HEIRS OF THE LATE JUAN AND JUANA GODEN REPRESENTED BY SOFRONIO GODEN DIZON, ALEJANDRO GODEN LORA AND/OR SEVERA GODEN SOLIS, PLAINTIFFS-APPELLEES, VS. SPOUSES BIENVENIDO AND FLOR…

Heirs of Goden versus Spouses Diapolit

The Case

This is a case about land, a defective sale, and the difference between a contract that never existed and one that merely was not fully paid. The Heirs of the late Juan and Juana Goden sued Spouses Bienvenido and Florencia Diapolit to recover two parcels of agricultural land in Sogod, Southern Leyte, one of which the spouses claimed to have bought from Arcadio Goden, one of the five Goden children. The action was one for accion publiciana, the recovery of the right of possession, with damages. The case matters for the bar because it draws a sharp line between lack of consideration, which voids a sale, and failure to pay the consideration, which does not; and because it shows how a seller who is only a co-owner can transfer no more than his own undivided share.

Procedural History

The Heirs of Goden filed their complaint for accion publiciana with damages before the Regional Trial Court, Branch 39, Sogod, Southern Leyte. After a full trial, the trial court ruled for the Heirs. It adjudged them the true owners of both parcels, declared the deed of sale executed by Arcadio Goden in favor of Bienvenido Diapolit null and void for lack of price certain or consideration, declared the area occupied by the spouses as owned pro indiviso by the Heirs, ordered the spouses to vacate and surrender possession, and condemned them to pay temperate, moral, and exemplary damages, attorney's fees, appearance fees, and costs. Spouses Diapolit appealed to the Court of Appeals, assigning as errors the existence of a perfected contract of sale, the bar of prescription, and the award of damages. The Court of Appeals resolved the appeal, and the matter reached the Supreme Court, which rendered the decision we study here.

Facts

During their lifetime, Spouses Juan and Juana Goden owned two parcels of land in Magcot, Mac, Sogod, Southern Leyte. The first parcel contained 3.2575 hectares and was covered by a tax declaration. The second parcel contained 2.3258 hectares and had been acquired from Crispolo Achecoso, whose name still appeared on the tax declaration. The spouses cultivated both parcels. They had five children: Hilario, Narcisa, Catalina, Arcadio, and Sofia, all surnamed Goden. After the parents died, the heirs appointed Placido Ramis, the husband of Catalina, as administrator. In 1952 Placido and Catalina moved to Mindanao and left administration to the family of Narcisa. In the late 1980s, the heir cultivating the land stopped visiting because of communist rebel activity in the area.

In about 1990 to 1991, the Heirs were surprised to find Spouses Diapolit in possession, harvesting abaca without their consent. The Heirs made repeated verbal demands to vacate, and the matter reached the Lupong Tagapamayapa of Mac, Sogod, Southern Leyte, but no settlement was reached. Hence the suit.

Spouses Diapolit answered that Arcadio Goden had sold one half portion of the second parcel to Bienvenido on April 30, 1979 for Five Thousand Pesos, by a private deed of sale, and that they had since possessed a little over one hectare of it. At trial it emerged that Bienvenido paid only One Thousand Two Hundred Pesos as initial payment, and for the balance of Three Thousand Eight Hundred Pesos he executed, through his wife Florencia, a promissory note dated May 30, 1979. Bienvenido never paid the balance.

Issues

• Whether or not ordinary acquisitive prescription barred the Heirs of Goden from recovering the portion of the second parcel occupied by Spouses Diapolit.
• Whether or not there was a perfected contract of sale between Arcadio Goden and Bienvenido Diapolit despite the private, unnotarized deed and the unpaid balance.
• Whether or not Bienvenido's failure to pay the balance of the consideration invalidated the sale.
• Whether or not the award of damages in favor of the Heirs of Goden had legal basis.

Applicable Provisions

Article 1117 of the Civil Code provides:

Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law.

This fixes the requirements of ordinary prescription, which the spouses invoked and which the Court found they did not meet.

Article 1134 of the Civil Code provides:

Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.

This supplies the ten-year period that presupposes good faith and just title.

Article 1358 of the Civil Code, as discussed in the decision, requires certain contracts, including those transmitting real rights over immovable property, to appear in a public document. The Court held that this form is not essential to validity but only for convenience, so the private deed of sale remained valid and binding between the parties.

Ruling

On prescription, the Court ruled for the Heirs. Ordinary acquisitive prescription demands possession in good faith and with just title for ten years. Bienvenido himself admitted on the witness stand that he knew Spouses Goden had five children, so he knew Arcadio could not dispose of the whole half portion, since Arcadio had four other siblings who were co-owners. A purchaser who knows of a defect or lack of title in his vendor cannot claim to have acquired title in good faith against the true owner. Lacking good faith and just title, the spouses could not count the ten-year period in their favor.

On the contract of sale, the Court ruled for the spouses. The unnotarized deed was a private document, but it was authenticated through Florencia's testimony, and the Heirs themselves offered the promissory note for the unpaid balance as rebuttal evidence, thereby impliedly admitting the deed. Citing Heirs of Gonzales versus Heirs of Perez, the Court held that the form required by Article 1358 is not essential to validity or enforceability but merely for convenience, and that even a verbal contract of sale of real estate produces legal effects between the parties.

On the unpaid balance, the Court again ruled for the spouses. A contract of sale is consensual, not real; it is perfected upon the meeting of the minds as to price. Citing Spouses Buenaventura and Joaquin versus Court of Appeals, the Court held that if there is a meeting of the minds as to the price, the sale is valid despite the manner of payment or even a breach of that manner. The Court put the distinction thus:

Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.

Since Arcadio was only a co-owner, however, he could validly dispose only of his one-fifth ideal share. The Heirs themselves conceded this in their Reply. One-fifth of 2.3258 hectares is 4,651.6 square meters, and at the intended price of about 0.43 pesos per square meter, the One Thousand Two Hundred Pesos actually paid corresponds to 2,791 square meters. The Court therefore adjudged that area to the spouses. Because the spouses were entitled to a portion of the second parcel, the award of damages could no longer stand.

Doctrine

A contract of sale is consensual and is perfected by the meeting of the minds as to the price; payment of the price goes to performance, not perfection. Failure to pay the consideration is not lack of consideration: the former leaves a valid contract under which the seller may demand fulfillment or cancellation, while the latter prevents a valid contract from arising. The form required by Article 1358 is not essential to validity but only for convenience, so an unnotarized deed of sale of real property is valid and binding between the parties. Ordinary acquisitive prescription under Articles 1117 and 1134 requires possession in good faith and with just title for ten years; a purchaser who knows that his vendor is not the sole owner cannot claim good faith. Finally, a co-owner can dispose only of his undivided ideal share, and a sale beyond that share transfers nothing as to the shares of the other co-owners.

Disposition

The appeal was partly granted: the trial court's judgment was modified as to the first parcel, which was left undisturbed, while the declarations voiding the sale, awarding the whole of the second parcel to the Heirs, and granting damages were set aside, and Spouses Diapolit were adjudged entitled to 2,791 square meters of the second parcel.

Remember This

Memorize the line: failure to pay the consideration is different from lack of consideration. Examiners use this case to test the consensual nature of sale, the non-essential form under Article 1358, and the limits of what a co-owner may validly sell.