1

Uraca vs ca

The facts narrated by the Court of Appeals are as follows:[4]

The Velezes (herein private respondents) were the owners of the lot and commercial building in question
located at Progreso and M.C. Briones Streets in Cebu City.

Herein (petitioners) were the lessees of said commercial building.[5]

On July 8, 1985, the Velezes through Carmen Velez Ting wrote a letter to herein (petitioners) offering to sell
the subject property for P1,050,000.00 and at the same time requesting (herein petitioners) to reply in three
days.

On July 10, 1985, (herein petitioners) through Atty. Escolastico Daitol sent a reply-letter to the Velezes
accepting the aforesaid offer to sell.

On July 11, 1985, (herein petitioner) Emilia Uraca went to see Carmen Ting about the offer to sell but she was
told by the latter that the price was P1,400,000.00 in cash or managers check and not P1,050,000.00 as
erroneously stated in their letter-offer after some haggling. Emilia Uraca agreed to the price of P1,400,000.00
but counter-proposed that payment be paid in installments with a down payment of P1,000,000.00 and the
balance of P400,000 to be paid in 30 days. Carmen Velez Ting did not accept the said counter-offer of Emilia
Uraca although this fact is disputed by Uraca.

No payment was made by (herein petitioners) to the Velezes on July 12, 1985 and July 13, 1985.

On July 13, 1985, the Velezes sold the subject lot and commercial building to the Avenue Group (Private
Respondent Avenue Merchandising Inc.) for P1,050,000.00 net of taxes, registration fees, and expenses of the
sale.

At the time the Avenue Group purchased the subject property on July 13, 1985 from the Velezes, the certificate
of title of the said property was clean and free of any annotation of adverse claims or lis pendens.

On July 31, 1985 as aforestated, herein (petitioners) filed the instant complaint against the Velezes.

On August 1, 1985, (herein petitioners) registered a notice of lis pendens over the property in question with the
Office of the Register of Deeds.[6]

On October 30, 1985, the Avenue Group filed an ejectment case against (herein petitioners) ordering the latter
to vacate the commercial building standing on the lot in question.

Thereafter, herein (petitioners) filed an amended complaint impleading the Avenue Group as new defendants
(after about 4 years after the filing of the original complaint).

The trial court found two perfected contracts of sale between the Velezes and the petitioners, involving the
real property in question. The first sale was for P1,050,000.00 and the second was for P1,400,000.00. In
respect to the first sale, the trial court held that [d]ue to the unqualified acceptance by the plaintiffs within the
period set by the Velezes, there consequently came about a meeting of the minds of the parties not only as to
the object certain but also as to the definite consideration or cause of the contract.[7]And even
assuming arguendo that the second sale was not perfected, the trial court ruled that the same still constituted a
mere modificatory novation which did not extinguish the first sale. Hence, the trial court held that the Velezes
were not free to sell the properties to the Avenue Group.[8] It also found that the Avenue Group purchased the
property in bad faith.[9]
Private respondents appealed to the Court of Appeals. As noted earlier, the CA found the appeal
meritorious. Like the trial court, the public respondent held that there was a perfected contract of sale of the
property for P1,050,000.00 between the Velezes and herein petitioners. It added, however, that such perfected
contract of sale was subsequently novated. Thus, it ruled: Evidence shows that that was the original
contract. However, the same was mutually withdrawn, cancelled and rescinded by novation, and was therefore
abandoned by the parties when Carmen Velez Ting raised the consideration of the contract [by] P350,000.00,
thus making the price P1,400,000.00 instead of the original price of P1,050,000.00. Since there was no
agreement as to the second price offered, there was likewise no meeting of minds between the parties, hence,
no contract of sale was perfected.[10] The Court of Appeals added that, assuming there was agreement as to
the price and a second contract was perfected, the later contract would be unenforceable under the Statute of
Frauds. It further held that such second agreement, if there was one, constituted a mere promise to sell which
was not binding for lack of acceptance or a separate consideration.[11]
 2

The Issues

Petitioners allege the following errors in the Decision of Respondent Court:

I

Since it ruled in its decision that there was no meeting of the minds on the second price offered
(P1,400,000.00), hence no contract of sale was perfected, the Court of Appeals erred in not holding that the
original written contract to buy and sell for P1,050,000.00 the Velezes property continued to be valid and
enforceable pursuant to Art. 1279 in relation with Art. 1479, first paragraph, and Art. 1403, subparagraph 2 (e)
of the Civil Code.

II

The Court of Appeals erred in not ruling that petitioners have better rights to buy and own the Velezes property
for registering their notice of lis pendens ahead of the Avenue Groups registration of their deeds of sale taking
into account Art. 1544, 2nd paragraph, of the Civil Code.[12]

The Courts Ruling

The petition is meritorious.

First Issue: No Extinctive Novation

The lynchpin of the assailed Decision is the public respondents conclusion that the sale of the real
property in controversy, by the Velezes to petitioners for P1,050,000.00, was extinguished by novation after the
said parties negotiated to increase the price to P1,400,000.00. Since there was no agreement on the sale at
the increased price, then there was no perfected contract to enforce. We disagree.
The Court notes that the petitioners accepted in writing and without qualification the Velezes written offer
to sell at P1,050,000.00 within the three-day period stipulated therein. Hence, from the moment of acceptance
on July 10, 1985, a contract of sale was perfected since undisputedly the contractual elements of consent,
object certain and cause concurred.[13] Thus, this question is posed for our resolution: Was there a novation of
this perfected contract?
Article 1600 of the Civil Code provides that (s)ales are extinguished by the same causes as all other
obligations, x x x. Article 1231 of the same Code states that novation is one of the ways to wipe out an
obligation. Extinctive novation requires: (1) the existence of a previous valid obligation; (2) the agreement of all
the parties to the new contract;(3) the extinguishment of the old obligation or contract; and (4) the validity of the
new one.[14] The foregoing clearly show that novation is effected only when a new contract has extinguished an
earlier contract between the same parties. In this light, novation is never presumed; it must be proven as a fact
either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility
between old and new obligations or contracts.[15] After a thorough review of the records, we find this element
lacking in the case at bar.
As aptly found by the Court of Appeals, the petitioners and the Velezes did not reach an agreement on the
new price of P1,400,000.00 demanded by the latter. In this case, the petitioners and the Velezes clearly did not
perfect a new contract because the essential requisite of consent was absent, the parties having failed to
agree on the terms of the payment. True, petitioners made a qualified acceptance of this offer by proposing
that the payment of this higher sale price be made by installment, with P1,000,000.00 as down payment and
the balance of P400,000.00 payable thirty days thereafter. Under Article 1319 of the Civil Code,[16] such
qualified acceptance constitutes a counter-offer and has the ineludible effect of rejecting the Velezes
offer.[17] Indeed, petitioners counter-offer was not accepted by the Velezes. It is well-settled that (a)n offer must
be clear and definite, while an acceptance must be unconditional and unbounded, in order that their
concurrence can give rise to a perfected contract.[18] In line with this basic postulate of contract law, a definite
agreement on the manner of payment of the price is an essential element in the formation of a binding and
enforceable contract of sale.[19] Since the parties failed to enter into a new contract that could have
extinguished their previously perfected contract of sale, there can be no novation of the latter. Consequently,
the first sale of the property in controversy, by the Velezes to petitioners for P1,050,000.00, remained valid and
existing.
 3

In view of the validity and subsistence of their original contract of sale as previously discussed, it is
unnecessary to discuss public respondents theses that the second agreement is unenforceable under the
Statute of Frauds and that the agreement constitutes a mere promise to sell.

Second Issue: Double Sale of an Immovable

The foregoing holding would have been simple and straightforward. But Respondent Velezes complicated
the matter by selling the same property to the other private respondents who were referred to in the assailed
Decision as the Avenue Group.
Before us therefore is a classic case of a double sale -- first, to the petitioner; second, to the Avenue
Group. Thus, the Court is now called upon to determine which of the two groups of buyers has a better right to
said property.
Article 1544 of the Civil Code provides the statutory solution:
xxx xxx xxx

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good
faith.

Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article 1544 requires that such registration must be
coupled with good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the
first buyers rights except where the second buyer registers in good faith the second sale aheadof the first, as
provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of her rights under
the law, among them, to register first her purchase as against the second buyer. But in converso knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith This is the price exacted by Article 1544 of the
Civil Code for the second buyer being able to displace the first buyer; that before the second buyer can obtain
priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and
of the first buyers rights) ---- from the time of acquisition until the title is transferred to him by registration or
failing registration, by delivery of possession.[20] (Emphasis supplied)
After a thorough scrutiny of the records of the instant case, the Court finds that bad faith tainted the
Avenue Groups purchase on July 13, 1985 of the Velezes real property subject of this case, and the
subsequent registration thereof on August 1, 1995. The Avenue Group had actual knowledge of the Velezes
prior sale of the same property to the petitioners, a fact antithetical to good faith. For a second buyer like the
Avenue Group to successfully invoke the second paragraph, Article 1544 of the Civil Code, it must possess
good faith from the time of the sale in its favor until the registration of the same. This requirement of good faith
the Avenue Group sorely failed to meet. That it had knowledge of the prior sale, a fact undisputed by the Court
of Appeals, is explained by the trial court thus:

The Avenue Group, whose store is close to the properties in question, had known the plaintiffs to be the
lessee-occupants thereof for quite a time. Felix Ting admitted to have a talk with Ong Seng in 1983 or 1984
about the properties. In the cross-examination, Manuel Ting also admitted that about a month after Ester
Borromeo allegedly offered the sale of the properties Felix Ting went to see Ong Seng again. If these were so,
it can be safely assumed that Ong Seng had consequently told Felix about plaintiffs offer on January 11, 1985
to buy the properties for P1,000,000.00 and of their timely acceptance on July 10, 1985 to buy the same
at P1,050,000.00.

The two aforesaid admissions by the Tings, considered together with Uracas positive assertion that Felix Ting
met with her on July 11th and who was told by her that the plaintiffs had transmitted already to the Velezes
their decision to buy the properties at P1,050,000.00, clinches the proof that the Avenue Group had prior
knowledge of plaintiffs interest. Hence, the Avenue Group defendants, earlier forewarned of the plaintiffs prior
contract with the Velezes, were guilty of bad faith when they proceeded to buy the properties to the prejudice
of the plaintiffs.[21]

The testimony of Petitioner Emilia Uraca supports this finding of the trial court. The salient portions of her
testimony follow:
 4

BY ATTY. BORROMEO: (To witness)

Q According to Manuel Ting in his testimony, even if they know, referring to the Avenue Group, that
you were tenants of the property in question and they were neighbors to you, he did not inquire
from you whether you were interested in buying the property, what can you say about that?
A It was Felix Ting who approached me and asked whether I will buy the property, both the house and
the land and that was on July 10, 1985.
ATTY BORROMEO: (To witness)
Q What was your reply, if any?
A Yes, sir, I said we are going to buy this property because we have stayed for a long time there
already and we have a letter from Carmen Ting asking us whether we are going to buy the
property and we have already given our answer that we are willing to buy.
COURT: (To witness)
Q What do you mean by that, you mean you told Felix Ting and you showed him that letter of Carmen
Ting?
WITNESS:
A We have a letter of Carmen Ting where she offered to us for sale the house and lot and I told him
that I have already agreed with Concordia Ching, Ong Seng and my self that we buy the land. We
want to buy the land and the building.[22]
We see no reason to disturb the factual finding of the trial court that the Avenue Group, prior to the
registration of the property in the Registry of Property, already knew of the first sale to petitioners. It is
hornbook doctrine that findings of facts of the trial court, particularly when affirmed by the Court of Appeals, are
binding upon this Court[23] save for exceptional circumstances[24] which we do not find in the factual milieu of
the present case. True, this doctrine does not apply where there is a variance in the factual findings of the trial
court and the Court of Appeals. In the present case, the Court of Appeals did not explicitly sustain this
particular holding of the trial court, but neither did it controvert the same. Therefore, because the registration by
the Avenue Group was in bad faith, it amounted to no inscription at all. Hence, the third and not the second
paragraph of Article 1544 should be applied to this case. Under this provision, petitioners are entitled to the
ownership of the property because they were first in actual possession, having been the propertys lessees and
possessors for decades prior to the sale.
Having already ruled that petitioners actual knowledge of the first sale tainted their registration, we find no
more reason to pass upon the issue of whether the annotation of lis pendens automatically negated good faith
in such registration.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is hereby SET
ASIDE and the dispositive portion of the trial courts decision dated October 19, 1990 is REVIVED with the
following MODIFICATION -- the consideration to be paid under par. 2 of the disposition is P1,050,000.00 and
not P1,400,000.00. No Costs.
Pineda vs ca

The facts, as found by the Court of Appeals, are as follows:

Appellees Nelson Baez and Mercedes Baez are the original owners of a parcel of land together with its
improvements located at 32 Sarangaya St., White Plains, Quezon City while Ms. Alejandria Pineda is the
owner of a house located at 5224 Buchanan St., Los Angeles, California.

On January 11, 1983, the appellees and Alejandria Pineda, together with the latters spouse Alfredo Caldona,
executed an Agreement to Exchange Real Properties (Exh. A, p. 16, Folder of Exhibits). In the agreement, the
parties agreed to: 1) exchange their respective properties; 2) Pineda to pay an earnest money in the total
amount of $12,000.00 on or before the first week of February 1983; and 3) to consummate the exchange of
properties not later than June 1983. It appears that the parties undertook to clear the mortgages over their
respective properties. At the time of the execution of the exchange agreement, the White Plains property was
mortgaged with the Government Service Insurance System (GSIS) while the California property had a total
mortgage obligation of $84,000.00 (Exh. A-2, p. 18, Ibid).

In the meantime, the appellees were allowed to occupy or lease to a tenant Pinedas California property (Exh.
A-1, p. 17, Ibid) and Pineda was authorized to occupy appellees White Plainsproperty (Complaint; p. 8.
Records). Pursuant to the exchange agreement, Alejandria Pineda paid the appellees the total amount of
$12,000.00 broken down as follows: 1) $5,000.00, on January 1983; 2) $4,000.00 on April 1983; 3) $3,000.00
on January 1985 (Exh. C & D, pp. 28; 36 Ibid).
 5

On December 18, 1984, unknown to the appellees, Alejandria Pineda and the appellants Adeodato C. Duque,
Jr. and Evangeline Mary Jane Duque executed an Agreement to Sell over the White Plains property whereby
Pineda sold the property to the appellants for the amount of P1,600,000.00 (Exh. 1, p. 51, Ibid). The contract
provides that: 1) upon signing of the agreement, the purchaser shall pay P450,000.00 and the seller shall
cause the release of the property from any encumbrance and deliver to the purchaser the title to the property;
2) balance shall be paid by the purchaser to the seller on or before the end of January 1985; 3) upon full
payment, the seller shall deliver to the purchaser a deed of absolute sale duly signed by its registered owner,
the appellees. On the same date, Pineda, out of the downpayment received from the appellants, paid
the appellees mortgage obligation with the GSIS in the sum of P112,690.75 (Exhs. D-1 to D-3, pp. 41-43, Ibid).

Pineda then requested the appellees for a written authority for the release of the title from the GSIS (pp. 18-
19, November 9, 1989, TSN). On January 1, 1985, the appellees gave Pineda the aforementioned authority
with the understanding that Pineda will personally deliver the title to the appellees (Exh. E, p. 44, Ibid). The
record shows that pursuant to the agreement to sell the following payments were made by the appellants to
Pineda: 1) $25,000.00 on December 26, 1984; 2) $10,000.00 on January 18, 1985; 3) P50,000.00 on January
24, 1985; 4) $500.00 on February 1, 1985; and 5) $330 on February 7, 1985 (Exhs. 4 to 8, pp. 55-57, Ibid).
The appellants physically occupied the premises on June or July 1985 (Pre-Trial Order, p. 156, Records).

Upon their return to the Philippines sometime in March 1985, the appellees discovered that the appellants
were occupying the White Plains property. They talked with appellant Atty. AdeodatoDuque who showed
interest in buying the property and the latter mentioned that they gave money to Mrs. Pineda to facilitate the
redemption of her property in the U. S. (pp. 23-26, November 9, 1989, TSN). Appellees alleged that they
confronted Pineda on their title to the property but the latter replied that she gave the title to the appellants.
They did not insist on its return from the appellants as the latter were interested in buying the property (pp. 33-
35, November 9, 1989, TSN).

A series of communications ensued between the representatives of the appellees and Ms. Pineda with regards
to the status of the exchange agreement which resulted in its rescission for failure of Pineda to clear her
mortgage obligation of the California property (Exhs. B, C & D, pp. 24-29; 35-37, Folder of Exhibits).
Negotiations for the purchase of the property were held between the appellants and the appellees but the
same failed which resulted in the appellees demanding for the appellants to vacate the property (Exhs. F to F-
12, pp. 81-93, Ibid).

Appellees claim that upon their return to the Philippines on July 1987, they discovered from the Register of
Deeds that the title over their White Plains property was cancelled and a new one was issued in the name
of Alejandria Pineda. They also discovered a fictitious deed of sale dated September 5, 1979 in favor of
Pineda. Appellees alleged that the deed of absolute sale is fictitious and their signatures a forgery (pp. 37-
39, November 9, 1989, TSN). Appellants maintained that on December 22, 1986, they discovered the property
was registered in the name of Pineda by virtue of a deed of sale and they informed the appellees of the
existence of the deed of sale in a meeting in the United States on March 1987 (pp. 3-4, October 22, 1990,
TSN).

During that meeting, an agreement was reached by the appellants and the appellees for the sale of the
property at $89,000.00. Appellees alleged that the purchase price was reduced to $60,000.00 which appellants
failed to pay (pp. 40- 41, November 10, 1989, TSN). They admitted however to have received the sum of P
100,000.00 from Atty. Duque (pp. 51-52, November 10, 1989, TSN). On the other hand, the appellants alleged
that the purchase price of $89,000.00 was conditioned that all payments made to Pineda as well as expenses
incurred will be considered as forming part of the purchase price (pp. 3-4, October 22, 1990, TSN). The
records are silent as to what happened to this agreement.

On September 3, 1987, the present complaint was filed before the court a quo. Since the record of this case
was burned during the fire that razed the Quezon City Hall Building sometime in June 1988, the record was
reconstituted upon petition of the plaintiffs Nelson S. Baez and Mercedes Baez, without objection from the
defendant Duques. For failure to serve summons by personal delivery on defendant Alejandria Pineda,
an alias writ of summons was issued by publication. After the lapse of sixty (60) days from the last publication
of summons, the court, upon motion, declared Pineda in default in its order dated March 4, 1988. Thereafter,
defendant spouses Adeodato and Evangeline Mary Jane L. Duque, appellants herein, filed their Answer.[2]

On February 17, 1992, the trial court rendered a decision, the decretal portion of which reads as follows:

WHEREFORE, prescinding from the foregoing, judgment is hereby rendered:

1. Declaring plaintiffs spouses Nelson S. Baez and Mercedes Baez the absolute owners in fee simple title of
the house and lot in question located at 32 Sarangaya St., White Plains, Quezon City, entitled as such to all
the rights blossoming forth from such ownership.
 6

2. Declaring as null and void ab-initio for being a patent forgery that Deed of Absolute Sale dated September
5, 1979 (Exh. I) purportedly executed by plaintiffs in favor of defendant AlejandriaPineda;

3. Declaring as null and void that TCT No. T-338857 (Exh. H) of the land records of Quezon City, issued
January 03, 1986 in the name of Alejandria (dra) B. Pineda, widow, of legal age, Filipino and the Register of
Deeds of Quezon City, after the finality of this decision, is hereby ordered to cancel said Certificate of Title and,
in lieu thereof, to issue a new Certificate of Title in the name of plaintiffs Nelson S. Baez, married
to Mercedez Baez, both of legal age, Filipinos and residents of No. 32 Sarangaya St., White
Plains, Quezon City, covering the lot in question.

4. Declaring as null and void ab-initio that certain Agreement to Sell dated December 18, 1988 (Exh. 1)
executed by and between defendant Alejandria Pineda and spouses defendants AdeodataC. Duque, Jr. and
Evangeline Mary Jane Duque, over the house and lot in question;

5. Declaring alleged vendees, defendants Adeodato Duque, Jr. and Evangeline Mary Jane Duque as
purchasers in bad faith of the house and land in suit and as builders in bad faith over whatever improvements
introduced by them in the house and lot in question;

6. Ordering herein defendants Adeodato Duque, Jr. and Evangeline Mary Jane Duque, their heirs, and
assigns, and all persons claiming under them to vacate and peacefully surrender possession of the premises in
question located at no. 32 Sarangaya St., White Plains, Quezon City. Afterwhich, said defendants, their heirs
and assigns are likewise ordered to respect and not to molest the peaceful possession of plaintiffs
spouses Baezes over the premises in question;

7. Ordering defendants spouses Duques to pay plaintiffs the sum of P10,000.00 monthly rentals since August
1985 until they shall have peacefully surrendered physical possession of the premises in question to plaintiffs;

8. Ordering plaintiffs spouses Baez to reimburse defendants spouses the sum of P 100,000.00 representing
the amount they received when said defendants Duques offered a proposal to buy the premises in question
(Exh. N, p. 487, dated July 24, 1987), with interest at the legal rate, which amount however shall be deducted
from the accumulated past rentals due the plaintiffs;

9. Ordering defendant Pineda to pay plaintiffs the sum of P200,000.00 by way of moral damages, plus the sum
of P 100,000.00 by way of exemplary damages;

10. Ordering defendants spouses Duques to pay plaintiffs Baezes the sum of P 100,000.00 by way of moral
damages, plus the sum of P50,000.00 by way of exemplary damages;

11. Ordering herein defendant Pineda and defendants spouses Duques to pay jointly and severally the sum of
P50,000.00, plus 10% of the sums awarded to plaintiffs by way of reasonable attorneys fees; and

12. Both defendants to pay the costs.

SO ORDERED.[3]

In time, petitioners appealed the decision to the Court of Appeals.[4]

On September 18, 1992, respondents Nelson and Mercedes Baez filed with the Court of Appeals a motion
for execution pending appeal.[5] On April 27, 1993, the Court of Appeals denied the motion for lack of merit.[6]
On May 20, 1996, the Court of Appeals promulgated a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the decision appealed from is AFFIRMED with the modification that
rental payments should commence on January 1986 (not August 1985) and appellants are liable for attorneys
fees only in the sum of P50,000.00.[7]

On June 26, 1996, petitioners filed a motion for reconsideration of the above quoted
decision.[8] On November 7, 1996, the Court of Appeals denied the motion.[9]
Hence, this appeal.[10]

The Issue

The issue raised is whether petitioners validly acquired the subject property.
 7

The Court's Ruling

We deny the petition. The issue raised is factual. In an appeal via certiorari, we may not review the
findings of fact of the Court of Appeals.[11]
Nevertheless, it appears that the Baez spouses were the original owners of the parcel of land and
improvements located at 32 Sarangaya St., White Plains, Quezon City. On January 11, 1983,
the Baez spouses and petitioner Pineda executed an agreement to exchange real properties. However, the
exchange did not materialize.
Petitioner Pinedas sale of the property to petitioners Duque was not authorized by the real owners of the
land, respondent Baez. The Civil Code provides that in a sale of a parcel of land or any interest therein made
through an agent, a special power of attorney is essential.[12] This authority must be in writing, otherwise the
sale shall be void.[13] In his testimony, petitioner Adeodato Duque confirmed that at the time he purchased
respondents property from Pineda, the latter had no Special Power of Authority to sell the property.[14]
A special power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired for a valuable consideration.[15]Without an authority in writing, petitioner
Pineda could not validly sell the subject property to petitioners Duque. Hence, any sale in favor of
petitioners Duque is void.[16]
Further, Article 1318 of the Civil Code lists the requisites of a valid and perfected contract, namely: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; (3) cause of the
obligation which is established.[17] Pineda was not authorized to enter into a contract to sell the property. As the
consent of the real owner of the property was not obtained, no contract was perfected.[18]
Consequently, petitioner Duque failed to validly acquire the subject property.
TORCUATOR VS. BERNABE CITATION : 459 SCRA 439 (2005) TOPIC : OBLIGATIONS OF BUYER PAY

THE PRICE

FACTS: The subject property of the present case is a parcel of land which was purchased by respondents

spouses Diosdado and Lourdes Salvador from developer, Ayala Corporation. The sale was subject to several

restrictions imposed by Ayala Corporation. Salvadors later sold the subject property to the spouses Remigio

and Gloria Bernabe but in view of the the above-stated restrictions imposed by Ayala Corporation, the

Salvadors executed a special power of attorney authorizing the Bernabes to construct a residential house on

the lot and to transfer the title of the property in their names. The Bernabes, on the other hand, did not make

any improvement and proceeded to sell the subject property to petitioners, Spouses Mario and Elizabeth

Torcuator. Due again to the restrictions imposed by Ayala Corporation, the parties agreed to cancel the deed

of sale between the Salvadors and Bernabes and a new one was executed by the Salvadors in favor of the

Torcuators. A new SPA was executed by the Salvadors for the Torcuators in order for the latter to build a

house on the land in question, while an irrevocable SPA was executed by the Salvadors to the Bernabes

authorizing the latter to sell, transfer and convey, with power of substitution, the subject property. However, no

payment was tendered by the Torcuators to the Bernabes. Subsequently, the Bernabes sold the subject land

to a third person, Leonardo Angeles. As a result, the Torcuators commenced the instant action against the

Bernabes and Salvadors for Specific Performance or Rescission with Damages. The trial court, however,

dismissed the complaint on the ground that no real damage was suffered by the Torcuators. The Torcuators

appealed to the Court of Appeals, but the appellate court upheld the trial courts conclusion and dismissed
 8

the appeal. The CA ruled, among others, that the sale between the Bernabes and the Torcuators was tainted

with serious irregularities and bad faith.

ISSUE: Whether or not the Torcuators are entitled to recission of the contract of sale.

HELD: The Supreme Court says NO. Remarkably, the records are bereft of any indication that petitioners ever

attempted to tender payment or consign the purchase price as required by law. The Complaint filed by

petitioners makes no mention at all of a tender of payment or consignation having been made, much less that

petitioners are willing and ready to pay the purchase price. Petitioners averments to the effect that they have

sufficient funds to pay for the property and have even applied for a telegraphic transfer from their bank account

to the Bernabes bank account, uncoupled with actual tender and consignation, are utterly self- serving.

The trial court correctly noted that petitioners should have consigned the amount due in court instead of merely

sending respondents a letter expressing interest to push through with the transaction. Mere sending of a letter

by the vendee expressing the intention to pay without the accompanying payment is not considered a valid

tender of payment. Consignation of the amount due in court is essential in order to extinguish the obligation to

pay and oblige the vendor to convey title. On this score, even assuming that the agreement was a contract of

sale, respondents may not be compelled to deliver the property and execute the deed of absolute sale. In

cases such as the one before us, which involve the performance of an obligation and not merely the exercise

of a privilege or right, payment may be effected not by mere tender alone but by both tender and

consignation. The rule is different in cases which involve an exercise of a right or privilege, such as in an

option contract, legal redemption or sale with right to repurchase, wherein mere tender of payment would be

sufficient to preserve the right or privilege. Hence, absent a valid tender of payment and consignation,

petitioners are deemed to have failed to discharge their obligation to pay.

Yuvienco vs. Dacuycuy

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.
 9

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:

.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

(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:

Reurlet dated July 12 inform Dra. Yuvienco we agree to buy property proceed Tacloban to
negotiate details 1wph1.t

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 plaintiffs- tenants, 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
 10

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 above-quoted 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
 11

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
 12

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
 13

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.

Claudel vs. CA

This petition for review on certiorari seeks the reversal of the decision rendered by the Court of Appeals in CA-
G.R. CV No. 044291 and the reinstatement of the decision of the then Court of First Instance (CFI) of Rizal,
Branch CXI, in Civil Case No. M-5276-P, entitled. "Heirs of Macario Claudel, et al. v. Heirs of Cecilio Claudel,
et al.," which dismissed the complaint of the private respondents against the petitioners for cancellation of titles
and reconveyance with damages.2

As early as December 28, 1922, Basilio also known as "Cecilio" Claudel, acquired from the Bureau of Lands,
Lot No. 1230 of the Muntinlupa Estate Subdivision, located in the poblacion of Muntinlupa, Rizal, with an area
of 10,107 square meters; he secured Transfer Certificate of Title (TCT) No. 7471 issued by the Registry of
Deeds for the Province of Rizal in 1923; he also declared the lot in his name, the latest Tax Declaration being
No. 5795. He dutifully paid the real estate taxes thereon until his death in 1937.3 Thereafter, his widow "Basilia"
and later, her son Jose, one of the herein petitioners, paid the taxes.

The same piece of land purchased by Cecilio would, however, become the subject of protracted litigation thirty-
nine years after his death.

Two branches of Cecilio's family contested the ownership over the land-on one hand the children of Cecilio,
namely, Modesto, Loreta, Jose, Benjamin, Pacita, Carmelita, Roberto, Mario, Leonardo, Nenita, Arsenia
Villalon, and Felisa Claudel, and their children and descendants, now the herein petitioners (hereinafter
referred to as HEIRS OF CECILIO), and on the other, the brother and sisters of Cecilio, namely, Macario,
Esperidiona, Raymunda, and Celestina and their children and descendants, now the herein private
respondents (hereinafter referred to as SIBLINGS OF CECILIO). In 1972, the HEIRS OF CECILIO partitioned
this lot among themselves and obtained the corresponding Transfer Certificates of Title on their shares, as
follows:

TCT No. 395391 1,997 sq. m. Jose Claudel

TCT No. 395392 1,997 sq. m. Modesta Claudel and children

 14

TCT No. 395393 1,997 sq. m. Armenia C. Villalon

TCT No. 395394 1,997 sq. m. Felisa Claudel4

Four years later, on December 7, 1976, private respondents SIBLINGS OF CECILIO, filed Civil Case No.
5276-P as already adverted to at the outset, with the then Court of First Instance of Rizal, a "Complaint for
Cancellation of Titles and Reconveyance with Damages," alleging that 46 years earlier, or sometime in 1930,
their parents had purchased from the late Cecilio Claudel several portions of Lot No. 1230 for the sum of
P30.00. They admitted that the transaction was verbal. However, as proof of the sale, the SIBLINGS OF
CECILIO presented a subdivision plan of the said land, dated March 25, 1930, indicating the portions allegedly
sold to the SIBLINGS OF CECILIO.

As already mentioned, the then Court of First Instance of Rizal, Branch CXI, dismissed the complaint,
disregarding the above sole evidence (subdivision plan) presented by the SIBLINGS OF CECILIO, thus:

Examining the pleadings as well as the evidence presented in this case by the parties, the Court can
not but notice that the present complaint was filed in the name of the Heirs of Macario, Espiridiona,
Raymunda and Celestina, all surnamed Claudel, without naming the different heirs particularly involved,
and who wish to recover the lots from the defendants. The Court tried to find this out from the evidence
presented by the plaintiffs but to no avail. On this point alone, the Court would not be able to apportion
the property to the real party in interest if ever they are entitled to it as the persons indicated therein is
in generic term (Section 2, Rule 3). The Court has noticed also that with the exception of plaintiff
Lampitoc and (sic) the heirs of Raymunda Claudel are no longer residing in the property as they have
(sic) left the same in 1967. But most important of all the plaintiffs failed to present any document
evidencing the alleged sale of the property to their predecessors in interest by the father of the
defendants. Considering that the subject matter of the supposed sale is a real property the absence of
any document evidencing the sale would preclude the admission of oral testimony (Statute of Frauds).
Moreover, considering also that the alleged sale took place in 1930, the action filed by the plaintiffs
herein for the recovery of the same more than thirty years after the cause of action has accrued has
already prescribed.

WHEREFORE, the Court renders judgment dismissing the complaint, without pronouncement as to
costs.

SO ORDERED.5

On appeal, the following errors6 were assigned by the SIBLINGS OF CECILIO:

1. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS' COMPLAINT DESPITE CONCLUSIVE

EVIDENCE SHOWING THE PORTION SOLD TO EACH OF PLAINTIFFS' PREDECESSORS.

2. THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFFS FAILED TO PROVE ANY
DOCUMENT EVIDENCING THE ALLEGED SALE.

3. THE TRIAL COURT ERRED IN NOT GIVING CREDIT TO THE PLAN, EXHIBIT A, SHOWING THE
PORTIONS SOLD TO EACH OF THE PLAINTIFFS' PREDECESSORS-IN-INTEREST.

4. THE TRIAL COURT ERRED IN NOT DECLARING PLAINTIFFS AS OWNERS OF THE PORTION
COVERED BY THE PLAN, EXHIBIT A.

5. THE TRIAL COURT ERRED IN NOT DECLARING TRANSFER CERTIFICATES OF TITLE NOS.
395391, 395392, 395393 AND 395394 OF THE REGISTER OF DEEDS OF RIZAL AS NULL AND
VOID.

The Court of Appeals reversed the decision of the trial court on the following grounds:

1. The failure to bring and prosecute the action in the name of the real party in interest, namely the parties
themselves, was not a fatal omission since the court a quo could have adjudicated the lots to the SIBLINGS
OF CECILIO, the parents of the herein respondents, leaving it to them to adjudicate the property among
themselves.

2. The fact of residence in the disputed properties by the herein respondents had been made possible by the
toleration of the deceased Cecilio.
 15

3. The Statute of Frauds applies only to executory contracts and not to consummated sales as in the case at
bar where oral evidence may be admitted as cited in Iigo v. Estate of Magtoto7 and Diana, et al. v. Macalibo.8

In addition,

. . . Given the nature of their relationship with one another it is not unusual that no document to
evidence the sale was executed, . . ., in their blind faith in friends and relatives, in their lack of
experience and foresight, and in their ignorance, men, in spite of laws, will make and continue to make
verbal contracts. . . .9

4. The defense of prescription cannot be set up against the herein petitioners despite the lapse of over forty
years from the time of the alleged sale in 1930 up to the filing of the "Complaint for Cancellation of Titles and
Reconveyance . . ." in 1976.

According to the Court of Appeals, the action was not for the recovery of possession of real property but for the
cancellation of titles issued to the HEIRS OF CECILIO in 1973. Since the SIBLINGS OF CECILIO commenced
their complaint for cancellation of titles and reconveyance with damages on December 7, 1976, only four years
after the HEIRS OF CECILIO partitioned this lot among themselves and obtained the corresponding Transfer
Certificates of Titles, then there is no prescription of action yet.

Thus the respondent court ordered the cancellation of the Transfer Certificates of Title Nos. 395391, 395392,
395393, and 395394 of the Register of Deeds of Rizal issued in the names of the HEIRS OF CECILIO and
corollarily ordered the execution of the following deeds of reconveyance:

To Celestina Claudel, Lot 1230-A with an area of 705 sq. m.

To Raymunda Claudel, Lot 1230-B with an area of 599 sq. m.

To Esperidiona Claudel, Lot 1230-C with an area of 597 sq. m.

To Macario Claudel, Lot 1230-D, with an area of 596 sq. m.10

The respondent court also enjoined that this disposition is without prejudice to the private respondents, as
heirs of their deceased parents, the SIBLINGS OF CECILIO, partitioning among themselves in accordance
with law the respective portions sold to and herein adjudicated to their parents.

The rest of the land, lots 1230-E and 1230-F, with an area of 598 and 6,927 square meters, respectively would
go to Cecilio or his heirs, the herein petitioners. Beyond these apportionments, the HEIRS OF CECILIO would
not receive anything else.

The crux of the entire litigation is whether or not the Court of Appeals committed a reversible error in disposing
the question of the true ownership of the lots.

And the real issues are:

1. Whether or not a contract of sale of land may be proven orally:

2. Whether or not the prescriptive period for filing an action for cancellation of titles and reconveyance
with damages (the action filed by the SIBLINGS OF CECILIO) should be counted from the alleged sale
upon which they claim their ownership (1930) or from the date of the issuance of the titles sought to be
cancelled in favor of the HEIRS OF CECILIO (1976).

The rule of thumb is that a sale of land, once consummated, is valid regardless of the form it may have been
entered into.11 For nowhere does law or jurisprudence prescribe that the contract of sale be put in writing
before such contract can validly cede or transmit rights over a certain real property between the parties
themselves.

However, in the event that a third party, as in this case, disputes the ownership of the property, the person
against whom that claim is brought can not present any proof of such sale and hence has no means to enforce
the contract. Thus the Statute of Frauds was precisely devised to protect the parties in a contract of sale of real
property so that no such contract is enforceable unless certain requisites, for purposes of proof, are met.

The provisions of the Statute of Frauds pertinent to the present controversy, state:
 16

Art. 1403 (Civil Code). The following contracts are unenforceable, unless they are ratified:

2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following
cases, an agreement hereafter made shall be unenforceable 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 a secondary evidence of its
contents:

e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of
an interest therein;

The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of obligations
depending for their evidence upon the unassisted memory of witnesses by requiring certain enumerated
contracts and transactions to be evidenced in Writing.12

The provisions of the Statute of Frauds originally appeared under the old Rules of Evidence. However when
the Civil Code was re-written in 1949 (to take effect in 1950), the provisions of the Statute of Frauds were
taken out of the Rules of Evidence in order to be included under the title on Unenforceable Contracts in the
Civil Code. The transfer was not only a matter of style but to show that the Statute of Frauds is also a
substantive law.

Therefore, except under the conditions provided by the Statute of Frauds, the existence of the contract of sale
made by Cecilio with his siblings13 can not be proved.

On the second issue, the belated claim of the SIBLINGS OF CECILIO who filed a complaint in court only in
1976 to enforce a light acquired allegedly as early as 1930, is difficult to comprehend.

The Civil Code states:

Art. 1145. The following actions must be commenced within six years:

(1) Upon an oral contract . . . (Emphasis supplied).

If the parties SIBLINGS OF CECILIO had allegedly derived their right of action from the oral purchase made by
their parents in 1930, then the action filed in 1976 would have clearly prescribed. More than six years had
lapsed.

We do not agree with the parties SIBLINGS OF CECILIO when they reason that an implied trust in favor of the
SIBLINGS OF CECILIO was established in 1972, when the HEIRS OF CECILIO executed a contract of
partition over the said properties.

But as we had pointed out, the law recognizes the superiority of the torrens title.

Above all, the torrens title in the possession of the HEIRS OF CECILIO carries more weight as proof of
ownership than the survey or subdivision plan of a parcel of land in the name of SIBLINGS OF CECILIO.

The Court has invariably upheld the indefeasibility of the torrens title. No possession by any person of any
portion of the land could defeat the title of the registered owners thereof.14

A torrens title, once registered, cannot be defeated, even by adverse, open and notorious possession.
A registered title under the torrens system cannot be defeated by prescription.1wphi1 The title, once
registered, is notice to the world. All persons must take notice. No one can plead ignorance of the
registration.15

Furthermore, a private individual may not bring an action for reversion or any action which would have
the effect of cancelling a free patent and the corresponding certificate of title issued on the basis
thereof, with the result that the land covered thereby will again form part of the public domain, as only
the Solicitor General or the officer acting in his stead may do so.16

It is true that in some instances, the Court did away with the irrevocability of the torrens title, but the
circumstances in the case at bar varied significantly from these cases.

In Bornales v. IAC, 17 the defense of indefeasibility of a certificate of title was disregarded when the transferee
who took it had notice of the flaws in the transferor's title. No right passed to a transferee from a vendor who
 17

did not have any in the first place. The transferees bought the land registered under the torrens system from
vendors who procured title thereto by means of fraud. With this knowledge, they can not invoke the
indefeasibility of a certificate of title against the private respondent to the extent of her interest. This is because
the torrens system of land registration, though indefeasible, should not be used as a means to perpetrate fraud
against the rightful owner of real property.

Mere registration of the sale is not good enough, good faith must concur with registration. Otherwise
registration becomes an exercise in futility.18

In Amerol v. Bagumbaran,19 we reversed the decision of the trial court. In this case, the title was wrongfully
registered in another person's name. An implied trust was therefore created. This trustee was compelled by
law to reconvey property fraudulently acquired notwithstanding the irrevocability of the torrens title.20

In the present case, however, the facts belie the claim of ownership.

For several years, when the SIBLINGS OF CECILIO, namely, Macario, Esperidiona Raymunda, and Celestina
were living on the contested premises, they regularly paid a sum of money, designated as "taxes" at first, to the
widow of Cecilio, and later, to his heirs.21 Why their payments were never directly made to the Municipal
Government of Muntinlupa when they were intended as payments for "taxes" is difficult to square with their
claim of ownership. We are rather inclined to consider this fact as an admission of non-ownership. And when
we consider also that the petitioners HEIRS OF CECILIO had individually paid to the municipal treasury the
taxes corresponding to the particular portions they were occupying,22 we can readily see the superiority of the
petitioners' position.

Renato Solema and Decimina Calvez, two of the respondents who derive their right from the SIBLINGS OF
CLAUDEL, bought a portion of the lot from Felisa Claudel, one of the HEIRS OF CLAUDEL. 23 The Calvezes
should not be paying for a lot that they already owned and if they did not acknowledge Felisa as its owner.

In addition, before any of the SIBLINGS OF CECILIO could stay on any of the portions of the property, they
had to ask first the permission of Jose Claudel again, one of the HEIRS OF CECILIO. 24 In fact the only reason
why any of the heirs of SIBLINGS OF CECILIO could stay on the lot was because they were allowed to do so
by the HEIRS OF CECILIO.25

In view of the foregoing, we find that the appellate court committed a reversible error in denigrating the transfer
certificates of title of the petitioners to the survey or subdivision plan proffered by the private respondents. The
Court generally recognizes the profundity of conclusions and findings of facts reached by the trial court and
hence sustains them on appeal except for strong and cogent reasons inasmuch as the trial court is in a better
position to examine real evidence and observe the demeanor of witnesses in a case.

No clear specific contrary evidence was cited by the respondent appellate court to justify the reversal of the
lower court's findings. Thus, in this case, between the factual findings of the trial court and the appellate court,
those of the trial court must prevail over that of the latter.26

WHEREFORE, the petition is GRANTED We REVERSE and SET ASIDE the decision rendered in CA-G.R. CV
No. 04429, and we hereby REINSTATE the decision of the then Court of First Instance of Rizal (Branch 28,
Pasay City) in Civil Case No. M-5276-P which ruled for the dismissal of the Complaint for Cancellation of Titles
and Reconveyance with Damages filed by the Heirs of Macario, Esperidiona Raymunda, and Celestina, all
surnamed CLAUDEL. Costs against the private respondents.

Londres vs. CA
394 SCRA 133 (2002)

The present case stemmed from a battle of ownership over Lots 1320 and 1333 both located in Barrio
Baybay, Roxas City, Capiz. Paulina Arcenas (Paulina for brevity) originally owned these two parcels of land.
After Paulinas death, ownership of the lots passed to her daughter, Filomena VidaI (Filomena for brevity). The
surviving children of Filomena, namely, Sonia Fuentes Londres (Sonia for brevity), Armando V. Fuentes, Chi-
Chita Fuentes Quintia, Roberto V. Fuentes, Leopoldo V. Fuentes and Marilou Fuentes Esplana (petitioners for
brevity) now claim ownership over Lots 1320 and 1333.
On the other hand, private respondents Consolacion Alivio Alovera (Consolacion for brevity) and Elena
Alovera Santos (Elena for brevity) anchor their right of ownership over Lots 1320 and 1333 on the Absolute
Sale executed by Filomena on April 24, 1959 (Absolute Sale for brevity). Filomena sold the two lots in favor of
Consolacion and her husband, Julian Alovera (Julian for brevity). Elena is the daughter of Consolacion and
Julian (deceased).
 18

On March 30, 1989, petitioners filed a complaint for the declaration of nullity of contract, damages and just
compensation. Petitioners sought to nullify the Absolute Sale conveying Lots 1320 and 1333 and to recover
just compensation from public respondents Department of Public Works and Highways (DPWH for brevity) and
Department of Transportation and Communication (DOTC for brevity). The case was raffled to the Regional
Trial Court, Branch 18, Roxas City, Capiz and docketed as Civil Case No. V-5668.
In their Complaint, petitioners claimed that as the surviving children of Filomena, they are the owners of
Lots 1320 and 1333. Petitioners claimed that these two lots were never sold to Julian. Petitioners doubt the
validity of the Absolute Sale because it was tampered. The cadastral lot number of the second lot mentioned in
the Absolute Sale was altered to read Lot 1333 when it was originally written as Lot 2034. Petitioners pointed
out that Lot 2034, situated in Barrio Culasi, Roxas City, Capiz, was also owned by their grandmother, Paulina.
Petitioners alleged that it was only recently that they learned of the claim of private respondents when
Consolacion filed a petition for the judicial reconstitution of the original certificates of title of Lots 1320 and
1333 with the Capiz Cadastre.[4] Upon further inquiry, petitioners discovered that there exists a notarized
Absolute Sale executed on April 24, 1959 registered only on September 22, 1982 in the Office of the Register
of Deeds of Roxas City. The private respondents copy of the Absolute Sale was tampered so that the second
parcel of lot sold, Lot 2034 would read as Lot 1333. However, the Records Management and Archives Office
kept an unaltered copy of the Absolute Sale. This other copy shows that the objects of the sale were Lots 1320
and 2034.
In their Answer, private respondents maintained that they are the legal owners of Lots 1333 and 1320.
Julian purchased the lots from Filomena in good faith and for a valid consideration. Private respondents
explained that Julian was deaf and dumb and as such, was placed in a disadvantageous position compared to
Filomena. Julian had to rely on the representation of other persons in his business transactions. After the sale,
Julian and Consolacion took possession of the lots. Up to now, the spouses successors-in-interest are in
possession of the lots in the concept owners. Private respondents claimed that the alteration in the Absolute
Sale was made by Filomena to make it conform to the description of the lot in the Absolute Sale. Private
respondents filed a counterclaim with damages.
The cross-claim of petitioners against public respondents was for the recovery of just compensation.
Petitioners claimed that during the lifetime of Paulina, public respondents took a 3,200-square meter portion of
Lot 1320. The land was used as part of the Arnaldo Boulevard in Roxas City without any payment of just
compensation. In 1988, public respondents also appropriated a 1,786-square meter portion of Lot 1333 as a
vehicular parking area for the Roxas City Airport. Sonia, one of the petitioners, executed a deed of absolute
sale in favor of the Republic of the Philippines over this portion of Lot 1333. According to petitioners, the
vendee agreed to pay petitioners P214,320.00. Despite demands, the vendee failed to pay the stipulated
amount.
Public respondents in their Answer raised the following defenses: (1) they have no capacity to sue and be
sued since they have no corporate personality separate and distinct from the Government; (2) they cannot
comply with their undertaking since ownership over the portions of land is disputed by private respondents and
until the issue of ownership is settled, petitioners have no cause of action against public respondents; and (3)
they are not proper parties since they were not parties to the Absolute Sale sought to be nullified.
On May 28, 1991, the trial court issued its decision upholding the validity of the Absolute Sale. The
dispositive portion of the decision reads:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered:

1. Declaring the Absolute Sale executed by Filomina Vidal in favor of spouses Julian Alovera and
Consolacion Alivio on April 24, 1959 over subject Lots 1320 and 1333 (Exh. 4) valid and effective;
2. Declaring private defendants Consolacion Alivio Alovera and Elena Alovera Santos legal owners of
subject Lots 1320 and 1333;
3. Ordering public defendants Department of Public Works and Highways and Department of
Transportation and Communications to pay jointly and severally private defendants Consolacion
Alivio Alovera and Elena Alovera Santos just compensation of the 3,200-square meter portion
taken by the government from subject Lot 1320 used as part of the Arnaldo Boulevard in Roxas
City, and the 1,786-square meter portion also taken by the government from subject Lot 1333 to be
used as vehicle parking area of the Roxas City Airport; and
4. Ordering the dismissal of the complaint for lack of merit.

The cross-claim of private defendants against public defendants and private defendants counterclaim for
damages against the plaintiffs are likewise ordered dismissed. Costs against plaintiffs.

SO ORDERED
 19

The trial court ruled that the Absolute Sale is valid based on the following facts:

First, the description of subject Lot 1333, as appearing in the Absolute Sale dated April 24, 1959 executed by
Filomena Vidal in favor of spouses Julian Alovera and Consolacion Alivio (Exhs. 24 and 24-A), reads:

2) A parcel of land (Lot No. 1333 of the Cadastral Survey of Capiz), with the improvements thereon, situated in
the Barrio of Baybay, Municipality of Capiz (now Roxas City). Bounded on the N. by the property of Nemesio
Fuentes; on the S. by the property of Rufo Arcenas; on the E. by the property of Mateo Arcenas; and on the W.
by the property of Valeriano Arcenas; containing an area of Eighteen Thousand Five Hundred Fifty Seven
(18,557) square meters, more or less. This parcel of land is all rice land and the boundaries thereon are visible
consisting of stone monuments erected thereon by the Bureau of Lands. It is declared under Tax Dec. No. 336
in the name of Filomena Vidal and assessed at P930.00.

In the Absolute Sale executed by the same parties on the same date, the above-quoted description is the
same except the lot number, i.e., instead of the figure 1333 what is written therein is the figure 1320;

Second, subject Lot 1333 is situated in Barangay Baybay, Roxas City, whereas Lot 2034 which is the second
lot subject of the questioned absolute sale is situated in Barangay Culasi, Roxas City as evidenced by a
certified true/xerox copy of a sketch plan (Exh. 29) thereby indicating that said Lot 2034 in said Barangay
Culasi (Exh. 29-A).

Third, Lot 2034 was previously owned by Jose Altavas (Exhs, 38 and 38-A) and later is owned in common by
Libertad Altavas Conlu, et al. (Exhs. 37 and 37-A) and there is no convincing evidence showing that this lot
was ever owned, at one time or another, by Paulina Arcenas or by Filomena Vidal or by plaintiffs, or their
predecessors-in-interest;

Fourth, the two lots have been the subject of the transactions made by their former owner, Filomena Vidal, with
some persons, including spouses Julian Alovera and defendant Consolacion Alivio;

Fifth, the subject two lots have been continuously worked on since the early 1950s up to the present by
Alejandro Berlandino, and later by his son, Zosimo Berlandino, who were instituted therein as tenants by Julian
Alovera and the private defendants;

Sixth, these two lots have never been in the possession of the plaintiffs.[8]

The trial court further noted that while petitioners and private respondents claimed that Lots 1320 and
1333 are titled, both failed to account for the certificates of title. The trial court then concluded that there is
merely a disputable presumption that Lots 1320 and 1333 are titled and covered by certificates of title. The trial
court further declared that ownership over the two lots can still be acquired by ordinary prescription as in this
case.
Private respondents and their predecessors-in-interest have been in continuous possession of Lots 1320
and 1333 for nearly 30 years in good faith and with just title. The tax declarations issued in the name of
Consolacion and the real estate taxes paid by private respondents are strong evidence of ownership over Lots
1320 and 1333. Petitioners late filing of the complaint, 30 years after the execution of the Absolute Sale or
seven years after the registration of the same, was considered by the trial court as laches.
The trial court gave more credence to the explanation of private respondents as to why the Absolute Sale
was altered. Consolacion noticed that the lot number of the second parcel of and sold to them by Filomena
under the Absolute Sale appeared to be Lot 2034 and not Lot 1333. Together with her husband, Julian,
Consolacion went to Filomena. It was Filomena who erased Lot 2034 in the deed of sale and changed it to Lot
1333. However, the copies of the document in the custody of the Notary Public were not correspondingly
corrected. Consequently, the copies kept by the Records Management and Archives Office still referred to the
second parcel of land sold as Lot 2034.
Based on its factual findings, the trial court held that private respondents are the legal owners of Lots 1320
and 1333. Private respondents are therefore entitled to just compensation for the portions of land taken by
public respondents from the two lots. However, the trial court ruled that private respondents could not recover
attorneys fees since there was no indication that the complaint was maliciously filed and intended to prejudice
private respondents. The trial court held that petitioners filed the action in good faith, believing that they were
the real owners of the two lots.

The Ruling of the Court of Appeals

 20

The Court of Appeals sustained the factual findings of the trial court, specifically the six points enumerated
by the trial court establishing Lots 1320 and 1333 as the objects of the Absolute Sale. Applying Article 1370 of
the Civil Code,[9] the Court of Appeals agreed with the trial court that there could be no room for interpretation
as to the intention of the parties on the objects of their contract.
The Court of Appeals upheld the ruling of the trial court that private respondents are not entitled to
attorneys fees and damages. The Court of Appeals opined that while there might have been incipient greed
when the DPWH and DOTC notified petitioners of the just compensation from the government, there was,
however, no evidence that petitioners filed the complaint in bad faith. There was nothing in the records to
indicate that petitioners had actual or constructive knowledge of the sale of the two lots to Julian. The
document on file with the Records Management archives Office alluded to a parcel of land denominated as Lot
2034 which is different from the property in question, Lot 1333. It was only during the hearing of the case that it
was made clear through the presentation of evidence that the lot referred to in the Absolute Sale was Lot 1333,
not Lot 2034, in addition to Lot 1320.

The Courts Ruling

At the outset, it must be pointed out that this petition was seasonably filed, contrary to private respondents
contention that it was filed one day late. Petitioners had until January 17, 1999 to file this petition, which was a
Sunday. Since the last day for filing this petition fell on a Sunday, the time to file the petition would not have run
until the next working day.[11] Petitioners filed the petition the next working day, January 18, 1999. Plainly then,
the petition was filed on time.
The petition, however, must fail on substantive grounds.
Petitioners implore the Court to declare the Absolute Sale void for failing to identify with certainty the two
parcels of land sold by Filomena, their mother, to private respondents. However, there is no valid ground for
annulling the Absolute Sale. The Absolute Sale is clear as to the first parcel of lot sold, which is Lot 1320. What
raises some doubt is the identity of the second parcel of lot sold, Is it Lot 2034 as indicated in the registered
copy of the Absolute Sale? Or is it Lot 1333 as made to appear in the copy of the Absolute Sale of private
respondents?
In civil cases, the party with the burden of proof must establish his case by a preponderance of
evidence.[12] By preponderance of evidence is meant that the evidence as a whole adduced by one side is
superior to that of the other.[13] Petitioners have the burden of proving that Lot 2034 was the real object of the
Absolute Sale and the alteration of the same instrument was unauthorized, warranting the absolute nullification
of the sale. The trial court and the Court of Appeals found the evidence of private respondents far more
convincing in explaining the alteration in their copy of the Absolute Sale. Both courts ruled that the correction
was made by the parties to reflect the true object of the sale, which was Lot 1333, not Lot 2034. In arriving at
this conclusion, the two courts considered contemporaneous and subsequent acts that indicate that what
Filomena actually sold to private respondents were Lots 1320 and 1333. These factual findings are binding
upon the Court.[14]
As a rule, the appellate jurisdiction of the Court is limited only to question of law. [15] There is a question of
law in a given case when the doubt or difference arises as to what the law is given a certain set of facts, and
there is a question of fact when the doubt arises as to the truth or the falsity of the alleged facts.[16] No
exceptional circumstances are present in this case that would justify a re-evaluation of the factual findings of
the trial court and the Court of Appeals, findings that are duly supported by evidence of record.
Petitioners insist that there is serious doubt as to the identity of the objects of the Absolute Sale because
the descriptions of Lots 1320 and 1333 in the Absolute Sale do not correspond to the technical descriptions of
the two lots as found by the Bureau of Lands. Petitioners direct the Courts attention to these discrepancies:
We are not persuaded. Petitioners rely on the technical descriptions of Lots 1320 and 1333 that were
issued by the Bureau of Lands on November 8, 1988. It must be pointed out that when private respondents
and Filomena executed the sale in 1959, they based the description of the two lots on the tax declarations of
Filomena. Early tax declarations are, more often than not, based on approximation or estimation rather than on
computation.[19] This is understandably so because of the absence then of technical knowledge in the accurate
measurement of lands.[20] What really defines a piece of land is not the area mentioned in its description, but
the boundaries therein laid down, as enclosing the land and indicating its limits.[21] In this case, the boundaries
of the two lots are sufficiently designated in the Absolute Sale, leaving no room to doubt the identity of the
objects of the sale.
Petitioners anchor their right of ownership over Lots 1320 and 1333 as the sole heirs of their mother,
Filomena, who previously owned the lots. However, Filomena had already ceded her right of ownership over
Lots 1320 and 1333 to private respondents when she executed the Absolute Sale. A sale of real property is a
contract transferring dominion and other real rights in the thing sold.[22] Proof of the conveyance of ownership is
the fact that from the time of the sale, or after more than 30 years, private respondents have been in
 21

possession of Lots 1320 and 1333. Petitioners on the other hand have never been in possession of the two
lots.
Filomena died sometime in 1985[23] and petitioners instituted the complaint four years after Filomenas
death. It is unthinkable for Filomena to have allowed private respondents to enjoy ownership of Lots 1320 and
1333 if she never really intended to sell the two lots to private respondents or if she had Lot 2034 in mind when
she signed the Absolute Sale. In the first place, Lot 2034 could not have been contemplated by the parties
since this parcel of land was never owned by Filomena, or by her mother, Paulina. Secondly, Lot 2034 does
not fit the description of the second parcel of lot mentioned in the Absolute Sale. The Absolute Sale describes
the second lot as located in Barangay Baybay, Roxas City. Lot 2034 is situated in Barangay Culasi, Roxas
City.
In resolving the similar case of Atilano vs. Atilano,[24] where there was also a mistake in the designation
of the lot number sold, the Court took into account facts and circumstances to uncover the true intentions of the
parties. The Court held that when one sells or buys real property, one sells or buys the property as he sees it,
in its actual setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the
certificate of title. As long as the true intentions of the parties are evident, the mistake will not vitiate the
consent of the parties, or affect the validity and binding effect of the contract between them. In this case, the
evidence shows that the designation of the second parcel of land sold as Lot 2034 was merely an oversight or
a typographical error. The intention of the parties to the Absolute Sale became unmistakably clear when
private respondents, as vendees, took possession of Lots 1320 and 1333 in the concept of owners without the
objection of Filomena, the vendor.
Petitioners harp on the fact that the notarized and registered copy of the Absolute Sale should have, been
correspondingly corrected. Petitioners believe that the notarized and archived copy should prevail. We
disagree. A 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.[25] Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith with their respective contractual
commitments.[26] Article 1358 of the Civil Code, which requires certain contracts to be embodied in a public
instrument, is only for convenience, and registration of the instrument is needed only to adversely affect third
parties.[27] Formal requirements are, therefore, for the purpose of binding or informing third parties. [28] Non-
compliance with formal requirements does not adversely affect the validity of the contract or the contractual
rights and obligations of the parties.[29]
Petitioners fault the trial court for declaring that Lots 1333 and 1320 can be acquired by prescription even
though these lots are already covered by certificates of title. The real issue in this case is the true intentions of
the parties to the Absolute Sale, not adverse possession. The decisions of the trial court and the Court of
Appeals are clear on this point. In fact, the Court of Appeals no longer dealt with the issue of acquisitive
prescription since it was already convinced that private respondents right over Lots 1333 and 1320 emanates
from the Absolute Sale.
In a desperate bid to compel the Court to disregard the evidence of private respondents, petitioners
question the admissibility of the testimony of Consolacion on the ground that it violates the Dead Mans Statute.
Petitioners contend that Consolacions testimony as to how the alteration of the Absolute Sale took place
should have been disregarded since at the time that Consolacion testified, death had already sealed the lips of
Filomena, precluding petitioners from refuting Consolacions version.
The contention is without basis. The Dead Mans Statute then embodied in Section 20 (a) of Rule 130 of
the 1988 Rules of Court provides:

SEC. 20. Disqualification by reason of interest or relationship. - The following persons cannot testify as to
matters in which they are interested, directly or indirectly, as herein enumerated:

(a) Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an
executor or administrator or other representative of a deceased person, or against a person of unsound mind,
upon a claim or demand against the estate of such deceased person or against such person of unsound mind,
cannot testify as to any matter of fact occurring before the death of such deceased person or before such
person became of unsound mind;

The foregoing prohibition applies to a case against the administrator or representative of an estate upon a
claim against the estate of the deceased person.[30] The present case was not filed against the administrator of
the estate, nor was it filed upon claims against the estate since it was the heirs of Filomena who filed the
complaint against private respondents. Even assuming that Consolacions testimony was within the purview of
the Dead Mans Statute, the fact that the counsel of petitioners failed to timely object to the admissibility of
Consolacions testimony is a waiver of the prohibition.[31] The waiver was made more evident when the counsel
of petitioners cross-examined Consolacion.[32] Petitioners cannot now invoke the rule they knowingly waived.
From the time of the execution of the Absolute Sale on April 24, 1959, private respondents became the
owners of Lots 1320 and 1333. The expropriation of any portion of the two lots from the time of the execution
 22

of the Absolute Sale would necessarily entitle private respondents to the payment of just compensation. We
cannot, however, agree with the trial court and the Court of Appeals that public respondents could be ordered
to pay private respondents just compensation in the same suit. Public respondents were impleaded in this case
when petitioners filed a cross-claim against them for just compensation. The cross-claim should have been
dismissed, as it does not comply with Section 7 of Rule 6 of the 1988 Rules of Court. The rule provides:

SEC. 7. Cross-claim. A cross-claim is any claim by one party against a co-party arising out of the transaction or
occurrence that is the subject matter either of the original action or of a counterclaim therein. Such cross-claim
may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or
part of a claim asserted in the action against the cross-claimant.

Based on the foregoing rule, the cross-claim is proper only when:

1. It arises out of the subject matter of the complaint.

2. It is filed against a co-party.

3. The cross-claimant stands to be prejudiced by the filing of the action against him.[33]

The three requisites are absent in this case. The cross-claim for just compensation is a new matter raising
a new cause of action that must be litigated in a separate action, not in the same action for the nullification of
contract. The purpose of a cross-claim is to avoid multiplicity of suits.[34] Multiplicity of suits should be avoided if
the filing of a separate and independent action to recover a claim would entail proving exactly the same claim
in an existing action.[35] However, when the causes of action are distinct and separate from each other, as in
this case, the independent interest should be pursued in another proceeding. [36] Also, petitioners and public
respondents are not co-parties as they are not co-plaintiffs. Lastly, petitioners, as cross-claimants, would not
be prejudiced by the filing of the action since they are the plaintiffs in this case.
At any rate, private respondents are not left without any recourse. They can file their claim for
compensation with the proper government agency. Public respondent DPWH in its Comment points out that it
is now public respondent DOTC that has jurisdiction over the claim for compensation since the portions of the
properties subject of this case were taken to form part of the parking area of the Roxas Airport. [37] In the same
Comment, public respondent DPWH concedes that they have never denied their obligation from the very
beginning of this case.[38] Public respondents were only constrained to withhold payment of just compensation
as the reel owners of the lots In question were yet to be declared by the Court. Since the issue of ownership
has been settled, private respondents can now rightfully claim just compensation for the portions of Lots 1320
and 1333 taken by the government after the execution of the Absolute Sale.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 35540 is hereby AFFIRMED with
the MODIFICATION that the cross-claim against public respondents is DISMISSED. Costs against petitioners.

Ortega vs. Leonardo

Well known is the general rule in the Statute of Frauds precluding enforcement of oral contracts for the sale of
land. Not so well known is exception concerning the partially executed contracts 1 least our jurisprudence
offers few, if any, apposite illustrations. This appeal exemplifies such exception.

Alleging partial performance, plaintiff sought to compel defendant to comply with their oral contract of sale of a
parcel of land. Upon a motion to dismiss, the Manila court of first instance ordered dismissal following the
above general rule.

Hence this appeal. It should be sustained if the allegations of the complaint which the motion to dismiss
admitted set out an instance of partial performance.

Stripped of non-essentials, the complaint averred that long before and until her house had been completely
destroyed during the liberation of the City of Manila, plaintiff occupied a parcel of land, designated as Lot 1,
Block 3 etc. (hereinafter called Lot I) located at San Andres Street, Malate, Manila; that after liberation she re-
occupied it; that when the administration and disposition of the said Lot I (together with other lots in the Ana
Sarmiento Estate) were assigned by the Government to the Rural Progress Administration 2 plaintiff asserted
her right thereto (as occupant) for purposes of purchase; that defendant also asserted a similar right, alleging
occupancy of a portion of the land subsequent to plaintiff's; that during the investigation of such conflicting
interests, defendant asked plaintiff to desist from pressing her claim and definitely promised that if and when
he succeeded in getting title to Lot I3 , he would sell to her a portion thereof with an area of 55.60 square
meters (particularly described) at the rate of P25.00 per square meter, provided she paid for the surveying and
subdivision of the Lot and provided further that after he acquired title, she could continue holding the lot as
tenant by paying a monthly rental of P10.00 until said portion shall have been segregated and the purchase
 23

price fully paid; that plaintiff accepted defendant's offer, and desisted from further claiming Lot I; that defendant
finally acquired title thereto; that relying upon their agreement, plaintiff caused the survey and segregation of
the portion which defendant had promised to sell incurring expenses therefor, said portion being now
designated as Lot I-B in a duly prepared and approved subdivision plan; that in remodelling her son's house
constructed on a lot adjoining Lot I she extended it over said Lot I-B; that after defendant had acquired Lot I
plaintiff regularly paid him the monthly rental of P10.00; that in July 1954, after the plans of subdivision and
segregation of the lot had been approved by the Bureau of Lands, plaintiff tendered to defendant the purchase
price which the latter refused to accept, without cause or reason.

The court below explained in its order of dismissal:

It is admitted by both parties that an oral agreement to sell a piece of land is not enforceable. (Art.
1403, Civil Code, Section 21, Rule 123, Rules of Court.) Plaintiff, however, argues that the contract in
question, although verbal, was partially performed because plaintiff desisted from claiming the portion
of lot I in question due to the promise of defendant to transfer said portion to her after the issuance of
title to defendant. The court thinks that even granting that plaintiff really desisted to claim not on oral
promise to sell made by defendant, the oral promise to sell cannot be enforced. The desistance to claim
is not a part of the contract of sale of the land. Only in essential part of the executory contract will, if it
has already been performed, make the verbal contract enforceable, payment of price being an essential
part of the contract of sale.

If the above means that partial performance of a sale contract occurs only when part of the purchase price is
paid, it surely constitutes a defective statement of the law. American Jurisprudence in its title "Statute of
Frauds" lists other acts of partial performance, such as possession, the making of improvements, rendition of
services, payment of taxes, relinquishment of rights, etc.

Thus, it is stated that "The continuance in possession may, in a proper case, be sufficiently referable to the
parol contract of sale to constitute a part performance thereof. There may be additional acts or peculiar
circumstances which sufficiently refer the possession to the contract. . . . Continued possession under an oral
contract of sale, by one already in possession as a tenant, has been held a sufficient part performance, where
accompanied by other acts which characterize the continued possession and refer it to the contract of
purchase. Especially is this true where the circumstances of the case include the making of substantial,
permanent, and valuable improvements." (49 American Jurisprudence 44)

It is also stated that "The making of valuable permanent improvements on the land by the purchaser, in
pursuance of the agreement and with the knowledge of the vendor, has been said to be the strongest and the
most unequivocal act of part performance by which a verbal contract to sell land is taken out of the statute of
frauds, and is ordinarily an important element in such part performance. . . . Possession by the purchaser
under a parol contract for the purchase of real property, together with his making valuable and permanent
improvements on the property which are referable exclusively to the contract, in reliance on the contract, in the
honest belief that he has a right to make them, and with the knowledge and consent or acquiescence of the
vendor, is deemed a part performance of the contract. The entry into possession and the making of the
improvements are held on amount to such an alteration in the purchaser's position as will warrant the court's
entering a degree of specific performance." (49 American Jurisprudence p.755, 756.)

Again, it is stated that "A tender or offer of payment, declined by the vendor, has been said to be equivalent to
actual payment, for the purposes of determining whether or not there has been a part performance of the
contract. This is apparently true where the tender is by a purchaser who has made improvements. But the
doctrine now generally accepted, that not even the payment of the purchase price, without something more, . .
. is a sufficient part performance. (49 American Jurisprudence p. 772.)

And the relinquishment of rights or the compromise thereof has likewise been held to constitute part
performance. (See same title secs. 473, 474, 475.)

In the light of the above four paragraphs, it would appear that the complaint in this case described several
circumstance indicating partial performance: relinquishment of rights4 continued possession, building of
improvements, tender of payment plus the surveying of the lot at plaintiff's expense and the payment of rentals.

We shall not take, time to discuss whether one or the other or any two or three of them constituted sufficient
performance to take the matter away from the operation of the Statute of Frauds. Enough to hold that the
combination of all of them amounted to partial performance; and we do so line with the accepted basis of the
doctrine, that it would be a fraud upon the plaintiff if the defendant were permitted to oppose performance of
his part after he has allowed or induced the former to perform in reliance upon the agreement. (See 49
American Jurisprudence p. 725.)
 24

The paragraph immediately preceding will serve as our comment on the appellee's quotations from American
Jurisprudence itself to the effect that "relinquishment" is not part performance, and that neither "surveying the
land"5nor tender of payment is sufficient. The precedents hereinabove transcribed oppose or explain away or
qualify the appellee's citations. And at the risk of being repetitious we say: granting that none of the three
circumstances indicated by him, (relinquishment, survey, tender) would separately suffice, still
the combination of the three with the others already mentioned, amounts to more than enough.