G.R. No. 159665 - Taghoy vs. Spouses Tigol, Jr.

Spouses Filomeno Taghoy and Margarita Amit owned an 11,067-square meter parcel of land, designated as Lot 3635-B of subdivision plan (LRC) Psd-212881, located in Barrio Agus, Lapu-Lapu City, Cebu.
The property was registered under Transfer Certificate of Title (TCT) No. 6466 at the Lapu-Lapu City Registry of Deeds.
On August 6, 1975, Filomeno and Margarita executed a special power of attorney appointing Felixberto Tigol, Jr. as their attorney-in-fact.
On August 21, 1975, acting as attorney-in-fact, Felixberto executed a real estate mortgage over the property to secure a loan of P22,000.00 from the Philippine National Bank (PNB), intended to finance the shellcraft business of the couple’s children.

Filomeno died intestate on February 12, 1976.
On July 27, 1979, Filomeno’s widow, Margarita, together with their seven children (including Vicenta and Anselmo), executed a Deed of Extrajudicial Settlement and Sale. This document both adjudicated the property among themselves and sold it to Rosita and her husband Felixberto (the respondents) for P1,000.00.
On September 7, 1981, followed by August 10, 1982, the heirs executed two separate Deeds of Confirmation of Sale, confirming the supposed sale.
Simultaneously, the respondents executed explanatory Joint Affidavits in which they declared that the sale was without any genuine consideration and was solely aimed at securing a loan.

On March 9, 1983, the title (TCT No. 13250) was issued in the names of the respondents.
Later, on July 1, 1983, the respondents secured an additional loan of P70,000.00 with the Philippine Banking Corporation using the subject property as collateral.

On April 17, 1990, Anselmo and Vicenta, along with Margarita, Felisa, Gaudencio, Pantaleon, and the surviving heir Annabel, filed a complaint against the respondents and Anastacia for a declaration of nullity of the respondents’ TCT and for judicial partition.
The petitioners contended that the sale was fictitious or simulated; the deeds of confirmation were executed merely to facilitate the securing of a loan, not as an actual conveyance.
In contrast, the respondents argued that their payment of the PNB loan constituted valid consideration, thereby giving them a valid title derived from the Extrajudicial Settlement and Sale.
With some heirs failing to appear at the initial hearing, petitioners later amended the complaint to include them as party defendants or unwilling plaintiffs.

The Regional Trial Court (RTC), Branch 27, Lapu-Lapu City, found that the sale was absolutely simulated since the deeds of confirmation were executed solely to support the loan application. The RTC nullified the respondents’ title and ordered judicial partition after reimbursement of the respondents’ loan advance.
The respondents filed a motion for new trial based on newly discovered evidence regarding Margarita’s paraphernal property, but their motion was denied by the RTC.
The respondents then appealed with the Court of Appeals (CA), which reversed the RTC decision on August 26, 2002, basing its ruling on the testimony of Margarita and arguing that the contract was only relatively simulated.
Following the CA’s denial of the subsequent motion for reconsideration filed by petitioners, the present petition was filed for review on certiorari.

Two Joint Affidavits (dated September 7, 1981 and August 10, 1982) were central to the dispute. These affidavits admitted that the sale was executed without genuine consideration and solely for the purpose of obtaining a loan.
The respondents claimed that their payment of the PNB loan was the real and valid consideration for the transfer of the property.
Testimonies, especially by Margarita Taghoy, played a significant role in the CA ruling, although later disputed by petitioners in arguing the absence of true intent to sell.

Whether the sale of the subject property was absolutely simulated (void due to lack of true intent to transfer title) or relatively simulated (binding despite having a hidden, real agreement).
Whether the respondents’ payment of the PNB loan constituted valid consideration for the transaction, given that the sale lacked genuine intent as evidenced by their own joint affidavits.

Whether the respondents could claim full ownership of the property based on the loan payment advance, or whether they were merely entitled to reimbursement as a lien-holder for expenses incurred in preservation of co-ownership.
The legal consequences of a simulated sale on the validity of the transfer of title and the rights of the original co-owners (the petitioners).

The extent to which the contemporaneous and subsequent acts, including documentary evidence like joint affidavits and extrajudicial settlements, reveal the true intention of the parties.
If the parties’ clear indication of intent (or lack thereof) in executing the sale undermines the validity of the transfer.