CASE # 1:
00
SALES CASE DIGEST BATCH 2
TABLE OF CONTENTS
CASES
1. ALMIRA VS CA
2. MONTECALVO VS HEIRS OF PRIMERO
3. REYES VS TUPARAN
4. SPS SERRANO VS CAGUIAT
5. NABUS VS PACSON
6. OLIVAREZ VS CASTILLO
7. ACE FOODS INC VS MICRO PACIFIC
8. SABERON VS VENTANILLA
9. LABAGALA VS SANTIAGO
10.FRANCISCO VS HERRERA
11.PARAGAS VS HEIRS OF BALACANO
12.HEIRS OF REYES VS MEJARES
13.GUIANG VS CA
14.ANIZA VS SPS PADUA
15.SPS FUENTES VS ROCA
16.SPS AGBABAO VS SPS PARULAN
17.PELAYO VS PEREZ
18.ABALOS VS MACATANGAY
19.CALIMIM CANULAS VS FORTUN
20.PHILTRUST CORP VS ROLDAN
21.DISTAJO VS CA
22.CUI VS CUI
23.VALENCIA VS CABANTING
24.DIR. OF LANDS VS ABABA
25.SPS CADAVEDO VS LACAYA
contract while the balance of P85,000.
JUANA ALMIRA, RENATO was made payable within six (6) months
GARCIA, ROGELIO GARCIA, from the date of the execution of the
RODOLFO GARCIA, ROSITA instrument.
GARCIA, RHODORA GARCIA,
PAGE ROSALINDA GARCIA,  At the time of the execution of the
ROLANDO GARCIA And Kasunduan, petitioners allegedly
RAFAEL GARCIA informed respondent that TCT No. RT-
1 Represented in this suit by 1076 was in the possession of their
-
3 EDGARDO ALVAREZ, cousin, Conchalina Alibudbud, who
5 Petitioners, v. COURT OF having bought Vicente de Guzman’s ½
6
8
APPEALS AND FEDERICO share, owned the bigger portion of Lot.
9 BRIONES, Respondents. Respondent willingly entered into the
G.R. No. 115966. March 20, Kasunduan provided that the full
12
13 2003. – By Kash payment of the purchase price will be
15
18
made upon delivery of the title.
20 FACTS:
22  Petitioners are the wife and the children  Respondent took possession of the
23
24
of the late Julio Garcia who inherited property subject of the Kasunduan and
25 from his mother, Maria Alibudbud, a made various payments to petitioners
27 portion of a 90,655 square-meter
- amounting to P58,500.00. However,
29 property of the Sta. Rosa Estate in Brgy. upon failure of petitioners to deliver to
29 Caingin, Sta. Rosa, Laguna. Subject lot him a separate title to the property in the
30
32 was co-owned and registered in the name of Julio Garcia, he refused to make
32 names of with the following shares: further payments, prompting petitioners
33
Vicente de Guzman (½), Enrique to file a civil action before the RTC of San
Hemedes (¼), and Francisco Alibudbud, Pedro, Laguna, for (a) rescission of the
the father of Maria Alibudbud (¼). Kasunduan; (b) return by respondent to
petitioners of the possession of the
 Although there was no separate title in subject parcel of land; and (c) payment of
the name of Julio Garcia, there were tax damages.
declarations in his name to the extent of
his grandfather’s share covering an area Petitioners alleged that respondent was
of 21,460 square meters. bound to pay the balance of the
purchase price within six (6) months
 On July 5, 1984, Petitioners, as heirs of from the date of the execution of the
Julio Garcia, and respondent Federico Kasunduan and upon delivery of title.
Briones entered into a Kasunduan ng Petitioners claimed that they approached
Pagbibilihan over the 21,460 square- respondent several times to deliver but
meter portion for the sum of respondent told them that he did not
P150,000.00. Respondent paid have money to pay the balance of the
P65,000.00 upon execution of the purchase price. Respondent filed a
PAGE/1
 counterclaim for damages and averred
that he refused to make further
payments because of petitioners’ failure
to deliver to him a separate title in the
name of Julio Garcia.
 RTC rendered a decision decreeing the
rescission of the Kasunuduan ng
Pagbibilihan and ordering the defendant
to return and restore possession of the
property to the plaintiffs. Plaintiffs are
hereby ordered to refund to the
defendant the downpayment of
P65,000.00 and the partial payment of
the balance totaling to P58,500.00 plus
legal interest. Defendant’s counterclaim
is hereby dismissed for lack of merit.
 The court observed that even if
petitioners were obliged to deliver a
separate title in the name of Julio Garcia
to respondent, the latter appeared to
have insufficient funds to settle his
obligation as indicated by the fact that
his payments amounting to P58,500.00
were made in "trickles," having been
given on thirty-nine occasions within a
span of two years from the time of the
execution of the Kasunduan. It
concluded that respondent refused to
complete payment of the full purchase
price not because of the failure of
petitioners to deliver a separate title in
the name of Julio Garcia but because
respondent simply did not have
sufficient funds at hand.
 The Court of Appeals, noted that the
Kasunduan made no reference to TCT
No. RT-1076, reversed the decision of the
trial court, and dismissed the complaint.
The appellate court opined that the
parties intended to refer to a separate
title over the 21,460 square meter lot
when the Kasunduan mentioned a
"kaukulang titulo ng lupang nabanggit"
since it was the portion which was
covered by a separate tax declaration in
the name of Julio Garcia and it was the
portion that petitioners could sell.
Hence this petition.
ISSUE:
(1) whether payment of the balance of
the purchase price is conditioned
upon delivery of a separate title in
the name of Julio Garcia;
(2) whether the Kasunduan is a
contract to sell or a contract of sale;
(3) whether petitioners are entitled to
rescind the Kasunduan for failure
of respondent to complete payment
of the purchase price; and
RULING:
 It is basic in the interpretation and
construction of contracts that the literal
meaning of the stipulations shall control
if the terms of the contract are clear and
leave no doubt on the intention of the
contracting parties. However, if the
terms of the agreement are ambiguous,
resort is made to contract interpretation
which is the determination of the
meaning attached to written or spoken
words that make the contract. 10 To
ascertain the true intention of the
parties, their subsequent or
contemporaneous actions must be
principally considered.chanrob1es
virtua1 1aw 1ibrary
The tenor of the correspondence between
petitioners and respondent shows that
the parties intended that a separate title
to the property in the name of Julio
Garcia shall be delivered to respondent
as a condition for the latter’s payment of
the balance of the purchase price. There
is thus no basis to conclude that
insufficiency of funds rather than failure
of petitioners to deliver a separate title in
the name of Julio Garcia prevented
respondent from completing payment of
the purchase price.
 Article 1377 of the Civil Code which
states that the interpretation of obscure
words or stipulations in a contract shall
not favor the party who caused the
obscurity.
 We find no reason to apply Article 1377
of the Civil Code in this case where the
evident intention of the parties can be
readily discerned by their subsequent
and contemporaneous acts. While it is
true that the Kasunduan was prepared
by the counsel of respondent, there is no
indication that respondent took unfair
advantage of petitioners when he had the
terms of the Kasunduan drawn by his
counsel. Petitioners freely assented to
the Kasunduan which is written entirely
in a language spoken and understood by
both parties. That petitioners were fully
aware of the terms of the Kasunduan is
evidenced by their attempts to comply
with their obligation by securing a
subdivision plan and technical
description 16 of the property subject of
sale.
 2. it is necessary to ascertain whether
the Kasunduan is a contract to sell or a
contract of sale. In a contract to sell,
ownership is, by agreement, reserved to
the vendor and is not to pass until full
payment of the purchase price; whereas,
in contract of sale, title to the property
passes to the vendee upon delivery of the
thing sold. 17 Non-payment by the
PAGE/2
 vendee in a contract of sale entitles the
vendor to demand specific performance
or rescission of the contract, with
damages, under Article 1191 of the Civil
Code.
 A careful reading of the provisions of the
Kasunduan reveals that it is a contract
of sale. A deed of sale is absolute in
nature in the absence of any stipulation
reserving, title to the vendor until full
payment of the purchase price. In such
cases ownership of the thing sold passes
to the vendee upon actual or
constructive delivery thereof.
 3. The power to rescind is only given to
the injured party. The injured party is
the party who has faithfully fulfilled his
obligation or is ready and willing to
perform with his obligation. In the case
at bar, petitioners were not ready, willing
and able to comply with their obligation
to deliver a separate title in the name of
Julio Garcia to Respondent. Therefore,
they are not in a position to ask for
rescission of the Kasunduan. Moreover,
respondent’s obligation to pay the
balance of the purchase price was made
subject to delivery by petitioners of a
separate title in the name of Julio Garcia
within six (6) months from the time of the
execution of the Kasunduan, a condition
with which petitioners failed to comply.
Failure to comply with a condition
imposed on the performance of an
obligation gives the other party the
option either to refuse to proceed with
the sale or to waive that condition under
Article 1545 of the Civil Code. 20 Hence,
it is the respondent who has the option
either to refuse to proceed with the sale
or to waive the performance of the
condition imposed on his obligation to
pay the balance of the purchase price.
CASE # 3
MILA A. REYES v. VICTORIA
TUPARAN,
G.R. No. 188064 – By Navarro
Facts:
 Mila A. Reyes filed a complaint for
Rescission of Contract with Damages
against Victoria T. Tuparan before the
RTC. Petitioner alleged that she was the
registered owner of a residential and
commercial lot located in Karuhatan,
Valenzuela City, and covered by TCT No.
V-4130; that on that property, she put
up a three-storey commercial building
known as RBJ Building and a residential
apartment building.
 In December 1989, respondent leased
from petitioner a space on the ground
floor of the RBJ Building for her
pawnshop business for a monthly rental
of ₱4,000.00.
 On June 20, 1988, petitioner mortgaged
the subject real properties to the
Farmers Savings Bank and Loan Bank,
Inc. (FSL Bank) to secure a loan of
₱2,000,000.00 payable in installments.
Petitioner then decided to sell her real
properties for at least ₱6,500,000.00. As
a gesture of friendship, respondent
verbally offered to conditionally buy
petitioner‘s real properties for
₱4,200,000.00 payable on installment
basis without interest and to assume the
bank loan. FSL Bank approved their
proposal on the condition that petitioner
would sign or remain as co-maker for the
mortgage obligation assumed by
respondent.
 On November 26, 1990, the parties and
FSL Bank executed the corresponding
Deed of Conditional Sale of Real
Properties with Assumption of Mortgage.
 Under the Deed of Conditional Sale of
Real Properties with Assumption of
Mortgage, respondent was bound to pay
the petitioner a lump sum of ₱1.2 million
pesos without interest as part of the
purchase price in three (3) fixed
installments.
 Respondent, however, defaulted in the
payment of her obligations on their due
dates. As of August 31, 1992,
respondent had only paid ₱395,000.00,
leaving a balance of ₱805,000.00 as
principal on the unpaid installments and
₱466,893.25 as unpaid accumulated
interest
 On September 2, 1992, respondent
offered the amount of ₱751,000.00 only
payable on September 7, 1992, as full
payment of the purchase price of the
subject real properties and demanded
the simultaneous execution of the
corresponding deed of absolute sale.
 On September 10, 1992, Mila A. Reyes
(petitioner) filed a complaint for
Rescission of Contract with Damages
against Victoria T. Tuparan (respondent)
before the RTC.
 The petitioner basically argues that the
subject deed of conditional sale is a
reciprocal obligation and (respondent)
deliberately failed to comply with her
contractual obligations with the
PAGE/3
 petitioner by violating the terms or
manner of payment of the ₱1,200,000.00
balance.
 RTC: RTC handed down its decision
finding that respondent failed to pay in
full the .2 million total purchase price of
the subject real properties leaving a
balance of ?805,000.00. It stated that
the checks and receipts presented by
respondent refer to her payments of the
mortgage obligation with FSL Bank and
not the payment of the balance of
1,200,000.00. The RTC also considered
the Deed of Conditional Sale of Real
Property with Assumption of Mortgage
executed by and among the two parties
and FSL Bank a contract to sell, and not
a contract of sale.
 CA: On February 13, 2009, the CA
rendered its decision affirming with
modification the RTC Decision. The CA
agreed with the RTC that the contract
entered into by the parties is a contract
to sell but ruled that the remedy of
rescission could not apply because the
respondent's failure to pay the petitioner
the balance of the purchase price in the
total amount of ?805,000.00 was not a
breach of contract, but merely an event
that prevented the seller (petitioner) from
conveying title to the purchaser
(respondent). It reasoned that out of the
total purchase price of the subject
property in the amount
of ?4,200,000.00, respondent's
remaining unpaid balance was
only ?805,000.00. Since respondent had
already paid a substantial amount of the
purchase price, it was but right and just
to allow her to pay the unpaid balance of
 Based on the above provisions, the title and
the purchase price plus interest.
ISSUE:
Whether there was no legal basis for the
rescission of the Deed of Conditional Sale
with Assumption of Mortgage.
HELD:
 Accordingly, the petitioner‘s obligation to sell
 Yes. The nature of the contract is a
contract to sell and there can be no
rescission of an obligation that is yet to
exist.
 The Court agrees below that the subject
Deed of Conditional Sale with
Assumption of Mortgage entered into by
and among the two parties and FSL
Bank on November 26, 1990 is a
 Consistently, the Court handed down a
contract to sell and not a contract of sale.
The subject contract was correctly
classified as a contract to sell based on
the following pertinent stipulations:
 “Regarding the right to cancel the contract
8. That the title and ownership
of the subject real properties
shall remain with the First Party
until the full payment of the
Second Party of the balance of
the purchase price and
liquidation of the mortgage
obligation of ₱2,000,000.00.
9. That upon full payment,
Third Party shall issue the
corresponding Deed of
Cancellation of Mortgage and
the First Party shall execute the
corresponding Deed of Absolute
Sale in favor of the Second
Party.[7]
ownership of the subject properties remains
with the petitioner until the respondent fully
pays the balance of the purchase price and
the assumed mortgage obligation.
Thereafter , FSL Bank shall then issue the
corresponding deed of cancellation of
mortgage and the petitioner shall execute
the corresponding deed of absolute sale in
favor of the respondent.
the subject properties becomes demandable
only upon the happening of the positive
suspensive condition, which is the
respondent‘s full payment of the purchase
price. Without respondent’s full payment,
there can be no breach of contract to speak
of because petitioner has no obligation yet to
turn over the title.
similar ruling in the 2010 case of Heirs of
Atienza v. Espidol, where it was written:
for non-payment of an installment, there is
need to initially determine if what the parties
had was a contract of sale or a contract to
sell. In a contract of sale, the title to the
property passes to the buyer upon the
delivery of the thing sold. In a contract to
sell, on the other hand, the ownership is, by
agreement, retained by the seller and is not
to pass to the vendee until full payment of
the purchase price. In the contract of sale,
the buyer‘s non-payment of the price is a
negative resolutory condition; in the contract
to sell, the buyer‘s full payment of the price
is a positive suspensive condition to the
coming into effect of the agreement. In the
first case, the seller has lost and cannot
recover the ownership of the property unless
he takes action to set aside the contract of
sale. In the second case, the title simply
remains in the seller if the buyer does not
comply with the condition precedent of
making payment at the time specified in the
PAGE/4
contract. Here, it is quite evident that the
contract involved was one of a contract to
sell since the Atienzas, as sellers, were to
retain title of ownership to the land until
respondent Espidol, the buyer, has paid the
agreed price. Indeed, there seems no
question that the parties understood this to
be the case. “
 xxx there can be no rescission of an
obligation (to turn over title) that did not
yet exist since the suspensive condition
had not taken place. x x x. [Emphases
and underscoring supplied]
 Granting that a rescission can be
permitted under Article 1191, the Court
still cannot allow it for the reason that,
considering the circumstances, there
was only a slight or casual breach in the
fulfillment of the obligation.
 Unless the parties stipulated it,
rescission is allowed only when the
breach of the contract is substantial and
fundamental to the fulfillment of the
obligation. Whether the breach is slight
or substantial is largely determined by
the attendant circumstances.
 The Court agrees with the courts below
that the respondent showed her sincerity
and willingness to comply with her
obligation when she offered to pay the
petitioner the amount of ₱751,000.00.
CASE # 4
Spouses Serrano vs Caguiat
GR 139173 , February 28,
2007 - By Kerol
Facts:
 Spouses Onnie and Amparo Herrera,
petitioners, are the registered owners of
a lot located in Las Piñas, covered by
Transfer Certificate of Title.
 Sometime in March 1990, Godofredo
Caguiat, respondent, offered to buy the
lot. Petitioners agreed to sell it at
₱1,500.00 per square meter.
Respondent then gave petitioners
₱100,000.00 as partial payment. In turn,
petitioners gave respondent the
corresponding receipt stating that
respondent promised to pay the balance
of the purchase price on or before March
23, 1990
 On March 28, 1990, respondent,
through his counsel Atty. Ponciano
Espiritu, wrote petitioners informing
them of his readiness to pay the balance
of the contract price and requesting
them to prepare the final deed of sale
 On April 4, 1990, petitioners, through
Atty. Ruben V. Lopez, sent a letter to
respondent stating that petitioner
Amparo Herrera is leaving for abroad on
or before April 15, 1990 and that they are
canceling the transaction. Petitioners
also informed respondent that he can
recover the earnest money of
₱100,000.00 anytime.
 Again, on April 6, 1990, petitioners wrote
respondent stating that they delivered to
his counsel Philippine National Bank
Manager’s Check dated April 6, 1990 in
the amount of ₱100,000.00 payable to
him.
 In view of the cancellation of the contract
by petitioners, respondent filed with the
RTC a complaint against them for
specific performance and damages.
RTC:
In the evaluation of the evidence
presented by the parties as to the issue
as to who was ready to comply with his
obligation on the verbal agreement to
sell on March 23, 1990, shows that
plaintiff’s position deserves more weight
and credibility. First, the ₱100,000.00
that plaintiff paid whether as
downpayment or earnest money showed
that there was already a perfected
contract. Second, plaintiff was the first
to react to show his eagerness to push
through with the sale by sending
defendants the letter and reiterated the
same intent to pursue the sale in a letter
dated April 6, 1990. Third, plaintiff had
the balance of the purchase price ready
for payment. Defendants’ mere
allegation that it was plaintiff who did
not appear on March 23, 1990 is
unavailing. Defendants’ letters appear
to be mere afterthought.
CA:
CA affirmed the trial court’s judgment.
Issue:
Whether or not the document entitled
"Receipt for Partial Payment" signed by
both parties earlier mentioned is a
contract to sell or a contract of sale.
 Ruling: Contract to sell.
 Generally, the findings of fact of the
lower courts are entitled to great weight
and should not be disturbed except for
cogent reasons.14 Indeed, they should
not be changed on appeal in the absence
of a clear showing that the trial court
overlooked, disregarded, or
misinterpreted some facts of weight and
significance, which if considered would
have altered the result of the
PAGE/5
 case.1awphi1.n In the present case, we
find that both the trial court and the
Court of Appeals interpreted some
significant facts resulting in an
erroneous resolution of the issue
involved.
 In holding that there is a where by agreement the ownership is
perfected contract of sale, both courts
mainly relied on the earnest money given
by respondent to petitioners. They
invoked Article 1482 of the Civil Code
which provides 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 is a canon in the interpretation of
contracts that the words used therein
should be given their natural and
ordinary meaning unless a technical
meaning was intended. Thus, when
petitioners declared in the said "Receipt
for Partial Payment"– there can be no
other interpretation than that they
agreed to a conditional contract of sale,
consummation of which is subject only
to the full payment of the purchase price.
 A contract to sell is akin to a
conditional sale where the efficacy or
obligatory force of the vendor's obligation
to transfer title is subordinated to the
happening of a future and uncertain
event, so that if the suspensive condition
does not take place, the parties would
stand as if the conditional obligation had
never existed. The suspensive
condition is commonly full payment
of the purchase price.
 The differences between a contract to sell
and a contract of sale are well-settled in
jurisprudence. As early as 1951, in Sing
Yee v. Santos, we held that:
 x x x [a] distinction must be made
between a contract of sale in which title
passes to the buyer upon delivery of the
thing sold and a contract to sell x x x
reserved in the seller and is not to pass
until the full payment, of the purchase
price is made. In the first case, non-
payment of the price is a negative
resolutory condition; in the second case,
full payment is a positive suspensive
condition. Being contraries, their effect
in law cannot be identical. In the first
case, the vendor has lost and cannot
recover the ownership of the land sold
until and unless the contract of sale is
itself resolved and set aside. In the
second case, however, the title remains
in the vendor if the vendee does not
comply with the condition precedent of
making payment at the time specified in
the contract.
 In other words, in a contract to sell,
ownership is retained by the seller and is
not to pass to the buyer until full
payment of the price.
 In this case, the "Receipt for Partial
Payment" shows that the true agreement
between the parties is a contract to sell.
 It is true that Article 1482 of the Civil
Code provides that "Whenever earnest
money is given in a contract of sale, it
shall be considered as part of the price
and proof of the perfection of the
contract." However, this article speaks
of earnest money given in a contract of
sale. In this case, the earnest money
was given in a contract to sell. The
earnest money forms part of the
consideration only if the sale is
consummated upon full payment of the
purchase price. Now, since the earnest
money was given in a contract to sell,
Article 1482, which speaks of a contract
of sale, does not apply.
CASE # 5
NABUS (JULIE NABUS, MICHELLE
NABUS and BETTY
TOLERO), Petitioners vs. PACSON
(JOAQUIN PACSON and JULIA
PACSON), Respondents.
GR. No. 161318 November 25,
2009 – By Saniel
FACTS :
 The spouses Bate and Julie Nabus were
the owners of parcels of land with a total
area of 1,665 square meters, situated in
La Trinidad duly registered in their
names under TCT No. T-9697 of the
Register of Deeds of the Province of
Benguet.
 The property was mortgaged by the
Spouses Nabus to PNB, La Trinidad
Branch, to secure a loan in the amount
of ₱30,000.00.
 On February 19, 1977, the Spouses
Nabus executed a Deed of Conditional
Sale covering 1,000 square meters of the
1,665 square meters of land in favor of
respondents Spouses Pacson for a
consideration of ₱170,000.00, which was
duly notarized on February 21, 1977.
The consideration was to be paid :
1.That the sum of 13,000 more or
less, on or before February 21,1977- will
PAGE/6
 be paid directly to PNB-La Trinidad
Branch and which will form part of the
purchase price.
2. and that the balance - 17,500
remains as Spouses Nubus mortgage
balance and this amount will be paid by
Spouses Pacson at the rate of not less
than ₱3,000.00 a month beginning
March 1977, until the said mortgage
balance is fully liquidated, and that all
payments made by the Spouses Pacson
to the PNB,shall form part of the
consideration of this sale
3. and as soon as the mortgage
obligation with the PNB is fully paid,
then Spouses Pacson hereby obligates
himself, his heirs and assigns, to pay
the amount of not less than ₱2,000.00 a
month in favor of Spouses Nabus, his
heirs and assigns, until the full amount
of ₱170,000.00 is fully covered
 That, as soon as the full consideration of
this sale has been paid by Spouses
Pacson the corresponding transfer
documents shall be executed by Spouses
Nabus to the Spouses Pacson for the
portion sold.
 although the subject matter is now
subject of a civil case now pending before
the court and should Spouses Nabus be
defeated in the said civil case action,he
then hereby warrants that he shall
return the money paid by spouses
Pacson
 and so the parties agreed that it shall be
binding upon their heirs,successors or
assigns
 so pursuant to the Deed of Conditional
Sale, Spouses Pacson paid PNB the
amount of ₱12,038.86 on February 22,
1977 and ₱20,744.30 on July 17,
1978 for the full payment of the loan.
 Thereafter, Spouses Pacson took
possession of the subject property. They
constructed an 80 by 32-feet building
and a steel-matting fence around the
property to house their truck body-
building shop which they called the
"Emiliano Trucking Body Builder and
Auto Repair Shop."
 But before the payment of the balance of
the mortgage amount with PNB- Bate
Nabus died
 His surviving spouse Julie Nabus and
their daughter Michelle Nabus a minor,
executed a deed of extra judicial
settlement over the registered land
 However spouses Pacson continued to
pay the balance but not in installments
of 2000 as agreed upon but various
small amounts- spanning for a period of
7 years
 But the receipts showed that the total
sum paid by spouses pacson to spouses
nabus was 112,455.16 - leaving a
balance of 57,544.84
 Thus Julie Nabus approached Pacson to
ask for the full payment of the lot
 Pacson agreed to pay but told her to
return after 4 days, they will go over the
receipts, after 4 days Julie and Michelle
returned but Pacson sent them to
atty.Rillera for the execution of the Deed
of absolute sale, however atty Rillera
required Julie to return after 4 days and
bring with her the deed of extrajudicial
settlement and the transfer certificate in
the name of Julie and michelle.However
Julie did not return
 So Catalina Pacson went to Register of
deeds and asked for a copy of the title of
the land, she found out that it was still
in the name of Julie and Michelle Nabus.
 after a week Spouses Pacson heard a
humor that the lot was already sold to
Betty Tolero and that on March 22,1984
the gate to the repair shop of Spouses
Pacson was padlocked
 Thus Spouses Pacson filed with RTC a
complaint of annulment of the deed of
conditional sale issued in the name of
Julie and Michelle Nabus and anullment
of the deed of absolute sale in favor of
Betty Tolero
 However Julie and Michelle Nabus
alleged that Spouses Pacson did not
proceed with the conditional sale of the
subject property that instead Spouses
pacson wanted to convert the conditional
sale to contract of lease, since the
spouses pacson did not like that there
was a pending case in court and that
consequently Joaquin Pacson did not
continue to sign the document, hence
the second page of the document is
unsign and that it was their
understanding that spouses Pacson
would occupy the property as Lessee and
whatever amount paid by them would be
considered rental and because of that
Julie Nabus was free to sell the property.
 RTC favored spouses Pacson contending
that the deed of conditional sale was not
PAGE/7
 converted to a contract of lease because
the original copy of the the contract
showed that all the pages were signed by
all of the parties and that the failure of
Jouquin Pacson to sign the second page
of one of the carbon copies of the
contract was by sheer inadvertence. All
the receipts of payment expressly stated
that they were made in payment of the
lot,and not a single receipt showed
payment for rentals
 CA affirmed the trial courts decision,
thus Julie and Michelle Nabus and Betty
Tolero filed a petition.(see ruling of RTC)
ISSUE :
(1) Whether or not the deed of
conditional sale was converted into
a contract of lease ( so Julie and
Michelle Nabus was free to sell the
property)
(2) Whether or not the deed of
Conditional sale was a contract of
sale.
RULING :
 The court ruled that the deed of
Conditional Sale entered into by the
spouses Pacson and the Spouses Nabus
was not converted in a contract of lease.
The 364 receipts issued to the spouses
pacson contained a phrase as partial
payment of the lot - evidencing sale
under the contract and not the lease of
the property.
 The court held that the contract entered
into by spouses pacson and spouses
nabus was a contract to sell and not a
contract of sale.
 That a contract of sale is that on of the
contracting parties obligates himself to
transfer the ownership of and deliver a
determinate thing, and the other to pay
therefor a price certain in money or its
equivalent, while
 -Contract of sale - is that the ownership
is by agreement, reserved in the vendor
and is not to pass to the vendee until full
payment of the purchase price
 Thus for non payment of the purchase
price renders the contract to sell
ineffective and without force and effect
and thus a cause of action for specific
performance does not arise.
 Since the contract to sell was without
force and effect Juliea nd Michelle Nabus
can validly conveyed the subject property
to another buyer- (herein Betty Tolero)
through contract of absolute sale
 However Julie and Michelle Nabus are
ordered to reimburse Spouses Pacson.
CASE #6
OLIVAREZ REALTY CORPORATION
and sa DR. PABLO R.
OLIVAREZ, Petitioner, vs.
BENJAMIN CASTILLO, Respondent.
G.R. No. 196251 July 9, 2014 –
By Escano
FACTS:
 Castillo was the owner of a parcel of land
covered by TCT 19972. The Philippine
Tourism Authority allegedly claimed
ownership of the same parcel of land
based on TCT 18493.
 Castillo and Olivarez Realty Corporation,
represented by Dr. Pablo Olivarez,
entered into a contract of conditional
sale over the property. The details were
as follows:
1. Under the deed of conditional sale,
Castillo agreed to sell his property
to Olivarez Realty; with Olivarez
Realty delivering the dow
npayment and the rest to be paid
in 30 equal monthly installments
every 8th of the month beginning
in the month that the parties
would receive a decision voiding
the PTA’s title to the property.
2. Under the same deed, Olivarez
Realty will file the action against
PTA with full assistance of
Castillo; and that should the
petition be denied, Castillo shall
reimburse all the amounts paid by
Olivarez Realty.
3. Under the same contract, Olivarez
Realty undertook to pay the
legitimate tenants of the land
disturbance compensation, while
Castillo undertook to clear the
land of the tenants within 6
months from the signing of the
deed; that should Castillo fail to
clear the land within 6 months,
Olivarez Realty may suspend its
monthly downpayment until the
tenants vacate the property.
4. The parties agreed that Olivarez
Realty Corporation may
immediately occupy the property
upon signing of the deed. Should
the contract be cancelled, Olivarez
Realty Corporation agreed to
return the property’s possession
to Castillo and forfeit all the
PAGE/8
 improvements it may have
introduced on the property.
 Olivarez Realty failed to comply with the
conditions, to wit: a) pay the full
purchase price; b) failed to file any action
against PTA; c) failed to clear the land of
the tenants nor paying them disturbance
compensation. For breaching the
contract, Castillo prayed for rescission of
contract under Art. 1191 of Civil Code,
plus damages.
 In their defense, Olivarez Realty alleged
that Castillo failed to fully assist in filing
the action against PTA; that Castillo
failed to clear the property of the tenants
within 6 months from the signing of the
deed. Thus, they had all the legal right to
withhold the subsequent payments to
fully pay the purchase price.
 RTC and CA ruled that Olivarez Realty
breached the contract and ordered the
rescission of the sale plus damages.
ISSUE:
1. WON rescission of the contract is
proper; WON the contract was a
Contract to Sell or a Contract of
Conditional Sale
RULING:
 NO. SC characterized the contract as a
contract to sell, not a contract of
conditional sale. In a contract of
conditional sale, the buyer automatically
acquires title to the property upon full
payment of the purchase price. This
transfer of title is “by operation of law
without any further act having to be
performed by the seller.” In a contract to
sell, transfer of title to the prospective
buyer is not automatic. “The prospective
seller must convey title to the property
through a deed of conditional sale.” The
distinction is important to determine the
applicable laws and remedies in case a
party does not fulfill his or her
obligations under the contract. In
contracts of conditional sale, our laws on
sales under the Civil Code of the
Philippines apply. On the other hand,
contracts to sell are not governed by our
law on sales but by the Civil Code
provisions on conditional obligations.
 Specifically, Article 1191 of the Civil
Code on the right to rescind reciprocal
obligations does not apply to contracts to
sell. Failure to fully pay the purchase
price in contracts to sell is not the breach
of contract under Art. 1191. Failure to
fully pay the purchase price is merely an
event which prevents the seller’s
obligation to convey title from acquiring
binding force. This is because there can
be no rescission of an obligation that is
still nonexistent, the suspensive
condition (the condition of having the
buyer pay the full purchase price) having
not happened.
 In this case, Castillo reserved his title to
the property and undertook to execute a
deed of absolute sale upon Olivarez
Realty Corporation’s full payment of the
purchase price. Since Castillo still has to
execute a deed of absolute sale to
Olivarez Realty Corporation upon full
payment of the purchase price, the
transfer of title is not automatic. As this
case involves a contract to sell, Article
1191 of the Civil Code of the Philippines
does not apply. The contract to sell is
instead cancelled, and the parties shall
stand as if the obligation to sell never
existed.
 SC cancelled the deed of conditional sale.
Olivarez Realty was ordered to return to
Castillo the possession of property,
together with all improvements that it
introduced. Olivarez Realty was also
ordered to pay moral damages,
exemplary damages, and attorney’s fees
to Castillo.
CASE # 7
ACE FOODS, INC., vs.MICRO
PACIFIC TECHNOLOGIES CO.,
LTD.
G.R. No. 200602 December 11,
2013 - By Criador
FACTS:
 ACE Foods is a domestic corporation
engaged in the trading and distribution
of consumer goods in wholesale and
retail bases, while Micropacific
Technologies Co., LTD. (MTCL) is one
engaged in the supply of computer
hardware and equipment.
 On September 26, 2001, MTCL sent a
letter-proposal for the delivery and sale
of the computer 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.
 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]
PAGE/9
 WARRANTY : One (1) year on parts and
services. Accessories not included in
warranty.
 On October 29, 2001, ACE Foods
accepted MTCL’s proposal and issued a
purchase order for the computer
products amounting to ₱646,464.00. On
March 4, 2002, MTCL delivered the said
products to ACE Foods as reflected in the
invoice receipt. The fine print of the
invoice states, "the 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" (title
reservation stipulation). After delivery,
the subject products were then installed
and configured in ACE Foods’s premises.
However, ACE Foods did not pay MTCL
despite demands. Instead of paying the
purchase price, ACE Foods sent MTCL a
Letter dated September 19, 2002, stating
that it has been returning the computer
products to MTCL through its sales
representative Mr. Mark Anteola who has
agreed to pull out the said products, but
had failed to do so up to now.
 On October 16, 2002, ACE Foods filed a
Complaint against MTCL before the RTC,
praying that the latter pull the computer
productsout of its premises 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 Foods’s
technicians on how to use and maintain
the subject products. ACE Foods
likewise claimed that the subject
products MTCL delivered are defective
and not working.
 For its part, MTCL answered that (a.) 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 Foods’s premises.
Thereafter, MTCL even conducted a
training course for ACE Foods’s
representatives/employees. (b.) that
there was actually no agreement as to
the purported "after delivery services."
(c.) MTCL posited that ACE Foods
refused and failed to pay the purchase
price for the subject products despite the
latter’s 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.
The RTC :
 The RTC favored ACE foods and directed
MTCL to remove the subject products
from ACE Foods’s premises and pay
actual damages and attorney fees.
 The RTC ruled that this instance was a
contract to sell 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. Since
title remained with MTCL, the RTC
therefore directed it to withdraw the
subject products from ACE Foods’s
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.
The CA:
 The CA reversed and set aside the RTC’s
ruling, ordering ACE Foods to pay MTCL
the amount of ₱646,464.00, plus legal
interest
 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 Foods’s
premises. Since MTCL had already
complied with its obligation, ACE Foods’s
corresponding obligation arose and was
then duty bound to pay the agreed
purchase price within thirty days. 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. The CA also dismissed ACE Foods’s
claim regarding MTCL’s 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.
ISSUE:
Should ACE Foods pay MTCL the
purchase price for the subject
products?
HELD:
 Yes, it should pay MTCL.
 A contract is what the law defines it to
be, not what the contracting parties call
it. In the interpretation of an
instrument, the intention of the
parties is primordial and is to be
pursued.
P A G E / 10
 The very essence of a contract of sale
is the transfer of ownership in
exchange for a price paid or promised.
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.
 A contract of sale is a consensual
contract. The sale is perfected by mere
consent. No form is required for its
validity. Upon perfection of the contract,
the parties may reciprocally demand
performance.
 A contract to sell is 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.
 The Court agrees with the CA that the
parties have agreed to a contract of
sale and not to a contract to sell. Since
it is consensual in 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 latter’s proposal to
sell the subject products in
consideration of the purchase price of
₱646,464.00. 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.
 The Court dispels the notion that the
stipulation anent MTCL’s 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.
The said stipulation did not novate the
contract of sale between the parties
which.
 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.
 In the present case, the title reservation
stipulation appearing in the Invoice
Receipt modify or supersede 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 novation 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. Absent
any clear indication that the title
reservation stipulation was actually
agreed upon, the Court deems 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. Hence,
ACE Foods’s obligation to pay the
purchase price as well as to accept
the delivery of the goods, remains
enforceable and subsisting.
 Ace Foods claim for rescission based on
the breach of delivery services cannot
stand since it was not adequately
proven in this case. ACE Foods failed to
prove its allegations of breach. Hence,
the same cannot be sustained.
P A G E / 11
 In summary, the court held that what
the parties entered into was a contract
of sale, perfected upon consent and
reciprocally demandable on such
perfection. They cannot rescind the
contract since they could not prove
breach in the delivery services
CASE # 9
Ida Labagala vs Nicolasa
Santiago
GR No. 132305 Dec 4, 2001
-By
Facts:
 Jose Santiago owned a land covered by
TCT No.64729 located in Sta. Cruz,
Manila. The latter’s siblings, Nicolasa
and Amanda, sued Jose for recovery of
2/3 share of the said property alleging
that Jose fraudulently registered it in his
name alone. April 20, 1981, the trial
court in that case decided in favor of the
sisters, recognizing their right of owners.
Jose Died on Feb. 6, 1984. On August 5,
1987, respondents filed a complaint for
recovery of title, ownership, and
possession against Ida C. Labagala,
before the RTC of Manila, to, recover
from her the 1/3 portion of said property
pertaining to Jose but which came into
her sole possession upon Jose's death
alleging that the latter’s hare now
belongs to them by operation of law
because they were the only legal heirs.
They claimed that the sale made on the
property by Jose in behalf of Labagala
was executed through machination and
with malicious intent by the latter. That
the said deed of sale was a forgery
because Jose only affixed his
thumbmark which is absurd since the
latter was college graduate and that he
always signs with his full name.
Furthermore, it was highly improbable
for Labagala to have paid the
consideration of 150k since the latter is
unemployed and without visible means
of livelihood at the time of sale. And that
Lagabala only registered the Deed of Sale
only on January, 26, 1987, 8 yrs after
the execution of the sale.
 Petitioner claimed that her true name is
not Ida C. Labagala, as claimed by
respondent but Ida C. Santiago and that
she claimed to be the daughter of Jose
and thus, entitled to a share of the
property and that the purported sale of
the property was in fact a donation to
her. She also claims that Jose never
acknowledged Nicolasa and Armanda’s
claim over the property. Petitioner also
revealed that respondents had in 1985
filed two ejectment cases against her and
other occupants of the property. The first
was decided in her and the other
defendants' favor, while the second was
dismissed. She recognized respondent’s
ownership of 2/3 of the property as
decreed by the RTC but caused to issue
the title in her name alone because
respondents Nicolasa and Armanda took
no steps to prevent property from being
sold by public auction for failure to pay
realty taxes.
RTC’s Ruling : October 17, 1990, the trial
court ruled in favor of Ida. The RTC also
recognized the sibling’s share up to 1/3 each
while the remaining 1/3 is adjudged and
adjudicated to Ida as owner and entitled to
possession. RTC, while there was indeed no
consideration for the deed of sale executed
by Jose in favor of petitioner, said deed
constitutes a valid donation. Even if it were
not, petitioner would still be entitled to
Jose's 1/3 portion of the property as Jose's
daughter evidenced by the decisions in the 2
ejectment cases and Jose’s income tax
return which listed Ida as his daughter.
Nicolasa and Armanda knew of petitioner's
existence and her being the daughter of
Jose, per records of the earlier ejectment
cases they filed against petitioner.
CA’s Ruling :The CA reversed the decision of
the RTC.
Ida’s Argument
 Ida argued that the RTC was correct in
ruling that she adduced evidence to
prove her filiation to Jose Santiago and
the Nicolasa and Armanda has
previously considered her as the
daughter of Jose. She asserts that her
identification as Jose's daughter in his
ITR outweighs the "strange" answers he
gave when he testified in a Civil Case.
Petitioner asserts that respondents
cannot impugn her filiation collaterally,
citing the case of Sayson v. Court of
Appeals12 in which we held that "(t)he
legitimacy of (a) child can be impugned
only in a direct action brought for that
purpose, by the proper parties and
within the period limited by
law." Petitioner also cites Article 263 of
13
P A G E / 12
 the Civil Code in support of this
contention.\
Respondent’s argument
 Respondents contend that petitioner is
not the daughter of Jose, per her birth
certificate that indicates her parents as
Leo Labagala and Cornelia Cabrigas.
They further argued that Art 263 of the
CC does not apply since this is not an
action impugning a child's legitimacy but
one for recovery of title, ownership, and
possession of property .
Issue:
WON Nicolasa and Armanda may
impugn Ida’s filiation for recovery of
title and possession and WON Ida is
entitled to ½ portion of the property
co-owned by Jose, Nicolasa and
Armanada through SALE or
DONATION?
Ruling:
 On the first issue, the SC ruled the Art
263 of the CC is misplaced. The said
article provides that The action to
impugn the legitimacy of the child
shall be brought within one year from
the recording of the birth in the Civil
Register, if the husband should be in
the same place, or in a proper case,
any of his heirs, If he or his heirs are
absent, the period shall be eighteen
months if they should reside in the
Philippines; and two years if abroad.
Article 263 refers to an action to impugn
the legitimacy of a child, to assert and
prove that a person is not a man's child
by his wife. Nicolasa and Armanda
asserts not merely that Ida is not a
legitimate child of Jose, but that she is
not a child of the latter at all. The present
action is one for recovery of title and
possession, and thus outside the scope
of Article 263 on prescriptive periods.
Reliance on the case of Sayson is likewise
improper because what was challenged
the Sayson vs CA is the validity of the
adoption and the legitimate status of
Doribel Sayson. But in the case at bar,
what was assailed is not Ida’s legitimate
status but are asserting that Ida is not
at all the child of Jose. Ida’s status that
she is not the daughter of Jose Santiago
was evidenced by her Birth Certificate.
Ida only presented her testimony and her
baptismal certificate but this document
is not conclusive proof, more so are the
entries made in an ITR which only shows
the income tax has been paid. But still
Ida asserts that she has been using
Santiago’s name for all her life but this
would fail because the use of a family
name does not establish pedigree.
During Ida’s testimony before the trial
court, Ida denied knowing Cornelia
Cabrigas, who was listed as the mother
in the birth certificate of Ida Labagala. In
her petition before this Court, however,
she stated that Cornelia is the sister of
her mother, Esperanza. It appears that
petitioner made conflicting statements
that affect her credibility and could cast
along shadow of doubt on her claims of
filiation. Hence, Ida is not the daughter
of Jose but the daughter of Leon
Labagala and Cornelia Cabriagas as
shown in her Birth Certificate.
 On the issue on the validity of the Deed
of Sale, the SC ruled that said deed is not
a valid sale. Jose did not have the right
to transfer ownership of the entire
property to Ida since 2/3 thereof
belonged to his sisters. Petitioner could
not have given her consent to the
contract, being a minor at the
time. Consent of the contracting parties
is among the essential requisites of a
contract, including one of sale, absent
which there can be no valid contract.
Moreover, petitioner admittedly did not
pay any centavo for the property, which
makes the sale void. Article 1471 of the
Civil Code provides that if the price is
simulated, the sale is void, but the act
may be shown to have been in reality a
donation. Neither is the Deed on of a
valid deed of donation. As explained by
the CA, even if the deed is ganuine, it
cannot be a valid donation. I lacks
acceptance of the done required by Art
725 of the CC. Being a minor in 1979,
acceptance of the donation should have
been made by her father.
CASE # 10
JULIAN FRANCISCO (Substituted by
his Heirs, namely: CARLOS ALTEA
FRANCISCO;
the heirs of late ARCADIO FRANCISCO,
namely: CONCHITA SALANGSANG-
FRANCISCO (surviving spouse),
and his children namely: TEODULO S.
FRANCISCO, EMILIANO S. FRANCISCO,
MARIA THERESA S. FRANCISCO,
PAULINA S. FRANCISCO, THOMAS S.
FRANCISCO;
P A G E / 13
 PEDRO ALTEA FRANCISCO; CARINA
FRANCISCO-ALCANTARA; EFREN
ALTEA FRANCISCO; DOMINGA LEA
FRANCISCO-REGONDON;
BENEDICTO ALTEA FRANCISCO and
ANTONIO ALTEA FRANCISCO),
petitioner,
vs.
PASTOR HERRERA, respondent
G.R. No. 139982 November 21,
2002
Facts:
 Eligio Herrera, Sr., the father of
respondent, was the owner of two parcels
of land, one consisting of 500 sq. m. and
another consisting of 451 sq. m., covered
by Tax Declaration (TD) Nos. 01-00495
and 01-00497, respectively. Both were
located at Barangay San Andres, Cainta,
Rizal.3
 On January 3, 1991, petitioner bought
from said landowner the first parcel,
covered by TD No. 01-00495, for the
price of P1,000,000, paid in installments
from November 30, 1990 to August 10,
1991
 On March 12, 1991, petitioner bought
the second parcel covered by TD No. 01-
00497, for P750,000.
Contention of Herrera:
 Contending that the contract price for
the two parcels of land was grossly
inadequate, the children of Eligio, Sr.,
namely, Josefina Cavestany, Eligio
Herrera, Jr., and respondent Pastor
Herrera, tried to negotiate with petitioner
to increase the purchase price.
 When petitioner refused, herein
respondent then filed a complaint for
annulment of sale, with the RTC of
Antipolo City.
 In his complaint, respondent claimed
ownership over the second parcel, which
is the lot covered by TD No. 01-00497,
allegedly by virtue of a sale in his favor
since 1973. He likewise claimed that the
first parcel, the lot covered by TD No. 01-
00495, was subject to the co-ownership
of the surviving heirs of Francisca A.
Herrera, the wife of Eligio, Sr.,
considering that she died intestate on
April 2, 1990, before the alleged sale to
petitioner.
 Finally, respondent also alleged that the
sale of the two lots was null and void on
the ground that at the time of sale, Eligio,
Sr. was already incapacitated to give
consent to a contract because he was
already afflicted with senile dementia,
characterized by deteriorating mental
and physical condition including loss of
memory.
Answer of Francisco:
 In his answer, petitioner as defendant
below alleged that respondent was
estopped from assailing the sale of the
lots. Petitioner contended that
respondent had effectively ratified both
contracts of sales, by receiving the
consideration offered in each
transaction.
RTC Ruling:
 On November 14, 1994, the Regional
Trial Court handed down its decision,
the dispositive portion of which reads:
1. The deeds of sale of the properties
covered by Tax Dec. Nos. 01-00495
and 01-00497 are declared null and
void;
2. The defendant is to return the lots
in question including all
improvements thereon to the plaintiff
and the plaintiff is ordered to
simultaneously return to the
defendant the purchase price of the
lots sold totalling to P750,000.00 for
lot covered by TD 01-00497 and
P1,000,000.00 covered by TD 01-
00495;
3. The court also orders the
defendant to pay the cost of the suit.
<>4. The counter-claim of the
defendant is denied for lack of merit.
 Petitioner then elevated the matter to the
Court of Appeals in CA-G.R. CV No.
47869. On August 30, 1999, however,
the appellate court affirmed the decision
of the Regional Trial Court, thus:
 WHEREFORE, premises considered, the
decision appealed from is hereby
AFFIRMED in toto. Costs against
defendant-appellant.
CA RULING
Hence, this petition for review anchored on
the following grounds:
I. THE COURT OF APPEALS
COMPLETELY IGNORED THE BASIC
DIFFERENCE BETWEEN A VOID
AND A MERELY VOIDABLE
CONTRACT THUS MISSING THE
ESSENTIAL SIGNIFICANCE OF THE
ESTABLISHED FACT OF
RATIFICATION BY THE
RESPONDENT WHICH
EXTINGUISHED WHATEVER BASIS
RESPONDENT MAY HAVE HAD IN
P A G E / 14
 HAVING THE CONTRACT AT BENCH by ratification. There are two types of
ANNULLED. void contracts: (1) those where one of the
essential requisites of a valid contract as
II. THE DECISION OF THE COURT provided for by Article 131810 of the Civil
OF APPEALS ON "SENILE Code is totally wanting; and (2) those
DEMENTIA": declared to be so under Article 140911 of
the Civil Code. By contrast, a voidable or
A. DISREGARDED THE annullable contract is one in which the
FACTUAL BACKGROUND OF essential requisites for validity under
THE CASE; Article 1318 are present, but vitiated by
want of capacity, error, violence,
B. WAS CONTRARY TO intimidation, undue influence, or deceit.
ESTABLISHED
 Article 1318 of the Civil Code states that
JURISPRUDENCE; AND
no contract exists unless there is a
concurrence of consent of the parties,
C. WAS PURELY
object certain as subject matter, and
CONJECTURAL, THE
cause of the obligation established.
CONJECTURE BEING
ERRONEOUS. Article 1327 provides that insane or
demented persons cannot give consent
III. THE COURT OF APPEALS WAS IN to a contract. But, if an insane or
GROSS ERROR AND IN FACT demented person does enter into a
VIOLATED PETITIONERS’ RIGHT TO contract, the legal effect is that the
DUE PROCESS WHEN IT RULED contract is voidable or annullable as
THAT THE CONSIDERATION FOR specifically provided in Article 1390. 1
THE QUESTIONED CONTRACTS  In the present case, vendor Eligio, Sr.
WAS GROSSLY INADEQUATE. 6 entered into an agreement with
petitioner, but that the former’s capacity
ISSUE: to consent was vitiated by senile
dementia. Hence, it was ruled that the
Whether the assailed contracts of sale void assailed contracts are not void or
or merely voidable and hence capable of inexistent per se; rather, these are
being ratified? contracts that are valid and binding
unless annulled through a proper action
RULING: The 2 contract of sale is filed in court.
declared valid.
 An annullable contract may be rendered
perfectly valid by ratification, which can
 A void or inexistent contract is one which
be express or implied. Implied
has no force and effect from the very ratification may take the form of
beginning. Hence, it is as if it has never accepting and retaining the benefits of a
been entered into and cannot be contract. As in this case, respondent
validated either by the passage of time or negotiated for the increase of the
purchase price while receiving the
installment payments from the
petitioner. Clearly, respondent was
agreeable to the contract. Further, there
is no showing that respondent returned
the payments or made an offer to do so.
This bolsters the view that indeed there
was ratification.
 Nor can we find for respondent’s
argument that the contracts were void as
Eligio, Sr., could not sell the lots in
question as one of the properties had
already been sold to him, while the other
was the subject of a co-ownership among
the heirs of the deceased wife of Eligio,
Sr. Note that it was found by both the
trial court and the Court of Appeals that
Eligio, Sr., was the "declared owner" of
said lots. This finding is conclusive on
us. As declared owner of said parcels of
land, it follows that Eligio, Sr., had the
right to transfer the ownership thereof
under the principle of jus disponendi.
 In sum, the appellate court erred in
sustaining the judgment of the trial court
that the deeds of sale of the two lots in
question were null and void.
CASE # 11
PARAGAS VS. HEIRS OF BALACANO
G.R. No. 168220. August 31, 2005
FACTS:
 Gregorio Balacano was the owner of Lot
1175-E and F located at Blauartem
Santiago City, Isabela. Gregorio and his
wife Lorenza had three children, namely:
Domingo, Catalino and Alfredo.
 Purportedly a little shy of a week prior to
his death, on July 22, 1996, Gregorio
P A G E / 15
 sold a portion of Lot 1175-F and the
whole Lot 1175-E to the Spouses Rudy
and Corazon Paragas for P500,000.00.
This sale appeared in a deed of absolute
sale notarized by Atty. Alexander V. de
Guzman, Notary Public for Santiago City,
on the same date – July 22, 1996 – and
witnessed by Antonio Agcaoili ("Antonio")
and Julia Garabiles ("Julia"). Gregorio’s
certificates of title over Lots 1175-E and
1175-F were consequently cancelled and
new certificates of title were issued in
favor of the Spouses Paragas.
 On October 17, 1996 Spouses Paragas
then sold a portion of Lot 1175-E to one
of Gregorio’s children, Catalino, for
P60,000.00.
 On October 22, 1996, Domingo’s
children filed for a complaint for
annulment of sale and partition against
Catalino and the Spouses Paragas. They
asked for the nullification of the deed of
sale executed by Gregorio and the
partition of Lots 1175-E and 1175-F.
They likewise asked for damages.
ALLEGATIONS OF THE HEIRS OF
DOMINGO:
 In asking for the nullification of deed of
sale, they alleged that:
(1) their grandfather Gregorio could not
have appeared before the notary
public on July 22, 1996 at Santiago
City because he was then confined at
the Veterans Memorial Hospital in
Quezon City;
(2) at the time of the alleged execution of
the deed of sale, Gregorio was
seriously ill, in fact dying at that
time, which vitiated his consent to
the disposal of the property; and
(3) Catalino manipulated the execution
of the deed and prevailed upon the
dying Gregorio to sign his name on a
paper the contents of which he never
understood because of his serious
condition.
 Alternatively, they alleged that assuming
Gregorio was of sound and disposing
mind, he could only transfer a half
portion of Lots 1175-E and 1175-F as the
other half belongs to their grandmother
Lorenza who predeceased Gregorio – they
claimed that Lots 1175-E and 1175-F
form part of the conjugal partnership
properties of Gregorio and Lorenza.
 Finally, they alleged that the sale to the
Spouses Paragas covers only a 5-hectare
portion of Lots 1175-E and 1175-F
leaving a portion of 6,416 square meters
that Catalino is threatening to dispose.
DEFENDANTS’ MOTION TO DISMISS:
 Defendants Catalino and the Spouses
Paragas moved to dismiss the complaint
on the following grounds:
(1) The plaintiffs have no legal capacity -
the Domingo’s children cannot file
the case because Domingo is still
alive, although he has been absent
for a long time;
(2) An indispensable party is not
impleaded – that Gregorio’s other
son, Alfredo was not made a party to
the suit; and
(3) The complaint states no cause of
action – that Domingo’s children
failed to allege a ground for the
annulment of the deed of sale; they
did not cite any mistake, violence,
intimidation, undue influence or
fraud, but merely alleged that
Gregorio was seriously ill.
Domingo’s children opposed this motion
RTC: Denied the defendant’s motion to
dismiss, but directed the plaintiffs-appellees
to amend the complaint to include Alfredo as
a party. Alfredo was subsequently declared
as in default for his failure to file his Answer
to the Complaint.
DEFENDANT’S ANSWER:
 Defendants denied the allegations in the
complaint and claimed that:
(1) the deed of sale was actually
executed by Gregorio on July 19 (or
18), 1996 and not July 22, 1996
(2) the Notary Public personally went to
the Hospital in Bayombong, Nueva
Vizcaya on July 18, 1996 to notarize
the deed of sale already subject of a
previously concluded covenant
between Gregorio and the Spouses
Paragas
(3) at the time Gregorio signed the deed,
he was strong and of sound and
disposing mind
(4) Lots 1175-E and 1175-F were
Gregorio’s separate capital and the
inscription of Lorenza’s name in the
titles was just a description of
Gregorio’s marital status
(5) the entire area of Lots 1175-E and
1175-F were sold to the Spouses
Paragas.
P A G E / 16
 Plaintiff Nanette testified to prove the
allegations in their complaint, stating
that Gregorio was brought to the hospital
in Nueva Vizcaya and stayed there until
the afternoon of July 19, 1996. Gregorio,
who was then very weak and could no
longer talk was transferred in the
afternoon of July 19, 1996 to the
Veteran’s Hospital in Quezon City where
he died on July 28, 1996. She claimed
that Gregorio could not have signed the
deed of sale, a she stayed at the hospital
with Gregorio and saw no visitors on July
19.
 Defendants presented the Notary Public
de Guzman and the instrumental
witnesses, who claimed that they went to
the hospital in Nueva Vizcaya on July 18,
and that after being read and explained
the contents of the deed to Gregorio and
after receiving the money from Rudy
Paragas, Gregorio signed the deed of
sale. He described Gregorio as still
strong but sickly, who got up from the
bed with help.
CA:
 Declared the deed of sale null and void
purportedly executed by Gregorio in
favor of the Spouses Paragas, noting that
at the time of the execution of the deed,
Gregorio was ill. The CA also found the
explanations of Atty. De Guzman as
justifications for a lie, stating that “The
Court cannot imagine an attorney to
undertake to travel to another province to
notarize a document when he must
certainly know, being a lawyer and by all
means, not stupid, that he has no
authority to notarize a document in that
province.”
 The CA also ruled that intention to sell is
not actual selling. Enough time has
lapsed when Gregorio allegedly informed
Paragas that he will sell his land him to
the time Gregorio was brought to the
hospital (around 2-3 weeks, actually).
And had there been meeting of the minds
between both parties regarding the sale,
surely Gregorio would have immediately
returned to the office of Atty. De
Guzman to execute the deed of sale.
Because of the seriousness of his
illness, it is not expected that
Gregorio Balacano would be
negotiating a contract of sale. Thus,
Rudy Paragas negotiated with Catalino
Balacano, the son of Gregorio Balacano
with whom the latter was staying.
ISSUE:
1. WON there have been a perfected and
partially executed contract of sale over
the lots prior to the signing of the deed of
sale?
HELD:
NO. Atty. De Guzman’s testimony that
there was prior agreement between
Gregorio and the Spouses Paragas on the
sale of the lots does not conclusively
establish the meeting of the minds
between Gregorio and the Spouses
Paragas on the price or consideration for
the sale of lots. There is no conclusive
proof of the partial execution of the
contract because the only evidence the
plaintiffs-appellants presented to prove
this claim was Atty. de Guzman’s
testimony, which is hearsay and thus,
has no probative value.
2. WON Gregorio gave an intelligent
consent to the sale of the aforementioned
lots when he signed the deed of sale?
HELD:
NO. It is not disputed that when Gregorio
signed the deed of sale, Gregorio was
seriously ill, as he in fact died a week
after the deed’s signing. Gregorio’s death
was neither sudden nor immediate; he
fought at least a month-long battle
against the disease until he succumbed
to death on July 22, 1996. Given that
Gregorio purportedly executed a deed
during the last stages of his battle
against his disease, we seriously doubt
whether Gregorio could have read, or
fully understood, the contents of the
documents he signed or of the
consequences of his act. There was
likewise no conclusive evidence that the
contents of the deed were sufficiently
explained to Gregorio before he signed
the deed of sale, as the evidence of the
defendants were the testimonies of Atty.
De Guzman which the Court does not
find to be credible.
3. WON there was a perfected deed of sale?
HELD:
NO.Article 24 of the Civil Code tells us
that in all contractual, property or other
relations, when one of the parties is at a
disadvantage on account of his moral
dependence, ignorance, indigence,
mental weakness, tender age or other
P A G E / 17
 handicap, the courts must be vigilant for
his protection.
The CA was correct in finding that
Gregorio’s consent to the sale of the lots
was absent, making the contract null
and void. Consequently, the spouses
Paragas could not have made a
subsequent transfer of the property to
Catalino Balacano. Indeed, nemo dat
quod non habet. Nobody can dispose of
that which does not belong to him.
CASE # 12
Heirs of Reyes vs Mijares
410 SCRA 97
-By Ana Leah
Facts:
 Vicente and Ignacia were married in
1960, but had been separated de facto
since 1974.Sometime in 1984, Ignacia
learned that on March 1, 1983, Vicente
sold Lot No. 4349-B-2 to respondent
spouses Cipriano and Florentina Mijares
for P40, 000.00. As a consequence
thereof, TCT No. 205445 was cancelled
and TCT No. 306087 was issued on April
19, 1983 in the name of respondent
spouses. She likewise found out that
Vicente filed a petition for administration
and appointment of guardian with the
Metropolitan Trial Court of Quezon City,
Branch XXI. Vicente misrepresented
therein that his wife, Ignacia, died on
March 22, 1982, and that he and their 5
minor children were her only heirs. On
September 29, 1983, the court appointed
Vicente as the guardian of their minor
children. Subsequently, in its Order
dated October 14, 1983, the court
authorized Vicente to sell the estate of
Ignacia.
On August 9, 1984, Ignacia, through her CA decision: On January 26, 2000, the
counsel, sent a letter to respondent Court of Appeals reversed and set aside
spouses demanding the return of her ½ the decision of the trial court. It ruled
share in the lot. Failing to settle the that notwithstanding the absence of
matter amicably, Ignacia filed on June 4, Ignacia’s consent to the sale, the same
1996 a complaint for annulment of sale must be held valid in favor of
against respondent spouses. The respondents because they were innocent
complaint was thereafter amended to purchasers for value.
include Vicente Reyes as one of the
defendants. Issue:
(1) What is the status of the sale of
Petitioner’s contention: the sale be Lot No. 4349-B-2 to respondent
declared void in its entirety and that the spouses?
respondents be ordered to reimburse to
her the rentals they collected on the (2) Assuming that the sale is
apartments built on Lot No. 4349-B-2 annullable, should it be annulled in
computed from March 1, 1983. its entirety or only with respect to the
share of Ignacia?
Respondent’s contention: In their
(3) Are respondent spouses
answer, Mejares spouses claimed that
purchasers in good faith?
they are purchasers in good faith and
that the sale was valid because it was
Held:
duly approved by the court. Vicente
 First Issue. Articles 166 and 173 of the
Reyes, on the other hand, contended
Civil Code,29 the governing laws at the
that what he sold to the spouses was
time the assailed sale was contracted,
only his share in Lot No. 4349-B-2,
provide:
excluding the share of his wife, and that
Art.166. Unless the wife has been
he never represented that the latter was
declared a non compos mentis or a
already dead. He likewise testified that
spendthrift, or is under civil interdiction
respondent spouses, through the
or is confined in a leprosarium, the
counsel they provided him, took
husband cannot alienate or encumber
advantage of his illiteracy by filing a
any real property of the conjugal
petition for the issuance of letters of
partnership without the wife’s consent. If
administration and appointment of
she refuses unreasonably to give her
guardian without his knowledge.
consent, the court may compel her to
grant the same…
RTC decision: On February 15, 1990, the
court a quo rendered a decision
Art. 173. The wife may, during the
declaring the sale of Lot No. 4349-B-2
marriage and within ten years from the
void with respect to the share of Ignacia.
transaction questioned, ask the courts
It held that the purchase price of the lot
for the annulment of any contract of the
was P110, 000.00 and ordered Vicente to
husband entered into without her
return ½ thereof or P55, 000.00 to
consent, when such consent is required,
respondent spouses.
or any act or contract of the husband
P A G E / 18
which tends to defraud her or impair her
interest in the conjugal partnership
property. Should the wife fail to exercise
this right, she or her heirs after the
dissolution of the marriage, may demand
the value of property fraudulently
alienated by the husband.
Pursuant to the foregoing provisions, the
husband could not alienate or encumber
any conjugal real property without the
consent, express or implied, of the wife
otherwise, the contract is voidable.
Indeed, in several cases the Court had
ruled that such alienation or
encumbrance by the husband is void.
The better view, however, is to consider
the transaction as merely voidable and
not void.This is consistent with Article
173 of the Civil Code pursuant to which
the wife could, during the marriage and
within 10 years from the questioned
transaction, seek its annulment.
In the case at bar, there is no dispute
that Lot No. 4349-B-2, is a conjugal
property having been purchased using
the conjugal funds of the spouses during
the subsistence of their marriage. It is
beyond cavil therefore that the sale of
said lot to respondent spouses without
the knowledge and consent of Ignacia is
voidable. Her action to annul the March
1, 1983 sale which was filed on June 4,
1986, before her demise is perfectly
within the 10 year prescriptive period
under Article 173 of the Civil Code. Even
if we reckon the period from November
25, 1978 which was the date when
Vicente and the respondent spouses
entered into a contract concerning Lot
No. 4349-B-2, Ignacia’s action would still
be within the prescribed period.
Second issue, the trial court correctly
annulled the voidable sale of Lot No.
4349-B-2 in its entirety. In Bucoy v.
Paulino,36 a case involving the
annulment of sale with assumption of
mortgages executed by the husband
without the consent of the wife, it was
held that the alienation or encumbrance
must be annulled in its entirety and not
only insofar as the share of the wife in
the conjugal property is concerned.
Although the transaction in the said case
was declared void and not merely
voidable, the rationale for the annulment
of the whole transaction is the same thus
the plain meaning attached to the plain
language of the law is that the contract,
in its entirety, executed by the husband
without the wife's consent, may be
annulled by the wife. Had Congress
intended to limit such annulment in so
far as the contract shall "prejudice" the
wife, such limitation should have been
spelled out in the statute. It is not the
legitimate concern of this Court to recast
the law.
Third issue, the Court finds that
respondent spouses are not purchasers
in good faith. A purchaser in good faith
is one who buys property of another,
without notice that some other person
has a right to, or interest in, such
property and pays full and fair price for
the same, at the time of such purchase,
or before he has notice of the claim or
interest of some other persons in the
property. He buys the property with the
belief that the person from whom he
receives the thing was the owner and
could convey title to the property. A
purchaser cannot close his eyes to facts
which should put a reasonable man on
his guard and still claim he acted in good
faith.
In the instant case, there existed
circumstances that should have placed
respondent spouses on guard. The death
certificate of Ignacia, shows that she died
on March 22, 1982. The same death
certificate, however, reveals that – (1) it
was issued by the Office of the Civil
Registrar of Lubao Pampanga on March
10, 1982; (2) the alleged death of Ignacia
was reported to the Office of the Civil
Registrar on March 4, 1982; and (3) her
burial or cremation would be on March
8, 1982.39 These obvious flaws in the
death certificate should have prompted
respondents to investigate further,
especially so that respondent Florentina
Mijares admitted on cross examination
that she asked for the death certificate of
Ignacia because she was suspicious that
Ignacia was still alive.40 Moreover,
respondent spouses had all the
opportunity to verify the claim of Vicente
that he is a widower because it was their
lawyer, Atty. Rodriguito S. Saet, who
represented Vicente in the special
proceedings before the Metropolitan Trial
Court.
Neither can respondent spouses rely on
the alleged court approval of the sale.
Note that the Order issued by the
Metropolitan Trial Court of Quezon City,
Branch XXXI, appointing Vicente as
guardian of his 5 minor children, as well
as the Order authorizing him to sell the
estate of Ignacia were issued only on
September 29, 1983 and October 14,
1983, respectively. On the other hand,
the sale of the entire Lot No. 4349-B-2 to
respondent spouses appears to have
been made not on March 1, 1983, but
even as early as November 25, 1978.
The fact that the 5 minor children44 of
P A G E / 19
 Vicente represented by the latter, signed
the March 1, 1983 deed of sale of Lot No.
4349-B-2 will not estop them from
assailing the validity thereof. Not only
were they too young at that time to
understand the repercussions of the
sale, they likewise had no right to sell the
property of their mother who, when they
signed the deed, was very much alive.
If a voidable contract is annulled, the
restoration of what has been given is
proper. The relationship between parties
in any contract even if subsequently
annulled must always be characterized
and punctuated by good faith and fair
dealing. Hence, for the sake of justice
and equity, and in consonance with the
salutary principle of non-enrichment at
another’s expense, the Court sustains
the trial court’s order directing Vicente to
refund to respondent spouses the
amount of P110,000.00 which they have
paid as purchase price of Lot No. 4349-
B-2.45
CASE # 13
Spouses ANTONIO and
LUZVIMINDA GUIANG, Petitioners,
vs. COURT OF APPEALS and GILDA
COPUZ, Respondents.
G.R. No. 125172 June 26, 1998 –
By Lazo
FACTS:
 May 1990, Respondent Gilda Corpuz,
filed a complaint against her husband
Judie Corpuz and and Petitioner spouses
Antonio and Luzviminda Guiang. Corpuz
is seeking the declaration f a certain deed
of sale involving the conjugal property of
the private respondent spouses to be
null and void.
 RTC RULED IN FAVOR OF THE
RESPONDENT SPOUSES
 ON APPEAL, CA affirmed the RTC
decision
 June 1989 Plaintiff Gilda Corpuz left for
Manila to look for work abroad, in the
Middle East. But became the victim of an
unscrupulous illegal recruiter. While
away, Judie Corpuz stayed most of the
time at his place of work a hotel,
restaurant and cooperative.
 In Jan 1990, One of the daughters of the
spouses Corpuz learned that her father
intended to sell the remaining ½ portion
of their property (1st half was sold to the
Sps Guiangs before, they are their
neighbors ), including their house to the
sps Guiangs. She wrote a letter to her
mother to inform her, whose reply was to
object the sale; The daughter however,
did not inform the father but instead
gave the letter to the Guiangs
 Later, The Husband Corpus pushed
through with the sale.
 March 1990, he sold to the Sps Guiang
the ½ property thru a deed of transfer of
rights for a total consideration of 30,000
 4 days later, to cure whatever defect in
the Title over the lot, Luzviminda Guiang
transferred executed another agreement
over the lot to Manuela Callejo for P9000
 March 11 1990, Wife Corpuz returned
and found that her children were staying
in other households while her husband
is nowhere to be found. She was later
told by her children that he now has a
new wife
 Sps Guiang complained against Wife
Corpuz for trespassing or staying in the
house sold to the Sps by Corpuz's
husband
 An amicable settlement was signed by
the the Corpus's in the Barangay (to have
them leave the property without charge)
ISSUE:
(1) WON the contract of sale (Deed of
Transfer of Rights) was merely
voidable
(2) WON the contract was ratified by
private respondent when she entered
into an amicable settlement with
them.
HELD:
 1 NO, The contract is Void
 Art. 1390. The following contracts are
voidable or annullable, even though
there may have been no damage to the
contracting parties:
xxx xxx xxx
(2) Those where the consent is
vitiated by mistake, violence,
intimidation, undue influence or
fraud.
 These contracts are binding, unless they
are annulled by a proper action in court.
They are susceptible of ratification.(n)
 However, private respondent's
consent to the contract of sale of their
conjugal property was totally
inexistent or absent.
 This being the case, said contract
properly falls within the ambit of Article
124 of the Family Code, which was
correctly applied by the two lower court:
P A G E / 20
 Art. 124. The administration and
enjoyment of the conjugal partnerhip
properly shall belong to both spouses
jointly. In case of disgreement, the
husband's decision shall prevail, subject
recourse to the court by the wife for
proper remedy, which must be availed of
within five years from the date of the
contract implementing such decision.
 In the event that one spouse is
incapacitated or otherwise unable to
participate in the administration of the
conjugal properties, the other spouse
may assume sole powers of
administration. These powers do not
include the powers of disposition or
encumbrance which must have the
authority of the court or the written
consent of the other spouse. In the
absence of such authority or consent,
the disposition or encumbrance shall
be void. However, the transaction
shall be construed as a continuing
offer on the part of the consenting
spouse and the third person, and may
be perfected as a binding contract
upon the acceptance by the other
spouse or authorization by the court
before the offer is withdrawn by either
or both offerors. (165a) (Emphasis
supplied)
 The legal provision is clear. The
disposition or encumbrance is void. It
becomes still clearer if we compare the
same with the equivalent provision of the
Civil Code of the Philippines. Under
Article 166 of the Civil Code, the
husband cannot generally alienate or
encumber any real property of the
conjugal partnershit without the
wife's consent. The alienation or
encumbrance if so made however is not
null and void. It is merely voidable. The
offended wife may bring an action to
annul the said alienation or
encumbrance. Thus the provision of
Article 173 of the Civil Code of the
Philippines, to wit:
Art. 173. The wife may,
during the marriage and
within ten years from the
transaction questioned, ask
the courts for the annulment
of any contract of the
husband entered into without
her consent, when such
consent is required, or any
act or contract of the
husband which tends to
defraud her or impair her
interest in the conjugal
partnership property. Should
the wife fail to exercise this
right, she or her heirs after
the dissolution of the
marriage, may demand the
value of property fraudulently
alienated by the husband.(n)
This particular provision giving
the wife ten (10) years . . . during
[the] marriage to annul the
alienation or encumbrance was
not carried over to the Family
Code. It is thus clear that any
alienation or encumbrance made
after August 3, 1988 when the
Family Code took effect by the
husband of the conjugal
partnership property without the
consent of the wife is null and
void.
 Furthermore, it must be noted that the
fraud and the intimidation referred to by
petitioners were perpetrated in the
execution of the document embodying
the amicable settlement. Gilda Corpuz
alleged during trial that barangay
authorities made her sign said document
through misrepresentation and
coercion. 13 In any event, its execution
does not alter the void character of the
deed of sale between the husband and
the petitioners-spouses, as will be
discussed later. The fact remains that
such contract was entered into
without the wife's consent.
 In sum, the nullity of the contract of
sale is premised on the absence of
private respondent's consent. To
constitute a valid contract, the Civil
Code requires the concurrence of the
following elements: (1) cause, (2)
object, and (3) consent, 14 the last
element being indubitably absent in
the case at bar.
 2 No, Void contracts cannot be ratified
 By the specific provision of the law
[Art. 1390, Civil Code] therefore, the
Deed to Transfer of Rights (Exh. "A")
cannot be ratified, even by an
"amicable settlement". The
participation by some barangay
authorities in the "amicable settlement"
cannot otherwise validate an invalid act.
Moreover, it cannot be denied that the
"amicable settlement (Exh. "B")
entered into by plaintiff Gilda Corpuz
and defendent spouses Guiang is a
contract. It is a direct offshoot of the
Deed of Transfer of Rights (Exh. "A"). By
express provision of law, such a contract
is also void. Thus, the legal provision, to
wit:
P A G E / 21
 Art. 1422. A contract which
is the direct result of a
previous illegal contract, is
also void and inexistent.
(Civil Code of the
Philippines).
In summation therefore, both
the Deed of transfer of Rights
(Exh. "A") and the "amicable
settlement" (Exh. "3") are null
and void.
 Doctrinally and clearly, a void contract
cannot be ratified. Neither can the
"amicable settlement" be considered a
continuing offer that was accepted and
perfected by the parties, following the
last sentence of Article 124. The order of
the pertinent events is clear: after the
sale, petitioners filed a complaint for
trespassing against private respondent,
after which the barangay authorities
secured an "amicable settlement" and
petitioners filed before the MTC a motion
for its execution. The settlement,
however, does not mention a continuing
offer to sell the property or an acceptance
of such a continuing offer. Its tenor was
to the effect that private respondent
would vacate the property. By no stretch
of the imagination, can the Court
interpret this document as the
acceptance mentioned in Article 124.
CASE # 14
AINZA VS. SPOUSES ANTONIO
PADUA and EUGENIA PADUA
G.R. No. 165420 June 30, 2005
FACTS:
 In her complaint for partition of real
property, annulment of titles with
damages, Concepcion Ainza
(Concepcion) alleged that respondent-
spouses Eugenia (Eugenia) and Antonio
Padua (Antonio) owned a lot with an
unfinished residential house located at
Quezon City. Sometime in April 1987,
she bought one-half of an undivided
portion of the property from her
daughter, Eugenia and the latter’s
husband, Antonio, for P100,000.00.
 No Deed of Absolute Sale was executed
to evidence the transaction, but cash
payment was received by the
respondents, and ownership was
transferred to Concepcion through
physical delivery to her attorney-in-fact
and daughter, Natividad Tuliao
(Natividad). Concepcion authorized
Natividad and the latter’s husband,
Ceferino Tuliao (Ceferino) to occupy the
premises, and make improvements on
the unfinished building.
 Thereafter, Concepcion alleged that
without her consent, respondents
caused the subdivision of the property
into three portions and registered it in
their names in violation of the
restrictions annotated at the back of the
title.
 On the other hand, Antonio averred that
he bought the property in 1980 and
introduced improvements thereon.
Between 1989 and 1990, he and his wife,
Eugenia, allowed Natividad and Ceferino
to occupy the premises temporarily. In
1994, they caused the subdivision of the
property and three (3) separate titles
were issued.
 The trial court upheld the sale between
Eugenia and Concepcion. It ruled that
the sale was consummated when both
contracting parties complied with their
respective obligations. Eugenia
transferred possession by delivering the
property to Concepcion who in turn paid
the purchase price. It also declared that
the transfer of the property did not
violate the Statute of Frauds because a
fully executed contract does not fall
within its coverage.
 On appeal by the respondents, decision
of the trial court, and declared the sale
null and void. Applying Article 124 of the
Family Code, the Court of Appeals ruled
that since the subject property is
conjugal, the written consent of Antonio
must be obtained for the sale to be valid.
It also ordered the spouses Padua to
return the amount of P100,000.00 to
petitioners plus interest.
ISSUE:
The sole issue for resolution in this
petition for review is whether there
was a valid contract of sale between
Eugenia and Concepcion even
without the consent of Antonio.
HELD:
 A contract of sale is perfected by mere
consent, upon a meeting of the minds on
the offer and the acceptance thereof
based on subject matter, price and terms
of payment.
 In this case, there was a perfected
contract of sale between Eugenia and
P A G E / 22
 Concepcion. The records show that
Eugenia offered to sell a portion of the
property to Concepcion, who accepted
the offer and agreed to pay P100,000.00
as consideration. The contract of sale
was consummated when both parties
fully complied with their respective
obligations. Eugenia delivered the
property to Concepcion, who in turn,
paid Eugenia the price of One Hundred
Thousand Pesos (P100,000.00.
 In the instant case, the oral contract of
sale between Eugenia and Concepcion
was evidenced by a receipt signed by
Eugenia. Antonio also stated that his
wife admitted to him that she sold the
property to Concepcion.
 It is undisputed that the subject property
was conjugal and sold by Eugenia in
April 1987 or prior to the effectivity of the
Family Code on August 3, 1988, Article
254 of which repealed Title V, Book I of
the Civil Code provisions on the property
relations between husband and wife.
However, Article 256 thereof limited its
retroactive effect only to cases where it
would not prejudice or impair vested or
acquired rights in accordance with the
Civil Code or other laws. In the case at
bar, vested rights of Concepcion will be
impaired or prejudiced by the application
of the Family Code; hence, the provisions
of the Civil Code should be applied.
 The consent of both Eugenia and
Antonio is necessary for the sale of the
conjugal property to be valid. Antonio’s
consent cannot be presumed. Except for
the self-serving testimony of petitioner
Natividad, there is no evidence that
Antonio participated or consented to the
sale of the conjugal property. Eugenia
alone is incapable of giving consent to
the contract. Therefore, in the absence of
Antonio’s consent, the disposition made
by Eugenia is voidable.
 The contract of sale between Eugenia
and Concepcion being an oral contract,
the action to annul the same must be
commenced within six years from the
time the right of action accrued. Eugenia
sold the property in April 1987 hence
Antonio should have asked the courts to
annul the sale on or before April 1993.
No action was commenced by Antonio to
annul the sale, hence his right to seek its
annulment was extinguished by
prescription, more than ten (10) years
had already lapsed without any such
action being filed.
 In sum, the sale of the conjugal property
by Eugenia without the consent of her
husband is voidable. It is binding unless
annulled. Antonio failed to exercise his
right to ask for the annulment within the
prescribed period, hence, he is now
barred from questioning the validity of
the sale between his wife and
Concepcion.
CASE # 15
Spouses Fuentes vs. Roca
GR NO 178902 (April 21, 2010)
FACTS:
 Sabina Tarroza sold to her son, Tarciano
Roca a lot. Tarciano then offered to sell
the lot to Petitioner Spouses Fuentes.
They agreed that the petitioner will only
pay the down payment of P60, 000 and
the remaining balance of P140, 000 only
if Tarciano could obtain the consent of
his estranged wife, Rosario Roca. The
parties left their agreement with Atty.
Plagata who then worked on the
requirements of the sale. According to
Atty. Plagata, he went to Manila and see
Rosario and had her sign an affidavit of
consent. So thereafter, Tarciano
executed a deed of absolute sale and the
Spouses Fuentes then paid the balance
of P140, 000. When Tarciano and
Rosario passed away, the children of
Tarciano, herein respondent Rocas, filed
for an action for annulment of sale and
reconveyance of the land against the Sps
Fuentes alleging the sale was void due to
the lack of consent from Rosario. They
alleged that the affidavit was a forgery.
RTC: Dismissed the case.
CA: Reversed.
ISSUE: What is the status of the sale,
whether the CC or the FC would govern, did
the action prescribe.
RULING: The sale was void, the Family Code
will govern and the action did not prescribe
The Court agrees with the CA’s observation
that Rosario’s signature strokes on the
affidavit appears heavy, deliberate, and
forced. Her specimen signatures, on the
other hand, are consistently of a lighter
stroke and more fluid. The way the letters
"R" and "s" were written is also remarkably
different. The variance is obvious even to the
untrained eye. Significantly, Rosario’s
specimen signatures were made at about the
P A G E / 23
time that she signed the supposed affidavit
of consent. They were, therefore, reliable
standards for comparison. The Fuentes
spouses presented no evidence that Rosario
suffered from any illness or disease that
accounted for the variance in her signature
when she signed the affidavit of consent.
Notably, Rosario had been living separately
from Tarciano for 30 years since 1958. And
she resided so far away in Manila. It would
have been quite tempting for Tarciano to just
forge her signature and avoid the risk that
she would not give her consent to the sale or
demand a stiff price for it. What is more,
Atty. Plagata admittedly falsified the jurat of
the affidavit of consent. That jurat declared
that Rosario swore to the document and
signed it in Zamboanga City on January 11,
1989 when, as Atty. Plagata testified, she
supposedly signed it about four months
earlier at her residence in Paco, Manila on
September 15, 1988. While a defective
notarization will merely strip the document
of its public character and reduce it to a
private instrument, that falsified jurat, taken
together with the marks of forgery in the
signature, dooms such document as proof of
Rosario’s consent to the sale of the land.
That the Fuentes spouses honestly relied on
the notarized affidavit as proof of Rosario’s
consent does not matter. The sale is still void
without an authentic consent. Contrary to
the ruling of the Court of Appeals, the law
that applies to this case is the Family Code,
not the Civil Code. Although Tarciano and
Rosario got married in 1950, Tarciano sold
the conjugal property to the Fuentes
spouses on January 11, 1989. When
Tarciano married Rosario, the Civil Code put
in place the system of conjugal partnership
of gains on their property relations. While its
Article 165 made Tarciano the sole
administrator of the conjugal partnership,
Article 166 prohibited him from selling
commonly owned real property without his
wife’s consent. Still, if he sold the same
without his wife’s consent, the sale is not
void but merely voidable. Article 173 gave
Rosario the right to have the sale annulled
during the marriage within ten years from
the date of the sale. Failing in that, she or
her heirs may demand, after dissolution of
the marriage, only the value of the property
that Tarciano fraudulently sold. Under the
provisions of the Civil Code governing
contracts, a void or inexistent contract has
no force and effect from the very beginning.
And this rule applies to contracts that are
declared void by positive provision of law, as
in the case of a sale of conjugal property
without the other spouse’s written consent.
A void contract is equivalent to nothing and
is absolutely wanting in civil effects. It
cannot be validated either by ratification or
prescription. But, although a void contract
has no legal effects even if no action is taken
to set it aside, when any of its terms have
been performed, an action to declare its
inexistence is necessary to allow restitution
of what has been given under it. This action,
according to Article 1410 of the Civil Code
does not prescribe.
CASE # 16
SPOUSES REX AND
CONCEPCION AGGABAO
versus DIONISIO Z. PARULAN,
JR. and MA. ELENA
PARULAN
G.R. No. 165803 – By Soriano
FACTS:
 Involved in this action are two parcels
of land and their improvements in
Parañaque City and registered under
the name of Spouses Parulan, who
have been estranged from one another.
Real estate broker Atanacio offered the
property to Spouses Aggabao who
upon Atanacio’s insistence prevailed
upon them, so that they and Atanacio
met with Ma. Elena (Parulan’s wife) at
the site of the property. During their
meeting, Spouses Aggabao paid Ma.
Elena earnest money amounting to
P20,000 which she acknowledged with
a handwritten receipt. Then and there,
they agreed on the terms of how the
buyers will pay the price of the
property.
 Spouses Aggabao complied with all
the terms with regard to the payment
of the properties, but when Ma. Elena
already needed to turn over the
owner’s duplicate copies for both
lands, she was able to turn over only
one (which was successfully
transferred to the name of spouses
Aggabao). For the other one, she said
that it is with a relative in HongKong
but she promised to deliver it to the
spouses in a week. Needless to say,
she failed to do so and by doing their
own verification, the spouses found
out that said copy of title was in the
hands of Dionisio’s brother.
 The spouses met with Dionisio’s
brother, Atty. Parulan, who told them
that he is the one with the power to
sell the property. He demanded
P800,000 for said property and gave
the spouses several days to decide.
P A G E / 24
 When Atty. Parulan did not hear back
from the spouses, he gave them a
call, and was then informed that they
have already paid the full amount to
Ma. Elena.
 Subsequently, Dionisio, through Atty.
Parulan, commenced an action praying
for the declaration of the nullity of
the deed of absolute sale executed by
Ma. Elena, and the cancellation of the
title issued to the petitioners by virtue
thereof.
ISSUE:
Whether or not the sale of
conjugal property made by Ma.
Elena, by presenting a special
power of attorney to sell (SPA)
purportedly executed by
respondent husband in her favor
was validly made to the vendees.
RULING:
 No, the Court ruled that the sale of
conjugal property without the consent
of the husband was not merely
voidable but void; hence, it could not
be ratified. Spouses Aggabao also
cannot use the defense that they are
buyers in good faith because they did
not exercise the necessary prudence
to inquire into the wife’s authority to
sell.
 The relevant part of Article 124 of
the Family Code provides that: xxx In
the event that one spouse is
incapacitated or otherwise unable to
participate in the administration of
the conjugal properties, the other
spouse may assume sole powers of
administration. These powers do not
include disposition or encumbrance
without authority of the court or the
written consent of the other spouse.
In the absence of such authority or
consent, the disposition or
encumbrance shall be void. Xxx
 Spouses Aggabao also failed to
substantiate their contention that
Dionisio, while holding the
administration over the property, had
delegated to his brother, Atty.
Parulan, the administration of the
property, considering that they did
not present in court the SPA granting
to Atty. Parulan the authority for the
administration.
 Nonetheless, the Court would like to
stress that the power of
administration does not include acts
of disposition or encumbrance, which
are acts of strict ownership. As such,
an authority to dispose cannot
proceed from an authority to
administer, and vice versa, for the
two powers may only be exercised by
an agent by following the provisions
on agency of the Civil Code (from
Article 1876 to Article 1878).
Specifically, the apparent authority of
Atty. Parulan, being a special agency,
was limited to the sale of the
property in question, and did not
include or extend to the power to
administer the property.
 On the other hand, we agree with
Dionisio that the void sale was a
continuing offer from the petitioners
and Ma. Elena that Dionisio had the
option of accepting or rejecting before
the offer was withdrawn by either or
both Ma. Elena and the petitioners.
The last sentence of the second
paragraph of Article 124 of the Family
Code makes this clear, stating that
in the absence of the other spouse’s
consent, the transaction should be
construed as a continuing offer on
the part of the consenting spouse
and the third person, and may be
perfected as a binding contract upon
the acceptance by the other spouse
or upon authorization by the court
before the offer is withdrawn by
either or both offerors.
CASE # 17
DAVID V. PELAYO and
LORENZA* B. PELAYO VS.
MELKI E. PEREZ
G.R. No. 141323 June 8, 2005 –
By Lumacad
FACTS:
 David Pelayo executed a Deed of
Absolute Sale on January 11, 1988,
conveyed to Melki Perez two parcels of
agricultural land situated in Panabo.
Loreza Pelayo, wife, and another one
whose signature is illegible witnessed the
execution of the deed. Loreza, however,
signed only on the third page in the
space provided for witnesses on account
of which Perez’ application for
registration of the deed with the Office of
the Register of Deeds in Tagum, Davao
was denied. Perez thereupon asked
Loreza to sign on the first and second
pages of the deed but she refused, hence,
he instituted the instant complaint for
specific performance against her and her
husband Pelayo. The defendants moved
to dismiss the complaint on the ground
that it stated no cause of action, citing
Section 6 of RA 6656 otherwise known as
the Comprehensive Agrarian Reform Law
which took effect on June 10, 1988 and
which provides that contracts executed
prior thereto shall "be valid only when
P A G E / 25
 registered with the Register of Deeds
within a period of three (3) months after
the effectivity of this Act. The deed was
executed on January 10, 1988, the
defendants claimed that Perez had at
least up to September 10, 1988 within
which to register the same, but as they
failed to, it is not valid and, therefore,
unenforceable. In their Answer, the
defendants claimed that as the lots were
occupied illegally by some persons
against whom they filed an ejectment
case, they and Perez who is their friend
and known at the time as an
activist/leftist, just made it appear in the
deed that the lots were sold to him in
order to frighten said illegal occupants,
with the intentional omission of Loreza’s
signature so that the deed could not be
registered; and that the deed being
simulated and bereft of consideration is
void/inexistent. Perez countered that the
lots were given to him by defendant
Pelayo in consideration of his services as
his attorney-in-fact to make the
necessary representation and
negotiation with the illegal occupants-
defendants in the ejectment suit; and
that after his relationship with defendant
Pelayo became sour, the latter sent a
letter to the Register of Deeds of Tagum
requesting him not to entertain any
transaction concerning the lots title to
which was entrusted to Perez who
misplaced and could [not] locate it.
Defendant Pelayo also contended that
according to Article 166:
 Article 166. Unless the wife has been
declared a non compos mentis or a
spendthrift, or is under civil interdiction
or is confined in a leprosarium, the
husband cannot alienate or encumber
any real property of the conjugal
partnership without the wife’s consent.
 it is null and void.
 RTC: The trial court, finding, among
others, that Perez did not possess, nor
pay the taxes on the lots, that defendant
Pelayo was indebted to Perez for services
rendered and, therefore, the deed could
only be considered as evidence of debt,
and that in any event, there was no
marital consent to nor actual
consideration for the deed, held that the
deed was null and void.
 WHEREFORE, judgment is hereby
rendered ordering and directing the
defendants to pay plaintiff Melki Perez
the sum of TEN THOUSAND
(₱10,000.00) Pesos as principal with 12%
interest per annum starting from the
date of filing of the complaint on August
1, 1991 until plaintiff is fully paid.
 The court further orders that the Deed of
Absolute Sale, of the complaint and of
the plaintiff’s Motion for Summary
Judgment is declared null and void and
without force and it is likewise removed
as a cloud over defendants’ title and
property in suit.
 CA: The CA then promulgated its
Decision on April 20, 1999 whereby it
ruled that by Lorenza’s signing as
witness to the execution of the deed, she
had knowledge of the transaction and is
deemed to have given her consent to the
same; that herein petitioners failed to
adduce sufficient proof to overthrow the
presumption that there was
consideration for the deed, and that
petitioner David Pelayo, being a lawyer,
is presumed to have acted with due care
and to have signed the deed with full
knowledge of its contents and import.
The CA reversed and set aside the RTC
Decision, declaring as valid and
enforceable the questioned deed of sale
and ordering herein petitioner Lorenza
Pelayo to affix her signature on all pages
of said document.
ISSUE:
1. WON CA erred in not taking into
account the provisions of RA 6657.
2. WON the deed is considered valid.
3. WON there was implied marital
consent.
RULING:
 No. The proper interpretation of both
sections is that under R.A. No. 6657, the
sale or transfer of a private agricultural
land is allowed only when said land area
constitutes or is a part of the landowner-
seller retained area and only when the
total landholdings of the purchaser-
transferee, including the property sold
does not exceed five (5) hectares.
 Aside from declaring that the failure of
respondent to register the deed was not
of his own fault or negligence, the CA
ruled that respondent’s failure to register
the deed of sale within three months
after effectivity of The Comprehensive
Agrarian Reform Law did not invalidate
the deed of sale as "the transaction over
said property is not proscribed by R.A.
No. 6657.
 Law of the case has been defined as the
opinion delivered on a former appeal. It
is a term applied to an established rule
P A G E / 26
 that when an appellate court passes on
a question and remands the case to the
lower court for further proceedings, the
question there settled becomes the law of
the case upon subsequent appeal. It
means that whatever is once irrevocably
established as the controlling legal rule
or decision between the same parties in
the same case continues to be the law of
the case, whether correct on general
principles or not, so long as the facts on
which such decision was predicated
continue to be the facts of the case before
the court.
 2. Yes. It has been held that the contract
is valid until the court annuls the same
and only upon an action brought by the
wife whose consent was not obtained. In
the present case, despite respondent’s
repeated demands for Lorenza to affix
her signature on all the pages of the deed
of sale, showing respondent’s insistence
on enforcing said contract, Lorenza still
did not file a case for annulment of the
deed of sale. It was only when
respondent filed a complaint for specific
performance on August 8, 1991 when
petitioners brought up Lorenza’s alleged
lack of consent as an affirmative defense.
Thus, if the transaction was indeed
entered into without Lorenza’s consent,
we find it quite puzzling why for more
than three and a half years, Lorenza did
absolutely nothing to seek the
nullification of the assailed contract.
 Yes. We agree with the CA ruling that
petitioner Lorenza, by affixing her
signature to the Deed of Sale on the
space provided for witnesses, is deemed
to have given her implied consent to the
contract of sale. Sale is a consensual
contract that is perfected by mere
consent, which may either be express or
implied. A wife’s consent to the
husband’s disposition of conjugal
property does not always have to be
explicit or set forth in any particular
document, so long as it is shown by acts
of the wife that such consent or approval
was indeed given. In the present case,
although it appears on the face of the
deed of sale that Lorenza signed only as
an instrumental witness, circumstances
leading to the execution of said
document point to the fact that Lorenza
was fully aware of the sale of their
conjugal property and consented to the
sale. Under the rules of evidence, it is
presumed that a person takes ordinary
care of his concerns. Petitioners did not
even attempt to overcome the
aforementioned presumption as no
evidence was ever presented to show that
Lorenza was in any way lacking in her
mental faculties and, hence, could not
have fully understood the ramifications
of signing the deed of sale. Neither did
petitioners present any evidence that
Lorenza had been defrauded, forced,
intimidated or threatened either by her
own husband or by respondent into
affixing her signature on the subject
document. If Lorenza had any objections
over the conveyance of the disputed
property, she could have totally refrained
from having any part in the execution of
the deed of sale. Instead, Lorenza even
affixed her signature thereto.
 Moreover, under Article 173, in relation
to Article 166, both of the New Civil Code,
which was still in effect on January 11,
1988 when the deed in question was
executed, the lack of marital consent to
the disposition of conjugal property does
not make the contract void ab initio but
merely voidable. Said provisions of law
provide:
 Art. 166. Unless the wife has been
declared a non compos mentis or a
spendthrift, or is under civil interdiction
or is confined in a leprosarium, the
husband cannot alienate or encumber
any real property of the conjugal
property without the wife’s consent. If
she refuses unreasonably to give her
consent, the court may compel her to
grant the same.
CASE # 18
ABALOS VS MACATANGAY, JR.
G.R. No. 155043 September 30
2004
FACTS:
 Spouses Arturo and Esther Abalos are
the registered owners of a parcel of land
with improvements. Arturo made a
Receipt and Memorandum of Agreement
in favor of Macatangay, binding himself
to sell to latter the subject property and
not to offer the same to any other party
within 30 days from date. Full payment
would also be effected as soon as
possession of the property shall have
been turned over to Macatangay.
Macatangay gave an earnest money
amounting to P5,000.00 to be deducted
from the purchase price of
P1,300,000.00 in favor of the spouses.
 Subsequently, Arturo and Esther had a
marital squabble brewing at that time
and Macatangay, to protect his interest,
made an annotation in the title of the
property. He then sent a letter informing
them of his readiness to pay the full
amount of the purchase price. Esther,
through her SPA, executed in favor of
P A G E / 27
 Macatangay, a Contract to sell the
property to the extent of her conjugal
interest for the sum of P650,000 less the
sum already received by her and Arturo.
She agreed to surrender the property to
Macatangay within 20 days along with
the deed of absolute sale upon full
payment, while he promised to pay the
balance of the purchase price for P1,
290,000.00 after being placed in
possession of the property. Macatangay
informed them that he was ready to pay
the amount in full. The couple failed to
deliver the property so he sued the
spouses.
 RTC dismissed the complaint, because
the SPA could not have authorized
Arturo to sell the property to Macatangay
as it was falsified. CA reversed the
decision, ruling the SPA in favor of
Arturo, assuming it was void, cannot
affect the transaction between Esther
and Macatangay. On the other hand, the
CA considered the RMOA executed by
Arturo valid to effect the sale of his
conjugal share in the property.
ISSUE:
Whether or not the sale of property is
valid.
RULING:
 No. Arturo and Esther appear to have
been married before the effectivity of the
Family Code. There being no indication
that they have adopted a different
property regime, their property relations
would automatically be governed by the
regime of conjugal partnership of gains.
The subject land which had been
admittedly acquired during the marriage
of the spouses forms part of their
conjugal partnership.
 Under the Civil Code, the husband is the until the dissolution and liquidation of
administrator of the conjugal the conjugal partnership, or after
partnership. This right is clearly granted dissolution of the marriage, when it is
to him by law. More, the husband is the finally determined that, after settlement
sole administrator. The wife is not of conjugal obligations, there are net
entitled as of right to joint assets left which can be divided between
administration. the spouses or their respective heirs.
 The Family Code has introduced some
changes particularly on the aspect of the
administration of the conjugal
 The husband, even if he is statutorily
partnership. The new law provides that
designated as administrator of the
the administration of the conjugal
conjugal partnership, cannot validly
partnership is now a joint undertaking of
alienate or encumber any real property
the husband and the wife. In the event
of the conjugal partnership without the
that one spouse is incapacitated or
wife’s consent. Similarly, the wife cannot
otherwise unable to participate in the
dispose of any property belonging to the
administration of the conjugal
conjugal partnership without the
partnership, the other spouse may
conformity of the husband. The law is
assume sole powers of administration.
explicit that the wife cannot bind the
However, the power of administration
conjugal partnership without the
does not include the power to dispose or
husband’s consent, except in cases
encumber property belonging to the
provided by law.
conjugal partnership. In all instances,
 More significantly, it has been held that
the present law specifically requires the
prior to the liquidation of the conjugal
written consent of the other spouse, or
partnership, the interest of each spouse
authority of the court for the disposition
in the conjugal assets is inchoate, a mere
or encumbrance of conjugal partnership
expectancy, which constitutes neither a
property without which, the disposition
legal nor an equitable estate, and does
or encumbrance shall be void.
not ripen into title until it appears that
 Inescapably, herein Arturo’s action for
there are assets in the community as a
specific performance must fail. Even on
result of the liquidation and settlement.
the supposition that the parties only
The interest of each spouse is limited to
disposed of their respective shares in the
the net remainder or “remanente liquido”
property, the sale, assuming that it
(haber ganancial) resulting from the
exists, is still void for as previously
liquidation of the affairs of the
stated, the right of the husband or the
partnership after its dissolution. Thus,
wife to one-half of the conjugal assets
the right of the husband or wife to one-
does not vest until the liquidation of the
half of the conjugal assets does not vest
P A G E / 28
 conjugal partnership. Nemo dat qui non
habet. No one can give what he has not.
CASE # 20
Philippine Trust Co. v. Roldan
GR NO L-8477 MAY 31, 1956
 BY PAGANTIAN
Facts:
 Mariano Bernardo, a minor, inherited 17
parcels of land from his deceased father.
Respondent, Mariano’s step-mother, was
appointed his guardian. As guardian,
she sold the 17 parcels to Dr. Ramos, her
brother-in-law, for P14,700. After a
week, Dr. Ramos sold the lands to her for
P15,000. Subsequently, she sold 4 out of
17 parcels to Emilio Cruz. Petitioner
replaced Roldan as guardian, and two
months thereafter, this litigation sought
to declare as null and void the sale to Dr.
Ramos, and the sale to Emilio Cruz.
Issue:
Whether the sale of the land by the
guardian is null and void for being
violative of the prohibition for a
guardian to purchase either in
person or through the mediation of
another the property of her ward
RTC:
 The court of first instance, following our
decision in Rodriguez vs. Mactal, 60 Phil.
13 held the article was not controlling,
because there was no proof that Fidel C.
Ramos was a mere intermediary or that
the latter had previously agreed with
Socorro Roldan to buy the parcels for her
benefit.
 However, taking the former guardian at
her word - she swore she had
repurchased the lands from Dr. Fidel C.
Ramos to preserve it and to give her
protege opportunity to redeem — the
court rendered judgment upholding the
contracts but allowing the minor to
repurchase all the parcels by paying
P15,000, within one year.
CA:
 The Court of Appeals affirmed the
judgment, adding that the minor knew
the particulars of, and approved the
transaction, and that “only clear and
positive evidence of fraud or bad faith,
and not mere insinuations and
inferences will overcome the
presumptions that a sale was concluded
in all good faith for value”.
SC:
 From both the legal and equitable
standpoints these three sales should not
be sustained:
 The first two for violation of article 1459
of the Civil Code: Remembering the
general doctrine that guardianship is a
trust of the highest order, and the
trustee cannot be allowed to have any
inducement to neglect his ward’s
interest, and in line with the court’s
suspicion whenever the guardian
acquires ward’s property we have no
hesitation to declare that in this case, in
the eyes of the law, Socorro Roldan took
by purchase her ward’s parcels thru Dr.
Ramos, and that Article 1459 of the Civil
Code applies.
 And the third because Socorro Roldan
could pass no title to Emilio Cruz. The
annulment carries with is (Article 1303
Civil Code) the obligation of Socorro
Roldan to return the 17 parcels together
with their fruits and the duty of the
minor, through his guardian to repay
P14,700 with legal interest.
CASE # 21
Distajo vs. CA
G.R. No. 112954. August
25, 2000. - By Balijani
Facts:
 During the lifetime of Iluminada
Abiertas, she designated one of her sons,
Rufo Distajo, to be the administrator of
her parcels of land denoted as Lot Nos.
1018, 1046, 1047, and 1057 situated in
Barangay Hipona, Pontevedra, Capiz.
 On May 29, 1963, Iluminada Abiertas
certified to the sale of Lot Nos. 1046 and
1047 in favor of Rufo Distajo.
 On June 4, 1969, Iluminada Abiertas
sold Lot No. 1057 to Rhodora Distajo, the
daughter of Rufo Distajo.
 On July 12, 1969, Iluminada Abiertas
sold Lot No. 1018 to Rufo Distajo.
 Several lots were also sold by Teresita
Abiertas , daughter of Iluminada’s
deceased brother , in favor of Rufo
Distajo.
 On June 5, 1986, the heirs of Iluminada
(her other children), filed with the RTC a
complaint for recovery of possession and
owndership of Lot No 1018.
 Their main contention is the Rufo could
not have acquired the said lands because
the Civil Code prohibits the
administrator from acquiring properties
under his administration. They also
alleged the Rufo merely forged the
signatures of Iluminada to effect the sale.
Issue:
Are agents / administrators prohibited
from purchasing property in their hands
for sale?
Held:
P A G E / 29
RTC: Dismissed the case for lack of action,
laches and prescription.
CA: Reversed the decision and favors the
heirs of iluminada. The Court of
Appeals ordered the partition of land to
the heirs.
SC:
 No. Under paragraph (2) of the above
article, the prohibition against agents
purchasing property in their hands for
sale or management is not absolute. It
does not apply if the principal consents
to the sale of the property in the hands
of the agent or administrator. In this
case, the deeds of sale signed by
Iluminada Abiertas shows that she gave
consent to the sale of the properties in
favor of her son, Rufo, who was the
administrator of the properties. Thus,
the consent of the principal Iluminada
Abiertas removes the transaction out of
the prohibition contained in Article
1491(2).
 In his petition, Ricardo Distajo assails
the genuineness of the signatures of
Iluminada Abiertas in the deeds of sale
of the parcels of land, and claims that
Rufo Distajo forged the signature of
Iluminada Abiertas. However, no
handwriting expert was presented to
corroborate the claim of forgery.
Petitioner even failed to present a
witness who was familiar with the
signature of Iluminada Abiertas. Forgery
should be proved by clear and
convincing evidence, and whoever
alleges it has the burden of proving the
same.
CASE # 22
CUI vs. CUI
GR No.L-7041 August 31, 1964
-By Mamaril
FACTS:
 The Hospicio is a charitable institution
established by the spouses Don Pedro
Cui and Doña Benigna Cui, now
deceased, "for the care and support,
free of charge, of indigent invalids,
and incapacitated and helpless
persons." It was incorporated under
Act No. 3239 of the Philippine
Legislature in 1925 and endowed with
extensive properties by the said
spouses through a series of donations,
principally the deed of donation
executed in 1926.
 Section 2 of Act No. 3239 gave the
initial management to the founders
jointly and, in case of their incapacity
or death, to "such persons as they
may nominate or designate, in the
order prescribed to them."
 Don Pedro Cui died in 1926, while his
widow died in 1929. The administration
passed to Mauricio Cui and Dionisio
Jakosalem. The former died on 8 May
1931 and the latter on 1 July 1931.
 On 2 July 1931 Dr. Teodoro Cui, only
son of Mauricio Cui, became the
administrator. Beginning 1932, a 
series of controversies and court
litigations ensued concerning the
position of administrator.
 Plaintiff Jesus Ma. Cui and defendant
Antonio Ma. Cui are brothers, being
the sons of Mariano Cui, one of the
nephews of the spouses Don Pedro
Cui and Doña Benigna Cui. In 1960,
the then incumbent administrator, Dr.
Teodoro Cui, resigned in favor of
Antonio Ma. Cui pursuant to a
"convenio" entered into between them.
On February 28, Antonio Ma. Cui took
his oath of office. Jesus Ma. Cui, had
no prior notice of either the "convenio"
or of his brother's assumption of the
position.
 Dr. Teodoro Cui died on 27 August
and the plaintiff wrote a letter to the
defendant demanding that the office
be turned over to him. The demand
remained unheeded, the plaintiff filed
the complaint. Romulo Cui later on
intervened, claiming a right to the
same office, being a grandson of
Vicente Cui, one of the nephews
mentioned by the founders of the
Hospicio in their deed of donation.
 As between Jesus and Antonio the
main issue turns upon their respective
qualifications to the position of
administrator. Jesus is the older and
under equal circumstances would be
preferred pursuant to section 2 of the
deed of donation. However, before the
test of age may be, applied the deed
gives preference to the one, among
the legitimate descendants of the
nephews named, "que posea titulo de
abogado, o medico, o ingeniero civil,
o farmaceutico, o a falta de estos
titulos el que pague al estado mayor
impuesto o contribucion."
What is being disputed is the meaning
of the term "titulo de abogado." Jesus
Ma. Cui holds the degree of Bachelor
of Laws from the University of Santo
Tomas (Class 1926) but is not a
member of the Bar, not having passed
the examinations. Antonio Ma. Cui is
a member of the Bar and although
disbarred by the Court but was
reinstated by resolution about two
weeks before he assumed the position
of administrator of the Hospicio.
P A G E / 30
 The Court a quo, decied in favor of
the plaintiff and held that the phrase
"titulo de abogado," taken alone,
means that of a full-fledged lawyer,
but that has used in the deed of
donation and considering the function
or purpose of the administrator, it
should not be given a strict
interpretation but a liberal one," and
therefore means a law degree or
diploma of Bachelor of Laws.
 Jesus Ma. Cui believed he was
entitled to the office in as long ago
as 1932. On January 26 of that year
he filed a complaint in quo warranto
against Dr. Teodoro Cui, who
assumed the administration of the
Hospicio. Mariano Cui, the plaintiff's
father and Antonio Ma. Cui came in
as intervenors. The case was
dismissed by the Court of First
Instance upon a demurrer by the.
Upon appeal to the Supreme Court
from the order of dismissal, the case
was remanded. The plaintiff, did not
prosecute the case as decided by the
Court, but entered into an
arrangement whereby Teodoro Cui
continued as administrator, Mariano
Cui was named "legal adviser" and
plaintiff Jesus Ma. Cui accepted a
position as assistant administrator.
 The plaintiff tried to get the position
by a series of extra-judicial
maneuvers. However, the
Commissioner to the Secretary of
Justice ruled that the plaintiff, not
being a lawyer, was not entitled to
the administration of the Hospicio.
 12. Defendant Antonio Ma. Cui was
reinstated by this Court as member
of the Bar, and succeeded Dr. Teodoro
Cui when he resigned as administrator
pursuant to the "convenio" between
them.
ISSUE:
(1) WON the administrator should
only have possession of the
academic degree of Bachelor of
Laws.
(2) WON Jesus Cui is disqualified
as being an administrator.
(3) WON Antonio Cui is entitled as
administrator despite his past
disbarment.
HELD:
 NO. The Court is of the opinion, that
whether taken alone or in context the
term "titulo de abogado" means not
mere possession of the academic
degree of Bachelor of Laws but
membership in the Bar after due
admission, qualifying one for the
practice of law. In Spanish the word
"titulo" is defined as "testimonies o
instrumento dado para ejercer un
empleo, dignidad o profesion" and the
word "abogado," as follows: "Perito en
el derecho positivo que se dedica a
defender en juicio, por escrito o de
palabra, los derechos o intereses de
los litigantes, y tambien a dar dictmen
sobre las cuestiones o puntos legales
que se le consultan (Id., p.5) A
Bachelor's degree alone, conferred by
a law school upon completion of
certain academic requirements, does
not entitle its holder to exercise the
legal profession. The English
equivalent of "abogado" is lawyer or
attorney-at-law. This term has a fixed
and general signification, and has
reference to that class of persons who
are by license officers of the courts,
empowered to appear, prosecute and
defend, and upon whom peculiar
duties, responsibilities and liabilities
are devolved by law as a consequence.
 YES. He only has the academic degree
of Bachelor of Laws. The founders of
the Hospicio de San Jose de Barili
provided in the deed of donation that
if not a lawyer, the administrator
should be a doctor or a civil engineer
or a pharmacist, in that order; or
failing all these, should be the one
who pays the highest taxes among
those otherwise qualified. A lawyer,
first of all, because under Act No.
3239 the managers or trustees of the
Hospicio shall "make regulations for
the government of said institution (Sec.
3, b); shall "prescribe the conditions
subject to which invalids and
incapacitated and destitute persons
may be admitted to the institute" (Sec.
3, d); shall see to it that the rules
and conditions promulgated for
admission are not in conflict with the
provisions of the Act; and shall
administer properties of considerable
value — for all of which work, it is
to be presumed, a working knowledge
of the law and a license to practice
the profession would be a distinct
asset.
 YES. It is argued that although the
latter (Antonio) is a member of the
Bar he is nevertheless disqualified by
virtue of paragraph 3 of the deed of
donation, which provides that the
administrator may be removed on the
ground, among others, of ineptitude in
the discharge of his office or lack of
evident sound moral character.
Reference is made to the fact that the
defendant was disbarred by this Court
in1957 for immorality and
unprofessional conduct. It is also a
fact, however, that he was reinstated
P A G E / 31
 in 1960, before he assumed the office
of administrator. His reinstatement is
a recognition of his moral
rehabilitation, upon proof no less than
that required for his admission to the
Bar in the first place. As far as moral
character is concerned, the standard
required of one seeking reinstatement
to the office of attorney cannot be less
exacting than that implied in
paragraph 3 of the deed of donation
as a requisite for the office which is
disputed in this case. When the
defendant was restored to the roll of
lawyers the restrictions and
disabilities resulting from his previous
disbarment were wiped out.
CASE # 23
PAULINO VALENCIA v. ATTY. ARSENIO
FER. CABANTING
Adm. Cases Nos. 1302, 1991-04-26
Facts:
 On December 15, 1969 Serapia, assisted
by Atty. Arsenio Fer Cabanting, filed a
complaint against Paulino for the
recovery of possession with damages.
 On January 22, 1973, the Court of First
Instance of Pangasinan, Branch V,
rendered a decision in favor of plaintiff,
Serapia Raymundo.
 Paulino, thereafter, filed a Petition for
Certiorari, under Rule 65, with
Preliminary Injunction before the Court
of Appeals alleging that the trial court
failed to provide a workable solution
concerning his house.
 While the petition was pending, the trial
court, on
 March 9, 1973, issued an order of  In the case at bar, while it is true that
execution stating that "the decision in Atty. Arsenio Fer Cabanting purchased
this case has already become final and the lot after finality of judgment, there
executory was still a pending certiorari
proceeding. A thing is said to be in
 On March 20, 1973, Serapia sold 40 litigation not only if there is some contest
square meters of the litigated lot to Atty. or litigation over it in... court, but also
Jovellanos and the remaining portion
from the moment that it becomes subject
she sold to her counsel, Atty. Arsenio Fer to the judicial action of the judge. (Gan
Cabanting, on April 25, 1973.
Tingco vs. Pabinguit, 35 Phil. 81).
Issues:  Logic dictates, in certiorari proceedings,
Whether or not Atty. Cabanting
that the appellate court may either grant
purchased the subject property in or dismiss the petition.
violation of Art. 1491 of the New Civil
Code. CASE # 24
THE DIRECTOR OF LANDS,
Ruling: petitioner, vs. SILVERETRA ABABA,
 The following persons cannot acquire by ET AL., claimants, JUAN
purchase, even at a public or judicial LARRAZABAL, MARTA C. DE
LARRAZABAL, MAXIMO
auction, either in person or through the
ABAROQUEZ and ANASTACIA
mediation of another:
CABIGAS, petitioners-appellants,
 xxx this prohibition includes the act of ALBERTO FERNANDEZ, adverse
acquiring by assignment and shall apply claimant-appellee.
to lawyers, with respect to the property G.R. No. L-26096 February 27, 1979
and rights which may be the object of
any litigation in which they may take FACTS:
part by virtue of their profession.  The adverse claimant Atty.
Fernandez was retained as counsel
 Public policy prohibits the transactions by petitioner (Abarquez) in a civil a
in view of the fiduciary relationship case for the annulment of a contract
involved. It is intended to curtail any of sale with right of repurchase and
undue influence of the lawyer upon his for the recovery of the land which
client. Greed may get the better of the was the subject matter thereof.
sentiments of loyalty and Unable to compensate his lawyer
disinterestedness. Any violation of... whom he also retained for his appeal,
this prohibition would constitute the petitioner executed a document
whereby he obliged himself to give to
malpractice
his lawyer ½ of whatever he might
 Art. 1491, prohibiting the sale to the recover from Lots 5600 and 5602
counsel concerned, applies only while should the appeal prosper.
the litigation is pending.
P A G E / 32
 The real property sought to be recovered
was actually the share of petitioner in
Lots 5600 and 5602 which were part of
the estate of his deceased parents and
which were partitioned among the heirs,
which included petitioner and his sister.
 The case having been resolved and title
having been issued to petitioner, adverse
claimant waited for petitioner to comply
with his obligation under the document
executed by him by delivering the ½
portion of the said parcels of land.
Petitioner refused to comply with his
obligation and instead offered to sell the
whole parcels of land to spouses
Larrazabal. Then, adverse claimant
immediately took steps to protect his
interest by filing a motion to annotate his
attorney’s lien and by notifying the
prospective buyers of his claim over the
½ portion of the parcels of land.
 The motion was granted. The annotation
of adverse claim appeared on the new
transfer certificate of title. This adverse
claim became the subject of cancellation
proceedings filed by petitioner-spouses.
The trial court resolved the case in favor
of the adverse claimant. On appeal,
petitioners contended that a contract for
a contingent fee violates Article 1491
because it involves an assignment of a
property subject of litigation.
ISSUE:
WON the contract for a contingent fee
as basis of the interest of Atty.
Fernandez is prohibited by Article
1491 of the Civil Code.
HELD:
 NO. The contention is without merit.
Article 1491 prohibits only the sale or
assignment between the lawyer and his
client of property which is the subject of
litigation. For the prohibition to
operate, the sale or assignment of the
property must take place during the
pendency of the litigation involving
the property.
 Likewise, under American Law, the
prohibition does not apply to “cases
where after completion of litigation the
lawyer accepts on account of his fee and
interest in the assets realized by the
litigation. There is clear distinction
between such cases and one in which the
lawyer speculates on the outcome of the
matter in which he is employed.
 Further, a contract for a contingent fee is
not covered by Article 1491 because the
transfer or assignment of the property in
litigation takes effect only after the
finality of a favorable judgment. In the
instant case, the attorney’s fees of Atty.
Fernandez, consisting of ½ of whatever
the petitioner might recover from his
share in the lots in question is
contingent upon the success of the
appeal. Hence, the payment of the
attorney’s fees, that is, the transfer or
assignment of ½ of the property in
litigation will take place only if the appeal
prospers. Therefore, the transfer actually
takes effect after the finality of a
favorable judgment rendered on appeal
and not during the pendency of litigation
involving the property in question.
Consequently, the contract for a
contingent fee is not covered by Article
1491 of the Civil Code.
CASE # 25
CONJUGAL PARTNERSHIP OF THE
SPOUSES CADAVEDO VS LACAYA
Gr 173188 January 15 2014
FACTS:
- Spouses Vicente Cadavedo and
Benita Arcoy-Cadavedo acquired a
homestead grant over a 230,765-
square meter parcel of land. The
spouses Cadavedo sold the subject
lot to the spouses Ames.
- The issue started when the spouses
Ames failed to pay the balance of the
purchase price.
- Cadavedo engaged the services of
Atty. Lacava who amended the
complaint to assert the nullity of the
sale.
- The RTC upheld the sale of the
subject lot to the spouses Ames. The
spouses Cadavedo, thru Atty.
Lacaya, appealed the case to the CA.
- While the appeal before the CA was
pending, the spouses Ames sold the
subject lot to their children. The
spouses Ames’ was issued in their
children’s names. On October 11,
1976, the spouses Ames mortgaged
the subject lot with the Development
Bank of the Philippines (DBP) in the
names of their children.
- On August 13, 1980, the CA issued
its decision , reversing the decision of
the RTC and declaring the deed of
sale, transfer of rights, claims and
interest to the spouses Ames null
and void ab initio. It directed the
spouses Cadavedo to return the
P A G E / 33
 initial payment and ordered the
Register of Deeds to cancel the
spouses Ames and to reissue another
title in the name of the spouses
Cadavedo. The case eventually
reached this Court via the spouses
Ames’ petition for review on certiorari
which this Court dismissed for lack
of merit.
- On October 16, 1981, the RTC
granted the motion for the issuance
of a writ of execution in the Case No.
and the spouses Cadavedo were
placed in possession of the subject
lot on October 24, 1981. Atty.
Lacaya asked for one-half of the
subject lot as attorney’s fees. He
caused the subdivision of the
subject lot into two equal portions,
based on area, and selected the
more valuable and productive half
for himself; and assigned the other
half to the spouses Cadavedo.
- Vicente andAtty. Lacaya entered into
an amicable settlement (compromise
agreement), re-adjusting the area
and portion obtained by each. Atty.
Lacaya acquired 10.5383 hectares
pursuant to the agreement. The MTC
approved the compromise
agreement.
- The spouses Cadavedo filed before
the RTC an action against the
respondents, assailing the MTC-
approved compromise agreement.
the RTC declared the contingent fee
of 10.5383 hectares as excessive and
unconscionable. The RTC reduced
the land area to 5.2691 hectares and
ordered the respondents to vacate
and restore the remaining
5.2692hectares to the spouses
Cadavedo. The RTC considered the
one-half portion of the subject lot,
as Atty. Lacaya’s contingent
fee,excessive, unreasonable and
unconscionable
- The CA reversed and set aside the
RTC’s September 17, 1996 decision
and maintained the partition and
distribution of the subject lot under
the compromise agreement. In so
ruling, the CA noted the following
facts: (1) Atty. Lacaya served as the
spouses Cadavedo’s counsel from
1969 until 1988,when the latter filed
the present case against Atty.
Lacaya; (2) during the nineteen (19)
years of their attorney-client
relationship, Atty. Lacaya
represented the spouses Cadavedo in
three civil cases.
ISSUE:
Whether or not Atty. Lacaya’s
acquisition of the one-half portion
contravenes Article 1491 of the Civil
code.
RULING:
YES.
- Article 1491 (5) of the Civil Code
forbids lawyers from acquiring, by
purchase or assignment, the
property that has been the subject of
litigation in which they have taken
part by virtue of their
profession.32 The same proscription
is provided under Rule 10 of the
Canons of Professional Ethics.
- A thing is in litigation if there is a
contest or litigation over it in court or
when it is subject of the judicial
action. Following this definition, we
find that the subject lot was still in
litigation when Atty. Lacaya acquired
the disputed one-half portion. We
note in this regard the following
established facts:(1)on September
21, 1981, Atty. Lacaya filed a motion
for the issuance of a writ of execution
in Civil Case No. 1721; (2) on
September 23, 1981, the spouses
Ames filed Civil Case No. 3352
against the spouses Cadavedo; (3)on
October 16, 1981, the RTC granted
the motion filed for the issuance of a
writ of execution in Civil Case No.
1721 and the spouses Cadavedo took
possession of the subject lot on
October 24, 1981; (4) soon after, the
subject lot was surveyed and
subdivided into two equal portions,
and Atty. Lacaya took possession of
one of the subdivided portions; and
(5) on May 13, 1982, Vicente and
Atty. Lacaya executed the
compromise agreement.
- From these timelines, whether by
virtue of the alleged oral contingent
fee agreement or an agreement
subsequently entered into, Atty.
Lacaya acquired the disputed one-
half portion (which was after October
24, 1981) while Civil Case No. 3352
and the motion for the issuance of a
writ of execution in Civil Case No.
1721were already pending before the
lower courts. Similarly, the
compromise agreement, including
the subsequent judicial approval,
was effected during the pendency of
Civil Case No. 3352. In all of these,
the relationship of a lawyer and a
client still existed between Atty.
Lacaya and the spouses Cadavedo.
P A G E / 34
- Thus, whether we consider these
transactions –the transfer of the
disputed one-half portion and the
compromise agreement –
independently of each other or
resulting from one another, we find
them to be prohibited and void by
reason of public policy. Under Article
1409 of the Civil Code, contracts
which are contrary to public policy
and those expressly prohibited or
declared void by law are considered
in existent and void from the
beginning.

- In the present case, we reiterate that

the transfer or assignment of the
disputed one-half portion to Atty.
Lacaya took place while the subject
lot was still under litigation and the
lawyer-client relationship still
existed between him and the spouses
Cadavedo. Thus, the general
prohibition provided under Article
1491 of the Civil Code, rather than
the exception provided in
jurisprudence, applies. The CA
seriously erred in upholding the
compromise agreement on the basis
of the unproved oral contingent fee
agreement.

P A G E / 35