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Noel vs.

Hilaria and Gregorio (Sps. Nanaman) were childless. Gregorio, however, had a child
named Virgilio, by another woman, which they reared as if like it was their own. When
Gregorio died, Hilaria administered the properties left his husband. With the help of
Virgilio, they enjoyed the land to the exclusion of Gregorios brother and other children
by also another woman. Virgilio declared te land in his name for taxation purposes
reflected in a Tax Declaration. Sometime after, the land was mortgage by Hilaria and
Virgilio to the private respondent, DELESTE. The same land was subsequently sold to
Deleste and another tax declaration was issued, now, in favor of the private
When Hilaria died, the other children of Gregorio filed an intestate claim over the
estate of their father. Also, Gregorios brother raised that he should be included as heir
of Gregorio. Hence, the case was consolidated. The petition was further amended to
include the estate of Hilaria and his brother and his brothers son to be additional
Juan Nanaman (Brother of Gregorio ) as appointed as administrator of the land,
included the entire lot (34.7 hectares) in the list of assets of the estate. Edilberto Noel
subsequently took over as administrator of the estate. Noel was not able to take
possession of the land since it was in the possession of DELESTE and some heirs of
Thereafter, DELESTE and the heirs of the Sps. Nanaman(children of gregorio and
relatives of Hilaria_ executed an amicable settlement of the Nanaman Estate, Deleste
agreed to relinquish his rights over of the entire land sold to him by Hilaria and
Virgilio in favor of the heirs. It was approved by the court but was rendered null and
void because not all heirs have agreed.
The court ordered noel to file an action to recover the ENTIRE land from Deleste,
which he did.
RTC: Sale of entire land even if the said land was conjugal is valid since Hilaria acted
as an administratrix of the estate of Gregorio, in which proceeds were used to pay
debts of the conjugal property.
CA: Noel appealed to the Court of Appeals. In its Decision of February 18, 1980, the
appellate court ruled that the transaction between Hilaria and Virgilio on one hand

and private respondent on the other, was indeed a sale. It found that no fraud,
mistake or misrepresentation attended in the execution of the deed of sale and that no
proof was shown that the contract was merely a mortgage.
The appellate court, however, agreed with Noel that Hilaria could not validly sell the
37.7-hectare land because it was conjugal property, and Hilaria could sell only her
one-half share thereof.
CA AMENDED: Decision of the trial court affirmed. They relied heavily that the
respondents slept on their rights, raising the ground of prescription.
ISSUE: whether or not the contract of sale is valid.
Under Spanish law which was effective at the time of death of Gregorio. Hilaria could
only obtain the undivided share of the estate which she could validly alienate. And
with respect to Virgilio, the Spanish law does not give right over an illegitimate child
inheritance. Hence, with respect to his share, he cannot validly alienate it.
SC: On the other hand, Virgilio was not an heir of Gregorio under the Spanish Civil
Code of 1889. Although he was treated as a child by the Nanaman spouses,
illegitimate children who were not natural were disqualified to inherit under the said
Code (Cid v. Burnaman, 24 SCRA 434 [1968]). Article 998 of the Civil Code of the
Philippines, which gave an illegitimate child certain hereditary rights, could not benefit
Virgilio because the right of ownership of the collateral heirs of Gregorio had become
vested upon his death (Civil Code of the Philippines, Art. 2253; Uson v. Del Rosario, 92
Phil. 530 [1953]). Therefore, Virgilio had no right at all to transfer ownership over
which he did not own.
In a contract of sale, it is essential that the seller is the owner of the property he is
selling. The principal obligation of a seller is "to transfer the ownership of" the property
sold (Civil Code of the Philippines, Art. 1458). This law stems from the principle that
nobody can dispose of that which does not belong to him (Azcona v. Reyes, 59 Phil.
446 [1934]; Coronel v. Ona, 33 Phil. 456 [1916). NEMO DAT QUAD NON HABET .
Ratio: What Noel is trying to tell us is that a person cannot sell what he does not own.
However, nowhere in the decision states that the sale will be void if there is no
ownership by the seller at the time of perfection. This is consistent with Article 1459
which states that the vendor must have a right to transfer the ownership thereof at the
time it is delivered.

Nool vs. CA
Two (2) parcels of land are in dispute and litigated upon here. The first has an area of
1 hectare. It was formerly owned by Victorino Nool and covered by Transfer Certificate
of Title No. T-74950. With an area of 3.0880 hectares, the other parcel was previously
owned by Francisco Nool under Transfer Certificate of Title No. T-100945. Both parcels
are situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool and
Gaudencio Almojera, now the appellants, seek recovery of the aforementioned parcels
of land from the defendants, Anacleto Nool, a younger brother of Conchita, and Emilia
Nebre, now the appellees.
Conchita and Gaudencio (C&G) mortgaged the real properties with the DBP.
Thereafter, the properties were foreclosed. Within the redemption period, C&G
contacted Anacleto to redeem the foreclosed properties, which he did. As a result, the
two lands were transferred in the name of A. As part of their agreement and
understanding, A agreed to buy from C&G the properties for 100k, 30k of which the
price was paid to C&G and upon payment of the balance of 14k, C&G will regain the
two hectares of land, which the defendant failed to pay. On the same day the
agreement was made, another covenant was entered into by the parties; whereby A
agreed to return the lands to C&G at any time C&G have the necessary amount to
redeem the land. A signed the private writing, agreeing to return subject lands when
plaintiffs have the money to redeem the same; A having been made to believe, then,
that his sister, Conchita, still had the right to redeem the said properties.
RTC: Private writing only an option to sell and considered validly withdrawn for want
of consideration. Hence, the said writing is not binding.
Worthy to stress is that the DBP where the land was mortgaged, certified that the
redemption period of the foreclosed property prescribed, making DBP as the rightful
owner of the land. It is only upon a conditional sale that it was redeemed by A, which
was evidenced by a certificate of title.
ISSUE: W/N the sale is valid, making the right of repurchase likewise valid.
Held: Not valid.
One repurchases only what one has previously sold. In other words, the right to
repurchase presupposes a valid contract of sale between the same parties.
Undisputedly, private respondents acquired title to the property from DBP, and not
from the petitioners.

In the present case however, it is likewise clear that the sellers can no longer deliver
the object of the sale to the buyers, as the buyers themselves have already acquired
title and delivery thereof from the rightful owner, the DBP. Thus, such contract may be
deemed to be inoperative[20] and may thus fall, by analogy, under item no. 5 of Article
1409 of the Civil Code: Those which contemplate an impossible service. Article 1459 of
the Civil Code provides that the vendor must have a right to transfer the ownership
thereof [object of the sale] at the time it is delivered. Here, delivery of ownership is no
longer possible. It has become impossible.
Furthermore, Article 1505 of the Civil Code provides that where goods are sold by a
person who is not the owner thereof, and who does not sell them under authority or
with consent of the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct precluded from denying the
sellers authority to sell. Here, there is no allegation at all that petitioners were
authorized by DBP to sell the property to the private respondents. Jurisprudence, on
the other hand, teaches us that a person can sell only what he owns or is authorized
to sell; the buyer can as a consequence acquire no more than what the seller can
legally transfer. No one can give what he does not have neno dat quod non habet. On
the other hand, Exhibit D presupposes that petitioners could repurchase the property
that they sold to private respondents. As petitioners sold nothing, it follows that they
can also repurchase nothing. Nothing sold, nothing to repurchase. In this light, the
contract of repurchase is also inoperative and by the same analogy, void.
Villanueva: The problem in Nool is that it equated the primary obligation in a contract
of sale to transfer ownership and deliver possession as service. It must not be
forgotten, a contract of sale gives rise to a real obligation, which is to give and not an
obligation to do which is the prestation in a service. Further, a contract of sale can
be enforced by specific performance, which is to give to the prestation due. On the
other hand, service cannot be subject to the remedy of specific performance, since it
will constitute involuntary servitude.

Villaflor vs. CA
FACTS: On 16 January 1940, Cirilo Piencenaves, in a Deed of Absolute Sale, sold to
Vicente Villafor, a parcel of agricultural land (planted to Abaca) containing an area of
50 hectares, more or less. The deed states that the land was sold to Villaflor on 22
June1937, but no formal document was then executed, and since then until the
present time, Villaflor has been in possession and occupation of the same. Before the

sale of said property, Piencenaves inherited said property form his parents and was in
adverse possession of such without interruption for more than 50 years. On the same
day, Claudio Otero, in a Deed of Absolute Sale sold to Villaflor a parcel of agricultural
land (planted to corn), containing an area of 24 hectares, more or less; Hermogenes
Patete, in a Deed of Absolute Sale sold to Villaflor, a parcel of agricultural land
(planted to abaca and corn), containing an area of 20 hectares, more or less. Both
deed state the same details or circumstances as that of Piencenaves. On 15 February
1940, Fermin Bocobo, in a Deed of Absolute Sale sold to Villaflor, a parcel of
agricultural land (planted with abaca), containing an area of 18 hectares, more or less.
On 8 November 1946, Villaflor leased to Nasipit Lumber Co., Inc. a parcel of land,
containing an area of 2 hectares, together with all the improvements existing thereon,
for a period of 5 years (from 1 June 1946) at a rental of P200.00 per annum to cover
the annual rental of house and building sites for 33 houses or buildings. The lease
agreement allowed the lessee to sublease the premises to any person, firm or
corporation; and to build and construct additional houses with the condition the
lessee shall pay to the lessor the amount of 50 centavos per month for every house
and building; provided that said constructions and improvements become the property
of the lessor at the end of the lease without obligation on the part of the latter for
expenses incurred in the construction of the same.
On 7 July 1948, in an Agreement to Sell Villaflor conveyed to Nasipit Lumber, 2
parcels of land. Parcel 1 contains an area of 112,000 hectares more or less, divided
into lots 5412, 5413, 5488, 5490,5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854,
5855, 5859, 5858, 5857, 5853, and 5852; and containing abaca, fruit trees, coconuts
and thirty houses of mixed materials belonging to the Nasipit Lumber Company. Parcel
2 contains an area of 48,000more or less, divided into lots 5411, 5410, 5409, and
5399, and containing 100 coconut trees, productive, and 300 cacao trees. From said
day, the parties agreed that Nasipit Lumber shall continue to occupy the property not
anymore in concept of lessee but as prospective owners.
On 2 December 1948, Villaflor filed Sales Application V-807 with the Bureau of Lands,
Manila, to purchase under the provisions of Chapter V, XI or IX of CA 141 (The Public
Lands Act), as amended, the tract of public lands. Paragraph 6 of the Application,
states: I understand that this application conveys no right to occupy the land prior to
its approval, and I recognize that the land covered by the same is of public domain and
any and all rights I may have with respect thereto by virtue of continuous occupation
and cultivation are hereby relinquished to the Government.

On 7 December 1948, Villaflor and Nasipit Lumber executed an Agreement,

confirming the Agreement to Sell of 7 July 1948, but with reference to the Sales
Application filed with the Bureau of Land. On 31 December 1949, the Report by the
public land inspector (District Land Office, Bureau of Lands, in Butuan) contained an
endorsement of the said officer recommending rejection of the Sales Application of
Villaflor for having leased the property to another even before he had acquired
transmissible rights thereto. In a letter of Villaflor dated 23 January1950, addressed
to the Bureau of Lands, he informed the Bureau Director that he was already
occupying the property when the Bureaus Agusan River Valley Subdivision Project
was inaugurated, that the property was formerly claimed as private property, and that
therefore, the property was segregated or excluded from disposition because of the
claim of private ownership. Likewise, in a letter of Nasipit Lumber dated 22 February
1950 addressed to the Director of Lands, the corporation informed the Bureau that it
recognized Villaflor as the real owner, claimant and occupant of the land; that since
June 1946, Villaflor leased 2hectares inside the land to the company; that it has no
other interest on the land; and that the Sales Application of Villaflor should be given
favorable consideration.
On 24 July 1950, the scheduled date of auction of the property covered by the Sales
Application, Nasipit Lumber offered the highest bid of P41.00 per hectare, but since an
applicant under CA 141, is allowed to equal the bid of the highest bidder, Villaflor
tendered an equal bid, deposited the equivalent of 10% of the bid price and then paid
the assessment in full.
On 16 August 1950, Villaflor executed a document, denominated as a Deed of
Relinquishment of Rights, in favor on Nasipit Lumber, in consideration of the amount
of P5,000 that was to be reimbursed to the former representing part of the purchase
price of the land, the value of the improvements Villaflor introduced thereon, and the
expenses incurred in the publication of the Notice of Sale; in light of his difficulty to
develop the same as Villaflor has moved to Manila. Pursuant thereto, on 16
August1950, Nasipit Lumber filed a Sales Application over the 2 parcels of land,
covering an area of 140 hectares, more or less. This application was also numbered V807. On 17 August 1950 the Director of Lands issued an Order of Award in favor of
Nasipit Lumber; and its application was entered in the record as Sales Entry V-407.On
27 November 1973, Villafor wrote a letter to Nasipit Lumber, reminding the latter of
their verbal agreement in 1955; but the new set of corporate officers refused to
recognize Villaflors claim.

In a formal protest dated 31 January 1974 which Villaflor filed with the Bureau of
Lands, he protested the Sales Application of Nasipit Lumber, claiming that the
company has not paid him P5,000.00 as provided in the Deed of Relinquishment of
Rights dated 16 August 1950. On 8 August 1977, the Director of Lands found that the
payment of the amount of P5,000.00 in the Deed and the consideration in the
Agreement to Sell were duly proven, and ordered the dismissal of Villaflors protest.
On 6 July 1978, Villaflor filed a complaint in the trial court for Declaration of Nullity
of Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels
of land subject of the contract), and Damages at about the same time that he
appealed the decision of the Minister of Natural Resources to the Office of the
President. On 28 January 1983, he died. The trial court ordered his widow, Lourdes D.
Villaflor, to be substituted as petitioner. After trial in due course, the then CFI Agusan
del Norte and Butuan City, Branch III, dismissed the complaint on the grounds that:
(1) petitioner admitted the due execution and genuineness of the contract and was
estopped from proving its nullity, (2) the verbal lease agreements were unenforceable
under Article 1403 (2)(e) of the Civil Code, and (3) his causes of action were barred by
extinctive prescription and/or laches. It ruled that there was prescription and/or
laches because the alleged verbal lease ended in 1966, but the action was filed only on
6 January 1978. The 6-year period within which to file an action on an oral contract
per Article 1145 (1) of the Civil Code expired in 1972. Nasipit Lumber was declared the
lawful owner and actual physical possessor of the 2 parcels of land (containing a total
area of 160 hectares). The Agreements to Sell Real Rights and the Deed of
Relinquishment of Rights over the 2 parcels were likewise declared binding between
the parties, their successors and assigns; with double costs against Villaflor. The heirs
of petitioner appealed to the Court of Appeals which, however, rendered judgment
against them via the assailed Decision dated 27 September 1990 finding petitioners
prayers (1) for the declaration of nullity of the deed of relinquishment, (2) for the
eviction of private respondent from the property and (3) for the declaration of
petitioners heirs as owners to be without basis.
Not satisfied, petitioners heirs filed the petition for review dated 7 December 1990. In
a Resolution dated 23 June 1991, the Court denied this petition for being late. On
reconsideration, the Court reinstated the petition.
ISSUE: Whether the sale is valid or void for the alleged existence of simulation of
HELD: The provision of the law is specific that public lands can only be acquired in
the manner provided for therein and not otherwise(Sec. 11, CA. No. 141, as amended).

In his sales application, petitioner expressly admitted that said property was public
land. This is formidable evidence as it amounts to an admission against interest. The
records show that Villaflor had applied for the purchase of lands in question with this
Office (Sales Application V-807) on 2 December 948. There is a condition in the sales
application to the effect that he recognizes that the land covered by the same is of
public domain and any and all rights he may have with respect thereto by virtue of
continuous occupation and cultivation are relinquished to the Government of which
Villaflor is very much aware. It also appears that Villaflor had paid for the publication
fees appurtenant to the sale of the land. He participated in the public auction where
he was declared the successful bidder. He had fully paid the purchase price thereof. It
would be a height of absurdity for Villaflor to be buying that which is owned by him if
his claim of private ownership thereof is to be believed. The area in dispute is not the
private property of the petitioner.
It is a basic assumption of public policy that lands of whatever classification belong to
the state. Unless alienated in accordance with law, it retains its rights over the same
as dominus. No public land can be acquired by private persons without any grant,
express or implied from the government. It is indispensable then that there be showing
of title from the state or any other mode of acquisition recognized by law. s such sales
applicant manifestly acknowledged that he does not own the land and that the same is
a public land under the administration of the Bureau of Lands, to which the
application was submitted, all of its acts prior thereof, including its real estate tax
declarations, characterized its possessions of the land as that of a sales applicant.
And consequently, as one who expects to buy it, but has not as yet done so, and is not,
therefore, its owner.
The rule on the interpretation of contracts (Article 1371) is used in affirming, not
negating, their validity. Article 1373, which is a conjunct of Article 1371, provides that,
if the instrument is susceptible of two or more interpretations, the interpretation
which will make it valid and effectual should be adopted. In this light, it is not difficult
to understand that the legal basis urged by petitioner does not support his allegation
that the contracts to sell and the deed of relinquishment are simulated and fictitious.
Simulation occurs when an apparent contract is a declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the purpose of
deception, the appearance of a juridical act which does not exist or is different from
that which was really executed. Such an intention is not apparent in the agreements.
The intent to sell, on the other hand, is as clear as daylight. The fact, that the
agreement to sell (7 December 1948) did not absolutely transfer ownership of the land

to private respondent, does not show that the agreement was simulated. Petitioners
delivery of the Certificate of Ownership and execution of the deed of absolute sale were
suspensive conditions, which gave rise to a corresponding obligation on the part of the
private respondent, i.e., the payment of the last installment of the consideration
mentioned in the Agreement. Such conditions did not affect the perfection of the
contract or prove simulation
Nonpayment, at most, gives the vendor only the right to sue for collection. Generally,
in a contract of sale, payment of the price is a resolutory condition and the remedy of
the seller is to exact fulfillment or, in case of a substantial breach, to rescind the
contract under Article 1191 of the Civil Code. However, failure to pay is not even a
breach, but merely an event which prevents the vendors obligation to convey title from
acquiring binding force.
T he requirements for a sales application under the Public Land Act are: (1) the
possession of the qualifications required by said Act (under Section 29) and (2) the
lack of the disqualifications mentioned therein (under Sections 121, 122, and 123).
Section121 of the Act pertains to acquisitions of public land by a corporation from a
grantee: The private respondent, not the petitioner, was the direct grantee of the
disputed land. Sections 122 and 123 disqualify corporations, which are not authorized
by their charter, from acquiring public land; the records do not show that private
respondent was not so authorized under its charter
The Supreme Court dismissed the petition.


FACTS: A parcel of land (Lot 115-A-1 of subdivision plan [LRC] Psd-32117, a portion of
Lot 115-A described on Plan Psd-55228, LRC[GLRO] Record 8374, located in
Poblacion, Binan, Laguna, and containing 753 sq.m., TCT T-32007) was originally
owned in common by the siblings Mariano and Gaudencia Zarraga, who inherited it
from their father. Mariano predeceased his sister who died single, without offspring on
5 August 1983, at the age of 97. Victorina Zarraga vda. de Loyola and Cecilia Zarraga,
are sisters of Gaudencia and Mariano. The property was subject of Civil Case B-1094
before the then CFI Laguna (Branch 1, Spouses Romualdo Zarraga, et al. v .Gaudencia
Zarraga, et al.). Romualdo Zarraga was the plaintiff in Civil Case B-1094. The
defendants were his siblings: Nieves, Romana, Guillermo, Purificacion, Angeles,
Roberto, Estrella, and Jose, all surnamed Zarraga, as well as his aunt, Gaudencia.

The trial court decided Civil Case B-1094 in favor of the defendants. Gaudencia was
adjudged owner of the 1/2 portion of Lot 115-A-1. Romualdo elevated the decision to
the Court of Appeals and later the Supreme Court. The petition (GR 59529) was
denied by the Court on 17 March 1982.On 24 August 1980, nearly 3 years before the
death of Gaudencia while GR 59529 was still pending before the Supreme Court.
On said date, Gaudencia allegedly sold to the children of Mariano Zarraga (Nieves,
Romana, Romualdo, Guillermo, Lucia, Purificacion, Angeles, Roberto, Estrella Zarraga)
and the heirs of Jose Zarraga Aurora, Marita, Jose, Ronaldo, Victor, Lauriano,and
Ariel Zarraga; first cousins of the Loyolas) her share in Lot 115-A- 1 for P34,000.00.
The sale was evidenced by a notarizeddocument denominated as Bilihang Tuluyan ng
Kalahati (1/2) ng Isang Lagay na Lupa. Romualdo, the petitioner in GR 59529, was
among the vendees.The decision in Civil Case B-1094 became final. The children of
Mariano Zarraga and the heirs of Jose Zarraga (privaterespondents) filed a motion for
On 16 February 1984, the sheriff executed the corresponding deed of reconveyance to
Gaudencia. On 23 July 1984, however, the Register of Deeds of Laguna, Calamba
Branch, issued in favor of private respondents, TCT T-116067, on the basis of the sale
on 24 August 1980 by Gaudencia to them. On 31 January 1985, Victorina and Cecilia
filed a complaint, docketed as Civil Case B-2194, with the RTC of Bian, Laguna, for
the purpose of annulling the sale and the TCT. Victorina died on 18 October 1989,
while Civil Case B-2194 was pending with the trial court. Cecilia died on 4 August
1990, unmarried and childless. Victorina and Cecilia were substituted by Ruben,
Candelaria,Lorenzo, Flora, Nicadro, Rosario, Teresita and Vicente Loyola as plaintiffs.
The trial court rendered judgment in favor of complainants; declaring the simulated
deed of absolute sale as well as the issuance of the corresponding TCT null and void,
ordering the Register of Deeds of Laguna to cancel TCT T-116087 and to issue another
one in favor of the plaintiffs and the defendants as co-owners and legal heirs of the
late Gaudencia, ordering the defendants to reconvey and deliver the possession of the
shares of the plaintiff on the subject property, ordering the defendants to pay P20,000
as attorneys fees and cost of suit, dismissing the petitioners claim for moral and
exemplary damages, and dismissing the defendants counterclaim for lack of merit. On
appeal, and on 31 August 1993, the appellate court reversed the trial court (CA-GR CV
36090). On September 15, 1993, the petitioners (as substitute parties for Victorina
and Cecilia, the original plaintiffs) filed a motion for reconsideration, which was denied
on 6 June 1994. Hence, the petition for review on certiorari.
ISSUE: Whether the alleged sale between Gaudencia and respondents is valid

HELD: Petitioners vigorously assail the validity of the execution of the deed of absolute
sale suggesting that since the notary public who prepared and acknowledged the
questioned Bilihan did not personally know Gaudencia, the execution of the deed was
suspect. The rule is that a notarized document carries the evidentiary weight
conferred upon it with respect to its due execution, and documents acknowledged
before a notary public have in their favor the presumption of regularity. By their failure
to overcome this presumption, with clear and convincing evidence, petitioners are
estopped from questioning the regularity of the execution of the deed.
Petitioners suggest that all the circumstances lead to the conclusion that the deed of
sale was simulated. Simulation is "the declaration of a fictitious will, deliberately made
by agreement of the parties, in order to produce, for the purposes of deception, the
appearances of a juridical act which does not exist or is different what that which was
really executed." Characteristic of simulation is that the apparent contract is not really
desired or intended to produce legal effect or in any way alter the juridical situation of
the parties. Perusal of the questioned deed will show that the sale of the property
would convert the co-owners to vendors and vendees, a clear alteration of the juridical
relationships. This is contrary to the requisite of simulation that the apparent contract
was not really meant to produce any legal effect. Also in a simulated contract, the
parties have no intention to be bound by the contract. But in this case, the parties
clearly intended to be bound by the contract of sale, an intention they did not deny.
The requisites for simulation are: (a) an outward declaration of will different from the
will of the parties; (b) the false appearance must have been intended by mutual
agreement; and (c) the purpose is to deceive third persons. None of these are present
in the assailed transaction.
Contracts are binding only upon the parties who execute them. Article 1311 of the
Civil Code clearly covers this situation. In the present case Romualdo had no
knowledge of the sale, and thus, he was a stranger and not a party to it. Even if
curiously Romualdo, one of those included as buyer in the deed of sale, was the one
who questioned Gaudencias ownership in Civil Case B-1094, Romana testified that
Romualdo really had no knowledge of the transaction and he was included as a buyer
of the land only because he was a brother.
Petitioners fault the Court of Appeals for not considering that at the time of the sale in
1980, Gaudencia was already 94 years old; that she was already weak; that she was
living with private respondent Romana; and was dependent upon the latter for her
daily needs, such that under these circumstances, fraud or undue influence was
exercised by Romana to obtain Gaudencia's consent to the sale. The rule on fraud is

that it is never presumed, but must be both alleged and proved. For a contract to be
annulled on the ground of fraud, it must be shown that the vendor never gave consent
to its execution. If a competent person has assented to a contract freely and fairly, said
person is bound. There also is a disputable presumption, that private transactions
have been fair and regular. Applied to contracts, the presumption is in favor of validity
and regularity. In this case, the allegation of fraud was unsupported, and the
presumption stands that the contract Gaudencia entered into was fair and regular.
Petitioners also claim that since Gaudencia was old and senile, she was incapable of
independent and clear judgment. However, a person is not incapacitated to contract
merely because of advanced years or by reason of physical infirmities. Only when such
age or infirmities impair his mental faculties to such extent as to prevent him from
properly, intelligently, and fairly protecting his property rights, is he considered
incapacitated. Petitioners show no proof that Gaudencia had lost control of her mental
faculties at the time of the sale. The notary public who interviewed her, testified that
when he talked to Gaudencia before preparing the deed of sale, she answered correctly
and he was convinced that Gaudencia was mentally fit and knew what she was doing.

Petitioners seem to be unsure whether they are assailing the sale of Lot 115-A-1 for
being absolutely simulated or for inadequacy of the price. These two grounds are
irreconcilable. If there exists an actual consideration for transfer evidenced by the
alleged act of sale, no matter how inadequate it be, the transaction could not be a
simulated sale. No reversible error was thus committed by the Court of Appeals in
refusing to annul the questioned sale for alleged inadequacy of the price
The Supreme Court denied the petition, and affirmed the assailed decision of the
Court of Appeals; with costs against petitioners

UY vs CA

FACTS: William Uy and Rodel Roxas are agents authorized to sell 8 parcels of land by
the owners thereof. By virtue of such authority, they offered to sell the lands, located
in Tuba, Tadiangan, Benguet to National Housing Authority (NHA) to be utilized and
developed as a housing project. On 14 February 1989, the NHA Board passed
Resolution 1632 approving the acquisition of said lands, with an area of 31.8231
hectares, at the cost of P23.867 million, pursuant to which the parties executed a
series of Deeds of Absolute Sale covering the subject lands. Of the 8 parcels of land,
however, only 5 were paid for by the NHA because of the report it received from the

Land Geosciences Bureau of the Department of Environment and Natural Resources

(DENR)that the remaining area is located at an active landslide area and therefore, not
suitable for development into a housing project.
On 22 November 1991, the NHA issued Resolution 2352 cancelling the sale over the 3
parcels of land. The NHA, through Resolution 2394, subsequently offered the amount
of P1.225 million to the landowners as daos perjuicios. On 9 March 1992, petitioners
Uy and Roxas filed before the RTC Quezon City a Complaint for Damages against NHA
and its General Manager Robert Balao. After trial, the RTC rendered a decision
declaring the cancellation of the contract to be justified. The trial court nevertheless
awarded damages to plaintiffs in the sum of P1.255 million, the same amount initially
offered by NHA to petitioners as damages.
Upon appeal by petitioners, the Court of Appeals reversed the decision of the trial
court and entered a new one dismissing the complaint. It held that since there was
sufficient justifiable basis in cancelling the sale, it saw no reason for the award of
damages. The Court of Appeals also noted that petitioners were mere attorneys-in-fact
and, therefore, not the real parties-in-interest in the action before the trial court. Their
motion for reconsideration having been denied, petitioners seek relief from the
Supreme Court.
ISSUES: 1) Whether the petitioners are real parties in interest
2) Whether the cancellation is justified

HELD: 1) Section 2, Rule 3 of the Rules of Court requires that every action must be
prosecuted and defended in the name of the real party-in-interest. The real party-ininterest is the party who stands to be benefited or injured by the judgment or the
party entitled to the avails of the suit. Interest, within the meaning of the rule,
means material interest, an interest in the issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental
interest. Cases construing the real party-in-interest provision can be more easily
understood if it is borne in mind that the true meaning of real party-in-interest may be
summarized as follows: An action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced.
Where the action is brought by an attorney-in-fact of a land owner in his name, (as in
our present action) and not in the name of his principal, the action was properly

dismissed because the rule is that every action must be prosecuted in the name of the
real parties-in-interest (Section 2, Rule 3, Rules of Court)
Petitioners claim that they lodged the complaint not in behalf of their principals but in
their own name as agents directly damaged by the termination of the contract.
Petitioners in this case purportedly brought the action for damages in their own name
and in their own behalf. An action shall be prosecuted in the name of the party who,
by the substantive law, has the right sought to be enforced. Petitioners are not parties
to the contract of sale between their principals and NHA. They are mere agents of the
owners of the land subject of the sale. As agents, they only render some service or do
something in representation or on behalf of their principals. The rendering of such
service did not make them parties to the contracts of sale executed in behalf of the
latter. Since a contract may be violated only by the parties thereto as against each
other, the real parties-in-interest, either as plaintiff or defendant, in an action upon
that contract must, generally, either be parties to said contract. Petitioners have not
shown that they are assignees of their principals to the subject contracts. While they
alleged that they made advances and that they suffered loss of commissions, they
have not established any agreement granting them "the right to receive payment and
out of the proceeds to reimburse [themselves] for advances and commissions before
turning the balance over to the principal[s]."
2) The right of rescission or, more accurately, resolution, of a party to an obligation
under Article 1191 is predicated on a breach of faith by the other party that violates
the reciprocity between them. The power to rescind, therefore, is given to the injured
party. Article 1191 states that the power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible. In the
present case, the NHA did not rescind the contract. Indeed, it did not have the right to
do so for the other parties to the contract, the vendors, did not commit any breach,
much less a substantial breach, of their obligation. Their obligation was merely to
deliver the parcels of land to the NHA, an obligation that they fulfilled. The NHA did
not suffer any injury by the performance thereof
The cancellation was not a rescission under Article 1191. Rather, the cancellation was
based on the negation of the cause arising from the realization that the lands, which
were the object of the sale, were not suitable for housing. Cause is the essential reason
which moves the contracting parties to enter into it. In other words, the cause is the

immediate, direct and proximate reason which justifies the creation of an obligation
through the will of the contracting parties. Cause, which is the essential reason for the
contract, should be distinguished from motive, which is the particular reason of a
contracting party which does not affect the other party. Ordinarily, a party's motives
for entering into the contract do not affect the contract. However, when the motive
predetermines the cause, the motive may be regarded as the cause. In this case, it is
clear, and petitioners do not dispute, that NHA would not have entered into the
contract were the lands not suitable for housing. In other words, the quality of the
land was an implied condition for the NHA to enter into the contract. On the part of
the NHA, therefore, the motive was the cause for its being a party to the sale. We hold
that the NHA was justified in canceling the contract. The realization of the mistake as
regards the quality of the land resulted in the negation of the motive/cause thus
rendering the contract inexistent.
The Supreme Court denied the petition

FACTS: Miguel and Candida Mapalo were illiterate farmers and owned a parcel of land.
Since Maximo Mapalo was to be married, they donated to him the eastern half of the
land. Maximo, however, deceived them by making them sign an instrument donating
the entire lot. There was a consideration for P5,000 stated in the deed, but the
spouses never received anything. Miguel built a fence to divide the lot and continued
to occupy the western part. Maximo then registered the entire lot and 13 year after,
sold the same to the Narcisos who took possession only of the eastern half. Later on,
the Narcisos sought to be declared owners of the entire land; the spouses claimed that
the sale to the Narcisos was void for lack of consideration. The CA declared that the
sale was merely voidable and the action by the spouses was barred by prescription,
being filed after 4 years from the discovery of the fraud.
ISSUE: W/N there was a valid contract of sale
HELD: Consideration was totally absent; the P5,000 price stipulated was never
received/delivered to the spouses. Thus, the sale to the Narcisos was VOID ab initio for
want of consideration. The inexistence of the contract is permanent and cannot be the
subject of prescription. The Narcisos are also in bad faiththey had knowledge of the
true nature and extent of Maximos right over the land.

FACTS: For an in consideration of P1 and other valuable considerations, Imelda Ong

transferred through a Deed of Quitclaim her rights over a portion of a parcel of land
to Sandra. Later on, she revoked the Deed and donated the whole property to her son,
Rex. Sanda, through her guardian, sought to recover ownership and possession
thereof. Imelda alleged that the sale was void for lack of consideration.
ISSUE: W/N there was a valid contract of sale
HELD: YES. There was consideration. Its apparent inadequacy is of no moment since
the usual practice in deeds of conveyance is to place a nominal amount although there
is more valuable consideration given. Consideration is presumed to exist. He who
alleges otherwise assumes the burden of proof. The one peso was not the
consideration, but rather the other valuable consideration.
FACTS: Hilario died with no will and was survived only by collateral relatives. Bagnas
(et al) were the nearest kin. Retonil (et al) were also relatives but to a farther extent.
They claimed ownership over 10 lots from the estate of Hilario presenting notarized
and registered Deeds of Sale (in Tagalog) where the consideration for the lands was P1
and services rendered, being rendered, and to be rendered. Bagnas argued that the
sales were fictitious, while Retonil claimed to have done many things for Hilariosuch
as nursing him on his deathbed.
ISSUE: W/N there was a valid contract of sale
HELD: NO. At the onset, if a contract has no consideration, it is not merely voidable,
but VOIDand even collateral heirs may assail the contract. In this case, there was no
consideration. Price must be in money or its equivalent; services are not the equivalent
of money insofar as the requirement of price is concerned. A contract is not one for
sale if the consideration consists of services. Not only are they vague, they are
unknown and not susceptible of determination without a new agreement between the
FACTS: Josefina approached Fernando asking for help.
Her family was to be sued by Tan for issuing rubber checks; thus she asked him to
cede his 3 lots to Tan and it will be Josefina who will repurchase them for him. He
initially rejected her offer. Then, Josefina issued him 2 checks, one for P1.4M,
pertaining to the value of the lot, and another for P420,000 corresponding to 6
months interests. He agreed, drafted the instrument himself, and ceded his properties
to Tan. Later, both checks bounced; he sued Tan for annulment of the sale for lack of

consideration since he never received anything. He also sued Josefina criminally, but
ISSUE: W/N there was a valid contract of sale
HELD: YES. There was consideration in the form of the check for P420,000. It was his
fee for executing the sale. It was not only kindness that impelled him to cede his
property, it was also his interest for profit.
That he never received money is of no moment; a sale is a consensual contract. He
also tacitly admitted to the sale when he filed criminal charges against Josefina.
Fernando, being a lawyer, has no one else to blame but himself for the loss. He acted
negligently our of desire for profit.