SOLIDSTATE
MULTI-PRODUCTS G.R. No. 175118
CORPORATION,
Petitioner, Present:
QUISUMBING,
J.,
- versus
- Chairperson,
CARPIO
MORALES,
TINGA,
SPS.
ERLINDA CATIENZA- VELASCO, and
VILLAVERDE
and VICTOR BRION, JJ.
VILLAVERDE,
Respondents.
Promulgated:
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Tinga,
J.:
Petitioner
Solidstate Multi-Products Corporation seeks the reversal of the Decision[1] of
the Court of Appeals dated
The
facts are as follows:
In
February 1976, Julian Peñaranda (Peñaranda), respondent Erlinda Villaverde’s
uncle, sold to petitioner a 48,182-square meter parcel of land located in
Molino, Bacoor,
The undertaking was reduced to
writing in the form of an Agreement with Mortgage[4]
dated
Petitioner
instituted a civil action against the Estate of Virata to remove the cloud on
its title. The complaint, docketed as
Civil Case No. RTC-BCV 82-85 of the Regional Trial Court of Bacoor,
On
P96,000.00—receipt of which
respondents acknowledged to their full satisfaction—and of the cancellation of
the original mortgage obligation under the Agreement with Mortgage. It appears
that respondents also received the amount of P105,000.00 from petitioner
on account of the sale.
Respondents,
seven years thence, filed a Complaint[9]
seeking the annulment of the Deed of Absolute Sale on the ground that their
consent to the transaction was vitiated by mistake, undue influence and
fraud. They alleged that petitioner had induced
them to sell their land on the misinformation that the case filed against the
Estate of Virata, which motivated them to sign the Agreement with Mortgage and
later the Deed of Absolute Sale, had already been dismissed.
The
trial court rendered judgment in favor of respondents, ruling that the latter’s
property covered by TCT No. T-82596 was made the subject of the Agreement with
Mortgage and of the Deed of Absolute Sale only to guarantee the success of the
quieting of title case against the Estate of Virata. Since the case was
eventually won by petitioner the trial court concluded that the sale was
absolutely simulated or fictitious, without consideration and, therefore, void
under Article 1409 of the Civil Code. It
then directed the nullification of the Deed of Absolute Sale, the return of TCT
No. T-82596 to respondents, and the cancellation of the annotation on the
dorsal portion of the title pertaining to the Agreement with Mortgage. It also
awarded P100,000.00 to respondents as nominal damages.[10]
The Court of Appeals affirmed the decision of the trial
court with the modification that respondents return to petitioner the amount of
P105,000.00 with interest at 6% from the finality of judgment until
fully paid.
In this Petition for Review on Certiorari[11]
dated
there
is no basis for the appellate court’s ruling that the stated consideration of P96,000.00
for the Agreement with Mortgage, which respondents did not actually receive, is
the same consideration for the Deed of Absolute Sale. The appellate court
allegedly merely speculated that there was no consideration for the sale just
because the Deed of Absolute Sale alluded to the mortgage. Petitioner maintains that there is nothing in
the deed which indicates that respondents agreed to sell the property because
they failed to comply with their obligation under the Agreement with Mortgage
or that the sale was due to the dismissal of the case for quieting of title.
Petitioner insists that respondents consent to the sale
was not vitiated in any manner because the status of the quieting of title case
could be easily verified with the exercise of reasonable diligence on their
part. It also avers that the sale was supported by valuable consideration
because respondents received P96,000.00 which they themselves
acknowledged in the Deed of Absolute Sale, as well as an additional P105,000.00. Finally, petitioner argues that the complaint
was filed more than four (4) years from the discovery of the alleged fraud or
mistake and was thus filed out of time.
In their Comments[12]
dated
Petitioner filed a Reply[13]
dated
Petitioner points out that respondents also signed a
separate agreement to shoulder 50% of the expenses incurred in the quieting of
title case. It avers that it incurred litigation expenses in the amount of P3,000,000.00
for which respondents should answer. The considerations for the Deed of
Absolute Sale are allegedly the amount of P96,000.00 stated therein, the
cancellation of the original mortgage obligation under the Agreement with
Mortgage, the amount of P105,000.00 received by respondents, and the
payment of respondents’ obligations under the said agreement.
A contract, as defined by the Civil Code, has the
following requisites: (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.[14] Cause
or consideration is the contested requisite in this case.
The Agreement with Mortgage, one of the key contracts in
the present controversy, specifically mentions that the mortgage is without any
consideration. Paragraph 8 thereof
states:
8. The
Mortgage herein agreed upon is without any consideration and the amount of
NINETY SIX THOUSAND (P96,000.00) PESOS, Philippine Currency, mentioned
in the next preceding paragraph was not paid to and received by the First Party
and the Third Party;[15]
That the parties specifically treated this contract, on
the one hand, to be without consideration despite presumably knowing the legal
consequence of such a characterization, i.e., that a contract without consideration is void under Article 1352
of the Civil Code, is odd in light of petitioner’s argument that the
consideration for the mortgage was Peñaranda’s undertakings (1) to institute at
his own expense whatever legal action may be necessary to protect petitioner’s
title to the lot he had sold to the latter and (2) to answer for any damage
which may be suffered by petitioner if ownership of the property is adjudged to
another claimant.
On the other hand, the Deed of Absolute Sale makes
specific reference to the mortgage obligation and states that the consideration
for the sale, like the mortgage, is also P96,000.00 “and the
cancellation of the original mortgage obligation of NINETY
SIX THOUSAND
PESOS
(P96,000.00).”[16] As
previously stipulated by the parties, however, the amount of P96,000.00,
which was supposedly the consideration for the mortgage, was never received by
respondents.
The foregoing circumstances justify the appellate court’s
conclusion, to which we agree, that the parties executed the Agreement with
Mortgage and the Deed of Absolute Sale solely to confront the possibility that
the property sold by Peñaranda to petitioner would be adjudged to another
claimant. The final disposition of the
quieting of title case in favor of petitioner rendered the contracts without a
cause, therefore void.[17]
The evidence clearly shows that while respondents
acknowledged receipt of the amount of P96,000.00 in the Deed of Absolute
Sale, such amount was not actually paid to them by petitioner. A contract of
sale is void and produces no effect whatsoever where the price, which appears
thereon as paid, has in fact never been paid by the purchaser to the vendor.[18]
As the appellate court found, respondents were given the
amount of P55,000.00 in October 1988—a few months before the Deed of
Absolute Sale was executed—after they were told that the amount was a “paconsuelo” for the use of their
property.[19] Later, when they obliged to sign the Deed of
Absolute Sale, respondents were given P50,000.00. The amount of P50,000.00, which is
less than the stated consideration for the sale of P96,000.00, was
received by respondents only because they were then under the impression that
petitioner had lost the quieting of title case. The amounts received by respondents are not
the consideration for the sale but rather, as they understood it, amounts merely
by petitioner out of the latter’s munificence and good will. In their own words, respondents allege that
they signed the Deed of Absolute Sale “due to the fraudulent misrepresentation
and false notice or information coupled by plaintiffs’ financial handicap at
that time, in consideration of the meager amount of P50,000.00,”[20]
We do not agree, however, with the appellate court’s
ruling that the sale should be considered a pactum commissorium prohibited
under Article 2088 of the Civil Code.[21] There is no stipulation in any of the
contracts between the parties which states that ownership of the property in
question shall automatically vest in petitioner upon respondents’ failure to
perform their obligations under the mortgage contract, which is the essence of pactum
commissorium.[22]
There does not even appear to have been any demand or default yet. That the parties entered into a separate Deed
of Absolute Sale is proof that there was no automatic transfer of ownership.
Based on the foregoing, we find that prescription had
not, nay cannot, set in. Article 1410 of
the Civil Code provides that the action or defense for the declaration of the
inexistence of a contract does not prescribe.
As a final note, effect should be given to the agreement signed
by respondents in which they committed “to shoulder 50% of the expense that
will be incurred” in the case filed by petitioner against the Estate of Virata.[23] The appellate court correctly ruled, however,
that this issue must be resolved in another case.
WHEREFORE, the Decision of the Court of Appeals in
CA-G.R. CV No. 73733 dated
SO
ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONCHITA CARPIO MORALES PRESBITERO J.
VELASCO, JR.
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson,
Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson’s Attestation, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1]Rollo, pp. 35-42; penned by Associate Justice Mario L. Guariña III and concurred in by Associate Justices Roberto A. Barrios and Arcangelita Romilla-Lontok.
[10]The
Decision dated
[21]Civil Code, Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.