SAN AGUSTIN V.
COURT OF APPEALS xxx
371 SCRA 348 | J. Quisumbing | Dec. 4, 2001
Facts:
The Government Service Insurance System (GSIS) sold to a
certain Macaria Vda. De Caiquep (Macaria) a parcel of land located in
Pasig, part of the GSIS Low Cost Housing Project. The sale, however,
was subject to the condition that within 5 years, the vendee shall not
sell, convey, lease or sublease, or otherwise encumber the property in
favor of another party. Notwithstanding the condition, Macaria sold
the property to respondent Maximo Menez, Jr. (Menez) within the
period. The corresponding Deed of Absolute Sale was notarized but
was not immediately registered due to the five-year prohibition.
In 1979, an Arrest, Search & Seizure Order was issued against
Menez for being suspected as a subversive. Menez voluntarily
surrendered and was detained for 2 years, but upon release, another re-
arrest order was issued, prompting him to hide for another 4 years.
In 1990, Menez discovered that the Transfer Certificate of Title
covering the Pasig property (TCT #436465) was missing. He filed an
Affidavit of Loss and was given a certified copy of TCT #436465,
which indicated that there was a different registered owner of the
property. Menez tried searching for said owner in vain. Later, he filed
a petition before the RTC Pasig for the issuance of owner’s duplicate
copy of TCT #436465 to replace the lost one, which the RTC
eventually granted. As a result, petitioner Jesus San Agustin (San
Agustin), who claimed to be the nephew/heir of the late Macaria and
present occupant of the property, filed a Motion to Reopen
Reconstitution Proceedings, which the RTC denied. When the Court of
Appeals denied his appeal, San Agustin raised the matter to the
Supreme Court.
Issue:
Was the Deed of Absolute Sale between the late Macaria and
respondent Menez valid?
Ruling:
YES. Article 1409 of the Civil Code provides:
“The following contracts are inexistent and void from the
beginning:
(7) Those expressly prohibited or declared void by law.
xxx.”
Petitioner’s contention that the sale between the late Macaria
and Menez contravened the five-year prohibitory period as stated
under Commonwealth Act No. 141 is misplaced because said law
refers to homestead lands only. The subject property is not a
homestead but a lot owned by GSIS in its proprietary capacity.
Moreover, as far as the violation of the five-year prohibitory period is
concerned, it is the GSIS and not petitioner who has a cause of action
against Menez. Since GSIS has not filed any action for annulment of
the sale or forfeiture of the lot, the sale by Macaria to Menez remains
valid for now. The validity of the sale remains binding even upon
Macaria’s heirs, including petitioner, in light of Article 1311 of the
Civil Code which provides, in part: “Contracts take effect only
between the parties, their assigns and heirs…”
In Sarmiento v. Salud, it was held that “[e]ven if the transaction
between [two parties] were wrongful, still, as between themselves, the
purchaser and the seller were both in pari delicto…”1 In the instant
case, both Macaria and Menez were aware of the restriction but still
chose to commit the violation. As a result, both of them are estopped
from assailing and annulling their own deliberate acts.
1
Sarmiento v. Salud, 45 SCRA 213, 216 (1972), citing Articles 1411-1412 of the Civil Code
which provide:
“Article 1411. When the nullity proceeds from the illegality of the cause or object of the
contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall
have no action against each other, and both shall be prosecuted. Moreover, the provisions of
the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable
to the things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may
claim what he has given, and shall not be bound to comply with his promise.
Article 1412. If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has
given by virtue of the contract, or demand the performance of the other's undertaking;
(2) When only one of the contracting parties is at fault, he cannot recover what he has given by
reason of the contract, or ask for the fulfillment of what has been promised him. The other,
who is not at fault, may demand the return of what he has given without any obligation to
comply his promise.”