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Article 1471. If the price is simulated, the sale is void, but the act may be shown to have been in

reality a donation or some other act or contract.

So we have Article 1471 if the price is simulated the sale is void.

So we have already discussed the case of Mapalo v Mapalo wherein the situation constitutes

whether just fraud and vitiation of consent gives rise to a voidable contract since there as in fact

no intention to enter into a sale, there was no consent at all and more importantly there was no

consideration or the price agreed upon which means the contract was void ab initio.

We also dicussed the case ofModina v CA, the principle of in pari delicto which provides

recovery to the guilty parties. The the principle of in pari delicto applies only to cases where the

nullity arises from the illegality of the consideration or the purpose of the contract, but does not

apply to inexistent and void contracts where the price is merely simulated. But again in Modinathe wife alleged that there was no consideration at all and therefore, there was no valid contract.

Q: What Evidence was shown to support his contention that it was only to facilitate the loan of

the Spouses Intac?

A: The evidence was shown through the testimonial evidence of Marrieto who was there when

Irene and Angelina made the transaction in 1977 and that Ireneo personally told him that he was

going to execute the deed of sale and to use the same as a collateral for the loan obligations.

Q: So what do you have here? An absolutely simulated or a relatively simulated contract?

A: In this case, it was an absolutely simulated contract.

Q: Now, aside from the testimony of Marrieto what were the other instances that we can

consider that there was really no intent to sell the property?

A: There was a failure on the part of the Spouses Intac to adduce evidence as to the payment of

purchase price particularly the alleged purchase price.

Q: Aside from that, remember in Art. 1354 the consideration is presumed, so in other words he

does no have the burden, the question is, in addition to the testimony of Marrieto, what were

other indication that there was indeed, no intent to sell the said land of Spouses Intac?

A: It was stated that even after the transaction in 1977, the heirs of Ireneo was still residing in

the land so therefore, there intention to convey ownership over the land and that the Heirs of

Ireneo were still collecting rents over the lot. As such, if there was really intent to sell it would be

the Spouses Intac who would have right over the civil fruits as a consequence of ownership and

in this case they did not do so.

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So here, the court ruled that there was an absolute simulation. Here the court emphasized the

distinction between an absolutely simulated from a relatively simulated contract. If the parties

state a false cause in the contract to conceal their real agreement, the contract is only relatively

simulated and the parties are still bound by their real agreement. Hence, where the essential

requisites of a contract are present and the simulation refers only to the content or terms of the

contract, the agreement is absolutely binding and enforceable between the parties and their

successors in interest.

In absolute simulation, there is a colorable contract but it has no substance as the parties have

no intention to be bound by it.

The main characteristic of an absolute simulation is that the apparent contract is not really

desired or intended to produce legal effect or in any way alter the juridical situation of the

parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may

recover from each other what they may have given under the contract.

In this case, there was no valid sale that took place. There was no simply no consideration and

no intent to sell. Now, proof here was the testimony of Marrieto who was a witness in the

execution of the purported deed of sale. Aside from that, the Spouses failure to adduce

evidence to prove that there was payment only strengthened Marrietto’s testimony. Indeed, te

allegation of spouses Intac that Irene was in a state of financial distress, so kailiangan Aniya ng

pera then how come ibebenta pa niya kay Spouses Intac na pwede naman niya i mortgage ang

property. Aside from that, the heirs of Ireneo continued in possession over the subject property.

They were also the one’s who paid the taxes. In fact, it was the heirs who were still collecting

the rentals. If indeed, the property was sold to Spouses Intac, it bears the question why did theynot assert their ownership over the property immediately after the alleged sale took place. Why

did they assert ownership only after the death of IreneO and Salvacion. One of the most distinct

feature of an absolute simulation is the complete absence of any attempt on the part of the

vendee to assert his right over the property.

Buenaventura v. CA

416 SCRA 263, G.R. No. 126376, November 20, 2003

FACTS:

Plaintiffs assail the validity of the Deed of Absolute Sale over several parcels of land executed

by their parents spouses Leonardo Joaquin and Feliciana Landrito in favor of some of their

children, herein defendant. Plaintiffs are also heirs of spouses Jpo

They sought to declare the deeds void on the following grounds:

Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in

litis;

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Secondly, assuming that there was consideration in the sums reflected in the questioned deeds,

the properties are more than three-fold times more valuable than the measly sums appearing

therein;

Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and

vendees); and

Fourthly, the purported sale of the propertiesin litiswas the result of a deliberate conspiracy

designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.

RTC and CA ruled in favor of defendants holding that the plaintiff’s right to the legitime was

merely inchoate and only vested upon their parent’s death.

ISSUE: WON the Sale is VOID for lack of consideration/price.

HELD:

A contract of sale is consensual in that it is perfected once there is a meeting of the minds.

It is not the act of payment of price that determines the validity of a contract of sale. Payment of

the price has nothing to do with the perfection of the contract. Payment of the price goes into the

performance of the contract. Failure to pay the consideration is different from lack of

consideration. The former results in a right to demand the fulfillment or cancellation of the

obligation under an existing valid contract while the latter prevents the existence of a valid

contract.

Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. Toprove simulation, petitioners presented Emma Joaquin Valdoz’s testimony stating that their

father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed

of sale without need for her payment of the purchase price. The trial court did not find the

allegation of absolute simulation of price credible. Petitioners’ failure to prove absolute

simulation of price is magnified by their lack of knowledge of their respondent siblings’ financial

capacity to buy the questioned lots. On the other hand, the Deeds of Sale which petitioners

presented as evidence plainly showed the cost of each lot sold. Not only did respondents’ minds

meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the

filing of the complaint, respondent siblings have also fully paid the price to their respondent

father.

The Court also noted Articles 1355 and Article 1470 as relevant to this case.

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a

contract, unless there has been fraud, mistake or undue influence.

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a

defect in the consent, or that the parties really intended a donation or some other act or

contract.

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Q: What kind of simulation would that be if the real price is not stipulated in the contract?

A: Relative simulation.

Q: What is the effect of relative simulation?

A: The effect is that the contract is valid but subject to reformation.

Q: Which portion in the decision of the court refers to an absolutely simulated contract?

A: If there is no meeting of the minds with respect to the price the contract is absolutely

simulated and the contract is void. However, in this case, petitioners failed to show that the

prices in the Deeds of Sale were absolutely simulated. The deed of sale presented clearly

showed that there was a purchase price.

Q: In this case, was there an absolutely simulated or a relatively simulated contract?

A: There was neither a relatively simulated nor an absolutely simulated contract.

Q: How about the payment of the price? was there full payment of the price here?

A: the court ruled that the failure to pay in full the purchase price does not invalidate the contract

as that would only pertain to the performance of the contract and not the perfection thereof.

Q: How would that be different from lack of consideration?

A: lack of consideration would result into a void contract as that would mean that there was no

consideration at all.

So here, if the price is not stipulated in the contract, the contract is valid but subject toreformation. That is relative simulation. If there is no meeting of the minds of the parties with

regard to the price because the price stipulated in the contract is simulated then the contract is

void. That is absolute simulation. However, in this case there was no indication that the price is

not real and furthermore the allegation that there was no full payment that would not affect the

validity of the contract of sale.

It is not the act of payment of price that determines the validity of a contract of sale. Payment of

the price has nothing to do with the perfection of the contract. Payment of the price goes into the

performance of the contract. Failure to pay the consideration is different from lack of

consideration. The former results in a right to demand the fulfillment or cancellation of the

obligation under an existing valid contract while the latter prevents the existence of a valid

contract.

Also here take not as to the issue of the value of the property. Again we go into the

characeteristic or nature of a sale that there is no requirement that the price be equal to the

exact value of the subject matter of sale.

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Now I have here in our outline when price is false. As i mentioned, I put in quotation marks so as

not to confuse that false cause mentioned under 1353 because as I have discussed before with

false cause under 1353 The statement of a false cause in contracts shall render them void—-

That is false cause which refers to simulated price under Art. 1471. Now what is this false cause

that I have pointed out here. It is when there is a real price upon which the minds of the parties

have met. But what is stated in the deed is not the one intended to be. But there is that intention.

There is that meeting of the minds. So the contract is valid. What is the remedy? Reformation of

the contract so that the intention of the parties would be reflected therein. Nevertheless, the

parties are bound by their real agreement.

Macapagal v. Remorin

(458 SCRA 653, G.R. No. 158380, May 16, 2005)

FACTS:

•

Purificacion (second wife of Candido) and Corazon Caluza (daughter ofCandido from 1

stmarriage)are the heirs left by Candido Caluza. They extra judicially settled the

properties left by Candido such that Corazon will get the property in Quezon City and

Purificacion will get the land in Bulacan.

• When Corazon left the Philippines for Thailand, Purificacion executed an

affidavit of loss which states that the TCT for the property in QC was lost. She used such

affidavit to file a petition for restitution of TCT. The same was granted by RTC and a new TCT

was issued in favor of Purification.

• Purification sold the property to Remorin who mortgaged it to L&R Corporation.

When Corazon knew about the sale to Remorin, she filed a complaint for falsification and

Perjury against Purificacion and Remorin. However, they entered into a compromise agreement

which stated that the property shall be transferred direct to its interested buyer with defendant

Catalina O. Remorin assuming and paying (from the proceeds of the sale) her mortgage

obligation with Mrs. Laurelia C. Valenciano (Laurelia became the creditor of Remorin because

Remorin mortgaged the property to Laurelia in order to pay L&R) annotated at the back of the

title thereof; any and all expenses for segregation survey, re-titling, capital gains taxes and those

connected with the annotation and/or release of said mortgage should now be shouldered by

defendant Catalina O. Remorin; said defendant further agrees to execute such other documentsor papers as are necessary to implement the aforementioned Memorandum of Agreement of

March 21, 1986 (sic). The Compromise agreement was approved by the judge.

• On May 24, 2989, Corazon sold the property to Laurelia by virtue of a deed

entitled "Sale of Unsegregated Portion of Land.". On August 1989, Catalina also sold the same

land to

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Macapagal.

• Laurelia filed an ejectment suit against

Macapagal who, in turn, filed a complaint for nullification and damages against the defendants.

• Macapgal contends that the sale between her and Catalina was valid because

it was stated in the compromise agreement that Corazon was the one who had authority to sell.

• Respondents, on the other hand, contended that Corazon did not give Catalina

he authority to sell. It was provided in the Agreement that Catalina shall pay off her mortgage

obligation and incidental expenses from the proceeds of the sale only to reassure Catalina that

her obligation would be paid in the event that Corazon sells the property.

ISSUE: WON the fact the true consideration was not reflected deed of sale between Corazon

and Catalina would cause the nullity of the contract? NO

HELD:

The issue on the PRICE.

The fact that the deed of sale between respondents Corazon and Laurelia did not accurately

reflect the true consideration thereof is not cause for declaration of its nullity. When the parties

intended to be bound by the contract except that it did not reflect the actual purchase price of

the property, there is only a relative simulation of the contract which remains valid and

enforceable. It cannot be declared null and void since it does not fall under the category of an

absolutely simulated or fictitious contract. The contract of sale is valid but subject to reformation.

There was no waiver of Corazon’s authority to sell.

In the case at bar, the Compromise Agreement dated September 9, 1988 cannot be taken as a

waiver of Corazon’s authority to sell and grant thereof to Catalina considering that the

Agreement merely provided that Catalina pay off her mortgage obligation and incidental

expenses from the proceeds of the sale. Although it was imperative, as part of the compromise,

that the money come from the proceeds of the sale, it was not expressly stated, nor did it

necessarily mean, that Catalina herself be the one to directly sell the property. The money may

merely be handed over to her for such payment. The rule is that any reasonable doubt that he

language used conveys authority to sell will yield a construction that no such authority has been

given. Authority to sell must be couched in clear and unmistakable language. Even assuming

arguendo that the parties intended to confer upon Catalina authority to sell the disputed

property, they clearly did not intend the Agreement to be the document itself considering that

they agreed to execute such other documents or papers as are necessary to implement the

agreement, which they never did. Under Article 1878, paragraph 5 of the Civil Code, a special

power of attorney is necessary for an agent to enter into any contract by which the ownership of

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an immovable property is transmitted or acquired either gratuitously or for a valuable

consideration. Catalina admittedly did not have such a document in her favor.

*Macapagal was also considered as buyer in bad faith because she did not buy it from the

owner of the registered land

Q: What is the status of the sale between Catalina and Aurelia?

A: It was void because in the first place, the owner is not Catalina and true owner as

such she has no power or authority to sell the said land.

Q: So we go back to our discussion the ownership is not required for the validity of the

sale? Right? SO what is the real issue here?

A: The real issue here is that between the sale of laurel and Corazon the consideration

of the price was not present.

Q: In other words between these two sales who has a better right? The first one wall

saying right because the one who sole the property was not the owner. Now as we said,

in the sale of Corazon there could have been no right transferred to the buyer asallegedly the true consideration was not stipulated in the contract. What was the ruling

of the SC?

A: Accdg. to the court, the fact in the sale between spouses and Laurelia did not

stipulate the true consideration does not cause for the nullity of the contract. In this

case, it will only be subject to reformation because although the said consideration was

not stated there was meeting of the minds between the parties. In this case, the court

held that there was only relative simulation.

So with regard to the sale made by Corazon the SC said that she was not authorized to

sell it. Although ownership is not required for the perfection of a Contract of Sale. Takenote the SC held here that Catalina was allegedly acting as an agent and if yu have an

agency, when an agent sells an immovable property of a principal the authority must be

inwrapping in order for the sale to be valid. In this case, in the compromise agreement

there was authority as to that effect. Also, in relation to agency, there must be a special

power of attorney which is also absent in this case. The issue here really is with regard

to the consideration. It appears that the deed os sale did not reflect the true

consideration. However the SC held that is not a cause for a declaration of its nullity. If

the real price is not stated in the contract, then the contract of sale is valid but subject to

reformation. So again here, when the parties intended to be bound but the deed did notreflect the actual price agreed upon, there is only relative simulation of the contract

which remains valid and enforceable subject to reformation. An example of this where

parties would put a lower purchase price in the deed of sale than that what was really

paid by the buyer to lower the taxes or capital gains tax.

Now how about the non-payment of the price?

Q: What is the effect of the failure to pay the price by the buyer?

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A: It constitutes a breach and will result into a rescission of the contract.

Q: Aside from rescission, are there other remedies?

A: Specific performance ma’am.

Balatbat v CA

(261 SCRA 128, G.R. No. 109410, August 28, 1996)FACTS:

Spouses Aurelio Rogue and Maria Mesina acquired a lot during their conjugal union and

the house constructed thereon was likewise

built during their marital union.

Out of their union, Aurelio and Maria had four

children.

Maria Mesina died in 1966. The only conjugal

properties left are the house and lot.

In 1977, Aurelio filed a complaint for partition against his 4 children before the CFI.

The children were declared in default andAurelio presented evidence ex-parte.

CFI declared that Aurelio, as the legal spouse, is entitled to 1/2 share pro-indiviso thereof. With

respect to the 1/2 share pro-indiviso now

forming the estate of Maria Mesina, Aurelio and the four children, are each entitled to one-fifth

(1/5) sharepro-indiviso. Said decision became

final and executory.

In 1979, the ROD issued TCTs in the name of Aurelio (6/10 share), and his children-Severina,

Osmundo, Feliciano and Corazon (all with 1/10

share each).

In April 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose

Repuyan as evidenced by a "Deed of Absolute

Sale."

Also in 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse

claim on the TCT, claiming among others that

she bought 6/10 portion of the property herein

described from Aurelio Roque for the amount of P50,000 with a down payment of P5,000 and

the balance of P45,000 to be paid AFTER the

partition and subdivision of the property.

On August 1980, Aurelio filed a complaint for"Rescission of Contract" against spouses Aurora Tuazon-Repuyan and Jose Repuyan before

CFI.

The complaint is grounded on spouses

Repuyan's failure to pay the balance of P45,000

of the purchase price.

On Sept. 5, 1980, Spouses Repuyan filed their answer with counterclaim.

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In the meantime in 1982, the trial court issued n order on the partition case, ordering

the

Deputy Clerk of the Court to sign the DOAS for

and in behalf of Aurelio’s children, in order to effect the partition of the property involved.

(Apparently, the house and lot were to be sold

pala to Clara Balatbat for P100k, in order to

effect the partition of the property involved.)

A DOAS was executed in 1982 between Aurelio, Corazon, Felician, Severa and Osmundo and

Clara Balatbat, married to Alejandro Balatbat.

Therafter, Clara Balatbat filed a motion for the

issuance of a writ of possession which was granted by the trial court, "subject, however, to

valid rights and interest of third persons over

the same portion thereof, other than vendor orany other person or persons privy to or claiming

any rights or interests under it."

On May 1982, Clara Balatbat filed a motion to intervene in the civil case for rescission of

contract against spouses Repuyan

which was granted. However, Clara Balatbat failed to file

her complaint in intervention so her complaint was dismissed. The court further declared that

The contract of sale denominated as "Deed of

Absolute Sale" was valid and enforceable, and

so ordered to partition and subdivide the land and to aggregate therefrom a portion equivalent

to 6/10 thereof, and cause the same to be titledin the name of Repuyan spouses, and after

which, the Repuyan spouses, shall pay Aurelio

the sum of P45,000.

ISSUE: WON there was valid contract of sale despite the non-payment of the P45,000 at the

time that the action for rescission was filed– YES.

HELD:

The RTC dismissed Aurelio Roque complaint for rescission of the DOS and declared that the

sale as valid and enforceable. No appeal having been made, the decision became final and

executory. It must be noted that Balatbat filed a motion for intervention in that case but did not

file her complaint in intervention. In that case wherein Aurelio Roque sought to rescind DOS in

favor of spouses Repuyan for non-payment of the P45,000 balance, the trial court dismissed the

complaint for rescission.

Examining the terms and conditions of the "Deed of Sale", the P45,000 balance is payable only

"after the property has been partitioned and subdivided, and title issued in the name of the

BUYER" hence, Aurelio Roque cannot demand payment of the balance unless and until the

property has been subdivided and titled in the name of Repuyan. Devoid of any stipulation that

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"ownership in the thing shall not pass to the purchaser until he has fully paid the price",

ownership in thing shall pass from the vendor to the vendee upon actual or constructive delivery

of the thing sold even if the purchase price has not yet been fully paid. The failure of the buyer to

make good the price does not, in law, cause the ownership to revest to the seller unless the

bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the ew Civil

Code. Non-payment only creates a right to demand the fulfillment of the obligation or to rescind

the contract.

A contract of sale being consensual, it is perfected by

the mere consent of the parties.

Delivery of the

thing bought or payment of the price is not

necessary for the perfection of the contract; and

failure of the vendee to pay the price after the

execution of the contract does not make the sale null and void for lack of consideration but

results at most in default on the part of the vendee, for which he vendor may exercise his legalremedies.

Balatbat has nobody to blame but herself in dealing with the disputed property for failure to

inquire or discover a flaw in the title to the property.

(there was also a discussion on double sale. Kasi may double sale na nangyari dito. Ultimately,

the SC declared Repuyan to have a better right since good faith pag acquire nung property and

nauna siya mag annotate ng adverse claim sa title ng property)

Q: Was there partition of the property?

A: No, there was no partition of the property.

Q: what is the effect that there was no partition?

A: Aurelio cannot demand the payment of the 45 thousand because his obligation to

cause the partition has not been complied yet.

Q: In other words, can specific performance or rescission can be demanded in this

case?

A: No because Aurelio is still in default ma’am so he still cannot demand the obligation

of the other party to be performef ma’am.

So here, remember again failure to pay the price does not affect the validity of the

contract of sale as that would pertain into the performance stage of the obligation. Now,

in this case notice that the balance, the vendor cannot demand its payment unless the

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property has been subdivided and titled tot he private respondents and this has not yet

happened. The stipulation that the ownership of the thing shall not pass to the

purchaser until he has paid the price, ownership shall only pass upon actual or

constructive deliver of the land. So in this case there was a discussion with regard to

delivery which we will discuss further later when we go that topic.

As to the payment of the purchase pricefailure of the buyer to make good their price does

not cause the ownership to vest to the seller unless the bilateral contract of sale is first

rescinded or resolved pursuant to Art 1191. Non payment only creates a right to demand the

fulfilment of the obligation or rescind the contract.

Now, kung sang na si vendor ROque na subdivide na ang property, he could have

asked for rescission. But in this case, there was none, he was not yet even ready to

perform his obligation he cannot demand rescission because you must come to courtwith clean hands.

A contract of sale being consensual is perfected by mere consent. The parties’ delivery or

payment of the price not necessary for the perfection of the contract. And failure of vendee to

pay price after execution of contract does not make the sale null and void for lack of

consideration but results at most in default on the part of the vendee, for which he vendor may

exercise his legal remedies. So again take note of that.

Now as to the second element of a valid price. Remember that price should be in money or int

equivalent it is very clear under Art. 1458. In the case of Inchausti, we have here the definition of

sum (?) It signifies the amount or figure in terms of money that must be paid as a result of a

transaction.

Bagnas v CA

(176 SCRA 159, G.R. No. L-38498, August 10, 1989

FACTS:

•Hilario Mateum of Kawit, Cavite, died on March 11, 1964, single, without ascendants or

descendants, and survived only by collateral relatives, of whom petitioners herein, his first

cousins, were the nearest. Mateum left no will, no debts, and an estate consisting of 29 parcels

of land in Kawit and Imus, Cavite, 10 of which are involved in this appeal.

On April 3, 1964, the private respondents, themselves collateral relatives of

Mateum though more remote in degree than the petitioners, registered with the Registry of

Deeds 2 deeds of sale purportedly executed by Mateum in their favor covering 10 parcels of

land.

• It is asserted by the petitioners, but denied by

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the respondents, that said sales notwithstanding, Mateum continued in the possession of the

lands purportedly conveyed until his death, that he remained the declared owner thereof and

that the tax payments thereon continued to be paid in his name.

• Petitioners sought annulment of the deeds of sale as fictitious, fraudulent or

falsified, or, alternatively, as donations void for want of acceptance embodied in a public

instrument. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being

intestate heirs of Hilario Mateum, the petitioners prayed for recovery of ownership and

possession of said lands, accounting of the fruits thereof and damages.

• Although the complaint originally sought recovery of all the 29 parcels of land

left by Mateum, at the pre-trial the parties agreed that the controversy be limited to the 10

parcels subject of the questioned sales, and the Trial Court ordered the exclusion of the 19 other

parcels from the action.

•

Respondents denied the alleged fictitious or fraudulent character of the sales intheir favor, asserting that said sales were made for good and valuable consideration and the

they were collateral relatives of Hilario Mateum and had done many good things for him, nursing

him in his last illness, which services constituted the bulk of the consideration of the sales.

• The Trial Court granted the motion to dismiss by respondents, holding that the

plaintiffs, as mere collateral relatives, not forced heirs, of Hilario

Mateum, could not legally question the disposition made by said deceased during his lifetime,

and that the plaintiffs evidence of alleged fraud was insufficient, the fact that the deeds of sale

each stated a consideration of only P1.00 not being in itself evidence of fraud or simulation.•The CA affirmed the Trial Court's reliance on the Armentia ruling which, it would appear, both

courts saw as denying, without exception to collaterals, of a decedent, not forced heirs, the right

to impugn the latter's dispositions inter vivos of his property. The Appellate Court also analyzed

the testimony of the plaintiffs' witnesses, declared that it failed to establish fraud of any kind or

that Mateum had continued paying taxes on the lands in question even after executing the

deeds conveying them to the defendants, and closed with the statement that "... since in duly

notarized and registered deeds of sale consideration is presumed, we do not and it necessary to

rule on the alternative allegations of the appellants that the said deed of sale were (sic) in reality

donations.

12

ISSUE: WON the price of P1.00 plus unspecified past, present and future services to which no

value is assigned renders the deeds void or inexistent from the beginning or voidable? YES

HELD:

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YES. The deeds were void ab initio for lack of

valuable consideration.

The validity of a sale prescribe that the price be adequate and must be real, not fictitious,

stressing the obvious parallel between price and

actual value of the property sold.

• True price, which is essential to the validity of a

sale, means existent, real and effective price,•that which does not consist in an insignificant

amount that it is not the same as the concept of

a just price which entails weighing and measuring, for economic equivalence, the

amount of price against all the factors that determine the value of the thing sold.

• But there is no need of such a close examination when the immense

disproportion between such economic values is clearly a case of insignificant or ridiculous price,

the unbelievable amount of which at once points out its inexistence.

• ART 1458 of the Civil Code, in prescribing that a

sale be for a ... price certain in money or its equivalent ... requires that "equivalent" be•

something representative of money, e.g., a

check or draft, to the effect that services are not

the equivalent of money insofar as said requirement is concerned and that a contract is

not a true sale where the price consists of

services or prestations

• The "services" mentioned in the questioned deeds of sale are not only vague

and uncertain, but are unknown and not susceptible of determination without the necessity of a

new agreement between the parties to said deeds.

Without necessarily according all these assertions its full concurrence, but upon theconsideration alone that the apparent gross, not to say enormous, disproportion between the

stipulated price (in each deed) of P1.00 plus unspecified and unquantified services and the

undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by

assessments for tax purposes which, it is well- known, are notoriously low indicators of actual

value plainly and unquestionably demonstrates that they state a false and fictitious

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consideration, and no other true and lawful cause having been shown, the Court finds both said

deeds, insofar as they purport to be sales, not merely voidable, but void ab initio.

Neither can the validity of said conveyances be defended on the theory that their true causa is

the liberality of the transferor and they may be considered in reality donations because the law

also prescribes that donations of immovable property, to be valid, must be madeand accepted in

a public instrument, and it is not denied by the respondents that there has been no such

acceptance which they claim is not required.

The transfers in question being void, it follows as a necessary consequence and conformably to

the concurring opinion in Armentia, with which

the Court fully agrees, that the properties purportedly conveyed remained part of the estate of

Hilario Mateum, said transfers

notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such

is not challenged.

Respondents also failed to offer evidence of existent lawful consideration. The rule is that when

a dismissal thus obtained is reversed on appeal, the movant loses the right to present evidencein his behalf.

SC reversed CA decision.

Q: What was the consideration in the case of Bagnas?

A: The consideration was 1 peso.

Q: Now was that a valid consideration?

A: The SC held in this case that it was not a valid consideration.

Q: What were the specific terms used to state the consideration?

A: It was each recited the reconsideration of the sale to be" ... halagang ISANG PISO

(Pl.00), salaping Pilipino, at mga naipaglingkod, ipinaglilingkod sa aking kapakanan ..."

("the sum of ONE PESO Pl.00), Philippine Currency, and services rendered, being

rendered and to be rendered for my benefit").

Q: Now was that a valid consideration?

A: In this case ma’am, it cannot be considered as a valid consideration.

Q: So are you saying that just because it is one peso and services to be rendered,being rendered for my benefit automatic that there is no valid consideration at all? What

made it invalid? What made it not money or in its equivalent?

A: In this case the SC ruledassert that Art. 1458 of the Civil Code, in prescribing that a sale

be for a ... price certain in money or its equivalent ... requires that "equivalent" be something

representative of money,e.g., a check or draft, again citing Manresa16 to the effect that

services are not the equivalent of money insofar as said requirement is

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concerned and that a contract is not a true sale where the price consists of

services or prestations.

Q: But isn’t it that gross inadequacy of the price does not invalidate the contract?

A: Yes, ma’am. But it was also pointed out that the "services" mentioned in the

questioned deeds of sale are not only vague and uncertain, but are unknown and

not susceptible of determination without the necessity of a new agreement

between the parties to said deeds.

So take not here the one peso agreement and the services rendered, being rendered

and to be rendered for my benefit. So here the consideration unspecified what kind of

services upon theWithout necessarily according all these assertions its full concurrence, but

upon the consideration alone that the apparent gross, not to say enormous, disproportion

between the stipulated price (in each deed) of P l.00 plus unspecified and unquantified services

and the undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by

assessments for tax purposes which, it is well-known, are notoriously low indicators of actual

value plainly and unquestionably demonstrates that they state a false and fictitious

consideration, and no other true and lawful cause having been shown, the Court finds both said

deeds, insofar as they purport to be sales, not merely voidable, but voidab initio.

In other words simulated and no there proof was adequately shown therefore the deeds are

considered not merely voidable but void ab ignition.

Now to represent consideration, it must be something that will represent money such as a check

when en cashed. Now in this case of Bagnas the SC looked into the lack of intention of the

parties where the services mentioned here was not an equivalent of money.

Ong vs. Ong

(139 SCRA 133, G.R. No. L-67888, October 8, 1985)

FACTS:

• On 25 February 1976, Imelda Ong for and in consideration of P1 and other valuable

considerations, executed in favor of Sandra Maruzzo, then a minor, a Quitclaim Deed

whereby she transferred, released, assigned and forever quitclaimed to Sandra Maruzzo,

her heirs and assigns, all her rights, title, interest and participation in 1/2 undivided

portion of a parcel of land (Lot 10-B of the subdivision plan (LRC) Psd- 157841, a

portion of lot 10 Block 18 of PSD-13288 LCR (GLRC) Record 2029, situated in Makati,

containing 125 square meters.

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On 19 November 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and,

thereafter, on 20 January 1982 donated the whole property to her son, Rex Ong

Jimenez.

• On 20 June 1983, Sandra Maruzzo, through her guardian ad litem Alfredo Ong,filed with the RTC Makati an action against Imelda Ong, for the recovery of

ownership/possession and nullification of the Deed of Donation over the portion

belonging to her and for accounting.

• Imelda Ong claimed that the Quitclaim Deed is null and void inasmuch as it is

equivalent to a Deed of Donation, acceptance of which by the donee is necessary

to give it validity. Further, it is averred that the donee, Sandra Maruzzo, being a

minor, had no legal personality and therefore incapable of accepting the donation.

• Upon admission of the documents involved, the parties filed their responsive

memoranda and submitted the case for decision. On 12 December 1983, the trial

court rendered judgment in favor of Maruzzo and held that the Quitclaim Deed is

equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of

the latter.

• Imelda Ong appealed to the Intermediate Appellate Court. On 20 June 1984,

IAC promulgated its Decision affirming the appealed judgment and held that the

Quitclaim Deed is a conveyance of property with a valid cause or consideration;

that the consideration is P1 which is clearly stated in the deed itself; that the

apparent inadequacy is of no moment since it is the usual practice in deeds of

conveyance to place a nominal amount although there is a more valuable

consideration given. Hence, the petition for review on certiorari.

• On 15 March 1985, Sandra Maruzzo, through her guardian ad litem Alfredo

Ong, filed an Omnibus Motion informing this Court that she has reached the age

of majority as evidenced by her Birth Certificate and she prays that she be

substituted as private respondent in place of her guardian ad litem. On 15 April

1985, the Court issued a resolution granting the same.

ISSUE: WON the sale of real property is valid. YES.

HELD:

Consideration or cause is not P1 alone but also other valuable considerations The

subject deed reveals that the conveyance of the 1/2 undivided portion of the

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property was for and in consideration of P1 and the other valuable considerations

paid by Sandra Maruzzo, through her representative, Alfredo Ong, to petitioner

Imelda Ong. Stated differently, the cause or consideration is not P1 alone but also

the other valuable considerations.

Cause not stated in contract is presumed existing unless proven to the contrary; Executionof deed a prima facie evidence of existence of valuable consideration

Although the cause is not stated in the contract it is presumed that it is existing unless the

debtor proves the contrary (Article 1354 of the Civil Code). One of the disputable

presumptions is that there is a sufficient cause of the contract (Section 5, (r), Rule 131,

Rules of Court). It is a legal presumption of sufficient cause or consideration supporting a

contract even if such cause is not stated therein (Article 1354, New Civil Code) This

presumption cannot be overcome by a simple assertion of lack of consideration especially

when the contract itself states that consideration was given, and the same has been

reduced into a public instrument with all due formalities and solemnities. To overcomethe presumption of consideration the alleged lack of consideration must be shown by

preponderance of evidence in a proper action. (Samanilla vs. Cajucom, et al., 107 Phil.

432). The execution of a deed purporting to convey ownership of a realty is in itself

prima facie evidence of the existence of a valuable consideration, the party alleging lack

of consideration has the burden of proving such allegation. (Caballero, et al. vs.

Caballero, et al., (CA), 45 O.G. 2536).

Acceptance by legal representatives of minor applies to onerous and conditional

donations

Granting that the Quitclaim deed is a donation, Article 741 of the Civil Code provides

that the requirement of the acceptance of the donation in favor of minor by parents of

legal representatives applies only to onerous and conditional donations where the

donation may have to assume certain charges or burdens (Article 726, Civil Code). The

acceptance by a legal guardian of a simple or pure donation does not seem to be

necessary (Perez vs. Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan

vs. Casilan and CA (109 Phil. 889) that the donation to an incapacitated donee does not

need the acceptance by the lawful representative if said donation does not contain any

condition. In simple and pure donation, the formal acceptance is not important for the

donor requires no right to be protected and the donee neither undertakes to do anythingnor assumes any obligation. The Quitclaim in question does not impose any condition.

Bad faith and inadequacy of monetary consideration does not render conveyance

inexistent, assignor’s liberality may be sufficient cause for a valid contract

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It is not unusual in deeds of conveyance adhering to the Anglo-Saxon practice of stating

that the consideration given is the sum of P1, although the actual consideration may have

been much more. Moreover, assuming that said consideration of P1 is suspicious, this

circumstance, alone, does not necessarily justify the inference that the vendees were not

purchasers in good faith and for value. Neither does this inference warrant the conclusion

that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the

monetary consideration do not render a conveyance inexistent, for the assignor’sliberality may be sufficient cause for a valid contract (Article 1350, Civil Code), whereas

fraud or bad faith may render either rescissible or voidable, although valid until annulled,

a contract concerning an object certain entered into with a cause and with the consent of

the contracting parties.

Q: What is the consideration in Ong v. Ong?

A: The consideration is also 1 peso and other valuable considerations but in this case the SC

held that the consideration is valid.

Q: How would you reconcile that with the ruing in Bagnas wherein one peso and services wasnot a valid consideration but in this case one peso and other valuable consideration valid.

A: With respect to the Bagnas case, the consideration involves services were not an equivalent

amount in money whereas in this case, the other valuable consideration were equated to money.

So here, the quitclaim was considered as a deed of sale over the one hand undivided portion

in consideration of 1 peso and other valuable consideration, valid as the cause or consideration

was not the one peso alone but also the other valuable considerations. Again, 1354 although

the cause is not stated in the contract it is valid and existing unless the parties prove the

contrary. Under the rules on evidence there is a disputable presumption that there is sufficient

cause in a contract. This legal presumption of sufficient cause of a contract even if such causeis not stated and it cannot be overcome by simple assertion of lack of consideration. You really

go back as to whether or not there was intention on the parties to enter into a contract of sale.

In the case of Bagnas aside from the fact that the consideration was one peso and other

services rendered, there was really no evidence that the parties really entered into a contract of

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sale. Here in Ong, there was no proof shown that there was no intention and therefore the

presumption of existence of a consideration is applicable.

Republic v. PRDC

102 Phil. 960, G.R. No. L-10141, January 31, 1958

FACTS:

The Republic of the Phil, in representation

of the Bureau of Prisons filed a case for collection of

sum of money from Macario Apostol. Apostol, in his own behalf, submitted the highest

bid for the highest bid for the purchase of 100 tons of Palawan Almaciga and 3million

board feet of logs with the Bureau of Prisons. A contract was drawn and Apostol

was able to obtain goods from the Bureau of Prisons but were unable to pay the total

balance of

P34,015.06.

Now, respondent PRDC moved to intervene, alleging that Apostol, then the president of

PRDC, without the knowledge or consent of the stockholders thereof, disposed of said

goods by delivering the same to the Bureau of Prisons of in an attempt to settle his

personal debts with the latter entity.

RTC refused such intervention. CA reversed and allowed PRDC to intervene.

Petitioner, asserts that the subject matter of the original litigation is a sum of money

allegedly due to the Bureau of Prisons from Macario Apostol and not the goods or the

materials reportedly turned over by Apostol as payment of his private debts to the Bureau

of Prisons and the recovery of which is sought by the petitioner; and that for this reason,

petitioner has no legal interest in the very subject matter in litigation as to entitle it tointervene.

ISSUE: WON has legal interest to intervene. YES

HELD:

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The Government argues that "Price . . . is always paid in terms of money and the

supposed payment beeing in kind, it is no payment at all,

"citing Article 1458 of the new Civil Code. However, the same Article provides that the

purchaser may pay "a price certain in money or its equivalent," which means that they

meant of the price need not be in money. Whether the G.I. sheets, black sheets, M. S.Plates, round bars and G. I. pipes claimed by the respondent corporation to belong to it

and delivered to the Bureau of Prison by Macario Apostol in payment of his account is

sufficient payment therefore, is for the court to pass upon and decide after hearing all the

parties in the case. Should the trial court hold that it is as to credit Apostol with the value

or price of the materials delivered by him, certainly the herein respondent corporation

would be affected adversely if its claim of ownership of such sheets, plates, bars and

pipes is true.

Q: Why was there an issue as to these construction materials as to whether they were a

valid consideration or not? What was the allegation here of the government with regard toprice?

A: citing Article 1458 of the new Civil Code provides that the purschaser may pay "a

price certain in money or its equivalent ," which means that they meant of the price need

not be in money. Whether the G.I. sheets, black sheets, M. S. Plates, round bars and G. I.

pipes claimed by the respondent corporation to belong to it and delivered to the Bureau of

Prison by Macario Apostol in payment of his account is sufficient payment therefore, is

for the court to pass upon and decide after hearing all the parties in the case.

Q: So what is the effect if there is a valid consideration? How will it affect PRDC? Why

will that be relevant?

A: Because if the there was a valid consideration then PRDC can intervene being an

interested party.

So here, the Government argues that "Price . . . is always paid in terms of money and the

supposed payment beeing in kind, it is no payment at all, "citing Article 1458 of the new

Civil Code. However, the SC ruled the same Article provides that the purschaser may pay

"a price certain in money or its equivalent ," which means that they meant of the price

need not be in money. Whether the G.I. sheets, black sheets, M. S. Plates, round bars and

G. I. pipes claimed by the respondent corporation to belong to it and delivered to the

Bureau of Prison by Macario Apostol in payment of his account is sufficient payment

therefore, is for the court to pass upon and decide after hearing all the parties in the case.

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Should the trial court hold that it is as to credit Apostol with the value or price of the

materials delivered by him, certainly the herein respondent corporation would be affected

adversely if its claim of ownership of such sheets, plates, bars and pipes is true.

Remember this is in relation to the motion to intervene by PRDC.

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