Sanchez vs. Mapalad Realty Corporation

A deed of sale attended by fraud and proved to be fictitious transfers no title to the buyer. Where the alleged vendor had no authority to sell because he had already divested all his interests in the corporation, and where no consideration was paid, the contract of sale is void ab initio for being fictitious, and the buyer acquires no title to the subject property. A transferee pendente lite, who purchases property with notice of a lis pendens, stands exactly in the shoes of the transferor and is bound by any judgment rendered against the transferor, acquiring no better right than his predecessor.

Respondent Mapalad Realty Corporation was the registered owner of four parcels of land along Roxas Boulevard, Baclaran, Parañaque, covered by TCT Nos. S-81403, S-81404, S-81405, and S-81406, with a total land area of 4,038 square meters. On March 21, 1986, shortly after the February 1986 EDSA Revolution, Jose Y. Campos executed an affidavit admitting that Mapalad was one of the companies he held in trust for former President Ferdinand E. Marcos, and turned over all assets and properties to the new administration led by President Corazon C. Aquino. On March 23, 1986, the Presidential Commission on Good Government (PCGG) issued writs of sequestration for Mapalad and all its properties, placing the corporation under government custody pending determination of its true ownership.

Respondent Mapalad Realty Corporation was the registered owner of four parcels of land along Roxas Boulevard, Baclaran, Parañaque, covered by TCT Nos. S-81403, S-81404, S-81405, and S-81406, with a total land area of 4,038 square meters. On March 21, 1986, shortly after the February 1986 EDSA Revolution, Jose Y. Campos executed an affidavit admitting that Mapalad was one of the companies he held in trust for former President Ferdinand E. Marcos, and turned over all assets, properties, records, and documents pertaining to Mapalad to the new administration led by then President Corazon C. Aquino. On March 23, 1986, the PCGG issued writs of sequestration for Mapalad and all its properties.

On August 2, 1992, the PCGG appointed Rolando E. Josef as Vice President/Treasurer and General Manager of Mapalad. He immediately conducted an inventory of the assets of the corporation, and it was then discovered that four TCTs were missing. Josef inquired about the missing TCTs from Luis R. Narciso, an employee of Port Center Development Corporation, a sister company of Mapalad, and was informed that Mapalad's former director and general manager, Felicito L. Manalili, took the missing TCTs sometime in July 1992. On September 8, 1992, Narciso executed an affidavit stating that the missing TCTs were taken from him by Manalili. Josef personally talked to Manalili, who promised to return the titles but never did despite repeated demands.

On November 16, 1992, Felimon Oliquiano, Jr., president of Nordelak Development Corporation, filed a notice of adverse claim over the subject properties based on a deed of sale purportedly executed on November 2, 1989 by Miguel Magsaysay in his capacity as president and board chairman of Mapalad, selling the four lots to Nordelak for a total purchase price of P20,190,000.00. This deed was notarized by Elpidio T. Clemente as Document No. 121, Page 26, Book No. 82, Series of 1989. Josef notified the Register of Deeds of Parañaque by three successive letters dated November 18, December 7, and 8, 1992, that the owner's duplicate copies of the four TCTs were missing, and requested that no transaction be entertained. On December 22, 1992, Mapalad filed with the RD a verified petition for cancellation of adverse claim, which also included a notice of loss of the owner's duplicate copies of the TCTs.

On January 14, 1993, Mapalad discovered that its titles to the four properties were cancelled as early as December 22, 1992, and in lieu thereof, TCT Nos. 68493, 68494, 68495, and 68496 in the name of Nordelak were issued by virtue of another deed of sale also dated November 2, 1989 and purportedly signed by the same Miguel Magsaysay. Although this document was also notarized by the same Elpidio T. Clemente, bearing the same Document No. 121, Page 26, Book No. 82, Series of 1989, the amount indicated as total purchase price was P7,268,400.00 instead of P20,190,000.00. Thus, there were two deeds of absolute sale bearing the same dates, involving the same parties, the same parcels of land, and notarized by the same notary public under identical notarial entries, but with different considerations.

Way back October 13, 1978, A. Magsaysay, Inc., a corporation controlled by Miguel Magsaysay, acquired ownership of all shares of stock of Mapalad. On December 3, 1982, however, A. Magsaysay, Inc. sold all its shares to Novo Properties, Inc., and Miguel Magsaysay also sold his one and only share to Novo Properties, Inc., thus completely terminating any and all rights or interest he used to have over the properties of Mapalad. Immediately upon learning of the cancellation of Mapalad's four TCTs, Josef conferred with Miguel Magsaysay, who denied having signed the purported deeds of absolute sale. On January 19, 1993, the PCGG asked the Parañaque RD to immediately recall, revoke, and cancel the four titles issued in favor of Nordelak. On January 22, 1993, the PCGG issued a writ of injunction enjoining the RD from entertaining any transaction relative to the titles in Nordelak's name, which was annotated as Entry No. 93-14786. On January 25, 1993, the RD requested Nordelak to surrender the titles, but Nordelak refused.

On February 3, 1993, Mapalad commenced the present action for annulment of deed of sale and reconveyance of title with damages against Nordelak, alleging that the deed of sale was falsified and a forgery, that Manalili conspired with the other defendants to defraud Mapalad, and that there were two deeds of absolute sale with the same date but different considerations. On February 22, 1993, a notice of lis pendens was annotated as Entry No. 93-91718 on the TCTs in Nordelak's name. On October 24, 1994, while the case was still pending before the RTC, Nordelak sold the subject properties for P50,000,000.00 to Manuel Luis S. Sanchez, now petitioner before the Supreme Court. The RTC ruled that Mapalad failed to adduce positive proof of forgery and dismissed the complaint, but the CA reversed, finding clear evidence of fraud: Magsaysay was no longer Mapalad's president when the deed was executed; the deed was registered more than three years after its date; the notary public did not submit a copy of the deed in the notarial section; there was no consideration for the deed; and Nordelak's president was never presented to testify on the validity of the deed.

• Error in CA's Finding of Fraud: Petitioner argued that contrary to the express findings of the trial court that the questioned deed of sale was genuine, valid, and subsisting, the Court of Appeals ruled that there was fraud on the part of Nordelak in obtaining the certificates of title over the disputed property, and consequently the questioned deed was fictitious.
• Error in CA's Finding on Good Faith: Petitioner argued that contrary to the express findings of the trial court that Nordelak was a buyer in good faith and for value, the Court of Appeals ruled otherwise.
• Procedural Issue on Questions of Fact: The Solicitor General raised the procedural issue of whether petitioner may raise questions of fact in the present petition, given that factual findings of the CA are generally conclusive on the Court.

• Fraud and Forgery: Respondent Mapalad alleged in its complaint that the deed of sale was falsified and a forgery, that defendant Felicito L. Manalili conspired and confederated with the other defendants to defraud Mapalad by fabricating a fictitious, spurious, and falsified deed of sale, and that there were two deeds of absolute sale with the same date of November 2, 1989 but differing in the amounts of consideration.
• Lack of Consideration: Respondent presented the testimony of Rolando Josef that Mapalad did not receive any amount with respect to the alleged transaction involving the sale of its properties, which was not disputed by the appellees.
• Nordelak's Defenses: Nordelak and its president Oliquiano alleged in their answer that Nordelak was a buyer in good faith and that it never dealt with defendant Manalili in the purchase of the subject properties.

• Procedural — Questions of Fact: Whether petitioner may raise questions of fact in the present petition for review on certiorari.
• Validity of the Sale: Whether there was a valid sale between Mapalad and Nordelak.
• Transferee Pendente Lite: Whether petitioner Sanchez acquired valid title over the properties as an innocent purchaser for value despite a defect in Nordelak's title.

• Procedural — Questions of Fact: Yes, the case falls within the exception to the rule that factual issues may not be entertained by this Court, because the factual findings of the Court of Appeals and the trial court are contradictory.
• Validity of the Sale: No. There can be no valid contract of sale between Mapalad and Nordelak. The contract of sale is not only voidable on account of lack of valid consent on the part of the purported seller, but also void ab initio for being fictitious on account of lack of consideration.
• Transferee Pendente Lite: No. Petitioner, as a transferee pendente lite, merely steps into the shoes of his predecessor-in-interest who had no valid title, and cannot acquire any better right than his predecessor.

• Procedural — Questions of Fact: The Court noted that the basis for the trial court's disposition in favor of Nordelak was Mapalad's apparent failure to adduce sufficient evidence to prove that Miguel Magsaysay's signatures on the two deeds of sale were forged. The CA, however, went beyond the mere determination of whether the signatures were forged and looked into the validity of the deed of absolute sale as a whole, based on the testimonies of Miguel Magsaysay himself. The Court sustained the CA's finding and conclusion, holding that while there have been guidelines used by the Court in determining what constitutes sufficient proof to establish whether a signature was forged, it does not preclude a party from adducing other possible proofs. In this case, not only did Magsaysay disown the signatures appearing on the deed of sale, he cited a valid legal reason for him not to have signed such document at all — he had no more power and authority to sign for and in behalf of Mapalad because as early as 1982, he had already divested himself of all his interests in said corporation. His testimonies constitute sufficient basis for the Court to conclude that the signatures appearing on the two deeds of sale were not his signatures. This factual determination on the genuineness or forgery of the signatures is most crucial, and when compared with this, all other factual issues raised in the petition become immaterial.

• Validity of the Sale: The Court defined a contract as a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another to the fulfillment of a prestation. There can be no contract unless the following concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause of the obligation which is established. The essential requisites of a valid contract of sale are: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. Contracts of sale are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Consent may be given only by a person with the legal capacity to give consent. In the case of juridical persons such as corporations like Mapalad, consent may only be granted through its officers who have been duly authorized by its board of directors. In the present case, consent was purportedly given by Miguel Magsaysay, but as he categorically stated on the witness stand, he was no longer connected with Mapalad on the said date because he already divested all his interests in said corporation as early as 1982. Even assuming, for the sake of argument, that the signatures purporting to be his were genuine, it would still be voidable for lack of authority resulting in his incapacity to give consent for and in behalf of the corporation. The CA also noted that the alleged contract of sale had no consideration — there was no payment effected by Nordelak for this transaction, and Josef testified that no funds were infused into Mapalad's coffers on account of this transaction, which testimony remained uncontroverted. Nordelak could have easily produced the cancelled check before the trial court, if there was any, but it did not. The third element for a valid contract of sale is likewise lacking. Lack of consideration makes a contract of sale fictitious, and a fictitious sale is void ab initio.

• Transferee Pendente Lite: The Court held that Nordelak did not acquire ownership or title over the four properties because the contract of sale between Mapalad and Nordelak was not only voidable but also void ab initio. Not having any title to the property, Nordelak had nothing to transfer to petitioner Sanchez, applying the principle of nemo dat non quod habet — no one can give what he does not have. Petitioner acquired the property subject of litigation during the pendency of the case in the trial court, and it is undisputed that notices of lis pendens were annotated on the TCTs in Nordelak's name as Entry No. 93-91718. Citing Lim vs. Vera Cruz, the Court explained that a notice of lis pendens is filed for the purpose of warning all persons that the title to certain property is in litigation and that if they purchase the same, they are in danger of being bound by an adverse judgment. By virtue of the notice of lis pendens annotated on the four TCTs, petitioner had notice that the property he was intending to buy was under litigation. He is, therefore, a transferee pendente lite who, as held in Voluntad vs. Dizon, stands exactly in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor. Under the circumstances, petitioner cannot acquire any better right than his predecessor, Nordelak. A judgment of reconveyance can be legally enforced by Mapalad against petitioner as transferee pendente lite of Nordelak.

• Nemo dat non quod habet — No one can give what he does not have. The Court applied this principle to hold that since Nordelak did not acquire ownership or title over the four properties because the contract of sale was void ab initio, Nordelak had nothing to transfer to petitioner Sanchez, who therefore acquired no valid title.

• Transferee pendente lite — A transferee who purchases property during the pendency of litigation, with notice of a lis pendens, stands exactly in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor. The Court applied this doctrine to hold that petitioner Sanchez, who bought the properties with an annotation of a notice of lis pendens, cannot acquire any better right than his predecessor Nordelak, and a judgment of reconveyance can be legally enforced against him.

• Lis pendens — A notice of lis pendens is filed for the purpose of warning all persons that the title to certain property is in litigation and that if they purchase the same, they are in danger of being bound by an adverse judgment. The notice is intended to be a warning to the whole world that one who buys the property does so at his own risk, in order to save innocent third persons from any involvement in any future litigation concerning the property.

• Fictitious sale — Lack of consideration makes a contract of sale fictitious, and a fictitious sale is void ab initio. The Court applied this doctrine to hold that the deed of absolute sale dated November 2, 1989 was void ab initio because no consideration was paid by Nordelak for the transaction.

• Exceptions to the rule on conclusiveness of CA factual findings — In petitions for review on certiorari, the findings of fact of the CA are generally conclusive on the Court, save for admitted exceptions including: (1) the factual findings of the CA and the trial court are contradictory; (2) the findings are grounded entirely on speculation, surmises, or conjectures; (3) the inference made by the CA from its findings of fact is mainly mistaken, absurd, or impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the appellate court goes beyond the issues of the case; (6) the judgment is premised on a misapprehension of facts; (7) the CA fails to notice certain relevant facts; and (8) the findings of fact of the CA are contrary to those of the trial court. The Court applied this doctrine to take cognizance of the case because the CA and RTC findings were contradictory.

• "Where a deed of sale was attended by fraud and proved to be fictitious, the buyer acquired no title to the subject property. The sale of four parcels of prime land along Roxas Boulevard surrendered by a former associate of President Marcos to the Aquino government bears the earmarks of a grand scam perpetrated by the very same persons appointed by the Presidential Commission on Good Government (PCGG) to safeguard the assets of the sequestered companies." — This passage states the core ruling of the case and the Court's characterization of the fraudulent transaction, serving as the ratio decidendi.

• "Lack of consideration makes a contract of sale fictitious. A fictitious sale is void ab initio." — This passage articulates the controlling doctrine on fictitious sales, which the Court applied to declare the deed of absolute sale between Mapalad and Nordelak void ab initio.

• "Nemo dat non quod habet. Hindi maibibigay ng isang tao ang hindi kanya. No one can give what he does not have." — This passage states the principle applied to hold that Nordelak, having no valid title, had nothing to transfer to petitioner Sanchez.

• "By virtue of the notice of lis pendens annotated on the four TCTs in this case, petitioner had notice that the property he was intending to buy is under litigation. He is, therefore, a transferee pendente lite who, as held by this Court in Voluntad v. Dizon, stands exactly in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor." — This passage defines the doctrine of transferee pendente lite and its application to petitioner Sanchez, who purchased the property with notice of the pending litigation.

• Lim vs. Vera Cruz, G.R. No. 143646, April 4, 2001, 356 SCRA 386 — Cited as controlling precedent for the definition and purpose of a notice of lis pendens, which the Court applied to hold that petitioner had notice of the pending litigation and bought the property at his own risk.
• Voluntad vs. Dizon, G.R. No. 132294, August 26, 1999, 313 SCRA 209 — Cited as controlling precedent for the doctrine that a transferee pendente lite stands exactly in the shoes of the transferor and is bound by any judgment rendered for or against the transferor.
• Landbank of the Philippines vs. Monet's Export and Manufacturing Corporation, G.R. No. 161865, March 10, 2005, 453 SCRA 173 — Cited for the enumeration of exceptions to the rule that factual findings of the CA are conclusive on the Court, which the Court applied to take cognizance of the case.
• Swedish Match, AB vs. Court of Appeals, G.R. No. 128120, October 20, 2004, 441 SCRA 1 — Cited for the definition of a contract and the requisites for its validity, which the Court applied to determine the validity of the deed of sale.
• Nazareno vs. Nazareno, G.R. No. 138842, October 18, 2000, 343 SCRA 637 — Cited for the doctrine that a fictitious sale is void ab initio, which the Court applied to declare the deed of sale void.
• Consumido vs. Ros, G.R. No. 166875, July 31, 2007 — Cited for the principle that a corporation, being a juridical person, must act through its officers or agents in the normal course of business, which the Court applied to determine the validity of consent given on behalf of Mapalad.

• Article 1458, Civil Code — Defines the contract of sale, where one of the contracting parties obligates himself to transfer ownership of and to deliver a determinate thing and the other party to pay therefor a price certain in money or its equivalent. The Court applied this provision to determine whether a valid contract of sale existed between Mapalad and Nordelak.
• Section 14, Rule 18, Rules of Court — Provides that when a complaint states a common cause of action against several defendants, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. The Court noted that the RTC declared defendant Manalili in default despite this provision.
• Property Registration Decree (P.D. 1529) — The CA noted that under this decree, no voluntary instrument shall be registered by the Register of Deeds unless the owner's duplicate is presented with the instrument of transfer, which supported the finding that Manalili took the titles for the purpose of registering the fictitious deed of absolute sale.

Ynares-Santiago (Chairperson), Austria-Martinez, Chico-Nazario, and Nachura, JJ., concurred.