Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-38498 August 10, 1989
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS MAIMINA
BAGNAS, SITO BAGNAS !"# AGATONA ENCARNACION, petitioners,
vs.
$ON. COURT O% APPEALS, ROSA L. RETONIL TEO%ILO ENCARNACION, !"#
&OSE B. NAMBA'ANrespondents.
Beltran, Beltran & Beltran for petitioners.
Jose M. Legaspi for private respondents.

NARVASA, J.:
The facts underlin! this appeal b certiorari are not in dispute. "ilario Mateu# of
$a%it, &avite, died on March '', '()*, sin!le, %ithout ascendants or descendants, and
survived onl b collateral relatives, of %ho# petitioners herein, his first cousins, %ere
the nearest. Mateu# left no %ill, no debts, and an estate consistin! of t%ent+nine
parcels of land in $a%it and I#us, &avite, ten of %hich are involved in this appeal.
1
On ,pril -, '()*, the private respondents, the#selves collateral relatives of Mateu#
thou!h #ore re#ote in de!ree than the petitioners,
(
re!istered %ith the Re!istr of
Deeds for the Province of &avite t%o deeds of sale purportedl e.ecuted b Mateu# in
their /respondents01 favor coverin! ten parcels of land. 2oth deeds %ere in Ta!alo!,
save for the 3n!lish descriptions of the lands conveed under one of the#4 and each
recited the reconsideration of the sale to be5 ... hala!an! IS,N6 PISO /Pl.771, salapin!
Pilipino, at #!a naipa!lin!8od, ipina!lilin!8od sa a8in! 8apa8anan ...5 /5the su# of
ON3 P3SO Pl.771, Philippine &urrenc, and services rendered, bein! rendered and to
be rendered for # benefit51. One deed %as dated Februar ),'()- and covered five
parcels of land, and the other %as dated March *, '()-, coverin! five other parcels,
both, therefore, antedatin! Mateu#0s death b #ore than a ear.
3
It is asserted b the
petitioners, but denied b the respondents, that said sales not%ithstandin!, Mateu#
continued in the possession of the lands purportedl conveed until his death, that he
re#ained the declared o%ner thereof and that the ta. pa#ents thereon continued to
be paid in his na#e.
4
9hatever the truth, ho%ever, is not crucial. 9hat is not disputed
is that on the stren!th of the deeds of sale, the respondents %ere able to secure title in
their favor over three of the ten parcels of land conveed thereb.
)
On Ma ::,'()* the petitioners co##enced suit a!ainst the respondents in the &ourt
of First Instance of &avite, see8in! annul#ent of the deeds of sale as fictitious,
fraudulent or falsified, or, alternativel, as donations void for %ant of acceptance
e#bodied in a public instru#ent. &lai#in! o%nership pro indiviso of the lands sub;ect
of the deeds b virtue of bein! intestate heirs of "ilario Mateu#, the petitioners praed
for recover of o%nership and possession of said lands, accountin! of the fruits thereof
and da#a!es. ,lthou!h the co#plaint ori!inall sou!ht recover of all the t%ent+nine
parcels of land left b Mateu#, at the pre+trial the parties a!reed that the controvers
be li#ited to the ten parcels sub;ect of the <uestioned sales, and the Trial &ourt
ordered the e.clusion of the nineteen other parcels fro# the action.
*
Of the ten parcels
%hich re#ained in liti!ation, nine %ere assessed for purposes of ta.ation at values
a!!re!atin! P'7,=77 77. The record does not disclose the assessed value of the tenth
parcel, %hich has an area of ',**- s<uare #eters.
+
In ans%er to the co#plaint, the defendants /respondents here1 denied the alle!ed
fictitious or fraudulent character of the sales in their favor, assertin! that said sales
%ere #ade for !ood and valuable consideration4 that %hile 5... the #a have the effect
of donations, et the for#alities and sole#nities of donation are not re<uired for their
validit and effectivit, ... that defendants %ere collateral relatives of "ilario Mateu# and
had done #an !ood thin!s for hi#, nursin! hi# in his last illness, %hich services
constituted the bul8 of the consideration of the sales4 and /b %a of affir#ative
defense1 that the plaintiffs could not <uestion or see8 annul#ent of the sales because
the %ere #ere collateral relatives of the deceased vendor and %ere not bound,
principall or subsidiaril, thereb.
8
,fter the plaintiffs had presented their evidence, the defendants filed a #otion for
dis#issal in effect, a de#urrer to the evidence reassertin! the defense set up in their
ans%er that the plaintiffs, as #ere collateral relatives of "ilario Mateu#, had no li!ht to
i#pu!n the latter0s disposition of his properties b #eans of the <uestioned
conveances and sub#ittin!, additionall, that no evidence of fraud #aintainin! said
transfers had been presented.
9
The Trial &ourt !ranted the #otion to dis#iss, holdin! /a1 on the authorit of ,r#entia
vs. Patriarca,
10
that the plaintiffs, as #ere collateral relatives, not forced heirs, of "ilario
Mateu#, could not le!all <uestion the disposition #ade b said deceased durin! his
lifeti#e, re!ardless of %hether, as a #atter of ob;ective realit, said dispositions %ere
valid or not4 and /b1 that the plaintiffs evidence of alle!ed fraud %as insufficient, the fact
that the deeds of sale each stated a consideration of onl Pl.77 not bein! in itself
evidence of fraud or si#ulation.
11
1
On appeal b the plaintiffs to the &ourt of ,ppeals, that court affir#ed, advertin! %ith
approval to the Trial &ourt0s reliance on the Armentia rulin! %hich, it %ould appear, both
courts sa% as denin!, %ithout e.ception, to collaterals, of a decedent, not forced heirs,
the ri!ht to i#pu!n the latter0s dispositions inter vivos of his propert. The ,ppellate
&ourt also anal>ed the testi#on of the plaintiffs0 %itnesses, declared that it failed to
establish fraud of an 8ind or that Mateu# had continued pain! ta.es on the lands in
<uestion even after e.ecutin! the deeds convein! the# to the defendants, and closed
%ith the state#ent that 5... since in dul notari>ed and re!istered deeds of sale
consideration is presu#ed, %e do not and it necessar to rule on the alternative
alle!ations of the appellants that the said deed of sale %ere /sic1 in realit donations.
1(
One issue clearl predo#inates here. It is %hether, in vie% of the fact that, for
properties assuredl %orth in actual value #an ti#es over their total assessed
valuation of #ore than P'7,777.77, the <uestioned deeds of sale each state a price of
onl one peso /P'.771 plus unspecified past, present and future services to %hich no
value is assi!ned, said deeds %ere void or ine.istent fro# the be!innin! /5nulo51 or
#erel voidable, that is, valid until annulled. If the %ere onl voidable, then it is a
correct proposition that since the vendor Mateu# had no forced heirs %hose le!iti#es
#a have been i#paired, and the petitioners, his collateral relatives, not bein! bound
either principall or subsidiaril to the ter#s of said deeds, the latter had and have no
actionable ri!ht to <uestion those transfers.
On the other hand, if said deeds %ere void ab initio because to all intents and purposes
%ithout consideration, then a different le!al situation arises, and <uite another result
obtains, as pointed out b the e#inent civil la% authorit, Mr. ?ustice ?.2.@. Rees %ho,
in his concurrin! opinion in Armentia, saidA
I ... cannot brin! #self to a!ree to the proposition that the heirs
intestate %ould have no le!al standin! to contest the conveance
#ade b the deceased if the sa#e %ere #ade %ithout an
consideration, or for a false and fictitious consideration. For under the
&ivil &ode of the Philippines, ,rt. '*7(, par. -, contracts %ith a cause
that did not e.ist at the ti#e of the transaction are ine.istent and void
fro# the be!innin!. The sa#e is true of contracts statin! a false
cause /consideration1 unless the persons interested in upholdin! the
contract should prove that there is another true and la%ful
consideration therefor. /lbid., ,rt. '-=-1.
If therefore the contract has no causa or consideration, or
the causa is false and fictitious /and no true hidden causa is proved1
the propert alle!edl conveed never reall leaves the patri#on of
the transferor, and upon the latter0s death %ithout a testa#ent, such
propert %ould pass to the transferor0s heirs intestate and be
recoverable b the# or b the ,d#inistrator of the transferor0s estate.
In this particular re!ard, I thin8 &oncepcion vs. Sta. ,na, BC Phil. CBC
and Sobs vs. &hua Pua "er#anos, =7 Phil. =-), do not correctl
state the present la%, and #ust be clarified.
To be sure the <uoted passa!e does not re;ect and is not to be construed as re;ectin!
the Concepcion and Solisrulin!s
13
as outri!htl erroneous, far fro# it. On the contrar,
those rulin!s undoubtedl read and applied correctl the la% e.tant in their ti#eA ,rt.
':C) of the &ivil &ode of 'BB( under %hich the state#ent of a false cause in a contract
rendered it voidable onl, not void ab initio. In observin! that the 5... do not correctl
state the present la% and #ust be clarified,5 ?ustice Rees clearl had in #ind the fact
that the la% as it is no% /and alread %as in the ti#e ,r#entia1 no lon!er dee#s
contracts %ith a false cause, or %hich are absolutel si#ulated or fictitious, #erel
voidable, but declares the# void, i.e., ine.istent /5nulo51 unless it is sho%n that the are
supported b another true and la%ful cause or consideration.
14
, lo!ical conse<uence
of that chan!e is the ;uridical status of contracts %ithout, or %ith a false, cause is that
conveances of propert affected %ith such a vice cannot operate to divest and transfer
o%nership, even if uni#pu!ned. If after%ards the transferor dies the propert descends
to his heirs, and %ithout re!ard to the #anner in %hich the are called to the
succession, said heirs #a brin! an action to recover the propert fro# the purported
transferee. ,s pointed out, such an action is not founded on fraud, but on the pre#ise
that the propert never leaves the estate of the transferor and is trans#itted upon his
death to heirs, %ho %ould labor under no incapacit to #aintain the action fro# the
#ere fact that the #a be onl collateral relatives and bound neither principall or
subsidiaril under the deed or contract of conveance.
In Armentia the &ourt deter#ined that the conveance <uestioned %as #erel
annullable not void ab initio, and that the plaintiff s action %as based on fraud vitiatin!
said conveance. The &ourt saidA
"potheticall ad#ittin! the truth of these alle!ations /of plaintiffs
co#plaint1, the conclusion is irresistible that the sale is #erel
voidable. 2ecause Marta ,r#entia e.ecuted the docu#ent, and this
is not controverted b plaintiff. 2esides, the fact that the vendees
%ere #inors, #a8es the contract, at %orst, annullable b the#, Then
a!ain, inade<uac of consideration does not i#pl total %ant of
consideration. 9ithout #ore, the parted acts of Marta ,r#entia after
the sale did not indicate that the said sale %as void fro# the bein!.
The su# total of all these is that, in essence, plaintiffs case is
botto#ed on fraud, %hich renders the contract voidable.
2
It therefore see#s clear that insofar as it #a be considered as settin! or reaffir#in!
precedent, Armentia onl ruled that transfers #ade b a decedent in his lifeti#e, %hich
are voidable for havin! been fraudulentl #ade or obtained, cannot be posthu#ousl
i#pu!ned b collateral relatives succeedin! to his estate %ho are not principall or
subsidiaril bound b such transfers. For the reasons alread stated, that rulin! is not
e.tendible to transfers %hich, thou!h #ade under closel si#ilar circu#stances, are
void ab initio for lac8 or falsit of consideration.
The petitioners here ar!ue on a broad front that the ver recitals of the <uestioned
deeds of sale reveal such %ant or spuriousness of consideration and therefore the void
character of said sales. TheA
'. advert to a decision of the &ourt of ,ppeals in Montinola vs. Herbosa /=( O.6. No.
*C, pp, B'7', B''B1 holdin! that a price of P l.77 for the sale of thin!s %orth at least
P:7,777.77 is so insi!nificant as to a#ount to no price at all, and does not satisf the
la% %hich, %hile not re<uirin! for the validit of a sale that the price be ade<uate,
prescribes that it #ust be real, not fictitious, stressin! the obvious parallel bet%een that
case and the present one in stated price and actual value of the propert sold4
:. cite Manresa to the sa#e effectA that true price, %hich is essential to the validit of a
sale, #eans e.istent, real and effective price, that %hich does not consist in an
insi!nificant a#ount as, sa, P.:7 for a house4 that it is not the sa#e as the concept of
a ;ust price %hich entails %ei!hin! and #easurin!, for econo#ic e<uivalence, the
a#ount of price a!ainst all the factors that deter#ine the value of the thin! sold4 but
that there is no need of such a close e.a#ination %hen the i##ense disproportion
bet%een such econo#ic values is patent a case of insi!nificant or ridiculous price, the
unbelievable a#ount of %hich at once points out its ine.istence4
1)
-. assert that ,rt. '*=B of the &ivil &ode, in prescribin! that a sale be for a ... price
certain in #one or its e<uivalent ... re<uires that 5e<uivalent5 be so#ethin!
representative of #one, e.g., a chec8 or draft, a!ain citin! Manresa
1*
to the effect that
services are not the e<uivalent of #one insofar as said re<uire#ent is concerned and
that a contract is not a true sale %here the price consists of services or prestations4
*. once #ore citin! Manresa
1+
also point out that the 5services5 #entioned in the
<uestioned deeds of sale are not onl va!ue and uncertain, but are un8no%n and not
susceptible of deter#ination %ithout the necessit of a ne% a!ree#ent bet%een the
parties to said deeds.
9ithout necessaril accordin! all these assertions its full concurrence, but upon the
consideration alone that the apparent !ross, not to sa enor#ous, disproportion
bet%een the stipulated price /in each deed1 of P l.77 plus unspecified and un<uantified
services and the undisputabl valuable real estate alle!edl sold %orth at least
P'7,=77.77 !oin! onl b assess#ents for ta. purposes %hich, it is %ell+8no%n, are
notoriousl lo% indicators of actual value plainl and un<uestionabl de#onstrates that
the state a false and fictitious consideration, and no other true and la%ful cause
havin! been sho%n, the &ourt finds both said deeds, insofar as the purport to be
sales, not #erel voidable, but void ab initio.
Neither can the validit of said conveances be defended on the theor that their
true causa is the liberalit of the transferor and the #a be considered in realit
donations
18
because the la%
19
also prescribes that donations of i##ovable propert,
to be valid, #ust be #ade and accepted in a public instru#ent, and it is not denied b
the respondents that there has been no such acceptance %hich the clai# is not
re<uired.
(0
The transfers in <uestion bein! void, it follo%s as a necessar conse<uence and
confor#abl to the concurrin! opinion in Armentia, %ith %hich the &ourt full a!rees,
that the properties purportedl conveed re#ained part of the estate of "ilario Mateu#,
said transfers not%ithstandin!, recoverable b his intestate heirs, the petitioners herein,
%hose status as such is not challen!ed.
The private respondents have onl the#selves to bla#e for the lac8 of proof that #i!ht
have saved the <uestioned transfers fro# the taint of invalidit as bein! fictitious and
%ithout ilicit cause4 proof, to be brief, of the character and value of the services, past,
present, and future, constitutin! accordin! to the ver ter#s of said transfers the
principal consideration therefor. The petitioners0 co#plaint /par. )1
(1
averred that the
transfers %ere 5... fraudulent, fictitious andDor falsified and /%ere1 ... in realit donations
of i##ovables ...,5 an aver#ent that the private respondents not onl specificall
denied, alle!in! that the transfers had been #ade 5... for !ood and valuable
consideration ...,5 but to %hich the also interposed the affirmative defenses that said
transfers %ere 5... valid, bindin! and effective ...,5 and, in an obvious reference to the
services #entioned in the deeds, that the 5... had done #an !ood thin!s to /the
transferor1 durin! his lifeti#e, nursed hi# durin! his ripe ears and too8 care of hi#
durin! his previous and last illness ...,5 /pars. *, ), ') and 'C, their
ans%er1.lp!"#.$%t
((
The onus, therefore, of sho%in! the e.istence of valid and illicit
consideration for the <uestioned conveances rested on the private respondents. 2ut
even on a contrar assu#ption, and positin! that the petitioners initiall had the burden
of sho%in! that the transfers lac8ed such consideration as the alle!ed in their
co#plaint, that burden %as shifted to the private respondents %hen the petitioners
presented the deeds %hich the clai#ed sho%ed that defect on their face and it
beca#e the dut of said respondents to offer evidence of e.istent la%ful consideration.
,s the record clearl de#onstrates, the respondents not onl failed to offer an proof
%hatsoever, optin! to rel on a de#urrer to the petitioner0s evidence and upon the
thesis, %hich the have #aintained all the %a to this &ourt, that petitioners, bein!
3
#ere collateral relatives of the deceased transferor, %ere %ithout ri!ht to the
conveances in <uestion. In effect, the !a#bled their ri!ht to adduce evidence on a
dis#issal in the Trial &ourt and lost, it bein! the rule that %hen a dis#issal thus
obtained is reversed on appeal, the #ovant loses the ri!ht to present evidence in his
behalf.
(3
9"3R3FOR3, the appealed Decision of the &ourt of ,ppeals is reversed. The
<uestioned transfers are declared void and of no force or effect. Such certificates of title
as the private respondents #a have obtained over the properties sub;ect of said
transfers are hereb annulled, and said respondents are ordered to return to the
petitioners possession of an the properties involved in tills action, to account to the
petitioners for the fruits thereof durin! the period of their possession, and to pa the
costs. No da#a!es, attorne0s fees or liti!ation e.penses are a%arded, there bein! no
evidence thereof before the &ourt.
SO ORD3R3D.
Cru&, 'anca(co, 'ri$)o*A+uino and Medialdea, JJ., concur.
4