G.R. No.

L-48563 May 25, 1979

VICENTE E. TANG, petitioner,
vs.
HON. COURT OF APPEALS and PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, respondents.
This is a petition to review on certiorari of the decision of the Court of Appeals (CA-G.R. No. 55407-R, June 8, 1978) which affirmed the
decision of the Court of First Instance of Manila in Civil Case No. 90062 wherein the petitioner herein was the plaintiff and Philippine American
Life Insurance Co. the herein respondent was the defendant. The action was for the enforcement of two insurance policies that had been issued by
the defendant company under the following circumstances.
On September 25, 1965, Lee See Guat, a widow, 61 years old, and an illiterate who spoke only Chinese, applied for an insurance on her life for
P60,000 with the respondent Company. The application consisted of two parts, both in the English language. The second part of her application
dealt with her state of health and because her answers indicated that she was healthy, the Company issued her Policy No. 0690397, effective
October 23, 1965, with her nephew Vicente E. Tang, herein Petitioner, as her beneficiary,
On November 15, 1965, Lee See Guat again applied with the respondent Company for an additional insurance on her life for P40,000.
Considering that her first application had just been approved, no further medical examination was made but she was required to accomplish and
submit Part I of the application which reads: "I/WE HEREBY DECLARE AND AGREE that all questions, statements answers contained herein,
as well as those made to or to be made to the Medical Examiner in Part II are full, complete and true and bind all parties in interest under the
policy herein applied for; that there shall be no contract of insurance unless a policy is issued on this application and the fun first premium
thereon, according to the mode of payment specified in answer to question 4D above, actually paid during the lifetime and good health of the
Proposed Insured." Moreover, her answers in Part II of her previous application were used in appraising her insurability for the second insurance.
On November 28, 1965, Policy No. 695632 was issued to Lee See Guat with the same Vicente E. Tang as her beneficiary.
On April 20, 1966, Lee See Guat died of lung cancer. Thereafter, the beneficiary of the two policies, Vicente E. Tang claimed for their face value
in the amount of P100,000 which the insurance company refused to pay on the ground that the insured was guilty of concealment and
misrepresentation at the time she applied for the two policies. Hence, the filing of Civil Case No. 90062 in the Court of First Instance of Manila
which dismissed the claim because of the concealment practised by the insured in violation of the Insurance Law.
On appeal, the Court of Appeals, affirmed the decision. In its decision, the Court of Appeals stated, inter alia: "There is no doubt that she
deliberately concealed material facts about her physical condition and history and/or conspired with whoever assisted her in relaying false
information to the medical examiner, assuming that the examiner could not communicate directly with her."
The issue in this appeal is the application of Art. 1332 of the Civil Code which stipulates:
Art. 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.
According to the Code Commission: "This rule is especially necessary in the Philippines where unfortunately there is still a fairly large number
of illiterates, and where documents are usually drawn up in English or Spanish." (Report of the Code Commission, p. 136.) Art. 1332
supplements Art. 24 of the Civil Code which provides 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 handicap, the court must be
vigilant for his protection.
It is the position of the petitioner that because Lee See Guat was illiterate and spoke only Chinese, she could not be held guilty of concealment of
her health history because the applications for insurance were in English and the insurer has not proved that the terms thereof had been fully
explained to her.
It should be noted that under Art. 1332 above quoted, the obligation to show that the terms of the contract had been fully explained to the party
who is unable to read or understand the language of the contract, when fraud or mistake is alleged, devolves on the party seeking to enforce it.
Here the insurance company is not seeking to enforce the contracts; on the contrary, it is seeking to avoid their performance. It is petitioner who
is seeking to enforce them even as fraud or mistake is not alleged. Accordingly, respondent company was under no obligation to prove that the
terms of the insurance contracts were fully explained to the other party. Even if we were to say that the insurer is the one seeking the performance
of the contracts by avoiding paying the claim, it has to be noted as above stated that there has been no imputation of mistake or fraud by the
illiterate insured whose personality is represented by her beneficiary the petitioner herein. In sum, Art. 1332 is inapplicable to the case at bar.
Considering the findings of both the CFI and Court of Appeals that the insured was guilty of concealment as to her state of health, we have to
affirm.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed. No special pronouncement as to costs.
SO ORDERED.
Separate Opinions
ANTONIO, J., concurring:
I concur.
In a contract of insurance each party "must communicate to the other, in good faith, all facts within his knowledgewhich are material to the
contract, and which the other has not the means of ascertaining ... (section 27, Act 2427, as amended. Emphasis supplied). As a general rule, a

failure by the insured to disclose conditions affecting the risk, of which he is aware makes the contract voidable at the option of the insurer (45
C.J.S. 153). The reason for this rule is that insurance policies are traditionally contracts "ubemae fidei" which means most abundant good faith
absolute and perfect candor or openness and honesty; the absence of any concealment or deception however slight. Here, the Court of Appeals
found that the insured "deliberately concealed material facts about her physical condition and history and/or concealed with whoever assisted her
in relaying false information to the medical examiner ... "
Certainly, petitioner cannot assume inconsistent positions by attempting to enforce the contract of insurance for the purpose of collecting the
proceeds of the policy and at the same time nullify the contract by claiming that he executed the same thru fraud or mistake.
# Separate Opinions
ANTONIO, J., concurring:
I concur.
In a contract of insurance each party "must communicate to the other, in good faith, all facts within his knowledgewhich are material to the
contract, and which the other has not the means of ascertaining ... (section 27, Act 2427, as amended. Emphasis supplied). As a general rule, a
failure by the insured to disclose conditions affecting the risk, of which he is aware makes the contract voidable at the option of the insurer (45
C.J.S. 153). The reason for this rule is that insurance policies are traditionally contracts "ubemae fidei" which means most abundant good faith
absolute and perfect candor or openness and honesty; the absence of any concealment or deception however slight. Here, the Court of Appeals
found that the insured "deliberately concealed material facts about her physical condition and history and/or concealed with whoever assisted her
in relaying false information to the medical examiner ... "
Certainly, petitioner cannot assume inconsistent positions by attempting to enforce the contract of insurance for the purpose of collecting the
proceeds of the policy and at the same time nullify the contract by claiming that he executed the same thru fraud or mistake.

C & C COMMERCIAL CORPORATION vs. ANTONIO C. MENOR, as Acting General Manager of the National Waterworks and
Sewerage Authority, and MEMBERS OF THE COMMITTEE ON PRE-QUALIFICATION, NAWASA
This case is about the requirement of a tax clearance certificate as a prerequisite for taking part in public biddings or contracts to sell supplies to
any government agency.
Judge Cloribel of the Court of First Instance of Manila in his decision dated March 1, 1967 in Civil Case No. 66750, a mandamus case, ordered
the Acting General Manager of the National Waterworks and Sewerage Authority and the members of the Committee on Pre-Qualification to
allow C & C Commercial Corporation to participate as a qualified bidder in the public bidding for the supply of asbestos cement pressure pipes
to the Nawasa in spite of the fact that it had a pending tax case and had no tax clearance certificate.
By virtue of that judgment, which became final because the Nawasa did not appeal, C & C Commercial Corporation took part in the bidding.
When the bids were opened on May 18, 1967, it was found to be the lowest bidder.
In a letter dated July 25, 1967, Antonio C. Menor, the acting general manager of the Nawasa, required C & C Commercial Corporation to submit
the tax clearance certificate required in Presidential Administrative Order No, 66 dated June 26, 1967, 63 0. G. 6391, which reads as follows:
Now, therefore, I, Ferdinand E. Marcos, President of the Philippines, by virtue of the powers vested in me by law, do hereby
order the disqualification of any person, natural or juridical, with a pending case before the Bureau of Internal Revenue or the
Bureau of Customs or criminal or civil case in court pending or finally decided against him or it involving non-payment of any
tax, duty or undertaking with the Government, to participate in public biddings or in any contract with the Government or any
of its subdivisions, branches or instrumentalities. including government-owned or controlled corporations, until after such case
or cases are terminated in his or its favor, or unless the Secretary of Finance shall certify that such cases are pending and not
decided without fault on the part of the taxpayer and the taxpayer submits bond for payment of taxes that may be assessed
against him.
Government offices entities and instrumentalities and local governments shall impose this condition and shall require, in
addition, the latest certified copy of BIR Letter of Confirmation Form No. 19.65-E-I and BIR tax clearance Form No. 1761 as
prerequisites to participation in any public bidding orexecution of any contract with them. Violation of this order shall be a
ground for administrative action. (pp. 8-9, Brief for defendants-appellants).
Menor said that the requirement as to the tax clearance certificate was mandatory as held by the Government Corporate Counsel in his Opinion
No. 159, Series of 1967.
On that same date, July 25, 1967, or long after Judge Cloribel's judgment had been executed and when he had no more jurisdiction to amend it, C
& C Commercial Corporation filed a motion in Civil Case No. 66750 wherein it prayed that the Nawasa officials be ordered to award to the said
corporation the contract for the supply of asbestos cement pressure pipes, that they be restrained from awarding the contract to another bidder and
that they be required to show cause why they should not be held in contempt of court. In effect, that motion was another petition for mandamus.
Judge Cloribel in his order of August 23, 1967 granted the motion and ordered Menor and the other Nawasa officials to award within ten days
from notice the contract to C & C Commercial Corporation as the lowest bidder. From that order, the Nawasa appealed to this Court. Judge
Cloribel approved its record on appeal in his order of November 9, 1967.
Realizing that the appeal would delay the award and that another bidder might be given the contract, C & C Commercial Corporation filed in the
lower court another petition for mandamus dated November 21, 1967 wherein it prayed that the Nawasa Board of Directors, its Committee of
Awards and Menor, its acting general manager, be restrained from awarding the contract to another bidder and that they be ordered to award the
contract to C & C Commercial Corporation (pp. 29-30, Rollo).
That case, Civil Case No. 71346, was assigned to Judge Francisco Geronimo. In his order dated January 8, 1968, he denied the motion of C & C
Commercial Corporation for a preliminary injunction. He said that the injunction would be inimical to the public interest (p. 37, Rollo).
The Government Corporate Counsel in a manifestation dated January 15, 1968 apprised the lower court that the Nawasa board of directors in its
resolution dated January 11, 1968 awarded the contract to Regal Trading Corporation as the "lowest complying bidder" (p. 38, Rollo).
Menor in his letter of January 16, 1968 forwarded to the President of the Philippines for examination and review the contract entered into
between the Nawasa and Regal Trading Corporation, acting in behalf of the Sumitomo Shoji Kaisha, Ltd., for the supply of asbestos cement
pressure pipes worth $387,814.72 (p. 41, Rollo). The Presidential Economic Staff and the Office of the President approved the contract (p. 64,
Rollo).
Unable to get an injunction from Judge Geronimo, C & C Commercial Corporation sought recourse in this Court. In its ex parte motion of
January 28, 1968, it asked this Court to enjoin the implementation of the said contract (p. 16, Rollo).
The Nawasa opposed the motion on the ground that there was nothing more to be enjoined. Its counsel revealed in its opposition what C & C
Commercial Corporation had suppressed: the fact that after Judge Geronimo had denied its petition for injunction C & C Commercial
Corporation instituted another action (the third case) in the Court of First Instance at Pasig, Rizal (presided over by Judge Pedro Navarro),
docketed as Civil Case No. 10572, wherein it sought a declaration of the nullity of the award to Regal Trading Corporation.
Judge Navarro in his order dated February 7, 1968 restrained Menor, the Nawasa, the Committee of Awards and Regal Trading Corporation
"from going through" with the said contract and from opening the corresponding letter of credit until the injunction incident is resolved (pp. 5859 and 80-81, Rollo).
In contrast, this Court in its resolution of March 18, 1968 denied C & C Commercial Corporation's aforementioned motion for the issuance of an
injunction. As the parties herein had already submitted their briefs, the appeal was submitted for decision. The issue is the propriety of Judge

Cloribel's order compelling the Nawasa officials to award the said contract to C & C Commercial Corporation.
It may be argued that the issue had become moot because the contract had already been awarded to Regal Trading Corporation in 1968 and at
this late hour it can be presumed that the contract had been fully performed and implemented. Nevertheless, a ruling on the contentions of C & C
Commercial Corporation is necessary, according to the Government Corporate Counsel, "if only to make the appellee-corporation stop playing
around with our courts" (p. 70, Rollo). For the guidance of the bench and bar, we have to resolve the legal issues raised by the Nawasa.
We hold that Judge Cloribel acted without jurisdiction and with grave abuse of discretion in issuing his erroneous order, directing that the
Nawasa officials should award the contract to C & C Commercial Corporation. The order is erroneous and void for the following reasons:
1. The said order was an amendment of a judgment that had already been satisfied. The case was closed and terminated. Judge Cloribel had no
right and authority to issue such an order after he had lost jurisdiction over the case. The award of the contract to C & C Commercial Corporation
was not the lis mota in the mandamus case before Judge Cloribel. It was an extraneous matter that could not have been injected into that case nor
resolved therein. What was in issue was whether C & C Commercial Corporation should be allowed to take part in the bidding even if it had no
tax clearance certificate.
2. The Nawasa was justified in not awarding the contract- to C & C Commercial Corporation because it had no tax clearance certificate. It had a
pending tax case in the Bureau of Internal Revenue. The award to C & C Commercial Corporation would be in gross contravention of
Administrative Order No. 66.
That was the ruling in Nawasa vs. Reyes, L-28597, February 29, 1968, 22 SCRA 905, where the bidder was also the appellee herein, C & C
Commercial Corporation. It was held therein that C & C Commercial Corporation was disqualified under the said order to take part in the
bidding to supply the Nawasa with steel pipes because it had "tremendous tax liabilities".
Under Administrative Order No. 66, the Nawasa officials would be subject to administrative disciplinary action if they awarded the contract to C
& C Commercial Corporation in spite of its unsettled tax liabilities.
The trial court erred in holding that Administrative Order No. 66 could not be given a retroactive effect to the bid of C & C Commercial
Corporation which allegedly had been allowed to bid in prior transactions with the Nawasa in spite of its pending tax case,
It erred because Administrative Order No. 66 (promulgated after Judge Cloribel had rendered his decision of March 1, 1967) covers not only the
bidding but also the "execution of any contract with" the lowest bidder. In this case, at the time the said order was issued, no award had as yet
been made and when the award was to be made, the said order was already in force.
3. Moreover, it was not the ministerial duty of the Nawasa officials to award the contract to C & C Commercial Corporation even if it was the
lowest bidder, The Nawasa in its addendum No.1 to the invitation to bid dated July 6, 1966 reserved the right "to reject the bid of any bidder" (p.
35, Record on Appeal).
Therefore, a bidder whose bid is rejected has no cause for complaint nor a right to dispute the award to another bidder (Esguerra & Sons vs.
Aytona, 114 Phil. 1189; Surigao Mineral Reservation Board vs. Cloribel, L-27072, July 31, 1968, 24 SCRA 491).
It should be noted that "advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest
or lowest bidder, unless the contrary appears" (Art. 1326, Civil Code). No such contrary intention appears in this case.
WHEREFORE, the trial court's order is reversed and set aside with costs against C & C Commercial Corporation. SO ORDERED.
Separate Opinions
ABAD SANTOS, J., concurring:
I concur. I wish to add that the rehabilitation of the waterworks system in Metro Manila was considerably delayed because contractors filed
baseless suits and they were aided by judges who should have known better.
DE CASTRO, J., dissenting:
In a judgment rendered by the Court of First Instance of Manila in Civil Case No. 66750 filed by the C & C Commercial Corporation principally
against the NAWASA on September 7, 1966, the court ordered the NAWASA to allow the plaintiff corporation to enter as among the qualified
bidders in the bidding for the supply of asbestos cement pressure pipes on September 23, 1966. 1 The complaint was filed because of the
imposition of a requirement by NAWASA for the bidders to submit a certificate to the effect that they have paid all taxes due with the Bureau of
Internal Revenue, which the plaintiff questioned as illegal. 2
Choosing not to appeal the decision which thus became final and executory, and in compliance therewith, the defendant NAWASA pre-qualified
the plaintiff corporation which thereupon submitted its bid. However, before NAWASA could make any award of the corresponding contract, the
President of the Philippines promulgated Administrative Order No. 66 "disqualifying any person, natural or juridical, with a pending case before
the Bureau of Internal Revenue or the Bureau of Customs, or criminal or civil case in court, pending or finally decided against him or involving
non-payment of any tax, duty or undertaking with the government, to participate in public bidding or in any contract with the government or any
of its subdivision, branches or instrumentalities including government-owned or controlled corporation ... by reason of which NAWASA refused
to award the contract to plaintiff corporation, prompting the latter to file a motion praying that defendants award the contract called for to said
plaintiff being the lowest responsible bidder. 3 Granting the motion, the court ordered the defendants to award the contract in favor of the
plaintiff, the court observing in its Order dated August 23, 1967, that the plaintiff is "the lowest bidder and practically the only one who can
furnish a Filipino or local product under the provision of Commonwealth Act No. 138." 4
In the motion for reconsideration of the aforementioned order, defendants contended that the matter of award of the contract was not included in

the Decision dated March 1, 1967; that Administrative Order No. 66 of the President of the Philippines dated June 26, 1967 applies to the
contract called for; and that the matter of the award of the contract in question rests on the absolute discretion of the defendants, taking into
consideration all the circumstances attendant thereto. 5 This motion having been denied, defendants took the present recourse to have the Order
dated August 23, 1967 of th lower court set aside.
The only issues raised by the defendants-appellants (appellants for short) are: (1) whether or not the award of the contract in question may be
deemed to have been included in the judgment of the Court of First Instance dated March 1, 1967, or inferred therefrom; and (2) whether or not
Administrative Order No. 66 dated June 26, 1967 of the President of the Philippines applies in the instant case.
The decision of the Court of First Instance of Manila dated March 1, 1967 disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered granting the relief prayed for by ordering the defendants to
allow the plaintiff corporation to enter as among the qualified bidders to supply the materials consisting of locally
manufactured asbestos cement pressure pipes of different sizes from 12" to 24" diameter, without costs or damages.
In accordance with the foregoing decision, plaintiff-appellee (appellee for short) submitted its bid. However,despite that it was found on May 18,
1967 to have been the lowest responsible bidder, appellee was not forthwith given the final award of the corresponding contract because, as stated
earlier, the President of the Philippines promulgated on June 26, 1967 Administrative Order No. 66 pertinent provisions of which reads:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by law,
do hereby order the disqualification of any person, natural or juridical, with a pending case before the Bureau of Internal
Revenue of the Bureau of Customs, or criminal or civil case in court pending or finally decided against him or it involving nonpayment of any tax, duty, or undertaking with the Government, to participate in public biddings or in any contract with the
Government or any of its subdivisions, branches, or instrumentalities, including government-owned or controlled corporations,
until after such case or cases are terminated in his or its favor, or unless the Secretary of Finance shall certify, that such cases
are pending and not decided 'without fault on the part of the taxpayer and the taxpayer submits bond for payment of taxes that
may be assessed against him.
Government offices, entities and instrumentalities and local governments, shall impose this condition and shall require in
addition, the latest certified copy of BIR Letter of Confirmation Form -No. 19.65 E-I and BIR Tax Clearance Form No. 17.61 as
prerequisite to participation in any public biddings orexecution of any contract with them. Violation of this Order shall be a
ground for administrative action. (Emphasis supplied)
What appellant Antonio C. Menor, Acting General Manager of NAWASA did was to address a letter to appellee on July 25, 1967, requesting it to
comply within ten (10) days from receipt of the letter with the requirements of the presidential administrative order, and to submit to his office
proof of said compliance. 6
On the same date, July 25, 1967, plaintiff filed a "Motion" with the court below for the issuance of an order to compel appellants to "award the
contract called for in the aforementioned bidding" in its favor. To the motion, appellants filed an opposition, despite which, the lower court issued
the questioned Order of August 23, 1967.
The main contention of appellants in seeking the setting aside of the aforementioned questioned order is that the subject thereof is not included
in, or inferred from, the judgment of March 1, 1967 which merely "ordered appellants to allow the plaintiff to enter as among the qualified
bidders." Appellants claim that the Judgment, was already satisfied when appellants pre-qualified the appellee and allowed it to tender its bid, and
that nothing more is to be done under the judgment.
It is at this point that Section 49 of the Revised Rules of Court on the "Effect of judgment" comes into play, the pertinent provisions of which are
as follows:
SECTION 49. Effect of Judgments.- The effect of a judgement or final order rendered by a court or judge of the Philippines,
having jurisdiction to pronounce the judgment or order, may be as follows:
(a) . . .
(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have
been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the
commencement of action or special proceeding, litigation for the same thing and under the same title and in the same capacity;
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in
a former judgement which appears upon its face to have been so adjudged, or which was actually and necessarily included
therein or necesarry thereto.
Appellants contend that the matter of the award of the contract in question was not "so adjudged" in the judgment of March 1, 1967 which
limited its dispositive portion to adjudging only the pre-qualification of appellee. Appellee contends otherwise and maintains that the awarding of
the contract to it is necessarily implied from and included in the order in the judgment declaring it qualified to take part in the bidding.
I find merit in the contention of appellee. In bringing the action to compel appellants to allow it to take part in the bidding in question, appellee
necessarily meant to be also awarded the corresponding contract if its bid is found to be the lowest within the meaning of the term "lowest
bidder" under the law and jurisprudence. The judgment, ordering appellants to allow appellee to enter its bid would be empty and meaningless if
despite the fact that appellee is found to be the "lowest bidder", the award of the contract is not made in its favor, without any valid reason to
reject any or all bids as is generally set forth in all invitations to bid. No valid reason is intimidated by appellants other than the promulgation of
Presidential Administrative Order No. 66, after the judgment has become final and even already executed, at least insofar as it ordered appellants
to allow appellee to enter its bid. This is evident from the fact that appellants gave appellee ten (10) days within which to comply with its
provision, indicating that if the requirement thereof is complied with by appellee, the contract would be awarded to it as the lowest bidder.

For obvious reason, appellee could not comply with the aforementioned requirement, for it is an admitted fact that it has pending tax cases before
the Bureau of Internal Revenue. It is precisely for this reason that appellee went to court and filed Civil Case No. 66750 when appellants imposed
on it (appellee) the same or similar requirements as those found in Administrative Order No. 66, in order to have itself declared qualified to take
part in the bidding. When the lower court decided in favor of appellee by declaring it to be qualified to so take part in the public bidding in
question, the judgment must take precedence over Administrative Order No. 66 promulgated after the judgment has become final.
As may be seen, the presidential administrative order disqualified a person, natural or juridical, who has a pending tax case, administrative or
judicial, from participating in public biddings or any contract with the Government or any of its subdivisions, branches or instrumentalities,
including government-owned or controlled corporation. The judgment in question, on the other hand, qualified appellee to participate in the
public bidding, which necessarily includes the award to him of the corresponding contract, if found to be the lowest bidder, otherwise taking part
in the bidding would be a meaningless exercise and the judgment, an empty victory for appellee.1wph1.t The judgment has become the "law
of the case," and in a true sense, the judgment has become "property" of which it may not be deprived without due process of law. This is exactly
what Administrative Order No. 66 of the President of the Philippines would do if it is made to apply to the instant case, for while the Court, by
final judgment, qualified appellee to participate in the bidding, the Administrative Order would disqualify said party. This would be an illegal
interference on the power of the judiciary.
I, therefore, vote to dismiss the appeal and the order appealed from, affirmed, if only on reliance of the provision of Section 11, Article X of the
New Constitution for reasons I have set forth at length in Malacora vs. Court of Appeals, G.R. No. 51042, September 30, 1982, this case having
been submitted more than eighteen (18) months before the instant case could be decided.
Separate Opinions
ABAD SANTOS, J., concurring:
I concur. I wish to add that the rehabilitation of the waterworks system in Metro Manila was considerably delayed because contractors filed
baseless suits and they were aided by judges who should have known better.
DE CASTRO, J., dissenting:
In a judgment rendered by the Court of First Instance of Manila in Civil Case No. 66750 filed by the C & C Commercial Corporation principally
against the NAWASA on September 7, 1966, the court ordered the NAWASA to allow the plaintiff corporation to enter as among the qualified
bidders in the bidding for the supply of asbestos cement pressure pipes on September 23, 1966. 1 The complaint was filed because of the
imposition of a requirement by NAWASA for the bidders to submit a certificate to the effect that they have paid all taxes due with the Bureau of
Internal Revenue, which the plaintiff questioned as illegal. 2
Choosing not to appeal the decision which thus became final and executory, and in compliance therewith, the defendant NAWASA pre-qualified
the plaintiff corporation which thereupon submitted its bid. However, before NAWASA could make any award of the corresponding contract, the
President of the Philippines promulgated Administrative Order No. 66 "disqualifying any person, natural or juridical, with a pending case before
the Bureau of Internal Revenue or the Bureau of Customs, or criminal or civil case in court, pending or finally decided against him or involving
non-payment of any tax, duty or undertaking with the government, to participate in public bidding or in any contract with the government or any
of its subdivision, branches or instrumentalities including government-owned or controlled corporation ... by reason of which NAWASA refused
to award the contract to plaintiff corporation, prompting the latter to file a motion praying that defendants award the contract called for to said
plaintiff being the lowest responsible bidder. 3 Granting the motion, the court ordered the defendants to award the contract in favor of the
plaintiff, the court observing in its Order dated August 23, 1967, that the plaintiff is "the lowest bidder and practically the only one who can
furnish a Filipino or local product under the provision of Commonwealth Act No. 138." 4
In the motion for reconsideration of the aforementioned order, defendants contended that the matter of award of the contract was not included in
the Decision dated March 1, 1967; that Administrative Order No. 66 of the President of the Philippines dated June 26, 1967 applies to the
contract called for; and that the matter of the award of the contract in question rests on the absolute discretion of the defendants, taking into
consideration all the circumstances attendant thereto. 5 This motion having been denied, defendants took the present recourse to have the Order
dated August 23, 1967 of th lower court set aside.
The only issues raised by the defendants-appellants (appellants for short) are: (1) whether or not the award of the contract in question may be
deemed to have been included in the judgment of the Court of First Instance dated March 1, 1967, or inferred therefrom; and (2) whether or not
Administrative Order No. 66 dated June 26, 1967 of the President of the Philippines applies in the instant case.
The decision of the Court of First Instance of Manila dated March 1, 1967 disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered granting the relief prayed for by ordering the defendants to
allow the plaintiff corporation to enter as among the qualified bidders to supply the materials consisting of locally
manufactured asbestos cement pressure pipes of different sizes from 12" to 24" diameter, without costs or damages.
In accordance with the foregoing decision, plaintiff-appellee (appellee for short) submitted its bid. However,despite that it was found on May 18,
1967 to have been the lowest responsible bidder, appellee was not forthwith given the final award of the corresponding contract because, as stated
earlier, the President of the Philippines promulgated on June 26, 1967 Administrative Order No. 66 pertinent provisions of which reads:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by law,
do hereby order the disqualification of any person, natural or juridical, with a pending case before the Bureau of Internal
Revenue of the Bureau of Customs, or criminal or civil case in court pending or finally decided against him or it involving nonpayment of any tax, duty, or undertaking with the Government, to participate in public biddings or in any contract with the
Government or any of its subdivisions, branches, or instrumentalities, including government-owned or controlled corporations,

until after such case or cases are terminated in his or its favor, or unless the Secretary of Finance shall certify, that such cases
are pending and not decided 'without fault on the part of the taxpayer and the taxpayer submits bond for payment of taxes that
may be assessed against him.
Government offices, entities and instrumentalities and local governments, shall impose this condition and shall require in
addition, the latest certified copy of BIR Letter of Confirmation Form -No. 19.65 E-I and BIR Tax Clearance Form No. 17.61 as
prerequisite to participation in any public biddings orexecution of any contract with them. Violation of this Order shall be a
ground for administrative action. (Emphasis supplied)
What appellant Antonio C. Menor, Acting General Manager of NAWASA did was to address a letter to appellee on July 25, 1967, requesting it to
comply within ten (10) days from receipt of the letter with the requirements of the presidential administrative order, and to submit to his office
proof of said compliance. 6
On the same date, July 25, 1967, plaintiff filed a "Motion" with the court below for the issuance of an order to compel appellants to "award the
contract called for in the aforementioned bidding" in its favor. To the motion, appellants filed an opposition, despite which, the lower court issued
the questioned Order of August 23, 1967.
The main contention of appellants in seeking the setting aside of the aforementioned questioned order is that the subject thereof is not included
in, or inferred from, the judgment of March 1, 1967 which merely "ordered appellants to allow the plaintiff to enter as among the qualified
bidders." Appellants claim that the Judgment, was already satisfied when appellants pre-qualified the appellee and allowed it to tender its bid, and
that nothing more is to be done under the judgment.
It is at this point that Section 49 of the Revised Rules of Court on the "Effect of judgment" comes into play, the pertinent provisions of which are
as follows:
SECTION 49. Effect of Judgments.- The effect of a judgement or final order rendered by a court or judge of the Philippines, having
jurisdiction to pronounce the judgment or order, may be as follows:
(a) . . .
(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of action or special
proceeding, litigation for the same thing and under the same title and in the same capacity;
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former
judgement which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necesarry
thereto.

Appellants contend that the matter of the award of the contract in question was not "so adjudged" in the judgment of March 1, 1967 which
limited its dispositive portion to adjudging only the pre-qualification of appellee. Appellee contends otherwise and maintains that the awarding of
the contract to it is necessarily implied from and included in the order in the judgment declaring it qualified to take part in the bidding.
I find merit in the contention of appellee. In bringing the action to compel appellants to allow it to take part in the bidding in question, appellee
necessarily meant to be also awarded the corresponding contract if its bid is found to be the lowest within the meaning of the term "lowest
bidder" under the law and jurisprudence. The judgment, ordering appellants to allow appellee to enter its bid would be empty and meaningless if
despite the fact that appellee is found to be the "lowest bidder", the award of the contract is not made in its favor, without any valid reason to
reject any or all bids as is generally set forth in all invitations to bid. No valid reason is intimidated by appellants other than the promulgation of
Presidential Administrative Order No. 66, after the judgment has become final and even already executed, at least insofar as it ordered appellants
to allow appellee to enter its bid. This is evident from the fact that appellants gave appellee ten (10) days within which to comply with its
provision, indicating that if the requirement thereof is complied with by appellee, the contract would be awarded to it as the lowest bidder.
For obvious reason, appellee could not comply with the aforementioned requirement, for it is an admitted fact that it has pending tax cases before
the Bureau of Internal Revenue. It is precisely for this reason that appellee went to court and filed Civil Case No. 66750 when appellants imposed
on it (appellee) the same or similar requirements as those found in Administrative Order No. 66, in order to have itself declared qualified to take
part in the bidding. When the lower court decided in favor of appellee by declaring it to be qualified to so take part in the public bidding in
question, the judgment must take precedence over Administrative Order No. 66 promulgated after the judgment has become final.
As may be seen, the presidential administrative order disqualified a person, natural or juridical, who has a pending tax case, administrative or
judicial, from participating in public biddings or any contract with the Government or any of its subdivisions, branches or instrumentalities,
including government-owned or controlled corporation. The judgment in question, on the other hand, qualified appellee to participate in the
public bidding, which necessarily includes the award to him of the corresponding contract, if found to be the lowest bidder, otherwise taking part
in the bidding would be a meaningless exercise and the judgment, an empty victory for appellee. The judgment has become the "law of the case,"
and in a true sense, the judgment has become "property" of which it may not be deprived without due process of law. This is exactly what
Administrative Order No. 66 of the President of the Philippines would do if it is made to apply to the instant case, for while the Court, by final
judgment, qualified appellee to participate in the bidding, the Administrative Order would disqualify said party. This would be an illegal
interference on the power of the judiciary.
I, therefore, vote to dismiss the appeal and the order appealed from, affirmed, if only on reliance of the provision of Section 11, Article X of the
New Constitution for reasons I have set forth at length in Malacora vs. Court of Appeals, G.R. No. 51042, September 30, 1982, this case having
been submitted more than eighteen (18) months before the instant case could be decided.
G.R. No. L-30771 May 28, 1984 LIAM LAW vs. OLYMPIC SAWMILL CO. and ELINO LEE CHI
This is an appeal by defendants from a Decision rendered by the then Court of First Instance of Bulacan. The appeal was originally taken to the

then Court of Appeals, which endorsed it to this instance stating that the issue involved was one of law.
It appears that on or about September 7, 1957, plaintiff loaned P10,000.00, without interest, to defendant partnership and defendant Elino Lee
Chi, as the managing partner. The loan became ultimately due on January 31, 1960, but was not paid on that date, with the debtors asking for an
extension of three months, or up to April 30, 1960.
On March 17, 1960, the parties executed another loan document. Payment of the P10,000.00 was extended to April 30, 1960, but the obligation
was increased by P6,000.00 as follows:
That the sum of SIX THOUSAND PESOS (P6,000.00), Philippine currency shall form part of the principal obligation to
answer for attorney's fees, legal interest, and other cost incident thereto to be paid unto the creditor and his successors in
interest upon the termination of this agreement.
Defendants again failed to pay their obligation by April 30, 1960 and, on September 23, 1960, plaintiff instituted this collection case. Defendants
admitted the P10,000.00 principal obligation, but claimed that the additional P6,000.00 constituted usurious interest.
Upon application of plaintiff, the Trial Court issued, on the same date of September 23, 1960, a writ of Attachment on real and personal
properties of defendants located at Karanglan, Nueva Ecija. After the Writ of Attachment was implemented, proceedings before the Trial Court
versed principally in regards to the attachment.
On January 18, 1961, an Order was issued by the Trial Court stating that " after considering the manifestation of both counsel in Chambers, the
Court hereby allows both parties to simultaneously submit a Motion for Summary Judgment. 1 The plaintiff filed his Motion for Summary
Judgment on January 31, 1961, while defendants filed theirs on February 2, 196l. 2
On June 26, 1961, the Trial Court rendered decision ordering defendants to pay plaintiff "the amount of P10,000.00 plus the further sum of
P6,000.00 by way of liquidated damages . . . with legal rate of interest on both amounts from April 30, 1960." It is from this judgment that
defendants have appealed.
We have decided to affirm.
Under Article 1354 of the Civil Code, in regards to the agreement of the parties relative to the P6,000.00 obligation, "it is presumed that it exists
and is lawful, unless the debtor proves the contrary". No evidentiary hearing having been held, it has to be concluded that defendants had not
proven that the P6,000.00 obligation was illegal. Confirming the Trial Court's finding, we view the P6,000.00 obligation as liquidated damages
suffered by plaintiff, as of March 17, 1960, representing loss of interest income, attorney's fees and incidentals.
The main thrust of defendants' appeal is the allegation in their Answer that the P6,000.00 constituted usurious interest. They insist the claim of
usury should have been deemed admitted by plaintiff as it was "not denied specifically and under oath". 3
Section 9 of the Usury Law (Act 2655) provided:
SEC. 9. The person or corporation sued shall file its answer in writing under oath to any complaint brought or filed against said
person or corporation before a competent court to recover the money or other personal or real property, seeds or agricultural
products, charged or received in violation of the provisions of this Act. The lack of taking an oath to an answer to a complaint
will mean the admission of the facts contained in the latter.
The foregoing provision envisages a complaint filed against an entity which has committed usury, for the recovery of the usurious interest paid.
In that case, if the entity sued shall not file its answer under oath denying the allegation of usury, the defendant shall be deemed to have admitted
the usury. The provision does not apply to a case, as in the present, where it is the defendant, not the plaintiff, who is alleging usury.
Moreover, for sometime now, usury has been legally non-existent. Interest can now be charged as lender and borrower may agree upon. 4 The
Rules of Court in regards to allegations of usury, procedural in nature, should be considered repealed with retroactive effect.
Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time
of their passage. Procedural laws are retrospective in that sense and to that extent. 5
... Section 24(d), Republic Act No. 876, known as the Arbitration Law, which took effect on 19 December 1953, and may be
retroactively applied to the case at bar because it is procedural in nature. ... 6
WHEREFORE, the appealed judgment is hereby affirmed, without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.

G.R. No. L-32066 August 6, 1979 MANUEL LAGUNZAD vs. MARIA SOTO VDA. DE GONZALES and CA

Before us is a Petition for Review by certiorari of the Decision of the Court of Appeals in CA-G.R. No. 34703, promulgated on January 13, 1970,
affirming the Decision of the Court of First Instance of Negros Occidental, dated June 30, 1964, in Civil Case No. 6414 entitled "Maria Soto
Vda. de Gonzales vs. Manuel Lagunzad," for a Sum of Money and Attachment.
The present controversy stems from a "Licensing Agreement" entered into by and between petitioner Manuel M. Lagunzad and private
respondent Maria Soto Vda. de Gonzales on October 5, 1961, which contract petitioner claims to be null and void for having been entered into by
him under duress, intimidation and undue influence.
The antecedental facts follow: Sometime in August, 1961, petitioner Manuel Lagunzad, a newspaperman, began the production of a movie
entitled "The Moises Padilla Story" under the name of his own business outfit, the "MML Productions." It was based mainly on the copyrighted
but unpublished book of Atty. Ernesto Rodriguez, Jr., entitled "The Long Dark Night in Negros" subtitled "The Moises Padilla Story," the rights
to which petitioner had purchased from Atty. Rodriguez in the amount of P2,000.00.
The book narrates the events which culminated in the murder of Moises Padilla sometime between November 11 and November 17, 1951. Padilla
was then a mayoralty candidate of the Nacionalista Party (then the minority party) for the Municipality of Magallon, Negros Occidental, during
the November, 1951 elections. Governor Rafael Lacson, a member of the Liberal Party then in power and his men were tried and convicted for
that murder in People vs. Lacson, et al. In the book, Moises Padilla is portrayed as "a martyr in contemporary political history."
Although the emphasis of the movie was on the public life of Moises Padilla, there were portions which dealt with his private and family life
including the portrayal in some scenes, of his mother, Maria Soto Vda. de Gonzales, private respondent herein, and of one "Auring" as his girl
friend.
The movie was scheduled for a premiere showing on October 16, 1961, or at the very latest, before the November, 1961 elections.
On October 3, 1961, petitioner received a telephone call from one Mrs. Nelly Amante, half-sister of Moises Padilla, objecting to the filming of
the movie and the "exploitation" of his life. Shown the early "rushes" of the picture, Mrs. Amante and her sister, Mrs. Gavieres, objected to many
portions thereof notwithstanding petitioner's explanation that the movie had been supervised by Ernesto Rodriguez, Jr., based on his book "The
Long Dark Night in Negros." On October 5, 1961, Mrs. Amante, for and in behalf of her mother, private respondent, demanded in writing for
certain changes, corrections and deletions in the movie. Petitioner contends that he acceded to the demands because he had already invested
heavily in the picture to the extent of mortgaging his properties, in addition to the fact that he had to meet the scheduled target date of the
premiere showing.
On the same date, October 5, 1961, after some bargaining as to the amount to be paid, which was P50,000.00 at first, then reduced to P20,000.00,
petitioner and private respondent, represented by her daughters and Atty. Ernesto Rodriguez, at the law office of Jalandoni and Jamir, executed a
"Licensing Agreement" reading as follows:
LICENSING AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement, made and executed at the City of Manila, Philippines, this 5th day of October, 1961, by and between:
MANUEL M. LAGUNZAD, of legal age, married, presently engaged in the business of producing motion
pictures under the style of "MML Productions" with residence at 76 Central Boulevard, Quezon City and with
offices at 301 Cu Unjieng Bldg., Escolta, Manila and hereinafter referred to as LICENSEE,
and
MARIA SOTO VDA. DE GONZALES, of legal age, widow, resident of the Municipality of Moises Padilla,
Province of Negros Occidental, represented in this Act by her Attorneys-in-fact Atty. Ernesto Rodriguez, Jr. of
legal age and resident of 393F-Buencamino St., San Miguel, Manila; Maria Nelly G. Amazite, of legal age
and resident of 121 South 13, Quezon City; and Dolores G, Gavieres, of legal age, and resident of 511 San
Rafael Street, Quiapo, Manila, also duly authorized and hereinafter referred to as LICENSOR,
WITNESSETH:
That, the LICENSEE is currently producing a motion picture entitled "The Moises Padilla Story" (hereinafter referred to as the
PICTURE, for short) based on certain episodes in the life of Moises Padilla, now deceased:
That the LICENSOR is the legitimate mother and only surviving compulsory heir of Moises Padilla, the latter not having
married during his lifetime and having died without any descendants, legitimate or illegitimate;
That, in the PICTURE and in all incidents thereof, such as scenarios, advertisements, etc., the LICENSEE has, without the prior
consent and authority of LICENSOR, exploited the life story of Moises Padilla for pecuniary gain and other profit motives, and
has, furthermore encroached upon the privacy of Moises Padilla's immediate family, and has in fact, included in the
PICTURE'S cast, persons portraying some of MOISES PADILLA's kin, including LICENSOR herself;
That, for and in consideration of the foregoing premises and the other covenants and conditions hereunder stated, the
LICENSOR hereby grants authority and permission to LICENSEE to exploit, use, and develop the life story of Moises Padilla
for purposes of producing the PICTURE, and in connection with matters incidental to said production, such as advertising and
the like, as well as authority and permission for the use of LICENSOR's name in the PICTURE and have herself portrayed
therein, the authority and permission hereby granted, to retroact to the date when LICENSEE first committed any of the acts
herein authorized.
THE CONDITIONS AND OTHER COVENANTS OF THIS AGREEMENT ARE AS FOLLOWS:
1. For and in consideration of the authority and permission hereby granted by LICENSOR to LICENSEE, LICENSEE shall pay
LICENSOR, through Atty. Lope E. Adriano at the Pelaez and Jalandoni Law Office, 6th Floor, Magsaysay Bldg., San Luis,
Ermita, Manila, the following:
a) The sum of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, payable without need of
further demand, as follows: P5,000.00 on or before Oct. 10, 1961; P10,000.00 on or before Oct. 31, 1961; and
P5,000.00 on or before November 30, 1961. In default of the payment of any of these amounts as they fall
due, the others become immediately due and demandable.
b) A royalty in such amount corresponding to TWO AND A HALF PER CENTUM (2- %) of all gross
income or receipts derived by, and/or for and in behalf of, LICENSEE as rentals and or percentage of box
office receipts from exhibitors and others for the right to exploit, use, distribute and/or exhibit the picture

anywhere here in the Philippines or abroad.

2) The LICENSEE agrees to keep complete, true and accurate books of accounts, contracts and vouchers relating to the
exploitation, distribution and exhibition of the PICTURE, the bookings thereof and the rentals and gross receipts therefrom, and
to give to LICENSOR and/or her accredited representatives, full access at all reasonable times to all of the said books, accounts,
records, vouchers and all other papers.
3) The LICENSEE shall furnish LICENSOR monthly statements in duplicate, showing in detail the gross receipts accruing
from the picture, which monthly statements shall be delivered to the LICENSOR with reasonable promptness, and upon
verification and approval of said statements by LICENSOR, the LICENSEE shall pay the corresponding royalties due to the
LICENSOR.
4) The authority and permission herein granted is subject to the condition that LICENSEE shall change, delete, and/or correct
such portions in the PICTURE as the LICENSOR may require, in writing before final printing of the PICTURE, and shall,
furthermore, not be understood as a consent to anything in the picture that is, or tends to be, derogatory to the deceased
MOISES PADILLA or to LICENSOR.
5) The LICENSOR shall not in any way be liable on any claim from third persons as a result of, or arising from, the manner by
which the PICTURE is put together, nor on any claim arising from the production, distribution and exhibition of the PICTURE,
and in the event of any such claim being asserted against LICENSOR, the LICENSEE undertakes to hold LICENSOR harmless
thereon.
6) This agreement shall be binding upon the parties hereto, their representatives, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the date and at the place first above stated.
MARIA SOTO VDA. DE GONZALES MANUEL M. LAGUNZAD
Licensor Licensee
By:
(Sgd.) ERNESTO R. RODRIGUEZ, Jr.
(Sgd.) MARIA NELLY G. AMANTE
(Sgd.) DOLORES G. GAVIERES
Attorneys-in-fact
SIGNED IN THE PRESENCE OF:
LOPE E. ADRIANO ILLEGIBLE
ACKNOWLEDGMENT
Petitioner takes the position that he was pressured into signing the Agreement because of private respondent's demand, through Mrs. Amante, for
payment for the "exploitation" of the life story of Moises Padilla, otherwise, she would "call a press conference declaring the whole picture as a
fake, fraud and a hoax and would denounce the whole thing in the press, radio, television and that they were going to Court to stop the picture."
On October 10, 1961, petitioner paid private respondent the amount of P5,000.00 but contends that he did so not pursuant to their Agreement but
just to placate private respondent.
On October 14, 1961, the filming of the movie was completed. On October 16, 1961, a premiere showing was held at the Hollywood Theatre,
Manila, with the Moises Padilla Society as its sponsor. Subsequently, the movie was shown in different theaters all over the country.
Because petitioner refused to pay any additional amounts pursuant to the Agreement, on December 22, 1961, private respondent instituted the
present suit against him praying for judgment in her favor ordering petitioner 1) to pay her the amount of P15,000.00, with legal interest from the
filing of the Complaint; 2) to render an accounting of the proceeds from the picture and to pay the corresponding 2-1/2% royalty therefrom; 3) to
pay attorney's fees equivalent to 20% of the amounts claimed; and 4) to pay the costs.
Traversing the Complaint, petitioner contended in his Answer that the episodes in the life of Moises Padilla depicted in the movie were matters of
public knowledge and occurred at or about the same time that the deceased became and was a public figure; that private respondent has no
property right over those incidents; that the Licensing Agreement was without valid cause or consideration and that he signed the same only
because private respondent threatened him with unfounded and harassing action which would have delayed production; and that he paid private
respondent the amount of P5,000.00 in October, 1961, only because of the coercion and threat employed upon him. By way of counterclaim,
petitioner demanded that the Licensing Agreement be declared null and void for being without any valid cause; that private respondent be
ordered to return to him the amount of P5,000.00; and that he be paid P50,000.00 by way of moral damages, and P7,500.00 as attorney's fees.
Private respondent duly filed her Answer to Counterclaim alleging that the transaction between her and petitioner was entered into freely and
voluntarily.
On June 30, 1964, the trial Court rendered a Decision, and decreed in its dispositive portion:
WHEREFORE, judgment is hereby rendered ordering the defendant Manuel Lagunzad to pay the plaintiff the sum of
P15,000.00 with interest at the rate of 6% per annum from December 22, 1961 up to its complete payment; to order the
defendant to render an accounting of the gross income or proceeds derived from the exhibition, use and/or rental of the motion
picture of "The Moises Padilla Story" and to pay the plaintiff 2- 1/2% of said gross income; to pay the plaintiff the amount
equivalent to 20% of the amount due the plaintiff under the first cause of action as attorney's fees; and to pay the costs.
On appeal to the Court of Appeals, the latter Court affirmed the judgment. Reconsideration having been denied by the Court, petitioner filed the
instant Petition for Review on Certiorari.
Initially, or on June 16, 1970, this Court denied the Petition for lack of merit, but resolved subsequently to give it due course after petitioner
moved for reconsideration on the additional argument that the movie production was in exercise of the constitutional right of freedom of
expression, and that the Licensing cement is a form of restraint on the freedom of speech and of the press.
In his Brief, petitioner assigns the following errors to the appellate Court:
I. THE COURT OF APPEALS ERRED IN EXERCISING JURISDICTION IN THE CASE BECAUSE THE JUDGMENT APPEALED
FROM WAS INTERLOCUTORY IN NATURE AND CHARACTER;
II. THE COURT OF APPEALS ERRED IN ITS FAILURE TO MAKE COMPLETE FINDINGS OF FACTS ON ALL ISSUES BEFORE IT;
III. THE COURT OF APPEALS ERRED IN NOT DECLARING THE LICENSING AGREEMENT, EXHIBIT "A", NULL AND VOID FOR
LACK OF, OR FOR HAVING AN ILLEGAL CAUSE OR CONSIDERATION OF CONTRACT, PETITIONER HAVING PREVIOUSLY

OBTAINED THE AUTHORITY AND/OR PERMISSION PURPOSELY GRANTED TO HIM BY RESPONDENT UNDER SAID
LICENSING AGREEMENT;
IV. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LICENSING AGREEMENT, EXHIBIT "A", IS NULL AND
VOID; RESPONDENT NOT HAVING HAD ANY PROPERTY NIGHTS OVER THE INCIDENTS IN THE LIFE OF MOISES PADILLA
WHO WAS A PUBLIC FIGURE.
V. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LICENSING AGREEMENT, EXHIBIT "A", WAS NULL AND
VOID, PETITIONER'S CONSENT HAVING BEEN PROCURED BY MEANS OF DURESS, INTIMIDATION AND UNDUE
INFLUENCE;
VI. THE COURT OF APPEALS, IN UPHOLDING THE RIGHT TO PRIVACY OF RESPONDENT AS DEFINED IN ART. 26 OF THE
NEW CIVIL CODE OVER THE RIGHT OF PETITIONER TO FILM THE PUBLIC LIFE OF A PUBLIC FIGURE, INFRINGED UPON
THE CONSTITUTIONAL RIGHT OF PETITIONER TO FREE SPEECH AND FREE PRESS.

We find the assigned errors bereft of merit.

Petitioner's contention that because an accounting had been ordered, respondent Court of Appeals did not have jurisdiction over the case as the
Decision of the lower Court was not yet final and appealable, is untenable. The doctrine enunciated in Fuentebella vs. Carrascoso relied upon by
petitioner, which held that whether or not the action for accounting is the principal action or is merely incidental to another, the judgment
requiring such accounting cannot be final, has been abandoned in Miranda vs. Court of Appeals which ruled:
For the guidance of bench and bar, the Court declares as abandoned the doctrine of Fuentebella vs. Carrascoso and adopts the
opposite rule that judgments for recovery with accounting are final and appealable (without need of awaiting the accounting)
and would become final and executory if not appealed within the reglementary period.
In other words, where there is complete adjudication and determination of the rights and obligations of the parties, as in the instant case, an order
for accounting in that judgment does not affect its final character, said accounting being merely incidental to the judgment.
Petitioner's contention that respondent Court failed to make complete findings of fact on all issues raised before it is without basis. A careful
study of the Decision reveals that respondent Court has substantially and sufficiently complied with the injunction that a decision must state
clearly and distinctly the facts and the law on which it is based. The rule remains that the ultimate test as to the sufficiency of a Court's findings
of fact is "whether they are comprehensive enough and pertinent to the issues raised to provide a basis for decision." The judgment sought to be
reviewed sufficiently complies with this requirement.
Neither do we agree with petitioner's submission that the Licensing Agreement is null and void for lack of, or for having an illegal cause or
consideration. While it is true that petitioner had purchased the rights to the book entitled "The Moises Padilla Story," that did not dispense with
the need for prior consent and authority from the deceased heirs to portray publicly episodes in said deceased's life and in that of his mother and
the members of his family. As held in Schuyler v. Curtis, "a privilege may be given the surviving relatives of a deceased person to protect his
memory, but the privilege exists for the benefit of the living, to protect their feelings and to prevent a violation of their own rights in the character
and memory of the deceased."
Petitioner's averment that private respondent did not have any property right over the life of Moises Padilla since the latter was a public figure, is
neither well taken. Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to invade a
person's privacy to disseminate public information does not extend to a fictional or novelized representation of a person, no matter how public a
figure he or she may be. In the case at bar, while it is true that petitioner exerted efforts to present a true-to-life story of Moises Padilla, petitioner
admits that he included a little romance in the film because without it, it would be a drab story of torture and brutality.
We also find it difficult to sustain petitioner's posture that his consent to the Licensing Agreement was procured thru duress, intimidation and
undue influence exerted on him by private respondent and her daughters at a time when he had exhausted his financial resources, the premiere
showing of the picture was imminent, and "time was of the essence." As held in Martinez vs. Hongkong & Shanghai Bank, it is necessary to
distinguish between real duress and the motive which is present when one gives his consent reluctantly. A contract is valid even though one of the
parties entered into it against his own wish and desires, or even against his better judgment. In legal effect, there is no difference between a
contract wherein one of the contracting parties exchanges one condition for another because he looks for greater profit or gain by reason of such
change, and an agreement wherein one of the contracting parties agrees to accept the lesser of two disadvantages. In either case, he makes a
choice free and untramelled and must accordingly abide by it. The Licensing Agreement has the force of law between the contracting parties and
since its provisions are not contrary to law, morals, good customs, public order or public policy (Art. 1306, Civil Code), petitioner Should
comply with it in good faith.
Lastly, neither do we find merit in petitioner's contention that the Licensing Agreement infringes on the constitutional right of freedom of speech
and of the press, in that, as a citizen and as a newspaperman, he had the right to express his thoughts in film on the public life of Moises Padilla
without prior restraint. The right of freedom of expression, indeed, occupies a preferred position in the "hierarchy of civil liberties." It is not,
however, without limitations. As held in Gonzales vs. Commission on Elections, 27 SCRA 835, 858 (1969):
From the language of the specific constitutional provision, it would appear that the right is not susceptible of any limitation. No
law may be passed abridging the freedom of speech and of the press. The realities of life in a complex society preclude
however, a literal interpretation. Freedom of expression is not an absolute. It would be too much to insist that at all times and
under all circumstances it should remain unfettered and unrestrained. There are other societal values that press for recognition.
The prevailing doctrine is that the clear and present danger rule is such a limitation. Another criterion for permissible limitation on freedom of
speech and of the press, which includes such vehicles of the mass media as radio, television and the movies, is the "balancing-of-interests test."
The principle i requires a court to take conscious and detailed consideration of the interplay of interests observable in a given situation or type of
situation."
In the case at bar, the interests observable are the right to privacy asserted by respondent and the right of -freedom of expression invoked by
petitioner. Taking into account the interplay of those interests, we hold that under the particular circumstances presented, and considering the
obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have to be upheld particularly
because the limits of freedom of expression are reached when expression touches upon matters of essentially private concern.
WHEREFORE, the Petition for Review is denied and the judgment appealed from hereby affirmed. Costs against petitioner.
SO ORDERED.
RURAL BANK OF PARARAQUE, INC. vs. ISIDRA REMOLADO and COURT OF APPEALS

This case is about the repurchase of mortgage property after the period of redemption and had expired. Isidra Remolado, 64, a widow, and
resident of Makati, Rizal, owned a lot with an area of 308 square meters, with a bungalow thereon, which was leased to Beatriz Cabagnot (86-7,
record on Appeal).
The lot is located at 41 Molave Street, United Paraaque, Rizal. In 1966 she mortgaged it to the Rural Bank of Paraaque, Inc. as security for a
loan of P15,000. She paid the loan.
On April 17, 1971 she mortgaged it again to the bank. She eventually secured loans totalling P18,000 (Exh. At D). the loans become overdue.
The bank foreclosed the mortagage on July 21, 1972 and bought the property at the foreclosure sale for P22,192.70. The one-year period of
redemption was to expire on August 21, 1973.
On August 8, 1973 the bank advised Remolado that she had until August 23 to redeem the property (Exh. U or 6; 53, Record on Appeal). On
August 9, 1973 or 14 days before the expiration of the one-year redemption period, the bank gave her a statement showing that she should pay
P25,491.96 for the redemption of the property on August 23 (Exh. F). No redemption was made on that date.
On September 3, 1973 the bank consolidated its ownership over the property (Exh. H). Remolado's title was cancelled. A new title, TCT No.
418737, was issued to the bank on September 5 (Exh. 0).
On September 24, 1973, the bank gave Remolado up to ten o'clock in the morning of October 31, 1973, or 37 days, within which to repurchase
(not redeem since the period of redemption had expired) the property (Exh. I-1; 32, Record on Appeal). The bank did not specify the price.
On October 26, 1973 Remolado and her daughter, Patrocinio Gomez, promised to pay the bank P33,000 on October 31 for the repurchase of the
property (Exh. X or 9; 64, Record on Appeal).
Exhibits 1-1 and X do not evidence any perfected repurchase agreemi6nt. Even if it is assumed that the bank's commitment to resell the property
was accepted by Remolado, that option was not supported by a consideration distinct from the price (Art. 1479, Civil Code). Lacking such
consideration, the option is void (Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Company, 97 Phil. 249).
Contrary to her promise, Remolado did not repurchase the property on October 31, Five days later, or on November 5, Remolado and her
daughter delivered P33,000 rash to the bank's assistant manager as repurchase price. The amount was returned to them the next day, November 6,
1973 (Exh. V, W and 11). The assistant manager had no intention of receiving the money. It was just left with her by Remolado (Exh. 10; 42,
Record on Appeal). At that time, the bank was no longer willing to allow the repurchase.
On that day, November 6, Remolado filed an action to compel the bank to reconvey the property to her for P25,491.96 plus interest and other
charges and to pay P35,000 as damages. The repurchase price was not consigned. A notice of lis pendens was registered.
On November 15, the bank sold the property to Pilar Aysip for P50,000. A new title was issued to Aysip with an annotation of lis pendens (Exh. P
and 12; 649, Record on Appeal).
The trial court ordered the bank to return the property to Remolado upon payment of the redemption price of P25,491.96 plus interest and other
bank charges and to pay her P15,000 as damages. The Appellate Court affirmed the judgment. The bank appealed to this Court. It contends that
Remolado had no more right of redemption and, therefore, no cause of action against the bank.
We hold that the trial court and the Appellate Court erred in ordering the reconveyance of the property, There was no binding agreement for its
repurchase. Even on the assumption that the bank should be bound by its commitment to allow repurchase on or before October 31, 1973, still
Remolado had no cause of action because she did not repurchase the property on that date.
Justice is done according to law. As a rule, equity follows the law. There may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action must fail although the disadvantaged party deserves commiseration or
sympathy.
The choice between what is legally just and what is morally just, when these two options do not coincide, is explained by Justice Moreland in
Vales vs. Villa, 35 Phfl. 769, 788 where he said:
Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by themindeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a
violation of law, the commission of what the law knows as an actionable wrong before the courts are authorized to lay hold of
the situation and remedy it.
In the instant case, the bank acted within its legal rights when it refused to give Remolado any extension to repurchase after October 31, 1973. It
had given her about two years to liquidate her obligation. She failed to do so.
WHEREFORE, the Appellate Court's judgment is reversed and set aside. The complaint and counterclaim are dismissed. The notice of lis
pendens is cancelled. No costs.
SO ORDERED.

G.R. No. L-55201 February 3, 1994

MARIANO T. LIM, JAIME T. LIM, JOSE T. LIM, JOVITA T. LIM, ANACORITA T. LIM, ANTONIETTA T. LIM, RUBEN T. LIM,
BENJAMIN T. LIM, ET AL. vs. COURT OF APPEALS, LORENZO O. TAN and HERMOGENES O. TAN
This is a petition for review of the Decision of the Court of Appeals in CA-G.R. No. 51340-R entitled "Mariano T. Lim, et al., vs. Lorenzo O.
Tan, et al., dated July 28, 1908. 1
The case involves the partition of the properties of the deceased spouse Tan Quico and Josefa Oraa. The former died on May 11, 1932 and the
latter on August 6, 1932. Both died intestate. They left some ninety six (96) hectares of land located in the municipality of Guinobatan and
Camalig Albay. 2
The late spouses were survived by four (4) children: Cresencia, Lorenzo, Hermogenes and Elias. Elias died on May 2, 1935 without issue.
Cresencia died on December 20, 1967. 3 She was survived by her husband, Lim Chay Sing, 4 and children, Mariano, Jaime, Jose Jovita,
Anacoreta, Antonietta, Ruben, Benjamin and Rogelio. They are the petitioners in the case at bench.
The sad spectacle of the heirs squalling over the properties of their deceased parents was again replayed in the case at bench. The protagonists
were the widower and children of Cresencia on one side, and Lorenzo and Hermogenes on the other side.
The late Cresencia and Lorenzo had contrasting educational background. Cresencia only reached the second grade of elementary school. She
could not read or write in English. On the other hand, Lorenzo is a lawyer and a CPA.
Petitioners, heirs of Cresencia, alleged that since the demise of the spouses Tan Quico and Josefa Oraa, the subject properties had been
administered by respondent Lorenzo. They claimed that before her death, Cresencia had demanded their partition from Lorenzo. 5 After
Cresencia's death, they likewise clamored for their partition. 6 Their efforts proved fruitless. They failed Civil Case No. 3676.
Respondent Lorenzo and Hermogenes adamant stance against partition is based on various contentions. Principally, they urge: (1) that the
properties had already been partitioned, albeit, orally; and (2) during her lifetime, the late Cresencia had sold and conveyed all her interests in
said properties to respondent Lorenzo. They cited as evidence the "Deed of Confirmation of Extra Judicial Settlement of the Estate of Tan Quico
and Josefa Oraa" 7 and a receipt of payment. 8
The trial court decided in favor of the petitioners. It rejected the alleged oral petition in light of the contrary testimony of respondent
Hermogenes. It voided the "Deed of Confirmation of Extra Judicial Settlement of the Estate of Tan Quico and Josefa Oraa and Sale" 9 on the
ground that it was not understood by the late Cresencia when she signed it.
On appeal, the respondent Court of Appeals, voting 4-1, reversed. It held there was evidence to establish that the subject properties had been
previously partitioned. It ruled that respondent Lorenzo was not shown to have exercised any undue influence over the late Crescencia when she
signed the said Deed of Confirmation, etc.
Dissatisfied, petitioners filed this petition for review by certiorari. They submit:
I. THE FINDING OR CONCLUSION DRAWN BY THE HONORABLE COURT OF APPEALS THAT
THE EVIDENCE ON RECORD ALSO SHOWS THAT THE TERMS OF EXH. "E" (ALSO EXH. "1" IN ENGLISH)
WERE READ TO CRESENCIANA O. TAN IN THE BICOL DIALECT, EXPLAINED TO AND UNDERSTOOD BY
HER, BEFORE SHE SIGNED THE SAME.
BASED ON THE FACTS STATED IN THE JUDGMENT QUOTING "THE PERTINENT TESTIMONIES ON THIS POINT" OR BOTH
DEFENDANTS IS MANIFESTLY INCORRECT, AS THE SAME FALL FAR SHORT OF THE MANDATORY REQUIREMENT OF ART.
1332, CIVIL CODE, THAT THE TERMS THEREOF SHOULD BE FULLY EXPLAINED TO THE ILLITERATE CRESENCIA O. TAN
WHO DID NOT KNOW HOW TO READ AND WRITE IN ENGLISH.
II. THE CONCLUSION DRAWN BY THE HONORABLE COURT OF APPEALS THAT THERE WAS NO UNDUE INFLUENCE
EXERTED ON CRESENCIA O. TAN BY HER (LAWYER-CPA) BROTHER LORENZO O. TAN BASED ON FACTS STATED IN THE
QUESTIONED JUDGMENT IS CLEARLY INCORRECT, AS IT IS CONTRARY TO THE PROVISION OF ART. 1337, CIVIL CODE.
III. THE FINDING AND DECLARATION OF THE HONORABLE COURT OF APPEALS THAT LORENZO O. TAN IS THE LAWFUL
OWNER OF THE PROPERTIES PERTAINING TO THE SHARE OF SAID ILLITERATE OR PARTY AT A DISADVANTAGE,
CRESENCIA O. TAN BY VIRTUE OF SAID DOCUMENT (EXH. "E"; ALSO EXH. "1") IS CONTRARY TO LAW, AS THE LATTER'S
CONSENT WAS GIVEN BY MISTAKE, UNDUE INFLUENCE AND/OR FRAUD.
IV. THE FINDING OF THE HONORABLE COURT OF APPEALS THAT THERE WAS AN ORAL PARTITION BY AND AMONG
CRESENCIA O. TAN AND HER TWO BROTHERS LORENZO O. TAN AND HERMOGENES O. TAN IS CONTRARY TO THE ORAL
ADMISSION OF HERMOGENES O. TAN HIMSELF WHO TESTIFIED THAT
WE DID NOT HAVE EXACTLY A PARTITION IN 1930.
AS WELL AS SERIOUSLY CONTRADICTED BY CLEAR, COMPETENT AND CREDIBLE DOCUMENTARY EVIDENCE AND
THEREFORE SHOULD BE DISREGARDED.

We grant the petition.

The general rule is that factual findings of lower courts are accorded great respect by this court on review of their decisions. In the petition at
bench, we are constrained to re-examine these findings considering the contrarieties in the findings made by the appellate court and the trial
court. Indeed, even the Decision of the appellate court is not a unanimous but a mere majority decision.
The first issue is whether or not the subject properties had already been partitioned among the heirs of tan Quico and Josefa Oraa. The private
respondents alleged that the properties had been orally partitioned in 1930. 10Their evidence on this score, however, leaves much to be desired. It
is only respondent Lorenzo who stubbornly insisted that the said properties had already been divided. However, brother Hermogenes, the other
respondent, gave a different testimony. We quote his testimony:

xxx xxx xxx

Court: Q Never mind your sister, we are talking about your parents. During their lifetime in 1930 you said that
the properties would be divided, so, in 1930, there was no actual division because it would only be divided?
A We did not have exactly a partition in 1930.

Q You did not have a partition in 1930?

A No, your Honor.

The documentary evidence likewise support the conclusion that there was no such partition. Exhibit "2", the receipt dated April 20, 1966
thumbmarked by the late Crescencia and presented by the petitioners themselves reads:
RECEIPT FOR P8,970.00
Received from LORENZO O. TAN, on various dates, the total sum of EIGHT THOUSAND NINE HUNDRED SEVENTY
(P8,970.00) PESOS as partial payment for the sale of my pro-indiviso share on the properties inherited by me from my
deceased parents.
As guarantee for the payment, I put up as security my pro-indiviso one-third share on the properties inherited by me from my
deceased parents.
Signed this 20th day of April, 1966 at Quezon City, Philippines.
(SGD.) CRESENCIA O. TAN
Witness: (SGD.) ANTONIETTA T. LIM
Note: Amount of P8,970 includes P6,700 paid to acquire Lot No. 202-54-41-T from Pedro L. Morada who transferred his right
to Jovita Lim.
The receipt speaks of the late Cresencia's pro-indiviso share of the subject properties or her share before division. We also note that the subject
lots are still covered by tax declarations 12 in the name of their parents. If these lots had already been partitioned to the different heirs and then
occupied by them, it appears strange that their tax declarations have not been adjusted to reflect their ownership considering the long time that
has elapsed since 1930. Respondent Lorenzo testified that he took possession of the lot supposed to belong to the late Crescencia in 1966, 13 yet,
he himself did not cause any change in its tax declaration. Similarly corrosive of the claim of private respondents is their own Exhibit "E" or "1",
entitled "Deed of Confirmation of Extra Judicial Settlement of the Estate of Tan Quico and Josefa Oraa." Nowhere in the text of this document
prepared by no less than respondent Lorenzo, is there any intimation that the subject why Exhibit was entitled Deed of Confirmation, respondent
Lorenzo explained; ". . . . we want to put it in black and white, the separation of the properties which was in existence since 1930 to 1932. . ."
(TSN, March 2, 1970, p. 40). To say the least, the omission buttresses the conclusion that the properties have not been partitioned.
We now determine the next crucial issue of fact, i. e., whether or not the above mentioned Deed of Confirmation of Extra Judicial Settlement of
the estate of Tan Quico and Josefa Oraa (Exhibit "E" or "1") is valid. The respondent court, reversing the trial court, held that the evidence failed
to establish that it was signed by the late Crescencia as a result of fraud, mistake or undue influence. We hold this ruling erroneous. In calibrating
the credibility of the witnesses on this issue, we take our mandate from Article 1332 of the Civil Code which provides: "When one of the parties
is unable to read, or if the contract is in language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former." this substantive law came into being due to the finding of the Code
Commission that there is still a fairly large number of illiterates in this country, and documents are usually drawn up in English or Spanish. 14 It
is
also
in
accord
with
our
state
policy
of
promoting
social
justice. 15 It also supplements Article 24 of the Civil Code which calls on court to be vigilant in the protection of the rights of those who are
disadvantaged in life. in the petition at bench, the questioned Deed is written in English, a language not understood by the late Crescencia, an
illiterate. It was prepared by the respondent Lorenzo, a lawyer and CPA. For reasons difficult to divine, respondent Lorenzo did not cause the
notarization of the deed. Petitioners alleged that the Deed was signed by the late Crescencia due to mistake, fraud or undue influence. They
postulated that respondent Lorenzo took advantage of the late Crescencia's trust and confidence. Testifying on the trust of the late Crescencia on
respondent Lorenzo, petitioner Jose Lim declared: 16
xxx xxx xxx
Q Now, will you tell the Court how the relation between your mother and your uncle Lorenzo Tan before
September 1967?
A My mother was so close to his brother, Lorenzo Tan. My mother always asked him advice because he is
considered by my mother as God to her. . . .
Considering these circumstances, the burden was on private respondents to prove that the content of the Deed was explained to the illiterate
Crescencia before she signed it. 17 In this regard, the evidence adduced by the respondents failed to discharge their burden. On one hand,
respondent Lorenzo testified that he and his brother, respondent Hermogenes, explained in Bicolano, the meaning of the deed to the late
Crescencia, viz: 18
ATTY. LUDOVICE: Q Who read the document to her?
A I and my brother.

Q Who is that brother?

COURT: Q Who read that document?

A Hermogenes Tan.

A I prepared it.

Q Why do you have to prepare the document?

Q You prepared it yourself? A Yes, sir.

A Because I have all the details.

COURT: All right. ATTY. LUDOVICE: Q In what language did you read this document to Crescencia O.
Tan? A First it was in English then it was in Bicol so as to clarify things, they were my sister and my brother
and to other persons who is going to witness the document
Q Did your sister understand the Bicol dialect when the contents of this was read?
A Yes and before that, my sister knows everything what is going on.
ATTY. GATDULA: I moved to strike out the last portion of the answer.
COURT: Strike it out.
Respondent Hermogenes, however, gave a different testimony. He declared it was respondent Lorenzo alone who read the text of the Deed in
Bicolano to the late Crescencia. We quote his testimony, viz:
Q You presented this document, EXHIBIT 1 for the defendants, to Crescencia Tan?
A It was presented by my brother Lorenzo Tan.
Q On what occasion was that on August 15, 1967 was this presented?
A August 16 coincide with the fiesta in our town, Guinobatan.
Q Was this read to your sister by your brother Lorenzo? A Yes, sir, that was read.
Q In what language was it read to her? A It was read in Bicol. Q Did your sister understand the contents of
the document?
A Yes, sir.

Q Who read the document to her? A Lorenzo Tan read the document.

This variance in testimony on a material matter works against the credibility of private respondents. Nor are we prepared to give full faith and
credit to the testimony that respondent Lorenzo alone explained the text of the deed to the late Crescencia. Respondent Lorenzo has too much of
a material stake on the dispute. His testimony on the issue is, therefore, not free from bias and prejudice. Indeed, the preparation and alleged
signing of the said Deed leave a lot of questions unanswered. For one, the Deed as important as it is, was not caused to be notarized by
respondent Lorenzo. The need for notarization could not have escaped respondent Lorenzo, a lawyer by profession. Article 1358 of the Civil
Code requires that the Deed should appear in a public document. For another, respondent Lorenzo prepared the Deed in English language when
he knew all along that the late Cresencia would not be able to comprehend its meaning. For still another, none of the alleged witnesses to the
Deed was presented to testify on whether it was signed by the late Crescencia voluntarily and with clear comprehension of its content. Last but
not the least, it is strange that the Crescencia signed the said Deed with full freedom and complete understanding of its legal significance.
Finally, we come to the issue of whether or not the late Crescencia sold her inheritance share in favor of the respondent Lorenzo. In taking the
stance that there was indeed a sale, private respondents point to the receipt, Exh. "2" dated April 20, 1966 as evidence. The significance of this
receipt, Exh. "2" was well analyzed by the trial court and we approve its ruling, viz:
Said defendant likewise presented in evidence a receipt (Exhibit 2) purports to show that on April 20, 1966, Cresencia O. Tan
had already received the aggregate amount of P8,970.00 from defendant Lorenzo O. Tan as "partial payment for the sale of my
(Cresenciana O. Tan's) pro-indiviso share on the properties inherited by me from my deceased parents.
It is contended, by these exhibits, that Cresenciana O. Tan wanted to buy Lot 202-5-41-T at No. 53 Bignay, Project 2, Quezon
City, with the proceeds of the sale to defendant Lorenzo O. Tan of a portion of Lot 7671 located in Singtan, Guinobatan, Albay,
which is alleged to be the share of said Cresenciana O. Tan.
However, the same receipt Exhibit 2 recites at the bottom thereof that the amount of P8,970.00 includes the amount of
P6,700.00 paid to purchase the lot of certain Pedro L. Morada who transferred his right to Jovita Lim. This statement in Exhibit
2 belies defendant's contention that Cresenciana O. Tan is the buyer of the lot in Quezon City.
IN VIEW WHEREOF, the petition for review on certiorari is granted and the Decision of the respondent appellate court in Ca-G.R. No. 51340-R
dated July 28, 1980 is reversed and set aside. In its lieu, the Decision of the then CFI of Albay, 10th Judicial District, Br. II in Civil Case No.
3676 is reinstated. Costs against private respondents.
SO ORDERED.

G.R. No. L-20620 August 15, 1974 REPUBLIC OF THE PHILIPPINES vs. CARMEN M. VDA. DE CASTELLVI, ET AL.

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an expropriation proceeding.
Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed, on June 26, 1959, a complaint for eminent
domain against defendant-appellee, Carmen M. Vda. de Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi (hereinafter
referred to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga, described as follows:
A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded on the NE by Maria Nieves Toledo-Gozun; on the
SE by national road; on the SW by AFP reservation, and on the NW by AFP reservation. Containing an area of 759,299 square
meters, more or less, and registered in the name of Alfonso Castellvi under TCT No. 13631 of the Register of Pampanga ...;
and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as Toledo-Gozun over two parcels of land described as
follows:
A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on the NE by Lot 3, on the SE by Lot 3; on the
SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing an area of
450,273 square meters, more or less and registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the
Register of Deeds of Pampanga. ..., and
A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE by
school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B, Blk-1.
Containing an area of 88,772 square meters, more or less, and registered in the name of Maria Nieves Toledo Gozun under TCT
No. 8708 of the Register of Deeds of Pampanga, ....
In its complaint, the Republic alleged, among other things, that the fair market value of the above-mentioned lands, according to the Committee
on Appraisal for the Province of Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the
provisional value of the lands be fixed at P259.669.10, that the court authorizes plaintiff to take immediate possession of the lands upon deposit
of that amount with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to ascertain and report to the court the just
compensation for the property sought to be expropriated, and that the court issues thereafter a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at P259,669.10.
In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the land under her administration, being a residential
land, had a fair market value of P15.00 per square meter, so it had a total market value of P11,389,485.00; that the Republic, through the Armed
Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated demands, illegally occupying her property since July
1, 1956, thereby preventing her from using and disposing of it, thus causing her damages by way of unrealized profits. This defendant prayed that
the complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon
at 6% per annum from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi,
Luis Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants.
Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of P259,669.10, the trial court ordered that the Republic
be placed in possession of the lands. The Republic was actually placed in possession of the lands on August 10,
1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that her two parcels of land were residential
lands, in fact a portion with an area of 343,303 square meters had already been subdivided into different lots for sale to the general public, and
the remaining portion had already been set aside for expansion sites of the already completed subdivisions; that the fair market value of said
lands was P15.00 per square meter, so they had a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she
be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount
of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of
defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be
expropriated was at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00
as provisional value of her lands. 2 On May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi
the amount of P151,859.80 as provisional value of the land under her administration, and ordered said defendant to deposit the amount with the
Philippine National Bank under the supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order
of condemnation. 3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as commissioner for the court; Atty. Felicisimo G.
Pamandanan, counsel of the Philippine National Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal
counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified themselves, proceeded to the performance of their
duties.
On March 15,1961 the Commissioners submitted their report and recommendation, wherein, after having determined that the lands sought to be
expropriated were residential lands, they recommended unanimously that the lowest price that should be paid was P10.00 per square meter, for
both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that
legal interest on the compensation, computed from August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no
consequential damages be awarded. 4 The Commissioners' report was objected to by all the parties in the case by defendants Castellvi and

Toledo-Gozun, who insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and by the Republic, which
insisted that the price to be paid for the lands should be fixed at P0.20 per square meter. 5
After the parties-defendants and intervenors had filed their respective memoranda, and the Republic, after several extensions of time, had
adopted as its memorandum its objections to the report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the
dispositive portion of which reads as follows:
WHEREFORE, taking into account all the foregoing circumstances, and that the lands are titled, ... the rising trend of land
values ..., and the lowered purchasing power of the Philippine peso, the court finds that the unanimous recommendation of the
commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just.
xxx xxx xxx
The plaintiff will pay 6% interest per annum on the total value of the lands of defendant Toledo-Gozun since (sic) the amount
deposited as provisional value from August 10, 1959 until full payment is made to said defendant or deposit therefor is made in
court.
In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to defendant Castellvi from July
1, 1956 when plaintiff commenced its illegal possession of the Castellvi land when the instant action had not yet been
commenced to July 10, 1959 when the provisional value thereof was actually deposited in court, on the total value of the said
(Castellvi) land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total value of the land
herein adjudged minus the amount deposited as provisional value, or P151,859.80, such interest to run until full payment is
made to said defendant or deposit therefor is made in court. All the intervenors having failed to produce evidence in support of
their respective interventions, said interventions are ordered dismissed.
The costs shall be charged to the plaintiff.
On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the grounds of newly-discovered evidence, that the
decision was not supported by the evidence, and that the decision was against the law, against which motion defendants Castellvi and ToledoGozun filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new trial and/or reconsideration was called for
hearing, the Republic filed a supplemental motion for new trial upon the ground of additional newly-discovered evidence. This motion for new
trial and/or reconsideration was denied by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26, 1961 and the order of July 12, 1961. Defendant
Castellvi also filed, on July 17, 1961, her notice of appeal from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time within which to file its record on appeal. The Republic's record on appeal was
finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the Republic's record on appeal, but also a joint
memorandum in support of their opposition. The Republic also filed a memorandum in support of its prayer for the approval of its record on
appeal. On December 27, 1961 the trial court issued an order declaring both the record on appeal filed by the Republic, and the record on appeal
filed by defendant Castellvi as having been filed out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961 and for reconsideration", and subsequently an
amended record on appeal, against which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial
court issued an order, stating that "in the interest of expediency, the questions raised may be properly and finally determined by the Supreme
Court," and at the same time it ordered the Solicitor General to submit a record on appeal containing copies of orders and pleadings specified
therein. In an order dated November 19, 1962, the trial court approved the Republic's record on appeal as amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and Toledo-Gozun before this Court, but this Court denied the
motion.
In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her land. The Republic, in its comment on
Castellvi's motion, opposed the same. This Court denied Castellvi's motion in a resolution dated October 2,1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be authorized to mortgage the lands subject of
expropriation, was denied by this Court or October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don Alfonso de Castellvi in the expropriation
proceedings, filed a notice of attorney's lien, stating that as per agreement with the administrator of the estate of Don Alfonso de Castellvi they
shall receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court may finally decide as the expropriated price
of the property subject matter of the case."
--------Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands subject of the instant proceedings as just compensation;
2. In holding that the "taking" of the properties under expropriation commenced with the filing of this action;
3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property to start from July of 1956;

4. In denying plaintiff-appellant's motion for new trial based on newly discovered evidence.
In its brief, the Republic discusses the second error assigned as the first issue to be considered. We shall follow the sequence of the Republic's
discussion.
1. In support of the assigned error that the lower court erred in holding that the "taking" of the properties under expropriation commenced with
the filing of the complaint in this case, the Republic argues that the "taking" should be reckoned from the year 1947 when by virtue of a special
lease agreement between the Republic and appellee Castellvi, the former was granted the "right and privilege" to buy the property should the
lessor wish to terminate the lease, and that in the event of such sale, it was stipulated that the fair market value should be as of the time of
occupancy; and that the permanent improvements amounting to more that half a million pesos constructed during a period of twelve years on the
land, subject of expropriation, were indicative of an agreed pattern of permanency and stability of occupancy by the Philippine Air Force in the
interest of national Security. 7
Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of eminent domain requires two essential elements,
to wit: (1) entrance and occupation by condemn or upon the private property for more than a momentary or limited period, and (2) devoting it to
a public use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. This appellee argues that in the
instant case the first element is wanting, for the contract of lease relied upon provides for a lease from year to year; that the second element is
also wanting, because the Republic was paying the lessor Castellvi a monthly rental of P445.58; and that the contract of lease does not grant the
Republic the "right and privilege" to buy the premises "at the value at the time of occupancy." 8
Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error assigned, because as far as she was
concerned the Republic had not taken possession of her lands prior to August 10, 1959. 9
In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is concerned, it should be noted that the Castellvi
property had been occupied by the Philippine Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the
pertinent portions of which read:
CONTRACT OF LEASE
This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE ESTATE OF ALFONSO DE
CASTELLVI, represented by CARMEN M. DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and
THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED
FORCES OF THE PHILIPPINES, hereinafter called the LESSEE,
WITNESSETH:
1. For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants and conditions of the parties, the
LESSOR has, and by these presents does, lease and let unto the LESSEE the following described land together with the
improvements thereon and appurtenances thereof, viz:
Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit, situado en el Barrio de San
Jose, Municipio de Floridablanca Pampanga. ... midiendo una extension superficial de cuatro milliones once mil cuatro cientos
trienta y cinco (4,001,435) [sic] metros cuadrados, mas o menos.
Out of the above described property, 75.93 hectares thereof are actually occupied and covered by this contract. .
Above
lot
Pampanga ...

is

more

particularly

described

in

TCT

No.

1016,

province

of

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with full authority to execute a contract of this
nature.
2. The term of this lease shall be for the period beginning July 1, 1952 the date the premises were occupied by the PHILIPPINE
AIR FORCE, AFP until June 30, 1953, subject to renewal for another year at the option of the LESSEE or unless sooner
terminated by the LESSEE as hereinafter provided.
3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and undisturbed possession of the demised
premises throughout the full term or period of this lease and the LESSOR undertakes without cost to the LESSEE to eject all
trespassers, but should the LESSOR fail to do so, the LESSEE at its option may proceed to do so at the expense of the
LESSOR. The LESSOR further agrees that should he/she/they sell or encumber all or any part of the herein described premises
during the period of this lease, any conveyance will be conditioned on the right of the LESSEE hereunder.
4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR HUNDRED FIFTY-FIVE
PESOS & 58/100 (P455.58) ...
5. The LESSEE may, at any time prior to the termination of this lease, use the property for any purpose or purposes and, at its
own costs and expense make alteration, install facilities and fixtures and errect additions ... which facilities or fixtures ... so
placed in, upon or attached to the said premises shall be and remain property of the LESSEE and may be removed therefrom by
the LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of the premises upon the expiration
or termination of this lease and if so required by the LESSOR, shall return the premises in substantially the same condition as
that existing at the time same were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the
elements or by circumstances over which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so requires
the return of the premises in such condition, the LESSOR shall give written notice thereof to the LESSEE at least twenty (20)
days before the termination of the lease and provided, further, that should the LESSOR give notice within the time specified

above, the LESSEE shall have the right and privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of
performance of its obligation, if any, to restore the premises. Fair value is to be determined as the value at the time of
occupancy less fair wear and tear and depreciation during the period of this lease.
6. The LESSEE may terminate this lease at any time during the term hereof by giving written notice to the LESSOR at least
thirty (30) days in advance ...
7. The LESSEE should not be responsible, except under special legislation for any damages to the premises by reason of
combat operations, acts of GOD, the elements or other acts and deeds not due to the negligence on the part of the LESSEE.
8. This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or written, previously
entered into between the parties covering the property herein leased, the same having been merged herein. This AGREEMENT
may not be modified or altered except by instrument in writing only duly signed by the parties. 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in terms and conditions, including the date',
with the annual contracts entered into from year to year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)".
11 It is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the above-mentioned contract, on a year
to year basis (from July 1 of each year to June 30 of the succeeding year) under the terms and conditions therein stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the same but Castellvi refused. When the AFP
refused to vacate the leased premises after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing
the latter that the heirs of the property had decided not to continue leasing the property in question because they had decided to subdivide the land
for sale to the general public, demanding that the property be vacated within 30 days from receipt of the letter, and that the premises be returned
in substantially the same condition as before occupancy (Exh. 5 Castellvi). A follow-up letter was sent on January 12, 1957, demanding the
delivery and return of the property within one month from said date (Exh. 6 Castellvi). On January 30, 1957, Lieutenant General Alfonso
Arellano, Chief of Staff, answered the letter of Castellvi, saying that it was difficult for the army to vacate the premises in view of the permanent
installations and other facilities worth almost P500,000.00 that were erected and already established on the property, and that, there being no
other recourse, the acquisition of the property by means of expropriation proceedings would be recommended to the President (Exhibit "7"
Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from
the land. While this ejectment case was pending, the Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the
Republic was placed in possession of the lands on August 10, 1959, On November 21, 1959, the Court of First Instance of Pampanga, dismissed
Civil Case No. 1458, upon petition of the parties, in an order which, in part, reads as follows:
1. Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she has agreed to receive
the rent of the lands, subject matter of the instant case from June 30, 1966 up to 1959 when the Philippine Air Force was placed
in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga;
2. That because of the above-cited agreement wherein the administratrix decided to get the rent corresponding to the rent from
1956 up to 1959 and considering that this action is one of illegal detainer and/or to recover the possession of said land by virtue
of non-payment of rents, the instant case now has become moot and academic and/or by virtue of the agreement signed by
plaintiff, she has waived her cause of action in the above-entitled case. 12
The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947 by virtue of afore-quoted lease agreement. In
American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in eminent
domain) as follows:
Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a
momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally
appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial
enjoyment thereof. 13
Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease agreement the
Republic, through the AFP, took possession of the property of Castellvi.
Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment; of but a
moment's duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life;
operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.) The word "momentary" when applied to
possession or occupancy of (real) property should be construed to mean "a limited period" not indefinite or permanent. The aforecited lease
contract was for a period of one year, renewable from year to year. The entry on the property, under the lease, is temporary, and considered
transitory. The fact that the Republic, through the AFP, constructed some installations of a permanent nature does not alter the fact that the entry
into the land was transitory, or intended to last a year, although renewable from year to year by consent of 'The owner of the land. By express
provision of the lease agreement the Republic, as lessee, undertook to return the premises in substantially the same condition as at the time the
property was first occupied by the AFP. It is claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from
the construction of permanent improvements. But this "intention" cannot prevail over the clear and express terms of the lease contract. Intent is to
be deduced from the language employed by the parties, and the terms 'of the contract, when unambiguous, as in the instant case, are conclusive in
the absence of averment and proof of mistake or fraud the question being not what the intention was, but what is expressed in the language
used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to

judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered (Art. 1371, Civil Code).
If the intention of the lessee (Republic) in 1947 was really to occupy permanently Castellvi's property, why was the contract of lease entered into
on year to year basis? Why was the lease agreement renewed from year to year? Why did not the Republic expropriate this land of Castellvi in
1949 when, according to the Republic itself, it expropriated the other parcels of land that it occupied at the same time as the Castellvi land, for
the purpose of converting them into a jet air base? 14 It might really have been the intention of the Republic to expropriate the lands in question
at some future time, but certainly mere notice - much less an implied notice of such intention on the part of the Republic to expropriate the
lands in the future did not, and could not, bind the landowner, nor bind the land itself. The expropriation must be actually commenced in court
(Republic vs. Baylosis, et al., 96 Phil. 461, 484).
Third, the entry into the property should be under warrant or color of legal authority. This circumstance in the "taking" may be considered as
present in the instant case, because the Republic entered the Castellvi property as lessee.
Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. It may be conceded that the
circumstance of the property being devoted to public use is present because the property was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the
property. In the instant case, the entry of the Republic into the property and its utilization of the same for public use did not oust Castellvi and
deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously recognized as owner by the Republic,
as shown by the renewal of the lease contract from year to year, and by the provision in the lease contract whereby the Republic undertook to
return the property to Castellvi when the lease was terminated. Neither was Castellvi deprived of all the beneficial enjoyment of the property,
because the Republic was bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it filed the complaint for
eminent domain on June 26, 1959.
It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be considered to have taken place in 1947
when the Republic commenced to occupy the property as lessee thereof. We find merit in the contention of Castellvi that two essential elements
in the "taking" of property under the power of eminent domain, namely: (1) that the entrance and occupation by the condemnor must be for a
permanent, or indefinite period, and (2) that in devoting the property to public use the owner was ousted from the property and deprived of its
beneficial use, were not present when the Republic entered and occupied the Castellvi property in 1947.
Untenable also is the Republic's contention that although the contract between the parties was one of lease on a year to year basis, it was "in
reality a more or less permanent right to occupy the premises under the guise of lease with the 'right and privilege' to buy the property should the
lessor wish to terminate the lease," and "the right to buy the property is merged as an integral part of the lease relationship ... so much so that the
fair market value has been agreed upon, not, as of the time of purchase, but as of the time of occupancy" 15 We cannot accept the Republic's
contention that a lease on a year to year basis can give rise to a permanent right to occupy, since by express legal provision a lease made for a
determinate time, as was the lease of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand (Article 1669, Civil
Code). Neither can it be said that the right of eminent domain may be exercised by simply leasing the premises to be expropriated (Rule 67,
Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into a contract of lease where its real intention was to buy, or
why the Republic should enter into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the Republic) when all
the time the Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to without resorting to any guise
whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in the absence of any agreement between the parties to
that effect. To sustain the contention of the Republic is to sanction a practice whereby in order to secure a low price for a land which the
government intends to expropriate (or would eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say
ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that the "taking" of the property for the purposes
of the expropriation be reckoned as of the date when the Government started to occupy the property under the lease, and then assert that the value
of the property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value of the property, for many good
reasons, had in the meantime increased during the period of the lease. This would be sanctioning what obviously is a deceptive scheme, which
would have the effect of depriving the owner of the property of its true and fair market value at the time when the expropriation proceedings were
actually instituted in court. The Republic's claim that it had the "right and privilege" to buy the property at the value that it had at the time when
it first occupied the property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph No. 5 of the lease
agreement was that, should the lessor require the lessee to return the premises in the same condition as at the time the same was first occupied by
the AFP, the lessee would have the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in the same
condition as it was at the commencement of the lease, in lieu of the lessee's performance of the undertaking to put the land in said condition. The
"fair value" at the time of occupancy, mentioned in the lease agreement, does not refer to the value of the property if bought by the lessee, but
refers to the cost of restoring the property in the same condition as of the time when the lessee took possession of the property. Such fair value
cannot refer to the purchase price, for purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of contracts
that "However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are
different from those upon which the parties intended to agree" (Art. 1372, Civil Code).
We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the year 1947 when the Republic first occupied the
same pursuant to the contract of lease, and that the just compensation to be paid for the Castellvi property should not be determined on the basis
of the value of the property as of that year. The lower court did not commit an error when it held that the "taking" of the property under
expropriation commenced with the filing of the complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined as of the date of the filing of the complaint.
This Court has ruled that when the taking of the property sought to be expropriated coincides with the commencement of the expropriation
proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just compensation should be determined as of the
date of the filing of the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case,
it is undisputed that the Republic was placed in possession of the Castellvi property, by authority of the court, on August 10, 1959. The "taking"
of the Castellvi property for the purposes of determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959 when

the complaint for eminent domain was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had never been under lease to the Republic, the
Republic was placed in possession of said lands, also by authority of the court, on August 10, 1959, The taking of those lands, therefore, must
also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.
2. Regarding the first assigned error discussed as the second issue the Republic maintains that, even assuming that the value of the
expropriated lands is to be determined as of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only exhorbitant
but also unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun maintain that their lands are residential lands
with a fair market value of not less than P15.00 per square meter.
The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential lands. The finding of the lower court is in
consonance with the unanimous opinion of the three commissioners who, in their report to the court, declared that the lands are residential lands.
The Republic assails the finding that the lands are residential, contending that the plans of the appellees to convert the lands into subdivision for
residential purposes were only on paper, there being no overt acts on the part of the appellees which indicated that the subdivision project had
been commenced, so that any compensation to be awarded on the basis of the plans would be speculative. The Republic's contention is not well
taken. We find evidence showing that the lands in question had ceased to be devoted to the production of agricultural crops, that they had become
adaptable for residential purposes, and that the appellees had actually taken steps to convert their lands into residential subdivisions even before
the Republic filed the complaint for eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this Court laid down basic
guidelines in determining the value of the property expropriated for public purposes. This Court said:
In determining the value of land appropriated for public purposes, the same consideration are to be regarded as in a sale of
property between private parties. The inquiry, in such cases, must be what is the property worth in the market, viewed not
merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted,
that is to say, What is it worth from its availability for valuable uses?
So many and varied are the circumstances to be taken into account in determining the value of property condemned for public
purposes, that it is practically impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances
will modify the most carefully guarded rule, but, as a general thing, we should say that the compensation of the owner is to be
estimated by reference to the use for which the property is suitable, having regard to the existing business or wants of the
community, or such as may be reasonably expected in the immediate future. (Miss. and Rum River Boom Co. vs. Patterson, 98
U.S., 403).
In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for which it would bring the most in the
market. 17 The owner may thus show every advantage that his property possesses, present and prospective, in order that the price it could be sold
for in the market may be satisfactorily determined. 18 The owner may also show that the property is suitable for division into village or town lots.
19
The trial court, therefore, correctly considered, among other circumstances, the proposed subdivision plans of the lands sought to be expropriated
in finding that those lands are residential lots. This finding of the lower court is supported not only by the unanimous opinion of the
commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the province of Pampanga composed of the
Provincial Treasurer, the Provincial Auditor and the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held
on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:
3. Since 1957 the land has been classified as residential in view of its proximity to the air base and due to the fact that it was not
being devoted to agriculture. In fact, there is a plan to convert it into a subdivision for residential purposes. The taxes due on the
property have been paid based on its classification as residential land;
The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early as July 11, 1956 in her letter to the Chief
of Staff of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved
by the National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had not been devoted to agriculture since
1947 when it was leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based on its classification as residential
had been paid since then (Exh. 13-Castellvi). The location of the Castellvi land justifies its suitability for a residential subdivision. As found by
the trial court, "It is at the left side of the entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and
2, Exh. 12-Castellvi), the poblacion, (of Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by. The barrio
schoolhouse and chapel are also near (T.S.N. November 23,1960, p. 68)." 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of Castellvi. The lands of Toledo-Gozun adjoin
the land of Castellvi. They are also contiguous to the Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the
barrio chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding lot
1-B it had already been surveyed and subdivided, and its conversion into a residential subdivision was tentatively approved by the National
Planning Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine
Air Force among them commissioned officers, non-commission officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open
a subdivision on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the lands that are the subject of expropriation in the present case, as of
August 10, 1959 when the same were taken possession of by the Republic, were residential lands and were adaptable for use as residential
subdivisions. Indeed, the owners of these lands have the right to their value for the use for which they would bring the most in the market at the
time the same were taken from them. The most important issue to be resolved in the present case relates to the question of what is the just
compensation that should be paid to the appellees.

The Republic asserts that the fair market value of the lands of the appellees is P.20 per square meter. The Republic cites the case of Republic vs.
Narciso, et al., L-6594, which this Court decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and ToledoGozun, and to one Donata Montemayor, which were expropriated by the Republic in 1949 and which are now the site of the Basa Air Base. In
the Narciso case this Court fixed the fair market value at P.20 per square meter. The lands that are sought to be expropriated in the present case
being contiguous to the lands involved in the Narciso case, it is the stand of the Republic that the price that should be fixed for the lands now in
question should also be at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as fixed by this Court in the Narciso case, was based
on the allegation of the defendants (owners) in their answer to the complaint for eminent domain in that case that the price of their lands was
P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court said, then, that the owners of the land could not be
given more than what they had asked, notwithstanding the recommendation of the majority of the Commission on Appraisal which was
adopted by the trial court that the fair market value of the lands was P3,000.00 per hectare. We also find that the price of P.20 per square meter
in the Narciso case was considered the fair market value of the lands as of the year 1949 when the expropriation proceedings were instituted, and
at that time the lands were classified as sugar lands, and assessed for taxation purposes at around P400.00 per hectare, or P.04 per square meter.
22 While the lands involved in the present case, like the lands involved in the Narciso case, might have a fair market value of P.20 per square
meter in 1949, it can not be denied that ten years later, in 1959, when the present proceedings were instituted, the value of those lands had
increased considerably. The evidence shows that since 1949 those lands were no longer cultivated as sugar lands, and in 1959 those lands were
already classified, and assessed for taxation purposes, as residential lands. In 1959 the land of Castellvi was assessed at P1.00 per square meter.
23
The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D),
recommended the sum of P.20 per square meter as the fair valuation of the Castellvi property. We find that this resolution was made by the
Republic the basis in asking the court to fix the provisional value of the lands sought to be expropriated at P259,669.10, which was approved by
the court. 24 It must be considered, however, that the amount fixed as the provisional value of the lands that are being expropriated does not
necessarily represent the true and correct value of the land. The value is only "provisional" or "tentative", to serve as the basis for the immediate
occupancy of the property being expropriated by the condemnor. The records show that this resolution No. 5 was repealed by the same Provincial
Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal committee stated
that "The Committee has observed that the value of the land in this locality has increased since 1957 ...", and recommended the price of P1.50 per
square meter. It follows, therefore, that, contrary to the stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not
be made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant Provincial Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to
the effect that in 1950 the lands of Toledo-Gozun were classified partly as sugar land and partly as urban land, and that the sugar land was
assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per square meter and part at P.20 per square meter; and that in
1956 the Castellvi land was classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter. We can not also consider
this certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun
because, as the evidence shows, the lands in question, in 1957, were already classified and assessed for taxation purposes as residential lands.
The certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land
of Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of the assessment of the land for taxation
purposes can not bind the landowner where the latter did not intervene in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise the lands that were being expropriated, recommended to the court that
the price of P10.00 per square meter would be the fair market value of the lands. The commissioners made their recommendation on the basis of
their observation after several ocular inspections of the lands, of their own personal knowledge of land values in the province of Pampanga, of
the testimonies of the owners of the land, and other witnesses, and of documentary evidence presented by the appellees. Both Castellvi and
Toledo-Gozun testified that the fair market value of their respective land was at P15.00 per square meter. The documentary evidence considered
by the commissioners consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City, in the province of
Pampanga, which were sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The
commissioners also considered the decision in Civil Case No. 1531 of the Court of First Instance of Pampanga, entitled Republic vs. Sabina
Tablante, which was expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in Angeles City,
where the court fixed the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said:
... This expropriation case is specially pointed out, because the circumstances and factors involved therein are similar in many
respects to the defendants' lands in this case. The land in Civil Case No. 1531 of this Court and the lands in the present case
(Civil Case No. 1623) are both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national
road fronting them and are situated in a first-class municipality. As added advantage it may be said that the Basa Air Base land
is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's
throw away from the same lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a
natural swimming pool for vacationists on weekends. These advantages are not found in the case of the Clark Air Base. The
defendants' lands are nearer to the poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles,
Pampanga.
The deeds of absolute sale, according to the undersigned commissioners, as well as the land in Civil Case No. 1531 are
competent evidence, because they were executed during the year 1959 and before August 10 of the same year. More
specifically so the land at Clark Air Base which coincidentally is the subject matter in the complaint in said Civil Case No.
1531, it having been filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of First
Instance of Pampanga on January 15, 1959, several months before the lands in this case were taken by the plaintiffs ....
From the above and considering further that the lowest as well as the highest price per square meter obtainable in the market of

Pampanga relative to subdivision lots within its jurisdiction in the year 1959 is very well known by the Commissioners, the
Commission finds that the lowest price that can be awarded to the lands in question is P10.00 per square meter. 26
The lower court did not altogether accept the findings of the Commissioners based on the documentary evidence, but it considered the
documentary evidence as basis for comparison in determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and
just". 27 In arriving at its conclusion, the lower court took into consideration, among other circumstances, that the lands are titled, that there is a
rising trend of land values, and the lowered purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:
A court of first instance or, on appeal, the Supreme Court, may change or modify the report of the commissioners by increasing
or reducing the amount of the award if the facts of the case so justify. While great weight is attached to the report of the
commissioners, yet a court may substitute therefor its estimate of the value of the property as gathered from the record in
certain cases, as, where the commissioners have applied illegal principles to the evidence submitted to them, or where they have
disregarded a clear preponderance of evidence, or where the amount allowed is either palpably inadequate or excessive. 28
The report of the commissioners of appraisal in condemnation proceedings are not binding, but merely advisory in character, as far as the court is
concerned. 29 In our analysis of the report of the commissioners, We find points that merit serious consideration in the determination of the just
compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be noted that the commissioners had made ocular
inspections of the lands and had considered the nature and similarities of said lands in relation to the lands in other places in the province of
Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the commissioners regarding the circumstances that
make the lands in question suited for residential purposes their location near the Basa Air Base, just like the lands in Angeles City that are near
the Clark Air Base, and the facilities that obtain because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the
flourishing first class town of Floridablanca. It is true that the lands in question are not in the territory of San Fernando and Angeles City, but,
considering the facilities of modern communications, the town of Floridablanca may be considered practically adjacent to San Fernando and
Angeles City. It is not out of place, therefore, to compare the land values in Floridablanca to the land values in San Fernando and Angeles City,
and form an idea of the value of the lands in Floridablanca with reference to the land values in those two other communities.
The important factor in expropriation proceeding is that the owner is awarded the just compensation for his property. We have carefully studied
the record, and the evidence, in this case, and after considering the circumstances attending the lands in question We have arrived at the
conclusion that the price of P10.00 per square meter, as recommended by the commissioners and adopted by the lower court, is quite high. It is
Our considered view that the price of P5.00 per square meter would be a fair valuation of the lands in question and would constitute a just
compensation to the owners thereof. In arriving at this conclusion We have particularly taken into consideration the resolution of the Provincial
Committee on Appraisal of the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi could be sold for from
P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed
all the circumstances relating to this expropriations proceedings, and in fixing the price of the lands that are being expropriated the Court arrived
at a happy medium between the price as recommended by the commissioners and approved by the court, and the price advocated by the
Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year
1959.30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and are of the same nature, the Court has deemed it
proper to fix the same price for all these lands.
3. The third issue raised by the Republic relates to the payment of interest. The Republic maintains that the lower court erred
when it ordered the Republic to pay Castellvi interest at the rate of 6% per annum on the total amount adjudged as the value of
the land of Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this assignment of error.
In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1, 1956 to July 10, 1959, the lower court held that
the Republic had illegally possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August
10, 1959 when the Republic was placed in possession of the land pursuant to the writ of possession issued by the court. What really happened
was that the Republic continued to occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi filed
an ejectment case against the Republic in the Court of First Instance of Pampanga. 31 However, while that ejectment case was pending, the
Republic filed the complaint for eminent domain in the present case and was placed in possession of the land on August 10, 1959, and because of
the institution of the expropriation proceedings the ejectment case was later dismissed. In the order dismissing the ejectment case, the Court of
First Instance of Pampanga said:
Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she had agreed to receive the
rent of the lands, subject matter of the instant case from June 30, 1956 up to 1959 when the Philippine Air Force was placed in
possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee
with
the
Provincial
Treasurer
of
Pampanga; ...
If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be considered as having allowed her land to be
leased to the Republic until August 10, 1959, and she could not at the same time be entitled to the payment of interest during the same period on
the amount awarded her as the just compensation of her land. The Republic, therefore, should pay Castellvi interest at the rate of 6% per annum
on the value of her land, minus the provisional value that was deposited, only from July 10, 1959 when it deposited in court the provisional value
of the land.
4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion for a new trial based on nearly discovered
evidence. We do not find merit in this assignment of error.
After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new trial, supplemented by another motion, both

based upon the ground of newly discovered evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of
absolute sale-executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having
an area of 100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for
P14,000, or P.14 per square meter.
In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some 35,000 square meters of land situated at
Floridablanca for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in
favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of land having an area of 4,120,101
square meters, including the sugar quota covered by Plantation Audit No. 161 1345, situated at Floridablanca, Pampanga, for P860.00 per hectare
(a little less than P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a new trial.
To warrant the granting of a new trial based on the ground of newly discovered evidence, it must appear that the evidence was discovered after
the trial; that even with the exercise of due diligence, the evidence could not have been discovered and produced at the trial; and that the evidence
is of such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo Narciso and that made by Jesus Toledo to the
Land Tenure Administration were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to
be expropriated in the instant case are residential lands. The lower court also concluded that the land sold by the spouses Laird to the spouses
Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price of other lands may be admitted in
evidence to prove the fair market value of the land sought to be expropriated, the lands must, among other things, be shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential, the evidence would still not warrant the
grant of a new trial, for said evidence could have been discovered and produced at the trial, and they cannot be considered newly discovered
evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial court said:
The Court will now show that there was no reasonable diligence employed.
The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to the original motion, is
covered by a Certificate of Title issued by the Office of the Register of Deeds of Pampanga. There is no question in the mind of
the court but this document passed through the Office of the Register of Deeds for the purpose of transferring the title or
annotating the sale on the certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to check
conveyances which may be presented in the evidence in this case as it is now sought to be done by virtue of the motions at bar,
Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise reasonable diligence as required by the rules. The assertion
that he only went to the office of the Register of Deeds 'now and then' to check the records in that office only shows the halfhazard [sic] manner by which the plaintiff looked for evidence to be presented during the hearing before the Commissioners, if
it is at all true that Fiscal Lagman did what he is supposed to have done according to Solicitor Padua. It would have been the
easiest matter for plaintiff to move for the issuance of a subpoena duces tecum directing the Register of Deeds of Pampanga to
come to testify and to bring with him all documents found in his office pertaining to sales of land in Floridablanca adjacent to
or near the lands in question executed or recorded from 1958 to the present. Even this elementary precaution was not done by
plaintiff's numerous attorneys.
The same can be said of the deeds of sale attached to the supplementary motion. They refer to lands covered by certificate of
title issued by the Register of Deeds of Pampanga. For the same reason they could have been easily discovered if reasonable
diligence has been exerted by the numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale
could be found in several government offices, namely, in the Office of the Register of Deeds of Pampanga, the Office of the
Provincial Assessor of Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries public that
acknowledged these documents, or in the archives of the National Library. In respect to Annex 'B' of the supplementary motion
copy of the document could also be found in the Office of the Land Tenure Administration, another government entity. Any
lawyer with a modicum of ability handling this expropriation case would have right away though [sic] of digging up documents
diligently showing conveyances of lands near or around the parcels of land sought to be expropriated in this case in the offices
that would have naturally come to his mind such as the offices mentioned above, and had counsel for the movant really
exercised the reasonable diligence required by the Rule' undoubtedly they would have been able to find these documents and/or
caused the issuance of subpoena duces tecum. ...
It is also recalled that during the hearing before the Court of the Report and Recommendation of the Commissioners and
objection thereto, Solicitor Padua made the observation:
I understand, Your Honor, that there was a sale that took place in this place of land recently where the land was sold for P0.20
which is contiguous to this land.
The Court gave him permission to submit said document subject to the approval of the Court. ... This was before the decision
was rendered, and later promulgated on May 26, 1961 or more than one month after Solicitor Padua made the above
observation. He could have, therefore, checked up the alleged sale and moved for a reopening to adduce further evidence. He
did not do so. He forgot to present the evidence at a more propitious time. Now, he seeks to introduce said evidence under the
guise of newly-discovered evidence. Unfortunately the Court cannot classify it as newly-discovered evidence, because tinder
the circumstances, the correct qualification that can be given is 'forgotten evidence'. Forgotten however, is not newly-discovered
evidence. 33

The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial court, whose judgment should not be disturbed
unless there is a clear showing of abuse of discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied the
motions for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-Gozun, as described in the complaint, are
declared expropriated for public use;
(b) the fair market value of the lands of the appellees is fixed at P5.00 per square meter;
(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just compensation for her one parcel of land that has
an area of 759,299 square meters, minus the sum of P151,859.80 that she withdrew out of the amount that was deposited in
court as the provisional value of the land, with interest at the rate of 6% per annum from July 10, 1959 until the day full
payment is made or deposited in court;
(d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the just compensation for her two parcels of
land that have a total area of 539,045 square meters, minus the sum of P107,809.00 that she withdrew out of the amount that
was deposited in court as the provisional value of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until
the day full payment is made or deposited in court; (e) the attorney's lien of Atty. Alberto Cacnio is enforced; and
(f) the costs should be paid by appellant Republic of the Philippines, as provided in Section 12, Rule 67, and in Section 13, Rule
141, of the Rules of Court.
IT IS SO ORDERED.

G.R. No. L-25494 June 14, 1972 NICOLAS SANCHEZ vs. SEVERINA RIGOS
Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of Appeals, which certified the case to Us, upon the ground that
it involves a question purely of law.

The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument entitled "Option to
Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in the
barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in Transfer Certificate of Title No.
NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed "terminated and
elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of payment of
the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount
with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages.
After the filing of defendant's answer admitting some allegations of the complaint, denying other allegations thereof, and alleging, as special
defense, that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by
force of the New Civil Code, is null and void" on February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a
judgment on the pleadings. Accordingly, on February 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the
sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay
P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos.
This case admittedly hinges on the proper application of Article 1479 of our Civil Code, which provides:
ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.
In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff
agreed and committed to buy" the land described in the option, copy of which was annexed to said pleading as Annex A thereof and is quoted on
the margin. 1 Hence, plaintiff maintains that the promise contained in the contract is "reciprocally demandable," pursuant to the first paragraph of
said Article 1479. Although defendant had really "agreed, promised and committed" herself to sell the land to the plaintiff, it is not true that the
latter had, in turn, "agreed and committed himself " to buy said property. Said Annex A does not bear out plaintiff's allegation to this effect. What
is more, since Annex A has been made "an integral part" of his complaint, the provisions of said instrument form part "and parcel" 2 of said
pleading.
The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A is not a "contract to buy and sell." It merely
granted plaintiff an "option" to buy. And both parties so understood it, as indicated by the caption, "Option to Purchase," given by them to said
instrument. Under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the
plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported
by a consideration "distinct from the price" stipulated for the sale of the land.
Relying upon Article 1354 of our Civil Code, the lower court presumed the existence of said consideration, and this would seem to be the main
factor that influenced its decision in plaintiff's favor. It should be noted, however, that:
(1) Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to "sales" in particular, and, more
specifically, to "an accepted unilateral promise to buy or to sell." In other words, Article 1479 is controlling in the case at bar.
(2) In order that said unilateral promise may be "binding upon the promisor, Article 1479 requires the concurrence of a condition, namely, that the
promise be "supported by a consideration distinct from the price." Accordingly, the promisee can not compel the promisor to comply with the
promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such
consideration. Plaintiff herein has not even alleged the existence thereof in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special defense, the absence of said consideration for her
promise to sell and, by joining in the petition for a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment in
defendant's answer. Indeed as early as March 14, 1908, it had been held, in Bauermann v. Casas, 3 that:
One who prays for judgment on the pleadings without offering proof as to the truth of his own allegations, and without giving
the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant
allegations of the opposing party, and to rest his motion for judgment on those allegations taken together with such of his own
as are admitted in the pleadings. (La Yebana Company vs. Sevilla, 9 Phil. 210). (Emphasis supplied.)
This view was reiterated in Evangelista v. De la Rosa 4 and Mercy's Incorporated v. Herminia Verde. 5
Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 6 from which We quote:
The main contention of appellant is that the option granted to appellee to sell to it barge No. 10 for the sum of P30,000 under
the terms stated above has no legal effect because it is not supported by any consideration and in support thereof it invokes
article 1479 of the new Civil Code. The article provides:
"ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price."
On the other hand, Appellee contends that, even granting that the "offer of option" is not supported by any consideration, that
option became binding on appellant when the appellee gave notice to it of its acceptance, and that having accepted it within the
period of option, the offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support this
contention, appellee invokes article 1324 of the Civil Code which provides:
"ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn

any time before acceptance by communicating such withdrawal, except when the option is founded upon
consideration as something paid or promised."
There is no question that under article 1479 of the new Civil Code "an option to sell," or "a promise to buy or to sell," as used in
said article, to be valid must be "supported by a consideration distinct from the price." This is clearly inferred from the context
of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by consideration. In other
words, "an accepted unilateral promise can only have a binding effect if supported by a consideration which means that the
option can still be withdrawn, even if accepted, if the same is not supported by any consideration. It is not disputed that the
option is without consideration. It can therefore be withdrawn notwithstanding the acceptance of it by appellee.
It is true that under article 1324 of the new Civil Code, the general rule regarding offer and acceptance is that, when the offerer
gives to the offeree a certain period to accept, "the offer may be withdrawn at any time before acceptance" except when the
option is founded upon consideration, but this general rule must be interpreted as modified by the provision of article 1479
above referred to, which applies to "a promise to buy and sell" specifically. As already stated, this rule requires that a promise to
sell to be valid must be supported by a consideration distinct from the price.
We are not oblivious of the existence of American authorities which hold that an offer, once accepted, cannot be withdrawn,
regardless of whether it is supported or not by a consideration (12 Am. Jur. 528). These authorities, we note, uphold the general
rule applicable to offer and acceptance as contained in our new Civil Code. But we are prevented from applying them in view
of the specific provision embodied in article 1479. While under the "offer of option" in question appellant has assumed a clear
obligation to sell its barge to appellee and the option has been exercised in accordance with its terms, and there appears to be no
valid or justifiable reason for appellant to withdraw its offer, this Court cannot adopt a different attitude because the law on the
matter is clear. Our imperative duty is to apply it unless modified by Congress.
However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, 8 decided later thatSouthwestern Sugar & Molasses Co. v.
Atlantic Gulf & Pacific Co., 9 saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral
promise to sell similar to the one sued upon here was involved, treating such promise as an option which, although not binding as a contract in
itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. Speaking through
Associate Justice, later Chief Justice, Cesar Bengzon, this Court said:
Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his
option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not
bound to buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioner's offer a
bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just
get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale.
Lastly, even supposing that Exh. A granted an option which is not binding for lack of consideration, the authorities hold that:
"If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding
until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale,
even though the option was not supported by a sufficient consideration. ... . (77 Corpus Juris Secundum, p.
652. See also 27 Ruling Case Law 339 and cases cited.)
"It can be taken for granted, as contended by the defendant, that the option contract was not valid for lack of
consideration. But it was, at least, an offer to sell, which was accepted by letter, and of the acceptance the
offerer had knowledge before said offer was withdrawn. The concurrence of both acts the offer and the
acceptance could at all events have generated a contract, if none there was before (arts. 1254 and 1262 of
the Civil Code)." (Zayco vs. Serra, 44 Phil. 331.)
In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may,
accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if
accepted, results in a perfected contract of sale.
This view has the advantage of avoiding a conflict between Articles 1324 on the general principles on contracts and 1479 on sales of
the Civil Code, in line with the cardinal rule of statutory construction that, in construing different provisions of one and the same law or code,
such interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict between the same. Indeed, the
presumption is that, in the process of drafting the Code, its author has maintained a consistent philosophy or position. Moreover, the decision in
Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 10 holding that Art. 1324 is modified by Art. 1479 of the Civil Code, in
effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not
so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an
option or promise supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or implement
the same principle.
Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll
& Co. case, and that, insofar as inconsistent therewith, the view adhered to in theSouthwestern Sugar & Molasses Co. case should be deemed
abandoned or modified.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos. It is so ordered.
ANTONIO, J., concurring:

I concur in the opinion of the Chief Justice.

I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co., 1
which holds that an option to sell can still be withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance
of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2 holding that "an option implies ... the legal obligation to keep the offer (to sell)
open for the time specified;" that it could be withdrawn before acceptance, if there was no consideration for the option, but once the "offer to
sell" is accepted, a bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser. In other words, if
the option is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a
withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate
a contract.
While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the
view, that the offeror can not exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation
on the part of the offeror to maintain in such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot
arbitrarily revoke the offer without being liable for damages which the offeree may suffer. A contrary view would remove the stability and
security of business transactions. 3
In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of Pl,510.00before any withdrawal from the
contract has been made by the Defendant (Severina Rigos)." Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her
offer, a bilateral reciprocal contract to sell and to buy was generated.

G.R. No. L-60174 February 16, 1983

EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners,
vs.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR ALDON, AND THE HONORABLE

COURT OF APPEALS, respondents.

Romulo D. San Juan for petitioner.
Gerundino Castillejo for private respondent.
ABAD SANTOS, J.:
Maximo Aldon married Gimena Almosara in 1936. The spouses bought several pieces of land sometime between 1948 and 1950. In 1960-62, the
lands were divided into three lots, 1370, 1371 and 1415 of the San Jacinto Public Land Subdivision, San Jacinto, Masbate.
In 1951, Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe. The sale was made without the consent of her
husband, Maximo.
On April 26, 1976, the heirs of Maximo Aldon, namely his widow Gimena and their children Sofia and Salvador Aldon, filed a complaint in the
Court of First Instance of Masbate against the Felipes. The complaint which was docketed as Civil Case No. 2372 alleged that the plaintiffs were
the owners of Lots 1370, 1371 and 1415; that they had orally mortgaged the same to the defendants; and an offer to redeem the mortgage had
been refused so they filed the complaint in order to recover the three parcels of land.
The defendants asserted that they had acquired the lots from the plaintiffs by purchase and subsequent delivery to them. The trial court sustained
the claim of the defendants and rendered the following judgment:
a. declaring the defendants to be the lawful owners of the property subject of the present litigation;
b. declaring the complaint in the present action to be without merit and is therefore hereby ordered dismissed;
c. ordering the plaintiffs to pay to the defendants the amount of P2,000.00 as reasonable attorney's fees and to pay the costs of
the suit.
The plaintiffs appealed the decision to the Court of Appeals which rendered the following judgment:
PREMISES CONSIDERED, the decision appealed from is hereby REVERSED and SET ASIDE, and a new one is hereby
RENDERED, ordering the defendants-appellees to surrender the lots in question as well as the plaintiffs'-appellants' muniments
of title thereof to said plaintiffs-appellants, to make an accounting of the produce derived from the lands including expenses
incurred since 1951, and to solidarity turn over to the plaintiffs-appellants the NET monetary value of the profits, after
deducting the sum of P1,800.00. No attorney's fees nor moral damages are awarded for lack of any legal justification therefor.
No. costs.
The ratio of the judgment is stated in the following paragraphs of the decision penned by Justice Edgardo L. Paras with the concurrence of
Justices Venicio Escolin and Mariano A. Zosa:
One of the principal issues in the case involves the nature of the aforementioned conveyance or transaction, with appellants
claiming the same to be an oral contract of mortgage or antichresis, the redemption of which could be done anytime upon
repayment of the P1,800.00 involved (incidentally the only thing written about the transaction is the aforementioned receipt re
the P1,800). Upon the other hand, appellees claim that the transaction was one of sale, accordingly, redemption was improper.
The appellees claim that plaintiffs never conveyed the property because of a loan or mortgage or antichresis and that what
really transpired was the execution of a contract of sale thru a private document designated as a 'Deed of Purchase and Sale'
(Exhibit 1), the execution having been made by Gimena Almosara in favor of appellee Hermogena V. Felipe.
After a study of this case, we have come to the conclusion that the appellants are entitled to recover the ownership of the lots in
question. We so hold because although Exh. 1 concerning the sale made in 1951 of the disputed lots is, in Our opinion, not a
forgery the fact is that the sale made by Gimena Almosara is invalid, having been executed without the needed consent of her
husband, the lots being conjugal. Appellees' argument that this was an issue not raised in the pleadings is baseless, considering
the fact that the complaint alleges that the parcels 'were purchased by plaintiff Gimena Almosara and her late husband Maximo
Aldon' (the lots having been purchased during the existence of the marriage, the same are presumed conjugal) and inferentially,
by force of law, could not, be disposed of by a wife without her husband's consent.
The defendants are now the appellants in this petition for review. They invoke several grounds in seeking the reversal of the decision of the Court
of Appeals. One of the grounds is factual in nature; petitioners claim that "respondent Court of Appeals has found as a fact that the 'Deed of
Purchase and Sale' executed by respondent Gimena Almosara is not a forgery and therefore its authenticity and due execution is already beyond
question." We cannot consider this ground because as a rule only questions of law are reviewed in proceedings under Rule 45 of the Rules of
Court subject to well-defined exceptions not present in the instant case.
The legal ground which deserves attention is the legal effect of a sale of lands belonging to the conjugal partnership made by the wife without the
consent of the husband.
It is useful at this point to re-state some elementary rules: The husband is the administrator of the conjugal partnership. (Art. 165, Civil Code.)
Subject to certain exceptions, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent.
(Art. 166, Idem.) And the wife cannot bind the conjugal partnership without the husband's consent, except in cases provided by law. (Art. 172,
Idem.)
In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without the consent of the husband and the sale is not
covered by the phrase "except in cases provided by law." The Court of Appeals described the sale as "invalid" - a term which is imprecise when

used in relation to contracts because the Civil Code uses specific names in designating defective contracts, namely: rescissible (Arts. 1380 et
seq.), voidable(Arts. 1390 et seq.), unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 et seq.)
The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidable contract.
According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of the parties is incapable of giving consent to
the contract." (Par. 1.) In the instant case-Gimena had no capacity to give consent to the contract of sale. The capacity to give consent belonged
not even to the husband alone but to both spouses.
The view that the contract made by Gimena is a voidable contract is supported by the legal provision that contracts entered by the husband
without the consent of the wife when such consent is required, are annullable at her instance during the marriage and within ten years from the
transaction questioned. (Art. 173, Civil Code.)
Gimena's contract is not rescissible for in such contract all the essential elements are untainted but Gimena's consent was tainted. Neither can the
contract be classified as unenforceable because it does not fit any of those described in Art. 1403 of the Civil Code. And finally, the contract
cannot be void or inexistent because it is not one of those mentioned in Art. 1409 of the Civil Code. By process of elimination, it must perforce
be a voidable contract.
The voidable contract of Gimena was subject to annulment by her husband only during the marriage because he was the victim who had an
interest in the contract. Gimena, who was the party responsible for the defect, could not ask for its annulment. Their children could not likewise
seek the annulment of the contract while the marriage subsisted because they merely had an inchoate right to the lands sold.
The termination of the marriage and the dissolution of the conjugal partnership by the death of Maximo Aldon did not improve the situation of
Gimena. What she could not do during the marriage, she could not do thereafter.
The case of Sofia and Salvador Aldon is different. After the death of Maximo they acquired the right to question the defective contract insofar as
it deprived them of their hereditary rights in their father's share in the lands. The father's share is one-half (1/2) of the lands and their share is twothirds (2/3) thereof, one-third (1/3) pertaining to the widow.
The petitioners have been in possession of the lands since 1951. It was only in 1976 when the respondents filed action to recover the lands. In the
meantime, Maximo Aldon died.
Two questions come to mind, namely: (1) Have the petitioners acquired the lands by acquisitive prescription? (2) Is the right of action of Sofia
and Salvador Aldon barred by the statute of limitations?
Anent the first question, We quote with approval the following statement of the Court of Appeals:
We would like to state further that appellees [petitioners herein] could not have acquired ownership of the lots by prescription in
view of what we regard as their bad faith. This bad faith is revealed by testimony to the effect that defendant-appellee Vicente
V. Felipe (son of appellees Eduardo Felipe and Hermogena V. Felipe) attempted in December 1970 to have Gimena Almosara
sign a ready-made document purporting to self the disputed lots to the appellees. This actuation clearly indicated that the
appellees knew the lots did not still belong to them, otherwise, why were they interested in a document of sale in their favor?
Again why did Vicente V. Felipe tell Gimena that the purpose of the document was to obtain Gimena's consent to the
construction of an irrigation pump on the lots in question? The only possible reason for purporting to obtain such consent is
that the appellees knew the lots were not theirs. Why was there an attempted improvement (the irrigation tank) only in 1970?
Why was the declaration of property made only in 1974? Why were no attempts made to obtain the husband's signature, despite
the fact that Gimena and Hermogena were close relatives? An these indicate the bad faith of the appellees. Now then, even if
we were to consider appellees' possession in bad faith as a possession in the concept of owners, this possession at the earliest
started in 1951, hence the period for extraordinary prescription (30 years) had not yet lapsed when the present action was
instituted on April 26, 1976.
As to the second question, the children's cause of action accrued from the death of their father in 1959 and they had thirty (30) years to institute it
(Art. 1141, Civil Code.) They filed action in 1976 which is well within the period.
WHEREFORE, the decision of the Court of Appeals is hereby modified. Judgment is entered awarding to Sofia and Salvador Aldon their shares
of the lands as stated in the body of this decision; and the petitioners as possessors in bad faith shall make an accounting of the fruits
corresponding to the share aforementioned from 1959 and solidarity pay their value to Sofia and Salvador Aldon; costs against the petitioners.
SO ORDERED.
Concepcion Jr., Guerrero and De Castro, JJ., concur.
Makasiar, (Chairman), J., In the result.
Escolin J., took no part.

Separate Opinions
AQUINO, J., concurring:
I concur in the result. The issue is whether the wife's sale in 1651 of an unregistered sixteen-hectare conjugal land, without the consent of her

husband (he died in 1959), can be annulled in 1976 by the wife and her two children.
As a rule, the husband cannot dispose of the conjugal realty without the wife's consent (Art. 166, Civil Code). Thus, a sale by the husband of the
conjugal realty without the wife's consent was declared void (Tolentino vs. Cardenas, 123 Phil. 517; Villocino vs. Doyon, L-19797, December
17, 1966, 18 SCRA 1094 and L-28871, April 25, 1975, 63 SCRA 460; Reyes vs. De Leon, L-22331, June 6,1967, 20 SCRA 369; Bucoy vs.
Paulino, L-25775, April 26, 1968, 23 SCRA 248; Tinitigan vs. Tinitigan, L-45418, October 30,1980, 100 SCRA 619).
With more reason, the wife cannot make such a disposition without the husband's consent since the husband is the administrator of the conjugal
assets.
In the instant case, the Court of Appeals did not err in voiding the wife's sale of the conjugal land without the husband's consent. As that sale is
contrary to law, the action to have it declared void or inexistent does not prescribe.
Moreover, there are indications that the contract between the parties was an antichresis, a transaction which is very common in rural areas.
Separate Opinions
AQUINO, J., concurring:
I concur in the result. The issue is whether the wife's sale in 1651 of an unregistered sixteen-hectare conjugal land, without the consent of her
husband (he died in 1959), can be annulled in 1976 by the wife and her two children.
As a rule, the husband cannot dispose of the conjugal realty without the wife's consent (Art. 166, Civil Code). Thus, a sale by the husband of the
conjugal realty without the wife's consent was declared void (Tolentino vs. Cardenas, 123 Phil. 517; Villocino vs. Doyon, L-19797, December
17, 1966, 18 SCRA 1094 and L-28871, April 25, 1975, 63 SCRA 460; Reyes vs. De Leon, L-22331, June 6,1967, 20 SCRA 369; Bucoy vs.
Paulino, L-25775, April 26, 1968, 23 SCRA 248; Tinitigan vs. Tinitigan, L-45418, October 30,1980, 100 SCRA 619).
With more reason, the wife cannot make such a disposition without the husband's consent since the husband is the administrator of the conjugal
assets.
In the instant case, the Court of Appeals did not err in voiding the wife's sale of the conjugal land without the husband's consent. As that sale is
contrary to law, the action to have it declared void or inexistent does not prescribe.
Moreover, there are indications that the contract between the parties was an antichresis, a transaction which is very common in rural areas.

G.R. No. L-25650 June 11, 1975

ISIDORA L. CABALIW and SOLEDAD SADORRA vs. SOTERO SADORRA, ENCARNACION SADORRA, EMILIO ANTONIO,
ESPERANZA RANJO, ANSELMO RALA, BASION VELASCO, IGNACIO SALMAZAN, and THE HONORABLE COURT OF
APPEALS,

Isidora Cabaliw was the wife of Benigno Sadorra by his second marriage solemnized on May 5, 1915, before the Justice of the Peace of
Bayambang, Pangasinan. This couple had a daughter named Soledad Sadorra. During their marriage, the spouses acquired two (2) parcels of land
situated in Iniangan, Dupax, Nueva Vizcaya. One parcel with an area of 14.4847 hectares was acquired by a Sales Patent and covered by Original
Certificate of Title No. 1 of the Land Records of Nueva Vizcaya issued in the name of Benigno Sadorra. The other piece of land of about 1-1/2
hectares and covered by Tax Declaration Nos. 6209 and 6642 was secured through purchase.
Having been abandoned by her husband, Isidora Cabaliw instituted an action for support with the Court of First Instance of Manila, entitled
"Isidora Cabaliw de Orden versus Benigno Sadorra" docketed therein as Civil Case No. 43193. On January 30, 1933, judgment was rendered
requiring Benigno Sadorra to pay his wife, Isidora Cabaliw, the amount of P75.00 a month in terms of support as of January 1, 1933, and P150.00
in concept of attorney's fees and the costs.
Unknown to Isidora Cabaliw, on August 19, 1933, Benigno Sadorra executed two (2) deeds of sale over the two parcels of land above described
in favor of his son-in-law, Sotero Sadorra, the latter being married to Encarnacion Sadorra, a daughter of Benigno Sadorra by his first marriage.
These deeds were duly registered and Original Certificate of Title No. 1 was cancelled and replaced with T.C.T. No. 522 of the Register of Deeds
of Nueva Vizcaya.
Because of the failure of her husband to comply with the judgment of support, Isidora Cabaliw filed in Civil Case 43192 a motion to cite
Benigno Sadorra for contempt and the Court of First Instance of Manila in its Order of May 12, 1937, authorized Isidora to take possession of the
conjugal property, to administer the same, and to avail herself of the fruits thereof in payment of the monthly support in arrears. With this order of
the Court, Isidora proceeded to Nueva Vizcaya to take possession of the aforementioned parcels of land, and it was then that she discovered that
her husband had sold them to his son-in-law Sotero. On February 1, 1940, Isidora filed with the Court of First Instance of Nueva Vizcaya Civil
Case No. 449 against her husband and Sotero Sadorra for the recovery of the lands in question on the ground that the sale was fictitious; at the
same time a notice of lis pendens was filed with the Register of Deeds of Nueva Vizcaya.
In May of 1940, Benigno Sadorra died.
On June 7, 1948, the above-mentioned notice of lis pendens was cancelled by the Register of Deeds of Nueva Vizcaya upon the filing of an
affidavit by Sotero Sadorra to the effect that Civil Case No. 449 had been decided in his favor and that he was adjudged the owner of the land
covered by T.C.T. No. 522, but that his copy of the decision was lost during the war.
On October 1, 1954, Isidora and her daughter Soledad filed with the Court of First Instance of Nueva Vizcaya Civil Case 634 to recover from the
spouses Sotero and Encarnacion Sadorra the aforementioned two parcels of land; they also caused the annotation of a cautionary notice and
notice of lis pendens over T.C.T. 522. 1
On November 22, 1955, the complaint was amended and named additional party-defendants were the children of Benigno Sadorra by his first
marriage. The amended complaint prayed among others: (1) that the deeds of sale executed by Benigno Sadorra be declared null and void; (2)
that defendant spouses Sotero and Encarnacion Sadorra be directed to yield the possession of the lands in question; and (3) that said lands be
ordered partitioned among plaintiffs and defendants who are children by the first marriage of Benigno Sadorra in the proportions provided by
law. 2
During the pendency of civil case 634 certain parties intervened claiming that they had purchased parts of the land covered by T.C.T. 522.
After trial, the lower court rendered judgment and among other things: (1) declared the deeds of sale executed by Benigno Sadorra to be
simulated and fictitious; (2) recognized and upheld the rights of the intervenor-purchasers who acquired their portions prior to the registration of
the notice of lis pendens on October 1, 1954, but dismissed the claims of the intervenors who allegedly bought parts of the land subsequent
thereto; and (3) ordered the partition of the remaining unsold lands between Isidora Cabaliw, Sotero Sadorra, on one hand and the children by the
first marriage of Benigno Sadorra on the other. 3
From the foregoing decision of the lower court in civil case 634 spouses Sotero and Encarnacion Sadorra appealed to the Court of Appeals and so
did the intervenors whose claim were dismissed. (CA-G.R. No. 26956-R) On November 29, 1965, the appellate court by a vote of 3 to 2 reversed
the decision of the trial court, and dismissed the amended complaint of Isidora Cabaliw. 4
Hence, this petition filed by Isidora Cabaliw and her daughter, Soledad Sadorra, for the Court to review the adverse judgment of the Court of
Appeals.
Several errors have been assigned by petitioners but the vital question upon which depends the outcome of this appeal is given in Error I, to wit:
The Honorable Court of Appeals gravely erred in holding that the fraud could not be presumed in the transfer of the lots in
question by the late Benigno Sadorra to his son-in-law Sotero Sadorra, even if this transfer was done shortly after judgment was
rendered against the former and in favor of your petitioner Isidora Cabaliw. (p. 1, Petitioner's Brief)
The Court of Appeals sustained the validity and efficacy of the deeds of sale executed by Benigno Sadorra in favor of his son-in-law (Exhibits I
and I-1) on the ground that these are public documents and as such are presumed by law to have been fair and legal; that the vendee Sotero
Sadorra, is presumed to have acted in good faith, citing Art. 44, Spanish Civil Code, Art. 627 New Civil Code; that fraud is never presumed, and
it is settled in this jurisdiction that strong and convincing evidence is necessary to overthrow the validity of an existing public instrument. The
appellate court continued that inasmuch as under the old Civil Code in force at the time of the sale, the husband was empowered to dispose of the
conjugal property without the consent of the wife, the sales made by Benigno Sadorra were valid, and the wife Isidora cannot now recover the
property from the vendee.
The judgment of the Court of Appeals cannot be sustained.
The facts narrated in the first portion of this Decision which are not disputed, convincingly show or prove that the conveyances made by Benigno
Sadorra in favor of his son-in-law were fraudulent. For the heart of the matter is that about seven months after a judgment was rendered against
him in Civil Case No. 43192 of the Court of First Instance of Manila and without paying any part of that judgment, Benigno Sadorra sold the

only two parcels of land belonging to the conjugal partnership to his son-in-law. Such a sale even if made for a valuable consideration is
presumed to be in fraud of the judgment creditor who in this case happens to be the offended wife.
Article 1297 of the old Civil Code which was the law in force at the time of the transaction provides: 5
Contracts by virtue of which the debtor alienates property by gratuitous title are presumed to be made in fraud of creditors.
Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been
rendered in any instance or some writ of attachment has been issued. The decision or attachment need not refer to the property
alienated and need not have been obtained by the party seeking rescission. (emphasis supplied)
The above-quoted legal provision was totally disregarded by the appellate court, and there lies its basic error.
We agree with petitioners that the parties here do not stand in equipoise, for the petitioners have in their favor, by a specific provision of law, the
presumption of a fraudulent transaction which is not overcome by the mere fact that the deeds of sale in question were in the nature of public
instruments. As well said in the dissenting opinion of Justice Magno Gatmaitan, the principle invoked by the majority opinion that to destroy the
validity of an existing public document "strong and convincing evidence is necessary", operates "where the action was brought by one party
against the other to impugn the contract ... but that rule can not operate and does not, where the case is one wherein the suit is not between the
parties inter se but is one instituted by a third person, not a party to the contract but precisely the victim of it because executed to his prejudice
and behind his back; neither law, nor justice, nor reason, nor logic, should so permit, otherwise, in such a suit, the courts would be furnishing a
most effective shield of defense to the aggressor." (pp. 30-31, CA Decision)
Furthermore, the presumption of fraud established by the law in favor of petitioners is bolstered by other indicia of bad faith on the part of the
vendor and vendee. Thus (1) the vendee is the son-in-law of the vendor. In the early case of Regalado vs. Luchsinger & Co., 5 Phil. 625, this
Court held that the close relationship between the vendor and the vendee is one of the known badges of fraud. (2) At the time of the conveyance,
the vendee, Sotero, was living with his father-in-law, the vendor, and he knew that there was a judgment directing the latter to give a monthly
support to his wife Isidora and that his father-in-law was avoiding payment and execution of the judgment. 6 (3) It was known to the vendee that
his father-in-law had no properties other than those two parcels of land which were being sold to him. 7 The fact that a vendor transfers all of his
property to a third person when there is a judgment against him is a strong indication of a scheme to defraud one who may have a valid interest
over his properties. 8
Added to the above circumstances is the undisputed fact that the vendee Sotero Sadorra secured the cancellation of the lis pendens on O.C.T. No.
1, which was annotated in 1940 at the instance of Isidora Cabaliw, and the issuance of a transfer certificate of title in his favor, by executing an
affidavit, Exhibit H, on June 7, 1948, wherein he referred to Isidora as "the late Isidora Cabaliw' when he knew for a fact that she was alive, and
alleged that Civil Case 449 of the Court of First Instance of Nueva Vizcaya was decided in his favor where in truth there was no such decision
because the proceedings in said case were interrupted by the last world war. Such conduct of Sotero Sadorra reveals, as stated by the lower court,
an "utter lack of sincerity and truthfulness" and belies his pretensions of good faith.
On the part of the transferee, he did not present satisfactory and convincing evidence sufficient to overthrow the presumption and evidence of a
fraudulent transaction. His is the burden of rebutting the presumption of fraud established by law, and having failed to do so, the fraudulent
nature of the conveyance in question prevails. 9
The decision of the Court of Appeals makes mention of Art. 1413 of the old Civil Code which authorizes the husband as administrator to alienate
and bind by onerous title the property of the conjugal partnership without the consent of the wife, and by reason thereof, concludes that petitioner
Isidora Cabaliw can not now seek annulment of the sale made by her husband. On this point, counsel for petitioners rightly claims that the lack of
consent of the wife to the conveyances made by her husband was never invoked nor placed in issue before the trial court. What was claimed all
along by plaintiff, Isidora Cabaliw now petitioner, was that the conveyances or deeds of sale were executed by her husband to avoid payment of
the monthly support adjudged in her favor and to deprive her of the means to execute said judgment. In other words, petitioner seeks relief not so
much as an aggrieved wife but more as a judgment creditor of Benigno Sadorra. Art. 1413 therefore is inapplicable; but even if it were, the result
would be the same because the very article reserves to the wife the right to seek redress in court for alienations which prejudice her or her heirs.
10 The undisputed facts before Us clearly show that, the sales made by the husband were merely a scheme to place beyond the reach of the wife
the only properties belonging to the conjugal partnership and deprive her of what rightly belongs to her and her only daughter Soledad.
PREMISES CONSIDERED, We find merit to this Petition for Review and We set aside the decision of the appellate court for being contrary to
the law applicable to the facts of the case. The decision of the trial court stands affirmed with costs against private respondents.
So Ordered.

G.R. No. L-31087 September 27, 1979 EASTERN SHIPPING LINES, INC. vs. MARGARINE-VERKAUFS-UNION GmbH
The Court affirms the appealed judgment holding petitioner liable under the terms of its own bill of lading for the damage suffered by
respondent's copra cargo on board petitioner's vessel, but sets aside the award of attorney's fees to respondent-plaintiff for lack of any statement
or reason in the lower court's judgment that would justify the award.
Respondent corporation, a West German corporation not engaged in business in the Philippines, was the consignee of 500 long tons of Philippine

copra in bulk with a total value of US$ 108,750.00 shipped from Cebu City on board petitioner's (a Philippine corporation) vessel, the SS
"EASTERN PLANET" for discharge at Hamburg, Germany. Petitioner's bill of lading for the cargo provided as follows:
... Except as otherwise stated herein and in - the Charter Party, this contract shag be governed by the laws of the Flag of the Ship
carrying the goods. In case of average, same shall be adjusted according to York-Antwerp Rules of 1950.
While the vessel was off Gibraltar, a fire broke out aboard the and caused water damage to the copra shipment in the amount of US$ 591.38.
Petitioner corporation rejected respondent's claim for payment of the and respondent filed on June 18, 1966 in the Manila court of first instance
its complaint against petitioner as defendant for recovery of the same and US$ 250.00 - attorney's fees and expenses of litigation.
After trial, the lower court rejected petitioner's defense that did not exceed 5% of respondent's interest in the cargo it was not liable under
Philippine Law for the damage which I rendered judgment on April 25, 1969 "ordering the defendant, Eastern Shipping Lines, Inc. to pay to the
plaintiff, Margarine-Verkaufs-Union GMBH, the sum of US$ 591.38, with interest at the legal rate from the date of the filing of the complaint
until fully paid, plus US$ 250.00 as attorney's fees and the costs of the suit."
In this review on questions of law, petitioner reiterates as its first assignment t of error its submittal that Article 848 of the Code of Commerce 1
which would bar claims for averages not exceeding 5% of the claimant's interest should be applied rather than the lower court's ruling that
petitioner's bill of lading expressly contained "an agreement to the contrary," i.e. for the application of the York-Antwerp Rules which provide for
respondent's fun recovery of the damage loss.
The Court finds no error and upholds the lower court's ruling sustaining respondent's damage claim although the amount thereof did not exceed
5% of respondent's interest in the cargo and would have been barred by the cited article of the Commerce Code. We hold that the lower court
correctly ruled the cited codal article to be "not applicable in this particular case for the reason that the bill of lading (Exhibit "F") contains "an
agreement to the contrary" for it is expressly provided in the last sentence of the first paragraph (Exhibit "1-A") that "In case of average, same
shall be adjusted according to York-Antwerp Rules of 1950." The insertion of said condition is expressly authorized by Commonwealth Act No.
65 which has adopted in toto the U.S. Carriage of Goods by Sea Act. Now, it has not been shown that said rules limit the recovery of damage to
cases within a certain percentage or proportion that said damage may bear to claimant's interest either in the vessel or cargo as provided in Article
848 of the Code of Commerce On the contrary, Rule 3 of said York-Antwerp Rules expressly states that "Damage done to a ship and cargo, or
either of them, by water or otherwise, including damage by breaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall
be made good as general average. ... "
There is a clear and irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the parties as their contract under the bill
of lading which sustains respondent's claim and the codal article cited by petitioner which would bar the same. Furthermore, as correctly
contended by respondent, what is here involved is a contract of adhesion as embodied in the printed bill of lading issued by petitioner for the
shipment to which respondent as the consignee merely adhered, having no choice in the matter, and consequently, any ambiguity therein must be
construed against petitioner as the author.
We find, however, petitioner's second and only other assignment of error against the award of attorney's fees of US$ 250.00 to be well taken. The
text of the lower court's decision stated no justification nor reason for the award of attorney's fees and should therefore be disallowed. As restated
in Buan vs. Camaganacan 2 , the general rule is that it is contrary to sound public policy to place a penalty on the right to litigate nor should
attorney's fees be awarded everytime a party wins a lawsuit. Hence, Article 2208 of the Civil Code provides that "in the absence of stipulation,
attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered," save for the eleven exceptions therein expressly
provided.
Insofar as the present case is concerned, the lower court made no finding that it falls within any of the exceptions that would justify the award for
attorney's fees, such as gross and evident bad faith in refusing to satisfy a plainly valid, just and demandable claim. Even under the broad
eleventh exception of the cited article which allows the imposition of attorney's fees "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be recovered," the Court stressed in Buan, supra, that "the conclusion must be
borne out by findings of facts and law. What is just and equitable in a given case is not a mere matter of feeling but of demonstration .... Hence,
the exercise of judicial discretion in the award of attorney's fees under Article 2208 (11) of the Civil Code demands a factual, legal or equitable
justification upon the basis of which the court exercises its discretion. Without such a justification, the award is a conclusion without a premise,
its basis being improperly left to speculation and conjecture." The summary award of counsel's fees made in the appealed judgment must
therefore be set aside.
A final observation. The appealed judgment ordered petitioner to pay respondent the sum of US$591.38 with interest at the legal rate (which we
hold to be the rate of six [6%] per cent under Article 2209 of the Civil Code in force at the time of the judgment of April 25, 1969) from the filing
of the complaint on June 18, 1966 until fully paid. Petitioner did not appeal from nor question this portion of the judgment requiring that it pay
respondent-creditor the damage claim with interest in U.S. currency (with reference to the general rule of discharging obligations in Philippine
currency measured at the prevailing rate of exchange 3 ). Consequently, we find no necessity to make any further pronouncement thereon. We
merely affirm the judgment in U.S. currency in favor of respondent corporation, a foreign corporation not engaged in business herein, in view of
petitioner's acquiescence therein and view the judgment as one wherein the lower court sentenced petitioner to pay and remit to respondent as a
non-resident foreign corporation the amount due under the judgment in U S. currency. ACCORDINGLY, the appealed judgment is hereby
affirmed with the modification that the award of attorney's fees is set aside. With costs against petitioner.
G.R. No. L-11872 December 1, 1917 DOMINGO MERCADO and JOSEFA MERCADO, vs. JOSE ESPIRITU, administrator of the
estate of the deceased Luis Espiritu
This is an appeal by bill of exceptions, filed by the counsel for the plaintiffs from the judgment of September 22, 1914, in which the judge of the
Seventh Judicial District dismissed the complaint filed by the plaintiffs and ordered them to keep perpetual silence in regard to the litigated land,
and to pay the costs of the suit.
By a complaint dated April 9, 1913, counsel for Domingo and Josefa Mercado brought suit in the Court of First Instance of Bulacan, against Luis

Espiritu, but, as the latter died soon thereafter, the complaint was amended by being directed against Jose Espiritu in his capacity of his
administrator of the estate of the deceased Luis Espiritu. The plaintiffs alleged that they and their sisters Concepcion and Paz, all surnamed
Mercado, were the children and sole heirs of Margarita Espiritu, a sister of the deceased Luis Espiritu; that Margarita Espiritu died in 1897,
leaving as her paraphernal property a tract of land of 48 hectares in area situated in the barrio of Panducot, municipality of Calumpit, Bulacan,
and bounded as described in paragraph 4 of the amended complaint, which hereditary portion had since then been held by the plaintiffs and their
sisters, through their father Wenceslao Mercado, husband of Margarita Espiritu; that, about the year 1910, said Luis Espiritu, by means of
cajolery, induced, and fraudulently succeeded in getting the plaintiffs Domingo and Josefa Mercado to sign a deed of sale of the land left by their
mother, for the sum of P400, which amount was divided among the two plaintiffs and their sisters Concepcion and Paz, notwithstanding the fact
that said land, according to its assessment, was valued at P3,795; that one-half of the land in question belonged to Margarita Espiritu, and onehalf of this share, that is, one-fourth of said land , to the plaintiffs, and the other one-fourth, to their two sisters Concepcion and Paz; that the part
of the land belonging to the two plaintiffs could produce 180 cavanes of rice per annum, at P2.50 per cavan, was equivalent to P450 per annum;
and that Luis Espiritu had received said products from 1901 until the time of his death. Said counsel therefore asked that judgment be rendered in
plaintiffs' favor by holding to be null and void the sale they made of their respective shares of their land, to Luis Espiritu, and that the defendant
be ordered to deliver and restore to the plaintiffs the shares of the land that fell to the latter in the partition of the estate of their deceased mother
Margarita Espiritu, together with the products thereof, uncollected since 1901, or their equivalent, to wit, P450 per annum, and to pay the costs of
the suit.
In due season the defendant administrator answered the aforementioned complaint, denying each and all of the allegations therein contained, and
in special defense alleged that the land, the subject-matter of the complaint, had an area of only 21 cavanes of seed rice; that, on May 25, 1894,
its owner, the deceased Margarita Espiritu y Yutoc, the plaintiffs' mother, with the due authorization of her husband Wenceslao Mercado y Arnedo
Cruz sold to Luis Espiritu for the sum of P2,000 a portion of said land, to wit, an area such as is usually required for fifteen cavanes of seed; that
subsequently, on May 14, 1901, Wenceslao Mercado y Arnedo Cruz, the plaintiffs' father, in his capacity as administrator of the property of his
children sold under pacto de retro to the same Luis Espiritu at the price of P375 the remainder of the said land, to wit, an area covered by six
cavanes of seed to meet the expenses of the maintenance of his (Wenceslao's) children, and this amount being still insufficient the successively
borrowed from said Luis Espiritu other sums of money aggregating a total of P600; but that later, on May 17,1910, the plaintiffs, alleging
themselves to be of legal age, executed, with their sisters Maria del Consejo and Maria dela Paz, the notarial instrument inserted integrally in the
5th paragraph of the answer, by which instrument, ratifying said sale under pacto de retro of the land that had belonged to their mother Margarita
Espiritu, effected by their father Wenceslao Mercado in favor of Luis Espiritu for the sum of P2,600, they sold absolutely and perpetually to said
Luis Espiritu, in consideration of P400, the property that had belonged to their deceased mother and which they acknowledged having received
from the aforementioned purchaser. In this cross-complaint the defendant alleged that the complaint filed by the plaintiffs was unfounded and
malicious, and that thereby losses and damages in the sum of P1,000 had been caused to the intestate estate of the said Luis Espiritu. He therefore
asked that judgment be rendered by ordering the plaintiffs to keep perpetual silence with respect to the land in litigation and, besides, to pay said
intestate estate P1,000 for losses and damages, and that the costs of the trial be charged against them.
In reply to the cross-complaint, the plaintiffs denied each and all of the facts therein set forth, and in special defense alleged that at the time of the
execution of the deed of sale inserted in the cross-complaint the plaintiffs were still minors, and that since they reached their majority the four
years fixed by law for the annulment of said contract had not yet elapsed. They therefore asked that they be absolved from the defendant's crosscomplaint.
After trial and the introduction of evidence by both parties, the court rendered the judgment aforementioned, to which the plaintiffs excepted and
in writing moved for a reopening of the case and a new trial. This motion was overruled, exception was taken by the petitioners, and the proper
bill of exceptions having been presented, the same was approved and transmitted to the clerk of this court.
As the plaintiffs assailed the validity of the deed of sale, Exhibit 3, executed by them on May 17, 1910, on the ground that they were minors
when they executed it, the questions submitted to the decision of this court consist in determining whether it is true that the plaintiffs were then
minors and therefore incapable of selling their property on the date borne by the instrument Exhibit 3; and in case they then were such, whether a
person who is really and truly a minor and, notwithstanding, attests that he is of legal age, can, after the execution of the deed and within legal
period, ask for the annulment of the instrument executed by him, because of some defect that invalidates the contract, in accordance with the law
(Civ. Code, arts. 1263 and 1300), so that he may obtain the restitution of the land sold.
The records shows it to have been fully proven that in 1891 Lucas Espiritu obtained title by composition with the State, to three parcels of land,
adjoining each other, in the sitio of Panducot of the pueblo of Calumpit, Bulacan, containing altogether an area of 75 hectares, 25 ares, and 59
centares, which facts appear in the title Exhibit D; that, upon Luis Espiritu's death, his said lands passed by inheritance to his four children named
Victoria, Ines, Margarita, and Luis; and that, in the partition of said decedent's estate, the parcel of land described in the complaint as containing
forty-seven and odd hectares was allotted to the brother and sister Luis and Margarita, in equal shares. Margarita Espiritu, married to Wenceslao
Mercado y Ardeno Cruz, had by this husband five children, Maria Consejo, Maria de la Paz, Domingo, Josefa, and Amalia, all surnamed
Mercado y Espiritu, who, at the death of their mother in 1896 inherited, by operation of law, one-half of the land described in the complaint.
The plaintiffs' petition for annulment of the sale and the consequent restitution to them of two-fourths of the land left by their mother, that is, of
one-fourth of all the land described in the complaint, and which, they stated, amounts to 11 hectares, 86 ares and 37 centares. To this claim the
defendant excepted, alleging that the land in question comprised only an area such as is customarily covered by 21 cavanes of seed.
It was also duly proven that, by a notarial instrument of May 25, 1894, the plaintiffs' mother conveyed by actual and absolute sale for the sum of
P2,000, to her brother Luis Espiritu a portion of the land now on litigation, or an area such as is usually covered by about 15 cavanes of seed; and
that, on account of the loss of the original of said instrument, which was on the possession of the purchaser Luis Espiritu, and furthermore
because, during the revolution, the protocols or registers of public documents of the Province of Bulacan were burned, Wenceslao Mercado y
Arnedo Cruz, the widower of the vendor and father of the plaintiffs, executed, at the instance of the interested party Luis Espiritu, the notarial
instrument Exhibit 1, of the date of May 20, 1901, in his own name and those of his minor children Maria Consejo, Maria de la Paz, Domingo,
Josefa, and Amalia, and therein set forth that it was true that the sale of said portion of land had been made by his aforementioned wife, then

deceased, to Luis Espiritu in 1894.

However, even prior to said date, to wit, on May 14th of the same year, 1901, the widower Wenceslao Mercado, according to the private
document Exhibit 2, pledged or mortgaged to the same man, Luis Espiritu, for P375, a part, or an area covered by six cavanes of seed, of the land
that had belonged to this vendor's deceased wife, to the said Luis Espiritu and which now forms a part of the land in question a transaction
which Mercado was obliged to make in order to obtain funds with which "to cover his children's needs." Wenceslao Mercado, the plaintiffs'
father, having died, about the year 1904, the plaintiffs Domingo and Josefa Mercado, together with their sisters Consejo and Paz, declaring
themselves to be of legal age and in possession of the required legal status to contract, executed and subscribed before a notary the document
Exhibit 3, on May 17, 1910, in which referring to the previous sale of the land, effected by their deceased mother for the sum of P2,600 and with
her husband's permission and authorization, they sold absolutely and in perpetuity to Luis Espiritu, for the sum of P400 "as an increase" of the
previous purchase price, the land described in said instrument and situated in Panducot, pueblo of Calumpit, Bulacan, of an area equal to that
usually sown with 21 cavanes of seed bounded on the north by the lands of Flaviano Abreu and the heirs of Pedro Espiritu, on the east by those of
Victoria Espiritu and Ines Espiritu, on the south by those of Luis Espiritu, and on the west by those of Hermogenes Tan-Toco and by the SapangMaitu stream.
In this status of the case the plaintiffs seek the annulment of the deed Exhibit 3, on the ground that on the date of its execution they were minors
without legal capacity to contract, and for the further reason that the deceased purchaser Luis Espiritu availed himself of deceit and fraud in
obtaining their consent for the execution of said deed.
As it was proven by the testimony of the clerk of the parochial church of Apalit (plaintiffs were born in Apalit) that the baptismal register books
of that parish pertaining to the years 1890-1891, were lost or burned, the witness Maria Consejo Mercado recognized and identified the book
Exhibit A, which she testified had been kept and taken care of by her deceased father Wenceslao Mercado, pages 396 and 397 of which bear the
attestation that the plaintiff Domingo Mercado was born on August 4, 1890, and Josefa Mercado, on July 14, 1891. Furthermore, this witness
corroborated the averment of the plaintiffs' minority, by the personal registration certificate of said Domingo Mercado, of the year 1914, Exhibit
C, by which it appears that in 1910 he was only 23 years old, whereby it would also be appear that Josefa Mercado was 22 years of age in 1910,
and therefore, on May 17,1910, when the instrument of purchase and sale, Exhibit 3, was executed, the plaintiffs must have been, respectively, 19
and 18 years of age.
The witness Maria Consejo Mercado also testified that after her father's death her brother and sisters removed to Manila to live there, although
her brother Domingo used to reside with his uncle Luis Espiritu, who took charge of the administration of the property left by his predecessors in
interest; that it was her uncle Luis who got for her brother Domingo the other cedula, Exhibit B, pertaining to the year 1910, where in it appears
that the latter was then already 23 years of age; that she did not know why her uncle did so; that she and her brother and sisters merely signed the
deed of May 17, 1910; and that her father Wenceslao Mercado, prior to his death had pledged the land to her uncle Luis Espiritu.
The witness Ines Espiritu testified that after the death of the plaintiffs' father, it was Luis Espiritu who directed the cultivation of the land in
litigation. This testimony was corroborated by her sister Victoria Espiritu, who added that her nephew, the plaintiff Domingo, had lived for some
time, she did not know just how long, under the control of Luis Espiritu.
Roque Galang, married to a sister of Luis Espiritu, stated that the land that fell to his wife and to his sister-in-law Victoria, and which had an area
of about 8 hectares less than that of the land allotted to the aforementioned Luis and Margarita produced for his wife and his sister-in-law Victoria
a net and minimum yield of 507 cavanes in 1907, in spite of its being high land and of inferior quality, as compared with the land in dispute, and
that its yield was still larger in 1914, when the said two sisters' share was 764 cavanes.
Patricio Tanjucto, the notary before whom the deed Exhibit 3 was ratified, was a witness for the defendant. He testified that this deed was drawn
up by him at the request of the plaintiff Josefa Mercado; that the grantors of the instrument assured him that they were all of legal age; that said
document was signed by the plaintiffs and the other contracting parties, after it had been read to them and had been translated into the
Pampangan dialect for those of them who did not understand Spanish. On cross-examination, witness added that ever since he was 18 years of
age and began to court, he had known the plaintiff Josefa Mercado, who was then a young maiden, although she had not yet commenced to attend
social gatherings, and that all this took place about the year 1898, for witness said that he was then [at the time of his testimony, 1914,] 34 years
of age.
Antonio Espiritu, 60 years of age, who knew Lucas Espiritu and the properties owned by the latter, testified that Espiritu's land contained an area
of 84 cavanes, and after its owner's death, was under witness' administration during to harvest two harvest seasons; that the products yielded by a
portion of this land, to wit, an area such as is sown by about 15 cavanes of seed, had been, since 1894, utilized by Luis Espiritu, by reason of his
having acquired the land; and that, after Margarita Espiritu's death, her husband Wenceslao Mercado took possession of another portion of the
land, containing an area of six cavanes of seed and which had been left by this deceased, and that he held same until 1901, when he conveyed it
to Luis Espiritu. lawphi1.net
The defendant-administrator, Jose Espiritu, son of the deceased Luis Espiritu, testified that the plaintiff Domingo Mercado used to live off and on
in the house of his deceased father, about the year 1909 or 1910, and used to go back and forth between his father's house and those of his other
relatives. He denied that his father had at any time administered the property belonging to the Mercado brother and sisters.
In rebuttal, Antonio Mercado, a cousin of Wenceslao, father of the plaintiffs, testified that he mediate in several transactions in connection with a
piece of land belonging to Margarita Espiritu. When shown the deed of purchase and sale Exhibit 1, he stated that he was not acquainted with its
contents. This same witness also testified that he mediated in a transaction had between Wenceslao Mercado and Luis Espiritu (he did not
remember the year), in which the former sold to the latter a parcel of land situated in Panducot. He stated that as he was a witness of the deed of
sale he could identify this instrument were it exhibited to him; but he did not do so, for no instrument whatever was presented to him for
identification. The transaction mentioned must have concerned either the ratification of the sale of the land of 15 cavanes, in 1901, attested in
Exhibit 1, or the mortgage or pledge of the other parcel of 6 cavanes, given on May 14, 1901, by Wenceslao Mercado to Luis Espiritu, as may be
seen by the private document Exhibit 2. In rebuttal, the plaintiff Josefa Mercado denied having gone to the house of the notary Tanjutco for the
purpose of requesting him to draw up any document whatever. She stated that she saw the document Exhibit 3 for the first time in the house of

her uncle Luis Espiritu on the day she signed it, on which occasion and while said document was being signed said notary was not present, nor
were the witnesses thereto whose names appear therein; and that she went to her said uncle's house, because he had sent for her, as well as her
brother and sisters, sending a carromata to fetch them. Victoria Espiritu denied ever having been in the house of her brother. Luis Espiritu in
company with the plaintiffs, for the purpose of giving her consent to the execution of any deed in behalf of her brother.
The evidence adduced at the trial does not show, even circumstantially, that the purchaser Luis Espiritu employed fraud, deceit, violence, or
intimidation, in order to effect the sale mentioned in the document Exhibit 3, executed on May 17, 1910. In this document the vendors, the
brother and the sisters Domingo, Maria del Consejo, Paz and, Josefa surnamed Mercado y Espiritu, attested the certainty of the previous sale
which their mother, during her lifetime, had made in behalf of said purchaser Luis Espiritu, her brother with the consent of her husband
Wenceslao Mercado, father of the vendors of the portion of land situated in the barrio of Panducot, pueblo of Calumpit, Bulacan; and in
consideration of the fact that the said vendor Luis Espiritu paid them, as an increase, the sum of P400, by virtue of the contract made with him,
they declare having sold to him absolutely and in perpetuity said parcel of the land, waive and thenceforth any and all rights they may have,
inasmuch as said sum constitutes the just price of the property.
So that said document Exhibit 3 is virtually an acknowledgment of the contract of sale of the parcel or portion of land that would contain 15
cavanes of seed rice made by the vendors' mother in favor of the purchaser Luis Espiritu, their uncle, and likewise an acknowledgment of the
contract of pledge or mortgage of the remainder of said land, an area of six cavanes, made with the same purchaser, at an increase of P400 over
the price of P2,600, making an aggregate sum of P3,000, decomposed as follows: P2,000, collected during her lifetime, by the vendors' father;
and the said increase of P400, collected by the plaintiffs.
In the aforementioned sale, according to the deed of May 25, 1894, Margarita Espiritu conveyed to her brother Luis the parcel of 15 cavanes of
seed, Exhibit 1, and after her death the plaintiffs' widowed father mortgaged or pledged the remaining parcel or portion of 6 cavanes of seed to
her brother-in-law, Luis Espiritu, in May, 1901 (Exhibit 2). So it is that the notarial instrument Exhibit 3, which was assailed by the plaintiffs,
recognized the validity of the previous contracts, and the totality of the land, consisting of an area containing 21 cavanes of seed rice, was sold
absolutely and in perpetuity, the vendors receiving in exchange P400 more; and there is no conclusive proof in the record that this last document
was false and simulated on account of the employment of any violence, intimidation, fraud, or deceit, in the procuring of the consent of the
vendors who executed it.
Considering the relation that exists between the document Exhibit 3 and those of previous dates, Exhibits 1 and 2, and taking into the account the
relationship between the contracting parties, and also the general custom that prevails in many provinces of these Islands for the vendor or debtor
to obtain an increase in the price of the sale or of the pledge, or an increase in the amount loaned, without proof to the contrary, it would be
improper and illegal to hold, in view of the facts hereinabove set forth, that the purchaser Luis Espiritu, now deceased, had any need to forge or
simulate the document Exhibit 3 inasmuch as, since May, 1894, he has held in the capacity of owner by virtue of a prior acquisition, the parcel of
land of 15 cavanes of seed, and likewise, since May, 1901, according to the contract of mortgage or pledge, the parcel of 6 cavanes, or the
remainder of the total area of 21 cavanes.
So that Luis Espiritu was, during his lifetime, and now, after his death, his testate or intestate estate is in lawful possession of the parcel of land
situated in Panducot that contains 21 cavanes of seed, by virtue of the title of conveyance of ownership of the land measuring 15 cavanes, and, in
consequence of the contract of pledge or mortgage in security for the sum of P600, is likewise in lawful possession of the remainder of the land,
or an area containing 6 cavanes of seed.
The plaintiffs have absolutely no right whatever to recover said first parcel of land, as its ownership was conveyed to the purchaser by means of a
singular title of purchase and sale; and as to the other portion of 6 cavanes of seed, they could have redeemed it before May 17, 1910, upon the
payment or the return of the sum which their deceased father Wenceslao Mercado had, during his lifetime, received as a loan under security of
the pledged property; but, after the execution of the document Exhibit 3, the creditor Luis Espiritu definitely acquired the ownership of said
parcel of 6 cavanes. It is therefore a rash venture to attempt to recover this latter parcel by means of the contract of final and absolute sale, set
forth in the deed Exhibit 3.
Moreover, the notarial document Exhibit 1, are regards the statements made therein, is of the nature of a public document and is evidence of the
fact which gave rise to its execution and of the date of the latter, even against a third person and his predecessors in interest such as are the
plaintiffs. (Civ. Code, art. 1218.)
The plaintiffs' father, Wenceslao Mercado, recognizing it to be perfectly true that his wife Margarita Espiritu sold said parcel of land which she
inherited from her father, of an area of about "15 cavanes of seed," to her brother Luis Espiritu, by means of an instrument executed by her on
May 25,1894 an instrument that disappeared or was burned and likewise recognizing that the protocols and register books belonging to the
Province of Bulacan were destroyed as a result of the past revolution, at the request of his brother-in-law Luis Espiritu he had no objection to
give the testimony recorded in said notarial instrument, as it was the truth regarding what had occurred, and in so doing he acted as the plaintiffs'
legitimate father in the exercise of his parental authority, inasmuch as he had personal knowledge of said sale, he himself being the husband who
authorized said conveyance, notwithstanding that his testimony affected his children's interest and prejudiced his own, as the owner of any fruits
that might be produced by said real property.
The signature and handwriting of the document Exhibit 2 were identified as authentic by one of the plaintiffs, Consejo Mercado, and as the
record shows no evidence whatever that this document is false, and it does not appear to have been assailed as such, and as it was signed by the
plaintiffs' father, there is no legal ground or well-founded reason why it should be rejected. It was therefore properly admitted as evidence of the
certainty of the facts therein set forth.
The principal defect attributed by the plaintiffs to the document Exhibit 3 consists in that, on the date of May 17, 1910, when it was executed that
they signed it, they were minors, that is, they had not yet attained the age of 21 years fixed by Act No. 1891, though no evidence appears in the
record that the plaintiffs Josefa and Domingo Mercado were in fact minors, for no certified copies were presented of their baptismal certificates,
nor did the plaintiffs adduce any supplemental evidence whatever to prove that Domingo was actually 19 and Josefa 18 years of age when they
signed the document Exhibit 3, on May 17, 1910, inasmuch as the copybook, Exhibit A, notwithstanding the testimony of the plaintiff Consejo

Mercado, does not constitute sufficient proof of the dates of births of the said Domingo and Josefa.
However, even in the doubt whether they certainly were of legal age on the date referred to, it cannot be gainsaid that in the document Exhibit 3
they stated that they were of legal age at the time they executed and signed it, and on that account the sale mentioned in said notarial deed Exhibit
3 is perfectly valid a sale that is considered as limited solely to the parcel of land of 6 cavanes of seed, pledged by the deceased father of the
plaintiffs in security for P600 received by him as a loan from his brother-in-law Luis Espiritu, for the reason that the parcel of 15 cavanes had
been lawfully sold by its original owner, the plaintiffs' mother.
The courts, in their interpretation of the law, have laid down the rule that the sale of real estate, made by minors who pretend to be of legal age,
when in fact they are not, is valid, and they will not be permitted to excuse themselves from the fulfillment of the obligations contracted by them,
or to have them annulled in pursuance of the provisions of Law 6, title 19, of the 6th Partida; and the judgment that holds such a sale to be valid
and absolves the purchaser from the complaint filed against him does not violate the laws relative to the sale of minors' property, nor the juridical
rules established in consonance therewith. (Decisions of the supreme court of Spain, of April 27, 1860, July 11, 1868, and March 1, 1875.)
itc@alf
With respect to the true age of the plaintiffs, no proof was adduced of the fact that it was Luis Espiritu who took out Domingo Mercado's personal
registration certificate on April 13, 1910, causing the age of 23 years to be entered therein in order to corroborate the date of the notarial
instrument of May 17th of the same year; and the supposition that he did, would also allow it to be supposed, in order to show the propriety of
the claim, that the cedula Exhibit C was taken out on February 14, 1914, where in it is recorded that Domingo Mercado was on that date 23 years
of age, for both these facts are not proved; neither was any proof adduced against the statement made by the plaintiffs Domingo and Josefa in the
notarial instrument Exhibit 3, that, on the date when they executed it, they were already of legal age, and, besides the annotation contained in the
copybook Exhibit A, no supplemental proof of their true ages was introduced.
Aside from the foregoing, from a careful examination of the record in this case, it cannot be concluded that the plaintiffs, who claim to have
minors when they executed the notarial instrument Exhibit 3, have suffered positive and actual losses and damages in their rights and interests as
a result of the execution of said document, inasmuch as the sale effected by the plaintiffs' mother, Margarita Espiritu, in May, 1894, of the greater
part of the land of 21 cavanes of seed, did not occasion any damage or prejudice to the plaintiffs, inasmuch as their father stated in the document
Exhibit 2 that he was obliged to mortgage or pledge said remaining portion of the land in order to secure the loan of the P375 furnished by Luis
Espiritu and which was subsequently increased to P600 so as to provide for certain engagements or perhaps to meet the needs of his children, the
plaintiff; and therefore, to judge from the statements made by their father himself, they received through him, in exchange for the land of 6
cavanes of seed, which passed into the possession of the creditor Luis Espiritu, the benefit which must have accrued to them from the sums of
money received as loans; and, finally, on the execution of the impugned document Exhibit 3, the plaintiffs received and divided between
themselves the sum of P400, which sum, added to that P2,000 received by Margarita Espiritu, and to that of the P600 collected by Wenceslao
Mercado, widower of the latter and father of the plaintiffs, makes all together the sum of P3,000, the amount paid by the purchaser as the price of
all the land containing 21 cavanes of seed, and is the just price of the property, was not impugned, and, consequently, should be considered as
equivalent to, and compensatory for, the true value of said land.
For the foregoing reasons, whereby the errors assigned to the judgment appealed from have been refuted, and deeming said judgment to be in
accordance with law and the evidence of record, we should, and do hereby, affirm the same, with costs against the appellants. So ordered.
Separate Opinions
CARSON, J., concurring:

I concur.

But in order to avoid misunderstanding, I think it well to indicate that the general statement, in the prevailing opinion to the effect that the
making of false representations as to his age by an infant executing a contract will preclude him from disaffirming the contract or setting up the
defense of infancy, must be understood as limited to cases wherein, on account of the minor's representations as to his majority, and because of
his near approach thereto, the other party had good reason to believe, and did in fact believe the minor capable of contracting.
The doctrine set forth in the Partidas, relied upon by the supreme court of Spain in the cases cited in the prevailing opinion, is substantially
similar to the doctrine of estoppel as applied in like instances by many of the courts in the United States.
For the purposes of convenient comparison, I here insert some citations of authority, Spanish and American, recognizing the limitations upon the
general doctrine to which I am inviting attention at this time; and in this connection it is worthy of note that the courts of the United States look
with rather less favor than the supreme court of Spain upon the application of the doctrine, doubtless because the cases wherein it may properly
be applied, are much less likely to occur in a jurisdiction where majority is reached at the age of 21 than a jurisdiction wherein majority is not
ordinarily attained until the infant reaches the age of 25.
Ley 6, tit. 19, Partida 6. is, in part, as follows:
If he who is minor (1) deceitfully says or sets forth in an instrument that he is over twenty-five years of age, and this assertion is
believed by another person who takes him to be of about that age, (2) in an action at law he should be deemed to be of the age he
asserted, and should no (3) afterwards be released from liability on the plea that he was not of said age when he assumed the obligation.
The reason for this is that the law helps the deceived and not the deceivers.
In the glossary to these provisions of the Partidas by Gregorio Lopez, I find the following:
(1) De tal tiempo. Nota bene hoc verbum, nam si appareret ex aspectu eum esse minorem, tunc adversarius non potest dicere se
deceptum; imo tam ipse, quam minor videntur esse in dolo, quo casu competit minori restitutio, quia facta doli compensatione, perinde
ast ac si nullus fuiset in dolo, et ideo datur restitutio; et quia scienti dolus non infertur, l. 1. D. de act. empt. secundum Cyn. Alberic et
Salic. in l. 3. C.si minor se major. dixer. adde Albericum tenentem, quabndo per aspectum a liter constaret, in authent.sacramenta
puberum, col. 3. C. si advers vendit.

(2) Engoosamente. Adde 1. 2. et 3. C. si minor se major. dixer. Et adverte nam per istam legem Partitarum, que non distinguit, an
adultus, vel pupillus talem assertionem faciat, videtur comprobari dictum Guillielm. de Cun. de quo per Paul. de Castr. in 1. qui jurasse.
in princ. D. de jurejur. quod si pupillus proximus pubertari juret, cum contrahit, se esse puberem, et postea etiam juret, quod non veniet
contra contractum quod habebit locum dispositio authenticae sacramenta puberum, sicut si esset pubes: et cum isto dicto transit ibi Paul.
de Cast. multum commendans, dicens, se alibi non legisse; si tamen teneamus illam opinionem, quod etiam pupillus doli capax obligatur
ex juramento, non esset ita miranda dicat, decissio; vide per Alexand. in dict. 1. qui jurasse, in princ. Item lex ista Partitarum expresse
sentit de adulto, non de pupillo, cum superius dixit, que paresciere de tal tiempo: Doctores etiam intelligunt de adulto 11. dict. tit. C. si
minor. se major. dixer. et patet ex 11. illius tituli. Quid autem dicemus in dubio, cum non constat de dolo minoris? Azon. in summa illius
tit. in fin. Cynus tamen, et alli, tenent oppositum, quia dolus non praesumitur, nisi probetur, 1. quotiens, s., qui dolo, D. de probat. Et hoc
etiam vult ista lex Partitarum, cum dicit, si lo faze engoosamente: et ita tenent Alberic. et Salicet. in dict. 1. 3. ubi etiam Bart. in fin. Si
autem minor sui facilitate asserat se mojorem, et ita juret, tunc distingue, ut habetur dict. 1. 3 quia aut juravit verbo tenus, et tunc non
restituitur, nisi per instrumentum seu scripturam probet se minorem; et si juravit corporaliter, nullo modo restituitur, ut ibi; et per quae
instrumenta probentur, cum verbo tenus juravit, vide per Specul. tit. de restit, in integr. s. quis autem, col. 4. vers. sed cujusmodi erit
scriptura, ubi etiam vide per Speculatorem aliquas notabiles quaestiones in ista materia, in col. 5. videlicet, an praejudicet sibi minor ex
tali juramento in aliis contractibus, et tenet, quod non; et tenet glossa finalis in 1. de aetate, D. de minor. in fin. gloss. vide ibi per
Speculat. ubi etiam de aliis in ista materia.
In the decision of the supreme court of Spain dated the 27th of April, 1860, I find an excellent illustration of the conditions under which that
court applied the doctrine, as appears from the following resolution therein set forth.
Sales of real estate made by minors are valid when the latter pretend to be twenty-five years of age and, due to the circumstances that
they are nearly of that age, are married, or have administration of their property, or on account of other special circumstances affecting
them, the other parties to the contract believe them to be of legal age.
With these citations compare the general doctrine in the United States as set forth in 22 Cyc. (p. 610), supported by numerous citations of
authority.
Estoppel to disaffirm (I) In General. The doctrine of estoppel not being as a general rule applicable to infants, the court will not
readily hold that his acts during infancy have created an estoppel against him to disaffirm his contracts. Certainly the infant cannot be
estopped by the acts or admissions of other persons.
(II) False representations as to age. According to some authorities the fact that an infant at the time of entering into a contract falsely
represented to the person with whom he dealt that he had attained the age of majority does not give any validity to the contract or estop
the infant from disaffirming the same or setting up the defense of infancy against the enforcement of any rights thereunder; but there is
also authority for the view that such false representations will create an estoppel against the infant, and under the statutes of some states
no contract can be disaffirmed where, on account of the minor's representations as to his majority, the other party had good reason to
believe the minor capable of contracting. Where the infant has made no representations whatever as to his age, the mere fact that the
person with whom he dealt believed him to be of age, even though his belief was warranted by the infant's appearance and the
surrounding circumstances, and the infant knew of such belief, will not render the contract valid or estop the infant to disaffirm.

G.R. No. L-8334 December 28, 1957 BIENVENIDO BABAO, ETC. vs. FLORENCIO PEREZ, ETC., ET AL.
This is an action to recover one-half () of a parcel of land containing an area of 156 hectares situated in San Juan, Batangas, plus the value of
the produce gathered thereon from August, 1947 until actual recovery and in the alternative, to recover the Sum of P47,000 representing
reimbursement of the amount of useful and necessary expenses incurred to the clear and improve the aforesaid land.
Plaintiff is the judicial administrator of the estate of the late Santiago Babao while defendant Florencio Perez is the judicial administrator of the
estate of the late Celestina Perez. The other defendants are purchasers and actual owners of portions of the land which is sought to be recovered
in the present litigation.

The complaint alleges that Celestina Perez was in her lifetime the owner of the parcel of land in question which was not registered either under
Act 496 or under the Spanish Mortgage law: that sometime in 1924 when the deceased Santiago Babao married Maria Cleofe Perez, niece of
Celestina Perez, the latter and the former entered into a verbal agreement whereby Santiago Babao bound himself to improve the land by leveling
and clearing all the forest trees standing thereon and planting in lieu there of coconuts, rice, corn and other crops such as bananas and bamboo
trees, and to act at the same time as administrator thereof during the lifetime of Celestina Perez, all expenses for labor, and materials to be at his
cost, in consideration of which Celestina in turn bound herself to convey to Santiago Babao or, his wife of land, together with all the
improvements thereon upon her death; that pursuant to said verbal agreement, Santiago Babao in 1924 left his job as administrator of the Llana
Estate in San Juan, Batangas for which he was receiving a salary of P150 a month, and started leveling and clearing the land having planted in an
area of 50 hectares 50,000 coconuts trees, and rice and corn in another area of 70 hectares, leaving out only 50 hectares unimproved, all of which
having been administered by him from 1924 to 1946; that for clearing and improving the portions of land above-mentioned, he incurred expenses
amounting to P7,400 which added to his salary as administrator from l924 to 1946 at rate P150 a month mounting to P39,600, makes a total of
P47,000; that in the violation of the aforesaid verbal agreement, Celestina Perez, acting through Leovigildo Perez, to whom she extended a power
of Attorney to sell, sold few days before she died about 127 __ hectares of the land in question in consequence of which Santiago Babao was
deprived of the possession and administration thereof from 1945. that said sales are fictitious and were made clear violation of the oral agreement
made between Celestina Perez and Santiago Babao and as such the same are null and void; that Celestina Perez died on August 24, 1947 as a
result of which intestate proceedings were instituted for the settlement of her estate and one Florencio Perez was named as judicial administrator;
that Santiago Babao died on January 6, 1948 and as a consequence in estate proceedings were instituted for the settlement of his estate and
Bienvenido Babao failed to recover the portion of the lane herein litigated, said estate would suffer an irreparable damage of not less than
P366,700 representing fruits which it has failed to receive during the last 20 years. Wherefore, plaintiff played for the conveyance of portion of
the land in question and for annulment of the sales of the portion for having been made fictitiously, and in the alternative, for judgment in
plaintiff's favor for the sum of P47,000 representing the amount of useful and necessary expenses incurred by Santiago Babao in improving the
land in line with the oral agreement.
Defendants denied plaintiff's claim that a verbal agreement was entered into between Celestina Perez Babao relative to the clearing, improving
and administering the land belonging to the former having an area of 156 hectares, as well as the other claim that Santiago Babao had actually
cleared and improve a great portion thereof at the cost at around P7,400. They alleged in 1924 and for many years prior thereto, the land in
question had already been cleared and cultivated for agricultural purposes with an exception of a portion of 50 hectares: that said land was
cleared and cultivated due partly to the effort made by Celestinas husband, Esteban de Villa, her overseers and tenants, and partly to the "trusco"
system employed by them whereby persons were allowed to clear the land and plat thereon and from the harvest were compensated according to
a graduated scale of division varying from year to year; that the coconut trees, banana plants and bamboo trees now standing thereon were
planted not by Santiago Babao nor at his expenses but by the tenants of the spouses Esteban de Villa and Celestina Perez who were dully
compensated according to the "trusco" system; that although Santiago Babao and Maria Cleofe Perez were married in 1924, the former did not
have anything to do with the land in question to Esteban de Villa was then still living and actively managed the same with help of his overseer
and tenants until he died in 1930; that it was only in that year when Santiago Babao began administering the land in the capacity of a nephew of
Celestina until 1935 when Celestina disgusted with the conduct of Santiago, left the company of Santiago and his wife and went to live with her
nephew Bernardo Perez until her death in 1947; that since then Celestina Perez prohibited Santiago from interfering with the administration of
the land and designated another person in his place, and for the work he did from 1930 to 1935, he was more than compensated because the
proceeds of the harvests during said years were all given only to him and his wife and Celestina was given only what was barely sufficient for her
maintenance.
Defendants also alleged that the sales made by Celestina Perez through her attorney-in-fact Leovigildo Perez of several portions of the land were
not fictitious is alleged but were made with full knowledge and authority of Celestina who executed in favor of Leovigildo Perez a power of
Attorney under the authority notary public in the presence of Santiago Babao himself who did not interpose any objection to the execution of said
power of attorney and, therefore, said sales are real, valid and genuine, having been executed in accordance with law. Defendants prayed that the
complaint be dismissed with costs, after awarding to them moral damages in the amount that the court may deem proper to fix.
After hearing, the court rendered in favor of the plaintiff and against the defendants, Wherefore, judgement is rendered in favor of the plaintiff
and against the defendants,
(1) Declaring the sales of Lupang Parang by and between the defendants, fraudulent and fictitious, null and void;
(2) Ordering defendant Florencio Perea as administrator of the testate of the deceased Celestina Perez, to pay plaintiff the sum of P3,786.66 annually
from August 25, 1947 until delivery of the land to the latter, with interest thereon at the rate of 6 per cent per annum from the date of the filing of the
complaint;
(3) Divesting the title of defendants over of Lupang Parang both in quantity and quality and vesting title however in plaintiff pursuant to section 10
of Rule 39. To carry out this judgement, the Clerk of Court is hereby appointed representative of this Court to designate a disinterested surveyor for the
necessary survey and division, the expenses therefor to be defrayed half and half by plaintiff and Florencio Perez;
(4) Ordering defendants to surrender the possession of the half adjudicated and vested in favor of the plaintiff after the same has been designated under
the proceeding paragraph; and (5) To pay the costs.

Defendants in due time took the case on appeal to the Court of Appeals where the parties submitted their respective briefs within the
reglementary period, and thereafter the court rendered judgment reversing in toto the decision appealed from and dismissing the case without
pronouncement as to costs. But when its attention was called, thru a proper motion, that the court acted without jurisdiction because the amount
involved was more than P50,000, the court in a resolution entered on August 14, 1954 set aside its decision and forwarded the case to us to have
remanded to the Court of Appeals proved futile.
While this case was pending in the lower court, counsel for appellants filed a motion to dismiss on the ground, amount others, but the alleged
verbal agreement between Santiago Babao and Celestina Perez was enforceable under the Statute of frauds. The trial court denied this motion on
the ground that it appears from the complaint "that Santiago fully complied with his part of the oral contract between the parties and that this is

an action not only specific performance but also for damages." Consequently, the court held that the Statute of frauds cannot be invoked for the
reason that "performance by one party of his part of the contract takes the case out of the statute." And pursuant to such ruling, when the case was
tried on the merits, the court overruled to the introduction of oral testimony to prove the alleged verbal agreement.
The important question then to be determined is whether or not the alleged verbal agreement falls within the prohibition of the Statute of frauds.
This statute, formerly incorporated as Section 21 of Rule 123 of our Rules of Court, is now found in Article 1403 of the new Civil Code, which
provides, in so far as pertinent to this case, as follows:1awphi1.net
In the following cases an agreement hereafter made shall be enforceable by action unless the same, or some note or memorandum
thereof, be in writing, and subscribed by the party charged or by his agent, evidence therefore, of the agreement cannot be received
without the writing, or secondary evidence of its contents;
(a) An agreement that by its terms is not to be performed within a year from the making thereof.
(e) An agreement . . . for the sale of real property or of an interest therein.
Appellants contends that the alleged verbal agreement falls under the paragraphs (a) and (c) above-quoted because the same may be considered
as an agreement which by its terms is not to be performed within one year from the making thereof, or one which involves a sale of real property
or of an interest therein. If this premise is correct, appellants contend, then the trial court erred in allowing the introduction of parole evidence to
prove the alleged agreement over the vigorous objection of counsel for appellants.
That the alleged verbal agreement is one which by its terms is not to be performed within one year is very apparent from the allegations of the
complaint. Thus, it is therein alleged that the agreement was allegedly made in 1924 and by its terms Santiago Babao bound himself (1) to
improve all the forest trees and planting thereon coconuts, rice, corn and other crops such as bananas and bamboo trees, and (2) to act at the same
time as administrator of said land and improvements during the lifetime to Celestina Perez. And in consideration of such undertaking, Celestina
Perez "bound herself to give and deliver, either to Santiago Babao or his wife Cleofe Perez, one-half () of the whole area of said land as
improved with all the improvements thereon upon her death". It is also alleged in the complaint that Celestina Perez died on August 24, 1947, or
23 years after the making of the alleged agreement while Santiago Babao died on January 6, 1948. From the above terms, therefore, it is not
difficult to see that the undertaking assumed by Santiago Babao which was to clear, level and plant to coconut trees and other plants 156 hectares
of forest land could not be accomplished in one year. In fact, the alleged improvements were supposedly accomplished during the lifetime of
Celestina, which lasted over a period of 23 years, and even then not all was cleared and planted but only a portion thereof. Another part of his
undertaking is that he is to administer the land during the lifetime of Celestina, and as we have already said, her death occurred 23 years after the
agreement.
But the trial court expressed the view that the statute does not apply because it assumed that Santiago Babao was fully complied with his part of
the oral contract between the parties, and in its opinion "performance by one party of his part of the contract takes the case out of the statute."
Even if his assumption were correct, still we find one flaw in its logic which fully nullifies it for it falls to consider that in order that a partial
performance of the contract may take the case out of the operation of the statute, it must appear clear that the full performance has been made by
one party within one year, as otherwise the statute would apply. Thus, the rule on this point is well stated in Corpus Juris in the following wise:
Contracts which by their terms are not to be performed within one year, may be taken out of the statute through performance by one party
thereto. All that is required in such case is complete performance within the year by one party, however many tears may have to elapse before the
agreement is performed by the other party. But nothing less than full performance by one party will suffice, and it has been held that, if anything
remains to be done after the expiration of the year besides the mere payment of money, the statute will apply." 1 (Emphasis supplied). It is not
therefore correct to state that Santiago Babao has fully complied with his part within the year from the alleged contract in question.
When, in an oral contract which, by its terms, is to be performed within one year from the execution of the contracting parties has
complied within the year with obligations imposed on him by said contract, the other party cannot avoid the fulfillment of those
incumbent on him under the same contract by invoking the statute of frauds because the latter aims to prevent and not to protect fraud.
(Shoemaker vs. La Tondea, Inc. 68 Phil., 24.).
The broad view is that the statute of Frauds applies only to agreements not to be performed on either side within a year from the making
thereof. Agreements to be fully performed on one side within the year are taken out of the operation of the statute. (National Bank vs.
Philippine Vegetable Oil Co., Phil., 857, 858.).
Assuming arguendo that the agreement in question falls also under paragraph (a) of article 1403 of the new Civil Code, i.e., it is a contract or
agreement for the sale of real property or of an interest therein, it cannot also be contended that the provision does not apply to the present case
for the reason that there was part performance on the part of one of the parties. In this connection, it must be noted that this statute is one based
on equity. It is based on equitable estoppel or estoppel by conduct. It operates only under certain specified conditions and when adequate relief of
law is unavailable (49 Am. Jur., Statute of Frauds, Section 422, p. 727). And one of the requisites that need be present is that the agreement relied
on must be certain, definite, clear, unambiguous and unequivocal in its terms before the statute may operate. Thus, the rule on this matter is as
follows:
The contract must be fully made and completed in every respect except for the writing required by the statute, in order to be enforceable
on the ground of part performance. The parol agreement relied on must be certain, definite, clear, unambiguous, and unequivocal in its
terms, particularly where the agreement is between parent and child, and be clearly established by the evidence. The requisite of
clearness and definiteness extends to both the terms and the subject matter of the contract. Also, the oral contract must be fair,
reasonable and just in its provisions for equity to enforce it on the ground of part performance. If it would be inequitable to enforce the
oral agreement, or if its specific enforcement would be harsh or oppressive upon the defendant, equity will withhold its aid. Clearly, the
doctrine of part performance taking an oral contract out of the statute of frauds does not apply so as to support a suit for specific
performance where both the equities and the statute support the defendant's case. (49 Am. Jur., p. 729.).

The alleged agreement is far from complying with the above requirement for, according to the complaint, Santiago Babao bound himself to
convert a big parcel of forest land of 156 hectares into a veritable farm planted to coconuts, rice, corn and other crops such as bananas and
bamboo trees and to act as administrator of said farm during the lifetime of Celestina Perez, while the latter in turn bound herself to give either to
Santiago or his wife of the land as improved with all the improvements thereupon her death. This agreement is indeed vague and ambiguous
for it does not specify how many hectares was to be planted to coconuts, how many to rice and corn, and what portion to bananas and bamboo
trees. And as counsel for appellants puts it, "as the alleged contract stands, if Santiago Babao should plant one-half hectares to coconuts, one-half
to rice, and another half hectare to corn, and the rest to bananas and bamboo trees, he would be entitled to receive one-half of 156 hectares, or 78
hectares, of land for his services. That certainly would be unfair and unheard of; no sane property owner would enter into such contract. It costs
much more time, money, and labor to plant coconut trees than to plant bananas and bamboo trees; and it also costs less to convert forest land to
rice and corn land than to convert it into a coconut plantation. On the part of Celestina Perez, her promise is also incapable of execution. How
could she give and deliver one half of the land upon her death?"
The terms of the alleged contract would appear more vague if we consider the testimony of Carlos Orense who claimed to have been present at
the time the alleged agreement was made between Celestina Perez and Santiago Babao for apparently the same does not run along the same line
as the one claimed by appellee. This is what Orense said: "You, Santiago, leave the Llana estate and attend to this lupang parang. Have it cleared
and planted to coconuts, for that land will eventually fall in your hands" (as translated from Tagalog), which runs counter with the claim of
appellee. The agreement being vague and ambiguous, the doctrine of part performance cannot therefore be invoked to take this case out of the
operation of the statute.
Obviously, there can be no part performance until there is a definite and complete agreement between the parties. In order to warrant the
specific enforcement of a parol contract for the sale of land, on the ground of part performance, all the essential terms of the contract
must be established by competent proof, and shown to be definite, certain, clear, and unambiguous.
And this clearness and definiteness must extend to both the terms and the subject matter of the contract.
The rule that the court will not specifically enforce a contract for the sale of land unless its terms have been definitely understood and
agreed upon by the parties, and established by the evidence, is especially applicable to oral contracts sought to be enforced on the
ground of part performance. An oral contract, to be enforced on this ground, must at least have that degree of certainty which is required
of written contracts sought to be specifically enforced.lawphi1.net
The parol contract must be sufficiently clear and definite to render the precise acts which are to be performed thereunder clearly
ascertainable. Its terms must be so clear and complete as to allow no reasonable doubt respecting its enforcement according to the
understanding of the parties. (101 A.L.R., pp. 950-951).
In this jurisdiction, as in the United States, the existence of an oral agreement or understanding such as that alleged in the complaint in
the case at bar cannot be maintained on vague, uncertain, and indefinitetestimony, against the reasonable presumption that prudent men
who enter into such contracts will execute them in writing, and comply with the formalities prescribed by law for the creation of a valid
mortgage. But where the evidence as to the existence of such an understanding or agreement is clear, convincing and satisfactory, the
same broad principles of equity operate on this jurisdiction as in the United States to compel the parties to live up to the terms of their
contract. (Cuyugan vs. Santos, 34 Phil., 100, 101.).
There is another flaw that we find in the decision of the court a quo. During the trial of this case, counsel for appellants objected the admission of
the testimony of plaintiff Bernardo Babao and that of his mother Cleofe Perez as to what occurred between Celestina Perez and Santiago Babao,
with regard to the agreement on the ground that their testimony was prohibited by section 26(c) of Rule 123 of the Rules of Court. This rule
prohibits parties or assignors of parties to a case, or persons in whose behalf case is prosecuted, against an executor or administrator of a
deceased person upon a claim or demand against the estate of such deceased person from testifying as to any matter of fact occurring before the
death of such deceased person. But the court overruled the opposition saying that said rule did not apply where the complaint against the estate of
a deceased person alleges fraud, citing the case of Ong Chua vs. Carr, 53 Phil., 980. Here again the court is in error because if in that case the
witness was allowed to testify it was because the existence of fraud was first established by sufficient and competent evidence. Here, however,
the alleged fraud is predicated upon the existence of the agreement itself which violates the rule of petitio principii. Evidently, the fraud to exist
must be established by evidence aliunde and not by the same evidence which is to sought to be prevented. The infringement of the rule is evident.
. . . The reason for this rule is that "if death has closed the lips of one party, the policy of the law is to close the lips of the other.' Another
reason is that `the temptation to falsehood and concealment in such cases is considered too great to allow the surviving party to testify in
his own behalf.' Accordingly, the incompetency applies whether the deceased died before or after the commencement of the action
against him, if at the time the testimony was given he was dead and cannot disprove it, since the reason for the prohibition, which is to
discourage perjury, exists in both instances. (Moran, Comments on the Rules of Court, Vol. 3, 1952 Ed., p. 234.).lawphi1.net
Having reached the conclusion that all the parol evidence of appellee was submitted in violation of the Statute of Frauds, or of the rule which
prohibits testimony against deceased persons, we find unnecessary to discuss the other issues raised in appellants' brief.
Wherefore, the decision appealed from is reversed, and the case is dismissed, with costs against appellee.
G.R. No. L-5028 November 26, 1952 FELIPE CABAGUE and GERONIMO CABAGUE, plaintiffs-appellants,
vs. MATIAS AUXILIO and SOCORRO AUXILIO, defendants-appellees.
According to the Rules of Court parol evidence is not admissible to prove an agreement made upon the consideration of marriage other than a
mutual promise to marry.1 This litigation calls for application of that rule.
In the justice of the peace court of Basud, Camarines Norte, Felipe Cabague and his son Geronimo sued the defendant Matias Auxilio and his
daughter Socorro to recover damages resulting from defendants' refusal to carry out the previously agreed marriage between Socorro and
Geronimo.

The complaint alleged, in short: (a) that defendants promised such marriage to plaintiffs, provided the latter would improve the defendants' house
in Basud and spend for the wedding feast and the needs of the bride; (b) that relying upon such promises plaintiffs made the improvement and
spent P700; and (c) that without cause defendants refused to honor their pledged word.
The defendants moved to dismiss, arguing that the contract was oral, unenforceable under the rule of evidence hereinbefore mentioned. And the
court dismissed the case. On appeal to the Court of First Instance, the plaintiffs reproduced their complaint and defendants reiterated their motion
to dismiss. From an order of dismissal this appeal was perfected in due time and form.
It should be observed preliminarily that, under the former rules of procedure, when the complaint did not state whether the contract sued on was
in writing or not, the statute of frauds could be no ground for demurrer. Under the new Rules "defendant may now present a motion to dismiss on
the ground that the contract was not in writing, even if such fact is not apparent on the face of the complaint. The fact may be proved by him."
(Moran Rules of Court 2d ed. p. 139 Vol. I.)
There is no question here that the transaction was not in writing. The only issue is whether it may be proved in court.
The understanding between the plaintiffs on one side and the defendants on the other, really involves two kinds of agreement. One, the agreement
between Felipe Cabague and the defendants in consideration of the marriage of Socorro and Geronimo. Another, the agreement between the two
lovers, as "a mutual promise to marry". For breach of that mutual promise to marry, Geronimo may sue Socorro for damages. This is such action,
and evidence of such mutual promise is admissible.2 However Felipe Cabague's action may not prosper, because it is to enforce an agreement in
consideration of marriage. Evidently as to Felipe Cabague and Matias Auxilio this action could not be maintained on the theory of "mutual
promise to marry".3 Neither may it be regarded as action by Felipe against Socorro "on a mutual promise to marry."
Consequently, we declare that Geronimo may continue his action against Socorro for such damages as may have resulted from her failure to carry
out their mutual matrimonial promises.
Wherefore this expediente will be returned to the lower court for further proceedings in accordance with this opinion. So ordered.

G.R. No. L-11231 May 12, 1958 ROSARIO CARBONNEL vs. JOSE PONCIO, RAMON INFANTE, and EMMA INFANTE,
The issue in this case is whether the Statute of Frauds is applicable thereto.
Plaintiff Rosario Carbonnel alleges, in her second amended complaint, filed with the Court of First Instance of Rizal, that, on January 27, 1955,
she purchased from defendant Jose Poncio, at P9.50 a square meter, a parcel of land of about 195 square meters, more or less, located in San Juan
del Monte, Rizal, known as Lot No. 13-B of subdivision plan Psd-19567, and more particularly described in Transfer Certificate of Title No.
5040 (now No. 37842), excluding the improvements thereon; that plaintiff paid P247.26 on account of the price and assumed Poncio's obligation
with the Republic Savings Bank amounting to P1,177.48, with the understanding that the balance would be payable upon execution of the
corresponding deed of conveyance; that one of the conditions of the sale was that Poncio would continue staying in said land for one year, as

stated in a document signed by him (and later marked as Exhibit A), a translation of which was attached to the said complaint: that Poncio refuses
to execute the corresponding deed of sale, despite repeated demand; that plaintiff has thereby suffered damages in the sum of P5,000, aside from
attorney's fees amounting to P1,000; that Poncio has conveyed the same property to defendants Ramon R. Infante and Emma L. Infante, who
knew, of the first sale to plaintiff; and that the Infantes had thereby, caused damages to plaintiff in the sum of P5,000.
Plaintiff prayed, therefore, that she be declared owner of the land in question; that the sale to the Infantes be annulled; that Poncio be required to
execute the corresponding deed of conveyance in plaintiff's favor; that the Register of Deeds of Rizal be directed to issue the corresponding title
in plaintiff's name; and that defendants be sentenced to pay damages.
Defendants moved to dismiss said complaint upon the ground that plaintiff's claim is unenforceable under the Statute of Frauds, and that said
pleading does not state facts sufficient to constitute a cause of action. The motion was denied, "without prejudice to considering, when this case is
decided on the merits, whether the same falls under the Statute of Frauds."
Thereafter, the Infantes filed an answer denying, most of the allegations of said complaint and alleged, by way of special defense, that they
purchased the land in question in good faith, for value, and without knowledge of the alleged sale to plaintiff; and that plaintiff's claim is
unenforceable under the Statute of Frauds. They, likewise, set up counterclaims for damages.
In his answer, Poncio denied specifically some allegations of said complaint and alleged that he had no knowledge sufficient to form a belief as
to the truth of the other averments therein. By way of special defenses, he alleged that he had consistently turned down several offers, made by
plaintiff, to buy the land in question, at P15 a square meter, for he believes that it is worth not less than P20 a square meter; that Mrs. Infante,
likewise, tried to buy the land at P15 a square meter; that, on or about January 27, 1955, Poncio was advised by plaintiff that should she decide to
buy the property at P20 a square meter, she would allow him to remain in the property for one year; that plaintiff then induced Poncio to sign a
document, copy of which is probable, the one appended to the second amended complaint; that Poncio signed it "relying upon the statement of
the plaintiff that the document was a permit for him to remain in the premises in the event that defendant decided to sell the property to the
plaintiff at P20 a square meter"; that on January 30, 1955, Mrs. Infante improved her offer and he agreed to sell the land and its improvements to
her for P3,535; that Poncio has not lost "his mind," to sell his property, worth at least P4,000, for the paltry sum of P1,177.48, the amount of his
obligation to the Republic Savings Bank; and that plaintiff's action is barred by the Statute of Frauds. Poncio similarly set up a counterclaim for
damages.
As the case came up for trial on February 23, 1956 plaintiff introduced the testimony of one Constancio Meonada, who said that he is janitor of
the Sto. Domingo Church and a high school, as well as auto-mechanic, graduate; that he has been and still is a paying boarder in plaintiff's house;
that Poncio is his townmate, both being from Mahatao, Batanes; that, after making a rough draft, based upon data furnished by plaintiff, he typed
Exhibit A, which is, in the Batanes dialect; that, thereafter, Poncio came to plaintiff's house, where he was shown Exhibit A; that after the witness
had read its contents to Poncio and given him a copy thereof, Poncio signed Exhibit A and so did the plaintiff; that Meonada likewise signed at
the foot of Exhibit A, as attesting witness; and that translated freely into English, Exhibit A, reads as follows:
From this date, January 27, Jose Poncio may stay in this lot that I bought from him until one year without payment. After that one year
and he cannot find any place where to transfer his house, he can also stay in this lot and he will pay according agreement. (t.s.n., p. 4.)
Then, taking the witness stand, plaintiff testified that she has known Poncio since childhood, he being related to her mother; that Poncio's lot
adjoins her lot, in San Juan, Rizal; that one day Poncio told her that he wanted to sell his property; that, after both had agreed on its price, he said
that his lot is mortgaged to the Republic savings Bank; and that at noon time, on the same day, he came back stating that both would "go to the
bank to pay the balance in arrears." At this juncture, defense counsel moved to strike out the statement of the witness, invoking, in support of the
motion, the Statute of Frauds. After an extended discussion, the parties agreed to submit memoranda and the hearing was suspended. Later on,
the lower court issued an order dismissing plaintiff's complaint, without costs, upon the ground that her cause of action is unenforceable under
the Statute of Frauds. The counterclaims were, also, dismissed. Hence, this appeal by plaintiff.
We are of the opinion and so hold that the appeal is well taken. It is well settled in this jurisdiction that the Statute of Frauds is applicable only to
executory contracts (Facturan vs. Sabanal, 81 Phil., 512), not to contracts that are totally or partially performed (Almirol, et al., vs. Monserrat, 48
Phil., 67, 70; Robles vs. Lizarraga Hermanos, 50 Phil., 387; Diana vs. Macalibo, 74 Phil., 70).
Subject to a rule to the contrary followed in a few jurisdictions, it is the accepted view that part performance of a parol contract for the
sale of real estate has the effect, subject to certain conditions concerning the nature and extent of the acts constituting performance and
the right to equitable relief generally, of taking such contract from the operation of the statute of frauds, so that chancery may decree its
specific performance or grant other equitable relief. It is well settled in Great Britain and in this country, with the exception of a few
states, that a sufficient part performance by the purchaser under a parol contract for the sale of real estate removes the contract from the
operation of the statute of frauds. (49 Am. Jur. 722-723.)
In the words of former Chief Justice Moran: "The reason is simple. In executory contracts there is a wide field for fraud because unless they be in
writing there is no palpable evidence of the intention of the contracting parties. The statute has precisely been enacted to prevent fraud."
(Comments on the Rules of Court, by Moran, Vol. III [1957 ed.], p. 178.) However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already denied by him from
the transaction in litigation, and, at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.
For obvious reasons, it is not enough for a party to allege partial performance in order to hold that there has been such performance and to render
a decision declaring that the Statute of Frauds is inapplicable. But neither is such party required to establish such partial performance by
documentary proof before he could have theopportunity to introduce oral testimony on the transaction. Indeed, such oral testimony would usually
be unnecessary if there were documents proving partial performance. Thus, the rejection of any and all testimonial evidence on partial
performance, would nullify the rule that the Statute of Frauds is inapplicable to contracts which have been partly executed, and lead to the very
evils that the statute seeks to prevent.
The true basis of the doctrine of part performance according to the overwhelming weight of authority, is that it would be a fraud upon
the plaintiff if the defendant were permitted to escape performance of his part of the oral agreement after he has permitted the plaintiff to
perform in reliance upon the agreement. The oral contract is enforced in harmony with the principle that courts of equity will not allow
the statute of frauds to be used as an instrument of fraud. In other words, the doctrine of part performance was established for the same
purpose for which, the statute of frauds itself was enacted, namely, for the prevention of fraud, and arose from the necessity of
preventing the statute from becoming an agent of fraud for it could not have been the intention of the statue to enable any party to
commit a fraud with impunity. (49 Am. Jur., 725-726; emphasis supplied.)

When the party concerned has pleaded partial performance, such party is entitled to a reasonable chance to; establish by parol evidence the truth
of this allegation, as well as the contract itself. "The recognition of the exceptional effect of part performance in taking an oral contract out of the
statute of frauds involves the principle that oral evidence is admissible in such cases to prove both the contract and the part performance of the
contract" (49 Am. Jur., 927).
Upon submission of the case for decision on the merits, the Court should determine whether said allegation is true, bearing in mind that parol
evidence is easier to concoct and more likely to be colored or inaccurate than documentary evidence. If the evidence of record fails to prove
clearly that there has been partial performance, then the Court should apply the Statute of Frauds, if the cause of action involved falls within the
purview thereof. If the Court is, however, convinced that the obligation in question has been partly executed and that the allegation of partial
performance was not resorted to as a devise to circumvent the Statute, then the same should not be applied.
Apart from the foregoing, there are in the case at bar several circumstances indicating that plaintiff's claim might not be entirely devoid of factual
basis. Thus, for instance, Poncio admitted in his answer that plaintiff had offered several times to purchase his land.
Again, there is Exhibit A, as document signed by the defendant. It is in the Batanes dialect, which, according to plaintiff's uncontradicted
evidence, is the one spoken by, Poncio, he being a native of said region. Exhibit A states that Poncio would stay in the land sold by him to
plaintiff for one year, from January 27, 1955, free of charge, and that, if he cannot find a place where to transfer his house thereon, he may
remain in said lot under such terms as may be agreed upon. Incidentally, the allegation in Poncio's answer to the effect that he signed Exhibit A
under the belief that it "was a permit for him to remain in the premises in the event" that "he decided to sell the property" to the plaintiff at P20 a
sq. m." is, on its face, somewhat difficult to believe. Indeed, if he had not decided as yet to sell the land to plaintiff, who, had never increased her
offer of P15 a square meter, there was no reason for Poncio to get said, Permit from her. Upon the other hand, if plaintiff intended to mislead
Poncio, she would have caused Exhibit A to be drafted, probably in English, instead of taking the trouble of seeing to it that it was written
precisely in his native dialect, the Batanes. Moreover, Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to
sign a document without reading its contents, apart from the fact that Meonada had read Exhibit A to him and given him a copy thereof, before he
signed thereon, according to Meonada's uncontradicted testimony.
Then, also, defendants say in their brief:
The only allegation in plaintiff's complaint that bears any relation to her claim that there has been partial performance of the supposed
contract of sale, is the notation of the sum of P247.26 in the bank book of defendant Jose Poncio. The noting or jotting down of the sum
of P247.26 in the bank book of Jose Poncio does not prove the fact that said amount was the purchase price of the property in question.
For all we knew, the sum of P247.26 which plaintiff claims to have paid to the Republic Savings Bank for the account of the defendant,
assuming that the money paid to the, Republic Savings Bank came from the plaintiff, was the result of some usurious loan or
accommodation, rather than earnest money or part payment of the land. Neither is a competent or satisfactory evidence to prove the
conveyance on the land in question the fact that the bank book account of Jose Poncio happens to be in the possession of the plaintiff.
(Defendants-Appellees' brief, pp. 25-26.)
How shall we know why Poncio's bank deposit book is in plaintiff's possession or whether there is any relation between the P247.26 entry therein
and the partial payment of P247.26 allegedly made by plaintiff to Poncio on account of the price of his land, if we do not allow the plaintiff to
explain it on the witness stand? Without expressing any opinion on the merits of plaintiff's claim, it is clear, therefore, that she is entitled, legally
as well as from the viewpoint of equity, to an opportunity to introduce parol evidence in support of the allegations of her second amended
complaint.
Wherefore, the order appealed from is hereby set aside, and let this case be remanded to the lower court for further proceedings not inconsistent
with this decision, with the costs of this instance against defendants-appellees. It is so ordered.

G.R. No. L-55048 May 27, 1981 SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO SOTTO
vs. HON. AUXENCIO C. DACUYCUY, Judge of the CFI of Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ, CONSTANCIA
NOGAR, MANUEL GO, INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU SENG, BENITO YOUNG,
FERNANDO YU, SEBASTIAN YU, CARLOS UY, HOC CHUAN and MANUEL DY
Petition for certiorari and prohibition to declare void for being in grave abuse of discretion the orders of respondent judge dated November 2,
1978 and August 29, 1980, in Civil Case No. 5759 of the Court of First Instance of Leyte, which denied the motion filed by petitioners to dismiss
the complaint of private respondents for specific performance of an alleged agreement of sale of real property, the said motion being based on the
grounds that the respondents' complaint states no cause of action and/or that the claim alleged therein is unenforceable under the Statute of

Frauds.
Finding initially prima facie merit in the petition, We required respondents to answer and We issued a temporary restraining order on October 7,
1980 enjoining the execution of the questioned orders.
In essence, the theory of petitioners is that while it is true that they did express willingness to sell to private respondents the subject property for
P6,500,000 provided the latter made known their own decision to buy it not later than July 31, 1978, the respondents' reply that they were
agreeable was not absolute, so much so that when ultimately petitioners' representative went to Cebu City with a prepared and duly signed
contract for the purpose of perfecting and consummating the transaction, respondents and said representative found variance between the terms
of payment stipulated in the prepared document and what respondents had in mind, hence the bankdraft which respondents were delivering to
petit loners' representative was returned and the document remained unsigned by respondents. Hence the action below for specific performance.
To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru a certain Pedro C. Gamboa, sent to respondents the
following letter:
Mr. Yao King Ong

Life Bakery

Tacloban City

Dear Mr. Yao: 1wph1.t

This refers to the Sotto property (land and building) situated at Tacloban City. My clients are willing to sell them at a total
price of P6,500,000.00.
While there are other parties who are interested to buy the property, I am giving you and the other occupants the preference, but
such priority has to be exercised within a given number of days as I do not want to lose the opportunity if you are not interested.
I am therefore gluing you and the rest of the occupants until July 31, 1978 within it which to decide whether you want to buy
the property. If I do not hear from you by July 31, I will offer or close the deal with the other interested buyer.
Thank you so much for the hospitality extended to me during my last trip to Tacloban, and I hope to hear from you very soon.
1wph1.t
Very truly yours,
Pedro C. Gamboa 1
(Page 9, Record.)
Reacting to the foregoing letter, the following telegram was sent by "Yao King Ong & tenants" to Atty. Pedro Gamboa in Cebu
City:
Atty. Pedro Gamboa
Room 314, Maria Cristina Bldg.
Osmea Boulevard, Cebu City
Reurlet dated July 12 inform Dra. Yuvienco we agree to buy property proceed Tacloban to negotiate details 1wph1.t
Yao King Ong & tenants
(Page 10, Record.)
Likewise uncontroverted is the fact that under date of July 27, 1978, Atty. Gamboa wired Yao King Ong in Tacloban City as
follows:
NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING WITH CONTRACT PREPARE PAYMENT BANK DRAFT
1wph1.t
ATTY. GAMBOA
(Page 10, Id.)
Now, Paragraph 10 of the complaint below of respondents alleges: 1wph1.t
10. That on August 1, 1978, defendant Pedro Gamboa arrived Tacloban City bringing with him the prepared contract to
purchase and to sell referred to in his telegram dated July 27, 1978 (Annex 'D' hereof) for the purpose of closing the
transactions referred to in paragraphs 8 and 9 hereof, however, to the complete surprise of plaintiffs, the defendant (except def.
Tacloban City Ice Plant, Inc.) without giving notice to plaintiffs, changed the mode of payment with respect to the balance of
P4,500,000.00 by imposing upon plaintiffs to pay same amount within thirty (30) days from execution of the contract instead of
the former term of ninety (90) days as stated in paragraph 8 hereof. (Pp. 10-11, Record.)
Additionally and to reenforce their position, respondents alleged further in their complaint: 1wph1.t
8. That on July 12, 1978, defendants (except defendant Tacloban City Ice Plant, Inc.) finally sent a telegram letter to plaintiffstenants, through same Mr. Yao King Ong, notifying them that defendants are willing to sell the properties (lands and building)

at a total price of P6,500,000.00, which herein plaintiffs-tenants have agreed to buy the said properties for said price; a copy of
which letter is hereto attached as integral part hereof and marked as Annex 'C', and plaintiffs accepted the offer through a
telegram dated July 25, 1978, sent to defendants (through defendant Pedro C. Gamboa), a copy of which telegram is hereto
attached as integral part hereof and marked as Annex C-1 and as a consequence hereof. plaintiffs except plaintiff Tacloban merchants' Realty Development Corporation) and defendants (except defendant Tacloban City Ice Plant. Inc.) agreed to the
following terms and conditions respecting the payment of said purchase price, to wit: 1wph1.t
P2,000,000.00 to be paid in full on the date of the execution of the contract; and the balance of P4,500,000.00
shall be fully paid within ninety (90) days thereafter;
9. That on July 27, 1978, defendants sent a telegram to plaintiff- tenants, through the latter's representative Mr. Yao King Ong,
reiterating their acceptance to the agreement referred to in the next preceding paragraph hereof and notifying plaintiffs-tenants
to prepare payment by bank drafts; which the latter readily complied with; a copy of which telegram is hereto attached as
integral part hereof and marked as Annex "D"; (Pp 49-50, Record.)
It was on the basis of the foregoing facts and allegations that herein petitioners filed their motion to dismiss alleging as main grounds:
1wph1.t
I. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT CORPORATION, amended complaint, does not
state a cause of action and the claim on which the action is founded is likewise unenforceable under the provisions of the
Statute of Frauds.
II. That as to the rest of the plaintiffs, their amended complaint does not state a cause of action and the claim on which the
action is founded is likewise unenforceable under the provisions of the Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry, respondent judge ruled negatively on the motion to dismiss, discoursing at length on the
personality as real party-in-interest of respondent corporation, while passing lightly, however, on what to Us are the more substantial and decisive
issues of whether or not the complaint sufficiently states a cause of action and whether or not the claim alleged therein is unenforceable under the
Statute of Frauds, by holding thus: 1wph1.t
The second ground of the motion to dismiss is that plaintiffs' claim is unenforceable under the Statute of Frauds. The defendants
argued against this motion and asked the court to reject the objection for the simple reason that the contract of sale sued upon in
this case is supported by letters and telegrams annexed to the complaint and other papers which will be presented during the
trial. This contention of the defendants is not well taken. The plaintiffs having alleged that the contract is backed up by letters
and telegrams, and the same being a sufficient memorandum, the complaint states a cause of action and they should be given a
day in court and allowed to substantiate their allegations (Paredes vs. Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the Statute of Frauds a mere note or memorandum in writing subscribed by the
vendor or his agent containing the name of the parties and a summary statement of the terms of the sale either expressly or by
reference to something else is all that is required. The statute does not require a formal contract drawn up with technical
exactness for the language of Par. 2 of Art. 1403 of the Philippine Civil Code is' ... an agreement ... or some note or
memorandum thereof,' thus recognizing a difference between the contract itself and the written evidence which the statute
requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; Ill Moran, Comments on the Rules of Court, 1952 ed. p. 187). See also
Bautista's Monograph on the Statute of Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether or not in the light of the foregoing circumstances, the complaint in controversy states
sufficiently a cause of action. This issue necessarily entails the determination of whether or not the plaintiffs have alleged facts adequately
showing the existence of a perfected contract of sale between herein petitioners and the occupant represented by respondent Yao King Ong.
In this respect, the governing legal provision is, of course, Article 1319 of the Civil Code which provides:1wph1.t
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are
constitute the contract. The offer must be certain the acceptance absolute. A qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind offerer except from the time it came to his knowledge. The contract, in a
case, is presumed to have been entered into in the place where the offer was made.
In the instant case, We can lay aside, for the moment, petitioners' contention that the letter of July 12, 1978 of Atty. Pedro C. Gamboa to
respondents Yao King Ong and his companions constitute an offer that is "certain", although the petitioners claim that it was a mere expression of
willingness to sell the subject property and not a direct offer of sale to said respondents. What We consider as more important and truly decisive
is what is the correct juridical significance of the telegram of respondents instructing Atty. Gamboa to "proceed to Tacloban to negotiate details."
We underline the word "negotiate" advisedly because to Our mind it is the key word that negates and makes it legally impossible for Us to hold
that respondents' acceptance of petitioners' offer, assuming that it was a "certain" offer indeed, was the "absolute" one that Article 1319 abovequoted requires.
Dictionally, the implication of "to negotiate" is practically the opposite of the Idea that an agreement has been reached. Webster's Third
International Dictionary, Vol. II (G. & C. Merriam Co., 1971 Philippine copyright) gives the meaning of negotiate as "to communicate or confer
with another so as to arrive at the settlement of some matter; meet with another so as to arrive through discussion at some kind of agreement or
compromise about something; to arrange for or bring about through conference or discussion; work at or arrive at or settle upon by meetings
and agreements or compromises ". Importantly, it must be borne in mind that Yao King Ong's telegram simply says "we agree to buy
property". It does not necessarily connote acceptance of the price but instead suggests that the details were to be subject of negotiation.
Respondents now maintain that what the telegram refers to as "details" to be "negotiated" are mere "accidental elements", not the essential

elements of the contract. They even invite attention to the fact that they have alleged in their complaint (Par. 6) that it was as early as "in the
month of October, 1977 (that) negotiations between plaintiffs and defendants for the purchase and sale (in question) were made, thus resulting
to offers of same defendants and counter-offer of plaintiffs". But to Our mind such alleged facts precisely indicate the failure of any meeting of
the minds of the parties, and it is only from the letter and telegrams above-quoted that one can determine whether or not such meeting of the
minds did materialize. As We see it, what such allegations bring out in bold relief is that it was precisely because of their past failure to arrive at
an agreement that petitioners had to put an end to the uncertainty by writing the letter of July 12, 1978. On the other hand, that respondents were
all the time agreeable to buy the property may be conceded, but what impresses Us is that instead of "absolutely" accepting the "certain" offer
if there was one of the petitioners, they still insisted on further negotiation of details. For anyone to read in the telegram of Yao that they
accepted the price of P6,500,000.00 would be an inference not necessarily warranted by the words "we agree to buy" and "proceed Tacloban to
negotiate details". If indeed the details being left by them for further negotiations were merely accidental or formal ones, what need was there to
say in the telegram that they had still "to negotiate (such) details", when, being unessential per their contention, they could have been just easily
clarified and agreed upon when Atty. Gamboa would reach Tacloban?
Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier above, We gather that it was in answer to the telegram of Yao.
Considering that Yao was in Tacloban then while Atty. Gamboa was in Cebu, it is difficult to surmise that there was any communication of any
kind between them during the intervening period, and none such is alleged anyway by respondents. Accordingly, the claim of respondents in
paragraph 8 of their complaint below that there was an agreement of a down payment of P2 M, with the balance of P4.5M to be paid within 90
days afterwards is rather improbable to imagine to have actually happened.
Respondents maintain that under existing jurisprudence relative to a motion to dismiss on the ground of failure of the complaint to state a cause
of action, the movant-defendant is deemed to admit the factual allegations of the complaint, hence, petitioners cannot deny, for purposes of their
motion, that such terms of payment had indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact that under Article 1319 of the Civil Code above-quoted, and judged in the
light of the telegram-reply of Yao to Atty. Gamboa's letter of July 12, 1978, there was not an absolute acceptance, hence from that point of view,
petitioners' contention that the complaint of respondents state no cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in 90 days may at best be deemed as a distinct cause of action.
And placed against the insistence of petitioners, as demonstrated in the two deeds of sale taken by Atty. Gamboa to Tacloban, Annexes 9 and 10
of the answer of herein respondents, that there was no agreement about 90 days, an issue of fact arose, which could warrant a trial in order for the
trial court to determine whether or not there was such an agreement about the balance being payable in 90 days instead of the 30 days stipulated
in Annexes 9 and 10 above-referred to. Our conclusion, therefore, is that although there was no perfected contract of sale in the light of the letter
of Atty. Gamboa of July 12, 1978 and the letter-reply thereto of Yao; it being doubtful whether or not, under Article 1319 of the Civil Code, the
said letter may be deemed as an offer to sell that is "certain", and more, the Yao telegram is far from being an "absolute" acceptance under said
article, still there appears to be a cause of action alleged in Paragraphs 8 to 12 of the respondents' complaint, considering it is alleged therein that
subsequent to the telegram of Yao, it was agreed that the petitioners would sell the property to respondents for P6.5 M, by paving P2 M down and
the balance in 90 days and which agreement was allegedly violated when in the deeds prepared by Atty. Gamboa and taken to Tacloban, only 30
days were given to respondents.
But the foregoing conclusion is not enough to carry the day for respondents. It only brings Us to the question of whether or not the claim for
specific performance of respondents is enforceable under the Statute of Frauds. In this respect, We man, view the situation at hand from two
angles, namely, (1) that the allegations contained in paragraphs 8 to 12 of respondents' complaint should be taken together with the documents
already aforementioned and (2) that the said allegations constitute a separate and distinct cause of action. We hold that either way We view the
situation, the conclusion is inescapable e that the claim of respondents that petitioners have unjustifiably refused to proceed with the sale to them
of the property v in question is unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any writing or memorandum, much less a duly signed agreement to
the effect that the price of P6,500,000 fixed by petitioners for the real property herein involved was agreed to be paid not in cash but in
installments as alleged by respondents. The only documented indication of the non-wholly-cash payment extant in the record is that stipulated in
Annexes 9 and 10 above-referred to, the deeds already signed by the petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the
respondents. In other words, the 90-day term for the balance of P4.5 M insisted upon by respondents choices not appear in any note, writing or
memorandum signed by either the petitioners or any of them, not even by Atty. Gamboa. Hence, looking at the pose of respondents that there was
a perfected agreement of purchase and sale between them and petitioners under which they would pay in installments of P2 M down and P4.5 M
within ninety 90) days afterwards it is evident that such oral contract involving the "sale of real property" comes squarely under the Statute of
Frauds (Article 1403, No. 2(e), Civil Code.)
On the other score of considering the supposed agreement of paying installments as partly supported by the letter and t telegram earlier quoted
herein, His Honor declared with well studied ratiocination, albeit legally inaccurate, that: 1wph1.t
The next issue relate to the State of Frauds. It is contended that plaintiffs' action for specific performance to compel the
defendants to execute a good and sufficient conveyance of the property in question (Sotto land and building) is unenforceable
because there is no other note memorandum or writing except annexes "C", "C-l" and "D", which by themselves did not give
birth to a contract to sell. The argument is not well founded. The rules of pleading limit the statement of the cause of action only
to such operative facts as give rise to the right of action of the plaintiff to obtain relief against the wrongdoer. The details of
probative matter or particulars of evidence, statements of law, inferences and arguments need not be stated. Thus, Sec. 1 of Rule
8 provides that 'every pleading shall contain in a methodical and logical form, a plain concise and direct statement of the
ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere
evidentiary facts.' Exhibits need not be attached. The contract of sale sued upon in this case is supported by letters and
telegrams annexed to the complaint and plaintiffs have announced that they will present additional evidences during the trial to
prove their cause of action. The plaintiffs having alleged that the contract is backed up by letters and telegrams, and the same

being sufficient memorandum, the complaint states a cause of action and they should be given their day in court and allowed to
substantiate their allegations (Parades vs. Espino, 22 SCRA 1000). (Pp 165-166, Record.)
The foregoing disquisition of respondent judge misses at least two (2) juridical substantive aspects of the Statute of Frauds insofar as sale of real
property is concerned. First, His Honor assumed that the requirement of perfection of such kind of contract under Article 1475 of the Civil Code
which provides that "(t)he contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price", the Statute would no longer apply as long as the total price or consideration is mentioned in some note or
memorandum and there is no need of any indication of the manner in which such total price is to be paid.
We cannot agree. In the reality of the economic world and the exacting demands of business interests monetary in character, payment on
installments or staggered payment of the total price is entirely a different matter from cash payment, considering the unpredictable trends in the
sudden fluctuation of the rate of interest. In other words, it is indisputable that the value of money - varies from day to day, hence the
indispensability of providing in any sale of the terms of payment when not expressly or impliedly intended to be in cash.
Thus, We hold that in any sale of real property on installments, the Statute of Frauds read together with the perfection requirements of Article
1475 of the Civil Code must be understood and applied in the sense that the idea of payment on installments must be in the requisite of a note or
memorandum therein contemplated. Stated otherwise, the inessential elements" mentioned in the case of Parades vs. Espino, 22 SCRA 1000,
relied upon by respondent judge must be deemed to include the requirement just discussed when it comes to installment sales. There is nothing in
the monograph re the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor indicative of any contrary view to this ruling of
Ours, for the essence and thrust of the said monograph refers only to the form of the note or memorandum which would comply with the Statute,
and no doubt, while such note or memorandum need not be in one single document or writing and it can be in just sufficiently implicit tenor,
imperatively the separate notes must, when put together', contain all the requisites of a perfected contract of sale. To put it the other way, under
the Statute of Frauds, the contents of the note or memorandum, whether in one writing or in separate ones merely indicative for an adequate
understanding of all the essential elements of the entire agreement, may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules on proper pleading, the ruling of the trial court that, even if the allegation of the
existence of a sale of real property in a complaint is challenged as barred from enforceability by the Statute of Frauds, the plaintiff may simply
say there are documents, notes or memoranda without either quoting them in or annexing them to the complaint, as if holding an ace in the
sleeves is not correct. To go directly to the point, for Us to sanction such a procedure is to tolerate and even encourage undue delay in litigation,
for the simple reason that to await the stage of trial for the showing or presentation of the requisite documentary proof when it already exists and
is asked to be produced by the adverse party would amount to unnecessarily postponing, with the concomitant waste of time and the prolongation
of the proceedings, something that can immediately be evidenced and thereby determinable with decisiveness and precision by the court without
further delay.
In this connection, Moran observes that unlike when the ground of dismissal alleged is failure of the complaint to state a cause of action, a
motion to dismiss invoking the Statute of Frauds may be filed even if the absence of compliance does not appear an the face of the complaint.
Such absence may be the subject of proof in the motion stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494, 1979
ed.) It follows then that when such a motion is filed and all the documents available to movant are before the court, and they are insufficient to
comply with the Statute, it becomes incumbent upon the plaintiff, for the reasons of policy We have just' indicated regarding speedy
administration of justice, to bring out what note or memorandum still exists in his possession in order to enable the court to expeditiously
determine then and there the need for further proceedings. In other words, it would be inimical to the public interests in speedy justice for
plaintiff to play hide and seek at his own convenience, particularly, when, as is quite apparent as in the instant case that chances are that there are
no more writings, notes or memoranda of the installment agreement alleged by respondents. We cannot divine any reason why any such
document would be withheld if they existed, except the unpermissible desire of the respondents to force the petitioners to undergo the ordeals,
time, effort and expenses of a futile trial.
In the foregoing premises, We find no alternative than to render judgment in favor of petitioners in this certiorari and prohibition case. If at all,
appeal could be available if the petitioners subjected themselves to the trial ruled to be held by the trial court. We foresee even at this point, on
the basis of what is both extant and implicit in the records, that no different result can be probable. We consider it as sufficiently a grave abuse of
discretion warranting the special civil actions herein the failure of respondent judge to properly apply the laws on perfection of contracts in
relation to the Statute of Frauds and the pertinent rules of pleading and practice, as We have discussed above.
ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978 and August 29, 1980 are hereby set aside and private
respondents' amended complaint, Annex A of the petition, is hereby ordered dismissed and the restraining order heretofore issued by this Court
on October 7, 1980 is declared permanent. Costs against respondents.
Guerrero,* Abad Santos and De Castro, JJ., concur.1wph1.t
Mr. Justice Hermogenes Concepcion, Jr. is on leave.
Separate Opinions
AQUINO, J., concurring:
I concur in the result. Private respondents cannot prove any perfected sale which they can enforce.
Footnotes
1 Yao King Ong was recognized as acting not only on his own behalf but also of his co-tenants. On the other hand, the authority
of Pedro C. Gamboa to make this offer is not disputed, regardless of whether it was in writing or not. At this point, it may be
mentioned that among the plaintiffs in Civil Case No. 5759 is a corporation named Tacloban Merchants Realty Development
Corporation which registered its articles of incorporation with the Securities and Exchange Commission on August 8, 1978 and
secured the issuance of the corresponding certificate on August 9, 1978. It appears that said corporation was purportedly formed

in order to carry out the intent of the occupants of petitioners' property in question, albeit there are stockholders who are not
occupants and vice-versa. The personality as a real party-interest of this corporation to be plaintiff is among the issues passed
upon by His Honor. Considering the ultimate manner We view this controversy, We believe it is not essential for the final
resolution thereof to deal with that matter here.
* Mr. Justice Juvenal K. Guerrero, Member of the First Division, was designated to sit in the Second Division.

G.R. No. L-11240 December 18, 1957 CONCHITA LIGUEZ vs. COURT OF APPEALS, MARIA NGO VDA. DE LOPEZ, ET AL.,
From a decision of the Court of Appeals, affirming that of the Court of First Instance of Davao dismissing her complaint for recovery of land,
Conchita Liguez has resorted to this Court, praying that the aforesaid decision be reversed on points of law. We granted certiorari on October 9,
1956.
The case began upon complaint filed by petitioner-appellant against the widow and heirs of the late Salvador P. Lopez to recover a parcel of
51.84 hectares of land, situated in barrio Bogac-Linot, of the municipality of Mati, Province of Davao. Plaintiff averred to be its legal owner,
pursuant to a deed of donation of said land, executed in her favor by the late owner, Salvador P. Lopez, on 18 May 1943. The defense interposed
was that the donation was null and void for having an illicit causa or consideration, which was the plaintiff's entering into marital relations with
Salvador P. Lopez, a married man; and that the property had been adjudicated to the appellees as heirs of Lopez by the court of First Instance,
since 1949.

The Court of Appeals found that the deed of donation was prepared by the Justice of the Peace of Mati, Davao, before whom it was signed and
ratified on the date aforesaid. At the time, the appellant Liguez was a minor, only 16 years of age. While the deed recites
That the DONOR, Salvador P. Lopez, for and in the consideration of his love and affection for the said DONEE, Conchita Liguez, and
also for the good and valuable services rendered to the DONOR by the DONEE, does by these presents, voluntarily give grant and
donate to the said donee, etc. (Paragraph 2, Exhibit "A")
the Court of Appeals found that when the donation was made, Lopez had been living with the parents of appellant for barely a month; that the
donation was made in view of the desire of Salvador P. Lopez, a man of mature years, to have sexual relations with appellant Conchita Liguez;
that Lopez had confessed to his love for appellant to the instrumental witnesses, with the remark that her parents would not allow Lopez to live
with her unless he first donated the land in question; that after the donation, Conchita Liguez and Salvador P. Lopez lived together in the house
that was built upon the latter's orders, until Lopez was killed on July 1st, 1943, by some guerrillas who believed him to be pro-Japanese.
It was also ascertained by the Court of Appeals that the donated land originally belonged to the conjugal partnership of Salvador P. Lopez and his
wife, Maria Ngo; that the latter had met and berated Conchita for living maritally with her husband, sometime during June of 1943; that the
widow and children of Lopez were in possession of the land and made improvements thereon; that the land was assessed in the tax rolls first in
the name of Lopez and later in that of his widow.; and that the deed of donation was never recorded.
Upon these facts, the Court of Appeals held that the deed of donation was inoperative, and null and void (1) because the husband, Lopez, had no
right to donate conjugal property to the plaintiff appellant; and (2) because the donation was tainted with illegal cause or consideration, of which
donor and donee were participants.
Appellant vigorously contends that the Court of First Instance as well as the Court of Appeals erred in holding the donation void for having an
illicit cause or consideration. It is argued that under Article 1274 of the Civil Code of 1889 (which was the governing law in 1948, when the
donation was executed), "in contracts of pure beneficence the consideration is the liberality of the donor", and that liberality per se can never be
illegal, since it is neither against law or morals or public policy.
The flaw in this argument lies in ignoring that under Article 1274, liberality of the do or is deemed causa in those contracts that are of "pure"
beneficence; that is to say, contracts designed solely and exclusively to procure the welfare of the beneficiary, without any intent of producing
any satisfaction for the donor; contracts, in other words, in which the idea of self-interest is totally absent on the part of the transferor. For this
very reason, the same Article 1274 provides that in remuneratory contracts, the consideration is the service or benefit for which the remuneration
is given; causa is not liberality in these cases because the contract or conveyance is not made out of pure beneficence, but " solvendi animo." In
consonance with this view, this Supreme Court in Philippine Long Distance Co. vs. Jeturian * G.R. L-7756, July 30, 1955, like the Supreme
Court of Spain in its decision of 16 Feb. 1899, has ruled that bonuses granted to employees to excite their zeal and efficiency, with consequent
benefit for the employer, do not constitute donation having liberality for a consideration.
Here the facts as found by the Court of Appeals (and which we can not vary) demonstrate that in making the donation in question, the late
Salvador P. Lopez was not moved exclusively by the desire to benefit appellant Conchita Liguez, but also to secure her cohabiting with him, so
that he could gratify his sexual impulses. This is clear from the confession of Lopez to the witnesses Rodriguez and Ragay, that he was in love
with appellant, but her parents would not agree unless he donated the land in question to her. Actually, therefore, the donation was but one part of
an onerous transaction (at least with appellant's parents) that must be viewed in its totality. Thus considered, the conveyance was clearly
predicated upon an illicit causa.
Appellant seeks to differentiate between the alleged liberality of Lopez, as causa for the donation in her favor, and his desire for cohabiting with
appellant, as motives that impelled him to make the donation, and quotes from Manresa and the jurisprudence of this Court on the distinction that
must be maintained between causa and motives (De Jesus vs. Urrutia and Co., 33 Phil. 171). It is well to note, however that Manresa himself
(Vol. 8, pp. 641-642), while maintaining the distinction and upholding the inoperativeness of the motives of the parties to determine the validity
of the contract, expressly excepts from the rule those contracts that are conditioned upon the attainment of the motives of either party.
. . . distincion importantisima, que impide anular el contrato por la sola influencia de los motivos a no ser que se hubiera subordinando al
cumplimiento de estos como condiciones la eficacia de aquel.
The same view is held by the Supreme Court of Spain, in its decisions of February 4, 1941, and December 4, 1946, holding that the motive may
be regarded as causa when it predetermines the purpose of the contract.
In the present case, it is scarcely disputable that Lopez would not have conveyed the property in question had he known that appellant would
refuse to cohabit with him; so that the cohabitation was an implied condition to the donation, and being unlawful, necessarily tainted the donation
itself.
The Court of Appeals rejected the appellant's claim on the basis of the well- known rule "in pari delicto non oritur actio" as embodied in Article
1306 of 1889 (reproduced in Article 1412 of the new Civil Code):
ART. 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
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 with his promise.
In our opinion, the Court of Appeals erred in applying to the present case the pari delicto rule. First, because it can not be said that both parties
here had equal guilt when we consider that as against the deceased Salvador P. Lopez, who was a man advanced in years and mature experience,

the appellant was a mere minor, 16 years of age, when the donation was made; that there is no finding made by the Court of Appeals that she was
fully aware of the terms of the bargain entered into by and Lopez and her parents; that, her acceptance in the deed of donation (which was
authorized by Article 626 of the Old Civil Code) did not necessarily imply knowledge of conditions and terms not set forth therein; and that the
substance of the testimony of the instrumental witnesses is that it was the appellant's parents who insisted on the donation before allowing her to
live with Lopez. These facts are more suggestive of seduction than of immoral bargaining on the part of appellant. It must not be forgotten that
illegality is not presumed, but must be duly and adequately proved.
In the second place, the rule that parties to an illegal contract, if equally guilty, will not be aided by the law but will both be left where it finds
them, has been interpreted by this Court as barring the party from pleading the illegality of the bargain either as a cause of action or as a defense.
Memo auditor propriam turpitudinem allegans. Said this Court in Perez vs. Herranz, 7 Phil. 695-696:
It is unnecessary to determine whether a vessel for which a certificate and license have been fraudulently obtained incurs forfeiture
under these or any other provisions of this act. It is enough for this case that the statute prohibits such an arrangement as that between
the plaintiff and defendant so as to render illegal both the arrangement itself and all contracts between the parties growing out of it.
It does not, however, follow that the plaintiff can succeed in this action. There are two answers to his claim as urged in his brief. It is a
familiar principle that the courts will not aid either party to enforce an illegal contract, but will leave them both where it finds them; but
where the plaintiff can establish a cause of action without exposing its illegality, the vice does not affect his right to recover. The
American authorities cited by the plaintiff fully sustain this doctrine. The principle applies equally to a defense. The law in those islands
applicable to the case is found in article 1305 of the Civil Code, shutting out from relief either of the two guilty parties to an illegal or
vicious contract.
In the case at bar the plaintiff could establish prima facie his sole ownership by the bill of sale from Smith, Bell and Co. and the official
registration. The defendant, on his part, might overthrow this title by proof through a certain subsequent agreement between him and the
plaintiff, dated March 16, 1902, that they had become owners in common of the vessel, 'the agreement not disclosing the illegal motive
for placing the formal title in the plaintiff. Such an ownership is not in itself prohibited, for the United States courts recognize the
equitable ownership of a vessel as against the holder of a legal title, where the arrangement is not one in fraud of the law. (Weston vs.
Penniman, Federal Case 17455; Scudder vs. Calais Steamboat Company, Federal Case 12566.).
On this proof, the defendant being a part owner of the vessel, would have defeated the action for its exclusive possession by the plaintiff.
The burden would then be cast upon the plaintiff to show the illegality of the arrangement, which the cases cited he would not be
allowed to do.
The rule was reaffirmed in Lima vs. Lini Chu Kao, 51 Phil. 477.
The situation confronting us is exactly analogous. The appellant seeks recovery of the disputed land on the strength of a donation regular on its
face. To defeat its effect, the appellees must plead and prove that the same is illegal. But such plea on the part of the Lopez heirs is not receivable,
since Lopez, himself, if living, would be barred from setting up that plea; and his heirs, as his privies and successors in interest, can have no
better rights than Lopez himself.
Appellees, as successors of the late donor, being thus precluded from pleading the defense of immorality or illegal causa of the donation, the total
or partial ineffectiveness of the same must be decided by different legal principles. In this regard, the Court of Appeals correctly held that Lopez
could not donate the entirety of the property in litigation, to the prejudice of his wife Maria Ngo, because said property was conjugal in character
and the right of the husband to donate community property is strictly limited by law (Civil Code of 1889, Arts. 1409, 1415, 1413; Baello vs.
Villanueva, 54 Phil. 213).
ART. 1409. The conjugal partnership shall also be chargeable with anything which may have been given or promised by the husband
alone to the children born of the marriage in order to obtain employment for them or give then, a profession or by both spouses by
common consent, should they not have stipulated that such expenditures should be borne in whole or in part by the separate property of
one of them.".
ART. 1415. The husband may dispose of the property of the conjugal partnership for the purposes mentioned in Article 1409.)
ART. 1413. In addition to his powers as manager the husband may for a valuable consideration alienate and encumber the property of
the conjugal partnership without the consent of the wife.
The text of the articles makes it plain that the donation made by the husband in contravention of law is not void in its entirety, but only in so far
as it prejudices the interest of the wife. In this regard, as Manresa points out (Commentaries, 5th Ed., pp. 650-651, 652-653), the law asks no
distinction between gratuitous transfers and conveyances for a consideration.
Puede la mujer como proprietaria hacer anular las donaciones aun durante el matrimonio? Esta es, en suma, la cuestion, reducida a
determinar si la distinta naturaleza entre los actos a titulo oneroso y los actos a titulo lucrativo, y sus especiales y diversas circunstancias,
pueden motivar una solucion diferente en cuanto a la epoca en que la mujer he de reclamar y obtener la nulidad del acto; cuestion que no
deja de ser interesantisima.lawphi1.net
El Codigo, a pesar de la variacion que ha introducido en el proyecto de 1851, poniendo como segundo parrafo del articulo 1.413, o como
limitacion de las enajenaciones u obligaciones a titulo oneroso, lo que era una limitacion general de todos los actos del marido, muestra,
sin embargo, que no ha variado de criterio y que para el las donaciones deben en todo equipararse a cualquier otro acto ilegal o
frraudulento de caracter oneroso, al decir en el art. 1.419: "Tambien se traera a colacion en el inventario de la sociedad el importe de
las donaciones y enajenaciones que deban considerarse ilegales o fraudulentas, con sujecion al art. 1.413.' (Debio tambien citarse el
articulo 1.415, que es el que habla de donaciones.)lawphi1.net
"En resumen: el marido solo puede donar los bienes gananciales dentro de los limites marcados en el art. 1.415. Sin embargo, solo la

mujer o sus herederos pueden reclamar contra la valides de la donacion, pues solo en su interes establece la prohibicion. La mujer o sus
herederos, para poder dejar sin efecto el acto, han de sufrir verdadero perjuicio, entendiendose que no le hay hasta, tanto que, terminada
por cualquier causa la sociedad de gananciales, y hecha su liquidacion, no pueda imputarse lo donado al haber por cualquier concepto
del marido, ni obtener en su consecuencia la mujer la dibida indemnizacion. La donacioni reviste por tanto legalmente, una eficacia
condicional, y en armonia con este caracter, deben fijarse los efectos de la misma con relacion a los adquirentes y a los terceros
poseedores, teniendo, en su caso, en cuenta lo dispuesto en la ley Hipotecaria. Para prevenir todo perjuicio, puede la mujer, durante el
matrimonio inmediatamente al acto, hacer constar ante los Tribunales su existencia y solicitor medidas de precaucion, como ya se ha
dicho. Para evitarlo en lo sucesivo, y cuando las circunstancias lo requieran, puede instar la declaracion de prodigalidad.
To determine the prejudice to the widow, it must be shown that the value of her share in the property donated can not be paid out of the husband's
share of the community profits. The requisite data, however, are not available to us and necessitate a remand of the records to the court of origin
that settled the estate of the late Salvador P. Lopez.
The situation of the children and forced heirs of Lopez approximates that of the widow. As privies of their parent, they are barred from invoking
the illegality of the donation. But their right to a legitime out of his estate is not thereby affected, since the legitime is granted them by the law
itself, over and above the wishes of the deceased. Hence, the forced heirs are entitled to have the donation set aside in so far as in officious: i.e.,
in excess of the portion of free disposal (Civil Code of 1889, Articles 636, 654) computed as provided in Articles 818 and 819, and bearing in
mind that "collationable gifts" under Article 818 should include gifts made not only in favor of the forced heirs, but even those made in favor of
strangers, as decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16 June 1902. So that in computing the legitimes, the
value of the property to herein appellant, Conchita Liguez, should be considered part of the donor's estate. Once again, only the court of origin
has the requisite date to determine whether the donation is inofficious or not.
With regard to the improvements in the land in question, the same should be governed by the rules of accession and possession in good faith, it
being undisputed that the widow and heirs of Lopez were unaware of the donation in favor of the appellant when the improvements were made.
The appellees, relying on Galion vs. Garayes, 53 Phil. 43, contend that by her failure to appear at the liquidation proceedings of the estate of
Salvador P. Lopez in July 1943, the appellant has forfeited her right to uphold the donation if the prejudice to the widow Maria Ngo resulting
from the donation could be made good out of the husband's share in the conjugal profits. It is also argued that appellant was guilty of laches in
failing to enforce her rights as donee until 1951. This line of argument overlooks the capital fact that in 1943, appellant was still a minor of
sixteen; and she did not reach the age of majority until 1948. Hence, her action in 1951 was only delayed three years. Nor could she be properly
expected to intervene in the settlement of the estate of Lopez: first, because she was a minor during the great part of the proceedings; second,
because she was not given notice thereof ; and third, because the donation did not make her a creditor of the estate. As we have ruled in Lopez vs.
Olbes, 15 Phil. 547-548:
The prima facie donation inter vivos and its acceptance by the donees having been proved by means of a public instrument, and the
donor having been duly notified of said acceptance, the contract is perfect and obligatory and it is perfectly in order to demand its
fulfillment, unless an exception is proved which is based on some legal reason opportunely alleged by the donor or her heirs.
So long as the donation in question has not been judicially proved and declared to be null, inefficacious, or irregular, the land donated is
of the absolute ownership of the donees and consequently, does not form a part of the property of the estate of the deceased Martina
Lopez; wherefore the action instituted demanding compliance with the contract, the delivery by the deforciant of the land donated, or
that it be, prohibited to disturb the right of the donees, should not be considered as incidental to the probate proceedings aforementioned.
The case of Galion vs. Gayares, supra, is not in point. First, because that case involved a stimulated transfer that case have no effect, while a
donation with illegal causa may produce effects under certain circumstances where the parties are not of equal guilt; and again, because the
transferee in the Galion case took the property subject to lis pendens notice, that in this case does not exist.
In view of the foregoing, the decisions appealed from are reversed and set aside, and the appellant Conchita Liguez declared entitled to so much
of the donated property as may be found, upon proper liquidation, not to prejudice the share of the widow Maria Ngo in the conjugal partnership
with Salvador P. Lopez or the legitimes of the forced heirs of the latter. The records are ordered remanded to the court of origin for further
proceedings in accordance with this opinion. Costs against appellees. So ordered.

G.R. No. L-50439 July 20, 1982 ENRIQUE T. YUCHENGCO, INC., A. T. YUCHENGCO, INC., ANNABELLE Y. PUEY and MONA
LISA Y. ABAYA, plaintiff-appellee vs.CONRADO M. VELAYO, defendant-appellant
This case is certified to Us by the Court of Appeals in its Resolution dated March 6, 1976, on the ground that it involves purely question of law,
as raised in the appeal of the decision of the Court of First Instance of Rizal (Pasig Branch) in Civil Case No. 21031, the dispositive portion of
which reads as follows:
FROM THE FOREGOING, this Court rules that the Stock Purchase Agreement, Exhibit "A", is not merely annulable, but null
and void ab initio, and it is hereby so declared, and as a consequence, defendant is ordered to return to the plaintiffs the sum of
P367,500.00 together with its interests at the legal rate from July 22, 1974, which is the date of the Stock Purchase Agreement,
Exhibit "A". Defendant is also ordered to pay attorney's fees of P10,000.00, and the costs. 1
The records show that sometime in June 1974, defendant-appellant Conrado M. Velayo offered to sell to the plaintiffs-appellees 2,265 shares of
common stock of the RIC Tours Philippines, Inc. ("Ric Tours Phil., for short) a Philippine Corporation then duly licensed as a tourist operator,

constituting 70% of the subscribed and outstanding capital stock of the said corporation. Appellees paid the entire purchase price of P367,500.00
to appellant Velayo, and the latter, on his part, delivered to the former all the 2,265 shares of stock of Ric Tours Phil. On July 5, 1974, appellees
took possession of all the assets of Ric Tours Phil.
On August 5, 1975, appellant received a letter from the Director of Bureau of Special Services, Department of Tourism (now Ministry of
Tourism) directing him "to explain within seventy-two (72) hours from receipt of said letter why the Department of tourism should not cancel the
Local Tour Operator's License of Ric Tours Phil. for having sold to another group the shares of stock of Ric Tours Phil. without prior notice and
approval from the Department of Tourism which is a violation of Part II, Sec. 10, Part IV, Sec. 4 of the Rules and Regulations Governing the
business of Tour Operators and Tour Guides."
In his answer, appellant claims that the shares of stock of Ric Tours Phil. were sold to another group without previous clearance from the
Department of Tourism because he really was not aware of the rule requiring prior approval by the Department of Tourism for the validity of
transfers of shares of local tour operators. On August 12, 1974, appellant received a letter from Director Jose Clemente of the Bureau of Special
Services, informing him that "the license to operate the business as Tour Operator of the Ric Tours Phil. is cancelled effective upon receipt of this
letter." On August 18, 1974, appellant wrote a letter addressed to Hon. Jose Aspiras, Secretary of Tourism, requesting for a reconsideration of the
order of August 12, 1974 of Director Jose Clemente. On August 20, 1974, Director Jose Clemente issued Circular No. 11 informing all concerned
"that the provisional license of Ric Tours Phil. has been cancelled as of August 12, 1974 for violation of the Rules and Regulations Governing the
Business of Tour Operators and that by virtue of said cancellation, Ric Tours Phil. has been ordered to close shop and to cease from further
engaging in any business transaction immediately."
On September 3, 1974, appellees wrote a letter to appellant demanding rescission of the contract, the restitution of the sum of P367,500.00
representing the purchase price of 2,265 shares of Ric Tours Phil. and offering delivery of the certificates of stock representing the 2,265 shares
upon receipt of the P367,500.00. On September 13, 1974, appellant received a letter from the Department of Tourism denying his request for
reconsideration. On September 18, 1974, appellant filed a formal appeal to the Secretary of Tourism from the order dated February 5, 1975.
On February 24, 1976, appellant filed a formal appeal to the Office of the President, which, however affirmed the decisions and orders of the
Director of Special Services and the Secretary of Tourism cancelling the license of Ric Tours Phil. as a tour operator.
On April 4, 1975, appellees brought a complaint before the Court of First Instance of Rizal (Pasig Branch) praying for the annulment of contract,
the return of P367,500.00 plus interest and the payment of damages. On October 4, 1976, the parties agreed to submit the case for decision on the
basis of their Joint Stipulation of Facts wherein they admitted the facts set forth above, and the pleadings on record without the necessity of oral
evidence. On March 17, 1977, the trial court rendered its decision favorable to appellees. Hence, this appeal.
The only issue presented in this case is whether or not the "Stock Purchase Agreement" entered into by the appellees and appellant Velayo should
be annulled, or in the alternative, declared void ab initio.
Appellant contends that appellees have no right to rescind the contract since the ownership of Ric Tours Phil. and its license to operate as tour
operator were transferred to appellees upon delivery to them of all the shares of stock together with all the other assets of the corporation:
consequently under the doctrine of res suo domino perit, appellees as buyers in a consummated sale should suffer the loss when the license was
cancelled.
Appellant's contention is devoid of merit. The provision governing the Agreement sought to be annuled is Sec 4, Part IV of the Rules and
Regulations Governing the Business of Tour Operators and Tour Guides, which recites as follows:
Sec. 4. No transfer of rights to a license of a tour operator or ownership of shares or interests in the agency shall be valid unless
made with the prior approval of the Department. (Emphasis supplied).
The above-quoted rule is clear and mandatory. It requires the prior approval of the Department of Tourism for the validity of any transfer of rights
to a license of a tour operator or ownership of shares or interests in any tour agency. In the case at bar, it was admitted by both parties, that the
Stock Purchase Agreement was made without the prior approval of the Department of Tourism. Pursuant to paragraph 7, article 1409 of the New
Civil Code, such agreement would be inexistent and null and void from the beginning. For it is well-settled that any contract entered into must be
in accordance with, and not repugnant to, an applicable statute whose terms are deemed embodied therein 2 and without the need for the parties
of expressly making reference to it. 3 Inasmuch as the agreement between the parties is null and void from the beginning, it produces no legal
effect. No valid transfer of ownership of Ric Tours Phil., to the appellees, therefore, took place upon delivery to them by the appellant of the
shares of stock of said corporation as to make them suffer the consequence of the subsequent revocation by the Department of Tourism of the
license of Ric Tours Phil., as they would indeed suffer much loss after parting with their money for which they would receive nothing. The
doctrine of res suo domino perit advanced by the defendant cannot, therefore, be applied.
Appellant would further contend that both parties are presumed to know the rule requiring prior approval by the Department of Tourism of sales
of shares of stock of tour operators, and both are guilty of having violated said rule; that they are, therefore, in pari delicto and the law will not
aid either party but leave them where they are.
We, likewise, see no merit in this contention. Appellant as the vendor in the sale of the shares of stock of RIC Tours Phil. is obligated not only to
transfer the ownership of and deliver, but also to warrant the thing which is the object of the sale, i.e., the 2,265 shares of stock of Ric Tours Phil.,
pursuant to article 1495 of the New Civil Code. Delivery, alone, of said shares of stock is not sufficient, for the appellant, as the vendor, must also
warrant clear title to the same, in accordance with the aforesaid provision. Consequently, only appellant is charged with knowledge of the rule
requiring prior approval by the Department of Tourism of an sales of shares of stock of tour operators, for it is he as the vendor, who is under
obligation to give the appellees-vendees clear title to the property he is conveying. As aptly stated by the trial court: "The obligation to secure
prior Department of Tourism approval devolved upon the defendant (herein appellant) for it was he as the owner vendor who had the duty to give
clear title to the properties he was conveying. It was he alone who was charged with knowing about the rules attendant to a sale of the assets or
shares of his tourist-oriented organization. He should- have known that under said rules and regulations, on pain of nullity, shares of stock in his
company could not be transferred without prior approval from the Department of Tourism. The failure to secure this approval is attributable to

him alone." The pari delicto doctrine, therefore, can neither be applied.
Even assuming that both parties were guilty of the violation, it does not always follow, as is appellant's contention , that both parties being in pari
delicto, should be left where they are. It has been held that "although the parties are in pari delicto, yet the court may interfere and grant relief at
the suit of one of them, where public policy requires its intervention, even though the result may be that a benefit will be derived by a plaintiff
who is in equal guilt with defendant." 4 In the case at bar, there is no question that contracts and agreements concerning the transfer of rights or
ownership of shares of stock in a tour operator or agency should be as would assure the best protection of the public, for as admitted by the
appellant himself, the "Department of Tourism would like to assure itself that the shares of stock would not be sold to persons unfit to engage in
the business of tour operation," in line with the policy of the Government to make the tourist industry a positive instrument towards accelerated
national development. Pursuant thereto, Presidential Decree No. 189, creating the Department of Tourism, expressly confers upon it the function
of licensing, regulating and supervising travel agents, tour operators and tour guides, 5 to see to it that only those persons and entities who are fit
and responsible should engage in tour operation business. Accordingly, the Department of Tourism promulgated its "Rules and Regulations
Governing the Business of Tour Operators and Tour Guides," 6 providing, among others, that prior approval of the Department of Tourism is a
requisite for the validity of transfers of rights, of ownership of shares of stock in a tour operator or agency, and that a violation of this rule and
regulation is a ground for suspension/cancellation of license and/or forfeiture of bond.
It is a familiar doctrine in administrative law, that the "Rules and Regulations Governing the Business of Tour Operators and Tour Guides" issued
by the Ministry of Tourism, promulgated pursuant to the authority vested upon it by P.D. Nos. 189 and 259, to accomplish the objectives of the
statute of making the tourist industry a positive instrument towards accelerated national development, have the force and effect of law, are
binding on all persons subject to them and compliance therewith may be enforced by a penal sanction provided in the law. 7Thus, Section 4-B of
P.D. No. 189, as amended by P.D. No. 259, commands that:
Sec. 4-B. Any person violating or causing to violate any provision of this Decree or of the rules and regulations or circulars
promulgated by the Department of Tourism pursuant to its power to license, classify, regulate and/or supervise the operation of
all persons, businesses, establishments, facilities and services that cater to, or have any thing to do with travelers and tourists,
both international and domestic, shall upon, conviction by a court of competent jurisdiction, suffer the penalty of imprisonment
of not less than two (2) years nor more than five (5) years or a fine of not less than two thousand pesos nor more than five
thousand pesos or both, at the discretion of the Court. In addition thereto such violation shall ipso facto constitute a valid
ground for the revocation of all privileges, permits and authorization granted to such persons or entity under this Decree by the
Department of Tourism. ... (Emaphasis supplied).
From the foregoing, We hold that the transfer to plantiffs-appellees of rights of ownership of shares of stck of Ric Tours Phil. is void, and since
the agreement concerning the sale or transfer legally did not exist, appellant has no title whatsoever to the money received by him by virtue
thereof, which he and should accordingly refund to appellees, with interest thereon at the legal rate until filly paid. 8 WHEREFORE, the decision
appealed from being in accordance with law, is hereby AFFIRMED, without special pronouncement as to costs.
Separate Opinions
AQUINO, J., concurring:
I concur in the result. The stock purchase agreement is not a contrato nulo, anullable or unenforceable contract. It is a rescissible contract under
articles 1191, 1547(2) and 1599(4) of the Civil Code because the seller, Conrado Velayo, failed to comply with his representation and warranty in
paragraph 111(b) and (f) of the contract of sale (Exh. A) that Ric Tours of the Philippines, Inc. is a domestic corporation "in good standing and is
engaged in the business of transporting, entering and servicing of tourists" and "is duly authorized and licensed to operate as a tour operator by
the Department of Tourism" (pp. 20-21, Record on Appeal).
It was incumbent upon Velayo as seller to deliver to the Yuchengcos as buyers the approval by the Secretary of Tourism of the sale of Velayo's
shares of stock and of the concomitant transfer of the tour operator's license to the Yuchengcos, as required in section 4, Part IV of the Rules and
Regulations Governing the Business of Tour Operators and Tour Guides.
Not having fulfilled that obligation or commitment, Velayo breached his warranty obligation. Without the Secretary's approval of the sale of the
shares of Ric Tours and without a license to operate as a travel agency, Ric Tours is a futile enterprise. The Yuchengcos bought practically
nothing.
Not to rescind the contract and not to require Velayo to return the price of P367,500 with legal rate of interest would enable him to enrich himself
unjustly at the expense of the Yuchengcos.
G.R. No. L-36731 January 27, 1983
VICENTE GODINEZ, ET AL., plaintiffs-appellants,
vs.
FONG PAK LUEN ET AL., defendants, TRINIDAD S. NAVATA, defendant-appellee.
Dominador Sobrevinas for plaintiffs-appellants.
Muss S. Inquerto for defendant-appellee
GUTIERREZ, JR., J.:
The plaintiffs filed this case to recover a parcel of land sold by their father, now deceased, to Fong Pak Luen, an alien, on the ground that the sale
was null and void ab initio since it violates applicable provisions of the Constitution and the Civil Code.
The order of the Court of First Instance of Sulu dismissing the complaint was appealed to the Court of Appeals but the latter court certified the

appeal to us since only pure questions of law were raised by the appellants.
The facts of the case were summarized by the Court of Appeals as follows:
On September 30, 1966, the plaintiffs filed a complaint in the Court of First Instance of Sulu alleging among others that they
are the heirs of Jose Godinez who was married to Martina Alvarez Godinez sometime in 1910; that during the marriage of their
parents the said parents acquired a parcel of land lot No. 94 of Jolo townsite with an area of 3,665 square meters as evidenced
by Original Certificate of Title No. 179 (D -155) in the name of Jose Godinez; that their mother died sometime in 1938 leaving
the plaintiffs as their sole surviving heirs; that on November 27, 1941, without the knowledge of the plaintiffs, the said Jose
Godinez, for valuable consideration, sold the aforesaid parcel of land to the defendant Fong Pak Luen, a Chinese citizen, which
transaction is contrary to law and in violation of the Civil Code because the latter being an alien who is inhibited by law to
purchase real property; that Transfer Certificate Title No. 884 was then issued by the Register of Deeds to the said defendant,
which is null and void ab initio since the transaction constituted a non-existent contract; that on January 11, 1963, said
defendant Fong Pak Luen executed a power of attorney in favor of his co-defendant Kwan Pun Ming, also an alien, who
conveyed and sold the above described parcel of land to co-defendant Trinidad S. Navata, who is aware of and with full
knowledge that Fong Pak Luen is a Chinese citizen as well as Kwan Pun Ming, who under the law are prohibited and
disqualified to acquire real property in this jurisdiction; that defendant Fong Pak Luen has not acquired any title or interest in
said parcel of land as the purported contract of sale executed by Jose Godinez alone was contrary to law and considered nonexistent, so much so that the alleged attorney-in-fact, defendant Kwan Pun Ming had not conveyed any title or interest over said
property and defendant Navata had not acquired anything from said grantor and as a consequence Transfer Certificate of Title
No. 1322, which was issued by the Register of Deeds in favor of the latter is null and void ab initio,- that since one-half of the
said property is conjugal property inherited by the plaintiffs from their mother, Jose Godinez could -not have legally conveyed
the entire property; that notwithstanding repeated demands on said defendant to surrender to plaintiffs the said property she
refused and still refuses to do so to the great damage and prejudice of the plaintiffs; and that they were constrained to engage
the services of counsel in the sum of P2,000.00.1wph1.t The plaintiffs thus pray that they be adjudged as the owners of the
parcel of land in question and that Transfer Certificate of Title RT-90 (T-884) issued in the name of defendant Fong Pak Luen
be declared null and void ab initio; and that the power of attorney issued in the name of Kwan Pun Ming, as well as Transfer
Certificate of Title No. 'L322 issued in the name of defendant Navata be likewise declared null and void, with costs against
defendants.
On August 18, 1966, the defendant Register of Deeds filed an answer claiming that he was not yet the register of deeds then;
that it was only the ministerial duty of his office to issue the title in favor of the defendant Navata once he was determined the
registerability of the documents presented to his office.
On October 20, 1966, the defendant Navata filed her answer with the affirmative defenses and counterclaim alleging among
others that the complaint does not state a cause of action since it appears from the allegation that the property is registered in the
name of Jose Godinez so that as his sole property he may dispose of the same; that the cause of action has been barred by the
statute of limitations as the alleged document of sale executed by Jose Godinez on November 27, 1941, conveyed the property
to defendant Fong Pak Luen as a result of which a title was issued to said defendant; that under Article 1144 (1) of the Civil
Code, an action based upon a written contract must be brought within 10 years from the time the right of action accrues; that the
right of action accrued on November 27, 1941 but the complaint was filed only on September 30, 1966, beyond the 10 year
period provided for by law; that the torrens title in the name of defendant Navata is indefeasible who acquired the property from
defendant Fong Pak Luen who had been in possession of the property since 1941 and thereafter defendant Navata had
possessed the same for the last 25 years including the possession of Fong Pak Luen; that the complaint is intended to harass the
defendant as a civic leader and respectable member of the community as a result of which she suffered moral damages of
P100,000.00, P2,500.00 for attorney's fees and P500.00 expenses of litigation, hence, said defendant prays that the complaint be
dismissed and that her counterclaim be granted, with costs against the plaintiffs. On November 24, 1967, the plaintiffs filed an
answer to the affirmative defenses and counter-claim. As the defendants Fong Pak Luen and Kwan Pun Ming are residing
outside the Philippines, the trial court upon motion issued an order of April 17, 1967, for the service of summons on said
defendants by publication. No answer has been filed by said defendants.
On December 2, 196 7, the court issued an order as follows:
Both parties having agreed to the suggestion of the Court that they submit their supplemental pleadings to
support both motion and opposition and after submittal of the same the said motion to dismiss which is an
affirmative defense alleged in the complaint is deemed submitted. Failure of both parties or either party to
submit their supplemental pleadings on or about December 9, the Court will resolve the case.
On November 29, 1968, the trial court issued an order missing the complaint without pronouncement as to costs. (Record on
Appeal, pp. 31- 37). A motion for reconsideration of this order was filed by the plaintiffs on December 12, 196F, which was
denied by the trial court in an order of July 11, 1969, (Rec. on Appeal, pp. 38, 43, 45, 47). The plaintiffs now interpose this
appeal with the following assignments of errors:
I. The trial court erred in dismissing plaintiffs-appellants' complaint on the ground of prescription of action,
applying Art. 1144 (1) New Civil Code on the basis of defendant Trinidad S. Navata's affirmative defense of
prescription in her answer treated as a motion to dismiss.
II. The trial court erred in denying plaintiffs-appellants' motion for reconsideration of the order of dismissal.
III. The trial court erred in not ordering this case to be tried on the merits."

The appellants contend that the lower court erred in dismissing the complaint on the ground that their cause of action has prescribed. While the
issue raised appears to be only the applicability of the law governing prescription, the real question before us is whether or not the heirs of a
person who sold a parcel of land to an alien in violation of a constitutional prohibition may recover the property if it had, in the meantime, been
conveyed to a Filipino citizen qualified to own and possess it.
The question is not a novel one. Judicial precedents indicate fairly clearly how the question should be resolved.
There can be no dispute that the sale in 1941 by Jose Godinez of his residential lot acquired from the Bureau of Lands as part of the Jolo townsite
to Fong Pak Luen, a Chinese citizen residing in Hongkong, was violative of Section 5, Article XIII of the 1935 Constitution which provided:
Sec. 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines.
The meaning of the above provision was fully discussed in Krivenko v. Register of Deeds of Manila (79 Phil. 461) which also detailed the
evolution of the provision in the public land laws, Act No. 2874 and Commonwealth Act No. 141. The Krivenko ruling that "under the
Constitution aliens may not acquire private or agricultural lands, including residential lands" is a declaration of an imperative constitutional
policy. Consequently, prescription may never be invoked to defend that which the Constitution prohibits. However, we see no necessity from the
facts of this case to pass upon the nature of the contract of sale executed by Jose Godinez and Fong Pak Luen whether void ab initio, illegal per
se or merely pro-exhibited.** It is enough to stress that insofar as the vendee is concerned, prescription is unavailing. But neither can the vendor
or his heirs rely on an argument based on imprescriptibility because the land sold in 1941 is now in the hands of a Filipino citizen against whom
the constitutional prescription was never intended to apply. The lower court erred in treating the case as one involving simply the application of
the statute of limitations.
From the fact that prescription may not be used to defend a contract which the Constitution prohibits, it does not necessarily follow that the
appellants may be allowed to recover the property sold to an alien. As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later sold
the same property to Trinidad S. Navata, a Filipino citizen qualified to acquire real property.
In Vasquez v. Li Seng Giap and Li Seng Giap & Sons (96 Phil. 447), where the alien vendee later sold the property to a Filipino corporation, this
Court, in affirming a judgment dismissing the complaint to rescind the sale of real property to the defendant Li Seng Giap on January 22, 1940,
on the ground that the vendee was an alien and under the Constitution incapable to own and hold title to lands, held:
In Caoile vs. Yu Chiao 49 Qff Gaz., 4321; Talento vs. Makiki 49 Off. Gaz., 4331; Bautista vs. Uy 49 Off. Gaz., 4336; Rellosa
vs. Gaw Chee 49 Off. Gaz., 4345 and Mercado vs. Go Bio, 49 Off. Gaz., 5360, the majority of this Court has ruled that in sales
of real estate to aliens incapable of holding title thereto by virtue of the provisions of the Constitution (Section 5, Article XIII
Krivenko vs. Register of Deeds, 44 Off. Gaz., 471) both the vendor and the vendee are deemed to have committed the
constitutional violation and being thus in pari delicto the courts will not afford protection to either party. (Article 1305, old
Civil Code; Article 1411, new Civil Code) From this ruling three Justices dissented. (Mr. Justice Pablo, Mr. Justice Alex. Reyes
and the writer. See Caoile vs. Yu Chiao Talento vs. Makiki Bautista us. Uy, Rellosa vs. Gaw Chee and Mercado vs. Go Bio).
supra.
The action is not of rescission because it is not postulated upon any of the grounds provided for in Article 1291 of the old Civil
Code and because the action of rescission involves lesion or damage and seeks to repair it. It is an action for annulment under
Chapter VI, Title II, Book 11, on nullity of contracts, based on a defect in the contract which invalidates it independently of
such lesion or damages. (Manresa, Commentarios al Codigo Civil Espanol Vol. VIII, p. 698, 4th ed.) It is very likely that the
majority of this Court proceeded upon that theory when it applied the in pari delicto rule referred to above.
In the United States the rule is that in a sale of real estate to an alien disqualified to hold title thereto the vendor divests himself
of the title to such real estate and has no recourse against the vendee despite the latter's disability on account of alienage to hold
title to such real estate and the vendee may hold it against the whole world except as against the State. It is only the State that is
entitled by proceedings in the nature of office found to have a forfeiture or escheat declared against the vendee who is incapable
of holding title to the real estate sold and conveyed to him. Abrams vs. State, 88 Pac. 327; Craig vs. Leslie et al., 4 Law, Ed.
460; 3 Wheat, 563, 589590; Cross vs. Del Valle, 1 Wall, [U.S.] 513; 17 Law. Ed., 515; Governeur vs. Robertson, 11 Wheat, 332,
6 Law. Ed., 488.)
However, if the State does not commence such proceedings and in the meantime the alien becomes naturalized citizen, the State
is deemed to have waived its right to escheat the real property and the title of the alien thereto becomes lawful and valid as of
the date of its conveyance or transfer to him. (Osterman vs. Baldwin, 6 Wall, 116, 18 Law. ed. 730; Manuel vs. Wulff, 152 U.S.
505, 38 Law. ed. 532; Pembroke vs. Houston, 79, SW 470; Fioerella vs. Jones, 259 SW 782. The rule in the United States that
in a sale of real estate to an alien disqualified to hold title thereto, the vendor divests himself of the title to such real estate and is
not permitted to sue for the annulment Of his Contract, is also the rule under the Civil Code. ... Article 1302 of the old Civil
Code provides: ... Persons sui juriscannot, however, avail themselves of the incapacity of those with whom they contracted; ...
xxx xxx xxx
. . . (I)f the ban on aliens from acquiring not only agricultural but, also urban lands, as construed by this Court in the Krivenko
case, is to preserve the nation's land for future generations of Filipinos, that aim or purpose would not be thwarted but achieved
by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization. The title to the parcel
of land of the vendee, a naturalized Filipino citizen, being valid that of the domestic corporation to which the parcel of land has
been transferred, must also be valid, 96.67 per cent of its capital stock being owned by Filipinos.
Herrera v. Luy Kim Guan (SCRA 406) reiterated the above ruling by declaring that where land is sold to a Chinese citizen, who later sold it to a
Filipino, the sale to the latter cannot be impugned.

The appellants cannot find solace from Philippine Banking Corporation v. Lui She (21 SCRA 52) which relaxed the pari delicto doctrine to allow
the heirs or successors-in-interest, in appropriate cases, to recover that which their predecessors sold to aliens.
Only recently, in Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547) we had occasion to pass upon a factual situation substantially similar to
the one in the instant case. We ruled:
But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by
a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There
would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a
qualified person. Applying by analogy the ruling of this Court in Vasquez vs. Giap & Sons: (.96 Phil. 447 [1955])
... if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case,
is to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by
making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization.
While, strictly speaking, Ong King Po, private respondent's vendor, had no rights of ownership to transmit, it is likewise in
escapable that petitioner Epifania had slept on her rights for 26 years from 1936 to 1962. By her long inaction or inexcusable
neglect, she should be held barred from asserting her claim to the litigated property (Sotto vs. Teves, 86 SCRA 157 [1978])
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by
exercising due diligence could or should have been done earlier; it is negligence or ommission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.
(Tijam, et al. vs. Sibonghanoy, et al., No. L-21450, April 15, 1968, 23 SCRA 29, 35).' (Cited in Sotto vs. Teves, 86 SCRA 154
[1978]).
Respondent, therefore, must be declared to be the rightful owner of the property.
In the light of the above considerations, we find the second and third assignments of errors without merit. Respondent Navata, the titled owner of
the property is declared the rightful owner.
WHEREFORE, the instant appeal is hereby denied. The orders dismissing the complaint and denying the motion for reconsideration are
affirmed.
SO ORDERED.
Footnotes
** Under the facts in Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547), this Court stated that "(t)here should be no question
that the sale of the land in question in 1936 by Epifania Sarsosa to Ong King Po was non-existent and void from the beginning
(Art. 1409 [71, Civil Code) because it was a contract executed against the mandatory provision of the 1935 Constitution, which
is an expression of public policy to conserve lands for the Filipinos." In Philippine Banking Corporation v. Lui She (21 SCRA
52) the Court, however, applied Article 1416 of the Civil Code, which refers toagreements not illegal se but merely prohibited,
to justify the exception to the rule on pari delicto.

G.R. No. L-31606 March 28, 1983 DONATO REYES YAP and MELITONA MARAVILLAS vs. HON. EZEKIEL S. GRAGEDA, as
Judge of the Court of First Instance of Albay and JOSE A. RICO
We are asked in this petition to review the amended decision of the respondent court which declared as absolutely null and void the sale of a
residential lot in Guinobatan, Albay to a Chinese national and ordered its reconveyance to the vendors thirty years after the sale inspite of the fact
that the vendee had been a naturalized Filipino citizen for fifteen years at the time.
We grant the petition. The questioned decision and the order amending it are reversed and set aside.
The facts are not disputed.
On April 12, 1939, Maximino Rico, for and in his own behalf and that of the minors Maria Rico, Filomeno Rico, Prisco Rico, and Lourdes' Rico,
executed a Deed of Absolute Sale (Annex 'A' to the complaint) over Lot 339 and a portion of Lot 327 in favor of the petitioner Donato Reyes Yap
who was then a Chinese national. Respondent Jose A. Rico is the eldest son of Maximino Rico, one of the vendors in Annex 'A'.
Subsequently, the petitioner as vendee caused the registration of the instrument of sale and the cancellation of Original Certificates of Title Nos.
29332 and 29410 and the consequent issuance in his favor of Transfer Certificate of Title No. T-2433 covering the two lots subject matter of the
Contract of Sale.

After the lapse of nearly fifteen years from and after the execution of the deed of absolute sale, Donato Reyes Yap was admitted as a Filipino
citizen and allowed to take his oath of allegiance to the Republic of the Philippines. He was, thereafter, issued Certificate of Naturalization No. 7,
File No. 19 of the Court of First Instance of Albay.
On December 1, 1967, the petitioner ceded the major portion of Lot No. 327 consisting of 1,078 square meters which he acquired by purchase
under the deed of sale in favor of his engineer son, Felix Yap, who was also a Filipino citizen because of the Filipino citizenship of his mother
and the naturalization of his father Donato Reyes Yap.
Subsequently, Lourdes Rico, aunt and co-heir of respondent Jose A. Rico. sold the remaining portion of Lot 327 to the petitioner who had his
rights thereon duly registered under Act 496. Petitioner, Donato Reyes Yap, has been in possession of the lots in question since 1939, openly,
publicly, continuously, and adversely in the concept of owner until the present time. The petitioner has one surviving son by his first marriage to
a Filipino wife. He has five children by his second marriage also to a Filipina and has a total of 23 grandchildren all of whom are Filipino
citizens.
The respondent court considered Section 5, Article XIII of the 1935 Constitution that "no private agricultural land shall be transferred or assigned
except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines" to be an absolute
and unqualified prohibition and, therefore, ruled that a conveyance contrary to it would not be validated nor its void nature altered by the
subsequent naturalization of the vendee.
The dispositive portion of the amended decision reads:
WHEREFORE, in view of all the foregoing, the Contract of Sale embodied in the 'Escritura de Compra Venta' which is attached
to the Complaint as Annex 'A', is hereby declared null and void ab initio and without any legal force and effect.
The action to recover Lot 339 of the Cadastral Survey of Guinobatan, Albay, covered by Transfer Certificate of Title No.
T2433. and Lot 327 covered by the same Transfer Certificate of Title, is hereby granted to plaintiff, upon payment of the
consideration price of P150.00 and declaring plaintiff as the lawful owner and entitled to the possession thereof.
Defendant Donato Reyes Yap is hereby ordered to produce his Transfer Certificate of Title No. T-2433 to the Register of Deeds
of Albay, so as to enable said office to make the due and proper annotations on said title as well as in the original of the
declaration of nullity as herein adjudged. Let Transfer Certificate of Title issued to plaintiff, concerning said Lots 339 and 327
of the Cadastral Survey of Guinobatan, Albay.
COSTS AGAINST DEFENDANTS.
The rulings in Vasquez v.Leng Seng Giap et al. (96 Phil. 447) and Sarosa Vda. de Bersabia v. Cuenco (113 SCRA 547) sustain the petitioner's
contentions. We stated in Sarosa Vda de Bersabia:
There should be no question that the sale of the land in question in 1936 by Epifania to Ong King Po was inexistent and void
from the beginning (Art. 1409 [7], Civil Code) because it was a contract executed against the mandatory provision of the 1935
Constitution, which is an expression of public policy to conserve lands for the Filipinos. Said provision reads:
Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to
in. individuals, corporations, or associations, qualified to acquire or hold lands of the public domain.
Had this been a suit between Epifania and Ong King Po she could have been declared entitled to the litigated land on the basis,
as claimed, of the ruling in Philippine Banking Corporation vs. Lui She, reading:
... For another thing, and this is not only cogent but also important. Article 1416 of the Civil Code provides as
an exception to the rule on pari delicto that when the agreement is not illegal per se but is merely prohibited,
and the prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has sold or delivered. ...
But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by
a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There
would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a
qualified person. Applying by analogy the ruling of this Court in Vasquez vs. Giap and Leng Seng Giap & Sons:
... if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in
the Krivenko case, is to preserve the nation's lands for future generations of Filipinos, that aim or purpose
would not be thwarted but achieved by making lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization.
Only recently, we had occasion to reiterate the above rulings in Vicente Godines v. Fong Pak Luen, et al. (G.R. No. L-36731, January 27, 1983).
WHEREFORE, the amended judgment of the respondent court is hereby REVERSED and SET ASIDE. The complaint is DISMISSED.