Case Summary (G.R. No. 261491)
Key Dates and Procedural Posture
Relevant events: mortgage to Cooperative Rural Bank (CRB) in 1987 and foreclosure; alleged redemption by payment arranged through Rosalinda; notarized Deed of Sale dated December 27, 2003; remortgage in 2004; mortgaging to Dumasig on August 22, 2011; trial court Decision (Branch 21, RTC, Lanao del Norte) dated August 14, 2019 in favor of petitioners; Court of Appeals Decision dated October 29, 2020 reversing the trial court; Court of Appeals Resolution dated June 8, 2022 denying reconsideration; Supreme Court decision reversing the Court of Appeals and reinstating the trial court decision.
Applicable Law and Constitutional Framework
The 1987 Philippine Constitution governs the adjudication (decision date post‑1990). Statutory and regulatory authorities applied in the case include Presidential Decree No. 27 (land reform restrictions on transfers of land awarded under the decree), Executive Order No. 228, Department of Agrarian Reform Administrative Order No. 08‑1995, the Civil Code (notably Articles 1078 on co‑ownership and 2085 on requisites of mortgage), and procedural rules, including Rule 45 (petition for review on certiorari).
Antecedent Facts and Immediate Transactions
Sps. Dela Cruz obtained an emancipation patent and title to the subject land. In 1987 they mortgaged parcels (including the subject land) to CRB, defaulted, and suffered foreclosure. To avoid loss, they went to Rosalinda for financial assistance; receipt for redemption indicated Silvestra Dela Cruz as payor. After payment, CRB returned original TCTs to Sps. Dela Cruz, who gave them to Rosalinda. A notarized Deed of Sale with Assumption of Mortgage (covering TCT No. EP‑250) was executed on December 27, 2003. In 2004 Sps. Dela Cruz remortgaged the subject property to Llanes for PHP 350,000. Rosalinda possessed the land for one cropping season in 2004 and then returned possession to her parents. Sps. Dela Cruz retained possession until their deaths in 2007 and 2009. On August 22, 2011, Rosalinda mortgaged the property to Dumasig for PHP 700,000; funds were partly used to pay Saladaga (PHP 100,000) and to pay Llanes (PHP 500,000).
Petitioners’ Claim and Trial Court Findings
Petitioners alleged accion reivindicatoria with damages, asserting that the subject land remained their parents’ property and that the purported sale to Rosalinda was void. The trial court found the 2003 Deed of Sale to be absolutely fictitious and void for simulation because Sps. Dela Cruz continued to possess, cultivate, and exercise acts of ownership after the sale; they later remortgaged the property in 2004; Rosalinda possessed it for only one cropping season and returned it; and an Amended Waiver of Rights and Interest in 2005 was executed in favor of one heir (Diego). The trial court also held the Deed of Sale violative of Presidential Decree No. 27, which prohibits transfers of land acquired under the decree except by hereditary succession or to the government. The RTC declared petitioners and Rosalinda co‑owners, ordered partition, and directed Dumasig to vacate and surrender possession of the portion mortgaged to him.
Court of Appeals Ruling and Rationale
The Court of Appeals reversed. It reasoned that continued cultivation by Sps. Dela Cruz did not negate the validity of the notarized Deed of Sale, invoking family practices where a daughter may help parents retain livelihood. The CA relied on the presumption of regularity attaching to a duly notarized instrument. It held the sale did not violate PD No. 27 because the property was sold to an heir (Rosalinda), and invoked a prescriptive aspect under DAR AO No. 08‑1995, observing the sale occurred 16 years after Sps. Dela Cruz obtained title and was therefore outside a 10‑year period referenced by the CA. Accordingly, the CA declared Rosalinda and Dumasig rightful owners and possessors.
Issues Presented to the Supreme Court
The central legal question: Are Rosalinda and Dumasig the rightful owners and possessors of the subject property, in light of the evidence of simulation and the prohibitions of PD No. 27?
Standard for Reviewing Findings of Fact
The Supreme Court noted that while it is generally not a trier of facts, it may re‑examine factual findings when the Court of Appeals’ determinations are contrary to the trial court’s findings or are unsupported by the evidence. The Court invoked precedent allowing such review where the CA’s findings were inconsistent with the record.
Supreme Court’s Analysis on Simulation (Absolute Simulation)
The Court applied the doctrine of absolute simulation: an apparent contract that is colorable only and lacks intent to produce legal effects is void. To determine simulation, the totality of prior, contemporaneous and subsequent acts of the parties must be examined. The Court enumerated facts showing lack of intent to sell: (1) the funds used to redeem the CRB mortgage were proceeds of a loan obtained by Rosalinda using the subject property as collateral (indicating no true transfer of value from Rosalinda); (2) Sps. Dela Cruz continued possession and exercised ownership rights after the 2003 Deed of Sale; (3) Sps. Dela Cruz remortgaged the property in 2004 to Llanes; (4) Rosalinda’s possession was limited to one cropping season and she returned the land; (5) Sps. Dela Cruz executed an Amended Waiver in favor of one child (Diego) while still alive; and (6) Rosalinda assumed control and mortgaged the land to Dumasig only after the deaths of Sps. Dela Cruz. These circumstances collectively demonstrated an absence of intent on the part of the sellers to effectuate a true sale, rendering the Deed of Sale absolutely simulated and void.
Supreme Court’s Analysis under PD No. 27 and Related Authorities
Independently, the Court found the 2003 sale void for contravening PD No. 27. The decree prohibits transfer of title to land acquired under it except by hereditary succession or to the government; Supreme Court jurisprudence limits exceptions to (1) transfer to the Government, (2) transfer to heirs via hereditary succession, and (3) transfer to the actual tenant‑tiller. The Court rejected the CA’s rationale that a sale to an heir satisfies the PD No. 27 exception because the exce
...continue readingCase Syllabus (G.R. No. 261491)
Nature of the Petition
- Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the Court of Appeals dispositions in CA-G.R. CV No. 05495-MIN.
- Specific assailed CA dispositions:
- Decision dated October 29, 2020 declaring respondents Rosalinda D. Epe and Alejandro Dumasig as rightful owners and possessors of the land covered by TCT No. EP-250.
- Resolution dated June 8, 2022 denying petitioners’ Motion for Reconsideration.
Parties and Relationship
- Petitioners: Candelario S. Dela Cruz, Lubita D. Lantapon, Diego S. Dela Cruz, Mauricia D. Epe, Rodrigo S. Dela Cruz, and Ariston S. Dela Cruz — children/heirs of Eniego P. Dela Cruz and Silvestra D. Dela Cruz (Sps. Dela Cruz).
- Respondents: Rosalinda D. Epe (daughter of Sps. Dela Cruz) and Alejandro Dumasig (mortgagee/lender).
- Parental deaths: Eniego P. Dela Cruz died July 31, 2009; Silvestra D. Dela Cruz died October 30, 2007.
Relevant Property and Titles
- Subject property: 35,153 square meters agricultural land in Sitio Cogon, Barangay Lala Proper, Lala, Lanao del Norte.
- Title: Emancipation patent covered by Transfer Certificate of Title (TCT) No. EP-250, originally in the name of Eniego P. Dela Cruz married to Silvestra Suelo Dela Cruz.
Factual Background — Early Encumbrance and Redemption
- In 1987, Sps. Dela Cruz obtained a loan and mortgaged two lots including the subject property with Cooperative Rural Bank (CRB) of Tubod, Lanao del Norte.
- The loan was not paid and CRB foreclosed the mortgage.
- Sps. Dela Cruz sought help from their daughter Rosalinda, who agreed to pay the loan in exchange for being promised that the redeemed property would be her share in the inheritance.
- The receipt for the payment indicated Silvestra Dela Cruz as payor.
- After payment, CRB returned original copies of TCTs to Sps. Dela Cruz, who gave them to Rosalinda.
Factual Background — Deed of Sale (2003) and Subsequent Events
- On December 27, 2003, Sps. Dela Cruz and Rosalinda went to Atty. Gregorio Pizarro who drafted a Deed of Sale with Assumption of Mortgage for the property covered by TCT No. EP-250; the Deed was signed by all parties and notarized.
- In 2004, Sps. Dela Cruz re-mortgaged the subject property to Erlito Llanes for PHP 350,000.00.
- Rosalinda possessed the subject property for one cropping season in 2004 and then returned it to her parents.
- Sps. Dela Cruz continued to possess and cultivate the land until their deaths (2007 and 2009).
Factual Background — Mortgage to Dumasig (2011)
- On August 22, 2011, Rosalinda mortgaged the subject property to Alejandro Dumasig via an Agreement of Loan with Real Estate Mortgage for PHP 700,000.00.
- The Agreement of Loan with Real Estate Mortgage was signed by Rosalinda as borrower-mortgagor and Dumasig as lender-mortgagee, witnessed by their children and notarized by Atty. Bienvenido L. Bontilao.
- Disposition of loan proceeds: PHP 100,000.00 used to pay a loan to Paulino Saladaga; PHP 500,000.00 paid to Erlito Llanes.
Petitioners’ Contentions and Allegations
- Petitioners alleged continuous cultivation, tilling, and planting of rice on the subject property by them during their parents’ lifetime.
- After the death of their father, petitioners entrusted management and cultivation to their sister Rosalinda.
- In 2011, petitioners discovered Dumasig occupying and cultivating the land without their knowledge or consent; Dumasig claimed Rosalinda mortgaged a 30,000-square meter portion to him.
- December 2016: petitioners demanded return of possession and ownership; Dumasig refused and could not produce Deed of Real Estate Mortgage or Deed of Absolute Sale allegedly executed with Rosalinda.
- Petitioners filed accion reivindicatoria with damages before the Regional Trial Court, Lanao del Norte, Branch 21 (Civil Case No. 21-508).
- Arguments to the Supreme Court: the 2003 sale between Sps. Dela Cruz and Rosalinda is void for lack of consideration because payment came from loan proceeds (not Rosalinda’s funds); Sps. Dela Cruz did not intend to sell because they continued possession and re-mortgaged in 2004; existence of an Amended Waiver of Rights and Interest dated July 13, 2005 in favor of Diego; sale violated Presidential Decree No. 27 because the transfer to Rosalinda was by sale not hereditary succession; sale deprived petitioners of their legitimes (not finally adjudicated in this case).
Procedural History — Trial Court Ruling (RTC, Aug 14, 2019)
- Trial court (Acting Presiding Judge Alberto P. Quinto, Branch 21, RTC, Lanao del Norte) granted plaintiffs’ accion reivindicatoria and damages.
- Reliefs ordered by RTC:
- Declared plaintiffs and Rosalinda as co-owners of the land covered by TCT No. EP-250.
- Directed partition of the land between plaintiffs and Rosalinda.
- Directed defendant Alejandro Dumasig to vacate and surrender possession of the portion mortgaged to him to plaintiffs.
- Ordered defendants Dumasig and Rosalinda to pay litigation expenses of PHP 100,000.00 (solidarily) in favor of the plaintiffs.
- RTC reasoning:
- The sale of subject property by Sps. Dela Cruz to Rosalinda was void because parties did not intend to be bound (Sps. Dela Cruz continued possession and enjoyment after execution of Deed of Sale until death).
- Sale violated Presidential Decree No. 27 which prohibits transfer of land acquired pursuant to the Decree except by hereditary succession or to the government.
- Consequently, subsequent acquisition and possession of the property by Dumasig was also void.
Court of Appeals Ruling (CA Decision, Oct 29, 2020; MR Denied June 8, 2022)
- Court of Appeals reversed and set aside the trial court Decision and dismissed petitioners’ accion reivindicatoria with damages.
- CA key findings and reasoning:
- Continued possession of the land by Sps. Dela Cruz after the Deed of Sale did not negate the sale; such condu