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1
SUBJECT: SALES LAW
The intrinsic defects are extractable from the following questions: a) If Jose Santiago intended to
donate the properties in question to Ida, what was the big idea of hiding the nature of the contract in the
facade of the sale? b) If the deed is a genuine document, how could it have happened that Jose Santiago who
was of course fully aware that he owned only 1/3 pro indiviso of the properties covered by his title, sold or
donated the whole property to Ida? c) Why in heaven's name did Jose Santiago, a college graduate, who
always signed his name in documents affix his thumbmark on this deed of sale? d) If Ida was the child of
Jose Santiago, what was the sense of the latter donating his properties to her when she would inherit them
anyway upon his death? and e) If the deed was executed in 1979, how come it surfaced only in 1984 after the
death of Jose Santiago and of all people, the one in possession was the baptismal sponsor of Ida?
Clearly, there is no valid sale in this case. Jose did not have the right to transfer ownership of
the entire property to petitioner since 2/3 thereof belonged to his sisters. Petitioner could not have
given her consent to the contract, being a minor at the time. Consent of the contracting parties is among
the essential requisites of a contract, including one of sale, absent which there can be no valid contract.
Moreover, petitioner admittedly did not pay any centavo for the property, which makes the sale void
for having a simulated price.
Neither may the purported deed of sale be a valid deed of donation because it lacks the
acceptance of the donee. Being a minor at the time, the acceptance should have been made by her parents or
her legal representative. However, no one accepted the “donation” for Ida.
The decision of the CA is upheld.
ADDITIONAL NOTES: (on the issue of filiation) Petitioner contends that she has adduced sufficient evidence to
prove her filiation by Jose Santiago, making her his sole heir. She asserts that her identification as Jose's
daughter in his ITR is adequate evidence. She asserts further that respondents cannot impugn her filiation
collaterally, citing Article 263 of the Civil Code as her basis.
Respondents contend that petitioner is not the daughter of Jose, per her birth certificate that indicates
her parents as Leo Labagala and Cornelia Cabrigas, instead of Jose Santiago and Esperanza Cabrigas.
Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove that a
person is not a man's child by his wife. However, the present case is not one impugning petitioner's
legitimacy. Respondents are asserting not merely that petitioner is not a legitimate child of Jose, but
that she is not a child of Jose at all.
The Certificate of Record of Birth plainly states that Ida was the child of the spouses Leon Labagala
and Cornelia Cabrigas. A copy of this document is also found in the Local Civil Registry; therefore, this
certificate is proof of the filiation of Ida. Ida however insists that she is not Ida Labagala but Ida Santiago. If
this is not her birth certificate, then where is hers? She did not present any though it would have been the
easiest thing to do.
Ida could only present a baptismal certificate stating that appellee's parents were Jose Santiago and
Esperanza Cabrigas. But jurisprudence states that a baptismal certificate, a private document, is not
conclusive proof of filiation. More so are the entries made in an income tax return, which only shows
that income tax has been paid and the amount thereof. It is also noteworthy that petitioner, who claims to
be Ida Santiago, has the same birthdate as Ida Labagala. The similarity is too uncanny to be a mere
coincidence.
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SUBJECT: SALES LAW
Thus, we are constrained to agree with the factual finding of the Court of Appeals that petitioner is in
reality the child of Leon Labagala and Cornelia Cabrigas, and contrary to her averment, not of Jose Santiago
and Esperanza Cabrigas. Not being a child of Jose, it follows that petitioner cannot inherit from him through
intestate succession.
G.R. No. 127540
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners,
vs.
HON. COURT OF APPEALS, FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.
QUISUMBING, J.:
FACTS:
Paulina Rigonan owned three parcels of land in Ilocos Norte. She allegedly sold them to private
respondents, the spouses Felipe and Concepcion Rigonan, who claim to be her relatives. In 1966, herein
petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan, who claim to be her closest
surviving relatives, allegedly took possession of the properties by means of stealth, force and intimidation,
and refused to vacate the same.
Felipe Rigonan then filed a complaint for reinvindicacion before the RTC.
For their defense, herein petitioners alleged that the deed of absolute sale was void for being spurious
as well as lacking consideration. They said that Paulina Rigonan did not sell her properties to anyone. As her
nearest surviving kin within the fifth degree of consanguinity, they inherited the three lots and the permanent
improvements via intestate succession.
The trial court ruled in favor the petitioners, the relatives. The CA reversed the trial court’s decision.
Hence, this petition seeking to annul the ruling of the CA.
ISSUE:
WoN private respondents sufficiently established the existence and due execution of the Deed of
Absolute Sale.
RULING:
NO. Noteworthy is the fact that private respondents presented only a carbon copy of this deed. When
the Register of Deeds was subpoenaed to produce the deed, no original typewritten deed but only a
carbon copy was presented to the trial court. Although the CA calls it a duplicate original, the deed
contained filled in blanks and alterations. None of the witnesses directly testified to prove positively and
convincingly Paulina’s execution of the original deed of sale. The carbon copy did not bear her signature, but
only her alleged thumbprint. Juan Franco testified that he was an instrumental witness to the deed. However,
when cross-examined and shown a copy of the subject deed, he retracted and said that said deed of sale was
not the document he signed as witness. He declared categorically he knew nothing about it.
In addition, the alleged other copies of the document bore different dates of entry and different entry
numbers in the Register of Deeds. The deed was apparently registered long after its alleged date of execution
and after Paulina’s death. Admittedly, even Paulina was not given a copy.
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SUBJECT: SALES LAW
Furthermore, it appears that the alleged vendor was never asked to vacate the premises she had
purportedly sold. Felipe testified that he had agreed to let Paulina stay in the house until her death.
Jurisprudence states that the buyer’s immediate possession and occupation of the property is deemed
corroborative of the truthfulness and authenticity of the deed of sale. The alleged vendor’s continued
possession of the property in this case throws an inverse implication, a serious doubt on the due execution of
the deed of sale. Noteworthy, the same parcels of land involved in the alleged sale were still included in the
will subsequently executed by Paulina and notarized by the same notary public who notarized the deed of
sale, Atty. Tagatag. These circumstances, taken together, militate against unguarded acceptance of the due
execution and genuineness of the alleged deed of sale.
Finally, the SC had to take into account the element of consideration for the sale. The price allegedly
paid by private respondents for nine parcels, including the three parcels in dispute, a house and a warehouse,
raises further questions. Consideration is the why of a contract, the essential reason which moves the
contracting parties to enter into the contract. On record, there is unrebutted testimony that Paulina as
landowner was financially well off. She loaned money to several people. The Court sees no apparent and
compelling reason for her to sell the subject parcels of land with a house and warehouse at a meager price of
P850 only.
The petition is granted. The assailed decision of the CA is reversed.
ADDITIONAL NOTES: At the time of the execution of the alleged contract, Paulina Rigonan was already of
advanced age and senile. She died an octogenarian barely over a year when the deed was allegedly executed.
The general rule is that a person is not incompetent to contract merely because of advanced years or
by reason of physical infirmities. However, when such age or infirmities have impaired the mental
faculties so as to prevent the person from properly, intelligently, and firmly protecting her property
rights, then she is undeniably incapacitated. The unrebutted testimony of Zosima Domingo shows that at
the time of the alleged execution of the deed, Paulina was already incapacitated physically and mentally. She
narrated that Paulina played with her waste and urinated in bed. Given these circumstances, there is sufficient
reason to seriously doubt that she consented to the sale of and the price for her parcels of land.
G.R. No. 143826
HEIRS OF IGNACIA AGUILAR-REYES, petitioners,
vs.
SPOUSES CIPRIANO MIJARES and FLORENTINA MIJARES, respondents.
YNARES-SANTIAGO, J.:
FACTS:
Vicente and Ignacia were married in 1960, but had been separated de facto since 1974. Sometime in
1984, Ignacia learned that Vicente sold one of their properties to respondent spouses Cipriano and Florentina
Mijares. She likewise found out that Vicente filed a petition for administration and appointment of guardian
with the MTC where he misrepresented therein that she died on March 22, 1982, and that he and their 5
minor children were her only heirs. As a result, the court appointed Vicente as the guardian of their minor
children and authorized Vicente to sell the estate of Ignacia.
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SUBJECT: SALES LAW
Thereafter, Ignacia sent a letter to respondent spouses demanding the return of her 1/2 share in the lot.
Failing to settle the matter amicably, Ignacia filed a complaint for annulment of sale against respondent
spouses.
The trial court rendered a decision declaring part of the sale void with respect to the share of Ignacia.
Ignacia then filed a motion for modification of the decision praying that the sale be declared void in its
entirety, which the trial court granted. Both Ignacia Aguilar-Reyes (substituted by her heirs after her death)
and respondent spouses appealed the decision to the CA.
Petitioners contended that they are entitled to reimbursement of the rentals collected on the property
in issue, while respondent spouses claimed that they are buyers in good faith. The decision of the lower court
was reversed. Hence, this petition for review on certiorari.
ISSUE:
WoN there was a valid contract of sale; and
If not, may the respondents raise the defense of good faith?
RULING:
NO to both issues.
(1) Articles 166 and 173 of the Civil Code, the governing laws at the time the assailed sale was
contracted, provide the husband could not alienate or encumber any conjugal real property without
the consent, express or implied, of the wife, otherwise, the contract is voidable. This is consistent with
Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10
years from the questioned transaction, seek its annulment.
(Note that this particular provision giving the wife ten (10) years x x x during the marriage to
annul the alienation or encumbrance was not carried over to the Family Code. It is thus clear that
any alienation or encumbrance made after the Family Code took effect by the husband of the
conjugal partnership property without the consent of the wife is null and void, not merely
voidable.)
In the case at bar, there is no dispute that the lot in question is a conjugal property having been
purchased using the conjugal funds of the spouses during the subsistence of their marriage. It is
beyond cavil therefore that the sale of said lot to respondent spouses without the knowledge and
consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale which was filed on June 4, 1986,
before her demise is perfectly within the 10 year prescriptive period under Article 173 of the Civil Code.
(2) The Court finds that respondent spouses are not purchasers in good faith. A purchaser in good
faith is one who buys property of another, without notice that some other person has a right to, or interest in,
such property and pays full and fair price for the same, at the time of such purchase, or before he has notice
of the claim or interest of some other persons in the property.
In the instant case, there existed circumstances that should have placed respondent spouses on
guard. The death certificate of Ignacia shows that she died on March 22, 1982. The same death certificate,
however, reveals that – (1) it was issued by the Office of the Civil Registrar of Lubao Pampanga on March
10, 1982; (2) the alleged death of Ignacia was reported to the Office of the Civil Registrar on March 4, 1982;
and (3) her burial or cremation would be on March 8, 1982. These obvious flaws in the death certificate
should have prompted respondents to investigate further. Moreover, respondent spouses had all the
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SUBJECT: SALES LAW
opportunity to verify the claim of Vicente that he is a widower because it was their lawyer, Atty. Rodriguito
S. Saet, who represented Vicente in the special proceedings before the MTC.
Respondent spouses also cannot deny knowledge that Vicente was married at the time the sale was
entered into. This is so because the 1978 "agreement" described Vicente as "married" but the conformity of
his wife to the sale did not appear in the deed. Obviously, the execution of another deed of sale in 1983 over
the same lot intended to correct the absence of Ignacia’s consent. Even assuming that respondent spouses
believed in good faith that Ignacia really died on March 22, 1982, after they purchased the lot, the fact
remains that the sale was entered into before her demise, without her consent.
The petition is partially granted, with modifications only as to the interest rates given and damages
awarded. The decision of the CA is reversed.
ADDITIONAL NOTES: It has been repeatedly held by the SC that in cases where the husband sold conjugal
property without his wife’s consent, the contract must be annulled in its entirety. Had Congress intended to
limit such annulment in so far as the contract shall "prejudice" the wife, such limitation should have been
spelled out in the statute.
G.R. No. 133879
EQUATORIAL REALTY DEVELOPMENT, INC., petitioner,
vs.
MAYFAIR THEATER, INC., respondent.
PANGANIBAN, J.:
FACTS:
Carmelo & Bauermann, Inc. used to own a parcel of land, together with two 2-storey buildings
constructed thereon, located at Claro M. Recto Avenue, Manila.
Carmelo entered into a two contracts of lease (covering two different portions of the property) with
Mayfair Theater Inc. for a period of 20 years for the latter to put up movie houses. Both leases contained a
provision granting Mayfair a right of first refusal to purchase the subject properties. The subject properties,
however, were sold by Carmelo to Equatorial Realty Development, Inc. without their first being offered to
Mayfair.
The “mother case”: Consequently, Mayfair filed a complaint before the RTC seeking the annulment
of sale between Carmelo and Equatorial, specific performance, and damages. The trial court ruled in favor of
Carmelo and Equatorial. This was reversed by the CA. Carmelo and Equatorial then filed a petition for
review before the SC, which was denied.
Second case: Equatorial then filed with the RTC an action for the collection of a sum of money
against Mayfair, claiming payment of rentals or reasonable compensation for the defendant's use of the
subject premises after its lease contracts had expired, when the validity of the deed of sale with Equatorial
still stands. This action was the progenitor of the present case.
The lower court debunked the claim of Equatorial for unpaid back rentals, holding that the rescission
of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual
proprietary rights, even in expectancy. It declared the rescinded Deed of Absolute Sale as void at its
inception as though it did not happen.
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SUBJECT: SALES LAW
any doubt whatever as to the identity of the tobacco intended to be covered by the quedan. The assignee
stands in the shoes of the insolvent, and while it is his duty to protect the general creditors, he is not in the
position of a judgment creditor with an unsatisfied execution.
In view of the foregoing considerations, the court is of the opinion that the quedan is a negotiable
warehouse receipt which was duly issued and delivered by the debtor U. de Poli to the American Foreign
Banking Corporation, and that it divested U. de Poli of his title to said tobacco and transferred the position
and the title thereof to the American Foreign Banking Corporation.
The judgment appealed from is affirmed.
G.R. No. L-34655
SIY CONG BIENG & CO., INC., plaintiff-appellee,
vs.
HONGKONG & SHANGHAI BANKING CORPORATION, defendant-appellant.
OSTRAND, J.:
FACTS:
Both the plaintiff and the defendant are corporations domicile in the City of Manila and duly
authorized to transact business in accordance with the laws of the Philippine Islands.
Sometime in 1926, Ranft called at the office of the herein plaintiff (Siy Cong Bieng) to purchase
hemp and he was offered the bales of hemp subject in this case. On the same date, the quedans, together with
the covering invoice, were sent to Ranft by Siy Cong Bieng, without having paid for the hemp, for it appears
that in their previous transactions of the same kind, quedans were paid one or two days after their delivery.
That same day, the quedans in question were delivered by Ranft to the defendant bank (HK &
Shanghai Banking Corporation) to secure the payment of preexisting debts of Ranft. Six of the quedans were
indorsed in blank by Siy Cong Bieng and Ranft, while two of them were indorsed by Ranft alone.
Unfortunately, that night, Ranft died, and when the Siy Cong Bieng found that such was the case, it
immediately demanded the return of the quedans, or the payment of the value, but was told that the quedans
had already been sent to HK & Shanghai Banking Corporation.
Demand had been made by Siy Cong Bieng on HK & Shanghai Banking Corporation for the return of
the quedans, or their value, which demand was refused by the bank on the ground that it was a holder of the
quedans in due course. Thereupon Siy Cong Bieng filed a complaint wherein it alleged that it has "sold" the
quedans in question to the deceased Ranft for cash, but that the said Ranft had not fulfilled the conditions of
the sale. Later on, plaintiff filed an amended complaint, wherein they changed the word "sold" referred to in
the first complaint to the words "attempted to sell".
The lower court ruled in favor of Siy Cong Bieng, finding that HK & Shanghai Banking Corporation
could not have acted in good faith for the reason that according to the statements of its own witness, Thiele,
it might be deduced that the said bank knew that the value of the said quedans was not as yet paid when the
same were endorsed to it.
Hence, this present action.
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SUBJECT: SALES LAW
ISSUE:
WoN the quedans in question were negotiable in form.
RULING:
YES. When these quedans were thus negotiated, Otto Ranft was indebted to the HK & Shanghai
Banking Corporation in the sum of P622,753.22, which indebtedness was partly covered by quedans. There
is no doubt that the quedans here in question were received by the bank to secure the payment of Ranft's
preexisting debts.
Then, taking into consideration that the quedans were negotiable in form and duly endorsed in
blank by Siy Cong Bieng and Otto Ranft, it follows that on the delivery of the qeudans to the bank they
were no longer the property of Ranft unless he liquidated his debt with the bank.
The question as to the rights the HK & Shanghai Banking Corporation acquired over the aforesaid
quedans after indorsement and delivery to it is found in section 41 of the Warehouse Receipts Act:
SEC. 41. Rights of person to whom a receipt has been negotiated. — A person to
whom a negotiable receipt has been duly negotiated acquires thereby:
(a) Such title to the goods as the person negotiating the receipt to him had or
had ability to convey to a purchaser in good faith for value, and also such title
to the goods as the depositor of person to whose order the goods were to be
delivered by the terms of the receipt had or had ability to convey to a purchaser
in good faith for value…
While the Court regrets that the plaintiff in this case has suffered the loss of the quedans, the bank is
not responsible for the loss; the negotiable quedans were duly negotiated to the bank and as far as the record
shows, there has been no fraud on the part of the defendant.
The appealed judgment is reversed.
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