CORNELIA BALADAD (REPRESENTED BY HEINRICH M. ANGELES AND REX AARON A. BALADAD), PETITIONER, VS. SERGIO A. RUBLICO AND SPOUSES LAUREANO F. YUPANO, RESPONDENTS.

Baladad versus Rublico

The Case

This is a petition for review brought by Cornelia Baladad against Sergio Rublico and the spouses Laureano and Felicidad Yupano, arising from a complaint for annulment of sale, cancellation of title, and damages over two parcels of land in Makati. The case matters because it gathers in one decision several rules a Bar candidate must command: the severability of contracts contained in a single instrument, the requisites of a valid contract of sale, the perfection of sale by mere meeting of the minds, the principle that no one can give what he does not have, and the standard of a buyer in good faith as against one who closes his eyes to facts that should provoke inquiry.

Procedural History

Cornelia filed her complaint for annulment of sale, cancellation of title, and damages before Branch 133 of the Regional Trial Court of Makati City. After trial, the court ruled in her favor, declaring the affidavits of adjudication and the sale to the Yupanos void, ordering the cancellation of the Yupano titles and the restoration of the original title, and awarding moral damages, attorney's fees, and costs. The respondents appealed to the Court of Appeals, which reversed and set aside the trial court's decision. The appellate court declared the deed of extrajudicial settlement with absolute sale void, upheld Sergio's affidavit of self-adjudication, and pronounced the Yupanos purchasers in good faith and lawful owners. Cornelia moved for reconsideration, but the motion was denied. She then came to the Supreme Court by petition for review.

Facts

Two parcels of land in Makati were registered in the name of Julian Angeles in December 1965. In December 1968, Julian married Corazon Rublico; both were already in their sixties. Corazon had a son by an earlier partner, the respondent Sergio Rublico. Julian died in February 1969, leaving his wife Corazon and his brother Epitacio as his heirs.

On February 4, 1985, while Corazon lay on her death bed, a notary public, Atty. Julio Francisco, was brought to her house and notarized a document entitled Extrajudicial Settlement of Estate with Absolute Sale. Under it, Corazon and Epitacio, through his attorney-in-fact Vicente Angeles, adjudicated the two lots to themselves, three fourths to Corazon and one fourth to Epitacio, and then sold both shares to Cornelia Baladad, Epitacio's daughter, for 107,750 pesos. Corazon affixed her thumbmark after the notary read and explained the contents in Tagalog. Cornelia did not sign the document. Corazon died two days later.

Title remained in Julian's name. More than two years after Corazon's death, Sergio executed an affidavit of adjudication as sole heir, adjudicating the same lots to himself. He then secured a reconstituted owner's duplicate title in his name, and in May 1988 sold the two lots to the spouses Yupano for 100,000 pesos. New titles were issued to the Yupanos, later replaced by two separate certificates. Meanwhile, seven families occupied the lots and paid rentals, first to Julian and Corazon, then to Cornelia through an agent, and later to Cornelia's brother Vicente when she moved to the United States. The Yupanos lived only a block away, and Laureano had known the families and had verified that tenants were paying rentals to Vicente before he bought. Cornelia annotated her adverse claim on the Yupano titles in July 1990.

Issues

• Whether or not the Extrajudicial Settlement of Estate with Absolute Sale executed by Corazon two days before her death is valid.
• Whether or not the absence of Cornelia's signature on the deed prevents the perfection of the sale in her favor.
• Whether or not Sergio acquired ownership of the lots that he could validly transmit to the spouses Yupano.
• Whether or not the spouses Yupano were purchasers in good faith and for value.

Applicable Provisions

Article 1318 of the Civil Code provides:

There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established.

The Court uses these requisites to test the validity of each of the two contracts contained in the single document.

Article 1475 of the Civil Code provides:

The contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.

This provision supplies the answer to the missing signature of Cornelia, since perfection does not depend on the form of the writing.

Ruling

On the first issue, the Court upheld the validity of the deed. The document contains two contracts, the extrajudicial adjudication between Corazon and Epitacio and the absolute sale to Cornelia, which are severable and each must comply with Article 1318. On consent, the Court rejected the defense testimony that Vicente held Corazon's hand to affix her thumbmark on a blank sheet, because the witness was shown to be unreliable, having first insisted that Corazon was already dead on the date of the deed when she in fact died two days later. The respondents never questioned Corazon's mental state and focused only on her physical weakness, impliedly conceding that she was of sound and disposing mind. The notary's testimony that he read and explained the deed in Tagalog stood unrebutted. And the deed is unambiguous on its face, so the Court would not go beyond its terms and risk substituting its own interpretation for the intent of the parties.

On the second issue, the Court held that Cornelia's signature was immaterial. A contract of sale is perfected upon a meeting of the minds on the thing and the price. That Cornelia herself brought the notary to Corazon's house showed her prior consent, and her subsequent exercise of dominion over the properties confirmed it.

On the third issue, the Court held that Sergio never owned the lots and could not sell them. As the Court put it, no one can give what he does not have. Even before he could inherit any share from his mother, Corazon had already sold the properties to Cornelia. His affidavit of adjudication was therefore void and without effect, and his sale to the Yupanos was null and void.

On the fourth issue, the Court held that the Yupanos could not claim good faith. Although a purchaser is generally not required to explore beyond the face of the certificate of title, that rule protects only the innocent purchaser for value and in good faith. It excludes one who has knowledge of a defect in the vendor's title or of facts sufficient to induce a reasonably prudent man to inquire. The Yupanos lived a block away, Laureano knew the tenants were paying rentals to Vicente, and he had verified this before buying. These facts should have alerted him, yet he ignored them.

Doctrine

A single instrument may contain several distinct contracts, and each stands or falls on its own under Article 1318 of the Civil Code: consent, object certain, and cause. A contract of sale is perfected by the meeting of the minds on the thing and the price under Article 1475, so the buyer's signature on the deed is not essential where consent is otherwise shown. No one can give what he does not have; a vendor who never owned the property transmits nothing, and his sale is void. The protection of the torrens system extends only to purchasers in good faith and for value, not to one who buys with notice of facts that would prompt a prudent man to inquire.

Disposition

The Court reversed and set aside the decision of the Court of Appeals and reinstated the trial court's decision with modification: the extrajudicial adjudication with absolute sale was declared valid, the sale between Sergio and the Yupanos was declared null and void, Sergio was ordered to return the 100,000 pesos less the amount spent on the invalid title, and the Register of Deeds was ordered to cancel the Yupano titles and restore the original title.

Remember This

Memorize the line: no one can give what he does not have, and a torrens title does not shield a buyer who had reason to doubt. Examiners use this case for the requisites of a valid sale, the perfection of sale despite a missing signature, and the test of a buyer in good faith against one with notice of facts that demand inquiry.