Republic of the
Supreme Court
THIRD Division
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HEIRS OF
POLICRONIO M. URETA, SR., namely: CONRADO B. URETA, MACARIO B. URETA, GLORIA
URETA-GONZALES, ROMEO B. URETA, RITA URETA-SOLANO, NENA URETA-TONGCUA,
VENANCIO B. URETA, LILIA URETA-TAYCO, and HEIRS OF POLICRONIO B. URETA, JR.,
namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA, EMMANUEL T. URETA, and
BERNADETTE T. URETA, |
G.R. No. 165748 |
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Petitioners, |
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- versus - |
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HEIRS
OF LIBERATO M. URETA, namely: TERESA F. URETA, AMPARO URETA-CASTILLO, IGNACIO
F. URETA, SR., EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA, JR., RAY
F. URETA, ZALDY F. URETA, and MILA JEAN URETA CIPRIANO; HEIRS
OF PRUDENCIA URETA PARADERO, namely: WILLIAM U. PARADERO, WARLITO U.
PARADERO, CARMENCITA P. PERLAS, CRISTINA P. CORDOVA, EDNA P. GALLARDO, LETICIA
P. REYES; NARCISO M. URETA; VICENTE
M. URETA; HEIRS
OF FRANCISCO M. URETA, namely: EDITA T. URETA-REYES and LOLLIE T.
URETA-VILLARUEL; ROQUE M. URETA; ADELA URETA-GONZALES; HEIRS OF INOCENCIO M.
URETA, namely: BENILDA V. URETA, ALFONSO V. URETA II, DICK RICARDO V. URETA,
and ENRIQUE V. URETA; MERLINDA U. RIVERA; JORGE URETA; ANDRES URETA,
WENEFREDA U. TARAN; and BENEDICT URETA, |
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Respondents. |
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HEIRS
OF LIBERATO M. URETA, namely: TERESA F. URETA, AMPARO URETA-CASTILLO, IGNACIO
F. URETA, SR., EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA, JR., RAY
F. URETA, ZALDY F. URETA, and MILA JEAN URETA CIPRIANO; HEIRS
OF PRUDENCIA URETA PARADERO, namely: WILLIAM U. PARADERO, WARLITO U.
PARADERO, CARMENCITA P. PERLAS, CRISTINA P. CORDOVA, EDNA P. GALLARDO,
LETICIA P. REYES; NARCISO M. URETA; VICENTE
M. URETA; HEIRS
OF FRANCISCO M. URETA, namely: EDITA T. URETA-REYES and LOLLIE T.
URETA-VILLARUEL; ROQUE M. URETA; ADELA URETA-GONZALES; HEIRS OF INOCENCIO M.
URETA, namely: BENILDA V. URETA, ALFONSO V. URETA II, DICK RICARDO V. URETA,
and ENRIQUE V. URETA; MERLINDA U. RIVERA; JORGE URETA; ANDRES URETA,
WENEFREDA U. TARAN; and BENEDICT URETA, |
G.R. No. 165930 |
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Petitioners, |
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- versus |
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HEIRS OF
POLICRONIO M. URETA, SR., namely: CONRADO B. URETA, MACARIO B. URETA, GLORIA
URETA-GONZALES, ROMEO B. URETA, RITA URETA-SOLANO, NENA URETA-TONGCUA,
VENANCIO B. URETA, LILIA URETA-TAYCO, and HEIRS OF POLICRONIO B. URETA, JR.,
namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA, EMMANUEL T. URETA, and
BERNADETTE T. URETA, |
Present: VELASCO, JR., J.,
Chairperson, PERALTA, ABAD,
SERENO,* JJ. Promulgated: |
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Respondents. |
September 14, 2011 |
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D E C I S I O N
MENDOZA, J.:
These
consolidated petitions for review on
certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure assail the April 20, 2004 Decision[1]
of the Court of Appeals (CA), and its October 14, 2004 Resolution[2]
in C.A.-G.R. CV No. 71399, which affirmed with modification the April 26, 2001
Decision[3]
of the Regional Trial Court, Branch 9, Kalibo, Aklan (RTC) in Civil Case
No. 5026.
The Facts
In
his lifetime, Alfonso Ureta (Alfonso) begot 14 children, namely,
Policronio, Liberato, Narciso, Prudencia, Vicente, Francisco, Inocensio, Roque,
Adela, Wenefreda, Merlinda, Benedicto, Jorge, and Andres. The children of
Policronio (Heirs of Policronio), are opposed to the rest of Alfonsos
children and their descendants (Heirs of Alfonso).
Alfonso
was financially well-off during his lifetime. He owned several fishpens, a
fishpond, a sari-sari store, a passenger jeep, and was engaged in the buying
and selling of copra. Policronio, the eldest, was the only child of Alfonso who
failed to finish schooling and instead worked on his fathers lands.
Sometime
in October 1969, Alfonso and four of his children, namely, Policronio,
Liberato, Prudencia, and Francisco, met at the house of Liberato. Francisco,
who was then a municipal judge, suggested that in order to reduce the
inheritance taxes, their father should make it appear that he had sold some of
his lands to his children. Accordingly, Alfonso executed four (4) Deeds of Sale covering several parcels of land
in favor of Policronio,[4]
Liberato,[5]
Prudencia,[6]
and his common-law wife, Valeriana Dela Cruz.[7]
The Deed of Sale executed on
Since
the sales were only made for taxation purposes and no monetary consideration
was given, Alfonso continued to own, possess and enjoy the lands and their produce.
When
Alfonso died on
Policronio
died on
On
April 19, 1989, Alfonsos heirs executed a Deed of Extra-Judicial Partition,[8]
which included all the lands that were covered by the four (4) deeds of sale
that were previously executed by Alfonso for taxation purposes. Conrado,
Policronios eldest son, representing the Heirs of Policronio, signed the Deed
of Extra-Judicial Partition in behalf of his co-heirs.
After
their fathers death, the Heirs of Policronio found tax declarations in his
name covering the six parcels of land. On
Not
long after, on
Believing
that the six parcels of land belonged to their late father, and as such, excluded
from the Deed of Extra-Judicial Partition, the Heirs of Policronio sought to
amicably settle the matter with the Heirs of Alfonso. Earnest efforts proving
futile, the Heirs of Policronio filed a Complaint for Declaration of Ownership,
Recovery of Possession, Annulment of Documents, Partition, and Damages[9]
against the Heirs of Alfonso before the RTC on November 17, 1995 where the
following issues were submitted: (1) whether or not the Deed of Sale was valid;
(2) whether or not the Deed of Extra-Judicial Partition was valid; and (3) who
between the parties was entitled to damages.
The Ruling of the RTC
On
WHEREFORE, the Court finds that the
preponderance of evidence tilts in favor of the defendants, hence the instant
case is hereby DISMISSED.
The counterclaims are likewise
DISMISSED.
With costs against plaintiffs.
SO ORDERED.
The
RTC found that the Heirs of Alfonso clearly established that the Deed of Sale was
null and void. It held that the Heirs of Policronio failed to rebut the
evidence of the Heirs of Alfonso, which proved that the
Deed of Sale in the possession of the former was one of the four (4) Deeds of
Sale executed by Alfonso in favor of his 3 children and second wife for
taxation purposes;
that although tax declarations were issued in the name
of Policronio, he or his heirs never took possession of the subject lands
except a portion of parcel 5; and that all the produce were
turned over by the tenants to Alfonso and the administrators of his estate and
never to Policronio or his heirs.
The
RTC further found that there was no money
involved in the sale. Even granting that there was, as claimed by the Heirs of
Policronio, ₱2,000.00 for six parcels of land, the amount was grossly
inadequate. It was also noted that the aggregate area of the subject lands was
more than double the average share adjudicated to each of the other children in
the Deed of Extra-Judicial Partition; that the siblings of Policronio were the
ones who shared in the produce of the land; and that the Heirs of Policronio
only paid real estate taxes in 1996 and 1997. The RTC opined that Policronio
must have been aware that the transfer was merely for taxation purposes because
he did not subsequently take possession of the properties even after the death
of his father.
The Deed of Extra-Judicial Partition, on
the other hand, was declared valid by
the RTC as all the heirs of Alfonso were represented and received equal shares and
all the requirements of a valid extra-judicial partition were met. The RTC
considered Conrados claim that he did not understand the full significance of
his signature when he signed in behalf of his co-heirs, as a gratutitous
assertion. The RTC was of the view that when he admitted to have signed all the
pages and personally appeared before the notary public, he was presumed to have
understood their contents.
Lastly, neither party was entitled to
damages. The Heirs of Alfonso failed to
present testimony to serve as factual basis for moral damages, no document was presented
to prove actual damages, and the Heirs of Policronio were found to have filed
the case in good faith.
The Ruling of the CA
Aggrieved,
the Heirs of Policronio appealed before the CA, which rendered a decision on
WHEREFORE,
the appeal is PARTIALLY GRANTED. The
appealed Decision, dated
1.)
The Deed of
2.)
The Deed of Extra-Judicial Partition, dated
3.)
The claim for actual and exemplary damages are DISMISSED for lack of
factual and legal basis.
The
case is hereby REMANDED to the court of origin
for the proper partition of ALFONSO URETAS Estate in accordance with Rule 69
of the 1997 Rules of Civil Procedure. No costs at this instance.
SO
ORDERED.
The
CA affirmed the finding of the RTC that the Deed of Sale was void. It found the
Deed of Sale to be absolutely simulated as the parties did not intend to be
legally bound by it. As such, it produced no legal effects and did not alter
the juridical situation of the parties. The CA also noted that Alfonso
continued to exercise all the rights of an owner even after the execution of
the Deed of Sale, as it was undisputed that he remained in possession of the
subject parcels of land and enjoyed their produce until his death.
Policronio,
on the other hand, never exercised any rights pertaining to an owner over the
subject lands from the time they were sold to him up until his death. He never
took or attempted to take possession of the land even after his fathers death,
never demanded delivery of the produce from the tenants, and never paid realty
taxes on the properties. It was also noted that Policronio never disclosed the
existence of the Deed of Sale to his children, as they were, in fact, surprised
to discover its existence. The CA, thus, concluded that Policronio must have
been aware that the transfer was only made for taxation purposes.
The
testimony of Amparo Castillo, as to the circumstances surrounding the actual
arrangement and agreement between the parties prior to the execution of the
four (4) Deeds of Sale, was found by the CA to be unrebutted. The RTCs
assessment of the credibility of her testimony was accorded respect, and the
intention of the parties was given the primary consideration in determining the
true nature of the contract.
Contrary
to the finding of the RTC though, the CA annulled the Deed of Extra-Judicial
Partition due to the incapacity of one of the parties to give his consent to
the contract. It held that before
Conrado could validly bind his co-heirs to the Deed of Extra-Judicial Partition,
it was necessary that he be clothed with the proper authority. The CA ruled
that a special power of attorney was required under Article 1878 (5) and (15)
of the Civil Code. Without a special
power of attorney, it was held that Conrado lacked the legal capactiy to give
the consent of his co-heirs, thus, rendering the Deed of Extra-Judicial
Partition voidable under Article 1390 (1) of the Civil Code.
As
a consequence, the CA ordered the remand of the case to the RTC for the proper
partition of the estate, with the option that the parties may still voluntarily
effect the partition by executing another agreement or by adopting the assailed
Deed of Partition with the RTCs approval in either case. Otherwise, the RTC
may proceed with the compulsory partition of the estate in accordance with the
Rules.
With
regard to the claim for damages, the CA agreed with the RTC and dismissed the
claim for actual and compensatory damages for lack of factual and legal basis.
Both
parties filed their respective Motions for Reconsideration, which were denied
by the CA for lack of merit in a Resolution dated
In
their Motion for Reconsideration, the Heirs of Policronio argued that the RTC
violated the best evidence rule in giving credence to the testimony of Amparo
Castillo with regard to the simulation of the Deed of Sale, and that
prescription had set in precluding any question on the validity of the
contract.
The
CA held that the oral testimony was admissible under Rule 130, Section 9 (b)
and (c), which provides that evidence aliunde
may be allowed to explain the terms of the written agreement if the same failed
to express the true intent and agreement of the parties thereto, or when the
validity of the written agreement was put in issue. Furthermore, the CA found
that the Heirs of Policronio waived their right to object to evidence aliunde
having failed to do so during trial and for raising such only for the first
time on appeal. With regard to prescription, the CA ruled that the action or
defense for the declaration of the inexistence of a contract did not prescribe
under Article 1410 of the Civil Code.
On the other hand, the Heirs of Alfonso
argued that the Deed of Extra-Judicial Partition should not have been annulled,
and instead the preterited heirs should be given their share. The CA reiterated
that Conrados lack of capacity to give his co-heirs consent to the extra-judicial
settlement rendered the same voidable.
Hence,
the present Petitions for Review on Certiorari.
The Issues
The
issues presented for resolution by the Heirs of Policronio in G.R. No. 165748 are as follows:
I.
Whether
the Court of Appeals is correct in ruling that the Deed of Absolute
Assuming
that indeed the said document is simulated, whether or not the parties thereto
including their successors in interest are estopped to question its validity,
they being bound by Articles 1412 and 1421 of the Civil Code?
II.
Whether
prescription applies to bar any question respecting the validity of the Deed of
Absolute
III.
Whether
the Court of Appeals correctly ruled in nullifying the Deed of Extrajudicial
Partition because Conrado Ureta signed the same without the written authority
from his siblings in contravention of Article 1878 in relation to Article 1390
of the Civil Code and in relation therewith, whether the defense of
ratification and/or preterition raised for the first time on appeal may be
entertained?
The
issues presented for resolution by the Heirs of Alfonso in G.R. No. 165930 are as follows:
I.
Whether
or not grave error was committed by the Trial Court and Court of Appeals in
declaring the Deed of Sale of subject properties as absolutely simulated and
null and void thru parol evidence based on their factual findings as to its
fictitious nature, and there being waiver of any objection based on violation
of the parol evidence rule.
II.
Whether
or not the Court of Appeals was correct in holding that Conrado Uretas lack of
capacity to give his co-heirs consent to the Extra-Judicial Partition rendered
the same voidable.
III.
Granting
arguendo that Conrado Ureta was not authorized to represent his co-heirs and
there was no ratification, whether or not the Court of Appeals was correct in
ordering the remand of the case to the Regional Trial Court for partition of
the estate of Alfonso Ureta.
IV.
Since
the sale in favor of Policronio Ureta Sr. was null and void ab initio, the
properties covered therein formed part of the estate of the late Alfonso Ureta
and was correctly included in the Deed of Extrajudicial Partition even if no
prior action for nullification of the sale was filed by the heirs of Liberato
Ureta.
V.
Whether
or not the heirs of Policronio Ureta Sr. can claim that estoppel based on
Article 1412 of the Civil Code as well as the issue of prescription can still
be raised on appeal.
These
various contentions revolve around two major issues, to wit: (1) whether the
Deed of Sale is valid, and (2) whether the Deed of Extra-Judicial Partition is
valid. Thus, the assigned errors shall be discussed jointly and in seriatim.
The Ruling of the Court
Validity of the Deed of
Two veritable
legal presumptions bear on the validity of the Deed of Sale: (1) that there was
sufficient consideration for the contract; and (2) that it was the result of a
fair and regular private transaction. If shown to hold, these presumptions
infer prima facie the transactions
validity, except that it must yield to the evidence adduced.[10]
As will be
discussed below, the evidence overcomes these two presumptions.
Absolute Simulation
First,
the Deed of Sale was not the result of a fair and regular private transaction
because it was absolutely simulated.
The Heirs of Policronio argued that the land had been validly
sold to Policronio as the Deed of Sale contained
all the essential elements of a valid contract of sale, by virtue of which, the
subject properties were transferred in his name as evidenced by the tax
declaration. There being no invalidation prior to the execution of the Deed of
Extra-Judicial Partition, the probity and integrity of the Deed of Sale should
remain undiminished and accorded respect as it was a duly notarized public
instrument.
The Heirs of Policronio posited that
his loyal services to his father and his being the eldest among Alfonsos
children, might have prompted the old man to sell the subject lands to him at a
very low price as an advance inheritance. They explained that Policronios
failure to take possession of the subject lands and to claim their produce manifests
a Filipino family practice wherein a child would take possession and enjoy the
fruits of the land sold by a parent only after the latters death. Policronio
simply treated the lands the same way his father Alfonso treated them - where
his children enjoyed usufructuary rights over the properties, as opposed to
appropriating them exclusively to himself. They contended that Policronios failure
to take actual possession of the lands did not prove that he was not the owner as
he was merely exercising his right to dispose of them. They argue that it was
an error on the part of the CA to conclude that ownership by Policronio was not
established by his failure to possess the properties sold. Instead, emphasis
should be made on the fact that the tax declarations, being indicia of
possession, were in Policronios name.
They further
argued that the Heirs of Alfonso failed to appreciate that the Deed of Sale was
clear enough to convey the subject parcels of land. Citing jurisprudence, they
contend that there is a presumption that an instrument sets out the true
agreement of the parties thereto and that it was executed for valuable
consideration,[11]
and where there is no doubt as to the intention of the parties to a contract,
the literal meaning of the stipulation shall control.[12]
Nowhere in the Deed of Sale is it indicated that the transfer was only for
taxation purposes. On the contrary, the document clearly indicates that the
lands were sold. Therefore, they averred that the literal meaning of the
stipulation should control.
The
Court disagrees.
The Court finds
no cogent reason to deviate from the finding of the CA that the Deed of Sale is
null and void for being absolutely simulated. The Civil Code provides:
Art. 1345. Simulation
of a contract may be absolute or relative. The former takes place when the
parties do not intend to be bound at all; the latter, when the parties conceal
their true agreement.
Art. 1346. An
absolutely simulated or fictitious contract is void. A relative simulation,
when it does not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy binds the
parties to their real agreement.
Valerio
v. Refresca[13] is instructive on
the matter of simulation of contracts:
In absolute simulation, there is a colorable contract but it has no
substance as the parties have no intention to be bound by it. The main
characteristic of an absolute simulation is that the apparent contract is not
really desired or intended to produce legal effect or in any way alter the
juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void,
and the parties may recover from each other what they may have given under the
contract. However, if the
parties state a false cause in the contract to conceal their real agreement,
the contract is relatively simulated and the parties are still bound by their
real agreement. Hence,
where the essential requisites of a contract are present and the simulation
refers only to the content or terms of the contract, the agreement is
absolutely binding and enforceable between the parties and their successors in
interest.
Lacking,
therefore, in an absolutely simulated contract is consent which is essential to
a valid and enforceable contract.[14]
Thus, where a person, in order to place his property beyond the reach of his
creditors, simulates a transfer of it to another, he does not really intend to
divest himself of his title and control of the property; hence, the deed of
transfer is but a sham.[15]
Similarly, in this case, Alfonso simulated a transfer to Policronio purely for
taxation purposes, without intending to transfer ownership over the subject
lands.
The primary consideration in
determining the true nature of a contract is the intention of the parties. If the words of a
contract appear to contravene the evident intention of the parties, the latter
shall prevail. Such intention is determined not only from the express terms of
their agreement, but also from the contemporaneous and subsequent acts of the
parties.[16]
The true intention of the parties in this case was sufficiently proven by the
Heirs of Alfonso.
The Heirs of
Alfonso established by a preponderance of evidence[17]
that the Deed of Sale was one of the four (4) absolutely simulated Deeds of
Sale which involved no actual monetary consideration, executed by Alfonso in
favor of his children, Policronio, Liberato, and Prudencia, and his second wife,
Valeriana, for taxation purposes.
Amparo
Castillo, the daughter of Liberato, testified, to wit:
Q: Now sometime in the year 1969 can you
recall if your grandfather and his children [met] in your house?
A: Yes sir, that was sometime in October
1969 when they [met] in our house, my grandfather, my late uncle Policronio
Ureta, my late uncle Liberato Ureta, my uncle Francisco Ureta, and then my
auntie Prudencia Ureta they talk[ed] about, that idea came from my uncle
Francisco Ureta to [sell] some parcels of land to his children to lessen the
inheritance tax whatever happened to my grandfather, actually no money involved
in this sale.
Q: Now you said there was that agreement,
verbal agreement. [W]here were you when this Alfonso Ureta and his children
gather[ed] in your house?
A: I was near them in fact I heard
everything they were talking [about]
x
x x
Q: Were there documents of sale executed by
Alfonso Ureta in furtherance of their verbal agreement?
A: Yes sir.
Q: To whom in particular did your
grandfather Alfonso Ureta execute this deed of sale without money consideration
according to you?
A: To my uncle Policronio Ureta and to
Prudencia Ureta Panadero.
Q: And who else?
A: To Valeriana dela Cruz.
Q: How about your father?
A: He has.[18]
The
other Deeds of Sale executed by Alfonso in favor of his children Prudencia and
Liberato, and second wife Valeriana,
all bearing the same date of execution, were duly presented in evidence by the
Heirs of Alfonso, and were uncontested by the Heirs of Policronio. The lands
which were the subject of these Deeds of Sale were in fact included in the Deed
of Extra-Judicial Partition executed by all the heirs of Alfonso, where it was
expressly stipulated:
That
the above-named Amparo U. Castillo, Prudencia U. Paradero, Conrado B. Ureta and
Merlinda U. Rivera do hereby recognize and acknowledge as a fact that the
properties presently declared in their respective names or in the names of
their respective parents and are included in the foregoing instrument are
actually the properties of the deceased Alfonso Ureta and were transferred only
for the purpose of effective administration and development and convenience in
the payment of taxes and, therefore, all instruments conveying or affecting the
transfer of said properties are null and void from the beginning.[19]
As
found by the CA, Alfonso continued to exercise all the rights of an owner even
after the execution of the Deeds of Sale. It was undisputed that Alfonso
remained in possession of the subject lands and enjoyed their produce until his
death. No credence can be given to the
contention of the Heirs of Policrionio that their father did not take
possession of the subject lands or enjoyed the fruits thereof in deference to a
Filipino family practice. Had this been true, Policronio should have taken
possession of the subject lands after his father died. On the contrary, it was admitted
that neither Policronio nor his heirs ever took possession of the subject lands
from the time they were sold to him, and even after the death of both Alfonso
and Policronio.
It was also admitted by the Heirs of
Policronio that the tenants of the subject lands never turned over the produce
of the properties to Policronio or his heirs but only to Alfonso and the
administrators of his estate. Neither was there a demand for their delivery to
Policronio or his heirs. Neither did Policronio ever pay real estate taxes on
the properties, the only payment on record being those made by his heirs in
1996 and 1997 ten years after his death. In sum, Policronio never exercised
any rights pertaining to an owner over the subject lands.
The
most protuberant index of simulation of contract is the complete absence of an
attempt in any manner on the part of the ostensible buyer to assert rights of
ownership over the subject properties. Policronios failure to take exclusive
possession of the subject properties or, in the alternative, to collect
rentals, is contrary to the principle of ownership. Such failure is a clear
badge of simulation that renders the whole transaction void. [20]
It
is further telling that Policronio never disclosed the existence of the Deed of
Sale to his children. This, coupled with Policronios failure to exercise any
rights pertaining to an owner of the subject lands, leads to the conclusion
that he was aware that the transfer was only made for taxation purposes and
never intended to bind the parties thereto.
As
the above factual circumstances remain unrebutted by the Heirs of Policronio,
the factual findings of the RTC, which were affirmed by the CA, remain binding and
conclusive upon this Court.[21]
It
is clear that the parties did not intend to be bound at all, and as such, the
Deed of Sale produced no legal effects and did not alter the juridical
situation of the parties. The Deed of Sale is, therefore, void for being
absolutely simulated pursuant to Article 1409 (2) of the Civil Code which
provides:
Art. 1409.
The following contracts are inexistent and void from the beginning:
x
x x
(2) Those
which are absolutely simulated or fictitious;
x
x x
For guidance, the following are the most
fundamental characteristics of void or inexistent contracts:
1) As a general rule, they produce no
legal effects whatsoever in accordance with the principle "quod nullum est
nullum producit effectum."
2) They
are not susceptible of ratification.
3) The right to set up the defense of
inexistence or absolute nullity cannot be waived or renounced.
4) The action or defense for the declaration of
their inexistence or absolute nullity is imprescriptible.
5) The inexistence or absolute nullity
of a contract cannot be invoked by a person whose interests are not directly
affected.[22]
Since
the Deed of Sale is void, the subject properties were properly included in the Deed
of Extra-Judicial Partition of the estate of Alfonso.
Absence
and Inadequacy of Consideration
The second
presumption is rebutted by the lack of consideration for the Deed of Sale.
In their Answer,[23]
the Heirs of Alfonso initially argued that the Deed of Sale was void for lack
of consideration, and even granting that there was consideration, such was
inadequate. The Heirs of Policronio counter that the defenses of absence or
inadequacy of consideration are not grounds to render a contract void.
The Heirs of Policronio contended that under Article 1470 of
the Civil Code, gross inadequacy of the price does
not affect a contract of sale, except as it may indicate a defect in the
consent, or that the parties really intended a donation or some other act or
contract. Citing jurisprudence, they argued that inadequacy of monetary
consideration does not render a conveyance inexistent as liberality may be
sufficient cause for a valid contract, whereas fraud or bad faith may render it
either rescissible or voidable, although valid until annulled.[24]
Thus, they argued that if the contract suffers from inadequate consideration,
it remains valid until annulled, and the remedy of rescission calls for
judicial intervention, which remedy the Heirs of Alfonso failed to take.
It is further
argued that even granting that the sale of the subject lands for a consideration
of ₱2,000.00 was inadequate, absent any evidence of the fair market value
of the land at the time of its sale, it cannot be concluded that the price at
which it was sold was inadequate.[25]
As there is nothing in the records to show that the Heirs of Alfonso supplied
the true value of the land in 1969, the amount of ₱2,000.00 must thus
stand as its saleable value.
On
this issue, the Court finds for the Heirs of Alfonso.
For lack of
consideration, the Deed of Sale is once again found to be void. It states that Policronio
paid, and Alfonso received, the ₱2,000.00 purchase price on the date of
the signing of the contract:
That
I, ALFONSO F. URETA, x x x for and in consideration
of the sum of TWO THOUSAND (₱2,000.00)
PESOS, Philippine Currency, to me in hand paid by POLICRONIO M. URETA, x x x, do
hereby CEDE, TRANSFER, and CONVEY, by way of absolute sale, x x x six (6)
parcels of land x x x.[26]
[Emphasis ours]
Although,
on its face, the Deed of Sale appears to be supported by valuable
consideration, the RTC found that there was no money involved in the sale.[27]
This finding was affirmed by the CA in ruling that the sale is void for being
absolutely simulated. Considering that there is no cogent reason to deviate
from such factual findings, they are binding on this Court.
It
is well-settled in a long line of cases that where a deed of sale states that
the purchase price has been paid but in fact has never been paid, the deed of
sale is null and void for lack of consideration.[28]
Thus, although the contract states that the purchase price of ₱2,000.00
was paid by Policronio to Alfonso for the subject properties, it has been
proven that such was never in fact paid as there was no money involved. It must,
therefore, follow that the Deed of Sale is void for lack of consideration.
Given that the Deed
of Sale is void, it is unnecessary to discuss the issue on the inadequacy of
consideration.
Parol
Evidence and Hearsay
The Heirs of
Policronio aver that the rules on parol evidence and hearsay were violated by
the CA in ruling that the Deed of Sale was void.
They argued that
based on the parol evidence rule, the Heirs of Alfonso and, specifically, Amparo
Castillo, were not in a position to prove the terms outside of the contract
because they were not parties nor successors-in-interest in the Deed of Sale in
question. Thus, it is argued that the testimony of Amparo Castillo violates the
parol evidence rule.
Stemming from
the presumption that the Heirs of Alfonso were not parties to the contract, it
is also argued that the parol evidence rule may not be properly invoked by
either party in the litigation against the other, where at least one of the
parties to the suit is not a party or a privy of a party to the written
instrument in question and does not base a claim on the instrument or assert a
right originating in the instrument or the relation established thereby.[29]
Their arguments
are untenable.
The objection
against the admission of any evidence must be made at the proper time, as soon
as the grounds therefor become reasonably apparent, and if not so made, it will
be understood to have been waived. In the case of testimonial evidence, the
objection must be made when the objectionable question is asked or after the
answer is given if the objectionable features become apparent only by reason of
such answer.[30]
In this case, the Heirs of Policronio failed to timely object to the testimony
of Amparo Castillo and they are, thus, deemed to have waived the benefit of the
parol evidence rule.
Granting that
the Heirs of Policronio timely objected to the testimony of Amparo Castillo,
their argument would still fail.
Section 9 of
Rule 130 of the Rules of Court provides:
Section 9.
Evidence of written agreements. When the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon
and there can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to
modify, explain or add to the terms of written agreement if he puts in issue in
his pleading:
(a) An intrinsic ambiguity, mistake or
imperfection in the written agreement;
(b)
The failure of the written agreement to express the true intent and agreement
of the parties thereto;
(c)
The validity of the written agreement; or
(d) The existence of other terms agreed to by
the parties or their successors in interest after the execution of the written
agreement.
The term "agreement" includes
wills.
[Emphasis ours]
Paragraphs (b)
and (c) are applicable in the case at bench.
The failure of
the Deed of Sale to express the true intent and agreement of the parties was
clearly put in issue in the Answer[31]
of the Heirs of Alfonso to the Complaint. It was alleged that the Deed of Sale was only made
to lessen the payment of estate and inheritance taxes and not meant to transfer
ownership. The exception in paragraph (b) is allowed to enable the court to
ascertain the true intent of the parties, and once the intent is clear, it
shall prevail over what the document appears to be on its face.[32]
As the true intent of the parties was duly proven in the present case, it now prevails
over what appears on the Deed of Sale.
The validity of
the Deed of Sale was also put in issue in the Answer, and was precisely one of
the issues submitted to the RTC for resolution.[33]
The operation of the parol evidence rule requires the existence of a valid
written agreement. It is, thus, not applicable in a proceeding where the
validity of such agreement is the fact in dispute, such as when a contract may
be void for lack of consideration.[34]
Considering that the Deed of Sale has
been shown to be void for being absolutely simulated and for lack of
consideration, the Heirs of Alfonso are not precluded from presenting evidence
to modify, explain or add to the terms of the written agreement.
The Heirs of
Policronio must be in a state of confusion in arguing that the Heirs of Alfonso
may not question the Deed of Sale for not being parties or
successors-in-interest therein on the basis that the parol evidence rule may
not be properly invoked in a proceeding or litigation where at least one of the
parties to the suit is not a party or a privy of a party to the written
instrument in question and does not base a claim on the instrument or assert a
right originating in the instrument or the relation established thereby. If
their argument was to be accepted, then the Heirs of Policronio would themselves
be precluded from invoking the parol evidence rule to exclude the evidence of
the Heirs of Alfonso.
Indeed, the
applicability of the parol evidence rule requires that the case be between
parties and their successors-in-interest.[35]
In this case, both the Heirs of Alfonso and the Heirs of Policronio are
successors-in-interest of the parties to the Deed of Sale as they claim rights
under Alfonso and Policronio, respectively. The parol evidence rule excluding evidence aliunde, however, still cannot apply
because the present case falls under two exceptions to the rule, as discussed
above.
With respect to
hearsay, the Heirs of Policronio contended that the rule on hearsay was
violated when the testimony of Amparo Castillo was given weight in proving that
the subject lands were only sold for taxation purposes as she was a person
alien to the contract. Even granting that they did not object to her testimony during
trial, they argued that it should not have been appreciated by the CA because
it had no probative value whatsoever.[36]
The Court disagrees.
It has indeed
been held that hearsay evidence whether objected to or not cannot be given
credence for having no probative value.[37]
This principle, however, has been
relaxed in cases where, in addition to the failure to object to the
admissibility of the subject evidence, there were other pieces of evidence
presented or there were other circumstances prevailing to support the fact in
issue. In Top-Weld
Manufacturing, Inc. v. ECED S.A.,[38] this Court held:
Hearsay evidence alone may be insufficient to establish
a fact in an injunction suit (Parker v. Furlong, 62 P. 490) but, when no
objection is made thereto, it is, like any other evidence, to be considered and
given the importance it deserves. (Smith v. Delaware & Atlantic Telegraph
& Telephone Co., 51 A 464). Although we should warn of the undesirability
of issuing judgments solely on the basis of the affidavits submitted, where as
here, said affidavits are overwhelming, uncontroverted by competent evidence
and not inherently improbable, we are constrained to uphold the allegations of
the respondents regarding the multifarious violations of the contracts made by
the petitioner.
In the case at bench,
there were other prevailing circumstances which corroborate the testimony of
Amparo Castillo. First, the other Deeds of Sale which were executed in
favor of Liberato, Prudencia, and Valeriana on the same day as that of
Policronios were all presented in evidence. Second, all the properties
subject therein were included in the Deed of Extra-Judicial Partition of the
estate of Alfonso. Third, Policronio, during his lifetime, never exercised
acts of ownership over the subject properties (as he never demanded or took
possession of them, never demanded or received the produce thereof, and never
paid real estate taxes thereon). Fourth, Policronio never informed his
children of the sale.
As the Heirs of
Policronio failed to controvert the evidence presented, and to timely object to
the testimony of Amparo Castillo, both the RTC and the CA correctly accorded
probative weight to her testimony.
Prior
Action Unnecessary
The Heirs of Policronio averred that the Heirs of Alfonso should
have filed an action to declare the sale void prior to executing the Deed of
Extra-Judicial Partition. They argued that the sale should enjoy the presumption
of regularity, and until overturned by a court, the Heirs of Alfonso had no
authority to include the land in the inventory of properties of Alfonsos
estate.
By doing so, they arrogated upon themselves the power
of invalidating the Deed of Sale which is exclusively vested in a court of law
which, in turn, can rule only upon the
observance of due process. Thus, they contended that prescription, laches, or estoppel
have set in to militate against assailing the validity of the sale.
The Heirs of Policronio are mistaken.
A simulated
contract of sale is without any cause or consideration, and is, therefore, null
and void; in such case, no independent action to rescind or annul the contract
is necessary, and it may be treated as non-existent for all purposes.[39]
A void or inexistent contract is one which has no force and effect from the
beginning, as if it has never been entered into, and which cannot be validated
either by time or ratification. A void contract produces no effect whatsoever
either against or in favor of anyone; it does not create, modify or extinguish
the juridical relation to which it refers.[40]
Therefore, it was not necessary for the Heirs of Alfonso to first file an
action to declare the nullity of the Deed of Sale prior to executing the Deed
of Extra-Judicial Partition.
Personality
to Question
The Heirs of
Policronio contended that the Heirs of Alfonso are not parties, heirs, or
successors-in-interest under the contemplation of law to clothe them with the
personality to question the Deed of Sale. They argued that under Article 1311
of the Civil Code, contracts take effect only between the parties, their
assigns and heirs. Thus, the genuine character of a contract which personally
binds the parties cannot be put in issue by a person who is not a party
thereto. They posited that the Heirs of Alfonso were not parties to the
contract; neither did they appear to be beneficiaries by way of assignment or
inheritance. Unlike themselves who are direct heirs of Policronio, the Heirs of
Alfonso are not Alfonsos direct heirs. For the Heirs of Alfonso to qualify as
parties, under Article 1311 of the Civil Code, they must first prove that they
are either heirs or assignees. Being neither, they have no legal standing to
question the Deed of Sale.
They further
argued that the sale cannot be assailed for being barred under Article 1421 of
the Civil Code which provides that the defense of illegality of a contract is
not available to third persons whose interests are not directly affected.
Again, the Court
disagrees.
Article 1311 and
Article 1421 of the Civil Code provide:
Art. 1311. Contracts
take effect only between the parties, their assigns and heirs, x x x
Art. 1421. The
defense of illegality of contracts is not available to third persons whose
interests are not directly affected.
The right to set
up the nullity of a void or non-existent contract is not limited to the
parties, as in the case of annullable or voidable contracts; it is extended to
third persons who are directly affected by the contract. Thus, where a contract
is absolutely simulated, even third persons who may be prejudiced thereby may
set up its inexistence.[41]
The Heirs of Alfonso are the children of Alfonso, with his deceased children
represented by their children (Alfonsos grandchildren). The Heirs of Alfonso
are clearly his heirs and successors-in-interest and, as such, their interests
are directly affected, thereby giving them the right to question the legality
of the Deed of Sale.
Inapplicability
of Article 842
The Heirs of
Policronio further argued that even assuming that the Heirs of Alfonso have an
interest in the Deed of Sale, they would still be precluded from questioning
its validity. They posited that the Heirs of Alfonso must first prove that the
sale of Alfonsos properties to Policronio substantially diminished their successional
rights or that their legitimes would be unduly prejudiced, considering that
under Article 842 of the Civil Code, one who has compulsory heirs may dispose
of his estate provided that he does not contravene the provisions of the Civil
Code with regard to the legitime of said heirs. Having failed to do so, they argued
that the Heirs of Alfonso should be precluded from questioning the validity of
the Deed of Sale.
Still, the Court
disagrees.
Article 842 of
the Civil Code provides:
Art. 842. One
who has no compulsory heirs may dispose by will of all his estate or any part
of it in favor of any person having capacity to succeed.
One who has
compulsory heirs may dispose of his estate provided he does not contravene the
provisions of this Code with regard to the legitime of said heirs.
This article
refers to the principle of freedom of disposition by will. What is involved in
the case at bench is not a disposition by will but by Deed of Sale. Hence, the
Heirs of Alfonso need not first prove that the disposition substantially
diminished their successional rights or unduly prejudiced their legitimes.
Inapplicability
of Article 1412
The Heirs of
Policronio contended that even assuming that the contract was simulated, the
Heirs of Alfonso would still be barred from recovering the properties by reason
of Article 1412 of the Civil Code, which provides that if the act in which the
unlawful or forbidden cause does not constitute a criminal offense, and the
fault is both on the contracting parties, neither may recover what he has given
by virtue of the contract or demand the performance of the others undertaking.
As the Heirs of Alfonso alleged that the purpose of the sale was to avoid the
payment of inheritance taxes, they cannot take from the Heirs of Policronio
what had been given to their father.
On this point,
the Court again disagrees.
Article 1412 of
the Civil Code is as follows:
Art. 1412. If
the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:
(1) When the fault
is on the part of both contracting parties, neither may recover what he has
given by virtue of the contract, or demand the performance of the others
undertaking;
(2) When only one
of the contracting parties is at fault, he cannot recover what he has given by
reason of the contract, or ask for the fulfillment of what has been promised
him. The other, who is not at fault, may demand the return of what he has given
without any obligation to comply with his promise.
Article 1412 is not
applicable to fictitious or simulated contracts, because they refer to contracts
with an illegal cause or subject-matter.[42]
This article presupposes the existence of a cause, it cannot refer to
fictitious or simulated contracts which are in reality non-existent.[43]
As it has been determined that the Deed of Sale is a simulated contract, the
provision cannot apply to it.
Granting that
the Deed of Sale was not simulated, the provision would still not apply. Since
the subject properties were included as properties of Alfonso in the Deed of
Extra-Judicial Partition, they are covered by corresponding inheritance and
estate taxes. Therefore, tax evasion, if at all present, would not arise, and
Article 1412 would again be inapplicable.
Prescription
From the
position that the Deed of Sale is valid and not void, the Heirs of Policronio
argued that any question regarding its validity should have been initiated
through judicial process within 10 years from its notarization in accordance
with Article 1144 of the Civil Code. Since 21 years had already elapsed when
the Heirs of Alfonso assailed the validity of the Deed of Sale in 1996, prescription
had set in. Furthermore, since the Heirs
of Alfonso did not seek to nullify the tax declarations of Policronio, they had
impliedly acquiesced and given due recognition to the Heirs of Policronio as
the rightful inheritors and should, thus, be barred from laying claim on the
land.
The Heirs of
Policronio are mistaken.
Article 1410 of
the Civil Code provides:
Art. 1410. The
action for the declaration of the inexistence of a contract does not prescribe.
This is one of
the most fundamental characteristics of void or inexistent contracts.[44]
As the Deed
of Sale is a void contract, the action for the declaration of its nullity, even if
filed 21 years after its execution, cannot be barred by prescription for it is
imprescriptible. Furthermore, the right to set up the
defense of inexistence or absolute nullity cannot be waived or renounced.[45]
Therefore,
the Heirs of Alfonso cannot be precluded from setting up the defense of its
inexistence.
Validity of
the Deed of Extra-Judicial Partition
The
Court now resolves the issue of the validity of the Deed of Extra-Judicial
Partition.
Unenforceability
The
Heirs of Alfonso argued that the CA was mistaken in annulling the Deed of Extra-Judicial
Partition due to the incapacity of Conrado to give the consent of his co-heirs
for lack of a special power of attorney. They contended that what was involved was not
the capacity to give consent in behalf of the co-heirs but the authority to
represent them. They argue that the Deed of Extra-Judicial
Partition is not a voidable or an annullable contract under Article 1390 of the
Civil Code, but rather, it is an unenforceable or, more specifically, an
unauthorized contract under Articles 1403 (1) and 1317 of the Civil Code. As
such, the Deed of Extra-Judicial Partition should not be annulled but only be
rendered unenforceable against the siblings of Conrado.
They further
argued that under Article 1317 of the Civil Code, when the persons represented
without authority have ratified the unauthorized acts, the contract becomes
enforceable and binding. They contended that the Heirs of Policronio ratified
the Deed of Extra-Judicial Partition when Conrado took possession of one of the
parcels of land adjudicated to him and his siblings, and when another parcel
was used as collateral for a loan entered into by some of the Heirs of
Policronio. The Deed of Extra-Judicial
Partition having been ratified and its benefits accepted, the same thus became
enforceable and binding upon them.
The Heirs of Alfonso averred that granting arguendo that
Conrado was not authorized to represent his co-heirs and there was no
ratification, the CA should not have remanded the case to the RTC for partition
of Alfonsos estate. They argued that the CA should not have applied the Civil
Code general provision on contracts, but the special provisions dealing with
succession and partition. They contended that contrary
to the ruling of the CA, the extra-judicial parition was not an act of strict
dominion, as it has been ruled that partition of inherited land is not a
conveyance but a confirmation or ratification of title or right to the land.[46]
Therefore, the law requiring a special power of attorney should not be applied
to partitions.
On the other hand, the Heirs of Policronio insisted
that the CA pronouncement on the invalidity of the Deed of Extra-Judicial
Partition should not be disturbed because the subject properties should not
have been included in the estate of Alfonso, and because Conrado lacked the written
authority to represent his siblings. They argued with the CA in ruling that a
special power of attorney was required before Conrado could sign in behalf of his
co-heirs.
The Heirs of Policronio denied that
they ratified the Deed of Extra-Judicial Partition. They claimed that there is
nothing on record that establishes that they ratified the partition. Far from
doing so, they precisely questioned its execution by filing a complaint. They
further argued that under Article 1409 (3) of the Civil Code, ratification
cannot be invoked to validate the illegal act of including in the partition those
properties which do not belong to the estate as it provides another mode of
acquiring ownership not sanctioned by law.
Furthermore, the Heirs of Policronio contended that the
defenses of unenforceability, ratification, and preterition are being raised
for the first time on appeal by the Heirs of Alfonso. For having failed to
raise them during the trial, the Heirs of Alfonso should be deemed to have waived
their right to do so.
The Court agrees in part with the Heirs of Alfonso.
To begin, although the defenses of unenforceability,
ratification and preterition were raised by the Heirs of Alfonso for the first
time on appeal, they are concomitant matters which may be taken up. As
long as the questioned items bear relevance and close relation to those
specifically raised, the interest of justice would dictate that they, too, must
be considered and resolved. The rule that only theories raised in the initial
proceedings may be taken up by a party thereto on appeal should refer to
independent, not concomitant matters, to support or oppose the cause of action.[47]
In the RTC, the Heirs of Policronio alleged that Conrados
consent was vitiated by mistake and undue influence, and that he signed the
Deed of Extra-Judicial Partition without the authority or consent of his
co-heirs.
The RTC found
that Conrados credibility had faltered, and his claims were rejected by the
RTC as gratuitous assertions. On the basis of such, the RTC ruled that Conrado
duly represented his siblings in the Deed of Extra-Judicial Partition.
On the other hand, the CA annulled the
Deed of Extra-Judicial Partition under Article 1390 (1) of the Civil Code,
holding that a
special power of attorney was lacking as required under Article 1878 (5) and
(15) of the Civil Code. These articles are as follows:
Art. 1878. Special powers of attorney are necessary in the following
cases:
x x x
(5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;
x x x
(15) Any other act of strict dominion.
Art. 1390. The following contracts are voidable or annullable,
even though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a
contract;
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action
in court. They are susceptible of ratification.
This
Court finds that Article 1878 (5) and (15) is inapplicable to the case at
bench. It has been held in several cases[48] that partition among heirs is not
legally deemed a conveyance of real property resulting in change of ownership.
It is not a transfer of property from one to the other, but rather, it is a
confirmation or ratification of title or right of property that an heir is
renouncing in favor of another heir who accepts and receives the
inheritance. It is merely a designation
and segregation of that part which belongs to each heir. The Deed of
Extra-Judicial Partition cannot, therefore, be considered as an act of strict
dominion. Hence, a special power of attorney is not necessary.
In
fact, as between the parties, even an oral partition by the heirs is valid if
no creditors are affected. The requirement of a written memorandum under the
statute of frauds does not apply to partitions effected by the heirs where no
creditors are involved considering that such transaction is not a conveyance of
property resulting in change of ownership but merely a designation and segregation
of that part which belongs to each heir.[49]
Neither
is Article 1390 (1) applicable. Article 1390 (1) contemplates the incapacity of
a party to give consent to a contract. What is involved in the case at bench though
is not Conrados incapacity to give consent to the contract, but rather his
lack of authority to do so. Instead, Articles 1403 (1), 1404, and 1317 of the
Civil Code find application to the circumstances prevailing in this case. They
are as follows:
Art. 1403. The following contracts are unenforceable, unless they
are ratified:
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his powers;
Art. 1404. Unauthorized contracts are governed by Article 1317
and the principles of agency in Title X of this Book.
Art. 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law a right to represent
him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on
whose behalf it has been executed, before it is revoked by the other
contracting party.
Such
was similarly held in the case of Badillo
v. Ferrer:
The
Deed of Extrajudicial Partition and
The
deed of extrajudicial parition and sale is an unenforceable or, more
specifically, an unauthorized contract under Articles 1403(1) and 1317 of the New
Civil Code.[50]
Therefore,
Conrados failure to obtain authority from his co-heirs to sign the Deed of
Extra-Judicial Partition in their behalf did not result in his incapacity to
give consent so as to render the contract voidable, but rather, it rendered the
contract valid but unenforceable against Conrados co-heirs for having been
entered into without their authority.
A
closer review of the evidence on record, however, will show that the Deed of
Extra-Judicial Partition is not unenforceable but, in fact, valid, binding and enforceable
against all the Heirs of Policronio for having given their consent to the
contract. Their consent to the Deed of Extra-Judicial Partition has been proven
by a preponderance of evidence.
Regarding his alleged vitiated consent due to mistake and
undue influence to the Deed of Extra-Judicial Partition, Conrado testified, to
wit:
Q: Mr. Ureta you
remember having signed a document entitled deed of extra judicial partition
consisting of 11 pages and which have previously [been] marked as Exhibit I for
the plaintiffs?
A: Yes sir.
Q: Can you
recall where did you sign this document?
A: The way I
remember I signed that in our house.
Q: And who
requested or required you to sign this document?
A: My aunties.
Q: Who in
particular if you can recall?
A: Nay Pruding
Panadero.
Q: You mean that
this document that you signed was brought to your house by your Auntie Pruding
Pa[r]adero [who] requested you to sign that document?
A: When she
first brought that document I did not sign that said document because I [did]
no[t] know the contents of that document.
Q: How many
times did she bring this document to you [until] you finally signed the
document?
A: Perhaps 3
times.
Q: Can you tell
the court why you finally signed it?
A: Because the
way she explained it to me that the land of my grandfather will be partitioned.
Q: When you
signed this document were your brothers and sisters who are your co-plaintiffs
in this case aware of your act to sign this document?
A: They do not
know.
x x x
Q: After you
have signed this document did you inform your brothers and sisters that you
have signed this document?
A: No I did not. [51]
x x x
Q: Now you read
the document when it was allegedly brought to your house by your aunt
A: I did not
read it because as I told her I still want to ask the advise of my brothers and
sisters.
Q: So do I get
from you that you have never read the document itself or any part thereof?
A: I have read
the heading.
x x x
Q: And why is it
that you did not read all the pages of this document because I understand that
you know also how to read in English?
A: Because the
way Nay Pruding explained to me is that the property of my grandfather will be
partitioned that is why I am so happy.
x x x
Q: You mean to
say that after you signed this deed of extra judicial partition up to the
present you never informed them?
A: Perhaps they
know already that I have signed and they read already the document and they
have read the document.
Q: My question
is different, did you inform them?
A: The document
sir? I did not tell them.
Q: Even until
now?
A: Until now I
did not inform them.[52]
This Court finds no cogent reason to reverse the finding of
the RTC that Conrados explanations were mere gratuitous assertions not entitled
to any probative weight. The RTC found Conrados
credibility to have faltered when he testified that perhaps his siblings were
already aware of the Deed of Extra-Judicial Partition. The RTC was in the best position to
judge the credibility of the witness testimony.
The CA also recognized that Conrados consent was not vitiated by mistake and
undue influence as it required a special power of attorney in order to bind his
co-heirs and, as such, the CA thereby recognized that his signature was binding
to him but not with respect to his co-heirs. Findings of fact of the trial
court, particularly when affirmed by the CA, are binding to this Court.[53]
Furthermore,
this Court notes other peculiarities in Conrados testimony. Despite claims of undue influence,
there is no indication that Conrado was forced to sign by his aunt, Prudencia
Paradero. In fact, he testified that he was happy to sign because his
grandfathers estate would be partitioned. Conrado, thus, clearly understood
the document he signed. It is also worth noting that despite the document being
brought to him on three separate occasions and indicating his intention to
inform his siblings about it, Conrado failed to do so, and still neglected to
inform them even after he had signed the partition. All these circumstances negate
his claim of vitiated consent. Having duly signed the
Deed of Extra-Judicial Partition, Conrado is bound to it. Thus, it is enforceable against him.
Although
Conrados co-heirs claimed that they did not authorize Conrado to sign the Deed
of Extra-Judicial Partition in their behalf, several circumstances militate
against their contention.
First,
the Deed of Extra-Judicial Partition was executed on
Second, Conrado retained possession of one
of the parcels of land adjudicated to him and his co-heirs in the Deed of
Extra-Judicial Partition.
Third, after
the execution of the partition on April 19, 1989 and more than a year before
they claimed to have discovered the existence of the Deed of Extra-Judicial
Partition on July 30, 1995, some of the Heirs of Policronio, namely, Rita
Solano, Macario Ureta, Lilia Tayco, and Venancio Ureta executed on June 1,
1994, a Special Power of Attorney[54]
in favor of their sister Gloria Gonzales, authorizing her to obtain a loan from
a bank and to mortgage one of the parcels of land adjudicated to them in the
Deed of Extra-Judicial Partition to secure payment of the loan. They were able
to obtain the loan using the land as collateral, over which a Real Estate Mortgage[55]
was constituted. Both the Special Power of Attorney and the Real Estate
Mortgage were presented in evidence in the RTC, and were not controverted or
denied by the Heirs of Policronio.
Fourth, in the letter dated August 15,
1995, sent by the counsel of the Heirs of Policronio to the Heirs of Alfonso
requesting for amicable settlement, there was no mention that Conrados consent
to the Deed of Extra-Judicial Partition was vitiated by mistake and undue
influence or that they had never authorized Conrado to represent them or sign
the document on their behalf. It is questionable for such a pertinent detail to
have been omitted. The body of said letter is reproduced hereunder as follows:
Greetings:
Your
nephews and nieces, children of your deceased brother Policronio Ureta, has
referred to me for appropriate legal action the property they inherited from
their father consisting of six (6) parcels of land which is covered by a Deed
of Absolute Sale dated October 25, 1969. These properties ha[ve] already been
transferred to the name of their deceased father immediately after the sale,
machine copy of the said Deed of Sale is hereto attached for your ready
reference.
Lately,
however, there was published an Extra-judicial Partition of the estate of
Alfonso Ureta, which to the surprise of my clients included the properties already
sold to their father before the death of said Alfonso Ureta. This inclusion of
their property is erroneous and illegal because these properties were covered
by the Deed of Absolute Sale in favor of their father Policronio Ureta no
longer form part of the estate of Alfonso Ureta. Since Policronio Ureta has [sic]
died in 1974 yet, these properties have passed by hereditary succession to his
children who are now the true and lawful owners of the said properties.
My clients
are still entitled to a share in the estate of Alfonso Ureta who is also their
grandfather as they have stepped into the shoes of their deceased father
Policronio Ureta. But this estate of Alfonso Ureta should already exclude the
six (6) parcels of land covered by the Deed of Absolute Sale in favor of
Policronio Ureta.
My clients cannot understand why the
properties of their late father [should] be included in the estate of their
grandfather and be divided among his brothers and sisters when said properties
should only be divided among themselves as children of Policronio Ureta.
Since this
matter involves very close members of the same family, I have counseled my
clients that an earnest effort towards a compromise or amicable settlement be
first explored before resort to judicial remedy is pursued. And a compromise or
amicable settlement can only be reached if all the parties meet and discuss the
problem with an open mind. To this end, I am suggesting a meeting of the
parties on
I would,
however, interpret the failure to come to the said meeting as an indication
that the parties are not willing to or interested in amicable settlement of
this matter and as a go signal for me to resort to legal and/or judicial
remedies to protest the rights of my clients.
Thank you
very much.[56]
Based on the foregoing, this Court
concludes that the allegation of Conrados vitiated consent and lack of
authority to sign in behalf of his co-heirs was a mere afterthought on the part
of the Heirs of Policronio. It appears that the Heirs of Policronio were not
only aware of the existence of the Deed of Extra-Judicial Partition prior to
In view of the foregoing, there is no
longer a need to discuss the issue of ratification.
Preterition
The Heirs of
Alfonso were of the position that the absence of the Heirs of Policronio in the
partition or the lack of authority of their representative results, at the very
least, in their preterition and not in the invalidity of the entire deed of
partition.
Assuming there was actual preterition, it did not render
the Deed of Extra-Judicial Partition voidable. Citing
Article 1104 of the Civil Code, they aver that a partition made with
preterition of any of the compulsory heirs shall not be rescinded, but the heirs
shall be proportionately obliged to pay the share of the person omitted. Thus,
the Deed of Extra-Judicial Partition should not have been annulled by the CA.
Instead, it should have ordered the share of the heirs omitted to be given to
them.
The Heirs of Alfonso also argued that all that remains
to be adjudged is the right of the preterited heirs to represent their father,
Policronio, and be declared entitled to his share. They contend that remand to
the RTC is no longer necessary as the issue is purely legal and can be resolved
by the provisions of the Civil Code for there is no dispute that each of
Alfonsos heirs received their rightful share. Conrado,
who received Policronios share, should then fully account for what he had received
to his other co-heirs and be directed to deliver their share in the
inheritance.
These arguments
cannot be given credence.
Their posited
theory on preterition is no longer viable. It has already been determined that the Heirs
of Policronio gave their consent to the Deed of Extra-Judicial Partition and
they have not been excluded from it. Nonetheless, even granting that the Heirs
of Policronio were denied their lawful participation in the partition, the
argument of the Heirs of Alfonso would still fail.
Preterition
under Article 854 of the Civil Code is as follows:
Art. 854. The preterition or omission of one, some, or all of
the compulsory heirs in the direct line, whether living at the time of the
execution of the will or born after the death of the testator, shall annul the
institution of heir; but the devises and legacies shall be valid insofar as
they are not inofficious.
If the omitted compulsory heirs should die before the testator, the
institution shall be effectual, without prejudice to the right of
representation.
Preterition has
been defined as the total omission of a compulsory heir from the inheritance.
It consists in the silence of the testator with regard to a compulsory heir,
omitting him in the testament, either by not mentioning him at all, or by not
giving him anything in the hereditary property but without expressly
disinheriting him, even if he is mentioned in the will in the latter case.[57]
Preterition is thus a concept of testamentary succession and requires a will.
In the case at bench, there is no will involved. Therefore, preterition cannot
apply.
Remand Unnecessary
The Deed of Extra-Judicial Partition is
in itself valid for complying with all the legal requisites, as found by the
RTC, to wit:
A persual of the Deed of
Extra-judicial Partition would reveal that all the heirs and children of Alfonso
Ureta were represented therein; that nobody was left out; that all of them
received as much as the others as their shares; that it distributed all the
properties of Alfonso Ureta except a portion of parcel 29 containing an area of
14,000 square meters, more or less, which was expressly reserved; that Alfonso
Ureta, at the time of his death, left no debts; that the heirs of Policronio Ureta,
Sr. were represented by Conrado B. Ureta; all the parties signed the document,
was witnessed and duly acknowledged before Notary Public Adolfo M. Iligan of
Kalibo, Aklan; that the document expressly stipulated that the heirs to whom
some of the properties were transferred before for taxation purposes or their
children, expressly recognize and acknowledge as a fact that the properties
were transferred only for the purpose of effective administration and
development convenience in the payment of taxes and, therefore, all instruments
conveying or effecting the transfer of said properties are null and void from
the beginning (Exhs. 1-4, 7-d).[58]
Considering
that the Deed of Sale has been found void and the Deed of Extra-Judicial
Partition valid, with the consent of all the Heirs of Policronio duly given, there
is no need to remand the case to the court of origin for partition.
WHEREFORE,
the petition in G.R. No. 165748 is DENIED. The petition
in G.R. No. 165930 is GRANTED. The
assailed
(1) The Deed of Extra-Judicial Partition, dated
VALID, and
(2) The order to remand the case to the
court of origin is hereby DELETED.
SO ORDERED.
JOSE CATRAL
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate
Justice
Chairperson
DIOSDADO M.
PERALTA ROBERTO A.
ABAD
Associate Justice Associate Justice
MARIA
Associate
Justice
A T T E S
T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.
PRESBITERO J. VELASCO, JR.
Associate
Justice
Chairperson
C E R T I F
I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairpersons Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO
C. CORONA
Chief Justice
* Designated as
additional member of the Third Division per Special Order No. 1028 dated
[1] Penned by Associate
Justice Perlita J. Tria Tirona with Associate Justice B.A. Adefuin-De La Cruz
and Associate Justice Arturo D. Brion (now a member of this Court), concurring.
[2] Penned by Associate
Justice Perlita J. Tria Tirona with Associate Justice Ruben T. Reyes and
Associate Justice Arturo D. Brion (now a member of this Court), concurring.
[3] Rollo (G.R. No. 165748), pp. 75-81.
[4] Exhibit G,
records, p. 349.
[5] Exhibit 5, id. at
526.
[6] Exhibit 11, id. at
528.
[7] Exhibit 6, id. at
527.
[8] Exhibit 7, id. at 529-539.
[9] Rollo (G.R. No. 165748), pp. 51-65.
[10] Manila Banking Corporation v. Silverio, 504 Phil. 17, 25-26 (2005), citing Suntay v. Court of Appeals, 321 Phil.
809 (1995) and Rules of Court,
Rule 131, Sec. 3 (r) and (p).
[11] Gatmaitan v. Court of Appeals, G.R. No. 76500,
[12] Ascalon v. Court of Appeals, 242 Phil. 265 (1988).
[13] G.R. No. 163687, March
28, 2006, 485 SCRA 494, 500-501; citing Loyola
v. Court of Appeals, 383 Phil. 171 (2000), and Balite v. Lim, 487 Phil. 281 (2004).
[14] Manila Banking Corporation v. Silverio, supra note 10 at 27, citing Peoples Aircargo and Warehousing Co., Inc. v. Court of Appeals,
357 Phil. 850 (1998).
[15] Tongoy v. Court of Appeals, 208 Phil. 95, 113 (1983); citing Rodriguez v. Rodriguez, 127 Phil. 294,
301-302 (1967).
[16] Lopez v. Lopez, G.R. No. 161925,
[17] Rules of Court, Rule 133, Sec. 1. Preponderance
of evidence, how determined. In civil cases, the party having the burden
of proof must establish his case by a preponderance of evidence. In determining
where the preponderance or superior weight of evidence on the issues involved
lies, the court may consider all the facts and circumstance of the case, the
witnesses manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the nature of
the facts to which they testify, the probability of their testimony, their
interest or want of interest, and also their personal credibility so far as the
same may legitimately appear upon the trial. The court may also consider the
number of witnesses, though the preponderance is not necessarily with the
greater number.
[18] TSN,
[19] Exhibit 7-d,
records, p. 533.
[20] Manila Banking Corporation v. Silverio, supra note 10 at 31, citing Suntay v. Court of Appeals, 321 Phil. 809 (1995); Santiago v. Court of Appeals, 343 Phil.
612 (1997); Cruz v. Bancom Finance
Corporation, 429 Phil. 225 (2002); and Ramos
v. Heirs of Ramos, 431 Phil. 337 (2002).
[21] Samala v. Court of Appeals, 467 Phil. 563, 568 (2004).
[22] Tongoy v. Court of Appeals, supra note
15; Manila Banking Corporation v. Silverio, 504 Phil. 17, 33 (2005).
[23] Rollo (G.R. No. 165748), p. 69-70.
[24] Morales Development Company, Inc. v. Court of Appeals, 137 Phil.
307 (1969).
[25] Acabal v. Acabal, 494 Phil. 528 (2005).
[26] Exhibit G, records, p. 349.
[27] Rollo
(G.R. No. 165748), p. 79; and TSN,
[28] Montecillo v. Reynes, 434 Phil. 456, 469 (2002); citing Ocejo Perez & Co. v. Flores, 40 Phil
921 (1920); Mapalo v. Mapalo, 123
Phil. 979 (1966); Vda. de Catindig v.
Roque, 165 Phil. 707 (1976); Rongavilla
v. Court of Appeals, 355 Phil. 721 (1998); and Yu Bu Guan v. Ong, 419 Phil. 845 (2001).
[29] Lechugas v. Court of Appeals, 227 Phil. 310 (1986).
[30] Rules of Court, Rule 132, Sec. 36.
[31] Rollo
(G.R. No. 165748), pp. 66-74.
[32] Premier Insurance v. Intermediate Appellate Court, 225 Phil. 370,
381 (1986); citing Labasan v. Lacuesta,
175 Phil. 216 (1978).
[33] Rollo
(G.R No. 165748), p. 77.
[34] Herrera, Remedial Law, Vol. V, pp. 208-209,
[1999].
[35] Lechugas v. Court of Appeals, 227 Phil. 310, 319 (1986).
[36] Eugenio v. Court of Appeals, G.R. No. 103737,
[37] People v. Parungao, 332 Phil. 917, 924 (1996).
[38] 222
Phil. 424, 437 (1985).
[39] Ocejo
Perez & Co. v.
[40] Tongoy v. Court of Appeals, supra note 15.
[41] Arsenal v. Intermediate Appellate Court, 227 Phil. 36, 46-47 (1986);
Tolentiono, Civil Code of the
[42] Sta. Romana v. Imperio, 122 Phil. 1001, 1007 (1965); Tolentino,
Civil Code of the
[43] Gonzales v. Trinidad, 67 Phil. 682, 683-684 (1939); Castro v. Escutin, 179 Phil. 277, 284
(1979).
[44] Tongoy v. Court of Appeals, supra note
15; Manila Banking Corporation v. Silverio, 504 Phil. 17, 33 (2005).
[45]
[46]
[47] Borbon II v. Servicewide Specialists, Inc., 328 Phil. 150, 160
(1996).
[48] Barcelona v. Barcelona, 100 Phil. 251, 255 (1956); Maestrado v. Court of Appeals, 384 Phil.
418, 432 (2000); Castro v. Miat, 445
Phil. 282 297-298 (2003), citing Pada-Kilario
v. Court of Appeals, 379 Phil. 515 (2000).
[49] Maestrado v. Court of Appeals, 384 Phil. 418, 432 (2000).
[50] 236 Phil. 438,
447-448 (1987).
[51] TSN,
[52]
[53] Philippine Rabbit Bus Lines Inc. v. Macalinao, 491 Phil. 249, 255
(2005).
[54] Exhibit 2,
records, p. 524.
[55] Exhibit 3, id. at 525.
[56] Exhibit A, id. at 335-336.
[57] Neri v. Akutin, 72 Phil. 322, 325 (1914); Maninang v. Court of Appeals, 199 Phil. 640, 647 (1982).
[58] Rollo (G.R. No. 165748), p. 80.