Bacalso vs. Aca-Ac

A deed of absolute sale is void ab initio where the purchase price stated therein was never paid, as the total absence of consideration prevents the existence of a valid contract.

The Bacus siblings (Gregoria, Eutiquia, and Julian) were the registered owners of Lot No. 1809-G-2 in Talisay, Cebu, which they inherited from their mother, Matea Bacalso. On October 15, 1987, they executed a Deed of Absolute Sale conveying a 271-square-meter portion of the lot, designated as Lot No. 1809-G-2-C, to their cousin, petitioner Timoteo Bacalso, for P8,000.00. Prior to this sale, Timoteo and his relatives had already contested the ownership of the mother lot (Lot No. 1809-G), claiming Matea held it in trust for her siblings, but the courts ruled Matea was the sole owner.

The Bacus siblings were the registered owners of Lot No. 1809-G-2 in San Roque, Talisay, Cebu, which they inherited from their mother, Matea Bacalso. On October 15, 1987, the siblings executed a Deed of Absolute Sale conveying a 271-square-meter portion of the lot, designated as Lot No. 1809-G-2-C, to their cousin, Timoteo Bacalso, for P8,000.00. However, on March 4, 1988, before any transfer of title, Timoteo, along with his sisters and cousins, filed a complaint for declaration of nullity of title and reconveyance against the Bacus siblings, claiming co-ownership over the mother lot. The RTC dismissed the complaint on November 29, 1989, declaring Matea the sole owner, a ruling affirmed by the CA and finalized on April 15, 1992.

Undaunted, Timoteo and Diosdada Bacalso filed a new complaint on October 26, 1995, asserting ownership over Lot No. 1809-G-2-C by virtue of the October 15, 1987 Deed of Absolute Sale, and alleging that the Bacus siblings reneged on their promise to issue a new title. They further claimed that the Bacus siblings had subdivided the lot and, without their knowledge, sold Lot No. 1809-G-2-C to Evelyn Sychangco on February 11, 1992, resulting in the issuance of TCT No. 74687 in her name. The Bacus siblings countered that the sale to the petitioners never materialized because the purchase price was never paid. Sychangco asserted she was a buyer in good faith who relied on the clean certificate of title.

The RTC found that the petitioners failed to pay the P8,000.00 purchase price. It noted that Timoteo never secured a receipt for the payment, paid outside the presence of the notary, suppressed the deed during his prior lawsuit, failed to segregate the lot, and did not declare it for taxation. The RTC concluded the sale was void for want of consideration and that Sychangco, as a buyer in good faith, had a better right. The CA affirmed this ruling, distinguishing failure to pay the price under a valid contract from a total lack of consideration that prevents the contract's existence.

• Validity of the Contract: Petitioners argued that the Deed of Absolute Sale possessed all the requisites of a valid contract and that there was no lack of consideration, asserting that the testimonies of Timoteo and his witness established that the P8,000.00 purchase price was paid to Julian at the Sto. Niño Church before the deed's execution.
• Remedy for Non-Payment: Petitioners contended that even if they failed to pay the purchase price, such failure merely constitutes a breach of obligation warranting rescission, not nullity, and does not render the sale void for being fictitious or simulated.
• Presumption of Regularity: Petitioners argued that the CA erred in disregarding the fact that the Deed of Absolute Sale was notarized, thus enjoying the presumption of regularity.
• Transfer of Ownership: Petitioners maintained that upon the execution of the notarized deed of sale, the Bacus siblings were no longer the owners or possessors of the subject lot, as ownership had already transferred to them.

• Non-Payment of Purchase Price: Respondents Bacus siblings denied the petitioners' allegations and claimed that the alleged sale did not push through because the petitioners failed to pay the purchase price.
• Good Faith of Subsequent Buyer: Respondent Sychangco averred that she was a buyer in good faith and for value, having relied on the clean certificate of title of the property which bore no annotation of liens or encumbrances.

• Question of Fact vs. Law: Whether the Court can review the factual findings of the lower courts in a Petition for Review on Certiorari under Rule 45.
• Validity of the Deed of Sale: Whether the Deed of Absolute Sale dated October 15, 1987 is void ab initio for want of consideration due to the non-payment of the purchase price.

• Question of Fact vs. Law: No. Factual findings of the trial court, when affirmed by the CA, are final and conclusive and may not be reviewed on appeal via certiorari, and this case falls under none of the recognized exceptions.
• Validity of the Deed of Sale: Yes, the deed is void ab initio. A deed of sale is null and void where the purchase price stated therein was never paid, as the total absence of consideration prevents the existence of a valid contract.

• Question of Fact vs. Law: The central issue of the validity of the Deed of Absolute Sale involves a question of fact. Settled jurisprudence dictates that only questions of law may be brought before the Court via Rule 45. The Court is not mandated to re-examine or weigh evidence already passed upon by the lower courts. The Court reviewed the records and found no reason to disturb the RTC's findings as affirmed by the CA, as the case does not fall under any of the recognized exceptions to the rule against reviewing factual findings.
• Validity of the Deed of Sale: Under Article 1318 of the Civil Code, the cause of the obligation is an essential requisite of a valid contract. The Court distinguished between failure to pay the purchase price, which results in a right to demand fulfillment or cancellation under an existing valid contract, and lack of consideration, which prevents the existence of a valid contract altogether. The RTC's factual findings, adopted by the CA, established that the P8,000.00 was never paid. Timoteo's own conduct—failing to secure a receipt, paying outside the notary's presence, suppressing the deed in his prior lawsuit, and failing to declare the property for taxation—confirmed the non-payment. Because no price was paid, there was no cause or consideration, rendering the sale void ab initio under Article 1352 of the Civil Code. Consequently, Sychangco, as a buyer in good faith, acquired a better right to the property.

• Distinction between failure to pay consideration and lack of consideration — 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, rendering it void ab initio. The Court applied this doctrine to hold that since the purchase price was never paid, the contract lacked an essential requisite and was void from the beginning.
• Finality of factual findings of lower courts — Factual findings of the trial court, when affirmed by the CA, are final and conclusive and may not be reviewed on appeal via certiorari under Rule 45, subject to recognized exceptions. The Court relied on this doctrine to decline reviewing the factual findings that the purchase price was never paid.

• "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." — This passage articulates the controlling distinction that determines whether a contract is merely rescissible or void ab initio.
• "There can be no doubt that the contract of sale or Kasulatan lacked the essential element of consideration. It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration." — This quotation establishes the canonical formulation of the rule applied to the facts of the case.

• Sps. Carpio vs. Sebastian, et al. — Cited to support the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45.
• Spouses Pascual vs. Spouses Coronal — Cited to reinforce that factual findings of the trial court affirmed by the CA are final and conclusive.
• Citibank, N.A. vs. Sabeniano — Cited to enumerate the exceptions to the rule that factual findings of the CA cannot be reviewed by the Supreme Court.
• Sps. Lequin vs. Sps. Vizconde — Cited as controlling precedent for the rule that a deed of sale stating the price has been paid, when it was never actually paid, is null and void ab initio for lack of consideration.

• Article 1318, Civil Code — Provides the requisites of a valid contract: consent, object certain, and cause of the obligation. The Court used this to show that the absence of cause (non-payment) invalidated the contract.
• Article 1352, Civil Code — Provides that contracts without cause produce no effect whatsoever. The Court applied this to declare the deed of absolute sale void ab initio.

Velasco, Jr., (Chairperson), Peralra, Villarama, Jr., and Jardeleza, JJ., concur.