leabress vs ca

7/27/2019 Leabress vs CA

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SECOND DIVISION

SPOUSES CARMEN S. TONGSON G.R. No. 167874

and JOSE C. TONGSON

substituted by his children namely: Present:

JOSE TONGSON, JR.,

RAUL TONGSON, CARPIO, J., Chairperson,

TITA TONGSON, BRION,

GLORIA TONGSON DEL CASTILLO,

ALMA TONGSON, ABAD, and

Petitioners, PEREZ, JJ.

- versus -

EMERGENCY PAWNSHOP BULA, Promulgated:

INC. and DANILO R. NAPALA,

Respondents. January 15, 2010

x-----------------------------------------------------------------------------------------x

D E C I S I O N


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CARPIO, J.:

The Case

Before the Court is a petition for review[1] of the 31 August 2004 Decision[2] and 10 March 2005

Resolution[3] of the Court of Appeals in CA-G.R. CV No. 58242. In the 31 August 2004 Decision, the

Court of Appeals partially granted the appeal filed by Emergency Pawnshop Bula, Inc. (EPBI) and Danilo

R. Napala (Napala) by modifying the decision of the trial court. In the 10 March 2005 Resolution, the

Court of Appeals denied the motion for partial reconsideration filed by the Spouses Jose C. Tongson and

Carmen S. Tongson (Spouses Tongson).

The Facts

In May 1992, Napala offered to purchase from the Spouses Tongson their 364-square meter parcel

of land, situated in Davao City and covered by Transfer Certificate of Title (TCT) No. 143020, for

P3,000,000. Finding the offer acceptable, the Spouses Tongson executed with Napala a Memorandum

of Agreement[4] dated 8 May 1992.

On 2 December 1992, respondents lawyer Atty. Petronilo A. Raganas, Jr. prepared a Deed of

Absolute Sale[5] indicating the consideration as only P400,000. When Carmen Tongson noticed that

the consideration was very low, she [complained] and called the attention of Napala but the latter told

her not to worry as he would be the one to pay for the taxes and she would receive the net amount of

P3,000,000.[6]

To conform with the consideration stated in the Deed of Absolute Sale, the parties executed

another Memorandum of Agreement, which allegedly replaced the first Memorandum of Agreement,[7]

showing that the selling price of the land was only P400,000.[8]


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Upon signing the Deed of Absolute Sale, Napala paid P200,000 in cash to the Spouses Tongson and

issued a postdated Philippine National Bank (PNB) check in the amount of P2,800,000,[9] representing

the remaining balance of the purchase price of the subject property. Thereafter, TCT No. 143020 was

cancelled and TCT No. T-186128 was issued in the name of EPBI.[10]

When presented for payment, the PNB check was dishonored for the reason Drawn Against

Insufficient Funds. Despite the Spouses Tongson's repeated demands to either pay the full value of the

check or to return the subject parcel of land, Napala failed to do either. Left with no other recourse, the

Spouses Tongson filed with the Regional Trial Court, Branch 16, Davao City a Complaint for Annulment

of Contract and Damages with a Prayer for the Issuance of a Temporary Restraining Order and a Writ of

Preliminary Injunction.[11]

In their Answer, respondents countered that Napala had already delivered to the Spouses Tongsonthe amount of P2,800,000 representing the face value of the PNB check, as evidenced by a receipt

issued by the Spouses Tongson. Respondents pointed out that the Spouses Tongson never returned the

PNB check claiming that it was misplaced. Respondents asserted that the payment they made rendered

the filing of the complaint baseless.[12]

At the pre-trial, Napala admitted, among others, issuing the postdated PNB check in the sum of

P2,800,000.[13] The Spouses Tongson, on the other hand, admitted issuing a receipt which showed that

they received the PNB check from Napala. Thereafter, trial ensued.

The Ruling of the Trial Court

The trial court found that the purchase price of the subject property has not been fully paid and

that Napalas assurance to the Spouses Tongson that the PNB check would not bounce constituted fraud

that induced the Spouses Tongson to enter into the sale. Without such assurance, the Spouses Tongson

would not have agreed to the contract of sale. Accordingly, there was fraud within the ambit of Article

1338 of the Civil Code,[14] justifying the annulment of the contract of sale, the award of damages and

attorneys fees, and payment of costs.


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The dispositive portion of the 9 December 1996 Decision of the trial court reads:

WHEREFORE, judgment is hereby rendered

I Annulling the contract entered into by the plaintiffs with the defendants;

II Declaring the writs of preliminary injunctions issued permanent;

III Ordering defendants to:

1) reconvey the property subject matter of the case to the plaintiffs;

2) pay plaintiffs:

a) P100,000 as moral damages;

b) P50,000 as exemplary damages;

c) P20,000 as attorneys fees; and

d) P35,602.50 cost of suit broken down as follows:

P70.00 bond fee

P60.00 lis pendens fee

P902.00 docket fee

P390.00 docket fee

P8.00 summons fee

P12.00 SDF

P178.50 Xerox

P9,000 Sidcor Insurance Bond fee

P25,000 Sidcor Insurance Bond fee

or the total sum of P205,602.50.


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It is further ordered that the monetary award be offsetted [sic] to defendants downpayment of

P200,000 thereby leaving a balance of P5,602.50.[15]

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals agreed with the trial courts finding that Napala employed fraud when he

misrepresented to the Spouses Tongson that the PNB check in the amount of P2,800,000 would be

properly funded at its maturity. However, the Court of Appeals found that the issuance and delivery of

the PNB check and fraudulent representation made by Napala could not be considered as the

determining cause for the sale of the subject parcel of land. Hence, such fraud could not be made the

basis for annulling the contract of sale. Nevertheless, the fraud employed by Napala is a proper and

valid basis for the entitlement of the Spouses Tongson to the balance of the purchase price in the

amount of P2,800,000 plus interest at the legal rate of 6% per annum computed from the date of filing

of the complaint on 11 February 1993.

Finding the trial courts award of damages unconscionable, the Court of Appeals reduced the

moral damages from P100,000 to P50,000 and the exemplary damages from P50,000 to P25,000.

The dispositive portion of the 31 August 2004 Decision of the Court of Appeals reads:

WHEREFORE, the instant appeal is PARTIALLY GRANTED. The assailed decision of the Regional

Trial Court, 11th Judicial Region, Branch 16, Davao City, in Civil Case No. 21,858-93, is hereby MODIFIED,

to read:


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WHEREFORE, judgment is hereby rendered ordering defendants to pay plaintiffs:

a) the sum of P2,800,000.00 representing the balance of the purchase price of the subject parcel of

land, plus interest at the legal rate of 6% per annum computed from the date of filing of the complaint

on 11 February 1993, until the finality of the assailed decision; thereafter, the interest due shall be at

the legal rate of 12% per annum until fully paid;

b) P50,000 as moral damages;

c) P25,000 as exemplary damages;

d) P20,000 as attorneys fees; and

e) The costs of suit in the total amount of P35,602.50.

It is understood, however, that plaintiffs entitlement to items a to d, is subject to the condition

that they have not received the same or equivalent amounts in criminal case for Violation of Batas

Pambansa Bilang 22, docketed as Criminal Case No. 30508-93, before the Regional Trial Court of Davao

City, Branch 12, instituted against the defendant Danilo R. Napala by plaintiff Carmen S. Tongson.

SO ORDERED.[16]

The Spouses Tongson filed a partial motion for reconsideration which was denied by the Court of

Appeals in its Resolution dated 10 March 2005.

The Issues

The Spouses Tongson raise the following issues:


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1. WHETHER THE CONTRACT OF SALE CAN BE ANNULLED BASED ON THE FRAUD EMPLOYED BY

NAPALA; and

2. WHETHER THE COURT OF APPEALS ERRED IN REDUCING THE AMOUNT OF DAMAGES AWARDED BY

THE TRIAL COURT.

The Ruling of the Court

The petition has merit.

On the existence of fraud

A contract is a meeting of the minds between two persons, whereby one is bound to give

something or to render some service to the other.[17] A valid contract requires the concurrence of the

following essential elements: (1) consent or meeting of the minds, that is, consent to transfer ownership

in exchange for the price; (2) determinate subject matter; and (3) price certain in money or its

equivalent.[18]


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In the present case, there is no question that the subject matter of the sale is the 364-square meter

Davao lot owned by the Spouses Tongson and the selling price agreed upon by the parties is P3,000,000.

Thus, there is no dispute as regards the presence of the two requisites for a valid sales contract, namely,

(1) a determinate subject matter and (2) a price certain in money.

The problem lies with the existence of the remaining element, which is consent of the contracting

parties, specifically, the consent of the Spouses Tongson to sell the property to Napala. Claiming that

their consent was vitiated, the Spouses Tongson point out that Napalas fraudulent representations of

sufficient funds to pay for the property induced them into signing the contract of sale. Such fraud,

according to the Spouses Tongson, renders the contract of sale void.

On the contrary, Napala insists that the Spouses Tongson willingly consented to the sale of the

subject property making the contract of sale valid. Napala maintains that no fraud attended theexecution of the sales contract.

The trial and appellate courts had conflicting findings on the question of whether the consent of

the Spouses Tongson was vitiated by fraud. While the Court of Appeals agreed with the trial courts

finding that Napala employed fraud when he assured the Spouses Tongson that the postdated PNB

check was fully funded when it fact it was not, the Court of Appeals disagreed with the trial courts

ruling that such fraud could be the basis for the annulment of the contract of sale between the parties.

Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations

of one of the contracting parties, the other is induced to enter into a contract which, without them, he

would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo

causante), not merely the incidental (dolo incidente), inducement to the making of the contract.[19]Additionally, the fraud must be serious.[20]

We find no causal fraud in this case to justify the annulment of the contract of sale between the

parties. It is clear from the records that the Spouses Tongson agreed to sell their 364-square meter

Davao property to Napala who offered to pay P3,000,000 as purchase price therefor. Contrary to the


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Spouses Tongsons belief that the fraud employed by Napala was already operational at the time of the

perfection of the contract of sale, the misrepresentation by Napala that the postdated PNB check

would not bounce on its maturity hardly equates to dolo causante. Napalas assurance that the check

he issued was fully funded was not the principal inducement for the Spouses Tongson to sign the Deed

of Absolute Sale. Even before Napala issued the check, the parties had already consented and agreed to

the sale transaction. The Spouses Tongson were never tricked into selling their property to Napala. On

the contrary, they willingly accepted Napalas offer to purchase the property at P3,000,000. In short,

there was a meeting of the minds as to the object of the sale as well as the consideration therefor.

Some of the instances where this Court found the existence of causal fraud include: (1) when the

seller, who had no intention to part with her property, was tricked into believing that what she signed

were papers pertinent to her application for the reconstitution of her burned certificate of title, not a

deed of sale;[21] (2) when the signature of the authorized corporate officer was forged;[22] or (3) when

the seller was seriously ill, and died a week after signing the deed of sale raising doubts on whether the

seller could have read, or fully understood, the contents of the documents he signed or of the

consequences of his act.[23] Suffice it to state that nothing analogous to these badges of causal fraud

exists in this case.

However, while no causal fraud attended the execution of the sales contract, there is fraud in its

general sense, which involves a false representation of a fact,[24] when Napala inveigled the Spouses

Tongson to accept the postdated PNB check on the representation that the check would be sufficiently

funded at its maturity. In other words, the fraud surfaced when Napala issued the worthless check to

the Spouses Tongson, which is definitely not during the negotiation and perfection stages of the sale.Rather, the fraud existed in the consummation stage of the sale when the parties are in the process of

performing their respective obligations under the perfected contract of sale. In Swedish Match, AB v.

Court of Appeals,[25] the Court explained the three stages of a contract, thus:

I n general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and

consummation. Negotiation begins from the time the prospective contracting parties manifest their

interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the

contract takes place when the parties agree upon the essential elements of the contract. Consummation

occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the

extinguishment thereof.


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Indisputably, the Spouses Tongson as the sellers had already performed their obligation of

executing the Deed of Sale, which led to the cancellation of their title in favor of EPBI. Respondents as

the buyers, on the other hand, failed to perform their correlative obligation of paying the full amount of

the contract price. While Napala paid P200,000 cash to the Spouses Tongson as partial payment, Napala

issued an insufficiently funded PNB check to pay the remaining balance of P2.8 million. Despite repeated

demands and the filing of the complaint, Napala failed to pay the P2.8 million until the present. Clearly,

respondents committed a substantial breach of their reciprocal obligation, entitling the Spouses

Tongson to the rescission of the sales contract. The law grants this relief to the aggrieved party, thus:

Article 1191 of the Civil Code provides:

Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the

obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with

payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if

the latter should become impossible.

Article 1385 of the Civil Code provides the effects of rescission, viz:

ART. 1385. Rescission creates the obligation to return the things which were the object of the

contract, together with their fruits, and the price with its interest; consequently, it can be carried out

only when he who demands rescission can return whatever he may be obliged to restore.

Neither shall rescission take place when the things which are the object of the contract are legally

in the possession of third persons who did not act in bad faith.


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While they did not file an action for the rescission of the sales contract, the Spouses Tongson

specifically prayed in their complaint for the annulment of the sales contract, for the immediate

execution of a deed of reconveyance, and for the return of the subject property to them.[26] The

Spouses Tongson likewise prayed for such other reliefs which may be deemed just and equitable in thepremises. In view of such prayer, and considering respondents substantial breach of their obligation

under the sales contract, the rescission of the sales contract is but proper and justified. Accordingly,

respondents must reconvey the subject property to the Spouses Tongson, who in turn shall refund the

initial payment of P200,000 less the costs of suit.

Napalas claims that rescission is not proper and that he should be given more time to pay for the

unpaid remaining balance of P2,800,000 cannot be countenanced. Having acted fraudulently in

performing his obligation, Napala is not entitled to more time to pay the remaining balance of

P2,800,000, and thereby erase the default or breach that he had deliberately incurred.[27] To do

otherwise would be to sanction a deliberate and reiterated infringement of the contractual obligations

incurred by Napala, an attitude repugnant to the stability and obligatory force of contracts.[28]

The Court notes that the selling price indicated in the Deed of Absolute Sale was only P400,000,

instead of the true purchase price of P3,000,000. The undervaluation of the selling price operates to

defraud the government of the taxes due on the basis of the correct purchase price. Under the law,[29]

the sellers have the obligation to pay the capital gains tax. In this case, Napala undertook to advance

the capital gains tax, among other fees, under the Memorandum of Agreement, thus:

ATTY. ALABASTRO:

Q Is it not a fact that you were the one who paid for the capital gains tax?

A No, I only advanced the money.

Q To whom?

A To BIR.

COURT:


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Q You were the one who went to the BIR to pay the capital gains tax?

A It is embodied in the memorandum agreement.[30]

While Carmen Tongson protested against the very low consideration, she eventually agreed to

the reduced selling price indicated in the Deed of Absolute since Napala assured her not to worry

about the taxes and expenses, as he had allegedly made arrangements with the Bureau of Internal

Revenue (BIR) regarding the payment of the taxes, thus:

Q What is the amount in the Deed of Absolute Sale?

A It was only Four Hundred Thousand. And he told me not to worry because x x x the BIR and not toworry because he will pay me what was agreed the amount of Three Million and he will be paying all

these expenses so I was thinking, if that is the case, anyway he paid me the Two Hundred Thousand cash

and a subsequent Two Point Eight Million downpayment check so I really thought that he was paying the

whole amount.

COURT:

Proceed.

ATTY. LIZA:

Q So you eventually agreed that this consideration be reduced to Four Hundred Thousand Pesos

and to be reflected in the Deed of Absolute Sale?

A Yes, but when I was complaining to him why it is so because I was worried why that was like thatbut Mr. Napala told me dont worry because [he] can remedy this. And I asked him how can [he]

remedy this? And he told me we can make another Memorandum of Agreement.

COURT:


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Q Before you signed the Deed of Absolute Sale, you found out the amount?

A Yes, sir.

Q And you complained?

A Yes.[31]

Considering that the undervaluation of the selling price of the subject property, initiated by Napala,

operates to defraud the government of the correct amount of taxes due on the sale, the BIR must

therefore be informed of this Decision for its appropriate action.

On the award of damages

Citing Article 1338 of the Civil Code, the trial court awarded P100,000 moral damages and P50,000

exemplary damages to the Spouses Tongson. While agreeing with the trial court on the Spouses

Tongsons entitlement to moral and exemplary damages, the Court of Appeals reduced such awards for

being unconscionable. Thus, the moral damages was reduced from P100,000 to P50,000, and the

exemplary damages was reduced from P50,000 to P25,000.

As discussed above, Napala defrauded the Spouses Tongson in his acts of issuing a worthless check

and representing to the Spouses Tongson that the check was funded, committing in the process a

substantial breach of his obligation as a buyer. For such fraudulent acts, the law, specifically the Civil

Code, awards moral damages to the injured party, thus:

ART. 2220. Willful injury to property may be a legal ground for awarding moral damages if the

court should find that, under the circumstances, such damages are justly due. The same rule applies to

breaches of contract where the defendant acted fraudulently or in bad faith. (Emphasis supplied)


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Considering that the Spouses Tongson are entitled to moral damages, the Court may also award

exemplary damages, thus:

ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the

defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

Article 2234. When the amount of the exemplary damages need not be proved, the plaintiff must

show that he is entitled to moral, temperate or compensatory damages before the court may consider

the question of whether or not exemplary damages would be awarded. In case liquidated damages have

been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be

recovered, nevertheless, before the court may consider the question of granting exemplary in addition

to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or

compensatory damages were it not for the stipulation for liquidated damages. (Emphasis supplied)

Accordingly, we affirm the Court of Appeals awards of moral and exemplary damages, which we

find equitable under the circumstances in this case.

WHEREFORE, we PARTIALLY GRANT the petition. We SET ASIDE the 31 August 2004 Decision and

10 March 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 58242, except as to the award of

moral and exemplary damages, and ORDER the rescission of the contract of sale between the Spouses

Tongson and Emergency Pawnshop Bula, Inc.

Let a copy of this Decision be forwarded to the Bureau of Internal Revenue for its appropriate

action.

SO ORDERED.


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ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ARTURO D. BRION

Associate Justice

MARIANO C. DEL CASTILLO ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE P. PEREZ


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Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the

case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO

Associate Justice

CHAIRPERSON

CERTIFICATION

PURSUANT TO SECTION 13, ARTICLE VIII OF THE CONSTITUTION, AND THE DIVISION

CHAIRPERSONS ATTESTATION, I CERTIFY THAT THE CONCLUSIONS IN THE ABOVE DECISION HAD BEEN

REACHED IN CONSULTATION BEFORE THE CASE WAS ASSIGNED TO THE WRITER OF THE OPINION OF

THE COURTS DIVISION.

REYNATO S. PUNO


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Chief Justice

[1] Under Rule 45 of the Rules of Court.

[2] Rollo, pp. 33-63. Penned by Associate Justice Perlita J. Tria Tirona with Associate Justices

Ruben T. Reyes and Jose C. Reyes, Jr., concurring.

[3] Id. at 73-74.

[4] Exhibit B.

[5] Exhibit C.

[6] Records, pp. 4-5; TSN, 29 April 1994, pp. 10-11.

[7] TSN, 27 January 1995, pp. 5-6. Atty. Petronilo Raganas testified on this matter, thus:

ATTY. ALABASTRO:

Q After this Exhibit B was prepared, a new Memorandum Agreement was prepared to replace

this Memorandum of Agreement marked as Exhibit B?

A That other Memorandum Agreement was made to replace that Memorandum Agreement in the

amount of Three Million pesos to jibe with the Deed of Sale.

Q So the first Memorandum Agreement which was prepared and replaced by another

Memorandum Agreement with the consideration of Four Hundred Thousand pesos was this

Memorandum Agreement wherein the consideration was Three Million Pesos?

A Yes, sir.

Q And of course, this was notarized by you, this Exhibit B?

A Actually, this was notarized but this was replaced by another Memorandum of Agreement using

the same document.


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Q You mean using the same document number, page number?

A Yes, to jibe.

Q Im showing to you these documents consisting of 2 pages marked as Exhibit J and J-1 with

the letter head of Raganas Law Office. That is in you own handwriting?

A Yes, sir.

Q So, the true consideration of the transaction involving the property of the spouses is Three

Million and not Four Hundred Thousand?

A In principle, they agreed on that amount.

[8] Exhibit EE-1.

[9] Exhibit D.

[10] Exhibit F.

[11] Docketed as Civil Case No. 21,858-93.

[12] Records, p. 27.

[13] Id. at 110.

[14] ART. 1338. There is fraud when, through insidious words or machinations of one of the

contracting parties, the other is induced to enter into a contract which, without them, he would not

have agreed to.

[15] Rollo, p. 148. Penned by Judge Romeo D. Marasigan.

[16] Id. at 61-62.

[17] Article 1305 of the Civil Code.

[18] Article 1318 of the Civil Code in relation to Article 1458 of the same Code.

ART. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;


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(3) Cause of the obligation which is established.

ART. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the

ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money

or its equivalent.

[19] Woodhouse v. Halili, 93 Phil. 526, 537 (1953).

[20] Article 1344 of the Civil Code provides: In order that fraud may make a contract voidable, it

should be serious and should not have been employed by both contracting parties.

Incidental fraud only obliges the person employing it to pay damages.

[21] Archipelago Management and Marketing Corp. v. CA, 359 Phil. 363 (1998).

[22] Sanchez v. Mapalad, G.R. No. 148516, 27 December 2007, 541 SCRA 397.

[23] Paragas v. Heirs of Balacano, G.R. No. 168220, 31 August 2005, 468 SCRA 717.

[24] See Bartolo v. Sandiganbayan, G.R. No. 172173, 16 April 2009.

[25] 483 Phil. 735, 750-751 (2004), citing Bugatti v. Court of Appeals, 397 Phil. 376 (2000).

[26] Records, p. 8.

[27] Luzon Brokerage v. Maritime Building Co., Inc., 150 Phil. 114, 125 (1972).

[28] Id.

(D) [29]Capital Gains from Sale of Real Property.

(1) In General. - The provisions of Section 39(B) notwithstanding, a final tax of six percent (6%) based on

the gross selling price or current fair market value as determined in accordance with Section 6(E) of this

Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from

the sale, exchange, or other disposition of real property located in the Philippines, classified as capital

assets, including pacto de retro sales and other forms of conditional sales, by individuals, including

estates and trusts: Provided, That the tax liability, if any, on gains from sales or other dispositions of real

property to the government or any of its political subdivisions or agencies or to government-owned or -

controlled corporations shall be determined either under Section 24(A) or under this Subsection, at the

option of the taxpayer; x x x

[30] TSN, 20 July 1995, p. 61.


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[31] TSN, 29 April 1994, pp. 10-11.


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THIRD DIVISION

CARMEN DEL PRADO,Petitioner,

- versus -

SPOUSES ANTONIO L. CABALLERO

and LEONARDA CABALLERO,Respondents.

G.R. No. 148225

Present:

CORONA,J.,Chairperson,

NACHURA,

DEL CASTILLO,

ABAD, and

MENDOZA,JJ.

Promulgated:

March 3, 2010

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the decision[1]of the Court of

Appeals (CA) dated September 26, 2000 and its resolution denying the motion for

reconsideration thereof.

The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6

(LRC Rec. No. N-611), Judge Juan Y. Reyes of the Regional Trial Court (RTC) of

Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero and

Leonarda B. Caballero severalparcels of land situated in Guba, Cebu City, one of

which was Cadastral Lot No. 11909, the subject of this controversy.[2]On May 21,
http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/148225.htm#_ftn1


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1987, Antonio Caballero moved for the issuance of the final decree of registration

for their lots.[3]Consequently, on May 25, 1987, the same court, through then

Presiding Judge Renato C. Dacudao, ordered the National Land Titles and Deeds

Registration Administration to issue the decree of registration and the

corresponding titles of the lots in favor of the Caballeros.[4]

On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No.

11909 on the basis of the tax declaration covering the property. The pertinent

portion of the deed of sale reads as follows:

That we, Spouses ANTONIO L. CABALLERO and LEONARDA

B. CABALLERO, Filipinos, both of legal age and residents of Talamban,Cebu City, Philippines, for and in consideration of the sum of FORTY

THOUSAND PESOS (P40,000.00), Philippine Currency, paid byCARMEN DEL PRADO, Filipino, of legal age, single and a resident ofSikatuna St., Cebu City, Philippines, the receipt of which is full is hereby

acknowledged, do by these presents SELL, CEDE, TRANSFER, ASSIGN

& CONVEY unto the said CARMEN DEL PRADO, her heirs, assignsand/or successors-in-interest, one (1) unregistered parcel of land, situated

at Guba, Cebu City, Philippines, and more particularly described and

bounded, as follows:

A parcel of land known as Cad. Lot No.

11909, bounded as follows:

North : Lot 11903

East : Lot 11908

West : Lot 11910

South : Lot 11858 & 11912

containing an area of 4,000 square meters,

more or less, covered by Tax Dec. No. 00787 of theCebu City Assessors Office, Cebu City.

of which parcel of land we are the absolute and lawful owners.

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was

issued only on November 15, 1990, and entered in the Registration Book of the

City of Cebu on December 19, 1990.[5]Therein, the technical description of Lot

No. 11909 states that said lot measures about 14,457 square meters, more or less.[6]
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On March 20, 1991, petitioner filed in the same cadastral proceedings a

Petition for Registration of Document Under Presidential Decree (P.D.)

1529[7]in order that a certificate of title be issued in her name, covering the whole

Lot No. 11909. In the petition, petitioner alleged that the tenor of the instrument of

sale indicated that the sale was for a lump sum orcuerpo cierto, in which case, thevendor was bound to deliver all that was included within said boundaries even

when it exceeded the area specified in the contract. Respondents opposed, on the

main ground that only 4,000 sq m of Lot No. 11909 was sold to petitioner. They

claimed that the sale was not for a cuerpo cierto. They moved for the outright

dismissal of the petition on grounds of prescription and lack of jurisdiction.

After trial on the merits, the court found that petitioner had established a

clear and positive right to Lot No. 11909. The intended sale between the partieswas for a lump sum, since there was no evidence presented that the property was

sold for a price per unit. It was apparent that the subject matter of the sale was the

parcel of land, known as Cadastral Lot No. 11909, and not only a portion thereof.[8]

Thus, on August 2, 1993, the court a quo rendered its decision with the

following dispositive portion:

WHEREFORE, premises considered, the petition is hereby granted

and judgment is hereby rendered in favor of herein petitioner. TheRegister of Deeds of the City of Cebu is hereby ordered and directed to

effect the registration in his office of the Deed of Absolute Sale betweenSpouses Antonio Caballero and Leonarda Caballero and Petitioner,

Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after

payment of all fees prescribed by law. Additionally, the Register of Deeds

of the City of Cebu is hereby ordered to cancel Original Certificate No.1305 in the name of Antonio Caballero and Leonarda Caballero and the

Transfer Certificate of Title be issued in the name of Petitioner Carmen

del Prado covering the entire parcel of land known as Cadastral Lot No.

11909.[9]

An appeal was duly filed. On September 26, 2000, the CA promulgated the

assailed decision, reversing and setting aside the decision of the RTC.

The CA no longer touched on the character of the sale, because it found that

petitioner availed herself of an improper remedy. The petition for registration of
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document is not one of the remedies provided under P.D. No. 1529, after the

original registration has been effected. Thus, the CA ruled that the lower court

committed an error when it assumed jurisdiction over the petition, which prayed

for a remedy not sanctioned under theProperty Registration Decree. Accordingly,

the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decisionis REVERSED and SET ASIDE and a new one entered dismissing the

petition for lack of jurisdiction. No pronouncement as to costs.[10]

Aggrieved, petitioner filed the instant petition, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALSCOMMITTED GRAVE ERROR IN MAKING FINDINGS

OF FACT CONTRARY TO THAT OF THE TRIAL

COURT[;]

II. WHETHER OR NOT THE COURT OF APPEALSCOMMITTED GRAVE ERROR IN FAILING TO RULE

THAT THE SALE OF THE LOT IS FOR A LUMP SUM

ORCUERPO CIERTO[;]

III. WHETHER OR NOT THE COURTA QUO HAS

JURISDICTION OVER THE PETITION FOR

REGISTRATION OF THE DEED OF ABSOLUTE SALEDATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN

PETITIONER AND RESPONDENTS[.][11]

The core issue in this case is whether or not the sale of the land was for a

lump sum or not.

Petitioner asserts that the plain language of the Deed of Sale shows that it is

a sale of a real estate for a lump sum, governed under Article 1542 of the Civil

Code.[12]In the contract, it was stated that the land contains an area of 4,000 sq

m more or less, bounded on the North by Lot No. 11903, on the East by Lot No.

11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No.

11910. When the OCT was issued, the area of Lot No. 11909 was declared to be

14,475 sq m, with an excess of 10,475 sq m. In accordance with Article 1542,

respondents are, therefore, duty-bound to deliver the whole area within the
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boundaries stated, without any corresponding increase in the price. Thus, petitioner

concludes that she is entitled to have the certificate of title, covering the whole Lot

No. 11909, which was originally issued in the names of respondents, transferred to

her name.

We do not agree.

InEsguerra v. Trinidad,[13]the Court had occasion to discuss the matter of

sales involving real estates. The Courts pronouncement is quite instructive:

In sales involving real estate, the parties may choose between two types of

pricing agreement: a unit price contract wherein the purchase price isdetermined by way of reference to a stated rate per unit area (e.g., P1,000 per

square meter), ora lump sum contract which states a full purchase price for animmovable the area of which may be declared based on the estimate or where

both the area and boundaries are stated (e.g., P1 million for 1,000 squaremeters, etc.). InRudolf Lietz, Inc. v. Court of Appeals (478 SCRA 451), the Court

discussed the distinction:

In a unit price contract, the statement of area of immovable is

not conclusive and the price may be reduced or increased

depending on the area actually delivered. If the vendor delivers

less than the area agreed upon, the vendee may oblige the vendorto deliver all that may be stated in the contract or demand for the

proportionate reduction of the purchase price if delivery is notpossible. If the vendor delivers more than the area stated in thecontract, the vendee has the option to accept only the amount

agreed upon or to accept the whole area, provided he pays for the

additional area at the contract rate.

x x x x

In the case where the area of an immovable is stated in the

contract based on an estimate, the actual area delivered may not

measure up exactly with the area stated in the contract. Accordingto Article 1542 of the Civil Code, in the sale of real estate, made

for a lump sum and not at the rate of a certain sum for a unit ofmeasure or number, there shall be no increase or decrease of theprice, although there be a greater or less areas or number than that

stated in the contract. . . .

x x x x
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Where both the area and the boundaries of the immovable

are declared, the area covered within the boundaries of the

immovable prevailsover the stated area. In cases of conflictbetween areas and boundaries, it is the latter which should

prevail. What r eall y defi nes a piece of groundis not the area,

calculated with more or less certainty, mentioned in itsdescription, but the boundaries therein laid down, as enclosing theland and indicating its limits. In a contract of sale of land in a

mass, it is well established that the specific boundaries stated in the

contract must control over any statement with respect to the areacontained within its boundaries. It is not of vital consequence that

a deed or contract of sale of land should disclose the area with

mathematical accuracy. It is sufficient if its extent is objectively

indicated with sufficient precision to enable one to identify it. Anerror as to the superficial area is immaterial. Thus, the obligation

of the vendor is to deliver everything within the boundaries,

inasmuch as it is the entirety thereof that distinguishes thedeterminate object.[14]

The Court, however, clarified that the rule laid down in Article 1542 is not

hard and fast and admits of an exception. It held:

A caveat is in order, however. The use of more or less orsimilar

words in designating quantity covers only a reasonable excess or

deficiency. A vendee of land sold in gross or with the description more

or less with reference to its area does not therebyipso facto take all risk

of quantity in the land..

Numerical data are not of course the sole gauge of

unreasonableness of the excess or deficiency in area. Courts must

consider a host of other factors. In one case (seeRoble v. Arbasa, 414Phil. 343 [2001]), the Court found substantial discrepancy in area due to

contemporaneous circumstances. Citing change in the physical nature ofthe property, it was therein established that the excess area at the southern

portion was a product of reclamation, which explained why the lands

technical description in the deed of sale indicated the seashore as its

southern boundary, hence, the inclusion of the reclaimed area wasdeclared unreasonable.[15]

In the instant case, the deed of sale is not one of a unit price contract. The

parties agreed on the purchase price of P40,000.00 for a predetermined area of

4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by
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Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot

No. 11910. In a contract of sale of land in a mass, the specific boundaries stated in

the contract must control over any other statement, with respect to the area

contained within its boundaries.[16]

Blacks Law Dictionary[17]defines the phrase more or less to mean:

About; substantially; or approximately; implying that both parties

assume the risk of any ordinary discrepancy. The words are intended to

cover slight or unimportant inaccuraciesin quantity, Carter v. Finch, 186

Ark. 954, 57 S.W.2d 408; and are ordinarily to be interpreted as taking

care of unsubstantial differences or differences of small importance

compared to the whole number of items transferred.

Clearly, the discrepancy of 10,475 sq m cannot be considered a slight

difference in quantity. The difference in the area is obviously sizeable and too

substantial to be overlooked. It is not a reasonable excess or deficiency that should

be deemed included in the deed of sale.

We take exception to the avowed rule that this Court is not a trier of facts.

After an assiduous scrutiny of the records, we lend credence to respondents claim

that they intended to sell only 4,000 sq m of the whole Lot No. 11909, contrary to

the findings of the lower court. The records reveal that when the parties made an

ocular inspection, petitioner specifically pointed to that portion of the lot, which

she preferred to purchase, since there were mango trees planted and a deep well

thereon. After the sale, respondents delivered and segregated the area of 4,000 sq

m in favor of petitioner by fencing off the area of 10,475 sq m belonging to

them.[18]

Contracts are the law between the contracting parties. Sale, by its very

nature, is a consensual contract, because it is perfected by mere consent. Theessential elements of a contract of sale are the following: (a) consent or meeting of

the minds, that is, consent to transfer ownership in exchange for the price; (b)

determinate subject matter; and (c) price certain in money or its equivalent. All

these elements are present in the instant case.[19]
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More importantly, we find no reversible error in the decision of the CA.

Petitioners recourse, by filing the petition for registration in the same cadastral

case, was improper. It is a fundamental principle in land registration that a

certificate of title serves as evidence of an indefeasible and incontrovertible title to

the property in favor of the person whose name appears therein. Suchindefeasibility commences after one year from the date of entry of the decree of

registration.[20]Inasmuch as the petition for registration of document did not

interrupt the running of the period to file the appropriate petition for review and

considering that the prescribed one-year period had long since expired, the decree

of registration, as well as the certificate of title issued in favor of respondents, had

become incontrovertible.[21]

WHEREFORE, the petition is DENIED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice

WE CONCUR:

RENATO C. CORONAAssociate Justice

Chairperson

MARIANO C. DEL CASTILLO

Associate Justice

ROBERTO A. ABAD

Associate Justice

JOSE CATRAL MENDOZA
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Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in

consultation before the case was assigned to the writer of the opinion of theCourts Division.

RENATO C. CORONA

Associate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division

Chairperson's Attestation, I certify that the conclusions in the above Decision hadbeen reached in consultation before the case was assigned to the writer of the

opinion of the Courts Division.

REYNATO S. PUNOChief Justice


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Additional member in lieu of Associate Justice Diosdado M. Peralta per Special Order No. 824 dated

February 12, 2010. In lieu of Associate Justice Presbitero J. Velasco, Jr. per Raffle dated February 22, 2010.[1] Penned by Associate Justice Conrado M. Vasquez, Jr., with Associate Justices Presbitero J. Velasco, Jr.

(now a member of this Court) and Juan Q. Enriquez, Jr., concurring; rollo,pp. 8-15.[2] Lot Nos. 10222, 10516, 10585, 10752, 11833, 11834, 11854, 11860, 11909, 11911, 11888; RTC

Judgment dated February 1, 1985; records, p. 191.[3] Records, p. 193.[4] RTC Order dated May 25, 1987; Exhibit 14, id. at 194.[5] Exhibit 2-B, records, p. 9.[6] OCT No. 1305; Exhibit 15, records, p. 196.[7] Records, p. 1.[8] Rollo, pp. 226-227.[9] Id. at 90.[10] Id. at 55.[11] Id. at 358.[12] Article 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit

of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser areas

or number than that stated in the contract.

The same rule shall be applied when two or more immovables are sold for a single price; but if, besidesmentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be

designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even

when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a

reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because

the vendee does not accede to the failure to deliver what has been stipulated.[13] G.R. No. 169890, March 12, 2007, 518 SCRA 186.[14] Id. at 196-198.[15] Id. at 199.[16] Salinas v. Faustino, G.R. No. 153077, September 19, 2008, 566 SCRA 18.[17] 6th Ed., 1990.

[18] TSN, January 20, 1992, pp. 44, 53.[19] Roble v. Arbasa, G.R. No. 130707, July 31, 2001, 362 SCRA 69, 82.[20] Rollo,p. 54.[21] Id.
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Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. L-41847 December 12, 1986

CATALINO LEABRES, petitioner,vs.COURT OF APPEALS and MANOTOK REALTY, INC., respondents.

Magtanggol C. Gunigundo for petitioner.

Marcelo de Guzman for respondents.

PARAS, J .:

Before Us is a Petition for certiorari to review the decision of the Court of Appeals which is quotedhereunder:

In Civil Case No. 64434, the Court of First Instance of Manila made the following quoted decision:

(1) Upon defendant's counterclaim, ordering plaintiff Catalino Leabres to vacate and/orsurrender possession to defendant Manotok Realty, Inc. the parcel of land subject matter ofthe complaint described in paragraph 3 thereof and described in the Bill of Particulars datedMarch 4, 1966;

(2) To pay defendant the sum of P81.00 per month from March 20, 1959, up to the time heactually vacates and/or surrenders possession of the said parcel of land to the defendantManotok Realty, Inc., and

(3) To pay attorney's fees to the defendant in the amount of P700.00 and pay the costs.(Decision, R.A., pp. 54-55).

The facts of this case may be briefly stated as follows:

Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by thedeceased is the "Legarda Tambunting Subdivision" located on Rizal Avenue Extension, City ofManila, containing an area of 80,238.90 sq. m., covered by Transfer Certificates of Title No. 62042;

45142; 45149; 49578; 40957 and 59585. Shortly after the death of said deceased, plaintiff CatalinoLeabres bought, on a partial payment of Pl,000.00 a portion (No. VIII, Lot No. 1) of the Subdivisionfrom surviving husband Vicente J. Legarda who acted as special administrator, the deed or receiptof said sale appearing to be dated May 2, 1950 (Annex "A"). Upon petition of Vicente L. Legarda,who later was appointed a regular administrator together with Pacifica Price and AugustoTambunting on August 28, 1950, the Probate Court of Manila in the Special Proceedings No. 10808)over the testate estate of said Clara Tambunting, authorized through its order of November 21, 1951the sale of the property.


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In the meantime, Vicente L. Legarda was relieved as a regular Administrator and the Philippine TrustCo. which took over as such administrator advertised the sale of the subdivision which includes thelot subject matter herein, in the issues of August 26 and 27, September 2 and 3, and 15 and 17,1956 of the Manila Times and Daily Mirror. In the aforesaid Special Proceedings No. 10808, noadverse claim or interest over the subdivision or any portion thereof was ever presented by anyperson, and in the sale that followed, the Manotok Realty, Inc. emerged the successful bidder at the

price of P840,000.00. By order of the Probate Court, the Philippine Trust Co. executed the Deed ofAbsolute Sale of the subdivision dated January 7, 1959 in favor of the Manotok Realty, Inc. whichdeed was judicially approved on March 20, 1959, and recorded immediately in the proper Register ofDeeds which issued the corresponding Certificates of Title to the Manotok Realty, Inc., thedefendant appellee herein.

A complaint dated February 8, 1966, was filed by herein plaintiff, which seeks, among other things,for the quieting of title over the lot subject matter herein, for continuing possession thereof, and fordamages. In the scheduled hearing of the case, plaintiff Catalino Leabres failed to appear althoughhe was duly notified, and so the trial Court, in its order dated September 14, 1967, dismissed thecomplaint (Annex "E").In another order of dismissal was amended as to make the same refer onlyto plaintiff's complaint and the counter claim of the defendant was reinstated and as the evidencethereof was already adduced when defendant presented its evidence in three other cases pending inthe same Court, said counterclaim was also considered submitted for resolution. The motion forreconsideration dated January 22, 1968 (Annex " I "), was filed by plaintiff, and an opposition theretodated January 25, 1968, was likewise filed by defendant but the Court a quo dismissed said motionin its order dated January 12, 1970 (Annex "K"), "for lack of merits" (pp. 71-72, Record on Appeal).

Appealing the decision of the lower Court, plaintiff-appellant advances the following assignment oferrors:

I

THE LOWER COURT ERRED IN DENYING THE MOTION FOR RECONSIDERATION,DATED OCTOBER 9, 1967, THUS DEPRIVING THE PLAINTIFF-APPELLANT HIS DAY IN

COURT.

II

THE LOWER COURT ERRED IN ORDERING THE PLAINTIFF-APPELLANT CATALINOLEABRES TO VACATE AND/OR SURRENDER THE POSSESSION OF THE LOTSUBJECT MATTER OF THE COMPLAINT TO DEFENDANT-APPELLEE.

III

THE LOWER COURT ERRED IN ORDERING THE PLAINTIFF-APPELLANT TO PAYDEFENDANT-APPELLEE THE SUM OF P 81.00 PER MONTH FROM MARCH 20, 1969,

UP TO THE TIME HE ACTUALLY VACATE THE PARCEL OF LAND. (Appellant's Brief, p.7)

In the First Assigned Error, it is contended that the denial of his Motion for Reconsideration datedOctober 9, 1967, the plaintiff-appellant was not accorded his day in Court.

The rule governing dismissal of actions for failure to prosecute is provided for in Section 3, Rule 17of the Rules of Court, as follows:


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If the plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonablelength of time, or to comply with these rules or any order of the Court, the action may be dismissedupon motion of the defendant or upon the Court's own motion. This dismissal shall have the effect ofan adjudication upon the merits, unless otherwise provided by the Court.

Under the afore-cited section, it is discretionary on the part of the Court to dismiss an action for

failure to prosecute, and its action will not be reversed upon appeal in the absence of abuse. Theburden of showing abuse of this discretion is upon the appellant since every presumption is towardthe correctness of the Court's action (Smith, Bell & Co., et al vs. American Pres. Lines, Ltd., andManila Terminal Co., No. L-5304, April 30, 1954; Adorable vs. Bonifacio, G. R. No. L-0698, April 22,1959); Flores vs. Phil. Alien Property Administration, G.R. No. L-12741, April 27, 1960). By thedoctrine laid down in these cases, and by the provisions of Section 5, Rules 131 of the Rules ofCourt, particularly paragraphs (m) and (o) which respectively presume the regularity of officialperformance and the passing upon by the Court over all issues within a case, it matters not if theCourt dismissing the action for failure to prosecute assigns any special reason for its action or not.We take note of the fact that the Order declaring appellant in default was handed down onSeptember 14, 1967. Appellant took no steps to have this Order set aside. It was only on January22, 1968, after he was furnished a copy of the Court's decision dated December 9, 1967 or aboutfour months later that he attached this Order and the decision of the Court. Appellant slept on hisrights-if he had any. He had a chance to have his day in Court but he passed it off. Four months laterhe alleges that sudden illness had prevented him. We feel appellant took a long time too-long in fact-to inform the Court of his sudden illness. This sudden illness that according to him prevented himfrom coming to Court, and the time it took him to tell the Court about it, is familiar to the forum as anoft repeated excuse to justify indifference on the part of litigants or outright negligence of those whorepresent them which subserves the interests of justice. In the instant case, not only did theappellant wantonly pass off his chance to have a day in Court but he has also failed to give aconvincing, just and valid reason for the new hearing he seeks. The trial court found it so; We find itso. The trial Court in refusing to give appellant a new trial does not appear to have abused hisdiscretion as to justify our intervention.

The Second and Third Assignments of Error are hereby jointly treated in our discussion since the

third is but a consequence of the second.

It is argued that had the trial Court reconsidered its order dated September 14, 1967 dismissing thecomplaint for failure to prosecute, plaintiff-appellant might have proved that he owns the lotsubjectmatter of the case, citing the receipt (Annex A) in his favor; that he has introducedimprovements and erected a house thereon made of strong materials; that appellee's adverseinterest over the property was secured in bad faith since he had prior knowledge and notice ofappellant's physical possession or acquisition of the same; that due to said bad faith appellant hassuffered damages, and that for all the foregoing, the judgment should be reversed and equitablerelief be given in his favor.

As above stated, the Legarda-Tambunting Subdivision which includes the lot subject matter of theinstant case, is covered by Torrens Certificates of Title. Appellant anchors his claim on the receipt(Annex "A") dated May 2, 1950, which he claims as evidence of the sale of said lot in his favor.

Admittedly, however, Catalino Leabres has not registered his supposed interest over the lot in therecords of the Register of Deeds, nor did he present his claim for probate in the testate proceedingsover the estate of the owner of said subdivision, in spite of the notices advertised in the papers.(Saldana vs. Phil. Trust Co., et al.; Manotok Realty, Inc., supra).

On the other hand, defendant-appellee, Manotok Realty, Inc., bought the whole subdivision whichincludes the subject matter herein by order and with approval of the Probate Court and upon said


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approval, the Deed of Absolute Sale in favor of appellee was immediately registered with the properRegister of Deeds. Manotok Realty, Inc. has therefore the better right over the lot in questionbecause in cases of lands registered under the Torrens Law, adverse interests not therein annotatedwhich are without the previous knowledge by third parties do not bind the latter. As to theimprovement which appellant claims to have introduced on the lot, purchase of registered lands forvalue and in good faith hold the same free from all liens and encumbrances except those noted on

the titles of said land and those burdens imposed by law. (Sec. 39, Act. 496).

An occupant of aland, or a purchaser thereof from a person other than the registered owner, cannot claim good faithso as to be entitled to retention of the parcels occupied by him until reimbursement of the value ofthe improvements he introduced thereon, because he is charged with notice of the existence of theowner's certificate of title (J.M. Tuason & Co. vs. Lecardo, et al., CA-G.R. No. 25477-R, July 24,1962; J.M. Tuason & Co., Inc. vs. Manuel Abundo, CA-G.R. No. 29701-R, November 18, 1968).

Appellant has not convinced the trial Court that appellee acted in bad faith in the acquisition of theproperty due to the latter's knowledge of a previous acquisition by the former, and neither are weimpressed by the claim. The purchaser of a registered land has to rely on the certificate of titlethereof. The good faith of appellee coming from the knowledge that the certificate of title coveringthe entire subdivision contain no notation as to appellant's interest, and the fact that the records ofthese eases like Probate Proceedings Case No. 10808, do not show the existence of appellant'sclaim, strongly support the correctness of the lower Court's decision

WHEREFORE, in view of the foregoing, we find no reason to amend or set aside the decisionappealed from, as regards to plaintiff-appellant Catalino Leabres. We therefore affirm the same, withcosts against appellant. (pp. 33-38, Rollo)

Petitioner now comes to us with the following issues:

(1) Whether or not the petitioner was denied his day in court and deprived of due process oflaw.

(2) Whether or not the petitioner had to submit his receipt to the probate court in order that

his right over the parcel of land in dispute could be recognized valid and binding andconclusive against the Manotok Realty, Inc.

(3) Whether or not the petitioner could be considered as a possessor in good faith and in theconcept of owner. (p. 11, Rollo)

Petitioner's contention that he was denied his day in court holds no water. Petitioner does not denythe fact that he failed to appear on the date set for hearing on September 14, 1967 and as aconsequence of his non-appearance, the order of dismissal was issued, as provided for by Section3, Rule 17 of the Revised Rules of Court.

Moreover, as pointed out by private respondent in its brief, the hearing on June 11, 1967 was not ex

parte. Petitioner was represented by his counsel on said date, and therefore, petitioner was given hisday in Court.

The main objection of the petition in the lower court's proceeding is the reception of respondent'sevidence without declaring petitioner in default. We find that there was no necessity to declarepetitioner in default since he had filed his answer to the counterclaim of respondent.

Petitioner anchors his main arguments on the receipt (Exh. 1) dated May 2, 1950, as a basis of avalid sale. An examination of the receipt reveals that the same can neither be regarded as a contract


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of sale or a promise to sell. There was merely an acknowledgment of the sum of One ThousandPesos (P1,000.00). There was no agreement as to the total purchase price of the land nor to themonthly installment to be paid by the petitioner. The requisites of a valid Contract of Sale namely 1)consent or meeting of the minds of the parties; 2) determinate subject matter; 3) price certain inmoney or its equivalent-are lacking in said receipt and therefore the "sale" is not valid norenforceable. Furthermore, it is a fact that Dona Clara Tambunting died on April 22, 1950. Her estate

was thereafter undercustodia legis of the Probate Court which appointed Don Vicente Legarda asSpecial Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in his ownpersonal-capacity and without court approval, consequently, said sale cannot bind the estate ofClara Tambunting. Petitioner should have submitted the receipt of alleged sale to the Probate Courtfor its approval of the transactions. Thus, the respondent Court did not err in holding that thepetitioner should have submitted his receipt to the probate court in order that his right over thesubject land could be recognized-assuming of course that the receipt could be regarded as sufficientproof.

Anent his possession of the land, petitioner cannot be deemed a possessor in good faith in view ofthe registration of the ownership of the land. To consider petitioner in good faith would be to put apremium on his own gross negligence. The Court resolved to DENY the petition for lack of merit andto AFFIRM the assailed judgment.

Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.

leabress vs ca

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