Real Estate Week2

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PHILIPPINE CHRISTIAN UNIVERSITYCOLLEGE OF LAW

AY 2013-2014

REAL ESTATE TRANSACTIONSOutline and Case Assignments

Sale of Real Property

A. Introduction: Section 51, Republic Act 1529

B. Requirements of Form1. Unchuan v. Lozada, G.R. No. 172671, 16 April 20092. Estreller v. Ysmael, G.R. No. 170264, 12 March 2009

C. Sale of Conjugal Real Property1. Guiang v. Court of Appeals, G.R. No. 125172, 26 June 19982. Felipe v. Aldon, G.R. No. L-60174, 16 February 1983

D. Contract of Sale v. Contract to Sell1. Ayala Life Assurance, Inc. v. Ray Burton Development Corp., G.R. No. 163075, 23 January 20062. Carrascoso v. Court of Appeals, G.R. No. 123672, 14 December 2005

E. Delivery of Real Property1. De Leon v. Ong, G.R. No. 170405, 2 February 20102. San Lorenzo Development Corporation v. Court of Appeals, G.R. No. 124242, 21 January 20053. Agricultural Credit Cooperative Association v. Yusay, G.R. No. L-13313, 28 April 1960

F. Double Sales1. Fudot v. Cattleya Land, Inc., G.R. No. 171008, 13 September 2007 2. Liao v. Court of Appeals, G.R. Nos. 102961-62, 27 January 20003. Naawan Community Rural Bank, Inc. v. Court of Appeals, G.R. No. 128573, 13 January 20034. Gatioan v. Gaffud, G.R. No. L-21953, 28 March 19695. Solid Homes, Inc. v. Spouses Tan, G.R. Nos. 145156-57, 29 July 2005

6. Laperal v. Solid Homes, Inc., G.R. No. 130913, 21 June 2005 7. Santos v. Court of Appeals, G.R. No. 120820, 1 August 2000

G. Sale of Real Property in Installments1. Republic Act No. 6552, Realty Installment Buyer Protection Act 2. Rillo v. Court of Appeals, G.R. No. 125347, 19 June 19973. Levy Hermanos, Inc. v. Gervacio, G.R. No. L-46306, 27 October 19394. Lagandaon v. Court of Appeals, G.R. Nos. 102526-31, 21 May 19985. Leao v. Court of Appeals, G.R. No. 129018, 15 November 20016. Active Realty and Development Corporation v. Daroya, G.R. No. 141205, 9 May 2002


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Republic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. 172671 April 16, 2009

MARISSA R. UNCHUAN,Petitioner,vs.ANTONIO J.P. LOZADA, ANITA LOZADA and THE REGISTER OF DEEDS OF CEBU CITY,Respondents.

D E C I S I O N

QUISUMBING, J.:

For review are the Decision1dated February 23, 2006 and Resolution2dated April 12, 2006 of the Court of Appeals inCA-G.R. CV. No. 73829. The appellate court had affirmed with modification the Order3of the Regional Trial Court(RTC) of Cebu City, Branch 10 reinstating its Decision4dated June 9, 1997.

The facts of the case are as follows:

Sisters Anita Lozada Slaughter and Peregrina Lozada Saribay were the registered co-owners of Lot Nos. 898-A-3 and898-A-4 covered by Transfer Certificates of Title (TCT) Nos. 532585and 532576in Cebu City.

The sisters, who were based in the United States, sold the lots to their nephew Antonio J.P. Lozada (Antonio) under aDeed of Sale7dated March 11, 1994. Armed with a Special Power of Attorney8from Anita, Peregrina went to the house oftheir brother, Dr. Antonio Lozada (Dr. Lozada), located at 4356 Faculty Avenue, Long Beach California.9Dr. Lozadaagreed to advance the purchase price of US$367,000 or P10,000,000 for Antonio, his nephew. The Deed of Sale was laternotarized and authenticated at the Philippine Consuls Office. Dr. Lozada then forwarded the deed, special power of

attorney, and owners copies of the titles to Antonio in the Philippines. Upon receipt of said documents, the latter recorded the sale with the Register of Deeds of Cebu. Accordingly, TCT Nos. 12832210and 12832311were issued in the name of

Antonio Lozada.

Pending registration of the deed, petitioner Marissa R. Unchuan caused the annotation of an adverse claim on the lots.Marissa claimed that Anita donated an undivided share in the lots to her under an unregistered Deed of Donation12datedFebruary 4, 1987.

Antonio and Anita brought a case against Marissa for quieting of title with application for preliminary injunction andrestraining order. Marissa for her part, filed an action to declare the Deed of Sale void and to cancel TCT Nos. 128322 and128323. On motion, the cases were consolidated and tried jointly.

At the trial, respondents presented a notarized and duly authenticated sworn statement, and a videotape where Anitadenied having donated land in favor of Marissa. Dr. Lozada testified that he agreed to advance payment for Antonio in

preparation for their plan to form a corporation. The lots are to be eventually infused in the capitalization of DamasaCorporation, where he and Antonio are to have 40% and 60% stake, respectively. Meanwhile, Lourdes G. Vicencio, a

witness for respondents confirmed that she had been renting the ground floor of Anitas house since 1983, and tenderingrentals to Antonio.

For her part, Marissa testified that she accompanied Anita to the office of Atty. Cresencio Tomakin for the signing of theDeed of Donation. She allegedly kept it in a safety deposit box but continued to funnel monthly rentals to Peregrinasaccount.

A witness for petitioner, one Dr. Cecilia Fuentes, testified on Peregrinas medical records. According to her interpretationof said records, it was physically impossible for Peregrina to have signed the Deed of Sale on March 11, 1994, when shewas reported to be suffering from edema. Peregrina died on April 4, 1994.

In a Decision dated June 9, 1997, RTC Judge Leonardo B. Caares disposed of the consolidated cases as follows:

WHEREFORE, judgment is hereby rendered in Civil Case No. CEB-16145, to wit:

1. Plaintiff Antonio J.P. Lozada is declared the absolute owner of the properties in question;
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2. The Deed of Donation (Exh. "9") is declared null and void, and Defendant Marissa R. Unchuan is directed tosurrender the original thereof to the Court for cancellation;

3. The Register of Deeds of Cebu City is ordered to cancel the annotations of the Affidavit of Adverse Claim ofdefendant Marissa R. Unchuan on TCT Nos. 53257 and 53258 and on such all other certificates of title issued inlieu of the aforementioned certificates of title;

4. Defendant Marissa R. Unchuan is ordered to pay Antonio J.P. Lozada and Anita Lozada Slaughter the sum ofP100,000.00 as moral damages; exemplary damages of P50,000.00; P50,000.00 for litigation expenses andattorneys fees of P50,000.00; and

5. The counterclaims of defendant Marissa R. Unchuan [are] DISMISSED.

In Civil Case No. CEB-16159, the complaint is hereby DISMISSED.

In both cases, Marissa R. Unchuan is ordered to pay the costs of suit.

SO ORDERED.13

On motion for reconsideration by petitioner, the RTC of Cebu City, Branch 10, with Hon. Jesus S. dela Pea as Acting

Judge, issued an Order14

dated April 5, 1999. Said order declared the Deed of Sale void, ordered the cancellation of thenew TCTs in Antonios name, and directed Antonio to pay Marissa P200,000 as moral damages, P100,000 as exemplarydamages, P100,000 attorneys fees and P50,000 for expenses of litigation. The trial court also declared the Deed ofDonation in favor of Marissa valid. The RTC gave credence to the medical records of Peregrina.

Respondents moved for reconsideration. On July 6, 2000, now with Hon. Soliver C. Peras, as Presiding Judge, the RTC ofCebu City, Branch 10, reinstated the Decision dated June 9, 1997, but with the modification that the award of damages,litigation expenses and attorneys fees were disallowed.

Petitioner appealed to the Court of Appeals. On February 23, 2006 the appellate court affirmed with modification the July6, 2000 Order of the RTC. It, however, restored the award of P50,000 attorneys fees and P50,000 litigation expenses torespondents.

Thus, the instant petition which raises the following issues:

I.

WHETHER THE COURT OF APPEALS ERRED AND VIOLATED PETITIONERS RIGHT TO DUE PROCESS

WHEN IT FAILED TO RESOLVE PETITIONERS THIRD ASSIGNED ERROR.

II.

WHETHER THE HONORABLE SUPREME COURT MAY AND SHOULD REVIEW THE CONFLICTINGFACTUAL FINDINGS OF THE HONORABLE REGIONAL TRIAL COURT IN ITS OWN DECISION ANDRESOLUTIONS ON THE MOTIONS FOR RECONSIDERATION, AND THAT OF THE HONORABLE COURT OFAPPEALS.

III.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS CASE ISBARRED BY LACHES.

IV.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE DEED OF DONATION

EXECUTED IN FAVOR OF PETITIONER IS VOID.

V.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT ANITA LOZADASVIDEOTAPED STATEMENT IS HEARSAY.15
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Simply stated, the issues in this appeal are: (1) Whether the Court of Appeals erred in upholding the Decision of the RTCwhich declared Antonio J.P. Lozada the absolute owner of the questioned properties; (2) Whether the Court of Appealsviolated petitioners right to due process; and (3) Whether petitioners case is barred by laches.

Petitioner contends that the appellate court violated her right to due process when it did not rule on the validity of the salebetween the sisters Lozada and their nephew, Antonio. Marissa finds it anomalous that Dr. Lozada, an American citizen,had paid the lots for Antonio. Thus, she accuses the latter of being a mere dummy of the former. Petitioner begs the Courtto review the conflicting factual findings of the trial and appellate courts on Peregrinas medical condition on March 11,

1994 and Dr. Lozadas financial capacity to advance payment for Antonio. Likewise, petitioner assails the ruling of theCourt of Appeals which nullified the donation in her favor and declared her case barred by laches. Petitioner finallychallenges the admissibility of the videotaped statement of Anita who was not presented as a witness.

On their part, respondents pray for the dismissal of the petition for petitioners failure to furnish the Register of Deeds ofCebu City with a copy thereof in violation of Sections 316and 4,17Rule 45 of the Rules. In addition, they aver thatPeregrinas unauthenticated medical records were merely falsified to make it appear that she was confined in the hospitalon the day of the sale. Further, respondents question the credibility of Dr. Fuentes who was neither presented in court asan expert witness18nor professionally involved in Peregrinas medical care.

Further, respondents impugn the validity of the Deed of Donation in favor of Marissa. They assert that the Court ofAppeals did not violate petitioners right to due process inasmuch as it resolved collectively all the factual and legal issu eson the validity of the sale.

Faithful adherence to Section 14,19Article VIII of the 1987 Constitution is indisputably a paramount component of dueprocess and fair play. The parties to a litigation should be informed of how it was decided, with an explanation of thefactual and legal reasons that led to the conclusions of the court.20

In the assailed Decision, the Court of Appeals reiterates the rule that a notarized and authenticated deed of sale enjoys thepresumption of regularity, and is admissible without further proof of due execution. On the basis thereof, it declared

Antonio a buyer in good faith and for value, despite petitioners contention that the sale violates public policy. While it isa part of the right of appellant to urge that the decision should directly meet the issues presented for resolution,21merefailure by the appellate court to specify in its decision all contentious issues raised by the appellant and the reasons forrefusing to believe appellants contentions is not sufficient to hold the appellate courts decision contrary to the

requirements of the law

22

and the Constitution.

23

So long as the decision of the Court of Appeals contains the necessaryfindings of facts to warrant its conclusions, we cannot declare said court in error if it withheld "any specific findings offact with respect to the evidence for the defense."24We will abide by the legal presumption that official duty has beenregularly performed,25and all matters within an issue in a case were laid down before the court and were passed upon byit.26

In this case, we find nothing to show that the sale between the sisters Lozada and their nephew Antonio violated thepublic policy prohibiting aliens from owning lands in the Philippines. Even as Dr. Lozada advanced the money for the

payment of Antonios share, at no point were the lots registered in Dr. Lozadas name. Nor was it contemplated that thelots be under his control for they are actually to be included as capital of Damasa Corporation. According to theiragreement, Antonio and Dr. Lozada are to hold 60% and 40% of the shares in said corporation, respectively. UnderRepublic Act No. 7042,27particularly Section 3,28a corporation organized under the laws of the Philippines of which at

least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines, isconsidered a Philippine National. As such, the corporation may acquire disposable lands in the Philippines. Neither didpetitioner present proof to belie Antonios capacity to pay for the lots subjects of this case.

Petitioner, likewise, calls on the Court to ascertain Peregrinas physical ability to execute the Deed of Sale on March 11,1994. This essentially necessitates a calibration of facts, which is not the function of this Court.29Nevertheless, we havesifted through the Decisions of the RTC and the Court of Appeals but found no reason to overturn their factual findings.Both the trial court and appellate court noted the lack of substantial evidence to establish total impossibility for Peregrinato execute the Deed of Sale.

In support of its contentions, petitioner submits a copy of Peregrinas medical records to show that she was confined at theMartin Luther Hospital from February 27, 1994 until she died on April 4, 1994. However, a Certification30from Randy E.

Rice, Manager for the Health Information Management of the hospital undermines the authenticity of said medicalrecords. In the certification, Rice denied having certified or having mailed copies of Peregrinas medical records to thePhilippines. As a rule, a document to be admissible in evidence, should be previously authenticated, that is, its dueexecution or genuineness should be first shown.31Accordingly, the unauthenticated medical records were excluded fromthe evidence. Even assuming that Peregrina was confined in the cited hospital, the Deed of Sale was executed on March11, 1994, a month before Peregrina reportedly succumbed to Hepato Renal Failure caused by Septicemia due toMyflodysplastic Syndrome.32Nothing in the records appears to show that Peregrina was so incapacitated as to prevent herfrom executing the Deed of Sale. Quite the contrary, the records reveal that close to the date of the sale, specifically on
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March 9, 1994, Peregrina was even able to issue checks33to pay for her attorneys professional fees and her own hospitalbills. At no point in the course of the trial did petitioner dispute this revelation.

Now, as to the validity of the donation, the provision of Article 749 of the Civil Code is in point:

art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifyingtherein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effectunless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this stepshall be noted in both instruments.

When the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract beproved in a certain way, that requirement is absolute and indispensable.34Here, the Deed of Donation does not appear tobe duly notarized. In page three of the deed, the stamped name of Cresencio Tomakin appears above the words NotaryPublic until December 31, 1983 but below it were the typewritten words Notary Public until December 31, 1987. A closerexamination of the document further reveals that the number 7in 1987and Series of 1987were merely superimposed.35This was confirmed by petitioners nephew Richard Unchuan who testified that he saw petitioners husband write 7 over

1983 to make it appear that the deed was notarized in 1987. Moreover, a Certification

36

from Clerk of Court Jeoffrey S.Joaquino of the Notarial Records Division disclosed that the Deed of Donation purportedly identified in Book No. 4,Document No. 48, and Page No. 35 Series of 1987 was not reported and filed with said office. Pertinent to this, the Rulesrequire a party producing a document as genuine which has been altered and appears to have been altered after itsexecution, in a part material to the question in dispute, to account for the alteration. He may show that the alteration wasmade by another, without his concurrence, or was made with the consent of the parties affected by it, or was otherwiseproperly or innocently made, or that the alteration did not change the meaning or language of the instrument. If he fails todo that, the document shall, as in this case, not be admissible in evidence.371avvphi1

Remarkably, the lands described in the Deed of Donation are covered by TCT Nos. 7364538and 73646,39both of whichhad been previously cancelled by an Order40dated April 8, 1981 in LRC Record No. 5988. We find it equally puzzlingthat on August 10, 1987, or six months after Anita supposedly donated her undivided share in the lots to petitioner, the

Unchuan Development Corporation, which was represented by petitioners husband, filed suit to compel the Lozadasisters to surrender their titles by virtue of a sale. The sum of all the circumstances in this case calls for no otherconclusion than that the Deed of Donation allegedly in favor of petitioner is void. Having said that, we deem itunnecessary to rule on the issue of laches as the execution of the deed created no right from which to reckon delay inmaking any claim of rights under the instrument.

Finally, we note that petitioner faults the appellate court for not excluding the videotaped statement of Anita as hearsayevidence. Evidence is hearsaywhen its probative force depends, in whole or in part, on the competency and credibility ofsome persons other than the witness by whom it is sought to be produced. There are three reasons for excluding hearsayevidence: (1) absence of cross-examination; (2) absence of demeanor evidence; and (3) absence of oath.41It is a hornbookdoctrine that an affidavit is merely hearsay evidence where its maker did not take the witness stand.42Verily, the swornstatement of Anita was of this kind because she did not appear in court to affirm her averments therein. Yet, a more

circumspect examination of our rules of exclusion will show that they do not cover admissions of a party;43

the videotapedstatement of Anita appears to belong to this class. Section 26 of Rule 130 provides that "the act, declaration or omission ofa party as to a relevant fact may be given in evidence against him. It has long been settled that these admissions areadmissible even if they are hearsay.44Indeed, there is a vital distinction between admissions against interest anddeclaration against interest. Admissions against interest are those made by a party to a litigation or by one in privity withor identified in legal interest with such party, and are admissible whether or not the declarant is available as a witness.Declaration against interest are those made by a person who is neither a party nor in privity with a party to the suit, aresecondary evidence and constitute an exception to the hearsay rule. They are admissible only when the declarant isunavailable as a witness.45Thus, a mans acts, conduct, and declaration, wherever made, if voluntary, are admissibleagainst him, for the reason that it is fair to presume that they correspond with the truth, and it is his fault if they do not.46However, as a further qualification, object evidence, such as the videotape in this case, must be authenticated by a specialtestimony showing that it was a faithful reproduction.47Lacking this, we are constrained to exclude as evidence the

videotaped statement of Anita. Even so, this does not detract from our conclusion concerning petitioners failure to prove,by preponderant evidence, any right to the lands subject of this case.

Anent the award of moral damages in favor of respondents, we find no factual and legal basis therefor. Moral damagescannot be awarded in the absence of a wrongful act or omission or fraud or bad faith. When the action is filed in goodfaith there should be no penalty on the right to litigate. One may have erred, but error alone is not a ground for moraldamages.48The award of moral damages must be solidly anchored on a definite showing that respondents actuallyexperienced emotional and mental sufferings. Mere allegations do not suffice; they must be substantiated by clear and
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convincing proof.49As exemplary damages can be awarded only after the claimant has shown entitlement to moraldamages,50neither can it be granted in this case.

WHEREFORE, the instant petition is DENIED. The Decision dated February 23, 2006, and Resolution dated April 12,2006 of the Court of Appeals in CA-G.R. CV. No. 73829 are AFFIRMED with MODIFICATION. The awards of moraldamages and exemplary damages in favor of respondents are deleted. No pronouncement as to costs.

SO ORDERED.

LEONARDO A. QUISUMBINGAssociate JusticeChairperson

WE CONCUR:

CONCHITA CARPIO MORALES


Supreme Court

Manila

THIRD DIVISION

JAMES ESTRELLER, EDUARDO G.R. No. 170264CULIANAN, GREG CARROS,RAQUEL YEE, JOSELITOPENILLA, LORNA DOTE,CRESENCIANA CLEOPAS, Present:TRINIDAD TEVES, SONIAPENILLA, ANITA GOMINTONG, YNARES-SANTIAGO,J.,CHING DIONESIO, MARIBEL Chairperson,

MANALO, DESIRES HUERTO, AUSTRIA-MARTINEZ,and RAYMUNDO CORTES, CHICO-NAZARIO,

Petitioners, NACHURA, andPERALTA,JJ.

- versus -

LUIS MIGUEL YSMAEL andCRISTETA L. SANTOS-ALVAREZ, Promulgated:

Respondents. March 13, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
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D E C I S I O N

AUSTRIA-MARTINEZ,J.:

In the present petition, the Court finds occasion to reassert the legal precepts that a co-owner may file an action for recovery ofpossession without the necessity of joining all the other co-owners as co-plaintiffs since the suit is deemed to be instituted for the benefit ofall; and that Section 2 of Presidential Decree (P.D.) No. 2016, reinforced by P.D. No. 1517, which prohibits the eviction of qualifiedtenants/occupants, extends only to landless urban families who are rightful occupants of the land and its structures, and does not include

those whose presence on the land is merely tolerated and without the benefit of contract, those who enter the land by force or deceit, orthose whose possession is under litigation.

Respondents filed with the Regional Trial Court (RTC), Branch 216, Quezon City, a case for Recovery of Possession againstpetitioners, claiming ownership of the property subject of dispute located in E. Rodriguez Avenue and La Filonila Streets in Quezon City,by virtue of Transfer Certificate of Title (TCT) No. 41698 issued by the Register of Deeds of Quezon City on June 10, 1958.Respondents alleged that on various dates in 1973, petitioners entered the property through stealth and strategy and had since occupied the

same; and despite demands made in March 1993, petitioners refused to vacate the premises, prompting respondents to file the action.1 [1]

Petitioners denied respondents' allegations. According to them, respondent Luis Miguel Ysmael (Ysmael) had no personality tofile the suit since he only owned a small portion of the property, while respondent Cristeta Santos-Alvarez (Alvarez) did not appear to bea registered owner thereof. Petitioners also contended that their occupation of the property was lawful, having leased the same from theMagdalena Estate, and later on from Alvarez. Lastly, petitioners asserted that the property has already been proclaimed by the Quezon

City Government as an Area for Priority Development under P. D. Nos. 1517 and 2016, which prohibits the eviction of lawful tenantsand demolition of their homes.2[2]

After trial, the RTC rendered its Decision dated September 15, 2000 in favor of respondents. The dispositive portion of theDecision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs Luis Miguel Ysmael and Cristeta

L. Santos-Alvarez and against defendants ordering the latter and all persons claiming rights under them to immediatelyvacate the subject property and peacefully surrender the same to the plaintiffs.

Defendants are likewise ordered to pay plaintiffs the following:

1. The amount of P400.00 each per month from the date of extra-judicial demand untilthe subject property is surrendered to plaintiffs as reasonable compensation for the useand possession thereof;

2. The amount of P20,000.00 by way of exemplary damages;

3. The amount of P20,000.00 by way of attorney's fees and litigation expenses;


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4. Cost of suit.

Corollarily, the counter-claims of defendants are hereby DISMISSED for lack of merit.

SO ORDERED.3[3]

Petitioners appealed to the Court of Appeals (CA), which, in a Decision4[4]dated March 14, 2005, dismissed their appeal andaffirmed in toto the RTC Decision.

Hence, the present petition for review under Rule 45 of the Rules of Court, on the following grounds:

I

THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENTS YSMAELAND ALVAREZ ARE BOTH REAL PARTIES IN INTEREST WHO WOULD BE BENEFITED OR INJURED BYTHE JUDGMENT OR THE PARTY ENTITLED TO THE AVAILS OF THE SUIT.

II

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT

QUESTIONS AND ISSUES PRESENTED BY THE PETITIONERS IN ROMAN NUMERALS II, III AND IV OFTHEIR DISCUSSIONS AND ARGUMENTS IN THE APPELLANTS BRIEF WHICH ARE HEREUNTO COPIED ORREPRODUCED.5[5]

The present petition merely reiterates the issues raised and settled by the RTC and the CA. On this score, it is well to emphasizethe rule that the Courts role in a petition under Rule 45 is limited to reviewing or reversing errors of law allegedly committed by theappellate court. Factual findings of the trial court, especially when affirmed by the CA, are conclusive on the parties. Since such findingsare generally not reviewable, this Court is not duty-bound to analyze and weigh all over again the evidence already considered in theproceedings below, unless the factual findings complained of are devoid of support from the evidence on record or the assailed judgment

is based on a misapprehension of facts.6[6]

The Court then finds that the petition is without merit.


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Respondents are real parties-in-interest in the suit below and may, therefore, commence the complaint for accion publiciana.On the part of Ysmael, he is a named co-owner of the subject property under TCT No. 41698, together with Julian Felipe Ysmael, Teresa

Ysmael, and Ramon Ysmael.7[7] For her part, Alvarez was a buyer of a portion of the property, as confirmed in several documents,namely: (1) Decision dated August 30, 1974 rendered by the Regional Trial Court of Quezon City, Branch 9 (IX), in Civil Case No. Q-

8426, which was based on a Compromise Agreement between Alvarez and the Magdalena Estate;8 [8](2) an unnotarized Deed ofAbsolute Sale dated May 1985 executed between the Ysmael Heirs and Alvarez;9[9]and (3) a notarized Memorandum of Agreement

between the Ysmael Heirs and Alvarez executed on May 2, 1991.10[10]

Recently, in Wee v. De Castro,11[11]the Court, citing Article 487 of the Civil Code, reasserted the rule that any one of the co-owners may bring any kind of action for the recovery of co-owned properties since the suit is presumed to have been filed for the benefitof all co-owners. The Court also stressed that Article 487 covers all kinds of action for the recovery of possession, i.e., forcible entry andunlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion),thus:

In the more recent case of Carandang v. Heirs of De Guzman,this Court declared that a co-owner is not even a necessaryparty to an action for ejectment, for complete relief can be afforded even in his absence, thus:

In sum, in suits to recover properties, all co-owners are real parties in interest. However,pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them maybring an action, any kind of action for the recovery of co-owned properties. Therefore, only oneof the co-owners, namely the co-owner who filed the suit for the recovery of the co-ownedproperty, is an indispensable party thereto. The other co-owners are not indispensableparties. They are not even necessary parties, for a complete relief can be afforded in the suit evenwithout their participation, since the suit is presumed to have been filed for the benefit of all co-owners. (Emphasis supplied)

Petitioners persistently question the validity of the transfer of ownership to Alvarez. They insist that Alvarez failed to establishany right over the property since the Deed of Absolute Sale was not inscribed on TCT No. 41698. Interestingly, petitioners debunkedtheir own argument when they themselves claimed in their Answer with Counter-claim that they derived their right to occupy the

property from a lease agreement with, first, the Magdalena Estate, and thereafter, Alvarez herself.12[12] More importantly, the fact thatthe sale was not annotated or inscribed on TCT No. 41698 does not make it any less valid. A contract of sale has the force of lawbetween the contracting parties and they are expected to abide, in good faith, by their respective contractual commitments. Article 1358of the Civil Code which requires the embodiment of certain contracts in a public instrument, is only for convenience; and registration of


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the instrument only adversely affects third parties, and non-compliance therewith does not adversely affect the validity of the contract or

the contractual rights and obligations of the parties thereunder.13[13]

Petitioners further contend that the property subject of the Deed of Absolute SaleLot 6, Block 4 of Subd. Plan Psd No. 33309is different from that being claimed in this case, which are Lots 2 and 3. They claim that there exists another title covering the subjectproperty, i.e., TCT No. 41698 in the names of Victoria M. Panganiban and Teodoro M. Panganiban.

Notably, TCT No. 41698 in the name of the Ysmael Heirs covers several parcels of land under Subd. Plan Psd No. 33309.These include: Lot 2, Block 4; Lot 3, Block 4; and Lot 6, Block 4, each of which contains 1,000 square meters. In the Decision datedAugust 30, 1974 rendered by the RTC of Quezon City, Branch 9, in Civil Case No. Q-8426, the ownership of 200 square meters of Lot 2,Block 4; 250 square meters of Lot 3, Block 4; and the full 1,000 square meters of Lot 6, Block 4, was conferred on Alvarez. A Deed ofAbsolute Sale dated May 1985 was later executed by the Ysmael Heirs in favor of Alvarez, but it covered only Lot 6, Block 4.Nevertheless, a Memorandum of Agreement dated May 2, 1991 was subsequently entered into by the Ysmael Heirs and Alvarez,whereby all three apportioned parcels of land allocated to Alvarez under the RTC Decision dated August 30, 1974, were finally sold,transferred and conveyed to her. Evidently, while the title was yet to be registered in the name of Alvarez, for all intents and purposes,however, the subject property was already owned by her. The Ysmael Heirs are merely naked owners of the property, while Alvarez is

already the beneficial or equitable owner thereof; and the right to the gains, rewards and advantages generated by the property pertains toher.

The existence of a title in the same TCT No. 41698, this time in the names of Victoria M. Panganiban and Teodoro M.Panganiban, was adequately explained by the Certification of the Register of Deeds dated March 1, 1994, and which reads:

At the instance of RUY ALBERTO S. RONDAIN, I, SAMUEL C. CLEOFE, Register of Deeds of Quezon City, dohereby certify that TCT No. 41698, covering Lot 19, Blk. 8 of the cons.-subd. plan Pos-817, with an area of Three

Hundred Seventy Five (375) Square Meters, registered in the name of VICTORIA M. PANGANIBAN; and TEODOROM. PANGANIBAN, married to Elizabeth G. Panganiban, issued on February 8, 1991, is existing and on file in thisRegistry.

This is to certify further thatTCT No. 41698presented by Ruy Alberto S. Rondain covering Lot 3, Blk. 2 of the subd.Plan PSD-3309, with an area of Nine Hundred Ninety Six (996) Square Meters, issued on June 10, 1958 and registered inthe name of JUAN FELIPE YSMAEL, TERESA YSMAEL, RAMON YSMAEL, LUIS MIGUEL YSMAEL , whichis also an existing title is different and distinct from each other inasmuch as they cover different Lots and Plans.

That it is further certified that the similarity in the title numbers is due to the fact that after the fire of June 11, 1988,the Quezon City Registry issued new title numbers beginning with TCT No. 1.14[14] (Emphasis supplied)

Finally, petitioners' claim that they are entitled to the protection against eviction and demolition afforded by P.D. Nos.

2016,15[15]1517,16[16]and Republic Act (R.A.) No. 7279,17[17]is not plausible.


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Section 6 of P.D. No. 1517 grants preferential rights to landless tenants/occupants to acquire land within urban land reformareas, while Section 2 of P.D. No. 2016 prohibits the eviction of qualified tenants/ occupants.

InDimaculangan v. Casalla,18[18]the Court was emphatic in ruling that the protective mantle of P.D. No. 1517 and P.D. No.

2016 extends only to landless urban families who meet these qualifications: a) they are tenants as defined under Section 3(f) of P.D. No.1517; b) they built a home on the land they are leasing or occupying; c) the land they are leasing or occupying is within an Area forPriority Development and Urban Land Reform Zone; and d) they have resided on the land continuously for the last 10 years or more.

Section 3(f) of P.D. No. No. 1517 defines the term "tenant" covered by the said decree as the rightful occupant of land and itsstructures, but does not include those whose presence on the land is merely tolerated and without the benefit of contract, those who enterthe land by force or deceit, or those whose possession is under litigation. It has already been ruled that occupants of theland whosepresence therein is devoid of any legal authority, or those whose contracts of lease were already terminated or had already expired, or

whose possession is under litigation, are not considered "tenants" under the Section 3(f).19[19]

Petitioners claim that they are lawful lessees of the property. However, they failed to prove any lease relationship or, at the veryleast, show with whom they entered the lease contract. Respondents, on the other hand, were able to prove their right to enjoy possessionof the property. Thus, petitioners, whose occupation of the subject property by mere tolerance has been terminated by respondents,clearly do not qualify as tenants covered by these social legislations.

Finally, petitioners failed to demonstrate that they qualify for coverage under R. A. No. 7279 or the Urban Development andHousing Act of 1992.

R. A. No. 7279 provides for the procedure to be undertaken by the concerned local governments in the urban land developmentprocess, to wit: conduct an inventory of all lands and improvements within their respective localities, and in coordination with theNational Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, andthe Land Management Bureau; identify lands for socialized housing and resettlement areas for the immediate and future needs of the

underprivileged and homeless in the urban areas; acquire the lands; and dispose of said lands to the beneficiaries of the program.20 [20]While there is a Certification that the area bounded by E. Rodriguez, Victoria Avenue, San Juan River and 10 thStreet ofBarangay.

Damayang Lagi, Quezon City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967,21[21]


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there is no showing that the property has already been acquired by the local government for this purpose; or that petitioners have dulyqualified as beneficiaries.

All told, the Court finds no reason to grant the present petition.

WHEREFORE, the petition is DENIEDfor lack of merit. The Decision dated March 14, 2005 of the Court of Appeals isAFFIRMED.

SO ORDERED.


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FIRST DIVISION

[G.R. No. 125172. June 26, 1998]

Spouses ANTONIO and LUZVIMINDA GUIANG,petitioners, vs. COURT OF APPEALS and GILDA CORPUZ,respondents.

D E C I S I O N

PANGANIBAN, J.:

The sale of a conjugal property requires the consent of both the husband and the wife. The absence of theconsent of one renders the sale null and void, while the vitiation thereof makes it merely voidable. Only in thelatter case can ratification cure the defect.

The Case

These were the principles that guided the Court in deciding this petition for review of the Decisioni[1] datedJanuary 30, 1996 and the Resolutionii[2] dated May 28, 1996, promulgated by the Court of Appeals in CA-GR

CV No. 41758, affirming the Decision of the lower court and denying reconsideration, respectively.

On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complaintiii[3] against her husbandJudie Corpuz and Petitioners-Spouses Antonio and Luzviminda Guiang. The said Complaint sought thedeclaration of a certain deed of sale, which involved the conjugal property of private respondent and herhusband, null and void. The case was raffled to the Regional Trial Court of Koronadal, South Cotabato,Branch 25. In due course, the trial court rendered a Decisioniv[4] dated September 9, 1992, disposing asfollows:v[5]

ACCORDINGLY, judgment is rendered for the plaintiff and against the defendants,

1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. A) and the amicable

settlement dated March 16, 1990 (Exh. B) as null and void and of no effect;

2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda Corpuz over theremaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which has been the subject of the Deed ofTransfer of Rights (Exh. A);

3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda and Antonio Guiang the amount ofNINE THOUSAND (P9,000.00) PESOS corresponding to the payment made by defendants Guiangs to ManuelCallejo for the unpaid balance of the account of plaintiff in favor of Manuel Callejo, and another sum of P379.62representing one-half of the amount of realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-165409, both with legal interests thereon computed from the finality of the decision.

No pronouncement as to costs in view of the factual circumstances of the case.

Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court, in itschallenged Decision, ruled as follows:vi[6]

WHEREFORE, the appealed decision of the lower court in Civil Case No. 204 is hereby AFFIRMEDby this Court. No costs considering plaintiff-appellees failure to file her brief, despite notice.

Reconsideration was similarly denied by the same court in its assailed Resolution:vii[7]

Finding that the issues raised in defendants-appellants motion for reconsideration of Our decision inthis case of January 30, 1996, to be a mere rehash of the same issues which We have already passedupon in the said decision, and there [being] no cogent reason to disturb the same, this CourtRESOLVES to DENY the instant motion for reconsideration for lack of merit.

The Facts

The facts of this case are simple. Over the objection of private respondent and while she was in Manilaseeking employment, her husband sold to the petitioners-spouses one half of their conjugal property,


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consisting of their residence and the lot on which it stood. The circumstances of this sale are set forth in theDecision of Respondent Court, which quoted from the Decision of the trial court, as follows:viii[8]

1.Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They were marriedon December 24, 1968 in Bacolod City, before a judge. This is admitted by defendants-spouses

Antonio and Luzviminda Guiang in their answer, and also admitted by defendant Judie Corpuz whenhe testified in court (tsn. p..3, June 9, 1992), although the latter says that they were married in 1967.The couple have three children, namely: Junie18 years old, Harriet17 years of age, and Jodie orJoji, the youngest, who was 15 years of age in August, 1990 when her mother testified in court.

Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with plaintiff-wife Gilda Corpuzas vendee, bought a 421 sq. meter lot located in Barangay Gen. Paulino Santos (Bo. 1), Koronadal,South Cotabato, and particularly known as Lot 9, Block 8, (LRC) Psd-165409 from Manuel Callejo whosigned as vendor through a conditional deed of sale for a total consideration of P14,735.00. Theconsideration was payable in installment, with right of cancellation in favor of vendor should vendee failto pay three successive installments (Exh. 2, tsn. p. 6, February 14, 1990).

2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half portion of their LotNo. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses Antonio and Luzviminda Guiang. Thelatter have since then occupied the one-half portion [and] built their house thereon (tsn. p. 4, May 22,1992). They are thus adjoining neighbors of the Corpuzes.

3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to look for workabroad, in [the] Middle East. Unfortunately, she became a victim of an unscrupulous illegal recruiter.She was not able to go abroad. She stayed for sometime in Manila however, coming back toKoronadal, South Cotabato, x x x on March 11, 1990. Plaintiffs departure for Manila to look for work inthe Middle East was with the consent of her husband Judie Corpuz (tsn. p. 16, Aug.12, 1990; p. 10,Sept. 6, 1991).

After his wifes departure for Manila, defendant Judie Corpuz seldom went home to the conjugaldwelling. He stayed most of the time at his place of work at Samahang Nayon Building, a hotel,restaurant, and a cooperative. Daughter Harriet Corpuz went to school at Kings College, Bo. 1,Koronadal, South Cotabato, but she was at the same time working as household help of, and stayingat, the house of Mr. Panes. Her brother Junie was not working. Her younger sister Jodie (Joji) wasgoing to school. Her mother sometimes sent them money (tsn. p. 14, Sept. 6, 1991).

Sometime in January 1990, Harriet Corpuz learned that her father intended to sell the remaining one-half portion including their house, of their homelot to defendants Guiangs. She wrote a letter to hermother informing her. She [Gilda Corpuz] replied that she was objecting to the sale. Harriet, however,did not inform her father about this; but instead gave the letter to Mrs. Luzviminda Guiang so that she[Guiang] would advise her father (tsn. pp. 16-17, Sept. 6, 1991).

4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed through the saleof the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1, 1990, he sold todefendant Luzviminda Guiang thru a document known as Deed of Transfer of Rights (Exh. A) theremaining one-half portion of their lot and the house standing thereon for a total consideration ofP30,000.00 of which P5,000.00 was to be paid in June , 1990. Transferor Judie Corpuzs children

Junie and Harriet signed the document as witnesses.Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in defendantJudie Corpuzs title over the lot transferred, defendant Luzviminda Guiang as vendee executedanother agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh. 3), this time with Manuela JimenezCallejo, a widow of the original registered owner from whom the couple Judie and Gilda Corpuzoriginally bought the lot (Exh. 2), who signed as vendor for a consideration of P9,000.00. DefendantJudie Corpuz signed as a witness to the sale (Exh. 3-A). The new sale (Exh. 3) describes the lotsold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from the mass of evidence that the correctlot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier sold to the couple Gilda and Judie Corpuz.

5. Sometime on March 11, 1990, plaintiff returned home. She found her children staying with otherhouseholds. Only Junie was staying in their house. Harriet and Joji were with Mr. Panes. Gilda

gathered her children together and stayed at their house. Her husband was nowhere to be found.She was informed by her children that their father had a wife already.

6. For staying in their house sold by her husband, plaintiff was complained against by defendantLuzviminda Guiang and her husband Antonio Guiang before the Barangay authorities of BarangayGeneral Paulino Santos (Bo. 1), Koronadal, South Cotabato, for trespassing (tsn. p. 34, Aug. 17,1990). The case was docketed by the barangay authorities as Barangay Case No. 38 fortrespassing. On March 16, 1990, the parties thereat signed a document known as amicablesettlement. In full, the settlement provides for, to wit:


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That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie, Hariet and Judieto leave voluntarily the house of Mr. and Mrs. Antonio Guiang, where they are presentlyboarding without any charge, on or before April 7, 1990.

FAIL NOT UNDER THE PENALTY OF THE LAW.

Believing that she had received the shorter end of the bargain, plaintiff went to the Barangay Captainof Barangay Paulino Santos to question her signature on the amicable settlement. She was referredhowever to the Officer-In-Charge at the time, a certain Mr. de la Cruz. The latter in turn told her thathe could not do anything on the matter (tsn. p. 31, Aug. 17, 1990).

This particular point was not rebutted. The Barangay Captain who testified did not deny that Mrs.Gilda Corpuz approached him for the annulment of the settlement. He merely said he forgot whetherMrs. Corpuz had approached him (tsn. p. 13, Sept. 26, 1990). We thus conclude that Mrs. Corpuzreally approached the Barangay Captain for the annulment of the settlement. Annulment not havingbeen made, plaintiff stayed put in her house and lot.

7. Defendant-spouses Guiang followed thru the amicable settlement with a motion for the execution ofthe amicable settlement, filing the same with the Municipal Trial Court of Koronadal, South Cotabato.The proceedings [are] still pending before the said court, with the filing of the instant suit.

8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation of the Deed

of Transfer of Rights, Exh. A; P9,000.00 as the amount they paid to Mrs. Manuela Callejo, havingassumed the remaining obligation of the Corpuzes to Mrs. Callejo (Exh. 3); P100.00 for thepreparation of Exhibit 3; a total of P759.62 basic tax and special educational fund on the lot; P127.50as the total documentary stamp tax on the various documents; P535.72 for the capital gains tax;P22.50 as transfer tax; a standard fee of P17.00; certification fee of P5.00. These expensesparticularly the taxes and other expenses towards the transfer of the title to the spouses Guiangs wereincurred for the whole Lot 9, Block 8, (LRC) Psd-165409.

Ruling of Respondent Court

Respondent Court found no reversible error in the trial courts ruling that any alienation or encumbrance by thehusband of the conjugal property without the consent of his wife is null and void as provided under Article 124

of the Family Code. It also rejected petitioners contention that the amicable settlement ratified said sale,citing Article 1409 of the Code which expressly bars ratification of the contracts specified therein, particularlythose prohibited or declared void by law.

Hence, this petition.ix[9]

The Issues

In their Memorandum, petitioners assign to public respondent the following errors:x[10]

I

Whether or not the assailed Deed of Transfer of Rights was validly executed.

II

Whether or not the Court of Appeals erred in not declaring as voidable contract under Art. 1390 of theCivil Code the impugned Deed of Transfer of Rights which was validly ratified thru the execution of theamicable settlement by the contending parties.

III

Whether or not the Court of Appeals erred in not setting aside the findings of the Court a quo which

recognized as lawful and valid the ownership and possession of private respondent over the remainingone half (1/2) portion of the subject property.

In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of Rights) was merelyvoidable, and (2) such contract was ratified by private respondent when she entered into an amicablesettlement with them.

This Courts Ruling


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The petition is bereft of merit.

First Issue: Void or Voidable Contract?

Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the parties-litigantsin good faith and for valuable consideration. The absence of private respondents consent merely renderedthe Deed voidable under Article 1390 of the Civil Code, which provides:

ART. 1390. The following contracts are voidable or annullable, even though there may have been nodamage to the contracting parties:

x x x x x x x x x

(2)Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They aresusceptible of ratification.(n)

The error in petitioners contention is evident. Article 1390, par. 2, refers to contracts visited by vices ofconsent,i.e., contracts which were entered into by a person whose consent was obtained and vitiated throughmistake, violence, intimidation, undue influence or fraud. In this instance, private respondents consent to thecontract of sale of their conjugal property was totally inexistent or absent. Gilda Corpuz, on direct examination,testified thus:xi[11]

Q Now, on March 1, 1990, could you still recall where you were?

A I was still in Manila during that time.

x x x x x x x x x

ATTY. FUENTES:

Q When did you come back to Koronadal, South Cotabato?

A That was on March 11, 1990, Maam.

Q Now, when you arrived at Koronadal, was there any problem which arose concerning the ownership ofyour residential house at Callejo Subdivision?

A When I arrived here in Koronadal, there was a problem which arose regarding my residential house andlot because it was sold by my husband without my knowledge.

This being the case, said contract properly falls within the ambit of Article 124 of the Family Code, which wascorrectly applied by the two lower courts:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to bothspouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse tothe court by the wife for proper remedy, which must be availed of within five years from the date of thecontract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration ofthe conjugal properties, the other spouse may assume sole powers of administration. These powersdo not include the powers of disposition or encumbrance which must have the authority of the court orthe written consent of the other spouse. In the absence of such authority or consent, the disposition orencumbrance shall be void. However, the transaction shall be construed as a continuing offer on thepart of the consenting spouse and the third person, and may be perfected as a binding contract upon

the acceptance by the other spouse or authorization by the court before the offer is withdrawn by eitheror both offerors.(165a) (Italics supplied)

Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly explained theamendatory effect of the above provision in this wise:xii[12]

The legal provision is clear. The disposition or encumbrance is void. It becomes still clearer if wecompare the same with the equivalent provision of the Civil Code of the Philippines. Under Article 166of the Civil Code, the husband cannot generally alienate or encumber any real property of the conjugal


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partnership without the wifes consent. The alienation or encumbrance if so made however is not nulland void. It is merely voidable. The offended wife may bring an action to annul the said alienation orencumbrance. Thus, the provision of Article 173 of the Civil Code of the Philippines, to wit:

Art. 173. The wife may, during the marriage and within ten years from the transactionquestioned, ask the courts for the annulment of any contract of the husband entered intowithout her consent, when such consent is required, or any act or contract of the husbandwhich tends to defraud her or impair her interest in the conjugal partnership property. Shouldthe wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may

demand the value of property fraudulently alienated by the husband.(n)

This particular provision giving the wife ten (10) years x x x during [the] marriage to annul thealienation or encumbrance was not carried over to the Family Code. It is thus clear that any alienationor encumbrance made after August 3, 1988 when the Family Code took effect by the husband of theconjugal partnership property without the consent of the wife is null and void.

Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were perpetrated inthe execution of the document embodying the amicable settlement. Gilda Corpuz alleged during trial thatbarangay authorities made her sign said document through misrepresentation and coercion.xiii[13] In anyevent, its execution does not alter the void character of the deed of sale between the husband and thepetitioners-spouses, as will be discussed later. The fact remains that such contract was entered into withoutthe wifes consent.

In sum, the nullity of the contract of sale is premised on the absence of private respondents consent. Toconstitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause, (2)object, and (3) consent,xiv[14] the last element being indubitably absent in the case at bar.

Second Issue: Amicable Settlement

Insisting that the contract of sale was merely voidable, petitioners aver that it was duly ratified by thecontending parties through the amicable settlement they executed on March 16, 1990 in Barangay Case No.38.

The position is not well taken. The trial and the appellate courts have resolved this issue in favor of the privaterespondent. The trial court correctly held:xv[15]

By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed of Transfer of Rights(Exh. A) cannot be ratified, even by an amicable settlement. The participation by some barangayauthorities in the amicable settlement cannot otherwise validate an invalid act. Moreover, it cannot bedenied that the amicable settlement (Exh. B) entered into by plaintiff Gilda Corpuz and defendantspouses Guiang is a contract. It is a direct offshoot of the Deed of Transfer of Rights (Exh. A). Byexpress provision of law, such a contract is also void. Thus, the legal provision, to wit:

Art. 1422. A contract which is the direct result of a previous illegal contract, is also void andinexistent. (Civil Code of the Philippines).

In summation therefore, both the Deed of Transfer of Rights (Exh. A) and the amicable settlement(Exh. 3) are null and void.

Doctrinally and clearly, a void contract cannot be ratified.xvi[16]

Neither can the amicable settlement be considered a continuing offer that was accepted and perfected by theparties, following the last sentence of Article 124. The order of the pertinent events is clear: after the sale,petitioners filed a complaint for trespassing against private respondent, after which the barangay authoritiessecured an amicable settlement and petitioners filed before the MTC a motion for its execution. Thesettlement, however, does not mention a continuing offer to sell the property or an acceptance of such acontinuing offer. Its tenor was to the effect that private respondent would vacate the property. By no stretch ofthe imagination, can the Court interpret this document as the acceptance mentioned in Article 124.

WHEREFORE,the Court hereby DENIESthe petition andAFFIRMSthe challenged Decision and Resolution.Costs against petitioners.

SO ORDERED.

Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.


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SUPREME COURTManila

SECOND DIVISION

G.R. No. L-60174 February 16, 1983

EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners,vs.HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR ALDON, ANDTHE HONORABLE COURT OF APPEALS, respondents.

Romulo D. San Juan for petitioner.

Gerundino Castillejo for private respondent.

ABAD SANTOS, J .:

Maximo Aldon married Gimena Almosara in 1936. The spouses bought several pieces of land sometimebetween 1948 and 1950. In 1960-62, the lands were divided into three lots, 1370, 1371 and 1415 of the SanJacinto Public Land Subdivision, San Jacinto, Masbate.

In 1951, Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe. The salewas made without the consent of her husband, Maximo.

On April 26, 1976, the heirs of Maximo Aldon, namely his widow Gimena and their children Sofia and SalvadorAldon, filed a complaint in the Court of First Instance of Masbate against the Felipes. The complaint which wasdocketed as Civil Case No. 2372 alleged that the plaintiffs were the owners of Lots 1370, 1371 and 1415; that

they had orally mortgaged the same to the defendants; and an offer to redeem the mortgage had been refusedso they filed the complaint in order to recover the three parcels of land.

The defendants asserted that they had acquired the lots from the plaintiffs by purchase and subsequentdelivery to them. The trial court sustained the claim of the defendants and rendered the following judgment:

a. declaring the defendants to be the lawful owners of the property subject of the presentlitigation;

b. declaring the complaint in the present action to be without merit and is therefore herebyordered dismissed;

c. ordering the plaintiffs to pay to the defendants the amount of P2,000.00 as reasonableattorney's fees and to pay the costs of the suit.

The plaintiffs appealed the decision to the Court of Appeals which rendered the following judgment:

PREMISES CONSIDERED, the decision appealed from is hereby REVERSED and SET ASIDE,and a new one is hereby RENDERED, ordering the defendants-appellees to surrender the lotsin question as well as the plaintiffs'-appellants' muniments of title thereof to said plaintiffs-appellants, to make an accounting of the produce derived from the lands including expensesincurred since 1951, and to solidarity turn over to the plaintiffs-appellants the NET monetaryvalue of the profits, after deducting the sum of P1,800.00. No attorney's fees nor moraldamages are awarded for lack of any legal justification therefor. No. costs.

The ratio of the judgment is stated in the following paragraphs of the decision penned by Justice Edgardo L.Paras with the concurrence of Justices Venicio Escolin and Mariano A. Zosa:

One of the principal issues in the case involves the nature of the aforementioned conveyance ortransaction, with appellants claiming the same to be an oralcontract of mortgage or antichresis,the redemption of which could be done anytime upon repayment of the P1,800.00 involved(incidentally the only thing written about the transaction is the aforementioned receipt re the


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P1,800). Upon the other hand, appellees claim that the transaction was one of sale, accordingly,redemption was improper. The appellees claim that plaintiffs never conveyed the propertybecause of a loan or mortgage or antichresis and that what really transpired was the executionof a contract of sale thru a private document designated as a 'Deed of Purchase and Sale'(Exhibit 1), the execution having been made by Gimena Almosara in favor of appelleeHermogena V. Felipe.

After a study of this case, we have come to the conclusion that the appellants are entitled torecover the ownership of the lots in question. We so hold because although Exh. 1 concerningthe sale made in 1951 of the disputed lots is, in Our opinion, not a forgery the fact is that thesale made by Gimena Almosara is invalid, having been executed without the needed consent ofher husband, the lots being conjugal. Appellees' argument that this was an issue not raised inthe pleadings is baseless, considering the fact that the complaint alleges that the parcels 'werepurchased by plaintiff Gimena Almosara and her late husband Maximo Aldon' (the lots havingbeen purchased during the existence of the marriage, the same are presumed conjugal) andinferentially, by force of law, could not, be disposed of by a wife without her husband's consent.

The defendants are now the appellants in this petition for review. They invoke several grounds in seeking thereversal of the decision of the Court of Appeals. One of the grounds is factual in nature; petitioners claim that"respondent Court of Appeals has found as a fact that the 'Deed of Purchase and Sale' executed byrespondent Gimena Almosara is not a forgery and therefore its authenticity and due execution is alreadybeyond question." We cannot consider this ground because as a rule only questions of law are reviewed inproceedings under Rule 45 of the Rules of Court subject to well-defined exceptions not present in the instantcase.

The legal ground which deserves attention is the legal effect of a sale of lands belonging to the conjugalpartnership made by the wife without the consent of the husband.

It is useful at this point to re-state some elementary rules: The husband is the administrator of the conjugalpartnership. (Art. 165, Civil Code.) Subject to certain exceptions, the husband cannot alienate or encumber anyreal property of the conjugal partnership without the wife's consent. (Art. 166, Idem.) And the wife cannot bindthe conjugal partnership without the husband's consent, except in cases provided by law. (Art. 172, Idem.)

In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without the consent ofthe husband and the sale is not covered by the phrase "except in cases provided by law." The Court of

Appeals described the sale as "invalid" - a term which is imprecise when used in relation to contracts becausethe Civil Code uses specific names in designating defective contracts, namely: rescissible (Arts. 1380 et seq.),voidable (Arts. 1390 et seq.), unenforceable (Arts. 1403, et seq.), and void or inexistent(Arts. 1409 et seq.)

The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidablecontract.

According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of the parties isincapable of giving consent to the contract." (Par. 1.) In the instant case-Gimena had no capacity to give

consent to the contract of sale. The capacity to give consent belonged not even to the husband alone but toboth spouses.

The view that the contract made by Gimena is a voidable contract is supported by the legal provision thatcontracts entered by the husband without the consent of the wife when such consent is required, areannullable at her instance during the marriage and within ten years from the transaction questioned. (Art. 173,Civil Code.)

Gimena's contract is not rescissible for in such contract all the essential elements are untainted but Gimena'sconsent was tainted. Neither can the contract be classified as unenforceable because it does not fit any ofthose described in Art. 1403 of the Civil Code. And finally, the contract cannot be void or inexistent because itis not one of those mentioned in Art. 1409 of the Civil Code. By process of elimination, it must perforce be a

voidable contract.

The voidable contract of Gimena was subject to annulment by her husband only during the marriage becausehe was the victim who had an interest in the contract. Gimena, who was the party responsible for the defect,could not ask for its annulment. Their children could not likewise seek the annulment of the contract while themarriage subsisted because they merely had an inchoate right to the lands sold.


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The termination of the marriage and the dissolution of the conjugal partnership by the death of Maximo Aldondid not improve the situation of Gimena. What she could not do during the marriage, she could not dothereafter.

The case of Sofia and Salvador Aldon is different. After the death of Maximo they acquired the right to questionthe defective contract insofar as it deprived them of their hereditary rights in their father's share in the lands.The father's share is one-half (1/2) of the lands and their share is two-thirds (2/3) thereof, one-third (1/3)pertaining to the widow.

The petitioners have been in possession of the lands since 1951. It was only in 1976 when the respondentsfiled action to recover the lands. In the meantime, Maximo Aldon died.

Two questions come to mind, namely: (1) Have the petitioners acquired the lands by acquisitive prescription?(2) Is the right of action of Sofia and Salvador Aldon barred by the statute of limitations?

Anent the first question, We quote with approval the following statement of the Court of Appeals:

We would like to state further that appellees [petitioners herein] could not have acquiredownership of the lots by prescription in view of what we regard as their bad faith. This bad faithis revealed by testimony to the effect that defendant-appellee Vicente V. Felipe (son of

appellees Eduardo Felipe and Hermogena V. Felipe) attempted in December 1970 to haveGimena Almosara sign a ready-made document purporting to self the disputed lots to theappellees. This actuation clearly indicated that the appellees knew the lots did not still belong tothem, otherwise, why were they interested in a document of sale in their favor? Again why didVicente V. Felipe tell Gimena that the purpose of the document was to obtain Gimena's consentto the construction of an irrigation pump on the lots in question? The only possible reason forpurporting to obtain such consent is that the appellees knew the lots were not theirs. Why wasthere an attempted improvement (the irrigation tank) only in 1970? Why was the declaration ofproperty made only in 1974? Why were no attempts made to obtain the husband's signature,despite the fact that Gimena and Hermogena were close relatives? An these indicate the badfaith of the appellees. Now then, even if we were to consider appellees' possession in bad faithas a possession in the concept of owners, this possession at the earliest started in 1951, hence

the period for extraordinary prescription (30 years) had not yet lapsed when the present actionwas instituted on April 26, 1976.

As to the second question, the children's cause of action accrued from the death of their father in 1959 andthey had thirty (30) years to institute it (Art. 1141, Civil Code.) They filed action in 1976 which is well within theperiod.

WHEREFORE, the decision of the Court of Appeals is hereby modified. Judgment is entered awarding to Sofiaand Salvador Aldon their shares of the lands as stated in the body of this decision; and the petitioners aspossessors in bad faith shall make an accounting of the fruits corresponding to the share aforementioned from1959 and solidarity pay their value to Sofia and Salvador Aldon; costs against the petitioners.

SO ORDERED.

Concepcion Jr., Guerrero and De Castro, JJ., concur.

Makasiar, (Chairman), J., In the result.

Escolin J., took no part.


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SECOND DIVISION

AYALA LIFE ASSURANCE, INC.,

Petitioner,

- versus-

RAY BURTON DEVELOPMENT

CORPORATION,

Respondent.

G.R. No. 163075

Present:

PUNO,J., Chairman,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA,JJ.

Promulgated:

January 23, 2006

x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ,J.:


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Before us for resolution is the petition for review on certiorari[1] assailing the Decision[2]

dated January 21, 2004 of the Court of Appeals in CA-G.R. CV No. 74635,[3] as well as its Resolution

dated April 2, 2004 denying petitioners motion for reconsideration.

The facts are:

On December 22, 1995, Ayala Life Assurance, Inc., petitioner, and Ray Burton Development

Corporation, respondent, entered into a contract denominated as a Contract to Sell, with a Side

Agreement of even date. In these contracts, petitioner agreed to sell to respondent a parcel of land,

with an area of 1,691 square meters, situated at Madrigal Business Park, Ayala Alabang Village,

Muntinlupa City, covered by Transfer Certificate of Title No. 186485 of the Registry of Deeds of

Makati City. The purchase price of the land is P55,000.00 per square meter or a total of

P93,005,000.00, payable as follows:

(a) On contract dateP24,181,300.00 representing 26 percent of the purchase price, inclusive of theP1,000,000.00 option money;

(b) Not later than January 6, 1996P3,720,200.00 representing 4 percent of the purchase price tocomplete 30 percent down payment; and

(c) In consecutive quarterly installments for a period of 5 years from December 22, 1995

P65,103,500.00 representing the 70 percent balance of the purchase price.

The contract contains a stipulation in paragraphs 3 and 3.1 for an Event of Default. It

provides that in case the purchaser (respondent) fails to pay any installment for any reason not

attributable to the seller (petitioner), the latter has the right to assess the purchaser a late penalty

interest on the unpaid installment at two (2%) percent per month, computed from the date the

amount became due until full payment thereof. And if such default continues for a period of six (6)

months, the seller has the right to cancelthe contract without need of court declaration by giving the

purchaser a written notice of cancellation. In case of such cancellation, the seller shall returnto the

purchaser the amount he received, less penalties, unpaid charges and dues on the property.

Respondent paid thirty (30%) down payment and the quarterly amortization, including the one

that fell due on June 22, 1998.

However, on August 12, 1998, respondent notified petitioner in writing that it will no longer

continue to pay due to the adverse effects of the economic crisis to its business. Respondent then
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asked for the immediate cancellation of the contract and for a refund of its previous payments as

provided in the contract.

Petitioner refused to cancel the contract to sell. Instead, on November 25, 1999, it filed with

the Regional Trial Court, Branch 66, Makati City, a complaint for specific performance against

respondent, docketed as Civil Case No. 99-2014, demanding from the latter the payment of the

remaining unpaid quarterly installments beginning September 21, 1999 in the total sum of

P33,242,382.43, inclusive of interest and penalties.

Respondent, in its answer, denied any further obligation to petitioner, asserting that on August

12, 1

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