Lequin v. Vizconde
REITERATIONFacts
The Antecedents: Petitioners (Sps. Lequin) purchased a 10,115-square meter lot. Respondents (Sps. Vizconde), who are related to petitioners, represented that they had also bought a 1,012-square meter lot from the same seller, which was adjacent to petitioners' property and part of it. Petitioners, believing this representation, allowed respondents to build their house on 512 square meters of this claimed lot, while petitioners built their house on the remaining 500 square meters. To resolve disputes and clarify ownership, petitioners, on the advice of a lawyer, executed a Kasulatan ng Bilihang Tuluyan ng Lupa (Deed of Sale) on February 12, 2000, ostensibly selling 512 square meters of the subject lot to respondents for PhP 15,000. However, this amount was never paid; instead, petitioners paid respondents PhP 50,000 for the 500-square meter portion where petitioners' house stood, believing respondents owned it. When petitioners attempted to develop a dried-up canal adjacent to their property, respondents objected, claiming ownership. Inquiries revealed that respondents had actually bought only the dried-up canal, and the 1,012-square meter lot belonged to petitioners. Procedural History: Petitioners filed a Complaint for Declaration of Nullity of Contract, Sum of Money and Damages. The Regional Trial Court (RTC) declared the Kasulatan null and void, ordering respondents to return PhP 50,000 with interest, and awarding moral and exemplary damages, attorney's fees, and costs. The Court of Appeals (CA) reversed the RTC, declaring the Kasulatan valid but ordering respondents to return PhP 50,000 without interest. The CA found no simulation and dismissed allegations of fraud. Petitioners sought reconsideration, which was denied. The Petition: Petitioners appealed to the Supreme Court, arguing that the CA erred in not giving credence to the RTC's findings, in finding no fraud, and in considering the Kasulatan as a valid contract of sale, among other issues.
Issue(s)
Whether the Court of Appeals erred in not clearly stating the facts and law on which its decision was based. Whether the Court of Appeals erred in not giving due credence to the findings of facts of the trial court. Whether the Court of Appeals erred in finding that there was no fraud on the part of the respondents. Whether the Court of Appeals erred in considering the Kasulatan ng Bilihang Tuluyan as a valid contract of sale. Whether the Court of Appeals erred in not considering that the respondents did not have the financial capacity to purchase the subject land from the petitioners.
Ruling
The Supreme Court granted the petition, reversed and set aside the CA Decision and Resolution, and reinstated the RTC Decision with modifications regarding interest on the PhP 50,000 to be returned.
Ratio Decidendi
On the CA's findings: The CA's finding that there was no fraud or machinations was bereft of factual evidentiary support, and its judgment was based on a misapprehension of facts. The Supreme Court, as an exception to the rule on trier of facts, reviewed the records and found the RTC's conclusions to be correct. On the CA's findings: The CA's finding that there was no fraud or machinations was bereft of factual evidentiary support, and its judgment was based on a misapprehension of facts. The Supreme Court, as an exception to the rule on trier of facts, reviewed the records and found the RTC's conclusions to be correct. On the validity of the Kasulatan and fraud: The Court found that the CA misappreciated the evidence. It was established that petitioners bought the entire 10,115-square meter lot, while respondents bought only the dried-up canal. Respondent Raymundo Vizconde, having negotiated the sale to petitioners, was aware that the 1,012-square meter lot claimed by respondents was part of petitioners' property. Respondents' misrepresentation that they bought a separate lot constituted fraud, specifically concealment of a material fact, which vitiated petitioners' consent. The Court held that petitioners would not have entered into the contract of sale, nor paid PhP 50,000, had they known the true ownership. Therefore, the Kasulatan was voidable due to vitiated consent. The award of moral and exemplary damages was reinstated due to the fraud employed by respondents. On lack of consideration and simulation: The Court agreed with the RTC that the Kasulatan was simulated and lacked consideration. While the deed stated a PhP 15,000 payment, evidence showed petitioners actually paid respondents PhP 50,000, and respondents never paid the PhP 15,000. Petitioners presented evidence aliunde that the written agreement did not express the true intent of the parties, falling under the exception to the parol evidence rule. Respondents failed to prove payment, thus their affirmative defense failed. The Court cited Article 1471 of the Civil Code, stating that if the price is simulated, the sale is void. The lack of consideration and vitiated consent rendered the contract void ab initio. On ownership and the PhP 50,000 payment: The Court affirmed petitioners' legal ownership over the 512-square meter lot. Since petitioners legally owned the property, their payment of PhP 50,000 to respondents for a portion of it constituted unjust enrichment. The Court ordered the return of the PhP 50,000 with legal interest.
Main Doctrine
A contract of sale is void ab initio for lack of consideration if the stated purchase price was simulated and never paid. Consent is vitiated by fraud when one party conceals material facts or makes misrepresentations to induce the other party into entering a contract they would not have otherwise agreed to.