HERNANDEZ-NIEVERA vs HERNANDEZ FACTS: -Project Movers Realty & Development Corporation (PMRDC), one of the respondents herein, is a duly

organized domestic corporation engaged in real estate development. -Sometime in 1995, it entered through its president, respondent Mario Villamor (Villamor), into various agreements with co-respondents Home Insurance & Guaranty Corporation (HIGC) 5 and Land Bank of the Philippines (LBP), in connection with the construction of the Isabel Homes housing project in Batangas and of the Monumento Plaza commercial and recreation complex in Caloocan City. -In its Asset Pool Formation Agreement, PMRDC conveyed to HIGC the constituent assets of the two projects, 6 whereas LBP agreed to act as trustee of the resulting Asset Pool 7 for a consideration. -The execution of the projects would be funded largely through securitization, a method of sourcing development funds by the issuance of participation certificates against the direct backing assets of the projects, 9 whereby LBP would act as the nominal issuer of such certificates with the Asset Pool itself acting as the real issuer. - HIGC, in turn, would provide guaranty coverage to these participation certificates in accordance with its Contract of Guaranty with PMRDC and LBP. -On November 13, 1997, PMRDC entered into a Memorandum of Agreement (MOA) whereby it was given the option to buy pieces of land owned by petitioners Carolina Hernandez-Nievera (Carolina), Margarita H. Malvar (Margarita) and Demetrio P. Hernandez, Jr. (Demetrio). -Demetrio, under authority of a Special Power of Attorney to Sell or Mortgage, 12signed the MOA also in behalf of Carolina and Margarita. -The realty measured 4,580,451 square meters and was segregated by agreement into Area I and Area II. -Lands within Area I were then mortgaged to Solid Bank for which petitioners received consideration from PMRDC. -PMRDC saw the need to convey additional properties to and augment the value of its Asset Pool to support the collateralization of additional participation certificates to be issued. -March 23, 1998, it entered with LBP and Demetrio the latter purportedly acting under authority of the same special power of attorney as in the MOA. -PMRDC admittedly did not avail of its option to purchase the lands in Area II in the twelve months that passed after the execution of the MOA. Although PMRDC delivered to petitioners certain checks representing the money, the same however allegedly bounced. -January 8, 1999, petitioners demanded the return of the corresponding TCTs. 19 In its January 21, 1999 letter to Demetrio, however, PMRDC, through Villamor, stated that the TCTs could no longer be delivered back to petitioners as the covered properties had already been conveyed and assigned to the Asset Pool pursuant to the March 23, 1998 DAC. -They explained that Demetrio could not have entered into the said agreement as his power of attorney was limited only to selling or mortgaging the properties and not conveying the same to the Asset Pool. Boldly, they asserted that the fraudulent execution of the DAC was made possible through the connivance of all the respondents. -The trial court, on August 30, 2004, declared the MOA to be an option contract and ordered its rescission. It, likewise, declared the DAC null and void as it made a definite finding of forgery of Demetrio's signature as well as fraud in its execution, and accordingly, adjudged respondents PMRDC and Villamor liable to petitioner for damages. -Court of Appeals issued the assailed Decision reversing and setting aside the trial court's decision. WHEREFORE, based on the foregoing, the appeal is GRANTED. The decision dated August 30, 2004 of the Regional Trial Court, Branch 32, San Pablo City in Civil Case No. SP-5742 (2000) is REVERSED and SET ASIDE and a new one is entered declaring the Deed of Conveyance valid and thus, the Transfer Certificates of Title subject of this case are ordered returned to HIGC. No costs.

HELD: Central to the ruling of the Court of Appeals is its contrary finding that the allegation of forgery of Demetrio's signature in the DAC was not established by the evidence and, hence, following the legal presumption of regularity in the execution of notarized deeds, it upheld the validity of the DAC. 25 The Court of Appeals noted that the incompatibility in the terms of the MOA and the DAC clearly signified the intention of the parties to have the MOA novated by subsequent agreement and have the properties conveyed to the Asset Pool in exchange for PMRDC shares to be issued to Demetrio. This, according to the appellate court, completely changed the original obligations of PMRDC as provided in the MOA. It noted further that it was premature to order the release of the subject TCTs to petitioners at this stage of the proceedings, because that would amount to an execution of the decision. 26 EHcaDT With the denial of their motion for reconsideration, 27 petitioners filed the instant petition for review attributing error to the Court of Appeals in declining to rescind the MOA and declare the DAC null and void. Petitioners insist that the obligation of PMRDC to deliver back the TCTs arises on its failure to exercise the option to purchase the lands according to the terms of the MOA, and that the deliberate refusal of PMRDC to perform such obligation gives ground for the rescission of the MOA. This thesis is perched on petitioners' argument that the MOA could not have possibly been novated by the DAC because first, Demetrio's signature therein has been forged, andsecond, Demetrio could not have validly assented to the DAC in behalf of Carolina and Margarita because his special power was limited only to selling or mortgaging the properties and excludes conveying and assigning the said properties to the Asset Pool for consideration. 28 They also point out that the DAC itself is infirm insofar as it stipulated to convey the lands to the Asset Pool as the latter supposedly is neither a registered corporation nor a partnership and does not possess a legal personality. 29 Commenting on the petition, PMRDC and Villamor advance that petitioners' allegation of fraud and forgery are all factual matters that are inappropriate in a Rule 45 petition. 30 More importantly, they aver that the novation of the MOA by the DAC is unmistakable as the DAC itself has made an express reference to the MOA provisions on the payment of option money and, hence, has expressly modified the pertinent terms thereof. 31 HIGC and its president, Wilfredo Hernandez, both represented by the Office of the Government Corporate Counsel (OGCC), 32 and LBP 33 are of the same view. 34 In addition, HIGC explains that contrary to petitioners' belief, the transfer of the properties under the DAC is valid as the conveyance has been made to the Asset Pool with LBP, an entity with juridical entity, acting as trustee thereof. 35 Addressing the issue of forgery and fraud in the execution of the DAC, HIGC maintains that these factual matters remain to be mere allegations which nothing in the records of the case could conclusively prove, except the self-serving testimony of petitioners themselves. 36 The Court denies the petition. Petitioners' cause stems from the failure of PMRDC to restore to petitioners the possession of the TCTs of the lands within Area II upon its failure to exercise the option to purchase within the 12-month period stipulated in the MOA. Respondents maintain, however, that said obligation, dependent as it

is on the exercise of the option to purchase, has altogether been expressly obliterated by the terms of the DAC whereby petitioners, through Demetrio as attorney-in-fact, have agreed to novate the terms of the MOA by extinguishing the core obligations of PMRDC on the payment of option money. This seems to suggest that with the execution of the DAC, PMRDC has already entered into the exercise of its option except that its obligation to deliver the option money has, by subsequent agreement embodied in the DAC, been substituted instead by the obligation to issue participation certificates in Demetrio's name but which, likewise, has not yet been performed by PMRDC. But petitioners stand against the validity of the DAC on the ground that the signature of Demetrio therein was spurious. Firmly settled is the jurisprudential rule that forgery cannot be presumed from a mere allegation but rather must be proved by clear, positive and convincing evidence by the party alleging the same. 37 The burden to prove the allegation of forgery in this case has not been conclusively discharged by petitioners because first, nothing in the records supports the allegation except only perhaps Demetrio's explicit self-serving disavowal of his signature in open court. 38 Second,while in fact Demetrio at the trial of the case had committed to have the subject signature examined by an expert, 39nevertheless, the trial had terminated without the results of the examination being submitted in evidence. Third, the claim of forgery, unsubstantiated as it is, becomes even more unremarkable in light of the fact that the DAC involved in this case is a notarized deed guaranteed by public attestation in accordance with law, such that the execution thereof enjoys the legal presumption of regularity in the absence of compelling proof to the contrary. 40 EcTDCI Yet the inquiry on the validity of the DAC does not terminate with the finding alone of the genuineness of Demetrio's signature therein, because petitioners also stand against its validity on the ground of Demetrio's non-authority to execute the same. They claim that the execution of the DAC would be beyond the power of Demetrio to perform as his authority is limited only to selling or mortgaging the properties and does not include assigning and conveying said properties to the Asset Pool in consideration of shares of stocks for his lone benefit. For their part, respondents, who believe Demetrio's power of attorney was broad enough to effectuate a novation of PMRDC's core obligations in the MOA or, at the least, implement the provisions thereof through the DAC, invoke the 4th and 5th whereas-clauses in the DAC which, in relation to each other, supposedly pertain to that certain provision in the MOA which authorizes the conveyance of the properties to the Asset Pool in exchange for corporate shares. It is in the context of this vesture of power that Demetrio, representing his shared interest with Carolina and Margarita, entered into the MOA with PMRDC. It is likewise within this same context that Demetrio later on entered into the DAC and accordingly extinguished the previously subsisting obligation of PMRDC to deliver the stipulated option money and replaced said obligation with the delivery instead of participation certificates in favor of Demetrio. The powers conferred on Demetrio were exclusive only to selling and mortgaging the properties. Between these two specific powers, the power to sell is quite controversial because it is the sale transaction which bears close resemblance to the deal contemplated in the DAC. In fact, part of the testimony of Atty. Danilo Javier, counsel for respondent HIGC and head of its legal department at the time, is that in the execution of the DAC, respondents had relied on Demetrio's special power of attorney and also on his supposed agreement to be paid in kind, i.e., in shares of stock, as consideration for the assignment and conveyance of the subject properties to the Asset Pool. 45 What petitioners miss, however, is that the power conferred on Demetrio to sell "for such price or amount" 46 is broad enough to cover the exchange contemplated in the DAC between the properties and the corresponding corporate shares in PMRDC, with the latter replacing the cash equivalent of the option money initially agreed to be paid by PMRDC under the MOA. Suffice it to say that "price" is understood to mean "the cost at which something is obtained, or something which one ordinarily accepts voluntarily in exchange for something else, or the consideration given for the purchase of a thing." 47 Thus, it becomes clear that Demetrio's special power of attorney to sell is sufficient to enable him to make a binding commitment under the DAC in behalf of Carolina and Margarita. In particular, it does include the authority to extinguish PMRDC's obligation under the MOA to deliver option money and agree to a more flexible term by agreeing instead to receive shares of stock in lieu thereof and in consideration of the assignment and conveyance of the properties to the Asset Pool. Indeed, the terms of his special power of attorney allow much leeway to accommodate not only the terms of the MOA but also those of the subsequent agreement in the DAC which, in this case, necessarily and consequently has resulted in a novation of PMRDC's integral obligations. WHEREFORE, the Petition is DENIED. The October 19, 2005 Decision and January 11, 2006 Resolution of the Court of Appeals, in CA-G.R. CV No. 83852, are hereby AFFIRMED.

MAPALO vs MAPALO FACTS: -The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635 square-meter residential land in Manaoag, Pangasinan. -Said spouses-owners, out of love and affection for Maximo Mapalo brother of Miguel who was about to get married decided to donate the eastern half of the land to him. O.C.T. No. 46503 was delivered. -As a result, however, they were deceived into signing, on October 15, 1936, a deed of absolute sale over the entire land in his favor. Their signature thereto were procured by fraud, that is, they were made to believe by Maximo Mapalo and the attorney who acted as notary public who "translated" the document, that the same was a deed of donation in Maximo's favor covering one half (the eastern half) of their land. -Although the document of sale stated a consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not receive anything of value for the land. The attorney's misbehavior was the subject of an investigation but its result does not appear on record. -Following the execution of the afore-stated document the spouses Miguel Mapalo and Candida Quiba immediately built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion. Said fence still exists. The spouses have always been in continued possession over the western half of the land up to the present. -Meanwhile, Maximo Mapalo, on March 15, 1938, registered the deed of sale in his favor and obtained in his name Transfer Certificate of Title No. 12829 over the entire land. -Thirteen years later, on October 20, 1951, he sold for P2,500.00 said entire land in favor Evaristo, Petronila, Pacifico and Miguel, all sur named Narciso. The sale to the Narcisos was in turn registered on November 5, 1951 and Transfer Certificate Title No. 11350 was issued for the whole land in their names. -Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor was made. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinan (Civil Case No. 11991) to be declared owners of the entire land; for possession of its western portion; for damages; and for rentals. -CFI ruled in favor of the spouses Mapalo. -Court of Appeals reversed the Judgment of the Court of First Instance, solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action to annul the same, within four

years from notice of the fraud, had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on March 15, 1938. The Court of First Instance and the Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court of Appeals. ISSUE: W/N the consideration stated in the K is valid?

HELD: And here appellants press the contention that the document dated October 15, 1936, purporting to sell the entire land in favor of Maximo Mapalo, is void, not merely voidable, as to the western portion of the land, for being absolutely simulated or fictitious. Starting with fundamentals, under the Civil Code, either old or the new, for a contract to exist at all, three essential requisites must concur: (1) consent; (2) object, and (3) cause or consideration. 1 The Court of Appeals is right in that the element of consent is present as to the deed of sale of October 15, 1936. For consent was admittedly given, albeit obtained by fraud. Accordingly, said consent, although defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a voidable contract, not a reason for nullity ab initio. The parties are agreed that the second element of object is likewise present in the deed of October 15, 1936, namely, the parcel of land subject matter of the same. Not so, however, as to the third element of cause or consideration. And on this point the decision of the Court of Appeals is silent. As regards the eastern portion of the land, the Mapalo spouses are not claiming the same, it being their stand that they had donated and freely given said half of their land to Maximo Mapalo. And since they did not appeal from the decision of the trial court finding that there was a valid and effective donation of the eastern portion of their land in favor of Maximo Mapalo, the same pronouncement has become final as to them, rendering it no longer proper herein to examine the existence, validity or efficacy of said donation as to said eastern portion. Now, as to the western portion, however, the fact not disputed herein is that no donation by the Mapalo spouses obtained as to said portion. Accordingly, we start with the fact that liberality as a cause or consideration does not exist as regards the western portion of the land in relation to the deed of 1936; that there was no donation with respect to the same.

It is reduced, then, to the question whether there was an onerous conveyance of ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect to said western portion. Specifically, was there a cause or consideration to support the existence of a contract of sale? The rule under the Civil Code, again be it the old or the new, is that contracts without a cause or consideration produce no effect whatsoever. 2 None the less, under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it is supported by another real and licit consideration. 3 And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last four years, the term to run from the date of the consummation of the contract. 4 Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein there is no consideration, or one with a statement of a false consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500,00) Pesos. In fact, however, said consideration was totally absent. The problem, therefor, is whether a deed which states a consideration that in fact did not exist is a contract without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable. In our view, therefore, the ruling of this Court in Ocejo Perez & Co. vs. Flores, 40 Phil. 921, is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. Needless to add, the inexistence of a contract is permanent and incurable and cannot be the subject of prescription. Thereby in effect sustaining barring only its ruling on prescription the judgment and findings of the trial court, including that of bad faith on the part of the Narcisos in purchasing the land in question. We therefore see no need to further remand this case to the Court of Appeals for a ruling on this point, as appellees request in their brief in the event we hold the contract of 1936 to be in existent as regards the western portion of the land.

ONG vs ONG FACTS: -February 25, 1976 Imelda Ong, for and in consideration of One (P1.00) Peso and other valuable considerations, executed in favor of private respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she transferred, released, assigned and forever quitclaimed to Sandra Maruzzo, her heirs and assigns, all her rights, title, interest and participation in the ONE-HALF (1/2) undivided portion of the parcel of land. -On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and, thereafter, on January 20, 1982 donated the whole property described above to her son, Rex Ong Jimenez. -On June 20, 1983, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed with the Regional Trial Court of Makati, Metro Manila an action against petitioners, for the recovery of ownership/possession and nullification of the Deed of Donation over the portion belonging to her and for Accounting. -In their responsive pleading, petitioners claimed that the Quitclaim Deed is null and void inasmuch as it is equivalent to a Deed of Donation, acceptance of which by the donee is necessary to give it validity. Further, it is averred that the donee, Sandra Maruzzo, being a minor, had no legal personality and therefore incapable of accepting the donation. -Trial court rendered judgment in favor of respondent Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of the latter.

-On June 20, 1984, respondent Intermediate Appellate Court promulgated its Decision affirming the appealed judgment and held that the Quitclaim Deed is a conveyance of property with a valid cause or consideration; that the consideration is the One (P1.00) Peso which is clearly stated in the deed itself; that the apparent inadequacy is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is a more valuable consideration given. ISSUE: W/M the consideration the consideration of one peso to private respondent is valid? HELD: On March 15, 1985, respondent Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed an Omnibus Motion informing this Court that she has reached the age of majority as evidenced by her Birth Certificate and she prays that she be substituted as private respondent in place of her guardian ad litem Alfredo Ong. On April 15, 1985, the Court issued a resolution granting the same. A careful perusal of the subject deed reveals that the conveyance of the one-half (1/2) undivided portion of the above-described property was for and in consideration of the One (P1.00) Peso and the other valuable considerations (italics supplied) paid by private respondent Sandra Maruzzo, through her representative, Alfredo Ong, to petitioner Imelda Ong. Stated differently, the cause or consideration is not the One (P1.00) Peso alone but also the other valuable considerations. As aptly stated by the Appellate Court ". . . although the cause is not stated in the contract it is presumed that it is existing unless the debtor proves the contrary (Article 1354 of the Civil Code). One of the disputable presumptions is that there is a sufficient cause of the contract (Section 5, (r), Rule 131, Rules of Court). It is a legal presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein (Article 1354, New Civil Code of the Philippines.) This presumption cannot be overcome by a simple assertion of lack of consideration especially when the contract itself states that consideration was given, and the same has been reduced into a public instrument with all due formalities and solemnities. To overcome the presumption of consideration the alleged lack of consideration must be shown by preponderance of evidence in a proper action. (Samanilla vs. Cajucom, et al., 107 Phil. 432). The execution of a deed purporting to convey ownership of a realty is in itself prima facie evidence of the existence of a valuable consideration, the party alleging lack of consideration has the burden of proving such allegation. (Caballero, et al. vs. Caballero, et al., (CA), 45 O.G. 2536). Moreover, even granting that the Quitclaim deed in question is a donation, Article 741 of the Civil Code provides that the requirement of the acceptance of the donation in favor of minor by parents of legal representatives applies only to onerous and conditional donations where the donation may have to assume certain charges or burdens (Article 726, Civil Code). The acceptance by a legal guardian of a simple or pure donation does not seem to be necessary (Perez vs. Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan vs. Casilan and Court of Appeals, 109 Phil. 889) that the donation to an incapacitated donee does not need the acceptance by the lawful representative if said donation does not contain any condition. In simple and pure donation, the formal acceptance is not important for the donor requires no right to be protected and the donee neither undertakes to do anything nor assumes any obligation. The Quitclaim now in question does not impose any condition." The above pronouncement of respondent Appellate Court finds support in the ruling of this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which states that "the major premise thereof is based upon the fact that the consideration stated in the deeds of sale in favor of Reyes and the Abellas is P1.00. It is not unusual, however, in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00, although the actual consideration may have been much more. Moreover, assuming that said consideration of P1.00 is suspicious, this circumstance, alone, does not necessarily justify the inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither does this inference warrant the conclusion that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent, for the assignor's liberality may be sufficient cause for a valid contract (Article 1350, Civil Code), whereas fraud or bad faith may render either rescissible or voidable, although valid until annulled, a contract concerning an object certain entered into with a cause and with the consent of the contracting parties, as in the case at bar." WHEREFORE, the appealed decision of the Intermediate Appellate Court should be, as it is hereby AFFIRMED, with costs against herein petitioners.

BAGNAS vs CA FACTS: -Hilario Mateum of Kawit, Cavite, died on March 11, 1964, single, without ascendants or descendants, and survived only by collateral relatives, of whom petitioners herein, his first cousins, were the nearest. -Mateum left no will, no debts, and an estate consisting of twenty-nine parcels of land in Kawit and Imus, Cavite, ten of which are involved in this appeal. -On April 3, 1964, the private respondents, themselves collateral relatives of Mateum though more remote in degree than the petitioners, 2 registered with the Registry of Deeds for the Province of Cavite two deeds of sale purportedly executed by Mateum in their (respondents') flavor covering ten parcels of land. Both deeds were in Tagalog, save for the English descriptions of the lands conveyed under one of them; and each recited the reconsideration of the sale to be" . . . halagang ISANG PISO (P1.00), salaping Filipino, at mga naipaglingkod, ipinaglilingkod sa aking kapakanan . . ." ("the sum of ONE PESO(P1.00), Philippine Currency, and services rendered, being rendered and to be rendered for my benefit"). -On May 22, 1964 the petitioners commenced suit against the respondents in the Court of First Instance of Cavite, seeking annulment of the deeds of sale as fictitious, fraudulent or falsified, or, alternatively, as donations void for want of acceptance embodied in a public instrument. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum, the petitioners prayed for recovery of ownership and possession of said lands, accounting of the fruits thereof and damages. -The complaint originally sought recovery of all the twenty-nine parcels of land left by Mateum, at the pre-trial the parties agreed that the controversy be limited to the ten parcels subject of the questioned sales, and the Trial Court ordered the exclusion of the nineteen other parcels from the action.6 Of the ten parcels which remained in litigation, nine were assessed for purposes of taxation at values aggregating P10,500.00. The record does not disclose the assessed value of the tenth parcel, which has an area of 1,443 square meters. ISSUE: W/N there is a valid consideration? HELD: The consideration alone that the apparent gross, not to say enormous, disproportion between the stipulated price (in each deed) of P1.00 plus unspecified and unquantilled services and the undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by assessments

for tax purposes which, it is well-known, are notoriously low indicators of actual value plainly and unquestionably demonstrates that they state a false and fictitious consideration, and no other true and lawful cause having been shown, the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. Neither can the validity of said conveyances be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality donations, 18 because the law 19 also prescribes that donations of immovable property, to be valid, must be made and accepted ins public instrument, and it is not denied by the respondents that there has been no such acceptance which they claim is not required. 20 The transfers in question being void, it follows as a necessary consequence and conformably to the concurring opinion in Armentia, with which the Court fully agrees, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such is not challenged. The private respondents have only themselves to blame for the lack of proof that might have saved the questioned transfers from the taint of invalidity as being fictitious and without licit cause; proof, to be brief, of the character and value of the services, past, present, and future, constituting according to the very terms of said transfers the principal consideration therefor. The petitioners' complaint (par. 6) 21 averred that the transfers were ". . . fraudulent, fictitious and or falsified and(were) . . . in reality donations of immovables . . .," an averment that the private respondents not only specifically denied, alleging that the transfers had been made ". . . for good and valuable consideration . . .," but to which they also interposed the affirmative defenses that said transfers were". . . valid, binding and effective . . . ," and, in an obvious reference to the services mentioned in the deeds, that they . . . had done many good things to (the transferor) during his lifetime, nursed him during his ripe years and took care of him during his previous and last illness . . .," (pars. 4, 6, 16 and 17, their answer). 22 The onus, therefore, of showing the existence of valid and licit consideration for the questioned conveyances rested on the private respondents. But even on a contrary assumption, and positing that the petitioners initially had the burden of showing that the transfers lacked such consideration as they alleged in their complaint, that burden was shifted to the private respondents when the petitioners presented the deeds which they claimed showed that defect on their face and it became the duty of said respondents to offer evidence of existent, lawful consideration. As the record clearly demonstrates, the respondents not only failed to offer any proof whatsoever, opting to rely on a demurrer to the petitioners evidence and upon the thesis, which they have maintained all the way to this Court, that petitioners, being mere collateral relatives of the deceased transferor, were without right to the conveyances in question. In effect, they gambled their right to adduce evidence on a dismissal in the Trial Court and lost, it being the rule that when a dismissal thus obtained is reversed on appeal, the movant loses the right to present evidence in his behalf 23 WHEREFORE, the appealed Decision of the Court of Appeals is reversed. The questioned transfers are declared void and of no force or effect. Such certificates of title as the private respondents may have obtained over the properties subject of said transfers are hereby annulled, and said respondents are ordered to return to the petitioners possession of all the properties involved in this action, to account to the petitioners for the fruits thereof during the period of their possession, and to pay the costs. No damages, attorney's fees or litigation expenses are awarded, there being no evidence thereof before the Court.

MATE vs CA FACTS: On October 6, 1986 Josefina R. Rey (hereafter referred to as "Josie" for short) and private respondent went to the residence of petitioner at Tacloban City. Josie who is a cousin of petitioner's wife solicited his help to stave off her and her family's prosecution by private respondent for violation of B.P. 22 on account of the rubber checks that she, her mother, sister and brother issued to private respondent amounting to P4,432,067.00. She requested petitioner to cede to private respondent his three (3) lots in Tacloban City in order to placate him. On hearing Josie's proposal, he immediately rejected it as he owed private respondent nothing and he was under no obligation to convey to him his properties. Furthermore, his lots were not for sale. Josie explained to him that he was in no danger of losing his properties as he will merely execute a simulated document transferring them to private respondent but they will be redeemed by her with her own funds. After a long discussion, he agreed to execute a fictitious deed of sale with right to repurchase covering his three (3) lots mentioned above subject to the following conditions: 1.The amount to be stated in the document is P1,400,000.00 with interest thereon at 5% a month; 2.The properties will be repurchased within six (6) months or on or before April 4, 1987; 3.Although it would appear in the document that petitioner is the vendor, it is Josie who will provide the money for the redemption of the properties with her own funds; 4.Titles to the properties will be delivered to private respondent but the sale will not be registered in the Register of Deeds and annotated on the titles. "To assure petitioner that Josie will redeem the aforesaid properties, she issued to him two (2) BPI checks both postdated December 15, 1986. One check was for P1,400,000.00 supposedly for the selling price and the other was for P420,000.00 corresponding to the interests for 6 months. Immediately thereafter petitioner prepared the Deed of Sale with Right to Repurchase (Exh. A) and after it has been signed and notarized, it was given to private respondent together with the titles of the properties and the latter did not register the transaction in the Register of Deeds as agreed upon. "On January 14, 1987, petitioner deposited the check for P1,400,000.00 (Exh. B) in his account at the United Coconut Planters Bank and the other check for P420,000.00 (Exh. D) in his account at METROBANK preparatory to the redemption of his properties. However, both of them were dishonored by the drawee bank for having been drawn against a closed account. Realizing that he was swindled, he sent Josie a telegram about her checks and when she failed to respond, he went to Manila to look for her but she could not be found. So he returned to Tacloban City and filed Criminal Cases Nos. 8310 and 8312 against her for violation of B.P. 22 but the cases were later archived as the accused (Josie) could not be found as she went into hiding. To protect his interest, he filed Civil Case No. 7396 of the Regional Trial Court of

Leyte, Branch VII, entitled 'Fernando T. Mate vs. Josefina R. Rey and Inocencio Tan' for Annulment of Contract with Damages. Defendant Josefina R. Rey (Josie) was declared in default and the case proceeded against private respondent. But during the trial the RTC court asked private respondent to file an action for consolidation of ownership of the properties subject of the sale and pursuant thereto he filed Civil Case No. 7587 that was consolidated with the case he filed earlier which were later decided jointly by the trial court in favor of private respondent and was subsequently appealed to respondent Court that affirmed it with modification. Thereupon, petitioner filed a motion to reconsider the decision but it was denied. Hence, the instant petition for review ISSUE: W/N there is a valid consideration: HELD: The Supreme Court does not agree with petitioner's contention. The Court held that there was a consideration. While petitioner did not received the P1.4 Million purchase price from respondent Tan, he had in his possession a postdated check of Josie in an amount equivalent to the two lots on or before the sixth month. Unfortunately, the two checks bounced. Both were dishonored upon presentment for payment by petitioner with the drawee banks. However, there is absolutely no basis for petitioner to file a complaint against private respondent Tan and Josie to annul the pacto de retrosale on the ground of lack of consideration, invoking his failure to encash the two checks. Petitioner's cause of action was to file criminal actions against Josie under B.P. 22, which he did. The filing of said criminal cases was a tacit admission by petitioner that there was a consideration. The Court stressed that a contract once agreed upon, and provided that all the essential elements are present, is valid and binding between the parties. As admitted by petitioner, by virtue of the sale with pacto de retro, Josie Rey gave him, as vendor-a-retro, a postdated check in the amount of P1.4 Million, which represented the repurchase price of the two (2) lots. Aside from the P1.4 Million check, Josie gave another postdated check to petitioner in the amount of P420,000.00 ostensibly as interest for six (6) months but which apparently was his fee for having executed the pacto de retro document. Josie thus assumed the responsibility of paying the repurchase price on behalf of petitioner to private respondent. Unfortunately, the two checks issued by Josie Rey were worthless. Both were dishonored upon presentment by petitioner with the drawee bank. However, there is absolutely no basis for petitioner to file a complaint against private respondent Tan and Josie Rey to annul the pacto de retro sale on the ground of lack of consideration, invoking his failure to encash the two checks. Petitioner's cause of action was to file criminal actions against Josie Rey under B.P. 22, which he did. The filing of the criminal cases was a tacit admission by petitioner that there was a consideration of the pacto de retro sale.

ALIO vs HEIRS OF LORENZO FACTS: Angelica A. Lorenzo, daughter of Lucia Carlos Alio, bought a 1,745-square meter parcel of land, located at Rosary Heights, Cotabato City, registered in the name of Lucia, for P10,000.00 under a Deed of Absolute Sale.3 Consequently, a new TCT was issued in Angelica's name. Lucia, however, continued to pay the real estate taxes under her name and remained in continuous, open and adverse possession of the property. On October 3, 1985, Angelica died, leaving private respondents, as surviving heirs, her husband, Servillano, Sr. and their eight children. Subsequently, Lucia offered to sell to the Central Bank of the Philippines (CBP) her lots in Rosary Heights, including the subject lot, as registered in Angelica's name. She wrote a letter to Servillano, Sr. demanding the return of the subject lot but the latter refused. Hence, this case. As respondent heirs submit that sale was not simulated, Lucia, on the other hand, contends that the sale was simulated, considering the complete absence of any attempt on the part of Angelica or Servillano, Sr. to assert dominical rights over the subject property. She also point to the gross disproportion between the purchase price and the market value of the property, the non-payment of the consideration, and sale having been made in Angelica's name only as other indications of simulation. ISSUE: Whether or not the Deed of Absolute Sale executed by Lucia in favor of Angelica is valid and binding upon the parties. RULING: It is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration.29 Such intention is determined from the express terms of their agreement, 30 as well as their contemporaneous and subsequent acts. 31 When the parties do not intend to be bound at all, the contract is absolutely simulated; if the parties conceal their true agreement, then the contract is relatively simulated. 32 Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effects or in any way alter the juridical situation of the parties.33 In the present case, the evidence clearly shows that Angelica or Servillano, Sr. did not attempt to exercise any act of dominion over the subject lot. From the time the sale was effected on April 2, 1979 up to the time of the institution of the complaint on August 3, 1989, 40 Angelica or Servillano, Sr. did not enter the subject lot and occupy the premises. When Servillano, Sr. transferred his residence, he did not even choose to utilize the subject lot. 41 None of the respondent heirs also took possession of the subject lot. In contrast, Lucia was in actual possession of the property. She designated Vivian as caretaker of the subject lot in 1984. 42 Vivian constructed a house on the subject lot and has been residing therein since then.43 It is well-settled that actual possession of land consists in the manifestation of acts of dominion over it of such a nature as those a party would naturally exercise over his own property. 44 It is not necessary that the owner of a parcel of land should himself occupy the property as someone in his name may perform the act. In other words, the owner of real estate has possession, either when he himself is physically in occupation of the property, or when another person who recognizes his rights as owner is in such occupancy.45 Furthermore, Lucia religiously paid the realty taxes on the subject lot from 1980 to 1987. 46 While tax receipts and declarations of ownership for taxation purposes are not, in themselves, incontrovertible evidence of ownership, they constitute at least proof that the holder has a claim of title over the property,47 particularly when accompanied by proof of actual possession. 48 They are good indicia of the 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 at least constructive possession. 49 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. 50 Such an act strengthens one's bona fide claim of acquisition of ownership.51 Thus, the subsequent acts of the parties belie the intent to be bound by the deed of sale. MACASAET vs R. TRANSPORT CORP.

FACTS: On 3 January 1996, a Complaint for Recovery of Possession and Damages 3 was filed by herein respondent R. Transport Corporation against herein petitioner Alexander Macasaet before the Regional Trial Court (RTC) of Makati, Branch 147. The complaint alleged that R. Transport was a holder of Certificates of Public Convenience (CPC) to operate a public utility bus service within Metro Manila and the provinces whereas New Mindoro Transport Classic (NMTC), represented by petitioner, operates a transportation company in Oriental Mindoro. On 11 October 1995, and Macasaet entered into a "Deed of Sale with Assumption of Mortgage" (deed of sale) 4 over four (4) passenger buses 5 whereby Macasaet undertook to pay the consideration of twelve million pesos (P12,000,000.00) and assume the existing mortgage obligation on the said buses in favor of Phil. Hino Sales Corporation. Accordingly, R. Transport delivered to Macasaet two (2) passenger buses. aTEACS Despite repeated demands, however, Macasaet failed to pay the stipulated purchase price. This prompted R. Transport to file a complaint seeking the issuance of a writ of replevin, praying for judgment declaring R. Transport as the lawful owner and possessor of the passenger buses and ordering Macasaet to remit the amount of P660,000.00 representing the income generated by the two buses from 16 October 1995 to 2 January 1996. 6 Prior to the execution of the contract, "Special Trip Contract" was entered into by the parties on 8 October 1995. 7 This contract stipulated that R. Transport would lease the four buses subject of the deed of sale to Macasaet for the sum of P10,000.00 a day per bus or a total of P280,000.00 for the duration of one week, from 15-22 October 1995. 8Respondent's finance officer testified that the purpose of the contract was to support the delivery of the first two buses pending formal execution of the deed of sale. 9 On 8 January 1996, on R. Transport's motion, the trial court issued a writ of seizure 10 ordering the sheriff to take possession of the two buses in NMTC subject to R. Transport's filing of a bond in the amount of P12,000,000.00. The sheriff recovered the two buses and delivered them to R. Transport on 16 January 1996. 11 For his defense, petitioner alleged that he had paid respondent the full consideration of P12,000,000.00 and had agreed to assume the mortgage obligation in favor of Phil. Hino Sales Corporation. He claimed ownership over the four passenger buses, including the two buses already delivered to him. He further contended that he had already remitted P120,000.00 to respondent as partial payment of the mortgage obligation. Petitioner admitted that he had been earning at least P7,000.00 per day on each of the buses. 12 For his counterclaim, he prayed for the return of the bus units seized and the immediate delivery of the other two units, as well as for payment of damages. 13 In its Decision 14 dated 15 February 2001, the RTC upheld the right of respondent to possess the two buses but dismissed its claim for recovery of unpaid rentals for the use of the two buses. Dissatisfied with the RTC's refusal to award rentals, respondent filed a petition for review before the Court of Appeals asserting its right as an owner to the fruits of the two passenger buses, over the fruits thereof, i.e., the income derived from their use. The Court of Appeals, in its Decision dated 5 October 2005, sustained the trial court's finding that ownership over the passenger buses remained with respondent. Court of Appeals ruled that the deed of sale was not perfected, thus, respondent retained ownership over the buses. It further ordered petitioner to remit the income from the passenger buses in the amount of P7,000.00 per day for the period between 16 October 1995 and 16 January 1996, deducting therefrom the amount of P120,000.00 which had already been remitted to respondent. ISSUE: Is Section 34 of Rule 132 of the Rules of Court which states that "the court shall consider no evidence which has not been formally offered" applicable in the case at bar?

RULING: Petitioner argues in the main that there was no legal and factual basis for the Court of Appeals to order the remittance of income. He harps on the fact that there was no lease agreement alleged in respondent's complaint to support its claim for unpaid rentals. He reiterates the trial court's finding that the exhibits tending to prove the rentals were not formally offered in evidence. Moreover, no other competent evidence was presented to substantiate its claim for unpaid rentals. 20 Respondent, in its comment, merely parrots the ruling of the Court of Appeals, petitioner notes. 21 ITEcAD Crucial to the resolution of the case is the continuing efficacy of the deed of sale, which in turn is the basis in determining the ownership of the buses. Respondent, on the other hand, claims that the contract was never consummated for lack of consideration and because of the subsequent disapproval of the security finance needed for petitioner to assume the mortgage obligation. On the other hand, petitioner asserts ownership over the subject buses by virtue of payment of the stipulated consideration for the sale. The appellate court declared that the non-perfection of the deed of sale precluded petitioner from possessing and enjoying the buses, including the income thereof. Explained the appellate court: True, the plaintiff-appellant and the defendant-appellee have no agreement as to the payment of rentals for the subject passenger buses, since what was actually agreed upon by the parties herein, was not the lease, but the sale of the subject buses to the defendant-appellee in the amount of P12,000,000.00, with assumption of mortgage, as evidenced by the Deed of Sale with Assumption of Mortgage. It was pursuant to this Deed of Sale with Assumption of Mortgage that the subject two passenger buses were delivered by the plaintiff-appellant to the defendant-appellee in October, [sic] 1995. The said contract was the basis of the defendant-appellee's possession and enjoyment of the subject property, which includes entitlement to the income thereof. However, the aforementioned contract of sale has never been perfected.

Firstly, the court a quo found that no payment has been made by the defendant-appellee, for otherwise, it could not have upheld the plaintiff-appellant's possession over the subject buses. 22 The Court of Appeals erred in stating that the deed of sale was not perfected, for it was. There was no consummation, though. However, the rescission or resolution of the deed of sale is in order. The essential requisites of a contract under Article 1318 of the New Civil Code are: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. Thus, contracts, other than real 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. Once perfected, they bind other contracting parties and the obligations arising therefrom have the force of law between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law. 23 DSEIcT Being a consensual contract, 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. 24 A perfected contract of sale imposes reciprocal obligations on the parties whereby the vendor obligates himself to transfer the ownership of and to deliver a determinate thing to the buyer who, in turn, is obligated to pay a price certain in money or its equivalent. 25 Failure of either party to comply with his obligation entitles the other to rescission as the power to rescind is implied in reciprocal obligations. 26

Applying these legal precepts to the case at bar, we hold that respondent has the right to rescind or cancel the deed of sale in view of petitioner's failure to pay the stipulated consideration. Montecillo v. Reynes, 27 cited by the appellate court, is particularly instructive in distinguishing the legal effects of "failure to pay consideration" and "lack of consideration:" . . . Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing contract, while the latter prevents the existence of a valid contract. Where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration. . . . 28 The Court of Appeals however failed to consider that in the instant case, there was failure on the part of petitioner to pay the purchase price and to complete the assumption of mortgage. The latter argued before the lower court that payment was in fact made and counterclaimed for the immediate delivery of the two other passenger buses and payment of damages. 29 However, this claim remained a claim and was not substantiated. While the Court of Appeals relied on the text of the deed of sale which adverts to payment of the purchase price, 30 the non-payment of the purchase price was no longer an issue at the appellate level. Respondent presented strong evidence that petitioner did not pay the purchase price, and that paved the way for the issuance of a writ of replevin. Petitioner did not challenge the finding of the trial court before the Court of Appeals and this Court. He did not also controvert the non-consummation of the assumption of mortgage at any level of the proceedings. AECcTS Non-payment of the purchase price of property constitutes a very good reason to rescind a sale for it violates the very essence of the contract of sale. 31 While it is preferable that respondent instead should have filed an action to resolve or cancel the deed as the right to do so must be invoked judicially, 32 this shortcoming was cured when the complaint itself made out a case for rescission or resolution for failure of petitioner to comply with his obligation to pay the full purchase price.