ARTICLE 1469

G.R. No. 154117 October 2, 2009

ERNESTO FRANCISCO, JR., Petitioner, vs. OMBUDSMAN ANIANO A. DESIERTO, JOSEPH EJERCITO ESTRADA,
MARIANO Z. VELARDE, FRANKLIN M. VELARDE, ROBERT C. NACIANCENO, REY DIVINO S. DAVAL-SANTOS,
SOLEDAD S. MEDINA-CUE, PATRICK B. GATAN, LUIS V. MEDINA-CUE, SILVESTRE A. DE LEON, RAMON V.
DUMAUAL, RUBEN A. DE OCAMPO, MARIANO A. BENEDICTO II, GREGORIO R. VIGILAR, LUIS JUAN L. VIRATA,
CESAR E. A. VIRATA, MANUEL B. ZAMORA, JR., RONALDO B. ZAMORA, FRISCO F. SAN JUAN and ARSENIO B.
YULO Respondents.

ARTICLE 1470
G.R. No. 103338 January 4, 1994
FEDERICO SERRA, petitioner, vs. THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL BANKING
CORPORATION, respondents.

G.R. No. 126376 November 20, 2003

SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA
JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners,
vs. COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN
and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN
and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES TELESFORO
CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN
and LEA ASIS, respondents.

G.R. No. 132864 October 24, 2005

PHILIPPINE FREE PRESS, INC., Petitioner, vs. COURT OF APPEALS (12th Division) and LIWAYWAY PUBLISHING, INC.,
Respondents.

ARTICLE 1471
G.R. No. 130115 July 16, 2008
FELIX TING HO, JR., MERLA TING HO BRADEN, JUANA TING HO & LYDIA TING HO BELENZO, Petitioners, vs.
VICENTE TENG GUI, Respondent.

ARTICLE 1475
G.R. No. 83851. March 3, 1993.
VISAYAN SAWMILL COMPANY, INC., and ANG TAY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RJH
TRADING, represented by RAMON J. HIBIONADA, proprietor, respondents.
Saleto J. Erames and Edilberto V. Logronio for petitioners. Eugenio O. Original for private respondent.

G.R. No. 74470 March 8, 1989

NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners vs. THE INTERMEDIATE APPELLATE COURT
and LEON SORIANO, respondents.

ACE FOODS, INC., Petitioner, vs. MICRO PACIFIC TECHNOLOGIES CO., LTD.1, Respondent.

GR No. 188661
SERRANO VS CAGUIAT

ARTICLE 1476
G.R. No. 156539 September 5, 2007
DOMINGO A. DIZON, petitioner, vs. ELPIDIO R. DIZON, respondent.

ARTICLE 1477
G.R. No. L-59266 February 29, 1988
SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners, vs. HON. COURT OF APPEALS and ATILANO G.
JABIL, respondents.

G.R. No. 133895. October 2, 2001

ZENAIDA M. SANTOS v. CALIXTO SANTOS,
ALBERTO SANTOS, ROSA SANTOS-CARREON and ANTONIO SANTOS,

G.R. No. 125088 April 14, 2004

LAGRIMAS A. BOY, petitioner, vs. COURT OF APPEALS, ISAGANI P. RAMOS and ERLINDA GASINGAN RAMOS,
respondents.

G.R. No. 137162 January 24, 2007

CORAZON L. ESCUETA, assisted by her husband EDGAR ESCUETA, IGNACIO E. RUBIO, THE HEIRS OF LUZ R.
BALOLOY, namely, ALEJANDRINO R. BALOLOY and BAYANI R. BALOLOY, Petitioners, vs. RUFINA LIM, Respondent.

G.R. No. 168499 November 26, 2012

SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGO, Petitioners, vs.
MANCER VILLAMOR, CARLOS VILLAMOR, JOHN VILLAMOR and DOMINGO VILLAMOR, JR., Respondents.
ARTICLE 1478
G.R. No. 111238 January 25, 1995
ADELFA PROPERTIES, INC., petitioner, vs. COURT OF APPEALS, ROSARIO JIMENEZ-CASTAEDA and SALUD
JIMENEZ, respondents.

G.R. No. 109410 August 28, 1996

CLARA M. BALATBAT, petitioner, vs. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN,
respondents.

G.R. No. 125283 February 10, 2006

PAN PACIFIC INDUSTRIAL SALES CO., INC., Petitioner, vs. COURT OF APPEALS and NICOLAS CAPISTRANO,
Respondents.

BANK OF THE PHILIPPINE ISLANDS as successor-in-interest of FAR EAST BANK AND TRUST
COMPANY, Petitioners, vs. SMP, INC., Respondent

G.R. No. 139047

G.R. No. 139365
SPOUSES EMMA H. VER REYES and RAMON REYES, Petitioners,
- versus -
DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, ROSALINA PADLAN, AURORA TOLENTINO,
TRINIDAD L. CASTILLO, ROSARIO BONDOC, MARIA Q. CRISTOBAL and DULOS REALTY & DEVELOPMENT
CORPORATION, TRINIDAD LOZADA, JOHN DOE and RICHARD DOE, Respondents.

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

MARIA Q. CRISTOBAL and DULOS REALTY & DEVELOPMENT CORPORATION, Petitioners,

- versus -
DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, TRINIDAD LOZADA, ROSALINA PADLAN,
AURORA TOLENTINO, TRINIDAD L. CASTILLO, ROSARIO BONDOC, SPOUSES EMMA H. VER REYES and RAMON
REYES, Respondents.
 G.R. No. 154117 October 2, 2009
ERNESTO FRANCISCO, JR., Petitioner, vs. OMBUDSMAN ANIANO A. DESIERTO, JOSEPH EJERCITO ESTRADA,
MARIANO Z. VELARDE, FRANKLIN M. VELARDE, ROBERT C. NACIANCENO, REY DIVINO S. DAVAL-
SANTOS, SOLEDAD S. MEDINA-CUE, PATRICK B. GATAN, LUIS V. MEDINA-CUE, SILVESTRE A. DE LEON,
RAMON V. DUMAUAL, RUBEN A. DE OCAMPO, MARIANO A. BENEDICTO II, GREGORIO R. VIGILAR, LUIS
JUAN L. VIRATA, CESAR E. A. VIRATA, MANUEL B. ZAMORA, JR., RONALDO B. ZAMORA, FRISCO F. SAN
JUAN and ARSENIO B. YULO Respondents.

RESOLUTION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review on certiorari filed under Rule 45 of the 1997 Rules of Civil Procedure to
review and set aside the Resolution1 issued by the Office of the Ombudsman dated November 16, 2001 dismissing, for
lack of evidence, the case filed by petitioner Ernesto B. Francisco, Jr. (hereinafter, petitioner); and the Order, 2 likewise
issued by said Office, dated June 24, 2002 denying, for lack of merit, petitioners Motion for Reconsideration.

I. STATEMENT OF FACTS.
On 16 April 2001, petitioner filed a Complaint-Affidavit docketed as OMB-0-01-0577 with the Office of the
Ombudsman, alleging that the following respondents, by their individual acts and/or by conspiring and confederating
with one another, have committed the offenses/acts enumerated hereunder:
a) For violation of Republic Act No. 7080, otherwise known as an Act Defining and Penalizing the Crime of Plunder,
specifically Section 2, in relation to Section 1, sub-paragraph d(1), (3) and (6), as amended, by Republic Act No. 7659[:]
1. Joseph Ejercito Estrada former President of the Republic of the Philippines
2. Mariano "Bro. Mike" Z. Velarde
3. Franklin M. Velarde
4. Gregorio R. Vigilar former Secretary of [Department of Public Works and Highways (DPWH)] and Chairman,
[Toll Regulatory Board (TRB)]
5. Mariano E. Benedicto II Executive Director, TRB
6. Ramon V. Dumaual former Officer-in-Charge, TRB
7. Frisco San Juan former Chairman, [Public Estates Authority (PEA)]
8. John Does and Jane Does
b) For violation of Section 3(a) of [Republic Act No. 3019:]
1. Joseph Ejercito Estrada 4. Ramon V. Dumaual
2. Gregorio R. Vigilar 5. Frisco San Juan
3. Mariano E. Benedicto 6. John Does and Jane Does
c) For violation of Section 3(e) of R.A. No. 3019:
1. Joseph Ejercito Estrada 4. Gregorio R. Vigilar 7. Ruben de Ocampo
2. Mariano "Brother Mike" Z. Velarde 5. Mariano E. Benedicto II 8. Frisco San Juan
3. Franklin M. Velarde 6. Ramon V. Dumaual
9. Arsenio B. Yulo former Chairman and [General] Manager, PEA
10. Robert Nacianceno former [Metro Manila Development Authority (MMDA)] Manager and Chairman, Paraaque
City Appraisal Committee (PCAC)
11. Patrick B. Gatan DPWH Representative, PCAC Member
12. Luis V. Medina-Cue Pasay City Assessor, PCAC Member
13. Soledad V. Medina-Cue Paraaque City Assessor, PCAC Member
14. Rey Divino Daval-Santos OIC Paraaque City Engineers Office, PCAC Member
15. Silvestre de Leon Paraaque City Treasurer, PCAC Member
16. Ronaldo B. Zamora former Executive Secretary
17. Luis J. L. Virata
18. Manuel B. Zamora, Jr.
19. Cesar E.A. Virata
20. John Does and Jane Does
d) For violation of Section 3(g) of R.A. 3019;
1. Joseph Ejercito Estrada 6. Ramon V. Dumaual 11. Manuel B. Zamora, Jr.
2. Mariano "Brother Mike" Z. Velarde 7. Ruben de Ocampo 12. Cesar E.A. Virata
3. Franklin M. Velarde 8. Frisco San Juan 13. John Does and Jane Does
4. Gregorio R. Vigilar 9. Ronaldo B. Zamora
5. Mariano E. Benedicto, II 10. Luis J. L. Virata
e) For violation of Section 3(h) of R.A. 3019;
1. Ronaldo B. Zamora
f) For violation of Section 3(j) of R.A. 3019;
1. Joseph Ejercito Estrada 3. Mariano E. Benedicto, II 7. Manuel B. Zamora, Jr.
2. Mariano "Brother Mike" Z. Velarde 4. Frisco San Juan 8. Cesar E.A. Virata
3. Franklin M. Velarde 5. Ronaldo B. Zamora 9. John Does and Jane Does
2. Gregorio R. Vigilar 6. Luis J. L. Virata
g) For violation of Section 7(a) and (d) of R.A. 6713;
1. Ronaldo B. Zamora3
On May 31, 1990, during the administration of President Corazon Aquino, the Republic of the Philippines, through the
Toll Regulatory Board (TRB),4 granted the Public Estates Authority (PEA) a Toll Operation Certificate to construct,
rehabilitate, maintain and operate a toll expressway, namely, (a) Seaside Drive at Paraaque to C-6 at Bacoor, Cavite;
and (b) Expressway Extension to Noveleta/Kawit.
On February 3, 1994, during the administration of President Fidel Ramos, Renong Berhad, Majlis Amanah Rakyat
(MARA), and the PEA entered into a Memorandum of Understanding to jointly undertake the implementation of the
tollway project.5
On December 27, 1994, also during the administration of President Ramos, Renong Berhad, MARA and the PEA
entered into a Joint Venture Agreement to develop and operate as a toll road the R-1 Expressway Extension. The entire
project became known as the "MCTE Project."6
On August 17, 1995, Renong Berhad, MARA, PEA and United Engineers (Malaysia) Berhad entered into a Novation
Agreement whereby Renong Berhad assigned to United Engineers (Malaysia) Berhad (UEM) its rights, liabilities and
obligations under the Joint Venture Agreement.7
On July 26, 1996, the Republic of the Philippines, acting through the TRB, PEA and UEM-MARA Philippines
Corporation (UMPC) entered into a Toll Operations Agreement (TOA) 8 for the design, construction, operation and
maintenance of the MCTE project, which covered the Manila-Cavite Toll Expressway, the R-1 Expressway, the C-5
Link Expressway, and the R-1 Expressway Extension. President Fidel Ramos approved the TOA on the same day, July
26, 1996. Under the terms of the TOA:
1. UEM-MARA shall design and construct the expressways covered by the TOA;
2. TRB shall ensure the availability and assume responsibility for the acquisition of the lands required for the right of
way including the costs for procuring the area for the right of way;
3. PEA shall operate and maintain the expressways; and
4. PEA shall advance the funds necessary for the acquisition of the Right of Way subject to reimbursement by the
Republic of the Philippines.9
On August 9, 1997, the TRB approved the original alignment for the C-5 link. On the basis of this alignment, the TRB
issued notices to the owners of all properties affected, some of which either belonged to AMVEL Land Corporation
(AMVEL) or were part of joint venture agreements between AMVEL and the property owners. Private respondent
Mariano Z. Velarde is the Chairman of AMVEL while private respondent Franklin M. Velarde is the Executive Vice
President.
Among those property owners to whom TRB sent notices were the following:
a. Mariano Z. Velarde; d. Rosario Medina; and
b. Asuncion de Jugo; e. Silvestre Medina.10
c. Cornelia Medina;
Under the Memorandum of Agreement11 (MOA) between PEA and the Republic of the Philippines through the TRB
and the DPWH, the obligations of PEA and TRB/DPWH with respect to the acquisition of the right-of-way were set
forth. Under the MOA, the parties agreed that PEA shall have the following obligations:
1. To pay the purchase price of the lots to be expropriated for right of way as determined and requested by
TRB/DPWH.
2. To pay the expenses incurred in the relocation or eviction of squatters for the right-of-way requirements, subject to
TRB/DPWHs repayment.
3. The total amount to be disbursed in the acquisition of right-of-way and the additional expenses incurred in the
relocation and eviction of squatters shall not exceed the amount borrowed under the loan agreement. 12
On the other hand, TRB shall have the following obligations:
1. To identify and locate the lots to be acquired for the right-of-way;
2. To negotiate with individual owners of the lands their purchase price in accordance with Executive Order No. 329 dated
July 11, 1988, Executive Order No. 368 dated August 24, 1989 and Executive Order No. 369 dated September 14, 1989;
3. To cause the removal and/or relocation of the squatters that may hinder the construction of the expressway;
4. To prepare the necessary documents between the TRB/DPWH and the lot owners and owners of improvements;
5. To cause the cancellation of the Certificate of Title in the name of individual lot owners; [and]
6. To certify to the PEA that the lots for payment are free from all encumbrances and liens in accordance with the TOA.
It was pursuant to this MOA that the TRB identified and negotiated with the owners of the properties affected by the
construction of the Tollway Project C-5 Link Expressway. Among the properties affected by the Tollway Project were
properties owned or held by AMVEL Land Development Corporation (AMVEL), namely:
Land No Landowner TCT No. Affected Area
(sq m)
Lot 1-A Corazon & Cornelia Medina 33989 1,520
Lot 1-B AMVEL Land Development Corp. (AMVEL) 33989 6,583
Lot 2-A AMVEL 33988 6,062
Lot B-3-1 ADV Realty Corp. 122510 2,153
Lot 1 AMVEL 33550 6,643
Lot 2-B AMVEL 31446 3,908
Lot 2-C-1 AMVEL 31460 3,813
Lot 2-D-1 Ma. Asuncion de Jugo 113793 753
Lot 2-F-1 Rona Agustines 113796 2,973
Lot 1 Julieta Evangelista, et al. 122378 5,229
Lot 3-A E. Tirona, et al. 133990 16,543
Lot 2-B AMVEL 31988 16,313
Lot 4-A Tirona, et al. 133991 7,075
Total 79,568
Pursuant to the MOA, the TRB requested the Paraaque City Appraisal Committee (PCAC) of the Metropolitan Manila
Development Authority (MMDA) to appraise the affected properties. This Appraisal Committee was created by virtue
of Executive Order No. 329 dated July 11, 1988 as amended by Executive Order No. 369 dated August 24, 1989
specifically for the purpose of determining the fair valuation of properties to be purchased or acquired for development
and infrastructure projects for public use.13
On April 21, 1998, PCAC issued Resolution Nos. 98-5,14 98-615 and 98-716 appraising properties along Dr. A. Santos
Avenue as follows:
1. All lots abutting Dr. A. Santos Avenue at TWENTY FIVE THOUSAND PESOS (P25,000.00) per sq. m.;
2. All lots interior of Dr. A. Santos Avenue particularly along Palasan and Calang-Calangan, Bgy. San Dionisio at
TWENTY THOUSAND PESOS (P20,000.00) per sq. m.;
3. All untitled lots abutting Dr. A. Santos Avenue at SEVENTEEN THOUSAND FIVE HUNDRED PESOS
(P17,500.00) per sq. m.; and
4. All untitled lots interior of Dr. A. Santos Avenue along Palasan and Calang-Calangan at FOURTEEN THOUSAND
PESOS (P14,000.00) per sq. m.17
On May 6, 1998, the PCAC transmitted copies of Resolution Nos. 98-5, 98-6, 98-7 to the TRB.18
On May 7, 1998, the TRB, through its Resolution No. 98-26, approved the acquisition of properties affected by the C-5
Link in accordance with the PCAC appraisals.19
On May 8, 1998, the TRB, through Ramon V. Dumaual, made Payment Instructions20 to PEA to pay AMVELs
property at P20,000.00 per sq. m. pursuant to the PCAC Recommendation.
On April 28, 1998, PEA received a copy of the Memorandum from then President Fidel Ramos, dated April 27, 1998,
regarding the "Request of Bro. Mike Velarde Re: DPWH Road Right of Way Payments/Settlement on C-5 (PEA-
Renong Berhad)." The Memorandum contained the handwritten marginal note of then President Fidel V. Ramos
directing the DPWH to "Fast-Track the remaining issues NLT April 30, 1998 re the C5-Coastal Road Project in order
to alleviate heavy traffic congestion in the area." At that time, one of the remaining issues was the payment of the
purchase price of AMVEL lands for the right of way, which was then fixed at P20,000.00 per sq. m.21
To determine further the fair market value of the affected lands, the matter was referred to three independent
appraisers, namely: Asian Appraisal, Inc.; Royal Asia Appraisal Corporation, and Cuervo Appraisal, Inc.
On October 6, 1998, Asian Appraisal, Inc. submitted its Appraisal Report22 on the affected lands. It determined the fair
market value at P422,622,000.00 for 130,848 sq. m., or P3,229.87 per sq. m.
In its letters dated October 19 and 20, 1998, AMVEL questioned the valuation and sought a reconsideration of said
appraisal. In reply thereto, the TRB, in its letter dated October 20, 1998, informed AMVEL that it would commission
another private appraisal company to determine the true market value of the properties in the area.
On December 28, 1998, Royal Asia Appraisal Corporation submitted its Appraisal Report 23 on the affected lands. It
determined the fair market value at P4,395,179,000.00 for 319,398 sq. m., or P13,760.82 per sq. m.
In a letter24 dated November 8, 1998, AMVEL also questioned the valuation of Royal Asia and claimed that it was "not
realistically indicative of the prevailing market value of the properties." To break the impasse, AMVEL proposed that a
third appraisal be conducted to which then Secretary of the DPWH, respondent Gregorio Vigilar, agreed. For this
purpose, Cuervo Appraisers, Inc. was engaged to conduct a third appraisal.
On December 9, 1998, AMVEL complained of the "long-delayed payment" for its lands while "other landowners
adjoining [their] property also affected by the C-5 road right-of-way have already been paid at a price of P25,000.00
per sq. m."25
In his reply dated December 29, 1998, respondent Vigilar took exception to the claim of AMVEL that there was "long-
delayed payment," considering that several appraisals of the affected properties were made. In the same letter, he
proposed that the average of the three (3) private appraisals be used as a final valuation.
On January 11, 1999, Cuervo Appraisers, Inc. submitted its Fair Market Value Appraisal26 of the affected lands. It
determined the fair market value at P4,531,752,000 for 251,764 sq. m., or P18,000 per sq. m.
Further negotiations ensued between the parties. Finally, a consensus was reached to fix the price by averaging the four
appraisals done by MMDA, Royal Asia, Asian Appraisal, and Cuervo.
On January 15, 1999, the TRB, through its Resolution No. 99-02,27 approved the purchase price of P1,221,799,804.00 for the
acquisition of a total area of 79,598 sq. m. The average price per sq. m., as approved by the TRB, was P15,350.00.
On February 17, 1999, respondent Joseph E. Estrada, then President of the Republic of the Philippines, issued
Administrative Order No. 50 entitled "Prescribing the Guidelines for the Acquisition of Certain Parcels of Private Land
for Public Use including the Right of Way, Easement of Several Public Infrastructure Projects."
On March 30, 1999, respondent Estrada issued two (2) Memoranda to respondent Benedicto, the Executive Director of
TRB. The first Memorandum28 states:
"You are hereby directed to proceed with right of way acquisition of properties covered by the TRB Resolution #99-02
dated January 15, 1999, subject to existing laws, rules and regulations."
The second Memorandum29 states:
"The contracts for acquisition of the right of way at the C-5 Link of the Manila-Cavite Toll Expressway, stated in
Resolution No. 99-02 of the Toll Regulatory Board, is hereby approved, subject to compliance with existing laws, rules
and regulations.
"Further, you are directed to submit to this office a certification, stating that the said contracts are above board, that due
diligence has been complied with, that these contracts are free from all defects and that the terms of the contract are the
most advantageous to the government."
On March 30, 1999, TRB transmitted to PEA the Deeds of Absolute Sale executed by TRB and AMVEL as well as the
other parties represented by AMVEL. TRB advised PEA that it shall immediately inform PEA of the approval by the
President, and that, in the meantime, PEA should take note of the Deed of Sale and prepare for the eventual payment of
the properties in accordance with the TOA and the MOA.30
On April 5, 1999, the TRB, in compliance with the Memorandum of the President dated March 30, 1999 and pursuant
to its express obligations under the MOA to certify to PEA that the lots to be acquired were free from all liens and
encumbrances, issued its Compliance and Certification31 stating that the Deed of Sale between the Republic of the
Philippines and AMVEL Land Development Corp., dated March 30, 1999 "was above-board; that due diligence had
been complied with in the negotiation and execution thereof; that to the best of our knowledge, the same are free from
defects and that the terms thereof are not disadvantageous to the Government."

Based on such Compliance and Certification issued by the TRB, PEA paid fifty percent (50%) of the purchase price to AMVEL. 32

On April 8, 1999, respondent Benedicto sent a memorandum33 to the TRB informing it that:
a. The parties executed three (3) deeds of sale on [March 30, 1999];
b. The amounts for the right of way acquisition were those stated in the TRBs Resolution No. 99-02;
c. Total amount payable of P1,221,766,640 actually lower by 33,244 from the Board approved amount of
P1,221,799,884. 34
On April 29, 1999, or after nearly a year of negotiations for the purchase of the properties subject of the Right of Way
and upon receipt of the required documentation, PEA released the balance of the purchase price for the AMVEL
properties.35

II. PETITIONERS ALLEGATIONS

Petitioner, in his complaint-affidavit36 filed before the Office of the Ombudsman, alleges irregularities in the above-
mentioned transactions. In particular, petitioner contends that the government acquisition of the AMVEL lands took
place in just two and a half working days, considering that it was Holy Tuesday on March 30, 1999, the date that
respondent Estrada issued the Memorandum to TRB and PEA to proceed with the acquisition of lands for the right-of-
way of the C-5 Link of the MCTE Project, and PEA immediately released on April 5, 1999 fifty percent (50%) of the
total purchase price. He points out that Holy Wednesday was a half-working day, and what followed was a long
holiday, commencing on Holy Thursday and ending on Easter Sunday.37 Petitioner alleges that it was due to the
personal intervention of respondent Estrada and his close association with respondent Mariano Velarde that AMVEL
was able to close this deal. In his 183-page petition, he alleges:
65. Respondent Mike Velarde received a P685,892,495.00 windfall from the government for a property which he
acquired for almost nothing! His only capital was his closeness to respondent Estrada and the tremendous amount of
influence he wielded in the latters administration. Of course, all of these he owes to his mostly impoverished flock
who voted for respondent Estrada after "Brother Mike" endorsed him as "tiyak yon."38
Petitioner claims that the nine (9) parcels of land sold by AMVEL to the government, subject of his complaint, were
outrageously overpriced. He alleges that the Transfer Certificates of Title covering said parcels of land and their
corresponding areas, declared market values, assessed values and selling prices are as follows: 39
Transfer Area (sq. Declared Market Assessed Value Selling Price (Pesos)
Certificate of meters) Value (Pesos) (Pesos)
Title
140389 2,153 1,507,100 301,420 33,059,315
140388 6,643 4,650,100 930,020 102,003,265
131446 3,908 1,914,920 382,980 60,007,340
140402 3,813 1,868,370 373,670 58,548,615
140396 9,427 6,598,900 1,319,780 144,751,585
140397 44,669 31,268,300 6,253,660 685,892,495
140404 753 368,970 73,790 11,562,315
140405 2,973 1,456,770 291,350 45,650,415
140408 5,299 2,562,210 512,440 81,366,145
Total 79,638 52,195,640 10,439,110 1,222,841,490
Petitioner likewise claims that based on the 1999 tax declarations, AMVEL sold parcels of land, which were
"undeveloped agricultural lands and salt-making beds (salinar) but which had been reclassified as residential, to the
government at a price which was more than 2,300% percent of their total declared market value and 11,700% percent
of their total assessed value."40
Petitioner asserts that the purchase price for right-of-way acquisition "should be the equivalent of the zonal value plus
ten (10%) percent thereof," based on Administrative Order No. 50,41 which respondent Estrada issued on February 17,
1999 and was made effective immediately. Since the zonal value of the subject parcels of land was set the year before
at Four Thousand Five Hundred Pesos (P4,500.00) per sq. m. by the Department of Finance,42 the purchase price
should have been Four Thousand Nine Hundred Fifty Pesos (P4,950.00) only, for a total purchase price of Three
Hundred Ninety-Four Million Two Hundred-Eight Thousand and One Hundred Pesos only (P394,208,100.00). He
claims that the price that the government paid (P15,355.00 per sq. m.) was 310% of the zonal value.43
Petitioner argues that "[by] not following the guidelines set by Administrative Order No. 50, the government was
defrauded of the staggering amount of [P828,633,390.00]" and burdened with the payment of interest. The government
was made to pay in full when the guidelines set by said Administrative Order provided that, should the landowner
refuse to accept the purchase price, the government would be mandated to initiate expropriation proceedings and
deposit only ten (10%) percent of the offered amount.44
Petitioner notes that even respondent Estrada chose not to follow the guidelines prescribed by Administrative Order
No. 50 by "directing TRB to proceed with the acquisition and approving [AMVELs] Deeds of Sale." He alleges that
there was no legal impediment to its application because the Deeds of Sale for the AMVEL acquisitions were executed
long after the effectivity date of Administrative Order No. 50.45
Petitioner questions the findings of the government appraisal body, MMDA-PCAC, that the subject parcels of land
"have already been developed," and that these were classified as commercial lands. He relies on "a document found
among the records of the Legal Office of the Presidential Management Staff" 46 that states that the lands were "formerly
salt-making beds (SALINAR) which are not suitable for residential or commercial purposes;" that "AMVEL merely
covered these salt factories with trash and other low-grade filling materials;" that the properties "did not even have
access to the highway .. [until] AMVEL built a bridge from said properties to Dr. A. Santos Avenue when it was
already negotiating with the government;" and that AMVEL knew beforehand about the proposed highway when it
acquired the properties at a purchase price of Two Thousand Pesos (P2,000.00) per sq. m., properties that were later
sold to the government at Fifteen Thousand Three Hundred Fifty-Five Pesos (P15,355.00) per sq. m.47
The rest of petitioners allegations were summarized by respondent Office of the Ombudsman in the questioned
Resolution,48 which summary we find to be succinct and hereby quote in part below:
The complainant points out that much earlier, in March 1996, the heirs of a certain Andres Buenaventura filed an action
for annulment of title and reconveyance against the Tirona-Medina families before the RTC-Paranaque, docketed as Civil
Case No. 96-0141. The Buenaventura heirs claimed that they were rightful owners of the parcel of land covered by TCT No.
14729. The Buenaventura heirs caused the annotation of a Notice of Lis Pendens on TCT No. 14729. This notice of Lis
Pendens was carried over to the subdivided lots covered by TCT Nos. 133988, 133990 and 133991.
On 06 November 1998, AMVEL submitted to the TRB what it claimed to be a Decision dated 29 October 1998 of the
Court of Appeals First Division in CA-G.R. No. 54402, which supposedly affirmed the Decision of the RTC-
Paranaque dismissing the case filed by the Buenaventura heirs. The purported Court of Appeals Decision was signed
by Associate Justices Oswaldo Agcaoili, Fidel Purisima and Corona Ibay-Somera.
The complainant alleges that the supposed 28 October 1998 Decision was falsified and non-existent. In fact, the
records of the Court of Appeals show that, on 22 February 1999, "its Docket was instructed to (a)wait result of the
investigation of NBI as per instructions of J. Valdez." However, based on the same records, nothing was heard or
mentioned again about the result of the said NBI investigation.
Notwithstanding the attempt to defraud the government with the submission of the falsified and non-existent Court of Appeals
Decision, TRB did not charge AMVEL and, instead, proceeded with the execution of the Deeds of Sale on 30 March 1999.
The complainant further alleges that the original projected cost of the right-of-way for the MCTE Project at the time
the Toll Operation Agreement between the government and the foreign investor, Renong Berhad, was being deliberated
in late 1995, was P900 million only. However, by the time the Toll Operation Agreement was approved by the Office
of the President on 26 July 1996, the cost of the right-of-way acquisition had already risen to P1.7 billion.
The Toll Operation Agreement dated 26 July 1996 itself, in paragraph 5.04 thereof, likewise provides that "the Grantee
(PEA) shall advance the funds necessary for the acquisition of the Right of Way except land to be reclaimed subject to
a limit of [P1.7 million] and such funds shall be reimbursed by the Grantor to the Grantee."
As late as October 1998, UEM-MARA Philippines Corporation ("UMPC"), the local subsidiary of UEM Berhad and a
signatory to the Toll Operation Agreement, in a report to the Board of Investments entitled "Manila Cavite Toll
Expressway Project-Project Description October 1998," reported in its Summary of Project Costs that the total right-of-way
cost is only P1.7 billion. This is broken down as follows: C-5 Link Expressway, P1.356 billion; and R-1 Extension
Expressway, P344 million. UMPC further reported that "TRB on the other hand will be responsible for the acquisition of the
right-of-way which will be financed by PEA in accordance to the terms and conditions of NEDA as stipulated in the TOA."
Also, under the aforesaid NEDA Board Resolution No. 2, the Malaysian government agency, Majilis Amanah Rakyat
("MARA") and Renong Berhads construction affiliate, United Engineers Berhad (UEB), were supposed to advance
P900 million of the P1.7 billion cost of right-of-way acquisition to be guaranteed by the national government. Further,
MARA and UEB would secure foreign currency denominated loans for the P900 million that they were willing to advance.
It appears that the project proponents did not even comply with the aforesaid condition for NEDAs approval of the
project. The Malaysian firms were no longer made to advance the sum of P900 million.
Instead, on 5 December 1997, a Loan Agreement was executed among PEA, as borrower, the Republic of the
Philippines, as guarantor, and a syndicate of local and foreign banks, namely, Solidbank Corporation, Far East Bank
and Trust Company (now part of the Bank of the Philippine Islands), Asianbank Corporation, Chinatrust (Phils.)
Commercial Bank Corporation, Australia and New Zealand Banking Group Limited, Standard Chartered Bank, The
Bank of Nova Scotia (Manila Offshore Branch), The Development [Bank] of Singapore Ltd., and Bank of America
(hereinafter collectively referred to as the "lender banks").
The Lead Arranger for the loan was Exchange Capital Corporation, which is majority-owned by respondents Luis J. L.
Virata and Manuel B. Zamora, Jr. [The] Co-Lead Arrangers were FEB Investments, Inc. and SolidBank.
As earlier mentioned, TRB sent notices of acquisition to the landowners of the parcels of land that would be affected
by the C-5 Link sometime in 1997. Thereafter, the TRB Officer-in-Charge requested the Paranaque City Appraisal
Committee to appraise the said parcels of land. Thus, the City Appraisal Committee came out with Resolution No. 98-5
dated 21 April 1998 with bloated appraisals of said properties.
Complainant asseverates that in what appears to be an attempt to "legitimize" the bloated appraisal made by the
Paraaque City Appraisal Committee on 21 April 1998, on 7 May 1998, TRB and PEA entered into a Memorandum of
Agreement which, among others, explicitly provides that TRB shall "identify and locate the lots of land sought to be
acquired for the right-of-way" and "negotiate with the individual owners of the land the purchase price in accordance
with Executive Order No. 329 dated July 11, 1998, Executive Order No. 368 dated August 24, 1989 and Executive Order
NO. 269 dated September 4, 1989." These Executive Orders were even made part of the Memorandum of Agreement.
The complainant points out that seven (7) months after respondent Mike Velarde got his P1,222,841,490.00, on 23
November 1999, respondent Estrada, together with respondents Ronaldo B. Zamora, then Executive Secretary,
Gregorio R. Vigilar, then Public Works and Highways Secretary, and Frisco San Juan, then PEA Chairman, gave his
imprimatur and approval to the proposal of a four (4) month-old, P15 million company, the Coastal Road Corporation
("CRC"), to take over UMPC and the P7.73 billion MCTE Project (including the 800-hectare reclamation project along
Manila Bay going towards Cavite). This is now the subject of a separate case before the Ombudsman entitled "Ernesto
B. Francisco, Jr. vs. Joseph Ejercito Estrada, et al.," docketed as OMB Case NO. 0-00-1758.
Complainant Francisco further points out that the beneficial owners of CRC are respondents Luis J. L. Virata and
Manuel B. Zamora, Jr. Respondent Luis J. L. Virata is also CRCs President and Chief Executive Officer, while
respondent Cesar E.A. Virata is CRCs Chairman of the Board and is also a beneficial owner of CRC to the extent of
ten (10%) [percent] of its equity.
Also, on 23 November 1999, respondent Estrada, in the presence of respondents Ronaldo B. Zamora, Gregorio R.
Vigilar and Frisco San Juan, gave his imprimatur and approval to CRCs proposal to de-prioritize the construction of
the C-5 Link Expressway, on the one hand, and to prioritize the R-1 Expressway Extension, on the other. This was
done despite the lack of the requisite evaluation and approval of the TRB Board and the fact that CRC does not have
the requisite financial and technical capability and track record to take over the MCTE Project. Worse, the de-prioritization
of the C-5 Link despite the P1.85 billion already spent for right-of-way acquisitions caused the government tremendous
losses in terms of the interest on the dollar-denominated loan used to fund the said acquisitions.
Respondents LUIS J. L. VIRATA and MANUEL B. ZAMORA, JR. had another reason for pushing the prioritization
of the R-1 Expressway Extension. Respondents wanted to expedite the development of the Caylabne Bay Resort in
Ternate, Cavite. In the words of respondent Luis J. L. Virata, the Caylabne Bay Resort will be developed into a "top-
quality resort . . . with a whole bunch of a Mediterranean-looking buildings" and with "a first-class resort operation." In
an interview with Mr. Philip Cu-Unjieng, which appeared in the 7 February 1999 issue of the Philippine Star,
respondent Virata himself had categorically admitted how critical is the R-1 Expressway Extension to the development
of the Caylabne Bay Resort.
The real problem is that under UMPCs project timetable, the construction schedule of the C-5 Link Expressway was
set from March 1997 to September 1999, while that of the R-1 Extension was set almost near the same period, from
October 1997 to September 1999. Thus, the idea is for both expressways to be constructed and finished almost at the
same time. However, by October 1998, both were already delayed by eighteen (18) months and fourteen (14) months,
respectively. Instead of correcting the problem, the government allowed respondent Luis J. L. Virata and Manuel B. Zamora,
J. to take over the project despite their lack of financial and technical capability to do so. They even tried to borrow from
public funds from the Development Bank of the Philippines to finance their acquisition of UEM Berhads share in UMPC.
Respondents Mariano Z. Velarde, Franklin M. Velarde, Luis Juan L. Virata, Cesar E.A. Virata, Manuel Zamora, Jr.,
Ronaldo Zamora, Mariano E. Benedicto II, Frisco F. San Juan, Ruben A. de Ocampo, and Ramon V. Dumaual filed
individual Counter-Affidavits; while respondents Robert C. Nacianceno, Reydivino Bernabe Daval-Santos, Soledad
Samonte Medina-Cue, Patrick Beltran Gatan, Luis Vicente Medina-Cue, and Silvestre San Agustin de Leon, all
members of PCAC, filed a Joint Counter-Affidavit. Respondents Joseph Estrada and Arsenio Yulo were ordered to file
their counter-affidavits, but they did not file any.
Based on its findings of fact, the Office of the Ombudsman resolved to dismiss the case for lack of evidence.49
Petitioner filed a Motion for Reconsideration50 on January 14, 2002, alleging that serious errors of law and/or
irregularities had been committed prejudicial to his interest, as follows:
1. The Ombudsman did not conduct fact-finding in the instant case and pursue investigation requested by the complainant.
2. The Ombudsman did not issue the subpoena duces tecum requested by the complainant as would afford the
complainant the chance to file a reply-affidavit.
3. The inhibition of Desierto came too late since he had already prejudged the case.
4. The Ombudsman did not act on the motion for the inhibition of Overall Deputy Ombudsman Margarito P. Gervacio,
Jr. At any rate, Gervacio, out of delicadeza or sense of decency, should have voluntarily inhibited himself.
5. The Overall Deputy Ombudsman does not have authority to approve the dismissal of the instant case.
6. The Ombudsman took at their face value the arguments of, and interpretation of the law by, the respondents, on the
one hand, and totally disregarded the evidence of complainant, on the other.
7. In their haste to dismiss the instant case, Desierto and Gervacio did not consider additional evidence submitted by the complainant. 51
Respondent Office of the Ombudsman denied petitioners Motion for Reconsideration in an Order52 dated June 24, 2002.

III. ASSIGNMENT OF ERRORS

Petitioner raises the following assignment of errors against the questioned Resolution and Order issued by the Office of
the Ombudsman:
I The respondent Ombudsman committed a serious error of law in ruling that "the transaction/negotiation for the
purchase of affected lands was consummated as early as May 1998" and that "Administrative Order No. 50 finds no
application to the already perfected contract between TRB and AMVEL.
II The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to excess or
lack of jurisdiction, in concluding, without basis in fact, "that respondents complied with the prescribed procedure in
determining a fair and reasonable valuation of the properties in question" and in not finding that respondents
committed plunder and/or graft.
III The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to lack or
excess of jurisdiction in not finding that respondents committed plunder and/or graft when they changed the original
alignment of the Sucat Interchange which increased the affected land area of Amvel from 63,629 sq. mtrs. to 80,256 sq.
mtrs. or a difference of 16,897 sq. mtrs. which was sold to the government for about P259,115,495.00.
IV The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to lack or
excess of jurisdiction in not finding that respondents committed plunder and/or graft when respondent Mike Velarde
made a billion-peso killing from the transaction.
V The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to lack or
excess of jurisdiction in not finding that respondents committed graft when they proceeded with the transaction despite
the fact that 44,699 sq. mtrs. of land sold to the government did not have a clean title at the time of sale.
VI The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to lack or
excess of jurisdiction in not finding that respondents committed plunder and graft when they bloated the cost of the
road-right-of-way and depleted the proceeds of the US$68.6 Million loan for right-of-way acquisition.
VII The respondent Ombudsman committed a serious error of law and grave abuse of discretion amounting to lack or
excess of jurisdiction in not finding that respondents committed graft when they de-prioritized the R-1 Expressway
Extension over that of the C-5 Link Expressway.
VIII The respondent Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction
when he deliberately did not conduct fact-finding to gather more evidence in the case below despite repeated requests
by the complainant.
IX The respondent Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction when he
deliberately failed to act on motions to issue subpoena duces tecum and ad testificandum to further strengthen the case.
X The Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction when he failed to
act on the motion for the inhibition of Overall Deputy Ombudsman Margarito P. Gervacio, Jr. Likewise, Overall
Deputy Ombudsman Gervacio committed grave abuse of discretion amounting to lack of jurisdiction when he failed to
voluntarily inhibit himself out of delicadeza or a sense of decency.

IV. THEORY OF RESPONDENTS

A. COMMENT OF RESPONDENTS ROBERT C. NACIANCENO, REYDIVINO B. DAVAL-SANTOS,
SILVESTRE S.A. DE LEON, PATRICK B. GATAN, SOLEDAD S. MEDINA-CUE, AND LUIS V. MEDINA-CUE
The case docketed as OMB-0-01-0577 is "primarily an action to hold them accountable for violation of Section 3 (e) of
R.A. 3019, the Anti-Graft and Corrupt Practices Act, on account of their approval, in 1998, of PCAC Resolution No.
9805 ... as the same resolution had been allegedly used to justify the alleged over-pricing and related graft and corrupt
practices of other respondents in connection with the acquisition of lands by the national government, in 1999, for the
right of way of the C-5 Link of the Manila-Cavite Toll Expressway Project".
Respondents were "charged in their respective [capacities] as the Chairman and members of the [PCAC] created under
[Executive] Order No. 329, as amended by Executive Order No. 369, primarily for the determination of the reasonable
compensation to be paid to properties that will be affected by public works and projects in Paraaque City."53
Section 3(e) of Rep. Act No. 3019, under which respondents are charged, provides:
(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of
offices or government corporations charged with the grant of licenses or permits or other concessions. (Underscoring
supplied by respondents.)
Respondents claim that they are neither alleged nor shown to be, as they in fact are not, "officers and employees of
offices or government corporations charged with the grant of licenses or permits or other concessions." 54
Respondents assert that PCAC Resolution No. 98-5 is recommendatory in nature, and that the adoption of the
recommendations was within the prerogative and discretion of the implementing officers, most of all Fidel V. Ramos,
then the President of the Republic at the time of issuance of said resolution.
Respondents note that the alleged acts of plunder and graft and corrupt practices attributed to the other respondents
have been shown to have transpired during the incumbency of respondent Joseph E. Estrada as President of the
Republic, and after the issuance of said PCAC Resolution No. 98-5.55
Respondents further argue as follows:
[PCAC] had undertaken diligently and carefully the study and evaluation of the properties that will be affected by the
C-5 Link Expressway in Barangay San Dionisio, Paraaque City, taking cognizance of the sale of comparable property,
the applicable BIR Zonal Value, the opinion solicited from the residents of the properties near the subject parcels of
land, the condition or status of the parcels of land, the presence of other buildings and structure near the vicinity of the
properties, and the consequential damages to the owners of the affected properties. And, contrary to the allegation of
petitioner, the BIR Zonal Value (6th Revision) which took effect on February 2, 1998 provides for P20,000.00 per sq.
m. value for commercial land along Dr. A. Santos Avenue; and P30,000.00 per sq. m. value for Commercial land along
Ninoy Aquino Avenue; furthermore, while the allegations of the complainant that the zonal value of the residential
regular (RR) lands in Dr. A. Santos Avenue, San Dionisio, Paraaque City, was fixed by the Department of Finance at
P4,500.00 per sq. m. just a year before the AMVEL sale, the same department has fixed the zonal value of commercial
land along Dr. A. Santos Avenue, Brgy. San Dionisio, Paraaque City at P20,000.00 and along Ninoy Aquino Avenue
at P30,000.00 per sq. m. Paraaque City Ordinance No. 97-08, prescribes the land use plan and the zoning of the
Municipality of Paraaque, [and] provides that the lands along Dr. A. Santos Avenue is classified as within C-3 high
intensity commercial zone.56 (Emphasis added)
[The] valuation of the subject properties is justified, and shown to be consonant and consistent with existing accepted
appraisal practice and procedures in the appraisal of properties, considering that:
a) The appraisal of the properties was based on such factors as location, accessibility, selling prices of comparable
properties, opinion of people living within the vicinity of the subject properties, the amenities present like water,
electricity, transportation and communication with the vicinity of the property and the status or condition of the parcels
of land. The Committee has noted that the parcels of land have been developed to mean a great change in its former
condition as salt beds or Salinas and the complainant has acknowledged this truth in his complaint when he stated that
the former salt beds are filled up or covered by filling materials;
b) During the ocular inspection conducted by the technical committee tasked to inspect the subject properties, these
parcels of land were already filled and developed.
c) Ordinance No. 98-08, which prescribed the land use plan and zoning of the Municipality of Paraaque, provides that
Barangay San Dionisio where subject properties are located, is within C-3 high intensity commercial zone.57

B. COMMENT OF PRIVATE RESPONDENTS MARIANO Z. VELARDE AND FRANKLIN M. VELARDE

Private respondents Velarde allege that the transactions involving the purchase of the subject nine (9) parcels of land
were perfected before Administrative Order No. 50 came into effect. The sale was perfected on May 8, 1998, almost a
year before the issuance of Administrative Order No. 50, when the TRB sent a letter to the PEA instructing the latter to
prepare the checks representing payments for the subject properties.58
Private respondents Velarde aver that Amvel never questioned the amount of the purchase price, gave its imprimatur to the
purchase price set by TRB, and the last thing to be done was the actual receipt of the checks in payment thereof by Amvel.
Unfortunately, however, Amvel was not paid. Instead, TRB conducted a series of appraisals of the subject property.
As of December 9, 1998, Amvel wrote to the DPWH Secretary, asking that it be paid the purchase price set by the
PCAC as directed by TRB.59 In a letter dated January 20, 1999, TRB informed Amvel that it was willing to purchase
the latters properties at a price arrived at by adopting a formula close to averaging all four (4) appraisals obtained from
the PCAC, as well as the three (3) private appraisal companies. 60 Thereafter, TRB issued Resolution No. 99-02 on
January 15, 1999 approving the purchase of the subject properties in the aggregate amount of P1,221,799,804.00.61
On April 22, 1999, Amvel was able to receive full payment of the agreed purchase price, but the amount received was
P1,221,766,640.00.62
Private respondents argue that the subject properties were not overpriced. The properties were zoned and classified as
commercial areas, not agricultural or residential. Massive development and improvement works were immediately
carried out and introduced after these properties were acquired by Amvel through purchase or joint venture
agreements.63
Private respondents cited several factors why a higher appraisal value than the one eventually used should be adopted,
and these are:
a. The PCAC, as early as April 21, 1998 (way before the election of respondent Estrada to the presidency in the May
10, 1998 elections), had already fixed the price of the properties on the site, along with those found in the area:
between P20,000.00 and P25,000.00 per sq. m.
b. In 1997, the site was appraised at P18,000.00 per sq. m., and a portion of the same with an area of 49,316 sq. m.
covered by TCT No. 133550 was given a development loan accommodation by Metrobank in the amount of
P550,000,000.00.
c. The current Bureau of Internal Revenue (BIR) zonal valuation appraised the vicinity at P25,000.00 per sq. m.
Private respondents claim that the other properties affected by the C-5 Link Project adjacent to and near the vicinity of
the site were acquired and paid for by the government at P25,000.00 per sq. m. in accordance with the MMDA
appraisal.64 For the subject properties, the government was able to save P4,645.00 per sq. m.65

The private appraisal companies were engaged by TRB and not Amvel. The final purchase price was imposed upon
Amvel by the government, and respondents Velarde had no hand in fixing the said amount. Private respondents
Velarde merely acted within the bounds of their duties and powers as officers of Amvel. It was only natural that they
would negotiate for an amount most advantageous to the said company. The fact that the purchase price of the subject
properties considerably plummeted would certainly negate the allegation that respondent Mariano Z. Velarde exerted
influence on respondent Estrada or any other public officer for that matter.
Furthermore, private respondents aver that, except for a small portion, Amvel acquired the properties at prices ranging
from not less than P7,500.00 per sq. m. to as high as P9,000.00 per sq. m. Petitioner thus failed to take into
consideration the significant incidental expenses for the acquisition, consolidation, improvement and development of
the subject properties.
Private respondents claim that the re-alignment of the C-5 Link Project has actually resulted in the significant reduction
and decrease of the affected areas, that is, from the original 12 hectares to 7.9 hectares. Hence, petitioner completely
erred in claiming that the realignment had actually resulted in a greater profit to Amvel. The subject property,
measuring 79,568 sq. m., was just 34.28% of the total area of the site, which was 232,078 sq. m.
To provide a background of the transactions leading to the purchase by the government of the subject properties,
private respondents gave its version of the antecedent facts, as follows:
a. As early as June 1994, a company by the name of "ADV Realty" had set its sights in developing [a] large expanse of
undeveloped parcels of raw lands around the Ninoy Aquino International Airport (NAIA) and in Barangay San
Dionisio, Paraaque City into a commercial and business park by entering into various joint venture agreements with
several landowners, particularly the Medina-Tirona family.66
b. A large amphitheater would also be constructed to serve as a multi-purpose complex that would principally serve as
the venue for the weekly prayer meetings and healing sessions of the members of the El Shaddai Movement of which
herein respondent Mariano Z. Velarde is the Servant Leader.
c. In order to consolidate the whole area, joint ventures were likewise forged with the other landowners of the adjacent
properties who were all prominent families of Paraaque City (e.g., Medina-Evangelista, Balinghasay and Santos).
More importantly, for those properties that were not available for joint venture, ADV Realty acquired them by purchase.
d. In 1996, development efforts were immediately poured and instituted into the properties in accordance with the
master plan and the business development concepts for the area. In 1997, ADV Realty was able to consolidate a 23-
hectare property and pre-development operations thereon were in full blast. ADV Realtys name was then changed into
Amvel Land Development Corporation.
e. However, Amvel was notified by the government, through the TRB, in the last quarter of 1997 that the site will be
affected by the C-5 Link Project. Ex-president Fidel V. Ramos was still the incumbent president at that time.
f. Upon examining the proposed alignment of the aforesaid project, Amvel was surprised to find out that it would cut
across right at the center of the site. This would render the whole property unattractive to prospective investors as the C-5
Link Project would block all possible ingress to and egress from the property, making accessibility a major concern.
g. This would entail a re-evaluation and a radical change in the master plan of the commercial and business park. Once the
C-5 Link Project would be constructed, the remaining property of Amvel would be divided into two (2) portions. Both
portions would be enclosed by the proposed C-5 Link Project and the rivers found on the north and west side of the property.
h. Even other property owners in the area, most notably the SM Holdings Property and ADELFA Property, Inc., also
raised objections to the C-5 link Project as the original plan of the said Project posed serious threat to their respective
developmental plans for their properties.
i. As a result, Amvel, along with SM Holdings Property and ADELFA Property, Inc., negotiated for the re-alignment
of the C-5 Link Project.
j. As a consequence thereof, Amvel was constrained to construct another bridge as a passageway for the portion located
at the southern side of the property. To accomplish such a task, Amvel was forced to purchase the property where the
bridge would be constructed.
k. The final re-alignment plan that was jointly prepared by Amvel, SM Prime Holdings and ADELFA Properties, Inc.
and duly approved by the TRB, had actually and in reality resulted in the substantial reduction of the portion of the site
that would be affected by the C-5 Link Project. From the original area of TWELVE (12) hectares, it was reduced to
only 7.9 hectares.
l. Had Amvel really intended to capitalize on the business opportunity brought about by the C-5 Link Project, as wrongfully
alleged by petitioner, it could have proposed a re-alignment plan that would consume a larger portion of the site.
Private respondents argue that the subject properties were not bought by Amvel for the purpose of selling them to the
government, in the light of the proposed construction of the C-5 Link Project. After Amvel and TRB finally agreed on
the terms of the sale, all the portions of the site that were caught along the path of the C-5 Link Project were sold to the
government.67 These properties are described in the following table:
TCT No. Original Size (sq m) Previous owner Date of JVA/ Purchase Size sold to govt.
140397 122,694 Emmanuel Tirona, Ma. Aurora T. Mercado, (JVA with ADV Realty) 44,669
140396 10,099 Rosario T. Medina and Corazon T. Medina November 16, 1994 9,427
140388 49,316 Josefina, Adelaida, Jose and Teofilo, all Purchased by ADV realty on 6,643
surnamed Balinghasay January 23 1998.
140389 15,721 Balinghasays Purchased, by ADV Realty on 2,153
January 21, 1997
140402 3,813 Arcadio C. Santos Purchased by ADV realty on 3,813
September 12, 1997
131446 3,908 Victor B. Santos Purchased by ADV Realty in 3,908
1997
140404 2 parcels 19,543 sq m Ma. Asuncion Jugo, Jose Ramon L. Santos and JVA with ADV Realty on May 753
140405 Rona S. Agustines 27, 1997 2,973
140408 62,448 Leonor Crisostomo, Julieta, Amelia, Elizabeth, Land Development Agreement 5,229
Angela Katrina and Kristina Isabela, all with ADV Realty on December
surnamed Medina 19, 1996
The properties acquired by the government that were previously owned by (1) Emmanuel Tirona, Ma. Aurora T.
Mercado, Rosario T. Medina and Corazon T. Medina; (2) Ma. Asuncion Jugo, Jose Ramon L. Santos and Rona S.
Agustines; and (3) Leonor Crisostomo, Julieta, Amelia, Elizabeth, Angela Katrina and Kristina Isabela, all surnamed
Medina, were all part and parcel of larger tracts of land that were subject of several joint venture agreements. The
remaining portions were developed in accordance with the undertaking of Amvel under said agreements.
In a Memorandum of Agreement68 dated February 2, 2000 entered into by Emmanuel Tirona, Ma. Aurora T. Mercado,
Rosario T. Medina and Corazon T. Medina, and Amvel, the latter paid the former the amount of P320,000,000.00 as
their share of the purchase price paid by the government in acquiring the portion of the property subject of the
Development Joint Venture Agreement (with a Lease Clause) entered into by the same parties.
Private concrete roads were already constructed within the vicinity and modern drainage systems were already installed
therein. More than one (1) million cubic meters of soil were deposited on the site to raise its elevation above the
highest flood level recorded in the area, appropriately compacted with the use of heavy equipment as required in a
business/commercial land use.
If Amvel had an advance information that the C-5 Link Project would traverse a portion of the site way back in 1996,
then it should have only focused its sight and poured its resources on the 79,568 sq. m. of land affected by the said
Project by simply purchasing only to the extent of the same. Because of the intrusion of the C-5 Link Project into its
property, Amvel had to re-evaluate and change the master plan to conform to the significant changes in the shape and
configuration of the site, which was destructively broken into two parts by the C-5 Link Project. That the C-5 Link
Project greatly reduced the viability and marketability of the intended commercial and business park is beyond cavil, as
the construction of the C-5 Link Project would leave Amvel with a property enclosed or bounded by a highway and
rivers without any access, thereby forcing it to incur major additional costs and expenses to build the necessary bridges
and access roads to connect the remaining portions to the Ninoy Aquino Avenue.
Amvel, as a consequence of the Project, likewise incurred delays in introducing the needed developments it undertook
to infuse into the property, subject of the Land Development Agreement it entered into with the Medina family. The
amount of P10,000,000.00 was paid by Amvel to the Medina family as penalty for the aforementioned delay.69
Respondents Velarde allege that they had no participation whatsoever in the preparation of the fabricated CA
Decision70 dated October 29, 1998 in Buenaventura-Santiago, et al. v. Sps. Medina, et al., docketed as CA G.R. No.
CV 54402. Amvel received a copy of said decision on November 25, 1998. After receiving the same, Amvel
immediately furnished a copy to the TRB and the Register of Deeds of Paraaque City, to have the same annotated on
the Transfer Certificates of Title covering the parcels of land subject of the aforesaid case. When Amvel tried to secure
a certified true copy of the said decision from the CA, as required by the Register of Deeds and the TRB, it discovered
that the case was still pending for resolution and no such decision had been promulgated. Amvel sent a letter dated
February 8, 1999 to the Register of Deeds of Paraaque City to explain what happened and request that the annotations
already made on the titles be immediately canceled.71 On the same date, Amvel sent a letter to the TRB informing the
latter of its discovery that the alleged decision was spurious.72 Amvel requested that the CA conduct a full-blown
investigation regarding the matter.

C. COMMENT OF RESPONDENT DUMAUAL73

Respondent Dumaual was Officer-in-Charge of the TRB from November 28, 1997 to September 8, 1998.
In his statement of the facts, he pointed out that the alignment of the C-5 Link Expressway project was revised on April
1998 because, during the discussion with AMVEL on the acquisition of right-of-way ("ROW") for the revised
alignment, it was found that an area between the south slip road and the main C-5 Link would not be acquired for
ROW, which in effect would have produced a pocket with limited use.74
On September 16, 1998, a Memorandum was sent by respondent to the Board suggesting that "the south slip road be
located nearer to the main C-5 Link to maximize use of real estate." As of that date, TRB was still unable to formalize
the transaction with AMVEL and to pay the latter. Respondent Dumaual, despite due diligence, was unable to
determine the veracity of the relevant titles submitted for payment. He wrote to the TRB about the problems with the
titles and recommended that said properties be expropriated. He was relieved as OIC of TRB on September 8, 1998 and
had no more personal knowledge regarding the other allegations of petitioner.75

D. COMMENT OF PRIVATE RESPONDENT VIGILAR

Private respondent Vigilar raises the following grounds for the dismissal of the petition:
1. The petition is not the proper remedy. Petitioner cannot invoke Rule 45 to question the subject resolution and order
of the Ombudsman.
2. The petition fails to raise any question of law.
3. In any case, the Office of the Ombudsman acted correctly, on the basis of evidence presented, in dismissing the
complaint considering that
a. Private respondent Vigilar, being the ex-officio chairman of the TRB during the relevant period, was in no position
to be legally responsible for the TRBs acquisition of AMVELs properties.
b. The transaction between the TRB and AMVEL concerning the right-of-way for the C-5 Link was perfected before
the promulgation of Administrative Order No. 50.
c. The transaction between the TRB and AMVEL concerning the right-of-way for the C-5 Link is valid, regular, and
complies faithfully with Executive Order No. 132, the law governing at the time the contract of sale was perfected. The
said purchase was not grossly and manifestly disadvantageous to the government.
d. The evidence does not support a finding of probable cause for the crime of plunder against private respondent Vigilar.
e. The evidence does not support a finding of probable cause for violation of Section 3 (A), (E), (G) and (J) of Republic
Act 3019 against private respondent Vigilar.
f. The petition, like petitioners complaint before the Ombudsman, is built on malicious half-truths, hearsay and even
fabricated evidence.
Private respondent Vigilar avers that he only exercised administrative supervision over the TRB under the provisions
of Sec. 38, Ch. 7, Book IV of the Revised Administrative Code of 1987; and that he acted in good faith, relying on the
recommendation of the technical officers of the TRB, and cites Arias v. Sandiganbayan76 to support this averment.
He asserts that as early as May 7, 1998, the TRB had already approved the properties to be affected by the C-5 Link
based on the PCAC recommendation of P20,000 per sq. m., and such approval was made in accordance with Executive
Order No. 132, the law then prevailing. Unfortunately, the TRB had limited funds, so, hoping for a lower price, it
started negotiations with the property owners, including AMVEL. The TRB and AMVEL agreed subsequently that the
price should be adjusted by hiring independent appraisers and getting the average of the values to be determined by
these independent appraisers and the values stated in the PCAC resolutions. Later, on January 15, 1999, in keeping
with that agreement, the TRB approved the new, substantially reduced purchase price of P15,350.00 per sq. m. More
than a month later, on February 17, 1999, Administrative Order No. 50 was promulgated setting new standards for the
determination of the fair and reasonable value of private lands that would be expropriated for government
infrastructure projects. This Administrative Order was intended to supplant Executive Order No. 132.
Private respondent alleges that it is a basic fact that a "contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price" (Article 1475 [1], Civil Code). Therefore,
at the time TRB and AMVEL agreed as to the process for determining the purchase price, the contract of sale was
already perfected.
The requisites for a valid price in a contract of sale are: (1) it must be real; (2) it must be in money or its equivalent;
and (3) it must be certain or ascertainable at the time of the perfection of the contract (Articles 1471, 1458, 1468, 1469
and 1473, Civil Code).77 Under Article 1469, price is considered certain if "it be so with reference to another thing
certain, or that the determination thereof be left to the judgment of a specified person or persons." Said article further
provides: "Even before the fixing of the price by the designated third party, a contract of sale is deemed to be perfected
and existing."
Private respondent Vigilar avers that from the time AMVEL agreed sometime in the middle of 1998 that the price
would be the average of the values stated in the independent appraisers reports and the PCAC resolutions, the
government could no longer re-negotiate for a lower price. Thus, even before the TRB approved the price at
P15,350.00 per sq.m. on January 15, 1999, the price had already become certain. It was immaterial that the Deeds of
Sale were signed later. The execution of these Deeds of Sale was a mere formality; it was meant to document a contract
that had been perfected earlier.78

Private respondent claims that applying Administrative Order No. 50 retroactively to the contract between the TRB and
AMVEL violates Article 4 of the Civil Code, which provides that "[l]aws shall have no retroactive effect, unless the
contrary is provided." Administrative Order No. 50 does not state that it is exempt from this rule; it does not provide
for retroactive effect.
Petitioner has not shown that private respondent Vigilar, as Secretary of the DPWH and concurrent TRB chairman,
amassed any ill-gotten wealth to warrant a charge of plunder. Petitioner does not allege that private respondent Vigilar
received any money or derived any benefit, of any kind, from the right-of-way acquisition of the affected lands.
Regarding the allegation that he violated Sec. 3 (a) of R.A. No. 3019, private respondent points out that it is not clear
whether he was accused of being the public official who persuaded, induced, or influenced another public officer to
perform an act in violation of rules and regulations; or the one who was so persuaded, induced, or influenced.
Petitioner likewise failed to prove that the elements of violation of Section 3 (a), (e), (g) and (j) of Rep. Act No. 3019
have been committed by private respondent Vigilar. Thus, petitioners case against him is inadequate.
Private respondent argues that petitioner likewise failed to prove conspiracy. He states that a conspiracy exists when
two or more persons come to an agreement concerning the commission of a felony and decide to commit it.79 He cites
the "well-settled rule" that "conspiracy must be proven as clearly as the commission of the offense itself." 80
Petitioner alleges that respondents Estrada, Ronaldo Zamora, and Vigilar gave their imprimatur to the takeover by the
Coastal Road Corporation of the UMPC, as well as the de-prioritization of the construction of the C-5 Link when, on
November 23, 1999, they were present in a "photo-op" that took place in Malacaang. Private respondent avers that the
"photo-op" was staged by Cavite government officials to show their constituents that the MCTE Project was being fast-
tracked. Respondents merely graced the occasion in response to requests made by these local officials. They could not
be taken to court simply because of this; otherwise, it would be "guilt by photograph," which was contrary to plain and
common sense.81
Private respondent points out petitioners reliance on a certain "executive summary" 82 to support the latters allegation
that the subject transaction was grossly anomalous. This document, according to private respondent, has absolutely no
evidentiary value, as its origin is unknown, and it is unsigned. As regards petitioners submission of a Special Report
dated August 16, 2000 from the Philippine Daily Inquirer as evidence, private respondent points out that newspaper
and magazine articles are "hearsay twice removed and have no evidentiary value whatsoever." Private respondent
Vigilar cites in support of this contention the decision laid down by this Court in People v. Woolcock, et al.83
E. COMMENT OF RESPONDENT OFFICE OF THE OMBUDSMAN
Public respondent raises the following grounds for the denial of the instant petition:
1. The assailed resolution and order of the public respondent are not appealable under Rule 45 of the Rules of Court.
2. Petitioner has not adduced sufficient evidence to show that the transactions involving the purchase of the AMVEL
lands under Executive Order No. 132, Series of 1937 are unlawful or irregular.
3. Whether under Administrative Order No. 50, Series of 1999 or Executive Order No. 132, Series of 1937,
respondents substantially complied with the prescribed procedure in determining a fair and reasonable valuation of the
properties in question while exercising the power of eminent domain.
4. There is no law or particular rule that prohibits the re-alignment of the C-5 Link Project.
5. There is nothing unlawful or irregular in getting a reasonable return on investment; neither is there evidence of
bloating of prices.
6. Petitioners assertion that TCT No. 140397 (formerly TCT No. (S-14729) 876474) comprising fifty-six (56%) percent of the
total area sold by AMVEL to the government was not a clean title is rendered moot and academic by the Court of Appeals
Decision dated 21 April 1999 and the Memorandum of Agreement executed by and between the contending parties.
7. The public respondent cannot act on complaints based on mere speculations and conjectures.
8. Matters that are left to the exercise of wisdom and discretion of the Office of the Ombudsman are not appealable
under Rule 45 of the 1997 Rules of Civil Procedure, and absent any jurisdictional infirmity, the Ombudsmans
determination of probable cause, or the lack of it, deserves great respect and finality.
According to public respondent, the law on sales contemplates the consummation of the sales transaction at the
moment there is a meeting of minds of the parties thereto, upon the thing which is the object of the contract and upon
the price.84 In the case at bar, the meeting of the minds for the purchase of AMVEL properties occurred on May 8,
1998, the date TRB instructed PEA to pay the checks for the properties expropriated through the mode of voluntary
sales. Public respondent alleges:
Significantly, the purchase transactions over the subject properties are negotiated ones. On 9 August 1997, notices of
acquisition were sent by TRB to the affected landowners. In view of the acceptance by AMVEL of the amount offered
by the government during the negotiation process, no expropriation proceeding was initiated in court. Upon appraisal
by the [PCAC], the parties successfully arrived into an agreement as to the value or purchase price of the affected
properties on or before 08 May 1998, as evidenced by a letter sent by respondent Ramon V. Dumaual, Officer-in-
Charge, Toll Regulatory Board, to the Public Estates Authority, instructing the latter to prepare the checks representing
payments for the subject properties. It is therefore clear that the governing law at that given time was still Executive
Order No. 132, Series of 1937, and not Administrative Order No. 50, which took effect on 17 February 1999.85
Public respondent Ombudsman contends that in claiming that the subject properties were overpriced, petitioner failed
to consider that the transactions were entered into by the State in the exercise of the power of eminent domain, which
necessarily involves a derogation of a fundamental or private right of the people. Public respondent asserts that "[the]
appraisal or assessment of the property subject of the taking is not based solely on the market value or zonal valuation
made thereof by the Bureau of Internal Revenue (BIR)."86
Administrative Order No. 50, which petitioner believes should have been followed, provides the following standards
for the assessment of the value of the land:
SECTION 3.Standards for the Assessment of the Value of the Land Subject of Expropriation Proceeding. x x x
(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of certain improvements on the land
and for the value of improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and
(h) Such facts and events so as to enable the affected property owners to have sufficient funds to acquire similarly-
situated lands of approximate areas as those required from them by the government, and thereby rehabilitate
themselves as early as possible.
Executive Order No. 132 issued on December 27, 1937, on the other hand, laid down the following procedure:
(i) The Director of the Bureau of Public Works, City or District Engineer or other officials concerned shall make the
necessary negotiations with [the] owner of the property needed for public use with a view to having it donated, or sold
to the government at not to exceed the assessed valuation prior to the investigation and survey of the project.
(j) If the negotiation fails, the officials concerned shall forthwith and by formal notification submit the matter to an
Appraisal Committee which is hereby created and which shall be composed of the Provincial Treasurer, as Chairman,
and the District Engineer and the District Auditor, as members, of the province where the land is located. If the
property is situated in a chartered city the Appraisal Committee shall be composed of the City Treasurer, as Chairman
and the City Engineer and City Auditor, as members thereof. x x x
Public respondent contends that there was sufficient compliance with the guidelines and prescribed procedure set forth
in both issuances. The referral to PCAC for the determination of the fair market value of the properties was in order.
PCACs appraisal of P20,000.00 per sq. m. was a result of several factors: assessing the location accessibility; selling
prices of comparable properties; the amenities present like water, electricity, transportation and communication within
the vicinity; and the status or condition of the parcels of land. TRBs act of subjecting the properties to another round
of appraisal by independent appraisal companies was but a manifestation that it was protecting the governments
interests by ensuring that it would not be put to a disadvantageous position by the appraisal recommended by PCAC.
The result of the appraisals conducted by the three independent appraisal companies led TRB to come up with an
average appraisal in the amount of P15,355.00 per sq. m. in purchasing AMVELs properties. The amount was below
the original recommendation of PCAC to purchase AMVELs properties at P20,000.00 per sq. m. The determination of
this just compensation price was fair and reasonable.
The Zonal Valuation (6th Revision) that took effect on February 2, 1997 fixed the amount of P4,500.00 per sq. m. as
valuation of the residential regular (RR) lands situated on Dr. A. Santos Avenue, San Dionisio, Paraaque City.
Commercial land along the same place was fixed at P20,000.00 per sq. m. and along Ninoy Aquino International
Airport at P30,000.00 per sq. m. The affected AMVEL properties were classified by Ordinance No. 97-08 as within the
C-3 high-intensity commercial zone.
Public respondent claims that the Appraisal Committees created under E.O. 132 are endowed with special technical
knowledge, skills, expertise and training on the subject of appraisal; that the discretion given to the authorities on this
matter is of such wide latitude that the Court will not interfere therewith, unless it is apparent that it is being used as a
shield to a fraudulent transaction; and that government agencies or bodies dealing with basically technical matters
deserve to be disentangled from undue interference from the courts, and so from the Ombudsman as well (Concerned
Officials of the Metropolitan Waterworks and Sewerage System [MWSS] v. Vasquez, 87 citing Felipe Ysmael, Jr. &
Co., Inc. v. Deputy Executive Secretary88).89
Public respondent further contends:
[The] final re-alignment plan duly approved by the TRB resulted in the substantial reduction of the area traversed by
the C-5 Link Project from the original area of twelve (12) hectares to only 7.9 hectares, and only after averaging the
appraisals of government and private appraisers. This factual circumstance indicated prudence on the part of private
respondent PEA and TRB officials in effecting the power of eminent domain, as they gave due regard to the rights of
the landowners thereof. Again, the reduction in the expropriated private lands upon consideration of the rights of the
landowners may not be criminally actionable absent any showing of irregularity aliunde.
xxx

There are well-observed rules in the field of real estate. Judicial notice may be taken of a cardinal rule, which is
likewise of common knowledge, that the value of real property appreciates over time and at a rate which depends on
the extent of development of the area where the land is situated. Thus, the price sold at any given time does not mean
that the same price would be utilized for a subsequent sale thereof, especially where the property has undergone
development or has been converted into land for commercial purposes. [Even] petitioner concedes that AMVEL
developed the lands which were sold to the government. Thus, it was but reasonable for the price of the lands to have
appreciated. Besides, private respondents Velarde and/or AMVEL being engaged in real estate business, it is only
natural for them to ensure that profits are obtained on top of their investments, or even speculate, for that matter. As
declared by this Honorable Court in the case of Tatad vs. Garcia, Jr., "in all cases where a party enters into a contract
with the government, he does so, not out [of] charity and not to lose money, but to gain pecuniarily." 90
xxx

In relation to petitioners allegation that the bloated cost of right-of-way (ROW) project depleted the proceeds of the
US $68.6 Million loan for the right of way acquisition, the public respondent finds the said allegation vague and
without factual basis. The amount of loan proceeds was not a factor that should be considered in appraising the value of
the subject properties.91 (Emphasis ours)

F. COMMENT OF RESPONDENTS RONALDO B. ZAMORA, MANUEL B. ZAMORA, JR., CESAR E.A.

VIRATA, AND LUIS L. VIRATA
1. Petition should be dismissed as Petitioner is guilty of forum-shopping
Private respondents allege that petitioner admits that he previously filed a complaint 92 with respondent Office of the
Ombudsman against respondents Ronaldo B. Zamora, Manual B. Zamora, Jr., and Luis J. L. Virata (OMB Case No. 0-
00-1758); however, he did not attach a copy of said complaint to his petition filed before this Court. Said complaint
was dismissed by the Ombudsman. Petitioners Motion for Reconsideration in said case was still pending as of the time
of the filing of the Comment. Private respondents conclude that petitioner had filed multiple suits involving the very
same issues against respondents, and he merely rehashed the very same charges and allegations in the second
complaint. This, according to private respondents, was forum shopping, defined by this Court in Gatmaytan v. Court of
Appeals,93 as "the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition
that one or the other court would make a favorable disposition."
Both complaints filed by petitioner are grounded on the same causes and allegations surrounding the purported
illegality of the "transfer" of the Coastal Road Project to the Coastal Road Corporation. Respondents contend further:
[Petitioner] simultaneously and successively availed himself of several judicial remedies by filing two (2) separate
complaints against herein respondents, all substantially founded on the same essential facts and circumstances, and all
raising substantially the same issues. Petitioner obviously did this to increase his chances of obtaining a favorable
decision if not in one case or one court or tribunal, then in another.94
2. Petition does not raise any question of law.
Private respondents submit that a question of law "exists when there is a doubt or controversy as to what the law is on a
certain state of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of
facts." They further submit that "[one] test is whether the appellate court can determine the issue raised without
reviewing or evaluating the evidence, in which case it is a question of law; otherwise it will be a question of fact. The
question must not involve the examination of the probative value of the evidence presented."95
3. Petition, on its face, does not raise any credible factual issue in respect to the dismissal of the complaint against
respondents.
Petitioner failed to controvert the findings of fact and law made by the Ombudsman in his assailed Resolution.
Furthermore, the Ombudsman, in its Resolution dated July 16, 2001 in OMB Case No. 00-00-1758, comprehensively
passed upon the very same allegations of petitioner in OMB Case No. 0-001-00577.
Petitioners allegations in his complaint are contradictory. On the one hand, he claims that the de-prioritization of the
C-5 Link Expressway and the prioritization of the R-1 Expressway Extension would benefit Caylabne Bay Resort. On
the other hand, complainant himself alleges that the de-prioritization of the C-5 Link Expressway will result in a
minimal increase in vehicle volume along the R-1 Expressway. Clearly then, no appreciable benefit would result if
Coastal Road Corporation indeed pushed for the de-prioritization of the C-5 Link Expressway because the alleged
benefit to Caylabne Bay Resort would be negated by the revenue loss due to minimal increase in the vehicular volume
along the entire expressway.96
4. The petition, like petitioners complaint before the Ombudsman, is anchored on hearsay evidence twice removed.
Private respondents allege that in building a case against them regarding the purported de-prioritization of the C-5 Link
Expressway, petitioner quotes extensively from the February 7, 1999 article from the Philippine Star newspaper. They
contend that "[it] is elementary that newspaper and magazine articles are hearsay twice removed and have no
evidentiary value whatsoever.97

G. COMMENT OF PRIVATE RESPONDENT RUBEN A. DE OCAMPO98

Private respondent Ruben de Ocampo (de Ocampo) argues that the dismissal by the public respondent of the complaint
in the proceedings a quo should be sustained in toto because:
1. Petitioner fails to raise distinct and pure questions of law in the instant petition which omission is fatal to his appeal
by certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure.
2. The petitioner has no legal standing to institute the charges with the Office of the Ombudsman for alleged violations of
Sec.2 in relation to Sec. 1 sub-paragraph d(1), (3) and (6) of R.A. 7080, and Sec. 3 sub-paragraph (e) and (g) of R.A. 3019.
3. The facts as alleged in the complaint-affidavit and herein petition for review do not constitute the commission of any
offense on the part of respondent De Ocampo and no evidence whatsoever was presented against respondent De
Ocampo to support the allegations in petitioners complaint-affidavit.
De Ocampo avers that he held the position of Public Utility Regulation Officer II at the Toll Regulatory Board, a
position rated at Salary Grade-15, and one that was neither managerial nor supervisorial in nature. As such, he neither
had recommendatory nor decision-making powers or functions as regards the TRB.
De Ocampo contends that petitioner lacks the required personal knowledge of facts constitutive of the charges in the
latters Complaint before the Office of the Ombudsman. Petitioner failed to allege the means by which he supposedly
came to be acquainted with the material facts stated in his Complaint. According to him:
It is patent and undeniable that Petitioner was never privy to the contracts and communications alleged in his
Complaint and in this Petition for Review. Nowhere in the records does it appear that Petitioner ever participated in
any of the transactions referred to. Petitioners conclusions are merely hearsay and should therefore be disregarded. x x
x 99

De Ocampo cites Section 20 of Rep. Act No. 6770, "The Ombudsman Act of 1989," which states:
SECTION 20.Exceptions. The Office of the Ombudsman may not conduct the necessary investigation of any
administrative act or omission complained of if it believes that:
(1) The complainant has an adequate remedy in another judicial or quasi-judicial body;
(2) The complaint pertains to a matter outside the jurisdiction of the Office of the Ombudsman;
(3) The complaint is trivial, frivolous, vexatious or made in bad faith;
(4) The complainant has no sufficient personal interest in the subject matter of the grievance; or
(5) The complaint was filed after one (1) year from the occurrence of the act or omission complained of.
In this case, de Ocampo alleges that petitioner failed to show any interest in or show proof of personal knowledge of
the transactions as investigated by the Office of the Ombudsman, and has neither alleged nor proven that his rights
have been violated or that he has been put at a disadvantage by the consummation of the assailed transactions through
any act or omission of de Ocampo.100
Furthermore, private respondent contends:
[The] acts complained of by Petitioner occurred more than one (1) year prior to the institution of the original Complaint
before the Office of the Ombudsman on 16 April 2001. The last assailed transaction, more specifically, the act of then
President Estrada in granting his imprimatur and approval to CRCs proposal to deprioritize the construction of the C-5
Link Expressway and to prioritize the R-1 Expressway Extension, was consummated on 23 November 1999 or at least
one (1) year and four (4) months prior to the filing of the Complaint. The above-quoted Sec. 20 par. 5 of R.A. 6770
clearly states that "The Office of the Ombudsman may not conduct the necessary investigation of any administrative
act or omission of if it believes that The complaint was filed after one year from the occurrence of the act or
omission complained of." Considering the length of time which elapsed between the act complained of and the filing of
the Complaint, the Office of the Ombudsman should not have even considered the charges put forth by Petitioner. In
any event, the Complaint was correctly and cogently dismissed by the Ombudsman for utter lack of merit. x x x 101

H. COMMENT OF PRIVATE RESPONDENT FRISCO F. SAN JUAN

Private respondent Frisco F. San Juan (San Juan) raises the following arguments in his Comment:
I. The petition must be dismissed outright as it does not raise pure questions of law or cite any special and important
reasons for its allowance under Rule 45 of the Revised Rules of Court.
II. In any case, respondent Ombudsman did not commit any reversible error or grave abuse of discretion in dismissing
petitioners complaint a quo, in that:
a. Petitioner completely failed to establish the existence of any of the elements of plunder in order for the complaint to
prosper as against respondent San Juan or any of his co-respondents.
b. Nor was petitioner able to establish any violation by respondent San Juan of the Anti-Graft and Corrupt Practices
Act. On the contrary, the acquisition of the AMVEL Properties for the governments tollway project was neither
disadvantageous to the government nor did it give any unwarranted benefits, advantages or preference to any party.
c. Petitioner failed to otherwise specify any act or behavior on the part of Respondent San Juan which constitutes a
breach of the Code of Conduct and Ethical Behavior for public officials and employees.
d. Petitioners other imputations and insinuations of anomalies in respect of the subject expressway construction are
equally baseless and purely speculative accusations of wrongdoing on respondents part.
e. Given the patently baseless and utterly deficient complaint for "plunder", "graft", etc., the additional "fact-finding"
proceedings which petitioner sought to have in the case would have added nothing to petitioners cause against
respondents.102
San Juan, the Chairman of the PEA from July 1998 to February 2001, submits that a petition for review on certiorari,
under the mode of appeal provided by Rule 45 of the 1997 Rules of Civil Procedure, is required to raise "only
questions of law" which shall be distinctly set forth in the petition, the Honorable Court not being a trier of facts. Thus,
in certiorari proceedings under Rule 45, the findings of fact below as well as the conclusions on the credibility of
witnesses are generally not disturbed, the question before the court being limited to questions of law.103
According to San Juan, Rule 45 likewise provides that for the petitions to be filed under it to be allowed, there must be
special and important reasons therefor, as when the court a quo has decided a question of substance not heretofore
determined by the Honorable Court, or has decided it in any way probably not in accord with law or with the applicable
decisions thereof; or when the court a quo has so far departed from the accepted and usual course of proceedings, or so
far sanctioned such departure by a lower court as to call for the exercise of the power of supervision of this Court.
San Juan contends that at the heart of all the purported "serious errors of law" raised by petitioner are essentially
factual questions, which petitioner would have the Honorable Court resolve. Thus, San Juan avers that petitioner asks
that this Honorable Court determine:
if based on the appraisals of the properties involved, the right-of-way acquisitions were "overpriced";
if the purchase of the subject properties "had been consummated on 7 May 1998" ;
if there was "compliance with the procedure for the valuation of the properties involved";
if respondents "amassed wealth" from the subject transaction as to be liable for plunder;
if President Estrada "intervened" in the purchase of the right-of-way and the payment thereof;
if the titles transferred to the Republic were clean;
and so on.
San Juan concludes from the above that all these questions require an appreciation of the evidence and an examination
of the probative value of the proofs presented to determine the truth or falsity of the factual claims of the parties below;
these are thus factual questions.
As regards petitioners allegations of plunder, San Juan notes that "nowhere in the complaint was it alleged that
respondent San Juan or any of his co-respondents received any art of the purchase price for the lands purchased by the
Government from AMVEL from the right of way."104 The initiative of the TRB not only in renegotiating the purchase
price and in causing the re-appraisal of the properties by three (3) appraisers but also in successfully reducing the
purchase price cannot be the product of, and is in fact inconsistent with, respondents supposed "connivance" or
"collusion" with AMVEL.
San Juan further alleges that the negotiation, perfection and execution of the Deed of Sale of the lands in question
between TRB and Amvel were all done without the participation or involvement of PEA, as it was never involved in
the renegotiation efforts. This is consistent with the terms of the TOA and the MOA, where the "responsibility for
acquiring the lands," "the negotiation with its individual owners" and "the preparation of the necessary documents"
including the "cancellation of the titles in the name of the individual lot owners" and the "transfer thereof in the name
of the government" were all vested in TRB without the intervention of PEA.
San Juan alleges that the following steps were taken to ensure the regularity of the questioned transaction:
1. Prior to the full payment of the purchase price to the sellers, TRB ensured that the Deeds of Sale were executed by
authorized signatories, with the required Board resolutions and Special Powers of Attorney and duly notarized.
2. TRB likewise made certain that the real estate taxes covering the remaining quarters of the year and the documentary
stamp taxes due on the transactions equivalent to 1.5% of the purchase price were shouldered and paid for by AMVEL with
the corresponding tax clearance duly issued by the Bureau of Internal Revenue; and that all titles to the properties were clean
and transferred in the name of the Republic of the Philippines before the balance of the purchase price was fully paid.
3. Other than paying the purchase price for the properties, the Government did not pay any expenses for notarization,
taxes and transfer fees, registration and processing of the transfer of titles to the Republic of the Philippines and
clearing the properties of occupants and their relocation.
San Juan concludes that contrary to petitioners claims, AMVEL never received a "windfall from the government for
which it acquired for almost nothing." In truth, apart from receiving a purchase price reduced to the extent of P370
million, AMVEL was required to pay, as it did, expenses normally shouldered by a seller all these on top of what
petitioner himself recognized as developments undertaken by AMVEL on the properties prior to their acquisition by
the government.105
San Juan contends that tax declarations, which petitioner presented as evidence of the alleged overpriced purchase
price of the properties, are neither proof of the true market value of properties nor conclusive evidence of their value,
but only enable the assessor to identify the same for their assessment levels.106
Furthermore, San Juan alleges that the acquisition cost of a property cannot be the sole basis for determining its fair value;
the current value of similar properties and their actual or potential uses must be considered together with other factors.107
Regarding petitioners insistence that Administrative Order (A.O.) No. 50 should have been applied, San Juans
averments are summarized below:
1. A.O. No. 50 would have no application to the contract between TRB and AMVEL which had been priorly perfected
on May 7, 1998.
2. The Zonal valuation (6th Division) which took effect on February 2, 1997, fixing the amount of P4,500/sq m as
valuation of the affected properties, refers to residential regular (RR) lands situated in Dr. A. Santos Avenue, San
Dionisio, Paranaque City. The commercial lands along same place was fixed at P20,000.00/ sq m and along Ninoy
Aquino International Airport at P30,000/00 per sq m. The affected AMVEL properties were classified by Ordinance
No. 97-08 as within the C-3 high intensity commercial zone.
3. A.O. No. 50 does not in any way prohibit the conduct of a negotiated sale which is more expeditious and less expensive
for the Government than engaging in a protracted expropriation proceedings over the properties with the owners thereof. The
purported costs in terms of time, resources and money will not necessarily result in savings for the Government.
4. Even in expropriation proceedings, just compensation for the properties must be determined. And by "just
compensation" is meant "a fair and full equivalent for the loss sustained, which is the measure of the indemnity x x x
the market value of the land taken x x x being the sum of money which a person desirous, but not compelled to buy,
and an owner, willing, but not compelled to sell, would agree on as a price to be given and received for such property."
Thus, to determine just compensation, the parties must add to the market value, the consequential damages. (Tuason v.
LTA, 31 SCRA 413) In the present case, the final valuation agreed upon by the TRB and AMVEL, upon consideration
of the market value as determined by four (4) independent appraisers, constitutes such just compensation that is not
only fair to the seller but to the Government as well.
5. The Honorable Court itself had occasion to observe that protracted expropriation proceedings do not only mean
delay and difficulty for the Government, it also results in the citizen losing faith in the Government and in its readiness
to pay for what it appropriates. x x x
In this case, the properties affected by the right-of-way involve numerous owners. Thus, in pursuing a negotiated sale
instead of opting for expropriation proceedings and arriving at a mutually acceptable acquisition price in consideration
for the transfer of clean and unencumbered titles to the Republic, the Government did not suffer any losses, contrary to
petitioners claims.108
San Juan claims that neither the TRB nor PEA could have aborted the purchase of the AMVEL properties based on the
alleged falsification of the Court of Appeals Decision dated October 29, 1998. These properties were essential for the
Tollway Project a fact which petitioner himself concedes is a reasonable, necessary and urgent public work. Thus, the
TRB, more so PEA, could not have simply re-arranged the project plans and decided not to acquire the AMVEL
properties. In fact, it is absurd to even suggest that PEA could override the decision to build a cheaper and faster
expressway traversing the AMVEL properties. Not only did the AMVEL properties have the most advantageous access
to the NAIA, their development was the easiest to implement, because they had already been cleared of squatters and
other occupants.109
As for San Juans purported "approval" of the take-over of the Tollway Project by the Coastal Road Corporation
(CRC), San Juan states that there is simply no basis for this claim, for the following reasons:
a. At the end of 1999, the Malaysian counterpart could no longer fund the project due to currency regulations. After
CRC offered to take over the interest of Renong-Berhad, PEA in fact required it so show proof of its financial and
technical capability. When respondent San Juans term as PEA chairman ended, CRC had not yet submitted the PEA
requirements. Consequently, respondent San Juan could not have given my approval to de-prioritize the C-5 project
and to prioritize the R-1 Expressway extension as allegedly proposed by CRC. Other than his bare allegations, petitioner has
not presented any proof to show that respondent San Juan and the other respondents have turned-over the project to CRC and
acceded to its proposal to de-prioritize C-5 project and to prioritize the R-1 Expressway Extensions.
b. x x x [The] Ombudsman had already dismissed a related complaint by the same petitioner when he similarly
questioned the transfer and takeover of the Project to CRC. Thus, in a Resolution dated 16 July 2001, the Ombudsman
dismissed the complaint for plunder and violation of RA 3019 filed by the herein petitioner against Joseph Estrada and
other respondents for the transfer and take-over of the MCTE Project to CRC.110
San Juan also claims that in asserting that the acquisition price arrived at for the questioned transaction exceeded the
limit of P1.7 billion for the right-of-way purchase, petitioner ignores that the landowners of the affected properties are
entitled to just compensation for the taking of their properties. San Juan contends that such just compensation is not
based on the budget of the government for the project, but is "the fair and full equivalent for the loss sustained, which
is the measure of the indemnity x x x the market value of the land taken x x x being the sum of money which a person
desirous, but not compelled to buy, and an owner, wiling, but not compelled to sell, would agree on as a price to be
given and received for such property." San Juan further contends that petitioner has not otherwise shown how the entire
MCTE Project could be achieved within the said limit of P1.7 billion.111

V. ISSUES
The following issues were raised in the petition as well as in respondents respective Comments:
A. Whether or not the petition should be dismissed for using the wrong mode of appeal and for raising questions of fact
B. Whether or not public respondent Office of the Ombudsman committed serious errors of law as well as grave abuse
of discretion amounting to excess or lack of jurisdiction in issuing the questioned Resolution and Order

VI. DISCUSSION
A. Whether or not petition should be dismissed for using the wrong mode of appeal and for raising questions of fact
Respondents Office of the Ombudsman, Mariano Z. Velarde, Franklin M. Velarde, Gregorio R. Vigilar, Ronaldo B.
Zamora, Manuel B. Zamora Jr., Cesar E.A. Virata, Luis L. Virata, and Frisco F. San Juan contend that a petition for
review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure before this Honorable Court is not the proper
mode of appeal in questioning any final order or resolution of the Office of the Ombudsman; thus, the instant petition
should be outrightly dismissed motu proprio.
Section 1 of Rule 45 of the 1997 Rules of Civil Procedure provides:
Section 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever
authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise
only questions of law which must be distinctly set forth.
Private respondents Velarde aver that the "courts" referred to in the provision quoted above are "the courts that
compose the integrated judicial system and do not include quasi-judicial bodies or agencies such as the Office of the
Ombudsman."112 They claim that the proper mode of appeal in questioning the final judgment, order, or resolution of
quasi-judicial bodies or agencies is provided under Rule 43 of the 1997 Rules of Civil Procedure. Section 1 of said
Rule states:
Section 1. Scope.. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and
from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its
quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment
Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6557, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law."
To support their contention that Rule 43 applies to this case, private respondents rely on the Courts ruling in Fabian v.
Desierto,113 which provides:
Under the present Rule 45, appeals may be brought through a petition for review on certiorari but only from judgments
and final orders of the courts enumerated in Section 1 thereof. Appeals from judgments and final orders of quasi-
judicial agencies are now required to be brought to the Court of Appeals on a verified petition for review, under the
requirements and conditions in Rule 43 which was precisely formulated and adopted to provide for a uniform rule of
appellate procedure for quasi-judicial agencies.
It is suggested, however, that the provisions of Rule 43 should apply only to "ordinary" quasi-judicial agencies, but not
to the Office of the Ombudsman which is a "high constitutional body." We see no reason for this distinction for, if
hierarchical rank should be a criterion, that proposition thereby disregards the fact that Rule 43 even includes the
Office of the President and the Civil Service Commission, although the latter is even an independent constitutional
commission, unlike the Office of the Ombudsman which is a constitutionally-mandated but statutorily-created body.
Public respondent Ombudsman likewise argues that petitioner has taken the wrong mode of appeal, citing the rule as
laid down by this Court in Tirol v. del Rosario,114 which states:
Section 27 of R.A. No. 6770 provides that orders, directives and decisions of the Ombudsman in administrative cases
are appealable to the Supreme Court via Rule 45 of the Rules of Court. However, in Fabian v. Desierto, we declared
that Section 27 is unconstitutional since it expanded the Supreme Court's jurisdiction, without its advice and consent, in
violation of Article VI, Section 30 of the Constitution. Hence, all appeals from decisions of the Ombudsman in
administrative disciplinary cases may be taken to the Court of Appeals under Rule 43 of the 1997 Rules of Civil Procedure.
True, the law is silent on the remedy of an aggrieved party in case the Ombudsman found sufficient cause to indict him
in criminal or non-administrative cases. We cannot supply such deficiency if none has been provided in the law. We
have held that the right to appeal is a mere statutory privilege and may be exercised only in the manner prescribed by,
and in accordance with, the provisions of law. Hence, there must be a law expressly granting such privilege. The
Ombudsman Act specifically deals with the remedy of an aggrieved party from orders, directives and decisions of the
Ombudsman in administrative disciplinary cases. As we ruled in Fabian, the aggrieved party is given the right to appeal
to the Court of Appeals. Such right of appeal is not granted to parties aggrieved by orders and decisions of the
Ombudsman in criminal cases, like finding probable cause to indict accused persons.
Public respondent avers that no information has been filed with either the Sandiganbayan or the Regional Trial Court;
and not only did petitioner resort to the wrong mode of appeal, he also raised factual issues in his petition, which are
not proper grounds for appeal under the rule. Public respondent further avers that an error in the choice or mode of
appeal is one of the grounds for the dismissal of the appeal under Section 5, Rule 56 of the 1997 Rules of Civil
Procedure.115 This, aggravated by improper grounds raised on appeal, has rendered the instant petition dismissible.
Although we agree with private respondents Velarde that a petition for review on certiorari under Rule 45 is not the
proper remedy for parties seeking relief from final judgments, orders, or resolutions of quasi-judicial bodies or
agencies like the Office of the Ombudsman, as has been repeatedly held by this Court, 116 we find that the remedy of
appeal under Rule 43 posited by private respondents Velarde is not proper either. This Court subsequently held that
under the ruling in Fabian, "all appeals from decisions of the Ombudsman in administrative disciplinary cases may be
taken to the Court of Appeals under Rule 43 of the 1997 Rules of Civil Procedure." 117 Said remedy, therefore, is not
applicable to cases involving criminal or non-administrative charges filed before the Office of the Ombudsman, which
is the situation in the case before us now. As we further stated in Tirol v. Del Rosario:
[An] aggrieved party is not without recourse where the finding of the Ombudsman as to the existence of probable cause
is tainted with grave abuse of discretion, amounting to lack or excess of jurisdiction. An aggrieved party may file a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
In Fabian v. Desierto,118 the case was dismissed and remanded to the Court of Appeals. This case being criminal and
not administrative in nature, however, the conclusion in Fabian is not applicable.
Thus, due to the nature of this case and the allegations involving grave abuse of discretion committed by the Office of
the Ombudsman, it should have been filed under Rule 65, and not Rule 45, of the 1997 Rules of Civil Procedure.
This Court had already provided this remedy in Nava v. Commission on Audit,119 wherein we held:
The remedy availed of by petitioner is erroneous. Instead of a petition for certiorari under Rule 65 of the Rules of
Court, petitioner filed with this Court the present petition for review on certiorari under Rule 45 of the Rules of Court
pursuant to the provisions of Section 27 of Republic Act No. 6770.
Rule 45 of the Rules of Court provides that only judgments or final orders or resolutions of the Court of Appeals,
Sandiganbayan, the Regional Trial Court and other courts, whenever authorized by law, may be the subject of an
appeal by certiorari to this Court. It does not include resolutions of the Ombudsman on preliminary investigations in
criminal cases. Petitioner's reliance on Section 27 of R.A. No. 6770 is misplaced. Section 27 is involved only whenever
an appeal by certiorari under Rule 45 is taken from a decision in an administrative disciplinary action. It cannot be
taken into account where an original action for certiorari under Rule 65 is resorted to as a remedy for judicial review,
such as from an incident in a criminal action. In other words, the right to appeal is not granted to parties aggrieved by
orders and decisions of the Ombudsman in criminal cases, like the case at bar. Such right is granted only from orders or
decisions of the Ombudsman in administrative cases.
An aggrieved party is not left without any recourse. Where the findings of the Ombudsman as to the existence of
probable cause is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the aggrieved party
may file a petition for certiorari under Rule 65 of the Rules of Court. (Emphasis ours.)
Again, in Flores v. Office of Ombudsman,120 we ruled as follows:
x x x The instant petition was captioned as a petition for review by certiorari under Rule 45 of the Rules of Court.
However, the arguments raised refer to alleged grave abuse of discretion committed by the Office of the Ombudsman.
In determining the nature of an action, it is not the caption, but the averments in the petition and the character of the
relief sought, that are controlling. Accordingly, we are compelled to consider the instant petition as one under Rule 65
of the Rules of Court.
This case involves a significant amount of money that was already released by the government to a private institution,
AMVEL, as purchase price for the road right-of-way in a major infrastructure project that was undertaken by the
former and that naturally affected the general public. Therefore, even if this case was erroneously filed as shown above,
and may be dismissed outright under the rules, the Court deems it appropriate to brush aside technicalities of
procedure, as this involves matters of transcendental importance to the public; 121 and to consider the petition as one for
certiorari filed under Rule 65 of the Rules of Court.122
Respondents argue further that the petition should be instantly dismissed for failing to raise purely questions of law. As
may be gleaned from petitioners assignment of errors, this Court is being asked to determine the following, which
involve questions of fact:
1. Whether or not Administrative Order No. 50, s. 1999 is applicable to the sale of the subject properties in this case;
2. Whether or not private respondents complied with the prescribed procedure in determining a fair and reasonable
valuation of the subject properties;
3. Whether or not respondents bloated the purchase price;
4. Whether or not respondents changed the original alignment of the Sucat Interchange, which resulted in an increase in
the size of the AMVEL property sold to the government;
5. Whether or not respondent Mariano Z. Velarde "made a killing" in the sale of the subject properties;
6. Whether or not a portion of the subject properties did not have a clean title at the time they were sold to the government;
7. Whether or not the cost of the right-of-way was bloated, which led to the depletion of the proceeds of the US$68.6
Million loan for the right-of-way acquisition; and
8. Whether or not respondents de-prioritized the R-1 Expressway Extension over the C-5 Link Expressway.
It is settled that this Court is not a trier of facts123 and its jurisdiction is limited to errors of law. As we held in Tirol v.
Commission on Audit, "There is a question of law in any given case when the doubt or difference arises as to what the
law is on a certain state of facts. A question of fact arises when the doubt or difference arises as to the truth or
falsehood of alleged facts."124
Moreover, in Medina v. City Sheriff, Manila,125 we have stated:
For this petition to be granted, it must be shown that the respondent appellate court committed grave abuse of
discretion equivalent to lack of jurisdiction and not mere errors of judgment, for certiorari is not a remedy for errors of
judgment, which are correctible by appeal.

B. Whether or not public respondent Office of the Ombudsman committed serious errors of law as well as grave abuse
of discretion amounting to excess or lack of jurisdiction in issuing the questioned Resolution and Order
In the case now before us, petitioner wants this Court to review the evidence that was already thoroughly studied by
public respondent Ombudsman and passed upon in the questioned Resolution.126 Thus, public respondent found that:
The uncontroverted facts clearly show that Administrative Order No. 50 was issued on February 17, 1999, while the
transaction/ negotiation for the purchase of affected lands was consummated as early as May 1998. As correctly
pointed out by respondents, the governing law is Executive Order No. 132, (E.O. No. 132) issued on December 27,
1937, which laid down the following procedure:
a) The Director of the Bureau of Public Works, City or District Engineer or other officials concerned shall make the
necessary negotiations with owner of the property needed for public use with a view to having it donated, or sold to the
government at not to exceed the assessed valuation prior to the investigation and survey of the project.
b) If the negotiation fails, the officials concerned shall forthwith and by formal notification submit the matter to an
Appraisal Committee which is hereby created and which shall be composed of the Provincial Treasurer, as Chairman,
and the District Engineer and the District Auditor, as members, of the province where the land is located. If the
property is situated in a chartered city the Appraisal Committee shall composed (sic) of the City Treasurer, as
Chairman and the City Engineer and City Auditor, as members.
A perusal of the guidelines as well as the documentary evidence on the transaction reveals that respondents complied
with the prescribed procedure in determining a fair and reasonable valuation of the properties in question. The referral
for the determination of the fair market value of the properties to [the] Paranaque City Appraisal Committee which
recommended the payment of P20,000.00 per sq. m. thereof was in order. The appraisal was a result of several [factors]
ranging from assessing the location accessibility, selling prices of comparable properties, the amenities present like
water, electricity, transportation and communication within the vicinity and the status or condition of the parcels of
land. TRBs act of subjecting the properties to another round of appraisal, this time, by three independent appraisal
companies is a manifestation that TRB had made sure that the Government would not be put in a disadvantageous
position in view of a very high appraisal recommended by PCAC. Clearly, the result of the appraisals conducted by the
three (3) independent appraiser companies led TRB to come up with an average appraisal in the amount of P15,355.00
per square [meter] in purchasing AMVELs property. The amount is far below the original recommendation of PCAC
to purchase AMVELs property at P20,000.00 per sq. m.
Complainant merely relied on Administrative Order No. 50 issued by respondent Estrada and on the fact that the
valuation must be based on zonal valuation fixed by BIR at P4,000.00 per sq. m. a year prior to the sale.
As earlier stated, Administrative Order No. 50 finds no application to the already perfected contract between TRB and
AMVEL. On the Zonal Valuation (6th Revision) that took effect on February 2, 1997 whereby it fixed the amount of
P4,500.00 per sq. m. as valuation of the affected properties however refers to residential regular (RR) lands situated in
Dr. A. Santos Avenue, San Dionisio, Paranaque City. The commercial lands along same place was fixed at P20,000.00
per sq. m. and along Ninoy Aquino International Airport at P30,000.00 per sq. m. The affected AMVEL properties
were classified by Ordinance No. 97-08, pages 32, 33, 34 as within the C-3 high intensity commercial zone. The
properties in question being within commercial zone, PCAC properly recommended valuation of P20,000.00 is
justified (sic). We agree with the PCAC that the appraisal of a property is not limited only to the zonal valuation by the
BIR. As correctly pointed out by respondents Nacianceno, Daval-Santos, Medina-Cue and de Leon, the appraisal of
properties are also based on location, accessibility, selling prices of comparable properties, the amenities present like
water, electricity, transportation and communication, etc. In fact, in Administrative Order No. 50, zonal valuation is
only one of the many factors being considered in the payment of just compensation.
Complainant also anchored his complaint on two (2) Memoranda dated March 30, 1999, from then President Estrada.
We find no circumstance to consider the two (2) Memoranda anomalous or irregular. The approval of the Deeds of
Sale between TRB and AMVEL by respondent Estrada was in pursuance to the provisions of P.D. 1112.
It may not be amiss to state that the transaction between TRB and AMVEL was consummated as early as May 1998
during the administration of former President Fidel V. Ramos. The payment of the purchase price was only delayed as
the TRB conducted a re-appraisal of the property until the new administration of respondent Estrada in June 1998. It
was only in January 1999 that TRB, then having come out with a new price per sq. m. after averaging the appraisal of
the three (3) independent appraisers and of PCAC, approved the purchase price of P1,221,799,806.00 for the
acquisition of AMVELs property totaling 79,598 per sq. m. at P15,350.00. This delay in the determination of the
consideration did not affect the already perfected contract as the consideration thereof was already determined or
determinable. The events negate complainants claim that the transaction was concluded in just 2 working days. The
insinuation that respondent Estrada favored AMVEL in approving the purchase of subject properties . . . has no basis.
If indeed AMVEL persuaded respondent Estrada to act on its favor, then AMVEL could have pushed for the
acquisition of the properties not at P15,350.00 but at P20,000.00 per sq. m. Besides, the valuation of P15,355.00 per sq.
m. paid to AMVEL is much lower than the advertised price of the properties adjacent to AMVEL pegged at least
P19,000.00to P55,000.00 per sq. m. x x x Further, [with] respondents Velarde and/or AMVEL, being engaged in
business, it is natural that they engage in profit scheme (sic) which in this case appears justified.
While there was a complete payment in favor of AMVEL of the purchase price of P1,221,766,640.00 within one (1)
month from the time respondent Estrada approved the transaction, we find the same not anomalous. The several
[Deeds] of Sale executed by the parties, TRB and AMVEL, stipulate that fifty (50%) percent of the purchase price shall
be paid upon execution of the contract. The other fifty (50%) percent upon issuance by the Register of Deeds of the
corresponding Transfer Certificate of Title covering the properties in the name of the Republic of the Philippines.
In the crime of Plunder, the following elements must exist:
2. A public officer acquires wealth by himself or in connivance with another person;
3. The acquisition of the wealth was obtained through the means described in Section 1 (d).
In the instant case, the alleged ill-gotten wealth consisting of the overpriced purchase price of the properties affected by
C-5 Link, was allegedly obtained by respondents by taking undue advantage of their official position, authority,
relationship, connection or influence to unjustly enrich themselves at the expense of the Filipino People.
We find no evidence to support complainants claim of the existence of ill-gotten wealth. The purchase price of
P1,221,799,804 paid to AMVEL could not be considered as ill-gotten wealth as said amount is a consideration of a
legally entered Deeds (sic) of Sale. There is no evidence that public respondents benefited/profited or had taken shares
with private respondents in the transaction.
Complainant contends that public and private [respondents] acts constitute also violation of Section 3(a), (e), (g), (h)
and (j) of Republic Act 3019, as amended.
We find no evidence to support said allegation.
In reference to Section 3(a), there is no sufficient evidence showing that respondents, especially respondent Estrada,
induced or influenced anybody to perform an act in violation of rules and regulation (sic). Neither was there proof of a
violation of any rules or regulations promulgated by competent authority. Administrative Order No. 50 cannot be
considered as the rule violated since it finds no applications (sic) on the questioned transaction.
Insofar as Section 3(e) is concerned, there was no showing that the government suffered undue injury when the
AMVEL properties were purchased at P15,355.00 per sq. m. As earlier pointed out, complainant relied on the valuation
of P4,500.00 per sq. m. fixed by the BIR when the said valuation applies to regular residential land and not to
commercial lots fixed at least P20,000.00 per sq. m. The P15,355.00 per square meter [price] is relatively low
compared to that recommended by PCAC and contained at BIR Zonal Valuation which was P20,000.00 per sq. m.
Referring to Section 3(g), there was no basis to conclude that the contract was grossly disadvantageous to the
government. On the contrary, the government was able to save money when it decided to purchase the questioned
properties at P15,355.00 per sq. m. and not at P20,000.00.
Section 3(j) has no application in the instant case as it pertains to the granting of a license, permit or benefit. Assuming
as it does, it established a record that the affected properties were purchased from persons or [entities] who were
legally authorized to sell or own the same in accordance with the applicable laws, rules and regulations.

We find no evidence that the elements of Section 3(h) exist. The provision requires that there must be an actual
intervention in the transaction for financial or pecuniary interest by public respondent. While there was an intervention
by public respondents the same were in pursuance to the exercise official duties. Neither public respondents have direct
or indirect financial or pecuniary interest with AMVEL.

Considering that the crimes imputed against the respondents were not shown to exist, conspiracy could not likewise be
appreciated. It is a well settled ruled that conspiracy must be proven as clearly as the commission of the offense itself.

WHEREFORE, premises considered, this case is hereby DISMISSED for lack of evidence.
SO RESOLVED.127

Upon Motion for Reconsideration of petitioner, respondent Office of the Ombudsman issued an Order, 128 the pertinent
portions of which are quoted below:

There is no truth to the allegation that the Ombudsman deliberately failed to order the conduct of fact-finding
investigation. To conduct a fact-finding investigation is a question addressed to the sound discretion of the
Ombudsman and not therefore as a matter of right. When the instant complaint was filed complainant attached
voluminous documents which when evaluated was sufficient in form and substance to conduct preliminary
investigation. To that matter, there is no need to conduct fact-finding activities as the compliant already reached the
formal stage of investigation to determine whether or not probable cause exists to charge respondents. In the same
manner, the request for subpoena duces tecum cannot be demanded as a matter of policy for every [case] filed before
this Office. From the very beginning it is the duty of the complainant to present complete and ample evidence to
support his allegation and not to rely on the coercive processes of this Office lest to be accused of being a tool for every
complainants crusade and be labeled as engaged in fishing evidence.
[Complainant] questions the inhibition of the Honorable Ombudsman. We view however the same inhibition a prudent
exercise of impartiality. Prudence dictates that the Honorable Ombudsman himself should inhibit to clear any suspicion
that he would engage in any retaliatory [act] against the complainant in view of the impeachment case filed by the
latter. Far from the accusation that the Honorable Ombudsman prejudged the case as well as the members of the Panel,
we submit that the resolution was arrived [at] after a painstaking appreciation of the available evidence of the
complainant and respondents.
As a consequence of the inhibition of the Honorable Ombudsman, the Overall Deputy Ombudsman, Hon. Margarito P.
Gervacio, Jr. had to perform the duties of the Ombudsman and assumed and took charge of the disposition of the case.
This finds support under Section 8 of R.A. 6770, otherwise known as "Ombudsman Act of 1989". On the contrary,
complainant failed to cite the particular provision of law allegedly violated when the Overall Deputy Ombudsman
approved the dismissal of the case. In the same manner we find the insinuations of the complainant against the Overall
Deputy Ombudsman baseless much more sufficient to affect or disturb whatever findings we have in our resolution.
Complainant alleges that his evidence were totally disregarded. He forgot however, that respondents have evidence too.
Notwithstanding with the voluminous documents complainant submitted, this Office has to weigh the evidentiary value
and credibility of the evidence as well as the arguments of both parties. It so happened that in the appreciation thereof,
we gave credence to the evidence of the other parties. That judgment cannot be put as an issue that would warrant the
reversal of our decision.
In general, the Motion for Reconsideration failed to advance new arguments that would warrant the reversal of the
questioned Resolution. There was no new evidence submitted by the complainant to warrant a second look of our
resolution. The supposed documents he attached in the Motion were already passed upon and examined by this Office.
Lastly, complainant miserably failed to point out specifically the findings or conclusion of the resolution which was
contrary to law.

WHEREFORE, premises considered, the Motion for Reconsideration of the complainant is hereby DENIED for lack of
merit.
SO ORDERED.

We find no cogent reason to weigh all over again the evidence in this case and to reverse the findings of the public
respondent quoted above. This is because, as we held in Tirol v. COA:
[This] Court ordinarily does not interfere with the discretion of the Ombudsman to determine whether there exists
reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof and,
thereafter, to file the corresponding information with the appropriate courts. This rule is based not only upon respect
for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman but upon
practicality as well. Otherwise the functions of the courts will be grievously hampered by immeasurable petitions
assailing the dismissal of investigatory proceedings conducted by the Office of the of the Ombudsman with regard to
complaints filed before it, in as much the same way that the courts would be extremely swamped if they would be
compelled to review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide
to file an information in court or dismiss a complaint by a private complainant.129

More recently, we had occasion to pass upon a similar case, the core issue of which was whether the Ombudsman
committed grave abuse of discretion in dismissing petitioners' complaint against the respondents. In that case, we ruled
in the negative and, accordingly, dismissed the petition.130 Thus, we held:
We cannot overemphasize the fact that the Ombudsman is a constitutional officer duty bound to "investigate on its
own, or on complaint by any person, any act or omission of any public official, employee, office or agency, when such
act or omission appears to be illegal, unjust, improper, or inefficient." The raison d 'etre for its creation and endowment
of broad investigative authority is to insulate it from the long tentacles of officialdom that are able to penetrate judges'
and fiscals' offices, and others involved in the prosecution of erring public officials, and through the execution of
official pressure and influence, quash, delay, or dismiss investigations into malfeasances and misfeasances committed
by public officers.

In Presidential Commission on Good Government (PCGG) v. Desierto, we dwelt on the powers, functions and duties
of the Ombudsman, to wit:
The prosecution of offenses committed by public officers is vested primarily in the Office of the Ombudsman. It bears
emphasis that the Office has been given a wide latitude of investigatory and prosecutory powers under the Constitution
and Republic Act No. 6770 (The Ombudsman Act of 1989). This discretion is all but free from legislative, executive or
judicial intervention to ensure that the Office is insulated from any outside pressure and improper influence.
Indeed, the Ombudsman is empowered to determine whether there exist reasonable grounds to believe that a crime has
been committed and that the accused is probably guilty thereof and, thereafter, to file the corresponding information
with the appropriate courts. The Ombudsman may thus conduct an investigation if the complaint filed is found to be in
the proper form and substance. Conversely, the Ombudsman may also dismiss the complaint should it be found
insufficient in form or substance.

Unless there are good and compelling reasons to do so, the Court will refrain from interfering with the exercise of the
Ombudsman's powers, and respect the initiative and independence inherent in the latter who, beholden to no one, acts
as the champion of the people and the preserver of the integrity of public service.

The pragmatic basis for the general rule was explained in Ocampo v. Ombudsman:
The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the
Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously
hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the
Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely
swamped if they would be compelled to review the exercise of discretion on the part of the fiscals or prosecuting
attorneys each time they decide to file an information in court or dismiss a complaint by private complainants.
From the foregoing, it is crystal clear that we do not interfere with the Ombudsman's exercise of his investigatory and
prosecutory powers vested by the Constitution. In short, we do not review the Ombudsman's exercise of discretion in
prosecuting or dismissing a complaint except when the exercise thereof is tainted with grave abuse of discretion.

In the recent case Lazatin v. Ombudsman,132 this Court held that the question of whether "the Ombudsman correctly
ruled that there was enough evidence to support a finding of probable cause pertains to a mere error of judgment." The
Court further held:
It must be stressed that certiorari is a remedy meant to correct only errors of jurisdiction, not errors of judgment. This
has been emphasized in First Corporation v. Former Sixth Division of the Court of Appeals, to wit:
It is a fundamental aphorism in law that a review of facts and evidence is not the province of the extraordinary remedy
of certiorari, which is extra ordinem beyond the ambit of appeal. In certiorari proceedings, judicial review does not
go as far as to examine and assess the evidence of the parties and to weigh the probative value thereof. It does not
include an inquiry as to the correctness of the evaluation of evidence. Any error committed in the evaluation of
evidence is merely an error of judgment that cannot be remedied by certiorari. An error of judgment is one which the
court may commit in the exercise of its jurisdiction. An error of jurisdiction is one where the act complained of was
issued by the court without or in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to lack
or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari. Certiorari will not
be issued to cure errors of the trial court in its appreciation of the evidence of the parties, or its conclusions anchored on
the said findings and its conclusions of law. It is not for this Court to re-examine conflicting evidence, re-evaluate the
credibility of the witnesses or substitute the findings of fact of the court a quo.133

Even if the issues involved here are factual, petitioner invokes the power of the Court to reverse the decision of the
Ombudsman by alleging that the latter acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
However, as in Morong Water District v. Office of the Deputy Ombudsman,134 we find that:
[The] Order and the Resolution of the Ombudsman are based on substantial evidence. In dismissing the complaint of
petitioner, we cannot say that the Ombudsman committed grave abuse of discretion so as to call for the exercise of our
supervisory powers over him. This court is not a trier of facts. As long as there is substantial evidence in support of the
Ombudsman's decision, that decision will not be overturned.

As regards petitioners insistence that the Office of the Ombudsman should have conducted a fact-finding investigation
and issued subpoena duces tecum as requested, we find that the Ombudsmans action not to issue the same was not
made in grave abuse of discretion.135 We have previously ruled regarding this matter in this wise:
If the Ombudsman may dismiss a complaint outright for lack of merit, it necessarily follows that it is also within his
discretion to determine whether the evidence before him is sufficient to establish probable cause. Thus, petitioners may
not compel the Ombudsman to order the production of certain documents, if in the Ombudsman's judgment such
documents are not necessary in order to establish the guilt, or innocence, of the accused.

It has been the consistent policy of the Supreme Court not to interfere with the Ombudsman's exercise of his
investigatory powers. xxx

[It] is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in prosecuting or
dismissing a complaint filed before it. Such initiative and independence are inherent in the Ombudsman who, beholden
to no one, acts as the champion of the people and preserver of the integrity of the public service.

The rationale underlying the Court's policy of non-interference was laid down in Ocampo v.Ombudsman and reiterated
in the more recent case of Venus v. Desierto, to wit:
The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the
Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously
hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the
Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely
swamped if they would be compelled to review the exercise of discretion on the part of the fiscals or prosecuting
attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant. 136

Grave abuse of discretion has been defined as "such capricious and whimsical exercise of judgment tantamount to lack
of jurisdiction." The abuse of discretion must be "so patent and gross as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or hostility."137 We do not find this situation to be
present in the instant case so as to merit a reversal of the questioned Resolution and Order issued by respondent Office
of the Ombudsman.

WHEREFORE, premises considered, the petition is hereby DISMISSED. The assailed Resolution and Order of the
Ombudsman in OMB-0-01-0577 are AFFIRMED.
SO ORDERED.
 G.R. No. 103338 January 4, 1994
FEDERICO SERRA, petitioner, vs. THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL
BANKING CORPORATION, respondents.
Andres R. Amante, Jr. for petitioner.
R.C. Domingo, Jr. & Associates for private respondent.

NOCON, J.:
A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral
promise to buy and sell a determinate thing for a price certain is binding upon the promisor if the promise is supported
by a consideration distinct from the price. (Article 1479, New Civil Code) The first is the mutual promise and each has
the right to demand from the other the fulfillment of the obligation. While the second is merely an offer of one to
another, which if accepted, would create an obligation to the offeror to make good his promise, provided the
acceptance is supported by a consideration distinct from the price.
Disputed in the present case is the efficacy of a "Contract of Lease with Option to Buy", entered into between
petitioner Federico Serra and private respondent Rizal Commercial Banking Corporation. (RCBC).
Petitioner is the owner of a 374 square meter parcel of land located at Quezon St., Masbate, Masbate. Sometime in
1975, respondent bank, in its desire to put up a branch in Masbate, Masbate, negotiated with petitioner for the purchase
of the then unregistered property. On May 20, 1975, a contract of LEASE WITH OPTION TO BUY was instead
forged by the parties, the pertinent portion of which reads:
1. The LESSOR leases unto the LESSEE, an the LESSEE hereby accepts in lease, the parcel of land described in the
first WHEREAS clause, to have and to hold the same for a period of twenty-five (25) years commencing from June 1,
1975 to June 1, 2000. The LESSEE, however, shall have the option to purchase said parcel of land within a period of
ten (10) years from the date of the signing of this Contract at a price not greater than TWO HUNDRED TEN PESOS
(P210.00) per square meter. For this purpose, the LESSOR undertakes, within such ten-year period, to register said
parcel of land under the TORRENS SYSTEM and all expenses appurtenant thereto shall be for his sole account.
If, for any reason, said parcel of land is not registered under the TORRENS SYSTEM within the aforementioned ten-
year period, the LESSEE shall have the right, upon termination of the lease to be paid by the LESSOR the market value
of the building and improvements constructed on said parcel of land.
The LESSEE is hereby appointed attorney-in-fact for the LESSOR to register said parcel of land under the TORRENS
SYSTEM in case the LESSOR, for any reason, fails to comply with his obligation to effect said registration within
reasonable time after the signing of this Agreement, and all expenses appurtenant to such registration shall be charged
by the LESSEE against the rentals due to the LESSOR.
2. During the period of the lease, the LESSEE covenants to pay the LESSOR, at the latter's residence, a monthly rental
of SEVEN HUNDRED PESOS (P700.00), Philippine Currency, payable in advance on or before the fifth (5th) day of
every calendar month, provided that the rentals for the first four (4) months shall be paid by the LESSEE in advance
upon the signing of this Contract.
3. The LESSEE is hereby authorized to construct as its sole expense a building and such other improvements on said
parcel of land, which it may need in pursuance of its business and/or operations; provided, that if for any reason the
LESSEE shall fail to exercise its option mentioned in paragraph (1) above in case the parcel of land is registered under
the TORRENS SYSTEM within the ten-year period mentioned therein, said building and/or improvements, shall
become the property of the LESSOR after the expiration of the 25-year lease period without the right of reimbursement on
the part of the LESSEE. The authority herein granted does not, however, extend to the making or allowing any unlawful,
improper or offensive used of the leased premises, or any use thereof, other than banking and office purposes. The
maintenance and upkeep of such building, structure and improvements shall likewise be for the sole account of the LESSEE.
The foregoing agreement was subscribed before Notary Public Romeo F. Natividad.
Pursuant to said contract, a building and other improvements were constructed on the land which housed the branch
office of RCBC in Masbate, Masbate. Within three years from the signing of the contract, petitioner complied with his
part of the agreement by having the property registered and placed under the TORRENS SYSTEM, for which Original
Certificate of Title No. 0-232 was issued by the Register of Deeds of the Province of Masbate.
Petitioner alleges that as soon as he had the property registered, he kept on pursuing the manager of the branch to effect
the sale of the lot as per their agreement. It was not until September 4, 1984, however, when the respondent bank
decided to exercise its option and informed petitioner, through a letter, 2 of its intention to buy the property at the
agreed price of not greater than P210.00 per square meter or a total of P78,430.00. But much to the surprise of the
respondent, petitioner replied that he is no longer selling the property. 3
Hence, on March 14, 1985, a complaint for specific performance and damages were filed by respondent against
petitioner. In the complaint, respondent alleged that during the negotiations it made clear to petitioner that it intends to
stay permanently on property once its branch office is opened unless the exigencies of the business requires otherwise.
Aside from its prayer for specific performance, it likewise asked for an award of P50,000.00 for attorney's fees
P100,000.00 as exemplary damages and the cost of the suit. 4
A special and affirmative defenses, petitioner contended:
1. That the contract having been prepared and drawn by RCBC, it took undue advantage on him when it set in lopsided terms.
2. That the option was not supported by any consideration distinct from the price and hence not binding upon him.
3. That as a condition for the validity and/or efficacy of the option, it should have been exercised within the reasonable time
after the registration of the land under the Torrens System; that its delayed action on the option have forfeited whatever its
claim to the same.
4. That extraordinary inflation supervened resulting in the unusual decrease in the purchasing power of the currency
that could not reasonably be forseen or was manifestly beyond the contemplation of the parties at the time of the
establishment of the obligation, thus, rendering the terms of the contract unenforceable, inequitable and to the undue
enrichment of RCBC. 5
and as counterclaim petitioner alleged that:
1. The rental of P700.00 has become unrealistic and unreasonable, that justice and equity will require its adjustment.
2. By the institution of the complaint he suffered moral damages which may be assessed at P100,000.00 and award of
attorney's fee of P25,000.00 and exemplary damages at P100,000.00. 6
Initially, after trial on the merits, the court dismissed the complaint. Although it found the contract to be valid, the court
nonetheless ruled that the option to buy in unenforceable because it lacked a consideration distinct from the price and
RCBC did not exercise its option within reasonable time. The prayer for readjustment of rental was denied, as well as
that for moral and exemplary damages. 7
Nevertheless, upon motion for reconsideration of respondent, the court in the order of January 9, 1989, reversed itself,
the dispositive portion reads:
WHEREFORE, the Court reconsiders its decision dated June 6, 1988, and hereby renders judgment as follows:
1. The defendant is hereby ordered to execute and deliver the proper deed of sale in favor of plaintiff selling,
transferring and conveying the property covered by and described in the Original Certificate of Title 0-232 of the
Registry of Deeds of Masbate for the sum of Seventy Eight Thousand Five Hundred Forty Pesos (P78,540,00),
Philippine Currency;
2. Defendant is ordered to pay plaintiff the sum of Five Thousand (P5,000.00) Pesos as attorney's fees;
3. The counter claim of defendant is hereby dismissed; and
4. Defendants shall pay the costs of suit. 8
In a decision promulgated on September 19, 1991, 9 the Court of Appeals affirmed the findings of the trial court that:
1. The contract is valid and that the parties perfectly understood the contents thereof;
2. The option is supported by a distinct and separate consideration as embodied in the agreement;
3. There is no basis in granting an adjustment in rental.
Assailing the judgment of the appellate court, petitioner would like us to consider mainly the following:
1. The disputed contract is a contract of adhesion.
2. There was no consideration to support the option, distinct from the price, hence the option cannot be exercised.
3. Respondent court gravely abused its discretion in not granting currency adjustment on the already eroded value of
the stipulated rentals for twenty-five years.
The petition is devoid of merit.
There is no dispute that the contract is valid and existing between the parties, as found by both the trial court and the
appellate court. Neither do we find the terms of the contract unfairly lopsided to have it ignored.
A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the
other party merely affixes his signature or his "adhesion" thereto. These types of contracts are as binding as ordinary
contracts. Because in reality, the party who adheres to the contract is free to reject it entirely. Although, this Court will
not hesitate to rule out blind adherence to terms where facts and circumstances will show that it is basically one-sided.
We do not find the situation in the present case to be inequitable. Petitioner is a highly educated man, who, at the time
of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a CPA, holding a
respectable position with the Metropolitan Manila Commission. It is evident that a man of his stature should have been
more cautious in transactions he enters into, particularly where it concerns valuable properties. He is amply equipped to
drive a hard bargain if he would be so minded to.
Petitioner contends that the doctrines laid down in the cases of Atkins Kroll v. Cua Hian Tek, 11 Sanchez v. Rigos, 12 and
Vda. de Quirino v. Palarca 13 were misapplied in the present case, because 1) the option given to the respondent bank
was not supported by a consideration distinct from the price; and 2) that the stipulated price of "not greater than
P210.00 per square meter" is not certain or definite.
Article 1324 of the Civil Code provides that when an offeror has allowed the offeree a certain period to accept, the
offer maybe withdrawn at anytime before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised. On the other hand, Article 1479 of the Code provides that
an accepted unilateral promise to buy and sell a determinate thing for a price certain is binding upon the promisor if
the promise is supported by a consideration distinct from the price.
In a unilateral promise to sell, where the debtor fails to withdraw the promise before the acceptance by the creditor, the
transaction becomes a bilateral contract to sell and to buy, because upon acceptance by the creditor of the offer to sell
by the debtor, there is already a meeting of the minds of the parties as to the thing which is determinate and the price
which is certain. 14 In which case, the parties may then reciprocally demand performance.
Jurisprudence has taught us that an optional contract is a privilege existing only in one party the buyer. For a
separate consideration paid, he is given the right to decide to purchase or not, a certain merchandise or property, at any
time within the agreed period, at a fixed price. This being his prerogative, he may not be compelled to exercise the
option to buy before the time expires. 15
On the other hand, what may be regarded as a consideration separate from the price is discussed in the case of Vda. de
Quirino v. Palarca 16 wherein the facts are almost on all fours with the case at bar. The said case also involved a lease
contract with option to buy where we had occasion to say that "the consideration for the lessor's obligation to sell the
leased premises to the lessee, should he choose to exercise his option to purchase the same, is the obligation of the
lessee to sell to the lessor the building and/or improvements constructed and/or made by the former, if he fails to
exercise his option to buy leased premises." 17

In the present case, the consideration is even more onerous on the part of the lessee since it entails transferring of the
building and/or improvements on the property to petitioner, should respondent bank fail to exercise its option within
the period stipulated. 18

The bugging question then is whether the price "not greater than TWO HUNDRED PESOS" is certain or definite. A price is
considered certain if it is so with reference to another thing certain or when the determination thereof is left to the judgment
of a specified person or persons. 19 And generally, gross inadequacy of price does not affect a contract of sale. 20

Contracts are to be construed according to the sense and meaning of the terms which the parties themselves have used.
In the present dispute, there is evidence to show that the intention of the parties is to peg the price at P210 per square
meter. This was confirmed by petitioner himself in his testimony, as follows:
Q. Will you please tell this Court what was the offer?
A. It was an offer to buy the property that I have in Quezon City (sic).
Q. And did they give you a specific amount?
xxx xxx xxx
A. Well, there was an offer to buy the property at P210 per square meters (sic).
Q. And that was in what year?
A . 1975, sir.
Q. And did you accept the offer?
A. Yes, sir. 21

Moreover, by his subsequent acts of having the land titled under the Torrens System, and in pursuing the bank manager
to effect the sale immediately, means that he understood perfectly the terms of the contract. He even had the same
property mortgaged to the respondent bank sometime in 1979, without the slightest hint of wanting to abandon his offer
to sell the property at the agreed price of P210 per square meter. 22

Finally, we agree with the courts a quo that there is no basis, legal or factual, in adjusting the amount of the rent. The
contract is the law between the parties and if there is indeed reason to adjust the rent, the parties could by themselves
negotiate for the amendment of the contract. Neither could we consider the decline of the purchasing power of the
Philippine peso from 1983 to the time of the commencement of the present case in 1985, to be so great as to result in an
extraordinary inflation. Extraordinary inflation exists when there in an unimaginable increase or decrease of the
purchasing power of the Philippine currency, or fluctuation in the value of pesos manifestly beyond the contemplation
of the parties at the time of the establishment of the obligation. 23

Premises considered, we find that the contract of "LEASE WITH OPTION TO BUY" between petitioner and
respondent bank is valid, effective and enforceable, the price being certain and that there was consideration distinct
from the price to support the option given to the lessee.

WHEREFORE, this petition is hereby DISMISSED, and the decision of the appellate court is hereby AFFIRMED.
SO ORDERED.
 Serra vs. Court of Appeals, and RCBC
229 SCRA 60
January 1994

FACTS:

Petitioner Federico Serra, who is the owner of a 374 square meter parcel of land located at Masbate, Masbate, and
private respondent Rizal Commercial Banking Corporation (RCBC) entered into a "Contract of Lease with Option to
Buy" in May 25, 1975 which provided that Serra will lease the subject land to RCBC for a period of 25 years from
June 1, 1975 to June 1, 2000, that the RCBC has the option to purchase the same at P210.00 per square meter within a
period of 10 years from May 25, 1975, the date of the signing of the Contract, and that Serra will have to register said
land under the Torrens System to the Register of Deeds of Province of Masbate within the same 10-year option period.
Pursuant to said contract, RCBC constructed improvements on the subject land to house its branch office, while the
petitioner had the property, within 3 years from 1975, duly registered with OCT No. 0-232 under the Torrens System.
Later, petitioner alleged that as soon as he had the property registered, he kept on pursuing the branch manager for the
sale of the lot as per their agreement, but it was not until September 4, 1984, that RCBC decided to exercise the option.

RCBC informed petitioner, through a letter, of its intention to buy the property at the agreed price of not greater than
P210.00 per square meter or a total of P78,430.00, but petitioner replied that he is no longer selling the property. RCBC
then filed an action for specific performance and damages against Serra in March 1985 alleging that during the
negotiations it made clear to petitioner that it intends to stay permanently on property once its branch office is opened
unless the exigencies of the business requires otherwise.

Although finding that the contract was valid, the lower court ruled that the option to buy is unenforceable because it
lacked a consideration distinct from the price and RCBC did not exercise its option within the reasonable time. Upon
motion for reconsideration, however, the lower court reversed itself on the 2nd issue, declared the contract as valid, and
ordered Serra to deliver the proper deed of sale to RCBC. The Court of Appeals likewise affirmed said decision.

ISSUE:
Was there a valid contract of lease with option to buy between the parties? Was there a consideration distinct from the
price to support the option given to RCBC?

COURT RULING:
The Supreme Court affirmed the appellate courts decision. A contract of adhesion is one wherein a party, usually a
corporation, prepares the stipulations in the contract, while the other party merely affixes his signature or his
"adhesion" thereto. These types of contracts are as binding as ordinary contracts because in reality, the party who
adheres to the contract is free to reject it entirely.

In the case at bar, the Supreme Court did not find the situation to be inequitable because petitioner is a highly educated
man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a
CPA, holding a respectable position with the Metropolitan Manila Commission. It is evident that a man of his stature
should have been more cautious in transactions he enters into, particularly where it concerns valuable properties. Also,
in the present case, the consideration is even more onerous on the part of the lessee since it entails transferring of the
building and/or improvements on the property to petitioner, should respondent bank fail to exercise its option within
the period stipulated.
 G.R. No. 126376 November 20, 2003
SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA
JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners, vs.
COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN
and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO
JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES
TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES
GAVINO JOAQUIN and LEA ASIS, respondents.

DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Decision2 dated 26 June 1996 of the Court of Appeals in CA-
G.R. CV No. 41996. The Court of Appeals affirmed the Decision3 dated 18 February 1993 rendered by Branch 65 of
the Regional Trial Court of Makati ("trial court") in Civil Case No. 89-5174. The trial court dismissed the case after it
found that the parties executed the Deeds of Sale for valid consideration and that the plaintiffs did not have a cause of
action against the defendants.

The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and
Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN.
The married Joaquin children are joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents
Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of
title issued in their names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395 executed on 11 July 1978, in favor of
defendant Felicitas Joaquin, for a consideration of P6,000.00 (Exh. "C"), pursuant to which TCT No. [36113/T-172] was issued in
her name (Exh. "C-1");
2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394 executed on 7 June 1979, in favor of
defendant Clarita Joaquin, for a consideration of P1[2],000.00 (Exh. "D"), pursuant to which TCT No. S-109772 was issued in her
name (Exh. "D-1");
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988, in favor of
defendant spouses Fidel Joaquin and Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh. "E"), pursuant to which TCT
No. 155329 was issued to them (Exh. "E-1");

4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988, in favor of
defendant spouses Artemio Joaquin and Socorro Angeles, for a consideration of P[54,3]00.00 (Exh. "F"), pursuant to which TCT
No. 155330 was issued to them (Exh. "F-1"); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd-256395 executed on 9 September 1988, in
favor of Tomas Joaquin, for a consideration of P20,000.00 (Exh. "G"), pursuant to which TCT No. 157203 was issued in her name
(Exh. "G-1").
6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395 executed on 7 October 1988, in favor of
Gavino Joaquin, for a consideration of P25,000.00 (Exh. "K"), pursuant to which TCT No. 157779 was issued in his name (Exh.
"K-1").]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title, plaintiffs, in their complaint, aver:
- XX-

The deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as they are, are NULL AND VOID
AB INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are
more than three-fold times more valuable than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly
deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
- XXI -

Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172, S-109772, 155329, 155330,
157203 [and 157779] issued by the Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as the requisite
standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient
considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the consequences
of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal basis.

The Ruling of the Trial Court

Before the trial, the trial court ordered the dismissal of the case against defendant spouses Gavino Joaquin and Lea
Asis.5 Instead of filing an Answer with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to Dismiss.6 In
granting the dismissal to Gavino Joaquin and Lea Asis, the trial court noted that "compulsory heirs have the right to a
legitime but such right is contingent since said right commences only from the moment of death of the decedent
pursuant to Article 777 of the Civil Code of the Philippines."7
After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial court stated:
In the first place, the testimony of the defendants, particularly that of the xxx father will show that the Deeds of Sale
were all executed for valuable consideration. This assertion must prevail over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action against defendants since there can be
no legitime to speak of prior to the death of their parents. The court finds this contention tenable. In determining the
legitime, the value of the property left at the death of the testator shall be considered (Art. 908 of the New Civil Code).
Hence, the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore
cannot claim an impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the counterclaim is likewise
DISMISSED. No costs.
SO ORDERED.8

The Ruling of the Court of Appeals

The Court of Appeals affirmed the decision of the trial court.1wphi1 The appellate court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is, whether xxx they
have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and sisters, are compulsory
heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito, who are their parents. However, their right to the
properties of their defendant parents, as compulsory heirs, is merely inchoate and vests only upon the latters death.
While still alive, defendant parents are free to dispose of their properties, provided that such dispositions are not made
in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they claim to be creditors of
their defendant parents. Consequently, they cannot be considered as real parties in interest to assail the validity of said
deeds either for gross inadequacy or lack of consideration or for failure to express the true intent of the parties. In point
is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus:
The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily bound thereby; hence,
they have no legal capacity to challenge their validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the dispositions made by their
defendant parents in favor of their defendant brothers and sisters. But, as correctly held by the court a quo, "the
legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim
an impairment of their legitime while their parents live."
With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants is inconsequential.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffs-appellants.
SO ORDERED.9
Hence, the instant petition.

Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN QUESTION HAD NO VALID
CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT THERE WAS A
CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO NOT EXPRESS THE TRUE
INTENT OF THE PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS PART AND PARCEL OF A
CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO
JOAQUIN AND FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE A GOOD, SUFFICIENT AND
VALID CAUSE OF ACTION AGAINST THE PRIVATE RESPONDENTS. 10

The Ruling of the Court

We find the petition without merit.
We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before discussing the issues
on the purported lack of consideration and gross inadequacy of the prices of the Deeds of Sale.
Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale
Petitioners Complaint betrays their motive for filing this case. In their Complaint, petitioners asserted that the
"purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of
the compulsory heirs (plaintiffs herein) of their legitime." Petitioners strategy was to have the Deeds of Sale declared
void so that ownership of the lots would eventually revert to their respondent parents. If their parents die still owning
the lots, petitioners and their respondent siblings will then co-own their parents estate by hereditary succession.11
It is evident from the records that petitioners are interested in the properties subject of the Deeds of Sale, but they have
failed to show any legal right to the properties. The trial and appellate courts should have dismissed the action for this
reason alone. An action must be prosecuted in the name of the real party-in-interest.12
[T]he question as to "real party-in-interest" is whether he is "the party who would be benefitted or injured by the
judgment, or the party entitled to the avails of the suit."
xxx

In actions for the annulment of contracts, such as this action, the real parties are those who are parties to the agreement
or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the contracting
parties and can show the detriment which would positively result to them from the contract even though they did not
intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with "a present substantial interest, as distinguished from a mere expectancy or future, contingent,
subordinate, or consequential interest. The phrase present substantial interest more concretely is meant such
interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover if the
evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in a payment to or
recovery by him."13
Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the appellate court stated,
petitioners right to their parents properties is merely inchoate and vests only upon their parents death. While still
living, the parents of petitioners are free to dispose of their properties. In their overzealousness to safeguard their future
legitime, petitioners forget that theoretically, the sale of the lots to their siblings does not affect the value of their parents
estate. While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken from the estate.
Whether the Deeds of Sale are void for lack of consideration
Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their
respondent father. Thus, petitioners ask the court to declare the Deeds of Sale void.
A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes
a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties
as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of
payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If
there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated,
then the contract is void.14 Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the
sale is void.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do
with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the
consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation
of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.15
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation,
petitioners presented Emma Joaquin Valdozs testimony stating that their father, respondent Leonardo Joaquin, told her
that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price.16 The trial court
did not find the allegation of absolute simulation of price credible. Petitioners failure to prove absolute simulation of price is
magnified by their lack of knowledge of their respondent siblings financial capacity to buy the questioned lots.17 On the
other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold. Not only did
respondents minds meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the filing of
the complaint, respondent siblings have also fully paid the price to their respondent father.18
Whether the Deeds of Sale are void for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there
has been fraud, mistake or undue influence. (Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent,
or that the parties really intended a donation or some other act or contract. (Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would
invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of
the subject matter of sale. All the respondents believed that they received the commutative value of what they gave. As
we stated in Vales v. Villa:19
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.
Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater weight when they
coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there
has been a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to
constitute serious abuse of discretion.20 In the instant case, the trial court found that the lots were sold for a valid
consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of
Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon us.
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.
SO ORDERED.
 Spouses Joaquin v. CA
GR No. 126376 November 20, 2003

Nature: Petition for review on certiorari

Doctrine: The legitime of a compulsory heir is merely inchoate and vests only upon the death of the parents. While still
alive, the parents are free to dispose of their properties, provided such dispositions are not made in fraud of creditors.

Facts:
Spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and
Natividad, as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe and Gavino.

Sought to be declared null and void ab initio are certain deeds of sale of real property execut ed by defendant parents
in favour of their co-defendant children.

The plaintiff children are claiming that no actual valid consideration for the deeds of sale were made and that the
purported sale was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs of
their legitime.

Issue: Were the deeds of sale by the parents to their co-defendant children valid?

Ruling: Yes.

The right of children to the properties of their parents, as compulsory heirs, is merely inchoate and vests only upon
the parents death. While still alive, parents are free to dispose of their properties, provided such dispositions are not
made in fraud of creditors.

Compulsory heirs have the right to a legitime but such right is contingent since said right commences only from the
moment of death of the decedent.

There can be no legitime to speak of prior to the death of their parents. In determining the legitime, the value of the
property left at the death of the testator shall be considered.

The legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs cannot claim an
impairment of their legitime while their parents live.

The testimony of the defendants particularly that of the father will show that the Deeds of Sale were all executed for
valuable consideration.

Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated.
 G.R. No. 132864 October 24, 2005
PHILIPPINE FREE PRESS, INC., Petitioner, vs.
COURT OF APPEALS (12th Division) and LIWAYWAY PUBLISHING, INC., Respondents.

DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine Free Press, Inc. seeks
the reversal of the Decision1 dated February 25, 1998 of the Court of Appeals (CA) in CA GR CV No. 52660,
affirming, with modification, an earlier decision of the Regional Trial Court at Makati, Branch 146, in an action for
annulment of deeds of sale thereat instituted by petitioner against the Presidential Commission for Good
Government (PCGG) and the herein private respondent, Liwayway Publishing, Inc.
As found by the appellate court in the decision under review, the facts are:
[Petitioner] . . . is a domestic corporation engaged in the publication of Philippine Free Press Magazine, one of the . . . widely
circulated political magazines in the Philippines. Due to its wide circulation, the publication of the Free Press magazine enabled
[petitioner] to attain considerable prestige prior to the declaration of Martial Law as well as to achieve a high profit margin. . . .
Sometime in . . . 1963, [petitioner] purchased a parcel of land situated at No. 2249, Pasong Tamo Street, Makati which
had an area of 5,000 square meters as evidenced by . . . (TCT) No. 109767 issued by the Register of Deeds of Makati
(Exh. Z). Upon taking possession of the subject land, [petitioner] constructed an office building thereon to house its various
machineries, equipment, office furniture and fixture. [Petitioner] thereafter made the subject building its main office . . . .
During the 1965 presidential elections, [petitioner] supported the late President Diosdado Macapagal against then
Senate President Ferdinand Marcos. Upon the election of the late President Ferdinand Marcos in 1965 and prior to the
imposition of Martial law on September 21, 1972, [petitioner] printed numerous articles highly critical of the Marcos
administration, exposing the corruption and abuses of the regime. The [petitioner] likewise ran a series of articles
exposing the plan of the Marcoses to impose a dictatorship in the guise of Martial Law . . . .
In the evening of September 20, 1972, soldiers surrounded the Free Press Building, forced out its employees at
gunpoint and padlocked the said establishment. The soldier in charge of the military contingent then informed Teodoro
Locsin, Jr., the son of Teodoro Locsin, Sr., the President of [petitioner], that Martial Law had been declared and that
they were instructed by the late President Marcos to take over the building and to close the printing press. xxx.
On September 21, 1972 . . ., Teodoro Locsin, Sr. was arrested [and] . . . . was brought to Camp Crame and was
subsequently transferred to the maximum security bloc at Fort Bonifacio.
Sometime in December, 1972, Locsin, Sr. was informed . . . that no charges were to be filed against him and that he was to
be provisionally released subject to the following conditions, to wit: (1) he remained (sic) under city arrest; xxx (5) he was
not to publish the Philippine Free Press nor was he to do, say or write anything critical of the Marcos administration . . . .
Consequently, the publication of the Philippine Free Press ceased. The subject building remained padlocked and under
heavy military guard (TSB, 27 May 1993, pp. 51-52; stipulated). The cessation of the publication of the ... magazine
led to the financial ruin of [petitioner] . . . . [Petitioners] situation was further aggravated when its employees
demanded the payment of separation pay as a result of the cessation of its operations. [Petitioners] minority
stockholders, furthermore, made demands that Locsin, Sr. buy out their shares. xxx.
On separate occasions in 1973, Locsin, Sr. was approached by the late Atty. Crispin Baizas with offers from then
President Marcos for the acquisition of the [petitioner]. However, Locsin, Sr. refused the offer stating that [petitioner]
was not for sale (TSN, 2 May 1988, pp. 8-9, 40; 27 May 1993, pp. 66-67).
A few months later, the late Secretary Guillermo De Vega approached Locsin, Sr. reiterating Marcoss offer to
purchase the name and the assets of the [petitioner].xxx
Sometime during the middle of 1973, Locsin, Sr. was contacted by Brig. Gen. Hans Menzi, the former aide-de-camp of
then President Marcos concerning the sale of the [petitioner]. Locsin, Sr. requested that the meeting be held inside the
[petitioner] Building and this was arranged by Menzi (TSN, 27 May 1993, pp. 69-70). During the said meeting, Menzi
once more reiterated Marcoss offer to purchase both the name and the assets of [petitioner] adding that "Marcos
cannot be denied" (TSN, 27 May 1993, p. 71). Locsin, Sr. refused but Menzi insisted that he had no choice but to sell.
Locsin, Sr. then made a counteroffer that he will sell the land, the building and all the machineries and equipment
therein but he will be allowed to keep the name of the [petitioner]. Menzi promised to clear the matter with then
President Marcos (TSN, 27 May 1993, p. 72). Menzi thereafter contacted Locsin, Sr. and informed him that President
Marcos was amenable to his counteroffer and is offering the purchase price of Five Million Seven Hundred Fifty
Thousand (P5, 750,000.00) Pesos for the land, the building, the machineries, the office furnishing and the fixtures of
the [petitioner] on a "take-it-or-leave-it" basis (TSN, 2 May 1988, pp.42-43; 27 May 1993, p. 88).
On August 22, 1973, Menzi tendered to Locsin, Sr. a check for One Million (P1, 000,000.00) Pesos downpayment for
the sale, . . . Locsin, Sr. accepted the check, subject to the condition that he will refund the same in case the sale will
not push through. (Exh. 7).
On August 23, 1973, the Board of Directors of [petitioner] held a meeting and reluctantly passed a resolution
authorizing Locsin, Sr. to sell the assets of the [petitioner] to Menzi minus the name "Philippine Free Press (Exhs. A-1
and 1; TSN, 27 May 1993, pp. 73-76).
On October 23, 1973, the parties [petitioner, as vendor and private respondent, represented by B/Gen. Menzi, as
vendee] met . . . and executed two (2) notarized Deeds of Sale covering the land, building and the machineries of the
[petitioner]. Menzi paid the balance of the purchase price in the amount of . . . (P4,750,000.00) Pesos (Exhs. A and (; B
and 10;TSN, 27 May 1993, pp. 81-82; 3 June 1993, p. 89).
Locsin, Sr. thereafter used the proceeds of the sale to pay the separation pay of [petitioners] employees, buy out the
shares of the minority stockholders as well as to settle all its obligations.
On February 26, 1987, [petitioner] filed a complaint for Annulment of Sale against [respondent] Liwayway and the
PCGG before the Regional Trail Court of Makati, Branch 146 on the grounds of vitiated consent and gross inadequacy
of purchase price. On motion of defendant PCGG, the complaint against it was dismissed on October 22, 1987. (Words
in bracket and underscoring added)
In a decision dated October 31, 1995,2 the trial court dismissed petitioners complaint and granted private respondents
counterclaim, to wit:
WHEREFORE, in view of all the foregoing premises, the herein complaint for annulment of sales is hereby dismissed
for lack of merit.
On [respondent] counterclaim, the court finds for [respondent] and against [petitioner] for the recovery of attorneys
fees already paid for at P1,945,395.98, plus a further P316,405.00 remaining due and payable.
SO ORDERED. (Words in bracket added)
In time, petitioner appealed to the Court of Appeals (CA) whereat its appellate recourse was docketed as CA-G.R. C.V.
No. 52660.
As stated at the outset hereof, the appellate court, in a decision dated February 25, 1998, affirmed with modification the
appealed decision of the trial court, the modification consisting of the deletion of the award of attorneys fees to private
respondent, thus:
WHEREFORE, with the sole modification that the award of attorneys fees in favor of [respondent] be deleted, the
Decision appealed from is hereby AFFIRMED in all respects.
SO ORDERED.
Hence, petitioners present recourse, urging the setting aside of the decision under review which, to petitioner, decided
questions of substance in a way not in accord with law and applicable jurisprudence considering that the appellate court
gravely erred:
I IN ITS MISAPPLICATION OF THE DECISIONS OF THE HONORABLE COURT THAT RESULTED IN ITS ERRONEOUS
CONCLUSION THAT PETITIONER'S CAUSE OF ACTION HAD ALREADY PRESCRIBED.
II IN CONCLUDING THAT THE UNDISPUTED FACTS AND CIRCUMSTANCES PRECEDING THE EXECUTION OF THE
CONTRACTS OF SALE FOR THE PETITIONER'S PROPERTIES DID NOT ESTABLISH THE FORCE, INTIMIDATION,
DURESS AND UNDUE INFLUENCE WHICH VITIATED PETITIONER'S CONSENT.
A. IN CONSIDERING AS HEARSAY THE TESTIMONIAL EVIDENCE WHICH CLEARLY ESTABLISHED THE THREATS
MADE UPON PETITIONER AND THAT RESPONDENT LIWAYWAY WILL BE USED AS THE CORPORATE VEHICLE
FOR THE FORCED ACQUISITION OF PETITIONER'S PROPERTIES.
B. IN CONCLUDING THAT THE ACTS OF THEN PRESIDENT MARCOS DURING MARTIAL LAW DID NOT
CONSTITUTE THE FORCE, INTIMIDATION, DURESS AND UNDUE INFLUENCE WHICH VITIATED PETITIONER'S
CONSENT.
C. IN RESOLVING THE INSTANT CASE ON THE BASIS OF MERE SURMISES AND SPECULATIONS INSTEAD OF
THE UNDISPUTED EVIDENCE ON RECORD.
III IN CONCLUDING THAT THE GROSSLY INADEQUATE PURCHASE PRICE FOR PETITIONER'S PROPERTIES DOES
NOT INDICATE THE VITIATION OF PETITIONER'S CONSENT TO THE CONTRACTS OF SALE.
IV IN CONCLUDING THAT PETITIONER'S USE OF THE PROCEEDS OF THE SALE FOR ITS SURVIVAL CONSTITUTE
AN IMPLIED RATIFICATION [OF] THE CONTRACTS OF SALE.
V IN EXCLUDING PETITIONER'S EXHIBITS "X-6" TO "X-7" AND "Y-3" (PROFFER) WHICH ARE ADMISSIBLE EVIDENCE
WHICH COMPETENTLY PROVE THAT THEN PRESIDENT MARCOS OWNED PRIVATE RESPONDENT LIWAYWAY,
WHICH WAS USED AS THE CORPORATE VEHICLE FOR THE ACQUISITION OF PETITIONER'S PROPERTIES.
The petition lacks merit.
Petitioner starts off with its quest for the allowance of the instant recourse on the submission that the martial law
regime tolled the prescriptive period under Article 1391 of the Civil Code, which pertinently reads:
Article 391. The action for annulment shall be brought within four years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
xxx xxx xxx

It may be recalled that the separate deeds of sale3 sought to be annulled under petitioners basic complaint were both
executed on October 23, 1973. Per the appellate court, citing Development Bank of the Philippines [DBP] vs.
Pundogar4, the 4-year prescriptive period for the annulment of the aforesaid deeds ended "in late 1977", doubtless
suggesting that petitioners right to seek such annulment accrued four (4) years earlier, a starting time-point
corresponding, more or less, to the date of the conveying deed, i.e., October 23, 1973. Petitioner contends, however,
that the 4-year prescriptive period could not have commenced to run on October 23, 1973, martial law being then in
full swing. Plodding on, petitioner avers that the continuing threats on the life of Mr. Teodoro Locsin, Sr. and his
family and other menacing effects of martial law which should be considered as force majeure - ceased only after the
February 25, 1986 People Power uprising.
Petitioner instituted its complaint for annulment of contracts on February 26, 1987. The question that now comes to the
fore is: Did the 4 year prescriptive period start to run in late October 1973, as postulated in the decision subject of
review, or on February 25, 1986, as petitioner argues, on the theory that martial law has the effects of a force majeure5,
which, in turn, works to suspend the running of the prescriptive period for the main case filed with the trial court.
Petitioner presently faults the Court of Appeals for its misapplication of the doctrinal rule laid down in DBP vs.
Pundogar6 where this Court, citing and quoting excerpts from the ruling in Tan vs. Court of Appeals 7, as reiterated in
National Development Company vs. Court of Appeals, 8 wrote
We can not accept the petitioners contention that the period during which authoritarian rule was in force had
interrupted prescription and that the same began to run only on February 25, 1986, when the Aquino government took
power. It is true that under Article 1154 [of the Civil Code] xxx fortuitous events have the effect of tolling the period of
prescription. However, we can not say, as a universal rule, that the period from September 21, 1972 through February
25, 1986 involves a force majeure. Plainly, we can not box in the "dictatorial" period within the term without
distinction, and without, by necessity, suspending all liabilities, however demandable, incurred during that period,
including perhaps those ordered by this Court to be paid. While this Court is cognizant of acts of the last regime,
especially political acts, that might have indeed precluded the enforcement of liability against that regime and/or its
minions, the Court is not inclined to make quite a sweeping pronouncement, . . . . It is our opinion that claims should
be taken on a case-to-case basis. This selective rule is compelled, among others, by the fact that not all those
imprisoned or detained by the past dictatorship were true political oppositionists, or, for that matter, innocent of any
crime or wrongdoing. Indeed, not a few of them were manipulators and scoundrels. [Italization in the original;
Underscoring and words in bracket added]
According to petitioner, the appellate court misappreciated and thus misapplied the correct thrust of the Tan case, as
reiterated in DBP which, per petitioners own formulation, is the following:9
The prevailing rule, therefore, is that on a case-to-case basis, the Martial Law regime may be treated as force majeure
that suspends the running of the applicable prescriptive period provided that it is established that the party invoking the
imposition of Martial Law as a force majeure are true oppositionists during the Martial Law regime and that said party
was so circumstanced that is was impossible for said party to commence, continue or to even resist an action during the
dictatorial regime. (Emphasis and underscoring in the original)
We are not persuaded.
It strains credulity to believe that petitioner found it impossible to commence and succeed in an annulment suit during
the entire stretch of the dictatorial regime. The Court can grant that Mr. Locsin, Sr. and petitioner were, in the context
of DBP and Tan, "true oppositionists" during the period of material law. Petitioner, however, has failed to convincingly
prove that Mr. Locsin, Sr., as its then President, and/or its governing board, were so circumstanced that it was well-
nigh impossible for him/them to successfully institute an action during the martial law years. Petitioner cannot
plausibly feign ignorance of the fact that shortly after his arrest in the evening of September 20, 1972, Mr. Locsin, Sr.,
together with several other journalists10, dared to file suits against powerful figures of the dictatorial regime and
veritably challenged the legality of the declaration of martial law. Docketed in this Court as GR No. L-35538, the case,
after its consolidation with eight (8) other petitions against the martial law regime, is now memorialized in books of
jurisprudence and cited in legal publications and case studies as Aquino vs. Enrile.11
Incidentally, Mr. Locsin Sr., as gathered from the ponencia of then Chief Justice Querube Makalintal in Aquino, was
released from detention notwithstanding his refusal to withdraw from his petition in said case. Judging from the actuations of
Mr. Locsin, Sr. during the onset of martial law regime and immediately thereafter, any suggestion that intimidation or duress
forcibly stayed his hands during the dark days of martial law to seek judicial assistance must be rejected.12
Given the foregoing perspective, the Court is not prepared to disturb the ensuing ruling of the appellate court on the
effects of martial law on petitioners right of action:
In their testimonies before the trial court, both Locsin, Sr. and Locsin, Jr. claimed that they had not filed suit to recover
the properties until 1987 as they could not expect justice to be done because according to them, Marcos controlled
every part of the government, including the courts, (TSN, 2 May 1988, pp. 23-24; 27 May 1993, p. 121). While that
situation may have obtained during the early years of the martial law administration, We could not agree with the
proposition that it remained consistently unchanged until 1986, a span of fourteen (14) years. The unfolding of
subsequent events would show that while dissent was momentarily stifled, it was not totally silenced. On the contrary,
it steadily simmered and smoldered beneath the political surface and culminated in that groundswell of popular protest
which swept the dictatorship from power.13
The judiciary too, as an institution, was no ivory tower so detached from the ever changing political climate. While it
was not totally impervious to the influence of the dictatorships political power, it was not hamstrung as to render it
inutile to perform its functions normally. To say that the Judiciary was not able to render justice to the persons who
sought redress before it . . . during the Martial Law years is a sweeping and unwarranted generalization as well as an
unfounded indictment. The Judiciary, . . . did not lack in gallant jurists and magistrates who refused to be cowed into
silence by the Marcos administration. Be that as it may, the Locsins mistrust of the courts and of judicial processes is
no excuse for their non-observance of the prescriptive period set down by law.
Corollary to the presented issue of prescription of action for annulment of contract voidable on account of defect of
consent14 is the question of whether or not duress, intimidation or undue influence vitiated the petitioners consent to
the subject contracts of sale. Petitioner delves at length on the vitiation issue and, relative thereto, ascribes the
following errors to the appellate court: first, in considering as hearsay the testimonial evidence that may prove the
element of "threat" against petitioner or Mr. Locsin, Sr., and the dictatorial regime's use of private respondent as a
corporate vehicle for forcibly acquiring petitioners properties; second, in concluding that the acts of then President
Marcos during the martial law years did not have a consent-vitiating effect on petitioner; and third, in resolving the
case on the basis of mere surmises and speculations.
The evidence referred to as hearsay pertains mainly to the testimonies of Messrs. Locsin, Sr. and Teodoro Locsin, Jr.
(the Locsins, collectively), which, in gist, established the following facts: 1) the widely circulated Free Press
magazine, which, prior to the declaration of Martial Law, took the strongest critical stand against the Marcos
administration, was closed down on the eve of such declaration, which closure eventually drove petitioner to financial
ruin; 2) upon Marcos orders, Mr. Locsin, Sr. was arrested and detained for over 2 months without charges and,
together with his family, was threatened with execution; 3) Mr. Locsin, Sr. was provisionally released on the condition
that he refrains from reopening Free Press and writing anything critical of the Marcos administration; and 4) Mr.
Locsin, Sr. and his family remained fearful of reprisals from Marcos until the 1986 EDSA Revolution.
Per the Locsins, it was amidst the foregoing circumstances that petitioners property in question was sold to private
respondent, represented by Gen. Menzi, who, before the sale, allegedly applied the squeeze on Mr. Locsin, Sr. thru the
medium of the "Marcos cannot be denied" and "[you] have no choice but to sell" line.
The appellate court, in rejecting petitioners above posture of vitiation of consent, observed:
It was under the above-enumerated circumstances that the late Hans Menzi, allegedly acting on behalf of the late
President Marcos, made his offer to purchase the Free Press. It must be noted, however, that the testimonies of Locsin,
Sr. and Locsin, Jr. regarding Menzis alleged implied threat that "Marcos cannot be denied" and that [respondent] was
to be the corporate vehicle for Marcoss takeover of the Free Press is hearsay as Menzi already passed away and is no
longer in a position to defend himself; the same can be said of the offers to purchase made by Atty. Crispin Baizas and
Secretary Guillermo de Vega who are also both dead. It is clear from the provisions of Section 36, Rule 130 of the
1989 Revised Rules on Evidence that any evidence, . . . is hearsay if its probative value is not based on the personal
knowledge of the witness but on the knowledge of some other person not on the witness stand. Consequently, hearsay
evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls
within the exceptions to the hearsay evidence rule (Citations omitted)
The appellate courts disposition on the vitiation-of-consent angle and the ratio therefor commends itself for concurrence.
Jurisprudence instructs that evidence of statement made or a testimony is hearsay if offered against a party who has no
opportunity to cross-examine the witness. Hearsay evidence is excluded precisely because the party against whom it is
presented is deprived of or is bereft of opportunity to cross-examine the persons to whom the statements or writings are
attributed.15 And there can be no quibbling that because death has supervened, the late Gen Menzi, like the other
purported Marcos subalterns, Messrs. Baizas and De Vega, cannot cross-examine the Locsins for the threatening
statements allegedly made by them for the late President.
Like the Court of Appeals, we are not unmindful of the exception to the hearsay rule provided in Section 38, Rule 130
of the Rules of Court, which reads:
SEC. 38. Declaration against interest. The declaration made by a person deceased or unable to testify, against the
interest of the declarant, if the fact asserted in the declaration was at the time it was made so far contrary to the
declarant's own interest, that a reasonable man in his position would not have made the declaration unless he believed it
to be true, may be received in evidence against himself or his successors-in-interest and against third persons.
However, in assessing the probative value of Gen. Menzis supposed declaration against interest, i.e., that he was
acting for the late President Marcos when he purportedly coerced Mr. Locsin, Sr. to sell the Free Press property, we are
loathed to give it the evidentiary weight petitioner endeavors to impress upon us. For, the Locsins can hardly be
considered as disinterested witnesses. They are likely to gain the most from the annulment of the subject contracts.
Moreover, allegations of duress or coercion should, like fraud, be viewed with utmost caution. They should not be laid
lightly at the door of men whose lips had been sealed by death.16 Francisco explains why:
[I]t has been said that "of all evidence, the narration of a witness of his conversation with a dead person is esteemed in
justice the weakest." One reason for its unreliability is that the alleged declarant can not recall to the witness the
circumstances under which his statement were made. The temptation and opportunity for fraud in such cases also
operate against the testimony. Testimony to statements of a deceased person, at least where proof of them will
prejudice his estate, is regarded as an unsafe foundation for judicial action except in so far as such evidence is borne
out by what is natural and probable under the circumstances taken in connection with actual known facts. And a court
should be very slow to act upon the statement of one of the parties to a supposed agreement after the death of the other
party; such corroborative evidence should be adduced as to satisfy the court of the truth of the story which is to benefit
materially the person telling it. 17
Excepting, petitioner insists that the testimonies of its witnesses the Locsins - are not hearsay because:
In this regard, hearsay evidence has been defined as "the evidence not of what the witness knows himself but of what
he has heard from others." xxx Thus, the mere fact that the other parties to the conversations testified to by the witness
are already deceased does [not] render such testimony inadmissible for being hearsay. 18
xxx xxx xxx

The testimonies of Teodoro Locsin, Sr. and Teodoro Locsin, Jr. that the late Atty. Baizas, Gen. Menzi and Secretary de
Vega stated that they were representing Marcos, that "Marcos cannot be denied", and the fact that Gen. Menzi stated
that private respondent Liwayway was to be the corporate vehicle for the then President Marcos' take-over of petitioner
Free Press are not hearsay. Teodoro Locsin, Sr. and Teodoro Locsin, Jr. were in fact testifying to matters of their own
personal knowledge because they were either parties to the said conversation or were present at the time the said
statements were made. 19
Again, we disagree.
Even if petitioner succeeds in halving its testimonial evidence, one-half purporting to quote the words of a live witness
and the other half purporting to quote what the live witness heard from one already dead, the other pertaining to the
dead shall nevertheless remain hearsay in character.
The all too familiar rule is that "a witness can testify only to those facts which he knows of his own knowledge". 20
There can be no quibbling that petitioners witnesses cannot testify respecting what President Marcos said to Gen.
Menzi about the acquisition of petitioners newspaper, if any there be, precisely because none of said witnesses ever
had an opportunity to hear what the two talked about.
Neither may petitioner circumvent the hearsay rule by invoking the exception under the declaration-against-interest
rule. In context, the only declaration supposedly made by Gen. Menzi which can conceivably be labeled as adverse to
his interest could be that he was acting in behalf of Marcos in offering to acquire the physical assets of petitioner. Far from
making a statement contrary to his own interest, a declaration conveying the notion that the declarant possessed the authority
to speak and to act for the President of the Republic can hardly be considered as a declaration against interest.
Petitioner next assails the Court of Appeals on its conclusion that Martial Law is not per se a consent-vitiating
phenomenon. Wrote the appellate court: 21
In other words, the act of the ruling power, in this case the martial law administration, was not an act of mere trespass
but a trespass in law - not a perturbacion de mero hecho but a pertubacion de derecho - justified as it is by an act of
government in legitimate self-defense (IFC Leasing & Acceptance Corporation v. Sarmiento Distributors Corporation,
, citing Caltex (Phils.) v. Reyes, 84 Phil. 654 [1949]. Consequently, the act of the Philippine Government in
declaring martial law can not be considered as an act of intimidation of a third person who did not take part in the
contract (Article 1336, Civil Code). It is, therefore, incumbent on [petitioner] to present clear and convincing evidence
showing that the late President Marcos, acting through the late Hans Menzi, abused his martial law powers by forcing
plaintiff-appellant to sell its assets. In view of the largely hearsay nature of appellants evidence on this point,
appellants cause must fall.
According to petitioner, the reasoning of the appellate court is "flawed" because:22
It is implicit from the foregoing reasoning of the Court of Appeals that it treated the forced closure of the petitioner's
printing press, the arrest and incarceration without charges of Teodoro Locsin, Sr., the threats that he will be shot and
the threats that other members of his family will be arrested as legal acts done by a dictator under the Martial Law
regime. The same flawed reasoning led the Court of Appeals to the erroneous conclusion that such acts do not
constitute force, intimidation, duress and undue influence that vitiated petitioner's consent to the Contracts of Sale.
The contention is a rehash of petitioners bid to impute on private respondent acts of force and intimidation that were
made to bear on petitioner or Mr. Locsin, Sr. during the early years of martial law. It failed to take stock of a very
plausible situation depicted in the appellate courts decision which supports its case disposition on the issue respecting
vitiation. Wrote that court:
Even assuming that the late president Marcos is indeed the owner of [respondent], it does not necessarily follow that
he, acting through the late Hans Menzi, abused his power by resorting to intimidation and undue influence to coerce the
Locsins into selling the assets of Free Press to them (sic).
It is an equally plausible scenario that Menzi convinced the Locsins to sell the assets of the Free Press without resorting
to threats or moral coercion by simply pointing out to them the hard fact that the Free Press was in dire financial straits
after the declaration of Martial Law and was being sued by its former employees, minority stockholders and creditors.
Given such a state of affairs, the Locsins had no choice but to sell their assets.23
Petitioner laments that the scenario depicted in the immediately preceding quotation as a case of a court resorting to
"mere surmises and speculations", 24 oblivious that petitioner itself can only offer, as counterpoint, also mere surmises
and speculations, such as its claim about Eugenio Lopez Sr. and Imelda R. Marcos offering "enticing amounts" to buy
Free Press.25
It bears stressing at this point that even after the imposition of martial law, petitioner, represented by Mr. Locsin, Sr.,
appeared to have dared the ire of the powers-that-be. He did not succumb to, but in fact spurned offers to buy, lock-
stock-and-barrel, the Free Press magazine, dispatching Marcos emissaries with what amounts to a curt "Free Press is
not for sale". This reality argues against petitioners thesis about vitiation of its contracting mind, and, to be sure,
belying the notion that Martial Law worked as a Sword of Damocles that reduced petitioner or Mr. Locsin, Sr. into
being a mere automaton. The following excerpt from the Court of Appeals decision is self-explanatory: 26
Noteworthy is the fact that although the threat of arrest hung over his head like the Sword of Damocles, Locsin Sr. was
still able to reject the offers of Atty. Baizas and Secretary De Vega, both of whom were supposedly acting on behalf of
the late President Marcos, without being subjected to reprisals. In fact, the Locsins testified that the initial offer of
Menzi was rejected even though it was supposedly accompanied by the threat that "Marcos cannot be denied". Locsin,
Sr. was, moreover, even able to secure a compromise that only the assets of the Free Press will be sold. It is, therefore,
quite possible that plaintiff-appellants financial condition, albeit caused by the declaration of Martial Law, was a
major factor in influencing Locsin, Sr. to accept Menzis offer. It is not farfetched to consider that Locsin, Sr. would
have eventually proceeded with the sale even in the absence of the alleged intimidation and undue influence because of
the absence of other buyers.
Petitioners third assigned error centers on the gross inadequacy of the purchase price, referring to the amount of
P5,775,000.00 private respondent paid for the property in question. To petitioner, the amount thus paid does not even
approximate the actual market value of the assets and properties,27 and is very much less than the P18 Million offered
by Eugenio Lopez.28 Accordingly, petitioner urges the striking down, as erroneous, the ruling of the Court of Appeals
on purchase price inadequacy, stating in this regard as follows: 29
Furthermore, the Court of Appeals in determining the adequacy of the price for the properties and assets of petitioner
Free Press relied heavily on the claim that the audited financial statements for the years 1971 and 1972 stated that the
book value of the land is set at Two Hundred Thirty-Seven Thousand Five Hundred Pesos (P237,500.00). However, the
Court of Appeals' reliance on the book value of said assets is clearly misplaced. It should be noted that the book value
of fixed assets bears very little correlation with the actual market value of an asset. (Emphasis and underscoring in the
original).
With the view we take of the matter, the book or actual market value of the property at the time of sale is presently of
little moment. For, petitioner is effectively precluded, by force of the principle of estoppel ,30 from cavalierly
disregarding with impunity its own books of account in which the property in question is assigned a value less than
what was paid therefor. And, in line with the rule on the quantum of evidence required in civil cases, neither can we
cavalierly brush aside private respondents evidence, cited with approval by the appellate court, that tends to prove that-31

xxx the net book value of the Properties was actually only P994,723.66 as appearing in Free Press's Balance Sheet as of
November 30, 1972 (marked as Exh. 13 and Exh. V), which was duly audited by SyCip, Gorres, and Velayo, thus
clearly showing that Free Press actually realized a hefty profit of P4,755,276.34 from the sale to Liwayway.

Lest it be overlooked, gross inadequacy of the purchase price does not, as a matter of civil law, per se affect a contract
of sale. Article 1470 of the Civil Code says so. It reads:
Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the
consent, or that the parties really intended a donation or some other act or contract.

Following the aforequoted codal provision, it behooves petitioner to first prove "a defect in the consent", failing which
its case for annulment contract of sale on ground gross inadequacy of price must fall. The categorical conclusion of the
Court of Appeals, confirmatory of that of the trial court, is that the price paid for the Free Press office building, and
other physical assets is not unreasonable to justify the nullification of the sale. This factual determination, predicated as
it were on offered evidence, notably petitioners Balance Sheet as of November 30, 1972 (Exh. 13), must be accorded
great weight if not finality.32

In the light of the foregoing disquisition, the question of whether or not petitioners undisputed utilization of the
proceeds of the sale constitutes, within the purview of Article 1393 of the Civil Code, 33 implied ratification of the
contracts of sale need not detain us long. Suffice it to state in this regard that the ruling of the Court of Appeals on the
matter is well-taken. Wrote the appellate court: 34
In the case at bench, Free Presss own witnesses admitted that the proceeds of the 1973 sale were used to settle the
claims of its employees, redeem the shares of its stockholders and finance the companys entry into money-market
shareholdings and fishpond business activities (TSN, 2 May 1988, pp. 16, 42-45). It need not be overemphasized that
by using the proceeds in this manner, Free Press only too clearly confirmed the voluntaries of its consent and ratified
the sale. Needless to state, such ratification cleanses the assailed contract from any alleged defects from the moment it
was constituted (Art. 1396, Civil Code).

Petitioners posture that its use of the proceeds of the sale does not translate to tacit ratification of what it viewed as
voidable contracts of sale, such use being a "matter of [its financial] survival", 35 is untenable. As couched, Article 1393
of the Civil Code is concerned only with the act which passes for ratification of contract, not the reason which actuated
the ratifying person to act the way he did. "Ubi lex non distinguit nec nos distinguere debemus. When the law does not
distinguish, neither should we". 36

Finally, petitioner would fault the Court of Appeals for excluding Exhibits "X-6" to "X-7" and "Y-3" (proffer). These
excluded documents which were apparently found in the presidential palace or turned over by the US Government to
the PCGG, consist of, among others, what appears to be private respondents Certificate of Stock for 24,502 shares in
the name of Gen. Menzi, but endorsed in blank. The proffer was evidently intended to show that then President Marcos
owned private respondent, Liwayway Publishing Inc. Said exhibits are of little relevance to the resolution of the main
issue tendered in this case. Whether or not the contracts of sale in question are voidable is the issue, not the ownership
of Liwayway Publishing, Inc.

WHEREFORE, the petition is DENIED, and the challenged decision of the Court of Appeals AFFIRMED.
Costs against petitioner.

SO ORDERED.
 Philippine Free Press , Inc. vs Court of Appeals G.R. No. 132864 | October 24, 2005 | J. Garcia
Background Information:
Petitioner is a domestic corporation engaged in the publication of Philippine Free Press Magazine, one of the . . .
widely circulated political magazines in the Philippines during the 60s.
In 1963, Phil Free Press purchased a parcel of land and constructed a building therein which later on became the companys
main office.
In the 1965 Presidential Elections, Phil Free Press supported the late President Diosdado Macapagal against then Senate
President Ferdinand Marcos. Upon the election of Marcos, Phil Free Press printed numerous articles exposing
corruption and abuses of the Marcos Regime and the plan of the Marcoses to impose a dictatorship in the guise of Martial Law.
In September 20, 1972, the soldiers of Marcos seized control over the main office of Phil Free Press and padlocked the
establishment after forcing out its employees at gunpoint. Teodoro Locsin Sr., the President of the company, was informed
that Martial Law had been declared and that Marcos instructed the soldiers to close the printing press.
After the printing press was forcibly closed, Locsin was arrested and was locked up in a maximum security block at Fort
Bonifacio. He was later on released subject to certain conditions; the one related to the printing press is that he was not to
publish the Philippine Free Press.
Since the publication of the Philippine Free Press ceased, the property remained locked up and under heavy military guard. The
cessation of publication led to the financial ruin of the company. The situation was further aggravated when the employees
demanded for the payment of their separation pays as a result of the closure of the company. Also, the minority stockholders
demanded that Locsin buy out their shares.
Facts:
1. In early 1973, Locsin was approached several times by Marcos representatives with offers to buy the Philippine Free Press, Inc.
However, Locsin declined the offer stating that it was not for sale.
2. In mid 1973, Locsin was again contacted but this time, by Brig. General Hans Menzi, concerning the sale of the PFP, Inc. They
held a meeting at the building of the company and there, Menzi reiterated the offer to buy the property once again, asserting that
Marcos cannot be denied. Locsin then made a counteroffer that he will sell everything but that he will be allowed to keep the name
of PFP, Inc.
3. Menzi contacted Locsin thereafter informing the latter that Marcos was amenable to the counteroffer and is offering the purchase
price of P5,750,000.
4. In August 1973, Menzi tendered a check for P1,000,000 to Locsin for the downpayment of the sale and the latter
accepted the same document-embed
5. In October 1973, Menzi paid the balance of the purchase price and the parties executed 2 notarized deeds of sale of the property
in dispute.
6. Locsin used the proceeds of the sale to pay the separation pays of the employees and to buy out the
shares of the minority stockholders of the company.
7. In February 1987, PFP filed a complaint for Annulment of Sale on the grounds of vitiated consent and gross inadequacy of the
purchase price.
Issue:
1. Does the gross inadequacy of the purchase price indicate vitiation of consent to the contract of sale which would
make the sale voidable?
2. Does the utilization of the proceeds of the sale constitute as implied ratification of the sale?
Held:
On both counts, no. The Supreme Court dismissed the petition.
Ratio:
1. Gross inadequacy of the purchase price does not, as a matter of civil law, per se affect a contract of sale. Article
1470 of the Civil Code says so.
It reads: Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a
defect in the consent, or that the parties really intended a donation or some other act or contract.
Following the codal provision, petitioner must first prove a defect in the consent, failing which its
case for annulment contract of sale on ground gross inadequacy of price must fall. The categorical
conclusion of the Court of Appeals, confirmatory of that of the trial court, is that the price paid for the Free
Press office building, and other physical assets is not unreasonable to justify the nullification of the sale. This
factual determination, predicated as it were on offered evidence, notably petitioners Balance Sheet as of
November 30, 1972 (Exh.13), must be accorded great weight if not finality. (Balance Sheet indicates that the net
book value of the Properties was actually only P994,723.66.)
2. The Supreme Court reiterated the ruling of the Court of Appeals:
In the case at bench, Free Presss own witnesses admitted that the proceeds of the 1973 sale were used to settle
the claims of its employees, redeem the shares of its stockholders and finance the companys entry into
money-market shareholdings and fishpond business link-doc-reader activities (TSN, 2 May 1988, pp. 16, 42-45). It
need not be overemphasized that by using the proceeds in this manner, Free Press only too clearly confirmed the
voluntaries of its consent and ratified the sale. Needless to state, such ratification cleanses the assailed contract
from any alleged defects from the moment it was constituted (Art.
1396, Civil Code)
 G.R. No. 130115 July 16, 2008
FELIX TING HO, JR., MERLA TING HO BRADEN, JUANA TING HO & LYDIA TING HO BELENZO, Petitioners,
vs. VICENTE TENG GUI, Respondent.

DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari1 assailing the Decision2 of the Court of Appeals (CA) in CA-G.R. CV No.
42993 which reversed and set aside the Decision of the Regional Trial Court (RTC) of Olongapo City, Branch 74, in
Civil Case No. 558-0-88.
The instant case traces its origin to an action for partition filed by petitioners Felix Ting Ho, Jr., Merla Ting Ho Braden,
Juana Ting Ho and Lydia Ting Ho Belenzo against their brother, respondent Vicente Teng Gui, before the RTC,
Branch 74 of Olongapo City. The controversy revolves around a parcel of land, and the improvements established
thereon, which, according to petitioners, should form part of the estate of their deceased father, Felix Ting Ho, and
should be partitioned equally among each of the siblings.
In their complaint before the RTC, petitioners alleged that their father Felix Ting Ho died intestate on June 26, 1970,
and left upon his death an estate consisting of the following:
a) A commercial land consisting of 774 square meters, more or less, located at Nos. 16 and 18 Afable St., East Bajac-
Bajac, Olongapo City, covered by Original Certificate of Title No. P-1064 and Tax Declaration No. 002-2451;
b) A two-storey residential house on the aforesaid lot;
c) A two-storey commercial building, the first floor rented to different persons and the second floor, Bonanza Hotel,
operated by the defendant also located on the above described lot; and
d) A sari-sari store (formerly a bakery) also located on the above described lot.3
According to petitioners, the said lot and properties were titled and tax declared under trust in the name of respondent
Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to
own public lands in the Philippines; and that upon the death of Felix Ting Ho, the respondent took possession of the
same for his own exclusive use and benefit to their exclusion and prejudice.4
In his answer, the respondent countered that on October 11, 1958, Felix Ting Ho sold the commercial and residential
buildings to his sister-in-law, Victoria Cabasal, and the bakery to his brother-in-law, Gregorio Fontela.5 He alleged that
he acquired said properties from the respective buyers on October 28, 1961 and has since then been in possession of
subject properties in the concept of an owner; and that on January 24, 1978, Original Certificate of Title No. P-1064
covering the subject lot was issued to him pursuant to a miscellaneous sales patent granted to him on January 3, 1978. 6
The undisputed facts as found by the trial court (RTC), and affirmed by the appellate court (CA), are as follows:
[T]he plaintiffs and the defendant are all brothers and sisters, the defendant being the oldest.lavvphi1 They are the only
legitimate children of the deceased Spouses Felix Ting Ho and Leonila Cabasal. Felix Ting Ho died on June 26, 1970
while the wife Leonila Cabasal died on December 7, 1978. The defendant Vicente Teng Gui is the oldest among the
children as he was born on April 5, 1943. The father of the plaintiffs and the defendant was a Chinese citizen although
their mother was Filipino. That sometime in 1947, the father of the plaintiffs and defendant, Felix Ting Ho, who was
already then married to their mother Leonila Cabasal, occupied a parcel of land identified to (sic) as Lot No. 18 Brill
which was thereafter identified as Lot No. 16 situated at Afable Street, East Bajac-Bajac, Olongapo City, by virtue of
the permission granted him by the then U.S. Naval Reservation Office, Olongapo, Zambales. The couple thereafter
introduced improvements on the land. They built a house of strong material at 16 Afable Street which is a commercial
and residential house and another building of strong material at 18 Afable Street which was a residential house and a
bakery. The couple, as well as their children, lived and resided in the said properties until their death. The father, Felix
Ting Ho had managed the bakery while the mother managed the sari-sari store. Long before the death of Felix Ting
Ho, who died on June 26, 1970, he executed on October 11, 1958 a Deed of Absolute Sale of a house of strong material
located at 16 Afable Street, Olongapo, Zambales, specifically described in Tax Dec. No. 5432, in favor of Victoria
Cabasal his sister-in-law (Exh. C). This Deed of Sale cancelled the Tax Dec. of Felix Ting Ho over the said building
(Exh. C-1) and the building was registered in the name of the buyer Victoria Cabasal, as per Tax Dec. No. 7579 (Exh.
C-2). On the same date, October 11, 1958 the said Felix Ting Ho also sold a building of strong material located at 18
Afable Street, described in Tax Dec. No. 5982, in favor of Gregorio Fontela, of legal age, an American citizen, married
(Exh. D). This Deed of Sale, in effect, cancelled Tax Dec. No. 5982 and the same was registered in the name of the
buyer Gregorio Fontela, as per Tax Dec. No. 7580 (Exh. D-2). In turn Victoria Cabasal and her husband Gregorio
Fontela sold to Vicente Teng Gui on October 28, 1961 the buildings which were bought by them from Felix Ting Ho
and their tax declarations for the building they bought (Exhs. C-2 and D-2) were accordingly cancelled and the said
buildings were registered in the name of the defendant Vicente Teng Gui (Exhs. C-3 and D-3). On October 25, 1966
the father of the parties Felix Ting Ho executed an Affidavit of Transfer, Relinquishment and Renouncement of Rights
and Interest including Improvements on Land in favor of his eldest son the defendant Vicente Teng Gui. On the basis
of the said document the defendant who then chose Filipino citizenship filed a miscellaneous sales application with the
Bureau of Lands. Miscellaneous Sales Patent No. 7457 of the land which was then identified to be Lot No. 418, Ts-308
consisting of 774 square meters was issued to the applicant Vicente Teng Gui and accordingly on the 24th of January,
1978 Original Certificate of Title No. P-1064 covering the lot in question was issued to the defendant Vicente Teng
Gui. Although the buildings and improvements on the land in question were sold by Felix Ting Ho to Victoria Cabasal
and Gregorio Fontela in 1958 and who in turn sold the buildings to the defendant in 1961 the said Felix Ting Ho and
his wife remained in possession of the properties as Felix Ting Ho continued to manage the bakery while the wife
Leonila Cabasal continued to manage the sari-sari store. During all the time that the alleged buildings were sold to the
spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to the defendant Vicente
Teng Gui in October of 1961 the plaintiffs and the defendant continued to live and were under the custody of their
parents until their father Felix Ting Ho died in 1970 and their mother Leonila Cabasal died in 1978.7
In light of these factual findings, the RTC found that Felix Ting Ho, being a Chinese citizen and the father of the
petitioners and respondent, resorted to a series of simulated transactions in order to preserve the right to the lot and the
properties thereon in the hands of the family. As stated by the trial court:
After a serious consideration of the testimonies given by both one of the plaintiffs and the defendant as well as the
documentary exhibits presented in the case, the Court is inclined to believe that Felix Ting Ho, the father of the
plaintiffs and the defendant, and the husband of Leonila Cabasal thought of preserving the properties in question by
transferring the said properties to his eldest son as he thought that he cannot acquire the properties as he was a Chinese
citizen. To transfer the improvements on the land to his eldest son the defendant Vicente Teng Gui, he first executed
simulated Deeds of Sales in favor of the sister and brother-in-law of his wife in 1958 and after three (3) years it was made to appear
that these vendees had sold the improvements to the defendant Vicente Teng Gui who was then 18 years old. The Court finds that
these transaction (sic) were simulated and that no consideration was ever paid by the vendees.
xxx xxx xxx

With regards (sic) to the transfer and relinquishment of Felix Ting Hos right to the land in question in favor of the
defendant, the Court believes, that although from the face of the document it is stated in absolute terms that without
any consideration Felix Ting Ho was transferring and renouncing his right in favor of his son, the defendant Vicente
Teng Gui, still the Court believes that the transaction was one of implied trust executed by Felix Ting Ho for the
benefit of his family8
Notwithstanding such findings, the RTC considered the Affidavit of Transfer, Relinquishment and Renouncement of
Rights and Interests over the land as a donation which was accepted by the donee, the herein respondent. With respect
to the properties in the lot, the trial court held that although the sales were simulated, pursuant to Article 1471 of the
New Civil Code9 it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate such
properties to the respondent. As a result, it awarded the entire conjugal share of Felix Ting Ho in the subject lot and
properties to the respondent and divided only the conjugal share of his wife among the siblings. The dispositive portion
of the RTC decision decreed:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant as the Court orders the
partition and the adjudication of the subject properties, Lot 418, Ts-308, specifically described in original Certificate of
Title No. P-1064 and the residential and commercial houses standing on the lot specifically described in Tax Decs.
Nos. 9179 and 9180 in the name of Vicente Teng Gui in the following manner, to wit: To the defendant Vicente Teng
Gui is adjudicated an undivided six-tenth (6/10) of the aforementioned properties and to each of the plaintiffs Felix Ting Ho,
Jr., Merla Ting-Ho Braden, Juana Ting and Lydia Ting Ho-Belenzo each an undivided one-tenth (1/10) of the properties10
From this decision, both parties interposed their respective appeals. The petitioners claimed that the RTC erred in
awarding respondent the entire conjugal share of their deceased father in the lot and properties in question contrary to
its own finding that an implied trust existed between the parties. The respondent, on the other hand, asserted that the RTC
erred in not ruling that the lot and properties do not form part of the estate of Felix Ting Ho and are owned entirely by him.
On appeal, the CA reversed and set aside the decision of the RTC. The appellate court held that the deceased Felix
Ting Ho was never the owner and never claimed ownership of the subject lot since he is disqualified under Philippine
laws from owning public lands, and that respondent Vicente Teng Gui was the rightful owner over said lot by virtue of
Miscellaneous Sales Patent No. 7457 issued in his favor, viz:
The deceased Felix Ting Ho, plaintiffs and defendants late father, was never the owner of the subject lot, now
identified as Lot No. 418, Ts-308 covered by OCT No. P-1064 (Exh. A; Record, p. 104). As stated by Felix Ting Ho
no less in the "Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interest" etc. (Exh. B: Record,
p. 107), executed on October 25, 1966 he, the late Felix Ting Ho, was merely a possessor or occupant of the subject lot
"by virtue of a permission granted by the then U.S. Naval Reservation Office, Olongapo, Zambales". The late Felix
Ting Ho was never the owner and never claimed ownership of the land. (Emphasis supplied)1avvphi1
The affidavit, Exhibit B, was subscribed and sworn to before a Land Investigator of the Bureau of Lands and in the said
affidavit, the late Felix Ting Ho expressly acknowledged that because he is a Chinese citizen he is not qualified to
purchase public lands under Philippine laws for which reason he thereby transfers, relinquishes and renounces all his
rights and interests in the subject land, including all the improvements thereon to his son, the defendant Vicente Teng
Gui, who is of legal age, single, Filipino citizen and qualified under the public land law to acquire lands.
xxx xxx xxx

Defendant Vicente Teng Gui acquired the subject land by sales patent or purchase from the government and not from
his father, the late Felix Ting Ho. It cannot be said that he acquired or bought the land in trust for his father because on
December 5, 1977 when the subject land was sold to him by the government and on January 3, 1978 when
Miscellaneous Sales Patent No. 7457 was issued, the late Felix Ting Ho was already dead, having died on June 6, 1970
(TSN, January 10, 1990, p. 4).11
Regarding the properties erected over the said lot, the CA held that the finding that the sales of the two-storey
commercial and residential buildings and sari-sari store to Victoria Cabasal and Gregorio Fontela and subsequently to
respondent were without consideration and simulated is supported by evidence, which clearly establishes that these
properties should form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal.
Thus, while the appellate court dismissed the complaint for partition with respect to the lot in question, it awarded the
petitioners a four-fifths (4/5) share of the subject properties erected on the said lot. The dispositive portion of the CA
ruling reads as follows:
WHEREFORE, premises considered, the decision appealed from is REVERSED and SET ASIDE and NEW JUDGMENT rendered:
1. DISMISSING plaintiff-appellants complaint with respect to the subject parcel of land, identified as Lot No. 418, Ts-308,
covered by OCT No. P-1064, in the name of plaintiff-appellants [should be defendant-appellant];
2. DECLARING that the two-storey commercial building, the two-storey residential building and sari-sari store (formerly a bakery), all
erected on the subject lot No. 418, Ts-308, form part of the estate of the deceased spouses Felix Ting Ho and Leonila Cabasal, and that
plaintiff-appellants are entitled to four-fifths (4/5) thereof, the remaining one-fifth (1/5) being the share of the defendant-appellant;
3. DIRECTING the court a quo to partition the said two-storey commercial building, two-storey residential building and sari-sari
store (formerly a bakery) in accordance with Rule 69 of the Revised Rules of Court and pertinent provisions of the Civil Code;
4. Let the records of this case be remanded to the court of origin for further proceedings;
5. Let a copy of this decision be furnished the Office of the Solicitor General; and
6. There is no pronouncement as to costs.
SO ORDERED.12
Both petitioners and respondent filed their respective motions for reconsideration from this ruling, which were
summarily denied by the CA in its Resolution13 dated August 5, 1997. Hence, this petition.
According to the petitioners, the CA erred in declaring that Lot No. 418, Ts-308 does not form part of the estate of the
deceased Felix Ting Ho and is owned alone by respondent. Respondent, on the other hand, contends that he should be
declared the sole owner not only of Lot No. 418, Ts-308 but also of the properties erected thereon and that the CA
erred in not dismissing the complaint for partition with respect to the said properties. The primary issue for
consideration is whether both Lot No. 418, Ts-308 and the properties erected thereon should be included in the estate
of the deceased Felix Ting Ho.
We affirm the CA ruling.
With regard to Lot No. 418, Ts-308, Article XIII, Section 1 of the 1935 Constitution states:
Section 1. All agricultural timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy and other natural resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration of the Government established under this Constitution
Our fundamental law cannot be any clearer. The right to acquire lands of the public domain is reserved for Filipino
citizens or corporations at least sixty percent of the capital of which is owned by Filipinos. Thus, in Krivenko v.
Register of Deeds,14 the Court enunciated that:
Perhaps the effect of our construction is to preclude aliens, admitted freely into the Philippines from owning sites
where they may build their homes. But if this is the solemn mandate of the Constitution, we will not attempt to
compromise it even in the name of amity or equity. We are satisfied, however, that aliens are not completely excluded
by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary,
they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they
desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.15
In the present case, the father of petitioners and respondent was a Chinese citizen; therefore, he was disqualified from
acquiring and owning real property in the Philippines. In fact, he was only occupying the subject lot by virtue of the
permission granted him by the then U.S. Naval Reservation Office of Olongapo, Zambales. As correctly found by the
CA, the deceased Felix Ting Ho was never the owner of the subject lot in light of the constitutional proscription and
the respondent did not at any instance act as the dummy of his father.
On the other hand, the respondent became the owner of Lot No. 418, Ts-308 when he was granted Miscellaneous Sales
Patent No. 7457 on January 3, 1978, by the Secretary of Natural Resources "By Authority of the President of the
Philippines," and when Original Certificate of Title No. P-1064 was correspondingly issued in his name. The grant of
the miscellaneous sales patent by the Secretary of Natural Resources, and the corresponding issuance of the original
certificate of title in his name, show that the respondent possesses all the qualifications and none of the
disqualifications to acquire alienable and disposable lands of the public domain. These issuances bear the presumption
of regularity in their performance in the absence of evidence to the contrary.
Registration of grants and patents involving public lands is governed by Section 122 of Act No. 496, which was
subsequently amended by Section 103 of Presidential Decree No. 1529, viz:
Sec. 103. Certificate of title pursuant to patents.Whenever public land is by the Government alienated, granted or
conveyed to any person, the same shall be brought forthwith under the operation of this Decree. It shall be the duty of
the official issuing the instrument of alienation, grant, patent or conveyance in behalf of the Government to cause such
instrument to be filed with the Register of Deeds of the province or city where the land lies, and to be there registered
like other deeds and conveyance, whereupon a certificate of title shall be entered as in other cases of registered land,
and an owners duplicate issued to the grantee. The deeds, grant, patent or instrument of conveyance from the
Government to the grantee shall not take effect as a conveyance or bind the land, but shall operate only as a contract
between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It
is the act of registration that shall be the operative act to affect and convey the land, and in all cases under this Decree
registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for
registration shall be paid by the grantee. After due registration and issuance of the certificate of title, such land shall be
deemed to be registered land to all intents and purposes under this Decree.16
Under the law, a certificate of title issued pursuant to any grant or patent involving public land is as conclusive and
indefeasible as any other certificate of title issued to private lands in the ordinary or cadastral registration proceeding.
The effect of the registration of a patent and the issuance of a certificate of title to the patentee is to vest in him an
incontestable title to the land, in the same manner as if ownership had been determined by final decree of the court, and
the title so issued is absolutely conclusive and indisputable, and is not subject to collateral attack.17
Nonetheless, petitioners invoke equity considerations and claim that the ruling of the RTC that an implied trust was
created between respondent and their father with respect to the subject lot should be upheld.
This contention must fail because the prohibition against an alien from owning lands of the public domain is absolute
and not even an implied trust can be permitted to arise on equity considerations.
In the case of Muller v. Muller,18 wherein the respondent, a German national, was seeking reimbursement of funds
claimed by him to be given in trust to his petitioner wife, a Philippine citizen, for the purchase of a property in
Antipolo, the Court, in rejecting the claim, ruled that:
Respondent was aware of the constitutional prohibition and expressly admitted his knowledge thereof to this Court. He
declared that he had the Antipolo property titled in the name of the petitioner because of the said prohibition. His
attempt at subsequently asserting or claiming a right on the said property cannot be sustained.
The Court of Appeals erred in holding that an implied trust was created and resulted by operation of law in view of
petitioner's marriage to respondent. Save for the exception provided in cases of hereditary succession, respondent's
disqualification from owning lands in the Philippines is absolute. Not even an ownership in trust is allowed. Besides,
where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result
in favor of the party who is guilty of the fraud. To hold otherwise would allow circumvention of the constitutional
prohibition.
Invoking the principle that a court is not only a court of law but also a court of equity, is likewise misplaced. It has
been held that equity as a rule will follow the law and will not permit that to be done indirectly which, because of
public policy, cannot be done directly...19
Coming now to the issue of ownership of the properties erected on the subject lot, the Court agrees with the finding of
the trial court, as affirmed by the appellate court, that the series of transactions resorted to by the deceased were
simulated in order to preserve the properties in the hands of the family. The records show that during all the time that
the properties were allegedly sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent
sale of the same to respondent in 1961, the petitioners and respondent, along with their parents, remained in possession
and continued to live in said properties.
However, the trial court concluded that:
In fairness to the defendant, although the Deeds of Sale executed by Felix Ting Ho regarding the improvements in
favor of Victoria Cabasal and Gregorio Fontela and the subsequent transfer of the same by Gregorio Fontela and
Victoria Cabasal to the defendant are all simulated, yet, pursuant to Article 1471 of the New Civil Code it can be
assumed that the intention of Felix Ting Ho in such transaction was to give and donate the improvements to his eldest
son the defendant Vicente Teng Gui 20

Its finding was based on Article 1471 of the Civil Code, which provides that:
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.211avvph!1
The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that
the simulated sales were a valid donation to the respondent is misplaced because its finding was based on a mere
assumption when the law requires positive proof.
The respondent was unable to show, and the records are bereft of any evidence, that the simulated sales of the
properties were intended by the deceased to be a donation to him. Thus, the Court holds that the two-storey residential
house, two-storey residential building and sari-sari store form part of the estate of the late spouses Felix Ting Ho and
Leonila Cabasal, entitling the petitioners to a four-fifths (4/5) share thereof.
IN VIEW WHEREOF, the petition is DENIED. The assailed Decision dated December 27, 1996 of the Court of
Appeals in CA-G.R. CV No. 42993 is hereby AFFIRMED.
SO ORDERED.
 Ting Ho vs Teng Gui
GR No. 130115 July 16, 2008

Facts:
Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho Belenzo against their brother, respondent
Vicente Teng Gui. The controversy revolves around a parcel of land, and the improvements which should form part of
the estate of their deceased father, Felix Ting Ho, and should be partitioned equally among each of the siblings.
Petitioners alleged that their father Felix Ting Ho died intestate on June 26, 1970, and left upon his death an estate.
According to petitioners, the said lot and properties were titled and tax declared under trust in the name of respondent
Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to
own public lands in thePhilippines; and that upon the death of Felix Ting Ho, the respondent took possession of the
same for his own exclusive use and benefit to their exclusion and prejudice.

Issue:
Whether or not the sale was void

Ruling:
No, the sale was not void. Article 1471 of the Civil Code has provided that if the price is simulated, the sale is void, but
the act may be shown to have been in reality a donatin, or some other act or contract. The sale in this case, was
however valid because the sale was in fact a donation. The law requires positive proof of the simulation of the price of
the sale. But since the finding was based on a mere assumption, the price has not been proven to be a simulation.
 G.R. No. 74470 March 8, 1989
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO, respondents.
Cordoba, Zapanta, Rola & Garcia for petitioner National Grains Authority.
Plaridel Mar Israel for respondent Leon Soriano.

MEDIALDEA, J.:
This is a petition for review of the decision (pp. 9-21, Rollo) of the Intermediate Appellate Court (now Court of
Appeals) dated December 23, 1985 in A.C. G.R. CV No. 03812 entitled, "Leon Soriano, Plaintiff- Appellee versus
National Grains Authority and William Cabal, Defendants Appellants", which affirmed the decision of the Court of
First Instance of Cagayan, in Civil Case No. 2754 and its resolution (p. 28, Rollo) dated April 17, 1986 which denied
the Motion for Reconsideration filed therein.

The antecedent facts of the instant case are as follows:

Petitioner National Grains Authority (now National Food Authority, NFA for short) is a government agency created
under Presidential Decree No. 4. One of its incidental functions is the buying of palay grains from qualified farmers.
On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal,
the Provincial Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the documents required by the NFA
for pre-qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by Soriano and certified by a
Bureau of Agricultural Extension (BAEX) technician, Napoleon Callangan, (2) Xerox copies of four (4) tax
declarations of the riceland leased to him and copies of the lease contract between him and Judge Concepcion Salud,
and (3) his Residence Tax Certificate. Private respondent Soriano's documents were processed and accordingly, he was
given a quota of 2,640 cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum
number of cavans of palay that Soriano may sell to the NFA.
In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay.
The palay delivered during these two days were not rebagged, classified and weighed. when Soriano demanded
payment of the 630 cavans of palay, he was informed that its payment will be held in abeyance since Mr. Cabal was
still investigating on an information he received that Soriano was not a bona tide farmer and the palay delivered by him
was not produced from his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. On August 28,
1979, Cabal wrote Soriano advising him to withdraw from the NFA warehouse the 630 cavans Soriano delivered
stating that NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX
technician, Napoleon Callangan that Soriano is not a bona fide farmer.
Instead of withdrawing the 630 cavans of palay, private respondent Soriano insisted that the palay grains delivered be
paid. He then filed a complaint for specific performance and/or collection of money with damages on November 2,
1979, against the National Food Authority and Mr. William Cabal, Provincial Manager of NFA with the Court of First
Instance of Tuguegarao, and docketed as Civil Case No. 2754.
Meanwhile, by agreement of the parties and upon order of the trial court, the 630 cavans of palay in question were
withdrawn from the warehouse of NFA. An inventory was made by the sheriff as representative of the Court, a
representative of Soriano and a representative of NFA (p. 13, Rollo).
On September 30, 1982, the trial court rendered judgment ordering petitioner National Food Authority, its officers and
agents to pay respondent Soriano (as plaintiff in Civil Case No. 2754) the amount of P 47,250.00 representing the unpaid
price of the 630 cavans of palay plus legal interest thereof (p. 1-2, CA Decision). The dispositive portion reads as follows:
WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendants National Grains
Authority, and William Cabal and hereby orders:
1. The National Grains Authority, now the National Food Authority, its officers and agents, and Mr. William Cabal, the
Provincial Manager of the National Grains Authority at the time of the filing of this case, assigned at Tuguegarao,
Cagayan, whomsoever is his successors, to pay to the plaintiff Leon T. Soriano, the amount of P47,250.00,
representing the unpaid price of the palay deliveries made by the plaintiff to the defendants consisting of 630 cavans at
the rate Pl.50 per kilo of 50 kilos per cavan of palay;
2. That the defendants National Grains Authority, now National Food Authority, its officer and/or agents, and Mr.
William Cabal, the Provincial Manager of the National Grains Authority, at the time of the filing of this case assigned
at Tuguegarao, Cagayan or whomsoever is his successors, are likewise ordered to pay the plaintiff Leon T. Soriano, the
legal interest at the rate of TWELVE (12%) percent per annum, of the amount of P 47,250.00 from the filing of the
complaint on November 20, 1979, up to the final payment of the price of P 47,250.00;
3. That the defendants National Grains Authority, now National Food Authority, or their agents and duly authorized
representatives can now withdraw the total number of bags (630 bags with an excess of 13 bags) now on deposit in the
bonded warehouse of Eng. Ben de Guzman at Tuguegarao, Cagayan pursuant to the order of this court, and as
appearing in the written inventory dated October 10, 1980, (Exhibit F for the plaintiff and Exhibit 20 for the
defendants) upon payment of the price of P 47,250.00 and TWELVE PERCENT (12%) legal interest to the plaintiff,
4. That the counterclaim of the defendants is hereby dismissed;
5. That there is no pronouncement as to the award of moral and exemplary damages and attorney's fees; and
6. That there is no pronouncement as to costs.
SO ORDERED (pp. 9-10, Rollo)
Petitioners' motion for reconsideration of the decision was denied on December 6, 1982.

Petitioners' appealed the trial court's decision to the Intermediate Appellate Court. In a decision promulgated on
December 23, 1986 (pp. 9-21, Rollo) the then Intermediate Appellate Court upheld the findings of the trial court and
affirmed the decision ordering NFA and its officers to pay Soriano the price of the 630 cavans of rice plus interest.
Petitioners' motion for reconsideration of the appellate court's decision was denied in a resolution dated April 17, 1986
(p. 28, Rollo).
Hence, this petition for review filed by the National Food Authority and Mr. William Cabal on May 15, 1986 assailing
the decision of the Intermediate Appellate Court on the sole issue of whether or not there was a contract of sale in the
case at bar.
Petitioners contend that the 630 cavans of palay delivered by Soriano on August 23, 1979 was made only for purposes
of having it offered for sale. Further, petitioners stated that the procedure then prevailing in matters of palay
procurement from qualified farmers were: firstly, there is a rebagging wherein the palay is transferred from a private
sack of a farmer to the NFA sack; secondly, after the rebagging has been undertaken, classification of the palay is made
to determine its variety; thirdly, after the determination of its variety and convinced that it passed the quality standard,
the same will be weighed to determine the number of kilos; and finally, it will be piled inside the warehouse after the
preparation of the Warehouse Stock Receipt (WSP) indicating therein the number of kilos, the variety and the number
of bags. Under this procedure, rebagging is the initial operative act signifying acceptance, and acceptance will be
considered complete only after the preparation of the Warehouse Stock Receipt (WSR). When the 630 cavans of palay
were brought by Soriano to the Carig warehouse of NFA they were only offered for sale. Since the same were not
rebagged, classified and weighed in accordance with the palay procurement program of NFA, there was no acceptance
of the offer which, to petitioners' mind is a clear case of solicitation or an unaccepted offer to sell.
The petition is not impressed with merit.
Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties
obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay therefore a
price certain in money or its equivalent. A contract, on the other hand, is a meeting of minds between two (2) persons
whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil
Code of the Philippines). The essential requisites of contracts are: (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 (Art. 1318, Civil
Code of the Philippines.
In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter
accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a
meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's
farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of
palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New
Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the
contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this
case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of
palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans.
In its memorandum (pp. 66-71, Rollo) dated December 4, 1986, petitioners further contend that there was no contract
of sale because of the absence of an essential requisite in contracts, namely, consent. It cited Section 1319 of the Civil
Code which states: "Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause
which are to constitute the contract. ... " Following this line, petitioners contend that there was no consent because there
was no acceptance of the 630 cavans of palay in question.
The above contention of petitioner is not correct Sale is a consensual contract, " ... , there is perfection when there is
consent upon the subject matter and price, even if neither is delivered." (Obana vs. C.A., L-36249, March 29, 1985,
135 SCRA 557, 560) This is provided by Article 1475 of the Civil Code which states:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.
xxx
The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of
the goods delivered as contended by petitioners.
From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual
obligations or "the parties may reciprocally demand performance" thereof. (Article 1475, Civil Code, 2nd par.).
The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA)
cannot legally accept the said delivery because Soriano is allegedly not a bona fide farmer. The trial court and the
appellate court found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay grains to NFA.
Both courts likewise agree that NFA's refusal to accept was without just cause. The above factual findings which are
supported by the record should not be disturbed on appeal.

ACCORDINGLY, the instant petition for review is DISMISSED. The assailed decision of the then Intermediate
Appellate Court (now Court of Appeals) is affirmed. No costs.
SO ORDERED.
 G.R. No. 74470 March 8, 1989
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO

Facts:
On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal,
the Provincial Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the documents required by the NFA
for pre-qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by Soriano and certified by a
Bureau of Agricultural Extension (BAEX) technician, Napoleon Callangan, (2) Xerox copies of four (4) tax
declarations of the riceland leased to him and copies of the lease contract between him and Judge Concepcion Salud,
and (3) his Residence Tax Certificate. Private respondent Soriano's documents were processed and accordingly, he was
given a quota of 2,640 cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum
number of cavans of palay that Soriano may sell to the NFA.In the afternoon of August 23, 1979 and on the following
day, August 24, 1979, Soriano delivered 630 cavans of palay. The palay delivered during these two days were not
rebagged, classified and weighed. when Soriano demanded payment of the 630 cavans of palay, he was informed that
its payment will be held in abeyance since Mr. Cabal was still investigating on an information he received that Soriano
was not a bona tide farmer and the palay delivered by him was not produced from his farmland but was taken from the
warehouse of a rice trader, Ben de Guzman. On August 28, 1979, Cabal wrote Soriano advising him to withdraw from
the NFA warehouse the 630 cavans Soriano delivered stating that NFA cannot legally accept the said delivery on the
basis of the subsequent certification of the BAEX technician, Napoleon Callangan that Soriano is not a bona fide
farmer.Instead of withdrawing the 630 cavans of palay, private respondent Soriano insisted that the palay grains
delivered be paid. He then filed a complaint for specific performance and/or collection of money with damages on
November 2, 1979, against the National Food Authority and Mr. William Cabal, Provincial Manager of NFA with the
Court of First Instance of Tuguegarao.

Issue: whether or not there was a contract of sale in the case at bar

Ruling: Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting
parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay
therefore a price certain in money or its equivalent. A contract, on the other hand, is a meeting of minds between two
(2) persons whereby one binds himself, with respect to the other, to give something or to render some service (Art.
1305, Civil Code of the Philippines). The essential requisites of contracts are: (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 (Art.
1318, Civil Code of the Philippines.

In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter
accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a
meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's
farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of
palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New
Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the
contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this
case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of
palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans.

The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of
the goods delivered as contended by petitioners.From the moment the contract of sale is perfected, it is incumbent upon
the parties to comply with their mutual obligations or "the parties may reciprocally demand performance" thereof.
(Article 1475, Civil Code, 2nd par.).The reason why NFA initially refused acceptance of the 630 cavans of palay
delivered by Soriano is that it (NFA) cannot legally accept the said delivery because Soriano is allegedly not a bona
fide farmer. The trial court and the appellate court found that Soriano was a bona fide farmer and therefore, he was
qualified to sell palay grains to NFA.
 G.R. No. 83851. March 3, 1993.
VISAYAN SAWMILL COMPANY, INC., and ANG TAY, petitioners, vs. THE HONORABLE COURT OF
APPEALS and RJH TRADING, represented by RAMON J. HIBIONADA, proprietor, respondents.
Saleto J. Erames and Edilberto V. Logronio for petitioners.
Eugenio O. Original for private respondent.

SYLLABUS
1. CIVIL LAW; CONTRACT TO SELL; EFFECT OF VENDEE'S FAILURE TO COMPLY WITH POSITIVE
SUSPENSIVE CONDITION; CASE AT BAR. The petitioner corporation's obligation to sell is unequivocally subject to a
positive suspensive condition, i.e., the private respondent's opening, making or indorsing of an irrevocable and unconditional
letter of credit. The former agreed to deliver the scrap iron only upon payment of the purchase price by means of an
irrevocable and unconditional letter of credit. Otherwise stated, the contract is not one of sale where the buyer acquired
ownership over the property subject to the resolutory condition that the purchase price would be paid after delivery. Thus,
there was to be no actual sale until the opening, making or indorsing of the irrevocable and unconditional letter of credit.
Since what obtains in the case at bar is a mere promise to sell, the failure of the private respondent to comply with the
positive suspensive condition cannot even be considered a breach casual or serious but simply an event that prevented
the obligation of petitioner corporation to convey title from acquiring binding force. In Luzon Brokerage Co., Inc. vs.
Maritime Building Co., Inc., this Court stated: ". . . The upshot of all these stipulations is that in seeking the ouster of
Maritime for failure to pay the price as agreed upon, Myers was not rescinding (or more properly, resolving) the contract, but
precisely enforcing it according to its express terms. In its suit Myers was not seeking restitution to it of the ownership of the
thing sold (since it was never disposed of), such restoration being the logical consequence of the fulfillment of a resolutory
condition, express or implied (Article 1190); neither was it seeking a declaration that its obligation to sell was extinguished.
What it sought was a judicial declaration that because the suspensive condition (full and punctual payment) had not been
fulfilled, its obligation to sell to Maritime never arose or never became effective and, therefore, it (Myers) was entitled to
repossess the property object of the contract, possession being a mere incident to its right of ownership. It is elementary that,
as stated by Castan, -- 'b) Si la condicion suspensiva llega a faltar, la obligacion se tiene por no existente, y el acreedor pierde
todo derecho, incluso el de utilizar las medidas conservativas.'(3 Castan, Derecho Civil, 7a Ed., p. 107). (Also Puig Pea,
Der. Civ., T. IV (1), p. 113).'"
2. ID.; ID.; ID.; RESCISSION. The obligation of the petitioner corporation to sell did not arise; it therefore cannot be
compelled by specific performance to comply with its prestation. In short, Article 1191 of the Civil Code does not apply; on
the contrary, pursuant to Article 1597 of the Civil Code, the petitioner corporation may totally rescind, as it did in this case,
the contract. Said Article provides: "ART. 1597. Where the goods have not been delivered to the buyer, and the buyer has
repudiated the contract of sale, or has manifested his inability to perform his obligations, thereunder, or has committed a
breach thereof, the seller may totally rescind the contract of sale by giving notice of his election so to do to the buyer."
3. ID.; ID.; IN CASE AT BAR, VENDOR'S CONSENT TO DIGGING UP AND GATHERING OF SCRAP IRON NOT
CONSTRUED AS DELIVERY THEREOF; REASONS THEREFOR. Paragraph 6 of the Complaint reads: "6. That on
May 17, 1983 Plaintiff with the consent of defendant Ang Tay sent his men to the stockyard of Visayan Sawmill Co., Inc. at
Cawitan, Sta. Catalina, Negros Oriental to dig and gather the scrap iron and stock the same for weighing." This permission or
consent can, by no stretch of the imagination, be construed as delivery of the scrap iron in the sense that, as held by the
public respondent, citing Article 1497 of the Civil Code, petitioners placed the private respondent in control and possession
thereof. In the first place, said Article 1497 falls under the Chapter Obligations of the Vendor, which is found in Title VI
(Sales), Book IV of the Civil Code. As such, therefore, the obligation imposed therein is premised on an existing obligation
to deliver the subject of the contract. In the instant case, in view of the private respondent's failure to comply with the
positive suspensive condition earlier discussed, such an obligation had not yet arisen. In the second place, it was a mere
accommodation to expedite the weighing and hauling of the iron in the event that the sale would materialize. The private
respondent was not thereby placed in possession of and control over the scrap iron. Thirdly, We cannot even assume the
conversion of the initial contract or promise to sell into a contract of sale by the petitioner corporation's alleged implied
delivery of the scrap iron because its action and conduct in the premises do not support this conclusion. Indeed, petitioners
demanded the fulfillment of the suspensive condition and eventually cancelled the contract.
4. ID.; CONTRACTS; DAMAGES; MORAL DAMAGES; PURPOSE OF AWARD THEREOF; EXEMPLARY
DAMAGES. In contracts, such as in the instant case, moral damages may be recovered if defendants acted fraudulently
and in bad faith, while exemplary damages may only be awarded if defendants acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. In the instant case, the refusal of the petitioners to deliver the scrap iron was founded on
the non-fulfillment by the private respondent of a suspensive condition. It cannot, therefore, be said that the herein
petitioners had acted fraudulently and in bad faith or in a wanton, reckless, oppressive or malevolent manner. What this
Court stated in Inhelder Corp. vs. Court of Appeals needs to be stressed anew: "At this juncture, it may not be amiss to
remind Trial Courts to guard against the award of exhorbitant (sic) damages that are way out of proportion to the
environmental circumstances of a case and which, time and again, this Court has reduced or eliminated. Judicial discretion
granted to the Courts in the assessment of damages must always be exercised with balanced restraint and measured
objectivity." For, indeed, moral damages are emphatically not intended to enrich a complainant at the expense of the
defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to
obviate the moral suffering he has undergone, by reason of the defendant's culpable action. Its award is aimed at the restoration,
within the limits of the possible, of the spiritual status quo ante, and it must be proportional to the suffering inflicted.
DECISION
DAVIDE, JR., J p:
By this petition for review under Rule 45 of the Rules of Court, petitioners urge this Court to set aside the decision of public
respondent Court of Appeals in C.A.-G.R. CV No. 08807, 1 promulgated on 16 March 1988, which affirmed with modification, in
respect to the moral damages, the decision of the Regional Trial Court (RTC) of Iloilo in Civil Case No. 15128, an action for
specific performance and damages, filed by the herein private respondent against the petitioners. The dispositive portion of the trial
court's decision reads as follows:
"IN VIEW OF THE ABOVE FINDINGS, judgment is hereby rendered in favor of plaintiff and against the defendants
ordering the latter to pay jointly and severally plaintiff, to wit:
1) The sum of Thirty-Four Thousand Five Hundred Eighty Three and 16/100 (P34,583.16), as actual damages;
2) The sum of One Hundred Thousand (P100,000.00) Pesos, as moral damages;
3) The sum of Ten Thousand (P10,000.00) Pesos, as exemplary damages;
4) The sum of TWENTY Five Thousand (P25,000.00) Pesos, as attorney's fees; and
5) The sum of Five Thousand (P5,000.00) Pesos as actual litis expenses." 2
The public respondent reduced the amount of moral damages to P25,000.00.
The antecedent facts, summarized by the public respondent, are as follows:
"On May 1, 1983, herein plaintiff-appellee and defendants-appellants entered into a sale involving scrap iron located at the
stockyard of defendant-appellant corporation at Cawitan, Sta. Catalina, Negros Oriental, subject to the condition that plaintiff-
appellee will open a letter of credit in the amount of P250,000.00 in favor of defendant-appellant corporation on or before May 15,
1983. This is evidenced by a contract entitled `Purchase and Sale of Scrap Iron' duly signed by both parties.
On May 17, 1983, plaintiff-appellee through his man (sic), started to dig and gather and (sic) scrap iron at the
defendant-appellant's (sic) premises, proceeding with such endeavor until May 30 when defendants-appellants
allegedly directed plaintiff-appellee's men to desist from pursuing the work in view of an alleged case filed against
plaintiff-appellee by a certain Alberto Pursuelo. This, however, is denied by defendants-appellants who allege that on
May 23, 1983, they sent a telegram to plaintiff-appellee cancelling the contract of sale because of failure of the latter to
comply with the conditions thereof.
On May 24, 1983, plaintiff-appellee informed defendants-appellants by telegram that the letter of credit was opened
May 12, 1983 at the Bank of the Philippine Islands main office in Ayala, but then (sic) the transmittal was delayed.
On May 26, 1983, defendants-appellants received a letter advice from the Dumaguete City Branch of the Bank of the
Philippine Islands dated May 26, 1983, the content of which is quited (sic) as follows:
'Please be advised that we have received today cable advise from our Head Office which reads as follows:
'Open today our irrevocable Domestic Letter of Credit No. 01456-d fot (sic) P250,000.00 favor ANG TAY c/o Visayan Sawmill
Co., Inc. Dumaguete City, Negros Oriental Account of ARMACO-MARSTEEL ALLOY CORPORATION 2nd Floor Alpap 1
Bldg., 140 Alfaro stp (sic) Salcedo Village, Makati, Metro Manila Shipments of about 500 MT of assorted steel scrap
marine/heavy equipment expiring on July 24, 1983 without recourse at sight draft drawn on Armaco Marsteel Alloy Corporation
accompanied by the following documents: Certificate of Acceptance by Armaco-Marsteel Alloy Corporation shipment from
Dumaguete City to buyer's warehouse partial shipment allowed/transhipment (sic) not allowed'.
For your information'.
On July 19, 1983, plaintiff-appellee sent a series of telegrams stating that the case filed against him by Pursuelo had been dismissed
and demanding that defendants-appellants comply with the deed of sale, otherwise a case will be filed against them.
In reply to those telegrams, defendants-appellants' lawyer, on July 20, 1983 informed plaintiff-appellee's lawyer that
defendant-appellant corporation is unwilling to continue with the sale due to plaintiff-appellee's failure to comply with
essential pre-conditions of the contract.
On July 29, 1983, plaintiff-appellee filed the complaint below with a petition for preliminary attachment. The writ of
attachment was returned unserved because the defendant-appellant corporation was no longer in operation and also
because the scrap iron as well as other pieces of machinery can no longer be found on the premises of the corporation."
In his complaint, private respondent prayed for judgment ordering the petitioner corporation to comply with the
contract by delivering to him the scrap iron subject thereof; he further sought an award of actual, moral and exemplary
damages, attorney's fees and the costs of the suit.
In their Answer with Counterclaim, 5 petitioners insisted that the cancellation of the contract was justified because of
private respondent's non-compliance with essential pre-conditions, among which is the opening of an irrevocable and
unconditional letter of credit not later than 15 May 1983.
During the pre-trial of the case on 30 April 1984, the parties defined the issues to be resolved; these issues were
subsequently embodied in the pre-trial order, to wit:
"1. Was the contract entitled Purchase and Sale of Scrap Iron, dated May 1, 1983 executed by the parties cancelled and
terminated before the Complaint was filed by anyone of the parties; if so, what are the grounds and reasons relied upon
by the cancelling parties; and were the reasons or grounds for cancelling valid and justified?
2. Are the parties entitled to damages they respectively claim under the pleadings?"
On 29 November 1985, the trial court rendered its judgment, the dispositive portion of which was quoted earlier.
Petitioners appealed from said decision to the Court of Appeals which docketed the same as C.A.-G.R. CV No. 08807.
In their Brief, petitioners, by way of assigned errors, alleged that the trial court erred:
1. In finding that there was delivery of the scrap iron subject of the sale;
2. In not finding that plaintiff had not complied with the conditions in the contract of sale;
3. In finding that defendants-appellants were not justified in cancelling the sale;
4. In awarding damages to the plaintiff as against the defendants-appellants;
5. In not awarding damages to defendants-appellants." 7
Public respondent disposed of these assigned errors in this wise:
"On the first error assigned, defendants-appellants argue that there was no delivery because the purchase document
states that the seller agreed to sell and the buyer agreed to buy 'an undetermined quantity of scrap iron and junk which
the seller will identify and designate.' Thus, it is contended, since no identification and designation was made, there
could be no delivery. In addition, defendants-appellants maintain that their obligation to deliver cannot be completed
until they furnish the cargo trucks to haul the weighed materials to the wharf.
The arguments are untenable. Article 1497 of the Civil Code states:
'The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee.'
In the case at bar, control and possession over the subject matter of the contract was given to plaintiff-appellee, the
buyer, when the defendants-appellants as the sellers allowed the buyer and his men to enter the corporation's premises
and to dig-up the scrap iron. The pieces of scrap iron then (sic) placed at the disposal of the buyer. Delivery was
therefore complete. The identification and designation by the seller does not complete delivery.
On the second and third assignments of error, defendants-appellants argue that under Articles 1593 and 1597 of the Civil Code,
automatic rescission may take place by a mere notice to the buyer if the latter committed a breach of the contract of sale.
Even if one were to grant that there was a breach of the contract by the buyer, automatic rescission cannot take place
because, as already (sic) stated, delivery had already been made. And, in cases where there has already been delivery,
the intervention of the court is necessary to annul the contract.
As the lower court aptly stated:
'Respecting these allegations of the contending parties, while it is true that Article 1593 of the New Civil Code
provides that with respect to movable property, the rescission of the sale shall of right take place in the interest of the
vendor, if the vendee fails to tender the price at the time or period fixed or agreed, however, automatic rescission is not
allowed if the object sold has been delivered to the buyer (Guevarra vs. Pascual, 13 Phil. 311; Escueta vs. Pando, 76
Phil 256), the action being one to rescind judicially and where (sic) Article 1191, supra, thereby applies. There being
already an implied delivery of the items, subject matter of the contract between the parties in this case, the defendant having
surrendered the premises where the scraps (sic) were found for plaintiff's men to dig and gather, as in fact they had dug and
gathered, this Court finds the mere notice of resolution by the defendants untenable and not conclusive on the rights of the
plaintiff (Ocejo Perez vs. Int. Bank, 37 Phi. 631). Likewise, as early as in the case of Song Fo vs. Hawaiian Philippine
Company, it has been ruled that rescission cannot be sanctioned for a slight or casual breach (47 Phil. 821).'
In the case of Angeles vs. Calasanz (135 (1935) SCRA 323), the Supreme Court ruled:
'Article 1191 is explicit. In reciprocal obligations, either party has the right to rescind the contract upon failure of the
other to perform the obligation assumed thereunder.
Of course, it must be understood that the right of a party in treating a contract as cancelled or resolved on account of
infractions by the other contracting party must be made known to the other and is always provisional, being ever
subject to scrutiny and review by the proper court.'
Thus, rescission in cases falling under Article 1191 of the Civil Code is always subject to review by the courts and
cannot be considered final.
In the case at bar, the trial court ruled that rescission is improper because the breach was very slight and the delay in
opening the letter of credit was only 11 days.
'Where time is not of the essence of the agreement, a slight delay by one party in the performance of his obligation is not a
sufficient ground for rescission of the agreement. Equity and justice mandates (sic) that the vendor be given additional (sic) period
to complete payment of the purchase price.' (Taguda vs. Vda. de Leon, 132 SCRA (1984), 722).'
There is no need to discuss the fourth and fifth assigned errors since these are merely corollary to the first three assigned errors."
Their motion to reconsider the said decision having been denied by public respondent in its Resolution of 4 May 1988,
9 petitioners filed this petition reiterating the abovementioned assignment of errors.
There is merit in the instant petition.
Both the trial court and the public respondent erred in the appreciation of the nature of the transaction between the
petitioner corporation and the private respondent. To this Court's mind, what obtains in the case at bar is a mere
contract to sell or promise to sell, and not a contract of sale.
The trial court assumed that the transaction is a contract of sale and, influenced by its view that there was an "implied
delivery" of the object of the agreement, concluded that Article 1593 of the Civil Code was inapplicable; citing
Guevarra vs. Pascual 10 and Escueta vs. Pando, 11 it ruled that rescission under Article 1191 of the Civil Code could
only be done judicially. The trial court further classified the breach committed by the private respondent as slight or
casual, foreclosing, thereby, petitioners' right to rescind the agreement.
Article 1593 of the Civil Code provides:
"ARTICLE 1593. With respect to movable property, the rescission of the sale shall of right take place in the interest of
the vendor, if the vendee, upon the expiration of the period fixed for the delivery of the thing, should not have appeared
to receive it, or, having appeared, he should not have tendered the price at the same time, unless a longer period has
been stipulated for its payment."
Article 1191 provides:
"ARTICLE 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period."
xxx xxx xxx

Sustaining the trial court on the issue of delivery, public respondent cites Article 1497 of the Civil Code which provides:
"ARTICLE 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee."
In the agreement in question, entitled PURCHASE AND SALE OF SCRAP IRON, 12 the seller bound and promised
itself to sell the scrap iron upon the fulfillment by the private respondent of his obligation to make or indorse an
irrevocable and unconditional letter of credit in payment of the purchase price. Its principal stipulation reads, to wit:
xxx xxx xxx

"Witnesseth:
That the SELLER agrees to sell, and the BUYER agrees to buy, an undetermined quantity of scrap iron and junk which
the SELLER will identify and designate now at Cawitan, Sta. Catalina, Negros Oriental, at the price of FIFTY
CENTAVOS (P0.50) per kilo on the following terms and conditions:
1. Weighing shall be done in the premises of the SELLER at Cawitan, Sta. Catalina, Neg. Oriental.
2. To cover payment of the purchase price, BUYER will open, make or indorse an irrevocable and unconditional letter of
credit not later than May 15, 1983 at the Consolidated Bank and Trust Company, Dumaguete City, Branch, in favor of the
SELLER in the sum of TWO HUNDRED AND FIFTY THOUSAND PESOS (P250,000.00), Philippine Currency.
3. The SELLER will furnish the BUYER free of charge at least three (3) cargo trucks with drivers, to haul the weighed
materials from Cawitan to the TSMC wharf at Sta. Catalina for loading on BUYER's barge. All expenses for labor,
loading and unloading shall be for the account of the BUYER.
4. SELLER shall be entitled to a deduction of three percent (3%) per ton as rust allowance." (Emphasis supplied).
The petitioner corporation's obligation to sell is unequivocally subject to a positive suspensive condition, i.e., the
private respondent's opening, making or indorsing of an irrevocable and unconditional letter of credit. The former
agreed to deliver the scrap iron only upon payment of the purchase price by means of an irrevocable and unconditional
letter of credit. Otherwise stated, the contract is not one of sale where the buyer acquired ownership over the property
subject to the resolutory condition that the purchase price would be paid after delivery. Thus, there was to be no actual
sale until the opening, making or indorsing of the irrevocable and unconditional letter of credit. Since what obtains in
the case at bar is a mere promise to sell, the failure of the private respondent to comply with the positive suspensive
condition cannot even be considered a breach casual or serious but simply an event that prevented the obligation
of petitioner corporation to convey title from acquiring binding force. In Luzon Brokerage Co., Inc. vs. Maritime
Building Co., Inc., 13 this Court stated:
" . . . The upshot of all these stipulations is that in seeking the ouster of Maritime for failure to pay the price as agreed
upon, Myers was not rescinding (or more properly, resolving) the contract, but precisely enforcing it according to its
express terms. In its suit Myers was not seeking restitution to it of the ownership of the thing sold (since it was never
disposed of), such restoration being the logical consequence of the fulfillment of a resolutory condition, express or
implied (article 1190); neither was it seeking a declaration that its obligation to sell was extinguished. What it sought was a
judicial declaration that because the suspensive condition (full and punctual payment) had not been fulfilled, its obligation to
sell to Maritime never arose or never became effective and, therefore, it (Myers) was entitled to repossess the property object
of the contract, possession being a mere incident to its right of ownership. It is elementary that, as stated by Castan,
'b) Si la condicion suspensiva llega a faltar, la obligacion se tiene por no existente, y el acreedor pierde todo derecho,
incluso el de utilizar las medidas conservativas.' (3 Cast n, Derecho Civil, 7a Ed., p. 107). (Also Puig Pea, Der. Civ.,
T. IV (1), p. 113)'."
In the instant case, not only did the private respondent fail to open, make or indorse an irrevocable and unconditional
letter of credit on or before 15 May 1983 despite his earlier representation in his 24 May 1983 telegram that he had
opened one on 12 May 1983, the letter of advice received by the petitioner corporation on 26 May 1983 from the Bank
of the Philippine Islands Dumaguete City branch explicitly makes reference to the opening on that date of a letter of
credit in favor of petitioner Ang Tay c/o Visayan Sawmill Co. Inc., drawn without recourse on ARMACO-
MARSTEEL ALLOY CORPORATION and set to expire on 24 July 1983, which is indisputably not in accordance
with the stipulation in the contract signed by the parties on at least three (3) counts: (1) it was not opened, made or
indorsed by the private respondent, but by a corporation which is not a party to the contract; (2) it was not opened with
the bank agreed upon; and (3) it is not irrevocable and unconditional, for it is without recourse, it is set to expire on a specific
date and it stipulates certain conditions with respect to shipment. In all probability, private respondent may have sold the
subject scrap iron to ARMACO-MARSTEEL ALLOY CORPORATION, or otherwise assigned to it the contract with the
petitioners. Private respondent's complaint fails to disclose the sudden entry into the picture of this corporation.
Consequently, the obligation of the petitioner corporation to sell did not arise; it therefore cannot be compelled by
specific performance to comply with its prestation. In short, Article 1191 of the Civil Code does not apply; on the
contrary, pursuant to Article 1597 of the Civil Code, the petitioner corporation may totally rescind, as it did in this
case, the contract. Said Article provides:
"ARTICLE 1597. Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract of
sale, or has manifested his inability to perform his obligations, thereunder, or has committed a breach thereof, the seller
may totally rescind the contract of sale by giving notice of his election so to do to the buyer."
The trial court ruled, however, and the public respondent was in agreement, that there had been an implied delivery in
this case of the subject scrap iron because on 17 May 1983, private respondent's men started digging up and gathering
scrap iron within the petitioner's premises. The entry of these men was upon the private respondent's request. Paragraph
6 of the Complaint reads:
"6. That on May 17, 1983 Plaintiff with the consent of defendant Ang Tay sent his men to the stockyard of Visayan Sawmill
Co., Inc. at Cawitan, Sta. Catalina, Negros Oriental to dig and gather the scrap iron and stock the same for weighing.
This permission or consent can, by no stretch of the imagination, be construed as delivery of the scrap iron in the sense
that, as held by the public respondent, citing Article 1497 of the Civil Code, petitioners placed the private respondent in
control and possession thereof. In the first place, said Article 1497 falls under the Chapter 15 Obligations of the
Vendor, which is found in Title VI (Sales), Book IV of the Civil Code. As such, therefore, the obligation imposed
therein is premised on an existing obligation to deliver the subject of the contract. In the instant case, in view of the
private respondent's failure to comply with the positive suspensive condition earlier discussed, such an obligation had
not yet arisen. In the second place, it was a mere accommodation to expedite the weighing and hauling of the iron in
the event that the sale would materialize. The private respondent was not thereby placed in possession of and control
over the scrap iron. Thirdly, We cannot even assume the conversion of the initial contract or promise to sell into a
contract of sale by the petitioner corporation's alleged implied delivery of the scrap iron because its action and conduct
in the premises do not support this conclusion. Indeed, petitioners demanded the fulfillment of the suspensive condition
and eventually cancelled the contract.
All told, Civil Case No. 15128 filed before the trial court was nothing more than the private respondent's preemptive
action to beat the petitioners to the draw.
One last point. This Court notes the palpably excessive and unconscionable moral and exemplary damages awarded by
the trial court to the private respondent despite a clear absence of any legal and factual basis therefor. In contracts, such
as in the instant case, moral damages may be recovered if defendants acted fraudulently and in bad faith, 16 while
exemplary damages may only be awarded if defendants acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. 17 In the instant case, the refusal of the petitioners to deliver the scrap iron was founded on the
non-fulfillment by the private respondent of a suspensive condition. It cannot, therefore, be said that the herein
petitioners had acted fraudulently and in bad faith or in a wanton, reckless, oppressive or malevolent manner. What this
Court stated in Inhelder Corp. vs. Court of Appeals 18 needs to be stressed anew:
"At this juncture, it may not be amiss to remind Trial Courts to guard against the award of exhorbitant (sic) damages
that are way out of proportion to the environmental circumstances of a case and which, time and again, this Court has
reduced or eliminated. Judicial discretion granted to the Courts in the assessment of damages must always be exercised
with balanced restraint and measured objectivity."
For, indeed, moral damages are emphatically not intended to enrich a complainant at the expense of the defendant.
They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to obviate
the moral suffering he has undergone, by reason of the defendant's culpable action. Its award is aimed at the
restoration, within the limits of the possible, of the spiritual status quo ante, and it must be proportional to the suffering
inflicted. 19
WHEREFORE, the instant petition is GRANTED. The decision of public respondent Court of Appeals in C.A.-G.R.
CV No. 08807 is REVERSED and Civil Case No. 15128 of the Regional Trial Court of Iloilo is ordered DISMISSED.
Costs against the private respondent.
SO ORDERED.
 ACE FOODS, INC., Petitioner, vs.
MICRO PACIFIC TECHNOLOGIES CO., LTD.1, Respondent.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari2are the Decision3 dated October 21, 2011 and Resolution4 dated
February 8, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 89426 which reversed and set aside the Decision5
dated February 28, 2007 of the Regional Trial Court of Makati, Branch 148 (RTC) in Civil Case No. 02-1248, holding
petitioner ACE Foods, Inc. (ACE Foods) liable to respondent Micro Pacific Technologies Co., Ltd. (MTCL) for the
payment of Cisco Routers and Frame Relay Products (subject products) amounting to P646,464.00 pursuant to a
perfected contract of sale.

The Facts
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer goods in wholesale and retail

On September 26, 2001, MTCL sent a letter-proposal8 for the delivery and sale of the subject products to be installed at
various offices of ACE Foods. Aside from the itemization of the products offered for sale, the said proposal further
provides for the following terms, viz.:9

TERMS : Thirty (30) days upon delivery

VALIDITY : Prices are based on current dollar rate and subject to changes without prior notice.
DELIVERY : Immediate delivery for items on stock, otherwise thirty (30) to forty-five days upon receipt of [Purchase
Order]
WARRANTY : One (1) year on parts and services. Accessories not included in warranty.

On October 29, 2001, ACE Foods accepted MTCLs proposal and accordingly issued Purchase Order No. 100023 10
(Purchase Order) for the subject products amounting to P646,464.00 (purchase price). Thereafter, or on March 4, 2002,
MTCL delivered the said products to ACE Foods as reflected in Invoice No. 7733 11 (Invoice Receipt). The fine print
of the invoice states, inter alia, that "[t]itle to sold property is reserved in MICROPACIFIC TECHNOLOGIES CO.,
LTD. until full compliance of the terms and conditions of above and payment of the price"12 (title reservation
stipulation). After delivery, the subject products were then installed and configured in ACE Foodss premises. MTCLs
demands against ACE Foods to pay the purchase price, however, remained unheeded.13 Instead of paying the purchase
price, ACE Foods sent MTCL a Letter14 dated September 19, 2002, stating that it "ha[s] been returning the [subject
products] to [MTCL] thru [its] sales representative Mr. Mark Anteola who has agreed to pull out the said [products] but
had failed to do so up to now."

Eventually, or on October 16, 2002, ACE Foods lodged a Complaint15 against MTCL before the RTC, praying that the
latter pull out from its premises the subject products since MTCL breached its "after delivery services" obligations to it,
particularly, to: (a) install and configure the subject products; (b) submit a cost benefit study to justify the purchase of
the subject products; and (c) train ACE Foodss technicians on how to use and maintain the subject products. 16 ACE
Foods likewise claimed that the subject products MTCL delivered are defective and not working. 17

For its part, MTCL, in its Answer with Counterclaim,18 maintained that it had duly complied with its obligations to
ACE Foods and that the subject products were in good working condition when they were delivered, installed and
configured in ACE Foodss premises. Thereafter, MTCL even conducted a training course for ACE Foodss
representatives/employees; MTCL, however, alleged that there was actually no agreement as to the purported "after
delivery services." Further, MTCL posited that ACE Foods refused and failed to pay the purchase price for the subject
products despite the latters use of the same for a period of nine (9) months. As such, MTCL prayed that ACE Foods be
compelled to pay the purchase price, as well as damages related to the transaction.19

The RTC Ruling

On February 28, 2007, the RTC rendered a Decision, 20 directing MTCL to remove the subject products from ACE
Foodss premises and pay actual damages and attorney fees in the amounts of P200,000.00 and P100,000.00,
respectively.21

At the outset, it observed that the agreement between ACE Foods and MTCL is in the nature of a contract to sell. Its
conclusion was based on the fine print of the Invoice Receipt which expressly indicated that "title to sold property is
reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above
and payment of the price," noting further that in a contract to sell, the prospective seller explicitly reserves the transfer
of title to the prospective buyer, and said transfer is conditioned upon the full payment of the purchase price.22 Thus,
notwithstanding the execution of the Purchase Order and the delivery and installation of the subject products at the
offices of ACE Foods, by express stipulation stated in the Invoice Receipt issued by MTCL and signed by ACE Foods,
i.e., the title reservation stipulation, it is still the former who holds title to the products until full payment of the
purchase price therefor. In this relation, it noted that the full payment of the price is a positive suspensive condition, the
non-payment of which prevents the obligation to sell on the part of the seller/vendor from materializing at all. 23 Since
title remained with MTCL, the RTC therefore directed it to withdraw the subject products from ACE Foodss premises.
Also, in view of the foregoing, the RTC found it unnecessary to delve into the allegations of breach since the non-
happening of the aforesaid suspensive condition ipso jure prevented the obligation to sell from arising.24
Dissatisfied, MTCL elevated the matter on appeal.25

The CA Ruling
In a Decision26 dated October 21, 2011, the CA reversed and set aside the RTCs ruling, ordering ACE Foods to pay
MTCL the amount of P646,464.00, plus legal interest at the rate of 6% per annum to be computed from April 4, 2002,
and attorneys fees amounting to P50,000.00.27

It found that the agreement between the parties is in the nature of a contract of sale, observing that the said contract had
been perfected from the time ACE Foods sent the Purchase Order to MTCL which, in turn, delivered the subject
products covered by the Invoice Receipt and subsequently installed and configured them in ACE Foodss premises. 28
Thus, considering that MTCL had already complied with its obligation, ACE Foodss corresponding obligation arose
and was then duty bound to pay the agreed purchase price within thirty (30) days from March 5, 2002. 29 In this light,
the CA concluded that it was erroneous for ACE Foods not to pay the purchase price therefor, despite its receipt of the
subject products, because its refusal to pay disregards the very essence of reciprocity in a contract of sale. 30 The CA
also dismissed ACE Foodss claim regarding MTCLs failure to perform its "after delivery services" obligations since
the letter-proposal, Purchase Order and Invoice Receipt do not reflect any agreement to that effect.31
32
Aggrieved, ACE Foods moved for reconsideration which was, however, denied in a Resolution dated February 8,
2012, hence, this petition.

The Issue Before the Court

The essential issue in this case is whether ACE Foods should pay MTCL the purchase price for the subject products.

The Courts Ruling

The petition lacks merit.
A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting
parties call it.33 The real nature of a contract may be determined from the express terms of the written agreement and
from the contemporaneous and subsequent acts of the contracting parties. However, in the construction or
interpretation of an instrument, the intention of the parties is primordial and is to be pursued. The denomination or
title given by the parties in their contract is not conclusive of the nature of its contents.34

The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised. 35 This
may be gleaned from Article 1458 of the Civil Code which defines a contract of sale as follows:

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

A contract of sale may be absolute or conditional. (Emphasis supplied)

Corollary thereto, a contract of sale is classified as a consensual contract, which means that the sale is perfected by
mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may
reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and the
vendor may require the vendee to pay the thing sold.36

In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the
purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur.37

In this case, the Court concurs with the CA that the parties have agreed to a contract of sale and not to a contract to sell
as adjudged by the RTC. Bearing in mind its consensual nature, a contract of sale had been perfected at the precise
moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latters proposal to sell
the subject products in consideration of the purchase price of P646,464.00. From that point in time, the reciprocal
obligations of the parties i.e., on the one hand, of MTCL to deliver the said products to ACE Foods, and, on the other
hand, of ACE Foods to pay the purchase price therefor within thirty (30) days from delivery already arose and
consequently may be demanded. Article 1475 of the Civil Code makes this clear:

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

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

At this juncture, the Court must dispel the notion that the stipulation anent MTCLs reservation of ownership of the
subject products as reflected in the Invoice Receipt, i.e., the title reservation stipulation, changed the complexion of the
transaction from a contract of sale into a contract to sell. Records are bereft of any showing that the said stipulation
novated the contract of sale between the parties which, to repeat, already existed at the precise moment ACE Foods
accepted MTCLs proposal. To be sure, novation, in its broad concept, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it
is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory
agreement. In either case, however, novation is never presumed, and the animus novandi, whether totally or partially,
must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. 38

In the present case, it has not been shown that the title reservation stipulation appearing in the Invoice Receipt had been
included or had subsequently modified or superseded the original agreement of the parties. The fact that the Invoice
Receipt was signed by a representative of ACE Foods does not, by and of itself, prove animus novandi since: (a) it was
not shown that the signatory was authorized by ACE Foods (the actual party to the transaction) to novate the original
agreement; (b) the signature only proves that the Invoice Receipt was received by a representative of ACE Foods to
show the fact of delivery; and (c) as matter of judicial notice, invoices are generally issued at the consummation stage
of the contract and not its perfection, and have been even treated as documents which are not actionable per se,
although they may prove sufficient delivery. 39 Thus, absent any clear indication that the title reservation stipulation
was actually agreed upon, the Court must deem the same to be a mere unilateral imposition on the part of MTCL which
has no effect on the nature of the parties original agreement as a contract of sale. Perforce, the obligations arising
thereto, among others, ACE Foodss obligation to pay the purchase price as well as to accept the delivery of the
goods,40 remain enforceable and subsisting.

As a final point, it may not be amiss to state that the return of the subject products pursuant to a rescissory action 41 is
neither warranted by ACE Foodss claims of breach either with respect to MTCLs breach of its purported "after
delivery services" obligations or the defective condition of the products - since such claims were not adequately proven
in this case. The rule is clear: each party must prove his own affirmative allegation; one who asserts the affirmative of
the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable
judgment, which in civil cases, is by preponderance of evidence. 42 This, however, ACE Foods failed to observe as
regards its allegations of breach. Hence, the same cannot be sustained.

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated October 21, 2011 and Resolution dated
February 8, 2012 of the Court of Appeals in CA-G.R. CV No. 89426 are hereby AFFIRMED.
SO ORDERED.
 G.R. No. 156539 September 5, 2007
DOMINGO A. DIZON, petitioner, vs. ELPIDIO R. DIZON, respondent.

DECISION
Before us is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the Decision1 dated October 18, 2002 and Resolution2 dated January 7, 2003 rendered by the Court of Appeals in CA-
G.R. SP No. 45492, entitled "Elpidio R. Dizon, petitioner, v. The Honorable Presiding Judge, Regional Trial Court, Manila,
Branch 41, Deputy Sheriff Cesar Q. Cabildo and Domingo A. Dizon, respondents."
Domingo A. Dizon, petitioner, purchased from his nephew, Elpidio R. Dizon (herein respondent), a house and lot located on
Limay St., Tondo, Manila. However, respondent failed to deliver the house and lot to petitioner. It appears that the co-owner
of the lot, respondents brother Ricardo, did not give said respondent a written authority to sell his share. Consequently,
petitioner filed with the Regional Trial Court (RTC), Branch 41, Manila a complaint for specific performance and sum of
money with damages against respondent, docketed as Civil Case No. 90-51838.
On March 20, 1992, the trial court rendered a Decision rescinding the contract of sale between the parties, thus:
PREMISES CONSIDERED, judgment is hereby rendered:
1) declaring the contract of sale entered into by and between plaintiff and defendant over that undivided portion of Lot 27-B-3 in
the name of Ricardo Dizon and the building constructed thereon rescinded;
2) ordering defendant to pay plaintiff as follows:
a) a sum of P207,000.00 with interest thereon at the legal rate from January 29, 1990 until the same is fully paid;
b) the sum of P350,000.00 with interest thereon at the rate of 3% a month from January 29, 1990 until the same is fully paid;
c) the sum of P50,000.00 as and by way of attorneys fees and expenses of litigation.3
On January 13, 1997, the trial court issued a writ of execution implemented by sheriff Cesar Cabildo. He scheduled the
auction sale of respondents properties for the satisfaction of the above judgment on April 3, 1997 at 10:00 a.m.
Petitioners attorney-in-fact as well as respondent and his counsel participated in the sale. Petitioner emerged as the highest
bidder, having offered P180,000.00 for the two (2) parcels of land owned by respondent which were attached by the sheriff.
The proceedings at the auction sale were duly recorded in the Minutes of Sheriffs Sale 4 signed by the parties and their counsels.
In the afternoon of the same date, the sheriff went to the house of respondent and showed him the "Supplemental Minutes on
Sheriffs Sale" specifying that petitioners counsel arrived at 10:45 a.m. (after the auction sale at 10:25 a.m.) and offered a
new bid of P1,690,074.41 covering the same properties in lieu of the earlier bid of P180,000.00.
Respondent refused to sign the supplemental sale contending that it will be difficult for him to redeem the property. Besides,
the auction sale had already been perfected and, therefore, the subsequent sale is "a new or second sale." Consequently, he
filed a motion to quash the "Supplemental Minutes on Sheriffs Sale" alleging inter alia that the supplemental sale is void
because it was prepared at 10:25 a.m. after the auction sale at 10:00 a.m.
In an Order dated May 5, 1997, the trial court denied respondents motion to quash "it appearing that the subject
supplemental sale redounds to the benefit of movant-defendant as it obviates the execution and/or garnishment of any other
property, income, or deposits of movant-defendant."5
Respondent filed a motion for reconsideration, but it was also denied by the trial court in its Order dated August 12, 1997.
He then filed a petition for certiorari and prohibition with the Court of Appeals alleging that the RTC judge committed grave
abuse of discretion in upholding the validity of the "Supplemental Minutes on Sheriffs Sale."
In its assailed Decision dated October 18, 2002, the appellate court granted the petition and set aside the questioned Orders
of the RTC dated May 5, 1997 and August 12, 1997, thus:
The record shows that the auction sale begun on time, that is 10:00 AM of April 3, 1997, wherein both parties as well as their
respective counsels appeared and participated in the bid as reflected in the Minutes of Sheriffs Sale. As certified by the
respondent sheriff himself, the said sale was finished at exactly 10:25 oclock in the morning of said date. The amended bid
therefore of private respondents counsel made at 10:45 AM of even date could not be considered as valid as the same was made
after the perfection of the auction sale.
xxx

Consequently, the respondent judge is considered to have gravely abused his discretion in upholding the validity of the
Supplemental Minutes on Sheriffs Sale.6
Petitioner filed a motion for reconsideration but it was denied by the appellate court in its Resolution dated January 7, 2003.
Hence, the instant petition.
Petitioner contends that as the highest bidder, he has the option to amend his bid in order to conform to the amounts awarded
in his favor by the trial court.
Respondent maintains that since the auction sale had been perfected, its consideration can no longer be modified; and that it
will be difficult for him to redeem his properties valued at P1,690,074.41 instead of only P180,000.00.
Article 1476, paragraph 2 of the Civil Code provides:
Article 1476. In the case of a sale by auction:
xxx

(2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other
customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the
goods from the sale unless the auction has been announced to be without reserve.
During the public auction conducted on April 3, 1997 which ended at 10:25 a.m., the sheriff declared petitioner the highest
bidder. Considering that the auction sale had already been perfected, a supplemental sale with higher consideration at the
instance of only one party (herein petitioner) could no longer be validly executed.
We therefore rule that in denying respondents motion to quash the "Supplemental Minutes on Sheriffs Sale," and declaring
the supplemental sale valid, the trial court gravely abused its discretion.
WHEREFORE, we DENY the petition and AFFIRM the challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
45492. Costs against petitioner. SO ORDERED.
 Dizon vs Dizon
GR No. 156539, 5 September 2007

FACTS
Petitioner Domingo Dizon purchased from his nephew, herein respondent Elpidio Dizon a house and lot located in
Tondo, Manila. Respondent failed to deliver the house and lot to petitioner. Co-owner of the lot, respondents brother
Ricardo, did not give said respondent a written authority to sell his share. Petitioner then filed with the RTC a
complaint for specific performance and sum of money with damages against respondent. RTC rendered a decision
rescinding the contract between the parties.

The trial court issued a writ of execution implemented by sheriff Cesar Cabildo, who then scheduled the auction sale of
respondents properties. Petitioners attorney-in-fact as well as respondent and counsel participated. Petitioner was the
highest bidder having offered P180,000.00. In the afternoon of said auction date, the sheriff went to respondents
house and showed Supplemental Minutes on Sheriffs Sale offering a new bid at P1,690,074.41 in lieu of the earlier
bid. Respondent refused to sign contending that it would be difficult for himto redeem the property and besides, the
auction sale had already been perfected and the subsequent sale is a new or second sale. He moved to quash the
minutes but the trial court denied the motion. His MR was also denied. On petition for certiorari and prohibition before
the CA, it granted the petition and set aside the questioned orders.

ISSUE
Has petitioner the option to amend his bid being the highest bidder to conform to the amounts awarded in his favor by
the trial court?

HELD
No. Article 1476 (2) of the Civil Code provides: xxx (2) A sale by auction is perfected when the auctioneer announces
its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder
may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to
be without reserve. During the public auction conducted, which began at 10:25 AM and ended at 10:45 AM, the sheriff
declared petitioner as the highest bidder. Considering that the auction sale had already been perfected, a supplemental
sale with the higher consideration at the instance of only one party could no longer be validly executed.
CA affirmed; petition denied
 G.R. No. L-59266 February 29, 1988
SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners, vs. HON. COURT OF APPEALS and ATILANO G. JABIL, respondents.

BIDIN, J.:
This is a petition for review on certiorari seeking the reversal of the: (1) Decision * of the 9th Division, Court of
Appeals dated July 31,1981, affirming with modification the Decision, dated August 25, 1972 of the Court of First
Instance ** of Cebu in civil Case No. 23-L entitled Atilano G. Jabil vs. Silvestre T. Dignos and Isabela Lumungsod de
Dignos and Panfilo Jabalde, as Attorney-in-Fact of Luciano Cabigas and Jovita L. de Cabigas; and (2) its Resolution
dated December 16, 1981, denying defendant-appellant's (Petitioner's) motion for reconsideration, for lack of merit.
The undisputed facts as found by the Court of Appeals are as follows:
The Dignos spouses were owners of a parcel of land, known as Lot No. 3453, of the cadastral survey of Opon, Lapu-
Lapu City. On June 7, 1965, appellants (petitioners) Dignos spouses sold the said parcel of land to plaintiff-appellant
(respondent Atilano J. Jabil) for the sum of P28,000.00, payable in two installments, with an assumption of
indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the
vendors in the deed of sale (Exh. C) executed in favor of plaintiff-appellant, and the next installment in the sum of
P4,000.00 to be paid on or before September 15, 1965.
On November 25, 1965, the Dignos spouses sold the same land in favor of defendants spouses, Luciano Cabigas and
Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale (Exh. J, also
marked Exh. 3) was executed by the Dignos spouses in favor of the Cabigas spouses, and which was registered in the
Office of the Register of Deeds pursuant to the provisions of Act No. 3344.
As the Dignos spouses refused to accept from plaintiff-appellant the balance of the purchase price of the land, and as
plaintiff- appellant discovered the second sale made by defendants-appellants to the Cabigas spouses, plaintiff-
appellant brought the present suit. (Rollo, pp. 27-28)
After due trial, the Court of first Instance of Cebu rendered its Decision on August 25,1972, the decretal portion of
which reads:
WHEREFORE, the Court hereby declares the deed of sale executed on November 25, 1965 by defendant Isabela L. de
Dignos in favor of defendant Luciano Cabigas, a citizen of the United States of America, null and void ab initio, and
the deed of sale executed by defendants Silvestre T. Dignos and Isabela Lumungsod de Dignos not rescinded.
Consequently, the plaintiff Atilano G. Jabil is hereby ordered to pay the sum, of Sixteen Thousand Pesos (P16,000.00)
to the defendants-spouses upon the execution of the Deed of absolute Sale of Lot No. 3453, Opon Cadastre and when
the decision of this case becomes final and executory.
The plaintiff Atilano G. Jabil is ordered to reimburse the defendants Luciano Cabigas and Jovita L. de Cabigas, through
their attorney-in-fact, Panfilo Jabalde, reasonable amount corresponding to the expenses or costs of the hollow block
fence, so far constructed.
It is further ordered that defendants-spouses Silvestre T. Dignos and Isabela Lumungsod de Dignos should return to
defendants-spouses Luciano Cabigas and Jovita L. de Cabigas the sum of P35,000.00, as equity demands that nobody
shall enrich himself at the expense of another.
The writ of preliminary injunction issued on September 23, 1966, automatically becomes permanent in virtue of this
decision.
With costs against the defendants.
From the foregoing, the plaintiff (respondent herein) and defendants-spouss (petitioners herein) appealed to the Court of
Appeals, which appeal was docketed therein as CA-G.R. No. 54393-R, "Atilano G. Jabil v. Silvestre T. Dignos, et al."
On July 31, 1981, the Court of Appeals affirmed the decision of the lower court except as to the portion ordering Jabil
to pay for the expenses incurred by the Cabigas spouses for the building of a fence upon the land in question. The
disposive portion of said decision of the Court of Appeals reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, except as to the modification of the judgment as pertains to
plaintiff-appellant above indicated, the judgment appealed from is hereby AFFIRMED in all other respects.
With costs against defendants-appellants.
SO ORDERED.
Judgment MODIFIED.
A motion for reconsideration of said decision was filed by the defendants- appellants (petitioners) Dignos spouses, but
on December 16, 1981, a resolution was issued by the Court of Appeals denying the motion for lack of merit.
Hence, this petition.
In the resolution of February 10, 1982, the Second Division of this Court denied the petition for lack of merit. A
motion for reconsideration of said resolution was filed on March 16, 1982. In the resolution dated April 26,1982,
respondents were required to comment thereon, which comment was filed on May 11, 1982 and a reply thereto was
filed on July 26, 1982 in compliance with the resolution of June 16,1 982. On August 9,1982, acting on the motion for
reconsideration and on all subsequent pleadings filed, this Court resolved to reconsider its resolution of February 10,
1982 and to give due course to the instant petition. On September 6, 1982, respondents filed a rejoinder to reply of
petitioners which was noted on the resolution of September 20, 1982.
Petitioners raised the following assignment of errors:
I THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN GROSSLY, INCORRECTLY INTERPRETING
THE TERMS OF THE CONTRACT, EXHIBIT C, HOLDING IT AS AN ABSOLUTE SALE, EFFECTIVE TO TRANSFER
OWNERSHIP OVER THE PROPERTY IN QUESTION TO THE RESPONDENT AND NOT MERELY A CONTRACT TO
SELL OR PROMISE TO SELL; THE COURT ALSO ERRED IN MISAPPLYING ARTICLE 1371 AS WARRANTING
READING OF THE AGREEMENT, EXHIBIT C, AS ONE OF ABSOLUTE SALE, DESPITE THE CLARITY OF THE TERMS
THEREOF SHOWING IT IS A CONTRACT OF PROMISE TO SELL.
II THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN INCORRECTLY APPLYING AND OR IN
MISAPPLYING ARTICLE 1592 OF THE NEW CIVIL CODE AS WARRANTING THE ERRONEOUS CONCLUSION THAT
THE NOTICE OF RESCISSION, EXHIBIT G, IS INEFFECTIVE SINCE IT HAS NOT BEEN JUDICIALLY DEMANDED
NOR IS IT A NOTARIAL ACT.
III THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN REJECTING THE APPLICABILITY OF ARTICLES
2208,2217 and 2219 OF THE NEW CIVIL CODE AND ESTABLISHED JURISPRUDENCE AS TO WARRANT THE AWARD
OF DAMAGES AND ATTORNEY'S FEES TO PETITIONERS.
IV PLAINTIFF'S COMPLAINT FOR SPECIFIC PERFORMANCE SHOULD HAVE BEEN DISMISSED, HE HAVING COME
TO COURT WITH UNCLEAN HANDS.
V BY AND LARGE, THE COURT OF APPEALS COMMITTED AN ERROR IN AFFIRMING WITH MODIFICATION THE
DECISION OF THE TRIAL COURT DUE TO GRAVE MISINTERPRETATION, MISAPPLICATION AND
MISAPPREHENSION OF THE TERMS OF THE QUESTIONED CONTRACT AND THE LAW APPLICABLE THERETO.
The foregoing assignment of errors may be synthesized into two main issues, to wit:
I. Whether or not subject contract is a deed of absolute sale or a contract Lot sell.
II. Whether or not there was a valid rescission thereof.
There is no merit in this petition.
It is significant to note that this petition was denied by the Second Division of this Court in its Resolution dated
February 1 0, 1 982 for lack of merit, but on motion for reconsideration and on the basis of all subsequent pleadings
filed, the petition was given due course.
I. The contract in question (Exhibit C) is a Deed of Sale, with the following conditions:
1. That Atilano G..Jabilis to pay the amount of Twelve Thousand Pesos P12,000.00) Phil. Philippine Currency as advance payment;
2. That Atilano G. Jabil is to assume the balance of Twelve Thousand Pesos (P12,000.00) Loan from the First Insular Bank of Cebu;
3. That Atilano G. Jabil is to pay the said spouses the balance of Four. Thousand Pesos (P4,000.00) on or before September 15,1965;
4. That the said spouses agrees to defend the said Atilano G. Jabil from other claims on the said property;
5. That the spouses agrees to sign a final deed of absolute sale in favor of Atilano G. Jabil over the above-mentioned
property upon the payment of the balance of Four Thousand Pesos. (Original Record, pp. 10-11)
In their motion for reconsideration, petitioners reiterated their contention that the Deed of Sale (Exhibit "C") is a mere
contract to sell and not an absolute sale; that the same is subject to two (2) positive suspensive conditions, namely: the
payment of the balance of P4,000.00 on or before September 15,1965 and the immediate assumption of the mortgage
of P12,000.00 with the First Insular Bank of Cebu. It is further contended that in said contract, title or ownership over
the property was expressly reserved in the vendor, the Dignos spouses until the suspensive condition of full and
punctual payment of the balance of the purchase price shall have been met. So that there is no actual sale until full
payment is made (Rollo, pp. 51-52).
In bolstering their contention that Exhibit "C" is merely a contract to sell, petitioners aver that there is absolutely
nothing in Exhibit "C" that indicates that the vendors thereby sell, convey or transfer their ownership to the alleged
vendee. Petitioners insist that Exhibit "C" (or 6) is a private instrument and the absence of a formal deed of conveyance
is a very strong indication that the parties did not intend "transfer of ownership and title but only a transfer after full
payment" (Rollo, p. 52). Moreover, petitioners anchored their contention on the very terms and conditions of the
contract, more particularly paragraph four which reads, "that said spouses has agreed to sell the herein mentioned
property to Atilano G. Jabil ..." and condition number five which reads, "that the spouses agrees to sign a final deed of
absolute sale over the mentioned property upon the payment of the balance of four thousand pesos."
Such contention is untenable.
By and large, the issues in this case have already been settled by this Court in analogous cases.
Thus, it has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale"
where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold is
reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to pay within a fixed period Taguba v. Vda. de Leon, 132
SCRA 722; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 86 SCRA 305).
A careful examination of the contract shows that there is no such stipulation reserving the title of the property on the vendors nor
does it give them the right to unilaterally rescind the contract upon non-payment of the balance thereof within a fixed period.
On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as:
(1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. In
addition, Article 1477 of the same Code provides that "The ownership of the thing sold shall be transferred to the
vendee upon actual or constructive delivery thereof." As applied in the case of Froilan v. Pan Oriental Shipping Co., et
al. (12 SCRA 276), this Court held that in the absence of stipulation to the contrary, the ownership of the thing sold
passes to the vendee upon actual or constructive delivery thereof.
While it may be conceded that there was no constructive delivery of the land sold in the case at bar, as subject Deed of
Sale is a private instrument, it is beyond question that there was actual delivery thereof. As found by the trial court, the
Dignos spouses delivered the possession of the land in question to Jabil as early as March 27,1965 so that the latter
constructed thereon Sally's Beach Resort also known as Jabil's Beach Resort in March, 1965; Mactan White Beach
Resort on January 15,1966 and Bevirlyn's Beach Resort on September 1, 1965. Such facts were admitted by petitioner
spouses (Decision, Civil Case No. 23-L; Record on Appeal, p. 108).
Moreover, the Court of Appeals in its resolution dated December 16,1981 found that the acts of petitioners,
contemporaneous with the contract, clearly show that an absolute deed of sale was intended by the parties and not a
contract to sell.
Be that as it may, it is evident that when petitioners sold said land to the Cabigas spouses, they were no longer owners
of the same and the sale is null and void.
II. Petitioners claim that when they sold the land to the Cabigas spouses, the contract of sale was already rescinded.
Applying the rationale of the case of Taguba v. Vda. de Leon (supra) which is on all fours with the case at bar, the
contract of sale being absolute in nature is governed by Article 1592 of the Civil Code. It is undisputed that petitioners
never notified private respondents Jabil by notarial act that they were rescinding the contract, and neither did they file a
suit in court to rescind the sale. The most that they were able to show is a letter of Cipriano Amistad who, claiming to
be an emissary of Jabil, informed the Dignos spouses not to go to the house of Jabil because the latter had no money
and further advised petitioners to sell the land in litigation to another party (Record on Appeal, p. 23). As correctly
found by the Court of Appeals, there is no showing that Amistad was properly authorized by Jabil to make such extra-
judicial rescission for the latter who, on the contrary, vigorously denied having sent Amistad to tell petitioners that he
was already waiving his rights to the land in question. Under Article 1358 of the Civil Code, it is required that acts and
contracts which have for their object the extinguishment of real rights over immovable property must appear in a public
document.
Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money on the stipulated date of
payment on September 15,1965 and was able to raise the necessary amount only by mid-October 1965.
It has been ruled, however, that "where time is not of the essence of the agreement, a slight delay on the part of one
party in the performance of his obligation is not a sufficient ground for the rescission of the agreement" (Taguba v.
Vda. de Leon, supra). Considering that private respondent has only a balance of P4,000.00 and was delayed in payment
only for one month, equity and justice mandate as in the aforecited case that Jabil be given an additional period within
which to complete payment of the purchase price.
WHEREFORE, the petition filed is hereby Dismissed for lack of merit and the assailed decision of the Court of
Appeals is Affirmed in toto.
SO ORDERED.
 DIGNOS YS. COURT OF APPEALS158 SCRA 378

FACTS:
The spouses Silvestre and Isabel Dignos were. owners of a parcel of land in Opon, Lapu-Lapu City. OnJune 7, 1965,
appellants, herein petitioners Dignos spouses sold the said parcel of land to respondentAtilano J. Jabil for the sum of
P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the
sum of PI 2,000.00, which was paid andacknowledged by the vendors in the deed of sale executed in favor of plaintiff-
appellant, and the nextinstallment in the sum of P4,000.00 to be paid on or before September 15, 1965.On November
25, 1965, the Dignos spouses sold the same land in favor of defendants spouses, LucianoCabigas and Jovita L. De
Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos
spouses in favor of the Cabigas spouses, and which wasregistered in the Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.As the Dignos spouses refused to accept from plaintiff-appellant the balance of the
purchase price of theland, and as plaintiff- appellant discovered the second sale made by defendants-appellants to the
Cabigasspouses, plaintiff-appellant brought the present suit.

ISSUE:
Whether or not there was an absolute contract of sale.2. Whether or not the contract of sale was already rescinded when
the Digros spouses sold the land toCabigas

HELD:
Yes. That a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale"where nowhere in
the contract in question is a proviso or stipulation to the effect that title to theproperty sold is reserved in the vendor
until full payment of the purchase price, nor is there astipulation giving the vendor the right to unilaterally rescind the
contract the moment the vendeefails to pay within a fixed period.A careful examination of the contract shows that there
is no such stipulation reserving the title of the property on the vendors nor does it give them the right to unilaterally
rescind the contract uponnon-payment of the balance thereof within a fixed period.On the contrary, all the elements of
a valid contract of sale under Article 1458 of the Civil Code, arepresent, such as: (1) consent or meeting of the minds;
(2) determinate subject matter; and (3)price certain in money or its equivalent. In addition, Article 1477 of the same
Code provides that"The ownership of the thing sold shall be transferred to the vendee upon actual or constructive
delivery thereof." While it may be conceded that there was no constructive delivery of the land soldin the case at bar,
as subject Deed of Sale is a private instrument, it is beyond question that therewas actual delivery thereof. As found by
the trial court, the Dignos spouses delivered the possessionof the land in question to Jabil as early as March 27,1965 so
that the latter constructed thereonSally's Beach Resort also known as Jabil's Beach Resort in March, 1965; Mactan
White Beach Resorton January 15, J 966 and Bevirlyn's Beach Resort on September 1, 1965. Such facts were
admittedby petitioner spouses.2. No. The contract of sale being absolute in nature is governed by Article 1592 of the
Civil Code. It isundisputed that petitioners never notified private respondents Jabil by notarial act that they
wererescinding the contract, and neither did they file a suit in court to rescind the sale. There is noshowing that
Amistad was properly authorized by Jabil to make such extra-judicial rescission for thelatter who, on the contrary,
vigorously denied having sent Amistad to tell petitioners that he wasalready waiving his rights to the land in question.
Under Article 1358 of the Civil Code, it is requiredthat acts and contracts which have for their object extinguishment of
real rights over immovableproperty must appear in a public document.Petitioners laid considerable emphasis on the
fact that private respondent Jabil had no money onthe stipulated date of payment on September 15,1965 and was able
to raise the necessary amountonly by mid-October 1965. It has been ruled, however, that where time is not of the
essence of theagreement, a slight delay on the part of one party in the performance of his obligation is not asufficient
ground for the rescission of the agreement. Considering that private respondent has only abalance of P4,OOO.00 and
was delayed in payment only for one month, equity and justice mandateas in the aforecited case that Jabil be given an
additional period within which to complete paymentof the purchase price.
 G.R. No. 133895 October 2, 2001
ZENAIDA M. SANTOS, petitioner, vs.
CALIXTO SANTOS, ALBERTO SANTOS, ROSA SANTOS-CARREON and ANTONIO SANTOS, respondents.
QUISUMBING, J.:
This petition for review1 seeks to annul and set aside the decision date March 10, 1998 of the Court of Appeals that
affirmed the decision of the Regional Trial Court of Manila, Branch 48, dated March 17, 1993. Petitioner also seeks to
annul the resolution that denied her motion for reconsideration.

Petitioner Zenaida M. Santos is the widow of Salvador Santos, a brother of private respondents Calixto, Alberto,
Antonio, all surnamed Santos and Rosa Santos-Carreon.
The spouses Jesus and Rosalia Santos owned a parcel of land registered under TCT No. 27571 with an area of 154
square meters, located at Sta. Cruz Manila. On it was a four-door apartment administered by Rosalia who rented them
out. The spouses had five children, Salvador, Calixto, Alberto, Antonio and Rosa.
On January 19, 1959, Jesus and Rosalia executed a deed of sale of the properties in favor of their children Salvador and
Rosa. TCT No. 27571 became TCT No. 60819. Rosa in turn sold her share to Salvador on November 20, 1973 which
resulted in the issuance of a new TCT No. 113221. Despite the transfer of the property to Salvador, Rosalia continued
to lease receive rentals form the apartment units.

On November 1, 1979, Jesus died. Six years after or on January 9, 1985, Salvador died, followed by Rosalia who died
the following month. Shortly after, petitioner Zenaida, claiming to be Salvador's heir, demanded the rent from Antonio
Hombrebueno,2 a tenant of Rosalia. When the latter refused to pay, Zenaida filed and ejectment suit against him with
the Metropolitan Trial Court of Manila, Branch 24, which eventually decided in Zenaida's favor.

On January 5, 1989, private respondents instituted an action for reconveyance of property with preliminary injunction
against petitioner in the Regional Trial Court of Manila, where they alleged that the two deeds of sale executed on
January 19, 1959 and November 20, 1973 were simulated for lack of consideration. They were executed to
accommodate Salvador in generation funds for his business and providing him with greater business flexibility.

In her Answer, Zenaida denied the material allegations in the complaint as special and affirmative defenses, argued that
Salvador was the registered owner of the property, which could only be subjected to encumbrances or liens annotated
on the title; that the respondents' right to reconveyance was already barred by prescription and laches; and that the
complaint state no cause of action.

On March 17, 1993, the trial court decided in private respondents' favor, thus:
WHEREFORE, viewed from all the foregoing considerations, judgment is hereby made in favor of the plaintiffs and
against the defendants:
a) Declaring Exh. "B", the deed of sale executed by Rosalia Santos and Jesus Santos on January 19, 1959, as entirely
null and void for being fictitious or stimulated and inexistent and without any legal force and effect:

b) Declaring Exh. "D", the deed of sale executed by Rosa Santos in favor of Salvador Santos on November 20, 1973, also as
entirely null and void for being likewise fictitious or stimulated and inexistent and without any legal force and effect;

c) Directing the Register of Deeds of Manila to cancel Transfer Certificate of Title No. T-113221 registered in the
name of Salvador Santos, as well as, Transfer Certificate of Title No. 60819 in the names of Salvador Santos, Rosa
Santos, and consequently thereafter, reinstating with the same legal force and effect as if the same was not cancelled,
and which shall in all respects be entitled to like faith and credit; Transfer Certificate of Title No. T-27571 registered in
the name of Rosalia A. Santos, married to Jesus Santos, the same to be partitioned by the heirs of the said registered
owners in accordance with law; and

d) Making the injunction issued in this case permanent.

Without pronouncement as to costs.
SO OREDERED.3

The trial court reasoned that notwithstanding the deeds of sale transferring the property to Salvador, the spouses
Rosalia and Jesus continued to possess the property and to exercise rights of ownership not only by receiving the
monthly rentals, but also by paying the realty taxes. Also, Rosalia kept the owner's duplicate copy of the title even after
it was already in the name of Salvador. Further, the spouses had no compelling reason in 1959 to sell the property and
Salvador was not financially capable to purchase it. The deeds of sale were therefore fictitious. Hence, the action to
assail the same does not prescribe.4

Upon appeal, the Court of Appeals affirmed the trial court's decision dated March 10, 1998. It held that in order for the
execution of a public instrument to effect tradition, as provided in Article 1498 of the Civil Code, 5 the vendor shall
have had control over the thing sold, at the moment of sale. It was not enough to confer upon the purchaser the
ownership and the right of possession. The thing sold must be placed in his control. The subject deeds of sale did not
confer upon Salvador the ownership over the subject property, because even after the sale, the original vendors
remained in dominion, control, and possession thereof. The appellate court further said that if the reason for Salvador's
failure to control and possess the property was due to his acquiescence to his mother, in deference to Filipino custom,
petitioner, at least, should have shown evidence to prove that her husband declared the property for tax purposes in his
name or paid the land taxes, acts which strongly indicate control and possession. The appellate court disposed:
WHEREFORE, finding no reversible error in the decision appealed from, the same is hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED.6

Hence, this petition where petitioner avers that the Court of Appeals erred in:
I. HOLDING THAT THE OWNERSHIP OVER THE LITIGATED PROPERTY BY THE LATE HUSBAND OF
DEFENDANT-APPELLANT WAS AFFECTED BY HIS FAILURE TO EXERCISE CERTAIN ATTRIBUTES OF
OWNERSHIP.

II.HOLDING THAT DUE EXECUTION OF A PUBLIC INSTRUMENT IS NOT EQUIVALENT TO DELIVERY

OF THE LAND IN DISPUTE.

III.NOT FINDING THAT THE CAUSE OF ACTION OF ROSALIA SANTOS HAD PRESCRIBED AND/OR
BARRED BY LACHES.

IV. IGNORING PETITIONER'S ALLEGATION TO THE EFFECT THAT PLAINTIFF DR. ROSA [S.]
CARREON IS NOT DISQUALIFIED TO TESTIFY AS TO THE QUESTIONED DEEDS OF SALE
CONSIDERING THAT SALVADOR SANTOS HAS LONG BEEN DEAD.7

In this petition, we are asked to resolve the following:

1. Are payments of realty taxes and retention of possession indications of continued ownership by the original owners?
2. Is a sale through a public instrument tantamount to delivery of the thing sold?
3. Did the cause of action of Rosalia Santos and her heirs prescribe?
4. Can petitioner invoke the "Dead Man's Statute?"8

On the first issue, petitioner contends that the Court of Appeals erred in holding that despite the deeds of sale in
Salvador's favor, Jesus and Rosalia still owned the property because the spouses continued to pay the realty taxes and
possess the property. She argues that tax declarations are not conclusive evidence of ownership when not supported by
evidence. She avers that Salvador allowed his mother to possess the property out of respect to her in accordance with
Filipino values.

It is true that neither tax receipts nor declarations of ownership for taxation purposes constitute sufficient proof of
ownership. They must be supported by other effective proofs.9 These requisite proofs we find present in this case. As
admitted by petitioner, despite the sale, Jesus and Rosalia continued to possess and administer the property and enjoy
its fruits by leasing it to third persons.10 Both Rosa and Salvador did not exercise any right of ownership over it.11
Before the second deed of sale to transfer her share over the property was executed by Rosa, Salvador still sought
she permission of his mother.12 Further, after Salvador registered the property in his name, he surrendered the title to
his mother.13 These are clear indications that ownership still remained with the original owners. In Serrano vs. CA, 139
SCRA 179, 189 (1985), we held that the continued collection of rentals from the tenants by the seller of realty after
execution of alleged deed of sale is contrary to the notion of ownership.

Petitioner argues that Salvador, in allowing her mother to use the property even after the sale, did so out of respect for
her and out of generosity, a factual matter beyond the province of this Court.14 Significantly, in Alcos vs. IAC 162
SCRA 823, 837 (1988), we noted that the buyer's immediate possession and occupation of the property corroborated
the truthfulness and authenticity of the deed of sale. Conversely, the vendor's continued possession of the property
makes dubious the contract of sale between the parties.

On the second issue, is a sale through a public instrument tantamount to delivery of the thing sold? Petitioner in her
memorandum invokes Article 147715 of the Civil Code which provides that ownership of the thing sold is transferred to
the vendee upon its actual or constructive delivery. Article 1498, in turn, provides that when the sale is made through a
public instrument, its execution is equivalent to the delivery of the thing subject of the contract. Petitioner avers that
applying said provisions to the case, Salvador became the owner of the subject property by virtue of the two deeds of
sale executed in his favor.

Nowhere in the Civil Code, however, does it provide that execution of a deed of sale is a conclusive presumption of
delivery of possession. The Code merely said that the execution shall be equivalent to delivery. The presumption can
be rebutted by clear and convincing evidence.16 Presumptive delivery can be negated by the failure of the vendee to
take actual possession of the land sold.17

In Danguilan vs. IAC, 168 SCRA 22, 32 (1988), we held that for the execution of a public instrument to effect
tradition, the purchaser must be placed in control of the thing sold. When there is no impediment to prevent the thing
sold from converting to tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the
execution of a public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser
cannot have the enjoyment and material tenancy nor make use of it himself or through another in his name, then
delivery has not been effected.

As found by both the trial and appellate courts and amply supported by the evidence on record, Salvador was never
placed in control of the property. The original sellers retained their control and possession. Therefore, there was no real
transfer of ownership.
Moreover, in Norkis Distributors, Inc. vs. CA, 193 SCRA 694, 698-699 (1991), citing the land case of Abuan vs.
Garcia, 14 SCRA 759 (1965), we held that the critical factor in the different modes of effecting delivery, which gives
legal effect to the act is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that
intention, there is no tradition. In the instant case, although the spouses Jesus and Rosalia executed a deed of sale, they
did not deliver the possession and ownership of the property to Salvador and Rosa. They agreed to execute a deed of
sale merely to accommodate Salvador to enable him to generate funds for his business venture.

On the third issue, petitioner argues that from the date of the sale from Rosa to Salvador on November 20, 1973, up to
his death on January 9, 1985, more or less twelve years had lapsed, and from his death up to the filing of the case for
reconveyance in the court a quo on January 5, 1989, four years had lapsed. In other words, it took respondents about
sixteen years to file the case below. Petitioner argues that an action to annul a contract for lack of consideration
prescribes in ten years and even assuming that the cause of action has not prescribed, respondents are guilty of laches
for their inaction for a long period of time.

Has respondents' cause of action prescribed? In Lacsamana vs. CA, 288 SCRA 287, 292 (1998), we held that the right
to file an action for reconveyance on the ground that the certificate of title was obtained by means of a fictitious deed
of sale is virtually an action for the declaration of its nullity, which does not prescribe. This applies squarely to the
present case. The complaint filed by respondent in the court a quo was for the reconveyance of the subject property to
the estate of Rosalia since the deeds of sale were simulated and fictitious. The complaint amounts to a declaration of
nullity of a void contract, which is imprescriptible. Hence, respondents' cause of action has not prescribed.

Neither is their action barred by laches. The elements of laches are: 1) conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation of which the complaint seeks a remedy; 2) delay in asserting the
complainant's rights, the complainant having had knowledge or notice of the defendant's conduct as having been
afforded an opportunity to institute a suit; 3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right in which he bases his suit; and 4) injury or prejudice to the defendant in the event
relief is accorded to the complainant, or the suit is not held barred.18 These elements must all be proved positively. The
conduct which caused the complaint in the court a quo was petitioner's assertion of right of ownership as heir of
Salvador. This started in December 1985 when petitioner demanded payment of the lease rentals from Antonio
Hombrebueno, the tenant of the apartment units. From December 1985 up to the filing of the complaint for
reconveyance on January 5, 1989, only less than four years had lapsed which we do not think is unreasonable delay
sufficient to bar respondents' cause of action. We likewise find the fourth element lacking. Neither petitioner nor her
husband made considerable investments on the property from the time it was allegedly transferred to the latter. They
also did not enter into transactions involving the property since they did not claim ownership of it until December
1985. Petitioner stood to lose nothing. As we held in the same case of Lacsamana vs. CA, cited above, the concept of
laches is not concerned with the lapse of time but only with the effect of unreasonble lapse. In this case, the alleged 16
years of respondents' inaction has no adverse effect on the petitioner to make respondents guilty of laches.

Lastly, petitioner in her memorandum seeks to expunge the testimony of Rosa Santos-Carreon before the trial court in
view of Sec. 23, Rule 130 of the Revised Rules of Court, otherwise known as the "Dead Man's Statute." 19 It is too late
for petitioner, however, to invoke said rule. The trial court in its order dated February 5, 1990, denied petitioner's
motion to disqualify respondent Rosa as a witness. Petitioner did not appeal therefrom. Trial ensued and Rosa testified
as a witness for respondents and was cross-examined by petitioner's counsel. By her failure to appeal from the order
allowing Rosa to testify, she waived her right to invoke the dean man's statute. Further, her counsel cross-examined
Rosa on matters that occurred during Salvadors' lifetime. In Goi vs. CA, 144 SCRA 222, 231 (1986) we held that
protection under the dead man's statute is effectively waived when a counsel for a petitioner cross-examines a private
respondent on matters occurring during the deceased's lifetime. The Court of appeals cannot be faulted in ignoring
petitioner on Rosa's disqualification.1wphi1.nt

WHEREFORE, the instant petition is DENIED. The assailed decision dated March 10, 1998 of the Court of Appeals,
which sustained the judgment of the Regional Trial Court dated March 17, 1993, in favor of herein private respondents,
is AFFIRMED. Costs against petitioner.
SO ORDERED.
 ZENAIDA M. SANTOS v. CALIXTO SANTOS,
ALBERTO SANTOS, ROSA SANTOS-CARREON and ANTONIO SANTOS,
G.R. No. 133895. October 2, 2001

Topic: Estoppel by Laches

FACTS
On January 19, 1959, Jesus and Rosalia executed a deed of sale of the properties in favor of their children Salvador and
Rosa. TCT No. 27571 became TCT No. 60819. Rosa in turn sold her share to Salvador on November 20, 1973 which
resulted in the issuance of a new TCT No. 113221. Despite the transfer of the property to Salvador, Rosalia continued
to lease and receive rentals from the apartment units.

On November 1, 1979, Jesus died. Six years after or on January 9, 1985, Salvador died, followed by Rosalia who died
the following month. Shortly after, petitioner Zenaida, claiming to be Salvadors heir, demanded the rent from Antonio
Hombrebueno, a tenant of Rosalia. When the latter refused to pay, Zenaida filed an ejectment suit against him with the
Metropolitan Trial Court of Manila, which eventually decided in Zenaidas favor.

On January 5, 1989, private respondents instituted an action for reconveyance of property with preliminary injunction
against petitioner in the Regional Trial Court of Manila, where they alleged that the two deeds of sale executed on
January 19, 1959 and November 20, 1973 were simulated for lack of consideration. They were executed to
accommodate Salvador in generating funds for his business ventures and providing him with greater business
flexibility.

ISSUE
Whether or not the cause of action of Rosalia Santos and her heirs has already prescribed

RULING
No.
The complaint amounts to a declaration of nullity of a void contract which is imprescriptible. Hence,
respondents cause of action has not prescribed. Neither is their action barred by laches. The elements of laches are:
1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which the
complaint seeks a remedy;
2) delay in asserting the complainants rights, the complainant having had knowledge or notice of the defendants
conduct as having been afforded an opportunity to institute a suit; 3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right in which he bases his suit; and 4) injury or prejudice to the
defendant in the event relief is accorded to the complainant, or the suit is not held barred.

These elements must all be proved positively. As we held in the same case of Lacsamana vs. CA, cited above, the
concept of laches is not concerned with the lapse of time but only with the effect of unreasonable lapse. In this case,
the alleged 16 years (date of the sale from Rosa toSalvador on November 20, 1973, up to his death on January 9, 1985,
more or less twelve years had lapsed, and from his death up to the filing of the case for reconveyance in the court a quo
on January 5, 1989, four years had lapsed. In other words, it took respondents about sixteen years to file the case) of
respondents inaction has no adverse effect on the petitioner to make respondents guilty of laches.
 G.R. No. 125088 April 14, 2004
LAGRIMAS A. BOY, petitioner, vs.
COURT OF APPEALS, ISAGANI P. RAMOS and ERLINDA GASINGAN RAMOS, respondents.

DECISION
AZCUNA, J.:
Before us is a petition for review on certiorari of the decision of the Court of Appeals in an ejectment case, docketed as
CA-G.R. SP No. 38716, which reversed and set aside the decision1 of the Regional Trial Court of Manila, Branch 54,2
and reinstated the decision3 of the Metropolitan Trial Court of Manila, Branch 14,4 ordering petitioner to vacate the
disputed premises and to pay rent until the premises are vacated and possession is turned over to private respondents.
The facts, as stated by the Court of Appeals, are as follows:
On September 24, 1993, the spouses Isagani P. Ramos and Erlinda Gasingan Ramos, private respondents herein, filed
an action for ejectment against Lagrimas A. Boy (Lagrimas), petitioner herein, with the Metropolitan Trial Court of
Manila. In their Complaint, the spouses Ramos alleged that they are the owners of a parcel of land with an area of
55.75 square meters, and the house existing thereon, situated at 1151 Florentino Torres St., Singalong, Manila. They
acquired the said properties from Lagrimas who sold the same to them by virtue of a Deed of Absolute Sale,5 which
was executed on June 4, 1986. However, Lagrimas requested for time to vacate the premises, and they agreed thereto,
because they were not in immediate need of the premises. Time came when they needed the said house as they were
only renting their own residence. They then demanded that Lagrimas vacate the subject premises, but she refused to do
so. Hence, they initiated this action for ejectment against Lagrimas.6
In her Answer, Lagrimas alleged that sometime in September 1984, in order to accommodate her brothers need for a
placement fee to work abroad, she borrowed P15,000 from the spouses Ramos, who asked for the subject property as
collateral. On June 4, 1986, the spouses Ramos caused her to sign a Deed of Absolute Sale purporting to show that she
sold the property in question to them for the sum of P31,000. The balance of P16,000 was promised to be paid on that
date, but the promise was never fulfilled. Sometime in May 1988, Erlinda Ramos and Lagrimas executed an agreement
(Kasunduan)7 acknowledging that the subject parcel of land, together with the upper portion of the house thereon, had
been sold by Lagrimas to the spouses Ramos for P31,000; that of the said price, the sum of P22,500 (representing
P15,000 cash loan plus P7,500 as interest from September 1984 to May 1988) had been paid; that the balance of
P8,500 would be paid on the last week of August 1988; and that possession of the property would be transferred to the
spouses Ramos only upon full payment of the purchase price.8
Lagrimas admitted that the counsel of the spouses Ramos sent her a letter demanding that she vacate the premises.
Lagrimas alleged that the demand for her to pay the sum of P6,000 per month has no legal basis. Lagrimas was
summoned by the Punong Barangay for conciliation, but no settlement was reached.9
The Metropolitan Trial Court (MeTC) noted the existence of a Deed of Absolute Sale executed by the spouses Ramos
and Lagrimas on June 4, 1986. The Deed was duly acknowledged before a Notary Public and the parties therein did not
deny its due execution. The MeTC observed that Lagrimas defense that the spouses Ramos still had to pay the amount
of P16,000 to complete the full consideration of P31,000 was nowhere to be found in the Deed of Absolute Sale.10
The MeTC held that the Kasunduan, which Lagrimas attached to her Answer, cannot be given binding effect. The
MeTC stated that while Erlinda Ramos admitted the existence of said document, she thought that Lagrimas was only
asking for an additional amount. Erlinda Ramos claimed that after signing and reading the document, she realized that
it did not contain the true facts of the situation since they had already purchased the subject property and were,
therefore, the owners thereof. Erlinda Ramos, thereafter, refused to give her residence certificate and asked the notary
public not to notarize the document. Said incident was attested to by way of affidavit by Lutgarda Reyes, the friend and
companion of Lagrimas.11
Moreover, the MeTC ruled that the continued occupation by Lagrimas of said property after the sale, without payment
of rent, was by mere tolerance. It held that since the spouses Ramos, who were staying in a rented place, were asked to
vacate the same, they were in need to take possession of their own property.12
The MeTC thus rendered judgment in favor of private respondents, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs [herein private respondents] and against the
defendant [herein petitioner], ordering the latter and the persons claiming rights under her to vacate the premises
known as 1151 Florentino [Torres] Street, Singalong, Manila. The defendant is likewise ordered to pay plaintiffs the
sum of P1,000.00 per month as reasonable compensation for the use and occupation of the premises from the filing of
this complaint until the premises is vacated and possession is turned over to the plaintiffs; the further sum of P5,000.00
as attorneys fees plus the costs of the suit.
Defendants counterclaim is hereby dismissed for lack of merit.
SO ORDERED.13
Petitioner appealed said decision to the Regional Trial Court, which rendered judgment in her favor, thus:
In view of the foregoing, this Court hereby reverses the assailed Decision and dismisses the complaint. Costs against the appellee.
The order previously issued granting execution pending appeal is accordingly recalled.
SO ORDERED.14
The Regional Trial Court (RTC) held that the Kasunduan was binding between the parties and was the true agreement
between them. It ruled that pending the determination of the question of ownership, it cannot deprive the party in actual
possession of the right to continue peacefully with said possession. Since the question of ownership was inextricably
woven with that of possession, the RTC held that the MeTC should have dismissed the case because jurisdiction
pertains to another tribunal.15
Private respondents filed a petition for review of the decision of the RTC with the Court of Appeals. They faulted the
respondent Judge for giving credence to the Kasunduan and holding that it prevailed over the Deed of Absolute Sale.
The Court of Appeals ruled in favor of private respondents, thus:
WHEREFORE, the decision of the respondent Judge herein appealed from is hereby REVERSED and SET ASIDE,
and the decision of the Metropolitan Trial Court is hereby REINSTATED.
SO ORDERED.16
The Court of Appeals found, thus:
A review of the records discloses that the private respondent [herein petitioner Lagrimas] acquired the subject property
from one Marianita C. Valera by virtue of two instruments. The first one is a Deed of Sale dated September 27, 1984,
in which the vendor Marianita C. Valera sold a house of light wooden materials and her rights as a bonafide tenant of
the land on which it stands, to the vendee Lagrimas A. Boy for P31,000.00 (Annex 1 to the Affidavit of Lagrimas A.
Boy, p. 67, Record). The second one is a deed of absolute sale and assignment of rights dated March 18, 1985, in which the
vendor Ma. Nita C. Valera sold a residential house and her rights and interests over a parcel of land in which it is located, to
vendee Lagrimas A. Boy, for the price of P31,000.00 (Annex 2, Affidavit of Lagrimas A. Boy, pp. 68-69, Record).
It appears from the foregoing that Marianita C. Valera was originally one of the tenants/residents of 669 square meters
of land owned by the PNB. She constructed a house on a 55.75 square meter portion of the said land. In 1984, she sold
the house and only her rights as tenant of the land to private respondent, because the PNB had not yet sold the land to
the residents. In 1985, the sale of the land to the residents had already been accomplished. Hence, she sold the house
and her rights and interests to the land to the private respondent.
Significantly, these contracts coincide with certain events in the relationship between the petitioners [herein private
respondents spouses Ramos] and private respondent. According to the Answer of private respondent, sometime in
September, 1984, she borrowed the sum of P15,000.00 from the petitioners to accommodate her brothers placement
fee to work abroad (par. 7, Answer, p. 19, Record). And on March 19, 1985, the private respondent executed a deed of
real estate mortgage (Annex a to the Affidavit of Erlinda C. Ramos, pp. 54-55, Record), in which she mortgaged the
properties she has acquired from Marianita C. Valera to the petitioners, to secure a loan in the amount of P26,200.00,
payable within three months.
One year later, on June 4, 1986, the private respondent executed a deed of absolute sale in which she sold the same
property acquired from Marianita C. Valera to the petitioners, for the price of P31,000.00.17
Considering that petitioner borrowed P26,200 from private respondents, which loan was covered by a real estate
mortgage of the subject house and lot, and the subsequent sale of the property to private respondents for P31,000 after
non-payment of the loan, the Court of Appeals did not give credence to the statement in the Kasunduan that private
respondents paid only P22,500 to petitioner since her indebtedness already reached P26,200. The Court of Appeals gave
weight to the argument of private respondents that Erlinda Ramos was merely tricked into signing the Kasunduan. It gave
credence to the version of private respondents on how the Kasunduan came to be executed but not notarized, thus:
x x x Erlinda G. Ramos alleged in her affidavit that sometime in May, 1988, the exact date of which she cannot recall,
Lagrimas Boy went to their residence and pleaded that even if they have already fully paid the subject house and lot,
she was asking for an additional amount because she needed the money and there was no one for her to approach
(walang ibang matatakbuhan). She [Erlinda Ramos] claimed she committed a mistake because she agreed to give an
additional amount and went with [Lagrimas] to Atty. Estacio at the City Hall. [Lagrimas] arrive[d] ahead [of] Atty.
Estacio in company with her friend Lutgarda Bayas. Atty. Estacio told her [Erlinda Ramos] that she will give an
additional amount and she agreed without the knowledge of her husband. Atty. Estacio handed to her a piece of paper
and she was made to sign and she acceded and signed it without reading. After [Lagrimas] and her witnesses including
her companion Lutgarda Bayas signed the paper, she [Erlinda Ramos] go[t] it and read it. It was at that point that she
discovered that what were written thereon were not in accordance with the true and real fact and situation that the
subject house and lot already belongs to them because they have purchased it already and {Lagrimas} only requested
for an addition. She [Erlinda Ramos] told Atty. Estacio to change (baguhin) the statement because she was not
agreeable and she did not give her residence certificate (Cedula). Notary Public Estacio said that he cannot notarize the
document (purported Kasunduan) because she [Erlinda Ramos] refused saying she was "Pumapalag." He said that
Erlinda Ramos and [Lagrimas] should talk to each other again. She [Erlinda Ramos] committed another mistake
because she left the place leaving the piece of paper -- purported "Kasunduan" without knowing that [Lagrimas] kept
it. Erlinda Ramos innocently failed to demand the said piece of paper which [Lagrimas] is now using. She returned to
Atty. Estacio to get the piece of paper but he answered her saying naibasura na and she trusted him but this time, it
turned out that [Lagrimas] kept it which she is using now in this case.18
The Court of Appeals stated that the fact that petitioner has remained in possession of the property sold, and paid its
real estate taxes, would have made out a case for equitable mortgage. However, it noted that petitioner did not raise this
defense, but admitted having sold the property to private respondents, alleging only that they have not paid the
purchase price in full. It, therefore, ruled that the preponderance of evidence is against petitioner.
Hence, this petition, with the following assigned errors:
I THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT INTERPRETING THAT THE
"KASUNDUAN" EXECUTED BY AND BETWEEN PETITIONER (DEFENDANT) AND PRIVATE RESPONDENT
(PLAINTIFF) SUPERSEDES THE DEED OF SALE WHICH HAS NOT BEEN CONSUMMATED.
II THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN MISINTERPRETING AND
DISREGARDING THE "KASUNDUAN" AS NOT APPLICABLE IN THE CASE AT BAR.
III THE RESPONDENT COURT ERRED AND ABUSED ITS DISCRETION IN REVERSING AND DISMISSING THE
DECISION OF THE REGIONAL TRIAL COURT AND [IN REINSTATING] THE DECISION OF THE COURT A QUO.19
Petitioner contends that, as ruled by the RTC, since the question of ownership in this case is interwoven with that of
possession, the MeTC should have dismissed the case because jurisdiction pertains to another tribunal.
The contention is without merit.

The only issue for resolution in an unlawful detainer case is physical or material possession of the property involved,
independent of any claim of ownership by any of the party litigants.20
Prior to the effectivity of Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980), the jurisdiction of
inferior courts was confined to receiving evidence of ownership in order to determine only the nature and extent of
possession, by reason of which such jurisdiction was lost the moment it became apparent that the issue of possession
was interwoven with that of ownership.21
With the enactment of Batas Pambansa Blg. 129, inferior courts were granted jurisdiction to resolve questions of
ownership provisionally in order to determine the issue of possession, thus:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil
Cases.Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
xxx

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when in such
cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.
Section 16, Rule 70 (Forcible Entry and Unlawful Detainer) of the Rules of Court, as amended, similarly provides:
Sec. 16. Resolving defense of ownership.When the defendant raises the defense of ownership in his pleadings and the
question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be
resolved only to determine the issue of possession.
Thus, in forcible entry and unlawful detainer cases, if the defendant raises the question of ownership in his pleadings
and the question of possession cannot be resolved without deciding the issue of ownership, the inferior courts have the
undoubted competence provisionally to resolve the issue of ownership for the sole purpose of determining the issue of
possession.22 The MeTC, therefore, did not err in taking cognizance of the instant case.
Petitioner also contends that the Court of Appeals erred by misinterpreting and disregarding the Kasunduan, which is
binding between the parties and expressed their true intent. Petitioner asserts that the Kasunduan supersedes the Deed
of Absolute Sale, which is actually a contract to sell. In effect, petitioner is asking this Court to review the factual
finding of Court of Appeals on the true nature of the Kasunduan.
As a rule, the findings of the fact of the Court of Appeals are final and cannot be reviewed on appeal by this Court,
provided they are borne out by the record or are based on substantial evidence.23 After reviewing the records herein,
this Court finds no ground to change the factual finding of the Court of Appeals on the Kasunduan, with the resulting
holding that it is not binding on the parties.
The remaining issue is whether the Court of Appeals correctly ruled that private respondents have a right of material
possession over the disputed property.
It has been established that petitioner sold the subject property to private respondents for the price of P31,000, as
evidenced by the Deed of Absolute Sale,24 the due execution of which was not controverted by petitioner. The contract
is absolute in nature, without any provision that title to the property is reserved in the vendor until full payment of the
purchase price.25 By the contract of sale,26 petitioner (as vendor), obligated herself to transfer the ownership of, and to
deliver, the subject property to private respondents (as vendees) after they paid the price of P31,000. Under Article
1477 of the Civil Code, the ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. In addition, Article 1498 of the Civil Code provides that when the sale is made through a
public instrument, as in this case, the execution thereof shall be equivalent to the delivery of the thing which is the
object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. In this case, the Deed
of Absolute Sale does not contain any stipulation against the constructive delivery of the property to private
respondents. In the absence of stipulation to the contrary, the ownership of the property sold passes to the vendee upon
the actual or constructive delivery thereof.27 The Deed of Absolute Sale, therefore, supports private respondents right
of material possession over the subject property.
The finding of the MeTC, sustained by the Court of Appeals, is that the continued occupation by petitioner of said
property after the sale, without payment of rent, was by mere tolerance. Private respondents claimed that petitioner
requested for time to vacate the premises and they agreed thereto because they did not need the property at that time.
However, when private respondents were asked to vacate their rented residence, they demanded that petitioner vacate
the subject property, but petitioner refused to do so. A person who occupies the land of another at the latters tolerance
or permission, without any contract between them, is bound by an implied promise that he will vacate the same upon
demand, failing which a summary action for ejectment is the proper remedy against him.28
WHEREFORE, the assailed decision of the Court of Appeals, in CA-G.R. SP No. 38716, which reversed and set
aside the decision of the Regional Trial Court, and reinstated the decision of the Metropolitan Trial Court, is hereby
AFFIRMED. No costs.
SO ORDERED.
 G.R. No. 125088: Lagrimas Boy v. Court of Appeals, Erlinda & Isagani Ramos
14 April 2004, 427 SCRA 196

Constructive Delivery

Facts:
In 1984, Lagrimas needed money for her brothers placement fee to go abroad. She then borrowed P15k from
spouses Ramos. In 1986, Lagrimas executed a Deed of Absolute Sale with Ramoses. Subject of the sale was
Lagrimas 55.75 sq m land and the house erected there. Price agreed upon was P31k. Allegedly, Lagrimas debt is to
be deducted, so the Ramoses are to pay P16k more. Lagrimas stayed in the property as the Ramoses were not yet in
immediate need thereof.

In 1988, Lagrimas went to Erlinda asking that they execute a Kasunduan. The Kasunduan states that the
Ramoses still owe P16k to Lagrimas; that interest is to be deducted in favor of the Ramoses so that would leave a
balance of P8.5k. The Kasunduan was notarized but upon signing, Erlinda changed her mind. She said she realized
that they were actually able to pay P31k to Lagrimas when the Deed of Sale was executed. She advised the lawyer to
change what she just signed. The lawyer said that the parties need to talk to each other first. Lagrimas
promised the lawyer that she will be scrapping the Kasunduan.

Later, the need for the Ramoses to occupy the land arose. They demanded Lagrimas to vacate the property. Lagrimas
refused to do so. She invoked the Kasunduan.

ISSUE: Whether or not the Kasunduan prevails over the Deed of Absolute Sale.

HELD: No. A review of the Deed shows no indication that there was a balance left to be paid to Lagrimas. The
contract is absolute. It has been established that Lagrimas sold the subject property to private respondents for
the price of P31k, as evidenced by the Deed of Absolute Sale, the due execution of which was not controverted by
Lagrimas. The contract is absolute in nature, without any provision that title to the property is reserved in
Lagrimas until full payment of the purchase price. By the contract of sale, Lagrimas (as vendor), obligated herself to
transfer the ownership of, and to deliver, the subject property to the Ramoses (as vendees) after they paid the price of
P31k. Under Article 1477 of the Civil Code, the ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof. In addition, Article 1498 of the Civil Code provides that when the sale is
made through a public instrument, as in this case, the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be
inferred. In this case, the Deed of Absolute Sale does not contain any stipulation against the constructive
delivery of the property to private respondents. In the absence of stipulation to the contrary, the ownership of
the property sold passes to the vendee upon the actual or constructive delivery thereof. The Deed of Absolute Sale,
therefore, supports private respondents right of material possession over the subject property.
 G.R. No. 137162 January 24, 2007
CORAZON L. ESCUETA, assisted by her husband EDGAR ESCUETA, IGNACIO E. RUBIO, THE HEIRS OF LUZ R.
BALOLOY, namely, ALEJANDRINO R. BALOLOY and BAYANI R. BALOLOY, Petitioners, vs.
RUFINA LIM, Respondent.

DECISION
AZCUNA, J.:
This is an appeal by certiorari1 to annul and set aside the Decision and Resolution of the Court of Appeals (CA) dated
October 26, 1998 and January 11, 1999, respectively, in CA-G.R. CV No. 48282, entitled "Rufina Lim v. Corazon L.
Escueta, etc., et. al."

The facts2 appear as follows:

Respondent Rufina Lim filed an action to remove cloud on, or quiet title to, real property, with preliminary injunction
and issuance of [a hold-departure order] from the Philippines against Ignacio E. Rubio. Respondent amended her
complaint to include specific performance and damages.
In her amended complaint, respondent averred inter alia that she bought the hereditary shares (consisting of 10 lots) of
Ignacio Rubio [and] the heirs of Luz Baloloy, namely: Alejandrino, Bayani, and other co-heirs; that said vendors
executed a contract of sale dated April 10, 1990 in her favor; that Ignacio Rubio and the heirs of Luz Baloloy received
[a down payment] or earnest money in the amount of P102,169.86 and P450,000, respectively; that it was agreed in the
contract of sale that the vendors would secure certificates of title covering their respective hereditary shares; that the
balance of the purchase price would be paid to each heir upon presentation of their individual certificate[s] of [title];
that Ignacio Rubio refused to receive the other half of the down payment which is P[100,000]; that Ignacio Rubio
refused and still refuses to deliver to [respondent] the certificates of title covering his share on the two lots; that with
respect to the heirs of Luz Baloloy, they also refused and still refuse to perform the delivery of the two certificates of title
covering their share in the disputed lots; that respondent was and is ready and willing to pay Ignacio Rubio and the heirs of
Luz Baloloy upon presentation of their individual certificates of title, free from whatever lien and encumbrance;
As to petitioner Corazon Escueta, in spite of her knowledge that the disputed lots have already been sold by Ignacio
Rubio to respondent, it is alleged that a simulated deed of sale involving said lots was effected by Ignacio Rubio in her
favor; and that the simulated deed of sale by Rubio to Escueta has raised doubts and clouds over respondents title.
In their separate amended answers, petitioners denied the material allegations of the complaint and alleged inter alia the following:
For the heirs of Luz Baloloy (Baloloys for brevity):
Respondent has no cause of action, because the subject contract of sale has no more force and effect as far as the
Baloloys are concerned, since they have withdrawn their offer to sell for the reason that respondent failed to pay the
balance of the purchase price as orally promised on or before May 1, 1990.
For petitioners Ignacio Rubio (Rubio for brevity) and Corazon Escueta (Escueta for brevity):
Respondent has no cause of action, because Rubio has not entered into a contract of sale with her; that he has appointed
his daughter Patricia Llamas to be his attorney-in-fact and not in favor of Virginia Rubio Laygo Lim (Lim for brevity)
who was the one who represented him in the sale of the disputed lots in favor of respondent; that the P100,000
respondent claimed he received as down payment for the lots is a simple transaction by way of a loan with Lim.
The Baloloys failed to appear at the pre-trial. Upon motion of respondent, the trial court declared the Baloloys in
default. They then filed a motion to lift the order declaring them in default, which was denied by the trial court in an
order dated November 27, 1991. Consequently, respondent was allowed to adduce evidence ex parte. Thereafter, the trial
court rendered a partial decision dated July 23, 1993 against the Baloloys, the dispositive portion of which reads as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of [respondent] and against [petitioners, heirs]
of Luz R. Balolo[y], namely: Alejandrino Baloloy and Bayani Baloloy. The [petitioners] Alejandrino Baloloy and
Bayani Baloloy are ordered to immediately execute an [Absolute] Deed of Sale over their hereditary share in the
properties covered by TCT No. 74392 and TCT No. 74394, after payment to them by [respondent] the amount of
P[1,050,000] or consignation of said amount in Court. [For] failure of [petitioners] Alejandrino Baloloy and Bayani
Baloloy to execute the Absolute Deed of Sale over their hereditary share in the property covered by TCT No. T-74392
and TCT No. T-74394 in favor of [respondent], the Clerk of Court is ordered to execute the necessary Absolute Deed
of Sale in behalf of the Baloloys in favor of [respondent,] with a consideration of P[1,500,000]. Further[,] [petitioners]
Alejandrino Baloloy and Bayani Baloloy are ordered to jointly and severally pay [respondent] moral damages in the
amount of P[50,000] and P[20,000] for attorneys fees. The adverse claim annotated at the back of TCT No. T-74392 and
TCT No. T-74394[,] insofar as the shares of Alejandrino Baloloy and Bayani Baloloy are concerned[,] [is] ordered cancelled.
With costs against [petitioners] Alejandrino Baloloy and Bayani Baloloy.
SO ORDERED.3
The Baloloys filed a petition for relief from judgment and order dated July 4, 1994 and supplemental petition dated
July 7, 1994. This was denied by the trial court in an order dated September 16, 1994. Hence, appeal to the Court of
Appeals was taken challenging the order denying the petition for relief.
Trial on the merits ensued between respondent and Rubio and Escueta. After trial, the trial court rendered its assailed
Decision, as follows:
IN VIEW OF THE FOREGOING, the complaint [and] amended complaint are dismissed against [petitioners] Corazon
L. Escueta, Ignacio E. Rubio[,] and the Register of Deeds. The counterclaim of [petitioners] [is] also dismissed.
However, [petitioner] Ignacio E. Rubio is ordered to return to the [respondent], Rufina Lim[,] the amount of
P102,169.80[,] with interest at the rate of six percent (6%) per annum from April 10, [1990] until the same is fully
paid. Without pronouncement as to costs.
SO ORDERED.4
On appeal, the CA affirmed the trial courts order and partial decision, but reversed the later decision. The dispositive
portion of its assailed Decision reads:
WHEREFORE, upon all the foregoing premises considered, this Court rules:
1. the appeal of the Baloloys from the Order denying the Petition for Relief from Judgment and Orders dated July 4,
1994 and Supplemental Petition dated July 7, 1994 is DISMISSED. The Order appealed from is AFFIRMED.
2. the Decision dismissing [respondents] complaint is REVERSED and SET ASIDE and a new one is entered. Accordingly,
a. the validity of the subject contract of sale in favor of [respondent] is upheld.
b. Rubio is directed to execute a Deed of Absolute Sale conditioned upon the payment of the balance of the purchase
price by [respondent] within 30 days from the receipt of the entry of judgment of this Decision.
c. the contracts of sale between Rubio and Escueta involving Rubios share in the disputed properties is declared
NULL and VOID.
d. Rubio and Escueta are ordered to pay jointly and severally the [respondent] the amount of P[20,000] as moral
damages and P[20,000] as attorneys fees.
3. the appeal of Rubio and Escueta on the denial of their counterclaim is DISMISSED.
SO ORDERED.5
Petitioners Motion for Reconsideration of the CA Decision was denied. Hence, this petition.
The issues are:
I THE HONORABLE COURT OF APPEALS ERRED IN DENYING THE PETITION FOR RELIEF FROM
JUDGMENT FILED BY THE BALOLOYS.
II THE HONORABLE COURT OF APPEALS ERRED IN REINSTATING THE COMPLAINT AND IN
AWARDING MORAL DAMAGES AND ATTORNEYS FEES IN FAVOR OF RESPONDENT RUFINA L. LIM
CONSIDERING THAT:
A. IGNACIO E. RUBIO IS NOT BOUND BY THE CONTRACT OF SALE BETWEEN VIRGINIA LAYGO-LIM
AND RUFINA LIM.
B. THE CONTRACT ENTERED INTO BETWEEN RUFINA LIM AND VIRGINIA LAYGO-LIM IS A
CONTRACT TO SELL AND NOT A CONTRACT OF SALE.
C. RUFINA LIM FAILED TO FAITHFULLY COMPLY WITH HER OBLIGATIONS UNDER THE CONTRACT
TO SELL THEREBY WARRANTING THE CANCELLATION THEREOF.
D. CORAZON L. ESCUETA ACTED IN UTMOST GOOD FAITH IN ENTERING INTO THE CONTRACT OF
SALE WITH IGNACIO E. RUBIO.
III THE CONTRACT OF SALE EXECUTED BETWEEN IGNACIO E. RUBIO AND CORAZON L. ESCUETA IS
VALID.
IV THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING PETITIONERS COUNTERCLAIMS.
Briefly, the issue is whether the contract of sale between petitioners and respondent is valid.
Petitioners argue, as follows:
First, the CA did not consider the circumstances surrounding petitioners failure to appear at the pre-trial and to file the
petition for relief on time.
As to the failure to appear at the pre-trial, there was fraud, accident and/or excusable neglect, because petitioner Bayani
was in the United States. There was no service of the notice of pre-trial or order. Neither did the former counsel of
record inform him. Consequently, the order declaring him in default is void, and all subsequent proceedings, orders, or
decision are void.
Furthermore, petitioner Alejandrino was not clothed with a power of attorney to appear on behalf of Bayani at the pre-
trial conference.
Second, the sale by Virginia to respondent is not binding. Petitioner Rubio did not authorize Virginia to transact
business in his behalf pertaining to the property. The Special Power of Attorney was constituted in favor of Llamas,
and the latter was not empowered to designate a substitute attorney-in-fact. Llamas even disowned her signature
appearing on the "Joint Special Power of Attorney," which constituted Virginia as her true and lawful attorney-in-fact
in selling Rubios properties.

Dealing with an assumed agent, respondent should ascertain not only the fact of agency, but also the nature and extent
of the formers authority. Besides, Virginia exceeded the authority for failing to comply with her obligations under the
"Joint Special Power of Attorney."
The amount encashed by Rubio represented not the down payment, but the payment of respondents debt. His
acceptance and encashment of the check was not a ratification of the contract of sale.

Third, the contract between respondent and Virginia is a contract to sell, not a contract of sale. The real character of the
contract is not the title given, but the intention of the parties. They intended to reserve ownership of the property to
petitioners pending full payment of the purchase price. Together with taxes and other fees due on the properties, these
are conditions precedent for the perfection of the sale. Even assuming that the contract is ambiguous, the same must be
resolved against respondent, the party who caused the same.
Fourth, Respondent failed to faithfully fulfill her part of the obligation. Thus, Rubio had the right to sell his properties
to Escueta who exercised due diligence in ascertaining ownership of the properties sold to her. Besides, a purchaser
need not inquire beyond what appears in a Torrens title.

The petition lacks merit. The contract of sale between petitioners and respondent is valid.lawphil.net
Bayani Baloloy was represented by his attorney-in-fact, Alejandrino Baloloy. In the Baloloys answer to the original complaint and
amended complaint, the allegations relating to the personal circumstances of the Baloloys are clearly admitted.

"An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require
proof."6 The "factual admission in the pleadings on record [dispenses] with the need x x x to present evidence to prove
the admitted fact."7 It cannot, therefore, "be controverted by the party making such admission, and [is] conclusive"8 as
to them. All proofs submitted by them "contrary thereto or inconsistent therewith should be ignored whether objection
is interposed by a party or not."9 Besides, there is no showing that a palpable mistake has been committed in their
admission or that no admission has been made by them.

Pre-trial is mandatory.10 The notices of pre-trial had been sent to both the Baloloys and their former counsel of record.
Being served with notice, he is "charged with the duty of notifying the party represented by him."11 He must "see to it
that his client receives such notice and attends the pre-trial."12 What the Baloloys and their former counsel have alleged
instead in their Motion to Lift Order of As In Default dated December 11, 1991 is the belated receipt of Bayani
Baloloys special power of attorney in favor of their former counsel, not that they have not received the notice or been
informed of the scheduled pre-trial. Not having raised the ground of lack of a special power of attorney in their motion,
they are now deemed to have waived it. Certainly, they cannot raise it at this late stage of the proceedings. For lack of
representation, Bayani Baloloy was properly declared in default.

Section 3 of Rule 38 of the Rules of Court states:

SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the preceding sections
of this Rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, final order, or
other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or
such proceeding was taken; and must be accompanied with affidavits showing the fraud, accident, mistake, or
excusable negligence relied upon, and the facts constituting the petitioners good and substantial cause of action or
defense, as the case may be.

There is no reason for the Baloloys to ignore the effects of the above-cited rule. "The 60-day period is reckoned from
the time the party acquired knowledge of the order, judgment or proceedings and not from the date he actually read the
same."13 As aptly put by the appellate court:
The evidence on record as far as this issue is concerned shows that Atty. Arsenio Villalon, Jr., the former counsel of
record of the Baloloys received a copy of the partial decision dated June 23, 1993 on April 5, 1994. At that time, said
former counsel is still their counsel of record. The reckoning of the 60 day period therefore is the date when the said
counsel of record received a copy of the partial decision which was on April 5, 1994. The petition for relief was filed
by the new counsel on July 4, 1994 which means that 90 days have already lapsed or 30 days beyond the 60 day period.
Moreover, the records further show that the Baloloys received the partial decision on September 13, 1993 as evidenced
by Registry return cards which bear the numbers 02597 and 02598 signed by Mr. Alejandrino Baloloy.

The Baloloys[,] apparently in an attempt to cure the lapse of the aforesaid reglementary period to file a petition for
relief from judgment[,] included in its petition the two Orders dated May 6, 1994 and June 29, 1994. The first Order
denied Baloloys motion to fix the period within which plaintiffs-appellants pay the balance of the purchase price. The
second Order refers to the grant of partial execution, i.e. on the aspect of damages. These Orders are only consequences
of the partial decision subject of the petition for relief, and thus, cannot be considered in the determination of the
reglementary period within which to file the said petition for relief.

Furthermore, no fraud, accident, mistake, or excusable negligence exists in order that the petition for relief may be
granted.14 There is no proof of extrinsic fraud that "prevents a party from having a trial x x x or from presenting all of
his case to the court"15 or an "accident x x x which ordinary prudence could not have guarded against, and by reason of
which the party applying has probably been impaired in his rights."16 There is also no proof of either a "mistake x x x
of law"17 or an excusable negligence "caused by failure to receive notice of x x x the trial x x x that it would not be
necessary for him to take an active part in the case x x x by relying on another person to attend to the case for him,
when such other person x x x was chargeable with that duty x x x, or by other circumstances not involving fault of the
moving party."18

Article 1892 of the Civil Code provides:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute:
(1) When he was not given the power to appoint one x x x.
Applying the above-quoted provision to the special power of attorney executed by Ignacio Rubio in favor of his
daughter Patricia Llamas, it is clear that she is not prohibited from appointing a substitute. By authorizing Virginia Lim
to sell the subject properties, Patricia merely acted within the limits of the authority given by her father, but she will
have to be "responsible for the acts of the sub-agent,"19 among which is precisely the sale of the subject properties in
favor of respondent.
Even assuming that Virginia Lim has no authority to sell the subject properties, the contract she executed in favor of
respondent is not void, but simply unenforceable, under the second paragraph of Article 1317 of the Civil Code which reads:
Art. 1317. x x x
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it
has been executed, before it is revoked by the other contracting party.

Ignacio Rubio merely denies the contract of sale. He claims, without substantiation, that what he received was a loan,
not the down payment for the sale of the subject properties. His acceptance and encashment of the check, however,
constitute ratification of the contract of sale and "produce the effects of an express power of agency." 20 "[H]is action
necessarily implies that he waived his right of action to avoid the contract, and, consequently, it also implies the tacit, if
not express, confirmation of the said sale effected" by Virginia Lim in favor of respondent.

Similarly, the Baloloys have ratified the contract of sale when they accepted and enjoyed its benefits. "The doctrine of
estoppel applicable to petitioners here is not only that which prohibits a party from assuming inconsistent positions,
based on the principle of election, but that which precludes him from repudiating an obligation voluntarily assumed
after having accepted benefits therefrom. To countenance such repudiation would be contrary to equity, and would put
a premium on fraud or misrepresentation."21

Indeed, Virginia Lim and respondent have entered into a contract of sale. Not only has the title to the subject properties
passed to the latter upon delivery of the thing sold, but there is also no stipulation in the contract that states the
ownership is to be reserved in or "retained by the vendor until full payment of the price." 22

Applying Article 1544 of the Civil Code, a second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the obligation to discover such defect, cannot
be a registrant in good faith. Such second buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject of the sale. 23 Even the argument that a
purchaser need not inquire beyond what appears in a Torrens title does not hold water. A perusal of the certificates of
title alone will reveal that the subject properties are registered in common, not in the individual names of the heirs.

Nothing in the contract "prevents the obligation of the vendor to convey title from becoming effective" 24 or gives "the
vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period." 25
Petitioners themselves have failed to deliver their individual certificates of title, for which reason it is obvious that
respondent cannot be expected to pay the stipulated taxes, fees, and expenses.

"[A]ll the elements of a valid contract of sale under Article 1458 of the Civil Code are present, such as: (1) consent or
meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent." 26 Ignacio Rubio,
the Baloloys, and their co-heirs sold their hereditary shares for a price certain to which respondent agreed to buy and
pay for the subject properties. "The offer and the acceptance are concurrent, since the minds of the contracting parties
meet in the terms of the agreement."27

In fact, earnest money has been given by respondent. "[I]t shall be considered as part of the price and as proof of the
perfection of the contract.28 It constitutes an advance payment to "be deducted from the total price."29

Article 1477 of the same Code also states that "[t]he ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery thereof."30 In the present case, there is actual delivery as manifested by acts
simultaneous with and subsequent to the contract of sale when respondent not only took possession of the subject
properties but also allowed their use as parking terminal for jeepneys and buses. Moreover, the execution itself of the
contract of sale is constructive delivery.

Consequently, Ignacio Rubio could no longer sell the subject properties to Corazon Escueta, after having sold them to
respondent. "[I]n a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless
the contract is resolved or rescinded x x x."31 The records do not show that Ignacio Rubio asked for a rescission of the
contract. What he adduced was a belated revocation of the special power of attorney he executed in favor of Patricia
Llamas. "In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price
at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially
or by a notarial act."32

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV No.
48282, dated

October 26, 1998 and January 11, 1999, respectively, are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
 Escueta vs. Lim
G.R No. 137162 Jan 24, 2007

Facts:
Rufino Lim, herein respondent, averred that she had bought the hereditary properties of the Petitioners Rubio and heirs
of Baloloy. On April 10, 1990 Petitioners executed a Contract of Sale and received from Respondent Lim a down
payment of 102,169.86 and 450,000 respectively and the balance will be paid after the titles are transferred into Lims
name.

Rubio and the heirs of Baloloy refused to deliver the title to Lim despite her offer of the payment of the balance.
Despite the existence of a Contract of Sale between Lim and Rubio and the heirs of Baloloy, Corazon Escueta having
knowledge thereof executed a simulated sale involving the lots. As for the Baloloys, they argued that they already
withdrawn their offer to sell for the reason that respondent failed to pay the balance on time hence the Contract of Sale
has no more force and effect. As to Rubio, it alleged that Lim has no cause of action since, Rubio appointed her
daughter Patricia Llamas to be his attorney-in-fact, and not in favor of Victoria Laygo Lim who represented Rubio in
the sale between the Respondent Rufina Lim. The RTC declared the Petitioners in default. CA affirmed RTC decision
with amendments. Hence, this petition.

Issue: Whether or not the Contract of Sale between Rufina Lim and the Petitioners Rubio and Baloloys is valid.

Held: Yes, the Contract of Sale is valid.

Ruling: The Court held that the Contract of Sale between the petitioner and respondent is valid and binding. Rubio
argued that Victoria has no authority to represent him in the Sale of the disputed properties since Rubio appointed her
daughter as his attorney-in-fact and not Victoria. Art. 1892 provides:

Article 1892 of the Civil Code provides:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute:
(1) When he was not given the power to appoint one
In the case above, Rubio made his daughter Patricia to be her Attorney-in fact, and according to the above article,
Patricia is not prohibited to appoint a substitute as a representative of Rubio. Patricia, acting on the authority given to
her, appointed Victoria as her substitute hence the transaction between Victoria and Respondent is valid. Art. 1317
further provides:

Art. 1317. x x x
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it
has been executed, before it is revoked by the other contracting party.
The acceptance of Rubio of the downpayment and encashment of the said checks serves as the ratification of Rubio of
the Sale of the Properties with the respondent Rufina Lim.
 G.R. No. 168499 November 26, 2012
SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGO, Petitioners, vs.
MANCER VILLAMOR, CARLOS VILLAMOR, JOHN VILLAMOR and DOMINGO VILLAMOR, JR., Respondents.

DECISION
BRION, J.:
We resolve the petition for review on certiorari1 tiled by spouses Eros to Santiago and Nelsie Santiago (petitioners) to
challenge the August 10, 2004 decision2 and the June 8, 2005 resolution3of the Court of Appeals (CA) in CA-G.R. CV
No. 59112. The CA decision set aside the May 28, 1997 decision4 of the Regional Trial Court (RTC) of San Jacinto,
Masbate, Branch 50, in Civil Case No. 201. The CA resolution denied the petitioners' subsequent motion for
reconsideration.

THE FACTUAL ANTECEDENTS

In January 1982,5 the spouses Domingo Villamor, Sr. and Trinidad Gutierrez Villamor (spouses Villamor, Sr.), the
parents of Mancer Villamor, Carlos Villamor and Domingo Villamor, Jr. (respondents) and the grandparents of
respondent John Villamor, mortgaged their 4.5-hectare coconut land in Sta. Rosa, San Jacinto, Masbate, known as Lot
No. 1814, to the Rural Bank of San Jacinto (Masbate), Inc. (San Jacinto Bank) as security for a P10,000.00 loan.
For non-payment of the loan, the San Jacinto Bank extrajudicially foreclosed the mortgage, and, as the highest bidder
at the public auction, bought the land. When the spouses Villamor, Sr. failed to redeem the property within the
prescribed period, the San Jacinto Bank obtained a final deed of sale in its favor sometime in 1991. The San Jacinto
Bank then offered the land for sale to any interested buyer.6
a. The Specific Performance Case
Since the respondents had been in possession and cultivation of the land, they decided, together with their sister
Catalina Villamor Ranchez, to acquire the land from the San Jacinto Bank. The San Jacinto Bank agreed with the
respondents and Catalina to a P65,000.00 sale, payable in installments. The respondents and Catalina made four (4)
installment payments of P28,000.00, P5,500.00, P7,000.00 and P24,500.00 on November 4, 1991, November 23, 1992,
April 26, 1993 and June 8, 1994, respectively.7
When the San Jacinto Bank refused to issue a deed of conveyance in their favor despite full payment, the respondents
and Catalina filed a complaint against the San Jacinto Bank (docketed as Civil Case No. 200) with the RTC on October
11, 1994. The complaint was for specific performance with damages.
The San Jacinto Bank claimed that it already issued a deed of repurchase in favor of the spouses Villamor, Sr.; the
payments made by the respondents and Catalina were credited to the account of Domingo, Sr. since the real buyers of
the land were the spouses Villamor, Sr.8
In a February 10, 2004 decision, the RTC dismissed the specific performance case. It found that the San Jacinto Bank
acted in good faith when it executed a deed of "repurchase" in the spouses Villamor, Sr.s names since Domingo, Sr.,
along with the respondents and Catalina, was the one who transacted with the San Jacinto Bank to redeem the land.9
The CA, on appeal, set aside the RTCs decision.10 The CA found that the respondents and Catalina made the
installment payments on their own behalf and not as representatives of the spouses Villamor, Sr. The San Jacinto Bank
mistakenly referred to the transaction as a "repurchase" when the redemption period had already lapsed and the title
had been transferred to its name; the transaction of the respondents and Catalina was altogether alien to the spouses
Villamor, Sr.s loan with mortgage. Thus, it ordered the San Jacinto Bank to execute the necessary deed of sale in favor
of the respondents and Catalina, and to pay P30,000.00 as attorneys fees.11 No appeal appears to have been taken from
this decision.
b. The Present Quieting of Title Case
On July 19, 1994 (or prior to the filing of the respondents and Catalinas complaint for specific performance, as
narrated above), the San Jacinto Bank issued a deed of sale in favor of Domingo, Sr. 12 On July 21, 1994, the spouses
Villamor, Sr. sold the land to the petitioners for P150,000.00.13
After the respondents and Catalina refused the petitioners demand to vacate the land, the petitioners filed on October
20, 1994 a complaint for quieting of title and recovery of possession against the respondents. 14 This is the case that is
now before us.
The respondents and Catalina assailed the San Jacinto Banks execution of the deed of sale in favor of Domingo, Sr.,
claiming that the respondents and Catalina made the installment payments on their own behalf.15
In its May 28, 1997 decision,16 the RTC declared the petitioners as the legal and absolute owners of the land, finding
that the petitioners were purchasers in good faith; the spouses Villamor, Sr.s execution of the July 21, 1994 notarized
deed of sale in favor of the petitioners resulted in the constructive delivery of the land. Thus, it ordered the respondents
to vacate and to transfer possession of the land to the petitioners, and to pay P10,000.00 as moral damages.17
On appeal, the CA, in its August 10, 2004 decision, found that the petitioners action to quiet title could not prosper
because the petitioners failed to prove their legal or equitable title to the land. It noted that there was no real transfer of
ownership since neither the spouses Villamor, Sr. nor the petitioners were placed in actual possession and control of
the land after the execution of the deeds of sale. It also found that the petitioners failed to show that the respondents
and Catalinas title or claim to the land was invalid or inoperative, noting the pendency of the specific performance
case, at that time on appeal with the CA. Thus, it set aside the RTC decision and ordered the dismissal of the
complaint, without prejudice to the outcome of the specific performance case.18

When the CA denied19 the motion for reconsideration20 that followed, the petitioners filed the present Rule 45 petition.
THE PETITION
The petitioners argue that the spouses Villamor, Sr.s execution of the July 21, 1994 deed of sale in the petitioners
favor was equivalent to delivery of the land under Article 1498 of the Civil Code; the petitioners are purchasers in good
faith since they had no knowledge of the supposed transaction between the San Jacinto Bank and the respondents and
Catalina; and the respondents and Catalinas possession of the land should not be construed against them (petitioners)
since, by tradition and practice in San Jacinto, Masbate, the children use their parents property.

THE CASE FOR THE RESPONDENTS

The respondents and respondent John submit that they hold legal title to the land since they perfected the sale with the
San Jacinto Bank as early as November 4, 1991, the first installment payment, and are in actual possession of the land;
the petitioners are not purchasers in good faith since they failed to ascertain why the respondents were in possession of
the land.

THE ISSUE
The case presents to us the issue of whether the CA committed a reversible error when it set aside the RTC decision
and dismissed the petitioners complaint for quieting of title and recovery of possession.

OUR RULING
The petition lacks merit.
Quieting of title is a common law remedy for the removal of any cloud, doubt or uncertainty affecting title to real
property. The plaintiffs must show not only that there is a cloud or contrary interest over the subject real property,21 but
that they have a valid title to it.22 Worth stressing, in civil cases, the plaintiff must establish his cause of action by
preponderance of evidence; otherwise, his suit will not prosper.23
The petitioners anchor their claim over the disputed land on the July 21, 1994 notarized deed of sale executed in their
favor by the spouses Villamor, Sr. who in turn obtained a July 19, 1994 notarized deed of sale from the San Jacinto
Bank. On the other hand, the respondents and respondent John claim title by virtue of their installment payments to the
San Jacinto Bank from November 4, 1991 to June 8, 1994 and their actual possession of the disputed land.
After considering the parties evidence and arguments, we agree with the CA that the petitioners failed to prove that
they have any legal or equitable title over the disputed land.
Execution of the deed of sale only a prima facie presumption of delivery.
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof." Related to this article is Article 1497 which provides that "the thing sold
shall be understood as delivered, when it is placed in the control and possession of the vendee."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the execution of a
public instrument "shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed
the contrary does not appear or cannot clearly be inferred." However, the execution of a public instrument gives rise
only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of
the land sold.24 "A person who does not have actual possession of the thing sold cannot transfer constructive possession
by the execution and delivery of a public instrument."25
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it was not the
spouses Villamor, Sr. but the respondents who had actual possession of the land. The presumption of constructive
delivery is inapplicable and must yield to the reality that the petitioners were not placed in possession and control of
the land.
The petitioners are not purchasers in good faith.
The petitioners can hardly claim to be purchasers in good faith.
"A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in
such property and pays its fair price before he has notice of the adverse claims and interest of another person in the
same property."26 However, where the land sold is in the possession of a person other than the vendor, the purchaser
must be wary and must investigate the rights of the actual possessor; without such inquiry, the buyer cannot be said to
be in good faith and cannot have any right over the property.27
In this case, the spouses Villamor, Sr. were not in possession of the land.1wphi1 The petitioners, as prospective
vendees, carried the burden of investigating the rights of the respondents and respondent John who were then in actual
possession of the land. The petitioners cannot take refuge behind the allegation that, by custom and tradition in San
Jacinto, Masbate, the children use their parents' property, since they offered no proof supporting their bare allegation.
The burden of proving the status of a purchaser in good faith lies upon the party asserting that status and cannot be
discharged by reliance on the legal presumption of good faith.28 The petitioners failed to discharge this burden.
Lastly, since the specific performance case already settled the respondents and respondent John's claim over the
disputed land, the dispositive portion of the CA decision (dismissing the complaint without prejudice to the outcome of
the specific performance case29) is modified to reflect this fact; we thus dismiss for lack of merit the complaint for
quieting of title and recovery of possession.
WHEREFORE, we hereby DENY the petition and ORDER the DISMISSAL of Civil Case No. 201 before the
Regional Trial Court of San Jacinto, Masbate, Branch 50.
Costs against the petitioners.
SO ORDERED.
 Spouses Santiago vs. Villamor (2012)
Monday, September 8, 2014

Facts:
1 Spouses Villamor are the parents of respondents Mancer, Carlos and Domingo Jr. (respondents) and the
grandparents of respondent John Villamor.
2 In January 1982: Spouses Villamor mortgaged their 4.5-hectare coconut land in Masbate to the San Jacinto Bank as
security for a P10,000.00 loan.
3 For failure to pay the loan, the property was extra-judicially foreclosed by the bank. Spouses Villamor failed to
redeem the property so San Jacinto Bank obtained a final deed of sale in its favor in 1991. The San Jacinto
Bank then offered the land for sale to any interested buyer.
4 The children of spouses Villamor agreed to buy the property.
5 The San Jacinto Bank agreed with the respondents and Catalina (one of the sisters of the respondents) to a
P65,000.00 sale, payable in installments.
6 Upon full payment of the children of spouses Catalina, San Jacinto bank refused to issue the deed of conveyance.
Hence, they filed an action for specific performance
Specific performance case (RTC and CA):
o RTC ruled that the issuance of the deed of registration of San Jacinto Bank in favor of spouses Villamor was done in good faith.
o CA reversed RTC ruling saying that the children of Spouses Villamor did not act as representatives of their parents.
In 1994 (Before the action for specific performance was filed), spouses Villamor sold the land to petitioner-spouses
Santiago for P150k.
When the children of spouses VIllamor refused to vacate the land after spouses Santiagos demand, the latter also
filed an action for quieting of title.
Quieting of Title case (RTC and CA):
o RTC ruled that spouses Villamor were purchasers in good faith, hence they are the legal owners. RTC also said that
the notarized deed of sale in their favor resulted in constructive delivery of the land.
o CA ruled that spouses Villamors action for quieting of title cannot prosper for they have no legal or equitable title
over the land.
Spouses Villamor that the deed of sale executed in their favor was equivalent to delivery of the land under Article
1498 of the CC and that they are purchasers in good faith since they had no knowledge of the supposed
transaction between the San Jacinto Bank and the respondents and Catalina.
The children of Spouses Villamor (respondents) hold that they have a legal title to the land since they perfected the
sale with the San Jacinto Bank as early as November 4, 1991, the first installment payment, and are in actual
possession of the land; and that petitioners-spouses Santiago are not purchasers in good faith because they
failed to show why they are not in possession of the property.
Issue: WON Spouses Santiago has a legal title over the property. NO
Relevance: If they have legal title, they can file for action for quieting of title and for reconveyance.

Held:
The Court said that spouses Santiago failed to prove that they have any legal or equitable title over the disputed land.
Execution of the deed of sale only a prima facie presumption of delivery
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof."
Related to this article is Article 1497 which provides that "the thing sold shall be understood as delivered, when it is
placed in the control and possession of the vendee."
"A person who does not have actual possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the execution of a
public instrument "shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed
the contrary does not appear or cannot clearly be inferred." However, the execution of a public instrument gives rise
only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of
the land sold.
No constructive delivery of the land in favor of spouses Santiago
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it was not the
spouses Villamor, Sr. but the respondents who had actual possession of the land. The presumption of constructive
delivery is inapplicable and must yield to the reality that the petitioners were not placed in possession and control of
the land.
Spouses Santiago were not purchasers in good faith
In this case, the spouses Villamor, Sr. were not in possession of the land. The petitioners, as prospective vendees,
carried the burden of investigating the rights of the respondents who were then in actual possession of the land. The
petitioners cannot take refuge behind the allegation that, by custom and tradition in San Jacinto, Masbate, the children
use their parents' property, since they offered no proof supporting their bare allegation.
The burden of proving the status of a purchaser in good faith lies upon the party asserting that status and cannot be
discharged by reliance on the legal presumption of good faith. The petitioners failed to discharge this burden.
 G.R. No. 111238 January 25, 1995
ADELFA PROPERTIES, INC., petitioner, vs.
COURT OF APPEALS, ROSARIO JIMENEZ-CASTAEDA and SALUD JIMENEZ, respondents.

REGALADO, J.:
The main issues presented for resolution in this petition for review on certiorari of the judgment of respondent Court of
appeals, dated April 6, 1993, in CA-G.R. CV No. 34767 1 are (1) whether of not the "Exclusive Option to Purchase"
executed between petitioner Adelfa Properties, Inc. and private respondents Rosario Jimenez-Castaeda and Salud
Jimenez is an option contract; and (2) whether or not there was a valid suspension of payment of the purchase price by
said petitioner, and the legal effects thereof on the contractual relations of the parties.
The records disclose the following antecedent facts which culminated in the present appellate review, to wit:
1. Herein private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a
parcel of land consisting of 17,710 square meters, covered by Transfer Certificate of Title (TCT) No. 309773, 2 situated
in Barrio Culasi, Las Pias, Metro Manila.
2. On July 28, 1988, Jose and Dominador Jimenez sold their share consisting of one-half of said parcel of land,
specifically the eastern portion thereof, to herein petitioner pursuant to a "Kasulatan sa Bilihan ng Lupa." 3
Subsequently, a "Confirmatory Extrajudicial Partition Agreement" 4 was executed by the Jimenezes, wherein the
eastern portion of the subject lot, with an area of 8,855 square meters was adjudicated to Jose and Dominador Jimenez,
while the western portion was allocated to herein private respondents.
3. Thereafter, herein petitioner expressed interest in buying the western portion of the property from private
respondents. Accordingly, on November 25, 1989, an "Exclusive Option to Purchase" 5 was executed between
petitioner and private respondents, under the following terms and conditions:
1. The selling price of said 8,655 square meters of the subject property is TWO MILLION EIGHT HUNDRED FIFTY
SIX THOUSAND ONE HUNDRED FIFTY PESOS ONLY (P2,856,150.00)
2. The sum of P50,000.00 which we received from ADELFA PROPERTIES, INC. as an option money shall be credited as
partial payment upon the consummation of the sale and the balance in the sum of TWO MILLION EIGHT HUNDRED SIX
THOUSAND ONE HUNDRED FIFTY PESOS (P2,806,150.00) to be paid on or before November 30, 1989;
3. In case of default on the part of ADELFA PROPERTIES, INC. to pay said balance in accordance with paragraph 2
hereof, this option shall be cancelled and 50% of the option money to be forfeited in our favor and we will refund the
remaining 50% of said money upon the sale of said property to a third party;
4. All expenses including the corresponding capital gains tax, cost of documentary stamps are for the account of the
VENDORS, and expenses for the registration of the deed of sale in the Registry of Deeds are for the account of
ADELFA PROPERTIES, INC.
Considering, however, that the owner's copy of the certificate of title issued to respondent Salud Jimenez had been lost,
a petition for the re-issuance of a new owner's copy of said certificate of title was filed in court through Atty. Bayani L.
Bernardo, who acted as private respondents' counsel. Eventually, a new owner's copy of the certificate of title was
issued but it remained in the possession of Atty. Bernardo until he turned it over to petitioner Adelfa Properties, Inc.
4. Before petitioner could make payment, it received summons 6 on November 29, 1989, together with a copy of a
complaint filed by the nephews and nieces of private respondents against the latter, Jose and Dominador Jimenez, and
herein petitioner in the Regional Trial Court of Makati, docketed as Civil Case No. 89-5541, for annulment of the deed
of sale in favor of Household Corporation and recovery of ownership of the property covered by TCT No. 309773. 7
5. As a consequence, in a letter dated November 29, 1989, petitioner informed private respondents that it would hold
payment of the full purchase price and suggested that private respondents settle the case with their nephews and nieces,
adding that ". . . if possible, although November 30, 1989 is a holiday, we will be waiting for you and said plaintiffs at
our office up to 7:00 p.m." 8 Another letter of the same tenor and of even date was sent by petitioner to Jose and
Dominador Jimenez. 9 Respondent Salud Jimenez refused to heed the suggestion of petitioner and attributed the
suspension of payment of the purchase price to "lack of word of honor."
6. On December 7, 1989, petitioner caused to be annotated on the title of the lot its option contract with private respondents,
and its contract of sale with Jose and Dominador Jimenez, as Entry No. 1437-4 and entry No. 1438-4, respectively.
7. On December 14, 1989, private respondents sent Francisca Jimenez to see Atty. Bernardo, in his capacity as
petitioner's counsel, and to inform the latter that they were cancelling the transaction. In turn, Atty. Bernardo offered to
pay the purchase price provided that P500,000.00 be deducted therefrom for the settlement of the civil case. This was
rejected by private respondents. On December 22, 1989, Atty. Bernardo wrote private respondents on the same matter
but this time reducing the amount from P500,000.00 to P300,000.00, and this was also rejected by the latter.
8. On February 23, 1990, the Regional Trial Court of Makati dismissed Civil Case No. 89-5541. Thus, on February 28, 1990,
petitioner caused to be annotated anew on TCT No. 309773 the exclusive option to purchase as Entry No. 4442-4.
9. On the same day, February 28, 1990, private respondents executed a Deed of Conditional Sale 10 in favor of Emylene
Chua over the same parcel of land for P3,029,250, of which P1,500,000.00 was paid to private respondents on said
date, with the balance to be paid upon the transfer of title to the specified one-half portion.
10. On April 16, 1990, Atty. Bernardo wrote private respondents informing the latter that in view of the dismissal of
the case against them, petitioner was willing to pay the purchase price, and he requested that the corresponding deed of
absolute sale be executed. 11 This was ignored by private respondents.
11. On July 27, 1990, private respondents' counsel sent a letter to petitioner enclosing therein a check for P25,000.00
representing the refund of fifty percent of the option money paid under the exclusive option to purchase. Private
respondents then requested petitioner to return the owner's duplicate copy of the certificate of title of respondent Salud
Jimenez. 12 Petitioner failed to surrender the certificate of title, hence private respondents filed Civil Case No. 7532 in
the Regional Trial Court of Pasay City, Branch 113, for annulment of contract with damages, praying, among others,
that the exclusive option to purchase be declared null and void; that defendant, herein petitioner, be ordered to return
the owner's duplicate certificate of title; and that the annotation of the option contract on TCT No. 309773 be
cancelled. Emylene Chua, the subsequent purchaser of the lot, filed a complaint in intervention.
12. The trial court rendered judgment 13 therein on September 5, 1991 holding that the agreement entered into by the
parties was merely an option contract, and declaring that the suspension of payment by herein petitioner constituted a
counter-offer which, therefore, was tantamount to a rejection of the option. It likewise ruled that herein petitioner could
not validly suspend payment in favor of private respondents on the ground that the vindicatory action filed by the
latter's kin did not involve the western portion of the land covered by the contract between petitioner and private
respondents, but the eastern portion thereof which was the subject of the sale between petitioner and the brothers Jose
and Dominador Jimenez. The trial court then directed the cancellation of the exclusive option to purchase, declared the
sale to intervenor Emylene Chua as valid and binding, and ordered petitioner to pay damages and attorney's fees to
private respondents, with costs.
13. On appeal, respondent Court of appeals affirmed in toto the decision of the court a quo and held that the failure of
petitioner to pay the purchase price within the period agreed upon was tantamount to an election by petitioner not to
buy the property; that the suspension of payment constituted an imposition of a condition which was actually a counter-
offer amounting to a rejection of the option; and that Article 1590 of the Civil Code on suspension of payments applies
only to a contract of sale or a contract to sell, but not to an option contract which it opined was the nature of the
document subject of the case at bar. Said appellate court similarly upheld the validity of the deed of conditional sale
executed by private respondents in favor of intervenor Emylene Chua.
In the present petition, the following assignment of errors are raised:
1. Respondent court of appeals acted with grave abuse of discretion in making its finding that the agreement entered
into by petitioner and private respondents was strictly an option contract;
2. Granting arguendo that the agreement was an option contract, respondent court of Appeals acted with grave abuse of
discretion in grievously failing to consider that while the option period had not lapsed, private respondents could not
unilaterally and prematurely terminate the option period;
3. Respondent Court of Appeals acted with grave abuse of discretion in failing to appreciate fully the attendant facts
and circumstances when it made the conclusion of law that Article 1590 does not apply; and
4. Respondent Court of Appeals acted with grave abuse of discretion in conforming with the sale in favor of appellee Ma. Emylene
Chua and the award of damages and attorney's fees which are not only excessive, but also without in fact and in law. 14
An analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads to the
conclusion that the agreement between the parties is a contract to sell, and not an option contract or a contract of sale.
I 1. In view of the extended disquisition thereon by respondent court, it would be worthwhile at this juncture to briefly
discourse on the rationale behind our treatment of the alleged option contract as a contract to sell, rather than a contract
of sale. The distinction between the two is important for in contract of sale, the title passes to the vendee upon the
delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not
to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full
payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an
event that prevents the obligation of the vendor to convey title from becoming effective. Thus, a deed of sale is
considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in
the seller until the full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period. 15
There are two features which convince us that the parties never intended to transfer ownership to petitioner except
upon the full payment of the purchase price. Firstly, the exclusive option to purchase, although it provided for
automatic rescission of the contract and partial forfeiture of the amount already paid in case of default, does not
mention that petitioner is obliged to return possession or ownership of the property as a consequence of non-payment.
There is no stipulation anent reversion or reconveyance of the property to herein private respondents in the event that
petitioner does not comply with its obligation. With the absence of such a stipulation, although there is a provision on
the remedies available to the parties in case of breach, it may legally be inferred that the parties never intended to
transfer ownership to the petitioner to completion of payment of the purchase price.
In effect, there was an implied agreement that ownership shall not pass to the purchaser until he had fully paid the price.
Article 1478 of the civil code does not require that such a stipulation be expressly made. Consequently, an implied
stipulation to that effect is considered valid and, therefore, binding and enforceable between the parties. It should be noted
that under the law and jurisprudence, a contract which contains this kind of stipulation is considered a contract to sell.
Moreover, that the parties really intended to execute a contract to sell, and not a contract of sale, is bolstered by the fact
that the deed of absolute sale would have been issued only upon the payment of the balance of the purchase price, as
may be gleaned from petitioner's letter dated April 16, 1990 16 wherein it informed private respondents that it "is now
ready and willing to pay you simultaneously with the execution of the corresponding deed of absolute sale."
Secondly, it has not been shown there was delivery of the property, actual or constructive, made to herein petitioner.
The exclusive option to purchase is not contained in a public instrument the execution of which would have been
considered equivalent to delivery. 17 Neither did petitioner take actual, physical possession of the property at any given
time. It is true that after the reconstitution of private respondents' certificate of title, it remained in the possession of
petitioner's counsel, Atty. Bayani L. Bernardo, who thereafter delivered the same to herein petitioner. Normally, under
the law, such possession by the vendee is to be understood as a delivery. 18 However, private respondents explained that
there was really no intention on their part to deliver the title to herein petitioner with the purpose of transferring
ownership to it. They claim that Atty. Bernardo had possession of the title only because he was their counsel in the
petition for reconstitution. We have no reason not to believe this explanation of private respondents, aside from the fact
that such contention was never refuted or contradicted by petitioner.
2. Irrefragably, the controverted document should legally be considered as a perfected contract to sell. On this
particular point, therefore, we reject the position and ratiocination of respondent Court of Appeals which, while
awarding the correct relief to private respondents, categorized the instrument as "strictly an option contract."
The important task in contract interpretation is always the ascertainment of the intention of the contracting parties and
that task is, of course, to be discharged by looking to the words they used to project that intention in their contract, all
the words not just a particular word or two, and words in context not words standing alone. 19 Moreover, judging from
the subsequent acts of the parties which will hereinafter be discussed, it is undeniable that the intention of the parties
was to enter into a contract to sell. 20 In addition, the title of a contract does not necessarily determine its true nature. 21
Hence, the fact that the document under discussion is entitled "Exclusive Option to Purchase" is not controlling where
the text thereof shows that it is a contract to sell.
An option, as used in the law on sales, is a continuing offer or contract by which the owner stipulates with another that
the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with,
certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also
sometimes called an "unaccepted offer." An option is not of itself a purchase, but merely secures the privilege to buy. 22
It is not a sale of property but a sale of property but a sale of the right to purchase. 23 It is simply a contract by which
the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within
a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something, that it is, the right
or privilege to buy at the election or option of the other party. 24 Its distinguishing characteristic is that it imposes no
binding obligation on the person holding the option, aside from the consideration for the offer. Until acceptance, it is
not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in
the subject matter, but is merely a contract by which the owner of property gives the optionee the right or privilege of
accepting the offer and buying the property on certain terms. 25
On the other hand, a contract, like a contract to sell, involves a meeting of minds two persons whereby one binds
himself, with respect to the other, to give something or to render some service. 26 Contracts, in general, are perfected by
mere consent, 27 which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain and the acceptance absolute. 28
The distinction between an "option" and a contract of sale is that an option is an unaccepted offer. It states the terms
and conditions on which the owner is willing to sell the land, if the holder elects to accept them within the time limited.
If the holder does so elect, he must give notice to the other party, and the accepted offer thereupon becomes a valid and
binding contract. If an acceptance is not made within the time fixed, the owner is no longer bound by his offer, and the
option is at an end. A contract of sale, on the other hand, fixes definitely the relative rights and obligations of both
parties at the time of its execution. The offer and the acceptance are concurrent, since the minds of the contracting
parties meet in the terms of the agreement. 29
A perusal of the contract in this case, as well as the oral and documentary evidence presented by the parties, readily
shows that there is indeed a concurrence of petitioner's offer to buy and private respondents' acceptance thereof. The
rule is that except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly
made and must be evidenced by some acts or conduct communicated to the offeror, it may be made either in a formal
or an informal manner, and may be shown by acts, conduct, or words of the accepting party that clearly manifest a
present intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts,
conduct, or words of a party recognizing the existence of the contract of sale. 30
The records also show that private respondents accepted the offer of petitioner to buy their property under the terms of
their contract. At the time petitioner made its offer, private respondents suggested that their transfer certificate of title
be first reconstituted, to which petitioner agreed. As a matter of fact, it was petitioner's counsel, Atty. Bayani L.
Bernardo, who assisted private respondents in filing a petition for reconstitution. After the title was reconstituted, the
parties agreed that petitioner would pay either in cash or manager's check the amount of P2,856,150.00 for the lot.
Petitioner was supposed to pay the same on November 25, 1989, but it later offered to make a down payment of
P50,000.00, with the balance of P2,806,150.00 to be paid on or before November 30, 1989. Private respondents agreed to the
counter-offer made by petitioner. 31 As a result, the so-called exclusive option to purchase was prepared by petitioner and
was subsequently signed by private respondents, thereby creating a perfected contract to sell between them.
It cannot be gainsaid that the offer to buy a specific piece of land was definite and certain, while the acceptance thereof was
absolute and without any condition or qualification. The agreement as to the object, the price of the property, and the terms
of payment was clear and well-defined. No other significance could be given to such acts that than they were meant to
finalize and perfect the transaction. The parties even went beyond the basic requirements of the law by stipulating that "all
expenses including the corresponding capital gains tax, cost of documentary stamps are for the account of the vendors, and
expenses for the registration of the deed of sale in the Registry of Deeds are for the account of Adelfa properties, Inc."
Hence, there was nothing left to be done except the performance of the respective obligations of the parties.
We do not subscribe to private respondents' submission, which was upheld by both the trial court and respondent court
of appeals, that the offer of petitioner to deduct P500,000.00, (later reduced to P300,000.00) from the purchase price
for the settlement of the civil case was tantamount to a counter-offer. It must be stressed that there already existed a
perfected contract between the parties at the time the alleged counter-offer was made. Thus, any new offer by a party
becomes binding only when it is accepted by the other. In the case of private respondents, they actually refused to
concur in said offer of petitioner, by reason of which the original terms of the contract continued to be enforceable.
At any rate, the same cannot be considered a counter-offer for the simple reason that petitioner's sole purpose was to
settle the civil case in order that it could already comply with its obligation. In fact, it was even indicative of a desire by
petitioner to immediately comply therewith, except that it was being prevented from doing so because of the filing of
the civil case which, it believed in good faith, rendered compliance improbable at that time. In addition, no inference
can be drawn from that suggestion given by petitioner that it was totally abandoning the original contract.
More importantly, it will be noted that the failure of petitioner to pay the balance of the purchase price within the agreed
period was attributed by private respondents to "lack of word of honor" on the part of the former. The reason of "lack of
word of honor" is to us a clear indication that private respondents considered petitioner already bound by its obligation to
pay the balance of the consideration. In effect, private respondents were demanding or exacting fulfillment of the obligation
from herein petitioner. with the arrival of the period agreed upon by the parties, petitioner was supposed to comply with the
obligation incumbent upon it to perform, not merely to exercise an option or a right to buy the property.
The obligation of petitioner on November 30, 1993 consisted of an obligation to give something, that is, the payment of
the purchase price. The contract did not simply give petitioner the discretion to pay for the property. 32 It will be noted
that there is nothing in the said contract to show that petitioner was merely given a certain period within which to
exercise its privilege to buy. The agreed period was intended to give time to herein petitioner within which to fulfill
and comply with its obligation, that is, to pay the balance of the purchase price. No evidence was presented by private
respondents to prove otherwise.
The test in determining whether a contract is a "contract of sale or purchase" or a mere "option" is whether or not the
agreement could be specifically enforced. 33 There is no doubt that the obligation of petitioner to pay the purchase price
is specific, definite and certain, and consequently binding and enforceable. Had private respondents chosen to enforce
the contract, they could have specifically compelled petitioner to pay the balance of P2,806,150.00. This is distinctly
made manifest in the contract itself as an integral stipulation, compliance with which could legally and definitely be
demanded from petitioner as a consequence.
This is not a case where no right is as yet created nor an obligation declared, as where something further remains to be
done before the buyer and seller obligate themselves. 34 An agreement is only an "option" when no obligation rests on
the party to make any payment except such as may be agreed on between the parties as consideration to support the
option until he has made up his mind within the time specified. 35 An option, and not a contract to purchase, is effected
by an agreement to sell real estate for payments to be made within specified time and providing forfeiture of money
paid upon failure to make payment, where the purchaser does not agree to purchase, to make payment, or to bind
himself in any way other than the forfeiture of the payments made. 36 As hereinbefore discussed, this is not the situation
obtaining in the case at bar.
While there is jurisprudence to the effect that a contract which provides that the initial payment shall be totally
forfeited in case of default in payment is to be considered as an option contract, 37 still we are not inclined to conform
with the findings of respondent court and the court a quo that the contract executed between the parties is an option
contract, for the reason that the parties were already contemplating the payment of the balance of the purchase price,
and were not merely quoting an agreed value for the property. The term "balance," connotes a remainder or something
remaining from the original total sum already agreed upon.
In other words, the alleged option money of P50,000.00 was actually earnest money which was intended to form part of the
purchase price. The amount of P50,000.00 was not distinct from the cause or consideration for the sale of the property, but
was itself a part thereof. It is a statutory rule that whenever earnest money is given in a contract of sale, it shall be considered
as part of the price and as proof of the perfection of the contract. 38 It constitutes an advance payment and must, therefore, be
deducted from the total price. Also, earnest money is given by the buyer to the seller to bind the bargain.
There are clear distinctions between earnest money and option money, viz.: (a) earnest money is part of the purchase price,
while option money ids the money given as a distinct consideration for an option contract; (b) earnest money is given only
where there is already a sale, while option money applies to a sale not yet perfected; and (c) when earnest money is given,
the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy. 39
The aforequoted characteristics of earnest money are apparent in the so-called option contract under review, even
though it was called "option money" by the parties. In addition, private respondents failed to show that the payment of
the balance of the purchase price was only a condition precedent to the acceptance of the offer or to the exercise of the
right to buy. On the contrary, it has been sufficiently established that such payment was but an element of the
performance of petitioner's obligation under the contract to sell. 40

II 1. This brings us to the second issue as to whether or not there was valid suspension of payment of the purchase
price by petitioner and the legal consequences thereof. To justify its failure to pay the purchase price within the agreed
period, petitioner invokes Article 1590 of the civil Code which provides:
Art. 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have
reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the
payment of the price until the vendor has caused the disturbance or danger to cease, unless the latter gives security for
the return of the price in a proper case, or it has been stipulated that, notwithstanding any such contingency, the vendee shall
be bound to make the payment. A mere act of trespass shall not authorize the suspension of the payment of the price.
Respondent court refused to apply the aforequoted provision of law on the erroneous assumption that the true
agreement between the parties was a contract of option. As we have hereinbefore discussed, it was not an option
contract but a perfected contract to sell. Verily, therefore, Article 1590 would properly apply.
Both lower courts, however, are in accord that since Civil Case No. 89-5541 filed against the parties herein involved
only the eastern half of the land subject of the deed of sale between petitioner and the Jimenez brothers, it did not,
therefore, have any adverse effect on private respondents' title and ownership over the western half of the land which is
covered by the contract subject of the present case. We have gone over the complaint for recovery of ownership filed in
said case 41 and we are not persuaded by the factual findings made by said courts. At a glance, it is easily discernible
that, although the complaint prayed for the annulment only of the contract of sale executed between petitioner and the
Jimenez brothers, the same likewise prayed for the recovery of therein plaintiffs' share in that parcel of land
specifically covered by TCT No. 309773. In other words, the plaintiffs therein were claiming to be co-owners of the
entire parcel of land described in TCT No. 309773, and not only of a portion thereof nor, as incorrectly interpreted by
the lower courts, did their claim pertain exclusively to the eastern half adjudicated to the Jimenez brothers.
Such being the case, petitioner was justified in suspending payment of the balance of the purchase price by reason of
the aforesaid vindicatory action filed against it. The assurance made by private respondents that petitioner did not have
to worry about the case because it was pure and simple harassment 42 is not the kind of guaranty contemplated under
the exceptive clause in Article 1590 wherein the vendor is bound to make payment even with the existence of a
vindicatory action if the vendee should give a security for the return of the price.
2. Be that as it may, and the validity of the suspension of payment notwithstanding, we find and hold that private
respondents may no longer be compelled to sell and deliver the subject property to petitioner for two reasons, that is,
petitioner's failure to duly effect the consignation of the purchase price after the disturbance had ceased; and,
secondarily, the fact that the contract to sell had been validly rescinded by private respondents.
The records of this case reveal that as early as February 28, 1990 when petitioner caused its exclusive option to be
annotated anew on the certificate of title, it already knew of the dismissal of civil Case No. 89-5541. However, it was
only on April 16, 1990 that petitioner, through its counsel, wrote private respondents expressing its willingness to pay
the balance of the purchase price upon the execution of the corresponding deed of absolute sale. At most, that was
merely a notice to pay. There was no proper tender of payment nor consignation in this case as required by law.
The mere sending of a letter by the vendee expressing the intention to pay, without the accompanying payment, is not
considered a valid tender of payment. 43 Besides, a mere tender of payment is not sufficient to compel private
respondents to deliver the property and execute the deed of absolute sale. It is consignation which is essential in order
to extinguish petitioner's obligation to pay the balance of the purchase price. 44 The rule is different in case of an option
contract 45 or in legal redemption or in a sale with right to repurchase, 46 wherein consignation is not necessary because
these cases involve an exercise of a right or privilege (to buy, redeem or repurchase) rather than the discharge of an
obligation, hence tender of payment would be sufficient to preserve the right or privilege. This is because the
provisions on consignation are not applicable when there is no obligation to pay. 47 A contract to sell, as in the case
before us, involves the performance of an obligation, not merely the exercise of a privilege of a right. consequently,
performance or payment may be effected not by tender of payment alone but by both tender and consignation.
Furthermore, petitioner no longer had the right to suspend payment after the disturbance ceased with the dismissal of
the civil case filed against it. Necessarily, therefore, its obligation to pay the balance again arose and resumed after it
received notice of such dismissal. Unfortunately, petitioner failed to seasonably make payment, as in fact it has deposit
the money with the trial court when this case was originally filed therein.
By reason of petitioner's failure to comply with its obligation, private respondents elected to resort to and did announce the
rescission of the contract through its letter to petitioner dated July 27, 1990. That written notice of rescission is deemed sufficient
under the circumstances. Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not
applicable to a contract to sell. 48 Furthermore, judicial action for rescission of a contract is not necessary where the contract
provides for automatic rescission in case of breach, 49 as in the contract involved in the present controversy.
We are not unaware of the ruling in University of the Philippines vs. De los Angeles, etc. 50 that the right to rescind is
not absolute, being ever subject to scrutiny and review by the proper court. It is our considered view, however, that this
rule applies to a situation where the extrajudicial rescission is contested by the defaulting party. In other words,
resolution of reciprocal contracts may be made extrajudicially unless successfully impugned in court. If the debtor
impugns the declaration, it shall be subject to judicial determination 51 otherwise, if said party does not oppose it, the
extrajudicial rescission shall have legal effect. 52
In the case at bar, it has been shown that although petitioner was duly furnished and did receive a written notice of rescission
which specified the grounds therefore, it failed to reply thereto or protest against it. Its silence thereon suggests an admission
of the veracity and validity of private respondents' claim. 53 Furthermore, the initiative of instituting suit was transferred from
the rescinder to the defaulter by virtue of the automatic rescission clause in the contract. 54 But then, the records bear out the
fact that aside from the lackadaisical manner with which petitioner treated private respondents' latter of cancellation, it
utterly failed to seriously seek redress from the court for the enforcement of its alleged rights under the contract. If private
respondents had not taken the initiative of filing Civil Case No. 7532, evidently petitioner had no intention to take any legal
action to compel specific performance from the former. By such cavalier disregard, it has been effectively estopped from
seeking the affirmative relief it now desires but which it had theretofore disdained.
WHEREFORE, on the foregoing modificatory premises, and considering that the same result has been reached by respondent
Court of Appeals with respect to the relief awarded to private respondents by the court a quo which we find to be correct, its
assailed judgment in CA-G.R. CV No. 34767 is hereby AFFIRMED.
SO ORDERED.
 ADELFA PROPERTIES, INC vs. CA et al
G.R. No. 111238 January 25, 1995

FACTS: Private respondents and their brothers Jose and Dominador were the registered CO-OWNERS of a parcel of
land in Las Pinas, covered by a TCT.
Jose and Dominador sold their share (eastern portion of the land) to Adelfa. Thereafter, Adelfa expressed interest in
buying the western portion of the property from private respondents herein. Accordingly, an exclusive Option to
Purchase was executed between Adelfa and Private respondents and an option money of 50,000 was given to the
latter.
A new owners copy of the certificate of title was issued (as the copy with respondent Salud was lost) was issued but
was kept by Adelfas counsel, Atty. Bernardo.
Before Adelfa could make payments, it received summons as a case was filed (RTC Makati) against Jose and
Dominador and Adelfa, because of a complaint in a civil case by the nephews and nieces of private respondents herein.
As a consequence, Adelfa, through a letter, informed the private respondents that it would hold payment of the full
purchase price and suggested that they settle the case with their said nephews and nieces. Salud did not heed the
suggestion; respondents informed Atty. Bernardo that they are canceling the transaction. Atty Bernardo made offers
but they were all rejected.
RTC Makati dismissed the civil case. A few days after, private respondents executed a Deed of Conditional Sale in
favor of Chua, over the same parcel of land.
Atty Bernardo wrote private respondents informing them that in view of the dismissal of the case, Adelfa is willing to
pay the purchase price, and requested that the corresponding deed of Absolute Sale be executed. This was ignored by
private respondents.
Private respondents sent a letter to Adelfa enclosing therein a check representing the refund of half the option money
paid under the exclusive option to purchase, and requested Adelfa to return the owners duplicate copy of Salud.
Adelfa failed to surrender the certificate of title, hence the private respondents filed a civil case before the RTC Pasay,
for annulment of contract with damages. The trial court directed the cancellation of the exclusive option to purchase.
On appeal, respondent CA affirmed in toto the decision of the RTC hence this petition.

ISSUE:
WON the agreement between Adelfa and Private respondents was strictly an option contract
WON Article 1590 applies in this case, thereby justifiying the refusal by Adelfa to pay the balance of the purchase price
WON Private respondents could unilaterraly and prematurely terminate the option period, if indeed it is a option
contract, as the option period has not lapsed yet.

HELD: The judgement of the CA is AFFIRMED

1. NO. The agreement between the parties is a contract to sell, and not an option contract or a contract of sale.
Contract to SELL
by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price
title is retained by the vendor until the full payment of the price, such payment being a positive
Contract of SALE
the title passes to the vendee upon the delivery of the thing sold
the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded
There are two features which convince us that the parties never intended to transfer ownership to petitioner except
upon the full payment of the purchase price.
(1) the exclusive option to purchase, although it provided for automatic rescission of the contract and partial
forfeiture of the amount already paid in case of default, does not mention that petitioner is obliged to return possession
or ownership of the property as a consequence of non-payment. There is no stipulation anent reversion or reconveyance
of the property to herein private respondents in the event that petitioner does not comply with its obligation. With the
absence of such a stipulation, although there is a provision on the remedies available to the parties in case of breach, it
may legally be inferred that the parties never intended to transfer ownership to the petitioner to completion of payment
of the purchase price.
(2) Secondly, it has not been shown there was delivery of the property, actual or constructive, made to herein
petitioner. The exclusive option to purchase is not contained in a public instrument the execution of which would have
been considered equivalent to delivery. Neither did petitioner take actual, physical possession of the property at any
given time. It is true that after the reconstitution of private respondents certificate of title, it remained in the possession
of petitioners counsel, Atty. Bayani L. Bernardo, who thereafter delivered the same to herein petitioner. Normally,
under the law, such possession by the vendee is to be understood as a delivery. 18 However, private respondents
explained that there was really no intention on their part to deliver the title to herein petitioner with the purpose of
transferring ownership to it. They claim that Atty. Bernardo had possession of the title only because he was their
counsel in the petition for reconstitution.
In effect, there was an implied agreement that ownership shall not pass to the purchaser until he had fully paid the price
in this case. Article 1478 of the civil code does not require that such a stipulation be expressly made. Consequently, an
implied stipulation to that effect is considered valid and, therefore, binding and enforceable between the parties. It
should be noted that under the law and jurisprudence, a contract which contains this kind of stipulation is considered a
contract to sell.
The important task in contract interpretation is always the ascertainment of the intention (parties never intended to
transfer ownership to petitioner except upon the full payment of the purchase price) of the contracting parties and that
task is, of course, to be discharged by looking to the words they used to project that intention in their contract. The title
of a contract does not necessarily determine its true nature. Hence, the fact that the document under discussion is
entitled Exclusive Option to Purchase is not controlling where the text thereof shows that it is a contract to sell.
The obligation of petitioner consisted of an obligation to give something, that is, the payment of the purchase price.
The contract did not simply give petitioner the discretion to pay for the property. It will be noted that there is nothing
in the said contract to show that petitioner was merely given a certain period within which to exercise its privilege to
buy. The agreed period was intended to give time to herein petitioner within which to fulfill and comply with its
obligation, that is, to pay the balance of the purchase price. No evidence was presented by private respondents to prove
otherwise.
The test in determining whether a contract is a contract of sale or purchase or a mere option is whether or not the
agreement could be specifically enforced. There is no doubt that the obligation of petitioner to pay the purchase price is
specific, definite and certain, and consequently binding and enforceable. Had private respondents chosen to enforce the
contract, they could have specifically compelled petitioner to pay the balance. This is distinctly made manifest in the
contract itself as an integral stipulation, compliance with which could legally and definitely be demanded from
petitioner as a consequence.
While there is jurisprudence to the effect that a contract which provides that the initial payment shall be totally
forfeited in case of default in payment is to be considered as an option contract, still we are not inclined to conform
with the findings of respondent court and the court a quo that the contract executed between the parties is an option
contract, for the reason that the parties were already contemplating the payment of the balance of the purchase price,
and were not merely quoting an agreed value for the property. The term balance, connotes a remainder or something
remaining from the original total sum already agreed upon.
In other words, the alleged option money was actually earnest money which was intended to form part of the purchase
price. The amount was not distinct from the cause or consideration for the sale of the property, but was itself a part
thereof. It is a statutory rule that whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of the perfection of the contract. It constitutes an advance payment and must, therefore, be
deducted from the total price. Also, earnest money is given by the buyer to the seller to bind the bargain.
There are clear distinctions between earnest money and option money, viz.:
(a) earnest money is part of the purchase price, while option money ids the money given as a distinct consideration for
an option contract;
(b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; \
(c) when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option
money, he is not required to buy.
The aforequoted characteristics of earnest money are apparent in the so-called option contract under review, even
though it was called option money by the parties. In addition, private respondents failed to show that the payment of
the balance of the purchase price was only a condition precedent to the acceptance of the offer or to the exercise of the
right to buy. On the contrary, it has been sufficiently established that such payment was but an element of the
performance of petitioners obligation under the contract to sell.
2. Its failure to pay the purchase price within the agreed period, petitioner invokes Article 1590 of the civil Code which provides:
Art. 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have
reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the
payment of the price until the vendor has caused the disturbance or danger to cease, unless the latter gives security for the
return of the price in a proper case, or it has been stipulated that, notwithstanding any such contingency, the vendee shall be
bound to make the payment. A mere act of trespass shall not authorize the suspension of the payment of the price.
Respondent court refused to apply the aforequoted provision of law on the erroneous assumption that the true
agreement between the parties was a contract of option. As we have hereinbefore discussed, it was not an option
contract but a perfected contract to sell. Verily, therefore, Article 1590 would properly apply.
Both lower courts, are in accord that since the Civil Case in Makati involved only the eastern half of the land subject of
the deed of sale between Adelfa and the Jimenez brothers, it did not, therefore, have any adverse effect on private
respondents title and ownership over the western half of the land which is covered by the contract subject of the
present case. But at a glance, it is easily discernible that, although the complaint prayed for the annulment only of the
contract of sale executed between petitioner and the Jimenez brothers, the plaintiffs therein were claiming to be co-
owners of the entire parcel of land, and not only of a portion thereof nor, as incorrectly interpreted by the lower courts,
not pertaining exclusively to the eastern half adjudicated to the Jimenez brothers.
Such being the case, petitioner was justified in suspending payment of the balance of the purchase price by reason of
the aforesaid vindicatory action filed against it. The assurance made by private respondents that petitioner did not have
to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated under the
exceptive clause in Article 1590 wherein the vendor is bound to make payment even with the existence of a vindicatory
action if the vendee should give a security for the return of the price.
3. YES. The private respondents may no longer be compelled to sell and deliver the subject property to petitioner for
two reasons, that is, petitioners failure to duly effect the consignation of the purchase price after the disturbance had
ceased; and, secondarily, the fact that the contract to sell had been validly rescinded by private respondents.
The mere sending of a letter by the vendee expressing the intention to pay, without the accompanying payment, is not
considered a valid tender of payment. Besides, a mere tender of payment is not sufficient to compel private
respondents to deliver the property and execute the deed of absolute sale. It is consignation which is essential in order
to extinguish petitioners obligation to pay the balance of the purchase price.

The rule is different in case of an option contract or in legal redemption or in a sale with right to repurchase, wherein
consignation is not necessary because these cases involve an exercise of a right or privilege (to buy, redeem or
repurchase) rather than the discharge of an obligation, hence tender of payment would be sufficient to preserve the
right or privilege. This is because the provisions on consignation are not applicable when there is no obligation to
pay. A contract to sell, as in the case before us, involves the performance of an obligation, not merely the exercise of a
privilege of a right. Consequently, performance or payment may be effected not by tender of payment alone but by
both tender and consignation.

Furthermore, petitioner no longer had the right to suspend payment after the disturbance ceased with the dismissal of
the civil case filed against it. Necessarily, therefore, its obligation to pay the balance again arose and resumed after it
received notice of such dismissal. Unfortunately, petitioner failed to seasonably make payment. By reason of
petitioners failure to comply with its obligation, private respondents elected to resort to and did announce the
rescission of the contract through its letter to petitioner. That written notice of rescission is deemed sufficient under the
circumstances. Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not
applicable to a contract to sell. Furthermore, judicial action for rescission of a contract is not necessary where the
contract provides for automatic rescission in case of breach, as in the contract involved in the present controversy.

In the case at bar, it has been shown that although petitioner was duly furnished and did receive a written notice of
rescission which specified the grounds therefore, it failed to reply thereto or protest against it. By such cavalier
disregard, it has been effectively estopped from seeking the affirmative relief it now desires but which it had
theretofore disdained.

NOTES:
1. a deed of sale is considered absolute in nature where there is neither
(a) a stipulation in the deed that title to the property sold is reserved in the seller until the full payment of the price, nor
(b) one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.

2. We are not unaware of the ruling in University of the Philippines vs. De los Angeles, etc. 50 that the right to rescind
is not absolute, being ever subject to scrutiny and review by the proper court. It is our considered view, however, that
this rule applies to a situation where the extrajudicial rescission is contested by the defaulting party. In other words,
resolution of reciprocal contracts may be made extrajudicially unless successfully impugned in court. If the debtor
impugns the declaration, it shall be subject to judicial determination 51 otherwise, if said party does not oppose it, the
extrajudicial rescission shall have legal effect.

3. Option vs. contract

An option, as used in the law on sales, is a continuing offer or contract by which the owner stipulates with another that
the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with,
certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also
sometimes called an unaccepted offer. An option is not of itself a purchase, but merely secures the privilege to
buy. It is not a sale of property but a sale of property but a sale of the right to purchase. It is simply a contract by
which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price
within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something, that it is,
the right or privilege to buy at the election or option of the other party.

Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the
consideration for the offer. Until acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or
agree to transfer, any title to, or any interest or right in the subject matter, but is merely a contract by which the owner
of property gives the optionee the right or privilege of accepting the offer and buying the property on certain terms.

On the other hand, a contract, like a contract to sell, involves a meeting of minds two persons whereby one binds
himself, with respect to the other, to give something or to render some service. Contracts, in general, are perfected by
mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain and the acceptance absolute.

The distinction between an option and a contract of sale is that an option is an unaccepted offer. It states the terms
and conditions on which the owner is willing to sell the land, if the holder elects to accept them within the time limited.
If the holder does so elect, he must give notice to the other party, and the accepted offer thereupon becomes a valid and
binding contract. If an acceptance is not made within the time fixed, the owner is no longer bound by his offer, and the
option is at an end.

A contract of sale, on the other hand, fixes definitely the relative rights and obligations of both parties at the time of its
execution. The offer and the acceptance are concurrent, since the minds of the contracting parties meet in the terms of
the agreement.
 G.R. No. 109410 August 28, 1996
CLARA M. BALATBAT, petitioner, vs.
COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN, respondents.

TORRES, JR. , J.:p

Petitioner Clara M. Balatbat instituted this petition for review pursuant to Rule 45 of the Revised Rules of Court
seeking to set aside the decision dated August 12, 1992 of the respondent Court of Appeals in CA-GR. CV No. 29994
entitled "Alexandra Balatbat and Clara Balatbat, plaintiffs-appellants versus Jose Repuyan and Aurora Repuyan,
defendants-appellees", the dispositive portion of which reads: 1
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of P10,000.00 for
attorney's fees and P5,000.00 as costs of litigation are deleted. SO ORDERED.
The records show the following factual antecedents:
It appears that on June 15, 1977, Aurelio A. Roque filed a complaint for partition docketed as Civil Case No. 109032
against Corazon Roque, Alberto de los Santos, Feliciano Roque, Severa Roque and Osmundo Roque before the then
Court of First Instance of Manila, Branch IX. 2 Defendants therein were declared in default and plaintiff presented
evidence ex-parte. On March 29, 1979, the trial court rendered a decision in favor of plaintiff Aurelio A. Roque, the
pertinent portion of which reads: 3
From the evidence, it has been clearly established that the lot in question covered by Transfer Certificate of Title No.
51330 was acquired by plaintiff Aurelio Rogue and Maria Mesina during their conjugal union and the house
constructed thereon was likewise built during their marital union. Out of their union, plaintiff and Maria Mesina had
four children, who are the defendants in this case. When Maria Mesina died on August 28, 1966, the only conjugal
properties left are the house and lot above stated of which plaintiff herein, as the legal spouse, is entitled to one-half
share pro-indiviso thereof. With respect to the one-half share pro-indiviso now forming the estate of Maria Mesina,
plaintiff and the four children, the defendants here, are each entitled to one-fifth (1/5) share pro-indiviso. The deceased
wife left no debt.
Wherefore, judgment is hereby rendered ordering the partition of the properties, subject matter of this case consisting
of the house and lot, in the following manner:
1. Of the house and lot forming the conjugal properties, plaintiff is entitled to one-half share pro-indiviso thereof while
the other half forms the estate of the deceased Maria Mesina;
2. Of the Estate of deceased Maria Mesina, the same is to be divided into five (5) shares and plaintiff and his four
children are entitled each to one-fifth share thereof pro-indiviso.
Plaintiff claim for moral, exemplary and actual damages and attorney's fees not having been established to the
satisfaction of the Court, the same is hereby denied.
Without pronouncement as to costs.
SO ORDERED
On June 2, 1979, the decision became final and executory. The corresponding entry of judgment was made on March
29, 1979. 4
On October 5, 1979, the Register of Deeds of Manila issued a Transfer Certificate of Title No. 135671 in the name of
the following persons in the following proportions: 5
Aurelio A. Roque 6/10 share Feliciano M. Roque 1/10 share
Severina M. Roque 1/10 share Corazon M. Roque 1/10 share
Osmundo M. Roque 1/10 share
On April 1, 1980, Aurelio A. Rogue sold his 6/10 share in T.C.T. No. 135671 to spouses Aurora Tuazon-Repuyan and
Jose Repuyan as evidenced by ."Deed of Absolute Sale." 6
On July 21, 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim 7 on the Transfer
Certificate of Title No. 135671, 8 to wit:
Entry No. 5627/T-135671 NOTICE OF ADVERSE CLAIM Filed by Aurora Tuazon Repuyan, married,
claiming among others that she bought 6/10 portion of the property herein described from Aurelio Roque for the
amount of P50,000.00 with a down payment of P5,000.00 and the balance of P45,000.00 to be paid after the partition
and subdivision of the property herein described, other claims set forth in Doc. No. 954, page 18, Book 94 of
________________ 64 _______ PEDRO DE CASTRO, Notary Public of Manila.
Date of instrument July 21, 1980 Date of inscription July 21, 1980 at 3:35 p.m.
TERESITA H. NOBLEJAS By:
Acting Register of Deeds RAMON D. MACARICAN
Acting Second Deputy
On August 20, 1980, Aurelio A. Roque filed a complaint for "Rescission of Contract" docketed as Civil Case No.
134131 against spouses Aurora Tuazon-Repuyan and Jose Repuyan before Branch IV of the then Court of First
Instance of Manila. The complaint is grounded on spouses Repuyan's failure to pay the balance of P45,000.00 of the
purchase price. 9 On September 5, 1980, spouses Repuyan filed their answer with counterclaim. 10
In the meantime, the trial court issued an order in Civil Case No. 109032 (Partition case) dated February 2, 1982, to wit: 11
In view of all the foregoing and finding that the amount of P100,000.00 as purchase price for the sale of the parcel of
land covered by TCT No. 51330 of the Registry of Deeds of Manila consisting of 84 square meters situated in Callejon
Sulu, District of Santa Cruz, Manila, to be reasonable and fair, and considering the opportunities given defendants to
sign the deed of absolute sale voluntarily, the Court has no alternative but to order, as it hereby orders, the Deputy
Clerk of this Court to sign the deed of absolute sale for and in behalf of defendants pursuant to Sec. 10, Rule 39 of the
Rules of Court, in order to effect the partition of the property involved in this case. SO ORDERED.
A deed of absolute sale was executed on February 4, 1982 between Aurelio S. Roque, Corazon Roque, Feliciano
Roque, Severa Roque and Osmundo Roque and Clara Balatbat, married to Alejandro Balatbat. 12 On April 14, 1982,
Clara Balatbat filed a motion for the issuance of a writ of possession which was granted by the trial court on September
14, 1982 "subject, however, to valid rights and interest of third persons over the same portion thereof, other than
vendor or any other person or persons privy to or claiming any rights or interests under it." The corresponding writ of
possession was issued on September 20, 1982. 13
On May 20, 1982, petitioner Clara Balatbat filed a motion to intervene in Civil Case No. 134131 14 which was granted
as per court's resolution of October 21, 1982. 15 However, Clara Balatbat failed to file her complaint in intervention. 16
On April 15, 1986, the trial court rendered a decision dismissing the complaint, the pertinent portion of which reads: 17
The rescission of contracts are provided for in the laws and nowhere in the provision of the Civil Code under the title
Rescissible Contracts does the circumstances in the case at bar appear to have occurred, hence, the prayer for rescission
is outside the ambit for which rescissible [sic] could be granted.
The Intervenor Plaintiff, Clara Balatbat, although allowed to intervene, did not file her complaint in intervention.
Consequently, the plaintiff having failed to prove with sufficient preponderance his action, the relief prayed for had to
be denied. The contract of sale denominated as "Deed of Absolute Sale" (Exh. 7 and sub-markings) being valid and
enforceable, the same pursuant to the provisions of Art. 1159 of the Civil Code which says:
Obligations arising from contracts have the force of law between the contracting parties and should be complied with
in good faith.
has the effect of being the law between the parties and should be complied with. The obligation of the plaintiff under
the contract being to have the land covered by TCT No. 135671 partitioned and subdivided, and title issued in the name
of the defendant buyer (see page 2 par. C of Exh. 7-A) plaintiff had to comply thereto to give effect to the contract.
WHEREFORE, judgment is rendered against the plaintiff, Aurelio A. Roque, and the plaintiff in intervention, Clara
Balatbat, and in favor of the defendants, dismissing the complaint for lack of merit, and declaring the Deed of Absolute
Sale dated April 1, 1980 as valid and enforceable and the plaintiff is, as he is hereby ordered, to partition and subdivide
the land covered by T.C.T. No. 135671, and to aggregate therefrom a portion equivalent to 6/10 thereof, and cause the
same to be titled in the name of the defendants, and after which, the defendants, and after which, the defendants, and
after which, the defendants, and after which, the defendants to pay the plaintiff the sum of P45,000.00. Considering
further that the defendants suffered damages since they were forced to litigate unnecessarily, by way of their
counterclaim, plaintiff is hereby ordered to pay defendants the sum of P15,000.00 as moral damages, attorney's fees in
the amount of P5,000.00.
Costs against plaintiff. SO ORDERED.
On March 3, 1987, petitioner Balatbat filed a notice of lis pendens in Civil Case No. 109032 before the Register of
Deeds of Manila. 18
On December 9, 1988, petitioner Clara Balatbat and her husband, Alejandro Balatbat filed the instant complaint for
delivery of the owners duplicate copy of T.C.T. No. 135671 docketed as Civil Case No. 88-47176 before Branch 24 of
the Regional Trial Court of Manila against private respondents Jose Repuyan and Aurora Repuyan. 19
On January 27, 1989, private respondents filed their answer with affirmative defenses and compulsory counterclaim. 20
On November 13, 1989, private respondents filed their memorandum 21 while petitioners filed their memorandum on
November 23, 1989. 22
On August 2, 1990, the Regional Trial Court of Manila, Branch 24, rendered a decision dismissing the complaint, the
dispositive portion of which reads : 23
Considering all the foregoing, this Court finds that the plaintiffs have not been able to establish their cause of action
against the defendants and have no right to the reliefs demanded in the complaint and the complaint of the plaintiff
against the defendants is hereby DISMISSED. On the counterclaim, the plaintiff are ordered to pay defendants the
amount of Ten Thousand Pesos by way of attorney's fees, Five Thousand Pesos as costs of litigation and further to pay
the costs of the suit.
SO ORDERED.
Dissatisfied, petitioner Balatbat filed an appeal before the respondent Court of Appeals which rendered the assailed
decision on August 12, 1992, to wit: 24
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of P10,000.00 for
attorney's fees and P5,000.00 as costs of litigation are deleted. SO ORDERED.
On March 22, 1993, the respondent Court of Appeals denied petitioner's motion for reconsideration. 25
Hence, this petition for review.
Petitioner raised the following issues for this Court's resolution:
I WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE RESPONDENTS WAS MERELY EXECUTORY AND NOT
A CONSUMMATED TRANSACTION?
II WHETHER OR NOT THERE WAS A DOUBLE SALE AS CONTEMPLATED UNDER ART. 1544 OF THE CIVIL CODE?
III WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD FAITH AND FOR VALUE?
IV WHETHER OR NOT THE COURT OF APPEALS ERRED IN GIVING WEIGHT AND CONSIDERATION TO THE
EVIDENCE OF THE PRIVATE RESPONDENTS WHICH WERE NOT OFFERED?
Petitioner asseverates that the respondent Court of Appeals committed grave abuse of discretion tantamount to lack or
excess of jurisdiction in affirming the appealed judgment considering (1) that the alleged sale in favor of the private
respondents Repuyan was merely executory; (2) that there is no double sale; (3) that petitioner is a buyer in good faith
and for value; and (4) that private respondents did not offer their evidence during the trial.
Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was
merely executory for the reason that there was no delivery of the subject property and that consideration/price was not
fully paid, we find the sale as consummated, hence, valid and enforceable. In a decision dated April 15, 1986 of the
Regional Trial Court of Manila Branch IV in Civil Case No. 134131, the Court dismissed vendor's Aurelio Roque
complaint for rescission of the deed of sale and declared that the Sale dated April 1, 1980, as valid and enforceable. No
appeal having been made, the decision became final and executory. It must be noted that herein petitioner Balatbat
filed a motion for intervention in that case but did not file her complaint in intervention. In that case wherein Aurelio
Roque sought to rescind the April 1, 1980 deed of sale in favor of the private respondents for non-payment of the
P45,000.00 balance, the trial court dismissed the complaint for rescission. Examining the terms and conditions of the
"Deed of Sale" dated April 1, 1980, the P45,000.00 balance is payable only "after the property covered by T.C.T. No.
135671 has been partitioned and subdivided, and title issued in the name of the BUYER" hence, vendor Roque cannot
demand payment of the balance unless and until the property has been subdivided and titled in the name of private
respondents. Devoid of any stipulation that "ownership in the thing shall not pass to the purchaser until he has fully
paid the price" 26, ownership in thing shall pass from the vendor to the vendee upon actual or constructive delivery of
the thing sold even if the purchase price has not yet been fully paid. The failure of the buyer has not yet been fully paid.
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the
bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. 27 Non-payment
only creates a right to demand the fulfillment of the obligation or to rescind the contract.
With respect to the non-delivery of the possession of the subject property to the private respondent, suffice it to say that
ownership of the thing sold is acquired only from the time of delivery thereof, either actual or constructive. 28 Article
1498 of the Civil Code provides that when the sale is made through a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not
appear or cannot be inferred. 29 The execution of the public instrument, without actual delivery of the thing, transfers
the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the same. 30 In
the instant case, vendor Roque delivered the owner's certificate of title to herein private respondent. It is not necessary
that vendee be physically present at every square inch of the land bought by him, possession of the public instrument of
the land is sufficient to accord him the rights of ownership. Thus, delivery of a parcel of land may be done by placing
the vendee in control and possession of the land (real) or by embodying the sale in a public instrument (constructive).
The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a
public instrument. 31
A contract of sale being consensual, it is perfected by the mere consent of the parties. 32 Delivery of the thing bought or
payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after
the execution of the contract does not make the sale null and void for lack of consideration but results at most in default
on the part of the vendee, for which the vendor may exercise his legal remedies. 33
Article 1544 of the New Civil Code provides:
If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be movable property.
Should it be movable property, the ownership shall belong to the person acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession
and in the absence thereof, to the person who present the oldest title, provided there is good faith.
Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be
transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default
thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents
the oldest title, provided there is good faith. 34
In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share in TCT No. 135671 to private respondents
Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children
(4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982.
Undoubtedly, this is a case of double sale contemplated under Article 1544 of the New Civil Code.
This is an instance of a double sale of an immovable property hence, the ownership shall vests in the person acquiring
it who in good faith first recorded it in the Registry of Property. Evidently, private respondents Repuyan's caused the
annotation of an adverse claim on the title of the subject property denominated as Entry No. 5627/T-135671 on July 21,
1980. 35 The annotation of the adverse claim on TCT No. 135671 in the Registry of Property is sufficient compliance as
mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private respondents
who first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner.
Moreover, the physical possession of herein petitioners by virtue of a writ of possession issued by the trial court on
September 20, 1982 is "subject to the valid rights and interest of third persons over the same portion thereof, other than
vendor or any other person or persons privy to or claiming any rights to interest under it." 36 As between two
purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not registered
his title even if the latter is in actual possession of the immovable property. 37 Further, even in default of the first registrant
or first in possession, private respondents have presented the oldest title. 38 Thus, private respondents who acquired the
subject property in good faith and for valuable consideration established a superior right as against the petitioner.
Evidently, petitioner cannot be considered as a buyer in good faith. In the complaint for rescission filed by vendor
Aurelio Roque on August 20, 1980, herein petitioner filed a motion for intervention on May 20, 1982 but did not file
her complaint in intervention, hence, the decision was rendered adversely against her. If petitioner did investigate
before buying the land on February 4, 1982, she should have known that there was a pending case and an annotation of
adverse claim was made in the title of the property before the Register of Deeds and she could have discovered that the
subject property was already sold to the private respondents. It is incumbent upon the vendee of the property to ask for
the delivery of the owner's duplicate copy of the title from the vendor. A purchaser of a valued piece of property cannot
just close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith
and under the belief that there were no defect in the title of the vendor. 39 One who purchases real estate with
knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint
him with the defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen
or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs. 40
In fine, petitioner had nobody to blame but herself in dealing with the disputed property for failure to inquire or
discover a flaw in the title to the property, thus, it is axiomatic that culpa lata dolo aequiparatur gross negligence
is equivalent to intentional wrong.
IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby DISMISSED for lack of merit. No
pronouncement as to costs.
IT IS SO ORDERED.
 Balatbat v. CA

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

Issues:
(1) Whether the alleged sale to private respondents was merely executory
(2) Whether there was double sale
(3) Whether petitioner is a buyer in good faith and for value

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

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

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

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

(3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before buying the land on
February 4, 1982, she should have known that there was a pending case and an annotation of adverse claim was made
in the title of the property before the Register of Deeds and she could have discovered that the subject property was
already sold to the private respondents. It is incumbent upon the vendee of the property to ask for the delivery of the
owner's duplicate copy of the title from the vendor. One who purchases real estate with knowledge of a defect or lack
of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or
of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him
upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.
Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a state or condition of
mind which can only be judged of by actual or fancied tokens or signs.
 G.R. No. 125283 February 10, 2006
PAN PACIFIC INDUSTRIAL SALES CO., INC., Petitioner, vs.
COURT OF APPEALS and NICOLAS CAPISTRANO, Respondents.
DECISION
TINGA, J.:
Petitioner Pan Pacific Industrial Sales Co., Inc. (Pan Pacific) filed the instant Petition for Review on Certiorari 1
assailing the Decision2 dated 4 June 1996 of the Court of Appeals Fourteenth Division in C.A. G.R. No. CV-41112.
The challenged Decision affirmed in toto the Decision3 dated 24 April 1992 of the Regional Trial Court (RTC) of
Manila, Branch 18 in Civil Case No. 88-46720.
The case arose when on 22 December 1988, private respondent Nicolas Capistrano (Capistrano) filed an Amended
Complaint4 before the RTC of Manila against Severo C. Cruz III (Cruz), his spouse Lourdes Yap Miranda, and Atty.
Alicia Guanzon,5 pleading two causes of action.6
The first cause of action is for the nullification, or alternatively, for the "rescission," of a Deed of Absolute Sale7
covering a parcel of land that Capistrano owned, located at 1821 (Int.), Otis Street (now Paz Guanzon Street), Paco,
Manila, and covered by Transfer Certificate of Title (TCT) No. 143599 to Cruz.8 This is the subject lot. Capistrano
denied having executed the deed.
The second cause of action is for the rescission of another agreement with an alternative prayer for specific
performance. Capistrano alleged that he agreed to sell another parcel of land in the same vicinity to Cruz. According to
Capistrano, Cruz only paid P100,000.00 of the stipulated purchase price, thereby leaving P250,000.00 still unpaid.9
The operative facts follow.
On 10 September 1982, Capistrano executed a Special Power of Attorney10 authorizing Cruz to mortgage the subject
lot in favor of Associated Bank (the Bank) as security for the latters loan accommodation.11
Shortly, by virtue of the Special Power of Attorney, Cruz obtained a loan in the amount of P500,000.00 from the Bank.
Thus, he executed a Real Estate Mortgage12 over the subject lot in favor of the Bank.13
Capistrano and Cruz then executed a letter-agreement dated 23 September 1982 whereby Cruz agreed to buy the
subject lot for the price of P350,000.00, of which P200,000.00 would be paid out of the loan secured by Cruz, and the
balance of P150,000.00 in eight (8) quarterly payments of P18,750.00 within two (2) years from 30 October 1982,
without need of demand and with interest at 18% in case of default.14
On 15 March 1983, Capistrano executed the Deed of Absolute Sale15 over the subject lot in favor of Cruz. Two (2)
days later, on 17 March 1983, Notary Public Vicente J. Benedicto (Benedicto) notarized the deed. However, it was
earlier or on 9 March 1983 that Capistranos wife, Josefa Borromeo Capistrano, signed the Marital Consent 16
evidencing her conformity in advance to the sale. The Marital Consent was also sworn to before Benedicto.

Following the execution of the deed of sale, Cruz continued payments to Capistrano for the subject lot. Sometime in
October 1985, Capistrano delivered to Cruz a Statement of Account 17 signed by Capistrano, showing that as of 30
October 1985, Cruzs balance stood at P19,561.00 as principal, and P3,520.98 as interest, or a total of P23,081.98.
Thus, in May 1987, with the mortgage on the subject lot then being in danger of foreclosure by the Bank, Cruz filed a
case with the RTC of Manila, Branch 11, docketed as Civil Case No. 87-40647, to enjoin the foreclosure. Cruz
impleaded Capistrano and his spouse Josefa Borromeo Capistrano as defendants, the title to the subject lot not having
been transferred yet to his name.18
Cruz also devised a way to save the subject lot from foreclosure by seeking a buyer for it and eventually arranging for the
buyer to pay the mortgage debt. Towards this end, Cruz succeeded in engaging Pan Pacific. Thus, on 22 September 1988,
Pan Pacific paid off Cruzs debt in the amount of P1,180,000.00.19 Consequently, on 23 September 1988, the Bank executed
a Cancellation of Real Estate Mortgage.20 On even date, Cruz executed a Deed of Absolute Sale21 over the subject lot in
favor of Pan Pacific, attaching thereto the previous Deed of Absolute Sale executed by Capistrano in favor of Cruz.
Surprisingly, on 20 October 1988, Capistrano filed a Revocation of Special Power of Attorney22 with the Register of
Deeds of Manila. Less than a week later, Capistrano sent the Register of Deeds another letter informing said officer of
his having come to know of the sale of the subject lot by Cruz to Pan Pacific and requesting the officer to withhold any
action on the transaction.23
Before long, in November 1988, Capistrano filed the precursory complaint before the Manila RTC in Civil Case No. 88-46720.
Pan Pacific, which bought the subject lot from the Cruz spouses, was allowed to intervene in the proceedings and
joined Cruz, et al. in resisting the complaint insofar as the first cause of action on the subject lot is concerned.24
Then on 24 April 1992, a Decision was rendered by the trial court in favor of Capistrano on both causes of action, the
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, Severo E. (sic) Cruz
III, his spouse, Lourdes Miranda Cruz, and the intervenor, Pan Pacific Industrial Sales Co., Inc., as follows:
1. Declaring the Letter-Agreement, dated September 23, 1982, Exhibit "C", as resolved and/or rescinded;
2. Declaring both the Deed of Absolute Sale, Exhibit "H", and the document entitled, "Marital Consent", Exhibit "K", null and void;
3. Declaring the Deed of Absolute Sale executed by the spouses Severo C. Cruz, III and Lourdes Miranda Cruz in favor
of the intervenor, Pan Pacific Industrial Sales, Co., Inc., Exhibit "8", null and void;
4. Making the writ of preliminary injunction issued by this Court on November 23, 1988, permanent;
5. Ordering the intervenor, thru its legal counsel and corporate secretary, Atty. Senen S. Burgos, who has possession of
the owners copy of TCT No. 143599 of the Register of Deeds of Manila, in the name of the plaintiff, to surrender the
same to this Court within ten days from finality of the decision for turn over to the plaintiff;
6. Ordering Defendant Register of Deeds of Manila to reject and not give due course to the documents submitted to it,
which have for their purpose the transfer of the real estate property covered by TCT No. 143599 from the name of the
plaintiff to Defendant Cruz and/or to the intervenor; and
7. Ordering the spouses Severo C. Cruz, III and Lourdes Miranda Cruz to pay the plaintiff the sum of P69,561.00 as net
amount due to the latter as per the computation in the end-part of this decision.
The counterclaims of both Severo C. Cruz, III and spouse, and of the intervenor, Pan Pacific Industrial Sales Co., Inc.,
are both dismissed, for lack of merit.
Double costs against the defendants-Cruz spouses.
SO ORDERED.25
To arrive at the conclusion that the first Deed of Absolute Sale and the Marital Consent are spurious, the trial court
mainly relied on Capistranos disavowal of his signature and that of his wifes, together with extrinsic factors which in
its opinion evinced the spuriousness.
Pan Pacific and the Cruz spouses interposed separate appeals to the Court of Appeals, their common concern being the
trial courts finding that the Deed of Absolute Sale and the Marital Consent were spurious.26
In assailing this finding, Pan Pacific and the Cruz spouses contended that Capistrano failed to present clear and
convincing evidence to overturn the presumption of regularity of public documents like the documents in question. 27
The Court of Appeals affirmed the RTC Decision. Concerning the subject lot, it held that while a notarial document
cannot be disproved by the mere denial of the signer, the denial in this case should be taken together with the other
circumstances of the case which in sum constitute clear and convincing evidence sufficient to overcome the
presumption of regularity of the documents.28
The Cruz spouses did not elevate the Court of Appeals Decision to this Court. Thus, the RTC Decision became final as to them.
Pan Pacific, however, filed the instant Petition solely concerning the first cause of action in the Amended Complaint.
Pan Pacific contends that the genuineness and due execution of the Deed of Absolute Sale and Marital Consent cannot
be overridden by the self-serving testimony of Capistrano. It stresses that the trial court cannot rely on irrelevant
extrinsic factors to rule against the genuineness of the deed.29 Finally, it points out that Capistrano cannot contest the
sale of the subject lot to Cruz, as the sale had already been consummated.30
For his part, Capistrano posits in his Memorandum31 that Pan Pacific is not an innocent purchaser for value and in good faith
as Cruz was never the registered owner of the subject lot. Pan Pacific was bound at its peril to investigate the right of Cruz to
transfer the property to it. Moreover, Capistrano asserts that the legal presumption of regularity of public documents does not
obtain in this case as the documents in question were not properly notarized. He adds that the parties never appeared before
the notary public as in fact the deed had only been delivered by Capistrano to the house of Cruzs mother.
Furthermore, Capistrano maintains that his spouses signature on the Marital Consent is a forgery as it was virtually
impossible for her to have signed the same. Lastly, Capistrano disputes Cruzs assertion that the sale had been
consummated, pointing out that the Amended Complaint consisted of two (2) causes of action pertaining to two (2)
separate lots, and Cruz had only paid P100,000.00 of the total price of the lot subject of the second cause of action.
The petition is imbued with merit.
Pan Pacific disputes the common conclusion reached by the courts below that the presumption of regularity of the
Deed of Absolute Sale and the Marital Consent, which in its estimation are both public documents, has been rebutted
by Capistranos countervailing evidence. The correctness of the conclusions on the alleged spuriousness of the
documents in question drawn by the courts below from the facts on record is before this Court. The issue is a question
of law cognizable by the Court.32
Deeply embedded in our jurisprudence is the rule that notarial documents celebrated with all the legal requisites under
the safeguard of a notarial certificate is evidence of a high character and to overcome its recitals, it is incumbent upon
the party challenging it to prove his claim with clear, convincing and more than merely preponderant evidence.33
A notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and it has in its
favor the presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to
exclude all controversy as to the falsity of the certificate. Absent such, the presumption must be upheld. The burden of
proof to overcome the presumption of due execution of a notarial document lies on the one contesting the same.
Furthermore, an allegation of forgery must be proved by clear and convincing evidence, and whoever alleges it has the
burden of proving the same.34
Evidently, as he impugns the genuineness of the documents, Capistrano has the burden of making out a clear-cut case
that the documents are bogus. The courts below both concluded that Capistrano had discharged this burden. However,
this Court does not share the conclusion. Indeed, Capistrano failed to present evidence of the forgery that is enough to
overcome the presumption of authenticity.
To support the allegation of the spuriousness of his signature on the Deed of Absolute Sale and that of his wife on the
Marital Consent, Capistrano relied heavily on his bare denial, at the same time taking sanctuary behind other
circumstances which supposedly cast doubt on the authenticity of the documents. Capistrano did not bother to present
corroborating witnesses much less an independent expert witness who could declare with authority and objectivity that
the challenged signatures are forged. It befuddles the Court why both the courts below did not find this irregular
considering that the Court has previously declared in Sy Tiangco v. Pablo and Apao,,35 "that the execution of a
document that has been ratified before a notary public cannot be disproved by the mere denial of the alleged signer."
The case of Chilianchin v. Coquinco36 also finds application in this regard wherein we stated that:
As the lower court correctly said, the plaintiff did not even present a sample of his authentic signature to support his
contention that it is not his the (sic) signature appearing in said document. He did not call a handwriting expert to prove
his assertion. His attorney, at the beginning of the trial, made it of record that if the defendant present an expert in
hand-writing to show that the signature in question is genuine, the plaintiff will also present an expert to the contrary,
as if it were incumbent upon the defendant to show that the signature of the plaintiff in Exhibit A is genuine . . . .37
Corollarily, he who disavows the authenticity of his signature on a public document bears the responsibility to present
evidence to that effect. Mere disclaimer is not sufficient. At the very least, he should present corroborating witnesses to
prove his assertion. At best, he should present an expert witness.
On the other hand, the Court cannot understand why an unfavorable inference arose not from Capistranos but from
Cruzs failure to have the documents examined by an expert witness of the National Bureau Investigation (NBI) and to
present the notary public as witness. Specifically, the courts below took Cruzs inability to obtain the NBI examination
of the documents as he had somehow undertaken as an indication that the documents are counterfeit.38
The courts below may have forgotten that on Capistrano lies the burden to prove with clear and convincing evidence
that the notarized documents are spurious. Nothing in law or jurisprudence reposes on Cruz the obligation to prove that
the documents are genuine and duly executed. Hence it is not incumbent upon Cruz to call the notary public or an
expert witness. In contrast, Capistrano should have called the expert witness, the notary public himself or the witnesses
to the document to prove his contention that he never signed the deed of sale, that its subscribing witnesses never saw
him sign the same, and that he never appeared before the notary public before whom the acknowledgment was made.
In fact, there is no evidence that the notarization of the documents did not take place. All that Capistrano could say on
this matter was that he had not seen Benedicto, the notary public.39 The assertion that the parties to the deed never
appeared before the notary public is not supported by evidence either. The courts below drew an inference to that effect
from Cruzs testimony that the deed of sale was dropped or delivered to his mothers house. 40 That is not a reasonable
deduction to make as it is plainly conjectural. No conclusion can be derived therefrom which could destroy the
genuineness of the deed. The testimony means what it declares: that the copy of the deed was dropped at the house of
Cruzs mother. That is all.
Nor can the Court lend credence to the thinking of the courts below that since Cruz had a balance of P132,061.00
owing to Capistrano as of the date of the deed of sale, the latter could not have possibly executed the deed. This is plain
guesswork. From the existence of Cruzs outstanding balance, the non-existence of the deed of sale does not
necessarily follow.

Indeed, a vendor may agree to a deed of absolute sale even before full payment of the purchase price. Article 1478 of
the Civil Code states that "the parties may stipulate that ownership in the thing shall not pass to the purchaser until he
has fully paid the price." A sensu contrario, the parties may likewise stipulate that the ownership of the property may
pass even if the purchaser has not fully paid the price.
The courts below also assigned an adverse connotation to Cruzs impleading of the Capistrano spouses as party-
defendants in the action against the Bank to enjoin the foreclosure of the mortgage on the subject lot. Cruzs move is
congruent with both his strong desire to protect his interest in the subject lot and the reality that there was an existing deed of
sale in his favor. Precisely, his interest in the lot is borne out and had arisen from the deed of sale. As purchaser of the lot, he
had to avert the foreclosure of the mortgage thereon. And to ensure against the dismissal of the action for failure to join a
real party-in-interest, he had to implead Capistrano in whose name the title to the subject lot was registered still.
Apart from Capistranos abject failure to overcome the presumption of regularity and genuineness with which the Deed
of Absolute Sale is impressed as a public document, Capistranos cause is eviscerated by his own acts in writing before
and after the execution of the deed. Said written acts constitute indelible recognition of the existence and genuineness
of the Deed of Absolute Sale.
First is the letter-agreement41 dated 23 September 1982 made and signed by Capistrano in favor of Cruz, which the
latter also signed subsequently, stating that Cruz will, as he did, purchase the subject lot for P350,000.00 to be paid
according to the terms provided therein.
Second is the Statement of Account42 signed by Capistrano, which he delivered to Cruz, showing that as of 30 October
1985, Cruzs balance of the stipulated purchase price consisted of P19,561.00 as principal and P3,520.98 as interest, or
a total of P23,081.98.
Third is Capistranos Amended Complaint itself which illustrates his own manifest uncertainty as to the relief he was
seeking in court. He demanded that the Deed of Absolute Sale be nullified yet he prayed in the same breath for the
"rescission" of the same43 evidently, a self-defeating recognition of the contract. In asking for "rescission,"
Capistrano obviously was invoking Article 1191 of the Civil Code which provides that the "power to rescind," which
really means to resolve or cancel, is implied in reciprocal obligations "in case one of the obligors should not comply
with what is incumbent upon him." When a party asks for the resolution or cancellation of a contract it is implied that
he recognizes its existence. A non-existent contract need not be cancelled.
These are unmistakable written admissions of Capistrano that he really intended to sell the subject lot to Cruz and that
he received payments for it from the latter as late as the year 1985. It is thus a little baffling why in 1988, he decided to
disown the Deed of Absolute Sale. The most plausible explanation for his sudden change of mind would be his belated
realization that he parted with the subject lot for too small an amount (P350,000.00), compared to the price pegged by
Cruz (P1,800,000.00) in the sale to Pan Pacific.
Now, to the Marital Consent. The fact that the document contains a jurat, not an acknowledgment, should not affect its
genuineness or that of the related document of conveyance itself, the Deed of Absolute Sale. In this instance, a jurat suffices
as the document only embodies the manifestation of the spouses consent,44 a mere appendage to the main document.
The use of a jurat, instead of an acknowledgement does not elevate the Marital Consent to the level of a public
document but instead consigns it to the status of a private writing.45 The lack of acknowledgment, however, does not
render a deed invalid. The necessity of a public document for contracts which transmit or extinguish real rights over
immovable property, as mandated by Article 1358 of the Civil Code, is only for convenience; it is not essential for
validity or enforceability.46
From the perspective of the law on evidence, however, the presumption of regularity does not hold true with respect to
the Marital Consent which is a private writing. It is subject to the requirement of proof under Section 20, Rule 132 of
the Rules of Court which states:
Section 20. Proof of private document.- Before any private document offered as authentic is received in evidence, its
due execution and authenticity must be proved 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.
Any other private document need only be identified as that which is claimed to be.
The requirement of proof of the authenticity of the Marital Consent was adequately met, in this case, through the
testimony of Cruz to the effect that, together with the other witnesses to the document, he was present when
Capistranos wife affixed her signature thereon before notary public Benedicto.47 Viewed against this positive
declaration, Capistranos negative and self-serving assertions that his wifes signature on the document was forged
because "(i)t is too beautiful" and that his wife could not have executed the Marital Consent because it was executed on
her natal day and she was somewhere else, crumble and become unworthy of belief.
That the Marital Consent was executed prior to the Deed of Absolute Sale also does not indicate that it is phoney. A
fair assumption is that it was executed in anticipation of the Deed of Absolute Sale which was accomplished a scant six
(6) days later.
With respect to whatever balance Cruz may still owe to Capistrano, the Court believes that this is not a concern of Pan
Pacific as the latter is not a party to the Deed of Absolute Sale between Capistrano and Cruz. But of course, Pan Pacific
should enjoy full entitlement to the subject lot as it was sold to him by Cruz who earlier had acquired title thereto
absolutely and unconditionally by virtue of the Deed of Absolute Sale. Otherwise laid down, Cruz had the right to sell
the subject lot to Pan Pacific in 1988, as he in fact did. Thus, the question of whether or not Pan Pacific is a purchaser
in good faith should be deemed irrelevant.
WHEREFORE, the Petition is GRANTED. The Decision dated 4 June 1996 of the Court of Appeals in CA-G.R. CV
No. 41112 is REVERSED and SET ASIDE. Respondent Nicolas Capistrano is ordered to surrender the owners
duplicate certificate of Transfer of Certificate of Title No. 143599 to the Register of Deeds of Manila to enable the
issuance of a new title over the subject lot in the name of petitioner Pan Pacific Industrial Sales, Inc. Costs against
respondent Nicolas Capistrano.
SO ORDERED.
 BPI VS SMP, INC. GR No. 175466 December 23, 2009
RESOLUTION

NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision dated
August 16, 2006 and the Resolution dated November 15, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
86055.

The facts of the case, as culled by the CA from the Decision[if !supportFootnotes][3][endif] dated June 6, 2005 of the Regional
Trial Court (RTC), Branch 92, Quezon City, in Civil Case No. Q-97-30372, entitled SMP, Inc. v. Far East Bank and
Trust Company, et al., are as follows:

Sometime in January 1995, Maria Teresa Michaela Ong, as Sales Executive of SMP, Inc. undertook the acceptance and
servicing of a purchase order of CLOTHESPAK MANUFACTURING PHILS. (Clothespak) for 4,000 bags or sacks of
General purpose (GPS) polystyrene products. The ordered products were delivered, for which delivery receipts were
issued. The total selling price of the products amounted to U.S. $118,500.00. As payment, Clothespak issued postdated
checks in favor of plaintiff SMP and delivered the same to Maria Teresa Michaela Ong. When the same were deposited
by SMP Inc. on their maturity dates, the drawee bank dishonored and returned said checks for the reason Account
Closed.

In the meantime, a case was filed by herein defendant Far East Bank and Trust Company against Clothespak for a
recovery of sum of money with prayer for issuance of preliminary attachment. The Pasig Court granted and issued the
writ dated March 14, 1995 in favor of the plaintiff bank. Real and personal properties of the defendants were levied and
attached.

Thereafter, on March 28, 1995, SMP, Inc. filed an Affidavit of Third Party Claim in that Civil Case No. 65006,
claiming ownership of the 4,000 bags of General Purpose (GPS) polystyrene products taken at Clothespak factory
worth P3,096,405.00. With the filing by Far East Bank of the indemnity bond, the goods claimed were not released and
the Pasig Court directed SMP, Inc. to ventilate its claim of ownership in a vindicatory action under Section 17, Rule 39
of the Revised Rules of Court. Meanwhile, Far East Bank obtained a favorable judgment against Clothespak. It has
become final and executory which led to the implementation and enforcement of said decision against Clothespaks
properties inclusive of the goods earlier attached. Hence, the instant case is filed by SMP, Inc. to recover from the
attaching bank the value of the goods it claims ownership and for damages.

SMP, Inc. alleges that there was wrongful attachment of the goods for ownership of the same was never transferred to
Clothespak. The former anchors its claim of ownership over the goods by virtue of the Provisional Receipt No. 4476
issued by Sales Executive Maria Teresa Michaela Ong to Clothespak with the words, Materials belong to SMP Inc.
until your checks clear. She testified during the trial that the above words were in her own handwriting. The said
receipt was allegedly issued to Alex Tan of Clothespak after the checks, payment for the goods, were issued to her. It is
asserted that despite receipt by Clothespak of the goods, ownership remained with SMP, Inc. until the postdated checks
it issued were cleared.

Defendant bank, however, claims that the said provisional receipt was falsified to negate the terms of the Sales
Invoices. The phrase, materials belong to SMP, Inc. until your checks clear, was only an insertion of plaintiffs
representative in her own handwriting. It did not bear the conformity of Clothespak. Further, defendant bank assails the
admissibility of the receipt for it is a mere triplicate copy; the original and duplicate copies were not presented in court,
in violation of the Best Evidence Rule. Neither was there

Defendant asserted that the buyer Clothespak had already acquired ownership over the goods at the time of attachment.
As the delivery receipts clearly showed that the goods had already been delivered and received by the buyer subject to
the terms and conditions of the sales invoices where it was provided that the sales is (sic) F.O.B. with the loss and/or
damage to the goods in transit being for the buyers account. As provided by law, the ownership of the thing is acquired
by the vendee from the moment of delivery in any of the ways therein specified or in any manner signifying an
agreement that the possession is transferred to the vendee, and the thing sold is considered delivered when placed in the
control and possession of the said vendee.

The main issue presented is whether at the time of the attachment, plaintiff still owned the goods levied upon, or
ownership thereof had already passed to Clothespak Manufacturing. After carefully studying the different contentions
of both parties and the pieces of evidence they have submitted, the Courts (sic) finds in favor of the plaintiff.

The dispositive portion of the RTC Decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendant Far East Bank and Trust
Company (now Bank of the Philippine Islands), ordering the latter to pay the former the sum of Two Million Nine
Hundred Sixty Three Thousand Forty One Pesos and Fifty Three Centavos (P2,963,041.53) as actual damages, plus
costs of suit.

SO ORDERED.
On appeal, the CA affirmed in toto the RTC decision in a Decision[ dated August 16, 2006. Petitioner filed a motion for
reconsideration but the CA denied the same in a Resolution dated November 15, 2006.

Hence, this petition.

Petitioner submitted this sole issue for resolution:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THERE WAS A
WRONGFUL ATTACHMENT THUS AFFIRMING THE DECISION OF THE COURT A QUO THAT THE
GOODS ATTACHED WERE STILL OWNED BY SMP, INC., NOT [BY] CLOTHESPACK, WHEN THEY WERE
ATTACHED

We find the petition bereft of merit.

A distinction between a contract to sell and a contract of sale is helpful in order to determine the true intention of the
parties. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a
contract to sell, ownership is, by agreement, reserved for the vendor and is not to pass to the vendee until full payment
of the purchase price. In a contract of sale, non-payment of the price is a negative resolutory condition. In a contract to
sell, full payment is a positive suspensive condition. In a contract of sale, the vendor loses and cannot recover
ownership of the thing sold until and unless the contract of sale is itself resolved and set aside. In a contract to sell, the
title remains with the vendor if the vendee does not comply with the condition precedent of making payment at the
time specified in the contract. ] In a contract to sell, the payment of the purchase price is a positive suspensive
condition, the failure of which is not a breach, casual or serious, but a situation which prevents the obligation of the
vendor to convey title from acquiring an obligatory force.

In the instant case, ownership of the general purpose polystyrene products was retained by SMP, Incorporated (SMP)
until after the checks given as payment by Clothespak Manufacturing Philippines (Clothespak) cleared. This was
evidenced by a provisional receipt issued by SMP to Clothespak. The agreement between SMP and Clothespak
involved a contract to sell defined under Article 1478 of the Civil Code.

On the other hand, the stipulation that the loss or destruction of the products during transit is on the account of
Clothespak, as buyer of the products, is of no moment. This does not alter the nature of the contract as a contract to
sell. The free on board stipulation on the contract can coexist with the contract to sell. Otherwise stated, the provisions
or stipulations in the contract -- for the reservation of the ownership of a thing until full payment of the purchase price
and for the loss or destruction of the thing would be on account of the buyer -- are valid and can exist in conjunction
with the other.

In order to discredit the claim of ownership by SMP, petitioner questions the admissibility of the receipt presented by
the former, wherein the ownership was reserved for the buyer until after full payment of the purchase price. Petitioner
claims that the same was inadmissible in evidence and was in contravention of the best evidence rule. We beg to
disagree.

The best evidence rule is the rule which requires the highest grade of evidence obtainable to prove a disputed fact.
Although there are certain recognized exceptions when the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document itself.[if !supportFootnotes][12][endif]

However, in the instant case, contrary to petitioners contention, the receipt presented by SMP is deemed as an original,
considering that the triplicate copy of the provisional receipt was executed at the same time as the other copies of the
same receipt involving the same transaction. Section 4, Rule 130 of the Rules of Court provides:

Sec. 4. Original of document.

(a) The original of the document is one the contents of which are the subject of inquiry.
(b) When a document is in two or more copies executed at or about the same time, with identical contents, all such
copies are equally regarded as originals.
(c) When an entry is repeated in the regular course of business, one being copied from another at or near the time of the
transaction, all the entries are likewise equally regarded as originals.

WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit. The Decision dated
August 16, 2006 and the Resolution dated November 15, 2006 of the Court of Appeals in CA-G.R. CV No. 86055 are
hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.
 BANK OF THE PHILIPPINE ISLANDS as successor-in-interest of
FAR EAST BANK AND TRUSTCCOMPANY, Petitioners, vs. SMP, INC., Respondent

Facts:
Sometime in January 1995, Maria Teresa Michaela Ong, as Sales Executive of SMP, Inc. undertook the acceptance and
servicing of a purchase order of CLOTHESPAK MANUFACTURING PHILS. (Clothespak) for 4,000 bags or sacks of
General purpose (GPS) polystyrene products. The ordered products were delivered, for which delivery receipts were
issued. The total selling price of the products amounted to U.S. $118,500.00. As payment, Clothespak issued postdated
checks in favor of plaintiff SMP and delivered the same to Maria Teresa Michaela Ong. When the same were deposited
by SMP Inc. on their maturity dates, the drawee bank dishonored and returned said checks for the reason "Account
Closed." In the meantime, a case was filed by herein defendant Far East Bank and Trust Company against Clothespak
for a recovery of sum of money with prayer for issuance of preliminary attachment. The Pasig Court granted and issued
the writ dated March 14, 1995 in favor of the plaintiff bank. Real and personal properties of the defendants were levied
and attached.

Thereafter, on March 28, 1995, SMP, Inc. filed an Affidavit of Third Party Claim in that Civil Case No. 65006,
claiming ownership of the 4,000 bags of General Purpose (GPS) polystyrene products taken at Clothespak factory
worthP3,096,405.00. With the filing by Far East Bank of the indemnity bond, the goods claimed were not released and
the Pasig Court directed SMP, Inc. to ventilate its claim of ownership in a vindicatory action under Section 17, Rule 39
of the Revised Rules of Court. Meanwhile, Far East Bank obtained a favorable judgment against Clothespak. It has
become final and executory which led to the implementation and enforcement of said decision against Clothespak's
properties inclusive of the goodsearlier attached. Hence, the instant case is filed by SMP, Inc. to recover from the
attaching bank the value of the goods it claims ownership and for damages.

SMP, Inc. alleges that there was wrongful attachment of the goods for ownership of the same was never transferred to
Clothespak. The former anchors its claim of ownership over the goods by virtue of the Provisional Receipt No. 4476
issued by Sales Executive Maria Teresa Michaela Ong to Clothespak with the words, "Materials belong to SMP Inc.
until your checks clear." She testified during the trial that the above words were in her own handwriting. The said
receipt was allegedly issued to Alex Tan of Clothespak after the checks, payment for the goods, were issued to her. It is
asserted that despite receipt by Clothespak of the goods, ownership remained with SMP, Inc. until the postdated checks
it issued were cleared.

Defendant bank, however, claims that the said provisional receipt was falsified to negate the terms of the Sales
Invoices. The phrase, "materials belong to SMP, Inc. until your checks clear," was only an insertion of plaintiff's
representative in her own handwriting. It did not bear the conformity of Clothespak. Further, defendant bank assails the
admissibility of the receipt for it is a mere triplicate copy; the original and duplicate copies were not presented in court,
in violation of the Best Evidence Rule. Neither was there secondary evidence presented to conform to the rule.
The RTC ruled in favor of the plaintiff and CA affirmed its decision in toto.

Issue:
WON the Receipts presented by the respondent admissible in evidence.

Held:
In order to discredit the claim of ownership by SMP, petitioner questions the admissibility of the receipt presented by
the former, wherein the ownership was reserved for the buyer until after full payment of the purchase price. Petitioner
claims that the same was inadmissible in evidence and was in contravention of the best evidence rule.
The Supreme Court did not agree.

The best evidence rule is the rule which requires the highest grade of evidence obtainable to prove a disputed fact.
Although there are certain recognized exceptions when the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document itself.

However, in the instant case, contrary to petitioner's contention, the receipt presented by SMP is deemed as an original,
considering that the triplicate copy of the provisional receipt was executed at the same time as the other copies of the
same receipt involving the same transaction.

Section
4, Rule 130 of the Rules of Court provides:
Sec. 4. Original of document
(a) The original of the document is one the contents of which are the subject of inquiry.

(b) When a document is in two or more copies executed at or about the same time, with identical contents, all such
copies are equally regarded as originals.

(c) When an entry is repeated in the regular course of business, one being copied from another at or near the time of the
transaction, all the entries are likewise equally regarded as originals.
SPOUSES EMMA H. VER REYES and RAMON REYES, Petitioners, - versus -
DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, ROSALINA PADLAN, AURORA
TOLENTINO, TRINIDAD L. CASTILLO, ROSARIO BONDOC, MARIA Q. CRISTOBAL and DULOS REALTY &
DEVELOPMENT CORPORATION, TRINIDAD LOZADA, JOHN DOE and RICHARD DOE,

Respondents.

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

MARIA Q. CRISTOBAL and DULOS REALTY & DEVELOPMENT CORPORATION, Petitioners, - versus -
DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, TRINIDAD LOZADA, ROSALINA PADLAN,
AURORA TOLENTINO, TRINIDAD L. CASTILLO, ROSARIO BONDOC, SPOUSES EMMA H. VER REYES and
RAMON REYES, Respondents.

G.R. No. 139047

G.R. No. 139365

Present:
TINGA,* J.,
CHICO-NAZARIO,
Acting Chairperson,
VELASCO,*
NACHURA, and
REYES, JJ.

Promulgated: September 11, 2008

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

DECISION
CHICO-NAZARIO, J.:
The two Petitions for Review on Certiorari1 now before this Court seek to challenge, under Rule 45 of the Rules of
Court, the Decision2 dated 17 June 1999 of the Court of Appeals in CA-G.R. CV No. 35688, which reversed and set
aside the Decision3 dated 25 November 1991 of the Regional Trial Court (RTC) of Pasay City, Branch 119, in the
consolidated cases of LRC Case No. LP-553-P (an application for registration of title to real property) and Civil Case
No. 6914-P (an action to declare ownership over real property, formerly numbered Pq-8557-P). The Court of Appeals
upheld the title of Rosario Bondoc to the disputed property, thus, overturning the finding of the RTC of Pasay City that
Maria Q. Cristobal and Dulos Realty & Development Corporation have a registrable title to the same property.

The Contracts
At the core of the controversy in the Petitions at bar is a parcel of unregistered land located in Tungtong, Las Pias,
formerly of the Province of Rizal, now a part of Metro Manila, designated as Lot 1 of Plan Psu-205035, with an area of
19,545 square meters (subject property). It previously formed part of a bigger parcel of agricultural land4 first declared
in the name of Domingo Lozada (Domingo) in the year 1916 under Tax Declaration No. 2932.5
During the lifetime of Domingo, he was married twice. From his first marriage to Hisberta Guevarra in the year 1873,6
he fathered two children, namely Bernardo and Anatalia. After the death of Hisberta, Domingo married Graciana San
Jose in the year 18877 and their marriage produced two children, namely Nicomedes and Pablo.
Domingo and Graciana died on 27 February 1930 and 12 August 1941, respectively. On 18 March 1965, Nicomedes
and the heirs of his brother Pablo entered into an Extrajudicial Settlement of the Estate8 of their parents Domingo and
Graciana. According to the settlement, the entire parcel of agricultural land declared in the name of Domingo9 was
divided into two, Lot 1 and Lot 2, in accordance with the approved subdivision plan Psu-205035. The subject property,
i.e., Lot 1, was adjudicated to Nicomedes; while Lot 2 was given to the heirs of Pablo. Nicomedes then declared the
subject property in his name in 1965 under Tax Declaration No. 2050.10
On 23 June 1965, Nicomedes executed a Deed of Conditional Sale11 over the subject property in favor of Emma Ver
Reyes (Emma), which provided:
That the Vendor [Nicomedes] is the true and lawful owner of a parcel of land situated at Tungtong, Las Pinas, Rizal,
more particularly described as follows:
"A parcel of land (Lot 1 of plan Psu-205035), x x x; containing an area of NINETEEN THOUSAND FIVE HUNDRED
FOURTY FIVE (19,545) SQUARE METERS, more or less, and still a portion of the land covered by Tax Declaration No.
2304 of Las Pinas, Rizal, in the name of Domingo Lozada, and with a total assessed value of P1,860.00."
That the [subject property] is a paraphernal property of the Vendor [Nicomedes], the same having been inherited by
him from his deceased mother, Graciana San Jose, but was declared for taxation in the name of his deceased father,
Domingo Lozada;
That for and in consideration of the sum of FOUR PESOS AND FIFTY CENTAVOS (P4.50), Philippine Currency,
per square meter to be paid by the Vendee to the Vendor, the said Vendor by these presents hereby SELLS, CEDES,
TRANSFERS and CONVEYS by way of CONDITIONAL SALE the above-described parcel of land together with all
the improvements thereon to the said Vendee [Emma], her heirs, assigns and successors, free from all liens and
encumbrances, under the following terms and conditions, to wit:
1. That the Vendee [Emma] will pay the Vendor [Nicomedes] as follows:
(a). TWENTY FIVE PERCENT (25%) of the total price on the date of the signing of this contract;
(b). The next TWENTY FIVE PERCENT (25%) of the total price upon the issuance of the title for the land described above;
(c). The balance of FIFTY PERCENT (50%) of the total price within one (1) year from the issuance of the said title;
2. That if the Vendee [Emma] fails to pay the Vendor [Nicomedes] the sums stated in paragraphs 1(b) and 1(c) above
within the period stipulated and after the grace period of one (1) month for each payment, this contract shall
automatically be null and void and of no effect without the necessity of any demand, notice or filing the necessary
action in court, and the Vendor [Nicomedes] shall have the full and exclusive right to sell, transfer and convey
absolutely the above-described property to any person, but the said Vendor [Nicomedes] shall return to the Vendee
[Emma] all the amount paid to him by reason of this contract without any interest upon the sale of the said property to
another person;
3. That the total price shall be subject to adjustment in accordance with the total area of the above-described property
that will be finally decreed by the court in favor of the herein Vendor [Nicomedes]; and
4. That the Vendor [Nicomedes] will execute a final deed of absolute sale covering the said property in favor of the
Vendee [Emma] upon the full payment of the total consideration in accordance with the stipulations above.
The Deed of Conditional Sale was registered in the Registry of Property for Unregistered Lands in August 1965.12
It would appear from the records of the case that Emma was only able to pay the first installment of the total purchase
price agreed upon by the parties. Furthermore, as will be discussed later on, Nicomedes did not succeed in his attempt
to have any title to the subject property issued in his name.
On 14 June 1968, Nicomedes entered into another contract involving the subject property with Rosario D. Bondoc
(Rosario). Designated as an Agreement of Purchase and Sale,13 the significant portions thereof states:
NOW, THEREFORE, for and in consideration of the foregoing premises and of the sum of ONE HUNDRED
SEVENTY FIVE THOUSAND NINE HUNDRED FIVE PESOS (P175,905.00) Philippine Currency, which the
BUYER [Rosario] shall pay to the SELLER [Nicomedes] in the manner and form hereinafter specified, the SELLER
[Nicomedes] by these presents hereby agreed and contracted to sell all his rights, interests, title and ownership over the
parcel of land x x x unto the BUYER [Rosario], who hereby agrees and binds herself to purchase from the former, the
aforesaid parcel of land, subject to the following terms and conditions:
1. Upon the execution of this Agreement, the BUYER [Rosario] shall pay the SELLER [Nicomedes], the sum of
FIFTEEN THOUSAND PESOS (P15,000.00), Philippine Currency.
2. [That] upon the delivery by the SELLER [Nicomedes] to the BUYER [Rosario] of a valid title of the aforesaid
parcel of land, free from any and all liens and encumbrances, and the execution of the final Deed of Sale, the BUYER
[Rosario] shall pay to the SELLER [Nicomedes], the sum of THIRTY SEVEN THOUSAND SEVEN HUNDRED
FIVE PESOS (P37,705.00) Philippine Currency, and the final balance of ONE HUNDRED TWENTY THREE
THOUSAND AND TWO HUNDRED PESOS (P123,200.00) Philippine Currency, one year from the date of execution
of the final deed of sale, all without interest.
3. That in the event the BUYER [Rosario] fails to pay any amount as specified in Section 2, Paragraph II, then this
contract, shall, by the mere fact of non-payment expire itself and shall be considered automatically cancelled, of no
value and effect, and immediately thereafter the SELLER [Nicomedes] shall return to the BUYER [Rosario] the sums
of money he had received from the BUYER [Rosario] without any interests and whatever improvement or
improvements made or introduced by the BUYER [Rosario] on the lot being sold shall accrue to the ownership and
possession of the SELLER [Nicomedes].
xxxx
6. The SELLER [Nicomedes] hereby warrants the useful and peaceful possession and occupation of the lot subject
matter of this agreement by the BUYER [Rosario]. (Emphasis ours.)
On 7 March 1969, Nicomedes and Rosario executed a Joint Affidavit,14 whereby they confirmed the sale of the
subject property by Nicomedes to Rosario through the Agreement of Purchase and Sale dated 14 June 1968. They
likewise agreed to have the said Agreement registered with the Registry of Deeds in accordance with the provisions of
Section 194 of the Revised Administrative Code, as amended by Act No. 3344. The Agreement of Purchase and Sale
was thus registered on 10 March 1969.15
The records of this case show that, of the entire consideration stipulated upon in the Agreement, only the first
installment was paid by Rosario. No title to the subject property was ever delivered to her since, at the time of the
execution of the above contract, Nicomedess application for the registration of the subject property was still pending.
Five months thereafter, Nicomedes executed on 10 August 1969 a third contract, a Deed of Absolute Sale of
Unregistered Land,16 involving a portion of the subject property measuring 2,000 square meters, in favor of Maria Q.
Cristobal (Maria).17 The relevant terms of the Deed recite:
THAT I, NICOMEDES J. LOZADA, of legal age, Filipino citizen, married and a resident of Las Pias, Rizal,
Philippines, for and in consideration of the sum of TWENTY FIVE THOUSAND (P25,000.00) PESOS, Philippine
currency, receipt of which is hereby acknowledged to my full and entire satisfaction, do hereby sell, transfer and
convey to MARIA Q. CRISTOBAL, likewise of legal age, Filipino citizen, married to Juan [Dulos], and a resident of
114 Real Street, Las Pias, Rizal, Philippines, her heirs, executors, administrators and assigns, TWO THOUSAND
SQUARE METERS (2,000) for an easement of way of a parcel of unregistered land situated in the Barrio of Tungtong,
Municipality of Las Pias, Province of Rizal, Philippines, exclusively belonging to and possessed by me, and more
particularly described as follows:
"A parcel of land described under Tax Declaration No. 9575 (Lot No. 1, Psu 205035), situated in the Barrio of Tuntong,
Municipality of Las Pias, Province of Rizal, Philippines. xxx [C]ontaining an area of 1.9545 hectares, more or less.
Nicomedes passed away on 29 June 1972. The Deed of Absolute Sale of Unregistered Land between Nicomedes and
Maria was registered only on 8 February 1973,18 or more than seven months after the formers death.
On 10 August 1979, Nicomedess heirs, namely, the four children from his first marriage,19 the six children from his
second marriage,20 and his surviving second spouse Genoveva Pallera Vda. De Lozada, executed a Deed of
Extrajudicial Settlement of the Estate of the Late Nicomedes J. Lozada with Ratification of a Certain Deed of Absolute
Sale of Unregistered Land.21 The heirs declared in said Deed of Extrajudicial Settlement that the only property left by
Nicomedes upon his death was the subject property. They also ratified therein the prior sale of a portion of the subject
property made by Nicomedes in favor of Maria, but they clarified that the actual area of the portion sold as presented in
the plan was 2,287 square meters, not 2,000 square meters. After excluding the portion sold to Maria, the heirs claimed
equal pro indiviso shares in the remaining 17,258 square meters of the subject property.
On 30 July 1980, Nicomedess heirs22 collectively sold, for the sum of P414,192.00, their shares in the subject
property in favor of Dulos Realty and Development Corporation (Dulos Realty), as represented by its President Juan B.
Dulos, via a Deed of Absolute Sale of an Unregistered Land.23 The said Deed of Absolute Sale dated 30 July 1980,
however, was not registered.
The Cases
On 11 April 1966, after executing the Deed of Conditional Sale in favor of Emma on 23 June 1965, Nicomedes filed an
application for the registration of the subject property with the then Court of First Instance (CFI) of Pasig, docketed as
LRC Case No. N-6577. The grandchildren of Domingo by his former marriage24 opposed the application for
registration and Emma and her husband Ramon filed their intervention.
Sometime in 1973, following the execution in her favor of the Agreement of Purchase and Sale dated 14 June 1968 and
Joint Affidavit dated 7 March 1969, Rosario filed a motion to intervene in LRC Case No. N-6577 then pending before
the CFI of Pasig; however, her motion was denied by the CFI of Pasig, in an Order dated 2 June 1973.25 Rosario no
longer appealed from the order denying her motion to intervene in said case.
In view of the conflicting claims over the subject property, the CFI of Pasig dismissed without prejudice LRC Case No.
N-6577 on 21 November 1975 and ordered the parties therein, namely, the applicant Nicomedes and the
oppositors/intervenors, to litigate first the issues of ownership and possession.26
Five years later, on 27 June 1980, Domingos grandchildren from his first marriage, Dominador, et al.,27 filed an
Application for Registration28 of title to the subject property with the CFI of Rizal, docketed as LRC Case No. LP-
553-P. In their Application, Dominador, et al., alleged, inter alia, that they were the owners of the subject property by
virtue of inheritance; they were the actual occupants of the said property; and, other than Emma, they had no
knowledge of any encumbrance or claim of title affecting the same.
On 6 November 1980, Rosario, assisted by her husband Mariano Bondoc, invoking the Agreement of Purchase and
Sale executed in her favor by Nicomedes on 14 June 1968, filed a Complaint29 before the CFI of Rizal for the
declaration in her favor of ownership over the subject property, with an application for a temporary restraining order or
preliminary injunction, against Trinidad Lozada (one of Domingos heirs from his first marriage who applied for
registration of the subject property in LRC Case No. LP-553-P) and two other persons, who allegedly trespassed into
the subject property. Rosarios complaint was docketed as Civil Case No. Pq-8557-P.
On 4 August 1981, the parties agreed to have LRC Case No. LP-553-P (the application for land registration of
Dominador, et al.) consolidated with Civil Case No. Pq-8557-P (the action for declaration of ownership of Rosario).30
By subsequent events,31 and in consideration of the location of the subject property in Las Pias, LRC Case No. LP-
553-P and Civil Case No. Pq-8557-P, reinstated as Civil Case No. 6914-P, were finally transferred to and decided by
the RTC of Pasay City.
In its Decision dated 25 November 1991, the RTC of Pasay City, Branch 119, disposed of the cases thus:
WHEREFORE, considering all the foregoing, the court denies the application of Dominador Salvador, Sr. et al, having
no more right over the land applied for, dismisses Civil Case No. Pq-8557-P now 6914 for lack of merit, and hereby
declares Maria Cristobal Dulos and Dulos Realty and Development Corporation to have a registrable title, confirming
title and decreeing the registration of Lot 1 PSU-205035 containing a total area of 19,545 square meters, 2,287 square
meters of which appertains to Maria Cristobal Dulos married to Juan Dulos and the remaining portion, in favor of
Dulos Realty and Development Corporation, without pronouncement as to costs.32 (Emphasis ours.)
In so ruling, the RTC rationalized that the subject property constituted Domingos share in the conjugal properties of
his second marriage to Graciana San Jose and, therefore, properly pertained to Nicomedes as one of his sons in said
marriage. Being Domingos heirs from his first marriage, Dominador, et al., were not entitled to the subject property.
The lower court also found that neither Emma nor Rosario acquired a better title to the subject property as against
Maria and Dulos Realty. No final deed of sale over the subject property was executed in favor of Emma or Rosario,
while the sales of portions of the same property in favor of Maria and of the rest to Dulos Realty were fully
consummated as evidenced by the absolute deeds of sale dated 10 August 1969 and 30 July 1980, respectively.
Dominador, et al., Emma and her spouse Ramon Reyes (Ramon), and Rosario separately appealed to the Court of
Appeals the foregoing Decision dated 25 November 1991 of the RTC of Pasay City.33 Their consolidated appeals were
docketed as CA-G.R. CV No. 35688.
Dominador, et al., however, moved to withdraw their appeal in light of the amicable settlement they entered into with
Maria and Dulos Realty.34 In a Resolution dated 24 September 1992,35 the Court of Appeals granted their Motion to
Withdraw Appeal. Dominador, et al., later filed a motion to withdraw their earlier Motion to Withdraw Appeal, but this
was denied by the Court of Appeals in a Resolution dated 15 January 1993.36
In their respective Briefs before the appellate court,37 Emma and Rosario both faulted the RTC of Pasay City for
awarding the subject property to Maria and Dulos Realty. They each claimed entitlement to the subject property and
asserted the superiority of their respective contracts as against those of the others.
On 17 June 1999, the Court of Appeals rendered its assailed Decision, ruling as follows:
As gathered above, both contracts [entered into with Emma and Rosario] gave Nicomedes, as vendor, the right to
unilaterally rescind the contract the moment the buyer failed to pay within a fixed period (Pingol v. CA, 226 SCRA
118), after which he, as vendor, was obliged to return without interest the sums of money he had received from the
buyer (under the Deed of Conditional Sale [to Emma], upon the sale of the property to another). Additionally, under
the Agreement of Purchase and Sale [with Rosario], the vendor, in case of rescission, would become the owner and
entitled to the possession of whatever improvements introduced by the buyer.
Under the Deed of Conditional Sale [to Emma], there was no provision that possession would be, in case of rescission,
returned to the vendor, thereby implying that possession remained with him (vendor). Such being the case, it appears to
be a contract to sell. Whereas under the Agreement of Purchase and Sale [with Rosario], the provision that in case of
rescission, any improvements introduced by the vendee would become the vendors implies that possession was
transferred to the vendee and, therefore, it appears to be a contract of sale.
That the Agreement of Purchase and Sale [with Rosario] was a contract of sale gains light from the Joint Affidavit
subsequently executed by Rosario and Nicomedes stating that "an Agreement of Purchase and Sale wherein the former
(Nicomedes J. Lozada) sold to the latter (Rosario D. Bondoc) a parcel of land" had been executed but that the lot "not
having been registered under Act No. 496 nor under the Spanish Mortgage Law, the parties hereto have agreed to
register the Agreement of Purchase and Sale ... under the provision of Section 194 of the Revised Administrative Code,
as amended by Act No. 3344."
Rosario registered the Agreement of Purchase and Sale alright on March 10, 1969. She paid taxes on the lot from 1980
1985. She fenced the lot with concrete and hollow blocks. And apart from opposing the land registration case, she
filed a complaint against Trinidad, et al., for declaration ownership.

Article 1371 of the Civil Code provides:

"Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall
be principally considered."
From the provisions of the Agreement of Purchase and Sale [to Rosario] and the subsequent acts of the parties then
including the execution of the Joint Affidavit by Rosario and Nicomedes stating that "an Agreement of Purchase and
Sale wherein the former (Nicomedes...) sold to the latter (Rosario...) a parcel of land", had been executed, there is no
mistaking that the lot was sold to Rosario xxx.
Anent the effect of Rosarios registration of the Agreement of Purchase and Sale on Emmas contract involving the
same lot, Act No. 3344 (Amending Sec. 194 of the Administrative Code [Recording of instruments or deeds relating to
real estate not registered under Act No. 496 or under the Spanish Mortgage Law]) provides that any registration made
under Sec. 194 of the Administrative Code "shall be understood to be without prejudice to a third party who has a
better right".
"Better right", however, was not defined by law.
But author Narciso Pea is inclined to concur that "better right" should refer to a "right which must have been acquired
by a third party independently of the unregistered deed, such as, for instance, title by prescription, and that it has no
reference to rights acquired under that unregistered deed itself", he citing Nisce v. Milo, G.R. No. 425016, January 17,
1936 Unrep. 62 Phil. 976 x x x.
Given the fact that the contract in Emmas favor is a mere contract to sell, as against Rosarios contract which, as
demonstrated above is one of sale and, in any event, independently of Emmas contract to sell, she has no claim of a
better right unlike Rosario who has, not to mention the fact that she (Rosario) registered her contract earlier than
Emmas, Rosario must prevail.
The lot having been previously sold to Rosario, there was no lot or portion thereof to be later sold to Maria and to
Dulos Realty in 1979 and 1980, respectively.
WHEREFORE, the appealed Joint Decision is hereby REVERSED and SET ASIDE and another is rendered
confirming the title of Rosario D. Bondoc over subject lot, Lot 1, PSU-205035 containing an area of 19,545 sq.m.,
ordering its registration in her name, and dismissing the claims of ownership of all other claimants. Appellees Maria
Cristobal and Dulos Realty and Development Corporation and all other claimants to subject land including all persons
claiming under them are hereby ordered to vacate and restore possession to appellant Rosario D. Bondoc.
Upon issuance of title to subject lot, appellant Rosario D. Bondoc is ordered to pay the balance of the purchase price to
the heirs of Nicomedes Lozada in accordance with the Agreement of Purchase and Sale executed by the latter in her
favor. This judgment is without prejudice to the rights which Emma Ver Reyes and Maria Cristobal and Dulos Realty
and Development Corporation might have against the estate or surviving heirs of Nicomedes Lozada to the extent that
the latter was/were benefited.38 (Emphasis ours.)
Aggrieved, Emma and her husband Ramon,39 as well as Maria and Dulos Realty,40 without seeking reconsideration of
the appellate courts decision, filed directly before this Court separate Petitions for Review on Certiorari under Rule 45
of the Rules of Court, docketed as G.R. No. 139047 and G.R. No. 139365, respectively, assailing the 17 June 1999
Decision of the appellate court. Upon the manifestation and motion of Maria and Dulos Realty,41 the two Petitions
were ordered consolidated by this Court in a Resolution42 dated 13 December 1999.
In their Petition, Emma and her husband Ramon raise the following issues:
I. WHETHER OR NOT OWNERSHIP OF THE DISPUTED LOT WAS VALIDLY AND LEGALLY TRANSFERRED TO
EMMA VER REYES.
II. WHETHER OR NOT MARIA CRISTOBAL DULOS AND DULOS REALTY AND DEVELOPMENT CORPORATION
ARE PURCHASERS IN BAD FAITH.
III. WHETHER OR NOT EMMA VER REYES AND RAMON REYES ARE BARRED BY PRESCRIPTION OR LACHES.
IV. WHETHER OR NOT THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN CONFIRMING THE TITLE
OF ROSARIO BONDOC OVER THE DISPUTED LOT, ORDERING ITS REGISTRATION IN HER NAME AND
DISMISSING THE CLAIM OF EMMA VER REYES AND RAMON REYES.43

Maria and Dulos Realty, on the other hand, submitted in their Petition the following issues for consideration of this Court:
I.CWHETHER OR NOT BONDOCS AGREEMENT OF PURCHASE AND SALE AND SPOUSES REYES DEED OF
CONDITIONAL SALE ARE REGISTRABLE ABSOLUTE CONVEYANCES IN FEE SIMPLE TO SERVE AS BASIS FOR
AN AWARD AND REGISTRATION OF THE SUBJECT LOT IN THEIR FAVOR.
II.CWHETHER OR NOT RESPONDENTS BONDOC AND THE REYESES ARE BARRED BY LACHES AND/OR
PRESCRIPTION.
III. WHETHER OR NOT RESPONDENT BONDOC IS BARRED BY RES JUDICATA.44
The fundamental issue that the Court is called upon to resolve is, in consideration of all the contracts executed by
Nicomedes and/or his heirs involving the subject property, which party acquired valid and registrable title to the same.
Emma and Ramon contend that although the subject property was conditionally sold to them by Nicomedes, the
"conditionality" of the sale did not suspend the transfer of ownership over the subject property from Nicomedes to
Emma. Even though Nicomedes may automatically rescind the contract in case of non-payment by Emma of the
balance of the purchase price, it did not bar the transfer of title to the subject property to Emma in the meantime. Emma
and Reyes likewise claim that there was constructive delivery of the subject property to Emma, inasmuch as the Deed
of Conditional Sale in her favor was a public instrument. Furthermore, Emma was in possession of the subject property
in the concept of owner since she had been paying realty taxes for the same, albeit in the name of Nicomedes (in whose
name it was declared), from the time of the sale in 1965 until 1972. Emma and Ramon also assert that Maria and Dulos
Realty were in bad faith as the sales of the subject property in their favor, on 10 August 1969 and 30 July 1980,
respectively, occurred only after the filing of the cases involving the property45 and the registration of the sale to Emma.
Finally, Emma and Ramon maintain that the Court of Appeals erred in ruling that the contract in favor of Rosario was a
contract of sale for the sole reason that actual possession of the property was already transferred to the latter.
For their part, Maria and Dulos Realty point out that Emma and Rosario are not holders of absolute deeds of
conveyances over the subject property, which would have entitled them to register the same in their respective names.
They further buttress their alleged superior right to the subject property based on the execution of two notarized
documents of sale in their favor, which constituted symbolic and constructive delivery of the subject property to them.
Maria and Dulos Realty likewise assert that the claims of Emma and Rosario are already barred by laches and
prescription because they only decided to enforce their respective rights over the subject property after Domingos
heirs filed with the CFI of Rizal on 27 June 1980 an application for registration of the subject property, docketed as
LRC Case No. LP-553-P, notwithstanding their knowledge of Nicomedess death on 29 June 1972. Lastly, Maria and
Dulos Realty aver that Rosario is already barred by res judicata since her motion to intervene in LRC Case No. 6577,
the case instituted by Nicomedes to register the subject property, was denied by the CFI of Pasig. The dismissal of
Rosarios motion to intervene in the case for registration of the subject property already became final and executory,
thus, barring Rosario from pursuing her claim over the same.

This Courts Ruling

After a conscientious review of the arguments and evidence presented by the parties, the Court finds that the Deed of
Conditional Sale between Nicomedes and Emma and the Agreement of Purchase and Sale between Nicomedes and
Rosario were both mere contracts to sell and did not transfer ownership or title to either of the buyers in light of their
failure to fully pay for the purchase price of the subject property.
In Coronel v. Court of Appeals,46 this Court effectively provided the guidelines for differentiating between a contract
to sell and a contract of sale, to wit:
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a
contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element
is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer,
meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the
contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the
purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when
the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the prospective buyer. In Roque vs. Lapuz
(96 SCRA 741 [1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership
or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive
suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the
prospective sellers obligation to sell the subject property by entering into a contract of sale with the prospective buyer
becomes demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if
the promise is supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said
property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the
purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller
may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract
of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However,
if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been
previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer
by operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price,
ownership will not automatically transfer to the buyer although the property may have been previously delivered to
him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.
Also in Coronel v. Court of Appeals, the Court highlighted the importance of making the distinction between a contract
to sell and a contract of sale:
It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the
subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at
bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the
fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the
owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute
and this will definitely affect the sellers title thereto. In fact, if there had been previous delivery of the subject
property, the sellers ownership or title to the property is automatically transferred to the buyer such that, the seller will
no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of
the property who may have had actual or constructive knowledge of such defect in the sellers title, or at least was
charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot
defeat the first buyers title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the
property subject of the sale.47
Even in the absence of an express stipulation to such effect, the intention of the parties to execute a contract to sell may
be implied from the provisions of the contract. While Article 147848 of the Civil Code recognizes the right of the
parties to agree that the ownership of the thing shall not pass to the purchaser until he has fully paid the price therefore,
the same statutory provision does not require that such be expressly stipulated in the contract.
In Adelfa Properties, Inc. v. Court of Appeals,49 the Court ruled that since the contract between the parties therein did
not contain a stipulation on reversion or reconveyance of the property to the seller in the event that the buyer did not
comply with its obligation, it may legally be inferred that the parties never intended to transfer ownership to the buyer
prior to the completion of the payment of the purchase price. Consequently, the contract involved in the
aforementioned case was a mere contract to sell.
An agreement is also considered a contract to sell if there is a stipulation therein giving the vendor the rights to
unilaterally rescind the contract the moment the vendee fails to pay within a fixed period and to consequently open the
subject property anew to purchase offers.50 In the same vein, where the seller promises to execute a deed of absolute
sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell.51
Viewed in light of the foregoing pronouncements, the Deed of Conditional Sale executed by Nicomedes in favor of
Emma on 23 June 1965 is unmistakably a mere contract to sell. The Court looks beyond the title of said document,
since the denomination or title given by the parties in their contract is not conclusive of the nature of its contents.52 In
the construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued.53 If
the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning
of its stipulations shall control. If the words appear to be contrary to the evident intention of the parties, the latter shall
prevail over the former.54
A simple reading of the terms of the 23 June 1965 Deed of Conditional Sale readily discloses that it contains
stipulations characteristic of a contract to sell. It provides for the automatic cancellation of the contract should Emma
fail to pay the purchase price as required therein; and, in such an event, it grants Nicomedes the exclusive right to
thereafter sell the subject property to a third person. As in Adelfa Properties, the contract between Nicomedes and
Emma does not provide for reversion or reconveyance of the subject property to Nicomedes in the event of
nonpayment by Emma of the purchase price. More importantly, the Deed in question clearly states that Nicomedes will
issue a final deed of absolute sale only upon the full payment of the purchase price for the subject property. Taken
together, the terms of the Deeds reveal the evident intention of the parties to reserve ownership over the subject
property to Nicomedes pending payment by Emma of the full purchase price for the same.
While the Deed of Conditional Sale dated 23 June 1965 was indeed contained in a public instrument, it did not
constitute constructive delivery of the subject property to Emma in view of the contrary inference in the Deed itself that
the ownership over the subject property was reserved by Nicomedes.55 Moreover, other than her claim that she paid
the realty taxes on the subject property, Emma did not present any evidence that she took actual and physical
possession of the subject property at any given time.
This Court also finds that, contrary to the ruling of the Court of Appeals, the Agreement of Purchase and Sale executed
by Nicomedes in favor of Rosario on 14 June 1968 is likewise a mere contract to sell.
The Agreement itself categorically states that Nicomedes only undertakes to sell the subject property to Rosario upon
the payment of the stipulated purchase price and that an absolute deed of sale is yet to be executed between the parties.
Thus:
NOW, THEREFORE, for and in consideration of the foregoing premises and of the sum of ONE HUNDRED
SEVENTY FIVE THOUSAND NINE HUNDRED FIVE PESOS (P175,905.00) Philippine Currency, which the
BUYER shall pay to the SELLER in the manner and form hereinafter specified, the SELLER by these presents hereby
agreed and contracted to sell all his rights, interests, title and ownership over the parcel of land xxx unto the BUYER,
who hereby agrees and binds herself to purchase from the former, the aforesaid parcel of land, subject to the following
terms and conditions:
1. Upon the execution of this Agreement, the BUYER shall pay the SELLER, the sum of FIFTEEN THOUSAND
PESOS (P15,000.00), Philippine Currency.
2. That upon the delivery by the SELLER to the BUYER of a valid title of the aforesaid parcel of land, free from any
and all liens and encumbrances, and the execution of the final Deed of Sale, the BUYER shall pay to the SELLER, the
sum of THIRTY SEVEN THOUSAND SEVEN HUNDRED FIVE PESOS (P37,705.00) Philippine Currency, and the
final balance of ONE HUNDRED TWENTY THREE THOUSAND AND TWO HUNDRED PESOS (P123,200.00)
Philippine Currency, one year from the date of the execution of the final deed of sale, all without interest.
The Agreement additionally grants Nicomedes the right to automatically cancel the same in the event of nonpayment
by Rosario of any of the specified sums therein and any improvement introduced in the subject property shall thereby
accrue to Nicomedes, viz:
3. That in the event the BUYER fails to pay any amount as specified in Section 2, Paragraph II, then this contract,
shall, by the mere fact of non-payment expire itself and shall be considered automatically cancelled, of no value and
effect, and immediately thereafter the SELLER shall return to the buyer the sums of money he had received from the
BUYER without any interests and whatever improvement or improvements made or introduced by the BUYER on the
lot being sold shall accrue to the ownership and possession of the SELLER.57
As can be clearly read above, only the rights to possess the property and construct improvements thereon have been
evidently given to Rosario. The provisions of the Agreement do not in any way indicate that the ownership of the
subject property has likewise been transferred to Rosario. That Nicomedes shall appropriate the improvements as his
own should Rosario default in her payment of the purchase price only further supports the conclusion that title to the
subject property itself still remained with Nicomedes.
The Court concludes that the Deed of Conditional Sale in favor of Emma and the Agreement of Purchase and Sale in
favor of Rosario were mere contracts to sell. As both contracts remained unperfected by reason of the non-compliance
with conditions thereof by all of the parties thereto, Nicomedes can still validly convey the subject property to another
buyer. This fact, however, is without prejudice to the rights of Emma and Rosario to seek relief by way of damages
against the estate and heirs of Nicomedes to the extent that the latter were benefited by the sale to succeeding buyers.58
Thus, the Deeds of Absolute Sale in favor of Maria and Dulos Realty were the only conveyances of the subject
property in this case that can be the source of a valid and registrable title. Both contracts were designated as absolute
sales and the provisions thereof leave no doubt that the same were true contracts of sale. The total considerations for
the respective portions of the subject property were fully paid by the buyers and no conditions whatsoever were
stipulated upon by the parties as regards the transmission of the ownership of the said property to the said buyers.
The fact that Rosario was the first among the parties to register her contract in the Registry of Property for
Unregistered Lands on 10 March 1969 is of no moment.
Act No. 3344,59 which amended Section 194 of the Administrative Code, enunciates that any registration made under
Section 194 of the Administrative Code "shall be understood to be without prejudice to a third party who has a better
right."
In this case, Maria and Dulos Realty acquired their title to the property in separate deeds of absolute sale executed in
their favor by Nicomedes and his heirs. Upon the execution of these deeds, the ownership of the subject property was
vested unto the said buyers instantly, unlike the contracts to sell executed in favor of Emma and Rosario.
Consequently, the rights to the subject property of Maria and Dulos Realty, acquired through the contracts of sale in
their favor, are undeniably better or superior to those of Emma or Rosario, and can thus be confirmed by registration.
In sum, this Court recognizes the valid and registrable rights of Maria and Dulos Realty to the subject property, but
without prejudice to the rights of Emma and Rosario to seek damages against the estate and heirs of Nicomedes.
WHEREFORE, premises considered, the Petition in G.R. No. 139047 is DENIED, while the Petition in G.R. No.
139365 is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 35688 dated 17 June 1999 is
SET ASIDE and the Decision dated 25 November 1991 of the Regional Trial Court of Pasay City, Branch 119, is
REINSTATED. No costs.

SO ORDERED.