Heirs of Amparo del Rosario vs. Aurora O. Santos, et al.

A written deed of sale of real property is enforceable under the Statute of Frauds even if not notarized, and parol evidence is inadmissible to prove additional conditions not embodied in the deed where the writing is clear and unambiguous. The sale of an expected thing is likewise valid under Article 1461 of the New Civil Code and becomes effective when the expectant right materializes.

Amparo del Rosario was the vendee named in a Deed of Sale executed by Andres F. Santos, with Aurora O. Santos’s marital consent, covering 20,000 square meters to be segregated from Lot 1 of Psu-206650 in Barrio Sampaloc, Tanay, Rizal. Santos had earlier been engaged by Teofilo Custodio to prosecute the registration of a larger unregistered parcel and was to receive one-half of the property as attorney’s fees and advances. The dispute implicated the Statute of Frauds, the parol evidence rule, the rule on summary judgment, and Article 1461 of the New Civil Code on things having potential existence.

In February 1964, Teofilo Custodia owned an unregistered parcel of land with an area of approximately 220,000 square meters in Barrio Sampaloc, Tanay, Rizal. Custodia hired Andres F. Santos to cause the survey of the property, file registration proceedings, appear and represent him in all government offices, and advance all expenses for surveys, taxes, court fees, and registration fees up to the issuance of title in Custodia’s name. They agreed that after registration and after deducting all expenses from the total area, Custodia would assign and deliver to Santos one-half share of the whole property as appearing in the certificate of title. On March 22, 1964, Custodia’s land was surveyed under plan Psu-206650 and divided into six lots, one of which was a road lot; the total surveyed area was 211,083 square meters, with Lot 1 containing 181,420 square meters.

On September 28, 1964, Andres F. Santos, with the marital consent of Aurora O. Santos, executed a Deed of Sale in favor of Amparo del Rosario for ₱2,000. The deed sold 20,000 square meters to be segregated from Lot 1 of plan Psu-206650 along the southeastern portion. Santos stated in the deed that he owned one-half interest in the property as his attorney’s fee and that the 20,000 square meters would be transferred to the vendee as soon as the title was released by the proper authorities. The parties agreed that Santos would execute a Deed of Confirmation of Deed of Sale in favor of the vendee as soon as the title was released and the subdivision plan of Lot 1 was approved by the Land Registration Commissioner. The deed was notarized on October 1, 1964 by Notary Public Florencio Landrito. Appellants later claimed that they never appeared before the notary and that certain words in the acknowledgment portion were cancelled and changed without their knowledge and consent.

On December 27, 1965, a decree of registration No. N-108022 was issued in Land Registration Case No. N-5023 of the Court of First Instance of Rizal in favor of Teofilo Custodia. On March 23, 1966, Original Certificate of Title No. 5134 was issued to Custodia for Lots 1, 2, 3, 4, and 5 of Psu-206650, with a total area of 206,853 square meters. In April to May 1966, a consolidation-subdivision survey, (LRC) Pcs-5273, converted the lots into six new lots: Lot 1 with 20,000 square meters, Lot 2 with 40,775 square meters, Lot 3 with 50,000 square meters, Lot 4 with 40,775 square meters, Lot 5 with 50,000 square meters, and Road Lot 6 with 5,303 square meters. The plan was approved by the Land Registration Commission on June 22, 1966 and by the Court of First Instance of Rizal on July 2, 1966. Upon registration, Custodia’s Original Certificate of Title No. 5134 was cancelled and Transfer Certificate of Title Nos. 167561, 167562, 167563, 167564, 167565, and 167566 were issued for the six lots in Custodia’s name.

On June 23, 1966, Custodia conveyed to Santos Lots 4 and 5 of Pcs-5273, with a total area of 90,775 square meters, plus a one-half interest in Road Lot No. 6, as payment of Santos’s attorney’s fees and advances for the registration of Custodia’s land. Upon registration of the deed of conveyance on July 5, 1966, Custodia’s Transfer Certificate of Title Nos. 167564 and 167565 were cancelled, and Transfer Certificate of Title No. 167568 for Lot 4 and Transfer Certificate of Title No. 167585 for Lot 5 were issued to Santos. On September 2, 1967, Santos’s Lot 5, with an area of 50,000 square meters, was subdivided into Lots 5-A and 5-B under plan Psd-78008, with areas of 30,205 square meters and 19,795 square meters, respectively. Upon registration of Psd-78008 on October 3, 1967, Santos’s Transfer Certificate of Title No. 167585 was cancelled, and Transfer Certificate of Title No. 203580 for Lot 5-A and Transfer Certificate of Title No. 203581 for Lot 5-B were issued in the name of Andres F. Santos. Out of Custodia’s original Lot 1, Santos was given a total of 90,775 square meters registered under titles including Transfer Certificate of Title No. 167568 for Lot 4 and Transfer Certificate of Title No. 203580 for Lot 5-A, plus one-half of Road Lot No. 6.

Plaintiff claimed that the conditions for the execution of the Deed of Confirmation of Sale had been fulfilled, namely the release of the title of the lot and the approval of the subdivision plan by the Land Registration Commission. She enumerated the titles with their corresponding land areas derived by defendants from the lot: Transfer Certificate of Title No. 203580 covering 30,205 square meters, Transfer Certificate of Title No. 203581 covering 19,790 square meters, and Transfer Certificate of Title No. 167568 covering 40,775 square meters. On December 21, 1973, plaintiff sent a letter of demand to defendants, to which defendants replied. On January 14, 1974, Amparo del Rosario filed a complaint against the spouses Andres F. Santos and Aurora O. Santos for specific performance and damages, alleging their failure to execute the Deed of Confirmation of Sale in malicious breach of the Deed of Sale dated September 28, 1964.

In their motion to dismiss and answer with counterclaim, defendants pleaded lack of jurisdiction, lack of cause of action, prescription, waiver, abandonment or extinguishment of the claim, the statute of frauds, and non-existence of the cause or object of the contract. They alleged that the deed of sale was only an accommodation extended out of close friendship; that to allay plaintiff’s fears over the non-collection of the debt of Erlinda Cortez to plaintiff in sums exceeding ₱2,000, defendants, who were in turn indebted to Erlinda Cortez in the amount of ₱2,000, voluntarily offered to transfer to plaintiff their inexistent but expectant right over the lot as part payment of Erlinda Cortez’s indebtedness; and that because Erlinda Cortez later paid her creditor what was then due, the deed of sale had in effect been extinguished. They characterized the deed as a mere tentative agreement never intended to be ratified or acknowledged before a notary public and claimed they never appeared before Notary Public Florencio Landrito. In their answer with counterclaim, they further claimed that the deed was simulated and fictitious, that plaintiff paid no amount to defendants, and that the deed was entrusted to plaintiff’s care and custody on the conditions that plaintiff would secure the written consent of Erlinda Cortez to the deed as part payment of what she owed plaintiff and would render to defendants a true accounting of collections made from Erlinda showing the ₱2,000 consideration duly credited to Erlinda’s account. At pre-trial, defendants offered by way of compromise to pay plaintiff the sum of ₱2,000, but plaintiff rejected the offer and insisted on delivery of the land. The trial court found that no serious factual issues were involved, granted the motion for summary judgment, and rendered judgment in favor of plaintiff.

• Procedural Due Process and Summary Judgment: Appellants (defendants) argued that the lower court deprived them of procedural due process by rendering summary judgment, maintaining that a trial on the merits was indispensable because they had denied under oath all material allegations of the complaint and had put in issue the due execution of the Deed of Sale.
• Extinguishment of Claim: Appellants maintained that the lower court erred in holding that appellee’s claim had not been extinguished, claiming that Erlinda Cortez had paid her total indebtedness to appellee in the amount of ₱14,160, including the ₱2,000 intended to be paid by appellants, and that Erlinda Cortez had decided to forego, renounce, and refrain from collecting the ₱2,000 appellants owed her.
• Unwritten Conditions and Parol Evidence: Appellants argued that the lower court erred in sustaining appellee’s contention that there were no other unwritten conditions between the parties except those expressed in the deed, and that Erlinda Cortez’s conformity was not required to validate appellants’ obligation; they sought to prove at trial that the alleged conditions were not fulfilled.
• Validity and Genuineness of the Deed: Appellants contended that the lower court erred in holding that the deed was not infirmed and expressed the true intent of the parties, claiming that the deed was a mere tentative agreement, simulated and fictitious, and that they never appeared before the notary public.
• Co-ownership and Object of Sale: Appellants argued that the lower court erred in declaring that they were co-owners of the land registered solely in the name of Teofilo Custodia, and that the cause or object of the contract did not exist at the time of the transaction.
• Conveyance and Location of the Land: Appellants maintained that the lower court erred in ordering them to convey 20,000 square meters from the southeastern portion of Lot 4 or Lot 5-A, arguing that the southeastern portion of those lots was no longer the southeastern portion of the bigger Lot 1, which belonged to Teofilo Custodia.
• Attorney’s Fees and Costs: Appellants argued that the lower court erred in ordering them to pay appellee ₱2,000 as attorney’s fees and the costs of the action.
• Prescription: In their motion to dismiss, appellants pleaded prescription, alleging that the deed of sale was dated September 28, 1964 and supposedly ratified October 1, 1964, but the complaint was filed only on January 14, 1974, a lapse of more than nine years when it should have been filed within five years under Article 1149 of the New Civil Code.

• Fulfillment of Conditions: Plaintiff-appellee claimed that the conditions for the execution of the Deed of Confirmation of Sale had been fulfilled, namely the release of the title of the lot and the approval of the subdivision plan of the lot by the Land Registration Commission, and she enumerated the titles derived by defendants from the lot.
• Summary Judgment Proper: Plaintiff-appellee moved for summary judgment and/or judgment on the pleadings on the ground that defendants’ defenses failed to tender an issue or did not present issues serious enough to deserve a trial on the merits, and she submitted an affidavit of merits.
• Delivery of the Land: Plaintiff-appellee rejected defendants’ pre-trial compromise offer to pay ₱2,000 and insisted on the delivery of the land to her.

• Procedural Due Process and Summary Judgment: Whether the trial court properly rendered summary judgment without a full trial despite appellants’ denial of material allegations and their claim that the deed was falsely notarized.
• Extinguishment of Obligation: Whether appellee’s claim under the deed of sale was extinguished by payment, waiver, or abandonment due to Erlinda Cortez’s alleged payment and renunciation.
• Parol Evidence and Unwritten Conditions: Whether appellants could prove alleged unwritten conditions, namely Erlinda Cortez’s conformity and an accounting of collections, to vary the terms of the deed of sale.
• Due Execution and Genuineness of the Deed: Whether the deed of sale was invalid or unenforceable because of alleged false notarization and lack of ratification.
• Co-ownership and Sale of Expected Thing: Whether appellants had a valid interest in Lot 1 that could be sold, and whether the sale was valid despite the lack of title at the time of execution.
• Location and Conveyance: Whether the trial court properly ordered conveyance of 20,000 square meters from the southeastern portion of Lot 4 or Lot 5-A after appellants’ subdivision of Lot 1.
• Prescription: Whether the action for specific performance had prescribed.
• Attorney’s Fees and Costs: Whether the award of ₱2,000 as attorney’s fees and costs was proper.

• Procedural Due Process and Summary Judgment: Yes. Summary judgment was proper because the pleadings, affidavits, and exhibits showed no genuine issue as to any material fact and appellee was entitled to judgment as a matter of law under Rule 34, Section 3 of the Rules of Court.
• Extinguishment of Obligation: No. Appellants failed to substantiate their claim that the obligation had been extinguished, as the receipt for ₱14,160 excluded the ₱2,000 value of the property and no proof showed that Erlinda Cortez paid the ₱2,000 debt to appellee.
• Parol Evidence and Unwritten Conditions: No. The parol evidence rule barred proof of additional conditions not embodied in the deed, and none of the exceptions applied because the deed was clear and unambiguous.
• Due Execution and Genuineness of the Deed: Yes. The deed was valid and genuine; a sale of real property is enforceable under the Statute of Frauds if in writing, and notarization is not essential to its enforceability.
• Co-ownership and Sale of Expected Thing: Yes. The sale was valid as a sale of an expected thing under Article 1461 of the New Civil Code, and the expectant right materialized when appellants actually derived titles from Lot 1.
• Location and Conveyance: Yes. The subdivision of Lot 1 between appellants and Teofilo Custodio, made without appellee’s intervention, knowledge, and consent, was not binding on appellee, and appellants could not escape their obligation by subdividing the land.
• Prescription: No. Only seven years and six months of the ten-year prescription period for actions for specific performance of a written contract had elapsed.
• Attorney’s Fees and Costs: Yes. The award was just and lawful because appellants compelled appellee to litigate and failed to heed her just demand.

• Procedural Due Process and Summary Judgment: The trial court did not deprive appellants of procedural due process. Under Rule 34, Section 3 of the Rules of Court, summary judgment is proper where the pleadings, depositions, admissions, and affidavits show that, except as to the amount of damages, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Appellants did not deny the genuineness of their signatures on the deed and did not contest the words and figures in the deed except in the acknowledgment portion. By admitting the due execution and genuineness of the document, they admitted that they voluntarily signed it or that it was signed by another with their authority, and that at the time it was signed it was in the words and figures exactly as set out in the pleading relying upon it; formal requisites such as acknowledgment were waived. The alleged false notarization was therefore of no consequence. Appellants also failed to submit countervailing evidence on extinguishment, waiver, or unwritten conditions, leaving no genuine factual issue for trial.

• Extinguishment of Obligation: The claim was not extinguished. Appellants asserted that Erlinda Cortez paid ₱14,160, including the ₱2,000 intended for appellee, and later waived the ₱2,000 debt. However, the receipt for ₱14,160 signed by appellee, by appellants’ own statement in their answer with counterclaim, conspicuously excluded the ₱2,000 value of the property covered by the deed of sale. The receipt was no proof that Erlinda Cortez subsequently paid her ₱2,000 debt to appellee. No affidavit, document, or writing supported the claim that the ₱2,000 debt had been waived or abandoned. The trial court’s observation that it was improbable for Cortez to still pay her debt since Santos had already paid it was affirmed.

• Parol Evidence and Unwritten Conditions: The alleged unwritten conditions could not be proved. Section 7, Rule 130 of the Rules of Court provides that when the terms of an agreement have been reduced to writing, the writing is considered as containing all such terms, and no evidence of the terms of the agreement other than the contents of the writing may be admitted, except where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings, or when there is an intrinsic ambiguity in the writing. The parol evidence rule forbids any addition to or contradiction of the terms of a written instrument by testimony purporting to show that, at or before the signing of the document, other or different terms were orally agreed upon. Although Article 1306 of the New Civil Code allows parties to establish stipulations, clauses, terms, and conditions, the alleged conditions requiring appellee to secure Erlinda Cortez’s written conformity and to render an accounting were not embodied in the deed of sale. The deed was clear, without ambiguity, mistake, or imperfection, so the exception for failure of the writing to express the true intent of the parties did not apply.

• Due Execution and Genuineness of the Deed: The deed was genuine and not infirmed. For a sale of real property or of an interest therein to be enforceable under the Statute of Frauds, it is enough that it be in writing; it need not be notarized. The vendee may avail of the right under Article 1357 of the New Civil Code to compel the vendor to observe the form required by law in order that the instrument may be registered in the Registry of Deeds. The due execution and genuineness of the deed of sale were not really in issue because appellants admitted their signatures and the contents of the deed, contesting only the acknowledgment. The alleged false notarization did not invalidate the deed.

• Co-ownership and Sale of Expected Thing: The fifth assignment of error was without merit. By the terms of the deed of sale itself, which was found genuine and not infirmed, appellants declared themselves to be owners of one-half interest in the property. Notwithstanding the lack of title to the lot at the time of the execution of the deed of sale in favor of appellee, the sale was valid as a sale of an expected thing under Article 1461 of the New Civil Code, which provides that things having a potential existence may be the object of the contract of sale, that the efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence, and that the sale of a vain hope or expectancy is void. The expectant right materialized because appellants actually derived titles from Lot 1.

• Location and Conveyance: The order to convey 20,000 square meters from the southeastern portion of either Lot 4 or Lot 5-A was proper. The subdivision of Lot 1 between appellants and Teofilo Custodio was made between themselves alone, without the intervention, knowledge, and consent of appellee, and was therefore not binding upon appellee. Appellants could not violate or escape their obligation under the deed of sale by simply subdividing Lot 1, bisecting it, and segregating portions to change their sides in relation to the original Lot 1.

• Prescription: The action had not prescribed. The trial court ruled that only seven years and six months of the ten-year prescription period provided under Articles 1144 and 155 for actions for specific performance of a written contract of sale had elapsed, and the Supreme Court affirmed that ruling as in accordance with law.

• Attorney’s Fees and Costs: The award of ₱2,000 as attorney’s fees was just and lawful. The trial court found that appellants compelled appellee to litigate and failed to heed appellee’s just demand, and the Supreme Court affirmed the award.

• Parol Evidence Rule — Under Section 7, Rule 130 of the Rules of Court, when the terms of an agreement have been reduced to writing, the writing is considered as containing all such terms, and no evidence of other terms may be admitted between the parties, except where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings, or when there is an intrinsic ambiguity in the writing. The rule forbids any addition to or contradiction of the terms of a written instrument by testimony purporting to show that other or different terms were orally agreed upon. In this case, the alleged unwritten conditions requiring appellee to secure Erlinda Cortez’s conformity and to render an accounting could not be proved because the deed of sale was clear and unambiguous.

• Statute of Frauds and Notarization — A sale of real property or of an interest therein is enforceable under the Statute of Frauds if it is in writing; notarization is not required for enforceability. The vendee may avail of the right under Article 1357 of the New Civil Code to compel the vendor to observe the form required by law so that the instrument may be registered. The Court applied this doctrine in holding that the alleged false notarization did not invalidate the deed of sale.

• Sale of a Thing Having Potential Existence (Expected Thing) — Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence, and the sale of a vain hope or expectancy is void. The Court applied this doctrine in upholding the sale of 20,000 square meters from Santos’s one-half interest in Lot 1 even before title was issued, because the expectant right materialized when Santos actually derived titles from the lot.

• Summary Judgment — Under Rule 34, Section 3 of the Rules of Court, the judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The Court applied this doctrine in affirming the trial court’s summary judgment because appellants admitted the due execution and genuineness of the deed and failed to present countervailing evidence creating a genuine issue.

• Admission of Due Execution and Genuineness of a Document — The admission of the due execution of a document means that the party whose signature it bears admits that he voluntarily signed it or that it was signed by another for him and with his authority. The admission of the genuineness of the document means that the party whose signature it bears admits that at the time it was signed it was in the words and figures exactly as set out in the pleading of the party relying upon it, and that any formal requisites required by law, such as swearing and acknowledgment, are waived. The Court applied this doctrine because appellants did not deny their signatures and contested only the acknowledgment.

• Subdivision Without Consent Not Binding — A subdivision made by obligors among themselves without the intervention, knowledge, and consent of the obligee is not binding on the latter and cannot be used to escape a contractual obligation. The Court applied this doctrine in holding that appellants could not change the location of the 20,000 square meters owed to appellee by subdividing Lot 1 without her consent.

• Prescription of Actions for Specific Performance of a Written Contract — An action for specific performance of a written contract prescribes in ten years under Article 1144 of the New Civil Code. The Court applied this doctrine in affirming that the action had not prescribed because only seven years and six months of the ten-year period had elapsed.

• Attorney’s Fees — Attorney’s fees may be awarded where the defendants compelled the plaintiff to litigate and failed to heed the plaintiff’s just demand. The Court applied this doctrine in affirming the award of ₱2,000 as attorney’s fees.

• "The parol evidence rule forbids any addition to or contradiction of the terms of a written instrument by testimony purporting to show that, at or before the signing of the document, other or different terms were orally agreed upon by the parties." — This passage states the controlling formulation of the parol evidence rule applied to exclude appellants’ alleged unwritten conditions.
• "For a sale of real property or of an interest therein to be enforceable under the Statute of Frauds, it is enough that it be in writing. It need not be notarized." — This passage establishes that notarization is not essential to the enforceability of a written sale of real property, defeating appellants’ false-notarization defense.
• "Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void." — This passage quotes Article 1461 of the New Civil Code, the basis for upholding the sale of an expected thing.
• "The subdivision of Lot I between the appellants and Teofilo Custodio was made between themselves alone, without the intervention, knowledge and consent of the appellee, and therefore, not binding upon the latter." — This passage explains why appellants’ unilateral subdivision could not defeat the obligation to convey the 20,000 square meters.

• Article 1461, New Civil Code — Things having a potential existence may be the object of the contract of sale; the efficacy of the sale of a mere hope or expectancy is subject to the condition that the thing will come into existence, and the sale of a vain hope or expectancy is void. Applied to uphold the sale of 20,000 square meters from Santos’s expectant one-half interest in Lot 1.
• Article 1357, New Civil Code — The vendee may compel the vendor to observe the form required by law in order that the instrument may be registered in the Registry of Deeds. Applied to hold that the lack of valid notarization did not prevent enforcement of the deed.
• Article 1403, New Civil Code — The Statute of Frauds requires certain contracts, including a sale of real property or an interest therein, to be in writing for enforceability. Applied to hold that the written deed of sale was enforceable even without notarization.
• Article 1144, New Civil Code — Actions based on a written contract prescribe in ten years. Applied to hold that the action for specific performance had not prescribed.
• Articles 1144 and 155, New Civil Code (as cited in the text) — The trial court and Supreme Court referred to the ten-year prescription period for actions for specific performance of a written contract of sale; only seven years and six months had elapsed.
• Article 1149, New Civil Code — Appellants invoked the five-year prescription period in their motion to dismiss, but the Court applied the ten-year period for a written contract and rejected the prescription defense.
• Article 1487, New Civil Code — Expenses for the execution and registration of the sale are borne by the vendor. Cited in the dispositive portion ordering defendants to bear the expenses of execution and registration.
• Article 1306, New Civil Code — Contracting parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Appellants invoked this provision, but the Court held that the alleged additional conditions could not be proved because they were not embodied in the deed.
• Section 7, Rule 130, Rules of Court — The parol evidence rule: when the terms of an agreement have been reduced to writing, the writing is considered as containing all such terms, and no evidence of other terms may be admitted except in specified cases. Applied to exclude proof of alleged unwritten conditions.
• Rule 34, Section 3, Rules of Court — Summary judgment shall be rendered forthwith if the pleadings, depositions, admissions, and affidavits show no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Applied to affirm the trial court’s summary judgment.
• Rule 34, Section 5, Rules of Court — Supporting and opposing affidavits for summary judgment must be made on personal knowledge, set forth admissible facts, and show that the affiant is competent to testify. Applied in assessing appellants’ failure to present countervailing evidence.
• Section 31, Judiciary Act of 1948, as amended — The Court of Appeals certified the appeal to the Supreme Court because only questions of law were involved. Applied as the procedural basis for the Supreme Court’s jurisdiction over the certified appeal.

Justices Makasiar (Actg. Chairman), Fernandez, De Castro, and Melencio-Herrera concurred.