Pasco vs. Cuenca

G.R. No. 214319
Petitioner claimed ownership of land via 1986 deed of sale, but SC ruled it simulated, void for lack of consideration and intent, affirming CA's decision.
land sale dispute void deed of sale simulation

Case Summary (G.R. No. 214319)

Factual Background

The controversy concerned Lot No. 38-B in Katipunan, Zamboanga del Norte, area 336 square meters, originally registered in the names of Spouses Antonio Baguispas and Isabel Cuenca-Baguispas under Transfer Certificate of Title No. T-12461. Petitioner alleged that in June 1986 she and the Spouses Baguispas agreed that she would buy the lot for P50,000 and that the Spouses Baguispas executed a Deed of Sale dated July 1, 1986 in her favor. Petitioner further alleged that Antonio died on March 3, 1987 and that on June 8, 1988 Isabel Cuenca executed an affidavit of self-adjudication purporting to convey the lot to herself. Petitioner alleged that without her knowledge Isabel caused the transfer of title and later sold the lot by a Deed of Absolute Sale dated May 8, 1998 to the Spouses Ytang, resulting in registration under TCT No. T-62536.

Trial Court Proceedings

On September 9, 1999, Myrna C. Pasco filed a complaint in Civil Case No. 5437 for annulment of title, annulment of deed of sale, recovery of ownership and damages against Isabel Cuenca and the Spouses Ytang. The Regional Trial Court rendered judgment on May 31, 2010 in favor of petitioner, declaring TCT No. T-62536 null and void, declaring petitioner lawful owner of Lot No. 38-B, and directing the Register of Deeds of Zamboanga del Norte to reinstate TCT No. T-12461 and annotate thereon the Deed of Sale dated July 1, 1986 if petitioner caused its registration. The trial court found that the sale between the Spouses Baguispas and petitioner was valid and rejected respondents’ assertion that the sale was simulated. The trial court denied respondents’ motion for reconsideration.

Ruling of the Court of Appeals

By Decision dated August 27, 2014, the Court of Appeals reversed the RTC. The CA held that the Deed of Sale dated July 1, 1986 was void ab initio for lack of consideration. The CA relied on Article 1471 of the Civil Code that “if the price is simulated, the sale is void,” and concluded that the price in the deed was simulated. The CA found that the parties never intended to be bound by the deed because the sale served only as collateral representation to secure petitioner’s loan, and the Spouses Baguispas did not actually receive the P50,000. The CA observed that petitioner made no effort to assert ownership from 1986 until 1999, which it treated as a badge of simulation. The CA therefore upheld the subsequent sale from Isabel Cuenca to the Spouses Ytang as valid.

Proceedings before the Supreme Court

Myrna C. Pasco filed a petition for review on certiorari under Rule 45 challenging the CA Decision. The Court required petitioner’s counsel, Atty. Senen O. Angeles, to submit proof of authority to sign the petition’s verification and certification against forum shopping. Atty. Angeles later disclosed that petitioner died on August 19, 2011 and submitted a Letter of Authority dated September 20, 2014 from Emma P. Saile, who claimed to represent petitioner’s heirs, authorizing him to file the petition and to sign verifications. Respondents objected that counsel lacked authority and that the petition failed to cite the evidence on record. The Court directed Atty. Angeles to show cause for procedural deficiencies and to file a reply; counsel later explained that the heirs refused to cooperate and asked that the filing of a reply be dispensed with. The Court ultimately dispensed with the filing of petitioner’s reply in a Resolution dated April 25, 2018.

Issue Presented

Whether the Court of Appeals erred in ruling that the Deed of Sale of Real Property dated July 1, 1986 is null and void for lack of consideration and for absence of intent by the parties to be bound.

Supreme Court's Ruling

The Supreme Court denied the petition for lack of merit and affirmed the Decision of the Court of Appeals dated August 27, 2014. The Court ruled both on a procedural point and on the merits. Procedurally, the Court found that Atty. Angeles had no authority to file the petition on behalf of petitioner because the lawyer-client relationship terminated upon petitioner’s death and counsel did not have proper retention by substitute parties before filing; counsel’s belated submission of a Letter of Authority from an alleged heir did not cure the defect for purposes of the petition filed in this Court. On the merits, the Supreme Court agreed with the CA that the deed of sale was an absolutely simulated contract and therefore void.

Legal Basis and Reasoning

The Court observed that a petition under Rule 45, Rules of Court, Section 1 is limited to questions of law and that petitioner failed to establish any of the recognized exceptions permitting factual reexamination. The Court applied Article 1458 of the Civil Code to define a contract of sale and reiterated that the essential elements are consent, a determinate subject matter, and a price certain in money or equivalent. The Court invoked Article 1345 to explain simulation, distinguishing absol

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