Case Summary (G.R. No. 40791)
Factual Background
Sabas Escutin had been married for about forty years to Paula Arboly, who remained living at the time of the dispute. From that marriage, Sabas had four children, who were the plaintiffs. The evidence showed that Sabas left his wife and children and, for many years prior to his death, lived with his mistress, Juana Yap, in Capiz. Socorro Escutin, the defendant, was Juana Yap’s daughter, and she lived in the same house with Sabas and her mother. Sabas was ill for a long time before his death.
On February 26, 1932, twelve days before his death, Sabas executed a public instrument purporting to evidence a sale of a parcel of registered land—lot No. 1801—to Socorro Escutin for P1,925. The land had an area of nineteen hectares, twenty-one ares, and forty-three centares, more or less. The trial evidence also established that the reasonable market value of the land was P3,750, with part used for rice-growing and the remainder for raising corn.
Socorro Escutin’s defense was that the consideration of P1,925 had been delivered in cash to Sabas at the time of execution, and that Sabas signed the deed in the presence of two employees of the Court of First Instance of Capiz and the notary public. The record, however, showed that no money was paid in the presence of the witnesses. The notary public testified that Socorro took a bundle of bank notes from a wardrobe in the room where the document was signed and handed the money to Sabas, who counted it. The Court found that testimony unworthy of belief and emphasized that the evidence did not establish actual payment.
The evidence further showed that the deed was presented to the register of deeds on April 27, 1932, but no transfer certificate of title was issued in Socorro’s favor, and Socorro did not take possession of the land. The Court also found it implausible that Socorro, who was unmarried, or her mother had any occupation, profession, real property, or other income source that could enable them to pay the stipulated sum. It was shown that they lived in the house with Sabas at his expense. When Sabas’s family removed his body to Dao for burial, Socorro and her mother allegedly stated that Sabas had left no money, and the family had to pay for the burial expenses.
Additional testimony supported the conclusion that the conveyance was not genuine. Daniel Amancio, an inspector of the Capiz Motor Bus Co., testified that in February 1932 Juana Yap told him Sabas had land in Lacaron, Dao that he was trying to sell. Amancio stated that he was told he was not to be the real purchaser, but only a figurehead, because in the event of Sabas’s death the land would be conveyed to Socorro. Amancio testified that when he refused, Socorro expressed lack of pity toward him.
Sofronia Escolin testified that she took care of Sabas during his last illness. She stated that she was present when Juana Yap and Socorro begged Sabas to convey the land in Lacaron to Socorro, but he did not answer. She also testified that three days later Socorro and her mother again cried and requested Sabas to convey the land to Socorro. She narrated that Juana Yap returned two hours later with a document placed on a pillow, and Sabas signed it. She testified that no money was paid by Socorro or her mother to Sabas. She further stated that Socorro told her that the document was executed so Socorro would have something to live on in case of Sabas’s death and that Socorro asked her not to mention the matter to anyone.
Socorro and her mother did not take the stand despite being present when the aforementioned witnesses testified. The Court observed that Socorro’s defense on payment rested essentially on the uncorroborated testimony of the notary public.
Trial Court Decision
The Court of First Instance annulled the deed of sale, Exhibit A, on the ground that it was simulated and fraudulent. The trial judge found that the land described in the deed was the property of the plaintiffs. The decision treated the conveyance as lacking real consideration and executed to defraud the plaintiffs.
The Parties’ Contentions on Appeal
On appeal, Socorro argued that the stated consideration of P1,925 was actually delivered in cash at the time of execution. She maintained that the document was properly executed and signed in the presence of the witnesses and the notary. She also asserted that the notary public’s testimony supported payment.
In addition to the merits, the appeal raised procedural errors. Socorro challenged the trial court’s denial of a motion dated April 4, 1933 to strike out certain immaterial allegations in the complaint about “paramour” and references to paternity and filiation. She also objected to evidence introduced to investigate her paternity and filiation vis-à-vis Sabas.
Appellate Court’s Assessment of Consideration and Simulation
The Court held that the evidence fully sustained the lower court’s findings that the consideration stated in the deed was fictitious and that the document was executed in fraud of the plaintiffs. The Court placed decisive weight on multiple circumstances: the implausibility of Socorro’s ability to pay; the lack of proof of actual payment; the fact that no transfer certificate of title issued in Socorro’s favor; Socorro’s failure to take possession; Sabas’s illness and the timing of the execution shortly before death; the family’s testimony that Sabas had left no money; and witness testimony indicating the conveyance was a planned instrument to ensure Socorro would receive the land upon Sabas’s death.
Applying article 1275 of the Civil Code, the Court ruled that contracts without consideration or with an illicit consideration produce no effect whatsoever. It further relied on the doctrine stated in Ocejo, Perez & Co. vs. Flores and Bas (40 Phil., 921), that a purchase and sale is null and void when it appears that the consideration declared as paid was never actually paid, or that the sale lacks the cause or consideration that should have motivated it. The Court also cited its ruling in De Belen vs. Collector of Customs and Sheriff of Manila (46 Phil., 241) that a simulated transfer made without consideration and with intent to hinder, delay, or defraud creditors of the grantor is not a barrier to legal process against the grantor. In such a case, no independent action to rescind or annul is necessary because a simulated contract lacks essential elements to constitute a contract and may be treated as non-existent for all purposes.
Further, the Court invoked the reasoning in Gallion vs. Gayares (53 Phil., 43, 48), emphasizing that a wife defrauded by a fraudulent conveyance may be treated as a creditor of the grantor and may have a remedy under article 1413 of the Civil Code to annul the transfer and cancel any Torrens title issued. The Court used this doctrine to reinforce that a fraudulent and simulated conveyance, executed without consideration, could be treated as having no effect.
Given these principles, the Court affirmed that the deed was without force or effect.
Ruling on the Alleged Procedural and Evidentiary Errors
The Court also addressed Socorro’s assignme
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Case Syllabus (G.R. No. 40791)
Parties and Procedural Posture
- Pedro Escutin, Dominga Escutin, Consuelo Escutin, and Carolina Escutin (the plaintiffs and appellees) instituted an action in the Court of First Instance of Capiz to annul a deed of sale.
- Socorro Escutin (the defendant and appellant) defended the validity of the deed of sale and appealed the adverse judgment.
- The trial court annulled the deed, holding it null and void for being simulated and fraudulent, and because the land described belonged to the plaintiffs.
- The appellate issue before the Court focused on both the merits of the consideration and certain procedural evidentiary rulings made during trial.
Key Factual Allegations
- Sabas Escutin, now deceased, executed a public instrument dated February 26, 1932, purporting to sell lot No. 1801 of the cadastral survey of Dao, Capiz, for P1,925 to Socorro Escutin.
- The deed was ratified before notary public Rafael Lozada on the same date.
- The land described had an area of nineteen hectares, twenty-one ares, and forty-three centares, more or less.
- The deed stated the consideration of P1,925, while the Court found the reasonable market value of the land to be P3,750.
- The plaintiffs alleged that the sale was simulated, that the stated purchase price was fictitious, and that the deed was executed in fraud of the plaintiffs.
- The evidence showed that Sabas Escutin had a lawful wife, Paula Arboly, who was still living, and four children, who were the plaintiffs.
- Sabas Escutin had lived for many years prior to his death with his mistress, Juana Yap, in Capiz, and Socorro Escutin was Juana Yap’s daughter.
- Socorro Escutin, described as unmarried, and Juana Yap lived in the same house with Sabas Escutin at his expense.
- The Court considered it significant that, at and around the time of death, neither Socorro Escutin nor Juana Yap showed circumstances indicating the capacity to pay the price stated in the deed.
- When the plaintiffs’ family removed Sabas Escutin’s body for burial, Socorro Escutin and Juana Yap stated that Sabas Escutin had not left any money, and the family had to defray the interment expenses.
Proof on Alleged Consideration
- The defendant’s position was that the P1,925 was delivered in cash at the time of execution and that Sabas Escutin signed the deed in the presence of two Court of First Instance employees and the notary public.
- No money was paid over in the presence of the witnesses relied upon by the defendant.
- The notary public testified that Socorro Escutin handed Sabas Escutin a bundle of bank notes taken from a wardrobe and that Sabas Escutin counted the money.
- The Court declined to credit the notary public’s testimony regarding actual delivery, characterizing it as unworthy of belief.
- The case record showed that the deed was presented for registration on April 27, 1932, but no transfer certificate of title was issued in the defendant’s favor and the defendant did not take possession of the land.
- The Court treated the absence of transfer and possession as consistent with the finding that the transaction lacked real substance.
Witness Testimony on Fraudulent Intent
- Daniel Amancio, an inspector of the Capiz Motor Bus Co., testified that Juana Yap told him Sabas Escutin had land to sell, and that he was not to be the real buyer because upon Sabas Escutin’s death the land would be conveyed to Socorro Escutin.
- Amancio’s account indicated that Socorro Escutin expressed no pity when Amancio refused to act as a figurehead, thereby supporting the inference that the transaction was not a genuine sale.
- Sofronia Escolin testified that she cared for Sabas Escutin during his last illness and that she saw Juana Yap and Socorro Escutin repeatedly beg Sabas Escutin to convey the land to Socorro Escutin.
- Escolin testified that no money was paid by Socorro Escutin or Juana Yap when Sabas Escutin signed the instrument brought by Juana Yap.
- Escolin further testified that Socorro Escutin stated the document was executed so she would have something to live on in case of her father’s death.
- Escolin testified that Socorro Escutin requested her not to disclose the matter to anyone.
- The Court noted that neither the defendant nor her mother took the witness stand, leav