Gonzalez v. Trinidad
REITERATIONFacts
The Antecedents: Petitioners Amparo Gonzalez and Alfredo Trinidad entered into a deed of sale with respondents Primitivo Trinidad and Maria Ynares for an urban property for P10,000. The property was mortgaged for P6,500, which the purchasers assumed. The sale was simulated, and the vendors did not receive the price. The purpose of the fictitious sale was to prevent the attachment of the property by Dr. Ramon Papa, to whom Lorenzo Perez had endorsed a note for P4,000 executed by Primitivo Trinidad. Dr. Papa died, and his credit was adjudicated to Carmen Papa, who later agreed with Primitivo Trinidad for an indeterminate payment period, thus averting the feared litigation and attachment. Procedural History: In Civil Case No. 47960 of the Court of First Instance of Manila, the Court declared the deed of sale null and void and dismissed the plaintiffs' action and the defendants' counterclaim under Articles 1305 and 1306 of the Civil Code. The plaintiffs appealed to the Court of Appeals, which reversed the trial court's decision. The Petition: Petitioners contend that the Court of Appeals erred in holding that Articles 1305 and 1306 of the Civil Code are not applicable and in reversing, instead of affirming, the trial court's decision.
Issue(s)
Whether Articles 1305 and 1306 of the Civil Code are applicable to the simulated contract of sale. Whether the Court of Appeals erred in reversing the decision of the trial court.
Ruling
The Supreme Court denied the petition for review on certiorari, affirming the decision of the Court of Appeals. The Court held that the contract of sale was null and void per se due to the lack of consideration, as it was a simulated and fictitious transaction. The Court found that Articles 1305 and 1306 of the Civil Code were not applicable because the subject matter and the stated price were lawful, and the illegality pertained to the motive for entering into the contract, not the consideration itself.
Ratio Decidendi
On the applicability of Articles 1305 and 1306 of the Civil Code: The Court held that Articles 1305 and 1306 of the Civil Code are not applicable to the contract in question. These articles pertain to contracts with an illegal consideration or subject matter, which can either constitute an offense or misdemeanor or have an illegal consideration. In this case, the contract of sale, being onerous, had a lawful subject matter (the property) and a stated lawful consideration (P10,000). The illegality was in the motive of the parties, which was to defraud a creditor, not in the essential elements of the sale itself. The Court distinguished between the consideration of a contract and the motives of the contracting parties, stating that while motives may be illegal, they do not affect the validity of the contract unless the efficacy of the consideration is subordinated to their compliance as conditions. The Court cited Manresa and jurisprudence to support this distinction, emphasizing that the consideration is the essential reason which moves the contracting parties, while motives are particular reasons of a contracting party that do not affect the other party. On the reversal of the trial court's decision: The Court affirmed the decision of the Court of Appeals, which reversed the trial court's ruling. The trial court erroneously applied Articles 1305 and 1306 of the Civil Code. The Supreme Court found that the contract was null and void per se because it was fictitious and simulated, meaning there was a lack of consideration. Article 1261 of the Civil Code states that a contract is void if it lacks essential elements, such as consent or object. In this case, while there was consent and an object, the consideration (the price) was absent because the sale was not real. Therefore, the contract was nonexistent from the beginning, and the Court of Appeals correctly recognized this fact, albeit by distinguishing it from the application of Articles 1305 and 1306.
Main Doctrine
A contract of sale, being onerous, has for its cause or consideration the price. If the contract is fictitious and simulated, the consideration is lacking, rendering the contract null and void per se or nonexistent, even if the subject matter and the stated consideration are lawful and not penalized by law. The motives of the contracting parties should not be confused with the consideration.