BONIFACIO OLEGARIO AND ADELAIDA VICTORINO, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS, MANUEL RIVERA, PAZ OLEGARIO, AND SOCORRO OLEGARIO-TEVES, RESPONDENTS.

Spouses Marciliano Olegario and Aurelia Rivera-Olegario owned a
parcel of land measuring 91 square meters at 198 J.P. Rizal corner Antipolo
Streets, Caloocan City as evidenced by Transfer Certificate of Title (TCT) No.
124222 of the Register of Deeds of Caloocan City.^[1]

The Olegario couples were childless but reared and educated
private respondents Manuel Rivera, Paz Olegario, and Socorro
Olegario-Teves. Petitioner Bonifacio Olegario is the brother of
Marciliano while petitioner Adelaida Victorino is the niece of Aurelia.

On March 19, 1986,
Aurelia Rivera-Olegario died at the
age of eighty-three (83). To preclude
her heirs from inheriting and to avoid payment of taxes, Marciliano, then
eighty (80) years old, executed on April 15, 1986 a Deed of Absolute Sale of
the subject property in favor of private respondents.^[2] The purported consideration was FIFTY
THOUSAND PESOS (P50,000.00). The
contract of sale was not registered.

On March 10, 1988,
Marciliano died intestate. Petitioners
Bonifacio Olegario and Adelaida Victorino were the sole heirs of spouses
Olegario. On May 23, 1989, they
executed a Deed of Extra-judicial Settlement of Estate^[3] covering the subject lot which was published
in the Metropolitan Newsweek for three (3) consecutive weeks. On July 13, 1989, the said Extra-judicial
Settlement was recorded in the Register of Deeds of Caloocan City. TCT No. C-124222 was then cancelled and TCT
No. 190363 was issued in their
names.^[4]

On August 1, 1989,
petitioners sold the subject lot for TWO HUNDRED THOUSAND PESOS (P200,000.00)
to Elena Adaon and Nestor Tejon.^[5] TCT No. 190132 was then issued in vendees’
names.

Private respondents alleged that the Extra-­judicial Settlement
came to their knowledge only on August 21, 1989. On that same day, they tried to register their contract of sale
three (3) years from its execution. The
registration was denied as the
subject property has been
transferred to Elena Adaon and Nestor Tejon.

The fight for ownership of the subject lot ensued. Private respondents filed Civil Case No.
C-13973 for Annulment of Extra-judicial Settlement of Estate and Damages
against petitioners.^[6] As
special and affirmative defense, petitioners assailed the Deed of Absolute Sale
between Marciliano Olegario and private respondents. On the other hand, cross-claimants Elena Adaon and Nestor Tejon
maintained they were buyers in good faith and for value.

In due course, the trial court ruled in favor of private
respondents. It annulled the
Extra-judicial Settlement of the subject lot and its sale to Adaon and Tejon, viz:

“WHEREFORE, the judgment is rendered for the plaintiffs and
against the herein defendants, as follows:

“a) The extra-judicial settlement of estate
executed by defendants Bonifacio Olegario and Adelaida Victorino on May 23,
1989 as well as Transfer Certificates of Title issued subsequent thereto,
namely TCT No. 190363 in the name of Bonifacio Olegario and Adelaida Victorino
and TCT No. 190132 in the name of Elena Adaon and Nestor Tejon are hereby
declared NULL and VOID and without legal force and effect;

“b) The Register of Deeds of Kaloocan City is
hereby ordered to issue unto the herein plaintiffs new title in lieu of the
aforesaid cancelled titles in the name of the deceased Marciliano Olegario
married to Aurelia R. Olegario containing the same entry and/or inscription
before said Title No. 124222 was canceled;

“c) Defendants Bonifacio Olegario and Aurelia
Victorino Rivera are hereby ordered to pay the herein plaintiffs, jointly and
severally, the amount of P30,000.00 as nominal damages and the further sum of
P10,000.00 for and/as attorney’s fees; and

“d) To pay costs of suit.

“With regards to the cross-claim of defendants Elena Adaon and
Nestor Tejon, judgment is hereby rendered against Bonifacio Olegario and
Adelaida Victorino who are hereby ordered as follows:

“a) Defendant Bonifacio Olegario is hereby
ordered to pay cross-claimants Elena Adaon and Nestor Tejon in the amount of
P60,000.00 with legal interest from August 1, 1989;

“b) Defendant Adelaida Victorino is hereby
ordered to pay cross-claimants Elena Adaon and Nestor Tejon in the amount of
P30,000.00 with legal interest from August 1, 1989;

“c) Defendants Bonifacio Olegario and Adelaida
Victorino, jointly and severally, to pay cross-claimants the amount of
P5,000.00 for and/as attorney’s fees;

“Counter-claim interposed by herein defendants and
cross-claimants are hereby DISMISSED for lack of evidence to support the same.

“SO ORDERED.”^[7]

Petitioners elevated the
case to respondent Court of Appeals. On
January 7, 1992, the Sixteenth Division of respondent court affirmed the
impugned Decision with modifications, viz:

“WHEREFORE, except for the following modifications, to wit:

a) The
extra-judicial settlement of estate executed by defendants-appellants Bonifacio
Olegario and Adelaida Victorino on May 23, 1989 as well as Transfer
Certificates of Title issued subsequent thereto, namely TCT No. 190363 in the
name of Bonifacio Olegario and Adelaida Victorino and TCT No. 190132 in the
name of cross-appellants Elena Adaon and Nestor Tejon are hereby declared NULL
and VOID and without legal force
and effect with respect to 3/4 portion of the subject lot pertaining to the
plaintiffs-appellees;

b) The Register of
Deeds of Caloocan City is hereby ordered to issue unto the herein
plaintiffs-appellees new title corresponding to the 3/4 part of the disputed
lot; and to cancel TCT No. 190363 in the name of defendants-appellants
Bonifacio Olegario and Adelaida Victorino and TCT No. 190132 in the name of
cross­-claimants-appellants Elena Adaon and Nestor Tejon, and issue in lieu thereof new title
corresponding only to 1/4 portion of the subject property; and

c) Defendants-appellants Bonifacio Olegario and
Adelaida Victorino are hereby ordered to pay the herein plaintiffs?appellees,
jointly and severally, the amount of P10,000.00 as nominal damages and the
further sum of P5,000.00 for and/as attorney’s fees, the appealed decision is
hereby AFFIRMED in all other respects. No costs.

SO ORDERED.”^[8]

Petitioners now claim that respondent court erred in the
following wise:

I

THAT THE RESPONDENT COURT OF APPEALS
GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO RESOLVE PETITIONERS’ SECOND
ASSIGNMENT OF ERROR BEFORE IT AND CLOSING ITS EYES ON THE EVIDENCE ON RECORD PATENTLY ERRED IN NOT DECLARING THAT
THE PURPORTED DEED OF ABSOLUTE
SALE BETWEEN MARCILIANO OLEGARIO AND THE PRIVATE RESPONDENTS IS NULL AND VOID
FOR BEING ABSOLUTELY SIMULATED AND FICTITIOUS AND FOR BEING VIOLATIVE OF
ARTICLE 130 OF THE FAMILY CODE.

II

THAT THE RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN SUSTAINING THE EFFICACY OF THE UNRECORDED DEED OF ABSOLUTE
SALE OVER THAT OF THE EXTRA-JUDICIAL
SETTLEMENT OF ESTATE WHICH WAS EXECUTED AND RECORDED IN GOOD FAITH,
CONTRARY TO THE EXPRESS PROVISIONS OF ARTICLE 1544 OF THE CIVIL CODE.

III

THAT THE RESPONDENT COURT OF APPEALS
PATENTLY ERRED IN HOLDING THAT CROSS-CLAIMANTS ELENA ADAON AND NESTOR TEJON ARE
NOT BUYERS IN GOOD FAITH OF THE SUBJECT PROPERTY.

IV

THAT THE RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN AWARDING P30,000.00 NOMINAL DAMAGES AND P10,000.00 ATTORNEY’S
FEES IN FAVOR OF THE PRIVATE
RESPONDENTS DESPITE THE PATENT ABSENCE OF FACTUAL AND LEGAL BASIS THEREFORE.

We find merit in the petition.

There is no question that petitioners are the lawful heirs of
spouses Olegario. Under Article 160 of
the New Civil Code, the subject lot is presumed to be conjugal property. The death of Aurelia Rivera-Olegario on
March 19, 1986 dissolved the conjugal partnership. By virtue of such dissolution, 1/2 of the property should
appertain to Marciliano as his share from the conjugal estate plus another 1/4
representing his share as surviving spouse of Aurelia.^[9]
Petitioner Adelaida Victorino, as the sole surviving niece of Aurelia, is
entitled to the other 1/4 of the lot.^[10] When
Marciliano died intestate on March 10, 1986, petitioner Bonifacio Olegario, the
only surviving brother of Marciliano, stepped into his shoe.

We shall now determine whether the inheritance right of
petitioners can be prejudiced by the sale of the subject lot by the deceased
Marciliano to private respondents. In a
contract of sale, consideration is, as a rule, different from the motive of the
parties. Consideration is defined as
some right, interest, benefit, or advantage conferred upon the promisor, to
which he is otherwise not lawfully entitled, or any detriment, prejudice, loss,
or disadvantage suffered or undertaken by the promisee other than to such as he
is at the time of consent bound to suffer.^[11] As
contradistinguished, motive is the condition of mind which incites to action,
but includes also the inference as to the existence of such condition, from an
external fact of a nature to produce such a condition.^[12]
Under certain circumstances, however, the motive of the parties may be regarded
as the consideration when it predetermines the purpose of the contract.^[13]
When they blend to that degree, and the motive is unlawful, then the contract
entered into is null and void.^[14]

In the case at bench, the
primary motive of Marciliano in selling the controverted 91-square meter lot to
private respondents was to illegally frustrate petitioners’ right of
inheritance and to avoid payment of estate tax. This was unabashedly admitted by witness Susan Rivera, wife of
private respondent Manuel Rivera, on cross-examination. She declared:

Atty. Meris: (p. 12, TSN, June 18, 1991 [sic])

x x x                                              x x x                                         x x x

“Q : You mean to say that despite of your claim that your husband is
the son of Marciliano Olegario and Aurelia Olegario, they still executed a deed
of absolute sale over the said lot owned by your parents in law in favor of
your husband and his two sisters?

A :  It was decided that way to avoid paying tax, sir.

Q : In other words the sale was only fictitious or was only made in a way of
avoiding paying taxes?

A :  It was not that way but
my parents in law
were just avoiding distant
relatives who might claim
it.”^[15]

x x x                                              x x x                                         x x x

Atty. Buenaventura: (p. 15, TSN, June 18, 1990)

“Q : And as a husband(sic) of Manuel you are familiar of the
reason why this deed of sale was executed?

A : I have stated earlier that my father
in law sold
it to them for the reason
that he would not want the said property to be given to another party, sir.

Q
: In other words,
it was not really intended as honest to
goodness sale between the former owner and Manuel Rivera, your husband and
her sister? (sic)

A :  Yes, sir.”^[16]

x x x                                              x x x                                         x x x

We also note that in
their comment, rejoinder, and memorandum private respondents did not refute
petitioners’ charge that the said sale is fictitious. The conclusion is thus
inescapable that the purported sale of April 15, 1986 of the subject lot is
null and void. Illegal motive
predetermined the purpose of the contract.^[17]

In addition, the trial
court and respondent court failed to consider the lack of cause in the alleged deed of sale of 1986.^[18] The evidence does not show that private
respondents had FIFTY THOUSAND PESOS (P50,000.00) and paid the same to
Marciliano. Private respondents
allegedly borrowed THIRTY THOUSAND PESOS (P30,000.00) from the cooperative of
Mary Help of Christian Parish to prove their financial capacity. However, they floundered in their cross-examinations.

Atty. Meris: (cross-examination of respondent Manuel Rivera) (p. 39, TSN, June 4,
1990)

x x x                                              x x x                                         x x x

“Q : And how much did you buy
the said property?

A :  P50,000.00, sir.

Q : And did you bring this money at the City
Hall?

A :  No, sir.

Q : Did you give your
father the said amount?

A
: We spent it
for the treatment
of my father,
for payment of the
real estate tax and burial of my mother Aurelia Olegario sir. (Underscore
supplied).”^[19]

x x x                                              x x x                                         x x x

Atty. Buenaventura on cross-examination of Paz Olegario
(respondent), pp. 22, TSN, June 23, 1990.

x x x                                              x x x                                         x x x

“Q : Do you know how much was paid?

A :  P50,000.00, sir

Q : Was it paid in cash or in other form?

x x x                                              x x x                                         x x x

A :  No, sir.

Q : What do you mean by “no sir.”

Atty. Buenaventura:

May
we make on record that the witness is
having difficulty in answering the question despite being repeatedly interpreted the meaning of the question propounded on to.”

x x x                                              x x x                                         x x x

“Q : When was the money given,
after it (Deed of Sale) was executed on April
15, 1986?

A :  Last week of April, sir.

Q : Do you know where the money came from?

Atty. Buenaventura:

May we manifest to the Honorable Court that there are some signal coming from the other witness that has been presented before the Honorable Court and it seems that the witness is getting clue from the other witness. (Underscore
supplied)”^[20]

Applying Articles 1352
and 1409^[21] of the Civil Code in relation to the
indispensable requisite of a valid cause, we hold that the alleged deed of sale
is void.

It is also obvious to the
eye that the contract of sale in 1986 is unregistered. Section 51 of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, provides that “[T]he act
of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned.” Thus, even if the contract of sale is valid,
it cannot adversely affect third persons because of its non-registration. More specifically, it cannot prejudice
petitioners as well as Elena Adaon and Nestor Tejon.

IN VIEW WHEREOF, the Decision of respondent court dated
January 7, 1992 is REVERSED and SET ASIDE; the Complaint in Civil Case No.
C-13973 is ordered DISMISSED. No costs.

SO ORDERED.

Narvasa, C.J., (Chairman), Regalado, and Mendoza, JJ., concur.

^[1] Rollo p. 9, Petition p. 3, Exhibit “A.”

^[2]
Exhibit “B.”

^[3]
Exhibit “C.”

^[4]
Rollo p. 10, Petition p. 4.

^[5]
Id.

^[6]
Civil Case No. C-13973, Regional Trial Court of Caloocan City, National Capital
Judicial Region, Branch 123.

^[7]
Rollo pp. 38-39, Court of Appeals Decision pp. 3-4.

^[8]
Victor, Luis L., J. Ponente, Kapunan, Santiago
M., and Chua, Segundino G., JJ. Concurring.

^[9]
Rollo p. 40, Court of Appeals Decision p. 5.

Civil Code, Article 1001.

“Should brothers and sisters or
their children survive with the widow or widower, the latter shall be entitled
to one-half of the inheritance and the brothers and sisters or their children
to the other half.”

^[10]
Supra.

^[11]
Gabriel vs. Monte de Piedad y Caja de Ahorros and The Court of Appeals,
71 Phil. 497 [1941].

^[12]
Words and Phrases, Vol. 27A, [1961], p. 384.

^[13]
See Liguez vs. The Hon. Court of Appeals, 102 Phil. 577 [1957]
cited in The Civil Code of the Philippines, Aquino, R., Vol. 2, 1990 Edition,
p. 424.

^[14]
See E. Razon, Inc. vs.
Philippine Ports Authority No. L-75197, June 22, 1987, 151 SCRA 233.

^[15]
Rollo pp. 18-19, Petition
pp. 12-13.

^[16]
Id., p. 19.

^[17]
Avoidance of tax payment under National Internal Revenue Code, Section 253 and
to defeat petitioners’ right of inheritance.

^[18]
Civil Code, Article 1352.

“Contracts without cause, or
with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good
customs, public order or public policy.”

^[19]
Rollo p. 19, Petition p. 13.

^[20]
Id., pp. 23-24.

^[21]
Civil Code, Article 1409.

“The
following contracts are inexistent and void from the beginning:

x x x                             x x x                             x x x

(3) Those whose cause or object
did not exist at the time of the transaction;”