Possessor in good faith - "The signatures of Jacinta and of Ricardo (as witness) as well as her successful entry to the property appear to have comforted Dolores that everything was in order. Article 526 of the Civil Code provides that she is deemed a possessor in good faith, who is not aware that there exists in her title or mode of acquisition any flaw that invalidates it. "

DOLORES ALEJO, PETITIONER, V. SPOUSES ERNESTO CORTEZ AND PRISCILLA SAN PEDRO, SPOUSES JORGE LEONARDO AND JACINTA LEONARDO AND THE REGISTER OF DEEDS OF BULACAN, RESPONDENTS. [ G.R. No. 206114, June 19, 2017 ].


“x x x.

Nevertheless, We agree with the RTC and the CA when it held that the void Kasunduan constitutes a continuing offer from Jacinta and Dolores and that Jorge had the option of either accepting or rejecting the offer before it was withdrawn by either, or both, Jacinta and Dolores.

The point of contention is whether Jorge accepted such continuing offer. If so, then the Kasunduan is perfected as a binding contract; otherwise, the Kasunduan remains void.

The RTC opined that Jorge's failure to expressly repudiate the Kasunduan and his demand that Dolores comply with her undertakings therein show Jorge's acceptance of the sale of the conjugal property. On the other hand, the CA noted that in varying the terms of the Kasunduan, i.e., in the time of payment and the purchase price, Jorge is deemed to have only qualifiedly accepted the same.

We agree with the CA.

It is undisputed that after the execution of the Kasunduan, Jorge sent two letters to Dolores: one, informing her that he did not consent to the sale; and the other, demanding that Dolores pay the balance of the purchase price on or before October 5, 1996 and failing which, the purchase price shall be increased to PhP700,000.

Clearly, Jorge's first letter was an outright and express repudiation of the Kasunduan. The second letter, while ostensibly a demand for compliance with Dolores' obligation under the Kasunduan, varied its terms on material points, i.e., the date of payment of the balance and the purchase price. Consequently, such counter-offer cannot be construed as evidencing Jorge's consent to or acceptance of the Kasunduan for it is settled that where the other spouse's putative consent to the sale of the conjugal property appears in a separate document which does not contain the same terms and conditions as in the first document signed by the other spouse, a valid transaction could not have arisen.[24]

Neither can Jorge's subsequent letters to Dolores be treated as a ratification of the Kasunduan for the basic reason that a void contract is not susceptible to ratification. Nor can Jorge's alleged participation in the negotiation for the sale of the property or his acquiescence to Dolores' transfer to and possession of the subject property be treated as converting such continuing offer into a binding contract as the law distinctly requires nothing less than a written consent to the sale for its validity. Suffice to say that participation in or awareness of the negotiations is not consent.[25]

As above intimated, a determination that the Kasunduan is void renders the other issues raised by Dolores academic, i.e., whether the doctrine of res judicata applies and whether the Spouses Cortez are buyers in bad faith; hence they merit no further discussion.

The CA Correctly Ruled that Dolores
is a Possessor in Good Faith

While the Kasunduan was void from the beginning, Dolores is, in all fairness, entitled to recover from the Spouses Leonardo the amount of PhP300,000 with legal interest until fully paid.

Moreover, the CA correctly appreciated Dolores' standing as a possessor in good faith. It appears that Dolores acted in good faith in entering the subject property and building improvements on it. Ricardo represented that Jacinta and Jorge wanted to sell the subject property. Dolores had no reason to believe that Ricardo and Jacinta were lying. Indeed, upon her own brother's prodding, Dolores willingly parted with her money and paid the down payment on the selling price and later, a portion of the remaining balance. The signatures of Jacinta and of Ricardo (as witness) as well as her successful entry to the property appear to have comforted Dolores that everything was in order. Article 526 of the Civil Code provides that she is deemed a possessor in good faith, who is not aware that there exists in her title or mode of acquisition any flaw that invalidates it.

Likewise, as correctly held by the CA, Dolores, as possessor in good faith, is under no obligation to pay for her stay on the property prior to its legal interruption by a final judgment. She is further entitled under Article 448 to indemnity for the improvements introduced on the property with a right of retention until reimbursement is made. The Spouses Leonardo have the option under Article 546 of the Civil Code of indemnifying Dolores for the cost of the improvements or paying the increase in value which the property may have acquired by reason of such improvements.[26]

X x x.”