G.R. No. 200608 - Bacala vs. Heirs of Polino

Case Summary (G.R. No. 200608)

Factual Background

• Anecito and Clara Poliao owned an 80,003 m² coconut‐planted parcel in Cocomon, Lupon, Davao Oriental (TCT No. T-3353).
• On April 13, 1992, Anecito executed a notarized Deed of Sale conveying the property to his brother Juan for ₱15,000 and an accompanying Agreement granting Anecito lifetime usufruct and obliging Juan to support Anecito’s mentally incapacitated sons, Aquilino and Ducepino, upon Anecito’s death, with a resolutory clause in case of breach.
• Anecito died intestate on November 21, 1994; Clara died November 18, 1987. Both heirs were incapacitated.
• Aproniana balisalisa, their aunt, was appointed judicial guardian in 1996; Dioscoro substituted in 2010.

Proceedings Below

• September 3, 1996: Complaint filed for nullity of sale and agreement, accounting, damages, injunctive relief.
• 1997–2001: Trial in RTC Branch 32, Lupon. Aproniana testified; Juan testified for respondents; Ducepino died during proceedings.
• February 18, 2002: RTC voided the sale, agreement, and subsequent deed of transfer; ordered reconveyance, accounting of fruits, and awarded damages and fees.
• CA, March 10, 2011: Reversed, upholding validity of documents under Article 1354 (presumption of cause) and best‐evidence rule, treating the Agreement as an onerous donation governed by contract law.
• CA, February 3, 2012: Denied motion for reconsideration.

RTC Ruling on Nullity

• Found the stated ₱15,000 consideration grossly inadequate relative to market value (tax declaration ₱119,893; three-monthly harvest ₱7,000).
• Held the Deed of Sale fictitious and without cause; annulled sale and agreement under Articles 1346, 1352, 1409.
• Alternatively, deemed documents invalid as donation mortis causa for non-compliance with Article 749 formalities.
• Determined Juan breached usufruct and support obligations, causing Ducepino’s death; rescinded sale under contract terms.

CA Reversal and Legal Basis

• Presumed existence of cause and consideration in notarized Deed of Sale (Art. 1354, Civil Code; best‐evidence rule).
• Rejected hearsay on inadequacy; held petitioner failed to overcome presumptions.
• Declared the Agreement an onerous donation not subject to donation formalities.
• Criticized RTC for accepting petitioner’s uncorroborated allegations without further proof.

Issues before the Supreme Court

Whether gross inadequacy of price invalidates the sale or falls under the best‐evidence rule.
Whether the transaction constituted a donation mortis causa or sale.
Whether the Deed of Sale and Agreement should be read together to ascertain true intent.

Supreme Court’s Analysis on Consideration

• Adopts 1987 Constitution framework and relevant Civil Code and Rules of Court.
• Confirms two presumptions: a sale is supported by lawful cause (Art. 1354) and notarized documents are prima facie valid.
• Requires clear, convincing, or preponderant evidence to overturn these presumptions.
• Finds petitioner offered only Aproniana’s unsworn hearsay; no controverting evidence of non-payment or simulation.

Nature of the Transaction

• Identifies Deed of Sale and Agreement as a valid contract of sale with a resolutory condition (Arts. 1318, 1458, 1191, Civil Code).
• Rejects donation mortis causa theory: absence of animus donandi; parties expressly recited sale for ₱15,000.
• Clarifies that gross inadequacy alone does not transform sale into simulation or donation (Arts. 1470–1471).

Interpretation of Contractual Terms

• Applies parol‐evidence rule and plain‐meaning/four‐corners doctrine (Rule 130, Secs. 3, 10; Art. 13