G.R. No.

146608

October 23, 2003

SPOUSES CONSTANTE FIRME AND AZUCENA E. FIRME, petitioners, vs. UKAL ENTERPRISES AND DEVELOPMENT CORPORATION, respondent. DECISION CARPIO, J.: The Case This is a petition for review on certiorari of the Decision1 dated 3 January 2001 of the Court of Appeals in CA-G.R. CV No. 60747. The Court of Appeals reversed the Decision2 of the Regional Trial Court, Branch 223, Quezon City ("trial court"), which held that there was no perfected contract of sale since there was no consent on the part of the seller. The Facts Petitioner Spouses Constante and Azucena Firme ("Spouses Firme") are the registered owners of a parcel of land3 ("Property") located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro ("De Castro"), the vice president of Bukal Enterprises and Development Corporation ("Bukal Enterprises") authorized his friend, Teodoro Aviles ("Aviles"), a broker, to negotiate with the Spouses Firme for the purchase of the Property. On 28 March 1995, Bukal Enterprises filed a complaint for specific performance and damages with the trial court, alleging that the Spouses Firme reneged on their agreement to sell the Property. The complaint asked the trial court to order the Spouses Firme to execute the deed of sale and to deliver the title to the Property to Bukal Enterprises upon payment of the agreed purchase price. During trial, Bukal Enterprises presented five witnesses, namely, Aviles, De Castro, Antonio Moreno, Jocelyn Napa and Antonio Ancheta. Aviles testified that De Castro authorized him to negotiate on behalf of Bukal Enterprises for the purchase of the Property. According to Aviles, he met with the Spouses Firme on 23 January 1995 and he presented them with a draft deed of sale4 ("First Draft") dated February 1995. The First Draft of the deed of sale The Spouses Firme rejected this First Draft because of several objectionable conditions, including the payment of capital gains and other government taxes by the seller and the relocation of the squatters at the sellers expense. During their second meeting, Aviles presented to the Spouses Firme another draft deed of sale5 ("Second Draft") dated March 1995. The Spouses Firme allegedly accepted the Second Draft in view of the deletion of the objectionable conditions contained in the First Draft. According to Aviles, the Spouses Firme were willing to sell the Property at P4,000 per square meter. They then agreed that payment would be made at the Far East Bank and Trust Company ("FEBTC"), Padre Faura Branch, Manila. However, the scheduled payment had to be postponed due to problems in the transfer of funds. The Spouses Firme later informed Aviles that they were no longer interested in selling the Property.6 Bukal Enterprises then filed a complaint for specific performance and damages.8

The squatter families were each paid P60,000 in the presence of De Castro and Aviles. Thereafter, they voluntarily demolished their houses and vacated the Property.9 Jocelyn Mapa, the manager of FEBTC, Padre Faura Branch, testified that Bukal Enterprises has been their client since 1994. According to her, Bukal Enterprises applied for a loan of P4,500,000 on the third week of February 1995 allegedly to buy a lot in Fairview. FEBTC approved the loan on the last week of February and released the proceeds on the first week of March.10 On the other hand, Dr. Constante Firme ("Dr. Firme") was the sole witness for the defendant spouses. Dr. Firme testified that on 30 January 1995, he and his wife met with Aviles at the Aristocrat Restaurant in Quezon City. Aviles arranged the meeting with the Spouses Firme involving their Property in Fairview. Aviles offered to buy the Property at P2,500 per square meter. The Spouses Firme did not accept the offer because they were reserving the Property for their children. On 6 February 1995, the Spouses Firme met again with Aviles upon the latters insistence. Aviles showed the Spouses Firme a copy of a draft deed of sale12 ("Third Draft") which Aviles prepared. The Third Draft of the deed of sale provides: The Spouses Firme did not accept the Third Draft because they found its provisions one-sided. The Spouses Firme particularly opposed the provision on the delivery of the Propertys title to Bukal Enterprises for the latter to obtain a loan from the bank and use the proceeds to pay for the Property. The Spouses Firme repeatedly told Aviles that the Property was not for sale when Aviles called on 2 and 4 March 1995 regarding the Property. On 6 March 1995, the Spouses Firme visited their Property and discovered that there was a hollow block fence on one side, concrete posts on another side and bunkers occupied by workers of a certain Florante de Castro. On 11 March 1995, Spouses Firme visited the Property again with a surveyor. Dr. Firme talked with Ancheta who told him that the squatters had voluntarily demolished their shanties. The Spouses Firme sent a letter13 dated 20 March 1995 to Bukal Enterprises demanding removal of the bunkers and vacation by the occupants of the Property. On 22 March 1995, the Spouses Firme received a letter14 dated 7 March 1995 from Bukal Enterprises demanding that they sell the Property.15 On 7 August 1998, the trial court rendered judgment against Bukal Enterprises as follows: WHEREFORE, in the light of the foregoing premises, the above-entitled case [is] hereby DISMISSED and plaintiff BUKAL ENTERPRISES DEVELOPMENT CORPORATION is hereby ordered to pay the defendants Spouses Constante and Azucena Firme: 1. the sum of Three Hundred Thirty Five Thousand Nine Hundred Sixty Four and 90/100 (P335,964.90) as and by way of actual and compensatory damages; 2. the sum of Five Hundred Thousand Pesos (P500,000.00) as and by way of moral damages; 3. the sum of One Hundred Thousand Pesos (P100,000.00) as and by way of attorneys fees; and 4. the costs of the suit. SO ORDERED.16

Bukal Enterprises appealed to the Court of Appeals, which reversed and set aside the decision of the trial court. The dispositive portion of the decision reads: WHEREFORE, premises considered, the Decision, dated August 7, 1998, is hereby REVERSED and SET ASIDE. The complaint is granted and the appellees are directed to henceforth execute the Deed of Absolute Sale transferring the ownership of the subject property to the appellant immediately upon receipt of the purchase price of P3,224,000.00 and to perform all such acts necessary and proper to effect the transfer of the property covered by TCT No. 264243 to appellant. Appellant is directed to deliver the payment of the purchase price of the property within sixty days from the finality of this judgment. Costs against appellees. SO ORDERED.17 Hence, the instant petition.1a\^/phi1.net The Ruling of the Trial Court The trial court held there was no perfected contract of sale. Bukal Enterprises failed to establish that the Spouses Firme gave their consent to the sale of the Property. The parties did not go beyond the negotiation stage and there was no evidence of meeting of the minds between the parties. Furthermore, Aviles had no valid authority to bind Bukal Enterprises in the sale transaction. Under Sections 23 and 36 (No. 7) of the Corporation Code, the corporate power to purchase a specific property is exercised by the Board of Directors of the corporation. Without an authorization from the Board of Directors, Aviles could not validly finalize the purchase of the Property on behalf of Bukal Enterprises. There is no basis to apply the Statute of Frauds since there was no perfected contract of sale. The Ruling of the Court of Appeals The Court of Appeals held that the lack of a board resolution authorizing Aviles to act on behalf of Bukal Enterprises in the purchase of the Property was cured by ratification. Bukal Enterprises ratified the purchase when it filed the complaint for the enforcement of the sale. The Court of Appeals also held there was a perfected contract of sale. The appellate court ruled that the Spouses Firme revealed their intent to sell the Property when they met with Aviles twice. The Spouses Firme rejected the First Draft because they considered the terms unacceptable. When Aviles presented the Second Draft without the objectionable provisions, the Spouses Firme no longer had any cause for refusing to sell the Property. On the other hand, the acts of Bukal Enterprises in fencing the Property, constructing posts, relocating the squatters and obtaining a loan to purchase the Property are circumstances supporting their claim that there was a perfected contract of sale. The Spouses Firme allowed Bukal Enterprises to exercise acts of ownership over the Property when the latter introduced improvements on the Property and evicted the squatters. These acts constitute partial performance of the contract of sale that takes the oral contract out of the scope of the Statute of Frauds. The Issues The Spouses Firme raise the following issues:

1. WHETHER THE COURT OF APPEALS ERRED IN FINDING THAT THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONERS AND RESPONDENT DESPITE THE ADDUCED EVIDENCE PATENTLY TO THE CONTRARY; The Ruling of the Court The petition is meritorious. The fundamental question for resolution is whether there was a perfected contract of sale between the Spouses Firme and Bukal Enterprises. This requires a review of the factual and legal issues of this case. As a rule, only questions of law are appealable to this Court under Rule 4519 of the Rules of Civil Procedure. The findings of fact by the Court of Appeals are generally conclusive and binding on the parties and are not reviewable by this Court.20 However, when the factual findings of the Court of Appeals are contrary to those of the trial court or when the inference made is manifestly mistaken, this Court has the authority to review the findings of fact.21 Likewise, this Court may review findings of fact when the judgment of the Court of Appeals is premised on a misapprehension of facts.22 This is the situation in this case. Whether there was a perfected contract of sale We agree with the finding of the trial court that there was no perfected contract of sale. Clearly, the Court of Appeals misapprehended the facts of the case in ruling otherwise. First, the records indubitably show that there was no consent on the part of the Spouses Firme. Aviles did not present any draft deed of sale during his first meeting with the Spouses Firme on 30 January 1995.23 Dr. Firme was consistent in his testimony that he and his wife rejected the provisions of the Third Draft presented by Aviles during their second meeting on 6 February 1995. The Spouses Firme found the terms and conditions unacceptable and told Aviles that they would not sell the property.24 Aviles showed them only one draft deed of sale (Third Draft) during their second and last meeting on 6 February 1995.25 When shown a copy of the First Draft, Dr. Firme testified that it was not the deed of sale shown to them by Aviles during their second meeting26and that the Third Draft was completely different from the First Draft.27 Furthermore, Aviles admitted that the first proposal of Bukal Enterprises was at P2,500 per square meter for the Property.37 But the First, Second and Third Drafts of the deed of sale prepared by Aviles all indicated a purchase price of P4,000 per square meter or a lump sum of P3,224,000 (P4,000 per sq.m. x 806 sq.m. = P3,224,000) for the Property. Hence, Aviles could not have presented any of these draft deeds of sale to the Spouses Firme during their first meeting. Considering the glaring inconsistencies in Aviles testimony, it was proper for the trial court to give more credence to the testimony of Dr. Firme. Even after the two meetings with Aviles, the Spouses Firme were firm in their decision not to sell the Property. Aviles called the Spouses Firme twice after their last meeting. The Spouses Firme informed Aviles that they were not selling the Property. Significantly, De Castro also admitted that he was aware of the Spouses Firmes refusal to sell the Property.40 The confusing testimony of Aviles taken together with De Castros admission that he was aware of the Spouses Firmes refusal to sell the Property reinforces Dr. Firmes testimony that he and his wife never consented to sell the Property.

Consent is one of the essential elements of a valid contract. The Civil Code provides: Art. 1318. There is no contract unless the following requisites concur: 1. Consent of the contracting parties; 2. Object certain which is the subject matter of the contract; 3. Cause of the obligation which is established. The absence of any of these essential elements will negate the existence of a perfected contract of sale.41 Thus, where there is want of consent, the contract is non-existent.42 As held in Salonga, et al. v. Farrales, et al.:43 It is elementary that consent is an essential element for the existence of a contract, and where it is wanting, the contract is non-existent. The essence of consent is the conformity of the parties on the terms of the contract, the acceptance by one of the offer made by the other. The contract to sell is a bilateral contract. Where there is merely an offer by one party, without the acceptance of the other, there is no consent. (Emphasis supplied) In this case, the Spouses Firme flatly rejected the offer of Aviles to buy the Property on behalf of Bukal Enterprises. There was therefore no concurrence of the offer and the acceptance on the subject matter, consideration and terms of payment as would result in a perfected contract of sale.44 Under Article 1475 of the Civil Code, the contract of sale is perfected at the moment there is a meeting of minds on the thing which is the object of the contract and on the price. Another piece of evidence which supports the contention of the Spouses Firme that they did not consent to the contract of sale is the fact they never signed any deed of sale. If the Spouses Firme were already agreeable to the offer of Bukal Enterprises as embodied in the Second Draft, then the Spouses Firme could have simply affixed their signatures on the deed of sale, but they did not. Even the existence of a signed document purporting to be a contract of sale does not preclude a finding that the contract is invalid when the evidence shows that there was no meeting of the minds between the seller and buyer.45 In this case, what were offered in evidence were mere unsigned deeds of sale which have no probative value.46 Bukal Enterprises failed to show the existence of a perfected contract of sale by competent proof.1vvphi1.nt WHEREFORE, we SET ASIDE the Decision of the Court of Appeals and RENDER a new one: 1. Declaring that there was no perfected contract of sale; 2. Ordering Bukal Enterprises to pay the Spouses Firme P30,000 as nominal damages. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, and Azcuna, JJ., concur. Ynares-Santiago, J., on official leave.

G.R. No. 145017

January 28, 2005

DR. JOSE and AIDA YASON, petitioners, vs. FAUSTINO ARCIAGA, FELIPE NERI ARCIAGA, DOMINGO ARCIAGA, and ROGELIO ARCIAGA, respondents. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Amended Decision1 of the Court of Appeals dated September 13, 2000 in CA G.R. CV No. 55668, entitled "Faustino Arciaga, et. al. vs. Dr. Jose Yason and Aida Yason." The factual antecedents as borne by the records are: Spouses Emilio and Claudia Arciaga were owners of Lot No. 303-B situated in Barangay Putatan, Muntinlupa City, with an area of 5,274 square meters covered by TCT No. 40913 of the Registry of Deeds of Makati City. On March 28, 1983, they executed a Deed of Conditional Sale whereby they sold Lot No. 303-B for P265,000.00 to spouses Dr. Jose and Aida Yason, petitioners. They tendered an initial payment of P150,000.00. On April 19, 1983, upon payment of the balance of P115,000.00, spouses Emilio and Claudia Arciaga executed a Deed of Absolute Sale. That day, Claudia died. She was survived by her spouse and their six (6) children, namely: Faustino, Felipe Neri, Domingo, Rogelio, Virginia, and Juanita. Petitioners had the Deed of Absolute Sale registered in the Registry of Deeds of Makati City. They entrusted its registration to one Jesus Medina to whom they delivered the document of sale and the amount of P15,000.00 as payment for the capital gains tax. Without their knowledge, Medina falsified the Deed of Absolute Sale and had the document registered in the Registry of Deeds of Makati City. He made it appear that the sale took place on July 2, 1979, instead of April 19, 1983, and that the price of the lot was only P25,000.00, instead of P265,000.00. On the basis of the fabricated deed, TCT No. 40913 in the names of spouses Arciaga was cancelled and in lieu thereof, TCT No. 120869 was issued in the names of petitioners. Subsequently, petitioners had Lot No. 303-B subdivided into 23 smaller lots. Thus, TCT No. 120869 was cancelled and in lieu thereof, TCT Nos. 132942 to 132964 were issued. Petitioners then sold several lots to third persons, except the 13 lots covered by TCT Nos. 132942, 132943, 132945, 132946, 132948, 132950, 132951, 132953, 132954, 132955, 132958, 132962 and 132963, which they retained. Sometime in April 1989, spouses Arciagas children learned of the falsified document of sale. Four of them, namely: Faustino, Felipe Neri, Domingo and Rogelio, herein respondents, caused the filing with the Office of the Provincial Prosecutor of Makati City a complaint for falsification of documents against petitioners, docketed as I.S No. 89-1966. It was only after receiving the subpoena in April 1989 when they learned that the Deed of Absolute Sale was falsified. However, after the preliminary investigation, the Provincial Prosecutor dismissed the complaint for falsification for lack of probable cause. Undaunted, respondents, on October 12, 1989, filed with the Regional Trial Court (RTC), Branch 62, Makati City, a complaint for annulment of the 13 land titles, mentioned earlier, against petitioners. Respondents alleged inter alia that the Deed of Absolute Sale is void ab initio considering that (1)

Claudia Arciaga did not give her consent to the sale as she was then seriously ill, weak, and unable to talk and (2) Jesus Medina falsified the Deed of Absolute Sale; that without Claudias consent, the contract is void; and that the 13 land titles are also void because a forged deed conveys no title. In their answer, petitioners specifically denied the allegations in the complaint and averred that they validly acquired the property by virtue of the notarized Deed of Conditional Sale and the Deed of Absolute Sale executed by spouses Emilio and Claudia Arciaga, respondents parents. The Deed of Absolute Sale was duly signed by the parties in the morning of April 19, 1983 when Claudia was still alive. It was in the evening of the same day when she died. Hence, the contract of sale is valid. Furthermore, they have no participation in the falsification of the Deed of Absolute Sale by Medina. In fact, they exerted efforts to locate him but to no avail. On August 29, 1995, the trial court rendered a Decision dismissing respondents complaint and sustaining the validity of the Deed of Conditional Sale and the Deed of Absolute Sale. The dispositive portion reads: "WHEREFORE, Premises Considered, the COMPLAINT is hereby ordered DISMISSED, without pronouncement as to costs. SO ORDERED." In their appeal to the Court of Appeals, respondents alleged that the trial court clearly overlooked vital and significant facts which, if considered, would alter the result. Likewise, the trial court erred in concluding that the Deed of Absolute Sale forged by Medina transferred ownership to the vendees, being buyers in good faith; and in finding that Claudia Arciaga consented to the sale of the lots to petitioner spouses.2 Initially, the Court of Appeals in its Decision dated February 21, 2000 affirmed the trial courts ruling. But upon respondents motion for reconsideration, the Appellate Court reconsidered its Decision. In its Amended Decision, it declared the Deed of Absolute Sale void, thus: "WHEREFORE, Our decision dated February 21, 2000 is hereby SET ASIDE. The Deed of Absolute Sale dated April 19, 1983 is hereby declared null and void. The Registry of Deeds for Makati City is hereby ordered to cancel TCT Nos. 132942, 132943, 132945, 132946, 132948, 132950, 132951, 132953, 132954, 132955, 132958, 132962 and 132963 issued in the name of Jose Yason and to reinstate TCT No. 40913 in the name of Emilio Arciaga. SO ORDERED." In reversing its own Decision, the Appellate Court held: "There is no evidence showing that said July 2, 1979 Deed of Absolute Sale covering the subject property was ever executed by the parties. The appellees themselves who were supposedly the vendees did not even know of the existence of such sale. What the appellees were claiming was that they entrusted to one Jesus Medina the original copies of the purported Deed of Absolute Sale dated April 19, 1983 and the owners copy of TCT No. 40913 together with the amount of P15,000.00 for capital gains tax and expenses for registration. xxx

It turned out that Medina did not use the Deed of Sale dated April 19, 1983 but fabricated a Deed of Absolute Sale dated July 2, 1979 with a reduced consideration of P25,000.00. xxx Being a forged document, the July 2, 1979 Deed of Absolute Sale is indeed null and void. It appears, however, that a Deed of Conditional Sale dated March 28, 1983 (Exh. 1, Record, p. 289) and a Deed of Absolute Sale dated April 19, 1983 (Exh. 2, Record, p. 290) were purportedly executed by Emilio Arciaga and the appellees and that the said property was allegedly sold for P265,000.00. xxx The curious part about the controversial deeds is the date of their supposed execution, especially the date of the Absolute Deed of Sale which coincides with the date of the death of Claudia Arciaga. Also intriguing is the fact that only a thumbmark and not a signature of Claudia Arciaga was affixed on the supposed deeds, when in fact she could definitely read and write. Appellants claimed that their mother Claudia Rivera never gave her consent to the sale. They said that the thumbmark of their mother Claudia Arciaga was allegedly fixed on the Deed of Conditional Sale, if indeed it was prepared before the death of their mother on April 19, 1983, when she was already very ill and bedridden and could not anymore give her consent thereto, and the Deed of Absolute Sale was thumbmarked when she was already dead. xxx As between the testimony of the appellants and their sister Virginia Arciaga-Reyes, We are inclined to believe the claim of the former that their mother Claudia Rivera Arciaga died at around 10:00 in the morning. xxx The time when Claudia Rivera Arciaga actually died, to Us, is crucial if only to determine the credibility of witnesses. As between Virginia Arciaga Reyes and Jacklyn de Mesa, the latter is more credible.l^vvphi1.net She did not have any interest in the controverted property, unlike the appellants and Virginia Reyes, who are the children of Claudia Rivera Arciaga. The cardinal rule in the law of evidence is that the testimony must not only proceed from the mouth of a credible witness but must also be credible in itself (People vs. Serdan, G.R. 87318, September 2, 1992). xxx We certainly cannot believe the testimony of Virginia Arciaga Reyes that her mother Claudia went to the house of Atty. Fresnedi for the execution of the Deed of Conditional Sale. A person who is physically fit to travel can definitely write his signature, as only minimal effort is needed to perform this simple mechanical act. But what appeared in the deed was only a purported thumb mark of Claudia. Even Virginia Reyes said that her mother could write. Her testimony only supports the claim of the appellants that Claudia Rivera Arciaga was already very ill and weak when the Deed of

Conditional Sale was purportedly executed, and was already dead when she was made to affix her thumb mark on the Deed of Absolute Sale. xxx In sum, the inconsistent testimonies of the appellee and his witnesses, particularly that of Virginia Arciaga Reyes, clearly show that Claudia Rivera Arciaga did not voluntarily affix her thumb mark on the Deed of Conditional Sale and Deed of Absolute Sale." Hence, this petition for review on certiorari alleging that the Court of Appeals erred in declaring the Deed of Absolute Sale void for lack of consent on the part of Claudia Arciaga and because the same document was forged by Medina. The petition is impressed with merit. The rule is that only questions of law may be raised in a petition for review on certiorari; and that the factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are final and conclusive on this Court.3 However, there are exceptions, such as when the findings of the Court of Appeals are contrary to those of the trial court,4 as in this case. In determining whether the Deed of Absolute Sale dated April 19, 1983 is valid, it must contain the essential requisites of contracts, viz: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.5 A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.6 Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.7 To enter into a valid legal agreement, the parties must have the capacity to do so. The law presumes that every person is fully competent to enter into a contract until satisfactory proof to the contrary is presented. The burden of proof is on the individual asserting a lack of capacity to contract, and this burden has been characterized as requiring for its satisfaction clear and convincing evidence. The Appellate Court, in its Amended Decision, held that the Deed of Absolute Sale is void for lack of consent on the part of Claudia Arciaga who could not have affixed her thumbmark thereon since she was very ill then. In fact, she died a few hours thereafter. Thus, the basic issue for our resolution is whether Claudia Arciaga voluntarily affixed her thumbmark on the documents of sale. Respondents contend that Claudia did not give her consent to the contracts of sale. Since she knew how to read and write, she should have signed each document instead of merely affixing her thumbmark thereon. Domingo Arciaga, one of the respondents, testified that her mother Claudia was 82 years old when she died on April 19, 1983 due to "old age" and illness for four (4) months. On March 28, 1983, when the Conditional Deed of Sale was allegedly executed, she was already very weak and thin and could no longer speak. Considering her physical condition, she could not have affixed her thumbmark on the Conditional Deed of Sale that day.8

Domingo further testified that their mother Claudia, at the time of her death, was being attended to by his sisters Juanita and Virginia Arciaga; that he saw Virginia holding the thumb of their mother to enable her to affix her thumbmark on the Deed of Absolute Sale, then being held by Juanita, thus: "Q: Now, you have examined the document entitled Deed of Sale dated April 19, 1983, when for the first time did you see this document? A: When my mother died. Q: When? A: April 19, 1983. Q: At what particular occasion or will you please tell the Honorable Court the circumstances how you were able to see this document on April 19, 1983? A: This is like this. While my mother was being attended, I went over to the porch and I saw Mr. Rogelio Arciaga. We talked with each other. After that I went inside the house wherein I saw Juliana Arciaga holding that document, the Deed of Sale, and Virginia Arciaga was holding the thumb of mother affixing said thumb to the document. Q: Who is Virginia Arciaga? A: My sister. Q: How about Juanita Arciaga? A: My sister also. Q: How about Rogelio Arciaga? A: I have also a brother named Rogelio Arciaga but the one I mentioned has the same name as my brother. Q: After that what happened? A: I asked, what is that? And they told me that one parcel of land was sold already by us and they said that this is the Deed of Absolute Sale as proof that we have sold that parcel of land. I asked them: Why did you do that? It cannot be! Our mother is a good mother, why still permit her to commit a sin. Q: After that what happened next? A: They told me that they are not going to pursue with it and I told them it cannot be really done."9 Domingos testimony was corroborated by his brother Felipe Arciaga who testified that their mother was already dead when her thumbmark was affixed on the document of sale, thus:

"Q: Did you hear any conversation between Domingo and your sisters holding the document? A: Yes, sir. Q: What was the conversation that you heard? A: My brother said that it should not be thumbmarked since my mother is already dead. My sisters Virginia and Juanita replied that the thumb marking will no longer proceed."10 Upon the other hand, petitioners maintain that Claudia voluntarily affixed her thumbmark on the Deeds of Conditional and Absolute Sale which were notarized by Atty. Jaime Fresnedi. and Absolute Sale which were notarized by Atty. Jaime Fresnedi. Virginia Arciaga Andres, daughter of Claudia, testified that she took care of her mother. Five (5) months prior to the execution of the Conditional Deed of Sale on March 28, 1983, her parents informed her and her siblings that they would sell their land. After the sale, her brother Felipe Neri borrowed P50,000.00 from their father. Her father signed the two documents of sale, while her mother affixed her thumbmark thereon. Then Atty. Jaime Fresnedi notarized the Conditional Deed of Sale in his office, while the Deed of Absolute Sale was notarized in her house. Her brothers (respondents herein) were all notified of the sale.111awphi1.nt Atty. Jaime Fresnedi testified that he notarized the subject documents and knew that Claudia affixed her thumbmark thereon, thus: "Q: What is the importance of the signatures in these two (2) documents? A: That the parties who executed these documents appeared before me, your Honor. xxx Q: And when did you notarize the said document, this Deed of Absolute Sale dated April 19, 1983? A: It was notarized in the same date. Q: Where was it notarized? A: It was also notarized in my office. A: Yes, sir.12 xxx Q: Do you know personally Claudia Arciaga, the wife of Emilio Arciaga? A: No, I do not know her personally. xxx

Q: Prior to the execution of this document, Absolute Deed of Sale dated April 19, 1983, have you not met Claudia Rivera? A: I cannot remember. xxx Q: When you notarized this document on April 19, 1983, did you talk to Claudia Rivera? A: I cannot remember.13 xxx COURT: Q: Did you ascertain whether the person who affixed that thumbmark was really CLAUDIA ARCIAGA? A: Yes, your Honor. Q: What means did you take to ascertain that the one who affixed that thumbmark was CLAUDIA ARCIAGA? A: Because, your Honor, when there is a party, not necessarily your Honor in this case, whenever a party would request me to prepare a document and notarize such document, I asked his name and he answered. Let us say for example, this Mr. dela Cruz, he says he is Mr. dela Cruz or Mrs. Arciaga. That thru that introduction I knew that they were the ones who affixed their signatures or affix their thumbmarks. Q: In this particular case, did you do that? A: Yes, your Honor."14 The Court of Appeals, reversing the trial court, held that respondents were able to prove that Claudia Arciaga could not have affixed her thumbmark voluntarily on the Conditional Deed of Sale as "she was already very ill and bedridden and could not anymore give her consent thereto;" and that "the Absolute Deed of Sale was thumbmarked when she was already dead." While it is true that Claudia was sick and bedridden, respondents failed to prove that she could no longer understand the terms of the contract and that she did not affix her thumbmark thereon. Unfortunately, they did not present the doctor or the nurse who attended to her to confirm that indeed she was mentally and physically incapable of entering into a contract. Mere weakness of mind alone, without imposition of fraud, is not a ground for vacating a contract.15 Only if there is unfairness in the transaction, such as gross inadequacy of consideration, the low degree of intellectual capacity of the party, may be taken into consideration for the purpose of showing such fraud as will afford a ground for annulling a contract.16 Hence, a person is not incapacitated to enter into a contract merely because of advanced years or by reason of physical infirmities, unless such age and infirmities impair his mental faculties to the extent that he is unable to properly, intelligently and fairly understand the provisions of said contract. Respondents failed to show that Claudia was deprived of reason or that her condition hindered her from freely exercising her own will at the time of the execution of the Deed of Conditional Sale.

Also, it is of no moment that Claudia merely affixed her thumbmark on the document. The signature may be made by a persons cross or mark even though he is able to read and write and is valid if the deed is in all other respects a valid one.17 Significantly, there is no evidence showing that Claudia was forced or coerced in affixing her thumbmark on the Deed of Conditional Sale. Respondents insist that their mother died in the morning of April 19, 1983, hence, she could no longer affix her thumbmark on the Deed of Absolute Sale. Petitioners, however, maintain that she died in the evening of that day and that she affixed her thumbmark on the deed in the morning of that same day. Respondents should have offered in evidence the Certificate of Death of Claudia to show the exact date and time of her death. Again, they should have presented the attending physician to testify whether or not Claudia could still affix her thumbmark then. As earlier mentioned, the burden is on the respondents to prove the lack of capacity on the part of Claudia to enter into a contract. And in proving this, they must offer clear and convincing evidence. This they failed to do. The Court of Appeals also held that there is inconsistency in the testimonies of Virginia Arciaga and Atty. Jaime Fresnedi. While Virginia testified that the Deed of Absolute Sale was notarized in her house where Claudia lived, Atty. Fresnedi declared on the witness stand that he notarized the document in his office. The Appellate Court concluded that such inconsistency clearly shows that Claudia did not voluntarily affix her thumbmark on the document of absolute sale. Records disclose, however, that when Atty. Fresnedi testified in court, nine (9) years had passed from the time he notarized the Deed of Absolute Sale. Considering the length of time that passed and the numerous documents he must have notarized, his failure to remember exactly where he notarized the contract of sale is understandable. Thus, we cannot sustain the finding and conclusion of the Court of Appeals on this point.l^vvphi1.net In Chilianchin vs. Coquinco,18 this Court held that a notarial document must be sustained in full force and effect so long as he who impugns it does not present strong, complete, and conclusive proof of its falsity or nullity on account of some flaws or defects provided by law. Here, respondents failed to present such proof. It bears emphasis that a notarized Deed of Absolute Sale has in its favor the presumption of regularity, and it carries the evidentiary weight conferred upon it with respect to its execution.19 All told, we are convinced and so hold that there was consent on the part of Claudia Arciaga when she executed the Conditional Deed of Sale and the Deed of Absolute Sale being assailed by respondents. These documents, therefore, are valid. WHEREFORE, the challenged Decision of the Court of Appeals in CA-G.R. CV No. 55668 is REVERSED. The Decision of the RTC, Branch 62, Makati City dismissing respondents complaint is AFFIRMED. SO ORDERED.

G.R. No. 135634 May 31, 2000 HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, petitioners, vs. VICENTE RODRIGUEZ, respondent.

MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals 1 reversing the decision of the Regional Trial Court, Naga City, Branch 19, in Civil Case No. 87-1335, as well as the appellate court's resolution denying reconsideration. The antecedent facts are as follows: Juan San Andres was the registered owner of Lot No. 1914-B-2 situated in Liboton, Naga City. On September 28, 1964, he sold a portion thereof, consisting of 345 square meters, to respondent Vicente S. Rodriguez for P2,415.00. The sale is evidenced by a Deed of Sale. 2 Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial administrator of the decedent's estate in Special Proceedings No. R-21, RTC, Branch 19, Naga City. Ramon San Andres engaged the services of a geodetic engineer, Jose Peero, to prepare a consolidated plan (Exh. A) of the estate. Engineer Peero also prepared a sketch plan of the 345square meter lot sold to respondent. From the result of the survey, it was found that respondent had enlarged the area which he purchased from the late Juan San Andres by 509 square meters. 3 Accordingly, the judicial administrator sent a letter, 4 dated July 27, 1987, to respondent demanding that the latter vacate the portion allegedly encroached by him. However, respondent refused to do so, claiming he had purchased the same from the late Juan San Andres. Thereafter, on November 24, 1987, the judicial administrator brought an action, in behalf of the estate of Juan San Andres, for recovery of possession of the 509-square meter lot. In his Re-amended Answer filed on February 6, 1989, respondent alleged that apart from the 345square meter lot which had been sold to him by Juan San Andres on September 28, 1964, the latter likewise sold to him the following day the remaining portion of the lot consisting of 509 square meters, with both parties treating the two lots as one whole parcel with a total area of 854 square meters. Respondent alleged that the full payment of the 509-square meter lot would be effected within five (5) years from the execution of a formal deed of sale after a survey is conducted over said property. He further alleged that with the consent of the former owner, Juan San Andres, he took possession of the same and introduced improvements thereon as early as 1964. As proof of the sale to him of 509 square meters, respondent attached to his answer a receipt (Exh. 2) 5 signed by the late Juan San Andres, which reads in full as follows: Received from Vicente Rodriguez the sum of Five Hundred (P500.00) Pesos representing an advance payment for a residential lot adjoining his previously paid lot on three sides excepting on the frontage with the agreed price of Fifteen (15.00) Pesos per square meter and the payment of the full consideration based on a survey shall be due and payable in five (5) years period from the execution of the formal

deed of sale; and it is agreed that the expenses of survey and its approval by the Bureau of Lands shall be borne by Mr. Rodriguez. Naga City, September 29, 1964. Respondent also attached to his answer a letter of judicial administrator Ramon San Andres (Exh. 3), 6asking payment of the balance of the purchase price. The letter reads: Dear Inting, Please accommodate my request for Three Hundred (P300.00) Pesos as I am in need of funds as I intimated to you the other day. We will just adjust it with whatever balance you have payable to the subdivision. Thanks. Respondent deposited in court the balance of the purchase price amounting to P7,035.00 for the aforesaid 509-square meter lot. While the proceedings were pending, judicial administrator Ramon San Andres died and was substituted by his son Ricardo San Andres. On the other band, respondent Vicente Rodriguez died on August 15, 1989 and was substituted by his heirs. 7 Petitioner, as plaintiff, presented two witnesses. The first witness, Engr. Jose Peero, 8 testified that based on his survey conducted sometime between 1982 and 1985, respondent had enlarged the area which he purchased from the late Juan San Andres by 509 square meters belonging to the latter's estate. According to Peero, the titled property (Exh. A-5) of respondent was enclosed with a fence with metal holes and barbed wire, while the expanded area was fenced with barbed wire and bamboo and light materials. The second witness, Ricardo San Andres, 9 administrator of the estate, testified that respondent had not filed any claim before Special Proceedings No. R-21 and denied knowledge of Exhibits 2 and 3. However, he recognized the signature in Exhibit 3 as similar to that of the former administrator, Ramon San Andres. Finally, he declared that the expanded portion occupied by the family of respondent is now enclosed with barbed wire fence unlike before where it was found without fence. On the other hand, Bibiana B. Rodriguez, 10 widow of respondent Vicente Rodriguez, testified that they had purchased the subject lot from Juan San Andres, who was their compadre, on September 29, 1964, at P15.00 per square meter. According to her, they gave P500.00 to the late Juan San Andres who later affixed his signature to Exhibit 2. She added that on March 30, 1966; Ramon San Andres wrote them a letter asking for P300.00 as partial payment for the subject lot, but they were able to give him only P100.00. She added that they had paid the total purchase price of P7,035.00 on November 21, 1988 by depositing it in court. Bibiana B. Rodriquez stated that they had been in possession of the 509-square meter lot since 1964 when the late Juan San Andres signed the receipt. (Exh. 2) Lastly, she testified that they did not know at that time the exact area sold to them because they were told that the same would be known after the survey of the subject lot. On September 20, 1994, the trial court 11 rendered judgment in favor of petitioner. It ruled that there was no contract of sale to speak of for lack of a valid object because there was no sufficient

indication in Exhibit 2 to identify the property subject of the sale, hence, the need to execute a new contract. Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered a decision reversing the decision of the trial court. The appellate court held that the object of the contract was determinable, and that there was a conditional sale with the balance of the purchase price payable within five years from the execution of the deed of sale. The dispositive portion of its decision's reads: IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the complaint and rendering judgment against the plaintiff-appellee: 1. to accept the P7,035.00 representing the balance of the purchase price of the portion and which is deposited in court under Official Receipt No. 105754 (page 122, Records); 2. to execute the formal deed of sale over the said 509 square meter portion of Lot 1914-B-2 in favor of appellant Vicente Rodriguez; 3. to pay the defendant-appellant the amount of P50,000.00 as damages and P10,000.00 attorney's fees as stipulated by them during the trial of this case; and 4. to pay the costs of the suit. SO ORDERED. Hence, this petition. Petitioner assigns the following errors as having been allegedly committed by the trial court: I. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE DOCUMENT (EXHIBIT "2") IS A CONTRACT TO SELL DESPITE ITS LACKING ONE OF THE ESSENTIAL ELEMENTS OF A CONTRACT, NAMELY, OBJECT CERTAIN AND SUFFICIENTLY DESCRIBED. II. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS OBLIGED TO HONOR THE PURPORTED CONTRACT TO SELL DESPITE NON-FULFILLMENT BY RESPONDENT OF THE CONDITION THEREIN OF PAYMENT OF THE BALANCE OF THE PURCHASE PRICE. III. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT CONSIGNATION WAS VALID DESPITE NON-COMPLIANCE WITH THE MANDATORY REQUIREMENTS THEREOF. IV. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT LACHES AND PRESCRIPTION DO NOT APPLY TO RESPONDENT WHO SOUGHT INDIRECTLY TO ENFORCE THE PURPORTED CONTRACT AFTER THE LAPSE OF 24 YEARS.

The petition has no merit. First. Art. 1458 of the Civil Code provides: By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. As thus defined, the essential elements of sale are the following: a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b) Determinate subject matter; and, c) Price certain in money or its equivalent. 12 As shown in the receipt, dated September 29, 1964, the late Juan San Andres received P500.00 from respondent as "advance payment for the residential lot adjoining his previously paid lot on three sides excepting on the frontage; the agreed purchase price was P15.00 per square meter; and the full amount of the purchase price was to be based on the results of a survey and would be due and payable in five (5) years from the execution of a deed of sale. Petitioner contends, however, that the "property subject of the sale was not described with sufficient certainty such that there is a necessity of another agreement between the parties to finally ascertain the identity; size and purchase price of the property which is the object of the alleged sale." 1 He argues that the "quantity of the object is not determinate as in fact a survey is needed to determine its exact size and the full purchase price therefor" 14In support of his contention, petitioner cites the following provisions of the Civil Code: Art. 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not determinable shall not be an obstacle to the existence of a contract, provided it is possible to determine the same without the need of a new contract between the parties. Art. 1460. . . . The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new and further agreement between the parties. Petitioner's contention is without merit. There is no dispute that respondent purchased a portion of Lot 1914-B-2 consisting of 345 square meters. This portion is located in the middle of Lot 1914-B-2, which has a total area of 854 square meters, and is clearly what was referred to in the receipt as the "previously paid lot." Since the lot subsequently sold to respondent is said to adjoin the "previously paid lot" on three sides thereof, the subject lot is capable of being determined without the need of any new contract. The fact that the exact area of these adjoining residential lots is subject to the result of a survey does not detract from the fact that they are determinate or determinable. As the Court of Appeals explained: 15

Concomitantly, the object of the sale is certain and determinate. Under Article 1460 of the New Civil Code, a thing sold is determinate if at the time the contract is entered into, the thing is capable of being determinate without necessity of a new or further agreement between the parties. Here, this definition finds realization. Appellee's Exhibit "A" (page 4, Records) affirmingly shows that the original 345 sq. m. portion earlier sold lies at the middle of Lot 1914-B-2 surrounded by the remaining portion of the said Lot 1914-B-2 on three (3) sides, in the east, in the west and in the north. The northern boundary is a 12 meter road. Conclusively, therefore, this is the only remaining 509 sq. m. portion of Lot 1914-B-2 surrounding the 345 sq. m. lot initially purchased by Rodriguez. It is quite difined, determinate and certain. Withal, this is the same portion adjunctively occupied and possessed by Rodriguez since September 29, 1964, unperturbed by anyone for over twenty (20) years until appellee instituted this suit. Thus, all of the essential elements of a contract of sale are present, i.e., that there was a meeting of the minds between the parties, by virtue of which the late Juan San Andres undertook to transfer ownership of and to deliver a determinate thing for a price certain in money. As Art. 1475 of the Civil Code provides: The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. . . . That the contract of sale is perfected was confirmed by the former administrator of the estates, Ramon San Andres, who wrote a letter to respondent on March 30, 1966 asking for P300.00 as partial payment for the subject lot. As the Court of Appeals observed: Without any doubt, the receipt profoundly speaks of a meeting of the mind between San Andres and Rodriguez for the sale of the property adjoining the 345 square meter portion previously sold to Rodriguez on its three (3) sides excepting the frontage. The price is certain, which is P15.00 per square meter. Evidently, this is a perfected contract of sale on a deferred payment of the purchase price. All the prerequisite elements for a valid purchase transaction are present. Sale does not require any formal document for its existence and validity. And delivery of possession of land sold is a consummation of the sale (Galar vs. Husain, 20 SCRA 186 [1967]). A private deed of sale is a valid contract between the parties (Carbonell v. CA, 69 SCRA 99 [1976]). In the same vein, after the late Juan R. San Andres received the P500.00 downpayment on March 30, 1966, Ramon R. San Andres wrote a letter to Rodriguez and received from Rodriguez the amount of P100.00 (although P300.00 was being requested) deductible from the purchase price of the subject portion. Enrique del Castillo, Ramon's authorized agent, correspondingly signed the receipt for the P100.00. Surely, this is explicitly a veritable proof of he sale over the remaining portion of Lot 1914-B-2 and a confirmation by Ramon San Andres of the existence thereof. 16 There is a need, however, to clarify what the Court of Appeals said is a conditional contract of sale. Apparently, the appellate court considered as a "condition" the stipulation of the parties that the full consideration, based on a survey of the lot, would be due and payable within five (5) years from the execution of a formal deed of sale. It is evident from the stipulations in the receipt that the vendor Juan San Andres sold the residential lot in question to respondent and undertook to transfer the

ownership thereof to respondent without any qualification, reservation or condition. In Ang Yu Asuncion v. Court of Appeals, 17 we held: In Dignos v. Court of Appeals (158 SCRA 375), we have said that, although denominated a "Deed of Conditional Sale," a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon actual or constructive delivery (e.g., by the execution of a public document) of the property sold. Where the condition is imposed upon the perfection of the contract itself, the failure of the condition would prevent such perfection. If the condition is imposed on the obligation of a party which is not fulfilled, the other party may either waive the condition or refuse to proceed with the sale. (Art. 1545, Civil Code). Thus, in. one case, when the sellers declared in a "Receipt of Down Payment" that they received an amount as purchase price for a house and lot without any reservation of title until full payment of the entire purchase price, the implication was that they sold their property. 18 In People's Industrial Commercial Corporation v. Court of Appeals, 19 it was stated: A deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Applying these principles to this case, it cannot be gainsaid that the contract of sale between the parties is absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent. 20 Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. The stipulation that the "payment of the full consideration based on a survey shall be due and payable in five (5) years from the execution of a formal deed of sale" is not a condition which affects the efficacy of the contract of sale. It merely provides the manner by which the full consideration is to be computed and the time within which the same is to be paid. But it does not affect in any manner the effectivity of the contract. Consequently, the contention that the absence of a formal deed of sale stipulated in the receipt prevents the happening of a sale has no merit. Second. With respect to the contention that the Court of Appeals erred in upholding the validity of a consignation of P7,035.00 representing the balance of the purchase price of the lot, nowhere in the decision of the appellate court is there any mention of consignation. Under Art. 1257 of this Civil Code, consignation is proper only in cases where an existing obligation is due. In this case, however, the contracting parties agreed that full payment of purchase price shall be due and payable within five (5) years from the execution of a formal deed of sale. At the time respondent deposited the amount of P7,035.00 in the court, no formal deed of sale had yet been executed by the parties, and, therefore, the five-year period during which the purchase price should be paid had not commenced. In short, the purchase price was not yet due and payable. This is not to say, however, that the deposit of the purchase price in the court is erroneous. The Court of Appeals correctly ordered the execution of a deed of sale and petitioners to accept the amount deposited by respondent.

Third. The claim of petitioners that the price of P7,035.00 is iniquitous is untenable. The amount is based on the agreement of the parties as evidenced by the receipt (Exh. 2). Time and again, we have stressed the rule that a contract is the law between the parties, and courts have no choice but to enforce such contract so long as they are not contrary to law, morals, good customs or public policy. Otherwise, court would be interfering with the freedom of contract of the parties. Simply put, courts cannot stipulate for the parties nor amend the latter's agreement, for to do so would be to alter the real intentions of the contracting parties when the contrary function of courts is to give force and effect to the intentions of the parties. Fourth. Finally, petitioners argue that respondent is barred by prescription and laches from enforcing the contract. This contention is likewise untenable. The contract of sale in this case is perfected, and the delivery of the subject lot to respondent effectively transferred ownership to him. For this reason, respondent seeks to comply with his obligation to pay the full purchase price, but because the deed of sale is yet to be executed, he deemed it appropriate to deposit the balance of the purchase price in court. Accordingly, Art. 1144 of the Civil Code has no application to the instant case. 21 Considering that a survey of the lot has already been conducted and approved by the Bureau of Lands, respondent's heirs, assign or successors-in-interest should reimburse the expenses incurred by herein petitioners, pursuant to the provisions of the contract. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that respondent is ORDERED to reimburse petitioners for the expenses of the survey. SO ORDERED.

G.R. No. 126376

November 20, 2003

SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners, vs. COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents. DECISION CARPIO, J.: The Case This is a petition for review on certiorari1 to annul the Decision2 dated 26 June 1996 of the Court of Appeals in CA-G.R. CV No. 41996. The Court of Appeals affirmed the Decision3 dated 18 February 1993 rendered by Branch 65 of the Regional Trial Court of Makati ("trial court") in Civil Case No. 895174. The trial court dismissed the case after it found that the parties executed the Deeds of Sale for valid consideration and that the plaintiffs did not have a cause of action against the defendants. The Facts The Court of Appeals summarized the facts of the case as follows: Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The married Joaquin children are joined in this action by their respective spouses. Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of title issued in their names, to wit: 1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395 executed on 11 July 1978, in favor of defendant Felicitas Joaquin, for a consideration of P6,000.00 (Exh. "C"), pursuant to which TCT No. [36113/T-172] was issued in her name (Exh. "C-1"); 2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394 executed on 7 June 1979, in favor of defendant Clarita Joaquin, for a consideration of P1[2],000.00 (Exh. "D"), pursuant to which TCT No. S-109772 was issued in her name (Exh. "D-1"); 3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988, in favor of defendant spouses Fidel Joaquin and Conchita

Bernardo, for a consideration of P54,[3]00.00 (Exh. "E"), pursuant to which TCT No. 155329 was issued to them (Exh. "E-1"); 4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988, in favor of defendant spouses Artemio Joaquin and Socorro Angeles, for a consideration ofP[54,3]00.00 (Exh. "F"), pursuant to which TCT No. 155330 was issued to them (Exh. "F-1"); and 5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd256395 executed on 9 September 1988, in favor of Tomas Joaquin, for a consideration of P20,000.00 (Exh. "G"), pursuant to which TCT No. 157203 was issued in her name (Exh. "G-1"). 6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395 executed on 7 October 1988, in favor of Gavino Joaquin, for a consideration of P25,000.00 (Exh. "K"), pursuant to which TCT No. 157779 was issued in his name (Exh. "K-1").] In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title, plaintiffs, in their complaint, aver: - XXThe deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as they are, are NULL AND VOIDAB INITIO because a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis; b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are more than three-fold times more valuable than the measly sums appearing therein; c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime. - XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172, S109772, 155329, 155330, 157203 [and 157779] issued by the Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB INITIO. Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as the requisite standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the consequences of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal basis.4 (Emphasis in the original)

The Ruling of the Trial Court Before the trial, the trial court ordered the dismissal of the case against defendant spouses Gavino Joaquin and Lea Asis.5 Instead of filing an Answer with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to Dismiss.6 In granting the dismissal to Gavino Joaquin and Lea Asis, the trial court noted that "compulsory heirs have the right to a legitime but such right is contingent since said right commences only from the moment of death of the decedent pursuant to Article 777 of the Civil Code of the Philippines."7 After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial court stated: In the first place, the testimony of the defendants, particularly that of the xxx father will show that the Deeds of Sale were all executed for valuable consideration. This assertion must prevail over the negative allegation of plaintiffs. And then there is the argument that plaintiffs do not have a valid cause of action against defendants since there can be no legitime to speak of prior to the death of their parents. The court finds this contention tenable. In determining the legitime, the value of the property left at the death of the testator shall be considered (Art. 908 of the New Civil Code). Hence, the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim an impairment of their legitime while their parents live. All the foregoing considered, this case is DISMISSED. In order to preserve whatever is left of the ties that should bind families together, the counterclaim is likewise DISMISSED. No costs. SO ORDERED.8 The Ruling of the Court of Appeals The Court of Appeals affirmed the decision of the trial court.1wphi1 The appellate court ruled: To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is, whether xxx they have a cause of action against appellees. Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito, who are their parents. However, their right to the properties of their defendant parents, as compulsory heirs, is merely inchoate and vests only upon the latters death. While still alive, defendant parents are free to dispose of their properties, provided that such dispositions are not made in fraud of creditors. Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they claim to be creditors of their defendant parents. Consequently, they cannot be considered as real parties in interest to assail the validity of said deeds either for gross inadequacy or lack of consideration or for failure to express the true intent of the parties. In point is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus:

The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily bound thereby; hence, they have no legal capacity to challenge their validity. Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the dispositions made by their defendant parents in favor of their defendant brothers and sisters. But, as correctly held by the court a quo, "the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim an impairment of their legitime while their parents live." With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants is inconsequential. WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffsappellants. SO ORDERED.9 Hence, the instant petition. Issues Petitioners assign the following as errors of the Court of Appeals: 1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN QUESTION HAD NO VALID CONSIDERATION. 2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE. 3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO NOT EXPRESS THE TRUE INTENT OF THE PARTIES. 4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT PROPERTIES. 5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE RESPONDENTS.10 The Ruling of the Court We find the petition without merit. We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before discussing the issues on the purported lack of consideration and gross inadequacy of the prices of the Deeds of Sale. Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale

Petitioners Complaint betrays their motive for filing this case. In their Complaint, petitioners asserted that the "purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime." Petitioners strategy was to have the Deeds of Sale declared void so that ownership of the lots would eventually revert to their respondent parents. If their parents die still owning the lots, petitioners and their respondent siblings will then co-own their parents estate by hereditary succession.11 It is evident from the records that petitioners are interested in the properties subject of the Deeds of Sale, but they have failed to show any legal right to the properties. The trial and appellate courts should have dismissed the action for this reason alone. An action must be prosecuted in the name of the real party-in-interest.12 [T]he question as to "real party-in-interest" is whether he is "the party who would be benefitted or injured by the judgment, or the party entitled to the avails of the suit." xxx In actions for the annulment of contracts, such as this action, the real parties are those who are parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the contracting parties and can show the detriment which would positively result to them from the contract even though they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx. These are parties with "a present substantial interest, as distinguished from a mere expectancy or future, contingent, subordinate, or consequential interest. The phrase present substantial interest more concretely is meant such interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in a payment to or recovery by him."13 Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the appellate court stated, petitioners right to their parents properties is merely inchoate and vests only upon their parents death. While still living, the parents of petitioners are free to dispose of their properties. In their overzealousness to safeguard their future legitime, petitioners forget that theoretically, the sale of the lots to their siblings does not affect the value of their parents estate. While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken from the estate. Whether the Deeds of Sale are void for lack of consideration Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their respondent father. Thus, petitioners ask the court to declare the Deeds of Sale void. A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated, then the contract is void.14 Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the sale is void.

It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.15 Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation, petitioners presented Emma Joaquin Valdozs testimony stating that their father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price.16 The trial court did not find the allegation of absolute simulation of price credible. Petitioners failure to prove absolute simulation of price is magnified by their lack of knowledge of their respondent siblings financial capacity to buy the questioned lots.17 On the other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold. Not only did respondents minds meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the filing of the complaint, respondent siblings have also fully paid the price to their respondent father.18 Whether the Deeds of Sale are void for gross inadequacy of price Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale. Articles 1355 of the Civil Code states: Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied) Article 1470 of the Civil Code further provides: Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. (Emphasis supplied) Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. All the respondents believed that they received the commutative value of what they gave. As we stated in Vales v. Villa:19 Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. (Emphasis in the original) Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater weight when they coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there has been a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion.20 In

the instant case, the trial court found that the lots were sold for a valid consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon us. WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto. SO ORDERED.

G.R. No. 145330 October 14, 2005 SPOUSES GOMER and LEONOR RAMOS, Petitioners, vs. SPOUSES SANTIAGO and MINDA HERUELA, SPOUSES CHERRY and RAYMOND PALLORI, Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the Decision2 dated 23 August 2000 and the Order dated 20 September 2000 of the Regional Trial Court ("trial court") of Misamis Oriental, Branch 21, in Civil Case No. 98-060. The trial court dismissed the plaintiffs action for recovery of ownership with damages. The Antecedent Facts The spouses Gomer and Leonor Ramos ("spouses Ramos") own a parcel of land, consisting of 1,883 square meters, covered by Transfer Certificate of Title ("TCT") No. 16535 of the Register of Deeds of Cagayan de Oro City. On 18 February 1980, the spouses Ramos made an agreement with the spouses Santiago and Minda Heruela ("spouses Heruela")3 covering 306 square meters of the land ("land"). According to the spouses Ramos, the agreement is a contract of conditional sale. The spouses Heruela allege that the contract is a sale on installment basis. On 27 January 1998, the spouses Ramos filed a complaint for Recovery of Ownership with Damages against the spouses Heruela. The case was docketed as Civil Case No. 98-060. The spouses Ramos allege that out of theP15,3004 consideration for the sale of the land, the spouses Heruela paid only P4,000. The last installment that the spouses Heruela paid was on 18 December 1981. The spouses Ramos assert that the spouses Heruelas unjust refusal to pay the balance of the purchase price caused the cancellation of the Deed of Conditional Sale. In June 1982, the spouses Ramos discovered that the spouses Heruela were already occupying a portion of the land. Cherry and Raymond Pallori ("spouses Pallori"), daughter and son-in-law, respectively, of the spouses Heruela, erected another house on the land. The spouses Heruela and the spouses Pallori refused to vacate the land despite demand by the spouses Ramos. The spouses Heruela allege that the contract is a sale on installment basis. They paid P2,000 as down payment and made the following installment payments: 31 March 1980 2 May 1980 20 June 1980 8 October 1980 5 March 1981 18 December 1981 P200 P400 P200 P500 P400 P300

(for April and May 1980) (for June 1980) (for July, August and part of September 1980) (for October and November 1980) (for December 1980 and part of January 1981)

The spouses Heruela further allege that the 306 square meters specified in the contract was reduced to 282 square meters because upon subdivision of the land, 24 square meters became part of the road. The spouses Heruela claim that in March 1982, they expressed their willingness to pay the balance of P11,300 but the spouses Ramos refused their offer. The Ruling of the Trial Court In its Decision5 dated 23 August 2000, the trial court ruled that the contract is a sale by installment. The trial court ruled that the spouses Ramos failed to comply with Section 4 of Republic Act No. 6552 ("RA 6552"),6 as follows: SEC. 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. The dispositive portion of the Decision reads: WHEREFORE, the complaint is hereby dismissed and plaintiff[s] are ordered to execute the corresponding Deed of Sale in favor of defendants after the latter have paid the remaining balance of Eleven Thousand and Three Hundred Pesos (P11,300.00). Plaintiffs are further ordered to pay defendants the sum of P20,000.00, as Attorneys fees and P10,000.00 as litigation expenses. SO ORDERED.7 In an Order8 dated 20 September 2000, the trial court denied the spouses Ramos motion for reconsideration. Hence, this petition. The Issues The spouses Ramos raise the following issues: I. Whether RA 6552 is applicable to an absolute sale of land; II. Whether Articles 1191 and 1592 of the Civil Code are applicable to the present case; III. Whether the spouses Ramos have a right to cancel the sale; IV. Whether the spouses Heruela have a right to damages.9 The Ruling of the Court The petition is partly meritorious. The Agreement is a Contract to Sell

In its Decision, the trial court ruled on whether the contract made by the parties is a conditional sale or a sale on installment. The spouses Ramos premise is that since the trial court ruled that the contract is a sale on installment, the trial court also in effect declared that the sale is an absolute sale. The spouses Ramos allege that RA 6552 is not applicable to an absolute sale. Article 1458 of the Civil Code provides that a contract of sale may be absolute or conditional. A contract of sale is absolute when title to the property passes to the vendee upon delivery of the thing sold.10 A deed of sale is absolute when there is no stipulation in the contract that title to the property remains with the seller until full payment of the purchase price.11 The sale is also absolute if there is no stipulation giving the vendor the right to cancel unilaterally the contract the moment the vendee fails to pay within a fixed period.12 In a conditional sale, as in a contract to sell, ownership remains with the vendor and does not pass to the vendee until full payment of the purchase price.13 The full payment of the purchase price partakes of a suspensive condition, and non-fulfillment of the condition prevents the obligation to sell from arising.14 In this case, the agreement of the parties is embodied in a one-page, handwritten document.15 The document does not contain the usual terms and conditions of a formal deed of sale. The original document, elevated to this Court as part of the Records, is torn in part. Only the words "LMENT BASIS" is legible on the title. The names and addresses of the parties and the identity of the property cannot be ascertained. The agreement only provides for the following terms of the sale: TERM[S] OF SALE: PRICE PER SQM P50.00 X 306 SQM P 15,300.00 DOWN PAYMENT (TWO THOUSAND PESOS) 2,000.00 BALANCE PAYABLE AT MINIMUM OF P200.00 P 13,300.00 PER MONTH UNTIL FULLY PAID ======= In Manuel v. Rodriguez, et al.,16 the Court ruled that to be a written contract, all the terms must be in writing, so that a contract partly in writing and partly oral is in legal effect an oral contract. The Court reiterated the Manuelruling in Alfonso v. Court of Appeals:17 xxx In Manuel, "only the price and the terms of payment were in writing," but the most important matter in the controversy, the alleged transfer of title was never "reduced to any written document.["] It was held that the contract should not be considered as a written but an oral one; not a sale but a promise to sell; and that "the absence of a formal deed of conveyance" was a strong indication "that the parties did not intend immediate transfer of title, but only a transfer after full payment of the price." Under these circumstances, the Court ruled Article 1504 of the Civil Code of 1889 (Art. 1592 of the present Code) to be inapplicable to the contract in controversy a contract to sell or promise to sell "where title remains with the vendor until fulfillment of a positive suspensive condition, such as full payment of the price x x [x]. The records show that the spouses Heruela did not immediately take actual, physical possession of the land. According to the spouses Ramos, in March 1981, they allowed the niece of the spouses Heruela to occupy a portion of the land. Indeed, the spouses Ramos alleged that they only discovered in June 1982 that the spouses Heruela were already occupying the land. In their answer to the complaint, the spouses Heruela and the spouses Pallori alleged that their occupation of the land is lawful because having made partial payments of the purchase price, "they already considered themselves owners" of the land.18 Clearly, there was no transfer of title to the spouses Heruela. The

spouses Ramos retained their ownership of the land. This only shows that the parties did not intend the transfer of ownership until full payment of the purchase price. RA 6552 is the Applicable Law The trial court did not err in applying RA 6552 to the present case. Articles 119119 and 159220 of the Civil Code are applicable to contracts of sale. In contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,21 the Court declared: xxx Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon nonpayment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments xxx. Sections 3 and 4 of RA 6552 provide: Sec. 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments: (a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made:Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any. (b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. Down payments, deposits or options on the contract shall be included in the computation of the total number of installments made. Sec. 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. In this case, the spouses Heruela paid less than two years of installments. Thus, Section 4 of RA 6552 applies. However, there was neither a notice of cancellation nor demand for rescission by notarial act to the spouses Heruela. In Olympia Housing, Inc. v. Panasiatic Travel Corp.,22 the Court ruled that the vendor could go to court to demand judicial rescission in lieu of a notarial act of

rescission. However, an action for reconveyance is not an action for rescission. The Court explained in Olympia: The action for reconveyance filed by petitioner was predicated on an assumption that its contract to sell executed in favor of respondent buyer had been validly cancelled or rescinded. The records would show that, indeed, no such cancellation took place at any time prior to the institution of the action for reconveyance. xxx xxx xxx Not only is an action for reconveyance conceptually different from an action for rescission but that, also, the effects that flow from an affirmative judgment in either case would be materially dissimilar in various respects. The judicial resolution of a contract gives rise to mutual restitution which is not necessarily the situation that can arise in an action for reconveyance. Additionally, in an action for rescission (also often termed as resolution), unlike in an action for reconveyance predicated on an extrajudicial rescission (rescission by notarial act), the Court, instead of decreeing rescission, may authorize for a just cause the fixing of a period.23 In the present case, there being no valid rescission of the contract to sell, the action for reconveyance is premature. Hence, the spouses Heruela have not lost the statutory grace period within which to pay. The trial court should have fixed the grace period to sixty days conformably with Section 4 of RA 6552. The spouses Heruela are not entirely fault-free. They have been remiss in performing their obligation. The trial court found that the spouses Heruela offered once to pay the balance of the purchase price. However, the spouses Heruela did not consign the payment during the pendency of the case. In the meanwhile, the spouses Heruela enjoyed the use of the land. For the breach of obligation, the court, in its discretion, and applying Article 2209 of the Civil Code,24 may award interest at the rate of 6% per annum on the amount of damages.25 The spouses Heruela have been enjoying the use of the land since 1982. In 1995, they allowed their daughter and son-in-law, the spouses Pallori, to construct a house on the land. Under the circumstances, the Court deems it proper to award interest at 6% per annum on the balance of the purchase price. The records do not show when the spouses Ramos made a demand from the spouses Heruela for payment of the balance of the purchase price. The complaint only alleged that the spouses Heruelas "unjust refusal to pay in full the purchase price xxx has caused the Deed of Conditional Sale to be rescinded, revoked and annulled."26 The complaint did not specify when the spouses Ramos made the demand for payment. For purposes of computing the legal interest, the reckoning period should be the filing on 27 January 1998 of the complaint for reconveyance, which the spouses Ramos erroneously considered an action for rescission of the contract. The Court notes the reduction of the land area from 306 square meters to 282 square meters. Upon subdivision of the land, 24 square meters became part of the road. However, Santiago Heruela expressed his willingness to pay for the 306 square meters agreed upon despite the reduction of the land area.27 Thus, there is no dispute on the amount of the purchase price even with the reduction of the land area. On the Award of Attorneys Fees and Litigation Expenses The trial court ordered the spouses Ramos to pay the spouses Heruela and the spouses Pallori the amount ofP20,000 as attorneys fees and P10,000 as litigation expenses. Article 220828 of the Civil

Code provides that subject to certain exceptions, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered in the absence of stipulation. None of the enumerated exceptions applies to this case. Further, the policy of the law is to put no premium on the right to litigate.29 Hence, the award of attorneys fees and litigation expenses should be deleted. WHEREFORE, we AFFIRM the Decision dated 23 August 2000 of the Regional Trial Court of Misamis Oriental, Branch 21, dismissing the complaint for Recovery of Ownership with Damages, with the following MODIFICATION: 1. The spouses Heruela shall pay the spouses Ramos P11,300 as balance of the purchase price plus interest at 6% per annum from 27 January 1998. The spouses Heruela shall pay within 60 days from finality of this Decision; 2. Upon payment, the spouses Ramos shall execute a deed of absolute sale of the land and deliver the certificate of title in favor of the spouses Heruela; 3. In case of failure to thus pay within 60 days from finality of this Decision, the spouses Heruela and the spouses Pallori shall immediately vacate the premises without need of further demand, and the down payment and installment payments of P4,000 paid by the spouses Heruela shall constitute rental for the land; 4. The award of P20,000 as attorneys fees and P10,000 as litigation expenses in favor of the spouses Heruela and the spouses Pallori is deleted. SO ORDERED.

G.R. NO. 145470 December 9, 2005 SPS. LUIS V. CRUZ and AIDA CRUZ, Petitioners, vs. SPS. ALEJANDRO FERNANDO, SR., and RITA FERNANDO, Respondents. DECISION AUSTRIA-MARTINEZ, J.: For resolution is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated 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 Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit in its Order dated March 6, 1995.3Petitioners then filed their Answer setting forth the affirmative defenses that: (1) the Kasunduan is a perfectedcontract 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 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 ofaccion publiciana, against the defendants and judgment is hereby rendered as follows: 1. Ordering defendants and all persons claiming under them to vacate placefully (sic) the premises in question and to remove their house therefore (sic);

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. The counter claim is hereby DISMISSED for lack of merit. SO ORDERED.5 Petitioners appealed the RTC decision but it was affirmed by the CA per its Decision dated October 3, 2000. 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. 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. 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: 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;

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; 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; 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. 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 latters 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 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 courts 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. 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 ownersellers 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 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.