Case Summary (G.R. No. 115734)
Factual Background
The controversy concerns a parcel of land in Poblacion, Municipality of Biñan, Laguna, described in the records as Lot 115-A-1 containing 753 square meters, originally covered by Transfer Certificate of Title No. T-32007. The parcel was owned in common by siblings Mariano and Gaudencia Zarraga, who inherited it from their father. Mariano predeceased Gaudencia. Gaudencia died single and childless on August 5, 1983 at age ninety-seven. Members of the Loyola family succeeded as plaintiffs in the present action by substitution for their deceased sisters.
Prior Litigation and Title History
The property had earlier been the subject of Civil Case No. B-1094, in which Romualdo Zarraga sued members of his family including his aunt Gaudencia; the trial court adjudged Gaudencia owner of one-half of Lot 115-A-1 and that decision became final. While a related petition to the Supreme Court (G.R. No. 59529) was pending, on August 24, 1980 Gaudencia executed a notarized instrument denominated “Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay na Lupa,” purporting to sell one-half of the lot to several vendees surnamed Zarraga for P34,000.00. One vendee named Jose died later on July 29, 1981. After execution of a sheriff’s deed of reconveyance on February 16, 1984, the Register of Deeds of Laguna, Calamba Branch issued Transfer Certificate of Title No. T-116067 in favor of the private respondents on July 23, 1984.
Trial Court Proceedings
On January 31, 1985, Petitioners filed Civil Case No. B-2194 in the RTC of Biñan, Laguna, seeking annulment of the alleged sale and cancellation of the corresponding title. The trial court found the deed of absolute sale to be simulated, null and void from the beginning, ordered cancellation of the title issued in favor of the private respondents and directed reconveyance and delivery of possession to the plaintiffs as co-owners and heirs. The trial court denied claims for moral and exemplary damages for lack of preponderant evidence, dismissed a second cause of action as prescribed, and dismissed the defendants’ counterclaim.
Court of Appeals Decision
The Court of Appeals reversed the RTC judgment. It dismissed the plaintiffs’ complaint and declared the Bilihang Tuluyan dated August 24, 1980 and Transfer Certificate of Title No. T-116067 to be lawful, valid, and effective. The appellate court’s reversal became the subject of the petition for certiorari before the Supreme Court.
Issues Presented to the Supreme Court
Although petitioners framed multiple issues concerning simulation, undue influence, age and mental incapacity of the vendor, presence of certain vendees, alleged inconsistency of acts, inadequacy of price, and legal personality to sue, the Court distilled the sole question for resolution to whether the deed of absolute sale dated August 24, 1980 was valid.
Petitioners’ Contentions
Petitioners argued that the deed was simulated and therefore null and void. They relied on circumstances in which a notary public purportedly did not personally know Gaudencia, the advanced age and frailty of Gaudencia who lived under the care of one vendee, inclusion in the deed of vendees who allegedly lacked knowledge of the transaction, the death of one vendee before the sale, and a gross inadequacy of price given the alleged market value of the lot. Petitioners also questioned their legal personality as substituted plaintiffs.
Respondents’ Position and Evidentiary Record
Respondents relied on the notarized deed and the issuance of TCT No. T-116067. The notary public testified that he interviewed Gaudencia before preparing the deed and was convinced of her mental fitness. The record showed that Jose was alive on August 24, 1980. Romualdo was listed among the vendees though he later testified he lacked knowledge of the transaction; Romana testified that Romualdo was included only because he was a brother. The petitioners did not produce clear and convincing evidence sufficient to overcome the statutory and jurisprudential presumptions favoring the regularity of notarized instruments and private transactions.
Legal Analysis and Reasoning of the Supreme Court
The Court recognized the evidentiary force of a notarized document and applied the presumption of regularity of acknowledgment as articulated in Garrido v. Court of Appeals, Ramirez v. Ner, and Salame v. Court of Appeals. The Court held that petitioners failed to rebut the presumption of due execution by clear and convincing evidence and were therefore estopped from impugning the notarization. On simulation, the Court reviewed the doctrinal requisites: an outward declaration of will different from the true will, mutual agreement to create a false appearance, and intent to deceive third persons. The Court found the challenged deed created a genuine alteration of juridical relations from co-ownership to vendor and vendees and that the parties manifested an intention to be bound by the sale; therefore the circumstances did not satisfy the elements of simulation as defined in the authorities cited.
The Court addressed the contention that some vendees lacked knowledge of the sale by invoking Art. 1311, holding that contracts bind only the parties who execute them and that a nonparty such as Romual
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Parties and Procedural Posture
- Petitioners are Ruben Loyola, Candelaria Loyola, Lorenzo Loyola, Flora Loyola, Nicandro Loyola, Rosario Loyola, Teresita Loyola, and Vicente Loyola who substituted earlier plaintiffs in Civil Case No. B-2194 before the Regional Trial Court of Biñan, Laguna, Branch 24.
- Respondents include the private respondents surnamed Zarraga and the Register of Deeds and the Court of Appeals as appellee tribunal in CA-G.R. No. CV 36090.
- The RTC rendered judgment in Civil Case No. B-2194 annulling the deed of sale and directing cancellation of the corresponding certificate of title in favor of the private respondents.
- The Court of Appeals reversed the RTC by judgment dated August 31, 1993, declaring the deed and Transfer Certificate of Title No. T-116067 lawful, valid, and effective and dismissing the complaint.
- The present petition sought certiorari review of the Court of Appeals decision, and the Supreme Court denied the petition and affirmed the Court of Appeals decision.
Key Factual Allegations
- The disputed parcel is Lot 115-A-1, Psd-32117, containing seven hundred fifty three square meters and formerly covered by Transfer Certificate of Title No. T-32007.
- The lot was originally owned in common by siblings Mariano and Gaudencia Zarraga, who inherited it from their father.
- Gaudencia died single and childless on August 5, 1983, at age ninety-seven, and Mariano predeceased her.
- On August 24, 1980, Gaudencia purportedly executed a notarized instrument denominated Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay na Lupa effecting sale of her half-share for PHP 34,000 to certain Zarraga relatives.
- Transfer Certificate of Title No. T-116067 was issued in favor of the private respondents on July 23, 1984, based on the 1980 sale.
- Petitioners filed Civil Case No. B-2194 on January 31, 1985, seeking annulment of the sale and cancellation of the TCT.
Procedural History
- The property was earlier litigated in Civil Case No. B-1094, in which Gaudencia was adjudged owner of one-half portion and that decision was finally affirmed by the Supreme Court in G.R. No. 59529 on March 17, 1982.
- The challenged sale occurred on August 24, 1980, while G.R. No. 59529 was still pending before the Supreme Court.
- A sheriff executed a deed of reconveyance to Gaudencia on February 16, 1984, after motion for execution by the private respondents.
- The RTC in Civil Case No. B-2194 rendered judgment for the plaintiffs annulling the deed and directing cancellation and reconveyance, which judgment the Court of Appeals reversed on August 31, 1993.
- Petitioners filed a motion for reconsideration which was denied on June 6, 1994, and the present petition followed to the Supreme Court.
Issues Presented
- Petitioners framed multiple issues and specifically raised whether the deed of absolute sale dated August 24, 1980, was simulated and therefore null and void.
- Petitioners also questioned notarization, the mental capacity of Gaudencia, undue influence by private respondents, the inclusion of deceased or unaware vendees, and alleged gross inadequacy of price.
- The Supreme Court framed the dispositive issue as whether the deed of absolute sale is valid.
Trial Court Findings
- The RTC found the deed of absolute sale to be simulated, declared it nul