SPOUSES NARCISO RONGAVILLA and DOLORES RONGAVILLA, petitioners, vs. COURT (TCT) No.
(TCT) No. S-28903 after the parcel was subdivided, was kept in the possession of
OF APPEALS AND MERCEDES DELA CRUZ AND FLORENCIA DELA CRUZ, respondents.
DECISION
QUISUMBING, J.:
For review on appeal by certiorari are the Decision[1] of the Court of Appeals in CA-
G.R. CV No. 06543, promulgated on March 11, 1988, and the Resolution[2] dated
June 28, 1988, denying petitioner's motion for reconsideration.
The appealed decision affirmed in toto the judgment of the Regional Trial Court of
Pasay City in Civil Case No. LP-8790-P, which disposed of the controversy as follows:
"WHEREFORE, judgment is hereby rendered declaring void and inexistent the Deed
of Absolute Sale (Exh. "I") dated June 3, 1976 allegedly executed by plaintiffs in favor
of defendant spouses, which document is now particulary identified as Doc, No. 164;
Page no. 34; Book No. I; Series of 1976 in the Notarial Register of Arcadio Espiritu, a
Notary Public for and in Province of Cavite. Further, defendant spouses are hereby
ordered -
a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property
covered by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for the
Province of Rizal;
b. . To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and
c. To pay the cost of the suit."[3]
As gleaned from the record, the private parties are closely related. Plaintiffs below,
now the private respondents, are the aunts of herein petitioner Dolores Rongavilla.
Both spinsters, they earn their livelihood as embroiderers ("magbuburda") and
dressmakers; although unschooled in English, they are however able to read and
write in Tagalog. Since they are of advanced age (Mercedes de la Cruz, 60 and
Florencia de la Cruz, 71), their day to day activities were confined mostly close to
home.
The property subject of this controversy between kith and kin is a parcel of land,
located in Manuyo, Las Pias, Rizal (now Metro Manila) owned by private respondents,
in the proportion of one-half (1/2) pro-indiviso, with another niece named Juanita
Jimenez as co-owner of the other one-half. The whole parcel consisted of 131 square
meters and was covered by Original Certificate of Title (OCT) No. 5415 of the Register
of Deeds of the Province of Rizal. This OCT, as well as the Transfer Certificate of Title
Juanita Jimenez, who is the elder sister of Dolores Rongavilla.
Although the basic fact situation here might appear all too familiar, the legal
controversy itself is notable for having passed through the entire channel of the
justice system.[4] The present petition before us was given due course per
Resolution[5] dated June 26, 1989; but it was denied on September 20, 1989, for non-
compliance with certain requirements;[6] although, upon motion for reconsideration
by the petitioners showing compliance, it was reinstated[7] on September 2, 1991.
Considering the circumstances in this case, including the relationship of the parties,
it behooves this Court now to examine closely and carefully the questioned judgment
and the record below. For the Court could not but be mindful of the codal admonition
that:
"In all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age, or other handicap, the courts must vigilant for his protection."
(Art. 24, Civil Code)
From the facts found below, it appears that in the month of May, 1976, the private
respondents borrowed the amount of two thousand (P2,000) from the petitioners
for the purpose of having their (respondents') dilapidated rooftop repaired.
A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited
their aunt's home, bringing with them a document for the signature of their aunts.
The document is admittedly typewritten in English. When asked in Tagalog by one of
the aunts, respondent Mercedes de la Cruz, what the paper was all about, Dolores
Rongavilla answered also in Tagalog, that it was just a document to show that the
private respondents had a debt amounting to P2,000. On account of that
representation, private respondent signed the document.
In September 1980, or after a lapse of over four years, petitioner Dolores Rongavilla
went to private respondents' place and asked them to vacate the parcel in question,
claiming that she and her husband were already the new owners of the land.
Surprised by petitioners' moves, private respondents with the help of friends went
to the Office of the Register of Deeds of the Province of Rizal to verify the matter.
They discovered that their Certificate of Title had been cancelled and a new one,
Transfer Certificate of Title No. S-28903, had been issued in favor of petitioners. They
further discovered that said parcel of land had been mortgaged with the Cavite
Development Bank by the petitioners. It was only then that the private respondents
realized that the document they had previously been asked by their nieces to sign
was a deed of sale.
On February 3, 1981, private respondents filed with the Court of First Instance, now
Regional Trial Court, of Pasay City the sworn complaint[8] to have the purported deed
of sale declared void and inexistent, for being fictitious and simulated, and secured
by means of fraud and misrepresentation. They alleged that they did not sell their
property in question to the defendants; that they did not receive any consideration
on the supposed sale; that their Original Certificate of Title was cancelled and TCT
No. S-28903 was issued in favor of defendants (herein petitioners), who thereafter
mortgaged said title for a total of P40,000.00 to the damage and prejudice of the
plaintiffs. They also claimed moral and exemplary damages, as the court might
determine.
Petitioners duly filed their answer[9] after the denial of their motion to dismiss,
alleging that plaintiffs (now the private respondents) sold their parcel of land
voluntarily, that there was consent to the deed of sale, that there was sufficient
consideration therefor and that the document on the sale was complete in itself and
in due form, enabling the Register of deeds to cancel their old TCT and issue a new
one. Petitioners further stated that private respondent were fully appraised by the
Notary Public, Atty. Arcadio G. Espiritu, on what the document was all about, and
having understood the explanation made by said Notary Public, they voluntarily
affixed their signatures on said document. Petitioners also asserted as affirmative
and/or special defenses that prescription had set in and that private respondents no
longer had a cause of action, and that the deed of sale contained all the pre-requisites
of a contract, namely consent of the parties, consideration or a price certain, and
determinate thing or object; and could no longer be annulled. They also claimed
moral and exemplary damages.
The trial court's judgment, quoted at the outset, being adverse to the petitioners,
they seasonably appealed. And after their rebuff at the appellate level, they come
now to this Court on certiorari under Rule 45 of the Rules of Court, citing the
following grounds for their petition:
"(1) It is clear and patent error of the Court of Appeals to declare as 'void and
inexistent the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976.
(2) The Court of Appeals committed grave error of law in holding that the action to
declare nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe.
(3) The Court of Appeals committed grave abuse of discretion in relying on a
purported Certificate of Bureau of Internal Revenue which was not offered in
evidence.
(4) The Court of Appeals committed grave error of law and abuse of discretion and
grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the
petitioners to reconvey the subject parcel of land to the private respondents."[10]
With a slight variation but consistent with the grounds they have relied on petitioners
raise in their Memorandum[11] the following:
"ISSUES
1. Did the Court of Appeals commit a clear and patent error in declaring as 'void and
inexistent' the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976?
2. Did the Court of Appeals commit grave error in holding that the action to annul the
Deed of Sale (Exhibit 1) does not prescribe?
3. Did the Court of Appeals commit grave abuse of discretion in relying on a
purported Certificate of the Bureau of Internal Revenue which was not offered in
evidence?
4. Did the Court of Appeals commit grave error of law and grave abuse of discretion
amounting to lack of jurisdiction or in excess of jurisdiction in ordering petitioners to
reconvey the subject parcel of land to the private respondents?"
These issues may be synthesized into one: Did the respondent Court of Appeals
commit reversible error when it upheld the trial court's judgment that the disputed
Deed of Sale (Exhibit "1") is void and inexistent?
To resolve this pivotal issue, it must be noted that private respondents, as plaintiffs
below, based their complaint to declare the disputed deed void and inexistent on two
fundamental grounds: (1) lack of consent and (2) want of consideration. Under oath,
they strongly denied selling or even just agreeing to sell, their parcel of land to their
niece and nephew-in-law. During the hearing, they also denied going to and
appearing before the Notary Public who prepared the deed of sale. They also
vehemently denied receiving any consideration for the alleged sale. They added that
their signatures on the purported deed of sale were obtained by fraud and
misrepresentation as petitioners had misled them to believe the document was just
a paper to evidence a debt of P2,000 they obtained to buy G.I sheets for the repair
of their leaking roof.[12] Private respondents were shocked and got sick when they
were told by petitioners that they (respondents) were no longer the owners of the
land.[13]
On these two points of consent and consideration, the trial court found that:
"x x x. A careful analysis and meticulous evaluation of the evidence on record has
convinced the Court that the sale of their property to the defendants was farthest
from the plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed
the document which turned out to be a deed of sale, they were misled by defendant
Dolores Rongavilla and her sister Juanita Jimenez into believing that what they signed
was a document acknowledging the loan of P2,000.00 extended them by said
defendant.
"The Deed of Absolute Sale (Exh. "l") mentions a consideration of P2,000.00. Three
years after the alleged sale, the same property was mortgaged by defendant spouses
with the Cavite Development Bank for P40,000.00. Clearly enough, the gross
inadequacy and unconsciounableness [sic] of the consideration deters the Court from
subscribing to defendants' theory that plaintiffs sold the property to them. It is more
reasonable to assume that the amount of P2,000.00 mentioned in the deed refers to
the loan defendants extended to plaintiffs for the same amount.
"Plaintiffs are now of advanced age. Their only property is the lot in question and the
house erected thereon. x x x.
"As there is no indication that plaintiffs were in dire need of money, except for few
[sic] amount, except for few [sic] amount necessary for the repair of the roof of their
house for which they obtained a loan of P2,000.00 from defendants, there was no
reason for plaintiffs to dispose of their property. To do so would be inconsistent with
the regular norm of human conduct and the natural course of events. It is not in
accord with the natural promptings and instincts of human nature."[14]
To these findings by thetrial court, the Court of Appelas in its own decision asserted.
In addition, it laid stress on the point of lack of consideration by quoting agreeably
the trial judge's holding thereon:
"By more than mere preponderance of evidence of evidence plaintiffs [herein private
respondents] have established the merit of their cause of action. The Court is of the
opinion and so holds that there was fraud exercised by defendant Dolores Rongavilla
and her sister Juanita Jimenez in securing the signature of the Deed of Absolute Sale
(Exh. 'l') and there was no consideration whatsoever dor the alleged sale.
Undoubtedly, the said deed of sale is simulated, fictitious and void."[15]
And before concluding, the appellate court reiterated the proper characterization of
the deed of sale in question, not as an annullable contract, but as a void and
inexistent contract as found by the trial court:
"x x x. In the case at bar, however, We are dealing not merely with a voidable contract
which is tainted with fraud, mistake, undue influence, violence or intimidation which
may justify the annulment of a contract, but with a contract that is null and void ab
initio.
"In the present case, plaintiffs-appellees declared under oath in their complaint that
they signed the alleged document without knowing that said document was a deed
of absolute sale. This means that plaintiffs-appelles consent was not only vitiated,
but that plaintiffs-appealles have not give their consent at all. And since there was no
consent, the deed of absolute sale is, therefore, null and void ab initio. xxx'"[16]
Dissatisfied, petitioners now seek from this Court the reversal of the judgment below.
They insist in their petition before us that the deed is valid; and that because of the
statute of limitations, after the lapse of four years from its execution and registration,
it could no longer be annulled.
They assert that "the presumption that contracts are presumed to be valid and to be
supported by lawful and good consideration of one dollar is just as effectual and
valuable as a larger sum stipulated or paid''.[17]
They further assert that since private respondents signed the Deed of Sale, as a public
instrument, the truth of the recitals therein embodied could only be impugned and
disproved, not by mere preponderance of evidence, but by evidence of the "the
clearest and most satisfactory character, convincing and overwhelming.'"[18]
Petitioners further state that since they have been the ones paying real estate taxes
on the property, rather than their aunts, the latter by their acts had confirmed the
deed executed by them.[19]
Despite the petitioners' insistence that the deed of sale is presumed valid and, being
registered, could not be disturbed anymore, we however find their arguments and
ratiocination less than persuasive. While petitioners would not want the deed of sale
to be impugned, they themselves contradict the recitals therein. On the vital point of
consideration, they and their witnesses, namely Juanita Jimenez and Atty. Arcadio
Espiritu repeatedly declared that the true consideration paid for the sale of the land
was not P2,000 as stated in their own Exhibit "l", the Deed of Sale, but in fact
P7,800.00.[20]
Petitioner Dolores Rongavilla herself on cross-examination testified as follows:
"Atty. Rodriguez:
Q. You stated that you were present when this was explained by the notary public,
how did the notary public explain this deed of sale in English or Tagalog?
A. It was explained by the notary public that the property is being sold by them to us
and that the consideration was only P2,000.00 as appearing in the document in order
that we may be able to save for the payment of taxes and documentary stamps.
Q. Did the plaintiffs not say anything when the notary public according to you
explained that instead of P7,800.00, P2,000.00 will be stated in the document?
A. They did not say anything because we gave to them the amount of the
consideration agreed between us the sum of P7,800.00. (t.s.n., Sept. 2, 1982, pp. 9-
10)"[21]
By their own testimony, the petitioners are pictured as not exactly averse to bending
the truth, particularly the purported consideration. Sadly, the irony of it is that while
they claimed they were regulary paying taxes on the land in question they had no
second thoughts stating at the trial and later on appeal that they had resorted to
doctoring the price stated in the disputed Deed of Sale, allegedly "to save on taxes".
That admission surely opens the door to questions on the integrity, genuineness and
veracity of said public instrument.
Thus, the trial court could not be said to err in asserting that "while it is true that
public documents are presumed genuine and regular under the provisions of the
Rules of Court, this presumption is a rebuttable presumption which may be overcome
by clear, strong and convincing evidence."[22]
Moreover, Exhibit "l", the deed itself, shows that contrary to the testimony of the
notary public, who appeared as a witness for petitioners, what was originally typed
therein was the amount of "Three Thousand Pesos (P3,000)", which later on was
substituted by the handwritten amount now of Two Thousand Pesos (P2,000)."[23]
There is no need to speculate on the motivation for this alteration. The notary public
might have just wanted to further save on taxes, rather than short-change the coffers
of the government. But, again, the whole fabric of petitioners' claim to the sanctity
of the deed as public instrument had thereby been shredded.
If as petitioners claimed on trial, the price paid was P7,800 while their deed showed
only P2,000, after the amount of P3,000 in the deed was altered, one may well
inquire: which figure could this Court believe? Could one say that the trial and the
appellate courts both erred in holding that no consideration passed from the buyer
to the seller?
But petitioners herein would further take to task the appellate court for grave abuse
of discretion, as well as for a reversible error, in having relied on the "purported
Certification of the Bureau of Internal Revenue which was not offered in evidence".
Since this is a petition under Rule 45, however, we will not dwell on the alleged grave
abuse of discretion but limit our observation to the alleged error of law. The BIR
certificate was the subject of the testimony of witnesses at the hearing where both
parties took full advantage of the opportunity for direct and cross-examination as
well as rebuttal and sur-rebuttal.[24] On the witness stand, private respondents as
plaintiffs below denied that they had any tax account number nor even residence
certificates. They were supported by their witnesses, testifying also under oath. They
contradicted the claim of the petitioners' lawyer-notary public, that the disputed
deed of sale was complete and in due form and was signed in his presence by the
private respondents. They further denied even having gone to the office of the
lawyer-notary public in Bacoor, Cavite, on June 3, 1976, the date of execution shown
in the deed, or on any other date. While indeed the BIR certificate was not formally
offered in evidence, hence no longer available on review, the record would show that
said BIR certificate was presented during the testimony on rebuttal of respondent
Mercedes de la Cruz:[25]
"ATTY. RODRIGUEZ:
According to the defendants, there was the alleged deed of sale executed by you and
your sister in favor of the defendants before Notary Public Arcadio G. Espiritu. It
appears you have presented Tax Account No. (TAN) 2345-463-6 and your sister
Florencia de la Cruz also presented Tax Account No. (TAN) 2345-468-4. Now, do you
have any tax account number?
WITNESS:
None, sir.[26]
xxx

ATTY. RODRIGUEZ:
I am showing to you this certification from the "Kawanihan ng Rentas, Quezon City ,
dated June 16, 1982, addressed to Miss Florencia de la Cruz and Miss Mercedes de la
Cruz, Las Pias, Metro-Manila, issued by the accounting chief, stating that in reply to
you[r] request dated June 14, 1982, requesting certification of your TAN, the records
of their office do not show that you were issued any tax account number, what
relation has this document which for purposes of identification, we respectfully
request that the same be marked Exhibit "C" to the certification issued by the BIR?
WITNESS:
"Yes, this is the one."[27]
Now even if the matter of the official certification by the BIR is set aside, the whole
question of the TAN being fake or belonging to somebody else, would boil down to
one of credibility between the two camps. Unfortunately for the petitioners herein,
the trial court found them and their witnesses far from credible. As remarked by the
trial Judge, "the declarations of defendants [herein petitioners] do not inspire
rational belief."[28] It would thus appear that the trial court and the appellate court
committed no grave error of law, that would impel us on this point to override their
judgment.
Neither can we give assent to the assertion of petitioners that the appealed Court of
Appeals (CA) decision here as well as the judgment below is "contrary to settled
jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411 (1977) had
occasion already to affirm a trial court's judgment declaring null and void the
questioned deed of sale where it found:
"The undisputed facts of record support the finding of the trial court that the consent
of Ana Concepcion to the deed of sale was obtained through fraudulent
misrepresentation of [her nephew] Jaime Rivero that the contract she was signing
was one of mortgage."
"The land in question is located in the municipality of Polo, Bulacan, very near Manila.
It has an area of 2 hectares, 32 ares and 45 centares. The consideration for the sale
of said land is only P5,000.00 which is not only grossly inadequate but shocking to
the conscience x x x"[29]
In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of land in
Tayabas, Quezon, the Court confronted a similar question:
"The first question presented is whether the contract of sale executed by Isabel
Flores in favor of Joaquin Bas is valid or not.
"By relying upon the documents executed in his favor by Isabel Flores evidencing the
contract of sale, Joaquin Bas insists that there has been a perfect and valid contract
of sale of real estate between them and that he paid to her the consideration of
P20,000 mentioned in said documents. x x x.
"Isabel Flores, on the other hand, maintained that there was neither a real sale nor
did she receive a centavo from the defendant, as the price of said sale, x x x."[30]
Concluded the Court, after reviewing the series of transactions on record:
"It is then evident that the contract of sale mentioned in the notarial document of
May 7, 1915, lacks cause or consideration and is therefore null and void and without
any effect whatsoever according to Article 1275 of the Civil Code, for it has been
satisfactorily and conclusively proven that the purchaser Joaquin Bas has not paid
Isabel Flores for the price of the lands that the latter has sold to him, and after being
contented with having for a long time given several promises showing that he had no
intention to comply with his contract, he concluded by executing four promissory
notes payable to the vendor, which recite the aforementioned purchase price and
which were not also paid, there appearing in the record facts from which it can be
inferred that fraud has been committed."[31]
This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:
"The rule under the Civil Code, again be it the old or the new, is that contracts without
a cause or consideration produce no effect whatsoever."[32]
The "problem" before the Court "is whether a deed which states a consideration that
in fact did not exist, is a contract, without consideration, and therefore void ab initio,
or a contract with a false consideration, and therefore, at least under the Old Civil
Code, voidable." This problem arose, as observed by the Court, because the
questioned "deed of sale" between the brothers Magpalo, in 1936, stated that it had
for its consideration Five Hundred (P500.00) Pesos. In fact, however, said
"consideration was totally absent."[33]
Thus, the Court concluded:

"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40
Phil. 921 is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and null and void and produces no effect whatsoever where
the same is without cause or consideration in that the purchase price which appears
thereon as paid has in fact never been paid by the puchaser to vendor."[34]
Turning now to the issue of prescription, it follows that once the disputed deed is
found to be inexistent and void, the statute of limitations cannot apply. As the courts
below ruled, the cause of action for its declaration as such is imprescriptible.[35]
Petitioners-spouses contend, however, that this is contrary to settled jurisprudence
because the applicable precedent should be Pangadil v. CFI of Cotabato, 116 SCRA
347 (1982). But the fact situation of that case differs radically from the present
controversy. There the Court upheld the dismissal of the action to declare a
document known as "Ratificacion de Una Venta" as inexistent and void after finding
that it was "not a contract wherein the parties do not intend to be bound at all;" that
no circumstance was alleged to sustain the contention "that the execution of the
aforesaid document is contrary to public policy;"[36] and that for 27 years the
petitioners did not even care to verify the status of the land in question. "Their
inaction for such a considerable period of time reflects on the credibility of their
pretense that they merely intended to confirm an oral mortgage, instead of sale of
the land in question."[37]
Here in the present case, there is no doubt about the credibility of plaintiffs below
(herein private respondents) in pursuing their cause promptly and forcefully. They
never intended to sell, nor acceded to be bound by the sale of their land. Public policy
is also well served in defending the rights of the aged to legal protection, including
their right to property that is their home, as against fraud, misrepresentation,
chicanery and abuse of trust and confidence by those who owed them candor and
respect.
More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987), where this
Court found that:
"This Civil Code provides in Article 1391 that an action to annul a contract on the
ground of vitiated consent must be filed within four years from the discovery of the
vice of consent. In the instant case, however, we are dealing not with a voidable
contract tainted with fraud, mistake, undue influence, violence or intimidation that
can justify its nullification, but with a contract that is null and void ab initio
"Paulina Baranda declared under oath in her complaint that she signed the deeds of
sale without knowing what they were, which means that her consent was not merely
marred by the above-stated vices, so as to make the contracts voidable, but that she
had not given her consent at all. We are also satisfied that there was no valid
consideration either for the alleged transfers, for reasons already discussed. Lack of
consent and consideration made the deeds of sale void altogether[38]and rendered
them subject to attack at any time, conformably to the rule in Article 1410 that an
action to declare the inexistence of void contracts 'does not prescribe'."[39]
And if the passage of time could not cure the fatal flaw in the inexistent and void
contract, neither could an alleged ratification or confirmation thereof. Further, as in
the case before us, reconveyance is proper. "The defect of inexistence of a contract
is permanent and incurable, hence it cannot be cured either by ratification or by
prescription. x x x There is no need of an action to set aside a void or inexistent
contract; in fact such action cannot logically exist. However, an action to declare the
non-existence of the contract can be maintained; and in the same action, the plaintiff
may recover what he has given by virtue of the contract."[40]
Given the circumstances of the case and there being no reversible error in the
challenged decision, we are in accord with the judgment below and find the
petitioners' appeal without merit. For as well said in the Court of Appeals' Decision
and Resolution under review, "We cannot contemplate of the rather absurd
situation, which defendants-appellants would ineluctably lead [u]s to, where
plaintiffs-appellees would sell their only house, in which they have lived for so many
years, in order to secure the measly sum of P2,000.00 to repair the roof of their only
house, which would all be lost to them anyway upon the consummation of the sale.
They would then become homeless, and the repaired roof would be of no use to
them."[41] Experience which is the life of the law -- as well as logic and common
sense -- militates against the petitioners' cause.
WHEREFORE, the instant petition is hereby DENIED. The Decision and the Resolution
of the Court of Appeals in CA-G.R. CV No. 06543 are hereby AFFIRMED.
Cost against petitioners.
SO ORDERED.
YU BUN GUAN, petitioner, vs. ELVIRA ONG, respondent.
DECISION
PANGANIBAN, J.:
A simulated deed of sale has no legal effect, and the transfer certificate of title issued
in consequence thereof should be cancelled. Pari delicto does not apply to simulated
sales.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
April 25, 2000 Decision[1] and the August 31, 2000 Resolution[2] of the Court of
Appeals[3] (CA) in CA-GR CV No. 61364. The decretal portion of the Decision reads as
follows:
We cannot see any justification for the setting aside of the contested Decision.
THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED.[4]
The assailed Resolution denied petitioners Supplemental Motion for Reconsideration
with Leave to Submit [Newly] Discovered Evidence.
The CA sustained the Decision of the Regional Trial Court (RTC) of Makati City (Branch
60), which had disposed as follows:[5]
23. WHEREFORE, the Court hereby renders judgment as follows:
23.1. The Deed of Sale dated July 24, 1992 (Exh. EE or Exh. 3) is declared VOID.
23.2. The plaintiff ELVIRA ONG is declared the OWNER of the property covered by
Transfer Certificate of Title No. 217614, Registry of Deeds, Makati (Exh. DD).
23.3. The Register of Deeds, City of Makati is ordered to:
23.2.1. Cancel Transfer Certificate of Title No. 181033 (Exh. HH); and
23.2.2. Issue in lieu thereof, a transfer certificate of title in the name of ELVIRA A.
ONG, of legal age, single, Filipino;
23.[4]. The defendant YU BUN GUAN is ordered to pay to the said plaintiff, the
following:
23.[4].1. P48,631.00 As reimbursement of the capital gains tax (Exh. FF);
23.[4].2. Six (6) percent of P48,631.00 per annum from November 23, 1993, until the
said P48,631.00 is paid as damages
23.[4].3. P100,000.00 - as moral damages;
23.[4].4. P 50,000.00 as exemplary damages;
23.[4].5. P 100,000.00 as attorneys fees.
23.[5]. The COUNTERCLAIM is DISMISSED.
23.[6]. Cost is taxed against the defendant.
24. In Chambers, City of Makati, June 23, 1998.
The Facts
The antecedents of the case are succinctly summarized by the Court of Appeals in
this wise:
[Herein respondent] said that she and [petitioner] are husband and wife, having been
married according to Chinese rites on April 30, 1961. They lived together until she
and her children were abandoned by [petitioner] on August 26, 1992, because of the
latters incurable promiscuity, volcanic temper and other vicious vices; out of the
reunion were born three (3) children, now living with her [respondent].
She purchased on March 20, 1968, out of her personal funds, a parcel of land, then
referred to as the Rizal property, from Aurora Seneris, and supported by Title No.
26795, then subsequently registered on April 17, 1968, in her name.
Also during their marriage, they purchased, out of their conjugal funds, a house and
lot, in 1983, thereafter, registered in their names, under Title No. 118884.
Before their separation in 1992, she reluctantly agreed to the [petitioners]
importunings that she execute a Deed of Sale of the J.P. Rizal property in his favor,
but on the promise that he would construct a commercial building for the benefit of
the children. He suggested that the J.P. Rizal property should be in his name alone so
that she would not be involved in any obligation. The consideration for the simulated
sale was that, after its execution in which he would represent himself as single, a
Deed of Absolute Sale would be executed in favor of the three (3) children and that
he would pay the Allied Bank, Inc. the loan he obtained.
Because of the glib assurances of [petitioner], [respondent] executed a Deed of
Absolute Sale in 1992, but then he did not pay the consideration of P200,000.00,
supposedly the ostensible valuable consideration. On the contrary, she paid for the
capital gains tax and all the other assessments even amounting to not less than
P60,000.00, out of her personal funds.
Because of the sale, a new title (TCT No. 181033) was issued in his name, but to insure
that he would comply with his commitment, she did not deliver the owners copy of
the title to him.
Because of the refusal of [petitioner] to perform his promise, and also because he
insisted on delivering to him the owners copy of the title [to] the JP Rizal property, in
addition to threats and physical violence, she decided executing an Affidavit of
Adverse Claim.
Also to avoid burdening the JP Rizal property with an additional loan amount, she
wrote the Allied Bank, Inc. on August 25, 1992, withdrawing her authority for
[petitioner] to apply for additional loans.
To save their marriage, she even sought the help of relatives in an earnest effort [at]
reconciliation, not to mention a letter to [petitioner] on November 3, 1992.
[Petitioner], on the other hand, filed with the RTC, Makati, in 1993 (Case No. M-
2905), a Petition for Replacement of an owners duplicate title.
Attached to the Petition was the Affidavit of Loss dated March 26, 1993, in which he
falsely made it appear that the owners copy of the title was lost or misplaced, and
that was granted by the court in an Order dated September 17, 1993, following which
a new owners copy of the title was issued to [petitioner].
Upon discovery of the fraudulent steps taken by the [petitioner], [respondent]
immediately executed an Affidavit of Adverse Claim on November 29, 1993.
She precisely asked the court that the sale of the JP Rizal property be declared as null
and void; for the title to be cancelled; payment of actual, moral and exemplary
damages; and attorneys fees.
It was, on the other hand, the version of [petitioner] that sometime in 1968 or before
he became a Filipino, through naturalization, the JP Rizal property was being offered
to him for sale. Because he was not a Filipino, he utilized [respondent] as his dummy
and agreed to have the sale executed in the name of [respondent], although the
consideration was his own and from his personal funds.
When he finally acquired a Filipino citizenship in 1972, he purchased another
property being referred to as the Juno lot out of his own funds. If only to reflect the
true ownership of the JP Rizal property, a Deed of Sale was then executed in 1972.
Believing in good faith that his owners copy of the title was lost and not knowing that
the same was surreptitiously concealed by [respondent], he filed in 1993 a petition
for replacement of the owners copy of the title, in court.
[Petitioner] added that [respondent] could not have purchased the property because
she had no financial capacity to do so; on the other hand, he was financially capable
although he was disqualified to acquire the property by reason of his nationality.
[Respondent] was in pari delicto being privy to the simulated sale.
Before the court a quo, the issues were: who purchased the JP Rizal property? [W]as
the Deed of Sale void? and damages.[6]
Ruling of the Trial Court
After examining the evidence adduced by both parties, the RTC found that the JP
Rizal property was the paraphernal property of respondent, because (1) the title had
been issued in her name; (2) petitioner had categorically admitted that the property
was in her name; (3) petitioner was estopped from claiming otherwise, since he had
signed the Deed of Absolute Sale that stated that she was the absolute and registered
owner; and (4) she had paid the real property taxes thereon.[7]
The trial court further held that the in pari delicto rule found in Articles 1411 and
1412 of the Civil Code was not applicable to the present case, because it would apply
only to existing contracts with an illegal cause or object, not to simulated or fictitious
contracts or to those that were inexistent due to lack of an essential requisite such
as cause or consideration.[8] It likewise voided the Deed of Absolute Sale of the JP
Rizal property for having been simulated and executed during the marriage of the
parties.[9]
Ruling of the Court of Appeals
The Court of Appeals upheld the trial courts findings that the JP Rizal property had
been acquired by respondent alone, out of her own personal funds. It ruled thus:
x x x [T]he JP Rizal property was purchased by the [respondent] alone; therefore it is
a paraphernal property. As a matter of fact, the title was issued in her name, Exh. DD.
This was even admitted by [petitioner] in the Answer that the sale was executed in
her name alone. He also signed the sale mentioning [respondent] to be an absolute
owner; therefore, he should be estopped from claiming otherwise. She alone likewise
did the payment of the taxes.[10]
The CA debunked the contention of petitioner that he had purchased the property
out of his own funds and merely used respondent as his dummy.[11] It also held that
the latter was not in pari delicto with him, because the contract was simulated or
fictitious due to the lack of consideration. The contract was deemed void for having
been executed during the couples marriage.[12] The CA likewise affirmed the award
of actual, moral and exemplary damages to respondent.[13]
Hence, this Petition.[14]
Issues
In his Memorandum, petitioner raises the following issues for the Courts
consideration:
I contradictory to each other because, if the property is co-owned, he cannot claim to
Whether or not the Court of Appeals gravely erred in not applying [the] rules on co-
ownership under Article 144 of the New Civil Code in determining the proprietary
rights of the parties herein even as respondent herself expressly declared that the
money with which she allegedly bought the property in question in 1968 came from
her funds, salaries and savings at the time she and petitioner already lived as husband
and wife.
II
Whether or not the Court of Appeals likewise palpably erred in declaring the sale of
the subject property to herein petitioner in 1992 to be fictitious, simulated and
inexistent.
III
Whether or not the Court of Appeals further erred in not applying the [in] pari delicto
rule to the sale of the subject property in favor of the petitioner in 1992 contrary to
the express declaration to that effect in the very same case it cited (Rodriguez v.
Rodriguez; 20 SCRA 908) in the decision herein sought to be reviewed.
IV
Whether or not the Court of Appeals gravely erred in annul[l]ing the title (TCT No.
181033) to the subject property in the name of herein petitioner in the absence of
actual fraud.[15] (Underscoring in the original.)
This Courts Ruling
The Petition is devoid of merit.
First Issue: Nature of the Property
Petitioner contends that the JP Rizal property should be deemed as co-owned,
considering that respondent testified during trial that the money she used in
purchasing it had come from her income, salaries and savings, which are conjugal in
nature.
On the other hand, respondent maintains that the finding of the two lower courts
that the property was acquired using funds solely owned by her is binding and
supported by evidence. She further argues that the two defenses of petitioner are
own it in its entirety.
We find no reason to disturb the findings of the RTC and the CA that the source of
the money used to acquire the property was paraphernal. This issue is factual in
nature. It is axiomatic that factual findings of the trial court, especially when affirmed
by the Court of Appeals, as in this case, are binding and conclusive on the Supreme
Court. It is not the function of this Court to reexamine the lower courts findings of
fact. While there are exceptions to this rule, petitioner has not shown its entitlement
to any of them.[16]
The testimony of petitioner as to the source of the money he had supposedly used
to purchase the property was at best vague and unclear. At first he maintained that
the money came from his own personal funds. Then he said that it came from his
mother; and next, from his father. Time and time again, we [have] held that the
unnatural and contradictory testimony of a witness, x x x makes him unreliable x x
x.[17] His statement that the JP Rizal property was bought with his own money can
hardly be believed, when he himself was unsure as to the source of those funds.
On the other hand, the capacity of respondent to purchase the subject property
cannot be questioned. It was sufficiently established during trial that she had the
means to do so. In fact, her testimony that she had purchased several other lots using
her personal funds was not disputed.
Equally without merit is the contention of petitioner that, because he was a Chinese
national at the time, respondent was merely used as a dummy in acquiring the
property; thus, she could not have legally acquired title thereto. He testified that
sometime during the last month of 1968, he had consulted a certain Atty. Flores, who
advised him that the property be registered in the name of respondent. However,
TCT No. 217614 had been issued earlier on April 17, 1968. Thus, it appears that the
subject property had already been bought and registered in the name of respondent,
long before Atty. Flores allegedly advised him to have the property registered in her
name.
We therefore agree with the CAs affirmation of the RTCs findings that the property
had been acquired using respondents paraphernal property. The CA ruled thus:
The fact however, is that Yu never refuted Elviras testimony that: (a) the money with
which she acquired the JP Rizal property came from: (1) her income as a cashier in
the Hong Kiat Hardware; (2) income from her paraphernal property a lot in
Guadalupe; (3) her savings from the money which her parents gave her while she was
still a student; and (4) the money which her sister gave her for helping her run the
beauty parlor; (b) her parents were well off they had stores, apartments and beauty
parlors from which they derived income; (c) before her marriage she bought lots in
different places (p. 8, TSN, Jan. 26, 1998; pp. 22-23, TSN March 10, 1998).[18]
Second Issue: Fictitious, Simulated and Inexistent Sale
Next, petitioner argues that there was a valid sale between the parties, and that the
consideration consisted of his promise to construct a commercial building for the
benefit of their three children and to pay the loan he had obtained from Allied Bank.
We disagree. In Rongavilla v. Court of Appeals,[19] the Court declared that a deed of
sale, in which the stated consideration had not in fact been paid, is null and void:
The problem before the Court is whether a deed which states a consideration that in
fact did not exist, is a contract, without consideration, and therefore void ab initio,
or a contract with a false consideration, and therefore, at least under the Old Civil
Code, voidable. x x x."
"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40
Phil. 921[,] is squarely applicable herein. In that case we ruled that a contract of
purchase and sale is null and null and void and produces no effect whatsoever where
the same is without cause or consideration in that the purchase price which appears
thereon as paid has in fact never been paid by the purchaser to vendor."[20]
In the present case, it is clear from the factual findings of both lower courts that the
Deed of Sale was completely simulated and, hence, void and without effect. No
portion of the P200,000 consideration stated in the Deed was ever paid. And, from
the facts of the case, it is clear that neither party had any intention whatsoever to
pay that amount.
Instead, the Deed of Sale was executed merely to facilitate the transfer of the
property to petitioner pursuant to an agreement between the parties to enable him
to construct a commercial building and to sell the Juno property to their children.
Being merely a subterfuge, that agreement cannot be taken as the consideration for
the sale.
Third Issue: Inapplicability of the in Pari Delicto Principle
The principle of in pari delicto provides that when two parties are equally at fault, the
law leaves them as they are and denies recovery by either one of them. However,
this principle does not apply with respect to inexistent and void contracts. Said this
Court in Modina v. Court of Appeals:[21]
The principle of in pari delicto non oritur actio denies all recovery to the guilty parties
inter se. It applies to cases where the nullity arises from the illegality of the
consideration or the purpose of the contract. When two persons are equally at fault,
the law does not relieve them. The exception to this general rule is when the principle
is invoked with respect to inexistent contracts.[22]
Fourth Issue: Cancellation of TCT
Finally, based on the foregoing disquisition, it is quite obvious that the Court of
Appeals did not err in ordering the cancellation of TCT No. 181033, because the Deed
of Absolute Sale transferring ownership to petitioner was completely simulated, void
and without effect. In fact, there was no legal basis for the issuance of the certificate
itself.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED.
Costs against petitioner.
SO ORDERED.

G.R. No. L-67888 October 8, 1985
IMELDA ONG, ET AL., petitioners,
vs.
ALFREDO ONG, ET AL., respondents.
Faustino Y Bautista and Fernando M. Mangubat for private respondent.
RELOVA, J.:
This is a petition for review on certiorari of the decision, dated June 20, 1984, of the
Intermediate Appellate Court, in AC-G.R. No. CV-01748, affirming the judgment of
the Regional Trial Court of Makati, Metro Manila. Petitioner Imelda Ong assails the
interpretation given by respondent Appellate Court to the questioned Quitclaim
Deed.
Records show that on February 25, 1976 Imelda Ong, for and in consideration of One
(P1.00) Peso and other valuable considerations, executed in favor of private
respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she
transferred, released, assigned and forever quit-claimed to Sandra Maruzzo, her
heirs and assigns, all her rights, title, interest and participation in the ONE-HALF ()
undivided portion of the parcel of land, particularly described as follows:
A parcel of land (Lot 10-B of the subdivision plan (LRC) Psd 157841, being a portion
of Lot 10, Block 18, Psd-13288, LRC (GLRC) Record No. 2029, situated in the
Municipality of Makati, Province of Rizal, Island of Luzon ... containing an area of ONE
HUNDRED AND TWENTY FIVE (125) SQUARE METERS, more or less.
On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and,
thereafter, on January 20, 1982 donated the whole property described above to her
son, Rex Ong-Jimenez.
On June 20, 1983, Sandra Maruzzo, through her guardian (ad litem) Alfredo Ong, filed
with the Regional Trial Court of Makati, Metro Manila an action against petitioners,
for the recovery of ownership/possession and nullification of the Deed of Donation
over the portion belonging to her and for Accounting.
In their responsive pleading, petitioners claimed that the Quitclaim Deed is null and
void inasmuch as it is equivalent to a Deed of Donation, acceptance of which by the
donee is necessary to give it validity. Further, it is averred that the donee, Sandra
Maruzzo, being a minor, had no legal personality and therefore incapable of
accepting the donation.
Upon admission of the documents involved, the parties filed their responsive
memoranda and submitted the case for decision.
On December 12, 1983, the trial court rendered judgment in favor of respondent
Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and, hence,
there was a valid conveyance in favor of the latter.
Petitioners appealed to the respondent Intermediate Appellate Court. They
reiterated their argument below and, in addition, contended that the One (P1.00)
Peso consideration is not a consideration at all to sustain the ruling that the Deed of
Quitclaim is equivalent to a sale.
On June 20, 1984, respondent Intermediate Appellate Court promulgated its Decision
affirming the appealed judgment and held that the Quitclaim Deed is a conveyance
of property with a valid cause or consideration; that the consideration is the One
(P1.00) Peso which is clearly stated in the deed itself; that the apparent inadequacy
is of no moment since it is the usual practice in deeds of conveyance to place a
nominal amount although there is a more valuable consideration given.
Not satisfied with the decision of the respondent Intermediate Appellate Court,
petitioners came to Us questioning the interpretation given by the former to this
particular document.
On March 15, 1985, respondent Sandra Maruzzo, through her guardian ad litem
Alfredo Ong, filed an Omnibus Motion informing this Court that she has reached the
age of majority as evidenced by her Birth Certificate and she prays that she be
substituted as private respondent in place of her guardian ad litem Alfredo Ong. On
April 15, 1985, the Court issued a resolution granting the same.
A careful perusal of the subject deed reveals that the conveyance of the one- half ()
undivided portion of the above-described property was for and in consideration of
the One (P 1.00) Peso and the other valuable considerations (emphasis supplied) paid
by private respondent Sandra Maruzzo through her representative, Alfredo Ong, to
petitioner Imelda Ong. Stated differently, the cause or consideration is not the One
(P1.00) Peso alone but also the other valuable considerations. As aptly stated by the
Appellate Court-
... although the cause is not stated in the contract it is presumed that it is existing
unless the debtor proves the contrary (Article 1354 of the Civil Code). One of the
disputable presumptions is that there is a sufficient cause of the contract (Section 5,
(r), Rule 131, Rules of Court). It is a legal presumption of sufficient cause or
consideration supporting a contract even if such cause is not stated therein (Article
1354, New Civil Code of the Philippines.) This presumption cannot be overcome by a
simple assertion of lack of consideration especially when the contract itself states
that consideration was given, and the same has been reduced into a public
instrument with all due formalities and solemnities. To overcome the presumption
of consideration the alleged lack of consideration must be shown by preponderance
of evidence in a proper action. (Samanilla vs, Cajucom, et al., 107 Phil. 432).
inexistent, for the assignor's liberality may be sufficient cause for a valid contract
(Article 1350, Civil Code), whereas fraud or bad faith may render either rescissible or
voidable, although valid until annulled, a contract concerning an object certain
entered into with a cause and with the consent of the contracting parties, as in the
case at bar."
WHEREFORE. the appealed decision of the Intermediate Appellate Court should be,
as it is hereby AFFIRMED, with costs against herein petitioners.
SO ORDERED.

The execution of a deed purporting to convey ownership of a realty is in itself prima

facie evidence of the existence of a valuable consideration, the party alleging lack of
consideration has the burden of proving such allegation. (Caballero, et al. vs.
Caballero, et al., (CA), 45 O.G. 2536).

Moreover, even granting that the Quitclaim deed in question is a donation, Article
741 of the Civil Code provides that the requirement of the acceptance of the donation
in favor of minor by parents of legal representatives applies only to onerous and
conditional donations where the donation may have to assume certain charges or
burdens (Article 726, Civil Code). The acceptance by a legal guardian of a simple or
pure donation does not seem to be necessary (Perez vs. Calingo, CA-40 O.G. 53).
Thus, Supreme Court ruled in Kapunan vs. Casilan and Court of Appeals, (109 Phil.
889) that the donation to an incapacitated donee does not need the acceptance by
the lawful representative if said donation does not contain any condition. In simple
and pure donation, the formal acceptance is not important for the donor requires no
right to be protected and the donee neither undertakes to do anything nor assumes
any obligation. The Quitclaim now in question does not impose any condition.

The above pronouncement of respondent Appellate Court finds support in the ruling
of this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which states that
"the major premise thereof is based upon the fact that the consideration stated in
the deeds of sale in favor of Reyes and the Abellas is P1.00. It is not unusual, however,
in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the
consideration given is the sum of P1.00, although the actual consideration may have
been much more. Moreover, assuming that said consideration of P1.00 is suspicious,
this circumstance, alone, does not necessarily justify the inference that Reyes and
the Abellas were not purchasers in good faith and for value. Neither does this
inference warrant the conclusion that the sales were null and void ab initio. Indeed,
bad faith and inadequacy of the monetary consideration do not render a conveyance
G.R. No. L-10141 January 31, 1958
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
PHILIPPINE RESOURCES DEVELOPMENT CORPORATION and the COURT OF APPEALS,
respondents.
Office of the Solicitor General Ambrosio Padilla, and Solicitor Frine C. Zaballero for
petitioner.
Vicente L. Santiago for respondent Corporation.
PADILLA, J.:
This is a petition under Rule 46 to review a judgment rendered by the Court of
Appeals,in CA-GR No. 15767-R, Philippine Resources Development Corporation vs.
The Hon. Judge Magno Gatmaitan et al.
The findings of the Court of Appeals are, as follows.
It appears that on May 6, 1955, the Republic of the Philippines in representation of
the Bureau of Prisons instituted against Macario Apostol and the Empire Insurance
Co. a complaint docketed as Civil Case No. 26166 of the Court of First instance of
Manila. The complaint alleges as the first cause of action, that defendant Apostol
submitted the highest bid the amount P450.00 per ton for the purchase of 100 tons
of Palawan Almaciga from the Bureau of Prisons; that a contract therefor was drawn
and by virtue of which, Apostol obtained goods from the Bureau of Prisons valued
P15,878.59; that of said account, Apostol paid only P691.10 leaving a balane
obligation of P15,187.49. The complaint further averes, as second cause of action,
that Apostol submitted the best bid with the Bureau of Prisons for the purchase of
three million board feet of logs at P88.00 per 1,000 board feet; that a contract was
executed between the Director of Prisons and Apostol pursuant to which contract
Apostol obtained deliveries of logs valued at P65.830.00, and that Apostol failed to
pay a balance account Of P18,827.57. All told, for the total demand set forth in
complaint against Apostol is for P34,015.06 with legal interests thereon from January
8, 1952. The Empire lnsurance Company was included in the complaint having
executed a performance bond of P10,000.00 in favor of Apostol.
In his answer, Apostol interposed payment as a defense and sought the dismissal of
the complaint.
On July 19, 1955, the Philippine Resources Development Corporation moved to
intervene, appending to its motion, the complaint in the intervention of even date.
The complaint recites that for sometime prior to Apostol's transactions the corporate
had some goods deposited in a warehouse at 1201 Herran, Manila; that Apostol, then
the president of the corporation but without the knowledge or consent of the
stockholders thereof, disposed of said goods by delivering the same to the Bureau of
Prisons of in an attempt to settle his personal debts with the latter entity; that upon
discovery of Apodol's act, the corporation took steps to recover said goods by
demanding from the Bureau of Prisons the return thereof; and that upon the refusal
of the Bureau to return said goods, the corporation sought leave to intervene in Civil
Case No. 26166.
As aforestated, His Honor denied the motion for intervention and thereby issued an
order to this effect on July 23, 1955. A motion for the reconsideration of said order
was filed by the movant corporation and the same was likewise denied by His Honor
on August 18, 1955 . . . (Annex L.).
On 3 September 1955, in a petition for a writ of certiorari filed in the Court of Appeals,
the herein respondent corporation prayed for the setting aside of the order of the
Court of First Instance that had denied the admission of its complaint-in-intervention
and for an order directing the latter Court to allow the herein respondent corporation
to intervene in the action (Annex G). On 12 December 1955 the Court of Appeals set
aside the order denying the motion to intervene and ordered the respondent court
to admit the herein respondent corporation's complaint-in-intervention with costs
against Macario Apostol.
On 9 January 1956 the Republic of the Philippines filed this petition in this Court for
the purpose stated at the beginning of this opinion.
The Goverment contends that the intervenor has no legal interest in the matter in
litigation, because the action brought in the Court of First Instance of Manila against
Macario Apostol and the Empire Insurance Company (Civil Case No. 26166, Annex A)
is just for the collection from the defendant Apostol of a sum of money, the unpaid
balance of the purchase price of logs and almaciga bought by him from the Bureau
of Prisons, whereas the intervenor seeks to recover ownership and possession of G.
I. sheets, black sheets, M. S. plates, round bars and G. I. pipes that it claims its owns-
an intervention which would change a personal action into one ad rem and would
unduly delay the disposition of the case.
The Court of Appeals held that:
Petitioner ardently claims that the reason behind its motion to intervene is the desire
to protect its rights and interests over some materials purportedly belonging to it;
that said material were unauthorizedly and illegally assigned and delivered to the
Bureau of Prisons by petitioning corporation's president Macario Apostol in payment
of the latter's personal accounts with the said entity; and that the Bureau of Prisons
refused to return said materials despite petitioner's demands to do so.
Petitioner refers to the particulars recited in Apostol's answer dated July 12, 1955 to
the effect that Apostol had paid unto the Bureau of Prisons his accounts covered,
among others, by BPPO 1077 for the sum of P4,638.40 and BPPO 1549 for the amount
of P4,398.54. Petitioner moreover, points to the State of Paid and Unpaid accounts
of Apostol dated January 16, 1954 prepared by the accounting of officer of the
Bureau of Prisons (Annex B. Complaint in Intervention), wherein it appears that the
aforementioned accounts covered respectively by BPPO Nos. 1077 for 892 pieces of
GI sheets and 1549 for 399 pieces of GI pipes in the total sum of P9,036.94 have not
been credited to Apostol's account in view of lack of supporting papers; and that
according to the reply letter of the Undersecretary of Justice, said GI sheets and pipes
were delivered by Macario Apostol to the Bureau of Prisons allegedly in Apostol's
capacity as owner and that the black iron sheets were delivered by Apostol as
President of the petitioner corporation.
Respondents, on the other hand, assert that the subject matter of the original
litigation is a sum of money allegedly due to the Bureau of Prisons from Macario
Apostol and not the goods or the materials reportedly turned over by Apostol as
payment of his private debts to the Bureau of Prisons and the recovery of which is
sought by the petitioner; and that for this reason, petitioner has no legal interest in
the very subject matter in litigation as to entitle it to intervene.
We find no merit in respondents' contention. It is true that the very subject matter
of the original case is a sum of money. But it is likewise true as borne out by the
records, that the materials purportedly belonging to the petitioner corporation have
been assessed and evaluated and their price equivalent in terms of money have been
determined; and that said materials for whatever price they have been assigned by
defendant now respondent Apostol as tokens of payment of his private debts with
the Bureau of Prisons. In view of these considerations, it becomes enormously plain
in the event the respondent judge decides to credit Macario Apostol with the value
of the goods delivered by the latter to the Bureau of Prisons, the petitioner
corporation stands to be adversely affected by such judgment. The conclusion,
therefore, is inescapable that the petitioner possesses a legal interest in the matter
in litigation and that such interest is of an actual, material, direct and immediate
nature as to entitle petitioner to intervene.
xxx xxx xxx
Section 3 of Rule 13 of the Rules of Court endows the lower Court with discretion to
allow or disapprove the motion for intrvention (Santarromana et al. vs. Barrios, 63
Phil. 456); and that in the exercise of such discretion, the court shall consider whether
or not the intervention will unduly delay or prejudice the adjudicatio of the rights of
the original parties and whether or not the intervenors the rights may be fully
protected in a separate proceeding. The petitioner in the instant case positively
authorized to a separate action against any of all the respondents. But considering
that the resolution of the issues raised in and enjoined by the pleadings in the main
case, would virtally affect the rights not only the original parties but also of the berein
petitioner: that far from unduly delaying or prejudicing the adjudication of the rights
of the original parties or bringing about confusion in the original case, the adnission
of the complaint in intervention would help clarify the vital issue of the true and real
ownership of the materials involved, besides preventing an abhorrent munltiplicity
of suit, we believe that the motion to intervene should be given due to cause.
We find no reason for disturbing the foregoing pronouncements. The Government
argues that "Price . . . is always paid in terms of money and the supposed payment
beeing in kind, it is no payment at all, "citing Article 1458 of the new Civil Code.
However, the same Article provides that the purschaser may pay "a price certain in
money or its equivalent," which means that they meant of the price need not be in
money. Whether the G.I. sheets, black sheets, M. S. Plates, round bars and G. I. pipes
claimed by the respondent corporation to belong to it and delivered to the Bureau of
Prison by Macario Apostol in payment of his account is sufficient payment therefore,
is for the court to pass upon and decide after hearing all the parties in the case.
Should the trial court hold that it is as to credit Apostol with the value or price of the
materials delivered by him, certainly the herein respondent corporation would be
affected adversely if its claim of ownership of such sheets, plates, bars and pipes is
true.
The Government reiterates in its original stand that counsel appearing for the
respondent corporation has no authority to represent it or/and sue in its behalf, the
Court of Appeals held that:
Respondents aver also that petitioner lacks legal capacity to sue and that its counsel
is acting merely in an individual capacity without the benefit of the corporate act
authorizing him to bring sue. In this connection, respondents invoked among others
section 20 of Rule 127 which provision, in our opinion, squarely disproves their claim
as by virtue thereof, the authority of petitioner's counsel is pressumed. Withal, the
claim of the counsel for the petitioner that a resolution to proceed against Apostol,
had been unanonimously adopted by the stockholders of the corporation, has not
been refuted.

Evidently, petitioner is a duly organized corporation with offices at the Samanillo

Building and that as such, it is endowed with a personality distinct and separate from
that of its president or stockholders. It has the right to bring suit to safeguard its
interests and ordinarily, such right is exercised at the instance of the president.
However, under the circumstance now obtaining, such right properly devolves upon
the other officers of the corporations as said right is sought to be exercised against
the president himself who is the very object of the intended suit.

The power of a corporation to sue and be sued in any court1 is lodged in the board
of directors which exercises it corporater powers,2 and not in the president, as
contended by the Government. The "motion for admission of complaint in
intervention" (Annex C) and the "complaint in intervention" attached thereto, signed
by counsel and filed in the Court of First Instance begin with the following statement:
"COMES NOW the above-name Intervenor, by its undersigned counsel, . . . , "and
underneath his typewritten name is affixed the description" Counsel for the
Intervenor." As counsels authority to appeal for the respondent corporation was
newer questioned in the Court of First Instance, it is to be pressumed that he was
properly authorized to file the complaint in intervention and appeal for his client.1 It
was only in the Court of Appeals where his authority to appear was questioned. As
the Court of Appeals was satisfied that counsel was duly authorized by his client to
file the complaint does in intervention and to appear in its behalf, hte resolution of
the Court of Appeals on this point should not be disturbed.

Granting that counsel has not been actually authorized by the board of directors to
appear for and in behalf of the respondent corporation, the fact that counsel is the
secretary treasurer of the respondent corporation and member of the board of
directors; and that the other members of the board, namely, Macario Apostol, the
president, and his wife Pacita R. Apostol, who shuold normally initiate the action to
protect the corporate properties and in interest are the ones to be adversely affected
thereby, a single stockholder under such circumstances may sue in behalf of the
corporation.2 Counsel as a stockholder and director of the respondent corporation
may sue in its behalf and file the complaint in intervention in the proper court.

The judgment under review is affirmed, without pronouncements as to costs.

G.R. No. 172674 July 12, 2007
SPS. JORGE NAVARRA and CARMELITA BERNARDO NAVARRA and RRRC
DEVELOPMENT CORPORATION, Petitioners,
vs.
PLANTERS DEVELOPMENT BANK and ROBERTO GATCHALIAN REALTY, INC.,
Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review under Rule 45 of the
Rules of Court is the decision1 dated September 27, 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 50002, as reiterated in its resolution2 dated May 8, 2006,
denying reconsideration thereof. The challenged decision reversed that of the
Regional Trial Court (RTC) of Makati City, Branch 66, in its Civil Case No. 16917, an
action for Specific Performance and Injunction thereat commenced by the herein
petitioners against the respondents. The Makati RTC ruled that a perfected contract
of sale existed in favor of Jorge Navarra and Carmelita Bernardo Navarra (Navarras)
over the properties involved in the suit and accordingly ordered Planters
Development Bank (Planters Bank) to execute the necessary deed of sale therefor.
The CA reversed that ruling. Hence, this recourse by the petitioners.
The facts:
The Navarras are the owners of five (5) parcels of land located at B.F. Homes,
Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-58017, S-58011,
S-51732, S-51733 and A-14574. All these five (5) parcels of land are the subject of this
controversy.
On July 5, 1982, the Navarras obtained a loan of 1,200,000.00 from Planters Bank
and, by way of security therefor, executed a deed of mortgage over their
aforementioned five (5) parcels of land. Unfortunately, the couple failed to pay their
loan obligation. Hence, Planters Bank foreclosed on the mortgage and the mortgaged
assets were sold to it for 1,341,850.00, it being the highest bidder in the auction
sale conducted on May 16, 1984. The one-year redemption period expired without
the Navarras having redeemed the foreclosed properties.
On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a real
estate company owned by the parents of Carmelita Bernardo Navarra. RRRC itself
obtained a loan from Planters Bank secured by a mortgage over another set of
properties owned by RRRC. The loan having been likewise unpaid, Planters Bank
similarly foreclosed the mortgaged assets of RRRC. Unlike the Navarras, however,
RRRC was able to negotiate with the Bank for the redemption of its foreclosed
properties by way of a concession whereby the Bank allowed RRRC to refer to it
would-be buyers of the foreclosed RRRC properties who would remit their payments
directly to the Bank, which payments would then be considered as redemption price
for RRRC. Eventually, the foreclosed properties of RRRC were sold to third persons
whose payments therefor, directly made to the Bank, were in excess by 300,000.00
for the redemption price.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to
repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be
given until August 31, 1985 to pay the down payment of 300,000.00. Dated July 18,
1985 and addressed to then Planters Bank President Jesus Tambunting, the letter
reads in full:
This will formalize my request for your kind consideration in allowing my brother and
me to buy back my house and lot and my restaurant building and lot together with
the adjacent road lot.
Since my brother, who is working in Saudi Arabia, has accepted this arrangement only
recently as a result of my urgent offer to him, perhaps it will be safe for us to set
August 31, 1985 as the last day for the payment of a 300,000.00 downpayment. I
hope you will grant us the opportunity to raise the funds within this period, which
includes an allowance for delays.
The purchase price, I understand, will be based on the redemption value plus accrued
interest at the prevailing rate up to the date of our sales contract. Maybe you can
give us a long term payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home leave.
I realize that this is not a regular transaction but I am seeking your favor to give me a
chance to reserve whatever values I can still recover from the properties and to avoid
any legal complications that may arise as a consequence of the total loss of the
Balangay lot. I hope that you will extend to me your favorable action on this grave
matter.
In response, Planters Bank, thru its Vice-President Ma. Flordeliza Aguenza, wrote
back Navarra via a letter dated August 16, 1985, thus:
Regarding your letter dated July 18, 1985, requesting that we give up to August 31,
1985 to buy back your house and lot and restaurant and building subject to a
300,000.00 downpayment on the purchase price, please be advised that the
Collection Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the
details of the transaction so that they may work on the necessary documentation.
Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on August 20, 1985,
bringing with him a letter requesting that the excess payment of 300,000.00 in
connection with the redemption made by the RRRC be applied as down payment for
the Navarras repurchase of their foreclosed properties.
Because the amount of 300,000.00 was sourced from a different transaction
between RRRC and Planters Bank and involved different debtors, the Bank required
Navarra to submit a board resolution from RRRC authorizing him to negotiate for and
its behalf and empowering him to apply the excess amount of 300,000.00 in RRRCs
redemption payment as down payment for the repurchase of the Navarras
foreclosed properties.
Meanwhile, titles to said properties were consolidated in the name of Planters Bank,
and on August 27, 1985, new certificates of title were issued in its name, to wit: TCT
Nos. 97073, 97074, 97075, 97076 and 97077.
Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing him
that it could not proceed with the documentation of the proposed repurchase of the
foreclosed properties on account of his non- compliance with the Banks request for
the submission of the needed board resolution of RRRC.
In his reply-letter of January 28, 1987, Navarra claimed having already delivered
copies of the required board resolution to the Bank. The Bank, however, did not
receive said copies. Thus, on February 19, 1987, the Bank sent a notice to the
Navarrras demanding that they surrender and vacate the properties in question for
their failure to exercise their right of redemption.
Such was the state of things when, on June 31, 1987, in the RTC of Makati City, the
Navarras filed their complaint for Specific Performance with Injunction against
Planters Bank. In their complaint docketed in said court as Civil Case No. 16917 and
raffled to Branch 66 thereof, the Navarras, as plaintiffs, alleged that a perfected
contract of sale was made between them and Planters Bank whereby they would
repurchase the subject properties for 1,800,000.00 with a down payment of
300,000.00.
In its Answer, Planters Bank asserted that there was no perfected contract of sale
because the terms and conditions for the repurchase have not yet been agreed upon.
On September 9, 1988, a portion of the lot covered by TCT No. 97077 (formerly TCT
No. A-14574) was sold by Planters Bank to herein co-respondent Roberto Gatchalian
Realty, Inc. (Gatchalian Realty). Consequently, TCT No. 97077 was cancelled and TCT
No. 12692 was issued in the name of Gatchalian Realty. This prompted the Navarras
to amend their complaint by impleading Gatchalian Realty as additional defendant.
In a decision dated July 10, 1995, the trial court ruled that there was a perfected
contract of sale between the Navarras and Planters Bank, and accordingly rendered
judgment as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering:
a) the cancellation of the Deed of Absolute Sale (Exh. "2") over lot 4137-C between
defendant Planters Development Bank and defendant Roberto Gatchalian Realty
Corporation (RGRI) with the vendor bank refunding all the payments made by the
vendee RGRI "without interest less the five percent (5%) brokers commission":
b) the defendant Planters Development Bank to execute the Deed of Absolute Sale
over the lots covered by TCT Nos. 97073, 97074, 97075, 97076, and 97077 in favor of
all the plaintiffs for a consideration of ONE MILLION EIGHT HUNDRED THOUSAND
(P1,800,000.00) less the downpayment of P300,000.00 plus interest at the rate of
twenty five percent (25%) per year for five (5) years to be paid in full upon the
execution of the contract;
c) the defendant Planters Development Bank the amount of TEN THOUSAND PESOS
(P10,000.00) by way of attorneys fees.
d) No costs.
SO ORDERED.
Therefrom, Planters Bank and Gatchalian Realty separately went on appeal to the CA
whereat their appellate recourse were consolidated and docketed as CA-G.R. CV No.
50002.
As stated at the threshold hereof, the appellate court, in its decision of September
27, 2004, reversed that of the trial court and ruled that there was no perfected
contract of sale between the parties. Partly says the CA in its decision:
The Court cannot go along with the deduction of the trial court that the response of
Planters Bank was favorable to Jorge Navarras proposal and that the P300,000.00 in
its possession is a down payment and as such sufficient bases to conclude that there
was a valid and perfected contract of sale. Based on the turn of events and the tenor
of the communications between the offerors and the creditor bank, it appears that
there was not even a perfected contract to sell, much less a perfected contract of
sale.
Article 1319 cited by the trial court provides that the acceptance to an offer must be
absolute. Simply put, there must be unqualified acceptance and no condition must
tag along. But Jorge Navarra in trying to convince the bank to agree, had himself laid
out terms in offering (1) a downpayment of P300,000.00 and setting (2) as deadline
August 31, 1985 for the payment thereof. Under these terms and conditions the bank
indeed accepted his offer, and these are essentially the contents of Exhibits "J" and
"K."
But was there compliance? According to the evidence on file the P300,000.00, if at
all, was given beyond the agreed period. The court a quo missed the fact that the said
amount came from the excess of the proceeds of the sale to the Pea spouses which
Jorge Navarra made to appear was made before the deadline he set of August 31,
1985. But this is athwart Exhibits "M-1" and "N", the Contract to Sell and the Deed of
Sale between RRRC and the Peas, for these were executed only on September 13,
1985 and October 7, 1985 respectively.
xxx xxx xxx
There were two separate and independent loans secured by distinct mortgages on
different lots and their only commonality is the relationship of the Navarras and
Bernardo families. It is thus difficult to conceive and to conclude that such Byzantine
arrangement was acquiesced to and provided for in that single and simple letter of
the bank.
With their motion for reconsideration having been denied by the CA in its resolution
of May 8, 2006, petitioners are now with this Court via this recourse on their
submission that the CA erred -
I Letter dated July 18, 1985 of Jorge Navarra:
XXX IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT TO REPURCHASE
THE FORECLOSED PROPERTIES BETWEEN THE PETITIONERS AND THE PRIVATE
RESPONDENT PLANTERS DEVELOPMENT BANK, AS CORRECTLY FOUND BY THE TRIAL
COURT.
II
XXX IN HOLDING THAT THE PARTIES NEVER GOT PAST THE NEGOTIATION STAGE.
While the question raised is essentially one of fact, of which the Court normally
eschews from, yet, given the conflicting factual findings of the trial and appellate
courts, the Court shall go by the exception3 to the general rule and proceed to make
its own assessment of the evidence.
We DENY.
Petitioners contend that a perfected contract of sale came into being when
respondent Bank, thru a letter dated August 16, 1985, formally accepted the offer of
the Navarras to repurchase the subject properties.
In general, contracts undergo three distinct stages, to wit: negotiation, perfection or
birth, and consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends at the moment of
their agreement. Perfection or birth of the contract takes place when the parties
agree upon the essential elements of the contract, i.e., consent, object and price.
Consummation occurs when the parties fulfill or perform the terms agreed upon in
the contract, culminating in the extinguishment thereof.4
A negotiation is formally initiated by an offer which should be certain with respect to
both the object and the cause or consideration of the envisioned contract. In order
to produce a contract, there must be acceptance, which may be express or implied,
but it must not qualify the terms of the offer. The acceptance of an offer must be
unqualified and absolute to perfect the contract. In other words, it must be identical
in all respects with that of the offer so as to produce consent or meeting of the
minds.5
Here, the Navarras assert that the following exchange of correspondence between
them and Planters Bank constitutes the offer and acceptance, thus:

This will formalize my request for your kind consideration in allowing my brother and
me to buy back my house and lot and my restaurant building and lot together with
the adjacent road lot.
Since my brother, who is working in Saudi Arabia, has accepted this arrangement only
recently as a result of my urgent offer to him, perhaps it will be safe for us to set
August 31, 1985 as the last day for the payment of a 300,000.00 downpayment. I
hope you will grant us the opportunity to raise the funds within this period, which
includes an allowance for delays.
The purchase price, I understand, will be based on the redemption value plus accrued
interest at the prevailing rate up to the date of our sales contract. Maybe you can
give us a long term payment scheme on the basis of my brothers annual savings of
roughly US$30,000.00 everytime he comes home for his home leave.
I realize that this is not a regular transaction but I am seeking your favor to give me a
chance to reserve whatever values I can still recover from the properties and to avoid
any legal complications that may arise as a consequence of the total loss of the
Balangay lot. I hope that you will extend to me your favorable action on this grave
matter.
Letter dated August 16, 1985 of Planters Bank
Regarding your letter dated July 18, 1985, requesting that we give up to August 31,
1985 to buy back your house and lot and restaurant and building subject to a
300,000.00 downpayment on the purchase price, please be advised that the
Collection Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the
details of the transaction so that they may work on the necessary documentation.
(Emphasis ours)222
Given the above, the basic question that comes to mind is: Was the offer certain and
the acceptance absolute enough so as to engender a meeting of the minds between
the parties? Definitely not.
While the foregoing letters indicate the amount of 300,000.00 as down payment,
they are, however, completely silent as to how the succeeding installment payments
shall be made. At most, the letters merely acknowledge that the down payment of
300,000.00 was agreed upon by the parties. However, this fact cannot lead to the
conclusion that a contract of sale had been perfected. Quite recently, this Court held
that before a valid and binding contract of sale can exist, the manner of payment of
the purchase price must first be established since the agreement on the manner of
payment goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price.6
Too, the Navarras letter/offer failed to specify a definite amount of the purchase
price for the sale/repurchase of the subject properties. It merely stated that the
"purchase price will be based on the redemption value plus accrued interest at the
prevailing rate up to the date of the sales contract." The ambiguity of this statement
only bolsters the uncertainty of the Navarras so-called "offer" for it leaves much
rooms for such questions, as: what is the redemption value? what prevailing rate of
interest shall be followed: is it the rate stipulated in the loan agreement or the legal
rate? when will the date of the contract of sale be based, shall it be upon the time of
the execution of the deed of sale or upon the time when the last installment payment
shall have been made? To our mind, these questions need first to be addressed,
discussed and negotiated upon by the parties before a definite purchase price can be
arrived at.
Significantly, the Navarras wrote in the same letter the following:
Maybe you can give us a long-term payment scheme on the basis of my brothers
annual savings of roughly US$30,000.00 every time he comes home for his home
leave.
Again, the offer was not clear insofar as concerned the exact number of years that
will comprise the long-term payment scheme. As we see it, the absence of a
stipulated period within which the repurchase price shall be paid all the more adds
to the indefiniteness of the Navarras offer.
Clearly, then, the lack of a definite offer on the part of the spouses could not possibly
serve as the basis of their claim that the sale/repurchase of their foreclosed
properties was perfected. The reason is obvious: one essential element of a contract
of sale is wanting: the price certain. There can be no contract of sale unless the
following elements concur: (a) consent or meeting of the minds; (b) determinate
subject matter; and (c) price certain in money or its equivalent. Such contract is born
or perfected from the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price.7 Here, what is dramatically clear is that
there was no meeting of minds vis-a-vis the price, expressly or impliedly, directly or
indirectly.
Further, the tenor of Planters Banks letter-reply negates the contention of the SO ORDERED.
Navarras that the Bank fully accepted their offer. The letter specifically stated that
there is a need to negotiate on the other details of the transaction8 before the sale
may be formalized. Such statement in the Banks letter clearly manifests lack of
agreement between the parties as to the terms of the purported contract of
sale/repurchase, particularly the mode of payment of the purchase price and the
period for its payment. The law requires acceptance to be absolute and unqualified.
As it is, the Banks letter is not the kind which would constitute acceptance as
contemplated by law for it does not evince any categorical and unequivocal
undertaking on the part of the Bank to sell the subject properties to the Navarras.

The Navarras attempt to prove the existence of a perfected contract of sale all the
more becomes futile in the light of the evidence that there was in the first place no
acceptance of their offer. It should be noted that aside from their first letter dated
July 18, 1985, the Navarras wrote another letter dated August 20, 1985, this time
requesting the Bank that the down payment of 300,000.00 be instead taken from
the excess payment made by the RRRC in redeeming its own foreclosed properties.
The very circumstance that the Navarras had to make this new request is a clear
indication that no definite agreement has yet been reached at that point. As we see
it, this request constitutes a new offer on the part of the Navarras, which offer was
again conditionally accepted by the Bank as in fact it even required the Navarras to
submit a board resolution of RRRC before it could proceed with the proposed
sale/repurchase. The eventual failure of the spouses to submit the required board
resolution precludes the perfection of a contract of sale/repurchase between the
parties. As earlier mentioned, contracts are perfected when there is concurrence of
the parties wills, manifested by the acceptance by one of the offer made by the
other.9 Here, there was no concurrence of the offer and acceptance as would result
in a perfected contract of sale.1avvphi1

Evidently, what transpired between the parties was only a prolonged negotiation to
buy and to sell, and, at the most, an offer and a counter-offer with no definite
agreement having been reached by them. With the hard reality that no perfected
contract of sale/repurchase exists in this case, any independent transaction between
the Planters Bank and a third-party, like the one involving the Gatchalian Realty,
cannot be affected.

WHEREFORE, the petition is DENIED and the assailed decision and resolution of the
Court of Appeals are AFFIRMED.

No pronouncement as to costs.