Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 132305      December 4, 2001

IDA C. LABAGALA, petitioner, vs.NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON. COURT OF APPEALS, respondents.

QUISUMBING, J.:

This petition for review on certiorari seeks to annul the decision dated March 4, 1997,1 of the Court of Appeals in CA-G.R. CV No. 32817, which reversed and set aside the judgment dated October 17, 1990,2 of the Regional Trial Court of Manila, Branch 54, in Civil Case No.87-41515, finding herein petitioner to be the owner of 1/3 pro indiviso share in a parcel of land. 1âwphi1.nêt

The pertinent facts of the case, as borne by the records, are as follows:

Jose T. Santiago owned a parcel of land covered by TCT No. 64729, located in Rizal Avenue Extension, Sta. Cruz, Manila. Alleging that Jose had fraudulently registered it in his name alone, his sisters Nicolasa and Amanda (now respondents herein) sued Jose for recovery of 2/3 share of the property.3 On April 20, 1981, the trial court in that case decided in favor of the sisters, recognizing their right of ownership over portions of the property covered by TCT No. 64729. The Register of Deeds of Manila was required to include the names of Nicolasa and Amanda in the certificate of title to said property.4

Jose died intestate on February 6, 1984. On August 5, 1987, respondents filed a complaint for recovery of title, ownership, and possession against herein petitioner, Ida C. Labagala, before the Regional Trial Court of Manila, to, recover from her the 1/3 portion of said property pertaining to Jose but which came into petitioner's sole possession upon Jose's death.

Respondents alleged that Jose's share in the property belongs to them by operation of law, because they are the only legal heirs of their brother, who died intestate and without issue. They claimed that the purported sale of the property made by their brother to petitioner sometime in March 19795 was executed through petitioner's machinations and with malicious intent, to enable her to secure the corresponding transfer certificate of title (TCT No. 1723346) in petitioner's name alone.7

Respondents insisted that the deed of sale was a forgery .The deed showed that Jose affixed his thumbmark thereon but respondents averred that, having been able to graduate from college, Jose never put his thumb mark on documents he executed but always signed his name in full. They claimed that Jose could not have sold the property belonging to his "poor and unschooled sisters who. ..sacrificed for his studies and personal welfare."8Respondents also pointed out that it is highly improbable for petitioner to have paid the supposed consideration of P150,000 for the sale of the subject property because petitioner was unemployed and without any visible means of livelihood at the time of the alleged sale. They also stressed that it was quite unusual and questionable that petitioner registered the deed of sale only on January 26, 1987, or almost eight years after the execution of the sale.9

On the other hand, petitioner claimed that her true name is not Ida C. Labagala as claimed by respondent but Ida C. Santiago. She claimed not to know any person by the name of Ida C. Labagala. She claimed to be the daughter of Jose and thus entitled to his share in the subject property. She maintained that she had always stayed on the property, ever since she was a child. She argued that the purported sale of the property was in fact a donation to her, and that nothing could have precluded Jose from putting his thumbmark on the deed of sale instead of his signature. She pointed out that during his lifetime, Jose never acknowledged respondents' claim over the property such that respondents had to sue to claim portions thereof. She lamented that respondents had to disclaim her in their desire to obtain ownership of the whole property.

Petitioner revealed that respondents had in 1985 filed two ejectment cases against her and other occupants of the property. The first was decided in her and the other defendants' favor, while the second was dismissed. Yet respondents persisted and resorted to the present action.

Petitioner recognized respondents' ownership of 2/3 of the property as decreed by the RTC. But she averred that she caused the issuance of a title in her name alone, allegedly after respondents refused to take steps that would prevent the property from being sold by public auction for their failure to pay realty taxes thereon. She added that with a title issued in her name she could avail of a realty tax amnesty.

On October 17, 1990, the trial court ruled in favor of petitioner, decreeing thus:

WHEREFORE, judgment is hereby rendered recognizing the plaintiffs [herein respondents] as being entitled to the ownership and possession each of one-third (1/3) pro indiviso   share of the property originally covered by Transfer Certificate of Title No. 64729, in the name of Jose T. Santiago and presently covered by Transfer Certificate of Title No. 172334, in the name of herein defendant [herein petitioner] and which is located at No. 3075-A Rizal Avenue Extension, Sta. Cruz, Manila, as per complaint, and the adjudication to plaintiffs per decision in Civil Case No. 56226 of this Court, Branch VI, and the remaining one-third (1/3) proindiviso   share adjudicated in said decision to defendant Jose T. Santiago in said case, is hereby adjudged and adjudicated to herein defendant as owner and entitled to possession of said share. The Court does not see fit to adjudge damages, attorney's fees and costs. Upon finality of this judgment, Transfer Certificate of Title No. 172334 is ordered cancelled and a new title issued in the names of the two (2) plaintiffs and the defendant as owners in equal shares, and the Register of Deeds of Manila is so directed to effect the same upon payment of the proper fees by the parties herein.

SO ORDERED.10

According to the trial court, while there was indeed no consideration for the deed of sale executed by Jose in favor of petitioner, said deed constitutes a valid donation. Even if it were not, petitioner would still be entitled to Jose's 1/3 portion of the property as Jose's daughter. The trial court ruled that the following evidence shows petitioner to be the daughter of Jose: (1) the decisions in the two ejectment cases filed by respondents which stated that petitioner is Jose's daughter, and (2) Jose's income tax return which listed petitioner as his daughter. It further said that respondents knew of petitioner's existence and her being the daughter of Jose, per records of the earlier ejectment cases they filed against petitioner. According to the court, respondents were not candid with the court in refusing to recognize petitioner as Ida C. Santiago and insisting that she was Ida C. Labagala, thus affecting their credibility.

Respondents appealed to the Court of Appeals, which reversed the decision of the trial court.

WHEREFORE, the appealed decision is REVERSED and one is entered declaring the appellants Nicolasa and Amanda Santiago the co-owners in equal shares of the one-third (1/3) pro indiviso share of the late Jose Santiago in the land and building covered by TCT No. 172334. Accordingly, the Register of Deeds of Manila is directed to cancel said title and issue in its place a new one reflecting this decision.

SO ORDERED.

Apart from respondents' testimonies, the appellate court noted that the birth certificate of Ida Labagala presented by respondents showed that Ida was born of different parents, not Jose and his wife. It also took into account the statement made by Jose in Civil Case No. 56226 that he did not have any child.

Hence, the present petition wherein the following issues are raised for consideration:

1. Whether or not petitioner has adduced preponderant evidence to prove that she is the daughter of the late Jose T. Santiago, and

2. Whether or not respondents could still impugn the filiation of the petitioner as the daughter of the late Jose T. Santiago.

Petitioner contends that the trial court was correct in ruling that she had adduced sufficient evidence to prove her filiation by Jose Santiago, making her his sole heir and thus entitled to inherit his 1/3 portion. She points out that respondents had, before the filing of the instant case, previously "considered"11 her as the daughter of Jose who, during his lifetime, openly regarded her as his legitimate daughter. She asserts that her identification as Jose's daughter in his ITR outweighs the "strange" answers he gave when he testified in Civil Case No. 56226.

Petitioner asserts further that respondents cannot impugn her filiation collaterally, citing the case of Sayson v. Court of Appeals12 in which we held that "(t)he legitimacy of (a) child can be impugned only in a direct action brought for that purpose, by the proper parties and within the period limited by law."13 Petitioner also cites Article 263 of the Civil Code in support of this contention.14

For their part, respondents contend that petitioner is not the daughter of Jose, per her birth certificate that indicates her parents as Leo Labagala and Cornelia Cabrigas, instead of Jose Santiago and Esperanza Cabrigas.15 They argue that the provisions of Article 263 of the Civil Code do not apply to the present case since this is not an action impugning a child's legitimacy but one for recovery of title, ownership, and possession of property .

The issues for resolution in this case, to our mind, are (1) whether or not respondents may impugn petitioner's filiation in this action for recovery of title and possession; and (2) whether or not petitioner is entitled to Jose's 1/3 portion of the property he co-owned with respondents, through succession, sale, or donation.

On the first issue, we find petitioner's reliance on Article 263 of the Civil Code to be misplaced. Said article provides:

.Art. 263. The action to impugn the legitimacy of the child shall be brought within one year from the recording of the birth in the Civil Register, if the husband should be in the same place, or in a proper case, any of his heirs.

If he or his heirs are absent, the period shall be eighteen months if they should reside in the Philippines; and two years if abroad. If the birth of the child has been concealed, the term shall be counted from the discovery of the fraud.

This article should be read in conjunction with the other articles in the same chapter on paternity and filiation in the Civil Code. A careful reading of said chapter would reveal that it contemplates situations where a doubt exists that a child is indeed a man's child by his wife, and the husband (or, in proper cases, his heirs) denies the child's filiation. It does not refer to situations where a child is alleged not to be the child at all of a particular couple.16

Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove that a person is not a man's child by his wife. However, the present case is not one impugning petitioner's legitimacy. Respondents are asserting not merely that petitioner is not a legitimate child of Jose, but that she is not a child of Jose at all.17Moreover, the present action is one for recovery of title and possession, and thus outside the scope of Article 263 on prescriptive periods.

Petitioner's reliance on Sayson is likewise improper. The factual milieu present in Sayson does not obtain in the instant case. What was being challenged by petitioners in Sayson was (1) the validity of the adoption of Delia and Edmundo by the deceased Teodoro and Isabel Sayson, and (2) the legitimate status of Doribel Sayson. While asserting that Delia and Edmundo could not have been validly adopted since Doribel had already been born to the Sayson couple at the time, petitioners at the same time made the conflicting claim that Doribel was not the child of the couple. The Court ruled in that case that it was too late to question the decree of adoption that became final years before. Besides, such a challenge to the validity of the adoption cannot be made collaterally but in a direct proceeding.18

In this case, respondents are not assailing petitioner's legitimate status but are, instead, asserting that she is not at all their brother's child. The birth certificate presented by respondents support this allegation.

We agree with the Court of Appeals that:

The Certificate. of Record of Birth (Exhibit H)19 plainly states that... Ida was the child of the spouses Leon Labagala and [Cornelia] Cabrigas. This document states that it was Leon Labagala who made the report to the Local Civil Registrar and therefore the supplier of the entries in said Certificate. Therefore, this certificate is proof of the filiation of Ida. Appellee however denies that Exhibit H is her Birth Certificate. She insists that she is not Ida Labagala but Ida Santiago. If Exhibit H is not her birth certificate, then where is hers? She did not present any though it would have been the easiest thing to do considering that according to her baptismal certificate she was born in Manila in 1969. This court rejects such denials and holds that Exhibit H is the certificate of the record of birth of appellee Ida...

Against such evidence, the appellee Ida could only present her testimony and a baptismal certificate (Exhibit 12) stating that appellee's parents were Jose Santiago and Esperanza Cabrigas. But then, a decisional rule in evidence states that a baptismal certificate is not a proof of the parentage of the baptized person. This document can only prove the identity of the baptized, the date and place of her baptism, the identities of the baptismal sponsors and the priest who administered the sacrament -- nothing more.20 (Citations omitted.)

At the pre-trial conducted on August 11, 1988, petitioner's counsel admitted that petitioner did not have a birth certificate indicating that she is Ida Santiago, though she had been using this name all her life.21

Petitioner opted not to present her birth certificate to prove her relationship with Jose and instead offered in evidence her baptismal certificate.22 However, as we held in Heirs of Pedro Cabais v. Court of Appeals :

...a baptismal certificate is evidence only to prove the administration of the sacrament on the dates therein specified, but not the veracity of the declarations therein stated with respect to [a person's] kinsfolk. The same is conclusive only of the baptism administered, according to the rites of the Catholic Church, by the priest who baptized subject child, but it does not prove the veracity of the declarations and statements contained in the certificate concerning the relationship of the person baptized.23

A baptismal certificate, a private document, is not conclusive proof of filiation.24 More so are the entries made in an income tax return, which only shows that income tax has been paid and the amount thereof.25

We note that the trial court had asked petitioner to secure a copy of her birth certificate but petitioner, without advancing any reason therefor, failed to do so. Neither did petitioner obtain a certification that no record of her birth could be found in the civil registry, if such were the case. We find petitioner's silence concerning the absence of her birth certificate telling. It raises doubt as to the existence of a birth certificate that would show petitioner to be the daughter of Jose Santiago and Esperanza Cabrigas. Her failure to show her birth certificate would raise the presumption that if such evidence were presented, it would be adverse to her claim. Petitioner's counsel argued that petitioner had been using Santiago all her life. However, use of a family name certainly does not establish pedigree.

Further, we note that petitioner, who claims to be Ida Santiago, has the same birthdate as Ida Labagala.26 The similarity is too uncanny to be a mere coincidence.

During her testimony before the trial court, petitioner denied knowing Cornelia Cabrigas, who was listed as the mother in the birth certificate of Ida Labagala. In her petition before this Court, however, she stated that Cornelia is the sister of her mother, Esperanza. It appears that petitioner made conflicting statements that affect her credibility and could cast along shadow of doubt on her claims of filiation.

Thus, we are constrained to agree with the factual finding of the Court of Appeals that petitioner is in reality the child of Leon Labagala and Cornelia Cabrigas, and contrary to her averment, not of Jose Santiago and Esperanza Cabrigas. Not being a child of Jose, it follows that petitioner can not inherit from him through intestate succession. It now remains to be seen whether the property in dispute was validly transferred to petitioner through sale or donation.

On the validity of the purported deed of sale, however, we agree with the Court of Appeals that:

...This deed is shot through and through with so many intrinsic defects that a reasonable mind is inevitably led to the conclusion that it is fake. The intrinsic defects are extractable from the following questions: a) If Jose Santiago intended to donate the properties in question to Ida, what was the big idea of hiding the nature of the contract in the facade of the sale? b) If the deed is a genuine document, how could it have happened that Jose Santiago who was of course fully aware that he owned only 1/3 pro indiviso of the properties covered by his title sold or donated the whole properties to Ida? c) Why in heaven's name did Jose Santiago, a college graduate, who always signed his name in documents requiring his signature (citation omitted) [affix] his thumbmark on this deed of sale? d) If Ida was [the] child of Jose Santiago, what was the sense of the latter donating his properties to her when she

would inherit them anyway upon his death? e) Why did Jose Santiago affix his thumbmark to a deed which falsely stated that: he was single (for he was earlier married to Esperanza Cabrigas ); Ida was of legal age (for [ s ]he was then just 15 years old); and the subject properties were free from liens and encumbrances (for Entry No. 27261, Notice of Adverse Claim and Entry No. 6388, Notice of Lis Pendens were already annotated in the title of said properties). If the deed was executed in 1979, how come it surfaced only in 1984 after the death of Jose Santiago and of all people, the one in possession was the baptismal sponsor of Ida?27

Clearly, there is no valid sale in this case. Jose did not have the right to transfer ownership of the entire property to petitioner since 2/3 thereof belonged to his sisters.28 Petitioner could not have given her consent to the contract, being a minor at the time.29 Consent of the contracting parties is among the essential requisites of a contract,30 including one of sale, absent which there can be no valid contract. Moreover, petitioner admittedly did not pay any centavo for the property,31 which makes the sale void. Article 1471 of the Civil Code provides:

Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract.

Neither may the purported deed of sale be a valid deed of donation. Again, as explained by the Court of Appeals:

...Even assuming that the deed is genuine, it cannot be a valid donation. It lacks the acceptance of the donee required by Art. 725 of the Civil Code. Being a minor in 1979, the acceptance of the donation should have been made by her father, Leon Labagala or [her] mother Cornelia Cabrigas or her legal representative pursuant to Art. 741 of the same Code. No one of those mentioned in the law - in fact no one at all - accepted the "donation" for Ida.32

In sum, we find no reversible error attributable to the assailed decision of the Court of Appeals, hence it must be upheld. 1âwphi1.nêt

WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals in CA-G.R. CY No. 32817 isAFFIRMED.

Costs against petitioner.

SECOND DIVISION

G.R. No. 127540            October 17, 2001

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners, vs.HON. COURT OF APPEALS, FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners, vs.HON. COURT OF APPEALS, THE DIRECTOR OF LANDS, and FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.

QUISUMBNG, J.:

This petition1 seeks to annul the decision of the Court of Appeals dated August 29, 1996, which set aside the decision of the Regional Trial Court of Batac, Ilocos Norte, Branch 17, in Civil Case No. 582-17 for reinvindicacionconsolidated with Cadastral Case No. 1.2 The petition likewise seeks to annul the resolution dated December 11, 1996, denying petitioners' motion for reconsideration.

The facts of this case, culled from the records, are as follows:

Paulina Rigonan owned three (3) parcels of land, located at Batac and Espiritu, Ilocos Norte, including the house and warehouse on one parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion Rigonan, who claim to be her relatives. In 1966, herein petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan, who claim to be her closest surviving relatives, allegedly took possession of the properties by means of stealth, force and intimidation, and refused to vacate the same. Consequently, on February 2, 1976, herein respondent Felipe Rigonan filed a complaint for reinvindicacion against petitioners in the Regional Trial Court of Batac, Ilocos Norte. On July 3, 1977, he amended the complaint and included his wife as co-plaintiff. They alleged that they were the owners of the three parcels of land through the deed of sale executed by Paulina Rigonan on January 28, 1965; that since then, they had been in continuous possession of the subject properties and had introduced permanent improvements thereon; and that defendants (now petitioners) entered the properties illegally, and they refused to leave them when asked to do so.

Herein petitioners, as defendants below, contested plaintiffs' claims. According to defendants, the alleged deed of absolute sale was void for being spurious as well as lacking consideration. They said that Paulina Rigonan did not sell her properties to anyone. As her nearest surviving kin within the fifth degree of consanguinity, they inherited the three lots and the permanent improvements thereon when Paulina died in 1966. They said they had been in possession of the contested properties for more than 10 years. Defendants asked for damages against plaintiffs.

During trial, Juan Franco, Notary Public Evaristo P. Tagatag3 and plaintiff Felipe Rigonan testified for plaintiffs (private respondents now).

Franco testified that he was a witness to the execution of the questioned deed of absolute sale. However, when cross-examined and shown the deed he stated that the deed was not the document he signed as a witness, but rather it was the will and testament made by Paulina Rigonan.

Atty. Tagatag testified that he personally prepared the deed, he saw Paulina Rigonan affix her thumbprint on it and he signed it both as witness and notary public. He further testified that he also notarized Paulina's last will and testament dated February 19, 1965. The will mentioned the same lots sold to private respondents. When asked why the subject lots were still included in the last will and testament, he could not explain. Atty. Tagatag also mentioned that he registered the original deed of absolute sale with the Register of Deeds.

Plaintiff Felipe Rigonan claimed that he was Paulina's close relative. Their fathers were first cousins. However, he could not recall the name of Paulina's grandfather. His claim was disputed by defendants, who lived with Paulina as their close kin. He admitted the discrepancies between the Register of Deeds' copy of the deed and the copy in his possession. But he attributed them to the representative from the Office of the Register of Deeds who went to plaintiffs house after that Office received a subpoena duces tecum. According to him, the representative showed him blanks in the deed and then the representative filled in the blanks by copying from his (plaintiffs) copy.

Counsel for defendants (petitioners herein) presented as witnesses Jose Flores, the owner of the adjacent lot; Ruben Blanco, then acting Registrar of Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio Domingo.

Jose Flores testified that he knew defendants, herein petitioners, who had lived on the land with Paulina Rigonan since he could remember and continued to live there even after Paulina's death. He said he did not receive any notice nor any offer to sell the lots from Paulina, contrary to what was indicated in the deed of sale that the vendor had notified all the adjacent owners of the sale. He averred he had no knowledge of any sale between Paulina and private respondents.

Ruben Blanco, the acting Registrar of Deeds, testified that only the carbon copy, also called a duplicate original, of the deed of sale was filed in his office, but he could not explain why this was so.

Zosima Domingo testified that her husband, Eugenio Domingo, was Paulina's nephew. Paulina was a first cousin of Eugenio's father. She also said that they lived with Paulina and her husband, Jose Guerson, since 1956. They took care of her, spent for her daily needs and medical expenses, especially when she was hospitalized prior to her death. She stated that Paulina was never badly in need of money during her lifetime.

On March 23, 1994, the trial court rendered judgment in favor of defendants (now the petitioners). It disposed:

WHEREFORE, premises considered, judgment is hereby rendered in favor of defendants and against the plaintiffs, and as prayed for, the Amended Complaint is hereby DISMISSED.

Defendants are hereby declared, by virtue of intestate succession, the lawful owners and possessors of the house including the bodega and the three (3) parcels of land in suit and a Decree of Registration adjudicating the ownership of the said properties to defendants is hereby issued.

The alleged deed of sale ( Exhs. "A", "A-1", "1" and "1-a") is hereby declared null and void and fake and the prayer for the issuance of a writ of preliminary injunction is hereby denied.

Plaintiffs are hereby ordered to pay defendants:

a) P20,000.00 as moral damages;

b) P10,000.00 as exemplary damages;

c) P10,000.00 attorney's fees and other litigation expenses.

No pronouncement as to costs.4

Private respondents herein appealed to the Court of Appeals.

On August 29, 1996, the CA reversed the trial court's decision, thus:

WHEREFORE, the decision dated March 23, 1994 is hereby SET ASIDE. The plaintiffs-appellants Felipe Rigonan and Concepcion Rigonan are declared the owners of the properties under litigation and the defendants-appellees are hereby ordered to VACATE the

subject properties and SURRENDER the possession thereof to the heirs of the plaintiffs-appellants.

Costs against the defendants-appellees.5

Hence, this petition assigning the following as errors:

I

THE RESPONDENT COURT OF APPEALS HAS DECIDED QUESTIONS OF LEGAL SUBSTANCE AND SIGNIFICANCE NOT IN ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT.

II

THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE CONTRARY TO THOSE OF THE TRIAL COURT AND CLEARLY VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL COURTS ARE ENTITLED TO GREAT WEIGHT AND RESPECT ON APPEAL, ESPECIALLY WHEN SAID FINDINGS ARE ESTABLISHED BY UNREBUTTED TESTIMONIAL AND DOCUMENTARY EVIDENCE.

III

THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT COURT OF APPEALS ARE GROUNDED ENTIRELY ON SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES MANIFESTLY MISTAKEN.

IV

THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS NOT DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT CONCLUSION.

V

THAT THE FINDINGS OF FACT OF RESPONDENT COURT OF APPEALS ARE PREMISED ON SUPPOSED ABSENCE OF EVIDENCE BUT IS CONTRADICTED BY THE EVIDENCE ON RECORD THUS CONSTITUTES GRAVE ABUSE OF DISCRETION.6

The basic issue for our consideration is, did private respondents sufficiently establish the existence and due execution of the Deed of Absolute and Irrevocable Sale of Real Property? Marked as Exhibits "A," "A-1," "1" and "1-a," this deed purportedly involved nine (9) parcels of land, inclusive of the three (3) parcels in dispute, sold at the price of P850 by Paulina Rigonan to private respondents on January 28, 1965, at Batac, Ilocos Norte.7 The trial court found the deed "fake," being a carbon copy with no typewritten original presented; and the court concluded that the document's execution "was tainted with alterations, defects, tamperings, and irregularities which render it null and void ab initio".8

Petitioners argue that the Court of Appeals erred in not applying the doctrine that factual findings of trial courts are entitled to great weight and respect on appeal, especially when said findings are established by unrebutted testimonial and documentary evidence. They add that the Court of

Appeals, in reaching a different conclusion, had decided the case contrary to the evidence presented and the law applicable to the case. Petitioners maintain that the due execution of the deed of sale was not sufficiently established by private respondents, who as plaintiffs had the burden of proving it. First, the testimonies of the two alleged instrumental witnesses of the sale, namely, Juan Franco and Efren Sibucao, were dispensed with and discarded when Franco retracted his oral and written testimony that he was a witness to the execution of the subject deed. As a consequence, the appellate court merely relied on Atty. Tagatag's (the notary public) testimony, which was incredible because aside from taking the double role of a witness and notary public, he was a paid witness. Further his testimony, that the subject deed was executed in the house of Paulina Rigonan, was rebutted by Zosima Domingo, Paulina's housekeeper, who said that she did not see Atty. Tagatag, Juan Franco and Efren Sibucao in Paulina's house on the alleged date of the deed's execution.

Secondly, petitioners said that private respondents failed to account for the typewritten original of the deed of sale and that the carbon copy filed with the Register of Deeds was only a duplicate which contained insertions and erasures. Further, the carbon copy was without an affidavit of explanation, in violation of the Administrative Code as amended, which requires that if the original deed of sale is not presented or available upon registration of the deed, the carbon copy or so-called "duplicate original" must be accompanied by an affidavit of explanation, otherwise, registration must be denied.9

Thirdly, petitioners aver that the consideration of only P850 for the parcels of land sold, together with a house and a warehouse, was another indication that the sale was fictitious because no person who was financially stable would sell said property at such a grossly inadequate consideration.

Lastly, petitioners assert that there was abundant evidence that at the time of the execution of the deed of sale, Paulina Rigonan was already senile. She could not have consented to the sale by merely imprinting her thumbmark on the deed.

In their comment, private respondents counter that at the outset the petition must be dismissed for it lacks a certification against forum shopping. Nonetheless, even disregarding this requirement, the petition must still be denied in due course for it does not present any substantial legal issue, but factual or evidentiary ones which were already firmly resolved by the Court of Appeals based on records and the evidence presented by the parties. Private respondents' claim that the factual determination by the trial court lacks credibility for it was made by the trial judge who presided only in one hearing of the case. The trial judge could not validly say that the deed of absolute sale was "fake" because no signature was forged, according to private respondents; and indeed a thumbmark, said to be the seller's own, appears thereon.

In their reply, petitioners said that the copy of the petition filed with this Court was accompanied with a certification against forum shopping. If private respondents' copy did not contain same certification, this was only due to inadvertence. Petitioners ask for the Court's indulgence for anyway there was substantial compliance with Revised Circular No. 28-91.

On the contention that here only factual issues had been raised, hence not the proper subject for review by this Court, petitioners reply that this general rule admits of exceptions, as when the factual findings of the Court of Appeals and the trial court are contradictory; when the findings are grounded entirely on speculations, surmises or conjectures; and when the Court of Appeals overlooked certain relevant facts not disputed by the parties which if properly considered would justify a different conclusion. All these, according to petitioners, are present in this case.

Before proceeding to the main issue, we shall first settle procedural issues raised by private respondents.

While the trial judge deciding the case presided over the hearings of the case only once, this circumstance could not have an adverse effect on his decision. The continuity of a court and the efficacy of its proceedings are not affected by the death, resignation or cessation from the service of the presiding judge. A Judge may validly render a decision although he has only partly heard the testimony of the witnesses.10 After all, he could utilize and rely on the records of the case, including the transcripts of testimonies heard by the former presiding judge.

On the matter of the certification against forum-shopping, petitioners aver that they attached one in the copy intended for this Court. This is substantial compliance. A deviation from a rigid enforcement of the rules may be allowed to attain their prime objective for, after all, the dispensation of justice is the core reason for the court's existence.11

While the issues raised in this petition might appear to be mainly factual, this petition is properly given due course because of the contradictory findings of the trial court and the Court of Appeals. Further, the later court apparently overlooked certain relevant facts which justify a different conclusion.12 Moreover, a compelling sense to make sure that justice is done, and done rightly in the light of the issues raised herein, constrains us from relying on technicalities alone to resolve this petition.

Now, on the main issue. Did private respondents establish the existence and due execution of the deed of sale? Our finding is in the negative. First, note that private respondents as plaintiffs below presented only a carbon copy of this deed. When the Register of Deeds was subpoenaed to produce the deed, no original typewritten deed but only a carbon copy was presented to the trial court. Although the Court of Appeals calls it a "duplicate original," the deed contained filled in blanks and alterations. None of the witnesses directly testified to prove positively and convincingly Paulina's execution of the original deed of sale. The carbon copy did not bear her signature, but only her alleged thumbprint. Juan Franco testified during the direct examination that he was an instrumental witness to the deed. However, when cross-examined and shown a copy of the subject deed, he retracted and said that said deed of sale was not the document he signed as witness.13 He declared categorically he knew nothing about it.14

We note that another witness, Efren Sibucao, whose testimony should have corroborated Atty. Tagatag's, was not presented and his affidavit was withdrawn from the court,15 leaving only Atty. Tagatag's testimony, which aside from being uncorroborated, was self-serving.

Secondly, we agree with the trial court that irregularities abound regarding the execution and registration of the alleged deed of sale. On record, Atty. Tagatag testified that he himself registered the original deed with the Register of Deeds.16 Yet, the original was nowhere to be found and none could be presented at the trial. Also, the carbon copy on file, which is allegedly a duplicate original, shows intercalations and discrepancies when compared to purported copies in existence. The intercalations were allegedly due to blanks left unfilled by Atty. Tagatag at the time of the deed's registration. The blanks were allegedly filled in much later by a representative of the Register of Deeds. In addition, the alleged other copies of the document bore different dates of entry: May 16, 1966, 10:20 A.M.17 and June 10, 1966, 3:16 P.M.,18 and different entry numbers: 66246, 74389 19 and 64369. 20 The deed was apparently registered long after its alleged date of execution and after Paulina's death on March 20, 1966.21 Admittedly, the alleged vendor Paulina Rigonan was not given a copy.22

Furthermore, it appears that the alleged vendor was never asked to vacate the premises she had purportedly sold. Felipe testified that he had agreed to let Paulina stay in the house until her death.23 In Alcos v. IAC, 162 SCRA 823 (1988), the buyer's immediate possession and occupation of the property was deemed corroborative of the truthfulness and authenticity of the deed of sale. The

alleged vendor's continued possession of the property in this case throws an inverse implication, a serious doubt on the due execution of the deed of sale. Noteworthy, the same parcels of land involved in the alleged sale were still included in the will subsequently executed by Paulina and notarized by the same notary public, Atty. Tagatag.24 These circumstances, taken together, militate against unguarded acceptance of the due execution and genuineness of the alleged deed of sale.

Thirdly, we have to take into account the element of consideration for the sale. The price allegedly paid by private respondents for nine (9) parcels, including the three parcels in dispute, a house and a warehouse, raises further questions. Consideration is the why of a contract, the essential reason which moves the contracting parties to enter into the contract.25 On record, there is unrebutted testimony that Paulina as landowner was financially well off. She loaned money to several people.26 We see no apparent and compelling reason for her to sell the subject parcels of land with a house and warehouse at a meager price of P850 only.

In Rongavilla vs. CA, 294 SCRA 289 (1998), private respondents were in their advanced years, and were not in dire need of money, except for a small amount of P2,000 which they said were loaned by petitioners for the repair of their house's roof. We ruled against petitioners, and declared that there was no valid sale because of lack of consideration.

In the present case, at the time of the execution of the alleged contract, Paulina Rigonan was already of advanced age and senile. She died an octogenarian on March 20, 1966, barely over a year when the deed was allegedly executed on January 28, 1965, but before copies of the deed were entered in the registry allegedly on May 16 and June 10, 1966. The general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities.27 However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights then she is undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at the time of the alleged execution of the deed, Paulina was already incapacitated physically and mentally. She narrated that Paulina played with her waste and urinated in bed. Given these circumstances, there is in our view sufficient reason to seriously doubt that she consented to the sale of and the price for her parcels of land. Moreover, there is no receipt to show that said price was paid to and received by her. Thus, we are in agreement with the trial court's finding and conclusion on the matter:

The whole evidence on record does not show clearly that the fictitious P850.00 consideration was ever delivered to the vendor. Undisputably, the P850.00 consideration for the nine (9) parcels of land including the house and bodega is grossly and shockingly inadequate, and the sale is null and void ab initio.28

WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of Appeals dated August 29, 1996 and December 11, 1996, respectively, are REVERSED and SET ASIDE. The decision of the Regional Trial Court of Batac, Ilocos Norte, Branch 17, dated March 23, 1994, is REINSTATED.

Costs against private respondents.

SO ORDERED.

SECOND DIVISION

G.R. No. 168220. August 31, 2005

SPS. rudy Paragas and Corazon B. Paragas, Petitioners, vs.Hrs. of Dominador Balacano, namely: Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano, represented by NANETTE BALACANO and ALFREDO BALACANO, Respondent.

R E S O L U T I O N

CHICO-NAZARIO, J.:

This petition for review seeks to annul the Decision1 dated 15 February 2005 of the Court of Appeals in CA-G.R. CV No. 64048, affirming with modification the 8 March 1999 Decision2 of the Regional Trial Court (RTC), Branch 21, of Santiago City, Isabela, in Civil Case No. 21-2313. The petition likewise seeks to annul the Resolution3 dated 17 May 2005 denying petitioners’ motion for reconsideration.

The factual antecedents were synthesized by the Court of Appeals in its decision.

Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot 1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago City, Isabela] covered by TCT No. T-103297 and TCT No. T-103298 of the Registry of Deeds of the Province of Isabela.

Gregorio and Lorenza had three children, namely: Domingo, Catalino and Alfredo, all surnamed Balacano. Lorenza died on December 11, 1991. Gregorio, on the other hand, died on July 28, 1996.

Prior to his death, Gregorio was admitted at the Veterans General Hospital in Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996. He was transferred in the afternoon of July 19, 1996 to the Veterans Memorial Hospital in Quezon City where he was confined until his death.

Gregorio purportedly sold on July 22, 1996, or barely a week prior to his death, a portion of Lot 1175-E (specifically consisting of 15,925 square meters from its total area of 22,341 square meters) and the whole Lot 1175-F to the Spouses Rudy ("Rudy") and Corazon Paragas (collectively, "the Spouses Paragas") for the total consideration of P500,000.00. This sale appeared in a deed of absolute sale notarized by Atty. Alexander V. de Guzman, Notary Public for Santiago City, on the same date – July 22, 1996 – and witnessed by Antonio Agcaoili ("Antonio") and Julia Garabiles ("Julia"). Gregorio’s certificates of title over Lots 1175-E and 1175-F were consequently cancelled and new certificates of title were issued in favor of the Spouses Paragas.

The Spouses Paragas then sold on October 17, 1996 a portion of Lot 1175-E consisting of 6,416 square meters to Catalino for the total consideration of P60,000.00.

Domingo’s children (Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano;…) filed on October 22, 1996 a complaint for annulment of sale and partition against Catalino and the Spouses Paragas. They essentially alleged – in asking for the nullification of the deed of sale – that: (1) their grandfather Gregorio could not have appeared before the notary public on July 22, 1996 at Santiago City because he was then confined at the Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged execution of the deed of sale, Gregorio was seriously ill, in fact dying at that time, which vitiated his consent to the disposal of the property; and (3) Catalino manipulated the execution of the deed and prevailed upon the dying Gregorio to sign his name on a paper the contents of which he never understood because of his serious condition. Alternatively, they alleged that assuming Gregorio was of sound and disposing mind, he could only transfer a half portion of Lots

1175-E and 1175-F as the other half belongs to their grandmother Lorenza who predeceased Gregorio – they claimed that Lots 1175-E and 1175-F form part of the conjugal partnership properties of Gregorio and Lorenza. Finally, they alleged that the sale to the Spouses Paragas covers only a 5-hectare portion of Lots 1175-E and 1175-F leaving a portion of 6,416 square meters that Catalino is threatening to dispose. They asked for the nullification of the deed of sale executed by Gregorio and the partition of Lots 1175-E and 1175-F. They likewise asked for damages.

Instead of filing their Answer, the defendants Catalino and the Spouses Paragas moved to dismiss the complaint on the following grounds: (1) the plaintiffs have no legal capacity - the Domingo’s children cannot file the case because Domingo is still alive, although he has been absent for a long time; (2) an indispensable party is not impleaded – that Gregorio’s other son, Alfredo was not made a party to the suit; and (3) the complaint states no cause of action – that Domingo’s children failed to allege a ground for the annulment of the deed of sale; they did not cite any mistake, violence, intimidation, undue influence or fraud, but merely alleged that Gregorio was seriously ill. Domingo’s children opposed this motion.

The lower court denied the motion to dismiss, but directed the plaintiffs-appellees to amend the complaint to include Alfredo as a party. Alfredo was subsequently declared as in default for his failure to file his Answer to the Complaint.

The defendants-appellees filed their Answer with Counterclaim on May 7, 1997, denying the material allegations of the complaint. Additionally, they claimed that: (1) the deed of sale was actually executed by Gregorio on July 19 (or 18), 1996 and not July 22, 1996; (2) the Notary Public personally went to the Hospital in Bayombong, Nueva Vizcaya on July 18, 1996 to notarize the deed of sale already subject of a previously concluded covenant between Gregorio and the Spouses Paragas; (3) at the time Gregorio signed the deed, he was strong and of sound and disposing mind; (4) Lots 1175-E and 1175-F were Gregorio’s separate capital and the inscription of Lorenza’s name in the titles was just a description of Gregorio’s marital status; (5) the entire area of Lots 1175-E and 1175-F were sold to the Spouses Paragas. They interposed a counterclaim for damages.

At the trial, the parties proceeded to prove their respective contentions.

Plaintiff-appellant Nanette Balacano testified to prove the material allegations of their complaint. On Gregorio’s medical condition, she declared that: (1) Gregorio, who was then 81 years old, weak and sick, was brought to the hospital in Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until the afternoon on July 19, 1996; (2) thereafter, Gregorio, who by then was weak and could no longer talk and whose condition had worsened, was transferred in the afternoon of July 19, 1996 to the Veterans Memorial Hospital in Quezon City where Gregorio died. She claimed that Gregorio could not have signed a deed of sale on July 19, 1996 because she stayed at the hospital the whole of that day and saw no visitors. She likewise testified on their agreement for attorney’s fees with their counsel and the litigation expenses they incurred.

Additionally, the plaintiffs-appellees presented in evidence Gregorio’s medical records and his death certificate.

Defendants-appellees, on the other hand, presented as witnesses Notary Public de Guzman and instrumental witness Antonio to prove Gregorio’s execution of the sale and the circumstances under the deed was executed. They uniformly declared that: (1) on July 18, 1996, they went to the hospital in Bayombong, Nueva Vizcaya – where Gregorio was confined – with Rudy; (2) Atty. De Guzman read and explained the contents of the deed to Gregorio; (3) Gregorio signed the deed after receiving the money from Rudy; (4) Julia and Antonio signed the deed as witnesses. Additionally, Atty. De Guzman explained that the execution of the deed was merely a confirmation of a previous

agreement between the Spouses Paragas and Gregorio that was concluded at least a month prior to Gregorio’s death; that, in fact, Gregorio had previously asked him to prepare a deed that Gregorio eventually signed on July 18, 1996. He also explained that the deed, which appeared to have been executed on July 22, 1996, was actually executed on July 18, 1996; he notarized the deed and entered it in his register only on July 22, 1996. He claimed that he did not find it necessary to state the precise date and place of execution (Bayombong, Nueva Vizcaya, instead of Santiago City) of the deed of sale because the deed is merely a confirmation of a previously agreed contract between Gregorio and the Spouses Paragas. He likewise stated that of the stated P500,000.00 consideration in the deed, Rudy paid Gregorio P450,000.00 in the hospital because Rudy had previously paid Gregorio P50,000.00. For his part, Antonio added that he was asked by Rudy to take pictures of Gregorio signing the deed. He also claimed that there was no entry on the date when he signed; nor did he remember reading Santiago City as the place of execution of the deed. He described Gregorio as still strong but sickly, who got up from the bed with Julia’s help.

Witness for defendants-appellants Luisa Agsalda testified to prove that Lot 1175-E was Gregorio’s separate property. She claimed that Gregorio’s father (Leon) purchased a two-hectare lot from them in 1972 while the other lot was purchased from her neighbor. She also declared that Gregorio inherited these lands from his father Leon; she does not know, however, Gregorio’s brothers’ share in the inheritance. Defendant-appellant Catalino also testified to corroborate the testimony of witness Luisa Agsalda; he said that Gregorio told him that he (Gregorio) inherited Lots 1175-E and 1175-F from his father Leon. He also stated that a portion of Lot 1175-E consisting of 6,416 square meters was sold to him by the Spouses Paragas and that he will pay the Spouses ParagasP50,000.00, not as consideration for the return of the land but for the transfer of the title to his name.

Additionally, the defendants-appellants presented in evidence the pictures taken by Antonio when Gregorio allegedly signed the deed.4

The lower court, after trial, rendered the decision declaring null and void the deed of sale purportedly executed by Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon Paragas. In nullifying the deed of sale executed by Gregorio, the lower court initially noted that at the time Gregorio executed the deed, Gregorio was ill. The lower court’s reasoning in declaring the deed of sale null and void and this reasoning’s premises may be summarized as follows: (1) the deed of sale was improperly notarized; thus it cannot be considered a public document that is usually accorded the presumption of regularity; (2) as a private document, the deed of sale’s due execution must be proved in accordance with Section 20, Rule 132 of the Revised Rules on Evidence either: (a) by anyone who saw the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker; and (3) it was incumbent upon the Spouses Paragas to prove the deed of sale’s due execution but failed to do so – the lower court said that witness Antonio Agcaoili is not credible while Atty. Alexander De Guzman is not reliable.5

The lower court found the explanations of Atty. De Guzman regarding the erroneous entries on the actual place and date of execution of the deed of sale as justifications for a lie. The lower court said –

The Court cannot imagine an attorney to undertake to travel to another province to notarize a document when he must certainly know, being a lawyer and by all means, not stupid, that he has no authority to notarize a document in that province. The only logical thing that happened was that Rudy Paragas brought the deed of sale to him on July 22, 1996 already signed and requested him to notarize the same which he did, not knowing that at that time the vendor was already in a hospital and [sic] Quezon City. Of course had he known, Atty. De Guzman would not have notarized the document. But he trusted Rudy Paragas and moreover, Gregorio Balacano already informed him

previously in June that he will sell his lands to Paragas. In addition [sic, (,) was omitted] Rudy Paragas also told him that Balacano received an advance of P50,000.00.

The intention to sell is not actual selling. From the first week of June when, according to Atty. De Guzman, Gregorio Balacano informed him that he will sell his land to Rudy Paragas, enough time elapsed to the time he was brought to the hospital on June 28, 1996. Had there been a meeting of the minds between Gregorio Balacano and Rudy Paragas regarding the sale, surely Gregorio Balacano would have immediately returned to the office of Atty. De Guzman to execute the deed of sale. He did not until he was brought to the hospital and diagnosed to have liver cirrhosis. Because of the seriousness of his illness, it is not expected that Gregorio Balacano would be negotiating a contract of sale. Thus, Rudy Paragas negotiated with Catalino Balacano, the son of Gregorio Balacano with whom the latter was staying.6

The lower court also did not consider Antonio Agcaoili, petitioner Rudy Paragas’s driver, a convincing witness, concluding that he was telling a rehearsed story. The lower court said –

The only portion of his testimony that is true is that he signed the document. How could the Court believe that he brought a camera with him just to take pictures of the signing? If the purpose was to record the proceeding for posterity, why did he not take the picture of Atty. De Guzman when the latter was reading and explaining the document to Gregorio Balacano? Why did he not take the picture of both Gregorio Balacano and Atty. de Guzman while the old man was signing the document instead of taking a picture of Gregorio Balacano alone holding a ball pen without even showing the document being signed? Verily there is a picture of a document but only a hand with a ball pen is shown with it. Why? Clearly the driver Antonio Agcaoili must have only been asked by Rudy Paragas to tell a concocted story which he himself would not dare tell in Court under oath.7

The lower court likewise noted that petitioner Rudy Paragas did not testify about the signing of the deed of sale. To the lower court, Rudy’s refusal or failure to testify raises a lot of questions, such as: (1) was he (Rudy) afraid to divulge the circumstances of how he obtained the signature of Gregorio Balacano, and (2) was he (Rudy) afraid to admit that he did not actually pay the P500,000.00 indicated in the deed of sale as the price of the land?8

The lower court also ruled that Lots 1175-E and 1175-F were Gregorio’s and Lorenza’s conjugal partnership properties. The lower court found that these lots were acquired during the marriage because the certificates of title of these lots clearly stated that the lots are registered in the name Gregorio, "married to Lorenza Sumigcay." Thus, the lower court concluded that the presumption of law (under Article 160 of the Civil Code of the Philippines) that property acquired during the marriage is presumed to belong to the conjugal partnership fully applies to Lots 1175-E and 1175-F.9

Thus, on 8 March 1999, the RTC, Branch 21, of Santiago City, Isabela, rendered a Decision10 in Civil Case No. 21-2313, the dispositive portion of which reads as follows:

WHEREFORE in the light of the foregoing considerations judgment is hereby rendered:

1. DECLARING as NULL and VOID the deed of sale purportedly executed by Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon Paragas over lots 1175-E and 1175-F covered by TCT Nos. T-103297 and T-103298, respectively;

2. ORDERING the cancellation of TCT Nos. T-258042 and T-258041 issued in the name of the spouses Rudy and Corazon Paragas by virtue of the deed of sale; and

Declaring the parcel of lands, lots 1175-E and 1175-F as part of the estate of the deceased spouses Gregorio Balacano and Lorenza Balacano.11

In the assailed Decision dated 15 February 2005, the Court of Appeals affirmed the Decision of the trial court, with the modification that Lots 1175-E and 1175-F were adjudged as belonging to the estate of Gregorio Balacano. The appellate court disposed as follows:

Wherefore, premises considered, the appeal is hereby dismissed. We AFFIRM the appealed Decision for the reasons discussed above, with the MODIFICATION that Lots 1175-E and 1175-F belong to the estate of Gregorio Balacano.

Let a copy of this Decision be furnished the Office of the Bar Confidant for whatever action her Office may take against Atty. De Guzman.12 (Emphasis in the original.)

Herein petitioners’ motion for reconsideration was met with similar lack of success when it was denied for lack of merit by the Court of Appeals in its Resolution13 dated 17 May 2005.

Hence, this appeal via a petition for review where petitioners assign the following errors to the Court of Appeals,viz:

A. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, SERIOUSLY ERRED IN FINDING THAT THERE WAS NO PERFECTED AND PARTIALLY EXECUTED CONTRACT OF SALE OVER LOTS 1175-E AND 1175-F PRIOR TO THE SIGNING OF THE DEED OF SALE.

B. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, SERIOUSLY FAILED TO APPRECIATE THE SIGNIFICANCE OF THE JUDICIAL ADMISSION ON THE AUTHENTICITY AND DUE EXECUTION OF THE DEED OF SALE MADE BY THE RESPONDENTS DURING THE PRE-TRIAL CONFERENCE.

C. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, BASED ITS CONCLUSION THAT GREGORIO’S CONSENT TO THE SALE OF THE LOTS WAS ABSENT MERELY ON SPECULATIONS AND SURMISES.

D. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF RESPONDENTS’ LACK OF LEGAL CAPACITY TO SUE FOR NOT BEING THE PROPER PARTIES IN INTEREST.

E. THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION, SERIOUSLY ERRED IN DISMISSING ATTY. ALEXANDER DE GUZMAN AND ANTONIO AGCAOILI AS NOT CREDIBLE WITNESSES.14

At bottom is the issue of whether or not the Court of Appeals committed reversible error in upholding the findings and conclusions of the trial court on the nullity of the Deed of Sale purportedly executed between petitioners and the late Gregorio Balacano.

To start, we held in Blanco v. Quasha15 that this Court is not a trier of facts. As such, it is not its function to examine and determine the weight of the evidence supporting the assailed decision. Factual findings of the Court of Appeals, which are supported by substantial evidence, are binding, final and conclusive upon the Supreme Court,16 and carry even more weight when the said court affirms the factual findings of the trial court. Moreover, well- entrenched is the prevailing

jurisprudence that only errors of law and not of facts are reviewable by this Court in a petition for review on certiorari under Rule 45 of the Revised Rules of Court.

The foregoing tenets in the case at bar apply with greater force to the petition under consideration because the factual findings by the Court of Appeals are in full agreement with that of the trial court.

Specifically, the Court of Appeals, in affirming the trial court, found that there was no prior and perfected contract of sale that remained to be fully consummated. The appellate court explained -

In support of their position, the defendants-appellants argue that at least a month prior to Gregorio’s signing of the deed, Gregorio and the Spouses Paragas already agreed on the sale of Lots 1175-E and 1175-F; and that, in fact, this agreement was partially executed by Rudy’s payment to Gregorio of P50,000.00 before Gregorio signed the deed at the hospital. In line with this position, defendants-appellants posit that Gregorio’s consent to the sale should be determined, not at the time Gregorio signed the deed of sale on July 18, 1996, but at the time when he agreed to sell the property in June 1996 or a month prior to the deed’s signing; and in June 1996, Gregorio was of sound and disposing mind and his consent to the sale was in no wise vitiated at that time. The defendants-appellants further argue that the execution or signing of the deed of sale, however, irregular it might have been, does not affect the validity of the previously agreed sale of the lots, as the execution or signing of the deed is merely a formalization of a previously agreed oral contract.

. . .

In the absence of any note, memorandum or any other written instrument evidencing the alleged perfected contract of sale, we have to rely on oral testimonies, which in this case is that of Atty. de Guzman whose testimony on the alleged oral agreement may be summarized as follows: (1) that sometime in the first week of June 1996, Gregorio requested him (Atty. de Guzman) to prepare a deed of sale of two lots; (2) Gregorio came to his firm’s office in the morning with a certain Doming Balacano, then returned in the afternoon with Rudy; (3) he (Atty. de Guzman) asked Gregorio whether he really intends to sell the lots; Gregorio confirmed his intention; (4) Gregorio and Rudy left the law office at 5:00 p.m., leaving the certificates of title; (5) he prepared the deed a day after Rudy and Gregorio came. With regard to the alleged partial execution of this agreement, Atty. de Guzman said that he was told by Rudy that there was already a partial payment of P50,000.00.

We do not consider Atty. de Guzman’s testimony sufficient evidence to establish the fact that there was a prior agreement between Gregorio and the Spouses Paragas on the sale of Lots 1175-E and 1175-F. This testimony does not conclusively establish the meeting of the minds between Gregorio and the Spouses Paragas on the price or consideration for the sale of Lots 1175-E and 1175-F – Atty. de Guzman merely declared that he was asked by Gregorio to prepare a deed; he did not clearly narrate the details of this agreement. We cannot assume that Gregorio and the Spouses Paragas agreed to a P500,000.00 consideration based on Atty. de Guzman’s bare assertion that Gregorio asked him to prepare a deed, as Atty. de Guzman was not personally aware of the agreed consideration in the sale of the lots, not being privy to the parties’ agreement. To us, Rudy could have been a competent witness to testify on the perfection of this prior contract; unfortunately, the defendants-appellants did not present Rudy as their witness.

We seriously doubt too the credibility of Atty. de Guzman as a witness. We cannot rely on his testimony because of his tendency to commit falsity. He admitted in open court that while Gregorio signed the deed on July 18, 1996 at Bayombong, Nueva Vizcaya, he nevertheless did not reflect these matters when he notarized the deed; instead he entered Santiago City and July 22, 1996, as place and date of execution, respectively. To us, Atty. de Guzman’s propensity to distort facts in the performance of his public functions as a notary public, in utter disregard of the significance of the act

of notarization, seriously affects his credibility as a witness in the present case. In fact, Atty. de Guzman’s act in falsifying the entries in his acknowledgment of the deed of sale could be the subject of administrative and disciplinary action, a matter that we however do not here decide.

Similarly, there is no conclusive proof of the partial execution of the contract because the only evidence the plaintiffs-appellants presented to prove this claim was Atty. de Guzman’s testimony, which is hearsay and thus, has no probative value. Atty. de Guzman merely stated that Rudy told him that Rudy already gave P50,000.00 to Gregorio as partial payment of the purchase price; Atty. de Guzman did not personally see the payment being made.17

But, did Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-F when he signed the deed of sale? The trial court as well as the appellate court found in the negative. In the Court of Appeals’ rationale-

It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously ill, as he in fact died a week after the deed’s signing. Gregorio died of complications caused by cirrhosis of the liver. Gregorio’s death was neither sudden nor immediate; he fought at least a month-long battle against the disease until he succumbed to death on July 22, 1996. Given that Gregorio purportedly executed a deed during the last stages of his battle against his disease, we seriously doubt whether Gregorio could have read, or fully understood, the contents of the documents he signed or of the consequences of his act. We note in this regard that Gregorio was brought to the Veteran’s Hospital at Quezon City because his condition had worsened on or about the time the deed was allegedly signed. This transfer and fact of death not long after speak volumes about Gregorio’s condition at that time. We likewise see no conclusive evidence that the contents of the deed were sufficiently explained to Gregorio before he affixed his signature. The evidence the defendants-appellants offered to prove Gregorio’s consent to the sale consists of the testimonies of Atty. de Guzman and Antonio. As discussed above, we do not find Atty. de Guzman a credible witness. Thus, we fully concur with the heretofore-quoted lower court’s evaluation of the testimonies given by Atty. de Guzman and Antonio because this is an evaluation that the lower court was in a better position to make.

Additionally, the irregular and invalid notarization of the deed is a falsity that raises doubts on the regularity of the transaction itself. While the deed was indeed signed on July 18, 1996 at Bayombong, Nueva Vizcaya, the deed states otherwise, as it shows that the deed was executed on July 22, 1996 at Santiago City. Why such falsity was committed, and the circumstances under which this falsity was committed, speaks volume about the regularity and the validity of the sale. We cannot but consider the commission of this falsity, with the indispensable aid of Atty. de Guzman, an orchestrated attempt to legitimize a transaction that Gregorio did not intend to be binding upon him nor on his bounty.

Article 24 of the Civil Code tells us 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 be vigilant for his protection.18

Based on the foregoing, the court of Appeals concluded that Gregorio’s consent to the sale of the lots was absent, making the contract null and void. Consequently, the spouses Paragas could not have made a subsequent transfer of the property to Catalino Balacano. Indeed, nemo dat quod non habet. Nobody can dispose of that which does not belong to him.19

We likewise find to be in accord with the evidence on record the ruling of the Court of Appeals declaring the properties in controversy as paraphernal properties of Gregorio in the absence of competent evidence on the exact date of Gregorio’s acquisition of ownership of these lots.

On the credibility of witnesses, it is in rhyme with reason to believe the testimonies of the witnesses for the complainants vis-à-vis those of the defendants. In the assessment of the credibility of witnesses, we are guided by the following well-entrenched rules: (1) that evidence to be believed must not only spring from the mouth of a credible witness but must itself be credible, and (2) findings of facts and assessment of credibility of witness are matters best left to the trial court who had the front-line opportunity to personally evaluate the witnesses’ demeanor, conduct, and behavior while testifying.20

In the case at bar, we agree in the trial court’s conclusion that petitioners’ star witness, Atty. De Guzman is far from being a credible witness. Unlike this Court, the trial court had the unique opportunity of observing the demeanor of said witness. Thus, we affirm the trial court and the Court of Appeals’ uniform decision based on the whole evidence in record holding the Deed of Sale in question to be null and void.

In Domingo v. Court of Appeals,21 the Court declared as null and void the deed of sale therein inasmuch as the seller, at the time of the execution of the alleged contract, was already of advanced age and senile. We held –

. . . She died an octogenarian on March 20, 1966, barely over a year when the deed was allegedly executed on January 28, 1965, but before copies of the deed were entered in the registry allegedly on May 16 and June 10, 1966. The general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities. However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights then she is undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at the time of the alleged execution of the deed, Paulina was already incapacitated physically and mentally. She narrated that Paulina played with her waste and urinated in bed. Given these circumstances, there is in our view sufficient reason to seriously doubt that she consented to the sale of and the price for her parcels of land. Moreover, there is no receipt to show that said price was paid to and received by her. Thus, we are in agreement with the trial court’s finding and conclusion on the matter: . . .

In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution of the contract and suffering from liver cirrhosis at that – circumstances which raise grave doubts on his physical and mental capacity to freely consent to the contract. Adding to the dubiety of the purported sale and further bolstering respondents’ claim that their uncle Catalino, one of the children of the decedent, had a hand in the execution of the deed is the fact that on 17 October 1996, petitioners sold a portion of Lot 1175-E consisting of 6,416 square meters to Catalino for P60,000.00.22 One need not stretch his imagination to surmise that Catalino was in cahoots with petitioners in maneuvering the alleged sale.

On the whole, we find no reversible error on the part of the appellate court in CA-G.R. CV No. 64048 that would warrant the reversal thereof.

WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision23 and the Resolution,24 dated 15 February 2005 and 17 May 2005, respectively, of the Court of Appeals in CA-G.R. CV No. 64048 are hereby AFFIRMED. No costs.

SO ORDERED

FIRST DIVISION

G.R. No. 143826               August 28, 2003

HEIRS OF IGNACIA AGUILAR-REYES, Petitioners, vs.Spouses CIPRIANO MIJARES and FLORENTINA MIJARES, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Under the regime of the Civil Code, the alienation or encumbrance of a conjugal real property requires the consent of the wife. The absence of such consent renders the entire transaction1 merely voidable and not void.2The wife may, during the marriage and within ten years from the transaction questioned, bring an action for the annulment of the contract entered into by her husband without her consent.3

Assailed in this petition for review on certiorari are the January 26, 2000 Decision4 and June 19, 2000, Resolution5 of the Court of Appeals in CA-G.R. No. 28464 which declared respondents as purchasers in good faith and set aside the May 31, 1990 and June 29, 1990 Orders of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018.

The controversy stemmed from a dispute over Lot No. 4349-B-2,6 approximately 396 square meters, previously covered by Transfer Certificate of Title (TCT) No. 205445, located in Balintawak, Quezon City and registered in the name of Spouses Vicente Reyes and Ignacia Aguilar-Reyes.7 Said lot and the apartments built thereon were part of the spouses’ conjugal properties having been purchased using conjugal funds from their garments business.8

Vicente and Ignacia were married in 1960, but had been separated de facto since 1974.9 Sometime in 1984, Ignacia learned that on March 1, 1983, Vicente sold Lot No. 4349-B-2 to respondent spouses Cipriano and Florentina Mijares for P40,000.00.10 As a consequence thereof, TCT No. 205445 was cancelled and TCT No. 306087 was issued on April 19, 1983 in the name of respondent spouses.11 She likewise found out that Vicente filed a petition for administration and appointment of guardian with the Metropolitan Trial Court of Quezon City, Branch XXI. Vicente misrepresented therein that his wife, Ignacia, died on March 22, 1982, and that he and their 5 minor children were her only heirs.12 On September 29, 1983, the court appointed Vicente as the guardian of their minor children.13 Subsequently, in its Order dated October 14, 1983, the court authorized Vicente to sell the estate of Ignacia.14

On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent spouses demanding the return of her ½ share in the lot. Failing to settle the matter amicably, Ignacia filed on June 4, 1996 a complaint15 for annulment of sale against respondent spouses. The complaint was thereafter amended to include Vicente Reyes as one of the defendants.16

In their answer, respondent spouses claimed that they are purchasers in good faith and that the sale was valid because it was duly approved by the court.17 Vicente Reyes, on the other hand, contended that what he sold to the spouses was only his share in Lot No. 4349-B-2, excluding the share of his wife, and that he never represented that the latter was already dead.18 He likewise testified that respondent spouses, through the counsel they provided him, took advantage of his illiteracy by filing a petition for the issuance of letters of administration and appointment of guardian without his knowledge.19

On February 15, 1990, the court a quo rendered a decision declaring the sale of Lot No. 4349-B-2 void with respect to the share of Ignacia. It held that the purchase price of the lot was P110,000.00 and ordered Vicente to return ½ thereof or P55,000.00 to respondent spouses. The dispositive portion of the said decision, reads-

WHEREFORE, premises above considered, judgment is hereby rendered declaring the subject Deed of Absolute Sale, dated March [1,] 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares NULL AND VOID WITH RESPECT TO ONE-HALF (1/2) OF THE SAID PROPERTY;

The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the names of defendant spouses Cipriano Mijares and Florentina Mijares and to issue a new TCT in the name of the plaintiff Ignacia Aguilar-Reyes as owner in fee simple of one-half (1/2) of said property and the other half in the names of defendant spouses Cipriano Mijares and Florentin[a] Mijares, upon payment of the required fees therefore;

Said defendant spouses Mijares are also ordered to allow plaintiff the use and exercise of rights, as well as obligations, pertinent to her one-half (1/2) ownership of the subject property;

Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of interest from the execution of the subject Deed of Absolute Sale on March 1, 1983, to the defendant spouses Cipriano Mijares and Florentina Mijares which corresponds to the one-half (1/2) of the actual purchase price by the said Mijares but is annulled in this decision (sic);

Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of P50,000.00 by way of moral and exemplary damages, plus costs of this suit.

SO ORDERED.20

Ignacia filed a motion for modification of the decision praying that the sale be declared void in its entirety and that the respondents be ordered to reimburse to her the rentals they collected on the apartments built on Lot No. 4349-B-2 computed from March 1, 1983. 1âwphi1

On May 31, 1990, the trial court modified its decision by declaring the sale void in its entirety and ordering Vicente Reyes to reimburse respondent spouses the purchase price of P110,000, thus –

WHEREFORE, premises considered, judgment is hereby rendered declaring the subject Deed of Absolute Sale, dated March 1, 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares as nulland void ab initio, in view of the absence of the wife’s conformity to said transaction.

Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the name of Cipriano Mijares and Florentin[a] Mijares and issue a new TCT in the name of the plaintiff and defendant Ignacia Aguilar-Reyes and Vicente Reyes as owners in fee simple, upon payment of required fees therefore.

Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten thousand pesos (P110,000.00) with legal rate of interest at 12% per annum from the execution of the subject Deed of Absolute Sale on March 1, 1983.

Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way of moral and exemplary damages, plus costs of this suit.

SO ORDERED.21

On motion22 of Ignacia, the court issued an Order dated June 29, 1990 amending the dispositive portion of the May 31, 1990 decision by correcting the Transfer Certificate of Title of Lot No. 4349-B-2, in the name of Cipriano Mijares and Florentina Mijares, from TCT No. 306083 to TCT No. 306087; and directing the Register of Deeds of Quezon City to issue a new title in the name of Ignacia Aguilar-Reyes and Vicente Reyes. The Order likewise specified that Vicente Reyes should pay Ignacia Aguilar-Reyes the amount of P50,000.00 as moral and exemplary damages.23

Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the Court of Appeals.24 Pending the appeal, Ignacia died and she was substituted by her compulsory heirs.25

Petitioners contended that they are entitled to reimbursement of the rentals collected on the apartment built on Lot No. 4349-B-2, while respondent spouses claimed that they are buyers in good faith. On January 26, 2000, the Court of Appeals reversed and set aside the decision of the trial court. It ruled that notwithstanding the absence of Ignacia’s consent to the sale, the same must be held valid in favor of respondents because they were innocent purchasers for value.26 The decretal potion of the appellate court’s decision states –

WHEREFORE, premises considered, the Decision appealed from and the Orders dated May 31, 1990 and June 29, 1990, are SET ASIDE and in lieu thereof a new one is rendered –

1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by Vicente Reyes in favor of spouses Cipriano and [Florentina] Mijares valid and lawful;

2. Ordering Vicente Reyes to pay spouses Mijares the amount of P30,000.00 as attorney’s fees and legal expenses; and

3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.

No pronouncement as to costs.

SO ORDERED.27

Undaunted by the denial of their motion for reconsideration,28 petitioners filed the instant petition contending that the assailed sale of Lot No. 4392-B-2 should be annulled because respondent spouses were not purchasers in good faith.

The issues for resolution are as follows: (1) What is the status of the sale of Lot No. 4349-B-2 to respondent spouses? (2) Assuming that the sale is annullable, should it be annulled in its entirety or only with respect to the share of Ignacia? (3) Are respondent spouses purchasers in good faith?

Articles 166 and 173 of the Civil Code,29 the governing laws at the time the assailed sale was contracted, provide:

Art.166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real

property of the conjugal partnership without the wife’s consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same…

Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

Pursuant to the foregoing provisions, the husband could not alienate or encumber any conjugal real property without the consent, express or implied, of the wife otherwise, the contract is voidable. Indeed, in several cases30the Court had ruled that such alienation or encumbrance by the husband is void. The better view, however, is to consider the transaction as merely voidable and not void.31 This is consistent with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10 years from the questioned transaction, seek its annulment.32

In the case of Heirs of Christina Ayuste v. Court of Appeals,33 it was categorically held that –

There is no ambiguity in the wording of the law. A sale of real property of the conjugal partnership made by the husband without the consent of his wife is voidable. The action for annulment must be brought during the marriage and within ten years from the questioned transaction by the wife. Where the law speaks in clear and categorical language, there is no room for interpretation — there is room only for application.34

Likewise, in Spouses Guiang v. Court of Appeals,35 the Court quoted with approval the ruling of the trial court that under the Civil Code, the encumbrance or alienation of a conjugal real property by the husband absent the wife’s consent, is voidable and not void. Thus –

…Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real property of the conjugal partnership without the wife’s consent. The alienation or encumbrance if so made however is not null and void. It is merely voidable. The offended wife may bring an action to annul the said alienation or encumbrance. Thus, the provision of Article 173 of the Civil Code of the Philippines, to wit:

Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

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

In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal property having been purchased using the conjugal funds of the spouses during the subsistence of their marriage. It is beyond cavil therefore that the sale of said lot to respondent spouses without the knowledge and consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale which was filed on June 4, 1986, before her demise is perfectly within the 10 year prescriptive period under Article 173 of the

Civil Code. Even if we reckon the period from November 25, 1978 which was the date when Vicente and the respondent spouses entered into a contract concerning Lot No. 4349-B-2, Ignacia’s action would still be within the prescribed period.

Anent the second issue, the trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its entirety. InBucoy v. Paulino,36 a case involving the annulment of sale with assumption of mortgages executed by the husband without the consent of the wife, it was held that the alienation or encumbrance must be annulled in its entirety and not only insofar as the share of the wife in the conjugal property is concerned. Although the transaction in the said case was declared void and not merely voidable, the rationale for the annulment of the whole transaction is the same thus –

The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the husband without the wife's consent, may be annulled by the wife. Had Congress intended to limit such annulment in so far as the contract shall "prejudice" the wife, such limitation should have been spelled out in the statute. It is not the legitimate concern of this Court to recast the law. As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C. Puno of the Court of First Instance correctly stated, "[t]he rule (in the first sentence of Article 173) revokes Baello vs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430," in which cases annulment was held to refer only to the extent of the one-half interest of the wife…

The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share of the wife, is not without its basis in the common-sense rule. To be underscored here is that upon the provisions of Articles 161, 162 and 163 of the Civil Code, the conjugal partnership is liable for many obligations while the conjugal partnership exists. Not only that. The conjugal property is even subject to the payment of debts contracted by either spouse before the marriage, as those for the payment of fines and indemnities imposed upon them after the responsibilities in Article 161 have been covered (Article 163, par. 3), if it turns out that the spouse who is bound thereby, "should have no exclusive property or if it should be insufficient." These are considerations that go beyond the mere equitable share of the wife in the property. These are reasons enough for the husband to be stopped from disposing of the conjugal property without the consent of the wife. Even more fundamental is the fact that the nullity is decreed by the Code not on the basis of prejudice but lack of consent of an indispensable party to the contract under Article 166.37

With respect to the third issue, the Court finds that respondent spouses are not purchasers in good faith. A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted in good faith.38

In the instant case, there existed circumstances that should have placed respondent spouses on guard. The death certificate of Ignacia, shows that she died on March 22, 1982. The same death certificate, however, reveals that – (1) it was issued by the Office of the Civil Registrar of Lubao Pampanga on March 10, 1982; (2) the alleged death of Ignacia was reported to the Office of the Civil Registrar on March 4, 1982; and (3) her burial or cremation would be on March 8, 1982.39 These obvious flaws in the death certificate should have prompted respondents to investigate further, especially so that respondent Florentina Mijares admitted on cross examination that she asked for the death certificate of Ignacia because she was suspicious that Ignacia was still alive.40 Moreover, respondent spouses had all the opportunity to verify the claim of Vicente that he is a widower because it was their lawyer, Atty. Rodriguito S. Saet, who represented Vicente in the special proceedings before the Metropolitan Trial Court.

Neither can respondent spouses rely on the alleged court approval of the sale. Note that the Order issued by the Metropolitan Trial Court of Quezon City, Branch XXXI, appointing Vicente as guardian of his 5 minor children, as well as the Order authorizing him to sell the estate of Ignacia were issued only on September 29, 1983 and October 14, 1983, respectively. On the other hand, the sale of the entire Lot No. 4349-B-2 to respondent spouses appears to have been made not on March 1, 1983, but even as early as November 25, 1978. In the "Agreement" dated November 25, 1978, Vicente in consideration of the amount of P110,000.00, sold to Cipriano Mijares Lot No. 4349-B-2 on installment basis, with the first installment due on or before July 31, 1979.41 This was followed by a "Memorandum of Understanding" executed on July 30, 1979, by Vicente and Cipriano – (1) acknowledging Cipriano’s receipt of Vicente’s down payment in the amount of P50,000.00; and (2) authorizing Florentina Mijares to collect rentals.42 On July 14, 1981, Vicente and Cipriano executed another "Memorandum of Agreement," stating, among other, that out of the purchase price of P110,000.00 Vicente had remaining balance of P19,000.00.43 Clearly therefore, the special proceedings before the Metropolitan Trial Court of Quezon City, Branch XXXI, could not have been the basis of respondent spouses’ claim of good faith because the sale of Lot No. 4349-B-2 occurred prior thereto.

Respondent spouses cannot deny knowledge that at the time of the sale in 1978, Vicente was married to Ignacia and that the latter did not give her conformity to the sale. This is so because the 1978 "Agreement" described Vicente as "married" but the conformity of his wife to the sale did not appear in the deed. Obviously, the execution of another deed of sale in 1983 over the same Lot No. 4349-B-2, after the alleged death of Ignacia on March 22, 1982, as well as the institution of the special proceedings were, intended to correct the absence of Ignacia’s consent to the sale. Even assuming that respondent spouses believed in good faith that Ignacia really died on March 22, 1982, after they purchased the lot, the fact remains that the sale of Lot No. 4349-B-2 prior to Ignacia’s alleged demise was without her consent and therefore subject to annulment. The October 14, 1983 order authorizing the sale of the estate of Ignacia, could not have validated the sale of Lot No. 4349-B-2 because said order was issued on the assumption that Ignacia was already dead and that the sale dated March 1, 1983 was never categorically approved in the said order.

The fact that the 5 minor children44 of Vicente represented by the latter, signed the March 1, 1983 deed of sale of Lot No. 4349-B-2 will not estop them from assailing the validity thereof. Not only were they too young at that time to understand the repercussions of the sale, they likewise had no right to sell the property of their mother who, when they signed the deed, was very much alive.

If a voidable contract is annulled, the restoration of what has been given is proper. The relationship between parties in any contract even if subsequently annulled must always be characterized and punctuated by good faith and fair dealing. Hence, for the sake of justice and equity, and in consonance with the salutary principle of non-enrichment at another’s expense, the Court sustains the trial court’s order directing Vicente to refund to respondent spouses the amount of P110,000.00 which they have paid as purchase price of Lot No. 4349-B-2.45The court a quo correctly found that the subject of the sale was the entire Lot No. 4349-B-2 and that the consideration thereof is not P40,000.00 as stated in the March 1, 1983 deed of sale, but P110,000.00 as evidenced by the – (1) "Agreement" dated November 25, 1978 as well as the July 30, 1979 "Memorandum of Understanding" and the July 14, 1981 "Memorandum of Agreement" which served as receipts of the installment payments made by respondent Cipriano Mijares; and (2) the receipt duly signed by Vicente Reyes acknowledging receipt of the amount of P110,000.00 from respondent spouses as payment of the sale of the controverted lot.46

The trial court, however, erred in imposing 12% interest per annum on the amount due the respondents. InEastern Shipping Lines, Inc. v. Court of Appeals,47 it was held that interest on obligations not constituting a loan or forbearance of money is six percent (6%) annually. If the

purchase price could be established with certainty at the time of the filing of the complaint, the six percent (6%) interest should be computed from the date the complaint was filed until finality of the decision. In Lui v. Loy,48 involving a suit for reconveyance and annulment of title filed by the first buyer against the seller and the second buyer, the Court, ruling in favor of the first buyer and annulling the second sale, ordered the seller to refund to the second buyer (who was not a purchaser in good faith) the purchase price of the lots. It was held therein that the 6% interest should be computed from the date of the filing of the complaint by the first buyer. After the judgment becomes final and executory until the obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed equivalent to a forbearance of credit.49

Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined with certainty at the time of the filing of the complaint shall earn 6% interest per annum from June 4, 1986 until the finality of this decision. If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the interest rate shall be twelve percent (12%) per annum computed from the time the judgment becomes final and executory until it is fully satisfied.

Petitioner’s prayer for payment of rentals should be denied. Other than the allegation of Ignacia in her Sinumpaang Salaysay that the apartments could be rented at P1,000.00 a month, no other evidence was presented to substantiate her claim. In awarding rentals which are in the nature of actual damages, the Court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss.50 None, having been presented in the case at bar, petitioner’s claim for rentals must be denied.

While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, law and jurisprudence authorize a tribunal to consider errors, although unassigned, if they involve (1) errors affecting the lower court’s jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical errors.51 In this case, though defendant Vicente Reyes did not appeal, the "plain error" committed by the court a quo as to the award of moral and exemplary damages must be corrected. These awards cannot be lumped together as was done by the trial court.52 Moral and exemplary damages are different in nature, and require separate determination. Moral damages are awarded where the claimant experienced physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury as a result of the act complained of.53 The award of exemplary damages, on the other hand, is warranted when moral, temperate, liquidated, or compensatory damages were likewise awarded by the court.54

Hence, the trial court’s award of "P50,000.00 by way of moral and exemplary damages" should be modified. Vicente Reyes should be ordered to pay the amounts of P25,000.00 as moral damages and P25,000.00 as exemplary damages. Since Vicente Reyes was among the heirs substituted to the late Ignacia Aguilar-Reyes, payment of moral and exemplary damages must be made by Vicente to his children, petitioners in this case.

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The January 26, 2000 Decision and June 19, 2002, Resolution of the Court of Appeals in CA-G.R. No. 28464 are REVERSED and SET ASIDE. The May 31, 1990 Order of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018, which annulled the March 1, 1983 Deed of Absolute Sale over Lot No. 4349-B-2, and ordered the Register of Deeds of Quezon City to cancel TCT No. 306087 in the name of respondent spouses Cipriano Mijares and Florentina Mijares covering the same property; as well as the June 29, 1990 Order correcting the typographical errors in the order dated March 1, 1983, are REINSTATED, with the following modifications –

(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of title over Lot No. 4349-B-2, in the name of petitioners as co-owners thereof;

(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of P110,000.00 as purchase price of Lot No. 4349-B-2, with interest at 6% per annum from June 4, 1986, until finality of this decision. After this decision becomes final, interest at the rate of 12% per annum on the principal and interest (or any part thereof) shall be imposed until full payment.

(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar-Reyes, the amounts of P25,000.00 as moral damages and P25,000.00 as exemplary damages.

SO ORDERED.

Davide, Jr., C.J.,

FIRST DIVISION

 

G.R. No. 125172 June 26, 1998

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

 

PANGANIBAN, J.:

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

The Case

These were the principles that guided the Court in deciding this petition for review of the Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated by the Court of Appeals in CA-GR CV No. 41758, affirming the Decision of the lower court and denying reconsideration, respectively.

On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against her husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said Complaint sought the declaration of a certain deed of sale, which involved the conjugal property of private respondent and her husband, null and void. The case was raffled to the Regional Trial Court of Koronadal, South Cotabato, Branch 25. In due course, the trial court rendered a Decision 4 dated September 9, 1992, disposing as follow: 5

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

1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A") and the "amicable settlement" dated March 16, 1990 (Exh. "B") as null void and of no effect;

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

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

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

Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court, in its challenged Decision, ruled as follow: 6

WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby AFFIRMED by this Court. No costs considering plaintiff-appellee's failure to file her brief despite notice.

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

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

The Facts

The facts of this case are simple. Over the objection of private respondent and while she was in Manila seeking employment, her husband sold to the petitioners-spouses one half of their conjugal peoperty, consisting of their residence and the lot on which it stood. The circumstances of this sale are set forth in the Decision of Respondent Court, which quoted from the Decision of the trial court as follows: 8

1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They were married on December 24, 1968 in Bacolod City, before a judge. This is admitted by defendants-spouses Antonio and Luzviminda Guiang in their answer, and also admitted by defendant Judie Corpuz when he testified in court (tsn. p. 3, June 9, 1992), although the latter says that they were married in 1967. The couple have three children, namely: Junie — 18 years old, Harriet — 17 years of age, and Jodie or Joji, the youngest, who was 15 years of age in August, 1990 when her mother testified in court.

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

2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses Antonio and Luzviminda Guiang. The latter have since then occupied the one-half portion [and] built their house thereon (tsn. p. 4, May 22, 1992). They are thus adjoining neighbors of the Corpuzes.

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

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

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

4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed through the sale of the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1, 1990, he sold to defendant Luzviminda Guiang thru a document known as "Deed of Transfer of Rights" (Exh. "A") the remaining one-half portion of their lot and the house standing thereon for a total consideration of P30,000.00 of which P5,000.00 was to be paid in June, 1990. Transferor Judie Corpuz's children Junie and Harriet signed the document as witness.

Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in defendant Judie Corpuz's title over the lot transferred, defendant Luzviminda Guiang as vendee executed another agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh. "3"), this time with Manuela Jimenez Callejo, a widow of the original registered owner from whom the couple Judie and Gilda Corpuz originally bought the lot (Exh. "2"), who signed as vendor for a consideration of P9,000.00. Defendant Judie Corpuz signed as a witness to the sale (Exh. "3-A"). The new sale

(Exh. "3") describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from the mass of evidence that the correct lot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier sold to the couple Gilda and Judie Corpuz.

5. Sometimes on March 11, 1990, plaintiff returned home. She found her children staying with other households. Only Junie was staying in their house. Harriet and Joji were with Mr. Panes. Gilda gathered her children together and stayed at their house. Her husband was nowhere to be found. She was informed by her children that their father had a wife already.

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

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

FAIL NOT UNDER THE PENALTY OF THE LAW.

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

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

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

8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation of the Deed of Transfer of Rights, Exh. "A", P9,000.00 as the amount they paid to Mrs. Manuela Callejo, having assumed the remaining obligation of the Corpuzes to Mrs. Callejo (Exh. "3"); P100.00 for the preparation of Exhibit "3"; a total of P759.62 basic tax and special education fund on the lot; P127.50 as the total documentary stamp tax on the various documents; P535.72 for the capital gains tax; P22.50 as transfer tax; a standard fee of P17.00; certification fee of P5.00. These expenses particularly the taxes and other expenses towards the transfer of the title to the spouses Guiangs were incurred for the whole Lot 9, Block 8, (LRC) Psd-165409.

Ruling of Respondent Court

Respondent Court found no reversible error in the trial court's ruling that any alienation or encumbrance by the husband of the conjugal propety without the consent of his wife is null and void as provided under Article 124 of the Family Code. It also rejected petitioners' contention that the "amicable sttlement" ratified said sale, citing Article 1409 of the Code which expressly bars ratification of the contracts specified therein, particularly those "prohibited or declared void by law."

Hence, this petition. 9

The Issues

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

I

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

II

Whether or not the Cour of Appeals erred in not declairing as voidable contract under Art. 1390 of the Civil Code the impugned Deed of Transfer of Rights which was validly ratified thru the execution of the "amicable settlement" by the contending parties.

III

Whether or not the Court of Appeals erred in not setting aside the findings of the Court a quo which recognized as lawful and valid the ownership and possession of private respondent over the remaining one half (1/2) portion of the properly.

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

This Court's Ruling

The petition is bereft of merit.

First Issue: Void or Voidable Contract?

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

Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:

xxx xxx xxx

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

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

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

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

A I was still in Manila during that time.

xxx xxx xxx

ATTY. FUENTES:

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

A That was on March 11, 1990, Ma'am.

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

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

This being the case, said contract properly falls within the ambit of Article 124 of the Family Code, which was correctly applied by the teo lower court:

Art. 124. The administration and enjoyment of the conjugal partnerhip properly shall belong to both spouses jointly. In case of disgreement, the husband's decision shall prevail, subject recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (165a) (Emphasis supplied)

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

The legal provision is clear. The disposition or encumbrance is void. It becomes still clearer if we compare the same with the equivalent provision of the Civil Code of the Philippines. Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real property of the conjugal partnershit without the wife's consent. The alienation or encumbrance if so made however is not null and void. It is merely voidable. The offended wife may bring an action to annul the said alienation or encumbrance. Thus the provision of Article 173 of the Civil Code of the Philippines, to wit:

Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.(n)

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

Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were perpetrated in the execution of the document embodying the amicable settlement. Gilda Corpuz alleged during trial that barangay authorities made her sign said document through misrepresentation andcoercion. 13 In any event, its execution does not alter the void character of the deed of sale between the husband and the petitioners-spouses, as will be discussed later. The fact remains that such contract was entered into without the wife's consent.

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

Second Issue: Amicable Settlement

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

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

By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to Transfer of Rights (Exh. "A") cannot be ratified, even by an "amicable settlement". The participation by some barangay authorities in the "amicable settlement" cannot otherwise validate an invalid act. Moreover, it cannot be denied that the "amicable

settlement (Exh. "B") entered into by plaintiff Gilda Corpuz and defendent spouses Guiang is a contract. It is a direct offshoot of the Deed of Transfer of Rights (Exh. "A"). By express provision of law, such a contract is also void. Thus, the legal provision, to wit:

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

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

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

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

WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision and Resolution. Costs against petitioners.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 155043             September 30, 2004

ARTURO R. ABALOS, petitioner, vs.DR. GALICANO S. MACATANGAY, JR., respondent.

D E C I S I O N

TINGA, J.:

The instant petition seeks a reversal of the Decision of the Court of Appeals in CA-G.R. CV No. 48355 entitled "Dr. Galicano S. Macatangay, Jr. v. Arturo R. Abalos and Esther Palisoc-Abalos," promulgated on March 14, 2002. The appellate court reversed the trial court’s decision which

dismissed the action for specific performance filed by respondent, and ordered petitioner and his wife to execute in favor of herein respondent a deed of sale over the subject property.

Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with improvements located at Azucena St., Makati City consisting of about three hundred twenty-seven (327) square meters, covered by Transfer Certificate of Title (TCT) No. 145316 of the Registry of Deeds of Makati.

Armed with a Special Power of Attorney dated June 2, 1988, purportedly issued by his wife, Arturo executed aReceipt and Memorandum of Agreement (RMOA) dated October 17, 1989, in favor of respondent, binding himself to sell to respondent the subject property and not to offer the same to any other party within thirty (30) days from date. Arturo acknowledged receipt of a check from respondent in the amount of Five Thousand Pesos (P5,000.00), representing earnest money for the subject property, the amount of which would be deducted from the purchase price of One Million Three Hundred Three Hundred Thousand Pesos (P1,300,000.00). Further, the RMOA stated that full payment would be effected as soon as possession of the property shall have been turned over to respondent.

Subsequently, Arturo’s wife, Esther, executed a Special Power of Attorney dated October 25, 1989, appointing her sister, Bernadette Ramos, to act for and in her behalf relative to the transfer of the property to respondent. Ostensibly, a marital squabble was brewing between Arturo and Esther at the time and to protect his interest, respondent caused the annotation of his adverse claim on the title of the spouses to the property on November 14, 1989.

On November 16, 1989, respondent sent a letter to Arturo and Esther informing them of his readiness and willingness to pay the full amount of the purchase price. The letter contained a demand upon the spouses to comply with their obligation to turn over possession of the property to him. On the same date, Esther, through her attorney-in-fact, executed in favor of respondent, a Contract to Sell the property to the extent of her conjugal interest therein for the sum of six hundred fifty thousand pesos (P650,000.00) less the sum already received by her and Arturo. Esther agreed to surrender possession of the property to respondent within twenty (20) days from November 16, 1989, while the latter promised to pay the balance of the purchase price in the amount of one million two hundred ninety thousand pesos (P1,290,000.00) after being placed in possession of the property. Esther also obligated herself to execute and deliver to respondent a deed of absolute sale upon full payment.

In a letter dated December 7, 1989, respondent informed the spouses that he had set aside the amount of One Million Two Hundred Ninety Thousand Pesos (P1,290,000.00) as evidenced by Citibank Check No. 278107 as full payment of the purchase price. He reiterated his demand upon them to comply with their obligation to turn over possession of the property. Arturo and Esther failed to deliver the property which prompted respondent to cause the annotation of another adverse claim on TCT No. 145316. On January 12, 1990, respondent filed a complaint for specific performance with damages against petitioners. Arturo filed his answer to the complaint while his wife was declared in default.

The Regional Trial Court (RTC) dismissed the complaint for specific performance. It ruled that the Special Power of Attorney (SPA) ostensibly issued by Esther in favor of Arturo was void as it was falsified. Hence, the court concluded that the SPA could not have authorized Arturo to sell the property to respondent. The trial court also noted that the check issued by respondent to cover the earnest money was dishonored due to insufficiency of funds and while it was replaced with another check by respondent, there is no showing that the second check was issued as payment for the earnest money on the property.

On appeal taken by respondent, the Court of Appeals reversed the decision of the trial court. It ruled that the SPA in favor of Arturo, assuming that it was void, cannot affect the transaction between Esther and respondent. The appellate court ratiocinated that it was by virtue of the SPA executed by Esther, in favor of her sister, that the sale of the property to respondent was effected. On the other hand, the appellate court considered the RMOA executed by Arturo in favor of respondent valid to effect the sale of Arturo’s conjugal share in the property.

Dissatisfied with the appellate court’s disposition of the case, petitioner seeks a reversal of its decision alleging that:

I.

The Court of Appeals committed serious and manifest error when it decided on the appeal without affording petitioner his right to due process.

II.

The Court of Appeals committed serious and manifest error in reversing and setting aside the findings of fact by the trial court.

III.

The Court of Appeals erred in ruling that a contract to sell is a contract of sale, and in ordering petitioner to execute a registrable form of deed of sale over the property in favor of respondent.1

Petitioner contends that he was not personally served with copies of summons, pleadings, and processes in the appeal proceedings nor was he given an opportunity to submit an appellee’s brief. He alleges that his counsel was in the United States from 1994 to June 2000, and he never received any news or communication from him after the proceedings in the trial court were terminated. Petitioner submits that he was denied due process because he was not informed of the appeal proceedings, nor given the chance to have legal representation before the appellate court.

We are not convinced. The essence of due process is an opportunity to be heard. Petitioner’s failure to participate in the appeal proceedings is not due to a cause imputable to the appellate court but because of petitioner’s own neglect in ascertaining the status of his case. Petitioner’s counsel is equally negligent in failing to inform his client about the recent developments in the appeal proceedings. Settled is the rule that a party is bound by the conduct, negligence and mistakes of his counsel.2 Thus, petitioner’s plea of denial of due process is downright baseless.

Petitioner also blames the appellate court for setting aside the factual findings of the trial court and argues that factual findings of the trial court are given much weight and respect when supported by substantial evidence. He asserts that the sale between him and respondent is void for lack of consent because the SPA purportedly executed by his wife Esther is a forgery and therefore, he could not have validly sold the subject property to respondent.

Next, petitioner theorizes that the RMOA he executed in favor of respondent was not perfected because the check representing the earnest money was dishonored. He adds that there is no evidence on record that the second check issued by respondent was intended to replace the first check representing payment of earnest money.

Respondent admits that the subject property is co-owned by petitioner and his wife, but he objects to the allegations in the petition bearing a relation to the supposed date of the marriage of the vendors. He contends that the alleged date of marriage between petitioner and his wife is a new factual issue which was not raised nor established in the court a quo. Respondent claims that there is no basis to annul the sale freely and voluntarily entered into by the husband and the wife.

The focal issue in the instant petition is whether petitioner may be compelled to convey the property to respondent under the terms of the RMOA and the Contract to Sell. At bottom, the resolution of the issue entails the ascertainment of the contractual nature of the two documents and the status of the contracts contained therein.

Contracts, in general, require the presence of three essential elements: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.3

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation.4 In a contract of sale, the seller must consent to transfer ownership in exchange for the price, the subject matter must be determinate, and the price must be certain in money or its equivalent.5 Being essentially consensual, a contract of sale 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.6 However, ownership of the thing sold shall not be transferred to the vendee until actual or constructive delivery of the property.7

On the other hand, an accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option.8 An option merely grants a privilege to buy or sell within an agreed time and at a determined price. It is separate and distinct from that which the parties may enter into upon the consummation of the option.9 A perfected contract of option does not result in the perfection or consummation of the sale; only when the option is exercised may a sale be perfected.10 The option must, however, be supported by a consideration distinct from the price.11

Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the property to respondent for a price certain within a period of thirty days. The RMOA does not impose upon respondent an obligation to buy petitioner’s property, as in fact it does not even bear his signature thereon. It is quite clear that after the lapse of the thirty-day period, without respondent having exercised his option, Arturo is free to sell the property to another. This shows that the intent of Arturo is merely to grant respondent the privilege to buy the property within the period therein stated. There is nothing in the RMOA which indicates that Arturo agreed therein to transfer ownership of the land which is an essential element in a contract of sale. Unfortunately, the option is not binding upon the promissory since it is not supported by a consideration distinct from the price.12

As a rule, the holder of the option, after accepting the promise and before he exercises his option, is not bound to buy. He is free either to buy or not to buy later. In Sanchez v. Rigos13 we ruled that in an accepted unilateral promise to sell, the promissor is not bound by his promise and may, accordingly, withdraw it, since there may be no valid contract without a cause or consideration. Pending notice of its withdrawal, his accepted promise partakes of the nature of an offer to sell which, if acceded or consented to, results in a perfected contract of sale.

Even conceding for the nonce that respondent had accepted the offer within the period stated and, as a consequence, a bilateral contract of purchase and sale was perfected, the outcome would be the same. To benefit from such situation, respondent would have to pay or at least make a valid tender of payment of the price for only then could he exact compliance with the undertaking of the

other party.14 This respondent failed to do. By his own admission, he merely informed respondent spouses of his readiness and willingness to pay. The fact that he had set aside a check in the amount of One Million Two Hundred Ninety Thousand Pesos (P1,290,000.00) representing the balance of the purchase price could not help his cause. Settled is the rule that tender of payment must be made in legal tender. A check is not legal tender, and therefore cannot constitute a valid tender of payment.15 Not having made a valid tender of payment, respondent’s action for specific performance must fail.

With regard to the payment of Five Thousand Pesos (P5,000.00), the Court is of the view that the amount is not earnest money as the term is understood in Article 1482 which signifies proof of the perfection of the contract of sale, but merely a guarantee that respondent is really interested to buy the property. It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale.16 No reservation of ownership on the part of Arturo is necessary since, as previously stated, he has never agreed to transfer ownership of the property to respondent.

Granting for the sake of argument that the RMOA is a contract of sale, the same would still be void not only for want of consideration and absence of respondent’s signature thereon, but also for lack of Esther’s conformity thereto. Quite glaring is the absence of the signature of Esther in the RMOA, which proves that she did not give her consent to the transaction initiated by Arturo. The husband cannot alienate any real property of the conjugal partnership without the wife’s consent.17

However, it was the Contract to Sell executed by Esther through her attorney-in-fact which the Court of Appeals made full use of. Holding that the contract is valid, the appellate court explained that while Esther did not authorize Arturo to sell the property, her execution of the SPA authorizing her sister to sell the land to respondent clearly shows her intention to convey her interest in favor of respondent. In effect, the court declared that the lack of Esther’s consent to the sale made by Arturo was cured by her subsequent conveyance of her interest in the property through her attorney-in-fact.

We do not share the ruling.

The nullity of the RMOA as a contract of sale emanates not only from lack of Esther’s consent thereto but also from want of consideration and absence of respondent’s signature thereon. Such nullity cannot be obliterated by Esther’s subsequent confirmation of the putative transaction as expressed in the Contract to Sell. Under the law, a void contract cannot be ratified18 and the action or defense for the declaration of the inexistence of a contract does not prescribe.19 A void contract produces no effect either against or in favor of anyone–it cannot create, modify or extinguish the juridical relation to which it refers.20

True, in the Contract to Sell, Esther made reference to the earlier RMOA executed by Arturo in favor of respondent. However, the RMOA which Arturo signed is different from the deed which Esther executed through her attorney-in-fact. For one, the first is sought to be enforced as a contract of sale while the second is purportedly a contract to sell only. For another, the terms and conditions as to the issuance of title and delivery of possession are divergent.

The congruence of the wills of the spouses is essential for the valid disposition of conjugal property. Where the conveyance is contained in the same document which bears the conformity of both husband and wife, there could be no question on the validity of the transaction. But when there are two (2) documents on which the signatures of the spouses separately appear, textual concordance of the documents is indispensable. Hence, in this case where the wife’s putative consent to the sale of conjugal property appears in a separate document which does not, however, contain the same

terms and conditions as in the first document signed by the husband, a valid transaction could not have arisen.

Quite a bit of elucidation on the conjugal partnership of gains is in order.

Arturo and Esther appear to have been married before the effectivity of the Family Code. There being no indication that they have adopted a different property regime, their property relations would automatically be governed by the regime of conjugal partnership of gains.21

The subject land which had been admittedly acquired during the marriage of the spouses forms part of their conjugal partnership.22

Under the Civil Code, the husband is the administrator of the conjugal partnership. This right is clearly granted to him by law.23 More, the husband is the sole administrator. The wife is not entitled as of right to joint administration.24

The husband, even if he is statutorily designated as administrator of the conjugal partnership, cannot validly alienate or encumber any real property of the conjugal partnership without the wife’s consent.25 Similarly, the wife cannot dispose of any property belonging to the conjugal partnership without the conformity of the husband. The law is explicit that the wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law.26

More significantly, it has been held that prior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement. The interest of each spouse is limited to the net remainder or "remanente liquido" (haber ganancial) resulting from the liquidation of the affairs of the partnership after its dissolution.27 Thus, the right of the husband or wife to one-half of the conjugal assets does not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after settlement of conjugal obligations, there are net assets left which can be divided between the spouses or their respective heirs.28

In not a few cases, we ruled that the sale by the husband of property belonging to the conjugal partnership without the consent of the wife when there is no showing that the latter is incapacitated is void ab initio because it is in contravention of the mandatory

requirements of Article 166 of the Civil Code.29 Since Article 166 of the Civil Code requires the consent of the wife before the husband may alienate or encumber any real property of the conjugal partnership, it follows that acts or transactions executed against this mandatory provision are void except when the law itself authorizes their validity.30

Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals,31 we ruled that neither spouse could alienate in favor of another, his or her interest in the partnership or in any property belonging to it, or ask for partition of the properties before the partnership itself had been legally dissolved. Nonetheless, alienation of the share of each spouse in the conjugal partnership could be had after separation of property of the spouses during the marriage had been judicially decreed, upon their petition for any of the causes specified in Article 19132 of the Civil Code in relation to Article 21433 thereof.

As an exception, the husband may dispose of conjugal property without the wife’s consent if such sale is necessary to answer for conjugal liabilities mentioned in Articles 161 and 162 of the Civil Code.34 In Tinitigan v. Tinitigan, Sr.,35 the Court ruled that the husband may sell property belonging to the conjugal partnership even without the consent of the wife if the sale is necessary to answer for a big conjugal liability which might endanger the family’s economic standing. This is one instance where the wife’s consent is not required and, impliedly, no judicial intervention is necessary.

Significantly, the Family Code has introduced some changes particularly on the aspect of the administration of the conjugal partnership. The new law provides that the administration of the conjugal partnership is now a joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration does not include the power to dispose or encumber property belonging to the conjugal partnership.36 In all instances, the present law specifically requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be void.37

Inescapably, herein petitioner’s action for specific performance must fail. Even on the supposition that the parties only disposed of their respective shares in the property, the sale, assuming that it exists, is still void for as previously stated, the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership. Nemo dat qui non habet. No one can give what he has not.

WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE. The complaint in Civil Case No. 90-106 of the Regional Trial Court of Makati is ordered DISMISSED. No pronouncement as to costs.

SO ORDERED.

FIRST DIVISION

G.R. No. 165420               June 30, 2005

CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A. TULIAO, CORAZON A. JALECO and LILIA A. OLAYON, petitioners, vs.SPOUSES ANTONIO PADUA and EUGENIA PADUA, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the February 24, 2004 decision of the Court of Appeals in CA-G.R. CV No. 70239,1 and its September 28, 2004 resolution, denying reconsideration thereof.2

In her complaint for partition of real property, annulment of titles with damages,3 Concepcion Ainza (Concepcion) alleged that respondent-spouses Eugenia (Eugenia) and Antonio Padua (Antonio) owned a 216.40 sq. m. lot with an unfinished residential house located at No. 85-A Durian corner Pajo Sts., Barangay Quirino 2-C, Project 2, Quezon City, covered by Transfer Certificate of Title No. 271935. Sometime in April 1987, she bought one-half of an undivided portion of the property from

her daughter, Eugenia and the latter’s husband, Antonio, for One Hundred Thousand Pesos (P100,000.00).

No Deed of Absolute Sale was executed to evidence the transaction, but cash payment was received by the respondents, and ownership was transferred to Concepcion through physical delivery to her attorney-in-fact and daughter, Natividad Tuliao (Natividad). Concepcion authorized Natividad and the latter’s husband, Ceferino Tuliao (Ceferino) to occupy the premises, and make improvements on the unfinished building.

Thereafter, Concepcion alleged that without her consent, respondents caused the subdivision of the property into three portions and registered it in their names under TCT Nos. N-155122, N-155123 and N-155124 in violation of the restrictions annotated at the back of the title.

On the other hand, Antonio averred that he bought the property in 1980 and introduced improvements thereon. Between 1989 and 1990, he and his wife, Eugenia, allowed Natividad and Ceferino to occupy the premises temporarily. In 1994, they caused the subdivision of the property and three (3) separate titles were issued.

Thereafter, Antonio requested Natividad to vacate the premises but the latter refused and claimed that Concepcion owned the property. Antonio thus filed an ejectment suit on April 1, 1999. Concepcion, represented by Natividad, also filed on May 4, 1999 a civil case for partition of real property and annulment of titles with damages.

Antonio claimed that his wife, Eugenia, admitted that Concepcion offered to buy one third (1/3) of the property who gave her small amounts over several years which totaled P100,000.00 by 1987 and for which she signed a receipt.

On January 9, 2001, the Regional Trial Court of Quezon City, Branch 85, rendered judgment4 in favor of Concepcion, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants and ordering:

1. the subdivision of the subject property between the said plaintiff and defendants in equal shares with one-half of the property, including the portion occupied by the spouses Severino and Natividad Tuliao to be awarded to the plaintiff;

2. the cancellation of Transfer Certificates of Title Nos. N-155122, N-155123, N-155124 of the Registry of Deeds of Quezon City;

3. the defendants to pay to the plaintiff P50,000.00 as attorney’s fees.

SO ORDERED.5

The trial court upheld the sale between Eugenia and Concepcion. It ruled that the sale was consummated when both contracting parties complied with their respective obligations. Eugenia transferred possession by delivering the property to Concepcion who in turn paid the purchase price. It also declared that the transfer of the property did not violate the Statute of Frauds because a fully executed contract does not fall within its coverage.

On appeal by the respondents, the Court of Appeals reversed the decision of the trial court, and declared the sale null and void. Applying Article 124 of the Family Code, the Court of Appeals ruled that since the subject property is conjugal, the written consent of Antonio must be obtained for the sale to be valid. It also ordered the spouses Padua to return the amount of P100,000.00 to petitioners plus interest.6

The sole issue for resolution in this petition for review is whether there was a valid contract of sale between Eugenia and Concepcion.

A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof based on subject matter, price and terms of payment.7

In this case, there was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia offered to sell a portion of the property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as consideration. The contract of sale was consummated when both parties fully complied with their respective obligations. Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of One Hundred Thousand Pesos (P100,000.00), as evidenced by the receipt which reads:

R E C E I P T

Received the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as payment for the lot on 85-A Durian St., Project 2, Quezon City, from Mrs. Concepcion R. Ainza, on April, 1987.

_______(Sgd.)______

Mrs.. Eugenia A. Padua8

The verbal contract of sale between Eugenia and Concepcion did not violate the provisions of the Statute of Frauds that a contract for the sale of real property shall be unenforceable unless the contract or some note or memorandum of the sale is in writing and subscribed by the party charged or his agent.9 When a verbal contract has been completed, executed or partially consummated, as in this case, its enforceability will not be barred by the Statute of Frauds, which applies only to an executory agreement.10 Thus, where one party has performed his obligation, oral evidence will be admitted to prove the agreement.11

In the instant case, the oral contract of sale between Eugenia and Concepcion was evidenced by a receipt signed by Eugenia. Antonio also stated that his wife admitted to him that she sold the property to Concepcion.

It is undisputed that the subject property was conjugal and sold by Eugenia in April 1987 or prior to the effectivity of the Family Code on August 3, 1988, Article 254 of which repealed Title V, Book I of the Civil Code provisions on the property relations between husband and wife. However, Article 256 thereof limited its retroactive effect only to cases where it would not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. In the case at bar, vested rights of Concepcion will be impaired or prejudiced by the application of the Family Code; hence, the provisions of the Civil Code should be applied.

In Felipe v. Heirs of Aldon, et al.,12 the legal effect of a sale of conjugal properties by the wife without the consent of the husband was clarified, to wit:

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

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

In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without the consent of the husband and the sale is not covered by the phrase "except in cases provided by law." The Court of Appeals described the sale as "invalid" – a term which is imprecise when used in relation to contracts because the Civil Code uses specific names in designating defective contracts, namely: rescissible (Arts. 1380 et seq.), voidable(Arts. 1390 et seq.), unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 et seq.).1awphi1.zw+

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

According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of the parties is incapable of giving consent to the contract." (Par. 1.) In the instant case Gimena had no capacity to give consent to the contract of sale. The capacity to give consent belonged not even to the husband alone but to both spouses.

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

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

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

The consent of both Eugenia and Antonio is necessary for the sale of the conjugal property to be valid. Antonio’s consent cannot be presumed.13 Except for the self-serving testimony of petitioner Natividad, there is no evidence that Antonio participated or consented to the sale of the conjugal property. Eugenia alone is incapable of giving consent to the contract. Therefore, in the absence of Antonio’s consent, the disposition made by Eugenia is voidable.14

The contract of sale between Eugenia and Concepcion being an oral contract, the action to annul the same must be commenced within six years from the time the right of action accrued.15 Eugenia sold the property in April 1987 hence Antonio should have asked the courts to annul the sale on or before April 1993. No action was commenced by Antonio to annul the sale, hence his right to seek its annulment was extinguished by prescription.

Even assuming that the ten (10)-year prescriptive period under Art. 173 should apply, Antonio is still barred from instituting an action to annul the sale because since April 1987, more than ten (10) years had already lapsed without any such action being filed.

In sum, the sale of the conjugal property by Eugenia without the consent of her husband is voidable. It is binding unless annulled. Antonio failed to exercise his right to ask for the annulment within the prescribed period, hence, he is now barred from questioning the validity of the sale between his wife and Concepcion.

WHEREFORE, the petition is GRANTED. The decision dated February 24, 2004 of the Court of Appeals in CA-G.R. CV No. 70239 and its resolution dated September 28, 2004 are REVERSED and SET ASIDE. The decision dated January 9, 2001 of the Regional Trial Court of Quezon City, Branch 85, in Civil Case No. Q-99-37529, is REINSTATED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Baguio City

EN BANC

G.R. No. 178902               April 21, 2010

MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners, vs.CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR MALCAMPO,Respondents.

D E C I S I O N

ABAD, J.:

This case is about a husband’s sale of conjugal real property, employing a challenged affidavit of consent from an estranged wife. The buyers claim valid consent, loss of right to declare nullity of sale, and prescription.

The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of absolute sale.1 But Tarciano did not for the meantime have the registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of Atty. Romulo D. Plagata whom they asked to prepare the documents of sale. They later signed an agreement to sell that Atty. Plagata prepared2 dated April 29, 1988, which agreement expressly stated that it was to take effect in six months.

The agreement required the Fuentes spouses to pay Tarciano a down payment of P60,000.00 for the transfer of the lot’s title to him. And, within six months, Tarciano was to clear the lot of structures

and occupants and secure the consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarciano’s compliance with these conditions, the Fuentes spouses were to take possession of the lot and pay him an additional P140,000.00 or P160,000.00, depending on whether or not he succeeded in demolishing the house standing on it. If Tarciano was unable to comply with these conditions, the Fuentes spouses would become owners of the lot without any further formality and payment.

The parties left their signed agreement with Atty. Plagata who then worked on the other requirements of the sale. According to the lawyer, he went to see Rosario in one of his trips to Manila and had her sign an affidavit of consent.3 As soon as Tarciano met the other conditions, Atty. Plagata notarized Rosario’s affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of absolute sale4 in favor of the Fuentes spouses. They then paid him the additional P140,000.00 mentioned in their agreement. A new title was issued in the name of the spouses5 who immediately constructed a building on the lot. On January 28, 1990 Tarciano passed away, followed by his wife Rosario who died nine months afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with Tarciano’s sister, Pilar R. Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and reconveyance of the land against the Fuentes spouses before the Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale to the spouses was void since Tarciano’s wife, Rosario, did not give her consent to it. Her signature on the affidavit of consent had been forged. They thus prayed that the property be reconveyed to them upon reimbursement of the price that the Fuentes spouses paid Tarciano.6

The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that he personally saw Rosario sign the affidavit at her residence in Paco, Manila, on September 15, 1988. He admitted, however, that he notarized the document in Zamboanga City four months later on January 11, 1989.7 All the same, the Fuentes spouses pointed out that the claim of forgery was personal to Rosario and she alone could invoke it. Besides, the four-year prescriptive period for nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at the trial. Comparing Rosario’s standard signature on the affidavit with those on various documents she signed, the Rocas’ expert testified that the signatures were not written by the same person. Making the same comparison, the spouses’ expert concluded that they were.8

On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action had already prescribed since the ground cited by the Rocas for annulling the sale, forgery or fraud, already prescribed under Article 1391 of the Civil Code four years after its discovery. In this case, the Rocas may be deemed to have notice of the fraud from the date the deed of sale was registered with the Registry of Deeds and the new title was issued. Here, the Rocas filed their action in 1997, almost nine years after the title was issued to the Fuentes spouses on January 18, 1989.9

Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere variance in the signatures of Rosario was not conclusive proof of forgery.10 The RTC ruled that, although the Rocas presented a handwriting expert, the trial court could not be bound by his opinion since the opposing expert witness contradicted the same. Atty. Plagata’s testimony remained technically unrebutted.11

Finally, the RTC noted that Atty. Plagata’s defective notarization of the affidavit of consent did not invalidate the sale. The law does not require spousal consent to be on the deed of sale to be valid.

Neither does the irregularity vitiate Rosario’s consent. She personally signed the affidavit in the presence of Atty. Plagata.12

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence of forgery and did not give credence to Atty. Plagata’s testimony that he saw Rosario sign the document in Quezon City. Its jurat said differently. Also, upon comparing the questioned signature with the specimen signatures, the CA noted significant variance between them. That Tarciano and Rosario had been living separately for 30 years since 1958 also reinforced the conclusion that her signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that their property relations were governed by the Civil Code under which an action for annulment of sale on the ground of lack of spousal consent may be brought by the wife during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and Tarciano was merely voidable, the CA held that its annulment entitled the spouses to reimbursement of what they paid him plus legal interest computed from the filing of the complaint until actual payment. Since the Fuentes spouses were also builders in good faith, they were entitled under Article 448 of the Civil Code to payment of the value of the improvements they introduced on the lot. The CA did not award damages in favor of the Rocas and deleted the award of attorney’s fees to the Fuentes spouses.13

Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review.14

The Issues Presented

The case presents the following issues:

1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s sale of their conjugal land to the Fuentes spouses was forged;

2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses already prescribed; and

3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to annul that sale.

The Court’s Rulings

First. The key issue in this case is whether or not Rosario’s signature on the document of consent had been forged. For, if the signature were genuine, the fact that she gave her consent to her husband’s sale of the conjugal land would render the other issues merely academic.

The CA found that Rosario’s signature had been forged. The CA observed a marked difference between her signature on the affidavit of consent15 and her specimen signatures.16 The CA gave no weight to Atty. Plagata’s testimony that he saw Rosario sign the document in Manila on September 15, 1988 since this clashed with his declaration in the jurat that Rosario signed the affidavit in Zamboanga City on January 11, 1989.

The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit appears heavy, deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a lighter stroke and more fluid. The way the letters "R" and "s" were written is also remarkably different. The variance is obvious even to the untrained eye.

Significantly, Rosario’s specimen signatures were made at about the time that she signed the supposed affidavit of consent. They were, therefore, reliable standards for comparison. The Fuentes spouses presented no evidence that Rosario suffered from any illness or disease that accounted for the variance in her signature when she signed the affidavit of consent. Notably, Rosario had been living separately from Tarciano for 30 years since 1958. And she resided so far away in Manila. It would have been quite tempting for Tarciano to just forge her signature and avoid the risk that she would not give her consent to the sale or demand a stiff price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat declared that Rosario swore to the document and signed it in Zamboanga City on January 11, 1989 when, as Atty. Plagata testified, she supposedly signed it about four months earlier at her residence in Paco, Manila on September 15, 1988. While a defective notarization will merely strip the document of its public character and reduce it to a private instrument, that falsified jurat, taken together with the marks of forgery in the signature, dooms such document as proof of Rosario’s consent to the sale of the land. That the Fuentes spouses honestly relied on the notarized affidavit as proof of Rosario’s consent does not matter. The sale is still void without an authentic consent.

Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988.

When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of gains on their property relations. While its Article 165 made Tarciano the sole administrator of the conjugal partnership, Article 16617 prohibited him from selling commonly owned real property without his wife’s consent. Still, if he sold the same without his wife’s consent, the sale is not void but merely voidable. Article 173 gave Rosario the right to have the sale annulled during the marriage within ten years from the date of the sale. Failing in that, she or her heirs may demand, after dissolution of the marriage, only the value of the property that Tarciano fraudulently sold. Thus:

Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife.18Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights.19 Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the law that governed the disposal of that lot was already the Family Code.

In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which the wife who gave no consent may assail her husband’s sale of the real property. It simply provides that without the other spouse’s written consent or a court order allowing the sale, the same would be void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force and effect from the very beginning. And this rule applies to contracts that are declared void by positive provision of law,20 as in the case of a sale of conjugal property without the other spouse’s written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or prescription.21

But, although a void contract has no legal effects even if no action is taken to set it aside, when any of its terms have been performed, an action to declare its inexistence is necessary to allow restitution of what has been given under it.22 This action, according to Article 1410 of the Civil Code does not prescribe. Thus:

Art. 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and reconveyance of the real property that Tarciano sold without their mother’s (his wife’s) written consent. The passage of time did not erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held, Article 173 provides that the wife may bring an action for annulment of sale on the ground of lack of spousal consent during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud and that, therefore, the applicable prescriptive period should be that which applies to fraudulent transactions, namely, four years from its discovery. Since notice of the sale may be deemed given to the Rocas when it was registered with the Registry of Deeds in 1989, their right of action already prescribed in 1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that they appeared to have agreed to buy the property upon an honest belief that Rosario’s written consent to the sale was genuine. They had four years then from the time they learned that her signature had been forged within which to file an action to annul the sale and get back their money plus damages. They never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent upon a false representation that the property would go to their children, not to strangers, and it turned out that this was not the case, then she would have four years from the time she discovered the fraud within which to file an action to declare the sale void. But that is not the case here. Rosario was not a victim of fraud or misrepresentation. Her consent was simply not obtained at all. She lost nothing since the sale without her written consent was void. Ultimately, the Rocas ground for annulment is not forgery but the lack of written consent of their mother to the sale. The forgery is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that the law gave the right to bring an action to declare void her husband’s sale of conjugal land. But here, Rosario died in 1990, the year after the sale. Does this mean that the right to have the sale declared void is forever lost?

The answer is no. As stated above, that sale was void from the beginning. Consequently, the land remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership of the property to their heirs, namely, the Rocas.23 As lawful owners, the Rocas had the right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and disposal.1avvphi1

In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover from Tarciano’s heirs, the Rocas, the P200,000.00 that they paid him, with legal interest until fully paid, chargeable against his estate.

Further, the Fuentes spouses appear to have acted in good faith in entering the land and building improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing and documenting the transaction, represented that he got Rosario’s signature on the affidavit of consent. The Fuentes spouses had no reason to believe that the lawyer had violated his commission and his oath. They had no way of knowing that Rosario did not come to Zamboanga to give her consent. There is no evidence that they had a premonition that the requirement of consent presented some difficulty. Indeed, they willingly made a 30 percent down payment on the selling price months earlier on the assurance that it was forthcoming.

Further, the notarized document appears to have comforted the Fuentes spouses that everything was already in order when Tarciano executed a deed of absolute sale in their favor on January 11, 1989. In fact, they paid the balance due him. And, acting on the documents submitted to it, the Register of Deeds of Zamboanga City issued a new title in the names of the Fuentes spouses. It was only after all these had passed that the spouses entered the property and built on it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on the property prior to its legal interruption by a final judgment against them.24 What is more, they are entitled under Article 448 to indemnity for the improvements they introduced into the property with a right of retention until the reimbursement is made. Thus:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the

building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code,25 of indemnifying the Fuentes spouses for the costs of the improvements or paying the increase in value which the property may have acquired by reason of such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer Certificate of Title T-90,981 that the Register of Deeds of Zamboanga City issued in the names of the latter spouses pursuant to that deed of sale are DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with legal interest from January 11, 1989 until fully paid, chargeable against his estate;

4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify petitioner spouses Manuel and Leticia Fuentes with their expenses for introducing useful improvements on the subject land or pay the increase in value which it may have acquired by reason of those improvements, with the spouses entitled to the right of retention of the land until the indemnity is made; and

5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive evidence and determine the amount of indemnity to which petitioner spouses Manuel and Leticia Fuentes are entitled.

SO ORDERED

SECOND DIVISION

G.R. No. 141323               June 8, 2005

DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners, vs.MELKI E. PEREZ, Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on April 20, 1999 which reversed the Decision of the Regional Trial Court

(RTC) of Panabo, Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December 17, 1999 denying petitioners’ motion for reconsideration.

The antecedent facts as aptly narrated by the CA are as follows:

David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988, conveyed to Melki Perez (Perez) two parcels of agricultural land (the lots) situated in Panabo, Davao which are portions of Lot 4192, Cad. 276 covered by OCT P-16873.

Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible witnessed the execution of the deed.

Loreza, however, signed only on the third page in the space provided for witnesses on account of which Perez’ application for registration of the deed with the Office of the Register of Deeds in Tagum, Davao was denied.

Perez thereupon asked Loreza to sign on the first and second pages of the deed but she refused, hence, he instituted on August 8, 1991 the instant complaint for specific performance against her and her husband Pelayo (defendants).

The defendants moved to dismiss the complaint on the ground that it stated no cause of action, citing Section 6 of RA 6656 otherwise known as the Comprehensive Agrarian Reform Law which took effect on June 10, 1988 and which provides that contracts executed prior thereto shall "be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act."

The questioned deed having been executed on January 10, 1988, the defendants claimed that Perez had at least up to September 10, 1988 within which to register the same, but as they failed to, it is not valid and, therefore, unenforceable.

The trial court thus dismissed the complaint. On appeal to this Court, the dismissal was set aside and the case was remanded to the lower court for further proceedings.

In their Answer, the defendants claimed that as the lots were occupied illegally by some persons against whom they filed an ejectment case, they and Perez who is their friend and known at the time as an activist/leftist, hence feared by many, just made it appear in the deed that the lots were sold to him in order to frighten said illegal occupants, with the intentional omission of Loreza’s signature so that the deed could not be registered; and that the deed being simulated and bereft of consideration is void/inexistent.

Perez countered that the lots were given to him by defendant Pelayo in consideration of his services as his attorney-in-fact to make the necessary representation and negotiation with the illegal occupants-defendants in the ejectment suit; and that after his relationship with defendant Pelayo became sour, the latter sent a letter to the Register of Deeds of Tagum requesting him not to entertain any transaction concerning the lots title to which was entrusted to Perez who misplaced and could [not] locate it.

Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996, that the deed was without his wife Loreza’s consent, hence, in light of Art. 166 of the Civil Code which provides:

Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s consent . . .

it is null and void.

The trial court, finding, among others, that Perez did not possess, nor pay the taxes on the lots, that defendant Pelayo was indebted to Perez for services rendered and, therefore, the deed could only be considered as evidence of debt, and that in any event, there was no marital consent to nor actual consideration for the deed, held that the deed was null and void and accordingly rendered judgment the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering and directing the defendants to pay plaintiff Melki Perez the sum of TEN THOUSAND (P10,000.00) Pesos as principal with 12% interest per annum starting from the date of filing of the complaint on August 1, 1991 until plaintiff is fully paid.

The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND (P3,000.00) as attorney’s fees.

The court further orders that the Deed of Absolute Sale, (Annex ‘A’) of the complaint and (Annex ‘C’) of the plaintiff’s Motion for Summary Judgment is declared null and void and without force and it is likewise removed as a cloud over defendants’ title and property in suit. . . ."2

The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners failed to file their appellees’ brief. The CA then promulgated its Decision on April 20, 1999 whereby it ruled that by Lorenza’s signing as witness to the execution of the deed, she had knowledge of the transaction and is deemed to have given her consent to the same; that herein petitioners failed to adduce sufficient proof to overthrow the presumption that there was consideration for the deed, and that petitioner David Pelayo, being a lawyer, is presumed to have acted with due care and to have signed the deed with full knowledge of its contents and import. The CA reversed and set aside the RTC Decision, declaring as valid and enforceable the questioned deed of sale and ordering herein petitioner Lorenza Pelayo to affix her signature on all pages of said document.

Petitioners moved for reconsideration of the decision but the same was denied per Resolution dated December 17, 1999. The CA found said motion to have been filed out of time and ruled that even putting aside technicality, petitioners failed to present any ground bearing on the merits of the case to justify a reversal or setting aside of the decision.

Hence, this petition for review on certiorari on the following grounds:

1. The CA erred in ignoring the specific provision of Section 6, in relation to Section 4 of R.A. No. 6657 otherwise known as the Comprehensive Agrarian Reform Law of 1988 which took effect on June 15, 1988 and which provides that contracts executed prior thereto shall "be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act."

2. The CA erred in holding that the deed of sale was valid and considering the P10,000.00 adjudged by the trial court as Perez’s remuneration as the consideration for the deed of sale, instead of declaring the same as null and void for being fictitious or simulated and on the basis of Art. 491, Par. 2 of the New Civil Code which prohibits agents from acquiring by purchase properties from his principal under his charge.

3. The CA made a novel ruling that there was implied marital consent of the wife of petitioner David Pelayo.

4. Petitioners should have been allowed to file their appellees’ brief to ventilate their side, considering the existence of peculiar circumstances which prevented petitioners from filing said brief.

On the other hand, respondent points out that the CA, in resolving the first appeal docketed as CA-G.R. SP No. 387003 brought by respondent assailing the RTC Order granting herein petitioners’ motion to dismiss, already ruled that under R.A. No. 6657, the sale or transfer of private agricultural land is allowed only when the area of the land being conveyed constitutes or is a part of, the landowner-seller retained area and when the total landholding of the purchaser-transferee, including the property sold, does not exceed five (5) hectares; that in this case, the land in dispute is only 1.3 hectares and there is no proof that the transferee’s (herein respondent) total landholding inclusive of the subject land will exceed 5 hectares, the landholding ceiling prescribed by R.A. No. 6657; that the failure of respondent to register the instrument was not due to his fault or negligence but can be attributed to Lorenza’s unjustified refusal to sign two pages of the deed despite several requests of respondent; and that therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No. 6657.

Respondent further maintains that the CA correctly held in its assailed Decision that there was consideration for the contract and that Lorenza is deemed to have given her consent to the deed of sale.

Respondent likewise opines that the CA was right in denying petitioners’ motion for reconsideration where they prayed that they be allowed to file their appellees’ brief as their counsel failed to file the same on account of said counsel’s failing health due to cancer of the liver. Respondent emphasized that in petitioners’ motion for reconsideration, they did not even cite any errors made by the CA in its Decision.

The issues boil down to the question of whether or not the deed of sale was null and void on the following grounds: (a) for not complying with the provision in R.A. No. 6657 that such document must be registered with the Register of Deeds within three months after the effectivity of said law; (b) for lack of marital consent; (c) for being prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of consideration.

We rule against petitioners.

The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for respondent’s failure to register said document with the Register of Deeds within three months after the effectivity of R.A. No. 6657, had been resolved with finality by the CA in its Decision dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein petitioners no longer elevated said CA Decision to this Court and the same became final and executory on January 7, 1995.5

In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No. 6657, to mean thus:

. . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or transfer of a private agricultural land is allowed only when said land area constitutes or is a part of the landowner-seller retained area and only when the total landholdings of the purchaser-transferee, including the property sold does not exceed five (5) hectares.

Aside from declaring that the failure of respondent to register the deed was not of his own fault or negligence, the CA ruled that respondent’s failure to register the deed of sale within three months after effectivity of The Comprehensive Agrarian Reform Law did not invalidate the deed of sale as "the transaction over said property is not proscribed by R.A. No. 6657."

Thus, under the principle of law of the case, said ruling of the CA is now binding on petitioners. 1avvph!

1 Such principle was elucidated in Cucueco vs. Court of Appeals,6 to wit:

Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.

Petitioners not having questioned the Decision of the CA dated November 24, 1994 which then attained finality, the ruling that the deed of sale subject of this case is not among the transactions deemed as invalid under R.A. No. 6657, is now immutable.

We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of Sale on the space provided for witnesses, is deemed to have given her implied consent to the contract of sale.

Sale is a consensual contract that is perfected by mere consent, which may either be express or implied.7 A wife’s consent to the husband’s disposition of conjugal property does not always have to be explicit or set forth in any particular document, so long as it is shown by acts of the wife that such consent or approval was indeed given.8 In the present case, although it appears on the face of the deed of sale that Lorenza signed only as an instrumental witness, circumstances leading to the execution of said document point to the fact that Lorenza was fully aware of the sale of their conjugal property and consented to the sale.

In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been having serious problems, including threats to the life of petitioner David Pelayo, due to conflicts with the illegal occupants of the property in question, so that respondent, whom many feared for being a leftist/activist, offered his help in driving out said illegal occupants.

Human experience tells us that a wife would surely be aware of serious problems such as threats to her husband’s life and the reasons for such threats. As they themselves stated, petitioners’ problems over the subject property had been going on for quite some time, so it is highly improbable for Lorenza not to be aware of what her husband was doing to remedy such problems. Petitioners do not deny that Lorenza Pelayo was present during the execution of the deed of sale as her signature appears thereon. Neither do they claim that Lorenza Pelayo had no knowledge whatsoever about the contents of the subject document. Thus, it is quite

certain that she knew of the sale of their conjugal property between her husband and respondent.

Under the rules of evidence, it is presumed that a person takes ordinary care of his concerns.10 Petitioners did not even attempt to overcome the aforementioned presumption as no evidence was ever presented to show that Lorenza was in any way lacking in her mental faculties and, hence, could not have fully understood the ramifications of signing the deed of sale. Neither did petitioners present any evidence that Lorenza had been defrauded, forced, intimidated or threatened

either by her own husband or by respondent into affixing her signature on the subject document. If Lorenza had any objections over the conveyance of the disputed property, she could have totally refrained from having any part in the execution of the deed of sale. Instead, Lorenza even affixed her signature thereto.

Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal property does not make the contract void ab initio but merely voidable. Said provisions of law provide:

Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal property without the wife’s consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.

. . .

Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

Hence, it has been held that the contract is valid until the court annuls the same and only upon an action brought by the wife whose consent was not obtained.11 In the present case, despite respondent’s repeated demands for Lorenza to affix her signature on all the pages of the deed of sale, showing respondent’s insistence on enforcing said contract, Lorenza still did not file a case for annulment of the deed of sale. It was only when respondent filed a complaint for specific performance on August 8, 1991 when petitioners brought up Lorenza’s alleged lack of consent as an affirmative defense. Thus, if the transaction was indeed entered into without Lorenza’s consent, we find it quite puzzling why for more than three and a half years, Lorenza did absolutely nothing to seek the nullification of the assailed contract.

The foregoing circumstances lead the Court to believe that Lorenza knew of the full import of the transaction between respondent and her

husband; and, by affixing her signature on the deed of sale, she, in effect, signified her consent to the disposition of their conjugal property.

With regard to petitioners’ asseveration that the deed of sale is invalid under Article 1491, paragraph 2 of the New Civil Code, we find such argument unmeritorious. Article 1491 (2) provides:

Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

. . .

(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given;

. . .

In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of her sons as the administrator of several parcels of her land. The landowner subsequently executed a Deed of Certification of Sale of Unregistered Land, conveying some of said land to her son/administrator. Therein, we held that:

Under paragraph (2) of the above article, the prohibition against agents purchasing property in their hands for sale or management is not absolute. It does not apply if the principal consents to the sale of the property in the hands of the agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of the properties in favor of her son, Rufo, who was the administrator of the properties. Thus, the consent of the principal Iluminada Abiertas removes the transaction out of the prohibition contained in Article 1491(2).13

The above-quoted ruling is exactly in point with this case before us. Petitioners, by signing the Deed of Sale in favor of respondent, are also deemed to have given their consent to the sale of the subject property in favor of respondent, thereby making the transaction an exception to the general rule that agents are prohibited from purchasing the property of their principals.

Petitioners also argue that the CA erred in ruling that there was consideration for the sale. We find no error in said appellate court’s ruling. The element of consideration for the sale is indeed present. Petitioners, in adopting the trial court’s narration of antecedent facts in their petition,14 thereby admitted that they authorized respondent to represent them in negotiations with the "squatters" occupying the disputed property and, in consideration of respondent’s services, they executed the subject deed of sale. Aside from such services rendered by respondent, petitioners also acknowledged in the deed of sale that they received in full the amount of Ten Thousand Pesos. Evidently, the consideration for the sale is respondent’s services plus the aforementioned cash money.

Petitioners contend that the consideration stated in the deed of sale is excessively inadequate, indicating that the deed of sale was merely simulated. We are not persuaded. Our ruling in Buenaventura vs. Court of Appeals15 is pertinent, to wit:

. . . Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. . . . As we stated in Vales vs. Villa:

Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them – indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it.16

Verily, in the present case, petitioners have not presented proof that there has been fraud, mistake or undue influence exercised upon them by respondent. It is highly unlikely and contrary to human experience that a layman like respondent would be able to defraud, exert undue influence, or in any way vitiate the consent of a lawyer like petitioner David Pelayo who is expected to be more knowledgeable in the ways of drafting contracts and other legal transactions.

Furthermore, in their Reply to Respondent’s Memorandum,17 petitioners adopted the CA’s narration of fact that petitioners stated in a letter they sent to the Register of Deeds of Tagum that they have entrusted the titles over subject lots to herein respondent. Such act is a clear indication that they intended to convey the subject property to herein respondent and the deed of sale was not merely simulated or fictitious.

Lastly, petitioners claim that they were not able to fully ventilate their defense before the CA as their lawyer, who was then suffering from cancer of the liver, failed to file their appellees’ brief. Thus, in their motion for reconsideration of the CA Decision, they prayed that they be allowed to submit such appellees’ brief. The CA, in its Resolution dated December 17, 1999, stated thus:

By movant-defendant-appellee’s own information, his counsel received a copy of the decision on May 5, 1999. He, therefore, had fifteen (15) days from said date or up to May 20, 1999 to file the motion. The motion, however, was sent through a private courier and, therefore, considered to have been filed on the date of actual receipt on June 17, 1999 by the addressee – Court of Appeals, was filed beyond the reglementary period.

Technicality aside, movant has not proffered any ground bearing on the merits of the case why the decision should be set aside.1awphi1

Petitioners never denied the CA finding that their motion for reconsideration was filed beyond the fifteen-day reglementary period. On that point alone, the CA is correct in denying due course to said motion. The motion having been belatedly filed, the CA Decision had then attained finality. Thus, in Abalos vs. Philex Mining Corporation,18 we held that:

. . . Nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land.

Moreover, it is pointed out by the CA that said motion did not present any defense or argument on the merits of the case that could have convinced the CA to reverse or modify its Decision.

We have consistently held that a petitioner’s right to due process is not violated where he was able to move for reconsideration of the order or decision in question.19 In this case, petitioners had the opportunity to fully expound on their defenses through a motion for reconsideration. Petitioners did file such motion but they wasted such opportunity by failing to present therein whatever errors they believed the CA had committed in its Decision. Definitely, therefore, the denial of petitioners’ motion for reconsideration, praying that they be allowed to file appellees’ brief, did not infringe petitioners’ right to due process as any issue that petitioners wanted to raise could and should have been contained in said motion for reconsideration.

IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court of Appeals dated April 20, 1999 and its Resolution dated December 17, 1999 are hereby AFFIRMED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-57499 June 22, 1984

MERCEDES CALIMLIM- CANULLAS, petitioner, vs.HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and CORAZON DAGUINES, respondents.

Fernandez Law Offices for petitioner.

Francisco Pulido for respondents.

 

MELENCIO-HERRERA, J.:

Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the Resolution on the Motion for Reconsideration, dated November 27, 1980, of the then Court of First Instance of Pangasinan, Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land in favor of DAGUINES but not of the conjugal house thereon'

The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962. They begot five children. They lived in a small house on the residential land in question with an area of approximately 891 square meters, located at Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited the land.

In 1978, FERNANDO abandoned his family and was living with private respondent Corazon DAGUINES. During the pendency of this appeal, they were convicted of concubinage in a judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan, Branch II, which judgment has become final.

On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO described the house as "also inherited by me from my deceased parents."

Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19, 1980 for quieting of title and damages against MERCEDES. The latter resisted and claimed that the house in dispute where she and her children were residing, including the coconut trees on the land, were built and planted with conjugal funds and through her industry; that the sale of the land together with the house and improvements to DAGUINES was null and void because they are conjugal properties and she had not given her consent to the sale,

In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of the land in question as well as the one-half () of the house erected on said land." Upon reconsideration prayed for by MERCEDES, however, respondent Court resolved:

WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on October 6, 1980, is hereby amended to read as follows:

(1) Declaring plaintiff as the true and lawful owner of the land in question and the 10 coconut trees;

(2) Declaring as null and void the sale of the conjugal house to plaintiff on April 15, 1980 (Exhibit A) including the 3 coconut trees and other crops planted during the conjugal relation between Fernando Canullas (vendor) and his legitimate wife, herein defendant Mercedes Calimlim- Canullas;

xxx xxx xxx

The issues posed for resolution are (1) whether or not the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property; and (2) whether or not the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transaction.

The determination of the first issue revolves around the interpretation to be given to the second paragraph of Article 158 of the Civil Code, which reads:

xxx xxx xxx

Buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same.

We hold that pursuant to the foregoing provision both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot, 1 which value would be reimbursed at the liquidation of the conjugal partnership. 2

In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404), Manresa stated:

El articulo cambia la doctrine; los edificios construidos durante el matrimonio en suelo propio de uno de los conjuges son gananciales, abonandose el valor del suelo al conj uge a quien pertenezca.

It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it was held that the land belonging to one of the spouses, upon which the spouses have built a house, becomes conjugal property only when the conjugal partnership is liquidated and indemnity paid to the owner of the land. We believe that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following was explained:

As to the above properties, their conversion from paraphernal to conjugal assets should be deemed to retroact to the time the conjugal buildings were first constructed thereon or at the very latest, to the time immediately before the death of Narciso A. Padilla that ended the conjugal partnership. They can not be considered to have become conjugal property only as of the time their values were paid to the estate of the widow Concepcion Paterno because by that time the conjugal partnership no longer existed and it could not acquire the ownership of said properties. The acquisition by the partnership of these properties was, under the 1943 decision, subject to the suspensive condition that their values would be reimbursed to the

widow at the liquidation of the conjugal partnership; once paid, the effects of the fulfillment of the condition should be deemed to retroact to the date the obligation was constituted (Art. 1187, New Civil Code) ...

The foregoing premises considered, it follows that FERNANDO could not have alienated the house and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4

Anent the second issue, we find that the contract of sale was null and void for being contrary to morals and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived and from whence they derived their support. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects. 5

Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are void and inexistent from the very beginning.

Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect whatsoever.The cause is unlawful if it is contrary to law, morals, good customs, public order, or public policy."

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. 6 Similarly, donations between spouses during marriage are prohibited. 7 And this is so because if transfers or con conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, 8 as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the wig of the parties. That was the ruling in Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent dissertation on this point:

We reach a different conclusion. While Art. 133 of the Civil Code considers as void a donation between the spouses during the marriage, policy considerations of the most exigent character as wen as the dictates of morality require that the same prohibition should apply to a common-law relationship.

As announced in the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the old Civil Code speaks unequivocally. If the policy of the law is, in the language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor of the other consort and his descendants because of fear of undue influence and improper pressure upon the donor, a prejudice deeply rooted in our ancient law, ..., then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without benefit of nuptials. For it is not to be doubted that assent to such irregular connection for thirty years bespeaks greater influence of one party over the other, so that the danger that the law seeks to avoid is correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would not be just that such donations — should subsist, lest the conditions of those who incurred guilt should turn out to be better." So long as marriage remains the cornerstone of our family law, reason and morality alike

demand that the disabilities attached to marriage should likewise attach to concubinage (Emphasis supplied),

WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the sale of the lot, house and improvements in question, is hereby declared null and void. No costs.

SO ORDERED.

FIRST DIVISION

G.R. No. 112954               August 25, 2000

RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO, ZACARIAS A. DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO TAPAR, petitioners, vs.COURT OF APPEALS and LAGRIMAS SORIANO DISTAJO, respondents.

D E C I S I O N

PARDO, J.:

The case under consideration is a petition for review on certiorari of a decision of the Court of Appeals1 , which modified the ruling of the Regional Trial Court, Roxas City regarding seven parcels of land located in Barangay Hipona, Pontevedra, Capiz.2

During the lifetime of Iluminada Abiertas, she designated one of her sons, Rufo Distajo, to be the administrator of her parcels of land denoted as Lot Nos. 1018, 1046, 1047, and 1057 situated in Barangay Hipona, Pontevedra, Capiz.

On May 21, 1954, Iluminada Abiertas sold a portion of Lot No. 1018 (1018-A) to her other children, namely, Raul Distajo, Ricardo Distajo, Ernesto Distajo, Federico Distajo, and Eduardo Distajo.3

On May 29, 1963, Iluminada Abiertas certified to the sale of Lot Nos. 1046 and 1047 in favor of Rufo Distajo.4

On June 4, 1969, Iluminada Abiertas sold Lot No. 1057 to Rhodora Distajo, the daughter of Rufo Distajo.5

On July 12, 1969, Iluminada Abiertas sold Lot No. 1018 to Rufo Distajo.6

Meanwhile, Justo Abiertas, Jr., the brother of Iluminada Abiertas, died leaving behind his children, Teresita, Alicia, Josefa and Luis Abiertas. Teresita paid for the real estate taxes of the following properties, which she inherited from her father: Lot Nos. 1001, 1048, 1049, and a portion of Lot No. 1047, all located in Capiz. On May 26, 1954, Teresita Abiertas sold Lot No. 1001 in favor of Rufo Distajo.7 On June 2, 1965, Teresita Abiertas, for herself and representing her sisters and brother, sold Lot Nos. 1048, 1049, and a portion of Lot No. 1047 to Rufo Distajo.8

After purchasing the above-mentioned parcels of land, Rufo Distajo took possession of the property and paid the corresponding real estate taxes thereon. Rhodora Distajo likewise paid for the real estate taxes of Lot No. 1057.

When Iluminada Abiertas died in 1971, Zacarias Distajo, Pilar Distajo-Tapar, and Rizaldo Distajo,9 demanded possession of the seven parcels of land from Lagrimas S. Distajo, and her husband, Rufo Distajo. The latter refused.

Consequently, on June 5, 1986, Ricardo Distajo, with the other heirs of Iluminada Abiertas, namely, Ernesto Distajo, Raul Distajo, Federico Distajo, Zacarias Distajo, Eduardo Distajo, and Pilar Distajo, filed with the Regional Trial Court, Roxas City a complaint for recovery of possession and ownership of Lot No. 1018, partition of Lot Nos. 1001, 1018-B, 1046, 1047, 1048, 1049, 1057, and damages.

On September 4, 1986, private respondent Lagrimas Distajo10 filed an answer with counterclaim.

On April 9, 1990, the trial court dismissed the complaint for lack of cause of action, laches and prescription. The counterclaim was likewise dismissed. The parties appealed to the Court of Appeals.11

On August 21, 1992, the Court of Appeals rendered its decision,12 the dispositive portion of which states as follows:

"PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE and a new judgment rendered, as follows:

WHEREFORE, the Court decides the case in favor of the defendant and dismisses the plaintiffs’ complaint for lack of cause of action except with regard to the plaintiffs’ claim over a 238 sq. m. portion of Lot No. 1018 (the portion adjoining the market site and measuring seventeen meters and that adjoining the property of E. Rodriguez measuring 14 meters). The Court hereby Orders the partition of Lot No. 1018 to conform to the following: 238 sq. m. as above specified to belong to the plaintiffs as prayed for by them while the rest is declared property of the defendant.

Upon partition of Lot No. 1018 in accordance with this Court’s Order, the City Assessor of Roxas City is hereby Ordered to cancel Tax Declaration 2813 in the name of Rufo Distajo (or any subsequent tax declaration/s issued relative to the above-cited Tax Declaration No. 2813) and forthwith to issue the corresponding tax declarations in the names of the respective parties herein.

SO ORDERED."

On September 10, 1992, Ricardo Distajo filed a motion for reconsideration.13 On December 9, 1993, the Court of Appeals denied the motion.14

Hence, this petition.15

Petitioner alleges that Iluminada Abiertas exclusively owns the seven parcels of land delineated as Lot Nos. 1001, 1018, 1046, 1047, 1048, 1049, and 1057, all of which should be partitioned among all her heirs. Furthermore, Rufo Distajo cannot acquire the subject parcels of land owned by Iluminada Abiertas because the Civil Code prohibits the administrator from acquiring properties under his administration.16 Rufo Distajo merely employed fraudulent machinations in order to obtain the consent of his mother to the sale, and may have even forged her signature on the deeds of sale of the parcels of land.

In her comment dated May 13, 1994, private respondent Lagrimas S. Distajo contends that Rufo Distajo rightfully owns the subject parcels of land because of various deeds of sale executed by Iluminada Abiertas selling Lot Nos. 1018-B, 1047 and 1046 in favor of Rufo Distajo and Lot No. 1057

in favor of Rhodora Distajo. Private respondent also avers that petitioner cannot claim any right over Lot Nos. 1001, 1048 and 1049, considering that such lands belong to the brother of Iluminada Abiertas, namely, Justo Abiertas, Jr., whose heirs sold said parcels of land to Rufo Distajo.

The petition lacks merit.

Factual findings of the trial court will not be disturbed on appeal unless the court has overlooked or ignored some fact or circumstance of sufficient weight or significance, which, if considered, would alter the result of the case.17When there is no conflict between the findings of the trial and appellate courts, a review of the facts found by the appellate court is unnecessary.18

Since the trial court and the Court of Appeals agree that Iluminada Abiertas owned Lot Nos. 1046, 1057 and a portion of Lot No. 1047, and that Justo Abiertas Jr. owned Lot Nos. 1001, 1048, and 1049, such findings are binding on this Court, which is not a trier of facts.19 However, the record shows that Lot No. 1018 should be divided into Lot No. 1018-A and 1018-B, the delineation of which the Court of Appeals clarified in its decision.

The issues in this case, therefore, are limited to those properties which were owned by Iluminada Abiertas, ascendant of petitioner, consisting of Lot Nos. 1018-A, 1046, 1057, and a portion of 1047.

In his petition, Ricardo Distajo assails the genuineness of the signatures of Iluminada Abiertas in the deeds of sale of the parcels of land, and claims that Rufo Distajo forged the signature of Iluminada Abiertas. However, no handwriting expert was presented to corroborate the claim of forgery. Petitioner even failed to present a witness who was familiar with the signature of Iluminada Abiertas. Forgery should be proved by clear and convincing evidence, and whoever alleges it has the burden of proving the same.20

Petitioner likewise contends that the sale transactions are void for having been entered into by the administrator of the properties. 1âwphi1 We disagree. The pertinent Civil Code provision provides:

"Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

(1) The guardian, the property of the person or persons who may be under guardianship;

(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given;

(3) Executors and administrators, the property of the estate under administration;" x x x

Under paragraph (2) of the above article, the prohibition against agents purchasing property in their hands for sale or management is not absolute. It does not apply if the principal consents to the sale of the property in the hands of the agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of the properties in favor of her son, Rufo, who was the administrator of the properties. Thus, the consent of the principal Iluminada Abiertas removes the transaction out of the prohibition contained in Article 1491(2).

Petitioner also alleges that Rufo Distajo employed fraudulent machinations to obtain the consent of Iluminada Abiertas to the sale of the parcels of land. However, petitioner failed to adduce convincing evidence to substantiate his allegations.

In the absence of any showing of lack of basis for the conclusions made by the Court of Appeals, this Court finds no cogent reason to reverse the ruling of the appellate court.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals in CA-G.R. CV No. 30063.

SO ORDERED.

 

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-7041             February 21, 1957

JESUS MA. CUI, ET AL., plaintiffs-appellants, vs.ANTONIO MA. CUI, ET AL., defendants-appellees.

Claro M. Recto, Jose P. Laurel and Vicente Jayme for appellants.Pimintel & Pimintel and Amador E. Gomez for appellees.

BAUTISTA ANGELO, J.:

On May 25, 1948, Jesus Ma. Cui and Jorge Ma. Cui brought an action in the Court of First Instance of Cebu against Antonio Ma. Cui and Mercedes Cui de Ramos seeking the annulment of the sale of three parcels of land against Antonio Ma. Cui and Mercedes Cui de Ramas of the latter and the partition of the same among the heirs who should inherit them including the plaintiffs. The Rehabilitation Finance Corporation was included as party defendant because the lands above-mentioned were mortgaged to it to secure a loan of P130,000, the object being to have the mortgage declared null and void.

On March 19, 1949, Rosario Cui, daughter of Don Mariano Cui, filed in the same court a petition for the appointment of a guardian of the person and properties of her father on the ground of incompetency and, accordingly, he was declared incompetent on March 31, 1949 and one Victorino Reynes was appointed as his guardian.

On July 13, 1949, the complaint was amended by including as party plaintiffs the guardian as party plaintiffs the guardian Victorino Reynes and the other children and relatives of Don Mariano, namely, Jose Ma. Cui, Serafin Ma. Cui, Rosario Cui, her husband Irineo Encarnacion, Lourdes C. Velez, Priscilla Velez and Federico Tamayo.

Defendants in their answer set up the defense that the sale mentioned in the complaint is valid because it was executed when Don Mariano Cui was still in possession of his mental faculties and that, while the sale was at first executed in favor of the defendants and their sister Rosario Cui, the latter however resold her share to Don Mariano for reason stated in the deed of resale executed to the effect. They prayed that the complaint be

Search

dismissed.

On May 22, 1951, after due hearing and the presentation of voluminous evidence on the part of both parties, the court rendered its decision dismissing the complaint and which plaintiffs appealed in due time, and because the value of the property involved exceeds the amount of P50,000, the case was certified to us for decision by the Court of Appeals under section 1 of Republic Act No. 296.

Plaintiffs and defendants, with the exception of the Rehabilitation Finance Corporation, are the legitimate children of Don Mariano Cui and Doña Antonia Perales who died intestate in the City of Cebu on March 20, 1939. Plaintiffs in their complaint allege that during the marriage of Don Mariano Cui and Doña Antonia Perales, the spouses acquired certain properties in the City of Cebu, namely, Lots Nos. 2312, 2313 and 2319, with an approximate area of 2,658 square meters, having an assessed value of P159,480, and a market value of 120 per square meter; that upon the death of Doña Antonia Perales, the conjugal partnership did not leave any indebtedness and the conjugal properties were placed under the administration of Don Mariano Cui; that while the latter was 84 years of age and under the influence of defendants, the latter, by means of deceit, secured the transfer to themselves of the aforementioned lots without any pecuniary consideration; that in the deed of sale executed on March 8, 1946, Rosario Cui appeared as one of the vendees, but on learning of this fact she subsequently renounced her rights under the sale and returned her portion to Don Mariano Cui by executing a deed of resale in his favor on October 11, 1946; that defendants, fraudulently and with the desire of enriching themselves unjustly at the expense of their father, Don Mariano Cui, and of their brothers and co-heirs, secured a loan of P130,000 from the Rehabilitation properties, and with the loan thus obtained, defendants contructed thereon an apartment building of strong materials consisting of 14 doors, valued at approximately P130,000 and another building on the same parcels of land, which buildings were leased to some Cinese commercial firms a monthly rental of P7,600, which defendants have collected and will continue to collect to the prejudice of the plaintiffs; and because of this fraudulent and illegal transaction, plaintiffs prayed that the sale and mortgage executed on the properties in question, in so far as the shares of the plaintiffs are concerned, be declared null and void and the defendants be ordered to pay the plaintiffs their shares in the rentals of the properties at the rate of P7,600 a month from November 1, 1947 up to the time of their full payment, together with whatever interest may be thereon and the expenses of litigation.

Defendants, on the other hand, aver that while the properties in question were acquired during the marriage of Don Mariano Cui and Doña Antonia Perales, however, they were entirely the exclusive property of Don Mariano Cui up to the time of their transfer to defendants under the deed of Sale Exhibit A, having been acquired by him as a donation from his uncle Don Pedro Cui and his aunt Doña Benigna Cui; that this fact was known to the plaintiffs and to the guardian of Don Mariano, Victorino Reynes, because in the extra-judicial partition executed between plaintiffs and defendants on December 6, 1946 of the properties of the deceased Antonia Perales, the three lots in question did not form part of the conjugal properties of the spouses Don Mariano Cui and Doña Antonia Perales; that Don Mariano Cui, for a consideration, voluntarily and without deceit, pressure or influence on the part of defendants, executed and signed the deed of sale Exhibit A; and that Don Cariano Cui was at that time in full enjoyment of his mental faculties and only suffered loss of memory several years later when he was declared by the court incompetent to manage his properties.

Defendants denied that the building constructed on the three lots in question consisted of 14 doors and alleged that it consisted of only 12 doors. They also denied that they received the sum of P7,600 as monthly rental of said building because what they have been receiving was only a monthly rental of P4,800. As a special defense, they aver that they are the owners of the naked ownership of 2/3 of the three lots in question subject to the usufruct over the rents of products thereof in favor of Don Mariano Cui during his lifetime, with the

exception of the rents from the building constructed on the 2/3 portion belonging to them; that the 2/3 of the lots in question did not produce any rent at the time of their acquisition by the defendants, for they produced rentals only after the defendants had constructed

the 12-door apartment now standing thereon; that subsequently and by verbal agreement between Don Mariano Cui and the defendants, the usufruct of the former over said 2/3 portion was fixed at P400 monthly, and this sum Don Mariano has been receiving since then up to the present time. Defendants also aver that they are the exclusive owner of the 12-door apartment constructed on the 2/3 portion of the lots in question, having been constructed at their expense and by virtue of the authorization given to them in the deed of sale Exhibit A; that the loan of P130,000 obtained from the Rehabilitation Finance Corporation was solicited personally by defendants Antonio Ma. Cui and Mercedes Cui de Ramas for their exclusive benefit and for the purpose of investing it in the construction of said building; that since the property is undivided, Don Mariano Cui, as one of the co-owners, consented to the execution of a mortgage thereon in favor of said corporation to guarantee the payment of the loan jointly with his co-owners, the aforesaid defendants, for the sole purpose of accommodating the latter and to enable them to obtain the loan; that the plaintiffs are in estoppel to claim that the lots in question belong to the conjugal partnership of their parents Don Mariano Cui and Doña Antonia Perales, and that plaintiffs instituted the present action because they do not like the manner in which their father had disposed of said lots, especially Jesus Ma. Cui who was unsuccessful in his request that the ¹/3 said lots be sold to him. They prayed that the action be dismissed.

In this appeal, appellants now contended that the lower court erred: (1) "In not declaring the deed of sale, Exhibit A, avoid or inexistent for lack of valid consent and consideration"; (2) "In not declaring illegal the sale, evidenced by Exhibit A, on the ground that it was a transaction between principal and agent, which is prohibited by paragraph (2), Article 1959 of the old Civil Code"; (3) "In not finding that the three lots conveyed by means of the deed of sale, Exhibit A, belong to the unliquidated conjugal partnership of Don Mariano Cui and his deceased wife Doña Antonia Perales, and that entire property"; and (4) "In not finding that the plaintiffs are entitled to seven-eights (7/8) of property in question and of the rentals thereof beginning November 1, 1947." We will discuss these issues separately.

In support of their contention that Don Mariano Cui did not and could not have validly consented to the deed of sale in question, appellants submitted the following proposition: (a) Don Mariano was incapacitated to give his consent by reason of his age and ailment; (b) Don Mariano acted under a mistake, and his signature was secured by means of deceit; and (c) the sale Exhibit A is vatiated by undue influence.

In support of the first proposition, it is argued that Don Mariano, at the time he signed the deed of sale Exhibit A on March 8, 1946, was already 83 years old, was sickly and infirm, and frequently complained of ill health. It is also contended that six days before the sale, or on March 2, 1946, he had executed a general power of attorney in favor of defendant Antonio Cui, which act could signify that Don Mariano himself realized that he was longer capacitated to administer his properties and found it necessary to relieve himself of the task of dealing with other persons in connection therewith. It is also pointed out that his children, Jorge, Jesus and Rosario Cui testified that he was ill, he was forgetful, he could not read nor remember well what he read, and his letters show that he was no longer familiar with the rules of orthography. In his letter he also complained about his illness and he realized that his affections were due to his old age. It is also emphasized that as early as August, 1944, Jesus Cui noted that his father was "muy debil . . . en cuestiones negocios" and that "en cuanto a su capacidad para administar sus bienes en que tenia que producir o estudiar, el (Don Mariano) no se acordaba." Although he was not in same when he signed the deed of sale Exhibit A, yet he was admittedly

"incompetente para manejar su dinero." (pp. 85-86, Brief for plaintiffs and Appellants.)

As regards the second proportion, it is insinuated that if Don Mariano, by reason of his advanced age, his weak mind and body and feeble will and reason, was not capacitated to give his consent, it would follow as a corollary that he could not fully understand the contents of the deed of sale. He must have therefore labored under a mistake as to true nature of the transaction especially when it was written in a language which he did not understand. Other insinuation leading to the same result are: Don Mariano must have erroneously thought that the only way to pay his debt of P3,000 to Ramon Aboitiz was by executing the sale, just as he gave consent to the sale of his conjugal property of San Jose St., Cebu City, because he thought it was the only available way to pay his indebtedness to the Insular Life Assurance Co. Or he must have thought that the document he was made to sign by Antonio Cui was not a sale but a mere authority to administer the property for purpose of revenue, or he must have been induced to signing it after he was promised a life annuity in the form of usufruct over the rents of the properties in question. In other words the insinuation is made that Antonio Cui employed deceit in securing the signature Don Mariano to the sale in question in order merely to satisfy his selfish ends. There being, therefore, error and deceit, there is no valid consent which can give validity to the sale on the sale on the part of Don Mariano.

And with regard to the third proposition, the following circumstances are pointed out: At the time of the sale, Don Mariano was already 83 years old, was infirm and was living with the vendees, herein appellees. Antonio Cui was his lawyer and attorney in fact and there was between them confidential family and spiritual relations. Don Mariano was then in financial as shown by the fact that he was worried about his debt to Ramon Aboitiz, and way back in 1946 he had to borrow money from his daughter Rosario Cui which remained unpaid even after the sale in question. The presence of undue influence is further shown, appellants contend, in the execution by Don Mariano of the Mortgage in favor of the Rehabilitation Finance Corporation, the extrajudicial partition Exhibit 1-a, the partition of the property in question, the alleged oral waiver of usufrutuary rights, and the alleged explanatory statement Exhibit 34. These acts, which were allegedly mastermined by Antonio Cui, show, appellants contend, that Antonio Cui could get from father whatever he wanted.

We do not believe the arguments advanced by appellants in an effort to nullify the deed of sale Exhibit A sufficient in law to invalidate the same on the ground of lack of valid consent on the part of Don Mariano for the simple reason that they are merely based on surmises or conjectures or circumstances which, though they may show inferentially that he was sickly or forgetful because of his advanced age, do not however point unremittingly to the conclusion that at the time he signed said deed of sale he was not full enjoyment of his mental faculties as to disqualify him to do so or that he was not aware of the nature of the transaction he was then undertaking. Although at the time of the sale he was already 83 years old, he was sickly and forgetful, as contended, yet, according to the authorities, weakness of mind alone, not caused by insanity, is not a ground for avoiding a contract, for it is still necessary to show that the person at the time of doing the act "is not capable of understanding with reasonable clearness the nature and effect of the transaction in which he is engaging" (Page on Contracts, Vol. III, p. 2810). Or, as well stated in the very case cited by counsel for appellants only when there is "great weakness of mind in a person executing a conveyance of land, arising from age, sickness, or any other cause", can a person ask a court of equity to interfere in order to set aside the conveyance (Allore vs. Jewell, 24 Law Ed., 263-264). And here the evidence shows that such is not the case, for the several letters and documents signed all executed by Don Mariano many months after the execution of the deed of sale Exhibit A clearly indicate that, while he was of an advanced age, he was however still physically fit and his mind was keen and clear. This we will see in the following discussion of the evidence.

One of such evidence is the testimony of Rosario Cui, one of the appellants herein. It should be remembered that it was she who initiated the proceedings for the declaration of incompetency of Don Mariano Cui in order that he may be placed under guardianship and at the hearing held for that purpose, she was the main witness. When called upon to testify as to the state of health and mental condition of Don Mariano, she stated that during the period she had been living with her father in Calapan, Mindoro, which dates as for back as the

Japanese occupation, she had observed that the state of his mind was very good, he was not yet so forgetful as he is now, and that she discovered his mental weakness which makes him incompetent to manage his own affairs only sometime in the month of January, 1949 (pp. 5 and 6, Exhibit 9; p. 136, t.s.n). And on the strenght of her testimony, Don Mariano was declared incompetent on March 31, 1949. This is an indication that, when the deed of sale was executed on March 8, 1946, three years before his declaration of incompetency, Don Mariano was still in the full enjoyment of his mental-faculties. It should be stated that his testimony of Rosario Cui stands undisputed.

A circumstance which strongly corroborates this testimony of Rosario Cui is the letter Exhibit 26 which Don Mariano wrote to Don Ramon Aboitiz on May 31, 1946, two months after the execution of the deed of sale Exhibit A, in relation to the indebtedness he owed him by reason of his having acted as the surety of his son Jesus Cui which the latter had not been able to settle. This letter, which shows how lucid, keen, clear and analytical his mind was, is herein reproduced for ready reference:

Cebu, Mayo 31, 1946

Sr. DON RAMON ABOITIZCEBU

ESTIMADO AMIGO —

La portadora de la presente es mi hija Mercedes, esposa del Dr. Ramas, a quien he dado el encargo de presentarse a Vd. con esta carta y pagarle en mi nombre como fiador de mi hijo Jesus Cui el saldo resultante de laliquidacion hecha por Vd. el 5 de Diciembre de 1941 de la deuda que este contrajo, de Vd. por cierto prestamo en metalico que le dio bajo mi garantia consistente en hipoteca.

Como Vd. trata de cobrar intereses sobre el mencionado saldo hasta la fecha en que se pague el mismo a partir desde el 1.o de Enero de 1944, permitame que le suplique encarecidamente apelando a su buen corazon y reconocida generosidad, deje Vd. de cobrarme esos intereses. En apoyo de esta suplica someto a su buen criterio lo siguiente: 1.o, mi buenavoluntad, diligencia y prontitud en finiquitar al citado saldo; 2.oel motivo, como Vd. lo sabe, se tuvo que contraer la citada deuda sin ningun provecho para mi, antes bien me ha causada molestias y apuros para pagarla completamente, y 3.o durante la ocupacion japonesa en Cebu y estando yo ya refugiado en Manila le escribia de vez en cuando a mi dicho hijo Jesusy siempre le recordaba que procurara hacerlo por todos los medios, sabiendo yo que el disponia de bastante dinero; lo cual demuestra a Vd. que la prealudida deuda me ha tenido en constante preocupacion, realizandose porultimo mis temores de que al fin habria yo que pagar casi a la deuda entera.

Como Vd. muy pronto se va a marchar de este nuestro pais, concedame Vd. lo que le pido en la precedente suplica como un recuerdo, imperecerederopara mi, de nuestra buena amistad. Le deseo un feliz viaje, asi como una feliz estancia en el pais donde establecerse, con buen exito ademas en susnegocios.

Disponga como gusto de affmo. amigo y servidor.

(Fdo.)

Scarcely four months before the execution of the deed of sale, Don Mariano was residing in Calapan, Mindoro, in the house of Rosario Cui, and while there he received several letters from his daughter-in-law, Carmen Gomez, wherein in a very expressive and persuasive manner she asked her father-in-law, Don Mariano, to extend a helping hand to his son Jesus Cui, who was then confined in the stockade of the military authorities in Leyte for collaboration, so that he may get his provisional release by putting up a bail bond for him. Because Jesus Cui, his son, had embarked him into some commercial venture even before the war which resulted in a disastrous failure and made him suffer a loss of nearly P25,000, aside from the undertaking he assumed as a surety for the payment of a loan of P3,000 which Jesus had contracted from Don Ramon Aboitiz on January 27, 1941 which Jesus failed to pay, all of which made him bitter and resentful against his own son, Don Mariano turned a deaf ear to the plea of Carmen stating in a language as forceful as it is clear the reasons for his attitude. These reasons were expressed by Don Mariano in letters dated November 11, 1945 and November 22, 1945 which are also herein reproduced for ready reference, omitting the letters of Carmen, which are referred to therein, for being unnecessary for our purpose. Note that the person named Chong appearing in the letters is the nickname given to Jesus, son of Don Mariano:

Calapan, Mindoro         Nbre. 11, 1945

MI ESTIMADA MAMING —

Recibi el 9 del actual tu carta, fechada el 21 de Obre. ppdo y me entere desu contenido.

Empiezo dandote las expressivas gracias por su interes y buen deseo por mi salud, que ya no es tan buena como antes; tengo ya mis achaques a causa de mi vejez que va avanzando cada dia mas; no puedo esperar ya buena salud.

Me haces una apologia en favor de tu marido Chong, mi hijo, alabandole comoun buen hijo; comprendo que lo hagas, porque la pasion te ciega; pero no me lo digas a mi que conozco muy a-fondo a Chong. Nunca le he conocido a Chong como buen hijo mio, pues me ha dado el los mayores disgustos que he tenido en mi vida. Mes mijores amigos que esteban al tanto de la vida de Chong y de sus fracasos en los negocios y con quienes a veces me desahogaba, me echaban a mi la culpa porque era yo demasiado apasionado por el. Ahora que llegado a ser pobre, lo comprendo y lo lamento, y me recuerda de lo que me dijo a mi tia Benigna, ya difunta (q.e.p.d) un dia, muy formalmente y en serio, que presentia que yo a la vez me quedaria pobre y me aconsejo que tuviera mucho cuidado en administrar mis bienes con prudencia..

Siento mucho tener que decirte que no me encuentro en condiciones para prestar la fianza que me pides en favor de Chong; primero, porque no dispongo de beienes inmuebles para constituir la fianza y segundo, porque si bien es verdad que me quedan solares en la calle Manalili de esa Ciudad, pero el gravamen de hipoteca sobre estos solares esta sin cancelarse aun en el registro de propiedad, lo cual tendra aun bastante tiempo, y por otra parte, me reservo los mismos, siempre libres, para poder disponer de ellos cuando fuere necesario, para atendar mis gastos. Dispensame, pues, que no pueda complacerte en lo que me pides. Ahora le escribo a nene para que te envie esta carta como me lo pides.

En retorno Yre y Nenita te envian sus recuerdos.

Termino deseando a ti y Nene siempre beuna salud y enviando a este un cariñoso beso y a ti.

En sincero afecto de tu suergo

MARIANO CUI

Calapan, Mindoro        Nbre. 22, 1945

ME APRECIABLE MAMING —

Recibi el 20 del actual por correo tu carta escrita ya alli en Manila y me apresuro a contestartela.

Ya habras recibido y te habras enterado ya de mi carta, fecha 11 del actual. Contestando la tuya anterior portador de aquella mi nieto Liling, que semarcho de aqui para alli el sabado pasado.

Siento mucho tener que desirte que insisto en mi negativa de ser fiador de Chong en la forma indirecta que se me propone por los que negocian en prestar fianzas; yo que he sido juez conozco el alcance de esa fianza queyo otorgue a favor de Don Ramon Aboitiz para garantir el prestamo, que este hizo a Chong, de TRES MIL PESOS, que creo que estan sin pagar aun y que yo como burro de carga tendre que pagarlos. Debes, pues dejarme ya en pazporque tengo mala pata en ser fiador de Chong. Estoy pidiendo a Dios que me de medios para poder ayudarle. Temo, ademas, que Dios me castigue haciendomal uso de los pocos bienes que me ga dejado para mantenerme durante los pocos anos de vida que me va considiendo aun y para ni vivir pidiendo limosna, ya que de mis hijos poco puedo esperar.

Agradezco mucho to oferta de que cuando os establicias alli en Manila pararesidir permanentemente me distenares una habitacion para mi, y me reservotal oferta para cuando sea conveniente aceptarla.

Sin otra cosa mas, afectuoso recuerdos a Chong y a ti mi aprecio sincero.

Tu suegro,

Rosario Cui not only testified that Don Mariano was still good and of sound mind when he lived with her for eighteen months from September, 1944 up to February, 1946, and for another four months from July, 1946 to October, 1946 in Calapan, Mindoro, but she also sustained correspondence with Don Mariano even as late as the year 1947. Hereunder we transcribe Don Mariano's letter to Rosario on July 14, 1947:

Cebu, Julio 14, 1947

Sra. ROSARIO C. DE ENCARNACIONCALAPAN, MINDOROMI QUERIDISIMA HIJA —

Siento mucho que el no haber tu recibido carta mia desde que he llegado aquios haya preocupado tanto artibuyendolo a mi falta de buena salud. Gracias a Dios no fue asi.

A la semana despues de haber llegado he recibido una carta tuya, disculpandote de no haber tu podido despedirnos abordo del barco en que ibamos con motivo de las fuertes lluvias que entonces cayeron. Te conteste que habias hecho muy bien, teniendo tu una salud muy delicada para cogerte unas mojaduras de funestas consecuencias para ti.

A mediados de mayo ultimo calcule que estarias aun en Manila a consequenciaaun de la operacion de tu matriz; pero no sabiendo que direccion pner en micarta a ti desisti de escribirte.

Cuanta bondad y generosidad en el arreglo de mi cuarto o habitacion. Aunqueno lo veo aun, os lo agradezco ya de todo corazon. Debe de estar ya muy confortable, y sin las goteras que tanto me molestaban. Espero poder volveraun alli en cuanto se termine estos asuntos.

Te deseo que se te desaperezca pronto la debilidad de tu corazon para que notengas mas inveycciones de alcampor.

Envio mis mas afectuosos recuerdos a Yre y chiquillos.

Te da un fuerte abrazo tu padre que entranablamente te quiere.

Another interesting circumstance is the discussion which Jesus Ma. Cui had with his father Don Mariano on April 20, 1946 relative to the sale of the lots in question. It should be noted that when Jesus came to know of that sale he could not refrain his anger feeling that he had been ignored or the subject of discrimination on the part of his father and give vent to his feeling he wrote to him on March 20, 1947 a letter, copy of which was marked Exhibit M-2, wherein he appealed to him (his father) to give him and his other children an opportunity to buy the properties in question, to which letter Don Mariano answered with another date April 22, 1947 wherein he apparently gave in to the demand of Jesus subject to certain condition. As the evidence shows, Don Mariano came to answer the letter of Jesus in this manner: Don Mariano discussed the matter with his son Antonio showing to him the letter of Jesus on which occasion Antonio said: "Bueno papa, si tu crees que en eso el esta empeñado y si queres darle a el y el ha dicho a ti que el va a hacer todos los medios para conseguir dicho terreno, puedes hacer todo lo que quiera con tal de que me devuelves mi dinero que yo habia pagado porque era dinero de mi esposa." To this Don Mariano answered: "Vamos a ver primero, que es lo que van a contestar a la carta que voy a mandar."

The letter thus referred to is the one sent by Don Mariano to Jesus, Exhibit I, wherein the former made known to Jesus that he was willing to give to all his children equal opportunity to buy the lots in question subject to the condition that his son or daughter who is not able to pay his debt or obligations or has no money with which to pay them would be automatically excluded from the sale. The evidence also shows that neither Jesus nor the other children who wanted to participate in the sale took the trouble of answering the letter nor made known their desire as to the proposition of their father, and such silence is undoubtedly due to the fact that they were not in a financial condition to comply with the condition imposed in the letter. In fact, according to Antonio Cui, such is the predicament in which his brothers were situated as shown by the fact that Jorge at that time was indebted to his father in the amount of P6,000, Jesus in the amount of P18,000, Jose in the amount of P14,000, while his other brothers did not have the necessary means to take part in the sale. The fact unfolded in connection with this incident constitute a clear indication of the state of mind then enjoyed by Don Mariano for he took the precaution before answering the letter of Jesus of discussing the matter first with his son Antonio who was the one mostly affected by the decision he was about to make considering the menacing attitude and the incessant demand of Jesus regarding the transaction. Only a person of sound mind could have adopted such precaution and circumspections.

The deed of sale Exhibit A was executed by Don Mariano Cui, Antonio Cui and Mercedes Cui de Ramas on March 8, 1946 in the city of Cebu, and by Rosario Cui and her husband Dr. Ireneo Encarnacion in the City of

Manila on March 20, 1946. The consideration of the sale was P64,000 plus the reservation of the right in favor of Don Mariano "to enjoy the fruits and rents of the same" as long as he lives. It appears however that, while in said deed of sale it is stated that Don Mariano has acknowledged receipt of said consideration of P64,000, the same is not true with regard to the share of Rosario Cui. So Don Mariano went to Calapan, Mindoro in July, 1946 to collect from Rosario her share of the purchase price amounting to P20,000. Rosario then excused herself from going ahead with the sale alleging as reason that she needed what money she had to rehabilitate her electric plant in Calapan and also because Cebu was very far from Mindoro where they had already their permanent residence. Not being able to pay her share in the consideration of the sale, Don Mariano demanded from her the resale of her interest. This was done when she went to Manila on October 11, 1946 to execute the deed of resale in favor of Don Mariano. This attitude of Don Mariano is very significant in so far as his state of mind is concerned. It shows that he was fully conscious of what was transpiring and of the transaction he was executing so much so that he went to the extent of demanding from Rosario the resale of her interest when she failed to pay her share in the consideration of the sale.

There are other letters and documents which Don Mariano had prepared and executed in the neighborhood of the time the deed of sale in question was executed which also depict the mental condition that he possessed at the time, and to show this we can do no better than to quote what the lower court said on this point:

Ademas de lo que ya dejamos expuesto, Don Mariano Cui ejecuto varios actos que tambien impugnan la contension de que el ya estuvo mentalmente incapacitado al otogar el Exh. A. Poco antes y tambien despues de otogar dicha escritura, el escribo varias cartas a sus hijos y otogo varios documentos. Entre las cartas figuran el Exh. 4, que esta dirigida a Jorge, lleva la fecha 24 de marzo de 1945; Exh. 23, dirigida a su hija Mercedes, fechada 9 de septiembre de 1946; Exh. 26, dirigida a Don Ramon Aboitiz, fechada el 21 de mayo de 1946; Exhs. 36 y 40 dirigidas a su hijo Antonio, y fechadas 3 de julio p. 13 de agosto de 1945, respectivamente; Exhs. 41 y 42, contestaciones de las cartas de Carmen, esposa de Jesus, fechadas el 11 y 22 de noviembre de 1945, respectivamente; y exh. 57, dirigida a su hija Rosario, fechada Julio 14, 1947. Entre los documentos figuran; Exh. 1-a, escitura de reparticion extrajudicial, otorgada el 6 de deciembre de 1946; Exh. 3-b, un affidavit de fecha 20 de febrero de 1945; Exh. 24, recibo a favor de Gil Ramas, otorgado el 5 de marzo de 1946; Exh. 24, constanciaque fue suscrita y jurada ante el Escribano de este Juzgado el 23 de febrerode 1948; Exh. 34, borrador de exhibit anterior con las correcciones hechas de puno y letra de Don Mariano Cui; Exh. 44, autorizacion a Mercedes y Antonio para hipotecar su participacion en los lotes en cuestion, fechadael 7 de enero de 1947; Exh. 45, convenio entre Don Mariano, por una parte, y Mercedes y Antonio, por otra parte, referente a los terrenos en cuestion, que lleva fecha 30 de septiembre de 1947; Exh. C escritura de hipoteca a favor de la RFC de fecha 15 de abril de 1947; y Exh. S, un memorandum que contiene algunas notas de sus ingresos y gastos que comprende has ta el mes de enero de 1949, poco antes de haber perdido su memoria.

Una lectura de las cartas arribas mencionadas dos lleva a la necesaria conviccion de que durante el periodo en que se escibieron las mismas, o sea hasta el mes de Julio de 1947, Don Mariano Cui aun tenia el pleno goce de sus facultades mentales, pues de otro modo, el no podia expresarsecon tanta claridad y precision en los asuntos que trataba en dichas cartas. Con respecto a los documentos arriba referidos, los mismos, son de tal naturaleza e importancia, que no se podian haber otorgardo por Don Mariano si el no estaba en su cabal juicio. El Exh. S fue presentado por los mismos demandantes, y esta circunstancia, naturalmente, presupone que ellos admiten que Don Mariano Cui estuvo mentalmente sano al anotar los asientos en dicho memorandum, muchos de los cuales tuvieron lugar ya despues de otorgarse el documento en cuestion Exh. A.

It is obvious from the foregoing discussion that Don Mariano signed and executed the deed of sale Exhibit A

not only at a time when he was still in the full enjoyment of his mental faculties, but also under conditions which indicate that he knew what he was doing and, as a consequence, it cannot be said that he has entered into the transaction without his consent or under a misapprehension that the document he was signing was not the sale of the properties in question but one merely pertaining to their administration.

In connection with the contention that the deed of sale Exhibit A was executed by Don Mariano under circumstances which point out that he has done so because of undue influence on the part of the defendants, counsel for appellants mentions the following circumstances: (1) Don Mariano was already 83 years old, he was the father of the vendees, and at the time of the sale or long before it was consummated, he was living with the vendees; (2) one of the vendees, Antonio Cui, was his attorney in fact and lawyer; (3) the vendor and the vendees had obviously confidential family and spiritual relations; (4) the vendor was suffering from mental weakness; and (5) the vendor was in financial distress. The presence of undue influence, according to appellants, is further shown by the execution of the mortgage in favor of the Rehabilitation Finance Corporation, the extra-judicial petition Exh. 1-a, the partition of the properties in question, the alleged oral waiver of usufructuary rights, and the explanatory statement Exhibit 34, which acts, it is claimed, in which Don Mariano was supposed to have taken part and which were all masterminded by Antonio Cui, show that Antonio Cui could get from his father whatever he wanted.

There is however no concrete proof that may substantiate this claim of undue influence. The only direct evidence on the matter is the testimony of Jesus Cui which in the main is based on mere conjecture and not on actual facts. The circumstance that Don Mariano Cui was then living in the house of Mercedes Cui when the deed of sale was signed does not necessarily imply that he was made to sign it under the insidious machinations practiced on him by his daughter. On the contrary, the evidence shows that Don Mariano lived most of the time before the execution of the sale with his other children and not necessarily with herein defendants. Thus, according to the testimony of Jesus Cui himself, during the Japanese occupation, or from 1942 to 1943, his father lived in the City of Cebu. During the month of September, 1943, he went to Manila and lived in the house of his daughter Lourdes Cui de Velez, where he stayed up to September, 1944. Then he went to Calapan, Mindoro to live in the house of his daughter Rosario where he stayed up to February, 1946 when he returned to Cebu. It was only then that he began living in the house of Mercedes Cui. In Mercedes Cui when the deed of sale was executed on March 8, 1946. There is therefore no basis for concluding that said deed of sale was executed simply under the undue influence of Antonio Cui and Mercedes Cui. The fact that about six days before the sale Antonio Cui was made by Don Mariano Cui his attorney in fact could not mean anything unusual for he was then getting old and he needed one who could help him administer the properties of his deceased spouse, and the choice fell on Antonio because he was the only lawyer in the family. And if to all this we add that Don Mariano was then in full enjoyment of his mental faculties, as we have already pointed out elsewhere, it would be presumptuous, if not unfair, on our part to affirm, as appellants want us to do, that he allowed himself to do an act which is not fully accord with his free and voluntary will.

We will not take up the claim that the deed of sale Exhibit A was executed without mediating any consideration on the part of the vendees. if this were true then said deed would be void and inexistent for it would then be afictitious or simulated contract. This claim is merely predicated on the documents Exhibits G and H and the declarations of Rosario Cui and Jesus Ma. Cui. We will briefly discuss this evidence.

Exhibit G is an alleged written statement made by Don Mariano Cui on January 24, 1949 which reads as follows:

A quien corresponde:

Habiendome enterado que hoy existe un lio entre mis hijos en el Juzgado sobre mis propiedades t los de mi difunta esposa, y sobre todo porque el transpaso de las misma a mi hijo Antonio Ma. Cui ya hija Mercedes Cui de Ramas no se halla aun pagado por los mismos,

es mi deseo que el pleito entre mis hijos sea inmediatamente zanjadoy todas participen por igual dichos bienes.

Y para que asi consta firmo esta declaracion en la Ciudad de Cebu, hoy a 24 de enero de 1949.

(Fdo.) MARIANO CUI

Rosario Cui, testifying on the circumstances surrounding the preparation of said Exhibit G, said as follows:

Sr. PIMENTEL:

P. Ayer declaro usted sobre este Exhibit G que, segun usted, esta firmadopor su Padres?

R. Si, señor.

P. Como llego a su poder este documento?

R. Esto me dio mi papa; sabe usted cuando estaba tratando con mi hermano,este me insulto y estaba y llorando, y despues se fueron al cine; y entoncesdijo el; Deja Vd. y mande preparar una orden mia de que yo quiero se termineese asunto y que se arregle entre estedes y no me gusta que haya pleito y yo voy a firmar y se preparo eso.

P. Usted mando preparar el exhibit G en la localidad?

R. Si, señor, con el S. Jayme.

P. Donde lo firmo este exhibit G?

R. En la casa de mi hermana Mercedes. Cuando lo firmo estabamos los dos, mi marido y yo.

P. Su hermano de usted estaba presente?

R. Estaba en casa mi hermana Mercedes, pero no estaba delante. Mi hermano estaba ausente. Cuando se hizo este, debla haberse firmado el 24, pero era por suplica de mi papa, y habia mucha gente, y ademas en aquel dia noquiera dar disgustos, y cuando nos marchamos, le dije: "Papa, esta aqui el papel que me ha entregado, que voy a hacer", y dijo: "voy a firmarlo."

P. Eso fue cuando?

R. El enero 25.

P. Sabiendo usted que su padre vivia en la casa de Mercedes por que no llamo usted a Mercedes para ser mas legal?

No me acuerdo de eso.

P. Ni siquiera el esposo de su hermana, el Doctor, llamo usted para que preseciara la firma de

este Exhibit G?

R. No me acorde de eso. (pags. 162-B, 163 y164, transcripcion,)

If we would give credit to what document Exhibit G literally says, we would indeed come to the conclusion that Antonio Ma. Cui and his sister Mercedes, vendees of the property, have not as yet paid the consideration of the sale to their father Don Mariano, but the testimony of Rosario Cui itself belies that such was the real intention of Don Mariano when the statement was allegedly made. According to Rosario Cui, when Don Mariano was informed that a case was brought to court to seek the annulment of the sale of the Manalili property and she informed him of the attitude of the other children, Don Mariano said: "Deje Vd. y mande preparar una orden mia de que yo quieroque se termine el asunto y se arregle entre ustedes y no me gusta que haya pleito, y yo voy a firmar y se preparo eso." Then she caused that statementto be prepared by Atty. Jayme which was signed by Don Mariano in the house of Mercedes, If we were to believe the testimony of Rosario Cui, we would find that the only wish of Don Mariano was to have the litigation terminated and amicably settled and that nothing was said about the alleged non-payment of the consideration. And it is strange that the statement was signed in the house of Mercedes Cui and the latter never came to know about it before it was presented in court. It is apparent that the whole thing was a concoction of some of those interested in winning the case which was already pending in court by inserting something that might serve as basis for the nullification of the sale; and our suspicion is strengthened when we consider that statement was allegedly signed at a time when, according to Rosario Cui herself, her father was already mentally infirm, so much so that about one month thereafter he was declared incompetent and mentally incapacitated.

The document Exhibit H is an alleged letter of Don Mariano to his son-in-law, Dr. Ireneo Encarnacion, husband of Rosario, dated January 30, 1949, wherein Don Mariano apparently added at the foot the following statement: "PD. Quizas te podre pagar cuando me paguen ellos Nene los solares de Manalili." If we will give credit to the above statement, we would also conclude that the vendees have not paid the consideration of the sale of the Manalili property. Again we can say that such cannot represent the clear will of Don Mariano if we want to be consistent with our finding that at that time he was no longer in possession of his mental faculties. Apparently, this is another scheme employed by Rosario Cui and her husband to bolster up their case seeking the annulment of the sale.

But the most serious attempt to show that the defendants did not pay any consideration for the sale of the lots in question is the story that is now being brought to bear on the sale of the San Jose property by Don Mariano to his daughter-in-law, Elisa Quintos, wife of Antonio Cui, on August 31, 1944 which, it is alleged, does not show on its face the true consideration paid by Elisa to don Mariano regarding said property. In relating the so try relative to this transaction, the picture which counsel for appellants wants to portray is that the true consideration paid by Elisa to Don Mariano is the sum of P125,000, and not simply P50,000 as it was made to appear therein, and, therefore, when the deed of sale was executed on March 8, 1946 no actual consideration passed from Antonio Cui to Don Mariano because the latter was not then owing any amount either to said Antonio or to his wife Elisa Quintos.

Before discussing the details concerning the sale of the San Jose property as narrated by counsel for appellants, let us take note of the version of Antonio Cui as to how he came to pay the consideration of P21,333 assigned to him in the transaction. Antonio Cui testified that of the said sum of P21,333 representing his share in the consideration of the sale, P1,333 was advanced in his favor by his sister Mercedes as shown by the receipt Exhibit 24 issued by Don Mariano in favor of the latter. The balance of P20,000 represents settlement of the debt his father then owed to his wife Elisa. This indebtedness, according to Antonio, arose in the following manner: On June 10, 1935, the conjugal partnership of the spouses Don Mariano Cui and Doña Antonia Perales contracted an obligation of P80,000 with the Filipinas Life Assurance Co., Ltd. secured by a mortgaged on real estate belonging both to the conjugal partnership and to the estate of Don Mariano. On March 23, 1942, the company made a demand on Don Mariano for the payment of the obligation which was

then increasing in view of the accumulation of the interests. In order that he may settle this obligation, Don Mariano asked his son Jesus Cui to look for a buyer of the San Jose property in Cebu City.

Apparently, Jesus made efforts to look for a buyer as shown by several letters and telegrams he sent to his father regarding the matter so much so that Don Mariano, acknowledging said efforts, sent to him on October 5, 1943 a letter thanking him for the interest he was displaying and stating that he could keep for himself whatever amount he might secure in excess of the sum of P90,000 which at that time was the totality of the obligation (Exh. 49). But since two years had passed and nothing concrete came from the efforts exerted by Jesus, Don Mariano had to turn for help to his son Antonio. Antonio agree to help and said that he would talk to his wife about it. The best way he and his wife found to raise the money was to sell the property his wife had in Malate, City of Manila, for the sum P300,000. Of this amount, they gave to his father the sum of P125,000 to cover his needs and obligations. With this money, Don Mariano pay his debt to the insurance company of P94,736.93, including interests, deducted the sum of P5,000 representing the amount spent by him for the wedding of Antonio and Elisa, and applied P50,000 as consideration for the sale to Elisa Quintos of the house and lot at San Jose street in Cebu City. And in recognition of the help extended to him by Antonio and Elisa, Don Mariano acknowledged in their favor the sum of P70,000 as a loan. The deed of sale of the San Jose property to Elisa Quintos was executed by Don Mariano Cui on August 31, 1944 with two of his children, Lourdes Cui de Velez and Jorge Cui as witnesses. And when the sale of the lots in question came, it was agreed that the loan of P70,000 be reduced to P20,000, Philippine currency, in deference to the request of Don Mariano which amount, in addition to the sum of P1,333 advanced by Mercedes, became the consideration paid by Antonio Cui for his share in the transaction. This is the explanation given by Antonio of how he came to pay the consideration of the sale, and apparently this is supported by the same deed of sale wherein Don Mariano acknowledged having received the total consideration (Exhibit A).

Appellants, however, do not seem to agree to this narration for they do not give faith and credit to the explanation given by Antonio Cui as to how he came to pay his share in the consideration of sale, and to show that Antonio cannot be truthful and that the sale of the San Jose property, as well as that of the lots in question, are but the product of his insidious scheme and manipulations to serve his own selfish interests, they brought forth in this case certain documents and telegrams tending to show that Don Mariano could have intended to sell the San Jose property for less than the amount of his obligation to the insurance company more so when he had received offers for the purchase of said property in the amount of not less than P150,000. Thus, an attempt was made to show that on August 25, 1944, or five days before the sale to Elisa Quintos was consummated, Paulino Gullas offered to buy the property for P150,000. There was also an attempt to show that at about the time the sale was being made to Elisa Quintos of that property, Sergio Osmeña, Jr. also made an offer in the same amount of P150,000.

While these facts are true because they are supported by unrefuted evidence, it is however also true that those offers came when the negotiation between Don Mariano Cui and Elisa Quintos had already been completed. It should be borne in mind that the authority given by Don Mariano Cui to Jesus Cui to sell the property was given even as early as 1942 and despite the lapse of two years nothing concrete came out in spite of the efforts made by Jesus to look for a buyer, and so Elisa Quintos had to sell her property in Manila just to please and accommodate her father-in-law, Don Mariano. The offer, therefore, of Paulino Gullas or of Sergio Osmeña, Jr., even for the sum of P150,000, came late, and under the circumstances, Don Mariano had no other alternative, as any other decent man would have done, than to reject the offers and maintain the sale he made to Elisa even at the sacrifice of some material advantage in his favor. He wrote to Jesus on August 7, 1944 (Exhibit 52) and told him that he had already sold the San Jose property to Elisa assuring him at the same time that although the price paid for it was not high, still he considered the sale to his advantage as Elisa and Antonio spontaneously reserved in his favor the right to occupy for life any room he may choose in the same house included in the transaction when he should return to Cebu to live there, a privilege which Don Mariano knew no other buyer would be in position to offer. This explains somewhat this apparent incongruity in the transaction. This consideration may really appear low especially when done in Japanese currency, but at the same time we

cannot overlook the fact that some moral factor has played an important part in the transaction. At any rate, that is the consideration that appears in the document (Exhibit R), and its genuineness and due execution is not now disputed. We are, therefore, constrained to consider it on its face value.

The consideration paid by Mercedes Cui for her share in the sale in question is also disputed by appellants who claim that she has not paid any amount and that the explanation she has given as to how she came to pay said consideration is not worthy of credence. Mercedes Cui, on this matter, testified that before her father Mariano left for Manila in the month of July, 1943, he had been taking from her on several occasions sum of money which reached a total of P140,000; that in February, 1946, her father returned to Cebu and she again gave him the sum of P2,000, making a total of P16,000, the money taken by her father; that after receiving the sum of P2,000, her father offered to sell her ¹/3of the interest in the three lots in question, which she accepted; that days before she signed the deed of sale Exhibit A, she gave her father the sum of P6,666, of which P1,333 were given for the account of her brother Antonio Cui, and the sum of P5,333 was applied to cover the balance of her share in the consideration to complete the amount of P16,000 previously taken by her father; that in acknowledgement of the receipt from her of said amounts, her father executed the receipts Exhibit 24 in his own handwriting, and days after, she was made to sign said deed of sale; and that her father did not include in the sale her other brothers and sisters because he knew their precarious financial situation.

The weakness which appellants find in this explanation given by Mercedes Cui lies in that she has been able to produce any receipt showing the deliveries of money she claimed to have made to her father. This may be true, but this was explained by her saying that it has never been her habit to ask for receipt from her father for any money she may have given him, unlike her sister Rosario who has the habit of asking for receipts. On the other hand, she claims that her payment of the consideration cannot be disputed for Don Mariano has expressly acknowledged having received it in a document written in his own handwriting, as evidence by Exhibit 24, the genuineness of which is not disputed. And there is one circumstance that bolster up this claim, which also holds true with regard to Antonio Cui, and that is the attitude shown by Don Mariano when Rosario Cui has not paid her consideration in the sale. It should be recalled that when Don Mariano came to know this fact, he went to Calapan, Mindoro, where Rosario was residing, to demand payment from her, and when she failed, he asked her to execute a deed of resale in his favor. If Antonio or Mercedes, as appellants now claim, has not paid his or her share in the consideration, Don Mariano would have also demanded from any one of them the resale of the property, in the same way that Rosario was required. The fact that Don Mariano did not do so shows that both paid their shares to his full satisfaction.

But appellants are not yet satisfied with this reasoning. They insist that Mercedes has not paid any consideration because, they contend, if it were true that she has given her father the different sums of money she claims she has given, which amount to P16,000, the receipt of said amounts would have been noted by Don Mariano in the diary Exhibit KK which was kept by him during the years 1942 to 1945 wherein several entries appear of different sums of money received and disbursed by him for sundry expenses. When these alleged sums were not noted down in said diary, they contend, it is because they are not true.

If we were to believe the testimony of Jesus Ma. Cui that his father had the habit of writing down in said diary all the receipts and expenses he makes daily up to the last centavo, the contention may be correct, considering

that the sums of money delivered by Mercedes do not appear in said diary. But that statement of Jesus Cui is an exaggeration for, as affirmed by Antonio Cui, not all the entries appearing therein are in the handwriting of Don Mariano, nor is it true that all the receipts and expenses he makes everyday are noted down therein, for the truth is that there are many money transactions and expenses made by Don Mariano during the period of 1942 to 1945 that have not been recorded therein. Thus, the expenses and receipts had by Don Mariano while he was in Manila, do not appear therein, nor those incurred by him in his travels from Manila to Calapan, and vice-versa. Nor do they appear therein the expenses incurred by Don Mariano for his son Jorge and his family when they went to Calapan; neither does it appear the loan of P3,000 made to Miguel Ortigas. It does not also appear the sum of P18,000 borrowed from him by Jorge while they were in Manila as testified by the latter.

In connection with this diary, we may also point out the suspicious circumstances surrounding its presentation in court as evidence. It appears that this document was presented by Rosario Cui who testified that she received it from her father after Mercedes had already testified in this case, which was on September 30, 1949. According to her, Don Mariano on that occasion gave her instruction as to where to get said document and what to do with it. She said that when she talked with her father about the claim of Antonio that the consideration he paid was P70,000 which were reduced to P20,000 upon his request, her father said: "despues me dijo mi papa quebuscara en sus libros, porque el tenia un libro diario donde apuntaba susgastos y tenia varios cuadernos todavia alli pero yo no quise sacar todo; entonses al me dijo que yo lo llevara y lo utilizara para comprobar dos gastos y las entradas durante esos años." (p. 112, Memorandum for Appellees)What Rosario has attributed to her father as regards the use of the diary Exhibit KK is hard to believe considering that by that time, September 30,1949, Don Mariano could no longer hold such a coherent conversation and much less give instructions as to the best way could make use of the diary, considering that Don Mariano at that time has already been declared mentally incapacitated. The presentation of said diary can have no other meaning than that it is an eleventh hour attempt to bolster up the claim of appellants that the deed of sale Exhibit A lacks consideration.

As an additional arguemen to nullify the deed of sale Exhibit A, even partially, in the supposition that all their previous arguments would prove of no avail, appellants raise the question that said sale should be invalidated at least in so far as the portion of the property sold to Antonio Cui is concerned, for the reason that when that sale was effected he was then acting as the agent or administrator of the properties of Don Mariano Cui. In advancing this argument, appellants lay stress on the power of attorney Exhibit L which was executed by Don Mariano in favor of Antonio Cui on March 2, 1946, wherein the former has constituted the latter as his "true and lawful attorney" to perform in his name and that of the intestate heirs of Doña Antonia Perales the following acts:

. . . to administer, sell, mortgage, lease, demand, claim, represent me and the intestate heirs, in all meetings of corporations, associations, of which my or their presence is required, sue for, collect, cash, indorse checks drawn in my favor or of the intestate heirs against any person or entity or bank, and sign all documents, that I and or the intestate heirs to which I am the administrator are entitled to; giving and granting untomy said attorney full power to perform and to make everything necessary to be done or which he believes to be necessary or beneficial for me and the said heirs as fully and to all intents and purposes as I might or could do if personally present, with full power of substitution, and revocation, hereby granting ratifying all that he or his substitutes shall lawfully do or cause to be done by virtue of these presents.

While under article 1459 of the old Civil Code an agent or administrator is disqualified from purchasing property in his hands for sale or management, and, in this case, the property in question was sold to Antonio Cui while he was already the agent or administrator of the properties of Don Mariano Cui, we however believe that this question can not now be raised or invoked for the following reasons.

(1) This contention is being raised in this appeal for the first time. It was never raised in the trial court. An

examination of the complaints, both original as well as amended, will show that nowhere therein do they raise the invalidity of the sale on that ground nor ask as an alternative relief for the partial revocation of the sale in so far as Antonio's share is concerned because of the alleged relation of principal and agent between vendor and vendee. It is undoubtedly for this reason that the trial has not passed upon this question in its decision. And considering that under Section 19, Rule 48, of our Rules of Court, an appellant may only include "In his assignment of error any question of law or fact that has been raised in the court below and which is within the issues made by the parties in their pleadings", it follows that appellants are now prevented from raising this question for the first time in this instance.

(2) The power of attorney in question is couched in so general a language that one cannot tell whether it refers to the properties of Don Mariano or only to the conjugal properties of the spouses. However, considering that the appointment was extended to Antonio Cui by Don Mariano so that he may act as agent "for me and for the intestate heirs of the deceased Antonia Perales", one is led to believe that the power refers to the conjugal properties wherein he had one-half interest in the heirs of Doña Antonia, the remaining half. Moreover, the power of attorney was executed on March 2, 1946 while the deed of sale was executed on March 8, 1946. They were therefore executed practically at the same time, which makes it doubtful as to whether such sale can be deemed to be within the prohibition of the law.

(3) The prohibition of the law is contained in article 1459 of the old Civil Code, but this prohibition has already been removed. Under the provisions of article 1491, section 2, of the new Civil Code, an agent may now buy property placed in his hands for sale or administration, provided that the principal gives his consent thereto. While the new Code came into effect only on August 30, 1950, however, since this is a right that is declared for the first time, the same may be given retroactive effect if no vested or acquired right is impaired (Article 2253, new Civil Code). During the lifetime Don Mariano, and particularly on March 8, 1946, the herein appellants could not claim any vested or acquired right in these properties, for, as heirs, the most they had was a mere expentancy. We may, therefore, invoke now this practical and liberal provision of our new Civil Code even if the sale had taken place before its effectivity.

The remaining question to be determined refers to the nature of the properties in question which appellants claim belong to the conjugal partnership of Don Mariano Cui and Doña Antonia Perales while, on the other hand, appellees contend belong exclusively to Don Mariano.

In support of their contention, appellants rely on the legal presumption that said properties are conjugal because they were acquired by Don Mariano and his wife during their marriage, and on the testimony of Jesus, Jorge and Rosario Cui, three of the children of Don Mariano, who testified that said properties are conjugal because they have always been of the belief or impression that they belong to the conjugal partnership of their parents. They have not presented any documentary evidence in support of their contention.

It is true that the properties in question were acquired during the marriage of Don Mariano Cui Doña Antonia Perales", and as much they are presumed to be conjugal properties (Article 1407, old Civil Code), but this presumption appears here rebutted by conclusive and strong evidence to the contrary. It should be stated that these properties originally belonged to Don Pedro Cui and Doña Benigna Cui, uncle and aunt, respectively, of Don Mariano, which were donated by them to Don Mariano on April 12, 1912 on condition that the latter renounce any further inheritance he might have been in the intestate estate of the donors. And while appellees have been able to introduce any copy of the deed of donation because the same has already disappeared, the fact however remains that it has been clearly established that such donation has been actually made exclusively to Don Mariano by clear and satisfactory evidence. The following is a discussion of such evidence which consists in the testimony of Marta Cui and Generoso Vda. de Jakosalem, both nieces of the donors, and in numerous documents the genuineness of which is not disputed.

Marta Cui, a woman 81 years old, testified that since she was 10 years of age she lived in the company of her

uncle Pedro Cui and aunt Benigna Cui; that during their lifetime these two made donations of their lands to their nephews and nieces subject to the condition that they should renounce whatever share they might have in their inheritance and among the donees was Don Mariano Cui; that the donations were made exclusively to their nephews and nieces, or without including their respective spouses; that the donation made in her favor is contained in the document Exhibit 21; and that the lots in question were donated to Don Mariano Cui to the exclusion of his spouse Antonia Perales. Examining said donation Exhibit 21 one would find that it was really made exclusive in favor of Marta Cui subject to the condition that she would renounce whatever inheritance she might have from the donors.

Generoso Vda. de Jakosalem, another woman of advanced age who because of unexpected illness was not able to continue testifying, also affirmed that the lots in question were donated to Don Mariano by her uncle Pedro Cui and aunt Benigna Cui exclusively, and this she knows personally because on the same date such donation was made, she also received a donation from the same donors.

Antonia Ma. Cui, testifying on this matter, said: that while he was acting as private secretary of his father Don Mariano before the was, he had an opportunity to see a copy of the deed of donation of the lots in question in his favor (his father), which copy was furnished by the clerk of court, and at the foot thereof there appears a note to the effect that the original of said deed was on file in the record of the cadastral case covering the property; that said document appears signed by the donors Pedro Cui and Benigna Cui, by the donee Mariano Cui and the instrumental witnesses Victor Cui and Dionisio Jakosalem; that said copy having been lost, he went to see the clerk of court to inquire about the original that was on file in the record of the cadastral case but the clerk of court told him that the record was destroyed during the last was; that he them went to the office of the Bureau of Achives to see if he could get a copy of the document but in said office he only found the notarial register of the notary public Raymundo Enrique wherein the deed of donation appears recorded; that at his request the chief of said office issued photastic copies of the pages of the notarial register which contained the annotation relative not only to the deed of donation in question but also to that which pertains to the other deeds of donation executed by the donors Pedro Cui and Benigna Cui (Exhibit 31-a and 31-b); that the entry No. 310 that appears in the copy marked Exhibit 31-b refers to the deed of donation of the lots in question in favor of his father because said entry refers to a property situated in Plaza Washington, Cebu, where his father did not have any other property except that donated to him by his relatives, which was later divided into three lots, and that it is of common knowledge among members of the Cui family that all the nephews of Pedro Cui and Benigna Cui received from them by way of donation several pieces of lands subject to the condition that they renounce their right to inherit from the donors.

Entry No. 310 which appears in photastic copy Exhibit 31-b contains under the heading "Nature of Instrument" the following annotation: "Donacion condicional que hacen Pedro Cui y Benigna Cui a favor de su sobrino Mariano Cui de un solar con todas sus mejoras y edifficio en la plaza de Washington, Cebu; y la aceptacion del donatario quien agradece a los donantes." In the same entry there also appears that the document was executed on April 12, 1912 by Pedro Cui, Benigna Cui, and attested by Victor Cui and Dionisio Jakosalem.

In the photastic copy Exhibit 31-a, there appear entries Nos. 301, 303, 304 and 305 which refer to the deeds of donnation executed by Pedro Cui and Benigna Cui in favor of their nephews and nieces Mauricio Cui, Marta Cui, Victor Cui, Angel Cui and Felicidad Cui. Note that these donations were made exclusively in favor of the nephews and nieces without including their respective spouses and were all executed on April 11, 1912, or one day before the execution of the donation in favor of Don Mariano Cui. The two photostatic copies Exhibits 31-a and 31-b corroborate the testimony of Marta Cui and Generoso Vda. de Jakosalem to the effect that all the donations made by Don Pedro Cui and Benigna Cui in favor of their nephews and nieces were made to them exclusively or without including their respective spouses, and subject to the condition that they should renounce their right to inherit from the donors.

In addition to the foregoing evidence, there are other documents which strenghten the contention that the lots

in question were donated exclusively to Don Mariano Cui. One of them is the inventory prepared by Don Mariano of the properties which belonged to him exclusively and those which belonged to the conjugal partnership, as a result of the death of his wife Antonia Perales in 1939, copies of which were furnished to all the children of Don Mariano. In this inventory marked Exhibit 8, under the heading "Bienes del esposo superviviente Don Mariano Cui," the following appears: "1.-Un solar compuesto de los lotes 2312, 2313 y 2319, del Catastro de Cebu, con sus mejoras consistentes en una casa de pierda y madera con techo de teja y con una azotea tambien de pierda y madera." In the same inventory under the heading "Bienes ganancials habidos durante el matrimonio de Don Mariano Cui y Doña Antonia Perales," there also appears the following statement: "1. Un edificio mixto de concreto y madera con techo de hierro galvanizado . . . construido un una porcion de terreno, de mildosientos cincuenta (1,250) metros cuadrados de superficie, mas o menos, la cual forma parte de un solar de mayor extention, situado entre las Calles Manalili y Calderon de la ciudad de Cebu, Cebu . . . y pertenece en propiedad exclusiva al esposa superviviente Don Mariano Cui." This property is the one known as lots Nos. 2312, 2313, and 2319. This inventory was never objected to by the heirs and shows clearly that while the land belongs exclusively to Don Mariano Cui the building constructed thereon was considered as conjugal property.

Another important document is the extra-judicial partition of the properties pertaining to the conjugal partnership of Don Mariano Cui and the deceased wife Antonia Perales, marked Exhibit 1-a, which was signed by Don Mariano and all his children, with the exception of Jorge Cui, who was then in Manila when the document was signed on December 6, 1946. In said document mention is made of the inventory which was prepared by Don Mariano of the conjugal properties belonging to him and his wife, as well as the powers of attorney executed in favor of Don Mariano by his children authorizing him to administer the properties belonging to the conjugal partnership. It is interesting to note that in this deed of partition a relation is made of the conjugal properties as well as of the debts and obligation which were then existing against the partnership and the disposition made of the properties to pay said debts and obligations. It is also interesting to note that the three lots in question are not included in this deed of partition. The fact that all the heirs, with the exception of Jorge, signed this deeds of partition without any protest, is a clear proof that they knew right along that said lots were exclusive property of their father and did not belong to the conjugal partnership. It is true that appellants Jesus Ma. Cui and Rosario Cui, while admitting the authenticity and due execution of the above deed of partition, now contend that they signed the same without being aware of its contents, but this contention can hardly be given credit, for we can not suppose that, referring as it does to an important document which concern precisely a partition of inheritance, they should sign the same without first ascertaining or satisfying themselves of the nature of the transaction.

Other important documents that may have a bearing on this matter are inheritance tax return Exhibit 32 and the relation Exhibit 33 of the real properties of Don Mariano Cui for the purpose required by law relative to the issuance of the Residence Certificate B. The inheritance tax return was filed by Don Mariano Cui in 1939 in connection with the hereditary left by his wife Antonia Perales and in said the lots in question were not included, while the relation Exhibit 33 includes said lots because they were deemed by Don Mariano as his exclusive property and as such should be included in the assessment to be made in connection with the issuance of the Residence Certificate B. These two documents, which were prepared by Don Mariano Cui, clearly indicate that the lots in question were always considered by him as his exclusive property.

There can therefore be no doubt, in the light of the overhelming evidence, testimonial as well as documentary, we have discussed in the preceeding paragraphs, that these three lots in question have always been considered not only by Don Mariano Cui, but by his children and other relatives, him by his uncle Pedro Cui and aunt Benigna Cui to the exclusion of his wife Antonia Perales. Consequently, the contention that, in disposing of said property, Don Mariano Cui has appropriated what belongs to his co-heirs, has completely no function in the evidence.

Having reached the conclusion that the lots in question were the exclusive property of Don Mariano Cui and

that the deed of sale Exhibit A was executed by him freely, intelligently, and with sufficient pecuniary consideration, we deem it unnecessary to dwell on the other points discussed by both parties in their briefs and in their respective memoranda. While these points, vehemently advocated by appellants' counsel may throw could on the due execution of the sale, or may cast doubt on the sufficiency of its consideration, we are however constrained to uphold its validity if we are to be consistent with our conclusion that Don Mariano has executed it while still in the full enjoyment of his mental faculties, considering that he never lifted a finger to dispute it, in the same manner he did with regard to Rosario Cui. No other conclusion is plausible and proper, considering all the circumstances of the case.

Wherefore, we hereby affirm the decision appealed from, without pronouncement as to costs

FIRST DIVISION

G.R. No. L-26096 February 27, 1979

THE DIRECTOR OF LANDS, petitioner, vs.SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL, MARTA C. DE LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS, petitioners-appellants, ALBERTO FERNANDEZ, adverse claimant-appellee.

Juanito Ll. Abao for petitioners-appellants.

Alberto R Fernandez in his own behalf.

 

MAKASIAR, J.:

This is an appeal from the order of the Court of First Instance of Cebu dated March 19, 1966 denying the petition for the cancellation of an adverse claim registered by the adverse claimant on the transfer certificate of title of the petitioners.

The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel by petitioner, Maximo Abarquez, in Civil Case No. R-6573 of the Court of First Instance of Cebu, entitled "Maximo Abarquez vs. Agripina Abarquez", for the annulment of a contract of sale with right of repurchase and for the recovery of the land which was the subject matter thereof. The Court of First Instance of Cebu rendered a decision on May 29, 1961 adverse to the petitioner and so he appealed to the Court of Appeals.

Litigating as a pauper in the lower court and engaging the services of his lawyer on a contingent basis, petitioner, liable to compensate his lawyer whom he also retained for his appeal executed a document on June 10, 1961 in the Cebuano-Visayan dialect whereby he obliged himself to give to his lawyer one-half (1/2) of whatever he might recover from Lots 5600 and 5602 should the appeal prosper. The contents of the document as translated are as follows:

AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R-6573 of the Court of First Instance of Cebu, make known through this agreement that for the services rendered by Atty. Alberto B. Fernandez who is my lawyer in this case, if the appeal is won up to the Supreme Court, I Promise and will guarantee that I win give to said lawyer one-half (1/2) of what I may recover from the estate of my father in Lots No. 5600 and 5602 which are located at Bulacao Pardo, City of Cebu. That with respect to any money which may be adjudged to me from Agripina Abarquez, except 'Attorney's Fees', the same shall pertain to me and not to said lawyer.

IN WITNESS WHEREOF, I have caused my right thumb. mark to be affixed hereto this 10th of June, 1961, at the City of Cebu.

THUMBMARKMAXIMO ABARQUEZ

(p. 5, Petitioner-Appellant's Brief, p. 26, rec.)

The real Property sought to be recovered in Civil Case No. R6573 was actually the share of the petitioner in Lots 5600 and 5602, which were part of the estate of his deceased parents and which were partitioned the heirs which included petitioner Maximo Abarquez and his elder sister Agripina Abarquez, the defendant in said civil case.

This partition was made pursuant to a project of partition approved by the Court which provided am other that Lots Nos. 5600 and 5602 were to be divided into three equal Parts, one third of which shall be given to Maximo Abarquez. However, Agripina Abarquez the share of her brother stating that the latter executed an instrument ofpacto de retro prior to the partition conveying to her any or all rights in the estate of their parents. Petitioner discovered later that the claim of his sister over his share was based on an instrument he was believe all along to be a mere acknowledgment of the receipt of P700.00 which his sister gave to him as a consideration for g care of their father during the latter's illness and never an instrument of pacto de retro. Hence, he instituted an action to annul the alleged instrument of pacto de retro.

The Court of Appeals in a decision promulgated on August 27, 1963 reversed the decision of the lower court and annulled the dead of pacto de retro. Appellee Agripina Abarquez filed a motion for reconsideration but the same was denied in a resolution dated January 7, 1964 (p. 66, Record on Appeal; p. 13, Rec.) and the judgment became final and executory on January 22,1964.

Subsequently, Transfer Certificate of Title No. 31841 was issued on May 19,1965 in the name of Maximo Abarquez, married to Anastacia Cabigas, over his adjudged share in Lots Nos. 5600 and 5602 containing an area of 4,085 square meters (p. 110, ROA; p. 13, rec.). These parcels of land later by the subject matter of the adverse claim filed by the claimant.

The case having been resolved and title having been issued to petitioner, adverse claimant waited for petitioner to comply with ha obligation under the document executed by him on June 10, 1961 by delivering the one-half (½) portion of the said parcels of land.

Petitioner refused to comply with his obligation and instead offered to sell the whole parcels of land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal. Upon being informed of the intention of the petitioner, adverse t claimant immediately took stops to protect his interest by filing with the trial court a motion to annotate Ins attorney's lien on TCT No. 31841 on June 10, 1965 and by notifying the prospective buyers of his claim over the one-half portion of the parcels of land.

Realizing later that the motion to annotate attorney's lien was a wrong remedy, as it was not within the purview of Section 37, rule 138 of the Revised Rule of Court, but before the same was by the trial court, adverse t by an affidavit of adverse claim on July 19, 1965 with the Register of Deeds of Cebu (p. 14, ROA; p. 13, rec.). By virtue of the petition of mid affidavit the adverse claim for one-half (½) of the lots covered by the June 10, 1961 document was annotated on TCT No. 31841.

Notwithstanding the annotation of the adverse claim, petitioner-spouse Maximo Abarquez and Anastacia Cabigas conveyed by deed of absolute sale on July 29, 1965 two-thirds (2/3) of the lands covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal. When the new transfer certificate of title No. 32996 was issued, the annotation of adverse claim on TCT No. 31841 necessarily had to appear on the new transfer certificate of title. This adverse claim on TCT No. 32996 became the subject of cancellation proceedings filed by herein petitioner-spouses on March 7, 1966 with the Court of First Instance of Cebu (p. 2 ROA; p. 13, rec.). The adverse claimant, Atty. Alberto B. Fernandez, filed his opposition to the petition for cancellation on March 18, 1966 (p. 20, ROA; p. 13 rec.). The trial court resolved the issue on March 19, 1966, when it declared that:

...the petition to cancel the adverse claim should be denied. The admission by the petitioners that the lawyers (Attys. Fernandez and Batiguin) are entitled to only one-third of the lot described in Transfer Certificate of Title No. 32966 is the best proof of the authority to maintain said adverse claim (p. 57, ROA; p. 13, rec.).

Petitioner-spouses decided to appeal the order of dismissal to this Court and correspondingly filed the notice of appeal on April 1, 1966 with the trial court. On April 2, 1966, petitioner-spouses filed the appeal bond and subsequently filed the record on appeal on April 6, 1966. The records of the case were forwarded to this Court through the Land Registration Commission of Manila and were received by this Court on May 5, 1966.

Counsel for the petitioner-spouses filed the printed record on appeal on July 12, 1966. Required to file the appellants' brief, counsel filed one on August 29, 1966 while that of the appellee was filed on October 1, 1966 after having been granted an extension to file his brief.

The case was submitted for decision on December 1, 1966. Counsel for the petitioners filed a motion to expunge appellees' brief on December 8, 1966 for having been filed beyond the reglementary period, but the same was denied by this Court in a resolution dated February 13, 1967.

The pivotal issue to be resolved in the instant case is the validity or nullity of the registration of the adverse claim of Atty. Fernandez, resolution of which in turn hinges on the question of whether or not the contract for a contingent fee, basis of the interest of Atty. Fernandez, is prohibited by the Article 1491 of the New Civil Code and Canon 13 of the Canons of Professional Ethics.

Petitioners contend that a contract for a contingent fee violates Article 1491 because it involves an assignment of a property subject of litigation. That article provides:

Article 1491. The following persons cannot acquire by purchase even at a public or judicial auction, either in person or through the petition of another.

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior and other o and employees connected with the administration of justice, the property and rights

in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions;this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession (Emphasis supplied).

This contention is without merit. Article 1491 prohibits only the sale or assignment between the lawyer and his client, of property which is the subject of litigation. As WE have already stated. "The prohibition in said article a only to applies stated: " The prohibition in said article applies only to a sale or assignment to the lawyer by his client of the property which is the subject of litigation. In other words, for the prohibition to operate, the sale or t of the property must take place during the pendency of the litigation involving the property" (Rosario Vda. de Laig vs. Court of Appeals, et al., L-26882, November 21, 1978).

Likewise, under American Law, the prohibition does not apply to "cases where after completion of litigation the lawyer accepts on account of his fee, an interest the assets realized by the litigation" (Drinker, Henry S., Legal Ethics, p. 100 [1953], citing App. A, 280; N.Y. Ciu 714). "There is a clear distraction between such cases and one in which the lawyer speculates on the outcome of the matter in which he is employed" (Drinker, supra, p. 100 citing A.B.A. Op. 279).

A contract for a contingent fee is not covered by Article 1491 because the tranfer or assignment of the property in litigation takes effect only after the finality of a favorable judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of one-half (1/2) of whatever Maximo Abarquez might recover from his share in the lots in question, is contingent upon the success of the appeal. Hence, the payment of the attorney's fees, that is, the transfer or assignment of one-half (1/2) of the property in litigation will take place only if the appeal prospers. Therefore, the tranfer actually takes effect after the finality of a favorable judgment rendered on appeal and not during the pendency of the litigation involving the property in question. Consequently, the contract for a contingent fee is not covered by Article 1491.

While Spanish civilists differ in their views on the above issue — whether or not a contingent fee contract (quota litis agreement) is covered by Article 1491 — with Manresa advancing that it is covered, thus:

Se ha discutido si en la incapacidad de Ion Procumdam y Abogados asta o el pecto de quota litis. Consiste este, como es sabido, en la estipulacion de que el Abogado o el Procurador ban de hacer suyos una parte alicuota de In cona que se li m la son es favorable. Con es te concepto a la vista, es para nosortros que el articulo que comentamos no menciona ese pacto; pero como la incapacidad de los Abogados y Procuradores se extinede al acto de adquirir por cesion; y la efectividad del pacto dequota litis implica necesariamente una cesion, estimamos que con solo el num. 5 del articulo 1459 podria con exito la nulidad de ese pacto tradicionalmente considerado como ilicito.

xxx xxx xxx

Debe tenerse tambien en cuenta, respecto del ultimo parrafo del articulo 1459, la sentencia del Tribunal Supreme de 25 Enero de 1902, que delcara que si bien el procurador no puede adquirir para si los bienes, en cuanto a los cuales tiene incapacidad, puede adquirirlos para otra persona en quien no concurra incapacidad alguna (Manresa, Comentarios al Codigo Civil Español, Tomo X, p. 110 [4a ed., 1931] emphasis supplied).

Castan, maintaining that it is not covered, opines thus;

C. Prohibiciones impuestas a las personas encargadas, mas o menos directamente, de la administracion de justicia.—El mismo art. 1,459 del Codigo civil prohibe a los Magistrados, Jueces, individuos del Minesterio fiscal, Secretarios de Tribunales y Juzgados y Oficiales de Justicia adquirir por compra (aunque sea en subasta publica o judicial, por si ni por persona alguna intermedia). 'Los bienes y derechos que estuviesen en litigio ante el Tribunal en cuya jurisdicion on teritorio ejercieran sus respectivas funciones, extendiendo se esta prohibicion al acto de adquirir por cesion', y siendo tambien extensiva ' Alos Abogados y Procuradores respecto a los bienes y derecho que fueran objeto del un litigio en que intervengan pos su profession y oficio.'

El fundamento de esta prohibicion es clarismo. No solo se trata—dice Manresa—de quitar la ocasion al fraude; persiguese, ademas, el proposito de rodear a las personas que intervienen en la administracion de justicia de todos los prestigios que necesitan para ejercer su ministerio, librando los de toda sospecha, que, aunque fuere infundada, redundaria en descredito de la institucion.

Por no dor lugar a recelos de ninguna clase, admite el Codigo (en el apartado penutimo del art. 1.459) algunos casos en que, por excepcion, no se aplica el pricipio prohibitivo de que venimos hablando. Tales son los de que se trate de acciones hereditarias entre coheredero, de cesion en pago de creditos, o de garantia de los bienes que posean los funcionarios de justicia.

Algunos autores (Goyena, Manresa, Valverde) creen que en la prohibicion del art. 1.459 esta comprendido el pacto de quota litis (o sea el convenio por el cual se concede al Abogado o Procurador, para el caso de obtener sentencia favorable una parte alicuota de la cosa o cantidad que se litiga), porque dicho pacto supone la venta o cesion de una parte de la cosa o drecho que es objecto del litigio. Pero Mucius Scaevola oberva, conrazon, que en el repetido pacto no hay propiamente caso de compraventa ni de cesion de derechos, y bastan para estimario nulo otros preceptos del Codigo como los relativos a la ilicitud de la causa (Castan, Derecho Civil Espñol, Tomo 4, pp. 68-69, [9a ed., 1956], emphasis supplied).

The Supreme Court of Spain, in its sentencia of 12 November 1917, has ruled that Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) does not apply to a contract for a contingent fee because it is not contrary to morals or to law, holding that:

... que no es susceptible de aplicarse el precepto contenido en el num. 5 del art. 1.459 a un contrato en el que se restrigen los honorarios de un Abogado a un tanto por ciento de lo que se obtuviera en el litigio, cosa no repudiada por la moral ni por la ley (Tolentino, Civil Code of the Philippines, p. 35, Vol. V [1959]; Castan, supra; Manresa, supra).

In the Philippines, among the Filipino commentators, only Justice Capistrano ventured to state his view on the said issue, thus:

The incapacity to purchase or acquire by assignment, which the law also extends to lawyers with t to the property and rights which may be the object of any litigation in

which they may take part by virtue of their profession, also covers contracts for professional services quota litis. Such contracts, however, have been declared valid by the Supreme Court" (Capistrano, Civil Code of the Philippines, p. 44, Vol. IV [1951]).

Dr. Tolentino merely restated the views of Castan and Manresa as well as the state of jurisprudence in Spain, as follows:

Attorneys-at-law—Some writers, like Goyena, Manresa and Valverde believe that this article covers quota litis agreements, under which a lawyer is to be given an aliquot part of the property or amount in litigation if he should win the case for his client. Scaevola and Castan, however, believe that such a contract does not involve a sale or assignment of right but it may be void under other articles of the Code, such as those referring to illicit cause- On the other hand the Spanish Supreme Court has held that this article is not applicable to a contract which limits the fees of a lawyer to a certain percentage of what may be recovered in litigation, as this is not contrary to moral or to law. (Tolentino, Civil Code of the Philippines, p. 35, Vol. V [1959]; Castan, supra, Emphasis supplied).

Petitioners her contend that a contract for a contingent fee violates the Canons of Professional Ethics. this is likewise without merit This posture of petitioners overlooked Canon 13 of the Canons which expressly contingent fees by way of exception to Canon 10 upon which petitioners relied. For while Canon 10 prohibits a lawyer from purchasing ...any interest in the subject matter of the litigation which he is conducting", Canon 13, on the other hand, allowed a reasonable contingent fee contract, thus: "A contract for a con. tangent fee where sanctioned by law, should be reasonable under all the circumstances of the ca including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness." As pointed out by an authority on Legal Ethics:

Every lawyer is intensely interested in the successful outcome of his case, not only as affecting his reputation, but also his compensation. Canon 13 specifically permits the lawyer to contract for a con tangent fee which of itself, negatives the thought that the Canons preclude the lawyer's having a stake in his litigation. As pointed out by Professor Cheatham on page 170 n. of his Case Book, there is an inescapable conflict of interest between lawyer and client in the matter of fees. Nor despite some statements to the con in Committee opinions, is it believed that, particularly in view of Canon 13, Canon 10 precludes in every case an arrangement to make the lawyer's fee payable only out of the results of the litigation. The distinction is between buying an interest in the litigation as a speculation which Canon 10 condemns and agreeing, in a case which the lawyer undertakes primarily in his professional capacity, to accept his compensation contingent on the outcome (Drinker, Henry S Legal Ethics, p. 99, [1953], Emphasis supplied).

These Canons of Professional Ethics have already received "judicial recognition by being cited and applied by the Supreme Court of the Philippines in its opinion" Malcolm, Legal and Judicial Ethics, p. 9 [1949]). And they have likewise been considered sources of Legal Ethics. More importantly, the American Bar Association, through Chairman Howe of the Ethics Committee, opined that "The Canons of Professional Ethics are legislative expressions of professional opinion ABA Op. 37 [1912])" [See footnote 25, Drinker, Legal Ethics, p. 27]. Therefore, the Canons have some binding effect

Likewise, it must be noted that this Court has already recognized this type of a contract as early as the case ofUlanday vs. Manila Railroad Co. (45 PhiL 540 [1923]), where WE held that "contingent fees are not prohibited in the Philippines, and since impliedly sanctioned by law 'Should be under the supervision of the court in order that clients may be protected from unjust charges' (Canons of Profession 1 Ethics)". The same doctrine was subsequently reiterated in Grey vs. Insular Lumber Co. (97 PhiL 833 [1955]) and Recto vs. Harden (100 PhiL 427 [1956]).

In the 1967 case of Albano vs. Ramos (20 SCRA 171 [19671), the attorney was allowed to recover in a separate action her attomey's fee of one-third (1/3) of the lands and damages recovered as stipulated in the contingent fee contract. And this Court in the recent case of Rosario Vda de Laig vs. Court of Appeals, et al. (supra), which involved a contingent fee of one-half (½) of the property in question, held than ,contingent fees are recognized in this i jurisdiction (Canon 13 of the Canons of Professional Ethics adopted by the Philippine Bar association in 1917 [Appendix B, Revised Rules of Court)), which contingent fees may be a portion of the property in litigation."

Contracts of this nature are permitted because they redound to the benefit of the poor client and the lawyer "especially in cases where the client has meritorious cause of action, but no means with which to pay for legal services unless he can, with the sanction of law, make a contract for a contingent fee to be paid out of the proceeds of the litigation" (Francisco, Legal Ethics, p. 294 [1949], citing Lipscomb vs. Adams 91 S.W. 1046, 1048 [1949]). Oftentimes, contingent fees are the only means by which the poor and helpless can redress for injuries sustained and have their rights vindicated. Thus:

The reason for allowing compensation for professional services based on contingent fees is that if a person could not secure counsel by a promise of large fees in case of success, to be derived from the subject matter of the suit, it would often place the poor in such a condition as to amount to a practical denial of justice. It not infrequently happens that person are injured through the negligence or willful misconduct of others, but by reason of poverty are unable to employ counsel to assert their rights. In such event their only means of redress lies in gratuitous service, which is rarely given, or in their ability to find some one who will conduct the case for a contingent fee. That relations of this king are often abused by speculative attorneys or that suits of this character are turned into a sort of commercial traffic by the lawyer, does not destroy the beneficial result to one who is so poor to employ counsel (id, at p. 293, citing Warvelle, Legal Ethics, p. 92, Emphasis supplied).

Justice George Malcolm, writing on contingent fees, also stated that:

... the system of contingent compensation has the merit of affording to certain classes of persons the opportunity to procure the prosecution of their claims which otherwise would be beyond their means. In many cases in the United States and the Philippines, the contingent fee is socially necessary (Malcolm, Legal and Judicial Ethics, p. 55 [1949], emphasis supplied).

Stressing further the importance of contingent fees, Professor Max Radin of the University of California, said that:

The contingent fee certainly increases the possibility that vexatious and unfounded suits will be brought. On the other hand, it makes possible the enforcement of legitimate claims which otherwise would be abandoned because of the poverty of the claimants. Of these two possibilities, the social advantage seems clearly on the side of the contingent fee. It may in fact be added by way of reply to the first objection that

vexations and unfounded suits have been brought by men who could and did pay substantial attorney's fees for that purpose (Radin, Contingent Fees in California, 28 Cal. L. Rev. 587, 589 [1940], emphasis supplied).

Finally, a contingent fee contract is always subject to the supervision of the courts with respect to the stipulated amount and may be reduced or nullified. So that in the event that there is any undue influence or fraud in the execution of the contract or that the fee is excessive, the client is not without remedy because the court will amply protect him. As held in the case of Grey vs. Insular Lumber Co., supra, citing the case of Ulanday vs. Manila Railroad Co., supra:

Where it is shown that the contract for a contingent fee was obtained by any undue influence of the attorney over the client, or by any fraud or imposition, or that the compensation is so clearly excessive as to amount to extortion, the court win in a proper case protect the aggrieved party.

In the present case, there is no iota of proof to show that Atty. Fernandez had exerted any undue influence or had Perpetrated fraud on, or had in any manner taken advantage of his client, Maximo Abarquez. And, the compensation of one-half of the lots in question is not excessive nor unconscionable considering the contingent nature of the attorney's fees.

With these considerations, WE find that the contract for a contingent fee in question is not violative of the Canons of Professional Ethics. Consequently, both under the provisions of Article 1491 and Canons 10 and 13 of the Canons of Profession Ethics, a contract for a contingent fee is valid

In resolving now the issue of the validity or nullity for the registration of the adverse claim, Section 110 of the Land Registration Act (Act 496) should be considered. Under d section, an adverse claim may be registered only by..

Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the o registration ... if no other provision is made in this Act for registering the same ...

The contract for a contingent fee, being valid, vested in Atty Fernandez an interest or right over the lots in question to the extent of one-half thereof. Said interest became vested in Atty. Fernandez after the case was won on appeal because only then did the assignment of the one-half (½) portion of the lots in question became effective and binding. So that when he filed his affidavit of adverse claim his interest was already an existing one. There was therefore a valid interest in the lots to be registered in favor of Atty. Fernandez adverse to Mo Abarquez.

Moreover, the interest or claim of Atty. Fernandez in the lots in question arose long after the original petition which took place many years ago. And, there is no other provision of the Land Registration Act under which the interest or claim may be registered except as an adverse claim under Section 110 thereof. The interest or claim cannot be registered as an attorney's charging lien. The lower court was correct in denying the motion to annotate the attomey's lien. A charging lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant case. Said Section provides that:

Section 37. An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his oppossession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all

judgments, for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client ... (emphasis supplied).

Therefore, as an interest in registered land, the only adequate remedy open to Atty. Fernandez is to register such interest as an adverse claim. Consequently, there being a substantial compliance with Section 110 of Act 496, the registration of the adverse claim is held to be valid. Being valid, its registration should not be cancelled because as WE have already stated, "it is only when such claim is found unmeritorious that the registration thereof may be cancelled" (Paz Ty Sin Tei vs. Jose Lee Dy Piao 103 Phil. 867 [1958]).

The one-half (½) interest of Atty. Fernandez in the lots in question should therefore be respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and Marta C. de Larrazabal. They purchased their two-thirds (2/3) interest in the lots in question with the knowledge of the adverse claim of Atty. Fernandez. The adverse claim was annotated on the old transfer certificate of title and was later annotated on the new transfer certificate of title issued to them. As held by this Court:

The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than the registered owner thereof (Sanchez, Jr. vs. Court of Appeals, 69 SCRA 332 [1976]; Paz Ty Sin Tei vs. Jose Le Dy Piaosupra).

Having purchased the property with the knowledge of the adverse claim, they are therefore in bad faith. Consequently, they are estopped from questioning the validity of the adverse claim.

WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE PETITION FOR THE CANCELLATION OF THE ADVERSE CLAIM SHOULD BE, AS IT IS HEREBY AFFIRMED, WITH COSTS AGAINST PETITIONER-APPELLANTS JUAN LARRAZABAL AND MARTA C. DE LARRAZABAL.

SO ORDERED.

EN BANC

 

G.R. No. L-35702 May 29, 1973

DOMINGO D. RUBIAS, plaintiff-appellant, vs.ISAIAS BATILLER, defendant-appellee.

Gregorio M. Rubias for plaintiff-appellant.

Vicente R. Acsay for defendant-appellee.

 

TEEHANKEE, J.:

In this appeal certified by the Court of Appeals to this Court as involving purely legal questions, we affirm the dismissal order rendered by the Iloilo court of first instance after pre-trial and submittal of the pertinent documentary exhibits.

Such dismissal was proper, plaintiff having no cause of action, since it was duly established in the record that the application for registration of the land in question filed by Francisco Militante, plaintiff's vendor and predecessor interest, had been dismissed by decision of 1952 of the land registration court as affirmed by final judgment in 1958 of the Court of Appeals and hence, there was no title or right to the land that could be transmitted by the purported sale to plaintiff.

As late as 1964, the Iloilo court of first instance had in another case of ejectment likewise upheld by final judgment defendant's "better right to possess the land in question . having been in the actual possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff."

Furthermore, even assuming that Militante had anything to sell, the deed of sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land registration case involving the very land in dispute (ultimately decided adversely against Militante by the Court of Appeals' 1958 judgment affirming the lower court's dismissal of Militante's application for registration) was properly declared inexistent and void by the lower court, as decreed by Article 1409 in relation to Article 1491 of the Civil Code.

The appellate court, in its resolution of certification of 25 July 1972, gave the following backgrounder of the appeal at bar:

On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership and possession of certain portions of lot under Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller, who illegally entered said portions of the lot on two occasions — in 1945 and in 1959. Plaintiff prayed also for damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with counter-claim defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question and for the alleged malicious institution of the complaint he claims he has suffered moral damages in the amount of P 2,000.00, as well as the sum of P500.00 for attorney's fees. ...

On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial conference between the parties and their counsel which order reads as follows..

'When this case was called for a pre-trial conference today, the plaintiff appeared assisted by himself and Atty. Gregorio M. Rubias. The defendant also appeared, assisted by his counsel Atty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed that the following facts are attendant in this case and that they will no

longer introduced any evidence, testimonial or documentary to prove them:

1. That Francisco Militante claimed ownership of a parcel of land located in the Barrio of General Luna, municipality of Barotac Viejo province of Iloilo, which he caused to be surveyed on July 18-31, 1934, whereby he was issued a plan Psu-99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.)

2. Before the war with Japan, Francisco Militante filed with the Court of First Instance of Iloilo an application for the registration of the title of the land technically described in psu-99791 (Exh. "B")opposed by the Director of Lands, the Director of Forestry and other oppositors. However, during the war with Japan, the record of the case was lost before it was heard, so after the war Francisco Militante petitioned this court to reconstitute the record of the case. The record was reconstituted on the Court of the First Instance of Iloilo and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of First Instance heard the land registration case on November 14, 1952, and after the trial this court dismissed the application for registration. The appellant, Francisco Militante, appealed from the decision of this Court to the Court of Appeals where the case was docketed as CA-GR No. 13497-R..

3. Pending the disposal of the appeal in CA-GR No. 13497-R and more particularly on June 18, 1956, Francisco Militante sold to the plaintiff, Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The sale was duly recorded in the Office of the Register of Deeds for the province of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").

(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was "a parcel of untitled land having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and) subject to the exclusions made by me, under (case) CA-i3497, Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of First Instance of the province of Iloilo. These exclusions referred to portions of the original area of over 171 hectares originally claimed by Militante as applicant, but which he expressly recognized during the trial to pertain to some oppositors, such as the Bureau of Public Works and Bureau of Forestry and several other individual occupants and accordingly withdrew his application over the same. This is expressly made of record in Exh. A, which is the Court of Appeals' decision of 22 September 1958 confirming the land registration court's dismissal of Militante's application for registration.)

4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R promulgated its judgment confirming the decision of this Court in Land Case No. R-695, GLRO Rec. No. 54852 which dismissed the application for Registration filed by Francisco Militante (Exh. "I").

5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-6").

6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh. "E")

for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5").

7. Tax Declaration No. 2434 in the name of Liberato Demontaño for the land described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco Militante (Exh. "E"). Liberato Demontaño paid the land tax under Tax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959 (Exh. "H").

8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was revised by Tax Dec. No. 9498 in the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946, for the year 1950, and for the year 1960 as shown by the certificate of the treasurer (Exh. "3"). The defendant may present to the Court other land taxes receipts for the payment of taxes for this lot.

9. The land claimed by the defendant as his own was surveyed on June 6 and 7,1956, and a planapproved by Director of Land on November 15, 1956 was issued, identified as Psu 155241 (Exh. "5").

10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled his answer on August 29, 1960 (Exh. "4-A"). The Municipal Court of Barotac Viejo after trial, decided the case on May 10, 1961 in favor of the defendant and against the plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of the Municipal Court of Barotac Viejo which was docketed in this Court as Civil Case No. 5750 on June 3, 1961, to which the defendant, Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And this Court after the trial. decided the case on November 26, 1964, in favor of the defendant, Isaias Batiller and against the plaintiff (Exh. "4-D").

(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26 November 1964dismissing plaintiff's therein complaint for ejectment against defendant, the iloilo court expressly found "that plaintiff's complaint is unjustified, intended to harass the defendant" and "that the defendant, Isaias Batiller, has a better right to possess the land in question described in Psu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff-hereby dismissing plaintiff's complaint and ordering the plaintiff to pay the defendant attorney's fees ....")

B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the following:

1. That the land he purchased from Francisco Militante under Exh. "A" was formerly owned and possessed by Liberato Demontaño but that on September 6, 1919 the land was sold at public auction by virtue of a judgment in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato Demontaño Francisco Balladeros and Gregorio Yulo,

defendants", of which Yap Pongco was the purchaser (Exh. "1-3"). The sale was registered in the Office of the Register of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a definite Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco (Exh. "I"), the sale having been registered in the Office of the Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").

2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as evidenced by a notarial deed (Exh. "J") which was registered in the Registry of Deeds on May 13, 1940 (Exh. "J-1").

3. That plaintiff suffered damages alleged in his complaint.

C. Defendants, on the other hand will prove by competent evidence during the trial of this case the following facts:

1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed by Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his father , Basilio Batiller, in the ownership and possession of the land in the year 1930, and since then up to the present, the land remains in the possession of the defendant, his possession being actual, open, public, peaceful and continuous in the concept of an owner, exclusive of any other rights and adverse to all other claimants.

2. That the alleged predecessors in interest of the plaintiff have never been in the actual possession of the land and that they never had any title thereto.

3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the defendant has beenapproved.

4. The damages suffered by the defendant, as alleged in his counterclaim."' 1

The appellate court further related the developments of the case, as follows:

On August 17, 1965, defendant's counsel manifested in open court that before any trial on the merit of the case could proceed he would file a motion to dismiss plaintiff's complaint which he did, alleging that plaintiff does not have cause of action against him because the property in dispute which he (plaintiff) allegedly bought from his father-in-law, Francisco Militante was the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid case plaintiff was the counsel on record of his father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which reads:

'Art. 1409. The following contracts are inexistent and void from the beginning:

xxx xxx xxx

(7) Those expressly prohibited by law.

'ART. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: .

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights of in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring an assignment and shall apply tolawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.'

defendant claims that plaintiff could not have acquired any interest in the property in dispute as the contract he (plaintiff) had with Francisco Militante was inexistent and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly opposed defendant's motion to dismiss claiming that defendant can not invoke Articles 1409 and 1491 of the Civil Code as Article 1422 of the same Code provides that 'The defense of illegality of contracts is not available to third persons whose interests are not directly affected' (See pp. 32-35 Record on Appeal).

On October 18, 1965, the lower court issued an order disclaiming plaintiffs complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal the lower court practically agreed with defendant's contention that the contract (Exh. A) between plaintiff and Francism Militante was null and void. In due season plaintiff filed a motion for reconsideration (pp. 50-56 Record on Appeal) which was denied by the lower court on January 14, 1966 (p. 57, Record on Appeal).

Hence, this appeal by plaintiff from the orders of October 18, 1965 and January 14, 1966.

Plaintiff-appellant imputes to the lower court the following errors:

'1. The lower court erred in holding that the contract of sale between the plaintiff-appellant and his father-in-law, Francisco Militante, Sr., now deceased, of the property covered by Plan Psu-99791, (Exh. "A") was void, not voidable because it was made when plaintiff-appellant was the counsel of the latter in the Land Registration case.

'2. The lower court erred in holding that the defendant-appellee is an interested person to question the validity of the contract of sale between plaintiff-appellant and the deceased, Francisco Militante, Sr.

'3. The lower court erred in entertaining the motion to dismiss of the defendant-appellee after he had already filed his answer, and after the termination of the pre-trial, when the said motion to dismiss raised a collateral question.

'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'

The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal posers — (1) whether or not the contract of sale between appellant and his father-in-law, the late Francisco Militante over the property subject of Plan Psu-99791 was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute; and (2) whether or not the lower court was correct in entertaining defendant-appellee's motion to dismiss after the latter had already filed his answer and after he (defendant) and plaintiff-appellant had agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal to this Court as involving pure questions of law.

It is at once evident from the foregoing narration that the pre-trial conference held by the trial court at which the parties with their counsel agreed and stipulated on the material and relevant facts and submitted their respective documentary exhibits as referred to in the pre-trial order, supra, 2 practically amounted to a fulldress trial which placed on record all the facts and exhibits necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at the-trial dealing with the source of the alleged right and title of Francisco Militante's predecessors, supra, 3 actually are already made of record in thestipulated facts and admitted exhibits. The chain of Militante's alleged title and right to the land as supposedly traced back to Liberato Demontaño was actually asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case and rejected by the Iloilo land registration court which dismissedMilitante's application for registration of the land. Such dismissal, as already stated, was affirmed by the final judgment in 1958 of the Court of Appeals. 4

The four points on which defendant on his part reserved the presentation of evidence at the trial dealing with his and his ancestors' continuous, open, public and peaceful possession in the concept of owner of the land and the Director of Lands' approval of his survey plan thereof, supra, 5 are likewise already duly established facts of record, in the land registration case as well as in the ejectment case wherein the Iloilo court of first instance recognized the superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's complaint upon defendant's motion after the pre-trial.

1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in- law, Francisco Militante, in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals.

With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application for registration, the lack of any rightful claim or title of Militante to the land was conclusively and decisively judicially determined. Hence, there was no right or title to the land that could be transferred or sold by Militante's purported sale in 1956 in favor of plaintiff.

Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner of the land and to be restored to possession thereof with damages was bereft of any factual or legal basis.

2. No error could be attributed either to the lower court's holding that the purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Philippine Civil Code, reproduced supra; 6 and that consequently, plaintiff's purchase of the property

in litigation from his client (assuming that his client could sell the same since as already shown above, his client's claim to the property was defeated and rejected) was void and could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived."

The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as holding that a sale of property in litigation to the party litigant's lawyer "is not void but voidable at the election of the vendor" was correctly held by the lower court to have been superseded by the later 1929 case of Director of Lands vs. Abagat. 8 In this later case of Abagat, the Court expressly cited two antecedent cases involving the same transaction of purchase of property in litigation by the lawyer which was expressly declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the vendor-client but by the adverse parties against whom the lawyer was to enforce his rights as vendee thus acquired.

These two antecedent cases thus cited in Abagat clearly superseded (without so expressly stating the previous ruling in Wolfson:

The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large number of collateral heirs but no descendants. Litigation between the surviving husband, Juan Soriano, and the heirs of Vicenta immediately arose, and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of land in favor of Sisenando Palarca and on the following day, May 3, 1918, Palarca filed an application for the registration of the land in the deed. After hearing, the Court of First Instance declared that the deed was invalid by virtue of the provisions of article 1459 of the Civil Code, which prohibits lawyers and solicitors from purchasing property rights involved in any litigation in which they take part by virtue of their profession. The application for registration was consequently denied, and upon appeal by Palarca to the Supreme Court, the judgement of the lower court was affirmed by a decision promulgated November 16,1925. (G.R. No. 24329, Palarca vs. Director of Lands, not reported.)

In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of Vicente Macaraeg, filed claims for the parcels in question. Buenaventura Lavitoria administrator of the estate of Juan Soriano, did likewise and so did Sisenando Palarca. In a decision dated June 21, 1927, the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of Palarea and ordered the registration of the land in his name. Upon appeal to this court by the administration of the estates of Juan Soriano and Vicente Macaraeg, the judgment of the court below was reversed and the land adjudicated to the two estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May 21, 1928, not reported.) 9

In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of the lawyer's purchase of the land in litigation from his client, ordered the issuance of a writ of possession for the return of the land by the lawyer to the adverse parties without reimbursement of the price paid by him and other expenses, and ruled that "the appellant Palarca is a lawyer and is presumed to know the law. He must, therefore, from the beginning, have been well aware of the defect in his title and is, consequently, a possessor in bad faith."

As already stated, Wolfson and Abagat were decided with relation to Article 1459 of the Civil Code of Spain then adopted here, until it was superseded on August 30, 1950 by the Civil Code of the Philippines whose counterpart provision is Article 1491.

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.

In Wolfson which involved the sale and assignment of a money judgment by the client to the lawyer, Wolfson, whose right to so purchase the judgment was being challenged by the judgment debtor, the Court, through Justice Moreland, then expressly reserved decision on "whether or not the judgment in question actually falls within the prohibition of the article" and held only that the sale's "voidability can not be asserted by one not a party to the transaction or his representative," citing from Manresa 10 that "(C)onsidering the question from the point of view of the civil law, the view taken by the code, we must limit ourselves to classifying as void all acts done contrary to the express prohibition of the statute. Now then: As the code does not recognize such nullity by the mere operation of law, the nullity of the acts hereinbefore referred to must be asserted by the person having the necessary legal capacity to do so and decreed by a competent court." 11

The reason thus given by Manresa in considering such prohibited acquisitions under Article 1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor and not void — "that the Code does not recognize such nullity de pleno derecho" — is no longer true and applicable to our own Philippine Civil Code whichdoes recognize the absolute nullity of contracts "whose cause, object, or purpose is contrary to law, morals, good customs, public order or public policy" or which are "expressly prohibited or declared void by law" and declares such contracts "inexistent and void from the beginning." 12

The Supreme Court of Spain and modern authors have likewise veered from Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June 1966, the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public policy, that violation of the prohibition contract cannot be validated by confirmation or ratification, holding that:

... la prohibicion que el articulo 1459 del C.C. establece respecto a los administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala, contendia entre otras, en S. de 27-5-1959, un fundamento de orden moral lugar la violacion de esta a la nulidad de pleno derecho del acto o negocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe con efecto alguno la aludida retification ... 13

The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy as applied by the Supreme Court of Spain to administrators and agents in its above cited decision should certainly apply with greater reason to judges, judicial officers, fiscals and lawyers under paragraph 5 of the codal article.

Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to Article 1459, Spanish Civil Code:.

Que caracter tendra la compra que se realice por estas personas? Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el motivo de la prohibicion es de orden publico. 14

Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la consequencia de la infraccion es la nulidad radical y ex lege." 15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personas que intervienen en la administrcionde justicia de todos los retigios que necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere in fundada, redundura endescredito de la institucion." 16 arrives at the contrary and now accepted view that "Puede considerace en nuestro derecho inexistente 'o radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17

It is noteworthy that Caltan's rationale for his conclusion that fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." 18

Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract." 19

As applied to the case at bar, the lower court therefore properly acted upon defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase of the land, since its juridical effects and plaintiff's alleged cause of action founded thereon were being asserted against defendant-appellant. The principles governing the nullity of such prohibited contracts and judicial declaration of their nullity have been well restated by Tolentino in his treatise on our Civil Code, as follows:

Parties Affected. — Any person may invoke the in existence of the contract whenever juridical effects founded thereon are asserted against him. Thus, if there has been a void transfer of property, the transferor can recover it by the accion reinvindicatoria; and any prossessor may refuse to deliver it to the transferee, who cannot enforce the contract. Creditors may attach property of the debtor which has been alienated by the latter under a void contract; a mortgagee can allege the

inexistence of a prior encumbrance; a debtor can assert the nullity of an assignment of credit as a defense to an action by the assignee.

Action On Contract. — Even when the contract is void or inexistent, an action is necessary to declare its inexistence, when it has already been fulfilled. Nobody can take the law into his own hands; hence, the intervention of the competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of what has been given under it. The judgment, however, will retroact to the very day when the contract was entered into.

If the void contract is still fully executory, no party need bring an action to declare its nullity; but if any party should bring an action to enforce it, the other party can simply set up the nullity as a defense. 20

ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs in all instances against plaintiff-appellant. So ordered.

EN BANC

A.C. No. 13021, A.C. No. 13912, A.C. No. 15433             June 30, 2008

CONSTANCIA L. VALENCIA, complainant, vs.ATTY. DIONISIO C. ANTINIW, respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This is an appeal for reinstatement to the Bar of respondent Dionisio C. Antiniw.

The record shows that respondent was disbarred and his name stricken off the Roll of Attorneys on April 26, 1991 in a consolidated Decision4 of this Court, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring: 1. Dionisio Antiniw DISBARRED from the practice of law, and his name is ordered stricken off from the roll of attorneys; 2. Arsenio Fer Cabanting SUSPENDED from the practice of law for six months from finality of this judgment; and 3. Administrative Case No. 1391 against Atty. Eduardo Jovellanos and additional charges therein, and Administrative Case No. 1543 DISMISSED.

In the aforesaid consolidated Decision, respondent was found guilty of malpractice in falsifying a notarized deed of sale and subsequently introducing the same as evidence for his client in court.

Respondent’s motion for reconsideration of the consolidated decision disbarring him was denied by the Resolution of August 26, 1993.5 In the same Resolution, the Court also held with respect to respondent’s plea for mercy and compassion that:

x x x the same is merely NOTED until such time as he would have been able to satisfactorily show contrition and proof of his being again worthy of membership in the legal profession.

Subsequently, in a Manifestation dated September 17, 1993,6 respondent proffered his apologies to the Court for his shortcomings as a legal practitioner asserting that if there was an offense or oversight committed against the legal profession, it was due to his sincere belief that he was doing it honestly to protect the interest of his client. He pleaded that, pending his submission of proof showing that he is again worthy of membership in the Bar, he be permitted to continue with his notarial work. In a Resolution dated October 19, 1993,7 the Court denied respondent’s plea in the aforesaid Manifestation.

On January 4, 1994, respondent filed a Petition dated December 8, 19938 praying for leave to submit proof of his being again worthy to be re-admitted to the legal profession. Attached to the Petition were testimonials, affidavits and sworn certifications of known and outstanding members of his community at Urdaneta, Pangasinan, as well as manifestos and resolutions of groups and associations representing various sectors thereat, all attesting to his honesty, worthiness, respectability and competency as a lawyer and as an elected Board Member in Pangasinan. In a Resolution dated January 27, 1994,9 the Court denied said petition. A Letter dated February 1, 199510 which was sent to the Court by Bishop Jesus C. Galang, D.D. of the Diocese of Urdaneta, Pangasinan, pleading for respondent’s reinstatement, was noted in the Court’s Resolution dated March 14, 1995.11

Respondent filed an Appeal for Reinstatement dated March 8, 1996,12 declaring that since his disbarment, he had embarked on and actively participated in civic and humanitarian activities in the Fifth District of Pangasinan where he was again elected for the third time as a Provincial Board Member and for which activities he received Plaques of Appreciation and Recognition, Resolution/Letters, Awards and Commendations from local government officials of Pangasinan and different groups and associations in the province, all showing that he is worthy to once again practice the legal profession. His appeal, however, was denied by the Resolution dated April 23, 1996.13

On December 17, 1996, respondent filed a Plea for Re-Admission dated December 8, 1996,14 reiterating his earlier plea for the lifting of his disbarment. The plea was also denied on January 28, 1997.15

On September 1, 1997, respondent again filed a Plea for Judicial Clemency and Reinstatement to the Bar dated August 30, 1997,16 submitting in support thereof the favorable indorsements, letters and resolutions from the Pangasinan Chapter of the Integrated Bar of the Philippines (IBP); the Executive Judges of the Regional Trial Courts at Lingayen and Urdaneta, Pangasinan; the Provincial Prosecutor’s Association of Pangasinan; Eastern Pangasinan Lawyer’s League; the Provincial Board of Pangasinan; Rotary Club of Urdaneta; and the past National President of the IBP, Atty. Numeriano G. Tanopo Jr. The foregoing plea was merely noted by the Court on October 14, 1997.17

The following year, respondent filed an Appeal dated July 8, 1998,18 reiterating therein his apologies to the Court and promising that should he be given back his license to practice law, he will live up to the exacting standards of the legal profession and abide by the Code of Professional Ethics and the Lawyer’s Oath. Among the written proofs appended to his appeal was the Letter dated June 18, 199819 from Bishop Galang, of the Diocese of Urdaneta, Pangasinan, wherein he reiterated his earlier plea for respondent’s reinstatement.

In a Letter dated July 13, 199820 received by this Court on July 23, 1998, Bishop Galang withdrew his letter dated July 10, 1998 recommending respondent’s reinstatement for being misled into signing the same.

Thereafter, respondent filed a Manifestation and Motion dated December 22, 1998,21 wherein he pointed out that more than seven (7) years had elapsed from the time of his disbarment and that others who were likewise disbarred but for a shorter duration, namely Attys. Benjamin Grecia and Benjamin Dacanay,22 had already been reinstated to the law profession. Among the attachments to respondent’s Manifestation was Resolution No. 98-7c dated 6 July 1998 issued by the IBP, Pangasinan Chapter, strongly indorsing respondent’s plea for judicial clemency and reinstatement, and the letter dated June 18, 1998 from Bishop Galang supporting his reinstatement to the Bar.

In a Resolution dated February 9, 1999,23 the Court noted (a) the letters dated June 18, 1998 and July 13, 1998 of Bishop Galang; (b) Appeal dated July 8, 1998 and Manifestation and Motion dated December 22, 1998 both filed by respondent. Respondent was also required to comment on Bishop Galang’s letter dated July 13, 1998 within ten days from notice.

In his Comments with Motion dated March 23, 1999,24 on Bishop Galang’s letter dated July 13, 1998, respondent denied the existence of a letter dated July 10, 1998 of Bishop Galang but acknowledged the existence of the letter dated June 18, 1998. Respondent averred that if the Bishop was indeed referring to the June 18, 1998 letter, he never misled or had any intention to mislead the bishop into signing the same. By its Resolution dated June 22, 1999,25 the Court noted the aforesaid Comments with Motion of respondent

An Appeal Reiterating Earlier Petition, Appeal, Pleas and Motion for Reinstatement to the Bar dated August 28, 199926 was filed by the respondent on September 21, 1999. In a Resolution dated November 16, 1999,27 the Court noted said appeal and denied for lack of merit respondent’s prayer that his Plea for Judicial Clemency and Reinstatement dated September 1, 1997 and Manifestation and Motion for Reinstatement dated December 22, 1998 be approved and given due course.

Thereafter, respondent’s wife, Manuela A. Antiniw, sent to the Court a Letter of Appeal dated February 7, 2000,28asking for clemency in behalf of her husband and affirming therein that her husband had for eight (8) years continuously pleaded for his reinstatement and that he had submitted proof by way of testimonials of (a) his character and standing prior to his disbarment, (b) his conduct subsequent to his disbarment, and (c) his efficient government service. Attached to the letter of respondent’s wife was a sworn testimonial of one of the complainants in the consolidated administrative cases, Lydia Bernal, attesting to the respondent’s character reformation. The aforesaid letter was noted by the Court in a Resolution dated 28 February 2000.29

Respondent filed a Plea for Judicial Clemency and Reinstatement dated March 19, 2001,30 therein asserting that the long period of his disbarment gave him sufficient time to soul-search and reflect on his professional conduct, redeem himself, and prove once more that he would be able to practice law and at the same time uphold the dignity of the legal profession. The Court, in its Resolution of June 26, 2001,31 denied the aforesaid plea.

By its Indorsement dated September 10, 2001,32 the Office of the Chief Justice referred to the Bar Confidant the letter dated August 24, 200133 of Assistant Commissioner Jesse J. Caberoy of the Civil Service Commission (CSC) requesting comment on the contention of respondent that the disbarment of a lawyer only prevents him from practicing his profession and does not operate to divest him of his earned eligibility by passing the Bar examination. In a Letter dated September 20, 2001,34 respondent cited pertinent provisions of the Omnibus Rules Implementing Book V of Executive Order No. 292 and other pertinent Civil Service Laws in support of his aforementioned stand. The aforesaid Letters dated August 24, 2001 and September 20, 2001, of CSC Assistant Commissioner and respondent, respectively, were noted by the Court’s Resolution dated November 20, 2001.35Likewise in said Resolution, the letters were referred to the Office of the Bar Confidant (OBC) for evaluation, report and recommendation.

In its Report and Recommendation dated January 25, 2002,36 the OBC opined that the eligibility vested in a successful bar candidate would not be prejudiced or forfeited by his disbarment and the matter of enjoying first- grade eligibility by passing the Bar, in relation to the position of City Administrator, should be determined by the CSC. Nevertheless, the OBC was of the view that the controversy between the CSC and respondent could not be considered as already ripe for judicial determination. Thus, the OBC recommended that the CSC, through Assistant Commissioner Caberoy, and respondent be advised to institute the corresponding legal remedy before the proper court.

In a Resolution dated February 12, 2002,37 the Court held that it could only resolve actual controversies brought before it and would thus, refrain from rendering advisory opinions. Accordingly, the Letter dated August 24, 2001 of Assistant Commissioner Caberoy and Letter dated September 20, 2001 of respondent were merely noted.

Respondent then filed a Plea for Reinstatement to the Bar dated February 28, 2002,38 stating therein that for the past ten (10) years since he was disbarred, he had deeply regretted having violated his obligations as a lawyer; that he realized the gravity of his mistakes; and that because of such disbarment, he even lost his chance to be permanently appointed as City Administrator of Urdaneta City and/or as City Legal Officer, after his stint as a Provincial Board Member in Pangasinan for three (3) consecutive terms. In the event his disbarment is lifted, respondent then promised never to cause dishonor again to the legal profession and to abide by the ideals and canons thereof. Attached to his Plea for Reinstatement to the Bar were certifications from various civic and religious groups attesting to his good moral character and to his worthiness to be a member of the legal profession. In a Resolution dated April 23, 2002,39 the Court noted the aforesaid Plea. Subsequently, the Court required the IBP to Comment on the aforesaid respondent’s Plea through its Resolution dated July 23, 2002.40

In its Comment of September 9, 2002,41 the IBP, through its Commission on Bar Discipline, recommended the following:

Considering that the respondent has shown that he has been repentant of what he had done which was a gross violation of his lawyer’s oath and of the Canon of Professional Ethics and that he has been completely reformed and is therefore worthy to be reinstated in the Roll of Attorney’s as evidenced by Certifications of different religious and civic groups, it is recommended that he be allowed to again practice the legal profession.

It is, however recommended that he be placed on probation, meaning that the reinstatement should only be temporary and that he be placed under observation for one year.

If during the period of one year, he proves that he has completely lived up to the high standards of the legal profession, by then it will be recommended that his reinstatement as a member of the Bar be made permanent.42

The aforesaid comment was noted and referred to the IBP Board of Governors for comment and recommendation by the Resolution dated December 3, 2002.43

The IBP Board of Governors issued its Resolution No. XVI-2005-99, dated March 12, 2005 44 resolving as follows:

xxx to approve respondent’s Plea for Reinstatement and recommend the reinstatement of Atty. Dionisio C. Antiniw as member of the bar immediately.

On June 6, 2006, the Court issued a Resolution45 referring the case to the Office of the Bar Confidant (OBC) for study and recommendation.

On March 23, 2007, the OBC submitted its Report and Recommendation,46 to wit:

Indeed the high standards of the Bar require an impeccable record but our findings show that respondent has been sufficiently punished for the last fifteen (15) years of his disbarment and he has sufficiently reformed to be a worthy member of the Bar. In all candor, he promises the Court that should he be reinstated to practice the legal profession, he will faithfully abide by the ideals, canons and ethics of the legal profession and by his oath as a lawyer.

x x x

In the light of the foregoing, it is respectfully submitted that the disbarment of respondent DIONISIO C. ANTINIW from the practice of law be LIFTED and he be allowed to resume the practice of law. 47

We agree with the foregoing recommendations of the Office of the Bar Confidant and the IBP Commission on Bar Discipline as affirmed by the IBP Board of Governors.

Respondent was disbarred from the practice of law pursuant to the Decision promulgated on April 26, 199148which pertinently reads, as follows:

There is a clear preponderant evidence that Atty. Antiniw committed falsification of a deed of sale, and its subsequent introduction in court prejudices his prime duty in the administration of justice as an officer of the court.

A lawyer owes entire devotion to the interest of his client. (Santos vs. Dichoso, 84 SCRA 622) but not at the expense of truth. (Cosmos Foundry Shopworkers Union vs. La Bu, 63 SCRA 313). The first duty of a lawyer is not to his client but to the administration of justice. (Lubiano vs. Gordalla, 115 SCRA 459) To that end, his client’s success is wholly subordinate. His conduct ought to and must always be scrupulously observant of law and ethics. While a lawyer must advocate his client’s cause in utmost earnestness and with the maximum skill he can marshall, he is not at liberty to resort to illegal means for his client’s interest. It is the duty of an attorney to employ, for the purpose of maintaining the causes confided to him, such means as are consistent with truth and honor. (Pangan vs Ramos, 93 SCRA 87).

Membership in the Bar is a privilege burdened with conditions. By far, the most important of them is mindfulness that a lawyer is an officer of the court. (In re: Ivan T. Publico, 102 SCRA 722). This Court may suspend or disbar a lawyer whose acts show his unfitness to continue as a member of the Bar. (Halili vs. CIR, 136 SCRA 112). Disbarment, therefore, is not meant as a punishment depriving him of a source of livelihood but is rather intended to protect the administration of justice by requiring that those who exercise this function should be competent, honorable and reliable in order that courts and the public may rightly repose confidence in them. (Noriega vs. Sison 125 SCRA 293). Atty. Antiniw failed to live up to the high standards of the law profession.49

However, the record shows that the long period of respondent’s disbarment gave him the chance to purge himself of his misconduct, to show his remorse and repentance, and to demonstrate his

willingness and capacity to live up once again to the exacting standards of conduct demanded of every member of the bar and officer of the court. During respondent’s disbarment for more than fifteen (15) years to date for his professional infraction, he has been persistent in reiterating his apologies and pleas for reinstatement to the practice of law and unrelenting in his efforts to show that he has regained his worthiness to practice law, by his civic and humanitarian activities and unblemished record as an elected public servant, as attested to by numerous civic and professional organizations, government institutions, public officials and members of the judiciary.

In Adez Realty, Inc. v. Court of Appeals,50 the disbarment of a lawyer was lifted for the reasons quoted hereunder:

The disbarment of movant Benjamin M. Dacanay for three (3) years has, quite apparently, given him sufficient time and occasion to soul-search and reflect on his professional conduct, redeem himself and prove once more that he is worthy to practice law and be capable of upholding the dignity of the legal profession. His admission of guilt and repeated pleas for compassion and reinstatement show that he is ready once more to meet the exacting standards the legal profession demands from its practitioners.51

Moreover, it is well-settled that the objective of a disciplinary case is not so much to punish the individual attorney as to protect the dispensation of justice by sheltering the judiciary and the public from the misconduct or inefficiency of officers of the court. Restorative justice, not retribution, is our goal in disciplinary proceedings.52

Guided by this doctrine and considering the evidence submitted by respondent satisfactorily showing his contrition and his being again worthy of membership in the legal profession, the Court finds that it is now time to lift herein respondent’s disbarment and reinstate him to the august halls of the legal profession, but with the following reminder:

[T]he practice of law is a privilege burdened with conditions. Adherence to the rigid standards of mental fitness, maintenance of the highest degree of morality and faithful compliance with the rules of the legal profession are the conditions required for remaining a member of good standing of the bar and for enjoying the privilege to practice law. The Supreme Court, as guardian of the legal profession, has ultimate disciplinary power over attorneys. This authority to discipline its members is not only a right but a bounden duty as well x x x. That is why respect and fidelity to the Court is demanded of its members.53

Likewise, respondent is enjoined to keep in mind that:

Of all classes and professions, the lawyer is most sacredly bound to uphold the laws, as he is their sworn servant; and for him, of all men in the world, to repudiate and override the laws, to trample them under foot and to ignore the very bonds of society, argues recreancy to his position and office and sets a pernicious example to the insubordinate and dangerous elements of the body politic.54

WHEREFORE, the disbarment of DIONISIO C. ANTINIW from the practice of law is LIFTED and he is therefore allowed to resume the practice of law upon payment

SO ORDERED.

FIRST DIVISION

A.C. No. 6210             December 9, 2004

FEDERICO N. RAMOS, complainant, vs.ATTY. PATRICIO A. NGASEO, respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for violation of the Code of Professional Responsibility and Article 1491 of the Civil Code by demanding from his client, complainant Federico N. Ramos, the delivery of 1,000 square meters of land, a litigated property, as payment for his appearance fees.

The facts as narrated by the complainant are as follows:

Sometime in 1998, complainant Federico Ramos went to respondent Atty. Patricio Ngaseo's Makati office to engage his services as counsel in a case1 involving a piece of land in San Carlos, Pangasinan. Respondent agreed to handle the case for an acceptance fee of P20,000.00, appearance fee of P1,000.00 per hearing and the cost of meals, transportation and other incidental expenses. Complainant alleges that he did not promise to pay the respondent 1,000 sq. m. of land as appearance fees.2

On September 16, 1999, complainant went to the respondent's office to inquire about the status of the case. Respondent informed him that the decision was adverse to them because a congressman exerted pressure upon the trial judge. Respondent however assured him that they could still appeal the adverse judgment and asked for the additional amount of P3,850.00 and another P2,000.00 on September 26, 2000 as allowance for research made.3

Although an appeal was filed, complainant however charges the respondent of purposely failing to submit a copy of the summons and copy of the assailed decision. Subsequently, complainant learned that the respondent filed the notice of appeal 3 days after the lapse of the reglementary period.

On January 29, 2003, complainant received a demand-letter from the respondent asking for the delivery of the 1,000 sq. m. piece of land which he allegedly promised as payment for respondent's appearance fee. In the same letter, respondent also threatened to file a case in court if the complainant would not confer with him and settle the matter within 30 days.

Respondent alleged that sometime in the late 1997, a former client, Federico Ramos and his brother, Dionisio, went to his Makati office to engage his professional services in connection with a 2-hectare parcel of land situated in San Carlos, Pangasinan which the complainant's family lost 7 years earlier through an execution sale in favor of one Alfredo T. Castro. Complainant, who was deaf and could only speak conversational Tagalog haltingly, was assisted by his brother Dionisio. They came all the way from Pangasinan because no lawyer in San Carlos City was willing to handle the case. Complainant, through Dionisio, avers that he has consulted 2 local lawyers but did not engage

their services because they were demanding exorbitant fees. One local lawyer was willing to handle the case for at least one-half of the land involved as his attorney's fee, plus cash expenses, while the other asked for ¼ of the land in addition to a large sum of money. Respondent agreed to handle the case for an acceptance fee of P60,000.00 plus an appearance fee of P3,000.00 per hearing. Complainant told him that he would consult his siblings on the matter.

Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo, went to respondent's office to discuss the legal fees. Complainant, through Castillo, told respondent that he was willing to pay an acceptance fee of P40,000.00, P20,000.00 of which shall be paid upon engagement and the remaining P20,000.00 to be paid after their treasure hunt operations in Nueva Viscaya were terminated. Further, complainant offered, in lieu of P3,000.00 per appearance, 1,000 sq. m. of land from the land subject matter of the case, if they win, or from another piece of property, if they lose. In addition, complainant also offered to defray the expenses for transportation, meals and other incidental expenses. Respondent accepted the complainant's offer.

Respondent claims that after the trial court dismissed Civil Case No. SCC 2128, he filed a timely notice of appeal and thereafter moved to be discharged as counsel because he had colon cancer. Complainant, now assisted by one Johnny Ramos, implored respondent to continue handling the case, with an offer to double the 1,000 sq. m. piece of land earlier promised and the remaining balance of P20,000.00 acceptance fee. Johnny Ramos made a written commitment and gave respondent's secretary P2,000.00 of the P3,850.00 expenses for the preparation of the appellant's brief.

On July 18, 2001, the Court of Appeals rendered a favorable decision ordering the return of the disputed 2-hectare land to the complainant and his siblings. The said decision became final and executory on January 18, 2002. Since then complainant allegedly failed to contact respondent, which compelled him to send a demand letter on January 29, 2003.

On February 14, 2003, complainant filed a complaint before the IBP charging his former counsel, respondent Atty. Ngaseo, of violation of the Code of Professional Responsibility for demanding the delivery of 1,000 sq. m. parcel of land which was the subject of litigation.

In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala found the respondent guilty of grave misconduct and conduct unbecoming of a lawyer in violation of the Code of Professional Responsibility and recommended that he be suspended from the practice of law for 1 year.4

On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-2003-47 the full text of which reads:5

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, with modification, and considering that respondent have violated the Code of Professional Responsibility for grave misconduct and conduct unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby SUSPENDED from the practice of law for six (6) months.

On December 11, 2003, respondent filed a petition for review assailing IBP Resolution No. XVI-2003-47 for having been issued without or in excess of jurisdiction.6

Respondent argues that he did not violate Article 1491 of the Civil Code because when he demanded the delivery of the 1,000 sq. m. of land which was offered and promised to him in lieu of the appearance fees, the case has been terminated, when the appellate court ordered the return of the 2-hectare parcel of land to the family of the complainant.

Respondent further contends that he can collect the unpaid appearance fee even without a written contract on the basis of the principle of quantum meruit. He claims that his acceptance and appearance fees are reasonable because a Makati based legal practitioner, would not handle a case for an acceptance fee of only P20,000.00 and P1,000.00 per court appearance.

Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by purchase or assignment the property or rights involved which are the object of the litigation in which they intervene by virtue of their profession.7 The prohibition on purchase is all embracing to include not only sales to private individuals but also public or judicial sales. The rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved, i.e., the relation of trust and confidence and the peculiar control exercised by these persons.8 It is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client and unduly enrich himself at the expense of his client.9However, the said prohibition applies only if the sale or assignment of the property takes place during the pendency of the litigation involving the client's property. Consequently, where the property is acquired after the termination of the case, no violation of paragraph 5, Article 1491 of the Civil Code attaches.

Invariably, in all cases where Article 1491 was violated, the illegal transaction was consummated with the actual transfer of the litigated property either by purchase or assignment in favor of the prohibited individual. In Biascan v. Lopez, respondent was found guilty of serious misconduct and suspended for 6 months from the practice of law when he registered a deed of assignment in his favor and caused the transfer of title over the part of the estate despite pendency of Special Proceedings No. 98037 involving the subject property.10 In the consolidated administrative cases of Valencia v. Cabanting,11 the Court suspended respondent Atty. Arsenio Fer Cabanting for six (6) months from the practice of law when he purchased his client's property which was still the subject of a pending certiorari proceeding.

In the instant case, there was no actual acquisition of the property in litigation since the respondent only made a written demand for its delivery which the complainant refused to comply. Mere demand for delivery of the litigated property does not cause the transfer of ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even assuming arguendo that such demand for delivery is unethical, respondent's act does not fall within the purview of Article 1491. The letter of demand dated January 29, 2003 was made long after the judgment in Civil Case No. SCC-2128 became final and executory on January 18, 2002.

We note that the report of the IBP Commissioner, as adopted by the IBP Board of Governors in its Resolution No. XVI-2003-47, does not clearly specify which acts of the respondent constitute gross misconduct or what provisions of the Code of Professional Responsibility have been violated. We find the recommended penalty of suspension for 6 months too harsh and not proportionate to the offense committed by the respondent. The power to disbar or suspend must be exercised with great caution. Only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and member of the bar will disbarment or suspension be imposed as a penalty.12 All considered, a reprimand is deemed sufficient and reasonable.

WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is found guilty of conduct unbecoming a member of the legal profession in violation of Rule 20.04 of Canon 20 of the

Code of Professional Responsibility. He is REPRIMANDED with a warning that repetition of the same act will be dealt with more severely.

SO ORDERED.

EN BANC

A.M. No. 133-J May 31, 1982

BERNARDITA R. MACARIOLA, complainant, vs.HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.

 

MAKASIAR, J:

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of the Court of First Instance of Leyte, now Associate Justice of the Court of Appeals, with "acts unbecoming a judge."

The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia Muñoz Palma of the Court of Appeals now retired Associate Justice of the Supreme Court, to whom this case was referred on October 28, 1968 for investigation, thus:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R. Macariola, defendant, concerning the properties left by the deceased Francisco Reyes, the common father of the plaintiff and defendant.

In her defenses to the complaint for partition, Mrs. Macariola alleged among other things that; a) plaintiff Sinforosa R. Bales was not a daughter of the deceased Francisco Reyes; b) the only legal heirs of the deceased were defendant Macariola, she being the only offspring of the first marriage of Francisco Reyes with Felisa Espiras, and the remaining plaintiffs who were the children of the deceased by his second marriage with Irene Ondez; c) the properties left by the deceased were all the conjugal properties of the latter and his first wife, Felisa Espiras, and no properties were acquired by the deceased during his second marriage; d) if there was any partition to be made, those conjugal properties should first be partitioned into two parts, and one part is to be adjudicated solely to defendant it being the share of the latter's deceased mother, Felisa Espiras, and the other half which is the share of the deceased Francisco Reyes was to be divided equally among his children by his two marriages.

On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of evidence, finds and so holds, and hereby renders judgment (1) Declaring the plaintiffs Luz R. Bakunawa,

Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes as the only children legitimated by the subsequent marriage of Francisco Reyes Diaz to Irene Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an illegitimate child of Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging to the conjugal partnership of the spouses Francisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416 as belonging to the spouses Francisco Reyes Diaz and Irene Ondez in common partnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the defendant Bernardita R. Macariola, being the only legal and forced heir of her mother Felisa Espiras, as the exclusive owner of one-half of each of Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of said Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No. 1154 as belonging to the estate of Francisco Reyes Diaz; (7) Declaring Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304 and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-half (1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth (1/4) of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8) Directing the division or partition of the estate of Francisco Reyes Diaz in such a manner as to give or grant to Irene Ondez, as surviving widow of Francisco Reyes Diaz, a hereditary share of. one-twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation to Art. 892, par 2, New Civil Code), and the remaining portion of the estate to be divided among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes and defendant Bernardita R. Macariola, in such a way that the extent of the total share of plaintiff Sinforosa R. Bales in the hereditary estate shall not exceed the equivalent of two-fifth (2/5) of the total share of any or each of the other plaintiffs and the defendant (Art. 983, New Civil Code), each of the latter to receive equal shares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties, within thirty days after this judgment shall have become final to submit to this court, for approval a project of partition of the hereditary estate in the proportion above indicated, and in such manner as the parties may, by agreement, deemed convenient and equitable to them taking into consideration the location, kind, quality, nature and value of the properties involved; (10) Directing the plaintiff Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the costs of this suit, in the proportion of one-third (1/3) by the first named and two-thirds (2/3) by the second named; and (I 1) Dismissing all other claims of the parties [pp 27-29 of Exh. C].

The decision in civil case 3010 became final for lack of an appeal, and on October 16, 1963, a project of partition was submitted to Judge Asuncion which is marked Exh. A. Notwithstanding the fact that the project of partition was not signed by the parties themselves but only by the respective counsel of plaintiffs and defendant, Judge Asuncion approved it in his Order dated October 23, 1963, which for convenience is quoted hereunder in full:

The parties, through their respective counsels, presented to this Court for approval the following project of partition:

COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this Honorable Court respectfully submit the following Project of Partition:

l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to Bernardita Reyes Macariola;

2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern part of the lot shall be awarded likewise to Bernardita R. Macariola;

3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;

4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western part of the lot shall likewise be awarded to Sinforosa Reyes-Bales;

5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares;

6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portions awarded under item (2) and (4) above shall be awarded to Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares, provided, however that the remaining portion of Lot No. 3416 shall belong exclusively to Priscilla Reyes.

WHEREFORE, it is respectfully prayed that the Project of Partition indicated above which is made in accordance with the decision of the Honorable Court be approved.

Tacloban City, October 16, 1963.

(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City

(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City

While the Court thought it more desirable for all the parties to have signed this Project of Partition, nevertheless, upon assurance of both counsels of the respective parties to this Court that the Project of Partition, as above- quoted, had been made after a conference and agreement of the plaintiffs and the defendant approving the above Project of Partition, and that both lawyers had represented to the Court that they are given full authority to sign by themselves the Project of Partition, the Court, therefore, finding the above-quoted Project of Partition to be in accordance with law, hereby approves the

same. The parties, therefore, are directed to execute such papers, documents or instrument sufficient in form and substance for the vesting of the rights, interests and participations which were adjudicated to the respective parties, as outlined in the Project of Partition and the delivery of the respective properties adjudicated to each one in view of said Project of Partition, and to perform such other acts as are legal and necessary to effectuate the said Project of Partition.

SO ORDERED.

Given in Tacloban City, this 23rd day of October, 1963.

(SGD) ELIAS B. ASUNCION Judge

EXH. B.

The above Order of October 23, 1963, was amended on November 11, 1963, only for the purpose of giving authority to the Register of Deeds of the Province of Leyte to issue the corresponding transfer certificates of title to the respective adjudicatees in conformity with the project of partition (see Exh. U).

One of the properties mentioned in the project of partition was Lot 1184 or rather one-half thereof with an area of 15,162.5 sq. meters. This lot, which according to the decision was the exclusive property of the deceased Francisco Reyes, was adjudicated in said project of partition to the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of partition was approved by the trial court the adjudicatees caused Lot 1184 to be subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).

Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of 2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who was issued transfer certificate of title No. 2338 of the Register of Deeds of the city of Tacloban (Exh. 12).

On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria S. Asuncion (Exh. 11), which particular portion was declared by the latter for taxation purposes (Exh. F).

On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their respective shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc." (Exit 15 & 16). At the time of said sale the stockholders of the corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with Judge Asuncion as the President and Mrs. Asuncion as the secretary (Exhs. E-4 to E-7). The Articles of Incorporation of "The Traders Manufacturing and Fishing Industries, Inc." which we shall henceforth refer to as "TRADERS" were registered with the Securities and Exchange Commission only on January 9, 1967 (Exh. E) [pp. 378-385, rec.].

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging four causes of action, to wit: [1] that respondent Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010 decided by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance of Leyte; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum by closely fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney when in truth and in fact his name does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar; and [4] that there was a culpable defiance of the law and utter disregard for ethics by respondent Judge (pp. 1-7, rec.).

Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on October 16, 1968 by herein complainant. In Our resolution of October 28, 1968, We referred this case to then Justice Cecilia Muñoz Palma of the Court of Appeals, for investigation, report and recommendation. After hearing, the said Investigating Justice submitted her report dated May 27, 1971 recommending that respondent Judge should be reprimanded or warned in connection with the first cause of action alleged in the complaint, and for the second cause of action, respondent should be warned in case of a finding that he is prohibited under the law to engage in business. On the third and fourth causes of action, Justice Palma recommended that respondent Judge be exonerated.

The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein instituted an action before the Court of First Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al., defendants," which was docketed as Civil Case No. 4235, seeking the annulment of the project of partition made pursuant to the decision in Civil Case No. 3010 and the two orders issued by respondent Judge approving the same, as well as the partition of the estate and the subsequent conveyances with damages. It appears, however, that some defendants were dropped from the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he was no longer a real party in interest when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 a portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder was sold to the Traders Manufacturing and Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was dismissed on the ground that she was no longer a real party in interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of Lot 1184 acquired by her and respondent Judge from Dr. Arcadio Galapon was already sold on August 31, 1966 to the Traders Manufacturing and Fishing industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus, Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R. Celestial and Pilar P. Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A. Tolete were dismissed with the conformity of complainant herein, plaintiff therein, and her counsel.

On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was directed and authorized on June 2, 1969 by the then Secretary (now Minister) of Justice and now Minister of National Defense Juan Ponce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the dispositive portion of which reads as follows:

A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION

(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction to take cognizance of the issue of the legality and validity of the Project of

Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"] approving the partition;

(2) dismissing the complaint against Judge Elias B. Asuncion;

(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B. Asuncion,

(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral damages;

(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplary damages;

(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and

(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.

B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN —

(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of the deceased Gerardo Villasin;

(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo Villasin the cost of the suit.

C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010 —

(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O. Reyes.

D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO —

(1) Dismissing the complaint against Bonifacio Ramo;

(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.

SO ORDERED [pp. 531-533, rec.]

It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon perfection of the appeal on February 22, 1971.

I

WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first cause of action, that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010. 'That Article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or through the mediation of another:

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession [emphasis supplied].

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to operate, the sale or assignment of the property must take place during the pendency of the litigation involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who declared the same for taxation purposes only. The subsequent sale on August 31, 1966 by spouses Asuncion and spouses Galapon of their respective shares and interest in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was the secretary, took place long after the finality of the decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the project of partition.

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the Court of First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of partition and the two orders approving the same, as well as the partition of the estate and the subsequent conveyances, the same, however, is of no moment.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the property was no longer subject of litigation.

The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or affect the aforesaid facts — that the questioned sale to respondent Judge, now Court of Appeals Justice, was effected and consummated long after the finality of the aforesaid decision or orders.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code.

It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to conceal the illegal and unethical transfer of said lot to respondent Judge as a consideration for the approval of the project of partition. In this connection, We agree with the findings of the Investigating Justice thus:

And so we are now confronted with this all-important question whether or not the acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer of the whole lot to "TRADERS" of which respondent was the President and his wife the Secretary, was intimately related to the Order of respondent approving the project of partition, Exh. A.

Respondent vehemently denies any interest or participation in the transactions between the Reyeses and the Galapons concerning Lot 1184-E, and he insists that there is no evidence whatsoever to show that Dr. Galapon had acted, in the purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of Respondent's Memorandum).

xxx xxx xxx

On this point, I agree with respondent that there is no evidence in the record showing that Dr. Arcadio Galapon acted as a mere "dummy" of respondent in acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this investigator as a respectable citizen, credible and sincere, and I believe him when he testified that he bought Lot 1184-E in good faith and for valuable consideration from the Reyeses without any intervention of, or previous understanding with Judge Asuncion (pp. 391- 394, rec.).

On the contention of complainant herein that respondent Judge acted illegally in approving the project of partition although it was not signed by the parties, We quote with approval the findings of the Investigating Justice, as follows:

1. I agree with complainant that respondent should have required the signature of the parties more particularly that of Mrs. Macariola on the project of partition submitted to him for approval; however, whatever error was committed by respondent in that respect was done in good faith as according to Judge Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs. Macariola, That he was

authorized by his client to submit said project of partition, (See Exh. B and tsn p. 24, January 20, 1969). While it is true that such written authority if there was any, was not presented by respondent in evidence, nor did Atty. Ramo appear to corroborate the statement of respondent, his affidavit being the only one that was presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead this investigator to believe that she knew the contents of the project of partition, Exh. A, and that she gave her conformity thereto. I refer to the following documents:

1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban Cadastral Survey in which the deceased Francisco Reyes holds a "1/4 share" (Exh. 9-a). On tills certificate of title the Order dated November 11, 1963, (Exh. U) approving the project of partition was duly entered and registered on November 26, 1963 (Exh. 9-D);

2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita Reyes Macariola onOctober 22, 1963, conveying to Dr. Hector Decena the one-fourth share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee stated that she was the absolute owner of said one-fourth share, the same having been adjudicated to her as her share in the estate of her father Francisco Reyes Diaz as per decision of the Court of First Instance of Leyte under case No. 3010 (Exh. 7-A). The deed of sale was duly registered and annotated at the back of OCT 19520 on December 3, 1963 (see Exh. 9-e).

In connection with the abovementioned documents it is to be noted that in the project of partition dated October 16, 1963, which was approved by respondent on October 23, 1963, followed by an amending Order on November 11, 1963, Lot 1154 or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot 1154 which complainant sold to Dr. Decena on October 22, 1963, several days after the preparation of the project of partition.

Counsel for complainant stresses the view, however, that the latter sold her one-fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and not because of the project of partition, Exh. A. Such contention is absurd because from the decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154 belonged to the estate of Francisco Reyes Diaz while the other half of said one-fourth was the share of complainant's mother, Felisa Espiras; in other words, the decision did not adjudicate the whole of the one-fourth of Lot 1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant became the owner of the entire one-fourth of Lot 1154 only by means of the project of partition, Exh. A. Therefore, if Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no other reason than that she was wen aware of the distribution of the properties of her deceased father as per Exhs. A and B. It is also significant at this point to state that Mrs. Macariola admitted during the cross-examination that she went to Tacloban City in connection with the sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can deduce that she could not have been kept ignorant of the proceedings in civil case 3010 relative to the project of partition.

Complainant also assails the project of partition because according to her the properties adjudicated to her were insignificant lots and the least valuable. Complainant, however, did not present any direct and positive evidence to prove the alleged gross inequalities in the choice and distribution of the real properties when she could have easily done so by presenting evidence on the area, location, kind, the

assessed and market value of said properties. Without such evidence there is nothing in the record to show that there were inequalities in the distribution of the properties of complainant's father (pp. 386389, rec.).

Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however, improper for him to have acquired the same. He should be reminded of Canon 3 of the Canons of Judicial Ethics which requires that: "A judge's official conduct should be free from the appearance of impropriety, and his personal behavior, not only upon the bench and in the performance of judicial duties, but also in his everyday life, should be beyond reproach." And as aptly observed by the Investigating Justice: "... it was unwise and indiscreet on the part of respondent to have purchased or acquired a portion of a piece of property that was or had been in litigation in his court and caused it to be transferred to a corporation of which he and his wife were ranking officers at the time of such transfer. One who occupies an exalted position in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in the courts of justice, so that not only must he be truly honest and just, but his actuations must be such as not give cause for doubt and mistrust in the uprightness of his administration of justice. In this particular case of respondent, he cannot deny that the transactions over Lot 1184-E are damaging and render his actuations open to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was no longer in litigation in his court and that he was purchasing it from a third person and not from the parties to the litigation, he should nonetheless have refrained from buying it for himself and transferring it to a corporation in which he and his wife were financially involved, to avoid possible suspicion that his acquisition was related in one way or another to his official actuations in civil case 3010. The conduct of respondent gave cause for the litigants in civil case 3010, the lawyers practising in his court, and the public in general to doubt the honesty and fairness of his actuations and the integrity of our courts of justice" (pp. 395396, rec.).

II

With respect to the second cause of action, the complainant alleged that respondent Judge violated paragraphs 1 and 5, Article 14 of the Code of Commerce when he associated himself with the Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, said corporation having been organized to engage in business. Said Article provides that:

Article 14 — The following cannot engage in commerce, either in person or by proxy, nor can they hold any office or have any direct, administrative, or financial intervention in commercial or industrial companies within the limits of the districts, provinces, or towns in which they discharge their duties:

1. Justices of the Supreme Court, judges and officials of the department of public prosecution in active service. This provision shall not be applicable to mayors, municipal judges, and municipal prosecuting attorneys nor to those who by chance are temporarily discharging the functions of judge or prosecuting attorney.

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5. Those who by virtue of laws or special provisions may not engage in commerce in a determinate territory.

It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce which is part of the commercial laws of the Philippines, it, however, partakes of the

nature of a political law as it regulates the relationship between the government and certain public officers and employees, like justices and judges.

Political Law has been defined as that branch of public law which deals with the organization and operation of the governmental organs of the State and define the relations of the state with the inhabitants of its territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law embraces constitutional law, law of public corporations, administrative law including the law on public officers and elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature of an administrative law because it regulates the conduct of certain public officers and employees with respect to engaging in business: hence, political in essence.

It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885, with some modifications made by the "Commission de Codificacion de las Provincias de Ultramar," which was extended to the Philippines by the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on December 1, 1888.

Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been abrogated because where there is change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign.

Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:

By well-settled public law, upon the cession of territory by one nation to another, either following a conquest or otherwise, ... those laws which are political in their nature and pertain to the prerogatives of the former government immediately cease upon the transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).

While municipal laws of the newly acquired territory not in conflict with the, laws of the new sovereign continue in force without the express assent or affirmative act of the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par. 14). However, such political laws of the prior sovereignty as are not in conflict with the constitution or institutions of the new sovereign, may be continued in force if the conqueror shall so declare by affirmative act of the commander-in-chief during the war, or by Congress in time of peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In the case of American and Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief Justice Marshall said:

On such transfer (by cession) of territory, it has never been held that the relations of the inhabitants with each other undergo any change. Their relations with their former sovereign are dissolved, and new relations are created between them and the government which has acquired their territory. The same act which transfers their country, transfers the allegiance of those who remain in it; and the law which may be denominated political, is necessarily changed, although that which regulates the intercourse and general conduct of individuals, remains in force, until altered by the newly- created power of the State.

Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a general principle of the public law that on acquisition of territory the previous political relations of the ceded region are totally abrogated. "

There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of Commerce after the change of sovereignty from Spain to the United States and then to the Republic of the Philippines. Consequently, Article 14 of the Code of Commerce has no legal and binding effect and cannot apply to the respondent, then Judge of the Court of First Instance, now Associate Justice of the Court of Appeals.

It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, which provides that:

Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any Iaw from having any interest.

Respondent Judge cannot be held liable under the aforestated paragraph because there is no showing that respondent participated or intervened in his official capacity in the business or transactions of the Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the business of the corporation in which respondent participated has obviously no relation or connection with his judicial office. The business of said corporation is not that kind where respondent intervenes or takes part in his capacity as Judge of the Court of First Instance. As was held in one case involving the application of Article 216 of the Revised Penal Code which has a similar prohibition on public officers against directly or indirectly becoming interested in any contract or business in which it is his official duty to intervene, "(I)t is not enough to be a public official to be subject to this crime; it is necessary that by reason of his office, he has to intervene in said contracts or transactions; and, hence, the official who intervenes in contracts or transactions which have no relation to his office cannot commit this crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).

It does not appear also from the records that the aforesaid corporation gained any undue advantage in its business operations by reason of respondent's financial involvement in it, or that the corporation benefited in one way or another in any case filed by or against it in court. It is undisputed that there was no case filed in the different branches of the Court of First Instance of Leyte in which the corporation was either party plaintiff or defendant except Civil Case No. 4234 entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.,"wherein the complainant herein sought to recover Lot 1184-E from the aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9 or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent Judge was no longer connected with the corporation, having disposed of his interest therein on January 31, 1967.

Furthermore, respondent is not liable under the same paragraph because there is no provision in both the 1935 and 1973 Constitutions of the Philippines, nor is there an existing law expressly prohibiting members of the Judiciary from engaging or having interest in any lawful business.

It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948, does not contain any prohibition to that effect. As a matter of fact, under Section 77 of said law, municipal judges may engage in teaching or other vocation not involving the practice of law after office hours but with the permission of the district judge concerned.

Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce is, as heretofore stated, deemed abrogated automatically upon the transfer of sovereignty from Spain to America, because it is political in nature.

Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by judges of a property in litigation before the court within whose jurisdiction they perform their duties, cannot apply to respondent Judge because the sale of the lot in question to him took place after the finality of his decision in Civil Case No. 3010 as well as his two orders approving the project of partition; hence, the property was no longer subject of litigation.

In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service Act of 1959 prohibits an officer or employee in the civil service from engaging in any private business, vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking without a written permission from the head of department, the same, however, may not fall within the purview of paragraph h, Section 3 of the Anti-Graft and Corrupt Practices Act because the last portion of said paragraph speaks of a prohibition by the Constitution or law on any public officer from having any interest in any business and not by a mere administrative rule or regulation. Thus, a violation of the aforesaid rule by any officer or employee in the civil service, that is, engaging in private business without a written permission from the Department Head may not constitute graft and corrupt practice as defined by law.

On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil Service Rules, We hold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules promulgated thereunder, particularly Section 12 of Rule XVIII, do not apply to the members of the Judiciary. Under said Section 12: "No officer or employee shall engage directly in any private business, vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking without a written permission from the Head of Department ..."

It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by Republic Act No. 296, as amended, otherwise known as the Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.

Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of the Philippines, not in the Commissioner of Civil Service, and only on two grounds, namely, serious misconduct and inefficiency, and upon the recommendation of the Supreme Court, which alone is authorized, upon its own motion, or upon information of the Secretary (now Minister) of Justice to conduct the corresponding investigation. Clearly, the aforesaid section defines the grounds and prescribes the special procedure for the discipline of judges.

And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline judges of inferior courts as well as other personnel of the Judiciary.

It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of the existing Civil Service Law and rules or of reasonable office regulations, or in the interest of the service, remove any subordinate officer or employee from the service, demote him in rank, suspend him for not more than one year without pay or fine him in an amount not exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a ground for disciplinary action against civil service officers and employees.

However, judges cannot be considered as subordinate civil service officers or employees subject to the disciplinary authority of the Commissioner of Civil Service; for, certainly, the Commissioner is not the head of the Judicial Department to which they belong. The Revised Administrative Code (Section 89) and the Civil Service Law itself state that the Chief Justice is the department head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under the 1973 Constitution, the Judiciary is the only other or second branch of the government (Sec. 1, Art. X, 1973 Constitution). Besides, a violation of Section 12, Rule XVIII cannot be considered as a ground for disciplinary action against judges because to recognize the same as applicable to them, would be adding another ground for the discipline of judges and, as aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their removal, namely, serious misconduct and inefficiency.

Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who has original and exclusive jurisdiction "(T)o decide, within one hundred twenty days, after submission to it, all administrative cases against permanent officers and employees in the competitive service, and, except as provided by law, to have final authority to pass upon their removal, separation, and suspension and upon all matters relating to the conduct, discipline, and efficiency of such officers and employees; and prescribe standards, guidelines and regulations governing the administration of discipline" (emphasis supplied). There is no question that a judge belong to the non-competitive or unclassified service of the government as a Presidential appointee and is therefore not covered by the aforesaid provision. WE have already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only permanent officers and employees who belong to the classified service come under the exclusive jurisdiction of the Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619 [1963]).

Although the actuation of respondent Judge in engaging in private business by joining the Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, is not violative of the provissions of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft and Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the Civil Service Act of 1959, the impropriety of the same is clearly unquestionable because Canon 25 of the Canons of Judicial Ethics expressly declares that:

A judge should abstain from making personal investments in enterprises which are apt to be involved in litigation in his court; and, after his accession to the bench, he should not retain such investments previously made, longer than a period sufficient to enable him to dispose of them without serious loss. It is desirable that he should, so far as reasonably possible, refrain from all relations which would normally tend to arouse the suspicion that such relations warp or bias his judgment, or prevent his impartial attitude of mind in the administration of his judicial duties. ...

WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January 31, 1967 from the aforesaid corporation and sold their respective shares to third parties, and it appears also that the aforesaid corporation did not in anyway benefit in any case filed by or against it in court as there was no case filed in the different branches of the Court of First Instance of Leyte from the time of the drafting of the Articles of Incorporation of the corporation on March 12,

1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of respondent on January 31, 1967 from said corporation. Such disposal or sale by respondent and his wife of their shares in the corporation only 22 days after the incorporation of the corporation, indicates that respondent realized that early that their interest in the corporation contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore deserve the commendation for their immediate withdrawal from the firm after its incorporation and before it became involved in any court litigation

III

With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum, and that there was culpable defiance of the law and utter disregard for ethics. WE agree, however, with the recommendation of the Investigating Justice that respondent Judge be exonerated because the aforesaid causes of action are groundless, and WE quote the pertinent portion of her report which reads as follows:

The basis for complainant's third cause of action is the claim that respondent associated and closely fraternized with Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when in truth and in fact said Dominador Arigpa Tan does not appear in the Roll of Attorneys and is not a member of the Philippine Bar as certified to in Exh. K.

The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and claims that all the time he believed that the latter was a bona fide member of the bar. I see no reason for disbelieving this assertion of respondent. It has been shown by complainant that Dominador Arigpa Tan represented himself publicly as an attorney-at-law to the extent of putting up a signboard with his name and the words "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but natural for respondent and any person for that matter to have accepted that statement on its face value. "Now with respect to the allegation of complainant that respondent is guilty of fraternizing with Dominador Arigpa Tan to the extent of permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M & M-1), that fact even if true did not render respondent guilty of violating any canon of judicial ethics as long as his friendly relations with Dominador A. Tan and family did not influence his official actuations as a judge where said persons were concerned. There is no tangible convincing proof that herein respondent gave any undue privileges in his court to Dominador Arigpa Tan or that the latter benefitted in his practice of law from his personal relations with respondent, or that he used his influence, if he had any, on the Judges of the other branches of the Court to favor said Dominador Tan.

Of course it is highly desirable for a member of the judiciary to refrain as much as possible from maintaining close friendly relations with practising attorneys and litigants in his court so as to avoid suspicion 'that his social or business relations or friendship constitute an element in determining his judicial course" (par. 30, Canons of Judicial Ethics), but if a Judge does have social relations, that in itself would not constitute a ground for disciplinary action unless it be clearly shown that his social relations be clouded his official actuations with bias and partiality in favor of his friends (pp. 403-405, rec.).

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not violate any law in acquiring by purchase a parcel of land which was in litigation in his court and in engaging in business by joining a private corporation during his incumbency as judge of the Court of First Instance of Leyte, he should be reminded to be more discreet in his private and business

activities, because his conduct as a member of the Judiciary must not only be characterized with propriety but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.

SO ORDERED.

EN BANC

G.R. No. L-10439           October 17, 1916

GAN TIANGCO, plaintiff-appellee, vs.SILVINO PABINGUIT, defendant-ppellant.

Leopoldo Rovira for appellant.No appearance for appellee.

 

ARELLANO, C.J.:

          It is not disputed in these proceedings that Candida Acabo was the owner of six parcels of land, all situated in the municipality of Jimalalud, Oriental Negros, of the following dimensions: The first, 8 hectares; the second, 40 ares; the third and fourth, each 20 ares; the fifth, 40 ares; and the sixth parcel, 20 ares.

          According to the notarial instrument, Exhibit A, admitted in evidence without objection, these lands were sold on June 12, 1911, by their owner Candida Acabo, to one Gan Tingco, for P500. .

          But the purchaser Gan Tingcowas unable to take possession of the six parcels of land sold him by Acabo, for they were in the possession of Silvino Pabinguit, who alleges certain rights therein. He claims to have purchased them for P375 from Faustino Abad; that Abad yhad become their owner through purchase from Henry Gardner; that the latter, in turn, had owned tyhem by reason of having purchased them for P555 at a public auctiona held in the barrio of Martelo, municipality of Tayasan, on MArch 20, 1907. An effort was made to prove these facts by documents Exhibits 1, 2, and 3. Exhibit 1 is a notarial instrument, dated April 29, 1907, which purports to show that on this date Henry Gardner sold to Faustino Abad seven parcels of land for P275. Exhibit 2 is a notarial instrument which sets forth that Faustino Abad, on June 19, 1907, for the sum of P375 sold to Silvino Pabinguit six parcels of land, the area, situation and bounds of which are described in the document. Exhibit 3 is a copy which the deputy sheriff said he kept of the proceedings had by virtue of a writ of execution issued by the justice of the peace of Guijulngan, in whcih the latter directed him to make a demand upon Candida Acabo to comply with the judgment rendered against her as a result of the complaint, filed by Silvestre Basaltos, and further ordering him, in case of her failure to comply tehrewith, to levy upon "fixtures and other chattels and to collect the amounts ordered, that is, P157.50, plus P300 for losses damages, the proper costs and those of this execution." The date of the writ appears to be (for it has been corrected in an illegible manner) that of January 2, 1907, and the fist execution proceedings bear the date of March 14, 1907. In the return the deputy sheriff begins by saying that he made demand upon Candida Acabo and that the latter stated that she had neither corn nor money; that he levied upon three plow carabaos, one brood caraballa and the six

parcles of land in question, for their identity was expressly admitted; that their sale was announced for the 20th of March, 1907 (but the return does not show the signature of the woman upon whom the demand was made, nor does it disclose any evidence whatever to show that the owner of this property had any knowledge of this attachment or levy); that on March 20, 1907, he proceeded to sell at public auction all the property levied upon; that the jsutice of the peace who ordered the execution, Henry Gardner, himself appeared as the highest bidder and offered P280 for the four carabaos and P275 for all the coconut groves, that, is the six parcels of land measuring nine hectares and a fraction in area, containing bearing fruit trees, or a total sum of P555, which the said successful bidder then and there paid over; and, finally, that the same justice of the peace, Gardner, the highest bidder, himself received the sum of P157.50, the remainder of the proceeds from the execution sale after deduction of the costs, as the person authrized so to do by the plaintiff Silvestre Basaltos; and that Gardner alone, not Basaltos nor the judgment debtor Candida Acabo, signed the record of the proceedings. Afterwards the deputy sheriff certified that the costs of the execution amounted to P52.50, and that there was a surplus of P45 to Candida Acabo's credit, which was to be delivered to her after settlement of the matter of the certificates of ownership and the arrangment of the trabsfer of the carabaos. These proceedings were signed only by the deputy sheriff and recite that "by authorization of Candida Acabo I have delivered the sum of P29 as the true balance in favor of the Said Candida Acabo, of the P45 mentione in the precedeing statement, from which latter sum there has been deducted the amount of P16 which was paid to the treasusrer of this municipality on the following accounts: Fine, P8; certificate of ownership, P4; and certificate of transfer, P4." In that manner was the record closed and it was not signed by any other person than the deputy sheriff, ALejandro Sanchez.

          The jusrice of the peace, Gardner, and the deputy sheriff, Sanchez, were summoned to appear in the trial court on March 18, 1914. Sanchez did not put in an appearance, and on being required by telegraph to explain the reason and show why he should not be punished for contempt of court, he wired back, saying: "From 12th to 18th instant was making investigations attempted rape and theft. Will arrive there Monday, 23d. Will have enough time to finish investigation," and on the day for the hearing he presented the document Exhibit 3, referred to in the preceding paragragh.

          Henry Gardner, in testifying for the defense, stated that the deputy sheriff had executed in Gardner's favor a certificate of his purchase at auction sale, but witness did not know where the document was and did not need it because he, in turn, has sold everything he had purchased at that sale; that he was formerly justice of the peace of the municipality of Guijulngan, of Tayasan, and knew of a complaint by Silvestre Basaltos against Candida Acabo; that afterwards when the auction was held, he took part therein, but that as he subsequently learned that he was forbidden to do so, he sold what he had purchased to Faustino Abad, Candida Acabo's son, who was but a boy at the time; that the writ of execution was returnmed to him and he made a record of that matter; that he had it in the justice of the peace court and left it there when he ceased to hold office, in 1909.

          Faustino Abad testified that Henry Gardner did actually sell to him for P275 the coconut groves which Gardner had purchased at auction; that it was true that on April 29, 1907, witness was only 19 years old; that he knew that the coconut groves were those that had belonged to his mother Candida Acabo; and that he, in turn, sold the said coconut groves to Silvino Pabinguit for P375, on June 19 of the same year. Both Gardner's deed of sale to Abad and the latter's to Pabinguit were certified by the same deputy sheriff ALejandro Sanchez as notary public of the municipality of Tayasan.

          This same Alejandro Sanchez, being then the justice of the peace of Tayasan, testified as a witness for the defense. He began by recognizing the aforesaid deeds as having been certified by him in his capacity of notary public of Tayasan, and afterwards stated that he had something to do with a writ of execution issued by the justice of the peace of Guijulngan, Henry Gardner, upon

certain real estate belonging to Candida Acabo (it odes not so appear in the writ, wherein only fixtures and other chattels are referred to); that, in consideration of the P555 which Gardner paid at the time of the auction, witness, without any reservation whatsoever, delivered to Gardner the carabaos and lands knocked down to him at the sale; and that after he had received from Gardner the purchase price he returned it to him, just as he would have delivered it to the plaintiff Silvestre Basaltos, of whom Gardner claimed to be the representative duly authorized as such by this plaintiff.

          Candida Acabo testified that Alejandro Sanchez, while sheriff of Tayasan, did not take possession of her lands by reason of the levy; that the only property which he levied upon was four carabaos, and she did not know whether they had been sold at auction; and that Sanchez had not told her that he lands had been levied upon, or that they had been sold at auction.

          Silvino Pabinguit testified that in the month of February he was in Guijilngan searching for the record of the auction sale of Candida Acabo's property; that four persons made the search; and . . . the record was not found. This last statement was made by Alejandro Sanchez.

          The Court of First Instance of Oriental NEgros rendered judgment in behalf of the plaintiff, Gan Tingco, declaring him the owner of the lands described in the complaint, and ordered the defendant, Silvino Pabinguit, to restore the plaintiff to their possession. No express finfding was made as to the costs.

          The defendant appealed, with the right to a review of the evidence. The appeal was heard by this court, it having been brought it by bill of exceptions.

          The appellant alleges that the trial court erred in holding that, notwithstanding the sale of the lands in question at public auction, Candida Acabo did not cease to be the owner of these properties, because there were certain irregularities and defects in the said auction.

          In the judgment appealed from several of these defects are specified and it is unnecessary to treat of them in detail. With respect to the legality of the proceedings had up to the time of the sale of the lands, there is certainly room for doubt. No evidence is found that Silvestre Basaltos filed any complaint against Candida Acabo before the justice of the peace court of Guijulngan and that any judgment was rendered on January 2, 1907, enabling the plaintiff to recover from the defendant 150 cavanes of corn, or in default thereof the sum of P157.50, and in addition P300 for losses and damages and court costs. Only the writ of execution appears in the record. The original copy of the return to the wirt of execution was not presented, because it was not found; there was offered in evidence only what the sheriff said was a copy of the return, and he delayed as long in presenting it as he did in obeting the summons of the court to appear as a witness. No copy of that judgment was delivered to the judgment debtor, in violation of the provisions of section 446 of Act No. 190. The sheriff sold lands belonging to the judgment debtor, and it does not appear that the provisions of section 445 of the same Act were complied with, to wit, that if real estate be levied upon and sold by virtue of the execution, the clerk must record the execution and the officer's return thereon and certify the same under his hand, as true copies, in a book to be called the "Execution Book." The justice of peace, in his writ, certainly did not order the levy upon ior sale of real estate, but only fixtures and other chattles; but the sheriff's return includes real estate levied upon and solt at public auction. The purchaser at public auction, the same justice of the peace, could not exhibit the instrument which he said the sheriff executed in his behalf, because, as he said, he did not know where it was and that he did not need it. We are not sure that Candida Acabo, a simple country woman, was not despoiled of her lands under the pretexts of debt, judgment, and execution.

          Leaving out of account that things which should have been proven at trial were not proven, it is a positive fact that Henry Gardner, justice of peace of Guijulngan, was the purchaser at public

auction of Candida Acabo's lands and carabaos levied upon as a result of the judgment, and that he delivered the price of the sale, P555, to the sheriff; but hte latter returned this sum to the justice of the peace, who said that he wea authorized by Silvestre Basaltos, the supposed creditor, to receive the same. At the finish the sheriff delivered nothing to the owner Acabo, all the proceeds of the auction sale having been expended in one way or another without the consent of the judgment debtor appearing of record.

          Aside from everything else, the trial court was impressed by the circumstance that in the public auction the purchaser was the justice of the peace himself. This, in the judge's opinion, was unauthorized, because article 1459, No. 5, of the Civil Code, prohibits judges from acquring by purchase, even at pub;ic or judicial sale, either in person or by an agent, any property or rights litigated in the court in the jurisdiction or territory within which they exercise their respective duties; this prohibition includes taking of property by assignment.

          The appellant alleges that the property purchased by justice of the peace Gardner was not the subject of litigation in the justice court; that the action was to recover a certain sum of money, and that he had ordered the property sold on execution.

          This raises, therefore, a question as to the true meaning of paragraph 5 of article 1459 of the Civil Code. lawphil.net

          The Ley de Bases, in accordance with which the Civil Code was enacted, provides as follows, in Base No. 26:

          The forms, requirements and conditions of each particular contract shall be determined and defined subject to the general list of obligations and their effects, with the understanding that the legislation in force and the legal principles evolved therefrom by judicial decisions, etc., etc., shall serve as basis.

          One of the bodies of law which conastitute the legislation now in force in the Novisima Recopilacion. In Law 4, Title 14, Book 5 of the same is found the following provision: "We order that in public auctions held by direction of our alcaldes, neither the latter nor any person whomsoever in their name shall bid in anything sold at such public auctions." The word alcaldes means judges. The caption of Title 14 is "Alcaldes or Provincial Judges," and the entire title deals with the exercise of judicial jurisdiction. Prior to the enactment of the Civil Code, the Penal Code was also in force. Article 400 of the latter prohinits, under penalty, any judge from taking part, either directly, or indirectly, in any operation of exchange, trade or porfit with respect to things not the product of his own property, within the territory over which he exercises jurisdiction. Judging from the legal oprecedents on which the Civil Code is based, it would not seem too much to conclude that the said article of the Civil Code does not make any distinction between property in litigation. In effect, it appears to be as delicate a matter for a judge to take part in the sale of property that had been the subject of ligitgation in his court, as to intervene in auction of property which, though not directly litigated in his court, is nevertheless levied upon and sold as the result of a writ of execution issued by him. What the law intends to avoid is the improper interference with an interest of a judge in a thing levied upon and sold by his order.

          If under the law Gardner was prohibited from acquiring the ownership of Acabo's lands, then he could not have transmitted to Faustino Abad the right of ownership that he did not possess; nor could Abad, to whom this alleged ownership had not been transmitte, have conveyed the same to Pabinguit. What Gardner should have done in view of the fact that the sale, as he finally acknowledged, was void, was to claim the price that had been deposited in court, and the justice of the peace of Guijulngan should have declared the auction void and have ordered a new sale to be

held, besides correcting the errors that had been committed in the proceedings. To the reasons already stated, there is to be added the additional one, with respect to the sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time — a circumstance that deprived him of capacity to sell (Civil Code, art. 1263). Abad had no ownership to transmit to anyone and, besides, he had no personality to enable him to contract by himself, on account of his lack of legal age.

          Sanchez, the sheriff, the sole notary who certified all these deeds of conveyance in order that Pabinguit might become owner of those coconut lands with which his own lands adjoined, was in such a hurry that, as he testified at the trial, on the very same day of the auction he had already executed in behalf of Henry Gardner the final deed of sale of the said lands, without allowing time for their possible redemption. Section 466 of Act No. 190 prescribes that if redemption has not been requested, this deed is to be executed within the twelve months subsequent to the sale.

          This court finds no reason whatever why it should not affirm the judgment appealed from. It is therefore hereby affirmed with the costs of this instance against the appellant. So ordered.

EN BANC

[G.R. No. L-8477. May 31, 1956.]

THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of the minor, MARIANO L. BERNARDO, Petitioner, vs. SOCORRO ROLDAN, FRANCISCO HERMOSO, FIDEL C. RAMOS and EMILIO

CRUZ, Respondents.

 

D E C I S I O N

BENGZON, J.:

As guardian of the property of the minor Mariano L. Bernardo, the Philippine Trust Company filed in the Manila court of first instance a complaint to annul two contracts regarding 17 parcels of land: chanroblesvirtuallawlibrary (a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C. Ramos; chan   roblesvirtualawlibraryand (b) sale thereof by Fidel C. Ramos to Socorro Roldan personally. The complaint likewise sought to annul a conveyance of four out of the said seventeen parcels by Socorro Roldan to Emilio Cruz.

The action rests on the proposition that the first two sales were in reality a sale by the guardian to herself — therefore, null and void under Article 1459 of the Civil Code. As to the third conveyance, it is also ineffective, because Socorro Roldan had acquired no valid title to convey to Cruz.

The material facts of the case are not complicated. These 17 parcels located in Guiguinto, Bulacan, were part of the properties inherited by Mariano L. Bernardo from his father, Marcelo Bernardo, deceased. In view of his minority, guardianship proceedings were instituted, wherein Socorro Roldan was appointed his guardian. She was the surviving spouse of Marcelo Bernardo, and the stepmother of said Mariano L. Bernardo.

On   July  27,  1947,   Socorro  Roldan  filed   in   said  guardianship  proceedings   (Special  Proceeding  2485, Manila), a motion asking for authority to sell as guardian the 17 parcels for the sum of P14,700 to Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest the money in a residential house, which the minor desired to have on Tindalo Street, Manila. The motion was granted.

On August  5,  1947  Socorro  Roldan,  as  guardian,  executed   the  proper  deed  of   sale   in   favor  of  her brother-in-law Dr. Fidel C. Ramos (Exhibit A-1), and on August 12, 1947 she asked for, and obtained, judicial confirmation of the sale. On August 13, 1947, Dr. Fidel C. Ramos executed in favor of Socorro 

Roldan, personally, a deed of conveyance covering the same seventeen parcels, for the sum of P15,000 (Exhibit A-2). And on October 21, 1947 Socorro Roldan sold four parcels out of the seventeen to Emilio Cruz for P3,000, reserving to herself the right to repurchase (Exhibit A-3).

The  Philippine  Trust  Company   replaced  Socorro  Roldan  as  guardian,  on  August  10,  1948.  And  this litigation, started two months later,  seeks to undo what the previous guardian had done. The step-mother in effect, sold to herself, the properties of her ward, contends the Plaintiff, and the sale should be annulled because it violates Article 1459 of the Civil Code prohibiting the guardian from purchasing “either in person or through the mediation of another” the property of her ward.

The court of first instance, following our decision in Rodriguez vs. Mactal, 60 Phil. 13 held the article was not controlling, because there was no proof that Fidel C. Ramos was a mere intermediary or that the latter had previously agreed with Socorro Roldan to buy the parcels for her benefit.

However, taking the former guardian at her word - she swore she had repurchased the lands from Dr. Fidel C. Ramos to preserve it and to give her protege opportunity to redeem — the court rendered judgment  upholding   the   contracts  but   allowing   the  minor   to   repurchase  all   the  parcels  by  paying P15,000, within one year.

The  Court  of  Appeals   affirmed   the   judgment,   adding   that   the  minor   knew   the  particulars  of,   and approved the transaction, and that “only clear and positive evidence of fraud or bad faith, and not mere insinuations and inferences will overcome the presumptions that a sale was concluded in all good faith for value”.

At first glance the resolutions of both courts accomplished substantial justice: chanroblesvirtuallawlibrary the minor recovers his properties. But if the conveyances are annulled as prayed for, the minor will obtain a better deal: chanroblesvirtuallawlibrary he receives all the fruits of the lands from the year 1947 (Article 1303 Civil Code) and will return P14,700, not P15,000.

To our minds the first two transactions herein described couldn’t be in a better juridical situation than if this guardian had purchased the seventeen parcels on the day following the sale to Dr. Ramos. Now, if she was willing to pay P15,000 why did she sell the parcels for less? In one day (or actually one week) the   price   could   not   have   risen   so   suddenly.   Obviously   when,   seeking   approval   of   the   sale   she represented the price to be the best obtainable in the market, she was not entirely truthful. This is one phase to consider.

Again, supposing she knew the parcels were actually worth P17,000; chan   roblesvirtualawlibrarythen she agreed to sell them to Dr.  Ramos  at  P14,700; chan   roblesvirtualawlibraryand knowing   the  realty’s  value  she  offered him the next  day  P15,000  or P15,500, and got it. Will there be any doubt that she was recreant to her guardianship, and that her acquisition should be nullified? Even without proof that she had connived with Dr. Ramos. Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward’s interest and in line with the court’s suspicion whenever the guardian acquires the ward’s property 1 we have no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies.

She acted it may be true without malice; chan   roblesvirtualawlibrarythere may have been no previous agreement between her and Dr. Ramos to the effect that the latter would buy the lands for her. But the stubborn fact remains that she acquired her protege’s properties, through her brother-in-law. That she planned to get them for herself at the time of selling them to Dr. Ramos, may be deduced from the very short time between the   two   sales   (one   week).   The   temptation  which   naturally   besets   a   guardian   so   circumstanced, necessitates the annulment of the transaction, even if no actual collusion is proved (so hard to prove) 

between such guardian and the intermediate purchaser. This would uphold a sound principle of equity and justice. 2

We are aware of course that in Rodriguez vs. Mactal, 60 Phil. p. 13 wherein the guardian Mactal sold in January 1926 the property of her ward to Silverio Chioco, and in March 1928 she bought it from Chioco, this Court said:chanroblesvirtuallawlibrary

“In order to bring the sale in this case within the part of Article 1459, quoted above, it is essential that the proof submitted establish some agreement between Silverio Chioco and Trinidad Mactal  to the effect that Chioco should buy the property for the benefit of Mactal. If there was no such agreement, either express or implied, then the sale cannot be set aside cralaw . (Page 16; chan roblesvirtualawlibraryItalics supplied.)”

However, the underlined portion was not intended to establish a general principle of law applicable to all   subsequent   litigations.   It  merely  meant   that   the   subsequent   purchase  by  Mactal   could  not   be annulled in that particular case because there was no proof of a previous agreement between Chioco and her. The court then considered such proof necessary to establish that the two sales were actually part of one scheme — guardian getting the ward’s property through another person — because two years had elapsed between the sales. Such period of time was sufficient to dispel the natural suspicion of the guardian’s motives or actions. In the case at bar, however, only one week had elapsed. And if we were technical, we could say, only one day had elapsed from the judicial approval of the sale (August 12), to the purchase by the guardian (Aug. 13).

Attempting to prove that the transaction was beneficial to the minor, Appellee’s attorney alleges that the money (P14,700) invested in the house on Tindalo Street produced for him rentals of P2,400 yearly; chan 

roblesvirtualawlibrarywhereas the parcels of land yielded to his step-mother only an average of P1,522 per year. 3 The argument would carry some weight if that house had been built out of the purchase price of P14,700 only.  4 One thing is certain:chanroblesvirtuallawlibrary the calculation does not include the price of the lot on which the house was erected.  Estimating such  lot  at  P14,700 only,   (ordinarily   the city   lot   is  more valuable   than the building) the result is that the price paid for the seventeen parcels gave the minor an income of only P1,200 a year, whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of P1,522.00. The minor was thus on the losing end.

Hence, from both the legal and equitable standpoints these three sales should not be sustained: chanroblesvirtuallawlibrary the first two for violation of article 1459 of the Civil Code; chan   roblesvirtualawlibraryand the third because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together with their fruits and the duty of the minor, through his guardian to repay P14,700 with legal interest.

Judgment is therefore rendered:chanroblesvirtuallawlibrary

a.  Annulling   the three contracts  of  sale   in  question; chan   roblesvirtualawlibraryb.  declaring   the minor  as   the owner  of   the seventeen parcels of land, with the obligation to return to Socorro Roldan the price of P14,700 with legal interest from August 12, 1947; chan  roblesvirtualawlibraryc. Ordering Socorro Roldan and Emilio Cruz to deliver said parcels of land to the minor; chan roblesvirtualawlibraryd. Requiring Socorro Roldan to pay him beginning with 1947 the fruits, which her attorney admits, amounted to P1,522 a year; chan   roblesvirtualawlibrarye. Authorizing the minor to deliver directly to Emilio Cruz, out of the price of P14,700 above mentioned, the sum of P3,000; chan   roblesvirtualawlibraryand f. charging Appellees with the costs. SO ORDERED.

Paras, C.J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., and Endencia, JJ., concur.