ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS, MAXIMINA BAGNAS, SIXTO BAGNAS, AND AGATONA ENCARNACION, PETITIONERS, VS. HON. COURT OF APPEALS, ROSA L. RETONIL, TEOFILO ENCA…

The facts underlying this
appeal by certiorari are not in dispute.

Hilario Mateum of Kawit, Cavite, died on March 11,
1964, single, without ascendants or descendants, and survived only by collateral
relatives, of whom petitioners herein, his first cousins, were the
nearest.  Mateum
left no will, no debts, and an
estate consisting of twenty-nine parcels of land in Kawit
and Imus, Cavite, ten of which are involved in this appeal.^[1]

On April 3, 1964, the
private respondents, themselves collateral relatives of Mateum
though more remote in degree than the petitioners,^[2] registered with the Registry of Deeds for
the Province of Cavite two deeds of sale purportedly
executed by Mateum in their (respondents’)
favor covering ten parcels of land. 
Both deeds were in Tagalog, save for the
English descriptions of the lands conveyed under one of them; and each recited
the consideration of the sale to be “*** halagang
ISANG PISO (P1.00), salaping Pilipino, at mga naipaglingkod, ipinaglilingkod at ipaglilingkod sa aking kapakanan
***” (“the sum of ONE PESO (P1.00), Philippine Currency, and services
rendered, being rendered and to be rendered for my benefit”).  One deed was dated February
6, 1963 and covered five parcels of land, and the other was dated March 4,
1963, covering five
other parcels, both, therefore, antedating Mateum’s
death by more than a year.^[3] It is asserted by the petitioners, but
denied by the respondents, that said sales
notwithstanding, Mateum continued in the possession of the lands purportedly conveyed until his death, that he remained the
declared owner thereof and that the tax payments thereon continued to be
paid in his name.^[4]
Whatever the truth, however, is not crucial. 
What is not disputed is
that on the strength of the deeds of sale, the respondents were able to secure
title in their favor over three of the ten parcels of land conveyed thereby.^[5]

On May 22,
1964 the petitioners
commenced suit against the respondents in the Court of First Instance of Cavite, seeking annulment of the deeds of sale as
fictitious, fraudulent or falsified, or, alternatively, as donations void
for want of acceptance embodied in a public instrument.  Claiming ownership pro indiviso of the lands subject of the deeds by virtue
of being intestate heirs of Hilario Mateum, the petitioners prayed for recovery of ownership
and possession of said lands, accounting of the fruits thereof and
damages.  Although the complaint
originally sought recovery of all the
twenty-nine parcels of land left by Mateum, at the
pre-trial the parties agreed that the controversy be limited to the ten parcels
subject of the questioned sales, and the Trial Court ordered the exclusion of
the nineteen other parcels from the action.^[6] Of the ten parcels which remained in
litigation, nine were assessed
for purposes of taxation at values aggregating P10,500.00.  The record does not disclose the assessed
value of the tenth parcel, which has an area of 1,443 square meters.^[7]

In answer to the
complaint, the defendants (respondents here) denied the alleged fictitious or
fraudulent character of the sales in their favor, asserting that said sales
were made for good and valuable consideration; that while “*** they may
have the effect of donations, yet the formalities and solemnities of donation
are not required for their validity and effectivity,
***;” that defendants were collateral relatives of Hilario
Mateum and had done many good things for him, nursing
him in his last illness, which services constituted the bulk of the consideration
of the sales; and (by way of affirmative defense) that the plaintiffs could not
question or seek annulment of the sales because they were mere collateral
relatives of the deceased vendor and were not bound, principally or subsidiarily, thereby.^[8]

After the plaintiff’s had
presented their evidence, the defendants filed a motion for dismissal — in
effect, a demurrer to the evidence — reasserting the defense set up in their
answer that the plaintiffs, as mere collateral relatives of Hilario
Mateum, had no right to impugn the latter’s
disposition of his properties by means of the questioned conveyances and
submitting, additionally, that no evidence of fraud tainting said transfers had
been presented.^[9]

The Trial Court granted
the motion to dismiss, holding (a) on the authority of Armentia
vs. Patriarca,^[10] that the plaintiffs, as mere collateral relatives, not forced heirs, of Hilario Mateum, could not legally question the disposition made by said deceased during his
lifetime, regardless of whether, as a matter of objective reality, said dispositions
were valid or not; and (b) that the plaintiffs’ evidence of alleged fraud was
insufficient, the fact that the deeds of sale each stated a consideration of
only P1.00 not being in itself evidence of fraud or simulation.^[11]

On appeal by the
plaintiffs to the Court of Appeals, that Court affirmed, adverting with
approval to the Trial Court’s reliance on the Armentia
ruling which, it would appear, both
courts saw as denying, without exception, to collaterals, of a decedent, not
forced heirs, the right to impugn the latter’s dispositions inter
vivos of
property.  The Appellate Court also analyzed the
testimony of the plaintiffs’
witnesses, declared that it failed to establish fraud of any kind or that Mateum had continued paying taxes on the lands in question
even after executing the deeds conveying them to the defendants, and closed
with the statement that “*** since in duly notarized and registered deeds of sale consideration is presumed, we do not find it necessary to rule on the alternative
allegations of the appellants that the said deed of sale were (sic) in reality donations.”^[12]

One issue clearly
predominates here.  It is whether, in
view of the fact that, for properties assuredly worth in actual value many
times over their total assessed valuation of more than P10,000.00,
the questioned deeds of sale each state a price of only one peso
(P1.00) plus unspecified past, present and future services to which no value is
assigned, said deeds were void or inexistent from the beginning (“nulo“) or merely voidable,
that is, valid until annulled.  If they
were only voidable, then it is a correct proposition
that since the vendor Mateum had no forced heirs
whose legitimes may have been impaired, and the
petitioners, his collateral relatives, not being bound either principally or subsidiarily to the terms of said deeds, the latter had and
have no actionable right to question those transfers.

On the other hand, if
said deeds were void ab initio
because to all intents and purposes without consideration, then a different
legal situation arises, and quite another result obtains, as pointed out by the
eminent civil law authority, Mr. Justice J.B.L. Reyes who, in his concurring
opinion in Armentia, said:

“I *** cannot bring myself to agree to the proposition that
the heirs intestate would have no legal standing to contest the conveyance made
by the deceased if the same were made without any consideration, or for a false
and fictitious consideration.  For under the Civil Code of the Philippines, Art. 1409, par. 3, contracts with a cause that did not
exist at the time of the transaction are inexistent and void from the
beginning.  The same is true of contracts
stating a false cause (consideration) unless the persons interested in
upholding the contract should prove that there is another true and lawful
consideration therefor.  (Ibid., Art.
1353).

If therefore the contract has no causa
or consideration, or the causa is false and
fictitious (and no true hidden causa is
proved) the property allegedly conveyed never really leaves the patrimony of
the transferor, and upon the latter’s death without a testament, such property would pass to the
transferor’s heirs intestate and be recoverable by them or by the Administrator
of the transferor’s estate.  In this
particular regard, I think Concepcion vs. Sta. Ana,
87 Phil. 787 and Solis vs. Chua Pua Hermanos, 50 Phil. 536, do not correctly state the present
law, and must be clarified.”

To be sure the quoted passage does not reject —
and is not to be construed as rejecting — the Concepcion
and Solis rulings^[13] as outrightly
erroneous, far from it.  On the contrary,
those rulings undoubtedly read and applied correctly the law extant in their
time:  Art. 1276 of the Civil Code of
1889 under which the statement of a false cause in a contract rendered it voidable only, not void ab
initio. 
In observing that they “*** do not correctly state the present law
and must be clarified,” Justice Reyes clearly had in mind the fact that
the law as it is now (and already was in the time of Armentia)
no longer deems contracts with a false cause, or which are absolutely simulated
or fictitious, merely voidable, but declares them
void, i.e., inexistent (“nulo“)
unless it is shown that they are supported by another true
and lawful cause or consideration.^[14] A logical consequence of that change in the
juridical status of contracts without, or with a false, cause is that
conveyances of property affected with such a vice cannot operate to
divest and transfer ownership, even if unimpugned.  If afterwards the transferor dies the
property descends to his heirs, and without regard to the manner in which they
are called to the succession, said heirs may bring an action to recover the property
from the purported transferee.  As
pointed out, such an action is
not founded on fraud, but on the premise that the property never leaves the
estate of the transferor and is transmitted upon his death to heirs, who would
labor under no incapacity to maintain the action from the
mere fact that they may be only collateral relatives and bound neither
principally or subsidiarily under the deed or contract of conveyance.

In Armentia the
Court determined that the conveyance questioned was merely annullable, not void
ab initio,
and that the plaintiff’s action was
based on fraud vitiating said conveyance.  The
Court said:

“Hypothetically admitting the truth of these allegations (of
plaintiff’s complaint), the conclusion is irresistible that the sale is merely voidable.  Because
Marta Armentia executed the document, and this is not
controverted by plaintiff.  Besides, the fact that the vendees were minors, makes the contract, at worst, annullable by them.  Then again, inadequacy of consideration does
not imply total want of consideration. 
Without more, the purported acts of Marta Armentia
after the sale did not indicate that the said sale was void from the beginning.

The sum total of all these is that, in essence, plaintiff’s case is bottomed on fraud, which renders the contract voidable.”

It therefore seems clear
that insofar as it may be considered as setting or reaffirming precedent,
Armentia only ruled that transfers made by a
decedent in his lifetime, which are voidable
for having been fraudulently made or obtained, cannot be posthumously impugned
by collateral relatives succeeding to his estate who are not principally or subsidiarily bound by such transfers.  For the reasons already stated, that ruling
is not extendible to transfers which, though made under closely similar
circumstances, are void ab initio
for lack or falsity of consideration.

The petitioners here
argue on a broad front that the very recitals of the questioned deeds of sale reveal
such want or spuriousness of consideration and therefore the void character of said sales.  They:

1.  advert to a decision of
the Court of Appeals in Montinola vs. Herbosa (59 O.G. No.
47, pp. 8101, 8118) holding that a price of P1.00 for the sale of things worth
at least P20,000.00 is so insignificant as to amount to no
price at all, and does not satisfy the law which, while not requiring for the
validity of a sale that the price be adequate, prescribes that it must be real,
not fictitious, stressing the obvious
parallel between that case and the present one in stated price and
actual value of the property sold;

2.  cite Manresa
to the same effect:  that true price,
which is essential to the validity of a sale, means existent, real and
effective price, that which does not consist in an insignificant amount as,
say, P.20 for a house; that it is not the same as the concept of a just price which entails weighing and
measuring, for economic equivalence, the amount of price against all the factors that determine the value of the
thing sold; but that there is no need of such a close examination when the
immense disproportion between such economic values is patent — a case of
insignificant or ridiculous price, the unbelievable amount of which at once
points out its inexistence;”^[15]

3.  assert
that Art. 1458 of the Civil Code, in prescribing that a sale be for a “***
price certain in money or its equivalent ***,” requires that
“equivalent” be something representative of money, e.g.,
a check or draft, again citing Manresa^[16]
to the effect that services are not the equivalent of money insofar as said
requirement is concerned and that a contract
is not a true sale where the price consists of services or prestations;

4.  once more citing Manresa,^[17]
also point out that the “services” mentioned in the questioned deeds
of sale are not only vague and
uncertain, but are unknown and not susceptible of determination without the
necessity of a new agreement between the parties to said deeds.

Without necessarily
according all these assertions its
full concurrence, but upon the
consideration alone that the apparent gross, not to say
enormous, disproportion between the stipulated price (in each deed) of P1.00
plus unspecified and unquantified services and the undisputably valuable real estate allegedy
sold — worth at least P10,500.00 going only by assessments for tax purposes
which, it is well-known, are notoriously low indicators of actual value —
plainly and unquestionably demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause having been
shown, the Court finds both said deeds, insofar as they purport to be sales,
not merely voidable, but void ab
initio.

Neither can the validity
of said conveyances be defended on the theory that their true causa is the
liberality of the transferor and they may be considered in reality donations,^[18] because the law^[19] also prescribes that donations of
immovable property, to be valid, must be made and accepted in a
public instrument, and it is not denied by the respondents that there has been no
such acceptance which they claim is not
required.^[20]

The transfers in question
being void, it follows as a necessary consequence and conformably to the
concurring opinion in Armentia, with which the
Court fully agrees, that the properties purportedly conveyed remained part of
the estate of Hilario Mateum,
said transfers notwith­standing, recoverable by his intestate heirs, the
petitioners herein, whose status as
such is not challenged.

The private respondents
have only themselves to blame for the lack of proof that might have saved the
questioned transfers from the taint of invalidity as being fictitious and
without licit cause; proof, to be brief, of the character and value of the
services, past, present and future, constituting — according to the very terms
of said transfers — the principal consideration therefor.  The
petitioners’ complaint (par. 6)^[21] averred that the transfers were “***
fraudulent, fictitious and/or falsified and (were) *** in reality donations of immovables ***,” an averment that the private
respondents not only specifically denied, alleging that the transfers had been
made “*** for good and valuable consideration ***,” but to which they
also interposed the affirmative defenses that said transfers were
“***’ valid, binding and effective ***,” and, in an obvious
reference to the services mentioned in the deeds, that they “*** had done
many good things to (the transferor) during his lifetime, nursed him during his
ripe years and took care of him during his previous and last illness ***,”
(pars. 4, 6, 16 and 17, their answer).^[22]
The onus, therefore, of showing the existence of valid and licit
consideration for the questioned conveyances rested on the private respondents. 
But even on a contrary assumption,
and positing that the petitioners initially had the burden of showing that the
transfers lacked such consideration as they alleged in their complaint, that
burden was shifted to the private respondents when the petitioners presented
the deeds which they claimed showed that defect on their face and it became the
duty of said respondents to offer evidence of existent, lawful consideration.

As the record clearly
demonstrates, the respondents not only failed to offer any proof
whatsoever, opting to rely on a demurrer to the petitioners’ evidence and upon
the thesis, which they have maintained all the way to this Court, that petitioners, being mere
collateral relatives of the deceased transferor, were without right to the conveyances in question.  In effect, they gambled their right to adduce
evidence on a dismissal in the Trial Court and lost, it being the rule that
when a dismissal thus obtained is reversed on appeal, the movant
loses the right to present evidence in his behalf.^[23]

WHEREFORE, the appealed Decision of the Court of Appeals
is reversed.  The questioned transfers
are declared void and of no force or effect. 
Such certificates of title as the private respondents may have obtained over the properties subject of said
transfers are hereby annulled, and said respondents are ordered to return to
the petitioners possession of all the properties
involved in this action, to
account to the petitioners for the fruits thereof during the period of their
possession, and to pay the
costs.  No damages, attorney’s fees or
litigation expenses are awarded, there being
no evidence thereof before the Court.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

^[1]
Rollo, pp. 3, 50, 51.

^[2]
Id.; two of
the respondents are nephews, and the third is a niece, of Mateum;
Rollo, p. 50.

^[3]
record on appeal,
pp. 15-25.

^[4]
petitioners‘ brief, p. 8; respondents’ brief, p. 5.

^[5]
record on appeal, pp. 11, 26.

^[6]
record on appeal, pp. 35-39.

^[7]
supra; id., pp. 15-25.

^[8]
id., pp. 25-32.

^[9]
record on appeal, pp. 43-49.

^[10]
18 SCRA 1253.

^[11]
record on appeal,
pp. 79-89.

^[12]
Rollo, pp. 30-40.

^[13]
Solis, the earlier case (the correct volume and page citation of which
is 50 Phil. 636), held that a voluntary conveyance, without any consideration
whatever, is prima facie good as between the parties.  In
Concepcion, the Court ruled that the surviving
brother of a decedent cannot bring action to annul, for being based on a false or fictitious consideration, a sale of
real property made by the latter in her lifetime; this because the effect of a
false consideration was limited to making the contract voidable,
and the action to annul voidable contracts could only
be brought by the persons bound thereto or by the heir/s to whom the rights and
obligations arising from such contracts are transmitted.

^[14]
Arts. 1353 and 1409, Civil Code of
the Philippines.

^[15]
Vol. 10, 3rd. ed., p. 47.

^[16]
Vol. 8, 3rd ed., pp. 59-60.

^[17]
Vol. 10, 3rd ed., pp. 47-48.

^[18]
Art. 1471, Civil Code
of the Philippines.

^[19]
Art. 749, id.

^[20]
Answer to the Complaint; record on appeal,
p. 27.

^[21]
record on appeal, p. 11.

^[22]
record on appeal, pp. 25-26, 29-30.

^[23]
Rule 35, Sec. 1, Rules of Court; Siayngco vs. Costibolo, 27 SCRA 272, 283-384.