‭ .R. No.

L-38303, May 30, 1988‬

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‭HONGKONG & SHANGHAI BANKING CORPORATION, plaintiff-appellant, VS.‬
‭RALPH PAULI and SPOUSES SALLY P. GARGANERA and MATEO GARGANERA,‬
‭defendants-appellees.‬

‭FACTS‬

‭ SBC filed a complaint in the Court of First Instance of Manila against the defendant, Pauli, for‬
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‭the sum of P258,964.15. The Supreme Court upheld the bank's decision, but the bank failed to‬
‭execute the writs of execution due to the unavailability of Pauli's leviable assets. Pauli had‬
‭purchased a sugar cane plantation, Hacienda Riverside, from the Philippine National Bank in‬
‭1957, but did not register the deed of Sale to avoid discovery by his creditors. In 1963, he‬
‭fraudulently sold the hacienda to his daughter, Sally Garganera, and her husband Mateo‬
‭Garganera. Warner Barnes & Co., another creditor of Pauli, instituted another civil case with the‬
‭CF of Negros Occidental for the sale to the Garganera spouses, which was declared fictitious‬
‭for fraud of creditors. The defendants appealed the decision to the CA, but entered into a‬
‭compromise agreement with Warner Barnes & Co., Ltd., paying its judgment credit of‬
‭P28,962.11, and filed a joint motion to dismiss, which the CA approved.‬

‭ etitioner HSBC filed a complaint for the revival of the 1962 judgment in its favor, ordering the‬
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‭plaintiff the sum of P219,276.20 with legal interest until fully paid and the costs. The bank then‬
‭filed a new complaint against Pauli and the Garganeras, docketed as Civil Case No. 465 in the‬
‭CFl of Negros Occidental, praying for the annulment of the Conditional Sale and Deed of Sale of‬
‭Hacienda Riverside to the Garganeras and for Garganera's certificate of Title No. 1-34425.‬

‭Issue/s‬

‭ hether or not the action for annulment of the sale of Lot 693 to the Garganeras had been‬
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‭prescribed.‬

‭Ruling:‬

I‭n the present case, the Court held that when a transaction involves registered land, the‬
‭four-year period within winch to bring an action for annulment of the deed, shall be computed‬
‭from the registration of the conveyance (March 5, 1963) on the familiar theory that the‬
‭registration of the document is constructive notice of the conveyance to the whole world, and‬
‭not in 1969 wherein the plaintiff had obtained actual knowledge of the fraudulent sale of Pauli's‬
‭land to the Garganeras.‬
‭ .R. No. 75287 June 30, 1987‬
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‭HOUSE INTERNATIONAL BUILDING TENANTS ASSOCIATION, INC.,‬
‭petitioner-plaintiff,‬
‭vs.‬
‭INTERMEDIATE APPELLATE COURT, CENTERTOWN MARKETING CORP., MANILA‬
‭TOWERS DEVELOPMENT CORP., AND THE GOVERNMENT SERVICE INSURANCE‬
‭SYSTEM, respondents-defendants‬

‭FACTS‬

‭ he House International is a non stock non profit corporation whose‬

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‭directors and members are heads of the families of the Building in 777 Ongpin‬
‭Street. The land was formerly owned by Atty. Ang who mortgaged it to the GSIS to‬
‭be able to secure payment of a loan. The mortgage has been foreclosed and the right‬
‭of redemption over the property has expired; resulting to the selling of the said‬
‭building to the Centertown Marketing through a deed of conditional sale, without‬
‭informing the tenants of the building. The said Company was not authorized to‬
‭engage in real estate, so it resulted for it to corporate a sister company for them to‬
‭be able to engage in real estate business. The House Association filed for the‬
‭annulment of the deed of conditional sale.‬

‭Issue:‬

‭ hether or not the House International Building Tenants Association is a proper‬

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‭party to file a case for the annulment of conditional sale.‬

‭Held:‬

‭ o, the House International Building Tenants Association is a proper party to file a‬

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‭case for the annulment of conditional sale. Article 1397 of the Civil Code has‬
‭provided that The action for the annulment of contracts may be instituted by all who‬
‭are thereby obliged principally or subsidiarily. The Association is not a party nor a‬
‭privy to the Deed of conditional sale and therefore, it cannot assail the validity of‬
‭the said contracts.‬
‭G.R. No. L-8334 December 28, 1957‬

‭ IENVENIDO BABAO, ETC., plaintiff-appellee,‬

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‭vs.‬
‭FLORENCIO PEREZ, ETC., ET AL., defendants-appellants.‬

‭FACTS‬

‭ elestina Perez, the owner of a parcel of land, and Santiago Babao, her niece, entered into a‬
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‭verbal agreement in 1924 to improve the land by clearing forest trees and planting crops. Perez‬
‭was bound to convey half of the land and its improvements upon her death. However, Perez‬
‭sold 127 hectares of the land before her death, denying Babao possession and administration.‬
‭When Santiago Babao died in 1948, Bienvenido Babao was appointed judicial administrator of‬
‭his estate. He filed a case for the conveyance of half of the land, annulment of fictitious sales,‬
‭and judgment in favor of Babao for P47,000, the useful and necessary expenses he incurred in‬
‭improving the land. Perez's counsel filed a motion to dismiss, arguing that the verbal agreement‬
‭was unenforceable under the Statute of Frauds. However, the trial court denied the motion, as it‬
‭appeared that Babao fully complied with his part of the oral contract.‬

‭ISSUES‬

‭ /N the verbal agreement falls within the prohibition of the Statute of Frauds, and‬
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‭is therefore unenforceable.‬

‭HELD:‬

‭ ES,The plaintiff has been awarded a judgment against the defendants for fraudulent and‬
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‭fictitious sales of Lupang Parang. The court has ordered Florencio Perez, the administrator of‬
‭the deceased Celestina Perez's testament estate, to pay the plaintiff P3,786.66 annually until‬
‭the land is delivered to her. The defendants have been ordered to divest their title over half of‬
‭Lupang Parang, both in quantity and quality, and to designate a disinterested surveyor for the‬
‭necessary survey and division. The court has also ordered the defendants to surrender‬
‭possession of the half adjudicated and vested in the plaintiff, and to pay the costs.‬

"‭ When, in an oral contract which, by its terms, is not to be performed within one year from‬
‭the execution thereof, one of the contracting: parties has complied within the year with the‬
‭ bligations imposed on him by said contract, the other party cannot avoid the fulfillment of‬
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‭those incumbent on him under the same contract by invoking the statute of frauds because‬
‭the latter aims to prevent and not to protect fraud.‬

‭G.R. No. L-35702 May 29, 1973‬

‭ OMINGO D. RUBIAS, plaintiff-appellant,‬

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‭vs.‬
‭ISAIAS BATILLER, defendant-appellee.‬

‭FACTS‬

‭ n August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership‬
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‭and possession of certain portions of lot located in Barrio General Luna, Barotac Viejo, Iloilo‬
‭which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant‬
‭defendant, Isaias Batiller, who illegally entered said portions of the lot. Plaintiff prayed also for‬
‭damages andattorney’s fees. In his answer with counterclaim defendant claims the complaint of‬
‭the plaintiff does not state a cause of action, the truth of the matter being that he and his‬
‭predecessors-in-interest have always been in actual, open and continuous possession since‬
‭time immemorial under claim of ownership of the portions of the lot in question and for the‬
‭alleged malicious institution of the complaint he claims he has suffered moral damages in the‬
‭amount of P 2,000.00, as well as the sum of P500.00 for attorney’s fees.‬

‭ efendant claims that plaintiff could not have acquired any interest in the property in dispute as‬
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‭the contract he (plaintiff) had with Francisco Militante was inexistent and void. Plaintiff strongly‬
‭opposed defendant’s motion to dismiss claiming that defendant cannot invoke Articles 1409 and‬
‭1491 of the Civil Code as Article 1422 of the same Code provides that ‘The defense of illegality‬
‭of contracts is not available to third persons whose interests are not directly affected‬

‭ISSUE/S‬

‭ hether or not the contract of sale between appellant and his father-in-law, the late Francisco‬
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‭Militante over the property was void because it was made when plaintiff was counsel of his‬
‭father-in-law in a land registration case involving the property in dispute.‬

‭RULING‬

‭ he plaintiff's claim of ownership to the land was based on a sale made in 1956 by his‬
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‭father-in-law, Francisco Militante, in his favor. Militante's application for registration had already‬
‭been dismissed by the Iloilo land registration court and was pending appeal in the Court of‬
‭Appeals. Therefore, there was no right or title to the land that could be transferred or sold by‬
‭Militante's purported sale in 1956 in favor of the plaintiff. The plaintiff's complaint against the‬
‭defendant, to be declared absolute owner of the land and restored to possession with damages,‬
‭was without any factual or legal basis. Article 1491 of the Civil Code prohibits certain persons‬
f‭rom acquiring property in their trust or control, including guardians, agents, administrators,‬
‭public officers, judicial officers, and those disqualified by law.‬