of real estate nowadays. Thus. the obligation or promise of each party is the consideration for that of the other. WHEREFORE. being not only educated but businesspersons as well. not having been raised as a defense by respondent corporation. It is not also correct to say that there is no consideration in an agreement of right of first refusal. x x x. 1967 and March 31.. it could give rise to a damage claim under Article 19 of the Civil Code which ordains that ‗every person must. when one of the parties is at a disadvantage on account of his moral dependence. the offeror is still free and has the right to withdraw the offer before its acceptance. and observe honesty and good faith. the consideration for the loan-mortgage includes the consideration for the right of first refusal. before the offeror‘s coming to know of such fact. petitioners complain that this was never invoked as a defense by respondent corporation and is thus deemed waived. 43 Phil.. It must be supported by consideration. while ambiguities in a contract of adhesion are to be construed against the party that prepared the same. that since the stipulations in the subject Deed of Restrictions are plain and unambiguous. should it sell the leased property. the withdrawal is effective immediately after its manifestation. the right of first refusal is an integral part of the contracts of lease. neither may petitioners complain of having been denied due process as they were given the chance to meet the issue of violation of respondent Corporation‘s right of first refusal upon which we anchored our order for the rescission of the Deed of Sale. In the instant case. Respondent Court of Appeals correctly ruled that the said paragraph 8 grants the right of first refusal to Mayfair and is not an option contract. Indeed. the validity and/or enforceability of a contract of adhesion will have to be determined by the peculiar circumstances obtaining in each case and the situation of the parties concerned.. If." Here. which became the basis for our order of rescission. considering that the contract provision in question (paragraph 9) is likewise plain and unambiguous. With respect to the rescission of the Deed of Sale. As explained in Ayala Corporation vs. as we have already stated in our Decision sought to be reconsidered. however. however.[4] Coming now to the case at bar. we have merely taken our cue from the Equatorial case. may be withdrawn.. Petitioners also pray that since the subject contract is a contract of adhesion. Mayfair shall be given the right to match the offered purchase price and to buy the property at that price. however.. this rule applies only if the stipulations in such contract are obscure or ambiguous. the courts must be vigilant for his protection. In the instant case. The court also went on to rule in the Ayala case (supra). It cannot be denied. As stated in Vda.. Thus. The Court of Appeals is correct in stating that Paragraph 8 was incorporated into the contracts of lease for the benefit of Mayfair which wanted to be assured that it shall be given the first crack or the first option to buy the property at the price which Carmelo is willing to accept. there would be no need for construction.[3] however. the optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the optionee-offeree. there was no cause for applying the rule on stringent treatment towards contracts of adhesion. that respondent Corporation had always invoked its right of first refusal. must not be exercised whimsically or arbitrarily. contrary to petitioners‘ charge that this conclusion enjoys no basis.Thus. Stated differently. The offer. has been granted to Mayfair under the said lease contracts. Ray Burton Development Corporation. act with justice. The optioner-offeror. such as by its mailing and not necessarily when the offeree learns of the withdrawal. An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. 1969 contracts which would bring them into the ambit of the usual offer or option requiring an independent consideration. at this stage. tender age or other handicap. where this court refrained from applying the rule on strict interpretation of a contract of adhesion – "(T)he stringent treatment towards contracts of adhesion which the courts are enjoined to observe is in pursuance of the mandate in Article 24 of the New Civil Code that ‗(i)n all contractual. petitioners. In the latter case. otherwise.If the period is not itself founded upon or supported by a consideration. mental weakness. Arias. (Laudico vs.If the period has a separate consideration. cannot claim being the weaker or disadvantaged parties in the subject contract so as to call for a strict interpretation against respondent Corporation.‘ In the light of the foregoing disquisition and in view of the wording of the questioned provision in the two lease contracts involved in the instant case. the following rules generally govern: (1). vs. 1990. Chua and concurred in by Justices Vicente V. the VENDORS hereby sells. Appellants' demand for actual. VITUG. 1990 (penned by Justice Segundino G. Thus the dispositive portion of the decision states: WHEREFORE. that when plaintiffs did not receive any reply. otherwise. judgment is hereby rendered in favor of the defendants and against the plaintiffs summarily dismissing the complaint subject to the aforementioned condition that if the defendants subsequently decide to offer their property for sale for a purchase price of Eleven Million Pesos or lower.R. 1994 ANG YU ASUNCION. 176 SCRA 815). transfers and conveys for and in favor of the VENDEE. the judgment appealed from is hereby AFFIRMED. hence.: Assailed. among others.R. All requisites obtaining. but subject to the following modification: The court a quo in the aforestated decision gave the plaintiffs-appellants the right of first refusal only if the property is sold for a purchase price of Eleven Million pesos or lower. considering the mercurial and uncertain forces in our market economy today. plaintiffs appealed to this Court in CA-G. petitioners. et al. 630-638 Ongpin Street. the claim for specific performance will not lie. 1986. The antecedents are recited in good detail by the appellate court thusly: On July 29. 1987 a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong. his heirs. Aggrieved by the decision. defendants filed a motion for summary judgment which was granted by the lower court. there was no meeting of the minds between the parties concerning the sale of the property. dated 30 August 1991 and 27 September 1991. dated 04 December 1991. in Civil Case No. CV No. 87-41058. Umali. 21123. Mendoza and Fernando A. ARTHUR GO AND KEH TIONG. Court of Appeals. executors. Rose Cu Unjieng and Jose Tan before the Regional Trial Court. Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million. We find no reason not to grant the same right of first refusal to herein appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos. the lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below. Courts may render summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law (Garcia vs. subject to the following terms and conditions: 1. respondents.000. Soriano & Associates for private respondent. while CA-G. plaintiffs will have the right of first refusal. that on several occasions before October 9. the decision of the court a quo is legally justifiable. That for and in consideration of the sum of FIFTEEN MILLION PESOS (P15. Petition) transferring the property in question to herein petitioner Buen Realty and Development Corporation. Nonetheless. this Court affirmed with modification the lower court's judgment. Summary judgment for defendants was properly granted.000. THE HON.00). 109125 December 2. 21123 was pending consideration by this Court. holding: In resume. defendants need not offer the property to the plaintiffs if the purchase price is higher than Eleven Million Pesos. Albano for petitioners. CV No. 1987 with the same request. they sent another letter dated January 28.R. SP No. In a decision promulgated on September 21. Manila in Civil Case No. The Supreme Court denied the appeal on May 6. plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. 26345 setting aside and declaring without force and effect the orders of execution of the trial court. Santiago). the Cu Unjieng spouses executed a Deed of Sale (Annex D. there was no contract of sale at all. is the decision of the Court of Appeals. Manila. SO ORDERED. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION. On November 15. that plaintiffs thereafter asked the defendants to put their offer in writing to which request defendants acceded. the above-described property with all the improvements found therein including all the rights and 34 . against Bobby Cu Unjieng. that they have occupied said spaces since 1935 and have been religiously paying the rental and complying with all the conditions of the lease contract. however. No pronouncement as to costs. Branch 31. After the issues were joined. moral and exemplary damages will likewise fail as there exists no justifiable ground for its award. receipt of which in full is hereby acknowledged. Binondo. No. that during the negotiations. 1991 "for insufficiency in form and substances" (Annex H. plaintiffs wrote them on October 24. The trial court found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale. finding the appeal unmeritorious. alleging. 1986 asking that they specify the terms and conditions of the offer to sell. in this petition for review. SO ORDERED. J. Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action. that since defendants failed to specify the terms and conditions of the offer to sell and because of information received that defendants were about to sell the property. that plaintiffs are tenants or lessees of residential and commercial spaces owned by defendants described as Nos. that in reply to defendant's letter. WHEREFORE.R. in CAG. Absent such requirement. administrators or assigns. 8741058. then the plaintiffs has the option to purchase the property or of first refusal.. Antonio M. Petition). The decision of this Court was brought to the Supreme Court by petition for review on certiorari.Republic of the Philippines SUPREME COURT Manila EN BANC G. R.interest in the said property free from all liens and encumbrances of whatever nature. except the pending ejectment proceeding. All previous transactions involving the same property notwithstanding the issuance of another title to Buen Realty Corporation. The perfection of the contract takes place upon the concurrence of the essential elements thereof. Civil Code). petitioners contend that Buen Realty can be held bound by the writ of execution by virtue of the notice of lis pendens. and (c) the subject-persons who. As a consequence. defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion. and considering the mercurial and uncertain forces in our market economy today. 1 On 04 December 1991. viewed from the demandability of the obligation. TCT No. registration fees for the transfer of title in his favor and other expenses incidental to the sale of above-described property including capital gains tax and accrued real estate taxes. 105254/T-881 in the name of the Cu Unjiengs.e.000. with respect to the other. Petition) quoted as follows: Presented before the Court is a Motion for Execution filed by plaintiff represented by Atty. The gist of the motion is that the Decision of the Court dated September 21. SO ORDERED. 87-41058 as modified by the Court of Appeals in CA-G. delicts and quasi-delicts).R. there was an Entry of Judgment by the Supreme Court as of June 6. the lessees wrote a reply to petitioner stating that petitioner brought the property subject to the notice of lis pendens regarding Civil Case No. 1991 of the Decision in Civil Case No.. the appellate court. That the VENDEE shall pay the Documentary Stamp Tax. 1305. the dispositive portion of which reads: WHEREFORE. The obligation is constituted upon the concurrence of the essential elements thereof. 1991. its consummation. on appeal to it by private respondent. 1991. Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer. petitioner as the new owner of the subject property wrote a letter to the lessees demanding that the latter vacate the premises. 1991 the corresponding writ of execution (Annex C. are the active (obligee) and the passive (obligor) subjects.R. A not too recent development in real estate transactions is the adoption of such arrangements as the right of first refusal. CV No. 1991 respondent Judge issued another order. On July 1. TCT No. 105254/T-881 in the name of the Cu Unjieng spouses was cancelled and. No.00 and ordering the Register of Deeds of the City of Manila. finally. On the same day. 1157. September 27. Petition) was issued. 21123. Negotiation covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is concluded (perfected). On September 22. i. An obligation is a juridical necessity to give.000. stating that the aforesaid modified decision had already become final and executory. let there be Writ of Execution issue in the aboveentitled case directing the Deputy Sheriff Ramon Enriquez of this Court to implement said Writ of Execution ordering the defendants among others to comply with the aforesaid Order of this Court within a period of one (1) week from receipt of this Order and for defendants to execute the necessary Deed of Sale of the property in litigation in favor of the plaintiffs Ang Yu Asuncion. we might point out some fundamental precepts that may find some relevance to this discussion. which is a meeting of minds between two persons whereby one binds himself. Civil Code). Keh Tiong and Arthur Go for the consideration of P15. On July 16. For ready reference. to do or not to do (Art. 1156. In this petition for review on certiorari. CV-21123. quasicontracts. to give something or to render some service (Art. Civil Code). 195816 issued in the name of Buen Realty. set aside and declared without force and effect the above questioned orders of the court a quo. to cancel and set aside the title already issued in favor of Buen Realty Corporation which was previously executed between the latter and defendants and to register the new title in favor of the aforesaid plaintiffs Ang Yu Asuncion. 2. is hereby set aside as having been executed in bad faith. contracts. and elevated to the Supreme Court upon the petition for review and that the same was denied by the highest tribunal in its resolution dated May 6. WHEREFORE. respondent Judge issued an order (Annex A. its perfection and. L-97276. 1991. It is the observation of the Court that this property in dispute was the subject of theNotice of Lis Pendens and that the modified decision of this Court promulgated by the Court of Appeals which had become final to the effect that should the defendants decide to offer the property for sale for a price of P11 Million or lower. 1990 as modified by the Court of Appeals in its decision in CA G. a purchase option and a contract to sell. Keh Tiong and Arthur Go. the concurrence of 35 . The lessees filed a Motion for Execution dated August 27. (b) the object which is the prestation or conduct. 1991. the same right of first refusal to herein plaintiffs/appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos or more. We affirm the decision of the appellate court. required to be observed (to give. 1991 in G. carried over on TCT No. Vicente Sison and Atty. Among the sources of an obligation is a contract (Art. Antonio Albano. viz: (a) The vinculum juris or juridical tie which is the efficient cause established by the various sources of obligations (law. On August 30. As a consequence of the sale. to do or not to do). Anacleto Magno respectively were duly notified in today's consideration of the motion as evidenced by the rubber stamp and signatures upon the copy of the Motion for Execution. A contract undergoes various stages that include its negotiation or preparation. 87-41058 annotated on TCT No. Both defendants Bobby Cu Unjieng and Rose Cu Unjieng represented by Atty. 1990. had now become final and executory. in lieu thereof. A contract which is consensual as to perfection is so established upon a mere meeting of minds. 195816 was issued in the name of petitioner on December 3. at the time of the latter's purchase of the property on 15 November 1991 from the Cu Unjiengs. SO ORDERED. 1319. In fine. see also Art. Even on the premise that such right of first refusal has been decreed under a final judgment. the offer is accepted before a breach of the option. is an independent contract by itself. is essential in order to make the act valid. for instance. to deliver and to transfer ownership of a thing or right to another. 1482. in fact. given. Prior thereto. called the buyer. has merely accorded a "right of first refusal" in favor of petitioners. in any case. The optioner-offeror. A contract of sale may be absolute or conditional. The consequence of such a declaration entails no more than what has heretofore been said. before the offeror's coming to know of such fact. 948. including the price.. the exercise of the right. If. can warrant a recovery for damages. by the execution of a public document) of the property sold.g. 36 . whether private respondent Buen Realty Development Corporation. In a right of first refusal. in fact. such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally. The offer. it must be stressed. and the other to pay therefor a price certain in money or its equivalent. either negotiating party may stop the negotiation. In the law on sales. or. it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. petitioners are aggrieved by the failure of private respondents to honor the right of first refusal. Cua. may be withdrawn. modifying the previous decision in South Western Sugar vs. The right to withdraw. Civil Code. 7 The optionee has the right. Atlantic Gulf. an unjustified disregard thereof.e. 97 Phil. An option or an offer would require. This contract is legally binding. the circumstances expressed in Article 19 12 of the Civil Code. . a similar instance would be an "earnest money" in a contract of sale that can evidence its perfection (Art. as it is here so conveyed to us. . act with justice.g. as in a pledge or commodatum. Once the option is exercised timely. in addition to the above. for if. e.. called the seller. 11 It is not to say. like here. while the object might be made determinate. we have said that. the alleged purchaser of the property. The option. Civil Code.. over which the latter agrees. has acted in good faith or bad faith and whether or not it should. per se be brought within the purview of an option under the second paragraph of Article 1479. 1479. such as by its mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. i. as an independent source of obligation. vs. The stage of consummationbegins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof. Civil Code). is what may properly be termed a perfected contract ofoption. such as already intimated above. 45 SCRA 368).offer and acceptance. to buy. the failure of the condition would prevent such perfection. cannot be held subject to the writ of execution issued by respondent Judge. give everyone his due. The final judgment in Civil Case No. 2 In Dignos vs. Ownership will then be transferred to the buyer upon actual or constructive delivery (e." (2) If the period has a separate consideration. when coupled with a valuable consideration distinct and separate from the price. Sanchez vs. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. can be obligatory on the parties. 135 SCRA 409. at any time prior to the perfection of the contract. among other things. and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to be concluded. the contract is perfected when a person. (1451a) 6 Observe. the optioner-offeror withdraws the offer before its acceptance(exercise of the option) by the optionee-offeree. In these cases. the full payment of the purchase price). 1545. that obviously are yet to be later firmed up. viz: Art. Court of Appeals (158 SCRA 375). Furthermore. Where the condition is imposed upon the perfection of the contract itself. not having been impleaded in Civil Case No. 10 a clear certainty on both the object and the cause or consideration of the envisioned contract. the remedy is not a writ of execution on the judgment. otherwise. Thus. These relations. as long as the object is made determinate and the price is fixed. In sales. particularly. . Remolado. 4 An unconditional mutual promise to buy and sell. by communicating that withdrawal to the offeree (see Art. 87-41058 are matters that must be independently addressed in appropriate proceedings. at this stage. be considered bound to respect the registration of the lis pendens in Civil Case No. see also Atkins. serve as a binding juridical relation. however. Kroll & Co. holding that this rule is applicable to a unilateral promise to sell under Art. it has been intended to be part of the consideration for the main contract with a right of withdrawal on the part of the optionee. the pertinent scattered provisions of the Civil Code on human conduct. must not be exercised whimsically or arbitrarily. 1479. 43 Phil. A negotiation is formally initiated by an offer. and in sales. its breach cannot justify correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence. the offeror is still free and has the right to withdraw the offer before its acceptance. let alone ousted from the ownership and possession of the property." a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated. Civil Code).. Buen Realty. it could give rise to a damage claim under Article 19 of the Civil Code which ordains that "every person must. but an action for damages in a proper forum for the purpose. nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. and observe honesty and good faith. A contract which requires. Rigos. that the option is not the contract of sale itself. renders himself liable for damages for breach of the option. the latter may not sue for specific performance on the proposed contract ("object" of the option) since it has failed to reach its own stage of perfection. it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by. however. on the object and on the cause thereof. it cannot. if an acceptance has been made. without first being duly afforded its day in court. 87-41058. 3 If the condition is imposed on the obligation of a party which is not fulfilled. the other party may either waive the condition or refuse to proceed with the sale (Art. 8 Let us elucidate a little. the prescribed form being thereby an essential element thereof. 1324. and it would be a breach of that contract to withdraw the offer during the agreed period. aforequoted. to which the topic for discussion about the case at bench belongs. compliance with certain formalities prescribed by law. obligates himself. Arias. would be dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another but also on terms. the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force. In a solemn contract. in the exercise of his rights and in the performance of his duties. or possibly of an offer under Article 1319 9 of the same Code. until or unless the price is paid. Until the contract is perfected. An imperfect promise (policitacion) is merely an offer. the withdrawal is effective immediately after its manifestation. however. that the right of first refusal would be inconsequential for. although denominated a "Deed of Conditional Sale. and compliance therewith may accordingly be exacted. however. however. 102 Phil. such as in a donation of real property. care should be taken of the real nature of the consideration given. Inc. however. until a contract is perfected. the main contract could be deemed perfected. 87-41058. the delivery of the object of the agreement. vs. Neither can the right of first refusal. it conforms with the second paragraph of Article 1479 of the Civil Code. 5 An accepted unilateral promise which specifies the thing to be sold and the price to be paid. the following rules generally govern: (1) If the period is not itself founded upon or supported by a consideration. understood in its normal concept. When the sale is not absolute but conditional. among other laws of general application. a contract of "option" is deemed perfected. Where a period is given to the offeree within which to accept the offer. Rural Bank of Parañaque. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. since there is none to execute. are not considered binding commitments. a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings. is commonly referred to as a real contract. 249. for a price certain. Needless to point out. the so-called "right of first refusal" is an innovative juridical relation. 1458. if. Article 1458 of the Civil Code provides: Art. 270). but not the obligation. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. We are also unable to agree with petitioners that the Court of Appeals has erred in holding that the writ of execution varies the terms of the judgment in Civil Case No. 87-41058, later affirmed in CA-G.R. CV-21123. The Court of Appeals, in this regard, has observed: Finally, the questioned writ of execution is in variance with the decision of the trial court as modified by this Court. As already stated, there was nothing in said decision 13 that decreed the execution of a deed of sale between the Cu Unjiengs and respondent lessees, or the fixing of the price of the sale, or the cancellation of title in the name of petitioner (Limpin vs. IAC, 147 SCRA 516; Pamantasan ng Lungsod ng Maynila vs. IAC, 143 SCRA 311; De Guzman vs. CA, 137 SCRA 730; Pastor vs. CA, 122 SCRA 885). It is likewise quite obvious to us that the decision in Civil Case No. 87-41058 could not have decreed at the time the execution of any deed of sale between the Cu Unjiengs and petitioners. WHEREFORE, we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders, dated 30 August 1991 and 27 September 1991, of the court a quo. Costs against petitioners. SO ORDERED. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9871 January 31, 1958 ATKINS, KROLL and CO., INC., petitioner, vs. B. CUA HIAN TEK, respondent. BENGZON, J.: Review of a Court of Appeals' decision. For its failure to deliver one thousand cartons of sardines, which it had sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by the Manila court of first instance to Pay damages, which on appeal was reduced by the Court of Appeals to P3,240.15 representing unrealized profits. There was no such contract of sale, says petitioner, but only an option to buy, which was not enforceable for lack of consideration because in accordance with Art. 1479 of the New Civil Code "an accepted unilatateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. Simple are the facts of this case: Dated September 13, 1951, petitioner sent to respondent a letter of the following tenor: Sir (s) /Madam: We are pleased to make you herewith the following firm offer, subject to reply by September 23, 1951: Quantity and Commodity: 400 Ctns. Luneta brand Sardines in Tomato Sauce 48/15-oz. Ovals at $8.25 Ctn. 300 Ctns. Luntea brand Sardines Natural 48/15 oz. talls at $6.25 Ct. 300 Ctns. Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 Ct. Price(s): All prices C ad F Manila Cosular Fees of $6.00 to be added. Shipmet: Durig September/October from US Ports. Supplier: Atkins, Kroll & Co., Sa Frasisco, Cal. U.S.A. We are looking forward to receive your valued order and remain . The Court of first instance and the Court of Appeals1 found that B. Cua Hian Tek accepted the offer unconditionally and delivered his letter of acceptance Exh. B on September 21, 1951. However, due to shortage of catch of sardines by the packers in California, Atkins Kroll & Co., failed to deliver the commodities it had offered for sale. There are other details to which reference shall not be made, as they touch the question whether the acceptance had been handed on time; and on that issue of Court of Appeals definitely found for plaintiff. Ayway, in presenting its case before this Court petitioner does not dispute such timely acceptance. It merely raises the point that the acceptance only created an option, which, lacking consideration, had no obligatory force. The offer Exh. A, petitioner argues, "was a promise to sell a determinate thing for a price certain. Upon its acceptance by respondent, the offer became an accepted unilateral promise to sell a determinate thing for price certain. Inasmuch as there was no consideration to support the promise to sell distinct from the price, it follows that under Art. 1479 aforequoted, the promise is not binding on the petitioner even if it was accepted by respondent." (p. 12 brief of petitioner.). The argument, maifestly assumes that only a unilateral promise arose when the offeree accepted. Such assumption is a mistake, because a bilateral cotract to sell and to buy was created upon acceptance. So much so that B. Cua Hian Tek could be sued, he had backed out after accepting, by refusing to get the sardines and/or to pay for their price. Indeed, the word "option" is found neither in the offer nor in the 37 acceptance. On the copntrary Exh. B accepted "the firm offer for the sale" and adds, "the undersigned buyer has immediately filed an application for import license . . ." (Emphasis Ours.). Petitioner, however, insists the offer was a mere offer of option, because the "firm offer" Exh. A. was a continuing offer to sell until September 23, "an option is nothing more than a continuing offer" for a specified time. In our opinion implies more than that: it implies the legal obligation to keep open for the time specified.2 Yet the letter Exh. A did not by itself produce the legal obligation of keeping the offer open up ot Septmber 23. It could be withdrawn before acceptance, because it is admitted, there was no consideration for it. ART. 1324. When the offerer has showed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as somnething paid or promissed. (n) (New Civil Code.). Ordinarily an offer to buy or sell may be withdrawn or countermanded before accepatnce, even though the offer provides that it will not be withdrawn or countermanded, or allows the offeree a certain time within which to accept it, unless such provision or agreement is supported by an independent consideration. . . (77 Corpus Juris Secundum p. 636.). Furthermore, an option is unilateral: a promise to sell3 at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to later. In this case, however, upon accepeting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligations of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilalteral contract of sale. Lastly, even supposing that Exh. A granted an option which is not binding for lack of consideration, the authorities hold that . If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration. . . (77 Corpus Juris Secundum p. 652. See also 27 Ruling Case Law 339 and cases cited.). It can be taken for granted, as contended by the defendants, that the option contract was not valid for lack of consideration. But it was, at least, an offer to sell, which was accepted by letter, and of this acceptance the offerer had knowledge before said offer was withdrawn. The concurrence of both acts—the offer and the acceptance—could at all events have generated a contract, if none there was before (atrs. 1254 and 1262 of the Civil Code). (Zayco vs. Serra, 44 Phil. 331.). One additional observation should be made before the closing this opinion. The defense in the court of first instance rested on the proposition or propositions that the offer had not been precedent had not been fulfilled. This option-without-consideration idea was never mentioned in the answer. A Change of theory in the appellate courts is not permitted. In order that a question may be raised on appeal, it is essential that it be within the issues made by the parties in their pleadings. Consequently, when a party deliberately adopts a certain theory, and the case is tried and decided upon that theory in the court below, he will not be permitted to change his theory on appeal because, to permit him to do so, would be unfair to the adverse party. (Rules of Court by Moran— 1957 Ed. Vol. I p.715 citing Agoncillo vs. Javier, 38 Phil. 424; American Express Company vs. Natividad, 46 Phil. 207; San Agustin vs. Barrios, 68 Phil. 465, 480; Toribio vs. Dacasa, 55 Phil. 461.) . We must therefore hold, as the lower courts have held that there was a contract of sale between the parties. And as no legal excuse has been proven, the seller's failure to comply therewith gave around to an award for damages, which has been fixed by the Court of Appeals at P3,240.15-amount which petitioner does not dispute in this final instance. Consequently, the decision under review should be, and it is hereby affirmed, with cost against petitioner. SECOND DIVISION [G.R. No. 135929. April 20, 2001] LOURDES ONG LIMSON, petitioner, vs. COURT OF APPEALS, SPOUSES LORENZO DE VERA and ASUNCION SANTOS-DE VERA, TOMAS CUENCA, JR., and SUNVAR REALTY DEVELOPMENT CORPORATION, respondents. DECISION BELLOSILLO, J.: Filed under Rule 45 of the Rules of Court this Petition for Review on Certiorari seeks to review, reverse and set aside the Decision[1] of the Court of Appeals dated 18 May 1998 reversing that of the Regional Trial Court dated 30 June 1993. The petition likewise assails the Resolution[2] of the appellate court of 19 October 1998 denying petitioner‘s Motion for Reconsideration. Petitioner Lourdes Ong Limson, in her 14 May 1979 Complaint filed before the trial court,[3] alleged that in July 1978 respondent spouses Lorenzo de Vera and Asuncion Santos-de Vera, through their agent Marcosa Sanchez, offered to sell to petitioner a parcel of land consisting of 48,260 square meters, more or less, situated in Barrio San Dionisio, Parañaque, Metro Manila; that respondent spouses informed her that they were the owners of the subject property; that on 31 July 1978 she agreed to buy the property at the price of P34.00 per square meter and gave the sum of P20,000.00 to respondent spouses as "earnest money;" that respondent spouses signed a receipt therefor and gave her a 10-day option period to purchase the property; that respondent Lorenzo de Vera then informed her that the subject property was mortgaged to Emilio Ramos and Isidro Ramos; that respondent Lorenzo de Vera asked her to pay the balance of the purchase price to enable him and his wife to settle their obligation with the Ramoses. Petitioner also averred that she agreed to meet respondent spouses and the Ramoses on 5 August 1978 at the Office of the Registry of Deeds of Makati, Metro Manila, to consummate the transaction but due to the failure of respondent Asuncion Santos-de Vera and the Ramoses to appear, no transaction was formalized. In a second meeting scheduled on 11 August 1978 she claimed that she was willing and ready to pay the balance of the purchase price but the transaction again did not materialize as respondent spouses failed to pay the back taxes of subject property. Subsequently, on 23 August 1978 petitioner allegedly gave respondent Lorenzo de Vera three (3) checks in the total amount of P36,170.00 for the settlement of the back taxes of the property and for the payment of the quitclaims of the three (3) tenants of subject land. The amount was purportedly considered part of the purchase price and respondent Lorenzo de Vera signed the receipts therefor. Petitioner alleged that on 5 September 1978 she was surprised to learn from the agent of respondent spouses that the property was the subject of a negotiation for the sale to respondent Sunvar Realty Development Corporation (SUNVAR) represented by respondent Tomas Cuenca, Jr. On 15 September 1978 petitioner discovered that although respondent spouses purchased the property from the Ramoses on 20 March 1970 it was only on 15 September 1978 that TCT No. S-72946 covering the property was issued to respondent spouses. As a consequence, she filed on the same day an Affidavit of Adverse Claim with the Office of the Registry of Deeds of Makati, Metro Manila, which was annotated on TCT No. S-72946. She also claimed that on the same day she informed respondent Cuenca of her "contract" to purchase the property. The Deed of Sale between respondent spouses and respondent SUNVAR was executed on 15 September 1978 and TCT No. S-72377 was issued in favor of the latter on 26 September 1978 with the Adverse Claim of petitioner annotated thereon. Petitioner claimed that when respondent spouses sold the property in dispute to SUNVAR, her valid and legal right to purchase it was ignored if not violated. Moreover, she maintained that SUNVAR was in bad faith as it knew of her "contract" to purchase the subject property from respondent spouses. Finally, for the alleged unlawful and unjust acts of respondent spouses, which caused her damage, prejudice and injury, petitioner claimed that the Deed of Sale, should be annuled and TCT No. S-72377 in the name of respondent SUNVAR canceled and TCT No. S-72946 restored. She also insisted that a Deed of 38 Sale between her and respondent spouses be now executed upon her payment of the balance of the purchase price agreed upon, plus damages and attorney‘s fees. In their Answer[4] respondent spouses maintained that petitioner had no sufficient cause of action against them; that she was not the real party in interest; that the option to buy the property had long expired; that there was no perfected contract to sell between them; and, that petitioner had no legal capacity to sue. Additionally, respondent spouses claimed actual, moral and exemplary damages, and attorney‘s fees against petitioner. On the other hand, respondents SUNVAR and Cuenca, in their Answer,[5] alleged that petitioner was not the proper party in interest and/or had no cause of action against them. But, even assuming that petitioner was the proper party in interest, they claimed that she could only be entitled to the return of any amount received by respondent spouses. In the alternative, they argued that petitioner had lost her option to buy the property for failure to comply with the terms and conditions of the agreement as embodied in the receipt issued therefor. Moreover, they contended that at the time of the execution of the Deed of Sale and the payment of consideration to respondent spouses, they "did not know nor was informed" of petitioner‘s interest or claim over the subject property. They claimed furthermore that it was only after the signing of the Deed of Sale and the payment of the corresponding amounts to respondent spouses that they came to know of the claim of petitioner as it was only then that they were furnished copy of the title to the property where the Adverse Claim of petitioner was annotated. Consequently, they also instituted a Cross-Claim against respondent spouses for bad faith in encouraging the negotiations between them without telling them of the claim of petitioner. The same respondents maintained that had they known of the claim of petitioner, they would not have initiated negotiations with respondent spouses for the purchase of the property. Thus, they prayed for reimbursement of all amounts and monies received from them by respondent spouses, attorney‘s fees and expenses for litigation in the event that the trial court should annul the Deed of Sale and deprive them of their ownership and possession of the subject land. In their Answer to the Cross-Claim[6] of respondents SUNVAR and Cuenca, respondent spouses insisted that they negotiated with the former only after the expiration of the option period given to petitioner and her failure to comply with her commitments thereunder. Respondent spouses contended that they acted legally and validly, in all honesty and good faith. According to them, respondent SUNVAR made a verification of the title with the Office of the Register of Deeds of Metro Manila District IV before the execution of the Deed of Absolute Sale. Also, they claimed that the Cross-Claim was barred by a written waiver executed by respondent SUNVAR in their favor. Thus, respondent spouses prayed for actual damages for the unjustified filing of the Cross-Claim, moral damages for the mental anguish and similar injuries they suffered by reason thereof, exemplary damages "to prevent others from emulating the bad example" of respondents SUNVAR and Cuenca, plus attorney‘s fees. After a protracted trial and reconstitution of the court records due to the fire that razed the Pasay City Hall on 18 January 1992, the Regional Trial Court rendered its 30 June 1993 Decision[7] in favor of petitioner. It ordered (a) the annulment and rescission of the Deed of Absolute Sale executed on 15 September 1978 by respondent spouses in favor of respondent SUNVAR; (b) the cancellation and revocation of TCT No. S-75377 of the Registry of Deeds, Makati, Metro Manila, issued in the name of respondent Sunvar Realty Development Corporation, and the restoration or reinstatement of TCT No. S-72946 of the same Registry issued in the name of respondent spouses; (c) respondent spouses to execute a deed of sale conveying ownership of the property covered by TCT No. S-72946 in favor of petitioner upon her payment of the balance of the purchase price agreed upon; and, (d) respondent spouses to pay petitioner P50,000.00 as and for attorney‘s fees, and to pay the costs. On appeal, the Court of Appeals completely reversed the decision of the trial court. It ordered (a) the Register of Deeds of Makati City to lift the Adverse Claim and such other encumbrances petitioner might have filed or caused to be annotated on TCT No. S-75377; and, (b) petitioner to pay (1) respondent SUNVAR P50,000.00 as nominal damages, P30,000.00 as exemplary damages and P20,000 as attorney‘s fees; (2) respondent spouses, P15,000.00 as nominal damages, P10,000.00 as exemplary damages and P10,000.00 as attorney‘s fees; and, (3) the costs. Petitioner timely filed a Motion for Reconsideration which was denied by the Court of Appeals on 19 October 1998. Hence, this petition. At issue for resolution by the Court is the nature of the contract entered into between petitioner Lourdes Ong Limson on one hand, and respondent spouses Lorenzo de Vera and Asuncion Santos-de Vera on the other. The main argument of petitioner is that there was a perfected contract to sell between her and respondent spouses. On the other hand, respondent spouses and respondents SUNVAR and Cuenca argue that what was perfected between petitioner and respondent spouses was a mere option. A scrutiny of the facts as well as the evidence of the parties overwhelmingly leads to the conclusion that the agreement between the parties was a contract of option and not a contract to sell. An option, as used in the law of sales, is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also sometimes called an "unaccepted offer." An option is not of itself a purchase, but merely secures the privilege to buy.[8] It is not a sale of property but a sale of the right to purchase.[9] It is simply a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something, i.e., the right or privilege to buy at the election or option of the other party.[10] Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in the subject matter, but is merely a contract by which the owner of the property gives the optionee the right or privilege of accepting the offer and buying the property on certain terms.[11] On the other hand, a contract, like a contract to sell, involves the meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.[12] Contracts, in general, are perfected by mere consent,[13] which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute.[14] The Receipt[15] that contains the contract between petitioner and respondent spouses provides – Received from Lourdes Limson the sum of Twenty Thousand Pesos (P20,000.00) under Check No. 22391 dated July 31, 1978 as earnest money with option to purchase a parcel of land owned by Lorenzo de Vera located at Barrio San Dionisio, Municipality of Parañaque, Province of Rizal with an area of forty eight thousand two hundred sixty square meters more or less at the price of Thirty Four Pesos (P34.00)[16] cash subject to the condition and stipulation that have been agreed upon by the buyer and me which will form part of the receipt. Should the transaction of the property not materialize not on the fault of the buyer, I obligate myself to return the full amount of P20,000.00 earnest money with option to buy or forfeit on the fault of the buyer. I guarantee to notify the buyer Lourdes Limson or her representative and get her conformity should I sell or encumber this property to a third person. This option to buy is good within ten (10) days until the absolute deed of sale is finally signed by the parties or the failure of the buyer to comply with the terms of the option to buy as herein attached. In the interpretation of contracts, the ascertainment of the intention of the contracting parties is to be discharged by looking to the words they used to project that intention in their contract, all the words, not just a particular word or two, and words in context, not words standing alone. [17] The above Receipt readily shows that respondent spouses and petitioner only entered into a contract of option; a contract by which respondent spouses agreed with petitioner that the latter shall have the right to buy the former‘s property at a fixed price of P34.00 per square meter within ten (10) days from 31 July 1978. Respondent spouses did not sell their property; they did not also agree to sell it; but they sold something, i.e., the privilege to buy at the election or option of petitioner. The agreement imposed no binding obligation on petitioner, aside from the consideration for the offer. 39 The consideration of P20,000.00 paid by petitioner to respondent spouses was referred to as "earnest money." However, a careful examination of the words used indicates that the money is not earnest money butoption money. "Earnest money" and "option money" are not the same but distinguished thus: (a) earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy, [18] but may even forfeit it depending on the terms of the option. There is nothing in the Receipt which indicates that the P20,000.00 was part of the purchase price. Moreover, it was not shown that there was a perfected sale between the parties where earnest money was given. Finally, when petitioner gave the "earnest money," the Receipt did not reveal that she was bound to pay the balance of the purchase price. In fact, she could even forfeit the money given if the terms of the option were not met. Thus, the P20,000.00 could only be money given as consideration for the option contract. That the contract between the parties is one of option is buttressed by the provision therein that should the transaction of the property not materialize without fault of petitioner as buyer, respondent Lorenzo de Vera obligates himself to return the full amount of P20,000.00 "earnest money" with option to buy or forfeit the same on the fault of petitioner. It is further bolstered by the provision therein that guarantees petitioner that she or her representative would be notified in case the subject property was sold or encumbered to a third person. Finally, the Receiptprovided for a period within which the option to buy was to be exercised, i.e., "within ten (10) days" from 31 July 1978. Doubtless, the agreement between respondent spouses and petitioner was an "option contract" or what is sometimes called an "unaccepted offer." During the option period the agreement was not converted into a bilateral promise to sell and to buy where both respondent spouses and petitioner were then reciprocally bound to comply with their respective undertakings as petitioner did not timely, affirmatively and clearly accept the offer of respondent spouses. The rule is that except where a formal acceptance is not required, although the acceptance must be affirmatively and clearly made and evidenced by some acts or conduct communicated to the offeror, it may be made either in a formal or an informal manner, and may be shown by acts, conduct or words by the accepting party that clearly manifest a present intention or determination to accept the offer to buy or sell. But there is nothing in the acts, conduct or words of petitioner that clearly manifest a present intention or determination to accept the offer to buy the property of respondent spouses within the 10-day option period. The only occasion within the option period when petitioner could have demonstrated her acceptance was on 5 August 1978 when, according to her, she agreed to meet respondent spouses and the Ramoses at the Office of the Register of Deeds of Makati. Petitioner‘s agreement to meet with respondent spouses presupposes an invitation from the latter, which only emphasizes their persistence in offering the property to the former. But whether that showed acceptance by petitioner of the offer is hazy and dubious. On or before 10 August 1978, the last day of the option period, no affirmative or clear manifestation was made by petitioner to accept the offer. Certainly, there was no concurrence of private respondent spouses‘ offer and petitioner‘s acceptance thereof within the option period. Consequently, there was no perfected contract to sell between the parties. On 11 August 1978 the option period expired and the exclusive right of petitioner to buy the property of respondent spouses ceased. The subsequent meetings and negotiations, specifically on 11 and 23 August 1978, between the parties only showed the desire of respondent spouses to sell their property to petitioner. Also, on 14 September 1978 when respondent spouses sent a telegram to petitioner demanding full payment of the purchase price on even date simply demonstrated an inclination to give her preference to buy subject property. Collectively, these instances did not indicate that petitioner still had the exclusive right to purchase subject property. Verily, the commencement of negotiations between respondent spouses and respondent SUNVAR clearly manifested that their offer to sell subject property to petitioner was no longer exclusive to her. We cannot subscribe to the argument of petitioner that respondent spouses extended the option period when they extended the authority of their agent until 31 August 1978. The extension of the contract of agency could not operate to extend the option period between the parties in the instant case. The extension must not be implied but categorical and must show the clear intention of the parties. As to whether respondent spouses were at fault for the non-consummation of their contract with petitioner, we agree with the appellate court that they were not to be blamed. First, within the option period, or on 4 August 1978, it was respondent spouses and not petitioner who initiated the meeting at the Office of the Register of Deeds of Makati. Second, that the Ramoses failed to appear on 4 August 1978 was beyond the control of respondent spouses. Third, the succeeding meetings that transpired to consummate the contract were all beyond the option period and, as declared by the Court of Appeals, the question of who was at fault was already immaterial. Fourth, even assuming that the meetings were within the option period, the presence of petitioner was not enough as she was not even prepared to pay the purchase price in cash as agreed upon. Finally, even without the presence of the Ramoses, petitioner could have easily made the necessary payment in cash as the price of the property was already set at P34.00 per square meter and payment of the mortgage could very well be left to respondent spouses. Petitioner further claims that when respondent spouses sent her a telegram demanding full payment of the purchase price on 14 September 1978 it was an acknowledgment of their contract to sell, thus denying them the right to claim otherwise. We do not agree. As explained above, there was no contract to sell between petitioner and respondent spouses to speak of. Verily, the telegram could not operate to estop them from claiming that there was such contract between them and petitioner. Neither could it mean that respondent spouses extended the option period. The telegram only showed that respondent spouses were willing to give petitioner a chance to buy subject property even if it was no longer exclusive. The option period having expired and acceptance was not effectively made by petitioner, the purchase of subject property by respondent SUNVAR was perfectly valid and entered into in good faith. Petitioner claims that in August 1978 Hermigildo Sanchez, the son of respondent spouses‘ agent, Marcosa Sanchez, informed Marixi Prieto, a member of the Board of Directors of respondent SUNVAR, that the property was already sold to petitioner. Also, petitioner maintains that on 5 September 1978 respondent Cuenca met with her and offered to buy the property from her at P45.00 per square meter. Petitioner contends that these incidents, including the annotation of her Adverse Claim on the title of subject property on 15 September 1978 show that respondent SUNVAR was aware of the perfected sale between her and respondent spouses, thus making respondent SUNVAR a buyer in bad faith. Petitioner is not correct. The dates mentioned, at least 5 and 15 September 1978, are immaterial as they were beyond the option period given to petitioner. On the other hand, the referral to sometime in August 1978in the testimony of Hermigildo Sanchez as emphasized by petitioner in her petition is very vague. It could be within or beyond the option period. Clearly then, even assuming that the meeting with Marixi Prieto actually transpired, it could not necessarily mean that she knew of the agreement between petitioner and respondent spouses for the purchase of subject property as the meeting could have occurred beyond the option period. In which case, no bad faith could be attributed to respondent SUNVAR. If, on the other hand, the meeting was within the option period, petitioner was remiss in her duty to prove so. Necessarily, we are left with the conclusion that respondent SUNVAR bought subject property from respondent spouses in good faith, for value and without knowledge of any flaw or defect in its title. The appellate court awarded nominal and exemplary damages plus attorney‘s fees to respondent spouses and respondent SUNVAR. But nominal damages are adjudicated to vindicate or recognize the right of the plaintiff that has been violated or invaded by the defendant. [19] In the instant case, the Court recognizes the rights of all the parties and finds no violation or invasion of the rights of respondents by petitioner. Petitioner, in filing her complaint, only seeks relief, in good faith, for what she believes she was entitled to and should not be made to suffer therefor. Neither should exemplary damages be awarded to respondents as they are imposed only by way of example or correction for the public good and only in addition to the moral, temperate, liquidated or compensatory damages.[20] No such kinds of damages were awarded by 40 112485. PANGANIBAN. August 9. SO ORDERED.00 as and for [a]ttorney‘s fees.000. P15. The Decision of the Court of Appeals ordering the Register of Deeds of Makati City to lift the adverse claim and such other encumbrances petitioner Lourdes Ong Limson may have filed or caused to be annotated on TCT No. MACARIO PEREZ. premises considered. FLORENCIO PEREZ. vs. respondents. MIGUEL PEREZ SR. In the assessment of the facts. 1993. in favor of plaintiff Emilia Manzano. Leoncio Perez. 2001] EMILIA MANZANO. 32594. The dispositive part of the Decision reads: ―WHEREFORE. LEONCIO PEREZ. WHEREFORE. which was not justified in this case. Bounded on the North by Callejon. together with all the improvements thereon.. the judgment appealed from is hereby REVERSED and another one is entered dismissing plaintiff‘s complaint. Siniloan. the party that presents a preponderance of convincing evidence wins. ‗J‘ & ‗K‘) over the properties in question void or simulated. assailing the March 31..00 as exemplary damages. Nestor Perez and Gloria Perez to execute an Extra Judicial Partition with transfer over the said residential lot and house.R. the Judgment[3] reversed by the CA ruled in this wise: ―WHEREFORE. The Case Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. situated at General Luna Street.: THIRD DIVISION [G.‖ On the other hand. NESTOR PEREZ. 1993 Decision[1] of the Court of Appeals (CA)[2] in CA-GR CV No. MIGUEL PEREZ JR.the Court of Appeals. reason and logic are used. Miguel Perez. 41 . petitioner. subject matter of this case. only nominal.‖[4] The Motion for Reconsideration filed by petitioner before the CA was denied in a Resolution dated October 28.000. and To pay the cost of suit.. Sr. P10. and GLORIA PEREZ. 2) Declaring the two ‗Kasulatan ng Bilihang Tuluyan‘ (Exh. ‗Q‘ & ‗P‘).000. Macario Perez. In civil cases. attorney‘s fees could not also be recovered as the Court does not deem it just and equitable under the circumstances. J. S-75377 is AFFIRMED. No. Florencio Perez. 1993 and 1994. 3) Ordering the defendants Miguel Perez. Laguna. the petition is DENIED. ‗J‘ & ‗K‘) over the properties in question rescinded.00 as moral damages. judgment is hereby rendered: 1) Declaring the two ‗Kasulatan ng Bilihang Tuluyan‘ (Exh. DECISION Courts decide cases on the basis of the evidence presented by the parties. Finally. more particularly described hereunder: ‗A parcel of residential lot (Lots 1725 and 1726 of the Cadastral Survey of Siniloan). Jr. now covered and described in Tax Declaration Nos. 4) Ordering the defendants to pay plaintiff: a) b) c) d) P25.[5] The Facts The facts of the case are summarized by the Court of Appeals as follows: ―[Petitioner] Emilia Manzano in her Complaint alleged that she is the owner of a residential house and lot. respectively in the name of Nieves Manzano (Exh. with the MODIFICATION that the award of nominal and exemplary damages as well as attorney‘s fees is DELETED. To secure payment of their indebtedness.00 plus other valuables allegedly received by her from Nieves Manzano.‘ ‗Second. sister of the [petitioner] and predecessor-in-interest of the herein [private respondents]. ‗V-2‘ & ‗V-3‘). 9583. and her son. it was not explained why physical possession of the house and lot had to be with the supposed vendee and her family who even built a pigpen on the lot (p. ‗F‘ & ‗G‘). the [petitioner] executed two deeds of conveyance for the sale of the residential lot on 22 January 1979 (Exhibit ‗J‘) and the sale of the house erected thereon on 2 February 1979 (Exhibit ‗K‘). and it is on [record] that [petitioner] has been paying the real estate taxes [on] the same (Exh. she would not have agreed to reacquire one-half thereof for a consideration of P10. more or less. attorney‘s fees of P10. ―Pursuant to their understanding. and costs of suit.000. by [a] town river.00 per court appearance. Sr. she failed to show any proof that the transaction she entered into with her sister was a loan and not a sale.‘ ‗This is a clear indication also that they (respondents) recognized [petitioner] as owner of said properties.‖[6] Ruling of the Court of Appeals The Court of Appeals was not convinced by petitioner‘s claim that there was a supposed oral agreement of commodatum over the disputed house and lot. the award of moral damages of not less than P50.I. the properties in question after [they have] been transferred to Nieves Manzano.on the East.‘ xxx xxx xxx ‗Third. xxx xxx xxx ‗Sixth. exemplary damages of P10. and the [respondents] have not presented evidence to belie her testimony. ‗V‘.00 attorney‘s fees of P10. Inc. Intermediate Appellate Court. This is especially true if we are to accept her assertion that Nieves Manzano did not purchase the property for value. the [respondents] prayed as counterclaim the award of moral damages in the amount of P10. upon request of the [petitioner] to return said properties to her. if the agreement was to merely use plaintiff‘s property as collateral in a mortgage loan.000. that except for the [petitioner‘s] bare allegations. allegedly constrained to engage the services of a counsel to protect her proprietary rights. Inc. TSN.00 plus P500.00 and other things of value. [respondents] confirmed the fact that [petitioner] went to the house in question and hacked the stairs. ‗V-1‘. both for a consideration of P1. Luna Street.00 per appearance in court and costs of suit. According to [petitioner] she did it for failure of the [respondents] to return and vacate the premises. No. uncontroverted is the fact that the consideration [for] the alleged sale of the properties in question is P1. (Exh. Neither was it persuaded by her allegation that respondents‘ predecessor-in-interest had given no consideration for the sale of the property in the latter‘s favor.00. in the sum of P30.00 each. ‗A‘) to secure payment of the loan extended to Macario Perez. She was. 195 SCRA 38). It explained as follows: ―To begin with. ―The alleged failure of the defendants-appellants to present evidence of payment of real estate taxes cannot prejudice their cause. ―The [petitioner] alleged that sincere efforts to settle the dispute amicably failed and that the unwarranted refusal of the [respondents] to return the property caused her sleepless nights. [Respondents] did not file any action against her. [respondents] did promise and prepare an Extra Judicial Partition with Sale over said properties in question. [respondent] Miguel Perez.‘ ‗[These] uncontroverted facts [are] clear recognition [by private respondents] that [petitioner] is the owner of the properties in question. with a floor area of 40 square meters. the same were mortgaged in favor of the Rural Bank of Infante. Nieves Manzano. Containing an area of 130 square meters more or less.‖ xxx xxx xxx ‗Fourth.00. But since the [respondents] felt that the property is the only memory left by their predecessor-in-interest. one of the [private respondents]. exemplary damages in an amount as may be warranted by the evidence on record. allegedly borrowed the aforementioned property as collateral for a projected loan. 9583 and assessed at P1. [respondent] Macario Perez. on the South by Constancia Adofina. however the same did not materialize. the [respondents] argued that what the parties to the [sale] agreed upon was to resell the property to the [petitioner] after the payment of the loan with the Rural Bank. and on the West by Gen. the court a quo considered the following: ‗First. ―On 2 April 1979. ―In seeking the dismissal of the complaint. 6.000. ―In ruling for the [petitioner]. obtained a loan from the Rural Bank of Infanta. upon payment and [release] to the [private respondents]. the [respondents] countered that they are the owners of the property in question being the legal heirs of Nieves Manzano Who purchased the same from the [petitioner] for value and in good faith..00 (Exhibit ‗U-1‘).000. iron roofing. covered by Tax Dec. 1990). June 11. ―As a proximate result of the filing of this alleged baseless and malicious suit.00. ‗A residential house of strong mixed materials and G. More importantly. ―Nieves Manzano died on 18 December 1979 leaving her husband and children as heirs. were returned to [petitioner] by Florencio Perez. Nieves Manzano together with her husband. [respondents‘] pretense of ownership of the properties in question is belied by their failure to present payment of real estate taxes [for] said properties.000. ―The [petitioner] sought the annulment of the deeds of sale and execution of a deed of transfer or reconveyance of the subject property in her favor. [Petitioner] denies she has received any consideration for the transfer of said properties. Also covered by Tax No.‖ xxx xxx xxx ‗Seventh. mental shock and social humiliation.000.000. A mere execution of the document transferring title in the latter‘s name would suffice for the purpose. The [respondents] also argued that the [petitioner] is now estopped from questioning their ownership after seven (7) years from the consummation of the sale. [respondents] herein allegedly refused to return the subject property to the [petitioner] even after the payment of their loan with the Rural Bank (Exhibit ‗B‘). ‗T‘. the documents covering said properties which were given to the bank as collateral of said loan.330. the Cadastral Notice of said properties were in the name of [petitioner] and the same was sent to her (Exh. likewise. they executed a Real Estate Mortgage (Exhibit ‗A‘) over the subject property in favor of the bank.00 plus P500. These heirs.‘ ―In 1979. Realty tax payment of property is not conclusive evidence of ownership (Director of Lands vs. Tax receipts only become strong evidence of 42 . they politely informed the [petitioner] of their refusal to sell the same.‘ xxx xxx xxx ‗Fifth. The [petitioner] acceded to the request of her sister upon the latter‘s promise that she [would] return the property immediately upon payment of her loan. as shown by the deeds of sale which contain the true agreements between the parties therein. if the plaintiff-appellee remained as the rightful owner of the subject property. ―By way of special and affirmative defense. The other heirs of Nieves Manzano did not sign. The execution of a deed purporting to convey ownership of a realty is in itself prima facie evidence of the existence of a valuable consideration and x x x the party alleging lack of consideration has the burden of proving such allegation (Caballero. that of petitioner awfully pales. at bottom. however. Bare allegations. These matters are not. Nonetheless. this course of action would ultimately lead to anarchy.00) Peso alone but also the other valuable considerations. ‗V-1‘. 196 SCRA 650). C. 9589 in the name of Nieves Manzano (Exhibits ‗D‘ and ‗D-1‘) indicates that the transfer of the subject property was based on the Absolute Sale executed before Notary Public Alfonso Sanvictores.[15] Here petitioner has failed to come up with even a preponderance of evidence to prove her claim. ‗V-3‘ and ‗T‘). Court of Appeals. issued in favor of respondents‘ predecessor-in-interest the day after the sale was Tax Declaration No. self-serving. We reiterate.000 for that portion if. The facts alleged by petitioner in her favor are the following: (1) she inherited the subject house and lot from her parents. the documents pertaining to the house and lot were returned by Respondent Florencio Perez to petitioner.G. 1994 (Exhibit ‗P‘). aside from being contrary to the rule of law and our judicial system. with her siblings waiving in her favor their claim over the same. while plaintiff-appellee was still the owner of the subject property in 1979 (Exhibit ‘I‘). But that payment. which was made only after her Complaint had already been lodged before the trial court. In addition to her own oral testimony. Caballero. although the transfer did not materialize because of the refusal of the other respondents to sign the document. et al. that an elaborate discussion of the parol evidence rule and its exceptions was merely given as a preface by the appellate court. Page 157. who are entitled to their claim and who are not.00 ―plus other valuable. petitioner has presented no convincing proof of her continued ownership of the subject property. The inadequacy of the monetary consideration does not render a conveyance null and void. That is why parties to a case are given all the opportunity to present evidence to help the courts decide on who are telling the truth and who are lying. as aptly explained by the CA. The Court of Appeals erred in failing to consider that: A) The introduction of petitioner‘s evidence is proper under the parol evidence rule. and are.000 taken in the names of Nieves Manzano Perez and Respondent Miguel Perez. she owns the whole? Pitted against respondents‘ evidence. without having dominion over it? Why would they execute a reconveyance of one half of it in favor of petitioner? Why would the latter have to pay P10. 9633 (Exhibit ‗H‘). the main issue is whether the agreement between the parties was a commodatum or an absolute sale. 2536). The Court’s Ruling The Petition has no merit. Neither can we give weight to her allegation that respondents‘ possession of the subject property was merely by virtue of her tolerance. how could one of them obtained a mortgage over the property. it considered and weighed each and every piece thereof. (2) the property was mortgaged to secure a loan of P30. is not sufficient to invalidate the sale. But the Court is constrained to resolve it. This Court finds no cogent reason to disturb the findings and conclusions of the Court of Appeals. the plaintiff-appellee began paying her taxes only in 1986 after the instant complaint ha[d] been instituted (Exhibits ‗V‘. it was not persuaded. as explained in the multitude of reasons explicitly stated in its Decision. (4) three of the respondents were signatories to a document transferring one half of the property to Emilia Manzano in consideration of the sum of ten thousand pesos. we find that petitioner has failed to discharge her burden of proving her case by preponderance of evidence. convincing indicators of petitioner‘s ownership of the house and lot. for the vendor‘s liberality may be a sufficient cause for a valid contract (Ong vs. This concept refers to evidence that has greater weight or is more convincing than that which is offered in opposition. Rule 131 of the Rules of Court. 200 SCRA 37). C) Petitioner is entitled to the reliefs prayed for. Court of Appeals. unsubstantiated by evidence. ―2. this Petition. not a commodatum over the subject house and lot. Nowhere therein did it consider petitioner‘s evidence as improper under the said rule. points to the existence of a sale. as a rule. ―There is always the presumption that a written contract [is] for a valuable consideration (Section 5 (r). this circumstance alone. and (5) petitioner hacked the stairs of the subject house.A. it means probability of truth. because the factual findings of the Court of Appeals are contrary to those of the trial court. Indeed. respondents presented two Deeds of Sale. the issue in this case is enveloped by conflict in factual perception. Moreover.ownership when accompanied by proof of actual possession of the property (Tabuena vs. there must be clear and convincing evidence that is more than merely preponderant.[13] On the other hand. plaintiff-appell[ee] was not in possession of the subject property. 139 SCRA 133). B) The rules on admission by silence apply in the case at bar. they even support the claim of respondents. 45 O. On the contrary. ―In this case. however. Jurisprudence on the subject matter. The Supreme Court cannot depart from these guidelines and decide on the basis of compassion alone because. the Certificate of Tax Declaration issued by the Office of the Municipal Treasurer on 8 August 1990 upon the request of the plaintiff-appellee herself (Exhibit ‗W‘) named Nieves Manzano as the owner and possessor of the property in question. the Petition is hereby DENIED and the assailed Decision AFFIRMED. Assuming that such consideration is suspiciously insufficient. The defendant-appellants were the ones in actual occupation of the house and lot which as aforestated was unnecessary if the real agreement was merely to lend the property to be used as collateral. as she claims. when applied thereto. are not equivalent to proof under our Rules. therefore. A reading of the assailed Decision shows.. Ong.‖ Having been notarized. vs. she submitted proof of payment of real property taxes. duly recorded in his notarial book as Document No. Both Deeds – for the residential lot and for the house erected thereon – were each in consideration of P1. Upon close examination of the records. 1993 (Exhibit ‗Q‘) are all in the name of Nieves Manzano. which petitioner executed in favor of the former‘s predecessor-in-interest.‖[7] Hence. et al. cannot be considered in her favor for being self-serving. which covered the property. Book No. the evidence offered by petitioner to prove her claim is sadly lacking. they are presumed to have been duly executed. as well as the presumption of regularity in the execution thereof.‖[10] In sum. such as the two ―Kasulatan ng Bilihang Tuluyan” in this case. 43 . (3) upon full payment of the loan. Tax Declaration No[s]. Oral testimony cannot. petitioner contends that the CA erred in rejecting the introduction of her parol evidence. prevail over a written agreement of the parties. ―The consideration [for] the questioned [sale] is not the One (P1. yet no case was filed against her. Main Issue: Sale or Commodatum Obviously. 3157. Courts are not blessed with the ability to read what goes on in the minds of people. 9589. which is ordinarily not reviewable in a petition under Rule 45. Costs against petitioner. On the contrary.[11] Preliminarily. Moreover. Tax Declaration No. ―Significantly.[14] In order to contradict the facts contained in a notarial document. II. The Court of Appeals erred in reversing the decision of the trial court whose factual findings are entitled to great respect since it was able to observe and evaluate the demeanor of the witnesses.[12] In the case at bar. Gamaitan vs. WHEREFORE. Also.[8] Issues Petitioner submits the following grounds in support of her cause:[9] ―1. "K" to "K2") and TCT No. vs. No. In its decision dated August 10. 188862 covering the subject lot was then issued in favor of the latter.5 Petitioners seasonably moved for reconsideration. and without any consideration. As a result of this sale. 1998. with improvements thereon.2 dated March 25.4 From the above judgment. of the Regional Trial Court (RTC) of Manila. Maria filed Civil Case No. to reimburse or return the sum ofP570. prior to the sale to petitioners. the Vasquez spouses conveyed the parcel of land covered by TCT No. Sr. "L" and "L-1") registered in the name of Elenita Vasquez married to Crispulo Vasquez having been issued thru a void and inexistent contract. 188862 with legal rate of interest from the date of this decision. 59694. "B" and "B-1") both dated May 25. 150925 May 27. which affirmed in toto the decision. 89-50263.Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. the vendor having no valid title to dispose of the same. Costs against appellants. 1991 at age 64. On February 15. this petition for review.00 as and for attorney‘s fees. located in Felix Huertas Street. REYNALDO. YOLANDA and ELISA. 1989 (Exh. before the RTC of Manila against Diorita Dojoles and the Vasquez spouses. and Maria Contreras Mandap. petitioners. the trial court decided Civil Case No. "A" and "A-1". On September 5. 44730 and 55847. E-02380 in the former Juvenile and Domestic Relations Court of Manila for the dissolution and separation of the conjugal partnership. are as follows: The respondents are the legitimate children of the marriage of Dionisio Mandap. 89-50263 in favor of the herein respondents. thus: WHEREFORE.00 representing the purchase price of the lot covered by TCT No. 89-50263. Ordering the Register of Deeds of Manila to cancel TCT No. 186749 (Exh. Branch 34. Sr.R. for the nullification of the sale to the latter of subject lot. Ordering defendants James and Florence Tan to jointly and severally pay the sum of P15. similarly void. and her husband. denying their motion for reconsideration.. this time against the spouses Tan. became totally blind in 1940. Sps. the Decision of the lower court dated March 25. 1998.. the spouses James and Florence Tan. "Q" and "7". The pertinent facts. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita Dojoles to pay attorney‘s fees in the amount of P50. 1989. Declaring the Deeds of Sale (Exh. Sr. were adjudicated by the Juvenile and Domestic Relations Court in favor of Dionisio Mandap. 1989 executed in favor of Elenita Vasquez married to Crispulo Vasquez as null and void and of no legal force and effect whatsoever. James and Florence Tan is without merit. He suffered from diabetes since 1931. 4. IN THE SUPPLEMENTAL COMPLAINT AGAINST SPOUSES JAMES AND FLORENCE TAN 1. Further. Elenita Dojoles Vasquez. The decretal part of its judgment reads as follows: WHEREFORE. 186748 (Exh. Sr. Sr. J. 188862. The action was docketed as Civil Case No. and hence. Vasquez and Sps. 4. 186748 and 186749 covering the subject properties were issued in the name of Elenita Vasquez married to Crispulo Vasquez. SO ORDERED. 2. and was crippled for about 10 years until his death.R. alleging that the sale of subject properties by their father was fictitious. 59694 on the ground that the trial court erred in not declaring them to be buyers in good faith and in not sustaining the validity of their title. Sr. Meanwhile. and the spouses Crispulo and Elenita Vasquez simulated and thus void. Ordering the plaintiffs or the Estate of Dionisio Mandap. until his death on October 2.000. CV No.. further ordering the reconveyance of said title to the Estate of Dionisio Mandap. submitting the following issues for our resolution: I WHETHER OR NOT PETITIONERS HAVE THE LEGAL PERSONALITY TO BRING THE INSTANT PETITION. SO ORDERED. On March 25.. Dionisio Mandap. the appeals interposed by appellants Dojoles. the consent of their father was vitiated due to his physical infirmities. TCT No. in CA-G. the respondents filed an action for cancellation of title with damages. 2004 SPOUSES JAMES TAN and FLORENCE TAN. lived with Diorita Dojoles. Manila. 5. 1998 is AFFIRMED in toto. but it was denied by the appellate court. of the Court of Appeals. CV No.00 representing the purchase price of the subject lot. in Civil Case No. 2. Two separate lots.000. 2001. their children opted to stay with Maria. Ordering the Register of Deeds of Manila to cancel TCT No. The trial court declared the sale of properties between Dionisio Mandap. 1989. 1989. Sta. respectively.000.: For review on certiorari is the decision1 dated August 10. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita Dojoles to jointly and severally reimburse or return the fruits or earnings in the mentioned lots in the form of rentals which is hereby fixed at P10. premises considered judgment is hereby rendered as follows: IN CIVIL CASE NO.R. he conveyed the subject properties to his common-law wife‘s sister. On September 11. Cruz. 44 . 1991.000. Ordering Spouses Crispulo and Elenita Vasquez to return the sum of P1. the subsequent sale between the Vasquez spouses and petitioners herein. 2001. the source of which having been declared null and void. 89-50263 1. TCT Nos. However. respondents. DECISION QUISUMBING. CARMINA.. To help support the children. all surnamed MANDAP. 186748 in favor of petitioners. respondents filed a supplemental complaint.000. Crispulo Vasquez. plus legal rate of interest starting from the rendition of this decision until fully paid.00 and to pay the costs of this suit. 188862 issued in the name of James Tan. IN BOTH CASES THE COUNTERCLAIMS INTERPOSED BY THE DEFENDANTS ARE DISMISSED FOR LACK OF MERIT. When the Mandap spouses parted ways. Likewise assailed by the petitioners is the resolution3 dated November 23. petitioners appealed to the Court of Appeals in CA-G. 3. the Court of Appeals found the appeal bereft of merit and affirmed in totothe lower court decision. Tan) executed by Elenita Vasquez married to Crispulo Vasquez as null and void and of no force and effect whatsoever.00 per month from the date this complaint was filed until defendants restore and/or surrender the subject premises to the Estate of Dionisio Mandap. 3. Declaring the Deed of Sale dated September 11. 44730 and 55847 were cancelled and TCT Nos. as found by the trial court. 2001 of the appellate court.. Sr. before his death on May 25. Hence. with whom he had two children. each with an area of 88 square meters covered by TCT Nos.000. TCT No. other than judicial costs. It is true that he who alleges a fact bears the burden of proving it. but because the presumptions of fraud and undue influence exerted upon the vendor had not been overcome by petitioners. CV No. AND THE VASQUEZES IS VALID. or legal personality. True. to seek a review by this Court of the decision by the appellate court which they assail. the petitioners should have presented evidence showing that the terms of the deeds of sale to the Vasquez spouses were fully explained to Mandap. 2208. He stated on that occasion that he received P550. Sr.000 as second payment.000. He could not possibly have read the contents of the deeds of sale. he was already totally blind and paralyzed. to the Vasquez spouses is valid. On the third issue. But they contend the deeds‘ validity were not affected. Petitioners also claim the purchase price was not grossly inadequate so as to invalidate the sale of subject properties. Thus. Sr. Sr. 1998 of the Regional Trial Court of Manila. except: … (11) In any other case where the court deems it just and equitable that attorney‘s fees and expenses of litigation should be recovered. However. the petitioners insist the essential requisites of a contract of sale have been satisfied. We find for petitioners on this issue. commissioners appointed by the lower court conducted an ocular inspection concerning the physical condition of Mandap. 2001 in CA-G. 1332. every care to protect his interest conformably with Article 24 of the Civil Code must be taken. it follows that the subsequent sale of the property by the latter to petitioners is also valid.. But this contention cannot be sustained. the said documents were actually notarized in Manila. the petitioners submit that having been made parties-defendants by respondents via the supplemental complaint in Civil Case No. to wit: ART. however. their co-defendants in Civil Case No. However.9 The crucial point here is that while Mandap. the person enforcing the contract must show that the terms thereof have been fully explained to the former. But petitioners failed to comply with the strict requirements of Article 1332. Petitioners presented no evidence disproving that (1) Mandap. Sr. Respondents counter that petitioners have no legal personality to appeal the decision of the appellate court voiding the sale between Dionisio Mandap. mental weakness. of the lots to the Vasquez spouses and subsequently. Yet the documents stated the contrary. the trial court‘s decision became final and executory only as to petitioners‘ co-defendants in the trial court who did not appeal. which vitiated his consent. Hence. Article 24 is clear on this. considering the circumstances herein. Respondents contend that petitioners. said inadequacy may indicate that there was a defect in the vendor‘s consent. As the party seeking to enforce the contract. tender age or other handicap. thereby casting doubt on the alleged consent of the vendor. IV WHETHER OR NOT THE AWARD OF ATTORNEY‘S [FEES] HAS LEGAL BASIS. 89-50263.6 Anent the first issue. namely. the courts must be vigilant for his protection. 89-50263 did not do so. Sr. petitioners contend that it was error for the appellate court to declare the sale to them of the subject lot null and void. ignorance. property or other relations.000 and P320. Since the vendor in this case was totally blind and crippled at the time of the sale. petitioners may elevate to the Supreme Court the controversy within the prescriptive period for appeal. (2) object certain. it follows that the sale to petitioners is also void. the presumption of fraud and undue influence was not rebutted. Hence. namely Diorita Dojoles and the Vasquez spouses.R. they have the right to appeal to this Court the adverse ruling of the appellate court against them. as aggrieved parties. Sr. and mistake or fraud is alleged. the award of attorney‘s fees is just and equitable. to wit: ART. knew the contents of the deeds of sale disposing of his properties. and (3) cause or consideration therefor. appears on record to show that this requirement was complied with.550.000 as first payment.000 as attorney‘s fees does not appear to us unreasonable but just and equitable. since fraud and undue influence are alleged by respondents. With regard to the second issue. it had become final and executory. Hence. cannot be recovered. SO ORDERED.10 More important. no premium should be placed on the right to litigate. After careful consideration of the submission of the parties. attorney‘s fees and expenses of litigation. Note that while petitioners elevated the trial court‘s decision to the appellate court. On August 1. since we find that based on the evidence on record. Sr. The trial court voided the petitioners‘ sale of subject lot. Sr. it bears stressing that even an apparently valid notarization of a document does not guarantee its validity. 24. Costs against petitioners. prove the existence of fraud. we find in favor of respondents. Nothing. indigence.. Petitioners‘ contentions lack merit. mere inadequacy of the price does not necessarily void a contract of sale. or if the contract is in a language not understood by him. ART. testified that he executed the deeds of sale in Las Piñas. Since the Vasquezes as sellers had no valid title over the parcel of land they sold. In the absence of stipulation. is AFFIRMED.11 The party must show that he falls under one of the instances enumerated in Article 2208 of the Civil Code. The decision of the Court of Appeals dated August 10.II WHETHER OR NOT THE SALE BETWEEN MANDAP SR. In all contractual. and on appeal that decision was affirmed by the Court of Appeals. He could not have consented to a contract whose terms he never knew nor understood. Petitioners do not dispute the fact that the notary public who notarized the deeds of sale was not duly commissioned. the parties interested in enforcing the contract. 59694. petitioners contest the award of attorney‘s fees. the sale in favor of the Vasquez spouses is void. WHEREFORE. They point to fraud in the sale of the subject properties. the petition is hereby DENIED. in the sale by the Vasquezes to petitioners. and not every winning party is entitled to an automatic grant of attorney‘s fees. not being privy to said sale. Such falsity raises doubt regarding the genuineness of the vendor‘s alleged consent to the deeds of sale.000. On the last issue. petitioners argue that since the sale of subject properties by Mandap. another P550. because petitioners merely stepped into the shoes of the Vasquez spouses.. was totally blind and suffering from acute diabetes such that he could no longer discern the legal consequences of his acts. even if their co-defendants did not appeal the said ruling of the Court of Appeals. Sr. Branch 34. respectively or a total of only P570. in the deeds of sale covering the subject properties. However.000 the remaining balance of the total selling price of what was loaned to the vendees. This inconsistency in the amount of the consideration is unexplained. the prices indicated were P250. entirely dependent on outside support. Thus. However.. Indeed. It cannot be presumed Mandap. 45 . the burden shifts8 to petitioners to prove that the contents of the contract were fully explained to Mandap. Mandap. 1990. andP1. Article 1332 of the Civil Code is applicable in these circumstances. At the time Dionisio Mandap. The court a quo’s order to pay P15. (1) consent of the contracting parties. in our view. … In this particular case. which sustained the decision dated March 25. purportedly sold the lots in question to the Vasquez spouses. They have been satisfied first in the sale by Mandap. did not personally appear before a notary public. cannot invoke its validity. III WHETHER OR NOT THE SALE BETWEEN THE VASQUEZES AND PETITIONERS IS VALID.. evidence on record. when one of the parties is at a disadvantage on account of his moral dependence.7 They possess locus standi. petitioners as buyers thereof could not claim that the contract of sale is valid. When one of the parties is unable to read. More important. Sr. and (2) that undue influence was exerted upon him.. it must be pointed out that the trial court and the Court of Appeals voided the sale of the subject properties not because the price was grossly inadequate. They contend that inasmuch as the latter did not appeal the questioned decision. Sr. and the Vasquez spouses. Sr. to the prejudice of Mandap. The assailed ruling of the Court of Appeals.SECOND DIVISION [G.[4] attempted to repurchase the property by filing a Motion for Consignation. The facts are as follow: On 11 January 1980. on 18 August 1994.[2] The conveyance was covered by a Deed of Sale dated 2 September 1978. We conclude instead that the document has not been duly notarized and accordingly reverse the Court of Appeals. approved and incorporated the compromise agreement in a Decision which it rendered on 7 September 1981. FRANKLIN CARIÑO Ex-Officio Notary Public Judge. who notarized the same.: The controversy in the present petition hinges on the admissibility of a single document. SPOUSES ESTAFINO AQUINO and FLORENTINA AQUINO and the HONORABLE COURT OF APPEALS. However. arguing that the right to repurchase was not yet demandable and that Tigno had failed to make a tender of payment. petitioner raises a substantial argument regarding the capacity of the notary public. Tigno imputes grave abuse of discretion and misappreciation of facts to the Court of Appeals when it admitted the Deed of Sale. which was likewise opposed by the Aquinos. 3344. November 25.R. ―8. Tigno filed a Motion for a Writ of Execution.[13] The RTC likewise observed that nowhere in the alleged deed of sale was there any statement that it was acknowledged by Bustria.T. they could normally lead to the dismissal of this Petition for Review. Eventually. and that the non-assistance or representation of Bustria by counsel did not render the document null and ineffective.[16] The RTC then stressed that the previous Motion for Execution lodged by Tigno had to be denied since more than five (5) years had elapsed from the date the judgment in Civil Case No. M. whereby Bustria agreed to recognize the validity of the sale. which overturned the findings of fact of the Regional Trial Court. After the Court of Appeals denied Tigno‘s Motion for Reconsideration.00) with the trial court. The RTC therein expressed doubts as to the authenticity of the Deed of Sale. On 18 December 1989. As such.000) square meter fishpond located in Dasci.‖ the deed of sale (Deed of Sale)[9] purportedly executed by Bustria. 2004] ZENAIDA B.[6] seeking the revival of the decision in Civil Case No. The appellate court ratiocinated that there were no material or substantial inconsistencies between the testimonies of Cariño and De Francia that would taint the document with doubtful authenticity.[17] The Aquinos interposed an appeal to the Court of Appeals. characterizing the testimonies of De Francia and Cariño as conflicting. Pangasinan both parties known to me to be the same parties who executed the foregoing instrument. Pangasinan. Tigno filed an action forRevival of Judgment. He also argues that the appellate court should have declared the Deed of Sale as a false. considering that it had been previously unknown. Upon submission. The admission of the Deed of Sale was objected to by Tigno on the ground that it was a false and fraudulent document which had not been acknowledged by Bustria as his own. while this Court is not ordinarily a trier of facts. petitioners. TIGNO. 129416. the Court of Appeals Tenth Division promulgated a Decision[20] reversing and setting aside the RTC Decision. and denied by the RTC. Thereafter. Branch VII. Then. In anOrder dated 10 October 1999. petitioner Zenaida B.[24] Moreover. Accordingly.S. the Court of Appeals held that the RTC erred in refusing to admit the Deed of Sale. Tigno (Tigno).C. DECISION TINGA. Branch 55 at Alaminos. MUNICIPALITY OF ALAMINOS ) SUBSCRIBED AND SWORN TO before me this 17th day of October 1985 at Alaminos.[14] that it was suspicious that Bustria was not assisted or represented by his counsel in connection with the preparation and execution of the deed of sale[15] or that Aquino had raised the matter of the deed of sale in his previous Opposition to the Motion for Consignation.[18] In the meantime. She deposited the amount of Two Hundred Thirty Thousand Pesos (P200. A-1257. and that its existence was suspicious. IMELDA B. respondents.[10] In an Order dated 6 April 1994. J. the Aquinos filed an opposition.[3] On 1 December 1989. though registrable under Act No. the Court of First Instance of Pangasinan. Bustria and the Aquinos entered into a compromise agreement.[12] Then. TIGNO.000. A1257. and that there must be clear. the RTC denied the Motion for Consignation. in their Formal Offer of Documentary Evidence. notarized by a person of questionable capacity. No. so that it could be executed accordingly. and the Aquinos in turn agreed to grant to Bustria the right to repurchase the same property after the lapse of seven (7) years. and not even presented by the Aquinos when they opposed Tigno‘s previous Motion for Consignation. the RTC refused to admit the Deed of Sale in evidence. in substitution of her deceased father Isidro Bustria. the instrumental witness to the deed of sale. vs.[23] factual review may be warranted in instances when the findings of the trial court and the intermediate appellate court are contrary to each other. respondent spouses Estafino and Florentina Aquino (the Aquinos) filed a complaint for enforcement of contract and damages against Isidro Bustria (Bustria). and that the document extinguished the right of Bustria‘s heirs to repurchase the property.[11] A Motion for Reconsideration praying for the admission of said exhibit was denied in an Orderdated 27 April 1994. Pangasinan 46 . relied primarily on the presumption of regularity attaching to notarized documents with respect to its due execution.[19] On 23 December 1996.[8] Among the witnesses presented by the Aquinos during trial were Jesus De Francia (De Francia).[7] The Aquinos filed an answer. The property was not registered either under the Land Registration Act or under the Spanish Mortgage Law. the Aquinos offered for admission as their Exhibit No. a Decision was rendered by the RTC in favor of Tigno. on 6 September 1991.[5] In June of 1991. but this Court will take it up with definitiveness. The Court of Appeals was unfortunately silent on that matter. TIGNO and ARMI B. to notarize the document. and former Judge Franklin Cariño (Judge Cariño). The notarial certification of the Deed of Sale reads as follows: ACKNOWLEDGMENT REPUBLIC OF THE PHILIPPINES) PROVINCE OF PANGASINAN ) S. the RTC ordered the revival of the judgment dated 7 September 1981 in Civil Case No. now Regional Trial Court (RTC). Judge Cariño. The general thrusts of the arguments posed by Tigno are factually based. convincing and more than merely preponderant evidence to contradict the same. wherein they alleged that Bustria had sold his right to repurchase the property to them in a deed of sale dated 17 October 1985. but the judgment could be revived by action such as the instant complaint. Accordingly. [1] The complaint sought to enforce an alleged sale by Bustria to the Aquinos of a one hundred twenty thousand (120. a deed of sale involving interest over real property. Pangasinan. the RTC allowed the execution pending appeal of its Decision. Bustria died in October of 1986. A-1257 had become final and executory. These two witnesses testified as to the occasion of the execution and signing of the deed of sale by Bustria.[22] the present petition was filed before this Court. that the absence of the acknowledgment and substitution instead of a jurat did not render the instrument invalid. Alaminos. fraudulent and unreliable document not supported by any consideration at all.[21] It was noted that a notarized document carried in its favor the presumption of regularity with respect to its due execution. this Decision should again serve as an affirmation of the rule prohibiting municipal judges from notarizing documents not connected with the exercise of their official duties. while a jurat is that part of an affidavit where the officer certifies that the same was sworn before him. After all. An acknowledgment is the act of one who has executed a deed in going before some competent officer or court and declaring it to be his act or deed. Rollo. Most crucially for this case. 16. considering that Alaminos. from a civil law perspective. Moya. and other acts of conveyance which bear no relation to the performance of their functions as judges. and perhaps may prove to be prejudicial to parties in good faith relying on the proferred authority of the notary public or the person pretending to be one. notarization is not an empty routine.[25] Under Section 127 of the Land Registration Act. Rule 132 states: Section 19.[33] However. it is only when there are no lawyers or notaries public that the exception applies. is nevertheless valid and binding among the parties. Municipal Trial Court (MTC) and Municipal Circuit Trial Court (MCTC) judges are empowered to perform the functions of notaries public ex officiounder Section 76 of Republic Act No. Asis. it was not proper that a city judge should notarize documents involving private transactions and sign the document in this wise: "GUMERSINDO ARCILLA. Still. documents are either public or private.[31] In response. MTC:‖ [A notary ex officio] should not compete with private law practitioners or regular notaries in transacting legal conveyancing business. but required merely for convenience. it must be considered a private document. as far back as 1980 inBorre v. the Deed of Sale is now subject to the requirement of proof under Section 20.[35] The Deed of Salewas not connected with any official duties of Judge Cariño.[36] There are possible grounds for leniency in connection with this matter. In the instant case. and renders it admissible in court without further proof of its authenticity. yet it is also an accepted rule that the failure to observe the proper form does not render the transaction invalid. City Judge" (p. who ceased being a judge in 1986.[30] that municipal judges may not undertake the preparation and acknowledgment of private documents. Pangasinan. was a sitting judge of the Metropolitan Trial Court of Alaminos. and (c) Public records. of private documents required by law to be entered therein.There are palpable errors in this certification.) The Deed of Sale. Section 19. one which is determinative of this petition. official bodies and tribunals. but does so anyway. whether of the Philippines. Article 1358 of the Civil Code requires that the form of a contract that transmits or extinguishes real rights over immovable property should be in a public document.[26] which has been replicated in Section 112 of Presidential Decree No. The nullity of the alleged or attempted notarization performed by Judge Cariño is sufficient to exclude the document in question from the class of public documents. or four years after the Deed of Sale was notarized by Cariño. Rule 132. hence.—Before any private document offered as authentic is received in evidence. the notarization of a document by a duly appointed notary public will have the same legal effect as one accomplished by a non-lawyer engaged in pretense. The validity of a notarial certification necessarily derives from the authority of the notarial officer. It is undisputed that Franklin Cariño at the time of the notarization of the Deed of Sale. If the notary public does not have the capacity to notarize a document. to the contrary.[29] Petitioners point out. Notary Public Ex-Officio. A jurat is a distinct creature from an acknowledgment. since it was not properly acknowledged. Annex D of Complaint).[32] Respondent‘s contention is erroneous. subject to the exceptions laid down in Circular No. and there was no reason for him to notarize it. as amended (otherwise known as the Judiciary Act of 1948) and Section 242 of the Revised Administrative Code. the absence of notarization of the Deed of Sale would not necessarily invalidate the transaction evidenced therein.[41] On the other hand. what then is the effect on the Deed of Sale if it was not notarized? True enough.—For the purpose of their presentation in evidence. invalidly notarized as it was. it has been uniformly held that the form required in Article 1358 is not essential to the validity or enforceability of the transaction. Proof of private document. Our observations as to the errant judge in Borre are pertinent in this case. considering that Judge Cariño identified himself in the Deed of Sale as ―Ex-Officio Notary Public. Public documents are: (a) The written official acts. There may be sufficient ground to call to task Judge Cariño. it would still be classified as a private document. Even if one was produced. it engages public interest in a substantial degree and the protection of that interest requires preventing those who are not qualified or authorized to act as notaries public from imposing upon the public and the courts and administrative offices generally. or records of the official acts of the sovereign authority. This pertains to the authority of Judge Franklin Cariño to notarize the Deed of Sale. Thus. [38] was even then not an isolated backwater town and had its fair share of practicing lawyers. and public officers. contracts. we would be hard put to accept the veracity of its contents. assuming he is still alive. for his improper notarial activity. 1529. kept in the Philippines. Its proper probative value is governed by the Rules of Court. but merely subscribed and sworn to by way of jurat. Clearly. Without such a rule. There was no such certification in the Deed of Sale. respondents claim that the prohibition imposed on municipal court judges from notarizing documents took effect only in December of 1989. as Supreme Court Circular No. Perhaps though. does not fall under the enumeration of public documents. the case rests on the admissibility of the Deed of Sale. then the document should be treated as unnotarized. which states: Section 20. or of a foreign country. Being a private document. 296. we should deem the Deed of Sale as not having been notarized at all. The rule may strike as rather harsh. Classes of documents. its due execution and authenticity must be proved either: 47 .[34] the Court explicitly declared that municipal court judges such as Cariño may notarize only documents connected with the exercise of their official duties. for the time-honored rule is that even a verbal contract of sale or real estate produces legal effects between the parties. Indeed. All other writings are private. (b) Documents acknowledged before a notary public except last wills and testaments.[27] theDeed of Sale should have been acknowledged before a notary public. I-90 permits notaries public ex officio to perform any act within the competency of a regular notary public provided that certification be made in the notarized documents attesting to the lack of any lawyer or notary public in such municipality or circuit.[42] We have even affirmed that a sale of real property though not consigned in a public instrument or formal writing. 1-90. Most glaringly. the document is certified by way of a jurat instead of an acknowledgment.[39] However. In doing so.[43] Still. Notarization of a private document converts such document into a public one. to admit otherwise would render merely officious the elaborate process devised by this Court in order that a lawyer may receive a notarial commission. the Court has to reckon with the implications of the lack of valid notarization of the Deed of Sale from the perspective of the law on evidence.[28] But there is an even more substantial defect in the notarization. (Emphasis supplied. now a city. Judge.[37] The facts of this case do not warrant a relaxed attitude towards Judge Cariño‘s improper notarial activity. he obliterated the distinction between a regular notary and a notary ex officio. Even assuming that the Deed of Sale was validly notarized. the presumption of regularity relied upon by the Court of Appeals no longer holds true since the Deed of Sale is not a notarized document. The notarization of a document carries considerable legal effect.[40] Thus. formal sanction may no longer be appropriate considering Judge Cariño‘s advanced age. citing Tabao v. citing ordinary human nature to ask for receipts for significant amounts given and to keep the same. and the exercise of its sound discretion as the primary trier of fact warrants due respect. but also the authenticity of the Deed of Sale.[44] Prior to the initiation of the present action. notwithstanding the contrary testimony grounded on personal knowledge by the documentary witness. to execute the Deed of Sale. The Court likewise has its own observations on the record that affirm the doubts raised by the Court of Appeals. Thus. taking great lengths as it did to explain its doubts as to its veracity. The testimonies of Judge Cariño and De Francia now become material not only to establish due execution. then the opposing testimonies on that point by the material witnesses properly raises questions about the due execution of the document itself. the Deed of Sale is a private document.[46] In itself. the RTC alluded to notable inconsistencies in their testimonies. where the document was signed. passing through two towns to Alaminos. it is incredulous that the Aquinos did not invoke the Deed of Sale when they opposed in court petitioner‘s successive attempts at consignation and execution of judgment. and perverse deliberation for one to erroneously assert. then doubt can be cast as to the reliability of the notarial witness De Francia. then the integrity of the notary public. was already ninety-three (93) years old when he allegedly signed the Deed of Sale in 1985. an assertion which the RTC found as unbelievable. Did the RTC err then in refusing to admit the Deed of Sale? We hold that it did not. under oath and with particularities. the implausibility of the scenario strikes as odd and therefore reinforces the version found by the RTC as credible. but they did not raise then the claim that such right to repurchase was already extinguished by the Deed of Sale. there are no contradictions in the testimonies of Judge Cariño and De Francia on the question of whether or not Bustria signed the Deed of Sale. The RTC wisely refused to admit the Deed of Sale. if we were to instead believe De Francia. The inconsistencies in the testimonies of Judge Cariño and De Francia are irreconcilable. Rule 132 provides ample discretion on the trier of fact before it may choose to receive the private document in evidence. as distinguished from private documents. TheDeed of Sale. Pangasinan. However. would be obviously compromised. Still. However. Assuming that Judge Cariño had indeed authored the Deed of Sale. the absence of receipts. the Court shall now examine whether the appellate court was in error in reversing the conclusion of the RTC on these testimonies.[47] while Judge Cariño testified that he did not type the Deed of Sale since it was already prepared when the parties arrived at his office for the signing. The Aquinos duly opposed these prior attempts of the petitioner to exercise the right to repurchase. the Aquinos asserted before the RTC that Bustria traveled unaccompanied from his home in Dasol. given the totality of the circumstances surrounding this case. Any other private document need only be identified as that which is claimed to be. There are also other evident differences between Bustria‘s signature on the Deed of Sale and on other documents on the record. or any proof of consideration. The inconsistencies cited by the RTC were that De Francia testified that Judge Cariño himself prepared and typed the Deed of Sale in his office. would have already precluded Tigno‘s causes of action for either consignation or execution of judgment. The dubiousness in origin of the Deed of Sale is not alleviated by the other observations of the RTC. Section 20. If Judge Cariño was truthful in testifying that he did not write the Deed of Sale. it should be acknowledged as a matter of general assumption that persons of Bustria‘s age are typically sedentary and rarely so foolhardy as to insist on traveling significant distances alone. Strangely. considering that it was subscribed when Bustria was eighty-nine (89) years old. If his testimony as to authorship of the document is deemed as dubious. The most telling observation of the RTC relates to the fact that for the very first time respondents alleged the existence of the Deed of Sale when they filed their answer to petitioner‘s current action to revive judgment. who likewise insist that its enforceability militates against Tigno‘s claim. who would die in 1986. as drawn by the RTC. or (b) By evidence of the genuineness of the signature or handwriting of the maker. considering that the subject property had previously been fiercely litigated. if in existence and valid. Bustria‘s signature in the 1981 Compromise Agreement is noticeably shaky which is not surprising. flatly contradict each other on the basis of their own personal and sensory knowledge. Thus. then there is all the reason to make a similar assumption as to his testimony on the notarization of the Deed of Sale. Judge Cariño. This factor was not duly considered by the Court of Appeals. Admittedly. the burden falls upon the Aquinos to prove its authenticity and due execution. These have to be weighed against the findings of the Court of Appeals that the fact that Bustria signed the Deed of Sale was established by the respective testimonies of witnesses De Francia and Judge Cariño. is remarkably steady in its strokes. It is disconcerting that the very two witnesses of the respondent offered to prove the Deed of Sale. The matter of authenticity of the Deed of Sale being disputed. Tigno attempted to exercise the right to repurchase only a few years after the execution of the Deed of Sale to which respondents themselves were signatories. Correspondingly. it would indeed be odd that he would not remember having written the document himself yet sufficiently recall notarizing the same. which if genuine was affixed when he was already ninety-three (93) years old. the purported author of the Deed of Sale disavowed having drafted the document. We can appreciate in a similar vein the observation of the Court of Appeals that Bustria did not bother to seek his lawyer‘s assistance as regards the execution of the Deed of Sale. these doubts cast above arise in chief from an appreciation of circumstantial evidence. the Court of Appeals stated with utter nonchalance that a perusal of the record revealed no material or substantial inconsistencies between the testimonies of Judge Cariño and De Francia. that a person drafted a particular document in his presence. As a final measure of analysis. It noted that no receipts were ever presented by the respondents to evidence actual payment of consideration by them to Bustria. Without discrediting the accomplishments of nonagenarians capable of great physical feats. The RTC was not convinced of the proffered proof by the Aquinos. However. the identity of the progenitor of this allimportant document is a material evidentiary point. It also pointed to certain incredible aspects in the Aquinos‘ tale of events. not only the due execution of the document must be proven but also its authenticity. However. a high level of gumption. Bustria‘s signature on theDeed of Sale.(a) By anyone who saw the document executed or written. as earlier established. then the Court of Appeals should have properly come out with its finding. If the only point of consideration was the due execution of the Deed of Sale. And on this point. Tigno had tried to operationalize and implement the Compromise Agreement through two judicial means: consignation and execution of judgment. Establishing the identity of the person who wrote the Deed of Sale would not ordinarily be necessary to establish the validity of the transaction it covers. the absence of such proof further militates against the claims of the Aquinos. 48 . Other variances aside. the inconsistencies pointed out by the RTC become crucial. Worse. the appellate court made no comment as to the inconsistency pointed out by the RTC as to who prepared the Deed of Sale. was that the Deed of Sale had yet to be created when petitioner moved in 1990 for consignation and execution of judgment —an existential anomaly if we were to agree with the respondents that such document had been signed and notarized back in 1985. However. since it is the authenticity of the document itself that is disputed. Isidro Bustria. The Deed of Sale was offered in evidence as authentic by the Aquinos. The only believable conclusion. The Court of Appeals clearly erred in not appreciating the Deed of Sale as a private document and in applying the presumption of regularity that attaches only to duly notarized documents. despite the allegation of the respondents that the amount was covered by seven (7) receipts. would not be conclusive since consideration is always presumed. In its own appreciation of these testimonies.[48] On this point. [45] The Aquinos claimed that Bustria kept all the receipts. Also of note is the fact that there are glaring differences as to the alleged signature of Bustria on the Deed of Sale and as it otherwise appears on the judicial record. Although the Court of Appeals was correct in ruling that the document would not be rendered null or ineffective due to the lack of assistance of counsel. It is not possible to affirm the testimony of either without denigrating the competence and credibility of the other as a witness. It takes a leap of imagination. since its due execution and authenticity have not been proven. 1968. The Court deems as correct the refusal of the RTC to admit the Deed of Sale. petitioner.R. Subsequently. No. And by way of affirmative defenses. de Espiritu vs. 1964. The evidence pointing to the non-existence of such a transaction is so clear and convincing that it is sufficient even to rebut the typical presumption of regularity arising from the due execution of notarial documents. and (2) record on appeal. said respondents.000. As a result. defendants denied that the transaction was a sale and alleged that it was merely a contract of antichresis whereby petitioner had loaned to them P1. dated November 9. A-1918 is REINSTATED. SO ORDERED. and that despite demands made "time and again" by her for the execution of such deed. The Court of Appeals was clearly in error in peremptorily disregarding this observation of the RTC. Since the validity of the Deed of Sale has been successfully assailed. Maria San Miguel Vda. respondents. the Petition is GRANTED. JOSEFA JARDINIANO and REGISTER OF DEEDS FOR THE PROVINCE OF CAVITE. COURT OF FIRST INSTANCE OF CAVITE." In their answer. under the statute of frauds. Branch 55. ANASTACIA TOPACIO. They are important because they cast doubt on the credibility of those witnesses of the Aquinos. Finding the said motion to dismiss to be well-taken for the reasons stated therein. respondent court issued the impugned order of dismissal reading as follows: Submitted for resolution is a motion to dismiss filed counsel for the defendants to which no opposition has been filed despite the fact that the plaintiff was furnished with a copy thereof. 1964 alleged that sometime in 1948. in Civil Case No. for having been filed out of time. CV No. The assailed Decision dated 23 December 1996 and Resolution dated 9 June 1997 of the Court of Appeals in CA-G. 49879 is REVERSED. BARREDO. respondents reiterated their said affirmative defense of prescription in a formal motion to dismiss and as no opposition thereto was filed by petitioner.:p Petition for certiorari and mandamus. Costs against respondents. Anastasia Topacio. Tigno‘s right to repurchase was not extinguished at the time of the filing of the Petition for revival of judgment. the Deed of Sale is ineluctably an unnotarized document. vs. The Court of Appeals being in error when it concluded otherwise. and (2) prescription of petitioner's action. Petitioner's complaint in the court below which was filed on October 20. on July 31. but no deed of sale was executed at the time because private respondents promised they would do so as soon as the titles which were then in the name of their predecessor in interest were transferred to their names. for the reasons stated earlier.. Beltran and Associates for petitioner.00. the reinstatement of the RTC Decision is warranted. as well as those combinedly dismissing plaintiff's appeal from said orders. et al. delivery thereof together with the corresponding transfer certificates of title was made to her. and the Decision dated 18 August 1994 of the Regional Trial Court of Alaminos. Republic of the Philippines SUPREME COURT Manila EN BANC G. 1972 MARIA SAN MIGUEL VDA. for being null and void. 1967. is hereby dismissed with costs against the plaintiff.00) Pesos and. However. as correctly concluded by the RTC. N-233. this Court grants the same and the complaint. the issues squarely presented to the Court relate to the approval of plaintiff's: (1) motion for reconsideration.R. dated October 16. respondents interposed (1) unenforceability by action of the alleged sale. defendants had verbally sold to her the two parcels of land in question for Three Thousand (P3. presented as they were to attest to the due execution and authenticity of the Deed of Sale. DE ESPIRITU. Perez and Estrella for respondents.These inconsistencies are not of consequence because there is need to indubitably establish the author of the Deed of Sale. for which she demanded the delivery of the lands in question and the titles thereto as security. Beltran. "without justifiable cause therefor adamantly failed and refused — to comply with (such) just and valid demand.500. the order of respondent court of July 27. WHEREFORE. 49 . The other details leading to the issuance of this order and what took place thereafter up to the disapproval of the appeal of petitioner are recounted by the trial judge in his order of April 1. SO ORDERED. Remulla. with the right to collect or receive the income therefrom pending the payment of the loan. we are less willing than the Court of Appeals to impute conclusive value to the testimonies of de Francia and Judge Cariño. the same having allegedly accrued in 1948. certiorari to set aside. in consequence. 1967 in its Civil Case No. L-30486 October 31. dismissing on the ground of prescription plaintiff's (herein petitioner's) action to compel defendants (herein private respondents) to execute the proper deed of conveyance of two parcels of land to said plaintiff. And the lower court had more than sufficient basis to conclude that it is a spurious document. and the subsequent order for the return of the corresponding titles over said lands to defendants. Pangasinan. 1969 thus: At this stage of the proceedings. HON. J. The totality of the picture leads us to agree with the trial court that the Deed of Sale is ineluctably dubious in origin and in execution. Said Order granted defendants' motion to dismiss and ordered the plaintiff to return to the defendants Transfer Certificates of Title No. It should be noted that although copies of the Orders of this Court (dated October 14. defendants lay stress on the fact that the order (dated July 31. Arsenio Cabrera. WITHOUT HEARING. dated January 23. 1968. 1969). the hearing was reset to March 15. 1968 and the record on appeal filed on November 12. 1967. 1968. issued an Order dismissing plaintiff's Complaint'. on January 16. has already become final and executory. 1968. THE LOWER COURT UNLAWFULLY DENIED THE APPEAL TAKEN BY PETITIONER FROM THE ORDER TO RETURN THE TITLES. one of petitioner's counsel of record. An examination. SO ORDERED. 1965. counsel for the defendants filed a 'Motion for Return of Transfer Certificates of Title. Arsenio Cabrera of the plaintiff on February 8. Petitioner now alleges as grounds for her petition that: I. dated November 9. that the order of the Court was never served on or received by either the plaintiff or her attorneys. 1967. The attorneys for the plaintiff were furnished with a copy of the urgent motion on July 25. Anent plaintiff's record on appeal. that a motion for reconsideration signed by the plaintiff herself. Copies of this order were sent to both counsel for the parties by ordinary mail on July 31. none of them ever denied having received a copy of said quoted order. Plaintiff contends that 'an action to compel compliance to a promise to execute the necessary public document of sale of real estate does not prescribe.Plaintiff seeks for a reconsideration of the Court's order. Although the two lawyers of the plaintiff were each furnished with a copy of this memorandum (see registry receipt attached to page 9 of the memorandum and registry return receipt attached to rejoinder to reply. was sent by registered mail to Atty. dated July 31. THE HON. It should be noted that in paragraph 1 of this motion counsel for the defendants expressly stated. A copy of the Order was sent by ordinary mail to Atty. hence although a copy of the Order dated July 31. 1967. 1968 is expressly alleged the "dismissal of the Complaint for the reasons stated in the Motion to dismiss filed by the herein defendants. Finally. Consequently. 1968. 1967." the Order has already become final and executory before the motion was filed on May 6. is denied. Needless to state. 1968. 1967. of the record is necessary. the notice of appeal filed on October 30. It is obvious that the motion was filed out of time — the order of the Court has become final and executory. The Court. II. 1967 an urgent motion to resolve the motion to dismiss. nor manifested an intention to appeal from. 1968. Even on the basis of the allegation in said motion that the Order was "received on March 27. they were actually received as shown by the fact that said counsel appeared in court on the date set in said Orders. 1968 their motion of November 9. No objection having been interposed by counsel for the defendants. plaintiff's counsel cannot validly claim that they were unaware of said Order. the Order of this Court. 1968. At the hearing on March 15. 1967) had already become final and executory when plaintiff filed her motion for reconsideration (dated November 9. September 26. 23. Hence. de Guia. said Order. the view of the defendants that the Order of this Court. are hereby both denied. dated January 3. finding the motion to dismiss to be well-taken for the reasons stated therein. was filed with the Court. and (2) that although it seems that copy of the order of January 23. Almost 6 months thereafter. hence. whereas. 1967. issued the Order of July 31. III. It was only on May 6. 1967. 1966. 1967. On January 31. 1968). AND IN ISSUING THE ORDER DATED JAN. 1966. dated July 31. one of the lawyers of the plaintiff was given 5 days within which to submit an opposition to the motion to dismiss. 1967. is quoted verbatim. 1968. 1968 for the reconsideration of the dismissal order of July 31. November 29. Plaintiff's counsel neither moved for a reconsideration of. 1968). plaintiff's motion for reconsideration. and not one of them ever denied the veracity of such allegation. 1968 was sent by registered mail to Atty. 1967 has never been served upon counsel for petitioner nor upon her. none of the lawyers for the plaintiff appeared. in defendants' "Memorandum in Support of Opposition to Motion for Reconsideration. 1968. 1967. in open Court." dated August 2. 1967 this Honorable Court. there is no denying that another copy thereof was sent also by registered mail to petitioner herself and this was received by her on April 27. as it hereby sustains. 1966) were sent by ordinary mail to counsel for the plaintiff. the counsel for the defendants was given 15 days within which to file a motion to dismiss on any of the grounds alleged in the affirmative defenses contained in the answer. not by her counsel. Arturo T. counsel for the defendants filed on July 26. As more than 4 months have elapsed and no such opposition has been filed. therefore. 1965. on February 8.' furnishing on the same date counsel for the plaintiff with a copy thereof and setting the same for the consideration and approval of the Court on January 23. 1968 IMPLEMENTING THE ORDER OF DISMISSAL BY REQUIRING PETITIONER TO RETURN CERTIFICATES OF TITLE TO THE VENDORS. COURT OF FIRST INSTANCE OF CAVITE LACKED JURISDICTION AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE COMPLAINT. and to furnish counsel for the defendants with a copy thereof. 1967 dismissing the complaint with costs against the plaintiff. which dismissed this case. 1967. it is undeniable that when petitioner's counsel filed on November 11. although the plaintiff herself verbally informed the Court that because her lawyers were suddenly called to an emergency she prayed that the hearing on the motion to dismiss be reset to another date. under Section 3 of Rule 41. "That on July 31. on the basis of defendants' motion to dismiss. 1967 was not sent to plaintiff's counsel by registered mail. At the hearing on February 28. the period for appeal from any final order or judgment starts only from the date 50 . and the attorneys for the plaintiff were given an equal number of days from receipt of a copy thereof within which to file an opposition. on March 2. dated January 30. 1968. It appears that on January 13. in her reply to the opposition (dated December 20. But the plaintiff argues. counsel for the defendants filed the motion to dismiss. Moreover. that is. and furnished on the same date the two lawyers of the plaintiff.' In their opposition. in paragraph 3 of defendants' "Opposition to Motion for Reconsideration" filed on May 30. 1967. but by ordinary mail because the Court was without money to defray the expenses of registered mail. this Court is persuaded to share. the record shows that a copy of the Order. there is no showing as to when the same was received. THERE BEING NO EVIDENCE NOR ALLEGATIONS IN THE COMPLAINT TO SUPPORT SAID DISMISSAL OR PRESCRIPTION. this order had not yet become final and executory. dated July 31. There are two vital points that standout in this case: (1) that the order of dismissal of July 31. acting on defendants' Motion to Dismiss on the ground that the cause of action of the plaintiff has already prescribed. October 17. 1968 were both filed beyond the reglamentary period and. 1968. in open Court where counsel for the defendants and the plaintiff were notified. December 12. 1967. THE HON. ON THE GROUND OF PRESCRIPTION OF CAUSE OF ACTION. COURT OF FIRST INSTANCE OF CAVITE LIKEWISE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN DENYING THE MOTION FOR RECONSIDERATION OF SAID ORDER OF DISMISSAL. The first point is crucial for the simple reason that without such service being made. In view of the foregoing. ALLEGED IN THE MOTION TO DISMISS. The hearing set for that date was reset to February 28. almost four (4) months after the issuance of the Order. 18517 and 18518 of the Registry of Deeds for the Province of Cavite within ten (10) days from receipt of a copy of the order." Copies of this opposition were sent to the two lawyers of the plaintiff. one of the lawyers for the plaintiff. at least. We believe that the specific enumeration in the Civil Code of imprescriptible actions excludes any other ones. Our jurisprudence is replete with cases wherein the Court refused to give its stamp of approval even to service actually and admittedly made upon a party merely because. duration and the procedure to enforce them shall be regulated by this Code and by the Rules of Court. 2270. its finality. 5 In this connection. however. which means when it is duly served. (2) Upon a quasi-contract. We could order that petitioner's appeal be given due course. the whole statute of limitations embodied in Chapter III of the Code of Civil Procedure must be deemed supplanted and replaced by Chapter 3. which are actions involving public policy. an earlier determination of his claim is possible. and good conscience cannot countenance the idea of allowing a party to spend more time. Indeed.from notice thereof. (Rule 4). Court of Appeals. Title V. shall remain in full force in conformity with the old legislation. 1968. no mention is made of its actual receipt and the date of such receipt. and the procedure was different from that established in this new body of laws. 190. the nature of petitioner's action may be said to be one founded on an oral contract. it is likewise noteworthy that although His Honor's order of April 1. 3 which is exactly what the dismissal order here in question is. cannot be considered as among those rendered unenforceable by the statute of frauds. cannot have any detracting effect upon the final outcome of the main controversy relative to the correctness or incorrectness of the order of dismissal. Rule 13 constitutes an elaborate system of specific modes of filing and serving "pleadings. and per the ruling in Castillo vs. and "under this provision. In fact. March 31. the Code of Civil Procedure. there seems to have been no appearance for petitioner when the motion was heard on the day the court granted the same. as in this case wherein there is no showing whatsoever that petitioner or her counsel did receive the ordinary mail containing the order of dismissal in dispute. respondents are right in maintaining that the applicable provision here is Article 1145 which reads thus: ART. include a decision. L-18046. almost fully consummated by the delivery of the lands and the corresponding titles to her. only to lose. and Article 2258. said later order is of secondary importance. hence. idle to discuss whether or not said order has become final and unappealable. provided due process is not denied. nothing in the order of January 23. Actions and rights which came into being but were not exercised before the effectivity of this Code. The following laws and regulations are hereby repealed: xxx xxx xxx (3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code. service must be made upon his lawyer of record. there is hardly any prospect of its being ultimately successful. differently from the Code of Civil Procedure. it is to be noted that significantly. under which petitioner's claim of imprescriptibility can be sustained. Nor is there any other provision of the Civil Code or any unrepealed law or jurisprudential ruling of this Court. having in mind the repealing clause just quoted. notices. differently from what happened in the National Lumber case decided by this Court. no matter if the party himself solicits the service and thereby factually learns of the judgment. such action is imprescriptible under Section 38 of Art. as in the acts and contracts enumerated in the following article. In other words. predicating her contention on the theory that since she is seeking nothing more than to compel private respondents to execute a promised deed of sale in her favor. It is petitioner's pose that respondent judge erred in holding that her action has already prescribed. and considering that there is in fact no showing that any entry of judgment was made before November 11. has to be denied where it is evident that there is no merit in the appeal itself. under the rules. 1968 for the return of their title. the only other possibility is that petitioner's case comes under Article 1149 providing: 51 . This Court has already ruled on several occasions. such indirect way of imparting knowledge of the order to petitioner's counsel cannot serve as a mode of service within the contemplation of said rulings. 4 If service expressly admitted by a party to have been made to him has been considered ineffective only because it was not made in the manner prescribed. 73 Phil. If the exercise of the right or action was commenced under the old laws. therefore. 1964. has not yet become final and executory. 596 that mandamus to compel approval and certification of an appeal. Understandably. if the order of dismissal is set aside. 1 Section 7 of Rule 13 very explicitly enjoins that "(F)inal orders or judgments shall be served either personally or by registered mail". To require the parties to return first to the lower court and then come back here. but is pending on the date this Code takes effect. Remarkable also is the fact that it was petitioner herself and not her counsel who signed the motion for reconsideration of May 6. To start with. to be sure. We do not see it that way. since as early as De la Cruz vs. petitioner's invocation here of Section 38 of Act 190 is being refuted by respondents with the citation principally of Article 2270 of the Civil Code of the Philippines which ordains that: ART. the parties concerned may choose which method or course to pursue. although it is not disputed that a copy was actually received by petitioner by registered mail on April 27. The following actions must be commenced within six years: (1) Upon an oral contract. in the light of the rulings just mentioned prescribing strict compliance with the requirements of service. with more or less certainty in the end. petitioner must be deemed to have been on notice of said order since then." 2 Indeed. If Article 1357 which reads: ART. that looking at petitioner's position from another angle. and in consequence. which in itself is a complete and comprehensive body of rules on prescription intended to cover all conceivable situations. Book III of the Civil Code. if legally conceivable. 1357. it is simply that said article does not contemplate that the time to commence an action to compel the execution of a formal agreement can be longer than that for the filing of the suit for specific performance of the perfected contract itself. In any event. In a broad sense. Moreover. 1968. only to rediscuss the same points which after all both of them have already extensively taken up in their pleadings in this case will not serve the ends of justice. when. it is not very clear that petitioner's counsel was in fact served with such copy. It is. for the simple reason that it has already been. which included allegations attesting to the issuance of the order of dismissal. effort and money. once the contract has been perfected. 1968 was premised. the contracting parties may compel each other to observe that form. since the order of dismissal on which this order of January 23. but their exercise. which. Consequently. 1968 can defeat or even minimize the right of petitioner to the lands in dispute. appears to have been "furnished" counsel for petitioner on the same date. If the law requires a document or other special form. proof of which does not exist. the Civil Code does not consider the action by the vendee of real property to compel execution of a deed of conveyance as imprescriptible. Besides. which provides: ART. It is contended that because copy of respondents' motion of January 16. Assuming otherwise. It appears. We cannot see any logic in thinking otherwise. 10 SCRA 549. and it would be subversive of this rule and productive of confusion. there is no affirmative act of petitioner or her counsel upon which an inference of possible waiver may be safely drawn. in the second place and worse. 6 After all. from petitioner's own point of view. (1279a) is indicative of anything relevant to the point under discussion. and the action of the petitioner is sustained. much more should such fate befall a defective service. a final order or judgment cannot be served by ordinary mail. and "it would serve no useful purpose to reinstate" the same. as to its substantive merits. mandamus is mainly a remedy in equity. if any mode other than those respectively fixed by it for each particular situation therein expressly contemplated were to be sanctioned and given legal effect. Blanco. 1968 was sent to Counsel Cabrera of petitioner by registered mail. under Article 1143. 1145. 1969 states that copy of the order of January 23. Upon the foregoing premises. appearances. a decision granting herein petition could be in order. only the following rights "are not extinguished by prescription: (1) to demand a right of way. procedurally speaking. 1968. motions. orders and other papers" which. of course. This right may be exercised simultaneously with the action upon the contract. even if otherwise well grounded. 2258. regulated in Article 649 and (2) to bring an action to abate a public or private nuisance". Unlike in the Castillo case. it is in these cases that partial payments consist in relatively small amounts. he mortgaged the car to the plaintiff. but on straight term. Gaz. The lower court applied. as in the instant case. There is. the parties submitted the case for decision. the law is aimed at those sales where the price is payable in several installments. vs. in which the balance. J. substantial compliance with the fundamental law and the rules. vs. L-46306 October 27. in so far as the size of each partial payment is concerned. since anyway it is not difficult to quote textually the subject of the reference for a closer adherence to the obvious spirit and reason behind the requirements. Abreu. and none of the interrupting circumstances enumerated in Article 1155 has been shown to have intervened. if there be an agreement to this effect. albeit. 4122. since the cause of action of petitioner accrued in 1948 and the present suit was instituted in 1964 or sixteen years later. 1937. plaintiff foreclosed the mortgage and the car was sold at public auction. 1149. Article 1454-A of the Civil Code reads as follows: In a contract for the sale of personal property payable in installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property. the record reveals. 1939 LEVY HERMANOS. is not. LAZARO BLAS GERVACIO. to secure the payment of the note. being a decision. in the latter case. and rendered judgment in favor of the defendant. executed a promissory note for the balance of P2. defendant-appellee. WHEREFORE. that petitioner contends that the order of dismissal above-quoted. No. the partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. Wherefore. generally. if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same and any agreement to the contrary shall be null and void. with interest at 12 per cent per annum.600 and interest. for. De Santos (33 Off.. MORAN. therefore. one on installments. Plaintiff appealed. 2170). the petition is denied. the said order adopts by reference the reasons. perhaps. but in actual practice the 52 . payable on or before June 15. The contention is not well taken. alleged in the motion to dismiss of respondents.400. The oretically. Defendant failed to pay the note it its maturity. INC. there is no difference between paying the price in tow installments. with costs against petitioner. Felipe Caniblas for appellant. a Packard car.R. plaintiff Levy Hermanos. As may be seen. for the rest. should be paid in its totality at the time specified in the promissory note. Republic of the Philippines SUPREME COURT Manila EN BANC G. therefore. There is no such temptation where the price is to be paid in cash.. Defendant.800. and with this admission. the one contemplated in Act No. However. plaintiff filed a complaint in the Court of First Instance of Manila. The present action is for the collection of the balance of P1. inserted as articles 1454-A of the Civil Code. it is unquestionable that petitioner's action filed in the court below has already prescribed. however. without reimbursement to the purchaser of the installments already paid. 1937. Undoubtedly. Defendant admitted the allegations of the complaint." The contract. constituting thus a great temptation for improvident purchasers to buy beyond their means.: On February 9-4. partly in cash and partly in one term.. or. 1938. which. judges are advised that mere general reference should be avoided. as well as of the rules.ART. while a sale of personal property. which substantially recites the following facts: On March 10. All other actions whose periods are not fixed in this Code or in other laws must be brought within five years from the time the right of action accrues. violates the constitutional requirement. at which plaintiff was the highest bidder for P1. sold to defendant Lazaro Blas Gervacio. It may be mentioned. for. that it should state the facts and the law on which it is based. In either case. we held that "in order to apply the provisions of article 1454-A of the Civil Code it must appear that there was a contract for the sale of personal property payable in installments and that there has been a failure to pay two or more installments. Lichaucco and Picazo for appellee. The transaction is not is not. In Macondray and Co. Inc. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to the right to the recovery of the unpaid balance. includes the facts and the law in support thereof. after making the initial payment. the provisions of Act No. in the instant case. plaintiff-appellant. after payment of the initial sum. plaintiff filed before the Court of First Instance of Negros Occidental the present complaint against defendants for the latter to pay the balance of the price of the car. for it requires non-payment of two or more installments in order that its provisions may be invoked. only one installment was unpaid. Inc. The applicable law in the case at bar..05 plus the costs of this suit. No. the trial court rendered a decision in favor of the IFC and against the Nonatos. A cash payment cannot be considered as a payment by installment. But all these considerations are immaterial. the respondent appellate court affirmed the j judgment. the Court hereby renders judgment ordering the defendant to pay to the plaintiff the amount of P 17. this petition for review on certiorari.nêt The suggestion that the cash payment made in this case should be considered as an installment in order to bring the contract sued upon under the operation of the law. Judgment is reversed. the same not having been proven to the satisfaction of the Court. For failure of defendants to pay two or more installments. assigned its rights and interests over the note and mortgage in favor of plaintiff Investor's Finance Corporation (FNCB) Finance). according to the regular course of business.08 with interest at the rate of 6 per cent from the date of the filing of the complaint.difference exists. Hence. pp. effectively cancelled the sale of the vehicle. ESCOLIN. 1976. despite demands. L-67181 November 22. 10% of the amount due as attorney's fees. (Records.537. involving as it does a sale of personal property on installment. 1985 Republic of the Philippines SUPREME COURT Manila SECOND DIVISION SPOUSES RESTITUTO NONATO and ESTER NONATO. Finally. It is therefore barred from exacting recovery of the unpaid balance of the purchase price. it had. on June 9. 1937. in contracts providing for payment of the price in two installments. there is generally a provision for initial payment.lâwphi1. 36-37) In their answer. defendant spouses Restituto Nonato and Ester Nonato purchased one (1) unit of Volkswagen Sakbayan from the People's Car. Inc. is Article 1484 of the Civil Code which provides: 53 . J. (Exh. with damages and attorney's fees. Inc. who had cancelled the sale of a motor vehicle for failure of the buyer to pay two or more of the stipulated installments.: The issue posed in this petition for review of the decision of the respondent appellate court is whether a vendor. A or 1) and a chattel mortgage in favor of People's Car. 1978. 1978 (Exh. still the law does not apply. To secure complete payment. Here. the defendants executed a promissory note (Exh. for. plaintiff demanded from defendants that they pay the balance of the price of the car (Exhs. and the sum of P52. the spouses Nonato alleged by way of defense that when the company repossessed the vehicle..60 with interest at the rate of 14% per annum from July 28.600 with interest at the rate of 12 per cent per annum from June 15. on installment basis. 1976 until fully paid. is completely untenable. G. or his assignee. petitioners. No pronouncement as to other charges and damages. with costs in both instances against the appellee.R. F and C). E or 4). and the defendant-appellee is hereby sentenced to pay plaintiff-appellant the sum of P1. People's Car. 1 On appeal. vs. as mandated by the provisions of Article 1484 of the Civil Code. The pertinent facts are summarized by the respondent appellate court as follows: On June 28. by that act. litigation expenses in the amount of P 133. After due hearing. THE HONORABLE INTERMEDIATE APPELLATE COURT and INVESTOR'S FINANCE CORPORATIONrespondents. and even if it can be so considered. Despite repossession. may also demand payment of the balance of the purchase price. the car was repossessed by plaintiff on March 20. as follows: PREMISES CONSIDERED. the language of the law being so clear as to require no construction at all. B or 2). if one was constituted. should the vendee fail to pay. 3 This could only mean that should petitioners fail to redeem the car within the aforesaid period by paying the balance of the purchase price. Presiding Judge of the Court of First Instance of Manila. Since the payments made by petitioner Eutropio Zayas. Fernandez as the highest bidder in the amount of P5. plus the P5.000. under the following terms and conditions: Selling price Financing charge Total Selling Price Payable on Delivery Payable in 24 months at 12% interest per annum P7. No. The meaning of the aforequoted provision has been repeatedly enunciated in a long line of cases. for even after it had notified the Nonatos that the value of the car was not sufficient to cover the balance of the purchase price. or to cancel the sale. should the vendee's failure to pay cover two or more installments. Jr. JR. Indeed. (2) Cancel the sale.. Ernesto Carmona.00 (Annex "B" to Answer. REYES. the balance of the total selling price. the company contends that the repossession of the vehicle was only for the purpose of appraising its value and for storage and safekeeping pending full payment by the Nonatos of the purchasing price. GUTIERREZ. vs. the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation. dealer of respondent Luneta Motor Company.00 debt.82 P7. there was no attempt at all on the part of the company to return the repossessed car. No costs. the vendor or seller has the option to avail of any of these three remedies-either to exact fulfillment by the purchaser of the obligation. The motor vehicle was sold at public auction with the respondent Luneta Motor Company represented by Atty. 400E-127738 from Mr. the petitioner was unable to pay further monthly installments prompting the respondent Luneta Motor Company to extra-judicially foreclose the chattel mortgage (Annex "A" to Answer. 74381 for further proceedings instead of affirming the city court's order of dismissal. The allegation is untenable. respondents.926. It is thus barred from exacting payment from petitioners of the balance of the price of the vehicle which it had already repossessed. J. But while the Nonatos maintain that the company had. the acts performed by the corporation are wholly consistent with the conclusion that it had opted to cancel the contract of sale of the vehicle. 10. the judgment of the appellate court in CA-G.74 plus interests.006. per your receipt and your answer.500. After paying a total amount of P3. or to foreclose the mortgage on the purchased personal property. 1982 Republic of the Philippines SUPREME COURT Manila FIRST DIVISION EUTROPIO ZAYAS.000. he shall have no further action against the purchaser to recover any unpaid balance of the price. The company thus denies having exercised its right to cancel the sale of the repossessed car. 69276-R is hereby set aside and the complaint filed by respondent Investors Finance Corporation against petitioner in Civil Case No. Original Record. that the exercise of one would bar the exercise of the others. sir. (3) Foreclose the chattel mortgage on the thing sold. the company's witness.R. Witness. if one has been constituted. by that act. to wit: ATTY. who testified. should the vendee's failure to pay cover two or more installments.: Eutropio Zayas. Jr. p. SO ORDERED. the company will not return the unit without paying a sum of money.In a contract of sale of personal property the price of which is payable in installments.00 realized from the foreclosure of the chattel mortgage could not cover the total amount of the promissory note executed by the petitioner in favor of the respondent Luneta Motor Company. Branch XXI.920. 4 Respondent corporation further asserts that it repossessed the vehicle merely for the purpose of appraising its current value. more particularly the balance of the account? WITNESS: Yes. Salcedo for petitioner. Pantaleon Z. The receipt issued by the respondent company to the Nonatos when it took possession of the vehicle states that the vehicle could be redeemed within fifteen [151 days. JR. G. The records show otherwise. filed this petition for review by certiorari to secure a reversal of the respondent court's orders which remanded Civil Case No.00. 11. Original Record.006. Leandro B.00 P1.551.R. This was confirmed by Mr. supra). The petitioner Eutropio Zayas. Thus: "Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments. as it is hereby. supra). purchased on installment basis a motor vehicle described as ONE (1) UNIT FORD THAMES FREIGHTER W/PUJ BODY with Engine No. Simultaneously with the execution of the promissory note and to secure its payment. Any agreement to the contrary shall be void. WHEREFORE. not cumulative. petitioner. in favor of respondent Luneta Motor Company. It cannot have its cake and eat it too. The promissory note stated the amounts and dates of payment of twenty-six installments covering the P7. Fernandez for respondents. Jr.. as it did in fact. 165263 with the City Court of Manila for the recovery of the balance of P1. 13852 should be.920. the latter filed Civil Case No. These remedies have been recognized as alternative. 54 .82 P8. it is clear now that. exercised its option to cancel the contract of sale. LUNETA MOTOR COMPANY and HONORABLE JUAN O. PAMPLONA: So that Mr. the petitioner executed a chattel mortgage on the subject motor vehicle in favor of the respondent. and 2) executed a promissory note in the amount of P7.148. Leandro B. p.920. In this case. Roque Escaño of the Escaño Enterprises in Cagayan de Oro City. 2 It is not disputed that the respondent company had taken possession of the car purchased by the Nonatos on installments.82 P1.. the company would retain permanent possession of the vehicle. dismissed.426. L-30583 October 23.00. No.82.00 The motor vehicle was delivered to the petitioner who 1) paid the initial payment in the amount of P1. 400E-127738 and Chassis No. 26 plus interest up to the date of the sale at public auction of the motor vehicle. and finding the same well taken. 33. The respondent's arguments have no merit. with the plaintiff as the highest bidder thereof. Luneta Motor Company appealed the case to the Court of First Instance of Manila where it was docketed as Civil Case No. v. in part. In his answer with affirmative defenses and counterclaim. Luneta Motor Company denied the applicability of Article 1484 of the Civil Code . He alleged as affirmative defenses. Eutropio Zayas. After several postponements. had already been discharged either by payment or by sale in public auction of the said motor vehicle as evidenced by a Notice of Sale marked as Annex "A" and Certificate of Sale marked as Annex "B". Zayas cited the case of Ruperto Cruz v. p. Eutropio Zayas. Jr. on the question of law since the presentation of evidence is necessary to adjudicate the questions involved. JR. Original Record) In its Reply. among others: 1) that the plaintiff has no cause of action against him. in line with the ruling of the Supreme Court in the case of Ruperto G. 380) his obligation per the promissory note was extinguished by the sale at public auction of the motor vehicle. (pp. Viz: 55 . The Escaño Enterprises of Cagayan de Oro City was an agent of Luneta Motor Company. IN ORDERING THE REMAND OF THE CASE TO THE CITY COURT FOR FURTHER PROCEEDINGS TAKEN BY THE RESPONDENT FROM THE CITY COURT TO THE COURT OF FIRST INSTANCE. p. 74381. After various incidents. Cruz v.74 plus interest of 12% thereon from that date had already become due and payable but despite repeated demands to pay the same.REGARDING THE QUESTION OF RECOVERY OF THE DEFICIENCY AMOUNT IN A CHATTEL MORTGAGE AFTER SELLING IT IN A PUBLIC AUCTION. The issue raised and argued by the defendant was whether or not a deficiency amount after the motor vehicle. L24772) in connection with Article 1484 of the Civil Code. subject of the chattel mortgage. this petition. The main defense of respondent Luneta Motor Company is that Escano Enterprises. that the role of Luneta Motor Company in the said transaction was only to finance the purchase price of the motor vehicle. Jr. promissory note dated October 6. the respondent court issued an order which. According to the plaintiff. The court denied the motion for reconsideration for lack of merit. of his FORD THAMES BEARING Engine No. (Answer. Original Record). In short.. dismissing its complaint on the ground that the defendant is no longer liable for the deficiency judgment inasmuch as the chattel mortgage has been foreclosed. The promissory note mentioned in the certification refers to the promissory note executed by Eutropio Zayas. 2. in connection with the purchase of the motor vehicle. Jr. 400E-127738 which he purchased from the Luneta Motor Company but he denied his alleged outstanding liability of P1. and that in order to protect its interest as regards the promissory note executed in its favor.R. Jr. of the petitioner's OPPOSITION TO URGENT MOTION FOR RECONSIDERATION. the promissory note in favor of Luneta Motor Company was specifically mentioned. in favor of respondent Luneta Motor Company. Luneta Motor Company filed an "Urgent Motion for Reconsideration" reiterating its stand that Article 1484 of the New Civil Code on sale of personal property by installment was not applicable and that the contract involving the parties was a mere case of an ordinary loan secured by chattel mortgage.00 in its favor. and 2) that pursuant to Article 1484 of the New Civil Code and the case of Pacific Commercial Co. Thus: CERTIFICATION This is to certify that Mr. De La Rama. respondent Luneta Motor Company maintains that the contract between the company and the petitioner was only an ordinary loan removed from the coverage of Article 1484 of the New Civil Code. the defendant executed the promissory note and chattel mortgage to secure the plaintiff's interest for having financed the purchase of the motor vehicle by the defendant from the Escaño Enterprises of Cagayan de Oro City. with the plaintiff as the highest bidder thereof. the subject of the chattel mortgage which was executed by him in favor of the plaintiff as security for the payment of said promissory note. as the City Court had done. had paid only P6. 400E-127738.<äre||anº•1àw> Acting on the motion. G.. the city court issued an Order: On Petition of counsel for the defendant for the dismissal of this case on the ground that the defendant is no longer liable for the deficiency judgment inas much as the chattel mortgage has been foreclosed. a chattel mortgage covering the same motor vehicle was also executed by petitioner Eutropio Zayas. and 3. Jr. has been sold at public auction could still be recovered. Jr. Original Record). for the simple reason that the contract involved between the parties is not one for a sale on installment" (Reply. 36) Annex "A" is a Certification from the cashier of Escano Enterprises on the monthly installments paid by Mr. this Court is of the impression that the case at bar may not be decided merely. citing the case of Ruperto G. Jr.920. A very significant evidence which proves the nature of the relationship between Luneta Motor Company and Escaño Enterprises is Annex "A. now maintains:: That Respondent Court of First Instance erred: 1.551. the said obligation if there was any.. 1966. (Original Record. defendant Zayas. 13. (72 Phil. MANILA. purchased the subject motor vehicle was a distinct and different entity. executed a promissory note in the amount of P7. There was only one promissory note executed by Eutropio Zayas. Jr.appearance of the plaintiff and its counsel on the date set for hearing. admitted having executed the promissory note for the monthly payments. No. that out of the P7.. Jr. reads: This is an appeal taken by plaintiff from the order of the City Court of Manila. He also asked the court to allow him to discuss the merits of his affirmative defense as if a motion to dismiss had been filed. Eutropio Zayas. L24772 in connection with Article 1484 of the Civil Code.368. moved to have the case dismissed for lack of interest on the part of the plaintiff. In the certification. Petitioner Eutropio Zayas. Cruz v.00. Jr. Filipinas Investmentdecided on May 27. Jr. that the balance of P1. an entity entirely different and distinct from the plaintiff corporation (p.Luneta Motor Company alleged in its complaint that defendant Eutropio Zayas. 8.551.920. refused and failed to pay. on a Ford Thames vehicle bearing Engine No. 82-83. IN HOLDING THAT THE QUESTION OF LAW CANNOT BE DECIDED SINCE PRESENTATION OF EVIDENCE IS NECESSARY. BRANCH XXI. Original Record).R. Cagayan de Oro City from which petitioner Eutropio Zayas. 7.74 plus interest thereon . As a result of the non. p. has paid from us the following. 1968. the case was set for hearing. this case is hereby remanded to the court of origin for further proceedings. No. p. Eutropio Zayas. EUTROPIO ZAYAS. xxx xxx xxx After going over the pleadings in this case. Filipinas Investment (G. (Answer. Filipinas Investment (23 SCRA 791). Original Record) Hence. more particularly the complaint and the answer to the complaint filed with the City Court of Manila.. IN NOT DISMISSING THE APPEAL TAKEN BY THE PRIVATE RESPONDENT FROM THE CITY COURT TO THE COURT OF FIRST INSTANCE. Let this case be dismissed without pronouncement as to costs. WHEREFORE. R. vs. No. 1998. 1967 April 8. the vendor may exercise any of the following remedies: xxx xxx xxx xxx xxx xxx (3) Foreclose the chattel .00 100. 0000. WHEREFORE. SERASPI. To rule otherwise would pave the way for subverting the policy underlying Article 1484 of the New Civil Code. COURT OF APPEALS AND SIMEON RECASA. the complaint filed by petitioners for the recovery of possession and ownership of two parcels of land in Banga.00 60.ESCAÑO O.. In a contract of sale of personal property the price of which is payable in installments.148. petitioners.00 AMOUNT P 1.00 166. Accordingly.mortgage on the thing sold. (Cruz v. #40031 10536 10645 10704 10749 10132 10788 10795 10827 10934 10991 11105 DATE RECEIVED October 5. Whichever right the vendor elects he need not return to the purchaser the amount of the installments already paid. 1967 May 10. There was no necessity for the remand of records to the city court for the presentation of evidence on the issue raised in the case. 1967 February 1. Branch XXI issued in Civil Case No.00 100. 1967 March 30.00 150. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. The facts are as follows: ESCAÑO ENTERPRISES (SGD. Any agreement to the contrary shall be void. thus: Undoubtedly the principal object of the above amendment was to remedy the abuses committed in connection with the foreclosure of chattel mortgages.00 242. dated May 15. Filipinas Investment & Finance Corporation. on the foreclosure of chattel mortgages over personal property sold on installment basis.. 1966 January 19. 1966 November 8. 1967 March 22. vs. the Court of First Instance of Manila.00 100. the instant petition is hereby granted. 1967 June 19. was merely a collecting-agent as far as the purchase of the subject motor vehicle was concerned.R 09998 10064 10188 10355 LMC C. respondents. The Order of the City Court of Manila dismissing the complaint in Civil Case No. 1967 April 18.00 100. Millan. When.00 100. 165263 is affirmed. supra. J. Kalibo. 1967 May 26. DECISION MENDOZA. reversing the decision of Branch 1 of the Regional Trial Court. The principal and agent relationship is clear. 1967 P3. therefore. Branch XXI is directed to dismiss the appeal in Civil Case No. 74381. xxx xxx xxx . But even assuming that the "distinct and independent entity" theory of the private respondent is valid. 23 SCRA 791) Our findings and conclusions are borne out by the records available to the respondent court.: olanski This case is here for review of the decision[1] of the Court of Appeals. The orders remanding the case to the court of origin and denying the motion for reconsideration of the Court of First Instance of Manila.00 100. And the reason for this doctrine was aptly stated in the case of Bachrach Motor Co. assigned its rights vis-a-vis the sale to respondent Luneta Motor Company. the purchase price of which is payable in installments. In this case.R. The transaction would still be a sale of personal property in installments covered by Article 1484 of the New Civil Code. 1967 March 13. April 28. 1966 December 12. has the right to cancel the sale or foreclose the mortgage if one has been given on the property.00 100. 135602.00 270. 74381 are annulled. Furthermore. on the ground of prescription. 1967 February 27.00 400. 1966 October 20. Aklan and dismissing.00 60. did not change at all.00 have no further action against the purchaser to recover any unpaid balance of the price. respondent Luneta Motor Company had no better rights than assignor Escaño Enterprises under the same transaction. if the vendor avails himself of the right to foreclose the mortgage this amendment prohibits him from bringing an action against the purchaser for the unpaid balance. Aklan. "if there be an agreement to that effect". buying it at foreclosure sale for a low price and then bringing suit against the mortgagor for a deficiency judgment. the nature of the transaction as a sale of personal property on installment basis remains. 2000] HEIRS OF QUIRICO SERASPI AND PURIFICACION R. ART. SECOND DIVISION [G. BACULIO Escano Enterprises. 1967 April 11. the established rule is to the effect that the foreclosure and actual sale of a mortgaged chattel bars further recovery by the vendor of any balance on the purchaser's outstanding obligation not so satisfied by the sale. SO ORDERED. 1484. should the vendee's failure to pay cover two or more installments.00 100. he shall 56 . As assignee. a dealer of respondent Luneta Motor Company. Escaño Enterprises. the nature of the transaction involving Escano Enterprises and Eutropio Zayas. if one has been constituted. Jr.) EMELITA H. Under this amendment the vendor of personal property. This amendment prevents mortgagees from seizing the mortgaged property. the facts in that case arose before the effectivity of the Civil Code. This provision is without prejudice to what is established for the acquisition of ownership and other real rights by prescription. representing the heirs of the second marriage. this petition filed by Quirico Seraspi who. petitioners have not acquired the property through any of the modes recognized by law for the acquisition of ownership. and West by National Road. is whether private respondent has acquired the ownership of the two lands by prescription. as heir of the third marriage. who had been paralyzed due to a stroke. 1141 of the Civil Code which provides: Real actions over immovables prescribe after thirty years. more or less. The basis of petitioners‘ claim of ownership is the contract of sale they had with Rata. sold the share of the heirs in the estate to Dominador Recasa. In 1948. it was held that the action had prescribed. he is a mere usurper. 1137. Two issues are presented: (1) whether petitioners‘ action is barred by extinctive prescription. acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. 1950. Since the action for recovery of possession and ownership was filed by petitioners only on April 12. Art. Dominador. i. his intestate estate was partitioned into three parts by his heirs. Jurissc Like private respondent. (KRBI) on the security of the lands in question to finance improvements on the lands. and (7) prescription. However.. Nor can he base his ownership on succession for the property was not part of those distributed to the heirs of the third marriage. located in Barangay Lapnag. Series of 1984. As Art.00. to which private respondent belongs.00.Marcelino Recasa was the owner of two parcels of land described as follows: PARCEL I: A parcel of cocal land located at Barangay Lapnag. Accordingly. it follows that private respondent. Art. he had fifteen (15) children from his three marriages. In 1983. On the other hand. Good faith consists in the reasonable belief that the person from whom the possessor received the thing was its owner but could not transmit the ownership thereof. The trial court ruled in favor of the Seraspis. with an area of 770 square meters. and having an assessed value of P1. South by Celsa Retis. Hence. as owner of the property. the Seraspis obtained a loan from the Kalibo Rural Bank. in turn sold the share of the heirs to Quirico and Purificacion Seraspi whose heirs are the present petitioners. Series of 1984.[4] Private respondent contends that he acquired the ownership of the questioned property by ordinary prescription through adverse possession for ten (10) years. During his lifetime. without need of title or of good faith. each part being reserved for each group of heirs belonging to one of the three marriages Marcelino entered into.440. which parcel of land declared in the name of Marcelino Recasa under Tax Declaration No. Citing Arradaza v. It must be remembered that in the partition of the intestate estate of Marcelino Recasa. private respondent was co-owner of all of his father‘s properties. Neither can private respondent claim good faith in his favor. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty years. (2) intellectual creation. (6) tradition in consequence of certain contracts. Patronicio Recasa. forcibly entered the lands in question and took possession thereof. What is more. now Flocerfina Ibit.Scsdaad Arradaza involves acquisitive. private respondent did not acquire possession of the property through any of the modes recognized by the Civil Code. East by Banga-Libacao Provincial Road. taking advantage of the illness of Quirico Seraspi.648 square meters. For all intents and purposes. the lands were sold by KRBI to Manuel Rata. prescription. because he has neither just title nor good faith. (4) donation. while ruling that petitioners were able to establish the identity of the property as well as the credibility of their title ¾ the elements required to prove one‘s claim for recovery of property [2] ¾ nonetheless held that the action was barred by prescription. On this point. While. stating that they had acquired the property through a sale and acquisitive prescription. more or less. Subsequently. Included in this sale was the property sold by Patronicio to Dominador. bounded North by Concepcion Navarra. under Art. The contention has no merit. on appeal. covered by Tax Declaration No. In 1974. private respondent Simeon Recasa. allowed Quirico Seraspi to administer the property. It appears that Rata. (3) law.[6] Private respondent entered the property without the consent of the previous owner. brother-in-law of Quirico Seraspi. Aklan. as heir to the intestate estate of his father. (5) succession. East by Gabriel Reloj.e. Marcelino‘s child by his third wife. At the time of his death in 1943. Banga.[3] it held that an action for recovery of title or possession of real property or an interest therein can only be brought within ten (10) years after the cause of action has accrued. such co-ownership rights were effectively dissolved by the partition agreed upon by the heirs of Marcelino Recasa. what was applied was §41 of the Code of Civil Procedure which provides that title by prescription is acquired after ten (10) years. but the grantor was not the owner or could not transmit any right. 1134. For while a contract of sale 57 . the ownership of a piece of land cannot be acquired by occupation. they failed to pay the loan for which reason the mortgage was foreclosed and the lands were sold to KRBI as the highest bidder. Inc. the properties were divided into three parts. each part corresponding to the share of the heirs in each marriage. The question. in whatever manner possession may have been commenced or continued. Court of Appeals. there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights. to wit: (1) occupation. thirteen (13) years after their predecessor-ininterest had been allegedly deprived of the possession of the property by private respondent. and (2) whether private respondent Simeon Recasa acquired ownership of the properties in question through acquisitive prescription. what is involved here is extinctive prescription. 1129 provides: Supremax For the purposes of prescription. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years. representing the heirs of the first marriage. an heir of the second marriage.650. the Seraspis purchased the lands from Manuel Rata and afterwards filed a complaint against Simeon Recasa for recovery of possession of the lands. We rule for petitioners. depending on whether the property is possessed in good faith and with just title for the time fixed by law. Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. Aklan. with an assessed value of P2. The Court of Appeals. and the applicable law is Art. Marcelino contracted three (3) marriages. Since the contested parcels of land were adjudicated to the heirs of the first and second marriages. Sdaad In 1958. not extinctive. but this by itself is insufficient to make them owners of the property. In the case at bar. has no right over the parcels of land. therefore. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law. 1117. the Court of Appeals reversed on the ground that the action of the Seraspis was barred by the statute of limitations. Banga. Thus. PARCEL II: A parcel of cocal land with an area of 3. the Civil Code provides: Art. in the meantime. However. and West by Aklan River. 11079 in the name of Purificacion Seraspi. 1987.[5] Private respondent could not have acquired ownership over the property through occupation since. and regardless of good faith or with just title. South by Diosdado Navarra. In the same year. On June 15. 3721. bounded North by Lazaro Navarra. 714 of the Civil Code. had passed away and was thus substituted by his heirs. 1981. he defaulted in the payment of the loan. Such right may be transferred by the sale or assignment of the property. 1964. petitioner. No. hence not subject to disposition. In the auction sale held on September 9.R. respondent spouses. 1965. on October 29. 1980. Municipality of Garchitorena. 110053 October 16. 1981. 1995 DEVELOPMENT BANK OF THE PHILIPPINES.000. On June 8. 3344. vs. SO ORDERED. 1982. The land. the decision of the respondent Court of Appeals is hereby REVERSED. the former has the right of action against the latter for the recovery of the property. and private respondent Simeon Recasa is ordered to return the possession of the contested parcels of land to petitioners as heirs of Quirico and Purificacion Seraspi.00.000.00 had been received by private respondents. respondent spouses offered to buy the property for P18. WHEREFORE. 1970. Pacifico Chica mortgaged the land to DBP to secure a loan of P6. Luciano Sarmiento sold the land to Pacifico Chica. more or less. Pacifico Chica failed to redeem the property. On July 20. herein petitioner Development Bank of the Philippines (DBP) executed a "Deed of Absolute Sale" in favor of respondent spouses Celebrada and Abner Mangubat over a parcel of unregistered land identified as Lot 1. 1937. was executed by DBP in favor of respondent spouses.599. The parties further agreed that payment was to be made within six months thereafter for it to be considered as cash payment. 1993 denying petitioner's motion for reconsideration. 58 . 2 Thereafter. covered only by a tax declaration. despite the aforesaid certification of the bureau. said office issued a certificate attesting to the fact that the said property was classified as timberland. the deed of absolute sale. as plaintiffs. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. which document was registered in the Registry of Deeds pursuant to Act No. DBP made a counteroffer of P25. on the understanding of the parties that DBP would work for the release of the land by the former Ministry of Natural Resources. The latter required the former to submit a certification from the Bureau of Forest Development that the land is alienable and disposable. which is now being assailed herein. Said document contained a waiver of the seller's warranty against eviction. At the time they bought the property from Rata in 1983.is perfected by the meeting of minds upon the thing which is the object of the contract and upon the price.R. situated in the Barrio of Toytoy. On July 20. this does not give private respondent a right to remain in possession of the property.[8] Hence. 1981. ostensibly because the release of the land from the then Ministry of Natural Resources had not been obtained.[9] when the property belonging to a person is unlawfully taken by another. REGALADO. The certificate of sale was entered in the Book of Unregistered Property on September 23. It does not appear that their request was acted upon by DBP. Consequently. and its resolution dated April 7. filed a complaint against DBP in the trial court 4 seeking the annulment of the subject deed of absolute sale on the ground that the object thereof was verified to be timberland and. respondent spouses executed a real estate mortgage over the land on March 17. To secure payment of the loan.99. CV No.[7] the ownership of the thing sold is not transferred to the vendee until actual or constructive delivery of the property. petitioners are not the owners of the property since it has not been delivered to them. PSU-142380. and the transferee can maintain such action against the wrongdoer.5057 hectares. The loan was then released to respondent spouses on a staggered basis. They also alleged that petitioner. 28311. containing an area of 55. However. 1983.00. 1970 by the sheriff. 1 Said adjudgments.540. DBP acquired the property as the highest bidder and was issued a certificate of sale on September 17. COURT OF APPEALS. On April 27. were rooted in the factual groundwork of this case which is laid out hereunder. 1992 in CA-G. and DBP consolidated its ownership over the same.: This appeal by certiorari sprouted from the judgment of respondent Court of Appeals promulgated on September 9. Peterson. J. respondents.500. 3 The loan application of respondent spouses was nevertheless eventually approved by DBP in the sum of P140. After a substantial sum of P118. the maxim non nudis pactis. However. on February 4. they asked for the release of the remaining amount of the loan. the property was in the possession of private respondent. respondent spouses applied for an industrial tree planting loan with DBP. As held in Waite v. sed traditione dominia dominica rerum transferuntur (not mere agreements but tradition transfers the ownership of things). Petitioners‘ title to the property prevails over private respondents‘ possession in fact but without basis in law. On October 14.00 which was accepted by respondent spouses. donated it to Luciano Sarmiento. is in law an inalienable part of the public domain. CELEBRADA MANGUBAT and ABNER MANGUBAT. therefore. is known to have been originally owned by one Presentacion Cordovez. Province of Camarines Sur. in turn. who. 1970. On July 7. hence DBP caused the extrajudicial foreclosure of the mortgage. However. to which the latter is supposed to have a good title. Contrary to the claim of petitioner.00 loan. 2. he is entitled as a general rule to interest on the money paid from the time of payment. and. incidental expenses and other damages in the amount of P50. there being no factual or legal basis therefor. Whether or not private respondent spouses Celebrada and Abner Mangubat should be ordered to pay petitioner DBP their loan obligation due under the mortgage contract executed between them and DBP. as stated in its Order dated August 16. 13 We also find ample support for said propositions in American jurisprudence. the purchaser is entitled to recover the money paid by him where the contract is set aside by reason of the mutual material mistake of the parties as to the identity or quantity of the land sold. 8 As substantially stated at the outset. respondent Court of Appeals rendered judgment modifying the disposition of the court below by deleting the award for damages. DBP can not be held liable for anything inasmuch as respondent spouses had full knowledge of the extent and nature of DBP's rights. and not official receipts of expenses for taxes and said survey.as defendant therein. the list of damages was presented in the trial court and was correspondingly marked as "Exhibit P. in consequence of facts unknown alike to both parties.000. raising the following issues: 1.00 and P7. to reimburse to respondent spouses the taxes paid by them. The trial court erred in finding that defendant-appellant DBP acted fraudulently and in bad faith or that it had misrepresented facts since it had prior knowledge that subject property was part of the public domain at the time of sale to therein plaintiffs-appellees.000. 17 An action for money had and received lies to recover back money paid on a contract. the cost of the relocation survey. the restoration of what was given by each of them to the other is consequently in order. such decreed nullification of the document has already achieved finality. and this r. Actual or compensatory damages cannot be presumed. and the costs of suit. 1990. The trial court erred in declaring the deed of absolute sale executed between the parties canceled and annulled on the ground that therein defendant-appellant had no title over the property subject of the sale. although there be no fraud or intentional misrepresentation on his part.500. Furthermore.540. the money remains.emains uncontroverted as a fact in the case at bar. plus corresponding interest thereon. respondent court correctly applied the rule that if both parties have no fault or are not guilty. and the acts of the parties in an effort to create one can in no wise bring about a change of their legal status.000. the total amount of P118.540. the return by DBP to respondent spouses of the purchase price. The trial court erred awarding to therein plaintiffs-appellees damages arising from an alleged breach of contract. admitted by the trial court but only as part of the testimonial evidence for private respondents." 20 The said exhibit was. since it had already released P118. In order that damages may be recovered. Merchants National Bank 14 where it was held that: "Whenever money is paid upon the representation of the receiver that he has either a certain title in property transferred in consideration of the payment or a certain authority to receive the money paid. when in fact he has no such title or authority. in equity and good conscience. That list. The parties and the subject matter of the contract remain in all particulars just as they did before any act was performed in relation thereto. 5 In its answer. plus charges and other expenses. having purchased it for value at an auction sale pursuant to an extrajudicial foreclosure of mortgage. plus interest. per se. 16 A contract which the law denounces as void is necessarily no contract whatever. but must depend upon competent proof that they have been suffered and on evidence of the actual amount thereof. but must be duly proved. and that in the remote possibility that the land is reverted to the public domain. 21 However. found that there had been no bad faith on the part of either party. A court cannot rely on speculation. on both local and foreign legal principles. 1993. since it was vigorously objected to by DBP.000. The trial court erred in finding said plaintiffs-appellees' waiver of warranty against eviction void. equity will cancel the transaction and cause the purchase money to be restored to the buyer. 10 Not satisfied therewith. Petitioner likewise contends that the trial court and respondent Court of Appeals erred in ordering the reimbursement of taxes and the cost of the relocation survey. Correspondingly. to dwell on the effects of that declaration of nullity. attorney's fees. and so proved with a reasonable degree of certainty. putting both parties in status quo. then.00.980. he has no title at all.540.00. no damages will be awarded. that assuming arguendo that there was a flaw in its title. yet there is no consideration for the payment. 3. It argues that private respondents merely submitted a "list of damages" allegedly incurred by them. 6 On May 25. Whether or not petitioner should reimburse respondent spouses the purchase price of the property and the amount of P11. It further averred that the annulment of the sale and the return of the purchase price to respondent spouses would redound to their benefit but would result in petitioner's prejudice. 18 As a general rule.00 to the former while it would be left without any security for the P140. 7 In its recourse to the Court of Appeals. we answer in the affirmative. 1988. title and interest over the land. but affirming the same in all its other aspects. 5. DBP raised the following assignment of errors: 1. acted fraudulently and in bad faith by misrepresenting itself as the absolute owner of the land and in incorporating the waiver of warranty against eviction in the deed of sale. thereafter.540.00 as reimbursement for land taxes and expenses for the relocation survey." Therefore. ordering the annulment of the deed of absolute sale. 4.980. 12 This is because the declaration of nullity of a contract which is void ab initio operates to restore things to the state and condition in which they were found before the execution thereof. If the proof is flimsy and unsubstantial. The list of damages was prepared extrajudicially by respondent spouses by themselves without any supporting receipts as bases thereof or to substantiate the same. and 2. we agree with petitioner that the same cannot constitute sufficient legal basis for an award of P4. despite that admission of the said list of damages as evidence. jointly and severally. the same list has allegedly not been identified or even presented at any stage of the proceedings. DBP interposed the instant petition for review on certiorari. conjecture or guesswork as to the fact and amount of damages. respectively.00 purchase price. respondent spouses should be made to immediately pay.00 for taxes and expenses for the relocation Survey. and to further pay them attorney's fees and litigation expenses in the amount of P10. 11 Considering that neither party questioned the legality and correctness of the judgment of the court a quo. after an extensive discussion. is necessarily self-serving and. 59 . the best evidence obtainable by the injured party must be presented. The effect of an application of the aforequoted rule with respect to the right of a party to recover the amount given as consideration has been passed upon in the case of Leather Manufacturers National Bank vs. The trial court erred in not ordering said plaintiffs-appellees to pay their loan obligation to defendantappellant DBP in the amount of P118. litigation expenses and the costs. DBP contended that it was actually the absolute owner of the land.00. if one buys the land of another. 15 And where a purchaser recovers the purchase money from a vendor who fails or refuses to deliver the title. the trial court rendered judgment annulling the subject deed of absolute sale and ordering DBP to return the P25. We only need The Court of Appeals. said appellate court also denied petitioner's motion for reconsideration. 22 Turning now to the issue of whether or not private respondents should be made to pay petitioner their loan obligation amounting to P118. that there was neither malice nor fraud in the sale of the land under the terms mutually agreed upon by the parties. should have been declared inadmissible in evidence as the factum probans. 19 Thus. on that account. is ineluctably called for. the consideration of which has failed. the property of the payer and may be recovered back by him. as affirmed by respondent court.00 with interest at 15% per annum. 9 On April 7. therefore. 1) showing that the contract of sale of the motorcycle had been perfected. Inc. Kabankalan Branch. which was private respondent Alberto Nepales' action for specific performance of a contract of sale with damages against petitioner Norkis Distributors. That obligation matures and becomes demandable in accordance with the stipulations pertaining to it. the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it (p. SO ORDERED.000. 1979. the mortgage deed remains as evidence or proof of a personal obligation of the debtor.500.1984. in Civil Case No.00 as reimbursement for taxes and expenses for the relocation survey.In its legal context.540. 26 the principal obligation which it guarantees is not thereby rendered null and void. An investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident (p. 60 . Negros Occidental. 2-b). The motorcycle met an accident on February 3. the contract of loan executed between the parties is entirely different and discrete from the deed of sale they entered into. 13. specifically paragraphs 16 and 28 thereof. THE COURT OF APPEALS & ALBERTO NEPALES. then displayed in the Norkis showroom. the mortgage contract which embodies the terms and conditions of the loan obligation of respondent spouses. private respondent Alberto Nepales bought from the Norkis-Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX with Engine No. 30 Thus. He alleged that Norkis failed to deliver the motorcycle which he purchased. 29 Admissions made by the parties in the pleadings or in the course of the trial or other proceedings do not require proof and can not be contradicted unless previously shown to have been made through palpable mistake. credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. Hence. Color Maroon. affirming with modification the judgment of the Regional Trial Court. In case of nullity. 09149. p. It is also worth noting that the adjustment and allowance of petitioner's demand by counterclaim or set-off in the present action.00. Himamaylan.500. respondents. 1980. what is lost is only the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the principal obligation. No.s. t. 27 It was likewise incorrect for the Court of Appeals to deny the claim of petitioner for payment of the loan on the ground that it failed to present the promissory note therefor. In all other respects. 1984). Rollo). 1979.n. 24 or the consideration of the contract is simulated 25 or false. by deleting the award of P11. 31 The rules on counterclaim are designed to achieve the disposition of a whole controversy of the conflicting claims of interested parties at one time and in one action. 1980 at Binalbagan.00. When Norkis could not deliver. 32 WHEREFORE. 1980. The annulment of the sale will not have an effect on the existence and demandability of the loan. Furthermore. the motorcycle remained in Norkis' possession. On November 6. 36. 1982.828 in March. While respondent court also made the concession that its judgment was accordingly without prejudice to the filing by petitioner of a separate action for the collection of that amount. t. are more than adequate evidence to sustain petitioner's claim for payment of private respondents' aforestated indebtedness and for the adjudication of DBP's claim therefor in the very same action now before us. Branch LVI. 15.:p Subject of this petition for review is the decision of the Court of Appeals (Seventeenth Division) in CA-G..R. will readily show that it embodies not only the mortgage but the complete terms and conditions of the loan agreement as well. In the meantime. dated March 17. Rollo). Where a mortgage is not valid.. this does not detract from the adverse effects of that erroneous ruling on the proper course of action in this case. Under the foregoing circumstances. Negros Occidental Branch (p. and ordering respondent spouses Celebrada and Abner Mangubat to pay petitioner Development Bank of the Philippines the amount of P118. however. Inc. 91029 February 7. as where it is executed by one who is not the owner of the property. The record shows that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan. No. As security for the loan. are so precise and clear as to thereby render unnecessary the introduction of the promissory note which would merely serve the same purpose. thereby causing him damages. representing the total amount of the loan released to them. Nepales signed the sales invoice to signify his conformity with the terms of the sale. One who has received money as a loan is bound to pay to the creditor an equal amount of the same kind and quality. 13. The unit was a total wreck (p. rather than by another independent action. the motorcycle was registered in the Land Transportation Commission in the name of Alberto Nepales. 1980. inconvenience. The trend of judicial decisions is toward a liberal extension of the right to avail of counterclaims or set-offs. 1272. Negros Occidental. petitioner. Exhibit 3. L2-329401K Frame No. Nepales would execute a chattel mortgage on the motorcycle in favor of DBP..980. is favored or encouraged by law. On January 22. Negros Occidental. 1979 (Exh. NL2-0329401. Rollo) and demanded the delivery of the motorcycle. provided all parties can be brought before the court and the matter decided without prejudicing the rights of any party. The fact is that a reading of the mortgage contract 28 executed by respondent spouses in favor of petitioner. multiplicity of suits. and the amount due to the creditor may be enforced in an ordinary personal action. Rollo). 1272. where it was docketed as Civil Case No. The facts borne out by the record are as follows: Petitioner Norkis Distributors. 23 The fact that the annulment of the sale will also result in the invalidity of the mortgage does not have an effect on the validity and efficacy of the principal obligation. Branch LVI. the said judgment of respondent Court of Appeals is AFFIRMED. with interest of 15% per annum plus charges and other expenses in accordance with their mortgage contract. evidenced by an official receipt. respondent Celebrada Mangubat expressly acknowledged in her testimony that she and her husband are indebted to petitioner in the amount of P118. Branch Manager Labajo issued Norkis Sales Invoice No. 12. was returned. 33. for even an obligation that is unsupported by any security of the debtor may also be enforced by means of an ordinary action.s. and unwarranted consumption of the time of the court. INC. On September 20. Such a practice serves to avoid circuitry of action. the judgment appealed from is hereby MODIFIED. J.R. As the price of the motorcycle later increased to P7. Sixth (6th) Judicial Region. On March 20. A registration certificate (Exh. (Norkis for brevity). more or less.00 was payable by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP). is the distributor of Yamaha motorcycles in Negros Occidental with office in Bacolod City with Avelino Labajo as its Branch Manager. Sixth (6th) Judicial Region. 1991 NORKIS DISTRIBUTORS. Nepales paid the difference of P328 (p. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.n. as well as respondent Celebrada Mangubat's admission in open court. expense. vs. The provisions of said contract. and stored inside Norkis' warehouse. which Norkis' Branch Manager Labajo agreed to accept. The price of P7. August 2. GRIÑO-AQUINO. 2) in his name was issued by the Land Transportation Commission on November 6. he filed an action for specific performance with damages against Norkis in the Regional Trial Court of Himamaylan. 0120 (Exh. August 2. DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total sum of P7. The registration fees were paid by him. 1979 with the Land Transportation Commission in private respondent's name (Exh. is insufficient (De Leon. Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer. Rollo). Norkis' theory is that: . 33-34. It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the contract.00 as exemplary damages. who allegedly took possession of the vehicle from Norkis did not explain how Payba got hold of the vehicle on February 3. 5. 408). it insists that there was constructive delivery of the unit upon: (1) the issuance of the Sales Invoice No. SO ORDERED. p. 87. in order that this symbolic delivery may produce the effect of tradition. Appellants' Brief). 5. 404. p.s." is applicable to this case. the lower court rendered a decision dated August 27. It is not enough to confer upon the purchaser the ownership and the right of possession. then fiction yields to reality-the delivery has riot been effects . there is no tradition (Abuan vs.(Emphasis supplied.. the risk of loss should be borne by the seller. The answer to this question would depend on whether there had already been a transfer of ownership of the motorcycle to private respondent at the time it was destroyed. 20. As pointed out by the private respondent. The Letter of Guarantee (Exh. plus interest equivalent to what the Kabankalan Sub-Branch of the Development Bank of the Philippines will have to charge the plaintiff on fits account. the risk of loss or damage had to be borne by him as owner of the unit. An invoice is nothing more than a detailed statement of the nature. 1980 until payment of the present value of the damaged vehicle" (p35. kind. without the intention. In the case of Addison vs. (p. 28. the risk of loss is shifted from the vendor to the vendee. When the motorcycle was registered by Norkis in the name of private respondent. it is necessary that the act of delivery whether constructive or actual. 1) in the name of the private respondent and the affixing of his signature thereon. is controverted by the latter. No. 3) for payment of registration fees (p.. we deny the petition for review and hereby affirm the appealed decision. 1985). for there was neither an actual nor constructive delivery of the thing sold. 1460). Without that intention. 1989. 61 . Felix and Tioco (38 Phil. On March 20. the Court of appeals affirmed the appealed judgment on August 21. t. but deleted the award of damages "in the amount of Fifty (P50. before private respondent's loan was released and before he even paid Norkis. Hence.R.Rollo. 33. B) and the registration of the vehicle in the name of plaintiff-appellee (private respondent) with the Land Registration Commission (Exhibit C) was not to transfer to Nepales the ownership and dominion over the motorcycle. If the thing sold is generic. therefore.Norkis answered that the motorcycle had already been delivered to private respondent before the accident.n. 1174). If Norkis would not accede to that arrangement. par. with costs against the petitioner. 1262.000. this Court held: The Code imposes upon the vendor the obligation to deliver the thing sold. plus P1. 1978 Ed. After trial on the merits. and costs of the litigation. but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. If the vendee had paid the price in advance the vendor may retain the same. but only to comply with the requirements of the Development Bank of the Philippines for processing private respondent's motorcycle loan. Jur. 11 65. But if notwithstanding the execution of the instrument. is that the vendee assumes the risk of loss by fortuitous event (Art. 09149. The legal effect. 1979 (Exh. and its acceptance by the vendee. the obligation of the vendor to deliver a determinate thing becomes extinguished if the thing is lost by fortuitous event (Art. 1985 ruling in favor of private respondent (p. The Court of Appeals denied Norkis' motion for reconsideration. 94). Vol. the critical factor in the different modes of effecting delivery. 1263). and quality as the one which was totally destroyed in their possession last February 3. The act. 2). A thing is determinate when it is particularly designated or physically segregated from all others of the same class (Art. there would be no sale. Rollo. Under Art. The defendants are ordered to pay solidarity to the plaintiff the present value of the motorcycle which was totally destroyed. 3). (Civil Code of the Philippines. citing Manresa. 1980. 2829. . the loss or destruction does not extinguish the obligation (Art. This is in accordance with the well-known doctrine of res perit domino. Norkis' claim that Julian Nepales was acting as Alberto's agent when he allegedly took delivery of the motorcycle (p. 1980. 14 SCRA 759).00) Pesos a day from February 3. 1980 until full payment of the said present value of the motorcycle.) On appeal. In all forms of delivery. The latter's supposed relative. Art. Thus. which was still the owner and possessor of the motorcycle when it was wrecked.00 per day from February 3. Rollo). the motorcycle had already figured in an accident while driven by one Zacarias Payba. 1262) after the perfection of the contract to the time of delivery. 2nd Ed.. which gives legal effect to the act. but. its material delivery could have been made. at the moment of the sale. it is necessary that the vendor shall have had such control over the thing sold that. 67. 1462). finding no reversible error in the decision of the Court of Appeals in CA-G. p. . without the fault or fraud of the vendor and before he has incurred in delay (Art. Norkis. WHEREFORE. (2) the registration of the vehicle on November 6. In lieu of paying the present value of the motorcycle. 1475) and even before delivery. that is. symbolic delivery through the execution of a public instrument is sufficient. plus P50. hence. In other words. DBP would not approve private respondent's loan application and. Garcia. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. judgment is rendered in favor of the plaintiff and against the defendants.1987 Ed. the defendants can deliver to the plaintiff a brand-new motorcycle of the same brand. 5) issued by the DBP. 0120 (Exh. that is. That argument is not well taken. 1980." (Civil Code. and (3) the issuance of official receipt (Exh. The thing is considered to be delivered when it is "placed in the hands and possession of the vendee.) Norkis concedes that there was no "actual" delivery of the vehicle. 378). After the contract of sale has been perfected (Art. Rollo). the issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. be coupled with the intention of delivering the thing. because such tenancy and enjoyment are opposed by the interposition of another will. reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite for the approval of the buyer's loan. is the actual intention of the vendor to deliver. The thing sold must be placed in his control. quantity and cost of the thing sold and has been considered not a bill of sale (Am. the vendor becomes released from his obligation to deliver the determinate thing sold while the vendee's obligation to pay the price subsists. However. Vol.) thus: WHEREFORE. (pp. this Petition for Review. Norkis did not intend yet to transfer the title or ownership to Nepales. consequently. Ambrosio Padilla. even before the ownership is transferred to the vendee. Payba was not shown by Norkis to be a representative or relative of private respondent. Comments and Cases on Sales. The principal issue in this case is who should bear the loss of the motorcycle. Alberto denied having authorized Julian Nepales to get the motorcycle from Norkis Distributors or to enter into any transaction with Norkis relative to said motorcycle.) The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice dated September 20. the things sold remain at seller's risk until the ownership thereof is transferred to the buyer. This circumstances more than amply rebut the disputable presumption of delivery upon which Norkis anchors its defense to Nepales' action (pp. February 6.. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. hence. judgment is hereby rendered as follows: 1. respondents. The Government Corporate Counsel for Phil. petitioner filed in the then Court of First Instance of La Union a complaint against PVTA and FVTR praying that the two defendants be ordered to pay it P4. Dismissing the plaintiffs complaint regarding the 96 bales and 78 bales of tobacco under Guias Nos. 1 and 2. assisted by Mr. The PVTA a government corporation created under Republic Act No. FARMER'S 'VIRGlNlA TOBACCO REDRYING COMPANY. Hence. petitioner shipped to the FVTR 96 bales of tobacco weighing 4... 8 the lower court. INC. (FVTR). 5 They prayed that interest be charged on the first two amounts. 2265 to promote the tobacco industry. after which the tobacco were brought inside the Redying Compound." 13 62 . 2 and the whole of Guia No. The documents submitted accompanying the tobacco shipments were the BIR clearance. PVTA ruled that the PVTA. FERNAN. Because the rest of the plaintiffs tobacco were not graded and weighed.11 which is the agreed value of the plaintiffs uncontested 89 bales of tobacco. The dispositive portion of the decision states: WHEREFORE. 1968. 3 Unfortunately.R. Pio Balagot. 1984. the grading of the plaintiffs tobacco took place but only 89 bales from Guia No. Aldegunda Villanueva.382. Ordering the defendant PVTA to pay the plaintiff the amount of P1.800 kilos covered by Guia No. 10 Petitioner appealed to the then Intermediate Appellate Court which. and INTERMEDIATE APPELLATE COURT. respectively. 1 and 2. The plaintiff asked that its ungraded and un-weighed tobacco be withdrawn from the Redrying Plant.382 were lost while they were in the possession of the FVTR Having learned of such loss in 1965.443 representing the value of the 89 bales which were weighed. There is no pronouncement as to costs. graded and accepted by the defendants.Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.350 kilos covered by Guia No. the remaining un-graded and un-weighed 174 bales with a total value of P28. 7 In its decision. Mr. saw the Branch Manager of the defendant FVTR and asked him to have their tobacco graded and weighed. INC. Manager of the defendant PVTA in Manila and told the latter that some tobacco of the plaintiff were not graded and weighed and were no longer in the premises of defendant FVTR's Redrying Plant. Business Manager of the plaintiff.000 as attorney's fee. 9 should not be held responsible for the lost bales of tobacco because they were not yet properly graded and weighed and that petitioner failed to present the weigher's tally sheets and warehouse receipts or quedans. The operations of defendant FVTR in Bauang. vs. La Union (San Fernando for short) and Guias Nos. whereby the PVTA agreed to lend P25. FVTR was declared in default. redrying and servicing with the FVTR for the1963 tobacco trading operation. SO ORDERED. the PVTA also entered into a merchandising loan agreement with the petitioner. up to its full payment. authorizing the tobacco shipment to proceed to the Redrying Plant. they were listed in the Log Book. some officers and employees in the premises of defendant FVTR asked money for the separate grading and weighed of the un-graded and un-weighed tobacco bales. from the filing of the Complaint on December 27. No. petitioner demanded for its value and the application of the same to its merchandising loan with PVTA but both the latter and the FVTR refused to heed said demands. 2. stopped in October 1963. defendant FVTR at Bauang. weighed and accepted. PVTA. Since the grading and weighing of the plaintiffs tobacco was (sic) not resumed. P28. Before shipping the tobacco to the Redrying Plant. petitioner. Virginia Tobacco Administration. Inc. Villanueva for petitioner. The Log Book was then submitted to the Marketing Department. the following transpired: .323. Upon the arrival of the tobacco shipments in the Redrying Plant.J. Since the plaintiff admitted that it has a merchandising loan of P20. PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION. The remaining bales of tobacco in Guia No. Clearance from the Regional Tobacco Inspector at San Fernando. L-66944 November 13.500 to the petitioner for the purchase of flue-cured Virginia tobacco from bona fide Virginia tobacco former-producers. citing Santiago Virginia Tobacco Planters Association vs. the plaintiff (petitioner herein) obtained a Clearance issued by the Tobacco Inspector. Clarence J. 12 and that the said "question of substance boils down (to) whether or not there is a perfected contract of sale between petitioner and respondent PVTA with respect to the aforesaid remaining bales of tobacco. After several days.. a duly incorporated and authorized tobacco trading entity. 11 affirmedin toto the lower court's decision. 2. C. entered into a contract of procuring. La Union (Bauang for short). 2 The following month.1 In June of that year. Ordering the defendant PVTA to pay the plantiff the amount of P9. in 1965. 1989 ALLIANCE TOBACCO CORPORATION. in its decision of March 20. with interest at the legal rate. I were not graded and weighed because after grading and weighing 89 bales of Guia No. Eduardo Bananal. 6 Thereafter.: The issue in the instant petition for review on certiorari of the decision of the then Intermediate Appellate Court is whether or not petitioner's delivery of 174 bales of tobacco to the Farmer's Virginia Tobacco Redrying Company. petitioner and the PVTA submitted a stipulation of facts and agreed that a partial judgment be rendered as to the 89 bales of tobacco which had been weighed and graded. De los Angeles. It contends that the question of substance decided by the said court is not in accord with the decision of this Court in Philippine Virginia Tobacco Administration vs.000 as attorney's fees and litigation expenses. 2. said Business Manager personally called on Atty. formerly the Trading Department and kept by the Branch Manager. Bauang. 4 Consequently. 3. 1 and 167 bales weighing 8. In the words of the lower court.000 from defendant PVTA the amounts to be paid to the former may be applied by the latter to the payment of said loan and its interest at the agreed rate. petitioner interposed the instant petition for review on certiorari of the appellate court decision. a contractee of the Philippine Virginia Tobacco Administration (PVTA) perfected the contract of sale between petitioner and the (PVTA) so as to hold the latter liable for the loss of said bales while in the possession of the FVTR.00 representing the value of the lost bales of tobacco and/or that the said amount be applied to its loan with PVTA and P4. Manager Bananal told her that the plaintiffs tobacco in question were considered accepted. The defendants PVTA and FVTR refused to allow the plaintiffs request because according to them the tobacco sought to be withdrawn were subject of a merchandising loan and owned by defendant. Jovencio Pimentel. 2 were graded. it had not duly accepted the shipments so as to perfect the contract of sale. in this case. Hence. the trader is left empty-handed. however. Respondent PVTA is likewise ordered to pay petitioner's claim of P28. 18 However. however. On top of this. To prove such delivery. the decision of the appellate court insofar as lt affirms the decision of the lower court directing the PVTA to pay petitioner the amount of P9." 21 the procedure is observed by everyone involved in the trade. WHEREFORE. shipping documents and check-lists which are accomplished prior to delivery do not prove actual delivery. SO ORDERED. vs. must once more prevail. Under the Santiago case. Furthermore. On the other hand. not having been weighed and graded by its agents. documents such as the weigher's tally sheet and the warehouse receipts which are accomplished when the actual delivery is made are necessary. Some demand grease money to facilitate the trading process. 1986. The Civil Code provides that ownerhip of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. De los Angeles cases. 14 On January 13.382. this Court denied the petition for lack of merit. The peculiar procedure undergone in trading. the same may be found in the persons charged with the implementation of the procedure. However upon petitioner's motion for reconsideration of the resolution denying the petition. As it turned out later. delivery thereof to the FVTR should also be considered effective delivery to the PVTA. PVTA case (Santiago case for brevity) should be applied. the FVTR refused to weigh and grade the remaining 174 bales. The moment the shipment is placed in the hands of the PVTA or its representative and it is lost. the petition having presented only the factual question of whether or not the tobacco shipment was indeed weighed and graded at the redrying plant. this is what happened in this case. Petitioner contends that it bound not only FVTR but also the PVTA and perfected the contract of sale between petitioner and the PVTA On the other hand. without having been weighed or graded. the lower court established from the testimonies of witnesses the fact that petitioner entrusted to the FVTR a total of 263 bales of tobacco 89 bales of which were even actually weighed and graded in the redrying plant. Sadly. physical delivery of the shipments was not proven. the Court set aside said resolution of January 13. Since PVTA had virtual control over the lost tobacco bales. the actual. and trading of Virginia tobacco. warehousing. there was a need to prove actual delivery because the petitioner therein demanded for the payment of tobacco shipments which were allegedly delivered to the FVTR. Should the petitioner still owe respondent PVTA pursuant to the merchandising loan agreement between them. it should be emphasized that the lower court made a definitive factual finding on the actual and physical delivery of the lost bales of tobacco from the petitioner to the FVTR. 15 At the outset. 63 . But observance of the procedure more often than not renders a trader at a disadvantage.11 for the 89 bales of tobacco is hereby affirmed. While the flaw may not really be in the procedure itself. said shipments were lost while in the custody of FVTR thereby placing the petitioner in a "no win" situation. Some personnel mishandle the shipment to the detriment of the trader. the same shall be offset by whatever amount the petitioner would receive from the respondent PVTA by virtue of this decision. the PVTA argues that the delivery was not valid and binding on it considering that. disagree as to the legal implications of such delivery. It should be noted. Equity and fair dealing. 1968 up to their full payment. we find said contention misplaced herein. the herein respondent alleges that. the FVTR also refused to grant petitioner's request to withdraw the un-weighed and un-graded shipments. Both amounts are subject to interest at the legal rate from the filing of the complaint on December 27. all functions and operations with respect to the processing. No costs. A strict interpretation of the provision of Article 1475 may result in adverse effects to small planters who would not be paid for the lost products of their toil. Verily. Such situation was what the ruling in PVTA vs. the provisions of ally existing law to the contrary notwithstanding. In said case. that the factual circumstances extant in this case are different from those in the Santiago case. the tobacco trading procedure conceived and formulated by the PVTA is akin to a contract of adhesion wherein only one party has a hand in the determination of the terms.823. reveals that delivery seals the contract of sale because the trader loses not only possession but also control over the shipment. supervise and control.On the other hand. 20 Indeed.00 for the lost 174 bales of tobacco. graded and weighed. which procedure was set out at length in both the Santiago and the PVTA vs. while under an Ideal situation. 17 In other words. we would have found merit in respondent PVTA's contention that the contract of sale could not have been perfected pursuant to Article 1475 22 of the Civil Code because to determine the price of the tobacco traded. the tobacco shipment could not be deemed to have been accepted by FVTR much less the PVTA It insists that the Santiago Virginia Tobacco Planters Association. 1986 and gave due course to the petition. actual delivery plays a pivotal role. Outlined by the PVTA pursuant to its power "to take over and assume. in tobacco trading. Inc. the shipment should first be inspected. the same must be denied. the anchor of said case. and therefore exclusively direct. for reasons beyond the control of the petitioner. 16 The parties. De los Angeles sought to avoid. 19 There is delivery when the thing sold is placed in the control and possession of the vendee. Article XIV of the 1973 Constitution provides. petitioners refused to vacate the said premises. Assuming that Exhibit "B" is in existence and that it was duly executed. Bautista. 113472-73 December 20. claimed that on July 23. Manila. To sustain such an outrageous contention would be giving a high premium to a violation of our nationalization laws. and (3) When it ruled that no express nor implied trust existed between petitioners and private respondent (Rollo. while petitioner Ong Ching Po died in October 1986. Ong Ching Po into signing another document in favor of Soledad Parian (She is the Filipino wife of Ong Yee. The decision of the Court of Appeals became final and executory. Ong Ching Po unequivocally. The inferior court dismissed her case. According to private respondent. J. the same property sold by Ong Joi Jong to private respondent in 1947. Branch 10. 1947 in the name of private respondent. II According to petitioners. "C") read as follows: Deed of Sale I. the brother of petitioner Ong Ching Po. As stated by petitioners themselves. 1993. On December 12 1985. On appeal by petitioners to the Court of Appeals. 1986. petitioners. a deed of conveyance in favor of Soledad Parian [private respondent] or it was only resorted to or executed as a subterfuge because the real buyer (Ong Ching Po) was an alien and it was agreed upon between Ong Ching Po and his brother (Ong Yee. or associations qualified to acquire or hold lands of the public domain in the Philippines. the Court of Appeals erred: (1) When it gave full faith and credit to the Deed of Sale (Exh. QUIASON. p. petitioner Yu Siok Lian. now belong (sic) to Mr. Ong Joi Jong sold a parcel of land located at Fundidor Street. private respondent filed a case for unlawful detainer against petitioner Ong Ching Po before the Metropolitan Trial Court of Manila. in the Regional Trial Court. 86-36818. Article XIII of the 1935 Constitution provides. the trial court rendered a decision in favor of private respondent. 85-33962. Salva. The dismissal was affirmed by the Regional Trial Court. no private agricultural land shall be transferred or assigned except to individuals. but whether this document is what it purports to be (i. Hence. respondents. Soledad Parian's husband) that the land be registered in the name of Soledad Parian in order to avoid legal complications and to facilitate registration and transfer and that the said title would be transferred by Soledad to Ong Ching Po or his successors-in-interest and that she would be holding the title in trust for him" (Rollo. Section 14. petitioner Ong Ching Po bought the said parcel of land from Ong Joi Jong. The sale was evidenced by a photo copy of a Deed of Sale written in Chinese with the letter head "Sincere Trading Co. 19-20). 4 Fundidor Street. petitioners Jimmy and David Ong. docketed as Civil Case No. . 17-18).000. Manila. COURT OF APPEALS and SOLEDAD PARIAN. she demanded that the lot be vacated because she was going to sell it. "B"). Branch 58. YU SIOK LIAN DAVID ONG and JIMMY ONG. Jimmy Ong and David Ong filed an action for reconveyance and damages against private respondent in the Regional Trial Court. as follows: 64 . 9260 dated September 2. 1994 ONG CHING PO. 4) On December 6. petitioners Ong Ching Po. which dismissed the petition for certiorari in CA-G. Exh. And the purpose of this document is to precisely serve as proof of the sale. the case was consolidated with Civil Case No. Addendum: I have acceded to the request of Mr. in turn. Ong Joi Jong. Arrieta. On May 30 1990. "A") in favor of private respondent. which dismissed the petition. instead of the Deed of Sale (Exh. I certify to the truthfulness of this fact." (Exh. Arthem Maceda Potian for private respondent. as follows: Save in cases of hereditary succession. the document was registered with the Register of Deeds of Manila. An English translation of said document (Exh. Manila. docketed as Case No.R. "B" and its translation. Salva for petitioner. On July 26. When her husband died. The said sale was evidenced by a notarized Deed of Sale written in English. Nos.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. is not so much as to which between Exhibit "A" and "Exhibit "B" is more weighty. 1947. she entrusted the administration of the lot and building to petitioner Ong Ching Po when she and her husband settled in Iloilo. 1946. the said court affirmed the decision of the Regional Trial Court. San Nicolas to private respondent Soledad Parian. died in January 1983. San Nicolas an (sic) area consisting 213 square meters including a one-story house erected thereon unto Mr. . a party to this Deed of Sale hereby sell in absolutely (sic) manner a lot located on No. Branch 53. which issued Transfer Certificate of Title No. still petitioners cannot claim ownership of the disputed lot by virtue thereof. vs. "C") in favor of petitioner Ong Ching Po. 85-33962. corporations.00 the receipt of which is hereby acknowledged by me and consequently I have executed and signed the government registered title (sic) the said lot inclusive of the house erected thereon. what is in dispute ".. 2839192.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision of the Court of Appeals dated July 15. on the other hand. Section 5. The decision of the Regional Trial Court was. Unfortunately. 1984. Subsequently. the wife of Ong Yee. brother of Ong Ching Po) for the purpose of facilitating the issuance of the new title by the City Register of Deeds and for the reason that he is not yet a Filipino. We cannot go along with the claim that petitioner Ong Ching Po merely used private respondent as a dummy to have the title over the parcel of land registered in her name because being an alien he was disqualified to own real property in the Philippines. pp. (Exhibits for the plaintiff. private respondent filed an action for quieting of title against petitioners Ong Ching Po and his wife. The latter. I On July 23. Branch 26. Ong Ching Po for the sum of P6. On March 19.e. this petition. CV Nos. petitioner Ong Ching Po executed a Deed of Absolute Sale conveying to his children.R. pp. affirmed by the Court of Appeals. Petitioners. 1983. Upon her motion. (2) When it concluded that the acts of petitioners were not acts of ownership. ]). Aguilar. Aguilar. Under Article 1498 of the Civil Code of the Philippines. Petitioner Yu Siok Lian testified that she was present when said document was executed. Exhibit "B". 1946 to the plaintiff. whether individuals or corporations. petitioners argue that if they cannot prove an express trust in writing. It cannot be made to rest on vague and uncertain evidence or on loose. hence. SO ORDERED 65 . the deed of sale executed by Ong Joi Jong in favor of private respondent (Exh. Records p. are not necessarily reflective of dominion. On the other hand. Exhibit "C". On the other end of the legal spectrum. no private land shall be transferred or conveyed except to individuals. It appears. its contents may be proved by a copy. deed of sale (Exh. p. exploitation. they have also been disqualified from acquiring private lands. have been disqualified from acquiring public lands. because such kind of evidence may be easily fabricated (Salao v. why did she not sign said document. loss. as even a mere administrator or manager may lawfully perform them pursuant to his appointment or employment (Rollo. 116 Phil. The rental receipts were also in the name of her husband. Yu Siok Lian. he was disqualified from acquiring and owning real property. The 1935 Constitution reserved the right to participate in the "disposition. however. development and utilization" of all "lands of the public domain and other natural resources of the Philippines" for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Under the law. It is not correct to say that private respondent never took possession of the property. Petitioners failed to adduce evidence as to the genuineness and due execution of the deed of sale. Petitioners do not claim that Ong Yee was not in a financial position to acquire the land and to introduce the improvements thereon. corporations. notwithstanding her pretensions to the contrary (Decision p. rental receipts. To remove the mantle of validity bestowed by law on said document. As observed by the Court of Appeals: We find. but the trial court rejected her claim and held: If it is true that she was present. It is markworthy that all the tax receipts were in the name of private respondent and her husband. 70 SCRA 65 [1976]). 1267 [1962]). or unavailability. Aliens. The Court does not believe that she was present during the execution and signing of the deed of sale involved therein. she was married only on September 6. corporations. Under Section 4. the evidence must be trustworthy and received by the courts with extreme caution. the same is null and void. in Baguio City where she apparently resided. it being contrary to law. 1457). therefore. possession is transferred to the vendee by virtue of the notarized deed of conveyance. This order may be changed if necessary in the discretion of the court (De Vera v. Not even Exhibit "B" can be considered as such a document because private respondent. "No express trust concerning an immovable or any interest therein may be proved by parole evidence. 6. or cannot be produced in court. There is no document showing the establishment of an express trust by petitioner Ong Ching Po as trustor and private respondent as trustee. execution. Under Article 1443 of the Civil Code of the Philippines. 218 SCRA 602 [1993]). the registered owner of the property subject of said "deed of sale.Save in cases of hereditary succession. Secondary evidence is admissible when the original documents were actually lost or destroyed." was not a party thereto. petitioners said that private respondent implied in her deposition that it was her husband who paid for the property. As to the contention of petitioners that all the tax receipts. or by a person to whom the parties to the instrument had previously confessed the execution thereof (De Vera v. The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. WHEREFORE.. or after the deed of sale was executed. When the original writing has been lost or destroyed. Such transaction is a common practice in Filipino-family affairs. because these documents had not been properly authenticated. that these acts. or by a recital of its contents in some authentic document. the execution thereof shall be equivalent to the delivery of the object of the contract. 10). admitted in her testimony in court that Ong Yee was a stockholder of Lam Sing Corporation and was engaged in business. it was because her family had settled in Iloilo. Assuming that the genuineness and due execution of Exhibit "B" has been established. upon proof of its execution and lost or destruction. even if true. The Court of Appeals did not give any credence to Exhibit "B" and its translation. Molo-Peckson. "B") and transfer certificate of title were in their possession. petitioners claim that private respondent admitted that she did not pay anything as consideration for the purported sale in her favor. "when the sale is made through a public instrument. or associations qualified to acquire or hold lands in the public domain. that the sale was financed out of conjugal funds and that it was her husband who handled the transaction for the purchase of the property. or by any person who was present and saw it executed or who after its execution. contents. But prior to the introduction of such secondary evidence. the wife of petitioner Ong Ching Po. they can prove an implied trust orally. private respondent explained that she and her husband entrusted said lot and building to petitioners when they moved to Iloilo. Salao. Art. De Leon v. While an implied trust may be proved orally (Civil Code of the Philippines. supra). Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain" (II Bernas. or associations qualified to acquire or hold lands in the public domain. The due execution of the document may be established by the person or persons who executed it. by the person before whom its execution was acknowledged. even merely as a witness? Her oral testimony is easy to concoct or fabricate. tax declaration. 414). "A") is a notarized document. saw it and recognized the signatures. et al. The Constitution of the Philippines 439-440 [1988 ed. no private lands shall be transferred or conveyed except to individuals. Rule 130 of the Revised Rules of Court: Secondary Evidence when Original is lost or destroyed. Ong Ching Po. The correct order of proof is as follows: existence. therefore. the petition is DISMISSED. equivocal or indefinite declarations (Cf. Petitioner Ong Ching Po was a Chinese citizen. The oral testimony to prove the existence of the express trust will not suffice." If what petitioners meant was that private respondent never lived in the building constructed on said land. or by the recollection of the witnesses. In the same breath. if from the deed the contrary does not appear or cannot clearly be inferred. Section 7." Undaunted. Article XII of the 1987 Constitution provides: Save in cases of hereditary succession. the proponent must establish the former existence of the document. Furthermore. as indicated in the sketch plan. located at Tindig na Manga. and AYALA LAND. Marlene Sabio (herein petitioners) all their rights.: Before us is a petition for review on certiorari assailing the decision of the Court of Appeals in CA-G. 4 hereunder. 1994. Las Piñas City. cases. vs. conveyed and transferred all their rights over the parcel covered by TCT No. this vast estate was registered in the name of Las Piñas Ventures. 65162 to Interbank. CONVEY and TRANSFER unto and in favor of the FIRST PARTY a CONTIGUOUS PORTION of the afore-described parcel of land. INC. Allegedly. Subsequently. J. then to ALI. Lot No.000 square meter portion. Incorporated (or ALI). Designated as Lots 2 and 3. Book T-328. b. This entire property became the site of what was known then as ―Ayala Las Piñas Subdivision. Philippine Currency. to wit: xxx xxx xxx 2. the Sabios and Interbank settled their opposing claims by entering into a Memorandum of Agreement (or MOA) whereby the Sabios assigned. was issued also on April 25. The Regional Trial Court of Makati. which is hereto attached as Annex ―D‖ and made an integral part hereof.. 65162. 66 . Page 113) and Transfer Certificate of Title No. and the Bank of the Philippine Islands (or BPI). 1981. PAL Employees Savings and Loan Association. S-65162. Page 113) and Transfer Certificate of Title No.000) SQUARE METERS. INC.[2] For this purpose. the portion covered by TCT No. Branch 64. the exact location of which is. 85717. Ayala Property Ventures. Filipinas Life Assurance Company. particularly that which was covered by TCT No.‖ Thereafter. INC. which was eventually subdivided and retitled in favor of ALI.. with all the improvements thereon. Book T-328. 190703-Rizal. That for and in consideration of the aforementioned assignment. Page 161 (formerly No. AND. 48870 which affirmed and modified the judgment of the Regional Trial Court of Makati. the said property was the subject of several land registration. 190713-Rizal.‖ Years later. fees and expenses incidental to and/or connected with the segregation. GOLDENROD. was also subsequently transferred first to LPVI. registration and delivery to the FIRST PARTY of a new transfer certificate of title in the name of the FIRST PARTY. Book T-127. September 4. covered by Transfer Certificate of Title No. Page 162 (formerly No. over the afore-described parcel of land herein assigned. together with the parcels of land belonging to defendants. receipt of which in full is hereby acknowledged by the FIRST PARTY from the SECOND PARTY. while the subject property was still the object of several pending cases.454 square meters.. Almanza. TCT No. AYALA CORPORATION. 6. 190714-Rizal. T-41263 and T-41262 were issued on April 25.b. covered by the aforementioned Transfer Certificate of Title No. as far as practicable. 85717.R. (or Interbank) acquired from the Trans-Resource Management and Development Corporation all of the latter‘s rights to the subject property by virtue of a deed of assignment executed between them on July 12. In turn.[3] Similarly. SABIO. Page 162 (formerly No. COMPLETE and PERFECT its ownership and title to the afore-described three (3) parcels of land with all the improvements thereon. petitioners. CV No. The same paragraph also granted Interbank the right to assign all its rights and interests outlined in the MOA. Interbank transferred all its rights and interests to the Las Piñas Ventures. 18540. i. 1985 pursuant to paragraph 4 thereof. in whose favor TCT Nos. Book T-328. it being understood that the right of way herein contemplated shall not be less than TEN (10) meters in WIDTH. and a new title. in Civil Case No. Incorporated or (PESALA) and the Ayala Group of Companies comprised of the Ayala Corporation. c.FIRST DIVISION [G.00). the Sabios). PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION. 65161 and 65162). T-41261. respondents. Ltd. Inc. Transfer Certificate of Title No. ASSIGN. Incorporated (or LPVI). particularly the parcels of land covered by Transfer Certificate of Title No. Book T-328. interests. namely: TCT Nos. The object of the controversy is a portion of a vast tract of land measuring approximately 152. d. summarized the Sabios‘ claims in their complaint. Page 114). situated at Tindig Na Manga (Almanza). Page 161 (formerly No. INC. provided that all the obligations of Interbank specified in the aforequoted paragraphs 2. Page 114).e. 1973. S-65161Metro Manila.d shall also bind all of its assigns. S-65162-Metro Manila. 2 and 3 were acquired from LPVI by the Ayala Group of Companies (herein respondents) through a merger between LPVI and Ayala Land. 190714-Rizal. heirs and successors. free from all liens and encumbrances. a deed of assignment with assumption of mortgage was later executed by the Ledonio spouses in favor of the Sabio couple on November 23. Book T1227.000) SQUARE METERS. LAS PIÑAS VENTURES. Interbank) shall: a.000 square meter contiguous portion of said lot.. Rizal (now Metro Manila). Book T-1227. 65161 and 65162 on March 8. MARLENE A. with the express exception of a 58. LOT 6-B. a dispute arose concerning the 58. Book T-328. and MA. 1994.. conveyance and transfer by the FIRST PARTY (i.000 square meter contiguous portion subject of the MOA that was to be conveyed and transferred back to the Sabios by Interbank. Incorporated (or APVI). No. INC. The aforementioned CONTIGUOUS PORTION referred to in paragraph 1 hereof with an area of FIFTY EIGHT THOUSAND (58.[5] The said MOA was annotated on TCT Nos.c and 2. 1984.. INC. Branch 65. DECISION YNARES-SANTIAGO. this first class residential subdivision was renamed ―Ayala Southvale. then covered by TCT No. 1854. the latter (SECOND PARTY. the property had already been cleared. Las Piñas. 132709. PN107 affecting the land. an action for specific performance and damages. FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE. and 6 (formerly covered by two Certificates of Title. S-65162-Metro Manila. assigned to the spouses Camilo and Ma. by defendant Ayala Group. S-65161-Metro Manila. was acquired by the Ayala Group sometime in 1993. thus: Plaintiffs claimed that defendant Interbank was obligated to complete and perfect its ownership and title to the parcels of land so that Interbank could transfer to plaintiffs the absolute ownership and title over the contiguous portion.). conveyed and transferred by the SECOND PARTY. in Civil Case No. the International Corporate Bank. Also in controversy was the permanent and perpetual right of way that Interbank was obligated to constitute in favor of the Sabios‘ 58. Book T1227. 1985. title and participation over a contiguous portion of the subject property measuring 119.e. (now UNION BANK OF THE PHILIPPINES). ALI. 190714-Rizal. Book T-1227. as well as civil. a permanent and perpetual RIGHT OF WAY sufficient for all the needs of said parcel of land through out the properties already owned and/or to be acquired by the SECOND PARTY.. The MOA also provided. Incorporated (or LPVI). LEDONIO-SABIO.R.000. PAY to the FIRST PARTY the sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750. 2. They also claimed that one of the commitments of defendant Interbank which induced plaintiffs to execute the agreement without which plaintiffs would not have executed was that defendant Interbank would clear the contiguous portion of all occupants and wall-in the same. one of the parties in LRC Case No. the spouses Gerardo and Emma Ledonio. or on March 6.[4] Sometime thereafter. Another contiguous parcel. 65161 designated as Lot Nos. Constitute and grant and by these presents has CONSTITUTED and GRANTED without indemnity whatsoever in favor of the FIRST PARTY and of said parcel of land to be covered by a new transfer certificate of title in the name of the FIRST PARTY with an area of FIFTY EIGHT THOUSAND (58. BPI was later dropped as a partydefendant. Subject to the rights of the SECOND PARTY under the provisions of No. AYALA PROPERTY VENTURES CORPORATION. The Sabios were thereby constrained to institute an action for Specific Performance and Damages against Interbank. THE INTERNATIONAL CORPORATE BANK. survey. 2001] SPOUSES CAMILO L. LPVI.429 square meters. then covered by TCT No. On May 25.[1] In the early 1970‘s. Page 114). of occupants except for the contiguous portion thereof. Insular Life Assurance Company. Bear and defray all costs. Goldenrod Incorporated. Page 162 (formerly No. S-65162-Metro Manila. Plaintiffs claimed Actual and Compensatory damages in the amount of P500. before conveyance of the property can be considered as full compliance with the obligation imposed upon the defendants under the MOA. the defendants signified willingness to abide by the MOA. In particular. The trial court erred in not finding that all eighteen (18) parcels of land. Consequently. L. and the annotation of the subject Memorandum of Agreement. H. Defendants Ayala Corp. however. The issues having been joined. and asked that judgment be rendered directing the defendants to comply with their obligations as defined in the pertinent provisions of the MOA. are all servient estates referred to in paragraph 2. prepared the Deed of Conveyance [8] required by the Register of Deeds. the defendants also averred that fulfillment of its obligation under the MOA became impossible due to the plaintiff spouses‘ own acts. J and J-1) and this loan is now deemed paid (Exhs. H-1. Hence. M-2. 67 .000 square meter portion of squatters and other illegal occupants.000. The defendants nevertheless repudiated plaintiffs‘ claim that they (defendants) were obligated to clear the said property of all squatters and occupants. The trial court ruled in favor of the defendants. T-5331 to T-5334 and titles derived therefrom.000. and the circumstances attendant to. With regard to that 58. plaintiffs have been prevented from utilizing for productive purposes the land. VI. Nevertheless. but the plaintiffs themselves refused to sign the said deed unless the subject property was cleared of all squatters and other illegal occupants. G and G-1) where the contiguous portion of the property was used as collateral (Exhs. O. 5-6.000 square meter parcel. First. hence.000 square meter portion of all occupants and to fence the said premises. that is: Whether or not the defendants had the obligation to clear the subject 58. the TCTs covering the contiguous portion of the property. In the transactions they were each involved in. whether expressly or impliedly. The defendants further admitted the obligation to grant an easement of right of way under the MOA. including that portion which was to be assigned to the plaintiff spouses. The trial court erred in its interpretation of the phrase ―free from all liens and encumbrances‖ as appearing in the MOA. More particularly. in each transaction.Plaintiffs alleged that defendants. but that they were also willing and prepared to provide an alternative choice at the pleasure of the plaintiff spouses. the trial court issued an order granting the defendants‘ motion for partial immediate execution pending appeal by directing the Register of Deeds to ―immediately cancel and/or cause the cancellation of the notice of lis pendens and other annotations as regards this case and the annotation of the Memorandum of Agreement on TCT Nos. Sabio to the effect that Interbank and Ayala Investment and Development Corporation would enter into a joint venture to develop the entire parcel. the defendants noted that the property in question became the subject of an action for recovery of ownership filed by the Ledonio spouses against the Sabios. in using said phrase. the contract from which the alleged obligations arose. finding that the MOA did not impose.c. The trial court also sought to address the preliminary issue of whether or not an order directing the cancellation of the annotation of the MOA and notices of lis pendens on the titles covering the subject property was warranted. the contiguous portion was expressly excluded in the corresponding contracts (Exhs. in fact. particularly Ayala Group. and complete and perfect title to the parcel of land. considering that the defendants filed their confession of judgment only after the lapse of six (6) years from the filing of the action. that should prevail. the defendants also acknowledged the obligation to segregate that contiguous portion and deliver title thereto to the plaintiff spouses free from liens and encumbrances. Defendant Ayala Group is ordered to pay plaintiffs Camilo and Marlene Sabio P500. P to P-2) and plaintiffs are now considered released. VII. the trial court focused on the primordial matter of contention. the trial court awarded actual and exemplary damages to the plaintiff spouses for losses they incurred due to the defendants‘ delay in complying with the MOA. both of which are annotated on TCTs Nos. plaintiffs have no cause of action against them and even assuming that defendants were privy to the MOA.[6] The defendants‘ answer was summed up by the trial court as follows: Defendants disclaimed liability. On the contrary.00. into a first class residential subdivision. Be that as it may. They further alleged that they were constrained to obtain a loan from Interbank (Exhs. The trial court erroneously disregarded the other provisions and parts of the MOA which could have evinced the reasons for. E.[11] The opposing parties filed their respective motions for reconsideration. the execution of the said MOA. much less to fence the said property. claimed that they were not privy to the MOA.00 in exemplary damages. subsequent to the MOA. all the parties filed separate appeals before the Court of Appeals. convey and transfer to the plaintiffs-appellants (Sabio spouses). Consequently. C-1.b. the trial court disposed as follows: In view of the foregoing. the defendants submitted a Notice of Confession of Judgment and Motion for Partial Decision Against Answering Defendant for the alleged purpose of securing an entry of judgment against them while avoiding the formality. F.. the defendants confessed judgment with regard to the plaintiff spouses‘ prayer emanating from the MOA. failed to comply with their commitments and obligations in the MOA specifically those arising from the abovementioned provisions thereof. D-2. Moreover. [9] Moreover. but both were denied by the trial court. arguing that no such obligation was imposed in the MOA. The trial court erred in not finding that the defendants-appellants (Ayala Group of Companies) are obligated to perfect and complete ownership and title to the entire property covered by TCT No. V. Plaintiffs. T-5331 to 5334. III. the annotation of the notice of lis pendens caused to be registered by the Ledonios on the titles hampered the delivery of the title covering the 58. The trial court erred in not ordering the defendants-appellants to cause the annotation of the easement of right of way on all eighteen (18) titles. are directed to specifically comply with the obligations under the MOA by executing a Deed of Conveyance upon payment by the defendant of the foregoing amount.000. including the surrounding real estate. I-1. Ayala Life. APVI (collectively referred to as Ayala Group).000 square meter portion had already been paid off by the defendants. the mortgage obligations of the plaintiff spouses annotated on the titles covering the 58.00 in actual damages and P250. necessitating the removal of all illegal occupants and enclosing the perimeters of the said property with a wall that would include the 58. IV. Costs against defendant Ayala Group. VIII. T-5331 to T-5334.000 square meter portion to the Sabios.‖[12] Meanwhile. covered by eighteen (18) titles in the name of LPVI. 2-Ayala. The trial court erred in compelling the plaintiffs-appellants Sabios to sign the draft deed of conveyance when said document was a gross violation of paragraphs 2. and LPVI.[7] Sometime thereafter. 2-A-PESALA). time and expense of ordinary proceedings.000 square meter parcel and had.000 square meter portion pertaining to the Sabio spouses. defendants posited that they were ready to deliver the title to the 58. Secondly. on Interbank and its transferees the obligation to clear the subject 58. they would still have no obligation to clear the contiguous portion of the property as there was no express or implied provision in the MOA that the party to whom the property was transferred would clear the same. However. E-1.000. manifesting that not only did the defendants constitute and grant such right of way.00 and Exemplary Damages in the amount of P250. the Sabios (plaintiffs-appellants) ascribed the following errors to the trial court: I.d of the MOA. PESALA.d of the MOA. in their appeal before the Court of Appeals. said property acquired did not include the contiguous portion which plaintiffs claimed was the subject of noncompliance of the obligations agreed upon. F-1. pursuant to which they each acquired the property which was originally transferred by the plaintiffs to defendant Interbank. by invoking inapplicable jurisprudence when it is the intention of the parties to the MOA. K. including that portion which the defendant-appellants must assign. T-5331. The trial court erred in ordering the cancellation of the annotation of the MOA and Notices of Lis Pendens on LPVI‘s TCT Nos. ALI.[10] prompting the latter to seek a court order cancelling the Notice of Lis Pendens and annotation of the MOA on the titles covering the subject parcel of land. and 2. comprising what was then known as the Ayala Las Piñas Subdivision. N. The trial court erred in failing to appreciate the testimony of plaintiff-appellant Camilo L. The Register of Deeds is directed to cancel the notice of lis pendens as regards this case. 2. II. I. IV.b of the MOA mandates that respondents Ayala Group of Companies shall assign. ―A-23‖ thru ―A-26‖.T.d was to grant them the same rights as any homeowner would have to freely pass through all the roads in the proposed subdivision.the first day of the hearing of the above-entitled case --. Psu-80886 (Exhibits ―A-34‖. and/or claims of occupants/possessors who were not parties to any of the cases mentioned in the aforementioned documents referred to in the aforementioned annexes. ―II-1‖. ―A-10‖ thru ―A-15‖. ―1-A-Ayala‖ and ―6-A-Ayala‖) with all the improvements thereon. Book 27. X. (now Union Bank of the Philippines). Book 207. Psu 80886 with all the improvements thereon.b.both of which constitute judicial admissions contemplated by Section 4. 2. to provide ingress to.―with all the improvements thereon‖ as mandated by the provisions of paragraph 2. the same being incapable of accurate pecuniary estimation. Finally. Page 132 (Exhibits ―LL‖ thru ―LL-2‖ and ―3-Ayala‖) in the name of respondent Las Piñas Ventures. ―EEEE‖ thru ―EEEE-4‖ and ―4-Ayala‖) prepared sometime in January 1990 by respondents Ayala Group of Companies. The Court of Appeals acted contrary to law and jurisprudence in holding that the two ―roads right of way‖ (Exhibits ―6-B‖ and ―6-C‖) --. while the MOA mentioned only TCT Nos. Petitioners are justified in refusing to affix their signatures to said draft. concluding that their claim for damages.[16] After a careful and thorough disquisition of the facts of this case and the arguments raised in this petition.confined and limited to Lot 10. ―II-1‖. and 2. Hence. the dominant estate. No. as second party.[13] In contrast. ―1-A-Ayala‖ and ―6-A-Ayala‖) is still in the hostile and adverse actual occupation and possession of third parties.T. ―A-23‖ thru ―A-26‖. The Court of Appeals acted contrary to law and jurisprudence in utterly disregarding the import and significance of the premises or ―Whereases‖ of the MOA and the various annexes thereto forming integral parts thereof (Exhibits ―A-6‖ thru ―A-9‖.b of the MOA. and.then covered by T. II. 1997.C. including adverse claims. and egress from. convey and transfer unto and in favor of petitioners. 65161 and 65162. T-5332-Las Piñas.[15] The Court of Appeals also rejected the Sabios‘ position that the purpose and spirit of the establishment of a right of way in their favor under paragraph 2. Part IV (New Rules of Evidence) of the Rules of Court. later by T. No. The defendants-appellants having complied with the obligation to establish the right of way. the Court of Appeals determined that there was no need to annotate the easement on the titles not affected by said road right of way. there was no reason to interpret the MOA differently. ―A-31‖ thru ―A-33‖. their losses could not be compensated as actual damages. The Court of Appeals acted contrary to law and jurisprudence in disregarding the following intention of the parties to the MOA as evidenced by the annexes thereto (Exhibits ―A-6‖ thru ―A-9‖. ―1-A-Ayala‖ and ―6A-Ayala‖) but also ―all the improvements thereon.T. affirming with modification the trial court‘s ruling.C. 1994 directing the cancellation of the annotation of the MOA and the Notices of Lis Pendens on LPVI‘s titles. the Court of Appeals rendered judgment decreeing: WHEREFORE. while the Court of Appeals ruled that the defendants-appellants are not entitled to damages. VII.C. Metro Manila. ―1-A-Ayala‖ and ―6A-Ayala‖) which respondents Ayala Group of Companies are committed and obligated to assign. In fact. The Court of Appeals acted contrary to law and jurisprudence in affirming the decision of the trial court directing the petitioners to affix their signatures to the draft deed of conveyance (Exhibits ―CC‖ thru ―CC-4‖.IX. and. the Court of Appeals rendered the decision subject of the instant petition for review. Inc. VI. The Court of Appeals affirmed the trial court‘s conclusion that under the MOA. Page 131 in the name of respondent Las Piñas Ventures. (Exhibits ―KK‖ thru ―KK-3‖ and ―3-Ayala‖) and now covered by T. ―A-35‖ thru ―A-46‖). whether actual or exemplary. respondents Ayala Group of Companies are mandated to first ―complete and perfect‖ their ―ownership and title‖ to the entirety to the afore-described Lot 6. that is. The Court of Appeals acted contrary to law and jurisprudence in not holding that --. notices of lis pendens. so that the court may be placed in the position/situation of the parties thereto at the time the agreement was executed. No. Page 61 in the name of respondent Ayala Land. V. earlier covered by T.. the Interbank and the defendants-appellants ―did not assume the obligation to clear the subject contiguous portion of the land of occupants and to wall in the same. ―A-10‖ thru ―A-15‖.d of the MOA. Rule 129. while failing to award damages in their (defendants-appellants) favor. was unsubstantiated and devoid of legal basis.proposed by respondents Ayala Group of Companies constitute sufficient and valid compliance with the mandate of paragraph 2. Inc.as expressly agreed and stipulated in paragraph 2. constitutes sufficient and valid compliance with the commitment and obligation of the second party to ―assign. evidencing the reasons behind and the circumstances surrounding the execution thereof. the defendants-appellants merely impugned the trial court‘s judgment for having awarded actual and exemplary damages to the plaintiffs-appellants Sabio spouses. ―A-27‖ thru ―A-30‖. despite the fact that. ―EEEE‖ thru ―EEEE-4‖ and ―4-Ayala‖).‖ III. The Court of Appeals ruled that the phrase ―permanent and perpetual right of way‖ must be construed in its ordinary and accepted signification. ―II-1‖. On April 30.C. the said court reversed the trial court‘s award of damages to the Sabios. No. Metro Manila.b of the MOA (Exhibits ―A‖ thru ―A -5‖ and ―1Ayala‖) Psu-80886 (Exhibits ―A-34‖. 5333 and 5331. in releasing respondents Ayala Group of Companies from their commitment and obligation of complying therewith. in the name of CPJ Corporation.. T-5331Las Piñas. No. The Court of Appeals acted contrary to law and jurisprudence in affirming the ruling of the trial court that the mere execution of the draft deed of conveyance (Exhibits ―CC‖ thru ―CC -4‖. the judgment appealed from is AFFIRMED with the MODIFICATION that the awards for actual and exemplary damages in favor of the plaintiffs are hereby SET ASIDE. ―II-1‖. Book T-328. Book 27.‖[14] The Court of Appeals further agreed with the trial court‘s ruling that since the intentions of the parties to the MOA were clearly worded in the provisions they expressly stipulated on. More so. ―II-1‖.T. Psu-80886 (Exhibits ―A-34‖. convey and transfer unto and in favor of the first party‖ the aforementioned contiguous portion --. While the trial court was right in concluding that the Sabio spouses suffered damages. ―1-A-Ayala‖ and ―6-A-Ayala‖) --. The Court of Appeals acted contrary to law and jurisprudence in disregarding the legal effect upon paragraph IV of the second amended and supplemental complaint dated 23 April 1990 of the confession of judgment made on 18 June 1993 and the statement made by respondents Ayala Group of Companies on 05 November 1993 --. Page 162. ―A-16‖ thru ―A-22‖. --.T. and ―A-35‖ thru ―A-46‖) in the use of the phrase ―free from all liens and encumbrances‖ in paragraph 2. The trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order dated September 21. pursuant to paragraph 4 of the MOA. SO ORDERED. Psu 80886 (Exhibits ―A-34‖. petitioner attributed to the Court of Appeals ten (10) alleged errors: I. convey and transfer unto and in favor of the petitioners not only the aforementioned Lot 6-B. S-65162-Metro Manila. as well as to provide adequate and convenient passage to and from the nearest highway. for the signature of the petitioners as first party. ―A-16‖ thru ―A-22‖.C. Inc.c thereof: --free from any and all liens/encumbrances and/or problems of whatever kind and nature. T-41261-Las Piñas. which were later replaced by TCT Nos.Lot 6-B. said Lot 6-B. admittedly. Psu-80886 --. Psu 80886 (Exhibits ―A-34‖. Metro Manila. because paragraph 2. including the aforementioned Lot 6-B. 68 .c. In this petition for review before us. we find no reversible error on the part of the Court of Appeals. 85717 and later by T.d of the MOA. no other titles were mentioned. Inc. successors-in-interest of respondent The International Corporate Bank. and in releasing respondents from their obligations under paragraphs 2. 69 . Sabio‖ annotated on the TCTs of the contiguous portion of the property are included in the obligation ―to deliver the new TCT free from all liens and encumbrances. Occupation by the occupants of the contiguous portion of the property is not an encumbrance which defendant Interbank is obligated to clear the property from. and during the negotiations one hundred (100) to two hundred (200) squatter families were already occupying the 58. including improvements thereon. the literal meaning of the stipulations shall control. T. An adverse possession by another is not an ―encumbrance‖ in law and does not contradict the condition that the property be free from encumbrances. m. 1375. Page 131 (Exhibits ―KK‖ thru ―KK-3‖ and ―3-Ayala‖).both of which constitute judicial admissions contemplated by Section 4. The meaning of the words.‖ and that the obligation to clear the occupants‘ shanties is deemed included in the obligation ―to complete and perfect ownership and title to the land and to transfer to plaintiffs the contiguous portion with all improvements. Plaintiffs alleged that the clearing and walling-in of occupants was a ―principal commitment‖ and ―inducement‖ without which plaintiffs would not have executed the MOA. No. to complete and perfect ownership and title to the entire estate. In affirming the order issued by the trial court on 21 September 1994. the latter shall prevail over the former.T. (Underscoring ours)[21] On appeal.VIII. they must also be able to place the petitioners in possession thereof since possession is a necessary attribute of ownership. pp. (Yuson and De Guzman v. X. The Court of Appeals acted contrary to law and jurisprudence in disregarding the legal effect upon paragraphs IV. nor is it a ―lien‖ which connotes security for a claim. they could have specifically provided for it. and. Civil Code of the Philippines). It is their contention that the presence of illegal occupants and the existence of unauthorized improvements on the subject parcel negates the respondents‘ claim that they have completed and perfected their ownership and title over said property. portion (TSN. convey and transfer the subject 58. Plaintiff Camilo Sabio is a member of the bar who engaged in the practice of law for over twenty years and is currently holding public office. the predominant purpose of paragraph 2-b to transfer ownership and title without plaintiffs having to spend a single cent would be illusory and meaningless. No. XII. the stipulations in the annexed documents. and (2) to give significance to the premises and ―whereas‖ clauses of the MOA in the interpretation of the phrase ―free from all liens and encumbrances‖ in paragraph 2. it is presumed the words were used in their primary and general acceptation. No. but by subject matter. T-5333 (Exhibits ―MM‖ thru ―MM-2‖ and ―3-B-Ayala‖).[19] These related matters concerning the intention of the parties to the MOA. the petitioners assail the alleged failure of the court a quo and the Court of Appeals to: (1) consider the intention of the parties as manifested in the annexes to the MOA. If such were the case. and claims of other occupants and possessors who were not parties to the cases involving the subject parcel.[20] advancing the same arguments and premises already discussed in the case below. the Court of Appeals likewise acted with grave abuse of discretion amounting to lack or excess of jurisdiction. while adding that: Indeed. T-5334-Las Piñas. Plaintiffs claimed that the obligation to clear and wall-in the occupants was implied in the provisions of the MOA. The fact that the subject parcel is possessed and occupied by squatters is a clear indication that the respondents were never in possession. the Court of Appeals affirmed and quoted with approval the above-stated findings and conclusion of the trial court. portion was one of the principal commitments made by Interbank which induced plaintiffs to execute the MOA. acting with grave abuse of discretion amounting to lack or excess of jurisdiction. Their premise is that the presence of squatters and unauthorized improvements should be considered a lien or encumbrance on the subject parcel. thus the complaint alleges that the removal of the occupants and the walling in of the 58. Metro Manila. Page 134 (Exhibits ―NN‖ thru ―NN-2‖ and ―3-C-Ayala‖).000 sq. there must first be removal of the illegal occupants and unauthorized structures. for the petitioners.‖ IX. a Notice of Lis Pendens is not a lien or encumbrance. The Court of Appeals acted contrary to law and jurisprudence in affirming the decision of the trial court directing the cancellation of the annotation of the MOA and of the notices of lis pendens on the following Transfer Certificates of Title: T. for clarity and better articulation of the issues involved.C. 22 [1921]). Part IV (New Rules of Evidence) of the Rules of Court. Otherwise.c of the MOA. Civil Code of the Philippines). T. Page 132 (Exhibits ―LL‖ thru ―LL -2‖ and ―3-A-Ayala‖). ―free from all encumbrance‖ does not include adverse possession of a third person. in not directing that the judgment in the above-entitled case be annotated on all the eighteen (18) Transfer Certificates of Title covering a total of eighteen (18) parcels of land earlier known as the ―Ayala Las Piñas Subdivision‖ and now as ―Ayala Southvale. Book 27.[18] Thus. No. T-5332-Las Piñas. p. Likewise.T. The plaintiffs have failed to prove that the intention of the parties was other than that expressed by the literal meaning of the terms of the MOA. and cannot conceivably be the lien or encumbrance contemplated by law. 1993. Before the respondents can assign. Metro Manila.‖ This court finds that there is no implication of that sort. December 3.c of said MOA.[17] The petitioners posit that while the MOA is explicit in requiring Interbank. a provision to that effect should have been expressly stipulated in the MOA or at least implied therein. December 10. Plaintiffs further alleged that the obligations to clear and wall-in occupants and to secure the cancellation of the Notice of Lis Pendens regarding the case of ―Ledonio v. and to ―wall-in‖ the same before turning over the title thereto.‖ the shanties being deemed included in the term ―improvements.‖ (Art. 1370. ―If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties.T. In drafting the MOA and/or agreeing to the stipulations in the same. Plaintiffs assert that unless the squatters are removed from the contiguous portion and the area is properly walled in to make their removal effective. such transfer and conveyance would be meaningless. The trial court dealt exhaustively on these issues. The evidence does not show that the parties had intentions other than those commonly understood from the aforementioned terms in the MOA.000 square meter portion to the petitioners free from all liens and encumbrances. T-5331-Las Piñas.C. and the subject parcel should be walled-in before said property is transferred by the respondents to them. and T. XIII and XIV of the second amended and supplemental complaint dated 23 April 1990 of the confession of judgment made on 18 June 1993 by respondents Ayala Group of Companies and their statement made on 05 November 1993 --. defendant Interbank has no obligation to clear the contiguous portion of the land of occupants and to wall-in the same for nothing in the MOA obligates Interbank to do so. an assiduous examination of the MOA and its WHEREAS clauses yields no basis for a necessary inference that the Interbank undertook to clear the 58. even including such other problems as adverse claims. portion to be assigned to plaintiffs of occupants/squatters. Rule 129. convey and transfer title to the subject parcel. Consequently. The MOA was negotiated for more than one year (see TSN. We shall deal with these alleged errors. m. and the respondents as its transferees. finding that: However. ―Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract‖ (Art.the first hearing of the above-entitled case --.‖ This allegation is untenable. 1993.T. m. If the words appear contrary to the evident intention of the parties. It is a mere cautional notice to a prospective buyer or mortgagee of a parcel of land under litigation. notices of lis pendens. and the interpretation of the phrase ―free from all liens and encumbrances‖ were earlier raised by the petitioners in their appeal before the Court of Appeals. The first matter of contention is the Memorandum of Agreement (MOA) between the petitioners (spouses Sabio) and Interbank. Book 27. The occupants were already in the contiguous portion of the property when the MOA was executed and if plaintiffs had wanted to ensure that defendant Interbank would take responsibility for clearing the property of occupants. otherwise. 42 Phil. Metro Manila.C. the court a quo and the Court of Appeals failed to compel the respondents to abide by their commitment to assign. any conveyance of the subject parcel by the respondents would not be ―free from all liens and encumbrances‖ as stipulated in paragraph 2.C. a person of his stature could have been more circumspect. The petitioners also contend that under the circumstances. Diaz. Book 27. ―to complete and perfect ownership and title to the land and to (transfer) to plaintiffs the contiguous portion with all improvements‖ and ―to deliver the new TCT free from all liens and encumbrances.000 sq. 17-19). 15). illusory and impracticable. not in numerical order.000 sq. et al.‖ involving the property described herein. coupled with petitioners‘ failure to contest the contract for failing to express the true intention of the parties. and the negotiations took about a year. notice is hereby given that an action/petition for review has been commenced and is now pending in the Court of First Instance of Rizal in Civil/LRC Rec. Entry No.[35] In the former. (Underscoring ours)[22] It is a long-held cardinal rule that when the terms of an agreement are reduced to writing. There being no such obligation on the part of the respondents. 657. 976 entitled ―E. They strongly contend that these documents reflect their true intentions that Interbank. by and between TRMDC and Interbank. it is highly inconceivable and illogical that the plaintiffs did not insist on expressly providing the necessary stipulations and in words that leave nothing to further interpretation. Ledonio. the Alanos and TRMDC. Indeed. 1984. Mayuga. N34761). there was no mention of illegal occupants and structures. The second document dated April 14. took part personally and with the assistance of another lawyer. 1762: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L. or inferred by interpretation or be shown by evidence outside of the document convinces us that the plaintiffs‘ expectations were an afterthought. 69433/L.[27] such that the literal meaning of its stipulations must control. there is no mention of the presence and clearing of squatters from the premises as a condition. as well as the other documents that preceded the execution of the MOA. No. explain or add to the terms of the written agreement. Then. transferred and conveyed to Interbank (covered by TCT Nos. or to make a new contract for the parties by interjecting material stipulations. the first document is a Deed of Assignment [29] dated May 25. counsel for the plaintiffs. the only obligation that the Sabios assumed from the Ledonios were those under the mortgage in favor of the Philippine National Bank. for the sake of discussion. The fourth contract is a Deed of Assignment with Assumption of Mortgage[33] between Gerardo and Emma Ledonio as assignors. such agreement is deemed to contain all its terms and there cannot be. transfer and convey the same to petitioners. No. three (3) parcels of property. the Memorandum of Agreement[34] and the Addendum thereto. 657. Baltazar. whereby the Ledonios absolutely assigned and transferred to the Sabios three (3) parcels of land for and in consideration of services rendered. PN-107 (LRC Rec. even on the petitioners‘ adamant insistence. but with particular reference to the ―litigation of any and all cases affecting the properties.‖[31] A related document was the Contract to Buy and Sell[32] between the Alano spouses and TRMDC arising from the agreement between CPJ Corporation. the stipulations of which are deemed the law between the contracting parties.[24] Since the MOA of the parties was reduced to writing. there were executed on June 28. There is no reference therein to illegal occupants. 1981. a lawyer. never put in issue the allegation that the MOA failed to express the true intent of the parties thereto. N-30603) and N-6336 (LRC Rec. Entry No.P. as well as by other third persons not parties in the said pending cases/litigations. F..[26] The fact that the terms of the MOA are explicit and leave no doubt as to the intention of the parties. are obligated to clear the subject parcel of illegal occupants and structures. before conveyance or transfer can be effected. however. Sabio. no imposition to rid the property subject of the said mortgage of such persons and structures. Guico. one of which later became the subject of the MOA between Interbank and petitioners. No. whereby CPJ Corporation sold to the Alanos and TRMDC. of the Court of First Instance of Rizal. et al. between the parties and their successors-in-interest. 1763: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L. The lower courts found that nowhere in the MOA did Interbank commit to clear the subject parcel of squatters or illegal occupants. and its successors-in-interest. to first rid the subject parcel of squatters. versus F. Instead. counsel for the intervenor. in their pleadings.e. F. entitled ―Gerardo G. notice is hereby given that an action/petition for intervention has been commenced and is now pending in the Court of First Instance of Rizal in Civil/LRC Rec. S-65161 and 65162). 1753: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L. it is deemed to contain all the terms agreed upon and no evidence of such terms can be admitted other than the contents of the agreement itself. No. on the condition that there be settlement within one (1) year of all the attending liens and problems enumerated as follows: LIENS Entry No. Baltazar. No.P. i. in the drafting of the MOA. et al. notice is hereby given that an action/petition for review has been commenced and is now pending in the Court of First Instance of Rizal in Civil/LRC Rec. 67527/L. and Civil Case No. counsel for the plaintiff/defendants. Sabio.[23] Accordingly. G. 758. and no reason is suggested why he refrained from including therein specific language containing what he considers the principal commitment of the second party to remove the squatters and wall-in the 58. remove all improvements and fence the perimeter thereof. 70 . 976 entitled ―E. 1980 is an Agreement[30] between the CPJ Corporation. 1973 between the Ledonio spouses and petitioners. In the said document. x x x especially those cases mentioned under the Deed of Cession and Assignment dated April 14. they adopt inconsistent positions in regard to the MOA. there are definite references to the pending cases/litigations as the source of the liens and encumbrances on the subject property. or even to read into the contract words which it does not contain. and then wall-in said property before there can be fulfillment of the stipulation to assign. we note that petitioners. Mayuga. versus Eduardo C. 19722. they cannot be compelled by the courts. as financier of the Alanos. We have uniformly held that it is only where a party puts in issue in the pleadings the failure of the written agreement to express the true intent of the parties thereto that said party may present evidence to modify. Baltazar.‖ involving the property described herein. it is valid and binding on the parties and their successors-in-interest on the one hand.000 portion to be conveyed to him. in respect of which the SECOND PARTY hereby agree(s) to and will assume full and sole responsibility for the settlement or removal thereof and save free and harmless the FIRST PARTY from any and all liability resulting and arising therefrom.[25] Nevertheless. arguing that these will provide proof of the real intention of the parties when they executed the MOA.. et al. not including therein any other extrajudicial claims of ownership or possession. and the Sabio couple as assignees. x x x.[28] Be that as it may. and other obligations such as fencing in these properties.‖ involving the property described herein. No. executed by said parties on November 23. Sabio. we shall. Neither was Interbank obliged to remove whatever unauthorized improvements were introduced in the said property. without warranty of any kind as to title and possession on the part of the seller. and Trans-Resource Management and Development Corporation (or TRMDC). Again. structures. That the commitment must be implied. that by itself. it is not the province of the courts to amend a contract by construction. Baltazar. Contrary to petitioners‘ suppositions. 1980‖ executed by the same parties.. Ledonio. LRC Cases Nos. behooves the courts not to read into the MOA any other intention that would contradict its apparent import. the spouses Epifanio and Cecilia Alano. vs. and therefore. 69434/L. 187222. then fence its boundaries. et al.P. the Alanos committed to free the titles from all liens and encumbrances on or before a certain date. Plaintiff Sabio. CPJ Corporation. Ledonio. the Alanos and TRMDC agreed to buy the property on an ―As Is‖ basis. Going by chronological order. S. F. while they also seek the court‘s cognizance of extraneous documents to radically modify or add to the terms of the written agreement on the other hand. 758. No. No. the trial court and the Court of Appeals referred to no other document but the MOA itself. peruse the documents referred to by petitioners as allegedly containing the factual and legal bases for their claim that respondents are obligated to first clear the subject parcel of all illegal occupants and structures. The Alanos and TRMDC thereby admitted: full knowledge of all the legal incidents and adverse claims affecting the said properties which have been and are being asserted by opposing parties in the pending cases/litigations involving the subject properties. By the very nature of the contract. the property subject of this petition was among those assigned. instead. Nor is there any stipulation that would constrain the respondents to fence or wall-in the subject parcel along its perimeters. any evidence of the terms of the written agreement other than the contents of the agreement itself. In both documents.In light of the above circumstances. At the outset. Therein. petitioners invoke the ―whereas‖ clauses of the MOA. it is highly inconceivable and illogical that petitioner Camilo Sabio. [41] Even if he would belatedly complain that the MOA did not state the true intentions of the parties. Entry No. and CECILIA P.[44]Neither have petitioners shown that after the execution of the MOA. More importantly. Entry No. did not make mention of squatters and illegal structures. no evidence of such terms other than the contents of the written agreement. and to fence the perimeter of the subject property.[36] In paragraph 2. the subject property. liens and problems affecting the property. 28. ALANO and TRANS-RESOURCE MANAGEMENT & DEVELOPMENT CORPORATION. the claims of third parties such as squatters were not among those enumerated as liens or problems affecting the subject property. the parties stipulated that Interbank shall render full and free assistance to TRMDC in ―exploring.‖[42] He cannot now insist that the court should accept his bare testimony that there was a verbal understanding between the parties to the MOA. Finally. There exists other terms agreed by the parties or their successors-in-interest after the execution of the written agreement. There is an intrinsic ambiguity. TRMDC executed a Deed of Assignment[37] on July 12. Ma. Ma. However. reiterating TRMDC‘s undertaking ―to assign. it is considered as containing all the terms agreed upon and there can be between the parties and their successors-in-interest. SR. The terms of the MOA and the preceding contracts are clear and leave no doubt as to their meaning. and neither did the said MOA impose on Interbank the obligation to wall-in the subject property. the validity of the MOA was never questioned. in the course of negotiations that lasted about a year. the parties and their successors-in-interest agreed to terms other than those appearing in the MOA. Said documents cited the MOA entered into by the same parties.By virtue of an instrument duly executed by and between EPIFANIO J. nor even to fence the subject parcel of land. In fact. 2. the former have agreed to sell unto the latter the property described herein for a total consideration of FOURTEEN MILLION FOUR HUNDRED SIXTY SEVEN THOUSAND SEVEN HUNDRED TEN PESOS (P14. Neither is there any provision in the cited documents that sustains petitioners‘ contention. Series of 1980 of Notary Public for Makati. Metro Manila. SR. and walling-in of. the court a quo and the Court of Appeals did not err in finding that respondents were not under compulsion to clear the subject property of squatters and unauthorized structures under the MOA.P. Thus. 1984 in favor of Interbank involving. presented and filed by Camilo L. II.000. Neither did they stipulate that Interbank was obligated to clear the subject property of such occupants and structures. versus CPJ CORPORATION. petitioners would argue that there was no necessity to make specific provisions with respect to the removal of the occupants and structures from.‖ but with specific reference to the liens and problems enumerated in the preceding paragraph. To them. 3. the Court of Appeals noted. but unsubstantiated testimony offered as proof of verbal agreements which tend to vary the terms of a written agreement is inadmissible under the parol evidence rule. transfer and convey unto SPS. stating that the real intention or agreement of the parties was that the obligation to complete and perfect ownership and title included the removal of all squatters and unauthorized structures. ALANO. and 4. but should rather be fulfilled according to the literal sense of their stipulations. No. mistake or imperfection in the writing. hence. 148. there is no factual or legal basis for petitioners‘ claim that the respondents are obligated to rid the subject property of squatters and unauthorized structures. claim among other things. the succeeding paragraph stressed that TRMDC is obligated to execute a Deed of Assignment pending its accomplishment and/or compliance with its obligations under the MOA and Addendum to the MOA. LRC Rec. The written agreement fails to express the true agreement and intent of the parties thereto. there being no specific mention of their presence therein. LEDONIO. the Court of Appeals correctly concluded that petitioner Camilo Sabio‘s testimony in this regard cannot be taken advantage of ―to inject into the agreement any understanding which is contradictory to or at variance with the terms thereof without violating the parol evidence rule x x x. that the property described in this certificate of title is the subject of a Letter-Agreement executed by the herein owner and the adverse claimants. it was sufficient that both parties knew the actual condition of the property. he is estopped from doing so.. among others. et al. ALANO and CECILIA P. No. Consequently. such that there was no necessity to make specific provisions concerning the removal of illegal occupants and structures. notice is hereby given that an action has been commenced and is now pending in the Court of First Instance of Rizal in LRC Case No. such as when: 1. EPIFANIO J. et al. transfer and convey absolute ownership and title in fee simple‖ over the properties described therein ―free from any and all liens/encumbrances and/or problems of whatever kind and nature‖ within a specified period of time. Cynthia Q. albeit in a manner that departs from the stipulations contained therein. Page No. 65120/L. 71 .‖ The rule is that ―when the terms of an agreement have been reduced to writing. mistake or imperfection in the writing by any of the parties.710. Petitioner Camilo Sabio testified to that effect. No. In fact.00 subject to the terms and conditions set forth in Doc. Book II. ALANO and CECILIA P. N-30603. The validity of the written agreement is in question. Clearly. negotiating and consummating appropriate settlement agreements with the parties/claimants concerned. ALANO and TRANS-RESOURCE MANAGEMENT & DEVELOPMENT CORPORATION. 1140: LIS PENDENS: By virtue of a notice of lis pendens. Halaqueña. did not include clearing the property of squatters and unauthorized structures. the Addendum to the MOA between TRMDC and Interbank is a mere amendment to the computations of the principal debt and interests of TRMDC loan with Interbank. There is nothing in said document that even touches on the subject of claims. 38000/S-65161: AGREEMENT . parol evidence cannot be admitted to incorporate additional contemporaneous conditions which are not mentioned at all in the written agreement. On the other hand. EPIFANIO J. Series of 1980 of Notary Public for Makati. the petitioners are vigorously pursuing its execution.[38] However. Sabio. as mentioned earlier. the spouses EPIFANIO J.In an affidavit duly subscribed and sworn to. the MOA between the Sabios and Interbank was never assailed for any intrinsic ambiguity. including defraying the required cost of such settlements with view to cleaning/settling all of said liens/problems within the prescribed period.‖ involving the land described in this certificate of title. in an instrument duly executed by the herein registered owner agrees to sell. 40608/S-65161: CONTRACT TO BUY AND SELL . counsel for the Respondent-Counter-Petitioners. Cynthia Q. an experienced lawyer who personally took part in the preparation of the MOA with the assistance of another lawyer. In furtherance of their stipulations in the MOA and Addendum thereto. the parcel subject of this petition. entitled ―GERARDO G.In favor of SPS.[43] Furthermore. ―did not insist on expressly providing the necessary stipulations and in words that leave nothing to further interpretation. ―problems of whatever kind and nature‖ may be broadly construed. Indeed. ALANO. the obligations of TRMDC were effectively limited to those specifically enumerated in the two preceding documents which.‖[39] There are exceptions to said rule. ALANO and TRANS-RESOURCE MANAGEMENT & DEVELOPMENT CORPORATION for the sum of P5. petitioners never alleged in any of their pleadings that the MOA failed to express the true agreement and intent of the parties thereto. Neither was Interbank obligated under the terms of said agreement to clear the subject property of illegal occupants. Metro Manila.250.467. No.00) subject to the terms and conditions set forth in Doc. however. 25081/T-190713: ADVERSE CLAIM . petitioner Camilo Sabio would be hard put to question the very contents of the MOA since he admittedly participated in the drafting of the MOA with the assistance of legal counsel. Since no fraud or mistake that would vitiate the validity of the MOA has been alleged. the MOA between petitioners and Interbank. and CECILIA P. ALANO. While the phrase. inasmuch as there was no obligation to fence the perimeter of the subject property. Book No. His testimony may have been unrebutted.c of the MOA. Page 31. as previously discussed. P-107. In fine.[40] In the instant case.Entry No. Entry No. Halaqueña. 133. they cannot be interpreted in a way that would please the petitioners. the stipulations of the contract being the law between the parties. RTC. as the very term connotes. The International Corporate Bank. prior physical delivery or possession is not legally required and the execution of the deed of sale or conveyance is deemed 72 . Therefore. nevertheless. there is no justification in the instant case to admit parol evidence to support the petitioners‘ claims.. does not conflict with his conveyance of (the) land in fee. it was held: x x x. T-5331 of Las Piñas Registry of Deeds and described in the above fourth WHEREAS clause. as earlier discussed. METERS. Similarly. Section 9 of the Rules of Court.g.[48] Petitioners have failed to show how squatters and unauthorized structures can fall under the definition of ―liens and encumbrances. or liability attached to and binding real property. 43516). Notwithstanding the presence of illegal occupants on the subject property.‖ The word ―lien. to the petitioners by virtue of the deed of conveyance. That as part of the consideration of this Conveyance. it signifies their control and their intention as owners ―to obtain for themselves and to terminate said occupants‘ actual possession thereof. which. A lien is already an existing burden or charge on the property while a notice of lis pendens. refused to sign said deed of conveyance on the ground that it was grossly violative of the law and the MOA. by agreement of the parties. control and enjoyment is a main attribute to ownership. TCT No. Cedes and Conveys unto the SECOND PARTY the said 58. viz:[47] In People v.‖ We adopt this Court‘s definition of the words ―lien‖ and ―encumbrance‖ as set forth in People v. Inc. Since the execution of the deed of conveyance is deemed equivalent to delivery. II. The following are considered encumbrances: A claim. Ledonio vs. it is of no legal consequence that respondents were never in actual possession or occupation of the subject property. on the SE. along lines 1 to 6 by Lot 8. Marlene A. covered by TCT No. v.[46] and quoted in the impugned decision of the Court of Appeals. refers to a legal claim or charge on property to secure the payment of a debt or obligation. All things considered. nor even to alter or contradict them. Whatever mode petitioners choose. perfected and completed ownership and title to the subject property. et al. of the subject property. the execution thereof shall be equivalent to the delivery of the object of the contract. the FIRST PARTY Transfers. symbolic delivery by mere execution of the deed of conveyance is not sufficient since actual possession. is established as the repository of their stipulations.. We do not agree. Psd-13-008573. no such burdens on the property concerning the squatters appear in said documents. not just one of technicality but of substance. It is a right which the law gives to have a debt satisfied out of a particular thing. Ayala Corporation failed to ―complete and perfect ownership and title‖ to the subject property since it was never in actual occupation. along line 6-7 by Lot 10 both of plan Psu-80886). the courts have no recourse but to enforce them as they were agreed upon and written. It signifies a legal claim or charge on property. cannot and should not be considered a ―lien or encumbrance‖ as commonly defined and accepted. but rejected by petitioners. It is also a matter of both principle and policy that when the written contract.[55] Thus.‖[57] It is sufficient that there are no legal impediments to prevent petitioners from gaining physical possession of the subject property. As stated above. Metro Manila.[53] we find that petitioners‘ contention that respondents ―never acquired ownership over the subject property since the latter was never in possession of the subject property nor was the property ever delivered‖ is totally without merit. which may be exercised over the property of another. an encumbrance is a burden upon land. easement. Under Article 1498 of the Civil Code. Among these. in accordance with Rule 130. however.[56] the key word is control. ―when the sale is made through a public instrument.[52] Parallel to our ruling in Dulay Enterprises.000-square meter portion of Lot 6 (Psd–80888) in accordance with the Bureau of Land‘s approved survey plan. Since none of these exceptions was ever put in issue in the pleadings. (Swo-20609).‖ Possession is also transferred. Court of Appeals.. if from the deed the contrary does not appear or cannot be inferred. Assigns. the FIRST PARTY is now in a position to comply with its obligation under Section 5 of the said Deed of Sale (Annex ―B‖) to convey the property to the SECOND PARTY. T-5331 of Las Piñas Registry of Deeds ―A PARCEL OF LAND (Lot 6-B of the subdivision plan Psd-13-008573. e. docketed as Civil Case No.. 18540 of the Regional Trial Court of Makati. they could file ejectment suits against the occupants.[45] With more reason do we agree with the findings of the Court of Appeals that the existence of squatters and unauthorized structures in the subject property is not covered by the phrase ―liens and encumbrances. Las Piñas. though adverse to (the) interest of (the) landowner. lien. 2. security interest.. Although the parol evidence rule is inflexible. & NE. III. as a collateral or security for the payment of some debt or obligation. or to amicably secure the latter‘s evacuation of the premises. charge. either real or personal. THEREFORE.. However. As such. for the law is clear on this matter.. the Supreme Court held that not all claims against a property can be considered a lien within the contemplation of law. Considering that the deed of conveyance proposed by respondents did not stipulate or infer that petitioners could not exercise control over said property. the Court of Appeals did not err in concluding that the possession of squatters or any other persons occupying the subject property without any legal right whatsoever. is only a notice or warning that a claim or possible charge on the property is pending determination by the court. possession. that the written document is the best evidence of its own contents. The courts cannot supply or read into these documents words which they clearly do not contain. LRC Record No. along with ownership thereof.000) SQ. & W. x x x containing an area of FIFTY EIGHT THOUSAND (58. such as lien.[51] more particularly arguing that: I. stipulated that: WHEREAS. or servitude. Branch 145. and which may often be used interchangeably with the word ―encumbrance. neither is non-possession inconsistent with ownership. Camilo and Ma. control and enjoyment of said property. As we held in Power Commercial and Industrial Corp.‖ The documents relied upon by petitioners themselves enumerate the liens and encumbrances and other claims on the subject property.000-square-meter portion of Lot 6-B. as owners. lease.‖ NOW.[49] In said document. It is a cardinal rule of evidence. Mere execution of the deed of conveyance does not constitute sufficient and valid compliance with par. Court of Appeals . being a portion of Lot 6. Under the law. Under the aforementioned Article 1498. the FIRST PARTY had already completed the segregation of the said 58.[54] Just as possession is not a definite proof of ownership. respondents Ayala Corporation.‖ by common acceptation. the mere execution of the deed of conveyance in a public document is equivalent to the delivery of the property. They. easement or right of way. The second object of contention is the Deed of Conveyance proposed by respondents. depreciative of its value. in accordance with the pertinent provisions of the MOA between Interbank and the Sabios. RTC (178 SCRA 299). Psu-80886. delivery can be effected through the mere execution of said deed. have several options. any other evidence is excluded and the same cannot be used as a substitute for such contract. and on the S. along lines 7-8-1 by Lot 6-A of the subdivision plan. accrued and unpaid taxes.[50] The Sabios. it admits of four (4) exceptions. transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance. the parol evidence rule must be strictly adhered to in this instant case. prior physical delivery or possession is not legally required. not possession. a mortgage. for and in consideration of the foregoing. situated in Barrio Almanza Dos. Psd-13-008573.b of the MOA. A ―lien‖ is a qualified right or a propriety interest. v. a copy of which is hereto attached as Annex ―C‖. Bounded on the NW.In sum. now described as follows: Lot 6-B. judgment lien. the SECOND PARTY binds himself to file a Notice of Withdrawal of the case entitled ―Sps. Petitioners. It is well-established that ownership and possession are two entirely different legal concepts. respondents did not state anything that would contradict their earlier defenses and arguments already on record. free from all liens and encumbrances.000. the courts cannot read into the MOA any other intention that would contradict the apparent agreement. S-65161. Apart from those matters expressly admitted by respondents. Petitioners cannot deny that the deed of conveyance can effectively transfer ownership as it constitutes symbolic or constructive delivery of the subject property. In fact.‖[59] Respondents counter that the right-of-way it has proposed is one with a definite lane and width and which is the most convenient route to the main access road that connects Ayala-Las Piñas to the AyalaAlabang Road. containing an area of approximately 370. respondents only admitted all the documentary evidence. and the imposition thereof must be tempered and limited to the ordinary needs of petitioners‘ property. where the distance from the dominant estate to a public highway may be the shortest. Petitioners have failed. the documents themselves are the best evidence of the agreements between the parties in the absence of compelling evidence to the contrary. insofar as the implementation of the MOA is concerned.[63] more than double the stipulated minimum width. As petitioners themselves noted. fees and expenses incidental to segregation. as earlier discussed. Had the parties intended that petitioners be given such access. Besides. the deed of conveyance complied with par. Petitioners argue that for them to have to spend to clear the subject property of illegal occupants and structures would violate par. not to satisfy their caprices. covered by TCT No. 2. language to that effect could have easily and logically have been employed. would not alter the outcome of this case. at petitioners‘ option. which right-of-way shall not be less than ten (10) meters wide. The courts cannot embellish the precise stipulations of the MOA just for the convenience of petitioners. Psd-13008573. If the parties thereto really intended to impose on Interbank and its successors-in-interest the obligation to eject the squatters from the subject property and defray the cost therefor. Had the parties to the MOA intended for Interbank and its successors-in-interest to be obligated to shoulder the expense of clearing the subject property of squatters and illegal structures. to provide ingress to and egress from the dominant estate. registration and delivery of a new title to the petitioners. Another object of contention is the stipulated permanent and perpetual right-of-way. and (c) ―it is admitted by the defendants and we are ready to admit the documentary evidence that they‘ll be presenting. The law requires that the right-of-way must be at the point least prejudicial to the servient estate.[60] The proposed right-of-way is particularly described in TCT No. respondents asked the court a quoto render partial judgment based on their admission of the genuineness and contents of certain documentary evidence offered by both parties. respondents‘ counsel declared in open court that: (a) they were ―ready to agree and admit all the documentary evidence that the counsel (Atty.b of the MOA. The MOA itself does not provide that petitioners shall have free access to all the roads within the proposed subdivision that respondents would establish on the estate. or to provide passage in going to the highway from the dominant estate and back.‖ Thus. An easement is an abnormal restriction on respondents‘ property rights. and setting the same aside. be implemented literally and without further delay. Nothing more is required. T-5332. The lower court‘s conclusions. they constitute express judicial admissions which the courts should have considered.000 square-meter portion of Lot 6-B. [62] While the proposed right-of-way traversed respondents‘ properties. and TCT No. XII. The terms of the MOA are so clear as to leave no room for any other interpretation. It is clear that respondents made no admission that would support any of petitioners‘ contentions that deviate from the very stipulations in the MOA. they can exercise control over the said property. i. While this may already be moot and academic. 2. The fact is that respondents did not lack in satisfying the requirements in par.c of the MOA.. Cedes and Conveys unto the SECOND PARTY (Sabios) the said 58. It is patently clear that expenses for removal of illegal occupants and structures are not among those listed in said paragraph 2. Neither can they negate the fact that as owners. The trial court found that petitioners are entitled to P500. As it happened. Indeed.c. petitioners omitted to include this as a condition when they drafted the MOA. It cannot also be said that respondents are deemed to have admitted the allegations in Camilo Sabio‘s testimony as to the circumstances surrounding the execution of the MOA. XIII.‖ Petitioners contend that ―it is the purpose and spirit of the MOA that (they) shall have the same right to pass through the Ayala Corporation‘s proposed subdivision like any other homeowner therein. In fact. no factual basis was presented to support the claim for not only actual 73 . the Court of Appeals reversed the trial court‘s ruling.00 in exemplary damages. and when applicable. It was a mere reiteration of their stand that the MOA.868 square meters. that would be stretching the purpose and meaning of a right-of-way beyond its legal and general acceptation. the proposed right-of-way is twenty-five (25) meters wide. however. T-5331 of Las Piñas Registry of Deeds and described in the above fourth WHEREAS clause. the same should have been incorporated in the MOA. Related to the issue of the confession of judgment is petitioners‘ claim for damages. are more than amply supported by documentary evidence. Petitioners‘ access to all the subdivision roads like any homeowner therein is not a necessity and goes beyond mere convenience on their part. As found by the Court of Appeals. as worded. in this petition. respondents were willing to provide another access road to service the subject property. which under par. which provided that the said property shall be assigned and conveyed after Interbank and its successors-in-interest shall complete and perfect ownership and title to said property.‖[67] Clearly. S-65162. We stated earlier that this issue is already moot and academic for the supposed judicial admissions referred to by petitioners. remote.[68] It is the fundamental principle of the law on damages that while one injured by a breach of contract shall be awarded fair and just compensation commensurate with the loss sustained as a consequence of the defendant‘s acts or omission.d of the MOA shall be ―sufficient for all the needs of said parcel of land throughout the pro perties already owned and/or to be acquired by the SECOND PARTY‖ (Interbank) particularly the parcels of land covered by TCT No. There can be no implied admission of allegations which are extraneous to the contents of the documents expressly admitted by respondents. it is more in the nature of a motion for partial judgment on the pleadings or a summary judgment. 2.[66] While respondents denominated their pleading as a confession of judgment. speculative and nonsubstantial proof.equivalent to delivery.[61] We agree with the Court of Appeals that the phrase ―permanent and perpetual right of way‖ should be construed in its ordinary and accepted signification. to present any persuasive proof that they are entitled to the damages awarded by the trial court. The Deed of Conveyance clearly states that ―the FIRST PARTY (respondent Ayala Corporation) Transfers. not the testimonial evidence offered by petitioners. There is really no reason for petitioners to complain and want for more. Moreover. survey.e. 2. Instead of the minimum width of 10 meters. finding the awards for actual and exemplary damages in favor of petitioners unwarranted. Once again. The Court of Appeals noted that the obligation to defray all the costs and fees was connected with the delivery to petitioners of a new certificate of title. the claim for actual damages remained unsubstantiated and unproven. Assigns. Otherwise. it should have been stated in the MOA. This deed operates as a formal or symbolic delivery of the property sold and authorizes the buyer or transferee to use the document as proof of ownership. Respondents are not obligated to remove the occupants before conveying the subject property to petitioners. Their specific denials of certain allegations in petitioners‘ complaint still stand in their answer.000. which imposed on Interbank and its successors-in-interest the burden to bear all costs.[58] There is also no truth to petitioners‘ allegation that the deed of conveyance merely transferred to the Sabios all the rights and participation of respondents over the subject property.d of the MOA. and XIV of the former‘s second amended and supplemental complaint. (b) ―it‘s very clear that this case could be decided based on the pleadings and documentary evidence‖ x x x.[65] hence. there can be no implied admissions which the lower court could properly recognize.00 in actual damages and P250. had they been considered by the lower court. It is well-settled that actual or compensatory damages must be duly proved and proved with reasonable degree of certainty. the same should not encroach into the latter‘s proposed subdivision roads. petitioners raise the issue that respondents‘ confession of judgment[64] did not deny certain allegations contained in paragraphs IV. TCT No. 85717.[69] Petitioners also failed to establish that the delay in the implementation of the MOA was the sole responsibility of respondents. a party is entitled only to such compensation for the pecuniary loss that he has duly proven. On appeal. Sabio) has anyway enumerated in his pre-trial brief‖ x x x. Actual damages cannot be presumed and cannot be based on just flimsy. executed the building in question to the plaintiff for the period of three (3) years from June 1. desiring perhaps not to violate the terms of her contract of lease. Green. Notwithstanding all these difficulties. amounting to P8.. to the defendants herein was filed did she fail to pay the rent corresponding to the months of November and December. continued paying the monthly rental of P4. who. Ramirez and Ortigas for appellant. T5331. The lessee informed the defendant's attorney in fact of this difficulty.C. and ordering the plaintiff herein to render an accounting of all the rentals she might have collected from the tenants and of all the expenses incurred by her in the upkeep of the building. There can really be no justification for annotation on the titles that are not subject to the easement. which became eventually TCT No. for a long time had leased and occupied the rooms of the upper floor facing the Escolta. we come to the tenth and last error assigned by petitioners. Green. Considering Green's attitude as a disturbing factor. 65161 (now 5333) and 65162 (now 5331). The defendant herein. The defendants herein appealed from the judgment rendered by the Court of First Instance of Manila declaring the contract in question rescinded. or rather her attorney in fact. especially since the easement of right-of-way as offered by respondent is more than adequate for the needs of the subject property. 1930. S-65161 and S-65162.[70] Anent the directive to cancel the annotation of the MOA and the Notices of Lis Pendens on TCT Nos.c and 2. also instituted judicial proceedings against the plaintiff herein for the purpose of ejecting her from the building in question and recovering the rents due and unpaid. Green requiring him to deliver the rooms which. 1933 ANGELA MONTENEGRO. Petitioners failed to show that respondents acted in a wanton. we find no merit in petitioners‘ contention. 2.R. They also stress that the MOA expressly mandates the annotation of the MOA on TCT Nos. defendant-appellants. ET AL..[74] the Court of Appeals held that: Nevertheless. there should be no reason to extend this requirement to other titles not mentioned in the MOA. hence. No pronouncement as to costs. Ana Subdivision of the Manila Improvement Co. the MOA only require that it be annotated on TCT Nos. Manila. payable at the end of every calendar month. Inc. Victoriano Yamson for appellee. and the omission cannot be supplied by construction. 48870 is AFFIRMED in toto. stubbornly opposed the delivery of the rooms they were then occupying. Green but his contract of leased expired on May 31. Green was the president who. T-5333 and T-5334. that the trial court erred in ordering the cancellation of the notice of lis pendens on TCT Nos. heirs and successors of the parties. and to obtain an indemnity for damages amounting to P10. were detaining. 2. plaintiff-appellee. paragraph 4 of the MOA itself expressly provides that the obligations assumed under paragraphs 2. in view of all the foregoing. 65161 and TCT No. at a monthly rental of P4. addressed communications to B. Sellner and Manila Improvement Co. At that time the building was being occupied by various tenants among whom were B.. IMPERIAL. L-38085 Republic of the Philippines SUPREME COURT Manila EN BANC November 13. 5331. CV No. Inc..000 corresponding to the months of June. 1930. Finally.. which was denied him. Rule 38 of the Rules of Court regarding execution pending appeal which requires the existence of ―good reasons‖. No mention is made of the other titles to be owned and/or acquired by defendant-appellant. the appellant‘s argument that the trial court committed grave abuse of discretion in ordering the cancellation of the notices of lis pendens before finality of the assailed judgment in the absence of ―good reasons‖ to justify execution pending appeal is untenable. the whole building was not delivered to the plaintiff herein because B. 26 to 36 Escolta. In its Resolution. CONSUELO ROXAS DE GOMEZ.000 from the aforesaid defendants.‖ (Underscoring ours) We find no cogent reason to disturb the ruling of the Court of Appeals in this regard. and that the MOA shall be annotated on TCT No.b. the plaintiff herein instituted ejectment proceedings against him in the municipal court of the City of Manila. It was leased by B. Sellner and Sta. fraudulent. Sellner and Manila Improvement Co. to October.000. and that it was properly constituted without imposing unnecessary burden on the other properties of respondents. G..A. the instant petition for review is DENIED and the Decision of the Court of Appeals dated April 30. reckless or malevolent manner that would warrant the award of exemplary damages. but under Section 24 of Rule 14 and Section 77 of PD 1529 which allow the trial court to cancel notice of lis pendens even before final resolution of the case on the merits upon finding that the notice ―is for the purpose of molesting the adverse party. G. She likewise instituted similar actions against other tenants thereof.A. 5333 and TCT No. J. 65162. On this last date. The trial court rendered judgment in favor of the plaintiff based on the ground that inasmuch as the whole building was not delivered to her. T-5332.A. The defendant's attorney in fact should have delivered to the said lessee until the 20th of the said month. the plaintiff and the defendant.. vs. and a small room between the lavatory and the main stairway. Petitioners also take exception to the refusal of the lower court to annotate the judgment in the case below on all eighteen (18) titles covering the parcels of land comprising Ayala Southvale Subdivision. Accordingly.R.d thereof (par.[72] The Court of Appeals found that: With respect to the annotation of the MOA. The underlying intention of petitioners is to have the easement of right-of-way annotated on all of the titles. the trial court did not abuse.or compensatory damages.[71]petitioners argue that the maintenance of the annotation of the MOA and the notices of lis pendens is necessary to protect their rights should the property be sold to third persons for value.d contains the right of way provision) shall be binding upon all the assigns. 1930. On June 5th of the same year. with the costs against the aforesaid defendants. T-5331 to T-5334 and all titles derived therefrom.e. however. G. to have both parties render an accounting of the monies each party might have collected of lease in question. represented by her attorney in fact Manuel Martinez Llanos. 74 . Thus. its discretion when it allowed the cancellation of the annotations. 1997 in CA-G.A. The defendant Consuelo Roxas de Gomez was and is the present owner of the property known at the "Paris Building" situated at Nos. but also for exemplary damages. inclusive. 1931. there is no reason to annotate the same on the titles that are not affected thereby. WHEREFORE. the plaintiff herein. mutually reimbursing what is due to each other. the contract should be rescinded. of which said B.C. Inc. SO ORDERED. gravely or otherwise.000.: The plaintiff brought this action against the defendants to rescind a contract of lease entered into by them. or that it is not necessary to protect the rights of the party who caused it to be registered. 1931. No. In light of the foregoing discussion. i. Green remained firm in this opposition thereto on the ground that he was the former lessee and that he had applied by letter for a renewal of his contract of lease. neither did the Court of Appeals err when it affirmed the order of the trial court on the finding that there was no longer any necessity to protect the rights of petitioners over the titles that were either not affected by the easement or not mentioned in the MOA.[73] We agree. Respondents counter that there is no such need because the right-of-way has been delineated and segregated and.A. The order of cancellation of the notices of lis pendens was not issued by the trial court under Section 2. Indeed. fifteen days after the date the judgment became final. Again. That the portion of the estate to be acquired shall first be defined and delineated. Maria. Q-3332 C. Exhibit B. with the costs against the plaintiff. or Bacoor. in justice. The trial court erred in not giving the public instrument of lease." On July 13. it was only for the sole purpose of not violating any of the terms of the contract affecting her. 2. J. through the Executive Secretary.R. have never been placed in the possession of the said lessee. the Board of Directors of the PHHC passed Resolution No.00 to be absorbed by the GSIS.000.C. 1960. The trial court erred in holding that the plaintiff is not estopped from asking the rescission of her contract of lease with the defendants.£îhqw⣠1. Without indulging in a lengthy discussion of the merits of such contention. That the confirmation by the OEC and the President of the purchase price of P0. entered into a 75 . Wherefore. the President authorized the floating of bonds under Republic Act Nos. The trial court erred in declaring the contract of lease. shall first be secured. Petitioner Philippine Suburban Development Corporation. The appellants.:ñé+. the President of the Philippines.A. of then Auditor General Pedro M. as owner of the unoccupied portion of the Sapang Palay Estate (specifically two parcels covered by TCT Nos. G. she had been paying the stipulated rent until November 1. acting on the reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs.F. Gimenez. The trial court erred in denying the defendants' motion for a new trial and in not dismissing the instant complaint. vs.lawphil. it is hereby affirmed. 1975 Republic of the Philippines SUPREME COURT Manila SECOND DIVISION PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION. T-23807 and T-23808). which is the subject matter of the lease.net IV. to wit: I.In their brief. 1959. but confines itself to providing that the execution thereof shall be equivalent to delivery. The President. with the costs against the appellants. The other point raised by the assignments of error is that referring to the alleged estoppel attributed to the lessee herein. which means that the disputable presumption established therein can be rebutted by means of clear and convincing evidence. after an exchange of communications. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3. Green.500. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and development of this property from the proposed P4. The vendor shall agree to the dismissal with prejudice of Civil Case No. the appellants assign the following alleged errors.90 paid to the Provincial Treasurer of Bulacan. V. Cavite for those who desire to settle south of Manila. The records show that the greater portion of the building in question was delivered to and received by the lessee not later than June 20. The facts of the case are as follows: On June 8. however. pursuant to OEC Memorandum Circular No. 3. entitled "Phil. 4. informed the PHHC of such approval by letter bearing the same date (Annex "B"). It is contended that she cannot consistently question the fact of the consummation of the contract of lease nor ask for the rescission thereof on the ground that. Suburban Dev. the same to be absorbed by the Government Service Insurance System. PEDRO M. approved in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. No. II. Bulacan for relocating the squatters who desire to settle north of Manila. 5. 1931. We are of the opinion that the resolution of the present case depends particularly upon whether or not the whole building under lease was delivered to the lessee in order that she might have the full enjoyment thereof to which she was entitled. Rizal. 114. respondent. and of another area either in Las Piñas or Parañaque. but that the rooms or offices occupied by B. It should be noted that the Civil Code does not provide that the execution of the deed is a conclusive presumption of the delivery of possession. A preponderance of the evidence shows that if the lessee continued paying the rent as she in fact did.460. et al. and of the Social Welfare Administrator together with the recommendation of the Manager of the Government Service Insurance System. III.5 million bond issue to be absorbed by the GSIS. be construed as a waiver of her right to ask for the rescission of the contract on the grounds hereinbefore stated.45 per square meter "subject to the following conditions precedent: têñ. 1000 and 1322 in the amount of P7. So ordered. conclusive probatory value evidencing delivery of the property in question from the date of the execution thereof. 1960. among other things. L-19545 April 18. her acts cannot. even granting that she had not been placed in the material possession of the whole building in question.£ªwph!1 Appeal by certiorari from the decision dated December 11. THE AUDITOR GENERAL. contend that the execution of the contract is equivalent to delivery of the possession thereof. The project was to be financed through the flotation of bonds under the charter of the PHHC in the amount of P4. 1957. On December 29.5 million. as in the case under consideration.45 per sq. 1960.. GIMENEZ. G. On June 10. Quezon City. and finding that the judgment appealed from is in accordance with the law and the findings of the court. If this is true. the right to rescind the contract of lease when he is not placed in the material possession of the property which is the subject matter of the lease. m. Inc. we are of the opinion that such acts do not constitute the defense invoked.1960. all the important questions raised in the present appeal are deemed definitely settled.. Exhibit B. in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0. 1930. Ortiz. ANTONIO. at a meeting with the Cabinet. petitioner. dated May 6. Sellner and Manila Improvement Co. meter. to the lessee. it is evident that the plaintiff herein has the right to the remedy of rescission prayed for in her complaint in accordance with the express provisions of article 1556 of the Civil Code which grants to the lessee. The trial court erred in holding that the lessors did not deliver the possession of the property. disallowing the request of petitioner for the refund of real estate tax in the amount of P30. This would be true if the records did not show that in reality the lessee did not obtain the material possession of the whole building.I. V. However. 700 (Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0. Corp. 1961.45 per sq. rescinded. and the People's Homesite and Housing Corporation. 1961. (4. the VENDOR by these presents does hereby sell. 1961.000. including documentary stamps.00).00) PESOS and the VENDOR is hereby constituted as Attorney-in-fact and authorized to receive from. shall be paid by the VENDEE unto the VENDOR immediately upon the VENDEE's obtaining sufficient funds from proceeds of bonds floated by the VENDEE or the Government for the purchase of the properties subject of this transaction. 290. with the understanding that the expenses for preparation. to whom a copy of the contract had been submitted for approval in conformity with Executive Order No. On April 12. but this notwithstanding. the above described two (2) parcels of land.710. That the VENDOR shall take charge of the preparation and registration of the documents necessary in clearing the above referred to mortgage lien.00 to be retained by the VENDEE mentioned in the immediately preceding paragraph 2(a) for the purpose of discharging the said mortgage lien.000. Philippine currency. provided. said payment to be made directly to the MORTGAGEES and the difference shall be paid to the VENDOR. among others: têñ. 2.00. a loan for the purchase of the above described two (2) parcels of land in anticipation of the purchase by the said GOVERNMENT SERVICE INSURANCE SYSTEM of the bonds to be floated by the National Government to enable the VENDEE to make this purchase. 3." (Annex "F") The above document was not registered in the Office of the Register of Deeds until March 14. 1960. 1961.223. 1961. by letter. Philippine Currency. prior to the signing of the deed by the parties. VENDEE in favor of the VENDOR as and by way of attorney's fees. Pertinent portions of this decision are quoted hereunder: têñ. That for and in consideration of the sum of THREE MILLION THREE HUNDRED EIGHTY-SIX THOUSAND TWO HUNDRED TWENTY THREE (P3.) That all expenses for the preparation and notarization of this document shall be for the account of the VENDOR. that the PHHC could not at once advance the money needed for registration expenses. paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter.898.676. for the collection of any amounts due from the VENDEE in favor of the VENDOR. and provided. approved the Deed of Absolute Sale on February 1. In support of its stand.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. and from whatever amount may be granted as loan by the GOVERNMENT SERVICE INSURANCE SYSTEM to the VENDEE.. the records show that the deed of sale executed on December 29. administrators or assigns.00) PESOS.590. 1961. That the payment of the consideration mentioned in paragraph 1 above shall be made as follows: (a) The vendee is presently negotiating or securing from the GOVERNMENT SERVICE INSURANCE SYSTEM.099. (b) That out of the sum of P1. however.. 1960 it ceased to be the owner of the property involved and that consequently it was under no obligation to pay the real property tax thereon effective January 1. maintains that in view of the execution of the deed of sale on December 29. It appears that as early as the first week of June. by virtue of a directive of the President of the Philippines. with the consent of petitioner. in view of the fact that from 1948 to December 20. the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30. was approved by the President upon favorable recommendation of the Cabinet and the Committee created for the purpose of surveying suitable lots which may be acquired for relocating squatters in Manila on February 1. and the GOVERNMENT SERVICE INSURANCE SYSTEM is directed to pay the balance of the loan direct to the herein VENDOR chargeable against VENDEE's loan from the GOVERNMENT SERVICE INSURANCE SYSTEM. its successors. Should there be instituted any legal action. further. Said amount represented the realty tax due on the property involved for the calendar year 1961 (Annex "G"). 1961. petitioner claims. as vendor. through the Executive Secretary. notarization.000. 1960. and the costs of suit. That this sixty (60) days period may be extended for another period of sixty (60) days upon written request by the VENDEE at least five (5) days prior to the expiration of the said sixty (60) days period. due to the fact. said request was denied by the Secretary of Finance in a letter-decision dated August 22.. T-23807 and T-23808. That should this amount be more than sufficient to cover the said mortgage lien. the President. to enable the said PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the lots which they were then occupying (Annexes "D" and "D-1"). In the meantime. 1960 . 1961.710. or whatever amount is not paid by virtue of the first payment mentioned in paragraph (a) above.710. provided that this first payment shall not be less than ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1. 1960. the VENDEE shall pay the difference to the VENDOR. transfer and convey by way of absolute sale unto the VENDEE. under the following terms and conditions. 1960 in the greatly increased amount of P4. That registration and issuance of certificates of title in the name of the VENDEE shall be for the account of the VENDEE.00. to answer for the remaining Notice of Lis Pendens annotated at the back of Transfer Certificate of Title Nos. further. together with all the improvements existing thereon. Upon recommendation of the Provincial Treasurer of Bulacan. or on June 13. 1961.223.. and reassessed beginning December 21. registration. provided. that Corporation cites Article 1498 of the New 76 . provided. Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on December 29. dated January 9. the VENDEE binding itself to deliver forthwith the said amount of P40. however.00) PESOS shall be retained by the said VENDEE for the purpose of paying and clearing the existing lien annotated at the back of the aforesaid Transfer Certificates of Title Nos.00 unto the successful party involved in said Notice of Lis Pendens. Said objections were embodied in a letter to the President. the Auditor General. That full and complete payment of the balance mentioned in this particular paragraph 2(c) shall be made or paid by the VENDEE within a period of sixty (60) days from date of delivery of title by the VENDOR in the name of the VENDEE. Philippine Currency. requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. through the PHHC. ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1. T-23807 and T-23808 until such lien shall have been discharged or cancelled.£îhqw⣠. the PHHC acquired possession of the property.£îhqw⣠1.110. Petitioner.000) PESOS. the VENDEE binds itself to pay unto the VENDOR a sum equivalent to twenty-five (25%) per centum of the total balance due from the.386. the VENDEE shall deduct and further retain or keep as a trust fund the amount of FORTY THOUSAND (P40. 1961 only and that said instrument of sale was registered with the Register of Deeds on March 14. That Corporation. (c) The remaining balance of the total consideration in the amount of ONE MILLION SIX HUNDRED SEVENTY-SIX THOUSAND TWO HUNDRED TWENTY-THREE PESOS (P1. the entire hacienda was assessed at P131. That the VENDOR hereby warrants to defend the title and ownership of the VENDEE to the two (2) parcels of land above described from any claim or claims of third parties whomsoever. however.000. expressed objections thereto and requested a reexamination of the contract.contract embodied in a public instrument entitled "Deed of Absolute Sale" (Annex "F") whereby the former conveyed unto the latter the two parcels of land abovementioned. and provided. and other expenses for the cancellation of said mortgage lien shall be for the account of the VENDOR and shall be advanced by the VENDEE to the VENDOR. however. to be paid by the VENDEE to the herein VENDOR in the manner outlined hereinbelow.. Without any pronouncement as to costs.00 of the purchase price. approved and authorized the purchase by the PHHC of the entire property consisting of 752. in case of sale by installments.Civil Code of the Philippines which provides that "when the sale is made through a public instrument. a deed purporting to convey or affect registered land shall operate as a contract between the parties. 7 Indeed. even as early as the first week of June.90. and. had consummated the sale and transferred the title to the purchaser. the Provincial Treasurer contends that. 1960. acting pursuant to the aforecited approval of the President. refers to a case involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. 496). in the case at bar. as under the Land Registration Act (Act No. in the amount of P30. and that the petitioner should register the deed and secure a new title in the name of the vendee before the government can be compelled to pay the balance of P1. for instance. passed its Resolution No. unless from the express terms of the instrument. 11 WHEREFORE. In the case at bar. As We held in Federation of the United NAMARCO Distributors v. the vendor is still liable to the payment of real property tax for the calendar year 1961. the vendor remains as the owner of the said property. I. We find the petition meritorious. dated February 3. It is. or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops. the purchaser PHHC is a government entity not subject to real property tax. Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question. and. when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance. hold that the payment of the real estate tax after such transfer is the responsibility of the purchaser. and. until the deed of sale has been actually registered. is hereby ordered refunded. 1960. the final say. on June 8. the possession of the property was actually delivered to the vendee prior to the sale. or where. coupled with the execution of the Deed of Absolute Sale. ordinarily entered into by government offices and government-owned or controlled corporations. consequently. petitioner has ceased to be the owner of the property involved. l960. 3 In other words. or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. instead of only the unoccupied portion thereof as was previously authorized. no rights of third persons are involved. and is certainly not necessary to give effect to the deed of sale. much less is there any subsequent alienation of the same property. 2 When the sale of real property is made in a public instrument. this was not the intention of the parties. However. the title to the property should remain with the vendor. 4 or where the vendor has no control over the thing sold at the moment of the sale. 1959. 290. In the absence of an express stipulation to the contrary. 1960 to use it as a resettlement area for squatters and flood victims from Manila and suburbs. 1959. by the transmission of ownership to the vendee. through the PHHC. Section 50 of the Land Registration Act provides that. because the land sold is registered under the Torrens System. 10 We. 290 dated February 3. The registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor. Respondent further contends that since the property involved is a land registered under the Land Registration Act (Act No. 9 cited by respondent. even before the date of the sale. for actual notice is equivalent to registration. It cannot be denied that the President of the Philippines. would therefore. Respondent. therefore. did not preclude the transmission of ownership. as between the parties to the contract. therefore. National Marketing the approval by the Auditor General contemplated by Administrative Order No. It is undisputed that the property is in the possession of the vendee. the vendor still remains as owner of the property until the deed of sale is actually registered with the Office of the Register of Deeds. not be necessary. the prior approval by the Auditor General envisioned by Administrative Order No. 1 II Under the civil law. approved and authorized the purchase by the national government. its material delivery could not have been made. liable for the payment of real property tax. Tancioco. delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive (constructive tradition). 77 . the execution thereof is equivalent to the delivery of the thing object of the contract. if from the deed the contrary does not appear or cannot clearly be inferred" and Article 1496 of the same Code which states that "the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501. where the contract already bears the approval of the President. pursuant to the Executive Order dated February 3. there is symbolic delivery of the property subject of the sale by the execution of the public instrument. not relevant to the case at bar. Since the delivery of possession. 6 III . but title passes by the delivery of the goods. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price. the payment of the purchase price of the good is not a condition. 1960. the PHHC. 700 approving and authorizing the purchase of the unoccupied portion of said property.676. that on June 10.4940 hectares. the constant doctrine has been that. 496) the Philippine Suburban Development Corporation is still the owner of the property until the deed of sale covering the same has been actually registered. therefore. In other words. the President has. or six (6) months prior to the execution of the Deed of Absolute Sale on December 29. 8 The case of Vargas v." On the other hand. refers to contracts in general. Such would be the case. there is no question that the vendor had actually placed the vendee in possession and control over the thing sold. it is stipulated that until the last installment is made. as between the parties to a contract of sale. Corporation. therefore. 5 In the case at bar. 1960. to meet a special situation and entered into in implementation of a Presidential directive to solve and emergency. at his Cabinet meeting. registration is not necessary to make it valid and effective. if from the deed the contrary does not appear or cannot clearly be inferred. and.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29. 1960. however. even without the act of registration. under no obligation to pay the real property tax for the year 1961. and not to a contract for a special purpose. the appealed decision is hereby reversed. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30.460. of the unoccupied portion of the property of petitioner. the action of the Auditor General would no longer be necessary because under the said Administrative Order. argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply because of the requirement in the contract that the sale shall first be approved by the Auditor General.460. precedent to the transfer of title to the buyer. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. We fail to see the merit in respondent's insistence that. the President of the Philippines at his Cabinet meeting on June 13. and the real property tax paid under protest to the Provincial Treasurer of Bulacan by petitioner Philippine Suburban Development Corporation. and the fact that the contract here involved — which is for a special purpose to meet a special situation — was entered into precisely to implement the Presidential directive. at any rate. and that after the PHHC took possession of the aforementioned property on the first week of June. although possession was transferred to the vendee and the deed of sale was executed in a public instrument on December 29. 1960. 1959 and later by the President. therefore. or by clear inference therefrom.223. In a long line of cases already decided by this Court. to pay each of the complainants their separation pay equivalent at least to one month salary for every year of service. While the Deed of Conditional Sale was executed on October 17.1989.863.89 from the petitioner in satisfaction of its obligation or to cause the full satisfaction of the same out of the chattels of the immovable properties of the petitioner. Ilocos Sur plant of the petitioner.464. The parties submitted their respective position papers with the petitioner maintaining that it had already sold its redrying plant as of October 17. 1990. a certain Mr. whichever is higher a fraction of six months being considered as one whole year. filed its comment praying therein for the dismissal of the petition on the ground that no jurisdictional infirmity attended the issuance of the challenged writ of execution because there is no actual sale of the plant and its facilities up to the present time. 1381-86. Aguilar for petitioner. and for purposes of computing said benefit. Such backwages must be computed by taking into consideration the nature of complainants work as seasonal period in one (1) calendar year should be treated as one (1) whole year (sic) wherefore. (PTRFC) dated October 17. the petitioner contends that the amount of backwages to be paid to the private respondents should be based on the period covering October 5 to 17. however. in accordance with prevailing jurisprudence. management. the private respondents filed their "Opposition to Manifestation" with annexes showing a certification from the Office of the Municipal Assessor of Marikina. The petitioner filed its comment/rejoinder on September 27. (Emphasis supplied . On September 29. the NLRC promulgated its resolution modifying the decision appealed from. in the alternative.1985. 1985 up to August 1990. the petitioner has taken the position that the date of the actual sale of the plant and its facilities is October 17. dismissed in a resolution dated September 4. 1989. No. 89477 by way of a petition. that only a change in name and form has been undertaken by the petitioner. 1990. that there was no actual sale between the petitioner and the PTRFCI. the herein petitioner Fortune Tobacco Corporation before the National Labor Relations Commission (NLRC) praying that they be reinstated in the company with full backwages and without loss of seniority rights. the petitioner was given ample time to establish by way of competent proof the date of the actual sale of the plant and its facilities cited in the final and executory decision of the NLRC. bearing the same date. In fine. Costs against respondent-appellant. in a hearing set up for the purpose. The petitioner filed a bond in the amount of P100. 1990. 1985 by virtue of the Deed of Conditional Sale. alleging therein that the sale on October 17. as counsel for the NLRC. Pursuant to the resolution of the NLRC dated July 31. 3 Thus. The thrust of the petition is that the computation made by the NLRC is attended with grave abuse of discretion and thus. 1990. 6 The petitionee elevated the case to this Court by way of the instant petition with the same arguments raised before the NLRC recited therein. 1990. the dispositive portion of which reads as follows: WHEREFORE. 95937 August 16. NATIONAL LABOR RELATIONS COMMISSION & EDGARDO DE LA CRUZ. The petitioner maintains that the plant and its facilities were sold on October 17. ET AL respondents. The case was docketed as NLRC Case No. Evangelista. The said amount was apparently reached by reckoning the computation period to start from October 5. that the control. After the parties filed the required pleadings. which was for all intents and purposes sustained by this Court as explained earlier.) 2 The petitioner went to this Court in G.000. The petitioner prays for the issuance of a temporary restraining order and/or writ of preliminary injunction. Pedro A. respondent (herein petitioner) is hereby ordered to reinstate the individual complainants (herein private respondents) to their former position(s) with full backwages reckoned from October 5. or. among others.R. On August 21. The Court finds that there is no actual sale of the plant and its facilities up to the present time. 1990. 4 The amount stated in the computation is P3.:p The computation of the backwages to be paid to the herein private respondents is in issue in this petition for certiorari and prohibition. operation and funding of the plant are in the hands of the petitioner notwithstanding the alleged sale. 1989. 1985 is valid and that the property remains in the name of the petitioner pending the full payment of the purchase price agreed upon by the vendor and the vendee . Inc.R. 5 On October 26. the labor arbiter to whom the case was assigned rendered a decision. No. the petitioner filed its manifestation to which was attached a certified copy of the "Deed of Conditional Sale" executed by and between the petitioner and Premium Tobacco Redrying and Fluecuring Company. petitioner. 1990. Angelo Ang. J. that the Deed of Conditional Sale entered into by the said parties does not state any consideration. except for the above modification the decision sought to be reversed should be as it is hereby AFFIRMED.89 is in accord with the resolution of the said Commission. that the properties are still declared in the name of the petitioner.89. On July 31. 7 The Court eventually resolved to give due course to the petition. 1986. this Court resolved to issue a temporary restraining order enjoining the private respondents from enforcing the challenged writ of execution. On October 30. thus: And considering that as alleged by the respondent without any contravention from the complainants that the plant had already been sold. The Office of the Solicitor General. the usual or normal seasonal period of one (1) calendar year shall be treated as one (1) whole year. that the PTRFCI representative. On August 28. the private respondents maintain that there has been no actual sale of the plant and its facilities up to the present time and as such the backwages to be paid should be computed accordingly. The research unit also stated that it took into account this period because the date of the actual sale of the plant is not ascertained. 1985 up to the date the plant was actually sold. is the plant manager of the Vigan. 1991 FORTUNE TOBACCO CORPORATION. 1985 up to actual reinstatement. Labor Arbiter Ramon Reyes issued an order holding. The petitioner also attached its own computation of the amounts which should be paid the private respondents. that there was no actual transfer or actual sale of the plant and its facilities in favor of the PTRFCI. 1990. the decision of the NLRC became final and executory. the writ of execution should not be enforced. Respondent-appellant must also pay the complainants' backwages from October 5. and that the computation made by the NLRC is in order. xxx xxx xxx 1 The petitioner appealed the said decision of the labor arbiter to the NLRC.863.1985 up to the time the plant and its facilities are actually sold. 1985 and as such the amount stated in the computation of the research unit of the NLRC should be substantially reduced. among others. pay the backwages of the private respondents for the period coveting October 5. it 78 . The same was. the labor arbiter went on to declare that The computation of the research unit of the NLRC in the amount of P3. The NLRC shares the view of the private respondents. With this observations. The petitioner also argues that the award of damages should be limited to cover a three-year period only. GANCAYCO. respondent-appellant must pay separation pay to all those who opt not to be rehired by the new owner of the plant. On November 21. In due time. On the other hand. The record of the case discloses the following facts: On January 29. 1985. and that no actual sale has taken place. among others. executed by the petitioner and the PTRFCI. the labor arbiter issued a writ of execution directing the Acting Sheriff of the NLRC to collect the aforestated amount of P3. the case was deemed submitted for decision. 1985. vs.464. On September 7. 1985.464. the Research and Information Unit of the NLRC came up with its "Computation of Backwages and Separation Pay" pursuant to the decision dated July 31. Mostrales & Associates for private respondents. Revilla and Cesar V.863. The opposition alleges.00. the petitioner is required to. a copy of a Declaration of Real Property and an affidavit of one of the complainants in this case alleging that there was no actual sale of the plant and its facilities to the alleged vendee.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. 1989 issued by the Second Division of this Court. Metro Manila. the private respondents filed a complaint for illegal dismissal against their employer. Thus put. 1985. and. the plaintiff be ordered to refund the P3. and the VENDEE shall forthwith surrender the possession and custody of the PROPERTIES to the VENDOR. ipso facto. and for the purpose of the issuance of this writ the defendant. He was able to designate only two of the four parcels. demandable in accordance with the terms of the contract of sale aforementioned. Upon execution of this Deed the PROPERTIES shall be deemed transferred to the possession of the VENDEE.000 on account of the purchase price.000 thirty days after the issuance to her of a certificate of title under the Land Registration Act. vs. At any rate. in June. filed suit in Court of First Instance of Manila to compel Marciana Felix to make payment of the first installment of P2. computed from October 5. in order. the petitioner may not validly contend that there has been an actual sale of the plant and its facilities to the PTRFCI. in the meantime. be annulled and in such event. No pronouncement as to costs. A. who claimed to be the owner of the parts so occupied by him. in order to survey the land sold to the defendant." It was also covenanted that "within one year from the date of the certificate of title in favor of Marciana Felix. That in case the VENDEE fails to make timely payment as specified above. for the purpose of designating and delivering the lands sold. 10 A modification is. SO ORDERED.does not necessarily follow that the plant and its facilities were. and bound herself to pay the remainder in installments. D. 9 The Solicitor General points out that under these circumstances. as they were not designated to him by the plaintiff. WHEREFORE. with the consent of her husband.000.000. The pertinent portions of the said document are as follows: 1. after a declaration of the rescission of the contract of the purchase and sale of said lands. and more than two-thirds of these two were found to be in the possession of one Juan Villafuerte. A. A. In order to make this survey it was necessary to obtain from the Land Court a writ of injunction against the occupants. together with the interest agreed upon. the defendant Balbino Tioco. sell. let or otherwise encumber or dispose of the PROPERTIES or assign its rights under this Agreement without the prior written consent of the VENDOR. It was further stipulated that the purchaser was to deliver to the vendor 25 per centum of the value of the products that she might obtain from the four parcels "from the moment she takes possession of them until the Torrens certificate of title be issued in her favor.000 on July 15. 5). Aitken for appellant. She therefore asked that she be absolved from the complaint. The Solicitor General manifests that the tax records of the petitioner as well as the certification issued by the Municipal Assessor of Marikina reveal that the plant is still registered in the name of the petitioner. the surveyor Santamaria went to Lucena.R. at the exclusive option of the VENDOR. the sum of P3. however. 1914. lease. Ownership. in which case Marciana Felix shall be obliged to return to me. even accepting that the plant and its facilities hive been sold on a conditional basis. L-12342 August 3. at the request of the plaintiff and accompanied by him. Thos. Modesto Reyes and Eliseo Ymzon for appellees." In January. with the condition that the total price should not exceed P85. In August. over the PROPERTIES shall be retained by the VENDOR until the VENDEE shall have paid in full the purchase price stipulated in Article I hereof. however. record. He did not survey the other parcels. the first of P2. 1914. accompanied by a representative of the latter. filed an application with the Land Court for 79 . any award in excess of such period is null and void. These observations are well-taken. The backwages to be paid to the private respondents should. The backwages to be paid to the private respondents should not exceed a period covering three years. a fortiori. The defendant Felix paid. notwithstanding the demands made upon him for this purpose. p. Addison. within ten years from the date of such title P10.: By a public instrument dated June 11. ADDISON. 1914. together with interest at the rate of 10 per cent per annum. and to pay an indemnity for the losses and damages which the defendant alleged she had suffered through the plaintiff's non-fulfillment of the contract. and I shall obliged to return to her. The defendant. The petitioner. defendants-appellees. on July 15. which are those occupied mainly by the brothers Leon and Julio Villafuerte. MARCIANA FELIX and BALBINO TIOCO. In fact. this contract shall. The contention finds support in prevailing jurisprudence. 1914. or fails to perform any of the covenants or agreements hereof. The VENDOR. for each coconut tree in bearing and P5 for each such tree not in bearing. it is clearly stipulated that ownership over the plant and its facilities will be transferred to the vendee by way of "a final and absolute deed of sale" only after such fun payment. Republic of the Philippines SUPREME COURT Manila EN BANC G.000 that had been paid to him on account. A. there can be no actual sale thereof unless the plant and its facilities are unconditionally conveyed to the PTRFCI by virtue of "a final or absolute deed of sale" in accordance with the terms and conditions stated in the agreement between the parties. at the time of the execution of the deed. all payments made by the VENDEE by virtue of this contract shall be automatically forfeited and retained by the VENDOR as rental payments for the use of said PROPERTIES and/or liquidated damages sustained by it as a result of the VENDEE's default. Any disposition made in violation of this article shall be void ab initio. inclusive of interest charges. Marciana Felix. jointly with her husband. went to Lucena. and that. computed from October 5. that might be growing on said four parcels of land on the date of the issuance of title to her. and of the interest in arrears. therefore. A careful evaluation of the stipulations of the said agreement will readily show that the petitioner has no intention to transfer ownership over the plant and its facilities to the vendee unless there is full payment of the purchase price on the part of the latter. the plaintiff sold to the defendant Marciana Felix. A. upon full payment by the VENDEE of the unpaid balance of the purchase price inclusive of interest charges above specified will execute and deliver to the VENDEE a final or absolute deed of sale over the PROPERTIES. The plaintiff admitted that the purchaser would have to bring suit to obtain possession of the land (sten. The VENDEE shall not. No. FISHER. II. however. the net value of all the products of the four parcels sold. The terms and conditions of the agreement speak for themselves. at the request of the purchaser. the instant petition is hereby DISMISSED. described in the instrument. answered the complaint and alleged by way of special defense that the plaintiff had absolutely failed to deliver to the defendant the lands that were the subject matter of the sale. this latter may rescind the present contract of purchase and sale. sold on that very day. four parcels of land. the vendor. DEFAULT AND FORFEITURE 1. The evidence adduced shows that after the execution of the deed of the sale the plaintiff. but he surveyed only two parcels. and the second of P5. Addison. plaintiff-appellant. and further. 1985. 2. all the sums that she may have paid me. correctly asserts that the award of backwages should be limited to cover a three-year period. at the stipulated rate of 8 per cent per annum. 1915. not exceed a period covering three (3) years. 1918 A. J. notes. 1914. with the costs of both instances against the appellant. He argues that the right to rescind the contract by virtue of the special agreement not only did not exist from the moment of the execution of the contract up to one year after the registration of the land. namely. From this judgment the plaintiff appealed. it was expressly stipulated in the contract that the purchaser should deliver to the vendor one-fourth "of the products . . The thing is considered to be delivered when it is placed "in the hands and possession of the vendee.000 received by him on account of the price of the sale. and as regards the other two. we consider it to be correct in its result. The proceedings in the matter of this application were subsequently dismissed. for it is incontrovertible that. for failure to present the required plans within the period of the time allowed for the purpose. the trial judge rested his conclusion solely on the indisputable fact that up to that time the lands sold had not been registered in accordance with the Torrens system. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. as a general rule. this latter may rescind the present contract of purchase and sale . vol. during said period." Therefore the right to elect to rescind the contract was subject to a condition. a third person may be in possession of the same thing. Code. of the aforesaid four parcels from the moment when she takes possession of them until the Torrens certificate of title be issued in her favor. the abandonment of the thing by the person who makes the delivery and the taking control of it by the person to whom the delivery is made. . It is true. It is not enough to confer upon the purchaser the ownership and the right of possession. 560) that this article "merely declares that when the sale is made through the means of a public instrument. . art.) Of course if the sale had been made under the express agreement of imposing upon the purchaser the obligation to take the necessary steps to obtain the material possession of the thing sold. but it is not always sufficient to permit of the apprehension of the thing by the purchaser. 1914. In decreeing the rescission of the contract.. though. Rep. The record shows that the plaintiff did not deliver the thing sold. (Civ. the rescission of the sale and the return of the price. and that from such non-fulfillment arises the purchaser's right to demand. while its ownership still pertains to the vendor (and with greater reason if it does not). . holding the contract of sale to be rescinded and ordering the return to the plaintiff the P3. that the mere execution of the instrument was not a fulfillment of the vendors' obligation to deliver the thing sold. "the word "delivery" expresses a complex idea . vol.. more than two-thirds of their area was in the hostile and adverse possession of a third person. to be the possessor in fact. and the plaintiff is ordered to make restitution of the sum of P3.. perhaps the condition would have been considered as fulfilled (arts. held in its decision of November 10. (Civ." The appellant objects. and it were proven that she knew that the thing was in the possession of a third person claiming to have property rights therein. it is necessary that the vendor shall have had such control over the thing sold that. as she has demanded." It is evident. 80 . then fiction yields to reality — the delivery has not been effected. consequently the defendant cannot be heard to invoke a right which depends on the existence of that condition. that the obligation was incumbent upon the defendant Marciana Felix to apply for and obtain the registration of the land in the new registry of property. the issuance of the title. Civ. The thing sold must be placed in his control. in order to be able to enjoy the property sold. . Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual agreement. the execution of this latter is equivalent to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition necessarily implies the real tradition of the thing sold. together with interest thereon at the legal rate of 6 per annum from the date of the filing of the complaint until payment. within one year from the date of the certificate of title in favor of Marciana Felix. as the appellant argues. Code. p. 1118. 96. So ordered. It is therefore held that the contract of purchase and sale entered into by and between the plaintiff and the defendant on June 11. and 1119. but does not accrue until the land is registered. yet this presumption gives way before proof to the contrary. he was not even able to show them to the purchaser. such agreement would be perfectly valid. that such was the agreement.) It is true that the same article declares that the execution of a public instruments is equivalent to the delivery of the thing which is the object of the contract. Code). . interpreting article 1462 of the Civil Code. in fact. at the moment of the sale. it is not the conventional but the legal interest that is demandable... because such tenancy and enjoyment are opposed by the interposition of another will. that the cross-complaint is not founded on the hypothesis of the conventional rescission relied upon by the court. 174) in his commentaries on article 1604 of the French Civil code. As Dalloz rightly says (Gen. together with interest thereon at the rate of 10 per cent per annum. But if. and rightly. the material possession and enjoyment of the four parcels of land. whereby it is stipulated that ". The trial court rendered judgment in behalf of the defendant. The Code imposes upon the vendor the obligation to deliver the thing sold. its material delivery could have been made. wherefore. . is rescinded. 1506 and 1124. The supreme court of Spain. The record show that up to the present time that condition has not been fulfilled. arts.. then. but. . Rep. But there is nothing in the instrument which would indicate. but from this it cannot be concluded that she had to await the final decision of the Court of Land Registration. symbolic delivery through the execution of a public instrument is sufficient. . in order that this symbolic delivery may produce the effect of tradition. in the case at bar. and if this allegation had been proven.000 paid on account of the price." This obviously shows that it was not forseen that the purchaser might be deprived of her possession during the course of the registration proceedings. The wording of the clause. If in the cross-complaint it had been alleged that the fulfillment of the condition was impossible for reasons imputable to the plaintiff. but that the transaction rested on the assumption that she was to have. However. 43." (Civ. The one year's deliberation granted to the purchaser was to be counted "from the date of the certificate of title . With respect to two of the parcels of land." The execution of a public instrument is sufficient for the purposes of the abandonment made by the vendor. but this issue was not presented in the defendant's answer. but on the failure to deliver the land sold. 1462. he who purchases by means of a public instrument should be deemed . On the contrary. even implicitly. notwithstanding the execution of the instrument. 1117.the registration in her name of four parcels of land described in the deed of sale executed in her favor by the plaintiff. and on the terms of the second paragraph of clause (h) of the contract. although we are not in agreement with the reasoning found in the decision appealed from. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. substantiates the contention. . p. 1903. J. the delivery made on November 20. 4885. Thus. 1969. June 29. The following excerpts from the transcript of stenographic notes are significant: I. of the Revised Penal Code. 1968.H. If ownership over the jewelry was not transmitted on that date. the check was dishonored and Cruz was informed that Vallarta's account had been closed. art. art. Rosalinda Cruz. "A. In a "sale or return. In order to arrive at the proper characterization of the transaction between Vallarta and Cruz. and the price was agreed upon. or simultaneous with the act of fraud. In seeking acquittal. or tradition. and issued a post-dated check in the amount of P5.R. e. it is necessary to determine the intention of the parties. The check issued in December 1968 was therefore in payment of a pre-existing obligation. On November 20. The offender must be able to obtain money or property from the offended party because of the issuance of a check whether post-dated or not. 315 (2) (d). which penalizes any person who shall defraud another "(b)y postdating a check. Salva for petitioner. Revised Penal Code. 1968 when the seven pieces of jewelry were delivered. 712). VALLARTA. and as such it should be either prior to. I agreed to reduce it to Five Thousand Eight Hundred (P5. She also argues that at any rate. and chose another ring. Petitioner is charged under Art. 1968. exchanged one item with another. Cruz. 339 [1933]). as of that date. art. 22) (Emphasis supplied). but the sale was perfected in December 1968.: The petitioner seeks a reversal of the Court of Appeals decision dated December 13. and accused Victoria Vallarta are long time friends and business acquaintances. The delivery made on November 20. respondents. 1969. Cross-Examination of Rosalinda Cruz COURT: But could you still recall or you cannot recall whether you agreed to reduce the cost to Five Thousand Eight Hundred ( P5. when I went to see her in her house to finalize what jewelries she wanted (Id. Thus. or his funds deposited therein were not sufficient to cover the amount of the check. No. 1502). WE affirm. whether it was a "sale or return" or some other transaction. the date when the check was issued. this criminal action was instituted. Pasay City Court. even if it was dishonored. Cross-Examination of Rosalinda Cruz Q: Now." the ownership passes to the buyer on delivery (CIVIL CODE.800. she started avoiding Cruz. the price to be paid for the jewelry was finally agreed upon only in December 1968. Act No. Lilius. She thus assigns as errors the finding of that Court a quo that the jewelries were entrusted on November 20. it was a "sale on approval " (also called " sale on acceptance. sale. petitioner stresses that the transaction between her and Cruz was a "sale or return. 81 . both the trial court and the Court of Appeals found Vallarta guilty beyond reasonable doubt of the crime of estafa. Sir. 26). Rosalinda Cruz deposited said check with the bank. you mentioned about certain jewelries in Exh. Francisco G.00) Pesos. Vallarta. Vallarta pleaded for more time. she gave me postdated check. 315 (2) (d) as amended by Rep.Republic of the Philippines SUPREME COURT Manila EN BANC G. Later. Sir. CORTES. Properly. at p. It was on one (1) day when I entrusted them to her so she can select what she wants (Id at p. And after that I knew (learned) that it was closed account (TSN. In which case.g. Sir. III. 1987 VICTORIA R. or issuing a check in payment of an obligation when the offender had no funds in the bank. Still later. there was a meeting of the minds between the parties as to the object of the contract and the consideration therefore only in December 1968. Thus. what prompted Cruz to deliver the jewelry was the social standing of petitioner Vallarta and not the postdated check. Note that Vallarta changed the ruby ring because it was not acceptable to her. but not criminally liable under Art. 1974 affirming the Trial Court's judgment convicting her of estafa. II. That is. L-40195 May 29. likewise. as a mode of acquiring ownership must be in consequence of a contract (CIVIL CODE. Vallarta? A: After that and after she finally agreed to buy two sets and changed the ruby ring with another ring. vs. If there was no meeting of the minds on November 20. the latter would not have parted with his money or other property were it not for the issuance of the check. As found by the trial court and the Court of Appeals. petitioner claims that she can only be held civilly liable. Could you tell under your oath whether all the jewelries listed here (Exh. p. the transaction entered into by Cruz and Vallarta was not a "sale or return." By virtue of Rep. Vallarta decided to buy some items. Likewise. (The subsequent return of the goods reverts ownership in the seller [CIVIL CODE. what happened with that business transaction of yours with Mrs. it was a "sale on approval" since ownership passed to the buyer. 59 Phil. "A") were taken by Mrs. 1968 was only for the purpose of enabling Vallarta to select what jewelry she wanted.00) Pesos? A Yes. To constitute estafa under this provision the act of post-dating or issuing a check in payment of an obligation must be the efficient cause of defraudation. only when she signified her approval or acceptance to the seller. However. THE HONORABLE COURT OF APPEALS and THE HONORABLE JUDGE FRANCISCO LLAMAS.000 dated January 30. In December of the same year. then it could have been transmitted only in December 1968. " "sale on trial. 1968 was not a delivery for purposes of transferring ownership — the prestation incumbent on the vendor. 9) (Emphasis supplied). Based on the foregoing facts. 4885. We denied the petition initially but granted a motion for reconsideration and gave the petition due course. Delivery. I waited for January 30." or "sale on satisfaction" [CIVIL CODE. then. Act No. the check should not be." Rather. that is. there was yet no contract of sale which could be the basis of delivery or tradition. Direct Examination of Rosalinda Cruz Q: Now. Cruz apprised Vallarta of the dishonor and the latter promised to give another check. then. Hence. 1 deposited the check in the Security Bank. issued in payment of a pre-existing obligation (People v." perfected and consummated on November 20. 1502]). "(t)he failure of the drawer of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack or insufficiency of funds" is deemed prima facie evidence of deceit constituting false pretense or fraudulent act. the private offended party. upon presentment. Cruz entrusted to Victoria Vallarta seven pieces of jewelry. 1502]). Vallarta at one single instance? A: Yes. and the finding that there was deceit in the issuance of the postdated check. 1968.800. the same time that the check was issued. petitioner. 1972. art. 34 Phil. foreseeing his inability to pay the check at maturity. Deceit is therefore presumed. or his funds deposited therein were not sufficient to cover the amount of the check. Villapando (56 Phil. Revised Penal Code. Thus. 315 (2) (d). Our decision would remain. contends that Rep. Act No. and not the non-payment of the debt. and eliminated the requirement that the drawer inform the payee that he had no funds in the bank or the funds deposited by him were not sufficient to cover the amount of the check. p. Sabio (No. the presumption of deceit under Rep. Costs against the petitioner. pp. it is alleged. Act No. and. as when the drawer. Pasay City. 856 [1953] at 858-59. she does not question the constitutionality of Art. Alleging that a check drawn by one Sison was given by petitioner to Cruz in payment of the rubber check. 86 SCRA 568). Instead the issuance of the check was simultaneous with the transfer of ownership over the jewelry. A TREATISE ON THE CONSTITUTIONAL LIMITATIONS. Her motion was directed at the finding of the trial court that no payments were made. (2) notice has been given to the drawer. the check is not funded or the obligation is not paid. (3) three days from notice. she concedes the constitutionality of the latter statute. 82 . SO ORDERED. Petitioner lays stress on her being an alumna of a reputable school. For instance. She claims that even as the presumption of deceit established by Rep. Act No. at least in so far as issuing bouncing checks is concerned. petitioner was able to obtain the jewelry because she issued the check. which she failed to rebut. But was the check issued simultaneously with the fraud? Republic Act No. 4885 is unconstitutional. November 20. on her having a husband who is a bank manager. There can be no doubt that the "postdating or issuing of a check in payment of an obligation when the offender had no funds in the bank. See also US v. she would have called to the witness stand the Branch Manager of Security Bank and Trust Company. when the check which later bounced was issued. 92 Phil. or did she do so because of the check issued to her? As the trial court and the Court of Appeals found. amending Art. 315 (2) (d). It is thus suggested that a person of petitioner's social standing cannot be guilty of deceit. 4885 it is still criminal fraud or deceit in the issuance of a check which is made punishable under the Revised Penal Code. and argues that it was these qualifications and not the post-dated check which prompted Cruz to deliver the jewelry (Rollo. L-45490. Mingoa. We ruled in the case of People v. Act No. 725 [1916]). where the check was allegedly deposited by Cruz." is a false pretense or a fraudulent act. that Republic Act No. Thus. and on the big land-holdings of her father. WHEREFORE. made an arrangement with his creditor as to the manner of payment of the debt. and provides for its punishment. 4885 violates the constitutional injunction against imprisonment for non-payment of debt. which defines the crime she is being accused of. 4885 merely established the prima facie evidence of deceit. Petitioner also argues that Rep. Petitioner also assigns as error the denial by the trial court of her motion for reconsideration. pp. finding no error in the assailed decision of the Court of Appeals. Ironically. 46). If accepted. Hence. 639-641). (3) Vallarta failed to make it good within three days. Her failure to deposit the necessary amount to cover it within three days from notice of dishonor created the prima facie presumption established by the amendatory law. Act No. Mingoa. for said bank manager to Identify the owner-holder of the savings account to which the amount in Sison's check had been credited (Brief for Petitioner. 31 [1931]) that good faith is a defense to a charge of estafa by postdating a check. In People v. 315 (2) of the Revised Penal Code. She further concedes that a person may be imprisoned for "criminal fraud" covered by Art. 4885 does nothing more than limit the period within which the drawer/issuer must pay the creditor. 4885 has not changed the rule established in Art. Act No. 4885. and enacting what evidence shall be sufficient to overcome such presumption of innocence" (People v. pp. 4885 is stated under the guise of being prima facie. 2-3). It is rebuttable. the accused is held guilty. even with the amendment introduced by Rep. (1) the check was dishonored as Vallarta's account had been earlier closed. (2) she was notified by Cruz of the dishonor: and. Revised Penal Code. 4885. Petitioner.* Moreover. 10-11). In fact. Luling. there was no deceit. 315 (2) (d). Granting that the bank manager's testimony would have been as alleged by petitioner. however.Thus. this Court ruled that Rep. Contrary to petitioner's assertion. the payments petitioner allegedly made were not shown to have any relevance to the obligation in question. because after the prosecution has proved that: (1) the check has been dishonored. Rep. supra. It is so characterized by Art. And the "legislature may enact that when certain facts have been proved they shall be prima facie evidence of the existence of the guilt of the accused and shift the burden of proof provided there be a rational connection between the facts proved and the ultimate fact presumed so that the inference of the one from proof of the others is not unreasonable and arbitrary because of lack of connection between the two in common experience" (People v. citing I COOLEY. Act No. it is now well settled that "there is no constitutional objection to the passage of a law providing that the presumption of innocence may be overcome by a contrary presumption founded upon the experience of human conduct. the same is AFFIRMED. it could result in a law that falls unequally on persons depending on their social position. Revised Penal Code. As correctly observed by both the trial court and the Court of Appeals (Court of Appeals Decision. 1978. This reasoning does not merit serious consideration. It is in effect a conclusive presumption. 315 (2) (d) prior to the amendment. 78-79: Motion for Reconsideration. 4885 is not conclusive. Republic Act No. the constitutional presumption of innocence is violated. Did Cruz part with the jewelry solely because she knew Vallarta to be rich. it was not in payment of a pre-existing obligation. establishes a prima facie evidence of deceit upon proof that the drawer of the check failed to deposit the amount necessary to cover his check within three (3) days from receipt of notice of dishonor for lack or insufficiency of funds. Admittedly. petitioner claims that had her motion for reconsideration been granted. 204 SCRA 247 [1991]. 1971 respectively. Cebu where they professed satisfaction at the performance of their own plastic bags. only the 15. remitted the amounts of P1. Caguioa. Toledo.00 24 February 1971 11. respondent's major client. the decision of the appellate court may be overturned.O. respondent. respondent has received a total of 52. Under such 83 .200. Considering however. 1971 plus 15% of the total obligation as attorney's fees.720. Campos.123. and May 3. The cement was delivered packed in kraft paper bags.).474. the trial court rendered its decision. 1973 when the demands remained unheeded. and P13. (p. As asserted by herein respondent. Cudala. then as now. respondent admitted its liability for the 53. Likewise. in common use. it is also settled that the factual findings of the appellate court are final and conclusive (Bustamante v.92 37. Sandiganbayan. Notwithstanding the measures adopted by respondent such as the use of masks.. p. Campos sent Panganiban a letter proclaiming dramatic results in the experiment. the present recourse. principally because Itemcop is a sister corporation of Atlas. the dispositive portion of which reads: WHEREFORE. At the trial on the merits. 1971. INC. J. judgment is hereby rendered sentencing the defendant to pay the sum of P84. Hence. The first issue to be resolved is the propriety of this petition as it calls for a re-examination of the factual findings of the appellate court. 1983 decision of the then Intermediate Appellate Court in CA-G. On December 29. 147 SCRA 236 [1987]. No other payments were made. President of respondent corporation. with three hundred (300) "improved bags". thereby leaving a balance of P84. The experiment. As a rule.640. it is well-entrenched in Our jurisprudence that this Court is not a trier of facts (Valdez v.00 yet the appellate court disregarded this fact and totally cleared respondent from all responsibility.Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. Respondent was. and fourth purchase orders. A few weeks later. MELO. or at least modified. cement dust still spilled through the gaps. Moran v. to the factory of respondent's supplier.00 ———— TOTAL: P101.230. 133 SCRA 88 [1984]).654. the bags were already tested and the results thereof. constrained to revert to the use of kraft paper bags in packing cement. Ibid. penned by the Honorable Justice Eduardo P. 131). third. P2. Narciso. Panganiban accompanied Paulino Ugarte. 1971. respondent has repeatedly admitted its liability for the 53. 28. Thereafter.654. were nevertheless favorably considered after due alterations were made. with Justices Gaviola and Quetulio-Losa concurring. this was not done and so petitioner demanded payment for the said bags.000 . was unsuccessful.). Panganiban agreed to use the plastic cement bags.00 6 April 1971 10. another Vice-President of Itemcop. which is whether or not respondent may be held liable for the 47. Panganiban acquiesced. for brevity). Sometime in October.92 9. CA.80 (p. CA. Pecson. a Vice-President of petitioner Industrial Textile Manufacturing Company of the Philippines (or Itemcop. to test fifty (50) pieces of plastic cement bags. CV No.83 P44. and two other officials of petitioner company followed the 180 bags to the plant of Atlas in Sangi. Luzon Cement Corporation in Norzagaray. SO ORDERED..800 plastic lime bags amounting to P44.: Before Us is a petition for review on certiorari seeking the reversal of the November 9.000 . to wit: DATE NUMBER OF BAGS UNIT COST AMOUNT 5 January 1971 53.00 on March 31.00. (TSN. in a long line of cases. Ugarte. A review of the record instantly reveals that the case at bar falls under the last exception. thus. gloves. Respondent. Apparently. The second batch of plastic bags subjected to trial was likewise a failure. By then. However. petitioner was asked to take back the unused plastic bags. Significantly. (p.000 plastic bags which were not actually used for packing cement as originally intended.) Respondent corporation's appeal was upheld by the appellate court when it reversed the trial court's decision and dismissed the case with costs against petitioner. 194 SCRA 360 [1991]). as it did pay for. 1970. Manlapaz v. Respondent said that it will pay. Indeed. 68281. the workers still refused to utilize the plastic bags. No. therefore. Four purchase orders (P.000 bags of cement per year to Atlas Consolidated Mining and Development Corporation (Atlas for short). Bengzon.123.900. 1971 (p. asked Lauro Panganiban. the quantity of bags ordered by respondent also negates its position that the bags were still under experimentation. the bags ordered should have been considerably lesser in number and would normally increase as the suitability of the plastic bags became more definite. CA. thus prompting A. respondent. On May 25. Jr. Zarraga. had a contract to supply 300. however. that the bags were in the cement factory of respondent's supplier.s) were thereafter issued. Reiterations thereof were later sent by petitioner's counsel.R. petitioner. if it were so. INC. Ibid. only 15. Consequently. it is on the basis of such experimental findings that respondent agreed to use the plastic cement bags and thereafter issued the purchase orders heretofore mentioned. Azcuna & Bengzon Law Office for petitioner.000 bags.80 with l2% interest per annum from May. March 19.000 bags were actually used and 37. and April 17. as when the inference made is manifestly mistaken or when the judgment is based on misapprehension of facts or when the appellate court overlooked relevant facts not disputed by the parties and which if properly considered. February 17. 1970. and the costs. A collection suit was filed on April 11.000 bags. Palileo. Rollo). which dismissed petitioner's complaint and absolved herein respondent from any liability to the former. the workers of Luzon Cement strongly objected to the use thereof due to the serious health hazards posed by the continued seepage of cement dust. 66140 January 21. on the other hand.00. 1993 INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES.90 9. LPJ ENTERPRISES. Ibid. With respect to the second.R. As earlier adverted to.000 plastic bags it actually used in packing cement. if he would like to cooperate in an experiment to develop plastic cement bags. Although the weaving of the plastic bags was already tightened. CA. albeit initially unsuccessful. 74. As for the remaining 47. vs. however. 80. 142 SCRA 593. Cement dust oozed out under pressure through the small holes of the woven plastic bags and the loading platform was filled with dust.000 .000 bags were already considered unfit for packing cement. and conveyor system.800 polypropylene lime bags covered by the first purchase order. Finally. Verily.480. Inc.00 March 1971 41. It appears on record that respondent LPJ Enterprises. it was very probable that the problems alluded to by respondent could no longer be resolved.800 P . On this point alone. 197 SCRA 245 [1991]). Sacay v. Let Us now turn to the crux of the controversy. January 5. Soriano y Cia of petitioner's Legal Department to send demand letters to respondent corporation. [1986]. 58. It is beyond dispute that prior to respondent's transaction with petitioner. petitioner maintained that it was respondent's obligation to return the bags to them. would justify a different conclusion (Aquino v. CA. Ugarte then asked Panganiban to send 180 bags of cement to Atlas via commercial shipping. 193 SCRA 603 [1991]. April 31. denied full responsibility therefor. Radiowealth Finance Company v. We have pronounced certain exceptions. Cesar Campos. Bulacan. it is worthy to note that as of the date of petitioner's third delivery on March 19. a member of the Soriano Group of Companies.00 Petitioner delivered the above orders consecutively on January 12. the seepage was substantially reduced.. 1981. : Assailed in this Petition for Review on Certiorari is the Decision of the respondent Court of Appeals dated January 29. 2 with a face value of P500. it executed a Detached Assignment in favor of the Petitioner to enable the latter to have its title completed and registered in the books of the respondent.000. TORRES. Not to be overlooked also is the fact that Panganiban. its rights and title in the said CBCI (Annex "C") to petitioner and.00). (p.361. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. Surprisingly. Accordingly.11) on April 27. for and in consideration of the sum of PESOS: FIVE HUNDRED THOUSAND (P500. D891. Rollo). which authorization is specifically phrased as follows: '(Filriters) hereby irrevocably authorized the said issuer (Central Bank) to transfer the said bond/certificates on the books of its fiscal agent. clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval". . . Filriters Guaranty Assurance Corporation (Filriters) executed a "Detached Assignment" . Philfinance transferred and assigned all.. assigned and delivered unto Philippine Underwriters Finance Corporation (Philfinance) all its rights and title to Central Bank Certificates of Indebtedness of PESOS: FIVE HUNDRED THOUSAND (P500. We find that Article 1502 of the Civil Code. to compel the Central Bank of the Philippines to register the transfer of the subject CBCI to petitioner Traders Royal Bank (TRB). 1971.. transferred and delivered to petitioner CBCI 4-year. has no application at all to this case. On February 4. 733. And by means of said Detachment. WHEREFORE. We hold that the transaction between respondent and petitioner constituted an absolute sale. 1981. it did thereby "irrevocably authorize the said issuer (respondent herein) to transfer the said bond/certificate on the books of its fiscal agent.. 1990. also collected due commissions for the four purchase orders issued in favor of petitioner. Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or return. 8th series. J. respondent still accepted the same upon delivery on April 17. In the said petition. and a Detached Assignment 4 dated April 27. respondents. at the stipulated price of PESOS: FIVE HUNDRED NINETEEN THOUSAND THREE HUNDRED SIXTY-ONE & 11/100 (P519. Docketed as Civil Case No. 1997 TRADERS ROYAL BANK. On the other hand. 79. Pursuant to the aforesaid Repurchase Agreement (Annex "B"). 1979. which CBCI was among those previously acquired by PhilFinance from Filriters as averred in paragraph 3 of the Petition.. respondent simply declared that it did not receive any because it transferred its offices to another place. SO ORDERED. it was but logical for respondent to cancel then the fourth purchase order for another 10. D891 (Annex "C"). 6. . COURT OF APPEALS. 1981. The aforesaid Detached Assignment (Annex "A") contains an express authorization executed by the transferor intended to complete the assignment through the registration of the transfer in the name of PhilFinance. 93397 March 3. The provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken. JR.R.000. respondent corporation's president. 1 affirming the nullity of the transfer of Central Bank Certificate of Indebtedness (CBCI) No. In the light of these principles." . invoked by both parties herein. On November 27. respondent's supplier and virtually a stranger as far as petitioner is concerned. the action was originally filed as a Petition for Mandamus 5 under Rule 65 of the Rules of Court.000) and having an aggregate value of PESOS: THREE MILLION FIVE HUNDRED THOUSAND (P3. (67 Am Jur 2d. 4. petitioner. when the checks it issued in favor of petitioner were dishonored for insufficient funds. 1971 and remitted its payments until May 3. transferred. . If the purchaser desired to incorporate a stipulation securing to him the right of return. sold. 84 . 1981. 1981. Finally. PhilFinance failed to repurchase the CBCI on the agreed date of maturity.predicament. the conditions which allegedly govern the transaction according to respondent may not be considered.00).00. No. Branch 32. whereby Filriters. whereby. Philfinance agreed to repurchase CBCI Serial No. April 27. . FILRITERS GUARANTY ASSURANCE CORPORATION and CENTRAL BANK of the PHILIPPINES. under a Repurchase Agreement 3 dated February 4. It is for this reason that petitioner may not be expected to just pull out its bags from Luzon Cement.000 bags. as registered owner. PhilFinance sold. the bags remained in the custody of Luzon Cement. from the Philippine Underwriters Finance Corporation (Philfinance) to the petitioner Trader's Royal Bank (TRB). D891 with a face value of P500. furthermore.00 . he should have done so at the time the contract was made. 1981. Serial No. the buyer cannot accept part and reject the rest of the goods since this falls outside the normal intent of the parties in the "on approval" situation. . 8. TRB stated that: 3. In the meantime. respondent is liable for the plastic bags delivered to it by petitioner. the decision appealed from is hereby SET ASIDE and the decision of the trial court REINSTATED. 748).000. Owing to the default of PhilFinance. 83-17966 in the Regional Trial Court of Manila. pp.000. 7. The trial court correctly observed that such conditions should have been distinctly specified in the purchase orders and respondent's failure to do so is fatal to its cause. premises considered. vs. 5. .500. When petitioner sent letters demanding the full payment of the bags. . petitioner entered into a Repurchase Agreement with PhilFinance . as requiring by Article V. executed similar detached assignment forms transferring the CBCI to plaintiff. and without any clearance or authorization from the Insurance Commissioner. and requested the latter to effect the transfer of the CBCI on its books and to issue a new certificate in the name of petitioner as absolute owner thereof. 11." and. Alfredo Banaria. 13. its policy holders and all who have present or future claims against its policies. 891. d) The transfer of dimunition of reserve investments of Filriters is expressly prohibited by law. D891 in favor of Philfinance. Plaintiff knew full well that the assignment by Philfinance of CBCI No. The assignment of the CBCI is illegal act in the sense of malum in se or malum prohibitum. 16. as required by the above-quoted provision. and similarly noted hereon. Filriters. Series of 1980 (Rules and Regulations Governing CBCIs) provides that the registered certificates are payable only to the registered owner (Article II. 891 to Philfinance. the Regional Trial Court of Manila. in person or by his attorney duly authorized in writing. a) The assignment was executed without consideration and for that reason. 891 in favor of PhilFinance. 1984. to the Securities Servicing Department of the respondent. knowledge or consent of the board of directors of Filriters. the registered owner of the subject CBCI as respondent. without a doubt. Upon these assertions. for anyone to make. e) The assignment of the CBCI has resulted in the capital impairment and in the solvency deficiency of Filriters (and has in fact helped in placing Filriters under conservatorship). Respondent failed and refused to register the transfer as requested. The express provisions governing the transfer of the CBCI were substantially complied with the petitioner's request for registration. the latest of which is hereto attached as Annex "E" and made an integral part hereof. The assignment of the CBCI to Philfinance is a personal act of Alfredo Banaria and not the corporate act of Filriters and such null and void. 12. 769. There was no attempt to get any clearance or authorization from the Insurance Commissioner. The detached assignment is patently void and inoperative because the assignment is without the knowledge and consent of directors of Filriters. and the subsequent assignment of CBCI by PhilFinance in favor of the plaintiff Traders Royal Bank as null and void and of no force and effect. Branch XXXIII found the assignment of CBCI No. judgment is hereby rendered in favor of the respondent Filriters Guaranty Assurance Corporation and against the plaintiff Traders Royal Bank: (a) Declaring the assignment of CBCI No. the Detached Assignments presented to respondent were sufficient authorizations in writing executed by the registered owner. Subsequently. Without any consideration or benefit whatsoever to Filriters. xxx xxx xxx 14. The dispositive portion of the decision reads: ACCORDINGLY. and not duly authorized in writing by the Board. Plaintiff had acted in bad faith and with knowledge of the illegality and invalidity of the assignment. Section 1). an inevitable result known to the officer who executed assignment. and upon payment of a nominal transfer fee which may be required. a) The CBCI constitutes part of the reserve investments of Filriters against liabilities requires by the Insurance Code and its assignment or transfer is expressly prohibited by law. together with the two (2) aforementioned Detached Assignments (Annexes "B" and "D"). The CBCI constitutes part of the reserve investment against liabilities required of respondent as an insurance company under the Insurance Code. Section 3 of CB Circular No. Corporation [sic] Code. 891 by Filriters is not a regular transaction made in the usual of ordinary course of business. Civil Code). is immoral and against public policy. TRB prayed for the registration by the Central Bank of the subject CBCI in its name. c) The CBCI involved substantial amount and its assignment clearly constitutes disposition of "all or substantially all" of the assets of Filriters. Upon such compliance with the aforesaid requirements. On December 4. without any board resolution. PhilFinance. Respondent is the registered owner of CBCI No. b) The provision on transfer of the CBCIs provides that the Central Bank shall treat the registered owner as the absolute owner and that the value of the registered certificates shall be payable only to the registered owner. xxx xxx xxx 15. a) The CBCI No. without any consideration or benefit redounding to Filriters and to the grave prejudice of Filriters. a sufficient notice to plaintiff that the assignments do not give them the registered owner's right as absolute owner of the CBCI's. 10. in violation of law and the trust fund doctrine and to the prejudice of policyholders and to all who have present or future claim against policies issued by Filriters. then Senior Vice-President-Treasury of Filriters. VicePresident-Treasury of Filriters (both of whom were holding the same positions in Philfinance). b) The assignment was executed without any knowledge and consent of the board of directors of Filriters. 7 In its Decision 8 dated April 29. the assignment is void from the beginning (Article 1409.9. Alberto Fabella. 18. 85 . Petitioner presented the CBCI (Annex "C"). the ministerial duties of registering a transfer of ownership over the CBCI and issuing a new certificate to the transferee devolves upon the respondent. and its transferee. b) The assignment by Filriters of the CBCI is clearly not a transaction in the usual or regular course of its business. a new Certificate shall be issued to the transferee of the registered holder thereof. either as corporate or personal act. and continues to do so notwithstanding petitioner's valid and just title over the same and despite repeated demands in writing. which requires the affirmative action of the stockholders (Section 40. 1988. and the subsequent assignment of the same CBCI by Philfinance in favor of Traders Royal Bank null and void and of no force and effect. Senior Vice-President-Comptroller are Pilar Jacobe. 12. Filriters interjected as Special Defenses the following: 11. to wit: "No transfer thereof shall be valid unless made at said office (where the Certificate has been registered) by the registered owner hereof. which is a requirement under the Insurance Code for its existence as an insurance company and the pursuit of its business operations. the Regional Trial Court the case took cognizance of the defendant Central Bank of the Philippines' Motion for Admission of Amended Answer with Counter Claim for Interpleader 6 thereby calling to fore the respondent Filriters Guaranty Assurance Corporation (Filriters). 891 is not a negotiable instrument and as a certificate of indebtedness is not payable to bearer but is a registered in the name of Filriters. c) CB Circular 769. executed a detached assignment purportedly assigning CBCI No. 17. c) The CBCI constitutes reserve investment of Filriters against liabilities. For its part. whose name was inscribed thereon. D891 from Filriters. (c) Ordering the plaintiff Traders Royal Bank to pay respondent Filriters Guaranty Assurance Corp. Court of Appeals. 16: The accepted rule is that the negotiability or non-negotiability of an instrument is determined from the writing. a sister corporation. D891. discounting the petitioner's submission that the same is a negotiable instrument. v. 1981. the registered owner. Banaria. What happened was Philfinance merely borrowed CBCI No. which provided that any "assignment of registered certificates shall not be valid unless made . Inc. whose name is inscribed thereon. In the construction of a bill or note. 1981. D891 in its name before the Security and Servicing Department of the Central Bank (CB). if it can be legally ascertained. resulting in the nullity of the transfer (People v. Under a deed of assignment dated November 27. 94 Phil. The sum of P10. since the instrument clearly stated that it was payable to Filriters.(b) Ordering the respondent Central Bank of the Philippines to disregard the said assignment and to pay the value of the proceeds of the CBCI No. Que Po Lay. the subject CBCI is not a negotiable instrument in the absence of words of negotiability within the meaning of the negotiable instruments law (Act 2031). a certificate of indebtedness pertains to certificates for the creation and maintenance of a permanent improvement revolving fund. Failing to get a favorable judgment. Armed with the deed of assignment. Thus. Commissioner of Internal Revenue. and that the certificate lacked the words of negotiability which serve as an expression of consent that the instrument may be transferred by negotiation. 32). 1981. conveying to appellant TRB all its right and the title to CBCI No. and to no one else. and the freedom of negotiability is the foundation for the protection which the law throws around a holder in due course (11 Am. to guarantee its financing operations. The findings of the fact of the said court are hereby reproduced: The records reveal that defendant Filriters is the registered owner of CBCI No. Hence. Being equivalent to a bond. the registered owner hereof. freedom of negotiability is the touchtone relating to the protection of holders in due course. series of 1980. Left with no other recourse. enforce payment of the instrument for the full amount thereof against all parties liable thereon. having made without consideration. D891. D891. it executed a deed of assignment. petitioner argued that the subject CBCI was a negotiable instrument. as actual payment to Filriters. the principal sum of FIVE HUNDRED THOUSAND PESOS. did not have the necessary written authorization from the Board of Directors of Filriters to act for the latter. thus demanding the application of the doctrine or piercing the veil of corporate fiction. As held in Caltex (Philippines). the registered owner. the assignment did not therefore bind Filriters and violated as the same time Central Bank Circular No. 15 A reading of the subject CBCI indicates that the same is payable to FILRITERS GUARANTY ASSURANCE CORPORATION. Said the Court: In the case at bar. 13 Petitioner's present position rests solely on the argument that Philfinance owns 90% of Filriters equity and the two corporations have identical corporate officers. the appellate court that the CBCI is not a negotiable instrument. 769 which has the force and effect of a law. D891 to Philippine Underwriters Finance Corporation (Philfinance). was subsequently treated by the lower court as a case of interpleader when CB prayed in its amended answer that Filriters be impleaded as a respondent and the court adjudge which of them is entitled to the ownership of CBCI No. stating that: As worded. D891 which it could assign or transfer to Traders Royal Bank and which the latter can register with the Central Bank. the instrument is payable only to Filriters. who signed the deed of assignment purportedly for and on behalf of Filriters. having acquired the certificate through simulation. the assignment of the certificate from Filriters to Philfinance was fictitious. vs. While the writing may be read in the light of surrounding circumstance in order to more perfectly understand the intent and meaning 86 . however. Jur. Philfinance acquired no title or rights under CBCI No." Petitioner's claimed interest has no basis. but their appeals likewise failed. xxx xxx xxx Properly understood. 14 This renders the payment by TRB to Philfinance of CBCI. and (d) to pay the costs. The language of negotiability which characterize a negotiable paper as a credit instrument is its freedom to circulate as a substitute for money. Subsequently. It lacks the words of negotiability which should have served as an expression of consent that the instrument may be transferred by negotiation. 3M Philippines. and did not conform to Central Bank Circular No. SO ORDERED. Alfredo O. and that it is a holder in due course of the certificate. The pertinent portions of the subject CBCI read: xxx xxx xxx The Central Bank of the Philippines (the Bank) for value received. . 202). and it may thus. the intention of the parties is to control. its possession of the same is thus free fro any defect of title of prior parties and from any defense available to prior parties among themselves. WHEREFORE. granting Philfinance the right to repurchase the instrument on or before April 27. 9 The petitioner assailed the decision of the trial court in the Court of Appeals 10. Obviously. 12 In ignoring said argument. Central Bank. of if this Certificate of indebtedness be registered. It is usually used for the purpose of long term loans. better known as the "Rules and Regulations Governing Central Bank Certificates of Indebtedness". which was still registered in the name of Filriters. In sum. The suit. TRB then sought the transfer and registration of CBCI No. however. D891. . The transfer was made under a repurchase agreement dated February 4. 640." (82 Minn. TRB filed a special civil action for mandamus against the Central Bank in the Regional Trial Court of Manila. 769. When Philfinance failed to buy back the note on maturity date. This freedom in negotiability is totally absent in a certificate indebtedness as it merely to pay a sum of money to a specified person or entity for a period of time.000 as attorney's fees. 2d. the registered owner hereof. since it was derived from Philfinance whose interest was inexistent. hereby promises to pay bearer. there is no merit to the lower court's ruling that the transfer of the CBCI from Filriters to Philfinance was null and void for lack of consideration. refused to effect the transfer and registration in view of an adverse claim filed by defendant Filriters. from the face of the instrument itself. Inc. the instrument provides a promise "to pay Filriters Guaranty Assurance Corporation. as to give validity to the transfer of the CBCI from registered owner to petitioner TRB. Philfinance transferred CBCI No. is similar to a "bond. Filriters transferred CBCI No. SO ORDERED. thus. with costs against plaintiff-appellant. TRB now comes to this Court on appeal. it is properly understood as acknowledgment of an obligation to pay a fixed sum of money. to appellant Traders Royal Bank (TRB). Admittedly. D891 to the Filriters Guaranty Assurance Corporation. The appellate court ruled that the subject CBCI is not a negotiable instrument. 1971. dated April 27. 165 SCRA 778). For lack of such authority. that is. and having acquired the said certificate from Philfinance as a holder in due course. by the registered owner thereof in person or by his representative duly authorized in writing. to FILRITERS GUARANTY ASSURANCE CORPORATION." Very clearly. the judgment appealed from is AFFIRMED. 11 In the appellate court. Though it is true that when valid reasons exist. or its rights. 17 We disagree with Petitioner. as this merely an equitable remedy. Says the petitioner. as it has. then TRB's payment to Philfinance for the CBCI purchased by it could just as well be considered a payment to Filriters. Thus. in fact. if the principle of piercing the veil of corporate entity were to be applied in this case. D891 is governed by CB Circular No. the registered owner of the CBCI as to bar the latter from claiming. fraud. and may be awarded only in cases when the corporate fiction is used to defeat public convenience.of the parties. though separate corporate entities on paper. the general rule must upheld. 1980. despite the petitioners insistence on the contrary. Philfinance acquired no title or rights under CBCI No. Commissioner of Internal Revenue. 769. D891 from Filriters. resulting in the nullity of the transfer (People vs. to guarantee its (Philfinance's) financing operations. in person. The terms of the CBCI No. 769 which has the force and effect of a law. the assignment did not therefore bind Filriters and violated at the same time Central Bank Circular No. This Certificate shall pass by delivery unless it is registered in the owner's name at any office of the Bank or any agency duly authorized by the Bank. What the parties meant must be determined by what they said. . justify wrong. In the case at bar. otherwise known as the "Rules and Regulations Governing Central Bank Certificates of Indebtedness". thus. or on account hereof. did not have the necessary written authorization from the Board of Directors of Filriters to act for the latter. It is the protection of the interests of innocent third persons dealing with the corporate entity which the law aims to protect by this doctrine. After such registration no transfer thereof shall be valid unless made at said office (where the Certificates has been registered) by the registered owner hereof. The corporate separateness between Filriters and Philfinance remains. yet as they have constituted the writing to be the only outward and visible expression of their meaning. The fact that Filfinance owns majority shares in Filriters is not by itself a ground to disregard the independent corporate status of Filriters. The duty of the court in such case is to ascertain. pierced. for lack of any consideration. 769. or crime was committed upon another. D891 is defective since it acquired the instrument from Filriters fictitiously. In the case at bar. 18 Peiercing the veil of corporate entity requires the court to see through the protective shroud which exempts its stockholders from liabilities that ordinarily. other than the allegation that Filriters is 90% owned by Philfinance. The pertinent question then is. vs. D891 contain a provision on its TRANSFER. who signed the deed of assignment purportedly for and on behalf of Filriters. and the payment by TRB to Philfinance should be construed as payment to Filriters. Section 3 thereof provides that any assignment of registered certificates shall not be valid unless made . a sister corporation. vs. 20 the mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities. and for all other purpose whether or not this Certificate shall be overdue. Since Philfinance own about 90% of Filriters and the two companies have the same corporate officers. CBCI No. have used their corporate fiction to defraud TRB into purchasing the subject CBCI. D891. 640. or if this Certificate is registered as herein authorized. and prompted it to inquire from Filriters as to Philfinance's title over the same or its authority to assign the certificate. there is sufficient showing that the petitioner was not defrauded at all when it acquired the subject certificate of indebtedness from Philfinance. was the transfer of the CBCI from Filriters to Philfinance and subsequently from Philfinance to TRB. the court must be sure that the corporate fiction was misused. considering that the Court of Appeals has held that the CBCI was merely borrowed by Philfinance from Filriters. What happened was Philfinance merely borrowed CBCI No. the assignment made is a complete nullity. a sister corporation. But to do this. Petitioner knew that Philfinance is not registered owner of the CBCI No. The bank or any agency duly authorized by the Bank may deem and treat the bearer of this Certificate. his. duly authorized in writing and similarly noted hereon and upon payment of a nominal transfer fee which may be required. 19 in the absence of such grounds. What is more. the Court of Appeals should have ruled that such veil of corporate entity was. or distinguished one corporation from a seemingly separate one. for the purpose of receiving payment hereof. so as to entitle TRB to have the CBCI registered in its name with the Central Bank? The following are the appellate court's pronouncements on the matter: Clearly shown in the record is the fact that Philfinance's title over CBCI No. Collector of Internal Revenue. to such an extent that injustice. For one. if it were to be consistent therewith.. on the issued raised by TRB that there was a piercing a veil of corporate entity. As it is. xxx xxx xxx We respectfully submit that. 94 Phil. In Liddel & Co. no other words are to be added to it or substituted in its stead. The fact that a non-owner was disposing of the registered CBCI owned by another entity was a good reason for petitioner to verify of inquire as to the title Philfinance to dispose to the CBCI. series of 1980. Petitioner cannot put up the excuse of piercing the veil of corporate entity. her. and such registration is noted hereon. but what is the meaning of the words they have used. We find that the transfer made by Filriters to Philfinance did not conform to Central Bank Circular No. the person in whose name the same is registered as the absolute owner of this Certificate. under which the note was issued. On its face the subject certificates states that it is registered in the name of Filriters. the legal fiction that a corporation is an entity with a juridical personality separate from its stockholders and from other corporations may be disregarded. Section 3. there was really no consideration involved. Que Po Lay. by the registered owner thereof in person or by his representative duly authorized in writing. Article V of which provides that: 87 . This should have put the petitioner on notice. that it never received any payment for that CBCI sold and that said CBCI was sold without its authority. Alfredo O. the transfer of the instrument from Philfinance to TRB was merely an assignment. there is nothing else which could lead the court under circumstance to disregard their corporate personalities. Banaria. nor did it make inquiries as to the ownership of the certificate. in accord with existing law. Published in the Official Gazette on November 19. Although the deed of assignment stated that the transfer was for "value received". or by his attorney. . which purchase now is refused registration by the Central Bank. D891 which it could assign or transfer to Traders Royal Bank and which the latter can register with the Central Bank Petitioner now argues that the transfer of the subject CBCI to TRB must upheld. protect fraud or defend crime or where a corporation is a mere alter ego or business conduit of a person. Moreover. Thus: TRANSFER. not what the parties may have secretly intended as contradistinguished from what their words express. 3M Philippines. were it not for the existing corporate fiction. they could be subject to. and the identity of one shall be maintained as to the other. Inc. a new Certificate shall be issued to the transferee of the registered owner thereof. and is not governed by the negotiable instruments law. For lack of such authority. 165 SCRA 778). there is no showing to the effect that petitioner had any dealings whatsoever with Filriters. disregarding. Thus. Inc. known as the Rules and Regulations Governing Central Bank Certificates of Indebtedness. This is notice to petitioner to secure from Filriters a written authorization for the transfer or to require Philfinance to submit such an authorization from Filriters. series of 1990 21. as the respondent Filriters and Philfinance. In sum. as everyone must. 1990 is hereby AFFIRMED. D891 in the face value of P5000. not without the approval of its Board of Directors. is considered part of the law. the sale from Filriters to Philfinance was fictitious. Did you have the knowledge of this CBCI No. and observe honesty and good faith. sir. Q Why do you know this? A Well. which for all intents.000. 88 . and by the registered owner thereof. who had signed the deed of assignment from Filriters to Philfinance. For this purpose. 891 before 1981? A Yes. in the exercise of his rights and in the performance of his duties. Q Legal reserve for the purpose of what? A Well. be taken out of the said funds. in person or by his representative. Central Bank Circular. purportedly for and in favor of Filriters. An entity which deals with corporate agents within circumstances showing that the agents are acting in excess of corporate authority. sir. As found by the courts a quo. ACCORDINGLY. 3. the anauthorized use or distribution of the same by a corporate officer of Filriters cannot bind the said corporation. As it is. in his testimony given before the court on May 30. Banaria. 22 This is only fair. you see. therefore. the transferee may be designated as the representative of the registered owner. Q Do you know this Central Bank Certificate of Indebtedness. in short. It cannot.Sec. This is how this CBCI came to be purchased by the company. and its requirements. did not have the necessary written authorization from the Board of Directors of Filriters to act for the latter. which are required by law 24 to be maintained at a mandated level. may not hold the corporation liable. — Assignment of registered certificates shall not be valid unless made at the office where the same have been issued and registered or at the Securities Servicing Department. the Insurance companies are required to put up legal reserves under Section 213 of the Insurance Code equivalent to 40 percent of the premiums receipt and further. Central Bank of the Philippines. Consequently. the title of Filriters over the subject certificate of indebtedness must be upheld over the claimed interest of Traders Royal Bank. 1986. SO ORDERED. Manager-inCharge of respondent Filriters. 23 The transfer made by Filriters to Philfinance did not conform to the said.00 subject of this case? A Yes. Nemo potest nisi quod de jure potest — no man can do anything except what he can do lawfully. Philfinance had no title over the subject certificate to convey the Traders Royal Bank. Assignment of Registered Certificates. this was CBCI of the company sought to be examined by the Insurance Commission sometime in early 1981 and this CBCI No. Petitioner. the Insurance Commission requires this reserve to be invested preferably in government securities or government binds. the subject CBCI was acquired by Filriters to form part of its legal and capital reserves. for then. act with justice. and the maintenance of the required reserve fund. This CBCI is an investment of Filriters required by the Insurance Commission as legal reserve of the company. CBCI No. This was pointed out by Elias Garcia. This is fatal to the petitioner's cause. duly authorized in writing. the petition is DISMISSED and the decision appealed from dated January 29. Q Let me take you back further before 1981. cannot feign ignorance of Central Bank Circular 769. without violating the requirements of the law. and therefore void and inexistent. Alfredo O. as there was no consideration for the same. Thus. being a commercial bank. give everyone his due. Concededly. 891 was among the CBCI's that were found to be missing.