G.R. No. 38498 August 10, 1989
ISAAC BAGNAS, ENCARNACION BAGNAS, SILVESTRE BAGNAS, MAXIMINA BAGNAS, SIXTO BAGNAS and AGATONA ENCARNACION, petitioners, vs. HON. COURT OF APPEALS, ROSA L. RETONIL, TEOFILO ENCARNACION, and JOSE B. NAMBAYAN, respondents.

FACTS

Hilario Mateum died intestate, survived only by collateral relatives. The petitioners, his first cousins, are his nearest heirs. After his death, private respondents, more remote collateral relatives, registered two deeds of sale purportedly executed by Mateum over ten parcels of land. The deeds, dated over a year before Mateum’s death, stated a consideration of “ONE PESO… and services rendered, being rendered and to be rendered for my benefit.” Petitioners filed suit in the Court of First Instance of Cavite seeking annulment of the deeds as fictitious, fraudulent, or as donations void for lack of formal acceptance. They claimed ownership as intestate heirs and prayed for recovery of the properties.
After petitioners presented their evidence, respondents filed a motion to dismiss (demurrer to evidence). The Trial Court granted the motion, ruling that petitioners, as mere collateral relatives and not forced heirs, had no legal right to question the dispositions made by Mateum during his lifetime. It also found insufficient evidence of fraud. The Court of Appeals affirmed, relying on the same principle that collateral relatives cannot impugn inter vivos dispositions by a decedent.

ISSUE

Whether the petitioners, as collateral heirs, have the legal right to seek the annulment of the subject deeds of sale executed by the deceased Hilario Mateum.

RULING

Yes. The Supreme Court reversed the appellate court’s decision. The legal logic centers on distinguishing between voidable contracts and void or inexistent contracts. The lower courts erroneously applied jurisprudence stating that collateral relatives cannot question voidable dispositions, as such actions are reserved for parties obliged thereunder or their compulsory heirs if legitimes are impaired. However, the Court found the deeds in question were not merely voidable but void ab initio for lack of consideration. The stated price of one peso is nominal, and the accompanying “services” were unspecified and unvalued, rendering the consideration purely potestative or indeterminate. Under the Civil Code, contracts without cause or with an illicit cause produce no effect whatsoever and are inexistent.
Since the contracts are void, the rule barring collateral relatives from contesting voidable acts does not apply. An action to declare the nullity of a void contract does not prescribe and can be instituted by any person with a material and direct interest, such as the intestate heirs who stand to inherit the properties. The respondents, having opted to file a demurrer to evidence and lost, forfeited their right to present evidence to prove any lawful consideration. Consequently, the transfers are declared void, and the respondents are ordered to return the properties and account for their fruits.