G.R. No. 228999 - ANA DE JOYA AND CIRIACO DE JOYA, LERMA R. CASTILLO AND MARIO CASTILLO, SPOUSES DOMINGO CORDERO AND LEONCIA CORDERO, AND RICARDO VILLALOBOS, AS THE SURVIVING HEIRS OF SPOUSES EUFRONIO CORDERO AND TARCILA C. CORDERO, Petitioners, v. FRANCISCO P. MADLANGBAYAN, SUBSTITUTED BY RODESINDA F. MADLANGBAYAN AND MARIA LOURDES M. MONTALBO, THE REGISTER OF DEEDS FOR THE PROVINCE OF BATANGAS, SPOUSES ROLANDO DALIDA AND MARIA FLORITA DALIDA, SPOUSES GEORGE GULLET AND CONCHITA GULLET, SPOUSES ROSENDO RAMOS AND ISABELITA RAMOS, RENATO GO, CHOLLIE MAGNAYE-GO, VENECIO H. MAGNAYE, CRISTETA SALCEDO-MAGNAYE AND JAYSON MAGNAYE, Respondents.
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the Decision2 dated September 26, 2016, of the Court of Appeals (CA) in CA-G.R. CV No. 105049, and its Resolution3 dated December 28, 2016, denying the motion for reconsideration
thereof. The assailed issuances granted the appeal and reversed and set
aside the Judgment dated December 10, 2014, of the Regional Tried Court (RTC) of Batangas City, Branch 84.
The Antecedent FactsPetitioners Ana de Joya and Ciriaco de Joya, Lerma R. Castillo and Mario Castillo, Spouses Domingo Cordero and Leoncia Cordero, and Eufronio
Cordero and Tarcila Cordero (petitioners) are the registered owners of
two parcels of agricultural land - Lot Nos. 5 and 6, consisting of an
area of 140,327 square meters and 31,465 square meters, respectively
(subject properties). Both are located at Barrio Concordia, Alitagtag,
Batangas, and are covered by Transfer Certificate of Title (TCT) No.
T-64767.
4By virtue of a Special Power of Attorney dated January 23, 1992, and a
Pangkalahatang Gawad ng Kapangyarihang Hindi Natitinag dated February 5, 1996, petitoners granted respondent Francisco P.
Madlangbayan (respondent Madlangbayan) the authority to sell the subject properties.
5Sometime during the first half of April 1996, respondent Madlangbayan
received a counter-offer from respondents Spouses Ma. Florita and
Roiando Dalida, Spouses Guillermo and Rosalinda Cano, and spouses
Rosendo and Isabelita Ramos (respondents Dalida, et al.). The
counter-offer was rejected by the petitioners in a letter
6 dated April 10, 1996,
viz.:
chanroblesvirtualawlibraryBauan, Batangas
April 10, 1996
Rolando Z. Dalida
Chairman of the Board
Rural Bank of Bauan Inc.
Bauan, Batangas
My dear Mr. Dalida,
I regret to inform you that after conferring with my client, the owner
of the parcel of land I have been authorized to sell, they could not
agree on almost all of your counter offer, particularly on the amount of the total consideration and the terms of payment. This is so because
they are in great need of cash and the amount of SEVENTEEN MILLION
(P17,000,000.00) PESOS is non-negotiable. However, if you could give a
better offer I could agree to give you the right to buy the property
after May 31, 1996.
Very truly yours,
(signed)
Francisco P. Madlangbayan
Subsequent thereto, petitioners alleged that former Mayor Rod A.
Macalintal in a meeting with petitioner Eufronio Cordero (petitioner
Eufronio), agreed to accept their offer to sell the subject properties
at the price of P100.00 per square meter. The agreement however did not
push thru due to a conflict in respondent Madlangbayan's commission. The latter supposedly claimed a share of P13,600,000.00 commission out of
the P17,000,000.00 purchase price.
7Due to the disagreement, the petitioners executed a
Revocation of Special Power of Attorney and General Power of Attorney on May 3, 1996, rescinding respondent Madlangbayan's authority over the subject properties.
8On June 5, 1996, the petitioners sent a letter to respondent
Madlangbayan, demanding, in view of the revocation of the power of
attorney, for the latter to surrender the owner's duplicate certificate
of title.
9 As the demand
remained unheeded, the petitioners filed an Affidavit of Adverse Claim
on TCT No. 64767 before the Registry of Deeds of Batangas on July 1,
1997.
10On July 14, 1997, a complaint for revocation of authority was filed by
the petitioners against respondent Madlangbayan. In response, the latter replied that the authority could no longer be revoked as he had already sold the property pursuant to the power of attorney given him.
11Petitioners filed a
Supplemental Complaint/Petition dated January 26, 1998, impleading as defendants herein respondents Dalida, et al.
for entering into a conspiracy with respondent Madlangbayan in executing a fake
Deed of Absolute Sale, dated April 8, 1996, over the subject properties.
12On March 21, 2000, petitioners filed a
Second Supplemental Complaint/Petition praying for additional damages on account of the lost owner's duplicate certificate of title over the subject properties.
13During trial, the petitioners presented evidence which tend to prove
that they had rejected the initial proposal submitted to them for the
sale of the subject properties and that respondent Madlangbayan's
authority to sell the subject properties had been revoked due to a
misunderstanding in the latter's commission.
14Further, petitioners averred that on a separate occasion, on November 8, 1998, petitioner Eufronio discovered a letter dated April 10, 1996,
addressed to respondent Rolando Dalida in which the subject properties
were offered to the latter for a non-negotiable amount of
P17,000,000.00. Thereafter, petitioner Eufronio was surprised to learn
that the subject properties were sold to respondent spouses Dalida for
the amount of P10,000,000.00 by virtue of a
Deed of Absolute Sale dated April 8, 1996.
15For their part, respondents Dalida, et al. claim that sometime in 1995,
respondent Madlangbayan, armed with a special power of attorney, offered the subject properties to them for the amount of P17,000,000.00.
Respondents Dalida, et al. made a counter offer of P10,000 000.00 which
was accepted. Consequently, with the execution of a
Deed of Absolute Sale dated April 8, 1996, the purchase price of P10,000,000.00 was deposited in respondent Madlangbayan's account in the Rural Bank of Bauan. The
owner's duplicate copy of title over the subject properties was then
given to respondents Dalida, et al.
16After trial, the RTC rendered its Decision
17 on August 8, 2002, which found respondents Dalida, et al., to be buyers in good faith, thereby ruling as follows:
chanroblesvirtualawlibraryWHEREFORE, judgment is hereby rendered in favor of
[respondent Madlangbayan and respondents Dalida et al.] upholding the
validity of the Special Powers of Attorneys (Exhibits "B" and "C") and
the Deed of Absolute Sale (Exhibit "K").
The amount in escrow deposit on (sic.) Ten Million Pesos
(Php10,000,000.00) with the Rural Bank of Bauan shall be paid and
delivered to the [petitioners] or their authorized representatives by
the
[respondents] and the said bank.
The counterclaims are likewise DISMISSED sans evidence of bad faith in filing this case. No pronouncement as to cost.
SO ORDERED.18
The petitioners filed an appeal before the CA, docketed as CA G.R. CV
No. 77685. While the appeal was pending, the petitioners filed a
Motion for New Trial (On the Ground of Newly Discovered Evidence). In its Resolution
19 dated December 13, 2005, the CA granted the motion,
viz.:
chanroblesvirtualawlibraryWHEREFORE, finding the instant "MOTION FOR NEW TRIAL (On the Ground of Newly Discovered Evidence)" to be impressed with merit, the
same s hereby GRANTED. Guided by Section 4, Rule 53 and Sections 3 and
6, Rule 37 of the Revised Rules of Court, the assailed 8 August 2002
Decision of the Regional Trial Court of Batangas City, Branch 84, is SET ASIDE. Said court is ordered to HOLD a trial de novo within a
non-extendible period of thirty (30) days from notice. This Court's
Judicial Records Division (Civil Records Section) is hereby DIRECTED to
REMAND the entire records of this case to the court a quo.
SO ORDERED.20
In the course of the new trial, the petitioners presented evidence which tend to establish the circumstances attending Certificate of Time
Deposit (CTD) No. 7290 dated April 10, 1996, in the name of respondent
Madlangbayan. The proceedings likewise revealed that the subject
properties had been sold by respondents Dalida, et al. to respondent
spouses Chollie Go and Renato Go (respondents Go, et al.) by virtue of a Deed of Absolute Sale, dated April 24, 2003, and that the owner's
duplicate certificate of title is now in the possession of respondent
Chollie's brother, Renato Go.
21With the new information, petitioners filed a
Third Supplemental Complaint dated November 16, 2006, impleading respondents Go, et al. in the case.
22On March 8, 2007, petitioners filed a
Motion for Summary Judgment/Judgement on the Pleadings. Despite respondents Go, et al.'s opposition, the RTC rendered its
Decision (
New)
23 dated June 27, 2007. The RTC found that the price of the sale was
simulated and unpaid; and that the records are bereft of evidence to
prove good faith on the part of respondents Dalida, et al. Thus, the RTC upheld the rights of the petitioners over the subject properties. The
dispositive portion of the Decision reads:
chanroblesvirtualawlibraryWHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants:
- Ordering the [respondents], namely Renato Go, Chollie Go, Venecio H. Magnayee, Cristela Salcedo-Magnaye and Jayson Magnaye to vacate and
deliver to [petitioners] the two (2) parcels of land in question
including improvements, both covered by TCT No. T-64767 issued by the
Register of Deeds for the Province of Batangas being the property
located in Barrio Concordia, Municipality of Alitagtag, Province of
Batangas. x x x
- To pay lost or unrealized income (rental): for the 14.0327 hectares and 3.1465 hectares x x x
- To pay the interest of 6% per annum on the respective amounts
jointly by all [respondents] from the date of this decision until fully
paid;
- To pay moral damages jointly by all [respondents] in the amount of P300,000.00; and P100,000.00 as exemplary damages;
- To pay attorney's fee in the amount of P215,573.00 which was
incurred by the [petitioners] from January 1998 to July 2002 to be paid
jointly by the [respondents Dalida, et al.] only;
- To pay attorney's fee in the amount of P348,515.00 which was
the attorney's fee incurred by the [petitioners] from April 2003 to
April 2007 to be paid jointly by [respondents Dalida, et al.] and
[respondents Go et al.] and;
- Costs[s] of suit.
SO ORDERED.24
Motion for Reconsideration of the June 27, 2007 Decision of the RTC
having been denied, respondents Go, et al. filed an appeal before the
CA. The case was docketed as CA-G.R. CV No. 90502.
25On December 17, 2009, the CA rendered its Decision
26 finding the appeal meritorious, thus:
chanroblesvirtualawlibraryWHEREFORE, in view of the foregoing, the appeal is GRANTED.
The decision dated June 27, 2007 assailed herein is SET ASIDE. The case, with its entire records, is ordered REMANDED to the trial court for
continuation or proper proceedings on the merits which must be conducted with dispatch.
SO ORDERED.27
On January 5, 2010, petitioners filed a Motion for Reconsideration, but the same was denied by the CA in its Resolution
28 dated July 23, 2010.
29In accordance with the December 17, 2009 Decision of the CA, the RTC
issued an Order setting the case for continuation of trial on October
25, 2012.
30In the course of the proceedings in the court below, respondents Go, et
al. presented the testimony of respondent Jayson Magnaye. Magnaye
testified that at the time of sale, a certain Diosdado Andal leased a
portion of the subject properties. After the sale, respondents Go, et
al. took possession and introduced improvements on the subject
properties. However, on February 14, 2008, petitioners forcibly took the subject properties.
31On December 10, 2014, the RTC rendered its Judgment
32 in favor of the petitioners and against the respondents. The dispositive portion of which reads:
chanroblesvirtualawlibraryWHEREFORE, premises considered, the Court finds that a
preponderance of evidence exists in favor of the [Petitioners] and
against the [Respondents]. Judgment is hereby rendered, as follows:
1) The Special Power of Attorney dated January 23, 1992 and General
Power of Attorney dated February 5, 1996 executed in favor of
[Respondent] Francisco Madlangbayan are annulled, revoked and
terminated, for all intents and purposes;
2) The Deed of Sale dated April 8, 1996 executed by [Respondent]
Francisco Madlangbayan and [Respondents] Spouses Rolando Dalida and Ma.
Florita Dalida, Spouses George Guilet and Conchita Guilet, Spouses
Guillermo Cano and Rosalinda Cano, and Spouses Rosenda Ramos and
Isabelita Ramos is void ab initio for Jack of consideration;
3) The subsequent Deed of Sale dated January 2003 between [Respondents
Dalida, et al.] and [Respondents Go et al.] is null and void as the
spring cannot rise higher than its source. Accordingly, [Respondents
Dalida, et al.] are DIRECTED to return to [Respondents Go, et al.] the
purchase price paid in the amount of Eight Million Two Hundred
Fifty-Thousand Pesos (Php8,250,000.00) with appropriate legal interest
from time of sale until fully paid.
4) [Respondents Go, et al.] did not acquire the subject lots in good
faith and for value; as builders in bad faith, they lose the
improvements they built without right to indemnity.
5) The [Petitioners] are ORDERED to choose one of the following options: (a) to appropriate for themselves the improvements made without
indemnifying [Respondents Go, et al.) for the value of the materials; or (b) to recover portions of the subject lot and demand that [Respondents Go, et al.] demolish whatever improvements they had made therein, so as to return the said portions to their former condition, at the expense
of the latter, or (c) to surrender the said portions to [Respondents Go, et al.] and compel the latter to reimburse the [Petitioners] for the
purchase price, plus appropriate interest; and to manifest to this Court the option chosen, furnishing copies thereof to all the [Respondents]
within five (5) days from receipt hereof.
6) In view of the finding that [Respondents Go, et al.] are not
purchasers in good faith, and depending on the option chosen by the
[Petitioners], as enumerated in paragraph 5 hereof;
(a) In case the [Petitioners] choose the option under paragraph 5(a),
[Respondents Go, et al.] are ORDERED to vacate the premises and
surrender possession of the improvement and subject lot to the
[Petitioners], if the said [Respondents Go, et al.] still exercise
possession over said lot, within ten (10) days from receipt of the
option exercised by the [Petitioners].
(b) In case the [Petitioners] choose the option under paragraph 5(b),
[Respondents Go, et al.] are ORDERED to demolish whatever improvements
it has made on the said portions, so as to return the same to their
former condition, at its own expense and to surrender to the
[Petitioners] the possession over the subject lots, if the said
[Respondents Go et al.] still exercise possession over the said lot,
within ten (10) days from receipt of the option exercised by the
[Petitioners].
(c) In case the [Petitioners] choose the option under paragraph 5(c),
[Respondents Go, et al.] are ORDERED to pay the rPetitioners] for the
subject lot to be pegged at the current fair market va!ue, plus
appropriate interest.
7) All of the [Respondents] are ORDERED to solidarily pay the
[Petitioners] the unrealized or lost rental income in the amount of
Twelve Thousand Pesos (Php12,000) a year for one parcel of 14.0327
hectares, or One Hundred Sixty-Eight Thousand Three Hundred Ninety-Two
Pesos and Forty Centavos (Php168,392.40) per annum, to be computed from
June 5, 2003 until February 14, 2008.
8) [Respondents Madlangbayan and Dalida, et al.] shall be jointly liable to pay the unrealized or lost rental income in the amount of Twelve
Thousand Pesos (Php12,000) a year for the parcel of land with the area
of 3.1465 hecaters, or Thirty-Seven Thousand Seven Hundred Fifty-Eight
Pesos (Php37,758.00) per annum, to be computed from June 5, 2003 until
February 14, 2008.
9) All of the [Respondents] are ORDERED to solidarity pay the
[Petitioners] the amount of Three Hundred Thousand Pesos (Php300,000.00) as moral damages, One Hundred Thousand Pesos (Php100,000.00) as
exemplary damages, and Four Hundred Thousand Pesos (Php400,000) as
attorney's fees;
10) All of the [Respondents'] counterclaims are DISMISSED for lack of
merit. [Respondents Go, et al.'s] cross-claim against [co-respondent
Madlangbayan] for whatever loss and damage they may suffer is likewise
DENIED for lack of sufficient evidentiary basis.
SO ORDERED.33
Respondents Go, et al. filed a Motion for Reconsideration but the same was denied by the RTC in its Order dated March 31, 2015.
34 Thus, respondents Go, et al. filed an appeal before the CA.
On September 26, 2016, the CA rendered the herein assailed Decision
35 which found as follows:
chanroblesvirtualawlibraryWHEREFORE, the instant Appeal is GRANTED. The Judgment of the Regional Trial Court of Batangas City, Branch 84, in Civil Case
No. 4887 is hereby REVERSED and SET ASIDE. [Petitioners] are hereby
ordered to vacate the subject property and deliver possession thereof to [Respondents] Chollie Magnaye-Go, Cristeta S. Magnaye and Jayson
Magnaye.
SO ORDERED.36
In so ruling, the CA held that the
Deed of Absolute Sale dated
April 8, 1996, is valid as all the elements of a valid contract of sale
is present. Having been executed by respondent Madlangbayan prior to the revocation of the power of attorney, the CA held that his act of
conveying the property is a valid source of obligation to bind the
petitioners, thus, the element of consent is satisfied. With respect to
the subject matter, the CA noted that the
Deed of Absolute Sale
dated April 8, 1996 describes in sufficient detail the subject
properties. Finally, as to the purchase price, the CA found that the
Deed is supported by a purchase price of P10,000,000.00, paid in full to respondent Madlangbayan through CTD No. 7290 dated April 10, 1996 and
placed in escrow with Bauan Rural Bank.
37In holding that the
Deed of Absolute Sale, dated April 8, 1996,
is supported by adequate consideration, the CA adjudged irrelevant the
fact that CTD No. 7290, dated April 10, 1996, is not included in the
inventory of outstanding deposit liabilities of Bauan Rural Bank as of
its closure date on May 9, 2003, or that the Philippine Deposit
Insurance Corporation (PDIC) certified that as of the date they took
over the bank on May 13, 2003, no document was found to validate the CTD account. The CA concluded that, notwithstanding, there is no sufficient proof to rule that that CTD No. 7290 dated April 10, 1996 does not
exist as the PDIC was only able to look into available records provided
to them by the rural bank.
38Considering that the transfer of the subject properties through the
Deed of Absolute Sale, dated April 8, 1996, is valid, the CA ruled that the subsequent sale
between respondents Dalida and respondents Go, et al. is also valid.
That a Notice of
Lis Pendens, dated July 14, 1997, is annotated
on the subject titles at the time of sale to respondents Go, et al. does not render the transfer invalid but merely subjects the same dependent
upon the outcome of litigation.
39Motion for Reconsideration of the said Decision having been similarly denied by the CA in its Resolution
40 dated December 28, 2016, the petitioners filed the instant Petition for review on
certiorari.
In support of the instant petition, the petitioners raise the following errors committed by the CA:
chanroblesvirtualawlibrary I.
THE COURT OF APPEALS GRAVELY ERRED WHEN A SALE TRANSACTION WAS
CONSUMMATED ON 8 APRIL 1996 AS EVIDENCED BY THE DEED OF ABSOLUTE SALE OF THE SAME DATE BEFORE PETITIONERS REVOKED THE POWER OF ATTORNEY GRANTED
TO MADLANGBAYAN; OTHERWISE STATED, THE COURT OF APPEALS GRAVELY ERRED
WHEN IT DID NOT FIND THAT THE DEED OF ABSOLUTE SALE DATED 8 APRIL 1996
WAS ABSOLUTELY SIMULATED.
II.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT DISREGARDED THE NUMEROUS
JUDICIAL AND EXTRAJUDICIAL ADMISSIONS BY THE RESPONDENTS'
PREDECESSORS-IN-INTEREST, THE DALIDAS AND MADLANGBAYAN ESTABLISH THAT
THERE WAS NO CONSUMMATED SALE TRANSACTION AS OF 8 APRIL 1996 CONTRARY TO THE DEED OF ABSOLUTE SALE OF SAID DATE.
III.
THE COURT OF APPEALS GRAVELY ERRED WHEN, WITHOUT ANY EVIDENCE OF EITHER
THE EXISTENCE OF CERTIFICATE OF TIME DEPOSIT NO. 7290 OR OF THE ACTUAL
CASH PAID TO THE PETITIONERS, IT FOUND THAT THERE WAS VALUABLE
CONSIDERATION FOR THE ALLEGED CONSUMMATED SALE.
IV.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT DID NOT APPLY THE BEST
EVIDENCE RULE AND THE REQUIREMENTS FOR THE PRESENTATION OF SECONDARY
EVIDENCE BUT MERELY ASSUMED AS ESTABLISHED FACT, THE EXISTENCE OF CTD
NO. 7290.
V.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO APPRECIATE AS
APPLICABLE. THE PRESUMPTION THAT EVIDENCE WILLFULLY SUPPRESSED WOULD BE
ADVERSE IF PRODUCED WITH RESPECT TO THE REFUSAL AND FAILURE OF THE
DALIDAS, MADLANGBAYAN AND THE RURAL BANK OF BAUAN TO DEPOSIT IN COURT OR THE LAND BANK OF THE PHILIPPINES THE ALLEGED PIO MILLION CONSIDERATION
FOR THE ALLEGED CONSUMMATED SALE TRANSACTION.
VI.
THE COURT OF APPEALS GRAVELY ERRED IN CONCLUDING THAT CTD NO. 7290 DID
EXIST BASED ON A MERE UNSUBSTANTIATED CONJECTURE DEVOID OF ANY
EVIDENTIARY BASIS.41
Succinctly, the instant petition rests on the determination of the issue of whether or not a valid contract of sale was entered into involving
the subject properties.
Ruling of the CourtPetitioners submit that the CA erred in relying upon the existence of the
Deed of Absolute Sale dated April 8, 1996. They claim that the purported contract of sale is
simulated citing, in the main, in support thereof: the failure of
respondent Madlangbayan and respondents Dalida, et al. to reach an
agreement as evidenced by a letter dated April 10, 1996, and want of
evidence of payment constituting valuable consideration.
42In its Comment,
43 respondents Go, et al. aver that the
Deed of Absolute Sale dated April 8, 1996, is valid as all the elements of a contract of sale is present. They assert that the law and the rules presume the
existence of a sufficient consideration in every contract and the burden is upon the petitioners to prove otherwise. In the case at bar,
respondents Go, et al. claim that the petitioners failed to overcome
such presumption and show that CTD No. 7290 does not exist. Further,
respondents Go, et al. argue that there was no actual receipt by the
petitioners of the consideration does not render the contract
inexistent. At most, the same constitutes a breach of contract that may
be the subject of an action for specific performance.
44The petition is
meritorious.
At the outset, it bears to state that the issue presented invites the
Court to determine factual issues that is generally beyond the province
of a petition for review. Under Rule 45 of the Rules of Court, only
questions of law should be raised in a petition for review on
certiorari. However, the rule admits of jurisprudentially established exceptions as when the findings of fact of the RTC and the CA are cont1icting,
similar to the case at bar.
45On its face, the
Deed of Absolute Sale dated April 8, 1996,
involving the subject properties appears to be valid and supported by an adequate consideration, but the attendant circumstances indicate
otherwise.
There are two veritable legal presumptions that support the validity of a Deed of Sale: (1) that it was the result of a fair and regular private
transaction, and (2) that there was sufficient consideration for the
contract. However, these presumptions merely infer
prima facie the transaction's validity and may be rebutted by proof to the contrary.
46 Thus, jurisprudence instructs that even the existence of a signed
document purporting to be a contract of sale does not preclude the
finding that the contract is invalid when the evidence shows that there
was no meeting of minds between the seller and the buyer.
47In this controversy, these presumptions are negated by evidence and the circumstances surrounding the execution of the
Deed of Absolute Sale dated April 8, 1996.
The first presumption is contravened by evidence that the contract of sale is simulated.
48A contract to be valid, requires for its existence the presence of three essential elements: (1) consent of the contracting parties; (2) object
certain which is the subject matter of the contract; and (3) cause of
the obligation which is established.
49The absence of any of these elements renders the contract void. In
particular, when an apparent contract exists but the consent is wanting, the contract is absolutely simulated.
50 This is because in absolute simulation, the colorable contract is not
desired to produce legal effect or in any way alter the judicial
relation of the parties.
51 Otherwise put, in absolute simulation, there appears to be a contract
but it has no substance as the parties have no intention to be bound by
it.
52In a simulated deed of sale for instance, the contract may appear to be
supported by a cause or consideration, but the purchase price has never
been actually paid. In which case, the deed of sale has no legal effect
and any transfer certificate of title which has been issued as a result
thereof must be cancelled. Likewise, the principle of
in pari delicto does not apply.
53 The parties may recover from each other what they may have given under the contract.
54In contrast, in a relative simulation, the parties conceal their true agreement.
55 In a relative simulation, the parties may still be bound by their
agreement when the enforcement of the contract does not prejudice third
persons and is not intended for any purpose that is contrary to law,
morals, good customs, public order or public policy.
56In a case for declaration of nullity of an instrument for being
simulated, the burden is upon the person who impugns its regularity and
validity
57 to establish the
contract's inexistence by preponderance of evidence. This is because the law presumes that a transaction has been fair and regular.
Preponderance of evidence means the probability of the truth. It is the
weight, credit, and value of the aggregate evidence on either side. It
is evidence that is more convincing or worthier of belief than that
which is offered in opposition thereto. Preponderance of evidence is
synonymous to "greater weight of evidence" or "greater weight of
credible evidence."
58In civil cases, this burden of proof always rests upon the plaintiff.
However, when in the course of trial, the plaintiff successfully makes
out a
prima facie case in his favor, "the burden of evidence
shifts to the defendant to controvert the plaintiff's prima facie case,
otherwise, a verdict must be returned in favor of the plaintiff."
59After a careful scrutiny of the records of the case at bar, the Court
finds that the petitioners, as plaintiffs, were able to discharge this
burden. The petitioners were able to establish by preponderance of
evidence that no contract of sale involving the subject properties has
been perfected and that the
Deed of Absolute Sale dated April 8, 1996 is absolutely simulated.
The primary consideration in determining the true nature of a contract
is the intention of the parties. Such that when a conflict exists
between the express terms of an agreement and the evident intention of
the parties, the latter prevails. Thus, such intention is judged not
only from the words of the contract, but also from the contemporaneous
and subsequent acts of the contracting parties.
60Respondent Madlangbayan is an agent of the petitioners, vested with the
power to negotiate the sale of the subject properties. The agency is
created and evidenced by one general power of attorney and one special
power of attorney, pursuant to which, respondent Madlangbayan dealt with potential buyers respondents Dalida, et al. In April 1996, he acted as
agent of the petitioners when he received respondent Dalida, et al.'s
offer to purchase the subject properties. Respondent Madlangbayan also
acted in representation of the petitioners when he rejected the offer
placed on April 10, 1996. Thus, there is no contest that at the time
respondent Madlangbayan negotiated with respondents Dalida, et al. he
was still possessed with the requisite authority to deal with the
subject properties. Nonetheless, at that point, it was clear that no
contract was perfected as the parties failed to agree on the purchase
price. In order "[t]o produce an agreement, the offer must be certain
and the acceptance timely and absolute."
61Consent, as an essential element of a contract of sale is manifested by
"the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract."
62 The contract of sale is perfected with the union of the contracting
parties' minds upon the thing that is the object of the contract and
upon the price which constitutes the consideration therefor.
63To convert the offer into a contract, the acceptance must be identical
in all respects with that of the offer. Where a party sets a different
purchase price than the amount of the original offer, the acceptance is
qualified. In which case, a perfected contract would have arisen only if the other party accepts the counter-offer. Otherwise stated, any
modification or variation from an offer annuls such offer and does not
generate consent.
64The tenor of respondent Madlangbayan's letter to respondents Dalida, et
al. is telling that the parties did not pass the negotiation state:
chanroblesvirtualawlibraryBauan, Batangas
April 10, 1996
Rolando Z. Dalida
Chairman of the Board
Rural Bank of Bauan Inc.
Bauan, Batangas
My dear Mr. Dalida,
I regret to inform you that after conferring with my client, the owner
of the parcel of land I have been authorized to sell, they could not
agree on almost all of your counter offer, particularly on the amount of the total consideration and the terms of payment. This is so because
they are in great need of cash and the amount of SEVENTEEN MILLION PESOS is non-negotiable. However, if you could give a better offer I could
agree to give you the right to buy the property after May 31, 1996.
Very truly yours,
(signed)
Francisco P. Madlangbayan
Simply put, the parties failed to come into an agreement with the rejection of respondent Dalida, et al.'s counter offer.
The Court cannot simply brush aside the fact that the letter of
respondent Madlangbayan rejecting respondent Dalida, et al.'s counter
offer was dated two days after the date of
Deed of Absolute Sale. The respondents failed to offer an explanation to justify the same.
When made to explain, respondent Madlangbayan merely opined: "[b]ut as
far as my Deed of Absolute Sale is concerned, that is the date when the
Deed of Sale has been notarized."
65The respondents having failed to offer evidence sufficient to justify
why the rejection of the offer with the same parties came after the
supposed execution of the Deed of Sale, it is more in accord with logic
and ordinary human experience to conclude that the Deed of Absolute Sale dated April 8, 1996 is absolutely simulated. This conclusion is
particularly supported by the fact that the said Deed is tainted with
various irregularities which cloud its validity.
On its face, Deed of Absolute Sale dated April 8, 1996 states that it
was notarized by Notary Public Atty. Henry Adasa on the same date it was executed, with the following notarial details: Doc. No. 350, Page No.
70, Book No. XII, Series of 1996.
66 However, it is not disputed that the same does not appear in Atty.
Adasa's Notarial Registry for the year 1996. Atty. Adasa claims that the failure is by mere inadvertence. Regardless of the reason for such
omission, the failure of Atty. Adasa to register the subject Deed of
Absolute Sale casts doubt on the authenticity of the document.
Registration of the notarized document in the notarial registry is basic requirement in the notarial process. The notarial registry is a record
of the notary public's official acts. Acknowledged documents and
instruments recorded in it are considered public documents. The notarial registry is a record of the notary public's official acts. Acknowledged documents and instruments recorded in it are considered public
documents. A document or instrument which does not appear in the
notarial records or without a copy of it therein, suggests that the
document or instrument was not really notarized.
67 Without registration, a document or instrument while signed by the
Notary Public cannot be treated as duly notarized. It cannot be treated
as a public document
68 and
as such, is not entitled to the presumption of regularity. The document
or instrument does not have for its benefit that which is due to public
documents, that is that genuineness and due execution need not be
proved. Irregular notarization reduces the evidentiary value of a
document to a private document which requires proof of its due execution and authenticity to be admissible as evidence.
69While, on its own, the absence of registration does not invalidate the
Deed of Sale, considering however the presence of the letter dated April 10, 1996 rejecting respondent Dalida, et al.'s counter offer, the case
yields in favor of the petitioner.
Interestingly, it was only in response to the Complaint for revocation
filed on July 14, 1997, that respondent Madlangbayan brought to the
attention of the petitioner's that the property had been sold and as a
result, the power of attorney could no longer be revoked.
70 Relevant to the sale of the subject properties, a Deed of Absolute Sale dated April 8, 1996, for the amount of P10,000,000.00 was presented by
respondents Dalida, et al.
The authority given to respondent Madlangbayan was expressly revoked in an instrument dated May 3, 1996.
71 This would have been sufficient to revoke the agency, but as the
owner's duplicate TCT remained with respondent Madlangbayan, the
petitioners filed an Affidavit of adverse claim on July 1, 1997. On July 14, 1997, the petitioners filed a case for annulment of respondent
Madlangbayan's authority. Simultaneously, petitioners also filed a
notice of
lis pendens which was annotated on the TCT of the subject properties.
72A contract of agency is extinguished by its revocation.
73 As agency is a personal contract of representation that is based on the trust and confidence reposed by the principal upon the agent,
74 it may be revoked by the principal at will.
75 The withdrawal of such authority by the principal may either be express or implied.
76From the revocation of the agency on May 3, 1996, therefore, respondent
Madlangbayan no longer had any authority over the subject properties.
Had there really been a perfected contract of sale, respondent
Madlangbayan should have informed the petitioners at this point. That
respondent Madlangbayan failed to inform the petitioners of the supposed sale of the subject properties to respondents Dalida, et al. lends
further doubts to the contentious Deed of Sale.
Likewise, the gist of the letter dated April 10, 1996, tells us that
while respondent Madlangbayan is vested with the authority to sell the
property, he may only do so for the amount approved by the petitioners,
that is P17,000,000.00. Any amount below the asking price would have to
be consulted with and approved by the petitioners. Respondent
Madlangbayan, on his own, cannot enter in a contract below the initial
price set by the petitioners. In this regard, the Court cannot help but
doubt why in the case at bar, no prior and timely information was given
to the petitioners regarding the sale. For one, the Deed of Absolute
Sale was for P10,000,000.00, an amount below the ceiling set by the
petitioners. As aforestated, respondent Madlangbayan also had every
opportunity to notify the petitioners that he had successfully
negotiated a sale. In particular, in the natural course of things, the
immediate reaction would be to inform the petitioners of the supposed
sale of the subject properties after being informed of the revocation of his power of attorneys effective May 3, 1996, if indeed one has been
entered into. Nonetheless, in this case, the sale was brought to the
attention of the petitioners in respondent Madlangbayan's Answer. Even
so, at that point, respondent Madlangbayan did not present a copy of the supposed Deed of Absolute Sale he had executed with respondents Dalida, et al. He, instead, presented two documents denominated as
Memorandum of Agreement, both of which are undated and are not notarized, stating as
consideration an amount lower than that indicated in the Deed of
Absolute Sale,
i.e., P7,000,000.00. The respondents failed to provide the reason for the inconsistency between these instruments.
A contract of agency is personal, representative, and derivative in
nature. The authority of the agent to act emanates from the powers
granted to him by his principal. The agent is the extension of the
principal only insofar as acts performed by him that are within the
scope of his authority.
77 By way of exception, a principal may be bound by the agent's acts
performed beyond the scope of his authority, in case of express or
implied ratification. Ratification, however, demands that the principal
has full knowledge of all the material facts or should have knowledge
thereof in view of circumstances which invites "a reasonably prudent
man" to conduct an inquiry.
78 In this case, petitioners deny knowledge of the sale of the subject
properties; respondent Madlangbayan does not controvert such submission. Thus, there is no room for ratification in this case.
In view of the foregoing, therefore, it is of no moment that the
petitioners made an admission of the existence of two escrow agreements. The fact remains that there is no valid and perfected contract of sale
involving the subject properties in this case.
In the same vein, respondents Dalida, et al. cannot be considered as
buyers in good faith. Primarily, they were aware that they were dealing
with respondent Madlangbayan as an agent of the petitioners. Therefore,
they were bound at their peril, in that in dealing with the agent, it
was incumbent upon them to ascertain the nature and extent of such
agent's authority.
79 Moreover, they were privy to and did not controvert the contents of
respondent Madlangbayan's letter dated April 10, 1996. Respondents also
failed to directly address why the letter rejecting their counter-offer
was dated later than the Deed of Sale; instead they merely deflected the issue by saying that respondent Madlangbayan never admitted that the
"rejection of the offer for P17,000,000.00" happened after the Deed of
Absolute Sale had been executed.
80 Remarkably, no explanation was offered to rationalize the situation.
Finally, the Court sustains the findings of the CA that respondents Go,
et al. cannot, as well, be considered as buyers in good faith
considering that at the time the Deed of Sale was executed in their
favor, there was an existing Notice of
Lis Pendens dated July 14, 1997, on the TCT of the subject properties. Furthermore, respondents
Go, et al. were likewise aware of the existence of
Kasunduan sa Pag-upa ng Lupa dated June 5, 2003, over the subject properties executed between the petitioners and one Diosdado Andal.
81Moreover, a simulated sale and all transactions subsequent thereto are void and conveys no title.
82 Consequently, the Deed of Sale between respondents Go, et al. and respondents Dalida, et al. is void.
In addition, as successors-in-interest, respondents Go, et al. stand
exactly in the shoes of their predecessor-in-interest, respondents
Dalida, et al. The latter, as buyers in a simulated sale acquired no
right of ownership over the subject properties and had nothing to
transfer to respondents Go, et al.
83There being no valid transfer of the subject properties, the petitioners remained to be the owners thereof.
As a final note, with the admission of Atty. Adasa that out of
inadvertence he failed to register the subject Deed of Absolute Sale,
the Court deems it appropriate to issue him a stern warning that a
repetition of the same or similar acts shall be dealt with more
severely. Time and again, the Court has constantly reminded Notaries
Public that their solemn duties are imbued with public interest and are
not to be taken lightly.
84 Hence, they must "observe with utmost care and fidelity the basic
requirements in the performance of their duties; otherwise, the
confidence of the public in the integrity of the notarized deeds will be undermined."
85WHEREFORE, in consideration of the foregoing disquisitions, the instant petition for review on
certiorari is
GRANTED. The Decision dated September 26, 2016 of the Court of Appeals in
CA-G.R. CV No. 105049, and its Resolution dated December 28, 2016, are
REVERSED and SET ASIDE. The Judgment dated December 10, 2014 of the Regional Trial Court of Batangas City, Branch 84, is hereby
REINSTATED.
In addition, for failure to register the Deed of Absolute Sale dated
April 8, 1996, presented to him for notarization, Atty. Henry Adasa is
STERNLY WARNED that a repetition of the same or similar acts in the future shall be
dealt with more severely. Let a copy of this Decision be furnished the
Office of the Bar Confidant, to be appended to his personal record.
chanroblesvirtualawlibrarySO ORDERED.Gesmundo, C.J., Caguioa, Carandang, and
Zalameda, JJ., concur.
chanrobleslawlibraryEndnotes:
1Rollo, pp. 10-47.
2 Id. at 48-68; penned by
Associate Justice Jane Aurora C. Lantion, with Associate Justices
Fernanda Lampas-Peralta and Nina G. Antonio-Valenzuela, concurring.
3 Id. at 69-71.
4 Id. at 51.
5 Id.
6 Id. at 13-14.
7 Id. at 14.
8 Id. at 52.
9 Id. at 15.
10 Id.
11 Id.
12 Id.
13 Id. at 53.
14 Id.
15 Id.
16 Id. at 54.
17 Rendered by Presiding Judge Paterno V. Tac-an. Id., records, vol. IV, p. 1028.
18Rollo, p. 54.
19 Penned by Associate
Justice Vicente S.E. Veloso, with Associate Justices Bienvenido L. Reyes (now a retired member of this Court) and Amelita G. Tolentino,
concurring. Rollo, p. 55, Records, Vol. V, pp. 2-13.
20 Id. at 55.
21 Id. at 55, 87.
22 Id.
23 Rendered by Presiding Judge Paterno V. Tac-an. Rollo, p. 56, records, vol. VI, pp. 277-288.
24 Id. at 56-57.
25 Id. at 57.
26 Penned by Associate
Justice Arcangelita M. Romilla-Lontok with Associate Justices Arturo G.
Tayag and Sixto C. Marella, Jr., concurring. Id., records, vol. VII, pp. 5-21.
27 Id., id. at 21.
28 Penned by Associate
Justice Stephen C. Cruz, with Associate Justices Isaias P. Dicdican and
Danton Q. Bueser, concurring. Id., id. at 32-33.
29 Id.
30 Id.
31 Id. at 58.
32 Rendered by Presiding Judge Dorcas P. Ferriols-Perez. Id. at 57, records, vol. VII, p. 183.
33 Id. at 49-51.
34 Id. at 58.
35 Id. at 48-68.
36 Id. at 68.
37 Id. at 60-62.
38 Id. at 63-65.
39 Id. at 67.
40 Id. at 69-71.
41 Id. at 18-19.
42 Id. at 30.
43 Id. at 86-98.
44 Id. at 90-92.
45Medina v. Mayor Asistio, Jr., 269 Phil. 225 (1990).
46Heirs of Policronio M. Ureta, Sr., et al. v. Heirs of Liberato M. Ureta, et al., 673 Phil. 188, 209 (2011).
47Riosa v. Tabaco La Suerte Corporation, 720 Phil. 586, 598 (2013).
48 Id.
49 CIVIL CODE, Article 1318.
50Clemente v. Court of Appeals, et al., 771 Phil. 113, 125-126 (2015).
51Heirs of Spouses Intac v. Court of Appeals, et al., 697 Phil. 373, 384 (2012), supra citing Sps. Lopez v. Sps. Lopez, 620 Phil. 368, 378-379 (2009).
52 CIVIL CODE, Article 1345, Heirs of Spouses Intac v. Court of Appeals, et al., supra.
53Yun Bun Guan v. Ong, 419 Phil. 845, 956 (001).
54Clemente v. Court of Appeals, et al., supra at 124.
55 CIVIL CODE, Article 1345.
56 CIVIL CODE, Article 1346.
57Ramos v. Heirs of Honorio Ramos Sr., 431 Phil. 337, 339 (2002).
58Tan v. Hosana, 780 Phil. 258, 266 (2016).
59Dantis v. Maghinang, Jr., 708 Phil. 575, 588-589 (2013), citing Jison v. CA, 350 Phil. 138, 173 (1998).
60Heirs of Spouses Intac v. Court of Appeals, et al., supra note 51 at 387-388.
61 CIVIL CODE, Article 1319; The Insular Life Assurance Co., Ltd. v. Asset Builders Corporation, 466 Phil. 751, 754 (2004).
62 CIVIL CODE, Article 1319.
63Clemente v. Court of Appeals, et al. supra note 50 at 123-124.
64Heirs of Fausto C. Ignacio v. Home Bankers Savings and Trust Company, et al., 702 Phil. 109, 121-122 (2013).
65 Records, Vol. II, p. 654.
66 Id.
67Bernardo v. Atty. Ramos, 433 Phil. 8, 16-17 (2002).
68 Cf. Id.
69Riosa v. Tabaco La Suerte Corporation, supra note 47 at 602.
70Rollo pp. 51-52.
71 Id. at 52, 14.
72 Id. at 52.
73 CIVIL CODE, Article 1919.
74Republic of the Philippines v. Judge Evangelista, 504 Phil. 115, 121 (2005).
75 CIVIL CODE, Article 1920.
76 Id.
77Sps. Viloria v. Continental Airlines, Inc., 679 Phil. 61, 75-76 (2012), citing Rallos v. Felix Go Chan & Sons Realty Corporation, 171 Phil. 222 (1978).
78Litonjua, Jr. v. Eternit Corporation, 523 Phil. 588, 608 (2006).
79Manila Memorial Park Cemetery, Inc. v. Linsangan, 485 Phil. 764, 779 (2004).
80Rollo p. 95.
81 Id. at 67.
82 Cf. Tolentino, et al. v. Sps. Latagan, 761 Phil. 108, 117 (2015).
83 Id.
84Dr. Malvar v. Atty. Baleros, 807 Phil. 16, 30-31 (2017).
85 Id. cralawredlibrary