G.R. No.

L-31586 February 28, 1972

ERNESTO, FORTUNATA, MONTANO, ZOSIMA, RAMON, GUADALUPE, LUIS, JOSEFINA and ROSALIA all surnamed YTURRALDE petitioners-appellants,
vs.
THE HONORABLE COURT OF APPEALS, HONORABLE VICENTE G. ERICTA, in his capacity as Judge of the Court of First Instance of Zamboanga del Sur, and ISABELO
REBOLLOS, respondents-appellees.
Jose A. Ambrosia and Patrio C. Avedano for petitioners-appellants.
Geronimo G. Pajarito for respondents-appellees.
MAKASIAR, J.:p
Petitioners-appellants in this appeal by certiorari seek the reversal of the decision of the Court of Appeals dated December 24, 1969.
The Court of Appeals narrated the facts thus: .
It appears that the spouses Francisco Yturralde and Margarita de los Reyes, owned a parcel of agricultural land located in Guilinan, Tungawan,
Zamboanga del Sur, containing an area of 14.1079 hectares, more or less, and registered in their names under Original Certificate of Title No.
2356 of the Office of the Register of Deeds of Zamboanga del Sur. Sometime in the year 1944, Francisco Yturralde died intestate, survived by his
wife, Margarita de los Reyes, and their children who are the petitioners herein, Ernesto, Fortunata, Montano, Zosimo, Ramon, Guadalupe, Luis,
Josefina and Rosalia, all surnamed Yturralde. In 1950, Margarita de los Reyes contracted a second marriage with her brother-in-law and uncle of
the petitioners herein, Damaso Yturralde .
On May 30, 1952, Damaso Yturralde and Margarita de los Reyes executed a deed of sale with right of repurchase in favor of the respondent
herein, Isabelo Rebollos, covering the above-mentioned property in consideration of the sum of P1,715.00. The vendors a retro failed to
exercise the right to repurchase the property within the three-year period agreed upon, which expired on May 30, 1955. In 1961, Margarita de
los Reyes died.
On May 3, 1965, the respondent, Isabelo Rebollos, filed a petition for consolidation of ownership with the Court of First Instance of Zamboanga
del Sur, docketed as Civil Case No. 436 therein, naming as respondents in the case the petitioners herein and Damaso Yturralde (Annex A,
Petition). Summons was then issued, and received on June 17, 1965 by the respondent therein, Damaso, Ernesto, Fortunata, Montano,
Guadalupe, Luis and Rosalia, all surnamed Yturralde (Annexes C and F, Petition). However, summons could not be served on three of the
respondents therein, Josefina, Zosima and Ramon Yturralde, as they were no longer residing at their last known addresses (Annexes B, C and F,
Petition). The Judge then presiding the Court of First Instance of Zamboanga del Sur, Hon. Dimalanes Buissan, in his order dated October 7,
1965, directed that summons be served upon the said three respondents therein (Annex C, Petition). The copies of the petition sent to said
three respondents, but returned without service, were then delivered by Rebollos to the Clerk of Court of the Court of First Instance of
Zamboanga del Sur to complete the delivery thereof under Section 6 of Rule 13, Rules of Court (Annex D, Petition). Thereafter, on motion filed
by Rebollos to declare the respondents in the case in default (Annex E, Petition), the Court issued an order dated November 13, 1965, declaring
all the respondents therein in default, after which Rebollos presented his evidence (Annexes F and G, Petition). On November 20, 1965, the
Court rendered a decision consolidating the ownership of the subject property in favor of Rebollos, and ordering the Register of Deeds of
Zamboanga del Sur to cancel Original Certificate of Title No. 2356 covering said property and, in lieu thereof, to issue a transfer certificate of
title in the name of Rebollos (Annex H, Petition).
On June 3, 1966, Rebollos filed a motion to order the petitioner Montano Yturralde herein to surrender and deliver to the Register of Deeds the
owner's duplicate of Original Certificate of Title No. 2356, which motion was granted by the Court presided at the time by Judge Antonio
Montilla (Annexes I and H, Petition). Due to the failure of petitioner Montano Yturralde to comply with the order (Annex J) and on the motion
filed by Rebollos, the Court, then presided by the respondent Judge ordered the arrest of said Montano Yturralde, but the order of arrest was
subsequently lifted on motion filed by Montano Yturralde (Annexes K, L, M, N, O and P, Petition).
On motion filed by Rebollos, dated January 6, 1969, the respondent Judge ordered the execution of the judgment in Civil Case No. 436, and on
January 20, 1969, the corresponding writ of execution was issued (Annexes Q, R and S, Petition). The petitioners herein then filed a motion for
reconsideration of the order granting execution and for the quashing of the writ of execution, which was denied by the respondent Judge in his
order of March 21, 1969 (Annex T, U, V and W, Petition). On petition filed by Rebollos, the respondent Judge, ordered the demolition of all
buildings not belonging to said Rebollos found on the premises in question (Annexes X and Y, Petition).The petitioners then filed a motion for
reconsideration of the order of demolition, which was denied by the respondent Judge, who, however, on motion of said petitioners, directed
the respondent Sheriff to defer the implementation of the writ of execution and the order of demolition until after June 23, 1969 (Annexes Z
and AA, Petition). Thereafter, the petitioners instituted the present proceedings.
The petition was given due course by this Court, and on June 19, 1969, a writ of preliminary injunction was issued, restraining the respondents
from enforcing the decision and the orders complained of in Civil Case No. 436, until further orders. In his answer to the petition filed by the
respondent, Isabelo Rebollos, he averred that on January 3, 1968, he sold the property in question to Pilar M. vda. de Reyes under a deed of
absolute sale and, accordingly, a Transfer Certificate of Title was issued in favor of said vendee covering the subject property by the Register of
Deeds (Answers and Annexes 4 and 5 thereto).
The case before us is one for prohibition. (Section 2 of Rule 65, Rules of Court). (Pp. 16-19, rec.).
The Court of Appeals held that the action for prohibition before it seeking to restrain the enforcement of the decision in Civil Case No. 436 and the implementing
orders issued subsequent thereto by the respondent Judge of the Court of First Instance of Zamboanga del Sur, will not prosper; because prohibition is a preventive
remedy to restrain the exercise of a power or the performance of an act and not a remedy against acts already accomplished, which cannot be undone through a writ
of prohibition, and in the instant case, the judgment of the lower trial court consolidates the ownership of the entire property involved in Civil Case No. 436 in favor
of respondent Isabelo Rebollos, orders the cancellation of the original certificate of title covering the same, and directs the issuance of a new certificate of title in the
name of respondent Rebollos.
By virtue of an absolute deed of sale executed on January 3, 1968 by respondent Isabelo Rebollos, a new certificate of title was issued in the name of the vendee,
Pilar M. Vda. de Reyes (citing Annexes 4 and 5 of the Answer). The respondent Court of Appeals then concluded that "As the thing sought to be restrained had already
been done, and since a certificate of title is conclusive evidence of the ownership of the land referred to therein (Section 47, Act No. 496, as amended; Aldecoa & Co.
vs. Warner, Barnes & Co., 30 Phil. 153; Yumul vs. Rivera, et a1., 64 Phil. 13), and the same cannot be collaterally attacked, but can only be challenged in a direct
proceeding (Menderson vs. Garrido, 90 Phil. 624), prohibition in this case is not the proper remedy." .
Petitioners-appellants claim that the Court of Appeals erred (1) in sustaining the actuation of the trial court in allowing service of summons upon appellants Josefina,
Zosima and Ramon Yturralde by registered mail pursuant to Section 6, Rule 13, of the Rules of Court; (2) in sustaining the ruling of the trial court that it properly
acquired jurisdiction over the aforesaid three appellants by virtue of such mode of service of summons; and (3) in not declaring as null and void the decision of the
trial court along with its implementing orders, at least insofar as the aforenamed three appellants are concerned on the ground that they were not given their day in
court.
The three assigned errors shall be discussed jointly.
I
The respondent Court of Appeals erred in holding that the petition for prohibition before it will not prosper as the act sought to be prevented had already been
performed; because the order for the issuance of the writ of execution, the corresponding writ of execution and the order for demolition respectively dated January
6, 1969, January 20, 1969 and May 15, 1969 in Special Civil Case No. 436 were not enforced by the respondent trial judge, who in his order dated May 26, 1969
directed the provincial sheriff to defer the implementation thereof (Annex "AA", p. 66, record of C.A. G.R. No. 43310; pp. 19-26, rec.). The petitioners herein
reiterated that they are still in possession of the property in question, which possession was recognized and protected by the respondent Court of Appeals itself when
it issued the writ of preliminary injunction dated June 19, 1969 against private respondent Isabelo Rebollos pursuant to its resolution dated June 17, 1969 (pp. 67-74,
rec. of C.A. G.R. No. 43310).
It should be noted that the petition for prohibition filed with the Court of Appeals prayed for the issuance of the writ of preliminary injunction.
enjoining herein respondents from enforcing the Decision dated November 20, 1965, the orders dated January 15, 1969, March 21, 1969, May
15, 1969 and May 26, 1969, Annexes "H", "R", "W", "Y", and "AA" hereof, and after due hearing ..., the preliminary writ of injunction be made
permanent and so with the writ of prohibition.
Petitioners also pray for such other and further reliefs to which they may be entitled under the law.
While it is true that the decision in Special Civil Case No. 436 was already rendered, Original Certificate of Title No. 2356 was cancelled and a new transfer certificate
of title issued in the name of Pilar V. vda. de Reyes by virtue of the deed of absolute sale executed on January 3, 1968 by private respondent Isabelo Rebollos in her
favor; the writ of execution and the order of demolition, as heretofore stated, were never enforced by reason of which herein petitioners remain and are still in
possession of the land. Moreover, the general prayer for such other reliefs as herein petitioners may be entitled to under the law, includes a prayer for the
nullification of the decision of November 20, 1965 as well as the questioned orders above-mentioned.
II
Unlike the old Civil Code, Article 1607 of the new Civil Code of 1950 provides that consolidation of ownership in the vendee a retro of real property by virtue of the
failure of the vendor a retro "to comply with the provisions of Article 1616 shall not be recorded in the Registry of Property without a judicial order, after the vendor
has been duly heard." In the case of Teodoro vs. Arcenas,
1
this Court, through Mr. Justice Jose B. L. Reyes, ruled that under the aforesaid Article 1607 of the new Civil
Code, such consolidation shall be effected through an ordinary civil action, not by a mere motion, and that the vendor a retro should be made a party defendant, who
should be served with summons in accordance with Rule 14 of the Revised Rules of Court; and that the failure on the part of the court to cause the service of
summons as prescribed in Rule 14, is sufficient cause for attacking the validity of the judgment and subsequent orders on jurisdictional grounds.
2
The Court in said
case stressed that the reason behind the requirement of a judicial order for consolidation as directed by Article 1067 of the new Civil Code is because "experience has
demonstrated too often that many sales with right of re-purchase have been devised to circumvent or ignore our usury laws and for this reason, the law looks upon
them with disfavor (Report of the Code Commission, pp. 63-64). When, therefore, Article 1607 speaks of a judicial order after the vendor shall have been duly heard,
it contemplates none other than a regular court proceeding under the governing Rules of Court, wherein the parties are given full opportunity to lay bare before the
court the real covenant. Furthermore, the obvious intent of our Civil Code, in requiring a judicial confirmation of the consolidation in the vendee a retroof the
ownership over the property sold, is not only to have all doubts over the true nature of the transaction speedily ascertained, and decided, but also to prevent the
interposition of buyers in good faith while such determination is being made. Under the former method of consolidation by a mere extrajudicial affidavit of the
buyer a retro, the latter could easily cut off any claims of the seller by disposing of the property, after such consolidation, to strangers in good faith and without
notice. The chances of the seller a retro to recover his property would thus be nullified, even if the transaction were really proved to be a mortgage and not a sale."
3

The doctrine in the aforesaid case of Teodoro vs. Arcenas was reiterated by this Supreme Tribunal through Mr. Justice Jose P. Bengzon in the case of Ongcoco, et al.
vs. Honorable Judge, et al.
4

The jurisdiction over the persons of herein petitioners Josefina, Zosima and Ramon all surnamed Yturralde, was not properly acquired by the court because they were
not properly served with summons in the manner directed by Rule 14 of the Revised Rules of Court. The said three petitioners cannot therefore be legally declared in
default. Rule 13 of the Revised Rules of Court on service and filing of pleadings and other papers with the court, does not apply to service of summons. Rule 14 of the
Revised Rules of Court on service of summons, which should govern, provides that "upon the filing of the complaint, the Clerk of Court shall forthwith issue the
corresponding summons to the defendants" (Section 1, Rule 14), which summons shall be served by the sheriff or other proper court officer or for special reason by
any person specially authorized by the court issuing the summons by personally handing a copy of the same to the defendants (Sections 5 & 7, Rule 14). If the
residence of the defendant is unknown or cannot be ascertained by diligent inquiry or if the defendant is residing abroad, service may be made by publication in a
newspaper of general circulation in accordance with Sections 16 & 17, Rule 14.
5
The sheriff or private respondent Isabelo Rebollos himself should have made a
diligent inquiry as to the whereabouts of the three petitioners aforementioned. The trial court could have directed such an inquiry, which would have disclosed that
petitioners Josefina, Ramon and Zosima reside respectively at Sibugey in Zamboanga del Sur, Roxas Street in Basilan City, and Washington, D.C., U.S.A. There is no
showing that such a diligent inquiry was made to justify a substituted service of summons by publication. The return dated June 18, 1965, of the acting chief of police
of Tungawan, Zamboanga del Sur, to the clerk of court and ex-officio provincial sheriff "that Josefina, Zosima and Ramon are no longer residing in this municipality"
(Annex "B" to Petition of Court of Appeals, p. 20, rec. of C.A. G.R. No. 43310), does not suffice to indicate that a careful investigation of their whereabouts was made.
And even if it did, substituted service of summon by publication should have been required. Aside from the fact that the said return of service is a nullity as it is not
under oath, there is no showing even that the acting chief of police was especially authorized by the court to serve the summons (Sections5 & 20, Rule 14, Revised
Rules of Court.)
6

To emphasize, Section 3 of Rule 14 of the Revised Rules of Court commands the service of summons together with a copy of the petition, on each of the defendants
who must be specifically named in the summons, upon the filing of such petition, like the petition in Special Civil Case No. 436 filed by privaterespondent Isabelo
Rebollos for consolidation of ownership over the lot coveredby Original Certificate of Title No. 2356 in the name of "Francisco Yturralde married to Margarita de los
Reyes." .
III
The action for consolidation should be brought against all the indispensable parties, without whom no final determination can be had of the action; and such
indispensable parties who are joined as party defendants must be properly summoned pursuant to Rule 14 of the Revised Rules of Court. If anyone of the party
defendants, who are all indispensable parties is not properly summoned, the court acquires no jurisdiction over the entire case and its decision and orders therein are
null and void.
7

The pacto de retro sale executed by Margarita de los Reyes "casada en segundas nuptias con Damaso Yturralde," expressly stipulates that she only sold all her rights,
interests and participation in the lot covered by O.C.T. No. 2356 (Annex "I", p. 66, rec.). Margarita therefore, could not, for she had no right to, sell the entire lot,
which is registered under O.C.T. No. 2356 "inthe name of Francisco Yturralde married to Margarita de los Reyes." Said lot is acknowledge by herein petitioners as the
conjugal property of Francisco and Margarita (p. 2, rec. of C.A. G.R. No. 43310). What she validly disposed of under the aforesaid pacto de retro sale of 1952 was only
her conjugal share in the lot plus her successional right as heir in the conjugal share of her deceased husband Francisco.
Consequently, the vendee a retro, Isabelo Rebollos, cannot legally petition for the consolidation of his ownership over the entire lot.
But in the petition he filed in Special Civil Case No. 436 on May 3, 1965 against herein nine petitioners as children and heirs of the deceased spouses Francisco
Yturralde (who died in 1944) and Margarita de los Reyes (who died in 1961), and Damaso Yturralde, stepfather of herein petitioners, Rebollos prayed for the
consolidation of his ownership over the entire lot covered by O.C.T. No. 2356, and not merely over the interest conveyed to him by Margarita. As the petition of
private respondent Rebollos sought to divest all of them of their undivided interest in the entire agricultural land, which undivided interest was never alienated by
them to Rebollos, herein petitioners became indispensable parties. Rebollos himself acknowledged that they are indispensable parties, for he included them as party-
defendants in his petition in order to acquire their undivided interest in the lot. While summons were served properly on all the other defendants in said Civil Case
No. 436, herein petitioners Josefina, Zosima and Ramon were not so served. Because of such failure to comply with Rule 14 of the Revised Rules of Court on service of
summons on indispensable parties, as heretofore stated, the trialcourt did not validly acquire jurisdiction over the case; because no complete and final determination
of the action can be had without the aforesaid three petitioners Josefina, Zosima and Ramon.
The petition for consolidation filed by herein private respondent Rebollos is similar in effect to an action for partition by a co-owner, wherein each co-owner is an
indispensable party; for without him no valid judgment for partition may be rendered.
8

That the three children, herein petitioners Josefina, Zosima and Ramon, are essential parties, without whom no valid judgment may be rendered, is further
underscored by the fact that the agricultural land in question was owned by them in common and pro indiviso with their mother and their brothers and sisters and
was not then as now physically partitioned among them.
For attempting to acquire the entire parcel by foisting upon the court the misrepresentation that the whole lot was sold to him, private respondent Isabelo Rebollos
must suffer the consequences of his deceit by the nullification of the entire decision in his favor granting the consolidation of his title over the entire land in question.
This Court condemns such deception.
It should be noted that herein petitioners in 1967 also filed an action against only Isabelo Rebollos for the recovery of ownership, annulment of judgment,
redemption and damages in the Court of First Instance of Zamboanga del Sur docketed as Civil Case No. 944 and entitled "Fortunata Yturralde, et al. vs. Rebollos" (pp.
76, 84-96, rec. of C.A. G.R. No. 43310).
In their complaint in said Civil Case No. 944 dated May 23, 1967 (pp. 117-124, rec. of C.A. G.R. No. 43310), herein petitioners allege inter alia that the respondent trial
court (in Special Civil Case No. 436) had no jurisdiction over their share in the aforementioned lot through a "summary proceedings without notice to them" (pp. 88-
89, rec. of C.A. G.R. No. 43310).
Herein petitioners should amend their complaint in Civil Case No. 944 so as toinclude Pilar V. vda. de Reyes party defendant therein in order that they can obtain a
full and complete valid judgment in the same action; because the vendee is an indispensable party.
9

It is a curious fact that Rebollos filed his petition for consolidation of title only on May 3, 1965, almost ten years after the redemption period expiredon May 30, 1955,
and about four years after the death in 1961 of the vendor a retro.
lt is equally interesting to note that after herein petitioners filed in 1967 an action against Rebollos for the recovery of ownership, annulment of judgment,
redemption and damages, Rebollos sold on January 3, 1968 the land in question to Pilar V. vda. de Reyes, with the deed of sale duly notarized by Atty. Geronimo G.
Pajarito, counsel for Rebollos in Special Civil Case No. 436 (pp. 16-17, 22-25, 31, 42, 44-47, 51, 56, 59, 61-62, 93, rec. of C.A. G.R. No. 43310).
But more intriguing is the fact that, after Rebollos sold on January 3, 1968 the land to Pilar V. vda. de Reyes, Rebollos himself, not his vendee, filed:
(1) a motion dated January 6, 1969 for the issuance of a writ of execution from the judgment in Special Civil Case No. 436, by reason of which
the corresponding writ of execution was issued on January 20, 1969; .
(2) an opposition to the motion of herein petitioners for the reconsideration of the aforesaid order of January 20, 1969; and .
(3) a motion dated April 7, 1969 for execution and demolition of the buildings of herein petitioners (pp, 61-62, rec. of CA-G.R. No. 43310).
WHEREFORE, judgment is hereby rendered reversing the decision of respondent Court of Appeals dated December 24, 1969, and setting aside as null and void .
(1) the decision of the respondent trial judge dated November 20, 1965; .
(2) the order for the issuance of the writ of execution dated January 6, 1969; .
(3) the writ of execution dated January 20, 1969; and .
(4) the order of demolition dated May 15, 1969 in Special Civil Case No. 436; .
without prejudice to the final outcome of Civil Case No. 944.
With costs against private respondent Isabelo Rebollos.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo and Villamor, JJ., concur.



QUANTITY OF SUBJECT MATTER NOT ESSENTIAL FOR PERFECTION
G.R. No. 74470 March 8, 1989
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO, respondents.
Cordoba, Zapanta, Rola & Garcia for petitioner National Grains Authority.
Plaridel Mar Israel for respondent Leon Soriano.
MEDIALDEA, J.:
This is a petition for review of the decision (pp. 9-21, Rollo) of the Intermediate Appellate Court (now Court of Appeals) dated December 23, 1985 in A.C. G.R. CV No.
03812 entitled, "Leon Soriano, Plaintiff- Appellee versus National Grains Authority and William Cabal, Defendants Appellants", which affirmed the decision of the
Court of First Instance of Cagayan, in Civil Case No. 2754 and its resolution (p. 28, Rollo) dated April 17, 1986 which denied the Motion for Reconsideration filed
therein.
The antecedent facts of the instant case are as follows:
Petitioner National Grains Authority (now National Food Authority, NFA for short) is a government agency created under Presidential Decree No. 4. One of its
incidental functions is the buying of palay grains from qualified farmers.
On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal, the Provincial Manager of NFA stationed at
Tuguegarao, Cagayan. He submitted the documents required by the NFA for pre-qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by
Soriano and certified by a Bureau of Agricultural Extension (BAEX) technician, Napoleon Callangan, (2) Xerox copies of four (4) tax declarations of the riceland leased
to him and copies of the lease contract between him and Judge Concepcion Salud, and (3) his Residence Tax Certificate. Private respondent Soriano's documents
were processed and accordingly, he was given a quota of 2,640 cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum
number of cavans of palay that Soriano may sell to the NFA.
In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay. The palay delivered during these two days
were not rebagged, classified and weighed. when Soriano demanded payment of the 630 cavans of palay, he was informed that its payment will be held in abeyance
since Mr. Cabal was still investigating on an information he received that Soriano was not a bona tide farmer and the palay delivered by him was not produced from
his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. On August 28, 1979, Cabal wrote Soriano advising him to withdraw from the NFA
warehouse the 630 cavans Soriano delivered stating that NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX
technician, Napoleon Callangan that Soriano is not a bona fide farmer.
Instead of withdrawing the 630 cavans of palay, private respondent Soriano insisted that the palay grains delivered be paid. He then filed a complaint for specific
performance and/or collection of money with damages on November 2, 1979, against the National Food Authority and Mr. William Cabal, Provincial Manager of NFA
with the Court of First Instance of Tuguegarao, and docketed as Civil Case No. 2754.
Meanwhile, by agreement of the parties and upon order of the trial court, the 630 cavans of palay in question were withdrawn from the warehouse of NFA. An
inventory was made by the sheriff as representative of the Court, a representative of Soriano and a representative of NFA (p. 13, Rollo).
On September 30, 1982, the trial court rendered judgment ordering petitioner National Food Authority, its officers and agents to pay respondent Soriano (as plaintiff
in Civil Case No. 2754) the amount of P 47,250.00 representing the unpaid price of the 630 cavans of palay plus legal interest thereof (p. 1-2, CA Decision). The
dispositive portion reads as follows:
WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendants National Grains Authority, and William Cabal and
hereby orders:
1. The National Grains Authority, now the National Food Authority, its officers and agents, and Mr. William Cabal, the Provincial Manager of the
National Grains Authority at the time of the filing of this case, assigned at Tuguegarao, Cagayan, whomsoever is his successors, to pay to the
plaintiff Leon T. Soriano, the amount of P47,250.00, representing the unpaid price of the palay deliveries made by the plaintiff to the
defendants consisting of 630 cavans at the rate Pl.50 per kilo of 50 kilos per cavan of palay;
2. That the defendants National Grains Authority, now National Food Authority, its officer and/or agents, and Mr. William Cabal, the Provincial
Manager of the National Grains Authority, at the time of the filing of this case assigned at Tuguegarao, Cagayan or whomsoever is his
successors, are likewise ordered to pay the plaintiff Leon T. Soriano, the legal interest at the rate of TWELVE (12%) percent per annum, of the
amount of P 47,250.00 from the filing of the complaint on November 20, 1979, up to the final payment of the price of P 47,250.00;
3. That the defendants National Grains Authority, now National Food Authority, or their agents and duly authorized representatives can now
withdraw the total number of bags (630 bags with an excess of 13 bags) now on deposit in the bonded warehouse of Eng. Ben de Guzman at
Tuguegarao, Cagayan pursuant to the order of this court, and as appearing in the written inventory dated October 10, 1980, (Exhibit F for the
plaintiff and Exhibit 20 for the defendants) upon payment of the price of P 47,250.00 and TWELVE PERCENT (12%) legal interest to the plaintiff,
4. That the counterclaim of the defendants is hereby dismissed;
5. That there is no pronouncement as to the award of moral and exemplary damages and attorney's fees; and
6. That there is no pronouncement as to costs.
SO ORDERED (pp. 9-10, Rollo)
Petitioners' motion for reconsideration of the decision was denied on December 6, 1982.
Petitioners' appealed the trial court's decision to the Intermediate Appellate Court. In a decision promulgated on December 23, 1986 (pp. 9-21, Rollo) the then
Intermediate Appellate Court upheld the findings of the trial court and affirmed the decision ordering NFA and its officers to pay Soriano the price of the 630 cavans
of rice plus interest. Petitioners' motion for reconsideration of the appellate court's decision was denied in a resolution dated April 17, 1986 (p. 28, Rollo).
Hence, this petition for review filed by the National Food Authority and Mr. William Cabal on May 15, 1986 assailing the decision of the Intermediate Appellate Court
on the sole issue of whether or not there was a contract of sale in the case at bar.
Petitioners contend that the 630 cavans of palay delivered by Soriano on August 23, 1979 was made only for purposes of having it offered for sale. Further,
petitioners stated that the procedure then prevailing in matters of palay procurement from qualified farmers were: firstly, there is a rebagging wherein the palay is
transferred from a private sack of a farmer to the NFA sack; secondly, after the rebagging has been undertaken, classification of the palay is made to determine its
variety; thirdly, after the determination of its variety and convinced that it passed the quality standard, the same will be weighed to determine the number of kilos;
and finally, it will be piled inside the warehouse after the preparation of the Warehouse Stock Receipt (WSP) indicating therein the number of kilos, the variety and
the number of bags. Under this procedure, rebagging is the initial operative act signifying acceptance, and acceptance will be considered complete only after the
preparation of the Warehouse Stock Receipt (WSR). When the 630 cavans of palay were brought by Soriano to the Carig warehouse of NFA they were only offered for
sale. Since the same were not rebagged, classified and weighed in accordance with the palay procurement program of NFA, there was no acceptance of the offer
which, to petitioners' mind is a clear case of solicitation or an unaccepted offer to sell.
The petition is not impressed with merit.
Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other party to pay therefore a price certain in money or its equivalent. A contract, on the other hand, is a meeting of minds
between two (2) persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code of the Philippines).
The essential requisites of contracts are: (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 (Art. 1318, Civil Code of the Philippines.
In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's
Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the palay grains
produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has
not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In
this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so
much of his produce as long as it does not exceed 2,640 cavans.
In its memorandum (pp. 66-71, Rollo) dated December 4, 1986, petitioners further contend that there was no contract of sale because of the absence of an essential
requisite in contracts, namely, consent. It cited Section 1319 of the Civil Code which states: "Consent is manifested by the meeting of the offer and the acceptance of
the thing and the cause which are to constitute the contract. ... " Following this line, petitioners contend that there was no consent because there was no acceptance
of the 630 cavans of palay in question.
The above contention of petitioner is not correct Sale is a consensual contract, " ... , there is perfection when there is consent upon the subject matter and price, even
if neither is delivered." (Obana vs. C.A., L-36249, March 29, 1985, 135 SCRA 557, 560) This is provided by Article 1475 of the Civil Code which states:
Art. 1475. 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.
x x x
The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of the goods delivered as contended by
petitioners.
From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual obligations or "the parties may reciprocally demand
performance" thereof. (Article 1475, Civil Code, 2nd par.).
The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA) cannot legally accept the said delivery because
Soriano is allegedly not a bona fide farmer. The trial court and the appellate court found that Soriano was a bona fide farmer and therefore, he was qualified to sell
palay grains to NFA.
Both courts likewise agree that NFA's refusal to accept was without just cause. The above factual findings which are supported by the record should not be disturbed
on appeal.
ACCORDINGLY, the instant petition for review is DISMISSED. The assailed decision of the then Intermediate Appellate Court (now Court of Appeals) is affirmed. No
costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
G.R. No. 105387 November 11, 1993
JOHANNES SCHUBACK & SONS PHILIPPINE TRADING CORPORATION, petitioner,
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR., doing business under the name and style "PHILIPPINE SJ INDUSTRIAL TRADING," respondents.
Hernandez, Velicaria, Vibar & Santiago for petitioner.
Ernesto M. Tomaneng for private respondent.

ROMERO, J.:
In this petition for review on certiorari, petitioner questions the reversal by the Court of Appeals
1
of the trial court's ruling that a contract of sale had been perfected
between petitioner and private respondent over bus spare parts.
The facts as quoted from the decision of the Court of Appeals are as follows:
Sometime in 1981, defendant
2
established contact with plaintiff
3
through the Philippine Consulate General in Hamburg, West Germany,
because he wanted to purchase MAN bus spare parts from Germany. Plaintiff communicated with its trading partner. Johannes Schuback and
Sohne Handelsgesellschaft m.b.n. & Co. (Schuback Hamburg) regarding the spare parts defendant wanted to order.
On October 16, 1981, defendant submitted to plaintiff a list of the parts (Exhibit B) he wanted to purchase with specific part numbers and
description. Plaintiff referred the list to Schuback Hamburg for quotations. Upon receipt of the quotations, plaintiff sent to defendant a letter
dated 25 November, 1981 (Exh. C) enclosing its offer on the items listed by defendant.
On December 4, 1981, defendant informed plaintiff that he preferred genuine to replacement parts, and requested that he be given 15% on all
items (Exh. D).
On December 17, 1981, plaintiff submitted its formal offer (Exh. E) containing the item number, quantity, part number, description, unit price
and total to defendant. On December, 24, 1981, defendant informed plaintiff of his desire to avail of the prices of the parts at that time and
enclosed Purchase Order No. 0101 dated 14 December 1981 (Exh. F to F-4). Said Purchase Order contained the item number, part number and
description. Defendant promised to submit the quantity per unit he wanted to order on December 28 or 29 (Exh. F).
On December 29, 1981, defendant personally submitted the quantities he wanted to Mr. Dieter Reichert, General Manager of plaintiff, at the
latter's residence (t.s.n., 13 December, 1984, p. 36). The quantities were written in ink by defendant in the same Purchase Order previously
submitted. At the bottom of said Purchase Order, defendant wrote in ink above his signature: "NOTE: Above P.O. will include a 3% discount.
The above will serve as our initial P.O." (Exhs. G to G-3-a).
Plaintiff immediately ordered the items needed by defendant from Schuback Hamburg to enable defendant to avail of the old prices. Schuback
Hamburg in turn ordered (Order No. 12204) the items from NDK, a supplier of MAN spare parts in West Germany. On January 4, 1982,
Schuback Hamburg sent plaintiff a proforma invoice (Exhs. N-1 to N-3) to be used by defendant in applying for a letter of credit. Said invoice
required that the letter of credit be opened in favor of Schuback Hamburg. Defendant acknowledged receipt of the invoice (t.s.n., 19 December
1984, p. 40).
An order confirmation (Exhs. I, I-1) was later sent by Schuback Hamburg to plaintiff which was forwarded to and received by defendant on
February 3, 1981 (t.s.n., 13 Dec. 1984, p. 42).
On February 16, 1982, plaintiff reminded defendant to open the letter of credit to avoid delay in shipment and payment of interest (Exh. J).
Defendant replied, mentioning, among others, the difficulty he was encountering in securing: the required dollar allocations and applying for
the letter of credit, procuring a loan and looking for a partner-financier, and of finding ways 'to proceed with our orders" (Exh. K).
In the meantime, Schuback Hamburg received invoices from, NDK for partial deliveries on Order No.12204 (Direct Interrogatories., 07 Oct,
1985, p. 3). Schuback Hamburg paid NDK. The latter confirmed receipt of payments made on February 16, 1984 (Exh.C-Deposition).
On October 18, 1982, Plaintiff again reminded defendant of his order and advised that the case may be endorsed to its lawyers (Exh. L).
Defendant replied that he did not make any valid Purchase Order and that there was no definite contract between him and plaintiff (Exh. M).
Plaintiff sent a rejoinder explaining that there is a valid Purchase Order and suggesting that defendant either proceed with the order and open a
letter of credit or cancel the order and pay the cancellation fee of 30% of F.O.B. value, or plaintiff will endorse the case to its lawyers (Exh. N).
Schuback Hamburg issued a Statement of Account (Exh. P) to plaintiff enclosing therewith Debit Note (Exh. O) charging plaintiff 30%
cancellation fee, storage and interest charges in the total amount of DM 51,917.81. Said amount was deducted from plaintiff's account with
Schuback Hamburg (Direct Interrogatories, 07 October, 1985).
Demand letters sent to defendant by plaintiff's counsel dated March 22, 1983 and June 9, 1983 were to no avail (Exhs R and S).
Consequently, petitioner filed a complaint for recovery of actual or compensatory damages, unearned profits, interest, attorney's fees and costs against private
respondent.
In its decision dated June 13, 1988, the trial court
4
ruled in favor of petitioner by ordering private respondent to pay petitioner, among others, actual compensatory
damages in the amount of DM 51,917.81, unearned profits in the amount of DM 14,061.07, or their peso equivalent.
Thereafter, private respondent elevated his case before the Court of Appeals. On February 18, 1992, the appellate court reversed the decision of the trial court and
dismissed the complaint of petitioner. It ruled that there was no perfection of contract since there was no meeting of the minds as to the price between the last week
of December 1981 and the first week of January 1982.
The issue posed for resolution is whether or not a contract of sale has been perfected between the parties.
We reverse the decision of the Court of Appeals and reinstate the decision of the trial court. It bears emphasizing that a "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. . . . "
5

Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter offer." The facts presented to us indicate that consent
on both sides has been manifested.
The offer by petitioner was manifested on December 17, 1981 when petitioner submitted its proposal containing the item number, quantity, part number,
description, the unit price and total to private respondent. On December 24, 1981, private respondent informed petitioner of his desire to avail of the prices of the
parts at that time and simultaneously enclosed its Purchase Order No. 0l01 dated December 14, 1981. At this stage, a meeting of the minds between vendor and
vendee has occurred, the object of the contract: being the spare parts and the consideration, the price stated in petitioner's offer dated December 17, 1981 and
accepted by the respondent on December 24,1981.
Although said purchase order did not contain the quantity he wanted to order, private respondent made good, his promise to communicate the same on December
29, 1981. At this juncture, it should be pointed out that private respondent was already in the process of executing the agreement previously reached between the
parties.
Below Exh. G-3, marked as Exhibit G-3-A, there appears this statement made by private respondent: "Note. above P.O. will include a 3% discount. The above will
serve as our initial P.O." This notation on the purchase order was another indication of acceptance on the part of the vendee, for by requesting a 3% discount, he
implicitly accepted the price as first offered by the vendor. The immediate acceptance by the vendee of the offer was impelled by the fact that on January 1, 1982,
prices would go up, as in fact, the petitioner informed him that there would be a 7% increase, effective January 1982. On the other hand, concurrence by the vendor
with the said discount requested by the vendee was manifested when petitioner immediately ordered the items needed by private respondent from Schuback
Hamburg which in turn ordered from NDK, a supplier of MAN spare parts in West Germany.
When petitioner forwarded its purchase order to NDK, the price was still pegged at the old one. Thus, the pronouncement of the Court Appeals that there as no
confirmed price on or about the last week of December 1981 and/or the first week of January 1982 was erroneous.
While we agree with the trial court's conclusion that indeed a perfection of contract was reached between the parties, we differ as to the exact date when it
occurred, for perfection took place, not on December 29, 1981. Although the quantity to be ordered was made determinate only on December 29, 1981, quantity is
immaterial in the perfection of a sales contract. What is of importance is the meeting of the minds as to the object and cause, which from the facts disclosed, show
that as of December 24, 1981, these essential elements had already occurred.
On the part of the buyer, the situation reveals that private respondent failed to open an irrevocable letter of credit without recourse in favor of Johannes Schuback of
Hamburg, Germany. This omission, however. does not prevent the perfection of the contract between the parties, for the opening of the letter of credit is not to be
deemed a suspensive condition. The facts herein do not show that petitioner reserved title to the goods until private respondent had opened a letter of credit.
Petitioner, in the course of its dealings with private respondent, did not incorporate any provision declaring their contract of sale without effect until after the
fulfillment of the act of opening a letter of credit.
The opening of a etter of credit in favor of a vendor is only a mode of payment. It is not among the essential requirements of a contract of sale enumerated in Article
1305 and 1474 of the Civil Code, the absence of any of which will prevent the perfection of the contract from taking place.
To adopt the Court of Appeals' ruling that the contract of sale was dependent on the opening of a letter of credit would be untenable from a pragmatic point of view
because private respondent would not be able to avail of the old prices which were open to him only for a limited period of time. This explains why private
respondent immediately placed the order with petitioner which, in turn promptly contacted its trading partner in Germany. As succinctly stated by petitioner, "it
would have been impossible for respondent to avail of the said old prices since the perfection of the contract would arise much later, or after the end of the year
1981, or when he finally opens the letter of credit."
6

WHEREFORE, the petition is GRANTED and the decision of the trial court dated June 13, 1988 is REINSTATED with modification.
SO ORDERED.
Feliciano, Bidin, Melo and Vitug, JJ., concur.
OBLIGATION OF VENDOR TO TRANSFER OWNERSHIP
A. SALE BY PERSON NOT THE OWNER ART 1505,1434,1459
G.R. No. 136054 September 5, 2001
HEIRS OF SEVERINA SAN MIGUEL, namely: MAGNO LAPINA, PACENCIA LAPINA, MARCELO LAPINA, SEVERINO LAPINA, ROSARIO LAPINA, FRANCISCO LAPINA, CELIA
LAPINA assisted by husband RODOLFO TOLEDO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, DOMINADOR SAN MIGUEL, GUILLERMO F. SAN ARTEMIO F. SAN MIGUEL, PACIENCIA F. SAN MIGUEL, CELESTINO, assisted
by husband, ANTERO CELESTINO, represented by their Attorney-in-Fact ENRICO CELESTINO, AUGUSTO SAN MIGUEL, ANTONIO SAN MIGUEL, RODOLFO SAN
MIGUEL, CONRADO SAN MIGUEL and LUCITA SAN MIGUEL, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari
1
of the decision of the Court of Appeals,
2
affirming that of the Regional Trial Court, Cavite, Branch 19, Bacoor
3
ordering
petitioners, Heirs of Severina San Miguel (hereafter, "Severina's heirs") to surrender to respondents Dominador San Miguel, et al. (hereafter, "Dominador, et al."),
Transfer Certificate of Title No. 223511 and further directing Severina's heirs to pay for the capital gains and related expenses for the transfer of the two (2) lots to
Dominador, et al.
The Facts
This case involves a parcel of land originally claimed by Severina San Miguel (petitioners' predecessor-in-interest, hereafter, "Severina"). The land is situated in
Panapan, Bacoor, Cavite with an area of six hundred thirty two square meters (632 sq. m.), more or less.
Without Severina's knowledge, Dominador managed to cause the subdivision of the land into three (3) lots, to wit:
4

"LRC Psu-1312 - with an area of 108 square meters;
"LRC Psu-1313 - Lot 1, with an area of 299 square meters;
"LRC Psu-1313 - Lot 2, with an area of 225 square meters."
On September 25, 1974, Dominador, et al. filed a petition with the Court of First Instance, Cavite, as a land registration court, to issue title over Lots 1 and 2 of LRC
Psu-1313, in their names.
5

On July 19, 1977, the Land Registration Commission (hereafter "LRC") rendered a decision directing the issuance of Original Certificate of Title No. 0-1816 in the
names of Dominador, et al.
On or about August 22, 1978, Severina filed with the Court of First Instance of Cavite a petition for review of the decision alleging that the land registration
proceedings were fraudulently concealed by Dominador from her.
6

On December 27, 1982, the court resolved to set aside the decision of July 19, 1977, and declared Original Certificate of Title No. 0-1816 as null and void.
On July 13, 1987, the Register of Deeds of Cavite issued Transfer Certificate of Title No. T-223511 in the names of Severina and her heirs.
7

On February 15, 1990, the trial court issued an order in favor of Severina's heirs, to wit:
8

"WHEREFORE, as prayed for, let the writ of possession previously issued in favor of petitioner Severina San Miguel be implemented."
However, the writ was returned unsatisfied.
On November 28, 1991, the trial court ordered:
9

"WHEREFORE, as prayed for, let an alias writ of demolition be issued in favor of petitioners, Severina San Miguel."
Again, the writ was not satisfied.
On August 6, 1993, Severina's heirs, decided not to pursue the writs of possession and demolition and entered into a compromise with Dominador, et al. According to
the compromise, Severina's heirs were to sell the subject lots
10
to Dominador, et al. for one and a half million pesos (P1.5 M) with the delivery of Transfer Certificate
of Title No. T-2235
11
(hereafter, "the certificate of title") conditioned upon the purchase of another lot 11 which was not yet titled at an additional sum of three
hundred thousand pesos (P300,000.00). The salient features of the compromise (hereafter "kasunduan") are:
12

"5. Na ang Lot 1 at Lot 2, plano LRC Psu-1313 na binabanggit sa itaas na ipinagkasundo ng mga tagapagmana ni Severina San Miguel na kilala sa kasulatang
ito sa taguring LAPINA (representing Severina's heirs), na ilipat sa pangalan nina SAN MIGUEL (representing Dominador's heirs) alang alang sa halagang
ISANG MILYON AT LIMANG DAANG LIBONG PISO (P1,500,000.00) na babayaran nina SAN MIGUEL kina LAPINA;
"6. Na si LAPINA at SAN MIGUEL ay nagkakasundo na ang lote na sakop ng plano LRC-Psu-1312, may sukat na 108 metro cuadrado ay ipagbibili na rin kina
SAN MIGUEL sa halagang TATLONG DAANG LIBONG PISO (P300,000.00);
"7. Na kinikilala ni SAN MIGUEL na ang tunay na may-ari ng nasabing lote na sakop ng plano LRC Psu-1312 ay sina LAPINA at sila na ang magpapatitulo nito
at sina LAPINA ay walang pananagutan sa pagpapatitulo nito at sa paghahabol ng sino mang tao;
"8. Na ang nasabing halaga na TATLONG DAANG LIBONG PISO (P300,000.00) ay babayaran nina SAN MIGUEL kina LAPINA sa loob ng dalawang (2) buwan
mula sa petsa ng kasulatang ito at kung hindi mabayaran nina SAN MIGUEL ang nasabing halaga sa takdang panahon ay mawawalan ng kabuluhan ang
kasulatang ito;
"9. Na sina LAPINA at SAN MIGUEL ay nagkakadunso (sic) rin na ang owner's copy ng Transfer Certificate of Title No. T-223511 na sumasakop sa Lots 1 at 2,
plano LRC Psu-1313 ay ilalagay lamang nina LAPINA kina SAN MIGUEL pagkatapos mabayaran ang nabanggit na P300,000.00"
On the same day, on August 6, 1993, pursuant to the kasunduan, Severina's heirs and Dominador, et al. executed a deed of sale designated as "kasulatan sa bilihan
ng lupa."
13

On November 16, 1993, Dominador, et al. filed with the trial court,
14
Branch 19, Bacoor, Cavite, a motion praying that Severina's heirs deliver the owner's copy of the
certificate of title to them.
15

In time, Severina's heirs opposed the motion stressing that under the kasunduan, the certificate of title would only be surrendered upon Dominador, et al.'s payment
of the amount of three hundred thousand pesos (P300,000.00) within two months from August 6, 1993, which was not complied with.
16

Dominador, et al. admitted non-payment of three hundred thousand pesos (P300,000.00) for the reason that Severina's heirs have not presented any proof of
ownership over the untitled parcel of land covered by LRC-Psu-1312. Apparently, the parcel of land is declared in the name of a third party, a certain Emiliano
Eugenio.
17

Dominador, et al. prayed that compliance with the kasunduan be deferred until such time that Severina's heirs could produce proof of ownership over the parcel of
land.
18

Severina's heirs countered that the arguments of Dominador, et al. were untenable in light of the provision in thekasunduan where Dominador, et al. admitted their
ownership over the parcel of land, hence dispensing with the requirement that they produce actual proof of title over it.
19
Specifically, they called the trial court's
attention to the following statement in the kasunduan:
20

"7. Na kinikilala ni SAN MIGUEL na ang tunay na may-ari ng nasabing lote na sakop ng plano LRC Psu-1312 ay sina LAPINA at sila na ang magpapatitulo nito
at sina LAPINA ay walang pananagutan sa pagpapatitulo nito at sa paghahabol ng sino mang tao;"
According to Severina's heirs, since Dominador, et al. have not paid the amount of three hundred thousand pesos (P300,000.00), then they were justified in
withholding release of the certificate of title.
21

The trial court conducted no hearing and then rendered judgment based on the pleadings and memoranda submitted by the parties.
The Trial Court's Ruling
On June 27, 1994, the trial court issued an order to wit:
22

"WHEREFORE, finding the Motion to Order to be impressed with merit, the defendants-oppositors-vendors Heirs of Severina San Miguel are hereby
ordered to surrender to the movant-plaintiffs-vendees-Heirs of Dominador San Miguel the Transfer Certificates of Title No. 223511 and for herein
defendants-oppositors-vendors to pay for the capital gains and related expenses for the transfer of the two lots subject of the sale to herein movants-
plaintiffs-vendees-Heirs of Dominador San Miguel."
"SO ORDERED."
On July 25, 1994, Severina's heirs filed with the trial court a motion for reconsideration of the afore-quoted order.
23

On January 23, 1995, the trial court denied the motion for reconsideration for lack of merit and further ordered:
24

"x x x . . . Considering that the Lots 1 and 2 covered by TCT No. T-223511 had already been paid since August 6, 1993 by the plaintiffs-vendees Dominador
San Miguel, et al. (Vide, Kasulatan sa Bilihan ng Lupa, Rollo, pp. 174-176), herein defendants-vendors-Heirs of Severina San Miguel is hereby ordered (sic)
to deliver the aforesaid title to the former (Dominador San Miguel, et al.) within thirty (30) days from receipt of this order. In case the defendants-vendors-
Heirs of Severina San Miguel fail and refuse to do the same, then the Register of Deeds of Cavite is ordered to immediately cancel TCT No. T-223511 in the
name of Severina San Miguel and issue another one in the name of plaintiffs Dominador San Miguel, et al.
"Also send a copy of this Order to the Register of Deeds of the Province of Cavite, Trece Martires City, for her information and guidance.
"SO ORDERED."
On February 7, 1995, Severina's heirs appealed the orders to the Court of Appeals.
25

The Court of Appeals' Ruling
On June 29, 1998, the Court of Appeals promulgated a decision denying the appeal, and affirming the decision of the trial court. The Court of Appeals added that the
other matters raised in the petition were "extraneous" to thekasunduan.
26
The Court of Appeals upheld the validity of the contract of sale and sustained the parties'
freedom to contract. The Court of Appeals decided, thus:
27

"WHEREFORE, the decision appealed from is hereby AFFIRMED.
"SO ORDERED."
On August 4, 1998, Severina's heirs filed with the Court of Appeals a motion for reconsideration of the above decision.
28
On October 14, 1998, the Court of Appeals
denied the motion for reconsideration for lack of merit.
29

Hence, this appeal.
30

The Issues
Severina's heirs submit that the Court of Appeals erred and committed grave abuse of discretion: First, when it held that the kasunduan had no effect on the
"kasulatan sa bilihan ng lupa." Second, when it ordered them to surrender the certificate of title to Dominador, et al., despite non-compliance with their prior
obligations stipulated under the kasunduan. Third, when it did not find that the kasunduan was null and void for having been entered into by Dominador, et al.
fraudulently and in bad faith.
31

We find the above issues raised by Severina's heirs to be factual. The question whether the prerequisites to justify release of the certificate of title to Dominador, et
al. have been complied with is a question of fact.
32

However, we sift through the arguments and identify the main legal issue, which is whether Dominador, et al. may be compelled to pay the three hundred thousand
pesos (P300,000.00) as agreed upon in the kasunduan (as a pre-requisite for the release of the certificate of title), despite Severina's heirs' lack of evidence of
ownership over the parcel of land covered by LRC Psu-1312.
The Court's Ruling
We resolve the issue in the negative, and find the petition without merit.
Severina's heirs anchor their claim on the kasunduan, stressing on their freedom to stipulate and the binding effect of contracts. This argument is misplaced.
33
The
Civil Code provides:
ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not
contrary to law, morals, good customs, public order or public policy (italics ours).
It is basic that the law is deemed written into every contract.
34
Although a contract is the law between the parties, the provisions of positive law which regulate
contracts are deemed written therein and shall limit and govern the relations between the parties.
35
The Civil Code provisions on "sales" state:
ARTICLE 1458. 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 a price certain in money or its equivalent. . . .
ARTICLE 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.
ARTICLE 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of sale (emphasis ours).
True, in contracts of sale, the vendor need not possess title to the thing sold at the perfection of the contract.
36
However, the vendor must possess title and must be
able to transfer title at the time of delivery. In a contract of sale, title only passes to the vendee upon full payment of the stipulated consideration, or upon delivery of
the thing sold.
37

Under the facts of the case, Severina's heirs are not in a position to transfer title. Without passing on the question of who actually owned the land covered by LRC Psu
-1312, we note that there is no proof of ownership in favor of Severina's heirs. In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said land
in his name.
38
Though tax declarations do not prove ownership of the property of the declarant, tax declarations and receipts can be strong evidence of ownership of
land when accompanied by possession for a period sufficient for prescription.
39
Severina's heirs have nothing to counter this document.
Therefore, to insist that Dominador, et al. pay the price under such circumstances would result in Severina's heirs' unjust enrichment.
40
Basic is the principle in law,
"Niguno non deue enriquecerse tortizamente condano de otro."
41
The essence of a sale is the transfer of title or an agreement to transfer it for a price actually paid or
promised.
42
In Nool v. Court of Appeals,
43
we held that if the sellers cannot deliver the object of the sale to the buyers, such contract may be deemed to be
inoperative. By analogy, such a contract may fall under Article 1405, No. 5 of the Civil Code, to wit:
ARTICLE 1405. The following contracts are inexistent and void from the beginning: . . .
(5) Those which contemplate an impossible service.
xxx xxx xxx
Severina's heirs insist that delivery of the certificate of title is predicated on a condition payment of three hundred thousand pesos (P300,000.00) to cover the sale
of Lot 3 of LRO Psu 1312. We find this argument not meritorious. The condition cannot be honored for reasons afore-discussed. Article 1183 of the Civil Code provides
that,
"Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them.
If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid, x x x"
Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not a valid justification for refusal to deliver the certificate of title.
Besides, we note that the certificate of title covers Lots 1 and 2 of LRC Psu-1313, which were fully paid for by Dominador, et al. Therefore, Severina's heirs are bound
to deliver the certificate of title covering the lots.
The Fallo
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 48430 is AFFIRMED in toto.
No costs.
SO ORDERED.
Davide, Jr., C .J ., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

B. EXCEPTIONS ARTICLES:
1431
1911
1898
559
1506
1390
1636
[G.R. No. 129428. February 27, 2003]
BENJAMIN NAVARRO and ROSITA FORTEA, petitioners, vs. SECOND LAGUNA DEVELOPMENT BANK, and SPOUSES ISAAC GUZMAN and VILMA
ESPORLAS,respondents.
D E C I S I O N
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari
[1]
assailing the Decision
[2]
of the Court of Appeals dated April 21, 1997 in CA-G.R. CV No. 44240 affirming with
modification the Decision of the Regional Trial Court (RTC), Branch 148, Makati City in Civil Case No. 90-849, Spouses Benjamin Navarro and Rosita Fortea vs. Second
Laguna Development Bank, spouses Domalito Velasco and Esther Navarro, Luciana Navarro and spouses Isaac Guzman and Vilma Esporlas, for annulment of
foreclosure of mortgage and consolidation of ownership and damages.
Subject of this suit is the 1/6 portion of a parcel of land located in Alabang, Muntinlupa, known as Lot No. 1513-A, Plan Psd-51043, consisting of 345 square
meters and covered by TCT No. (244200) 114525 of the Registry of Deeds of Makati City.
Records show that the late Catalino Navarro and his wife Consuelo Hernandez originally owned Lot No. 1513-A. On December 4, 1968, they sold 5/6 of the
unsegregated portion of the lot to their children, namely, Leticia, Esther, Benjamin, Luciana and Leoniza, all surnamed Navarro. By virtue of the sale, TCT No. 244200
was issued in their names. Spouses Benjamin and Rosita Navarro, herein petitioners, are listed therein as co-owners of the property.
On March 18, 1978, without the knowledge and consent of petitioners, spouses Donalito Velasco and Esther Navarro, conspiring with the latters sister Luciana
Navarro, executed a falsified Deed of Absolute Sale wherein they made it appear that the entire lot was sold to said spouses Velasco for P35,000.00. TCT No. 244200
was thus cancelled and in lieu thereof, TCT No. 114526 was issued in the names of spouses Velasco. Subsequently, they mortgaged the property to respondent
Second Laguna Development Bank to secure payment of a loan.
On June 30, 1987, upon failure of spouses Velasco to pay their loan, respondent bank had the mortgage foreclosed. On August 8, 1988 and January 5, 1990,
petitioners, introducing themselves as attorneys-in-fact of Esther Navarro-Velasco, wrote respondent bank, offering to redeem the property
for P450,000.00. However, they failed to do so. Hence, ownership thereof was consolidated in the name of respondent bank under TCT No. 168230 issued on
February 1, 1990.
On March 26, 1990, petitioners filed with the RTC a complaint against respondent bank and spouses Velasco (docketed as Civil Case No. 90-849) praying for the
(a) annulment of the mortgage; (b) cancellation of TCT No. 168230 in the name of respondent bank; and (c) award of damages and attorneys fees. In their
complaint, petitioners alleged that the sale of the lot with respect to their 1/6 share (59 square meters) is void ab initio considering that their signatures appearing in
the Deed of Absolute Sale dated March 18, 1978 were falsified. Consequently, the mortgage contract involving their share executed by spouses Velasco and
respondent bank is likewise void.
On April 3, 1990, respondent bank sold the lot to respondent spouses Isaac Guzman and Vilma Esporlas and on May 18, 1990, TCT No. 169929
[3]
was issued in
their names. Thereupon, petitioners impleaded spouses Guzman as additional defendants in Civil Case No. 90-849. Petitioners alleged that said spouses were
purchasers in bad faith because they knew of the pending litigation concerning the property.
On July 29, 1991, the trial court declared spouses Velasco in default for their failure to file an answer.
On September 29, 1993, the trial court rendered its Decision
[4]
dismissing petitioners complaint; upholding the validity of the foreclosure of mortgage and
declaring respondent spouses Guzman the lawful owners of the property; ordering petitioners to pay said spouses P50,000.00 as actual damages, P30,000.00 as
moral damages and P35,000.00 as attorneys fees; ordering petitioners to pay respondent bank P25,000.00 as attorneys fees; and ordering spouses Velasco to pay
petitioners P268,000.00 corresponding to the value of the latters 1/6 share in the property and P20,000.00 as attorneys fees.
On appeal, the Court of Appeals affirmed with modification the RTC decision, thus:
WHEREFORE, the decision appealed from is hereby MODIFIED by deleting the awards of actual and moral damages as well as attorneys fees in favor of defendant
spouses Vilma Esporlas Guzman and Isaac Guzman, and the award of attorneys fees in favor of defendant Second Laguna Development Bank.
With the above modifications, the judgment below is AFFIRMED in all other respects.
No pronouncement as to costs.
SO ORDERED.
[5]

The Court of Appeals ratiocinated as follows:
Inevitably, the core of the controversy is the determination of whether or not defendant spouses Vilma Esporlas and Isaac Guzman are purchasers in good faith.
Apart from appellants bare assertion, we find no evidence to establish appellees bad faith. It is settled jurisprudence that whoever alleges bad faith in any
transaction must substantiate his allegation, since it is presumed that a person takes ordinary care of his concerns and that private transactions have been entered in
good faith.
Clearly, we find appellants wanting in this respect.
In this connection, it is essential to point out that prior to the foreclosure sale, appellants had the opportunity to object to the validity of the mortgage over the
property in controversy.
It is beyond dispute, as disclosed by evidence, that on June 4, 1986, appellant Benjamin Navarro wrote a certain Oscar of defendant-appellee bank, asking for the
Statement of Accounts of defendant Esther Navarro.
On August 8, 1988, appellant spouses wrote defendant-appellee bank, introducing themselves as the attorneys-in-fact of defendant Esther Navarro.
Again, on January 5, 1990, appellant Benjamin Valerio (believed to be Benjamin Navarro by the court a quo per his signature) wrote the Far East Bank & Trust
Company, the owner of defendant bank, requesting the latter to allow redemption of the land for (P450,000.00).
On all these occasions, appellants did not even bother to question the validity of the purchasers title over the property. Hence, we agree with the court a quo that
these acts of appellants were tainted with laches and estoppel. They failed for an unreasonable length of time to do that which by exercising due diligence could or
should have been done earlier. They neglected or omitted to assert their right within a time reasonable under the premises, thereby warranting a presumption that
they have abandoned such right.
However, we find no sufficient justification for the awards of actual and moral damages as well as attorneys fees by the court a quo.
Needless to emphasize, actual damages refer to those recoverable because of pecuniary loss, which include the value of the loss suffered and unrealized profits (8
Manresa 100). Actual damages must be proved and the amount of damages must possess at least some degree of certainty (Tomassi vs. Villa-Abrillee, L-7047, August
21, 1958, in relation to Chua Teck Hee vs. Philippine Publishing House, 34 Phil. 447).
Reviewing the records, we find no evidence whatsoever adduced by defendants-appellees to prove the actual loss suffered by them. All the court a quo did, in
awarding actual damages in the amount of P50,000.00, is to state that defendants-appellees Isaac Guzman and Vilma Esporlas are entitled to actual damages for they
were not able to enjoy their lawfully acquired property. This reason is simply not enough basis to award actual damages.
As regards the claim for moral damages and attorneys fees, the court a quo likewise erred in awarding them. In Dela Pena vs. Court of Appeals, 231 SCRA 456, it
was held that it is improper to award them on the sole basis of an action later declared to be unfounded in the absence of deliberate intent to cause prejudice to the
other. No proof has been introduced that the action filed by appellant spouses was deliberately intended to prejudice defendants-appellees. At the most, what we
see here is appellants legitimate and genuine desire to seek redress through the judicial system and to obtain complete relief by including spouses Vilma Esporlas
and Isaac Guzman and the Second Laguna Development Bank as party defendants.
[6]

Petitioners filed a partial motion for reconsideration of the Court of Appeals Decision but it was denied in the Resolution
[7]
dated June 11, 1997.
Hence, the instant petition.
Petitioners contend that the Court of Appeals erred in upholding the validity of the sale of the property between respondent bank and spouses Guzman and
declaring that they are estopped from questioning the validity of the mortgage and its foreclosure.
In their separate comments, respondents practically reiterated the findings and conclusion of the Court of Appeals in its assailed Decision.
The petition lacks merit.
In Rural Bank of Compostela vs. Court of Appeals,
[8]
this Court held that the rule that persons dealing with registered lands can rely solely on the certificate of
title does not apply to banks because their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should
guard against loss by not committing any act of negligence which amounts to lack of good faith. Thus, in Cruz vs. Bancom Finance Corporation,
[9]
this Court stressed
that a mortgagee-bank is expected to exercise greater care and prudence before entering into a mortgage contract, even those involving registered lands. The
ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations.
In entering into the mortgage contract with spouses Velasco, there was no indication that respondent bank acted in bad faith. Spouses Velasco presented to
the bank their TCT No. 114256 showing they were then the absolute owners thereof. Indeed, there were no circumstances or indications that aroused respondent
banks suspicion that the title was defective.
As to the validity of the sale of the property to respondent spouses Guzman, this Court agrees with the finding of the Court of Appeals that petitioners are
estopped from assailing the same.
Article 1431 of the Civil Code states that through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of
conduct that thereby causes loss or injury to another.
[10]

It bears reiterating that in their two letters to respondent bank earlier mentioned, petitioners did not state that spouses Velasco falsified their signatures
appearing in the Deed of Absolute Sale. Nor did they question the validity of the mortgage and its foreclosure. Indeed, those letters could have led respondent bank
to believe that petitioners recognized the validity of the Deed of Absolute Sale and the mortgage as well as its subsequent foreclosure.
WHEREFORE, the instant petition is DISMISSED. The challenged Decision dated April 21, 1997 of the Court of Appeals in CA-G.R. CV No. 44240 is AFFIRMED.
SO ORDERED.
Puno, (Chairman), Panganiban and Carpio-Morales, JJ., concur.
Corona, J., on leave.

G.R. No. L-11108 June 30, 1958
CHUA HAI, petitioner,
vs.
HON. RUPERTO KAPUNAN, JR. as Judge of the Court of First Instance of Manila and ONG SHU,respondents.
Pedro Panganiban y Tolentino for petitioner.
German Lee for respondent Ong Shu.
REYES, J. B. L., J.:
Certiorari against an order of the Court of First Instance of Manila, Hon. Ruperto Kapunan, Jr. presiding, ordering the return to the complainant in criminal case No.
34250, People vs. Roberto Sotto, of 100 sheets of galvanized iron roofing which had been sold by the accused in said case to petitioner herein, Chua Hai. The order is
as follows:
Counsel for the complainant in this case seeks the return of the 700 sheets of galvanized iron now with the Manila Police Department which form part of
the hardware materials involved in this case. Chua Hai, one of the persons who purchased from the accused one hundred (100) pieces of the said
galvanized iron sheets, opposes the said motion on the ground that the question of ownership should be determined in the proper proceedings, claiming
that he has a valid title to the 100 pieces, having bought them from the accused Roberto Soto on February 1, 1956. Roberto Soto is presently at large, his
arrest having been ordered by this Court on June 13, 1956, for failure to appear for trial.
Considering the provisions of Article 105 of the Revised Penal Code, the said 700 sheets, except five of them which are to be retained for purposes of
evidence, are hereby ordered returned to the complainant, subject, however, to the condition that the complainant post a bond in an amount equal to
twice the value of 100 sheets in favor of Chua Hai who has a claim of ownership to the said 100 sheets, and without prejudice on the part of said Chua Hai
to file the corresponding action on the matter of ownership thereof by virtue of his purchase from the herein accused.
From the facts alleged in the pleadings presented in this case, we gather the following: On January 31, 1956, Roberto Soto purchased from Youngstown Hardware,
owned by Ong Shu, 700 corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70, and in payment thereof he issued a check drawn against
the Security Bank and Trust Company for P7,000.00, without informing Ong Shu that he had no sufficient funds in said bank to answer for the same. When the check
was presented for payment, it was dishonored for insufficiency of funds. Soto sold 165 sheets in Pangasinan and 535 sheets in Calapan, Mindoro. Of those sold in
Pangasinan, 100 were sold to petitioner Chua Hai. When the case was filed in the Court of First Instance of Manila against Roberto Soto, for estafa, the offended party
filed a petition asking that the 700 galvanized iron sheets, which were deposited with the Manila Police Department, be returned to him, as owner of the Youngstown
Hardware. Petitioner herein opposed the motion with respect to the 100 sheets that he had bought from Soto. Notwithstanding the opposition, the court ordered the
return of the galvanized iron sheets to Ong Shu. Petitioner then presented a motion to reconsider the order, alleging that by the return thereof to the offended party,
the court had not only violated the contract of deposit, because it was in that concept that petitioner had delivered the 100 sheets to the Manila Police Department,
and that said return to Ong Shu amounted to a deprivation of his property without due process of law. It is also claimed that Article 105 of the Revised Penal Code,
under whose authority the return was ordered, can be invoked only after the termination of the criminal case and not while said criminal case is still pending trial.
The court having given no heed to these protests on the part of the petitioner, the latter brought the present petition to this Court alleging that the order of the
respondent judge constitutes a deprivation of petitioner's property without due process of law, violating the contract of deposit under which the sheets were
delivered to the police department of the City of Manila, and determining the respective rights of petitioner and respondent Ong Shu without a previous trial of the
criminal case all of which constitute a grave abuse of discretion and excess of jurisdiction. In answer to the petition, it is claimed that as respondent Ong Shu is the
owner of the property, he has the right to recover possession thereof even if said property appears to have fallen into the possession of a third party who acquired it
by legal means, provided that said form of acquisition is not that provided for in Article 464 of the Civil Code (where property has been pledged in a monte de
piedad established under authority of the Government) ; that even if the property was acquired in good faith, the owner who has been unlawfully deprived thereof
may recover it from the person in possession of the same unless a person in possession acquired it in good faith at a public sale. (Art. 559, Civil Code of the
Philippines). It is also claimed that under the provisions of Article 105 of the Revised Penal Code, under which restitution is made by a return of the thing itself
whenever possible, the galvanized iron sheets in question should be returned to the offended party, the owner, and that there is no provision of law requiring that
the criminal case must first be finally disposed of before restitution of the goods swindled can be ordered returned to the owner. In answer to the allegation that
petitioner has been deprived of his property without due process of law, it is alleged that same is without foundation because the petitioner was given ample time to
be heard. As to the claim that the galvanized iron sheets in question were deposited with the Manila Police Department, it is argued that the delivery to the Manila
Police Department was by virtue of the order of the court, because the said sheets, were the subject of or are the instruments of the commission of the crime
of estafa, and the court had the power to order the return thereof to the owner after it had satisfied itself of the ownership thereof by the offended party. It is also
alleged in defense that petitioner's rights, if any, are sufficiently protected by the bond that the court has required to be filed.
We find the case meritorious, since petitioner's good faith is not questioned. To deprive the possessor in good faith, even temporarily and provisionally, of the
chattels possessed, violates the rule of Art. 559 of the Civil Code. The latter declares that possession of chattels in good faith is equivalent to title; i.e., that for all
intents and purposes, the possessor is the owner, until ordered by the proper court to restore the thing to the one who was illegally deprived thereof. Until such
decree is rendered (and it can not be rendered in a criminal proceeding in which the possessor is not a party), the possessor, as presumptive owner, is entitled to hold
and enjoy the thing; and "every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said
possession established by the means established by the laws and the Rules of Court."(Art. 539, New Civil Code).
The decision of the court below, instead of conforming to Arts. 559 and 539 of the Civil Code, directs possessor to surrender the chattel to the claimant Ong Shu
before the latter has proved that he was illegally deprived thereof, without taking into account that the mere filing of a criminal action for estafa is no proof
that estafa was in fact committed. Instead of regarding the possessor as the owner of the chattel until illegal deprivation is shown, the court below regards the
possessor of the chattel not as an owner, but as a usurper, and compels him to surrender possession even before the illegal deprivation is proved. We see no warrant
for such a reversal of legal rules.
It can not be assumed at this stage of the proceedings that respondent Ong Shu is still the owner of the property; to do so it take for granted that the estafa was in
fact committed, when so far, the trial on the merits has not even started, and the presumption of innocence holds full sway.
In the third place, the civil liability of the offender to make restitution, under Art. 105 of the Revised Penal Code,does not arise until his criminal liability is finally
declared, since the former is a consequence of the latter. Art. 105 of the Revised Penal Code, therefore, can not be invoked to justify the order of the court below,
since that very article recognizes the title of an innocent purchaser when it says:
ART. 105. Restitution . . .
The thing itself shall be restored, even though it be found in the possession of a third person who has acquired it by lawful means, saving to the latter his
action against the proper person who may be liable to him.
This provision is not applicable in cases in which the thing has been acquired by the third person in the manner and under the requirements which, by law,
bar an action for its recovery. (R.P.C.) (Emphasis supplied)
The last paragraph of Article 105 plainly refers to those cases where recovery is denied by the civil law, notwithstanding the fact that the former owner was deprived
of his chattels through crime. One of these cases is that provided for in Art. 85 of the Code of Commerce:
ART. 85. La compra de mercaderias en almacenes o tiendas abiertas al publico causara prescripcion de derecho a favor del comprador respecto de las
mercaderias adquiridas, quedando a salvo en su caso los derechos del propietario de los objetos vendidos para ejercitar las acciones civiles o criminales
que puedan corresponderle contra el que los vendiere indebidamente. (Civ. 464)
Para los efectos de esta prescripcion, se reputaran almacenes o tiendas abiertas al publico:
1. Los que establezcan los comerciantes inscritos.
2. Los que establezcan los comerciantes no inscritos, siempre que los almacenes o tiendas permanezcan abiertos al publico por espacio de echo dias
consecutivos, o se hayan anunciado por medio de rotulos, muestras o titulos en el local mismo, o por avisos repartidos al publico o insertos en los diarios
de la localidad.
Notwithstanding the claim of some authors that this Art. 85 has been repealed, the fact is that its rule exists and has been confirmed by Article 1505 of the new Civil
Code:
ART. 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the seller's authority to sell.
Nothing in this Title, however, shall affect:
x x x x x x x x x
(3) Purchases made in a merchant's store, or in fairs, or markets in accordance with the Code of Commerce and special laws. (C.C.)
But even if the articles in dispute had not been acquired in a market, fair or merchant's store, still, so far as disclosed, the facts do not justify a finding that the owner,
respondent Ong Shu, was illegally deprived of the iron sheets, at least in so far as appellant was concerned. It is not denied that Ong Shu delivered the sheets to Soto
upon a perfected contract of sale, and such delivery transferred title or ownership to the purchaser. Says Art. 1496:
ART. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497
to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. (C.C.)
The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and unless the bilateral contract of sale is first
rescinded or resolved pursuant to Article 1191 of the new Civil Code.
And, assuming that the consent of Ong Shu to the sale in favor of Sotto was obtained by the latter through fraud or deceit, the contract was not thereby rendered
void ab initio, but only voidable by reason of the fraud, and Article 1390 expressly provides that:
ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification. (C.C.)
Agreeably to this provision, Article 1506 prescribes:
ART. 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title
to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. (C.C.)
Hence, until the contract of Ong Shu with Sotto is set aside by a competent court (assuming that the fraud is established to its satisfaction), the validity of appellant's
claim to the property in question cannot be disputed, and his right to the possession thereof should be respected.
It is no excuse that the respondent Ong Shu was required to post a redelivery bond. An indemnity bond, while answering for damages, is not, by itself alone, sufficient
reason for disturbing property rights, whether temporarily or permanently. If the invasion is not warranted, the filing of a bond will not make it justifiable.
Questions of ownership and possession being eminently civil in character, they should not be settled by exclusive reference to the Revised Penal Code. If Ong Shu has
reason to fear that petitioner Chua Hai may dispose of the chattels in dispute and thereby render nugatory his eventual right to restitution, then the proper remedy
lies in a civil suit and attachment, not in an order presuming to adjudicate in a criminal case the civil rights of one who is not involved therein.
Summing up, we hold:
1) That the acquirer and possessor in good faith, of a chattel or movable property is entitled to be respected and protected in his possession, as if he were the true
owner thereof, until a competent court rules otherwise;
2) That being considered, in the meantime, as the true owner, the possessor in good faith cannot be compelled to I surrender possession nor to be required to
institute an action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor;
3) That the filing of an information charging that the chattel was illegally obtained through estafa from its true owner by the transferor of the bona fide possessor
does not warrant disturbing the possession of the chattel against the will of the possessor; and
4) That the judge taking cognizance of the criminal case against the vendor of the possessor in good faith has not right to interfere with the possession of the latter,
who is not a party to the criminal proceedings, and such unwarranted interference is not made justifiable by requiring a bond to answer for damages caused to the
possessor.
Wherefore, the writ of certiorari is granted, and the order of the Court of First Instance of Manila in Criminal Case No. 34250, dated July 31, 1956, is hereby revoked
and set aside, as issued in abuse of discretion amounting to excess of jurisdiction. Costs against appellant Ong Shu.
Paras, C. J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Concepcion, and Endencia, JJ., concur.


Separate Opinions
FELIX, J., concurring:
The issue in this case revolves around the proposition of whether or not "goods purchased by an accused, for which he paid with a rubber check, can be seized from a
third party who bought the same in good faith and for a valuable consideration before the offender, who was charged with estafa, is tried and convicted."
I concur with the reasons adduced in the majority decision but the main basis of my vote with the majority of the Court is based on the principle that Article 105 of
the Revised Penal Code relied upon by the lower Court for the issuance of the order which We revoked and set aside in this instance, cannot be invoked and made
applicable to the case at bar.
As it is known, among the civil liabilities established by Articles 100 to 103 of the Revised Penal Code restitution is included and Article 105 of the same Code dealing
on restitution, provides the following:
ART. 105. Restitution. How Made. The restitution of the thing itself must be made whenever possible, with allowance for the deterioration or diminution
of value as determined by the court.
The thing itself shall be restored, even though it be found in the possession of a third person who has acquired it by lawful means, saving to the latter his
action against the proper person who may be liable to him.
This provision is not applicable in cases in which the thing has been acquired by the third person in the manner and under the requirements which, by law,
bar an action for its recovery.
There is no dispute that petitioner herein, Chua Hai, purchased from Roberto Sotto 100 sheets of galvanized iron roofing in good faith and for value, and there is no
denial either that this stock comes from and is a part of the 700 sheets that Roberto Sotto bought and paid with a check that bounced for lack of funds. Under such
circumstances, there is no question that the purchase was perfected by the agreement of the respondent Ong Shu and defendant Sotto and as a consequence of the
transaction, upon delivery of the sheets to the latter, ownership of the same was conveyed and transferred legally to the purchaser who, from that moment, with or
without payment of the consideration therefor was in turn entitled to sell and convey all or a portion of the property in question to a third party who definitely
acquired said goods, specially when he acted in good faith and for value. Had those goods been sold on credit by Ong Shu to Roberto Sotto, the failure of the latter to
pay the purchase price thereof would not entitle the vendor, under the circumstances obtaining in the instant case, to take the goods from Chua Hai and much less
without a previous court action. And the same thing can be said in the case at bar where the vendor was induced to part with his property by the issuance of a rubber
check. Both in the case of sale on credit as well as on the case of sale through the payment with rubber check, the transaction is perfected and the transfer of
ownership verified, the difference being only circumscribed to the liability of the first purchaser (Sotto) which in the first case would be merely civil, while in the latter
case is also criminal.
1
The first sale of the property having beenlegally consummated, the 100 sheets of galvanized iron herein involved could not be recovered from
Chua Hai even in case of Sotto's conviction of estafa, because under the terms of Article 105 of the Revised Penal Code, the restitution of the thing is not possible for
the reason that said thing has been acquired by the third persons(Chua Hai) in the manner under the requirements which (in addition to the other means enumerated
in the majority decision) bar, by law an action for its recovery. I am, therefore, of the opinion and thus hold that in cases where the ownership of the effects of the
crime has already been transferred by the offender to an innocent third party, the restitution of the thing itself referred to in Article 105 of the Revised Penal Code
must necessarily be limited to cases in which the offended party was illegally deprived of the property involved in the crime committed, such as in cases of robbery
and theft, but not to cams wherein the offended party has not been deprived of his property which he delivered to the purchaser with the expectation of course, of
receiving the consideration of the sale.
I, therefore, concur in the majority decision penned by Mr. Justice J. B. L. Reyes.


LABRADOR, J., dissenting:
I dissent. Before proceeding to the discussion of the facts it seems necessary for an understanding of this dissent that this is a certiorari originally instituted in this
Court against an order of Judge Ruperto Kapunan, Jr. of the Court of First Instance of Manila. As a case of certiorari, not a petition for review, the only pertinent issue,
as I see it, is whether under the facts and circumstances of the case the order against which the petition is instituted was issued in excess of jurisdiction or with grave
abuse of discretion. The order issued by the respondent judge was provisional in character, subject to the outcome of the criminal case and any other future litigation
respecting the property subject of the proceedings.
The certiorari seeks to set aside the order for the return to the complainant in criminal case No. 34250, People vs. Roberto Sotto, of 100 sheets of galvanized iron
roofing which had been sold by the accused in said case to petitioner herein, Chua Hai. The order is as follows:
Counsel for the complainant in this case seeks the return of the 700 sheets of galvanized iron now with the Manila Police Department which form part of
the hardware materials involved in this case. Chua Hai, one of the persons who purchased from the accused one hundred (100) pieces of the said
galvanized iron sheets, opposes the said motion on the ground that the question of ownership should be determined in the proper proceedings, claiming
that he has a valid title to the 100 pieces, having bought them from the accused Roberto Sotto on February 1, 1956. Roberto Sotto is presently at large, his
arrest having been ordered by this Court on June 13, 1956, for failure to appear for trial.
Considering the provisions of Article 105 of the Revised Penal Code, the said 700 sheets, except five of them which are to be retained for purposes of
evidence, are hereby ordered returned to the complainant, subject, however, to the condition that the complainant post a bond in an amount equal to
twice the value of 100 sheets in favor of Chua Hai who has a claim of ownership to the said 100 sheets, and without prejudice on the part of said Chua Hai
to file the corresponding action on the matter of ownership thereof by virtue of his purchase from the herein accused.
From the facts alleged in the pleadings prescribed in this case, we gather the following: On January 31, 1956, Roberto Sotto purchased from Youngstown Hardware,
owned by Ong Shu, 700 corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70, and in payment thereof he issued a check drawn against
the Security Bank and Trust Company for P7,000.00, without informing Ong Shu that had no sufficient funds in said bank to answer for the same. When the check was
presented for payment it was dishonored for insufficiency of funds. Sotto sold 165 sheets in Pangasinan and 535 sheets in Calapan, Mindoro. Of those sold in
Pangasinan, 100 was sold to petitioner Chua Hai. When the case was filed in the Court of First Instance of Manila against Roberto Sotto, for estafa, the offended party
filed a petition asking that the 700 galvanized iron sheets which were deposited with the Manila Police Department be returned to him, as owner of the Youngstown
Hardware. Petitioner herein opposed the motion with respect to the 100 sheets that he had bought from Sotto. Notwithstanding the opposition the court ordered
the return of the galvanized iron sheets to Ong Shu. Petitioner then presented a motion to reconsider the order, alleging that by the return thereof to the offended
party, the court had not only violated the contract of deposit, because it was in that concept that petitioner had deliver the 100 sheets to the Manila Police
Department, and that said return to Ong Shu amounted to a deprivation of his property without due process of law. It is also claimed that Article 105 of the Revised
Penal Code, under whose authority the return was ordered, can be invoked only after the termination of the criminal case and not while said criminal case is still
pending trial.
The court giving no heed to these protests on the part of the petitioner, the latter brought the present petition to this Court alleging that the order of the respondent
judge constitutes a deprivation of petitioner's property without due process of law, violating the contract of deposit under which the sheets were delivered to the
police department of the City of Manila, and determining the respective rights of petitioner and respondent Ong Shu without a previous trial of the criminal case
all of which constitute a grave abuse of discretion and excess of jurisdiction. In answer to the petition it is claimed that as respondent Ong Shu is the owner of the
property, he has the right to recover possession thereof even if said property appears to have fallen into the possession of a third party who acquired it by legal
means, provided that said form of acquisition is not that provided for in Article 464 of the Civil Code (where property has been pledged in a monte de
piedad established under authority of the Government) ; that even if the property was acquired in good faith, the owner who has been unlawfully deprived thereof
may recover it from the person in possession of the same unless a person in possession acquired it in good faith at a public sale (Art. 559, Civil Code of the
Philippines). It is also claimed that under the provisions of Article 105 of the Revised Penal Code, under which restitution is made by a return of the thing itself
whenever possible, the galvanized iron sheets in question should be returned to the offended party, the owner, and that there is no provision of law requiring that
the criminal case must first be finally disposed of before restitution of the goods swindled can be ordered returned to the owner. In answer to the allegation that
petitioner has been deprived of his property without due process of law, it is alleged that same is without foundation because the petitioner was given ample time to
be heard. As to the claim that the galvanized iron sheets in question were deposited with the Manila Police Department, it is argued that the delivery to the Manila
Police Department was by virtue of the order of the court, because the said sheets were the subject of or are the instruments of the commission of the crime
of estafa, and the court had the power to order the return thereof to the owner after it had satisfied itself of the ownership thereof by the offended party. It is also
alleged in defense that petitioner's rights, if any, are sufficiently protected by the bond that the court has required to be filed.
I find no merit in the contention that petitioner was deprived of the possession and ownership of the galvanized iron sheets without due process of law, it appearing
that sufficient opportunity was given him to explain his right to the possession and ownership thereof when he presented him motion for reconsideration which the
court heard and which it finally denied. The claim that the respective rights of the petitioner and the respondent owner can only be decided in the final criminal
action is also without merit. The criminal case seeks to determine the fact of the commission of the crime by the accused. When as in this case it cannot be seriously
contended that the galvanized iron sheet in question were not the ones that the accused had taken away from the offended party by illegal means, there is no
advantage to be gained by postponing the determination of the ownership of the stolen property as between the offended party and the purchaser. Anyway, the
order of the court is merely provisional in character and it is expressly provided therein that the claims of the parties to the property are to be determined in the final
action that the petitioner may file, if he desires to do so.
The decision of the majority supposedly rests on the provisions of Article 599 of the Civil Code, which is as follows:
The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner can not
obtain its return without reimbursing the price paid therefor.
We fully agree with the majority that this Article covers the case, but we are of the humble opinion that the provision that is applicable is not paragraph 1, but
paragraph 2. Granting that the petitioner was a possessor in good faith, the facts disclosed not by the information alone, but by the motion for the return of the
goods and other parts of the record show that these movable properties used to belong to the respondent Ong Shu and that he was deprived thereof unlawfully
because a certain person purchased it with a bogus check. As between the purchaser and Ong Shu, the lawful owner, even if the former is clothed with all the good
faith, the owner of the property Ong Shu has a better right to recover possession thereof. The criminal law provides that the subject of a crime can always be
recovered from whoever is in possession of the same, irrespective of the good faith of the possessor. Were we to adopt the ruling of the majority, we will be
encouraging crooks because by artful connivance with supposed buyers in good faith (and the worst part of it is good faith is always presumed), we will have a holiday
for crooks, thieves and robbers.
While it is true that the information does not deny the good faith of petitioner, but as against that of the lawful owner, Ong Shu, the latter should be given
preference.
It is not disputed that the respondent Ong Shu was originally the lawful owner. If that is so and he was deprived of the property by a criminal act, how can such
ownership now have been destroyed and can now be denied. The only way by which the petitioner, the buyer from the thief, can be protected in his possession is by
applying the provisions of paragraph 2 of Article 599 of the Civil Code, which reads:
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner can not
obtain its return without reimbursing the price paid therefor.
Note that we have underlined the words public sale. This he has not proved and no evidence has been shown or is insinuated in the record. Even if he had acquired it
at public sale, the right for reimbursement of the price still remains. The price is fully guaranteed by the bond approved by the court.
G.R. No. 151319 November 22, 2004
MANILA MEMORIAL PARK CEMETERY, INC., petitioner,
vs.
PEDRO L. LINSANGAN, respondent.


D E C I S I O N


TINGA, J.:
For resolution in this case is a classic and interesting texbook question in the law on agency.
This is a petition for review assailing the Decision
1
of the Court of Appeals dated 22 June 2001, and its Resolution
2
dated 12 December 2001 in CA G.R. CV No. 49802
entitled "Pedro L. Linsangan v. Manila Memorial Cemetery, Inc. et al.," finding Manila Memorial Park Cemetery, Inc. (MMPCI) jointly and severally liable with Florencia
C. Baluyot to respondent Atty. Pedro L. Linsangan.
The facts of the case are as follows:
Sometime in 1984, Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI).
According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject
to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the
former buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the
original buyer and to complete the down payment to MMPCI.
3
Baluyot issued handwritten and typewritten receipts for these payments.
4

Sometime in March 1985, Baluyot informed Atty. Linsangan that he would be issued Contract No. 28660, a new contract covering the subject lot in the name of the
latter instead of old Contract No. 25012. Atty. Linsangan protested, but Baluyot assured him that he would still be paying the old price of P95,000.00 with P19,838.00
credited as full down payment leaving a balance of about P75,000.00.
5

Subsequently, on 8 April 1985, Baluyot brought an Offer to Purchase Lot No. A11 (15), Block 83, Garden Estate I denominated as Contract No. 28660 and the Official
Receipt No. 118912 dated 6 April 1985 for the amount of P19,838.00. Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new
contract price, as the same was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a document
6
confirming that while the
contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.
The document reads in part:
The monthly installment will start April 6, 1985; the amount of P1,800.00 and the difference will be issued as discounted to conform to the previous price
as previously agreed upon. --- P95,000.00
Prepared by:
(Signed)
(MRS.) FLORENCIA C. BALUYOT
Agency Manager
Holy Cross Memorial Park
4/18/85
Dear Atty. Linsangan:
This will confirm our agreement that while the offer to purchase under Contract No. 28660 states that the total price of P132,250.00 your undertaking is to
pay only the total sum of P95,000.00 under the old price. Further the total sum of P19,838.00 already paid by you under O.R. # 118912 dated April 6, 1985
has been credited in the total purchase price thereby leaving a balance of P75,162.00 on a monthly installment of P1,800.00 including interests (sic)
charges for a period of five (5) years.
(Signed)
FLORENCIA C. BALUYOT
By virtue of this letter, Atty. Linsangan signed Contract No. 28660 and accepted Official Receipt No. 118912. As requested by Baluyot, Atty. Linsangan issued twelve
(12) postdated checks of P1,800.00 each in favor of MMPCI. The next year, or on 29 April 1986, Atty. Linsangan again issued twelve (12) postdated checks in favor of
MMPCI.
On 25 May 1987, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain, and presented to him
another proposal for the purchase of an equivalent property. He refused the new proposal and insisted that Baluyot and MMPCI honor their undertaking.
For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint
7
for Breach of Contract and Damages against the
former.
Baluyot did not present any evidence. For its part, MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract
8
because of non-
payment of arrearages.
9
MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use
its name except as to the extent expressly stated in the Agency Manager Agreement.
10
Moreover, MMPCI was not aware of the arrangements entered into by Atty.
Linsangan and Baluyot, as it in fact received a down payment and monthly installments as indicated in the contract.
11
Official receipts showing the application of
payment were turned over to Baluyot whom Atty. Linsangan had from the beginning allowed to receive the same in his behalf. Furthermore, whatever misimpression
that Atty. Linsangan may have had must have been rectified by the Account Updating Arrangement signed by Atty. Linsangan which states that he "expressly admits
that Contract No. 28660 'on account of serious delinquencyis now due for cancellation under its terms and conditions.'''
12

The trial court held MMPCI and Baluyot jointly and severally liable.
13
It found that Baluyot was an agent of MMPCI and that the latter was estopped from denying this
agency, having received and enchased the checks issued by Atty. Linsangan and given to it by Baluyot. While MMPCI insisted that Baluyot was authorized to receive
only the down payment, it allowed her to continue to receive postdated checks from Atty. Linsangan, which it in turn consistently encashed.
14

The dispositive portion of the decision reads:
WHEREFORE, judgment by preponderance of evidence is hereby rendered in favor of plaintiff declaring Contract No. 28660 as valid and subsisting and
ordering defendants to perform their undertakings thereof which covers burial lot No. A11 (15), Block 83, Section Garden I, Holy Cross Memorial Park
located at Novaliches, Quezon City. All payments made by plaintiff to defendants should be credited for his accounts. NO DAMAGES, NO ATTORNEY'S FEES
but with costs against the defendants.
The cross claim of defendant Manila Memorial Cemetery Incorporated as against defendant Baluyot is GRANTED up to the extent of the costs.
SO ORDERED.
15

MMPCI appealed the trial court's decision to the Court of Appeals.
16
It claimed that Atty. Linsangan is bound by the written contract with MMPCI, the terms of which
were clearly set forth therein and read, understood, and signed by the former.
17
It also alleged that Atty. Linsangan, a practicing lawyer for over thirteen (13) years at
the time he entered into the contract, is presumed to know his contractual obligations and is fully aware that he cannot belatedly and unilaterally change the terms
of the contract without the consent, much less the knowledge of the other contracting party, which was MMPCI. And in this case, MMPCI did not agree to a change in
the contract and in fact implemented the same pursuant to its clear terms. In view thereof, because of Atty. Linsangan's delinquency, MMPCI validly cancelled the
contract.
MMPCI further alleged that it cannot be held jointly and solidarily liable with Baluyot as the latter exceeded the terms of her agency, neither did MMPCI ratify
Baluyot's acts. It added that it cannot be charged with making any misrepresentation, nor of having allowed Baluyot to act as though she had full powers as the
written contract expressly stated the terms and conditions which Atty. Linsangan accepted and understood. In canceling the contract, MMPCI merely enforced the
terms and conditions imposed therein.
18

Imputing negligence on the part of Atty. Linsangan, MMPCI claimed that it was the former's obligation, as a party knowingly dealing with an alleged agent, to
determine the limitations of such agent's authority, particularly when such alleged agent's actions were patently questionable. According to MMPCI, Atty. Linsangan
did not even bother to verify Baluyot's authority or ask copies of official receipts for his payments.
19

The Court of Appeals affirmed the decision of the trial court. It upheld the trial court's finding that Baluyot was an agent of MMPCI at the time the disputed contract
was entered into, having represented MMPCI's interest and acting on its behalf in the dealings with clients and customers. Hence, MMPCI is considered estopped
when it allowed Baluyot to act and represent MMPCI even beyond her authority.
20
The appellate court likewise found that the acts of Baluyot bound MMPCI when
the latter allowed the former to act for and in its behalf and stead. While Baluyot's authority "may not have been expressly conferred upon her, the same may have
been derived impliedly by habit or custom, which may have been an accepted practice in the company for a long period of time."
21
Thus, the Court of Appeals noted,
innocent third persons such as Atty. Linsangan should not be prejudiced where the principal failed to adopt the needed measures to prevent misrepresentation.
Furthermore, if an agent misrepresents to a purchaser and the principal accepts the benefits of such misrepresentation, he cannot at the same time deny
responsibility for such misrepresentation.
22
Finally, the Court of Appeals declared:
There being absolutely nothing on the record that would show that the court a quo overlooked, disregarded, or misinterpreted facts of weight and significance, its
factual findings and conclusions must be given great weight and should not be disturbed by this Court on appeal.
WHEREFORE, in view of the foregoing, the appeal is hereby DENIED and the appealed decision in Civil Case No. 88-1253 of the Regional Trial Court,
National Capital Judicial Region, Branch 57 of Makati, is hereby AFFIRMED in toto.
SO ORDERED.
23

MMPCI filed its Motion for Reconsideration,
24
but the same was denied for lack of merit.
25

In the instant Petition for Review, MMPCI claims that the Court of Appeals seriously erred in disregarding the plain terms of the written contract and Atty. Linsangan's
failure to abide by the terms thereof, which justified its cancellation. In addition, even assuming that Baluyot was an agent of MMPCI, she clearly exceeded her
authority and Atty. Linsangan knew or should have known about this considering his status as a long-practicing lawyer. MMPCI likewise claims that the Court of
Appeals erred in failing to consider that the facts and the applicable law do not support a judgment against Baluyot only "up to the extent of costs."
26

Atty. Linsangan argues that he did not violate the terms and conditions of the contract, and in fact faithfully performed his contractual obligations and complied with
them in good faith for at least two years.
27
He claims that contrary to MMPCI's position, his profession as a lawyer is immaterial to the validity of the subject contract
and the case at bar.
28
According to him, MMPCI had practically admitted in its Petition that Baluyot was its agent, and thus, the only issue left to be resolved is
whether MMPCI allowed Baluyot to act as though she had full powers to be held solidarily liable with the latter.
29

We find for the petitioner MMPCI.
The jurisdiction of the Supreme Court in a petition for review under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not fact, unless the factual
findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts.
30
In BPI Investment
Corporation v. D.G. Carreon Commercial Corporation,
31
this Court ruled:
There are instances when the findings of fact of the trial court and/or Court of Appeals may be reviewed by the Supreme Court, such as (1) when the
conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed
by the respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the
evidence on record.
32

In the case at bar, the Court of Appeals committed several errors in the apprehension of the facts of the case, as well as made conclusions devoid of evidentiary
support, hence we review its findings of fact.
By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority
of the latter.
33
Thus, the elements of agency are (i) consent, express or implied, of the parties to establish the relationship; (ii) the object is the execution of a juridical
act in relation to a third person; (iii) the agent acts as a representative and not for himself; and (iv) the agent acts within the scope of his authority.
34

In an attempt to prove that Baluyot was not its agent, MMPCI pointed out that under its Agency Manager Agreement; an agency manager such as Baluyot is
considered an independent contractor and not an agent.
35
However, in the same contract, Baluyot as agency manager was authorized to solicit and remit to MMPCI
offers to purchase interment spaces belonging to and sold by the latter.
36
Notwithstanding the claim of MMPCI that Baluyot was an independent contractor, the fact
remains that she was authorized to solicit solely for and in behalf of MMPCI. As properly found both by the trial court and the Court of Appeals, Baluyot was an agent
of MMPCI, having represented the interest of the latter, and having been allowed by MMPCI to represent it in her dealings with its clients/prospective buyers.
Nevertheless, contrary to the findings of the Court of Appeals, MMPCI cannot be bound by the contract procured by Atty. Linsangan and solicited by Baluyot.
Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI. The terms of the offer to purchase,
therefore, are contained in such forms and, when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.
The Offer to Purchase duly signed by Atty. Linsangan, and accepted and validated by MMPCI showed a total list price of P132,250.00. Likewise, it was clearly stated
therein that "Purchaser agrees that he has read or has had read to him this agreement, that he understands its terms and conditions, and that there are no
covenants, conditions, warranties or representations other than those contained herein."
37
By signing the Offer to Purchase, Atty. Linsangan signified that he
understood its contents. That he and Baluyot had an agreement different from that contained in the Offer to Purchase is of no moment, and should not affect
MMPCI, as it was obviously made outside Baluyot's authority. To repeat, Baluyot's authority was limited only to soliciting purchasers. She had no authority to alter
the terms of the written contract provided by MMPCI. The document/letter "confirming" the agreement that Atty. Linsangan would have to pay the old price was
executed by Baluyot alone. Nowhere is there any indication that the same came from MMPCI or any of its officers.
It is a settled rule that persons dealing with an agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also
the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it.
38
The basis for agency is representation and a
person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.
39
If he does not make such an inquiry, he is chargeable
with knowledge of the agent's authority and his ignorance of that authority will not be any excuse.
40

As noted by one author, the ignorance of a person dealing with an agent as to the scope of the latter's authority is no excuse to such person and the fault cannot be
thrown upon the principal.
41
A person dealing with an agent assumes the risk of lack of authority in the agent. He cannot charge the principal by relying upon the
agent's assumption of authority that proves to be unfounded. The principal, on the other hand, may act on the presumption that third persons dealing with his agent
will not be negligent in failing to ascertain the extent of his authority as well as the existence of his agency.
42

In the instant case, it has not been established that Atty. Linsangan even bothered to inquire whether Baluyot was authorized to agree to terms contrary to those
indicated in the written contract, much less bind MMPCI by her commitment with respect to such agreements. Even if Baluyot was Atty. Linsangan's friend and
known to be an agent of MMPCI, her declarations and actions alone are not sufficient to establish the fact or extent of her authority.
43
Atty. Linsangan as a practicing
lawyer for a relatively long period of time when he signed the contract should have been put on guard when their agreement was not reflected in the contract. More
importantly, Atty. Linsangan should have been alerted by the fact that Baluyot failed to effect the transfer of rights earlier promised, and was unable to make good
her written commitment, nor convince MMPCI to assent thereto, as evidenced by several attempts to induce him to enter into other contracts for a higher
consideration. As properly pointed out by MMPCI, as a lawyer, a greater degree of caution should be expected of Atty. Linsangan especially in dealings involving legal
documents. He did not even bother to ask for official receipts of his payments, nor inquire from MMPCI directly to ascertain the real status of the contract, blindly
relying on the representations of Baluyot. A lawyer by profession, he knew what he was doing when he signed the written contract, knew the meaning and value of
every word or phrase used in the contract, and more importantly, knew the legal effects which said document produced. He is bound to accept responsibility for his
negligence.
The trial and appellate courts found MMPCI liable based on ratification and estoppel. For the trial court, MMPCI's acts of accepting and encashing the checks issued
by Atty. Linsangan as well as allowing Baluyot to receive checks drawn in the name of MMPCI confirm and ratify the contract of agency. On the other hand, the Court
of Appeals faulted MMPCI in failing to adopt measures to prevent misrepresentation, and declared that in view of MMPCI's acceptance of the benefits of Baluyot's
misrepresentation, it can no longer deny responsibility therefor.
The Court does not agree. Pertinent to this case are the following provisions of the Civil Code:
Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be
void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if
he undertook to secure the principal's ratification.
Art. 1910. The principal must comply with all the obligations that the agent may have contracted within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.
Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though
he had full powers.
Thus, the acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the
agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify.
44

Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority. The substance of the doctrine is
confirmation after conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge at the time of ratification of all the
material facts and circumstances relating to the unauthorized act of the person who assumed to act as agent. Thus, if material facts were suppressed or unknown,
there can be no valid ratification and this regardless of the purpose or lack thereof in concealing such facts and regardless of the parties between whom the question
of ratification may arise.
45
Nevertheless, this principle does not apply if the principal's ignorance of the material facts and circumstances was willful, or that the
principal chooses to act in ignorance of the facts.
46
However, in the absence of circumstances putting a reasonably prudent man on inquiry, ratification cannot be
implied as against the principal who is ignorant of the facts.
47

No ratification can be implied in the instant case.
A perusal of Baluyot's Answer
48
reveals that the real arrangement between her and Atty. Linsangan was for the latter to pay a monthly installment of P1,800.00
whereas Baluyot was to shoulder the counterpart amount of P1,455.00 to meet the P3,255.00 monthly installments as indicated in the contract. Thus, every time an
installment falls due, payment was to be made through a check from Atty. Linsangan for P1,800.00 and a cash component of P1,455.00 from Baluyot.
49
However, it
appears that while Atty. Linsangan issued the post-dated checks, Baluyot failed to come up with her part of the bargain. This was supported by Baluyot's statements
in her letter
50
to Mr. Clyde Williams, Jr., Sales Manager of MMPCI, two days after she received the copy of the Complaint. In the letter, she admitted that she was
remiss in her duties when she consented to Atty. Linsangan's proposal that he will pay the old price while the difference will be shouldered by her. She likewise
admitted that the contract suffered arrearages because while Atty. Linsangan issued the agreed checks, she was unable to give her share of P1,455.00 due to her own
financial difficulties. Baluyot even asked for compassion from MMPCI for the error she committed.
Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the
Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer. The down payment of P19,838.00 given by Atty. Linsangan was in accordance with the
contract as well. Payments of P3,235.00 for at least two installments were likewise in accord with the contract, albeit made through a check and partly in cash. In
view of Baluyot's failure to give her share in the payment, MMPCI received only P1,800.00 checks, which were clearly insufficient payment. In fact, Atty. Linsangan
would have incurred arrearages that could have caused the earlier cancellation of the contract, if not for MMPCI's application of some of the checks to his account.
However, the checks alone were not sufficient to cover his obligations.
If MMPCI was aware of the arrangement, it would have refused the latter's check payments for being insufficient. It would not have applied to his account the
P1,800.00 checks. Moreover, the fact that Baluyot had to practically explain to MMPCI's Sales Manager the details of her "arrangement" with Atty. Linsangan and
admit to having made an error in entering such arrangement confirm that MMCPI had no knowledge of the said agreement. It was only when Baluyot filed her
Answer that she claimed that MMCPI was fully aware of the agreement.
Neither is there estoppel in the instant case. The essential elements of estoppel are (i) conduct of a party amounting to false representation or concealment of
material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to
assert; (ii) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (iii) knowledge, actual or constructive, of
the real facts.
51

While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty.
Linsangan to believe that Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing that prior to signing Contract No.
28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. One who claims the benefit of an estoppel on the ground that he has been misled by
the representations of another must not have been misled through his own want of reasonable care and circumspection.
52
Even assuming that Atty. Linsangan was
misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily
determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract.
Estoppel must be intentional and unequivocal, for when misapplied, it can easily become a most convenient and effective means of injustice.
53
In view of the lack of
sufficient proof showing estoppel, we refuse to hold MMPCI liable on this score.
Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been expressly conferred upon her;
however, the same may have been derived impliedly by habit or custom which may have been an accepted practice in their company in a long period of time." A
perusal of the records of the case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to enter into agreements for
lower prices of its interment spaces, nor to assume a portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever presented
to this effect.
As the Court sees it, there are two obligations in the instant case. One is the Contract No. 28660 between MMPCI and by Atty. Linsangan for the purchase of an
interment space in the former's cemetery. The other is the agreement between Baluyot and Atty. Linsangan for the former to shoulder the amount P1,455.00, or the
difference between P95,000.00, the original price, and P132,250.00, the actual contract price.
To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It also bears emphasis that when the
third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person was
aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's
ratification.
54

This Court finds that Contract No. 28660 was validly entered into both by MMPCI and Atty. Linsangan. By affixing his signature in the contract, Atty. Linsangan
assented to the terms and conditions thereof. When Atty. Linsangan incurred delinquencies in payment, MMCPI merely enforced its rights under the said contract by
canceling the same.
Being aware of the limits of Baluyot's authority, Atty. Linsangan cannot insist on what he claims to be the terms of Contract No. 28660. The agreement, insofar as the
P95,000.00 contract price is concerned, is void and cannot be enforced as against MMPCI. Neither can he hold Baluyot liable for damages under the same contract,
since there is no evidence showing that Baluyot undertook to secure MMPCI's ratification. At best, the "agreement" between Baluyot and Atty. Linsangan bound only
the two of them. As far as MMPCI is concerned, it bound itself to sell its interment space to Atty. Linsangan for P132,250.00 under Contract No. 28660, and had in fact
received several payments in accordance with the same contract. If the contract was cancelled due to arrearages, Atty. Linsangan's recourse should only be against
Baluyot who personally undertook to pay the difference between the true contract price of P132,250.00 and the original proposed price of P95,000.00. To surmise
that Baluyot was acting on behalf of MMPCI when she promised to shoulder the said difference would be to conclude that MMPCI undertook to pay itself the
difference, a conclusion that is very illogical, if not antithetical to its business interests.
However, this does not preclude Atty. Linsangan from instituting a separate action to recover damages from Baluyot, not as an agent of MMPCI, but in view of the
latter's breach of their separate agreement. To review, Baluyot obligated herself to pay P1,455.00 in addition to Atty. Linsangan's P1,800.00 to complete the monthly
installment payment under the contract, which, by her own admission, she was unable to do due to personal financial difficulties. It is undisputed that Atty. Linsangan
issued the P1,800.00 as agreed upon, and were it not for Baluyot's failure to provide the balance, Contract No. 28660 would not have been cancelled. Thus, Atty.
Linsangan has a cause of action against Baluyot, which he can pursue in another case.
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 22 June 2001 and its Resolution dated 12 December 2001 in CA- G.R. CV
No. 49802, as well as the Decision in Civil Case No. 88-1253 of the Regional Trial Court, Makati City Branch 57, are hereby REVERSED and SET ASIDE. The Complaint in
Civil Case No. 88-1253 is DISMISSED for lack of cause of action. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
G.R. No. 151319 November 22, 2004
MANILA MEMORIAL PARK CEMETERY, INC., petitioner,
vs.
PEDRO L. LINSANGAN, respondent.


D E C I S I O N


TINGA, J.:
For resolution in this case is a classic and interesting texbook question in the law on agency.
This is a petition for review assailing the Decision
1
of the Court of Appeals dated 22 June 2001, and its Resolution
2
dated 12 December 2001 in CA G.R. CV No. 49802
entitled "Pedro L. Linsangan v. Manila Memorial Cemetery, Inc. et al.," finding Manila Memorial Park Cemetery, Inc. (MMPCI) jointly and severally liable with Florencia
C. Baluyot to respondent Atty. Pedro L. Linsangan.
The facts of the case are as follows:
Sometime in 1984, Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI).
According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject
to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the
former buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the
original buyer and to complete the down payment to MMPCI.
3
Baluyot issued handwritten and typewritten receipts for these payments.
4

Sometime in March 1985, Baluyot informed Atty. Linsangan that he would be issued Contract No. 28660, a new contract covering the subject lot in the name of the
latter instead of old Contract No. 25012. Atty. Linsangan protested, but Baluyot assured him that he would still be paying the old price of P95,000.00 with P19,838.00
credited as full down payment leaving a balance of about P75,000.00.
5

Subsequently, on 8 April 1985, Baluyot brought an Offer to Purchase Lot No. A11 (15), Block 83, Garden Estate I denominated as Contract No. 28660 and the Official
Receipt No. 118912 dated 6 April 1985 for the amount of P19,838.00. Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new
contract price, as the same was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a document
6
confirming that while the
contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.
The document reads in part:
The monthly installment will start April 6, 1985; the amount of P1,800.00 and the difference will be issued as discounted to conform to the previous price
as previously agreed upon. --- P95,000.00
Prepared by:
(Signed)
(MRS.) FLORENCIA C. BALUYOT
Agency Manager
Holy Cross Memorial Park
4/18/85
Dear Atty. Linsangan:
This will confirm our agreement that while the offer to purchase under Contract No. 28660 states that the total price of P132,250.00 your undertaking is to
pay only the total sum of P95,000.00 under the old price. Further the total sum of P19,838.00 already paid by you under O.R. # 118912 dated April 6, 1985
has been credited in the total purchase price thereby leaving a balance of P75,162.00 on a monthly installment of P1,800.00 including interests (sic)
charges for a period of five (5) years.
(Signed)
FLORENCIA C. BALUYOT
By virtue of this letter, Atty. Linsangan signed Contract No. 28660 and accepted Official Receipt No. 118912. As requested by Baluyot, Atty. Linsangan issued twelve
(12) postdated checks of P1,800.00 each in favor of MMPCI. The next year, or on 29 April 1986, Atty. Linsangan again issued twelve (12) postdated checks in favor of
MMPCI.
On 25 May 1987, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain, and presented to him
another proposal for the purchase of an equivalent property. He refused the new proposal and insisted that Baluyot and MMPCI honor their undertaking.
For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint
7
for Breach of Contract and Damages against the
former.
Baluyot did not present any evidence. For its part, MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract
8
because of non-
payment of arrearages.
9
MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use
its name except as to the extent expressly stated in the Agency Manager Agreement.
10
Moreover, MMPCI was not aware of the arrangements entered into by Atty.
Linsangan and Baluyot, as it in fact received a down payment and monthly installments as indicated in the contract.
11
Official receipts showing the application of
payment were turned over to Baluyot whom Atty. Linsangan had from the beginning allowed to receive the same in his behalf. Furthermore, whatever misimpression
that Atty. Linsangan may have had must have been rectified by the Account Updating Arrangement signed by Atty. Linsangan which states that he "expressly admits
that Contract No. 28660 'on account of serious delinquencyis now due for cancellation under its terms and conditions.'''
12

The trial court held MMPCI and Baluyot jointly and severally liable.
13
It found that Baluyot was an agent of MMPCI and that the latter was estopped from denying this
agency, having received and enchased the checks issued by Atty. Linsangan and given to it by Baluyot. While MMPCI insisted that Baluyot was authorized to receive
only the down payment, it allowed her to continue to receive postdated checks from Atty. Linsangan, which it in turn consistently encashed.
14

The dispositive portion of the decision reads:
WHEREFORE, judgment by preponderance of evidence is hereby rendered in favor of plaintiff declaring Contract No. 28660 as valid and subsisting and
ordering defendants to perform their undertakings thereof which covers burial lot No. A11 (15), Block 83, Section Garden I, Holy Cross Memorial Park
located at Novaliches, Quezon City. All payments made by plaintiff to defendants should be credited for his accounts. NO DAMAGES, NO ATTORNEY'S FEES
but with costs against the defendants.
The cross claim of defendant Manila Memorial Cemetery Incorporated as against defendant Baluyot is GRANTED up to the extent of the costs.
SO ORDERED.
15

MMPCI appealed the trial court's decision to the Court of Appeals.
16
It claimed that Atty. Linsangan is bound by the written contract with MMPCI, the terms of which
were clearly set forth therein and read, understood, and signed by the former.
17
It also alleged that Atty. Linsangan, a practicing lawyer for over thirteen (13) years at
the time he entered into the contract, is presumed to know his contractual obligations and is fully aware that he cannot belatedly and unilaterally change the terms
of the contract without the consent, much less the knowledge of the other contracting party, which was MMPCI. And in this case, MMPCI did not agree to a change in
the contract and in fact implemented the same pursuant to its clear terms. In view thereof, because of Atty. Linsangan's delinquency, MMPCI validly cancelled the
contract.
MMPCI further alleged that it cannot be held jointly and solidarily liable with Baluyot as the latter exceeded the terms of her agency, neither did MMPCI ratify
Baluyot's acts. It added that it cannot be charged with making any misrepresentation, nor of having allowed Baluyot to act as though she had full powers as the
written contract expressly stated the terms and conditions which Atty. Linsangan accepted and understood. In canceling the contract, MMPCI merely enforced the
terms and conditions imposed therein.
18

Imputing negligence on the part of Atty. Linsangan, MMPCI claimed that it was the former's obligation, as a party knowingly dealing with an alleged agent, to
determine the limitations of such agent's authority, particularly when such alleged agent's actions were patently questionable. According to MMPCI, Atty. Linsangan
did not even bother to verify Baluyot's authority or ask copies of official receipts for his payments.
19

The Court of Appeals affirmed the decision of the trial court. It upheld the trial court's finding that Baluyot was an agent of MMPCI at the time the disputed contract
was entered into, having represented MMPCI's interest and acting on its behalf in the dealings with clients and customers. Hence, MMPCI is considered estopped
when it allowed Baluyot to act and represent MMPCI even beyond her authority.
20
The appellate court likewise found that the acts of Baluyot bound MMPCI when
the latter allowed the former to act for and in its behalf and stead. While Baluyot's authority "may not have been expressly conferred upon her, the same may have
been derived impliedly by habit or custom, which may have been an accepted practice in the company for a long period of time."
21
Thus, the Court of Appeals noted,
innocent third persons such as Atty. Linsangan should not be prejudiced where the principal failed to adopt the needed measures to prevent misrepresentation.
Furthermore, if an agent misrepresents to a purchaser and the principal accepts the benefits of such misrepresentation, he cannot at the same time deny
responsibility for such misrepresentation.
22
Finally, the Court of Appeals declared:
There being absolutely nothing on the record that would show that the court a quo overlooked, disregarded, or misinterpreted facts of weight and significance, its
factual findings and conclusions must be given great weight and should not be disturbed by this Court on appeal.
WHEREFORE, in view of the foregoing, the appeal is hereby DENIED and the appealed decision in Civil Case No. 88-1253 of the Regional Trial Court,
National Capital Judicial Region, Branch 57 of Makati, is hereby AFFIRMED in toto.
SO ORDERED.
23

MMPCI filed its Motion for Reconsideration,
24
but the same was denied for lack of merit.
25

In the instant Petition for Review, MMPCI claims that the Court of Appeals seriously erred in disregarding the plain terms of the written contract and Atty. Linsangan's
failure to abide by the terms thereof, which justified its cancellation. In addition, even assuming that Baluyot was an agent of MMPCI, she clearly exceeded her
authority and Atty. Linsangan knew or should have known about this considering his status as a long-practicing lawyer. MMPCI likewise claims that the Court of
Appeals erred in failing to consider that the facts and the applicable law do not support a judgment against Baluyot only "up to the extent of costs."
26

Atty. Linsangan argues that he did not violate the terms and conditions of the contract, and in fact faithfully performed his contractual obligations and complied with
them in good faith for at least two years.
27
He claims that contrary to MMPCI's position, his profession as a lawyer is immaterial to the validity of the subject contract
and the case at bar.
28
According to him, MMPCI had practically admitted in its Petition that Baluyot was its agent, and thus, the only issue left to be resolved is
whether MMPCI allowed Baluyot to act as though she had full powers to be held solidarily liable with the latter.
29

We find for the petitioner MMPCI.
The jurisdiction of the Supreme Court in a petition for review under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not fact, unless the factual
findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts.
30
In BPI Investment
Corporation v. D.G. Carreon Commercial Corporation,
31
this Court ruled:
There are instances when the findings of fact of the trial court and/or Court of Appeals may be reviewed by the Supreme Court, such as (1) when the
conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed
by the respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the
evidence on record.
32

In the case at bar, the Court of Appeals committed several errors in the apprehension of the facts of the case, as well as made conclusions devoid of evidentiary
support, hence we review its findings of fact.
By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority
of the latter.
33
Thus, the elements of agency are (i) consent, express or implied, of the parties to establish the relationship; (ii) the object is the execution of a juridical
act in relation to a third person; (iii) the agent acts as a representative and not for himself; and (iv) the agent acts within the scope of his authority.
34

In an attempt to prove that Baluyot was not its agent, MMPCI pointed out that under its Agency Manager Agreement; an agency manager such as Baluyot is
considered an independent contractor and not an agent.
35
However, in the same contract, Baluyot as agency manager was authorized to solicit and remit to MMPCI
offers to purchase interment spaces belonging to and sold by the latter.
36
Notwithstanding the claim of MMPCI that Baluyot was an independent contractor, the fact
remains that she was authorized to solicit solely for and in behalf of MMPCI. As properly found both by the trial court and the Court of Appeals, Baluyot was an agent
of MMPCI, having represented the interest of the latter, and having been allowed by MMPCI to represent it in her dealings with its clients/prospective buyers.
Nevertheless, contrary to the findings of the Court of Appeals, MMPCI cannot be bound by the contract procured by Atty. Linsangan and solicited by Baluyot.
Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI. The terms of the offer to purchase,
therefore, are contained in such forms and, when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.
The Offer to Purchase duly signed by Atty. Linsangan, and accepted and validated by MMPCI showed a total list price of P132,250.00. Likewise, it was clearly stated
therein that "Purchaser agrees that he has read or has had read to him this agreement, that he understands its terms and conditions, and that there are no
covenants, conditions, warranties or representations other than those contained herein."
37
By signing the Offer to Purchase, Atty. Linsangan signified that he
understood its contents. That he and Baluyot had an agreement different from that contained in the Offer to Purchase is of no moment, and should not affect
MMPCI, as it was obviously made outside Baluyot's authority. To repeat, Baluyot's authority was limited only to soliciting purchasers. She had no authority to alter
the terms of the written contract provided by MMPCI. The document/letter "confirming" the agreement that Atty. Linsangan would have to pay the old price was
executed by Baluyot alone. Nowhere is there any indication that the same came from MMPCI or any of its officers.
It is a settled rule that persons dealing with an agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also
the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it.
38
The basis for agency is representation and a
person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.
39
If he does not make such an inquiry, he is chargeable
with knowledge of the agent's authority and his ignorance of that authority will not be any excuse.
40

As noted by one author, the ignorance of a person dealing with an agent as to the scope of the latter's authority is no excuse to such person and the fault cannot be
thrown upon the principal.
41
A person dealing with an agent assumes the risk of lack of authority in the agent. He cannot charge the principal by relying upon the
agent's assumption of authority that proves to be unfounded. The principal, on the other hand, may act on the presumption that third persons dealing with his agent
will not be negligent in failing to ascertain the extent of his authority as well as the existence of his agency.
42

In the instant case, it has not been established that Atty. Linsangan even bothered to inquire whether Baluyot was authorized to agree to terms contrary to those
indicated in the written contract, much less bind MMPCI by her commitment with respect to such agreements. Even if Baluyot was Atty. Linsangan's friend and
known to be an agent of MMPCI, her declarations and actions alone are not sufficient to establish the fact or extent of her authority.
43
Atty. Linsangan as a practicing
lawyer for a relatively long period of time when he signed the contract should have been put on guard when their agreement was not reflected in the contract. More
importantly, Atty. Linsangan should have been alerted by the fact that Baluyot failed to effect the transfer of rights earlier promised, and was unable to make good
her written commitment, nor convince MMPCI to assent thereto, as evidenced by several attempts to induce him to enter into other contracts for a higher
consideration. As properly pointed out by MMPCI, as a lawyer, a greater degree of caution should be expected of Atty. Linsangan especially in dealings involving legal
documents. He did not even bother to ask for official receipts of his payments, nor inquire from MMPCI directly to ascertain the real status of the contract, blindly
relying on the representations of Baluyot. A lawyer by profession, he knew what he was doing when he signed the written contract, knew the meaning and value of
every word or phrase used in the contract, and more importantly, knew the legal effects which said document produced. He is bound to accept responsibility for his
negligence.
The trial and appellate courts found MMPCI liable based on ratification and estoppel. For the trial court, MMPCI's acts of accepting and encashing the checks issued
by Atty. Linsangan as well as allowing Baluyot to receive checks drawn in the name of MMPCI confirm and ratify the contract of agency. On the other hand, the Court
of Appeals faulted MMPCI in failing to adopt measures to prevent misrepresentation, and declared that in view of MMPCI's acceptance of the benefits of Baluyot's
misrepresentation, it can no longer deny responsibility therefor.
The Court does not agree. Pertinent to this case are the following provisions of the Civil Code:
Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be
void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if
he undertook to secure the principal's ratification.
Art. 1910. The principal must comply with all the obligations that the agent may have contracted within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.
Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though
he had full powers.
Thus, the acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the
agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify.
44

Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority. The substance of the doctrine is
confirmation after conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge at the time of ratification of all the
material facts and circumstances relating to the unauthorized act of the person who assumed to act as agent. Thus, if material facts were suppressed or unknown,
there can be no valid ratification and this regardless of the purpose or lack thereof in concealing such facts and regardless of the parties between whom the question
of ratification may arise.
45
Nevertheless, this principle does not apply if the principal's ignorance of the material facts and circumstances was willful, or that the
principal chooses to act in ignorance of the facts.
46
However, in the absence of circumstances putting a reasonably prudent man on inquiry, ratification cannot be
implied as against the principal who is ignorant of the facts.
47

No ratification can be implied in the instant case.
A perusal of Baluyot's Answer
48
reveals that the real arrangement between her and Atty. Linsangan was for the latter to pay a monthly installment of P1,800.00
whereas Baluyot was to shoulder the counterpart amount of P1,455.00 to meet the P3,255.00 monthly installments as indicated in the contract. Thus, every time an
installment falls due, payment was to be made through a check from Atty. Linsangan for P1,800.00 and a cash component of P1,455.00 from Baluyot.
49
However, it
appears that while Atty. Linsangan issued the post-dated checks, Baluyot failed to come up with her part of the bargain. This was supported by Baluyot's statements
in her letter
50
to Mr. Clyde Williams, Jr., Sales Manager of MMPCI, two days after she received the copy of the Complaint. In the letter, she admitted that she was
remiss in her duties when she consented to Atty. Linsangan's proposal that he will pay the old price while the difference will be shouldered by her. She likewise
admitted that the contract suffered arrearages because while Atty. Linsangan issued the agreed checks, she was unable to give her share of P1,455.00 due to her own
financial difficulties. Baluyot even asked for compassion from MMPCI for the error she committed.
Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the
Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer. The down payment of P19,838.00 given by Atty. Linsangan was in accordance with the
contract as well. Payments of P3,235.00 for at least two installments were likewise in accord with the contract, albeit made through a check and partly in cash. In
view of Baluyot's failure to give her share in the payment, MMPCI received only P1,800.00 checks, which were clearly insufficient payment. In fact, Atty. Linsangan
would have incurred arrearages that could have caused the earlier cancellation of the contract, if not for MMPCI's application of some of the checks to his account.
However, the checks alone were not sufficient to cover his obligations.
If MMPCI was aware of the arrangement, it would have refused the latter's check payments for being insufficient. It would not have applied to his account the
P1,800.00 checks. Moreover, the fact that Baluyot had to practically explain to MMPCI's Sales Manager the details of her "arrangement" with Atty. Linsangan and
admit to having made an error in entering such arrangement confirm that MMCPI had no knowledge of the said agreement. It was only when Baluyot filed her
Answer that she claimed that MMCPI was fully aware of the agreement.
Neither is there estoppel in the instant case. The essential elements of estoppel are (i) conduct of a party amounting to false representation or concealment of
material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to
assert; (ii) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (iii) knowledge, actual or constructive, of
the real facts.
51

While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty.
Linsangan to believe that Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing that prior to signing Contract No.
28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. One who claims the benefit of an estoppel on the ground that he has been misled by
the representations of another must not have been misled through his own want of reasonable care and circumspection.
52
Even assuming that Atty. Linsangan was
misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily
determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract.
Estoppel must be intentional and unequivocal, for when misapplied, it can easily become a most convenient and effective means of injustice.
53
In view of the lack of
sufficient proof showing estoppel, we refuse to hold MMPCI liable on this score.
Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been expressly conferred upon her;
however, the same may have been derived impliedly by habit or custom which may have been an accepted practice in their company in a long period of time." A
perusal of the records of the case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to enter into agreements for
lower prices of its interment spaces, nor to assume a portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever presented
to this effect.
As the Court sees it, there are two obligations in the instant case. One is the Contract No. 28660 between MMPCI and by Atty. Linsangan for the purchase of an
interment space in the former's cemetery. The other is the agreement between Baluyot and Atty. Linsangan for the former to shoulder the amount P1,455.00, or the
difference between P95,000.00, the original price, and P132,250.00, the actual contract price.
To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It also bears emphasis that when the
third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person was
aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's
ratification.
54

This Court finds that Contract No. 28660 was validly entered into both by MMPCI and Atty. Linsangan. By affixing his signature in the contract, Atty. Linsangan
assented to the terms and conditions thereof. When Atty. Linsangan incurred delinquencies in payment, MMCPI merely enforced its rights under the said contract by
canceling the same.
Being aware of the limits of Baluyot's authority, Atty. Linsangan cannot insist on what he claims to be the terms of Contract No. 28660. The agreement, insofar as the
P95,000.00 contract price is concerned, is void and cannot be enforced as against MMPCI. Neither can he hold Baluyot liable for damages under the same contract,
since there is no evidence showing that Baluyot undertook to secure MMPCI's ratification. At best, the "agreement" between Baluyot and Atty. Linsangan bound only
the two of them. As far as MMPCI is concerned, it bound itself to sell its interment space to Atty. Linsangan for P132,250.00 under Contract No. 28660, and had in fact
received several payments in accordance with the same contract. If the contract was cancelled due to arrearages, Atty. Linsangan's recourse should only be against
Baluyot who personally undertook to pay the difference between the true contract price of P132,250.00 and the original proposed price of P95,000.00. To surmise
that Baluyot was acting on behalf of MMPCI when she promised to shoulder the said difference would be to conclude that MMPCI undertook to pay itself the
difference, a conclusion that is very illogical, if not antithetical to its business interests.
However, this does not preclude Atty. Linsangan from instituting a separate action to recover damages from Baluyot, not as an agent of MMPCI, but in view of the
latter's breach of their separate agreement. To review, Baluyot obligated herself to pay P1,455.00 in addition to Atty. Linsangan's P1,800.00 to complete the monthly
installment payment under the contract, which, by her own admission, she was unable to do due to personal financial difficulties. It is undisputed that Atty. Linsangan
issued the P1,800.00 as agreed upon, and were it not for Baluyot's failure to provide the balance, Contract No. 28660 would not have been cancelled. Thus, Atty.
Linsangan has a cause of action against Baluyot, which he can pursue in another case.
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 22 June 2001 and its Resolution dated 12 December 2001 in CA- G.R. CV
No. 49802, as well as the Decision in Civil Case No. 88-1253 of the Regional Trial Court, Makati City Branch 57, are hereby REVERSED and SET ASIDE. The Complaint in
Civil Case No. 88-1253 is DISMISSED for lack of cause of action. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
[G.R. No. 86051. September 1, 1992.]

JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and CITIWIDE MOTORS, INC., Respondents.

Ledesma, Saludo & Associates for Petitioner.

Magtanggol C. Gunigundo for Private Respondent.


SYLLABUS


1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE PROPERTY EQUIVALENT TO TITLE. It is quite clear that a party who (a) has lost any
movable or (b) has been unlawfully deprived thereof can recover the same from the present possessor even if the latter acquired it in good faith and has, therefore,
title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3) requisites to make possession of
movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner voluntarily parted with the possession of the thing; and (c) the
possession is in the concept of owner. (TOLENTINO, A.M., Civil Code of the Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid.,
1009, 2 Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have voluntarily parted
with the possession thereof. This is the justification for the exceptions found under the second sentence of Article 559 of the Civil Code.

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF CONSIDERATION; EFFECT THEREOF. There was a perfected unconditional contract of sale
between private respondent and the original vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first
vendee even if the said vendee was represented by someone who used a fictitious name and likewise voluntarily delivered the cars and the certificate of
registration to the vendees alleged representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of the check because of the
alteration merely amounted to a failure of consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for specific
performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code.


D E C I S I O N


DAVIDE, JR., J.:


Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in C.A.-G.R. CV No. 05955 2 reversing the decision of then Branch XVIII-B
(Quezon City) of the then Court of First Instance (now Regional Trial Court) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of which
reads:chanroblesvirtualawlibrary

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini, 1977 Model vehicle, subject of this case to the defendant Ledesma. The incidental
claim (sic) for damages professed by the plaintiff are dismissed for lack of merit. On defendants counterclaim, Court (sic) makes no pronouncement as to any form of
damages, particularly, moral, exemplary and nominal in view of the fact that Citiwide has a perfect right to litigate its claim, albeit by this pronouncement, it did not
succeed." 3

which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which reads:jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of P35,000.00 by way of actual damages recoverable upon plaintiffs replevin bond.
Plaintiff and its surety, the Rizal Surety and Insurance Co., are hereby ordered jointly and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as
damages for the wrongful issue of the writ of seizure, in line with Rule 57, Sec. 20, incorporated in Rule 60, Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the judgment of this Court on September 5, 1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack of merit. No costs at this instance." 4

The decision of the trial court is anchored on its findings that (a) the proof on record is not persuasive enough to show that defendant, petitioner herein, knew that
the vehicle in question was the object of a fraud and a swindle 5 and (b) that plaintiff, private respondent herein, did not rebut or contradict Ledesmas evidence that
valuable consideration was paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as follows:jgc:chanrobles.com.ph

"On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his father, a certain Rustico T. Consunji, two (2) brand new
motor vehicles from plaintiff-appellant Citiwide Motors, Inc., more particularly described as follows:chanrobles lawlibrary : rednad

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at P42,200.00; and

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to the person who represented himself as Jojo Consunji, allegedly the
son of the purported buyers Rustico T. Consunji, and said person in turn issued to plaintiff-appellant Managers Check No. 066-110-0638 of the Philippine Commercial
and Industrial Bank dated September 28, 1977 for the amount of P101,000.00 as full payment of the value of the two (2) motor vehicles.

However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the ground that it was tampered with, the correct amount of P101.00
having been raised to P101,000.00 per the banks notice of dishonor (Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal act perpetrated by the person who misrepresented himself as Jojo
Consunji and in the course of the investigation, plaintiff-appellant learned that the real identity of the wrongdoer/impostor is Armando Suarez who has a long line of
criminal cases against him for estafa using this similar modus operandi.

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which was found abandoned somewhere in Quezon City.

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by Armando Suarez to third persona and was in the possession of one
Jaime Ledesma at the time plaintiff-appellant instituted this action for replevin on November 16, 1977.

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in good faith from its registered owner, one Pedro Neyra, as evidenced
by the Land Transportation Commission Registration Certificate No. RCO1427249.chanrobles.com.ph : virtual law library

After posting the necessary bond in the amount double the value of the subject motor vehicle, plaintiff-appellant was able to recover possession of the 1977 Isuzu
Gemini as evidenced by the Sheriffs Return dated January 23, 1978." 6

After trial on the merits, the lower court rendered the decision and subsequently issued the Final Order both earlier adverted to, which plaintiff (private respondent
herein) appealed to the respondent Court of Appeals; it submitted the following assignment of errors:jgc:chanrobles.com.ph

"The trial court erred.
I


IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE CAR;
II


IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD FAITH AND FOR VALUE;
III


IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES, AND GRANTING DEFENDANT P35,000.00
DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00 DAMAGES FOR ALLEGED WRONGFUL SEIZURE;
IV


IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil Code which provides:jgc:chanrobles.com.ph

"ARTICLE 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor."cralaw virtua1aw library

Without in any way reversing the findings of the trial court that herein petitioner was a buyer in good faith and for valuable consideration, the respondent Court ruled
that:chanroblesvirtualawlibrary

"Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it not
only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes
two (2) exceptions to the general rule of irrevendicability (sic), to wit: when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these
cases, the possessor cannot retain the thing as against the owner who may recover it without paying any indemnity, except when the possessor acquired it in a public
sale. (Aznar v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the good faith of the possessor is not a bar to recovery of the movable
unless the possessor acquired it in a public sale of which there is no pretense in this case. Contrary to the court a assumption, the issue is not primarily the good faith
of Ledesma for even if this were true, this may not be invoked as a valid defense, if it be shown that Citiwide was unlawfully deprived of the vehicle.

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the phrase unlawfully deprived, to wit:chanrob1es virtual 1aw library

. . . it extends to all cases where there has been no valid transmission of ownership including depositary or lessee who has sold the same. It is believed that the
owner in such a case is undoubtedly unlawfully deprived of his property and may recover the same from a possessor in good faith.
x x x


In the case at bar, the person who misrepresented himself to be the son of the purported buyer, Rustico T. Consunji, paid for the two (2) vehicles using a check whose
amount has been altered from P101.00 to P101,000.00. There is here a case of estafa. Plaintiff was unlawfully deprived of the vehicle by false pretenses executed
simultaneously with the commission of fraud (Art. 315 2(a) R.P.C.). Clearly, Citiwide would not have parted with the two (2) vehicles were it not for the false
representation that the check issued in payment thereupon (sic) is in the amount of P101,000.00, the actual value of the two (2) vehicles." 8

In short, said buyer never acquired title to the property; hence, the Court rejected the claim of herein petitioner that at least, Armando Suarez had a voidable title to
the property.

His motion for reconsideration having been denied in the resolution of the respondent Court of 12 December 1988, 9 petitioner filed this petition alleging therein
that:chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"A

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL CODE TO THE INSTANT CASE DESPITE THE FACT THAT PRIVATE
RESPONDENT CITIWIDE MOTORS, INC. WAS NOT UNLAWFULLY DEPRIVED OF THE SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE TITLE AND
POSSESSION OR (sic) THE SAME IN FAVOR OF ITS IMMEDIATE TRANSFEREE.
B


THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE EFFECTS OF ARTICLES 1505 AND 1506 OF THE NEW CIVIL CODE CONSIDERING THAT THE
IMMEDIATE TRANSFEREE OF THE PRIVATE RESPONDENT CITIWIDE MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH TITLE WAS NOT
DECLARED VOID BY A COMPETENT COURT PRIOR TO THE ACQUISITION BY THE PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE PRIVATE RESPONDENT, BY ITS
OWN CONDUCT, IS NOW PRECLUDED FROM ASSAILING THE TITLE AND POSSESSION BY THE PETITIONER OF THE SAID CAR." 10

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his vendor in good faith and for valuable consideration. According to the trial court, the
private respondents evidence was not persuasive enough to establish that petitioner had knowledge that the car was the object of a fraud and a swindle and that it
did not rebut or contradict petitioners evidence of acquisition for valuable consideration. The respondent Court concedes to such findings but postulates that the
issue here is not whether petitioner acquired the vehicle in that concept but rather, whether private respondent was unlawfully deprived of it so as to make Article
559 of the Civil Code apply.

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the same from the present possessor even if the
latter acquired it in good faith and has, therefore, title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are
three (3) requisites to make possession of movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner voluntarily parted
with the possession of the thing; and (c) the possession is in the concept of owner. 11

Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof. This is the
justification for the exceptions found under the second sentence of Article 559 of the Civil Code.

The basic issue then in this case is whether private respondent was unlawfully deprived of the cars when it sold the same to Rustico Consunji, through a person who
claimed to be Jojo Consunji, allegedly the latters son, but who nevertheless turned out to be Armando Suarez, on the faith of a Managers Check with a face value of
P101,000.00, dishonored for being altered, the correct amount being only P101.00.chanrobles virtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held, that private respondent was unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private respondent and the original vendee. The former voluntarily caused the transfer of
the certificate of registration of the vehicle in the name of the first vendee even if the said vendee was represented by someone who used a fictitious name and
likewise voluntarily delivered the cars and the certificate of registration to the vendees alleged representative Title thereto was forthwith transferred to the vendee.
The subsequent dishonor of the check because of the alteration merely amounted to a failure of consideration which does not render the contract of sale void, but
merely allows the prejudiced party to sue for specific performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the
Revised Penal Code. This is the rule enunciated in EDCA Publishing and Distributing Corp. v. Santos, 12 the facts of which do not materially and substantially differ
from those obtaining in the instant case. In said case, a person identifying himself as Professor Jose Cruz, dean of the De la Salle College, placed an order by telephone
with petitioner for 406 books, payable upon delivery. Petitioner agreed, prepared the corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price. Two (2) days later, Cruz sold 120 books to private respondent Leonor Santos who, after verifying the sellers
ownership from the invoice the former had shown her, paid the purchase price of P1,700.00. Petitioner became suspicious over a second order placed by Cruz even
before his first check had cleared, hence, it made inquiries with the De la Salle College. The latter informed the petitioner that Cruz was not in its employ. Further
verification revealed that Cruz had no more account or deposit with the bank against which he drew the check. Petitioner sought the assistance of the police which
then set a trap and arrested Cruz. Investigation disclosed his real name, Tomas de la Pea, and his sale of 120 of the books to Leonor Santos. On the night of the
arrest; the policemen whose assistance the petitioner sought, forced their way into the store of Leonor and her husband, threatened her with prosecution for the
buying of stolen property, seized the 120 books without a warrant and thereafter turned said books over to the petitioner. The Santoses then sued for recovery of the
books in the Municipal Trial Court which decided in their favor; this decision was subsequently affirmed by the Regional Trial Court and sustained by the Court of
Appeals. Hence, the petitioner came to this Court by way of a petition for review wherein it insists that it was unlawfully deprived of the books because as the check
bounced for lack of funds, there was failure of consideration that nullified the contract of sale between it and the impostor who then acquired no title over the books.
We rejected said claim in this wise:jgc:chanrobles.com.ph

"The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to the
Civil Code:chanrob1es virtual 1aw library

ART. 1475. 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.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.chanrobles.com : virtual
law library
x x x


ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the purchase
price only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive
delivery of the thing sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. But absent the stipulation
above noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another." 13

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the Youngstown Hardware, owned by private respondent, corrugated galvanized
iron sheets and round iron bars for P6,137.70, in payment thereof, he issued a check drawn against the Security Bank and Trust Co. without informing Ong Shu that
he (Soto) had no sufficient funds in said bank to answer for the same. In the meantime, however, Soto sold the sheets to, among others, petitioner Chua Hai. In the
criminal case filed against Soto, upon motion of the offended party, the respondent Judge ordered petitioner to return the sheets which were purchased from Soto.
Petitioners motion for reconsideration having been denied, he came to this Court alleging grave abuse of discretion and excess of jurisdiction. In answer to the
petition, it is claimed that inter alia, even if the property was acquired in good faith, the owner who has been unlawfully deprived thereof may recover it from the
person in possession of the same unless the property was acquired in good faith at a public sale. 15 Resolving this specific issue, this Court ruled that Ong Shu was not
illegally deprived of the possession of the property:jgc:chanrobles.com.ph

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such delivery transferred title or ownership to the purchaser.
Says Art. 1496:chanrob1es virtual 1aw library

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or
in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. (C.C.)

The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and unless the bilateral contract of sale is first
rescinded or resolved pursuant to Article 1191 of the new Civil Code.chanrobles lawlibrary : rednad

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter through fraud or deceit, the contract was not thereby rendered void
ab initio, but only voidable by reason of the fraud, and Article 1390 expressly provides that:chanrob1es virtual 1aw library

ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:chanrob1es virtual 1aw
library

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.

Agreeably to this provision, Article 1506 prescribes:chanrob1es virtual 1aw library

ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the
goods, provided he buys them in good faith, for value, and without notice of the sellers defect of title. (C.C.)

Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that the fraud is established to its satisfaction), the validity of appellants
claim to the property in question can not be disputed, and his right to the possession thereof should be respected." 16

It was therefore erroneous for the respondent Court to declare that the private respondent was illegally deprived of the car simply because the check in payment
therefor was subsequently dishonored; said Court also erred when it divested the petitioner, a buyer in good faith who paid valuable consideration therefor, of his
possession thereof.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September 1988 and its Resolution of 12 December 1988 in C.A.-G.R. CV No. 05955
are hereby SET ASIDE and the Decision of the trial court of 3 September 1979 and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby REINSTATED,
with costs against private respondent Citiwide Motors, Inc.

SO ORDERED.

Gutierrez, Jr., Bidin and Romero, JJ., concur.

G.R. No. 104892 November 14, 1994
BONIFACIO OLEGARIO and ADELAIDA VICTORINO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, MANUEL RIVERA, PAZ OLEGARIO, and SOCORRO OLEGARIO-TEVES, respondents.
Tranquilino F. Meris for petitioners.
Eufracio T. Layag for private respondents.

PUNO, J.:
Spouses Marciliano Olegario and Aurelia Rivera-Olegario owned a parcel of land measuring 91 square meters at 198 J.P. Rizal corner Antipolo Streets, Caloocan City as
evidenced by Transfer Certificate of Title (TCT)
No. 124222 of the Register of Deeds of Caloocan City.
1

The Olegario couples were childless but reared and educated private respondents Manuel Rivera, Paz Olegario, and Socorro Olegario-Teves. Petitioner Bonifacio
Olegario is the brother of Marciliano while petitioner Adelaida Victorino is the niece of Aurelia.
On March 19, 1986, Aurelia Rivera-Olegario died at the age of eighty-three (83). To preclude her heirs from inheriting and to avoid payment of taxes, Marciliano, then
eighty (80) years old, executed on April 15, 1986 a Deed of Absolute Sale of the subject property in favor of private respondents.
2
The purported consideration was
FIFTY THOUSAND PESOS (P50,000.00). The contract of sale was not registered.
On March 10, 1988, Marciliano died intestate. Petitioners Bonifacio Olegario and Adelaida Victorino were the sole heirs of spouses Olegario. On May 23, 1989, they
executed a Deed of Extra-judicial Settlement of Estate
3
covering the subject lot which was published in the Metropolitan Newsweek for three (3) consecutive weeks.
On July 13, 1989, the said Extra-judicial Settlement was recorded in the Register of Deeds of Caloocan City. TCT
No. C-124222 was then cancelled and TCT No. 190363 was issued in their names.
4

On August 1, 1989, petitioners sold the subject lot for TWO HUNDRED THOUSAND PESOS (P200,000.00) to Elena Adaon and Nestor Tejon.
5
TCT No. 190132 was then
issued in vendees' names.
Private respondents alleged that the Extra-judicial Settlement came to their knowledge only on August 21, 1989. On that same day, they tried to register their
contract of sale three (3) years from its execution. The registration was denied as the subject property has been transferred to Elena Adaon and Nestor Tejon.
The fight for ownership of the subject lot ensued. Private respondents filed Civil Case No. C-13973 for Annulment of Extra-judicial Settlement of Estate and Damages
against petitioners.
6
As special and affirmative defense, petitioners assailed the Deed of Absolute Sale between Marciliano Olegario and private respondents. On the
other hand, cross-claimants Elena Adaon and Nestor Tejon maintained they were buyers in good faith and for value.
In due course, the trial court ruled in favor of private respondents. It annulled the Extra-judicial Settlement of the subject lot and its sale to Adaon and Tejon, viz.:
WHEREFORE, the judgment is rendered for the plaintiffs and against the herein defendants, as follows:
a) The extra-judicial settlement of estate executed by defendants Bonifacio Olegario and Adelaida Victorino on May 23, 1989 as well as Transfer
Certificates of Title issued subsequent thereto, namely TCT No. 190363 in the name of Bonifacio Olegario and Adelaida Victorino and TCT No.
190132 in the name of Elena Adaon and Nestor Tejon are hereby declared NULL and VOID and without legal force and effect;
b) The Register of Deeds of Kaloocan City is hereby ordered to issue unto the herein plaintiffs new title in lieu of the aforesaid cancelled titles in
the name of the deceased Marciliano Olegario married to Aurelia R. Olegario containing the same entry and/or inscription before said Title No.
124222 was cancelled;
c) Defendants Bonifacio Olegario and Aurelia Victorino Rivera are hereby ordered to pay the herein plaintiffs, jointly and severally, the amount
of P30,000.00 as nominal damages and the further sum of P10,000.00 for and/as attorney's fees; and
d) To pay costs of suit.
With regards to the cross-claim of defendants Elena Adaon and Nestor Tejon, judgment is hereby rendered against Bonifacio Olegario and
Adelaida Victorino who are hereby ordered as follows:
a) Defendant Bonifacio Olegario is hereby ordered to pay cross-claimants Elena Adaon and Nestor Tejon in the amount of P60,000.00 with legal
interest from August 1, 1989;
b) Defendant Adelaida Victorino is hereby ordered to pay cross-claimants Elena Adaon and Nestor Tejon in the amount of P30,000.00 with legal
interest from August 1, 1989;
c) Defendants Bonifacio Olegario and Adelaida Victorino, jointly and severally, to pay cross-claimants the amount of P5,000.00 for and/as
attorney's fees;
Counter-claim interposed by herein defendants and cross-claimants are hereby DISMISSED for lack of evidence to support the same.
SO ORDERED.
7

Petitioners elevated the case to respondent Court of Appeals. On January 7, 1992, the Sixteenth Division of respondent court affirmed the impugned Decision with
modifications, viz.:
WHEREFORE, except for the following modifications, to wit:
a) The extra-judicial settlement of estate executed by defendants-appellants Bonifacio Olegario and Adelaida Victorino on May 23, 1989 as well
as Transfer Certificates of Title issued subsequent thereto, namely TCT No. 190363 in the name of Bonifacio Olegario and Adelaida Victorino
and TCT No. 190132 in the name of cross-appellants Elena Adaon and Nestor Tejon are hereby declared NULL and VOID and without legal force
and effect with respect to 3/4 portion of the subject lot pertaining to the plaintiffs-appellees;
b) The Register of Deeds of Caloocan City is hereby ordered to issue unto the herein plaintiffs-appellees new title corresponding to the 3/4 part
of the disputed lot; and to cancel TCT No. 190363 in the name of defendants-appellants Bonifacio Olegario and Adelaida Victorino and TCT No.
190132 in the name of cross-claimants-appellants Elena Adaon and Nestor Tejon, and issue in lieu thereof new title corresponding only to 1/4
portion of the subject property; and
c) Defendants-appellants Bonifacio Olegario and Adelaida Victorino are hereby ordered to pay the herein plaintiffs-appellees, jointly and
severally, the amount of P10,000.00 as nominal damages and the further sum of P5,000.00 for and/as attorney's fees, the appealed decision is
hereby AFFIRMED in all other respects. No costs.
SO ORDERED.
8

Petitioners now claim that respondent court erred in the following wise:
I
THAT THE RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO RESOLVE PETITIONERS' SECOND
ASSIGNMENT OF ERROR BEFORE IT AND CLOSING ITS EYES ON THE EVIDENCE ON RECORD PATENTLY ERRED IN NOT DECLARING THAT THE
PURPORTED DEED OF ABSOLUTE SALE BETWEEN MARCILIANO OLEGARIO AND THE PRIVATE RESPONDENTS IS NULL AND VOID FOR BEING
ABSOLUTELY SIMULATED AND FICTITIOUS AND FOR BEING VIOLATIVE OF ARTICLE 130 OF THE FAMILY CODE.
II
THAT THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN SUSTAINING THE EFFICACY OF THE UNRECORDED DEED OF ABSOLUTE SALE
OVER THAT OF THE EXTRA-JUDICIAL SETTLEMENT OF ESTATE WHICH WAS EXECUTED AND RECORDED IN GOOD FAITH, CONTRARY TO THE
EXPRESS PROVISIONS OF ARTICLE 1544 OF THE CIVIL CODE.
III
THAT THE RESPONDENT COURT OF APPEALS PATENTLY ERRED IN HOLDING THAT CROSS-CLAIMANTS ELENA ADAON AND NESTOR TEJON ARE
NOT BUYERS IN GOOD FAITH OF THE SUBJECT PROPERTY.
IV
THAT THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AWARDING P30,000.00 NOMINAL DAMAGES AND P10,000.00 ATTORNEY'S
FEES IN FAVOR OF THE PRIVATE RESPONDENTS DESPITE THE PATENT ABSENCE OF FACTUAL AND LEGAL BASIS THEREFORE.
We find merit in the petition.
There is no question that petitioners are the lawful heirs of spouses Olegario. Under Article 160 of the New Civil Code, the subject lot is presumed to be conjugal
property. The death of Aurelia Rivera-Olegario on March 19, 1986 dissolved the conjugal partnership. By virtue of such dissolution, 1/2 of the property should
appertain to Marciliano as his share from the conjugal estate plus another 1/4 representing his share as surviving spouse of Aurelia.
9
Petitioner Adelaida Victorino, as
the sole surviving niece of Aurelia, is entitled to the other 1/4 of the lot.
10
When Marciliano died intestate on March 10, 1986, petitioner Bonifacio Olegario, the only
surviving brother of Marciliano, stepped into his shoe.
We shall now determine whether the inheritance right of petitioners can be prejudiced by the sale of the subject lot by the deceased Marciliano to private
respondents. In a contract of sale, consideration is, as a rule, different from the motive of the parties. Consideration is defined as some right, interest, benefit, or
advantage conferred upon the promissor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantage suffered or undertaken by
the promisee other than to such as he is at the time of consent bound to suffer.
11
As contradistinguished, motive is the condition of mind which incites to action, but
includes also the inference as to the existence of such condition, from an external fact of a nature to produce such a condition.
12
Under certain circumstances,
however, the motive of the parties may be regarded as the consideration when it predetermines the purpose of the contract.
13
When they blend to that degree, and
the motive is unlawful, then the contract entered into is null and void.
14

In the case at bench, the primary motive of Marciliano is selling the controverted 91-square meter lot to private respondents was to illegally frustrate petitioners'
right of inheritance and to avoid payment of estate tax. This was unabashedly admitted by witness Susan Rivera, wife of private respondent Manuel Rivera, on cross-
examination. She declared:
Atty. Meris: (p. 12, TSN, June 18, 1991 [sic])
xxx xxx xxx
Q You mean to say that despite of your claim that your husband is the son of Marciliano Olegario and Aurelia Olegario,
they still executed a deed of absolute sale over the said lot owned by your parents in law in favor of your husband and his
two sisters?
A It was decided that way to avoid paying tax, sir.
Q In other words the sale was only fictitious or was only made in a way of avoiding paying taxes?
A It was not that way but my parents in law were just avoiding distant relatives who might claim it.
15

xxx xxx xxx
Atty. Buenaventura: (p. 15, TSN, June 18, 1990)
Q And as a husband (sic) of Manuel you are familiar of the reason why this deed of sale was executed?
A I have stated earlier that my father in law sold it to them for the reason that he would not want the said property to be
given to another party, sir.
Q In other words, it was not really intended as honest to goodness sale between the former owner and Manuel Rivera,
your husband and her sister? (sic)
A Yes, sir.
16

xxx xxx xxx
We also note that in their comment, rejoinder, and memorandum private respondents did not refute petitioners' charge that the said sale is fictitious. The conclusion
is thus inescapable that the purported sale of April 15, 1986 of the subject lot is null and void. Illegal motive predetermined the purpose of the contract.
17

In addition, the trial court and respondent court failed to consider the lack of cause in the alleged deed of sale of 1986.
18
The evidence does not show that private
respondents had FIFTY THOUSAND PESOS (P50,000.00) and paid
the same to Marciliano. Private respondents allegedly borrowed THIRTY THOUSAND PESOS (P30,000.00) from the cooperative of Mary Help of Christian Parish to
prove their financial capacity. However, they floundered in their cross-examinations.
Atty. Meris: (Cross-examination of respondent Manuel Rivera) (p. 39, TSN, June 4, 1990)
xxx xxx xxx
Q And how much did you buy the said property?
A P50,000.00, sir.
Q And did you bring this money at the City Hall?
A No, sir.
Q Did you give your father the said amount?
A We spent it for the treatment of my father, for payment of the real estate tax and burial of my mother Aurelia Olegario
sir. (Emphasis supplied).
19

xxx xxx xxx
Atty. Buenaventura on cross-examination of Paz Olegario (respondent),
pp. 22, TSN, June 23, 1990.
xxx xxx xxx
Q Do you know how much was paid?
A P50,000.00, sir
Q Was it paid in cash or in other form?
xxx xxx xxx
A No, sir.
Q What do you mean by "no sir."
Atty. Buenaventura:
May we make on record that the witness is having difficulty in answering the question despite being repeatedly
interpreted the meaning of the question propounded on to.
xxx xxx xxx
Q When was the money given, after it (Deed of Sale) was executed on April 15, 1986?
A Last week of April, sir.
Q Do you know where the money came from?
Atty. Buenaventura:
May we manifest to the Honorable Court that there are some signal coming from the other witness that has been
presented before the Honorable Court and it seems that the witness is getting clue from the other witness. (Emphasis
supplied)
20

Applying Articles 1352 and 1409
21
of the Civil Code in relation to the indispensable requisite of a valid cause, we hold that the alleged deed of sale is void.
It is also obvious to the eye that the contract of sale in 1986 is unregistered. Section 51 of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, provides that "[T]he act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned." Thus, even if the
contract of sale is valid, it cannot adversely affect third persons because of its non-registration. More specifically, it cannot prejudice petitioners as well as Elena
Adaon and Nestor Tejon.
IN VIEW WHEREOF, the Decision of respondent court dated January 7, 1992 is REVERSED and SET ASIDE; the Complaint in Civil Case
No. C-13973 is ordered DISMISSED. No costs.
SO ORDERED.
Narvasa, C.J., Regalado and Mendoza, JJ., concur.