Facts:

This case involves the petitioner Dioscoro Poliao Bacala, who represents Aquilino O. Poliao, an incompetent individual, against the respondents, the heirs of spouses Juan Poliao and Corazon Rom. The events began with a complaint for nullity and/or annulment of sale, along with additional requests for accounting, damages, and attorney's fees, filed by Aproniana Poliao Balisalisa, who was the judicial guardian of Aquilino and his brother Ducepino, against Juan and Corazon. The case was filed in Civil Case No. 1863 before the Regional Trial Court (RTC), Branch 32 in Lupon, Davao Oriental. Aproniana, Juan, and a third sibling Anecito were siblings, with Anecito being the father of Aquilino and Ducepino, both of whom were mentally incapacitated. The registered owners of a coconut farming land, the subject of this dispute, were Anecito and his wife Clara, who passed away on November 21, 1994, and November 18, 1987, respectively. They left behind their sons as the sole heirs.

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Facts:

Background of the Case

• The case originates from a complaint for nullity and/or annulment of a sale, accounting, damages, and attorney’s fees with prayer for injunctive reliefs filed by Aproniana PoliAo, acting in her capacity as judicial guardian of two mentally incapacitated individuals, Aquilino and Ducepino O. PoliAo.
• The dispute arose from a transaction involving a parcel of land planted with coconuts located at Cocomon, Lupon, Davao Oriental, covered by Transfer Certificate of Title (TCT) No. T-3353, spanning 80,003 square meters, originally owned by siblings Anecito and Clara PoliAo.
• Following the intestate deaths of Anecito and Clara, the land became the subject of controversy among the surviving heirs.

Transaction Documents and Alleged Irregularities

• A Deed of Sale and a complementary Agreement executed on April 13, 1992 were presented.
• The Deed of Sale purported that Anecito sold the land to Juan for a consideration of P15,000.00.
• The accompanying Agreement stipulated that Anecito, during his lifetime, would retain usufruct of the property, and upon his death, Juan was required to support Aquilino and Ducepino. It also provided that any breach of the terms would render the Deed of Sale null and void.
• Aproniana contended that:
• The sale was fictitious and for an inadequately low price in comparison to the market value (at least P150,000.00 or even P300,000.00 as suggested by tax declarations).
• The transaction was in reality a donation mortis causa and was not executed according to the formalities required by law, especially given that the mental incompetence of Aquilino and Ducepino was known to the parties.
• Juan had not fulfilled his obligation to support the incapacitated siblings, which allegedly led to detrimental consequences including neglect and even the death of Ducepino.

Guardianship and Subsequent Proceedings

• Aproniana was granted letters of guardianship over Aquilino and Ducepino, which she took under oath in 1996 after posting a bond.
• While guardianship was pending, Juan executed a Deed of Voluntary Transfer conveying the property to his children, further complicating the dispute.
• Aproniana, in her complaint, sought to nullify the Deed of Sale, the Agreement, and to enjoin further wrongful actions by Juan and his wife, Corazon, including the subdivision of the land and reaping its fruits without proper accounting.
• Trial testimony was given:
• Aproniana testified regarding the nature of the transaction, the inadequacy of the price, Juan’s failure to support the children, and details about the conditions imposed in the Agreement.
• Juan testified that the sale occurred in the presence of a notary public, at the reputed price of P15,000.00, with Anecito’s acknowledged receipt of the amount, and that he had possession of the title, although the transfer had yet to be effected.
• The Regional Trial Court (RTC) ruled in favor of Aproniana in 2002, voiding the Deed of Sale for lack of cause and considering it fictitious and simulated, as well as nullifying the Agreement and the subsequent Deed of Voluntary Transfer.
• The respondents, heirs of Juan and Corazon, appealed the RTC decision to the Court of Appeals (CA).

Appellate Judgment and Resolution

• The Court of Appeals reversed the RTC ruling, applying Article 1354 of the Civil Code and the best evidence rule to presume the existence of a valid cause and consideration in the Deed of Sale.
• The CA held that:
• The gross inadequacy of the sale price did not automatically render the contract void.
• The transactions (Deed of Sale, the Agreement, and the Deed of Voluntary Transfer) were valid and were to be read together.
• Even if the transaction were to be interpreted as a donation mortis causa, it would remain valid as an onerous donation governed by contractual rules, not the formalities required for a donation.
• The CA’s decision was subsequently affirmed by a March 10, 2011 ruling and a February 3, 2012 resolution confirming the validity of the disputed documents.

Issue:

Regarding the Nullity of the Deed of Sale and Agreement

• Whether the gross inadequacy of the sale price (P15,000.00) relative to the market value renders the contract void due to a lack of valid cause or consideration.
• Whether Juan’s alleged silence about the inadequacy of consideration (i.e., the admission by silence or application of the best evidence rule) can be used to establish the absence of a valid contract.

Nature of the Transaction

• Whether the transactions between Anecito and Juan should be construed as a contract of sale with a resolutory condition or as a donation mortis causa.
• Whether the contractual stipulations—namely, the retention of usufruct by Anecito during his lifetime and the condition that Juan provide financial support to the mentally incapacitated children after Anecito’s death—affect the validity of the contract.

The Application of Contract Interpretation Doctrines

• Whether the “complementary contracts construed together” doctrine should be applied to determine the real intention behind the Deed of Sale and the Agreement.
• Whether principles of equity and the parol evidence rule should be employed to override or interpret the written stipulations in light of the allegations of simulation and inadequacy of consideration.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)