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Olegario vs. Court of Appeals

*
G.R. No. 104892. November 14, 1994.

BONIFACIO OLEGARIO and ADELAIDA VICTORINO,

petitioners,vs. THE HONORABLE COURT OF APPEALS,
MANUEL RIVERA, PAZ OLEGARIO, and SOCORRO
OLEGARIO-TEVES, respondents.

Civil Law; Sale; In a contract of sale, consideration is, as a rule,

different from the motive of the parties.—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. 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. Under certain
circumstances, however, the motive of the parties may be regarded as the
consideration when it predetermines the purpose of the contract. When they
blend to that degree, and the motive is unlawful, then the contract entered
into is null and void.
Same; Same; 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.
—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.
Same; Same; The purported sale of April 15, 1986 of the subject lot is
null and void.—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.
Same; Same; Even if the contract of sale is valid, it cannot adversely
affect third persons because of its non-registration.—It is also obvious to the
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eye that the contract of sale in 1986 is unregistered.

_______________

* SECOND DIVISION.

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Olegario vs. Court of Appeals

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.

PETITION for review of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.
     Tranquilino F. Meris for petitioners.
     Eufracio T. Layag for private respondents.

PUNO, J.:

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
1
City.
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
2
favor of private respondents. 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

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spouses Olegario. On May 23, 1989, they executed a Deed of Extra-

3
judicial Settlement of Estate covering the subject lot which

_______________

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

2 Exhibit “B.”
3 Exhibit “C.”

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Olegario vs. Court of Appeals

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
4
issued in their names.
On August 1, 1989, petitioners sold the subject lot for TWO
HUNDRED THOUSAND PESOS (P200,000.00) to Elena Adaon
5
and Nestor Tejon. 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 of6
Extrajudicial Settlement of Estate and Damages against petitioners.
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

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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

_______________

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.

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Olegario vs. Court of Appeals

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 cancelled;
“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-claim-ants are

hereby DISMISSED for lack of evidence to support the same.
7
“SO ORDERED.”

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:

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“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

_______________

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

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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.
8
SO ORDERED.”

Petitioners now claim that respondent court erred in the following

wise:

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

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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

_______________

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

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Olegario vs. Court of Appeals

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
9
another 1/4 representing his share as surviving spouse of Aurelia.
Petitioner Adelaida Victorino, as the sole surviving
10
niece of Aurelia,
is entitled to the other 1/4 of the lot. When Marciliano died

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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

_______________

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.

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11
to such as he is at the time of consent bound to suffer. 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
12
condition. Under certain circumstances, however, the motive of the
parties may be regarded as the consideration when it predetermines
13
the purpose of the contract. When they blend to that degree, and
the motive
14
is unlawful, then the contract entered into is null and
void.
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])

  xxx      xxx      xxx
“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

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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 inn
a way of avoiding paying taxes?
A It was not that way but my parents in law were just avoiding
15
distant relatives who might claim it.”
  xxx      xxx      xxx
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?

_______________

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.

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Olegario vs. Court of Appeals

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)
16
A Yes, sir.”
  xxx      xxx      xxx

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.
17
Illegal motive predetermined the purpose of the contract.
In addition, the trial court and respondent court failed to consider
18
the lack of cause in the alleged deed of sale of 1986. The evidence
does not show that private respondents had FIFTY THOUSAND
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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)
  xxx      xxx      xxx
“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.

_______________

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.”

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Olegario vs. Court of Appeals

19
  (Italics supplied).”
  xxx      xxx      xxx
Atty. Buenaventura on cross-examination of Paz Olegario (re
  spondent), pp. 22, TSN, June 23, 1990.
  xxx      xxx      xxx
“Q Do you know how much was paid?
A P50,000.00, sir.
Q Was it paid in cash or in other form?
  xxx      xxx      xxx
A No, sir.

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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.”
  xxx      xxx      xxx
“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
20
getting clue from the other witness. (Italics supplied)”

21
Applying Articles 1352 and 1409 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

_______________

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

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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.
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SO ORDERED.

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

concur.

Judgment reversed and set aside.

Note.—The sale in case at bar was absolutely simulated or

fictitious and inexistent and void. (Odejar vs. Guico, 180 SCRA
372[1989])

——o0o——

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