Title
Nazareno vs. Court of Appeals
Case
G.R. No. 138842
Decision Date
Oct 18, 2000
Dispute over simulated property sales between heirs of Maximino Nazareno, Sr.; Supreme Court nullified deeds, restoring properties to estate due to lack of consideration and tax evasion.
dispute
siblings
estate
A

Case Summary (G.R. No. 138842)

Factual Background

Maximino A. Nazareno, Sr. and Aurea Poblete were married and acquired several urban lots in Quezon City. They had five children: Natividad, Romeo, Jose, Pacifico, and Maximino, Jr. On January 29, 1970, a notarized Deed of Absolute Sale purportedly conveyed six Quezon City lots (Lots 3, 3-B, 10, 11, 13 and 14) from Maximino, Sr., with the consent of Aurea, to NATIVIDAD P. NAZARENO for stated considerations of P43,000 and P4,800. Transfer certificates of title were subsequently issued in favor of Natividad. Lot 3-B was occupied by Romeo, his wife Eliza, and Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold Lot 3-B to MAXIMINO P. NAZARENO, JR. on July 31, 1982, and the Register of Deeds issued a new title to Maximino, Jr.

Intestate Proceedings and Title Events

After the death of Maximino, Sr., Romeo filed intestate proceedings which resulted in his appointment as administrator of the estate. During those proceedings Romeo discovered the January 29, 1970 deed. Romeo later secured a title to Lot 3 in his own name. Controversy over possession of Lot 3-B led to Civil Case No. Q-39018: Maximino, Jr. sued for recovery of possession and damages, and both the trial court and the Court of Appeals affirmed his right to possession, a judgment that was final insofar as the parties in that action were concerned.

Trial Court Proceedings in Civil Case No. 88-58

On June 15, 1988, acting for the estate of their father, Romeo instituted an action for annulment of sale with damages in the Regional Trial Court, Quezon City, against Natividad and Maximino, Jr. alleging that the January 29, 1970 sale and the July 31, 1982 sale were void for want of consideration. Natividad and Maximino, Jr. filed a third‑party complaint against Romeo and Eliza, challenging Romeo’s title to Lot 3. After trial the trial court on August 10, 1992 declared the January 29, 1970 deed null and void, held that certain lots had passed to third persons, and directed that Natividad hold other lots in trust for Jose; the court imposed attorney’s fees and annotated liens on specified titles. On motion for reconsideration the trial court on October 14, 1992 amended its judgment to declare both the January 29, 1970 and the July 31, 1982 deeds null and directed cancellation and restoration of TCT No. 293701 (Lot 3-B) to its prior registration in the names of Maximino, Sr. and Aurea.

Evidence and Parties’ Contentions at Trial

Romeo testified that the transfers to the children were simulated and made without payment of consideration to avoid inheritance taxes. He produced a Deed of Partition and Distribution dated June 28, 1962 showing allotments of lots among the children and testified that some transfers to him and others were without payment though recited consideration in the deeds. Natividad testified that she paid the amounts recited in the January 29, 1970 deed, that she purchased the six lots because she alone had means, and that she sold certain lots to third parties who relied on her titles. Natividad also admitted occupying or allowing others to occupy some lots and acknowledged an intention to convey lots to siblings in the event of their return from abroad. The parties disputed whether the January 29, 1970 deed and other transfers reflected true sales for consideration or simulated conveyances intended to preserve assets from taxation while leaving beneficial ownership with the family.

Rulings Below: Trial Court and Court of Appeals

The trial court found badges of simulation and lack of consideration in respect of the January 29, 1970 deed and later also declared null the July 31, 1982 deed, ordering restoration and annotation of titles as modified. On appeal the Court of Appeals granted the appeal in part, declaring both deeds null and void, and holding that, except for Lots 13 and 14 which had passed to bona fide third persons, Lots 3, 3‑B, 10 and 11 formed part of the estate of the deceased. The Court of Appeals ordered the Register of Deeds to restore the respective titles to the estate. The petitioners sought review in this Court.

Issues Presented in the Petition

Petitioners advanced several issues, including whether the uncorroborated testimony of Romeo could overcome the presumption of validity afforded a notarized deed; whether the Court of Appeals misappreciated notarized documentary evidence and other instruments executed by the deceased spouses; whether admissions and prior orders in other proceedings estopped respondents; whether the January 29, 1970 deed constituted an indivisible contract that could not be annulled by the estate of Maximino, Sr. alone; and whether titles issued to Romeo and to Maximino, Jr. should be cancelled and restored to Natividad pursuant to the deed of 1970.

Supreme Court’s Assessment of Evidentiary Weight

The Court applied the well‑settled rule that findings of fact of the trial court and of the Court of Appeals are binding unless shown to be unsupported or clearly erroneous. The Court observed that the lone testimony of a witness, if credible, may suffice to establish a fact. The Court found Romeo’s testimony credible and not successfully rebutted. The Court reiterated that notarization furnishes a presumption of regularity but does not convert an instrument into a self‑validating proof that can prevail over the true intention of the parties. The Court cited Suntay v. Court of Appeals for the principle that a notary public does not validate an instrument that the parties never intended to be legally binding.

Supreme Court’s Analysis on Simulation and Lack of Consideration

The Court examined the surrounding facts and circumstances and found “badges of a simulated sale.” The record showed a family practice of simulated transfers to avoid inheritance taxes, admissions by family members that consideration was not paid, and the improbability that Natividad could have funded the purchases of all six lots. The Court accepted the conclusion of the lower courts that the Deed of Absolute Sale dated January 29, 1970 was simulated for want of consideration and therefore void ab initio. The Court similarly treated the July 31, 1982 transfer as void where appropriate.

On Prior Possession Proceedings and Res Judicata

The Court distinguished the prior possession case (CA‑G.R. CV No. 12932) in which judgment confirmed Maximino, Jr.’s right to possession of Lot 3‑B. The Court explained that the prior judgment bound the parties to that action but did not bind the estate as a separate juridical entity in the annulment suit. The Court therefore rejected petitioners’ contention that the prior decision conclusively established Natividad’s title against the estate.

On Implied Trust, Collation and the Rights of Heirs

The Court recognized that the deceased parents intended to entrust the six Quezon City lots to Natividad for the benefit of her siblings. Given that legal title had been placed in Natividad while beneficial ownership remain

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