GONZALES V.

TRINIDAD
67 PHIL 682 (1939)
FACTS: In November 1931, respondent Trinidad executed in favor of petitioner Gonzales a
deed of sale of a parcel of land in Manila for the amount of P10,000. Since the property was
mortgaged to the Bureau of Lands for P6,500, Gonzales assumed the encumbrance.
1. However, the sale was allegedly simulated since the supposed vendors did not receive the
alleged price since the sale was only effected to save the property from attachment from
Dr. Ramon Papa, who executed a credit of P4,000 in favor of Primitivo Trinidad.
2. Before the loan could be paid, Dr. Papa died and the credit represented by the note was
adjudicated to Carmen Papa.
3. Primitivo Trinidad, then, had an agreement with Carmen Papa that he would pay the latter
as soon as he had the money.
4. Respondent Trinidad filed a complaint against the petitioners Gonzales. CFI declared the
deed of sale null and void and dismissed the action of the plaintiffs and counterclaim of
the defendants, citing Art. 1305 and Art 1306 Civil Code (Now Art. 1411 and Art. 1412
NCC). CA reversed the same.
ISSUE: WON THE CA ERRED IN ITS DECISION IN DECLARING ART. 1305 AND 1306
NOT APPLICABLE IN THIS CASE
HELD: No, CA did not err in reversing the CFI decision. Art 1305 and 1306 Civil Code are not
applicable to the contract entered into by the parties because said provisions refer to contracts
with an illegal consideration or subject matter, whether the facts constitute an offense or
misdemeanor or whether the consideration is only rendered illegal. The contract of sale, being
onerous, has for its cause or consideration the price of P10,000; and both this consideration
as well as the subject matter, namely, the parcel of land, are lawful and not penalized by
law. However, since the contract was in itself fictitious and the simulated prince, the
consideration being thus lacking, said contract is null and void per se or non-existent. The
object of the contracting parties or the motives which the vendors had in entering into the
simulated contract should not be confused with the consideration which was lacking in this case.
Manresa makes the following distinction: The notion of consideration as it applies to
contracts, is the why of the contract, the essential reason which moves the contracting
parties to enter into the contract. In this sense, the consideration is related to the personal
element of the contract, because it represents the demand of reasonable and legal motives
for the determination of wills which concur in consent. In a contract of sale, the thing and the
price are the subject matter of the contract but in consideration thereof, the consideration for the
purchaser and the vendor is determined as indicated by the first of the definitions contained in
Art. 1274 (Now Art 1350: In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the other)