6. Essential Requisites of Contracts: Cause of Contracts; Olegario v.

CA (1994) [Graza, Siegfred Lance]

G.R. No. 104892 / 238 SCRA 96; November 14, 1994

BONIFACIO OLEGARIO and ADELAIDA VICTORINO, petitioners, vs. THE HONORABLE COURT OF APPEALS,
MANUEL RIVERA, PAZ OLEGARIO, and SOCORRO OLEGARIO-TEVES, respondents.

Ponente: Puno, J.

Material Facts:
Spouses Marciliano Olegario and Aurelia Rivera-Olegario owned a parcel of land in Caloocan City.
The couples were childless but reared and educated private respondents Manuel Rivera, Paz Olegario,
and Socorro Olegario-Teves. Petitioner Bonifacio Olegario is the brother of Marciliano while petitioner
Adelaida Victorino is the niece of Aurelia. Aurelia Rivera-Olegario died and to preclude her heirs from
inheriting and to avoid payment of taxes, Marciliano, executed on April 15, 1986 a Deed of Absolute Sale
of the subject property in favor of private respondents. The contract of sale was not registered. Marciliano
died intestate and petitioners Bonifacio Olegario and Adelaida Victorino were the sole heirs of spouses.
On May 23, 1989, they executed a Deed of Extra-judicial Settlement of Estate.

Petitioners, then, sold the subject lot to Elena Adaon and Nestor Tejon. Private respondents
alleged that the Extra-judicial Settlement came to their knowledge only on August 21, 1989. On that same
day, they tried to register their contract of sale three years from its execution. The registration was denied
as the subject property has been transferred to Elena Adaon and Nestor Tejon.

Private respondents filed a civil case for Annulment of Extrajudicial Settlement of Estate and
Damages against petitioners. As special and affirmative defense, petitioners assailed the sale between
Marciliano and private respondents. The trial court ruled in favor of private respondents. The Sixteenth
Division of the respondent court affirmed the impugned Decision with modifications.

Issue:
Whether or not there is a valid sale of the subject property between Marciliano Olegario and the private
respondents.

Ruling:
IN VIEW WHEREOF, the Decision of respondent court dated January 7, 1992 is REVERSED and SET ASIDE.

Ratio:
The Supreme Court held that under Article 160 of the New Civil Code, the petitioners are the
lawful heirs of spouses Olegario. As to the validity of the sale of the subject lot, it was held that the motive
of the parties may be regarded as the consideration when it predetermines the purpose of the contract.
When they blend to that degree, and the motive is unlawful, then the contract entered into is null and
void. In the case at bench, the primary motive of Marciliano, in selling the subject lot to private
respondents, was to illegally frustrate petitioners' right of inheritance and to avoid payment of estate tax.
The conclusion is thus inescapable that the purported sale of April 15, 1986 of the subject lot is null and
void. Illegal motive predetermined the purpose of the contract. The evidence also does not show that
private respondents had paid the purchase price to Marciliano. Applying Articles 1352 and 1409 of the
Civil Code in relation to the indispensable requisite of a valid cause, it was held that the alleged deed of
sale is void.