Session 5 Full text of Atty. Uribe's Sales Syllabus

G.R. No. L-31271 April 29, 1974 ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-appellants, vs. HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC WORKS & COMMUNICATIONS, respondents-appellees. Flores Macapagal, Ocampo and Balbastro for petitioners-appellants. Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General Dominador L. Quiroz and Solicitor Concepcion T. Agapinan for respondentsappellees. ESGUERRA, J.:p Petition for review by certiorari of the judgment of the Court of Appeals dated November 17, 1969 in its CA-G.R. 27655-R which reverses the judgment of the Court of First Instance of Pampanga in favor of petitioners-appellants against the Secretary and Undersecretary of Public Works & Communications in the case instituted to annul the order of November 25, 1958 of respondent Secretary of Public Works & Communications directing the removal by the petitioners of the dikes they had constructed on Lot No. 15856 of the Register of Deeds of Pampanga, which order was issued pursuant to the provisions of Republic Act No. 2056. The dispositive portion of the judgment of reversal of the Court of Appeals reads as follows: IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is hereby reversed, and another entered: [1] upholding the validity of the decision reached by the respondent officials in the administrative case; [2] dissolving the injunction issued by the Court below; and [3] cancelling the registration of Lot No. 2, the disputed area, and ordering its reconveyance to the public domain. No costs in this instance. The background facts are stated by the Court of Appeals as follows: The spouses Romeo Martinez and Leonor Suarez, now petitioners-appellees, are the registered owners of two (2) parcels of land located in Lubao, Pampanga, covered by transfer certificate of title No. 15856 of the Register of Deeds of the said province. Both parcels of land are fishponds. The property involved in the instant case is the second parcel mentioned in the above-named transfer certificate of title. The disputed property was originally owned by one Paulino Montemayor, who secured a "titulo real" over it way back in 1883. After the death of Paulino Montemayor the said property passed to his successors-in-interest, Maria Montemayor and Donata Montemayor, who in turn, sold it, as well as the first parcel, to a certain Potenciano Garcia. Because Potenciano Garcia was prevented by the then municipal president of Lubao, Pedro Beltran, from restoring the dikes constructed on the contested property, the former, on June 22, 1914, filed Civil Case No. 1407 with the Court of First Instance against the said Pedro Beltran to restrain the latter in his official capacity from molesting him in the possession of said second parcel, and on even date, applied for a writ of preliminary injunction, which was issued against said municipal president. The Court, by decision promulgated June 12, 1916, declared permanent the preliminary injunction, which, decision, on appeal, was affirmed by the Supreme Court on August 21, 1918. From June 22, 1914, the dikes around the property in question remained closed until a portion thereof was again opened just before the outbreak of the Pacific War. On April 17, 1925. Potenciano Garcia applied for the registration of both parcels of land in his name, and the Court of First Instance of Pampanga, sitting as land

registration court, granted the registration over and against the opposition of the Attorney-General and the Director of Forestry. Pursuant to the Court's decision, original certificate of title No. 14318, covering said parcels 1 and 2 was issued to the spouses Potenciano Garcia and Lorenza Sioson. These parcels of land were subsequently bought by Emilio Cruz de Dios in whose name transfer certificate of title No. 1421 was first issued on November 9, 1925. Thereafter, the ownership of these properties changed hands until eventually they were acquired by the herein appellee spouses who hold them by virtue of transfer certificate of title No. 15856. To avoid any untoward incident, the disputants agreed to refer the matter to the Committee on Rivers and Streams, by then composed of the Honorable Pedro Tuason, at that time Secretary of Justice, as chairman, and the Honorable Salvador Araneta and Vicente Orosa, Secretary of Agriculture and National Resources and Secretary of Public Works and Communications, respectively, as members. This committee thereafter appointed a Sub-Committee to investigate the case and to conduct an ocular inspection of the contested property, and on March 11, 1954, said Sub-Committee submitted its report to the Committee on Rivers and Streams to the effect that Parcel No. 2 of transfer certificate of title No. 15856 was not a public river but a private fishpond owned by the herein spouses. On July 7, 1954, the Committee on Rivers and Streams rendered its decision the dispositive part of which reads: "In view of the foregoing considerations, the spouses Romeo Martinez and Leonor Suarez should be restored to the exclusive possession, use and enjoyment of the creek in question which forms part of their registered property and the decision of the courts on the matter be given full force and effect." The municipal officials of Lubao, led by Acting Mayor Mariano Zagad, apparently refused to recognize the above decision, because on September 1, 1954, the spouses Romeo Martinez and Leonor Suarez instituted Civil Case No. 751 before the Court of First Instance of Pampanga against said Mayor Zagad, praying that the latter be enjoined from molesting them in their possession of their property and in the construction of the dikes therein. The writ of preliminary injunction applied for was issued against the respondent municipal Mayor, who immediately elevated the injunction suit for review to the Supreme Court, which dismissed Mayor Zagad's petition on September 7, 1953. With this dismissal order herein appellee spouses proceeded to construct the dikes in the disputed parcel of land. Some four (4) years later, and while Civil Case No. 751 was still pending the Honorable Florencio Moreno, then Secretary of Public Works and Communications, ordered another investigation of the said parcel of land, directing the appellees herein to remove the dikes they had constructed, on the strength of the authority vested in him by Republic Act No. 2056, approved on June 13, 1958, entitled "An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To Provide Penalties For Its Violation, And For Other Purposes. 1 The said order which gave rise to the instant proceedings, embodied a threat that the dikes would be demolished should the herein appellees fail to comply therewith within thirty (30) days. The spouses Martinez replied to the order by commencing on January 2, 1959 the present case, which was decided in their favor by the lower Court in a decision dated August 10, 1959, the dispositive part of which reads:

1

"WHEREFORE, in view of the foregoing considerations, the Court hereby declares the decision, Exhibit S, rendered by the Undersecretary of Public Works and Communications null and void; declares the preliminary injunction, hereto for issued, permanent, and forever enjoining both respondents from molesting the spouses Romeo Martinez and Leonor Suarez in their possession, use and enjoyment of their property described in Plan Psu-9992 and referred to in their petition." "Without pronouncement as to costs." "SO ORDERED." As against this judgment respondent officials of the Department of Public Works and Communications took the instant appeal, contending that the lower Court erred: 1. In holding that then Senator Rogelio de la Rosa, complainant in the administrative case, is not an interested party and his letter-complaint dated August 15, 1958 did not confer jurisdiction upon the respondent Undersecretary of Public Works and Communications to investigate the said administrative case; 2. In holding that the duty to investigate encroachments upon public rivers conferred upon the respondent Secretary under Republic Act No. 7056 cannot be lawfully delegated by him to his subordinates; 3. In holding that the investigation ordered by the respondent Secretary in this case is illegal on the ground that the said respondent Secretary has arrogated unto himself the power, which he does not possess, of reversing, making nugatory, and setting aside the two lawful decisions of the Court Exhibits K and I, and even annulling thereby, the one rendered by the highest Tribunal of the land; 4. In not sustaining respondent's claim that petitioners have no cause of action because the property in dispute is a public river and in holding that the said claim has no basis in fact and in law; 5. In not passing upon and disposing of respondent's counterclaim; 6. In not sustaining respondent's claim that the petition should not have been entertained on the ground that the petitioners have not exhausted administrative remedies; and 7. In holding that the decision of the respondents is illegal on the ground that it violates the principles that laws shall have no retroactive effect unless the contrary is provided and in holding that the said Republic Act No. 2056 is unconstitutional on the ground that respondents' threat of prosecuting petitioners under Section 3 thereof for acts done four years before its enactment renders the said law ex post facto. The Court of Appeals sustained the above-mentioned assignment of errors committed by the Court of First Instance of Pampanga and, as previously stated, reversed the judgment of the latter court. From this reversal this appeal by certiorari was taken, and before this Court, petitioners-appellants assigned the following errors allegedly committed by the Court of Appeals: 1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT CASE THAT PARCEL NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS A PUBLIC RIVER AND ORDERING THE CANCELLATION OF ITS REGISTRATION BECAUSE THIS CONSTITUTES A COLLATERAL ATTACK ON A TORRENS TITLE IN VIOLATION OF THE LAW AND THE WELL-SETTLED JURISPRUDENCE ON THE MATTER. 2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-LITIGATING THE ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 REGISTER OF DEEDS OF PAMPANGA, IS A PUBLIC RIVER NOTWITHSTANDING THE FACT THAT THIS ISSUE HAS BEEN LONG RESOLVED AND SETTLED BY THE LAND REGISTRATION COURT OF PAMPANGA IN LAND

REGISTRATION PROCEEDING NO. 692 AND IS NOW RES JUDICATA. 3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION OF THE REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 NOTWITHSTANDING THE FACT THAT THE TORRENS TITLE COVERING IT HAS BEEN VESTED IN THE PETITIONERS WHO ARE THE SEVENTH OF THE SUCCESSIVE INNOCENT PURCHASERS THEREOF AND WHO IN PURCHASING THE SAME RELIED ON THE PRINCIPLE THAT THE PERSONS DEALING WITH REGISTERED LAND NEED NOT GO BEHIND THE REGISTER TO DETERMINE THE CONDITION OF THE PROPERTY. The 1st and 2nd assignment of errors, being closely related, will be taken up together. The ruling of the Court of Appeals that Lot No. 2 covered by Transfer Certificate of Title No. 15856 of the petitioners-appellants is a public stream and that said title should be cancelled and the river covered reverted to public domain, is assailed by the petitioners-appellants as being a collateral attack on the indefeasibility of the torrens title originally issued in 1925 in favor of the petitioners-appellants' predecessor-in-interest, Potenciano Garcia, which is violative of the rule of res judicata. It is argued that as the decree of registration issued by the Land Registration Court was not re-opened through a petition for review filed within one (1) year from the entry of the decree of title, the certificate of title issued pursuant thereto in favor of the appellants for the land covered thereby is no longer open to attack under Section 38 of the Land Registration Act (Act 496) and the jurisprudence on the matter established by this Tribunal. Section 38 of the Land Registration Act cited by appellants expressly makes a decree of registration, which ordinarily makes the title absolute and indefeasible, subject to the exemption stated in Section 39 of the said Act among which are: "liens, claims or rights arising or existing under the laws or Constitution of the United States or of the Philippine Islands which the statute of the Philippine Islands cannot require to appear of record in the registry." At the time of the enactment of Section 496, one right recognized or existing under the law is that provided for in Article 339 of the old Civil Code which reads as follows: Property of public ownership is: 1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and banks shores, roadsteads, and that of a similar character. (Par. 1) The above-mentioned properties are parts of the public domain intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation. ( 3 Manresa, 6th ed. 101-104.) In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held: A simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein. If a person obtains title under the Torrens system which includes by mistake or oversight, lands which cannot be registered under the Torrens system, he does not by virtue of said certificate alone become the owner of the land illegally included. In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said: It is useless for the appellant now to allege that she has obtained certificate of title No. 329 in her favor because the said certificate does not confer upon her any right to the creek in question, inasmuch as the said creek, being of the public domain, is included among the various exceptions enumerated in Section 39 of Act 496 to which the said certificate is subject by express provision of the law. The same ruling was laid down in Director of Lands v. Roman Catholic Bishop of Zamboanga, 61 Phil. 644, as regards public plaza.

2

In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L-20355-56, April 30, 1965, 20 SCRA 704, it was held that the incontestable and indefeasible character of a Torrens certificate of title does not operate when the land covered thereby is not capable of registration. It is, therefore, clear that the authorities cited by the appellants as to the conclusiveness and incontestability of a Torrens certificate of title do not apply here. The Land Registration Court has no jurisdiction over non-registerable properties, such as public navigable rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of a private applicant. Hence, the judgment of the Court of First Instance of Pampanga as regards the Lot No. 2 of Certificate of Title No. 15856 in the name of petitioners-appellants may be attacked at any time, either directly or collaterally, by the State which is not bound by any prescriptive period provided for by the Statute of Limitations (Article 1108, par. 4, new Civil Code). The right of reversion or reconveyance to the State of the public properties fraudulently registered and which are not capable of private appropriation or private acquisition does not prescribe. (Republic v. Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348; Republic v. Ramos, G.R. No. L-15484, January 31, 1963, 7 SCRA 47.) When it comes to registered properties, the jurisdiction of the Secretary of Public Works & Communications under Republic Act 2056 to order the removal or obstruction to navigation along a public and navigable creek or river included therein, has been definitely settled and is no longer open to question (Lovina v. Moreno, G.R. No L-17821, November 29, 1963, 9 SCRA 557; Taleon v. Secretary of Public Works & Communications G.R. No. L-24281, May 16, 1961, 20 SCRA 69, 74). The evidence submitted before the trial court which was passed upon by the respondent Court of Appeals shows that Lot No. 2 (Plan Psu 992) of Transfer Certificate of Title No. 15856, is a river of the public domain. The technical description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title No. 14318 of the Register of Deeds of Pampanga, from which the present Transfer Certificate of Title No. 15856 was derived, confirms the fact that Lot No. 2 embraced in said title is bounded practically on all sides by rivers. As held by the Court of First Instance of Pampanga in Civil Case No. 1247 for injunction filed by the petitioners' predecessorsin-interest against the Municipal Mayor of Lubao and decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the main river that has been covered with water since time immemorial and, therefore, part of the public domain. This finding having been affirmed by the Supreme Court, there is no longer any doubt that Lot No. 2 of Transfer Certificate of Title No. 15856 of petitioners is a river which is not capable of private appropriation or acquisition by prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the Philippines, 69 Phil. 647). Consequently, appellants' title does not include said river. II As regards the 3rd assignment of error, there is no weight in the appellants' argument that, being a purchaser for value and in good faith of Lot No. 2, the nullification of its registration would be contrary to the law and to the applicable decisions of the Supreme Court as it would destroy the stability of the title which is the core of the system of registration. Appellants cannot be deemed purchasers for value and in good faith as in the deed of absolute conveyance executed in their favor, the following appears: 6. Que la segunda parcela arriba descrita y mencionada esta actualmente abierta, sin malecones y excluida de la primera parcela en virtud de la Orden Administrative No.

103, tal como fue enmendada, del pasado regimen o Gobierno. 7. Que los citados compradores Romeo Martinez y Leonor Suarez se encargan de gestionar de las autoridades correspondientes para que la citada segunda parcela pueda ser convertida de nuevo en pesqueria, corriendo a cuenta y cargo de los mismos todos los gastos. 8. Que en el caso de que dichos compradores no pudiesen conseguir sus propositos de convertir de nuevo en pesquera la citada segunda parcela, los aqui vendedores no devolveran ninguna cantidad de dinero a los referidos compradores; este es, no se disminuiriat el precio de esta venta. (Exh. 13-a, p. 52, respondents record of exhibits) These stipulations were accepted by the petitioners-appellants in the same conveyance in the following terms: Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes en al Barrio de Julo Municipio de Malabon, Provincia de Rizal, por la presente, declaran que estan enterados del contenido de este documento y lo aceptan en los precisos terminos en que arriba uedan consignados. (Exh. 13-a, ibid) Before purchasing a parcel of land, it cannot be contended that the appellants who were the vendees did not know exactly the condition of the land that they were buying and the obstacles or restrictions thereon that may be put up by the government in connection with their project of converting Lot No. 2 in question into a fishpond. Nevertheless, they willfully and voluntarily assumed the risks attendant to the sale of said lot. One who buys something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in good faith (Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664). The ruling that a purchaser of a registered property cannot go beyond the record to make inquiries as to the legality of the title of the registered owner, but may rely on the registry to determine if there is no lien or encumbrances over the same, cannot be availed of as against the law and the accepted principle that rivers are parts of the public domain for public use and not capable of private appropriation or acquisition by prescription. FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed from is in accordance with law, and the same is hereby affirmed with costs against the petitioners-appellants. Makalintal, C.J., Castro, Teehankee and Muñoz Palma, JJ., concur. Makasiar, J., is on leave.

3

G.R. No. L-24732 April 30, 1968 PIO SIAN MELLIZA, petitioner, vs. CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS, respondents. Cornelio P. Ravena for petitioner.Office of the Solicitor General for respondents. BENGZON, J.P., J.: Juliana Melliza during her lifetime owned, among other properties, three parcels of residential land in Iloilo City registered in her name under Original Certificate of Title No. 3462. Said parcels of land were known as Lots Nos. 2, 5 and 1214. The total area of Lot No. 1214 was 29,073 square meters. On November 27, 1931 she donated to the then Municipality of Iloilo, 9,000 square meters of Lot 1214, to serve as site for the municipal hall. 1 The donation was however revoked by the parties for the reason that the area donated was found inadequate to meet the requirements of the development plan of the municipality, the so-called "Arellano Plan". 2 Subsequently, Lot No. 1214 was divided by Certeza Surveying Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot 1214-B was further divided into Lots 1214-B-1, Lot 1214-B-2 and Lot 1214-B-3. As approved by the Bureau of Lands, Lot 1214-B-1 with 4,562 square meters, became known as Lot 1214-B; Lot 1214-B-2, with 6,653 square meters, was designated as Lot 1214-C; and Lot 1214-B-13, with 4,135 square meters, became Lot 1214-D. On November 15, 1932 Juliana Melliza executed an instrument without any caption containing the following: Que en consideracion a la suma total de SEIS MIL CUATRO CIENTOS VEINTIDOS PESOS (P6,422.00), moneda filipina que por la presente declaro haber recibido a mi entera satisfaccion del Gobierno Municipal de Iloilo, cedo y traspaso en venta real y difinitiva a dicho Gobierno Municipal de Iloilo los lotes y porciones de los mismos que a continuacion se especifican a saber: el lote No. 5 en toda su extension; una porcion de 7669 metros cuadrados del lote No. 2, cuya porcion esta designada como sublotes Nos. 2-B y 2-C del piano de subdivision de dichos lotes preparado por la Certeza Surveying Co., Inc., y una porcion de 10,788 metros cuadrados del lote No. 1214 — cuya porcion esta designada como sub-lotes Nos. 1214-B-2 y 1214-B-3 del mismo plano de subdivision. Asimismo nago constar que la cesion y traspaso que ariba se mencionan es de venta difinitiva, y que para la mejor identificacion de los lotes y porciones de los mismos que son objeto de la presente, hago constar que dichos lotes y porciones son los que necesita el Gobierno Municipal de Iloilo para la construccion de avenidas, parques y City Hall site del Municipal Government Center de iloilo, segun el plano Arellano. On January 14, 1938 Juliana Melliza sold her remaining interest in Lot 1214 to Remedios Sian Villanueva who thereafter obtained her own registered title thereto, under Transfer Certificate of Title No. 18178. Remedios in turn on November 4, 1946 transferred her rights to said portion of land to Pio Sian Melliza, who obtained Transfer Certificate of Title No. 2492 thereover in his name. Annotated at the back of Pio Sian Melliza's title certificate was the following: ... (a) that a portion of 10,788 square meters of Lot 1214 now designated as Lots Nos. 1214-B-2 and 1214-B-3 of the subdivision plan belongs to the Municipality of Iloilo as per instrument dated November 15, 1932.... On August 24, 1949 the City of Iloilo, which succeeded to the Municipality of Iloilo,

donated the city hall site together with the building thereon, to the University of the Philippines (Iloilo branch). The site donated consisted of Lots Nos. 1214-B, 1214-C and 1214-D, with a total area of 15,350 square meters, more or less. Sometime in 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian Melliza thereupon made representations, thru his lawyer, with the city authorities for payment of the value of the lot (Lot 1214-B). No recovery was obtained, because as alleged by plaintiff, the City did not have funds (p. 9, Appellant's Brief.) The University of the Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152 covering the three lots, Nos. 1214-B, 1214-C and 1214-D. On December 10, 1955 Pio Sian Melliza filed an action in the Court of First Instance of Iloilo against Iloilo City and the University of the Philippines for recovery of Lot 1214-B or of its value. The defendants answered, contending that Lot 1214-B was included in the public instrument executed by Juliana Melliza in favor of Iloilo municipality in 1932. After stipulation of facts and trial, the Court of First Instance rendered its decision on August 15, 1957, dismissing the complaint. Said court ruled that the instrument executed by Juliana Melliza in favor of Iloilo municipality included in the conveyance Lot 1214-B. In support of this conclusion, it referred to the portion of the instrument stating: Asimismo hago constar que la cesion y traspaso que arriba se mencionan es de venta difinitiva, y que para la major identificacion de los lotes y porciones de los mismos que son objeto de la presente, hago constar que dichos lotes y porciones son los que necesita el Gobierno municipal de Iloilo para la construccion de avenidas, parques y City Hall site del Municipal Government Center de Iloilo, segun el plano Arellano. and ruled that this meant that Juliana Melliza not only sold Lots 1214-C and 1214-D but also such other portions of lots as were necessary for the municipal hall site, such as Lot 1214-B. And thus it held that Iloilo City had the right to donate Lot 1214-B to the U.P. Pio Sian Melliza appealed to the Court of Appeals. In its decision on May 19, 1965, the Court of Appeals affirmed the interpretation of the Court of First Instance, that the portion of Lot 1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically mentioned but included whatever was needed for the construction of avenues, parks and the city hall site. Nonetheless, it ordered the remand of the case for reception of evidence to determine the area actually taken by Iloilo City for the construction of avenues, parks and for city hall site. The present appeal therefrom was then taken to Us by Pio Sian Melliza. Appellant maintains that the public instrument is clear that only Lots Nos. 1214-C and 1214-D with a total area of 10,788 square meters were the portions of Lot 1214 included in the sale; that the purpose of the second paragraph, relied upon for a contrary interpretation, was only to better identify the lots sold and none other; and that to follow the interpretation accorded the deed of sale by the Court of Appeals and the Court of First Instance would render the contract invalid because the law requires as an essential element of sale, a "determinate" object (Art. 1445, now 1448, Civil Code). Appellees, on the other hand, contend that the present appeal improperly raises only questions of fact. And, further, they argue that the parties to the document in question really intended to include Lot 1214-B therein, as shown by the silence of the vendor after Iloilo City exercised ownership thereover; that not to include it would have been absurd, because said lot is contiguous to the others admittedly included in the

4

conveyance, lying directly in front of the city hall, separating that building from Lots 1214-C and 1214-D, which were included therein. And, finally, appellees argue that the sale's object was determinate, because it could be ascertained, at the time of the execution of the contract, what lots were needed by Iloilo municipality for avenues, parks and city hall site "according to the Arellano Plan", since the Arellano plan was then already in existence. The appeal before Us calls for the interpretation of the public instrument dated November 15, 1932. And interpretation of such contract involves a question of law, since the contract is in the nature of law as between the parties and their successorsin-interest. At the outset, it is well to mark that the issue is whether or not the conveyance by Juliana Melliza to Iloilo municipality included that portion of Lot 1214 known as Lot 1214-B. If not, then the same was included, in the instrument subsequently executed by Juliana Melliza of her remaining interest in Lot 1214 to Remedios Sian Villanueva, who in turn sold what she thereunder had acquired, to Pio Sian Melliza. It should be stressed, also, that the sale to Remedios Sian Villanueva — from which Pio Sian Melliza derived title — did not specifically designate Lot 1214-B, but only such portions of Lot 1214 as were not included in the previous sale to Iloilo municipality (Stipulation of Facts, par. 5, Record on Appeal, p. 23). And thus, if said Lot 1214-B had been included in the prior conveyance to Iloilo municipality, then it was excluded from the sale to Remedios Sian Villanueva and, later, to Pio Sian Melliza. The point at issue here is then the true intention of the parties as to the object of the public instrument Exhibit "D". Said issue revolves on the paragraph of the public instrument aforequoted and its purpose, i.e., whether it was intended merely to further describe the lots already specifically mentioned, or whether it was intended to cover other lots not yet specifically mentioned. First of all, there is no question that the paramount intention of the parties was to provide Iloilo municipality with lots sufficient or adequate in area for the construction of the Iloilo City hall site, with its avenues and parks. For this matter, a previous donation for this purpose between the same parties was revoked by them, because of inadequacy of the area of the lot donated. Secondly, reading the public instrument in toto, with special reference to the paragraphs describing the lots included in the sale, shows that said instrument describes four parcels of land by their lot numbers and area; and then it goes on to further describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots are the ones needed for the construction of the city hall site, avenues and parks according to the Arellano plan. If the parties intended merely to cover the specified lots — Lots 2, 5, 1214-C and 1214-D, there would scarcely have been any need for the next paragraph, since these lots are already plainly and very clearly described by their respective lot number and area. Said next paragraph does not really add to the clear description that was already given to them in the previous one. It is therefore the more reasonable interpretation, to view it as describing those other portions of land contiguous to the lots aforementioned that, by reference to the Arellano plan, will be found needed for the purpose at hand, the construction of the city hall site. Appellant however challenges this view on the ground that the description of said other lots in the aforequoted second paragraph of the public instrument would thereby be legally insufficient, because the object would allegedly not be determinate as required by law.

Such contention fails on several counts. The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties. The Arellano plan was in existence as early as 1928. As stated, the previous donation of land for city hall site on November 27, 1931 was revoked on March 6, 1932 for being inadequate in area under said Arellano plan. Appellant claims that although said plan existed, its metes and bounds were not fixed until 1935, and thus it could not be a basis for determining the lots sold on November 15, 1932. Appellant however fails to consider that the area needed under that plan for city hall site was then already known; that the specific mention of some of the lots covered by the sale in effect fixed the corresponding location of the city hall site under the plan; that, therefore, considering the said lots specifically mentioned in the public instrument Exhibit "D", and the projected city hall site, with its area, as then shown in the Arellano plan (Exhibit 2), it could be determined which, and how much of the portions of land contiguous to those specifically named, were needed for the construction of the city hall site. And, moreover, there is no question either that Lot 1214-B is contiguous to Lots 1214C and 1214-D, admittedly covered by the public instrument. It is stipulated that, after execution of the contract Exhibit "D", the Municipality of Iloilo possessed it together with the other lots sold. It sits practically in the heart of the city hall site. Furthermore, Pio Sian Melliza, from the stipulation of facts, was the notary public of the public instrument. As such, he was aware of its terms. Said instrument was also registered with the Register of Deeds and such registration was annotated at the back of the corresponding title certificate of Juliana Melliza. From these stipulated facts, it can be inferred that Pio Sian Melliza knew of the aforesaid terms of the instrument or is chargeable with knowledge of them; that knowing so, he should have examined the Arellano plan in relation to the public instrument Exhibit "D"; that, furthermore, he should have taken notice of the possession first by the Municipality of Iloilo, then by the City of Iloilo and later by the University of the Philippines of Lot 1214-B as part of the city hall site conveyed under that public instrument, and raised proper objections thereto if it was his position that the same was not included in the same. The fact remains that, instead, for twenty long years, Pio Sian Melliza and his predecessors-ininterest, did not object to said possession, nor exercise any act of possession over Lot 1214-B. Applying, therefore, principles of civil law, as well as laches, estoppel, and equity, said lot must necessarily be deemed included in the conveyance in favor of Iloilo municipality, now Iloilo City. WHEREFORE, the decision appealed from is affirmed insofar as it affirms that of the Court of First Instance, and the complaint in this case is dismissed. No costs. So ordered. Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.Concepcion , C.J., is on leave.

5

G.R. No. L-36083 September 5, 1975 Spouses RAMON DOROMAL, SR., and ROSARIO SALAS, and Spouses RAMON DOROMAL, JR., and GAUDELIA VEGA, petitioners, vs. HON. COURT OF APPEALS and FILOMENA JAVELLANA, respondents. Salonga, Ordonez, Yap, Parlade and Associates and Marvin J. Mirasol for petitioners. Arturo H. Villanueva, Jr. for private respondent. BARREDO, J.: Petition for review of the decision of the Court of Appeals in CA-G.R. No. 47945-R entitled Filomena Javellana vs. Spouses Ramon Doromal, Sr., et al. which reversed the decision of the Court of First Instance of Iloilo that had in turn dismissed herein private respondent Filomena Javellana's action for redemption of a certain property sold by her co-owners to herein petitioners for having been made out of time. The factual background found by the Court of Appeals and which is binding on this Court, the same not being assailed by petitioners as being capricious, is as follows: IT RESULTING: That the facts are quite simple; Lot 3504 of the cadastral survey of Iloilo, situated in the poblacion of La Paz, one of its districts, with an area of a little more than 2-½ hectares was originally decreed in the name of the late Justice Antonio Horilleno, in 1916, under Original Certificate of Title No. 1314, Exh. A; but before he died, on a date not particularized in the record, he executed a last will and testament attesting to the fact that it was a co-ownership between himself and his brothers and sisters, Exh. C; so that the truth was that the owners or better stated, the co-owners were; beside Justice Horilleno, "Luis, Soledad, Fe, Rosita, Carlos and Esperanza," all surnamed Horilleno, and since Esperanza had already died, she was succeeded by her only daughter and heir herein plaintiff. Filomena Javellana, in the proportion of 1/7 undivided ownership each; now then, even though their right had not as yet been annotated in the title, the co-owners led by Carlos, and as to deceased Justice Antonio Horilleno, his daughter Mary, sometime since early 1967, had wanted to sell their shares, or if possible if Filomena Javellana were agreeable, to sell the entire property, and they hired an acquaintance Cresencia Harder, to look for buyers, and the latter came to interest defendants, the father and son, named Ramon Doromal, Sr. and Jr., and in preparation for the execution of the sale, since the brothers and sisters Horilleno were scattered in various parts of the country, Carlos in Ilocos Sur, Mary in Baguio, Soledad and Fe, in Mandaluyong, Rizal, and Rosita in Basilan City, they all executed various powers of attorney in favor of their niece, Mary H. Jimenez Exh. 1-8, they also caused preparation of a power of attorney of identical tenor for signature by plaintiff, Filomena Javellana, Exh. M, and sent it with a letter of Carlos, Exh. 7 dated 18 January, 1968 unto her thru Mrs. Harder, and here, Carlos informed her that the price was P4.00 a square meter, — although it now turns out according to Exh. 3 that as early as 22 October, 1967, Carlos had received in check as earnest money from defendant Ramon Doromal, Jr., the sum of P5,000.00 and the price therein agreed upon was five (P5.00) pesos a square meter as indeed in another letter also of Carlos to Plaintiff in 5 November, 1967, Exh. 6, he had told her that the Doromals had given the earnest money of P5,000.00 at P5.00 a square meter, — at any rate, plaintiff not being agreeable, did not sign the power of attorney, and the rest of the co-owners went ahead with their sale of their 6/7, Carlos first seeing to it that the deed of sale by their common attorney in fact, Mary H. Jimenez be signed and

ratified as it was signed and ratified in Candon, Ilocos Sur, on 15 January, 1968, Exh. 2, then brought to Iloilo by Carlos in the same month, and because the Register of Deeds of Iloilo refused to register right away, since the original registered owner, Justice Antonio Horilleno was already dead, Carlos had to ask as he did, hire Atty. Teotimo Arandela to file a petition within the cadastral case, on 26 February, 1968, for the purpose, Exh. C, after which Carlos returned to Luzon, and after compliance with the requisites of publication, hearing and notice, the petition was approved, and we now see that on 29 April, 1968, Carlos already back in Iloilo went to the Register of Deeds and caused the registration of the order of the cadastral court approving the issuance of a new title in the name of the co-owners, as well as of the deed of sale to the Doromals, as a result of which on that same date, a new title was issued TCT No. 23152, in the name of the Horillenos to 6/7 and plaintiff Filomena Javellana to 1/7, Exh. D, only to be cancelled on the same day under TCT No. 23153, Exh. 2, already in the names of the vendees Doromals for 6/7 and to herein plaintiff, Filomena Javellana, 1/7, and the next day 30 April, 1968, the Doromals paid unto Carlos by check, the sum of P97,000.00 Exh. 1, of Chartered Bank which was later substituted by check of Phil. National Bank, because there was no Chartered Bank Branch in Ilocos Sur, but besides this amount paid in check, the Doromals according to their evidence still paid an additional amount in cash of P18,250.00 since the agreed price was P5.00 a square meter; and thus was consummated the transaction, but it is here where complications set in, On 10 June, 1968, there came to the residence of the Doromals in Dumangas, Iloilo, plaintiff's lawyer, Atty. Arturo H. Villanueva, bringing with him her letter of that date, reading, "P.O. Box 189, Bacolod City June 10, 1968 Mr. & Mrs. Ramon Doromal, Sr. and Mr. and Mrs. Ramon Doromal, Jr. "Dumangas Iloilo Dear Mr. and Mrs. Doromal: The bearer of this letter is my nephew, Atty. Arturo H. Villanueva, Jr., of this City. Through him, I am making a formal offer to repurchase or redeem from you the 6/7 undivided share in Lot No. 3504, of the Iloilo Cadastre, which you bought from my erstwhile co-owners, the Horillenos, for the sum of P30,000.00, Atty. Villanueva has with him the sum of P30,000.00 in cash, which he will deliver to you as soon as you execute the contract of sale in my favor. Thank you very much for whatever favorable consideration you can give this request. Very truly yours, (SIGNED) Mrs. FILOMENA JAVELLANA" p. 26, Exh. "J", Manual of Exhibits. and then and there said lawyer manifested to the Doromals that he had the P30,000.00 with him in cash, and tendered it to them, for the exercise of the legal redemption, the Doromals were aghast, and refused. and the very next day as has been said. 11 June, 1968, plaintiff filed this case, and in the trial, thru oral and documentary proofs sought to show that as co-owner, she had the right to redeem at the price stated in the deed of sale, Exh. 2, namely P30,000.00 of the but defendants in answer, and in their evidence, oral and documentary sought to show that plaintiff had no more right to redeem and that if ever she should have, that it should be at the true and real price by them paid, namely, the total sum of P115,250.00, and trial

6

judge, after hearing the evidence, believed defendants, that plaintiff had no more right, to redeem, because, "Plaintiff was informed of the intended sale of the 6/7 share belonging to the Horillenos." and that, "The plaintiff have every reason to be grateful to Atty. Carlos Horilleno because in the petition for declaration of heirs of her late uncle Antonio Horilleno in whose name only the Original Certificate of Title covering the Lot in question was issued, her uncle Atty. Carlos Horilleno included her as one of the heirs of said Antonio Horilleno. Instead, she filed this case to redeem the 6/7 share sold to the Doromals for the simple reason that the consideration in the deed of sale is the sum of P30,000.00 only instead of P115,250.00 approximately which was actually paid by the defendants to her co-owners, thus she wants to enrich herself at the expense of her own blood relatives who are her aunts, uncles and cousins. The consideration of P30,000.00 only was placed in the deed of sale to minimize the payment of the registration fees, stamps, and sales tax. pp. 77-78, R.A., and dismiss and further condemned plaintiff to pay attorney's fees, and moral and exemplary damages as set forth in few pages back, it is because of this that plaintiff has come here and contends, that Lower Court erred: "I. ... in denying plaintiff-appellant, as a co-owner of Lot No. 3504, of the Iloilo Cadastre, the right of legal redemption under Art. 1620, of the Civil Code: "II. ... as a consequence of the above error, in refusing to order the defendantsappellees, the vendees of a portion of the aforesaid Lot No. 3504 which they bought from the co-owners of the plaintiff-appellant, to reconvey the portion they purchased to the herein plaintiff-appellant.. "III. ... in admitting extrinsic evidence in the determination of the consideration of the sale, instead of simply adhering to the purchase price of P30,000.00, set forth in the pertinent Deed of Sale executed by the vendors and owners of the plaintiff-appellant in favor of the defendants-appellees. "IV. ... in dismissing the complaint filed in this case." pp. 1-3, Appellant's Brief,. which can be reduced to the simple question of whether or not on tile basis of the evidence and the law, the judgment appealed from should be maintained; (Pp. 16-22, Record.) . Upon these facts, the Court of Appeals reversed the trial court's decision and held that although respondent Javellana was informed of her co-owners' proposal to sell the land in question to petitioners she was, however, "never notified ... least of all, in writing", of the actual execution and registration of the corresponding deed of sale, hence, said respondent's right to redeem had not yet expired at the time she made her offer for that purpose thru her letter of June 10, 1968 delivered to petitioners on even date. The intermediate court further held that the redemption price to be paid by respondent should be that stated in the deed of sale which is P30,000 notwithstanding that the preponderance of the evidence proves that the actual price paid by petitioners was P115,250. Thus, in their brief, petitioners assign the following alleged errors: I IT IS ERROR FOR THE COURT OF APPEALS TO HOLD THAT THE NOTICE IN WRITING OF THE SALE CONTEMPLATED IN ARTICLE 1623 OF THE CIVIL CODE REFERS TO A NOTICE IN WRITING AFTER THE EXECUTION AND REGISTRATION OF THE INSTRUMENT OF SALE, HENCE, OF THE DOCUMENT OF SALE. II

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE INSCRIPTION OF THE SALE IN THE REGISTRY OF PROPERTY TAKES EFFECT AS AGAINST THIRD PERSONS INCLUDING CLAIMS OF POSSIBLE REDEMPTIONERS. ASSUMING, ARGUENDO THAT PRIVATE RESPONDENT HAS THE RIGHT TO REDEEM, THE COURT OF APPEALS ERRED IN HOLDING THAT THE REDEMPTION PRICE SHOULD BE THAT STATED IN THE DEED OF SALE. (Pp. 12, Brief for Petitioner, page 74-Rec.) We cannot agree with petitioners. Petitioners do not question respondent's right to redeem, she being admittedly a 1/7 co-owner of the property in dispute. The thrust of their first assignment of error is that for purposes of Article 1623 of the Civil Code which provides that: ART. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners. the letters sent by Carlos Horilleno to respondent and dated January 18, 1968, Exhibit 7, and November 5, 1967, Exhibit 6, constituted the required notice in writing from which the 30-day period fixed in said provision should be computed. But to start with, there is no showing that said letters were in fact received by respondent and when they were actually received. Besides, petitioners do not pinpoint which of these two letters, their dates being more than two months apart, is the required notice. In any event, as found by the appellate court, neither of said letters referred to a consummated sale. As may be observed, it was Carlos Horilleno alone who signed them, and as of January 18, 1968, powers of attorney from the various co-owners were still to be secured. Indeed, the later letter of January 18, 1968 mentioned that the price was P4.00 per square meter whereas in the earlier letter of November 5, 1967 it was P5.00, as in fact, on that basis, as early as October 27, 1967, Carlos had already received P5,000 from petitioners supposedly as earnest money, of which, however, mention was made by him to his niece only in the later letter of January 18, 1968, the explanation being that "at later negotiation it was increased to P5.00 per square meter." (p. 4 of petitioners' brief as appellees in the Court of Appeals quoting from the decision of the trial court.) In other words, while the letters relied upon by petitioners could convey the idea that more or less some kind of consensus had been arrived at among the other co-owners to sell the property in dispute to petitioners, it cannot be said definitely that such a sale had even been actually perfected. The fact alone that in the later letter of January 18, 1968 the price indicated was P4.00 per square meter while in that of November 5, 1967, what was stated was P5.00 per square meter negatives the possibility that a "price definite" had already been agreed upon. While P5,000 might have indeed been paid to Carlos in October, 1967, there is nothing to show that the same was in the concept of the earnest money contemplated in Article 1482 of the Civil Code, invoked by petitioner, as signifying perfection of the sale. Viewed in the backdrop of the factual milieu thereof extant in the record, We are more inclined to believe that the said P5,000 were paid in the concept of earnest money as the term was understood under the Old Civil Code, that is, as a guarantee that the buyer would not back out, considering that it is not clear that there was already a definite agreement as to the price then and that petitioners were decided to buy 6/7 only of the property should respondent Javellana refuse to agree to part with her 1/7 share.

7

In the light of these considerations, it cannot be said that the Court of Appeals erred in holding that the letters aforementioned sufficed to comply with the requirement of notice of a sale by co-owners under Article 1623 of the Civil Code. We are of the considered opinion and so hold that for purposes of the co-owner's right of redemption granted by Article 1620 of the Civil Code, the notice in writing which Article 1623 requires to be made to the other co-owners and from receipt of which the 30-day period to redeem should be counted is a notice not only of a perfected sale but of the actual execution and delivery of the deed of sale. This is implied from the latter portion of Article 1623 which requires that before a register of deeds can record a sale by a co-owner, there must be presented to him, an affidavit to the effect that the notice of the sale had been sent in writing to the other co-owners. A sale may not be presented to the register of deeds for registration unless it be in the form of a duly executed public instrument. Moreover, the law prefers that all the terms and conditions of the sale should be definite and in writing. As aptly observed by Justice Gatmaitan in the decision under review, Article 1619 of the Civil Code bestows unto a co-owner the right to redeem and "to be subrogated under the same terms and conditions stipulated in the contract", and to avoid any controversy as to the terms and conditions under which the right to redeem may be exercised, it is best that the period therefor should not be deemed to have commenced unless the notice of the disposition is made after the formal deed of disposal has been duly executed. And it being beyond dispute that respondent herein has never been notified in writing of the execution of the deed of sale by which petitioners acquired the subject property, it necessarily follows that her tender to redeem the same made on June 10, 1968 was well within the period prescribed by law. Indeed, it is immaterial when she might have actually come to know about said deed, it appearing she has never been shown a copy thereof through a written communication by either any of the petitionerspurchasers or any of her co-owners-vendees. (Cornejo et al. vs. CA et al., 16 SCRA 775.) The only other pivotal issue raised by petitioners relates to the price which respondent offered for the redemption in question. In this connection, from the decision of the Court of Appeals, We gather that there is "decisive preponderance of evidence" establishing "that the price paid by defendants was not that stated in the document, Exhibit 2, of P30,000 but much more, at least P97,000, according to the check, Exhibit 1, if not a total of P115,250.00 because another amount in cash of P18,250 was paid afterwards." It is, therefore, the contention of petitioners here that considering said finding of fact of the intermediate court, it erred in holding nevertheless that "the redemption price should be that stated in the deed of sale." Again, petitioners' contention cannot be sustained. As stated in the decision under review, the trial court found that "the consideration of P30,000 only was placed in the deed of sale to minimize the payment of the registration fees, stamps and sales tax." With this undisputed fact in mind, it is impossible for the Supreme Court to sanction petitioners' pragmatic but immoral posture. Being patently violative of public policy and injurious to public interest, the seemingly wide practice of understating considerations of transactions for the purpose of evading taxes and fees due to the government must be condemned and all parties guilty thereof must be made to suffer the consequences of their ill-advised agreement to defraud the state. Verily, the trial court fell short of its devotion and loyalty to the Republic in officially giving its stamp of approval to the stand of petitioners and even berating respondent Javellana as wanting to enrich herself "at the expense of her own blood relatives who are her

aunts, uncles and cousins." On the contrary, said "blood relatives" should have been sternly told, as We here hold, that they are in pari-delicto with petitioners in committing tax evasion and should not receive any consideration from any court in respect to the money paid for the sale in dispute. Their situation is similar to that of parties to an illegal contract. 1 Of course, the Court of Appeals was also eminently correct in its considerations supporting the conclusion that the redemption in controversy should be only for the price stipulated in the deed, regardless of what might have been actually paid by petitioners that style inimitable and all his own, Justice Gatmaitan states those considerations thus: CONSIDERING: As to this that the evidence has established with decisive preponderance that the price paid by defendants was not that stated in the document, Exh. 2 of P30,000.00 but much more, at least P97,000.00 according to the check, Exh. 1 if not a total of P115,250.00 because another amount in cash of P18,250.00 was paid afterwards, perhaps it would be neither correct nor just that plaintiff should be permitted to redeem at only P30,000.00, that at first glance would practically enrich her by the difference, on the other hand, after some reflection, this Court can not but have to bear in mind certain definite points. 1st — According to Art. 1619 "Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title." pp. 471-472, New Civil Code, and note that redemptioner right is to be subrogated "upon the same terms and conditions stipulated in the contract." and here, the stipulation in the public evidence of the contract, made public by both vendors and vendees is that the price was P30,000.00; 2nd — According to Art. 1620, "A co-owner of a thing may exercise the right of redemption in case the share of all the other co-owners or any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. p. 472, New Civil Code, . from which it is seen that if the price paid is 'grossly excessive' redemptioner is required to pay only a reasonable one; not that actually paid by the vendee, going to show that the law seeks to protect redemptioner and converts his position into one not that of a contractually but of a legally subrogated creditor as to the right of redemption, if the price is not 'grossly excessive', what the law had intended redemptioner to pay can be read in Art. 1623. The right of a legal pre-emption or redemption shall not be exercised except within thirty (30) days from the notice in writing by the prospective vendor, or by the vendor as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof of all possible redemptioners.' p. 473, New Civil Code, if that be so that affidavit must have been intended by the lawmakers for a definite purpose, to argue that this affidavit has no purpose is to go against all canons of statutory construction, no law mandatory in character and worse, prohibitive should be understood to have no purpose at all, that would be an absurdity, that purpose could not but have been to give a clear and unmistakable guide to redemptioner, on how much he should pay and when he should redeem; from this must follow that that notice must have been intended to state the truth and if vendor and vendee should

8

have instead, decided to state an untruth therein, it is they who should bear the consequences of having thereby misled the redemptioner who had the right to rely and act thereon and on nothing else; stated otherwise, all the elements of equitable estoppel are here since the requirement of the law is to submit the affidavit of notice to all possible redemptioners, that affidavit to be a condition precedent to registration of the sale therefore, the law must have intended that it be by the parties understood that they were there asking a solemn representation to all possible redemptioners, who upon faith of that are thus induced to act, and here worse for the parties to the sale, they sought to avoid compliance with the law and certainly refusal to comply cannot be rewarded with exception and acceptance of the plea that they cannot be now estopped by their own representation, and this Court notes that in the trial and to this appeal, plaintiff earnestly insisted and insists on their estoppel; 3rd — If therefore, here vendors had only attempted to comply with the law, they would have been obligated to send a copy of the deed of sale unto Filomena Javellana and from that copy, Filomena would have been notified that she should if she had wanted to redeem, offered no more, no less, that P30,000.00, within 30 days, it would have been impossible for vendors and vendees to have inserted in the affidavit that the price was truly P97,000.00 plus P18,250.00 or a total of P115,250.00; in other words, if defendants had only complied with the law, they would have been obligated to accept the redemption money of only P30,000.00; 4th — If it be argued that foregoing solution would mean unjust enrichment for plaintiff, it need only be remembered that plaintiff's right is not contractual, but a mere legal one, the exercise of a right granted by the law, and the law is definite that she can subrogate herself in place of the buyer, "upon the same terms and conditions stipulated in the contract," in the words of Art. 1619, and here the price "stipulated in the contract" was P30,000.00, in other words, if this be possible enrichment on the part of Filomena, it was not unjust but just enrichment because permitted by the law; if it still be argued that plaintiff would thus be enabled to abuse her right, the answer simply is that what she is seeking to enforce is not an abuse but a mere exercise of a right; if it be stated that just the same, the effect of sustaining plaintiff would be to promote not justice but injustice, the answer again simply is that this solution is not unjust because it only binds the parties to make good their solemn representation to possible redemptioners on the price of the sale, to what they had solemnly averred in a public document required by the law to be the only basis for that exercise of redemption; (Pp. 24-27, Record.) WHEREFORE, the decision of the Court of Appeals is affirmed, with costs against petitioners.. Fernando, Makasiar, Esguerra, Aquino and Martin, JJ., concur. Makalintal, CJ., took no part. Muñoz Palma, J., took no part. Antonio and Concepcion Jr., JJ., are on leave.

G.R. No. 126812 November 24, 1998 GOLDENROD, INC., petitioner, vs. COURT OF APPEALS, PIO BARRETO & SONS, INC., PIO BARRETO REALTY DEVELOPMENT, INC. and ANTHONY QUE, respondents. BELLOSILLO, J.: In the absence of a specific stipulation, may the seller of real estate keep the earnest money to answer for damages in the event the sale fails due to the fault of the prospective buyer? Pio Barreto and Sons, Inc. (BARRETO & SONS) owned forty-three (43) parcels of registered land with a total area of 18,500 square meters located at Carlos Palanca St., Quiapo, Manila, which were mortgaged with United Coconut Planters Bank (UCPB). In 1988, the obligation of the corporation with UCPB remained unpaid making foreclosure of the mortgage imminent. Goldenrod, Inc. (GOLDENROD), offered to buy the property from BARRETO & SONS. On 25 May 1988, through its president Sonya G. Mathay, petitioner wrote respondent Anthony Que, President of respondent BARRETO & SONS, as follows: Thank you for your reply to our letter offering to buy your property in Echague (C. Palanca) Quiapo. We are happy that you accepted our offer except the two amendments concerning the payment of interest which should be monthly instead of semi-annually and the period to remove the trusses, steel frames etc. which shall be 180 days instead of 90 days only. Please be advised that we agree to your amendments. As to your other query, we prefer that the lots be reconsolidated back to its (sic) mother titles. Enclosed is the earnest money of P1 million which shall form part of the purchase price. Payment of the agreed total consideration shall be effected in accordance with our offer as you have accepted and upon execution of the necessary documents of sale to be implemented after the said reconsolidation of the lots. Kindly acknowlege receipt of the earnest money. When the term of existence of BARRETO & SONS expired, all its assets and liabilities including the property located in Quiapo were transferred to respondent Pio Barreto Realty Development, Inc. (BARRETO REALTY). Petitioner's offer to buy the property resulted in its agreement with respondent BARRETO REALTY that petitioner would pay the following amounts: (a) P24.5 million representing the outstanding obligations of BARRETO REALTY with UCPB on 30 June 1988, the deadline set by the bank for payment; and, (b) P20 million which was the balance of the purchase price of the property to be paid in installments within a 3-year period with interes at 18% per annum. Petitioner did not pay UCPB the P24.5 million loan obligation of BARRETO REALTY on the deadline set for payment; instead, it asked for an extension of one (1) month or up to 31 July 1988 to settle the obligation, which the bank granted. On 31 July 1988, petitioner requested another extension of sixty (60) days to pay the loan. This time bank demurred. In the meantime BARRETO REALTY was able to cause the reconsolidation of the forty-three (43) titles covering the property subject of the purchase into two (2) titles

9

covering Lots 1 and 2, which were issued on 4 August 1988. The reconsolidation of the titles was made pursuant to the request of petitioner in its letter to private respondents on 25 May 1988. Respondent BARRETO REALTY allegedly incurred expenses for the reconsolidation amounting to P250,000.00. On 25 August 1988 petitioner sought reconsideration of the denial by the bank of its request for extension of sixty (60) days by asking for a shorter period of thirty (30) days. This was again denied by UCPB. On 30 August 1988 Alicia P. Logarta, President of Logarta Realty and Development Corporation (LOGARTA REALTY), which acted as agent and broker of petitioner, wrote private respondent Anthony Que informing him on behalf of petitioner that it could not go through with the purchase of the property due to circumstances beyond its fault, i.e., the denial by UCPB of its request for extension of time to pay the obligation. In the same letter, Logarta also demanded the refund of the earnest money of P1 million which petitioner gave to respondent BARRETO REALTY. On 31 August 1988 respondent BARRETTO REALTY sold to Asiaworld Trade Center Phils., Inc. (ASIAWORLD), Lot 2, one of the two (2) consolidated lots, for the price of P23 million. On 13 October 1988 respondent BARRETTO REALTY executed a deed transferring by way of "dacion" the property reconsolidated as Lot 1 in favor of UCPB, which in turn sold the property to ASIAWORLD for P24 million. On 12 December 1988 Logarta again wrote respondent Que demanding the return of the earnest money to GOLDENROD. On 7 February 1989 petitioner through its lawyer reiterated its demand, but the same remained unheeded by private respondents. This prompted petitioner to file a complaint with the Regional Trial Court of Manila against private respondents for the return of the amount of P1 million and the payment of damages including lost interests or profits. In their answer, private respondents contended that it was the agreement of the parties that the earnest money of P1 million would be forfeited to answer for losses and damages that might be suffered by private respondents in case of failure by petitioner to comply with the terms of their purchase agreement. On 15 March 1991 the trial court rendered a decision 1 ordering private respondents jointly and severally to pay petitioner P1,000.000.00 with legal interest from 9 February 1989 until fully paid, P50,000.00 representing unrealized profits and P10,000.00 as attorney's fees. The trial court found that there was no written agreement between the parties concerning forfeiture of the earnest money if the sale did not push through. It further declared that the earnest money given by petitioner to respondent BARRETO REALTY was intended to form part of the purchase price; thus, the refusal of the latter to return the money when the sale was not consummated violated Arts. 22 and 23 of the Civil Code against unjust enrichment. Obviously dissatisfied with the decision of the trial court, private respondents appealed to the Court of Appeals which reversed the trial court and ordered the dismissal of the complaint; hence, this petition. Petitioner alleges that the Court of Appeals erred in disregarding the finding of the trial court that the earnest money given by petitioner to respondent BARRETTO REALTY should be returned to the former. The absence of an express stipulation that the same shall be forfeited in favor of the seller in case the buyer fails to comply with his obligation is compelling. It argues that the forfeiture of the money in favor of respondent BARRETTO REALTY would amount to unjust enrichment at the expense of petitioner. We sustain petitioner. Under Art. 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall be considered as part of the purchase price and as

proof of the perfection of the contract. Petitioner clearly stated without any objection from private respondents that the earnest money was intended to form part of the purchase price. It was an advance payment which must be deducted from the total price. Hence, the parties could not have intended that the earnest money or advance payment would be forfeited when the buyer should fail to pay the balance of the price, especially in the absence of a clear and express agreement thereon. By reason oi its failure to make payment petitioner, through its agent, informed private respondents that it would no longer push through with the sale. In other words, petitioner resorted to extrajudicial rescission of its agreement with private respondents. In University of the Philippines v. de los Angeles, 2 the right to rescind contracts is not absolute and is subject to scrutiny and review by the proper court. We held further, in the more recent case of Adelfa Properties, Inc. v. Court of Appeals, 3 that rescission of reciprocal contracts may be extrajudicially rescinded unless successfully impugned in court. If the party does not oppose the declaration of rescission of the other party, specifying the grounds therefor, and it fails to reply or protest against it, its silence thereon suggests an admission of the veracity and validity of the rescinding party's claim. Private respondents did not interpose any objection to the rescission by petitioner of the agreement. As found by the Court of Appeals, private respondent BARRETTO REALTY even sold Lot 2 of the subject consolidated lots to another buyer, ASIAWORLD, one day after its President Anthony Que received the broker's letter rescinding tne sale. Subsequently, on 13 October 1988 respondent BARRETO REALTY also conveyed ownership over Lot 1 to UCPB which, in turn, sold the same to ASIAWORLD. Art. 1385 of the Civil Code provides that rescission creates the obligation to return the things which were the object of the contract together with their fruits and interest. The vendor is therefore obliged to return the purchase price paid to him by the buyer if the latter rescinds the sale, 4 or when the transaction was called off and the subject property had already been sold to a third person, as what obtained in this case. 5 Therefore, by virtue of the extrajudicial rescission of the contract to sell by petitioner without opposition from private respondents who, in turn, sold the property to other persons, private respondent BARRETTO REALTY, as the vendor, had the obligation to return the earnest money of P1000,000.00 plus legal interest from the date it received notice of rescission from petitioner, i.e., 30 August 1988, up to the date of the return or payment. It would be most inequitable if resondent BARRETTO REALTY would be allowed to retain petitioner's payment of P1,000,000.00 and at the same time appropriate the proceeds of the second sale made to another. 6 WHEREFORE, the Petition is GRANTED. The decision of the Court of Appeals is REVERSED and SET ASIDE. Private respondent Pio Barretto Realty Development, Inc. (BARRETTO REALTY), its successors and assigns are ordered to return to petitioner Goldenrod, Inc. (GOLDENROD), the amount of P1,000,000.00 with legal interest thereon from 30 August 1988, the date of notice of extrajudicial rescission, until the amount is fully paid, with costs against private respondents. SO ORDERED. Davide, Jr., Vitug, Panganiban and Quisumbing, JJ., concur.

10

(SGD.) CARMENCITA RAMOS

SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA, Petitioners, - versus -

SPS. EDUARDO RAMOS and CARMENCITA RAMOS, Respondents.

G.R. No. 154413 Present: PUNO, J., Chairman, AUSTRIA-MARTINEZ , CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ. Promulgated:

(SGD.) ROSIE ENDRADA[6]

Upon the signing of the document, petitioners delivered to respondents four (4) postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella Edrada, in various amounts totaling One Hundred Forty Thousand Pesos (P140,000.00). The first three (3) checks were honored upon presentment to the drawee bank while the fourth check for One Hundred Thousand Pesos (P100,000.00) was dishonored because of a “stop payment” order. On 3 June 1996, respondents filed an action against petitioners for specific performance with damages before the RTC, praying that petitioners be obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of the purchase price. In their Complaint,[7] respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos (P900,000.00), as evidenced by the above-quoted document, which according to them evinced a contract to

August 31, 2005 x ---------------------------------------------------------------x DECISION

buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so respondents further averred. Belying the allegations of respondents, in their Answer with Counterclaim, petitioners averred that the document sued upon merely embodies an agreement brought about by the loans they extended to respondents. According to petitioners, respondents allowed them to manage or administer the fishing vessels as a business on the understanding that should they find the business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00). But petitioners “decided to call it quits” after spending a hefty sum for the repair and maintenance of the vessels which were already in dilapidated condition. [8]

TINGA, J.: In this Petition[1] under Rule 45, petitioner Spouses Alfredo and Rosella Edrada (petitioners) seek the reversal of the Former Second Division of the Court of Appeals’ Decision[2] and Resolution[3] in CA-G.R. CV No. 66375, which affirmed the Decision of Regional Trial Court (RTC) of Antipolo City, Branch 71,[4] in Civil Case No. 96-4057, and denied the Motion for Reconsideration[5] therein.

After trial, the RTC rendered a Decision[9] dated 22 February 1999, the dispositive portion of which reads:

Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of two (2) fishing vessels, the “Lady Lalaine” and the “Lady Theresa.” On 1 April 1996, respondents and petitioners executed an untitled handwritten document which lies at the center of the present controversy. Its full text is reproduced below:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants and the latter are ordered to pay to the former the amount of Eight Hundred Sixty Thousand Pesos (P860,000.00) with legal interests thereon from June 30, 1996 until fully paid; the amount of P20,000.00 as attorney’s fees and the cost of suit.

1st April 1996 This is to acknowledge that Fishing Vessels ‘Lady Lalaine’ and ‘Lady Theresa’ owned by Eduardo O. Ramos are now in my possession and received in good running and serviceable order. As such, the vessels are now my responsibility.

The counterclaim of the defendants for moral and exemplary damages and for attorney’s fees is dismissed for lack of merit.

Documents pertaining to the sale and agreement of payments between me and the owner of the vessel to follow. The agreed price for the vessel is Nine Hundred Thousand Only (P900,000.00). (SGD.) EDUARDO O. RAMOS (Seller) CONFORME:

(SGD.) ALFREDO R. EDRADA (Purchaser) CONFORME:

SO ORDERED.[10] The RTC treated the action as one for collection of a sum of money and for damages and considered the document as a perfected contract of sale. On 19 April 1999, petitioners filed a Motion for Reconsideration which the RTC denied in an Order[11] dated 2 July 1999.

11

Both parties appealed the RTC Decision. However, finding no reversible error in the appealed decision, the Court of Appeals, in its Decision,[12] affirmed the same and dismissed both appeals. Only petitioners elevated the controversy to this Court. Petitioners raised the nature of the subject document as the primary legal issue. They contend that there was no perfected contract of sale as distinguished from a contract to sell. They likewise posed as sub-issues the purpose for which the checks were issued, whether replacement of the crew was an act of ownership or administration, whether petitioners failed to protest the dilapidated condition of the vessels, and whether the instances when the vessels went out to sea proved that the vessels were not seaworthy.[13] It is also alleged in the petition that the true agreement as between the parties was that of a loan. Evidently, the petition hinges on the true nature of the document dated 1 April 1996. Normally, the Court is bound by the factual findings of the lower courts, and accordingly, should affirm the conclusion that the document in question was a perfected contract of sale. However, we find that both the RTC and the Court of Appeals gravely misapprehended the nature of the said document, and a reevaluation of the document is in order.[14] Even if such reevaluation would lead the court to examine issues not raised by the parties, it should be remembered that the Court has authority to review matters even if not assigned as errors in the appeal, if it is found that their consideration is necessary in arriving at a just decision of the case.[15] In doing so, we acknowledge that the contending parties offer vastly differing accounts as to the true nature of the agreement. Still, we need not look beyond the document dated 1 April 1996 and the stipulations therein in order to ascertain what obligations, if any, have been contracted by the party. The parol evidence rule forbids any addition to or contradiction of the terms of a written agreement by testimony or other evidence purporting to show that different terms were agreed upon by the parties, varying the purport of the written contract. Whatever is not found in the writing is understood to have been waived and abandoned.[16] We disagree with the RTC and the Court of Appeals that the document is a perfected contract of sale. A contract of sale is defined as an agreement whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.[17] It must evince the consent on the part of the seller to transfer and deliver and on the part of the buyer to pay.[18] An examination of the document reveals that there is no perfected contract of sale. The agreement may confirm the receipt by respondents of the two vessels and their purchase price. However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that “documents pertaining to the sale and agreement of payments…[are] to follow.” Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of payment of the purchase price, or the period when such would become due and demandable, have yet to be executed. But no such document was executed and no such terms were stipulated upon.

The fact that there is a stated total purchase price should not lead to the conclusion that a contract of sale had been perfected. In numerous cases, [19] the most recent of which is Swedish Match, AB v. Court of Appeals,[20] we held that before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established, as such stands as essential to the validity of the sale. After all, such agreement on the terms of payment is integral to the element of a price certain, such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Assuming arguendo that the document evinces a perfected contract of sale, the absence of definite terms of payment therein would preclude its enforcement by the respondents through the instant Complaint. A requisite for the judicial enforcement of an obligation is that the same is due and demandable. The absence of a stipulated period by which the purchase price should be paid indicates that at the time of the filing of the complaint, the obligation to pay was not yet due and demandable. Respondents, during trial, did claim the existence of a period. Respondent Carmencita Ramos, during cross-examination, claimed that the supposed balance shall be paid on 30 June 1996.[21] But how do respondents explain why the Complaint was filed on 3 June 1996? Assuming that the 30 June 1996 period was duly agreed upon by the parties, the filing of the Complaint was evidently premature, as no cause of action had accrued yet. There could not have been any breach of obligation because on the date the action was filed, the alleged maturity date for the payment of the balance had not yet arrived. In order that respondents could have a valid cause of action, it is essential that there must have been a stipulated period within which the payment would have become due and demandable. If the parties themselves could not come into agreement, the courts may be asked to fix the period of the obligation, under Article 1197 of the Civil Code. [22] The respondents did not avail of such relief prior to the filing of the instant Complaint; thus, the action should fail owing to its obvious prematurity. Returning to the true nature of the document, we neither could conclude that a “contract to sell” had been established. A contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.[23] A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties. There was no mutual promise to buy on the part of petitioners and to sell on the part of respondents. Again, the aforestated proviso in the agreement that documents pertaining to the sale and agreement of payments between the parties will follow clearly manifests lack of agreement between the parties as to the terms of the contract to sell, particularly the object and cause of the contract.

12

THIRD DIVISION The agreement in question does not create any obligatory force either for the transfer of title of the vessels, or the rendition of payments as part of the purchase price. At most, this agreement bares only their intention to enter into either a contract to sell or a contract of sale. Consequently, the courts below erred in ordering the enforcement of a contract of sale that had yet to come into existence. Instead, the instant Complaint should be dismissed. It prays for three reliefs arising from the enforcement of the document: execution by the petitioners of the necessary deed of sale over the vessels, the payment of the balance of the purchase price, and damages. The lower courts have already ruled that damages are unavailing. Our finding that there is no perfected contract of sale precludes the finding of any cause of action that would warrant the granting of the first two reliefs. No cause of action arises until there is a breach or violation thereof by either party.[24] Considering that the documents create no obligation to execute or even pursue a contract of sale, but only manifest an intention to eventually contract one, we find no rights breached or violated that would warrant any of the reliefs sought in the Complaint. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The case before the Regional Trial Court is ordered DISMISSED. No pronouncement as to costs. SO ORDERED.

PHILIPPINE FREE PRESS, INC., Petitioner, - versus COURT OF APPEALS (12th Division) and LIWAYWAY PUBLISHING, INC., Respondents.

x---------------------------------------------------------------------------------x DECISION GARCIA, J.: In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine Free Press, Inc. seeks the reversal of the Decision[1] dated February 25, 1998 of the Court of Appeals (CA) in CA-GR CV No. 52660, affirming, with modification, an earlier decision of the Regional Trial Court at Makati, Branch 146, in an action for annulment of deeds of sale thereat instituted by petitioner against the Presidential Commission for Good Government (PCGG) and the herein private respondent, Liwayway Publishing, Inc. As found by the appellate court in the decision under review, the facts are: xxx [Petitioner] . . . is a domestic corporation engaged in the publication of Philippine Free Press Magazine, one of the . . . widely circulated political magazines in the Philippines. Due to its wide circulation, the publication of the Free Press magazine enabled [petitioner] to attain considerable prestige prior to the declaration of Martial Law as well as to achieve a high profit margin. . . .

13

Sometime in . . . 1963, [petitioner] purchased a parcel of land situated at No. 2249, Pasong Tamo Street, Makati which had an area of 5,000 square meters as evidenced by . . . (TCT) No. 109767 issued by the Register of Deeds of Makati (Exh. Z). Upon taking possession of the subject land, [petitioner] constructed an office building thereon to house its various machineries, equipment, office furniture and fixture. [Petitioner] thereafter made the subject building its main office . . .

During the 1965 presidential elections, [petitioner] supported the late President Diosdado Macapagal against then Senate President Ferdinand Marcos. Upon the election of the late President Ferdinand Marcos in 1965 and prior to the imposition of Martial law on September 21, 1972, [petitioner] printed numerous articles highly critical of the Marcos administration, exposing the corruption and abuses of the regime. The [petitioner] likewise ran a series of articles exposing the plan of the Marcoses to impose a dictatorship in the guise of Martial Law . . . .In the evening of September 20, 1972, soldiers surrounded the Free Press Building, forced out its employees at gunpoint and padlocked the said establishment. The soldier in charge of the military contingent then informed Teodoro Locsin, Jr., the son of Teodoro Locsin, Sr., the President of [petitioner], that Martial Law had been declared and that they were instructed by the late President Marcos to take over the building and to close the printing press. xxx. On September 21, 1972 . . ., Teodoro Locsin, Sr. was arrested [and] . . . . was brought to Camp Crame and was subsequently transferred to the maximum security bloc at Fort Bonifacio. Sometime in December, 1972, Locsin, Sr. was informed . . . that no charges were to be filed against him and that he was to be provisionally released subject to the following conditions, to wit: (1) he remained (sic) under ‘city arrest’; xxx (5) he was not to publish the Philippine Free Press nor was he to do, say or write anything critical of the Marcos administration . . . . Consequently, the publication of the Philippine Free Press ceased. The subject building remained padlocked and under heavy military guard (TSB, 27 May 1993, pp. 51-52; stipulated). The cessation of the publication of the ... magazine led to the financial ruin of [petitioner] . . . . [Petitioner’s] situation was further aggravated when its employees demanded the payment of separation pay as a result of the cessation of its operations. [Petitioner’s] minority stockholders, furthermore, made demands that Locsin, Sr. buy out their shares. xxx. On separate occasions in 1973, Locsin, Sr. was approached by the late Atty. Crispin Baizas with offers from then President Marcos for the acquisition of the [petitioner]. However, Locsin, Sr. refused the offer stating that [petitioner] was not for sale (TSN, 2 May 1988, pp. 8-9, 40; 27 May 1993, pp. 66-67).

A few months later, the late Secretary Guillermo De Vega approached Locsin, Sr. reiterating Marcos’s offer to purchase the name and the assets of the [petitioner].xxx Sometime during the middle of 1973, Locsin, Sr. was contacted by Brig. Gen. Hans Menzi, the former aide-de-camp of then President Marcos concerning the sale of the [petitioner]. Locsin, Sr. requested that the meeting be held inside the [petitioner] Building and this was arranged by Menzi (TSN, 27 May 1993, pp. 69-70). During the said meeting, Menzi once more reiterated Marcos’s offer to purchase both the name and the assets of [petitioner] adding that “Marcos cannot be denied” (TSN, 27 May 1993, p. 71). Locsin, Sr. refused but Menzi insisted that he had no choice but to sell. Locsin, Sr. then made a counteroffer that he will sell the land, the building and all the machineries and equipment therein but he will be allowed to keep the name of the [petitioner]. Menzi promised to clear the matter with then President Marcos (TSN, 27 May 1993, p. 72). Menzi thereafter contacted Locsin, Sr. and informed him that President Marcos was amenable to his counteroffer and is offering the purchase price of Five Million Seven Hundred Fifty Thousand (P5, 750,000.00) Pesos for the land, the building, the machineries, the office furnishing and the fixtures of the [petitioner] on a “take-it-or-leave-it” basis (TSN, 2 May 1988, pp.42-43; 27 May 1993, p. 88). On August 22, 1973, Menzi tendered to Locsin, Sr. a check for One Million (P1, 000,000.00) Pesos downpayment for the sale, . . . Locsin, Sr. accepted the check, subject to the condition that he will refund the same in case the sale will not push through. (Exh. 7). On August 23, 1973, the Board of Directors of [petitioner] held a meeting and reluctantly passed a resolution authorizing Locsin, Sr. to sell the assets of the [petitioner] to Menzi minus the name “Philippine Free Press (Exhs. A-1 and 1; TSN, 27 May 1993, pp. 73-76). On October 23, 1973, the parties [petitioner, as vendor and private respondent, represented by B/Gen. Menzi, as vendee] met . . . and executed two (2) notarized Deeds of Sale covering the land, building and the machineries of the [petitioner]. Menzi paid the balance of the purchase price in the amount of . . . (P4,750,000.00) Pesos (Exhs. A and (; B and 10;TSN, 27 May 1993, pp. 81-82; 3 June 1993, p. 89). Locsin, Sr. thereafter used the proceeds of the sale to pay the separation pay of [petitioner’s] employees, buy out the shares of the minority stockholders as well as to settle all its obligations. On February 26, 1987, [petitioner] filed a complaint for Annulment of Sale against [respondent] Liwayway and the PCGG before the Regional Trail Court of Makati, Branch 146 on the grounds of vitiated consent and gross inadequacy of purchase price. On motion of defendant PCGG, the complaint against it was dismissed on October 22, 1987. (Words in bracket and underscoring added)

14

In a decision dated October 31, 1995,[2] the trial court dismissed petitioner’s complaint and granted private respondent’s counterclaim, to wit: WHEREFORE, in view of all the foregoing premises, the herein complaint for annulment of sales is hereby dismissed for lack of merit. On [respondent] counterclaim, the court finds for [respondent] and against [petitioner] for the recovery of attorney’s fees already paid for at P1,945,395.98, plus a further P316,405.00 remaining due and payable. SO ORDERED. (Words in bracket added) In time, petitioner appealed to the Court of Appeals (CA) whereat its appellate recourse was docketed as CA-G.R. C.V. No. 52660. As stated at the outset hereof, the appellate court, in a decision dated February 25, 1998, affirmed with modification the appealed decision of the trial court, the modification consisting of the deletion of the award of attorney’s fees to private respondent, thus:

B. xxx IN CONCLUDING THAT THE ACTS OF THEN PRESIDENT MARCOS DURING MARTIAL LAW DID NOT CONSTITUTE THE FORCE, INTIMIDATION, DURESS AND UNDUE INFLUENCE WHICH VITIATED PETITIONER'S CONSENT. C. xxx IN RESOLVING THE INSTANT CASE ON THE BASIS OF MERE SURMISES AND SPECULATIONS INSTEAD OF THE UNDISPUTED EVIDENCE ON RECORD. III xxx IN CONCLUDING THAT THE GROSSLY INADEQUATE PURCHASE PRICE FOR PETITIONER'S PROPERTIES DOES NOT INDICATE THE VITIATION OF PETITIONER'S CONSENT TO THE CONTRACTS OF SALE. IV xxx IN CONCLUDING THAT PETITIONER'S USE OF THE PROCEEDS OF THE SALE FOR ITS SURVIVAL CONSTITUTE AN IMPLIED RATIFICATION [OF] THE CONTRACTS OF SALE. V

WHEREFORE, with the sole modification that the award of attorney’s fees in favor of [respondent] be deleted, the Decision appealed from is hereby AFFIRMED in all respects. SO ORDERED. Hence, petitioner’s present recourse, urging the setting aside of the decision under review which, to petitioner, decided questions of substance in a way not in accord with law and applicable jurisprudence considering that the appellate court gravely erred: I

xxx IN EXCLUDING PETITIONER'S EXHIBITS “X-6” TO “X-7” AND “Y-3” (PROFFER) WHICH ARE ADMISSIBLE EVIDENCE WHICH COMPETENTLY PROVE THAT THEN PRESIDENT MARCOS OWNED PRIVATE RESPONDENT LIWAYWAY, WHICH WAS USED AS THE CORPORATE VEHICLE FOR THE ACQUISITION OF PETITIONER'S PROPERTIES. The petition lacks merit. Petitioner starts off with its quest for the allowance of the instant recourse on the submission that the martial law regime tolled the prescriptive period under Article 1391 of the Civil Code, which pertinently reads:

xxx IN ITS MISAPPLICATION OF THE DECISIONS OF THE HONORABLE COURT THAT RESULTED IN ITS ERRONEOUS CONCLUSION THAT PETITIONER'S CAUSE OF ACTION HAD ALREADY PRESCRIBED.

Article 391. The action for annulment shall be brought within four years.

II

This period shall begin:

xxx IN CONCLUDING THAT THE UNDISPUTED FACTS AND CIRCUMSTANCES PRECEDING THE EXECUTION OF THE CONTRACTS OF SALE FOR THE PETITIONER'S PROPERTIES DID NOT ESTABLISH THE FORCE, INTIMIDATION, DURESS AND UNDUE INFLUENCE WHICH VITIATED PETITIONER'S CONSENT. A. xxx IN CONSIDERING AS HEARSAY THE TESTIMONIAL EVIDENCE WHICH CLEARLY ESTABLISHED THE THREATS MADE UPON PETITIONER AND THAT RESPONDENT LIWAYWAY WILL BE USED AS THE CORPORATE VEHICLE FOR THE FORCED ACQUISITION OF PETITIONER'S PROPERTIES.

In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases. xxx

xxx

xxx

It may be recalled that the separate deeds of sale[3] sought to be annulled under petitioner’s basic complaint were both executed on October 23, 1973. Per the appellate court, citing Development Bank of the Philippines [DBP] vs. Pundogar[4], the 4-year prescriptive period for the annulment of the aforesaid deeds ended “in

15

late 1977”, doubtless suggesting that petitioner’s right to seek such annulment accrued four (4) years earlier, a starting time-point corresponding, more or less, to the date of the conveying deed, i.e., October 23, 1973. Petitioner contends, however, that the 4-year prescriptive period could not have commenced to run on October 23, 1973, martial law being then in full swing. Plodding on, petitioner avers that the continuing threats on the life of Mr. Teodoro Locsin, Sr. and his family and other menacing effects of martial law – which should be considered as force majeure ceased only after the February 25, 1986 People Power uprising. Petitioner instituted its complaint for annulment of contracts on February 26, 1987. The question that now comes to the fore is: Did the 4-year prescriptive period start to run in late October 1973, as postulated in the decision subject of review, or on February 25, 1986, as petitioner argues, on the theory that martial law has the effects of a force majeure[5], which, in turn, works to suspend the running of the prescriptive period for the main case filed with the trial court. Petitioner presently faults the Court of Appeals for its misapplication of the doctrinal rule laid down in DBP vs. Pundogar[6] where this Court, citing and quoting excerpts from the ruling in Tan vs. Court of Appeals [7], as reiterated in National Development Company vs. Court of Appeals, [8] wrote – We can not accept the petitioners’ contention that the period during which authoritarian rule was in force had interrupted prescription and that the same began to run only on February 25, 1986, when the Aquino government took power. It is true that under Article 1154 [of the Civil Code] xxx fortuitous events have the effect of tolling the period of prescription. However, we can not say, as a universal rule, that the period from September 21, 1972 through February 25, 1986 involves a force majeure. Plainly, we can not box in the "dictatorial" period within the term without distinction, and without, by necessity, suspending all liabilities, however demandable, incurred during that period, including perhaps those ordered by this Court to be paid. While this Court is cognizant of acts of the last regime, especially political acts, that might have indeed precluded the enforcement of liability against that regime and/or its minions, the Court is not inclined to make quite a sweeping pronouncement, . . . . It is our opinion that claims should be taken on a case-to-case basis. This selective rule is compelled, among others, by the fact that not all those imprisoned or detained by the past dictatorship were true political oppositionists, or, for that matter, innocent of any crime or wrongdoing. Indeed, not a few of them were manipulators and scoundrels. [Italization in the original; Underscoring and words in bracket added]

According to petitioner, the appellate court misappreciated and thus misapplied the correct thrust of the Tan case, as reiterated in DBP which, per petitioner’s own formulation, is the following:[9] The prevailing rule, therefore, is that on a case-to-case basis, the Martial Law regime may be treated as force majeure that suspends the running of the applicable prescriptive period provided that it is established that the party invoking the imposition of Martial Law as a force majeure are true oppositionists during the Martial Law regime and that said party was so circumstanced that is was

impossible for said party to commence, continue or to even resist an action during the dictatorial regime. (Emphasis and underscoring in the original) We are not persuaded. It strains credulity to believe that petitioner found it impossible to commence and succeed in an annulment suit during the entire stretch of the dictatorial regime. The Court can grant that Mr. Locsin, Sr. and petitioner were, in the context of DBP and Tan, “true oppositionists” during the period of material law. Petitioner, however, has failed to convincingly prove that Mr. Locsin, Sr., as its then President, and/or its governing board, were so circumstanced that it was well-nigh impossible for him/them to successfully institute an action during the martial law years. Petitioner cannot plausibly feign ignorance of the fact that shortly after his arrest in the evening of September 20, 1972, Mr. Locsin, Sr., together with several other journalists[10], dared to file suits against powerful figures of the dictatorial regime and veritably challenged the legality of the declaration of martial law. Docketed in this Court as GR No. L35538, the case, after its consolidation with eight (8) other petitions against the martial law regime, is now memorialized in books of jurisprudence and cited in legal publications and case studies as Aquino vs. Enrile.[11] Incidentally, Mr. Locsin Sr., as gathered from the ponencia of then Chief Justice Querube Makalintal in Aquino, was released from detention notwithstanding his refusal to withdraw from his petition in said case. Judging from the actuations of Mr. Locsin, Sr. during the onset of martial law regime and immediately thereafter, any suggestion that intimidation or duress forcibly stayed his hands during the dark days of martial law to seek judicial assistance must be rejected.[12] Given the foregoing perspective, the Court is not prepared to disturb the ensuing ruling of the appellate court on the effects of martial law on petitioner’s right of action: In their testimonies before the trial court, both Locsin, Sr. and Locsin, Jr. claimed that they had not filed suit to recover the properties until 1987 as they could not expect justice to be done because according to them, Marcos controlled every part of the government, including the courts, (TSN, 2 May 1988, pp. 23-24; 27 May 1993, p. 121). While that situation may have obtained during the early years of the martial law administration, We could not agree with the proposition that it remained consistently unchanged until 1986, a span of fourteen (14) years. The unfolding of subsequent events would show that while dissent was momentarily stifled, it was not totally silenced. On the contrary, it steadily simmered and smoldered beneath the political surface and culminated in that groundswell of popular protest which swept the dictatorship from power.[13] The judiciary too, as an institution, was no ivory tower so detached from the ever changing political climate. While it was not totally impervious to the influence of the dictatorship’s political power, it was not hamstrung as to render it inutile to perform its functions normally. To say that the Judiciary was not able to render justice to the persons who sought redress before it . . . during the Martial Law years is a sweeping and unwarranted generalization as well as an unfounded indictment. The Judiciary, . . . did not lack in gallant jurists and magistrates who refused to be cowed

16

into silence by the Marcos administration. Be that as it may, the Locsin’s mistrust of the courts and of judicial processes is no excuse for their non-observance of the prescriptive period set down by law. Corollary to the presented issue of prescription of action for annulment of contract voidable on account of defect of consent[14] is the question of whether or not duress, intimidation or undue influence vitiated the petitioner’s consent to the subject contracts of sale. Petitioner delves at length on the vitiation issue and, relative thereto, ascribes the following errors to the appellate court: first, in considering as hearsay the testimonial evidence that may prove the element of "threat" against petitioner or Mr. Locsin, Sr., and the dictatorial regime's use of private respondent as a corporate vehicle for forcibly acquiring petitioner’s properties; second, in concluding that the acts of then President Marcos during the martial law years did not have a consent-vitiating effect on petitioner; and third, in resolving the case on the basis of mere surmises and speculations.

unless the proponent can show that the evidence falls within the exceptions to the hearsay evidence rule (Citations omitted) The appellate court’s disposition on the vitiation-of-consent angle and the ratio therefor commends itself for concurrence. Jurisprudence instructs that evidence of statement made or a testimony is hearsay if offered against a party who has no opportunity to cross-examine the witness. Hearsay evidence is excluded precisely because the party against whom it is presented is deprived of or is bereft of opportunity to cross-examine the persons to whom the statements or writings are attributed.[15] And there can be no quibbling that because death has supervened, the late Gen Menzi, like the other purported Marcos subalterns, Messrs. Baizas and De Vega, cannot cross-examine the Locsins for the threatening statements allegedly made by them for the late President. Like the Court of Appeals, we are not unmindful of the exception to the hearsay rule provided in Section 38, Rule 130 of the Rules of Court, which reads:

The evidence referred to as hearsay pertains mainly to the testimonies of Messrs. Locsin, Sr. and Teodoro Locsin, Jr. (the Locsins, collectively), which, in gist, established the following facts: 1) the widely circulated Free Press magazine, which, prior to the declaration of Martial Law, took the strongest critical stand against the Marcos administration, was closed down on the eve of such declaration, which closure eventually drove petitioner to financial ruin; 2) upon Marcos’ orders, Mr. Locsin, Sr. was arrested and detained for over 2 months without charges and, together with his family, was threatened with execution; 3) Mr. Locsin, Sr. was provisionally released on the condition that he refrains from reopening Free Press and writing anything critical of the Marcos administration; and 4) Mr. Locsin, Sr. and his family remained fearful of reprisals from Marcos until the 1986 EDSA Revolution.

SEC. 38. Declaration against interest. – The declaration made by a person deceased or unable to testify, against the interest of the declarant, if the fact asserted in the declaration was at the time it was made so far contrary to the declarant's own interest, that a reasonable man in his position would not have made the declaration unless he believed it to be true, may be received in evidence against himself or his successors-in-interest and against third persons.

The appellate court, in rejecting petitioner’s above posture of vitiation of consent, observed:

However, in assessing the probative value of Gen. Menzi’s supposed declaration against interest, i.e., that he was acting for the late President Marcos when he purportedly coerced Mr. Locsin, Sr. to sell the Free Press property, we are loathed to give it the evidentiary weight petitioner endeavors to impress upon us. For, the Locsins can hardly be considered as disinterested witnesses. They are likely to gain the most from the annulment of the subject contracts. Moreover, allegations of duress or coercion should, like fraud, be viewed with utmost caution. They should not be laid lightly at the door of men whose lips had been sealed by death.[16] Francisco explains why:

It was under the above-enumerated circumstances that the late Hans Menzi, allegedly acting on behalf of the late President Marcos, made his offer to purchase the Free Press. It must be noted, however, that the testimonies of Locsin, Sr. and Locsin, Jr. regarding Menzi’s alleged implied threat that “Marcos cannot be denied” and that [respondent] was to be the corporate vehicle for Marcos’s takeover of the Free Press is hearsay as Menzi already passed away and is no longer in a position to defend himself; the same can be said of the offers to purchase made by Atty. Crispin Baizas and Secretary Guillermo de Vega who are also both dead. It is clear from the provisions of Section 36, Rule 130 of the 1989 Revised Rules on Evidence that any evidence, . . . is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand. Consequently, hearsay evidence, whether objected to or not, has no probative value

[I]t has been said that “of all evidence, the narration of a witness of his conversation with a dead person is esteemed in justice the weakest.’” One reason for its unreliability is that the alleged declarant can not recall to the witness the circumstances under which his statement were made. The temptation and opportunity for fraud in such cases also operate against the testimony. Testimony to statements of a deceased person, at least where proof of them will prejudice his estate, is regarded as an unsafe foundation for judicial action except in so far as such evidence is borne out by what is natural and probable under the circumstances taken in connection with actual known facts. And a court should be very slow to act upon the statement of one of the parties to a supposed agreement after the death of the other party; such corroborative evidence should be adduced as to satisfy the court of the truth of the story which is to benefit materially the person telling it. [17]

Per the Locsins, it was amidst the foregoing circumstances that petitioner’s property in question was sold to private respondent, represented by Gen. Menzi, who, before the sale, allegedly applied the squeeze on Mr. Locsin, Sr. thru the medium of the “Marcos cannot be denied” and “[you] have no choice but to sell” line.

17

Excepting, petitioner insists that the testimonies of its witnesses – the Locsins are not hearsay because: In this regard, hearsay evidence has been defined as “the evidence not of what the witness knows himself but of what he has heard from others.” xxx Thus, the mere fact that the other parties to the conversations testified to by the witness are already deceased does [not] render such testimony inadmissible for being hearsay. [18] xxx

xxx

perturbacion de mero hecho but a pertubacion de derecho - justified as it is by an act of government in legitimate self-defense (IFC Leasing & Acceptance Corporation v. Sarmiento Distributors Corporation, …, citing Caltex (Phils.) v. Reyes, 84 Phil. 654 [1949]. Consequently, the act of the Philippine Government in declaring martial law can not be considered as an act of intimidation of a third person who did not take part in the contract (Article 1336, Civil Code). It is, therefore, incumbent on [petitioner] to present clear and convincing evidence showing that the late President Marcos, acting through the late Hans Menzi, abused his martial law powers by forcing plaintiffappellant to sell its assets. In view of the largely hearsay nature of appellant’s evidence on this point, appellant’s cause must fall.

xxx

The testimonies of Teodoro Locsin, Sr. and Teodoro Locsin, Jr. that the late Atty. Baizas, Gen. Menzi and Secretary de Vega stated that they were representing Marcos, that “Marcos cannot be denied”, and the fact that Gen. Menzi stated that private respondent Liwayway was to be the corporate vehicle for the then President Marcos' take-over of petitioner Free Press are not hearsay. Teodoro Locsin, Sr. and Teodoro Locsin, Jr. were in fact testifying to matters of their own personal knowledge because they were either parties to the said conversation or were present at the time the said statements were made. [19]

According to petitioner, the reasoning of the appellate court is "flawed" because: [22]

Again, we disagree.

It is implicit from the foregoing reasoning of the Court of Appeals that it treated the forced closure of the petitioner's printing press, the arrest and incarceration without charges of Teodoro Locsin, Sr., the threats that he will be shot and the threats that other members of his family will be arrested as legal acts done by a dictator under the Martial Law regime. The same flawed reasoning led the Court of Appeals to the erroneous conclusion that such acts do not constitute force, intimidation, duress and undue influence that vitiated petitioner's consent to the Contracts of Sale.

Even if petitioner succeeds in halving its testimonial evidence, one-half purporting to quote the words of a live witness and the other half purporting to quote what the live witness heard from one already dead, the other pertaining to the dead shall nevertheless remain hearsay in character.

The contention is a rehash of petitioner’s bid to impute on private respondent acts of force and intimidation that were made to bear on petitioner or Mr. Locsin, Sr. during the early years of martial law. It failed to take stock of a very plausible situation depicted in the appellate court’s decision which supports its case disposition on the issue respecting vitiation. Wrote that court:

The all too familiar rule is that “a witness can testify only to those facts which he knows of his own knowledge”. [20] There can be no quibbling that petitioner’s witnesses cannot testify respecting what President Marcos said to Gen. Menzi about the acquisition of petitioner’s newspaper, if any there be, precisely because none of said witnesses ever had an opportunity to hear what the two talked about. Neither may petitioner circumvent the hearsay rule by invoking the exception under the declaration-against-interest rule. In context, the only declaration supposedly made by Gen. Menzi which can conceivably be labeled as adverse to his interest could be that he was acting in behalf of Marcos in offering to acquire the physical assets of petitioner. Far from making a statement contrary to his own interest, a declaration conveying the notion that the declarant possessed the authority to speak and to act for the President of the Republic can hardly be considered as a declaration against interest. Petitioner next assails the Court of Appeals on its conclusion that Martial Law is not per se a consent-vitiating phenomenon. Wrote the appellate court: [21]

Even assuming that the late president Marcos is indeed the owner of [respondent], it does not necessarily follow that he, acting through the late Hans Menzi, abused his power by resorting to intimidation and undue influence to coerce the Locsins into selling the assets of Free Press to them (sic). It is an equally plausible scenario that Menzi convinced the Locsins to sell the assets of the Free Press without resorting to threats or moral coercion by simply pointing out to them the hard fact that the Free Press was in dire financial straits after the declaration of Martial Law and was being sued by its former employees, minority stockholders and creditors. Given such a state of affairs, the Locsins had no choice but to sell their assets.[23] Petitioner laments that the scenario depicted in the immediately preceding quotation as a case of a court resorting to “mere surmises and speculations”, [24] oblivious that petitioner itself can only offer, as counterpoint, also mere surmises and speculations, such as its claim about Eugenio Lopez Sr. and Imelda R. Marcos offering “enticing amounts” to buy Free Press.[25]

In other words, the act of the ruling power, in this case the martial law administration, was not an act of mere trespass but a trespass in law - not a

18

It bears stressing at this point that even after the imposition of martial law, petitioner, represented by Mr. Locsin, Sr., appeared to have dared the ire of the powers-that-be. He did not succumb to, but in fact spurned offers to buy, lock-stockand-barrel, the Free Press magazine, dispatching Marcos’ emissaries with what amounts to a curt “Free Press is not for sale”. This reality argues against petitioner’s thesis about vitiation of its contracting mind, and, to be sure, belying the notion that Martial Law worked as a Sword of Damocles that reduced petitioner or Mr. Locsin, Sr. into being a mere automaton. The following excerpt from the Court of Appeals’ decision is self-explanatory: [26] Noteworthy is the fact that although the threat of arrest hung over his head like the Sword of Damocles, Locsin Sr. was still able to reject the offers of Atty. Baizas and Secretary De Vega, both of whom were supposedly acting on behalf of the late President Marcos, without being subjected to reprisals. In fact, the Locsins testified that the initial offer of Menzi was rejected even though it was supposedly accompanied by the threat that “Marcos cannot be denied”. Locsin, Sr. was, moreover, even able to secure a compromise that only the assets of the Free Press will be sold. It is, therefore, quite possible that plaintiff-appellant’s financial condition, albeit caused by the declaration of Martial Law, was a major factor in influencing Locsin, Sr. to accept Menzi’s offer. It is not farfetched to consider that Locsin, Sr. would have eventually proceeded with the sale even in the absence of the alleged intimidation and undue influence because of the absence of other buyers. Petitioner’s third assigned error centers on the gross inadequacy of the purchase price, referring to the amount of P5,775,000.00 private respondent paid for the property in question. To petitioner, the amount thus paid does not even approximate the actual market value of the assets and properties,[27] and is very much less than the P18 Million offered by Eugenio Lopez.[28] Accordingly, petitioner urges the striking down, as erroneous, the ruling of the Court of Appeals on purchase price inadequacy, stating in this regard as follows: [29]

xxx the net book value of the Properties was actually only P994,723.66 as appearing in Free Press's Balance Sheet as of November 30, 1972 (marked as Exh. 13 and Exh. V), which was duly audited by SyCip, Gorres, and Velayo, thus clearly showing that Free Press actually realized a hefty profit of P4,755,276.34 from the sale to Liwayway. Lest it be overlooked, gross inadequacy of the purchase price does not, as a matter of civil law, per se affect a contract of sale. Article 1470 of the Civil Code says so. It reads: Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. Following the aforequoted codal provision, it behooves petitioner to first prove “a defect in the consent”, failing which its case for annulment contract of sale on ground gross inadequacy of price must fall. The categorical conclusion of the Court of Appeals, confirmatory of that of the trial court, is that the price paid for the Free Press’ office building, and other physical assets is not unreasonable to justify the nullification of the sale. This factual determination, predicated as it were on offered evidence, notably petitioner’s Balance Sheet as of November 30, 1972 (Exh. 13), must be accorded great weight if not finality.[32] In the light of the foregoing disquisition, the question of whether or not petitioner’s undisputed utilization of the proceeds of the sale constitutes, within the purview of Article 1393 of the Civil Code,[33] implied ratification of the contracts of sale need not detain us long. Suffice it to state in this regard that the ruling of the Court of Appeals on the matter is well-taken. Wrote the appellate court: [34]

Furthermore, the Court of Appeals in determining the adequacy of the price for the properties and assets of petitioner Free Press relied heavily on the claim that the audited financial statements for the years 1971 and 1972 stated that the book value of the land is set at Two Hundred Thirty-Seven Thousand Five Hundred Pesos (P237,500.00). However, the Court of Appeals' reliance on the book value of said assets is clearly misplaced. It should be noted that the book value of fixed assets bears very little correlation with the actual market value of an asset. (Emphasis and underscoring in the original).

In the case at bench, Free Press’s own witnesses admitted that the proceeds of the 1973 sale were used to settle the claims of its employees, redeem the shares of its stockholders and finance the company’s entry into money-market shareholdings and fishpond business activities (TSN, 2 May 1988, pp. 16, 42-45). It need not be overemphasized that by using the proceeds in this manner, Free Press only too clearly confirmed the voluntaries of its consent and ratified the sale. Needless to state, such ratification cleanses the assailed contract from any alleged defects from the moment it was constituted (Art. 1396, Civil Code).

With the view we take of the matter, the book or actual market value of the property at the time of sale is presently of little moment. For, petitioner is effectively precluded, by force of the principle of estoppel ,[30] from cavalierly disregarding with impunity its own books of account in which the property in question is assigned a value less than what was paid therefor. And, in line with the rule on the quantum of evidence required in civil cases, neither can we cavalierly brush aside private respondent’s evidence, cited with approval by the appellate court, that tends to prove that-[31]

Petitioner’s posture that its use of the proceeds of the sale does not translate to tacit ratification of what it viewed as voidable contracts of sale, such use being a “matter of [its financial] survival”,[35] is untenable. As couched, Article 1393 of the Civil Code is concerned only with the act which passes for ratification of contract, not the reason which actuated the ratifying person to act the way he did. “Ubi lex non distinguit nec nos distinguere debemus. When the law does not distinguish, neither should we”. [36]

19

Finally, petitioner would fault the Court of Appeals for excluding Exhibits “X-6” to “X-7” and “Y-3” (proffer). These excluded documents which were apparently found in the presidential palace or turned over by the US Government to the PCGG, consist of, among others, what appears to be private respondent’s Certificate of Stock for 24,502 shares in the name of Gen. Menzi, but endorsed in blank. The proffer was evidently intended to show that then President Marcos owned private respondent, Liwayway Publishing Inc. Said exhibits are of little relevance to the resolution of the main issue tendered in this case. Whether or not the contracts of sale in question are voidable is the issue, not the ownership of Liwayway Publishing, Inc. WHEREFORE, the petition is DENIED, and the challenged decision of the Court of Appeals AFFIRMED.

Petitioners,

- versus -

Present: PUNO, Chairman, AUSTRIA-MARTINEZ, CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ.

SPS. ALEJANDRO FERNANDO, SR., and RITA FERNANDO, Promulgated: Respondents. December 9, 2005 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Costs against petitioner.

DECISION

SO ORDERED.

AUSTRIA-MARTINEZ, J.: For resolution is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated October 3, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61247, dismissing petitioners’ appeal and affirming the decision of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 79, in Civil Case No. 877-M-94. The antecedent facts are as follows: Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a 710-square meter property located in Sto. Cristo, Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr. and Rita Fernando (respondents) filed before the RTC a complaint for accion publiciana against petitioners, demanding the latter to vacate the premises and to pay the amount of P500.00 a month as reasonable rental for the use thereof. Respondents alleged in their complaint that: (1) they are owners of the property, having bought the same from the spouses Clodualdo and Teresita Glorioso (Gloriosos) per Deed of Sale dated March 9, 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell to petitioners the rear portion of the property but the transaction did not materialize due to petitioners’ failure to exercise their option; (3) the offer to sell is embodied in a Kasunduan dated August 6, 1983 executed before the Barangay Captain; (4) due to petitioners’ failure to buy the allotted portion, respondents bought the whole property from the Gloriosos; and (5) despite repeated demands, petitioners refused to vacate the property.[2]

SECOND DIVISION SPS. LUIS V. CRUZ and AIDA CRUZ,

G.R. NO. 145470

Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit in its Order dated March 6, 1995.[3] Petitioners then filed their Answer setting forth the affirmative defenses that: (1) the Kasunduan is a perfected contract of sale; (2) the agreement has already been “partially consummated” as they already relocated their house from the rear portion of the lot to the front portion that was sold to them; (3) Mrs. Glorioso prevented the complete consummation of the sale when she refused to have the exact boundaries of the lot bought by petitioners surveyed, and the existing survey was made without their knowledge and participation; and (4) respondents are buyers in bad faith having bought that portion of the lot occupied by them (petitioners) with full knowledge of the prior sale to them by the Gloriosos.[4]

20

After due proceedings, the RTC rendered a Decision on April 3, 1998 in favor of respondents. The decretal portion of the decision provides: PREMISES CONSIDERED, the herein plaintiffs was able to prove by preponderance of evidence the case of accion publiciana, against the defendants and judgment is hereby rendered as follows:

Petitioners, however, insist that the agreement was a perfected contract of sale, and their failure to pay the purchase price is immaterial. They also contend that respondents have no cause of action against them, as the obligation set in the Kasunduan did not set a period, consequently, there is no breach of any obligation by petitioners.

1. Ordering defendants and all persons claiming under them to vacate placefully (sic) the premises in question and to remove their house therefore (sic);

The resolution of the issues in this case principally is dependent on the interpretation of the Kasunduan dated August 6, 1983 executed by petitioners and the Gloriosos. The Kasunduan provided the following pertinent stipulations:

2. Ordering defendants to pay plaintiff the sum of P500.00 as reasonable rental per month beginning October 21, 1994 when the case was filed before this Court and every month thereafter until they vacate the subject premises and to pay the costs of suit.

a. Na pumayag ang mga maysumbong (referring to the Gloriosos) na pagbilhan ang mga ipinagsumbong (referring to petitioners) na bahagi ng lupa at ang ipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat;

The counter claim is hereby DISMISSED for lack of merit.

b. Na sa titulong papapanaugin ang magiging kabuuang sukat na mauukol sa mga ipinagsusumbong ay 223 metrong parisukat at ang 10 metro nito ay bilang kaloob ng mga maysumbong sa mga Ipinagsusumbong na bahagi ng right of way;

SO ORDERED.[5] Petitioners appealed the RTC decision but it was affirmed by the CA per its Decision dated October 3, 2000.

c. Na ang right of way ay may luwang na 1.75 meters magmula sa daang Lopez Jaena patungo sa likuran ng lote na pagtatayuan ng bahay ng mga Ipinagsusumbong na kanyang bibilhin;

Hence, the present petition raising the following issues: 1. Whether the Honorable Court of Appeals committed an error of law in holding that the Agreement (Kasunduan) between the parties was a “mere offer to sell,” and not a perfected “Contract of Purchase and Sale”? 2. Whether the Honorable Court of Appeals committed an error of law in not holding that where the parties clearly gave the petitioners a period of time within which to pay the price, but did not fix said period, the remedy of the vendors is to ask the Court to fix the period for the payment of the price, and not an “accion publiciana”? 3. Whether the Honorable Court of Appeals committed an error of law in not ordering respondents to at least deliver the “back portion” of the lot in question upon payment of the agreed price thereof by petitioners, assuming that the Regional Trial Court was correct in finding that the subject matter of the sale was said “back portion”, and not the “front” portion of the property? 4. Whether the Honorable Court of Appeals committed an error of law in affirming the decision of the trial court ordering the petitioners, who are possessors in good faith, to pay rentals for the portion of the lot possessed by them?[6] The RTC dwelt on the issue of which portion was being sold by the Gloriosos to petitioners, finding that it was the rear portion and not the front portion that was being sold; while the CA construed the Kasunduan as a mere contract to sell and due to petitioners’ failure to pay the purchase price, the Gloriosos were not obliged to deliver to them (petitioners) the portion being sold.

d. Na ang gugol sa pagpapasukat at pagpapanaog ng titulo ay paghahatian ng magkabilang panig na ang panig ay magbibigay ng halagang hindi kukulanging sa halagang tig-AAPAT NA DAANG PISO (P400.00); e. Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984;[7] (Emphasis supplied) Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Article 1475 of the Code further provides that the contract of sale is perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment the parties may reciprocally demand performance subject to the provisions of the law governing the form of contracts. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, as distinguished from a contract to sell where ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price.[8] Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective.

21

The Kasunduan provides for the following terms and conditions: (a) that the Gloriosos agreed to sell to petitioners a portion of the property with an area of 213 meters at the price of P40.00 per square meter; (b) that in the title that will be caused to be issued, the aggregate area is 223 square meters with 10 meters thereof serving as right of way; (c) that the right of way shall have a width of 1.75 meters from Lopez Jaena road going towards the back of the lot where petitioners will build their house on the portion of the lot that they will buy; (d) that the expenses for the survey and for the issuance of the title will be divided between the parties with each party giving an amount of no less than P400.00; and (e) that petitioners will definitely relocate their house to the portion they bought or will buy by January 31, 1984. The foregoing terms and conditions show that it is a contract to sell and not a contract of sale. For one, the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the conclusion that it is a contract to sell. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist.[9] Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale.[10] As held in Toyota Shaw, Inc. vs. Court of Appeals,[11] a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. The Kasunduan does not establish any definite agreement between the parties concerning the terms of payment. What it merely provides is the purchase price for the 213-square meter property at P40.00 per square meter. For another, the telltale provision in the Kasunduan that: “Na pumayag ang mga maysumbong na pagbilhan ang mga ipinagsumbong na bahagi ng lupa at ang ipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat,” simply means that the Gloriosos only agreed to sell a portion of the property and that the portion to be sold measures 213 square meters. Another significant provision is that which reads: “Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984.” The foregoing indicates that a contract of sale is yet to be consummated and ownership of the property remained in the Gloriosos. Otherwise, why would the alternative term “mabibili” be used if indeed the property had already been sold to petitioners. In addition, the absence of any formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership.[12] Normally, in a contract to sell, the payment of the purchase price is the positive suspensive condition upon which the transfer of ownership depends.[13] The parties, however, are not prohibited from stipulating other lawful conditions that must be fulfilled in order for the contract to be converted from a contract to sell or at the most an executory sale into an executed one.[14] In the present case, aside from the payment of the purchase price, there existed another suspensive condition, i.e.: that petitioners will relocate their house to the portion they bought or will buy by January 31, 1984.

Petitioners failed to abide by the express condition that they should relocate to the rear portion of the property being bought by January 31, 1984. Indeed, the Kasunduan discloses that it is the rear portion that was being sold by the Gloriosos, and not the front portion as petitioners stubbornly claim. This is evident from the provisions establishing a right of way from Lopez Jaena road going towards the back of the lot, and requiring them to relocate their house to the portion being sold by January 31, 1984. Petitioners are presently occupying the front portion of the property. Why the need for a right of way and for petitioners to relocate if the front portion on which their house stands is the portion being sold? This condition is a suspensive condition noncompliance of which prevented the Gloriosos from proceeding with the sale and ultimately transferring title to petitioners; and the Kasunduan from having obligatory force.[15] It is established by evidence that the petitioners did not transfer their house located in the front portion of the subject property to the rear portion which, under the Kasunduan, they intended to buy. Thus, no obligation arose on the part of the Gloriosos to consider the subject property as having been sold to petitioners because the latter’s non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Petitioners admit that they have not paid a single centavo to the Gloriosos. However, petitioners argue that their nonpayment of the purchase price was due to the fact that there is yet to be a survey made of the property. But evidence shows, and petitioners do not dispute, that as early as August 12, 1983, or six days after the execution of the Kasunduan, a survey has already been made and the property was subdivided into Lot Nos. 565-B-1 (front portion) and 565-B-2 (rear portion), with Lot No. 565-B-2 measuring 223 square meters as the portion to be bought by petitioners. Petitioners question the survey made, asserting that it is a “table survey” made without their knowledge and participation. It should be pointed out that the Kasunduan merely provides that the expenses for the survey will be divided between them and that each party should give an amount of no less than P400.00. Nowhere is it stated that the survey is a condition precedent for the payment of the purchase price. Petitioners further claim that respondents have no cause of action against them because their obligation to pay the purchase price did not yet arise, as the agreement did not provide for a period within which to pay the purchase price. They argue that respondents should have filed an action for specific performance or judicial rescission before they can avail of accion publiciana. Notably, petitioners never raised these arguments during the proceedings before the RTC. Suffice it to say that issues raised for the first time on appeal and not raised timely in the proceedings in the lower court are barred by estoppel.[16] Matters, theories or arguments not brought out in the original proceedings cannot be considered on review or appeal where they are raised for the first time. To consider the alleged facts and arguments raised belatedly would amount to trampling on the basic principles of fair play, justice and due process.[17] Moreover, it would be inutile for respondents to first petition the court to fix a period for

22

the performance of the contract. In the first place, respondents are not parties to the Kasunduan between petitioners and the Gloriosos, and they have no standing whatsoever to seek such recourse. In the second place, such recourse properly pertains to petitioners. It was they who should have sought the court’s intercession. If petitioners believed that they have an actionable contract for the sale of the property, prudence and common sense dictate that they should have sought its enforcement forthwith. Instead, petitioners whiled away their time.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated October 3, 2000 in CA-G.R. CV No. 61247 is AFFIRMED. SO ORDERED

Furthermore, there is no need for a judicial rescission of the Kasunduan for the simple reason that the obligation of the Gloriosos to transfer the property to petitioners has not yet arisen. There can be no rescission of an obligation that is nonexistent, considering that the suspensive conditions therefor have not yet happened.[18] Hence, petitioners have no superior right of ownership or possession to speak of. Their occupation of the property was merely through the tolerance of the owners. Evidence on record shows that petitioners and their predecessors were able to live and build their house on the property through the permission and kindness of the previous owner, Pedro Hipolito, who was their relative,[19] and subsequently, Teresita Glorioso, who is also their relative. They have no title or, at the very least, a contract of lease over the property. Based as it was on mere tolerance, petitioners’ possession could neither ripen into ownership nor operate to bar any action by respondents to recover absolute possession thereof.[20] There is also no merit to petitioners’ contention that respondents are buyers in bad faith. As explained in Coronel vs. Court of Appeals: In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer. [21] (Emphasis supplied) A person who occupies the land of another at the latter's forbearance or permission without any contract between them is necessarily bound by an implied promise that he will vacate upon demand.[22] Considering that petitioners’ continued possession of the property has already been rendered unlawful, they are bound to pay reasonable rental for the use and occupation thereof, which in this case was appropriately pegged by the RTC at P500.00 per month beginning October 21, 1994 when respondents filed the case against them until they vacate the premises. Finally, petitioners seek compensation for the value of the improvements introduced on the property. Again, this is the first time that they are raising this point. As such, petitioners are now barred from seeking such relief.[23]

G.R. No. L-26572 March 28, 1969 MORALES DEVELOPMENT COMPANY, INC., petitioner, vs. THE COURT OF APPEALS and HERMENEGILDO DESEO and SOCORRO DESEO respondents. Alberto R. de Joya for petitioner. Francisco Mendioro for respondents. CONCEPCION, C.J.: Petitioner, Morales Development Co., Inc, — hereafter referred to as Morales —

23

seeks the review on certiorari of a decision of the Court of Appeals reversing that of the Court of First Instance of the Province of Quezon. Hermenegildo Deseo and Socorro Deseo, respondents herein and plaintiffs below, brought this action to annul a sale to Morales of lot No. 2488 of the Cadastral Survey of Catanauan, Province of Quezon, and to secure the registration of a deed of conveyance of said lot in their (Deseos') favor. Lot No. 2488 used to belong to Enrique P. Montinola and was covered by Transfer Certificate of Title No. T-15687 of the Register of Deeds of said province, in his name. Alleging that his owner's duplicate copy of said certificate had been lost, Montinola succeeded in securing, from the Court above mentioned, an order for the issuance of a second owner's duplicate, with which he managed to sell the lot, on September 24, 1954, to Pio Reyes. Upon registration of the deed of sale to the latter, said TCT No. T15687 was cancelled and, in lieu thereof, TCT No. 21036, in the name of Reyes, was issued on November 18, 1954, Lupo Abella, married to Felisa Aguilar — hereafter referred to as the Abellas — purchased the land from Reyes, whereupon the deed of conveyance, executed by Reyes, was registered and the Abellas got TCT No. 21037 in their name, upon cancellation of said TCT No. 21036. About seven (7) months later, or on June 16, 1955, the Abellas sold the land, for P7,000, — of which P4,500 was then paid — to the Deseos, who immediately took possession of the property. It appears, however, that the first owner's duplicate of TCT No. T-15687 was either never lost or subsequently found by Montinola, who, making use of it, mortgaged C, the lot in question, before February 21, 1956, to the Philippine National Bank, for P700. Then, on the date last mentioned, Montinola sold the property to Morales, for P2,000, from which the sum due to the Bank was deducted. Upon presentation of the deed of sale in favor of Morales, the latter was advised by the office of the Register of Deeds of Quezon that said TCT No. T-15687 had already been cancelled and the property sold, first, to Pio Reyes, and, then, to the Abellas. Thereupon, Morales filed a petition for the annulment and cancellation of the second owner's copy of TCT No. T15687. After due notice to Reyes and the Abellas, but not to the Deseos, said petition was granted on March 12, 1956. Having been unable, in view of these developments, to register the deed of conveyance executed by the Abellas, the Deseos commenced, in the court aforementioned, the present action against Morales, for the annulment of the subsequent sale thereto by Montinola, and the registration of said deed of conveyance in their (Deseos) favor, alleging that the same enjoys preference over the sale to Morales, the Deseos having, prior thereto, bought lot No. 2488 in good faith and for value, and having been first in possession of said lot, likewise, in good faith. Upon the other hand, Morales claimed to have a better right upon the ground that it (Morales) had bought the property in good faith and for value, relying upon the first owner's duplicate copy of TCT No. T-15687, unlike the Deseos, whose predecessor in interest, Pio Reyes, had relied upon the second owner's duplicate, which — Morales alleged had been secured fraudulently, and that the sale to Reyes and that made by the latter to the Abellas are null and void, because both sales took place under suspicious circumstances, so that — Morales concluded — they (Reyes and the Abellas) were not purchasers in good faith and for value. After appropriate proceedings, the court of first instance sustained the contention of Morales and rendered judgment in its favor, which, on appeal taken by the Deseos, was reversed by the Court of Appeals. The dispositive part of the latter's decision reads: WHEREFORE, the judgment appealed from is hereby reversed and another one

entered in favor of the plaintiffs (Deseos) and against the defendant (Morales) declaring said plaintiffs to be the lawful and absolute owners of Lot No. 2489 of the Cadastral Survey of Catanauan, Quezon, covered by Transfer Certificate of Title No. T-21037 of the Office of the Register of Deeds of Quezon; declaring the deed of sale executed by Enrique P. Montinola in favor of defendant covering the same property as null and void; ordering the Register of Deeds of Quezon to register the deed of sale executed by the spouses Lupo Abella and Felisa Aguilar in favor of the plaintiffs dated June 16, 1955, marked Exhibit A, without cost, not having prayed for in the brief for the appellants. Hence, the present petition for review on certiorari by Morales, which insists that the Court of Appeals should have upheld its (Morales') contention adverted to above. We, however, find therein no merit. Morales maintains that the sale by Montinola to Reyes and that later made by Reyes to the Abellas are "suspicious"; that, consequently, Reyes and the Abellas were not purchasers in good faith and for value; and that these two (2) premises, in turn, lead to the conclusion that both sales are "null and void." This syllogism is obviously faulty. The major premise thereof is based upon the fact that the consideration stated in the deeds of sale in favor of Reyes and the Abellas is P1.00. It is not unusual, however, in deeds of conveyance adhering to the AngloSaxon practice of stating that the consideration given is the sum of P1.00, although the actual consideration may have been much more. Moreover, assuming that said consideration of P1.00 is suspicious, this circumstance, alone, does not necessarily justify the inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither does this inference warrant the conclusion that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent, for the assignor's liberality may be sufficient cause for a valid contract 1 , whereas fraud or bad faith may render either rescissible or voidable although valid until annulled, a contract concerning an object certain, entered into with a cause and with the consent of the contracting parties, as in the case at bar. 2 What is more, the aforementioned conveyance may not be annulled, in the case at bar, inasmuch as Reyes and the Abellas are not parties therein. Upon the other hand, the Deseos had bought the land in question for value and in good faith, relying upon the transfer certificate of title in the name of their assignors, the Abellas. The sale by the latter to the former preceded the purchase made by Morales, by about eight (8) months, and the Deseos took immediate possession of the land, which was actually held by them at the time of its conveyance to Morales by Montinola, and is in the possession of the Deseos, up to the present. Then, again TCT No. T-15687, in the name of Montinola, had been cancelled over a year before he sold the property to Morales, who, in turn, was informed of this fact, what it sought to register the deed of conveyance in its favor. It should be noted, also, that TCT No. 21037, in the name of the Abellas, on which the Deseos had relied in buying the lot in dispute, has not been ordered cancelled.lawphi1.ñet Since the object of this litigation is a registered land and the two (2) buyers thereof have so far been unable to register the deeds of conveyance in their respective favor, it follows that "the ownership" of said lot "pertain(s)" — pursuant to Article 1544 of our Civil Code 3 — to the Deseos, as the only party who took possession thereof in good faith. 4 Morales argues that it was not enough for the Deseos to have gone to the office of the Register of Deeds and found therein that there were no flaws in the title of the Abellas, and that the Deseos should have, also, ascertained why the Abellas had paid

24

only P1.00 to Reyes, and why the latter had paid the same amount to Montinola. To begin with, the Deseos did not know that said sum was the consideration paid by the Abellas to Reyes and by Reyes to Montinola. Secondly, the Deseos were not bound to check the deeds of conveyance by Reyes to the Abellas, and by Montinola to Reyes. Having found that the owner's duplicate copy of TCT No. 21037, in the name of the Abellas, was a genuine copy of the original on file with the Office of the Register of Deeds, the Deseos were fully justified in relying upon said TCT No. 21037, and had no legal obligation to make farther investigation. Thirdly, were we to adopt the process of reasoning advocated by Morales, the result would still be adverse thereto. Indeed, if it were not sufficient for the Deseos to verify in said office the genuineness of the owner's duplicate of TCT No. 21037, much less would Morales have been justified in relying upon Montinola's copy of TCT No, T15687 in his name. In fact, had Morales, at least gone to the Office of the Register of Deeds as the Deseos did — before purchasing the property in dispute, Morales would have found out, not only that TCT No. T-15687 had long been cancelled, but, also, that the property had been previously sold by Montinola to Reyes and by Reyes to the Abellas. In short, the negligence of Morales was the proximate cause of the resulting wrong, and, hence, Morales should be the party to suffer its consequences. 5 WHEREFORE, the appealed decision of the Court of Appeals should be, as it is hereby affirmed, with costs against petitioner herein, Morales Development Company, Inc. It is so ordered. Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

G.R. No. L-16590 January 30, 1965 ROBERTO LAPERAL, plaintiff-appellee, vs. HON. WILLIAM P. ROGERS, in his capacity as Attorney General of the United States, defendant-appellant, REPUBLIC OF THE PHILIPPINES, intervenor-appellant. Fidel N. Vivar for plaintiff-appellee.Lino M. Patajo for defendant-appellant.Office of the Solicitor General for intervenor-appellant. DIZON, J.:

Roberto Laperal — hereinafter referred to as appellee — was the registered owner of a residential lot and building situated at No. 1570 Arlegui St., San Miguel, Manila, covered by Transfer Certificate of Title No. 41622 of the Register of Deeds of Manila. On April 12, 1944, for the sum of P500,000.00 in Japanese Military War Notes, he executed a deed of sale conveying said property to the occupation Republic of the Philippines. As a result, T.C.T. No. 41622 was cancelled and T.C.T. No. 73102 was issued in the name of the vendee. On April 22, 1946, the Alien Property Custodian of the United States, acting under authority of the Trading With the Enemy Act, as amended, and Executive Order No. 9095 of the President of the United States, after finding that the occupation Republic was an instrumentality of the Japanese Army of occupation during the war, issued Vesting Order No. P-28 divesting the occupation Republic of its title to the aforementioned property. However, on January 9, 1947, pursuant to Executive Order No. 9818 of the President of the United States, the property was transferred to the Philippine Alien Property Administrator, to be held, used, administered, liquidated, sold or otherwise dealt with by the latter in accordance with the provisions of the Trading With the Enemy Act, as amended, and the Philippine Property Act of 1946. On April 2, 1947, appellee filed a claim for the return of the property aforesaid with the vested Property Claims Committee of the Philippine Alien Property Administrator. Because the latter failed to decide his claim, one way or the other, appellee, on July 14, 1947, commenced the present action in the Court of First Instance of Manila against James Mcl. Henderson, in his capacity as Philippine Alien Property Administrator of the United States, and the Register of Deeds of Manila, for the annulment of the abovementioned deed of sale and the issuance by the latter of the corresponding certificate of title in his name. The main allegations of the complaint were that appellee executed the deed of sale of April 12, 1944 in favor of the occupation Republic of the Philippines under duress and due to the threats employed by the representatives of the Japanese Military Administration, and that the consideration of P500,000.00 in Japanese Military notes was grossly inadequate. In his answer to the complaint, the Philippine Alien Property Administrator denied, for lack of knowledge and information, plaintiff's allegations concerning the circumstances under which the sale of the property was allegedly made. The Register of Deeds of Manila was declared in default due to his failure to answer the complaint within the reglementary period. On December 29, 1947, the Republic of the Philippines filed a motion to intervene as a party defendant on the ground that the President of the United States had authorized the transfer to it of the property in litigation, albeit the transfer could not be effected pending the final outcome of the present case under Section 9 (a) of the Trading With the Enemy Act (40 Stat. 411). Said motion was granted on January 31, 1948, and subsequently, the intervenor answered the complaint, alleging that the sale of the property to the occupation Republic was voluntary; that the conditions thereof were favorable to the vendor because the property was bought to be used as the official residence of the Speaker of the National Assembly; that the sum of P500,000.00 paid for the property was adequate consideration; and that, in the event that the court should order the return of the property to the plaintiff, the expenses it had incurred for the rehabilitation and repair of the building in question in the amount of P24,030.75 be reimbursed. On August 23, 1949, the Philippine Alien Property Administrator, with previous leave of court, filed an amended answer wherein it alleged that the claim filed by Laperal

25

with its Vested Property Claims Committee was disallowed by the latter on June 4, 1948, said decision having been affirmed by the Philippine Alien Property Administrator on November 26, 1948; that the plaintiff had profited from the use of the purchase price and is estopped from questioning the validity of the sale. As an alternative, it asked that, in the event that the deed of sale is declared null and void, plaintiff be ordered to return the purchase price of P500,000.00 with interest thereon at the rate of 6% per annum from April 12, 1944, and to pay the sum of P24,415.95 spent for the maintenance and preservation of the property in question.. On June 29, 1951, the Philippine Alien Property Administration of the United States was terminated by Executive Order No. 10254 of the President of the United States, its functions with respect to vested property, located in the Philippines having been transferred to the Attorney General of the United States. Consequently, upon motion of the latter, the Court, on August 7, 1951, ordered that the Attorney General of the United States be considered as defendant in substitution of James Mcl. Henderson, Philippine Alien Property Administrator. After due trial upon the issues thus joined, the Court rendered judgment, the dispositive part of which reads as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendant and intervenor; 1. Ordering the cancellation of the Deed of Sale dated April 12, 1944;. 2. Directing intervenor and defendant to jointly reconvey to plaintiff the property subject of the aforesaid Deed of Sale, upon refund by plaintiff to defendant of the amount of P35,714.28, which was the equivalent of the P500,000.00 Japanese Military notes paid by defendant to plaintiff, in present currency of the Philippines; 3. Ordering the intervenor Republic of the Philippines to pay plaintiff a monthly rental of P1,500.00 from the filing of the complaint in July, 1947, until the property is finally reconveyed to plaintiff; and 4. Ordering defendant and intervenor to pay attorney's fees in the sum of P10,000.00 and the costs. The main oral evidence presented by appellee to prove the duress relied upon was his testimony; that of his son Oliverio Laperal, and the deposition of Gen. Takagi Wachi, former chief of the Japanese Military Administration in the Philippines during the Japanese occupation. Summarized, it shows the following: Sometime during the first half of the month of April 1944, a group of Japanese soldiers, headed by an officer, tried twice, unsuccessfully, to see appellee at his store located on Rizal Avenue, Manila. Their third attempt, however, was successful, because when Oliverio, appellee's son, whom they found at the store, sensed that they were determined to go upstairs to search for his father, he had the latter called, and he had to go down to the store. Upon meeting him, the officer angrily asked why on their two previous visits they were unable to see him, to which appellee replied that on said occasions he was really not in the house. The officer then ordered him to go immediately to the Japanese Military Administration at Isaac Peral to see General Wachi in connection with his Arlegui property. The following day appellee went to said office where he was met by two high-ranking Japanese officers who told him that his property at Arlegui street was needed to house some distinguished guests. As he told them that he could not sell the place because he had already promised to give it to his daughter, the officers were angered and warned him that his refusal to sell was bad because it was a sign of hostility to the Japanese. He was then told to go to Malacañang. In the afternoon of that day, appellee was taken by car to his Arlegui property where General Wachi was waiting for him. Again asked why he did not want

to sell the property, appellee reiterated that he had already given it to his daughter. After Wachi had warned him that his non-cooperative attitude was dangerous, he was taken to a building located at the corner of Dewey Boulevard and Padre Faura where again Wachi asked him if he was still reluctant to sell. Replying that there was no need to buy the same as it was already being used by the Japanese , Wachi shouted at him, saying: "Don't you know that what you are doing is bad? Don't you know that we have an understanding with your government, and you are not cooperating? "Thereupon he was told to go to Malacañang the following day to receive the purchase price of his property. Early the following morning appellee went to Malacañang to seek President Laurel's help, but the latter told him that he was in no position to be of any help considering the conditions prevailing at the time, but assured him that he would be paid P500,000.00 for his property, tax-free. Later in the day appellee received a check in that amount after signing the deed of sale presented to him already prepared. The check was later deposited with the Philippine National Bank. Appellee also presented Ex-Secretary Pio Pedrosa as witness, and the latter testified that he had held several positions in the occupation government; that he was one of the witnesses to the deed of sale in question; that all purchases of lands by the Japanese Military Administration were coursed through the Philippine Government; that in the acquisition of lands, the latter had to accede to all impositions of the Japanese authorities; that it was the understanding that all vendors of real estate would be accorded the right to repurchase their property upon the termination of the so-called Greater East Asia War; and that the money paid for appellee's property came from the Japanese Military forces. Appellee's last witness was General Wachi who testified by deposition to the effect that sometime in March 1944, he began looking for a house for Gen. Teraochi who was scheduled to arrive in the Philippines about the end of April; that he found the Laperal property on Arlegui street to be suitable, and ordered a certain Captain Uga to see Laperal in connection with the purchase of the same; that Uga informed him that Laperal had stubbornly refused to sell the property, so he instructed Uga to tell Laperal to go to the office of the Japanese Military Administration; that Laperal, in fact, went to see him thereat. Aside from the above oral evidence, appellee introduced the documents marked as Exhibits A to Z-35, of which the following are, in our opinion, the important ones: Exhibit G is a letter of January 21, 1944 signed by Col. Utonomiya, military attache to the Japanese embassy, addressed to Pedro Sabido, Executive Secretary, regarding the imperative need of acquiring certain lands for the prosecution of the East Asia War; Exhibit G-1 contains the terms and conditions for the acquisition of private lands — acquisition to be made through the government of the Republic, although the payment was to be made by the Imperial Japanese Army or Navy; Exhibit H dated February 8, 1944 is a letter of Executive Secretary Sabido to the military and naval attache, indicating the readiness and cooperation of the Philippine government in the acquisition of such lands as may be desired by the Japanese forces; Exhibit T is a letter of Executive Secretary Abello to the Minister of Home Affairs requiring immediate compliance by the different offices of the government with the request of the Japanese Army for housing accommodation; Exhibit V is a communication of the Executive Secretary reiterating a prior directive on immediate action by offices and bureaus on request of the Japanese army for housing accommodation; Exhibit Z-3 is a memorandum of Vice-Minister Abello to Minister Recto dated December 16, 1943 on the coercion employed by Japanese naval personnel to compel house owners to

26

vacate their homes to be occupied by members of the Japanese navy. Upon the other hand, appellants (defendant and intervenor) presented the documents marked as Exhibits 1, 2, 3, 3-A to 3-B, 4, 4-B to 4-J, 5, 6, 6-A, 7, 8 and 9. Exhibit 1 is the alleged record of the current account of appellee with the Philippine National Bank, while Exhibits 2, 3, 3-A to 3-L refer to the cost of the repairs made on the property in question amounting to a total of P24,030.74. The other exhibits are not of moment in connection with the decisive issue involved.1äwphï1.ñët Appellants did not present any oral evidence other than the testimony of the witness who testified in connection with Exhibit 1. The issues to be resolved now are the following: (1) whether or not appellee executed the Deed of Sale of April 12, 1944 under duress and due to the threats of the Japanese army; and, in the affirmative, (2) whether or not he had ratified the sale by making use of the records thereof. With respect to the first issue, the lower court found on the basis of the evidence before it, that the sale was executed under duress. After a careful perusal of the record, we are constrained to affirm such finding, not only (a) because of the well settled rule and judicial appellate practice that, in the absence of evident error or abuse of discretion in the evaluation of the evidence, or the failure or refusal of the trial court to take into consideration some important and material fact, its findings of fact must be accepted (Valez vs. Pine, 76 Phil. 285); not only (b) because appellants presented no evidence to disprove the facts testified to by appellee and his witnesses — thus making such facts virtually undisputed, but also (c) because of the following circumstances: (1) It is of common knowledge that, during the second world war, the Japanese army of occupation in the Philippines, did occupy and take private properties in the City of Manila and elsewhere in the country without the consent of their respective owners, for their use in the prosecution of the war, resorting in some cases to the expedient of making the owners execute deeds of sale or contracts of lease; (2) It is not denied that appellee, before the war and at the time of the execution of the questioned sale, was a very rich man with extensive real state holdings principally in Manila. The record discloses in this connection, that from 1914 up to the date of the sale, he had not disposed of a single property by sale. The record further shows that at the time of the sale, he was in possession of a considerable amount of money, both in genuine Philippine currency and in Japanese military notes. Highly solvent as he was at the time, it was improbable — to say the least — that he would dispose of such valuable property as the one in question. If he had been in need of money at all, he would probably have sold some other much less desirable property. One may believe that the sale in question was voluntary only by assuming that Laperal sold the property involved to collaborate in the attainment of the ends pursued by the Japanese army of occupation — an assumption completely unjustified in this case in view of the absolute absence of evidence, direct or indirect, that Laperal collaborated or had ever intended to collaborate with the enemy. (3) The consideration paid for the property, namely the sum of P500,000.00 in Japanese military notes, was grossly inadequate. It has been agreed, for the purpose of this case, that at the time of the sale (April 1944), a pre-war Philippine peso was worth fourteen Japanese military pesos. On the other hand, the evidence of record shows that the pre-war assessed value of the property in question was P92,995.00 which, if reduced to its equivalent value in terms of Japanese military notes as of April 1944, would have amounted to around P1,300.000.00 (Japanese military notes). We must also consider the fact that the pre-war assessed value of the property did not

represent its real or actual value which could easily be around P200,000.00. Reduced to its equivalent in Japanese military notes, this would have meant around P2,800,000.00. Instead, he was merely paid P500,000.00 in Japanese military notes, or the equivalent of something around P35,000.00, Philippine currency, at the time. The transaction involved in this case is not covered by the theory of "collective" or "general" duress, according to which, the general feeling of fear which Filipinos felt for the Japanese during the years of occupation, unaccompanied by any particular coercive action on the part of the latter, does not invalidate a contract which would otherwise be valid if entered into freely during peace time. Regarding the threats faced by appellee, the trial court said the following: The evidence for the plaintiff has unmistakably shown that Roberto Laperal was inspired by a reasonable and well-grounded fear of suffering an imminent and serious injury to his person or property, including that of his family. The incidents which took place between the plaintiff, on one hand, and the Japanese soldiers, officers and General Wachi, on the other, prior to plaintiff's going to Malacañang to affix his signature on the Deed of Sale, instilled genuine fear in a man in Laperal's condition. It is of common knowledge that during those war days, an order from a mere Japanese soldier would inspire a well-grounded fear, for we know that a refusal to obey it would certainly result in the invader's committing inhuman and barbaric acts too well known and horrible to be ignored by all Filipinos during the occupation. In the case of plaintiff, he was dealing not with an ordinary Japanese soldier but, first, with a group of Japanese soldiers headed by a Japanese officer noted for their arrogance and ruthlessness, and who cowed him to go to the Office of the Japanese Military Administration, and once in that Office, he was in contact with two high-ranking Japanese officers, who were equally overbearing and who warned Laperal that his refusal to sell his property constituted a hostile act; and, lastly, with General Wachi, who reminded Laperal that non-cooperation was bad. Wachi shouted at Laperal when the latter reasoned out that be could not sell his property because he had already given it to his daughter. The Court could just imagine how Laperal must have been terrified when he was shouted at. While plaintiff was not actually threatened with being sent to the dreaded Fort Santiago or to some places in Manila which were then death or torture chambers known by all Filipinos during the occupation, yet the warnings of the Japanese officers and of General Wachi that his refusal to sell his property was bad and constituted a hostile act, were sufficient to give plaintiff an inkling of what would happen to him and his family if he show non-cooperation. How many were tortured and killed by the Japanese invaders on flimsy reasons or on signs of lack of cooperation? The Court has not forgotten incidents during the Japanese occupation which indicate in no uncertain terms the brutality which characterized the dealing of the Japanese with Filipinos. A mere failure to bow to a Japanese sentry was the cause on many occasions of Filipinos being subjected to inhuman treatment. The members of the Japanese Army and Navy were sensitive of such things as non-cooperation with them in getting food for their own use, failure to attend meetings organized by them, nonsupport of government programs by them, refusal to accept the occupation currency, etc. In the case of Laperal, the Japanese officers and General Wachi did not have to tell him that his unwillingness to sell his property which they urgently needed for the theater commander, General Teraochi, might subject him to severe penalties, for no one at that time could ignore the fact that the Japanese would not accept "no" for an answer and that the moment they were displeased, they would commit all sorts of highly inhuman acts, with or without reasons.

27

Coming to the issue of "ratification", appellants contend that appellee ratified the sale by utilizing the proceeds thereof. To support this contention, they presented the document marked as Exhibit 1 purporting to show the status of appellee's current account with the Philippine National Bank during the Japanese occupation. Aside from several deposits, amongst them being the sum of P500,048.66 deposited on April 28, 1944, it shows several withdrawals, and a remaining balance of P4,189.27. They also presented two deeds of sale executed in favor of appellee, one for a consideration of P75,000.00 on May 29, 1944 covering a parcel of land in Licab, Nueva Ecija (Exhibit 5), and another for a consideration of P250,000.00 executed on April 28, 1944 covering two lots situated in Iloilo (Exhibit 6). According to the evidence, the Philippine National Bank had been appellee's depository continuously since 1914. Because the document Exhibit 1 is incomplete and not entirely reliable, the trial judge questioned the witness presented by appellants to identify said exhibit, the result being what now appears on page 12 of the transcript for the session of July 18, 1957. THE HONORABLE COURT: Q. Who is in charge of the records? A. Another person. Q. Could you say anything about this record? A. No sir, in case of this nature, when the bank is asked to bring records to the Court the records clerk will have to retrieve that particular record and send me here. Q. Who is taking care of that record? A. The record clerk. Q. So you have nothing to do in this case except to bring this record to the Court? A. Yes. Q. What you have testified here is the only knowledge you have in this record? A. Yes, sir. As a consequence, ruling on the probative value of the document Exhibit A, the trial court held: This Exhibit 1 has no probative value at all. It was not properly identified by any witness of the defendant. The entries in said Exhibit were supposedly made way back in 1944, while the employee of the Philippine National Bank who testified on said exhibit was not the one who made the entries on Exhibit 1 or kept the books. He was a new employee, without sufficient personal knowledge of the matters he was made to testify. The above-quoted ruling of the trial court is bolstered by the fact that appellants failed to produce evidence sufficiently linking the different sums of money appearing on Exhibit 1 as having been withdrawn on different dates by appellee from his account, with the amounts allegedly paid by him for the purchase of the properties subject matter of the deeds of sale Exhibits 5, 6, 7 and 8. Not only the dates of the withdrawals but the amounts withdrawn do not tally with the dates of the sales and the different amounts paid as consideration therefore — a circumstance that demanded more imperatively the presentation of evidence on the point adverted to. In the absence thereof, we cannot simply presume that the amounts withdrawn were used by appellee for the purpose of buying other properties. We need not, however, go further discussing this point, for this reason. Among the assignment of errors submitted in the brief of appellant, the Honorable William P. Rogers, in his capacity as Attorney General of the United States (intervenor-appellant, Republic of the Philippines, filed no brief of its own but merely adopted "as its own all the errors assigned in the brief of its co-appellant"), we find no one assailing and

putting in issue this particular ruling of the trial court. The same, therefore, may not now be reviewed (Rule 51, sec. 7; Rule 56, sec. 1, Rules of Court). Upon the other hand, we find merit in the third and fourth assignment of errors made in the brief of appellants. In the former, it is contended that the lower court erred in ordering the Republic of the Philippines to pay rent for the use of the property from the date of the filing of the complaint until its reconveyance to appellee, and in the latter, that it also erred in awarding appellee the sum of P10,000.00 as attorney's fees. While it is true that during all these years the property in question has been in the possession of the Republic of the Philippines, it is nonetheless true that appellee has also been in possession of the money paid to him for the sale of said property. In the absence of concrete evidence showing considerable disparity in the benefits thus respectively derived by the two parties concerned, equity will presume that they are more or less the same. In connection with the sum of P10,000.00 awarded to appellee as attorney's fees, it does not appear that the two appellants here acted in bad faith or recklessly in sustaining the validity of the sale under question. It is not denied that neither had any part in forcing appellee to execute the sale. Besides after the pendente lite transfer of the property to it by the government of the United States, intervenor-appellant had no other reasonable recourse but to prosecute the pending case. On the other hand, the government of the United States was justified in confiscating the property upon the surrender of Japan because, although it was in the name of the occupation Republic of the Philippines, it appeared to have been really purchased by the Japanese army and paid for with funds of the latter. Therefore, in defending this suit, said party cannot be charged with notorious bad faith. Appellee, therefore, is not entitled to the rents and attorney's fees awarded to him in the decision appealed from. However, appellants' contention that the Republic of the Philippines should be reimbursed the sum of P24,030.75 representing expenses incurred for repairs made on the property in question is without merit as said repairs were made not to preserve the property or to save it from being lost, but to enable intervenor appellant to use it for its own purposes. In fact, as stated heretofore, it has enjoyed full possession and use of it since 1944. In view of what has been said heretofore, we do not deem it necessary to make a ruling on the fifth assigned error. WHEREFORE, modified as above indicated, the decision appealed from is affirmed, without costs. Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.Concepcion, J., took no part.

G.R. No. L-31018 June 29, 1973 LORENZO VELASCO AND SOCORRO J. VELASCO, petitioners, vs. HONORABLE COURT OF APPEALS and MAGDALENA ESTATE, INC., respondents. Napoleon G. Rama for petitioners. Dominador L. Reyes for private respondent.

28

CASTRO, J.: This is a petition for certiorari and mandamus filed by Lorenzo Velasco and Socorro J. Velasco (hereinafter referred to as the petitioners) against the resolution of the Court of Appeals dated June 28, 1969 in CA-G.R. 42376, which ordered the dismissal of the appeal interposed by the petitioners from a decision of the Court of First Instance of Quezon City on the ground that they had failed seasonably to file their printed record on appeal. Under date of November 3, 1968, the Court of First Instance of Quezon City, after hearing on the merits, rendered a decision in civil case 7761, dismissing the complaint filed by the petitioners against the Magdalena Estate, Inc. (hereinafter referred to as the respondent) for the purpose of compelling specific performance by the respondent of an alleged deed of sale of a parcel of residential land in favor of the petitioners. The basis for the dismissal of the complaint was that the alleged purchase and sale agreement "was not perfected". On November 18, 1968, after the perfection of their appeal to the Court of Appeals, the petitioners received a notice from the said court requiring them to file their printed record on appeal within sixty (60) days from receipt of said notice. This 60-day term was to expire on January 17, 1969. Allegedly under date of January 15, 1969, the petitioners allegedly sent to the Court of Appeals and to counsel for the respondent, by registered mail allegedly deposited personally by its mailing clerk, one Juanito D. Quiachon, at the Makati Post Office, a "Motion For Extension of Time To File Printed Record on Appeal." The extension of time was sought on the ground "of mechanical failures of the printing machines, and the voluminous printing jobs now pending with the Vera Printing Press. ..." On February 10, 1969, the petitioners filed their printed record on appeal in the Court of Appeals. Thereafter, the petitioners received from the respondent a motion filed on February 8, 1969 praying for the dismissal of the appeal on the ground that the petitioners had failed to file their printed record on appeal on time. Acting on the said motion to dismiss the appeal, the Court of Appeals, on February 25, 1969, issued the following resolution: Upon consideration of the motion of counsel for defendant-appellee praying on the grounds therein stated that the appeal be dismissed in accordance with Rules of Court, and of the opposition thereto filed by counsel for plaintiff-appellants, the Court RESOLVED to DENY the said motion to dismiss. Upon consideration of the registry-mailed motion of counsel for plaintiffs appellants praying on the grounds therein stated for an extension of 30 days from January 15, 1969 within which to file the printed record on appeal, the Court RESOLVED to GRANT the said motion and the printed record on appeal which has already been filed is ADMITTED. On March 11, 1969, the respondent prayed for a reconsideration of the abovementioned resolution, averring that the Court of Appeals had been misled bythe petitioners' "deceitful allegation that they filed the printed record on appeal within the reglementary period," because according to a certification issued by the postmaster of Makati, Rizal, the records of the said post office failed to reveal that on January 15, 1969 — the date when their motion for extension of time to file the printed record on appeal was supposedly mailed by the petitioners — there was any letter deposited there by the petitioners' counsel. The petitioners opposed the motion for reconsideration. They submitted to the appellate court the registry receipts (numbered 0215 and 0216), both stampled January 15, 1969, which were issued by the receiving clerk of the registry section of the Makati Post Office covering the mails for the

disputed motion for extension of time to file their printed record on appeal and the affidavit of its mailing clerk Juanito D. Quiachon, to prove that their motion for extension was timely filed and served on the Court of Appeals and the respondent, respectively. After several other pleadings and manifestations were filed by the parties relative to the issue raised by the respondent's above-mentioned motion for reconsideration, the Court of Appeals promulgated on June 28, 1969, its questioned resolution, the dispositive portion of which reads as follows: WHEREFORE, the motion for reconsideration filed on March 11, 1969 is granted and appeal interposed by plaintiff-appellants from the judgment of the court below is hereby dismissed for their failure to file their printed Record on Appeal within the period authorized by this Court. Atty. Patrocino R. Corpuz [counsel of the petitioner] is required to show cause within ten (10) days from notice why he should not be suspended from the practice of his necessary investigation against Juanito D. Quiachon of the Salonga, Ordoñez, Yap, Sicat & Associates Law Office, Suite 319 337 Rufino Building, Ayala Avenue, Makati Post Office, to file the appropriate criminal action against them as may be warranted in the premises, and to report to this Court within thirty (30) days the action he has taken thereon. The foregoing desposition was based on the following findings of the Court of Appeals: An examination of the Rollo of this case, particularly the letter envelope on page 26 thereof, reveals that on January 15, 1969, plaintiffs supposedly mailed via registered mail from the Post Office of Makati, Rizal their motion for extension of 30 days from that date to file their printed Record on Appeal, under registered letter No. 0216. However, in an official certification, the Postmaster of Makati states that the records of his office disclose: (a) that there were no registered letters Nos. 0215 and 0216 from the Salonga, Ordoñez, Yap, Sicat & Associates addressed to Atty. Abraham F. Sarmiento, 202 Magdalena Building, España Ext., Quezon City, and to the Court of Appeals, Manila, respectively, that were posted in the Post Office of Makati, Rizal, on January 15, 1969; (b) that there is a registered letter numbered 215 but that the same was posted on January 3, 1969 by Enriqueta Amada of 7 Angel, Pasillo F-2, Cartimar, Pasay City, as sender, and Giral Amasan of Barrio Cabuniga-an, Sto. Niño, Samar, as addressee; and that there is also a registered letter numbered 216; but that the same was likewise posted on January 3, 1969 with E.B.A. Construction of 1049 Belbar Building, Metropolitan, Pasong Tamo, Makati, as sender, and Pres. R. Nakaya of the United Pacific Trading Co., Ltd., 79, 6 Chamo, Nakatu, Yokohari, Japan, as addressee; (c) that on January 15, 1969, the registered letters posted at the Makati Post Office were numbered consecutively from 1001-2225, inclusive, and none of these letters was addressed to Atty. Abraham F. Sarmiento of to the Court of Appeals; (d) that in Registry Bill Book No. 30 for Quezon City as well as that Manila, corresponding to February 7, 1969, there are entries covering registered letters Nos. 0215 and 0216 for dispatch to Quezon City and Manila, respectively; however, such registry book for February 7, 1969 shows no letters with such numbers posted on the said date. The Acting Postmaster of the Commercial Center Post Office of Makati, Rizal, further certifies that "Registry Receipts Nos. 0215 and 0216 addressed to Atty. Abraham F. Sarmiento of the Magdalena Estate, Quezon City and the Honorable Court of Appeals, respectively, does not appear in our Registry Record Book which was allegedly posted at this office on January 15, 1969." From the foregoing, it is immediately apparent that the motion for extension of time to file their Record on Appeal supposedly mailed by the plaintiffs on January 15, 1969

29

was not really mailed on that date but evidently on a date much later than January 15, 1969. This is further confirmed by the affidavit of Flaviano Malindog, a letter carrier of the Makati Post Office, which defendant attached as Annex 1 to its supplemental reply to plaintiffs' opposition to the motion for reconsideration. In his said affidavit, Malindog swore among others: 'That on February 7, 1969, between 12:00 o'clock noon and 1:00 o'clock in the afternoon, JUANITO D. QUIACHON approached me at the Makati Post Office and talked to me about certain letters which his employer had asked him to mail and that I should help him do something about the matter; but I asked him what they were all about, and he told me that they were letters for the Court of Appeals and for Atty. Abraham Sarmiento and that his purpose was to show that they were posted on January 15, 1969; that I inquired further, and he said that the letters were not so important and that his only concern was to have them post maker January 15, 1969; 'That believing the word of JUANITO D. QUIACHON that the letters were not really important I agreed to his request; whereupon, I got two (2) registry receipts from an old registry receipt booklet which is no longer being used and I numbered them 0215 for the letter addressed to Atty. Abraham Sarmiento in Quezon City and 0216 for the letter addressed to the Court of Appeals, Manila; that I placed the same numbering on the respective envelopes containing the letters; and that I also post maker them January 15, 1969; 'That to the best of my recollection I wrote the correct date of posting, February 7, 1969, on the back of one or both of the registry receipts above mentioned; 'That the correct date of posting, February 7, 1969 also appears in the Registry Bill Books for Quezon City and Manila where I entered the subject registered letters; Of course, plaintiff's counsel denies the sworn statement of Malindog and even presented the counter-affidavit of one of his clerk by the name of Juanito D. Quiachon. But between Malindog, whose sworn statement is manifestly a declaration against interest since he can be criminally prosecuted for falsification on the basis thereof, and that of Quiachon, whose statement is self-serving, we are very much inclined to give greater weight and credit to the former. Besides, plaintiffs have not refuted the facts disclosed in the two (2) official certifications above mentioned by the Postmakers of Makati, Rizal. These two (2) certifications alone, even without to move this Court to reconsider its resolution of February 25, 1969 and order the dismissal of this appeal. On September 5, 1969, after the rendition of the foregoing resolution, the Court of Appeals promulgated another, denying the motion for reconsideration of the petitioner, but, at the same time, accepting as satisfactory the explanation of Atty. Patrocino R. Corpuz why he should not be suspended from the practice of the legal profession. On September 20, 1969, the First Assistant Fiscal of Rizal notified the Court of Appeals that he had found a prima facie case against Flaviano C. Malindog and would file the corresponding information for falsification of public documents against him. The said fiscal, however, dismissed the complaint against Quiachon for lack of sufficient evidence. The information subsequently filed against Malindog by the first Assistance Fiscal of Rizal reads as follow: That on or about the 7th day of February 1969, in the municipality of Makati, province of Rizal, and a place within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating together and mutually helping and aiding with John Doe, whose true identity and present whereabout is still unknown, did then and there willfully, unlawfully and feloniously falsify two registry receipts which are public

documents by reason of the fact that said registry receipts are printed in accordance with the standard forms prescribed by the Bureau of Posts, committed as follows: the above-named accused John Doe, on the date above-mentioned approached and induced the accused Malindog, a letter-carrier at the Makati Post Office, to postmark on Abraham Sarmiento in Quezon City, and the other to the Court of Appeals, Manila, and the accused Malindog, acceding to the inducement of, and in conspiracy with, his co-accused John Doe, did then and there willfully and feloniously falsify said registry receipts of the Makati Post Office on January 15, 1969, thereby making it appear that the said sealed envelopes addressed to Atty. Sarmiento and the Court of Appeals were actually posted, and causing it to appear that the Postmaster of Makati participated therein by posting said mail matters on January 15, 1969, when in truth and in fact he did not so participate. The petitioner contend that in promulgating its questioned resolution, the Court of Appeals acted without or in excess of jurisdiction, or with such whimsical and grave abuse of discretion as to amount to lack of jurisdiction, because (a) it declared that the motion for extension of time to file the printed record on appeal was not mailed on January 15, 1969, when, in fact, it was mailed on the record on appeal was filed only on February 10, 1969, beyond the time authorized by the appellate court, when the truth is that the said date of filing was within the 30-day extension granted by it; (c) the adverse conclusion of the appellate court are not supported by the records of the case, because the said court ignored the affidavit of the mailing clerk of the petitioners' counsel, the registry receipts and postmarked envelopes (citing Henning v. Western Equipment, 62 Phil. 579, and Caltex Phil., Inc. v. Katipunan Labor Union, 52 O.G. 6209), and, instead, chose to rely upon the affidavit of the mail carrier Malindog, which affidavit was prepared by counsel for the respondent at the affiant himself so declared at the preliminary investigation at the Fiscal's office which absolved the petitioners' counsel mailing clerk Quiachon from any criminal liability; (d) section 1, Rule 50 of the Rules of Court, which enumerates the grounds upon which the Court of Appeals may dismiss an appeal, does not include as a ground the failure to file a printed record on appeal; (e) the said section does not state either that the mismailing of a motion to extend the time to file the printed record on appeal, assuming this to be the case, may be a basis for the dismissal of the appeal; (f) the Court of Appeals has no jurisdiction to revoke the extention of time to file the printed record on appeal it had granted to the petitioners based on a ground not specified in section 1, Rule 50 of the Rules of Court; and (g) the objection to an appeal may be waived as when the appellee has allowed the record on appeal to be printed and approved (citing Moran, Vol. II, p. 519). Some of the objections raised by the petitioners to the questioned resolution of the Court of Appeals are obviously matters involving the correct construction of our rules of procedure and, consequently, are proper subjects of an appeal by way of certiorari under Rule 45 of the Rules of Court, rather than a special civil action for certiorari under Rule 65. The petitioners, however, have correctly appreciated the nature of its objections and have asked this Court to treat the instant petition as an appeal by way of certiorari under Rule 45 "in the event ... that this Honorable Supreme Court should deem that an appeal is an adequate remedy ..." The nature of the case at bar permits, in our view, a disquisition of both types of assignments. We do not share the view of the petitioners that the Court of Appeals acted without or in excess of jurisdiction or gravely abused its discretion in promulgating the questioned resolution. While it is true that stamped on the registry receipts 0215 and 0215 as well as on the

30

envelopes covering the mails in question is the date "January 15, 1969," this, by itself, does not establish an unrebuttable presumption of the fact of date of mailing. Henning and Caltex, cited by the petitioners, are not in point because the specific adjective issue resolved in those cases was whether or not the date of mailing a pleading is to be considered as the date of its filing. The issue in the case at bar is whether or not the motion of the petitioners for extension of time to file the printed record on appeal was, in point of fact, mailed (and, therefore, filed) on January 15, 1969. In resolving this issue in favor of the respondent, this Court finds, after a careful study and appraisal of the pleadings, admissions and denials respectively adduced and made by the parties, that the Court of Appeals did not gravely abuse its discretion and did not act without or in excess of its jurisdiction. We share the view of the appellate court that the certifications issued by the two postmasters of Makati, Rizal and the sworn declaration of the mail carrier Malindog describing how the said registry receipts came to be issued, are worthy of belief. It will be observed that the said certifications explain clearly and in detail how it was improbable that the petitioners' counsel in the ordinary course of official business, while Malindog's sworn statement, which constitutes a very grave admission against his own interest, provides ample basis for a finding that where official duty was not performed it was at the behest of a person interested in the petitioners' side of the action below. That at the preliminary investigation at the Fiscal's office, Malindog failed to identify Quiachon as the person who induced him to issue falsified receipts, contrary to what he declared in his affidavit, is of no moment since the findings of the inquest fiscal as reflected in the information for falsification filed against Malindog indicate that someone did induce Malindog to make and issue false registry receipts to the counsel for the petitioners. This Court held in Bello vs. Fernando 1 that the right to appeal is nota natural right nor a part of due process; it is merely a statutory privilege, and may be exercised only in the manner provided by law. In this connection, the Rule of Court expressly makes it the duty of an appellant to file a printed record on appeal with the Court of Appeals within sixty (60) record on appeal approved by the trial court has already been received by the said court. Thus, section 5 of Rule 46 states: Sec. 5. Duty of appellant upon receipt of notice. — It shall be the duty of the appellant within fifteen (15) days from the date of the notice referred to in the preceding section, to pay the clerk of the Court of Appeals the fee for the docketing of the appeal, and within sixty (60) days from such notice to submit to the court forty (40) printed copies of the record on appeal, together with proof of service of fifteen (15) printed copies thereof upon the appelee. As the petitioners failed to comply with the above-mentioned duty which the Rules of Court enjoins, and considering that, as found by the Court of Appeals, there was a deliberate effort on their part to mislead the said Court in grating them an extension of time within which to file their printed record on appeal, it stands to reason that the appellate court cannot be said to have abused its discretion or to have acted without or in excess of its jurisdiction in ordering the dismissal of their appeal. Our jurisprudence is replete with cases in which this Court dismissed an appeal on grounds not mentioned specifically in Section 1, Rule 50 of the Rules of Court. (See, for example, De la Cruz vs. Blanco, 73 Phil. 596 (1942); Government of the Philippines vs. Court of Appeals, 108 Phil. 86 (1960); Ferinion vs. Sta. Romana, L25521, February 28, 1966, 16 SCRA 370, 375). It will likewise be noted that inasmuch as the petitioners' motion for extension of the period to file the printed record on appeal was belated filed, then, it is as though the same were non-existent, since as this Court has already stated in Baquiran vs. Court

of Appeals, 2 "The motion for extension of the period for filing pleadings and papers in court must be made before the expiration of the period to be extended." The soundness of this dictum in matters of procedure is self-evident. For, were the doctrine otherwise, the uncertainties that would follow when litigants are left to determine and redetermine for themselves whether to seek further redress in court forthwith or take their own sweet time will result in litigations becoming more unreable than the very grievances they are intended to redness. The argument raised by the petitioner — that the objection to an appeal maybe waived, as when the appellee allows the record on appeal to be printed and approved — is likewise not meritorious considering that the respondent did file a motion in the Court of Appeals on February 8, 1969 praying for the dismissal of the below of the petitioners had not yet filed their record on appeal and, therefore, must be considered to have abandoned their appeal. In further assailing the questioned resolution of the Court of Appeals, the petitioners also point out that on the merits the equities of the instant case are in their favor. A reading of the record, however, persuades us that the judgment a quo is substantially correct and morally just. The appealed decision of the court a quo narrates both the alleged and proven facts of the dispute between the petitioners and the respondent, as follows: This is a suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate, Inc. on the allegation that on November 29, 1962 the plaintiff and the defendant had entered into a contract of sale (Annex A of the complaint) by virtue of which the defendant offered to sell the plaintiff and the plaintiff in turn agreed to buy a parcel of land with an area of 2,059 square meters more particularly described as Lot 15, Block 7, Psd-6129, located at No. 39 corner 6th Street and Pacific Avenue, New Manila, this City, for the total purchase price of P100,000.00. It is alleged by the plaintiff that the agreement was that the plaintiff was to give a down payment of P10,000.00 to be followed by P20,000.00 and the balance of P70,000.00 would be paid in installments, the equal monthly amortization of which was to be determined as soon as the P30,000.00 down payment had been completed. It is further alleged that the plaintiff paid down payment of P10,000.00 on November 29, 1962 as per receipt No. 207848 (Exh. "A")and that when on January 8, 1964 he tendered to the defendant the payment of the additional P20,000.00 to complete the P30,000.00 the defendant refused to accept and that eventually it likewise refused to execute a formal deed of sale obviously agreed upon. The plaintiff demands P25,000.00 exemplary damages, P2,000.00 actual damages and P7,000.00 attorney's fees. The defendant, in its Answer, denies that it has had any direct dealings, much less, contractual relations with the plaintiff regarding the property in question, and contends that the alleged contract described in the document attached to the complaint as Annex A is entirely unenforceable under the Statute of Frauds; that the truth of the matter is that a portion of the property in question was being leased by a certain Socorro Velasco who, on November 29, 1962, went to the office of the defendant indicated her desire to purchase the lot; that the defendant indicated its willingness to sell the property to her at the price of P100,000.00 under the condition that a down payment of P30,000.00 be made, P20,000.00 of which was to be paid on November 31, 1962, and that the balance of P70,000.00 including interest a 9% per annum was to be paid on installments for a period of ten years at the rate of P5,381.32 on June 30 and December of every year until the same shall have been fully paid; that on November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial payment

31

instead of the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted merely as deposited and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law the plaintiff herein; that Socorro Velasco failed to complete the down payment of P30,000.00 and neither has she paid any installments on the balance of P70,000.00 up to the present time; that it was only on January 8, 1964 that Socorro Velasco tendered payment of P20,000.00, which offer the defendant refused to accept because it had considered the offer to sell rescinded on account of her failure to complete the down payment on or before December 31, 1962. The lone witness for the plaintiff is Lorenzo Velasco, who exhibits the receipt, Exhibits A, issued in his favor by the Magdalena Estate, Inc., in the sum of P10,000.00 dated November 29, 1962. He also identifies a letter (Exh. B)of the Magdalena Estate, Inc. addressed to him and his reply thereto. He testifies that Socorro Velasco is his sisterin-law and that he had requested her to make the necessary contacts with defendant referring to the purchase of the property in question. Because he does not understand English well, he had authorized her to negotiate with the defendant in her whenever she went to the office of the defendant, and as a matter of fact, the receipt for the P10,000.00 down payment was issued in his favor. The plaintiff also depends on Exhibit A to prove that there was a perfected follows: "Earnest money for the purchase of Lot 15, Block 7, Psd-6129, Area 2,059 square meters including improvements thereon — P10,000.00." At the bottom of Exhibit A the following appears: "Agreed price: P100,000.00, P30,000.00 down payment, bal. in 10 years." To prove that the Magdalena Estate, Inc. had been dealing all along with him and not with his sister-in-law and that the Magdalena Estate, Inc. knew very well that he was the person interested in the lot in question and not his sister-in-law, the plaintiff offers in evidence five checks all drawn by him in favor of Magdalena Estate, Inc. for payment of the lease of the property. .... There does not seem to be any dispute regarding the fact that the Velasco family was leasing this property from the Magdalena Estate, Inc. since December 29, 1961; that the Velasco family sometime in 1962 offered to purchase the lot as a result of which Lorenzo Velasco thru Socorro Velasco made the P10,000.00 deposit or, in the language of the defendant 'earnest money or down payment' as evidenced by Exhibit A. The only matter that remains to be decided is whether the talks between the Magdalena Estate, Inc. and Lorenzo Velasco either directly or thru his sister-in-law Socorro Velasco ever ripened into a consummated sale. It is the position of the defendant (1) that the sale was never consummated and (2) that the contract is unenforceable under the Statute of Frauds. The court a quo agreed with the respondent's (defendant therein) contention that no contract of sale was perfected because the minds of the parties did not meet "in

regard to the manner of payment." The court a quo appraisal of this aspect of the action below is correct. The material averments contained in the petitioners' complaint themselves disclose a lack of complete "agreement in regard to the manner of payment" of the lot in question. The complaint states pertinently: 4. That plaintiff and defendant further agreed that the total down payment shall by P30,000.00, including the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said down payment of P30,000.00, the balance of P70,000.00 shall be said by the plaintiff to the defendant in 10 years from November 29, 1962; 5. That the time within the full down payment of the P30,000.00 was to be completed was not specified by the parties but the defendant was duly compensated during the said time prior to completion of the down payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant by checks drawn by plaintiff. It is not difficult to glean from the aforequoted averments that the petitioners themselves admit that they and the respondent still had to meet and agree on how and when the down-payment and the installment payments were to be paid. Such being the situation, it cannot, therefore, be said that a definite and firm sales agreement between the parties had been perfected over the lot in question. Indeed, this Court has already ruled before that a definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and unforceable contract of sale. 3 The fact, therefore, that the petitioners delivered to the respondent the sum of P10,000 as part of the down-payment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under article 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter — the terms of payment — still had to be mutually covenanted. ACCORDINGLY, the instant petitioner is hereby denied. No pronouncement as to costs. Makalintal, Makasiar and Esguerra, JJ., concur. Fernando, J., took no part. Barredo, J.: The petitioners having clearly and without sufficient justification failed to prosecute their appeal within the period allowed by the rules, I vote to deny the petition, and consistently with my view already expressed on previous occasions, any discussion of the merits of the appeal is unwarranted, particularly, in instances like the present, wherein the same does not appear to me, upon cursory examination to be beyond doubt..

32