Noel vs. CA

Facts:

Hilaria and Gregorio (Sps. Nanaman) were childless. Gregorio, however, had a child named Virgilio, by another woman, which they reared as if like it was their own. When Gregorio died, Hilaria administered the properties left his husband. With the help of Virgilio, they enjoyed the land to the exclusion of Gregorio’s brother and other children by also another woman. Virgilio declared te land in his name for taxation purposes reflected in a Tax Declaration. Sometime after, the land was mortgage by Hilaria and Virgilio to the private respondent, DELESTE. The same land was subsequently sold to Deleste and another tax declaration was issued, now, in favor of the private respondent.

When Hilaria died, the other children of Gregorio filed an intestate claim over the estate of their father. Also, Gregorio’s brother raised that he should be included as heir of Gregorio. Hence, the case was consolidated. The petition was further amended to include the estate of Hilaria and his brother and his brother’s son to be additional petitioners.

Juan Nanaman (Brother of Gregorio ) as appointed as administrator of the land, included the entire lot (34.7 hectares) in the list of assets of the estate. Edilberto Noel subsequently took over as administrator of the estate. Noel was not able to take possession of the land since it was in the possession of DELESTE and some heirs of Hilaria.

Thereafter, DELESTE and the heirs of the Sps. Nanaman(children of gregorio and relatives of Hilaria_ executed an amicable settlement of the Nanaman Estate, Deleste agreed to relinquish his rights over ½ of the entire land sold to him by Hilaria and Virgilio in favor of the heirs. It was approved by the court but was rendered null and void because not all heirs have agreed.

The court ordered noel to file an action to recover the ENTIRE land from Deleste, which he did.

RTC: Sale of entire land even if the said land was conjugal is valid since Hilaria acted as an administratrix of the estate of Gregorio, in which proceeds were used to pay debts of the conjugal property.

CA: Noel appealed to the Court of Appeals. In its Decision of February 18, 1980, the appellate court ruled that the transaction between Hilaria and Virgilio on one hand and private respondent on the other, was indeed a sale. It found that no fraud, mistake or misrepresentation attended in the execution of the deed of sale and that no proof was shown that the contract was merely a mortgage.

The appellate court, however, agreed with Noel that Hilaria could not validly sell the 37.7-hectare land because it was conjugal property, and Hilaria could sell only her one-half share thereof.

CA AMENDED: Decision of the trial court affirmed. They relied heavily that the respondents slept on their rights, raising the ground of prescription.

ISSUE: whether or not the contract of sale is valid.

Under Spanish law which was effective at the time of death of Gregorio. Hilaria could only obtain the undivided ½ share of the estate which she could validly alienate. And with respect to Virgilio, the Spanish law does not give right over an illegitimate child inheritance. Hence, with respect to his share, he cannot validly alienate it.

SC: On the other hand, Virgilio was not an heir of Gregorio under the Spanish Civil Code of 1889. Although he was treated as a child by the Nanaman spouses, illegitimate children who were not natural were disqualified to inherit under the said Code (Cid v. Burnaman, 24 SCRA 434 [1968]). Article 998 of the Civil Code of the Philippines, which gave an illegitimate child certain hereditary rights, could not benefit Virgilio because the right of ownership of the collateral heirs of Gregorio had become vested upon his death (Civil Code of the Philippines, Art. 2253; Uson v. Del Rosario, 92 Phil. 530 [1953]). Therefore, Virgilio had no right at all to transfer ownership over which he did not own.

In a contract of sale, it is essential that the seller is the owner of the property he is selling. The principal obligation of a seller is "to transfer the ownership of" the property sold (Civil Code of the Philippines, Art. 1458). This law stems from the principle that nobody can dispose of that which does not belong to him (Azcona v. Reyes, 59 Phil. 446 [1934]; Coronel v. Ona, 33 Phil. 456 [1916). NEMO DAT QUAD NON HABET .

Ratio: What Noel is trying to tell us is that a person cannot sell what he does not own. However, nowhere in the decision states that the sale will be void if there is no ownership by the seller at the time of perfection. This is consistent with Article 1459 which states that the vendor must have a right to transfer the ownership thereof at the time it is delivered.

Nool vs. CA

Two (2) parcels of land are in dispute and litigated upon here. The first has an area of 1 hectare. It was formerly owned by Victorino Nool and covered by Transfer Certificate of Title No. T-74950. With an area of 3.0880 hectares, the other parcel was previously owned by Francisco Nool under Transfer Certificate of Title No. T-100945. Both parcels are situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now the appellants, seek recovery of the aforementioned parcels of land from the defendants, Anacleto Nool, a younger brother of Conchita, and Emilia Nebre, now the appellees.

Conchita and Gaudencio (C&G) mortgaged the real properties with the DBP. Thereafter, the properties were foreclosed. Within the redemption period, C&G contacted Anacleto to redeem the foreclosed properties, which he did. As a result, the two lands were transferred in the name of A. As part of their agreement and understanding, A agreed to buy from C&G the properties for 100k, 30k of which the price was paid to C&G and upon payment of the balance of 14k, C&G will regain the two hectares of land, which the defendant failed to pay. On the same day the agreement was made, another covenant was entered into by the parties; whereby A agreed to return the lands to C&G at any time C&G have the necessary amount to redeem the land. A signed the private writing, agreeing to return subject lands when plaintiffs have the money to

redeem the same; A having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties.

RTC: Private writing only an option to sell and considered validly withdrawn for want of consideration. Hence, the said writing is not binding.

Worthy to stress is that the DBP where the land was mortgaged, certified that the redemption period of the foreclosed property prescribed, making DBP as the rightful owner of the land. It is only upon a conditional sale that it was redeemed by A, which was evidenced by a certificate of title.

ISSUE: W/N the sale is valid, making the right of repurchase likewise valid.

Held: Not valid.

One repurchases only what one has previously sold. In other words, the right to repurchase presupposes a valid contract of sale between the same parties. Undisputedly, private respondents acquired title to the property from DBP, and not from the petitioners.

In the present case however, it is likewise clear that the sellers can no longer deliver the object of the sale to the buyers, as the buyers themselves have already acquired title and delivery thereof from the rightful owner, the DBP. Thus, such contract may be deemed to be inoperative[20] and may thus fall, by analogy, under item no. 5 of Article 1409 of the Civil Code: Those which contemplate an impossible service. Article 1459 of the Civil Code provides that the vendor must have a right to transfer the ownership thereof [object of the sale] at the time it is delivered. Here, delivery of ownership is no longer possible. It has become impossible.

Furthermore, Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Here, there is no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents. Jurisprudence, on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer can as a consequence acquire no more than what the seller can legally transfer. No one can give what he does not have neno dat quod non habet. On the other hand, Exhibit D presupposes that petitioners could repurchase the property that they sold to private respondents. As petitioners sold nothing, it follows that they can also repurchase nothing. Nothing sold, nothing to repurchase. In this light, the contract of repurchase is also inoperative and by the same analogy, void.

Villanueva: The problem in Nool is that it equated the primary obligation in a contract of sale to transfer ownership and deliver possession as “service”. It must not be forgotten, a contract of sale gives rise to a real obligation, which is “to give” and not an obligation “to do” which is the prestation in a “service”. Further, a contract of sale can be enforced by specific performance, which is “to give” to the prestation due. On the other hand, “service” cannot be subject to the remedy of specific performance, since it will constitute involuntary servitude.

Villaflor vs. CA

FACTS: On 16 January 1940, Cirilo Piencenaves, in a Deed of Absolute Sale, sold to Vicente Villafor, a parcel of agricultural land (planted to Abaca) containing an area of 50 hectares, more or less. The deed states that the land was sold to Villaflor on 22 June1937, but no formal document was then executed, and since then until the present time, Villaflor has been in possession and occupation of the same. Before the sale of said property, Piencenaves inherited said property form his parents and was in adverse possession of such without interruption for more than 50 years. On the same day, Claudio Otero, in a Deed of Absolute Sale sold to Villaflor a parcel of agricultural land (planted to corn), containing an area of 24 hectares, more or less; Hermogenes Patete, in a Deed of Absolute Sale sold to Villaflor, a parcel of agricultural land (planted to abaca and corn), containing an area of 20 hectares, more or less. Both deed state the same details or circumstances as that of Piencenaves’. On 15 February 1940, Fermin Bocobo, in a Deed of Absolute Sale sold to Villaflor, a parcel of agricultural land (planted with abaca), containing an area of 18 hectares, more or less.

On 8 November 1946, Villaflor leased to Nasipit Lumber Co., Inc. a parcel of land, containing an area of 2 hectares, together with all the improvements existing thereon, for a period of 5 years (from 1 June 1946) at a rental of P200.00 per annum to cover the annual rental of house and building sites for 33 houses or buildings. The lease agreement allowed the lessee to sublease the premises to any person, firm or corporation; and to build and construct additional houses with the condition the lessee shall pay to the lessor the amount of 50 centavos per month for every house and building; provided that said constructions and improvements become the property of the lessor at the end of the lease without obligation on the part of the latter for expenses incurred in the construction of the same.

On 7 July 1948, in an “Agreement to Sell” Villaflor conveyed to Nasipit Lumber, 2 parcels of land. Parcel 1 contains an area of 112,000 hectares more or less, divided into lots 5412, 5413, 5488, 5490,5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852; and containing abaca, fruit trees, coconuts and thirty houses of mixed materials belonging to the Nasipit Lumber Company. Parcel 2 contains an area of 48,000more or less, divided into lots 5411, 5410, 5409, and 5399, and containing 100 coconut trees, productive, and 300 cacao trees. From said day, the parties agreed that Nasipit Lumber shall continue to occupy the property not anymore in concept of lessee but as prospective owners.

On 2 December 1948, Villaflor filed Sales Application V-807 with the Bureau of Lands, Manila, to purchase under the provisions of Chapter V, XI or IX of CA 141 (The Public Lands Act), as amended, the tract of public lands. Paragraph 6 of the Application, states: ‘I understand that this application conveys no right to occupy the land prior to its approval, and I recognize that the land covered by the same is of public domain and any and all rights I may have with respect thereto by virtue of continuous occupation and cultivation are hereby relinquished to the Government.

On 7 December 1948, Villaflor and Nasipit Lumber executed an “Agreement,” confirming the Agreement to Sell of 7 July 1948, but with reference to the Sales Application filed with the Bureau of Land. On 31 December 1949, the Report by the public land inspector (District Land Office, Bureau of Lands, in Butuan) contained an endorsement of the said officer recommending rejection of the Sales Application of Villaflor for having leased the property to another even before he had acquired transmissible rights thereto. In a letter of Villaflor dated 23 January1950, addressed to the Bureau of Lands, he informed the Bureau Director that he was already occupying the property when the Bureau’s Agusan River Valley Subdivision Project was inaugurated, that the property was formerly claimed as private property, and that therefore, the property was segregated or excluded from disposition because of the claim of private ownership. Likewise, in a letter of Nasipit Lumber dated 22 February 1950 addressed to the Director of Lands, the corporation informed the Bureau that it recognized Villaflor as the real owner, claimant and occupant of the land; that since June 1946, Villaflor leased 2hectares inside the land to the company; that it has no other interest on the land; and that the Sales Application of Villaflor should be given favorable consideration.

On 24 July 1950, the scheduled date of auction of the property covered by the Sales Application, Nasipit Lumber offered the highest bid of P41.00 per hectare, but since an applicant under CA 141, is allowed to equal the bid of the highest bidder, Villaflor tendered an equal bid, deposited the equivalent of 10% of the bid price and then paid the assessment in full.

On 16 August 1950, Villaflor executed a document, denominated as a “Deed of Relinquishment of Rights,” in favor on Nasipit Lumber, in consideration of the amount of P5,000 that was to be reimbursed to the former representing part of the purchase price of the land, the value of the improvements Villaflor introduced thereon, and the expenses incurred in the publication of the Notice of Sale; in light of his difficulty to develop the same as Villaflor has moved to Manila. Pursuant thereto, on 16 August1950, Nasipit Lumber filed a Sales Application over the 2 parcels of land, covering an area of 140 hectares, more or less. This application was also numbered V-807. On 17 August 1950 the Director of Lands issued an “Order of Award” in favor of Nasipit Lumber; and its application was entered in the record as Sales Entry V-407.On 27 November 1973, Villafor wrote a letter to Nasipit Lumber, reminding the latter of their verbal agreement in 1955; but the new set of corporate officers refused to recognize Villaflor’s claim.

In a formal protest dated 31 January 1974 which Villaflor filed with the Bureau of Lands, he protested the Sales Application of Nasipit Lumber, claiming that the company has not paid him P5,000.00 as provided in the Deed of Relinquishment of Rights dated 16 August 1950. On 8 August 1977, the Director of Lands found that the payment of the amount of P5,000.00 in the Deed and the consideration in the Agreement to Sell were duly proven, and ordered the dismissal of Villaflor’s protest.

On 6 July 1978, Villaflor filed a complaint in the trial court for “Declaration of Nullity of Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of land subject of the contract), and Damages” at about the same time that he appealed the decision of the Minister of Natural Resources to the Office of the President. On 28 January 1983, he died. The trial court ordered his widow, Lourdes D. Villaflor, to be substituted as petitioner. After trial in due course, the then CFI Agusan del Norte and Butuan City, Branch III, dismissed the complaint

on the grounds that: (1) petitioner admitted the due execution and genuineness of the contract and was estopped from proving its nullity, (2) the verbal lease agreements were unenforceable under Article 1403 (2)(e) of the Civil Code, and (3) his causes of action were barred by extinctive prescription and/or laches. It ruled that there was prescription and/or laches because the alleged verbal lease ended in 1966, but the action was filed only on 6 January 1978. The 6-year period within which to file an action on an oral contract per Article 1145 (1) of the Civil Code expired in 1972. Nasipit Lumber was declared the lawful owner and actual physical possessor of the 2 parcels of land (containing a total area of 160 hectares). The Agreements to Sell Real Rights and the Deed of Relinquishment of Rights over the 2 parcels were likewise declared binding between the parties, their successors and assigns; with double costs against Villaflor. The heirs of petitioner appealed to the Court of Appeals which, however, rendered judgment against them via the assailed Decision dated 27 September 1990 finding petitioner’s prayers —(1) for the declaration of nullity of the deed of relinquishment, (2) for the eviction of private respondent from the property and (3) for the declaration of petitioner’s heirs as owners —to be without basis.

Not satisfied, petitioner’s heirs filed the petition for review dated 7 December 1990. In a Resolution dated 23 June 1991, the Court denied this petition “for being late.” On reconsideration, the Court reinstated the petition.

ISSUE: Whether the sale is valid or void for the alleged existence of simulation of contract

HELD: The provision of the law is specific that public lands can only be acquired in the manner provided for therein and not otherwise(Sec. 11, CA. No. 141, as amended). In his sales application, petitioner expressly admitted that said property was public land. This is formidable evidence as it amounts to an admission against interest. The records show that Villaflor had applied for the purchase of lands in question with this Office (Sales Application V-807) on 2 December 948. There is a condition in the sales application to the effect that he recognizes that the land covered by the same is of public domain and any and all rights he may have with respect thereto by virtue of continuous occupation and cultivation are relinquished to the Government of which Villaflor is very much aware. It also appears that Villaflor had paid for the publication fees appurtenant to the sale of the land. He participated in the public auction where he was declared the successful bidder. He had fully paid the purchase price thereof. It would be a height of absurdity for Villaflor to be buying that which is owned by him if his claim of private ownership thereof is to be believed. The area in dispute is not the private property of the petitioner.

It is a basic assumption of public policy that lands of whatever classification belong to the state. Unless alienated in accordance with law, it retains its rights over the same as dominus. No public land can be acquired by private persons without any grant, express or implied from the government. It is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. s such sales applicant manifestly acknowledged that he does not own the land and that the same is a public land under the administration of the Bureau of Lands, to which the application was submitted, all of its acts prior thereof, including its real estate tax declarations, characterized its possessions of the land as that of a “sales applicant”.

And consequently, as one who expects to buy it, but has not as yet done so, and is not, therefore, its owner.

The rule on the interpretation of contracts (Article 1371) is used in affirming, not negating, their validity. Article 1373, which is a conjunct of Article 1371, provides that, if the instrument is susceptible of two or more interpretations, the interpretation which will make it valid and effectual should be adopted. In this light, it is not difficult to understand that the legal basis urged by petitioner does not support his allegation that the contracts to sell and the deed of relinquishment are simulated and fictitious.

Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Such an intention is not apparent in the agreements. The intent to sell, on the other hand, is as clear as daylight. The fact, that the agreement to sell (7 December 1948) did not absolutely transfer ownership of the land to private respondent, does not show that the agreement was simulated. Petitioner’s delivery of the Certificate of Ownership and execution of the deed of absolute sale were suspensive conditions, which gave rise to a corresponding obligation on the part of the private respondent, i.e., the payment of the last installment of the consideration mentioned in the Agreement. Such conditions did not affect the perfection of the contract or prove simulation

Nonpayment, at most, gives the vendor only the right to sue for collection. Generally, in a contract of sale, payment of the price is a resolutory condition and the remedy of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract under Article 1191 of the Civil Code. However, failure to pay is not even a breach, but merely an event which prevents the vendor’s obligation to convey title from acquiring binding force.

T he requirements for a sales application under the Public Land Act are: (1) the possession of the qualifications required by said Act (under Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections 121, 122, and 123). Section121 of the Act pertains to acquisitions of public land by a corporation from a grantee: The private respondent, not the petitioner, was the direct grantee of the disputed land. Sections 122 and 123 disqualify corporations, which are not authorized by their charter, from acquiring public land; the records do not show that private respondent was not so authorized under its charter

The Supreme Court dismissed the petition.

PRICE

7. LOYOLA vs CA

FACTS: A parcel of land (Lot 115-A-1 of subdivision plan [LRC] Psd-32117, a portion of Lot 115-A described on Plan Psd-55228, LRC[GLRO] Record 8374, located in Poblacion, Binan, Laguna, and containing 753 sq.m., TCT T-32007) was originally owned in common by the siblings Mariano and Gaudencia Zarraga, who inherited it from their father. Mariano predeceased his sister who died single, without offspring on 5 August 1983, at the age of 97.

Victorina Zarraga vda. de Loyola and Cecilia Zarraga, are sisters of Gaudencia and Mariano. The property was subject of Civil Case B-1094 before the then CFI Laguna (Branch 1, Spouses Romualdo Zarraga, et al. v .Gaudencia Zarraga, et al.). Romualdo Zarraga was the plaintiff in Civil Case B-1094. The defendants were his siblings: Nieves, Romana, Guillermo, Purificacion, Angeles, Roberto, Estrella, and Jose, all surnamed Zarraga, as well as his aunt, Gaudencia. The trial court decided Civil Case B-1094 in favor of the defendants. Gaudencia was adjudged owner of the 1/2 portion of Lot 115-A-1. Romualdo elevated the decision to the Court of Appeals and later the Supreme Court. The petition (GR 59529) was denied by the Court on 17 March 1982.On 24 August 1980, nearly 3 years before the death of Gaudencia while GR 59529 was still pending before the Supreme Court.

On said date, Gaudencia allegedly sold to the children of Mariano Zarraga (Nieves, Romana, Romualdo, Guillermo, Lucia, Purificacion, Angeles, Roberto, Estrella Zarraga) and the heirs of Jose Zarraga Aurora, Marita, Jose, Ronaldo, Victor, Lauriano,and Ariel Zarraga; first cousins of the Loyolas) her share in Lot 115-A- 1 for P34,000.00. The sale was evidenced by a notarizeddocument denominated as “Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay na Lupa.” Romualdo, the petitioner in GR 59529, was among the vendees.The decision in Civil Case B-1094 became final. The children of Mariano Zarraga and the heirs of Jose Zarraga (privaterespondents) filed a motion for execution.

On 16 February 1984, the sheriff executed the corresponding deed of reconveyance to Gaudencia. On 23 July 1984, however, the Register of Deeds of Laguna, Calamba Branch, issued in favor of private respondents, TCT T-116067, on the basis of the sale on 24 August 1980 by Gaudencia to them. On 31 January 1985, Victorina and Cecilia filed a complaint, docketed as Civil Case B-2194, with the RTC of Biñan, Laguna, for the purpose of annulling the sale and the TCT. Victorina died on 18 October 1989, while Civil Case B-2194 was pending with the trial court. Cecilia died on 4 August 1990, unmarried and childless. Victorina and Cecilia were substituted by Ruben, Candelaria,Lorenzo, Flora, Nicadro, Rosario, Teresita and Vicente Loyola as plaintiffs. The trial court rendered judgment in favor of complainants; declaring the simulated deed of absolute sale as well as the issuance of the corresponding TCT null and void, ordering the Register of Deeds of Laguna to cancel TCT T-116087 and to issue another one in favor of the plaintiffs and the defendants as co-owners and legal heirs of the late Gaudencia, ordering the defendants to reconvey and deliver the possession of the shares of the plaintiff on the subject property, ordering the defendants to pay P20,000 as attorney’s fees and cost of suit, dismissing the petitioner’s claim for moral and exemplary damages, and dismissing the defendants’ counterclaim for lack of merit. On appeal, and on 31 August 1993, the appellate court reversed the trial court (CA-GR CV 36090). On September 15, 1993, the petitioners (as substitute parties for Victorina and Cecilia, the original plaintiffs) filed a motion for reconsideration, which was denied on 6 June 1994. Hence, the petition for review on certiorari.

ISSUE: Whether the alleged sale between Gaudencia and respondents is valid

HELD: Petitioners vigorously assail the validity of the execution of the deed of absolute sale suggesting that since the notary public who prepared and acknowledged the questioned Bilihan did not personally know Gaudencia, the execution of the deed was suspect. The rule is that a notarized document carries the evidentiary weight conferred upon it with respect to its due

execution, and documents acknowledged before a notary public have in their favor the presumption of regularity. By their failure to overcome this presumption, with clear and convincing evidence, petitioners are estopped from questioning the regularity of the execution of the deed.

Petitioners suggest that all the circumstances lead to the conclusion that the deed of sale was simulated. Simulation is "the declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purposes of deception, the appearances of a juridical act which does not exist or is different what that which was really executed." Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. Perusal of the questioned deed will show that the sale of the property would convert the co-owners to vendors and vendees, a clear alteration of the juridical relationships. This is contrary to the requisite of simulation that the apparent contract was not really meant to produce any legal effect. Also in a simulated contract, the parties have no intention to be bound by the contract. But in this case, the parties clearly intended to be bound by the contract of sale, an intention they did not deny. The requisites for simulation are: (a) an outward declaration of will different from the will of the parties; (b) the false appearance must have been intended by mutual agreement; and (c) the purpose is to deceive third persons. None of these are present in the assailed transaction.

Contracts are binding only upon the parties who execute them. Article 1311 of the Civil Code clearly covers this situation. In the present case Romualdo had no knowledge of the sale, and thus, he was a stranger and not a party to it. Even if curiously Romualdo, one of those included as buyer in the deed of sale, was the one who questioned Gaudencia’s ownership in Civil Case B-1094, Romana testified that Romualdo really had no knowledge of the transaction and he was included as a buyer of the land only because he was a brother.

Petitioners fault the Court of Appeals for not considering that at the time of the sale in 1980, Gaudencia was already 94 years old; that she was already weak; that she was living with private respondent Romana; and was dependent upon the latter for her daily needs, such that under these circumstances, fraud or undue influence was exercised by Romana to obtain Gaudencia's consent to the sale. The rule on fraud is that it is never presumed, but must be both alleged and proved. For a contract to be annulled on the ground of fraud, it must be shown that the vendor never gave consent to its execution. If a competent person has assented to a contract freely and fairly, said person is bound. There also is a disputable presumption, that private transactions have been fair and regular. Applied to contracts, the presumption is in favor of validity and regularity. In this case, the allegation of fraud was unsupported, and the presumption stands that the contract Gaudencia entered into was fair and regular.

Petitioners also claim that since Gaudencia was old and senile, she was incapable of independent and clear judgment. However, a person is not incapacitated to contract merely because of advanced years or by reason of physical infirmities. Only when such age or infirmities impair his mental faculties to such extent as to prevent him from properly, intelligently, and fairly protecting his property rights, is he considered incapacitated. Petitioners show no proof that Gaudencia had lost control of her mental faculties at the time of the sale. The notary public who interviewed her, testified that when he talked to Gaudencia before preparing the

deed of sale, she answered correctly and he was convinced that Gaudencia was mentally fit and knew what she was doing.

Petitioners seem to be unsure whether they are assailing the sale of Lot 115-A-1 for being absolutely simulated or for inadequacy of the price. These two grounds are irreconcilable. If there exists an actual consideration for transfer evidenced by the alleged act of sale, no matter how inadequate it be, the transaction could not be a “simulated sale.” No reversible error was thus committed by the Court of Appeals in refusing to annul the questioned sale for alleged inadequacy of the price

The Supreme Court denied the petition, and affirmed the assailed decision of the Court of Appeals; with costs against petitioners

8. UY vs CA

FACTS: William Uy and Rodel Roxas are agents authorized to sell 8 parcels of land by the owners thereof. By virtue of such authority, they offered to sell the lands, located in Tuba, Tadiangan, Benguet to National Housing Authority (NHA) to be utilized and developed as a housing project. On 14 February 1989, the NHA Board passed Resolution 1632 approving the acquisition of said lands, with an area of 31.8231 hectares, at the cost of P23.867 million, pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands. Of the 8 parcels of land, however, only 5 were paid for by the NHA because of the report it received from the Land Geosciences Bureau of the Department of Environment and Natural Resources (DENR)that the remaining area is located at an active landslide area and therefore, not suitable for development into a housing project.

On 22 November 1991, the NHA issued Resolution 2352 cancelling the sale over the 3 parcels of land. The NHA, through Resolution 2394, subsequently offered the amount of P1.225 million to the landowners as daños perjuicios. On 9 March 1992, petitioners Uy and Roxas filed before the RTC Quezon City a Complaint for Damages against NHA and its General Manager Robert Balao. After trial, the RTC rendered a decision declaring the cancellation of the contract to be justified. The trial court nevertheless awarded damages to plaintiffs in the sum of P1.255 million, the same amount initially offered by NHA to petitioners as damages.

Upon appeal by petitioners, the Court of Appeals reversed the decision of the trial court and entered a new one dismissing the complaint. It held that since there was “sufficient justifiable basis” in cancelling the sale, “it saw no reason” for the award of damages. The Court of Appeals also noted that petitioners were mere attorneys-in-fact and, therefore, not the real parties-in-interest in the action before the trial court. Their motion for reconsideration having been denied, petitioners seek relief from the Supreme Court.

ISSUES: 1) Whether the petitioners are real parties in interest

2) Whether the cancellation is justified

HELD: 1) Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real party-in-interest. The real party-in-interest is the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit. “Interest,” within the meaning of the rule, means material interest, an interest in the issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. Cases construing the real party-in-interest provision can be more easily understood if it is borne in mind that the true meaning of real party-in-interest may be summarized as follows: An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced.

Where the action is brought by an attorney-in-fact of a land owner in his name, (as in our present action) and not in the name of his principal, the action was properly dismissed because the rule is that every action must be prosecuted in the name of the real parties-in-interest (Section 2, Rule 3, Rules of Court)

Petitioners claim that they lodged the complaint not in behalf of their principals but in their own name as agents directly damaged by the termination of the contract. Petitioners in this case purportedly brought the action for damages in their own name and in their own behalf. An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced. Petitioners are not parties to the contract of sale between their principals and NHA. They are mere agents of the owners of the land subject of the sale. As agents, they only render some service or do something in representation or on behalf of their principals. The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. Since a contract may be violated only by the parties thereto as against each other, the real parties-in-interest, either as plaintiff or defendant, in an action upon that contract must, generally, either be parties to said contract. Petitioners have not shown that they are assignees of their principals to the subject contracts. While they alleged that they made advances and that they suffered loss of commissions, they have not established any agreement granting them "the right to receive payment and out of the proceeds to reimburse [themselves] for advances and commissions before turning the balance over to the principal[s]."

2) The right of rescission or, more accurately, resolution, of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party that violates the reciprocity between them. The power to rescind, therefore, is given to the injured party. Article 1191 states that “the power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.” In the present case, the NHA did not rescind the contract. Indeed, it did not have the right to do so for the other parties to the contract, the vendors, did not commit any breach, much less a substantial breach, of their obligation. Their obligation was merely to deliver the parcels of land to the NHA, an obligation that they fulfilled. The NHA did not suffer any injury by the performance thereof

The cancellation was not a rescission under Article 1191. Rather, the cancellation was based on the negation of the cause arising from the realization that the lands, which were the object of the

sale, were not suitable for housing. Cause is the essential reason which moves the contracting parties to enter into it. In other words, the cause is the immediate, direct and proximate reason which justifies the creation of an obligation through the will of the contracting parties. Cause, which is the essential reason for the contract, should be distinguished from motive, which is the particular reason of a contracting party which does not affect the other party. Ordinarily, a party's motives for entering into the contract do not affect the contract. However, when the motive predetermines the cause, the motive may be regarded as the cause. In this case, it is clear, and petitioners do not dispute, that NHA would not have entered into the contract were the lands not suitable for housing. In other words, the quality of the land was an implied condition for the NHA to enter into the contract. On the part of the NHA, therefore, the motive was the cause for its being a party to the sale. We hold that the NHA was justified in canceling the contract. The realization of the mistake as regards the quality of the land resulted in the negation of the motive/cause thus rendering the contract inexistent.

The Supreme Court denied the petition

1. MAPALO v MAPALO

FACTS: Miguel and Candida Mapalo were illiterate farmers and owned a parcel of land. Since Maximo Mapalo was to be married, they donated to him the eastern half of the land. Maximo, however, deceived them by making them sign an instrument donating the entire lot. There was a consideration for P5,000 stated in the deed, but the spouses never received anything. Miguel built a fence to divide the lot and continued to occupy the western part. Maximo then registered the entire lot and 13 year after, sold the same to the Narcisos who took possession only of the eastern half. Later on, the Narcisos sought to be declared owners of the entire land; the spouses claimed that the sale to the Narcisos was void for lack of consideration. The CA declared that the sale was merely voidable and the action by the spouses was barred by prescription, being filed after 4 years from the discovery of the fraud.

ISSUE: W/N there was a valid contract of sale

HELD: Consideration was totally absent; the P5,000 price stipulated was never received/delivered to the spouses. Thus, the sale to the Narcisos was VOID ab initio for want of consideration. The inexistence of the contract is permanent and cannot be the subject of prescription. The Narcisos are also in bad faith—they had knowledge of the true nature and extent of Maximo’s right over the land.

ONG v ONG

FACTS: For an in consideration of P1 and other valuable considerations, Imelda Ong transferred through a Deed of Quitclaim her rights over a ½ portion of a parcel of land to Sandra. Later on, she revoked the Deed and donated the whole property to her son, Rex. Sanda, through her guardian, sought to recover ownership and possession thereof. Imelda alleged that the sale was void for lack of consideration.

ISSUE: W/N there was a valid contract of sale

HELD: YES. There was consideration. Its apparent inadequacy is of no moment since the usual practice in deeds of conveyance is to place a nominal amount although there is more valuable consideration given. Consideration is presumed to exist. He who alleges otherwise assumes the burden of proof. The one peso was not the consideration, but rather the other valuable consideration.

BAGNAS v CA

FACTS: Hilario died with no will and was survived only by collateral relatives. Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to a farther extent. They claimed ownership over 10 lots from the estate of Hilario presenting notarized and registered Deeds of Sale (in Tagalog) where the consideration for the lands was P1 and services rendered, being rendered, and to be rendered. Bagnas argued that the sales were fictitious, while Retonil claimed to have done many things for Hilario—such as nursing him on his deathbed.

ISSUE: W/N there was a valid contract of sale

HELD: NO. At the onset, if a contract has no consideration, it is not merely voidable, but VOID—and even collateral heirs may assail the contract. In this case, there was no consideration. Price must be in money or its equivalent; services are not the equivalent of money insofar as the requirement of price is concerned. A contract is not one for sale if the consideration consists of services. Not only are they vague, they are unknown and not susceptible of determination without a new agreement between the parties.

MATE v CAFACTS: Josefina approached Fernando asking for help.Her family was to be sued by Tan for issuing rubber checks; thus she asked him to cede his 3 lots to Tan and it will be Josefina who will repurchase them for him. He initially rejected her offer. Then, Josefina issued him 2 checks, one for P1.4M, pertaining to the value of the lot, and another for P420,000 corresponding to 6 months’ interests. He agreed, drafted the instrument himself, and ceded his properties to Tan. Later, both checks bounced; he sued Tan for annulment of the sale for lack of consideration since he never received anything. He also sued Josefina criminally, but absconded.ISSUE: W/N there was a valid contract of sale

HELD: YES. There was consideration in the form of the check for P420,000. It was his fee for executing the sale. It was not only kindness that impelled him to cede his property, it was also his interest for profit.That he never received money is of no moment; a sale is a consensual contract. He also tacitly admitted to the sale when he filed criminal charges against Josefina.Fernando, being a lawyer, has no one else to blame but himself for the loss. He acted negligently our of desire for profit.

Spouses Ladanga v. CA [G.R. No. L-55999. August 24, 1984.]

Second Division, Aquino (J): 4 concur, 1 took no part, 1 reserved vote

Facts: Clemencia A. Aseneta, a spinster who retired as division superintendent of public schools at 65 in 1961, had a nephew named Bernardo S. Aseneta, the child of her sister Gloria, and a niece named Salvacion, the daughter of her sister Flora. She legally adopted Bernardo in 1961. On a single date, 6 April 1974, she 9then 78 years old) signed 9 deeds of sale in favor of Salvacion, for various real properties. One deed of sale concerned the said Paco property (166 sq. m. lot located at 1238 Sison Street Paco Manila and administered by the Ladanga spouses, Agustin and Salvacion) which purportedly was sold to Salvacion for P26,000. The total price involved in the 9 deeds of sale and in the 10th sale executed on 8 November 1974 was P92,200. The deed of sale for the Paco property was signed in the office of the Quezon City registry of deeds.

In May 1975, Bernardo, as guardian of Clemencia, filed an action for reconveyance of the Paco property, accounting of the rentals and damages, with the CFI Manila. Clemencia was not mentally incompetent but she was placed under guardianship because she was an easy prey for exploitation and deceit. Clemencia testified and denied having “received even one centavo” of the price of P26,000), much less the P92,000. This testimony was corroborated by Soledad L. Maninang, 69, a dentist with whom Clemencia had lived for more than 30 years in Kamuning, Quezon City. The notary public stated that he did not see Salvacion hand any money to Clemencia for the purported sale when the deed was signed in the registry of deeds. The trial court declared void the sale of the Paco property.

Clemencia died on 21 May 1977 at the age of 80. She allegedly bequeathed her properties in a holographic will dated 23 November 1973 to Doctor Maninang. In that will she disinherited Bernardo. The will was presented for probate. The testate case was consolidated with the intestate proceeding filed by Bernardo in the sala of Judge Ricardo L. Pronove at Pasig, Rizal. He dismissed the testate case. He appointed Bernardo as administrator in the intestate case.

On appeal, the Court of Appeals affirmed the decision of the CFI, ordered the register of deeds to issue a new title to Clemencia, and ordered the spouses to pay Clemencia’s estate P21,000 as moral and exemplary damages and attorney’s fees and to render to Bernardo an accounting of the rentals of the property from 6 April 1974. The spouses appealed to the Supreme Court.

The Supreme Court affirmed the judgment of the Appellate Court with the modification that the adjudication for moral and exemplary damages is discarded; Without costs.

1. Only legal issues may be raised in a review of the decision of the appellate court

As a rule, only important legal issues, as contemplated in section 4, Rule 45 of the Rules of Court, may be raised in a review of the Appellate Court’s decision. The present case does not fall within any of the exceptions to that rule (2 Moran’s Comments on the Rules of Court, 1979 Ed. p. 475; Ramos vs. Pepsi-Cola Bottling Co., 125 Phil. 701).

2. Burden of proof

Clemencia herself testified that the price of P26,000 was not paid to her; and thus, the burden of the evidence shifted to the Ladanga spouses. They were not able to prove the payment of that amount, thus the sale was fictitious.

3. Void contract in the absence of price being paid; Sale inexistent and cannot be considered consummated

A contract of sale is void and produces no effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the purchaser to the vendor (Meneses Vda. de Catindig vs. Heirs of Catalina Roque, L-25777, November 26, 1976, 74 SCRA 83, 88; Mapalo vs. Mapalo, 123 Phil. 979, 987; Syllabus, Ocejo, Perez & Co. vs. Flores and Bas, 40 Phil. 921). Such a sale is inexistent and cannot be considered consummated (Borromeo vs. Borromeo, 98 Phil. 432; Cruzado vs. Bustos and Escaler, 34 Phil. 17; Garanciang vs. Garanciang, L-22351, May 21, 1969, 28 SCRA 229).

4. No evidence of intention of vendor to donate the property

Clemencia did not intended to donate the Paco property to the Ladangas. Her testimony and the notary’s testimony destroyed any presumption that the sale was fair and regular and for a true consideration. It seemed that the Ladangas abused Clemencia’s confidence and defrauded her of properties with a market value of P393,559.25 when she was already 78 years old.

5. Bernardo’s capacity to sue

Bernardo was Clemencia’s adopted son. Moreover, Clemencia, by testifying in this case, tacitly approved the action brought in her behalf. Bernardo had the right to institute the instant action.

6. Award of moral damages not sanctioned

The moral damages awarded by the trial court is not sanctioned by articles 2217 to 2220 of the Civil Code. Clemencia’s own signature in the deed brought about the mess within which she was entangled.

Balatbat v. CA

Facts:

A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union. Maria died on August 28, 1966. On June 15, 1977, Aurelio filed a case for partition. The trial court held that Aurelio is entitled to the ½ portion at his share in the conjugal property, and 1/5 of the other half which formed part of Maria’s estate, divided equally among him at his 4 children. The decision having become final and executory, the Register of Deeds of Manila issued a transfer certificate of title on October 5, 1979 according to the ruling of the court. On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose Repuyan, as evidenced by a deed of absolute sale. On June 21, 1980, Aurora caused the annotation of her affidavit of adverse claim. On August 20, 1980, Aurelio filed a complaint for rescission of contract grounded on the buyers’ failure to pay the balance of the purchase price. On February 4, 1982, another deed of absolute sale was executed between Aurelio and his children, and herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance of writ of possession, which was granted by the court on September 20, 1982, subject to valid rights and interests of third persons. Balatbat filed a motion to intervene in the rescission case, but did not file her complaint in intervention. The court ruled that the sale between Aurelio and Aurora is valid.

Issues:

(1) Whether the alleged sale to private respondents was merely executory

(2) Whether there was double sale

(3) Whether petitioner is a buyer in good faith and for value

Held:

(1) Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was merely executory for the reason that there was no delivery of the subject property and that consideration/price was not fully paid, we find the sale as consummated, hence, valid and enforceable. The Court dismissed vendor's Aurelio Roque complaint for rescission of the deed of sale and declared that the Sale dated April 1, 1980, as valid and enforceable. No appeal having been made, the decision became final and executory.

The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the same. In the instant case, vendor Roque delivered the owner's certificate of title to herein private respondent. The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the thing bought or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee, for which the vendor may exercise his legal remedies.

(2) Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondents Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of double sale contemplated under Article 1544 of the New Civil Code.

Evidently, private respondents Repuyan's caused the annotation of an adverse claim on the title of the subject property on July 21, 1980. The annotation of the adverse claim in the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world. On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private respondents who first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner. As between two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not registered his title even if the latter is in actual possession of the immovable property. Further, even in default of the first registrant or first in possession, private respondents have presented the oldest title. Thus, private respondents who acquired the subject property in good faith and for valuable consideration established a superior right as against the petitioner.

(3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before buying the land on February 4, 1982, she should have known that there was a pending case and an annotation of adverse claim was made in the title of the property before the Register of Deeds and she could have discovered that the subject property was already sold to the private respondents. It is incumbent upon the vendee of the property to ask for the delivery of the owner's duplicate copy of the title from the vendor. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs.

HEIRS OF ESCANLAR V. CA 281 SCRA 176 (1997)

FACTS: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and 1938, respectively. Nombre’s heirs include his nephews and grandnephews. Victoriana was succeeded by her late brother’s son, Gregorio Cari-an.

1. After Gregorio’s death in 1971, his wife, Generosa Martinez and children (Rodolfo, Carmen, Leonardo and Fredisminda) were adjudged as heirs by representation to Victoriana’s estate. Leonardo passed away, leaving his widow, Nelly Chua vda. de Cari-an and minor Leonell as his heirs

2. 2 parcels of land, denominated by Lot 1616 and 1617, formed part of the estate of Guillermo Nombre and Victoriana Cari-an.

3. In 1978, Gregorio’s heirs executed a deed of sale of rights, interests and participation in favor of Pedro Escanlar and Francisco Holgado over the ½ undivided share of Victoriana for P275,000 to be paid to the heirs, except the share of the minor Leonell Cari-an which shall be deposited to the Municipal Treasurer. Said contract of sale will be effective only upon approval of CFI

4. Escanlar and Holgado, the vendees, were concurrently the lessees of the subject property. In a deed of agreement executed by both parties confirming and affirming the contract of sale, they stipulated the following:

a. That the balance of the purchase price (P225,000) shall be paid on or before May 1979

b. Pending complete payment thereof, the vendees shall not assign, sell, lease or mortgage the rights, interests and participation thereof

c. In the event of nonpayment of the balance of said purchase price, the sum of P50,000 (down payment) shall be deemed as damages

5. Escanlar and Holgado were unable to pay the individual shares of the Cari-an heirs, amounting to P55,000 each, on the due date. However, said heirs received at least 12 installment payments from Escanlar and Holgado after May 1979. Rodolfo was fully paid by June 1979, Generosa Martinez, Carmen and Fredisminda were likewise fully compensated for their individual shares. The minor’s share was deposited with the RTC in September 1982.

6. Being former lessees, Escanlar and Holgado continued in possession of Lots 1616 and Lots 1617. Interestingly, they continued to pay rent based on their lease contract.

7. Subsequently, Escanlar and Holgado sought to intervene in the probate proceedings of Guillermo and Victoriana as buyers of Victoriana’s share. In 1982, the probate court approved the motion filed by the heirs of Guillermo and Victoriana to sell their respective shares in the estate. Thereafter, the Cari-ans, sold their shares in 8 parcels of land including lots 1616 and 1617 to spouses Chua for P1.85 million.

8. The Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado alleging the latter’s failure to pay the balance of the purchase price on the stipulated date and that they only received a total of P132,551 in cash and goods.

9. Escanlar and Holgado averred that the Cari-ans, having been paid, had no right to resell the subject lots and that the spouses Chua were purchasers in bad faith.

10. The trial court held in favor of the heirs of Cari-an citing that the sale between the Cari-ans and Escanlar is void as it was not approved by the probate court which was required in the deed of sale.

11. CA affirmed the same and cited that the questioned deed of sale of rights is a contract to sell because it shall become effective only upon approval by the probate court and upon full payment of the purchase price.

ISSUE: WON the non-happening of a condition affects the validity of the contract itself

HELD: No, the non-happening of a condition only affects the effectivity and not the validity of the contract.

Under Art 1318 Civil Code, the essential requisites of a contract are: consent of the contracting parties; object certain which is the subject matter of the contract and cause of the obligation which is established. Absent one of the above, no contract can arise. Conversely, where all are present, the result is a valid contract. However, some parties introduce various kinds of restrictions or modalities, the lack of which will not, however, affect the validity of the contract.

In the instant case, the Deed of Sale, complying as it does with the essential requisites, is a valid one. However, it did not bear the stamp of approval of the court. The contract’s validity was not affected for in the words of the stipulation, “ …this Contract of Sale of rights, interests and participations shall become effective only upon the approval by the Honorable Court…” In other words, only the effectivity and not the validity of the contract is affected.

CONTRACT TO SELL VS. CONTRACT OF SALE

In contracts to sell, ownership is retained by the seller and is not to pass until the full payment of the price. Such payment is a positive suspensive condition, the failure of which is not a breach of contract but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To illustrate, although a deed of conditional sale is denominated as such, absent a proviso that title to the property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period, by its nature, it shall be declared a deed of absolute sale.

In a contract of sale, the non-payment of the price is a resolutory condition which extinguishes the transaction that, for a time, existed and discharges the obligations

created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either specific performance or rescission.

In the case at bar, the sale of rights, interests and participation as to ½ portion pro indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the sellers did not reserve unto themselves the ownership of the property until full payment of the unpaid balance of P225,000.00; (2) there is no stipulation giving the sellers the right to unilaterally rescind the contract the moment the buyer fails to pay within the fixed period.

Need of probate court’s approval exists where specific properties of the estate are sold and not when ideal and indivisible shares of an heir are disposed of

The need for approval by the probate court exists only where specific properties of the estate are sold and not when only ideal and indivisible shares of an heir are disposed of. In Dillena v. Court of Appeals, the Court declared that it is within the jurisdiction of the probate court to approve the sale of properties of a deceased person by his prospective heirs before final adjudication. The probate court’s approval is necessary for the validity of any disposition of the decedent’s estate. However, reference to judicial approval cannot adversely affect the substantive rights of the heirs to dispose of their ideal share in the co-heirship and/or co-ownership among the heirs. It must be recalled that during the period of indivision of a decedent’s estate, each heir, being a co-owner, has full ownership of his part and may therefore alienate it. But the effect of the alienation with respect to the co-owners shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

Contractual stipulations considered law between parties; Exception: contemporaneous acts of parties

As a general rule, the pertinent contractual stipulation (requiring court approval) should be considered as the law between the parties. However, the presence of two factors militate against this conclusion: (1) the evident intention of the parties appears to be contrary to the mandatory character of said stipulation. Whoever crafted the document of conveyance, must have been of the belief that the controversial stipulation was a legal requirement for the validity of the sale. But the contemporaneous and subsequent acts of the parties reveal that the original objective of the parties was to give effect to the deed of sale even without court approval.

Receipt and acceptance of the numerous installments on the balance of the purchase price by the Cari-ans, although the period to pay the balance of the purchase price expired in May 1979, and leaving Escanlar and Holgado in possession of Lots 1616 and 1617 reveal their intention to effect the mutual transmission of rights and obligations. The Cari-ans did not seek judicial relief until late 1982 or three years later; (2) the requisite approval was virtually rendered impossible by the Cari-ans because they opposed the motion for approval of the sale filed by Escanlar and Holgado, and sued the latter for the cancellation of that sale. Having provided the obstacle and the justification for the stipulated approval not to be granted, the Cari-ans should not be allowed to cancel their first transaction with Escanlar and Holgado because of lack of approval by the probate court, which lack is of their own making.

REPUBLIC v. PHILIPPINE RESOURCES DEVELOPMENT CORPORATION

G.R. No. L-10141 January 31, 1958

Padilla, J.

Doctrine:

Article 1458 provides that the purchaser may pay “a price certain in money or its equivalent,” which means that the price need not be in money.

Facts:

The Bureau of Prisons instituted a complaint against Macario Apostol for the latter’s failure to pay the unpaid balance for logs purchased. Apostol, who was then the president of the respondent corporation, delivered goods belonging to the corporation and without the knowledge or consent of the stockholders thereof, to the Bureau of Prisons in an attempt to settle his personal debts with the latter entity. The corporation demanded the Bureau of Prisons for the return of the goods. Upon the refusal of the Bureau, the corporation filed a motion to intervene.

Issue:

Whether or not “price” is limited only to be paid in money

Held:

No. Article 1458 provides that the purchaser may pay “a price certain in money or its equivalent,” which means that they meant of the price need not be in money. In this case, the materials have been assessed and evaluated and their price equivalent in terms of money have been determined and that said materials for whatever price they have been assigned were considered as tokens of payment.

Torres vs. CA

Facts: Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture agreement" with Respondent Manuel Torres for the development of a parcel of land into a subdivision. Pursuant to the contract, they executed a Deed of Sale covering the said parcel of land in favor of respondent, who then had it registered in his name. By mortgaging the property, respondent obtained from Equitable Bank a loan of P40,000 which, under the Joint Venture Agreement, was to be used for the development of the subdivision.[4] All three of them also agreed to share the proceeds from the sale of the subdivided lots.

The project did not push through, and the land was subsequently foreclosed by the bank. According to petitioners, the project failed because of respondents lack of funds or means and skills. They add that respondent used the loan not for the development of the subdivision, but in furtherance of his own company, Universal Umbrella Company.

On the other hand, respondent alleged that he used the loan to implement the Agreement. With the said amount, he was able to effect the survey and the subdivision of the lots. He secured the Lapu Lapu City Councils approval of the subdivision project which he advertised in a local newspaper. He also caused the construction of roads, curbs and gutters. Likewise, he entered

into a contract with an engineering firm for the building of sixty low-cost housing units and actually even set up a model house on one of the subdivision lots. He did all of these for a total expense of P85,000.

Respondent claimed that the subdivision project failed, however, because petitioners and their relatives had separately caused the annotations of adverse claims on the title to the land, which eventually scared away prospective buyers. Despite his requests, petitioners refused to cause the clearing of the claims, thereby forcing him to give up on the project.

Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, who were however acquitted. Thereafter, they filed the present civil case which, upon respondent's motion, was later dismissed by the trial court in an Order dated September 6, 1982. On appeal, however, the appellate court remanded the case for further proceedings. Thereafter, the RTC issued its assailed Decision, which, as earlier stated, was affirmed by the CA.

Issue: Whether or not there is a partnership formed

Held: Yes.

ART. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

It is undisputed that petitioners are educated and are thus presumed to have understood the terms of the contract they voluntarily signed. If it was not in consonance with their expectations, they should have objected to it and insisted on the provisions they wanted.

Courts are not authorized to extricate parties from the necessary consequences of their acts, and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their obligations. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms.