Spouses Miguel Mapalo and Candida Quiba, illiterate farmers, were registered owners of a residential land in Manaoag, Pangasinan. Out of love and affection for Maximo Mapalo, a brother of Miguel who was about to get married, decided to donate the eastern half of the land to Mapalo. However, they were deceived into signing, on October 15, 1936, a deed of absolute sale over the entire land in his favor. Their signatures then, were procured by fraud—they were made to believe by Maximo Mapalo and by the attorney who acted as notary public who “translated” the document that the same was a deed of donation in Maximo's favor covering one-half (the eastern half) of their land. The document of sale stated a consideration of P500, but the spouses did not receive anything
of value for the land. After the execution of the afore-stated document, the spouses immediately built a permanent fence in the middle of their land, segregating the eastern portion from it’s western portion. Meanwhile, Mapalo registered the deed of sale in his favor and obtained his name over the entire land. Thirteen years later, he sold the entire land for P2,500, in favor of Evaristo, Petronila Pacifico, and Miguel Narciso. The sale was registered and a transfer certificate was issued for the whole land. The Narcisos took possession of the eastern portion of the land after the sale was made. A year after, they filed a suit to be declared owners of the land, along with damages, and for rentals. The Mapalo spouses filed their answer with a counterclaim on March 17, 1965, seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the western half of the land, on the grounds that their (Mapalo spouses) signatures to the deed of sale of 1936 was procured by fraud and that the Narcisos were buyers in bad faith. They asked for reconveyance to them of the western portion of the land and issuance of a Transfer Certificate of Title in their names as to said portion.
Whether or not the contract involves no consideration or false consideration.
The rule under the Civil Code, again be it the old or the new, is that contracts without a cause
or consideration produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it is supported by another real and licit consideration.3 And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last four years, the term to run from the date of the consummation of the contract. Since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein there is no consideration, or one with a statement of a false consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally absent. The problem, therefore, is whether a deed which states a consideration that in fact did not exist, is a contract without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable.
Digest Credit: Shem Gasatan