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July 1, 2014

Buenaventura vs. CA

Facts:
  • Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN.  (Note: So there are two sets of children here.)
  • Sought to be declared null and void ab initio are certain deeds of sale of real property executed by Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of title issued in their names.
  • The plaintiffs in this case sought for the declaration of nullity of the six deeds of sale and certificates of title in favor of the defendants. 
  • They alleged that certain deed of sale were null and void ab initio because they are simulated.
  • They said that: a. Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis; b. Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are more than three-fold times more valuable than the measly sums appearing therein; c. Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and d. Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
  • Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as the requisite standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the consequences of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal basis.
  • RTC ruled in favor of the defendants (respondents in this case) and dismissed the complaint. Upon appeal, the CA upheld RTC’s ruling.



Issues: 
1. Whether the Deeds of Sale are void for lack of consideration. NO
2. Whether the Deeds of Sale are void for gross inadequacy of price. NO

Held:

1st issue: There was a consideration.

If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment.  If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated, then the contract is void. Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the sale is void.

It is not the act of payment of price that determines the validity of a contract of sale.  
Payment of the price has nothing to do with the perfection of the contract.  Payment of the price goes into the performance of the contract.  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.

Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated.
To prove simulation, petitioners presented Emma Joaquin Valdoz’s testimony stating that their father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price. The trial court did not find the allegation of absolute simulation of price credible.  

Petitioners’ failure to prove absolute simulation of price is magnified by their lack of knowledge of their respondent siblings’ financial capacity to buy the questioned lots. On the other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold.  Not only did respondents’ minds meet as to the purchase price, but the real price was also stated in the Deeds of Sale.  As of the filing of the complaint, respondent siblings have also fully paid the price to their respondent father.

2nd issue: The general rule is that inadequacy of consideration shall not invalidate a contract.

Articles 1355 of the Civil Code states:
Art. 1355.  Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence.  (Emphasis supplied)

Article 1470 of the Civil Code further provides:
Art. 1470.  Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.  (Emphasis supplied)

Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale.  Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale.  All the respondents believed that they received the commutative value of what they gave.

Ruling: In the instant case, the trial court found that the lots were sold for a valid consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon us. WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.

REFERENCE:
G.R. No. 126376.  November 20, 2003
SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners, vs. COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents.

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