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Article 1471.

If the price is simulated, the sale is void, but the act may be shown to have been in
reality a donation or some other act or contract.
So we have Article 1471 if the price is simulated the sale is void.

So we have already discussed the case of Mapalo v Mapalo wherein the situation constitutes
whether just fraud and vitiation of consent gives rise to a voidable contract since there as in fact
no intention to enter into a sale, there was no consent at all and more importantly there was no
consideration or the price agreed upon which means the contract was void ab initio.
We also dicussed the case of Modina v CA, the principle of in pari delicto which provides
recovery to the guilty parties. The the principle of in pari delicto applies only to cases where the
nullity arises from the illegality of the consideration or the purpose of the contract, but does not
apply to inexistent and void contracts where the price is merely simulated. But again in Modina
the wife alleged that there was no consideration at all and therefore, there was no valid contract.
Q: What Evidence was shown to support his contention that it was only to facilitate the loan of
the Spouses Intac?
A: The evidence was shown through the testimonial evidence of Marrieto who was there when
Irene and Angelina made the transaction in 1977 and that Ireneo personally told him that he was
going to execute the deed of sale and to use the same as a collateral for the loan obligations.
Q: So what do you have here? An absolutely simulated or a relatively simulated contract?
A: In this case, it was an absolutely simulated contract.
Q: Now, aside from the testimony of Marrieto what were the other instances that we can
consider that there was really no intent to sell the property?
A: There was a failure on the part of the Spouses Intac to adduce evidence as to the payment of
purchase price particularly the alleged purchase price.
Q: Aside from that, remember in Art. 1354 the consideration is presumed, so in other words he
does no have the burden, the question is, in addition to the testimony of Marrieto, what were
other indication that there was indeed, no intent to sell the said land of Spouses Intac?
A: It was stated that even after the transaction in 1977, the heirs of Ireneo was still residing in
the land so therefore, there intention to convey ownership over the land and that the Heirs of
Ireneo were still collecting rents over the lot. As such, if there was really intent to sell it would be
the Spouses Intac who would have right over the civil fruits as a consequence of ownership and
in this case they did not do so.

So here, the court ruled that there was an absolute simulation. Here the court emphasized the
distinction between an absolutely simulated from a relatively simulated contract. If the parties
state a false cause in the contract to conceal their real agreement, the contract is only relatively
simulated and the parties are still bound by their real agreement. Hence, where the essential
requisites of a contract are present and the simulation refers only to the content or terms of the
contract, the agreement is absolutely binding and enforceable between the parties and their
successors in interest.
In absolute simulation, there is a colorable contract but it has no substance as the parties have
no intention to be bound by it.
The main characteristic of an absolute simulation is that the apparent contract is not really
desired or intended to produce legal effect or in any way alter the juridical situation of the
parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may
recover from each other what they may have given under the contract.
In this case, there was no valid sale that took place. There was no simply no consideration and
no intent to sell. Now, proof here was the testimony of Marrieto who was a witness in the
execution of the purported deed of sale. Aside from that, the Spouses failure to adduce
evidence to prove that there was payment only strengthened Marriettos testimony. Indeed, te
allegation of spouses Intac that Irene was in a state of financial distress, so kailiangan Aniya ng
pera then how come ibebenta pa niya kay Spouses Intac na pwede naman niya i mortgage ang
property. Aside from that, the heirs of Ireneo continued in possession over the subject property.
They were also the ones who paid the taxes. In fact, it was the heirs who were still collecting
the rentals. If indeed, the property was sold to Spouses Intac, it bears the question why did they
not assert their ownership over the property immediately after the alleged sale took place. Why
did they assert ownership only after the death of IreneO and Salvacion. One of the most distinct
feature of an absolute simulation is the complete absence of any attempt on the part of the
vendee to assert his right over the property.
Buenaventura v. CA
416 SCRA 263, G.R. No. 126376, November 20, 2003
FACTS:
Plaintiffs assail the validity of the Deed of Absolute Sale over several parcels of land executed
by their parents spouses Leonardo Joaquin and Feliciana Landrito in favor of some of their
children, herein defendant. Plaintiffs are also heirs of spouses Jpo
They sought to declare the deeds void on the following grounds:
Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in
litis;

Secondly, assuming that there was consideration in the sums reflected in the questioned deeds,
the properties are more than three-fold times more valuable than the measly sums appearing
therein;
Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and
vendees); and
Fourthly, the purported sale of the propertiesin litiswas the result of a deliberate conspiracy
designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
RTC and CA ruled in favor of defendants holding that the plaintiffs right to the legitime was
merely inchoate and only vested upon their parents death.
ISSUE: WON the Sale is VOID for lack of consideration/price.
HELD:
A contract of sale is consensual in that it is perfected once there is a meeting of the minds.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of
the price has nothing to do with the perfection of the contract. Payment of the price goes into the
performance of the contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract while the latter prevents the existence of a valid
contract.
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To
prove simulation, petitioners presented Emma Joaquin Valdozs testimony stating that their
father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed
of sale without need for her payment of the purchase price. The trial court did not find the
allegation of absolute simulation of price credible. Petitioners failure to prove absolute
simulation of price is magnified by their lack of knowledge of their respondent siblings financial
capacity to buy the questioned lots. On the other hand, the Deeds of Sale which petitioners
presented as evidence plainly showed the cost of each lot sold. Not only did respondents minds
meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the
filing of the complaint, respondent siblings have also fully paid the price to their respondent
father.
The Court also noted Articles 1355 and Article 1470 as relevant to this case.
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or undue influence.
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a
defect in the consent, or that the parties really intended a donation or some other act or
contract.

Q: What kind of simulation would that be if the real price is not stipulated in the contract?
A: Relative simulation.
Q: What is the effect of relative simulation?
A: The effect is that the contract is valid but subject to reformation.
Q: Which portion in the decision of the court refers to an absolutely simulated contract?
A: If there is no meeting of the minds with respect to the price the contract is absolutely
simulated and the contract is void. However, in this case, petitioners failed to show that the
prices in the Deeds of Sale were absolutely simulated. The deed of sale presented clearly
showed that there was a purchase price.
Q: In this case, was there an absolutely simulated or a relatively simulated contract?
A: There was neither a relatively simulated nor an absolutely simulated contract.
Q: How about the payment of the price? was there full payment of the price here?
A: the court ruled that the failure to pay in full the purchase price does not invalidate the contract
as that would only pertain to the performance of the contract and not the perfection thereof.
Q: How would that be different from lack of consideration?
A: lack of consideration would result into a void contract as that would mean that there was no
consideration at all.
So here, if the price is not stipulated in the contract, the contract is valid but subject to
reformation. That is relative simulation. If there is no meeting of the minds of the parties with
regard to the price because the price stipulated in the contract is simulated then the contract is
void. That is absolute simulation. However, in this case there was no indication that the price is
not real and furthermore the allegation that there was no full payment that would not affect the
validity of the contract of sale.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of
the price has nothing to do with the perfection of the contract. Payment of the price goes into the
performance of the contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract while the latter prevents the existence of a valid
contract.
Also here take not as to the issue of the value of the property. Again we go into the
characeteristic or nature of a sale that there is no requirement that the price be equal to the
exact value of the subject matter of sale.

Now I have here in our outline when price is false. As i mentioned, I put in quotation marks so as
not to confuse that false cause mentioned under 1353 because as I have discussed before with
false cause under 1353 The statement of a false cause in contracts shall render them voidThat is false cause which refers to simulated price under Art. 1471. Now what is this false cause
that I have pointed out here. It is when there is a real price upon which the minds of the parties
have met. But what is stated in the deed is not the one intended to be. But there is that intention.
There is that meeting of the minds. So the contract is valid. What is the remedy? Reformation of
the contract so that the intention of the parties would be reflected therein. Nevertheless, the
parties are bound by their real agreement.
Macapagal v. Remorin
(458 SCRA 653, G.R. No. 158380, May 16, 2005)
FACTS:
Purificacion (second wife of Candido) and Corazon Caluza (daughter of
st

Candido from 1 marriage)are the heirs left by Candido Caluza. They extra judicially settled the
properties left by Candido such that Corazon will get the property in Quezon City and
Purificacion will get the land in Bulacan.
When Corazon left the Philippines for Thailand, Purificacion executed an
affidavit of loss which states that the TCT for the property in QC was lost. She used such
affidavit to file a petition for restitution of TCT. The same was granted by RTC and a new TCT
was issued in favor of Purification.
Purification sold the property to Remorin who mortgaged it to L&R Corporation.
When Corazon knew about the sale to Remorin, she filed a complaint for falsification and
Perjury against Purificacion and Remorin. However, they entered into a compromise agreement
which stated that the property shall be transferred direct to its interested buyer with defendant
Catalina O. Remorin assuming and paying (from the proceeds of the sale) her mortgage
obligation with Mrs. Laurelia C. Valenciano (Laurelia became the creditor of Remorin because
Remorin mortgaged the property to Laurelia in order to pay L&R) annotated at the back of the
title thereof; any and all expenses for segregation survey, re-titling, capital gains taxes and those
connected with the annotation and/or release of said mortgage should now be shouldered by
defendant Catalina O. Remorin; said defendant further agrees to execute such other documents
or papers as are necessary to implement the aforementioned Memorandum of Agreement of
March 21, 1986 (sic). The Compromise agreement was approved by the judge.
On May 24, 2989, Corazon sold the property to Laurelia by virtue of a deed
entitled "Sale of Unsegregated Portion of Land.". On August 1989, Catalina also sold the same
land to

Macapagal.

Laurelia filed an ejectment suit against


Macapagal who, in turn, filed a complaint for nullification and damages against the defendants.
Macapgal contends that the sale between her and Catalina was valid because
it was stated in the compromise agreement that Corazon was the one who had authority to sell.
Respondents, on the other hand, contended that Corazon did not give Catalina
he authority to sell. It was provided in the Agreement that Catalina shall pay off her mortgage
obligation and incidental expenses from the proceeds of the sale only to reassure Catalina that
her obligation would be paid in the event that Corazon sells the property.
ISSUE: WON the fact the true consideration was not reflected deed of sale between Corazon
and Catalina would cause the nullity of the contract? NO
HELD:
The issue on the PRICE.
The fact that the deed of sale between respondents Corazon and Laurelia did not accurately
reflect the true consideration thereof is not cause for declaration of its nullity. When the parties
intended to be bound by the contract except that it did not reflect the actual purchase price of
the property, there is only a relative simulation of the contract which remains valid and
enforceable. It cannot be declared null and void since it does not fall under the category of an
absolutely simulated or fictitious contract. The contract of sale is valid but subject to reformation.

There was no waiver of Corazons authority to sell.


In the case at bar, the Compromise Agreement dated September 9, 1988 cannot be taken as a
waiver of Corazons authority to sell and grant thereof to Catalina considering that the
Agreement merely provided that Catalina pay off her mortgage obligation and incidental
expenses from the proceeds of the sale. Although it was imperative, as part of the compromise,
that the money come from the proceeds of the sale, it was not expressly stated, nor did it
necessarily mean, that Catalina herself be the one to directly sell the property. The money may
merely be handed over to her for such payment. The rule is that any reasonable doubt that he
language used conveys authority to sell will yield a construction that no such authority has been
given. Authority to sell must be couched in clear and unmistakable language. Even assuming
arguendo that the parties intended to confer upon Catalina authority to sell the disputed
property, they clearly did not intend the Agreement to be the document itself considering that
they agreed to execute such other documents or papers as are necessary to implement the
agreement, which they never did. Under Article 1878, paragraph 5 of the Civil Code, a special
power of attorney is necessary for an agent to enter into any contract by which the ownership of

an immovable property is transmitted or acquired either gratuitously or for a valuable


consideration. Catalina admittedly did not have such a document in her favor.
*Macapagal was also considered as buyer in bad faith because she did not buy it from the
owner of the registered land

Q: What is the status of the sale between Catalina and Aurelia?


A: It was void because in the first place, the owner is not Catalina and true owner as
such she has no power or authority to sell the said land.
Q: So we go back to our discussion the ownership is not required for the validity of the
sale? Right? SO what is the real issue here?
A: The real issue here is that between the sale of laurel and Corazon the consideration
of the price was not present.
Q: In other words between these two sales who has a better right? The first one wall
saying right because the one who sole the property was not the owner. Now as we said,
in the sale of Corazon there could have been no right transferred to the buyer as
allegedly the true consideration was not stipulated in the contract. What was the ruling
of the SC?
A: Accdg. to the court, the fact in the sale between spouses and Laurelia did not
stipulate the true consideration does not cause for the nullity of the contract. In this
case, it will only be subject to reformation because although the said consideration was
not stated there was meeting of the minds between the parties. In this case, the court
held that there was only relative simulation.
So with regard to the sale made by Corazon the SC said that she was not authorized to
sell it. Although ownership is not required for the perfection of a Contract of Sale. Take
note the SC held here that Catalina was allegedly acting as an agent and if yu have an
agency, when an agent sells an immovable property of a principal the authority must be
inwrapping in order for the sale to be valid. In this case, in the compromise agreement
there was authority as to that effect. Also, in relation to agency, there must be a special
power of attorney which is also absent in this case. The issue here really is with regard
to the consideration. It appears that the deed os sale did not reflect the true
consideration. However the SC held that is not a cause for a declaration of its nullity. If
the real price is not stated in the contract, then the contract of sale is valid but subject to
reformation. So again here, when the parties intended to be bound but the deed did not
reflect the actual price agreed upon, there is only relative simulation of the contract
which remains valid and enforceable subject to reformation. An example of this where
parties would put a lower purchase price in the deed of sale than that what was really
paid by the buyer to lower the taxes or capital gains tax.
Now how about the non-payment of the price?
Q: What is the effect of the failure to pay the price by the buyer?

A: It constitutes a breach and will result into a rescission of the contract.


Q: Aside from rescission, are there other remedies?
A: Specific performance maam.
Balatbat v CA
(261 SCRA 128, G.R. No. 109410, August 28, 1996)
FACTS:
Spouses Aurelio Rogue and Maria Mesina acquired a lot during their conjugal union and
the house constructed thereon was likewise
built during their marital union.
Out of their union, Aurelio and Maria had four
children.
Maria Mesina died in 1966. The only conjugal
properties left are the house and lot.
In 1977, Aurelio filed a complaint for partition against his 4 children before the CFI.
The children were declared in default and
Aurelio presented evidence ex-parte.
CFI declared that Aurelio, as the legal spouse, is entitled to 1/2 share pro-indiviso thereof. With
respect to the 1/2 share pro-indiviso now
forming the estate of Maria Mesina, Aurelio and the four children, are each entitled to one-fifth
(1/5) sharepro-indiviso. Said decision became
final and executory.
In 1979, the ROD issued TCTs in the name of Aurelio (6/10 share), and his children-Severina,
Osmundo, Feliciano and Corazon (all with 1/10
share each).
In April 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose
Repuyan as evidenced by a "Deed of Absolute
Sale."
Also in 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse
claim on the TCT, claiming among others that
she bought 6/10 portion of the property herein
described from Aurelio Roque for the amount of P50,000 with a down payment of P5,000 and
the balance of P45,000 to be paid AFTER the
partition and subdivision of the property.
On August 1980, Aurelio filed a complaint for
"Rescission of Contract" against spouses Aurora Tuazon-Repuyan and Jose Repuyan before
CFI.
The complaint is grounded on spouses
Repuyan's failure to pay the balance of P45,000
of the purchase price.
On Sept. 5, 1980, Spouses Repuyan filed their answer with counterclaim.

In the meantime in 1982, the trial court issued n order on the partition case, ordering

the
Deputy Clerk of the Court to sign the DOAS for
and in behalf of Aurelios children, in order to effect the partition of the property involved.
(Apparently, the house and lot were to be sold
pala to Clara Balatbat for P100k, in order to
effect the partition of the property involved.)
A DOAS was executed in 1982 between Aurelio, Corazon, Felician, Severa and Osmundo and
Clara Balatbat, married to Alejandro Balatbat.
Therafter, Clara Balatbat filed a motion for the
issuance of a writ of possession which was granted by the trial court, "subject, however, to
valid rights and interest of third persons over
the same portion thereof, other than vendor or
any other person or persons privy to or claiming
any rights or interests under it."
On May 1982, Clara Balatbat filed a motion to intervene in the civil case for rescission of
contract against spouses Repuyan
which was granted. However, Clara Balatbat failed to file
her complaint in intervention so her complaint was dismissed. The court further declared that
The contract of sale denominated as "Deed of
Absolute Sale" was valid and enforceable, and
so ordered to partition and subdivide the land and to aggregate therefrom a portion equivalent
to 6/10 thereof, and cause the same to be titled
in the name of Repuyan spouses, and after
which, the Repuyan spouses, shall pay Aurelio
the sum of P45,000.
ISSUE: WON there was valid contract of sale despite the non-payment of the P45,000 at the
time that the action for rescission was filed YES.
HELD:
The RTC dismissed Aurelio Roque complaint for rescission of the DOS and declared that the
sale as valid and enforceable. No appeal having been made, the decision became final and
executory. It must be noted that Balatbat filed a motion for intervention in that case but did not
file her complaint in intervention. In that case wherein Aurelio Roque sought to rescind DOS in
favor of spouses Repuyan for non-payment of the P45,000 balance, the trial court dismissed the
complaint for rescission.
Examining the terms and conditions of the "Deed of Sale", the P45,000 balance is payable only
"after the property has been partitioned and subdivided, and title issued in the name of the
BUYER" hence, Aurelio Roque cannot demand payment of the balance unless and until the
property has been subdivided and titled in the name of Repuyan. Devoid of any stipulation that

"ownership in the thing shall not pass to the purchaser until he has fully paid the price",
ownership in thing shall pass from the vendor to the vendee upon actual or constructive delivery
of the thing sold even if the purchase price has not yet been fully paid. The failure of the buyer to
make good the price does not, in law, cause the ownership to revest to the seller unless the
bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the ew Civil
Code. Non-payment only creates a right to demand the fulfillment of the obligation or to rescind
the contract.
A contract of sale being consensual, it is perfected by
the mere consent of the parties.
Delivery of the
thing bought or payment of the price is not
necessary for the perfection of the contract; and
failure of the vendee to pay the price after the
execution of the contract does not make the sale null and void for lack of consideration but
results at most in default on the part of the vendee, for which he vendor may exercise his legal
remedies.
Balatbat has nobody to blame but herself in dealing with the disputed property for failure to
inquire or discover a flaw in the title to the property.
(there was also a discussion on double sale. Kasi may double sale na nangyari dito. Ultimately,
the SC declared Repuyan to have a better right since good faith pag acquire nung property and
nauna siya mag annotate ng adverse claim sa title ng property)

Q: Was there partition of the property?


A: No, there was no partition of the property.
Q: what is the effect that there was no partition?
A: Aurelio cannot demand the payment of the 45 thousand because his obligation to
cause the partition has not been complied yet.
Q: In other words, can specific performance or rescission can be demanded in this
case?
A: No because Aurelio is still in default maam so he still cannot demand the obligation
of the other party to be performef maam.
So here, remember again failure to pay the price does not affect the validity of the
contract of sale as that would pertain into the performance stage of the obligation. Now,
in this case notice that the balance, the vendor cannot demand its payment unless the

property has been subdivided and titled tot he private respondents and this has not yet
happened. The stipulation that the ownership of the thing shall not pass to the
purchaser until he has paid the price, ownership shall only pass upon actual or
constructive deliver of the land. So in this case there was a discussion with regard to
delivery which we will discuss further later when we go that topic.
As to the payment of the purchase price failure of the buyer to make good their price does
not cause the ownership to vest to the seller unless the bilateral contract of sale is first
rescinded or resolved pursuant to Art 1191. Non payment only creates a right to demand the
fulfilment of the obligation or rescind the contract.

Now, kung sang na si vendor ROque na subdivide na ang property, he could have
asked for rescission. But in this case, there was none, he was not yet even ready to
perform his obligation he cannot demand rescission because you must come to court
with clean hands.

A contract of sale being consensual is perfected by mere consent. The parties delivery or
payment of the price not necessary for the perfection of the contract. And failure of vendee to
pay price after execution of contract does not make the sale null and void for lack of
consideration but results at most in default on the part of the vendee, for which he vendor may
exercise his legal remedies. So again take note of that.
Now as to the second element of a valid price. Remember that price should be in money or int
equivalent it is very clear under Art. 1458. In the case of Inchausti, we have here the definition of
sum (?) It signifies the amount or figure in terms of money that must be paid as a result of a
transaction.
Bagnas v CA
(176 SCRA 159, G.R. No. L-38498, August 10, 1989
FACTS:
Hilario Mateum of Kawit, Cavite, died on March 11, 1964, single, without ascendants or
descendants, and survived only by collateral relatives, of whom petitioners herein, his first
cousins, were the nearest. Mateum left no will, no debts, and an estate consisting of 29 parcels
of land in Kawit and Imus, Cavite, 10 of which are involved in this appeal.
On April 3, 1964, the private respondents, themselves collateral relatives of
Mateum though more remote in degree than the petitioners, registered with the Registry of
Deeds 2 deeds of sale purportedly executed by Mateum in their favor covering 10 parcels of
land.
It is asserted by the petitioners, but denied by

the respondents, that said sales notwithstanding, Mateum continued in the possession of the
lands purportedly conveyed until his death, that he remained the declared owner thereof and
that the tax payments thereon continued to be paid in his name.
Petitioners sought annulment of the deeds of sale as fictitious, fraudulent or
falsified, or, alternatively, as donations void for want of acceptance embodied in a public
instrument. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being
intestate heirs of Hilario Mateum, the petitioners prayed for recovery of ownership and
possession of said lands, accounting of the fruits thereof and damages.
Although the complaint originally sought recovery of all the 29 parcels of land
left by Mateum, at the pre-trial the parties agreed that the controversy be limited to the 10
parcels subject of the questioned sales, and the Trial Court ordered the exclusion of the 19 other
parcels from the action.
Respondents denied the alleged fictitious or fraudulent character of the sales in
their favor, asserting that said sales were made for good and valuable consideration and the
they were collateral relatives of Hilario Mateum and had done many good things for him, nursing
him in his last illness, which services constituted the bulk of the consideration of the sales.
The Trial Court granted the motion to dismiss by respondents, holding that the
plaintiffs, as mere collateral relatives, not forced heirs, of Hilario
Mateum, could not legally question the disposition made by said deceased during his lifetime,
and that the plaintiffs evidence of alleged fraud was insufficient, the fact that the deeds of sale
each stated a consideration of only P1.00 not being in itself evidence of fraud or simulation.
The CA affirmed the Trial Court's reliance on the Armentia ruling which, it would appear, both
courts saw as denying, without exception to collaterals, of a decedent, not forced heirs, the right
to impugn the latter's dispositions inter vivos of his property. The Appellate Court also analyzed
the testimony of the plaintiffs' witnesses, declared that it failed to establish fraud of any kind or
that Mateum had continued paying taxes on the lands in question even after executing the
deeds conveying them to the defendants, and closed with the statement that "... since in duly
notarized and registered deeds of sale consideration is presumed, we do not and it necessary to
rule on the alternative allegations of the appellants that the said deed of sale were (sic) in reality
donations.

12

ISSUE: WON the price of P1.00 plus unspecified past, present and future services to which no
value is assigned renders the deeds void or inexistent from the beginning or voidable? YES
HELD:


YES. The deeds were void ab initio for lack of
valuable consideration.
The validity of a sale prescribe that the price be adequate and must be real, not fictitious,
stressing the obvious parallel between price and
actual value of the property sold.
True price, which is essential to the validity of a
sale, means existent, real and effective price, that which does not consist in an insignificant
amount that it is not the same as the concept of
a just price which entails weighing and measuring, for economic equivalence, the
amount of price against all the factors that determine the value of the thing sold.
But there is no need of such a close examination when the immense
disproportion between such economic values is clearly a case of insignificant or ridiculous price,
the unbelievable amount of which at once points out its inexistence.
ART 1458 of the Civil Code, in prescribing that a
sale be for a ... price certain in money or its equivalent ... requires that "equivalent" be
something representative of money, e.g., a
check or draft, to the effect that services are not
the equivalent of money insofar as said requirement is concerned and that a contract is
not a true sale where the price consists of
services or prestations
The "services" mentioned in the questioned deeds of sale are not only vague
and uncertain, but are unknown and not susceptible of determination without the necessity of a
new agreement between the parties to said deeds.
Without necessarily according all these assertions its full concurrence, but upon the
consideration alone that the apparent gross, not to say enormous, disproportion between the
stipulated price (in each deed) of P1.00 plus unspecified and unquantified services and the
undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by
assessments for tax purposes which, it is well- known, are notoriously low indicators of actual
value plainly and unquestionably demonstrates that they state a false and fictitious

consideration, and no other true and lawful cause having been shown, the Court finds both said
deeds, insofar as they purport to be sales, not merely voidable, but void ab initio.
Neither can the validity of said conveyances be defended on the theory that their true causa is
the liberality of the transferor and they may be considered in reality donations because the law
also prescribes that donations of immovable property, to be valid, must be madeand accepted in
a public instrument, and it is not denied by the respondents that there has been no such
acceptance which they claim is not required.
The transfers in question being void, it follows as a necessary consequence and conformably to
the concurring opinion in Armentia, with which
the Court fully agrees, that the properties purportedly conveyed remained part of the estate of
Hilario Mateum, said transfers
notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such
is not challenged.
Respondents also failed to offer evidence of existent lawful consideration. The rule is that when
a dismissal thus obtained is reversed on appeal, the movant loses the right to present evidence
in his behalf.
SC reversed CA decision.
Q: What was the consideration in the case of Bagnas?

A: The consideration was 1 peso.


Q: Now was that a valid consideration?
A: The SC held in this case that it was not a valid consideration.
Q: What were the specific terms used to state the consideration?
A: It was each recited the reconsideration of the sale to be" ... halagang ISANG PISO
(Pl.00), salaping Pilipino, at mga naipaglingkod, ipinaglilingkod sa aking kapakanan ..."
("the sum of ONE PESO Pl.00), Philippine Currency, and services rendered, being
rendered and to be rendered for my benefit").
Q: Now was that a valid consideration?
A: In this case maam, it cannot be considered as a valid consideration.
Q: So are you saying that just because it is one peso and services to be rendered,
being rendered for my benefit automatic that there is no valid consideration at all? What
made it invalid? What made it not money or in its equivalent?
A: In this case the SC ruled assert that Art. 1458 of the Civil Code, in prescribing that a sale
be for a ... price certain in money or its equivalent ... requires that "equivalent" be something

to the effect that


services are not the equivalent of money insofar as said requirement is
representative of money, e.g., a check or draft, again citing Manresa

16

concerned and that a contract is not a true sale where the price consists of
services or prestations.
Q: But isnt it that gross inadequacy of the price does not invalidate the contract?
A: Yes, maam. But it was also pointed out that the "services" mentioned in the
questioned deeds of sale are not only vague and uncertain, but are unknown and
not susceptible of determination without the necessity of a new agreement
between the parties to said deeds.
So take not here the one peso agreement and the services rendered, being rendered
and to be rendered for my benefit. So here the consideration unspecified what kind of
services upon the Without necessarily according all these assertions its full concurrence, but
upon the consideration alone that the apparent gross, not to say enormous, disproportion
between the stipulated price (in each deed) of P l.00 plus unspecified and unquantified services
and the undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by
assessments for tax purposes which, it is well-known, are notoriously low indicators of actual
value plainly and unquestionably demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause having been shown, the Court finds both said
deeds, insofar as they purport to be sales, not merely voidable, but void ab initio.
In other words simulated and no there proof was adequately shown therefore the deeds are
considered not merely voidable but void ab ignition.
Now to represent consideration, it must be something that will represent money such as a check
when en cashed. Now in this case of Bagnas the SC looked into the lack of intention of the
parties where the services mentioned here was not an equivalent of money.

Ongvs.Ong
(139SCRA133,G.R.No.L67888,October8,1985)
FACTS:
On25February1976,ImeldaOngforandinconsiderationofP1andothervaluable
considerations,executedinfavorofSandraMaruzzo,thenaminor,aQuitclaimDeed
wherebyshetransferred,released,assignedandforeverquitclaimedtoSandraMaruzzo,
herheirsandassigns,allherrights,title,interestandparticipationin1/2undivided
portionofaparcelofland(Lot10Bofthesubdivisionplan(LRC)Psd157841,a
portionoflot10Block18ofPSD13288LCR(GLRC)Record2029,situatedinMakati,
containing125squaremeters.

On19November1980,ImeldaOngrevokedtheaforesaidDeedofQuitclaimand,
thereafter,on20January1982donatedthewholepropertytoherson,RexOng
Jimenez.
On20June1983,SandraMaruzzo,throughherguardianadlitemAlfredoOng,
filedwiththeRTCMakatianactionagainstImeldaOng,fortherecoveryof
ownership/possessionandnullificationoftheDeedofDonationovertheportion
belongingtoherandforaccounting.
ImeldaOngclaimedthattheQuitclaimDeedisnullandvoidinasmuchasitis
equivalenttoaDeedofDonation,acceptanceofwhichbythedoneeisnecessary
togiveitvalidity.Further,itisaverredthatthedonee,SandraMaruzzo,beinga
minor,hadnolegalpersonalityandthereforeincapableofacceptingthedonation.
Uponadmissionofthedocumentsinvolved,thepartiesfiledtheirresponsive
memorandaandsubmittedthecasefordecision.On12December1983,thetrial
courtrenderedjudgmentinfavorofMaruzzoandheldthattheQuitclaimDeedis
equivalenttoaDeedofSaleand,hence,therewasavalidconveyanceinfavorof
thelatter.
ImeldaOngappealedtotheIntermediateAppellateCourt.On20June1984,
IACpromulgateditsDecisionaffirmingtheappealedjudgmentandheldthatthe
QuitclaimDeedisaconveyanceofpropertywithavalidcauseorconsideration;
thattheconsiderationisP1whichisclearlystatedinthedeeditself;thatthe
apparentinadequacyisofnomomentsinceitistheusualpracticeindeedsof
conveyancetoplaceanominalamountalthoughthereisamorevaluable
considerationgiven.Hence,thepetitionforreviewoncertiorari.
On15March1985,SandraMaruzzo,throughherguardianadlitemAlfredo
Ong,filedanOmnibusMotioninformingthisCourtthatshehasreachedtheage
ofmajorityasevidencedbyherBirthCertificateandshepraysthatshebe
substitutedasprivaterespondentinplaceofherguardianadlitem.On15April
1985,theCourtissuedaresolutiongrantingthesame.
ISSUE:WONthesaleofrealpropertyisvalid.YES.
HELD:
ConsiderationorcauseisnotP1alonebutalsoothervaluableconsiderationsThe
subjectdeedrevealsthattheconveyanceofthe1/2undividedportionofthe

propertywasforandinconsiderationofP1andtheothervaluableconsiderations
paidbySandraMaruzzo,throughherrepresentative,AlfredoOng,topetitioner
ImeldaOng.Stateddifferently,thecauseorconsiderationisnotP1alonebutalso
theothervaluableconsiderations.
Causenotstatedincontractispresumedexistingunlessproventothecontrary;Execution
ofdeedaprimafacieevidenceofexistenceofvaluableconsideration
Althoughthecauseisnotstatedinthecontractitispresumedthatitisexistingunlessthe
debtorprovesthecontrary(Article1354oftheCivilCode).Oneofthedisputable
presumptionsisthatthereisasufficientcauseofthecontract(Section5,(r),Rule131,
RulesofCourt).Itisalegalpresumptionofsufficientcauseorconsiderationsupportinga
contractevenifsuchcauseisnotstatedtherein(Article1354,NewCivilCode)This
presumptioncannotbeovercomebyasimpleassertionoflackofconsiderationespecially
whenthecontractitselfstatesthatconsiderationwasgiven,andthesamehasbeen
reducedintoapublicinstrumentwithalldueformalitiesandsolemnities.Toovercome
thepresumptionofconsiderationtheallegedlackofconsiderationmustbeshownby
preponderanceofevidenceinaproperaction.(Samanillavs.Cajucom,etal.,107Phil.
432).Theexecutionofadeedpurportingtoconveyownershipofarealtyisinitself
primafacieevidenceoftheexistenceofavaluableconsideration,thepartyalleginglack
ofconsiderationhastheburdenofprovingsuchallegation.(Caballero,etal.vs.
Caballero,etal.,(CA),45O.G.2536).
Acceptancebylegalrepresentativesofminorappliestoonerousandconditional
donations
GrantingthattheQuitclaimdeedisadonation,Article741oftheCivilCodeprovides
thattherequirementoftheacceptanceofthedonationinfavorofminorbyparentsof
legalrepresentativesappliesonlytoonerousandconditionaldonationswherethe
donationmayhavetoassumecertainchargesorburdens(Article726,CivilCode).The
acceptancebyalegalguardianofasimpleorpuredonationdoesnotseemtobe
necessary(Perezvs.Calingo,CA40O.G.53).Thus,SupremeCourtruledinKapunan
vs.CasilanandCA(109Phil.889)thatthedonationtoanincapacitateddoneedoesnot
needtheacceptancebythelawfulrepresentativeifsaiddonationdoesnotcontainany
condition.Insimpleandpuredonation,theformalacceptanceisnotimportantforthe
donorrequiresnorighttobeprotectedandthedoneeneitherundertakestodoanything
norassumesanyobligation.TheQuitclaiminquestiondoesnotimposeanycondition.
Badfaithandinadequacyofmonetaryconsiderationdoesnotrenderconveyance
inexistent,assignorsliberalitymaybesufficientcauseforavalidcontract

ItisnotunusualindeedsofconveyanceadheringtotheAngloSaxonpracticeofstating
thattheconsiderationgivenisthesumofP1,althoughtheactualconsiderationmayhave
beenmuchmore.Moreover,assumingthatsaidconsiderationofP1issuspicious,this
circumstance,alone,doesnotnecessarilyjustifytheinferencethatthevendeeswerenot
purchasersingoodfaithandforvalue.Neitherdoesthisinferencewarranttheconclusion
thatthesaleswerenullandvoidabinitio.Indeed,badfaithandinadequacyofthe
monetaryconsiderationdonotrenderaconveyanceinexistent,fortheassignors
liberalitymaybesufficientcauseforavalidcontract(Article1350,CivilCode),whereas
fraudorbadfaithmayrendereitherrescissibleorvoidable,althoughvaliduntilannulled,
acontractconcerninganobjectcertainenteredintowithacauseandwiththeconsentof
thecontractingparties.

Q: What is the consideration in Ong v. Ong?


A: The consideration is also 1 peso and other valuable considerations but in this case the SC
held that the consideration is valid.
Q: How would you reconcile that with the ruing in Bagnas wherein one peso and services was
not a valid consideration but in this case one peso and other valuable consideration valid.
A: With respect to the Bagnas case, the consideration involves services were not an equivalent
amount in money whereas in this case, the other valuable consideration were equated to money.
So here, the quitclaim was considered as a deed of sale over the one hand undivided portion
in consideration of 1 peso and other valuable consideration, valid as the cause or consideration
was not the one peso alone but also the other valuable considerations. Again, 1354 although
the cause is not stated in the contract it is valid and existing unless the parties prove the
contrary. Under the rules on evidence there is a disputable presumption that there is sufficient
cause in a contract. This legal presumption of sufficient cause of a contract even if such cause
is not stated and it cannot be overcome by simple assertion of lack of consideration. You really
go back as to whether or not there was intention on the parties to enter into a contract of sale.
In the case of Bagnas aside from the fact that the consideration was one peso and other
services rendered, there was really no evidence that the parties really entered into a contract of

sale. Here in Ong, there was no proof shown that there was no intention and therefore the
presumption of existence of a consideration is applicable.
Republic v. PRDC

102Phil.960,G.R.No.L10141,January31,1958
FACTS:
TheRepublicofthePhil,inrepresentation
oftheBureauofPrisonsfiledacaseforcollectionof
sumofmoneyfromMacarioApostol.Apostol,inhisownbehalf,submittedthehighest
bidforthehighestbidforthepurchaseof100tonsofPalawanAlmacigaand3million
boardfeetoflogswiththeBureauofPrisons.AcontractwasdrawnandApostol

wasabletoobtaingoodsfromtheBureauofPrisonsbutwereunabletopaythetotal
balanceof
P34,015.06.

Now,respondentPRDCmovedtointervene,allegingthatApostol,thenthepresidentof
PRDC,withouttheknowledgeorconsentofthestockholdersthereof,disposedofsaid
goodsbydeliveringthesametotheBureauofPrisonsofinanattempttosettlehis
personaldebtswiththelatterentity.
RTCrefusedsuchintervention.CAreversedandallowedPRDCtointervene.
Petitioner,assertsthatthesubjectmatteroftheoriginallitigationisasumofmoney
allegedlyduetotheBureauofPrisonsfromMacarioApostolandnotthegoodsorthe
materialsreportedlyturnedoverbyApostolaspaymentofhisprivatedebtstotheBureau
ofPrisonsandtherecoveryofwhichissoughtbythepetitioner;andthatforthisreason,
petitionerhasnolegalinterestintheverysubjectmatterinlitigationastoentitleitto
intervene.
ISSUE:WONhaslegalinteresttointervene.YES
HELD:

TheGovernmentarguesthat"Price...isalwayspaidintermsofmoneyandthe
supposedpaymentbeeinginkind,itisnopaymentatall,
"citingArticle1458ofthenewCivilCode.However,thesameArticleprovidesthatthe
purchasermaypay"apricecertaininmoneyoritsequivalent,"whichmeansthatthey
meantofthepriceneednotbeinmoney.WhethertheG.I.sheets,blacksheets,M.S.
Plates,roundbarsandG.I.pipesclaimedbytherespondentcorporationtobelongtoit
anddeliveredtotheBureauofPrisonbyMacarioApostolinpaymentofhisaccountis
sufficientpaymenttherefore,isforthecourttopassuponanddecideafterhearingallthe
partiesinthecase.ShouldthetrialcourtholdthatitisastocreditApostolwiththevalue
orpriceofthematerialsdeliveredbyhim,certainlythehereinrespondentcorporation
wouldbeaffectedadverselyifitsclaimofownershipofsuchsheets,plates,barsand
pipesistrue.
Q:Whywasthereanissueastotheseconstructionmaterialsastowhethertheywerea
validconsiderationornot?Whatwastheallegationhereofthegovernmentwithregardto
price?
A:citingArticle1458ofthenewCivilCodeprovidesthatthepurschasermaypay"a
pricecertaininmoneyoritsequivalent,"whichmeansthattheymeantofthepriceneed
notbeinmoney.WhethertheG.I.sheets,blacksheets,M.S.Plates,roundbarsandG.I.
pipesclaimedbytherespondentcorporationtobelongtoitanddeliveredtotheBureauof
PrisonbyMacarioApostolinpaymentofhisaccountissufficientpaymenttherefore,is
forthecourttopassuponanddecideafterhearingallthepartiesinthecase.

Q:Sowhatistheeffectifthereisavalidconsideration?HowwillitaffectPRDC?Why
willthatberelevant?
A:BecauseifthetherewasavalidconsiderationthenPRDCcanintervenebeingan
interestedparty.

Sohere,theGovernmentarguesthat"Price...isalwayspaidintermsofmoneyandthe
supposedpaymentbeeinginkind,itisnopaymentatall,"citingArticle1458ofthenew
CivilCode.However,theSCruledthesameArticleprovidesthatthepurschasermaypay
"apricecertaininmoneyoritsequivalent,"whichmeansthattheymeantoftheprice
neednotbeinmoney.WhethertheG.I.sheets,blacksheets,M.S.Plates,roundbarsand
G.I.pipesclaimedbytherespondentcorporationtobelongtoitanddeliveredtothe
BureauofPrisonbyMacarioApostolinpaymentofhisaccountissufficientpayment
therefore,isforthecourttopassuponanddecideafterhearingallthepartiesinthecase.

ShouldthetrialcourtholdthatitisastocreditApostolwiththevalueorpriceofthe
materialsdeliveredbyhim,certainlythehereinrespondentcorporationwouldbeaffected
adverselyifitsclaimofownershipofsuchsheets,plates,barsandpipesistrue.
RememberthisisinrelationtothemotiontointervenebyPRDC.

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