HONGKONG & SHANGHAI BANKING CORPORATION vs.

RALPH PAULI and SPOUSES

FACTS:
The Hongkong & Shanghai Banking Corporation (HSBC) filed a complaint against
Ralph Pauli (Pauli) on 14 June 1957 to collect a sum of 258,964.15 PHP and the court ruled
in favor of HSBC on 2 June 1959. Pauli then filed an appeal, where the SC upheld the
aforementioned ruling on 31 March 1962. The writs of execution, however, were unfulfilled
as no leviable assets of Pauli could be located by the sheriffs. Unbeknownst to HSBC, Pauli
had previously bought a sugar cane plantation known as Hacienda Riverside on 8 January
1957 which he did not register the deed of sale. The plantation was fraudulently sold to his
daughter and her husband, Sally Garganera and Mateo Garganera (Garganera Spouses) and
the sale was registered on 5 March 1963.
Upon learning of the sale, HSBC filed a complaint against Pauli on 13 October 1969
for the revival of the 1962 ruling which was granted by the court on 23 January 1971. On 17
February 1971, HSBC filed a new complaint against Pauli and the Garganera Spouses for the
annulment of the deed of sale and title of Hacienda Riverside. Pauli and the Garganera
Spouses then filed a motion to dismiss on the grounds of res judicata, prescription, waiver and
abandonment of claim which the court granted. HSBC appealed to the CA, and the
Garganera Spouses filed a motion to certify the appeal to this Court as only questions of law
res judicata and prescription of the action are involved which the CA granted. Hence, this
appeal.

ISSUE:
Whether or not the action for annulment of the sale for Hacienda Riverside to the Garganera
spouses has prescribed.

HELD:
The court ruled that the action for annulment of the sale for Hacienda Riverside to
the Garganera spouses has prescribed. “When a transaction involves registered land, the
four-year period fixed in Article 1391 within winch to bring an action for annulment of the
deed, shall be computed from the registration of the conveyance (5 March 1963) on the
familiar theory that the registration of the document is constructive notice of the
conveyance to the whole world.”
The court ruled that HSBC’s claim that the prescription should be calculated from the
date HSBC acquired knowledge of the fraudulent sale of the land would “diminish public faith
in the integrity of torrens titles and impair commercial transactions involving registered
lands for it would render uncertain the computation of the period for the prescription of
such actions.”

HOUSE INTERNATIONAL BUILDING TENANTS ASSOCIATION, INC. vs.

FACTS:
House International Building Tenants Association, Inc. (ASSOCIATION), a domestic
non-stock, non-profit civic corporation is mostly comprised of tenants of a 14-storey House
International Building in Binondo Manila. The property was formerly owned by Atty. Felipe
Ang who mortgaged the same to the Government Service Insurance System (GSIS) which
after foreclosure of the mortgage and failure to exercise his right of redemption, the
property was sold to Centertown Marketing Corporation (CENTERTOWN) in a deed of
conditional sale, without notice to the tenants and without securing prior clearance of the
then Ministry of Human Settlements.
CENTERTOWN, unauthorized to engage in the real estate business, created a sister
corporation named Manila Towers Development Corporation (TOWERS) for real estate
business engagement and CENTERTOWN’s rights and obligations under the deed of
conditional sale was assigned to TOWERS with consent and approval of the GSIS.
ASSOCIATION then filed a complaint against CENTERTOWN, TOWERS, and GSIS for
annulment of the deed of conditional sale and the subsequent assignment thereof by
CENTERTOWN to TOWERS, alleging that the deed of of conditional sale is null and void ab
initio for being ultra vires since CENTERTOWN is not qualified to acquire real estate property
or to engage in real estate transactions. The complaint was dismissed and the subsequent
appeal by ASSOCIATION to the CA was denied which was affirmed by the appellate court on
4 February 1986. ASSOCIATION filed a motion for reconsideration but was denied on 26
June 1986, hence, this petition.

ISSUE:
Whether or not the deed of conditional sale is null and void ab initio for being ultra vires.

HELD:
The court ruled that the deed of conditional sale between CENTERTOWN and GSIS is not
null and void, but merely voidable. As the court has found that ASSOCIATION is not a real
party in interest who stands to be benefited or injured by the judgment or the party entitled
to the avails of the suit as ASSOCIATION has a personality separate and distinct from that of
its members, and it is not a party nor a privy to the deed of conditional sale, it cannot assail
the validity of the deed of conditional sale.

BIENVENIDO BABAO, ETC. vs. FLORENCIO PEREZ, ETC., ET AL.

FACTS:
Bienvenido Babao (Bienvenido) is the judicial administrator of the estate of the late
Santiago Babao (Santiago), while Florencio Perez (Florencio) is the judicial administrator of
the late Celestina Perez (Celestina). Celestina was the owner of an unregistered parcel of
land containing an area of 156 hectares and that in 1924, Santiago entered into a verbal
agreement with Celestina whereby Santiago bound himself to improve the land and act as
administrator, with all expenses for labor and materials at his cost, and in turn, Celestina
bound herself to convey to Santiago or his wife ½ of the land with all the improvements upon
her death. From 124 to 1946, Santiago then improved the land and planted 120 hectares of
crops, leaving 50 hectares unimproved. Celestina sold about 127 hectares of the parcel of
land with all the improvements before her death to which Santiago was deprived of the
possession and administration from 1945. Santiago filed this complaint alleging that the sale
of land is in violation of the oral agreement made between him and Celestina and that the
same is fraudulent and fictitious, with Bienvenido having instituted for the settlement of the
proceedings as Santiago died on 6 January 1948.
Florencio denied the existence of the verbal agreement between Santiago and
Celestina and that Santiago had made improvements to the land, claiming that in 1924 and
many prior years thereto, the land had already been cleared and cultivated except for a 50
hectare portion. The court ruled in favor of Bienvenido, declaring the sales of the parcels of
land fraudulent and fictitious, null and void. The court ordered Florencio to pay a sum until
the delivery of the land and divest the title of ½ of the parcel of land in question. Florencio
then filed an appeal to the CA where the prior judgment was reversed. But when its
attention was called, thru a proper motion, that the court acted without jurisdiction because
the amount involved was more than P50,000, the court in a resolution entered on August 14,
1954 set aside its decision and forwarded the case to the Supreme Court.

ISSUE:
Whether or not the alleged verbal agreement between Santiago and Celestina was valid and
enforceable.

HELD:
 The court held that the verbal agreement between Santiago and Celestina was not
valid and enforceable. The verbal agreement falls under the statute of frauds. The court also
held that Santiago did not fully perform his obligations within the year from the alleged
contract so the verbal agreement is not exempted from the statute. Additionally, the terms of
the alleged verbal agreement does not comply with one of the requisites that needs to be
present which is that the agreement must be certain, definite, clear, unambiguous, and
unequivocal in its terms.

DOMINGO D. RUBIAS vs. ISAIAS BATILLER

FACTS:
Domingo D. Rubias (Rubias), a lawyer, filed a suit to recover the ownership and
possession of certain portions of a lot in Barotac Viejo, Iloilo on August 31 1964 which he
bought from his father-in-law, Francisco Militante (Militante), in 1956, against its present
occupant, Isaias Batiller (Batiller), who illegally entered said portions of the lot on two
occasions — in 1945 and in 1959. Batiller claimed that Rubias does not state a cause of
action, “the truth of the matter being that he and his predecessors-in-interest have always
been in actual, open and continuous possession since time immemorial under claim of
ownership of the portions of the lot in question”. Batiller also filed a motion to dismiss on the
grounds that Rubias does not have a cause of action against him because the property in
dispute was bought from Militante during which Rubias was Militante’s lawyer, invoking
articles 1409 and 1491 of the Civil Code.
On 18 October 1965, the lower court dismissed the complaint on grounds that the
contract between Rubias and Militante was null and void. Rubias filed a motion for
reconsideration but was denied by the lower court on 14 January 1966. Rubias then filed an
appeal to the appellate court wic concluded that no error was committed by the lower court
in dismissing the complaint.

ISSUE:
Whether or not the contract of sale between Rubias and Militante for the portions of a lot in
Barotac Viejo, Iloilo was void.

HELD:
The SC held that the purchase of the property by Rubias from Militante was inexistent and
void from the beginning. As Rubias was also the lawyer of Militante, Rubias was prohibited by
law from acquiring any purchase of the property and rights of in litigation or levied upon an
execution before the court within whose jurisdiction or territory they exercise their
respective functions.