Acabal vs. Acabal

A sale by a co-owner of the entire co-owned property without the consent of the other co-owners is not null and void; it transfers only the seller’s undivided share, and the buyer becomes a co-owner. The sale in this case was accordingly upheld only as to Villaner Acabal’s five-ninths (5/9) share, fraud not having been proved by clear and convincing evidence.

Villaner Acabal and his children, respondents, trace their claim to a parcel of land in Barrio Tanglad, Manjuyod, Negros Oriental, originally owned by Villaner’s parents and transferred to Villaner in 1971 while he was married to Justiniana Lipajan. Leonardo Acabal, Villaner’s godson-nephew, later became the transferee under the disputed April 19, 1990 document, and Ramon Nicolas acquired the property from Leonardo. The dispute required the Court to characterize that document and to determine the effect of Villaner’s sale on the conjugal and co-ownership interests of his deceased wife’s heirs, against the backdrop of the Civil Code’s conjugal-property presumption, the co-ownership rules, and the retention limits of Republic Act No. 6657.

Villaner Acabal’s parents, Alejandro Acabal and Felicidad Balasabas, owned a parcel of land situated in Barrio Tanglad, Manjuyod, Negros Oriental, containing an area of 18.15 hectares more or less, described in Tax Declaration No. 15856. By a Deed of Absolute Sale dated July 6, 1971, his parents transferred ownership of the land to him for P2,000.00. At that time, Villaner was married to Justiniana Lipajan. Sometime after the transfer, Villaner became a widower.

On April 19, 1990, Villaner executed a document conveying the same property in favor of Leonardo Acabal, his godson-nephew. The document now appears as a Deed of Absolute Sale purportedly witnessed by Bais City trial court clerk Carmelo Cadalin and his wife Lacorte. Villaner later claimed that what he actually signed was a Lease Contract, modeled after a July 1976 lease agreement he had previously executed with Maria Luisa Montenegro, leasing the property to Leonardo for three years at P1,000.00 per hectare, and witnessed by two women employees of Judge Villegas of Bais City.

At trial, Villaner testified that he had an agreement with Leonardo but not for the sale of the property; that he did not know why he signed the document; that he did not read its contents and only read the title “Lease Contract”; that the witnesses were employees of Judge Villegas, not the Cadalins; that he did not appear before a notary public; and that he did not sell the property for P10,000.00 or receive that amount. He testified that he went to Carmelo “Mellie” Cadalin, who prepared the papers, and that perhaps copies of the deed of sale were placed under the documents he signed. He also said he was surprised that the deed of sale was witnessed by Carmelo Cadalin and his wife Lacorte.

Leonardo asserted that Villaner executed a Deed of Absolute Sale for a consideration of P10,000.00, which he had already paid, and that as he had become the absolute owner of the property, he validly transferred it to Ramon Nicolas on May 19, 1990. Carmelo Cadalin, who admittedly prepared the deed of absolute sale and appeared as a witness with his wife, corroborated Leonardo: Villaner and Leonardo went to his house and requested him to prepare a deed of sale; he initially refused but prepared it; he gave the document to Villaner to read; Villaner read and signed it; and Villaner was given the payment by Leonardo. Cadalin also prepared an affidavit of non-tenancy and aggregate area.

Villaner filed on October 11, 1993 a complaint before the Dumaguete RTC against Leonardo and Ramon Nicolas for annulment of the deeds of sale. The complaint was later amended to implead Villaner’s eight children as party plaintiffs, they being heirs of his deceased wife.

• Fraud and Voluntary Execution: Petitioners argued that the Court of Appeals erred in ruling that respondent Villaner Acabal was deceived into signing the Deed of Absolute Sale when he knowingly, freely, and voluntarily executed the same in favor of petitioner Leonardo Acabal.
• Inadequate Consideration: Petitioners argued that the Court of Appeals erred in ruling that the P10,000.00 consideration was “unusually low and inadequate,” especially taking into account the location of the subject property.
• Delay in Questioning Possession: Petitioners argued that the Court of Appeals erred in failing to consider why Villaner questioned Ramon Nicolas’s possession and ownership only after Nicolas had been in open, continuous, and peaceful possession of the subject property for almost three years.
• Good Faith of Ramon Nicolas: Petitioners argued that the Court of Appeals erred in failing to declare Ramon Nicolas a buyer in good faith, since he took the necessary steps an ordinary and prudent man would have taken before buying the questioned property.
• Failure to Present Lease Witnesses: Petitioners argued that the Court of Appeals erred in ruling for Villaner despite his failure to present a single witness to testify on the alleged contract of lease he claimed to have signed and which was allegedly witnessed by employees of Judge Villegas.
• Rule 8, Section 8: Petitioners contended that the Court of Appeals erred in ruling that Rule 8, Section 8 of the Rules of Court was not applicable, because Villaner failed to deny under oath the genuineness and due execution of the April 19, 1990 Deed of Absolute Sale.
• Rental Award: Petitioners argued that the Court of Appeals erred in ordering them to pay respondents jointly and severally, by way of rental, the sum of P10,000.00 per year from 1990 up to the time they vacate the premises.

• Simulation and Fraud: Respondent Villaner Acabal claimed that what he signed on April 19, 1990 was a Lease Contract, not a Deed of Absolute Sale; that the deed was simulated and fictitious; that he did not read the document and only saw the title “Lease Contract”; and that the signatures of the witnesses appearing on the deed were not those of the two women employees of Judge Villegas who actually witnessed his signing.
• Inadequate Price: Villaner argued that the P10,000.00 purchase price was unusually low for the property, presenting tax declarations and a declaration of real property to support his claim.
• Fraudulent Transfer to Nicolas: Villaner submitted that Leonardo’s transfer of the property to Ramon Nicolas within one month for a profit of P30,000.00 conclusively reflected Leonardo’s fraudulent intent.
• Comprehensive Agrarian Reform Law: Villaner argued that the sale of the property to Leonardo and the subsequent sale to Ramon Nicolas were void for violating the retention limits imposed by Republic Act No. 6657.
• Co-heirs’ Non-consent: Villaner’s co-heirs claimed that, as co-owners of the property, the Deed of Absolute Sale executed by Villaner in favor of Leonardo did not bind them because they did not consent to the undertaking.

• Validity of the April 19, 1990 Deed / Fraud and Simulation: Whether the Court of Appeals erred in ruling that Villaner Acabal was deceived into signing the Deed of Absolute Sale when he knowingly, freely, and voluntarily executed it in favor of Leonardo Acabal.
• Adequacy of Consideration: Whether the Court of Appeals erred in ruling that the P10,000.00 consideration was unusually low and inadequate.
• Delay in Questioning Ramon Nicolas’s Possession: Whether the Court of Appeals erred in failing to consider Villaner’s delay in questioning Ramon Nicolas’s possession and ownership after almost three years of open, continuous, and peaceful possession.
• Good Faith of Ramon Nicolas: Whether the Court of Appeals erred in failing to declare Ramon Nicolas a buyer in good faith.
• Failure to Present Witnesses on the Alleged Lease: Whether the Court of Appeals erred in ruling for Villaner despite his failure to present a witness to testify on the alleged lease contract.
• Rule 8, Section 8 of the Rules of Court: Whether the Court of Appeals erred in ruling that Rule 8, Section 8 was not applicable despite Villaner’s failure to deny under oath the genuineness and due execution of the Deed of Absolute Sale.
• Rental Award: Whether the Court of Appeals erred in ordering petitioners to pay rentals of P10,000.00 per year from 1990 until they vacate the premises.
• Comprehensive Agrarian Reform Law Retention Limits: Whether the sale to Leonardo and the subsequent sale to Ramon Nicolas are void for violating the retention limits under Republic Act No. 6657.
• Conjugal Property and Co-ownership: Whether the Deed of Absolute Sale binds Villaner’s co-heirs and what portion of the property may be validly conveyed.

• Validity of the April 19, 1990 Deed / Fraud and Simulation: No. The Court of Appeals erred in holding the deed simulated and fictitious; Villaner failed to prove fraud or lack of valid consent by clear and convincing evidence.
• Adequacy of Consideration: No. Inadequacy of price was not proven; the P10,000.00 price was more than reasonable based on the evidence, and mere inadequacy does not invalidate a sale unless grossly inadequate.
• Delay in Questioning Ramon Nicolas’s Possession: Not dispositive. The Court resolved the case on the failure to prove fraud and on the co-ownership limitation, not on the length of Nicolas’s possession.
• Good Faith of Ramon Nicolas: No. Nicolas’s good faith is irrelevant because the property is unregistered; one who purchases unregistered land does so at his peril.
• Failure to Present Witnesses on the Alleged Lease: Yes. Villaner’s unexplained failure to present the alleged women employee-witnesses discredited his claim and supported petitioners’ position.
• Rule 8, Section 8 of the Rules of Court: No. The failure to deny the genuineness and due execution of an actionable document does not preclude a party from attacking it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, or want of consideration.
• Rental Award: Yes. The Court of Appeals erred; its decision, including the rental award, was reversed and set aside.
• Comprehensive Agrarian Reform Law Retention Limits: No. The property was not suitable for agriculture, and only 3 to 4 hectares were planted, below the 5-hectare retention limit; even if the sale were contrary to law, Villaner was in pari delicto and not entitled to affirmative relief.
• Conjugal Property and Co-ownership: The sale is valid only as to Villaner’s five-ninths (5/9) undivided share. The property was conjugal; upon his wife’s death, co-ownership arose; Villaner could sell only his undivided share, and the buyers became co-owners.

• Validity of the April 19, 1990 Deed / Fraud and Simulation: The burden of proof lay on Villaner, who alleged fraud or lack of valid consent. Such allegations are never presumed and must be established by clear and convincing evidence. Villaner offered only his bare assertion that the transaction was a lease and a conjecture that Cadalin may have placed the deed of sale under the lease documents he signed; facts, not conjectures, decide cases. Atty. Vicente Real’s testimony did not corroborate Villaner because, on cross-examination, Real admitted it was impossible to remember every person who asked him to notarize documents and could not be sure Villaner was the person who appeared. Villaner also failed to present the two women employees of Judge Villegas whom he claimed actually witnessed the lease, and his assertion that the signatures on the deed were not theirs was thus discredited. Carmelo Cadalin, who prepared the deed and witnessed it with his wife, corroborated Leonardo’s account that Villaner read and signed the Deed of Absolute Sale and received the P10,000.00 payment. The Court of Appeals therefore erred in finding the deed simulated and fictitious.
• Adequacy of Consideration: Villaner presented tax declarations and a declaration of real property but no evidence of the property’s fair market value as of April 19, 1990. Inadequacy of price must be proven, not speculated upon. The ocular inspection report of Victor Ragay showed that only 3 to 4 hectares were planted to sugarcane, the rest was rocky and limestone-heavy, and the property was not suitable for agriculture. Ragay also reported that an adjoining 6-hectare property was recently sold for P1,600.00, or P266.67 per hectare, which would value the 18-hectare subject property at about P4,800.00; the P10,000.00 price was therefore more than reasonable. Even assuming the price was below fair market value, mere inadequacy does not invalidate a sale; the price must be grossly inadequate or shocking to the conscience, which was not shown.
• Delay in Questioning Ramon Nicolas’s Possession: The disposition did not rest on the timing of Villaner’s challenge. The petition was granted because Villaner failed to prove fraud and because the sale could affect only his undivided share in the co-owned property. The delay argument was therefore not adopted as a separate ground for reversal.
• Good Faith of Ramon Nicolas: Nicolas’s claim of good faith was held irrelevant because the disputed property was unregistered. The issue of a buyer’s good or bad faith is relevant only where the subject of the sale is registered land; one who purchases unregistered land does so at his peril. Cruz vs. Leis, which upheld a buyer’s reliance on a Torrens certificate of title, was distinguished because the land there was registered, whereas the property here was not.
• Failure to Present Witnesses on the Alleged Lease: Villaner claimed that two women employees of Judge Villegas witnessed his signing of a lease contract and that the signatures on the deed of sale were not theirs. This claim was discredited because Villaner failed to explain why he did not present those alleged witnesses. That failure weakened his assertion that the document he signed was a lease rather than a deed of sale.
• Rule 8, Section 8 of the Rules of Court: Petitioners contended that Villaner’s failure to deny under oath the genuineness and due execution of the Deed of Absolute Sale barred his challenge. This contention was rejected. The failure to deny the genuineness and due execution of an actionable document does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, and want of consideration. The Court of Appeals therefore did not err in declining to apply Rule 8, Section 8 to defeat Villaner’s action.
• Rental Award: Because the Court of Appeals decision was reversed and set aside, its order requiring petitioners to pay rentals of P10,000.00 per year from 1990 until they vacate the premises was likewise reversed. The sales were declared valid only as to Villaner’s 5/9 share, and no pronouncement was made as to costs.
• Comprehensive Agrarian Reform Law Retention Limits: Sections 6 and 70 of Republic Act No. 6657 cover only private lands devoted to or suitable for agriculture. Ragay’s ocular inspection showed that only 3 to 4 hectares were planted to sugarcane, while the rest was rocky and not suitable for planting. Since the area suitable for agriculture was at most 4 hectares, it was below the 5-hectare retention limit, and there was no violation of the law. Even assuming the disposition violated the law, Villaner would still have no affirmative relief because he and Leonardo were in pari delicto. The exception under Article 1416 of the Civil Code did not apply because the prohibition was for the protection of beneficiary farmers, not the landowner. Villaner could not feign ignorance of the law under Article 3 of the Civil Code.
• Conjugal Property and Co-ownership: The property was acquired on July 6, 1971, during Villaner’s marriage to Justiniana Lipajan. Under Article 160 of the Civil Code, it was presumed conjugal, and registration in Villaner’s name alone did not destroy that character. The burden was on petitioners to prove otherwise, and they failed. Upon Justiniana’s death, the conjugal partnership was terminated, and Villaner’s interest in one-half became vested; Justiniana’s one-half passed to her heirs, including Villaner and their eight children. A co-ownership thus arose. Each heir received 1/9 of Justiniana’s half, or 1/18 of the entire property; Villaner already owned 1/2, or 9/18, giving him a total of 10/18, or 5/9. As a co-owner, Villaner could sell his undivided share under Article 493 of the Civil Code, but he could not alienate the shares of his co-heirs. The sale of the entire property without their consent was not null and void; it transferred only Villaner’s 5/9 share, and the buyers became co-owners. The proper remedy was partition under Rule 69, not nullification or recovery of possession. Cruz vs. Leis was inapplicable because the property was unregistered.

• Burden of proof and clear and convincing evidence in fraud cases — A party alleging fraud or lack of valid consent to a contract bears the burden of proving it, not by mere preponderance but by clear and convincing evidence; fraud is never presumed. The Court applied this rule to hold that Villaner’s bare assertion that he signed a lease, unsupported by the alleged witnesses and contradicted by Cadalin’s testimony, failed to prove that he was deceived into signing the Deed of Absolute Sale.
• Inadequacy of price — Mere inadequacy of price does not invalidate a sale; the price must be grossly inadequate or shocking to the conscience such that a reasonable person would not consent to the transaction. The Court found no proof of the property’s fair market value as of the sale date and credited the ocular inspection showing the P10,000.00 price was reasonable.
• Pari delicto — Where parties are equally at fault in an illegal contract, the law leaves them where it finds them and grants no affirmative relief to either; an exception under Article 1416 of the Civil Code applies only when the contract is merely prohibited and the prohibition is designed to protect the plaintiff. The Court held that even if the sale violated agrarian retention limits, Villaner was in pari delicto and the exception did not apply because the prohibition protected beneficiary farmers, not the landowner.
• Conjugal partnership presumption — All property acquired during marriage is presumed conjugal unless proved to belong exclusively to one spouse; registration in the name of the husband alone does not destroy the conjugal nature of the property. The Court applied this to the land acquired in 1971 during Villaner’s marriage to Justiniana.
• Co-ownership and sale of undivided share — Each co-owner has full ownership of his undivided share and may alienate, assign, or mortgage it, but the effect of the alienation is limited to the portion allotted to him upon partition; a co-owner cannot alienate the shares of the other co-owners. The Court held that Villaner’s sale of the entire property transferred only his 5/9 undivided share, making the buyers co-owners.
• Good faith of buyer of unregistered land — The issue of a buyer’s good or bad faith is relevant only where the subject of the sale is registered land; one who purchases unregistered land does so at his peril. The Court thus held that Ramon Nicolas’s claim of good faith was irrelevant.
• Actionable document under Rule 8, Section 8 — Failure to deny under oath the genuineness and due execution of an actionable document does not preclude a party from attacking it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, or want of consideration. The Court rejected petitioners’ procedural argument based on this rule.

• "The failure to deny the genuineness and due execution of an actionable document does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, and want of consideration." — This states the procedural rule rejecting petitioners’ contention that Rule 8, Section 8 barred Villaner’s challenge to the deed.
• "It is a basic rule in evidence that the burden of proof lies on the party who makes the allegations – ei incumbit probatio, qui dicit, non qui negat; cum per rerum naturam factum negantis probatio nulla sit." — This anchors the Court’s holding that Villaner, as the party alleging fraud and lack of consent, had to prove his claim by competent evidence.
• "mere inadequacy of the price per se will not rule out the transaction as one of sale. For the price must be grossly inadequate or shocking to the conscience such that the mind revolts at it and such that a reasonable man would neither directly nor indirectly be likely to consent to it." — This defines the standard for invalidating a sale based on inadequacy of price, which the Court found unmet.
• "While a co-owner has the right to freely sell and dispose of his undivided interest, nevertheless, as a co-owner, he cannot alienate the shares of his other co-owners – nemo dat qui non habet." — This is the ratio for limiting the sale to Villaner’s five-ninths (5/9) undivided share and making the buyers co-owners.

• Bailon-Casilao vs. Court of Appeals, 160 SCRA 738 (1988) — Cited for the rule that a co-owner’s sale of the entire property affects only his share, that the buyer becomes a co-owner, and that the proper action is partition.
• Cruz vs. Leis, 327 SCRA 570 (2000) — Distinguished; it upheld a buyer’s reliance on a Torrens certificate of title for registered land, but was inapplicable because the subject property here was unregistered.
• San Pedro vs. Lee, G.R. No. 156522, May 28, 2004 and Fernandez vs. Tarun, 391 SCRA 653 (2002) — Cited for the rule that mere inadequacy of price does not invalidate a sale unless the price is grossly inadequate or shocking to the conscience.
• Silagan vs. Intermediate Appellate Court, 196 SCRA 774 (1991) — Cited for the pari delicto principle that no affirmative relief is given to parties equally at fault in an illegal contract.
• Bucoy vs. Paulino, 23 SCRA 248 (1968) and Mendoza vs. Reyes, 124 SCRA 154 (1983) — Cited for the rule that registration of property in the husband’s name alone does not destroy its conjugal nature.
• Aguirre vs. Court of Appeals, 421 SCRA 310 (2004) — Cited for the rule that a co-owner’s sale affects only his share and that a purchaser of unregistered land buys at his peril.
• Santos vs. Roman Catholic Church of Midsayap, 94 Phil. 405 (1954) — Cited to illustrate the Article 1416 exception to pari delicto; distinguished because the prohibition there protected the homesteader’s family, while here the agrarian retention limit protected beneficiary farmers.
• Holman vs. Johnson, 1 Cowp. 341 (1775) — Cited for the policy foundation of pari delicto: no court will lend aid to a party founding a cause of action on an illegal or immoral act.
• Republic vs. Court of Appeals, 296 SCRA 171 (1998) — Cited for the rule that failure to deny an actionable document does not bar evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, or want of consideration.

• Article 160, Civil Code — All property of the marriage is presumed conjugal unless proved exclusive; applied to the land acquired during Villaner’s marriage to Justiniana.
• Article 493, Civil Code — Each co-owner has full ownership of his part and may alienate it, but the effect is limited to the portion allotted to him upon division; applied to uphold the sale only as to Villaner’s 5/9 share.
• Article 1416, Civil Code — Allows recovery when a contract is merely prohibited and the prohibition protects the plaintiff; held inapplicable because the agrarian retention prohibition protected beneficiary farmers, not Villaner.
• Article 3, Civil Code — Ignorance of the law excuses no one; applied to reject Villaner’s claim of good faith or lesser guilt.
• Sections 6 and 70, Republic Act No. 6657 — Retention limits and disposition of private agricultural lands; held not violated because the property was not suitable for agriculture and only 3 to 4 hectares were planted, below the 5-hectare limit.
• Rule 8, Section 8, Rules of Court — Governs denial under oath of an actionable document; held not to preclude evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, or want of consideration.
• Rule 69, Revised Rules of Court — Governs partition; held to be the proper action for co-owners whose consent was not obtained in a sale of the entire property.
• Article 1623, Civil Code — Legal redemption by co-owners; mentioned en passant, with the Court noting that under Alonzo vs. Intermediate Appellate Court the co-heirs who lived with the vendor were deemed to have actual notice and could no longer redeem.
• Articles 175(1), 185, 777, and 996, Civil Code — Cited for termination of the conjugal partnership upon death, vesting of rights, succession, and the share of heirs; applied to compute Villaner’s 5/9 interest.

Panganiban (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.