Eugenio Domingo vs. Court of Appeals G.R. No.

127540 - October 17, 2001 FACTS: Paulina Rigonan owned three parcels of land including the house and warehouse on one parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion Rigonan, who claim to be her relatives amounting to P850.00. The petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan, who claim to be her closest surviving relatives, allegedly took possession of the properties by means of stealth, force and intimidation, and refused to vacate the same. The respondent filed a complaint for reinvindicacion against petitioners. The petitioners stated that the sale was spurious and they are the legitimate owner of the land being the nearest kin of Paulina. The respondents shown a carbon copy of the deed of sale not bearing the signature of Paulina only alleges thumb mark of the latter and the deed was tainted with alterations, defects and irregularities. The trial court found the deed fake and rendered judgment in favor of the petitioners. The appellate court, however, reversed the decision and declared the respondents the owner of the properties. On appeal, the petitioners asserted that there was abundant evidence at the time of the execution of the sale, the deceased was already senile. She could have not consented to the sale by merely imprinting her thumbmark on the deed. ISSUE: Whether or not the vendor has the capacity to act on the alleged sale of her property. RULING: The Supreme Court reinstated the decision of the trial court. There is a serious doubt that the seller consented to the sale of and the price for her parcels of land. The time of the execution of the alleged contract, Paulina Rigonan was already of advanced age and senile. She died an octogenarian barely over a year when the deed was allegedly executed but before copies of the deed were entered in the registry. The general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities. However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently and firmly protecting her property rights then she is undeniably incapacitated. The unrebutted testimony of ZosimaDomingo shows that at the time of the alleged execution of the deed, Paulina was already incapacitated physically and mentally. She narrated that Paulina played with her waste and urinated in bed.

Labagala vs. Santiago, 371 SCRA 360 (2001) MINORS, INSANE OR DEMENTED PERSONS, AND DEAF-MUTES Generally, minors, insane and demented persons, and deafmutes who do not know how to write, have no legal capacity to contract, and therefore are disqualifi ed from being parties to a sale. Nonetheless, contracts entered into by such legally incapacitated persons are not void, but merely voidable, subject to annulment or ratifi cation. The action for annulment cannot be instituted by the person who is capacitated since he is disqualifi ed from alleging the incapacity of the person with whom he contracts. Contracts entered into during lucid intervals by insane or demented persons are generally valid; whereas, those entered into in a state of drunkenness, or during a hypnotic spell, are merely voidable.

When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution, except insofar as he has been benefited by the thing or price received by him.

Facts: Jose T. Santiago owned a parcel of land. Alleging that Jose had fraudulently registered it in his name alone, his sister Nicolasa and Amanda Santiago (respondents), sued Jose for recovery of 2/3 share of the property. On April 20 1981, the trial court in that case decided in favor of the sisters, recognizing their right of ownership over portions of the property. Jose died intestate. Thereafter, the respondents filed an action before the regional trial court of Manila seeking to recover Joses 1/3 share over the property. Respondents claim that Joses share in the property ipso jure belongs to them because they are the only heirs of their brother, who died intestate and without issue. They allege that it is highly improbable for the petitioner to have paid the supposed consideration of P 150,000.00 for the sale of the subject property because the petitioner was unemployed and without any visible means of livelihood at the time of the alleged sale. Petitioner Labagala, on the other hand, claims that she is the daughter of Jose and Argued that the purported sale was in fact a donation to her. The RTC held that while there was indeed no consideration for the deed of sale executed by Jose in favor of petitioner, but said deed constitutes a valid donation. On appeal, the CA reversed the decision of the RTC. Issue: Whether the purported sale was valid? Held: There is no valid sale. Clearly there is no valid sale in this case. Jose did not have the right to transfer ownership of the entire property to petitioner since 2/3 thereof belonged to his sisters. Petitioner could not have given her consent to the contract, being a minor at the time. Consent of the contracting parties is among the essential requisites of a contract, including one of sale, absent which there can be no valid contract. Moreover, petitioner admittedly did not pay any centavo for the property, which makes the sale void. Article 1471 of the civil code provide, if the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract.

HEIRS OF IGNACIA AGUILAR-REYES vs. SPOUSES CIPRIANO MIJARES and FLORENTINA MIJARES [G.R. No. 143826. August 28, 2003.] FACTS: In 1960, Vicente Reyes married Ignacia Aguilar but they had been separated de facto in1974. One of their conjugal properties is Lot No. 4349 B-2 and the apartment built thereon. The said lot was

registered in the name of Spouses Vicente Reyes and Ignacia Aguilar-Reyes. Vicente Reyes filed a petition for administration and appointment of guardian with the MTC. In the said petition, he misrepresented that his wife, Ignacia, died on March 12, 1982 and that he and their minor children were her only heirs. The court appointed Vicente as guardian of their minor children and subsequently authorized Vicente to sell the estate of Ignacia. On March 1, 1983, respondent Spouses Cipriano and Florentina Mijares bought Lot No. 4349-B-2 for P110, 000. As a consequence of which, the certificate of title in the name of Vicente and Ignacia Agilar-Reyes was cancelled and a new title was issued in the name of respondent-spouse. These circumstances were discovered by Ignacia sometime in 1984.Ignacia then sent a letter to respondent-spouses demanding the return of her share in the lot. Failing to settle the matter amicably, Ignacia instituted a complaint for annulment of sale against respondent-spouses and Vicente was included as one of the defendants. In their answer, respondents claimed that they are purchasers in good faith and that the sale was valid because the same was duly approved by the court. After trial on the merits, the court a quo rendered a decision declaring the sale of Lot No.4349-B-2 void with respect to the share of Ignacia. A motion for modification of the decision was filed by Ignacia praying that the sale be declared void in its entirety and that the respondents bordered to reimburse the rentals collected on the apartments. The trial court granted the motion for modification. Both Ignacia and respondent-spouses appealed to the Court of Appeals. Pending the appeal, Ignacia died and was substituted by her compulsory heirs. The appellate court reversed the decision of the court a quo, ruling that, notwithstanding the absence of Iganacias consent to the sale, the same must be held valid in favor of respondent-spouses because they were innocent purchasers for value. ISSUES: 1. What is the status of the sale of Lot No. 4349-B-2 to respondent-spouses? 2. Would the sale, if voidable, be annulled in its entirety? 3. Were respondent-spouses purchasers in good faith? HELD: 1. VOIDABLE. Pursuant to the foregoing provisions (Articles 166 and 173 of the Civil Code),the husband could not alienate or encumber any conjugal real property without the consent, express or implied, of the wife otherwise, the contract is voidable. Indeed, in several cases the Court had ruled that such alienation or encumbrance by the husband is void. The better view, however, is to consider the transaction as merely voidable and not void. This is consistent with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10years from the questioned transaction, seek its annulment. In Spouses Guiang v. Court of Appeals, the Court quoted with approval the ruling of the trial court that under the Civil Code, the encumbrance or alienation of a conjugal real property byte husband absent the wife's consent, is voidable and not void. Thus . . . Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real property of the conjugal partnership without the wife's consent. The alienation or encumbrance if so made however is not null and void. It is merely voidable. The offended wife may bring an action to annul the said alienation or encumbrance. In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal property having been purchased

using the conjugal funds of the spouses during the subsistence of their marriage. It is beyond cavil therefore that the sale of said lot to respondent spouses without the knowledge and consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale which was filed on June4, 1986, before her demise is perfectly within the 10 year prescriptive period under Article 173 of the Civil Code. Even if we reckon the period from November 25, 1978 which was the date when Vicente and the respondent spouses entered into a contract concerning Lot No. 4349-B-2, Ignacia'saction would still be within the prescribed period. 2. YES.The trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its entirety. In Bucoy v. Paulino, a case involving the annulment of sale with assumption of mortgages executed by the husband without the consent of the wife, it was held that the alienation or encumbrance must be annulled in its entirety and not only insofar as the share of the wife in the conjugal property is concerned. Although the transaction in the said case was declared void and not merely voidable, the rationale for the annulment of the whole transaction is the same thus The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the husband without the wife's consent, may be annulled by the wife. Had Congress intended to limit such annulment in so far as the contract shall "prejudice" the wife, such limitation should have been spelled out in the statute. It is not the legitimate concern of this Court to recast the law. As Mr. Justice Jose B.L. Reyes of this Court and Judge Ricardo C. Puno of the Court of First Instance correctly stated, "the rule in the first sentence of Article 173 revokes Baellovs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430," in which cases annulment was held to refer only to the extent of the one-half interest of the wife. The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share of the wife, is not without its basis in the common-sense rule. To be underscored here is that upon the provisions of Articles 161, 162 and 163 of the Civil Code, the conjugal partnership is liable for many obligations while the conjugal partnership exists. Not only that. The conjugal property is even subject to the payment of debts contracted by either spouse before the marriage, as those forth payment of fines and indemnities imposed upon them after the responsibilities in Article 161have been covered (Article 163, par. 3), if it turns out that the spouse who is bound thereby, should have no exclusive property or if it should be insufficient." These are considerations that go beyond the mere equitable share of the wife in the property. These are reasons enough for the husband to be stopped from disposing of the conjugal property without the consent of the wife. Even more fundamental is the fact that the nullity is decreed by the Code not on the basis of prejudice but lack of consent of an indispensable party to the contract under Article 166. 3. NO. The Court finds that respondent spouses are not purchasers in good faith. A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted in good faith. In the instant case, there existed circumstances that should have placed respondent spouses on guard. The death certificate of Ignacia shows that she died on March 22, 1982. The same death certificate,

however, reveals that (1) it was issued by the Office of the Civil Registrar of Lubao Pampanga on March 10, 1982; (2) the alleged death of Ignacia was reported to the Office of the Civil Registrar on March 4, 1982; and (3) her burial or cremation would be on March 8, 1982.These obvious flaws in the death certificate should have prompted respondents to investigate further, especially so that respondent Florentina Mijares admitted on cross-examination that she asked for the death certificate of Ignacia because she was suspicious that Ignacia was still alive. Moreover, respondent spouses had all the opportunity to verify the claim of Vicente that he is a widower because it was their lawyer, Atty. Rodriguito S. Saet, who represented Vicente in the special proceedings before the Metropolitan Trial Court. Arturo Abalos vs Dr. Galicano Macatangay Jr 30 September 2004, 439 scra 649 Law on Sales Option Earnest Money Arturo and Esther Abalos are husband and wife. They own a parcel of land in Makati. On June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and Memorandum of Agreement in favor of Galicano in which Arturo acknowledged he received a P5k check from Galicano as earnest money to be deducted from the purchase price and that Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase price agreed upon was P1.3 M. The P5k check was dishonored due to insufficiency. Apparently, Esther and Arturo have a rocky relationship. Esther executed a SPA in favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged that that the RMOA is not valid for Esthers signature was not affixed thereto. And that Esther never executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered to him. But the spouses failed to deliver the land. Galicano sued the spouses. ISSUE: Whether or not there was a contract of sale between Arturo and Galicano. Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured the defect of the earlier contract between Arturo and Galicano. HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that the parties considered the P5k as an earnest money to be deducted from the purchase price. Taking arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed to render a payment of legal tender. A check is not a legal tender. Taking arguendo that the P5k was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for Esthers signature was not affixed. The property is conjugal and under the

Family Code, the spouses consents are required. Further, the earnest money here is not actually the earnest money contemplated under Article 1482 under the Civil Code. The subsequent agreement between Esther and Galicano did not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified. - PARTIES TO A SALE Paragas vs. Heirs of Dominador Balacano (2005) FACTS: Gregorio and Lorenza Balacano owned Lots 1175-E and 117-F. Spouses Balacano had 3 children, namely Domingo, Catalino, and Alfredo. Lorenza died during Dec. 11, 1991, while Gregorio died on July 28, 1996. Prior to Gregorios death, he was admitted in Veterans General Hospital in Nueva Vizcaya, and later transferred to Veterans Memorial Hospital in QC, until he died. It was alleged that Gregorio, barely a week prior to his death, sold the 2 lots to spouses Rudy and Corazon Paragas. The said sale appeared in a deed of absolute sale notarized by Atty. De Guzman. The spouses Paragas then sold a portion of one of the lots to Catalino. Domingos children filed a complaint for the annulment of the sale against Catalino and the spouses Paragas. Domingos children argue that: 1.Grandfather Gregorio was seriously ill at the time of the execution of the deed of sale.2.Gregorios consent was vitiated.3.That the lots form part of the conjugal partnership properties of Gregorio and Lorenza. Spouses Paragas moved to dismiss the complaint, arguing that 1.Plaintiffs do not have a cause of action and have no legal ground for the annulment of the deed of sale. Requisites: (1) There must be the performance of the prestation in lieu of payment (animo solvendi) which may consist in the delivery of a corporeal thing or a real right or a credit against the third person; (2) There must be some difference between the prestation due and that which is given in substitution (aliud pro alio); (3) There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a prestation different from that due. 2. Gregorio and Paragas already agreed on the sale of the Lots, that the execution of the Deed of Sale was merely a confirmation of the said agreement. RTC: declared the deed of sale null and void, and the lots were CP properties. Grounds: 1.Gregorio was ill 2.Deed of sale was improperly notarized.3.Atty. De Guzman explanations regarding the erroneous entries on the actual place and date of execution of the deed of sale were justifications for a lie. (He testified that the deed was only a confirmation of a previous agreement

bet.Gregorio and Paragas).4.Rudy Paragas refused or failed to testify about the signing of the deed of sale. CA: affirmed, with modifications: lots were estate of Gregorio ISSUE: W/N the Deed of Sale is null and void. HELD: DEED OF SALE NULL AND VOID 1. Gregorio, died due to complications caused by cirrhosis of the liver, had been fighting the said disease for a month.2.Due to his condition, there are serious doubts as to whether he could read, or fully understood the contents of the deed of sale.3.There are no conclusive evidence that show that the evidence of the deed were sufficiently explained to Gregorio before he affixed his signature.4.Art. 24 of the NCC provides that in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.

Olaguer vs Purungganan Facts: Eduardo Olaguer is the Executive Vice-president of Bussinesday and President of BusinessdayInformation Systems and Services and of Businessday Marketing Corporation. Moreover, he owned President of Businessday Information Systems and Services and of Businessday Marketing Corporation. Being an active Marcos oppositionist, he was afraid that in the event that he will be caught, detained, or forced to go underground, he will left his family without any means of support. He executed special powers of attorney, assigning Locsin and Joaquin as his attorneys-in-fact, and granted them the authority to sell and/or transfer his shares in Bussinessday in his absence. When Olaguer was arrested and detained for allegedly committing arson, LOcsin ordered Purungganan to cancel Olaguers shares and transfer those to his, Locsins, name. Locsin even sent his secretary, Fernando to Camp Crame to borrow from Olaguer the stock certificate and returned it with the word cancel written on it. During Olaguers detention, from 1980 to 1982, Businessday made regular deposits, each amounting toP10,000.00, to the Metropolitan Bank and Trust Company accounts of Manuel and Genaro Pantig, Olaguers in -laws. The deposits were made on every 15th and 30th of the month for the use of Olaguers family. When Olaguer was released, he questioned the transfer of his shares of stock to Locsin, alleging that the transfer was voidable since it was prohibited under the Civil Code. Issue: Whether the transfer of the shares of stocks of Olaguer to Locsins name was valid.

Held: The transfer was valid. ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:x x x x(2) Agents, the

property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; x x x. It is, indeed, a familiar and universally recognized doctrine that a person who undertakes to act as agent for another cannot be permitted to deal in the agency matter on his own account and for his own benefit without the consent of his principal, freely given, with full knowledge of every detail known to the agent which might affect the transaction. The prohibition against agents purchasing property in their hands for sale or management is, however, clearly, not absolute. It does not apply where the principal consents to the sale of the property in the hands of the agent or administrator. In the present case, the parties have conflicting allegations. While respondent Locsin averred that petitioner had permitted him to purchase petitioners shares, petitioner vehemently denies having known of the transaction. However, records show that petitioners position is less credible than that taken by respondent Locsin given petitioners contemporaneous and subsequent acts. In 1980, when Fernando returned a stock certificate she borrowed from the petitioner, it was marked "cancelled." Although the petitioner alleged that he was furious when he saw the word cancelled, he had not demanded the issuance of a new certificate in his name. Instead of having been put on his guard, petitioner remained silent over this obvious red flag and continued receiving, through his wife, payments which totaled to the aggregate amount of the shares of stock valued at par. When the payments stopped, no demand was made by either petitioner or his wife for further payments. From the foregoing, it is clear that petitioner knew of the transaction, agreed to the purchase price of P600, 000.00 for the shares of stock, and had in fact facilitated the implementation of the terms of the payment by providing respondent Locsin, through petitioners wife, with the information on the bank accounts of his in-laws. Petitioners wife and his son even provided receipts for the payments that were made to them by respondent Locsin, a practice that bespeaks of an onerous transaction and not an act of gratuity.

Cavite Development vs. Lim (G.R. No. 131679 February 1, 2000) Was it an option contract? NO. In the case at bar, the sum of P30, 000.00, although denominated in the offer to purchase asoption money, is actually in the nature of earnest money or down payment. An option contract is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract, hence only preparatory. After the payment of the 10% option money, the Offer to Purchase provides for the payment only of the balance of the purchase price, implying that the option money forms part of the purchase price. This is precisely the result of paying earnest money under Art. 1482 of the Civil Code. It is clear then that the parties in this case actually entered into a contract of sale, partially consummated as to the payment of the price. Was the sale null and void?

YES, for being an impossible service. CDB never acquired a valid title to the property because the foreclosure sale, by virtue of which, the property had been awarded to CDB as highest bidder, is likewise void since the mortgagor was not the owner of the property foreclosed. Such contract may be deemed to be inoperative and may thus fall, by analogy, under item No. 5 of Article 1409 of the Civil Code: Those which contemplate an impossible service. The bank was also negligent. There is no evidence that CDB observed its duty of diligence in ascertaining the validity of Rodolfo Guansings title. The alleged ocular inspection report20 by CDBs representative was never formally offered in evidence.

Ravina v. Villa Abrille, G.R. No. 160708, October 16, 2009, 604 SCRA 120 In the present case, the property is registered in the name of Pedro and his wife, Mary Ann. Petitioners cannot deny knowledge that during the time of the sale in 1991, Pedro was married to Mary Ann. However, Mary Anns conformity did not appear in the deed. Even assuming that petitioners believed in good faith that the subject property is the exclusive property of Pedro, they were apprised by Mary Anns lawyer of her objection to the sale and yet they still proceeded to purchase the property without Mary Anns written consent.