Sof Cases

FIRST DIVISION
[ G.R. Nos. 244667-69 (Formerly UDK 16373-75), December 02, 2020

]
HEIRS OF CORAZON VILLEZA, NAMELY: IMELDA V. DELA CRUZ,

I,• STELLA IMELDA II VILLEZA, IMELDA VILLEZA III, ROBYL•• O.
VILLEZA AND ABIGAIL WEHR, PETITIONERS, VS. ELIZABETH S.
ALIANGAN AND ROSALINA S. ALIANGAN, REP. BY ROGER A.
BANANG, RESPONDENTS.
DECISION
CAGUIOA, J.:
Before the Court is the Petition for Review1 (Petition) under Rule 45 of

the Rules of Court filed by petitioners assailing the Decision2 dated
December 17, 2018 (Decision) of the Court of Appeals3 in CA-G.R. CV
Nos. 108495-97. The CA Decision denied the three appeals of
petitioners and affirmed with modification the three Decisions all dated
August 30, 2016 of the Regional Trial Court of Cauayan City, Isabela,
Branch 20 (RTC), in Civil Cases Nos. (CV) Br. 20-3009,4 Br. 20-
3010,5 and Br. 20-3011.6
The Facts and Antecedent Proceedings
The CA Decision narrates the antecedents as follows:
In controversy are three (3) parcels of land with improvements located at

Angadanan, Isabela all registered under the name of Corazon Villeza
(Corazon).
It is alleged that Corazon, during her lifetime, sold the subject properties
to sisters Elizabeth Aliangan (Elizabeth) (a long-time neighbor and
friend) and Rosalina Aliangan (Rosalina), [respondents herein]. On
August 3, 2009[,] however, Corazon died without executing any deed of
conveyance in [respondents'] favor. [Respondents] thus filed three (3)
separate Amended Complaints for "Specific Performance and
Damages", docketed as Civil Case[s] Nos. Br. 20-3009, Br. 20-3010 and
Br. 20-3011, to compel [petitioners Heirs of Corazon Villeza, namely
Imelda V. dela Cruz, I, Stella Imelda II Villeza, Imelda Villeza III, Robyl
O. Villeza and Abigail Wehr, (petitioners)], legal heirs and collateral
relatives of Corazon, to execute the subject deeds. [It appears that aside
from petitioners, the other defendants are Lilibeth Villeza
Baliwag,7 Maria Victoria VillezaBarcena, Elmer V. Agpaoa, Dennis V.
Agpaoa and Kenneth V. Agpaoa, who are heirs of Rosario Agpaoa
(other defendants)].8
The RTC, in its Order dated May 19, 2011 consolidated [CV] Br. 20-
3010 and Br. 20-3011 with [CV] Br. 20-3009, but opted to render three
(3) separate Decisions to obviate confusion.
[Centro I Property; CV Br. 20-3009
In an Amended Complaint dated March 1, 2011, [respondents] averred

the following:
On January 10, 2006, Elizabeth and Rosalina, as buyers, and Corazon

and Rosario Agpaoa (Rosario), as sellers, entered into a Deed of
Conditional Sale for the sale of a residential house and an undivided
parcel of land, with a total area of 540.5 square meters, located at
Centro I, Angadanan, Isabela (Centro I property) for a purchase price of
[P]450,000.00.
At the time of the execution of the aforementioned deed, the Centro I

property formed part of Transfer Certificate of Title (TCT) No. T-299995,
a 2,162 sq.m. parcel of land registered under the name of
InocencioAgpaoa (Inocencio).
On November 14, 2006, TCT No. T-299995 was cancelled and TCT No.
T-356999 (now only covering the 540.5 sq.m. Centro I property) was
issued in Corazon's name. Thereafter, Elizabeth and Rosalina went
back to Toronto, Canada where they sent monthly remittances of
[P]10,000.00 from February 2006 to December 2007 to Rosario as
partial payments for the Centro I property.Rosario also acknowledged
receiving a total amount of [P]184,233.00, duly witnessed and signed by
Corazon, for the Centro I property. [Respondents] averred that they
continued sending monthly remittances to Rosario from January to April
2008.
On August 3, 2009 and September 1, 2009, respectively, Corazon and

Rosario died without transferring ownership of TCT No. T-356999 in
[respondents'] favor. Alleging full payment of the Centro I property,
[respondents] entreated [petitioners], as heirs of Corazon, to honor
the Deed of Conditional Sale dated January 10, 2006. [Petitioners] did
not accede to such request.
Worse, [respondents] discovered two (2) contracts conveying the Centro

I property to different persons, viz: (a) a Deed of Absolute Sale dated
February 9, 2007, executed by one Kenneth Agpaoa selling a parcel of
land covered by TCT No. T-356999 to Rosario; and (b) a Deed of
Absolute Sale dated February 9, 2007 executed by Rosario selling the
same parcel of land covered by TCT No. T-356999 to Corazon. It is
averred that the signatures of Corazon and Rosario in these documents
are forgeries.
Repudiating the January 10, 2006 Deed of Conditional Sale for allegedly

being void ab initio, [petitioners], in their Answer, argued, to wit: (a)
when the subject deed was executed on January 10, 2006, Inocencio x
xx was still the registered owner of the Centro I property considering that
TCT No. T-356999 was only issued in Corazon's name on November
14, 2006, Corazon cannot thus appropriate something she does not
own; (b) Corazon was the sole registered owner of TCT No. T-356999,
whatever amount received and acknowledged by Rosario, if any, could
never bind Corazon's property; and (c) [respondents], being Canadian
citizens, are disqualified under the Constitution from owning real
property in the Philippines.
[Petitioners] add that [respondents] have no cause of action against

them as they were neither privies to the purported contract nor were
they appointed as executors or administrators of Corazon's estate.
[Respondents'] actions with the [RTC] are asserted to be premature
considering that Corazon's estate is yet to undergo probate
proceedings.
[Bunay9 property; CV Br. 20-3010
In an Amended Complaint dated March 1, 2011, [respondent] Elizabeth

x x x averred the following:
Corazon is the registered owner of an agricultural land with

improvements located at Brgy. Bunay, Angadanan, Isabela, with an area
of 36,834 sq.m., more or less, covered by TCT No. T-297393 (Bunay
property).
In 2005, Corazon orally offered for sale the Bunay property to Elizabeth
for [P]250,000.00. On June 22, 2007, Elizabeth, while in Toronto,
Canada, sent two (2) remittances each worth [P]125,000.00 (or a total of
[P]250,000.00) addressed to Corazon as payment for the Bunay
property.These remittances were received by Corazon herself.
Due to Corazon's untimely demise on August 3, 2009 without

transferring ownership of the Bunay property, Elizabeth went back to the
Philippines to attend her wake and show [petitioners, heirs of Corazon,]
proof of purchase of the Bunay property. [Petitioners] however refused
to honor the same.
In their Answer dated June 1, 2010, [petitioners] reiterated their

arguments in [CV] Br. 20-3009 while denying the existence of any oral
contract of sale of the Bunay property between Corazon and Elizabeth.
[Petitioners] maintained that the two (2) remittance receipts are not
evidence to prove the sale, are self-serving and hearsay.
[Poblacion property; CV Br. 20-3011
In an Amended Complaint dated March 1, 2011, [respondent] Rosalina x

xx averred the following:
Corazon is the registered owner of a parcel of land located at Poblacion,
Angadanan, Isabela, with an area of 225 sq.m., more or less, covered
by TCT No. T-106311 (Poblacion property).
In 2000, Corazon orally offered for sale the Poblacion property including
the house erected thereon to Rosalina. From June 2000 to April 2003,
Rosalina, while in Toronto, Canada, sent several remittances (allegedly
as payment of the Poblacion property) to Corazon amounting to
[P]307,020.52. On February 11, 2005, Corazon acknowledged receipt of
[P]85,000.00 representing payment in full of the Poblacion property.
Due however to Corazon's untimely demise on August 3, 2009,

ownership of the Poblacion property was not transferred to Rosalina.
When shown evidence of Rosalina's purchase of the Poblacion property,
[petitioners] repudiated the same.
In their Answer, [petitioners] reiterated their arguments in [CV] Br. 20-

3009 and [CV] Br. 20-3010 while denying the authenticity of the oral
contract of sale of the Poblacion property between Corazon and
Rosalina.
In an Order dated November 8, 2011, the RTC declared defendants

heirs Lilibeth VillezaBaliwag, Maria Victoria VillezaBarcena, Elmer
VillezaAgpaoa, Dennis VillezaAgpaoa and Kenneth VillezaAgpaoa in
default for failure to file their responsive pleading within the prescribed
period.
During [the] pre-trial conference, the parties stipulated on the jurisdiction

of the RTC and the identity of the parties and the subject parcels of land.
On August 30, 2016, the RTC rendered the x xx Decisions in favor of

[respondents]. The RTC ratiocinated that the totality of evidence
adduced proved that Corazon, during her lifetime, sold the subject
properties to [respondents]. The RTC found that under the January 10,
2006 Deed of Conditional Sale, [respondents] have already paid the
entire purchase price. The remittance receipts also show that Corazon
intended to sell: the Bunay property to Elizabeth; and the Poblacion
property to Rosalina. Anent the issue of [respondents'] citizenship, the
RTC found that [respondents], being former Filipino citizen[s] are not
disqualified by law to acquire real properties subject to certain
limitations. The RTC added that Elizabeth has in fact re-acquired
Philippine citizenship when she took her oath of allegiance to the
Republic of the Philippines on November 4, 2009 in accordance with
Republic Act No. 9225.
[The dispositive portions of the Decisions state:
CV Br. 20-3009
WHEREFORE, in light of the foregoing, judgment is hereby rendered in
favor of the plaint[i]ffs [(respondents)] and against the defendants.
Defendants are hereby ordered to:
(1) To execute the corresponding document to effectuate the

transfer of property containing an area of 540 square meters, more
or less, located at Centro I, Angadanan, Isabela covered and
embraced by Transfer Certificate of Title No. T-356999 in favor of
the plaintiffs;
(2) To surrender to the plaintiffs the owner's duplicate copy of TCT

No. T-356999 so that the plaintiffs could register in their names, as
the lawful purchaser for value of the property described therein;
(3) To pay [P]100,000.00 as moral damages;
(4) To pay [P]50,000.00 as exemplary damages;
(5) To pay [P]150,000.00 as attorney's fees and cost of the suit.
SO ORDERED.
CV Br. 20-3010

favor of the plaintiffs and against the defendants. Defendants are hereby
ordered to:

transfer of property covered by Transfer Certificate of Title No. T-
297393 in favor of the plaintiff Elizabeth Aliangan;
(2) To surrender the [o]wner's duplicate copy of TCT N[o]. T-

297393 to plaintiff Elizabeth Aliangan so that she could register
into her name the property described therein;
SO ORDERED.
CV Br. 20-3011

favor of the plaintiffs and against the defendants. Defendants are hereby
ordered to:
106311 in favor of the plaintiff Elizabeth [sic] Aliangan and to
surrender the [o]wner's duplicate copy of TCT N[o]. T-106311 for
the plaintiff to [register] into her name the prop[e]rty described
therein;
SO ORDERED.]10
Aggrieved, [petitioners appealed to the CA.]11
Ruling of the CA
The CA, in its Decision dated December 17, 2018, found the appeals
without merit.
The CA stated that the actions for specific performance were not filed
prematurely because probate courts or courts of administration
proceedings cannot determine questions arising as to the ownership of
property alleged to be part of the estate of the decedent but claimed by
some other person to be his property, not by virtue of any right of
inheritance from the decedent, but by title adverse to that of the
decedent and the latter's estate.12
As to petitioners' argument that respondents' cause of action, if any, is

against the estate of Corazon and not against them, the CA pronounced
that Corazon died without issue, leaving her collateral relatives,
respondents herein, as heirs to her estate, and pursuant to Article 1311
of the Civil Code, contracts take effect between the parties, their assigns
and heirs.13 As heirs, they take the estate by right of succession subject
to all obligations resting thereon in the hands of her from whom they
derive their rights.14
Regarding the Deed of Conditional Sale (DCS) executed on January 10,

2006 over the Centro I property, the CA regarded it as a "contract to
sell" because of its provision that: "the corresponding Deed of Absolute
Sale shall be executed by the VENDORS upon full payment of the
balance."15 The obligation of Corazon to transfer ownership by delivery
arises upon full payment of the purchase price.16
On petitioners' argument that at the time the DCS was executed the land
was still registered in the name of Inocencio, as owner, and it was only
on November 14, 2006 that Corazon became the registered owner of
the Centro I property, the CA noted that based on the RTC's finding, the
final payment for the Centro I property was made in April 2008 at which
time, Corazon had every right to transfer ownership thereof.17
As to the payment of the purchase price, the CA reviewed the records of

the case and found no cogent reason to deviate from the finding of the
RTC that there is preponderance of evidence showing full payment by
respondents of the P450,000.00 purchase price of the Centro I
property.18
The CA jointly resolved the issues pertaining to the oral contracts of sale
of the Bunay property in favor of Elizabeth and the Poblacion property in
favor of Rosalina in order not to be repetitious.19
The CA noted that while the sales were agreed upon orally by the
parties, they are not covered by the Statute of Frauds and are, thus,
enforceable because there can be no serious argument about the total
execution of the two sales.20 The CA pointed out that the oral contract
of sale between Corazon and Elizabeth for the Bunay property was
evidenced by two remittances totaling P250,000.00 and their
corresponding receipts signed by Corazon.21 Regarding the oral
contract of sale between Corazon and Rosalina for the Poblacion
property, it was evidenced by several remittances starting June 2000 to
April 2003 amounting to P207,020.52, with an Acknowledgment Receipt
dated February 11, 2005 signed by Corazon wherein she acknowledged
receipt of P85,000.00 representing full payment.22
The CA concluded that respondents having fully paid the respective

purchase prices for the Centro I, Bunay and Poblacion properties,
petitioners and the other defendants may be compelled to execute the
necessary documents transferring ownership of the Centro I property
covered by TCT No. T-356999 to Elizabeth and Rosalina, the Bunay
property covered by TCT No. T-297393 to Elizabeth and the Poblacion
property covered by TCT No. 106311 to Rosalina.23
As to damages, the CA found that the awards of moral and exemplary

damages were not properly substantiated while the award of attorney's
fees is justified by paragraphs 2 and 11 of Article 2208 of the Civil Code
which allow recovery of counsel's fees where a defendant's act or
omission has compelled the plaintiff to litigate with a third person or to
incur expenses to protect his interest and where the court deems it just
and equitable that attorney's fees and expenses of litigation should be
awarded.24
The dispositive portion of the CA Decision states:
WHEREFORE, premises considered, the three (3) separate Appeals

are DENIED. The three (3) Decisions all dated August 30, 2016 of
Branch 20, Regional Trial Court of Cauayan City, Isabela in Civil Cases
Nos. Br. 20-3009, Br. 20-3010 and Br. No. 20-3011 are
hereby AFFIRMED WITH MODIFICATION in that the awards of moral
and exemplary damages are DELETED.
SO ORDERED.25
Hence the present Petition. Respondents filed their Comment26 dated

August 15, 2019, wherein they merely questioned the timeliness of the
payment by petitioners of the required fees. Petitioners filed their
Reply27 dated December 2, 2019.
The Issues
The Petition states the following issues to be resolved:
1. Whether the CA erred in ruling that there is a perfected

agreement of sale between respondents and Corazon.
2. Whether the CA erred in not dismissing the cases for specific

performance for lack of cause of action because respondents
should have filed their claims against the estate of Corazon under
Rules 86 and 87 of the Rules of Court.
3. Whether the CA erred in affirming the Decision of the RTC

ordering petitioners to execute deeds of conveyance in favor
respondents.28
The Court's Ruling
The Petition lacks merit.
The issues raised and arguments propounded by petitioners are

recycled. In fact, they have been resoundingly rejected by both the RTC
and the CA.
Petitioners' arguments in support of the errors of the CA that they

identified have been discussed jointly in their Petition.
Firstly, they reiterate that the sale of the Centro 1 property between
Corazon and respondents is void because at the time the DCS was
executed Corazon could not have sold the property belonging to
Inocencio without his consent.29 The consideration of the sale was not
established with certainty and petitioners claimed that the remittances
made by respondents to Corazon were intended to purchase materials
which were used in the construction of respondents'
house.30 Petitioners also argue that they knew nothing about the
purported sale. Thus, respondents could only recover from Corazon
during her lifetime and upon her death, respondents should have
brought a claim against her estate.31
Secondly, no written deeds of conveyance over the Bunay and
Poblacion properties were presented by respondents to show that
contracts of sale were executed by Corazon in respondents'
favor.32 The receipts presented do not prove that contracts of sale had
been executed.33
Lastly, petitioners claim that Corazon died intestate as a spinster and

she did not have any children, and petitioners are children of Corazon's
siblings.34 Citing Article 1311 of the Civil Code, petitioners argue that,
not being parties to the contracts of sale between respondents and
Corazon, they cannot be sued for the enforcement of the supposed
obligations arising from said contracts.35 Petitioners also argue that the
DCS does not contain a stipulation pour autrui in their favor to make it
binding upon them. They further argue that respondents should have
filed the cases of specific performance against Corazon's estate
pursuant to Section 8, Rule 89 of the Rules of Court and that prior notice
should first be served on the heirs and other interested persons of the
application for approval of any conveyance of any property held in trust
by the administrator before approval by the probate court of the
disposition pursuant to Section 9, Rule 8936 of the Rules of Court.37
As mentioned earlier, the foregoing arguments have been totally

rejected by the lower courts and the Court does not find their rejection
erroneous.
Before delving into the substantive issues, the Court will clarify certain
preliminary procedural matters.
On the argument of petitioners that the consideration of the sale

contemplated in the DCS was not established with certainty and that the
remittances made by respondents to Corazon were intended to
purchase materials, which were used in the construction of respondents'
house, this matter calls for reassessment of the factual findings of the
lower courts. Petitioners having availed of a review of the CA Decision
via a Rule 45 certiorari petition are precluded from raising factual issues.
Section 2 of Rule 45 of the Rules of Court is clear. Only questions of law
may be raised in the certiorari petition and must be distinctly set forth.
As to the payment of the purchase prices of the three properties, the

CA's finding that, upon its review of the records of the case, there is no
cogent reason to deviate from the finding of the RTC that there is
preponderance of evidence showing full payment by respondents of the
P450,000.00 purchase price of the Centro I property stands.38 The CA
stated: "The sum of these payments [(consisting of receipts and
remittances)] amounted to [P]454,233.00, an amount exceeding the
contract price of [P]450,000.00[; thus, this court] agrees with the RTC's
findings in [CV] Br. No. 20-2009, that [respondents] have fully paid the
Centro I property."39
For the Bunay property, the CA stated that: "the records show that
Elizabeth had given [P]250,000.00 as full payment [as evidenced by two
remittances and acknowledgment receipts]."40
For the Poblacion property, the CA stated that: "Rosalina had, on

several occasions, sent Corazon remittances totaling [P]307,020.52 as
partial payments of the purchase price x xx [and] presented a document
wherein Corazon acknowledged receipt of [P]85,000.00 as payment in
full of Corazon's 225 sq.m. parcel of land x x x."41
Thus, the Court, faced with a Rule 45 review of the CA Decision, is

bound by the CA's factual conclusion that "[respondents] have fully paid
the respective purchase price[s] for the Centro I, Bunay and Poblacion
properties,"42 which merely affirms the RTC's findings.
Petitioners cited Rules 86 and 87 of the Rules of Court in the grounds of

their Petition in support of their claim that respondents should have filed
their claim against Corazon's estate.43 In the discussion portion, they
mentioned Rule 73 in passing, but they zeroed in on Sections 8 and 9 of
Rule 89. Rules 86 and 87 were not even mentioned. Rule 86 is on
"Claims Against the Estate," Rule 87 is on "Actions by and against
Executors and Administrators," while Rule 73 is on "Venue and Process"
of the "Settlement of Estates of Deceased Persons." There being no
discussion in the Petition of the specific application of Rules 73, 86 and
87 in the present cases, the Court will not argue for them and only
consider petitioners' argument in relation to Sections 8 and 9 of Rule 89.
Petitioners argue that the actions for specific performance should be

filed against the estate of Corazon because they were not privies to the
contracts entered into by Corazon and that whatever actions for the
execution of deeds of conveyance over real property which the decedent
contracted prior to his or her death, or held in trust should be pursued in
accordance with Sections 8 and 9, Rule 89 of the Rules of Court.
Section 8, Rule 89 provides:
SEC. 8. When court may authorize conveyance of realty which

deceased contracted to convey. Notice. Effect of deed. – Where the
deceased was in his lifetime under contract, binding in law, to deed real
property, or an interest therein, the court having jurisdiction of the estate
may, on application for that purpose, authorize the executor or
administrator to convey such property according to such contract, or with
such modifications as are agreed upon by the parties and approved by
the court; and if the contract is to convey real property to the executor or
administrator, the clerk of court shall execute the deed. The deed
executed by such executor, administrator, or clerk of court shall be as
effectual to convey the property as if executed by the deceased in his
lifetime; but no such conveyance shall be authorized until notice of the
application for that purpose has been given personally or by mail to all
persons interested, and such further notice has been given, by
publication or otherwise, as the court deems proper; nor if the assets in
the hands of the executor or administrator will thereby be reduced so as
to prevent a creditor from receiving his full debt or diminish his dividend.
On the other hand, Section 9, Rule 89 provides:
SEC. 9. When court may authorize conveyance of lands which

deceased held in trust. – Where the deceased in his lifetime held real
property in trust for another person, the court may, after notice is given
as required in the last preceding section, authorize the executor or
administrator to deed such real property to the person, or his executor or
administrator, for whose use and benefit it was so held; and the court
may order the execution of such trust, whether created by deed or by
law.
Clearly, Section 9 of Rule 89 finds no application in these cases

inasmuch as the subject properties located in Centro I, Bunay and
Poblacion were not held in trust by Corazon for respondents or any
other person. Respondents have not even alleged any trust
arrangement in any of the three Amended Complaints.
Section 8, Rule 89 presupposes a pending probate or administration

proceeding for the testate or intestate estate of a decedent. The heirs of
Corazon have not initiated a special proceeding for the settlement of her
estate where an administrator has been appointed. Without such special
proceeding, respondents are not required to make an application to
authorize the administrator to convey the subject properties according to
the contracts that Corazon entered into but was unable to execute due
to her death.
The Court agrees with the CA that petitioners' invocation of Section 8,

Rule 89 is misplaced because that section presupposes that there is no
controversy as to the contract contemplated therein, and if objections
obtain, the remedy of the person seeking the execution of the contract is
an ordinary and separate action to compel the same.44 This is so given
that, as correctly observed by the CA, subject to settled exceptions not
present in the instant three cases, the law does not extend the
jurisdiction of a probate court to the determination of questions of
ownership, and similarly, a court of administration proceedings cannot
determine questions which arise as to the ownership of property alleged
to be part of the decedent's estate, but claimed by some other person to
be his or her property, not by virtue of any right of inheritance from the
decedent, but by title adverse to that of the decedent and the latter's
estate.45 The institution by respondents of the actions for specific
performance was thus the proper recourse because petitioners dispute
the validity of the conveyances over the contested properties.46
Proceeding now to the substantive issues.

Regarding the Centro I property, is the DCS a valid contract between
Corazon and Rosario, as sellers, and respondents, as buyers?
The salient provisions of the DCS are as follows:
["x x x x]
That Corazon C. Villeza and Rosario V. Agpaoa are the present owners
of an unregistered residential lot with an area of x x x (540.5) Square
Meters, more or less, together with a residential house located at Centro
I, Angadanan, Isabela;
That FOR AND IN CONSIDERATION of the sum of x xx (P450,000.00),

Philippine [c]urrency, to be paid in installments basis, the VENDORS
[(Corazon and Rosario)] does hereby SELL, TRANSFER and CONVEY,
by way of CONDITIONAL SALE, unto the said VENDEES
[(respondents)], the aforesaid residential house and unregistered
residential lot, free from any lien or encumbrance;
That the down payment in the amount of x xx (P50,000.00), Philippine

Currency, [shall] be paid upon the execution of this Conditional Sale;
That the remaining balance of [x x x] ([P]400,000.00), Philippine

[c]urrency, shall be paid in equal monthly installment of [x x x]
(P10,000.00)[, Philippine currency,] until the herein remaining balance
shall have been fully paid; and
That the corresponding Deed of Absolute Sale [(DAS)] shall be executed

by the VENDORS upon full payment of the balance.
[x x x x.]" (Emphasis ours)47
Given the stipulation: "[t]hat the corresponding Deed of Absolute Sale

[(DAS)] shall be executed by the VENDORS upon full payment of the
balance," the CA characterized the DCS as a contract to sell.
As defined in Article 1458 of the Civil Code, a contract of sale is a

contract whereby one of the contracting parties obligates himself to
transfer the ownership and to deliver a determinate thing, and the other
to pay therefor a price certain in money or its equivalent. It may be
absolute or conditional.
Professor Araceli Baviera (Prof. Baviera), a noted civil law professor,

made this comment on the definition of "Sale":
The Spanish Civil Code defined a contract of purchase and sale as one
where a contracting party obligates himself to deliver a determinate thing
and the other to pay a certain price therefor in money or in something
representing it.48 The New Civil Code defines a contract of sale as a
contract where one of the parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to
pay therefor a price certain in money or its equivalent.49 The Uniform
Sales Act defines a sale of goods as an agreement whereby the seller
transfers the property in goods to the buyer for a consideration called
the price, while a contract to sell goods is a contract whereby the seller
agrees to transfer the property in goods to the buyer for a consideration
called the price.50 Under the Uniform Commercial Code, a "contract for
sale" includes both a present sale of goods and a contract to sell goods
at a future time, and a "sale" consists in the passing of title from seller to
the buyer for a price.51
The Spanish Civil Code followed the Roman law definition imposing a
duty on the seller to deliver, but the seller was not bound to make the
buyer owner immediately and directly.52 According to the Code
Commission, the definition in the Spanish Civil Code is unsatisfactory
because even if the seller is not the owner of the thing sold, he may
validly sell, subject to the warranty against eviction.53 The present
definition is similar to the definition in the German Civil Code imposing
two obligations on the seller.54 The implication of these separate
obligations is that the seller may reserve ownership over the thing sold,
notwithstanding delivery to the buyer.55
As to "Contract to Sell" or "Executory Contract of Sale," Prof. Baviera

noted:
A sale is an executory contract, "if the seller merely promises to transfer

the property at some future date, or when the agreement contemplates
the performance of some act or condition necessary to complete the
transfer. Under such a contract, until the act is performed or the
condition fulfilled, which is necessary to convert the executory into an
executed contract, no title passes to the buyer, as against the seller or
persons claiming under him."56
Thus, it can be gathered from the above discussion that the definition of
sale in Article 1458 envisions both a contract of sale and a contract to
sell as understood in the Uniform Sales Act.
In a contract of sale, the seller transfers the property sold to the buyer
for a consideration called the price, which means ownership is
transferred to the buyer upon its execution through any of the modes of
delivery or tradition.
On the other hand, in a contract to sell, the seller merely "agrees to

transfer" the property object of the sale to the buyer for a consideration
called the price, which implies that ownership is not right away
transferred to the buyer.
Pursuant to Article 1478 of the Civil Code, even if the object of the sale
is delivered to the buyer upon the execution of the contract, the parties
may still stipulate that the ownership in the thing shall not pass to the
purchaser until he has fully paid the price. The withholding of ownership
despite delivery of the object to the buyer must be expressly stipulated.
Otherwise, with the delivery or tradition of the object to the buyer,
ownership is acquired by the buyer. Under Article 712, ownership and
other real rights over property are acquired and transmitted by tradition,
in consequence of certain contracts, like sale. Specifically, in sales,
Article 1496 states that: "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 1501,57 or in any other manner signifying
an agreement that the possession is transferred from the vendor to the
vendee."
The instance wherein the transfer of ownership is withheld by the seller

despite delivery of the object sold highlights the two obligations of the
seller in a contract of sale under Article 1495, which provides: "The
vendor is bound to transfer the ownership of and deliver, as well as
warrant the thing which is the object of the sale." To fully comply with his
obligations, the seller has still to transfer the ownership of the object of
the sale despite its delivery to the buyer at an earlier time if transfer of
ownership has been withheld until full payment of the consideration.
Going back to the DCS, the provision: "[t]hat the corresponding Deed of
Absolute Sale shall be executed by the VENDORS upon full payment of
the balance"58 is sanctioned by Article 1478 of the Civil Code, which
allows the parties to stipulate that the ownership in the thing shall not
pass to the purchaser until he has fully paid the price. The provision
where the seller agrees to execute a deed of absolute sale when the
buyer has paid in full the purchase price has been construed by the
Court to signify that the seller has withheld the transfer of ownership
until the purchase price has been paid in full, making the agreement
between the seller and the buyer a contract to sell and not a contract of
sale.
The categorization of an agreement or contract pertaining to the sale of

an immovable containing a stipulation that a deed of absolute sale will
be executed upon full payment of the consideration or purchase price as
a contract to sell is settled jurisprudence as enunciated by the Court
in Diego v. Diego,59 viz.:
It is settled jurisprudence, to the point of being elementary, that an

agreement which stipulates that the seller shall execute a deed of sale
only upon or after full payment of the purchase price is a contract to sell,
not a contract of sale. In Reyes v. Tuparan, this Court declared in
categorical terms that "[w]here the vendor promises to execute a deed
of absolute sale upon the completion by the vendee of the payment of
the price, the contract is only a contract to sell. The aforecited stipulation
shows that the vendors reserved title to the subject property until full
payment of the purchase price."
In this case, it is not disputed as in fact both parties agreed that the deed
of sale shall only be executed upon payment of the remaining balance of
the purchase price. Thus, pursuant to the above stated jurisprudence,
we similarly declare that the transaction entered into by the parties is a
contract to sell.60 (Emphasis in the original; citations omitted)
It must be remembered that the execution of a public instrument, such

as a deed of absolute sale, is equivalent to the delivery of the object of
the sale pursuant to Article 1498 of the Civil Code, which states: "[w]hen
the sale is made through a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly
be inferred." With respect to the Centro I property, there was no physical
delivery thereof upon the execution of the DCS and Corazon remained
in possession thereof until she died, with her heirs continuing such
possession after her death. Thus, the execution of the DAS upon full
payment of the purchase price was contemplated as the mode of
delivery to transfer ownership of the Centro I property to respondents
with the possessors vacating the premises.
The DCS is, therefore, a contract to sell as correctly ruled by the CA.
That the DCS is a contract to sell does not in any way compromise its
validity and enforceability, given the fact that the essential requisites of a
perfected contract are evident from the DCS. Article 1475 of the Civil
Code provides:
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.
(1450a)
Not only is the DCS a binding perfected contract, the buyers, herein
respondents, have in fact fully paid the agreed purchase price of
P450,000.00 and have complied with their prestation under the DCS.
With the payment in full of the purchase price by the buyers, the DCS
has been performed or consummated. At that point, had the sellers,
Corazon and Rosario, been still alive, they could be compelled by court
action to execute the DAS over the Centro I property, which they
contractually promised to execute upon full payment of the purchase
price. To reiterate, as the sellers, it was incumbent upon them to comply
with their obligations under Article 1458 of the Civil Code, which are "to
transfer the ownership of and to deliver a determinate thing," and Article
1495, which provides that "[t]he vendor is bound to transfer the
ownership of and deliver, as well as warrant the thing which is the object
of the sale."
Whether petitioners and the other defendants, being heirs of the sellers,
Corazon and Rosario having died in the meantime, may be compelled to
execute the DAS and deliver possession of the Centro I property to
respondents, this matter will be discussed subsequently.
Regarding petitioners' contention that the DCS is not valid because at

the time it was executed on January 10, 2006 the Centro I property was
then registered in the name of Inocencio and it was only on November
14, 2006 that Corazon became the registered owner thereof by virtue of
TCT T-356999, the same is not tenable. In this regard, the CA correctly
ruled that:
Like a contract of sale, a contract to sell is consensual. It is perfected at

the moment there is a meeting of the minds upon the thing which is the
object of the contract and upon the price. At this stage, the seller's
ownership of the thing sold is not an element in the perfection of the
contract of sale. It is, therefore, not required that, at the perfection stage,
the seller be the owner of the thing sold or even that such subject matter
of the sale exists at that point in time. Thus, under Art[icle] 1434 of the
Civil Code, when a person sells or alienates a thing which, at that time,
was not his, but later acquires title thereto, such title passes by
operation of law to the buyer or grantee. This is the same principle
behind the sale of "future goods" under Art[icle] 1462 of the Civil Code.
However, under Art[icle] 1459, at the time
of delivery or consummation stage of the sale, it is required that the
seller be the owner of the thing sold. Otherwise, he will not be able to
comply with his obligation to transfer ownership to the buyer. It is at the
consummation stage where the principle of nemo datquod non
habet [(one cannot give what one does not have)] applies.61 (Citations
omitted)
Indeed, as earlier mentioned, under Article 1475 of the Civil Code, the
contract of sale is perfected at the moment there is a meeting of the
minds upon the thing which is the object of the contract and upon the
price, and from that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the forms of
contracts. According to Article 1462, the goods which form the subject of
a contract of sale may be either existing goods, owned or possessed by
the seller, or goods to be manufactured, raised, or acquired by the seller
after the perfection of the contract of sale, called "future goods." There
may even be a contract of sale of goods, whose acquisition by the seller
depends upon a contingency which may or may not happen.
At such time when the contract of sale or contract to sell is perfected,

the seller does not need to have the right to transfer ownership of the
object of the sale. All that is required is that provided by Article 1459 of
the Civil Code which states that "the vendor must have a right to transfer
the ownership thereof at the time it is delivered." Thus, while the seller
may not own the object of the sale at the time the contract is perfected,
for the sale to be validly consummated, the seller must be the owner
thereof at the time of its delivery or tradition to the buyer.
With respect to the Centro I property, while on January 10, 2006 when
the DCS was executed it was still registered in Inocencio's name, the
certificate of title over the property was already transferred to Corazon
on November 14, 2006 when TCT T-356999 was issued in her name.
From that time, Corazon had the right to transfer the ownership of the
Centro I property such that in April 2008, when the purchase price was
paid in full by respondents, the sellers could have transferred the
ownership thereof to the buyers, as indeed they had the obligation to do
so.
Also, the fact that the seller is not the owner of the object of the sale at
the time it is sold and delivered does not prevent title or ownership from
passing to the buyer by operation of law if subsequently the seller
acquires title thereto or becomes the owner thereof pursuant to Article
1434 of the Civil Code. The said Article provides:
ART. 1434. When a person who is not the owner of a thing sells or
alienates and delivers it, and later the seller or grantor acquires title
thereto, such title passes by operation of law to the buyer or grantee.
In view of the foregoing, the CA was correct when it concluded that the
DCS is valid and enforceable.62
Regarding the Bunay and Poblacion properties, are the oral contracts of
sale covering them valid and enforceable?
According to Article 1483 of the Civil Code, "[s]ubject to the provisions of

the Statute of Frauds and of any other applicable statute, a contract of
sale may be made in writing, or by word of mouth, or partly in writing and
partly by word of mouth, or may be inferred from the conduct of the
parties." This provision echoes Article 1356, which provides that
contracts shall be obligatory in whatever form they may be entered into
provided all the essential requisites for their validity are present;
however, when the law requires that a contract be in some form in order
that it may be valid or enforceable, or that a contract be proved in a
certain way, that requirement is absolute and indispensable.
With respect to the Statute of Frauds, which is provided in Article

1403(2) of the Civil Code, an agreement for the sale of real property or
of an interest therein63 is unenforceable by action, unless the same, or
some note or memorandum thereof, be in writing, and subscribed by the
party charged, or by his agent; and evidence of the agreement cannot
be received without the writing, or a secondary evidence of its contents.
The Court in Swedish Match, AB v. Court of Appeals64 noted:

The Statute of Frauds embodied in Article 1403, paragraph (2), of the
Civil Code requires certain contracts enumerated therein to be
evidenced by some note or memorandum in order to be enforceable.
The term "Statute of Frauds" is descriptive of statutes which require
certain classes of contracts to be in writing. The Statute does not
deprive the parties of the right to contract with respect to the matters
therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable. Evidence of the agreement cannot
be received without the writing or a secondary evidence of its contents.
The Statute, however, simply provides the method by which the

contracts enumerated therein may be proved but does not declare them
invalid because they are not reduced to writing. By law, contracts are
obligatory in whatever form they may have been entered into, provided
all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be
valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. Consequently, the effect of
non-compliance with the requirement of the Statute is simply that no
action can be enforced unless the requirement is complied with. Clearly,
the form required is for evidentiary purposes only. Hence, if the parties
permit a contract to be proved, without any objection, it is then just as
binding as if the Statute has been complied with.
The purpose of the Statute is to prevent fraud and perjury in the

enforcement of obligations depending for their evidence on the
unassisted memory of witnesses, by requiring certain enumerated
contracts and transactions to be evidenced by a writing signed by the
party to be charged.65 (Citations omitted)
In the early case of Berg v. Magdalena Estate, Inc.66 (Berg), the Court

stated certain principles governing the meaning, extent and scope of the
rule underlying the Statute of Frauds relative to the note or
memorandum that may serve as proof to determine the existence of an
oral contract or agreement contemplated thereby, viz.:
Before we proceed, it is important to state at this juncture some

principles governing the meaning, extent and scope of the rule
underlying the statute of frauds relative to the note or memorandum that
may serve as proof to determine the existence of an oral contract or
agreement contemplated by it, and for our purpose, it suffices for us to
quote the following authorities:
"No particular form of language or instrument is necessary to constitute

a memorandum or note in writing under the statute of frauds; any
document or writing, formal or informal, written either for the purpose of
furnishing evidence of the contract or for another purpose, which
satisfies all the requirements of the statute as to contents and signature,
as discussed respectively infra secs. 178-200, and infra secs. 201-215,
is a sufficient memorandum or note. A memorandum may be written as
well with lead pencil as with pen and ink. It may also be filled in on a
printed form." (37 C. J. S., 653- 654.)
"The note or memorandum required by the statute of fraud need not be

contained in a single document, nor, when contained in two or more
papers, need each paper be sufficient as to contents and signature to
satisfy the statute. Two or more writings properly connected may be
considered together, matters missing or uncertain in one may be
supplied or rendered certain by another, and their sufficiency will depend
on whether, taken together, they meet the requirements of the statute as
to contents and the requirements of the statute as to signature, as
considered respectively infra secs. 179-200 and secs. 201-215.
"Papers connected. — The rule is frequently applied to two or more, or a

series of, letters or telegrams, or letters and telegrams sufficiently
connected to allow their consideration together; but the rule is not
confined in its application to letters and telegrams; any other documents
can be read together when one refers to the other. Thus, the rule has
been applied so as to allow the consideration together, when properly
connected, of a letter and an order of court, a letter and order for goods,
a letter and a deposition, letters or telegrams and undelivered deeds,
wills, correspondence and related papers, a check and a letter, a receipt
and a check, deeds and a map, a memorandum of agreement and a
deed, a memorandum of sale and an abstract of title, a memorandum of
sale and a will, a memorandum of sale and a receipt, and a contract,
deed, and instructions to a depository in escrow. The number of papers
connected to make out a memorandum is immaterial." (37 C. J. S. 656-
659)
Bearing in mind the foregoing rules, we are of the opinion that the
applications marked exhibits "3" and "4",67 whether considered
separately or jointly, satisfy all the requirements of the statute as to
contents and signature and, as such, they constitute sufficient proof to
evidence the agreement in question. And we say so because in both
applications all the requirements of a contract are present, namely, the
parties, the price or consideration, and the subject-matter. In the
application exhibit "3", Ernest Berg appears as the seller and the
Magdalena Estate Inc., as the purchaser, the former's interest in the
Crystal Arcade as the subject-matter, and the sum of P200,000 as the
consideration. And the application appears signed by Ernest Berg, the
party sought to be charged by the obligation. In other words, it can
clearly be implied that between Ernest Berg and the Magdalena Estate
Inc. there has been a clear agreement to sell said property for P200,000.
From the language of the application no other logical conclusion can be
drawn for if there has not been any previous agreement between the
parties it is foolhardy to suppose that Ernest Berg would take the trouble
of filing an application with the Treasury Department of the United States
to secure a license to sell the property. The claim of Ernest Berg that the
negotiations he had with Hemady ended with an offer on his part to buy
his interest for P350,000 cannot be sustained, for if such is the case it is
indeed hard to comprehend why he should state in his application that
he was selling the property for P200,000. The fact that in the same
application Berg also asked for license to place the money in an account
in his name, or in the name of the company he represents, and to apply
the same to the payment of the obligations of said company is of no
consequence, nor does it argue against the purpose of the application,
for that request only means that, should the sale be carried out, he
would deposit the money in the name of the company and later would
apply it to the payment of its obligations.68
In Litonjua v. Fernandez69 (Litonjua), the Court elucidated on what the

note or memorandum should contain, viz.:
x xxThe statute is satisfied or, as it is often stated, a contract or bargain

is taken within the statute by making and executing a note or
memorandum of the contract which is sufficient to state the
requirements of the statute. The application of such statute presupposes
the existence of a perfected contract. However, for a note or
memorandum to satisfy the statute, it must be complete in itself and
cannot rest partly in writing and partly in parol. The note or
memorandum must contain the names of the parties, the terms and
conditions of the contract and a description of the property sufficient to
render it capable of identification. Such note or memorandum must
contain the essential elements of the contract expressed with certainty
that may be ascertained from the note or memorandum itself, or some
other writing to which it refers or within which it is connected, without
resorting to parol evidence. To be binding on the persons to be charged,
such note or memorandum must be signed by the said party or by his
agent duly authorized in writing.
In City of Cebu v. Heirs of Rubi, we held that the exchange of written

correspondence between the parties may constitute sufficient writing to
evidence the agreement for purposes of complying with the statute of
frauds.70 (Italics in the original; citations omitted)
Even if the requirement of a note, memorandum or writing in Article

1403(2) is not met, contracts infringing the Statute of Frauds become
enforceable when they are ratified by the failure to object to the
presentation of oral evidence to prove the same, or by acceptance of
benefits under them according to Article 1405 of the Civil Code.
It is the well-established rule that the Statute of Frauds is applicable only

to executory contracts and not to partially or totally consummated ones,
and the basis of this rule is the fact that in consummated contracts, there
is already a ratification of the contract by acceptance of benefits within
the meaning of Article 1405.71
On this score, the disquisition of the Court en banc in Carbonnel v.
Poncio, et al.72 bears reiterating:
x x x It is well settled in this jurisdiction that the Statute of Frauds is

applicable only to executory contracts (Facturan vs. Sabanal, 81 Phil.,
512), not to contracts that are totally or partially performed (Almirol, et
al., vs. Monserrat, 48 Phil., 67, 70; Robles vs. Lizarraga Hermanos, 50
Phil., 387; Diana vs. Macalibo, 74 Phil., 70).
"Subject to a rule to the contrary followed in a few jurisdictions, it is the

accepted view that part performance of a parol contract for the sale of
real estate has the effect, subject to certain conditions concerning the
nature and extent of the acts constituting performance and the right to
equitable relief generally, of taking such contract from the operation of
the statute of frauds, so that chancery may decree its specific
performance or grant other equitable relief. It is well settled in Great
Britain and in this country, with the exception of a few states, that a
sufficient part performance by the purchaser under a parol contract for
the sale of real estate removes the contract from the operation of the
statute of frauds." (49 Am. Jur. 722-723.)
In the words of former Chief Justice Moran: "The reason is simple. In

executory contracts there is a wide field for fraud because unless they
be in writing there is no palpable evidence of the intention of the
contracting parties. The statute has precisely been enacted to prevent
fraud." (Comments on the Rules of Court, by Moran, Vol. III [1957 ed.],
p. 178.) However, if a contract has been totally or partially
performed, the exclusion of parol evidence would promote fraud or bad
faith, for it would enable the defendant to keep the benefits already
derived by him from the transaction in litigation, and, at the same time,
evade the obligations, responsibilities or liabilities assumed or
contracted by him thereby.
For obvious reasons, it is not enough for a party to allege partial

performance in order to hold that there has been such performance
and to render a decision declaring that the Statute of Frauds is
inapplicable. But neither is such party required to establish such partial
performance by documentary proof before he could have
the opportunity to introduce oral testimony on the transaction. Indeed,
such oral testimony would usually be unnecessary if there were
documents proving partial performance. Thus, the rejection of any and
all testimonial evidence on partial performance, would nullify the rule
that the Statute of Frauds is inapplicable to contracts which have been
partly executed, and lead to the very evils that the statute seeks to
prevent.
"The true basis of the doctrine of part performance according to the

overwhelming weight of authority, is that it would be a fraud upon the
plaintiff if the defendant were permitted to escape performance of his
part of the oral agreement after he has permitted the plaintiff to perform
in reliance upon the agreement. The oral contract is enforced in
harmony with the principle that courts of equity will not allow the statute
of frauds to be used as an instrument of fraud. In other words, the
doctrine of part performance was established for the same purpose for
which, the statute of frauds itself was enacted, namely, for the
prevention of fraud, and arose from the necessity of preventing the
statute from becoming an agent of fraud for it could not have been the
intention of the statue to enable any party to commit a fraud with
impunity." (49 Am. Jur., 725-726; italics supplied.)
When the party concerned has pleaded partial performance, such party
is entitled to a reasonable chance to establish by parol evidence the
truth of this allegation, as well as the contract itself. "The recognition of
the exceptional effect of part performance in taking an oral contract out
of the statute of frauds involves the principle that oral evidence is
admissible in such cases to prove both the contract and the part
performance of the contract" (49 Am. Jur., 927).
Upon submission of the case for decision on the merits, the Court
should determine whether said allegation is true, bearing in mind that
parol evidence is easier to concoct and more likely to be colored or
inaccurate than documentary evidence. If the evidence of record fails to
prove clearly that there has been partial performance, then the Court
should apply the Statute of Frauds, if the cause of action involved falls
within the purview thereof. If the Court is, however, convinced that the
obligation in question has been partly executed and that the allegation of
partial performance was not resorted to as a devise to circumvent the
Statute, then the same should not be applied.73
While the contracts of sale of the Bunay and Poblacion properties were
orally made between Corazon and Elizabeth, and between Corazon and
Rosalina, respectively, there were, in fact, remittances and receipts
signed by Corazon74 evidencing the payments made by Elizabeth and
Rosalina.
As to the Bunay property, the CA observed:
Here, the oral contract of sale between Corazon and Elizabeth for the
36,834 sq.m. Bunay property was evidenced by two (2) remittances
(totaling [P]250,000.00) and their corresponding receipts signed by
Corazon herself. The remittances also included a message to Corazon
which uniformly read:
"I'll call you. Worth P250,000. For the full payment of Azon's rice and
corn field at Nakar, San Guillermo."
xxxx
For the Bunay property, the records show that Elizabeth had given
[P]250,000.00 as full payment for: "Azon's rice and corn field at Nakar,
San Guillermo". It should be noted that the only agricultural land
registered under the name of Corazon at the time of the oral sale was
the Bunay property at Angadanan, Isabela. No explanation was
presented as to the discrepancy of the two (2) properties; neither did
defendants-appellants [(petitioners)] question such disparity. Verily,
Gemma Villanueva (Gemma), Corazon's long-time caretaker of the
Bunay property, testified that in 2008, Corazon told her that the property
they were tilling [was] already sold to Elizabeth Aliangan and that her
share [in] the cropping for April 2009 should be given to Elizabeth.
Considering that Nakar, San Guillermo is just adjacent to Bunay,
Angadanan, the parties may have mistakenly thought that the Bunay
property is within the boundary of Nakar. This confusion does not
however negate the fact that Corazon received [P]250,000.00 as full
payment of her rice and corn field. Without doubt, there is total execution
of the oral contract of sale of the Bunay property.75
With respect to the Poblacion property, the CA noted:
While the oral contract of sale between Corazon and Rosalina for the
225 sq.m. Poblacion property was evidenced by several remittances
starting June 2000 to April 2003 amounting to [P]207,020.52, Rosalina
alleged that a remittance worth [P]100,000.00 got lost beyond recovery.
Corazon however signed an Acknowledgement Receipt dated February
11, 2005, which reads in part:
"ACKNOWLEDGEMENT RECEIPT
KNOW ALL MEN BY THESE PRESENTS:
That, I, CORAZON C. VILLEZA, x xx hereby acknowledged to have

received the amount of EIGHTY FIVE THOUSAND PESOS
(P85,000.00), Philippine Currency, from ROSALINA S. ALIANGAN, x xx
representing payment (FULL) of the certain parcel of land with an area
of 225 Square Meters, more or less, including a residential house
therein located at Centro I, [Angadanan], Isabela[."]
xxxx
x x x Again, there seems to be a confusion as to the proper address of

the property subject of the sale. This Court however observes that only
the 225 sq.m. parcel of land registered in Corazon's name when
the Acknowledgement Receipt dated February 11, 2005 was executed
was the Poblacion property under TCT No. T-106311. There can be no
other conclusion than the object of the oral contract of sale was the
Poblacion property.76
The Court finds that the remittances and receipts which were executed
in relation to the Bunay property may not qualify as "some note or
memorandum thereof, x xx in writing, and subscribed by the party
charged" in compliance with Article 1403(2) because they are lacking in
the required details as prescribed in Litonjua and Berg. The Court notes
that it was Elizabeth who wrote the details of the oral sale in the
remittances and Corazon, the party charged, did not subscribe therein.
While the receipts might have been signed by Corazon, they do not
apparently reflect the application of the amounts which Elizabeth
remitted to Corazon. If the receipts reflected that the amounts indicated
therein were for the payment of the purchase price of the Bunay
property, then petitioners would not be insisting that said amounts were
intended to purchase materials which were used in the construction of
respondents' house.
However, with respect to the Poblacion property, the Court finds that the
remittances together with the Acknowledgement Receipt sufficiently
satisfy the note or memorandum requirement under Article 1403(2) of
the Civil Code. Specifically, the Acknowledgement Receipt contains the
names of the parties, the terms and conditions of the contract (i.e., the
P85,000.00 being the remaining balance of the purchase price, which
amounted to the P85,000.00 plus the previous remittances), a
description of the property sufficient to render it capable of identification
and signature of Corazon, the party charged.
Nonetheless, the remittances and receipts are sufficient proof that the
oral sales had been ratified by Corazon.
When Corazon received the full consideration of the sales from

Elizabeth and Rosalina, which is supported by the undisturbed finding of
both the RTC and CA that the respective purchase prices for the Bunay
and Poblacion properties had been fully paid by Elizabeth and Rosalina
to Corazon, there was ratification of the oral contracts of sale by
acceptance of benefits, making them enforceable. With the complete
payment of the consideration by respondents, the oral contracts of sale
covering the Bunay and Poblacion properties have been "partially
executed", rendering the Statute of Frauds inapplicable.
The Court agrees with the CA that while there may be disparities in the
locations of the properties subject of the oral sales, the disparities have
been adequately explained and petitioners did not even question them.
Petitioners did not also raise this factual issue in their Petition, which the
Court may not now rule upon given that petitioners availed of a Rule
45 certiorari review.
Thus, the CA did not err in recognizing the total execution of the said
two sales and their enforceability.77
These oral contracts of sale being enforceable, they should be reduced

into public documents so that they can be registered in the Registry of
Deeds. In this regard, Article 1406 of the Civil Code allows the parties to
avail themselves of the right under Article 1357, which states:
ART. 1357. If the law requires a document or other special form, as in

the acts and contracts enumerated in the following article, the
contracting parties may compel each other to observe that form, once
the contract has been perfected. This right may be exercised
simultaneously with the action upon the contract. (1279a)
Now that the DCS, with respect to the Centro I property, and the oral
contracts of sale, regarding the Bunay and Poblacion properties, are
declared valid and enforceable, may the heirs of the sellers be
compelled to comply with the obligations of the deceased sellers and to
execute the necessary public documents for their registration with the
proper Registry of Deeds?
Petitioners' claim that they are not bound by contracts entered into by
Corazon because they are not privies thereto and there is no
stipulation pour autrui in the DCS in their favor, citing Article 1311 of the
Civil Code.78
Article 1311 states:
ART. 1311. Contracts take effect only between the parties, their assigns
and heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property
he received from the decedent.
If a contract should contain some stipulation in favor of a third person,

he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation. A mere incidental benefit
or interest of a person is not sufficient. The contracting parties must
have clearly and deliberately conferred a favor upon a third person.
(1257a)
Petitioners' invocation of stipulation pour autrui is preposterous.
It is apparent from the relevant portions of the DCS quoted above that
petitioners are not privies or parties thereto and there is no
stipulation pour autrui in their favor, which the contracting parties clearly
and deliberately conferred upon them.
Also, such stipulation creates a right in favor of the third person upon
whom the stipulation is conferred, which he can enforce against the
contracting parties even if he is not a party to the contract. With respect
to the DCS, no such stipulation exists in favor of petitioners. Rather,
petitioners are being made liable to comply with the obligations of
Corazon, and respondents who are parties to the DCS are the ones
enforcing the contract.
Clearly petitioners and the other defendants are not parties to the DCS
and the two oral contracts of sale. There is also no evidence that they
were aware of, or consented to, the contracts when they were entered
into by their predecessors in interest, Corazon and Rosario. Can they,
nevertheless, be bound by those contracts as heirs of Corazon and
Rosario? To resolve this question, the relevant issue is whether the
obligations of Corazon and Rosario arising from the DCS with respect to
the Centro I property and the obligations of Corazon arising from the oral
contracts of sale with respect to the Bunay and Poblacion properties are
transmitted to petitioners as well as the other defendants, as heirs, and
not extinguished by the death of Corazon and Rosario.
The first paragraph of Article 1311 — "Contracts take effect only

between the parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is not liable
beyond the value of the property he received from the decedent." —
expresses the doctrine of the relative and personal character of
contracts.79 Under relativity of contracts, it is a general principle of law
that a contract can only bind the parties who had entered into it or their
successors or heirs who have assumed their personality or juridical
possession, and that, as a consequence, such contract cannot favor or
prejudice a third person (in conformity with the axiom res inter alios acta
aliisnequenocetpodest).80
In the early case of Mojica v. Fernandez,81 the Court ruled that the heirs
of a deceased person cannot be regarded as "third persons" with
respect to a contract of sale or lease of real estate executed by their
decedent in his lifetime,82 viz.:
But with respect to the contract[, the venta con pacto de retro (sale with
right of repurchase),] entered into by the deceased and evidenced by
the document of September 1, 1901, the heirs cannot be regarded as
"third persons." Article 27 of the Mortgage Law defines a "third person"
to be "one who has taken part in the act or contract recorded." Under the
Civil Code, the heirs, by virtue of the right of succession are subrogated
to all the rights and obligations of the deceased (art. 661)83 and can not
be regarded as third parties with respect to a contract to which the
deceased was a party, touching the estate of the deceased. (Barrios vs.
Dolor, 2 Phil. Rep., 44.) This doctrine was enunciated by the supreme
court of Spain in its decision of January 27, 1881, wherein it held that
"both judicial and extrajudicial acts, formally accepted by one who was a
lawful party thereto, are effective as to the heirs and successors of such
persons, who are not to be regarded as third persons for this purpose;"
also in its decision of January 28, 1892, wherein it held that "the heirs
are no more than the continuation of the juridical personality of their
predecessor in interest,84 and can in no way be considered as third
persons within the meaning of article 27 of the Mortgage Law."
The principle on which these decisions rest is not affected by the
provisions of the new Code of Civil Procedure, and, in accordance with
that principle, the heirs of a deceased person can not be held to be
"third persons" in relation to any contracts touching the real estate of
their decedent which comes into their hands by right of inheritance; they
take such property subject to all the obligations resting thereon in the
hands of him from whom they derive their rights.
x xxx
But we have said that with respect to the contract entered into by the
deceased, and evidenced by the private document of September 1,
1901, the heirs cannot be regarded as "third persons," and, therefore,
under the provisions of article 1279 of the Civil Code, the heirs of Pedro
Sanchez may be compelled in a proper action to execute the public
instrument evidencing the said contract, as required by the provisions of
article 1280 of that code.85
In Alvarez v. Intermediate Appellate Court,86 where the Court rejected

the contention of the heirs of the deceased seller, who fraudulently sold
two lots owned by another, that the liability arising therefrom should be
the sole liability of the deceased or his estate, the Court pronounced:
Petitioners further contend that the liability arising from the sale of Lots
No[s]. 773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo
Siason should be the sole liability of the late Rosendo Alvarez or of his
estate, after his death.
Such contention is untenable for it overlooks the doctrine obtaining in

this jurisdiction on the general transmissibility of the rights and
obligations of the deceased to his legitimate children and heirs. Thus,
the pertinent provisions of the Civil Code state:
"Art. 774. Success is a mode of acquisition by virtue of which the

property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another or
others either by his will or by operation of law.
"Art. 776. The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.
"Art. 1311. Contract stake effect only between the parties, their assigns
and heirs except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property
received from the decedent."
As explained by this Court through Associate Justice J.B.L. Reyes in the

case of Estate of Hemady vs. Luzon Surety Co., Inc.
"The binding effect of contracts upon the heirs of the deceased party is
not altered by the provision of our Rules of Court that money debts of a
deceased must be liquidated and paid from his estate before the residue
is distributed among said heirs (Rule 89). The reason is that whatever
payment is thus made from the [e]state is ultimately a payment by the
heirs or distributees, since the amount of the paid claim in fact
diminishes or reduces the shares that the heirs would have been entitled
to receive.
"Under our law, therefore, the general rule is that a party's contractual
rights and obligations are transmissible to the successors. The rule is a
consequence of the progressive 'depersonalization' of patrimonial rights
and duties that, as observed by VictorioPolacco, has characterized the
history of these institutions. From the Roman concept of a relation from
person to person, the obligation has evolved into a relation from
patrimony to patrimony, with the persons occupying only a
representative position, barring those rare cases where the obligation is
strictly personal, i.e., is contracted intuitu personae, in consideration of
its performance by a specific person and by no other. x xx"
Petitioners being the heirs of the late Rosendo Alvarez, they cannot
escape the legal consequences of their father's transaction, which gave
rise to the present claim for damages. That petitioners did not inherit the
property involved herein is of no moment because by legal fiction, the
monetary equivalent thereof devolved into the mass of their father's
hereditary estate, and we have ruled that the hereditary assets are
always liable in their totality for the payment of the debts of the estate.87
The discussion on Article 1311 of the Court in DKC Holdings

Corporation v. Court of Appeals88 is likewise enlightening:
The general rule, therefore, is that heirs are bound by contracts entered
into by their predecessors-in-interest except when the rights and
obligations arising therefrom are not transmissible by (1) their nature, (2)
stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal

provision making the rights and obligations under the contract
intransmissible. More importantly, the nature of the rights and
obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an

eminent civilist, is as follows:
"Among contracts which are intransmissible are those which are purely
personal, either by provision of law, such as in cases of partnerships
and agency, or by the very nature of the obligations arising therefrom,
such as those requiring special personal qualifications of the obligor. It
may also be stated that contracts for the payment of money debts are
not transmitted to the heirs of a party, but constitute a charge against his
estate. Thus, where the client in a contract for professional services of a
lawyer died, leaving minor heirs, and the lawyer, instead of presenting
his claim, for professional services under the contract to the probate
court, substituted the minors as parties for his client, it was held that the
contract could not be enforced against the minors; the lawyer was
limited to a recovery on the basis of quantum meruit."
In American jurisprudence, "(W)here acts stipulated in a contract require

the exercise of special knowledge, genius, skill, taste, ability,
experience, judgment, discretion, integrity, or other personal qualification
of one or both parties, the agreement is of a personal nature, and
terminates on the death of the party who is required to render such
service."
It has also been held that a good measure for determining whether a
contract terminates upon the death of one of the parties is whether it is
of such a character that it may be performed by the promissor's personal
representative. Contracts to perform personal acts which cannot be as
well performed by others are discharged by the death of the promissor.
Conversely, where the service or act is of such a character that it may
as well be performed by another, or where the contract, by its terms,
shows that performance by others was contemplated, death does not
terminate the contract or excuse nonperformance.
In the case at bar, there is no personal act required from the late
Encarnacion Bartolome. Rather, the obligation of Encarnacion in the
contract to deliver possession of the subject property to petitioner upon
the exercise by the latter of its option to lease the same may very well
be performed by her heir Victor.
As early as 1903, it was held that "(H)e who contracts does so for
himself and his heirs." In 1952, it was ruled that if the predecessor was
duty-bound to reconvey land to another, and at his death the
reconveyance had not been made, the heirs can be compelled to
execute the proper deed for reconveyance. This was grounded upon the
principle that heirs cannot escape the legal consequence of a
transaction entered into by their predecessor-in-interest because they
have inherited the property subject to the liability affecting their common
ancestor.
It is futile for Victor to insist that he is not a party to the contract because
of the clear provision of Article 1311 of the Civil Code. Indeed, being an
heir of Encarnacion, there is privity of interest between him and his
deceased mother. He only succeeds to what rights his mother had and
what is valid and binding against her is also valid and binding as against
him. This is clear from Parañaque Kings Enterprises vs. Court of
Appeals, where this Court rejected a similar defense —
With respect to the contention of respondent Raymundo that he is not
privy to the lease contract, not being the lessor nor the lessee referred to
therein, he could thus not have violated its provisions, but he is
nevertheless a proper party. Clearly, he stepped into the shoes of the
owner-lessor of the land as, by virtue of his purchase, he assumed all
the obligations of the lessor under the lease contract. Moreover, he
received benefits in the form of rental payments. Furthermore, the
complaint, as well as the petition, prayed for the annulment of the sale of
the properties to him. Both pleadings also alleged collusion between him
and respondent Santos which defeated the exercise by petitioner of its
right of first refusal.
In order then to accord complete relief to petitioner, respondent

Raymundo was a necessary, if not indispensable, party to the case. A
favorable judgment for the petitioner will necessarily affect the rights of
respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease,
which is a property right. The death of a party does not excuse
nonperformance of a contract which involves a property right, and the
rights and obligations thereunder pass to the personal representatives of
the deceased. Similarly, nonperformance is not excused by the death of
the party when the other party has a property interest in the subject
matter of the contract.
Under both Article 1311 of the Civil Code and jurisprudence, therefore,
Victor is bound by the subject Contract of Lease with Option to Buy.89
To better understand Article 1311 insofar as heirs are concerned, it must

be construed in relation to Article 776, which provides: "The inheritance
includes all the property, rights and obligations of a person which are not
extinguished by his death." In determining which rights are
intransmissible (extinguished by a person's death) or transmissible (not
extinguished by his death), the following general rules have been laid
down:
First: That rights which are purely personal, not in the inaccurate

equivalent of this term in contractual obligations, but in its proper sense,
are, by their nature and purpose, intransmissible, for they are
extinguished by death; examples, those relating to civil personality, to
family rights, and to the discharge of public office.
Second: That rights which are patrimonial or relating to property are, as

a general rule, not extinguished by death and properly constitute part of
the inheritance, except those expressly provided by law or by the will of
the testator, such as usufruct and those known as personal servitudes.
Third: That rights of obligation are by nature transmissible and may
constitute part of the inheritance, both with respect to the rights of the
creditor and as regards the obligations of the debtor.
The third rule stated above has three exceptions, especially with respect
to the obligations of the debtor. They are: (1) those which are personal,
in the sense that the personal qualifications and circumstances of the
debtor have been taken into account in the creation of the obligation, (2)
those that are intransmissible by express agreement or by will of the
testator, and (3) those that are intransmissible by express provision of
law, such as life pensions given under contract.
xxxx
x x x In connection with "obligations" as forming part of the inheritance,

the provisions of the Rules of Court on the settlement of the estates of
deceased persons should not be overlooked. The heirs of the deceased
are no longer liable for the debts he may leave at the time of his death.
Such debts are chargeable against the property or assets left by the
deceased. The property of the deceased may always be subjected to
the payment of his debts in whatever hands it may be found, inasmuch
as the right of a creditor to a lien upon such property, created by the
mere fact of the debtor's death, may be said to be recognized by the
provisions of the Rules of Court. Only what remains after all such debts
have been paid will be subject to distribution among the heirs. In other
words, the heirs are no longer personally liable for the debts of the
deceased; such debts must be collected only from the property left upon
his death, and if this should not be sufficient to cover all of them, the
heirs cannot be made to pay the uncollectible balance.
xxxx
This should not be understood to mean, however, that "obligations" are

no longer a part of the inheritance. Only money debts are chargeable
against the estate left by the deceased; these are the obligations which
do not pass to the heirs, but constitute a charge against the hereditary
property. There are other obligations, however, which do not constitute
money debts; these are not extinguished by death, and must still be
considered as forming part of the inheritance. Thus, if the deceased is a
lessee for a definite period, paying a periodical rental, then his heirs will
inherit the obligation to pay the rentals as they fall due together with the
rights arising from the lease contract. 90 (Citations omitted)
In Bonilla v. Barcena,91 the Court stated:
x x x The question as to whether an action survives or not depends on

the nature of the action and the damage sued for. In the causes of
action which survive the wrong complained affects primarily and
principally property and property rights, the injuries to the person being
merely incidental, while in the causes of action which do not survive the
injury complained of is to the person, the property and rights of property
affected being incidental. Following the foregoing criterion the claim of
the deceased plaintiff which is an action to quiet title over the parcels of
land in litigation affects primarily and principally property and property
rights and therefore is one that survives even after her death. x x
x92 (Citations omitted)
In National Housing Authority v. Almeida,93 the Court ruled that the

obligations of the seller and the buyer in a contract to sell are
transmissible, viz.:
The death of Margarita Herrera does not extinguish her interest over the
property. Margarita Herrera had an existing Contract to Sell with NHA as
the seller. Upon Margarita Herrera's demise, this Contract to Sell was
neither nullified nor revoked. This Contract to Sell was an obligation on
both parties—Margarita Herrera and NHA. Obligations are transmissible.
Margarita Herrera's obligation to pay became transmissible at the time of
her death either by will or by operation of law.
If we sustain the position of the NHA that this document is not a will,
then the interests of the decedent should transfer by virtue of an
operation of law and not by virtue of a resolution by the NHA. For as it
stands, NHA cannot make another contract to sell to other parties of a
property already initially paid for by the decedent. Such would be an act
contrary to the law on succession and the law on sales and
obligations.94
From the foregoing, it is quite clear that with respect to "obligations,"

similar to "rights", patrimonial obligations or those pertaining to property
are by nature generally transmissible and not extinguished by death.
Thus, patrimonial obligations form part of the inheritance of the
decedent, which are transmitted to or acquired by the heirs upon the
decedent's death. This is pursuant to Article 774 of the Civil Code which
recognizes succession as a mode of acquisition whereby the property,
rights and obligations to the extent of the value of the inheritance of a
person are transmitted through his death to another or others either by
his will or by operation of law, and Article 777 which provides the
transmission of the rights to the inheritance at the precise moment of the
death of the decedent. A contract of sale or a contract to sell with land or
immovable property as its object certainly involves patrimonial rights and
obligations, which by their nature are essentially transmissible or
transferable. Thus, the heirs of the seller and the buyer are bound
thereby and the former cannot be deemed as "third persons" or non-
privies to the contract of sale or contract to sell.
Consequently, Article 1311 of the Civil Code upon which petitioners rely
to negate their liability is itself the very basis of the obligation that
respondents are exacting from them. Since the obligations of the sellers
in the DCS and the two oral contracts of sale were transmitted upon the
death of Corazon and Rosario to petitioners and the other defendants,
the latter are bound to comply with the obligations to deliver and transfer
ownership of the Centro I property to respondents, the Bunay property to
Elizabeth, and the Poblacion property to Rosario. Likewise, since a
public document is required to be registered with the Registry of Deeds
to effect the transfer of the certificates of title covering the said
properties to the buyers, petitioners and the other defendants can be
compelled and are obligated to execute the necessary public documents
for that purpose pursuant to Article 1357 of the Civil Code.
WHEREFORE, the Petition is hereby DENIED. Accordingly, the

Decision dated December 17, 2018 of the Court of Appeals in CA-G.R.
CV Nos. 108495-97 is AFFIRMED WITH MODIFICATION. To avoid any
confusion, the dispositive portions of the three Decisions all dated
August 30, 2016 of the Regional Trial Court of Cauayan City, Isabela,
Branch 20, in Civil Case Nos. Br. 20-3009, Br. 20-3010, and Br. 20-3011
are restated with modification:
Civil Case No. Br. 20-3009
WHEREFORE, in the light of the foregoing, judgment is hereby rendered

in favor of the plaintiffs and against the defendants. ℒαwρhi ৷ Defendants
are hereby ordered:

transfer of property containing an area of 540 square meters, more
or less, located at Centro I, Angadanan, Isabela covered and
embraced by Transfer Certificate of Title No. T-356999 in favor of
the plaintiffs;
(2) To surrender to the plaintiffs the owner's duplicate copy of TCT

No. T-356999 so that the plaintiffs could register in their names, as
the lawful purchasers for value of the property described therein;
(3) To deliver to the plaintiffs physical possession of the property

described therein;
(4) To pay P150,000.00 as attorney's fees and cost of the suit.
SO ORDERED.

in favor of the plaintiff Elizabeth Aliangan and against the defendants
heirs of Corazon Villeza. The said defendants are hereby ordered:

297393 in favor of the plaintiff Elizabeth Aliangan;
(2) To surrender the owner's duplicate copy of TCT No. T-297393
to plaintiff Elizabeth Aliangan so that she could register into her
name the property described therein;
(3) To deliver to the plaintiff Elizabeth Aliangan physical

possession of the property described therein;
SO ORDERED.

in favor of the plaintiff Rosario Aliangan and against the defendants
heirs of Corazon Villeza. The said defendants are hereby ordered:

106311 in favor of the plaintiff Rosario Aliangan and to surrender
the owner's duplicate copy of TCT No. T-106311 to enable the
said plaintiff to register in her name the property described therein;
(2) To deliver to the plaintiff Rosario Aliangan physical possession

of the property described therein;
SO ORDERED.
SO ORDERED.
July 29, 2019
G.R. No. 226065
HEIRS OF SOLEDAD ALIDO, Petitioners

vs.
FLORA CAMPANO, or her representatives and THE REGISTER OF
DEEDS, PROVINCE OF ILOILO, Respondents
DECISION
REYES, J, JR., J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of

the Rules of Court seeking to reverse and set aside the January 20,
2016 Decision 1 and the May 31, 2016 Resolution2of the Court of
Appeals-Cebu City (CA) in CA-G.R. CV No. 04983, which reversed the
September 24, 2012 Decision3 of the Regional Trial Court, Branch 33,
Iloilo City (RTC).
The present controversy revolves around a parcel of land in Barangay

Abang-Abang,* Alimondian, Iloilo covered by Original Certificate of Title
(OCT) No. F-16558 and registered under the name of Soledad Alido
(Alido).
Factual background
On March 17, 1975, Alido was able to register the said parcel of land
under her name. In 1978, Flora Campano (respondent) was able to take
possession of the land and the owner's duplicate of OCT No. F-16558,
and paid its realty taxes. Allegedly, Alido had sold the property to her. 4
On September 18, 1996, Alido died leaving behind her children, namely
Reynaldo Almendral, Maggie Almendral-Sencil and Rodrigo Almendral.
On September 8, 2009, the heirs of Alido (petitioners) executed a Deed
of Adjudication of the above-mentioned property and sought to register
the property in their names. As such, they needed to retrieve OCT No.
F-16558, but respondent refused to do so. Thus, they were constrained
to file a verified petition before the RTC for respondent to surrender the
owner's duplicate of the title.5
RTC Decision
In its September 24, 2012 Decision, the RTC granted petitioners' petition
and ordered respondent to surrender the owner's duplicate of OCT No.
F-16558. The trial court ruled that since Alido is the registered owner of
the property, respondent cannot asse1i any right over the same and that
the payment of realty taxes does not prove ownership over the property.
It explained that as registered owner of the land, Alido's right cannot be
defeated by prescription. The RTC also expounded that the purported
sale between Alido and respondent was not valid because it was an oral
sale. The trial court posited that the law requires that the sale of real
property must appear in a public instrument. It expounded that the
delivery of the certificate of title did not create a valid sale. Thus, it
disposed:
IN VIEW THEREOF, judgment is hereby rendered in favor of the

petitioners and against the respondent, whereby respondent Flora
Campano is ordered to surrender the owner's duplicate ce1iificate of
Original Certificate of Title No. F-16558 with the Register of Deeds for
the Province of Iloilo. In the event that the said respondent is not
amenable to the process of this Court, the Register of Deeds is directed
to annul the owner's duplicate certificate of Original Certificate of Title
No. F-16558 in the possession of the latter and to issue new owner's
duplicate certificate of Original Certificate of Title No. F-16558 in lieu
thereof which shall contain a memorandum of the annulment of the
outstanding duplicate copy and to carry whatever entries or annotations
made thereat before its annulment but shall, in all respects, be entitled
to like faith and credence as the original owner's duplicate certificate of
title, upon payment of the required fees thereof.
SO ORDERED.6
Aggrieved, respondent moved for reconsideration, but it was denied by

the RTC in its January 23, 2013 Resolution. 7
Undeterred, respondent appealed to the CA.
CA Decision
In its January 20, 2016 Decision, the CA granted respondent's appeal

and dismissed the verified petition of petitioners. The appellate court
explained that an oral sale of real property is not void, but only
unenforceable under the Statute of Frauds. Nevertheless, it elucidated
that it was only applicable to executory contracts and not to partially or
completely executed contracts. The CA highlighted that the oral sale of
the subject parcel of land between respondent and Alido had been
executed. The appellate court noted that respondent possessed the
owner's duplicate of title, she had paid the realty taxes, and was in
peaceful possession of the land since 1978.
However, the CA observed that the sale between Alido and respondent
was void because it violated the terms of the former's free patent
application. The appellate court noted that the free patent was issued on
March 17, 1975 while the sale took place in 1978 - violating the five-year
restriction of alienating lands subject of a free patent.
Nonetheless, the CA postulated that petitioners cannot seek redress
because their action had been barred by laches. The appellate court
pointed out that respondent had possessed the property and had
custody of OCT No. F-16558 since 1978 without Alido ever questioning
her occupation over the property. In addition, it noted that petitioners
waited for 14 more years before they filed their verified petition against
respondents. Thus, it disposed:
IN LIGHT OF THE FOREGOING, the instant appeal is GRANTED. The

Decision dated September 24, 2012 of the RTC, Branch 33, Iloilo City in
Cad. Case No. Free Patent, is REVERSED and SET ASIDE. The
complaint filed by the heirs of Soledad Alido is DISMISSED.
SO ORDERED.8
Unsatisfied, petitioners moved for reconsideration, but it was denied by

the CA in its May 31, 2016 Resolution.
Hence, this present petition, raising:
The Issues
WHETHER THERE WAS A VALID SALE OF REAL PROPERTY

BETWEEN ALIDO AND RESPONDENT; and
II
WHETHER PETITIONERS' ACTION HAD BEEN BARRED BY

LACHES.
Petitioners argue that a Torrens Title is indefeasible, incontrovertible and

imprescriptible. As such, they believe that Alido's title cannot be
defeated by respondent's adverse possession. In addition, petitioners
lament that respondent had no document to prove that Alido really sold
the parcel of land to her. They insist that as legal owners of the parcel of
land, they are entitled to recover the owner's duplicate of OCT No. F-
16558 from respondent.
Further, petitioners aver that in the interest of higher justice, laches

should not be applied as injustice would be perpetrated should the
owner's duplicate of the title be not returned to them. They reiterate that
a certificate of title is proof of ownership that cannot be defeated even by
adverse possession or acquisitive prescription.
In its Comment9 dated March 9, 2017, respondent countered that laches

barred petitioners from instituting their verified petition before the RTC
because for more than three decades, she had possessed the land in
the concept of an owner with the explicit knowledge of Alido and her
heirs. She manifested that it took 32 years before petitioners had acted
on their rights.
Likewise, respondent pointed out that petitioners failed to show proof to

dispute the sale between her and Alido. She highlighted that Alido and
her heirs had stopped paying the realty taxes over the property after it
was sold to her. Also, respondent explained that the fact the sale was
not reflected in a public document did not render it void. She expounded
that petitioners' argument that a Torrens Title cannot be defeated by
prescription is misplaced because Alido had already sold the property to
her.
In their Reply10 dated September 14, 2017, petitioners reiterated the

arguments they had raised in their Petition for Review on Certiorari.
The Court's Ruling
The petition is meritorious.
A Torrens Title is indefeasible in that it could not be assailed collaterally

and it cannot be altered, modified or cancelled except in a direct
proceeding in accordance with law. 11 In addition, ownership supported
by a certificate of title can neither be defeated by adverse, open and
notorious possession nor prescription. 12 As such, prescription and
laches do not apply to registered land covered by the Torrens System. 13
Acting on this premise, petitioners believe that respondent cannot defeat

their claim of ownership because it is supported by a certificate of title
issued in the name of their predecessor. A circumspect analysis of
respondent's position, however, shows that the validity of OCT No. F-
16558 was never assailed in any way. Respondent never challenged the
certificate of title based on an independent and adverse possession.
Rather, she claims ownership over the property by virtue of an oral sale
between her and Alido. Thus, it can be readily seen that respondent
never contested petitioners' rights based on acquisitive prescription. She
simply asserts that petitioners no longer derived any right over the
property upon Alido's death because it was already sold to her prior to
the demise of their mother.
Thus, petitioners err in harping on the indefeasibility of title in asserting

their right to possess OCT No. F-16558. The validity of OCT No. F-
16558 was never questioned. Respondent anchors her claim on a
transmission of rights by virtue of an oral sale between her and Alido.
Oral Sale of real property
The RTC granted petitioners' verified petition as it ruled that they were
the legal owners of the land covered by OCT No. F-16558. The trial
court postulated that there was no valid sale between Alido and
respondent because Article 1358 of the Civil Code expressly requires
that the sale of real property must appear in a public document and that
the delivery of OCT No. F-16558 did not validate the transaction. On the
other hand, the CA explained that an executed oral sale of real prope1iy
is valid and binding among the parties.
Contracts which have all essential requisites for their validity are
obligatory regardless of the form they are entered into, except when the
law requires that a contract be in some form to be valid or
enforceable. 14 Article 1358 of the Civil Code provides that the following
must appear in a public instrument:
(1) Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over
immovable property; sales of real property or of an interest therein
are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of

those of the conjugal partnership of gains;
(3) The power to administer property, or any other power which has for
its object an act appearing or which should appear in a public document,
or should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in

a public document. (Emphasis supplied)
Article 1403(2) of the Civil Code, or otherwise known as the Statute of

Frauds, requires that covered transactions must be reduced in writing,
otherwise the same would be unenforceable by action. In other words,
sale of real property must be evidenced by a written document as an
oral sale of immovable property is unenforceable.
Nevertheless, it is erroneous to conclude that contracts of sale of real

property without its term being reduced in writing are void or invalid.
In The Estate of Pedro C. Gonzales v. The Heirs of Marcos Perez, 15 the
Court explained that failure to observe the prescribed form of contracts
do not invalidate the transaction, to wit:
Nonetheless, it is a settled rule that the failure to observe the proper

form prescribed by Article 1358 does not render the acts or contracts
enumerated therein invalid. It has been uniformly held that the form
required under the said Article is not essential to the validity or
enforceability of the transaction, but merely for convenience. The Court
agrees with the CA in holding that a sale of real property, though not
consigned in a public instrument or formal writing, is, nevertheless, valid
and binding among the parties, for the time-honored rule is that even a
verbal contract of sale of real estate produces legal effects between the
parties. Stated differently, although a conveyance of land is not made in
a public document, it does not affect the validity of such conveyance.
Article 1358 does not require the accomplishment of the acts or
contracts in a public instrument in order to validate the act or contract
but only to insure its efficacy.
Further, the Statute of Frauds applies only to executory contracts and

not to those which have been executed either fully or
partially. 16 In Swedish Match, AB v. Court of Appeals, 17 the Court
expounded on the purpose behind the requirement that certain contracts
be reduced in writing, viz.:
The Statute Frauds embodied in Article 1403, paragraph (2), of the Civil
Code requires certain contracts enumerated therein to be evidenced by
some note or memorandum in order to be enforceable. The term
"Statute of Frauds" is descriptive of statutes which require certain
classes of contracts to be in writing. The Statute does not deprive the
parties of the right to contract with respect to the matters therein
involved, but merely regulates the formalities of the contract
necessary to render it enforceable. Evidence of the agreement cannot
be received without the writing or a secondary evidence of its contents.

contracts enumerated therein may be proved but does not declare
them invalid because they are not reduced to writing. By law,
contracts are obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in order
that it may be valid or enforceable, or that a contract be proved in a
certain way, that requirement is absolute and
indispensable. Consequently, the effect of non-compliance with the
requirement of the Statute is simply that no action can be enforced
unless the requirement is complied with. Clearly, the form required is
for evidentiary purposes only. Hence, if the parties permit a contract to
be proved, without any objection, it is then just as binding as if the
Statute has been complied with.

contracts and transactions to be evidenced by a writing signed by
the party to be charged. (Emphases supplied)
While the Statute of Frauds aim to safeguard the parties to a contract

from fraud or perjury, its non-observance does not adversely affect the
intrinsic validity of their agreement. The form prescribed by law is for
evidentiary purposes, non-compliance of which does not make the
contract void or voidable, but only renders the contract unenforceable by
any action. In fact, contracts which do not comply with the Statute of
Frauds are ratified by the failure of the parties to object to the
presentation of oral evidence to
prove the same, or by an acceptance of benefits under them. 18
Further, the Statute of Frauds is limited to executory contracts where

there is a wide field for fraud as there is no palpable evidence of the
intention of the contracting parties. 19 It has no application to executed
contracts because the exclusion of parol evidence would promote fraud
or bad faith as it would allow parties to keep the benefits derived from
the transaction and at the same time evade the obligations imposed
therefrom.20
The RTC errs in summarily dismissing respondent's claim of ownership

simply because the sale between her and Alido was not supported by a
written deed. As above-mentioned, an oral sale of real property is not
void and even enforceable and binding between the parties if it had
been totally or partially executed.
The Court agrees with the observations of the CA that the Statute of
Frauds is inapplicable in the present case as the verbal sale between
respondent and Alido had been executed. From the time of the
purported sale in 1978, respondent peacefully possessed the property
and had in her custody OCT No. F-16558. Further, she had been the
one paying the real prope11y taxes and not Alido. Possession of the
property, making improvements therein and paying its real property
taxes may serve as indicators that an oral sale of a piece of land had
been performed or executed. 21
In addition, while tax declarations are not conclusive proof of ownership,

they may serve as indicia that the person paying the realty taxes
possesses the property in concept of an owner. In Heirs of Simplicio
Santiago v. Heirs of Mariano E. Santiago22 the Court, thus, explained:
In the instant case, it was established that Lot 2344 is a private property
of the Santiago clan since time immemorial, and that they have declared
the same for taxation. Although tax declarations or realty tax payment of
property are not conclusive evidence of ownership, nevertheless, they
are good indicia of possession in the concept of owner, for no one
in his right mind would be paying taxes for a property that is not in
his actual or constructive possession. They constitute at least proof
that the holder has a claim of title over the property. The voluntary
declaration of a piece of property for taxation purposes manifests
not only one's sincere and honest desire to obtain title to the
property and announces his adverse claim against the State and all
other interested parties, but also the intention to contribute needed
revenues to the Government. Such an act strengthens one's bona
fide claim of acquisition of ownership. (Emphases supplied)
From 1978 until her death, Alido never questioned respondent's

continued possession of the property, as well as of OCT No. F-16558.
Neither did she stop respondent from paying realty taxes under the
latter's name. Alido allowed respondent to exercise all the rights and
responsibilities of an owner over the subject parcel of land. Even after
her death, neither her heirs disturbed respondent's possession of the
property nor started paying for the real property taxes on the said lot.
Further, it is noteworthy that petitioners do not assail that respondent
had acquired the property fraudulently or illegally as they merely rely on
the fact that there was no deed of sale to support the said transaction.
However, as manifested by the actions or inactions of Alido and
respondent, it can be reasonably concluded that Alido had sold the
property to respondent and that the said transaction had been
consummated.
Having settled that a sale had indeed occurred between respondent and
Alido, a determination of its validity and whether petitioners can still
assail the same is necessary.
By virtue of a free patent application, Alido secured OCT No. F-16558

on March 17, 1975. Thereafter, she sold the property covered by OCT
No. F-16558 to respondent in 1978. It is settled that lands acquired
through free patent cannot be alienated or encumbered within five years
from the date of issuance of the patent.23 This is so considering that the
grant of free patent is done out of the benevolence of the State to
provide lots for land-destitute citizens for their home and
cultivation. 24 As such, any sale in violation of the five-year prohibition on
alienation is void and produces no effect whatsoever. 25 As a result, the
law still regards the original owner as the rightful owner subject to
escheat proceedings by the State.26
In the present case, Alido had already sold the property to respondent
within three years from the time she had acquired title thereto pursuant
to her free patent application. Clearly, the said transaction is void
because it transgresses the five-year prohibition on alienation of lands
acquired through free patent.
Under Article 1412(1) of the Civil Code,27 parties in a void contract who

are of equal fault cannot demand recovery, enforcement or performance
from the other. The said provision embodies the doctrine of in pari
delicto which "is a universal doctrine that holds that no action arises, in
equity or at law, from an illegal contract; no suit can be maintained for its
specific performance, or to recover the property agreed to be sold or
delivered, or the money agreed to be paid, or damages for its violation;
and where the parties are in pari delicto, no affirmative relief of any kind
will be given to one against the other." 28
Nevertheless, Article 1416 of the Civil Code provides that when the
agreement is not illegal per se, but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he
may, if public policy is thereby enhanced, recover what he has paid or
delivered. In other words, the doctrine of in pari delicto cannot apply
when it contravenes well-established public policy as whenever public
policy is advanced by either party, they may be allowed to sue for relief
against the transaction.29
The doctrine of in pari delicto does not apply in the sale of a homestead
which has been illegally sold, in violation of the homestead
law.30 In Spouses Maltos v. Heirs of Eusebio Borromeo,31 the Court
explained that the doctrine of in pari delicto cannot preclude a grantee
from recovering a parcel of land sold in violation of the five-year
prohibition on alienation of land acquired through free patent, to wit:
Santos involved the sale of a parcel of land within the five-year

prohibitory period. The Roman Catholic Church raised the defense of in
pari delicto. It was also argued by the Roman Catholic Church that the
effect of the sale would be the reversion of the property to the state. This
court held that:
Section 124 of the Public Land Act indeed provides that any acquisition,
conveyance or transfer executed in violation of any of its provisions shall
be null and void and shall produce the effect of annulling and cancelling
the grant or patent and cause the reversion of the property to the State,
and the principle of pari delicto has been applied by this Court in a
number of cases wherein the parties to a transaction have proven to be
guilty of effected the transaction with knowledge of the cause of its
invalidity. But we doubt if these principles can now be invoked
considering the philosophy and the policy behind the approval of
the Public Land Act. The principle underlying pari delicto as known
here and in the United States is not absolute in its application. It
recognizes certain exceptions one of them being when its
enforcement or application runs counter to an avowed fundamental
policy or to public interest. As stated by us in the [Rellosa] case, "This
doctrine is subject to one important limitation, namely, [']whenever public
policy is considered advanced by allowing either party to sue for relief
against the transaction. [']"
The case under consideration comes within the exception above

adverted to. Here appellee desires to nullify a transaction which was
done in violation of the law. Ordinarily the principle of pari delicto would
apply to her because her predecessor-in-interest has carried out the
sale with the presumed knowledge of its illegality, but because the
subject of the transaction is a piece of public land, public policy
requires that she, as heir, be not prevented from re-acquiring it
because it was given by law to her family for her home and
cultivation. This is the policy on which our homestead law is
predicated. This right cannot be waived. "It is not within the
competence of any citizen to barter away what public policy by law
seeks to preserve." We are, therefore, constrained to hold that appellee
can maintain the present action it being in furtherance of this
fundamental aim of our homestead law.
xxxx
As the in pari delicto rule is not applicable, the question now arises as to

who between the parties have a better right to possess the subject
parcel of land. x xx
xxxx
In Binayug v. Ugaddan, which involved the sale of two properties

covered by a homestead patent, this court cited jurisprudence showing
that in cases involving the sale of a property covered by the five-
year prohibitory period, the property should be returned to the
grantee.
Applying the ruling in Santos and Binayug, this court makes it clear that

petitioners have no better right to remain in possession of the property
against respondents.
Hence, the Court of Appeals did not err in ruling that while there is
yet no action for reversion filed by the Office of the Solicitor
General, the property should be conveyed by petitioners to
respondents. (Emphases supplied, citation in the original omitted)
The doctrine of in pari delicto is inapplicable in the present case

because to do so would contravene public policy of preserving the
grantee's right to the land under the homestead law. As explained
above, in sales of land in violation of the five-year prohibition, the land
should revert to the grantee in the absence of any reversion proceedings
instituted by the State. Thus, respondent has no better right to remain in
possession of the property against petitioners.
The CA, however, found that petitioners can no longer assail the sale
between Alido and respondent on account of laches. The appellate court
highlighted that respondent had possessed the property since 1978 and
was never disturbed either by Alido or petitioners until the latter had filed
the present complaint only in 2010.
Laches is the failure or neglect for an unreasonable and unexplained

length of time to do that which, by exercising due diligence, could or
should have been done earlier - it is negligence or omission to assert a
right within a reasonable time warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it. 32 It is
a creation of equity which seeks to avoid the assertion or enforcement
of a right which has become inequitable or unfair to permit by virtue of
one's negligence, folly or inattention.33
Laches, however, do not apply if the assailed contract is void ab

initio.34 In Heirs of lngjug-Tiro v. Spouses Casals,35 the Court expounded
that laches cannot prevail over the law that actions to assail a void
contract are imprescriptible it being based on equity, to wit:
In actions for reconveyance of property predicated on the fact that the
conveyance complained of was null and void ab initio, a claim of
prescription of action would be unavailing. "The action or defense for the
declaration of the inexistence of a contract does not prescribe." Neither
could laches be invoked in the case at bar. Laches is a doctrine in equity
and our courts are basically courts of law and not courts of
equity. Equity, which has been aptly described as "justice outside
legality," should be applied only in the absence of, and never
against, statutory law. Aequetas [nunquam/ contravenit legis. The
positive mandate of Art. 1410 of the New Civil Code conferring
imprescriptibility to actions for declaration of the inexistence of a
contract should preempt and prevail over all abstract arguments
based only on equity. Certainly, laches cannot be set up to resist the
enforcement of an imprescriptible legal right, and petitioners can validly
vindicate their inheritance despite the lapse of time. (Emphasis and
underscoring supplied)
As above-mentioned, a sale of a parcel of land in violation of the five-

year prohibition on the alienation of land acquired via a free patent
application is void and produces no legal effect. As successors-in-
interest of Alido, petitioners' right to challenge the sale between Alido
and respondent cannot be barred by laches as it was in violation of the
restriction on the sale of land acquired through free patent.1avvphi1
Consequently, petitioners may recover the parcel of land Alido had sold
to respondent. However, as a result of the annulment of the sale
between Alido and respondent, the latter may claim the purchase price
and interest. In Tingalan v. Spouses Melliza, 36 the Court explained that
while property sold in violation of the five-year prohibition on alienation
may be recovered, the purchaser is entitled to recover the purchase
price and interest, to wit:
Following the declaration that the contract of sale over the subject
property is void for being in violation of Section 118 of the Public Land
Act, as amended, jurisprudence dictates that the subject land be
returned to the heirs of petitioner Anastacio.x x x
xxxx
The Court made the same ruling on the issue of ownership in the earlier
cited case of Manzano in 1961, including a disposition that the buyer
therein is entitled to a reimbursement of the purchase price plus
interest, viz. :
x x x Being void from its inception, the approval thereof by the

Undersecretary of Agriculture and Natural Resources after the lapse of
five years from Manzano's patent did not legalize the sale x xx The
result is that the homestead in question must be returned to Manzano's
heirs, petitioners herein, who are, in turn, bound to restore to appellee
Ocampo the sum of P3,000.00 received by Manzano as the price
thereof x xx The fruits of the land should equitably compensate the
interest on the price.
Prior to Manzano, we made a similar ruling in the case of De los Santos
v. Roman Catholic Church of Midsayap that "[u]pon annulment of the
sale, the purchaser's claim is reduced to the purchase price and its
interest."
We shall apply the same rule in the case at bar. However, since the trial
court ruled that petitioners were barred by laches in asserting any claim
to the subject property, it did not make a factual determination of the
total purchase price paid by respondent-spouses to petitioner Anastacio
which must be returned to the heirs of respondents, including interest on
such amount. The trial court also did not make a ruling on the amount of
interest to be paid by petitioners to respondent-spouses, and if the fruits
realized by respondent-spouses from their long possession of the
subject land since 1977 would "equitably compensate the interest on the
price." This Court is not a trier of facts and we remand the instant case
for the trial court to make a factual determination of the aforesaid
amounts.
In the present case, the RTC simply invalidated the sale between Alido
and respondent due to it being an oral sale of land. The trial court
deemed the case submitted for decision after the parties were required
to file their respective position papers without proceeding to trial on the
merits. On appeal, the CA then brushed aside petitioners' complaint on
the ground of laches. Similar to Tingalan, no factual determination was
made with regard to the purchase price respondent had paid to Ali do in
exchange of the subject land. Thus, the case should be remanded to
determine the amount of purchase price respondent may recover and
whether the fruits she had enjoyed from the long possession of the
subject land would equitably compensate the interest on the price.
WHEREFORE, the January 20, 2016 Decision and the May 31, 2016
Resolution of the Court of Appeals-Cebu City in CA-G.R. CV No. 04983
are REVERSED and SET ASIDE. The present case is REMANDED to
the Regional Trial Court, Branch 33, Iloilo City to determine the
purchase price and interest respondent Flora Campano may recover.
This is without prejudice to any appropriate action the Government may

take against the heirs of Soledad Alido.
SO ORDERED.
January 11, 2018
G.R. No. 212472
SPECIFIED CONTRACTORS & DEVELOPMENT, INC., AND

SPOUSES ARCHITECT ENRIQUE O. OLONAN AND CECILIA R.
OLONAN, Petitioners
vs.
JOSE A. POBOCAN , Respondent
DECISION
TIJAM, J.:
This Petition for Review on Certiorari1under Rule 45 urges this Court to

reverse and set aside the November 27, 2013 Decision 2 and April 28,
2014 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
99994, and to affirm instead the June 4, 2012 Order 4 of the Regional
Trial Court (RTC) of Quezon City, Branch 92, in Civil Case No. Q-11-
70338. The court a quo had granted the Motion to Dismiss5 of Specified
Contractors & Development Inc. (Specified Contractors), and Spouses
Architect Enrique O. Olonan and Cecilia R. Olonan (collectively referred
to as petitioners), thereby dismissing the action for specific performance
filed by respondent Jose A. Pobocan. The dismissal of the case was
subsequently set aside by the CA in the assailed decision and
resolution.
It is undisputed that respondent was in the employ of Specified

Contractors until his retirement sometime in March 2011.1âwphi1 His
last position was president of Specified Contractors and its subsidiary,
Starland Properties Inc., as well as executive assistant of its other
subsidiaries and affiliates.
Architect Olonan allegedly6 agreed to give respondent one (1) unit for

every building Specified Contractors were able to construct as part of
respondent's compensation package to entice him to stay with the
company. Two (2) of these projects that Specified Contractors and
respondent were· able to build were the Xavierville Square
Condominium in Quezon City and the Sunrise 1-foliday Mansion Bldg. I
in Alfonso, Cavite. Pursuant to the alleged oral agreement, SpeCified
Contractors supposedly ceded, assigned and transferred Unit 708 of
Xavlerville Square Condominium and Unit 208 of Sunrise Holiday
Mansion Bldg. I (subject units) in favor of respondent.
In a March 14, 2011 letter7 addressed to petitioner Architect Enrique

Olonan as chairman of Specified Contractors, respondent requested the
execution of Deeds of Assignment or Deeds of Sale over the subject
units in his favor, along with various other beriefits, in view of his
impending retirement on March 19, 2011.
When respondent's demand was unheeded, he filed a Complaint8 on
November 21, 2011 before the RTC of Quezon City praying that
petitioners be ordered to execute and deliver the appropriate deeds of
conveyance and to pay moral and exemplary damages, as well as
attorney's fees.
On January 17, 2012, petitioners, instead of filing an answer, interposed

a Motion to Dismiss9 denying the existence of the alleged oral
agreement. They argued that, even assuming arguendo that there was
such an oral agreement, the alleged contract is unenforceable for being
in violation of the statute of frauds, nor was there any written document,
note or memorandum showing that the subject units have in fact been
ceded, assigned or transferred to respondent.Moreover, assuming again
that said agreement existed, the cause of action had long prescribed
because the alleged agreements were supposedly entered into in 1994
and 1999 as indicated in respondent's March 14, 2011 demand
letter, supra, annexed to the complaint.
The RTC, in granting10 the motion, dismissed the respondent's complaint

in its June 4, 2012 Order. While the RTC disagreed with petitioners that
the action had already prescribed under Articles 1144 11 and 114512 of
the New Civil Code, by reasoning that the complaint is in the· nature of a
real action which prescribes after 30 years conformably with Article
114113, it nonetheless agreed that the alleged agreement should have
been put into writing, and that such written note, memorandum or
agreement should have been attached as actionable documents to
respondent's complaint.
On appeal, the CA reversed14 the RTC's June 4, 2012 Order, reasoning

that the dismissal of respondent's complaint, anchored on the violation
of the statute of frauds, is unwarranted since the rule applies only to
executory and not to completed or partially consummated contracts.
According to the CA, there was allegedly partial performance of the
alleged obligation based on: (1) the respondent's possession of the
subject units; (2) the respondent's payment of condominium dues and
realty tax for Unit 708 Xavierville Square Condominium; (3) the
endorsement by petitioners of furniture/equipment for Unit 208 Sunrise
Holiday Mansion I; and (4) that shares on the rental from Unit 208
Sunrise Holiday Mansion I were allegedly received by the respondent
and-deducted from his monthly balance on the furniture/equipment
account.
Petitioners countered that while there is no dispute that respondent had

been occupying Unit 708 - previously Unit 803 - of Xavierville Square
Condominium, this was merely out of tolerance in view of respondent's
then position as president of the company and without surrender of
ownership. Petitioners also insisted that Unit 208 of Sunrise Holiday
Mansion I continues to be under their possession and control. Thus,
finding that the motion to dismiss was predicated on disputable grounds,
the CA declared in its assailed decision that a trial on the merits is
necessary to determine once and for all the nature of the respondent's
possession of the subject units.
Aggrieved, petitioners sought reconsideration of the CA decision, but

were unsuccessful. Hence, the present petition raising three issues:
1. Whether or not the RTC had jurisdiction over the respondent's

complaint considering that the allegations therein invoked a right
over the subject condominium units as part of his compensation
package, thus a claim arising out of an employer-employee
relationship cognizable by the labor arbiter; 15
2. Whether or not the respondent's cause of action had already

Prescribed;16 and,
3. Whether or not the action was barred by the statute of frauds.17
Resolution of the foregoing issues calls for an examination of the

allegations in the complaint and the nature of the action instituted by'
respondent. As will be discussed later, there is merit in petitioners'
insistence that respondent's right of action was already barred by the
statute of limitations.
What determines the nature of the action and which court has
jurisdiction over it are the allegations in the complaint and the character
of the relief sought.18 In his complaint, respondent claimed that
petitioners promised to convey to him the subject units to entice him to
stay with their company. From this, respondent prayed that petitioners
be compelled to perform their part of the alleged oral agreement. The
objective of the suit is to compel petitioners to perform an act,
specifically, to execute written instruments pursuant to a previous oral
contract. Notably, the respondent does not claim ownership of, nor title
to, the subject properties.
Not all actions involving real property are real actions. In Spouses
Saraza, et al. v. Francisco19 , it was clarified that:
x xx Although the end result of the respondent's claim was the transfer
of the subject property to his name, the suit was still essentially for
specific performance, a personal action, because it sought Fernando's
execution of a deed of absolute sale based on a contract which he had
previously made.
Similarly, that the end result would be the transfer of the subject units to
respondent's name in the event that his suit is decided in his favor is "an
anticipated consequence and beyond the cause for which the action [for
specific performance with damages] was instituted." 20 Had respondent's
action proceeded to trial, the crux of the controversy would have been
the existence or non-existence of the alleged oral contract from which
would flow respondent's alleged right to compel petitioners to execute
deeds of conveyance. The transfer of property sought by respondent is
but incidental to or an offshoot of the determination of whether or not
there is indeed, to begin with, an agreement to convey the properties in
exchange for services rendered.
Cabutihan v. Landcenter Construction & Development

Corporation21explains thus:
A close scrutiny of National Steel and Ruiz reveals that the prayers for

the execution of a Deed of Sale were not in any way connected to a
contract, like the Undertaking in this case. Hence, even if there were
prayers for the execution of a deed of sale, the actions filed in the said
cases were not for specific performance.
In the present case, petitioner seeks payment of her services in

accordance with the undertaking the parties signed.
It is axiomatic that jurisdiction over the subject matter of a case is

conferred by law and is determined by the allegations in the complaint
and the character of the relief sought, irrespective of whether the plaintiff
is entitled to all or some of the claims asserted therein. 22 We therefore
find that respondent correctly designated his complaint as one for
specific performance consistent with his allegations and prayer therein.
Accordingly, respondent's suit is one that is incapable of pecuniary
estimation and indeed cognizable by the RTC of Quezon City where
both parties reside. As stated in Surviving Heirs of Alfredo R. Bautista v.
Lindo:23
Settled jurisprudence considers some civil actions as incapable of

pecuniary estimation, viz:
1. Actions for specific performance;
While the lack of jurisdiction of a court may be raised at any stage of an

action, nevertheless, the party raising such question may be estopped if
he has actively taken part in the very proceedings which he questions
and he only objects to the court's jurisdiction because the judgment or
the order subsequently rendered is adverse to him. 24 In this case,
petitioners' Motion to Dismiss, Reply25 to the opposition on the motion,
and Sur-rejoinder26 only invoked the defenses of statute of frauds and
prescription before the RTC. It was only after the CA reversed the RTC's
grant of the motion to dismiss that petitioners raised for the first time the
issue of jurisdiction in their Motion for Reconsideration. 27 Clearly,
petitioners are estopped from raising this issue after actively taking part
in the proceedings before the RTC, obtaining a favorable ruling, and
then making an issue of it only after the CA reversed the RTC's order.
Even if this Court were to entertain the petitioners' belated assertion that
jurisdiction belongs to the labor arbiter as this case involves a claim
arising from an employer-employee relationship, reliance by petitioners
on Domondon v. NLRC28is misplaced. In Domondon, the existence of
the agreement on the transfer of car-ownership was not in issue but
rather, the entitlement of a former employee to his entire monetary
claims against a former employer, considering that the said employee
had not paid the balance of the purchase price of a company car which
the employee opted to retain. In the present case, the existence of the
alleged oral agreement, from which would flow the right to compel
performance, is in issue.
As the Court has ascertained that the present suit is essentially for
specific performance - a personal action - over which the court a
quo had jurisdiction, it was therefore erroneous for it to have treated the
complaint as a real action which prescribes after 30 years under Article
1141 of the New Civil Code. In a personal action, the plaintiff seeks the
recovery of personal property, the enforcement of a contract, or the
recovery of damages.29 Real actions, on the other hand, are those
affecting title to or possession of real property, or interest therein. 30 As a
personal action based upon an oral contract, Article 1145 providing a
prescriptive period of six years applies in this case instead. The shorter
period provided by law to institute an action based on an oral contract is
due to the frailty of human memory. Nothing prevented the parties from
reducing the alleged oral agreement into writing, stipulating the same in
a contract of employment or partnership, or even mentioning the same
in an office memorandum early on.
While the respondent's complaint was ingeniously silent as to when the

alleged oral agreement came about, his March 14, 2011 demand letter
annexed to his complaint categorically cites the year 1994 as when he
and Architect Olonan allegedly had an oral agreement to become
"industrial partners" for which he would be given a unit from every
building they constructed. From this, Unit 208 of Sunrise Holiday
Mansion I was allegedly assigned to him. Then he went on to cite his
resignation in October of 1997 and his re-employment with the company
on December 1, 1999 for which he was allegedly given Unit 803 of the
Xavierville Square Condominium, substituted later on by Unit 708
thereof.
The complaint for specific performance was instituted on November. 21,

2011, or 17 years from the oral agreement of 1994 and almost 12 years
after the December 1, 1999 oral agreement. Thus, the respondent's
action upon an oral contract was filed beyond the six-year period within
which he should have instituted the same.
Respondent argued that the prescriptive period should not be counted

from 1994 because the condominium units were not yet in existence at
that time, and that the obligation would have arisen after the units were
completed and ready for occupancy. Article 1347 31 of the New Civil
Code is, however, clear that future things may be the object of a
contract. This is the reason why real estate developers engage in pre-
selling activities. But even if we were to entertain respondent's view, his
right of action would still be barred by the statute of limitations.
Condominium Certificate of Title (CCT) No. N-1834 7 32 for Unit 708 of

Xavierville Square Condominium, copy of which was annexed to the
complaint, was issued on September 11, 1997 or more than 13 years
before· respondent's March 14, 2011 demand letter.CCT No. CT-
61333 for Unit 208 of Sunrise Holiday Mansion Building I; also annexed
to the complaint, was issued on March 12, 1996 or 14 years before
respondent's March 14, 2011 demand letter. Indubitably, in view of the
instant suit for specific performance being a personal action founded
upon an oral contract which must be brought within six years from the
accrual of the right, prescription had already set in.
Inasmuch as the complaint should have been dismissed by the RTC on

the ground of prescription, which fact is apparent from the complaint and
its annexes, it is no longer necessary to delve into the applicability of the
statute of frauds.
WHEREFORE, the petition is GRANTED. Accordingly, the Court of

Appeals' November 27, 2013 Decision and April 28, 2014 Resolution in
CA-G.R. CV No. 99994 are REVERSED and SET ASIDE. We sustain
the dismissal of Civil Case No. Q-11-70338, but on the ground that the
action for specific performance had already prescribed.
SO ORDERED.
G.R. No. 176841 June 29, 2010
ANTHONY ORDUÑA, DENNIS ORDUÑA, and ANTONITA

ORDUÑA, Petitioners,
vs.
EDUARDO J. FUENTEBELLA, MARCOS S. CID, BENJAMIN F. CID,
BERNARD G. BANTA, and ARMANDO GABRIEL, JR., Respondents.
DECISION
VELASCO, JR., J.:
In this Petition for Review1 under Rule 45 of the Rules of Court, Anthony

Orduña, Dennis Orduña and AntonitaOrduña assail and seek to set
aside the Decision2 of the Court of Appeals (CA) dated December 4,
2006 in CA-G.R. CV No. 79680, as reiterated in its Resolution of March
6, 2007, which affirmed the May 26, 2003 Decision 3 of the Regional Trial
Court (RTC), Branch 3 in Baguio City, in Civil Case No. 4984-R, a suit
for annulment of title and reconveyance commenced by herein
petitioners against herein respondents.
Central to the case is a residential lot with an area of 74 square meters

located at Fairview Subdivision, Baguio City, originally registered in the
name of Armando Gabriel, Sr. (Gabriel Sr.) under Transfer Certificate of
Title (TCT) No. 67181 of the Registry of Deeds of Baguio City. 4
As gathered from the petition, with its enclosures, and the comments
thereon of four of the five respondents,5 the Court gathers the following
relevant facts:
Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to

petitioner AntonitaOrduña (Antonita), but no formal deed was executed
to document the sale. The contract price was apparently payable in
installments as Antonita remitted from time to time and Gabriel Sr.
accepted partial payments. One of the Orduñas would later testify that
Gabriel Sr. agreed to execute a final deed of sale upon full payment of
the purchase price.6
As early as 1979, however, Antonita and her sons, Dennis and Anthony
Orduña, were already occupying the subject lot on the basis of some
arrangement undisclosed in the records and even constructed their
house thereon. They also paid real property taxes for the house and
declared it for tax purposes, as evidenced by Tax Declaration No. (TD)
96-04012-1110877 in which they place the assessed value of the
structure at PhP 20,090.
After the death of Gabriel Sr., his son and namesake, respondent
Gabriel Jr., secured TCT No. T-714998 over the subject lot and
continued accepting payments from the petitioners. On December 12,
1996, Gabriel Jr. wrote Antonita authorizing her to fence off the said lot
and to construct a road in the adjacent lot.9 On December 13, 1996,
Gabriel Jr. acknowledged receipt of a PhP 40,000 payment from
petitioners.10 Through a letter11 dated May 1, 1997, Gabriel Jr.
acknowledged that petitioner had so far made an aggregate payment of
PhP 65,000, leaving an outstanding balance of PhP 60,000. A receipt
Gabriel Jr. issued dated November 24, 1997 reflected a PhP 10,000
payment.
Despite all those payments made for the subject lot, Gabriel Jr. would
later sell it to Bernard Banta (Bernard) obviously without the knowledge
of petitioners, as later developments would show.
As narrated by the RTC, the lot conveyance from Gabriel Jr. to Bernard
was effected against the following backdrop: Badly in need of money,
Gabriel Jr. borrowed from Bernard the amount of PhP 50,000, payable
in two weeks at a fixed interest rate, with the further condition that the
subject lot would answer for the loan in case of default. Gabriel Jr. failed
to pay the loan and this led to the execution of a Deed of Sale 12 dated
June 30, 1999 and the issuance later of TCT No. T-72782 13 for subject
lot in the name of Bernard upon cancellation of TCT No. 71499 in the
name of Gabriel, Jr. As the RTC decision indicated, the reluctant
Bernard agreed to acquire the lot, since he had by then ready buyers in
respondents Marcos Cid and Benjamin F. Cid (Marcos and Benjamin or
the Cids).
Subsequently, Bernard sold to the Cids the subject lot for PhP 80,000.
Armed with a Deed of Absolute Sale of a Registered Land14 dated
January 19, 2000, the Cids were able to cancel TCT No. T-72782 and
secure TCT No. 7278315 covering the subject lot. Just like in the
immediately preceding transaction, the deed of sale between Bernard
and the Cids had respondent Eduardo J. Fuentebella (Eduardo) as one
of the instrumental witnesses.
Marcos and Benjamin, in turn, ceded the subject lot to Eduardo through
a Deed of Absolute Sale16 dated May 11, 2000. Thus, the consequent
cancellation of TCT No. T-72782 and issuance on May 16, 2000 of TCT
No. T-327617 over subject lot in the name of Eduardo.
As successive buyers of the subject lot, Bernard, then Marcos and

Benjamin, and finally Eduardo, checked, so each claimed, the title of
their respective predecessors-in-interest with the Baguio Registry and
discovered said title to be free and unencumbered at the time each
purchased the property. Furthermore, respondent Eduardo, before
buying the property, was said to have inspected the same and found it
unoccupied by the Orduñas.18
Sometime in May 2000, or shortly after his purchase of the subject lot,
Eduardo, through his lawyer, sent a letter addressed to the residence of
Gabriel Jr. demanding that all persons residing on or physically
occupying the subject lot vacate the premises or face the prospect of
being ejected.19
Learning of Eduardo’s threat, petitioners went to the residence of

Gabriel Jr. at No. 34 Dominican Hill, Baguio City. There, they met
Gabriel Jr.’s estranged wife, Teresita, who informed them about her
having filed an affidavit-complaint against her husband and the Cids for
falsification of public documents on March 30, 2000. According to
Teresita, her signature on the June 30, 1999 Gabriel Jr.–Bernard deed
of sale was a forgery. Teresita further informed the petitioners of her
intent to honor the aforementioned 1996 verbal agreement between
Gabriel Sr. and Antonita and the partial payments they gave her father-
in-law and her husband for the subject lot.
On July 3, 2001, petitioners, joined by Teresita, filed a

Complaint20 for Annulment of Title, Reconveyance with
Damages against the respondents before the RTC, docketed as Civil
Case No. 4984-R, specifically praying that TCT No. T-3276 dated May
16, 2000 in the name of Eduardo be annulled. Corollary to this prayer,
petitioners pleaded that Gabriel Jr.’s title to the lot be reinstated and that
petitioners be declared as entitled to acquire ownership of the same
upon payment of the remaining balance of the purchase price therefor
agreed upon by Gabriel Sr. and Antonita.
While impleaded and served with summons, Gabriel Jr. opted not to
submit an answer.
Ruling of the RTC
By Decision dated May 26, 2003, the RTC ruled for the respondents, as
defendants a quo, and against the petitioners, as plaintiffs therein, the
dispositive portion of which reads:
WHEREFORE, the instant complaint is hereby DISMISSED for lack of

merit. The four (4) plaintiffs are hereby ordered by this Court to
pay each defendant (except Armando Gabriel, Jr., Benjamin F. Cid, and
Eduardo J. Fuentebella who did not testify on these damages), Moral
Damages of Twenty Thousand (P20,000.00) Pesos, so
that each defendant shall receive Moral Damages of Eighty Thousand
(P80,000.00) Pesos each. Plaintiffs shall also pay all defendants (except
Armando Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who
did not testify on these damages), Exemplary Damages of Ten
Thousand (P10,000.00) Pesos each so that each defendant shall
receive Forty Thousand (P40,000.00) Pesos as Exemplary Damages.
Also, plaintiffs are ordered to pay each defendant (except Armando
Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not
testify on these damages), Fifty Thousand (P50,000.00) Pesos as
Attorney’s Fees, jointly and solidarily.
Cost of suit against the plaintiffs.21
On the main, the RTC predicated its dismissal action on the basis of the
following grounds and/or premises:
1. Eduardo was a purchaser in good faith and, hence, may avail

himself of the provision of Article 154422 of the Civil Code, which
provides that in case of double sale, the party in good faith who is
able to register the property has better right over the property;
2. Under Arts. 135623 and 135824 of the Code, conveyance of real

property must be in the proper form, else it is unenforceable;
3. The verbal sale had no adequate consideration; and
4. Petitioners’ right of action to assail Eduardo’s title prescribes in

one year from date of the issuance of such title and the one-year
period has already lapsed.
From the above decision, only petitioners appealed to the CA, their
appeal docketed as CA-G.R. CV No. 79680.
The CA Ruling
On December 4, 2006, the appellate court rendered the assailed

Decision affirming the RTC decision. The fallo reads:
WHEREFORE, premises considered, the instant appeal is hereby

DISMISSED and the 26 May 2003 Decision of the Regional Trial Court,
Branch 3 of Baguio City in Civil Case No. 4989-R is hereby AFFIRMED.
SO ORDERED.25
Hence, the instant petition on the submission that the appellate court
committed reversible error of law:
1. xxx WHEN IT HELD THAT THE SALE OF THE SUBJECT LOT

BY ARMANDO GABRIEL, SR. AND RESPONDENT ARMANDO
GABRIEL, JR. TO THE PETITIONERS IS UNENFORCEABLE.
2. xxx IN NOT FINDING THAT THE SALE OF THE SUBJECT

LOT BY RESPONDENT ARMANDO GABRIEL, JR. TO
RESPONDENT BERNARD BANTA AND ITS SUBSEQUENT
SALE BY THE LATTER TO HIS CO-RESPONDENTS ARE NULL
AND VOID.
3. xxx IN NOT FINDING THAT THE RESPONDENTS ARE

BUYERS IN BAD FAITH
4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT
BETWEEN GABRIEL, SR. AND RESPONDENT GABRIEL, JR.
AND THE PETITIONERS HAS NO ADEQUATE
CONSIDERATION.
5. xxx IN RULING THAT THE INSTANT ACTION HAD ALREADY

PRESCRIBED.
6. xxx IN FINDING THAT THE PLAINTIFFS-APPELLANTS ARE

LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY’S FEES.26
The Court’s Ruling
The core issues tendered in this appeal may be reduced to four and
formulated as follows, to wit: first, whether or not the sale of the subject
lot by Gabriel Sr. to Antonita is unenforceable under the Statute of
Frauds; second, whether or not such sale has adequate
consideration; third, whether the instant action has already prescribed;
and, fourth, whether or not respondents are purchasers in good faith.
Statute of Frauds Inapplicable to Partially Executed Contracts
It is undisputed that Gabriel Sr., during his lifetime, sold the subject
property to Antonita, the purchase price payable on installment basis.
Gabriel Sr. appeared to have been a recipient of some partial payments.
After his death, his son duly recognized the sale by accepting payments
and issuing what may be considered as receipts therefor. Gabriel Jr., in
a gesture virtually acknowledging the petitioners’ dominion of the
property, authorized them to construct a fence around it. And no less
than his wife, Teresita, testified as to the fact of sale and of payments
received.
Pursuant to such sale, Antonita and her two sons established their
residence on the lot, occupying the house they earlier constructed
thereon. They later declared the property for tax purposes, as evidenced
by the issuance of TD 96-04012-111087 in their or Antonita’s name, and
paid the real estates due thereon, obviously as sign that they are
occupying the lot in the concept of owners.
Given the foregoing perspective, Eduardo’s assertion in his Answer that

"persons appeared in the property"27 only after "he initiated ejectment
proceedings"28 is clearly baseless. If indeed petitioners entered and took
possession of the property after he (Eduardo) instituted the ejectment
suit, how could they explain the fact that he sent a demand letter to
vacate sometime in May 2000?
With the foregoing factual antecedents, the question to be resolved is
whether or not the Statute of Frauds bars the enforcement of the verbal
sale contract between Gabriel Sr. and Antonita.
The CA, just as the RTC, ruled that the contract is unenforceable for
non-compliance with the Statute of Frauds.
We disagree for several reasons. Foremost of these is that the Statute

of Frauds expressed in Article 1403, par. (2), 29 of the Civil Code applies
only to executory contracts, i.e., those where no performance has yet
been made. Stated a bit differently, the legal consequence of non-
compliance with the Statute does not come into play where the contract
in question is completed, executed, or partially consummated.30
The Statute of Frauds, in context, provides that a contract for the sale of
real property or of an interest therein shall be unenforceable unless the
sale or some note or memorandum thereof is in writing and subscribed
by the party or his agent. However, where the verbal contract of sale has
been partially executed through the partial payments made by one
party duly received by the vendor, as in the present case, the contract is
taken out of the scope of the Statute.

party to be charged.31 The Statute requires certain contracts to be
The term "Statute of Frauds" is descriptive of statutes that require
therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable.32
Since contracts are generally obligatory in whatever form they may have
been entered into, provided all the essential requisites for their validity
are present,33 the Statute simply provides the method by which the
contracts enumerated in Art. 1403 (2) may be proved but does
not declare them invalid because they are not reduced to writing. In fine,
the form required under the Statute is for convenience or evidentiary
purposes only.
There can be no serious argument about the partial execution of the

sale in question. The records show that petitioners had, on separate
occasions, given Gabriel Sr. and Gabriel Jr. sums of money as partial
payments of the purchase price. These payments were duly receipted
by Gabriel Jr. To recall, in his letter of May 1, 1997, Gabriel, Jr.
acknowledged having received the aggregate payment of PhP 65,000
from petitioners with the balance of PhP 60,000 still remaining unpaid.
But on top of the partial payments thus made, possession of the subject
of the sale had been transferred to Antonita as buyer. Owing thus to its
partial execution, the subject sale is no longer within the purview of the
Statute of Frauds.
Lest it be overlooked, a contract that infringes the Statute of Frauds is

ratified by the acceptance of benefits under the contract. 34 Evidently,
Gabriel, Jr., as his father earlier, had benefited from the partial payments
made by the petitioners. Thus, neither Gabriel Jr. nor the other
respondents—successive purchasers of subject lots—could plausibly
set up the Statute of Frauds to thwart petitioners’ efforts towards
establishing their lawful right over the subject lot and removing any cloud
in their title. As it were, petitioners need only to pay the outstanding
balance of the purchase price and that would complete the execution of
the oral sale.
There was Adequate Consideration
Without directly saying so, the trial court held that the petitioners cannot
sue upon the oral sale since in its own words: "x xx for more than a
decade, [petitioners] have not paid in full Armando Gabriel, Sr. or his
estate, so that the sale transaction between Armando Gabriel Sr. and
[petitioners] [has] no adequate consideration."
The trial court’s posture, with which the CA effectively concurred, is

patently flawed. For starters, they equated incomplete payment of the
purchase price with inadequacy of price or what passes as lesion, when
both are different civil law concepts with differing legal consequences,
the first being a ground to rescind an otherwise valid and enforceable
contract. Perceived inadequacy of price, on the other hand, is not a
sufficient ground for setting aside a sale freely entered into, save
perhaps when the inadequacy is shocking to the conscience. 35
The Court to be sure takes stock of the fact that the contracting parties
to the 1995 or 1996 sale agreed to a purchase price of PhP 125,000
payable on installments. But the original lot owner, Gabriel Sr., died
before full payment can be effected. Nevertheless, petitioners continued
remitting payments to Gabriel, Jr., who sold the subject lot to Bernard on
June 30, 1999. Gabriel, Jr., as may be noted, parted with the property
only for PhP 50,000. On the other hand, Bernard sold it for PhP 80,000
to Marcos and Benjamin. From the foregoing price figures, what is
abundantly clear is that what Antonita agreed to pay Gabriel, Sr., albeit
in installment, was very much more than what his son, for the same lot,
received from his buyer and the latter’s buyer later. The Court, therefore,
cannot see its way clear as to how the RTC arrived at its simplistic
conclusion about the transaction between Gabriel Sr. and Antonita being
without "adequate consideration."
The Issues of Prescription and the Bona
Fides of the Respondents as Purchasers
Considering the interrelation of these two issues, we will discuss them

jointly.
There can be no quibbling about the fraudulent nature of the

conveyance of the subject lot effected by Gabriel Jr. in favor of Bernard.
It is understandable that after his father’s death, Gabriel Jr. inherited
subject lot and for which he was issued TCT No. No. T-71499. Since the
Gabriel Sr. – Antonita sales transaction called for payment of the
contract price in installments, it is also understandable why the title to
the property remained with the Gabriels. And after the demise of his
father, Gabriel Jr. received payments from the Orduñas and even
authorized them to enclose the subject lot with a fence. In sum, Gabriel
Jr. knew fully well about the sale and is bound by the contract as
predecessor-in-interest of Gabriel Sr. over the property thus sold.
Yet, the other respondents (purchasers of subject lot) still maintain that
they are innocent purchasers for value whose rights are protected by
law and besides which prescription has set in against petitioners’ action
for annulment of title and reconveyance.
The RTC and necessarily the CA found the purchaser-respondents’

thesis on prescription correct stating in this regard that Eduardo’s TCT
No. T-3276 was issued on May 16, 2000 while petitioners filed their
complaint for annulment only on July 3, 2001. To the courts below, the
one-year prescriptive period to assail the issuance of a certificate of title
had already elapsed.
We are not persuaded.
The basic complaint, as couched, ultimately seeks the reconveyance of

a fraudulently registered piece of residential land. Having possession of
the subject lot, petitioners’ right to the reconveyance thereof, and the
annulment of the covering title, has not prescribed or is not time-barred.
This is so for an action for annulment of title or reconveyance based on
fraud is imprescriptible where the suitor is in possession of the property
subject of the acts,36 the action partaking as it does of a suit for quieting
of title which is imprescriptible.37 Such is the case in this instance.
Petitioners have possession of subject lots as owners having purchased
the same from Gabriel, Sr. subject only to the full payment of the agreed
price.
The prescriptive period for the reconveyance of fraudulently registered

real property is 10 years, reckoned from the date of the issuance of the
certificate of title, if the plaintiff is not in possession, but imprescriptible if
he is in possession of the property.38 Thus, one who is in actual
possession of a piece of land claiming to be the owner thereof may wait
until his possession is disturbed or his title is attacked before taking
steps to vindicate his right.39 As it is, petitioners’ action for reconveyance
is imprescriptible.
This brings us to the question of whether or not the respondent-

purchasers, i.e., Bernard, Marcos and Benjamin, and Eduardo, have the
status of innocent purchasers for value, as was the thrust of the trial
court’s disquisition and disposition.
We are unable to agree with the RTC.
It is the common defense of the respondent-purchasers that they each

checked the title of the subject lot when it was his turn to acquire the
same and found it clean, meaning without annotation of any
encumbrance or adverse third party interest. And it is upon this postulate
that each claims to be an innocent purchaser for value, or one who buys
the property of another without notice that some other person has a right
to or interest in it, and who pays therefor a full and fair price at the time
of the purchase or before receiving such notice. 40
The general rule is that one dealing with a parcel of land registered
under the Torrens System may safely rely on the correctness of the
certificate of title issued therefor and is not obliged to go beyond the
certificate.41 Where, in other words, the certificate of title is in the name
of the seller, the innocent purchaser for value has the right to rely on
what appears on the certificate, as he is charged with notice only of
burdens or claims on the res as noted in the certificate. Another
formulation of the rule is that (a) in the absence of anything to arouse
suspicion or (b) except where the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to make
such inquiry or (c) when the purchaser has knowledge of a defect of title
in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property, 42 said purchaser is
without obligation to look beyond the certificate and investigate the title
of the seller.
Eduardo and, for that matter, Bernard and Marcos and Benjamin, can
hardly claim to be innocent purchasers for value or purchasers in good
faith. For each knew or was at least expected to know that somebody
else other than Gabriel, Jr. has a right or interest over the lot. This is
borne by the fact that the initial seller, Gabriel Jr., was not in possession
of subject property. With respect to Marcos and Benjamin, they knew as
buyers that Bernard, the seller, was not also in possession of the same
property. The same goes with Eduardo, as buyer, with respect to
Marcos and Benjamin.ten.lihpwa1
Basic is the rule that a buyer of a piece of land which is in the actual
possession of persons other than the seller must be wary and should
investigate the rights of those in possession. Otherwise, without such
inquiry, the buyer can hardly be regarded as a buyer in good faith. When
a man proposes to buy or deal with realty, his duty is to read the public
manuscript, i.e., to look and see who is there upon it and what his rights
are. A want of caution and diligence which an honest man of ordinary
prudence is accustomed to exercise in making purchases is, in
contemplation of law, a want of good faith. The buyer who has failed to
know or discover that the land sold to him is in adverse possession of
another is a buyer in bad faith.43
Where the land sold is in the possession of a person other than the
vendor, the purchaser must go beyond the certificates of title and make
inquiries concerning the rights of the actual possessor. 44 And where, as
in the instant case, Gabriel Jr. and the subsequent vendors were not in
possession of the property, the prospective vendees are obliged to
investigate the rights of the one in possession. Evidently, Bernard,
Marcos and Benjamin, and Eduardo did not investigate the rights over
the subject lot of the petitioners who, during the period material to this
case, were in actual possession thereof. Bernard, et al. are, thus, not
purchasers in good faith and, as such, cannot be accorded the
protection extended by the law to such purchasers. 45 Moreover, not
being purchasers in good faith, their having registered the sale, will not,
as against the petitioners, carry the day for any of them under Art. 1544
of the Civil Code prescribing rules on preference in case of double sales
of immovable property. Occeña v. Esponilla46 laid down the following
rules in the application of Art. 1544: (1) knowledge by the first buyer of
the second sale cannot defeat the first buyer’s rights except when the
second buyer first register in good faith the second sale; and (2)
knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register, since such knowledge taints his registration
with bad faith.
Upon the facts obtaining in this case, the act of registration by any of the
three respondent-purchasers was not coupled with good faith. At the
minimum, each was aware or is at least presumed to be aware of facts
which should put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.
The award by the lower courts of damages and attorney’s fees to some
of the herein respondents was predicated on the filing by the original
plaintiffs of what the RTC characterized as an unwarranted suit. The
basis of the award, needless to stress, no longer obtains and, hence, the
same is set aside.
WHEREFORE, the petition is hereby GRANTED. The appealed

December 4, 2006 Decision and the March 6, 2007 Resolution of the
Court of Appeals in CA-G.R. CV No. 79680 affirming the May 26, 2003
Decision of the Regional Trial Court, Branch 3 in Baguio City are hereby
REVERSED and SET ASIDE. Accordingly, petitioner AntonitaOrduña is
hereby recognized to have the right of ownership over subject lot
covered by TCT No. T-3276 of the Baguio Registry registered in the
name of Eduardo J. Fuentebella. The Register of Deeds of Baguio City
is hereby ORDERED to cancel said TCT No. T-3276 and to issue a new
one in the name of Armando Gabriel, Jr. with the proper annotation of
the conditional sale of the lot covered by said title in favor of
AntonitaOrduña subject to the payment of the PhP 50,000 outstanding
balance. Upon full payment of the purchase price by AntonitaOrduña,
Armando Gabriel, Jr. is ORDERED to execute a Deed of Absolute Sale
for the transfer of title of subject lot to the name of AntonitaOrduña,
within three (3) days from receipt of said payment.
No pronouncement as to costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.

Associate Justice
WE CONCUR:
G.R. No. 145736 March 4, 2009
ESTATE OF ORLANDO LLENADO and WENIFREDA T. LLENADO,

in her capacity as (a) Administratrix of the Estate of Orlando A.
Llenado and (b) Judicial Guardian of the Minor children of Orlando
A. Llenado, and (c) in her Own behalf as the Surviving Spouse and
Legal Heir of Orlando A. Llenado, Petitioners,
vs.
EDUARDO LLENADO, JORGE LLENADO, FELIZA GALLARDO VDA.
DE LLENADO and REGISTER OF DEEDS of Valenzuela City, Metro
Manila, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the May 30, 2000
Decision1 of the Court of Appeals in CA-G.R. CV No. 58911 which
reversed the May 5, 1997 Decision2 of the Regional Trial Court of
Valenzuela City, Branch 75 in Civil Case No. 4248-V-93, and the
October 6, 2000 Resolution3 which denied the motion for
reconsideration. The appellate court dismissed for lack of merit the
complaint for annulment of deed of conveyance, title and damages filed
by petitioner against herein respondents.
The subject of this controversy is a parcel of land denominated as Lot

249-D-1 (subject lot) consisting of 1,554 square meters located in Barrio
Malinta, Valenzuela, Metro Manila and registered in the names of
Eduardo Llenado (Eduardo) and Jorge Llenado (Jorge) under Transfer
of Certificate of Title (TCT) No. V-1689.4 The subject lot once formed
part of Lot 249-D owned by and registered in the name of their father,
Cornelio Llenado (Cornelio), under TCT No. T-16810.
On December 2, 1975, Cornelio leased Lot 249-D-1 to his nephew,

Romeo Llenado (Romeo), for a period of five years, renewable for
another five years at the option of Cornelio. On March 31, 1978,
Cornelio, Romeo and the latter’s cousin Orlando Llenado (Orlando)
executed an Agreement5 whereby Romeo assigned all his rights to
Orlando over the unexpired portion of the aforesaid lease contract. The
parties further agreed that Orlando shall have the option to renew the
lease contract for another three years commencing from December 3,
1980, up to December 2, 1983, renewable for another four years or up
to December 2, 1987, and that "during the period that [this agreement] is
enforced, the xx x property cannot be sold, transferred, alienated or
conveyed in whatever manner to any third party."
Shortly thereafter or on June 24, 1978, Cornelio and Orlando entered

into a Supplementary Agreement6 amending the March 31, 1978
Agreement. Under the Supplementary Agreement, Orlando was given
an additional option to renew the lease contract for an aggregate period
of 10 years at five-year intervals, that is, from December 3, 1987 to
December 2, 1992 and from December 3, 1992 to December 2, 1997.
The said provision was inserted in order to comply with the requirements
of Mobil Philippines, Inc. for the operation of a gasoline station which
was subsequently built on the subject lot.
Upon the death of Orlando on November 7, 1983, his wife,

WenifredaLlenado (Wenifreda), took over the operation of the gasoline
station. Meanwhile, on January 29, 1987, Cornelio sold Lot 249-D to his
children, namely, Eduardo, Jorge, Virginia and Cornelio, Jr., through a
deed of sale, denominated as "KasulatansaGanap Na Bilihan," 7 for the
sum of P160,000.00. As stated earlier, the subject lot, which forms part
of Lot 249-D, was sold to Eduardo and Jorge, and titled in their names
under TCT No. V-1689. Several months thereafter or on September 7,
1987, Cornelio passed away.
Sometime in 1993, Eduardo informed Wenifreda of his desire to take

over the subject lot. However, the latter refused to vacate the premises
despite repeated demands. Thus, on September 24, 1993, Eduardo filed
a complaint for unlawful detainer before the Metropolitan Trial Court of
Valenzuela, Metro Manila against Wenifreda, which was docketed as
Civil Civil Case No. 6074.
On July 22, 1996, the Metropolitan Trial Court rendered its Decision in
favor of Eduardo and ordered Wenifreda to: (1) vacate the leased
premises; (2) pay Eduardo reasonable compensation for the use and
occupation of the premises plus attorney’s fees, and (3) pay the costs of
the suit.
Wenifreda appealed to the Regional Trial Court of Valenzuela, Metro

Manila, which reversed the decision of the court a quo. Thus, Eduardo
appealed to the Court of Appeals which rendered a Decision 8 on March
31, 1998 reversing the decision of the Regional Trial Court and
reinstating the decision of the Metropolitan Trial Court. It also increased
the amount of reasonable compensation awarded to Eduardo for the use
of the leased premises. Wenifreda’s appeal to this Court, docketed as
G.R. No. 135001, was dismissed in a Resolution 9 dated December 2,
1998. Accordingly, an Entry of Judgment10 was made in due course on
July 8, 1999.
Previously, after Eduardo instituted the aforesaid unlawful detainer case

on September 24, 1993, herein petitioner Wenifreda, in her capacity as
administratrix of the estate of Orlando Llenado, judicial guardian of their
minor children, and surviving spouse and legal heir of Orlando,
commenced the subject Complaint,11 later amended, on November 10,
1993 for annulment of deed of conveyance, title and damages against
herein respondents Eduardo, Jorge, FelizaLlenado (mother of the
Llenado brothers), and the Register of Deeds of Valenzuela, Metro
Manila. The case was docketed as Civil Case No. 4248-V-93 and raffled
to Branch 75 of the Regional Trial Court of Valenzuela, Metro Manila.
Petitioner alleged that the transfer and conveyance of the subject lot by
Cornelio in favor of respondents Eduardo and Jorge, was fraudulent and
in bad faith considering that the March 31, 1978 Agreement provided
that while the lease is in force, the subject lot cannot be sold, transferred
or conveyed to any third party; that the period of the lease was until
December 3, 1987 with the option to renew granted to Orlando; that the
subject lot was transferred and conveyed to respondents Eduardo and
Jorge on January 29, 1987 when the lease was in full force and effect
making the sale null and void; that Cornelio verbally promised Orlando
that in case he (Cornelio) decides to sell the subject lot, Orlando or his
heirs shall have first priority or option to buy the subject lot so as not to
prejudice Orlando’s business and because Orlando is the owner of the
property adjacent to the subject lot; and that this promise was wantonly
disregarded when Cornelio sold the said lot to respondents Jorge and
Eduardo.
In their Answer,12 respondents Eduardo and Jorge claimed that they

bought the subject lot from their father, Cornelio, for value and in good
faith; that the lease agreement and its supplement were not annotated at
the back of the mother title of the subject lot and do not bind them; that
said agreements are personal only to Cornelio and Orlando; that the
lease expired upon the death of Orlando on November 7, 1983; that they
were not aware of any verbal promise to sell the subject lot granted by
Cornelio to Orlando and, even if there was, said option to buy is
unenforceable under the statute of frauds.
After the parties presented their respective evidence, the Regional Trial
Court rendered judgment on May 5, 1997 in favor of petitioner, viz:
WHEREFORE, PREMISES CONSIDERED, this Court finds the

[petitioner’s] civil action duly established by preponderance of evidence,
renders judgment (adjudicates) in favor of the [petitioner], Estate of
Orlando Llenado represented by WenifredaLlenado, and against
[respondents] e.g. Jorge, Eduardo, Felisa Gallardo, all surnamed
Llenado, and the Register of Deeds of Valenzuela, Metro Manila, as
follows:
1) It hereby judicially declare as non-existence (sic) and null and

void, the following:
a) The Kasulatan Sa GanapnaKasunduan or Deed of Sale;
b) TCT- Transfer Certificate of Title No. V-9440, in the name

of [respondent] Eduardo Llenado, TCT- Transfer Certificate
of Title No. V-1689, in the name of Jorge Llenado, and
Eduardo Llenado, and all deeds, documents or proceedings
leading to the issuance of said title, and all subsequent title
issued therefrom and likewise whatever deeds, documents
or proceedings leading to the issuance of said subsequent
titles;
2) It hereby orders the reconveyance of the said properties

embraced in the said TCTs-Transfer Certificate of Title Nos. V-
9440 and V-1689 to the [petitioner] for the same consideration, or
purchase price, paid by [respondents] Eduardo Llenado and Jorge
Llenado for the same properties;
3) It hereby orders [respondent], Register of Deeds of Valenzuela,

Metro Manila, to cause the issuance of new transfer certificates of
title over the said property in the name of the [petitioner];
4) And, because this Court is not only a court of law, but of equity,
it hereby rendered the following damages to be paid by the
[respondents], as the [respondents] litigated under bonafide
assertions that they have meritorious defense, viz:
a) P400,000.00 as moral damages;
b) 10,000.00 as nominal damages;
c) 10,000.00 as temperate damages;
d) 10,000.00 as exemplary damages;
e) 10,000.00 attorney’s fees on the basis of quantum merit;

and
f) costs of suit.
SO ORDERED.13
The Regional Trial Court found that upon the death of Orlando on
November 7, 1983, his rights under the lease contract were transmitted
to his heirs; that since the lease was in full force and effect at the time
the subject lot was sold by Cornelio to his sons, the sale violated the
prohibitory clause in the said lease contract. Further, Cornelio’s promise
to sell the subject lot to Orlando may be established by parole evidence
since an option to buy is not covered by the statute of frauds. Hence, the
same is binding on Cornelio and his heirs.
Respondents appealed before the Court of Appeals which rendered the

assailed May 30, 2000 Decision reversing the judgment of the Regional
Trial Court and dismissing the Complaint. The appellate court held that
the death of Orlando did not extinguish the lease agreement and had the
effect of transmitting his lease rights to his heirs. However, the breach of
the non-alienation clause of the said agreement did not nullify the sale
between Cornelio and his sons because the heirs of Orlando are mere
lessees on the subject lot and can never claim a superior right of
ownership over said lot as against the registered owners thereof. It
further ruled that petitioner failed to establish by a preponderance of
evidence that Cornelio made a verbal promise to Orlando granting the
latter the right of first refusal if and when the subject lot was sold.
Upon the denial of its motion for reconsideration, petitioner is now before
this Court on the following assignment of errors:
[T]he Court of Appeals erred:
1.- In finding and concluding that there is no legal basis to annul

the deed of conveyance involved in the case and in not applying
R.A. No. 3516, further amending R.A. No. 1162; and
2.- In not finding and holding as null and void the subject deed of
conveyance, the same having been executed in direct violation of
an expressed covenant in said deed and in total disregard of the
pre-emptive, or preferential rights of the herein petitioners to buy
the property subject of their lease contract under said R.A. No.
3516, further amending R.A. No. 1162.14
The petition lacks merit.
Petitioner contends that the heirs of Orlando are entitled to the rights of
a tenant under Republic Act (R.A.) No. 1162,15 as amended by R.A. No.
3516.16 The right of first refusal or preferential right to buy the leased
premises is invoked pursuant to Section 517 of said law and this Court’s
ruling in Mataas Na Lupa Tenants Association, Inc. v. Dimayuga. 18
This issue is being raised for the first time on appeal. True, in Mataas Na
Lupa Tenants Association, Inc., the Court explained that Section 1 of
R.A. No. 1162, as amended by R.A. No. 3516, authorizes the
expropriation of any piece of land in the City of Manila, Quezon City and
suburbs which have been and are actually being leased to tenants for at
least 10 years, provided said lands have at least 40 families of tenants
thereon.19 Prior to and pending the expropriation, the tenant shall have a
right of first refusal or preferential right to buy the leased premises
should the landowner sell the same. However, compliance with the
conditions for the application of the aforesaid law as well as the
qualifications of the heirs of Orlando to be beneficiaries thereunder were
never raised before the trial court, or even the Court of Appeals,
because petitioner solely anchored its claim of ownership over the
subject lot on the alleged violation of the prohibitory clause in the lease
contract between Cornelio and Orlando, and the alleged non-
performance of the right of first refusal given by Cornelio to Orlando. The
rule is settled, impelled by basic requirements of due process, that
points of law, theories, issues and arguments not adequately brought to
the attention of the lower court will not be ordinarily considered by a
reviewing court as they cannot be raised for the first time on appeal. 20 As
the issue of the applicability of R.A. No. 1162, as amended, was neither
averred in the pleadings nor raised during the trial below, the same
cannot be raised for the first time on appeal.
At any rate, the allegations in the Complaint and the evidence presented
during the trial below do not establish that Orlando or his heirs are
covered by R.A. No. 1162, as amended. It was not alleged nor shown
that the subject lot is part of the landed estate or haciendas in the City of
Manila which were authorized to be expropriated under said law; that the
Solicitor General has instituted the requisite expropriation proceedings
pursuant to Section 221 thereof; that the subject lot has been actually
leased for a period of at least ten (10) years; and that the subject lot has
at least forty (40) families of tenants thereon. Instead, what was merely
established during the trial is that the subject lot was leased by Cornelio
to Orlando for the operation of a gasoline station, thus, negating
petitioner’s claim that the subject lot is covered by the aforesaid law. In
Mataas Na Lupa Tenants Association, Inc., the Court further explained
that R.A. No. 1162, as amended, has been superseded by Presidential
Decree (P.D.) No. 151722 entitled "Proclaiming Urban Land Reform in
the Philippines and Providing for the Implementing Machinery
Thereof."23However, as held in Tagbilaran Integrated Settlers
Association Incorporated v. Court of Appeals,24 P.D. No. 1517 is
applicable only in specific areas declared, through presidential
proclamation,25 to be located within the so-called urban zones. 26 Further,
only legitimate tenants who have resided on the land for ten years or
more who have built their homes on the land and residents who have
legally occupied the lands by contract, continuously for the last ten
years, are given the right of first refusal to purchase the land within a
reasonable time.27 Consequently, those lease contracts entered into for
commercial use are not covered by said law.28 Thus, considering that
petitioner failed to prove that a proclamation has been issued by the
President declaring the subject lot as within the urban land reform zone
and considering further that the subject lot was leased for the
commercial purpose of operating a gasoline station, P.D. No. 1517
cannot be applied to this case.
In fine, the only issue for our determination is whether the sale of the
subject lot by Cornelio to his sons, respondents Eduardo and Jorge, is
invalid for (1) violating the prohibitory clause in the lease agreement
between Cornelio, as lessor-owner, and Orlando, as lessee; and (2)
contravening the right of first refusal of Orlando over the subject lot.
It is not disputed that the lease agreement contained an option to renew

and a prohibition on the sale of the subject lot in favor of third persons
while the lease is in force. Petitioner claims that when Cornelio sold the
subject lot to respondents Eduardo and Jorge the lease was in full force
and effect, thus, the sale violated the prohibitory clause rendering it
invalid. In resolving this issue, it is necessary to determine whether the
lease agreement was in force at the time of the subject sale and, if it
was in force, whether the violation of the prohibitory clause invalidated
the sale.
Under Article 1311 of the Civil Code, the heirs are bound by the
contracts entered into by their predecessors-in-interest except when the
rights and obligations therein are not transmissible by their nature, by
stipulation or by provision of law. A contract of lease is, therefore,
generally transmissible to the heirs of the lessor or lessee. It involves a
property right and, as such, the death of a party does not excuse non-
performance of the contract.29 The rights and obligations pass to the
heirs of the deceased and the heir of the deceased lessor is bound to
respect the period of the lease.30 The same principle applies to the
option to renew the lease. As a general rule, covenants to renew a lease
are not personal but will run with the land. 31 Consequently, the
successors-in-interest of the lessee are entitled to the benefits, while
that of the lessor are burdened with the duties and obligations, which
said covenants conferred and imposed on the original parties.
The foregoing principles apply with greater force in this case because
the parties expressly stipulated in the March 31, 1978 Agreement that
Romeo, as lessee, shall transfer all his rights and interests under the
lease contract with option to renew "in favor of the party of the Third Part
(Orlando), the latter’s heirs, successors and assigns" 32indicating the
clear intent to allow the transmissibility of all the rights and interests of
Orlando under the lease contract unto his heirs, successors or assigns.
Accordingly, the rights and obligations under the lease contract with
option to renew were transmitted from Orlando to his heirs upon his
death on November 7, 1983.
It does not follow, however, that the lease subsisted at the time of the
sale of the subject lot on January 29, 1987. When Orlando died on
November 7, 1983, the lease contract was set to expire 26 days later or
on December 3, 1983, unless renewed by Orlando’s heirs for another
four years. While the option to renew is an enforceable right, it must
necessarily be first exercised to be given effect. 33 As the Court explained
in Dioquino v. Intermediate Appellate Court: 34
A clause found in an agreement relative to the renewal of the lease

agreement at the option of the lessee gives the latter an enforceable
right to renew the contract in which the clause is found for such time as
provided for. The agreement is understood as being in favor of the
lessee, and the latter is authorized to renew the contract and to continue
to occupy the leased property after notifying the lessor to that effect. A
lessor’s covenant or agreement to renew gives a privilege to the tenant,
but is nevertheless an executory contract, and until the tenant has
exercised the privilege by way of some affirmative act, he cannot be
held for the additional term. In the absence of a stipulation in the lease
requiring notice of the exercise of an option or an election to renew to be
given within a certain time before the expiration of the lease, which of
course, the lessee must comply with, the general rule is that a lessee
must exercise an option or election to renew his lease and notify the
lessor thereof before, or at least at the time of the expiration of his
original term, unless there is a waiver or special circumstances
warranting equitable relief.1avvphi1.zw+
There is no dispute that in the instant case, the lessees (private

respondents) were granted the option to renew the lease for another five
(5) years after the termination of the original period of fifteen years. Yet,
there was never any positive act on the part of private respondents
before or after the termination of the original period to show their
exercise of such option. The silence of the lessees after the termination
of the original period cannot be taken to mean that they opted to renew
the contract by virtue of the promise by the lessor, as stated in the
original contract of lease, to allow them to renew. Neither can the
exercise of the option to renew be inferred from their persistence to
remain in the premises despite petitioners’ demand for them to vacate. x
x x.35
Similarly, the election of the option to renew the lease in this case
cannot be inferred from petitioner Wenifreda’s continued possession of
the subject lot and operation of the gasoline station even after the death
of Orlando on November 7, 1983 and the expiration of the lease contract
on December 3, 1983. In the unlawful detainer case against petitioner
Wenifreda and in the subject complaint for annulment of conveyance,
respondents consistently maintained that after the death of Orlando, the
lease was terminated and that they permitted petitioner Wenifreda and
her children to remain in possession of the subject property out of
tolerance and respect for the close blood relationship between Cornelio
and Orlando. It was incumbent, therefore, upon petitioner as the plaintiff
with the burden of proof during the trial below to establish by some
positive act that Orlando or his heirs exercised the option to renew the
lease. After going over the records of this case, we find no evidence,
testimonial or documentary, of such nature was presented before the
trial court to prove that Orlando or his heirs exercised the option to
renew prior to or at the time of the expiration of the lease on December
3, 1983. In particular, the testimony of petitioner Wenifreda is wanting in
detail as to the events surrounding the implementation of the subject
lease agreement after the death of Orlando and any overt acts to
establish the renewal of said lease.
Given the foregoing, it becomes unnecessary to resolve the issue on

whether the violation of the prohibitory clause invalidated the sale and
conferred ownership over the subject lot to Orlando’s heirs, who are
mere lessees, considering that at the time of said sale on January 29,
1987 the lease agreement had long been terminated for failure of
Orlando or his heirs to validly renew the same. As a result, there was no
obstacle to the sale of the subject lot by Cornelio to respondents
Eduardo and Jorge as the prohibitory clause under the lease contract
was no longer in force.
Petitioner also anchors its claim over the subject lot on the alleged
verbal promise of Cornelio to Orlando that should he (Cornelio) sell the
same, Orlando would be given the first opportunity to purchase said
property. According to petitioner, this amounted to a right of first refusal
in favor of Orlando which may be proved by parole evidence because it
is not one of the contracts covered by the statute of frauds. Considering
that Cornelio sold the subject lot to respondents Eduardo and Jorge
without first offering the same to Orlando’s heirs, petitioner argues that
the sale is in violation of the latter’s right of first refusal and is, thus,
rescissible.
The question as to whether a right of first refusal may be proved by

parole evidence has been answered in the affirmative by this Court in
Rosencor Development Corporation v. Inquing:36
We have previously held that not all agreements "affecting land" must be
put into writing to attain enforceability. Thus, we have held that the
setting up of boundaries, the oral partition of real property, and an
agreement creating a right of way are not covered by the provisions of
the statute of frauds. The reason simply is that these agreements are
not among those enumerated in Article 1403 of the New Civil Code.
A right of first refusal is not among those listed as unenforceable under

the statute of frauds. Furthermore, the application of Article 1403, par.
2(e) of the New Civil Code presupposes the existence of a perfected,
albeit unwritten, contract of sale. A right of first refusal, such as the one
involved in the instant case, is not by any means a perfected contract of
sale of real property. At best, it is a contractual grant, not of the sale of
the real property involved, but of the right of first refusal over the
property sought to be sold.
It is thus evident that the statute of frauds does not contemplate cases
involving a right of first refusal. As such, a right of first refusal need not
be written to be enforceable and may be proven by oral evidence.37
In the instant case, the Regional Trial Court ruled that the right of first
refusal was proved by oral evidence while the Court of Appeals
disagreed by ruling that petitioner merely relied on the allegations in its
Complaint to establish said right. We have reviewed the records and find
that no testimonial evidence was presented to prove the existence of
said right. The testimony of petitioner Wenifreda made no mention of the
alleged verbal promise given by Cornelio to Orlando. The two remaining
witnesses for the plaintiff, Michael Goco and Renato Malindog, were
representatives from the Register of Deeds of Caloocan City who
naturally were not privy to this alleged promise. Neither was it
established that respondents Eduardo and Jorge were aware of said
promise prior to or at the time of the sale of the subject lot. On the
contrary, in their answer to the Complaint, respondents denied the
existence of said promise for lack of knowledge thereof. 38 Within these
parameters, petitioner’s allegations in its Complaint cannot substitute for
competent proof on such a crucial factual issue. Necessarily, petitioner’s
claims based on this alleged right of first refusal cannot be sustained for
its existence has not been duly established.
WHEREFORE, the petition is DENIED. The May 30, 2000 Decision of

the Court of Appeals in CA-G.R. CV No. 58911 dismissing the complaint
for annulment of deed of conveyance, title and damages, and the
October 6, 2000 Resolution denying the motion for reconsideration, are
AFFIRMED.
Costs against petitioner.

G.R. No. 173856 November 20, 2008
DAO HENG BANK, INC., now BANCO DE ORO UNIVERSAL

BANK, petitioner
vs.
SPS. LILIA and REYNALDO LAIGO, respondent.
DECISION
CARPIO MORALES, J.:
The Spouses Lilia and Reynaldo Laigo (respondents) obtained loans

from Dao Heng Bank, Inc. (Dao Heng) in the total amount of P11 Million,
to secure the payment of which they forged on October 28, 1996,
November 18, 1996 and April 18, 1997 three Real Estate
Mortgagescovering two parcels of land registered in the name of
respondent "Lilia D. Laigo, . . . married to Reynaldo Laigo," one
containing 569 square meters and the other containing 537 square
meters.
The mortgages were duly registered in the Registry of Deeds of Quezon

City.
The loans were payable within 12 months from the execution of the
promissory notes covering the loans. As of 2000, respondents failed to
settle their outstanding obligation, drawing them to verbally offer to cede
to Dao Heng one of the two mortgaged lots by way of dacion en pago.
To appraise the value of the mortgaged lands, Dao Heng in fact
commissioned an appraiser whose fees were shouldered by it and
respondents.
There appears to have been no further action taken by the parties after
the appraisal of the properties.
Dao Heng was later to demand the settlement of respondents' obligation

by letter of August 18, 20001 wherein it indicated that they had an
outstanding obligation of P10,385,109.92 inclusive of interests and other
charges. Respondents failed to heed the demand, however.
Dao Heng thereupon filed in September 2000 an application to foreclose

the real estate mortgages executed by respondents. The properties
subject of the mortgage were sold for P10,776,242 at a public auction
conducted on December 20, 2000 to Banco de Oro Universal Bank
(hereafter petitioner) which was the highest bidder.
It appears that respondents negotiated for the redemption of the

mortgages for by a June 29, 2001 letter2 to them, petitioner, to which
Dao Heng had been merged, through its Vice President on Property
Management & Credit Services Department, advised respondent Lilia
Laigo as follows:
This is to formally advise you of the bank's response to your proposal

pertaining to the redemption of the two (2) foreclosed lots located in
Fairview, Quezon City as has been relayed to you last June 13, 2001 as
follows:
1. Redemption price shall be P11.5MM plus 12% interest based on

diminishing balance payable in staggered payments up to January
2, 2002 as follows:
a. P3MM - immediately upon receipt of this approval
b. Balance payable in staggered payments (plus interest) up

to January 2, 2002
2. Release Values for Partial Redemption:
a. TCT No. 92257 (along Commonwealth) P7.500 MM*
b. TCT No. N-146289 (along Regalado) P4.000 MM*
* excluding 12% interest
3. Other Conditions:
a. Payments shall be covered by post dated checks
b. TCT No. 92257 shall be the first property to be released

upon payment of the first P7.5MM plus interest
c. Arrangement to be covered by an Agreement
If you are agreeable to the foregoing terms and conditions, please affix
your signature showing your conformity thereto at the space provided
below. (Emphasis and underscoring in the original; italics supplied)
Nothing was heard from respondents, hence, petitioner by its Manager,

Property Management & Credit Services Department, advised her by
letter of December 26, 20013 that in view of their failure to conform to the
conditions set by it for the redemption of the properties, it would proceed
to consolidate the titles immediately after the expiration of the
redemption period on January 2, 2002.
Six days before the expiration of the redemption period or on December

27, 2001, respondents filed a complaint before the Regional Trial Court
(RTC) of Quezon City, for Annulment, Injunction with Prayer for
Temporary Restraining Order (TRO), praying for the annulment of the
foreclosure of the properties subject of the real estate mortgages and for
them to be allowed "to deliver by way of ‘dacion en pago' one of the
mortgaged properties as full payment of [their] mortgaged obligation"
and to, in the meantime, issue a TRO directing the defendant-herein
petitioner to desist from consolidating ownership over their properties.
By respondents' claim, Dao Heng verbally agreed to enter into a dacion

en pago.
In its Opposition to respondents' Application for a TRO, 4 petitioner

claimed that there was no meeting of the minds between the parties on
the settlement of respondents' loan via dacion en pago.
A hearing on the application for a TRO was conducted by Branch 215 of

the RTC of Quezon City following which it denied the same.
Petitioner thereupon filed a Motion to Dismiss the complaint on the

ground that the claim on which respondents' action is founded is
unenforceable under the Statute of Frauds and the complaint states no
cause of action.Respondents opposed the motion, contending that their
delivery of the titles to the mortgaged properties constituted partial
performance of their obligation under the dacion en pago to take it out
from the coverage of the Statute of Frauds.
The trial court granted petitioner's Motion to Dismiss in this wise:
[P]laintiffs' claim must be based on a document or

writing evidencing the alleged dacion en pago, otherwise, the
same cannot be enforced in an action in court. The Court is not
persuaded by plaintiffs' contention that their case is an exception
to the operation of the rule on statute of frauds because of their
partial performance of the obligation in the dacion en
pago consisting of the delivery of the titles of the properties to the
defendants. As correctly pointed out by the defendants, the titles
were not delivered to them pursuant to the dacion en
pago but by reason of the execution of the mortgage loan
agreement. If indeed a dacion en pago agreement was entered
into between the parties, it is inconceivable that a written
document would not be drafted considering the magnitude of the
amount involved.5 (Emphasis and underscoring supplied)
Respondents assailed the dismissal of their complaint via Petition for

Review before this Court which referred it to the Court of Appeals for
disposition.
Reversing the trial court's dismissal of the complaint, the appellate court,
by Decision of January 26, 2006,6 reinstated respondents' complaint.7
In ordering the reinstatement of respondents' complaint, the appellate

court held that the complaint states a cause of action, respondents
having alleged that there was partial performance of the agreement to
settle their obligation via dacion en pago when they agreed to have the
properties appraised to thus place their agreement within the exceptions
provided under Article 14038 of the Civil Code on Statute of Frauds.
Thus the appellate court ratiocinated:
Particularly, in seeking exception to the application of the Statute

of Frauds, petitioners[-herein respondents] averred partial
performance of the supposed verbal dacion en pago. In paragraph
5 of their complaint, they stated: "As part of the agreement,
defendant Dao Heng Bank had the mortgaged property
appraised to determine which of the two shall be delivered as full
payment of the mortgage obligation; Also as part of the
deal, plaintiffs for their part paid P5,000.00 for the appraisal
expense. As reported by the appraiser commissioned by
Defendant Dao Heng, the appraised value of the mortgaged
properties were as follows: x x x" Having done so, petitioners are
at least entitled to a reasonable opportunity to prove their case in
the course of a full trial, to which the respondents may equally
present their evidence in refutation of the formers' case.
(Underscoring supplied)
Petitioner's Motion for Reconsideration having been denied by the

appellate court by Resolution of July 19, 2006, the present petition was
filed faulting the appellate court in ruling:
I.
. . . THAT THE COMPLAINT ALLEGED A SUFFICIENT CAUSE

OF ACTION DESPITE THE ALLEGATIONS, AS WELL AS
ADMISSIONS FROM THE RESPONDENTS, THAT THERE WAS
NO PERFECTED DACION EN PAGO CONTRACT;
II.
. . . THAT THE ALLEGED DACION EN PAGO IS NOT

UNENFORCEABLE UNDER THE STATUTE OF FRAUDS,
DESPITE THE ABSENCE OF A WRITTEN & BINDING
CONTRACT;
III.
. . . THAT THE COMPLAINT SUFFICIENTLY STATED A CAUSE

OF ACTION.9
Generally, the presence of a cause of action is determined from the

facts alleged in the complaint.
In their complaint, respondents alleged:
xxxx
4. Sometime in the middle of the year 2000, defendant Dao Heng
Bank as the creditor bank agreed to the full settlement of plaintiffs'
mortgage obligation of P9 Million through the assignment of one of
the two (2) mortgaged properties;
[5] As part of the agreement, defendant Dao Heng Bank had the

mortgaged properties appraised to determine which of the two (2)
mortgaged properties shall be delivered as full payment of the
mortgage obligation; Also as part of the deal, plaintiffs for their part
paid P5,000.00 for the appraisal expense; As reported by the
appraiser commissioned by defendant Dao Heng, the appraised
value of the mortgaged properties were as follows:
(a) Property No. 1 - T.C.T. No. 92257: P12,518,000.00
L2A Blk 12 Don Mariano Marcos Ave., Fairview, QC
(b) Property No. 2 - T.C.T. No. 146289: P8,055,000.00 L36

Blk 87 Regalado Ave. Cor. Ipil St., Neopolitan, QC
[6] Sometime in December, year 2000, the protest of plaintiffs

notwithstanding and in blatant breach of the agreed "Dacion en
pago" as the mode of full payment of plaintiffs' mortgage
obligation, defendant Dao Heng Bank proceeded to foreclose the
mortgaged properties above-described and sold said properties
which were aggregately valued at more than P20 Million for
only P10,776,242.00, an unconscionably very low price;
(Underscoring supplied)
Even if a complaint states a cause of action, however, a motion to

dismiss for insufficiency of cause of action may be granted if the
evidence discloses facts sufficient to defeat the claim and enables the
court to go beyond the disclosures in the complaint. In such instances,
the court can dismiss a complaint on this ground, even without a
hearing, by taking into account the discussions in said motion to dismiss
and the disposition thereto.10
In its Opposition to respondents' application for the issuance of a

TRO,11 petitioner, responding to respondents' allegation that it agreed to
the settlement of their obligation via the assignment of one of the two
mortgaged properties, alleged that there was no meeting of the minds
thereon:
4. Plaintiffs' claim that defendant Dao Heng Bank[s] foreclosure

sale of the mortgaged properties was improper because there was
an agreement to dacion one of the two (2) mortgaged properties
as full settlement of the loan obligation and that defendant Dao
Heng Bank and Banco de Oro were already negotiating and
colluding for the latter's acquisition of the mortgaged [properties]
for the unsconscionably low price of P10,776.242.00 are
clearly WITHOUT BASIS. Quite to the contrary, there was no
meeting of the minds between defendant Dao Heng Bank and the
plaintiffs to dacion any of the mortgaged properties as full
settlement of the loan. Although there was a PROPOSAL and
NEGOTIATIONS to settle the loan by way of dacion, nothing came
out of said proposal, much less did the negotiations mature into
the execution of a dacion en pago instrument. Defendant Dao
Heng Bank found the offer to settle by way of dacion not
acceptable and thus, it opted to foreclose on the mortgage.
The law clearly provides that "the debtor of a thing cannot compel
the creditor to receive a different one, although the latter may be of
the same value, or more valuable than that which is due" (Article
1244, New Civil Code). "The oblige is entitled to demand fulfillment
of the obligation or performance as stipulated" (Palmares v. Court
of Appeals, 288 SCRA 422 at p. 444 [1998]). "The power to decide
whether or not to foreclose on the mortgage is the sole prerogative
of the mortgagee" (Rural Bank of San Mateo, Inc. vs. Intermediate
Appellate Court, 146 SCRA 205, at 213 [1986]) Defendant Dao
Heng Bank merely opted to exercise such
prerogative.12 (Emphasis in the original; capitalization and
Dacion en pago as a mode of extinguishing an existing obligation

partakes of the nature of sale whereby property is alienated to the
creditor in satisfaction of a debt in money. 13 It is an objective novation of
the obligation, hence, common consent of the parties is required in order
to extinguish the obligation.
. . . In dacion en pago, as a special mode of payment, the debtor offers

another thing to the creditor who accepts it as equivalent of payment of
an outstanding debt. The undertaking really partakes in one sense of the
nature of sale, that is, the creditor is really buying the thing or property of
the debtor, payment for which is to be charged against the debtor's debt.
As such the elements of a contract of sale, namely, consent, object
certain, and cause or consideration must be present. In its modern
concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted
equivalent of the performance of an obligation is considered as the
object of the contract of sale, while the debt is considered the purchase
price. In any case, common consent is an essential prerequisite, be it
sale or novation, to have the effect of totally extinguishing the debt or
obligation."14 (Emphasis, italics and underscoring supplied; citation
omitted)
Being likened to that of a contract of sale, dacion en pago is governed

by the law on sales.15 The partial execution of a contract of sale takes
the transaction out of the provisions of the Statute of Frauds so long as
the essential requisites of consent of the contracting
parties, object and cause of the obligation concur and are clearly
established to be present.16
Respondents claim that petitioner's commissioning of an appraiser to

appraise the value of the mortgaged properties, his services for which
they and petitioner paid, and their delivery to petitioner of the titles to the
properties constitute partial performance of their agreement to take the
case out of the provisions on the Statute of Frauds.
There is no concrete showing, however, that after the appraisal of the

properties, petitioner approved respondents' proposal to settle their
obligation via dacion en pago. The delivery to petitioner of the titles to
the properties is a usual condition sine qua non to the execution of the
mortgage, both for security and registration purposes. For if the title to a
property is not delivered to the mortgagee, what will prevent the
mortgagor from again encumbering it also by mortgage or even by sale
to a third party.
Finally, that respondents did not deny proposing to redeem the

mortgages,17 as reflected in petitioner's June 29, 2001 letter to them,
dooms their claim of the existence of a perfected dacion en pago.
WHEREFORE, the Court of Appeals Decision of January 26, 2006

is REVERSED and SET ASIDE. The Resolution of July 2, 2002 of the
Regional Trial Court of Quezon City, Branch 215 dismissing
respondents' complaint is REINSTATED.
SO ORDERED.
G.R. No. 152132 July 24, 2007
LORDITO ARROGANTE, JOHNSTON ARROGANTE, ARME

ARROGANTE, and FE D. ARROGANTE, Petitioners,
vs.
BEETHOVEN DELIARTE, Joined by SPOUSE LEONORA
DUENAS, Respondents.
DECISION
NACHURA, J.:
This Petition for Review on Certiorari assails the Decision 1 dated August
28, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 58493 which
affirmed the Decision2 dated February 18, 1997 of the Regional Trial
Court (RTC), Branch 10, of Cebu City in an action for quieting of title and
damages.
It appears that the lot in controversy, Lot No. 472-A (subject lot), is
situated in Poblacion Daanbantayan, Cebu, and was originally conjugal
property of the spouses Bernabe Deliarte, Sr. and Gregoria Placencia
who had nine children, including herein respondent Beethoven Deliarte
and petitioner Fe Deliarte Arrogante. The other petitioners, Lordito,
Johnston, and Arme, Jr., all surnamed Arrogante, are the children of Fe
and, thus, nephews of Beethoven. Respondent Leonora Duenas is the
wife of Beethoven.
A series of misfortunes struck the Deliarte family. The first tragedy

occurred when a brother of Beethoven and Fe was hospitalized and
eventually died in Davao. Beethoven shouldered the hospitalization and
other related expenses, including the transport of the body from Davao
to Cebu and then to Daanbantayan.
The next occurrence took place a year after, when Gregoria was
likewise hospitalized and subsequently died on July 29, 1978. Once
again, Beethoven paid for all necessary expenses. Soon thereafter, it
was Bernabe, the parties’ ailing father, who died on November 7, 1980.
Not surprisingly, it was Beethoven who spent for their father’s
hospitalization and burial.
In between the deaths of Gregoria and Bernabe, on November 16, 1978,

the Deliarte siblings agreed to waive and convey in favor of Beethoven
all their rights, interests, and claims to the subject lot in consideration of
₱15,000.00.3 At the signing of the deed of absolute sale, the siblings
who failed to attend the family gathering, either because they were dead
or were simply unable to, were represented by their respective spouses
who signed the document on their behalf.4 Bernabe, who was already
blind at that time, was likewise present and knew of the sale that took
place among his children.
Thus, from then on, Beethoven occupied and possessed the subject lot
openly, peacefully, and in the concept of owner. He exercised full
ownership and control over the subject lot without any objection from all
his siblings, or their heirs, until 1993 when the controversy arose. 5 In
fact, on March 26, 1986, all of Beethoven’s siblings, except Fe, signed a
deed of confirmation of sale in favor of Beethoven to ratify the 1978
private deed of sale.
Sometime in August 1993, petitioner Lordito Arrogante installed placards

on the fence erected by respondents, claiming that the subject lot was
illegally acquired by the latter.6 The placards depicted Beethoven as a
land grabber who had unconscionably taken the subject lot from Lordito
who claimed that the lot is a devise from his grandfather.7 Allegedly, the
bequeathal was made in Bernabe’s last will and testament which was,
unfortunately, torn up and destroyed by Beethoven.8
Thus, on November 10, 1993, respondents filed an action for quieting of

title and damages against the petitioners.
In their answer, the petitioners averred that Beethoven does not own the
whole of the subject lot because Bernabe was still alive in 1978 when
Beethoven’s siblings sold to him all their rights and claims to and
interests in that lot. Thus, the siblings could sell only their respective
inheritance from one-half of the subject lot, representing Gregoria’s
share in the conjugal property. Corollarily, the petitioners claimed that Fe
continues to own 1/9 of one-half of the subject lot, comprising Bernabe’s
share of the property, which allegedly was not contemplated in the
conveyance in 1978. According to petitioners, this contention is
supported by Fe’s failure to sign the deed of confirmation of sale in
1986.
As regards the damaging placards, the petitioners asseverated that

Lordito acted on his own when he installed the same, and that this was
resorted to merely to air his grievance against his uncle, Beethoven, for
claiming ownership of the entire lot.
After trial, the RTC rendered aDecision quieting title on the subject lot in
favor of respondents and directing petitioners, jointly and severally, to
pay the respondents ₱150,000.00 as moral damages, ₱25,000.00 as
attorney’s fees, and ₱10,000.00 as litigation expenses.
On appeal, the CA affirmed the trial court’s decision but deleted the
award of attorney’s fees and litigation expenses. In ruling for the
respondents, both the trial and appellate courts upheld the validity of the
1978 sale as between the parties. Considering that petitioner Fe signed
the document and consented to the transaction, she is now barred from
repudiating the terms thereof. In this regard, the RTC and the CA
applied the parole evidence rule and allowed the introduction of
evidence on the additional consideration for the conveyance, namely,
the expenses incurred by Beethoven during the three tragedies that had
befallen the Deliarte family. Both courts found that the sale was already
completely executed, thus removing it from the ambit of the Statute of
Frauds.9
As for the award of moral damages, the trial and appellate courts held
that the other petitioners’ failure to prevent Lordito from putting up, or at
least, removing the placards, amounted to the defamation and
opprobrium of Beethoven with their knowledge and acquiescence. Thus,
the assessment of moral damages was appropriate, given the
humiliation and embarrassment suffered by Beethoven considering his
stature and reputation in the community as an electrical engineer
handling several big projects.
However, petitioners insist that the lower courts erred in their rulings.
They maintain that the 1978 sale did not contemplate the alienation of
Bernabe’s share in the conjugal partnership as he failed to sign the
private document. As such, the courts’ application of the parole evidence
rule and the Statute of Frauds were erroneous. In the same vein, the
petitioners posit that both courts’ ruling that they are jointly and severally
liable for moral damages is inconsistent with the evidence on record that
Lordito was the sole author of the damaging placards.
In this appeal, the issues for the resolution of this Court are:
I.
WHETHER OR NOT THE PRIVATE DEED OF SALE EXECUTED

IN 1978 IS A VALID CONVEYANCE OF THE ENTIRE LOT 472-A
TO PETITIONER BEETHOVEN DELIARTE.
II.
WHETHER OR NOT THE PAROLE EVIDENCE RULE IS

APPLICABLE TO THIS CASE.
III.
WHETHER OR NOT THE STATUTE OF FRAUDS IS

APPLICABLE TO THIS CASE.
IV.
WHETHER OR NOT THE PETITIONERS ARE JOINTLY AND

SEVERALLY LIABLE FOR MORAL DAMAGES.
At the outset, we note that both the lower and the appellate courts failed
to identify the applicable law.
First. The 1978 private deed of sale, insofar as it disposed of Bernabe’s
share in the conjugal partnership prior to his death, is void for being a
conveyance of the Deliarte siblings’ future inheritance.
Article 1347, paragraph 2 of the Civil Code characterizes a contract

entered into upon future inheritance as void. 10 The law applies when the
following requisites concur: (1) the succession has not yet been opened;
(2) the object of the contract forms part of the inheritance; and (3) the
promissor has, with respect to the object, an expectancy of a right which
is purely hereditary in nature.11
In this case, at the time the contract was entered into, succession to
Bernabe’s estate had yet to be opened, and the object thereof, i.e.,
Bernabe’s share in the subject lot, formed part of his children’s
inheritance, and the children merely had an inchoate hereditary right
thereto.
True, the prohibition on contracts respecting future inheritance admits of

exceptions, as when a person partitions his estate by an act inter vivos
under Article 1080 of the Civil Code.12 However, the private deed of sale
does not purport to be a partition of Bernabe’s estate as would exempt it
from the application of Article 1347. Nowhere in the said document does
Bernabe separate, divide, and assign to his children his share in the
subject lot effective only upon his death.13 Indeed, the document does
not even bear the signature of Bernabe.
Neither did the parties demonstrate that Bernabe undertook an oral

partition of his estate. Although we have held on several occasions that
an oral or parole partition is valid, our holdings thereon were confined to
instances wherein the partition had actually been consummated,
enforced, and recognized by the parties.14 Absent a showing of an overt
act by Bernabe indicative of an unequivocal intent to partition his estate
among his children, his knowledge and ostensible acquiescence to the
private deed of sale does not equate to an oral partition by an act inter
vivos. Besides, partition of property representing future inheritance
cannot be made effective during the lifetime of its owner. 15
Considering the foregoing, it follows that the 1986 deed of confirmation

of sale which sought to ratify the 1978 sale likewise suffers from the
same infirmity.16 In short, the 1986 deed is also void.
Nevertheless, it is apparent that Bernabe treated his share 17 in the

subject lot as his children’s present inheritance, and he relinquished all
his rights and claim thereon in their favor subject to Beethoven’s
compensation for the expenses he initially shouldered for the family. The
records reveal that Bernabe, prior to his hospitalization and death,
wanted to ensure that his children attended to the expenditure relating
thereto, and even articulated his desire that such surpass the provision
for both his son and wife, Beethoven’s and Fe’s brother and mother,
respectively.18 Their arrangement contemplated the Deliarte siblings’
equal responsibility for the family’s incurred expenses.
We take judicial notice of this collective sense of responsibility towards

family. As with most nuclear Filipino families, the Deliarte siblings
endeavored to provide for their parents or any member of their family in
need. This was evident in Florenda Deliarte Nacua’s, the youngest
Deliarte sibling’s, remittance to her parents of her salary for two years so
they could redeem the subject lot.19
Florenda corroborated the testimony of Beethoven that their father was

present during, and was aware of, the transaction that took place among
his children.20 The 1978 deed of sale, albeit void, evidenced the consent
and acquiescence of each Deliarte sibling to said transaction. They
raised no objection even after Beethoven forthwith possessed and
occupied the subject lot.
The foregoing arrangement, vaguely reflected in the void deed of sale,

points to a meeting of the minds among the parties constitutive of an
innominate contract, akin to both an onerous and a remuneratory
donation.21 In this regard, Bernabe’s waiver and relinquishment of his
share in the subject lot is effectively a donation inter vivos to his
children. However, the gratuitous act is coupled with an onerous cause –
equal accountability of the Deliarte siblings for the hospitalization and
death expenses of deceased family members to be taken from their
shares in the subject lot. In turn, the remunerative cause pertains to
Beethoven’s recompense for the family expenses he initially shouldered.
During his lifetime, Bernabe remained the absolute owner of his

undivided interest in the subject lot. Accordingly, he could have validly
disposed of his interest therein. His consent to the disposition of the
subject lot in favor of Beethoven, agreed upon among his children, is
evident, considering his presence in, knowledge of, and acquiescence to
the transaction. Further, the arrangement was immediately effected by
the parties with no objection from Bernabe or any of the Deliarte
siblings, including herein petitioner Fe. Ineluctably, the actual
arrangement between the parties included Bernabe, and the object
thereof did not constitute future inheritance.
Second. The parole evidence rule is applicable. While the application

thereof presupposes the existence of a valid agreement, the innominate
contract between the parties has been directly put in issue by the
respondents. Verily, the failure of the deed of sale to express the true
intent and agreement of the parties supports the application of the
parole evidence rule.22
Contrary to petitioners’ contention, the absence of Bernabe’s signature

in the 1978 deed of sale is not necessarily conclusive of his dissent or
opposition to the effected arrangement. As previously adverted to, the
agreement had multiple causes or consideration, apart from the
₱15,000.00 stated in the deed of sale. To repeat, the agreement
between the parties had both an onerous and a remunerative cause.
Also worthy of note is the moral consideration for the agreement given
the relationship between the parties.
Third. We agree with both the lower and the appellate courts that the
Statute of Frauds is not applicable to the instant case.
The general rule is that contracts are valid in whatever form they may
be.23 One exception thereto is the Statute of Frauds which requires a
written instrument for the enforceability of a contract. 24 However,
jurisprudence dictates that the Statute of Frauds only applies to
executory, not to completed, executed, or partially consummated,
contracts.25
In the case at bench, we find that all requisites for a valid contract are
present, specifically: (1) consent of the parties; (2) object or subject
matter, comprised of the parties’ respective shares in the subject lot; and
(3) the consideration, over and above the ₱15,000.00 stipulated price.
We note that the agreement between the parties had long been
consummated and completed. In fact, the agreement clearly
contemplated immediate execution by the parties. More importantly, the
parties, including petitioner Fe, ratified the agreement by the acceptance
of benefits thereunder.26
One other thing militates against Fe’s claim of ownership - silence and
palpable failure to object to the execution of the agreement. Fe insists
that she only intended to sell her share of the lot inherited from her
mother’s estate, exclusive of her father’s share therein.
We are not persuaded by the belated claim. This afterthought is belied

by the express stipulations in the 1978 deed of sale that the heirs of
Bernabe and Gregoria, absolutely sell, quitclaim, and transfer the
subject lot in favor of Beethoven. Although a void contract is not a
source of rights and obligations between the parties, the provisions in
the written agreement and their signature thereon are equivalent to an
express waiver of all their rights and interests in the entire lot in favor of
Beethoven, regardless of which part pertained to their mother’s or
father’s estate.
Truly significant is the fact that in all the years that Beethoven occupied
the subject lot, Fe never disturbed the former in his possession. Neither
did she present her other siblings to buttress her contradicting claim
over the subject lot. Likewise, she never asked for a partition of the
property even after the death of their father, Bernabe, to settle his
estate, or when her other siblings executed the deed of confirmation of
sale in 1986. Fe also does not pretend to share in the payment of realty
taxes thereon, but merely advances the claim that Priscillana, one of
their siblings, had already paid said taxes. 27 Ultimately, petitioner Fe is
estopped from staking a claim on the subject lot and wresting ownership
therein from Beethoven.
Our holding in the case of Tinsay v. Yusay28 is still good law, thus:
Juana Servando not being a party to the partition agreement Exhibit 1,

the agreement standing alone was, of course, ineffective as against her.
The attempt to partition her land among her heirs, constituting a partition
of future inheritance was invalid under the second paragraph of Article
1271 of the Civil Code and for the same reason the renunciation of all
interest in the land which now constitutes lots Nos. 241 and 713 made
by the appellants in favor of the children of Jovito Yusay would likewise
be of no binding force as to the undivided portion which belonged to
Juan Servando. But if the parties entered into the partition agreement in
good faith and treated all of the land as a present inheritance, and if the
appellants on the strength of the agreement obtained their Torrens title
to the land allotted to them therein, and if Perpetua Sian in reliance on
the appellants’ renunciation of all interest claimed by her on behalf of her
children in the cadastral case refrained from presenting any opposition
to the appellants’ claim to the entire fee in the land assigned to them in
the partition agreement and if the appellants after the death of Juana
Servando continued to enjoy the benefits of the agreement refusing to
compensate the heirs of Jovito Yusay for the latters’ loss of their interest
in lots Nos. 2 and 744 through the registration of the lots in the name of
the appellants and the subsequent alienation of the same to innocent
third parties, said appellants are now estopped from repudiating the
partition agreement of 1911 and from claiming any further interest in lots
Nos. 241 and 713. There is, however, no reason why they should not be
allowed to share in the distribution of the other property left by Juana
Servando.
Fourth. As to the lower courts’ award of moral damages, we sustain

respondents’ entitlement thereto. Undeniably, respondents suffered
besmirched reputation, wounded feelings, and social humiliation due to
the damaging placards.29 The injury is aggravated because of the
relationship among the parties. Respondent Beethoven was able to
prove that his nephews, petitioners Lordito, Johnston, and Arme, Jr.,
stayed with him at some point, and that he financially supported and
trained them to be electricians.30
Yet, Lordito denies malice in the aforesaid act. He argues that his only
quarrel with Beethoven stems from the latter’s claim of ownership over
the subject lot which was, supposedly, already bequeathed to him by his
grandfather, Bernabe. Lordito maintains that his claim is valid, supported
by a will Beethoven had torn up, which allegedly negates malice in his
act of putting up the placards.
We are not convinced.

To begin with, the supposed devise to Lordito appears to be void.
Considering that Bernabe’s estate consisted merely of his conjugal
share in the subject lot, the bequeathal infringes on his compulsory
heirs’ legitimes, including that of Lordito’s mother, Fe. 31 Lordito’s claim,
therefore, is only subordinate to Beethoven’s claim as a compulsory
heir, even without delving into the innominate contract between the
parties. In all, the ascription of malice and Lordito’s corresponding
liability for moral damages is correct given the words he employed in the
placards.
However, we agree with petitioners that there is a dearth of evidence

pointing to their collective responsibility for Lordito’s act.
Corollary thereto, Lordito admits and claims sole responsibility for

putting up the placards. The other petitioners’ specific participation in the
tortious act was not proven. Failure to prevent Lordito or command him
to remove the placards, alone, does not justify the finding that all the
petitioners are jointly and severally liable. It does not suffice that all the
petitioners were moved by a common desire to acquire the subject
property, absent any proof that they individually concurred in Lordito’s
act.
Entrenched is the rule that "the rights of a party cannot be prejudiced by

an act, declaration, or omission of another." 32 The exception under
Section 32, Rule 130 of the Rules of Court does not obtain in this
instance. The other petitioners’ acquiescence to and apparent
concurrence in Lordito’s act cannot be inferred merely from their failure
to remove the placards or reprimand Lordito. While the placards indeed
defamed Beethoven, there is nothing that directly links the other
petitioners to this dastardly act.
WHEREFORE, premises considered, the petition is PARTIALLY

GRANTED. The August 28, 2001 Decision of the Court of Appeals is
hereby MODIFIED. Petitioner Lordito Arrogante is held solely liable to
respondents for moral damages in the amount of ₱150,000.00. The
quieting of title in favor of respondents is hereby AFFIRMED. No costs.
SO ORDERED.
ANTONIO EDUARD
G.R. No. 141877 August 13, 2004
GREGORIO F. AVERIA and SYLVANNA A. VERGARA, representing

the absentee heir TERESA AVERIA,petitioners,
vs.
DOMINGO AVERIA, ANGEL AVERIA, FELIPE AVERIA, and the Heirs
of FELIMON F. AVERIA, respondents.
DECISION
CARPIO-MORALES, J.:
Macaria Francisco (Macaria) and Marcos Averia contracted marriage

which bore six issues, namely: Gregorio, Teresa, Domingo, Angel,
Felipe and Felimon.
Macaria was widowed and she contracted a second marriage with

Roberto Romero (Romero) which bore no issue.
Romero died on February 28, 1968,1 leaving three adjoining residential

lots located at Sampaloc, Manila.
In a Deed of Extrajudicial Partition and Summary Settlement of the

Estate of Romero, the house and lot containing 150 square meters at
725 Extremadura Street, Sampaloc was apportioned to Macaria.
Transfer Certificate of Title (TCT) No. 93310 covering the Extremadura

property was accordingly issued in the name of Macaria.2
Alleging that fraud was employed by her co-heirs in the partition of the
estate of Romero, Macaria filed on June 1, 1970 an action for annulment
of title and damages before the Court of First Instance of Manila against
her co-heirs Domingo Viray, et al., docketed as Civil Case No. 79955.
Macaria was represented in the case by Atty. Mario C. R. Domingo. The
case was pending litigation for about ten years until the decision of the
Court of Appeals which adjudged Macaria as entitled to an additional 30
square meters of the estate of Romero became final and executory.
Macaria’s son Gregorio and his family and daughter Teresa’s family
lived with her at Extremadura until her death on March 28, 1983.3
Close to six years after Macaria’s demise or on January 19, 1989, her
children Domingo, Angel and Felipe, along with Susan Pelayo vda. de
Averia (widow of Macaria’s deceased son Felimon), filed before the
Regional Trial Court (RTC) of Manila a complaint against their brother
Gregorio and niece Sylvanna Vergara "representing her absentee
mother" Teresa Averia, for judicial partition of the Extremadura property
inclusive of the 30 square meters judicially awarded.4 The case which
was docketed as Civil Case No. 89-47554 is now the subject of the
present decision.
The defendants Gregorio and Sylvanna Vergara, in their February 8,

1989 Answer to the Complaint, countered that Gregorio and his late wife
Agripina spent for the litigation expenses in Civil Case No. 79955, upon
the request of Macaria, and the couple spent not less P20,000.00 for the
purpose "which amount due to the inflation of the Philippine peso is now
equivalent to more or less P200,000.00;" that from 1974 to 1983,
Macaria was bedridden and it was Gregorio’s wife Agripina who nursed
and took care of her; that before Macaria died, she in consideration of
the court and other expenses which were defrayed by Gregorio and his
wife in prosecuting Civil Case No. 79955 and of "the kindness of the
said couple in caring for her," verbally sold to the spouses Gregorio and
Agripina one-half (½) of her Extremadura property.
Gregorio and Sylvanna further countered that the plaintiff Domingo sold
and assigned to the spouses Gregorio and Agripina his one sixth ( 1/6)
share in the remaining ½ portion of the Extremadura property.
Gregorio and Sylvanna concluded in their Answer that the plaintiffs are
not co-owners of the Extremadura property as ½ thereof is solely owned
by Gregorio and 1/6 of the other half representing Domingo’s share
thereof had already been sold and assigned by him (Domingo) to
Gregorio and his wife who died on May 20, 1987. 5
During the pendency of the case or on June 7, 1989, Macaria’s son

Felipe executed a Waiver-Affidavit6 waiving his "share" in the property
subject of litigation in favor of his co-heirs.
After trial, the trial court, Branch 31 RTC of Manila, rendered a decision
of July 19, 19917 crediting the version of the defendants in this
wise, quoted verbatim:
The defendant Gregorio Averia, Sr. had established that he had

paid plaintiff Domingo Averia P10,000.00 although denied by the
latter but Domingo Averia did not deny receiving the amount
of P5,000.00 on July 10, 1983 given by Gregorio Averia’s wife
Agrifina. According to the testimony of defendant’s witness,
plaintiff Domingo Averia sold on July 10, 1983 his inheritance
share in the property [consisting of a] house and lot located at 725
Extremadura because he was in . . . need of money and that he
was paid P5,000.00 on July 10, 1983 by Agrifina Averia and
another P5,000.00 by Major Gregorio Averia inside his room at the
Makati Police Department three (3) days later. The reason why
Domingo Averia became insistent in claiming his inheritance is the
fact that Gregorio Averia refused the request of Domingo Averia
and his children to occupy the portion of subject house which was
sold to him by their mother and it was for this reason that they
sought the assistance of the Citizens Legal Assistance Office
(CLAO), Atty. Benjamin Roxas in writing defendant Gregorio
Averia to allow him (Domingo Averia) to occupy a portion of
subject house but plaintiff Domingo Averia did not tell his brothers
and sisters that he had already sold his 1/6 share of the
inheritance although verbally in favor of Gregorio Averia and his
wife.
In the light of the foregoing, the Court, after a circumspect assessment

of the evidence presented by both parties, hereby declares,
that defendant Gregorio Averia then a major of police precinct in Makati
was the person responsible for the expenses in litigation in Civil Case
No. 79955, involving the property and their mother had indeed awarded
him with ½ portion of the property and that Domingo Averia sold 1/6 of
[his] share of the remaining ½ portion of the property to defendant
Gregorio. (Underscoring supplied)
Accordingly, the trial court disposed as follows, quoted verbatim:
WHEREFORE, the remaining 5/6 of ½ of the property may still be

subject of partition among the remaining heirs but the summary
settlement of the remaining estate of the 5/6 remaining portion of
the estate . . . may be sold and the proceeds thereof be distributed
among the heirs in accordance with the aliquot portions of each
and every heir of the deceased Macaria Francisco.
Both parties are hereby ordered to shoulder their respective

expenses for attorney’s fees and litigation costs. (Underscoring
supplied)
On appeal to the Court of Appeals (CA) wherein the plaintiffs Domingo

et al. assigned two errors, to wit:
A. THE TRIAL COURT ERRED IN ITS FINDING THAT THERE

WAS A SALE OF ONE-HALF OF THE DECEASED MACARIA F.
AVERIA’S INTEREST AND OWNERSHIP OVER THE SUBJECT
PROPERTY IN FAVOR OF DEFENDANT-APPELLEE
GREGORIO AVERIA.
B. THE TRIAL COURT ERRED IN ALLOWING THE RECEPTION

OF PAROL EVIDENCE TO THE EFFECT THAT PLAINTIFF-
APPELLANT DOMINGO AVERIA HAD ALREADY DISPOSED
OF HIS ONE SIXTH (1/6) SHARE OF THE SUBJECT
PROPERTY IN FAVOR OF DEFENDANT-APPELLEE
GREGORIO AVERIA8 (Emphasis supplied),
the appellate court reversed the decision of the trial court.
In reversing the trial court, the appellate court, noting that the alleged
transfers made by Macaria and Domingo in favor of Gregorio were
bereft of any written memoranda, held that it was error for the trial court
to rely solely on the evidence adduced by the defendants consisting of
the testimonies of Gregorio, Veronica Bautista, Sylvanna Vergara
Clutario, Atty. Mario C.R. Domingo, Felimon Dagondon and Gregorio
Averia, Jr. The CA explained its ruling in this wise:
[T]he alleged conveyances purportedly made by Macaria

Francisco and plaintiff-appellant Domingo Averia
are unenforceable as the requirements under the Statute of
Frauds have not been complied with. Article 1403, 2(e) of the New
Civil Code is explicit:
Art. 1403. The following contracts are unenforceable, unless

they are ratified:
(1) x x x
(2) Those that do not comply with the Statute of Frauds as

set forth in this number. In the following cases an agreement
thereafter made shall be unenforceable by action, unless the
same, or some note or memorandum thereof, be in writing
and subscribed by the party charged, or by this agent;
evidence, therefore, of the agreement cannot be received
without the writing, or a secondary evidence of its contents:
(a) x x x;
(b) x x x;
(e) an agreement for the leasing for a longer period than one
year, or for the sale of real property or of an interest therein;
(f) x x x"
The two (2) transactions in question being agreements for the sale
of real property or of an interest therein are in clear contravention
of the prescription that it must be in writing and subscribed by the
party charged or by an agent thereof. Hence, the strong insistence
by defendants-appellees on the verbal conveyances cannot be
made the basis for the alleged ownership over the undivided
interests claimed by Gregorio Averia.
The parol evidence upon which the trial court anchored its award
in favor of defendant-appellee Gregorio Averia is irregular as such
kind of evidence is foreclosed by Article 1403 of the Civil Code that
no evidence of the alleged agreements can be received without
the writing of secondary evidence which embodies the sale of the
real property. The introduction of the testimonies of Gregorio
Averia’s witnesses were timely objectedto by plaintiffs-appellants.
Since the testimonies of defendants-appellees’ witnesses are
inadmissible, then such exclusion has pulled the rug under the
assailed decision of the trial court and it has no more leg to stand
on.
In the vain attempt to salvage the situation, defendants-appellees

however argue that the Article 1403 or the Statute of Frauds does
not apply because the same only refers to purely executory
contracts and not to partially or completely executed contracts.
This contention is untenable. It was not amply demonstrated how

such alleged transfers were executed since plaintiffs-appellants
have vigorously objected and opposed the claims of ownership
by defendants-appellees. He who asserts a fact or the affirmative
of an issue has the burden of proving it. Defendants-appellees
miserably failed in this respect.
While this Court cannot discount the fact that either defendant-

appellee Gregorio Averia or plaintiff-appellant Domingo Averia
may have valid claims against the estate of Macaria Francsico,
such matter can best be threshed out in the proceedings for
partition before the court a quo bearing in mind that such partition
is subject to the payment of the debts of the deceased under
Article 1078 of the Civil Code.9 (Citations omitted; Emphasis and
The appellate court thus remanded the case to the trial court.
WHEREFORE, the decision dated July 19, 1991 is reversed and

set aside. The case is remanded to the court a quo which is
directed to effect the partition of the subject property or if not,
possible, sell the entire lot and distribute the proceeds of the sale
based on equal shares among the children of the late Macaria
Francisco after debts of the said deceased are paid or settled
pursuant to Article 1078 of the Civil Code.10 (Underscoring
supplied)
Gregorio and Sylvanna’s motion for reconsideration having been denied

by the appellate court, they lodged the Petition for Review on Certiorari
at bar upon the following assignment of errors:
I. THE COURT OF APPEALS (SECOND DIVISION) ERRED IN

ITS FINDING THAT THERE WAS NO SALE OF ONE-HALF (1/2)
OF THE DECEASED MACARIA F. AVERIA’S INTEREST AND
OWNERSHIP OVER THE SUBJECT PROPERTY IN FAVOR OF
PETITIONER GREGORIO F. AVERIA.
II. THE COURT OF APPEALS (SECOND DIVISION) ERRED IN
ITS FINDING THAT THE RECEPTION OF PAROL
EVIDENCE TO THE EFFECT THAT RESPONDENT DOMINGO
AVERIA HAD ALREADY SOLD HIS ONE SIXTH (1/6) SHARE IN
THE SUBJECT PROPERTY IN FAVOR OF PETITIONER
GREGORIO AVERIA IS NOT IN ACCORDANCE WITH LAW.11
Petitioners contend that contrary to the findings of the Court of Appeals,

they were able to amply establish, by the testimonies of credible
witnesses, the conveyances to Gregorio of ½ of the Sampaloc property
and 1/6 of the remaining half representing the share of Domingo. 12
With respect to the application by the appellate court of the Statute of

Frauds, petitioners contend that the same refers only to purely executory
contracts and not to partially or completely executed contracts as in the
instant case. The finding of the CA that the testimonies of petitioners’
witnesses were timely objected to by respondents is not, petitioners
insist, borne out in the records of the case except with respect to the
testimony of Gregorio.13
Petitioners thus conclude that respondents waived any objection to the

admission of parol evidence, hence, it is admissible and
enforceable14 following Article 140515 of the Civil Code.16
The Court finds for petitioner.
Indeed, except for the testimony of petitioner Gregorio bearing on the

verbal sale to him by Macaria of the property, the testimonies of
petitioners’ witnesses Sylvanna Vergara Clutario and Flora Lazaro
Rivera bearing on the same matter were not objected to by respondents.
Just as the testimonies of Gregorio, Jr. and Veronica Bautista bearing
on the receipt by respondent Domingo on July 23, 1983 from Gregorio’s
wife of P5,000.00 representing partial payment of the P10,000.00
valuation of his (Domingo’s) 1/6 share in the property, and of
the testimony of Felimon Dagondon bearing on the receipt by Domingo
of P5,000.00 from Gregorio were not objected to. Following Article 1405
of the Civil Code,17 the contracts which infringed the Statute of Frauds
were ratified by the failure to object to the presentation of parol
evidence, hence, enforceable.
ARTICLE 1403. The following contracts are unenforceable, unless

they are ratified:
xxx
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement
hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum thereof, be in writing,
and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received
without the writing, or a secondary evidence of its contents:
xxx
(e) An agreement for the leasing for a longer period than one
year, or for the sale of real property or of an interest
therein;
x x x (Emphasis and underscoring supplied),
Contrary then to the finding of the CA, the admission of parol evidence
upon which the trial court anchored its decision in favor of respondents
is not irregular and is not foreclosed by Article 1405.
In any event, the Statute of Frauds applies only to executory contracts

and not to contracts which are either partially or totally performed. 18 In
the case at bar, petitioners claimed that there was total performance of
the contracts, full payment of the objects thereof having already been
made and the vendee Gregorio having, even after Macaria’s death in
1983, continued to occupy the property until and after the filing on
January 19, 1989 of the complaint subject of the case at bar as in fact
he is still occupying it.
In proving the fact of partial or total performance, oral evidence may be

received as what the trial court in the case at bar did. Noted civilist
Arturo M. Tolentino elucidates on the matter:
The statute of frauds is not applicable to contracts which are either

totally or partially performed, on the theory that there is a wide field
for the commission of frauds in executory contracts which can only
be prevented by requiring them to be in writing, a fact which is
reduced to a minimum in executed contracts because the intention
of the parties becomes apparent by their execution, and execution
concludes, in most cases, the rights of the parties. However it
is not enough for a party to allege partial performance in
order to render the Statute of Frauds inapplicable;
such partial performance must be duly proved. But neither is
such party required to establish such partial performance by
documentary proof before he could have the opportunity to
introduce oral testimony on the transaction. The partial
performance may be proved by either documentary or oral
evidence.19 (Emphasis, underscoring and italics supplied)
The testimonies of petitioners’ witnesses being credible and

straightforward, the trial court did not err in giving them credence.
The testimony of Sylvana Vergara Clutario, daughter of Teresa, in fact

was more than sufficient to prove the conveyance of half of the subject
property by Macaria to Gregorio.
ATTY. DOMINGO:
Q: Are you the same Sylvana Vergara representing the defendant

Teresa Averia in this case?
WITNESS:
A: Yes, sir.
Q: Now on February 28, 1972, about 5:30 in the afternoon, where

were you?
A: As far as I can remember, I was inside my residence at 725

Extremadura at that date, and time.
Q: On that date and time, where were you residing?
A: At said address, 725 Extremadura Street, that time and date at

5:30 in the afternoon.
Q: Who were your companions if you have any?
A: I was there with my brothers and sisters and Uncle Gregorio

and Auntie Agripina and the children and my grand mother and
also the lady who is leading in the prayers because on that date it
is the anniversary of the death of my grandfather.
Q: What is the name of your grandmother?
A: Macaria Averia, sir.
Q: Now, this Gregorio Averia whom you identified to be your

Uncle, is he the same Gregorio Averia who is also the defendant in
this case?
WITNESS:
A: The same, sir.
Q: What is the name of your grandfather whom you said whose

death anniversary you are then celebrating on that date?
A: Roberto Romero, sir.
Q: What actually you were doing that time 5:30?
A: We had a gathering and merienda in recollection of the

celebration (sic) of the death of my grandfather, sir.
Q: When you said you were eating then, where were you eating
then?
A: It was beside my grandmother.
Q: Where?
A: At the dining room, sir.
Q: So you were sitting at the dining table all of you?
A: Yes, sir the others were a little bit near the table.
Q: Who were seated in the dining table?
A: The Spouses Gregorio and Agripina, my sister Beth and my

cousins and my Lola Macaria.
Q: When you were then seated in taking that ginatan as you stated
what transpired?
A: Somebody called up and the one who called up was the

Secretary of a lawyer and they were asking for [payment of]
expenses in connection with . . . [Criminal Case No. 79955].
Q: You said that it was Agripina who was the one who answered
that telephone call. After answering it, what did she say to anyone
seated in that table?
A: Agripina said if Gregorio has some money, he will pay them but
Gregorio said he will be responsible for the expenses.
Q: Did you come to know how much was amount being asked?
A: P500.00, sir.
Q: What else happened after Gregorio said that he would answer

for the expenses to be sent to the lawyer?
A: My Lola said that she was embarrassed and ashame[d]

because at that time she d[id] not have any money and it was the
couple who was taking the expenses of the case.
Q: When you said "Lola," you are referring to Macaria Averia?
A: Yes, sir.
Q: What else transpired?
A: Because of her embarrassment, she told [them that] one half

(1/2) of the House and Lot will be given to the couple to cover the
expenses of the case.
ATTY. DOMINGO:
Q: To whom did your grandmother say this?
A: Well, she said that to Gregorio and Agripina and Gregorio told
her, if that is what you wish, I will agree to your proposal.
Q: What was the reply of your grand mother?
A: My Lola told Gregorio that since you agree, you better prepare
all the documents and we will make ready the documents for the
division or partition.
Q: Do you know what House and Lot one half (1/2) of which your
grand mother was given (sic) to your Uncle and Auntie . . .?
A: She is referring to the House and Lot where I used to live

before.
Q: You are referring to the House and Lot located at 725

Extremadura Street, Sampaloc, Manila.
A: Yes, sir.
x x x20 (Emphasis and underscoring supplied)
Not only on account of Sylvana’s manner of testifying that her testimony

should be given weight. Her testimony was against the interest of her
mother Teresa whom she represented, her mother being also an heir of
Macaria. If the transfer by Macaria to Gregorio of ½ of the property is
upheld as valid and enforceable, then the share of the other heirs
including Sylvanna’s mother would considerably be reduced.
That Atty. Mario C. R. Domingo who was admittedly Macaria’s counsel

in Civil Case No. 79955 (which, as priorly reflected, entailed a period of
ten years in court), affirmed on the witness stand that Gregorio and his
wife were the ones who paid for his attorney’s fees amounting
to P16,000.0021 should no doubt strongly lend credence to Gregorio’s
claim to that effect.
As to the sale of Domingo’s 1/6 share to Gregorio, petitioners were able

to establish said transaction by parol evidence, consisting of the
testimonies of Gregorio Averia, Jr.,22 Veronica Averia23 and Felimon
Dagondon24 the presentation of which was, it bears repeating, not
objected to.
Albeit Domingo never denied having received the total amount

of P10,000.00 from Gregorio and his wife, he denied having sold to
Gregorio his interest over the property. Such disclaimer cannot,
however, prevail over the categorical, positive statements of petitioners’
above-named witnesses.
In sum, not only did petitioners’ witnesses prove, by their testimonies,
the forging of the contracts of sale or assignment. They proved the full
performance or execution of the contracts as well.
WHEREFORE, the petition is hereby GRANTED. The January 31, 2000

Decision of the Court of Appeals in CA-G.R. No. 44704 is hereby SET
ASIDE.
The case is hereby remanded to the trial court, Branch 31 of the RTC of
Manila, for appropriate action, following Section 2 of Rule 69 of the
Rules of Civil Procedure.
SO ORDERED.
Panganiban, (Chairman), and Corona, JJ., concur.

Sandoval-Gutierrez, J., on leave.
G.R. No. 128120 October 20, 2004
SWEDISH MATCH, AB, JUAN ENRIQUEZ, RENE DIZON,

FRANCISCO RAPACON, FIEL SANTOS, BETH FLORES, LAMBRTO
DE LA EVA, GLORIA REYES, RODRIGO ORTIZ, NICANOR
ESCALANTE, PETER HODGSON, SAMUEL PARTOSA, HERMINDA
ASUNCION, JUANITO HERRERA, JACOBUS NICOLAAS, JOSEPH
PEKELHARING (now Representing himself without court sanction
as "JOOST PEKELHARING)," MASSIMO ROSSI and ED
ENRIQUEZ, petitioners,
vs.
COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT
CORPORATION and ANTONIO K. LITONJUA, respondents.
DECISION
TINGA, J.:
Petitioners seek a reversal of the twin Orders1 of the Court of Appeals

dated 15 November 19962 and 31 January 1997,3 in CA-G.R. CV No.
35886, entitled "ALS Management et al., v. Swedish Match, AB et al."
The appellate court overturned the trial court’s Order4 dismissing the
respondents’ complaint for specific performance and remanded the case
to the trial court for further proceedings.
Swedish Match AB (hereinafter SMAB) is a corporation organized under

the laws of Sweden not doing business in the Philippines. SMAB,
however, had three subsidiary corporations in the Philippines, all
organized under Philippine laws, to wit: Phimco Industries, Inc.
(Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc.
Sometime in 1988, STORA, the then parent company of SMAB, decided

to sell SMAB of Sweden and the latter’s worldwide match, lighter and
shaving products operation to Eemland Management Services, now
known as Swedish Match NV of Netherlands, (SMNV), a corporation
organized and existing under the laws of Netherlands. STORA,
however, retained for itself the packaging business.
SMNV initiated steps to sell the worldwide match and lighter businesses
while retaining for itself the shaving business. SMNV adopted a two-
pronged strategy, the first being to sell its shares in Phimco Industries,
Inc. and a match company in Brazil, which proposed sale would stave-
off defaults in the loan covenants of SMNV with its syndicate of lenders.
The other move was to sell at once or in one package all the SMNV
companies worldwide which were engaged in match and lighter
operations thru a global deal (hereinafter, global deal).
Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad
Anonimas (SMSA)—the management company of the Swedish Match
group—was commissioned and granted full powers to negotiate by
SMNV, with the resulting transaction, however, made subject to final
approval by the board. Enriquez was held under strict instructions that
the sale of Phimco shares should be executed on or before 30 June
1990, in view of the tight loan covenants of SMNV. Enriquez came to the
Philippines in November 1989 and informed the Philippine financial and
business circles that the Phimco shares were for sale.
Several interested parties tendered offers to acquire the Phimco shares,

among whom were the AFP Retirement and Separation Benefits
System, herein respondent ALS Management & Development
Corporation and respondent Antonio Litonjua (Litonjua), the president
and general manager of ALS.
In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm

offer to buy all of the latter’s shares in Phimco and all of Phimco’s
shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for the
sum of ₱750,000,000.00.5
Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in

its letter dated 1 December 1989, thanked respondents for their interest
in the Phimco shares. Rossi informed respondents that their price offer
was below their expectations but urged them to undertake a
comprehensive review and analysis of the value and profit potentials of
the Phimco shares, with the assurance that respondents would enjoy a
certain priority although several parties had indicated their interest to
buy the shares.6
Thereafter, an exchange of correspondence ensued between petitioners

and respondents regarding the projected sale of the Phimco shares. In
his letter dated 21 May 1990, Litonjua offered to buy the disputed
shares, excluding the lighter division for US$30.6 million, which per
another letter of the same date was increased to US$36
million.7 Litonjua stressed that the bid amount could be adjusted subject
to availability of additional information and audit verification of the
company finances.
Responding to Litonjua’s offer, Rossi sent his letter dated 11 June 1990,
informing the former that ALS should undertake a due diligence process
or pre-acquisition audit and review of the draft contract for the Match
and Forestry activities of Phimco at ALS’ convenience. However, Rossi
made it clear that at the completion of the due diligence process, ALS
should submit its final offer in US dollar terms not later than 30 June
1990, for the shares of SMAB corresponding to ninety-six percent (96%)
of the Match and Forestry activities of Phimco. Rossi added that in case
the "global deal" presently under negotiation for the Swedish Match
Lights Group would materialize, SMAB would reimburse up to
US$20,000.00 of ALS’ costs related to the due diligence process. 8
Litonjua in a letter dated 18 June 1990, expressed disappointment at the

apparent change in SMAB’s approach to the bidding process. He
pointed out that in their 4 June 1990 meeting, he was advised that one
final bidder would be selected from among the four contending groups
as of that date and that the decision would be made by 6 June 1990. He
criticized SMAB’s decision to accept a new bidder who was not among
those who participated in the 25 May 1990 bidding. He informed Rossi
that it may not be possible for them to submit their final bid on 30 June
1990, citing the advice to him of the auditing firm that the financial
statements would not be completed until the end of July. Litonjua added
that he would indicate in their final offer more specific details of the
payment mechanics and consider the possibility of signing a conditional
sale at that time.9
Two days prior to the deadline for submission of the final bid, Litonjua
again advised Rossi that they would be unable to submit the final offer
by 30 June 1990, considering that the acquisition audit of Phimco and
the review of the draft agreements had not yet been completed. He said,
however, that they would be able to finalize their bid on 17 July 1990
and that in case their bid would turn out better than any other proponent,
they would remit payment within ten (10) days from the execution of the
contracts.10
Enriquez sent notice to Litonjua that they would be constrained to

entertain bids from other parties in view of Litonjua’s failure to make a
firm commitment for the shares of Swedish Match in Phimco by 30 June
1990.11
In a letter dated 3 July 1990, Rossi informed Litonjua that on 2 July

1990, they signed a conditional contract with a local group for the
disposal of Phimco. He told Litonjua that his bid would no longer be
considered unless the local group would fail to consummate the
transaction on or before 15 September1990. 12
Apparently irked by SMAB’s decision to junk his bid, Litonjua promptly

responded by letter dated 4 July 1990. Contrary to his prior
manifestations, he asserted that, for all intents and purposes, the US$36
million bid which he submitted on 21 May 1990 was their final bid based
on the financial statements for the year 1989. He pointed out that they
submitted the best bid and they were already finalizing the terms of the
sale. He stressed that they were firmly committed to their bid of US$36
million and if ever there would be adjustments in the bid amount, the
adjustments were brought about by SMAB’s subsequent disclosures and
validated accounts, such as the aspect that only ninety-six percent
(96%) of Phimco shares was actually being sold and not one-hundred
percent (100%).13
More than two months from receipt of Litonjua’s last letter, Enriquez sent
a fax communication to the former, advising him that the proposed sale
of SMAB’s shares in Phimco with local buyers did not materialize.
Enriquez then invited Litonjua to resume negotiations with SMAB for the
sale of Phimco shares. He indicated that SMAB would be prepared to
negotiate with ALS on an exclusive basis for a period of fifteen (15) days
from 26 September 1990 subject to the terms contained in the letter.
Additionally, Enriquez clarified that if the sale would not be completed at
the end of the fifteen (15)-day period, SMAB would enter into
negotiations with other buyers.14
Shortly thereafter, Litonjua sent a letter expressing his objections to the

totally new set of terms and conditions for the sale of the Phimco shares.
He emphasized that the new offer constituted an attempt to reopen the
already perfected contract of sale of the shares in his favor. He intimated
that he could not accept the new terms and conditions contained
therein.15
On 14 December 1990, respondents, as plaintiffs, filed before the

Regional Trial Court (RTC) of Pasig a complaint for specific performance
with damages, with a prayer for the issuance of a writ of preliminary
injunction, against defendants, now petitioners. The individual
defendants were sued in their respective capacities as officers of the
corporations or entities involved in the aborted transaction.
Aside from the averments related to their principal cause of action for
specific performance, respondents alleged that the Phimco
management, in utter bad faith, induced SMAB to violate its contract
with respondents. They contended that the Phimco management took
an interest in acquiring for itself the Phimco shares and that petitioners
conspired to thwart the closing of such sale by interposing various
obstacles to the completion of the acquisition audit. 16 Respondents
claimed that the Phimco management maliciously and deliberately
delayed the delivery of documents to LayaManabat Salgado & Co.
which prevented them from completing the acquisition audit in time for
the deadline on 30 June 1990 set by petitioners.17 Respondents added
that SMAB’s refusal to consummate the perfected sale of the Phimco
shares amounted to an abuse of right and constituted conduct which is
contrary to law, morals, good customs and public policy. 18
Respondents prayed that petitioners be enjoined from selling or

transferring the Phimco shares, or otherwise implementing the sale or
transfer thereof, in favor of any person or entity other than respondents,
and that any such sale to third parties be annulled and set aside.
Respondents also asked that petitioners be ordered to execute all
documents or instruments and perform all acts necessary to
consummate the sales agreement in their favor.
Traversing the complaint, petitioners alleged that respondents have no
cause of action, contending that no perfected contract, whether verbal or
written, existed between them. Petitioners added that respondents’
cause of action, if any, was barred by the Statute of Frauds since there
was no written instrument or document evidencing the alleged sale of
the Phimco shares to respondents.
Petitioners filed a motion for a preliminary hearing of their defense of bar

by the Statute of Frauds, which the trial court granted. Both parties
agreed to adopt as their evidence in support of or against the motion to
dismiss, as the case may be, the evidence which they adduced in
support of their respective positions on the writ of preliminary injunction
incident.
In its Order dated 17 April 1991, the RTC dismissed respondents’

complaint.19 It ruled that there was no perfected contract of sale between
petitioners and respondents. The court a quo said that the letter dated
11 June 1990, relied upon by respondents, showed that petitioners did
not accept the bid offer of respondents as the letter was a mere
invitation for respondents to conduct a due diligence process or pre-
acquisition audit of Phimco’s match and forestry operations to enable
them to submit their final offer on 30 June 1990. Assuming that
respondent’s bid was favored by an oral acceptance made in private by
officers of SMAB, the trial court noted, such acceptance was merely
preparatory to a formal acceptance by the SMAB—the acceptance that
would eventually lead to the execution and signing of the contract of
sale. Moreover, the court noted that respondents failed to submit their
final bid on the deadline set by petitioners.
Respondents appealed to the Court of Appeals, assigning the following

errors:
A. THE TRIAL COURT EXCEEDED ITS AUTHORITY AND

JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU
PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY
FOR "LACK OF A VALID CAUSE OF ACTION" WITHOUT THE
BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE
MOTION TO DISMISS.
B. THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-

APPELLANTS’ CAUSE OF ACTION BASED ON TORT WHICH,
HAVING BEEN SUFFICIENTLY PLEADED, INDEPENDENTLY
WARRANTED A FULL-BLOWN TRIAL.
C. THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-

APPELLANTS’ CAUSE OF ACTION BASED ON PROMISSORY
ESTOPPEL WHICH, HAVING BEEN SUFFICIENTLY PLEADED,
WARRANTED A FULL-BLOWN TRIAL, INDEPENDENTLY FOR
THE OTHER CAUSES OF ACTION.
D. THE TRIAL COURT JUDGE ERRED IN FORSWEARING
JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-
APPELLEES BY MAKING UNFOUNDED FINDINGS, ALL IN
VIOLATION OF PLAINTIFFS-APPELLANTS’ RIGHT TO DUE
PROCESS.20
After assessing the respective arguments of the parties, the Court of

Appeals reversed the trial court’s decision. It ruled that the series of
written communications between petitioners and respondents
collectively constitute a sufficient memorandum of their agreement under
Article 1403 of the Civil Code; thus, respondents’ complaint should not
have been dismissed on the ground that it was unenforceable under the
Statute of Frauds. The appellate court opined that any document or
writing, whether formal or informal, written either for the purpose of
furnishing evidence of the contract or for another purpose which satisfies
all the Statute’s requirements as to contents and signature would be
sufficient; and, that two or more writings properly connected could be

considered together. The appellate court concluded that the letters
exchanged by and between the parties, taken together, were sufficient
to establish that an agreement to sell the disputed shares to
respondents was reached.
The Court of Appeals clarified, however, that by reversing the appealed

decision it was not thereby declaring that respondents are entitled to the
reliefs prayed for in their complaint, but only that the case should not
have been dismissed on the ground of unenforceability under the
Statute of Frauds. It ordered the remand of the case to the trial court for
further proceedings.
Hence, this petition.
Petitioners argue that the Court of Appeals erred in failing to consider

that the Statute of Frauds requires not just the existence of any note or
memorandum but that such note or memorandum should evidence an
agreement to sell; and, that in this case, there was no word, phrase, or
statement in the letters exchanged between the two parties to show or
even imply that an agreement had been reached for the sale of the
shares to respondent.
Petitioners stress that respondent Litonjua made it clear in his letters

that the quoted prices were merely tentative and still subject to further
negotiations between him and the seller. They point out that there was
no meeting of the minds on the essential terms and conditions of the
sale because SMAB did not accept respondents’ offer that consideration
would be paid in Philippine pesos. Moreover, Litonjua signified their
inability to submit their final bid on 30 June 1990, at the same time
stating that the broad terms and conditions described in their meeting
were inadequate for them to make a response at that time so much so
that he would have to await the corresponding specifics. Petitioners
argue that the foregoing circumstances prove that they failed to reach an
agreement on the sale of the Phimco shares.
In their Comment, respondents maintain that the Court of Appeals

correctly ruled that the Statute of Frauds does not apply to the instant
case. Respondents assert that the sale of the subject shares to them
was perfected as shown by the following circumstances, namely:
petitioners assured them that should they increase their bid, the sale
would be awarded to them and that they did in fact increase their
previous bid of US$30.6 million to US$36 million; petitioners orally
accepted their revised offer and the acceptance was relayed to them by
Rene Dizon; petitioners directed them to proceed with the acquisition
audit and to submit a comfort letter from the United Coconut Planters’
Bank (UCPB); petitioner corporation confirmed its previous verbal
acceptance of their offer in a letter dated 11 June 1990; with the prior
approval of petitioners, respondents engaged the services of Laya,
Manabat, Salgado & Co., an independent auditing firm, to immediately
proceed with the acquisition audit; and, petitioner corporation reiterated
its commitment to be bound by the result of the acquisition audit and
promised to reimburse respondents’ cost to the extent of US$20,000.00.

All these incidents, according to respondents, overwhelmingly prove that
the contract of sale of the Phimco shares was perfected.
Further, respondents argued that there was partial performance of the

perfected contract on their part. They alleged that with the prior approval
of petitioners, they engaged the services of Laya, Manabat, Salgado &
Co. to conduct the acquisition audit. They averred that petitioners
agreed to be bound by the results of the audit and offered to reimburse
the costs thereof to the extent of US$20,000.00. Respondents added
that in compliance with their obligations under the contract, they have
submitted a comfort letter from UCPB to show petitioners that the bank
was willing to finance the acquisition of the Phimco shares. 21
The basic issues to be resolved are: (1) whether the appellate court
erred in reversing the trial court’s decision dismissing the complaint for
being unenforceable under the Statute of Frauds; and (2) whether there
was a perfected contract of sale between petitioners and respondents
with respect to the Phimco shares.
The Statute of Frauds embodied in Article 1403, paragraph (2), of the

Civil Code22 requires certain contracts enumerated therein to be
The term "Statute of Frauds" is descriptive of statutes which require
therein involved, but merely regulates the formalities
of the contract necessary to render it enforceable. 23 Evidence of the
agreement cannot be received without the writing or a secondary
evidence of its contents.

contracts enumerated therein may be proved but does not declare them
invalid because they are not reduced to writing. By law, contracts are
obligatory in whatever form they may have been entered into, provided
all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be
valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. 24 Consequently, the effect of
non-compliance with the requirement of the Statute is simply that no
action can be enforced unless the requirement is complied
with.25 Clearly, the form required is for evidentiary purposes only. Hence,
if the parties permit a contract to be proved, without any objection, it is
then just as binding as if the Statute has been complied with.26

party to be charged.27
However, for a note or memorandum to satisfy the Statute, it must be

complete in itself and cannot rest partly in writing and partly in parol. The
note or memorandum must contain the names of the parties, the terms
and conditions of the contract, and a description of the property
sufficient to render it capable of identification. 28 Such note or
memorandum must contain the essential elements of the contract
expressed with certainty that may be ascertained from the note or
memorandum itself, or some other writing to which it refers or within
which it is connected, without resorting to parol evidence. 29
Contrary to the Court of Appeals’ conclusion, the exchange of

correspondence between the parties hardly constitutes the note or
memorandum within the context of Article 1403 of the Civil Code.
Rossi’s letter dated 11 June 1990, heavily relied upon by respondents, is
not complete in itself. First, it does not indicate at what price the shares
were being sold. In paragraph (5) of the letter, respondents were
supposed to submit their final offer in U.S. dollar terms, at that after the
completion of the due diligence process. The paragraph undoubtedly
proves that there was as yet no definite agreement as to the price.
Second, the letter does not state the mode of payment of the price. In
fact, Litonjua was supposed to indicate in his final offer how and where
payment for the shares was planned to be made. 30
Evidently, the trial court’s dismissal of the complaint on the ground of

unenforceability under the Statute of Frauds is warranted. 31
Even if we were to consider the letters between the parties as a
sufficient memorandum for purposes of taking the case out of the
operation of the Statute the action for specific performance would still
fail.
A contract is defined as a juridical convention manifested in legal form,

by virtue of which one or more persons bind themselves in favor of
another, or others, or reciprocally, to the fulfillment of a prestation to
give, to do, or not to do.32 There can be no contract unless the following
requisites concur: (a) consent of the contracting parties; (b) object
certain which is the subject matter of the contract; (c) cause of the
obligation which is established.33 Contracts are perfected by mere
consent, which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract.34
Specifically, in the case of a contract of sale, required is the concurrence

of three elements, to wit: (a) consent or meeting of the minds, that is,
consent to transfer ownership in exchange for the price; (b) determinate
subject matter, and (c) price certain in money or its equivalent. 35 Such
contract is born from the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price. 36
In general, contracts undergo three distinct stages, to wit: negotiation;

perfection or birth; and consummation. Negotiation begins from the time
the prospective contracting parties manifest their interest in the contract
and ends at the moment of agreement of the parties. Perfection or birth
of the contract takes place when the parties agree upon the essential
elements of the contract. Consummation occurs when the parties fulfill
or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.37
A negotiation is formally initiated by an offer. A perfected promise merely

tends to insure and pave the way for the celebration of a future contract.
An imperfect promise (policitacion), on the other hand, is a mere
unaccepted offer.38 Public advertisements or solicitations and the like
are ordinarily construed as mere invitations to make offers or only as
proposals. At any time prior to the perfection of the contract, either
negotiating party may stop the negotiation. 39 The offer, at this stage,
may be withdrawn; the withdrawal is effective immediately after its
manifestation, such as by its mailing and not necessarily when the
offeree learns of the withdrawal.40
An offer would require, among other things, a clear certainty on both the
object and the cause or consideration of the envisioned contract.
Consent in a contract of sale should be manifested by the meeting of the
offer and the 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. 41
Quite obviously, Litonjua’s letter dated 21 May 1990, proposing the
acquisition of the Phimco shares for US$36 million was merely an offer.
This offer, however, in Litonjua’s own words, "is understood to be
subject to adjustment on the basis of an audit of the assets, liabilities
and net worth of Phimco and its subsidiaries and on the final negotiation
between ourselves."42
Was the offer certain enough to satisfy the requirements of the Statute
of Frauds? Definitely not.
Litonjua repeatedly stressed in his letters that they would not be able to
submit their final bid by 30 June 1990.43 With indubitable inconsistency,
respondents later claimed that for all intents and purposes, the US$36
million was their final bid. If this were so, it would be inane for Litonjua to
state, as he did, in his letter dated 28 June 1990 that they would be in a
position to submit their final bid only on 17 July 1990. The lack of a
definite offer on the part of respondents could not possibly serve as the
basis of their claim that the sale of the Phimco shares in their favor was
perfected, for one essential element of a contract of sale was obviously
wanting—the price certain in money or its equivalent. The price must be
certain, otherwise there is no true consent between the parties. 44 There
can be no sale without a price.45 Quite recently, this Court reiterated the
long-standing doctrine that the manner of payment of the purchase price
is an essential element before a valid and binding contract of sale can
exist since the agreement on the manner of payment goes into the price
such that a
disagreement on the manner of payment is tantamount to a failure to

agree on the price.46
Granting arguendo, that the amount of US$36 million was a definite

offer, it would remain as a mere offer in the absence of evidence of its
acceptance. To produce a contract, there must be acceptance, which
may be express or implied, but it must not qualify the terms of the
offer.47 The acceptance of an offer must be unqualified and absolute to
perfect the contract.48 In other words, it must be identical in all respects
with that of the offer so as to produce consent or meeting of the minds. 49
Respondents’ attempt to prove the alleged verbal acceptance of their

US$36 million bid becomes futile in the face of the overwhelming
evidence on record that there was in the first place no meeting of the
minds with respect to the price. It is dramatically clear that the US$36
million was not the actual price agreed upon but merely a preliminary
offer which was subject to adjustment after the conclusion of the audit of
the company finances. Respondents’ failure to submit their final bid on
the deadline set by petitioners prevented the perfection of the contract of
sale. It was not perfected due to the absence of one essential element
which was the price certain in money or its equivalent.
At any rate, from the procedural stand point, the continuing objections
raised by petitioners to the admission of parol evidence 50 on the alleged
verbal acceptance of the offer rendered any evidence of acceptance
inadmissible.
Respondents’ plea of partial performance should likewise fail. The

acquisition audit and submission of a comfort letter, even if considered
together, failed to prove the perfection of the contract. Quite the
contrary, they indicated that the sale was far from concluded.
Respondents conducted the audit as part of the due diligence process to
help them arrive at and make their final offer. On the other hand, the
submission of the comfort letter was merely a guarantee that
respondents had the financial capacity to pay the price in the event that
their bid was accepted by petitioners.
The Statute of Frauds is applicable only to contracts which are

executory and not to those which have been consummated either totally
or partially.51 If a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would
enable the defendant to keep the benefits already derived by him from
the transaction in litigation, and at the same time, evade the obligations,
responsibilities or liabilities assumed or contracted by him
thereby.52 This rule, however, is predicated on the fact of ratification of
the contract within the meaning of Article 1405 of the Civil Code either
(1) by failure to object to the presentation of oral evidence to prove the
same, or (2) by the acceptance of benefits under them. In the instant
case, respondents failed to prove that there was partial performance of
the contract within the purview of the Statute.
Respondents insist that even on the assumption that the Statute of

Frauds is applicable in this case, the trial court erred in dismissing the
complaint altogether. They point out that the complaint presents several
causes of action.
A close examination of the complaint reveals that it alleges two distinct

causes of action, the first is for specific performance 53 premised on the
existence of the contract of sale, while the other is solely for damages,
predicated on the purported dilatory maneuvers executed by the Phimco
management.54
With respect to the first cause of action for specific performance, apart
from petitioners’ alleged refusal to honor the contract of sale—which has
never been perfected in the first place—respondents made a number of
averments in their complaint all in support of said cause of action.
Respondents
claimed that petitioners were guilty of promissory estoppel, 55 warranty

breaches56 and tortious conduct57 in refusing to honor the alleged
contract of sale. These averments are predicated on or at least
interwoven with the existence or perfection of the contract of sale. As
there was no such perfected contract, the trial court properly rejected the
averments in conjunction with the dismissal of the complaint for specific
performance.
However, respondents’ second cause of action due to the alleged

malicious and deliberate delay of the Phimco management in the
delivery of documents necessary for the completion of the audit on time,
not being based on the existence of the contract of sale, could stand
independently of the action for specific performance and should not be
deemed barred by the dismissal of the cause of action predicated on the
failed contract. If substantiated, this cause of action would entitle
respondents to the recovery of damages against the officers of the
corporation responsible for the acts complained of.
Thus, the Court cannot forthwith order dismissal of the complaint without
affording respondents an opportunity to substantiate their allegations
with respect to its cause of action for damages against the officers of
Phimco based on the latter’s alleged self-serving dilatory maneuvers.
WHEREFORE, the petition is in part GRANTED. The

appealed Decision is hereby MODIFIED insofar as it declared the
agreement between the parties enforceable under the
Statute of Frauds. The complaint before the trial court is

ordered DISMISSED insofar as the cause of action for specific
performance is concerned. The case is ordered REMANDED to the trial

court for further proceedings with respect to the cause of action for
damages as above specified.
SO ORDERED.
G.R. No. 146608 October 23, 2003
SPOUSES CONSTANTE FIRME AND AZUCENA E.

FIRME, petitioners,
vs.
UKAL ENTERPRISES AND DEVELOPMENT
CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision 1 dated 3 January

2001 of the Court of Appeals in CA-G.R. CV No. 60747. The Court of
Appeals reversed the Decision2 of the Regional Trial Court, Branch 223,
Quezon City ("trial court"), which held that there was no perfected
contract of sale since there was no consent on the part of the seller.
The Facts
Petitioner Spouses Constante and Azucena Firme ("Spouses Firme")

are the registered owners of a parcel of land 3 ("Property") located on
Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro ("De
Castro"), the vice president of Bukal Enterprises and Development
Corporation ("Bukal Enterprises") authorized his friend, Teodoro Aviles
("Aviles"), a broker, to negotiate with the Spouses Firme for the
purchase of the Property.
On 28 March 1995, Bukal Enterprises filed a complaint for specific

performance and damages with the trial court, alleging that the Spouses
Firme reneged on their agreement to sell the Property. The complaint
asked the trial court to order the Spouses Firme to execute the deed of
sale and to deliver the title to the Property to Bukal Enterprises upon
payment of the agreed purchase price.
During trial, Bukal Enterprises presented five witnesses, namely, Aviles,

De Castro, Antonio Moreno, Jocelyn Napa and Antonio Ancheta.
Aviles testified that De Castro authorized him to negotiate on behalf of

Bukal Enterprises for the purchase of the Property. According to Aviles,
he met with the Spouses Firme on 23 January 1995 and he presented
them with a draft deed of sale4 ("First Draft") dated February 1995. The
First Draft of the deed of sale provides:
DEED OF ABSOLUTE SALE

This DEED OF ABSOLUTE SALE made and executed by and between
the Spouses CONSTANTE FIRME and AZUCENA E. FIRME, both of
legal age, Filipino citizens and with postal address at No. 1450 Union,
Paco, City of Manila, hereinafter called the VENDOR, and
BUKAL ENTERPRISES and DEVELOPMENT CORPORATION, a

corporation duly organized and registered in accordance with Philippine
Laws, with business address at Dahlia Avenue, Fairview Park, Quezon
City, herein represented by its PRESIDENT, MRS. ZENAIDA A. DE
CASTRO, hereinafter called the VENDEE.
WITNESSETH:
That the VENDOR is the absolute and registered owner of a certain

parcel of land located at Fairview Park, Quezon City, and more
particularly described as follows:
A parcel of land (Lot 4, Block 33 of the consolidation-subdivision plan

(LRC) Pcs-8124, Sheet No. I, being a portion of the consolidation of Lots
41-B-2-A and 41-B-2-C, Psd-1136 and Lot (LRC) Pcs-2665, (LRC)
GLRO) Record. No. 1037), situated in Quezon City, Island of Luzon.
Bounded on the NE., points 2 to 5 by Road Lot 24, of the consolidation-
subdivision plan. Beginning at a point marked "1" on plan, being S. 67
deg. 23’W., 9288.80 m. from BLLM I, Mp of Montalban, Rizal; thence N.
85 deg. 35’E., 17.39 m. to point 2; thence S. 54 deg. 22’E., 4.00 m. to
point 3; thence S. 14 deg. 21’E., 17.87 m. to point 4; thence 3 deg.
56’E., 17.92 m. to point 5; thence N. 85 deg. 12’ W., 23.38 m. to point 6;
thence N. 4 deg. 55’ W., 34.35 m. to the point of beginning; containing
an area of EIGHT HUNDRED AND SIX (806) SQUARE METERS, more
or less.
VENDOR’S title thereto being evidenced by Transfer Certificate of Title

No. 264243 issued by the Register of Deeds of Quezon City;
That the VENDOR, for and in consideration of the sum of THREE

MILLION TWO HUNDRED TWENTY FOUR THOUSAND PESOS
(₱3,224,000.00) Philippine Currency, to them in hand paid and receipt
whereof is hereby acknowledged, do hereby SELL, TRANSFER and
CONVEY unto the said VENDEE, its assigns, transferees and
successors in interest the above described property, free from all liens
and encumbrances whatsoever;
It is hereby mutually agreed that the VENDEE shall bear all the
expenses for the capital gains tax, documentary stamps, documentation,
notarization, removal and relocation of the squatters, registration,
transfer tax and other fees as may be required by law;
That the VENDOR shall pay the real estate tax for the current year and
back real estate taxes, charges and penalties if there are any.
IN WITNESS WHEREOF, we have hereunto affixed our signatures this
____ day of February, 1995, at Quezon City, Philippines.
CONSTANTE FIRME BUKAL ENTERPRISES AND

DEVELOPMENT CORP.
BY:
AZUCENA E. FIRME ZENAIDA A. DE CASTRO
VENDOR President
xxx
The Spouses Firme rejected this First Draft because of several

objectionable conditions, including the payment of capital gains and
other government taxes by the seller and the relocation of the squatters
at the seller’s expense. During their second meeting, Aviles presented to
the Spouses Firme another draft deed of sale 5 ("Second Draft") dated
March 1995. The Spouses Firme allegedly accepted the Second Draft in
view of the deletion of the objectionable conditions contained in the First
Draft. According to Aviles, the Spouses Firme were willing to sell the
Property at ₱4,000 per square meter. They then agreed that payment
would be made at the Far East Bank and Trust Company ("FEBTC"),
Padre Faura Branch, Manila. However, the scheduled payment had to
be postponed due to problems in the transfer of funds. The Spouses
Firme later informed Aviles that they were no longer interested in selling
the Property.6
De Castro testified that he authorized Aviles to negotiate for Bukal

Enterprises the purchase of the Property owned by the Spouses Firme.
The Property was located beside the Dahlia Commercial Complex
owned by Bukal Enterprises. Aviles informed him that the Spouses
Firme agreed to sell the Property at ₱4,000 per square meter, payable in
cash for a lump sum of ₱3,224,000. Furthermore, Bukal Enterprises
agreed to pay the taxes due and to undertake the relocation of the
squatters on the Property. For this purpose, Bukal Enterprises applied
for a loan of ₱4,500,000 which FEBTC granted. Bukal Enterprises then
relocated the four families squatting on the Property at a cost of ₱60,000
per family. After the squatters vacated the Property, Bukal Enterprises
fenced the area, covered it with filling materials, and constructed posts
and riprap. Bukal Enterprises spent approximately ₱300,000 for these
improvements. In a letter7 dated 7 March 1995, Bukal Enterprises
offered to pay the purchase price of ₱3,224,000 to the Spouses Firme
upon execution of the transfer documents and delivery of the owner’s
duplicate copy of TCT No. 264243. The Spouses Firme did not accept
this offer but instead sent Bukal Enterprises a letter demanding that its
workers vacate the Property. Bukal Enterprises then filed a complaint for
specific performance and damages.8
Antonio Moreno, one of the alleged squatters on the Property, testified
that he constructed his house on the Property sometime in 1982. On 26
February 1995, he was summoned together with the other squatters to a
meeting with Aviles regarding their relocation. They agreed to relocate
provided they would be given financial assistance of ₱60,000 per family.
Thus, on 6 March 1995, the squatter families were each paid ₱60,000 in
the presence of De Castro and Aviles. Thereafter, they voluntarily
demolished their houses and vacated the Property. 9
Jocelyn Mapa, the manager of FEBTC, Padre Faura Branch, testified

that Bukal Enterprises has been their client since 1994. According to
her, Bukal Enterprises applied for a loan of ₱4,500,000 on the third
week of February 1995 allegedly to buy a lot in Fairview. FEBTC
approved the loan on the last week of February and released the
proceeds on the first week of March.10
Antonio Ancheta ("Ancheta"), barangay captain of Barangay Fairview,

testified that he was present when one of the officers of Bukal
Enterprises, a certain Renato, paid each of the four squatter families
around ₱60,000 to ₱100,000. Ancheta informed Dr. Constante Firme
that he told the squatters to leave considering that they already received
payment for their relocation. According to Ancheta, Dr. Constante Firme
must have misunderstood him and thought that the squatters left
through Ancheta’s own efforts.11
On the other hand, Dr. Constante Firme ("Dr. Firme") was the sole
witness for the defendant spouses.
Dr. Firme testified that on 30 January 1995, he and his wife met with
Aviles at the Aristocrat Restaurant in Quezon City. Aviles arranged the
meeting with the Spouses Firme involving their Property in Fairview.
Aviles offered to buy the Property at ₱2,500 per square meter. The
Spouses Firme did not accept the offer because they were reserving the
Property for their children. On 6 February 1995, the Spouses Firme met
again with Aviles upon the latter’s insistence. Aviles showed the
Spouses Firme a copy of a draft deed of sale 12 ("Third Draft") which
Aviles prepared. The Third Draft of the deed of sale provides:
CONRACT OF SALE
This AGREEMENT, executed this ___ day of February, 1995, by and

between the Spouses CONSTANTE FIRME and AZUCENA E. FIRME,
both of legal age, Filipino citizen and with postal address at
__________, Quezon City, hereinafter referred to as the VENDORS,
and BUKAL ENTERPRISES and DEVELOPMENT CORPORATION, a
corporation duly organized and registered in accordance with Philippine
Laws, with postal address at Fairview Park, Quezon City, herein
represented by its President and Chief Executive Officer, hereinafter
referred to as the VENDEE.
WITNESSETH:
That for and in consideration of the sum of THREE MILLION TWO

HUNDRED TWENTY FOUR THOUSAND PESOS (₱3,224,000.00),
Philippine Currency, payable in the form hereinafter expressed, agreed
to sell to the VENDEE and the VENDEE has agreed to buy from the
VENDORS, a parcel of land situated at Dahlia Avenue corner Rolex
Street, Fairview Park, Quezon City, containing an area of 806 Square
Meters more or less, of which the VENDORS are the absolute registered
owners in accordance with the Land Registration Act, as evidenced by
Transfer Certificate of Title No. 264243 issued by the Register of Deeds
of Quezon City, more particularly described and bounded as follows:
(DESCRIPTION AND BOUNDARIES OF PROPERTY)
THE FURTHER TERMS AND CONDITIONS OF THE CONTRACT ARE

AS FOLLOWS:
1. The VENDEE agrees to pay the VENDORS upon

execution of this Contract the sum of ONE MILLION PESOS
(₱1,000,000.00), Philippine Currency, as downpayment and
agrees to pay the balance of TWO MILLION TWO
HUNDRED TWENTY FOUR THOUSAND PESOS
(₱2,224,000.00) at the post office address of the VENDORS
in Quezon City, or such other place or Office as the
VENDORS may designate within a period of sixty (60) days
counted from the date of this Contract;
2. The VENDORS have hereunto authorized the VENDEE to

mortgage the property and submit this Contract, together
with a certified true copy of the TCT, Tax Declaration, Tax
Clearance and Vicinity/Lot Plan, with their Lending Bank.
The proceeds of the VENDEE’S Loan shall directly be paid
and remitted by the Bank to the VENDORS;
3. The said parcel of land shall remain in the name of the

VENDORS until the Lending Bank of the VENDEE shall
have issued a Letter Guaranty Payment in favor of the
VENDORS, at which time the VENDORS agree to execute a
Deed of Absolute Sale in favor of the VENDEE and cause
the issuance of the Certificate of Title in the name of the
latter. The Capital Gains Tax and Documentary Stamps shall
be charged from the VENDORS in accordance with
law;1awphi1.nét
4. The payment of the balance of ₱2,224,000.00 by the

VENDEE to the VENDORS shall be within a period of sixty
(60) days effective from the date of this Contract. After the
lapse of 60 days and the loan has not yet been released due
to fortuitous events the VENDEE shall pay an interest of the
balance a monthly interest based on existing bank rate until
said fortuitous event is no longer present;
5. The VENDEE shall remove and relocate the Squatters,

however, such actual, reasonable and necessary expenses
shall be charged to the VENDORS upon presentation of
receipts and documents to support the act;
6. The VENDEE shall be allowed for all legal purposes to

take possession of the parcel of land after the execution of
this Contract and payment of the downpayment;
7. The VENDEE shall shoulder all expenses like the

documentation, registration, transfer tax and relocation of the
property.
IN WITNESS WHEREOF, we have hereunto affixed our signatures this

____ day of February, 1995, at Quezon City, Philippines.
CONSTANTE E. FIRME BUKAL ENTERPRISES DEV. CORP.

VENDOR VENDEE
BY:
AZUCENA E. FIRME ________________________
VENDOR President & Chief Executive Officer
xxx
The Spouses Firme did not accept the Third Draft because they found
its provisions one-sided. The Spouses Firme particularly opposed the
provision on the delivery of the Property’s title to Bukal Enterprises for
the latter to obtain a loan from the bank and use the proceeds to pay for
the Property. The Spouses Firme repeatedly told Aviles that the
Property was not for sale when Aviles called on 2 and 4 March 1995
regarding the Property. On 6 March 1995, the Spouses Firme visited
their Property and discovered that there was a hollow block fence on
one side, concrete posts on another side and bunkers occupied by
workers of a certain Florante de Castro. On 11 March 1995, Spouses
Firme visited the Property again with a surveyor. Dr. Firme talked with
Ancheta who told him that the squatters had voluntarily demolished their
shanties. The Spouses Firme sent a letter13 dated 20 March 1995 to
Bukal Enterprises demanding removal of the bunkers and vacation by
the occupants of the Property. On 22 March 1995, the Spouses Firme
received a letter14 dated 7 March 1995 from Bukal Enterprises
demanding that they sell the Property.15
On 7 August 1998, the trial court rendered judgment against Bukal
Enterprises as follows:
WHEREFORE, in the light of the foregoing premises, the above-entitled

case [is] hereby DISMISSED and plaintiff BUKAL ENTERPRISES
DEVELOPMENT CORPORATION is hereby ordered to pay the
defendants Spouses Constante and Azucena Firme:
1. the sum of Three Hundred Thirty Five Thousand Nine Hundred

Sixty Four and 90/100 (₱335,964.90) as and by way of actual and
compensatory damages;
2. the sum of Five Hundred Thousand Pesos (₱500,000.00) as

and by way of moral damages;
3. the sum of One Hundred Thousand Pesos (₱100,000.00) as

and by way of attorney’s fees; and
4. the costs of the suit.
SO ORDERED.16
Bukal Enterprises appealed to the Court of Appeals, which reversed and

set aside the decision of the trial court. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, the Decision, dated August 7,

1998, is hereby REVERSED and SET ASIDE. The complaint is granted
and the appellees are directed to henceforth execute the Deed of
Absolute Sale transferring the ownership of the subject property to the
appellant immediately upon receipt of the purchase price of
₱3,224,000.00 and to perform all such acts necessary and proper to
effect the transfer of the property covered by TCT No. 264243 to
appellant. Appellant is directed to deliver the payment of the purchase
price of the property within sixty days from the finality of this judgment.
Costs against appellees.
SO ORDERED.17
Hence, the instant petition.1a\^/phi1.net
The Ruling of the Trial Court
The trial court held there was no perfected contract of sale. Bukal
Enterprises failed to establish that the Spouses Firme gave their consent
to the sale of the Property. The parties did not go beyond the negotiation
stage and there was no evidence of meeting of the minds between the
parties. Furthermore, Aviles had no valid authority to bind Bukal
Enterprises in the sale transaction. Under Sections 23 and 36 (No. 7) of
the Corporation Code, the corporate power to purchase a specific
property is exercised by the Board of Directors of the corporation.
Without an authorization from the Board of Directors, Aviles could not
validly finalize the purchase of the Property on behalf of Bukal
Enterprises. There is no basis to apply the Statute of Frauds since there
was no perfected contract of sale.
The Ruling of the Court of Appeals
The Court of Appeals held that the lack of a board resolution authorizing
Aviles to act on behalf of Bukal Enterprises in the purchase of the
Property was cured by ratification. Bukal Enterprises ratified the
purchase when it filed the complaint for the enforcement of the sale.
The Court of Appeals also held there was a perfected contract of sale.
The appellate court ruled that the Spouses Firme revealed their intent to
sell the Property when they met with Aviles twice. The Spouses Firme
rejected the First Draft because they considered the terms
unacceptable. When Aviles presented the Second Draft without the
objectionable provisions, the Spouses Firme no longer had any cause
for refusing to sell the Property. On the other hand, the acts of Bukal
Enterprises in fencing the Property, constructing posts, relocating the
squatters and obtaining a loan to purchase the Property are
circumstances supporting their claim that there was a perfected contract
of sale.
The Spouses Firme allowed Bukal Enterprises to exercise acts of

ownership over the Property when the latter introduced improvements
on the Property and evicted the squatters. These acts constitute partial
performance of the contract of sale that takes the oral contract out of the
scope of the Statute of Frauds.
The Issues
The Spouses Firme raise the following issues:
1. WHETHER THE COURT OF APPEALS ERRED IN FINDING

THAT THERE WAS A PERFECTED CONTRACT OF SALE
BETWEEN PETITIONERS AND RESPONDENT DESPITE THE
ADDUCED EVIDENCE PATENTLY TO THE CONTRARY;
2. WHETHER THE COURT OF APPEALS ERRED IN NOT

FINDING THAT THE ALLEGED CONTRACT OF SALE IS
ENFORCEABLE DESPITE THE FACT THAT THE SAME IS
COVERED BY THE STATUTE OF FRAUDS;
3. WHETHER THE COURT OF APPEALS ERRED IN

DISREGARDING THE FACT THAT IT WAS NOT LEGALLY AND
FACTUALLY POSSIBLE FOR RESPONDENT TO PERFECT A
CONTRACT OF SALE; AND
4. THE COURT OF APPEALS ERRED IN RULING THAT THE
AWARD BY THE TRIAL COURT OF MORAL AND
COMPENSATORY DAMAGES TO PETITIONERS IS
IMPROPER.18
The Ruling of the Court
The fundamental question for resolution is whether there was a

perfected contract of sale between the Spouses Firme and Bukal
Enterprises. This requires a review of the factual and legal issues of this
case. As a rule, only questions of law are appealable to this Court under
Rule 4519 of the Rules of Civil Procedure. The findings of fact by the
Court of Appeals are generally conclusive and binding on the parties
and are not reviewable by this Court.20 However, when the factual
findings of the Court of Appeals are contrary to those of the trial court or
when the inference made is manifestly mistaken, this Court has the
authority to review the findings of fact.21 Likewise, this Court may review
findings of fact when the judgment of the Court of Appeals is premised
on a misapprehension of facts.22 This is the situation in this case.
Whether there was a perfected contract of sale
We agree with the finding of the trial court that there was no perfected
contract of sale. Clearly, the Court of Appeals misapprehended the facts
of the case in ruling otherwise.
First, the records indubitably show that there was no consent on the part
of the Spouses Firme. Aviles did not present any draft deed of sale
during his first meeting with the Spouses Firme on 30 January
1995.23 Dr. Firme was consistent in his testimony that he and his wife
rejected the provisions of the Third Draft presented by Aviles during their
second meeting on 6 February 1995. The Spouses Firme found the
terms and conditions unacceptable and told Aviles that they would not
sell the property.24 Aviles showed them only one draft deed of sale (Third
Draft) during their second and last meeting on 6 February 1995. 25 When
shown a copy of the First Draft, Dr. Firme testified that it was not the
deed of sale shown to them by Aviles during their second meeting 26 and
that the Third Draft was completely different from the First Draft. 27
On the other hand, Aviles gave conflicting testimony as to what

transpired during the two meetings with the Spouses Firme. In his direct
examination, Aviles testified that during his first meeting with the
Spouses Firme on 23 January 1995, he showed them the First Draft
which the Spouses Firme rejected.28 On their second meeting, Aviles
showed the Spouses Firme the Second Draft, which the Spouses Firme
allegedly approved because the objectionable conditions contained in
the First Draft were already deleted. However, a perusal of the First
Draft and the Second Draft would show that both deeds of sale contain
exactly the same provisions. The only difference is that the date of the
First Draft is February 1995 while that of the Second Draft is March
1995.
When Aviles testified again as rebuttal witness, his testimony became

more confusing. Aviles testified that during his first meeting with the
Spouses Firme on 30 January 1995, he showed them the Third Draft,
which was not acceptable to the latter.29 However, upon further
questioning by his counsel, Aviles concurred with Dr. Firme’s testimony
that he presented the Third Draft (Exh. "5"; Exh. "L") to the Spouses
Firme only during their second meeting. He also stated that he prepared
and presented to the Spouses Firme the First Draft (Exh. "C") and the
Second Draft (Exh. "C-1") during their first or second meeting. He
testified:
ATTY. MARQUEDA:
Q: On page 11 of the tsn dated August 5, 1997 a question was

posed "How did you find this draft the Contract of Sale which was
presented to you by Mr. Aviles on the second meeting?" The
answer is "On the first meeting(sic), we find it totally unacceptable,
sir."30 What can you say on this? Before that, Mr. Witness, what is
this Contract of Sale that you presented to Mr. Aviles on the
second meeting? Is this different from the Contract of Sale that
was marked as Exhibit "5-L"?
Q: May I see the document Exhibit 5 – L?31
INTERPRETER:
Witness going over the record.
ATTY. MARQUEDA:
Q: Is that the same document that was presented by you to Mr.
Firme on the second meeting or there is a different contract?
A: This is the same document – draft of the document that I

submitted to them during our second meeting. That was February.
This was the draft.
Q: What about Exhibit C and C-1 [which] were identified by you.

When was this presented to Dr. Firme?
A: This is the same.
Q: Exhibit C and C-1?
A: Yes because I prepared two documents during our meeting.

One already with notarial, the one without notarial page and the
other one with notarial page already, so I prepared two documents
but with the same contents both were dated February of 1995. 32
Q: So, you are referring now to Exhibit C and C-1 for the plaintiff?
A: C-1 is already in the final form because we agreed already as to

the date of the payment, so I prepared already another document
which is dated March 1995.33 (Emphasis supplied)
In his cross-examination, Aviles again changed his testimony. According

to him, he presented the Third Draft to the Spouses Firme during their
first meeting.34 However, when he went over the records, he again
changed his answer and stated that he presented the Third Draft during
their second meeting.35
In his re-direct examination, Aviles gave another version of what he

presented to the Spouses Firme during the two meetings. According to
him, he presented the Third Draft during the first meeting. On their
second meeting, he presented the First and the Second Drafts to the
Spouses Firme.36
Furthermore, Aviles admitted that the first proposal of Bukal Enterprises

was at ₱2,500 per square meter for the Property. 37 But the First, Second
and Third Drafts of the deed of sale prepared by Aviles all indicated a
purchase price of ₱4,000 per square meter or a lump sum of ₱3,224,000
(₱4,000 per sq.m. x 806 sq.m. = ₱3,224,000) for the Property. Hence,
Aviles could not have presented any of these draft deeds of sale to the
Spouses Firme during their first meeting.
Considering the glaring inconsistencies in Aviles’ testimony, it was

proper for the trial court to give more credence to the testimony of Dr.
Firme.
Even after the two meetings with Aviles, the Spouses Firme were firm in
their decision not to sell the Property. Aviles called the Spouses Firme
twice after their last meeting. The Spouses Firme informed Aviles that
they were not selling the Property.38 Aviles himself admitted this during
his testimony, thus:
Q. Now, the next question which states: "But did you not have any
occasion to talk to him after that second meeting?" and the answer
of Dr. Firme is "He called up a month after, that’s March 2, 1995."
What can you say on this?
A. I called him to inform him that the loan was already transferred
from Makati to Padre Faura Branch of the Far East Bank, so I
scheduled already the payment of their property.
Q. When?
A. On March 4, 1995.
Q. And then the next question which also states: "What did you
talked (sic) about over the telephone?" The answer of Dr. Firme
was "When I found out that he was calling, I told him that the
property is not for sale." What can you say on this?
A. He mentioned that they are no longer interested to sell their

property, perhaps they would like a higher price of the property.
They did not mention to me. I do not know what was their reason.
Q. The next question "So, what happened next?" The answer is

"He called up two days later, March 4 and my wife answered the
telephone and told him that the property is not for sale, sir." What
can you say on this?
A. That is true. That is what Mrs. Firme told me during our

conversation on the telephone that they are no longer interested to
sell the property for obvious reason.
Q. When was that?
A. March 4, 1995, your honor.39 (Emphasis supplied)
Significantly, De Castro also admitted that he was aware of the Spouses

Firme’s refusal to sell the Property.40
The confusing testimony of Aviles taken together with De Castro’s

admission that he was aware of the Spouses Firme’s refusal to sell the
Property reinforces Dr. Firme’s testimony that he and his wife never
consented to sell the Property.
Consent is one of the essential elements of a valid contract. The Civil

Code provides:
Art. 1318. There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract;
3. Cause of the obligation which is established.
The absence of any of these essential elements will negate the

existence of a perfected contract of sale.41 Thus, where there is want of
consent, the contract is non-existent.42 As held in Salonga, et al. v.
Farrales, et al.:43
It is elementary that consent is an essential element for the existence of

a contract, and where it is wanting, the contract is non-existent. The
essence of consent is the conformity of the parties on the terms of
the contract, the acceptance by one of the offer made by the
other. The contract to sell is a bilateral contract. Where there is merely
an offer by one party, without the acceptance of the other, there is no
consent. (Emphasis supplied)
In this case, the Spouses Firme flatly rejected the offer of Aviles to buy
the Property on behalf of Bukal Enterprises. There was therefore no
concurrence of the offer and the acceptance on the subject matter,
consideration and terms of payment as would result in a perfected
contract of sale.44 Under Article 1475 of the Civil Code, the contract of
sale is perfected at the moment there is a meeting of minds on the thing
which is the object of the contract and on the price.
Another piece of evidence which supports the contention of the Spouses

Firme that they did not consent to the contract of sale is the fact they
never signed any deed of sale. If the Spouses Firme were already
agreeable to the offer of Bukal Enterprises as embodied in the Second
Draft, then the Spouses Firme could have simply affixed their signatures
on the deed of sale, but they did not.
Even the existence of a signed document purporting to be a contract of

sale does not preclude a finding that the contract is invalid when the
evidence shows that there was no meeting of the minds between the
seller and buyer.45 In this case, what were offered in evidence were mere
unsigned deeds of sale which have no probative value. 46 Bukal
Enterprises failed to show the existence of a perfected contract of sale
by competent proof.1ªvvphi1.nét
Second, there was no approval from the Board of Directors of Bukal

Enterprises as would finalize any transaction with the Spouses Firme.
Aviles did not have the proper authority to negotiate for Bukal
Enterprises. Aviles testified that his friend, De Castro, had asked him to
negotiate with the Spouses Firme to buy the Property. 47 De Castro, as
Bukal Enterprises’ vice president, testified that he authorized Aviles to
buy the Property.48 However, there is no Board Resolution authorizing
Aviles to negotiate and purchase the Property on behalf of Bukal
Enterprises.49
It is the board of directors or trustees which exercises almost all the

corporate powers in a corporation. Thus, the Corporation Code provides:
SEC. 23. The board of directors or trustees. — Unless otherwise

provided in this Code, the corporate powers of all corporations formed
under this Code shall be exercised, all business conducted and all
property of such corporations controlled and held by the board of
directors or trustees to be elected from among the holders of stock, or
where there is no stock, from among the members of the corporation,
who shall hold office for one (1) year and until their successors are
elected and qualified. x x x
SEC. 36. Corporate powers and capacity. — Every corporation
incorporated under this Code has the power and capacity:
xxx
7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge,

mortgage and otherwise deal with such real and personal property,
including securities and bonds of other corporations, as the transaction
of a lawful business of the corporation may reasonably and necessarily
require, subject to the limitations prescribed by the law and the
Constitution.
xxx
Under these provisions, the power to purchase real property is vested in

the board of directors or trustees. While a corporation may appoint
agents to negotiate for the purchase of real property needed by the
corporation, the final say will have to be with the board, whose approval
will finalize the transaction.50 A corporation can only exercise its powers
and transact its business through its board of directors and through its
officers and agents when authorized by a board resolution or its by-
laws.51 As held in AF Realty & Development, Inc. v. Dieselman Freight
Services, Co.:52
Section 23 of the Corporation Code expressly provides that the

corporate powers of all corporations shall be exercised by the board of
directors. Just as a natural person may authorize another to do certain
acts in his behalf, so may the board of directors of a corporation validly
delegate some of its functions to individual officers or agents appointed
by it. Thus, contracts or acts of a corporation must be made either by the
board of directors or by a corporate agent duly authorized by the board.
Absent such valid delegation/authorization, the rule is that the
declarations of an individual director relating to the affairs of the
corporation, but not in the course of, or connected with, the performance
of authorized duties of such director, are held not binding on the
corporation. (Emphasis supplied)
In this case, Aviles, who negotiated the purchase of the Property, is

neither an officer of Bukal Enterprises nor a member of the Board of
Directors of Bukal Enterprises. There is no Board Resolution authorizing
Aviles to negotiate and purchase the Property for Bukal Enterprises.
There is also no evidence to prove that Bukal Enterprises approved
whatever transaction Aviles made with the Spouses Firme. In fact, the
president of Bukal Enterprises did not sign any of the deeds of sale
presented to the Spouses Firme. Even De Castro admitted that he had
never met the Spouses Firme.53 Considering all these circumstances, it
is highly improbable for Aviles to finalize any contract of sale with the
Spouses Firme.
Furthermore, the Court notes that in the Complaint filed by Bukal
Enterprises with the trial court, Aviles signed54 the verification and
certification of non-forum shopping.55 The verification and certification of
non-forum shopping was not accompanied by proof that Bukal
Enterprises authorized Aviles to file the complaint on behalf of Bukal
Enterprises.
The power of a corporation to sue and be sued is exercised by the board

of directors. "The physical acts of the corporation, like the signing of
documents, can be performed only by natural persons duly authorized
for the purpose by corporate by-laws or by a specific act of the board of
directors."56
The purpose of verification is to secure an assurance that the allegations

in the pleading are true and correct and that it is filed in good
faith.57 True, this requirement is procedural and not jurisdictional.
However, the trial court should have ordered the correction of the
complaint since Aviles was neither an officer of Bukal Enterprises nor
authorized by its Board of Directors to act on behalf of Bukal
Enterprises.
Whether the Statute of Frauds is applicable
The Court of Appeals held that partial performance of the contract of

sale takes the oral contract out of the scope of the Statute of Frauds.
This conclusion arose from the appellate court’s erroneous finding that
there was a perfected contract of sale. The records show that there was
no perfected contract of sale. There is therefore no basis for the
application of the Statute of Frauds. The application of the Statute of
Frauds presupposes the existence of a perfected contract. 58 Article 1403
of the Civil Code provides:
Art. 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who
has been given no authority or legal representation, or who has
acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement hereafter
made shall be unenforceable by action, unless the same, or some
note or memorandum thereof, be in writing and subscribed by the
party charged or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a secondary
evidence of its contents:
xxx
(e) An agreement for the leasing for a longer period than one year,
or for the sale of real property or of an interest therein;
xxx
Whether Bukal Enterprises is a builder in good faith
Bukal Enterprises is not a builder in good faith. The Spouses Firme did
not accept Aviles’ offer to purchase the Property. Aviles testified that
when he called the Spouses Firme on 2 March 1995, Dr. Firme informed
him that they were no longer interested in selling the Property. On 4
March 1995, Aviles called again and this time Mrs. Firme told him that
they were not selling the Property. Aviles informed De Castro of the
refusal of the Spouses Firme to sell the Property. However, Bukal
Enterprises still proceeded in relocating the squatters and constructing
improvements on the Property. De Castro testified:
ATTY. EJERCITO:
Q: The truth of the matter, Mr. Witness, is that the post was
constructed sometime late 1994. Is that not correct?
A: No, sir. It is not true.
Q: When was it constructed?
A: That March.
Q: When in March?
A: 1995.
Q: When in March 1995?
A: From the period of March 2, 1995 or two (2) weeks after the
removal of the squatters.
Q: When were the squatters removed?
WITNESS:
A: March 6 and 7 because there were four (4) squatters.
ATTY. EJERCITO:
Q: When did you find out that the Spouses Firme did not want to
sell the same?
A: First week of March 1995.

Q: In your Complaint you said you find out on March 3, 1995. Is
that not correct?
A: I cannot exactly remember, sir.
ATTY. MARQUEDA:
In the Complaint it does not state March 3. Maybe counsel was

thinking of this Paragraph 6 which states, "When the property was
rid of the squatters on March 2, 1995 for the documentation and
payment of the sale, xxx".
ATTY. EJERCITO:
Q: So, you found out on March 2, 1995 that the defendants were
no longer interested in selling to you the property. Is that correct?
A: Yes, sir, because Mr. Aviles relayed it to me.
Q: Mr. Aviles relayed to you that the Spouses Firme were no

longer interested in selling to you the property in March 2, 1995. Is
that correct?
A: Yes, sir. Mr. Aviles told me.
Q: In so many words, Mr. Witness, you learned that the Spouses

Firme were no longer interested in selling the property before you
spent allegedly all the sum of money for the relocation of squatters
for all this construction that you are telling this Court now?
WITNESS:
A: The refusal to sell is not yet formal and the lawyer sent a letter
tendering full payment of the purchase price.
ATTY. EJERCITO:
Q: You mean to say that you did not believe Mr. Aviles when he
told you that the Spouses Firme were no longer selling the
property?
A: No, sir.
Q: Was there anything formal when you say the Spouses Firme
agreed to sell the property?
A: None, sir.
Q: And yet that time you believe Mr. Aviles when he verbally told
you that the Sps. Firme agreed to sell the property? At what point
of the transaction with the Spouses Firme were you advised by
your lawyer?
WITNESS:
A: At the time when they refused to sell the lot.
ATTY. EJERCITO:
Q: Was that before the squatters were relocated allegedly by

Bukal Enterprises?
A: Yes, sir.
Q: In fact, it was the lawyer who advised you to relocate the

squatters. Is it not true?
A: No, sir.59 (Emphasis supplied)
Bukal Enterprises is obviously a builder in bad faith. No deed of sale has

been executed in this case. Despite the refusal of the Spouses Firme to
sell the Property, Bukal Enterprises still proceeded to introduce
improvements on the Property. Bukal Enterprises introduced
improvements on the Property without the knowledge and consent of the
Spouses Firme. When the Spouses Firme learned about the
unauthorized constructions made by Bukal Enterprises on the Property,
they advised the latter to desist from further acts of trespass on their
Property.60
The Civil Code provides:
Art. 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right of indemnity.
Art. 450. The owner of the land on which anything has been built,
planted or sown in bad faith may demand the demolition of the work, or
that the planting or sowing be removed, in order to replace things in their
former condition at the expense of the person who built, planted or
sowed; or he may compel the builder or planter to pay the price of the
land, and the owner the proper rent.
Under these provisions the Spouses Firme have the following options:
(1) to appropriate what Bukal Enterprises has built without any obligation
to pay indemnity; (2) to ask Bukal Enterprises to remove what it has
built; or (3) to compel Bukal Enterprises to pay the value of the
land.61 Since the Spouses Firme are undoubtedly not selling the Property
to Bukal Enterprises, they may exercise any of the first two options.
They may appropriate what has been built without paying indemnity or
they may ask Bukal Enterprises to remove what it has built at Bukal
Enterprises’ own expense.
Bukal Enterprises is not entitled to reimbursement for the expenses
incurred in relocating the squatters. Bukal Enterprises spent for the
relocation of the squatters even after learning that the Spouses Firme
were no longer interested in selling the Property. De Castro testified that
even though the Spouses Firme did not require them to remove the
squatters, they chose to spend for the relocation of the squatters since
they were interested in purchasing the Property. 62
Whether the Spouses Firme are entitled to compensatory and moral

damages
The Court agrees with the Court of Appeals to delete the award for
compensatory and moral damages. In awarding actual damages, the
trial court took into account the traveling expenses incurred by the
Spouses Firme who are already residing in the United States. However,
the trial court failed to consider the testimony of Dr. Firme that they
normally travel to the Philippines more than once a year to visit their
children.63 Thus, the expenses for the roundtrip tickets dated 1996-1997
could not be attributed solely for the attendance of hearings in the case.
Nevertheless, an award of nominal damages of ₱30,000 is warranted

since Bukal Enterprises violated the property rights of the Spouses
Firme.64 The Civil Code provides:
Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in article 1157, or in every case
where any property right has been invaded.
The award of damages is also in accordance with Article 451 of the Civil
Code which states that the landowner is entitled to damages from the
builder in bad faith.65
WHEREFORE, we SET ASIDE the Decision of the Court of Appeals and

RENDER a new one:
1. Declaring that there was no perfected contract of sale;
2. Ordering Bukal Enterprises to pay the Spouses Firme ₱30,000

as nominal damages.
SO ORDERED.

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FIRST DIVISION

[ G.R. Nos. 244667-69 (Formerly UDK 16373-75), December 02, 2020

HEIRS OF CORAZON VILLEZA, NAMELY: IMELDA V. DELA CRUZ,

Before the Court is the Petition for Review1 (Petition) under Rule 45 of

The Facts and Antecedent Proceedings

The CA Decision narrates the antecedents as follows:

In controversy are three (3) parcels of land with improvements located at

[Centro I Property; CV Br. 20-3009

In an Amended Complaint dated March 1, 2011, [respondents] averred

On January 10, 2006, Elizabeth and Rosalina, as buyers, and Corazon

At the time of the execution of the aforementioned deed, the Centro I

On August 3, 2009 and September 1, 2009, respectively, Corazon and

Worse, [respondents] discovered two (2) contracts conveying the Centro

Repudiating the January 10, 2006 Deed of Conditional Sale for allegedly

[Petitioners] add that [respondents] have no cause of action against

[Bunay9 property; CV Br. 20-3010

In an Amended Complaint dated March 1, 2011, [respondent] Elizabeth

Corazon is the registered owner of an agricultural land with

Due to Corazon's untimely demise on August 3, 2009 without

In their Answer dated June 1, 2010, [petitioners] reiterated their

[Poblacion property; CV Br. 20-3011

In an Amended Complaint dated March 1, 2011, [respondent] Rosalina x

Due however to Corazon's untimely demise on August 3, 2009,

In their Answer, [petitioners] reiterated their arguments in [CV] Br. 20-

In an Order dated November 8, 2011, the RTC declared defendants

During [the] pre-trial conference, the parties stipulated on the jurisdiction

On August 30, 2016, the RTC rendered the x xx Decisions in favor of

[The dispositive portions of the Decisions state:

(1) To execute the corresponding document to effectuate the

(2) To surrender to the plaintiffs the owner's duplicate copy of TCT

(3) To pay [P]100,000.00 as moral damages;

(4) To pay [P]50,000.00 as exemplary damages;

(5) To pay [P]150,000.00 as attorney's fees and cost of the suit.

WHEREFORE, in light of the foregoing, judgment is hereby rendered in

(1) To execute the corresponding document to effectuate the

(2) To surrender the [o]wner's duplicate copy of TCT N[o]. T-

(3) To pay [P]100,000.00 as moral damages;

(4) To pay [P]50,000.00 as exemplary damages;

(5) To pay [P]150,000.00 as attorney's fees and cost of the suit.

WHEREFORE, in light of the foregoing, judgment is hereby rendered in

(2) To pay [P]100,000.00 as moral damages;

(3) To pay [P]50,000.00 as exemplary damages;

(4) To pay [P]150,000.00 as attorney's fees and cost of the suit.

Aggrieved, [petitioners appealed to the CA.]11

As to petitioners' argument that respondents' cause of action, if any, is

Regarding the Deed of Conditional Sale (DCS) executed on January 10,

As to the payment of the purchase price, the CA reviewed the records of

The CA concluded that respondents having fully paid the respective

As to damages, the CA found that the awards of moral and exemplary

The dispositive portion of the CA Decision states:

WHEREFORE, premises considered, the three (3) separate Appeals

Hence the present Petition. Respondents filed their Comment26 dated

The Petition states the following issues to be resolved:

1. Whether the CA erred in ruling that there is a perfected

2. Whether the CA erred in not dismissing the cases for specific

3. Whether the CA erred in affirming the Decision of the RTC

The Court's Ruling

The Petition lacks merit.

The issues raised and arguments propounded by petitioners are