LAW ON SALES – PRICE AND OTHER CONSIDERATIONS

G.R. No. L-21489 and L-21628 May 19, 1966 The Narcisos took possession only of the eastern portion of the land in 1951, after the
sale in their favor was made. On February 7, 1952 they filed suit in the Court of First
MIGUEL MAPALO, ET AL., petitioners, Instance of Pangasinan (Civil Case No. 1191) to be declared owners of the entire land,
vs. for possession of its western portion; for damages; and for rentals. It was brought
MAXIMO MAPALO, ET AL., respondents. against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb
who had a house on the western part of the land with the consent of the spouses
Pedro P. Tuason for petitioners. Mapalo and Quiba.
Primicias and Del Castillo for respondents.
The Mapalo spouses filed their answer with a counterclaim on March 17, 1965,
BENGZON, J.P., J.: seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the
western half of the land, on the grounds that their (Mapalo spouses) signatures to the
The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were deed of sale of 1936 was procured by fraud and that the Narcisos were buyers in bad
registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635-square- faith. They asked for reconveyance to them of the western portion of the land and
meter residential land in Manaoag, Pangasinan. Said spouses-owners, out of love and issuance of a Transfer Certificate of Title in their names as to said portion.
affection for Maximo Mapalo — a brother of Miguel who was about to get married —
decided to donate the eastern half of the land to him. O.C.T. No. 46503 was delivered. In addition, the Mapalo spouses filed on December 16, 1957 their own complaint in
As a result, however, they were deceived into signing, on October 15, 1936, a deed of the Court of First Instance of Pangasinan (Civil Case No. U-133) against the
absolute sale over the entire land in his favor. Their signatures thereto were procured aforestated Narcisos and Maximo Mapalo. They asked that the deeds of sale of 1936
by fraud, that is, they were made to believe by Maximo Mapalo and by the attorney and of 1951 over the land in question be declared null and void as to the western half
who acted as notary public who "translated" the document, that the same was a deed of said land.
of donation in Maximo's favor covering one-half (the eastern half) of their land.
Although the document of sale stated a consideration of Five Hundred (P500.00) Judge Amado Santiago of the Court of First Instance of Pangasinan located in the
Pesos, the aforesaid spouses did not receive anything of value for the land. The municipality of Urdaneta tried the two cases jointly. Said court rendered judgment on
attorney's misbehaviour was the subject of an investigation but its result does not January 18, 1961, as follows:
appear on record. However we took note of the fact that during the hearing of these
cases said notary public was present but did not take the witness stand to rebut the WHEREFORE, judgment is hereby rendered as follows, to wit:
plaintiffs' testimony supporting the allegation of fraud in the preparation of the
document. (a) dismissing the complaint in Civil Case No. 11991;
(b) declaring Exhibit A, plaintiffs in Case No. 11991 and Exhibit 1, defendants in
Following the execution of the afore-stated document, the spouses Miguel Mapalo and Case No. U-133 as a donation only over the eastern half portion of the above-
Candida Quiba immediately built a fence of permanent structure in the middle of their described land, and as null and void with respect to the western half portion
land segregating the eastern portion from its western portion. Said fence still exists. thereof;
The spouses have always been in continued possession over the western half of the (c) declaring as null and void and without legal force and effect Transfer
land up to the present. Certificate of Title No. 12829 issued in favor of Maximo Mapalo as regards the
western half portion of the land covered therein;
Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered the (d) declaring as null and void Transfer Certificate of Title No. 11350 in the names
deed of sale in his favor and obtained in his name Transfer Certificate of Title No. of the Narcisos insofar as the western half portion of the land covered therein
12829 over the entire land. Thirteen years later on October 20, 1951, he sold for is concerned;
P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico and Miguel all (e) ordering the spouses Mapalo and Quiba and the Narcisos to have the above-
surnamed Narciso. The sale to the Narcisos was in turn registered on November 5, described land be subdivided by a competent land surveyor and that the
1951 and Transfer Certificate of Title No. 11350 was issued for the whole land in their expenses incident thereto be borne out by said parties pro rata;
names. (f) ordering the Register of Deeds of Pangasinan to issue in lieu of Transfer
Certificate of Title No. 11350 two new titles upon completion of the
subdivision plan, one in favor of the spouses Miguel Mapalo and Candida
Quiba covering the western half portion and another for the Narcisos
1| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
covering the eastern half portion of the said land, upon payment of the legal to them, rendering it no longer proper herein to examine the existence, validity
fees; meanwhile the right of the spouses Mapalo and Quiba is hereby ordered efficacy of said donation as to said eastern portion.1äwphï1.ñët
to be annotated on the back of Transfer Certificate of Title No. 11350; and
(g) sentencing Maximo Mapalo and the Narcisos to pay the costs. Now, as to the western portion, however, the fact not disputed herein is that no
donation by the Mapalo spouses obtained as to said portion. Accordingly, we start
IT IS SO ORDERED. with the fact that liberality as a cause or consideration does not exist as regards the
western portion of the land in relation to the deed of 1936; that there was no donation
The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963, the with respect to the same.
Court of Appeals reversed the judgment of the Court of First Instance, solely on the
ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been It is reduced, then, to the question whether there was an onerous conveyance of
obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect to
to annul the same, within four years from notice of the fraud, had long prescribed. It said western portion. Specifically, was there a cause or consideration to support the
reckoned said notice of the fraud from the date of registration of the sale on March existence of a contrary of sale?
15, 1938. The Court of First Instance and the Court of Appeals are therefore
unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It The rule under the Civil Code, again be it the old or the new, is that contracts without
was only on prescription that they lost in the Court of Appeals. a cause or consideration produce no effect whatsoever.2 Nonetheless, under the Old
Civil Code, the statement of a false consideration renders the contract voidable, unless
From said decision of the Court of Appeals, the Mapalo spouses appealed to this Court. it is proven that it is supported by another real and licit consideration.3 And it is
further provided by the Old Civil Code that the action for annulment of a contract on
And here appellants press the contention that the document dated October 15, 1936, the ground of falsity of consideration shall last four years, the term to run from the
purporting to sell the entire land in favor of Maximo Mapalo, is void, not merely date of the consummation of the contract.4
voidable, as to the western portion of the land for being absolutely simulated or
fictitious. Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should
be asked whether its case is one wherein there is no consideration, or one with a
Starting with fundamentals, under the Civil Code, either the old or the new, for a statement of a false consideration. If the former, it is void and inexistent; if the latter,
contract to exist at all, three essential requisites must concur: (1) consent, (2) object, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936
and (3) cause or consideration.1 The Court of Appeals is right in that the element of stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact,
consent is present as to the deed of sale of October 15, 1936. For consent was however, said consideration was totally absent. The problem, therefore, is whether a
admittedly given, albeit obtained by fraud. Accordingly, said consent, although deed which states a consideration that in fact did not exist, is a contract without
defective, did exist. In such case, the defect in the consent would provide a ground for consideration, and therefore void ab initio, or a contract with a false consideration,
annulment of a voidable contract, not a reason for nullity ab initio. and therefore, at least under the Old Civil Code, voidable.

The parties are agreed that the second element of object is likewise present in the According to Manresa, what is meant by a contract that states a false consideration is
deed of October 15, 1936, namely, the parcel of land subject matter of the same. one that has in fact a real consideration but the same is not the one stated in the
document.
Not so, however, as to the third element of cause or consideration. And on this point
the decision of the Court of Appeals is silent. In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil.
921, is squarely applicable herein. In that case we ruled that a contract of purchase
As regards the eastern portion of the land, the Mapalo spouses are not claiming the and sale is null and void and produces no effect whatsoever where the same is without
same, it being their stand that they have donated and freely given said half of their cause or consideration in that the purchase price which appears thereon as paid has
land to Maximo Mapalo. And since they did not appeal from the decision of the trial in fact never been paid by the purchaser to the vendor.
court finding that there was a valid and effective donation of the eastern portion of
their land in favor of Maximo Mapalo, the same pronouncement has become final as Needless to add, the inexistence of a contract is permanent and incurable and cannot
be the subject of prescription. In the words of Castan: "La inexistencia es perpetua e

2| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
insubsanable no pudiendo ser objecto de confirmacion ni prescripcion (Op. cit., p. this situation, the Narcisos may be considered purchasers in value but certainly
644.) In Eugenio v. Perdido, 97 Phil. 41, 42-43, involving a sale dated 1932, this Court, not as purchasers in good faith. ... (pp. 97-98, Record on Appeal.)
speaking through Justice Cesar Bengzon, now Chief Justice, stated: And said finding — which is one of fact — is found by us not a bit disturbed by the
Court of Appeals. Said the Court of Appeals:
Under the existing classification, such contract would be "inexisting" and "the
action or defense for declaration" of such inexistence "does not prescribe". (Art. In view of the conclusion thus reached, it becomes unnecessary to pass on the
1410, New Civil Code). While it is true that this is a new provision of the New Civil other errors assigned. Suffice it to say that, on the merits the appealed decision
Code, it is nevertheless a principle recognized since Tipton vs. Velasco, 6 Phil. 67 could have been upheld under Article 1332 of the new Civil Code and the following
that "mere lapse of time cannot give efficacy to contracts that are null and void". authorities: Ayola vs. Valderrama Lumber Manufacturers Co., Inc., 49 O.G. 980, 982;
Trasporte vs. Beltran, 51 O.G. 1434, 1435; Cortez vs. Cortez, CA-G.R. No. 18451-R,
Anent the matter of whether the Narcisos were purchasers in good faith, the trial August 8, 1961; Castillo vs. Laberinto, CA-G.R. No. 18118-R, December 20, 1961;
court in its decision resolved this issue, thus: and 13 C.J. 372-373, as well as the several facts and circumstances appreciated by
the trial court as supporting appellees' case.
With regard to the second issue, the Narcisos contend that they are the owners of
the above-described property by virtue of the deed of sale (Exh. B, plaintiffs in thereby in effect sustaining — barring only its ruling on prescription — the judgment
11991 and Exh. 2, defendants in U-133) executed in their favor by Maximo Mapalo, and findings of the trial court, including that of bad faith on the part of the Narcisos in
and further claim that they are purchasers for value and in good faith. This court, purchasing the land in question. We therefore see no need to further remand this case
however, cannot also give weight and credit on this theory of the Narcisos on the to the Court of Appeals for a ruling on this point, as appellees request in their brief in
following reasons: Firstly, it has been positively shown by the undisputed the event we hold the contract of 1936 to be inexistent as regards the western portion
testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed for of the land.
some days on the western side (the portion in question) of the above-described
land until their house was removed in 1940 by the spouses Mapalo and Quiba; In view of defendants' bad faith under the circumstances we deem it just and
secondly, Pacifica Narciso admitted in his testimony in chief that when they equitable to award, in plaintiffs' favor, attorneys' fees on appeal, in the amount of
bought the property, Miguel Mapalo was still in the premises in question (western P1,000.00 as prayed for in the counterclaim.
part) which he is occupying and his house is still standing thereon; and thirdly,
said Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness Wherefore, the decision of the Court of Appeals is hereby reversed and set aside, and
categorically declared that before buying the land in question he went to the house another one is hereby rendered affirming in toto the judgment of the Court of First
of Miguel Mapalo and Candida Quiba and asked them if they will permit their elder Instance a quo, with attorney's fees on appeal in favor of appellants in the amount of
brother Maximo to sell the property. P1,000.00, plus the costs, both against the private appellees. So ordered.

Aside from the fact that all the parties in these cases are neighbors, except Maximo
Mapalo the foregoing facts are explicit enough and sufficiently reveal that the
Narcisos were aware of the nature and extent of the interest of Maximo Mapalo
their vendor, over the above-described land before and at the time the deed of sale
in their favor was executed.

Upon the aforestated declaration of Pacifico Narciso the following question arises:
What was the necessity, purpose and reason of Pacifico Narciso in still going to
the spouses Mapalo and asked them to permit their brother Maximo to dispose of
the above-described land? To this question it is safe to state that this act of Pacifico
Narciso is a conclusive manifestation that they (the Narcisos) did not only have
prior knowledge of the ownership of said spouses over the western half portion
in question but that they also have recognized said ownership. It also conclusively
shows their prior knowledge of the want of dominion on the part of their vendor
Maximo Mapalo over the whole land and also of the flaw of his title thereto. Under
3| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
G.R. No. 83974 August 17, 1998 although, upon motion for reconsideration by the petitioners showing compliance, it was
reinstated7 on September 2, 1991.
SPOUSES NARCISO RONGAVILLA and DOLORES RONGAVILLA, petitioners,
vs. Considering the circumstances in this case, including the relationship of the parties, it
COURT OF APPEALS and MERCEDES DELA CRUZ and FLORENCIA DELA CRUZ, behooves this Court now to examine closely and carefully the questioned judgment and
respondents. the record below. For the Court could not but be mindful of the codal admonition that:

QUISUMBING, J.: In all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
For review on appeal by certiorari are the Decision 1 of the Court of Appeals in CA-G.R. CV weakness, tender age, or other handicap, the courts must be vigilant for his protection.
No. 06543, promulgated on March 11, 1988, and the Resolution 2 dated June 28, 1988, (Art. 24, Civil Code)
denying petitioners' motion for reconsideration.
From the facts found below, it appears that in the month of May, 1976, the private
The appealed decision affirmed in toto the judgment of the Regional Trial Court of Pasay respondents borrowed the amount of two thousand (P2,000) from the petitioners for the
City in Civil Case No. LP-8790-P, which disposed of the controversy as follows: purpose of having their (respondents') dilapidated rooftop repaired.
WHEREFORE, judgment is hereby rendered declaring void and inexistent the Deed of A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited their
Absolute Sale (Exh. "1") dated June 3, 1976 allegedly executed by plaintiffs in favor of aunts' home, bringing with them a document for the signature of their aunts. The
defendant spouses, which document is now particularly identified as Doc. No. 164; document is admittedly typewritten in English. When asked in Tagalog by one of the aunts,
Page No. 34; Book No. I; Series of 1976 in the Notarial Register of Arcadio Espiritu, a respondent Mercedes de la Cruz, what the paper was all about, Dolores Rongavilla
Notary Public for and in the Province of Cavite. Further, defendant spouses are hereby answered also in Tagalog, that it was just a document to show that the private respondents
ordered — had a debt amounting to P2,000. On account of that representation, private respondents
signed the document.
a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property
covered by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for In September 1980, or after a lapse of over four years, petitioner Dolores Rongavilla went
the Province of Rizal; to private respondents' place and asked them to vacate the parcel in question, claiming
b. To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and that she and her husband were already the new owners of the land.
c. To pay the costs of the suit.3
Surprised by petitioners' moves, private respondents with the help of friends went to the
As gleaned from the record, the private parties are closely related. Plaintiffs below, now Office of the Register of Deeds of the Province of Rizal to verify the matter. They discovered
the private respondents, are the aunts of herein petitioner Dolores Rongavilla. Both that their Certificate of Title had been cancelled and a new one, Transfer Certificate of Title
spinsters, they earn their livelihood as embroiderers ("magbuburda") and dressmakers; No. S-28903, had been issued in favor of petitioners. They further discovered that said
although unschooled in English, they are however able to read and write in Tagalog. Since parcel of land had been mortgaged with the Cavite Development Bank by the petitioners.
they are of advanced age (Mercedes de la Cruz, 60 and Florencia de la Cruz, 71), their day It was only then that the private respondents realized that the document they had
to day activities were confined mostly close to home. previously been asked by their nieces to sign was a deed of sale.
The property subject of this controversy between kith and kin is a parcel of land, located On February 3, 1981, private respondents filed with the Court of First Instance, now
in Manuyo, Las Piñas, Rizal (now Metro Manila) owned by private respondents, in the Regional Trial Court, of Pasay City the sworn complaint 8 to have the purported deed of
proportion of one-half (1/2) pro-indiviso, with another niece named Juanita Jimenez as co- sale declared void and inexistent, for being fictitious and simulated, and secured by means
owner of the other one-half. The whole parcel consisted of 131 square meters and was of fraud and misrepresentation. They alleged that they did not sell their property in
covered by Original Certificate of Title (OCT) No. 5415 of the Register of Deeds of the question to the defendants; that they did not receive any consideration on the supposed
Province of Rizal. This OCT, as well as the Transfer Certificate of Title (TCT) No. S-28903 sale; that their Original Certificate of Title was cancelled and TCT No. S-28903 was issued
after the parcel was subdivided, was kept in the possession of Juanita Jimenez, who is the in favor of defendants (herein petitioners), who thereafter mortgaged said title for a total
elder sister of Dolores Rongavilla. of P40,000.00 to the damage and prejudice of the plaintiffs. They also claimed moral and
exemplary damages, as the court might determine.
Although the basic fact situation here might appear all too familiar, the legal controversy
itself is notable for having passed through the entire channel of the justice system. 4 The Petitioners duly filed their answer 9 after the denial of their motion to dismiss, alleging
present petition before us was given due course per Resolution 5 dated June 26, 1989; but that plaintiffs (now the private respondents) sold their parcel of land voluntarily, that
it was denied on September 20, 1989, for non-compliance with certain requirements; 6 there was consent to the deed of sale, that there was sufficient consideration therefor, and

4| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
that the document on the sale was complete in itself and in due form, enabling the Register To resolve this pivotal issue, it must be noted that private respondents, as plaintiffs below,
of Deeds to cancel their old TCT and issue a new one. Petitioners further stated that private based their complaint to declare the disputed deed void and inexistent on two
respondents were fully apprised by the Notary Public, Atty. Arcadio G. Espiritu, on what fundamental grounds: (1) lack of consent and (2) want of consideration. Under oath, they
the document was all about, and having understood the explanation made by said Notary strongly denied selling or even just agreeing to sell, their parcel of land to their niece and
Public, they voluntarily affixed their signatures on said document. Petitioners also nephew-in-law. During the hearing, they also denied going to and appearing before the
asserted as affirmative and/or special defenses that prescription had set in and that Notary Public who prepared the deed of sale. They also vehemently denied receiving any
private respondents no longer had a cause of action, and that the deed of sale contained consideration for the alleged sale. They added that their signatures on the purported deed
all the pre-requisites of a contract, namely consent of the parties, consideration or a price of sale were obtained by fraud and misrepresentation as petitioners had misled them to
certain, and determinate thing or object; and could no longer be annulled. They also believe the document was just a paper to evidence a debt of P2,000 they obtained to buy
claimed moral and exemplary damages. G.I. sheets for the repair of their leaking roof. 12 Private respondents were shocked and
got sick when they were told by petitioners that they (respondents) were no longer the
The trial court's judgment, quoted at the outset, being adverse to the petitioners, they owners of the land. 13
seasonably appealed. And after their rebuff at the appellate level, they come now to this
Court on certiorari under Rule 45 of the Rules of Court, citing the following grounds for On these two points of consent and consideration, the trial court found that:
their petition:
. . . . A careful analysis and meticulous evaluation of the evidence on record has
(1) It is clear and patent error of the Court of Appeals to declare as void and inexistent convinced the Court that the sale of their property to the defendants was farthest from
the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976. the plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed the
(2) The Court of Appeals committed grave error of law in holding that the action to document which turned out to be a deed of sale, they were misled by defendant
declare nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe. Dolores Rongavilla and her sister Juanita Jimenez into believing that what they signed
(3) The Court of Appeals committed grave abuse of discretion in relying on a was a document acknowledging the loan of P2,000.00 extended them by said
purported Certificate of the Bureau of Internal Revenue which was not offered in defendant.
evidence.
(4) The Court of Appeals committed grave error of law and abuse of discretion and The Deed of Absolute Sale (Exh. "1") mentions a consideration of P2,000.00. Three
grave abuse of discretion amounting to lack or excess of jurisdiction in ordering years after the alleged sale, the same property was mortgaged by defendant spouses
the petitioners to reconvey the subject parcel of land to the private respondents. with the Cavite Development Bank for P40,000.00. Clearly enough, the gross
10 inadequacy and unconsciounableness [sic] of the consideration deters the Court from
subscribing to defendants' theory that plaintiffs sold the property to them. It is more
With a slight variation but consistent with the grounds they have relied on, petitioners reasonable to assume that the amount of P2,000.00 mentioned in the deed refers to
raise in their Memorandum 11 the following: the loan defendants extended to plaintiffs for the same amount.

ISSUES Plaintiffs are now of advanced age. Their only property is the lot in question and the
house erected thereon. . . . .
1. Did the Court of Appeals commit a clear and patent error in declaring as "void
and inexistent" the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976? As there is no indication that plaintiffs were in dire need of money, except for a few
2. Did the Court of Appeals commit grave error in holding that the action to annul [sic] amount necessary for the repair of the roof of their house for which they obtained
the Deed of Sale (Exhibit 1) does not prescribe? a loan of P2,000.00 from defendants, there was no reason for plaintiffs to dispose of
3. Did the Court of Appeals commit grave abuse of discretion in relying on a their property. To do so would be inconsistent with the regular norm of human
purported Certificate of the Bureau of Internal Revenue which was not offered conduct and the natural course of events. It is not in accord with the natural
in evidence? promptings and instincts of human nature. 14
4. Did the Court of Appeals commit grave error of law and grave abuse of
discretion amounting to lack of jurisdiction or in excess of jurisdiction in To these findings by the trial court, the Court of Appeals in its own decision assented. In
ordering petitioners to reconvey the subject parcel of land to the private addition, it laid stress an the point of lack of consideration by quoting agreeably the trial
respondents? judge's holding thereon:

These issues may be synthesized into one: Did the respondent Court of Appeals commit By more than mere preponderance of evidence plaintiffs [herein private respondents]
reversible error when it upheld the trial court's judgment that the disputed Deed of Sale have established the merit of their cause of action. The Court is of the opinion and so
(Exhibit "1") is void and inexistent? holds that there was fraud exercised by defendant Dolores Rongavilla and her sister
Juanita Jimenez in securing the signature of the Deed of Absolute Sale (Exh. "1") and

5| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
there was no consideration whatsoever for the alleged sale. Undoubtedly, the said deed A. It was explained by the notary public that the property is being sold by them to us
of sale is simulated, fictitious and void. 15 and that the consideration was only P2,000.00 as appearing in the document in order
that we may be able to save for the payment of taxes and documentary stamps.
And before concluding, the appellate court reiterated the proper characterization of the
deed of sale in question, not as an annullable contract, but as a void and inexistent contract Q. Did the plaintiffs not say anything when the notary public according to you
as found by the trial court: explained that instead of P7,800.00, P2,000.00 will be stated in the document?

. . . In the case at bar, however, We are dealing not merely with a voidable contract A. They did not say anything because we gave to them the amount of the consideration
which is tainted with fraud, mistake, undue influence, violence or intimidation which agreed between us the sum of P7,800.00. (t.s.n., Sept. 2, 1982, pp. 9-10) 21
may justify the annulment of a contract, but with a contract that is null and void ab
initio. By their own testimony, the petitioners are pictured as not exactly averse to bending the
truth, particularly the purported consideration. Sadly, the irony of it is that while they
In the present case, plaintiffs-appellees declared under oath in their complaint that claimed they were regularly paying taxes on the land in question they had no second
they signed the alleged document without knowing that said document was deed of thoughts stating at the trial and later on appeal that they had resorted to doctoring the
absolute sale. This means that plaintiffs-appellees consent was not only vitiated, but price stated in the disputed Deed of Sale, allegedly "to save on taxes". That admission
that plaintiffs-appellees have not given their consent at all. And since there was no surely opens the door to questions on the integrity, genuineness and veracity of said public
consent, the deed of absolute sale is, therefore, null and void ab initio. . . . 16 instrument.

Dissatisfied, petitioners now seek from this Court the reversal of the judgment below. They Thus, the trial court could not be said to err in asserting that "while it is true that public
insist in their petition before us that the deed is valid; and that because of the statute of documents are presumed genuine and regular under the provisions of the Rules of Court,
limitations, after the lapse of four years from its execution and registration, it could no this presumption is a rebuttable presumption which may be overcome by clear, strong and
longer be annulled. convincing evidence." 22

They assert that "the presumption that contracts are presumed to be valid and to be Moreover, Exhibit "1", the deed itself, shows that contrary to the testimony of the notary
supported by lawful and good consideration has not been overthrown;" and that "a public, who appeared as a witness for petitioners, what was originally typed therein was
stipulation in consideration of one dollar is just as effectual and valuable as a larger sum the amount of "Three Thousand Pesos (P3,000)", which later on was substituted by the
stipulated or paid". 17 handwritten amount now of "Two Thousand Pesos (P2,000)." 23 There is no need to
speculate on the motivation for this alteration. The notary public might have just wanted
They further assert that since private respondents signed the Deed of Sale, as a public to further save on taxes, rather than short-change the coffers of the government. But,
instrument, the truth of the recitals therein embodied could only be impugned and again, the whole fabric of petitioners' claim to the sanctity of the deed as public instrument
disproved, not by mere preponderance of evidence, but by evidence of "the clearest and had thereby been shredded.
most satisfactory character, convincing and overwhelming." 18 Petitioners further state
that since they have been the ones paying real estate taxes on the property, rather than If as petitioners claimed on trial, the price paid was P7,800 while their deed showed only
their aunts, the latter by their acts had confirmed the deed executed by them. 19 P2,000, after the amount of P3,000 in the deed was altered, one may well inquire: which
figure could this Court believe? Could one say that the trial and the appellate courts both
Despite the petitioners' insistence that the deed of sale is presumed valid and, being erred in holding that no consideration passed from the buyer to the seller?
registered, could not be disturbed anymore, we however find their arguments and
ratiocination less than persuasive. While petitioners would not want the deed of sale to be But petitioners herein would further take to task the appellate court for grave abuse of
impugned, they themselves contradict the recitals therein. On the vital point of discretion, as well as for a reversible error, in having relied on the "purported Certification
consideration, they and their witnesses, namely Juanita Jimenez and Atty. Arcadio Espiritu of the Bureau of Internal Revenue which was not offered in evidence". Since this is a
repeatedly declared that the true consideration paid for the sale of the land was not P2,000 petition under Rule 45, however, we will not dwell on the alleged grave abuse of discretion
as stated in their own Exhibit "1", the Deed of Sale, but in fact P7,800.00. 20 but limit our observation to the alleged error of law. The BIR certificate was the subject of
the testimony of witnesses at the hearing where both parties took full advantage of the
Petitioner Dolores Rongavilla herself on cross-examination testified as follows: opportunity for direct and cross-examination as well as rebuttal and sur-rebuttal. 24 On
the witness stand, private respondents as plaintiffs below denied that they had any tax
ATTY. RODRIGUEZ:
account number nor even residence certificates. They were supported by their witnesses,
Q. You stated that you were present when this was explained by the notary public, how testifying also under oath. They contradicted the claim of the petitioners' lawyer-notary
did the notary public explain this deed of sale in English or Tagalog? public, that the disputed deed of sale was complete and in due form and was signed in his
presence by the private respondents. They further denied even having gone to the office

6| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
of the lawyer-notary public in Bacoor, Cavite, on June 3, 1976, the date of execution shown misrepresentation of [her nephew] Jaime Rivero that the contract she was signing was
in the deed, or on any other date. While indeed the BIR certificate was not formally offered one of mortgage.
in evidence, hence no longer available on review, the record would show that said BIR
certificate was presented during the testimony on rebuttal of respondent Mercedes de la The land in question is located in the municipality of Polo, Bulacan, very near Manila.
Cruz: 25 It has an area of 2 hectares, 32 ares and 45 centares. The consideration for the sale of
said land is only P5,000.00 which is not only grossly inadequate but shocking to the
ATTY. RODRIGUEZ: conscience . . . 29

According to the defendants, there was the alleged deed of sale executed by you and In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of land in Tayabas,
your sister in favor of the defendants before Notary Public Arcadio G. Espiritu. It Quezon, the Court confronted a similar question:
appears you have presented Tax Account No. (TAN) 2345-463-6 and your sister
Florencia de la Cruz also presented Tax Account No. (TAN) 2345-468-4. Now, do you The first question presented is whether the contract of sale executed by Isabel Flores
have any tax account number? in favor of Joaquin Bas is valid or not.

WITNESS: By relying upon the documents executed in his favor by Isabel Flores evidencing the
contract of sale, Joaquin Bas insists that there has been a perfect and valid contract of
None, sir. 26 sale of real estate between them and that he paid to her the consideration of P20,000
mentioned in said documents. . . . .
xxx xxx xxx
Isabel Flores, on the other hand, maintained that there was neither a real sale nor did
ATTY. RODRIGUEZ: she receive a centavo from the defendant, as the price of said sale, . . . 30
I am showing to you this certification from the "Kawanihan ng Rentas, Quezon City, Concluded the Court, after reviewing the series of transactions on record:
dated June 16, 1982, addressed to Miss Florencia de la Cruz and Miss Mercedes de la
Cruz, Las Piñas, Metro-Manila, issued by the accounting chief, stating that in reply to It is then evident that the contract of sale mentioned in the notarial document of May
you[r] request dated June 14, 1982, requesting certification of your TAN, the records 7, 1915, lacks cause or consideration and is therefore null and void and without any
of their office do not show that you were issued any tax account number, what relation effect whatsoever according to Article 1275 of the Civil Code, for it has been
has this document which for purposes of identification, we respectfully request that satisfactorily and conclusively proven that the purchaser Joaquin Bas has not paid
the same be marked Exhibit "C" to the certification issued by the BIR? Isabel Flores for the price of the lands that the latter has sold to him, and after being
contented with having for a long time given several promises showing that he had no
WITNESS: intention to comply with his contract, he concluded by executing four promissory
notes payable to the vendor, which recite the aforementioned purchase price and
Yes, this is the one. 27
which were not also paid, there appearing in the record facts from which it can be
Now even if the matter of the official certification by the BIR is set aside, the whole inferred that fraud has been committed. 31
question of the TAN being fake or belonging to somebody else, would boil down to one of
This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:
credibility between the two camps. Unfortunately for the petitioners herein, the trial court
found them and their witnesses far from credible. As remarked by the trial Judge, "the The rule under the Civil Code, again be it the old or the new, is that contracts without
declarations of defendants [herein petitioners] do not inspire rational belief." 28 It would a cause or consideration produce no effect whatsoever. 32
thus appear that the trial court and the appellate court committed no grave error of law,
that would impel us on this point to override their judgment. The "problem" before the Court "is whether a deed which states a consideration that in
fact did not exist, is a contract, without consideration, and therefore void ab initio, or a
Neither can we give assent to the assertion of petitioners that the appealed Court of contract with a false consideration, and therefore, at least under the Old Civil Code,
Appeals (CA) decision here as well as the judgment below is "contrary to settled voidable." This problem arose, as observed by the Court, because the questioned "deed of
jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411 (1977) had occasion sale" between the brothers Magpalo, in 1936, stated that it had for its consideration Five
already to affirm a trial court's judgment declaring null and void the questioned deed of Hundred (P500.00) Pesos. In fact, however, said "consideration was totally absent." 33
sale where it found:
Thus, the Court concluded:
The undisputed facts of record support the finding of the trial court that the consent of
Ana Concepcion to the deed of sale was obtained through fraudulent

7| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil. incurable, hence it cannot be cured either by ratification or by prescription. . . . There is no
921 is squarely applicable herein. In that case we ruled that a contract of purchase and need of an action to set aside a void or inexistent contract; in fact such action cannot
sale is null and void and produces no effect whatsoever where the same is without logically exist. However, an action to declare the non-existence of the contract can be
cause or consideration in that the purchase price which appears thereon as paid has in maintained; and in the same action, the plaintiff may recover what he has given by virtue
fact never been paid by the purchaser to the vendor. 34 of the contract." 40

Turning now to the issue of prescription, it follows that once the disputed deed is found to Given the circumstances of the case and there being no reversible error in the challenged
be inexistent and void, the statute of limitations cannot apply. As the courts below ruled, decision, we are in accord with the judgment below and find the petitioners' appeal
the cause of action for its declaration as such is imprescriptible. 35 Petitioners-spouses without merit. For as well said in the Court of Appeals' Decision and Resolution under
contend, however, that this is contrary to settled jurisprudence because the applicable review, "We cannot contemplate of the rather absurd situation, which defendants-
precedent should be Pangadil v. CFI of Cotabato, 116 SCRA 347 (1982). But the fact appellants would ineluctably lead [u]s to, where plaintiffs-appellees would sell their only
situation of that case differs radically from the present controversy. There the Court house, in which they have lived for so many years, in order to secure the measly sum of
upheld the dismissal of the action to declare a document known as "Ratificacion de Una P2,000.00 to repair the roof of their only house, which would all be lost to them anyway
Venta" as inexistent and void after finding that it was "not a contract wherein the parties upon the consummation of the sale. They would then become homeless, and the repaired
do not intend to be bound at all," that no circumstance was alleged to sustain the roof would be of no use to them." 41 Experience which is the life of the law — as well as
contention "that the execution of the aforesaid document is contrary to public policy;" 36 logic and common sense — militates against the petitioners' cause.
and that for 27 years the petitioners did not even care to verify the status of the land in
question. "Their inaction for such a considerable period of time reflects on the credibility WHEREFORE, the instant petition is hereby DENIED. The Decision and the Resolution of
of their pretense that they merely intended to confirm an oral mortgage, instead of a sale the Court of Appeals in CA-G.R. CV No. 06543 are hereby AFFIRMED.
of the land in question." 37
Costs against petitioners.
Here in the present case, there is no doubt about the credibility of plaintiffs below (herein
SO ORDERED.
private respondents) in pursuing their cause promptly and forcefully. They never
intended to sell, nor acceded to be bound by the sale of their land. Public policy is also well
served in defending the rights of the aged to legal protection, including their right to
property that is their home, as against fraud, misrepresentation, chicanery and abuse of
trust and confidence by those who owed them candor and respect.

More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987), where this
Court found that:

The Civil Code provides in Article 1391 that an action to annul a contract on the ground
of vitiated consent must be filed within four years from the discovery of the vice of
consent. In the instant case, however, we are dealing not with a voidable contract
tainted with fraud, mistake, undue influence, violence or intimidation that can justify
its nullification, but with a contract that is null and void ab initio.

Paulina Baranda declared under oath in her complaint that she signed the deeds of sale
without knowing what they were, which means that her consent was not merely
marred by the above-stated vices, so as to make the contracts voidable, but that she
had not given her consent at all. We are also satisfied that there was no void
consideration either for the alleged transfers, for reasons already discussed. Lack of
consent and consideration made the deeds of sale void altogether 38 and rendered them
subject to attack at any time, conformably to the rule in Article 1410 that an action to
declare the inexistence of void contracts "does not prescribe". 39

And if the passage of time could not cure the fatal flaw in the inexistent and void contract,
neither could an alleged ratification or confirmation thereof. Further, as in the case before
us, reconveyance is proper. "The defect of inexistence of a contract is permanent and
8| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
G.R. No. 120724-25 May 21, 1998 3. Although it would appear in the document that petitioner is the vendor, it is Josie
who will provide the money for the redemption of the properties with her own
FERNANDO T. MATE, petitioner, funds;
vs. 4. Titles to the properties will be delivered to private respondent but the sale will
THE HONORABLE COURT OF APPEALS and INOCENCIO TAN, respondents. not be registered in the Register of Deeds and annotated on the titles.
MARTINEZ, J.: To assure petitioner that Josie will redeem the aforesaid properties, she issued to him
two (2) BPI checks both postdated December 15, 1986. One check was for
In this petition for review, petitioner assails the Decision 1 of the Court of Appeals dated
P1,400,000.00 supposedly for the selling price and the other was for P420,000.00
August 29, 1994 in CA-G.R. CV No. 28225-26, which affirmed with modification the
corresponding to the interests for 6 months. Immediately thereafter petitioner
decision of the trial court, the dispositive portion of which reads, to wit:
prepared the Deed of Sale with Right to Repurchase (Exh. A) and after it has been
WHEREFORE, this Court finds the Deed of Sale with Right of Repurchase executed signed and notarized, it was given to private respondent together with the titles of the
October 6, 1986 valid and binding between plaintiff and defendant (as vendor and properties and the latter did not register the transaction in the Register of Deeds as
vendee-a-retro respectively); that as the period to redeem has expired, ownership agreed upon.
thereof was consolidated by operation of law, and the Register of Deeds is hereby
On January 14, 1987, petitioner deposited the check for P1,400,000.00 (Exh. B) in his
ordered to REGISTER this decision consolidating the defendant's ownership over the
account at the United Coconut Planters Bank and the other check for P420,000.00 (Exh.
properties covered by Transfer Certificate of Title No. T-90-71, covering Lot 8; Original
D) in his account at METROBANK preparatory to the redemption of his properties.
Certificate of Title No. N-311 covering Lot 5370, all of the Tacloban Cadastre, and
However, both of them were dishonored by the drawee bank for having been drawn
issuing to defendant Inocencio Tan his titles after cancellation of the titles presently
against a closed account. Realizing that he was swindled, he sent Josie a telegram about
registered in plaintiff Fernando T. Mate's name and that of his wife.
her checks and when she failed to respond, he went to Manila to look for her but she
The plaintiff Fernando Mate is further ordered to pay defendant the sum of ONE could not be found. So he returned to Tacloban City and filed Criminal Cases Nos. 8310
HUNDRED FORTY THOUSAND (P140,000.00) PESOS, for and as attorney's fees. and 8312 against her for violation of B.P. 22 but the cases were later archived as the
accused (Josie) could not be found as she went into hiding. To protect his interest, he
With costs against the plaintiff Fernando Mate. filed Civil Case No. 7396 of the Regional Trial Court of Leyte, Branch VII, entitled
"Fernando T. Mate vs. Josefina R. Rey and Inocencio Tan" for Annulment of Contract
SO ORDERED.2 with Damages. Defendant Josefina R. Rey (Josie) was declared in default and the case
proceeded against private respondent. But during the trial the RTC court asked private
The facts of this case, as summarized in the petition, are reproduced hereunder:
respondent to file an action for consolidation of ownership of the properties subject of
On October 6, 1986 Josefina R. Rey (hereafter referred to as "Josie" for short) and the sale and pursuant thereto he filed Civil Case No. 7587 that was consolidated with
private respondent went to the residence of petitioner at Tacloban City. Josie who is a the case he filed earlier which were later decided jointly by the trial court in favor of
cousin of petitioner's wife solicited his help to stave off her and her family's private respondent and was subsequently appealed to respondent Court that affirmed
prosecution by private respondent for violation of B.P. 22 on account of the rubber it with modification. Thereupon, petitioner filed a motion to reconsider the decision
checks that she, her mother, sister and brother issued to private respondent but it was denied. Hence, the instant petition for review.3
amounting to P4,435067.00. She requested petitioner to cede to private respondent
In this petition for review, the petitioner presents as the sole issue the validity of the Deed
his three (3) lots in Tacloban City in order to placate him. On hearing Josie's proposal
of Sale with Right to Repurchase. He contends that it is null and void for lack of
he immediately rejected it as he owed private respondent nothing and he was under
consideration because allegedly no money changed hands when he signed it and the
no obligation to convey to him his properties. Furthermore, his lots were not for sale.
checks that were issued for redemption of the properties involved in the sale have been
Josie explained to him that he was in no danger of losing his properties as he will
dishonored by the drawee bank for having been drawn against a closed account. 4
merely execute a simulated document transferring them to private respondent but
they will be redeemed by her with her own funds. After a long discussion, he agreed to The contention is without merit.
execute a fictitious deed of sale with right to repurchase covering his three (3) lots
mentioned above subject to the following conditions: There was a consideration. The respondent court aptly observed that —

1. The amount to be stated in the document is P1,400,000.00 with interest thereon In preparing and executing the deed of sale with right of repurchase and in delivering
at 5% a month; to Tan the land titles, appellant actually accommodated Josefina so she would not be
2. The properties will be repurchased within six (6) months or on or before April 4, charged criminally by Tan. To ensure that he could repurchase his lots, appellant got a
1987; check of P1,400,000.00 from her. Also, by allowing his titles to be in possession of Tan
9| Elixir C. Langanlangan
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020
LAW ON SALES – PRICE AND OTHER CONSIDERATIONS
for a period of six months, appellant secured from her another check for P420,000.00. Josefina but also Tan for annulment of contract on the ground of lack of consideration
With this arrangement, appellant was convinced he had a good bargain. Unfortunately and false pretenses on their part.
his expectation crumbled. For this tragic incident, not only Josefina, but also Tan,
according to appellant must be answerable. Petitioner then postulates that "it is not only illegal but immoral to require him to
repurchase his own properties with his own money when he did not derive any benefit
xxx xxx xxx from the transaction." Thus, he invokes the case of Singson vs. Isabela Sawmill, 88 SCRA
633, 643, where the Court said that "where one or two innocent persons must suffer, that
It is plain that consideration existed at the time of the execution of the deed of sale with person who gave occasion for the damages to be caused must bear consequences."
right of repurchase. It is not only appellant's kindness to Josefina, being his cousin, but Petitioner's reliance on this doctrine is misplaced. He is not an innocent person. As a
also his receipt of P420,000.00 from her which impelled him to execute such contract. matter of fact, he gave occasion for the damage caused by virtue of the deed of sale with
5 right to repurchase which he prepared and signed. Thus, there is the equitable maxim that
between two innocent parties, the one who made it possible for the wrong to be done
Furthermore, while petitioner did not receive the P1.4 Million purchase prices from
should be the one to bear the resulting loss.6
respondent Tan, he had in his possession a postdated check of Josie Rey in an equivalent
amount precisely to repurchase the two lots on or before the sixth month. Petitioner further insinuates that private respondent deceived him into signing the deed
of sale with right to repurchase. This is not borne out by the evidence nor by petitioner's
As admitted by petitioner, by virtue of the sale with pacto de retro, Josie Rey gave him, as
own statement of facts which we heretofore produced. As aptly observed by the
vendor-a-retro, a postdated check in the amount of P1.4 Million, which represented the
respondent court "We are at a loss why herein appellant ascribes false pretenses to Tan
repurchase price of the two (2) lots. Aside from the P1.4 Million check, Josie gave another
who merely signed the contract." 7 Contrary to petitioner's pretension, respondent Tan
postdated check to petitioner in the amount of P420,000.00, ostensibly as interest for six
did not employ any devious scheme to make the former sign the deed of sale. It is to be
(6) months but which apparently was his fee for having executed the pacto de retro
noted that Tan waived his right to collect from Josefina Rey by virtue of the pacto de retro
document. Josie thus assumed the responsibility of paying the repurchase price on behalf
sale. In turn, Josefina gave petitioner a postdated check in the amount of P1.4 Million to
of petitioner to private respondent.
ensure that the latter would not lose his two lots. Petitioner, a lawyer, should have known
Unfortunately, the two checks issued by Josie Rey were worthless. Both were dishonored that the transaction was fraught with risks since Josefina Rey and family had a checkered
upon presentment by petitioner with the drawee banks. However, there is absolutely no history of issuing worthless checks. But had petitioner not agreed to the arrangement,
basis for petitioner to file a complaint against private respondent Tan and Josie Rey to respondent Tan would not have agreed to waive prosecution of Josefina Rey.
annul the pacto de retro sale on the ground of lack of consideration, invoking his failure to
Apparently, it was petitioner's agreed for a huge profit that impelled him to accede to the
encash the two checks. Petitioner's cause of action was to file criminal actions against Josie
scheme of Josefina Rey even if he knew it was a dangerous undertaking. When the drafted
Rey under B.P. 22, which he did. The filing of the criminal cases was a tacit admission by
the pacto de retro document, he threw caution to the winds forgetting that prudence might
petitioner that there was a consideration of the pacto de retro sale.
have been the better course of action. We can only sympathize with petitioner's
Petitioner further claims that the pacto de retro sale was subject to the condition that in predicament. However, a contract is a contract. One agreed upon, and provided all the
the event the checks given by Josie Reyes to him for the repurchase of the property were essential elements are present, it is valid and binding between the parties.
dishonored, then the document shall be declared null and void for lack of consideration.
Petitioner has no one to blame but himself for his misfortune.
We are not persuaded.
WHEREFORE, the Decision of the Court of Appeals dated August 29, 1994 is hereby
Private respondent Tan was already poised to file criminal cases against Josie Rey and her AFFIRMED. The petition for review is hereby DENIED DUE COURSE for lack of merit.
family. It would not be logical for respondent Tan to agree to the conditions allegedly
SO ORDERED.
imposed by petitioner. Petitioner knew that he was bound by the deed of sale with right
to repurchase, as evidenced by his filing criminal cases against Josie Rey when the two
checks bounced.

The respondent court further made the candid but true observation that:

If there is anybody to blame for his predicament, it is appellant himself. He is a lawyer.

He was the one who prepared the contract. He knew what he was entering into. Surely,
he must have been aware of the risk involved. When Josefina's checks bounced, he
should have repurchased his lots with his own money. Instead, he sued not only
10 | E l i x i r C . L a n g a n l a n g a n
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G.R. No. 144735 October 18, 2001 23.[4].2. Six (6) percent of P48,631.00 – per annum from November 23, 1993,
until the said P48,631.00 is paid – as damages;
YU BUN GUAN, petitioner, 23.[4].3. P100,000.00 – as moral damages;
vs. 23.[4].4. P50,000.00 as exemplary damages;
ELVIRA ONG, respondent. 23.[4].5. P100,000.00 – as attorney's fees.
23.[5]. The COUNTERCLAIM is DISMISSED.
PANGANIBAN, J.: 23.[6]. Cost is taxed against the defendant.

A simulated deed of sale has no legal effect, and the transfer certificate of title issued "24. In Chambers, City of Makati, June 23, 1998.
in consequence thereof should be cancelled. Pari delicto does not apply to simulated
sales. The Facts

Statement of the Case The antecedents of the case are succinctly summarized by the Court of Appeals in this
wise:
Before us is a Petition for Review under rule 45 of the Rules of Court, assailing the
April 25, 2000 Decision1 and the August 31, 2000 Resolution2 of the Court of Appeals3 '[Herein respondent] said that she and [petitioner] are husband and wife, having
(CA) in CA-GR CV No. 61364. The decretal portion of the Decision reads as follows: been married according to Chinese rites on April 30, 1961. They lived together
until she and her children were abandoned by [petitioner] on August 26, 1992,
"We cannot see any justification for the setting aside of the contested Decision. because of the latter's 'incurable promiscuity, volcanic temper and other vicious
vices'; out of the reunion were born three (3) children, now living with her
"THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED."4 [respondent].

The assailed Resolution denied petitioner's "Supplemental Motion for "She purchased on March 20, 1968, out of her personal funds, a parcel of land, then
Reconsideration with Leave to Submit [Newly] Discovered Evidence." referred to as the Rizal property, from Aurora Seneris, and supported by Title No.
26795, then subsequently registered on April 17, 1968, in her name.1âwphi1.nêt
The CA sustained the Decision of the Regional Trial Court (RTC) of Makati City
(Branch 60), which had disposed as follows:5 "Also during their marriage, they purchased, out of their conjugal funds, a house
and lot, in 1983, thereafter, registered in their names, under Title No. 118884.
"23. WHEREFORE, the Court hereby renders judgment as follows:
'Before their separation in 1992, she 'reluctantly agreed' to the [petitioner's]
23.1 The Deed of Sale dated July 24, 1992 (Exh. EE on Exh. 3) is declared VOID. 'importunings' that she execute a Deed of Sale of the J.P. Rizal property in his favor,
23.2 The plaintiff ELVIRA ONG is declared the OWNER of the property covered but on the promise that he would construct a commercial building for the benefit
by Transfer Certificate of Title No. 217614, Registry of Deeds, Makati (Exh. of the children. He suggested that the J.P. Rizal property should be in his name
DD). alone so that she would not be involved in any obligation. The consideration for
23.3 The Register of Deeds, City of Makati is ordered to: the 'simulated sale' was that, after its execution in which he would represent
23.2.1. Cancel Transfer Certificate of Title No. 181033 (Exh. HH); and himself as single, a Deed of Absolute Sale would be executed in favor of the three
23.2.2. Issue in lieu thereof, a transfer certificate of title in the name of ELVIRA (3) children and that he would pay the Allied Bank, Inc. the loan he obtained.
A. ONG, of legal age, single, Filipino';
"Because of the 'glib assurances' of [petitioner], [respondent] executed a Deed of
23.[4]. The defendant YU BUN GUAN is ordered to pay to the said plaintiff, the Absolute Sale in 1992, but then he did not pay the consideration of P200,000.00,
following: supposedly the 'ostensible' valuable consideration. On the contrary, she paid for
the capital gains tax and all the other assessments even amounting to not less than
23.[4].1. P48,631.00 – As reimbursement of the capital gains tax (Exh. FF); P60,000.00, out of her personal funds.

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"Because of the sale, a new title (TCT No. 181033) was issued in his name, but to "[Petitioner] added that [respondent] could not have purchased the property
'insure' that he would comply with his commitment, she did not deliver the because she had no financial capacity to do so; on the other hand, he was
owner's copy of the title to him. financially capable although he was financially capable although he was
disqualified to acquire the property by reason of his nationality. [Respondent] was
"Because of the refusal of [petitioner] to perform his promise, and also because he in pari delicto being privy to the simulated sale.
insisted on delivering to him the owner's copy of the title [to] the JP Rizal property,
in addition to threats and physical violence, she decided executing an Affidavit of "Before the court a quo, the issues were: who purchased the JP Rizal property?
Adverse Claim. [W]as the Deed of Sale void? and damages.6

Also to avoid burdening the JP Rizal property with an additional loan amount, she Ruling of the Trial Court
wrote the Allied Bank, Inc. on August 25, 1992, withdrawing her authority for
[petitioner] to apply for additional loans. After examining the evidence adduced by both parties, the RTC found that the JP Rizal
property was the paraphernal property of the respondent, because (1) the title had
"To save their marriage, she even sought the help of relatives in an earnest effort been issued in her name; (2) petitioner had categorically admitted that the property
[at] reconciliation, not to mention a letter to [petitioner] on November 3, 1992. was in her name; (3) petitioner was estopped from claiming otherwise, since he had
signed the Deed of Absolute Sale that stated that she was the "absolute and registered
"[Petitioner], on the other hand, filed with the RTC, Makati, in 1993 (Case No. M- owner"; (4) she had paid the real property taxes thereon.7
2905), a 'Petition for Replacement' of an owner's duplicate title.
The trial court further held that the in pari delicto rule found in Articles 1411 and
"Attached to the Petition was the Affidavit of Loss dated March 26, 1993, in which 1412 of the Civil Code was not applicable to the present case, because it would apply
he falsely made it appear that the owner's copy of the title was lost or misplaced, only to existing contracts with an illegal cause or object, not to simulated or fictitious
and that was granted by the court in an Order dated September 17, 1993, contracts or to those that were inexistent due to lack of an essential requisite such as
following which a new owner's copy of the title was issued to [petitioner]. cause or consideration.8 It likewise voided the Deed of Absolute Sale of the JP Rizal
property for having been simulated and executed during the marriage of the parties.9
"Upon discovery of the 'fraudulent steps' taken by the [petitioner], [respondent]
immediately executed an Affidavit of Adverse Claim on November 29, 1993. Ruling of the Court of Appeals

"She precisely asked the court that the sale of the JP Rizal property be declared as The Court of Appeals upheld the trial court's findings that the JP Rizal property had
null and void; for the title to be cancelled; payment of actual, moral and exemplary been acquired by respondent alone, out of her own personal funds. It ruled thus:
damages; and attorney's fees.
"x x x [T]he JP Rizal property was purchased by the [respondent] alone; therefore
"It was, on the other hand, the version of [petitioner] that sometime in 1968 or it is a paraphernal property. As a matter of fact, the title was issued in her name,
before he became a Filipino, 'through naturalization' the JP Rizal property was Exh. 'DD' This was even admitted by [petitioner] in the Answer that the sale was
being offered to him for sale. Because he was not a Filipino, he utilized executed in her name alone. He also signed the sale mentioning [respondent] to
[respondent] as his 'dummy' and agreed to have the sale executed in the name of be an absolute owner; therefore he should be estopped from claiming otherwise.
[respondent], although the consideration was his own and from his personal She alone likewise did the payment of the taxes.10
funds.
The CA debunked the contention of petitioner that he had purchased the property out
"When he finally acquired a Filipino citizenship in 1972, he purchased another of his own funds and merely used respondent as his dummy.11 It also held that the
property being referred to as the 'Juno lot' out of his own funds. If only to reflect latter was not in pari delicto with him, because the contract was simulated or fictitious
the true ownership of the JP Rizal property, a Deed of Sale was then executed in due to the lack of consideration. The contract was deemed void for having been
1972. Believing in good faith that his owner's copy of the title was lost and not executed during the couple's marriage.12 The CA likewise affirmed the award of
knowing that the same was surreptitiously 'concealed' by [respondent], he filed actual, moral and exemplary damages to respondent.13
in 1993 a petition for replacement of the owner's copy of the title, in court.

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Hence, this Petition.14 We find no reason to disturb the findings of the RTC and the CA that the source of the
money used to acquire the property was paraphernal. This issue is factual in nature.
Issues It is axiomatic that "factual findings of the trial court, especially when affirmed by the
Court of Appeals, as in this case, are binding and conclusive on the Supreme Court. It
In his Memorandum, petitioner raises the following issues for the Court's is not the function of this Court to reexamine the lower courts' findings of fact. While
consideration: there are exceptions to this rule, petitioner has not shown its entitlement to any of
them."16
I. "Whether or not the Court of Appeals gravely erred in not applying [the]
rules on co-ownership under Article 144 of the New Civil Code in The testimony of petitioner as to the source of the money he had supposedly used to
determining the proprietary rights of the parties herein even as purchase the property was at best vague and unclear. At first he maintained that the
respondent herself expressly declared that the money with which she money came from his own personal funds. Then he said that it came from his mother;
allegedly bought the property in question in 1968 came from her funds, and next, from his father. Time and time again, "we [have] held that the unnatural and
salaries and savings at the time she and petitioner already lived as husband contradictory testimony of a witness, x x x makes him unreliable x x x." 17 His
and wife. statement that the JP Rizal property was bought with his own money can hardly be
II. "Whether or not the Court of Appeals likewise palpably erred in declaring believed, when he himself was unsure as to the source of those funds.
the sale of the subject property to herein petitioner in 1992 to be fictitious,
simulated and inexistent. On the other hand, the capacity of respondent to purchase the subject property cannot
III. "Whether or not the Court of Appeals further erred in not applying the '[in] be questioned. It was sufficiently established during trial that she had the means to
pari delicto' rule to the sale of the subject property in favor of the petitioner do so. In fact, her testimony that she had purchased several other lots using her
in 1992 contrary to the express declaration to that effect in the very same personal funds was not disputed.
case it cited (Rodriguez v. Rodriguez; 20 SCRA 908) in the decision herein
sought to be reviewed. Equally without merit is the contention of petitioner that, because he was a Chinese
IV. "Whether or not the Court of Appeals gravely erred in annul[l]ing the title national at the time, respondent was merely used as a dummy in acquiring the
(TCT No. 181033) to the subject property in the name of herein petitioner property; thus, she could not have legally acquired title thereto. He testified that
in the absence of actual fraud."15 (Underscoring in the original.) sometime during the last month of 1968, he had consulted a certain Atty. Flores, who
advised him that the property be registered in the name of respondent. However, TCT
This Court's Ruling No. 217614 had been issued earlier on April 17, 1968. Thus, it appears that the subject
property had already been bought and registered in the name of respondent, long
The Petition is devoid of merit. before Atty. Flores allegedly advised him to have the property registered in her name.

First Issue: Nature of the Property We therefore agree with the CA's affirmation of the RTC's findings that the property
had been acquired using respondent's paraphernal property. The CA rule thus:
Petitioner contends that the JP Rizal property should be deemed as co-owned,
considering that respondent testified during trial that the money she used in "The fact however, is that Yu never refuted Elvira's testimony that: (a) the money
purchasing it had come from her income, salaries and savings, which are conjugal in with which she acquired the JP Rizal property came from": (1) her income as a
nature. cashier in the Hong Kiat Hardware: a (2) income from her paraphernal property –
a lot in Guadalupe; (3) her savings from the money which her parents gave her
On the other hand, respondent maintains that the finding of the two lower courts that while she was still a student; and (4) the money which her sister gave her for
the property was acquired using funds solely owned by her is binding and supported helping her run the beauty parlor; (b) her parents were well off – they had stores,
by evidence. She further argues that the two defenses of petitioner are contradictory apartments and beauty parlors from which they derived income; (c) before her
to each other because, if the property is co-owned, he cannot claim to own it in its marriage she bought lots in different places (p. 8, TSN, Jan. 26, 1998; pp. 22-23,
entirety. TSN March 10, 1998)."18

Second Issue: Fictitious, Simulated and Inexistent Sale

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Next, petitioner argues that there was a valid sale between the parties, and that the Finally, based on the foregoing disquisition, it is quite obvious that the Court of
consideration consisted of his promise to construct a commercial building for the Appeals did not err in ordering the cancellation of TCT No. 181033, because the Deed
benefit of their three children and to pay the loan he had obtained from Allied Bank. of Absolute Sale transferring ownership to petitioner was completely simulated, void
and without effect. In fact, there was no legal basis for the issuance of the certificate
We disagree. In Rongavilla v. Court of Appeals,19 the Court declared that a deed of sale, itself.1âwphi1.nêt
in which the stated consideration had not in fact been paid, is null and void:
WHEREFORE, the Petition is hereby DENIED and the assailed. Decision AFFIRMED.
"The 'problem' before the Court is whether a deed which states a consideration Costs against petitioner.
that in fact did not exist, is a contract, without consideration, and therefore void
ab initio, or a contract with a false consideration, and therefore, at least under the SO ORDERED.
Old Civil Code, voidable. x x x."

"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40
Phil. 921[,] is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and 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 vendor."20

In the present case, it is clear from the factual findings of both lower courts that the
Deed of Sale was completely simulated and, hence, void and without effect. No portion
of the P200,000 consideration stated in the Deed was ever paid. And, from the facts
of the case, it is clear that neither party had any intention whatsoever to pay that
amount.

Instead, the Deed of Sale was executed merely to facilitate the transfer of the property
to petitioner pursuant to an agreement between the parties to enable him to construct
a commercial building and to sell the Juno property to their children. Being merely a
subterfuge, that agreement cannot be taken as the consideration for the sale.

Third Issue: Inapplicability of the in Pari Delicto Principle

The principle of in pari delicto provides that when two parties are equally at fault, the
law leaves them as they are and denies recovery by either one of them. However, this
principle does not apply with respect to inexistent and void contracts. Said this Court
in Modina v. Court of Appeals:21

"The principle of in pari delicto non oritur actio denies all recovery to the guilty
parties inter se. It applies to cases where the nullity arises from the illegality of the
consideration or the purpose of the contract. When two persons are equally at
fault, the law does not relieve them. The exception to this general rule is when the
principle is invoked with respect to inexistent contracts."22

Fourth Issue: Cancellation of TCT

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G.R. No. L-67888 October 8, 1985 On December 12, 1983, the trial court rendered judgment in favor of respondent
Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and,
IMELDA ONG, ET AL., petitioners, hence, there was a valid conveyance in favor of the latter.
vs.
ALFREDO ONG, ET AL., respondents. Petitioners appealed to the respondent Intermediate Appellate Court. They
reiterated their argument below and, in addition, contended that the One (P1.00)
Faustino Y Bautista and Fernando M. Mangubat for private respondent. Peso consideration is not a consideration at all to sustain the ruling that the Deed
RELOVA, J.: of Quitclaim is equivalent to a sale.

This is a petition for review on certiorari of the decision, dated June 20, 1984, of On June 20, 1984, respondent Intermediate Appellate Court promulgated its
the Intermediate Appellate Court, in AC-G.R. No. CV-01748, affirming the Decision affirming the appealed judgment and held that the Quitclaim Deed is a
judgment of the Regional Trial Court of Makati, Metro Manila. Petitioner Imelda conveyance of property with a valid cause or consideration; that the
Ong assails the interpretation given by respondent Appellate Court to the consideration is the One (P1.00) Peso which is clearly stated in the deed itself;
questioned Quitclaim Deed. that the apparent inadequacy is of no moment since it is the usual practice in
deeds of conveyance to place a nominal amount although there is a more valuable
Records show that on February 25, 1976 Imelda Ong, for and in consideration of consideration given.
One (P1.00) Peso and other valuable considerations, executed in favor of private
respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she Not satisfied with the decision of the respondent Intermediate Appellate Court,
transferred, released, assigned and forever quit-claimed to Sandra Maruzzo, her petitioners came to Us questioning the interpretation given by the former to this
heirs and assigns, all her rights, title, interest and participation in the ONE-HALF particular document.
(½) undivided portion of the parcel of land, particularly described as follows: On March 15, 1985, respondent Sandra Maruzzo, through her guardian ad litem
A parcel of land (Lot 10-B of the subdivision plan (LRC) Psd 157841, being a Alfredo Ong, filed an Omnibus Motion informing this Court that she has reached
portion of Lot 10, Block 18, Psd-13288, LRC (GLRC) Record No. 2029, situated the age of majority as evidenced by her Birth Certificate and she prays that she
in the Municipality of Makati, Province of Rizal, Island of Luzon ... containing be substituted as private respondent in place of her guardian ad litem Alfredo
an area of ONE HUNDRED AND TWENTY FIVE (125) SQUARE METERS, more Ong. On April 15, 1985, the Court issued a resolution granting the same.
or less. A careful perusal of the subject deed reveals that the conveyance of the one- half
On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and, (½) undivided portion of the above-described property was for and in
thereafter, on January 20, 1982 donated the whole property described above to consideration of the One (P 1.00) Peso and the other valuable considerations
her son, Rex Ong-Jimenez. (emphasis supplied) paid by private respondent Sandra Maruzzo through her
representative, Alfredo Ong, to petitioner Imelda Ong. Stated differently, the
On June 20, 1983, Sandra Maruzzo, through her guardian (ad litem) Alfredo Ong, cause or consideration is not the One (P1.00) Peso alone but also the other
filed with the Regional Trial Court of Makati, Metro Manila an action against valuable considerations. As aptly stated by the Appellate Court-
petitioners, for the recovery of ownership/possession and nullification of the
Deed of Donation over the portion belonging to her and for Accounting. ... although the cause is not stated in the contract it is presumed that it is
existing unless the debtor proves the contrary (Article 1354 of the Civil Code).
In their responsive pleading, petitioners claimed that the Quitclaim Deed is null One of the disputable presumptions is that there is a sufficient cause of the
and void inasmuch as it is equivalent to a Deed of Donation, acceptance of which contract (Section 5, (r), Rule 131, Rules of Court). It is a legal presumption of
by the donee is necessary to give it validity. Further, it is averred that the donee, sufficient cause or consideration supporting a contract even if such cause is
Sandra Maruzzo, being a minor, had no legal personality and therefore incapable not stated therein (Article 1354, New Civil Code of the Philippines.) This
of accepting the donation. presumption cannot be overcome by a simple assertion of lack of
consideration especially when the contract itself states that consideration was
Upon admission of the documents involved, the parties filed their responsive given, and the same has been reduced into a public instrument with all due
memoranda and submitted the case for decision. formalities and solemnities. To overcome the presumption of consideration
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the alleged lack of consideration must be shown by preponderance of
evidence in a proper action. (Samanilla vs, Cajucom, et al., 107 Phil. 432).
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, the party
alleging lack of consideration has the burden of proving such allegation.
(Caballero, et al. vs. Caballero, et al., (CA), 45 O.G. 2536).
Moreover, even granting that the Quitclaim deed in question is a donation, Article
741 of the Civil Code provides that the requirement of the acceptance of the
donation in favor of minor by parents of legal representatives applies only to
onerous and conditional donations where the donation may have to assume
certain charges or burdens (Article 726, Civil Code). The acceptance by a legal
guardian of a simple or pure donation does not seem to be necessary (Perez vs.
Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan vs. Casilan and
Court of Appeals, (109 Phil. 889) that the donation to an incapacitated donee does
not need the acceptance by the lawful representative if said donation does not
contain any condition. In simple and pure donation, the formal acceptance is not
important for the donor requires no right to be protected and the donee neither
undertakes to do anything nor assumes any obligation. The Quitclaim now in
question does not impose any condition.
The above pronouncement of respondent Appellate Court finds support in the
ruling of this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which
states that "the major premise thereof is based upon the fact that the
consideration stated in the deeds of sale in favor of Reyes and the Abellas is P1.00.
It is not unusual, however, in deeds of conveyance adhering to the Anglo-Saxon
practice of stating that the consideration given is the sum of P1.00, although the
actual consideration may have been much more. Moreover, assuming that said
consideration of P1.00 is suspicious, this circumstance, alone, does not
necessarily justify the inference that Reyes and the Abellas were not purchasers
in good faith and for value. Neither does this inference warrant the conclusion
that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the
monetary consideration do not render a conveyance inexistent, for the assignor's
liberality may be sufficient cause for a valid contract (Article 1350, Civil Code),
whereas fraud or bad faith may render either rescissible or voidable, although
valid until annulled, a contract concerning an object certain entered into with a
cause and with the consent of the contracting parties, as in the case at bar."
WHEREFORE. the appealed decision of the Intermediate Appellate Court should
be, as it is hereby AFFIRMED, with costs against herein petitioners.
SO ORDERED.

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G.R. No. L-38498 August 10, 1989 prayed for recovery of ownership and possession of said lands, accounting of the
fruits thereof and damages. Although the complaint originally sought recovery of all
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS MAXIMINA the twenty-nine parcels of land left by Mateum, at the pre-trial the parties agreed that
BAGNAS, SIXTO BAGNAS and AGATONA ENCARNACION, petitioners, the controversy be limited to the ten parcels subject of the questioned sales, and the
vs. Trial Court ordered the exclusion of the nineteen other parcels from the action. 6 Of
HON. COURT OF APPEALS, ROSA L. RETONIL TEOFILO ENCARNACION, and JOSE the ten parcels which remained in litigation, nine were assessed for purposes of
B. NAMBAYAN respondents. taxation at values aggregating P10,500 00. The record does not disclose the assessed
value of the tenth parcel, which has an area of 1,443 square meters. 7
Beltran, Beltran & Beltran for petitioners.
Jose M. Legaspi for private respondents. In answer to the complaint, the defendants (respondents here) denied the alleged
fictitious or fraudulent character of the sales in their favor, asserting that said sales
NARVASA, J.: were made for good and valuable consideration; that while "... they may have the
effect of donations, yet the formalities and solemnities of donation are not required
The facts underlying this appeal by certiorari are not in dispute. Hilario Mateum of for their validity and effectivity, ... that defendants were collateral relatives of Hilario
Kawit, Cavite, died on March 11, 1964, single, without ascendants or descendants, and Mateum and had done many good things for him, nursing him in his last illness, which
survived only by collateral relatives, of whom petitioners herein, his first cousins, services constituted the bulk of the consideration of the sales; and (by way of
were the nearest. Mateum left no will, no debts, and an estate consisting of twenty- affirmative defense) that the plaintiffs could not question or seek annulment of the
nine parcels of land in Kawit and Imus, Cavite, ten of which are involved in this appeal. sales because they were mere collateral relatives of the deceased vendor and were
1 not bound, principally or subsidiarily, thereby. 8

On April 3, 1964, the private respondents, themselves collateral relatives of Mateum After the plaintiffs had presented their evidence, the defendants filed a motion for
though more remote in degree than the petitioners, 2 registered with the Registry of dismissal in effect, a demurrer to the evidence reasserting the defense set up in their
Deeds for the Province of Cavite two deeds of sale purportedly executed by Mateum answer that the plaintiffs, as mere collateral relatives of Hilario Mateum, had no light
in their (respondents') favor covering ten parcels of land. Both deeds were in Tagalog, to impugn the latter's disposition of his properties by means of the questioned
save for the English descriptions of the lands conveyed under one of them; and each conveyances and submitting, additionally, that no evidence of fraud maintaining said
recited the reconsideration of the sale to be" ... halagang ISANG PISO (Pl.00), salaping transfers had been presented. 9
Pilipino, at mga naipaglingkod, ipinaglilingkod sa aking kapakanan ..." ("the sum of
ONE PESO Pl.00), Philippine Currency, and services rendered, being rendered and to The Trial Court granted the motion to dismiss, holding (a) on the authority of
be rendered for my benefit"). One deed was dated February 6,1963 and covered five Armentia vs. Patriarca, 10 that the plaintiffs, as mere collateral relatives, not forced
parcels of land, and the other was dated March 4, 1963, covering five other parcels, heirs, of Hilario Mateum, could not legally question the disposition made by said
both, therefore, antedating Mateum's death by more than a year. 3 It is asserted by deceased during his lifetime, regardless of whether, as a matter of objective reality,
the petitioners, but denied by the respondents, that said sales notwithstanding, said dispositions were valid or not; and (b) that the plaintiffs evidence of alleged fraud
Mateum continued in the possession of the lands purportedly conveyed until his was insufficient, the fact that the deeds of sale each stated a consideration of only
death, that he remained the declared owner thereof and that the tax payments Pl.00 not being in itself evidence of fraud or simulation. 11
thereon continued to be paid in his name. 4 Whatever the truth, however, is not
crucial. What is not disputed is that on the strength of the deeds of sale, the On appeal by the plaintiffs to the Court of Appeals, that court affirmed, adverting with
respondents were able to secure title in their favor over three of the ten parcels of approval to the Trial Court's reliance on the Armentia ruling which, it would appear,
land conveyed thereby. 5 both courts saw as denying, without exception, to collaterals, of a decedent, not forced
heirs, the right to impugn the latter's dispositions inter vivos of his property. The
On May 22,1964 the petitioners commenced suit against the respondents in the Court Appellate Court also analyzed the testimony of the plaintiffs' witnesses, declared that
of First Instance of Cavite, seeking annulment of the deeds of sale as fictitious, it failed to establish fraud of any kind or that Mateum had continued paying taxes on
fraudulent or falsified, or, alternatively, as donations void for want of acceptance the lands in question even after executing the deeds conveying them to the
embodied in a public instrument. Claiming ownership pro indiviso of the lands subject defendants, and closed with the statement that "... since in duly notarized and
of the deeds by virtue of being intestate heirs of Hilario Mateum, the petitioners registered deeds of sale consideration is presumed, we do not and it necessary to rule

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on the alternative allegations of the appellants that the said deed of sale were (sic) in fictitious, merely voidable, but declares them void, i.e., inexistent ("nulo") unless it is
reality donations. 12 shown that they are supported by another true and lawful cause or consideration. 14
A logical consequence of that change is the juridical status of contracts without, or
One issue clearly predominates here. It is whether, in view of the fact that, for with a false, cause is that conveyances of property affected with such a vice cannot
properties assuredly worth in actual value many times over their total assessed operate to divest and transfer ownership, even if unimpugned. If afterwards the
valuation of more than P10,000.00, the questioned deeds of sale each state a price of transferor dies the property descends to his heirs, and without regard to the manner
only one peso (P1.00) plus unspecified past, present and future services to which no in which they are called to the succession, said heirs may bring an action to recover
value is assigned, said deeds were void or inexistent from the beginning ("nulo") or the property from the purported transferee. As pointed out, such an action is not
merely voidable, that is, valid until annulled. If they were only voidable, then it is a founded on fraud, but on the premise that the property never leaves the estate of the
correct proposition that since the vendor Mateum had no forced heirs whose transferor and is transmitted upon his death to heirs, who would labor under no
legitimes may have been impaired, and the petitioners, his collateral relatives, not incapacity to maintain the action from the mere fact that they may be only collateral
being bound either principally or subsidiarily to the terms of said deeds, the latter relatives and bound neither principally or subsidiarily under the deed or contract of
had and have no actionable right to question those transfers. conveyance.

On the other hand, if said deeds were void ab initio because to all intents and purposes In Armentia the Court determined that the conveyance questioned was merely
without consideration, then a different legal situation arises, and quite another result annullable not void ab initio, and that the plaintiff s action was based on fraud vitiating
obtains, as pointed out by the eminent civil law authority, Mr. Justice J.B.L. Reyes who, said conveyance. The Court said:
in his concurring opinion in Armentia, said:
Hypothetically admitting the truth of these allegations (of plaintiffs complaint),
I ... cannot bring myself to agree to the proposition that the heirs intestate would the conclusion is irresistible that the sale is merely voidable. Because Marta
have no legal standing to contest the conveyance made by the deceased if the same Armentia executed the document, and this is not controverted by plaintiff.
were made without any consideration, or for a false and fictitious consideration. Besides, the fact that the vendees were minors, makes the contract, at worst,
For under the Civil Code of the Philippines, Art. 1409, par. 3, contracts with a cause annullable by them, Then again, inadequacy of consideration does not imply total
that did not exist at the time of the transaction are inexistent and void from the want of consideration. Without more, the parted acts of Marta Armentia after the
beginning. The same is true of contracts stating a false cause (consideration) sale did not indicate that the said sale was void from the being.
unless the persons interested in upholding the contract should prove that there is
another true and lawful consideration therefor. (lbid., Art. 1353). The sum total of all these is that, in essence, plaintiffs case is bottomed on fraud,
which renders the contract voidable.
If therefore the contract has no causa or consideration, or the causa is false and
fictitious (and no true hidden causa is proved) the property allegedly conveyed It therefore seems clear that insofar as it may be considered as setting or reaffirming
never really leaves the patrimony of the transferor, and upon the latter's death precedent, Armentia only ruled that transfers made by a decedent in his lifetime,
without a testament, such property would pass to the transferor's heirs intestate which are voidable for having been fraudulently made or obtained, cannot be
and be recoverable by them or by the Administrator of the transferor's estate. In posthumously impugned by collateral relatives succeeding to his estate who are not
this particular regard, I think Concepcion vs. Sta. Ana, 87 Phil. 787 and Sobs vs. principally or subsidiarily bound by such transfers. For the reasons already stated,
Chua Pua Hermanos, 50 Phil. 536, do not correctly state the present law, and must that ruling is not extendible to transfers which, though made under closely similar
be clarified. circumstances, are void ab initio for lack or falsity of consideration.

To be sure the quoted passage does not reject and is not to be construed as rejecting The petitioners here argue on a broad front that the very recitals of the questioned
the Concepcion and Solis rulings 13 as outrightly erroneous, far from it. On the deeds of sale reveal such want or spuriousness of consideration and therefore the
contrary, those rulings undoubtedly read and applied correctly the law extant in their void character of said sales. They:
time: Art. 1276 of the Civil Code of 1889 under which the statement of a false cause
in a contract rendered it voidable only, not void ab initio. In observing that they "... do 1. advert to a decision of the Court of Appeals in Montinola vs. Herbosa (59 O.G. No.
not correctly state the present law and must be clarified," Justice Reyes clearly had in 47, pp, 8101, 8118) holding that a price of P l.00 for the sale of things worth at least
mind the fact that the law as it is now (and already was in the time Armentia) no P20,000.00 is so insignificant as to amount to no price at all, and does not satisfy the
longer deems contracts with a false cause, or which are absolutely simulated or
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law which, while not requiring for the validity of a sale that the price be adequate, that the properties purportedly conveyed remained part of the estate of Hilario
prescribes that it must be real, not fictitious, stressing the obvious parallel between Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the
that case and the present one in stated price and actual value of the property sold; petitioners herein, whose status as such is not challenged.

2. cite Manresa to the same effect: that true price, which is essential to the validity of The private respondents have only themselves to blame for the lack of proof that
a sale, means existent, real and effective price, that which does not consist in an might have saved the questioned transfers from the taint of invalidity as being
insignificant amount as, say, P.20 for a house; that it is not the same as the concept of fictitious and without ilicit cause; proof, to be brief, of the character and value of the
a just price which entails weighing and measuring, for economic equivalence, the services, past, present, and future, constituting according to the very terms of said
amount of price against all the factors that determine the value of the thing sold; but transfers the principal consideration therefor. The petitioners' complaint (par. 6) 21
that there is no need of such a close examination when the immense disproportion averred that the transfers were "... fraudulent, fictitious and/or falsified and (were) ...
between such economic values is patent a case of insignificant or ridiculous price, the in reality donations of immovables ...," an averment that the private respondents not
unbelievable amount of which at once points out its inexistence; 15 only specifically denied, alleging that the transfers had been made "... for good and
valuable consideration ...," but to which they also interposed the affirmative defenses
3. assert that Art. 1458 of the Civil Code, in prescribing that a sale be for a ... price that said transfers were "... valid, binding and effective ...," and, in an obvious reference
certain in money or its equivalent ... requires that "equivalent" be something to the services mentioned in the deeds, that they "... had done many good things to
representative of money, e.g., a check or draft, again citing Manresa 16 to the effect (the transferor) during his lifetime, nursed him during his ripe years and took care of
that services are not the equivalent of money insofar as said requirement is him during his previous and last illness ...," (pars. 4, 6, 16 and 17, their
concerned and that a contract is not a true sale where the price consists of services or answer).lâwphî1.ñèt 22 The onus, therefore, of showing the existence of valid and
prestations; illicit consideration for the questioned conveyances rested on the private
respondents. But even on a contrary assumption, and positing that the petitioners
4. once more citing Manresa 17 also point out that the "services" mentioned in the initially had the burden of showing that the transfers lacked such consideration as
questioned deeds of sale are not only vague and uncertain, but are unknown and not they alleged in their complaint, that burden was shifted to the private respondents
susceptible of determination without the necessity of a new agreement between the when the petitioners presented the deeds which they claimed showed that defect on
parties to said deeds. their face and it became the duty of said respondents to offer evidence of existent
lawful consideration.
Without necessarily according all these assertions its full concurrence, but upon the
consideration alone that the apparent gross, not to say enormous, disproportion As the record clearly demonstrates, the respondents not only failed to offer any proof
between the stipulated price (in each deed) of P l.00 plus unspecified and whatsoever, opting to rely on a demurrer to the petitioner's evidence and upon the
unquantified services and the undisputably valuable real estate allegedly sold worth thesis, which they have maintained all the way to this Court, that petitioners, being
at least P10,500.00 going only by assessments for tax purposes which, it is well- mere collateral relatives of the deceased transferor, were without right to the
known, are notoriously low indicators of actual value plainly and unquestionably conveyances in question. In effect, they gambled their right to adduce evidence on a
demonstrates that they state a false and fictitious consideration, and no other true dismissal in the Trial Court and lost, it being the rule that when a dismissal thus
and lawful cause having been shown, the Court finds both said deeds, insofar as they obtained is reversed on appeal, the movant loses the right to present evidence in his
purport to be sales, not merely voidable, but void ab initio. behalf. 23

Neither can the validity of said conveyances be defended on the theory that their true WHEREFORE, the appealed Decision of the Court of Appeals is reversed. The
causa is the liberality of the transferor and they may be considered in reality questioned transfers are declared void and of no force or effect. Such certificates of
donations 18 because the law 19 also prescribes that donations of immovable title as the private respondents may have obtained over the properties subject of said
property, to be valid, must be made and accepted in a public instrument, and it is not transfers are hereby annulled, and said respondents are ordered to return to the
denied by the respondents that there has been no such acceptance which they claim petitioners possession of an the properties involved in tills action, to account to the
is not required. 20 petitioners for the fruits thereof during the period of their possession, and to pay the
costs. No damages, attorney's fees or litigation expenses are awarded, there being no
The transfers in question being void, it follows as a necessary consequence and evidence thereof before the Court. SO ORDERED.
conformably to the concurring opinion in Armentia, with which the Court fully agrees,

19 | E l i x i r C . L a n g a n l a n g a n
Law on Sales – Dean SJ Sabio
XU – College of Law, 2019-2020