FACTS:

The dispute in this case revolves around the nature of the document that respondent Villaner Acabal executed in favor of petitioner Leonardo Acabal on April 19, 1990. Villaner's parents owned a parcel of land which they transferred to him through a Deed of Absolute Sale in 1971. Villaner became a widower and subsequently executed a deed on April 19, 1990, conveying the same property to Leonardo. However, Villaner claims that what he actually signed was a document captioned "Lease Contract" and not a "Deed of Absolute Sale."

Villaner filed a complaint for annulment of the deeds of sale against Leonardo and Ramon Nicolas. During the trial, Villaner testified that the document he signed was a lease contract and not a sale contract. He also disputed the authenticity of the witnesses' signatures on the document. Leonardo, on the other hand, maintains that what Villaner executed was a Deed of Sale.

Villaner Acabal executed a Deed of Absolute Sale in favor of Leonardo Acabal for a consideration of P10,000. Carmelo Cadalin, who prepared the deed, testified that Villaner Acabal requested him to prepare the document and Villaner Acabal read and signed it. Leonardo Acabal claims to have already paid the consideration and transferred the property to Ramon Nicolas.

The trial court dismissed the complaint filed by Villaner Acabal's heirs, but the Court of Appeals reversed the decision, ruling that the Deed of Absolute Sale was simulated and fictitious. Leonardo and Ramon Nicolas filed a petition for review on certiorari, asserting that Villaner Acabal willingly executed the deed and questioning the Court of Appeals' ruling on various grounds.

The case involves allegations of fraud and lack of valid consent to a contract. The plaintiff, Villaner, claims that he was deceived into executing a Deed of Absolute Sale instead of a lease agreement. He failed to provide evidence to support his claim, except for his bare allegation. He conjectured that the deed of sale may have been placed among the documents he signed for the lease agreement. Villaner presented Atty. Vicente Real, the notary public who notarized the document, as a witness. While on direct examination, Atty. Real virtually corroborated Villaner's claim that he did not bring the document for notarization, but on cross-examination, Atty. Real admitted that it is impossible for him to remember every person who requests document notarization.

Villaner also claimed that two women employees of Judge Villegas signed as witnesses to the deed, but he failed to present these alleged witnesses. Villaner also questioned the low purchase price of the property, but he failed to present evidence of the fair market value of the land at the time of the sale. The trial court appointed Victor Ragay to conduct an ocular inspection of the property and investigate matters related to the case. Ragay submitted a report on December 3, 1994.

ISSUES:

1. Whether the signatures of the witnesses in the disputed deed are valid and credible.

2. Whether the purchase price of the property was inadequate.

3. Whether the sale of the property violated the retention limits imposed by the Comprehensive Agrarian Reform Law.

4. Whether Villaner's co-heirs are bound by the Deed of Absolute Sale executed by Villaner in favor of Leonardo.

5. Whether the property is considered conjugal property and therefore part of the conjugal partnership between Villaner and Justiniana Lipajan.

6. How should the shares of the property be divided among Villaner, his co-heirs, and the heirs of Justiniana.

7. What is the proper recourse of co-owners when their consent was not secured in the sale of the entire property or in the sale of the undivided shares of some co-owners?

8. Can a buyer acquire valid title to an unregistered land even if the seller does not have the consent of the co-owners?

RULING:

1. The claim of the petitioner that the signatures of the witnesses in the disputed deed are not valid and credible is discredited due to his failure to present the alleged women employee-witnesses.

2. The petitioner failed to present evidence of the fair market value of the property as of the date of execution of the disputed deed. Without such evidence, it cannot be concluded that the purchase price was inadequate. Mere speculation or conjecture has no place in the judicial system.

3. Even assuming that the purchase price was below the fair market value of the property, mere inadequacy of price per se does not invalidate a transaction of sale. The price must be grossly inadequate or shocking to the conscience such that a reasonable person would not consent to it.

4. The principle of pari delicto applies to the case. It states that no action arises, in equity or at law, from an illegal contract, and no affirmative relief will be given to one party against the other if they are in pari delicto. The principle is grounded on the premise that courts should not mediate disputes among wrongdoers and that denying relief to a wrongdoer deters illegality. However, the principle of pari delicto admits an exception under Article 1416 of the Civil Code, which allows recovery for what has been paid or delivered under an inexistent contract when the contract is not illegal per se but merely prohibited, the prohibition is for the protection of the plaintiffs, and public policy is enhanced. In this case, the prohibition is not for the protection of the plaintiff-landowner but for the beneficiary farmers, so the exception under Article 1416 does not apply.

5. The co-heirs of Villaner are bound by the Deed of Absolute Sale executed by Villaner in favor of Leonardo. The property being conjugal, the co-heirs, as co-owners, have the right to sell their undivided share in the property. However, the sale affects only the share of the co-owner-seller and does not include the shares of the other co-owners who did not consent to the sale.

6. The property is considered conjugal property between Villaner and Justiniana Lipajan. The registration of the property solely in the name of Villaner does not destroy the conjugal nature of the property. The property was acquired during the existence of the marriage between Villaner and Justiniana, and therefore, the presumption under Article 160 of the Civil Code is that it is the couple's conjugal property.

7. With the dissolution of the conjugal partnership upon the death of Justiniana Lipajan, Villaner's interest in the conjugal partnership became vested with respect to an undivided one-half portion. Justiniana's share, in turn, vested upon her death to her heirs, including Villaner. Villaner's total interest amounts to five-ninths of the property. The property should be divided among the co-owners in accordance with their proportional shares.

8. The appropriate recourse of co-owners in cases where their consent was not secured in the sale of the entire property or in the sale of the undivided shares of some co-owners is an action for partition under Rule 69 of the Revised Rules of Court. The court ruled that the nullification of the sale or the recovery of possession from the third person who substituted the co-owner is not the proper action. Recovery of possession or restitution cannot be granted since the buyer is a legitimate proprietor and possessor in joint ownership of the common property.

9. In the case of unregistered land, the issue of good faith or bad faith of a buyer is irrelevant. A buyer who purchases an unregistered land does so at his own peril. The claim of the buyer to have bought the land in good faith is thus irrelevant.

PRINCIPLES:

• Inadequacy of price must be proven, as mere speculation or conjecture has no place in the judicial system.

• Mere inadequacy of price per se does not invalidate a transaction of sale. The price must be grossly inadequate or shocking to the conscience.

• Retention limits imposed by the Comprehensive Agrarian Reform Law apply to the sale, disposition, lease, management, contract, or transfer of possession of private lands. Any violation of these retention limits renders the transaction null and void, unless it was executed prior to the law and is registered with the proper authorities.

• The sale or disposition of agricultural lands covered by the Comprehensive Agrarian Reform Law is valid as long as it does not exceed the landholding ceilings and complies with the required affidavit and submission of documents.

• No action arises from an illegal contract, and no affirmative relief is given to one party against the other if they are in pari delicto.

• The principle of pari delicto serves as a sanction and deterrent for illegality.

• The exception to the principle of pari delicto under Article 1416 of the Civil Code requires that the contract is not illegal per se but merely prohibited, the prohibition is for the protection of the plaintiffs, and public policy is enhanced.

• Ignorance of the law does not excuse compliance with it.

• All property acquired during marriage is presumed to belong to the conjugal partnership unless proven to pertain exclusively to either the husband or the wife.

• Registration alone does not destroy the conjugal nature of the property.

• A co-owner has the right to sell their undivided share in a co-owned property, but the sale only affects the share of the co-owner-seller and does not include the shares of other co-owners who did not consent to the sale.

• The appropriate recourse of co-owners in cases of sale without their consent is an action for partition under Rule 69 of the Revised Rules of Court.

• Recovery of possession or restitution cannot be granted in cases where the buyer is a legitimate proprietor and possessor in joint ownership of the common property.

• In the case of unregistered land, the issue of good faith or bad faith of a buyer is irrelevant, and the buyer who purchases an unregistered land does so at his own peril.