G.R. No.

L-11872

December 1, 1917

DOMINGO
MERCADO
and
JOSEFA
MERCADO, plaintiffs-appellants,
vs.
JOSE ESPIRITU, administrator of the estate of the deceased Luis Espiritu, defendant-appellee.
Perfecto
Vicente Foz for appellee.

Salas

Rodriguez

for

appellants.

TORRES, J.:
This is an appeal by bill of exceptions, filed by the counsel for the plaintiffs from the judgment of September 22, 1914, in
which the judge of the Seventh Judicial District dismissed the complaint filed by the plaintiffs and ordered them to keep
perpetual silence in regard to the litigated land, and to pay the costs of the suit.
By a complaint dated April 9, 1913, counsel for Domingo and Josefa Mercado brought suit in the Court of First Instance of
Bulacan, against Luis Espiritu, but, as the latter died soon thereafter, the complaint was amended by being directed
against Jose Espiritu in his capacity of his administrator of the estate of the deceased Luis Espiritu. The plaintiffs alleged
that they and their sisters Concepcion and Paz, all surnamed Mercado, were the children and sole heirs of Margarita
Espiritu, a sister of the deceased Luis Espiritu; that Margarita Espiritu died in 1897, leaving as her paraphernal property a
tract of land of 48 hectares in area situated in the barrio of Panducot, municipality of Calumpit, Bulacan, and bounded as
described in paragraph 4 of the amended complaint, which hereditary portion had since then been held by the plaintiffs
and their sisters, through their father Wenceslao Mercado, husband of Margarita Espiritu; that, about the year 1910, said
Luis Espiritu, by means of cajolery, induced, and fraudulently succeeded in getting the plaintiffs Domingo and Josefa
Mercado to sign a deed of sale of the land left by their mother, for the sum of P400, which amount was divided among the
two plaintiffs and their sisters Concepcion and Paz, notwithstanding the fact that said land, according to its assessment,
was valued at P3,795; that one-half of the land in question belonged to Margarita Espiritu, and one-half of this share, that
is, one-fourth of said land , to the plaintiffs, and the other one-fourth, to their two sisters Concepcion and Paz; that the part
of the land belonging to the two plaintiffs could produce 180 cavanes of rice per annum, at P2.50 per cavan, was
equivalent to P450 per annum; and that Luis Espiritu had received said products from 1901 until the time of his death.
Said counsel therefore asked that judgment be rendered in plaintiffs' favor by holding to be null and void the sale they
made of their respective shares of their land, to Luis Espiritu, and that the defendant be ordered to deliver and restore to
the plaintiffs the shares of the land that fell to the latter in the partition of the estate of their deceased mother Margarita
Espiritu, together with the products thereof, uncollected since 1901, or their equivalent, to wit, P450 per annum, and to
pay the costs of the suit.
In due season the defendant administrator answered the aforementioned complaint, denying each and all of the
allegations therein contained, and in special defense alleged that the land, the subject-matter of the complaint, had an
area of only 21 cavanes of seed rice; that, on May 25, 1894, its owner, the deceased Margarita Espiritu y Yutoc, the
plaintiffs' mother, with the due authorization of her husband Wenceslao Mercado y Arnedo Cruz sold to Luis Espiritu for
the sum of P2,000 a portion of said land, to wit, an area such as is usually required for fifteen cavanes of seed; that
subsequently, on May 14, 1901, Wenceslao Mercado y Arnedo Cruz, the plaintiffs' father, in his capacity as administrator
of the property of his children sold under pacto de retro to the same Luis Espiritu at the price of P375 the remainder of the
said land, to wit, an area covered by six cavanes of seed to meet the expenses of the maintenance of his (Wenceslao's)
children, and this amount being still insufficient the successively borrowed from said Luis Espiritu other sums of money
aggregating a total of P600; but that later, on May 17,1910, the plaintiffs, alleging themselves to be of legal age, executed,
with their sisters Maria del Consejo and Maria dela Paz, the notarial instrument inserted integrally in the 5th paragraph of
the answer, by which instrument, ratifying said sale under pacto de retro of the land that had belonged to their mother
Margarita Espiritu, effected by their father Wenceslao Mercado in favor of Luis Espiritu for the sum of P2,600, they sold
absolutely and perpetually to said Luis Espiritu, in consideration of P400, the property that had belonged to their deceased
mother and which they acknowledged having received from the aforementioned purchaser. In this cross-complaint the
defendant alleged that the complaint filed by the plaintiffs was unfounded and malicious, and that thereby losses and

damages in the sum of P1,000 had been caused to the intestate estate of the said Luis Espiritu. He therefore asked that
judgment be rendered by ordering the plaintiffs to keep perpetual silence with respect to the land in litigation and, besides,
to pay said intestate estate P1,000 for losses and damages, and that the costs of the trial be charged against them.
In reply to the cross-complaint, the plaintiffs denied each and all of the facts therein set forth, and in special defense
alleged that at the time of the execution of the deed of sale inserted in the cross-complaint the plaintiffs were still minors,
and that since they reached their majority the four years fixed by law for the annulment of said contract had not yet
elapsed. They therefore asked that they be absolved from the defendant's cross-complaint.
After trial and the introduction of evidence by both parties, the court rendered the judgment aforementioned, to which the
plaintiffs excepted and in writing moved for a reopening of the case and a new trial. This motion was overruled, exception
was taken by the petitioners, and the proper bill of exceptions having been presented, the same was approved and
transmitted to the clerk of this court.
As the plaintiffs assailed the validity of the deed of sale, Exhibit 3, executed by them on May 17, 1910, on the ground that
they were minors when they executed it, the questions submitted to the decision of this court consist in determining
whether it is true that the plaintiffs were then minors and therefore incapable of selling their property on the date borne by
the instrument Exhibit 3; and in case they then were such, whether a person who is really and truly a minor and,
notwithstanding, attests that he is of legal age, can, after the execution of the deed and within legal period, ask for the
annulment of the instrument executed by him, because of some defect that invalidates the contract, in accordance with
the law (Civ. Code, arts. 1263 and 1300), so that he may obtain the restitution of the land sold.
The records shows it to have been fully proven that in 1891 Lucas Espiritu obtained title by composition with the State, to
three parcels of land, adjoining each other, in the sitio of Panducot of the pueblo of Calumpit, Bulacan, containing
altogether an area of 75 hectares, 25 ares, and 59 centares, which facts appear in the title Exhibit D; that, upon Luis
Espiritu's death, his said lands passed by inheritance to his four children named Victoria, Ines, Margarita, and Luis; and
that, in the partition of said decedent's estate, the parcel of land described in the complaint as containing forty-seven and
odd hectares was allotted to the brother and sister Luis and Margarita, in equal shares. Margarita Espiritu, married to
Wenceslao Mercado y Ardeno Cruz, had by this husband five children, Maria Consejo, Maria de la Paz, Domingo, Josefa,
and Amalia, all surnamed Mercado y Espiritu, who, at the death of their mother in 1896 inherited, by operation of law, onehalf of the land described in the complaint.
The plaintiffs' petition for annulment of the sale and the consequent restitution to them of two-fourths of the land left by
their mother, that is, of one-fourth of all the land described in the complaint, and which, they stated, amounts to 11
hectares, 86 ares and 37 centares. To this claim the defendant excepted, alleging that the land in question comprised only
an area such as is customarily covered by 21 cavanes of seed.
It was also duly proven that, by a notarial instrument of May 25, 1894, the plaintiffs' mother conveyed by actual and
absolute sale for the sum of P2,000, to her brother Luis Espiritu a portion of the land now on litigation, or an area such as
is usually covered by about 15 cavanes of seed; and that, on account of the loss of the original of said instrument, which
was on the possession of the purchaser Luis Espiritu, and furthermore because, during the revolution, the protocols or
registers of public documents of the Province of Bulacan were burned, Wenceslao Mercado y Arnedo Cruz, the widower
of the vendor and father of the plaintiffs, executed, at the instance of the interested party Luis Espiritu, the notarial
instrument Exhibit 1, of the date of May 20, 1901, in his own name and those of his minor children Maria Consejo, Maria
de la Paz, Domingo, Josefa, and Amalia, and therein set forth that it was true that the sale of said portion of land had been
made by his aforementioned wife, then deceased, to Luis Espiritu in 1894.
However, even prior to said date, to wit, on May 14th of the same year, 1901, the widower Wenceslao Mercado, according
to the private document Exhibit 2, pledged or mortgaged to the same man, Luis Espiritu, for P375, a part, or an area
covered by six cavanes of seed, of the land that had belonged to this vendor's deceased wife, to the said Luis Espiritu and
which now forms a part of the land in question a transaction which Mercado was obliged to make in order to obtain
funds with which "to cover his children's needs." Wenceslao Mercado, the plaintiffs' father, having died, about the year
1904, the plaintiffs Domingo and Josefa Mercado, together with their sisters Consejo and Paz, declaring themselves to be
of legal age and in possession of the required legal status to contract, executed and subscribed before a notary the

document Exhibit 3, on May 17, 1910, in which referring to the previous sale of the land, effected by their deceased
mother for the sum of P2,600 and with her husband's permission and authorization, they sold absolutely and in perpetuity
to Luis Espiritu, for the sum of P400 "as an increase" of the previous purchase price, the land described in said instrument
and situated in Panducot, pueblo of Calumpit, Bulacan, of an area equal to that usually sown with 21 cavanes of seed
bounded on the north by the lands of Flaviano Abreu and the heirs of Pedro Espiritu, on the east by those of Victoria
Espiritu and Ines Espiritu, on the south by those of Luis Espiritu, and on the west by those of Hermogenes Tan-Toco and
by the Sapang-Maitu stream.
In this status of the case the plaintiffs seek the annulment of the deed Exhibit 3, on the ground that on the date of its
execution they were minors without legal capacity to contract, and for the further reason that the deceased purchaser Luis
Espiritu availed himself of deceit and fraud in obtaining their consent for the execution of said deed.
As it was proven by the testimony of the clerk of the parochial church of Apalit (plaintiffs were born in Apalit) that the
baptismal register books of that parish pertaining to the years 1890-1891, were lost or burned, the witness Maria Consejo
Mercado recognized and identified the book Exhibit A, which she testified had been kept and taken care of by her
deceased father Wenceslao Mercado, pages 396 and 397 of which bear the attestation that the plaintiff Domingo Mercado
was born on August 4, 1890, and Josefa Mercado, on July 14, 1891. Furthermore, this witness corroborated the averment
of the plaintiffs' minority, by the personal registration certificate of said Domingo Mercado, of the year 1914, Exhibit C, by
which it appears that in 1910 he was only 23 years old, whereby it would also be appear that Josefa Mercado was 22
years of age in 1910, and therefore, on May 17,1910, when the instrument of purchase and sale, Exhibit 3, was executed,
the plaintiffs must have been, respectively, 19 and 18 years of age.
The witness Maria Consejo Mercado also testified that after her father's death her brother and sisters removed to Manila
to live there, although her brother Domingo used to reside with his uncle Luis Espiritu, who took charge of the
administration of the property left by his predecessors in interest; that it was her uncle Luis who got for her brother
Domingo the other cedula, Exhibit B, pertaining to the year 1910, where in it appears that the latter was then already 23
years of age; that she did not know why her uncle did so; that she and her brother and sisters merely signed the deed of
May 17, 1910; and that her father Wenceslao Mercado, prior to his death had pledged the land to her uncle Luis Espiritu.
The witness Ines Espiritu testified that after the death of the plaintiffs' father, it was Luis Espiritu who directed the
cultivation of the land in litigation. This testimony was corroborated by her sister Victoria Espiritu, who added that her
nephew, the plaintiff Domingo, had lived for some time, she did not know just how long, under the control of Luis Espiritu.
Roque Galang, married to a sister of Luis Espiritu, stated that the land that fell to his wife and to his sister-in-law Victoria,
and which had an area of about 8 hectares less than that of the land allotted to the aforementioned Luis and Margarita
produced for his wife and his sister-in-law Victoria a net and minimum yield of 507 cavanes in 1907, in spite of its being
high land and of inferior quality, as compared with the land in dispute, and that its yield was still larger in 1914, when the
said two sisters' share was 764 cavanes.
Patricio Tanjucto, the notary before whom the deed Exhibit 3 was ratified, was a witness for the defendant. He testified
that this deed was drawn up by him at the request of the plaintiff Josefa Mercado; that the grantors of the instrument
assured him that they were all of legal age; that said document was signed by the plaintiffs and the other contracting
parties, after it had been read to them and had been translated into the Pampangan dialect for those of them who did not
understand Spanish. On cross-examination, witness added that ever since he was 18 years of age and began to court, he
had known the plaintiff Josefa Mercado, who was then a young maiden, although she had not yet commenced to attend
social gatherings, and that all this took place about the year 1898, for witness said that he was then [at the time of his
testimony, 1914,] 34 years of age.
Antonio Espiritu, 60 years of age, who knew Lucas Espiritu and the properties owned by the latter, testified that Espiritu's
land contained an area of 84 cavanes, and after its owner's death, was under witness' administration during to harvest two
harvest seasons; that the products yielded by a portion of this land, to wit, an area such as is sown by about 15 cavanes
of seed, had been, since 1894, utilized by Luis Espiritu, by reason of his having acquired the land; and that, after
Margarita Espiritu's death, her husband Wenceslao Mercado took possession of another portion of the land, containing an

area of six cavanes of seed and which had been left by this deceased, and that he held same until 1901, when he
conveyed it to Luis Espiritu. lawphi1.net
The defendant-administrator, Jose Espiritu, son of the deceased Luis Espiritu, testified that the plaintiff Domingo Mercado
used to live off and on in the house of his deceased father, about the year 1909 or 1910, and used to go back and forth
between his father's house and those of his other relatives. He denied that his father had at any time administered the
property belonging to the Mercado brother and sisters.
In rebuttal, Antonio Mercado, a cousin of Wenceslao, father of the plaintiffs, testified that he mediate in several
transactions in connection with a piece of land belonging to Margarita Espiritu. When shown the deed of purchase and
sale Exhibit 1, he stated that he was not acquainted with its contents. This same witness also testified that he mediated in
a transaction had between Wenceslao Mercado and Luis Espiritu (he did not remember the year), in which the former sold
to the latter a parcel of land situated in Panducot. He stated that as he was a witness of the deed of sale he could identify
this instrument were it exhibited to him; but he did not do so, for no instrument whatever was presented to him for
identification. The transaction mentioned must have concerned either the ratification of the sale of the land of 15 cavanes,
in 1901, attested in Exhibit 1, or the mortgage or pledge of the other parcel of 6 cavanes, given on May 14, 1901, by
Wenceslao Mercado to Luis Espiritu, as may be seen by the private document Exhibit 2. In rebuttal, the plaintiff Josefa
Mercado denied having gone to the house of the notary Tanjutco for the purpose of requesting him to draw up any
document whatever. She stated that she saw the document Exhibit 3 for the first time in the house of her uncle Luis
Espiritu on the day she signed it, on which occasion and while said document was being signed said notary was not
present, nor were the witnesses thereto whose names appear therein; and that she went to her said uncle's house,
because he had sent for her, as well as her brother and sisters, sending a carromata to fetch them. Victoria Espiritu
denied ever having been in the house of her brother. Luis Espiritu in company with the plaintiffs, for the purpose of giving
her consent to the execution of any deed in behalf of her brother.
The evidence adduced at the trial does not show, even circumstantially, that the purchaser Luis Espiritu employed fraud,
deceit, violence, or intimidation, in order to effect the sale mentioned in the document Exhibit 3, executed on May 17,
1910. In this document the vendors, the brother and the sisters Domingo, Maria del Consejo, Paz and, Josefa surnamed
Mercado y Espiritu, attested the certainty of the previous sale which their mother, during her lifetime, had made in behalf
of said purchaser Luis Espiritu, her brother with the consent of her husband Wenceslao Mercado, father of the vendors of
the portion of land situated in the barrio of Panducot, pueblo of Calumpit, Bulacan; and in consideration of the fact that the
said vendor Luis Espiritu paid them, as an increase, the sum of P400, by virtue of the contract made with him, they
declare having sold to him absolutely and in perpetuity said parcel of the land, waive and thenceforth any and all rights
they may have, inasmuch as said sum constitutes the just price of the property.
So that said document Exhibit 3 is virtually an acknowledgment of the contract of sale of the parcel or portion of land that
would contain 15 cavanes of seed rice made by the vendors' mother in favor of the purchaser Luis Espiritu, their uncle,
and likewise an acknowledgment of the contract of pledge or mortgage of the remainder of said land, an area of six
cavanes, made with the same purchaser, at an increase of P400 over the price of P2,600, making an aggregate sum of
P3,000, decomposed as follows: P2,000, collected during her lifetime, by the vendors' father; and the said increase of
P400, collected by the plaintiffs.
In the aforementioned sale, according to the deed of May 25, 1894, Margarita Espiritu conveyed to her brother Luis the
parcel of 15 cavanes of seed, Exhibit 1, and after her death the plaintiffs' widowed father mortgaged or pledged the
remaining parcel or portion of 6 cavanes of seed to her brother-in-law, Luis Espiritu, in May, 1901 (Exhibit 2). So it is that
the notarial instrument Exhibit 3, which was assailed by the plaintiffs, recognized the validity of the previous contracts, and
the totality of the land, consisting of an area containing 21 cavanes of seed rice, was sold absolutely and in perpetuity, the
vendors receiving in exchange P400 more; and there is no conclusive proof in the record that this last document was false
and simulated on account of the employment of any violence, intimidation, fraud, or deceit, in the procuring of the consent
of the vendors who executed it.
Considering the relation that exists between the document Exhibit 3 and those of previous dates, Exhibits 1 and 2, and
taking into the account the relationship between the contracting parties, and also the general custom that prevails in many
provinces of these Islands for the vendor or debtor to obtain an increase in the price of the sale or of the pledge, or an

increase in the amount loaned, without proof to the contrary, it would be improper and illegal to hold, in view of the facts
hereinabove set forth, that the purchaser Luis Espiritu, now deceased, had any need to forge or simulate the document
Exhibit 3 inasmuch as, since May, 1894, he has held in the capacity of owner by virtue of a prior acquisition, the parcel of
land of 15 cavanes of seed, and likewise, since May, 1901, according to the contract of mortgage or pledge, the parcel of
6 cavanes, or the remainder of the total area of 21 cavanes.
So that Luis Espiritu was, during his lifetime, and now, after his death, his testate or intestate estate is in lawful possession
of the parcel of land situated in Panducot that contains 21 cavanes of seed, by virtue of the title of conveyance of
ownership of the land measuring 15 cavanes, and, in consequence of the contract of pledge or mortgage in security for
the sum of P600, is likewise in lawful possession of the remainder of the land, or an area containing 6 cavanes of seed.
The plaintiffs have absolutely no right whatever to recover said first parcel of land, as its ownership was conveyed to the
purchaser by means of a singular title of purchase and sale; and as to the other portion of 6 cavanes of seed, they could
have redeemed it before May 17, 1910, upon the payment or the return of the sum which their deceased father
Wenceslao Mercado had, during his lifetime, received as a loan under security of the pledged property; but, after the
execution of the document Exhibit 3, the creditor Luis Espiritu definitely acquired the ownership of said parcel of 6
cavanes. It is therefore a rash venture to attempt to recover this latter parcel by means of the contract of final and
absolute sale, set forth in the deed Exhibit 3.
Moreover, the notarial document Exhibit 1, are regards the statements made therein, is of the nature of a public document
and is evidence of the fact which gave rise to its execution and of the date of the latter, even against a third person and
his predecessors in interest such as are the plaintiffs. (Civ. Code, art. 1218.)
The plaintiffs' father, Wenceslao Mercado, recognizing it to be perfectly true that his wife Margarita Espiritu sold said
parcel of land which she inherited from her father, of an area of about "15 cavanes of seed," to her brother Luis Espiritu,
by means of an instrument executed by her on May 25,1894 an instrument that disappeared or was burned and
likewise recognizing that the protocols and register books belonging to the Province of Bulacan were destroyed as a result
of the past revolution, at the request of his brother-in-law Luis Espiritu he had no objection to give the testimony recorded
in said notarial instrument, as it was the truth regarding what had occurred, and in so doing he acted as the plaintiffs'
legitimate father in the exercise of his parental authority, inasmuch as he had personal knowledge of said sale, he himself
being the husband who authorized said conveyance, notwithstanding that his testimony affected his children's interest and
prejudiced his own, as the owner of any fruits that might be produced by said real property.
The signature and handwriting of the document Exhibit 2 were identified as authentic by one of the plaintiffs, Consejo
Mercado, and as the record shows no evidence whatever that this document is false, and it does not appear to have been
assailed as such, and as it was signed by the plaintiffs' father, there is no legal ground or well-founded reason why it
should be rejected. It was therefore properly admitted as evidence of the certainty of the facts therein set forth.
The principal defect attributed by the plaintiffs to the document Exhibit 3 consists in that, on the date of May 17, 1910,
when it was executed that they signed it, they were minors, that is, they had not yet attained the age of 21 years fixed by
Act No. 1891, though no evidence appears in the record that the plaintiffs Josefa and Domingo Mercado were in fact
minors, for no certified copies were presented of their baptismal certificates, nor did the plaintiffs adduce any
supplemental evidence whatever to prove that Domingo was actually 19 and Josefa 18 years of age when they signed the
document Exhibit 3, on May 17, 1910, inasmuch as the copybook, Exhibit A, notwithstanding the testimony of the plaintiff
Consejo Mercado, does not constitute sufficient proof of the dates of births of the said Domingo and Josefa.
However, even in the doubt whether they certainly were of legal age on the date referred to, it cannot be gainsaid that in
the document Exhibit 3 they stated that they were of legal age at the time they executed and signed it, and on that
account the sale mentioned in said notarial deed Exhibit 3 is perfectly valid a sale that is considered as limited solely to
the parcel of land of 6 cavanes of seed, pledged by the deceased father of the plaintiffs in security for P600 received by
him as a loan from his brother-in-law Luis Espiritu, for the reason that the parcel of 15 cavanes had been lawfully sold by
its original owner, the plaintiffs' mother.

The courts, in their interpretation of the law, have laid down the rule that the sale of real estate, made by minors who
pretend to be of legal age, when in fact they are not, is valid, and they will not be permitted to excuse themselves from the
fulfillment of the obligations contracted by them, or to have them annulled in pursuance of the provisions of Law 6, title 19,
of the 6th Partida; and the judgment that holds such a sale to be valid and absolves the purchaser from the complaint filed
against him does not violate the laws relative to the sale of minors' property, nor the juridical rules established in
consonance therewith. (Decisions of the supreme court of Spain, of April 27, 1860, July 11, 1868, and March 1,
1875.) itc@alf
With respect to the true age of the plaintiffs, no proof was adduced of the fact that it was Luis Espiritu who took out
Domingo Mercado's personal registration certificate on April 13, 1910, causing the age of 23 years to be entered therein in
order to corroborate the date of the notarial instrument of May 17th of the same year; and the supposition that he did,
would also allow it to be supposed, in order to show the propriety of the claim, that the cedula Exhibit C was taken out on
February 14, 1914, where in it is recorded that Domingo Mercado was on that date 23 years of age, for both these facts
are not proved; neither was any proof adduced against the statement made by the plaintiffs Domingo and Josefa in the
notarial instrument Exhibit 3, that, on the date when they executed it, they were already of legal age, and, besides the
annotation contained in the copybook Exhibit A, no supplemental proof of their true ages was introduced.
Aside from the foregoing, from a careful examination of the record in this case, it cannot be concluded that the plaintiffs,
who claim to have minors when they executed the notarial instrument Exhibit 3, have suffered positive and actual losses
and damages in their rights and interests as a result of the execution of said document, inasmuch as the sale effected by
the plaintiffs' mother, Margarita Espiritu, in May, 1894, of the greater part of the land of 21 cavanes of seed, did not
occasion any damage or prejudice to the plaintiffs, inasmuch as their father stated in the document Exhibit 2 that he was
obliged to mortgage or pledge said remaining portion of the land in order to secure the loan of the P375 furnished by Luis
Espiritu and which was subsequently increased to P600 so as to provide for certain engagements or perhaps to meet the
needs of his children, the plaintiff; and therefore, to judge from the statements made by their father himself, they received
through him, in exchange for the land of 6 cavanes of seed, which passed into the possession of the creditor Luis Espiritu,
the benefit which must have accrued to them from the sums of money received as loans; and, finally, on the execution of
the impugned document Exhibit 3, the plaintiffs received and divided between themselves the sum of P400, which sum,
added to that P2,000 received by Margarita Espiritu, and to that of the P600 collected by Wenceslao Mercado, widower of
the latter and father of the plaintiffs, makes all together the sum of P3,000, the amount paid by the purchaser as the price
of all the land containing 21 cavanes of seed, and is the just price of the property, was not impugned, and, consequently,
should be considered as equivalent to, and compensatory for, the true value of said land.
For the foregoing reasons, whereby the errors assigned to the judgment appealed from have been refuted, and deeming
said judgment to be in accordance with law and the evidence of record, we should, and do hereby, affirm the same, with
costs against the appellants. So ordered.

G.R. No. 165879

November 10, 2006

MARIA
B.
CHING, Petitioner,
vs.
JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRY GOYANKO, IMELDA GOYANKO, JULIUS GOYANKO,
MARY ELLEN GOYANKO AND JESS GOYANKO, Respondents.
DECISION
CARPIO MORALES, J.:
On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania) were married. 1 Out of the union
were born respondents Joseph, Jr., Evelyn, Jerry, Imelda, Julius, Mary Ellen and Jess, all surnamed Goyanko.
Respondents claim that in 1961, their parents acquired a 661 square meter property located at 29 F. Cabahug St., Cebu
City but that as they (the parents) were Chinese citizens at the time, the property was registered in the name of their aunt,
Sulpicia Ventura (Sulpicia).
On May 1, 1993, Sulpicia executed a deed of sale 2 over the property in favor of respondents father Goyanko. In turn,
Goyanko executed on October 12, 1993 a deed of sale 3 over the property in favor of his common-law-wife-herein
petitioner Maria B. Ching. Transfer Certificate of Title (TCT) No. 138405 was thus issued in petitioners name.
After Goyankos death on March 11, 1996, respondents discovered that ownership of the property had already been
transferred in the name of petitioner. Respondents thereupon had the purported signature of their father in the deed of
sale verified by the Philippine National Police Crime Laboratory which found the same to be a forgery.4
Respondents thus filed with the Regional Trial Court of Cebu City a complaint for recovery of property and damages
against petitioner, praying for the nullification of the deed of sale and of TCT No. 138405 and the issuance of a new one in
favor of their father Goyanko.
In defense, petitioner claimed that she is the actual owner of the property as it was she who provided its purchase price.
To disprove that Goyankos signature in the questioned deed of sale is a forgery, she presented as witness the notary
public who testified that Goyanko appeared and signed the document in his presence.
By Decision of October 16, 1998,5 the trial court dismissed the complaint against petitioner, the pertinent portions of which
decision read:
There is no valid and sufficient ground to declare the sale as null and void, fictitious and simulated. The signature on the
questioned Deed of Sale is genuine. The testimony of Atty. Salvador Barrameda who declared in court that Joseph
Goyanko, Sr. and Maria Ching together with their witnesses appeared before him for notarization of Deed of Sale in
question is more reliable than the conflicting testimonies of the two document examiners. Defendant Maria Ching asserted
that the Deed of Sale executed by Joseph Goyanko, Sr. in her favor is valid and genuine. The signature of Joseph
Goyanko, Sr. in the questioned Deed of Absolute Sale is genuine as it was duly executed and signed by Joseph Goyanko,
Sr. himself.
The parcel of lands known as Lot No. 6 which is sought to be recovered in this case could never be considered as the
conjugal property of the original Spouses Joseph C. Goyanko and Epifania dela Cruz or the exclusive capital property of
the husband. The acquisition of the said property by defendant Maria Ching is well-elicited from the aforementioned
testimonial and documentary evidence presented by the defendant. Although for a time being the property passed through
Joseph Goyanko, Sr. as a buyer yet his ownership was only temporary and transitory for the reason that it was
subsequently sold to herein defendant Maria Ching. Maria Ching claimed that it was even her money which was used by
Joseph Goyanko, Sr. in the purchase of the land and so it was eventually sold to her. In her testimony, defendant Ching

justified her financial capability to buy the land for herself. The transaction undertaken was from the original owner
Sulpicia Ventura to Joseph Goyanko, Sr. and then from Joesph Goyanko, Sr. to herein defendant Maria Ching.
The land subject of the litigation is already registered in the name of defendant Maria Ching under TCT No. 138405. By
virtue of the Deed of Sale executed in favor of Maria Ching, Transfer Certificate of Title No. 138405 was issued in her
favor. In recognition of the proverbial virtuality of a Torrens title, it has been repeatedly held that, unless bad faith can be
established on the part of the person appearing as owner on the certificate of title, there is no other owner than that in
whose favor it has been issued. A Torrens title is not subject to collateral attack. It is a well-known doctrine that a Torrens
title, as a rule, is irrevocable and indefeasible, and the duty of the court is to see to it that this title is maintained and
respected unless challenged in a direct proceedings [sic].6(Citations omitted; underscoring supplied)
Before the Court of Appeals where respondents appealed, they argued that the trial court erred:
1. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject property between
Joseph, Sr. and the defendant-appellee, despite the proliferation in the records and admissions by both parties
that defendant-appellee was the "mistress" or "common-law wife" of Joseph, Sr..
2. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject property between
Joseph, Sr. and the defendant-appellee, despite the fact that the marriage of Joseph, Sr. and Epifania was then
still subsisting thereby rendering the subject property as conjugal property of Joseph, Sr. and Epifania.
3. . . . in dismissing the complaint a quo . . . , in effect, sustaining the validity of the sale of the subject property
between Joseph, Sr. and the defendant-appellee, despite the clear findings of forgery and the non-credible
testimony of notary public.7
By Decision dated October 21, 2003, 8 the appellate court reversed that of the trial court and declared null and void the
questioned deed of sale and TCT No. 138405. Held the appellate court:
. . . The subject property having been acquired during the existence of a valid marriage between Joseph Sr. and Epifania
dela Cruz-Goyanko, is presumed to belong to the conjugal partnership. Moreover, while this presumption in favor of
conjugality is rebuttable with clear and convincing proof to the contrary, we find no evidence on record to conclude
otherwise. The record shows that while Joseph Sr. and his wife Epifania have been estranged for years and that he and
defendant-appellant Maria Ching, have in fact been living together as common-law husband and wife, there has never
been a judicial decree declaring the dissolution of his marriage to Epifania nor their conjugal partnership. It is therefore
undeniable that the 661-square meter property located at No. 29 F. Cabahug Street, Cebu City belongs to the conjugal
partnership.
Even if we were to assume that the subject property was not conjugal, still we cannot sustain the validity of the sale of the
property by Joseph, Sr. to defendant-appellant Maria Ching, there being overwhelming evidence on records that they
have been living together as common-law husband and wife. On this score, Art. 1352 of the Civil Code provides:
"Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or public policy."
We therefore find that the contract of sale in favor of the defendant-appellant Maria Ching was null and void for being
contrary to morals and public policy. The purported sale, having been made by Joseph Sr. in favor of his concubine,
undermines the stability of the family, a basic social institution which public policy vigilantly protects. Furthermore, the law
emphatically prohibits spouses from selling property to each other, subject to certain exceptions. And this is so because
transfers or conveyances between spouses, if allowed during the marriage would destroy the system of conjugal
partnership, a basic policy in civil law. The prohibition was designed to prevent the exercise of undue influence by one
spouse over the other and is likewise applicable even to common-law relationships otherwise, "the condition of those who
incurred guilt would turn out to be better than those in legal union. 9 (Underscoring supplied)
Hence, the present petition, petitioners arguing that the appellate court gravely erred in:

I.
. . . APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF
PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES ON THE SUBJECT PROPERTY, THE
SAME BEING FOUND BY THE COURT A QUO, AS THE EXCLUSIVE PROPERTY OF PETITIONER, AND THAT
THE SAME WAS NEVER PART OF THE CONJUGAL PROPERTY OF THE MARRIAGE BETWEEN
RESPONDENTS MOTHER EPIFANIA GOYANKO AND PETITIONERS COMMON LAW HUSBAND, JOSEPH
GOYANKO, SR., NOR THE EXCLUSIVE OR CAPITAL PROPERTY OF THE LATTER AT ANYTIME BEFORE
THE SAME WAS VALIDLY ACQUIRED BY PETITIONER.
II.
. . . NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR UNDER ARTICLES 1448
AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN COMMON LAW SPOUSES.
III.
. . . NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A TRUSTEE, WHO BECAME AS
SUCH IN CONTEMPLATION OF LAW, AND WHO HAPPENS TO BE A COMMON LAW HUSBAND OF THE
BENEFICIARY, IS NOT A VIOLATION OF A STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND
TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES.
IV.
. . . ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF THEIR CASE DURING
APPEAL.10
The pertinent provisions of the Civil Code which apply to the present case read:
ART. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or public policy.
ART. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
ARTICLE 1490. The husband and wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or

(2) When there has been a judicial separation of property under Article 191. (Underscoring supplied)
The proscription against sale of property between spouses applies even to common law relationships. So this Court ruled
in Calimlim-Canullas v. Hon. Fortun, etc., et al.:11
Anent the second issue, we find that the contract of sale was null and void for being contrary to morals and public
policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence they derived their support. The sale was
subversive of the stability of the family, a basic social institution which public policy cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is contrary to law, morals,
good customs, public order, or public policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect whatsoever. The
cause is unlawful if it is contrary to law, morals, good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain
exceptions.1wphi1 Similarly, donations between spouses during marriage are prohibited. And this is so because if
transfers or conveyances between spouses were allowed during marriage, that would destroy the system of conjugal
partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over
the other, as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply
to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who
incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest
and their criterion must be imposed upon the will of the parties. . . . 12 (Italics in the original; emphasis and underscoring
supplied)
As the conveyance in question was made by Goyangko in favor of his common- law-wife-herein petitioner, it was null and
void.
Petitioners argument that a trust relationship was created between Goyanko as trustee and her as beneficiary as
provided in Articles 1448 and 1450 of the Civil Code which read:
ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is
paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter
is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.
ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for the benefit of another and the
conveyance is made to the lender or payor to secure the payment of the debt, a trust arises by operation of law in favor of
the person to whom the money is loaned or for whom it is paid. The latter may redeem the property and compel a
conveyance thereof to him.
does not persuade.
For petitioners testimony that it was she who provided the purchase price is uncorroborated. That she may have been
considered the breadwinner of the family and that there was proof that she earned a living do not conclusively clinch her
claim.
As to the change of theory by respondents from forgery of their fathers signature in the deed of sale to sale contrary to
public policy, it too does not persuade. Generally, a party in a litigation is not permitted to freely and substantially change
the theory of his case so as not to put the other party to undue disadvantage by not accurately and timely apprising him of
what he is up against,13 and to ensure that the latter is given the opportunity during trial to refute all allegations against him
by presenting evidence to the contrary. In the present case, petitioner cannot be said to have been put to undue

disadvantage and to have been denied the chance to refute all the allegations against her. For the nullification of the sale
is anchored on its illegality per se, it being violative of the above-cited Articles 1352, 1409 and 1490 of the Civil Code.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED

G.R. No. L-57499 June 22, 1984

MERCEDES
CALIMLIMCANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and CORAZON
DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.

MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the Resolution on the Motion for
Reconsideration, dated November 27, 1980, of the then Court of First Instance of Pangasinan, Branch I, in Civil Case No.
15620 entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land in favor of
DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas and FERNANDO
Canullas were married on December 19, 1962. They begot five children. They lived in a small house on the residential
land in question with an area of approximately 891 square meters, located at Bacabac, Bugallon, Pangasinan. After
FERNANDO's father died in 1965, FERNANDO inherited the land.
In 1978, FERNANDO abandoned his family and was living with private respondent Corazon DAGUINES. During the
pendency of this appeal, they were convicted of concubinage in a judgment rendered on October 27, 1981 by the then
Court of First Instance of Pangasinan, Branch II, which judgment has become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the sum of P2,000.00.
In the document of sale, FERNANDO described the house as "also inherited by me from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19, 1980 for quieting of title and
damages against MERCEDES. The latter resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with conjugal funds and through her industry; that
the sale of the land together with the house and improvements to DAGUINES was null and void because they are
conjugal properties and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of the land in question as
well as the one-half () of the house erected on said land." Upon reconsideration prayed for by MERCEDES, however,
respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on October 6, 1980, is
hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question and the 10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on April 15, 1980 (Exhibit A)
including the 3 coconut trees and other crops planted during the conjugal relation between Fernando
Canullas (vendor) and his legitimate wife, herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx

The issues posed for resolution are (1) whether or not the construction of a conjugal house on the exclusive property of
the husband ipso facto gave the land the character of conjugal property; and (2) whether or not the sale of the lot together
with the house and improvements thereon was valid under the circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be given to the second paragraph of Article 158 of
the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the marriage on land belonging to one of
the spouses also pertain to the partnership, but the value of the land shall be reimbursed to the spouse
who owns the same.
We hold that pursuant to the foregoing provision both the land and the building belong to the conjugal partnership but the
conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot becomes a creditor of
the conjugal partnership for the value of the lot, 1 which value would be reimbursed at the liquidation of the conjugal
partnership. 2
In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el matrimonio en suelo propio de uno de
los conjuges son gananciales, abonandose el valor del suelo al conj uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it was held that the land belonging to
one of the spouses, upon which the spouses have built a house, becomes conjugal property only when the conjugal
partnership is liquidated and indemnity paid to the owner of the land. We believe that the better rule is that enunciated by
Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following was explained:
As to the above properties, their conversion from paraphernal to conjugal assets should be deemed to
retroact to the time the conjugal buildings were first constructed thereon or at the very latest, to the time
immediately before the death of Narciso A. Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the time their values were paid to the estate of
the widow Concepcion Paterno because by that time the conjugal partnership no longer existed and it
could not acquire the ownership of said properties. The acquisition by the partnership of these properties
was, under the 1943 decision, subject to the suspensive condition that their values would be reimbursed
to the widow at the liquidation of the conjugal partnership; once paid, the effects of the fulfillment of the
condition should be deemed to retroact to the date the obligation was constituted (Art. 1187, New Civil
Code) ...
The foregoing premises considered, it follows that FERNANDO could not have alienated the house and lot to DAGUINES
since MERCEDES had not given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being contrary to morals and public policy.
The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home
where his wife and children lived and from whence they derived their support. That sale was subversive of the stability of
the family, a basic social institution which public policy cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is contrary to law, morals,
good customs, public order, or public policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect whatsoever.The cause
is unlawful if it is contrary to law, morals, good customs, public order, or public policy."

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain
exceptions. 6 Similarly, donations between spouses during marriage are prohibited. 7 And this is so because if transfers or
con conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership,
a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the
other, 8 as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a
couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would
turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be
imposed upon the wig of the parties. That was the ruling in Buenaventura vs. Bautista, also penned by Justice JBL Reyes
(CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code considers as void a donation between
the spouses during the marriage, policy considerations of the most exigent character as wen as the
dictates of morality require that the same prohibition should apply to a common-law relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura vs. Bautista,
50 OG 3679, interpreting a similar provision of the old Civil Code speaks unequivocally. If the policy of the
law is, in the language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations
in favor of the other consort and his descendants because of fear of undue influence and improper
pressure upon the donor, a prejudice deeply rooted in our ancient law, ..., then there is every reason to
apply the same prohibitive policy to persons living together as husband and wife without benefit of
nuptials. For it is not to be doubted that assent to such irregular connection for thirty years bespeaks
greater influence of one party over the other, so that the danger that the law seeks to avoid is
correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would
not be just that such donations should subsist, lest the conditions of those who incurred guilt should
turn out to be better." So long as marriage remains the cornerstone of our family law, reason and morality
alike demand that the disabilities attached to marriage should likewise attach to concubinage (Emphasis
supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of November 27, 1980 on
petitioner's Motion for Reconsideration, are hereby set aside and the sale of the lot, house and improvements in question,
is hereby declared null and void. No costs.
SO ORDERED.

G.R. No. 188064

June 1, 2011

MILA
vs.
VICTORIA T. TUPARAN, Respondent.

A.

REYES, Petitioner,

DECISION
MENDOZA, J.:
Subject of this petition for review is the February 13, 2009 Decision 1 of the Court of Appeals (CA) which affirmed
with modification the February 22, 2006 Decision 2 of the Regional Trial Court, Branch 172, Valenzuela City (RTC), in
Civil Case No. 3945-V-92, an action for Rescission of Contract with Damages.
On September 10, 1992, Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages
against Victoria T. Tuparan (respondent) before the RTC. In her Complaint, petitioner alleged, among others, that
she was the registered owner of a 1,274 square meter residential and commercial lot located in Karuhatan,
Valenzuela City, and covered by TCT No. V-4130; that on that property, she put up a three-storey commercial
building known as RBJ Building and a residential apartment building; that since 1990, she had been operating a
drugstore and cosmetics store on the ground floor of RBJ Building where she also had been residing while the other
areas of the buildings including the sidewalks were being leased and occupied by tenants and street vendors.
In December 1989, respondent leased from petitioner a space on the ground floor of the RBJ Building for her
pawnshop business for a monthly rental of 4,000.00. A close friendship developed between the two which led to
the respondent investing thousands of pesos in petitioners financing/lending business from February 7, 1990 to
May 27, 1990, with interest at the rate of 6% a month.
On June 20, 1988, petitioner mortgaged the subject real properties to the Farmers Savings Bank and Loan Bank,
Inc. (FSL Bank) to secure a loan of 2,000,000.00 payable in installments. On November 15, 1990, petitioners
outstanding account on the mortgage reached 2,278,078.13. Petitioner then decided to sell her real properties for
at least 6,500,000.00 so she could liquidate her bank loan and finance her businesses. As a gesture of friendship,
respondent verbally offered to conditionally buy petitioners real properties for 4,200,000.00 payable on installment
basis without interest and to assume the bank loan. To induce the petitioner to accept her offer, respondent offered
the following conditions/concessions:
1. That the conditional sale will be cancelled if the plaintiff (petitioner) can find a buyer of said properties for
the amount of 6,500,000.00 within the next three (3) months provided all amounts received by the plaintiff
from the defendant (respondent) including payments actually made by defendant to Farmers Savings and
Loan Bank would be refunded to the defendant with additional interest of six (6%) monthly;
2. That the plaintiff would continue using the space occupied by her and drugstore and cosmetics store
without any rentals for the duration of the installment payments;
3. That there will be a lease for fifteen (15) years in favor of the plaintiff over the space for drugstore and
cosmetics store at a monthly rental of only 8,000.00 after full payment of the stipulated installment
payments are made by the defendant;
4. That the defendant will undertake the renewal and payment of the fire insurance policies on the two (2)
subject buildings following the expiration of the then existing fire insurance policy of the plaintiff up to the
time that plaintiff is fully paid of the total purchase price of 4,200,000.00. 3

After petitioners verbal acceptance of all the conditions/concessions, both parties worked together to obtain FSL
Banks approval for respondent to assume her (petitioners) outstanding bank account. The assumption would be
part of respondents purchase price for petitioners mortgaged real properties. FSL Bank approved their proposal on
the condition that petitioner would sign or remain as co-maker for the mortgage obligation assumed by respondent.
On November 26, 1990, the parties and FSL Bank executed the corresponding Deed of Conditional Sale of Real
Properties with Assumption of Mortgage. Due to their close personal friendship and business relationship, both
parties chose not to reduce into writing the other terms of their agreement mentioned in paragraph 11 of the
complaint. Besides, FSL Bank did not want to incorporate in the Deed of Conditional Sale of Real Properties with
Assumption of Mortgage any other side agreement between petitioner and respondent.
Under the Deed of Conditional Sale of Real Properties with Assumption of Mortgage, respondent was bound to pay
the petitioner a lump sum of 1.2 million pesos without interest as part of the purchase price in three (3) fixed
installments as follows:
a) 200,000.00 due January 31, 1991
b) 200,000.00 due June 30, 1991
c) 800,000.00 due December 31, 1991
Respondent, however, defaulted in the payment of her obligations on their due dates. Instead of paying the amounts
due in lump sum on their respective maturity dates, respondent paid petitioner in small amounts from time to time.
To compensate for her delayed payments, respondent agreed to pay petitioner an interest of 6% a month. As of
August 31, 1992, respondent had only paid 395,000.00, leaving a balance of 805,000.00 as principal on the
unpaid installments and 466,893.25 as unpaid accumulated interest.
Petitioner further averred that despite her success in finding a prospective buyer for the subject real properties
within the 3-month period agreed upon, respondent reneged on her promise to allow the cancellation of their deed
of conditional sale. Instead, respondent became interested in owning the subject real properties and even wanted to
convert the entire property into a modern commercial complex. Nonetheless, she consented because respondent
repeatedly professed friendship and assured her that all their verbal side agreement would be honored as shown by
the fact that since December 1990, she (respondent) had not collected any rentals from the petitioner for the space
occupied by her drugstore and cosmetics store.
On March 19, 1992, the residential building was gutted by fire which caused the petitioner to lose rental income in
the amount of 8,000.00 a month since April 1992. Respondent neglected to renew the fire insurance policy on the
subject buildings.
Since December 1990, respondent had taken possession of the subject real properties and had been continuously
collecting and receiving monthly rental income from the tenants of the buildings and vendors of the sidewalk fronting
the RBJ building without sharing it with petitioner.
On September 2, 1992, respondent offered the amount of 751,000.00 only payable on September 7, 1992, as full
payment of the purchase price of the subject real properties and demanded the simultaneous execution of the
corresponding deed of absolute sale.
Respondents Answer
Respondent countered, among others, that the tripartite agreement erroneously designated by the petitioner as a
Deed of Conditional Sale of Real Property with Assumption of Mortgage was actually a pure and absolute contract

of sale with a term period. It could not be considered a conditional sale because the acquisition of contractual rights
and the performance of the obligation therein did not depend upon a future and uncertain event. Moreover, the
capital gains and documentary stamps and other miscellaneous expenses and real estate taxes up to 1990 were
supposed to be paid by petitioner but she failed to do so.
Respondent further averred that she successfully rescued the properties from a definite foreclosure by paying the
assumed mortgage in the amount of 2,278,078.13 plus interest and other finance charges. Because of her
payment, she was able to obtain a deed of cancellation of mortgage and secure a release of mortgage on the
subject real properties including petitioners ancestral residential property in Sta. Maria, Bulacan.
Petitioners claim for the balance of the purchase price of the subject real properties was baseless and unwarranted
because the full amount of the purchase price had already been paid, as she did pay more than 4,200,000.00, the
agreed purchase price of the subject real properties, and she had even introduced improvements thereon worth
more than 4,800,000.00. As the parties could no longer be restored to their original positions, rescission could not
be resorted to.
Respondent added that as a result of their business relationship, petitioner was able to obtain from her a loan in the
amount of 400,000.00 with interest and took several pieces of jewelry worth 120,000.00. Petitioner also failed
and refused to pay the monthly rental of 20,000.00 since November 16, 1990 up to the present for the use and
occupancy of the ground floor of the building on the subject real property, thus, accumulating arrearages in the
amount of 470,000.00 as of October 1992.
Ruling of the RTC
On February 22, 2006, the RTC handed down its decision finding that respondent failed to pay in full the 4.2 million
total purchase price of the subject real properties leaving a balance of 805,000.00. It stated that the checks and
receipts presented by respondent refer to her payments of the mortgage obligation with FSL Bank and not the
payment of the balance of 1,200,000.00. The RTC also considered the Deed of Conditional Sale of Real Property
with Assumption of Mortgage executed by and among the two parties and FSL Bank a contract to sell, and not a
contract of sale. It was of the opinion that although the petitioner was entitled to a rescission of the contract, it could
not be permitted because her non-payment in full of the purchase price "may not be considered as substantial and
fundamental breach of the contract as to defeat the object of the parties in entering into the contract." 4 The RTC
believed that the respondents offer stated in her counsels letter dated September 2, 1992 to settle what she
thought was her unpaid balance of 751,000.00 showed her sincerity and willingness to settle her obligation.
Hence, it would be more equitable to give respondent a chance to pay the balance plus interest within a given
period of time.
Finally, the RTC stated that there was no factual or legal basis to award damages and attorneys fees because there
was no proof that either party acted fraudulently or in bad faith.
Thus, the dispositive portion of the RTC Decision reads:
WHEREFORE, judgment is hereby rendered as follows:
1. Allowing the defendant to pay the plaintiff within thirty (30) days from the finality hereof the amount of
805,000.00, representing the unpaid purchase price of the subject property, with interest thereon at 2% a
month from January 1, 1992 until fully paid. Failure of the defendant to pay said amount within the said
period shall cause the automatic rescission of the contract (Deed of Conditional Sale of Real Property with
Assumption of Mortgage) and the plaintiff and the defendant shall be restored to their former positions
relative to the subject property with each returning to the other whatever benefits each derived from the
transaction;

2. Directing the defendant to allow the plaintiff to continue using the space occupied by her for drugstore and
cosmetic store without any rental pending payment of the aforesaid balance of the purchase price.
3. Ordering the defendant, upon her full payment of the purchase price together with interest, to execute a
contract of lease for fifteen (15) years in favor of the plaintiff over the space for the drugstore and cosmetic
store at a fixed monthly rental of 8,000.00; and
4. Directing the plaintiff, upon full payment to her by the defendant of the purchase price together with
interest, to execute the necessary deed of sale, as well as to pay the Capital Gains Tax, documentary
stamps and other miscellaneous expenses necessary for securing the BIR Clearance, and to pay the real
estate taxes due on the subject property up to 1990, all necessary to transfer ownership of the subject
property to the defendant.
No pronouncement as to damages, attorneys fees and costs.
SO ORDERED.5
Ruling of the CA
On February 13, 2009, the CA rendered its decision affirming with modification the RTC Decision. The CA agreed
with the RTC that the contract entered into by the parties is a contract to sell but ruled that the remedy of rescission
could not apply because the respondents failure to pay the petitioner the balance of the purchase price in the total
amount of 805,000.00 was not a breach of contract, but merely an event that prevented the seller (petitioner) from
conveying title to the purchaser (respondent). It reasoned that out of the total purchase price of the subject property
in the amount of 4,200,000.00, respondents remaining unpaid balance was only 805,000.00. Since respondent
had already paid a substantial amount of the purchase price, it was but right and just to allow her to pay the unpaid
balance of the purchase price plus interest. Thus, the decretal portion of the CA Decision reads:
WHEREFORE, premises considered, the Decision dated 22 February 2006 and Order dated 22 December 2006 of
the Regional Trial Court of Valenzuela City, Branch 172 in Civil Case No. 3945-V-92 are AFFIRMED with
MODIFICATION in that defendant-appellant Victoria T. Tuparan is hereby ORDERED to pay plaintiffappellee/appellant Mila A. Reyes, within 30 days from finality of this Decision, the amount of 805,000.00
representing the unpaid balance of the purchase price of the subject property, plus interest thereon at the rate of 6%
per annum from 11 September 1992 up to finality of this Decision and, thereafter, at the rate of 12% per annum until
full payment. The ruling of the trial court on the automatic rescission of the Deed of Conditional Sale with
Assumption of Mortgage is hereby DELETED. Subject to the foregoing, the dispositive portion of the trial courts
decision is AFFIRMED in all other respects.
SO ORDERED.6
After the denial of petitioners motion for reconsideration and respondents motion for partial reconsideration,
petitioner filed the subject petition for review praying for the reversal and setting aside of the CA Decision anchored
on the following
ASSIGNMENT OF ERRORS
A. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN DISALLOWING THE
OUTRIGHT RESCISSION OF THE SUBJECT DEED OF CONDITIONAL SALE OF REAL PROPERTIES WITH
ASSUMPTION OF MORTGAGE ON THE GROUND THAT RESPONDENT TUPARANS FAILURE TO PAY
PETITIONER REYES THE BALANCE OF THE PURCHASE PRICE OF 805,000.00 IS NOT A BREACH OF
CONTRACT DESPITE ITS OWN FINDINGS THAT PETITIONER STILL RETAINS OWNERSHIP AND TITLE OVER

THE SUBJECT REAL PROPERTIES DUE TO RESPONDENTS REFUSAL TO PAY THE BALANCE OF THE
TOTAL PURCHASE PRICE OF 805,000.00 WHICH IS EQUAL TO 20% OF THE TOTAL PURCHASE PRICE OF
4,200,000.00 OR 66% OF THE STIPULATED LAST INSTALLMENT OF 1,200,000.00 PLUS THE INTEREST
THEREON. IN EFFECT, THE COURT OF APPEALS AFFIRMED AND ADOPTED THE TRIAL COURTS
CONCLUSION THAT THE RESPONDENTS NON-PAYMENT OF THE 805,000.00 IS ONLY A SLIGHT OR
CASUAL BREACH OF CONTRACT.
B. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN DISREGARDING AS
GROUND FOR THE RESCISSION OF THE SUBJECT CONTRACT THE OTHER FRAUDULENT AND
MALICIOUS ACTS COMMITTED BY THE RESPONDENT AGAINST THE PETITIONER WHICH BY
THEMSELVES SUFFICIENTLY JUSTIFY A DENIAL OF A GRACE PERIOD OF THIRTY (30) DAYS TO THE
RESPONDENT WITHIN WHICH TO PAY TO THE PETITIONER THE 805,000.00 PLUS INTEREST THEREON.
C. EVEN ASSUMING ARGUENDO THAT PETITIONER IS NOT ENTITLED TO THE RESCISSION OF THE
SUBJECT CONTRACT, THE COURT OF APPEALS STILL SERIOUSLY ERRED AND ABUSED ITS DISCRETION
IN REDUCING THE INTEREST ON THE 805,000.00 TO ONLY "6% PER ANNUM STARTING FROM THE DATE
OF FILING OF THE COMPLAINT ON SEPTEMBER 11, 1992" DESPITE THE PERSONAL COMMITMENT OF THE
RESPONDENT AND AGREEMENT BETWEEN THE PARTIES THAT RESPONDENT WILL PAY INTEREST ON
THE 805,000.00 AT THE RATE OF 6% MONTHLY STARTING THE DATE OF DELINQUENCY ON DECEMBER
31, 1991.
D. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN THE APPRECIATION
AND/OR MISAPPRECIATION OF FACTS RESULTING INTO THE DENIAL OF THE CLAIM OF PETITIONER
REYES FOR ACTUAL DAMAGES WHICH CORRESPOND TO THE MILLIONS OF PESOS OF RENTALS/FRUITS
OF THE SUBJECT REAL PROPERTIES WHICH RESPONDENT TUPARAN COLLECTED CONTINUOUSLY
SINCE DECEMBER 1990, EVEN WITH THE UNPAID BALANCE OF 805,000.00 AND DESPITE THE FACT THAT
RESPONDENT DID NOT CONTROVERT SUCH CLAIM OF THE PETITIONER AS CONTAINED IN HER
AMENDED COMPLAINT DATED APRIL 22, 2006.
E. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN THE APPRECIATION OF
FACTS RESULTING INTO THE DENIAL OF THE CLAIM OF PETITIONER REYES FOR THE 29,609.00 BACK
RENTALS THAT WERE COLLECTED BY RESPONDENT TUPARAN FROM THE OLD TENANTS OF THE
PETITIONER.
F. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN DENYING THE
PETITIONERS EARLIER "URGENT MOTION FOR ISSUANCE OF A PRELIMINARY MANDATORY AND
PROHIBITORY INJUNCTION" DATED JULY 7, 2008 AND THE "SUPPLEMENT" THERETO DATED AUGUST 4,
2008 THEREBY CONDONING THE UNJUSTIFIABLE FAILURE/REFUSAL OF JUDGE FLORO ALEJO TO
RESOLVE WITHIN ELEVEN (11) YEARS THE PETITIONERS THREE (3) SEPARATE "MOTIONS FOR
PRELIMINARY INJUNCTION/ TEMPORARY RESTRAINING ORDER, ACCOUNTING AND DEPOSIT OF RENTAL
INCOME" DATED MARCH 17, 1995, AUGUST 19, 1996 AND JANUARY 7, 2006 THEREBY PERMITTING THE
RESPONDENT TO UNJUSTLY ENRICH HERSELF BY CONTINUOUSLY COLLECTING ALL THE
RENTALS/FRUITS OF THE SUBJECT REAL PROPERTIES WITHOUT ANY ACCOUNTING AND COURT
DEPOSIT OF THE COLLECTED RENTALS/FRUITS AND THE PETITIONERS "URGENT MOTION TO DIRECT
DEFENDANT VICTORIA TUPARAN TO PAY THE ACCUMULATED UNPAID REAL ESTATE TAXES AND SEF
TAXES ON THE SUBJECT REAL PROPERTIES" DATED JANUARY 13, 2007 THEREBY EXPOSING THE
SUBJECT REAL PROPERTIES TO IMMINENT AUCTION SALE BY THE CITY TREASURER OF VALENZUELA
CITY.

G. THE COURT OF APPEALS SERIOUSLY ERRED AND ABUSED ITS DISCRETION IN DENYING THE
PETITIONERS CLAIM FOR MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES AGAINST THE
RESPONDENT.
In sum, the crucial issue that needs to be resolved is whether or not the CA was correct in ruling that there was no
legal basis for the rescission of the Deed of Conditional Sale with Assumption of Mortgage.
Position of the Petitioner
The petitioner basically argues that the CA should have granted the rescission of the subject Deed of Conditional
Sale of Real Properties with Assumption of Mortgage for the following reasons:
1. The subject deed of conditional sale is a reciprocal obligation whose outstanding characteristic is
reciprocity arising from identity of cause by virtue of which one obligation is correlative of the other.
2. The petitioner was rescinding not enforcing the subject Deed of Conditional Sale pursuant to Article
1191 of the Civil Code because of the respondents failure/refusal to pay the 805,000.00 balance of the
total purchase price of the petitioners properties within the stipulated period ending December 31, 1991.
3. There was no slight or casual breach on the part of the respondent because she (respondent) deliberately
failed to comply with her contractual obligations with the petitioner by violating the terms or manner of
payment of the 1,200,000.00 balance and unjustly enriched herself at the expense of the petitioner by
collecting all rental payments for her personal benefit and enjoyment.
Furthermore, the petitioner claims that the respondent is liable to pay interest at the rate of 6% per month on her
unpaid installment of 805,000.00 from the date of the delinquency, December 31, 1991, because she obligated
herself to do so.
Finally, the petitioner asserts that her claim for damages or lost income as well as for the back rentals in the amount
of 29,609.00 has been fully substantiated and, therefore, should have been granted by the CA. Her claim for moral
and exemplary damages and attorneys fees has been likewise substantiated.
Position of the Respondent
The respondent counters that the subject Deed of Conditional Sale with Assumption of Mortgage entered into
between the parties is a contract to sell and not a contract of sale because the title of the subject properties still
remains with the petitioner as she failed to pay the installment payments in accordance with their agreement.
Respondent echoes the RTC position that her inability to pay the full balance on the purchase price may not be
considered as a substantial and fundamental breach of the subject contract and it would be more equitable if she
would be allowed to pay the balance including interest within a certain period of time. She claims that as early as
1992, she has shown her sincerity by offering to pay a certain amount which was, however, rejected by the
petitioner.
Finally, respondent states that the subject deed of conditional sale explicitly provides that the installment payments
shall not bear any interest. Moreover, petitioner failed to prove that she was entitled to back rentals.
The Courts Ruling
The petition lacks merit.

The Court agrees with the ruling of the courts below that the subject Deed of Conditional Sale with Assumption of
Mortgage entered into by and among the two parties and FSL Bank on November 26, 1990 is a contract to sell and
not a contract of sale. The subject contract was correctly classified as a contract to sell based on the following
pertinent stipulations:
8. That the title and ownership of the subject real properties shall remain with the First Party until the full payment of
the Second Party of the balance of the purchase price and liquidation of the mortgage obligation of 2,000,000.00.
Pending payment of the balance of the purchase price and liquidation of the mortgage obligation that was assumed
by the Second Party, the Second Party shall not sell, transfer and convey and otherwise encumber the subject real
properties without the written consent of the First and Third Party.
9. That upon full payment by the Second Party of the full balance of the purchase price and the assumed mortgage
obligation herein mentioned the Third Party shall issue the corresponding Deed of Cancellation of Mortgage and the
First Party shall execute the corresponding Deed of Absolute Sale in favor of the Second Party.7
Based on the above provisions, the title and ownership of the subject properties remains with the petitioner until the
respondent fully pays the balance of the purchase price and the assumed mortgage obligation. Thereafter, FSL
Bank shall then issue the corresponding deed of cancellation of mortgage and the petitioner shall execute the
corresponding deed of absolute sale in favor of the respondent.
Accordingly, the petitioners obligation to sell the subject properties becomes demandable only upon the happening
of the positive suspensive condition, which is the respondents full payment of the purchase price. Without
respondents full payment, there can be no breach of contract to speak of because petitioner has no obligation yet to
turn over the title. Respondents failure to pay in full the purchase price is not the breach of contract contemplated
under Article 1191 of the New Civil Code but rather just an event that prevents the petitioner from being bound to
convey title to the respondent. The 2009 case of Nabus v. Joaquin & Julia Pacson8is enlightening:
The Court holds that the contract entered into by the Spouses Nabus and respondents was a contract to sell, not a
contract of sale.
A contract of sale is defined in Article 1458 of the Civil Code, thus:
Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
xxx
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of
a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential
element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell

the subject property when the entire amount of the purchase price is delivered to him. In other words, the full
payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by
the prospective buyer.
xxx

xxx

xxx

Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the
prospective sellers obligation to sell the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor
if the promise is supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to
sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the
seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated. However, if the suspensive condition is fulfilled, the contract
of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale
to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act
having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price,
ownership will not automatically transfer to the buyer although the property may have been previously delivered to
him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute
sale.
Further, Chua v. Court of Appeals, cited this distinction between a contract of sale and a contract to sell:
In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; in a contract to
sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the
purchase price. Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot
recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the
vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition,
failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming
effective.
It is not the title of the contract, but its express terms or stipulations that determine the kind of contract entered into
by the parties. In this case, the contract entitled "Deed of Conditional Sale" is actually a contract to sell. The contract
stipulated that "as soon as the full consideration of the sale has been paid by the vendee, the corresponding transfer
documents shall be executed by the vendor to the vendee for the portion sold." Where the vendor promises to
execute a deed of absolute sale upon the completion by the vendee of the payment of the price, the contract is only

a contract to sell." The aforecited stipulation shows that the vendors reserved title to the subject property until full
payment of the purchase price.
xxx
Unfortunately for the Spouses Pacson, since the Deed of Conditional Sale executed in their favor was merely a
contract to sell, the obligation of the seller to sell becomes demandable only upon the happening of the suspensive
condition. The full payment of the purchase price is the positive suspensive condition, the failure of which is not a
breach of contract, but simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force. Thus, for its non-fulfilment, there is no contract to speak of, the obligor having failed to
perform the suspensive condition which enforces a juridical relation. With this circumstance, there can be no
rescission or fulfillment of an obligation that is still non-existent, the suspensive condition not having occurred as
yet. Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is the obligors
failure to comply with an obligation already extant, not a failure of a condition to render binding that
obligation. [Emphases and underscoring supplied]
Consistently, the Court handed down a similar ruling in the 2010 case of Heirs of Atienza v. Espidol, 9 where it was
written:
Regarding the right to cancel the contract for non-payment of an installment, there is need to initially determine if
what the parties had was a contract of sale or a contract to sell. In a contract of sale, the title to the property passes
to the buyer upon the delivery of the thing sold. In a contract to sell, on the other hand, the ownership is, by
agreement, retained by the seller and is not to pass to the vendee until full payment of the purchase price. In the
contract of sale, the buyers non-payment of the price is a negative resolutory condition; in the contract to sell, the
buyers full payment of the price is a positive suspensive condition to the coming into effect of the agreement. In the
first case, the seller has lost and cannot recover the ownership of the property unless he takes action to set aside
the contract of sale. In the second case, the title simply remains in the seller if the buyer does not comply with the
condition precedent of making payment at the time specified in the contract. Here, it is quite evident that the contract
involved was one of a contract to sell since the Atienzas, as sellers, were to retain title of ownership to the land until
respondent Espidol, the buyer, has paid the agreed price. Indeed, there seems no question that the parties
understood this to be the case.
Admittedly, Espidol was unable to pay the second installment of P1,750,000.00 that fell due in December 2002. That
payment, said both the RTC and the CA, was a positive suspensive condition failure of which was notregarded a
breach in the sense that there can be no rescission of an obligation (to turn over title) that did not yet exist
since the suspensive condition had not taken place. x x x. [Emphases and underscoring supplied]
Thus, the Court fully agrees with the CA when it resolved: "Considering, however, that the Deed of Conditional Sale
was not cancelled by Vendor Reyes (petitioner) and that out of the total purchase price of the subject property in the
amount of 4,200,000.00, the remaining unpaid balance of Tuparan (respondent) is only 805,000.00, a substantial
amount of the purchase price has already been paid. It is only right and just to allow Tuparan to pay the said unpaid
balance of the purchase price to Reyes."10
Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for the reason that,
considering the circumstances, there was only a slight or casual breach in the fulfillment of the obligation.
Unless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and
fundamental to the fulfillment of the obligation. Whether the breach is slight or substantial is largely determined by
the attendant circumstances.11 In the case at bench, the subject contract stipulated the following important
provisions:

2. That the purchase price of 4,200,000.00 shall be paid as follows:

a) 278,078.13 received in cash by the First Party but directly paid to the Third Party as partial payment of
the mortgage obligation of the First Party in order to reduce the amount to 2,000,000.00 only as of
November 15, 1990;
b) 721,921.87 received in cash by the First Party as additional payment of the Second Party;
c) 1,200,000.00 to be paid in installments as follows:
1. 200,000.00 payable on or before January 31, 1991;
2. 200,000.00 payable on or before June 30, 1991;
3. 800,000.00 payable on or before December 31, 1991;
Note: All the installments shall not bear any interest.
d) 2,000,000.00 outstanding balance of the mortgage obligation as of November 15, 1990 which is hereby
assumed by the Second Party.
xxx
3. That the Third Party hereby acknowledges receipts from the Second Party P278,078.13 as partial payment of the
loan obligation of First Party in order to reduce the account to only 2,000,000.00 as of November 15, 1990 to be
assumed by the Second Party effective November 15, 1990. 12
From the records, it cannot be denied that respondent paid to FSL Bank petitioners mortgage obligation in the
amount of 2,278,078.13, which formed part of the purchase price of the subject property. Likewise, it is not
disputed that respondent paid directly to petitioner the amount of 721,921.87 representing the additional payment
for the purchase of the subject property. Clearly, out of the total price of 4,200,000.00, respondent was able to pay
the total amount of 3,000,000.00, leaving a balance of 1,200,000.00 payable in three (3) installments.
Out of the 1,200,000.00 remaining balance, respondent paid on several dates the first and second installments of
200,000.00 each. She, however, failed to pay the third and last installment of 800,000.00 due on December 31,
1991. Nevertheless, on August 31, 1992, respondent, through counsel, offered to pay the amount of 751,000.00,
which was rejected by petitioner for the reason that the actual balance was 805,000.00 excluding the interest
charges.
Considering that out of the total purchase price of 4,200,000.00, respondent has already paid the substantial
amount of 3,400,000.00, more or less, leaving an unpaid balance of only 805,000.00, it is right and just to allow
her to settle, within a reasonable period of time, the balance of the unpaid purchase price. The Court agrees with the
courts below that the respondent showed her sincerity and willingness to comply with her obligation when she
offered to pay the petitioner the amount of 751,000.00.
On the issue of interest, petitioner failed to substantiate her claim that respondent made a personal commitment to
pay a 6% monthly interest on the 805,000.00 from the date of delinquency, December 31, 1991. As can be
gleaned from the contract, there was a stipulation stating that: "All the installments shall not bear interest." The CA
was, however, correct in imposing interest at the rate of 6% per annum starting from the filing of the complaint on
September 11, 1992.
1avvphi1

Finally, the Court upholds the ruling of the courts below regarding the non-imposition of damages and attorneys
fees. Aside from petitioners self-serving statements, there is not enough evidence on record to prove that
respondent acted fraudulently and maliciously against the petitioner. In the case of Heirs of Atienza v. Espidol, 13 it
was stated:
Respondents are not entitled to moral damages because contracts are not referred to in Article 2219 of the Civil
Code, which enumerates the cases when moral damages may be recovered. Article 2220 of the Civil Code allows
the recovery of moral damages in breaches of contract where the defendant acted fraudulently or in bad faith.
However, this case involves a contract to sell, wherein full payment of the purchase price is a positive suspensive
condition, the non-fulfillment of which is not a breach of contract, but merely an event that prevents the seller from
conveying title to the purchaser. Since there is no breach of contract in this case, respondents are not entitled to
moral damages.
In the absence of moral, temperate, liquidated or compensatory damages, exemplary damages cannot be granted
for they are allowed only in addition to any of the four kinds of damages mentioned.
WHEREFORE, the petition is DENIED.
SO ORDERED.

G.R. No. 108169

August 25, 1999

SPOUSES VENANCIO DAVID and PATRICIA MIRANDA DAVID and FLORENCIA VENTURA VDA. DE
BASCO,petitioners,
vs.
ALEJANDRO and GUADALUPE TIONGSON, respondents.
PARDO, J.:
Before the Court is a petition for review on certiorari of the decision of the Court of Appeals 1 modifying that of the
trial court2 in an action for specific performance with damages filed by petitioners against respondents.
The facts are as follows:
On February 23, 1989, three sets of plaintiffs, namely, spouses Feliciano and Macaria Ventura, spouses Venancio
and Patricia David and Florencia Ventura Vda. de Basco, filed with the Regional Trial Court, San Fernando,
Pampanga, a complaint for specific performance with damages, against private respondents spouses Alejandro and
Guadalupe Tiongson, alleging that the latter sold to them lots located in Cabalantian, Bacolor, Pampanga, as
follows:
(a) a parcel of residential land with an area of 300 square meters (sq. m.), more or less, for a total purchase
price of P16,500.00, sold to spouses Feliciano and Macaria Ventura;
(b) a parcel of land consisting of 308 sq.m., more or less, which is a portion of Lot No. 1547-G-2-G covered
by TCT No. 187751-R, for a total consideration of P15,000.00, sold to spouses Venancio and Patricia M.
David;
(c) two parcels of land with a total area of 169 sq. m., 109 sq. m., which is a portion of Lot No. 1547-G-2-G
and a 60 sq. m., which is part of a lot covered by TCT No. 200835-R, for a total consideration of P10,400.00,
sold to Florencia Ventura Vda. de Basco.
The parties expressly agreed that as soon as the plaintiffs fully paid the purchase price on their respective lots,
respondents would execute an individual deed of absolute sale and cause the issuance of the corresponding
certificate of title in plaintiffs' favor.
Spouses Ventura immediately took possession of the lot, erected their house thereon and fenced the perimeters. As
of October 28, 1985, the Venturas had fully paid the price of their lot, evidenced by a certification 3 issued by
Alejandro Tiongson. Sometime in November 1985, the Venturas demanded the execution of a deed of sale and the
issuance of the corresponding certificate of title, but the latter refused to issue the same.
Spouses David claimed that, as agreed by the parties, the P15,000.00 purchase price would be paid as follows:
P3,800.00, as downpayment and a monthly amortization of P365.00, starting on March 8, 1983, until fully paid. On
October 31, 1985, the Davids had paid a total of P15,050.00, evidenced by the receipts issued by Alejandro
Tiongson.4 On the first week of November 1985, the Davids demanded the execution of a deed of sale and the
issuance of the corresponding certificate of title, but respondents refused. Unlike the Venturas, they were not able to
take possession of the property.
Plaintiff Florencia Ventura Vda. de Basco averred that she bought two parcels of land, a 109 sq. m. lot and a 60 sq.
m. lot, for P6,425.00 and P6,500.00, respectively. As of February 6, 1984, Florencia had paid P12,945.00 for the two
lots, evidenced by receipts issued by Alejandro Tiongson. 5 Sometime in March 1984, she demanded the execution
of the deeds of sale and issuance of the corresponding certificates of title over the lots. However, respondents failed
to comply with their obligation.
After no settlement was reached at the barangay level, on February 23, 1989, plaintiffs filed a complaint with the
Regional Trial Court, San Fernando, Pampanga, for specific performance with damages. On April 18, 1989, upon

motion of the plaintiffs, respondents Tiongsons were declared in default for failure to file their answer, despite the
fifteen (15) days extension granted by the trial court.
1wphi1.nt

On June 14, 1989, the trial court rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the
defendants:
1) Ordering the defendants to execute the deeds of absolute sale covering the lots respectively sold
to plaintiffs and to cause the issuance of the title covering the aforesaid lots at their own expense;
2) Ordering the defendants to pay unto the plaintiffs P15,000.00 as moral damages.
Defendants are likewise ordered to pay the costs of suit. 6
Respondents Tiongsons appealed the decision to the Court of Appeals. They claimed that their failure to file an
answer in due time amounted to excusable negligence. 7 They contended that the plaintiffs had not fully paid the
agreed price of P120 per sq. m. They argued that the Venturas were still in arrears for P30,000.00, the Davids for
P21,000.00 and Florencia for P9,880.00. Hence, the deeds of sale and certificates of title were not issued.
On October 19, 1992, the Court of Appeals 8 modified the trial court's decision. Although it blamed respondents for
their failure to file an answer in due time, it held that there was no perfected contracts of sale entered into by the
Davids and Florencia Vda. de Basco with respondents. However, the Court of Appeals upheld the sale involving the
Venturas and ordered respondents to execute a deed of sale and cause the issuance of the corresponding
certificate of title in Venturas' favor.
With respect to spouses David, the Court of Appeals said that there was no agreement as to the price, as well as the
manner and time of payment of the installments. It held that Patricia David's testimony regarding the price,
P15,000.00, payable in monthly installments of P365.00, contradicted a receipt stating: ". . . the balance to be paid
on installment to be agreed upon later on." 9 The appellate court referred to another receipt 10 wherein only P300.00
was paid but with the following statement "Subject to further discussion later on." It stated that there was no
agreement as to the price, since it was subject to further discussion by the parties. It held that the P115.00
overpayment11 illustrate the lack of an agreed price. The receipts failed to state the total purchase price or prove that
full payment was made. Thus, there was no meeting of minds regarding the price. Consequently, there was no
perfected contract of sale.
In ruling against the Davids, the Court of Appeals applied the doctrine in Yuvienco v. Dacuycuy12 that in sale of real
property on installments, the statute of frauds read together with the requirements of Article 1475, must be
understood and applied in the sense that the payment on installments must be in the requisite form of a note or
memorandum. In other words, there must be a note or memorandum evidencing the agreement to pay on
installment, otherwise, the contract is unenforceable under the statute of frauds. In the instant case, the agreement
to pay in installment was not reduced in writing.
As regards Florencia Ventura Vda. de Basco, the Court of Appeals ruled that there was no meeting of the minds with
regard to both object and consideration of the contract. It held that the 109 sq. m. lot could not be specifically
determined or identified by the parties.
As to the sixty (60) sq. m. lot, the Court of Appeals held that the object was not determinate nor determinable.
Assuming arguendo that the lot was determinate or determinable, the Court of Appeals held that there was no
purchase price agreed upon. The receipts indicated a price of P70.00 per sq. m., or a total of P4,200.00. However,
Florencia paid P6,500.00 for the lot. The discrepancy between Florencia's claim of full payment and the last
receipt13 stating that only a partial payment was made, bolstered the finding that there was no agreed price.
The Court of Appeals, however, upheld the contract of sale with respect to the spouses Ventura. It held that the
Venturas had fully paid for the lot, evidenced by the certification issued by Alejandro Tiongson. There was also
actual delivery when the Venturas took possession, erected their house thereon and fenced the perimeters.

The Court of Appeals decreed as follows:

PREMISES CONSIDERED, the appealed decision is hereby MODIFIED. The contracts of sale not having
been perfected between plaintiff-appellee spouses Venancio and Patricia M. David, and plaintiff-appellee
Florencia Ventura Vda. de Basco (vendees) and defendant-appellants Alejandro and Guadalupe D.
Tiongson (vendors), hence, inefficacious, the former's action for specific performance must fail, but
defendants-appellants must return to plaintiffs-appellees spouses Venancio and Patricia David the amount
of fifteen thousand one hundred fifteen pesos (P15,115.00) and to plaintiff-appellee Florencia Ventura Vda.
de Basco, the amount of twelve thousand nine hundred twenty five pesos (P12,925.00) with legal interest
from the time of the filing of the complaint until the return of the said amounts.
As to plaintiff-appellee spouses Feliciano and Macaria Ventura, the decision of the court a quo is
AFFIRMED. We hereby order: (a) Plaintiff-appellee spouses Feliciano and Macaria Ventura to have the lot
purchased by them segregated by a licensed surveyor from the rest of the Lot 8 described in TCT No.
200835-R and to have the corresponding subdivision plan, duly approved by the Land Registration Authority,
submitted to the court of origin for approval; (b) the defendants-appellants Alejandro and Guadalupe D.
Tiongson to be divested of their title to the lot purchased under Rule 39, Section 10, Rules of Court; and (c)
the Register of Deeds of Pampanga to cancel TCT No. 200835-R and issue, in lieu thereof, one title to the
names of Feliciano and Macaria Ventura for the lot they purchased another title in the names of Alejandro
and Guadalupe D. Tiongson.
In the light of the above, moral damages in the amount of three thousand pesos (P3,000.00) to be paid to
plaintiffs-appellees Feliciano and Macaria Ventura by defendant-appellant spouses Tiongson is considered
fair and reasonable. Without costs.14
On November 6, 1992, Venancio and Patricia M. David and Florencia Ventura Vda. de Basco filed a motion for
reconsideration of the foregoing decision. On December 11, 1992, the Court of Appeals denied the motion. 15
Hence, this petition for review.
We shall discuss the sales transactions between petitioners and respondents in seriatim.
As to the Spouses Venancio and Patricia David
Petitioners Davids contend that there was an implied agreement on the price and manner of installment payments.
The receipts issued by respondents and Patricia David's testimony clearly indicate the agreement.
We disagree with the finding of the Court of Appeals that there was no agreement as to the price of the lots. The
Court of Appeals relied heavily on the receipts issued by Alejandro Tiongson. However, Patricia David testified that
there was an agreement to purchase the lot for P15,000.00, payable as follows: P3,800.00 as down payment, with
P385.00 monthly installments thereafter.16 The respondents failed to rebut such declaration, as the default order
rendered them without personality to adduce evidence in their behalf.
However, in the brief filed with the appellate court, the Tiongsons alleged that the agreed price was P120.00
per sq. m. Hence, they are now estopped to deny the existence of an agreed price. The question to be
determined should not be whether there was an agreed price, but what that agreed price was, whether for a
total of P15,000.00, as claimed by the Davids or P120.00 per sq. m., as alleged by respondents. The sellers
could not render invalid a perfected contract of sale by merely contradicting the buyers' allegation regarding
the price, and subsequently raising the lack of agreement as to the price.
It is a fact that for three consecutive years, the Davids had religiously paid P385.00 as monthly installments, until it
amounted to P15,050.00, including the downpayment. As to the first installment receipt, wherein only P300.00 was
paid and a notation was written, to wit "Subject to further discussion later on," Patricia David explained that what
was subject to further discussion was not the total purchase price, but only the P65.00 underpayment.
The Court of Appeals held that the P115.00 overpayment confirmed the lack of agreement as to the price. However,
the receipts showed that Davids paid only P15,050.00. It perplexes this Court how the appellate court came up with

the P15,115.00 figure. At any rate, an overpayment of P50.00, as in this case, does not negate the existence of an
agreed purchase price. Instead, this entitles the buyer to claim reimbursement of any overpayment made.
Furthermore, the Court of Appeals erred in applying the statute of frauds. The rule presupposes the existence of a
perfected contract and requires only that a note or memorandum be executed in order to compel judicial
enforcement thereof.17
At any rate, we rule that there was a perfected contract. However, the statute of frauds is inapplicable. The rule is
settled that the statute of frauds applies only to executory and not to completed, executed, or partially executed
contracts.18 In the case of spouses David, the payments made rendered the sales contract beyond the ambit of the
statute of frauds.
The Court of Appeals erred in concluding that there was no perfected contract of sale. However, in view of the
stipulation of the parties that the deed of sale and corresponding certificate of title would be issued after full
payment, then, they had entered into a contract to sell and not a contract of sale. 19
As to Florencia Ventura Vda. de Basco
Petitioner Florencia Ventura Vda. de Basco contends that the receipts described the two (2) lots that she bought.
The receipts also indicated the price of each lot, to wit, P6,425.00 for the 109 sq. m. lot, and P6,500.00 for the 60
sq. m. lot.
As regards the 109 sq. m. lot, Florencia presented the following receipts as evidence of full payment:
Received from Mrs. Florencia Ventura-Basco of Cabalantian, Bacolor Pampanga, the sum of FIVE
HUNDRED PESOS (P500.00), Philippine Currency, as additional partial payment on the parcel of land
located at Cabalantian, Bacolor Pampanga, being the portion of Lot 1547-G-2-G of Psd-03-004803.
It is understood that this lot is the portion formerly earmarked for Mrs. Rosita Ventura-Muslan wherein she
already paid the sum of P1,500.00; hence, by agreement of Mrs. Basco and Mrs. Muslan, who are sisters,
the sum of P1,500.00 are applied herein as additional payment for and in behalf of Mrs. Basco, thereby
making the total payments made by Mrs. Basco to said lot in the sum of P2,000.00, as of this date.
San Fernando, Pampanga, June 4, 1983.
(signed)
C O N F O R M E:
ALEJANDRO
(signed)
FLORENCIA
(signed)

C.

TIONGSON

VENTURA-BASCO

ROSITA VENTURA-MUSLAN20
Received from Mrs. Florencia Ventura-Basco of Cabalantian, Bacolor Pampanga, the sum of FOUR THOUSAND
FOUR HUNDRED TWENTY FIVE PESOS (P4,425.00), Philippine Currency, representing the last and full payment
on the purchase price of Lot 1547-G-2-G-2, Plan Psd-03-05957, located at Cabalantian, Bacolor Pampanga, with an
area of 109 square meters, more or less, as regards the sum of P3,625 and the sum of P800.00 applied for the
payment of the segregation survey of said lot.
Title over this lot shall be issued upon the survey and segregation of the additional portion which Mrs. Florencia V.
Basco is also buying to be taken from Lot 1547-G-2-G-I, wherein the said portion of said Lot 1547-G-2-G-2 shall be
consolidated into one lot only at the expense of the buyer.

San Fernando, Pampanga, September 1, 1983.

C O N F O R M E: FOR ALEJANDRO TIONGSON
Seller
(signed)
FLORENCIA VENTURA-BASCO

By:
PORFIRIO
Buyer21

C.

(signed)
PINEDA

According to the Court of Appeals, the object is neither determinate nor determinable. It held that the receipts
described two different lots, one described as Psd-03-004803, while the other as Psd-03-05957. It stated that the
discrepancy showed there was no meeting of the minds as regards the object of the contract.
We disagree. We find that the 109 sq. m. lot was adequately described in the receipt, or at least, can be easily
determinable. The receipt issued on June 4, 1983 stated that the lot being purchased by Florencia was the one
earlier earmarked for her sister, Rosita Muslan. Thus, the subject lot is determinable. Any mistake in the designation
of the lot does not vitiate the consent of the parties or affect the validity and binding effect of the contract of
sale.22 The receipt issued on September 1, 1983 clearly described the lot area as 109 sq. m. It also showed that
Florencia had fully paid the purchase price.
With respect to the sixty (60) sq. m. lot, Florencia presented the following receipts to prove full payment:
Received from Mrs. Florencia Basco of Cabalantian, Bacolor, Pampanga, the sum of THREE THOUSAND
PESOS (P3,000.00), Philippine Currency, as partial and down payment on the purchase price of the
additional portion adjacent to Lot 1547-G-2-G. The price on this portion shall be computed at P70.00 per
square meter, and said portion shall be determined later as to its area, but in no case shall it be extended
farther than the gate opening at Juan Cunanan's lot and the acacia tree on the north.
San Fernando, Pampanga, November 8, 1983.
(signed)
ALEJANDRO
Seller
xxx

xxx

TIONGSON

xxx

Received from Mrs. Florencia Basco of Cabalantian, Bacolor, Pampanga, the sum of ONE THOUSAND
PESOS (P1,000.00), Philippine Currency, as partial and down payment on a portion of Lot 1547-G-2-I,
which is a portion of Lot 6 of the provisional plan with marking of Lot 35 on the sketch plan. The price shall
be computed at P70.00 per square meter. The final area shall be determined in the final survey to be
conducted.
This portion shall be across the road opposite the portion of same lot purchased by Macaria Ventura.
San Fernando, Pampanga, November 8, 1983.
(signed)
ALEJANDRO
Seller
xxx

xxx

TIONGSON

xxx

Received from Mrs. Florencia Basco of Cabalantian, Bacolor, Pampanga, the sum of TWO THOUSAND
FIVE HUNDRED PESOS (P2,500.00), to be applied as partial payment on the purchase price of Lots 8-A
(60 square meters), computed at P70.00 and Lot 6-U (338 square meters), computed at P70.00 per square
meter.
San Fernando, Pampanga, February 6, 1984.
(signed)
ALEJANDRO
Seller23

TIONGSON

Regarding this lot, we find that there was also a perfected contract of sale. In fact, in the last receipt the parties
agreed on the specific lot area. This suffices to identify the specific lot involved. It was unnecessary for the parties to
enter into another agreement to determine the exact property bought. What remained to be done was the actual
segregation of the 60 square meters.
Furthermore, the parties agreed on the price. The receipts clearly indicate the price as P70.00 per sq. m., hence the
total price should be P4,200.00. However, Florencia paid P6,500.00 for the lot. Hence, there was even an
overpayment of P2,300.00.
WHEREFORE, we REVERSE and SET ASIDE the decision of the Court of Appeals in CA G.R. CV No. 24667. In
lieu thereof, we render judgment ordering the respondents Tiongsons to execute deeds of absolute sale covering
the following lots respectively sold to petitioners, and cause the issuance of the corresponding certificates of title, to
wit:
1. 300 sq. m. lot sold to spouses Venancio and Patricia David;
2. 109 sq. m. lot sold to Florencia Ventura Vda. de Basco.
With respect to the 60 sq. m. lot sold to Florencia Ventura Vda. de Basco, respondent Tiongson is ordered to cause
the segregation of the lot, and thereafter, to execute a deed of absolute sale to Florencia Ventura Vda. de Basco
and cause the issuance of a certificate of title thereto.
We delete the award for moral damages, for lack of basis.
No costs.
SO ORDERED.

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