limketkai

Limketkai Sons Milling, Inc. vs. CA, 250 SCRA 523


































v Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 118114 December 7, 1995

TEODORO ACAP, petitioner, vs.COURT OF APPEALS and EDY DE LOS REYES, respondents.

PADILLA, J.:

This is a petition for review on certiorari of the decision 1 of the Court of Appeals, 2nd Division, in CA-G.R. No. 36177, which affirmed the decision 2 of the Regional Trial Court of Himamaylan, Negros Occidental holding that private respondent Edy de los Reyes had acquired ownership of Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental based on a document entitled "Declaration of Heirship and Waiver of Rights", and ordering the dispossession of petitioner as leasehold tenant of the land for failure to pay rentals.

The facts of the case are as follows:

The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT No. R-12179. The lot has an area of 13,720 sq. meters. The title was issued and is registered in the name of spouses Santiago Vasquez and Lorenza Oruma. After both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a duly notarized document entitled "Declaration of Heirship and Deed of Absolute Sale" in favor of Cosme Pido.

The evidence before the court a quo established that since 1960, petitioner Teodoro Acap had been the tenant of a portion of the said land, covering an area of nine thousand five hundred (9,500) meters. When ownership was transferred in 1975 by Felixberto to Cosme Pido, Acap continued to be the registered tenant thereof and religiously paid his leasehold rentals to Pido and thereafter, upon Pido's death, to his widow Laurenciana.

The controversy began when Pido died intestate and on 27 November 1981, his surviving heirs executed a notarized document denominated as "Declaration of Heirship and Waiver of Rights of Lot No. 1130 Hinigaran Cadastre," wherein they declared; to quote its pertinent portions, that:

. . . Cosme Pido died in the Municipality of Hinigaran, Negros Occidental, he died intestate and without any known debts and obligations which the said parcel of land is (sic) held liable.

That Cosme Pido was survived by his/her legitimate heirs, namely: LAURENCIANA PIDO, wife, ELY, ERVIN, ELMER, and ELECHOR all surnamed PIDO; children;

That invoking the provision of Section 1, Rule 74 of the Rules of Court, the above-mentioned heirs do hereby declare unto [sic] ourselves the only heirs of the late Cosme Pido and that we hereby adjudicate unto ourselves the above-mentioned parcel of land in equal shares.

Now, therefore, We LAURENCIANA 3, ELY, ELMER, ERVIN and ELECHOR all surnamed PIDO, do hereby waive, quitclaim all our rights, interests and participation over the said parcel of land in favor of EDY DE LOS REYES, of legal age, (f)ilipino, married to VIRGINIA DE LOS REYES, and resident of Hinigaran, Negros Occidental, Philippines. . . . 4 (Emphasis supplied)

The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes did not sign said document.

It will be noted that at the time of Cosme Pido's death, title to the property continued to be registered in the name of the Vasquez spouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor, private respondent Edy de los Reyes filed the same with the Registry of Deeds as part of a notice of an adverse claim against the original certificate of title.

Thereafter, private respondent sought for petitioner (Acap) to personally inform him that he (Edy) had become the new owner of the land and that the lease rentals thereon should be paid to him. Private respondent further alleged that he and petitioner entered into an oral lease agreement wherein petitioner agreed to pay ten (10) cavans of palay per annum as lease rental. In 1982, petitioner allegedly complied with said obligation. In 1983, however, petitioner refused to pay any further lease rentals on the land, prompting private respondent to seek the assistance of the then Ministry of Agrarian Reform (MAR) in Hinigaran, Negros Occidental. The MAR invited petitioner to a conference scheduled on 13 October 1983. Petitioner did not attend the conference but sent his wife instead to the conference. During the meeting, an officer of the Ministry informed Acap's wife about private respondent's ownership of the said land but

she stated that she and her husband (Teodoro) did not recognize private respondent's claim of ownership over the land.

On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for recovery of possession and damages against petitioner, alleging in the main that as his leasehold tenant, petitioner refused and failed to pay the agreed annual rental of ten (10) cavans of palay despite repeated demands.

During the trial before the court a quo, petitioner reiterated his refusal to recognize private respondent's ownership over the subject land. He averred that he continues to recognize Cosme Pido as the owner of the said land, and having been a registered tenant therein since 1960, he never reneged on his rental obligations. When Pido died, he continued to pay rentals to Pido's widow. When the latter left for abroad, she instructed him to stay in the landholding and to pay the accumulated rentals upon her demand or return from abroad.

Petitioner further claimed before the trial court that he had no knowledge about any transfer or sale of the lot to private respondent in 1981 and even the following year after Laurenciana's departure for abroad. He denied having entered into a verbal lease tenancy contract with private respondent and that assuming that the said lot was indeed sold to private respondent without his knowledge, R.A. 3844, as amended, grants him the right to redeem the same at a reasonable price. Petitioner also bewailed private respondent's ejectment action as a violation of his right to security of tenure under P.D. 27.

On 20 August 1991, the lower court rendered a decision in favor of private respondent, the dispositive part of which reads:

WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff, Edy de los Reyes, and against the defendant, Teodoro Acap, ordering the following, to wit:

1. Declaring forfeiture of defendant's preferred right to issuance of a Certificate of Land Transfer under Presidential Decree No. 27 and his farmholdings;

2. Ordering the defendant Teodoro Acap to deliver possession of said farm to plaintiff, and;

3. Ordering the defendant to pay P5,000.00 as attorney's fees, the sum of P1,000.00 as expenses of litigation and the amount of P10,000.00 as actual damages. 5

In arriving at the above-mentioned judgment, the trial court stated that the evidence had established that the subject land was "sold" by the heirs of Cosme Pido to private respondent. This is clear from the following disquisitions contained in the trial court's six (6) page decision:

There is no doubt that defendant is a registered tenant of Cosme Pido. However, when the latter died their tenancy relations changed since ownership of said land was passed on to his heirs who, by executing a Deed of Sale, which defendant admitted in his affidavit, likewise passed on their ownership of Lot 1130 to herein plaintiff (private respondent). As owner hereof, plaintiff has the right to demand payment of rental and the tenant is obligated to pay rentals due from the time demand is made. . . . 6

xxx xxx xxx

Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff does not of itself extinguish the relationship. There was only a change of the personality of the lessor in the person of herein plaintiff Edy de los Reyes who being the purchaser or transferee,

assumes the rights and obligations of the former landowner to the tenant Teodoro Acap, herein defendant. 7

Aggrieved, petitioner appealed to the Court of Appeals, imputing error to the lower court when it ruled that private respondent acquired ownership of Lot No. 1130 and that he, as tenant, should pay rentals to private respondent and that failing to pay the same from 1983 to 1987, his right to a certificate of land transfer under P.D. 27 was deemed forfeited.

The Court of Appeals brushed aside petitioner's argument that the Declaration of Heirship and Waiver of Rights (Exhibit "D"), the document relied upon by private respondent to prove his ownership to the lot, was excluded by the lower court in its order dated 27 August 1990. The order indeed noted that the document was not identified by Cosme Pido's heirs and was not registered with the Registry of Deeds of Negros Occidental. According to respondent court, however, since the Declaration of Heirship and Waiver of Rights appears to have been duly notarized, no further proof of its due execution was necessary. Like the trial court, respondent court was also convinced that the said document stands as prima facie proof of appellee's (private respondent's) ownership of the land in dispute.

With respect to its non-registration, respondent court noted that petitioner had actual knowledge of the subject sale of the land in dispute to private respondent because as early as 1983, he (petitioner) already knew of private respondent's claim over the said land but which he thereafter denied, and that in 1982, he (petitioner) actually paid rent to private respondent. Otherwise stated, respondent court considered this fact of rental payment in 1982 as estoppel on petitioner's part to thereafter refute private respondent's claim of ownership over the said land. Under these circumstances, respondent court ruled that indeed there was deliberate refusal by petitioner to pay rent for a continued period of five years that merited forfeiture of his otherwise preferred right to the issuance of a certificate of land transfer.

In the present petition, petitioner impugns the decision of the Court of Appeals as not in accord with the law and evidence when it rules that private respondent acquired ownership of Lot No. 1130 through the aforementioned Declaration of Heirship and Waiver of Rights.

Hence, the issues to be resolved presently are the following:

1. WHETHER OR NOT THE SUBJECT DECLARATION OF HEIRSHIP AND WAIVER OF RIGHTS IS A RECOGNIZED MODE OF ACQUIRING OWNERSHIP BY PRIVATE RESPONDENT OVER THE LOT IN QUESTION.

2. WHETHER OR NOT THE SAID DOCUMENT CAN BE CONSIDERED A DEED OF SALE IN FAVOR OF PRIVATE RESPONDENT OF THE LOT IN QUESTION.

Petitioner argues that the Regional Trial Court, in its order dated 7 August 1990, explicitly excluded the document marked as Exhibit "D" (Declaration of Heirship, etc.) as private respondent's evidence because it was not registered with the Registry of Deeds and was not identified by anyone of the heirs of Cosme Pido. The Court of Appeals, however, held the same to be admissible, it being a notarized document, hence, a prima facie proof of private respondents' ownership of the lot to which it refers.

Petitioner points out that the Declaration of Heirship and Waiver of Rights is not one of the recognized modes of acquiring ownership under Article 712 of the Civil Code. Neither can the same be considered a deed of sale so as to transfer ownership of the land to private respondent because no consideration is stated in the contract (assuming it is a contract or deed of sale).

Private respondent defends the decision of respondent Court of Appeals as in accord with the evidence and the law. He posits that while it may indeed be true that the trial court excluded his Exhibit "D" which is the Declaration of Heirship and Waiver of Rights as part of his evidence, the trial court declared him nonetheless owner of the subject lot based on other evidence adduced during the trial, namely, the notice

of adverse claim (Exhibit "E") duly registered by him with the Registry of Deeds, which contains the questioned Declaration of Heirship and Waiver of Rights as an integral part thereof.

We find the petition impressed with merit.

In the first place, an asserted right or claim to ownership or a real right over a thing arising from a juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That right or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership and real rights are acquired only pursuant to a legal mode or process. While title is the juridical justification, mode is the actual process of acquisition or transfer of ownership over a thing in question. 8

Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two (2) classes, namely, the original mode (i.e., through occupation, acquisitive prescription, law or intellectual creation) and the derivative mode (i.e., through succession mortis causa or tradition as a result of certain contracts, such as sale, barter, donation, assignment or mutuum).

In the case at bench, the trial court was obviously confused as to the nature and effect of the Declaration of Heirship and Waiver of Rights, equating the same with a contract (deed) of sale. They are not the same.

In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay a price certain in money or its equivalent. 9

Upon the other hand, a declaration of heirship and waiver of rights operates as a public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the decedent among themselves as they see fit. It is in effect an extrajudicial settlement between the heirs under Rule 74 of the Rules of Court. 10

Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary rights. The first presumes the existence of a contract or deed of sale between the parties. 11 The second is, technically speaking, a mode of extinction of ownership where there is an abdication or intentional relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of other persons who are co-heirs in the succession. 12 Private respondent, being then a stranger to the succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole basis of the waiver document which neither recites the elements of either a sale, 13 or a donation, 14 or any other derivative mode of acquiring ownership.

Quite surprisingly, both the trial court and public respondent Court of Appeals concluded that a "sale" transpired between Cosme Pido's heirs and private respondent and that petitioner acquired actual knowledge of said sale when he was summoned by the Ministry of Agrarian Reform to discuss private respondent's claim over the lot in question. This conclusion has no basis both in fact and in law.

On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights" was excluded by the trial court in its order dated 27 August 1990 because the document was neither registered with the Registry of Deeds nor identified by the heirs of Cosme Pido. There is no showing that private respondent had the same document attached to or made part of the record. What the trial court admitted was Annex "E", a notice of adverse claim filed with the Registry of Deeds which contained the Declaration of Heirship with Waiver of rights and was annotated at the back of the Original Certificate of Title to the land in question.

A notice of adverse claim, by its nature, does not however prove private respondent's ownership over the tenanted lot. "A notice of adverse claim is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court at some future date, and is no better than a notice of lis pendens which is a notice of a case already pending in court." 15

It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence whatsoever that a deed of sale was executed between Cosme Pido's heirs and private respondent transferring the rights of Pido's heirs to the land in favor of private respondent. Private respondent's right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT to the land and title the same in private respondent's name.

Consequently, while the transaction between Pido's heirs and private respondent may be binding on both parties, the right of petitioner as a registered tenant to the land cannot be perfunctorily forfeited on a mere allegation of private respondent's ownership without the corresponding proof thereof.

Petitioner had been a registered tenant in the subject land since 1960 and religiously paid lease rentals thereon. In his mind, he continued to be the registered tenant of Cosme Pido and his family (after Pido's death), even if in 1982, private respondent allegedly informed petitioner that he had become the new owner of the land.

Under the circumstances, petitioner may have, in good faith, assumed such statement of private respondent to be true and may have in fact delivered 10 cavans of palay as annual rental for 1982 to private respondent. But in 1983, it is clear that petitioner had misgivings over private respondent's claim of ownership over the said land because in the October 1983 MAR conference, his wife Laurenciana categorically denied all of private respondent's allegations. In fact, petitioner even secured a certificate from the MAR dated 9 May 1988 to the effect that he continued to be the registered tenant of Cosme Pido and not of private respondent. The reason is that private respondent never registered the Declaration of Heirship with Waiver of Rights with the Registry of Deeds or with the MAR. Instead, he (private respondent) sought to do indirectly what could not be done directly, i.e., file a notice of adverse claim on the said lot to establish ownership thereover.

It stands to reason, therefore, to hold that there was no unjustified or deliberate refusal by petitioner to pay the lease rentals or amortizations to the landowner/agricultural lessor which, in this case, private respondent failed to establish in his favor by clear and convincing evidence. 16

Consequently, the sanction of forfeiture of his preferred right to be issued a Certificate of Land Transfer under P.D. 27 and to the possession of his farmholdings should not be applied against petitioners, since private respondent has not established a cause of action for recovery of possession against petitioner.

WHEREFORE, premises considered, the Court hereby GRANTS the petition and the decision of the Court of Appeals dated 1 May 1994 which affirmed the decision of the RTC of Himamaylan, Negros Occidental dated 20 August 1991 is hereby SET ASIDE. The private respondent's complaint for recovery of possession and damages against petitioner Acap is hereby DISMISSED for failure to properly state a cause of action, without prejudice to private respondent taking the proper legal steps to establish the legal mode by which he claims to have acquired ownership of the land in question.

SO ORDERED.

Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

[Syllabus]

THIRD DIVISION

[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

D E C I S I O N

MELO, J.:

The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00.

The undisputed facts of the case were summarized by respondent court in this wise:

On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as Coronels) executed a document entitled “Receipt of Down Payment” (Exh. “A”) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced hereunder:

RECEIPT OF DOWN PAYMENT

P1,240,000.00 - Total amount

50,000.00 - Down payment

------------------------------------------

P1,190,000.00 - Balance

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the down payment above-stated.

On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00.

Clearly, the conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the document aforestated;

2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment;

3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. “B”, Exh. “2”).

On February 6, 1985, the property originally registered in the name of the Coronel’s father was transferred in their names under TCT No. 327043 (Exh. “D”; Exh “4”)

On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. “F-3”; Exh. “6-C”)

For this reason, Coronels canceled and rescinded the contract (Exh. “A”) with Ramona by depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz.

On February 22, 1985, Concepcion, et. al., filed a complaint for a specific performance against the Coronels and caused the annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. “E”; Exh. “5”).

On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds of Quezon City (Exh. “F”; Exh. “6”).

On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina (Exh. “G”; Exh. “7”).

On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. “H”; Exh. “8”).

(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit the case for decision solely on the basis of documentary exhibits. Thus,

plaintiffs therein (now private respondents) proffered their documentary evidence accordingly marked as Exhibits “A” through “J”, inclusive of their corresponding submarkings. Adopting these same exhibits as their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits “1” through “10”, likewise inclusive of their corresponding submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within which to simultaneously submit their respective memoranda, and an additional 15 days within which to submit their corresponding comment or reply thereto, after which, the case would be deemed submitted for resolution.

On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby canceled and declared to be without force and effect. Defendants and intervenor and all other persons claiming under them are hereby ordered to vacate the subject property and deliver possession thereof to plaintiffs. Plaintiffs’ claim for damages and attorney’s fees, as well as the counterclaims of defendants and intervenors are hereby dismissed.

No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)

A motion for reconsideration was filed by petitioners before the new presiding judge of the Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly:

The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding Judge should be denied for the following reasons: (1) The instant case became submitted for decision as of April 14, 1988 when the parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they were allowed to file memoranda at some future date did not change the fact that the hearing of the case was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2) When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the

rendition of the decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped from questioning said authority of Judge Roura after they received the decision in question which happens to be adverse to them; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he was in all respects the Presiding Judge with full authority to act on any pending incident submitted before this Court during his incumbency. When he returned to his Official Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve cases submitted to him for decision or resolution because he continued as Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to decide the case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court).

Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence presented by the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be disturbed.

IN VIEW OF THE FOREGOING, the “Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by the Incumbent Presiding Judge” dated March 20, 1989 is hereby DENIED.

SO ORDERED.

Quezon City, Philippines, July 12, 1989.

(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial court.

Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents’ Reply Memorandum, was filed on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on August 28, 1996, due to the voluntary inhibition of the Justice to whom the case was last assigned.

While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial court’s decision, we definitely find the instant petition bereft of merit.

The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the precise determination of the legal significance of the document entitled “Receipt of Down Payment” which was offered in evidence by both parties. There is no dispute

as to the fact that the said document embodied the binding contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows:

Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

While, it is the position of private respondents that the “Receipt of Down Payment” embodied a perfected contract of sale, which perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract of absolute sale.

Plainly, such variance in the contending parties’ contention is brought about by the way each interprets the terms and/or conditions set forth in said private instrument. Withal, based on whatever relevant and admissible evidence may be available on record, this Court, as were the courts below, is now called upon to adjudge what the real intent of the parties was at the time the said document was executed.

The Civil Code defines a contract of sale, thus:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective

seller without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule:

Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller’s obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor of the promise is supported by a consideration distinct from the price.

A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer

in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer.

In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller’s title thereto. In fact, if there had been previous delivery of the subject property, the seller’s ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller’s title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer’s title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale.

With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into by petitioners and private respondents.

It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the said “Receipt of Down Payment” that they --

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.

without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed is that they sold their property.

When the “Receipt of Down payment” is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioner’s father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price. Therefore, petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names from that of their father, after which, they promised to present said title, now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price.

The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there

would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then.

Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook to have the certificate of title change to their names and immediately thereafter, to execute the written deed of absolute sale.

Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms and conditions, promised to sell the property to the latter. What may be perceived from the respective undertakings of the parties to the contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely willing to transfer ownership of the subject house and lot to the buyer if the documents were then in order. It just so happened, however, that the transfer certificate of title was then still in the name of their father. It was more expedient to first effect the change in the certificate of title so as to bear their names. That is why they undertook to cause the issuance of a new transfer of the certificate of title in their names upon receipt of the down payment in the amount of P50,000.00. As soon as the new certificate of title is issued in their names, petitioners were committed to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to pay the remainder of the purchase price arise.

There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller against a buyer who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment therefor, in the contract entered into in the case at bar, the sellers were the ones who were unable to enter into a contract of absolute sale by reason of the fact that the certificate of title to the property was still in the name of their father. It was the sellers in this case who, as it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale.

What is clearly established by the plain language of the subject document is that when the said “Receipt of Down Payment” was prepared and signed by petitioners Romulo A. Coronel, et. al., the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners’ father, Constancio P. Coronel, to their names.

The Court significantly notes that this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. “D”; Exh. “4”). Thus, on said date, the conditional contract of sale between petitioners and private respondent Ramona P. Alcaraz became obligatory, the only act required for the consummation thereof being the delivery of the property by means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally committed themselves to do as evidenced by the “Receipt of Down Payment.”

Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus,

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.

Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioner’s names was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent Ramona P. Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00.

It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted that:

3. The petitioners-sellers Coronel bound themselves “to effect the transfer in our names from our deceased father Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment above-stated". The sale was still subject to this suspensive condition. (Emphasis supplied.)

(Rollo, p. 16)

Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only, they contend, continuing in the same paragraph, that:

. . . Had petitioners-sellers not complied with this condition of first transferring the title to the property under their names, there could be no perfected contract of sale. (Emphasis supplied.)

(Ibid.)

not aware that they have set their own trap for themselves, for Article 1186 of the Civil Code expressly provides that:

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical arguments is the fact that the condition herein referred to was actually and indisputably fulfilled on February 6, 1985, when a new title was issued in the names of petitioners as evidenced by TCT No. 327403 (Exh. “D”; Exh. “4”).

The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as “Receipt of Down Payment” (Exh. “A”; Exh. “1”), the parties entered into a contract of sale subject to the suspensive condition that the sellers shall effect the issuance of new certificate title from that of their father’s name to their names and that, on February 6, 1985, this condition was fulfilled (Exh. “D”; Exh. “4”).

We, therefore, hold that, in accordance with Article 1187 which pertinently provides -

Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation . . .

In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with.

the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that point in time, reciprocal obligations of both seller and buyer arose.

Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet the absolute owners of the inherited property.

We cannot sustain this argument.

Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law.

Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew his last breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).

Be it also noted that petitioners’ claim that succession may not be declared unless the creditors have been paid is rendered moot by the fact that they were able to effect the transfer of the title to the property from the decedent’s name to their names on February 6, 1985.

Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at that time and they cannot be allowed to now take a posture contrary to that which they took when they entered into the agreement with private respondent Ramona P. Alcaraz. The Civil Code expressly states that:

Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot claim now that they were not yet the absolute owners thereof at that time.

Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P. Alcaraz, the latter breach her reciprocal obligation when she rendered impossible the consummation thereof by going to the United States of America, without leaving her address, telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were correct in unilaterally rescinding the contract of sale.

We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant case. We note that these supposed grounds for petitioner’s rescission, are mere allegations found only in their responsive pleadings, which by express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners’ allegations. We have stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).

Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we cannot justify petitioners-sellers’ act of unilaterally and extrajudicially rescinding the contract of sale, there being no express stipulation authorizing the sellers to extrajudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. De Leon, 132 SCRA 722 [1984])

Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramona’s mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal Check (Exh. “B”; Exh. “2”) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned Concepcion’s authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale.

Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price is concerned. Petitioners who are precluded from setting up the defense of the physical absence of Ramona P. Alcaraz as above-explained offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramona’s corresponding obligation to pay the balance of the purchase

price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been in default.

Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default, to wit:

Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

x x x

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. (Emphasis supplied.)

There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents.

With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where Article 1544 of the Civil Code will apply, to wit:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith.

The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply.

The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer.

In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the Court, Justice Jose C. Vitug, explains:

The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).

Petitioners point out that the notice of lis pendens in the case at bar was annotated on the title of the subject property only on February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag was supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the property under a clean title, she was unaware of any adverse claim or previous sale, for which reason she is a buyer in good faith.

We are not persuaded by such argument.

In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold.

As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate of title in the names of petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag knew that the same property had already been previously sold to private respondents, or, at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Petitioner Mabanag cannot close her eyes to the defect in petitioners’ title to the property at the time of the registration of the property.

This Court had occasions to rule that:

If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a previous sale, the registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)

Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below.

Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and daughter. Thus, We will not touch this issue and no longer disturb the lower courts’ ruling on this point.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED.

SO ORDERED.

Narvasa, C.J. (Chairman), Davide, Jr., and Francisco, JJ., concur.

Panganiban, J., no part.

THIRD DIVISION

[G.R. No. 112330. August 17, 1999]

SPS. HENRY CO AND ELIZABETH CO AND MELODY CO, petitioners, vs. COURT OF APPEALS AND MRS. ADORACION CUSTODIO, represented by her Attorney-in-fact, TRINIDAD KALAGAYAN, respondents.

D E C I S I O N

GONZAGA-REYES, J.:

Before us is a Petition for Review on Certiorari of the decision of the Court of Appealsi[1] in CA-G.R. CV No. 32972 entitled MRS. ADORACION CUSTODIO, represented by her Attorney-in-fact, TRINIDAD KALAGAYAN vs. SPS. HENRY CO AND ELIZABETH CO AND MELODY CO.

The following facts as found by the lower court and adopted by the Court of Appeals are undisputed:

“xxx sometime on October 9, 1984, plaintiff entered into a verbal contract with defendant for her purchase of the latter’s house and lot located at 316 Beata St., New Alabang Village, Muntinlupa, Metro Manila, for and in consideration of the sum of $100,000.00. One week thereafter, and shortly before she left for the United States, plaintiff paid to the defendants the amounts of $1,000.00 and P40,000.00 as earnest money, in order that the same may be reserved for her purchase, said earnest money to be deducted from the total purchase price. The purchase price of $100,000.00 is payable in two payments $40,000.00 on December 4, 1984 and the balance of $60,000.00 on January 5, 1985. On January 25, 1985, although the period of payment had already expired, plaintiff paid to the defendant Melody Co in the United States, the sum of $30,000.00, as partial payment of the purchase price. Defendant’s counsel, Atty. Leopoldo

Cotaco, wrote a letter to the plaintiff dated March 15, 1985, demanding that she pay the balance of $70,000.00 and not receiving any response thereto, said lawyer wrote another letter to plaintiff dated August 8, 1986, informing her that she has lost her ‘option to purchase’ the property subject of this case and offered to sell her another property.

Under date of September 5 (1986), Atty. Estrella O. Laysa, counsel for plaintiff, wrote a letter to Atty. Leopoldo Cotaco informing him that plaintiff ‘is now ready to pay the remaining balance to complete the sum of $100,000.00, the agreed amount as selling price’ and on October 24, 1986, plaintiff filed the instant complaint.”ii[2]

The Regional Trial Court (RTC) ruled in favor of private respondent Adoracion Custodio (CUSTODIO) and ordered the petitioner spouses Henry and Elizabeth Co (COS) to refund the amount of $30,000.00 in CUSTODIO’s favor. The dispositive portion of the RTC’s decision reads:

“WHEREFORE, the Court hereby orders:

1. that the earnest money of $1,000.00 and P40,000.00 is hereby forfeited in favor of the defendants, and

2. the defendants are ordered to remit to plaintiff the peso equivalent of THIRTY THOUSAND ($30,000.00) U.S. DOLLARS, at the prevailing rate of exchange at the time of payment.

Costs against plaintiff.

SO ORDERED.”iii[3]

Not satisfied with the decision, the COS appealed to the Court of Appeals which affirmed the decision of the RTC. Hence, this appeal where the COS assign as sole error the following:

PETITIONER RESPECTFULLY SUBMITS THAT RESPONDENT COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THE SUPREME COURT.iv[4]

The COS argue that the Court of Appeals erred in ruling that CUSTODIO could still exercise her option to pay the balance of the purchase price of the property. The COS claim that CUSTODIO was in default since she failed to pay after a demand was made by the petitioners in their March 15, 1985 letterv[5]. The COS claim that they never granted CUSTODIO an extension of time to exercise the “option” contrary to the finding of the Court of Appeals that a thirty (30) day period of time was granted to her in their August 8, 1986 lettervi[6]. Said period refers to another option which the COS gave CUSTODIO to buy another piece of property and not the Beata property as they could no longer hold the Beata property for CUSTODIO. In fact, said letter specifically states that CUSTODIO lost her option to purchase the subject property; that the COS were willing to apply the payments already made to the payment of the second property; and that if CUSTODIO failed to purchase the second property within thirty (30) days, she would forfeit her

previous payments. Since CUSTODIO manifested her readiness to exercise her option to pay the balance of the purchase price of the Beata property and not the second property, her manifestation was no longer of any legal effect as this option was no longer available to her. This being the case, the Court of Appeals should have ruled that the COS properly rescinded their contract with CUSTODIO over the Beata property pursuant to Article 1191vii[7] of the Civil Code and should have further ordered her to pay them damages consequent to the rescission. Moreover, even assuming that they waived the deadline by accepting the payment of $30,000.00 on January 26, 1986, CUSTODIO still failed to pay the remaining balance of $70,000.00. Her offer to pay the remaining balance came too late as the option given to her had already been lost. In addition, the Court of Appeals also erred in ordering the COS to return the $30,000.00 dollars since the August 8, 1986 letter warned CUSTODIO that if the she did not exercise her option within thirty days, she would lose her option and other rights and any payments made shall be forfeited. Finally, the COS claim that the Court of Appeals erred in not granting them attorney’s fees when the law allows recovery therefor considering that by the defendant’s act or omission, the plaintiff is compelled to litigate with third persons or to incur expenses to protect his rights.viii

[8]

The core issue is whether or not the Court of Appeals erred in ordering the COS to return the $30,000.00 paid by CUSTODIO pursuant to the “option” granted to her over the Beata property?

We rule in the negative.

The COS’ main argument is that CUSTODIO lost her “option” over the Beata property and her failure to exercise said option resulted in the forfeiture of any amounts paid by her pursuant to the August letter.

An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. It is a separate and distinct contract from that which the parties may enter into upon the consummation of the option. It must be supported by consideration.ix[9] An option contract conforms with the second paragraph of Article 1479 of the Civil Codex[10] which reads:

“Article 1479. xxx

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.”

However, the March 15, 1985 letterxi[11] sent by the COS through their lawyer to the CUSTODIO reveals that the parties entered into a perfected contract of sale and not an option contract.

A contract of sale is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment the parties may reciprocally demand performance subject to the provisions of the law governing the form of contracts.xii[12] The elements of a valid contract of sale under Article 1458 of the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent.xiii[13] As evidenced by the March 15, 1985 letter, all

three elements of a contract of sale are present in the transaction between the petitioners and respondent. CUSTODIO’s offer to purchase the Beata property, subject of the sale at a price of $100,000.00 was accepted by the COS. Even the manner of payment of the price was set forth in the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00 was already received by the COS. Under Article 1482xiv[14] of the Civil Code, earnest money given in a sale transaction is considered part of the purchase price and proof of the perfection of the sale.xv[15]

Despite the fact that CUSTODIO’s failure to pay the amounts of US$ 40,000.00 and US$ 60,000.00 on or before December 4, 1984 and January 5, 1985 respectively was a breach of her obligation under Article 1191xvi[16] of the Civil Code, the COS did not sue for either specific performance or rescission of the contract. The COS were of the mistaken belief that CUSTODIO had lost her “option” over the Beata property when she failed to pay the remaining balance of $70,000.00 pursuant to their August 8, 1986 letter. In the absence of an express stipulation authorizing the sellers to extrajudicially rescind the contract of sale, the COS cannot unilaterally and extrajudicially rescind the contract of sale.xvii[17] Accordingly, CUSTODIO acted well within her rights when she attempted to pay the remaining balance of $70,000.00 to complete the sum owed of $100,000.00 as the contract was still subsisting at that time. When the COS refused to accept said payment and to deliver the Beata property, CUSTODIO immediately sued for the rescission of the contract of sale and prayed for the return of the $30,000.00 she had initially paid.

Under Article 1385xviii[18] of the Civil Code, rescission creates the obligation to return the things which were the object of the contract but such rescission can only be carried out when the one who demands rescission can return whatever he may be obliged to restore. This principle has been applied to rescission of reciprocal obligations under Article 1191 of the Civil Code.xix[19] The Court of Appeals therefore did not err in ordering the COS to return the amount of $30,000.00 to CUSTODIO after ordering the rescission of the contract of sale over the Beata property. We quote with approval the Court of Appeals’ decision to wit:

“Since it has been shown that the appellee who was not in default, was willing to perform part of the contract while the appellants were not, rescission of the contract is in order. 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, (Article 1191, same Code). Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest x x x x (Article 1385, same Code).

In the case at bar, the property involved has not been delivered to the appellee. She has therefore nothing to return to the appellants. The price received by the appellants has to be returned to the appellee as aptly ruled by the lower court, for such is a consequence of rescission, which is to restore the parties in their former situations.

No error was committed by the lower court when it did not award attorney’s fees to the appellants for as has been shown, the appellee’s complaint is not unfounded.”xx[20]

We cannot uphold the forfeiture clause contained in the petitioners’ August 8, 1986 letter. It appears that such condition was unilaterally imposed by the COS and was not agreed to by

CUSTODIO. It cannot therefore be considered as part of the contract of sale as it lacks the consent of CUSTODIO.xxi[21]

Finally, the Court of Appeals did not err in not awarding the COS attorney’s fees. Although attorney’s fees may be awarded if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is soughtxxii[22], we find that CUSTODIO’s act clearly was not unjustified.

WHEREFORE, the instant petition is hereby DENIED, and the appealed decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

G.R. No. , Aguinaldo v. Esteban and Sarmiento, 135 SCRA 645

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

DECISION

April 15, 1985

G.R. No. L-27289JUAN AGUINALDO, Substituted by MARINA and PRIMITIVO AGUINALDO, plaintiffs-appellants,vs.JOSE ESTEBAN and FRANCISCA SARMIENTO, defendants-appellees.

Crisostomo M. Diokno for plaintiff-appellants. Andres Franco for defendants-appellees.

RELOVA, J.:

In Civil Case No. 6977, the Court of First Instance of Rizal declared the contract, entitled: "Sanglaan ng Isang Lupa na Patuluyan Ipaaari," valid and binding contract of sale and dismissed the complaint as well as the counterclaim with costs against the plaintiff. From said judgment of the lower court, appeal was taken to this Court, "the same involving, as it does, a question of law." (p. 25, Rollo)

Plaintiff Juan Aguinaldo in his complaint alleged, among others, that on June 23, 1958, defendants, through fraud, deceit and misrepresentations and exercising undue pressure, influence and advantage, procured the thumbmark of Jose Aguinaldo, father of plaintiff, to be affixed on subject contract; that defendants caused the cancellation of Tax Declaration No. 4004, Rizal (1948) in the name of Jose Aguinaldo and the issuance in lieu thereof of Tax Declaration No. 10725-Rizal in the names of defendant spouses; that the document in question on which Jose Aguinaldo affixed his thumbmark is not true and genuine, as the thumbmark appearing thereon is a forgery; that it contains terms and conditions which partake the nature of "pacto comisario" which render same null and void; that it does not fix a period for the payment of the loan nor does it state the duration of the mortgage; that plaintiff is the sole successor-in-interest and legal heir of Jose Aguinaldo who died intestate in October 1960; that defendants having no right to win and possess the property in question are withholding the possession thereof from plaintiff and consequently deprived plaintiff of the fruits of said property; and that by reason of the willfull and malevolent acts of defendants, plaintiff suffered moral and actual damages in the amount of P4,000.00.

In their answer, defendants claim absolute ownership of subject property upon the death of Jose Aguinaldo in October 1960 on the theory that the document in controversy is one of sale and not one of mortgage.

The parties, through their respective counsels, agreed to submit the case for decision solely on whether the contract in question, Annex "A" of the complaint, is one of mortgage or of sale.

When plaintiff Juan Aguinaldo died intestate on August 6, 1965, his heirs, namely: Marina and Primitivo, both surnamed Aguinaldo, petitioned the trial court that they be substituted as party plaintiffs in lieu of their deceased father.

It is the position of plaintiffs-appellants that the document in question, Annex "A" of the complaint, is null and void because it contains stipulations which partake of the nature of "pacto comisario." On the other hand, the defendants contend that the contract is a valid sale and, as such, it passed the title to them.

Hereunder is the contract in question:

SANGLAAN NG ISANG LUPA-CANAVERAL NA PATULOYAN IPAAARI

HAYAG SA SINO MAN MAKAKABASA:

Na, ako JOSE AGUINALDO, Pilipino, balo, may karampatan gulang, tubo at naninirahan sa Bo. Bambang, Tagig, Rizal, Kapuluan Pilipinas, sa pamamagitan nito ay

ISINASAYSAY KO AT PINAGTITIBAY:

1. Na, sarili at tunay kong pagaari dahil sa ipinagkaloob sa akin ng aking amain Martin Concepcion (patay) ang isang parcelang lupa-canaveral, at ang lupang ito ay napagkikilala at nauligiran ng mga pagaaring lupa ng mga kahangganan kagaya ng mga sumusunod:

Isang parcelang lupa-canaveral na nasa pook ng Bo. Bambang, Tagig, Rizal, at siyang lupang nakatala sa Tax Declaration No. 4004-Rizal (1948), sa Tanggapan ng Tasador ng lupa sa lalawigan ng RizaL Pasig, RizaL at valor ameliarado ng P70.00 at napaloob sa mga pagaaring lupa ng mga kahangganan kagaya ng mga sumusunod: Sa Norte, Antonio Silvestre at Pedro Sarmiento; sa Este, Don-lingo Luga; sa Sur, Dionisio Dionisio at Pedro Sarmiento, at sa Weste, Tomas Cruz

2. Na, alang-alang sa halagang LIMANG DAAN AT APATNAPUNG PISO (P540.00), salaping Pilipino na sa kasalukuyan ay ating ginagamit, ay natanggap ko na, sa hindi biglaan kung hindi LIMANGPUNG SENTIMOS (P0.50) lamang araw-araw magbuhat pa nuong Marzo 26, 1955, at ang kabuuang halaga ng halagang nabanggit sa itaas nito, sa oras na ito, ay kusang loob kong tinanggap sa magasawang JOSE ESTEBAN at FRANCISCA SARMIENTO, mga Pilipino, may karampatan gulang, naninirahan at may padalahan sulat sa Bo. Bambang, Tagig, Rizal, ay ISINASANGLA AT PATULOYAN IPAARI KO sa nasabing magasawa ang lupang nobanggit ko sa itaas, sa aming mga kasunduan kagaya ng mga sumusunod:

NA AKO, JOSE AGUINALDO AY PAKAKANIN HABANG NABUBUHAY NG MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, 0 NG KANILANG KAHALILI AT TAGAPAGMANA, AT BILANG KABAYARAN NAMAN SA HALAGANG LIMANG DAAN AT APATNAPUNG PISO (P540.00) AT PAGPAPAKAIN SA AKIN NG MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, ORAS NA AKO AY MAMATAY SILA (JOSE ESTEBAN AT FRANCISCA SARMIENTO) NA ANG LUBOSAN MAGMAMAYARI NG AKING LUPANG ISINANGLANG ITO SA KANILA, SAPAGKAT ANG LAHAT NG AKING KARAPATAN SA LUPA, NGAYON PA AY IPINAGKAKALOOB KO SA KANILA SA ILALIM NG KASUNDUAN.

3. Na, ang lupa-canaveral na isinasangla ko sa pamamagitan ng kasulatan ito na ipaaring patuluyan ay pinamomosiyonan ng mag-asawang Jose Esteban at Francisco Sarmiento, nuong pang Marzo 26, 1955.

4. Na, ang lupang akin binabanggit sa kasulatan ito, ay hindi ko ipinagkakautang sa kanino man tao, na maliban sa magasawang Jose Esteban at Francisca Samiento.

5. Na, ang lupa kong ito na siyang nakatala sa Tax Declaration No. 4004-Rizal (1948), ay hindi nakatala sa bisa ng Batas Blg. 496 o maging sa Hipotecaria Espanola, at napagkasunduan ang kasulatan ito, ay nais ipatala sa bisa ng Batas Blg. 3344, at sinusugan.

SA KATUNAYAN NG LAHAT KONG IPINAHAYAG SA DOKUMENTONG ITO, ay inilagda ko ang aking pangalan at apelyedo dito sa Lunsod ng Maynila, Pilipinas, ngayong ika ______ ng Hunyo 1958, sa harap ng dalawang saksi.

(Thumbmark)JOSE AGUINALDONagsangla

SUMASANGAYON SA MGA ALITUNTUNIN:

(Sgd.) JOSE ESTEBANPinagsanglaan

(Sgd.) FRANCISCA SARMIENTOPinagsanglaan

MGA SAKSI:

(Sgd.) Illegible(Sgd.) Eugenia S. Relon

ACKNOWLEDGMENT

(pp. 7-1 0, Record on Appeal)

There is merit in the appeal.

On the issue as to whether or not the subject contract is one of sale or of mortgage, an inquiry into the surrounding facts would disclose the intention of the parties and thereby determine the truth of plaintiff-appellant's allegation that his father, Jose Aguinaldo, was misled into affixing his thumbmark on the said contract.

Plaintiff-appellant, Juan Aguinaldo, is the son of Jose and it is indeed intriguing why defendants-appellees, who are not related at all to the old man, would give him fifty centavos (P0.50) everyday beginning May 26, 1955. The contract in question was executed in June 1958, or after three (3) years from the time the daffy amount of half-a-peso was given the old man. Thereafter, the defendants-appellees' saw to it that the recipient of the money would execute the contract, entitled: "Sanglaan ng isang lupang-canaveral na Patuluyang Ipaaari."

It is significant to note that herein plaintiff-appellant was not even a witness in the document when his father who is of low intelligence, illiterate and could not even sign his name, affixed his thumbmark in the document in question. It would appear that the execution of the contract was made behind his back and/or without giving notice to him. Stated differently, if the transaction was on the level, why was not plaintiff-appellant asked to sign as a witness to the document. It may be true that the contract was read to the old man but it is doubtful if he understood the meaning of its contents. The contract was so written that anyone could believe he was only giving his property by way of mortgage, not as a sale. For instance, in paragraph 2 thereof, it reads "... ay isinasangla at patuloyan ipaaari ko sa nasabing magasawa ang lupang nabanggit ko sa itaas, ... ." In some Tagalog provinces the word "Sangla" means "Bilihan Mabibiling Muli" or "Pacto de Retro." By this contract, the vendee-a-retro takes possession of the property as owner until the same is repurchased or redeemed. On the other hand, mortgage is understood as "Prenda."

In the case at bar, defendants-appellees took possession of the property on March 26, 1955 when they started giving Jose Aguinaldo the fifty centavos (P0.50) a day. It would appear then that the money which he has been receiving from the Estebans come from his own property. In effect,

there was no consideration for the transfer of the property-be it sale, mortgage or Pacto Comisario.

WHEREFORE, the decision of the trial court, dated August 16, 1966, is REVERSED and the contract "Sanglaan ng Isang Lupa-Canaveral na Patuluyan Ipaaari" is declared null and void, and the deceased plaintiff Juan Aguinaldo is declared as the true and lawful owner of subject property.

Further, defendants-appellees are hereby ordered to transfer and deliver the possession of subject property to the said deceased plaintiff Juan Aguinaldo's heirs, Marina Aguinaldo and Primitive Aguinaldo, who substituted him as plaintiffs in this case and/or their respective heirs and successors; and the Provincial Assessor of Rizal is directed to cancel Tax Declaration No. 10725 (Rizal) in the name of defendants-appellees, Jose Esteban and Francisco Sarmiento, and in lieu thereof issue another in the name of the deceased plaintiff Juan Aguinaldo's heirs, Marina Aguinaldo and Primitivo Aguinaldo.

SO ORDERED.

Teehankee (Chairman), Plana, Gutierrez, Jr., De la Fuente and Alampay, JJ., concur.

FIRST DIVISION

[G.R. No. 83974. August 17, 1998]

SPOUSES NARCISO RONGAVILLA and DOLORES RONGAVILLA, petitioners, vs. COURT OF APPEALS AND MERCEDES DELA CRUZ AND FLORENCIA DELA CRUZ, respondents.

D E C I S I O N

QUISUMBING, J.:

For review on appeal by certiorari are the Decisionxxiii[1] of the Court of Appeals in CA-G.R. CV No. 06543, promulgated on March 11, 1988, and the Resolutionxxiv[2] dated June 28, 1988, denying petitioner's motion for reconsideration.

The appealed decision affirmed in toto the judgment of the Regional Trial Court of Pasay City in Civil Case No. LP-8790-P, which disposed of the controversy as follows:

"WHEREFORE, judgment is hereby rendered declaring void and inexistent the Deed of Absolute Sale (Exh. "I") dated June 3, 1976 allegedly executed by plaintiffs in favor of defendant spouses, which document is now particulary identified as Doc, No. 164; Page no. 34; Book No. I; Series of 1976 in the Notarial Register of Arcadio Espiritu, a Notary Public for and in Province of Cavite. Further, defendant spouses are hereby ordered -

a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property covered by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for the Province of Rizal;

b. . To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and

c. To pay the cost of the suit."xxv[3]

As gleaned from the record, the private parties are closely related. Plaintiffs below, now the private respondents, are the aunts of herein petitioner Dolores Rongavilla. Both spinsters, they earn their livelihood as embroiderers ("magbuburda") and dressmakers; although unschooled in English, they are however able to read and write in Tagalog. Since they are of advanced age (Mercedes de la Cruz, 60 and Florencia de la Cruz, 71), their day to day activities were confined mostly close to home.

The property subject of this controversy between kith and kin is a parcel of land, located in Manuyo, Las Piñas, Rizal (now Metro Manila) owned by private respondents, in the proportion of one-half (1/2) pro-indiviso, with another niece named Juanita Jimenez as co-owner of the other one-half. The whole parcel consisted of 131 square meters and was covered by Original Certificate of Title (OCT) No. 5415 of the Register of Deeds of the Province of Rizal. This OCT, as well as the Transfer Certificate of Title (TCT) No. S-28903 after the parcel was subdivided, was kept in the possession of Juanita Jimenez, who is the elder sister of Dolores Rongavilla.

Although the basic fact situation here might appear all too familiar, the legal controversy itself is notable for having passed through the entire channel of the justice system.xxvi[4] The present petition before us was given due course per Resolutionxxvii[5] dated June 26, 1989; but it was denied on September 20, 1989, for non-compliance with certain requirements;xxviii[6] although, upon motion for reconsideration by the petitioners showing compliance, it was reinstatedxxix[7] on September 2, 1991.

Considering the circumstances in this case, including the relationship of the parties, it behooves this Court now to examine closely and carefully the questioned judgment and the record below. For the Court could not but be mindful of the codal admonition that:

"In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age, or other handicap, the courts must vigilant for his protection." (Art. 24, Civil Code)

From the facts found below, it appears that in the month of May, 1976, the private respondents borrowed the amount of two thousand (P2,000) from the petitioners for the purpose of having their (respondents') dilapidated rooftop repaired.

A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited their aunt's home, bringing with them a document for the signature of their aunts. The

document is admittedly typewritten in English. When asked in Tagalog by one of the aunts, respondent Mercedes de la Cruz, what the paper was all about, Dolores Rongavilla answered also in Tagalog, that it was just a document to show that the private respondents had a debt amounting to P2,000. On account of that representation, private respondent signed the document.

In September 1980, or after a lapse of over four years, petitioner Dolores Rongavilla went to private respondents' place and asked them to vacate the parcel in question, claiming that she and her husband were already the new owners of the land.

Surprised by petitioners' moves, private respondents with the help of friends went to the Office of the Register of Deeds of the Province of Rizal to verify the matter. They discovered that their Certificate of Title had been cancelled and a new one, Transfer Certificate of Title No. S-28903, had been issued in favor of petitioners. They further discovered that said parcel of land had been mortgaged with the Cavite Development Bank by the petitioners. It was only then that the private respondents realized that the document they had previously been asked by their nieces to sign was a deed of sale.

On February 3, 1981, private respondents filed with the Court of First Instance, now Regional Trial Court, of Pasay City the sworn complaintxxx[8] to have the purported deed of sale declared void and inexistent, for being fictitious and simulated, and secured by means of fraud and misrepresentation. They alleged that they did not sell their property in question to the defendants; that they did not receive any consideration on the supposed sale; that their Original Certificate of Title was cancelled and TCT No. S-28903 was issued in favor of defendants (herein petitioners), who thereafter mortgaged said title for a total of P40,000.00 to the damage and prejudice of the plaintiffs. They also claimed moral and exemplary damages, as the court might determine.

Petitioners duly filed their answerxxxi[9] after the denial of their motion to dismiss, alleging that plaintiffs (now the private respondents) sold their parcel of land voluntarily, that there was consent to the deed of sale, that there was sufficient consideration therefor and that the document on the sale was complete in itself and in due form, enabling the Register of deeds to cancel their old TCT and issue a new one. Petitioners further stated that private respondent were fully appraised by the Notary Public, Atty. Arcadio G. Espiritu, on what the document was all about, and having understood the explanation made by said Notary Public, they voluntarily affixed their signatures on said document. Petitioners also asserted as affirmative and/or special defenses that prescription had set in and that private respondents no longer had a cause of action, and that the deed of sale contained all the pre-requisites of a contract, namely consent of the parties, consideration or a price certain, and determinate thing or object; and could no longer be annulled. They also claimed moral and exemplary damages.

The trial court's judgment, quoted at the outset, being adverse to the petitioners, they seasonably appealed. And after their rebuff at the appellate level, they come now to this Court on certiorari under Rule 45 of the Rules of Court, citing the following grounds for their petition:

"(1) It is clear and patent error of the Court of Appeals to declare as 'void and inexistent the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976.

(2) The Court of Appeals committed grave error of law in holding that the action to declare nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe.

(3) The Court of Appeals committed grave abuse of discretion in relying on a purported Certificate of Bureau of Internal Revenue which was not offered in evidence.

(4) The Court of Appeals committed grave error of law and abuse of discretion and grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the petitioners to reconvey the subject parcel of land to the private respondents."xxxii[10]

With a slight variation but consistent with the grounds they have relied on petitioners raise in their Memorandumxxxiii[11] the following:

"ISSUES

1. Did the Court of Appeals commit a clear and patent error in declaring as 'void and inexistent' the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976?

2. Did the Court of Appeals commit grave error in holding that the action to annul the Deed of Sale (Exhibit 1) does not prescribe?

3. Did the Court of Appeals commit grave abuse of discretion in relying on a purported Certificate of the Bureau of Internal Revenue which was not offered in evidence?

4. Did the Court of Appeals commit grave error of law and grave abuse of discretion amounting to lack of jurisdiction or in excess of jurisdiction in ordering petitioners to reconvey the subject parcel of land to the private respondents?"

These issues may be synthesized into one: Did the respondent Court of Appeals commit reversible error when it upheld the trial court's judgment that the disputed Deed of Sale (Exhibit "1") is void and inexistent?

To resolve this pivotal issue, it must be noted that private respondents, as plaintiffs below, based their complaint to declare the disputed deed void and inexistent on two fundamental grounds: (1) lack of consent and (2) want of consideration. Under oath, they strongly denied selling or even just agreeing to sell, their parcel of land to their niece and nephew-in-law. During the hearing, they also denied going to and appearing before the Notary Public who prepared the deed of sale. They also vehemently denied receiving any consideration for the alleged sale. They added that their signatures on the purported deed of sale were obtained by fraud and misrepresentation as petitioners had misled them to believe the document was just a paper to evidence a debt of P2,000 they obtained to buy G.I sheets for the repair of their leaking roof.xxxiv[12] Private

respondents were shocked and got sick when they were told by petitioners that they (respondents) were no longer the owners of the land.xxxv[13]

On these two points of consent and consideration, the trial court found that:

"x x x. A careful analysis and meticulous evaluation of the evidence on record has convinced the Court that the sale of their property to the defendants was farthest from the plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed the document which turned out to be a deed of sale, they were misled by defendant Dolores Rongavilla and her sister Juanita Jimenez into believing that what they signed was a document acknowledging the loan of P2,000.00 extended them by said defendant.

"The Deed of Absolute Sale (Exh. "l") mentions a consideration of P2,000.00. Three years after the alleged sale, the same property was mortgaged by defendant spouses with the Cavite Development Bank for P40,000.00. Clearly enough, the gross inadequacy and unconsciounableness [sic] of the consideration deters the Court from subscribing to defendants' theory that plaintiffs sold the property to them. It is more reasonable to assume that the amount of P2,000.00 mentioned in the deed refers to the loan defendants extended to plaintiffs for the same amount.

"Plaintiffs are now of advanced age. Their only property is the lot in question and the house erected thereon. x x x.

"As there is no indication that plaintiffs were in dire need of money, except for few [sic] amount, except for few [sic] amount necessary for the repair of the roof of their house for which they obtained a loan of P2,000.00 from defendants, there was no reason for plaintiffs to dispose of their property. To do so would be inconsistent with the regular norm of human conduct and the natural course of events. It is not in accord with the natural promptings and instincts of human nature."xxxvi[14]

To these findings by thetrial court, the Court of Appelas in its own decision asserted. In addition, it laid stress on the point of lack of consideration by quoting agreeably the trial judge's holding thereon:

"By more than mere preponderance of evidence of evidence plaintiffs [herein private respondents] have established the merit of their cause of action. The Court is of the opinion and so holds that there was fraud exercised by defendant Dolores Rongavilla and her sister Juanita Jimenez in securing the signature of the Deed of Absolute Sale (Exh. 'l') and there was no consideration whatsoever dor the alleged sale. Undoubtedly, the said deed of sale is simulated, fictitious and void."xxxvii[15]

And before concluding, the appellate court reiterated the proper characterization of the deed of sale in question, not as an annullable contract, but as a void and inexistent contract as found by the trial court:

"x x x. In the case at bar, however, We are dealing not merely with a voidable contract which is tainted with fraud, mistake, undue influence, violence or intimidation which may justify the annulment of a contract, but with a contract that is null and void ab initio.

"In the present case, plaintiffs-appellees declared under oath in their complaint that they signed the alleged document without knowing that said document was a deed of absolute sale. This means that plaintiffs-appelles consent was not only vitiated, but that plaintiffs-appealles have not give their consent at all. And since there was no consent, the deed of absolute sale is, therefore, null and void ab initio. xxx'"xxxviii[16]

Dissatisfied, petitioners now seek from this Court the reversal of the judgment below. They insist in their petition before us that the deed is valid; and that because of the statute of limitations, after the lapse of four years from its execution and registration, it could no longer be annulled.

They assert that "the presumption that contracts are presumed to be valid and to be supported by lawful and good consideration of one dollar is just as effectual and valuable as a larger sum stipulated or paid''.xxxix[17]

They further assert that since private respondents signed the Deed of Sale, as a public instrument, the truth of the recitals therein embodied could only be impugned and disproved, not by mere preponderance of evidence, but by evidence of the "the clearest and most satisfactory character, convincing and overwhelming.'"xl[18] Petitioners further state that since they have been the ones paying real estate taxes on the property, rather than their aunts, the latter by their acts had confirmed the deed executed by them.xli[19]

Despite the petitioners' insistence that the deed of sale is presumed valid and, being registered, could not be disturbed anymore, we however find their arguments and ratiocination less than persuasive. While petitioners would not want the deed of sale to be impugned, they themselves contradict the recitals therein. On the vital point of consideration, they and their witnesses, namely Juanita Jimenez and Atty. Arcadio Espiritu repeatedly declared that the true consideration paid for the sale of the land was not P2,000 as stated in their own Exhibit "l", the Deed of Sale, but in fact P7,800.00.xlii

[20]

Petitioner Dolores Rongavilla herself on cross-examination testified as follows:

"Atty. Rodriguez:

Q. You stated that you were present when this was explained by the notary public, how did the notary public explain this deed of sale in English or Tagalog?

A. It was explained by the notary public that the property is being sold by them to us and that the consideration was only P2,000.00 as appearing in the document in order that we may be able to save for the payment of taxes and documentary stamps.

Q. Did the plaintiffs not say anything when the notary public according to you explained that instead of P7,800.00, P2,000.00 will be stated in the document?

A. They did not say anything because we gave to them the amount of the consideration agreed between us the sum of P7,800.00. (t.s.n., Sept. 2, 1982, pp. 9-10)"xliii[21]

By their own testimony, the petitioners are pictured as not exactly averse to bending the truth, particularly the purported consideration. Sadly, the irony of it is that while they claimed they were regulary paying taxes on the land in question they had no second thoughts stating at the trial and later on appeal that they had resorted to doctoring the price stated in the disputed Deed of Sale, allegedly "to save on taxes". That admission surely opens the door to questions on the integrity, genuineness and veracity of said public instrument.

Thus, the trial court could not be said to err in asserting that "while it is true that public documents are presumed genuine and regular under the provisions of the Rules of Court, this presumption is a rebuttable presumption which may be overcome by clear, strong and convincing evidence."xliv[22]

Moreover, Exhibit "l", the deed itself, shows that contrary to the testimony of the notary public, who appeared as a witness for petitioners, what was originally typed therein was the amount of "Three Thousand Pesos (P3,000)", which later on was substituted by the handwritten amount now of Two Thousand Pesos (P2,000)."xlv[23] There is no need to speculate on the motivation for this alteration. The notary public might have just wanted to further save on taxes, rather than short-change the coffers of the government. But, again, the whole fabric of petitioners' claim to the sanctity of the deed as public instrument had thereby been shredded.

If as petitioners claimed on trial, the price paid was P7,800 while their deed showed only P2,000, after the amount of P3,000 in the deed was altered, one may well inquire: which figure could this Court believe? Could one say that the trial and the appellate courts both erred in holding that no consideration passed from the buyer to the seller?

But petitioners herein would further take to task the appellate court for grave abuse of discretion, as well as for a reversible error, in having relied on the "purported Certification of the Bureau of Internal Revenue which was not offered in evidence". Since this is a petition under Rule 45, however, we will not dwell on the alleged grave abuse of discretion but limit our observation to the alleged error of law. The BIR certificate was the subject of the testimony of witnesses at the hearing where both parties took full advantage of the opportunity for direct and cross-examination as well as rebuttal and sur-rebuttal.xlvi[24] On the witness stand, private respondents as plaintiffs below denied that they had any tax account number nor even residence certificates. They were supported by their witnesses, testifying also under oath. They contradicted the claim of the petitioners' lawyer-notary public, that the disputed deed of sale was complete and in due form and was signed in his presence by the private respondents. They further denied even having gone to the office of the lawyer-notary public in

Bacoor, Cavite, on June 3, 1976, the date of execution shown in the deed, or on any other date. While indeed the BIR certificate was not formally offered in evidence, hence no longer available on review, the record would show that said BIR certificate was presented during the testimony on rebuttal of respondent Mercedes de la Cruz:xlvii[25]

"ATTY. RODRIGUEZ:

According to the defendants, there was the alleged deed of sale executed by you and your sister in favor of the defendants before Notary Public Arcadio G. Espiritu. It appears you have presented Tax Account No. (TAN) 2345-463-6 and your sister Florencia de la Cruz also presented Tax Account No. (TAN) 2345-468-4. Now, do you have any tax account number?

WITNESS:

None, sir.xlviii[26]

x x x

ATTY. RODRIGUEZ:

I am showing to you this certification from the "Kawanihan ng Rentas, Quezon City , dated June 16, 1982, addressed to Miss Florencia de la Cruz and Miss Mercedes de la Cruz, Las Piñas, Metro-Manila, issued by the accounting chief, stating that in reply to you[r] request dated June 14, 1982, requesting certification of your TAN, the records of their office do not show that you were issued any tax account number, what relation has this document which for purposes of identification, we respectfully request that the same be marked Exhibit "C" to the certification issued by the BIR?

WITNESS:

"Yes, this is the one."xlix[27]

Now even if the matter of the official certification by the BIR is set aside, the whole question of the TAN being fake or belonging to somebody else, would boil down to one of credibility between the two camps. Unfortunately for the petitioners herein, the trial court found them and their witnesses far from credible. As remarked by the trial Judge, "the declarations of defendants [herein petitioners] do not inspire rational belief." l[28] It would thus appear that the trial court and the appellate court committed no grave error of law, that would impel us on this point to override their judgment.

Neither can we give assent to the assertion of petitioners that the appealed Court of Appeals (CA) decision here as well as the judgment below is "contrary to settled jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411 (1977) had occasion already to affirm a trial court's judgment declaring null and void the questioned deed of sale where it found:

"The undisputed facts of record support the finding of the trial court that the consent of Ana Concepcion to the deed of sale was obtained through fraudulent misrepresentation of [her nephew] Jaime Rivero that the contract she was signing was one of mortgage."

"The land in question is located in the municipality of Polo, Bulacan, very near Manila. It has an area of 2 hectares, 32 ares and 45 centares. The consideration for the sale of said land is only P5,000.00 which is not only grossly inadequate but shocking to the conscience x x x"li[29]

In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of land in Tayabas, Quezon, the Court confronted a similar question:

"The first question presented is whether the contract of sale executed by Isabel Flores in favor of Joaquin Bas is valid or not.

"By relying upon the documents executed in his favor by Isabel Flores evidencing the contract of sale, Joaquin Bas insists that there has been a perfect and valid contract of sale of real estate between them and that he paid to her the consideration of P20,000 mentioned in said documents. x x x.

"Isabel Flores, on the other hand, maintained that there was neither a real sale nor did she receive a centavo from the defendant, as the price of said sale, x x x." lii[30]

Concluded the Court, after reviewing the series of transactions on record:

"It is then evident that the contract of sale mentioned in the notarial document of May 7, 1915, lacks cause or consideration and is therefore null and void and without any effect whatsoever according to Article 1275 of the Civil Code, for it has been satisfactorily and conclusively proven that the purchaser Joaquin Bas has not paid Isabel Flores for the price of the lands that the latter has sold to him, and after being contented with having for a long time given several promises showing that he had no intention to comply with his contract, he concluded by executing four promissory notes payable to the vendor, which recite the aforementioned purchase price and which were not also paid, there appearing in the record facts from which it can be inferred that fraud has been committed."liii[31]

This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:

"The rule under the Civil Code, again be it the old or the new, is that contracts without a cause or consideration produce no effect whatsoever." liv[32]

The "problem" before the Court "is whether a deed which states a consideration that in fact did not exist, is a contract, without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable." This problem arose, as observed by the Court, because the questioned "deed of sale" between the brothers Magpalo, in 1936, stated that it had for its consideration

Five Hundred (P500.00) Pesos. In fact, however, said "consideration was totally absent."lv[33]

Thus, the Court concluded:

"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the puchaser to vendor." lvi[34]

Turning now to the issue of prescription, it follows that once the disputed deed is found to be inexistent and void, the statute of limitations cannot apply. As the courts below ruled, the cause of action for its declaration as such is imprescriptible. lvii[35] Petitioners-spouses contend, however, that this is contrary to settled jurisprudence because the applicable precedent should be Pangadil v. CFI of Cotabato, 116 SCRA 347 (1982). But the fact situation of that case differs radically from the present controversy. There the Court upheld the dismissal of the action to declare a document known as "Ratificacion de Una Venta" as inexistent and void after finding that it was "not a contract wherein the parties do not intend to be bound at all;" that no circumstance was alleged to sustain the contention "that the execution of the aforesaid document is contrary to public policy;"lviii[36] and that for 27 years the petitioners did not even care to verify the status of the land in question. "Their inaction for such a considerable period of time reflects on the credibility of their pretense that they merely intended to confirm an oral mortgage, instead of sale of the land in question."lix[37]

Here in the present case, there is no doubt about the credibility of plaintiffs below (herein private respondents) in pursuing their cause promptly and forcefully. They never intended to sell, nor acceded to be bound by the sale of their land. Public policy is also well served in defending the rights of the aged to legal protection, including their right to property that is their home, as against fraud, misrepresentation, chicanery and abuse of trust and confidence by those who owed them candor and respect.

More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987), where this Court found that:

"This Civil Code provides in Article 1391 that an action to annul a contract on the ground of vitiated consent must be filed within four years from the discovery of the vice of consent. In the instant case, however, we are dealing not with a voidable contract tainted with fraud, mistake, undue influence, violence or intimidation that can justify its nullification, but with a contract that is null and void ab initio

"Paulina Baranda declared under oath in her complaint that she signed the deeds of sale without knowing what they were, which means that her consent was not merely marred by the above-stated vices, so as to make the contracts voidable, but that she had not given her consent at all. We are also satisfied that there was no valid

consideration either for the alleged transfers, for reasons already discussed. Lack of consent and consideration made the deeds of sale void altogether lx[38]and rendered them subject to attack at any time, conformably to the rule in Article 1410 that an action to declare the inexistence of void contracts 'does not prescribe'." lxi[39]

And if the passage of time could not cure the fatal flaw in the inexistent and void contract, neither could an alleged ratification or confirmation thereof. Further, as in the case before us, reconveyance is proper. "The defect of inexistence of a contract is permanent and incurable, hence it cannot be cured either by ratification or by prescription. x x x There is no need of an action to set aside a void or inexistent contract; in fact such action cannot logically exist. However, an action to declare the non-existence of the contract can be maintained; and in the same action, the plaintiff may recover what he has given by virtue of the contract."lxii[40]

Given the circumstances of the case and there being no reversible error in the challenged decision, we are in accord with the judgment below and find the petitioners' appeal without merit. For as well said in the Court of Appeals' Decision and Resolution under review, "We cannot contemplate of the rather absurd situation, which defendants-appellants would ineluctably lead [u]s to, where plaintiffs-appellees would sell their only house, in which they have lived for so many years, in order to secure the measly sum of P2,000.00 to repair the roof of their only house, which would all be lost to them anyway upon the consummation of the sale. They would then become homeless, and the repaired roof would be of no use to them." lxiii[41] Experience which is the life of the law -- as well as logic and common sense -- militates against the petitioners' cause.

WHEREFORE, the instant petition is hereby DENIED. The Decision and the Resolution of the Court of Appeals in CA-G.R. CV No. 06543 are hereby AFFIRMED.

Cost against petitioners.

SO ORDERED.

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

SPECIAL FIRST DIVISION

[G.R. No. 122544. January 28, 2003]

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents.

[G.R. No. 124741. January 28, 2003]

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION and OVERLAND EXPRESS LINES, INC., respondents.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

On January 28, 1999, this Court rendered judgment in these consolidated cases as follows:

WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision dated March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV Nos. 25153-54, as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CA-G.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.

Let the records of this case be remanded to the trial court for immediate execution of the judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now Metropolitan Trial Court) of Quezon City, Branch III as affirmed in the decision dated September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the resolution dated June 19, 1985 of this Court.

However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00 which they received through Alice A. Dizon on June 20, 1975.

SO ORDERED.

Private respondent filed a Motion for Reconsideration, Second Motion for Reconsideration, and Motion to Suspend Procedural Rules in the Higher Interest of Substantial Justice, all of which have been denied by this Court. This notwithstanding, the cases were set for oral argument on March 21, 2001, on the following issues:

1. WHETHER THERE ARE CIRCUMSTANCES THAT WOULD JUSTIFY SUSPENSION OF THE RULES OF COURT;

2. WHETHER THE SUM OF P300,000.00 RECEIVED BY ALICE DIZON FROM PRIVATE RESPONDENT WAS INTENDED AS PARTIAL PAYMENT OF THE PURCHASE PRICE OF THE PROPERTY, OR AS PAYMENT OF BACK RENTALS ON THE PROPERTY;

3. WHETHER ALICE DIZON WAS AUTHORIZED TO RECEIVE THE SUM OF P300,000.00 ON BEHALF OF PETITIONERS;

4. (A) IF SO, WHETHER PETITIONERS ARE ESTOPPED FROM QUESTIONING THE BELATED EXERCISE BY PRIVATE RESPONDENT OF ITS OPTION TO BUY WHEN THEY ACCEPTED THE SAID PARTIAL PAYMENT;

(B) IF SO, WHETHER ALICE DIZON CAN VALIDLY BIND PETITIONERS IN THE ABSENCE OF A WRITTEN POWER OF ATTORNEY;

5. (A) WHETHER THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN THE PARTIES;

(B) WHETHER THERE WAS A CONTRACT OF SALE AT LEAST WITH RESPECT TO THE SHARES OF FIDELA AND ALICE DIZON; AND

6. WHETHER PRIVATE RESPONDENT’S ACTION FOR SPECIFIC PERFORMANCE HAS PRESCRIBED.

In order to resolve the first issue, it is necessary to pass upon the other questions which relate to the merits of the case. It is only where there exist strong compelling reasons, such as serving the ends of justice and preventing a miscarriage thereof, that this Court can suspend the rules.1[1]

After reviewing the records, we find that, despite all of private respondent’s protestations, there is absolutely no written proof of Alice Dizon’s authority to bind petitioners. First of all, she was not even a co-owner of the property. Neither was she empowered by the co-owners to act on their behalf.

The acceptance of the amount of P300,000.00, purportedly as partial payment of the purchase price of the land, was an act integral to the sale of the land. As a matter of fact, private respondent invokes such receipt of payment as giving rise to a perfected contract of sale. In this connection, Article 1874 of the Civil Code is explicit that: “When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.”

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for the sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration. The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document.2[2]

1

2

It necessarily follows, therefore, that petitioners cannot be deemed to have received partial payment of the supposed purchase price for the land through Alice Dizon. It cannot even be said that Alice Dizon’s acceptance of the money bound at least the share of Fidela Dizon, in the absence of a written power of attorney from the latter. It should be borne in mind that the Receipt dated June 20, 1975, while made out in the name of Fidela Dizon, was signed by Alice Dizon alone.

Moreover, there could not have been a perfected contract of sale. As we held in our Decision dated January 28, 1999, the implied renewal of the contract of lease between the parties affected only those terms and conditions which are germane to the lessee’s right of continued enjoyment of the property. The option to purchase afforded private respondent expired after the one-year period granted in the contract. Otherwise stated, the implied renewal of the lease did not include the option to purchase. We see no reason to disturb our ruling on this point, viz:

In this case, there was a contract of lease for one (1) year with option to purchase. The contract of lease expired without the private respondent, as lessee, purchasing the property but remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a monthly basis. The other terms of the original contract of lease which are revived in the implied new lease under Article 1670 of the New Civil Code are only those terms which are germane to the lessee’s right of continued enjoyment of the property leased. Therefore, an implied new lease does not ipso facto carry with it any implied revival of private respondent's option to purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien to the possession of the lessee. Private respondent’s right to exercise the option to purchase expired with the termination of the original contract of lease for one year. The rationale of this Court is that:

“This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period corresponding to the rent which is customarily paid – in this case up to the end of the month because the rent was paid monthly. Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the responsibility for repairs, etc. But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of lease.”3[3]

There being no merit in the arguments advanced by private respondent, there is no need to suspend the Rules of Court and to admit the motion for reconsideration. While it is within the power of the Court to suspend its own rules, or to except a particular case from its operation, whenever the interest of justice require it, however, the movant must show strong compelling

3

reasons such as serving the ends of justice and preventing a grave miscarriage thereof,4[4] none of which obtains in this case.

Litigation must end sometime and somewhere. An effective and efficient administration of justice requires that, once a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. Courts must, therefore, guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them.5[5]

ACCORDINGLY, the Motion to Suspend Procedural Rules in the Higher Interest of Substantial Justice filed by private respondent is DENIED WITH FINALITY. No further pleadings will be entertained in these cases.

SO ORDERED.

Puno, J., concur.

Davide, Jr., C.J., (Chairman), see separate opinion, hereto attached.

Case Digest Modina

11224053

MODINA vs. COURT OF APPEALS (317 SCRA 696)

FACTS: The parcel of land under the name of Ramon Chiang is in questioned since Mr. Chiang claims that the land has already been sold by his wife to him. Mr. Chiang in turn sells this land to Modina which are all evidenced by deed of sale. Modina then filed Complaint for Recovery of Possession with Damages before the Regional Trial Court of Iloilo City. On the other hand, Merlinda, the wife of Ramon, presented also a complaint which is to make the deed of sale between her husband and Modina null and void.

ISSUE:The first issue raised was that whether the sale of the parcel of land should be nullified or not. Second is that whether the petitioner, Modina, was a purchaser in good faith or not. Third is whether the decision of the trial court was in excess of jurisdiction or the court's acting beyond the limits of its power; and lastly whether or not only three-fourths of subject lots should be returned to the private respondent.

RULING:

4

5

The court declares the sale of land between Chiang and Modina as null and void. This is because under Art. 1490, husband and wife are prohibited to sell properties to each other. Not being the owner of the land, Ramon Chiang cannot sell the land to Modina. The sale by Ramon Chiang in favor of Modina is, likewise, void and inexistent. As for the second issue, the court concluded that Modina is not a purchaser in good faith. It was found that there were circumstances known to Modina which rendered their transaction fraudulent under the circumstances. Circumstances which indicated of bad faith on Modina, is that he asked his nephew to investigate the origin of the property and the latter learned that the land formed part of the properties of Merlinda’s first husband; and also that the said sale was between the spouses.

CONCURRING and DISSENTING OPINIONS:In my opinion, I believe that the contract of sale between Modina and Chiang from the very beginning...

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