G.R. No.

125172 June 26, 1998

Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,
vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of both the husband and the wife. The
absence of the consent of one renders the sale null and void, while the vitiation thereof makes it
merely voidable. Only in the latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in deciding this petition for review of the
Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated by the
Court of Appeals in CA-GR CV No. 41758, affirming the Decision of the lower court and
denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against her
husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said
Complaint sought the declaration of a certain deed of sale, which involved the conjugal property
of private respondent and her husband, null and void. The case was raffled to the Regional Trial
Court of Koronadal, South Cotabato, Branch 25. In due course, the trial court rendered a
Decision 4 dated September 9, 1992, disposing as follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff and against the
defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A")
and the "amicable settlement" dated March 16, 1990 (Exh. "B") as null void and
of no effect;
2. Recognizing as lawful and valid the ownership and possession of plaintiff
Gilda Corpuz over the remaining one-half portion of Lot 9, Block 8, (LRC) Psd165409 which has been the subject of the Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang
the amount of NINE THOUSAND (P9,000.00) PESOS corresponding to the
payment made by defendants Guiangs to Manuel Callejo for the unpaid balance of
the account of plaintiff in favor of Manuel Callejo, and another sum of P379.62
representing one-half of the amount of realty taxes paid by defendants Guiangs on

Lot 9, Block 8, (LRC) Psd-165409, both with legal interests thereon computed
from the finality of the decision.
No pronouncement as to costs in view of the factual circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court, in
its challenged Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby
AFFIRMED by this Court. No costs considering plaintiff-appellee's failure to file
her brief despite notice.
Reconsideration was similarly denied by the same court in its assailed Resolution: 7
Finding that the issues raised in defendants-appellants motion for reconsideration
of Our decision in this case of January 30, 1996, to be a mere rehash of the same
issues which we have already passed upon in the said decision, and there [being]
no cogent reason to disturb the same, this Court RESOLVED to DENY the instant
motion for reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and while she was in
Manila seeking employment, her husband sold to the petitioners-spouses one half of their
conjugal peoperty, consisting of their residence and the lot on which it stood. The circumstances
of this sale are set forth in the Decision of Respondent Court, which quoted from the Decision of
the trial court as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses.
They were married on December 24, 1968 in Bacolod City, before a judge. This is
admitted by defendants-spouses Antonio and Luzviminda Guiang in their answer,
and also admitted by defendant Judie Corpuz when he testified in court (tsn. p. 3,
June 9, 1992), although the latter says that they were married in 1967. The couple
have three children, namely: Junie 18 years old, Harriet 17 years of age, and
Jodie or Joji, the youngest, who was 15 years of age in August, 1990 when her
mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with
plaintiff-wife Gilda Corpuz as vendee, bought a 421 sq. meter lot located in
Barangay Gen. Paulino Santos (Bo. 1), Koronadal, South Cotabato, and
particularly known as Lot 9, Block 8, (LRC) Psd-165409 from Manuel Callejo
who signed as vendor through a conditional deed of sale for a total consideration

of P14,735.00. The consideration was payable in installment, with right of

cancellation in favor of vendor should vendee fail to pay three successive
installments (Exh. "2", tsn p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half
portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses
Antonio and Luzviminda Guiang. The latter have since then occupied the one-half
portion [and] built their house thereon (tsn. p. 4, May 22, 1992). They are thus
adjoining neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to
look for work abroad, in [the] Middle East. Unfortunately, she became a victim of
an unscrupulous illegal recruiter. She was not able to go abroad. She stayed for
sometime in Manila however, coming back to Koronadal, South Cotabato, . . . on
March 11, 1990. Plaintiff's departure for Manila to look for work in the Middle
East was with the consent of her husband Judie Corpuz (tsn. p. 16, Aug. 12, 1990;
p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz seldom went home
to the conjugal dwelling. He stayed most of the time at his place of work at
Samahang Nayon Building, a hotel, restaurant, and a cooperative. Daughter
Herriet Corpuz went to school at King's College, Bo. 1, Koronadal, South
Cotabato, but she was at the same time working as household help of, and staying
at, the house of Mr. Panes. Her brother Junie was not working. Her younger sister
Jodie (Jojie) was going to school. Her mother sometimes sent them money (tsn. p.
14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that her father intended to sell
the remaining one-half portion including their house, of their homelot to
defendants Guiangs. She wrote a letter to her mother informing her. She [Gilda
Corpuz] replied that she was objecting to the sale. Harriet, however, did not
inform her father about this; but instead gave the letter to Mrs. Luzviminda
Guiang so that she [Guiang] would advise her father (tsn. pp. 16-17, Sept. 6,
1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz
pushed through the sale of the remaining one-half portion of Lot 9, Block 8,
(LRC) Psd-165409. On March 1, 1990, he sold to defendant Luzviminda Guiang
thru a document known as "Deed of Transfer of Rights" (Exh. "A") the remaining
one-half portion of their lot and the house standing thereon for a total
consideration of P30,000.00 of which P5,000.00 was to be paid in June, 1990.

Transferor Judie Corpuz's children Junie and Harriet signed the document as
witness.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure
whatever defect in defendant Judie Corpuz's title over the lot transferred,
defendant Luzviminda Guiang as vendee executed another agreement over Lot 9,
Block 8, (LRC) Psd-165408 (Exh. "3"), this time with Manuela Jimenez Callejo, a
widow of the original registered owner from whom the couple Judie and Gilda
Corpuz originally bought the lot (Exh. "2"), who signed as vendor for a
consideration of P9,000.00. Defendant Judie Corpuz signed as a witness to the
sale (Exh. "3-A"). The new sale (Exh. "3") describes the lot sold as Lot 8, Block
9, (LRC) Psd-165408 but it is obvious from the mass of evidence that the correct
lot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier sold to the couple
Gilda and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home. She found her children
staying with other households. Only Junie was staying in their house. Harriet and
Joji were with Mr. Panes. Gilda gathered her children together and stayed at their
house. Her husband was nowhere to be found. She was informed by her children
that their father had a wife already.
6. For staying in their house sold by her husband, plaintiff was complained
against by defendant Luzviminda Guiang and her husband Antonio Guiang before
the Barangay authorities of Barangay General Paulino Santos (Bo. 1), Koronadal,
South Cotabato, for trespassing (tsn. p. 34, Aug. 17, 1990). The case was docketed
by the barangay authorities as Barangay Case No. 38 for "trespassing". On March
16, 1990, the parties thereat signed a document known as "amicable settlement".
In full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children,
namely: Junie, Hariet and Judie to leave voluntarily the house of
Mr. and Mrs. Antonio Guiang, where they are presently boarding
without any charge, on or before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff to the
Barangay Captain of Barangay Paulino Santos to question her signature on the
amicable settlement. She was referred however to the Office-In-Charge at the
time, a certain Mr. de la Cruz. The latter in turn told her that he could not do
anything on the matter (tsn. p. 31, Aug. 17, 1990).

This particular point not rebutted. The Barangay Captain who testified did not
deny that Mrs. Gilda Corpuz approached him for the annulment of the settlement.
He merely said he forgot whether Mrs. Corpuz had approached him (tsn. p. 13,
Sept. 26, 1990). We thus conclude that Mrs. Corpuz really approached the
Barangay Captain for the annulment of the settlement. Annulment not having
been made, plaintiff stayed put in her house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with a motion
for the execution of the amicable settlement, filing the same with the Municipal
Trial Court of Koronadal, South Cotabato. The proceedings [are] still pending
before the said court, with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for the
preparation of the Deed of Transfer of Rights, Exh. "A", P9,000.00 as the amount
they paid to Mrs. Manuela Callejo, having assumed the remaining obligation of
the Corpuzes to Mrs. Callejo (Exh. "3"); P100.00 for the preparation of Exhibit
"3"; a total of P759.62 basic tax and special education fund on the lot; P127.50 as
the total documentary stamp tax on the various documents; P535.72 for the capital
gains tax; P22.50 as transfer tax; a standard fee of P17.00; certification fee of
P5.00. These expenses particularly the taxes and other expenses towards the
transfer of the title to the spouses Guiangs were incurred for the whole Lot 9,
Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling that any alienation or
encumbrance by the husband of the conjugal propety without the consent of his wife is null and
void as provided under Article 124 of the Family Code. It also rejected petitioners' contention
that the "amicable sttlement" ratified said sale, citing Article 1409 of the Code which expressly
bars ratification of the contracts specified therein, particularly those "prohibited or declared void
by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the following errors: 10
I
Whether or not the assailed Deed of Transfer of Rights was validly executed.

II
Whether or not the Cour of Appeals erred in not declairing as voidable contract
under Art. 1390 of the Civil Code the impugned Deed of Transfer of Rights which
was validly ratified thru the execution of the "amicable settlement" by the
contending parties.
III
Whether or not the Court of Appeals erred in not setting aside the findings of the
Court a quo which recognized as lawful and valid the ownership and possession
of private respondent over the remaining one half (1/2) portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of
Rights) was merely voidable, and (2) such contract was ratified by private respondent when she
entered into an amicable sttlement with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the
parties-litigants in good faith and for valuable consideration. The absence of private respondent's
consent merely rendered the Deed voidable under Article 1390 of the Civil Code, which
provides:
Art. 1390. The following contracts are voidable or annullable, even though there
may have been no damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2, refers to contracts visited by
vices of consent,i.e., contracts which were entered into by a person whose consent was obtained
and vitiated through mistake, violence, intimidation, undue influence or fraud. In this instance,

private respondent's consent to the contract of sale of their conjugal property was totally
inexistent or absent. Gilda Corpuz, on direct examination, testified thus:11
Q Now, on March 1, 1990, could you still recall where you were?
A I was still in Manila during that time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any problem
which arose concerning the ownership of your residential house at
Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which
arose regarding my residential house and lot because it was sold by
my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of the Family
Code, which was correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the conjugal partnerhip properly
shall belong to both spouses jointly. In case of disgreement, the husband's
decision shall prevail, subject recourse to the court by the wife for proper remedy,
which must be availed of within five years from the date of the contract
implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in
the administration of the conjugal properties, the other spouse may assume sole
powers of administration. These powers do not include the powers of disposition
or encumbrance which must have the authority of the court or the written consent
of the other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
(165a) (Emphasis supplied)

Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly
explained the amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or encumbrance is void. It becomes
still clearer if we compare the same with the equivalent provision of the Civil
Code of the Philippines. Under Article 166 of the Civil Code, the husband cannot
generally alienate or encumber any real property of the conjugal partnershit
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. Thus the provision of Article 173 of the
Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years
from the transaction questioned, ask the courts for the annulment
of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the
husband.(n)
This particular provision giving the wife ten (10) years . . . during [the] marriage
to annul the alienation or encumbrance was not carried over to the Family Code.
It is thus clear that any alienation or encumbrance made after August 3, 1988
when the Family Code took effect by the husband of the conjugal partnership
property without the consent of the wife is null and void.
Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were
perpetrated in the execution of the document embodying the amicable settlement. Gilda Corpuz
alleged during trial that barangay authorities made her sign said document through
misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the deed of sale
between the husband and the petitioners-spouses, as will be discussed later. The fact remains that
such contract was entered into without the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private respondent's
consent. To constitute a valid contract, the Civil Code requires the concurrence of the following
elements: (1) cause, (2) object, and (3) consent, 14 the last element being indubitably absent in the
case at bar.

Second Issue: Amicable Settlement

Insisting that the contract of sale was merely voidable, petitioners aver that it was duly ratified
by the contending parties through the "amicable settlement" they executed on March 16, 1990 in
Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved this issue in favor
of the private respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to
Transfer of Rights (Exh. "A") cannot be ratified, even by an "amicable
settlement". The participation by some barangay authorities in the "amicable
settlement" cannot otherwise validate an invalid act. Moreover, it cannot be
denied that the "amicable settlement (Exh. "B") entered into by plaintiff Gilda
Corpuz and defendent spouses Guiang is a contract. It is a direct offshoot of the
Deed of Transfer of Rights (Exh. "A"). By express provision of law, such a
contract is also void. Thus, the legal provision, to wit:
Art. 1422. Acontract which is the direct result of a previous illegal
contract, is also void and inexistent. (Civil Code of the
Philippines).
In summation therefore, both the Deed of transfer of Rights (Exh. "A") and the
"amicable settlement" (Exh. "3") are null and void.
Doctrinally and clearly, a void contract cannot be ratified. 16
Neither can the "amicable settlement" be considered a continuing offer that was accepted and
perfected by the parties, following the last sentence of Article 124. The order of the pertinent
events is clear: after the sale, petitioners filed a complaint for trespassing against private
respondent, after which the barangay authorities secured an "amicable settlement" and petitioners
filed before the MTC a motion for its execution. The settlement, however, does not mention a
continuing offer to sell the property or an acceptance of such a continuing offer. Its tenor was to
the effect that private respondent would vacate the property. By no stretch of the imagination,
can the Court interpret this document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision
and Resolution. Costs against petitioners.
SO ORDERED.

G.R. No. 165879

November 10, 2006

MARIA B. CHING, Petitioner,

vs.
JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRY GOYANKO, IMELDA
GOYANKO, JULIUS GOYANKO, MARY ELLEN GOYANKO AND JESS GOYANKO,
Respondents.
DECISION
CARPIO MORALES, J.:
On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania) were
married.1 Out of the union were born respondents Joseph, Jr., Evelyn, Jerry, Imelda, Julius, Mary
Ellen and Jess, all surnamed Goyanko.
Respondents claim that in 1961, their parents acquired a 661 square meter property located at 29
F. Cabahug St., Cebu City but that as they (the parents) were Chinese citizens at the time, the
property was registered in the name of their aunt, Sulpicia Ventura (Sulpicia).
On May 1, 1993, Sulpicia executed a deed of sale2 over the property in favor of respondents
father Goyanko. In turn, Goyanko executed on October 12, 1993 a deed of sale3 over the
property in favor of his common-law-wife-herein petitioner Maria B. Ching. Transfer Certificate
of Title (TCT) No. 138405 was thus issued in petitioners name.
After Goyankos death on March 11, 1996, respondents discovered that ownership of the
property had already been transferred in the name of petitioner. Respondents thereupon had the
purported signature of their father in the deed of sale verified by the Philippine National Police
Crime Laboratory which found the same to be a forgery.4
Respondents thus filed with the Regional Trial Court of Cebu City a complaint for recovery of
property and damages against petitioner, praying for the nullification of the deed of sale and of
TCT No. 138405 and the issuance of a new one in favor of their father Goyanko.
In defense, petitioner claimed that she is the actual owner of the property as it was she who
provided its purchase price. To disprove that Goyankos signature in the questioned deed of sale
is a forgery, she presented as witness the notary public who testified that Goyanko appeared and
signed the document in his presence.
By Decision of October 16, 1998,5 the trial court dismissed the complaint against petitioner, the
pertinent portions of which decision read:

There is no valid and sufficient ground to declare the sale as null and void, fictitious and
simulated. The signature on the questioned Deed of Sale is genuine. The testimony of Atty.
Salvador Barrameda who declared in court that Joseph Goyanko, Sr. and Maria Ching together
with their witnesses appeared before him for notarization of Deed of Sale in question is more
reliable than the conflicting testimonies of the two document examiners. Defendant Maria Ching
asserted that the Deed of Sale executed by Joseph Goyanko, Sr. in her favor is valid and genuine.
The signature of Joseph Goyanko, Sr. in the questioned Deed of Absolute Sale is genuine as it
was duly executed and signed by Joseph Goyanko, Sr. himself.
The parcel of lands known as Lot No. 6 which is sought to be recovered in this case could never
be considered as the conjugal property of the original Spouses Joseph C. Goyanko and Epifania
dela Cruz or the exclusive capital property of the husband. The acquisition of the said property
by defendant Maria Ching is well-elicited from the aforementioned testimonial and documentary
evidence presented by the defendant. Although for a time being the property passed through
Joseph Goyanko, Sr. as a buyer yet his ownership was only temporary and transitory for the
reason that it was subsequently sold to herein defendant Maria Ching. Maria Ching claimed that
it was even her money which was used by Joseph Goyanko, Sr. in the purchase of the land and so
it was eventually sold to her. In her testimony, defendant Ching justified her financial capability
to buy the land for herself. The transaction undertaken was from the original owner Sulpicia
Ventura to Joseph Goyanko, Sr. and then from Joesph Goyanko, Sr. to herein defendant Maria
Ching.
The land subject of the litigation is already registered in the name of defendant Maria Ching
under TCT No. 138405. By virtue of the Deed of Sale executed in favor of Maria Ching,
Transfer Certificate of Title No. 138405 was issued in her favor. In recognition of the proverbial
virtuality of a Torrens title, it has been repeatedly held that, unless bad faith can be established on
the part of the person appearing as owner on the certificate of title, there is no other owner than
that in whose favor it has been issued. A Torrens title is not subject to collateral attack. It is a
well-known doctrine that a Torrens title, as a rule, is irrevocable and indefeasible, and the duty of
the court is to see to it that this title is maintained and respected unless challenged in a direct
proceedings [sic].6 (Citations omitted; underscoring supplied)
Before the Court of Appeals where respondents appealed, they argued that the trial court erred:
1. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the
subject property between Joseph, Sr. and the defendant-appellee, despite the proliferation
in the records and admissions by both parties that defendant-appellee was the "mistress"
or "common-law wife" of Joseph, Sr..
2. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the
subject property between Joseph, Sr. and the defendant-appellee, despite the fact that the

marriage of Joseph, Sr. and Epifania was then still subsisting thereby rendering the
subject property as conjugal property of Joseph, Sr. and Epifania.
3. . . . in dismissing the complaint a quo . . . , in effect, sustaining the validity of the sale
of the subject property between Joseph, Sr. and the defendant-appellee, despite the clear
findings of forgery and the non-credible testimony of notary public.7
By Decision dated October 21, 2003,8 the appellate court reversed that of the trial court and
declared null and void the questioned deed of sale and TCT No. 138405. Held the appellate
court:
. . . The subject property having been acquired during the existence of a valid marriage between
Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership.
Moreover, while this presumption in favor of conjugality is rebuttable with clear and convincing
proof to the contrary, we find no evidence on record to conclude otherwise. The record shows
that while Joseph Sr. and his wife Epifania have been estranged for years and that he and
defendant-appellant Maria Ching, have in fact been living together as common-law husband and
wife, there has never been a judicial decree declaring the dissolution of his marriage to Epifania
nor their conjugal partnership. It is therefore undeniable that the 661-square meter property
located at No. 29 F. Cabahug Street, Cebu City belongs to the conjugal partnership.
Even if we were to assume that the subject property was not conjugal, still we cannot sustain the
validity of the sale of the property by Joseph, Sr. to defendant-appellant Maria Ching, there being
overwhelming evidence on records that they have been living together as common-law husband
and wife. On this score, Art. 1352 of the Civil Code provides:
"Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or public policy."
We therefore find that the contract of sale in favor of the defendant-appellant Maria Ching was
null and void for being contrary to morals and public policy. The purported sale, having been
made by Joseph Sr. in favor of his concubine, undermines the stability of the family, a basic
social institution which public policy vigilantly protects. Furthermore, the law emphatically
prohibits spouses from selling property to each other, subject to certain exceptions. And this is so
because transfers or conveyances between spouses, if allowed during the marriage would destroy
the system of conjugal partnership, a basic policy in civil law. The prohibition was designed to
prevent the exercise of undue influence by one spouse over the other and is likewise applicable
even to common-law relationships otherwise, "the condition of those who incurred guilt would
turn out to be better than those in legal union.9 (Underscoring supplied)
Hence, the present petition, petitioners arguing that the appellate court gravely erred in:

I.
. . . APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES
AND TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON
LAW SPOUSES ON THE SUBJECT PROPERTY, THE SAME BEING FOUND BY
THE COURT A QUO, AS THE EXCLUSIVE PROPERTY OF PETITIONER, AND
THAT THE SAME WAS NEVER PART OF THE CONJUGAL PROPERTY OF THE
MARRIAGE BETWEEN RESPONDENTS MOTHER EPIFANIA GOYANKO AND
PETITIONERS COMMON LAW HUSBAND, JOSEPH GOYANKO, SR., NOR THE
EXCLUSIVE OR CAPITAL PROPERTY OF THE LATTER AT ANYTIME BEFORE
THE SAME WAS VALIDLY ACQUIRED BY PETITIONER.
II.
. . . NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR
UNDER ARTICLES 1448 AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY
EXIST BETWEEN COMMON LAW SPOUSES.
III.
. . . NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A
TRUSTEE, WHO BECAME AS SUCH IN CONTEMPLATION OF LAW, AND WHO
HAPPENS TO BE A COMMON LAW HUSBAND OF THE BENEFICIARY, IS NOT A
VIOLATION OF A STATE POLICY ON PROHIBITION AGAINST CONVEYANCES
AND TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON
LAW SPOUSES.
IV.
. . . ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF
THEIR CASE DURING APPEAL.10
The pertinent provisions of the Civil Code which apply to the present case read:
ART. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or public policy.
ART. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.
ARTICLE 1490. The husband and wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under Article 191.
(Underscoring supplied)
The proscription against sale of property between spouses applies even to common law
relationships. So this Court ruled in Calimlim-Canullas v. Hon. Fortun, etc., et al.:11
Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he
had abandoned his family and left the conjugal home where his wife and children lived and
from whence they derived their support. The sale was subversive of the stability of the
family, a basic social institution which public policy cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from
the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public
order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to each other
subject to certain exceptions.1wphi1 Similarly, donations between spouses during

marriage are prohibited. And this is so because if transfers or conveyances between spouses
were allowed during marriage, that would destroy the system of conjugal partnership, a basic
policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse
over the other, as well as to protect the institution of marriage, which is the cornerstone of family
law. The prohibitions apply to a couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who incurred guilt would turn out to be better
than those in legal union." Those provisions are dictated by public interest and their criterion
must be imposed upon the will of the parties. . . .12 (Italics in the original; emphasis and
underscoring supplied)
As the conveyance in question was made by Goyangko in favor of his common- law-wife-herein
petitioner, it was null and void.
Petitioners argument that a trust relationship was created between Goyanko as trustee and her as
beneficiary as provided in Articles 1448 and 1450 of the Civil Code which read:
ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary. However, if the person to
whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the
child.
ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for the benefit
of another and the conveyance is made to the lender or payor to secure the payment of the debt, a
trust arises by operation of law in favor of the person to whom the money is loaned or for whom
it is paid. The latter may redeem the property and compel a conveyance thereof to him.
does not persuade.
For petitioners testimony that it was she who provided the purchase price is uncorroborated.
That she may have been considered the breadwinner of the family and that there was proof that
she earned a living do not conclusively clinch her claim.
As to the change of theory by respondents from forgery of their fathers signature in the deed of
sale to sale contrary to public policy, it too does not persuade. Generally, a party in a litigation is
not permitted to freely and substantially change the theory of his case so as not to put the other
party to undue disadvantage by not accurately and timely apprising him of what he is up
against,13 and to ensure that the latter is given the opportunity during trial to refute all allegations
against him by presenting evidence to the contrary. In the present case, petitioner cannot be said
to have been put to undue disadvantage and to have been denied the chance to refute all the

allegations against her. For the nullification of the sale is anchored on its illegality per se, it
being violative of the above-cited Articles 1352, 1409 and 1490 of the Civil Code.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED
G.R. No. 158907

February 12, 2007

EDUARDO B. OLAGUER, Petitioner,

vs.
EMILIO PURUGGANAN, JR. AND RAUL LOCSIN, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the
Decision,1 dated 30 June 2003, promulgated by the Court of Appeals, affirming the Decision of
the Regional Trial Court, dated 26 July 1995, dismissing the petitioners suit.
The parties presented conflicting accounts of the facts.
EDUARDO B. OLAGUERS VERSION
Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of stock of
Businessday Corporation (Businessday) with a total par value of P600,000.00, with Certificates
of Stock No. 005, No. 028, No. 034, No. 070, and No. 100.2 At the time he was employed with
the corporation as Executive Vice-President of Businessday, and President of Businessday
Information Systems and Services and of Businessday Marketing Corporation, petitioner,
together with respondent Raul Locsin (Locsin) and Enrique Joaquin (Joaquin), was active in the
political opposition against the Marcos dictatorship.3 Anticipating the possibility that petitioner
would be arrested and detained by the Marcos military, Locsin, Joaquin, and Hector Holifea had
an unwritten agreement that, in the event that petitioner was arrested, they would support the
petitioners family by the continued payment of his salary.4 Petitioner also executed a Special
Power of Attorney (SPA), on 26 May 1979, appointing as his attorneys-in-fact Locsin, Joaquin
and Hofilea for the purpose of selling or transferring petitioners shares of stock with
Businessday. During the trial, petitioner testified that he agreed to execute the SPA in order to
cancel his shares of stock, even before they are sold, for the purpose of concealing that he was a
stockholder of Businessday, in the event of a military crackdown against the opposition.5 The

parties acknowledged the SPA before respondent Emilio Purugganan, Jr., who was then the
Corporate Secretary of Businessday, and at the same time, a notary public for Quezon City.6
On 24 December 1979, petitioner was arrested by the Marcos military by virtue of an Arrest,
Search and Seizure Order and detained for allegedly committing arson. During the petitioners
detention, respondent Locsin ordered fellow respondent Purugganan to cancel the petitioners
shares in the books of the corporation and to transfer them to respondent Locsins name.7
As part of his scheme to defraud the petitioner, respondent Locsin sent Rebecca Fernando, an
employee of Businessday, to Camp Crame where the petitioner was detained, to pretend to
borrow Certificate of Stock No. 100 for the purpose of using it as additional collateral for
Businessdays then outstanding loan with the National Investment and Development
Corporation. When Fernando returned the borrowed stock certificate, the word "cancelled" was
already written therein. When the petitioner became upset, Fernando explained that this was
merely a mistake committed by respondent Locsins secretary.8
During the trial, petitioner also agreed to stipulate that from 1980 to 1982, Businessday made
regular deposits, each amounting to P10,000.00, to the Metropolitan Bank and Trust Company
accounts of Manuel and Genaro Pantig, petitioners in-laws. The deposits were made on every
15th and 30th of the month.9 Petitioner alleged that these funds consisted of his monthly salary,
which Businessday agreed to continue paying after his arrest for the financial support of his
family.10 After receiving a total of P600,000.00, the payments stopped. Thereafter, respondent
Locsin and Fernando went to ask petitioner to endorse and deliver the rest of his stock
certificates to respondent Locsin, but petitioner refused. 11
On 16 January 1986, petitioner was finally released from detention. He then discovered that he
was no longer registered as stockholder of Businessday in its corporate books. He also learned
that Purugganan, as the Corporate Secretary of Businessday, had already recorded the transfer of
shares in favor of respondent Locsin, while petitioner was detained. When petitioner demanded
that respondents restore to him full ownership of his shares of stock, they refused to do so. On 29
July 1986, petitioner filed a Complaint before the trial court against respondents Purugganan and
Locsin to declare as illegal the sale of the shares of stock, to restore to the petitioner full
ownership of the shares, and payment of damages.12
RESPONDENT RAUL LOCSINS VERSION
In his version of the facts, respondent Locsin contended that petitioner approached him and
requested him to sell, and, if necessary, buy petitioners shares of stock in Businessday, to assure
support for petitioners family in the event that something should happen to him, particularly if
he was jailed, exiled or forced to go underground.13 At the time petitioner was employed with
Businessday, respondent Locsin was unaware that petitioner was part of a group, Light-a-Fire

Movement, which actively sought the overthrow of the Marcos government through an armed
struggle.14 He denied that he made any arrangements to continue paying the petitioners salary in
the event of the latters imprisonment.15
When petitioner was detained, respondent Locsin tried to sell petitioners shares, but nobody
wanted to buy them. Petitioners reputation as an oppositionist resulted in the poor financial
condition of Businessday and discouraged any buyers for the shares of stock.16 In view of
petitioners previous instructions, respondent Locsin decided to buy the shares
himself.1awphi1.net Although the capital deficiency suffered by Businessday caused the book
value of the shares to plummet below par value, respondent Locsin, nevertheless, bought the
shares at par value.17 However, he had to borrow from Businessday the funds he used in
purchasing the shares from petitioner, and had to pay the petitioner in installments of P10,000.00
every 15th and 30th of each month.18
The trial court in its Decision, dated 26 July 1995, dismissed the Complaint filed by the
petitioner. It ruled that the sale of shares between petitioner and respondent Locsin was valid.
The trial court concluded that petitioner had intended to sell the shares of stock to anyone,
including respondent Locsin, in order to provide for the needs of his family should he be jailed or
forced to go underground; and that the SPA drafted by the petitioner empowered respondent
Locsin, and two other agents, to sell the shares for such price and under such terms and
conditions that the agents may deem proper. It further found that petitioner consented to have
respondent Locsin buy the shares himself. It also ruled that petitioner, through his wife, received
from respondent Locsin the amount of P600,000.00 as payment for the shares of stock.19 The
dispositive part of the trial courts Decision reads:
WHEREFORE, for failure of the [herein petitioner] to prove by preponderance of evidence, his
causes of action and of the facts alleged in his complaint, the instant suit is hereby ordered
DISMISSED, without pronouncement as to costs.
[Herein respondents] counterclaims, however, are hereby DISMISSED, likewise, for dearth of
substantial evidentiary support.20
On appeal, the Court of Appeals affirmed the Decision of the trial court that there was a
perfected contract of sale.21 It further ruled that granting that there was no perfected contract of
sale, petitioner, nevertheless, ratified the sale to respondent Locsin by his receipt of the purchase
price, and his failure to raise any protest over the said sale.22 The Court of Appeals refused to
credit the petitioners allegation that the money his wife received constituted his salary from
Businessday since the amount he received as his salary, P24,000.00 per month, did not
correspond to the amount he received during his detention, P20,000.00 per month (deposits of
P10,000.00 on every 15th and 30th of each month in the accounts of the petitioners in-laws). On
the other hand, the total amount received, P600,000.00, corresponds to the aggregate par value of

petitioners shares in Businessday. Moreover, the financial condition of Businessday prevented it

from granting any form of financial assistance in favor of the petitioner, who was placed in an
indefinite leave of absence, and, therefore, not entitled to any salary. 23
The Court of Appeals also ruled that although the manner of the cancellation of the petitioners
certificates of stock and the subsequent issuance of the new certificate of stock in favor of
respondent Locsin was irregular, this irregularity will not relieve petitioner of the consequences
of a consummated sale.24
Finally, the Court of Appeals affirmed the Decision of the trial court disallowing respondent
Locsins claims for moral and exemplary damages due to lack of supporting evidence.25
Hence, the present petition, where the following issues were raised:
I.
THE APPELLATE COURT ERRED IN RULING THAT THERE WAS A PERFECTED
CONTRACT OF SALE BETWEEN PETITIONER AND MR. LOCSIN OVER THE SHARES;
II.
THE APPELLATE COURT ERRED IN RULING THAT PETITIONER CONSENTED TO THE
ALLEGED SALE OF THE SHARES TO MR. LOCSIN;
III.
THE APPELLATE COURT ERRED IN RULING THAT THE AMOUNTS RECEIVED BY
PETITIONERS IN LAWS WERE NOT PETITIONERS SALARY FROM THE
CORPORATION BUT INSTALLMENT PAYMENTS FOR THE SHARES;
IV.
THE APPELLATE COURT ERRED IN RULING THAT MR. LOCSIN WAS THE PARTY TO
THE ALLEGED SALE OF THE SHARES AND NOT THE CORPORATION; AND
V.
THE APPELLATE COURT ERRED IN RULING THAT THE ALLEGED SALE OF THE
SHARES WAS VALID ALTHOUGH THE CANCELLATION OF THE SHARES WAS
IRREGULAR.26
The petition is without merit.

The first issue that the petitioner raised is that there was no valid sale since respondent Locsin
exceeded his authority under the SPA27 issued in his, Joaquin and Holifenas favor. He alleged
that the authority of the afore-named agents to sell the shares of stock was limited to the
following conditions: (1) in the event of the petitioners absence and incapacity; and (2) for the
limited purpose of applying the proceeds of the sale to the satisfaction of petitioners subsisting
obligations with the companies adverted to in the SPA.28
Petitioner sought to impose a strict construction of the SPA by limiting the definition of the word
"absence" to a condition wherein "a person disappears from his domicile, his whereabouts being
unknown, without leaving an agent to administer his property,"29 citing Article 381 of the Civil
Code, the entire provision hereunder quoted:
ART 381. When a person disappears from his domicile, his whereabouts being unknown, and
without leaving an agent to administer his property, the judge, at the instance of an interested
party, a relative, or a friend, may appoint a person to represent him in all that may be necessary.
This same rule shall be observed when under similar circumstances the power conferred by the
absentee has expired.
Petitioner also puts forward that the word "incapacity" would be limited to mean "minority,
insanity, imbecility, the state of being deaf-mute, prodigality and civil interdiction."30 He cites
Article 38 of the Civil Code, in support of this definition, which is hereunder quoted:
ART. 38 Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil
interdiction are mere restrictions on capacity to act, and do not exempt the incapacitated person,
from certain obligations, as when the latter arise from his acts or from property relations, such as
easements.
Petitioner, thus, claims that his arrest and subsequent detention are not among the instances
covered by the terms "absence or incapacity," as provided under the SPA he executed in favor of
respondent Locsin.
Petitioners arguments are unpersuasive. It is a general rule that a power of attorney must be
strictly construed; the instrument will be held to grant only those powers that are specified, and
the agent may neither go beyond nor deviate from the power of attorney. However, the rule is not
absolute and should not be applied to the extent of destroying the very purpose of the power. If
the language will permit, the construction that should be adopted is that which will carry out
instead of defeat the purpose of the appointment. Clauses in a power of attorney that are
repugnant to each other should be reconciled so as to give effect to the instrument in accordance
with its general intent or predominant purpose. Furthermore, the instrument should always be
deemed to give such powers as essential or usual in effectuating the express powers.31

In the present case, limiting the definitions of "absence" to that provided under Article 381 of the
Civil Code and of "incapacity" under Article 38 of the same Code negates the effect of the power
of attorney by creating absurd, if not impossible, legal situations. Article 381 provides the
necessarily stringent standards that would justify the appointment of a representative by a judge.
Among the standards the said article enumerates is that no agent has been appointed to
administer the property. In the present case, petitioner himself had already authorized agents to
do specific acts of administration and thus, no longer necessitated the appointment of one by the
court. Likewise, limiting the construction of "incapacity" to "minority, insanity, imbecility, the
state of being a deaf-mute, prodigality and civil interdiction," as provided under Article 38,
would render the SPA ineffective. Article 1919(3) of the Civil Code provides that the death, civil
interdiction, insanity or insolvency of the principal or of the agent extinguishes the agency. It
would be equally incongruous, if not outright impossible, for the petitioner to require himself to
qualify as a minor, an imbecile, a deaf-mute, or a prodigal before the SPA becomes operative. In
such cases, not only would he be prevented from appointing an agent, he himself would be
unable to administer his property.
On the other hand, defining the terms "absence" and "incapacity" by their everyday usage makes
for a reasonable construction, that is, "the state of not being present" and the "inability to act,"
given the context that the SPA authorizes the agents to attend stockholders meetings and vote in
behalf of petitioner, to sell the shares of stock, and other related acts. This construction covers
the situation wherein petitioner was arrested and detained. This much is admitted by petitioner in
his testimony.32
Petitioners contention that the shares may only be sold for the sole purpose of applying the
proceeds of the sale to the satisfaction of petitioners subsisting obligations to the company is
far-fetched. The construction, which will carry out the purpose, is that which should be applied.
Petitioner had not submitted evidence that he was in debt with Businessday at the time he had
executed the SPA. Nor could he have considered incurring any debts since he admitted that, at
the time of its execution, he was concerned about his possible arrest, death and disappearance.
The language of the SPA clearly enumerates, as among those acts that the agents were authorized
to do, the act of applying the proceeds of the sale of the shares to any obligations petitioner
might have against the Businessday group of companies. This interpretation is supported by the
use of the word "and" in enumerating the authorized acts, instead of phrases such as "only for,"
"for the purpose of," "in order to" or any similar terms to indicate that the petitioner intended that
the SPA be used only for a limited purpose, that of paying any liabilities with the Businessday
group of companies.
Secondly, petitioner argued that the records failed to show that he gave his consent to the sale of
the shares to respondent Locsin for the price of P600,000.00. This argument is unsustainable.
Petitioner received from respondent Locsin, through his wife and in-laws, the installment
payments for a total of P600,000.00 from 1980 to 1982, without any protest or complaint. It was

only four years after 1982 when petitioner demanded the return of the shares. The petitioners
claim that he did not instruct respondent Locsin to deposit the money to the bank accounts of his
in-laws fails to prove that petitioner did not give his consent to the sale since respondent Locsin
was authorized, under the SPA, to negotiate the terms and conditions of the sale including the
manner of payment. Moreover, had respondent Locsin given the proceeds directly to the
petitioner, as the latter suggested in this petition, the proceeds were likely to have been included
among petitioners properties which were confiscated by the military. Instead, respondent Locsin
deposited the money in the bank accounts of petitioners in-laws, and consequently, assured that
the petitioners wife received these amounts. Article 1882 of the Civil Code provides that the
limits of an agents authority shall not be considered exceeded should it have been performed in
a manner more advantageous to the principal than that specified by him.
In addition, petitioner made two inconsistent statements when he alleged that (1) respondent
Locsin had not asked the petitioner to endorse and deliver the shares of stock, and (2) when
Rebecca Fernando asked the petitioner to endorse and deliver the certificates of stock, but
petitioner refused and even became upset.33 In either case, both statements only prove that
petitioner refused to honor his part as seller of the shares, even after receiving payments from the
buyer. Had the petitioner not known of or given his consent to the sale, he would have given
back the payments as soon as Fernando asked him to endorse and deliver the certificates of
stock, an incident which unequivocally confirmed that the funds he received, through his wife
and his in-laws, were intended as payment for his shares of stocks. Instead, petitioner held on to
the proceeds of the sale after it had been made clear to him that respondent Locsin had
considered the P600,000.00 as payment for the shares, and asked petitioner, through Fernando, to
endorse and deliver the stock certificates for cancellation.
As regards the third issue, petitioners allegation that the installment payments he was adjudged
to have received for the shares were actually salaries which Businessday promised to pay him
during his detention is unsupported and implausible. Petitioner received P20,000.00 per month
through his in-laws; this amount does not correspond to his monthly salary at P24,000.00.34 Nor
does the amount received correspond to the amount which Businessday was supposed to be
obliged to pay petitioner, which was only P45,000.00 to P60,000.00 per annum.35 Secondly, the
petitioners wife did not receive funds from respondent Locsin or Businessday for the entire
duration of petitioners detention. Instead, when the total amount received by the petitioner
reached the aggregate amount of his shares at par value -- P600,000.00 -- the payments stopped.
Petitioner even testified that when respondent Locsin denied knowing the petitioner soon after
his arrest, he believed respondent Locsins commitment to pay his salaries during his detention to
be nothing more than lip-service.36
Granting that petitioner was able to prove his allegations, such an act of gratuity, on the part of
Businessday in favor of petitioner, would be void. An arrangement whereby petitioner will
receive "salaries" for work he will not perform, which is not a demandable debt since petitioner

was on an extended leave of absence, constitutes a donation under Article 72637 of the Civil
Code. Under Article 748 of the Civil Code, if the value of the personal property donated exceeds
P5,000.00, the donation and the acceptance shall have to be made in writing. Otherwise, the
donation will be void. In the present case, petitioner admitted in his testimony38 that such
arrangement was not made in writing and, hence, is void.
The fact that some of the deposit slips and communications made to petitioners wife contain the
phrase "household expenses" does not disprove the sale of the shares. The money was being
deposited to the bank accounts of the petitioners in-laws, and not to the account of the petitioner
or his wife, precisely because some of his property had already been confiscated by the military.
Had they used the phrase "sale of shares," it would have defeated the purpose of not using their
own bank accounts, which was to conceal from the military any transaction involving the
petitioners property.
Petitioner raised as his fourth issue that granting that there was a sale, Businessday, and not
respondent Locsin, was the party to the transaction. The curious facts that the payments were
received on the 15th and 30th of each month and that the payor named in the checks was
Businessday, were adequately explained by respondent Locsin. Respondent Locsin had obtained
cash advances from the company, paid to him on the 15th and 30th of the month, so that he can
pay petitioner for the shares. To support his claim, he presented Businessdays financial records
and the testimony of Leo Atienza, the Companys Accounting Manager. When asked why the
term "shares of stock" was used for the entries, instead of "cash advances," Atienza explained
that the term "shares of stock" was more specific rather than the broader phrase "cash
advances."39 More to the point, had the entries been for "shares of stock," the issuance of shares
should have been reflected in the stock and transfer books of Businessday, which the petitioner
presented as evidence. Instead the stock and transfer books reveal that the increase in respondent
Locsins shares was a result of the cancellation and transfer of petitioners shares in favor of
respondent Locsin.
Petitioner alleges that the purported sale between himself and respondent Locsin of the disputed
shares of stock is void since it contravenes Article 1491 of the Civil Code, which provides that:
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:
xxxx
(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.40 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.>41
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.42 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 totalled 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,43 a practice that
bespeaks of an onerous transaction and not an act of gratuity.
Lastly, petitioner claims that the cancellation of the shares and the subsequent transfer thereof
were fraudulent, and, therefore, illegal. In the present case, the shares were transferred in the
name of the buyer, respondent Locsin, without the petitioner delivering to the buyer his
certificates of stock. Section 63 of the Corporation Code provides that:
Sec.63. Certificate of stock and transfer of shares. xxx Shares of stock so issued are personal
property and may be transferred by delivery of the certificate or certificates indorsed by the
owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer,
however, shall be valid, except as between the parties, until the transfer is recorded in the books
of the corporation showing the names of the parties to the transaction, the date of the transfer, the
number of the certificate or certificates and the number of shares transferred. (Emphasis
provided.)

The aforequoted provision furnishes the procedure for the transfer of shares the delivery of the
endorsed certificates, in order to prevent the fraudulent transfer of shares of stock. However, this
rule cannot be applied in the present case without causing the injustice sought to be avoided. As
had been amply demonstrated, there was a valid sale of stocks. Petitioners failure to deliver the
shares to their rightful buyer is a breach of his duty as a seller, which he cannot use to unjustly
profit himself by denying the validity of such sale. Thus, while the manner of the cancellation of
petitioners certificates of stock and the issuance of the new certificates in favor of respondent
Locsin was highly irregular, we must, nonetheless, declare the validity of the sale between the
parties. Neither does this irregularity prove that the transfer was fraudulent. In his testimony,
petitioner admitted that they had intended to conceal his being a stockholder of Businessday.44
The cancellation of his name from the stock and transfer book, even before the shares were
actually sold, had been done with his consent. As earlier explained, even the subsequent sale of
the shares in favor of Locsin had been done with his consent.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the
assailed Decision of the Court of Appeals, promulgated on 30 June 2003, affirming the validity
of the sale of the shares of stock in favor of respondent Locsin. No costs.
SO ORDERED.
G.R. No. 132474 November 19, 1999
RENATO CENIDO (deceased), represented by VICTORIA CENIDOSA, petitioner,
vs.
SPOUSES AMADEO APACIONADO and HERMINIA STA. ANA, respondents.

PUNO, J.:
In this petition for review, petitioner Renato Cenido seeks to reverse and set aside the decision of
the Court of Appeals 1 in CA-G.R. CV No. 41011 which declared the private respondents as the
owners of a house and lot in Binangonan, Rizal. 2
The antecedent facts are as follows:
On May 22, 1989, respondent spouses Amadeo Apacionado and Herminia Sta. Ana filed with the
Regional Trial Court, Branch 70, Rizal a complaint against petitioner Renato Cenido for,
"Declaration of Ownership, Nullity, with Damages." 3 The spouses alleged that: (1) they are the
owners of a parcel of unregistered land, 123 square meters in area and located at Rizal Street,
Barrio Layunan, Binangonan, Rizal, more particularly described as follows:

. . . that certain parcel of land located at Rizal, St., Layunan, Binangonan, Rizal,
with an area of 123 square meters, more or less, bounded on the North by Gavino
Aparato; on the East by Rizal St., on the South by Tranquilino Manuzon; and on
the West by Simplicio Aparato, and the residential house standing thereon. 4
(2) this house and lot were purchased by the spouses from its previous owner, Bonifacio
Aparato, now deceased, who lived under the spouses' care and protection for some twenty
years prior to his death; (3) while he was alive, Bonifacio Aparato mortgaged the said
property twice, one to the Rural Bank of Binangonan and the other to Linda C. Ynares, as
security for loans obtained by him; (4) the loans were paid off by the spouses thereby
securing the release and cancellation of said mortgages; (5) the spouses also paid and
continue to pay the real estate taxes on the property; (6) from the time of sale, they have
been in open, public, continuous and uninterrupted possession of the property in the
concept of owners; (7) that on January 7, 1987, petitioner Renato Cenido, claiming to be
the owner of the subject house and lot, filed a complaint for ejectment against them with
the Municipal Trial Court, Branch 2, Binangonan, Rizal; (8) through fraudulent and
unauthorized means, Cenido was able to cause the issuance in his name of Tax
Declaration No. 02-0368 over the subject property, which fact the spouses learned only
upon the filing of the ejectment case; (9) although the ejectment case was dismissed by
the Municipal Trial Court (MTC), Branch 2, the tax declaration in Cenido's name was not
cancelled and still subsisted; (10) the spouses have referred the matter to the barangay for
conciliation but Cenido unjustifiably refused to appear thereat. The spouses thus prayed
that:
WHEREFORE, it is respectfully prayed of the Honorable Court that judgment
issue in the case:
1. Declaring them (plaintiffs) the true and absolute owners of the house and lot
now covered by Tax Declaration No. 02-0368;
2. Declaring Tax Declaration No. 02-0368 in the name of defendant Renato
Cenido as null and void and directing the Provincial Assessor of Rizal and the
Municipal Assessor of Binangonan, Rizal to register and to declare the house and
lot covered by the same in their names (plaintiffs) for purposes of taxation;
3. Ordering defendant to pay them in the least amount of P50,000.00 as and for
moral damages suffered;
4. Ordering defendant to pay them the amount of P10,000.00 as and for attorney's
fees;

5. Ordering payment by defendant of exemplary damages in such amount which

the Honorable Court may deem just and equitable in the premises;
6. Ordering defendant to pay the costs of suit; and
Plaintiffs pray for such other and further relief which the Honorable Court may
deem just and equitable considering the foregoing premises. 5
Petitioner Cenido answered claiming that: (1) he is the illegitimate son of Bonifacio Aparato, the
deceased owner of the subject property; (2) as Aparato's sole surviving heir, he became the
owner of the property as evidenced by the cancellation of Tax Declaration No. 02-0274 in
Bonifacio's name and the issuance of Tax Declaration No. 02-0368 in his name; (3) his
ownership over the house and lot was also confirmed in 1985 by the Municipal Trial Court,
Branch 1, Binangonan in Case No. 2264 which "adjudicated various claims involving the same
subject property wherein plaintiffs were privy to the said case;" (4) that in said case, the
Apacionado spouses participated in the execution of the compromise agreement partitioning the
deceased's estate among his heirs, which agreement was adopted by the Municipal Trial Court as
its judgment; (5) that the Apacionado spouses were allowed to stay in his father's house
temporarily; (6) the mortgages on the property were obtained by his father upon request of the
Apacionados who used the proceeds of the loans exclusively for themselves; (7) the real estate
taxes or the property were paid for by his father, the principal, and the spouses were merely his
agents; (8) the instrument attesting to the alleged sale of the house and lot by Bonifacio Aparato
to the spouses is not a public document; (8) petitioner Cenido was never summoned to appear
before the barangay for conciliation proceedings. 6
Respondent spouses replied that: (1) Cenido is not the illegitimate son of Bonifacio, Cenido's
claim of paternity being spurious; (2) the ownership of the property was not the proper subject in
Civil Case No. 2264 before the MTC, Branch I, nor were the spouses parties in said case. 7
The parties went to trial. Respondent spouses presented four (4) witnesses, namely, respondent
Herminia Sta. Ana Apacionado; Rolando Nieves, the barangay captain; Norberto Aparato the son
of Gavino Aparato, Bonifacio's brother; and Carlos Inabayan, one of the two witnesses to the
deed of sale between Bonifacio Aparato and the spouses over the property. Petitioner Cenido
presented only himself as witness.
On March 30, 1993, the trial court rendered judgment. The court upheld petitioner Cenido's
ownership over the property by virtue of the recognition made by Bonifacio's then surviving
brother, Gavino, in the compromise judgment of the MTC. Concomitantly, the court also did not
sustain the deed of sale between Bonifacio and the spouses because it was neither notarized nor
signed by Bonifacio and was intrinsically defective. The court ordered thus:

WHEREFORE, in the light of the foregoing considerations, the Court believes

that preponderance of evidence is on the side of defendant and so the complaint
could not be given due course. Accordingly, the case is, as it should be, dismissed.
No attorney's fees or damages is being awarded as no evidence to this effect had
been given by defendant. With costs against plaintiffs.
SO ORDERED. 8
Respondent spouses appealed to the Court of Appeals. In a decision dated September 30, 1997,
the appellate court found the appeal meritorious and reversed the decision of the trial court. It
held that the recognition of Cenido's filiation by Gavino, Bonifacio's brother, did not comply
with the requirements of the Civil Code and the Family Code; that the deed between Bonifacio
and respondent spouses was a valid contract of sale over the property; and Cenido's failure to
object to the presentation of the deed before the trial court was a waiver of the defense of the
Statute of Frauds. The Court of Appeals disposed of as follows:
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE.
Plaintiffs-Appellants Spouses Amadeo Apacionado and Herminia Sta. Ana are
declared owners of the subject house and lot now covered by Tax Declaration No.
02-6368. 9
Hence, this recourse. Petitioner Cenido alleges that:
1. The unsigned, unnotarized and highly doubtful private document designated as
"Pagpapatunay" which is solely relied upon by the respondents in support of their
case is not sufficient to vest ownership of and transfer the title, rights and interest
over the subject property to the respondents.
xxx xxx xxx
2. The Court of Appeals departed from the accepted and usual course of judicial
proceedings in that it ruled against the petitioner in view of the alleged weakness
of his defense rather than evaluate the case based on the strength of the
respondents' evidence, thereby necessitating this Honorable Court's exercise of its
power of supervision. 10
Victoria Cenidosa, in representation of petitioner Cenido, has manifested, through counsel, that
petitioner died in September 1993; that on December 18, 1985, eight years before his death,
Cenido sold the subject house and lot to Maria D. Ojeda for the sum of P70,000.00; that Maria
D. Ojeda is now old and sickly, and is thus being represented in the instant case by her daughter,
Victoria O. Cenidosa. 11

In the same vein, respondent Herminia Sta. Ana Apacionado also manifested that her husband,
Amadeo Apacionado, died on August 11, 1989. Amadeo is now being represented by his
compulsory heirs. 12
Before ruling on petitioner's arguments, it is necessary to establish certain facts essential for a
proper adjudication of the case.
The records reveal that the late Bonifacio Aparato had two siblings a sister named Ursula and
a brother named Gavino. 13 Ursula died on March 1, 1979, 14 Bonifacio on January 3, 1982 15 and
Gavino, sometime after Bonifacio's death. Both Ursula and Bonifacio never married and died
leaving no legitimate offspring. Gavino's son, Norberto, however, testified that there was a fourth
sibling, a sister, who married but also died; as to when she died or whether she left any heirs,
Norberto did not know. 16 What is clear and undisputed is that Bonifacio was survived by Gavino
who also left legitimate heirs.
Both Bonifacio and Ursula lived in the subject property under the care and protection of the
Apacionados. Herminia Sta. Ana Apacionado started living with them in 1976. She took care of
Bonifacio and Ursula, who died three years later. Herminia married Amado Apacionado, whose
paternal grandmother was a sister of Bonifacio. 17Amadeo moved into Bonifacio's house and
assisted Herminia in taking care of the old man until his demise.
Shortly after Bonifacio's death, Civil Case No. 2264 was instituted by petitioner Cenido against
Gavino Aparato before the Municipal Trial Court, Branch 1, Binangonan. The records do not
reveal the nature of this action. 18Nevertheless, three years after filing of the case, the parties
entered into a compromise agreement. The parties listed the properties of Bonifacio comprising
two parcels of land: one parcel was the residential house and lot in question and the other was
registered agricultural land with an area of 38,641 square meters; Gavino Aparato expressly
recognized Renato Cenido as the sole illegitimate son of his brother, likewise, Cenido recognized
Gavino as the brother of Bonifacio; as Bonifacio's heirs, they partitioned his estate among
themselves, with the subject property and three portions of the agricultural land as Cenido's
share, and the remaining 15,309 square meters of the agricultural land as Gavino's; both parties
agreed to share in the documentation, registration and other expenses for the transfer of their
shares. This compromise agreement was adopted as the decision of the MTC on January 31,
1985. 19
In the same year, petitioner Cenido obtained in his name Tax Declaration No. 02-6368 over the
subject property. Two years later, in January 1987, he filed an ejectment case against respondent
spouses who continued occupying the property in question. This case was dismissed.

Respondent spouses' claim of ownership over the subject property is anchored on a one-page
typewritten document entitled "Pagpapatunay," executed by Bonifacio Aparato. The
"Pagpapatunay" reads as follows:
PAGPAPATUNAY
DAPAT MALAMAN NG LAHAT:
Akong si BONIFACIO APARATO, binata, Pilipino, husto sa gulang, at
kasalukuyang naninirahan sa Layunan, Binangonan, Rizal, ay nagpapatunay
nitong mga sumusunod:
Una: Na, ako ang siyang nagmamay-ari ng isang lagay na lupang SOLAR at
Bahay Tirahan na nakatirik sa nabanggit na solar na makikita sa lugar ng Rizal
St., Layunan, Binangonan, Rizal;
Ikalawa: Na, sapagkat ang nagalaga sa akin hanggang sa ako'y tuluyang kunin
ng Dakilang Maykapal ay walang iba kungdi ang mag-asawang AMADEO
APACIONADO at HERMINIA STA. ANA APACIONADO;
Ikatlo: Na, pinatutunayan ko sa mga maykapangyarihan at kanginumang tao na
ang nabanggit na SOLAR at bahay tirahan ay ipinagbili ko sa nabanggit na magasawa sa halagang SAMPUNG LIBONG (P10,000.00) PISO, bilang pakunsuwelo
sa kanilang pagmamalasakit sa aking pagkatao at kalalagayan;
Na, patunay na ito ay aking nilagdaan ng maliwanag ang aking isip at nalalaman
ko ang lahat ng nilalaman nito.
SA KATUNAYAN NG LAHAT, lumagda ako ng aking pangalan at apelyido
ngayong ika-10 ng Disyembre 1981, dito sa Layunan, Binangonan, Rizal.
(Thumbmarked)
BONIFACIO APARATO
Nagpatunay
NILAGDAAN SA HARAP NINA:
(SGD.) (SGD.)
Virgilio O. Cenido Carlos Inabayan

 Saksi Saksi 20
On its face, the document "Pagpapatunay" attests to the fact that Bonifacio Aparato was
the owner of the house and lot in Layunan, Rizal; that because the Apacionado spouses
took care of him until the time of his death, Bonifacio sold said property to them for the
sum of P10,000.00; that he was signing the same document with a clear mind and with
full knowledge of its contents; and as proof thereof, he was affixing his signature on said
document on the tenth day of December 1981 in Layunan, Binangonan, Rizal. Bonifacio
affixed his thumbmark on the space above his name; and this was witnessed by Virgilio
O. Cenido and Carlos Inabayan.
Petitioner Cenido disputes the authenticity and validity of the "Pagpapatunay." He claims that it
is not a valid contract of sale and its genuineness is highly doubtful because: (1) it was not
notarized and is merely a private instrument; (2) it was not signed by the vendor, Bonifacio; (3) it
was improbable for Bonifacio to have executed the document and dictated the words "lumagda
ako ng aking pangalan at apelyido" because he was paralyzed and could no longer sign his name
at that time; and (4) the phrase "ang nag-alaga sa akin hanggang sa ako'y tuluyang kunin ng
Dakilang Maykapal" speaks of an already departed Bonifacio and could have been made only by
persons other than the dead man himself. 21
To determine whether the "Pagpapatunay" is a valid contract of sale, it must contain the essential
requisites of contracts, viz: (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. 22
The object of the "Pagpapatunay" is the house and lot. The consideration is P10,000.00 for the
services rendered to Aparato by respondent spouses. According to respondent Herminia
Apacionado, this P10,000.00 was not actually paid to Bonifacio because the amount merely
quantified the services they rendered to the old man. It was the care the spouses voluntarily gave
that was the cause of the sale. 23 The cause therefore was the service remunerated. 24
Petition alleges that Bonifacio did not give his consent to the deed because he did not affix his
signature, but merely his thumbmark, on the document. Bonifacio was a literate person who
could legibly sign his full name, and his signature is evident in several documents such as his
identification card as member of the Anderson Fil-American Guerillas; 25 the "Kasulatan ng
Palasanglaan" dated July 25, 1974 where he and his two other siblings mortgaged the subject
property for P2,000.00 to one Linda Y. Cenido; 26 "Padagdag sa Sanglaan" dated June 16,
1976; 27 and another "Pagdagdag sa Sanglaan" dated March 2, 1979. 28
Respondent Herminia Sta. Ana Apacionado testified that Bonifacio Aparato affixed his
thumbmark because he could no longer write at the time of execution of the document. The old
man was already 61 years of age and could not properly see with his eyes. He was stricken by

illness a month before and was paralyzed from the waist down. He could still speak albeit in a
garbled manner, and be understood. The contents of the "Pagpapatunay" were actually dictated
by him to one Leticia Bandola who typed the same on a typewriter she brought to his house.29
That Bonifacio was alive at the time of execution of the contract and voluntarily gave his consent
to the instrument is supported by the testimony of Carlos Inabayan, the lessee of Bonifacio's
billiard hall at the ground floor of the subject property. Inabayan testified that on December 10,
1981, he was summoned to go up to Bonifacio's house. There, he saw Bonifacio, respondent
Apacionados, and a woman and her husband. He was given a sheet of paper to read. He read the
paper and understood that it was a deed of sale of the house and lot executed by Bonifacio in
favor of the Apacionados. Thereafter, Bonifacio requested him to sign the document as witness.
Reexamining the "Pagpapatunay," Inabayan saw that Bonifacio affixed his thumbmark on the
space above his name. Inabayan thus signed the document and returned to the billiard hall. 30
Inabayan's testimony has not been rebutted by petitioner. Petitioner, through counsel, waived his
right to do so, finding no need to cross-examine the witness. 31 This waiver was granted by the
court in the order of September 23, 1992. 32
One who alleges any defect or the lack of a valid consent to a contract must establish the same
by full, clear and convincing evidence, not merely by preponderance thereof. 33 Petitioner has not
alleged that the old man, by his physical or mental state, was incapacitated to give his consent at
the time of execution of the "Pagpapatunay." Petitioner has not shown that Bonifacio was insane
or demented or a deaf-mute who did not know how to write. 34Neither has petitioner claimed, at
the very least, that the consent of Bonifacio to the contract was vitiated by mistake, violence,
intimidation, undue influence or fraud. 35 If by assailing the intrinsic defects in the wordage of
the "Pagpapatunay" petitioner Cenido seeks to specifically allege the exercise of extrinsic fraud
and undue influence on the old man, these defects are not substantial as to render the entire
contract void. There must be clear and convincing evidence of what specific acts of undue
influence 36 or fraud 37 were employed by respondent spouses that gave rise to said defects.
Absent such proof, Bonifacio's presumed consent to the "Pagpapatunay" remains.
The "Pagpapatunay," therefore, contains all the essential requisites of a contract. Its authenticity
and due execution have not been disproved either. The finding of the trial court that the
document was prepared by another person and the thumbmark of the dead Bonifacio was merely
affixed to it is pure conjecture. On the contrary, the testimonies of respondent Herminia Sta. Ana
and Carlos Inabayan prove that the document is authentic and was duly executed by Bonifacio
himself.
The "Pagpapatunay" is undisputably a private document. And this fact does not detract from its
validity. The Civil Code, in Article 1356 provides:

Art. 1356. Contracts shall be 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. In such cases, the right of the parties
stated in the following article cannot be exercised.
Generally, contracts are obligatory, in whatever form such contracts may have been
entered into, provided all the essential requisites for their validity are present. When,
however, the law requires that a contract be in some form for it to be valid or enforceable,
that requirement must be complied with.
A certain form may be prescribed by law for any of the following purposes: for validity,
enforceability, or greater efficacy of the contract. 38 When the form required is for validity, its
non-observance renders the contract void and of no effect. 39 When the required form is for
enforceability, non-compliance therewith will not permit, upon the objection of a party, the
contract, although otherwise valid, to be proved or enforced by action. 40 Formalities intended for
greater efficacy or convenience or to bind third persons, if not done, would not adversely affect
the validity or enforceability of the contract between the contracting parties themselves. 41
Art. 1358 of the Civil Code requires that:
Art. 1358. The following must appear in a public document:
(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.
All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in
action are governed by Articles 1403, No. 2 and 1405.

Acts and contracts which create, transmit, modify or extinguish real rights over
immovable property should be embodied in a public document. Sales of real property are
governed by the Statute of Frauds which reads:
Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) . . .
(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 and 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:
(a) An agreement that by its terms is not to be performed within a
year from the making thereof;
xxx xxx 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;
(3) . . . .
The sale of real property should be in writing and subscribed by the party charged for it to
be enforceable. The "Pagpapatunay" is in writing and subscribed by Bonifacio Aparato,
the vendor; hence, it is enforceable under the Statute of Frauds. Not having been
subscribed and sworn to before a notary public, however, the "Pagpapatunay" is not a
public document, and therefore does not comply with Article 1358, paragraph 1 of the
Civil Code.
The requirement of a public document in Article 1358 is not for the validity of the instrument but
for its efficacy. 42Although a conveyance of land is not made in a public document, it does not
affect the validity of such conveyance. 43 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, 44 so that after the existence of said contract has been admitted, the party
bound may be compelled to execute the proper document. 45 This is clear from Article 1357, viz:
Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article [Article 1358], 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.
The private conveyance of the house and lot is therefore valid between Bonifacio Aparato and
respondent spouses. The question of whether the "Pagpapatunay" is sufficient to transfer and
convey title to the land for purposes of original registration 46 or the issuance of a real estate tax
declaration in respondent spouses' names, as prayed for by respondent spouses, 47 is another
matter altogether. 48 For greater efficacy of the contract, convenience of the parties and to bind
third persons, respondent spouses have the right to compel the vendor or his heirs to execute the
necessary document to properly convey the property. 49
Anent petitioner's second assigned error, the fact that the Court of Appeals sustained the validity
of the "Pagpapatunay" was not a conclusion that necessarily resulted from the weakness of
petitioner's claim of filiation to Bonifacio Aparato. Of and by itself, the "Pagpapatunay" is a
valid contract of sale between the parties and the Court of Appeals did not err in upholding its
validity.
The issue of petitioner's paternity, however, is essential to determine whether Tax Declaration
No. 02-6368 in the name of petitioner Cenido should be nullified, as prayed for by respondent
spouses in their complaint.
Tax Declaration No. 02-6368 50 in petitioner Cenido's name was issued pursuant to the
compromise judgment of the MTC where Gavino Aparato, Bonifacio's brother, expressly
recognized petitioner Cenido as Bonifacio's sole illegitimate son. The compromise judgment was
rendered in 1985, three years after Bonifacio's demise.
Under the Civil Code, 51 natural children and illegitimate children other than natural are entitled
to support and successional rights only when recognized or acknowledged by the putative
parent. 52 Unless recognized, they have no rights whatsoever against their alleged parent or his
estate. 53
The filiation of illegitimate children may be proved by any of the forms of recognition of natural
children. 54 This recognition may be made in three ways: 55 (1) voluntarily, which must be
express such as that in a record of birth, a will, a statement before a court of record, or in any
authentic writing; 56 (2) legally, i.e., when a natural child is recognized, such recognition extends
to his or her brothers and sisters of the full blood; 57 and (3) judicially or compulsorily, which
may be demanded by the illegitimate child of his parents. 58 The action for compulsory
recognition of the illegitimate child must be brought during the lifetime of the presumed parents.
This is explicitly provided in Article 285 of the Civil Code, viz:

Art. 285. The action for the recognition of natural children may be brought only
during the lifetime of the presumed parents, except in the following cases:
(1) If the father or mother died during the minority of the child, in which case the
latter may file the action before the expiration of four years from the attainment of
his majority;
(2) If after the death of the father or of the mother a document should appear of
which nothing had been heard and in which either or both parents recognize the
child.
In this case, the action must be commenced within four years from the finding of
the document.
The illegitimate child can file an action for compulsory recognition only during the lifetime of
the presumed parent. After the parent's death, the child cannot bring such action, except,
however, in only two instances: one is when the supposed parent died during the minority of the
child, and the other is when after the death of the parent, a document should be discovered in
which the parent recognized the child as his. The action must be brought within four years from
the attainment of majority in the first case, and from the discovery of the document in the second
case. The requirement that the action be filed during the parent's lifetime is to prevent
illegitimate children, on account of strong temptations to large estates left by dead persons, to
claim part of this estate without giving the alleged parent personal opportunity to be heard. 59 It is
vital that the parent be heard for only the parent is in a position to reveal the true facts
surrounding the claimant's conception. 60
In the case at bar, petitioner Cenido did not present any record of birth, will or any authentic
writing to show he was voluntarily recognized by Bonifacio as his illegitimate son. In fact,
petitioner admitted on the witness stand that he had no document to prove Bonifacio's
recognition, much less his filiation. 61 The voluntary recognition of petitioner's filiation by
Bonifacio's brother before the MTC does not qualify as a "statement in a court of record." Under
the law, this statement must be made personally by the parent himself or herself, not by any
brother, sister or relative; after all, the concept of recognition speaks of a voluntary declaration
by the parent, or if the parent refuses, by judicial authority, to establish the paternity or maternity
of children born outside wedlock. 62
The compromise judgment of the MTC does not qualify as a compulsory recognition of
petitioner. In the first place, when he filed this case against Gavino Aparato, petitioner was no
longer a minor. He was already pushing fifty years old. 63 Secondly, there is no allegation that
after Bonifacio's death, a document was discovered where Bonifacio recognized petitioner
Cenido as his son. Thirdly, there is nothing in the compromise judgment that indicates that the

action before the MTC was a settlement of Bonifacio's estate with a gross value not exceeding
P20,000.00. 64 Definitely, the action could not have been for compulsory recognition because the
MTC had no jurisdiction over the subject matter. 65
The Real Property Tax Code provides that real property tax be assessed in the name of the person
"owning or administering" the property on which the tax is levied. 66 Since petitioner Cenido has
not proven any successional or administrative rights to Bonifacio's estate, Tax Declaration No.
02-6368 in Cenido's name must be declared null and void.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 41011 are affirmed. Tax Declaration No. 02-6368 in the name of
petitioner Renato Cenido is declared null and void.
No costs.
SO ORDERED.
G.R. No. 139982

November 21, 2002

JULIAN FRANCISCO (Substituted by his Heirs, namely: CARLOS ALTEA

FRANCISCO;
the heirs of late ARCADIO FRANCISCO, namely: CONCHITA SALANGSANGFRANCISCO (surviving spouse),
and his children namely: TEODULO S. FRANCISCO, EMILIANO S. FRANCISCO,
MARIA THERESA S. FRANCISCO,
PAULINA S. FRANCISCO, THOMAS S. FRANCISCO;
PEDRO ALTEA FRANCISCO; CARINA FRANCISCO-ALCANTARA; EFREN ALTEA
FRANCISCO; DOMINGA LEA FRANCISCO-REGONDON;
BENEDICTO ALTEA FRANCISCO and ANTONIO ALTEA FRANCISCO), petitioner,
vs.
PASTOR HERRERA, respondent.
DECISION
QUISUMBING, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated August
30, 1999, in CA-G.R. CV No. 47869, which affirmed in toto the judgment2 of the Regional Trial
Court (RTC) of Antipolo City, Branch 73, in Civil Case No. 92-2267. The appellate court
sustained the trial courts ruling which: (a) declared null and void the deeds of sale of the
properties covered by Tax Declaration Nos. 01-00495 and 01-00497; and (b) directed petitioner
to return the subject properties to respondent who, in turn, must refund to petitioner the purchase
price of P1,750,000.
The facts, as found by the trial court and affirmed by the Court of Appeals, are as follows:

Eligio Herrera, Sr., the father of respondent, was the owner of two parcels of land, one consisting
of 500 sq. m. and another consisting of 451 sq. m., covered by Tax Declaration (TD) Nos. 0100495 and 01-00497, respectively. Both were located at Barangay San Andres, Cainta, Rizal.3
On January 3, 1991, petitioner bought from said landowner the first parcel, covered by TD No.
01-00495, for the price of P1,000,000, paid in installments from November 30, 1990 to August
10, 1991.
On March 12, 1991, petitioner bought the second parcel covered by TD No. 01-00497, for
P750,000.
Contending that the contract price for the two parcels of land was grossly inadequate, the
children of Eligio, Sr., namely, Josefina Cavestany, Eligio Herrera, Jr., and respondent Pastor
Herrera, tried to negotiate with petitioner to increase the purchase price. When petitioner refused,
herein respondent then filed a complaint for annulment of sale, with the RTC of Antipolo City,
docketed as Civil Case No. 92-2267. In his complaint, respondent claimed ownership over the
second parcel, which is the lot covered by TD No. 01-00497, allegedly by virtue of a sale in his
favor since 1973. He likewise claimed that the first parcel, the lot covered by TD No. 01-00495,
was subject to the co-ownership of the surviving heirs of Francisca A. Herrera, the wife of
Eligio, Sr., considering that she died intestate on April 2, 1990, before the alleged sale to
petitioner. Finally, respondent also alleged that the sale of the two lots was null and void on the
ground that at the time of sale, Eligio, Sr. was already incapacitated to give consent to a contract
because he was already afflicted with senile dementia, characterized by deteriorating mental and
physical condition including loss of memory.
In his answer, petitioner as defendant below alleged that respondent was estopped from assailing
the sale of the lots. Petitioner contended that respondent had effectively ratified both contracts of
sales, by receiving the consideration offered in each transaction.
On November 14, 1994, the Regional Trial Court handed down its decision, the dispositive
portion of which reads:
WHEREFORE, in view of all the foregoing, this court hereby orders that:
1. The deeds of sale of the properties covered by Tax Dec. Nos. 01-00495 and 01-00497
are declared null and void;
2. The defendant is to return the lots in question including all improvements thereon to
the plaintiff and the plaintiff is ordered to simultaneously return to the defendant the
purchase price of the lots sold totalling to P750,000.00 for lot covered by TD 01-00497
and P1,000,000.00 covered by TD 01-00495;
3. The court also orders the defendant to pay the cost of the suit.
<>4. The counter-claim of the defendant is denied for lack of merit.

SO ORDERED.4
Petitioner then elevated the matter to the Court of Appeals in CA-G.R. CV No. 47869. On
August 30, 1999, however, the appellate court affirmed the decision of the Regional Trial Court,
thus:
WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED in toto.
Costs against defendant-appellant.
SO ORDERED.5
Hence, this petition for review anchored on the following grounds:
I. THE COURT OF APPEALS COMPLETELY IGNORED THE BASIC DIFFERENCE
BETWEEN A VOID AND A MERELY VOIDABLE CONTRACT THUS MISSING
THE ESSENTIAL SIGNIFICANCE OF THE ESTABLISHED FACT OF
RATIFICATION BY THE RESPONDENT WHICH EXTINGUISHED WHATEVER
BASIS RESPONDENT MAY HAVE HAD IN HAVING THE CONTRACT AT BENCH
ANNULLED.
II. THE DECISION OF THE COURT OF APPEALS ON "SENILE DEMENTIA":
A. DISREGARDED THE FACTUAL BACKGROUND OF THE CASE;
B. WAS CONTRARY TO ESTABLISHED JURISPRUDENCE; AND
C. WAS PURELY CONJECTURAL, THE CONJECTURE BEING
ERRONEOUS.
III. THE COURT OF APPEALS WAS IN GROSS ERROR AND IN FACT VIOLATED
PETITIONERS RIGHT TO DUE PROCESS WHEN IT RULED THAT THE
CONSIDERATION FOR THE QUESTIONED CONTRACTS WAS GROSSLY
INADEQUATE.6
The resolution of this case hinges on one pivotal issue: Are the assailed contracts of sale void or
merely voidable and hence capable of being ratified?
Petitioner contends that the Court of Appeals erred when it ignored the basic distinction between
void and voidable contracts. He argues that the contracts of sale in the instant case, following
Article 13907 of the Civil Code are merely voidable and not void ab initio. Hence, said contracts
can be ratified. Petitioner argues that while it is true that a demented person cannot give consent
to a contract pursuant to Article 1327,8 nonetheless the dementia affecting one of the parties will
not make the contract void per se but merely voidable. Hence, when respondent accepted the
purchase price on behalf of his father who was allegedly suffering from senile dementia,
respondent effectively ratified the contracts. The ratified contracts then become valid and
enforceable as between the parties.

Respondent counters that his act of receiving the purchase price does not imply ratification on
his part. He only received the installment payments on his senile fathers behalf, since the latter
could no longer account for the previous payments. His act was thus meant merely as a safety
measure to prevent the money from going into the wrong hands. Respondent also maintains that
the sales of the two properties were null and void. First, with respect to the lot covered by TD
No. 01-00497, Eligio, Sr. could no longer sell the same because it had been previously sold to
respondent in 1973. As to lot covered by TD No. 01-00495, respondent contends that it is coowned by Eligio, Sr. and his children, as heirs of Eligios wife. As such, Eligio, Sr. could not sell
said lot without the consent of his co-owners.
We note that both the trial court and the Court of Appeals found that Eligio, Sr. was already
suffering from senile dementia at the time he sold the lots in question. In other words, he was
already mentally incapacitated when he entered into the contracts of sale. Settled is the rule that
findings of fact of the trial court, when affirmed by the appellate court, are binding and
conclusive upon the Supreme Court.9
Coming now to the pivotal issue in this controversy. A void or inexistent contract is one which
has no force and effect from the very beginning. Hence, it is as if it has never been entered into
and cannot be validated either by the passage of time or by ratification. There are two types of
void contracts: (1) those where one of the essential requisites of a valid contract as provided for
by Article 131810 of the Civil Code is totally wanting; and (2) those declared to be so under
Article 140911 of the Civil Code. By contrast, a voidable or annullable contract is one in which
the essential requisites for validity under Article 1318 are present, but vitiated by want of
capacity, error, violence, intimidation, undue influence, or deceit.
Article 1318 of the Civil Code states that no contract exists unless there is a concurrence of
consent of the parties, object certain as subject matter, and cause of the obligation established.
Article 1327 provides that insane or demented persons cannot give consent to a contract. But, if
an insane or demented person does enter into a contract, the legal effect is that the contract is
voidable or annullable as specifically provided in Article 1390.12
In the present case, it was established that the vendor Eligio, Sr. entered into an agreement with
petitioner, but that the formers capacity to consent was vitiated by senile dementia. Hence, we
must rule that the assailed contracts are not void or inexistent per se; rather, these are contracts
that are valid and binding unless annulled through a proper action filed in court seasonably.
An annullable contract may be rendered perfectly valid by ratification, which can be express or
implied. Implied ratification may take the form of accepting and retaining the benefits of a
contract.13 This is what happened in this case. Respondents contention that he merely received
payments on behalf of his father merely to avoid their misuse and that he did not intend to concur
with the contracts is unconvincing. If he was not agreeable with the contracts, he could have
prevented petitioner from delivering the payments, or if this was impossible, he could have
immediately instituted the action for reconveyance and have the payments consigned with the
court. None of these happened. As found by the trial court and the Court of Appeals, upon
learning of the sale, respondent negotiated for the increase of the purchase price while receiving
the installment payments. It was only when respondent failed to convince petitioner to increase

the price that the former instituted the complaint for reconveyance of the properties. Clearly,
respondent was agreeable to the contracts, only he wanted to get more. Further, there is no
showing that respondent returned the payments or made an offer to do so. This bolsters the view
that indeed there was ratification. One cannot negotiate for an increase in the price in one breath
and in the same breath contend that the contract of sale is void.
Nor can we find for respondents argument that the contracts were void as Eligio, Sr., could not
sell the lots in question as one of the properties had already been sold to him, while the other was
the subject of a co-ownership among the heirs of the deceased wife of Eligio, Sr. Note that it was
found by both the trial court and the Court of Appeals that Eligio, Sr., was the "declared owner"
of said lots. This finding is conclusive on us. As declared owner of said parcels of land, it follows
that Eligio, Sr., had the right to transfer the ownership thereof under the principle of jus
disponendi.
In sum, the appellate court erred in sustaining the judgment of the trial court that the deeds of
sale of the two lots in question were null and void.
WHEREFORE, the instant petition is GRANTED. The decision dated August 30, 1999 of the
Court of Appeals in CA-G.R. CV No. 47869, affirming the decision of the Regional Trial Court
in Civil Case No. 92-2267 is REVERSED. The two contracts of sale covering lots under TD No.
01-00495 and No. 01-00497 are hereby declared VALID. Costs against respondent.
SO ORDERED.