SECOND DIVISION

[G.R. No. 132305. December 4, 2001]

IDA C. LABAGALA, petitioner, vs. NICOLASA T. SANTIAGO, AMANDA T. SANTIAGO and HON.
COURT OF APPEALS, respondents.
DECISION
QUISUMBING, J.:
This petition for review on certiorari seeks to annul the decision dated March 4, 1997, [1] of the Court of
Appeals in CA-G.R. CV No. 32817, which reversed and set aside the judgment dated October 17, 1990, [2]of the
Regional Trial Court of Manila, Branch 54, in Civil Case No. 87-41515, finding herein petitioner to be the owner of
1/3 pro indiviso share in a parcel of land.
The pertinent facts of the case, as borne by the records, are as follows:
Jose T. Santiago owned a parcel of land covered by TCT No. 64729, located in Rizal Avenue Extension, Sta.
Cruz, Manila. Alleging that Jose had fraudulently registered it in his name alone, his sisters Nicolasa and Amanda
(now respondents herein), sued Jose for recovery of 2/3 share of the property. [3] On April 20, 1981, the trial court in
that case decided in favor of the sisters, recognizing their right of ownership over portions of the property covered
by TCT No. 64729. The Register of Deeds of Manila was required to include the names of Nicolasa and Amanda in
the certificate of title to said property.[4]
Jose died intestate on February 6, 1984. On August 5, 1987, respondents filed a complaint for recovery of title,
ownership, and possession against herein petitioner, Ida C. Labagala, before the Regional Trial Court of Manila, to
recover from her the 1/3 portion of said property pertaining to Jose but which came into petitioners sole possession
upon Joses death.
Respondents alleged that Joses share in the property belongs to them by operation of law, because they are the
only legal heirs of their brother, who died intestate and without issue. They claimed that the purported sale of the
property made by their brother to petitioner sometime in March 1979 [5] was executed through petitioners
machinations and with malicious intent, to enable her to secure the corresponding transfer certificate of title (TCT
No. 172334[6]) in petitioners name alone.[7]
Respondents insisted that the deed of sale was a forgery. The deed showed that Jose affixed his thumbmark
thereon but respondents averred that, having been able to graduate from college, Jose never put his thumbmark on
documents he executed but always signed his name in full. They claimed that Jose could not have sold the property
belonging to his poor and unschooled sisters who sacrificed for his studies and personal welfare. [8] Respondents also
pointed out that it is highly improbable for petitioner to have paid the supposed consideration of P150,000 for the
sale of the subject property because petitioner was unemployed and without any visible means of livelihood at the
time of the alleged sale. They also stressed that it was quite unusual and questionable that petitioner registered the
deed of sale only on January 26, 1987, or almost eight years after the execution of the sale.[9]
On the other hand, petitioner claimed that her true name is not Ida C. Labagala as claimed by respondent but
Ida C. Santiago. She claimed not to know any person by the name of Ida C. Labagala. She claimed to be the
daughter of Jose and thus entitled to his share in the subject property. She maintained that she had always stayed on
the property, ever since she was a child. She argued that the purported sale of the property was in fact a donation to
her, and that nothing could have precluded Jose from putting his thumbmark on the deed of sale instead of his
signature. She pointed out that during his lifetime, Jose never acknowledged respondents claim over the property
such that respondents had to sue to claim portions thereof. She lamented that respondents had to disclaim her in their
desire to obtain ownership of the whole property.
Petitioner revealed that respondents had in 1985 filed two ejectment cases against her and other occupants of
the property. The first was decided in her and the other defendants favor, while the second was dismissed.Yet
respondents persisted and resorted to the present action.
Petitioner recognized respondents ownership of 2/3 of the property as decreed by the RTC. But she averred that
she caused the issuance of a title in her name alone, allegedly after respondents refused to take steps that would
prevent the property from being sold by public auction for their failure to pay realty taxes thereon. She added that
with a title issued in her name she could avail of a realty tax amnesty.
On October 17, 1990, the trial court ruled in favor of petitioner, decreeing thus:
WHEREFORE, judgment is hereby rendered recognizing the plaintiffs [herein respondents] as being entitled to the
ownership and possession each of one-third (1/3) pro indiviso share of the property originally covered by Transfer

Certificate of Title No. 64729, in the name of Jose T. Santiago and presently covered by Transfer Certificate of Title
No. 172334, in the name of herein defendant [herein petitioner] and which is located at No. 3075-A Rizal Avenue
Extension, Sta. Cruz, Manila, as per complaint, and the adjudication to plaintiffs per decision in Civil Case No.
56226 of this Court, Branch VI, and the remaining one-third (1/3) pro indiviso share adjudicated in said decision to
defendant Jose T. Santiago in said case, is hereby adjudged and adjudicated to herein defendant as owner and
entitled to possession of said share. The Court does not see fit to adjudge damages, attorneys fees and costs. Upon
finality of this judgment, Transfer Certificate of Title No. 172334 is ordered cancelled and a new title issued in the
names of the two (2) plaintiffs and the defendant as owners in equal shares, and the Register of Deeds of Manila is
so directed to effect the same upon payment of the proper fees by the parties herein.
SO ORDERED.[10]
According to the trial court, while there was indeed no consideration for the deed of sale executed by Jose in
favor of petitioner, said deed constitutes a valid donation. Even if it were not, petitioner would still be entitled to
Joses 1/3 portion of the property as Joses daughter. The trial court ruled that the following evidence shows petitioner
to be the daughter of Jose: (1) the decisions in the two ejectment cases filed by respondents which stated that
petitioner is Joses daughter, and (2) Joses income tax return which listed petitioner as his daughter. It further said
that respondents knew of petitioners existence and her being the daughter of Jose, per records of the earlier
ejectment cases they filed against petitioner. According to the court, respondents were not candid with the court in
refusing to recognize petitioner as Ida C. Santiago and insisting that she was Ida C. Labagala, thus affecting their
credibility.
Respondents appealed to the Court of Appeals, which reversed the decision of the trial court.
WHEREFORE, the appealed decision is REVERSED and one is entered declaring the appellants Nicolasa and
Amanda Santiago the co-owners in equal shares of the one-third (1/3) pro indiviso share of the late Jose Santiago in
the land and building covered by TCT No. 172334. Accordingly, the Register of Deeds of Manila is directed to
cancel said title and issue in its place a new one reflecting this decision.
SO ORDERED.
Apart from respondents testimonies, the appellate court noted that the birth certificate of Ida Labagala
presented by respondents showed that Ida was born of different parents, not Jose and his wife. It also took into
account the statement made by Jose in Civil Case No. 56226 that he did not have any child.
Hence, the present petition wherein the following issues are raised for consideration:
1. Whether or not petitioner has adduced preponderant evidence to prove that she is the daughter of the late
Jose T. Santiago, and
2. Whether or not respondents could still impugn the filiation of the petitioner as the daughter of the late Jose
T. Santiago.
Petitioner contends that the trial court was correct in ruling that she had adduced sufficient evidence to prove
her filiation by Jose Santiago, making her his sole heir and thus entitled to inherit his 1/3 portion. She points out that
respondents had, before the filing of the instant case, previously considered [11] her as the daughter of Jose who,
during his lifetime, openly regarded her as his legitimate daughter. She asserts that her identification as Joses
daughter in his ITR outweighs the strange answers he gave when he testified in Civil Case No. 56226.
Petitioner asserts further that respondents cannot impugn her filiation collaterally, citing the case of Sayson v.
Court of Appeals[12] in which we held that (t)he legitimacy of (a) child can be impugned only in a direct action
brought for that purpose, by the proper parties and within the period limited by law. [13] Petitioner also cites Article
263 of the Civil Code in support of this contention.[14]
For their part, respondents contend that petitioner is not the daughter of Jose, per her birth certificate that
indicate her parents as Leo Labagala and Cornelia Cabrigas, instead of Jose Santiago and Esperanza Cabrigas.
[15]
They argue that the provisions of Article 263 of the Civil Code do not apply to the present case since this is not
an action impugning a childs legitimacy but one for recovery of title, ownership, and possession of property.
The issues for resolution in this case, to our mind, are (1) whether or not respondents may impugn petitioners
filiation in this action for recovery of title and possession; and (2) whether or not petitioner is entitled to Joses 1/3
portion of the property he co-owned with respondents, through succession, sale, or donation.
On the first issue, we find petitioners reliance on Article 263 of the Civil Code to be misplaced. Said article
provides:

Art. 263. The action to impugn the legitimacy of the child shall be brought within one year from the recording of the
birth in the Civil Register, if the husband should be in the same place, or in a proper case, any of his heirs.
If he or his heirs are absent, the period shall be eighteen months if they should reside in the Philippines; and two
years if abroad. If the birth of the child has been concealed, the term shall be counted from the discovery of the
fraud.
This article should be read in conjunction with the other articles in the same chapter on paternity and filiation
in the Civil Code. A careful reading of said chapter would reveal that it contemplates situations where a doubt exists
that a child is indeed a mans child by his wife, and the husband (or, in proper cases, his heirs) denies the childs
filiation. It does not refer to situations where a child is alleged not to be the child at all of a particular couple. [16]
Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove that a person is not a
mans child by his wife. However, the present case is not one impugning petitioners legitimacy. Respondents are
asserting not merely that petitioner is not a legitimate child of Jose, but that she is not a child of Jose at all.
[17]
Moreover, the present action is one for recovery of title and possession, and thus outside the scope of Article 263
on prescriptive periods.
Petitioners reliance on Sayson is likewise improper. The factual milieu present in Sayson does not obtain in the
instant case. What was being challenged by petitioners in Sayson was (1) the validity of the adoption of Delia and
Edmundo by the deceased Teodoro and Isabel Sayson, and (2) the legitimate status of Doribel Sayson. While
asserting that Delia and Edmundo could not have been validly adopted since Doribel had already been born to the
Sayson couple at the time, petitioners at the same time made the conflicting claim that Doribel was not the child of
the couple. The Court ruled in that case that it was too late to question the decree of adoption that became final years
before. Besides, such a challenge to the validity of the adoption cannot be made collaterally but in a direct
proceeding.[18]
In this case, respondents are not assailing petitioners legitimate status but are, instead, asserting that she is not
at all their brothers child. The birth certificate presented by respondents support this allegation.
We agree with the Court of Appeals that::
The Certificate of Record of Birth (Exhibit H)[19] plainly states that Ida was the child of the spouses Leon Labagala
and [Cornelia] Cabrigas. This document states that it was Leon Labagala who made the report to the Local Civil
Registrar and therefore the supplier of the entries in said Certificate. Therefore, this certificate is proof of the
filiation of Ida. Appellee however denies that Exhibit H is her Birth Certificate. She insists that she is not Ida
Labagala but Ida Santiago. If Exhibit H is not her birth certificate, then where is hers? She did not present any
though it would have been the easiest thing to do considering that according to her baptismal certificate she was
born in Manila in 1969. This court rejects such denials and holds that Exhibit H is the certificate of the record of
birth of appellee Ida
Against such evidence, the appellee Ida could only present her testimony and a baptismal certificate (Exhibit 12)
stating that appellees parents were Jose Santiago and Esperanza Cabrigas. But then, a decisional rule in evidence
states that a baptismal certificate is not a proof of the parentage of the baptized person. This document can only
prove the identity of the baptized, the date and place of her baptism, the identities of the baptismal sponsors and the
priest who administered the sacrament -- nothing more.[20] (Citations omitted.)
At the pre-trial conducted on August 11, 1988, petitioners counsel admitted that petitioner did not have a birth
certificate indicating that she is Ida Santiago, though she had been using this name all her life. [21]
Petitioner opted not to present her birth certificate to prove her relationship with Jose and instead offered in
evidence her baptismal certificate.[22] However, as we held in Heirs of Pedro Cabais v. Court of Appeals:
a baptismal certificate is evidence only to prove the administration of the sacrament on the dates therein
specified, but not the veracity of the declarations therein stated with respect to [a persons] kinsfolk. The same
is conclusive only of the baptism administered, according to the rites of the Catholic Church, by the priest who
baptized subject child, but it does not prove the veracity of the declarations and statements contained in the
certificate concerning the relationship of the person baptized.[23]
A baptismal certificate, a private document, is not conclusive proof of filiation. [24] More so are the entries made
in an income tax return, which only shows that income tax has been paid and the amount thereof. [25]
We note that the trial court had asked petitioner to secure a copy of her birth certificate but petitioner, without
advancing any reason therefor, failed to do so. Neither did petitioner obtain a certification that no record of her birth
could be found in the civil registry, if such were the case. We find petitioners silence concerning the absence of her
birth certificate telling. It raises doubt as to the existence of a birth certificate that would show petitioner to be the

daughter of Jose Santiago and Esperanza Cabrigas. Her failure to show her birth certificate would raise the
presumption that if such evidence were presented, it would be adverse to her claim. Petitioners counsel argued that
petitioner had been using Santiago all her life. However, use of a family name certainly does not establish pedigree.
Further, we note that petitioner, who claims to be Ida Santiago, has the same birthdate as Ida Labagala. [26] The
similarity is too uncanny to be a mere coincidence.
During her testimony before the trial court, petitioner denied knowing Cornelia Cabrigas, who was listed as the
mother in the birth certificate of Ida Labagala. In her petition before this Court, however, she stated that Cornelia is
the sister of her mother, Esperanza. It appears that petitioner made conflicting statements that affect her credibility
and could cast a long shadow of doubt on her claims of filiation.
Thus, we are constrained to agree with the factual finding of the Court of Appeals that petitioner is in reality
the child of Leon Labagala and Cornelia Cabrigas, and contrary to her averment, not of Jose Santiago and Esperanza
Cabrigas. Not being a child of Jose, it follows that petitioner can not inherit from him through intestate succession. It
now remains to be seen whether the property in dispute was validly transferred to petitioner through sale or
donation.
On the validity of the purported deed of sale, however, we agree with the Court of Appeals that:
This deed is shot through and through with so many intrinsic defects that a reasonable mind is inevitably led to
the conclusion that it is fake. The intrinsic defects are extractable from the following questions: a) If Jose
Santiago intended to donate the properties in question to Ida, what was the big idea of hiding the nature of the
contract in the faade of the sale? b) If the deed is a genuine document, how could it have happened that Jose
Santiago who was of course fully aware that he owned only 1/3 pro indiviso of the properties covered by his
title sold or donated the whole properties to Ida? c) Why in heavens name did Jose Santiago, a college
graduate, who always signed his name in documents requiring his signature (citation omitted) [affix] his
thumbmark on this deed of sale? d) If Ida was [the] child of Jose Santiago, what was the sense of the latter
donating his properties to her when she would inherit them anyway upon his death? e) Why did Jose Santiago
affix his thumbmark to a deed which falsely stated that: he was single (for he was earlier married to Esperanza
Cabrigas); Ida was of legal age (for [s]he was then just 15 years old); and the subject properties were free from
liens and encumbrances (for Entry No. 27261, Notice of Adverse Claim and Entry No. 6388, Notice of Lis
Pendens were already annotated in the title of said properties). If the deed was executed in 1979, how come it
surfaced only in 1984 after the death of Jose Santiago and of all people, the one in possession was the
baptismal sponsor of Ida?[27]
Clearly, there is no valid sale in this case. Jose did not have the right to transfer ownership of the entire
property to petitioner since 2/3 thereof belonged to his sisters. [28] Petitioner could not have given her consent to the
contract, being a minor at the time. [29] Consent of the contracting parties is among the essential requisites of a
contract,[30] including one of sale, absent which there can be no valid contract. Moreover, petitioner admittedly did
not pay any centavo for the property,[31] which makes the sale void. Article 1471 of the Civil Code provides:
Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or
some other act or contract.
Neither may the purported deed of sale be a valid deed of donation. Again, as explained by the Court of
Appeals:
Even assuming that the deed is genuine, it cannot be a valid donation. It lacks the acceptance of the donee required
by Art. 725 of the Civil Code. Being a minor in 1979, the acceptance of the donation should have been made by her
father, Leon Labagala or [her] mother Cornelia Cabrigas or her legal representative pursuant to Art. 741 of the same
Code. No one of those mentioned in the law - in fact no one at all - accepted the donation for Ida. [32]
In sum, we find no reversible error attributable to the assailed decision of the Court of Appeals, hence it must
be upheld.
WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals in CA-G.R. CV No. 32817
is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION
G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and CORAZON
DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the Resolution on the
Motion for Reconsideration, dated November 27, 1980, of the then Court of First Instance of Pangasinan,
Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas,"
upholding the sale of a parcel of land in favor of DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas and
FERNANDO Canullas were married on December 19, 1962. They begot five children. They lived in a
small house on the residential land in question with an area of approximately 891 square meters, located
at Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited the
land.
In 1978, FERNANDO abandoned his family and was living with private respondent Corazon DAGUINES.
During the pendency of this appeal, they were convicted of concubinage in a judgment rendered on
October 27, 1981 by the then Court of First Instance of Pangasinan, Branch II, which judgment has
become final.
On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the
sum of P2,000.00. In the document of sale, FERNANDO described the house as "also inherited by me
from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19, 1980 for
quieting of title and damages against MERCEDES. The latter resisted and claimed that the house in
dispute where she and her children were residing, including the coconut trees on the land, were built and
planted with conjugal funds and through her industry; that the sale of the land together with the house and
improvements to DAGUINES was null and void because they are conjugal properties and she had not
given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of the land
in question as well as the one-half () of the house erected on said land." Upon reconsideration prayed for
by MERCEDES, however, respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on
October 6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question and the 10
coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on April 15, 1980
(Exhibit A) including the 3 coconut trees and other crops planted during the conjugal
relation between Fernando Canullas (vendor) and his legitimate wife, herein defendant
Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a conjugal house on the
exclusive property of the husband ipso facto gave the land the character of conjugal property; and (2)
whether or not the sale of the lot together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be given to the second paragraph
of Article 158 of the Civil Code, which reads:
xxx xxx xxx

Buildings constructed at the expense of the partnership during the marriage on land
belonging to one of the spouses also pertain to the partnership, but the value of the land
shall be reimbursed to the spouse who owns the same.
We hold that pursuant to the foregoing provision both the land and the building belong to the conjugal
partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse
owning the lot becomes a creditor of the conjugal partnership for the value of the lot, 1 which value would
be reimbursed at the liquidation of the conjugal partnership. 2
In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404), Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el matrimonio en suelo
propio de uno de los conjuges son gananciales, abonandose el valor del suelo al conj
uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it was held that the
land belonging to one of the spouses, upon which the spouses have built a house, becomes conjugal
property only when the conjugal partnership is liquidated and indemnity paid to the owner of the land. We
believe that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA
678, 691 (1961), where the following was explained:
As to the above properties, their conversion from paraphernal to conjugal assets should
be deemed to retroact to the time the conjugal buildings were first constructed thereon or
at the very latest, to the time immediately before the death of Narciso A. Padilla that
ended the conjugal partnership. They can not be considered to have become conjugal
property only as of the time their values were paid to the estate of the widow Concepcion
Paterno because by that time the conjugal partnership no longer existed and it could not
acquire the ownership of said properties. The acquisition by the partnership of these
properties was, under the 1943 decision, subject to the suspensive condition that their
values would be reimbursed to the widow at the liquidation of the conjugal partnership;
once paid, the effects of the fulfillment of the condition should be deemed to retroact to
the date the obligation was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have alienated the house and
lot to DAGUINES since MERCEDES had not given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being contrary to morals
and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his
family and left the conjugal home where his wife and children lived and from whence they derived their
support. That sale was subversive of the stability of the family, a basic social institution which public policy
cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is contrary
to law, morals, good customs, public order, or public policy are void and inexistent from the very
beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect
whatsoever.The cause is unlawful if it is contrary to law, morals, good customs, public order, or public
policy."
Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. 6 Similarly, donations between spouses during marriage are prohibited. 7 And this is so
because if transfers or con conveyances between spouses were allowed during marriage, that would
destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, 8 as well as to protect the institution of
marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and
wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be
better than those in legal union." Those provisions are dictated by public interest and their criterion must
be imposed upon the wig of the parties. That was the ruling in Buenaventura vs. Bautista, also penned by
Justice JBL Reyes (CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the
pertinent dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code considers as void a
donation between the spouses during the marriage, policy considerations of the most

exigent character as wen as the dictates of morality require that the same prohibition
should apply to a common-law relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals decision,
Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the old Civil
Code speaks unequivocally. If the policy of the law is, in the language of the opinion of
the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor of the other
consort and his descendants because of fear of undue influence and improper
pressure upon the donor, a prejudice deeply rooted in our ancient law, ..., then there is
every reason to apply the same prohibitive policy to persons living together as husband
and wife without benefit of nuptials. For it is not to be doubted that assent to such
irregular connection for thirty years bespeaks greater influence of one party over the
other, so that the danger that the law seeks to avoid is correspondingly increased'.
Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would not be just
that such donations should subsist, lest the conditions of those who incurred guilt
should turn out to be better." So long as marriage remains the cornerstone of our family
law, reason and morality alike demand that the disabilities attached to marriage should
likewise attach to concubinage (Emphasis supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of
November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the sale of the
lot, house and improvements in question, is hereby declared null and void. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
A.M. No. 133-J May 31, 1982
BERNARDITA R. MACARIOLA, complainant,
vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.
MAKASIAR, J:
In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B.
Asuncion of the Court of First Instance of Leyte, now Associate Justice of the Court of Appeals, with "acts
unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia
Muoz Palma of the Court of Appeals now retired Associate Justice of the Supreme Court, to whom this
case was referred on October 28, 1968 for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition
filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela
Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R. Macariola, defendant,
concerning the properties left by the deceased Francisco Reyes, the common father of
the plaintiff and defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged among other things
that; a) plaintiff Sinforosa R. Bales was not a daughter of the deceased Francisco Reyes;
b) the only legal heirs of the deceased were defendant Macariola, she being the only
offspring of the first marriage of Francisco Reyes with Felisa Espiras, and the remaining
plaintiffs who were the children of the deceased by his second marriage with Irene
Ondez; c) the properties left by the deceased were all the conjugal properties of the latter
and his first wife, Felisa Espiras, and no properties were acquired by the deceased during
his second marriage; d) if there was any partition to be made, those conjugal properties
should first be partitioned into two parts, and one part is to be adjudicated solely to
defendant it being the share of the latter's deceased mother, Felisa Espiras, and the other

half which is the share of the deceased Francisco Reyes was to be divided equally
among his children by his two marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case
3010, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a
preponderance of evidence, finds and so holds, and hereby renders
judgment (1) Declaring the plaintiffs Luz R. Bakunawa, Anacorita Reyes,
Ruperto Reyes, Adela Reyes and Priscilla Reyes as the only children
legitimated by the subsequent marriage of Francisco Reyes Diaz to Irene
Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an
illegitimate child of Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474,
4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging to
the conjugal partnership of the spouses Francisco Reyes Diaz and Felisa
Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416 as belonging
to the spouses Francisco Reyes Diaz and Irene Ondez in common
partnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging
exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the
defendant Bernardita R. Macariola, being the only legal and forced heir
of her mother Felisa Espiras, as the exclusive owner of one-half of each
of Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and the
remaining one-half (1/2) of each of said Lots Nos. 4474, 4475, 4892,
5265, 4803, 4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No.
1154 as belonging to the estate of Francisco Reyes Diaz; (7) Declaring
Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304
and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining onehalf (1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth (1/4)
of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8)
Directing the division or partition of the estate of Francisco Reyes Diaz in
such a manner as to give or grant to Irene Ondez, as surviving widow of
Francisco Reyes Diaz, a hereditary share of. one-twelfth (1/12) of the
whole estate of Francisco Reyes Diaz (Art. 996 in relation to Art. 892, par
2, New Civil Code), and the remaining portion of the estate to be divided
among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita
Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes and defendant
Bernardita R. Macariola, in such a way that the extent of the total share
of plaintiff Sinforosa R. Bales in the hereditary estate shall not exceed
the equivalent of two-fifth (2/5) of the total share of any or each of the
other plaintiffs and the defendant (Art. 983, New Civil Code), each of the
latter to receive equal shares from the hereditary estate, (Ramirez vs.
Bautista, 14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33);
(9) Directing the parties, within thirty days after this judgment shall have
become final to submit to this court, for approval a project of partition of
the hereditary estate in the proportion above indicated, and in such
manner as the parties may, by agreement, deemed convenient and
equitable to them taking into consideration the location, kind, quality,
nature and value of the properties involved; (10) Directing the plaintiff
Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the
costs of this suit, in the proportion of one-third (1/3) by the first named
and two-thirds (2/3) by the second named; and (I 1) Dismissing all other
claims of the parties [pp 27-29 of Exh. C].
The decision in civil case 3010 became final for lack of an appeal, and on October 16,
1963, a project of partition was submitted to Judge Asuncion which is marked Exh. A.
Notwithstanding the fact that the project of partition was not signed by the parties
themselves but only by the respective counsel of plaintiffs and defendant, Judge

Asuncion approved it in his Order dated October 23, 1963, which for convenience is
quoted hereunder in full:
The parties, through their respective counsels, presented to this Court for
approval the following project of partition:
COMES NOW, the plaintiffs and the defendant in the above-entitled
case, to this Honorable Court respectfully submit the following Project of
Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively
to Bernardita Reyes Macariola;
2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along
the eastern part of the lot shall be awarded likewise to Bernardita R.
Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes
Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along
the western part of the lot shall likewise be awarded to Sinforosa ReyesBales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla
Reyes in equal shares;
6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the
portions awarded under item (2) and (4) above shall be awarded to Luz
Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and
Priscilla Reyes in equal shares, provided, however that the remaining
portion of Lot No. 3416 shall belong exclusively to Priscilla Reyes.
WHEREFORE, it is respectfully prayed that the Project of Partition
indicated above which is made in accordance with the decision of the
Honorable Court be approved.
Tacloban City, October 16, 1963.
(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City
While the Court thought it more desirable for all the parties to have
signed this Project of Partition, nevertheless, upon assurance of both
counsels of the respective parties to this Court that the Project of
Partition, as above- quoted, had been made after a conference and
agreement of the plaintiffs and the defendant approving the above
Project of Partition, and that both lawyers had represented to the Court
that they are given full authority to sign by themselves the Project of
Partition, the Court, therefore, finding the above-quoted Project of
Partition to be in accordance with law, hereby approves the same. The
parties, therefore, are directed to execute such papers, documents or
instrument sufficient in form and substance for the vesting of the rights,
interests and participations which were adjudicated to the respective
parties, as outlined in the Project of Partition and the delivery of the
respective properties adjudicated to each one in view of said Project of
Partition, and to perform such other acts as are legal and necessary to
effectuate the said Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.

The above Order of October 23, 1963, was amended on November 11, 1963, only for the
purpose of giving authority to the Register of Deeds of the Province of Leyte to issue the
corresponding transfer certificates of title to the respective adjudicatees in conformity with
the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184 or rather one-half
thereof with an area of 15,162.5 sq. meters. This lot, which according to the decision was
the exclusive property of the deceased Francisco Reyes, was adjudicated in said project
of partition to the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla all surnamed
Reyes in equal shares, and when the project of partition was approved by the trial court
the adjudicatees caused Lot 1184 to be subdivided into five lots denominated as Lot
1184-A to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's
court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of 2,172.5556 sq.
meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who was issued
transfer certificate of title No. 2338 of the Register of Deeds of the city of Tacloban (Exh.
12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an
area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria S. Asuncion
(Exh. 11), which particular portion was declared by the latter for taxation purposes (Exh.
F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their respective
shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries
Inc." (Exit 15 & 16). At the time of said sale the stockholders of the corporation were
Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and
the latter's wife, Victoria S. Asuncion, with Judge Asuncion as the President and Mrs.
Asuncion as the secretary (Exhs. E-4 to E-7). The Articles of Incorporation of "The
Traders Manufacturing and Fishing Industries, Inc." which we shall henceforth refer to as
"TRADERS" were registered with the Securities and Exchange Commission only on
January 9, 1967 (Exh. E) [pp. 378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968
alleging four causes of action, to wit: [1] that respondent Judge Asuncion violated Article 1491, paragraph
5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those
properties involved in Civil Case No. 3010 decided by him; [2] that he likewise violated Article 14,
paragraphs I and 5 of the Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as
the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the Civil Service Rules, and Canon 25
of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing
Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance
of Leyte; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum
by closely fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as
a practising attorney when in truth and in fact his name does not appear in the Rolls of Attorneys and is
not a member of the Philippine Bar; and [4] that there was a culpable defiance of the law and utter
disregard for ethics by respondent Judge (pp. 1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on
October 16, 1968 by herein complainant. In Our resolution of October 28, 1968, We referred this case to
then Justice Cecilia Muoz Palma of the Court of Appeals, for investigation, report and recommendation.
After hearing, the said Investigating Justice submitted her report dated May 27, 1971 recommending that
respondent Judge should be reprimanded or warned in connection with the first cause of action alleged in
the complaint, and for the second cause of action, respondent should be warned in case of a finding that
he is prohibited under the law to engage in business. On the third and fourth causes of action, Justice
Palma recommended that respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein
instituted an action before the Court of First Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff,
versus Sinforosa R. Bales, et al., defendants," which was docketed as Civil Case No. 4235, seeking the
annulment of the project of partition made pursuant to the decision in Civil Case No. 3010 and the two

orders issued by respondent Judge approving the same, as well as the partition of the estate and the
subsequent conveyances with damages. It appears, however, that some defendants were dropped from
the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he was no longer a
real party in interest when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 a
portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder was sold to the Traders
Manufacturing and Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was
dismissed on the ground that she was no longer a real party in interest at the time the aforesaid Civil
Case No. 4234 was filed as the portion of Lot 1184 acquired by her and respondent Judge from Dr.
Arcadio Galapon was already sold on August 31, 1966 to the Traders Manufacturing and Fishing
industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus, Ben Barraza
Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R. Celestial and Pilar P.
Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A.
Tolete were dismissed with the conformity of complainant herein, plaintiff therein, and her counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was
directed and authorized on June 2, 1969 by the then Secretary (now Minister) of Justice and now Minister
of National Defense Juan Ponce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the
dispositive portion of which reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction to
take cognizance of the issue of the legality and validity of the Project of Partition [Exhibit
"B"] and the two Orders [Exhibits "C" and "C- 3"] approving the partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B.
Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for
moral damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for
exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal
damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN,
FOR HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO
VILLASIN
(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of
the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo
Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES,
ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer,
Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon
perfection of the appeal on February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first
cause of action, that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New

Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties
involved in Civil Case No. 3010. 'That Article provides:
Article 1491. The following persons cannot acquire by purchase, even at a public or
judicial action, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the property
and rights in litigation or levied upon an execution before the court within whose
jurisdiction or territory they exercise their respective functions; this prohibition includes
the act of acquiring by assignment and shall apply to lawyers, with respect to the property
and rights which may be the object of any litigation in which they may take part by virtue
of their profession [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to
operate, the sale or assignment of the property must take place during the pendency of the litigation
involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de
Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of
the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order
dated October 23, 1963 and the amended order dated November 11, 1963 approving the October 16,
1963 project of partition made pursuant to the June 8, 1963 decision, had long become final for there was
no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs
in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E
from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of
the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half thereof
was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes and
Anacorita Reyes in the project of partition, and the same was subdivided into five lots denominated as Lot
1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which he was
issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a portion
of said lot to respondent Judge and his wife who declared the same for taxation purposes only. The
subsequent sale on August 31, 1966 by spouses Asuncion and spouses Galapon of their respective
shares and interest in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which
respondent was the president and his wife was the secretary, took place long after the finality of the
decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the project
of partition.
While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the
Court of First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of partition
and the two orders approving the same, as well as the partition of the estate and the subsequent
conveyances, the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr.
Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case
No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the
property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or
affect the aforesaid facts that the questioned sale to respondent Judge, now Court of Appeals Justice,
was effected and consummated long after the finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year
after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of
partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article 1491
of the New Civil Code.

It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio
Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to conceal the
illegal and unethical transfer of said lot to respondent Judge as a consideration for the approval of the
project of partition. In this connection, We agree with the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question whether or not the
acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer of the
whole lot to "TRADERS" of which respondent was the President and his wife the
Secretary, was intimately related to the Order of respondent approving the project of
partition, Exh. A.
Respondent vehemently denies any interest or participation in the transactions between
the Reyeses and the Galapons concerning Lot 1184-E, and he insists that there is no
evidence whatsoever to show that Dr. Galapon had acted, in the purchase of Lot 1184-E,
in mediation for him and his wife. (See p. 14 of Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the record showing that
Dr. Arcadio Galapon acted as a mere "dummy" of respondent in acquiring Lot 1184-E
from the Reyeses. Dr. Galapon appeared to this investigator as a respectable citizen,
credible and sincere, and I believe him when he testified that he bought Lot 1184-E in
good faith and for valuable consideration from the Reyeses without any intervention of, or
previous understanding with Judge Asuncion (pp. 391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in approving the project of
partition although it was not signed by the parties, We quote with approval the findings of the Investigating
Justice, as follows:
1. I agree with complainant that respondent should have required the signature of the
parties more particularly that of Mrs. Macariola on the project of partition submitted to him
for approval; however, whatever error was committed by respondent in that respect was
done in good faith as according to Judge Asuncion he was assured by Atty. Bonifacio
Ramo, the counsel of record of Mrs. Macariola, That he was authorized by his client to
submit said project of partition, (See Exh. B and tsn p. 24, January 20, 1969). While it is
true that such written authority if there was any, was not presented by respondent in
evidence, nor did Atty. Ramo appear to corroborate the statement of respondent, his
affidavit being the only one that was presented as respondent's Exh. 10, certain
actuations of Mrs. Macariola lead this investigator to believe that she knew the contents
of the project of partition, Exh. A, and that she gave her conformity thereto. I refer to the
following documents:
1) Exh. 9 Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban
Cadastral Survey in which the deceased Francisco Reyes holds a "1/4 share" (Exh. 9-a).
On tills certificate of title the Order dated November 11, 1963, (Exh. U) approving the
project of partition was duly entered and registered on November 26, 1963 (Exh. 9-D);
2) Exh. 7 Certified copy of a deed of absolute sale executed by Bernardita Reyes
Macariola onOctober 22, 1963, conveying to Dr. Hector Decena the one-fourth share of
the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee stated that she
was the absolute owner of said one-fourth share, the same having been adjudicated to
her as her share in the estate of her father Francisco Reyes Diaz as per decision of the
Court of First Instance of Leyte under case No. 3010 (Exh. 7-A). The deed of sale was
duly registered and annotated at the back of OCT 19520 on December 3, 1963 (see Exh.
9-e).
In connection with the abovementioned documents it is to be noted that in the project of
partition dated October 16, 1963, which was approved by respondent on October 23,
1963, followed by an amending Order on November 11, 1963, Lot 1154 or rather 1/4
thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot 1154 which
complainant sold to Dr. Decena on October 22, 1963, several days after the preparation
of the project of partition.

Counsel for complainant stresses the view, however, that the latter sold her one-fourth
share in Lot 1154 by virtue of the decision in Civil Case 3010 and not because of the
project of partition, Exh. A. Such contention is absurd because from the decision, Exh. C,
it is clear that one-half of one- fourth of Lot 1154 belonged to the estate of Francisco
Reyes Diaz while the other half of said one-fourth was the share of complainant's mother,
Felisa Espiras; in other words, the decision did not adjudicate the whole of the one-fourth
of Lot 1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant became the
owner of the entire one-fourth of Lot 1154 only by means of the project of partition, Exh.
A. Therefore, if Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no other
reason than that she was wen aware of the distribution of the properties of her deceased
father as per Exhs. A and B. It is also significant at this point to state that Mrs. Macariola
admitted during the cross-examination that she went to Tacloban City in connection with
the sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can
deduce that she could not have been kept ignorant of the proceedings in civil case 3010
relative to the project of partition.
Complainant also assails the project of partition because according to her the properties
adjudicated to her were insignificant lots and the least valuable. Complainant, however,
did not present any direct and positive evidence to prove the alleged gross inequalities in
the choice and distribution of the real properties when she could have easily done so by
presenting evidence on the area, location, kind, the assessed and market value of said
properties. Without such evidence there is nothing in the record to show that there were
inequalities in the distribution of the properties of complainant's father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil
Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however,
improper for him to have acquired the same. He should be reminded of Canon 3 of the Canons of Judicial
Ethics which requires that: "A judge's official conduct should be free from the appearance of impropriety,
and his personal behavior, not only upon the bench and in the performance of judicial duties, but also in
his everyday life, should be beyond reproach." And as aptly observed by the Investigating Justice: "... it
was unwise and indiscreet on the part of respondent to have purchased or acquired a portion of a piece of
property that was or had been in litigation in his court and caused it to be transferred to a corporation of
which he and his wife were ranking officers at the time of such transfer. One who occupies an exalted
position in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in
the courts of justice, so that not only must he be truly honest and just, but his actuations must be such as
not give cause for doubt and mistrust in the uprightness of his administration of justice. In this particular
case of respondent, he cannot deny that the transactions over Lot 1184-E are damaging and render his
actuations open to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was no
longer in litigation in his court and that he was purchasing it from a third person and not from the parties to
the litigation, he should nonetheless have refrained from buying it for himself and transferring it to a
corporation in which he and his wife were financially involved, to avoid possible suspicion that his
acquisition was related in one way or another to his official actuations in civil case 3010. The conduct of
respondent gave cause for the litigants in civil case 3010, the lawyers practising in his court, and the
public in general to doubt the honesty and fairness of his actuations and the integrity of our courts of
justice" (pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that respondent Judge violated
paragraphs 1 and 5, Article 14 of the Code of Commerce when he associated himself with the Traders
Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, said corporation having
been organized to engage in business. Said Article provides that:
Article 14 The following cannot engage in commerce, either in person or by proxy, nor
can they hold any office or have any direct, administrative, or financial intervention in
commercial or industrial companies within the limits of the districts, provinces, or towns in
which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the department of public
prosecution in active service. This provision shall not be applicable to mayors, municipal

judges, and municipal prosecuting attorneys nor to those who by chance are temporarily
discharging the functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage in commerce in a
determinate territory.
It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce
which is part of the commercial laws of the Philippines, it, however, partakes of the nature of a political
law as it regulates the relationship between the government and certain public officers and employees,
like justices and judges.
Political Law has been defined as that branch of public law which deals with the organization and
operation of the governmental organs of the State and define the relations of the state with the inhabitants
of its territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law
embraces constitutional law, law of public corporations, administrative law including the law on public
officers and elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature of an
administrative law because it regulates the conduct of certain public officers and employees with respect
to engaging in business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885,
with some modifications made by the "Commission de Codificacion de las Provincias de Ultramar," which
was extended to the Philippines by the Royal Decree of August 6, 1888, and took effect as law in this
jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to
the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been
abrogated because where there is change of sovereignty, the political laws of the former sovereign,
whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are
expressly re-enacted by affirmative act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:
By well-settled public law, upon the cession of territory by one nation to another, either
following a conquest or otherwise, ... those laws which are political in their nature and
pertain to the prerogatives of the former government immediately cease upon the transfer
of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with the, laws of the
new sovereign continue in force without the express assent or affirmative act of the
conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par. 14). However, such
political laws of the prior sovereignty as are not in conflict with the constitution or
institutions of the new sovereign, may be continued in force if the conqueror shall so
declare by affirmative act of the commander-in-chief during the war, or by Congress in
time of peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In the
case of American and Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542,
7 L. Ed. 242), Chief Justice Marshall said:
On such transfer (by cession) of territory, it has never been held that the
relations of the inhabitants with each other undergo any change. Their
relations with their former sovereign are dissolved, and new relations are
created between them and the government which has acquired their
territory. The same act which transfers their country, transfers the
allegiance of those who remain in it; and the law which may be
denominated political, is necessarily changed, although that which
regulates the intercourse and general conduct of individuals, remains in
force, until altered by the newly- created power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a general principle
of the public law that on acquisition of territory the previous political relations of the ceded region are
totally abrogated. "
There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of
the Code of Commerce after the change of sovereignty from Spain to the United States and then to the

Republic of the Philippines. Consequently, Article 14 of the Code of Commerce has no legal and binding
effect and cannot apply to the respondent, then Judge of the Court of First Instance, now Associate
Justice of the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public
officers already penalized by existing law, the following shall constitute corrupt practices
of any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any
business, contract or transaction in connection with which he intervenes
or takes part in his official capacity, or in which he is prohibited by the
Constitution or by any Iaw from having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph because there is no showing
that respondent participated or intervened in his official capacity in the business or transactions of the
Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the business of the corporation in
which respondent participated has obviously no relation or connection with his judicial office. The
business of said corporation is not that kind where respondent intervenes or takes part in his capacity as
Judge of the Court of First Instance. As was held in one case involving the application of Article 216 of the
Revised Penal Code which has a similar prohibition on public officers against directly or indirectly
becoming interested in any contract or business in which it is his official duty to intervene, "(I)t is not
enough to be a public official to be subject to this crime; it is necessary that by reason of his office, he has
to intervene in said contracts or transactions; and, hence, the official who intervenes in contracts or
transactions which have no relation to his office cannot commit this crime.' (People vs. Meneses, C.A. 40
O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained any undue advantage in its
business operations by reason of respondent's financial involvement in it, or that the corporation benefited
in one way or another in any case filed by or against it in court. It is undisputed that there was no case
filed in the different branches of the Court of First Instance of Leyte in which the corporation was either
party plaintiff or defendant except Civil Case No. 4234 entitled "Bernardita R. Macariola, plaintiff, versus
Sinforosa O. Bales, et al.,"wherein the complainant herein sought to recover Lot 1184-E from the
aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9
or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent
Judge was no longer connected with the corporation, having disposed of his interest therein on January
31, 1967.
Furthermore, respondent is not liable under the same paragraph because there is no provision in both the
1935 and 1973 Constitutions of the Philippines, nor is there an existing law expressly prohibiting
members of the Judiciary from engaging or having interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948,
does not contain any prohibition to that effect. As a matter of fact, under Section 77 of said law, municipal
judges may engage in teaching or other vocation not involving the practice of law after office hours but
with the permission of the district judge concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce is, as
heretofore stated, deemed abrogated automatically upon the transfer of sovereignty from Spain to
America, because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by
judges of a property in litigation before the court within whose jurisdiction they perform their duties, cannot
apply to respondent Judge because the sale of the lot in question to him took place after the finality of his
decision in Civil Case No. 3010 as well as his two orders approving the project of partition; hence, the
property was no longer subject of litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service
Act of 1959 prohibits an officer or employee in the civil service from engaging in any private business,
vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking

without a written permission from the head of department, the same, however, may not fall within the
purview of paragraph h, Section 3 of the Anti-Graft and Corrupt Practices Act because the last portion of
said paragraph speaks of a prohibition by the Constitution or law on any public officer from having any
interest in any business and not by a mere administrative rule or regulation. Thus, a violation of the
aforesaid rule by any officer or employee in the civil service, that is, engaging in private business without
a written permission from the Department Head may not constitute graft and corrupt practice as defined
by law.
On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil
Service Rules, We hold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules
promulgated thereunder, particularly Section 12 of Rule XVIII, do not apply to the members of the
Judiciary. Under said Section 12: "No officer or employee shall engage directly in any private business,
vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking
without a written permission from the Head of Department ..."
It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by
Republic Act No. 296, as amended, otherwise known as the Judiciary Act of 1948 and by Section 7,
Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of
the Philippines, not in the Commissioner of Civil Service, and only on two grounds, namely, serious
misconduct and inefficiency, and upon the recommendation of the Supreme Court, which alone is
authorized, upon its own motion, or upon information of the Secretary (now Minister) of Justice to conduct
the corresponding investigation. Clearly, the aforesaid section defines the grounds and prescribes the
special procedure for the discipline of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline
judges of inferior courts as well as other personnel of the Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of
the existing Civil Service Law and rules or of reasonable office regulations, or in the interest of the
service, remove any subordinate officer or employee from the service, demote him in rank, suspend him
for not more than one year without pay or fine him in an amount not exceeding six months' salary." Thus,
a violation of Section 12 of Rule XVIII is a ground for disciplinary action against civil service officers and
employees.
However, judges cannot be considered as subordinate civil service officers or employees subject to the
disciplinary authority of the Commissioner of Civil Service; for, certainly, the Commissioner is not the head
of the Judicial Department to which they belong. The Revised Administrative Code (Section 89) and the
Civil Service Law itself state that the Chief Justice is the department head of the Supreme Court (Sec. 20,
R.A. No. 2260) [1959]); and under the 1973 Constitution, the Judiciary is the only other or second branch
of the government (Sec. 1, Art. X, 1973 Constitution). Besides, a violation of Section 12, Rule XVIII cannot
be considered as a ground for disciplinary action against judges because to recognize the same as
applicable to them, would be adding another ground for the discipline of judges and, as aforestated,
Section 67 of the Judiciary Act recognizes only two grounds for their removal, namely, serious misconduct
and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who
has original and exclusive jurisdiction "(T)o decide, within one hundred twenty days, after submission to it,
all administrative cases against permanent officers and employees in the competitive service, and, except
as provided by law, to have final authority to pass upon their removal, separation, and suspension and
upon all matters relating to the conduct, discipline, and efficiency of such officers and employees; and
prescribe standards, guidelines and regulations governing the administration of discipline" (emphasis
supplied). There is no question that a judge belong to the non-competitive or unclassified service of the
government as a Presidential appointee and is therefore not covered by the aforesaid provision. WE have
already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only
permanent officers and employees who belong to the classified service come under the exclusive
jurisdiction of the Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], AngAngco vs. Castillo, 9 SCRA 619 [1963]).
Although the actuation of respondent Judge in engaging in private business by joining the Traders
Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, is not violative of the

provissions of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft and Corrupt
Practices Act as well as Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the
Civil Service Act of 1959, the impropriety of the same is clearly unquestionable because Canon 25 of the
Canons of Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in enterprises which are apt to
be involved in litigation in his court; and, after his accession to the bench, he should not
retain such investments previously made, longer than a period sufficient to enable him to
dispose of them without serious loss. It is desirable that he should, so far as reasonably
possible, refrain from all relations which would normally tend to arouse the suspicion that
such relations warp or bias his judgment, or prevent his impartial attitude of mind in the
administration of his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January
31, 1967 from the aforesaid corporation and sold their respective shares to third parties, and it appears
also that the aforesaid corporation did not in anyway benefit in any case filed by or against it in court as
there was no case filed in the different branches of the Court of First Instance of Leyte from the time of
the drafting of the Articles of Incorporation of the corporation on March 12, 1966, up to its incorporation on
January 9, 1967, and the eventual withdrawal of respondent on January 31, 1967 from said corporation.
Such disposal or sale by respondent and his wife of their shares in the corporation only 22 days after the
incorporation of the corporation, indicates that respondent realized that early that their interest in the
corporation contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore deserve the
commendation for their immediate withdrawal from the firm after its incorporation and before it became
involved in any court litigation
III
With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of
coddling an impostor and acted in disregard of judicial decorum, and that there was culpable defiance of
the law and utter disregard for ethics. WE agree, however, with the recommendation of the Investigating
Justice that respondent Judge be exonerated because the aforesaid causes of action are groundless, and
WE quote the pertinent portion of her report which reads as follows:
The basis for complainant's third cause of action is the claim that respondent associated
and closely fraternized with Dominador Arigpa Tan who openly and publicly advertised
himself as a practising attorney (see Exhs. I, I-1 and J) when in truth and in fact said
Dominador Arigpa Tan does not appear in the Roll of Attorneys and is not a member of
the Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and
claims that all the time he believed that the latter was a bona fide member of the bar. I
see no reason for disbelieving this assertion of respondent. It has been shown by
complainant that Dominador Arigpa Tan represented himself publicly as an attorney-atlaw to the extent of putting up a signboard with his name and the words "Attorney-at Law"
(Exh. I and 1- 1) to indicate his office, and it was but natural for respondent and any
person for that matter to have accepted that statement on its face value. "Now with
respect to the allegation of complainant that respondent is guilty of fraternizing with
Dominador Arigpa Tan to the extent of permitting his wife to be a godmother of Mr. Tan's
child at baptism (Exh. M & M-1), that fact even if true did not render respondent guilty of
violating any canon of judicial ethics as long as his friendly relations with Dominador A.
Tan and family did not influence his official actuations as a judge where said persons
were concerned. There is no tangible convincing proof that herein respondent gave any
undue privileges in his court to Dominador Arigpa Tan or that the latter benefitted in his
practice of law from his personal relations with respondent, or that he used his influence,
if he had any, on the Judges of the other branches of the Court to favor said Dominador
Tan.
Of course it is highly desirable for a member of the judiciary to refrain as much as
possible from maintaining close friendly relations with practising attorneys and litigants in
his court so as to avoid suspicion 'that his social or business relations or friendship
constitute an element in determining his judicial course" (par. 30, Canons of Judicial

Ethics), but if a Judge does have social relations, that in itself would not constitute a
ground for disciplinary action unless it be clearly shown that his social relations be
clouded his official actuations with bias and partiality in favor of his friends (pp. 403-405,
rec.).
In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not
violate any law in acquiring by purchase a parcel of land which was in litigation in his court and in
engaging in business by joining a private corporation during his incumbency as judge of the Court of First
Instance of Leyte, he should be reminded to be more discreet in his private and business activities,
because his conduct as a member of the Judiciary must not only be characterized with propriety but must
always be above suspicion.
WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY
REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 133879
November 21, 2001
EQUATORIAL REALTY DEVELOPMENT, INC., petitioner,
vs.
MAYFAIR THEATER, INC., respondent.
PANGANIBAN, J.:
General propositions do not decide specific cases. Rather, laws are interpreted in the context of the
peculiar factual situation of each proceeding. Each case has its own flesh and blood and cannot be ruled
upon on the basis of isolated clinical classroom principles.
While we agree with the general proposition that a contract of sale is valid until rescinded, it is equally true
that ownership of the thing sold is not acquired by mere agreement, but by tradition or delivery. The
peculiar facts of the present controversy as found by this Court in an earlier relevant Decision show that
delivery was not actually effected; in fact, it was prevented by a legally effective impediment. Not having
been the owner, petitioner cannot be entitled to the civil fruits of ownership like rentals of the thing sold.
Furthermore, petitioner's bad faith, as again demonstrated by the specific factual milieu of said Decision,
bars the grant of such benefits. Otherwise, bad faith would be rewarded instead of punished.
The Case
Filed before this Court is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the
March 11, 1998 Order2 of the Regional Trial Court of Manila (RTC), Branch 8, in Civil Case No. 97-85141.
The dispositive portion of the assailed Order reads as follows:
"WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby GRANTED, and the
complaint filed by plaintiff Equatorial is hereby DISMISSED." 3
Also questioned is the May 29, 1998 RTC Order4 denying petitioner's Motion for Reconsideration.
The Facts
The main factual antecedents of the present Petition are matters of record, because it arose out of an
earlier case decided by this Court on November 21, 1996, entitled Equatorial Realty Development, Inc. v.
Mayfair Theater, Inc.5 (henceforth referred to as the "mother case"), docketed as G.R No. 106063.
Carmelo & Bauermann, Inc. ("Camelo" ) used to own a parcel of land, together with two 2-storey buildings
constructed thereon, located at Claro M. Recto Avenue, Manila, and covered by TCT No. 18529 issued in
its name by the Register of Deeds of Manila.
On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. ("Mayfair") for a
period of 20 years. The lease covered a portion of the second floor and mezzanine of a two-storey
building with about 1,610 square meters of floor area, which respondent used as a movie house known as
Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Contract of Lease with Carmelo for the
lease of another portion of the latter's property namely, a part of the second floor of the two-storey
building, with a floor area of about 1,064 square meters; and two store spaces on the ground floor and the
mezzanine, with a combined floor area of about 300 square meters. In that space, Mayfair put up another
movie house known as Miramar Theater. The Contract of Lease was likewise for a period of 20 years.
Both leases contained a provision granting Mayfair a right of first refusal to purchase the subject
properties. However, on July 30, 1978 within the 20-year-lease term the subject properties were
sold by Carmelo to Equatorial Realty Development, Inc. ("Equatorial") for the total sum of P11,300,000,
without their first being offered to Mayfair.
As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the
Regional Trial Court of Manila (Branch 7) for (a) the annulment of the Deed of Absolute Sale between
Carmelo and Equatorial, (b) specific performance, and (c) damages. After trial on the merits, the lower
court rendered a Decision in favor of Carmelo and Equatorial. This case, entitled "Mayfair" Theater, Inc. v.
Carmelo and Bauermann, Inc., et al.," was docketed as Civil Case No. 118019.
On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA) completely reversed and set
aside the judgment of the lower court.
The controversy reached this Court via G.R No. 106063. In this mother case, it denied the Petition for
Review in this wise:
"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23,
1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between
petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby
deemed rescinded; Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty
Development the purchase price. The latter is directed to execute the deeds and documents
necessary to return ownership to Carmelo & Bauermann of the disputed lots. Carmelo &
Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for
P11,300,000.00."6
The foregoing Decision of this Court became final and executory on March 17, 1997. On April 25, 1997,
Mayfair filed a Motion for Execution, which the trial court granted.
However, Carmelo could no longer be located. Thus, following the order of execution of the trial court,
Mayfair deposited with the clerk of court a quo its payment to Carmelo in the sum of P11,300,000 less;
P847,000 as withholding tax. The lower court issued a Deed of Reconveyance in favor of Carmelo and a
Deed of Sale in favor of Mayfair. On the basis of these documents, the Registry of Deeds of Manila
canceled Equatorial's titles and issued new Certificates of Title 7 in the name of Mayfair.
Ruling on Equatorial's Petition for Certiorari and Petition contesting the foregoing manner of execution,
the CA in its Resolution of November 20, 1998, explained that Mayfair had no right to deduct the
P847,000 as withholding tax. Since Carmelo could no longer be located, the appellate court ordered
Mayfair to deposit the said sum with the Office of the Clerk of Court, Manila, to complete the full amount
of P11,300,000 to be turned over to Equatorial.
Equatorial questioned the legality of the above CA ruling before this Court in G.R No. 136221 entitled
"Equatorial Realty Development, Inc. v. Mayfair Theater, Inc." In a Decision promulgated on May 12,
2000,8 this Court directed the trial court to follow strictly the Decision in GR. No. 106063, the mother case.
It explained its ruling in these words:
"We agree that Carmelo and Bauermann is obliged to return the entire amount of eleven million
three hundred thousand pesos (P11,300,000.00) to Equatorial. On the other hand, Mayfair may
not deduct from the purchase price the amount of eight hundred forty-seven thousand pesos
(P847,000.00) as withholding tax. The duty to withhold taxes due, if any, is imposed on the seller
Carmelo and Bauermann, Inc."9
Meanwhile, on September 18, 1997 barely five months after Mayfair had submitted its Motion for
Execution before the RTC of Manila, Branch 7 Equatorial filed with the Regional Trial Court of Manila,
Branch 8, an action for the collection of a sum of money against Mayfair, claiming payment of rentals or
reasonable compensation for the defendant's use of the subject premises after its lease contracts had
expired. This action was the progenitor of the present case.

In its Complaint, Equatorial alleged among other things that the Lease Contract covering the premises
occupied by Maxim Theater expired on May 31, 1987, while the Lease Contract covering the premises
occupied by Miramar Theater lapsed on March 31, 1989. 10 Representing itself as the owner of the subject
premises by reason of the Contract of Sale on July 30, 1978, it claimed rentals arising from Mayfair's
occupation thereof.
Ruling of the RTC Manila, Branch 8
As earlier stated, the trial court dismissed the Complaint via the herein assailed Order and denied the
Motion for Reconsideration filed by Equatorial.11
The lower court debunked the claim of petitioner for unpaid back rentals, holding that the rescission of the
Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary
rights, even in expectancy.
In granting the Motion to Dismiss, the court a quo held that the critical issue was whether Equatorial was
the owner of the subject property and could thus enjoy the fruits or rentals therefrom. It declared the
rescinded Deed of Absolute Sale as avoid at its inception as though it did not happen."
The trial court ratiocinated as follows:
"The meaning of rescind in the aforequoted decision is to set aside. In the case of Ocampo v.
Court of Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court held that, 'to rescind is to
declare a contract void in its inception and to put an end as though it never were. It is not merely
to terminate it and release parties from further obligations to each other but to abrogate it from the
beginning and restore parties to relative positions which they would have occupied had no
contract ever been made.'
"Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial and Carmelo
dated July 31, 1978 is void at its inception as though it did not happen.
"The argument of Equatorial that this complaint for back rentals as 'reasonable compensation for
use of the subject property after expiration of the lease contracts presumes that the Deed of
Absolute Sale dated July 30, 1978 from whence the fountain of Equatorial's all rights flows is still
valid and existing.
xxx
xxx
xxx
"The subject Deed of Absolute Sale having been rescinded by the Supreme Court, Equatorial is
not the owner and does not have any right to demand backrentals from the subject property. . . 12
The trial court added: "The Supreme Court in the Equatorial case, G.R No. 106063, has categorically
stated that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the present
complaint to res judicata."13
Hence, the present recourse.14
Issues
Petitioner submits, for the consideration of this Court, the following issues: 15
"A
The basis of the dismissal of the Complaint by the Regional Trial Court not only disregards basic
concepts and principles in the law on contracts and in civil law, especially those on rescission and
its corresponding legal effects, but also ignores the dispositive portion of the Decision of the
Supreme Court in G.R. No. 106063 entitled 'Equatorial Realty Development, Inc. & Carmelo &
Bauermann, Inc. vs. Mayfair Theater, Inc.'
"B.
The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor of petitioner by
Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises used and occupied by
respondent, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063, is 'void
at its inception as though it did not happen.'
"C.
The Regional Trial Court likewise erred in holding that the aforesaid Deed of Absolute Sale, dated
July 31, 1978, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063,
petitioner 'is not the owner and does not have any right to demand backrentals from the subject

property,' and that the rescission of the Deed of Absolute Sale by the Supreme Court does not
confer to petitioner 'any vested right nor any residual proprietary rights even in expectancy.'
"D.
The issue upon which the Regional Trial Court dismissed the civil case, as stated in its Order of
March 11, 1998, was not raised by respondent in its Motion to Dismiss.
"E.
The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-85141 is not
one of the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the 1997 Rules of Civil
Procedure."
Basically, the issues can be summarized into two: (1) the substantive issue of whether Equatorial is
entitled to back rentals; and (2) the procedural issue of whether the court a quo's dismissal of Civil Case
No. 97-85141 was based on one of the grounds raised by respondent in its Motion to Dismiss and
covered by Rule 16 of the Rules of Court.
This Court's Ruling
The Petition is not meritorious.
First Issue:
Ownership of Subject Properties
We hold that under the peculiar facts and circumstances of the case at bar, as found by this Court en
banc in its Decision promulgated in 1996 in the mother case, no right of ownership was transferred from
Carmelo to Equatorial in view of a patent failure to deliver the property to the buyer.
Rental a Civil
Fruit of Ownership
To better understand the peculiarity of the instant case, let us begin with some basic parameters. Rent is
a civil fruit16 that belongs to the owner of the property producing it 17 by right of accession.18 Consequently
and ordinarily, the rentals that fell due from the time of the perfection of the sale to petitioner until its
rescission by final judgment should belong to the owner of the property during that period.
By a contract of sale, "one of the contracting parties obligates himself to transfer ownership of and to
deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent." 19
Ownership of the thing sold is a real right,20 which the buyer acquires only upon delivery of the thing to
him "in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee." 21 This right is transferred, not merely by
contract, but also by tradition or delivery.22 Non nudis pactis sed traditione dominia rerum transferantur.
And there is said to be delivery if and when the thing sold "is placed in the control and possession of the
vendee."23 Thus, it has been held that while the execution of a public instrument of sale is recognized by
law as equivalent to the delivery of the thing sold, 24 such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take actual possession of the land sold.25
Delivery has been described as a composite act, a thing in which both parties must join and the minds of
both parties concur. It is an act by which one party parts with the title to and the possession of the
property, and the other acquires the right to and the possession of the same. In its natural sense, delivery
means something in addition to the delivery of property or title; it means transfer of possession. 26 In the
Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the
absolute giving up of the control and custody of the property on the part of the vendor, and the
assumption of the same by the vendee."27
Possession Never
Acquired by Petitioner
Let us now apply the foregoing discussion to the present issue. From the peculiar facts of this case, it is
clear that petitioner never took actual control and possession of the property sold, in view of respondent's
timely objection to the sale and the continued actual possession of the property. The objection took the
form of a court action impugning the sale which, as we know, was rescinded by a judgment rendered by
this Court in the mother case. It has been held that the execution of a contract of sale as a form of
constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent the

passing of the property from the hands of the vendor into those of the vendee. 28 When there is such
impediment, "fiction yields to reality the delivery has not been effected." 29
Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally
sufficient impediment that effectively prevented the passing of the property into the latter's hands.
This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca,30 in which the Court held
as follows:
"The question that now arises is: Is there any stipulation in the sale in question from which we can
infer that the vendor did not intend to deliver outright the possession of the lands to the vendee?
We find none. On the contrary, it can be clearly seen therein that the vendor intended to place the
vendee in actual possession of the lands immediately as can be inferred from the stipulation that
the vendee 'takes actual possession thereof . . . with full rights to dispose, enjoy and make use
thereof in such manner and form as would be most advantageous to herself.' The possession
referred to in the contract evidently refers to actual possession and not merely symbolical
inferable from the mere execution of the document.
"Has the vendor complied with this express commitment? she did not. As provided in Article 1462,
the thing sold shall be deemed delivered when the vendee is placed in
the control and possession thereof, which situation does not here obtain because from the
execution of the sale up to the present the vendee was never able to take possession of the lands
due to the insistent refusal of Martin Deloso to surrender them claiming ownership thereof. And
although it is postulated in the same article that the execution of a public document is equivalent
to delivery, this legal fiction only holds true when there is no impediment that may prevent the
passing of the property from the hands of the vendor into those of the vendee. x x x." 31
The execution of a public instrument gives rise, therefore, only to a prima facie presumption of delivery.
Such presumption is destroyed when the instrument itself expresses or implies that delivery was not
intended; or when by other means it is shown that such delivery was not effected, because a third person
was actually in possession of the thing. In the latter case, the sale cannot be considered consummated.
However, the point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a
right to the fruits of the thing sold from the time the obligation to deliver the property to petitioner
arose.32 That time arose upon the perfection of the Contract of Sale on July 30, 1978, from which moment
the laws provide that the parties to a sale may reciprocally demand performance. 33 Does this mean that
despite the judgment rescinding the sale, the right to the fruits 34 belonged to, and remained enforceable
by, Equatorial?
Article 1385 of the Civil Code answers this question in the negative, because "[r]escission creates the
obligation to return the things which were the object of the contract, together with their fruits, and the price
with its interest; x x x" Not only the land and building sold, but also the rental payments paid, if any, had to
be returned by the buyer.
Another point. The Decision in the mother case stated that "Equatorial x x x has received rents" from
Mayfair "during all the years that this controversy has been litigated." The Separate Opinion of Justice
Teodoro Padilla in the mother case also said that Equatorial was "deriving rental income" from the
disputed property. Even hereinponente's Separate Concurring Opinion in the mother case recognized
these rentals. The question now is: Do all these statements concede actual delivery?
The answer is "No." The fact that Mayfair paid rentals to Equatorial during the litigation should not be
interpreted to mean either actual delivery or ipso facto recognition of Equatorial's title.
The CA Records of the mother case 35 show that Equatorial as alleged buyer of the disputed properties
and as alleged successor-in-interest of Carmelo's rights as lessor submitted two ejectment suits
against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed as Civil Case No.
121570 on July 9, 1987; and thesecond, as Civil Case No. 131944 on May 28, 1990. Mayfair eventually
won them both. However, to be able to maintain physical possession of the premises while awaiting the
outcome of the mother case, it had no choice but to pay the rentals.
The rental payments made by Mayfair should not be construed as a recognition of Equatorial as the new
owner. They were made merely to avoid imminent eviction. It is in this context that one should understand
the aforequoted factual statements in the ponencia in the mother case, as well as the Separate Opinion of
Mr. Justice Padilla and the Separate Concurring Opinion of the herein ponente.

At bottom, it may be conceded that, theoretically, a rescissible contract is valid until rescinded. However,
thisgeneral principle is not decisive to the issue of whether Equatorial ever acquired the right to collect
rentals. What is decisive is the civil law rule that ownership is acquired, not by mere agreement, but by
tradition or delivery. Under the factual environment of this controversy as found by this Court in the
mother case, Equatorial was never put in actual and effective control or possession of the property
because of Mayfair's timely objection.
As pointed out by Justice Holmes, general propositions do not decide specific cases. Rather, "laws are
interpreted in the context of the peculiar factual situation of each case. Each case has its own flesh and
blood and cannot be decided on the basis of isolated clinical classroom principles." 36
In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded before it
could be consummated. Petitioner never acquired ownership, not because the sale was void, as
erroneously claimed by the trial court, but because the sale was not consummated by a legally
effective delivery of the property sold.
Benefits Precluded by
Petitioner's Bad Faith
Furthermore, assuming for the sake of argument that there was valid delivery, petitioner is not entitled to
any benefits from the "rescinded" Deed of Absolute Sale because of its bad faith. This being the law of the
mother case decided in 1996, it may no longer be changed because it has long become final and
executory. Petitioner's bad faith is set forth in the following pertinent portions of the mother case:
"First and foremost is that the petitioners acted in bad faith to render Paragraph 8 'inutile.'
xxx
xxx
xxx
"Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in
question rescissible. We agree with respondent Appellate Court that the records bear out the fact
that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale,
studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good
faith, and, therefore, rescission lies.
xxx
xxx
xxx
"As also earlier emphasized, the contract of sale between Equatorial and Carmelo is
characterized by bad faith, since it was knowingly entered into in violation of the rights of and to
the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial
admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's
knowledge of the stipulations therein should have cautioned it to look further into the agreement
to determine if it involved stipulations that would prejudice its own interests.
xxx
xxx
xxx
"On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with
notice and full knowledge that Mayfair had a right to or interest in the property superior to its own.
Carmelo and Equatorial took unconscientious advantage of Mayfair." 37 (Italics supplied)
Thus, petitioner was and still is entitled solely to he return of the purchase price it paid to Carmelo; no
more, no less. This Court has firmly ruled in the mother case that neither of them is entitled to any
consideration of equity, as both "took unconscientious advantage of Mayfair." 38
In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By the
same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's en banc
Decision, which has long become final.
Petitioner's claim of reasonable compensation for respondent's use and occupation of the subject
property from the time the lease expired cannot be countenanced. If it suffered any loss, petitioner must
bear it in silence, since it had wrought that loss upon itself. Otherwise, bad faith would be rewarded
instead of punished.@lawphil.net
We uphold the trial court's disposition, not for the reason it gave, but for (a) the patent failure to deliver the
property and (b) petitioner's bad faith, as above discussed.
Second Issue:itc-alf
Ground in Motion to Dismiss

Procedurally, petitioner claims that the trial court deviated from the accepted and usual course of judicial
proceedings when it dismissed Civil Case No. 97-85141 on a ground not raised in respondent's Motion to
Dismiss. Worse, it allegedly based its dismissal on a ground not provided for in a motion to dismiss as
enunciated in the Rules of Court.@lawphil.net
We are not convinced A review of respondent's Motion to Dismiss Civil Case No. 97-85141 shows that
there were two grounds invoked, as follows:
"(A)
Plaintiff is guilty of forum-shopping.itc-alf
"(B)
Plaintiff's cause of action, if any, is barred by prior judgment." 39
The court a quo ruled, inter alia, that the cause of action of petitioner plaintiff in the case below) had been
barred by a prior judgment of this Court in G.R No. 106063, the mother case.
Although it erred in its interpretation of the said Decision when it argued that the rescinded Deed of
Absolute Sale was avoid," we hold, nonetheless, that petitioner's cause of action is indeed barred by a
prior judgment of this Court. As already discussed, our Decision in G.R No. 106063 shows that petitioner
is not entitled to back rentals, because it never became the owner of the disputed properties due to a
failure of delivery. And even assuming arguendo that there was a valid delivery, petitioner's bad faith
negates its entitlement to the civil fruits of ownership, like interest and rentals.
Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a court
of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any
subsequent litigation between the same parties and for the same cause. 40 Thus, "[a] final judgment on the
merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their
privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause
of action."41 Res judicata is based on the ground that the "party to be affected, or some other with whom
he is in privity, has litigated the same matter in a former action in a court of competent jurisdiction, and
should not be permitted to litigate it again.42
It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive trials. At
the same time, it prevents the clogging of court dockets. Equally important, it stabilizes rights and
promotes the rule of law.@lawphil.net
We find no need to repeat the foregoing disquisitions on the first issue to show satisfaction of the
elements of res judicata. Suffice it to say that, clearly, our ruling in the mother case bars petitioner from
claiming back rentals from respondent. Although the court a quo erred when it declared "void from
inception" the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion supports
the grant of the Motion to Dismiss on the ground that our prior judgment in G.R No. 106063 has already
resolved the issue of back rentals.
On the basis of the evidence presented during the hearing of Mayfair's Motion to Dismiss, the trial court
found that the issue of ownership of the subject property has been decided by this Court in favor of
Mayfair. We quote the RTC:
"The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated that the
Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the present complaint
to res judicata."43(Emphasis in the original)
Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in
interpreting the meaning of "rescinded" as equivalent to "void" In short, it ruled on the ground raised;
namely, bar by prior judgment. By granting the Motion, it disposed correctly, even if its legal reason for
nullifying the sale was wrong. The correct reasons are given in this Decision.
WHEREFORE, the Petition is hereby DENIED. Costs against petitioner.itc-alf
SO ORDERED.
FIRST DIVISION
[G.R. No. 143826. August 28, 2003]
HEIRS OF IGNACIA AGUILAR-REYES, petitioners, vs. SPOUSES CIPRIANO MIJARES AND
FLORENTINA MIJARES, respondents.

DECISION
YNARES-SANTIAGO, J.:
Under the regime of the Civil Code, the alienation or encumbrance of a conjugal real property
requires the consent of the wife. The absence of such consent renders the entire transaction [1]merely
voidable and not void.[2] The wife may, during the marriage and within ten years from the transaction
questioned, bring an action for the annulment of the contract entered into by her husband without her
consent.[3]
Assailed in this petition for review on certiorari are the January 26, 2000 Decision [4] and June 19,
2000, Resolution[5] of the Court of Appeals in CA-G.R. No. 28464 which declared respondents as
purchasers in good faith and set aside the May 31, 1990 and June 29, 1990 Orders of the Regional Trial
Court of Quezon City, Branch 101, in Civil Case No. Q-48018.
The controversy stemmed from a dispute over Lot No. 4349-B-2, [6] approximately 396 square meters,
previously covered by Transfer Certificate of Title (TCT) No. 205445, located in Balintawak, Quezon City
and registered in the name of Spouses Vicente Reyes and Ignacia Aguilar-Reyes. [7] Said lot and the
apartments built thereon were part of the spouses conjugal properties having been purchased using
conjugal funds from their garments business.[8]
Vicente and Ignacia were married in 1960, but had been separated de facto since 1974.[9] Sometime
in 1984, Ignacia learned that on March 1, 1983, Vicente sold Lot No. 4349-B-2 to respondent spouses
Cipriano and Florentina Mijares for P40,000.00. [10] As a consequence thereof, TCT No. 205445 was
cancelled and TCT No. 306087 was issued on April 19, 1983 in the name of respondent spouses. [11] She
likewise found out that Vicente filed a petition for administration and appointment of guardian with the
Metropolitan Trial Court of Quezon City, Branch XXI.Vicente misrepresented therein that his wife, Ignacia,
died on March 22, 1982, and that he and their 5 minor children were her only heirs. [12] On September 29,
1983, the court appointed Vicente as the guardian of their minor children. [13] Subsequently, in its Order
dated October 14, 1983, the court authorized Vicente to sell the estate of Ignacia. [14]
On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent spouses demanding the
return of her share in the lot. Failing to settle the matter amicably, Ignacia filed on June 4, 1996 a
complaint[15] for annulment of sale against respondent spouses. The complaint was thereafter amended to
include Vicente Reyes as one of the defendants.[16]
In their answer, respondent spouses claimed that they are purchasers in good faith and that the sale
was valid because it was duly approved by the court. [17] Vicente Reyes, on the other hand, contended that
what he sold to the spouses was only his share in Lot No. 4349-B-2, excluding the share of his wife, and
that he never represented that the latter was already dead. [18] He likewise testified that respondent
spouses, through the counsel they provided him, took advantage of his illiteracy by filing a petition for the
issuance of letters of administration and appointment of guardian without his knowledge. [19]
On February 15, 1990, the court a quo rendered a decision declaring the sale of Lot No. 4349-B-2
void with respect to the share of Ignacia. It held that the purchase price of the lot was P110,000.00 and
ordered Vicente to return thereof or P55,000.00 to respondent spouses. The dispositive portion of the
said decision, readsWHEREFORE, premises above considered, judgment is hereby rendered declaring the subject Deed of Absolute
Sale, dated March [1,] 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares
NULL AND VOID WITH RESPECT TO ONE-HALF (1/2) OF THE SAID PROPERTY;
The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the names of defendant
spouses Cipriano Mijares and Florentina Mijares and to issue a new TCT in the name of the plaintiff Ignacia
Aguilar-Reyes as owner in fee simple of one-half (1/2) of said property and the other half in the names of defendant
spouses Cipriano Mijares and Florentin[a] Mijares, upon payment of the required fees therefore;
Said defendant spouses Mijares are also ordered to allow plaintiff the use and exercise of rights, as well as
obligations, pertinent to her one-half (1/2) ownership of the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of interest from the execution of
the subject Deed of Absolute Sale on March 1, 1983, to the defendant spouses Cipriano Mijares and Florentina
Mijares which corresponds to the one-half (1/2) of the actual purchase price by the said Mijares but is annulled in
this decision (sic);

Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of P50,000.00 by way of moral and
exemplary damages, plus costs of this suit.
SO ORDERED.[20]
Ignacia filed a motion for modification of the decision praying that the sale be declared void in its
entirety and that the respondents be ordered to reimburse to her the rentals they collected on the
apartments built on Lot No. 4349-B-2 computed from March 1, 1983.
On May 31, 1990, the trial court modified its decision by declaring the sale void in its entirety and
ordering Vicente Reyes to reimburse respondent spouses the purchase price of P110,000, thus
WHEREFORE, premises considered, judgment is hereby rendered declaring the subject Deed of Absolute Sale,
dated March 1, 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares asnull and
void ab initio, in view of the absence of the wifes conformity to said transaction.
Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the
name of Cipriano Mijares and Florentin[a] Mijares and issue a new TCT in the name of the plaintiff and defendant
Ignacia Aguilar-Reyes and Vicente Reyes as owners in fee simple, upon payment of required fees therefore.
Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten thousand pesos (P110,000.00)
with legal rate of interest at 12% per annum from the execution of the subject Deed of Absolute Sale on March 1,
1983.
Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way of moral and exemplary
damages, plus costs of this suit.
SO ORDERED.[21]
On motion[22] of Ignacia, the court issued an Order dated June 29, 1990 amending the dispositive
portion of the May 31, 1990 decision by correcting the Transfer Certificate of Title of Lot No. 4349-B-2, in
the name of Cipriano Mijares and Florentina Mijares, from TCT No. 306083 to TCT No. 306087; and
directing the Register of Deeds of Quezon City to issue a new title in the name of Ignacia Aguilar-Reyes
and Vicente Reyes. The Order likewise specified that Vicente Reyes should pay Ignacia Aguilar-Reyes
the amount of P50,000.00 as moral and exemplary damages. [23]
Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the Court of Appeals.
[24]
Pending the appeal, Ignacia died and she was substituted by her compulsory heirs. [25]
Petitioners contended that they are entitled to reimbursement of the rentals collected on the
apartment built on Lot No. 4349-B-2, while respondent spouses claimed that they are buyers in good
faith. On January 26, 2000, the Court of Appeals reversed and set aside the decision of the trial court. It
ruled that notwithstanding the absence of Ignacias consent to the sale, the same must be held valid in
favor of respondents because they were innocent purchasers for value. [26] The decretal potion of the
appellate courts decision states
WHEREFORE, premises considered, the Decision appealed from and the Orders dated May 31, 1990 and June 29,
1990, are SET ASIDE and in lieu thereof a new one is rendered
1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by Vicente Reyes in favor of spouses Cipriano
and [Florentina] Mijares valid and lawful;
2. Ordering Vicente Reyes to pay spouses Mijares the amount of P30,000.00 as attorneys fees and legal expenses;
and
3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.
No pronouncement as to costs.
SO ORDERED.[27]
Undaunted by the denial of their motion for reconsideration, [28] petitioners filed the instant petition
contending that the assailed sale of Lot No. 4392-B-2 should be annulled because respondent spouses
were not purchasers in good faith.
The issues for resolution are as follows: (1) What is the status of the sale of Lot No. 4349-B-2 to
respondent spouses? (2) Assuming that the sale is annullable, should it be annulled in its entirety or only
with respect to the share of Ignacia? (3) Are respondent spouses purchasers in good faith?
Articles 166 and 173 of the Civil Code, [29] the governing laws at the time the assailed sale was
contracted, provide:

Art.166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is
confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership
without the wifes consent. If she refuses unreasonably to give her consent, the court may compel her to grant the
same
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for
the annulment of any contract of the husband entered into without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.
Pursuant to the foregoing provisions, the husband could not alienate or encumber any conjugal real
property without the consent, express or implied, of the wife otherwise, the contract is voidable. Indeed, in
several cases[30] the Court had ruled that such alienation or encumbrance by the husband is void. The
better view, however, is to consider the transaction as merely voidable and not void. [31] This is consistent
with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10
years from the questioned transaction, seek its annulment. [32]
In the case of Heirs of Christina Ayuste v. Court of Appeals,[33] it was categorically held that
There is no ambiguity in the wording of the law. A sale of real property of the conjugal partnership made by the
husband without the consent of his wife is voidable. The action for annulment must be brought during the marriage
and within ten years from the questioned transaction by the wife. Where the law speaks in clear and categorical
language, there is no room for interpretation there is room only for application.[34]
Likewise, in Spouses Guiang v. Court of Appeals,[35] the Court quoted with approval the ruling of the
trial court that under the Civil Code, the encumbrance or alienation of a conjugal real property by the
husband absent the wifes consent, is voidable and not void. Thus
Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real property of the
conjugal partnership without the wifes consent. The alienation or encumbrance if so made however is not null and
void. It is merely voidable. The offended wife may bring an action to annul the said alienation or
encumbrance. Thus, the provision of Article 173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for
the annulment of any contract of the husband entered into without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.
This particular provision giving the wife ten (10) years x x x during [the] marriage to annul the alienation or
encumbrance was not carried over to the Family Code. It is thus clear that any alienation or encumbrance made after
August 3, 1988 when the Family Code took effect by the husband of the conjugal partnership property without the
consent of the wife is null and void
In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal property having been
purchased using the conjugal funds of the spouses during the subsistence of their marriage. It is beyond
cavil therefore that the sale of said lot to respondent spouses without the knowledge and consent of
Ignacia is voidable. Her action to annul the March 1, 1983 sale which was filed on June 4, 1986, before
her demise is perfectly within the 10 year prescriptive period under Article 173 of the Civil Code. Even if
we reckon the period from November 25, 1978 which was the date when Vicente and the respondent
spouses entered into a contract concerning Lot No. 4349-B-2, Ignacias action would still be within the
prescribed period.
Anent the second issue, the trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its
entirety. In Bucoy v. Paulino,[36] a case involving the annulment of sale with assumption of mortgages
executed by the husband without the consent of the wife, it was held that the alienation or encumbrance
must be annulled in its entirety and not only insofar as the share of the wife in the conjugal property is
concerned. Although the transaction in the said case was declared void and not merely voidable, the
rationale for the annulment of the whole transaction is the same thus
The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the
husband without the wife's consent, may be annulled by the wife. Had Congress intended to limit such annulment in
so far as the contract shall prejudice the wife, such limitation should have been spelled out in the statute. It is not the

legitimate concern of this Court to recast the law. As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C.
Puno of the Court of First Instance correctly stated, [t]he rule (in the first sentence of Article 173) revokes Baello vs.
Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430, in which cases annulment was held to refer only
to the extent of the one-half interest of the wife
The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share of the wife, is not
without its basis in the common-sense rule. To be underscored here is that upon the provisions of Articles 161, 162
and 163 of the Civil Code, the conjugal partnership is liable for many obligations while the conjugal partnership
exists. Not only that. The conjugal property is even subject to the payment of debts contracted by either spouse
before the marriage, as those for the payment of fines and indemnities imposed upon them after the responsibilities
in Article 161 have been covered (Article 163, par. 3), if it turns out that the spouse who is bound thereby, should
have no exclusive property or if it should be insufficient. These are considerations that go beyond the mere equitable
share of the wife in the property. These are reasons enough for the husband to be stopped from disposing of the
conjugal property without the consent of the wife. Even more fundamental is the fact that the nullity is decreed by
the Code not on the basis of prejudice but lack of consent of an indispensable party to the contract under Article 166.
[37]

With respect to the third issue, the Court finds that respondent spouses are not purchasers in good
faith. A purchaser in good faith is one who buys property of another, without notice that some other
person has a right to, or interest in, such property and pays full and fair price for the same, at the time of
such purchase, or before he has notice of the claim or interest of some other persons in the property. He
buys the property with the belief that the person from whom he receives the thing was the owner and
could convey title to the property. A purchaser cannot close his eyes to facts which should put a
reasonable man on his guard and still claim he acted in good faith. [38]
In the instant case, there existed circumstances that should have placed respondent spouses on
guard. The death certificate of Ignacia, shows that she died on March 22, 1982. The same death
certificate, however, reveals that (1) it was issued by the Office of the Civil Registrar of Lubao Pampanga
on March 10, 1982; (2) the alleged death of Ignacia was reported to the Office of the Civil Registrar
on March 4, 1982; and (3) her burial or cremation would be on March 8, 1982.[39] These obvious flaws in
the death certificate should have prompted respondents to investigate further, especially so that
respondent Florentina Mijares admitted on cross examination that she asked for the death certificate of
Ignacia because she was suspicious that Ignacia was still alive. [40] Moreover, respondent spouses had all
the opportunity to verify the claim of Vicente that he is a widower because it was their lawyer, Atty.
Rodriguito S. Saet, who represented Vicente in the special proceedings before the Metropolitan Trial
Court.
Neither can respondent spouses rely on the alleged court approval of the sale. Note that the Order
issued by the Metropolitan Trial Court of Quezon City, Branch XXXI, appointing Vicente as guardian of his
5 minor children, as well as the Order authorizing him to sell the estate of Ignacia were issued only on
September 29, 1983 and October 14, 1983, respectively. On the other hand, the sale of the entire Lot No.
4349-B-2 to respondent spouses appears to have been made not on March 1, 1983, but even as early as
November 25, 1978. In the Agreement dated November 25, 1978, Vicente in consideration of the amount
of P110,000.00, sold to Cipriano Mijares Lot No. 4349-B-2 on installment basis, with the first installment
due on or before July 31, 1979. [41] This was followed by a Memorandum of Understanding executed on
July 30, 1979, by Vicente and Cipriano (1) acknowledging Ciprianos receipt of Vicentes down payment in
the amount of P50,000.00; and (2) authorizing Florentina Mijares to collect rentals. [42] On July 14, 1981,
Vicente and Cipriano executed another Memorandum of Agreement, stating, among other, that out of the
purchase price of P110,000.00 Vicente had remaining balance of P19,000.00. [43] Clearly therefore, the
special proceedings before the Metropolitan Trial Court of Quezon City, Branch XXXI, could not have
been the basis of respondent spouses claim of good faith because the sale of Lot No. 4349-B-2 occurred
prior thereto.
Respondent spouses cannot deny knowledge that at the time of the sale in 1978, Vicente was
married to Ignacia and that the latter did not give her conformity to the sale. This is so because the 1978
Agreement described Vicente as married but the conformity of his wife to the sale did not appear in the
deed. Obviously, the execution of another deed of sale in 1983 over the same Lot No. 4349-B-2, after the
alleged death of Ignacia on March 22, 1982, as well as the institution of the special proceedings were,
intended to correct the absence of Ignacias consent to the sale.Even assuming that respondent spouses
believed in good faith that Ignacia really died on March 22, 1982, after they purchased the lot, the fact

remains that the sale of Lot No. 4349-B-2 prior to Ignacias alleged demise was without her consent and
therefore subject to annulment. The October 14, 1983 order authorizing the sale of the estate of Ignacia,
could not have validated the sale of Lot No. 4349-B-2 because said order was issued on the assumption
that Ignacia was already dead and that the sale dated March 1, 1983 was never categorically approved in
the said order.
The fact that the 5 minor children[44] of Vicente represented by the latter, signed the March 1, 1983
deed of sale of Lot No. 4349-B-2 will not estop them from assailing the validity thereof. Not only were they
too young at that time to understand the repercussions of the sale, they likewise had no right to sell the
property of their mother who, when they signed the deed, was very much alive.
If a voidable contract is annulled, the restoration of what has been given is proper. The relationship
between parties in any contract even if subsequently annulled must always be characterized and
punctuated by good faith and fair dealing. Hence, for the sake of justice and equity, and in consonance
with the salutary principle of non-enrichment at anothers expense, the Court sustains the trial courts order
directing Vicente to refund to respondent spouses the amount of P110,000.00 which they have paid
as purchase price of Lot No. 4349-B-2.[45] The court a quo correctly found that the subject of the sale was
the entire Lot No. 4349-B-2 and that the consideration thereof is not P40,000.00 as stated in the March 1,
1983 deed of sale, but P110,000.00 as evidenced by the (1) Agreement dated November 25, 1978 as well
as the July 30, 1979 Memorandum of Understanding and the July 14, 1981 Memorandum of Agreement
which served as receipts of the installment payments made by respondent Cipriano Mijares; and (2) the
receipt duly signed by Vicente Reyes acknowledging receipt of the amount of P110,000.00 from
respondent spouses as payment of the sale of the controverted lot. [46]
The trial court, however, erred in imposing 12% interest per annum on the amount due the
respondents. In Eastern Shipping Lines, Inc. v. Court of Appeals,[47] it was held that interest on obligations
not constituting a loan or forbearance of money is six percent (6%) annually. If the purchase price could
be established with certainty at the time of the filing of the complaint, the six percent (6%) interest should
be computed from the date the complaint was filed until finality of the decision. In Lui v. Loy,[48] involving a
suit for reconveyance and annulment of title filed by the first buyer against the seller and the second
buyer, the Court, ruling in favor of the first buyer and annulling the second sale, ordered the seller to
refund to the second buyer (who was not a purchaser in good faith) the purchase price of the lots. It was
held therein that the 6% interest should be computed from the date of the filing of the complaint by the
first buyer. After the judgment becomes final and executory until the obligation is satisfied, the amount
due shall earn interest at 12% per year, the interim period being deemed equivalent to a forbearance of
credit.[49]
Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined
with certainty at the time of the filing of the complaint shall earn 6% interest per annum from June 4, 1986
until the finality of this decision. If the adjudged principal and the interest (or any part thereof) remain
unpaid thereafter, the interest rate shall be twelve percent (12%) per annum computed from the time the
judgment becomes final and executory until it is fully satisfied.
Petitioners prayer for payment of rentals should be denied. Other than the allegation of Ignacia in her
Sinumpaang Salaysay that the apartments could be rented at P1,000.00 a month, no other evidence was
presented to substantiate her claim. In awarding rentals which are in the nature of actual damages, the
Court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on
competent proof and on the best evidence obtainable regarding the actual amount of loss. [50] None,
having been presented in the case at bar, petitioners claim for rentals must be denied.
While as a general rule, a party who has not appealed is not entitled to affirmative relief other than
the ones granted in the decision of the court below, law and jurisprudence authorize a tribunal to consider
errors, although unassigned, if they involve (1) errors affecting the lower courts jurisdiction over the
subject matter, (2) plain errors not specified, and (3) clerical errors. [51] In this case, though defendant
Vicente Reyes did not appeal, the plain error committed by the court a quo as to the award of moral and
exemplary damages must be corrected. These awards cannot be lumped together as was done by the
trial court.[52] Moral and exemplary damages are different in nature, and require separate
determination. Moral damages are awarded where the claimant experienced physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury as a result of the act complained of. [53] The award of exemplary damages, on the other

hand, is warranted when moral, temperate, liquidated, or compensatory damages were likewise awarded
by the court.[54]
Hence, the trial courts award of P50,000.00 by way of moral and exemplary damages should be
modified. Vicente Reyes should be ordered to pay the amounts of P25,000.00 as moral damages and
P25,000.00 as exemplary damages. Since Vicente Reyes was among the heirs substituted to the late
Ignacia Aguilar-Reyes, payment of moral and exemplary damages must be made by Vicente to his
children, petitioners in this case.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The January 26,
2000 Decision and June 19, 2002, Resolution of the Court of Appeals in CA-G.R. No. 28464 are
REVERSED and SET ASIDE. The May 31, 1990 Order of the Regional Trial Court of Quezon City, Branch
101, in Civil Case No. Q-48018, which annulled the March 1, 1983 Deed of Absolute Sale over Lot No.
4349-B-2, and ordered the Register of Deeds of Quezon City to cancel TCT No. 306087 in the name of
respondent spouses Cipriano Mijares and Florentina Mijares covering the same property; as well as the
June 29, 1990 Order correcting the typographical errors in the order dated March 1, 1983, are
REINSTATED, with the following MODIFICATIONS
(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of title over Lot No.
4349-B-2, in the name of petitioners as co-owners thereof;
(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of P110,000.00 as
purchase price of Lot No. 4349-B-2, with interest at 6% per annum from June 4, 1986, until finality of this
decision. After this decision becomes final, interest at the rate of 12% per annum on the principal and
interest (or any part thereof) shall be imposed until full payment.
(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar-Reyes, the
amounts of P25,000.00 as moral damages and P25,000.00 as exemplary damages.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 127540
October 17, 2001
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners,
vs.
HON. COURT OF APPEALS, FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners,
vs.
HON. COURT OF APPEALS, THE DIRECTOR OF LANDS, and FELIPE C. RIGONAN and CONCEPCION R.
RIGONAN, respondents.
QUISUMBNG, J.:
This petition1 seeks to annul the decision of the Court of Appeals dated August 29, 1996, which set aside the
decision of the Regional Trial Court of Batac, Ilocos Norte, Branch 17, in Civil Case No. 582-17
for reinvindicacionconsolidated with Cadastral Case No. 1.2 The petition likewise seeks to annul the resolution
dated December 11, 1996, denying petitioners' motion for reconsideration.
The facts of this case, culled from the records, are as follows:
Paulina Rigonan owned three (3) parcels of land, located at Batac and Espiritu, Ilocos Norte, including the
house and warehouse on one parcel. She allegedly sold them to private respondents, the spouses Felipe and
Concepcion Rigonan, who claim to be her relatives. In 1966, herein petitioners Eugenio Domingo, Crispin
Mangabat and Samuel Capalungan, who claim to be her closest surviving relatives, allegedly took possession
of the properties by means of stealth, force and intimidation, and refused to vacate the same. Consequently, on
February 2, 1976, herein respondent Felipe Rigonan filed a complaint for reinvindicacion against petitioners in
the Regional Trial Court of Batac, Ilocos Norte. On July 3, 1977, he amended the complaint and included his
wife as co-plaintiff. They alleged that they were the owners of the three parcels of land through the deed of sale
executed by Paulina Rigonan on January 28, 1965; that since then, they had been in continuous possession of
the subject properties and had introduced permanent improvements thereon; and that defendants (now
petitioners) entered the properties illegally, and they refused to leave them when asked to do so.

Herein petitioners, as defendants below, contested plaintiffs' claims. According to defendants, the alleged deed
of absolute sale was void for being spurious as well as lacking consideration. They said that Paulina Rigonan
did not sell her properties to anyone. As her nearest surviving kin within the fifth degree of consanguinity, they
inherited the three lots and the permanent improvements thereon when Paulina died in 1966. They said they
had been in possession of the contested properties for more than 10 years. Defendants asked for damages
against plaintiffs.
During trial, Juan Franco, Notary Public Evaristo P. Tagatag 3 and plaintiff Felipe Rigonan testified for plaintiffs
(private respondents now).
Franco testified that he was a witness to the execution of the questioned deed of absolute sale. However, when
cross-examined and shown the deed he stated that the deed was not the document he signed as a witness, but
rather it was the will and testament made by Paulina Rigonan.
Atty. Tagatag testified that he personally prepared the deed, he saw Paulina Rigonan affix her thumbprint on it
and he signed it both as witness and notary public. He further testified that he also notarized Paulina's last will
and testament dated February 19, 1965. The will mentioned the same lots sold to private respondents. When
asked why the subject lots were still included in the last will and testament, he could not explain. Atty. Tagatag
also mentioned that he registered the original deed of absolute sale with the Register of Deeds.
Plaintiff Felipe Rigonan claimed that he was Paulina's close relative. Their fathers were first cousins. However,
he could not recall the name of Paulina's grandfather. His claim was disputed by defendants, who lived with
Paulina as their close kin. He admitted the discrepancies between the Register of Deeds' copy of the deed and
the copy in his possession. But he attributed them to the representative from the Office of the Register of
Deeds who went to plaintiffs house after that Office received a subpoena duces tecum. According to him, the
representative showed him blanks in the deed and then the representative filled in the blanks by copying from
his (plaintiffs) copy.
Counsel for defendants (petitioners herein) presented as witnesses Jose Flores, the owner of the adjacent lot;
Ruben Blanco, then acting Registrar of Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio
Domingo.
Jose Flores testified that he knew defendants, herein petitioners, who had lived on the land with Paulina
Rigonan since he could remember and continued to live there even after Paulina's death. He said he did not
receive any notice nor any offer to sell the lots from Paulina, contrary to what was indicated in the deed of sale
that the vendor had notified all the adjacent owners of the sale. He averred he had no knowledge of any sale
between Paulina and private respondents.
Ruben Blanco, the acting Registrar of Deeds, testified that only the carbon copy, also called a duplicate
original, of the deed of sale was filed in his office, but he could not explain why this was so.
Zosima Domingo testified that her husband, Eugenio Domingo, was Paulina's nephew. Paulina was a first
cousin of Eugenio's father. She also said that they lived with Paulina and her husband, Jose Guerson, since
1956. They took care of her, spent for her daily needs and medical expenses, especially when she was
hospitalized prior to her death. She stated that Paulina was never badly in need of money during her lifetime.
On March 23, 1994, the trial court rendered judgment in favor of defendants (now the petitioners). It disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of defendants and against
the plaintiffs, and as prayed for, the Amended Complaint is hereby DISMISSED.
Defendants are hereby declared, by virtue of intestate succession, the lawful owners and possessors
of the house including the bodega and the three (3) parcels of land in suit and a Decree of Registration
adjudicating the ownership of the said properties to defendants is hereby issued.
The alleged deed of sale ( Exhs. "A", "A-1", "1" and "1-a") is hereby declared null and void and fake
and the prayer for the issuance of a writ of preliminary injunction is hereby denied.
Plaintiffs are hereby ordered to pay defendants:
a) P20,000.00 as moral damages;
b) P10,000.00 as exemplary damages;
c) P10,000.00 attorney's fees and other litigation expenses.
No pronouncement as to costs.4
Private respondents herein appealed to the Court of Appeals.
On August 29, 1996, the CA reversed the trial court's decision, thus:
WHEREFORE, the decision dated March 23, 1994 is hereby SET ASIDE. The plaintiffs-appellants
Felipe Rigonan and Concepcion Rigonan are declared the owners of the properties under litigation

and the defendants-appellees are hereby ordered to VACATE the subject properties and
SURRENDER the possession thereof to the heirs of the plaintiffs-appellants.
Costs against the defendants-appellees. 5
Hence, this petition assigning the following as errors:
I
THE RESPONDENT COURT OF APPEALS HAS DECIDED QUESTIONS OF LEGAL SUBSTANCE AND
SIGNIFICANCE NOT IN ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE APPLICABLE
DECISIONS OF THIS HONORABLE COURT.
II
THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE CONTRARY TO THOSE OF THE
TRIAL COURT AND CLEARLY VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL COURTS
ARE ENTITLED TO GREAT WEIGHT AND RESPECT ON APPEAL, ESPECIALLY WHEN SAID FINDINGS
ARE ESTABLISHED BY UNREBUTTED TESTIMONIAL AND DOCUMENTARY EVIDENCE.
III
THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT COURT OF APPEALS ARE GROUNDED
ENTIRELY ON SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES MANIFESTLY
MISTAKEN.
IV
THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT
FACTS NOT DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A
DIFFERENT CONCLUSION.
V
THAT THE FINDINGS OF FACT OF RESPONDENT COURT OF APPEALS ARE PREMISED ON SUPPOSED
ABSENCE OF EVIDENCE BUT IS CONTRADICTED BY THE EVIDENCE ON RECORD THUS
CONSTITUTES GRAVE ABUSE OF DISCRETION.6
The basic issue for our consideration is, did private respondents sufficiently establish the existence and due
execution of the Deed of Absolute and Irrevocable Sale of Real Property? Marked as Exhibits "A," "A-1," "1"
and "1-a," this deed purportedly involved nine (9) parcels of land, inclusive of the three (3) parcels in dispute,
sold at the price of P850 by Paulina Rigonan to private respondents on January 28, 1965, at Batac, Ilocos
Norte.7 The trial court found the deed "fake," being a carbon copy with no typewritten original presented; and
the court concluded that the document's execution "was tainted with alterations, defects, tamperings, and
irregularities which render it null and void ab initio".8
Petitioners argue that the Court of Appeals erred in not applying the doctrine that factual findings of trial courts
are entitled to great weight and respect on appeal, especially when said findings are established by unrebutted
testimonial and documentary evidence. They add that the Court of Appeals, in reaching a different conclusion,
had decided the case contrary to the evidence presented and the law applicable to the case. Petitioners
maintain that the due execution of the deed of sale was not sufficiently established by private respondents, who
as plaintiffs had the burden of proving it. First, the testimonies of the two alleged instrumental witnesses of the
sale, namely, Juan Franco and Efren Sibucao, were dispensed with and discarded when Franco retracted his
oral and written testimony that he was a witness to the execution of the subject deed. As a consequence, the
appellate court merely relied on Atty. Tagatag's (the notary public) testimony, which was incredible because
aside from taking the double role of a witness and notary public, he was a paid witness. Further his testimony,
that the subject deed was executed in the house of Paulina Rigonan, was rebutted by Zosima Domingo,
Paulina's housekeeper, who said that she did not see Atty. Tagatag, Juan Franco and Efren Sibucao in
Paulina's house on the alleged date of the deed's execution.
Secondly, petitioners said that private respondents failed to account for the typewritten original of the deed of
sale and that the carbon copy filed with the Register of Deeds was only a duplicate which contained insertions
and erasures. Further, the carbon copy was without an affidavit of explanation, in violation of the Administrative
Code as amended, which requires that if the original deed of sale is not presented or available upon
registration of the deed, the carbon copy or so-called "duplicate original" must be accompanied by an affidavit
of explanation, otherwise, registration must be denied.9
Thirdly, petitioners aver that the consideration of only P850 for the parcels of land sold, together with a house
and a warehouse, was another indication that the sale was fictitious because no person who was financially
stable would sell said property at such a grossly inadequate consideration.

Lastly, petitioners assert that there was abundant evidence that at the time of the execution of the deed of sale,
Paulina Rigonan was already senile. She could not have consented to the sale by merely imprinting her
thumbmark on the deed.
In their comment, private respondents counter that at the outset the petition must be dismissed for it lacks a
certification against forum shopping. Nonetheless, even disregarding this requirement, the petition must still be
denied in due course for it does not present any substantial legal issue, but factual or evidentiary ones which
were already firmly resolved by the Court of Appeals based on records and the evidence presented by the
parties. Private respondents' claim that the factual determination by the trial court lacks credibility for it was
made by the trial judge who presided only in one hearing of the case. The trial judge could not validly say that
the deed of absolute sale was "fake" because no signature was forged, according to private respondents; and
indeed a thumbmark, said to be the seller's own, appears thereon.
In their reply, petitioners said that the copy of the petition filed with this Court was accompanied with a
certification against forum shopping. If private respondents' copy did not contain same certification, this was
only due to inadvertence. Petitioners ask for the Court's indulgence for anyway there was substantial
compliance with Revised Circular No. 28-91.
On the contention that here only factual issues had been raised, hence not the proper subject for review by this
Court, petitioners reply that this general rule admits of exceptions, as when the factual findings of the Court of
Appeals and the trial court are contradictory; when the findings are grounded entirely on speculations, surmises
or conjectures; and when the Court of Appeals overlooked certain relevant facts not disputed by the parties
which if properly considered would justify a different conclusion. All these, according to petitioners, are present
in this case.
Before proceeding to the main issue, we shall first settle procedural issues raised by private respondents.
While the trial judge deciding the case presided over the hearings of the case only once, this circumstance
could not have an adverse effect on his decision. The continuity of a court and the efficacy of its proceedings
are not affected by the death, resignation or cessation from the service of the presiding judge. A Judge may
validly render a decision although he has only partly heard the testimony of the witnesses. 10 After all, he could
utilize and rely on the records of the case, including the transcripts of testimonies heard by the former presiding
judge.
On the matter of the certification against forum-shopping, petitioners aver that they attached one in the copy
intended for this Court. This is substantial compliance. A deviation from a rigid enforcement of the rules may be
allowed to attain their prime objective for, after all, the dispensation of justice is the core reason for the court's
existence.11
While the issues raised in this petition might appear to be mainly factual, this petition is properly given due
course because of the contradictory findings of the trial court and the Court of Appeals. Further, the later court
apparently overlooked certain relevant facts which justify a different conclusion. 12 Moreover, a compelling sense
to make sure that justice is done, and done rightly in the light of the issues raised herein, constrains us from
relying on technicalities alone to resolve this petition.
Now, on the main issue. Did private respondents establish the existence and due execution of the deed of
sale? Our finding is in the negative. First, note that private respondents as plaintiffs below presented only a
carbon copy of this deed. When the Register of Deeds was subpoenaed to produce the deed, no original
typewritten deed but only a carbon copy was presented to the trial court. Although the Court of Appeals calls it
a "duplicate original," the deed contained filled in blanks and alterations. None of the witnesses directly testified
to prove positively and convincingly Paulina's execution of the original deed of sale. The carbon copy did not
bear her signature, but only her alleged thumbprint. Juan Franco testified during the direct examination that he
was an instrumental witness to the deed. However, when cross-examined and shown a copy of the subject
deed, he retracted and said that said deed of sale was not the document he signed as witness. 13 He declared
categorically he knew nothing about it.14
We note that another witness, Efren Sibucao, whose testimony should have corroborated Atty. Tagatag's, was
not presented and his affidavit was withdrawn from the court,15 leaving only Atty. Tagatag's testimony, which
aside from being uncorroborated, was self-serving.
Secondly, we agree with the trial court that irregularities abound regarding the execution and registration of the
alleged deed of sale. On record, Atty. Tagatag testified that he himself registered the original deed with the
Register of Deeds.16 Yet, the original was nowhere to be found and none could be presented at the trial. Also,
the carbon copy on file, which is allegedly a duplicate original, shows intercalations and discrepancies when
compared to purported copies in existence. The intercalations were allegedly due to blanks left unfilled by Atty.
Tagatag at the time of the deed's registration. The blanks were allegedly filled in much later by a representative

of the Register of Deeds. In addition, the alleged other copies of the document bore different dates of entry:
May 16, 1966, 10:20 A.M.17 and June 10, 1966, 3:16 P.M.,18 and different entry numbers: 66246, 74389 19 and
64369. 20 The deed was apparently registered long after its alleged date of execution and after Paulina's death
on March 20, 1966.21 Admittedly, the alleged vendor Paulina Rigonan was not given a copy.22
Furthermore, it appears that the alleged vendor was never asked to vacate the premises she had purportedly
sold. Felipe testified that he had agreed to let Paulina stay in the house until her death. 23 In Alcos v. IAC, 162
SCRA 823 (1988), the buyer's immediate possession and occupation of the property was deemed
corroborative of the truthfulness and authenticity of the deed of sale. The alleged vendor's continued
possession of the property in this case throws an inverse implication, a serious doubt on the due execution of
the deed of sale. Noteworthy, the same parcels of land involved in the alleged sale were still included in the will
subsequently executed by Paulina and notarized by the same notary public, Atty. Tagatag. 24 These
circumstances, taken together, militate against unguarded acceptance of the due execution and genuineness of
the alleged deed of sale.
Thirdly, we have to take into account the element of consideration for the sale. The price allegedly paid by
private respondents for nine (9) parcels, including the three parcels in dispute, a house and a warehouse,
raises further questions. Consideration is the why of a contract, the essential reason which moves the
contracting parties to enter into the contract.25 On record, there is unrebutted testimony that Paulina as
landowner was financially well off. She loaned money to several people. 26 We see no apparent and compelling
reason for her to sell the subject parcels of land with a house and warehouse at a meager price of P850 only.
In Rongavilla vs. CA, 294 SCRA 289 (1998), private respondents were in their advanced years, and were not in
dire need of money, except for a small amount of P2,000 which they said were loaned by petitioners for the
repair of their house's roof. We ruled against petitioners, and declared that there was no valid sale because of
lack of consideration.
In the present case, at the time of the execution of the alleged contract, Paulina Rigonan was already of
advanced age and senile. She died an octogenarian on March 20, 1966, barely over a year when the deed was
allegedly executed on January 28, 1965, but before copies of the deed were entered in the registry allegedly on
May 16 and June 10, 1966. The general rule is that a person is not incompetent to contract merely because of
advanced years or by reason of physical infirmities. 27 However, when such age or infirmities have impaired the
mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights
then she is undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at the time of
the alleged execution of the deed, Paulina was already incapacitated physically and mentally. She narrated that
Paulina played with her waste and urinated in bed. Given these circumstances, there is in our view sufficient
reason to seriously doubt that she consented to the sale of and the price for her parcels of land. Moreover,
there is no receipt to show that said price was paid to and received by her. Thus, we are in agreement with the
trial court's finding and conclusion on the matter:
The whole evidence on record does not show clearly that the fictitious P850.00 consideration was ever
delivered to the vendor. Undisputably, the P850.00 consideration for the nine (9) parcels of land
including the house and bodega is grossly and shockingly inadequate, and the sale is null and void ab
initio.28
WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of Appeals dated August 29,
1996 and December 11, 1996, respectively, are REVERSED and SET ASIDE. The decision of the Regional
Trial Court of Batac, Ilocos Norte, Branch 17, dated March 23, 1994, is REINSTATED.
Costs against private respondents.
SO ORDERED.