G.R. No.

146222

January 15, 2004

ERLINDA DELA CRUZ, PRISCILLA DE MESA, ZENAIDA LAMBERTO,

FLORA
DRISKELL
and
ANGELITO
DELA
CRUZ, Petitioners,
vs.
FORTUNATO
DELA
CRUZ,
DIVINA
GUTIERREZ
and
CLARK
GUTIERREZ, Respondents.
DECISION
QUISUMBING, J.:
This petition seeks to annul and set aside the decision 1 of the Court of
Appeals, promulgated on September 14, 2000, in CA-G.R. CV No. 53679,
affirming the decision2 of the Regional Trial Court (RTC) of Malolos, Bulacan,
Branch 17, dated December 14, 1995, in Civil Case No. 37-M-89. The trial
court dismissed the complaint in Civil Case No. 37-M-89 and held that herein
respondents Clark and Divina Gutierrez are the lawful owners of the property
in dispute. Petitioners also seek to annul the appellate courts
resolution,3 dated November 28, 2000, denying their motion for
reconsideration.
As culled from the records, the following are the facts of the case:
Paciencia dela Cruz, the original plaintiff in Civil Case No. 37-M-89, was the
owner of a parcel of land with an area of two (2) ares 4 and ninety (90)
centares,5 located at Lolomboy, Bocaue, Bulacan. Said parcel was registered
in her name under Transfer Certificate of Title (TCT) No. T-14.585 (M). A flea
market (talipapa) with fifty or so vendors was located on the property and
Paciencia collected from them their daily stall rentals. Paciencia had six (6)
children, namely Priscilla, Erlinda, Fortunato, Flora, Angelita and Zenaida, all
surnamed dela Cruz.
On September 25, 1980, Paciencia allegedly executed a Deed of Sale
whereby for and in consideration ofP21,000, she conveyed said parcel in
favor of her son, Fortunato dela Cruz. 6 On November 26, 1980, the Register
of Deeds of Bulacan issued TCT No. T-34.723 (M) in Fortunatos
name.7 Fortunato declared the property for taxation purposes and paid realty
taxes due thereon.8 Sometime between August 1985 to September 1988,
Fortunato mortgaged the property three (3) times to one Erlinda de Guzman
for the sums of P25,000,P50,000 and P100,000.9 Fortunato was unable to
pay these loans.
On January 11, 1989, Fortunato executed a "Kasulatan ng Bilihang
Patuluyan"10 in favor of Clark and Divina Gutierrez, the children of Claudio
and Adoracion Gutierrez, to whom he earlier offered to sell the property.
TheKasulatan alleged the purchase price to be P58,000 only but the amount
actually paid by the Gutierrezes to Fortunato was P600,000 as evidenced by
a receipt showing the true consideration for the sale. 11 That same day, the
sale was registered, leading to the cancellation of TCT No. T-34.723 (M) in the
name of Fortunato. Seven days later, a new certificate of title, TCT No. T101011 (M) was issued in the name of Clark and Divina Gutierrez. Thereafter,
the Gutierrezes took possession of the property, had the talipapa repaired,
and collected the daily stall rentals from the vendors.
On January 20, 1989, Paciencia instituted an action for reconveyance of
property with preliminary injunction against Fortunato and the spouses

Claudio and Adoracion Gutierrez, before the RTC of Malolos, Bulacan, which
docketed the complaint as Civil Case No. 37-M-89.
On February 8, 1989, the Complaint was amended to implead Clark and
Divina Gutierrez, the children of spouses Claudio and Adoracion Gutierrez, as
defendants who had the subject property titled in their names.
In her Complaint, Paciencia alleged that sometime in 1980, her son
Fortunato, took advantage of his close ties with her to induce her to sign an
instrument which appeared to be a Deed of Sale. Paciencia alleged that
Fortunato assured her that she would remain the owner thereof while
Fortunato would hold the property in trust for her and upon her death, all her
children would share in the property. Fortunato allegedly did not pay her any
consideration for such sale. She also claimed that she continued to collect
the daily stall rentals from the talipapa tenants until sometime in 1986 when
she fell ill and had to be hospitalized. As a result, Fortunato took over the
collection of the rentals. After Paciencia had recovered, she sought to resume
collecting the daily rentals but upon the plea of Fortunato who had no means
of income at that time, Paciencia allowed him to continue collecting the stall
rentals. Fortunato, however, was remiss in remitting the daily collections to
Paciencia.
Sometime in December 1988, Paciencia was shocked to learn that Fortunato
was offering the property for sale. She then demanded that the property be
reconveyed to her but Fortunato refused to do so. Meanwhile upon learning
that Fortunato was negotiating the sale of the land with the Gutierrez
spouses, Paciencia sent her daughter, Erlinda dela Cruz, to warn them that
Paciencia owned the property, and not Fortunato. However, the Gutierrez
couple insisted on buying the property and registered the same in favor of
their children, Divina and Clark Gutierrez. Consequently, the Gutierrezes took
over the collection of stall rentals from the tenants of the subject property.
In sum, Paciencia alleged that the sale of the property to the Gutierrezes was
null and void and fraudulently made as Fortunato had neither right nor
authority from her to sell or convey the subject property, as he only held it in
trust for her.
In his Answer, Fortunato averred that he lawfully acquired the subject
property from Paciencia, who absolutely conveyed the same to him,
delivered to him the owners duplicate of the title, and upon her instructions,
caused the registration of the property in his name.
For their part, Clark and Divina Gutierrez alleged that: (1) the subject
property was titled in the name of Fortunato dela Cruz; (2) Fortunato was
also the one collecting the daily rentals from the market vendors; (3)
Fortunato feared he would lose the property due to his inability to pay his
mortgage indebtedness to Erlinda de Guzman; and (4) he pleaded with them
to help him, as a result of which they turned to their parents who withdrew
their lifetime savings just to be able to buy the property. Clark and Divina
likewise alleged that Fortunato disclosed to them that Paciencia herself did
not like this instant suit as she had already given to all her children her
properties through similar transfers.
On December 14, 1995, the trial court decided Civil Case No. 37-M-89 in this
wise:
WHEREFORE, premises considered, judgment is hereby rendered:

1) dismissing the case and declaring defendants Clark and Divina

Gutierrez as the lawful owners of the property now covered by TCT No.
T-101011(M);
2) ordering the plaintiff to pay defendant Fortunato dela Cruz litigation
expenses of P2,000.00 and to pay the costs of the suit;
3) dismissing the counterclaim of defendants Gutierrezes for moral
damages and attorneys fees.
SO ORDERED.12
Paciencia then moved for reconsideration, but the trial court denied the
motion. She then interposed an appeal with the Court of Appeals, docketed
as CA-G.R. CV No. 53679.
On January 22, 1997, Paciencia dela Cruz died and was substituted by her
children, namely: petitioners Erlinda dela Cruz, Priscilla de Mesa y dela Cruz,
Zenaida Lamberto y dela Cruz, Flora Driskell y dela Cruz and Angelita dela
Cruz.
On September 14, 2000, the Court of Appeals affirmed the trial courts
decision, thus:
WHEREFORE, premises considered, the appealed decision in Civil Case No.
37-M-89 is hereby AFFIRMED. No costs.
SO ORDERED.13
Herein petitioners then moved for reconsideration, but it was denied by the
appellate court.
Hence, this instant petition grounded on the following issues:
1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE DECEASED PACIENCIA DELA CRUZ VOLUNTARILY
EXECUTED THE DEED OF ABSOLUTE SALE IN FAVOR OF RESPONDENT
DELA CRUZ.
2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE RESPONDENTS GUTIERREZES ARE BUYERS IN GOOD
FAITH.
3. WHETHER OR NOT THE EVIDENCE ON RECORD SUPPORTS THE
DECISION OF THE HONORABLE COURT OF APPEALS SUBJECT MATTER
OF THE INSTANT PETITION FOR REVIEW.14
Simply put, we find that the core issue in this case is whether the Deed of
Absolute Sale executed by the mother, Paciencia dela Cruz, in favor of her
son respondent Fortunato dela Cruz is simulated and must be declared
void.
Petitioners contend that the Court of Appeals erred in holding that Paciencia
dela Cruz, now deceased, had voluntarily executed the Deed of Absolute Sale
in favor of her son, Fortunato. They fault the court a quo for failing to
appreciate the fact that the Deed was entirely and completely written in
English, a language neither known nor understood by his mother, Paciencia.
Hence, the appellate court went against the dictates of Articles 1330 and

1332 of the Civil Code.15 Petitioners stress that there is no showing that the
terms of the Deed had been fully explained to Paciencia who allegedly
executed the document.
Petitioners also contend that respondents Clark and Divina Gutierrez are not
buyers in good faith. A buyer in good faith is one who buys a thing for value
and is not aware of any defect in the title of the seller. Their father, Claudio
Gutierrez, was the actual buyer of the subject property, and was aware of the
defect in the title of Fortunato. Hence, Claudio could not be a buyer in good
faith. Neither could his children respondents Clark and Divina Gutierrez
qualify and be deemed as buyers in good faith, since the said property was
actually bought by their father, who then caused the registration of the
property in their names.
Respondents, for their part, maintain that the Court of Appeals did not err in
affirming the trial courts ruling that Paciencia dela Cruz voluntarily executed
the Deed of Sale in Fortunatos favor. They aver there was nothing amiss in
said Deed. The Gutierrezes were innocent purchasers in good faith entitled to
the full protection of the law. In order that the purchaser of land with a
Torrens title may be considered in good faith, according to respondents, it is
enough that he examined the latest certificate of title, which was issued in
the name of the immediate transferor. This the Gutierrezes did. Moreover,
they had reason to believe that respondent Fortunato dela Cruzs title was
free from flaws and defects upon learning that the latter was the one
collecting the daily stall rentals from the tenants and the fact that
respondent Fortunato had mortgaged the said property three (3) times and
was then selling the property to pay off his loans.
We find for respondents. Petitioners arguments are less than persuasive, to
say the least. As a rule, when the terms of a contract are clear and
unambiguous as to the intention of the contracting parties, the literal
meaning of its stipulations shall control. It is only when the words appear to
contravene the evident intention of the parties that the latter shall prevail
over the former. The real nature of a contract may be determined from the
express terms of the agreement and from the contemporaneous and
subsequent acts of the parties thereto. 16 When they have no intention to be
bound at all, the purported contract is absolutely simulated and void. Hence,
the parties may recover what they gave under the simulated contract. If, on
the other hand, the parties state a false cause in the contract to conceal
their real agreement, the contract is relatively simulated and the parties real
agreement may be held binding between them.17
In the present case, it is not disputed that Paciencia dela Cruz executed a
Deed of Sale in favor of her son, respondent Fortunato dela Cruz. However,
petitioners insist that the said document does not reflect the true intention
and agreement of the parties. According to petitioners, Fortunato was to
merely hold the property in trust for their mother and that ownership thereof
would remain with the mother. Petitioners, however, failed to produce even
one credible witness who could categorically testify that such was the intent
of Paciencia and Fortunato. There is nothing on record to support sufficiently
petitioners contention. Instead, the evidence is unclear on whether
Paciencia in her lifetime, or later the petitioners themselves, actually
asserted or attempted to assert rights of ownership over the subject property
after the alleged sale thereof to Fortunato. The lot in dispute was thrice
mortgaged by Fortunato with nary a protest or complaint from petitioners.
When they learned that Fortunato mortgaged the property to Erlinda de
Guzman on three occasions: August 26, 1985, April 6, 1987 and September

7, 1988, they refused to redeem the property. They reasoned that if they
would redeem the property and pay the debts of Fortunato, the property
would merely return to him.18 Indeed, how could Fortunato have thrice
obtained a mortgage over the property, without having dominion over it?
Fortunato declared the property in his name for taxation purposes and paid
the realty taxes, without any protest from Paciencia or petitioners. His
actions are contrary to petitioners allegation that the parties never intended
to be bound by the assailed contract. Tax receipts and declaration of
ownership for taxation purposes are strong evidence of ownership. It has
been ruled that although tax declarations or realty tax payments are not
conclusive evidence of ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in his right mind will be paying
taxes for a property that is not in his actual or constructive possession. 19
As the Court of Appeals well observed, for nine (9) years, Paciencia allowed
Fortunato to benefit from the property.1wphi1 It was only when she learned
of its impending sale to the Gutierrez spouses, that she took action to
forestall the transfer of the property to a third person. She then caused the
annotation of her adverse claim on the certificate of title on the same day
the deed in favor of the Gutierrez children was registered. This was rather
belated, for the deed was already done.
Petitioners harp on the fact that the assailed Deed was in English and that it
was not explained to Paciencia. But we find that the petitioners failed to
prove their allegation that Pacencia could not speak, read, or understand
English. Moreover, Paciencias bare testimony20 on this point is
uncorroborated. For Article 1332 to apply, it must first be convincingly
established that the illiterate or disadvantaged party could not read or
understand the language in which the contract was written, 21 or that the
contract was left unexplained to said party. Petitioners failed to discharge
this burden.
The Deed of Absolute Sale dated September 25, 1980 was duly
acknowledged before a notary public. As a notarized document, it has in its
favor the presumption of regularity and it carries the evidentiary weight
conferred upon it with respect to its due execution. It is admissible in
evidence without further proof of its authenticity and is entitled to full faith
and credit upon its face.22
Coming now to whether the Gutierrezes were buyers in good faith, we note
that both the trial and appellate courts found that when Fortunato executed
the "Kasulatan ng Bilihang Patuluyan" on January 11, 1989 in favor of
respondents Clark and Divina Gutierrez, the name of the registered owner
appearing in the certificate of title was that of Fortunato dela Cruz. This
Kasulatan was duly executed and acknowledged before a notary public. At
the time of its execution, there was no annotation on Fortunatos certificate
of title to indicate any adverse claim of any third person. Only two cautionary
entries regarding Section 4,23 Rule 74 of the Rules of Court appear thereon.
Nothing more substantial appears in the certificate of title to indicate a
scintilla of flaw or defect in Fortunatos title. Hence, we cannot fairly rule that
in relying upon said title, the respondent Gutierrezes were in bad faith. A
person dealing with registered land may safely rely upon the correctness of
the certificate of title issued therefor and the law will in no way oblige him to
go behind the certificate to determine the condition of the property. The law
considers said person as an innocent purchaser for value. An innocent
purchaser for value is one who buys the property of another, without notice
that some other person has a right or interest in such property and pays the

full price for the same, at the time of such purchase or before he has notice
of the claims or interest of some other person in the property.24
We note, furthermore, that the Gutierrezes did not simply rely upon the face
of Fortunatos Certificate of Title to the property. They also employed the
services of counsel Atty. Crisanta Abarrientos, who verified the title with the
Registry of Deeds. Thus, they took all the necessary precautions to ascertain
the true ownership of the property, even engaging the services of legal
counsel for that specific purpose, and it was only after said counsel assured
them that everything was in order did they finalize the arrangements to
purchase the property. Hence, we entertain no doubt that the respondent
Gutierrezes were purchasers for value and in good faith.25
WHEREFORE, the instant petition is DENIED for lack of merit. The assailed
decision dated September 14, 2000 of the Court of Appeals in CA-G.R. CV No.
53679, which sustained the decision of the Regional Trial Court of Malolos,
Bulacan, Branch 17, dated December 14, 1995, in Civil Case No. 37-M-89, as
well as the appellate courts resolution of November 28, 2000, is AFFIRMED.
Costs against petitioners.
SO ORDERED.

G.R. No. L-16763 December 22, 1921

PASCUAL
COSO, petitioner-appellant,
vs.
FERMINA FERNANDEZ DEZA, ET AL., objectors-appellees.
Eduardo
Gutierrez
Repide
&
Felix
Socias
for
Jose Varela Calderon & Benito Jimenez Zoboli for appellees.

appellant.

OSTRAND, J.:
This is an appeal from a decision of the Court of First Instance of Manila
setting aside a will on the ground of undue influence alleged to have been
exerted over the mind of a testator by one Rosario Lopez. The will gives
the tercio de libre disposicion to an illegitimate son had by the testator with
said Rosario Lopez, and also provides for the payment to her of nineteen
hundred Spanish duros by way the reimbursement for expenses incurred by
her in taking care of the testator in Barcelona during the years 1909 to 1916,
when he is alleged to have suffered from a severe illness.
The evidence shows that the testator, a married man and resident of the
Philippine Islands, became acquainted with Rosario Lopez in Spain in 1898
and that he had illicit returns with her for many years thereafter. After his
return to the Philippines she followed him, arriving in Manila in February,
1918, and remained in close communication with him until his death in
February, 1919. There is no doubt that she exercised some influence over
him and the only question for our determination is whether this influence
was of such a character as to vitiate the will.
The English and American rule in regard to undue influence is thus stated in
40 Cyc., 1144-1149.

Mere general or reasonable influence over a testator is not sufficient to

invalidate a will; to have that effect the influence must be "undue." The
rule as to what constitutes "undue influence" has been variously
stated, but the substance of the different statements is that, to be
sufficient to avoid a will, the influence exerted must be of a kind that
so overpowers and subjugates the mind of the testator as to destroy
his free agency and make his express the will of another, rather than
his own.1awphil.net
. . . such influence must be actually exerted on the mind of the testator
in regard to the execution of the will in question, either at time of the
execution of the will, or so near thereto as to be still operative, with the
object of procuring a will in favor of particular parties, and it must
result in the making of testamentary dispositions which the testator
would not otherwise have made. . . .
. . . and while the same amount of influence may become "undue"
when exercised by one occupying an improper and adulterous relation
to testator, the mere fact that some influence is exercised by a person
sustaining that relation does not invalidate a will, unless it is further
shown that the influence destroys the testator's free agency.
The burden is upon the parties challenging the will to show that undue
influence, in the sense above expressed, existed at the time of its execution
and we do not think that this burden has been carried in the present case.
While it is shown that the testator entertained strong affections for Rosario
Lopez, it does not appear that her influence so overpowered and subjugated
his mind as to "destroy his free agency and make him express the will of
another rather than his own." He was an intelligent man, a lawyer by
profession, appears to have known his own mind, and may well have been
actuated only by a legitimate sense of duty in making provisions for the
welfare of his illegitimate son and by a proper feeling of gratitude in repaying
Rosario Lopez for the sacrifices she had made for him. Mere affection, even if
illegitimate, is not undue influence and does not invalidate a will. No
imposition or fraud has been shown in the present case.
Influence gained by kindness and affection will not be regarded as
`undue,' if no imposition or fraud be practiced, even though it induces
the testator to make an unequal and unjust disposition of his property
in favor of those who have contributed to his comfort and ministered to
his wants, if such disposition is voluntarily made. (Mackall vs. Mackall,
135 U. S., 1677.)
It may be further observed that under the Civil Law the right of a person with
legal heirs to dispose of his property by will is limited to only a portion of his
estate, and that under the law in force in these Islands before the enactment
of the Code of Civil Procedure, the only outside influences affecting the
validity of a will were duress, deceit, and fraud. The present doctrine of
undue influence originated in a legal system where the right of the testator
to dispose of his property by will was nearly unlimited. Manifestly, greater
safeguards in regard to execution of wills may be warranted when the right
to so dispose of property is unlimited than when it is restricted to the extent
it is in this jurisdiction. There is, therefore, certainly no reason for giving the
doctrine of undue influence a wider scope here than it enjoys in the United
States.

For the reasons stated, the decision of the lower court disallowing the will of
Federico Gimenez Zoboli is hereby reversed and it is ordered that the will be
admitted to probate. No costs will be allowed. So ordered.

G.R. No. 163687

March 28, 2006

GAUDENCIO VALERIO for himself and as attorney-in-fact of

BIENVENIDO VALERIO, CONRADO VALERIO, DIONISIO VALERIO,
EFEPANIA VALERIO and CARLOTA DE LEON VALENZUELA, Petitioners,
vs.
VICENTA REFRESCA, MARIANO1 REFRESCA, DOMINGO REFRESCA,
REMEDIOS REFRESCA, OLY REFRESCA, LALET REFRESCA and BENITO
REFRESCA, Respondents.
DECISION
PUNO, J.:
Narciso Valerio, married to Nieves Valerio, owned two (2) adjacent
agricultural lots in Calamba, Laguna, with a total area of 6.5 hectares. One of
these lots, Lot 428, was a four-hectare land. A portion thereof, consisting of
511 sq. m. and known as Lot 428-A, is the subject of the petition in the case
at bar.
It is undisputed that as early as 1963, spouses Alejandro and Vicenta
Refresca started cultivating the 6.5-hectare land as tenants. In 1968, Narciso
Valerio acquired ownership over the land. The tenancy relations between the
Valerios and Refrescas were established and their harmonious relations
continued uninterrupted. In 1974, the Valerios entered into a leasehold
contract2with tenant Alejandro Refresca whereby the latter was allowed to
continue tilling the 6.5-hectare land in exchange for fixed rentals.
On February 10, 1975, Narciso Valerio, with the consent of his wife Nieves,
executed a Deed of Sale whereby he sold his 6.5-hectare landholding to his
heirs, namely: Susana de Leon, Leslie de Leon, petitioners Carlota de Leon
Valenzuela, and Bienvenido, Dionisio, Conrado, Gaudencio, and
Efepania, all surnamed Valerio. Narciso likewise conveyed 511 sq.
m. of his landholding, known as Lot 428-A, in favor of his tenant
Alejandro Refresca in recognition of his long service and cultivation of the
subject land. On February 15, 1975, Narciso Valerio died.
On December 13, 1982, the parties to the Deed of Sale, as co-owners,
subdivided the 6.5-hectare land and executed a Deed of Agreement
of Subdivision.3The same 511 sq. m. of land was granted to tenant
Alejandro Refresca. Individual titles over the apportioned areas were
subsequently issued to the vendees.
Nieves Valerio, widow of Narciso, entered into another leasehold
agreement with the Refrescas over the 6.5-hectare landholding for
the period 1984-1985 in exchange for the latters payment of
rentals.
On March 4, 1987, petitioners mother, Nieves Valerio, died. After tenant
Alejandros demise in 1994, his widow, respondent Vicenta Refresca,
succeeded him by operation of law in tilling the land.

Thereafter, petitioners demanded that the respondents vacate the land. They
alleged that the 511 sq. m. lot was given to the respondents on the condition
that they will surrender their tenancy rights over the entire land but
respondents failed to do so. In 1995, the Department of Agrarian Reform
(DAR), Legal Division, in Sta. Cruz, Laguna, issued a Resolution
recognizing the right of respondent Vicenta Refresca, widow of
tenant Alejandro, to continue her peaceful possession and
cultivation of the 6.5-hectare land.
In 1998, despite the DAR ruling, petitioners sent a demand letter to
respondents to vacate the land. Respondents refused. Petitioners filed a
complaint4before the Regional Trial Court (RTC) of Calamba, Laguna, against
respondents -- widow and children of Alejandro Refresca -- for the annulment
of documents of transfer and title of Alejandro. They alleged that the cause
or consideration for the transfer of the 511 sq. m. lot to the Refrescas was an
agreement between Narciso and Alejandro that conveyance of said portion
would serve as disturbance compensation in favor of the latter, i.e., the 511
sq. m. lot was granted to the Refrescas in exchange for the surrender of their
tenancy rights over the entire 6.5-hectare land; that Alejandro allegedly
obliged himself to return the 6.5-hectare land he was tilling as a tenant; that
Alejandro failed to fulfill his promise and instead continued to till the land
until his death; that respondents succeeded in cultivating the entire land;
that as the cause for the cession of the land was not complied with, the
transfer of the 511 sq. m. lot to Alejandro should be declared void as a
contract without cause or consideration produced no effect.
In their Answer,5respondents maintained that the 511 sq. m. lot was granted
by Narciso to tenant Alejandro as a homelot due to the generosity of the
Valerio spouses with whom they had always maintained good relations; that
the lot was given to them in recognition of their long years of cultivating the
land; that in the 1975 Deed of Sale, Narciso apportioned his 6.5-hectare land
among petitioners as his heirs and Alejandro Refresca as his tenant; that as
co-owners, petitioners and Alejandro subdivided the land in order that
separate titles may be issued to them; that, thereafter, respondent Vicenta
succeeded her husband in tilling the 6.5-hectare land; that as tenant, she
paid lease rentals to petitioners who initially accepted them; and, that upon
the death of petitioners mother, Nieves Valerio, petitioners demanded the
Refrescas to return the 511 sq. m. land as the former intended to sell the
entire land which shall then be converted to commercial use. Respondents
likewise invoked prescription and estoppel in their defense.
At the pre-trial conference, the parties stipulated that the transfer of the 511
sq. m. lot to Alejandro was without monetary consideration. At the trial,
petitioners themselves admitted that they did not pay monetary
consideration for the transfer of the specific portions of the land to them.
After the trial, the RTC ruled in favor of petitioners.6It held that as the
Deed of Sale executed by Narciso Valeriois absolutely simulated or
fictitious and, as both parties were in pari delicto, petitioners could not
demand the surrender of the 511 sq. m. lot nor could respondents retain
possession thereof. The RTC ordered that the 511 sq. m. lot be reverted to
the estate of the deceased Valerio spouses. The dispositive portion reads:
ACCORDINGLY, judgment is hereby rendered as follows:

a) the Deed of Absolute Sale and its resultant document, the Deed of
Agreement of Subdivision[,] are hereby declared null and void and with
no further force and effect;
b) Transfer Certificate of Title No. T-151186 covering lot no. 428 of the
Calamba Friar Land Estate with an area of five hundred eleven (511)
square meters issued in the name of Alejandro Refresca married to
Vicenta Refresca is likewise declared null and void;
c) the said 511[-]square meter lot is ordered reverted to the estate of
the deceased Narciso Valerio and Nieves Valerio.
The prayer for damages by the plaintiffs and the counterclaim interposed by
defendants are likewise ordered DISMISSED for lack of merit.
With costs against plaintiffs and defendants.
SO ORDERED.7
On appeal, the Court of Appeals reversed the decision of the RTC. It ruled
that the Deed of Sale was not absolutely, but relatively simulated as
the parties intended to be bound by it. On the issue of consideration, the
Court of Appeals held that although the Deed of Sale was not supported by
monetary consideration, a cause exists although the parties could not agree
on what it was, i.e., while petitioners maintained that the lot was granted to
Alejandro in exchange for his tenancy rights, respondents claimed that the
lot was granted to them out of the generosity of the Valerio spouses. It also
ruled that the remedy of petitioners for breach of contract was to either ask
for rescission of the sale or specific performance within ten (10) years from
the alleged breach of contract. However, as petitioners action was filed
thirteen (13) years after the alleged breach, their present action has
prescribed. In any case, it ruled that petitioners were estopped from assailing
the deed of sale after they have agreed to subdivide the land as co-owners,
thus acknowledging its provision transferring ownership of the 511 sq. m. lot
to respondents.8
In this appeal, petitioners impugn the Decision of the Court of Appeals on the
following grounds:
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN NOT HOLDING
[THAT] THE AGREEMENT DATED FEBRUARY 10, 1975 BY AND BETWEEN
NARCISO VALERIO AND ALEJANDRO REFRESCA [IS] ABSOLUTELY SIMULATED
AND FICTITIOUS.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DECLARING THAT
PETITIONERS ACTION [HAS] ALREADY PRESCRIBED.
On the first issue, petitioners contend the 1975 Deed of Sale between
Narciso and Alejandro is absolutely simulated or fictitious and produced no
legal effect as there was no monetary consideration involved. 9Petitioners
further argue that as the Deed of Sale is void, it cannot be ratified by the
subsequent execution of a deed of partition among the parties.
Petitioners arguments fail to impress.
Article 1345 of the Civil Code10provides that the simulation of a contract
may either be absolute or relative. Inabsolute 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.11As 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. However, if the parties state a false cause in the
contract to conceal their real agreement, the contract is 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.12
In the case at bar, the records reveal that the clear intent of Narciso
Valerio in executing the 1975 Deed of Sale was to transfer
ownership of the apportioned areas of his 6.5-hectare land to
petitioners as his heirs and to his tenant Alejandro. Although no
monetary consideration was received by landowner Narciso from any of the
vendees, it cannot be said that the contract was not supported by a cause or
consideration or that Narciso never intended to transfer ownership thereof.
Indeed, the primary consideration in determining the true nature of a
contract is the intention of the parties. If the words of a contract appear
to contravene the evident intention of the parties, the latter shall prevail.
Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts of the
parties.13In the case at bar, the circumstances reveal that when landowner
Narciso executed the 1975 Deed of Sale, he intended to transfer ownership
of his entire 6.5-hectare landholding and apportion the area among Alejandro
and the petitioners. Neither he nor his wife, during their lifetime, exerted
effort to evict respondents when the latter allegedly failed to comply with the
condition to surrender their tenancy rights after the sale. That petitioners
and tenant Alejandro then took possession of their respective portions of the
land additionally shows that Narciso divested himself of his title and control
over the property. Truly, one of the most striking badges of absolute
simulation is the complete absence of any attempt on the part of a vendee
to assert his right of dominion over the property. 14In the case at bar,
petitioners and respondents were not amiss in claiming their right over their
respective lots.
Petitioners urge that the transfer of the lot to Alejandro was subject to the
condition that the latter shall waive his tenancy rights over the 6.5-hectare
land. They now impugn the transfer of ownership as the Refrescas allegedly
failed to abide by the condition. Respondents, on the other hand, assert that
it was generosity that motivated Narciso to cede the 511 sq. m. land to
Alejandro Refresca, as an acknowledgment of his long years of cultivating
the land as tenant. As the contract is one of pure beneficence, the
respondents contend that the cause or consideration therefor is the liberality
of the benefactor Narciso Valerio.
We find that the transfer of the lot to petitioners and Alejandro is supported
by a cause or consideration. If, as alleged by petitioners, the transfer was
conditioned on the surrender of respondents of their tenancy rights, said
condition is the consideration for the contract. If no such condition was
imposed by Narciso prior to the execution of the deed of sale, the cause for
the transfer of the lot to Alejandro is clearly the liberality or generosity of
landowner Narciso. In either case, we agree with the ruling of the Court of

Appeals that there was a cause or consideration for the transfer of the land
although the parties cannot agree on what it is.
On the issue of consideration, the Court is more inclined to give credence to
respondents claim that the cause of the contract is the generosity of Narciso
Valerio who intended to divest himself of ownership over the land. The
alleged condition imposed by Narciso on respondents, i.e., for the latter to
surrender their tenancy rights in exchange for the transfer of the 511 sq. m.
lot to them, is belied by the records. Respondents testified that no such
condition attached to the transfer as after the execution of the Deed of Sale
and even after Alejandros death, respondents were allowed to continue
cultivating the entire land as tenants. The records show that after the 1975
Deed of Sale, Nieves Valerio, widow of Narciso, executed a leasehold contract
in favor of Vicenta Refresca, widow of Alejandro, allowing her to continue
tilling the land in exchange for payment of the rentals. In fact, the tenancy
right of the respondents to succeed Alejandro in tilling the land has been
recognized by the DAR. Petitioners themselves admitted that Narciso
transferred ownership of the 511 sq. m. land to Alejandro and the other
apportioned lots to them out of the liberality of Narciso as neither the
petitioners nor Alejandro paid monetary consideration therefor. 15Clearly,
Narciso was motivated by generosity when he divested himself of ownership
over the land. This was the true intent of the parties although they tried to
conceal it with the execution of a deed of sale, when the contract is in reality
one of donation inter vivos.
We likewise agree with the findings of the Court of Appeals that
petitioners are estopped in impugning the sale as they overtly
recognized the validity of the transfer of the apportioned lot to
tenant Alejandro.Indeed, subsequent to the execution of the Deed of Sale,
petitioners and Alejandro, as co-owners, voluntarily partitioned the 6.5hectare lot which became the basis for the issuance of separate titles in their
names.16By this explicit act, petitioners clearly intended to be bound by the
1975 Deed of Sale which transferred the subdivided lots to each of the
parties.
Thus, we rule that the 1975 Deed of Sale between the parties is a
relatively simulated contract as the clear intent was to transfer
ownership over the land. Hence, the contract binds the parties to their
true agreement,i.e., to cause the transfer of the specific apportioned areas to
Alejandro and petitioners. Petitioners failed to discharge the burden of
proving their allegation that the 1975 Deed of Sale is a void contract for
being absolutely simulated.
As this Court has ruled on the validity of the 1975 Deed of Sale, we find no
reason to pass upon the issue of prescription raised by petitioners.
IN VIEW WHEREOF, the petition is dismissed. No pronouncement as to
costs.
SO ORDERED.

G.R. No. 46274

November 2, 1939

A.O.
vs.
JOHN C. ROBB, defendant-appellant.

FISHER, plaintiff-appellee,

Marcial
P.
Lichauco
and
Manuel
M.
Mejia
for
Wolfson, Barrion and Baradi and Ignacio Ycaza for appellee.

appellant.

VILLA-REAL, J.:
The defendant John C. Robb appeals to this Court from the judgment of the
Court of First Instance of Manila, the dispositive part of which reads:
Judgment is hereby rendered in favor of the plaintiff and against the
defendant, who is ordered to pay to the former the sum of P2,000, with
interest at the legal rate from March 11, 1938, until paid, plus costs.
The facts established at the trial without discussion are the following:
In September, 1935, the board of directors of the Philippine Greyhound Club,
Inc., told the herein defendant-appellant John C. Robb, to make a business
trip to Shanghai to study the operation of a dog racing course. In Shanghai,
the defendant-appellant stayed at the American Club where be became
acquainted with the plaintiff-appellee, A. O. Fisher, through their mutual
friends. In the course of a conversation, the defendant-appellant came to
know that the plaintiff-appellee was the manager of a dog racing course.
Upon knowing the purpose of the defendant-appellant's trip, the plaintiffappellee showed great interest and invited him to his establishment and for
several days gave him information about the business. It seems that the
plaintiff became interested in the Philippine Greyhound Club, Inc., and asked
the defendant if he could have a part therein as a stockholder. As the
defendant-appellant answered in the affirmative, the plaintiff-appellee
thereupon filled a subscription blank and, through his bank in Shanghai, sent
to the Philippine Greyhound Club, Inc., in Manila telegraphic transfer for
P3,000 in payment of the first installment of his subscription. Later on the
defendant-appellant returned to Manila from Shanghai.
Some months thereafter, when the board of directors of the Philippine
Greyhound Club, Inc., issued a call for the payment of the second installment
of the subscriptions, the defendant-appellant sent a radiogram to the
plaintiff-appellee did so and sent P2,000 directly to the Philippine Greyhound
Club, Inc., in payment of the said installment. Due to the manipulations of
those who controlled the Philippine Greyhound Club, Inc., during the absence
of the defendant-appellant undertook the organization of a company called
The Philippine Racing Club, which now manages the race track of the Santa
Ana park. The defendant immediately endeavored to save the investment of
those who had subscribed to the Philippine Greyhound Club, Inc., by having
the Philippine Racing Club acquire the remaining assets of the Philippine
Greyhound Club, Inc. The defendant-appellant wrote a letter to the plaintiffappellee in Shanghai explaining in detail the critical condition of the
Philippine Greyhound Club, Inc., and outlining his plans to save the
properties and assets of the plaintiff-appellee that he felt morally responsible
to the stockholders who had paid their second installment (Exh. C). In answer
to said letter, the plaintiff-appellee wrote the defendant-appellant requiring
him to return the entire amount paid by him to the Philippine Greyhound
Club, Inc., (exhibit E). Upon receiving this letter, the defendant-appellant

answered the plaintiff-appellee for any loss which he might have suffered in
connection with the Philippine Greyhound Club, Inc., in the same way that he
could not expect anyone to reimburse him for his own losses which were
much more than those of the plaintiff-appellee (Exh. B).
The principal question to be decided in this appeal is whether or not the trial
court erred in holding that there was sufficient consideration to justify the
promise made by the defendant-appellant in his letters Exhibits B and C.
In the fifth paragraph of the letter Exhibit B, dated March 16, 1936,
addressed by the defendant-appellant to the plaintiff-appellee, the former
said: "I feel a moral responsibility for these second payments, which were
made in order to carry out my plan (not the first payments, as you have it in
your letter), and Mr. Hilscher and I will see to it that stockholders who made
second payments receive these amounts back as soon as possible, out of our
own personal funds. "As it is, I have had to take my loss along with everyone
else here, and so far as I can see that is what all of us must do. The
corporation is finally flat, so it is out of the question to receive back any of
your investment from that source; the only salvage will be the second
payment that you made, and that will come from Hilscher and me personally,
as I say, not because of any obligation, but simply because we have taken it
on ourselves to do that. (And I wish I could find someone who would
undertake to repay a part of my own losses in the enterprise!)" And in the
seventh paragraph of the letter Exhibit C, dated February 21, 1936,
addressed by the same defendant-appellant to the same plaintiff-appellee
the former said the following:
However, Mr. Fischer and I feel a personal responsibility to those few
stockholders who made their second payments, including yourself, and it is
our intention to personally repay the amounts of the second payments made
by those few.
. . . And, finally, paragraph 8 of the same letter Exhibit C states: "We
are to receive a certain share of the new Philippine Racing Club for our
services as promoters of that organization, and as soon as this is
received by us, we will be in a position to compensate you and the few
others who made the second payments. That, as T have said, will come
from us personally, in an effort to make things easier for those who
were sportsmen enough to try to save the Greyhound organization by
making second payments.
Article 1254 of the Civil Code provides as follows:
A contract exists from the moment one or more persons consent to be
bound with respect to another or others to deliver something or to
render some services.
And article 1261 of the same Civil Code provides the following:
ART. 1261. There is no contract unless the following requisites exists:
1. The consent of the contracting parties;
2. A definite object which is the subject-matter of the contract;
3. A consideration for the obligation established.

In the present case, while the defendant-appellant told the plaintiff-appellee

that he felt morally responsible for the second payments which had been
made to carry out his plan, and that Mr. Hilscher and he would do everything
possible so that the stockholders who had made second payments may
receive the amount paid by them from their personal funds because they
voluntarily assumed the responsibility to make such payment as soon as
they receive from the Philippine racing Club certain shares for their services
as promoters of said organization, it does not appear that the plaintiffappellee had consented to said form of reimbursement of the P2,000 which
he had directly paid to the Philippine Greyhound Club, Inc., in satisfaction of
the second installment.
The first essential requisite, therefore, required by the cited article 1261 of
the Civil Code for the existence of a contract, does not exists.
As to the third essential requisite, namely, "A consideration for the obligation
established," article 1274 of the same Code provides:lawphi1.net
In onerous contracts the consideration as to each of the parties is the
delivery or performance or the promise of delivery or performance of a
thing or service by the other party; in remuneratory contracts the
consideration is the service or benefit for which the remuneration is
given, and in contracts of pure beneficence the consideration is the
liberality of the benefactors.
And article 1275 of the same Code provides:
ART. 1275. Contracts without consideration or with an illicit
consideration produce no effect whatsoever. A consideration is illicit
when it is contrary to law or morality.
Manresa, in volume 8, 4rth edition, pages 618-619 of his Commentaries on
the Civil Code, has this to say:
Considering the concept of the consideration as the explanation and
motive of the contract, it is related to the latter's object and even more
to its motives with which it is often confused. It is differentiated from
them, however, in that the former is the essential reason for the
contract, while the latter are the particular reasons of a contracting
party which do not affect the other party and which do not preclude
the existence of a different consideration. To clarify by an example: A
thing purchased constitutes the consideration for the purchaser and
not the motives which have influenced his mind, like its usefulness, its
perfection, its relation to another, the use thereof which he may have
in mind, etc., a very important distinction, which precludes the
annulment of the contract by the sole influence of the motives, unless
the efficacy of the former had been subordinated to compliance with
the latter as conditions.
The jurisprudence shows some cases wherein this important distinction
is established. The consideration of contracts, states the decision of
February 24, 1904, is distinct from the motive which may prompt the
parties in executing them. The inaccuracies committed in expressing
its accidental or secondary details do not imply lack of consideration or
false consideration, wherefore, they do not affect the essence and
validity of the contract. In a loan the consideration in its essence is, for
the borrower the acquisition of the amount, and for the lender the

power to demand its return, whether the money be for the former or
for another person and whether it be invested as stated or otherwise.
The same distinction between the consideration and the motive is
found in the decisions of November 23, 1920 and March 5, 1924.
The contract sought to be judicially enforced by the plaintiff-appellee against
the defendant-appellant is onerous in character, because it supposes the
deprivation of the latter of an amount of money which impairs his property,
which is a burden, and for it to be legally valid it is necessary that it should
have a consideration consisting in the lending or or promise of a thing or
service by such party. The defendant-appellant is required to give a thing,
namely, the payment of the sum of P2,000, but the plaintiff-appellee has not
given or promised anything or service to the former which may compel him
to make such payment. The promise which said defendant-appellant has
made to the plaintiff-appellee to return to him P2,000 which he had paid to
the Philippine Greyhound Club, Inc., as second installment of the payment of
the amount of the shares for which he has subscribed, was prompted by a
feeling of pity which said defendant-appellant had for the plaintiff-appellee
as a result of the loss which the latter had suffered because of the failure of
the enterprise. The obligation which the said defendant-appellant had
contracted with the plaintiff-appellee is, therefore, purely moral and, as such,
is not demandable in law but only in conscience, over which human judges
have no jurisdiction.1awphi1.net
As to whether a moral obligation is a sufficient consideration, read in volume
12 of the American Jurisprudence, pages 589-590, paragraphs 96, 67, the
following:
SEC. 96. Moral obligation. Although there is authority in support of
the board proposition that a moral obligation is sufficient consideration,
such proposition is usually denied. . . . .
The case presenting the question whether a moral obligation will
sustain an express executory promise may be divided into five classes:
(1) Cases in which the moral obligation arose wholly from ethical
considerations, unconnected with any legal obligations, perfect or
imperfect, and without the receipt of actual pecuniary or material
benefit by the promisor prior to the subsequent promise; (2) cases in
which the moral obligation arose from a legal liability already
performed or still enforceable; (3) cases in which the moral obligation
arose out of, or was connected with, a previous request or promise
creating originally an enforceable legal liability, which, however, at the
time of the subsequent express promise had become discharged or
barred by operation of a positive rule of law, so that at that time there
was no enforceable legal liability; (4) cases in which the moral
obligation arose from, or was connected with, a previous request or
promise which, however, never created any enforceable legal liability,
because of a rule of law which rendered the original agreement void, or
at least unenforceable; and (5) cases in which the moral obligation
arose out of, or was connected with, the receipt of actual material or
pecuniary benefit by the promisor, without, however, any previous
request or promise on his part, express or implied, and therefore, of
course, without any original legal liability, perfect or imperfect.
SEC. 97. Moral obligation unconnected with legal liability or legal
benefit. Although, as subsequently shown was formerly some doubt

as to the point, it is now well established that a mere moral obligation

or conscience duty arising wholly from ethical motives or a mere
conscientious duty unconnected with any legal obligation, perfect or
imperfect, or with the receipt of benefit by the promisor of a material
or pecuniary nature will not furnish a consideration for an executory
promise. . . . .
In view of the foregoing considerations, we are of the opinion and so hold,
that the promise made by an organizer of a dog racing course to a
stockholder to return to him certain amounts paid by the latter in satisfaction
of his subscription upon the belief of said organizer that he was morally
responsible because of the failure of the enterprise, is not the consideration
rquired by article 1261 of the Civil Code as an essential element for the legal
existence of an onerous contract which would bind the promisor to comply
with his promise.
Wherefore, the appealed judgment is reversed and the costs to the plaintiff.

GR No. L-47362 December 19, 1940

VILLARROEL
JUAN
vs. BERNARDINO ESTRADA, turned-appealed.
D.
Felipe
Agoncillo
on
behalf
of
D. Oben on behalf of Crispin turned-appealed.

F., relapsing-appellant,

the

appellant-appelante.

AVANCEA, Pres. :
On May 9, 1912, Alejandro F. Callao, mother of defendant John F. Villarroel,
obtained from spouses Mariano Estrada and Severina a loan of P1,000
payable after seven years (Exhibito A). Alejandra died, leaving as sole heir to
the defendant. Spouses Mariano Estrada and Severina died too, leaving as
sole heir to the plaintiff Bernardino Estrada. On August 9, 1930, the
defendant signed a document (Exhibito B) which states in duty the applicant
the sum of P1,000, with an interest of 12 percent per year. This action
concerns the payment of this amount.
The Court of First Instance of Laguna, in which this action was filed, condemn
the defendant to pay the claimed amount of P1,000 its legal interests of 12
percent a year since August 9, 1930 until full payment. I will appeal this
sentence.
It will be noted that the parties in the present case are, respectively, the only
heirs of the original creditor and debtor. This action is brought under the
obligation that the defendant as the only son of the original debtor
contracted for the plaintiff, sole heir of primitive loa creditors. It is recognized
that the amount of P1,000 to this obligation contracts is the same debt
mother sued the parents of the plaintiff. Lawphil.net
Although the action to recover the original debt has already prescribed when
the lawsuit was filed in this case, the question that arises in this appeal is
primarily whether, notwithstanding such prescription is brought from the
action. However, this action is not based on the original obligation contracted

by the mother of the defendant, who has already prescribed, but which
contracted the defendant on August 9, 1930 (Exhibito B) by assuming the
fulfillment of that obligation, and prescribed. As the defendant the only
herdero of the original debtor, with the right to succeed her in his
inheritance, that debt brought by her mother legally, but lost their
effectiveness by prescription, it is now, however, for a moral obligation,
which is consideration enough to create and make effective and enforceable
his obligation voluntarily on August 9, 1930 in the Exhibito B.
The rule that a new promise to pay a prrescrita debt must be made by the
same person obligated or other legally authorized by it, is not applicable to
the present case that compliance with the obligation of the obligated
orignalmente is not required, but which as I wanted des voluntarily assume
this obligation.
the original ruling, with costs against the appellant is confirmed. So it is
ordered.