G.R. No. 186264 - Formaran vs. Ong

Case Summary (G.R. No. 186264)

Factual Background

Dr. Lorna C. Formaran received by inter vivos donation a parcel of land on June 25, 1967 from spouses Melquiades Barraca and Praxedes Casidsid. On August 12, 1967, less than two months later, she signed a Deed of Absolute Sale purportedly conveying one-half of the donated parcel to Dr. Glenda B. Ong. The parties disputed whether any consideration passed. Petitioner maintained that the document was executed at the prodding of respondent Glenda and without payment and that the deed was later crumpled and thrown away by petitioner’s uncle. Petitioner retained actual possession, declared the land for taxation in her name, paid realty taxes, and mortgaged the land to Aklan Development Bank in 1978 for a P23,000 loan. Respondents asserted that the sale was genuine, that respondent Glenda declared and paid taxes on the property, and that the sale was registered only on May 25, 1991 to accommodate petitioner’s mortgage.

Procedural History in Lower Courts

Following the registration and subsequent disputes, Dr. Lorna C. Formaran filed Civil Case No. 5398 for annulment of the Deed of Absolute Sale before the Regional Trial Court, Branch 5, Kalibo, Aklan. The RTC rendered judgment on December 3, 1999, declaring the Deed of Absolute Sale null and void as an absolutely simulated contract and for want of consideration, declaring petitioner the lawful owner entitled to possession, ordering the cancellation of respondent Glenda’s Tax Declaration No. 1031, and awarding petitioner P25,000.00 for attorneys’ fees and litigation expenses. Dr. Glenda B. Ong appealed to the Court of Appeals.

Court of Appeals Disposition

The Court of Appeals, in CA G.R. CV No. 66187, rendered a decision on August 30, 2007 reversing and setting aside the RTC judgment and ordering the petitioner to vacate the land and restore possession to the respondents. The CA decision was penned by Associate Justice Agustin S. Dizon, with Associate Justices Francisco P. Acosta and Stephen C. Cruz concurring.

Present Petition and Relief Sought

Petitioner elevated the case to the Supreme Court by a petition for certiorari under Rule 45 challenging the CA’s reversal of the RTC. She argued that the CA misappreciated facts and evidence that established the Deed of Absolute Sale as a simulated instrument and therefore void under the Civil Code.

Parties’ Contentions

Dr. Lorna C. Formaran contended that the sale was absolutely simulated because it lacked consideration; it was executed shortly after a donation from parties related to respondent; petitioner remained in actual and continuous possession; the document was allegedly destroyed; the sale was registered only decades later; and respondent Glenda made no improvements. Dr. Glenda B. Ong maintained that the sale was real and involved consideration, that she changed the tax declaration and paid taxes, and that she established rights sufficient to sustain the conveyance and ejectment remedy previously obtained.

Issue Presented

The controlling issue was whether the Deed of Absolute Sale executed on August 12, 1967 was an absolutely simulated contract and therefore void under Article 1346 of the New Civil Code, entitling Dr. Lorna C. Formaran to judgment declaring the deed null and void and to possession of the land.

Supreme Court Ruling (Disposition)

The Court granted the petition. It reversed and set aside the Court of Appeals decision of August 30, 2007 in CA G.R. CV No. 66187 and reinstated the December 3, 1999 Decision of the Regional Trial Court, Branch 5, Kalibo, Aklan, in Civil Case No. 5398. The RTC judgment declaring the Deed of Absolute Sale absolutely simulated and void, declaring petitioner owner entitled to possession, ordering cancellation of respondent Glenda’s Tax Declaration No. 1031, and awarding petitioner P25,000.00 for attorneys’ fees and litigation expenses was reinstated.

Legal Basis and Reasoning

The Court accepted the RTC’s findings that the Deed of Absolute Sale was absolutely simulated and void under Article 1346. The Court relied on established indicia of simulation and bad faith: absence of consideration; close temporal proximity between the donation and the purported sale; petitioner’s continued actual possession; petitioner’s mortgaging of the property after the alleged sale; long delay in registration of the deed until May 25, 1991; lack of improvements by respondent Glenda; and petitioner’s residence on the land. The Court explained that notarization and the presumption of regularity of a notarized instrument do not validate a contract that was never intended by the parties to have binding legal

Case Syllabus (G.R. No. 186264)

Parties and Posture

Dr. Lorna C. Formaran was the petitioner who sought annulment of a Deed of Absolute Sale affecting the land she received by donation.
Dr. Glenda B. Ong and Solomon S. Ong were the respondents who asserted ownership under a Deed of Absolute Sale and pursued an unlawful detainer action.
The petition presented a Rule 45 certiorari appeal from the Decision of the Court of Appeals rendered on August 30, 2007.
The Regional Trial Court, Branch 5, Kalibo, Aklan rendered Judgment on December 3, 1999 in Civil Case No. 5398 in favor of the petitioner.
The Court of Appeals reversed the RTC decision and ordered the petitioner to vacate the land in question.
The Supreme Court granted the petition and adjudicated the present appeal on July 08, 2013.
The CA decision was noted as penned by Associate Justice Agustin S. Dizon with Associate Justices Francisco P. Acosta and Stephen C. Cruz concurring.

Factual Background

Dr. Lorna C. Formaran received a parcel of land by intervivos donation dated June 25, 1967 from Melquiades Barraca and Praxedes Casidsid.
The petitioner executed a Deed of Absolute Sale in favor of Dr. Glenda B. Ong on August 12, 1967 covering one-half of the donated parcel.
The petitioner maintained that the alleged sale was without monetary consideration and was executed to enable Glenda to obtain a bank loan for dental equipment.
The petitioner declared and paid realty taxes in her name from 1967 and periodically thereafter as evidenced by successive tax declarations and receipts.
The petitioner mortgaged the land to Aklan Development Bank on May 18, 1978 to secure a P23,000.00 loan.
The petitioner remained in actual possession of the land, and her house stood upon a portion of the land in question.
The parties’ accounts include the uncle’s assertion that the Deed of Absolute Sale was crumpled and thrown away, and the petitioner’s testimony that she first learned of the deed’s registration on May 25, 1991.
Glenda declared the land for taxation in her name and first paid realty taxes on the land in question on January 9, 1995.
Glenda filed an unlawful detainer case on May 30, 1996 docketed as Civil Case No. 183 before the 7th Municipal Circuit Trial Court of Ibajay-Nabas, Ibajay, Aklan and prevailed by Decision dated September 2, 1997.

Procedural History

The petitioner filed an action for annulment of the Deed of Absolute Sale in the RTC, docketed as Civil Case No. 5398.
The RTC, Branch 5, Kalibo, Aklan rendered judgment on December 3, 1999 declaring the Deed of Absolute Sale null and void as an absolutely simulated contract.
The RTC declared the petitioner as lawful owner entitled to possession, ordered cancellation of respondent Glenda’s Tax Declaration No. 1031, and awarded petitioner P25,000.00 for attorneys’ fees and litigation expenses.
The respondents appealed to the Court of Appeals which reversed and set aside the RTC decision on August 30, 2007.
The petitioner filed a Rule 45 petition in the Supreme Court which resulted in the present decision reversing the CA and reinstating the RTC judgment.

Issues

Whether the Deed of Absolute Sale executed on August 12, 1967 was an absolutely simulated contract and the