Title
De Joya vs. Madlangbayan
Case
G.R. No. 228999
Decision Date
Apr 28, 2021
Petitioners revoked agent Madlangbayan's authority to sell their land, but he sold it below the agreed price to respondents. SC ruled the sale invalid, declaring petitioners rightful owners, as respondents were not buyers in good faith.
null and void sale
simulation
agricultural land
A

Case Summary (G.R. No. 228999)

Key Dates and Documentary Markers

  • Special Power of Attorney: January 23, 1992.
  • General Power of Attorney: February 5, 1996.
  • Deed of Absolute Sale asserted by respondents: April 8, 1996.
  • Letter from Madlangbayan rejecting counter-offer (to Rolando Dalida): April 10, 1996.
  • Revocation of Powers of Attorney by petitioners: May 3, 1996.
  • Affidavit of Adverse Claim on TCT No. T-64767: July 1, 1997.
  • Complaint for revocation of authority: July 14, 1997.
  • Multiple trial and appellate rulings culminating in the Supreme Court decision under review.

Antecedent Facts

Petitioners are registered owners of two contiguous agricultural parcels. They executed a special and a general power of attorney empowering respondent Madlangbayan to sell the subject properties. Respondent Madlangbayan negotiated with prospective buyers (including the Dalidas and others) who submitted a counter-offer. Petitioners, through Madlangbayan, sent a letter dated April 10, 1996 rejecting the counter-offer and reiterating a non-negotiable asking price of P17,000,000.00. Petitioners later revoked the powers of attorney on May 3, 1996 and demanded surrender of the owner’s duplicates of the title; upon respondent’s failure to surrender, they filed an affidavit of adverse claim and a complaint seeking revocation of authority and other reliefs. Respondents claimed a Deed of Absolute Sale dated April 8, 1996 for P10,000,000.00 and presented a Certificate of Time Deposit (CTD No. 7290 dated April 10, 1996) purportedly evidencing payment.

Procedural History — Trial and Appellate Course

  • RTC (Branch 84) initially rendered judgment (August 8, 2002) finding respondents buyers in good faith and upholding the Deed of Absolute Sale; petitioners appealed.
  • Court of Appeals (CA) granted petitioners’ motion for new trial (December 13, 2005), ordered a trial de novo.
  • After new trial, RTC (June 27, 2007) found the sale simulated and unpaid, upheld petitioners’ rights and awarded possession, damages, and attorney’s fees; respondents appealed.
  • CA reversed and remanded (December 17, 2009) for continuation/proceedings on the merits; subsequent proceedings led to a RTC judgment in favor of petitioners (December 10, 2014).
  • CA reversed that RTC judgment and ordered respondents to be given possession (September 26, 2016); its denial of reconsideration was dated December 28, 2016.
  • Petitioners filed a Rule 45 petition for review on certiorari to the Supreme Court seeking annulment of the CA decision and reinstatement of the RTC judgment.

Issues Presented to the Supreme Court

Petitioners advanced principal errors asserted against the CA decision: (1) the April 8, 1996 Deed of Absolute Sale was absolutely simulated and there was no consummated sale on that date; (2) judicial and extrajudicial admissions by respondents’ predecessors negate consummation; (3) lack of proof of payment and existence of CTD No. 7290 undermines consideration; (4) the CA failed to apply best evidence and secondary evidence rules to prove the CTD’s existence; (5) refusal or failure to produce alleged consideration supports an adverse inference; and (6) the CA relied on conjecture in concluding CTD No. 7290 existed.

Governing Legal Principles Applied

  • Burden and scope of Rule 45: Generally confined to questions of law, but exceptions allow review of factual findings when RTC and CA findings conflict. (Rule 45 jurisprudence referenced.)
  • Presumptions: (1) that a signed deed of sale was the product of a fair and regular private transaction; and (2) that contracts have sufficient consideration — both are prima facie and rebuttable.
  • Elements of contract (Civil Code Article 1318): consent, object certain, and cause or consideration. A lack of consent renders a contract void; absolute simulation occurs when apparent consent is absent and the instrument is intended to produce no legal effect. (Civil Code Articles 1345–1346 referenced.)
  • Agency law: A principal may revoke an agency at will (Civil Code Articles 1919–1920); ratification requires knowledge of material facts or circumstances that should reasonably prompt inquiry.
  • Notarial formalities and evidentiary weight: A notarized document not appearing on the notary’s register weakens its presumption of regularity and reduces it to private-document evidentiary status unless authenticated.

Supreme Court Ruling (Disposition)

The Supreme Court granted the petition for review on certiorari. It reversed and set aside the Court of Appeals decision dated September 26, 2016 and its denial of reconsideration, and reinstated the Regional Trial Court’s December 10, 2014 judgment in favor of the petitioners. The Court also issued a stern warning to the notary (Atty. Henry Adasa) for failure to register the deed in his notarial registry and directed that a copy of the decision be furnished the Office of the Bar Confidant for inclusion in the notary’s personal record.

Reasoning — Validity and Simulation of the April 8, 1996 Deed of Sale

  • Rebuttal of prima facie presumptions: Although the Deed of Absolute Sale showed formal indicia of a sale, the surrounding circumstances and evidence rebutted the presumptions of a fair transaction and sufficient consideration. The Court examined contemporaneous acts and documents to determine the parties’ true intent.
  • Absence of consent and meeting of minds: The Court emphasized that contract perfection requires union of minds on the object and price; the April 10, 1996 letter from Madlangbayan explicitly rejected the buyer’s counter-offer and stated a non-negotiable price of P17,000,000.00, which shows the negotiation had not resulted in agreement. The letter post-dates the asserted April 8 deed and had not been explained by respondents. This temporal inconsistency and the content of the April 10 letter supported the conclusion that the April 8 deed was simulated.
  • Irregularities in notarization: The Deed of Absolute Sale bore a notarial entry purporting notarization by Atty. Adasa on April 8, 1996, yet the deed did not appear in Atty. Adasa’s notarial registry for 1996. The notary’s failure to register the instrument diminishes its evidentiary value and undermines the presumption of due execution and regularity. Given this defect together with the other evidentiary anomalies, the Court found the deed’s authenticity and legal effect suspect.
  • Failure to prove payment/consideration: The purported evidence of payment — CTD No. 7290 dated April 10, 1996 — was not established with sufficient proof. The CA had declined to find the absence of the CTD dispositive because PDIC records were limited to what the failed bank produced; the Supreme Court found that the totality of circumstances (including the timing of the rejection letter, notarial irregularity, and lack of contemporaneous notice to the principals) negated the inference of a valid, paid sale. Where the purchase price was not clearly and convincingly shown to have been paid to the principals, the deed lacked the essential cause and effect of an enforceable sale and was therefore simulated.
  • Agency revocation and absence of ratification: Petitioners revoked Madlangbayan’s authority on May 3, 1996. Even assuming Madlangbayan had purported to execute a sale, he failed to notify the principals; petitioners denied knowledge of any sale and did not ratify his acts. Because ratification requires knowledge of material facts or circumstances that would prompt a reasonably prudent inquiry, and no such knowledge or inquiry occurred, the alleged sale could not bind the principals. Buyers who deal with an agent bear the risk of ascertaining the agent’s authority; respondents who dealt with Madlangbayan thus assumed that risk.
  • Buyers’ good faith and lis pendens: Respondents Go, et al., who later acquired the property from the Dalidas, were not purchasers in good faith. The TCT had a Notice of Lis Pendens annotated (filed July 14, 1997), and respondents
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