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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-9935 February 1, 1915

YU TEK and CO., plaintiff-appellant,


vs.
BASILIO GONZALES, defendant-appellant.

Beaumont, Tenney and Ferrier for plaintiff.


Buencamino and Lontok for defendant.

TRENT, J.:

The basis of this action is a written contract, Exhibit A, the pertinent paragraphs of which follow:

1. That Mr. Basilio Gonzalez hereby acknowledges receipt of the sum of P3,000 Philippine
currency from Messrs. Yu Tek and Co., and that in consideration of said sum be obligates
himself to deliver to the said Yu Tek and Co., 600 piculs of sugar of the first and second
grade, according to the result of the polarization, within the period of three months, beginning
on the 1st day of January, 1912, and ending on the 31st day of March of the same year,
1912.

2. That the said Mr. Basilio Gonzales obligates himself to deliver to the said Messrs. Yu Tek
and Co., of this city the said 600 piculs of sugar at any place within the said municipality of
Santa Rosa which the said Messrs. Yu Tek and Co., or a representative of the same may
designate.

3. That in case the said Mr. Basilio Gonzales does not deliver to Messrs. Yu Tek and Co. the
600 piculs of sugar within the period of three months, referred to in the second paragraph of
this document, this contract will be rescinded and the said Mr. Basilio Gonzales will then be
obligated to return to Messrs. Yu Tek and Co. the P3,000 received and also the sum of
P1,200 by way of indemnity for loss and damages.

Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to
recover the P3,000. Plaintiff prayed for judgment for the P3,000 and, in addition, for P1,200 under
paragraph 4, supra. Judgment was rendered for P3,000 only, and from this judgment both parties
appealed.

The points raised by the defendant will be considered first. He alleges that the court erred in refusing
to permit parol evidence showing that the parties intended that the sugar was to be secured from the
crop which the defendant raised on his plantation, and that he was unable to fulfill the contract by
reason of the almost total failure of his crop. This case appears to be one to which the rule which
excludes parol evidence to add to or vary the terms of a written contract is decidedly applicable.
There is not the slightest intimation in the contract that the sugar was to be raised by the defendant.
Parties are presumed to have reduced to writing all the essential conditions of their contract. While
parol evidence is admissible in a variety of ways to explain the meaning of written contracts, it
cannot serve the purpose of incorporating into the contract additional contemporaneous conditions
which are not mentioned at all in the writing, unless there has been fraud or mistake. In an early
case this court declined to allow parol evidence showing that a party to a written contract was to
become a partner in a firm instead of a creditor of the firm. (Pastor vs. Gaspar, 2 Phil. Rep., 592.)
Again, in Eveland vs. Eastern Mining Co. (14 Phil. Rep., 509) a contract of employment provided
that the plaintiff should receive from the defendant a stipulated salary and expenses. The defendant
sought to interpose as a defense to recovery that the payment of the salary was contingent upon the
plaintiff's employment redounding to the benefit of the defendant company. The contract contained
no such condition and the court declined to receive parol evidence thereof.

In the case at bar, it is sought to show that the sugar was to be obtained exclusively from the crop
raised by the defendant. There is no clause in the written contract which even remotely suggests
such a condition. The defendant undertook to deliver a specified quantity of sugar within a specified
time. The contract placed no restriction upon the defendant in the matter of obtaining the sugar. He
was equally at liberty to purchase it on the market or raise it himself. It may be true that defendant
owned a plantation and expected to raise the sugar himself, but he did not limit his obligation to his
own crop of sugar. Our conclusion is that the condition which the defendant seeks to add to the
contract by parol evidence cannot be considered. The rights of the parties must be determined by
the writing itself.

The second contention of the defendant arises from the first. He assumes that the contract was
limited to the sugar he might raise upon his own plantation; that the contract represented a perfected
sale; and that by failure of his crop he was relieved from complying with his undertaking by loss of
the thing due. (Arts. 1452, 1096, and 1182, Civil Code.) This argument is faulty in assuming that
there was a perfected sale. Article 1450 defines a perfected sale as follows:

The sale shall be perfected between vendor and vendee and shall be binding on both of
them, if they have agreed upon the thing which is the object of the contract and upon the
price, even when neither has been delivered.

Article 1452 reads: "The injury to or the profit of the thing sold shall, after the contract has been
perfected, be governed by the provisions of articles 1096 and 1182."

This court has consistently held that there is a perfected sale with regard to the "thing" whenever the
article of sale has been physically segregated from all other articles Thus, a particular tobacco
factory with its contents was held sold under a contract which did not provide for either delivery of
the price or of the thing until a future time. McCullough vs. Aenlle and Co. (3 Phil. Rep., 295). Quite
similar was the recent case of Barretto vs. Santa Marina (26 Phil. Rep., 200) where specified shares
of stock in a tobacco factory were held sold by a contract which deferred delivery of both the price
and the stock until the latter had been appraised by an inventory of the entire assets of the company.
In Borromeo vs. Franco (5 Phil. Rep., 49) a sale of a specific house was held perfected between the
vendor and vendee, although the delivery of the price was withheld until the necessary documents of
ownership were prepared by the vendee. In Tan Leonco vs. Go Inqui (8 Phil. Rep., 531) the plaintiff
had delivered a quantity of hemp into the warehouse of the defendant. The defendant drew a bill of
exchange in the sum of P800, representing the price which had been agreed upon for the hemp thus
delivered. Prior to the presentation of the bill for payment, the hemp was destroyed. Whereupon, the
defendant suspended payment of the bill. It was held that the hemp having been already delivered,
the title had passed and the loss was the vendee's. It is our purpose to distinguish the case at bar
from all these cases.

In the case at bar the undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of
the first and second classes. Was this an agreement upon the "thing" which was the object of the
contract within the meaning of article 1450, supra? Sugar is one of the staple commodities of this
country. For the purpose of sale its bulk is weighed, the customary unit of weight being denominated
a "picul." There was no delivery under the contract. Now, if called upon to designate the article sold,
it is clear that the defendant could only say that it was "sugar." He could only use this generic name
for the thing sold. There was no "appropriation" of any particular lot of sugar. Neither party could
point to any specific quantity of sugar and say: "This is the article which was the subject of our
contract." How different is this from the contracts discussed in the cases referred to above! In the
McCullough case, for instance, the tobacco factory which the parties dealt with was specifically
pointed out and distinguished from all other tobacco factories. So, in the Barretto case, the particular
shares of stock which the parties desired to transfer were capable of designation. In the Tan Leonco
case, where a quantity of hemp was the subject of the contract, it was shown that that quantity had
been deposited in a specific warehouse, and thus set apart and distinguished from all other hemp.

A number of cases have been decided in the State of Louisiana, where the civil law prevails, which
confirm our position. Perhaps the latest is Witt Shoe Co. vs. Seegars and Co. (122 La., 145; 47
Sou., 444). In this case a contract was entered into by a traveling salesman for a quantity of shoes,
the sales having been made by sample. The court said of this contract:

But it is wholly immaterial, for the purpose of the main question, whether Mitchell was
authorized to make a definite contract of sale or not, since the only contract that he was in a
position to make was an agreement to sell or an executory contract of sale. He says that
plaintiff sends out 375 samples of shoes, and as he was offering to sell by sample shoes,
part of which had not been manufactured and the rest of which were incorporated in
plaintiff's stock in Lynchburg, Va., it was impossible that he and Seegars and Co. should at
that time have agreed upon the specific objects, the title to which was to pass, and hence
there could have been no sale. He and Seegars and Co. might have agreed, and did (in
effect ) agree, that the identification of the objects and their appropriation to the contract
necessary to make a sale should thereafter be made by the plaintiff, acting for itself and for
Seegars and Co., and the legend printed in red ink on plaintiff's billheads ("Our responsibility
ceases when we take transportation Co's. receipt `In good order'" indicates plaintiff's idea of
the moment at which such identification and appropriation would become effective. The
question presented was carefully considered in the case of State vs. Shields, et al. (110 La.,
547, 34 Sou., 673) (in which it was absolutely necessary that it should be decided), and it
was there held that in receiving an order for a quantity of goods, of a kind and at a price
agreed on, to be supplied from a general stock, warehoused at another place, the agent
receiving the order merely enters into an executory contract for the sale of the goods, which
does not divest or transfer the title of any determinate object, and which becomes effective
for that purpose only when specific goods are thereafter appropriated to the contract; and, in
the absence of a more specific agreement on the subject, that such appropriated takes place
only when the goods as ordered are delivered to the public carriers at the place from which
they are to be shipped, consigned to the person by whom the order is given, at which time
and place, therefore, the sale is perfected and the title passes.

This case and State vs. Shields, referred to in the above quotation are amply illustrative of the
position taken by the Louisiana court on the question before us. But we cannot refrain from referring
to the case of Larue and Prevost vs. Rugely, Blair and Co. (10 La. Ann., 242) which is summarized
by the court itself in the Shields case as follows:

. . . It appears that the defendants had made a contract for the sale, by weight, of a lot of
cotton, had received $3,000 on account of the price, and had given an order for its delivery,
which had been presented to the purchaser, and recognized by the press in which the cotton
was stored, but that the cotton had been destroyed by fire before it was weighed. It was held
that it was still at the risk of the seller, and that the buyer was entitled to recover the $3,000
paid on account of the price.
We conclude that the contract in the case at bar was merely an executory agreement; a promise of
sale and not a sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are
not applicable. The defendant having defaulted in his engagement, the plaintiff is entitled to recover
the P3,000 which it advanced to the defendant, and this portion of the judgment appealed from must
therefore be affirmed.

The plaintiff has appealed from the judgment of the trial court on the ground that it is entitled to
recover the additional sum of P1,200 under paragraph 4 of the contract. The court below held that
this paragraph was simply a limitation upon the amount of damages which could be recovered and
not liquidated damages as contemplated by the law. "It also appears," said the lower court, "that in
any event the defendant was prevented from fulfilling the contract by the delivery of the sugar by
condition over which he had no control, but these conditions were not sufficient to absolve him from
the obligation of returning the money which he received."

The above quoted portion of the trial court's opinion appears to be based upon the proposition that
the sugar which was to be delivered by the defendant was that which he expected to obtain from his
own hacienda and, as the dry weather destroyed his growing cane, he could not comply with his part
of the contract. As we have indicated, this view is erroneous, as, under the contract, the defendant
was not limited to his growth crop in order to make the delivery. He agreed to deliver the sugar and
nothing is said in the contract about where he was to get it.

We think is a clear case of liquidated damages. The contract plainly states that if the defendant fails
to deliver the 600 piculs of sugar within the time agreed on, the contract will be rescinded and he will
be obliged to return the P3,000 and pay the sum of P1,200 by way of indemnity for loss and
damages. There cannot be the slightest doubt about the meaning of this language or the intention of
the parties. There is no room for either interpretation or construction. Under the provisions of article
1255 of the Civil Code contracting parties are free to execute the contracts that they may consider
suitable, provided they are not in contravention of law, morals, or public order. In our opinion there is
nothing in the contract under consideration which is opposed to any of these principles.

For the foregoing reasons the judgment appealed from is modified by allowing the recovery of
P1,200 under paragraph 4 of the contract. As thus modified, the judgment appealed from is affirmed,
without costs in this instance.

Arellano, C.J., Torres, Carson and Araullo, JJ., concur.


Johnson, J., dissents.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-14070 March 29, 1961

MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS, LEONCIO GERVACIO BLAS and LODA
GERVACIO BLAS, plaintiffs-appellants,
vs.
ROSALINA SANTOS, in her capacity as Special Administratrix of the Estate of the deceased
MAXIMA SANTOS VDA. DE BLAS, in Sp. Proc. No. 2524, Court of First Instance of Rizal,
defendants-appellants. MARTA GERVACIO BLAS and DR. JOSE CHIVI, defendants-appellants.
Teofilo Sison and Nicanor Sison for plaintiffs-appellants.
De los Santos, Caluag, Pascal and Felizardo for defendants-appellees.

LABRADOR, J.:

This action was instituted by plaintiffs against the administration of the estate of Maxima Santos, to
secure a judicial declaration that one-half of the properties left by Maxima Santos Vda. de Blas, the
greater bulk of which are set forth and described in the project of partition presented in the
proceedings for the administration of the estate of the deceased Simeon Blas, had been promised
by the deceased Maxima Santos to be delivered upon her death and in her will to the plaintiffs, and
requesting that the said properties so promised be adjudicated to the plaintiffs. The complaint also
prays for actual damages in the amount of P50,000. (Record on Appeal, pp. 1-65.) The alleged
promise of the deceased Maxima Santos is contained in a document executed by Maxima Santos on
December 26, 1936 attached to the complaint as Annex "H" and introduced at the trial as Exhibit "A".
(Ibid., pp. 258-259.) The complaint also alleges that the plaintiffs are entitled to inherit certain
properties enumerated in paragraph 3 thereof, situated in Malabon, Rizal and Obando, Bulacan, but
which properties have already been in included in the inventory of the estate of the deceased
Simeon Blas and evidently partitioned and conveyed to his heirs in the proceedings for the
administration of his (Simeon Blas) estate.

Defendant, who is the administratrix of the estate of the deceased Maxima Santos Vda. de Blas,
filed an answer with a counterclaim, and later, an amended answer and a counterclaim. The said
amended answer admits the allegations of the complaint as to her capacity as administratrix the
death of Simeon Blas on January 3, 1937; the fact that Simeon Blas and Marta Cruz begot three
children only one of whom, namely, Eulalio Blas, left legitimate descendants; that Simeon Blas
contracted a second marriage with Maxima Santos on June 28, 1898. She denies for lack of
sufficient information and belief, knowledge edge of the first marriage of Simeon Blas to Marta Cruz,
the averment that Simeon Blas and Marta Cruz acquired properties situated in Obando, Bulacan,
that said properties were utilized as capital, etc. As special defenses, she alleges that the properties
of the spouses Blas and Santos had been settled and liquidated in the project of partition of the
estate of said Simeon Blas; that pursuant to the project of partition, plaintiffs and some defendants
had already received the respective properties adjudicated to them; that the plaintiffs and the
defendants Marta Geracio and Jose Chivi are estopped from impugning the validity of the project of
partition of the estate of the deceased Simeon Blas and from questioning the ownership in the
properties conveyed in the project of partition to Maxima Santos as her own exclusive property; that
the testament executed by Maxima Santos is valid, the plain plaintiffs having no right to recover any
portion of Maxima Santos' estate now under administration by the court. A counterclaim for the
amount of P50,000 as damages is also included in the complaint, as also a cross-claim against
Marta Gervacio Blas and Jose Chivi.

Trial of the case was Conducted and, thereafter, the court, Hon. Gustave Victoriano, presiding,
rendered judgment dismissing the complaint, with costs against plaintiff, and dismissing also the
counterclaim and cross-claim decision ,the plaintiffs filed by the defendants. From this district have
appealed to this Court.

The facts essential to an understanding of the issues involved in the case may be briefly
summarized as follows: Simeon Blas contracted a first marriage with Marta Cruz sometime before
1898. They had three children, only one of whom, Eulalio, left children, namely, Maria Gervacio Blas,
one of the plaintiffs, Marta Gervacio Blas, one of the defendants, and Lazaro Gervacio Blas. Lazaro
died in 1950, and is survived by three legitimate children who are plaintiffs herein, namely, Manuel
Gervacio Blas, Leoncio Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in 1898, and the
following year, Simeon Blas contracted a second marriage with Maxima Santos. At the time of this
second marriage, no liquidation of the properties required by Simeon Blas and Marta Cruz was
made. Three of the properties left are fishponds located in Obando, Bulacan. Maxima Santos does
not appear to have apported properties to her marriage with Simeon Blas.

On December 26, 1936, only over a week before over a week before his death on January 9, 1937,
Simeon Blas executed a last will and testament. In the said testament Simeon Blas makes the
following declarations:

2. Sa panahon ng aking pangalawang asawa, MAXIMA SANTOS DE BLAS, ay nagkaroon


ako at nakatipon ng mga kayamanan (bienes) at pag-aari (propriedades) na ang lahat ng
lupa, palaisdaan at iba pang pag-aari ay umaabot sa halagang ANIM NA RAAN PITONG
PU'T WALONG DAAN LIBO WALONG DAAN WALONG PUNG PISO (678,880-00) sang-
ayon sa mga halaga sa amillarimento (valor Amillarado.)

II

1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang lahat ng aking o aming
pag-kakautang na mag-asawa, kung mayroon man, yayamang ang lahat ng ito ay kita sa
loob ng matrimonio (bienes ganaciales) ay bahagi ng para sa aking asawa, MAXIMA
SANTOS DE BLAS, sang-ayon sa batas. (Record on Appeal, pp. 250-251.)

The above testamentary provisions may be translated as follows:

2. During my second marriage with Maxima Santos de Blas, I possessed and acquired
wealth and properties, consisting of lands, fishponds and other kinds of properties, the total
assessed value of which reached the amount P678,880.00.

II

1. One-half of our properties, after the payment of my and our indebtedness, all these
properties having been acquired during marriage (conjugal properties), constitutes the share
of my wife Maxima Santos de Blas, according to the law.

At the time of the execution of said will, Andres Pascual a son-in-law of the testator, and Avelina
Pascual and others, were present. Andres Pascual had married a descendant by the first marriage.
The will was prepared by Andres Pascual, with the help of his nephew Avelino Pascual. The testator
asked Andres Pascual to prepare a document which was presented in court as Exhibit "A", thus:

Q — Was there anybody who asked you to prepare this document?

A — Don Simeon Blas asked me to prepare this document (referring to Exhibit "A"), (t.s.n.,
Sarmiento to, P. 24).

The reason why the testator ordered the preparation of Exhibit "A" was because the properties that
the testator had acquired during his first marriage with Marta Cruz had not been liquidated and were
not separated from those acquired during the second marriage. Pascual's testimony is as follows:
Q — To whom do you refer with the word "they"?

A — Simeon Blas and his first wife, Marta Cruz. When Marta Cruz died they had not made a
liquidation of their conjugal properties and so all those properties were included all in the
assets of the second marriage, and that is the reason why this document was prepared.
(t.s.n., Sarmiento, p. 36.)

The above testimony is fully corroborated by that of Leoncio Gervacio, son-in-law of Simeon Blas.

Q — Please state to the Court?

A — My children were claiming from their grandfather Simeon Blas the properties left by their
grandmother Marta Cruz in the year 1936.

Q — And what happened with that claim of your children against Simeon Blas regarding the
assets or properties of the first marriage that were left after the death of Marta Cruz in 1936?

A — The claim was not pushed through because they reached into an agreement whereby
the parties Simeon Blas Maxima Santos, Maria Gervacio Bias, Marta Gervacio Blas and
Lazaro Gervacio Blas agreed that Simeon Blas and Maxima Blas will give one-half of the
estate of Simeon Blas. (t.s.n., Sarmiento, pp. 143-144).

The document which was thus prepared and which is marked as Exhibit "A" reads in Tagalog, thus:

MAUNAWA NG SINO MANG MAKABABASA:

Na akong si MAXIMA SANTOS DE BLAS, nasa hustong gulang, kasal kay SIMEON BLAS,
taga bayan ng Malabon, Rizal, Philippines, sa pamamagitan ng kasulatang ito ay malaya
kong ipinahahayag:

Na aking nabasa at naunawa ang testamento at huling kalooban na nilagdaan ng aking


asawa, SIMEON BLAS, at ipinahahayag ko sa ilalim ng aking karangalan at sa harap ng
aking asawa na igagalang at pagpipitaganan ang lahat at bawa't isang bahagi ng nabanggit
na testamento at ipinangangako ko pa sa pamamagitan ng kasulatang ito na ang lahat ng
maiiwang pag-aari at kayamanan naming mag-asawa, na nauukol at bahaging para sa akin
sa paggawa ko naman ng aking testamento ay ipagkakaloob ko ang kalahati (½) sa mga
herederos at legatarios o pinamamanahan ng aking nabanggit na asawa, SIMEON BLAS, sa
kaniyang testamento, na ako'y makapipili o makahihirang na kahit kangino sa kanila ng
aking pagbibigyan at pamamanahan sang-ayon sa paggalang, paglilingkod, at pakikisama
ng gagawin sa akin.

SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko ang kasulatang ito ngayon ika 26 ng


Diciembre ng taong 1936, dito sa San Francisco del Monte, San Juan, Rizal, Philippines.
(Exh. "A", pp. 29-30 — Appellant's brief).

(Fdo.) MAXIMA SANTOS DE BLAS

and which, translated into English, reads as follows:

KNOW ALL MEN BY THESE PRESENTS:


That I MAXIMA SANTOS DE BLAS, of legal age, married to SIMEON BLAS, resident of
Malabon, Rizal, Philippines, voluntarily state:

That I have read and knew the contents of the will signed by my husband, SIMEON BLAS,
(2) and I promise on my word of honor in the presence of my husband that I will respect and
obey all and every disposition of said will (3) and furthermore, I promise in this document that
all the properties my husband and I will leave, the portion and share corresponding to me
when I make my will, I will give one-half (½) to the heirs and legatees or the beneficiaries
named in the will of my husband, (4) and that I can select or choose any of them, to whom I
will give depending upon the respect, service and treatment accorded to me.

IN WITNESS WHEREOF, I signed this document this 26th day of December, 1936 at San
Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 30-31, Appellant's brief).

(Sgd.) MAXIMA SANTOS DE BLAS

The court below held that said Exhibit "A" has not created any right in favor of plaintiffs which can
serve as basis for the complaint; that neither can it be considered as a valid and enforceable
contract for lack of consideration and because it deals with future inheritance. The court also
declared that Exhibit "A" is not a will because it does not comply with the requisites for the execution
of a will; nor could it be considered as a donation, etc.

Both the court below in its decision and the appellees in their brief before us, argue vehemently that
the heirs of Simeon Blas and his wife Marta Cruz can no longer make any claim for the unliquidated
conjugal properties acquired during said first marriage, because the same were already included in
the mass of properties constituting the estate of the deceased Simeon Blas and in the adjudications
made by virtue of his will, and that the action to recover the same has prescribed. This contention is
correct. The descendants of Marta Cruz can no longer claim the conjugal properties that she and her
husband may have required during their marriage although no liquidation of such properties and
delivery thereof to the heirs of Marta Cruz have been made, no action to recover said propertied
having been presented in the proceedings for the settlement of the estate of Simeon Blas.

But the principal basis for the plaintiffs' action in the case at bar is the document Exhibit "A". It is not
disputed that this document was prepared at the instance of Simeon Blas for the reason that the
conjugal properties of me on Blas for the reason his first marriage had not been liquidated; that it
was prepared at the same time as the will of Simeon Blas on December 26, 1936, at the instance of
the latter himself. It is also not disputed that the document was signed by Maxima Santos and one
copy thereof, which was presented in court as Exhibit "A", was kept by plaintiffs' witness Andres
Pascual.

Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement and a contract in the
nature of a compromise to avoid litigation. Defendants-appellees, in answer, claim that it is neither a
trust agreement nor a compromise a agreement. Considering that the properties of the first marriage
of Simeon Blas had not been liquidated when Simeon Blas executed his will on December 26, 1936',
and the further fact such properties where actually , and the further fact that included as conjugal
properties acquired during the second marriage, we find, as contended by plaintiffs-appellants that
the preparation and execution of Exhibit "A" was ordered by Simeon Blas evidently to prevent his
heirs by his first marriage from contesting his will and demanding liquidation of the conjugal
properties acquired during the first marriage, and an accounting of the fruits and proceeds thereof
from the time of the death of his first wife.
Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the Civil Code of
Spain, in force at the time of the execution of Exhibit "A", which provides as follows:

Compromise is a contract by which each of the parties in interest, by giving, promising, or


retaining something avoids the provocation of a suitor terminates one which has already the
provocation been instituted. (Emphasis supplied.)

Exhibit "A" states that the maker (Maxima Santos) had read and knew the contents of the will of her
husband read and knew the contents of the will Simeon Blas — she was evidently referring to the
declaration in the will(of Simeon Blas) that his properties are conjugal properties and one-half
thereof belongs to her (Maxima Santos) as her share of the conjugal assets under the law. The
agreement or promise that Maxima Santos makes in Exhibit "A" is to hold one-half of her said share
in the conjugal assets in trust for the heirs and legatees of her husband in his will, with the obligation
of conveying the same to such of his heirs or legatees as she may choose in her last will and
testament. It is to be noted that the conjugal properties referred to are those that were actually
existing at that time, December 26, 1936. Simeon Blas died on January 9, 1937. On June 2, 1937,
an inventory of the properties left by him, all considered conjugal, was submitted by Maxima Santos
herself as administratrix of his estate. A list of said properties is found in Annex "E", the complete
inventory submitted by Maxima Santos Vda. de Blas, is administratrix of the estate of her husband,
dated March 10, 1939. The properties which were given to Maxima Santos as her share in the
conjugal properties are also specified in the project of partition submitted by said Maxima Santos
herself on March 14, 1939. (Record on Appeal, pp. 195-241.) Under Exhibit "A", therefore, Maxima
Santos contracted the obligation and promised to give one-half of the above indicated properties to
the heirs and legatees of Simeon Blas.

Counsel for the defendant-appellee claims Exhibit "A" is a worthless piece of paper because it is not
a will nor a donation mortis causa nor a contract. As we have in indicated above, it is a compromise
and at the same time a contract with a sufficient cause or consideration. It is also contended that it
deals with future inheritance. We do not think that Exhibit "A" is a contract on future inheritance. it is
an obligation or promise made by the maker to transmit one-half of her share in the conjugal
properties acquired with her husband, which properties are stated or declared to be conjugal
properties in the will of the husband. The conjugal properties were in existence at the time of the
execution of Exhibit "A" on December 26, 1936. As a matter of fact, Maxima Santos included these
properties in her inventory of her husband's estate of June 2, 1937. The promise does not refer to
any properties that the maker would inherit upon the death of her husband, because it is her share in
the conjugal assets. That the kind of agreement or promise contained in Exhibit "A" is not void under
Article 1271 of the old Civil Code, has been decided by the Supreme Court of Spain in its decision of
October 8, 19154, thus:

Que si bien el art. 1271 del Codigo civil dispone que sobre la herenciafutura no se podra
celebrar otros contratos que aquellos cuyo objecto seapracticar entre vivos la division de un
caudal, conforme al articulo 1056, esta prohibicion noes aplicable al caso, porque la
obligacion que contrajoel recurr en contrato privado de otorgar testamento e instituir
heredera a su subrina de los bienes que adquirio en virtud de herencia, procedentes desu
finada consorte que le quedasen sobrantes despues de pagar las deudas, y del ganacial
que se expresa, asi como de reconocer, ademas, con alguna cosaa otros sobrinos, se
refiere a bienes conocidos y determinados existentes cuando tal compromisi se otorgo, y no
a la universalidad de una herencia que, sequn el art. 659 del citado Codigo civil, as
determina a muerte, constituyendola todos los bienes, derechos y obligaciones que por ella
no sehayan extinguido: ..." (Emphasis supplied.)
It will be noted that what is prohibited to be the subject matter of a contract under Article 1271 of the
Civil Code is " future inheritance." To us future inheritance is any property or right not in existence or
capable of determination at the time of the contract, that a person may in the future acquire by
succession. The properties subject of the contract Exhibit "A" are well defined properties, existing at
the time of the agreement, which Simeon Blas declares in his statement as belonging to his wife as
her share in the conjugal partnership. Certainly his wife's actual share in the conjugal properties may
not be considered as future inheritance because they were actually in existence at the time Exhibit
"A" was executed.

The trial court held that the plaintiffs-appellants in the case at bar are concluded by the judgement
rendered in the proceedings for the settlement of the estate of Simeon Blas for the reason that the
properties left by him belonged to himself and his wife Maxima Santos; that the project of partition in
the said case, adjudicating to Maxima Santos one-half as her share in the conjugal properties, is a
bar to another action on the same subject matter, Maxima Santos having become absolute owner of
the said properties adjudicated in her favor. As already adverted to above, these contentions would
be correct if applied to the claim of the plaintiffs-appellants that said properties were acquired with
the first wife of Simeon Blas, Marta Cruz. But the main ground upon which plaintiffs base their
present action is the document Exhibit "A", already fully considered above. As this private document
contains the express promise made by Maxima Santos to convey in her testament, upon her death,
one-half of the conjugal properties she would receive as her share in the conjugal properties, the
action to enforce the said promise did not arise until and after her death when it was found that she
did not comply with her above-mentioned promise. (Art. 1969, old Civil Code.) The argument that the
failure of the plaintiffs-appellants herein to oppose the project of partition in the settlement of the
estate of Simeon Blas, especially that portion of the project which assigned to Maxima Santos one-
half of all the conjugal properties bars their present action, is, therefore, devoid of merit. It may be
added that plaintiffs-appellants did not question the validity of the project of partition precisely
because of the promise made by Maxima Santos in the compromise Exhibit "A"; they acquised in the
approval of said project of partition because they were relying on the promise made by Maxima
Santos in Exhibit "A", that she would transmit one-half of the conjugal properties that she was going
to receive as her share in the conjugal partnership upon her death and in her will, to the heirs and
legatees of her husband Simeon Blas.

Neither can the claim of prescription be considered in favor of the defendants. The right of action
arose at the time of the death of Maxima Santos on October 5,1956, when she failed to comply with
the promise made by her in Exhibit "A". The plaintiffs-appellants immediately presented this action
on December 27, 1956, upon learning of such failure on the part of Maxima Santos to comply with
said promise. This defense is, therefore, also without merit.

It is next contended by the defendant-appellee that Maxima Santos complied with her above-
mentioned promise, — that Andres Pascual, Tomasa Avelino, Justo Garcia, Ludovico Pimpin and
Marta Gervacio Blas were given substancial legacies in the will and testament of Maxima Santos. To
determine whether she had actually complied with the promise made in Exhibit "A", there is herein
set forth a list only of the fishponds and their respective areas as contained in the list of properties
she acquired as her share in the conjugal partnership, which list includes, besides many ricelands as
well as residential lots, thus:

31. Paco, Obando, Bulacan 5.8396 has.


32. Pangjolo, Obando 3.5857 "
34. Batang Pirasuan, Lubao, Pampanga 11.9515 "
35. Calangian, Lubao, Pampanga 30.2059 "
38. Bakuling, Lubao, Pampanga 215.4325 "
39. Bakuling, Lubao, Pampanga 8.3763 "
40. Bangkal, Sinubli 23.0730 "
41. Tagulod, 6.8692 "
44. Bangkal Pugad (a) 34.2779 "
(b) 51.7919 "
(c) 2.5202 "
45. Magtapat Bangkal, Lubao, Pampanga (a) 18.0024 "
(b) 7.3265 "
(c) 53.5180 "
46. Pinanganakan, Lubao, Pampanga 159.0078 "
47. Emigdio Lingid, Lubao, Pampanga 34.5229 "
48. Propios, Lubao, Pampanga 80.5382 "
49. Batang Mabuanbuan, Sexmoan,
Pampanga 43.3350 "
50. Binatang Mabuanbuan, Sexmoan,
Pampanga 3.5069 "
51. Sapang Magtua, Sexmoan, Pampanga 56,8242 "
52. Kay Limpin, Sexmoan, Pampanga 5.0130 "
53. Calise Mabalumbum, Sexmoan,
Pampanga 23.8935 "
54. Messapinit Kineke, Sexmoan,
Pampanga (a) 5.2972 "
(b) 5.9230 "
(c) 1.4638 "
(d) 1.4638 "
(e) 2.8316 "
(f) 10.4412 "
(g) 3.9033 "
(h) 11.9263 "
(i) 6.0574 "
55. Dalang, Banga, Sexmoan, Pampanga 23.3989 "
62. Alaminos, Pangasinan 147.1242 "
80. Mangasu Sexmoan, Pampanga 10.000 "
81. Don Tomas, Sexmoan, Pampanga 21.6435 "
82. Matikling, Lubao, Pampanga 16.0000 "
Total area ............................... 1045.7863 "
(See Record on Record, pp.
195-241.)

In her will, Maxima Santos devised to Marta Gervacio Blas the 80-hectare fishpond situated in
Lubao, Pampanga. The fishpond devised is evidently that designated as "Propios" in Lubao,
Pampanga, item No. 8 in the list of properties adjudicated to her in the project of partition. (Record
on Appeal, p. 215.) Considering that the total area of the fishponds amount to 1045.7863 hectares,
the 80 hectares devised to Marta Gervacio Blas is not even one-tenth of the total area of the
fishponds. Add to this the fact that in the will she imposed upon Marta Gervacio Blas de Chivi an
existing obligation on said fishponds, namely, its lease in 1957 and the duty to pay out of the rentals
thereof an obligation to the Rehabilitation Finance Corporation RFC (Ibid., pp. 262-263.) Angelina
Blas was given only a lot of 150 square meters in Hulong Duhat, Malabon, Rizal, and Leony Blas,
the sum of P300.00 (Ibid., p. 264.)

It is evident from a consideration of the above figures and facts that Maxima Santos did not comply
with her obligation to devise one-half of her conjugal properties to the heirs and legatees of her
husband. She does not state that she had complied with such obligation in her will. If she intended to
comply therewith by giving some of the heirs of Simeon Blas the properties mentioned above, the
most that can be considered in her favor is to deduct the value of said properties from the total
amount of properties which she had undertaken to convey upon her death.

All the issues in the pleadings of the parties and in their respective briefs, have now been fully
discussed and considered. Reiterating what we have stated above, we declare that by Exhibit "A", a
compromise to avoid litigation, Maxima Santos promised to devise to the heirs and legatees of her
husband Simeon Blas, one-half of the properties she received as her share in the conjugal
partnership of herself and her husband, which share is specified in the project of partition submitted
by herself on March 14, 1939 in the settlement of the estate of her husband, and which is found on
pages 195 to 240 of the record on appeal and on pages 27 to 46 of the project of partition, submitted
by Maxima Santos herself before the Court of First Instance of Rizal in Civil Case No. 6707, entitled
"Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Bias, Administradora"; and
that she failed to comply with her aforementioned obligation. (Exhibit "A")

WHEREFORE, the judgment appealed from is hereby reversed and the defendant-appellee,
administratrix of the estate of Maxima Santos, is ordered to convey and deliver one-half of the
properties adjudicated o Maxima Santos as her share in the conjugal properties in said Civil Case
No. 6707, entitled "Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Blas,
Administradora", to the heirs and the legatees of her husband Simeon Blas. Considering that all said
heirs and legatees, designated in the will of Simeon Blas as the persons for whose benefit Exhibit
"A" had been executed, have not appeared in these proceedings, the record is hereby remanded to
the court below, with instructions that, after the conveyance of the properties hereinabove ordered
had been effected, the said heirs and legatees (of Simeon Blas) file adversary pleadings to
determine the participation of each and every one of them in said properties. Costs against the
defendant- appellee Rosalina Santos.

Padilla, Parades and Dizon, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 188417 September 24, 2012

MILAGROS DE BELEN VDA. DE CABALU, MELITON CABALU, SPS. ANGELA CABALU and
RODOLFO TALAVERA, and PATRICIO ABUS, Petitioners,
vs.
SPS. RENATO DOLORES TABU and LAXAMANA, Municipal Trial Court in Cities, Tarlac City,
Branch II, Respondents.

DECISION

MENDOZA, J.:

This is a "Petition for Review on Certiorari (under Rule 45)" of the Rules of Court assailing the June
16, 2009 Decision1 of the Court of Appeals (CA) in CA-GR. CV No. 81469 entitled "Milagros De
Belen Vda de Cabalu v. Renato Tabu."

The Facts

The property subject of the controversy is a 9,000 square meter lot situated in Mariwalo, Tarlac,
which was a portion of a property registered in the name of the late Faustina Maslum (Faustina)
under Transfer Certificate of Title (TCT) No. 16776 with a total area of 140,211 square meters.2

On December 8, 1941, Faustina died without any children. She left a holographic will, dated July 27,
1939, assigning and distributing her property to her nephews and nieces. The said holographic will,
however, was not probated. One of the heirs was the father of Domingo Laxamana (Domingo),
Benjamin Laxamana, who died in 1960. On March 5, 1975, Domingo allegedly executed a Deed of
Sale of Undivided Parcel of Land disposing of his 9,000 square meter share of the land to Laureano
Cabalu.3

On August 1, 1994, to give effect to the holographic will, the forced and legitimate heirs of Faustina
executed a Deed of Extra-Judicial Succession with Partition. The said deed imparted 9,000 square
meters of the land covered by TCT No. 16776 to Domingo. Thereafter, on December 14, 1995,
Domingo sold 4,500 square meters of the 9,000 square meters to his nephew, Eleazar Tabamo. The
document was captioned Deed of Sale of a Portion of Land. On May 7, 1996, the remaining 4,500
square meters of Domingo’s share in the partition was registered under his name under TCT No.
281353.4

On August 4, 1996, Domingo passed away.

On October 8, 1996, two months after his death, Domingo purportedly executed a Deed of Absolute
Sale of TCT No. 281353 in favor of respondent Renato Tabu (Tabu). The resultant transfer of title
was registered as TCT No. 286484. Subsequently, Tabu and his wife, Dolores Laxamana
(respondent spouses), subdivided the said lot into two which resulted into TCT Nos. 291338 and
291339.5

On January 15, 1999, respondent Dolores Laxamana-Tabu, together with Julieta Tubilan-Laxamana,
Teresita Laxamana, Erlita Laxamana, and Gretel Laxamana, the heirs of Domingo, filed an unlawful
detainer action, docketed as Civil Case No. 7106, against Meliton Cabalu, Patricio Abus, Roger
Talavera, Jesus Villar, Marcos Perez, Arthur Dizon, and all persons claiming rights under them. The
heirs claimed that the defendants were merely allowed to occupy the subject lot by their late father,
Domingo, but, when asked to vacate the property, they refused to do so. The case was ruled in favor
of Domingo’s heirs and a writ of execution was subsequently issued.6

On February 4, 2002, petitioners Milagros de Belen Vda. De Cabalu, Meliton Cabalu, Spouses
Angela Cabalu and Rodolfo Talavera, and Patricio Abus (petitioners), filed a case for Declaration of
Nullity of Deed of Absolute Sale, Joint Affidavit of Nullity of Transfer Certificate of Title Nos. 291338
and 291339, Quieting of Title, Reconveyance, Application for Restraining Order, Injunction and
Damages (Civil Case No. 9290) against respondent spouses before the Regional Trial Court, Branch
63, Tarlac City (RTC).7

In their complaint, petitioners claimed that they were the lawful owners of the subject property
because it was sold to their father, Laureano Cabalu, by Domingo, through a Deed of Absolute Sale,
dated March 5, 1975. Hence, being the rightful owners by way of succession, they could not be
ejected from the subject property.8

In their Answer, respondent spouses countered that the deed of sale from which the petitioners
anchored their right over the 9,000 square meter property was null and void because in 1975,
Domingo was not yet the owner of the property, as the same was still registered in the name of
Faustina. Domingo became the owner of the property only on August 1, 1994, by virtue of the Deed
of Extra-Judicial Succession with Partition executed by the forced heirs of Faustina. In addition, they
averred that Domingo was of unsound mind having been confined in a mental institution for a time.9

On September 30, 2003, the RTC dismissed the complaint as it found the Deed of Absolute Sale,
dated March 5, 1975, null and void for lack of capacity to sell on the part of Domingo. Likewise, the
Deed of Absolute Sale, dated October 8, 1996, covering the remaining 4,500 square meters of the
subject property was declared ineffective having been executed by Domingo two months after his
death on August 4, 1996. The fallo of the Decision10reads:

WHEREFORE, in view of the foregoing, the complaint is hereby DISMISSED, and the decision is
hereby rendered by way of:

1. declaring null and void the Deed of Absolute Sale dated March 5, 1975, executed by
Domingo Laxamana in favor of Laureano Cabalu;

2. declaring null and void the Deed of Absolute Sale dated October 8, 1996, executed by
Domingo Laxamana in favor of Renato Tabu, and that TCT Nos. 293338 and 291339, both
registered in the name of Renato Tabu, married to Dolores Laxamana be cancelled;

3. restoring to its former validity, TCT No. 16770 in the name of Faustina Maslum subject to
partition by her lawful heirs.

Costs de oficio.

SO ORDERED.11

Not in conformity, both parties appealed to the CA. Petitioners contended that the RTC erred in
declaring void the Deed of Absolute Sale, dated March 5, 1975. They claimed that Domingo owned
the property, when it was sold to Laureano Cabalu, because he inherited it from his father,
Benjamin, who was one of the heirs of Faustina. Being a co-owner of the property left by Benjamin,
Domingo could dispose of the portion he owned, notwithstanding the will of Faustina not being
probated.

Respondent spouses, on the other hand, asserted that the Deed of Sale, dated March 5, 1975, was
spurious and simulated as the signature, PTR and the document number of the Notary Public were
different from the latter’s notarized documents. They added that the deed was without consent,
Domingo being of unsound mind at the time of its execution. Further, they claimed that the RTC
erred in canceling TCT No. 266583 and insisted that the same should be restored to its validity
because Benjamin and Domingo were declared heirs of Faustina.

On June 16, 2009, the CA rendered its decision and disposed as follows:

WHEREFORE, in the light of the foregoing, the instant appeal is partially GRANTED in that the
decision of the trial court is AFFIRMED WITH MODIFICATION that sub-paragraphs 2 & 3 of the
disposition, which reads:

"2. declaring null and void the Deed of Absolute Sale dated October 8, 1996, executed by Domingo
Laxamana in favor of Renato Tabu, and that TCT Nos. 291338 and 291339, both registered in the
name of Renato Tabu, married to Dolores Laxamana be cancelled;

3. restoring to its former validity, TCT No. 16776 in the name of Faustina Maslum subject to partition
by her lawful heirs," are DELETED.

IT IS SO ORDERED.12

In finding Domingo as one of the heirs of Faustina, the CA explained as follows:

It appears from the records that Domingo was a son of Benjamin as apparent in his Marriage
Contract and Benjamin was a nephew of Faustina as stated in the holographic will and deed of
succession with partition. By representation, when Benjamin died in 1960, Domingo took the place of
his father in succession. In the same vein, the holographic will of Faustina mentioned Benjamin as
one of her heirs to whom Faustina imparted 9,000 square meters of her property. Likewise, the
signatories to the Deed of Extra-judicial Succession with Partition, heirs of Faustina, particularly
declared Domingo as their co-heir in the succession and partition thereto. Furthermore, the parties in
this case admitted that the relationship was not an issue.13

Although the CA found Domingo to be of sound mind at the time of the sale on March 5, 1975, it
sustained the RTC’s declaration of nullity of the sale on the ground that the deed of sale was
simulated.

The CA further held that the RTC erred in canceling TCT No. 266583 in the name of Domingo and in
ordering the restoration of TCT No. 16770, registered in the name of Faustina, to its former validity,
Domingo being an undisputed heir of Faustina.

Hence, petitioners interpose the present petition before this Court anchored on the following:

GROUNDS

(A)

THE DEED OF SALE OF UNDIVIDED PARCEL OF LAND EXECUTED ON MARCH 5, 1975


BY DOMINGO LAXAMANA IN FAVOR OF LAUREANO CABALU IS VALID BECAUSE IT
SHOULD BE ACCORDED THE PRESUMPTION OF REGULARITY AND DECLARED
VALID FOR ALL PURPOSES AND INTENTS.

(B)
THE SUBPARAGRAPH NO. 2 OF THE DECISION OF THE REGIONAL TRIAL COURT
SHOULD STAY BECAUSE THE HONORABLE COURT OF APPEALS DID NOT DISCUSS
THE ISSUE AND DID NOT STATE THE LEGAL BASIS WHY SAID PARAGRAPH SHOULD
BE DELETED FROM THE SEPTEMBER 30, 2003 DECISION OF THE REGIONAL TRIAL
COURT.14

The core issues to be resolved are 1) whether the Deed of Sale of Undivided Parcel of Land
covering the 9,000 square meter property executed by Domingo in favor of Laureano Cabalu on
March 5, 1975, is valid; and 2) whether the Deed of Sale, dated October 8, 1996, covering the 4,500
square meter portion of the 9,000 square meter property, executed by Domingo in favor of Renato
Tabu, is null and void.

Petitioners contend that the Deed of Absolute Sale executed by Domingo in favor of Laureano
Cabalu on March 5, 1975 should have been declared valid because it enjoyed the presumption of
regularity. According to them, the subject deed, being a public document, had in its favor the
presumption of regularity, and to contradict the same, there must be clear, convincing and more than
preponderant evidence, otherwise, the document should be upheld. They insist that the sale
transferred rights of ownership in favor of the heirs of Laureano Cabalu.

They further argue that the CA, in modifying the decision of the RTC, should not have deleted the
portion declaring null and void the Deed of Absolute Sale, dated October 8, 1996, executed by
Domingo in favor of Renato Tabu, because at the time of execution of the said deed of sale, the
seller, Domingo was already dead. Being a void document, the titles originating from the said
instrument were also void and should be cancelled.

Respondent spouses, in their Comment15 and Memorandum,16 counter that the issues raised are not
questions of law and call for another calibration of the whole evidence already passed upon by the
RTC and the CA. Yet, they argue that petitioners’ reliance on the validity of the March 5, 1975 Deed
of Sale of Undivided Parcel of Land, based on presumption of regularity, was misplaced because
both the RTC and the CA, in the appreciation of evidence on record, had found said deed as
simulated.

It is well to note that both the RTC and the CA found that the evidence established that the March 5,
1975 Deed of Sale of Undivided Parcel of Land executed by Domingo in favor of Laureano Cabalu
was a fictitious and simulated document. As expounded by the CA, viz:

Nevertheless, since there are discrepancies in the signature of the notary public, his PTR and the
document number on the lower-most portion of the document, as well as the said deed of sale being
found only after the plaintiffs-appellants were ejected by the defendants-appellants; that they were
allegedly not aware that the said property was bought by their father, and that they never questioned
the other half of the property not occupied by them, it is apparent that the sale dated March 5, 1975
had the earmarks of a simulated deed written all over it. The lower court did not err in pronouncing
that it be declared null and void.17

Petitioners, in support of their claim of validity of the said document of deed, again invoke the legal
presumption of regularity. To reiterate, the RTC and later the CA had ruled that the sale, dated
March 5, 1975, had the earmarks of a simulated deed, hence, the presumption was already
rebutted. Verily and as aptly noted by the respondent spouses, such presumption of regularity
cannot prevail over the facts proven and already established in the records of this case.

Even on the assumption that the March 5, 1975 deed was not simulated, still the sale cannot be
deemed valid because, at that time, Domingo was not yet the owner of the property. There is no
dispute that the original and registered owner of the subject property covered by TCT No. 16776,
from which the subject 9,000 square meter lot came from, was Faustina, who during her lifetime had
executed a will, dated July 27, 1939. In the said will, the name of Benjamin, father of Domingo,
appeared as one of the heirs. Thus, and as correctly found by the RTC, even if Benjamin died
sometime in 1960, Domingo in 1975 could not yet validly dispose of the whole or even a portion
thereof for the reason that he was not the sole heir of Benjamin, as his mother only died sometime in
1980.

Besides, under Article 1347 of the Civil Code, "No contract may be entered into upon future
inheritance except in cases expressly authorized by law." Paragraph 2 of Article 1347, characterizes
a contract entered into upon future inheritance as void. The law applies when the following requisites
concur: (1) the succession has not yet been opened; (2) the object of the contract forms part of the
inheritance; and (3) the promissor has, with respect to the object, an expectancy of a right which is
purely hereditary in nature.18

In this case, at the time the deed was executed, Faustina’s will was not yet probated; the object of
the contract, the 9,000 square meter property, still formed part of the inheritance of his father from
the estate of Faustina; and Domingo had a mere inchoate hereditary right therein. 1âwphi1

Domingo became the owner of the said property only on August 1, 1994, the time of execution of the
Deed of Extrajudicial Succession with Partition by the heirs of Faustina, when the 9,000 square
meter lot was adjudicated to him.

The CA, therefore, did not err in declaring the March 5, 1975 Deed of Sale null and void.

Domingo’s status as an heir of Faustina by right of representation being undisputed, the RTC should
have maintained the validity of TCT No. 266583 covering the 9,000 square meter subject property.
As correctly concluded by the CA, this served as the inheritance of Domingo from Faustina.

Regarding the deed of sale covering the remaining 4,500 square meters of the subject property
executed in favor of Renato Tabu, it is evidently null and void. The document itself, the Deed of
Absolute Sale, dated October 8, 1996, readily shows that it was executed on August 4, 1996 more
than two months after the death of Domingo. Contracting parties must be juristic entities at the time
of the consummation of the contract. Stated otherwise, to form a valid and legal agreement it is
necessary that there be a party capable of contracting and a party capable of being contracted with.
Hence, if any one party to a supposed contract was already dead at the time of its execution, such
contract is undoubtedly simulated and false and, therefore, null and void by reason of its having
been made after the death of the party who appears as one of the contracting parties therein. The
death of a person terminates contractual capacity.19

The contract being null and void, the sale to Renato Tabu produced no legal effects and transmitted
no rights whatsoever. Consequently, TCT No. 286484 issued to Tabu by virtue of the October 8,
1996 Deed of Sale, as well as its derivative titles, TCT Nos. 291338 and 291339, both registered in
the name of Rena to Tabu, married to Dolores Laxamana, are likewise void.

The CA erred in deleting that portion in the RTC decision declaring the Deed of Absolute Sale, dated
October 8, 1996, null and void and canceling TCT Nos. 291338 and 291339.

WHEREFORE, the petition is partially GRANTED. The decretal portion of the June 16, 2009
Decision of the Court of Appeals is hereby MODIFIED to read as follows:
1. The Deed of Absolute Sale, dated March 5, 1975, executed by Domingo Laxamana in
favor of Laureano Cabalu, is hereby declared as null and void.

2. The Deed of Absolute Sale, dated October 8, 1996, executed by Domingo Laxamana in
favor of Renato Tabu, and TCT No. 286484 as well as the derivative titles TCT Nos. 291338
and 291339, both registered in the name of Renato Tabu, married to Dolores Laxamana, are
hereby declared null and void and cancelled.

3. TCT No. 281353 in the name of Domingo Laxamana is hereby ordered restored subject to
the partition by his lawful heirs.

SO ORDERED.