HEIRS

OF ARTURO REYES, represented by Evelyn R. San

Buenaventura, petitioners,
vs.
ELENA SOCCO-BELTRAN, respondent.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the Decision1 dated 31 January 2006 rendered by the
Court of Appeals in CA-G.R. SP No. 87066, which affirmed the Decision2
dated 30 June 2003 of the Office of the President, in O.P. Case No. 02A-007, approving the application of respondent Elena Socco-Beltran to
purchase the subject property.

The subject property in this case is a parcel of land originally identified
as Lot No. 6-B, situated in Zamora Street, Dinalupihan, Bataan, with a
total area of 360 square meters. It was originally part of a larger parcel
of land, measuring 1,022 square meters, allocated to the Spouses
Marcelo Laquian and Constancia Socco (Spouses Laquian), who paid for
the same with Japanese money. When Marcelo died, the property was
left to his wife Constancia. Upon Constancias subsequent death, she
left the original parcel of land, along with her other property, with her
heirs her siblings, namely: Filomena Eliza Socco, Isabel Socco de
Hipolito, Miguel R. Socco, and Elena Socco-Beltran.3 Pursuant to an
unnotarized document entitled "Extrajudicial Settlement of the Estate
of the Deceased Constancia R. Socco," executed by Constancias heirs
sometime in 1965, the parcel of land was partitioned into three lots
Lot No. 6-A, Lot No. 6-B, and Lot No. 6-C.4 The subject property, Lot No.
6-B, was adjudicated to respondent, but no title had been issued in her
name.

On 25 June 1998, respondent Elena Socco-Beltran filed an application
for the purchase of Lot No. 6-B before the Department of Agrarian
Reform (DAR), alleging that it was adjudicated in her favor in the extrajudicial settlement of Constancia Soccos estate.5

Petitioners herein, the heirs of the late Arturo Reyes, filed their protest
to respondents petition before the DAR on the ground that the subject
property was sold by respondents brother, Miguel R. Socco, in favor of

their father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5

September 1954, stipulating that:6

That I am one of the co-heirs of the Estate of the deceased Constancia
Socco; and that I am to inherit as such a portion of her lot consisting of
Four Hundred Square Meters (400) more or less located on the (sic)
Zamora St., Municipality of Dinalupihan, Province of Bataan, bounded
as follows:

x x x x

That for or in consideration of the sum of FIVE PESOS (P5.00) per
square meter, hereby sell, convey and transfer by way of this
conditional sale the said 400 sq.m. more or less unto Atty. Arturo C.
Reyes, his heirs, administrator and assigns x x x. (Emphasis supplied.)

Petitioners averred that they took physical possession of the subject
property in 1954 and had been uninterrupted in their possession of the
said property since then.

Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian
Reform Office conducted an investigation, the results of which were
contained in her Report/ Recommendation dated 15 April 1999. Other
than recounting the afore-mentioned facts, Legal Officer Pinlac also
made the following findings in her Report/Recommendation:7

Further investigation was conducted by the undersigned and based on
the documentary evidence presented by both parties, the following
facts were gathered: that the house of [the] Reyes family is adjacent to
the landholding in question and portion of the subject property
consisting of about 15 meters [were] occupied by the heirs of Arturo
Reyes were a kitchen and bathroom [were] constructed therein; on the
remaining portion a skeletal form made of hollow block[s] is erected
and according to the heirs of late Arturo Reyes, this was constructed
since the year (sic) 70s at their expense; that construction of the said
skeletal building was not continued and left unfinished which according
to the affidavit of Patricia Hipolito the Reyes family where (sic)

prevented by Elena Socco in their attempt of occupancy of the subject

landholding; (affidavit of Patricia Hipolito is hereto attached as Annex
"F"); that Elena Socco cannot physically and personally occupy the
subject property because of the skeletal building made by the Reyes
family who have been requesting that they be paid for the cost of the
construction and the same be demolished at the expense of Elena
Socco; that according to Elena Socco, [she] is willing to waive her right
on the portion where [the] kitchen and bathroom is (sic) constructed
but not the whole of Lot [No.] 6-B adjudicated to her; that the Reyes
family included the subject property to the sworn statement of value of
real properties filed before the municipality of Dinalupihan, Bataan,
copies of the documents are hereto attached as Annexes "G" and "H";
that likewise Elena Socco has been continuously and religiously paying
the realty tax due on the said property.

In the end, Legal Officer Pinlac recommended the approval of
respondents petition for issuance of title over the subject property,
ruling that respondent was qualified to own the subject property
pursuant to Article 1091 of the New Civil Code.8 Provincial Agrarian
Reform Officer (PARO) Raynor Taroy concurred in the said
recommendation in his Indorsement dated 22 April 1999.9

In an Order dated 15 September 1999, DAR Regional Director Nestor R.
Acosta, however, dismissed respondents petition for issuance of title
over the subject property on the ground that respondent was not an
actual tiller and had abandoned the said property for 40 years; hence,
she had already renounced her right to recover the same.10 The
dispositive part of the Order reads:

1. DISMISSING the claims of Elena Socco-Beltran, duly represented by
Myrna Socco for lack of merit;

2. ALLOCATING Lot No. 6-B under Psd-003-008565 with an area of 360
square meters, more or less, situated Zamora Street, Dinalupihan,
Bataan, in favor of the heirs of Arturo Reyes.

3. ORDERING the complainant to refrain from any act tending to

disturb the peaceful possession of herein respondents.

4. DIRECTING the MARO of Dinalupihan, Bataan to process the
pertinent documents for the issuance of CLOA in favor of the heirs of
Arturo Reyes.11

Respondent filed a Motion for Reconsideration of the foregoing Order,
which was denied by DAR Regional Director Acosta in another Order
dated 15 September 1999.12

Respondent then appealed to the Office of the DAR Secretary. In an
Order, dated 9 November 2001, the DAR Secretary reversed the
Decision of DAR Regional Director Acosta after finding that neither
petitioners predecessor-in-interest, Arturo Reyes, nor respondent was
an actual occupant of the subject property. However, since it was
respondent who applied to purchase the subject property, she was
better qualified to own said property as opposed to petitioners, who
did not at all apply to purchase the same. Petitioners were further
disqualified from purchasing the subject property because they were
not landless. Finally, during the investigation of Legal Officer Pinlac,
petitioners requested that respondent pay them the cost of the
construction of the skeletal house they built on the subject property.
This was construed by the DAR Secretary as a waiver by petitioners of
their right over the subject property.13 In the said Order, the DAR
Secretary ordered that:

WHEREFORE, premises considered, the September 15, 1999 Order is
hereby SET ASIDE and a new Order is hereby issued APPROVING the
application to purchase Lot [No.] 6-B of Elena Socco-Beltran.14

Petitioners sought remedy from the Office of the President by
appealing the 9 November 2001 Decision of the DAR Secretary. Their
appeal was docketed as O.P. Case No. 02-A-007. On 30 June 2003, the
Office of the President rendered its Decision denying petitioners
appeal and affirming the DAR Secretarys Decision.15 The fallo of the
Decision reads:


WHEREFORE, premises considered, judgment appealed from is
AFFIRMED and the instant appeal DISMISSED.16

Petitioners Motion for Reconsideration was likewise denied by the
Office of the President in a Resolution dated 30 September 2004.17 In
the said Resolution, the Office of the President noted that petitioners
failed to allege in their motion the date when they received the
Decision dated 30 June 2003. Such date was material considering that
the petitioners Motion for Reconsideration was filed only on 14 April
2004, or almost nine months after the promulgation of the decision
sought to be reconsidered. Thus, it ruled that petitioners Motion for
Reconsideration, filed beyond fifteen days from receipt of the decision
to be reconsidered, rendered the said decision final and executory.

Consequently, petitioners filed an appeal before the Court of Appeals,
docketed as CA-G.R. SP No. 87066. Pending the resolution of this case,
the DAR already issued on 8 July 2005 a Certificate of Land Ownership
Award (CLOA) over the subject property in favor of the respondents
niece and representative, Myrna Socco-Beltran.18 Respondent passed
away on 21 March 2001,19 but the records do not ascertain the
identity of her legal heirs and her legatees.

Acting on CA-G.R. SP No. 87066, the Court of Appeals subsequently
promulgated its Decision, dated 31 January 2006, affirming the
Decision dated 30 June 2003 of the Office of the President. It held that
petitioners could not have been actual occupants of the subject
property, since actual occupancy requires the positive act of occupying
and tilling the land, not just the introduction of an unfinished skeletal
structure thereon. The Contract to Sell on which petitioners based their
claim over the subject property was executed by Miguel Socco, who
was not the owner of the said property and, therefore, had no right to
transfer the same. Accordingly, the Court of Appeals affirmed
respondents right over the subject property, which was derived form
the original allocatees thereof.20 The fallo of the said Decision reads:

WHEREFORE, premises considered, the instant PETITION FOR REVIEW is

DISMISSED. Accordingly, the Decision dated 30 June 2003 and the
Resolution dated 30 December 2004 both issued by the Office of the
President are hereby AFFIRMED in toto.21

The Court of Appeals denied petitioners Motion for Reconsideration of
its Decision in a Resolution dated 16 August 2006.22

Hence, the present Petition, wherein petitioners raise the following
issues:

I

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE FINDINGS OF THE OFFICE OF THE PRESIDENT THAT THE
SUBJECT LOT IS VACANT AND THAT PETITIONERS ARE NOT ACTUAL
OCCUPANTS THEREOF BY DENYING THE LATTERS CLAIM THAT THEY
HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE, NOTORIOUS AND
AVDERSE POSSESSION THEREOF SINCE 1954 OR FOR MORE THAN
THIRTY (30) YEARS.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT
PETITIONERS "CANNOT LEGALLY ACQUIRE THE SUBJECT PROPERTY AS
THEY ARE NOT CONSIDERED LANDLESS AS EVIDENCED BY A TAX
DECLARATION."

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT
"WHATEVER RESERVATION WE HAVE OVER THE RIGHT OF MYRNA
SOCCO TO SUCCEED WAS ALREADY SETTLED WHEN NO LESS THAN
MIGUEL SOCCO (PREDECESSOR-IN INTEREST OF HEREIN PETITIONERS)
EXECUTED HIS WAIVER OF RIGHT DATED APRIL 19, 2005 OVER THE
SUBJECT PROPERTY IN FAVOR OF MYRNA SOCCO.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DENIED
PETITIONERS MOTION FOR NEW TRIAL THEREBY BRUSHING ASIDE THE
FACT THAT MYRNA V. SOCCO-ARIZO GROSSLY MISREPRESENTED IN
HER INFORMATION SHEET OF BENEFICIARIES AND APPLICATION TO
PURCHASE LOT IN LANDED ESTATES THAT SHE IS A FILIPINO CITIZEN,
WHEN IN TRUTH AND IN FACT, SHE IS ALREADY AN AMERICAN
NATIONAL.23

The main issue in this case is whether or not petitioners have a better
right to the subject property over the respondent. Petitioners claim
over the subject property is anchored on the Contract to Sell executed
between Miguel Socco and Arturo Reyes on 5 September 1954.
Petitioners additionally allege that they and their predecessor-ininterest, Arturo Reyes, have been in possession of the subject lot since
1954 for an uninterrupted period of more than 40 years.

The Court is unconvinced.

Petitioners cannot derive title to the subject property by virtue of the
Contract to Sell. It was unmistakably stated in the Contract and made
clear to both parties thereto that the vendor, Miguel R. Socco, was not
yet the owner of the subject property and was merely expecting to
inherit the same as his share as a co-heir of Constancias estate.24 It
was also declared in the Contract itself that Miguel R. Soccos
conveyance of the subject to the buyer, Arturo Reyes, was a conditional
sale. It is, therefore, apparent that the sale of the subject property in
favor of Arturo Reyes was conditioned upon the event that Miguel
Socco would actually inherit and become the owner of the said
property. Absent such occurrence, Miguel R. Socco never acquired
ownership of the subject property which he could validly transfer to
Arturo Reyes.

Under Article 1459 of the Civil Code on contracts of sale, "The thing
must be licit and the vendor must have a right to transfer ownership
thereof at the time it is delivered." The law specifically requires that

the vendor must have ownership of the property at the time it is

delivered. Petitioners claim that the property was constructively
delivered to them in 1954 by virtue of the Contract to Sell. However, as
already pointed out by this Court, it was explicit in the Contract itself
that, at the time it was executed, Miguel R. Socco was not yet the
owner of the property and was only expecting to inherit it. Hence,
there was no valid sale from which ownership of the subject property
could have transferred from Miguel Socco to Arturo Reyes. Without
acquiring ownership of the subject property, Arturo Reyes also could
not have conveyed the same to his heirs, herein petitioners.

Petitioners, nevertheless, insist that they physically occupied the
subject lot for more than 30 years and, thus, they gained ownership of
the property through acquisitive prescription, citing Sandoval v. Insular
Government 25 and San Miguel Corporation v. Court of Appeals. 26

In Sandoval, petitioners therein sought the enforcement of Section 54,
paragraph 6 of Act No. 926, otherwise known as the Land Registration
Act, which required -- for the issuance of a certificate of title to
agricultural public lands -- the open, continuous, exclusive, and
notorious possession and occupation of the same in good faith and
under claim of ownership for more than ten years. After evaluating the
evidence presented, consisting of the testimonies of several witnesses
and proof that fences were constructed around the property, the Court
in the afore-stated case denied the petition on the ground that
petitioners failed to prove that they exercised acts of ownership or
were in open, continuous, and peaceful possession of the whole land,
and had caused it to be enclosed to the exclusion of other persons. It
further decreed that whoever claims such possession shall exercise acts
of dominion and ownership which cannot be mistaken for the
momentary and accidental enjoyment of the property. 27

In San Miguel Corporation, the Court reiterated the rule that the open,
exclusive, and undisputed possession of alienable public land for the
period prescribed by law creates the legal fiction whereby land ceases
to be public land and is, therefore, private property. It stressed,
however, that the occupation of the land for 30 years must be

conclusively established. Thus, the evidence offered by petitioner

therein tax declarations, receipts, and the sole testimony of the
applicant for registration, petitioners predecessor-in-interest who
claimed to have occupied the land before selling it to the petitioner
were considered insufficient to satisfy the quantum of proof required
to establish the claim of possession required for acquiring alienable
public land.28

As in the two aforecited cases, petitioners herein were unable to prove
actual possession of the subject property for the period required by
law. It was underscored in San Miguel Corporation that the open,
continuous, exclusive, and notorious occupation of property for more
than 30 years must be no less than conclusive, such quantum of proof
being necessary to avoid the erroneous validation of actual fictitious
claims of possession over the property that is being claimed.29

In the present case, the evidence presented by the petitioners falls
short of being conclusive. Apart from their self-serving statement that
they took possession of the subject property, the only proof offered to
support their claim was a general statement made in the letter30 dated
4 February 2002 of Barangay Captain Carlos Gapero, certifying that
Arturo Reyes was the occupant of the subject property "since peace
time and at present." The statement is rendered doubtful by the fact
that as early as 1997, when respondent filed her petition for issuance
of title before the DAR, Arturo Reyes had already died and was already
represented by his heirs, petitioners herein.

Moreover, the certification given by Barangay Captain Gapero that
Arturo Reyes occupied the premises for an unspecified period of time,
i.e., since peace time until the present, cannot prevail over Legal Officer
Pinlacs more particular findings in her Report/Recommendation. Legal
Officer Pinlac reported that petitioners admitted that it was only in the
1970s that they built the skeletal structure found on the subject
property. She also referred to the averments made by Patricia Hipolito
in an Affidavit,31 dated 26 February 1999, that the structure was left
unfinished because respondent prevented petitioners from occupying
the subject property. Such findings disprove petitioners claims that

their predecessor-in-interest, Arturo Reyes, had been in open,

exclusive, and continuous possession of the property since 1954. The
adverted findings were the result of Legal Officer Pinlacs investigation
in the course of her official duties, of matters within her expertise
which were later affirmed by the DAR Secretary, the Office of the
President, and the Court of Appeals. The factual findings of such
administrative officer, if supported by evidence, are entitled to great
respect.32

In contrast, respondents claim over the subject property is backed by
sufficient evidence. Her predecessors-in-interest, the spouses Laquian,
have been identified as the original allocatees who have fully paid for
the subject property. The subject property was allocated to respondent
in the extrajudicial settlement by the heirs of Constancias estate. The
document entitled "Extra-judicial Settlement of the Estate of the
Deceased Constancia Socco" was not notarized and, as a private
document, can only bind the parties thereto. However, its authenticity
was never put into question, nor was its legality impugned. Moreover,
executed in 1965 by the heirs of Constancia Socco, or more than 30
years ago, it is an ancient document which appears to be genuine on its
face and therefore its authenticity must be upheld.33 Respondent has
continuously paid for the realty tax due on the subject property, a fact
which, though not conclusive, served to strengthen her claim over the
property.34

From the foregoing, it is only proper that respondents claim over the
subject property be upheld. This Court must, however, note that the
Order of the DAR Secretary, dated 9 November 2001, which granted
the petitioners right to purchase the property, is flawed and may be
assailed in the proper proceedings. Records show that the DAR
affirmed that respondents predecessors-in-interest, Marcelo Laquian
and Constancia Socco, having been identified as the original allocatee,
have fully paid for the subject property as provided under an
agreement to sell. By the nature of a contract or agreement to sell, the
title over the subject property is transferred to the vendee upon the
full payment of the stipulated consideration. Upon the full payment of
the purchase price, and absent any showing that the allocatee violated

the conditions of the agreement, ownership of the subject land should

be conferred upon the allocatee.35 Since the extrajudicial partition
transferring Constancia Soccos interest in the subject land to the
respondent is valid, there is clearly no need for the respondent to
purchase the subject property, despite the application for the purchase
of the property erroneously filed by respondent. The only act which
remains to be performed is the issuance of a title in the name of her
legal heirs, now that she is deceased.

Moreover, the Court notes that the records have not clearly
established the right of respondents representative, Myrna SoccoArizo, over the subject property. Thus, it is not clear to this Court why
the DAR issued on 8 July 2005 a CLOA36 over the subject property in
favor of Myrna Socco-Arizo. Respondents death does not automatically
transmit her rights to the property to Myrna Socco-Beltran.
Respondent only authorized Myrna Socco-Arizo, through a Special
Power of Attorney37 dated 10 March 1999, to represent her in the
present case and to administer the subject property for her benefit.
There is nothing in the Special Power of Attorney to the effect that
Myrna Socco-Arizo can take over the subject property as owner thereof
upon respondents death. That Miguel V. Socco, respondents only
nephew, the son of the late Miguel R. Socco, and Myrna Socco-Arizos
brother, executed a waiver of his right to inherit from respondent, does
not automatically mean that the subject property will go to Myrna
Socco-Arizo, absent any proof that there is no other qualified heir to
respondents estate. Thus, this Decision does not in any way confirm
the issuance of the CLOA in favor of Myrna Socco-Arizo, which may be
assailed in appropriate proceedings.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The
assailed Decision of the Court of Appeals in CA-G.R. SP No. 87066,
promulgated on 31 January 2006, is AFFIRMED with MODIFICATION.
This Court withholds the confirmation of the validity of title over the
subject property in the name of Myrna Socco-Arizo pending
determination of respondents legal heirs in appropriate proceedings.
No costs. SO ORDERED.

ROGELIA DACLAG and ADELINO DACLAG (deceased) Substituted by

RODEL M. DACLAG and ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG CONRADO MACAHILIG,
LORENZA HABER and BENITA DEL ROSARIO, Respondents.

Before us is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision1 dated
October 17, 2001 and the Resolution2 dated August 7, 2003 of the
Court of Appeals (CA) in CA G.R. CV No. 48498.

The antecedent facts:

During their lifetime, the spouses Candido and Gregoria Macahilig were
the owners of seven parcels of land, all located in Numancia, Aklan.
They had seven children, namely: Dionesio, Emeliano, Mario, Ignacio,
Eusebio, Tarcela and Maxima.

On March 18, 1982, Maxima, a daughter of Candido and Gregoria
entered into a Deed of Extra-judicial Partition3 with the heirs of her
deceased brothers, Mario and Eusebio Macahilig, over the seven
parcels of land. The same deed stated that Dionesio was already
deceased but was survived by his daughter, Susana Briones; Emeliano
was out of the country; Ignacio and Tarcela were also both deceased
but were survived by three children each.

One of the properties partitioned in the Deed was a parcel of irrigated
riceland located at Poblacion, Numancia, Aklan, with an area of 1,896
square meters declared in the name of Maxima under Tax Declaration
No. 644 which was denominated as "Parcel One." This Parcel One was
divided between Vicenta Macahilig Galvez for the heirs of Mario
Macahilig, who was given the one half southern portion of the land;
and Adela Macahilig for the heirs of Eusebio Macahilig, who got the
one half northern portion. The Deed was notarized by Municipal Judge
Francisco M. Ureta in his capacity as ex-officio notary public. The heirs
of Eusebio Macahilig are the herein respondents.

On March 19, 1982, Maxima executed a Statement of Conformity4 in

which she confirmed the execution of the Deed of Extra-judicial
Partition and conformed to the manner of partition and adjudication
made therein. She also attested that five parcels of land in the deed
were declared in her name for taxation purposes, although said lands
were actually the property of her deceased parents Candido and
Gregoria Macahilig; that she waived, renounced and relinquished all
her rights to the land adjudicated to all her co-heirs in the deed; and
that she had already sold one parcel before the deed was executed,
which was considered as her advance share. Pedro Divison, Maxima's
husband, also affixed his signature to the Statement of Conformity.

On May 23, 1984, Maxima sold Parcel One to spouses Adelino and
Rogelia Daclag (petitioners) as evidenced by a Deed of Sale5.

On July 17, 1984, OCT No. P-138736 was issued in the name of
petitioner Rogelia M. Daclag by virtue of her free patent application.

On December 16, 1991, Elino Macahilig, Adela Macahilig, Conrado
Macahilig, Lorenza Haber and Benita del Rosario (respondents) filed
with the Regional Trial Court (RTC) of Kalibo, Aklan a complaint for
recovery of possession and ownership, cancellation of documents and
damages against Maxima and petitioners, docketed as Civil Case No.
4334.

Respondents alleged that they were the lawful owners and previous
possessors of the one half northern portion of Parcel One by virtue of a
Deed of Extra-judicial Partition; that since they were all residents of
Caloocan City, their land was possessed by their first cousin, Penicula
Divison Quijano, Maxima's daughter, as tenant thereon, as she was also
in possession of the one half southern portion as tenant of the heirs of
Mario Macahilig; that sometime in 1983, upon request of Maxima and
out of pity for her as she had no share in the produce of the land,
Penicula allowed Maxima to farm the land; that without their
knowledge, Maxima illegally sold on May 23, 1984, the entire riceland
to petitioners, who are now in possession of the land, depriving
respondents of its annual produce valued at P4,800.00.

In their Answer with Cross-Claim, petitioners contended that:
petitioner Rogelia had been the registered owner of the entire riceland
since 1984 as evidenced by OCT No. P-13873; her title had become
incontrovertible after one year from its issuance; they purchased the
subject land in good faith and for value from co-defendant Maxima
who was in actual physical possession of the property and who
delivered and conveyed the same to them; they were now in
possession and usufruct of the land since then up to the present;
respondents were barred by laches for the unreasonable delay in filing
the case. They also filed a cross-claim against Maxima for whatever
charges, penalties and damages that respondents may demand from
them; and they prayed that Maxima be ordered to pay them damages
for the fraud and misrepresentation committed against them.

Respondents subsequently filed an Amended Complaint, upon learning
that petitioners were issued OCT No. 13873 by virtue of their free
patent application, and asked for the reconveyence of the one half
northern portion of the land covered by such title.

The land in question was delimited in the Commissioner's Report and
sketch submitted by Bernardo G. Sualog as the one half northern
portion, which had an area of 1178 sq. meters. The Report and the
sketch were approved by the RTC on June 22, 1991.

For failure of Maxima to file an answer, the RTC declared her in default
both in the complaint and cross-claim against her.

After trial, the RTC rendered its Decision7 dated November 18, 1994,
the dispositive portion of which reads:

WHEREFORE, finding preponderance of evidence in favor of plaintiffs
[respondents], judgment is hereby rendered as follows:

1. The deed of sale dated May 23, 1984, executed by Maxima Divison in
favor of Adelino Daclag and Rogelia Daclag before Notary Public Edgar

R. Peralta and docketed in his notarial register as Doc. No. 137, Page
No. 30, Book No. VII, Series of 1984 is declared NULL and VOID;

2. The plaintiffs are hereby declared the true and lawful owners and
entitled to the possession of the northern one-half (1/2) portion of the
land described under paragraph 2 of the amended complaint and
designated as Exhibit "F-1" in the commissioners sketch with an area
of 1,178 square meters;

3. The defendants-spouses Adelino and Rogelia Daclag [petitioners] are
hereby ordered and directed to vacate the land described in the
preceding paragraph and restore and deliver the possession thereof to
the plaintiffs;

4. The defendants are ordered to execute a deed of reconveyance in
favor of the plaintiffs over the land described in paragraph 2 hereof;

5. The defendants are ordered, jointly and severally, to pay the
plaintiffs ten (10) cavans of palay per annum beginning the second
cropping of 1984 until the time the possession of the land in question is
restored to the plaintiffs; and

6. The defendants are ordered, jointly and severally, to pay the
plaintiffs reasonable attorneys fees in the amount of P3,000.00 plus
cost of the suit.8

The RTC found that respondents were able to establish that Parcel One
was divided between the heirs of Mario and the heirs of Eusebio, with
the former getting the one half southern portion and the latter the one
half northern portion embodied in a Deed of Extra-judicial partition,
which bore Maxima's thumbmarks; that nobody questioned the Deed's
validity, and no evidence was presented to prove that the document
was not validly and regularly executed; that Maxima also executed a
duly notarized Statement of Conformity dated March 19, 1982 with the
conformity of her husband, Pedro. The RTC concluded that when
Maxima executed the Deed of Sale in favor of petitioners on May 23,
1984, Maxima had no right to sell that land as it did not belong to her;

that she conveyed nothing to petitioners; and that the deed of sale
should be declared null and void.

In disposing the issue of whether petitioners could be considered
innocent purchasers for value, the RTC ruled that petitioners could not
even be considered purchasers, as they never acquired ownership of
the land since the sale to them by Maxima was void; and that
petitioners' act of reflecting only the price of P5,000.00 in the Deed of
Sale to avoid paying taxes to the BIR should be condemned for
defrauding the government and thus should not be given protection
from the courts.

The RTC further ruled that since petitioners were able to obtain a free
patent on the whole land in petitioner Rogelia's name, reconveyance to
respondents of the 1,178 sq. meter northern portion of the land was
just and proper; that the respondents were entitled to a share in the
harvest at two croppings per year after deducting the share of the
tenant; that since Maxima died in October 1993, whatever charges and
claims petitioners may recover from her expired with her.

Aggrieved, petitioners filed their appeal with the CA.

On October 17, 2001, the CA dismissed the appeal and affirmed the
RTC decision.

The CA ruled that since Maxima had no right to sell the land as she was
not the rightful owner thereof, nothing was conveyed to petitioners;
that a person who acquired property from one who was not the owner
and had no right to dispose of the same, obtained the property without
right of title, and the real owner may recover the same from him.

The CA found that since respondents were unaware of the sale, it was
not a surprise that they did not question petitioners' application for a
free patent on the subject land; that the possession by Maxima of the
subject land did not vest ownership in her, as her possession was not in
the concept of an owner; and that petitioners were not purchasers in
good faith. It also found that the right to enjoy included the right to

receive the produce of the thing; that respondents as true owners of

the subject land were deprived of their property when Maxima illegally
sold it to petitioners; and thus, equity demanded that respondents be
given what rightfully belonged to them under the principle that a
person cannot enrich himself at the expense of another.

Hence, herein petition on the following grounds:

A. THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS
ERROR WHEN IT DECLARED THAT HEREIN PETITIONERS HAD NO VALID
TITLE OVER THE LAND IN QUESTION.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONERS ARE NOT PURCHASERS OR BUYERS IN GOOD FAITH.

C. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
AFFIRMED THE DECISION OF THE LOWER COURT IN ORDERING THE
DEFENDANTS-PETITIONERS JOINTLY AND SEVERALLY TO PAY PER
ANNUM BEGINNING THE SECOND CROPPING OF 1984 UNTIL THE TIME
THE POSSESSION OF THE LAND IN QUESTION IS RESTORED TO THE
PLAINTIFFS [respondents].9

The issues for resolution are (1) whether Maxima was the previous
owner of Parcel One, which included respondents' one half northern
portion, now covered by OCT No. P-13873; 2) whether petitioners
could validly invoke the defense of purchasers in good faith; and (3)
whether reconveyance is the proper remedy.

Preliminarily, we would like to state the inescapable fact that the Extrajudicial partition of the estate of Candido Macahilig involving the seven
parcels of land was made only between Maxima and the heirs of her
two deceased brothers Mario and Eusebio.

Section 1 of Rule 74 of the Rules of Court provides:

Section 1. Extrajudicial settlement by agreement between heirs. - If the
decedent left no will and no debts and the heirs are all of age, or the

minors are represented by their judicial or legal representatives duly

authorized for the purpose, the parties may, without securing letters of
administration, divide the estate among themselves as they see fit by
means of a public instrument filed in the office of the register of deeds,
and should they disagree, they may do so in an ordinary action for
partition. x x x

The fact of the extrajudicial settlement or administration shall be
published in a newspaper of general circulation in the manner provided
in the next succeeding section; but no extrajudicial settlement shall be
binding upon any person who has not participated therein or had no
notice thereof.

Records do not show that there has been any case filed by the other
heirs who had not participated in the Deed of Extra-judicial Partition
and were questioning the validity of such partition. Thus, the resolution
of the present case concerns only the issues between the parties
before us and will not in any way affect the rights of the other heirs
who have not participated in the partition.

The first two issues raised for resolution are factual. It is a settled rule
that in the exercise of the Supreme Court's power of review, the Court
is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties
during the trial of the case, considering that the findings of facts of the
CA are conclusive and binding on the Court.10 While jurisprudence has
recognized several exceptions in which factual issues may be resolved
by this Court, namely: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting;
(6) when in making its findings the CA went beyond the issues of the
case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to those
of the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set

forth in the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondent; (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by
the evidence on record; and (11) when the CA manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly
considered, could justify a different conclusion,11 none of these
exceptions has been shown to apply to the present case and, hence,
this Court may not review the findings of fact made by the lower
courts.

We find no cogent reason to depart from the findings of both the trial
court and the CA that Maxima was not the owner of the land she sold
to petitioners, and that the one half northern portion of such land was
owned by the respondents; that Maxima had no right to dispose of the
land and, thus, she had no right to convey the same.

To repeat, records show that Maxima entered into a Deed of Extrajudicial Partition with the heirs of her two deceased brothers, namely:
Mario and Eusebio, over seven parcels of land owned by Candido and
Gregoria Macahilig. One of these lands was the irrigated riceland with
an area of 1,896 sq. meters which, per the Deed of Partition, was
divided between the heirs of Mario and Eusebio; and the former got
the one half southern portion, while the latter got the one half
northern portion. Maxima affixed her thumbmark to the Deed. This
parcel of riceland was sold by Maxima to petitioners. However,
Maxima, at the time of the execution of the Deed of Sale over this
parcel of land in favor of petitioner on May 23, 1984, had no right to
sell the same as she was not the owner thereof.

In fact, Maxima, with the conformity of her husband Pedro, had even
executed a Statement of Conformity, in which she affirmed the
execution of the Deed of Extra-judicial Partition and conformed to the
manner of the partition of shares therein. She attested to the fact that
the five parcels of land subject of the Deed of Extra-judicial Partition,
which were declared in her name under different tax declarations,
were actually properties of her deceased parents; and that she waived

all her rights over the lands or portions thereof adjudicated to all her
co-heirs.

Neither Maxima nor any of her heirs ever questioned the validity of
these two above-mentioned documents to which she affixed her
thumbmarks. Notably, when the instant complaint was filed by
respondents against Maxima and petitioners in 1991, in which
respondents claimed as basis of their ownership of the one half
northern portion of the riceland was the Deed of Extra-judicial
Partition, Maxima, while still living at that time, as she died in 1993,
never denied the same. As already stated, she failed to file an answer
and was declared in default.

In a contract of sale, it is essential that the seller is the owner of the
property he is selling.12 Under Article 1458 of the Civil Code, the
principal obligation of a seller is to transfer the ownership of the
property sold.13 Also, Article 1459 of the Civil Code provides that the
thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered. Maxima's execution of the
Deed of Sale selling Parcel One, part of which is respondents' one half
northern portion, was not valid and did not transfer ownership of the
land to petitioners, as Maxima had no title or interest to transfer. It is
an established principle that no one can give what one does not have --
nemo dat quod non habet. Accordingly, one can sell only what one
owns or is authorized to sell, and the buyer can acquire no more than
what the seller can transfer legally.14

Petitioners insist that Maxima owned the subject land as shown by her
actual and continuous possession of the same; that it was declared in
her name for taxation purposes; that throughout the time that Maxima
and her children were in possession of the property, she never gave
any share of the produce to respondents; and that Maxima even
mortgaged the land to a bank.

We are not persuaded.

Maxima's possession of the subject land was by reason of her request

to her daughter Penicula, who was installed by respondents as tenant
after the execution of the Deed of Extra-judicial Partition, as Maxima
wanted to farm the land so that she could have a share in the produce,
to which Penicula acceded out of pity.15 It was also established that
after the execution of the Deed of Extra-judicial Partition, Penicula as
tenant was able to farm the subject land for one cropping year before
she allowed her mother Maxima to farm the land thereafter; and, at
that time, Penicula gave the corresponding share of the produce of that
one crop year to Adela,16 one of herein respondents, thus establishing
respondents' ownership of the subject land. Evidently, Maxima's
possession of the land was not in the concept of an owner.

While the land was declared in Maxima's name for taxation purposes, it
did not establish Maxima's ownership of the same. We have held that a
tax declaration, by itself, is not considered conclusive evidence of
ownership.17 It is merely an indicium of a claim of ownership.18
Because it does not by itself give title, it is of little value in proving
one's ownership.19 Petitioners' reliance on Maxima's tax declaration in
assuming that she owned Parcel One is an erroneous assumption that
should not prejudice the rights of the real owners.

The fact that a mortgage was constituted on the land while the same
was in Maxima's name would not make Maxima the owner thereof.
Maxima's non-ownership of Parcel One was clearly established by the
Deed of Extra-judicial Partition and the Statement of Conformity,
wherein she categorically declared that the land was actually owned by
her deceased parents, to which she separately affixed her thumbmarks.
Both documents showed declarations against her interest in the land. A
declaration against interest is the best evidence which affords the
greatest certainty of the facts in dispute.20

While petitioners were able to secure a certificate of title covering
Parcel One in petitioner Rogelia's name, their possession of a certificate
of title alone does not necessarily make them the true owners of the
property described therein. Our land registration laws do not give the
holder any better title than what he actually has.21

In Naval v. Court of Appeals,22 we held:

Registration of a piece of land under the Torrens System does not
create or vest title, because it is not a mode of acquiring ownership. A
certificate of title is merely an evidence of ownership or title over the
particular property described therein. It cannot be used to protect a
usurper from the true owner; nor can it be used as a shield for the
commission of fraud; neither does it permit one to enrich himself at the
expense of others. Its issuance in favor of a particular person does not
foreclose the possibility that the real property may be co-owned with
persons not named in the certificate, or that it may be held in trust for
another person by the registered owner.

x x x notwithstanding the indefeasibility of the Torrens title, the
registered owner may still be compelled to reconvey the registered
property to its true owners. The rationale for the rule is that
reconveyance does not set aside or re-subject to review the findings of
fact of the Bureau of Lands. In an action for reconveyance, the decree
of registration is respected as incontrovertible. What is sought instead
is the transfer of the property or its title which has been wrongfully or
erroneously registered in another person's name, to its rightful or legal
owner, or to the one with a better right.23

We find that reconveyance of the subject land to respondents is
proper. The essence of an action for reconveyance is that the free
patent and certificate of title are respected as incontrovertible. What is
sought is the transfer of the property, which has been wrongfully or
erroneously registered in another person's name, to its rightful owner
or to one with a better right.24

Respondents have specifically prayed that petitioners be ordered to
restore and reconvey to them the subject land. In an action for
reconveyance, the issue involved is one of ownership; and for this
purpose, evidence of title may be introduced. Respondents had
sufficiently established that Parcel One, covered by OCT No. P-13873,
of which respondents' northern one half portion formed a part, was

not owned by Maxima at the time she sold the land to petitioners. We
have earlier discussed the evidence presented by respondents
establishing that Maxima had no claim of ownership over the land sold
by her to petitioners.

An action for reconveyance prescribes in 10 years, the point of
reference being the date of registration of the deed or the date of
issuance of the certificate of title over the property.25 Records show
that while the land was registered in the name of petitioner Rogelia in
1984, the instant complaint for reconveyance was filed by the
respondents in 1991, and was thus still within the ten-year prescriptive
period.

Petitioners claim that they were innocent buyers in good faith and for
value; that there was no evidence showing that they were in bad faith
when they purchased the subject land; that Article 526 of the Civil Code
provides that he is deemed a possessor in good faith who is not aware
that there exists in his title or mode of acquisition any flaw which
invalidates it; and that good faith is always presumed, and upon him
who alleges bad faith on the part of a possessor rests the burden of
proof.

Notably, petitioners bought the property when it was still an
unregistered land. The defense of having purchased the property in
good faith may be availed of only where registered land is involved and
the buyer had relied in good faith on the clear title of the registered
owner.26

In Ong v. Olasiman27 in which a claim of good faith was raised by
petitioner who bought an unregistered land, we held:

Finally, petitioners' claim of good faith does not lie too as it is
irrelevant:

[T]he issue of good faith or bad faith of the buyer is relevant only
where the subject of the sale is registered land and the purchaser is
buying the same from the registered owner whose title to the land is

clean x x x in such case the purchaser who relies on the clean title of
the registered owner is protected if he is a purchaser in good faith for
value. Since the properties in question are unregistered lands,
petitioners as subsequent buyers thereof did so at their peril. Their
claim of having bought the land in good faith, i.e., without notice that
some other person has a right to or interest in the property, would not
protect them if it turns out, as it actually did in this case, that their
seller did not own the property at the time of the sale. 28

Petitioners claim that the subject land is a public land, and that
petitioners were issued title over this land in 1984; that respondents
did not present any evidence to prove that the subject land was already
a private land prior to their acquisition and the issuance of a free
patent title to them; that the presumption that the subject land was
formerly part of the mass of alienable lands of public domain under the
Regalian doctrine, and was regularly granted to petitioners by way of
free patent and certificate of title, remains incontrovertible in favor of
petitioner.1avvphi1

This issue was only raised for the first time in petitioners'
Memorandum filed with us. Well-settled is the rule that issues not
raised and/or ventilated in the trial court cannot be raised for the first
time on appeal and cannot be considered for review to consider
questions belatedly raised tramples on the basic principles of fair play,
justice and due process.29

Finally, we find no error committed by the CA in affirming the RTC's
order for petitioners to pay respondents their corresponding share in
the produce of the subject land from the time they were deprived
thereof until the possession is restored to them. As aptly stated by the
CA, thus:

It is said that one of the attributes of ownership is the right to enjoy
and dispose of the the thing owned, The right to enjoy included the
right to receive the produce of the thing. The plaintiffs-appellees, as
true owners of the subject land were deprived of their property when
Maxima Divison illegally sold it to spouses Daclags. As such, equtiy

demands that the plaintiff-appeellees be given what rightfully belonged

to them under the time honored principle that a person cannot enrich
himself at the expense of another.

WHEREFORE, the petition for review is DENIED. The Decision dated
October 17, 2001 and Resolution dated August 7, 2003 of the Court of
Appeals are AFFIRMED.

Costs against petitioners.

SO ORDERED.

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,

vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE,
respondents.

A contract of repurchase arising out of a contract of sale where the
seller did not have any title to the property "sold" is not valid. Since
nothing was sold, then there is also nothing to repurchase.

Statement of the Case

This postulate is explained by this Court as it resolves this petition for
review on certiorari assailing the January 20, 1993 Decision 1 of
Respondent Court of Appeals 2 in CA-G.R. CV No. 36473, affirming the
decision 3 of the trial court 4 which disposed as follows: 5

WHEREFORE, judgment is hereby rendered dismissing the complaint
for no cause of action, and hereby:

1.
Declaring the private writing, Exhibit "C", to be an option to sell,
not binding and considered validly withdrawn by the defendants for
want of consideration;

2.
Ordering the plaintiffs to return to the defendants the sum of
P30,000.00 plus interest thereon at the legal rate, from the time of
filing of defendants' counterclaim until the same is fully paid;

3.
Ordering the plaintiffs to deliver peaceful possession of the two
hectares mentioned in paragraph 7 of the complaint and in paragraph
31 of defendants' answer (counterclaim);

4.
Ordering the plaintiffs to pay reasonable rents on said two
hectares at P5,000.00 per annum or at P2,500.00 per cropping from the
time of judicial demand mentioned in paragraph 2 of the dispositive
portion of this decision, until the said two hectares shall have been
delivered to the defendants; and

5.
To pay the costs.

SO ORDERED.

The Antecedent Facts

The facts, which appear undisputed by the parties, are narrated by the
Court of Appeals as follows:

Two (2) parcels of land are in dispute and litigated upon here. The first
has an area of 1 hectare. It was formerly owned by Victorino Nool and
covered by Transfer Certificate of Title No. T-74950. With an area of
3.0880 hectares, the other parcel was previously owned by Francisco
Nool under Transfer Certificate of Title No. T-100945. Both parcel's are
situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool
and Gaudencio Almojera, now the appellants, seek recovery of the
aforementioned parcels of land from the defendants, Anacleto Nool, a
younger brother of Conchita, and Emilia Nebre, now the appellees.

In their complaint, plaintiff-appellants alleged inter alia that they are
the owners of subject parcels of land, and they bought the same from
Conchita's other brothers, Victorino Nool and Francisco Nool; that as
plaintiffs were in dire need of money, they obtained a loan from the
Ilagan Branch of the Development Bank of the Philippines, in Ilagan,
Isabela, secured by a real estate mortgage on said parcels of land,
which were still registered in the names of Victorino Nool and Francisco
Nool, at the time, and for the failure of plaintiffs to pay the said loan,
including interest and surcharges, totaling P56,000.00, the mortgage
was foreclosed; that within the period of redemption, plaintiffs
contacted defendant Anacleto Nool for the latter to redeem the
foreclosed properties from DBP, which the latter did; and as a result,
the titles of the two (2) parcels of land in question were transferred to
Anacleto Nool; that as part of their arrangement or understanding,
Anacleto Nool agreed to buy from plaintiff Conchita Nool the two (2)
parcels of land under controversy, for a total price of P100,000.00,
P30,000.00 of which price was paid to Conchita, and upon payment of
the balance of P14,000.00, plaintiffs were to regain possession of the

two (2) hectares of land, which amounts defendants failed to pay, and
the same day the said arrangement 6 was made; another covenant 7
was entered into by the parties, whereby defendants agreed to return
to plaintiffs the lands in question, at anytime the latter have the
necessary amount; that plaintiffs asked the defendants to return the
same but despite the intervention of the Barangay Captain of their
place, defendants refused to return the said parcels of land to
plaintiffs; thereby impelling them (plaintiffs) to come to court for relief.

In their Answer, defendants-appellees theorized that they acquired the
lands in question from the Development Bank of the Philippines,
through negotiated sale, and were misled by plaintiffs when defendant
Anacleto Nool signed the private writing, agreeing to return subject
lands when plaintiffs have the money to redeem the same; defendant
Anacleto having been made to believe, then, that his sister, Conchita,
still had the right to redeem the said properties.

The pivot of inquiry here, as aptly observed below, is the nature and
significance of the private document, marked Exhibit "D" for plaintiffs,
which document has not been denied by the defendants, as defendants
even averred in their Answer that they gave an advance payment of
P30,000.00 therefor, and acknowledged that they had a balance of
P14,000.00 to complete their payment. On this crucial issue, the lower
court adjudged the said private writing (Exhibit "D") as an option to sell
not binding upon and considered the same validly withdrawn by
defendants for want of consideration; and decided the case in the
manner above-mentioned.

There is no quibble over the fact that the two (2) parcels of land in
dispute were mortgaged to the Development Bank of the Philippines,
to secure a loan obtained by plaintiffs from DBP (Ilagan Branch), Ilagan,
Isabela. For the non-payment of said loan, the mortgage was
foreclosed and in the process, ownership of the mortgaged lands was
consolidated in DBP (Exhibits 3 and 4 for defendants). After DBP
became the absolute owner of the two parcels of land, defendants
negotiated with DBP and succeeded in buying the same. By virtue of
such sale by DBP in favor of defendants, the titles of DBP were

cancelled and the corresponding Transfer Certificates of Title (Annexes

"C" and "D" to the Complaint) issued to the defendants. 8

It should be stressed that Manuel S. Mallorca, authorized officer of
DBP, certified that the one-year redemption period was from March
16, 1982 up to March 15, 1983 and that the mortgagors' right of
redemption was not exercised within this period. 9 Hence, DBP became
the absolute owner of said parcels of land for which it was issued new
certificates of title, both entered on May 23, 1983 by the Registry of
Deeds for the Province of Isabela. 10 About two years thereafter, on
April 1, 1985, DBP entered into a Deed of Conditional Sale 11 involving
the same parcels of land with Private Respondent Anacleto Nool as
vendee. Subsequently, the latter was issued new certificates of title on
February 8, 1988. 12

The Court of Appeals ruled: 13

WHEREFORE, finding no reversible error infirming it, the appealed
Judgment is hereby AFFIRMED in toto. No pronouncement as to costs.

The Issues

Petitioners impute to Respondent Court the following alleged "errors":

1.
The Honorable Court of Appeals, Second Division has
misapplied the legal import or meaning of Exhibit "C" in a way contrary
to law and existing jurisprudence in stating that it has no binding effect
between the parties and considered validly withdrawn by defendantsappellees for want of consideration.

2.
The Honorable Court of Appeals, Second Division has miserably
failed to give legal significance to the actual possession and cultivation
and appropriating exclusively the palay harvest of the two (2) hectares
land pending the payment of the remaining balance of fourteen
thousand pesos (P14,000.00) by defendants-appellees as indicated in
Exhibit "C".

3.
The Honorable Court of Appeals has seriously erred in affirming
the decision of the lower court by awarding the payment of rents per
annum and the return of P30,000.00 and not allowing the plaintiffsappellants to re-acquire the four (4) hectares, more or less upon
payment of one hundred thousand pesos (P100,000.00) as shown in
Exhibit "D". 14

The Court's Ruling

The petition is bereft of merit.

First Issue: Are Exhibits "C" and "D" Valid and Enforceable?

The petitioner-spouses plead for the enforcement of their agreement
with private respondents as contained in Exhibits "C" and "D," and seek
damages for the latter's alleged breach thereof. In Exhibit C, which was
a private handwritten document labeled by the parties as Resibo ti
Katulagan or Receipt of Agreement, the petitioners appear to have
"sold" to private respondents the parcels of land in controversy
covered by TCT No. T-74950 and TCT No. T-100945. On the other hand,
Exhibit D, which was also a private handwritten document in Ilocano
and labeled as Kasuratan, private respondents agreed that Conchita
Nool "can acquire back or repurchase later on said land when she has
the money." 15

In seeking to enforce her alleged right to repurchase the parcels of
land, Conchita (joined by her co-petitioner-husband) invokes Article
1370 of the Civil Code which mandates that "(i)f the terms of a contract
are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control." Hence,
petitioners contend that the Court of Appeals erred in affirming the
trial court's finding and conclusion that said Exhibits C and D were "not
merely voidable but utterly void and inexistent."

We cannot sustain petitioners' view. Article 1370 of the Civil Code is
applicable only to valid and enforceable contracts. The Regional Trial
Court and the Court of Appeals ruled that the principal contract of sale

contained in Exhibit C and the auxiliary contract of repurchase in

Exhibit D are both void. This conclusion of the two lower courts appears
to find support in Dignos vs. Court of Appeals, 16 where the Court held:

Be that as it may, it is evident that when petitioners sold said land to
the Cabigas spouses, they were no longer owners of the same and the
sale is null and void.

In the present case, it is clear that the sellers no longer had any title to
the parcels of land at the time of sale. Since Exhibit D, the alleged
contract of repurchase, was dependent on the validity of Exhibit C, it is
itself void. A void contract cannot give rise to a valid one. 17 Verily,
Article 1422 of the Civil Code provides that "(a) contract which is the
direct result of a previous illegal contract, is also void and inexistent."

We should however add that Dignos did not cite its basis for ruling that
a "sale is null and void" where the sellers "were no longer the owners"
of the property. Such a situation (where the sellers were no longer
owners) does not appear to be one of the void contracts enumerated in
Article 1409 of the Civil Code. 18 Moreover, the Civil Code 19 itself
recognizes a sale where the goods are to be "acquired . . . by the seller
after the perfection of the contract of sale," clearly implying that a sale
is possible even if the seller was not the owner at the time of sale,
provided he acquires title to the property later on.

In the present case however, it is likewise clear that the sellers can no
longer deliver the object of the sale to the buyers, as the buyers
themselves have already acquired title and delivery thereof from the
rightful owner, the DBP. Thus, such contract may be deemed to be
inoperative 20 and may thus fall, by analogy, under item no. 5 of Article
1409 of the Civil Code: "Those which contemplate an impossible
service." Article 1459 of the Civil Code provides that "the vendor must
have a right to transfer the ownership thereof [object of the sale] at
the time it is delivered." Here, delivery of ownership is no longer
possible. It has become impossible.

Furthermore, Article 1505 of the Civil Code provides that "where goods
are sold by a person who is not the owner thereof, and who does not
sell them under authority or with consent of the owner, the buyer
acquires no better title to the goods than the seller had, unless the
owner of the goods is by his conduct precluded from denying the
seller's authority to sell." Here, there is no allegation at all that
petitioners were authorized by DBP to sell the property to the private
respondents. Jurisprudence, on the other hand, teaches us that "a
person can sell only what he owns or is authorized to sell; the buyer
can as a consequence acquire no more than what the seller can legally
transfer." 21 No one can give what he does not have nono dat quod
non habet. On the other hand, Exhibit D presupposes that petitioners
could repurchase the property that they "sold" to private respondents.
As petitioners "sold" nothing, it follows that they can also "repurchase"
nothing. Nothing sold, nothing to repurchase. In this light, the contract
of repurchase is also inoperative and by the same analogy, void.

Contract of Repurchase
Dependent on Validity of Sale

As borne out by the evidence on record, the private respondents
bought the two parcels of land directly from DBP on April 1, 1985 after
discovering that petitioners did not own said property, the subject of
Exhibits C and D executed on November 30, 1984. Petitioners,
however, claim that they can exercise their alleged right to
"repurchase" the property, after private respondents had acquired the
same from DBP. 22 We cannot accede to this, for it clearly contravenes
the intention of the parties and the nature of their agreement. Exhibit
D reads:

W R I T I N G

Nov. 30, 1984

That I, Anacleto Nool have bought from my sister Conchita Nool a land
an area of four hectares (4 has.) in the value of One Hundred Thousand
(100,000.00) Pesos. It is our agreement as brother and sister that she

can acquire back or repurchase later on said land when she has the
money. [Emphasis supplied].

As proof of this agreement we sign as brother and sister this written
document this day of Nov. 30, 1984, at District 4, San Manuel, Isabela.

Sgd ANACLETO NOOL

Anacleto Nool

Sgd Emilio Paron

Witness

Sgd Conchita Nool

Conchita Nool 23

One "repurchases" only what one has previously sold. In other words,
the right to repurchase presupposes a valid contract of sale between
the same parties. Undisputedly, private respondents acquired title to
the property from DBP, and not from petitioners.

Assuming arguendo that Exhibit D is separate and distinct from Exhibit
C and is not affected by the nullity of the latter, still petitioners do not
thereby acquire a right to repurchase the property. In that scenario,
Exhibit D ceases to be a "right to repurchase" ancillary and incidental to
the contract of sale; rather, it becomes an accepted unilateral promise
to sell. Article 1479 of the Civil Code, however, provides that "an
accepted unilateral promise to buy or sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported
by a consideration distinct from the price." In the present case, the
alleged written contract of repurchase contained in Exhibit D is bereft
of any consideration distinct from the price. Accordingly, as an
independent contract, it cannot bind private respondents. The ruling in
Diamante vs. CA 24 supports this. In that case, the Court through Mr.
Justice Hilario G. Davide, Jr. explained:

Article 1601 of the Civil Code provides:

Conventional redemption shall take place when the vendor reserves
the right to repurchase the thing sold, with the obligation to comply
with the provisions of article 1616 and other stipulations which may
have been agreed upon.

In Villarica, et al. Vs. Court of Appeals, et al., decided on 29 November
1968, or barely seven (7) days before the respondent Court
promulgated its decisions in this case, this Court, interpreting the
above Article, held:

The right of repurchase is not a right granted the vendor by the vendee
in a subsequent instrument, but is a right reserved by the vendor in the
same instrument of sale as one of the stipulations of the contract. Once
the instrument of absolute sale is executed, the vendor can not longer
reserve the right to repurchase, and any right thereafter granted the
vendor by the vendee in a separate instrument cannot be a right of
repurchase but some other right like the option to buy in the instant
case. . . .

In the earlier case of Ramos, et al. vs. Icasiano, et al., decided in 1927,
this Court had already ruled that "an agreement to repurchase
becomes a promise to sell when made after the sale, because when the
sale is made without such an agreement, the purchaser acquires the
thing sold absolutely, and if he afterwards grants the vendor the right
to purchase, it is a new contract entered into by the purchaser, as
absolute owner already of the object. In that case the vendor has nor
reserved to himself the right to repurchase.

In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another
occasion to apply the foregoing principle.

Hence, the Option to Repurchase executed by private respondent in
the present case, was merely a promise to sell, which must be
governed by Article 1479 of the Civil Code which reads as follows:


Art. 1479.
A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for
a price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.

Right to Repurchase Based on
Homestead or Trust Non-Existent

Petitioners also base their alleged right to repurchase on (1) Sec. 119 of
the Public Land Act 25 and (2) an implied trust relation as "brother and
sister." 26

The Court notes that Victorino Nool and Francisco Nool mortgaged the
land to DBP. The brothers, together with Conchita Nool and Anacleto
Nool, were all siblings and heirs qualified to repurchase the two parcels
of land under Sec. 119 of the Public Land Act which provides that
"(e)very conveyance of land acquired under the free patent or
homestead provisions, when proper, shall be subject to repurchase by
the applicant, his widow or legal heirs, within a period of five years
from the date of conveyance." Assuming the applicability of this
statutory provision to the case at bar, it is indisputable that Private
Respondent Anacleto Nool already repurchased from DBP the
contested properties. Hence, there was no more right of repurchase
that his sister Conchita or brothers Victorino and Francisco could
exercise. The properties were already owned by an heir of the
homestead grantee and the rationale of the provision to keep
homestead lands within the family of the grantee was thus fulfilled. 27

The claim of a trust relation is likewise without merit. The records show
that private respondents did not purchase the contested properties
from DBP in trust for petitioners. The former, as previously mentioned,
in fact bought the land from DBP upon realization that the latter could
not validly sell the same. Obviously, petitioners bought it for
themselves. There is no evidence at all in the records that they bought

the land in trust for private respondents. The fact that Anacleto Nool
was the younger brother of Conchita Nool and that they signed a
contract of repurchase, which as discussed earlier was void, does not
prove the existence of an implied trust in favor of petitioners.

Second Issue: No Estoppel in Impugning the
Validity of Void Contracts

Petitioners argue that "when Anacleto Nool took the possession of the
two hectares, more or less, and let the other two hectares to be
occupied and cultivated by plaintiffs-appellant, Anacleto Nool cannot
later on disclaim the terms or contions (sic) agreed upon and his
actuation is within the ambit of estoppel . . . 28 We disagree. The
private respondents cannot be estopped from raising the defense of
nullity of contract, specially in this case where they acted in good faith,
believing that indeed petitioners could sell the two parcels of land in
question. Article 1410 of the Civil Code mandates that "(t)he action or
defense for the declaration of the inexistence of a contract does not
prescribe." It is a well-settled doctrine that "as between parties to a
contract, validity cannot be given to it by estoppel if it is prohibited by
law or it is against public policy (19 Am. Jur. 802). It is not within the
competence of any citizen to barter away what public policy by law
seeks to preserve." 29 Thus, it is immaterial that private respondents
initially acted to implement the contract of sale, believing in good faith
that the same was valid. We stress that a contract void at inception
cannot be validated by ratification or prescription and certainly cannot
be binding on or enforceable against private respondents. 30

Third Issue: Return of P30,000.00 with Interest
and Payment of Rent

Petitioners further argue that it would be a "miscarriage of justice" to
order them (1) to return the sum of P30,000.00 to private respondents
when allegedly it was Private Respondent Anacleto Nool who owed the
former a balance of P14,000.00 and (2) to order petitioners to pay rent
when they "were allowed to cultivate the said two hectares." 31

We are not persuaded. Based on the previous discussion, the balance

of P14,000.00 under the void contract of sale may not be enforced.
Petitioners are the ones who have an obligation to return what they
unduly and improperly received by reason of the invalid contract of
sale. Since they cannot legally give title to what they "sold," they
cannot keep the money paid for the object of the sale. It is basic that
"(e)very person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the
same." 32 Thus, if a void contract has already "been performed, the
restoration of what has been given is in order." 33 Corollarily and as
aptly ordered by respondent appellate court, interest thereon will run
only from the time of private respondents' demand for the return of
this amount in their counterclaim. 34 In the same vein, petitioners'
possession and cultivation of the two hectares are anchored on private
respondents' tolerance. Clearly, the latter's tolerance ceased upon
their counterclaim and demand on the former to vacate. Hence, their
right to possess and cultivate the land ipso facto ceased.

WHEREFORE, the petition is DENIED and the assailed Decision of the
Court of Appeals affirming that of the trial court is hereby AFFIRMED.

SO ORDERED.

REGALADO DAROY, complainant, vs. ATTY. ESTEBAN ABECIA,

respondent.

This refers to the complaint for malpractice filed by Regalado Daroy
(now deceased) against Esteban Abecia, a member of the Bar.
Complainant Daroy accused respondent Abecia of having forged his
signature in a deed of absolute sale by means of which the latter was
able to transfer a parcel of land in Opol, Misamis Oriental, first to Jose
Gangay and eventually to his (respondents) wife Nena Abecia.

The facts of the instant case are as follows:

Respondent Abecia was counsel of complainant Daroy in a case for
forcible entry before the Municipal Trial Court of Opol, Misamis
Oriental.[1] Judgment was rendered in favor of complainant as plaintiff
in the ejectment case, ordering the defendants to pay damages,
attorneys fees, and the costs of the suit. To satisfy the judgment, the
sheriff sold at public auction on March 25, 1971 a parcel of land
belonging to one of the defendants to complainant Daroy as highest
bidder for P1,250.00. Upon failure of the defendants to redeem the
land, its ownership was consolidated in complainant Daroy.

Complainant Daroy claimed that respondent Abecia forged his
signature in a deed of absolute sale, dated March 31, 1971, transferring
the subject parcel of land to Jose Gangay purportedly for the sum of
P1,250.00 and that in a fictitious deed of absolute sale, dated April 17,
1971, it was made to appear that Gangay in turn conveyed the land to
Nena Abecia, wife of respondent Abecia, for the sum of P1,350.00.[2]
Complainant alleged that he entrusted the title to the land (TCT No. T315) to Abecia as his counsel and allowed him to take possession of the
land upon the latters request. By means of the forged deed of sale,
Abecia was able to obtain new transfer certificates of title, first in the
name of Gangay and then in that of Mrs. Abecia, from the Registry of
Deeds of Misamis Oriental.[3] Daroy claimed he discovered the fraud
only in 1984.

Daroy submitted in evidence a report of the National Bureau of

Investigation, which had examined the deed of sale in favor of Jose
Gangay, showing that Daroys signature in the deed of sale had been
written by a different hand. In addition, Daroy presented the affidavit,
executed on August 10, 1988, of Anita Gangay, wife of Jose Gangay, in
which she retracted an earlier affidavit executed on June 5, 1985. In the
first affidavit, she stated that she had bought the land in question from
Regalado Daroy and then sold it to her sister Nena Abecia, wife of
respondent Esteban. Now, in her present affidavit, it is stated that she
did not buy the land from Daroy nor later sell it to Nena Abecia and
that she really did not know anything about the controversy between
Regalado Daroy and Esteban Abecia, both of whom are her brothers-inlaw. (It appears that Mrs. Conchita Daroy, Mrs. Anita Gangay, and Mrs.
Nena Abecia are sisters, although Conchita Daroy and Regalado Daroy
are not married but lived together in a common-law relationship.)

A complaint for falsification of public document was also filed against
respondent Abecia in the Office of the City Prosecutor of Cagayan de
Oro which, however, dismissed the same.[4] On appeal, then
Undersecretary of Justice Silvestre H. Bello III reversed on May 6, 1988
the findings of the City Prosecutor of Cagayan de Oro and consequently
ordered the filing of the corresponding information in court.[5]
Accordingly, City Prosecutor Rodolfo R. Waga filed an information for
falsification of public document, dated June 30, 1988, with the Regional
Trial Court of Misamis Oriental.[6]

Respondent Abecia was unable to attend the hearings. He asked for
their transfer to Cagayan de Oro on the ground that he did not have
the means to travel, but his request was apparently denied sub silencio
as the Commission continued the hearings in Pasig, Metro Manila. As a
result only his counsel was present at the hearings.[7]

As respondent reiterated his request for the transfer of venue, it was
agreed at the hearing of January 30, 1989 that respondents answer,
dated August 3, 1987, and the affidavits of his witnesses as well as his
own would be considered as their direct testimonies.[8]

In his answer, respondent Esteban Abecia maintained that on March

31, 1971, Regalado Daroy sold the land in question to Jose Gangay, and
the latter in turn sold the land to Nena Abecia on April 17, 1971. He
cited the sheriffs return, dated August 6, 1973, in which it was stated
that on August 4, 1993 Regalado Daroy and his assignee Nena Abecia
were . . . placed in actual possession of the parcel of land subject
matter of the Deed of Conveyance and Possession.[9] He also referred
to the resolution of the Assistant Provincial Fiscal of Misamis Oriental,
who dismissed the complaint for grave coercion and malicious mischief
filed by Gertrudes De Bajuyo, one of the defendants in the ejectment
case, against Regalado Daroy and Nena Abecia for the demolition of
her house, precisely on the basis of the right of Mrs. Nena Abecia . . . as
assignee to do whatever she wants to do of the things she owns.[10]

On July 15, 1993, Commissioner Plaridel C. Jose rendered a report
finding respondent Abecia guilty of malpractice and recommending his
disbarment. In his report, Commissioner Jose stated:[11]

. . . In the course of his law practice, the respondent handled several
cases in behalf of the complainant Regalado Daroy, among which is
Civil Case No. 3288, wherein a parcel of land located at Opol, Misamis
Oriental covered by TCT No. T-15924 (TCT No. T-315) was the subject of
litigation. In the course of handling the same, the complainant
entrusted to the respondent the pertinent documents necessary in the
said case which included his said TCT No. T-15924.

In the year 1971, without the knowledge of the complainant, a
document entitled Deed of Sale dated March 31, 1971 was executed
and notarized by Notary Public Erasmo G. Damasing as Doc. No. 68,
Page No. 16, Book No. VIII, Series of 1971, which appears to have been
signed by complainant Regalado Daroy, thereby conveying the said
property in favor of a certain Jose Gangay, married to Anita Basmayor,
by virtue of which TCT No. T-15925 was issued in the name of Jose
Gangay.

Two weeks thereafter, under date of April 17, 1971, the said Jose
Gangay executed a Deed of Sale of the same property in favor of Mrs.

Nena Abecia, the wife of the respondent, by virtue of which TCT No. T15926 was issued in the name of Nena Abecia, married to Atty. Esteban
Abecia, the respondent.

Sometime in the year 1984, the complainant discovered that his said
property was already in the name of Mrs. Nena Abecia and Atty.
Esteban Abecia.

. . . .

The foregoing evidence sufficiently proved respondents acts
complained of in the present case . . . . The significant fact is that the
herein respondent was instrumental and responsible for falsifying the
signature of his client, complainant Daroy, in the deed of conveyance in
favor of Jose Gangay, for which he is at present criminally charged in
Criminal Case No. 88-443 before the Regional Trial Court of Misamis
Oriental.

In an unclear manner, respondent tried to justify his act by alleging that
the transfer of his clients property to his wife was proper because he
allegedly was not paid for his professional services. Such allegation,
even if true, would not exculpate him from liability. A lawyer who
executed with his client a deed transferring ownership over a parcel of
land involved in a pending litigation as his attorneys fees violates the
rule prohibiting the purchase of property in litigation by a lawyer from
his client.

. . . What is saddening is the fact that he is presently an incumbent
labor arbiter of the National Labor Relations Commission with the
delicate responsibility of administering justice to the parties before
him. . . . The Commission has no alternative but to recommend his
disbarment. It is likewise recommended that the National Labor
Relations Commission be furnished with these findings for its guidance
and appropriate action.

The Board of Governors of the Integrated Bar of the Philippines in

Resolution No. XI-94-072, dated March 26 1994,[12] approved the
report but reduced the penalty to indefinite suspension.

Respondent Abecia filed a Motion for Reconsideration and/or Appeal.
Among other things, he contends that:[13]

. . . .

1. The Commission on Bar Discipline erred when it held that
complainant had no knowledge of the execution of the Deed of
Absolute Sale on March 31, 1971 before Notary Public Erasmo G.
Damasing.

Complainant very well knew of the execution of the deed of sale as
shown in the Sheriffs Return of Service (Respondents Annex 9) dated
August 6, 1973, where he declared that he was accompanied by the
complainant and his assignee, Nena Abecia, in implementing the Deed
of Conveyance and Possession on August 4, 1973. The Deputy Sheriff
even went as far as declaring that the land was already in the name of
complainants assignee. Paragraph 2 of the said Sheriffs Return of
Service is herein quoted verbatim:

2. The undersigned then proceeded to the parcel of land which is the
subject matter of the Deed of Conveyance and Possession together
with purchaser Regalado Daroy, his assignee Nena Abecia, Atty.
Esteban Abecia, Ex-LTC Registrar Clemente Quiblat, P.M. Salazar, and
the Police Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado
Daroy and his assignee, Nena Abecia, were then formally placed in
actual and physical possession of the parcel of land subject matter of
the Deed of Conveyance and Possession. Regalado Daroy and his
assignee, Nena Abecia, then asserted their ownership of the parcel of
land by making use of the improvements found on the land such as the
young coconuts and bananas. As a matter of fact the parcel of land is
already in the name of Nena Abecia per Transfer Certificate of Title No.
T-15926 entered in the Register of Deeds of Cagayan de Oro City on
June 18, 1973 at 1:00 P.M. (Underscoring Ours).


Likewise, in Office File No. 419-74 of the Office of the Provincial Fiscal
(Respondents Annex 10) dated April 18, 1974, wherein complainant
Regalado Daroy was the accused, then 4th Asst. Fiscal Alejo G. Rola
referred to Nena Abecia as the owner of the subject property by virtue
of her being the assignee and/or transferee of the rights of Regalado
Daroy.

Furthermore, in Criminal Case No. 88-443 before Branch 25 of the RTC
of Misamis Oriental, complainant testified in open court that he came
to know of the Deed of Absolute Sale (Exhibit A) when the sheriff
awarded the land to him (TSN, p. 3. Oct. 4, 1989). The Sheriffs Deed of
Conveyance and Possession, however, was executed by the Provincial
Sheriffs way back in April 11, 1972.

How indeed can complainant now have the temerity to claim that he
discovered that the subject property was transferred only in 1984? And
how could the Commission on Bar Discipline have overlooked the
above evidence and believed the complainant hook, line and sinker?

2. The Commission on Bar Discipline erred in not giving credence and
weight to the testimony/sworn statement of the Notary Public
(Respondents Annex 4) and the instrumental witnesses to the
execution of the questioned Deed of Absolute Sale (Respondents
Annexes 5 and 6). Between the Notary Public and the complainant, the
Notary Public, who is known for his unquestioned integrity, honesty
and probity, is more believable. In fact, Notary Public Erasmo G.
Damasing, then the incumbent vice-mayor, went on to become the
congressman of Cagayan de Oro City. And between the positive
identification of the complainant as the person who executed the
instrument by the Notary Public (and the instrumental witnesses) and
the assertion of the alleged handwriting expert, the positive
identification must prevail especially since the questioned signature of
complainant has as many strokes as the sample signatures in the
documents submitted for comparison.

Respondents motion is well taken. As already stated, the land in

question was purchased by complainant at the sheriffs sale held on
March 25, 1971. The land was owned by Gertrudes de Bajuyo, wife of
one of the defendants in the action for forcible entry. Upon the lapse of
one year and the failure of the owner to redeem the land, its
ownership was consolidated in the name of complainant Regalado
Daroy. In his sheriffs Return of Service issued on August 6, 1973 - long
before the complaint in this case was filed on May 25, 1987 Deputy
Sheriff Eufrosino P. Castillo stated that when he finally transferred the
land to the buyer, he placed in possession of the land not only the
buyer, Regalado Daroy, but also the latters assignee, Nena Abecia, in
whose name the title to the land had in fact been transferred. The
Deputy Sheriff said in his report:[14]

2. The undersigned then proceeded to the parcel of land which is the
subject matter of the Deed of Conveyance and Possession together
with purchaser Regalado Daroy, his assignee Nena Abecia, Atty.
Esteban Abecia, Ex-LTC Registrar Clemente Quiblat, P.M. Salazar, and
the Police Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado
Daroy and his assignee, Nena Abecia, were then formally place in actual
and physical possession of the parcel of land subject of the Deed of
Conveyance and Possession. Regalado Daroy and his assignee, Nena
Abecia, then asserted their ownership of the parcel of land by making
use of the improvements found in the land such as the young coconuts
and bananas. As a matter of fact the parcel of land is already in the
name of Nena Abecia per Transfer Certificate of Title No. T-15926
entered in the Register of Deeds at Cagayan de Oro City on June 18,
1973 at 1:00 P.M.

3. At about 2:00 P.M. of the same day, August 4, 1973, the undersigned
accompanied with police Sgt. Felex Abejuela of Opol Police Department
and P.M. Salazar went to the house of Restituto Bajuyo at Mulugan,
Opol, Mis. Or. The undersigned explained to Restituto Bajuyo that
Regalado Daroy and his assignee Nena Abecia were already placed in
actual and physical possession of the parcel of land subject matter of
the Deed of Conveyance and Possession and admonished him not to
molest Regalado Daroy and his assignee or anybody appointed by them

to take care of the aforecited parcel of land. He was warned that any
violation will be contrary to law and will subject him to court
punishment.

It would appear, therefore, that as early as August 4, 1973 Daroy
already knew that title to the land had already been transferred in the
name of respondents wife. Complainants claim that he came to know
of such transfer only in 1984 is thus belied. Nor does it appear that the
transfer was made without his knowledge and consent. To the
contrary, the sheriffs return suggests that Daroy had agreed to such
transfer. Hence, the references to Mrs. Abecia as Daroys assignee.

It appears further that as a consequence of the demolition of the
former owners house, complainant and Mrs. Abecia were charged,
together with Deputy Sheriff Eufrosino P. Castillo, with grave
coercion/malicious mischief in the Office of the Provincial Fiscal of
Misamis Oriental. In his resolution, dated April 18, 1974, dismissing the
charges, Assistant Provincial Fiscal Alejo G. Rola stated, among other
things:[15]

The undersigned despite the declaration of complainant Gertrudes de
Bajuyo corroborated by the testimony of Josefina Jaraula that she was
intimidated by a PC soldier, is of the opinion that such evidence is
insufficient to warrant a belief that such an act was in fact done by Sgt.
Abalos, because the other witnesses for the complainant namely, Lito
Ejina and Jose Jaime never mentioned that there was such intimidation
employed by Sgt. Abalos at the time despite the fact that these two (2)
aforenamed witnesses, were present at the time and on the date
Josefina Jaraula was around. The undersigned is however of the
considered opinion that the house occupied by complainant Gertrudes
de Bajuyo was demolished by respondents, but such an act is a right of
Mrs. Nena Abecia in her capacity as an assignee to do whatever she
wants to do of the thing she owns. Furthermore, the allegation of
complainant regarding the intimidation made against her by the PC Sgt.
corroborated by the other witness Josefina Jaraula is insufficient to
offset the presumption of regularity of performance of an official duty

by a public officer, apart from the fact that the testimony of Gertrudes
Bajuyo and Josefina Jaraula are of dubious credibility.

Like the sheriffs return made in 1973, this resolution of the Assistant
Provincial Fiscal rendered the following year (1974) belies complainants
allegation that the land in question was transferred to Mrs. Abecia
without his knowledge and consent and that he came to know about it
only in 1984.

The aforementioned documents were attached to the answer of
respondent Esteban Abecia. However, despite the parties agreement
made at the hearing held on January 30, 1989, that the said documents
would be considered the evidence of respondent Abecia, they were not
even mentioned in the report of the Commissioner who investigated
the case.

Indeed, what appears to have happened in this case is that the parties
thought that because the land had been acquired by complainant at a
public sale held in order to satisfy a judgment in his favor in a case in
which respondent was complainants counsel, the latter could not
acquire the land. The parties apparently had in mind Art. 1491 of the
Civil Code which provides, in pertinent parts, as follows:

ART. 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:

. . . .

(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.[16]


Of course, the parties were mistaken in thinking that respondent could
not validly acquire the land. In Guevara v. Calalang,[17] on facts similar
to those in this case, we held that the prohibition in Art. 1491 does not
apply to the sale of a parcel of land, acquired by a client to satisfy a
judgment in his favor, to his attorney as long as the property was not
the subject of the litigation. For indeed, while judges, prosecuting
attorneys, and others connected with the administration of justice are
prohibited from acquiring property or rights in litigation or levied upon
in execution, the prohibition with respect to attorneys in the case
extends only to property and rights which may be the object of any
litigation in which they may take part by virtue of their profession.

The point is, the parties in this case thought the transfer of the land to
respondent Abecia was prohibited and so they contrived a way
whereby the land would be sold to Jose Gangay, whose wife Anita is
the sister of Mrs. Nena Abecia, and then Gangay would sell the land to
Mrs. Abecia. As Jose Gangay stated in his affidavit of March 6,
1985:[18]

4. T - Ano ba ang iyong masasabi tungkol sa nangyari?

S - Sinabihan ako ni Atty. Esteban Abecia, sapagkat siya raw ang
abogado sa lupang pinagkaguluhan, hindi maari na siya ang nakalagay
na nagbili ng upa sa kanyang cliente na si Regalado Daroy, dahil laban
raw sa kanilang batas sa mga abogado, kaya sinabihan ako ni Atty.
Esteban Abecia na maari bang gamitin niya ang pangalan ko na ako raw
ang nakabili sa lupa ni Regalado Daroy at paglipas raw ng isang taon, ay
kanya ng ilipat sa pangalan sa documento at tituto hanggang sa
pangalan ng kanyang asawa na si Nena Abecia.

5.T - Sumagot ka ba sa hiling ni Atty. Esteban Abecia?

S - Opo, pumayag ako dahil silang dalawa, si Regalado Daroy at si Atty.
Esteban Abecia ay aking mga bilas, sapagkat ang isat-isa naming mga
asawa ay magkakapatid.

6. T - Ano man ang nangyari pagkatapos noon?

S - Isang araw, ay pumunta si Atty. Esteban Abecia sa amin at sinama
niya ako doon kay Atty. Wilfredo Linaac upang ipa tunayan ang aking
pangalan doon sa documento sa pagbili, at dahil doon, iyong
documento sa pabili ay na notariohan ni Atty. Wilfredo Linaac.

7. T - Binayaran ba kayo ni Nena Abecia at ni Atty. Esteban Abecia sa
pera na naghaga ng isang libo tatlong daan at limang[pung] pesos
(P1,350.00) na iyong ang halaga sa lupa.

S - Wala.

8. T - Ipakita ko sa iyo itong documento ng pagbili at may takda ng
petsa na Abril 17, 1971 notariadad ni Atty. Wilfredo Linaac Signes sa
Doc. No. 333, Pahina 48, Aklat No. VI; taon series sa 1971; ano mang
ang kaugnayan nito sa documento ng pagbili?

S - Ang lahat na mga papiles sa sinasabi ninyo ay wala akong nalalaman,
ang nalaman ko lang noon akoy dinala ni Atty. Esteban Abecia sa oficina
ni Atty. Wilfredo Linaac tinanong ako kong aking pirma iyong sa sa
documento.

The sale of the land to Gangay may be fictitious and, therefore, void,
but that complainant Regalado Daroy intended to convey the land
ultimately to respondent Esteban Abecia appears to be the case.

It is true that the NBI found the signature of Regalado Daroy on the
deed of sale made in favor of Jose Gangay to have been forged. But
Erasmo Damasing, the notary public who notarized the deed, affirmed
that Daroy and his wife appeared before him on March 31, 1971 and, in
his presence, signed the document in question.[19] Daisy Felicilda
likewise stated in an affidavit executed on February 17, 1986 that she
was a witness to the execution of the deed of sale and that she saw
Daroy signing the deed of sale.[20]

Daroy never denied these claims of the notary public and a witness to
the execution of the deed of sale. Nor was the NBI writing expert ever
called to testify on his finding that the signature of Daroy in the deed of
sale appeared to have been signed by a different hand. The finding that
the deed of sale was forged was simply implied from the report of the
NBI writing expert. As complainant, Daroy had the burden of proving
that contrary to the recital in the jurat he and his wife never appeared
before the notary public and acknowledged the deed to be their
voluntary act.

WHEREFORE, the resolution dated March 26, 1994, of the IBP Board of
Governors is RECONSIDERED and the complaint against respondent
Esteban Abecia is DISMISSED.

SO ORDERED.


CASE NO. 5. AM NO. MTJ 89-20
CASE NO. 6 AM NO. 1302, 1391, 1543

FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs

Gregorio Fabillo, Roman Fabillo, Cristeta F. Maglinte and Antonio
Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case
Division) and ALFREDO MURILLO (substituted by his heirs Fiamita M.
Murillo, Flor M. Agcaoili and Charito M. Babol), respondents.

In the instant petition for review on certiorari, petitioners seek the
reversal of the appellate court's decision interpreting in favor of lawyer
Alfredo M. Murillo the contract of services entered into between him
and his clients, spouses Florencio Fabillo and Josefa Taa.

In her last will and testament dated August 16, 1957, Justina Fabillo
bequeathed to her brother, Florencio, a house and lot in San Salvador
Street, Palo, Leyte which was covered by tax declaration No. 19335,
and to her husband, Gregorio D. Brioso, a piece of land in Pugahanay,
Palo, Leyte. 1 After Justina's death, Florencio filed a petition for the
probate of said will. On June 2, 1962, the probate court approved the
project of partition "with the reservation that the ownership of the
land declared under Tax Declaration No. 19335 and the house erected
thereon be litigated and determined in a separate proceedings." 2

Two years later, Florencio sought the assistance of lawyer Alfredo M.
Murillo in recovering the San Salvador property. Acquiescing to render
his services, Murillo wrote Florencio the following handwritten letter:

Dear Mr. Fabillo:

I have instructed my stenographer to prepare the complaint and file
the same on Wednesday if you are ready with the filing fee and sheriffs
fee of not less than P86.00 including transportation expenses.

Considering that Atty. Montilla lost this case and the present action is a
revival of a lost case, I trust that you will gladly give me 40% of the
money value of the house and lot as a contigent (sic) fee in case of a

success. When I come back I shall prepare the contract of services for
your signature.

Thank you.

Cordially yours,
(Sgd.) Alfredo M. Murillo
Aug. 9, 1964 3

Thirteen days later, Florencio and Murillo entered into the following
contract:

CONTRACT OF SERVICES

KNOW ALL MEN BY THESE PRESENTS:

That I, FLORENCIO FABILLO, married to JOSEFA TANA, of legal age,
Filipino citizen and with residence and postal address at Palo, Leyte,
was the Petitioner in Special Proceedings No. 843, entitled "In the
Matter of the Testate Estate of the late Justina Fabillo, Florencio
Fabillo, Petitioner" of the Court of First Instance of Leyte;

That by reason of the Order of the Court of First Instance of Leyte
dated June 2, 1962, my claim for the house and lot mentioned in
paragraph one (1) of the last will and testament of the late Justina
Fabillo, was denied altho the will was probated and allowed by the
Court;

That acting upon the counsel of Atty. Alfredo M. Murillo, I have
cause(d) the preparation and filing of another case, entitled "Florencio
Fabillo vs. Gregorio D. Brioso," which was docketed as Civil Case No.
3532 of the Court of First Instance of Leyte;

That I have retained and engaged the services of Atty. ALFREDO M.
MURILLO, married and of legal age, with residence and postal address
at Santa Fe, Leyte to be my lawyer not only in Social Proceedings No.

843 but also in Civil Case No. 3532 under the following terms and
conditions;

That he will represent me and my heirs, in case of my demise in the
two cases until their successful conclusion or until the case is settled to
my entire satisfaction;

That for and in consideration for his legal services, in the two cases, I
hereby promise and bind myself to pay Atty. ALFREDO M. MURILLO, in
case of success in any or both cases the sum equivalent to FORTY PER
CENTUM (40%) of whatever benefit I may derive from such cases to be
implemented as follows:

If the house and lot in question is finally awarded to me or a part of the
same by virtue of an amicable settlement, and the same is sold, Atty.
Murillo, is hereby constituted as Atty. in-fact to sell and convey the said
house and lot and he shall be given as his compensation for his services
as counsel and as attorney-in-fact the sum equivalent to forty per
centum of the purchase price of the house and lot;

If the same house and lot is just mortgage(d) to any person, Atty.
Murillo shall be given the sum equivalent to forty per centum (40%) of
the proceeds of the mortgage;

If the house and lot is leased to any person, Atty. Murillo shall be
entitled to receive an amount equivalent to 40% (FORTY PER CENTUM)
of the rentals of the house and lot, or a part thereof;

If the house and lot or a portion thereof is just occupied by the
undersigned or his heirs, Atty. Murillo shall have the option of either
occupying or leasing to any interested party FORTY PER CENT of the
house and lot.

Atty. Alfredo M. Murillo shall also be given as part of his compensation
for legal services in the two cases FORTY PER CENTUM of whatever
damages, which the undersigned can collect in either or both cases,

provided, that in case I am awarded attorney's fees, the full amount of

attorney's fees shall be given to the said Atty. ALFREDO M. MURILLO;

That in the event the house and lot is (sic) not sold and the same is
maintained by the undersigned or his heirs, the costs of repairs,
maintenance, taxes and insurance premiums shall be for the account of
myself or my heirs and Attorney Murillo, in proportion to our rights and
interest thereunder that is forty per cent shall be for the account of
Atty. Murillo and sixty per cent shall be for my account or my heirs.

IN WITNESS HEREOF, I hereby set unto my signature below this 22nd
day of August 1964 at Tacloban City.

(Sgd.) FLORENCIO FABILLO

(Sgd.) JOSEFA T. FABILLO
WITH MY CONFORMITY:

(Sgd.) ALFREDO M. MURILLO
(Sgd.) ROMAN T. FABILLO
(Witness)
(Sgd.) CRISTETA F. MAGLINTE
(Witness) 4
Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case
No. 3532 against Gregorio D. Brioso to recover the San Salvador
property. The case was terminated on October 29, 1964 when the
court, upon the parties' joint motion in the nature of a compromise
agreement, declared Florencio Fabillo as the lawful owner not only of
the San Salvador property but also the Pugahanay parcel of land.

Consequently, Murillo proceeded to implement the contract of services
between him and Florencio Fabillo by taking possession and exercising
rights of ownership over 40% of said properties. He installed a tenant in
the Pugahanay property.

Sometime in 1966, Florencio Fabillo claimed exclusive right over the
two properties and refused to give Murillo his share of their produce. 5
Inasmuch as his demands for his share of the produce of the

Pugahanay property were unheeded, Murillo filed on March 23, 1970

in the then Court of First Instance of Leyte a complaint captioned
"ownership of a parcel of land, damages and appointment of a
receiver" against Florencio Fabillo, his wife Josefa Taa, and their
children Ramon (sic) Fabillo and Cristeta F. Maglinte. 6

Murillo prayed that he be declared the lawful owner of forty per cent
of the two properties; that defendants be directed to pay him jointly
and severally P900.00 per annum from 1966 until he would be given his
share of the produce of the land plus P5,000 as consequential damages
and P1,000 as attorney's fees, and that defendants be ordered to pay
moral and exemplary damages in such amounts as the court might
deem just and reasonable.

In their answer, the defendants stated that the consent to the contract
of services of the Fabillo spouses was vitiated by old age and ailment;
that Murillo misled them into believing that Special Proceedings No.
843 on the probate of Justina's will was already terminated when
actually it was still pending resolution; and that the contingent fee of
40% of the value of the San Salvador property was excessive, unfair and
unconscionable considering the nature of the case, the length of time
spent for it, the efforts exerted by Murillo, and his professional
standing.

They prayed that the contract of services be declared null and void;
that Murillo's fee be fixed at 10% of the assessed value of P7,780 of the
San Salvador property; that Murillo be ordered to account for the
P1,000 rental of the San Salvador property which he withdrew from the
court and for the produce of the Pugahanay property from 1965 to
1966; that Murillo be ordered to vacate the portion of the San Salvador
property which he had occupied; that the Pugahanay property which
was not the subject of either Special Proceedings No. 843 or Civil Case
No. 3532 be declared as the exclusive property of Florencio Fabillo, and
that Murillo be ordered to pay moral damages and the total amount of
P1,000 representing expenses of litigation and attorney's fees.

In its decision of December 2, 1975, 7 the lower court ruled that there
was insufficient evidence to prove that the Fabillo spouses' consent to
the contract was vitiated. It noted that the contract was witnessed by
two of their children who appeared to be highly educated. The spouses
themselves were old but literate and physically fit.

In claiming jurisdiction over the case, the lower court ruled that the
complaint being one "to recover real property from the defendant
spouses and their heirs or to enforce a lien thereon," the case could be
decided independent of the probate proceedings. Ruling that the
contract of services did not violate Article 1491 of the Civil Code as said
contract stipulated a contingent fee, the court upheld Murillo's claim
for "contingent attorney's fees of 40% of the value of recoverable
properties." However, the court declared Murillo to be the lawful
owner of 40% of both the San Salvador and Pugahanay properties and
the improvements thereon. It directed the defendants to pay jointly
and severally to Murillo the amount of P1,200 representing 40% of the
net produce of the Pugahanay property from 1967 to 1973; entitled
Murillo to 40% of the 1974 and 1975 income of the Pugahanay
property which was on deposit with a bank, and ordered defendants to
pay the costs of the suit.

Both parties filed motions for the reconsideration of said decision:
Fabillo, insofar as the lower court awarded 40% of the properties to
Murillo and the latter insofar as it granted only P1,200 for the produce
of the properties from 1967 to 1973. On January 29, 1976, the lower
court resolved the motions and modified its decision thus:

ACCORDINGLY, the judgment heretofore rendered is modified to read
as follows:

(a)
Declaring the plaintiff as entitled to and the true and lawful
owner of forty percent (40%) of the parcels of land and improvements
thereon covered by Tax Declaration Nos. 19335 and 6229 described in
Paragraph 5 of the complaint;

(b)
Directing all the defendants to pay jointly and severally to the
plaintiff the sum of Two Thousand Four Hundred Fifty Pesos
(P2,450.00) representing 40% of the net produce of the Pugahanay
property from 1967 to 1973;

(c)
Declaring the plaintiff entitled to 40% of the 1974 and 1975
income of said riceland now on deposit with the Prudential Bank,
Tacloban City, deposited by Mr. Pedro Elona, designated receiver of the
property;

(d)
Ordering the defendants to pay the plaintiff the sum of Three
Hundred Pesos (P 300.00) as attorney's fees; and

(e)
Ordering the defendants to pay the costs of this suit.

SO ORDERED.

In view of the death of both Florencio and Justina Fabillo during the
pendency of the case in the lower court, their children, who substituted
them as parties to the case, appealed the decision of the lower court to
the then Intermediate Appellate Court. On March 27, 1984, said
appellate court affirmed in toto the decision of the lower court. 8

The instant petition for review on certiorari which was interposed by
the Fabillo children, was filed shortly after Murillo himself died. His
heirs likewise substituted him in this case. The Fabillos herein question
the appellate court's interpretation of the contract of services and
contend that it is in violation of Article 1491 of the Civil Code.

The contract of services did not violate said provision of law. Article
1491 of the Civil Code, specifically paragraph 5 thereof, prohibits
lawyers from acquiring by purchase even at a public or judicial auction,
properties and rights which are the objects of litigation in which they
may take part by virtue of their profession. The said prohibition,
however, applies only if the sale or assignment of the property takes
place during the pendency of the litigation involving the client's
property. 9


Hence, a contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491 (5)
of the Civil Code because the payment of said fee is not made during
the pendency of the litigation but only after judgment has been
rendered in the case handled by the lawyer. In fact, under the 1988
Code of Professional Responsibility, a lawyer may have a lien over
funds and property of his client and may apply so much thereof as may
be necessary to satisfy his lawful fees and disbursements. 10

As long as the lawyer does not exert undue influence on his client, that
no fraud is committed or imposition applied, or that the compensation
is clearly not excessive as to amount to extortion, a contract for
contingent fee is valid and enforceable. 11 Moreover, contingent fees
were impliedly sanctioned by No. 13 of the Canons of Professional
Ethics which governed lawyer-client relationships when the contract of
services was entered into between the Fabillo spouses and Murillo. 12

However, we disagree with the courts below that the contingent fee
stipulated between the Fabillo spouses and Murillo is forty percent of
the properties subject of the litigation for which Murillo appeared for
the Fabillos. A careful scrutiny of the contract shows that the parties
intended forty percent of the value of the properties as Murillo's
contingent fee. This is borne out by the stipulation that "in case of
success of any or both cases," Murillo shall be paid "the sum equivalent
to forty per centum of whatever benefit" Fabillo would derive from
favorable judgments. The same stipulation was earlier embodied by
Murillo in his letter of August 9, 1964 aforequoted.

Worth noting are the provisions of the contract which clearly states
that in case the properties are sold, mortgaged, or leased, Murillo shall
be entitled respectively to 40% of the "purchase price," "proceeds of
the mortgage," or "rentals." The contract is vague, however, with
respect to a situation wherein the properties are neither sold,
mortgaged or leased because Murillo is allowed "to have the option of
occupying or leasing to any interested party forty per cent of the house
and lot." Had the parties intended that Murillo should become the

lawful owner of 40% of the properties, it would have been clearly and
unequivocally stipulated in the contract considering that the Fabillos
would part with actual portions of their properties and cede the same
to Murillo.

The ambiguity of said provision, however, should be resolved against
Murillo as it was he himself who drafted the contract. 13 This is in
consonance with the rule of interpretation that, in construing a
contract of professional services between a lawyer and his client, such
construction as would be more favorable to the client should be
adopted even if it would work prejudice to the lawyer. 14 Rightly so
because of the inequality in situation between an attorney who knows
the technicalities of the law on the one hand and a client who usually is
ignorant of the vagaries of the law on the other hand. 15

Considering the nature of the case, the value of the properties subject
matter thereof, the length of time and effort exerted on it by Murillo,
we hold that Murillo is entitled to the amount of Three Thousand Pesos
(P3,000.00) as reasonable attorney's fees for services rendered in the
case which ended on a compromise agreement. In so ruling, we uphold
"the time-honored legal maxim that a lawyer shall at all times uphold
the integrity and dignity of the legal profession so that his basic ideal
becomes one of rendering service and securing justice, not moneymaking. For the worst scenario that can ever happen to a client is to
lose the litigated property to his lawyer in whom all trust and
confidence were bestowed at the very inception of the legal
controversy." 16

WHEREFORE, the decision of the then Intermediate Appellate Court is
hereby reversed and set aside and a new one entered (a) ordering the
petitioners to pay Atty. Alfredo M. Murillo or his heirs the amount of
P3,000.00 as his contingent fee with legal interest from October 29,
1964 when Civil Case No. 3532 was terminated until the amount is fully
paid less any and all amounts which Murillo might have received out of
the produce or rentals of the Pugahanay and San Salvador properties,
and (b) ordering the receiver of said properties to render a complete
report and accounting of his receivership to the court below within

fifteen (15) days from the finality of this decision. Costs against the
private respondent.

SO ORDERED.

MAURO P. MANANQUIL, complainant,

vs.
ATTY. CRISOSTOMO C. VILLEGAS, respondent.

In a verified complaint for disbarment dated July 5, 1982, Mauro P.
Mananquil charged respondent Atty. Crisostomo C. Villegas with gross
misconduct or malpractice committed while acting as counsel of record
of one Felix Leong in the latter's capacity as administrator of the
Testate Estate of the late Felomina Zerna in Special Proceedings No.
460 before then Court of First Instance of Negros Occidental. The
complainant was appointed special administrator after Felix Leong
died.

In compliance with a resolution of this Court, respondent filed his
comment to the complaint on January 20, 1983. After complainant filed
his reply, the Court resolved to refer the case to the Solicitor General
for investigation, report and recommendation.

In a hearing conducted on May 15, 1985 by the investigating officer
assigned to the case, counsel for the complainant proposed that the
case be considered on the basis of position papers and memoranda to
be submitted by the parties. Respondent agreed. Thus, the
investigating officer required the parties to submit their respective
position papers and memoranda, with the understanding that with or
without the memoranda, the case will be deemed submitted for
resolution after the expiration of 30 days. In compliance, both parties
submitted their respective position papers; but no memorandum was
filed by either party. Thereafter, the case was deemed submitted.

In the pleadings submitted before the Court and the Office of the
Solicitor General, complainant alleges that over a period of 20 years,
respondent allowed lease contracts to be executed between his client
Felix Leong and a partnership HIJOS DE JOSE VILLEGAS, of which
respondent is one of the partners, covering several parcels of land of
the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957
of the Tanjay Cadastre, under iniquitous terms and conditions.
Moreover, complainant charges that these contracts were made

without the approval of the probate court and in violation of Articles

1491 and 1646 of the new Civil Code.

On the basis of the pleadings submitted by the parties, and other
pertinent records of the investigation, the Solicitor General submitted
his report dated February 21, 1990, finding that respondent committed
a breach in the performance of his duties as counsel of administrator
Felix Leong when he allowed the renewal of contracts of lease for
properties involved in the testate proceedings to be undertaken in
favor of HIJOS DE JOSE VILLEGAS without notifying and securing the
approval of the probate court. However, the Solicitor General opined
that there was no sufficient evidence to warrant a finding that
respondent had allowed the properties to be leased in favor of his
family partnership at a very low rental or in violation of Articles 1491
and 1646 of the new Civil Code. Thus, the Solicitor General
recommended that respondent be suspended from the practice of law
for a period of THREE (3) months with a warning that future
misconduct on respondent's part will be more severely dealt with
[Report and Recommendation of the Solicitor General, pp. 1-10; Rollo,
pp. 37-46. Also, Complaint of the Solicitor General, pp. 1-3; Rollo, pp.
47-49].

As gleaned from the record of the case and the report and
recommendation of the Solicitor General, the following facts are
uncontroverted:

That as early as March 21, 1961, respondent was retained as counsel of
record for Felix Leong, one of the heirs of the late Felomina Zerna, who
was appointed as administrator of the Testate Estate of the Felomina
Zerna in Special No. 460 on May 22, 1961;

That, a lease contract dated August 13, 1963 was executed between
Felix Leong and the "Heirs of Jose Villegas" represented by
respondent's brother-in-law Marcelo Pastrano involving, among others,
sugar lands of the estate designated as Lot Nos. 1124, 1228, 2221,
2402, 3939, 3942 and 3957 of the Tanjay Cadastre;

That Felix Leong was designated therein as administrator and "owner,

by testamentary disposition, of 5/6 of all said parcels of land";

That, the lifetime of the lease contract was FOUR (4) sugar crop years,
with a yearly rental of TEN PERCENT (10%) of the value of the sugar
produced from the leased parcels of land;

That, on April 20, 1965, the formal partnership of HIJOS DE JOSE
VILLEGAS was formed amongst the heirs of Jose Villegas, of which
respondent was a member;

That, on October 18, 1965, another lease contract was executed
between Felix Leong and the partnership HIJOS DE JOSE VILLEGAS,
containing basically the same terms and conditions as the first contract,
with Marcelo Pastrano signing once again as representative of the
lessee;

That, on March 14, 1968, after the demise of Marcelo Pastrano,
respondent was appointed manager of HIJOS DE JOSE VILLEGAS by the
majority of partners;

That, renewals of the lease contract were executed between Felix
Leong and HIJOS DE JOSE VILLEGAS on January 13, 1975 and on
December 4, 1978, with respondent signing therein as representative
of the lessee; and,

That, in the later part of 1980, respondent was replaced by his nephew
Geronimo H. Villegas as manager of the family partnership.

Under the above circumstances, the Court finds absolutely no merit to
complainant's charge, and the Solicitor General's finding, that
respondent committed acts of misconduct in failing to secure the
approval of the court in Special Proceedings No. 460 to the various
lease contracts executed between Felix Leong and respondent's family
partnership.

Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial

executor or administrator has the right to the possession and
management of the real as well as the personal estate of the deceased
so long as it is necessary for the payment of the debts and the expenses
of administration. He may, therefore, exercise acts of administration
without special authority from the court having jurisdiction of the
estate. For instance, it has long been settled that an administrator has
the power to enter into lease contracts involving the properties of the
estate even without prior judicial authority and approval [See Ferraris
v. Rodas, 65 Phil. 732 (1938); Jocson de Hilado v. Nava, 69 Phil. 1
(1939); San Diego, Sr. v. Hombre, G.R No. L-19265, May 29, 1964, 11
SCRA 165].

Thus, considering that administrator Felix Leong was not required
under the law and prevailing jurisprudence to seek prior authority from
the probate court in order to validly lease real properties of the estate,
respondent, as counsel of Felix Leong, cannot be taken to task for
failing to notify the probate court of the various lease contracts
involved herein and to secure its judicial approval thereto.

Nevertheless, contrary to the opinion of the Solicitor General, the Court
finds sufficient evidence to hold respondent subject to disciplinary
sanction for having, as counsel of record for the administrator in
Special Proceedings No. 460, participated in the execution in 1975 and
1978 of renewals of the lease agreement involving properties of the
estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of which
respondent is a member and in 1968 was appointed managing partner.

By virtue of Article 1646 of the new Civil Code, the persons referred to
in Article 1491 are prohibited from leasing, either in person or through
the mediation of another, the properties or things mentioned in that
article, to wit:

xxx xxx xxx

(1)
The guardian, the property of the person or persons who may
be under his guardianship;

(2) Agents, the property whose administration or sale may have been
intrusted to them, unless the consent of the principal have been given;

(3) Executors and administrators, the property of the estate under
administration

(4)
Public officers and employees, the property of the State or of
any subdivision thereof, or of any government owned or controlled
corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government
experts who, in any manner whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with the
administration of justice, the property or rights in litigation or levied
upon on 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.

(6) Any others specially disqualified by law

xxx xxx xxx

[Article 1491 of the new Civil Code; Emphasis supplied.]

The above disqualification imposed on public and judicial officers and
lawyers is grounded on public policy considerations which disallow the
transactions entered into by them, whether directly or indirectly, in
view of the fiduciary relationship involved, or the peculiar control
exercised by these individuals over the properties or rights covered
[See Rubias v. Batiller, G.R. No. L-35702, May 29, 1973, 51 SCRA 120;
Maharlika Publishing Corporation v. Tagle, G.R. No. 65594, July 9, 1986,
142 SCRA 553; Fornilda v. The Branch 164, RTC Fourth Judicial Region,

Pasig, G.R. No. 72306, October 5, 1988, 166 SCRA 281 and January 24,
1989, 169 SCRA 351].

Thus, even if the parties designated as lessees in the assailed lease
contracts were the "Heirs of Jose Villegas" and the partnership HIJOS
DE JOSE VILLEGAS, and respondent signed merely as an agent of the
latter, the Court rules that the lease contracts are covered by the
prohibition against any acquisition or lease by a lawyer of properties
involved in litigation in which he takes part. To rule otherwise would be
to lend a stamp of judicial approval on an arrangement which, in effect,
circumvents that which is directly prohibited by law. For, piercing
through the legal fiction of separate juridical personality, the Court
cannot ignore the obvious implication that respondent as one of the
heirs of Jose Villegas and partner, later manager of, in HIJOS DE JOSE
VILLEGAS stands to benefit from the contractual relationship created
between his client Felix Leong and his family partnership over
properties involved in the ongoing testate proceedings.

In his defense, respondent claims that he was neither aware of, nor
participated in, the execution of the original lease contract entered into
between his client and his family partnership, which was then
represented by his brother-in-law Marcelo Pastrano. And although he
admits that he participated in the execution of subsequent renewals of
the lease contract as managing partner of HIJOS DE JOSE VILLEGAS, he
argues that he acted in good faith considering that the heirs of
Filomena Zerna consented or acquiesced to the terms and conditions
stipulated in the original lease contract. He further contends that
pursuant to the ruling of the Court in Tuason v. Tuason [88 Phil. 428
(1951)] the renewal contracts do not fall within the prohibition of
Articles 1491 and 1646 since he signed the same as a mere agent of the
partnership.

Respondent's contentions do not provide sufficient basis to escape
disciplinary action from this Court.

It taxes this Courts imagination that respondent disclaims any
knowledge in the execution of the original lease contract between his

client and his family partnership represented by his brother-in-law. Be

that as it may, it cannot be denied that respondent himself had
knowledge of and allowed the subsequent renewals of the lease
contract. In fact, he actively participated in the lease contracts dated
January 13, 1975 and December 4, 1978 by signing on behalf of the
lessee HIJOS DE JOSE VILLEGAS.

Moreover, the claim that the heirs of Filomena Zerna have acquiesced
and consented to the assailed lease contracts does not militate against
respondent's liability under the rules of professional ethics. The
prohibition referred to in Articles 1491 and 1646 of the new Civil Code,
as far as lawyers are concerned, is intended to curtail any undue
influence of the lawyer upon his client on account of his fiduciary and
confidential association [Sotto v. Samson, G.R. No. L-16917, July 31,
1962, 5 SCRA 733]. Thus, the law makes the prohibition absolute and
permanent [Rubias v. Batiller, supra]. And in view of Canon 1 of the
new Code of Professional Responsibility and Sections 3 & 27 of Rule
138 of the Revised Rules of Court, whereby lawyers are duty-bound to
obey and uphold the laws of the land, participation in the execution of
the prohibited contracts such as those referred to in Articles 1491 and
1646 of the new Civil Code has been held to constitute breach of
professional ethics on the part of the lawyer for which disciplinary
action may be brought against him [See Bautista v. Gonzalez, Adm.
Matter No. 1625, February 12, 1990). Accordingly, the Court must
reiterate the rule that the claim of good faith is no defense to a lawyer
who has failed to adhere faithfully to the legal disqualifications
imposed upon him, designed to protect the interests of his client [See
In re Ruste, 70 Phil. 243 (1940); Also, Severino v. Severino, 44 Phil. 343
(1923)].

Neither is there merit in respondent's reliance on the case of Tuason v.
Tuason [supra.] It cannot be inferred from the statements made by the
Court in that case that contracts of sale or lease where the vendee or
lessee is a partnership, of which a lawyer is a member, over a property
involved in a litigation in which he takes part by virtue of his profession,
are not covered by the prohibition under Articles 1491 and 1646.

However, the Court sustains the Solicitor General's holding that there is
no sufficient evidence on record to warrant a finding that respondent
allowed the properties of the estate of Filomena Zerna involved herein
to be leased to his family partnership at very low rental payments. At
any rate, it is a matter for the court presiding over Special Proceedings
No. 460 to determine whether or not the agreed rental payments made
by respondent's family partnership is reasonable compensation for the
use and occupancy of the estate properties.

Considering thus the nature of the acts of misconduct committed by
respondent, and the facts and circumstances of the case, the Court
finds sufficient grounds to suspend respondent from the practice of law
for a period of three (3) months.

WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas
committed acts of gross misconduct, the Court Resolved to SUSPEND
respondent from the practice of law for four (4) months effective from
the date of his receipt of this Resolution, with a warning that future
misconduct on respondent's part will be more severely dealt with. Let
copies of this Resolution be circulated to all courts of the country for
their information and guidance, and spread in the personal record of
Atty. Villegas.

SO ORDERED.

CASE NO. 9 AM NO. 1625

IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY

OF GUAM OF ATTY. LEON G. MAQUERA

May a member of the Philippine Bar who was disbarred or suspended
from the practice of law in a foreign jurisdiction where he has also been
admitted as an attorney be meted the same sanction as a member of
the Philippine Bar for the same infraction committed in the foreign
jurisdiction? There is a Rule of Court provision covering this cases
central issue. Up to this juncture, its reach and breadth have not
undergone the test of an unsettled case.

In a Letter dated August 20, 1996,[1] the District Court of Guam
informed this Court of the suspension of Atty. Leon G. Maquera
(Maquera) from the practice of law in Guam for two (2) years pursuant
to the Decision rendered by the Superior Court of Guam on May 7,
1996 in Special Proceedings Case No. SP0075-94,[2] a disciplinary case
filed by the Guam Bar Ethics Committee against Maquera.

The Court referred the matter of Maqueras suspension in Guam to the
Bar Confidant for comment in its Resolution dated November 19,
1996.[3] Under Section 27, Rule 138 of the Revised Rules of Court, the
disbarment or suspension of a member of the Philippine Bar in a
foreign jurisdiction, where he has also been admitted as an attorney, is
also a ground for his disbarment or suspension in this realm, provided
the foreign courts action is by reason of an act or omission constituting
deceit, malpractice or other gross misconduct, grossly immoral
conduct, or a violation of the lawyers oath.

In a Memorandum dated February 20, 1997, then Bar Confidant Atty.
Erlinda C. Verzosa recommended that the Court obtain copies of the
record of Maqueras case since the documents transmitted by the
Guam District Court do not contain the factual and legal bases for
Maqueras suspension and are thus insufficient to enable her to
determine whether Maqueras acts or omissions which resulted in his
suspension in Guam are likewise violative of his oath as a member of
the Philippine Bar.[4]

Pursuant to this Courts directive in its Resolution dated March 18,

1997,[5] the Bar Confidant sent a letter dated November 13, 1997 to
the District Court of Guam requesting for certified copies of the record
of the disciplinary case against Maquera and of the rules violated by
him.[6]

The Court received certified copies of the record of Maqueras case
from the District Court of Guam on December 8, 1997.[7]

Thereafter, Maqueras case was referred by the Court to the Integrated
Bar of the Philippines (IBP) for investigation report and
recommendation within sixty (60) days from the IBPs receipt of the
case records.[8]

The IBP sent Maquera a Notice of Hearing requiring him to appear
before the IBPs Commission on Bar Discipline on July 28, 1998.[9]
However, the notice was returned unserved because Maquera had
already moved from his last known address in Agana, Guam and did not
leave any forwarding address.[10]

On October 9, 2003, the IBP submitted to the Court its Report and
Recommendation and its Resolution No. XVI-2003-110, indefinitely
suspending Maquera from the practice of law within the Philippines
until and unless he updates and pays his IBP membership dues in
full.[11]

The IBP found that Maquera was admitted to the Philippine Bar on
February 28, 1958. On October 18, 1974, he was admitted to the
practice of law in the territory of Guam. He was suspended from the
practice of law in Guam for misconduct, as he acquired his clients
property as payment for his legal services, then sold it and as a
consequence obtained an unreasonably high fee for handling his clients
case.[12]

In its Decision, the Superior Court of Guam stated that on August 6,
1987, Edward Benavente, the creditor of a certain Castro, obtained a
judgment against Castro in a civil case. Maquera served as Castros

counsel in said case. Castros property subject of the case, a parcel of

land, was to be sold at a public auction in satisfaction of his obligation
to Benavente. Castro, however, retained the right of redemption over
the property for one year. The right of redemption could be exercised
by paying the amount of the judgment debt within the aforesaid
period.[13]

At the auction sale, Benavente purchased Castros property for Five
Hundred U.S. Dollars (US$500.00), the amount which Castro was
adjudged to pay him.[14]

On December 21, 1987, Castro, in consideration of Maqueras legal
services in the civil case involving Benavente, entered into an oral
agreement with Maquera and assigned his right of redemption in favor
of the latter.[15]

On January 8, 1988, Maquera exercised Castros right of redemption by
paying Benavente US$525.00 in satisfaction of the judgment debt.
Thereafter, Maquera had the title to the property transferred in his
name.[16]

On December 31, 1988, Maquera sold the property to C.S. Chang and
C.C. Chang for Three Hundred Twenty Thousand U.S. Dollars
(US$320,000.00).[17]

On January 15, 1994, the Guam Bar Ethics Committee (Committee)
conducted hearings regarding Maqueras alleged misconduct.[18]

Subsequently, the Committee filed a Petition in the Superior Court of
Guam praying that Maquera be sanctioned for violations of Rules
1.5[19] and 1.8(a)[20] of the Model Rules of Professional Conduct
(Model Rules) in force in Guam. In its Petition, the Committee claimed
that Maquera obtained an unreasonably high fee for his services. The
Committee further alleged that Maquera himself admitted his failure to
comply with the requirement in Rule 1.8 (a) of the Model Rules that a
lawyer shall not enter into a business transaction with a client or
knowingly acquire a pecuniary interest adverse to a client unless the

transaction and the terms governing the lawyers acquisition of such

interest are fair and reasonable to the client, and are fully disclosed to,
and understood by the client and reduced in writing.[21]

The Committee recommended that Maquera be: (1) suspended from
the practice of law in Guam for a period of two [2] years, however, with
all but thirty (30) days of the period of suspension deferred; (2) ordered
to return to Castro the difference between the sale price of the
property to the Changs and the amount due him for legal services
rendered to Castro; (3) required to pay the costs of the disciplinary
proceedings; and (4) publicly reprimanded. It also recommended that
other jurisdictions be informed that Maquera has been subject to
disciplinary action by the Superior Court of Guam.[22]

Maquera did not deny that Castro executed a quitclaim deed to the
property in his favor as compensation for past legal services and that
the transaction, except for the deed itself, was oral and was not made
pursuant to a prior written agreement. However, he contended that
the transaction was made three days following the alleged termination
of the attorney-client relationship between them, and that the
property did not constitute an exorbitant fee for his legal services to
Castro.[23]

On May 7, 1996, the Superior Court of Guam rendered its Decision[24]
suspending Maquera from the practice of law in Guam for a period of
two (2) years and ordering him to take the Multi-State Professional
Responsibility Examination (MPRE) within that period. The court found
that the attorney-client relationship between Maquera and Castro was
not yet completely terminated when they entered into the oral
agreement to transfer Castros right of redemption to Maquera on
December 21, 1987. It also held that Maquera profited too much from
the eventual transfer of Castros property to him since he was able to
sell the same to the Changs with more than US$200,000.00 in profit,
whereas his legal fees for services rendered to Castro amounted only to
US$45,000.00. The court also ordered him to take the MPRE upon his
admission during the hearings of his case that he was aware of the

requirements of the Model Rules regarding business transactions

between an attorney and his client in a very general sort of way.[25]

On the basis of the Decision of the Superior Court of Guam, the IBP
concluded that although the said court found Maquera liable for
misconduct, there is no evidence to establish that [Maquera]
committed a breach of ethics in the Philippines.[26] However, the IBP
still resolved to suspend him indefinitely for his failure to pay his annual
dues as a member of the IBP since 1977, which failure is, in turn, a
ground for removal of the name of the delinquent member from the
Roll of Attorneys under Section 10, Rule 139-A of the Revised Rules of
Court.[27]

The power of the Court to disbar or suspend a lawyer for acts or
omissions committed in a foreign jurisdiction is found in Section 27,
Rule 138 of the Revised Rules of Court, as amended by Supreme Court
Resolution dated February 13, 1992, which states:

Section 27. Disbarment or suspension of attorneys by Supreme Court,
grounds therefor.A member of the bar may be disbarred or suspended
from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral
conduct, or by reason of his conviction of a crime involving moral
turpitude, or for any violation of the oath which he is required to take
before admission to practice, or for a willful disobedience appearing as
attorney for a party to a case without authority to do so. The practice
of soliciting cases at law for the purpose of gain, either personally or
through paid agents or brokers, constitutes malpractice.

The disbarment or suspension of a member of the Philippine Bar by a
competent court or other disciplinatory agency in a foreign jurisdiction
where he has also been admitted as an attorney is a ground for his
disbarment or suspension if the basis of such action includes any of the
acts hereinabove enumerated.

The judgment, resolution or order of the foreign court or disciplinary

agency shall be prima facie evidence of the ground for disbarment or
suspension (Emphasis supplied).

The Court must therefore determine whether Maqueras acts, namely:
acquiring by assignment Castros right of redemption over the property
subject of the civil case where Maquera appeared as counsel for him;
exercising the right of redemption; and, subsequently selling the
property for a huge profit, violate Philippine law or the standards of
ethical behavior for members of the Philippine Bar and thus constitute
grounds for his suspension or disbarment in this jurisdiction.

The Superior Court of Guam found that Maquera acquired his clients
property by exercising the right of redemption previously assigned to
him by the client in payment of his legal services. Such transaction falls
squarely under Article 1492 in relation to Article 1491, paragraph 5 of
the Civil Code of the Philippines. Paragraph 5 of Article 1491[28]
prohibits the lawyers acquisition by assignment of the clients property
which is the subject of the litigation handled by the lawyer. Under
Article 1492,[29] the prohibition extends to sales in legal redemption.

The prohibition ordained in paragraph 5 of Article 1491 and Article
1492 is founded on public policy because, by virtue of his office, an
attorney may easily take advantage of the credulity and ignorance of
his client[30] and unduly enrich himself at the expense of his client.

The case of In re: Ruste[31] illustrates the significance of the
aforementioned prohibition. In that case, the attorney acquired his
clients property subject of a case where he was acting as counsel
pursuant to a deed of sale executed by his clients in his favor. He
contended that the sale was made at the instance of his clients because
they had no money to pay him for his services. The Court ruled that the
lawyers acquisition of the property of his clients under the
circumstances obtaining therein rendered him liable for malpractice.
The Court held:

Whether the deed of sale in question was executed at the instance of

the spouses driven by financial necessity, as contended by the
respondent, or at the latters behest, as contended by the complainant,
is of no moment. In either case an attorney occupies a vantage position
to press upon or dictate his terms to a harassed client, in breach of the
rule so amply protective of the confidential relations, which must
necessarily exist between attorney and client, and of the rights of
both.[32]

The Superior Court of Guam also hinted that Maqueras acquisition of
Castros right of redemption, his subsequent exercise of said right, and
his act of selling the redeemed property for huge profits were tainted
with deceit and bad faith when it concluded that Maquera charged
Castro an exorbitant fee for his legal services. The court held that since
the assignment of the right of redemption to Maquera was in payment
for his legal services, and since the property redeemed by him had a
market value of US$248,220.00 as of December 21, 1987 (the date
when the right of redemption was assigned to him), he is liable for
misconduct for accepting payment for his legal services way beyond his
actual fees which amounted only to US$45,000.00.

Maqueras acts in Guam which resulted in his two (2)-year suspension
from the practice of law in that jurisdiction are also valid grounds for
his suspension from the practice of law in the Philippines. Such acts are
violative of a lawyers sworn duty to act with fidelity toward his clients.
They are also violative of the Code of Professional Responsibility,
specifically, Canon 17 which states that [a] lawyer owes fidelity to the
cause of his client and shall be mindful the trust and confidence
reposed in him; and Rule 1.01 which prohibits lawyers from engaging in
unlawful, dishonest, immoral or deceitful conduct. The requirement of
good moral character is not only a condition precedent to admission to
the Philippine Bar but is also a continuing requirement to maintain
ones goods standing in the legal profession.[33]

It bears stressing that the Guam Superior Courts judgment ordering
Maqueras suspension from the practice of law in Guam does not
automatically result in his suspension or disbarment in the Philippines.

Under Section 27,[34] Rule 138 of the Revised Rules of Court, the acts
which led to his suspension in Guam are mere grounds for disbarment
or suspension in this jurisdiction, at that only if the basis of the foreign
courts action includes any of the grounds for disbarment or suspension
in this jurisdiction.[35] Likewise, the judgment of the Superior Court of
Guam only constitutes prima facie evidence of Maqueras unethical acts
as a lawyer.[36] More fundamentally, due process demands that he be
given the opportunity to defend himself and to present testimonial and
documentary evidence on the matter in an investigation to be
conducted in accordance with Rule 139-B of the Revised Rules of Court.
Said rule mandates that a respondent lawyer must in all cases be
notified of the charges against him. It is only after reasonable notice
and failure on the part of the respondent lawyer to appear during the
scheduled investigation that an investigation may be conducted ex
parte.[37]

The Court notes that Maquera has not yet been able to adduce
evidence on his behalf regarding the charges of unethical behavior in
Guam against him, as it is not certain that he did receive the Notice of
Hearing earlier sent by the IBPs Commission on Bar Discipline. Thus,
there is a need to ascertain Maqueras current and correct address in
Guam in order that another notice, this time specifically informing him
of the charges against him and requiring him to explain why he should
not be suspended or disbarred on those grounds (through this
Resolution), may be sent to him.

Nevertheless, the Court agrees with the IBP that Maquera should be
suspended from the practice of law for non-payment of his IBP
membership dues from 1977 up to the present.[38] Under Section 10,
Rule 139-A of the Revised Rules of Court, non-payment of membership
dues for six (6) months shall warrant suspension of membership in the
IBP, and default in such payment for one year shall be ground for
removal of the name of the delinquent member from the Roll of
Attorneys.[39]

WHEREFORE, Atty. Leon G. Maquera is required to SHOW CAUSE,
within fifteen (15) days from receipt of this Resolution, why he should

not be suspended or disbarred for his acts which gave rise to the
disciplinary proceedings against him in the Superior Court of Guam and
his subsequent suspension in said jurisdiction.

The Bar Confidant is directed to locate the current and correct address
of Atty. Maquera in Guam and to serve upon him a copy of this
Resolution.

In the meantime, Atty. Maquera is SUSPENDED from the practice of law
for ONE (1) YEAR or until he shall have paid his membership dues,
whichever comes later.

Let a copy of this Resolution be attached to Atty. Maqueras personal
record in the Office of the Bar Confidant and copies be furnished to all
chapters of the Integrated Bar of the Philippines and to all courts in the
land.

SO ORDERED.

HEIRS OF AMPARO DEL ROSARIO, plaintiffs-appellees,

vs.
AURORA O. SANTOS, JOVITA SANTOS GONZALES, ARNULFO O.
SANTOS, ARCHIMEDES O. SANTOS, ERMELINA SANTOS RAVIDA, and
ANDRES O. SANTOS, JR., defendants-appellants.

The Court of Appeals, 1 in accordance with Section 31 of the Judiciary
Act of 1948, as amended, certified to Us the appeal docketed as CAG.R. No. 56674-R entitled "Amparo del Rosario, plaintiff-appellee, vs.
Spouses Andres Santos and Aurora Santos, defendants-appellants," as
only questions of law are involved.

On January 14, 1974, Amparo del Rosario filed a complaint against the
spouses Andres F. Santos and Aurora O. Santos, for specific
performance and damages allegedly for failure of the latter to execute
the Deed of Confirmation of Sale of an undivided 20,000 square meters
of land, part of Lot 1, Psu-206650, located at Barrio Sampaloc, Tanay,
Rizal, in malicious breach of a Deed of Sale (Exhibit A or 1) dated
September 28, 1964.

Amparo del Rosario died on Sept. 21, 1980 so that she is now
substituted by the heirs named in her will still undergoing probate
proceedings. Andres F. Santos also died, on Sept. 5, 1980, and he is
substituted by the following heirs: Jovita Santos Gonzales, Arnulfo O.
Santos, Archimedes O. Santos, Germelina Santos Ravida, and Andres O.
Santos, Jr.

The Deed of Sale (Exh. A or 1) is herein reproduced below:

DEED OF SALE

KNOW ALL MEN BY THESE PRESENTS:

I, ANDRES F. SANTOS, of legal age, married to Aurora 0. Santos, Filipino
and resident cf San Dionisio, Paranaque, Rizal, Philippines, for and in
consideration of the sum of TWO THOUSAND (P 2,000.00) PESOS,
Philippine Currency, the receipt whereof is hereby acknowledged, do

hereby SELLS, CONVEYS, and TRANSFERS (sic) unto Amparo del Rosario,
of legal age, married to Fidel del Rosario but with legal separation,
Filipino and resident of San Dionisio, Paranaque, Rizal, Philippines that
certain 20,000 square meters to be segregated from Lot 1 of plan Psu206650 along the southeastern portion of said lot, which property is
more particularly described as follows:

A parcel of land (Lot 1 as shown on plan Psu-206650, situated in the
Barrio of Sampaloc, Municipality of Tanay, Province of Rizal. Bounded
on the SW., along lines 1-2-3, by Lot 80 of Tanay Public Land
Subdivision, Pls-39; on the NW., along lines 3-4-5, by Lot 2; and along
lines 5-6-7-8-9-10-11, by Lot 6; on the NE., along lines 11-12-13, by Lot
3: and along lines 13-1415, by Lot 4, all of plan Psu-206650; and on the
SE., along line 15-1, by Lot 5 of plan Psu- 206650 ... ; containing an area
of ONE HUNDRED EIGHTY ONE THOUSAND FOUR HUNDRED TWENTY
(181,420) SQUARE METERS. All points referred to are indicated on the
plan and are marked on the ground as follows: ...

of which above-described property, I own one-half (1/2) interest
thereof being my attorney's fee, and the said 20,000 square meters will
be transferred unto the VENDEE as soon as the title thereof has been
released by the proper authority or authorities concerned:

That the parties hereto hereby agree that the VENDOR shall execute a
Deed of Confirmation of Deed of Sale in favor of the herein VENDEE as
soon as the title has been released and the subdivision plan of said Lot
1 has been approved by the Land Registration Commissioner.

IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of
September, 1964, in the City of Manila, Philippines.

s/ ANDRES F. SANTOS t/ ANDRES F. SANTOS

With My Marital Consent:

s/ Aurora O. Santos (Wife) t/ Aurora O. Santos (Wife)

SIGNED IN THE PRESENCE OF: s/ Felicitas C. Moro s/ Corona C. Venal

REPUBLIC OF THE PHILIPPINES) ) SS.

BEFORE ME, a Notary Public for and in Rizal, Philippines, personally
appeared Andres F. Santos, with Res. Cert. No. 4500027 issued at
Paranaque, Rizal, on Jan. 9, 1964, B-0935184 issued at Paranaque, Rizal
on April 15, 1964, and Aurora 0. Santos, with Res. Cert. No. A-4500028
issued at Paranaque, Rizal, on Jan. 9, 1964, giving her marital consent
to this instrument, both of whom are known to me and to me known to
be the same persons who executed the foregoing instruments and they
acknowledged to me that the same is their free act and voluntary deed.

IN WITNESS WHEREOF, I have hereunto signed this instrument and
affixed my notarial seal this lst day of October, 1964, in Pasig, Rizal,
Philippines.

Doc. No. 1792; Page No. 85; Book No. 19; Series of 1964.

s/ FLORENCIO LANDRITO t/ FLORENCIO LANDRITO

NOTARY PUBLIC Until December 31, 1965 2

Plaintiff claimed fulfillment of the conditions for the execution of the
Deed of Confirmation of Sale, namely: the release of the title of the lot
and the approval of the subdivision plan of said lot by the Land
Registration Commission. She even enumerated the titles with their
corresponding land areas derived by defendants from the aforesaid lot,
to wit:

(a)
TCT 203580 30,205 sq. meters

(b)
TCT 203581 19, 790 sq. meters

(c)
TCT 167568 40,775 sq. meters

In a motion to dismiss, defendants pleaded, inter alia, the defenses of

lack of jurisdiction of the court a quo over the subject of the action and
lack of cause of action allegedly because there was no allegation as to
the date of the approval of the subdivision plan, no specific statement
that the titles therein mentioned were curved out of Lot I and no clear
showing when the demands were made on the defendants. They
likewise set up the defense of prescription allegedly because the deed
of sale was dated September 28, 1964 and supposedly ratified October
1, 1964 but the complaint was filed only on January 14, 1974, a lapse of
more than nine years when it should have been filed within five years
from 1964 in accordance with Article 1149, New Civil Code.

Defendant also claimed that the demand set forth in the complaint has
been waived, abandoned or otherwise extinguished. It is alleged that
the deed of sale was "only an accommodation graciously extended, out
of close friendship between the defendants and the plaintiff and her
casual business partner in the buy and sell of real estate, one Erlinda
Cortez;" 3 that in order to allay the fears of plaintiff over the noncollection of the debt of Erlinda Cortez to plaintiff in various sums
exceeding P 2,000.00, defendants, who were in turn indebted to
Erlinda Cortez in the amount of P 2,000.00, voluntarily offered to
transfer to plaintiff their inexistent but expectant right over the lot in
question, the same to be considered as part payment of Erlinda Cortez'
indebtedness; that as Erlinda Cortez later on paid her creditor what
was then due, the deed of sale had in effect been extinguished.
Defendants thereby characterized the said deed of sale as a mere
tentative agreement which was never intended nor meant to be
ratified by and acknowledged before a notary public. In fact, they
claimed that they never appeared before Notary Public Florencio
Landrito.

Finally, defendants alleged that the claim on which the action or suit is
founded is unenforceable under the statute of frauds and that the
cause or object of the contract did not exist at the time of the
transaction.

After an opposition and a reply were filed by the respective parties, the
Court a quo resolved to deny the motion to dismiss of defendants.
Defendants filed their answer with counterclaim interposing more or
less the same defenses but expounding on them further. In addition,
they claimed that the titles allegedly derived by them from Lot 1 of
Annex A or I were cancelled and/or different from said Lot I and that
the deed of sale was simulated and fictitious, plaintiff having paid no
amount to defendants; and that the deed was entrusted to plaintiff's
care and custody on the condition that the latter; (a) would secure the
written consent of Erlinda Cortez to Annex A or I as part payment of
what she owed to plaintiff; (b) would render to defendants true
accounting of collections made from Erlinda showing in particular the
consideration of 2,000.00 of Annex A or I duly credited to Erlinda's
account. 4

Plaintiff filed a reply and answer to counterclaim and thereafter a
motion for summary judgment and/or judgment on the pleadings on
the ground that the defenses of defendants fail to tender an issue or
the same do not present issues that are serious enough to deserve a
trial on the merits, 5 submitting on a later date the affidavit of merits.
Defendants filed their corresponding opposition to the motion for
summary judgment and/or judgment on the pleadings. Not content
with the pleadings already submitted to the Court, plaintiff filed a reply
while defendants filed a supplemental opposition.

With all these pleadings filed by the parties in support of their
respective positions, the Court a quo still held in abeyance plaintiff's
motion for summary judgment or judgment on the pleadings pending
the pre-trial of the case. At the pre-trial, defendants offered by way of
compromise to pay plaintiff the sum of P2,000.00, the consideration
stated in the deed of sale. But the latter rejected the bid and insisted
on the delivery of the land to her. Thus, the pre-trial proceeded with
the presentation by plaintiff of Exhibits A to Q which defendants
practically admitted, adopted as their own and marked as Exhibits 1 to
17. In addition, the latter offered Exhibit 18, which was their reply to
plaintiff's letter of demand dated December 21, 1973.

From the various pleadings filed in this case by plaintiff, together with
the annexes and affidavits as well as the exhibits offered in evidence at
the pre-trial, the Court a quo found the following facts as having been
duly established since defendant failed to meet them with
countervailing evidence:

In February, 1964, Teofilo Custodia owner of a parcel of unregistered
land with an area of approximately 220,000 square meters in Barrio
Sampaloc, Tanay, Rizal, hired Attorney Andres F. Santos "to cause the
survey of the above-mentioned property, to file registration
proceedings in court, to appear and represent him in all government
office relative thereto, to advance all expenses for surveys, taxes to the
government, court fees, registration fees ... up to the issuance of title in
the name" of Custodia. They agreed that after the registration of the
title in Custodio's name, and "after deducting all expenses from the
total area of the property," Custodio would assign and deliver to Santos
"one-half (1/2) share of the whole property as appearing in the
certificate of title so issued." Exh. B or 2).

On March 22, 1964, Custodio's land was surveyed under plan Psu226650 (Exh. D or 4). It was divided into six (6) lots, one of which was a
road lot. The total area of the property as surveyed was 211,083 square
meters. The respective areas of the lots were as follows:

Lot 1

181,420 square meters

Lot 2

7,238 square meters

Lot 3

7,305 square meters

Lot 4


5,655 square meters

Lot 5

5,235 square meters

Road Lot 6

4,230 square meters

TOTAL

211,083 square meters

xxx xxx xxx

On December 27, 1965, a decree of registration No. N-108022 was
issued in Land Registration Case No. N-5023, of the Court of First
Instance of Rizal, LRC Record No. N-27513, in favor of Teofilo Custodia
married to Miguela Perrando resident of Tanay, Rizal. On March 23,
1966, Original Certificate of Title No. 5134 (Exh. Q or 17) was issued to
Custodio for Lots 1, 2, 3, 4 and 5, Psu- 206650, with a total area of
206,853 square meters. The areas of the five (5) lots were as follows:

Lot 1

181,420 square meters

Lot 2

7,238 square meters

Lot 3

7,305 square meters

Lot 4

5,655 square meters

Lot 5

5,235 square meters

In April to May, 1966, a consolidation-subdivision survey (LRC) Pcs-5273
(Exh. E or 5) was made on the above lots converting them into six (6)
new lots as follows:

xxx xxx xxx

Lot 1

20,000 square meters

Lot 2

40,775 square meters

Lot 3

50,000 square meters

Lot 4

40,775 square meters

Lot 5

50,000 square meters

Road Lot 6

5,303 square meters


TOTAL

206,853 square meters

On June 22, 1966, the consolidation-subdivision plan (LRC) Pcs-5273
(Exh. E or 5) was approved by the Land Registration Commission and by
the Court of First Instance of Rizal in an order dated July 2, 1966 (Entry
No. 61037 T-167561, Exh. Q). Upon its registration, Custodio's O.C.T.
No. 5134 (Exh. Q) was cancelled and TCT Nos. 167561, 167562, 167563,
167564 (Exh. G), 167565 (Exh. H and 167566 were issued for the six lots
in the name of Custodio (Entry No. 61035, Exh. Q).

On June 23, 1966, Custodio conveyed to Santos Lots 4 and 5, Pcs-5273
with a total area of 90,775 square meters (Exh. B or 2) described in
Custodio's TCT No. 167564 (Exh. G or 7) and TCT No. 167565 (Exh. H or
8), plus a one-half interest in the Road Lot No. 6, as payment of Santos'
attorney's fees and advances for the registration of Custodio's land.

Upon registration of the deed of conveyance on July 5, 1966, Custodio's
TCT Nos. 167564 and 167565 (Exhs. G and H) were cancelled. TCT No.
167568 (Exh. I or 9) for Lot 4 and TCT No. 167585 (Exh. J or 10) for Lot 5
were issued to Santos.

On September 2, 1967, Santos' Lot 5, with an area of 50,000 square
meters was subdivided into two (2) lots, designated as Lots 5-A and 5-B
in the plan Psd-78008 (Exh. F or 6), with the following areas:

Lot 5-A

30,205 square meters

Lot 5-B

19,795 square meters

TOTAL

50,000 square meters

Upon registration of Psd-78008 on October 3, 1967, Santos' TCT No.
167585 (Exh. J) was cancelled and TCT No. 203578 for Lot 5- A and TCT
No. 203579 for Lot 5-B were supposed to have been issued to Santos
(See Entry 6311 in Exh. J or 10). Actually, TCT No. 203580 was issued for
Lot 5-A (Exh. K or 1 1), and TCT No. 203581 for Lot 5-B (Exh. L or 12),
both in the name of Andres F. Santos.

Out of Custodio's original Lot 1, Psu-206650, with an area of 181,420
square meters, Santos was given a total of 90,775 square meters,
registered in his name as of October 3, 1967 under three (3) titles,
namely:



TCT No. 167585 for



Lot 4 Pcs-5273

40,775 sq. m.

(Exh. J or 10)



TCT No. 203580 for



Lot 5-A Psd-78008

30,205 sq. m.

(Exh. K or 11)



TCT No. 203581 for



Lot 5-B Psd-78008

19,795 sq. m.

(Exh. L or 12)





90,775 sq.m.

plus one-half of the road lot, Lot 6, PCS-5273, with an area of 5,303
square meters, which is registered jointly in the name of Santos and
Custodio (Exh. B & E) 6

The court a quo thereupon concluded that there are no serious factual
issues involved so the motion for summary judgment may be properly
granted. Thereafter, it proceeded to dispose of the legal issues raised
by defendants and rendered judgment in favor of plaintiff. The
dispositive portion of the decision states as follows:

WHEREFORE, defendants Andres F. Santos and Aurora Santos are
ordered to execute and convey to plaintiff Amparo del Rosario, within
ten (10) days from the finality of this decision, 20,000 square meters of
land to be taken from the southeastern portion of either Lot 4, Pcs5273, which has an area of 40,775 square meters, described in TCT No.
167568 (Exh. I or 9) of from their LOL 5-A. with an area of 30,205
square meters, described in TCI No. 203; O (Exh. K or 11). The expenses

of segregating the 20,000 square meters portion shall be borne fqually

by the parties. rhe expenses for the execution and registration of the
sale shall be borne by the defendants (Art. 1487, Civil Code). Since the
defendants compelled the plaintiff to litigate and they failed to heed
plainliff's just demand, they are further ordered to pay the plaintiff the
sum of P2,000.00 as attorney's fees and the costs of this action.

SO ORDERED. 7

Aggrieved by the aforesaid decision, the defendant's filed all appeal to
the Court of Appeals submitting for resolution seven assignments of
errors, to wit:

I.
The lower court erred in depriving the appellants of their right
to the procedural due process.

II.
The lower court erred in holding that the appellee's claim has
not been extinguished.

III.
The lower court erred in sustaining appellee's contention that
there are no other unwritten conditions between the appellants and
the appellee except those express in Exh. "1" or "A", and that Erlinda
Cortez' conformity is not required to validate the appellants' obligation.

IV.
The lower court erred in holding that Exh. "l" or "A" is not
infirmed and expressed the true intent of the parties.

V.
The lower court erred in declaring that the appellants are coowners of the lone registered owner Teofilo Custodia.

VI.
The lower court erred in ordering the appellants to execute and
convey to the appellee 20,000 sq. m. of land to be taken from the
southeastern portion of either their lot 4, Pcs-5273, which has an area
of 40,775 sq.m., described in T.C.T. No. 167568 (Exh. 9 or 1), or from
their lot No. 5-A, with an area of 30,205 sq.m. described in T.C.T. No.
203580 (Exh. 11 or K), the expenses of segregation to be borne equally

by the appellants and the appellee and the expenses of execution and
registration to be borne by the appellants.

VII. Thelowercourterredinorderingtheappellantstopayto the
appellee the sum of P2,000. 00 as attorney's fee and costs. 8

The first four revolve on the issue of the propriety of the rendition of
summary judgment by the court a quo, which concededly is a question
of law. The last three assail the summary judgment itself. Accordingly,
the Court of Appeals, with whom the appeal was filed, certified the
records of the case to this Court for final determination.

For appellants herein, the rendition of summary judgment has deprived
them of their right to procedural due process. They claim that a trial on
the merits is indispensable in this case inasmuch as they have denied
under oath all the material allegations in appellee's complaint which is
based on a written instrument entitled "Deed of Sale", thereby putting
in issue the due execution of said deed.

Appellants in their opposition to the motion for summary judgment
and/or judgment on the pleadings, however, do not deny the
genuineness of their signatures on the deed of sale.

(Par. 3 of said Motion, p. 101, Record on Appeal). They do not contest
the words and figures in said deed except in the acknowledgment
portion thereof where certain words were allegedly cancelled and
changed without their knowledge and consent and where, apparently,
they appeared before Notary Public Florencio Landrito when, in fact,
they claimed that they did not. In effect, there is an admission of the
due execution and genuineness of the document because by the
admission of the due execution of a document is meant that the party
whose signature it bears admits that voluntarily he signed it or that it
was signed by another for him and with his authority; and the
admission of the genuineness of the document is meant that the party
whose signature it bears admits that at the time it was signed it was in
the words and figures exactly as set out in the pleading of the party
relying upon it; and that any formal requisites required by law, such as

swearing and acknowledgment or revenue stamps which it requires,

are waived by him. 9

As correctly pointed out by the court a quo, the alleged false
notarization of the deed of sale is of no consequence. For a sale of real
property or of an interest therein to be enforceable under the Statute
of Frauds, it is enough that it be in writing. 10 It need not be notarized.
But the vendee may avail of the right under Article 1357 of the New
Civil Code to compel the vendor to observe the form required by law in
order that the instrument may be registered in the Registry of Deeds.
11 Hence, the due execution and genuineness of the deed of sale are
not really in issue in this case. Accordingly, assigned error I is without
merit.

What appellants really intended to prove through the alleged false
notarization of the deed of sale is the true import of the matter, which
according to them, is a mere tentative agreement with appellee. As
such, it was not intended to be notarized and was merely entrusted to
appellee's care and custody in order that: first, the latter may secure
the approval of one Erlinda Cortez to their (appellants') offer to pay a
debt owing to her in the amount of P2,000.00 to appellee instead of
paying directly to her as she was indebted to appellee in various
amounts exceeding P2,000.00; and second once the approval is
secured, appellee would render an accounting of collections made from
Erlinda showing in particular the consideration of P2,000.00 of the
deed of sale duly credited to Erlinda's account.

According to appellants, they intended to prove at a full dress trial the
material facts: (1) that the aforesaid conditions were not fulfilled; (2)
that Erlinda Cortez paid her total indebtedness to appellee in the
amount of P14,160.00, the P2,000.00 intended to be paid by appellant
included; and (3) that said Erlinda decided to forego, renounce and
refrain from collecting the P2,000.00 the appellants owed her as a
countervance reciprocity of the countless favors she also owes them.

Being conditions which alter and vary the terms of the deed of sale,
such conditions cannot, however, be proved by parol evidence in view

of the provision of Section 7, Rule 130 of the Rules of Court which

states as follows:

Sec. 7. Evidence of written agreements when the terms of an
agreement have been reduced to writing, it is to be considered as
containing all such terms, and, therefore, there can be, between the
parties and their successors in interest, no evidence of the terms of the
agreement other than the contents of the writing, except in the
following cases:

(a)
Where a mistake or imperfection of the writing, or its failure to
express the true intent and agreement of the parties, or the validity of
the agreement is put in issue by the pleadings;

(b)
When there is an intrinsic ambiguity in the writing. The term
"agreement" includes wills."

The parol evidence rule forbids any addition to or contradiction of the
terms of a written instrument by testimony purporting to show that, at
or before the signing of the document, other or different terms were
orally agreed upon by the parties. 12

While it is true, as appellants argue, that Article 1306 of the New Civil
Code provides that "the contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided that they are not contrary to law, morals, good
customs, public order, or public policy" and that consequently,
appellants and appellee could freely enter into an agreement imposing
as conditions thereof the following: that appellee secure the written
conformity of Erlinda Cortez and that she render an accounting of all
collections from her, said conditions may not be proved as they are not
embodied in the deed of sale.

The only conditions imposed for the execution of the Deed of
Confirmation of Sale by appellants in favor of appellee are the release
of the title and the approval of the subdivision plan. Thus, appellants
may not now introduce other conditions allegedly agreed upon by

them because when they reduced their agreement to writing, it is

presumed that "they have made the writing the only repository and
memorial of truth, and whatever is not found in the writing must be
understood to have been waived and abandoned." 13

Neither can appellants invoke any of the exceptions to the parol
evidence rule, more particularly, the alleged failure of the writing to
express the true intent and agreement of the parties. Such an
exception obtains where the written contract is so ambiguous or
obscure in terms that the contractual intention of the parties cannot be
understood from a mere reading of the instrument. In such a case,
extrinsic evidence of the subject matter of the contract, of the relations
of the parties to each other, and of the facts and circumstances
surrounding them when they entered into the. contract may be
received to enable the court to make a proper interpretation of the
instrumental. 14 In the case at bar, the Deed of Sale (Exh. A or 1) is
clear, without any ambiguity, mistake or imperfection, much less
obscurity or doubt in the terms thereof. We, therefore, hold and rule
that assigned errors III and IV are untenable.

According to the court a quo, "(s)ince Santos, in his Opposition to the
Motion for Summary Judgment failed to meet the plaintiff's evidence
with countervailing evidence, a circumstance indicating that there are
no serious factual issues involved, the motion for summary judgment
may properly be granted." We affirm and sustain the action of the trial
court.

Indeed, where a motion for summary judgment and/or judgment on
the pleadings has been filed, as in this case, supporting and opposing
affidavits shall be made on personal knowledge, shall set forth such
facts as may be admissible in evidence, and shall show affirmatively
that the affiant is competent to testify as to the matters stated therein.
Sworn or certified copies of all papers or parts thereof referred to in
the affidavitshalibeattachedtheretoorservedtherewith. 15

Examining the pleadings, affidavits and exhibits in the records, We find
that appellants have not submitted any categorical proof that Erlinda

Cortez had paid the P2,000.00 to appellee, hence, appellants failed to

substantiate the claim that the cause of action of appellee has been
extinguished. And while it is true that appellants submitted a receipt
for P14,160.00 signed by appellee, appellants, however, have stated in
their answer with counterclaim that the P2,000.00 value of the
property covered by the Deed of Sale, instead of being credited to
Erlinda Cortez, was conspicuously excluded from the accounting or
receipt signed by appellee totalling P14,160.00. The aforesaid receipt is
no proof that Erlinda Cortez subsequently paid her P2,000.00 debt to
appellee. As correctly observed by the court a quo, it is improbable that
Cortez would still pay her debt to appellee since Santos had already
paid it.

Appellants' claim that their P2,000.00 debt to Erlinda Cortez had been
waived or abandoned is not also supported by any affidavit, document
or writing submitted to the court. As to their allegation that the
appellee's claim is barred by prescription, the ruling of the trial court
that only seven years and six months of the ten-year prescription
period provided under Arts. 1144 and 155 in cases of actions for
specific performance of the written contract of sale had elapsed and
that the action had not yet prescribed, is in accordance with law and,
therefore, We affirm the same.

The action of the court a quo in rendering a summary judgment has
been taken in faithful compliance and conformity with Rule 34, Section
3, Rules of Court, which provides that "the judgment sought shall be
rendered forthwith if the pleadings, depositions, and admissions on file
together with the affidavits, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law. "

Resolving assignments of errors, V, VI, and VII which directly assail the
summary judgment, not the propriety of the rendition thereof which
We have already resolved to be proper and correct, it is Our considered
opinion that the judgment of the court a quo is but a logical
consequence of the failure of appellants to present any bona fide
defense to appellee's claim. Said judgment is simply the application of

the law to the undisputed facts of the case, one of which is the finding
of the court a quo, to which We agree, that appellants are owners of
one-half (1/2) interest of Lot I and, therefore, the fifth assignment of
error of appellants is without merit.

By the terms of the Deed of Sale itself, which We find genuine and not
infirmed, appellants declared themselves to be owners of one-half
(1/2) interest thereof. But in order to avoid appellee's claim, they now
contend that Plan Psu-206650 where said Lot I appears is in the
exclusive name of Teofilo Custodio as the sole and exclusive owner
thereof and that the deed of assignment of one-half (1/2) interest
thereof executed by said Teofilo Custodio in their favor is strictly
personal between them. Notwithstanding the lack of any title to the
said lot by appellants at the time of the execution of the deed of sale in
favor of appellee, the said sale may be valid as there can be a sale of an
expected thing, in accordance with Art. 1461, New Civil Code, which
states:

Art. 1461.
Things having a potential existence may be the object of
the contract of sale.



The efficacy of the sale of a mere hope or expectancy is deemed
subject to the condition that the thing will come into existence.

The sale of a vain hope or expectancy is void.

In the case at bar, the expectant right came into existence or
materialized for the appellants actually derived titles from Lot I .

We further reject the contention of the appellants that the lower court
erred in ordering the appellants to execute and convey to the appellee
20,000 sq.m. of land to be taken from the southeastern portion of
either their Lot 4, Pcs-5273, which has an area of 40,775 sq.m.,
described in T.C.T. No. 167568 (Exh. 9 or 1), or from their Lot No. 5-A,
with an area of 30,205 sq.m. described in T.C.T. No. 203580 (Exh. 11 or

K), the expenses of segregation to be borne equally by the appellants

and the appellee and the expenses of execution and registration to be
borne by the appellants. Their argument that the southeastern portion
of Lot 4 or Lot 5-A is no longer the southeastern portion of the bigger
Lot 1, the latter portion belonging to the lone registered owner, Teofilo
Custodia is not impressed with merit. The subdivision of Lot I between
the appellants and Teofilo Custodio was made between themselves
alone, without the intervention, knowledge and consent of the
appellee, and therefore, not binding upon the latter. Appellants may
not violate nor escape their obligation under the Deed of Sale they
have agreed and signed with the appellee b3 simply subdividing Lot 1,
bisecting the same and segregating portions to change their sides in
relation to the original Lot 1.

Finally, considering the trial court's finding that the appellants
compelled the appellee to litigate and they failed to heed appellee's
just demand, the order of the court awarding the sum of P2,000.00 as
attorney's fees is just and lawful, and We affirm the same.

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed
from is hereby AFFIRMED in toto, with costs against the appellants.

SO ORDERED.


JOSE M. JAVIER and ESTRELLA F. JAVIER, petitioners,
vs.
COURT OF APPEALS and LEONARDO TIRO, respondents.

Petitioners pray for the reversal of the decision of respondent Court of
Appeals in CA-G.R. No. 52296-R, dated March 6, 1978, 1 the dispositive
portion whereof decrees:

WHEREFORE, the judgment appealed from is hereby set aside and
another one entered ordering the defendants-appellees, jointly and
solidarily, to pay plaintiff-appellant the sum of P79,338.15 with legal

interest thereon from the filing of the complaint, plus attorney's fees in
the amount of P8,000.00. Costs against defendants-appellees. 2

As found by respondent court or disclosed by the records, 3 this case
was generated by the following antecedent facts.

Private respondent is a holder of an ordinary timber license issued by
the Bureau of Forestry covering 2,535 hectares in the town of Medina,
Misamis Oriental. On February 15, 1966 he executed a "Deed of
Assignment" 4 in favor of herein petitioners the material parts of which
read as follows:

xxx xxx xxx

I, LEONARDO A. TIRO, of legal age, married and a resident of Medina,
Misamis Oriental, for and in consideration of the sum of ONE HUNDRED
TWENTY THOUSAND PESOS (P120,000.00), Philippine Currency, do by
these presents, ASSIGN, TRANSFER AND CONVEY, absolutely and
forever unto JOSE M. JAVIER and ESTRELLA F. JAVIER, spouses, of legal
age and a resident (sic) of 2897 F.B. Harrison, Pasay City, my shares of
stocks in the TIMBERWEALTH CORPORATION in the total amount of
P120,000.00, payment of which shall be made in the following manner:

1.
Twenty thousand (P20,000.00) Pesos upon signing of this
contract;

2.
The balance of P100,000.00 shall be paid P10,000.00 every
shipment of export logs actually produced from the forest concession
of Timberwealth Corporation.

That I hereby agree to sign and endorse the stock certificate in favor of
Mr. & Mrs. Jose M. Javier, as soon as stock certificates are issued.

xxx xxx xxx

At the time the said deed of assignment was executed, private
respondent had a pending application, dated October 21, 1965, for an

additional forest concession covering an area of 2,000 hectares

southwest of and adjoining the area of the concession subject of the
deed of assignment. Hence, on February 28, 1966, private respondent
and petitioners entered into another "Agreement" 5 with the following
stipulations:

xxx xxx xxx

1.
That LEONARDO TIRO hereby agrees and binds himself to
transfer, cede and convey whatever rights he may acquire, absolutely
and forever, to TIMBERWEALTH CORPORATION, a corporation duly
organized and existing under the laws of the Philippines, over a forest
concession which is now pending application and approval as additional
area to his existing licensed area under O.T. License No. 391-103166,
situated at Medina, Misamis Oriental;

2.
That for and in consideration of the aforementioned transfer of
rights over said additional area to TIMBERWEALTH CORPORATION,
ESTRELLA F. JAVIER and JOSE M. JAVIER, both directors and
stockholders of said corporation, do hereby undertake to pay
LEONARDO TIRO, as soon as said additional area is approved and
transferred to TIMBERWEALTH CORPORATION the sum of THIRTY
THOUSAND PESOS (P30,000.00), which amount of money shall form
part of their paid up capital stock in TIMBERWEALTH CORPORATION;

3.
That this Agreement is subject to the approval of the members
of the Board of Directors of the TIMBERWEALTH CORPORATION.

xxx xxx xxx

On November 18, 1966, the Acting Director of Forestry wrote private
respondent that his forest concession was renewed up to May 12, 1967
under O.T.L. No. 391-51267, but since the concession consisted of only
2,535 hectares, he was therein informed that:

In pursuance of the Presidential directive of May 13, 1966, you are
hereby given until May 12, 1967 to form an organization such as a

cooperative, partnership or corporation with other adjoining licensees

so as to have a total holding area of not less than 20,000 hectares of
contiguous and compact territory and an aggregate allowable annual
cut of not less than 25,000 cubic meters, otherwise, your license will
not be further renewed. 6

Consequently, petitioners, now acting as timber license holders by
virtue of the deed of assignment executed by private respondent in
their favor, entered into a Forest Consolidation Agreement 7 on April
10, 1967 with other ordinary timber license holders in Misamis
Oriental, namely, Vicente L. De Lara, Jr., Salustiano R. Oca and
Sanggaya Logging Company. Under this consolidation agreement, they
all agreed to pool together and merge their respective forest
concessions into a working unit, as envisioned by the aforementioned
directives. This consolidation agreement was approved by the Director
of Forestry on May 10, 1967. 8 The working unit was subsequently
incorporated as the North Mindanao Timber Corporation, with the
petitioners and the other signatories of the aforesaid Forest
Consolidation Agreement as incorporators. 9

On July 16, 1968, for failure of petitioners to pay the balance due under
the two deeds of assignment, private respondent filed an action against
petitioners, based on the said contracts, for the payment of the
amount of P83,138.15 with interest at 6% per annum from April 10,
1967 until full payment, plus P12,000.00 for attorney's fees and costs.

On September 23, 1968, petitioners filed their answer admitting the
due execution of the contracts but interposing the special defense of
nullity thereof since private respondent failed to comply with his
contractual obligations and, further, that the conditions for the
enforceability of the obligations of the parties failed to materialize. As a
counterclaim, petitioners sought the return of P55,586.00 which
private respondent had received from them pursuant to an alleged
management agreement, plus attorney's fees and costs.

On October 7, 1968, private respondent filed his reply refuting the
defense of nullity of the contracts in this wise:


What were actually transferred and assigned to the defendants were
plaintiff's rights and interest in a logging concession described in the
deed of assignment, attached to the complaint and marked as Annex A,
and agreement Annex E; that the "shares of stocks" referred to in
paragraph II of the complaint are terms used therein merely to
designate or identify those rights and interests in said logging
concession. The defendants actually made use of or enjoyed not the
"shares of stocks" but the logging concession itself; that since the
proposed Timberwealth Corporation was owned solely and entirely by
defendants, the personalities of the former and the latter are one and
the same. Besides, before the logging concession of the plaintiff or the
latter's rights and interests therein were assigned or transferred to
defendants, they never became the property or assets of the
Timberwealth Corporation which is at most only an association of
persons composed of the defendants. 10

and contending that the counterclaim of petitioners in the amount of
P55,586.39 is actually only a part of the sum of P69,661.85 paid by the
latter to the former in partial satisfaction of the latter's claim. 11

After trial, the lower court rendered judgment dismissing private
respondent's complaint and ordering him to pay petitioners the sum of
P33,161.85 with legal interest at six percent per annum from the date
of the filing of the answer until complete payment. 12

As earlier stated, an appeal was interposed by private respondent to
the Court of Appeals which reversed the decision of the court of a quo.

On March 28, 1978, petitioners filed a motion in respondent court for
extension of time to file a motion for reconsideration, for the reason
that they needed to change counsel. 13 Respondent court, in its
resolution dated March 31, 1978, gave petitioners fifteen (15) days
from March 28, 1978 within which to file said motion for
reconsideration, provided that the subject motion for extension was
filed on time. 14 On April 11, 1978, petitioners filed their motion for
reconsideration in the Court of Appeals. 15 On April 21, 1978, private

respondent filed a consolidated opposition to said motion for

reconsideration on the ground that the decision of respondent court
had become final on March 27, 1978, hence the motion for extension
filed on March 28, 1978 was filed out of time and there was no more
period to extend. However, this was not acted upon by the Court of
Appeals for the reason that on April 20, 1978, prior to its receipt of said
opposition, a resolution was issued denying petitioners' motion for
reconsideration, thus:

The motion for reconsideration filed on April 11, 1978 by counsel for
defendants-appellees is denied. They did not file any brief in this case.
As a matter of fact this case was submitted for decision without
appellees' brief. In their said motion, they merely tried to refute the
rationale of the Court in deciding to reverse the appealed judgment. 16

Petitioners then sought relief in this Court in the present petition for
review on certiorari. Private respondent filed his comment, reiterating
his stand that the decision of the Court of Appeals under review is
already final and executory.

Petitioners countered in their reply that their petition for review
presents substantive and fundamental questions of law that fully merit
judicial determination, instead of being suppressed on technical and
insubstantial reasons. Moreover, the aforesaid one (1) day delay in the
filing of their motion for extension is excusable, considering that
petitioners had to change their former counsel who failed to file their
brief in the appellate court, which substitution of counsel took place at
a time when there were many successive intervening holidays.

On July 26, 1978, we resolved to give due course to the petition.

The one (1) day delay in the filing of the said motion for extension can
justifiably be excused, considering that aside from the change of
counsel, the last day for filing the said motion fell on a holiday
following another holiday, hence, under such circumstances, an
outright dismissal of the petition would be too harsh. Litigations
should, as much as possible, be decided on their merits and not on

technicalities. In a number of cases, this Court, in the exercise of equity

jurisdiction, has relaxed the stringent application of technical rules in
order to resolve the case on its merits. 17 Rules of procedure are
intended to promote, not to defeat, substantial justice and, therefore,
they should not be applied in a very rigid and technical sense.

We now proceed to the resolution of this case on the merits.

The assignment of errors of petitioners hinges on the central issue of
whether the deed of assignment dated February 15, 1966 and the
agreement of February 28, 1966 are null and void, the former for total
absence of consideration and the latter for non-fulfillment of the
conditions stated therein.

Petitioners contend that the deed of assignment conveyed to them the
shares of stocks of private respondent in Timberwealth Corporation, as
stated in the deed itself. Since said corporation never came into
existence, no share of stocks was ever transferred to them, hence the
said deed is null and void for lack of cause or consideration.

We do not agree. As found by the Court of Appeals, the true cause or
consideration of said deed was the transfer of the forest concession of
private respondent to petitioners for P120,000.00. This finding is
supported by the following considerations, viz:

1.
Both parties, at the time of the execution of the deed of
assignment knew that the Timberwealth Corporation stated therein
was non-existent. 18

2.
In their subsequent agreement, private respondent conveyed to
petitioners his inchoate right over a forest concession covering an
additional area for his existing forest concession, which area he had
applied for, and his application was then pending in the Bureau of
Forestry for approval.

3.
Petitioners, after the execution of the deed of assignment,
assumed the operation of the logging concessions of private
respondent. 19

4.
The statement of advances to respondent prepared by
petitioners stated: "P55,186.39 advances to L.A. Tiro be applied to
succeeding shipments. Based on the agreement, we pay P10,000.00
every after (sic) shipment. We had only 2 shipments" 20

5.
Petitioners entered into a Forest Consolidation Agreement with
other holders of forest concessions on the strength of the questioned
deed of assignment. 21

The aforesaid contemporaneous and subsequent acts of petitioners
and private respondent reveal that the cause stated in the questioned
deed of assignment is false. It is settled that the previous and
simultaneous and subsequent acts of the parties are properly
cognizable indica of their true intention. 22 Where the parties to a
contract have given it a practical construction by their conduct as by
acts in partial performance, such construction may be considered by
the court in construing the contract, determining its meaning and
ascertaining the mutual intention of the parties at the time of
contracting. 23 The parties' practical construction of their contract has
been characterized as a clue or index to, or as evidence of, their
intention or meaning and as an important, significant, convincing,
persuasive, or influential factor in determining the proper construction
of the agreement. 24

The deed of assignment of February 15, 1966 is a relatively simulated
contract which states a false cause or consideration, or one where the
parties conceal their true agreement. 25 A contract with a false
consideration is not null and void per se. 26 Under Article 1346 of the
Civil Code, a relatively simulated contract, when it does not prejudice a
third person and is not intended for any purpose contrary to law,
morals, good customs, public order or public policy binds the parties to
their real agreement.

The Court of Appeals, therefore, did not err in holding petitioners liable
under the said deed and in ruling that

. . . In view of the analysis of the first and second assignment of errors,
the defendants-appellees are liable to the plaintiff-appellant for the
sale and transfer in their favor of the latter's forest concessions. Under
the terms of the contract, the parties agreed on a consideration of
P120,000.00. P20,000.00 of which was paid, upon the signing of the
contract and the balance of P100,000.00 to be paid at the rate of
P10,000.00 for every shipment of export logs actually produced from
the forest concessions of the appellant sold to the appellees. Since
plaintiff-appellant's forest concessions were consolidated or merged
with those of the other timber license holders by appellees' voluntary
act under the Forest Consolidation Agreement (Exhibit D), approved by
the Bureau of Forestry (Exhibit D-3), then the unpaid balance of
P49,338.15 (the amount of P70,661.85 having been received by the
plaintiff-appellant from the defendants-appellees) became due and
demandable. 27

As to the alleged nullity of the agreement dated February 28, 1966, we
agree with petitioners that they cannot be held liable thereon. The
efficacy of said deed of assignment is subject to the condition that the
application of private respondent for an additional area for forest
concession be approved by the Bureau of Forestry. Since private
respondent did not obtain that approval, said deed produces no effect.
When a contract is subject to a suspensive condition, its birth or
effectivity can take place only if and when the event which constitutes
the condition happens or is fulfilled. 28 If the suspensive condition does
not take place, the parties would stand as if the conditional obligation
had never existed. 29

The said agreement is a bilateral contract which gave rise to reciprocal
obligations, that is, the obligation of private respondent to transfer his
rights in the forest concession over the additional area and, on the
other hand, the obligation of petitioners to pay P30,000.00. The
demandability of the obligation of one party depends upon the
fulfillment of the obligation of the other. In this case, the failure of

private respondent to comply with his obligation negates his right to

demand performance from petitioners. Delivery and payment in a
contract of sale, are so interrelated and intertwined with each other
that without delivery of the goods there is no corresponding obligation
to pay. The two complement each other. 30

Moreover, under the second paragraph of Article 1461 of the Civil
Code, the efficacy of the sale of a mere hope or expectancy is deemed
subject to the condition that the thing will come into existence. In this
case, since private respondent never acquired any right over the
additional area for failure to secure the approval of the Bureau of
Forestry, the agreement executed therefor, which had for its object the
transfer of said right to petitioners, never became effective or
enforceable.

WHEREFORE, the decision of respondent Court of Appeals is hereby
MODIFIED. The agreement of the parties dated February 28, 1966 is
declared without force and effect and the amount of P30,000.00 is
hereby ordered to be deducted from the sum awarded by respondent
court to private respondent. In all other respects, said decision of
respondent court is affirmed.

SO ORDERED.