G.R. No. 214319 - Pasco vs. Cuenca

Case Summary (G.R. No. 214319)

Factual Background and Pleadings

Petitioner filed a complaint on September 9, 1999 seeking annulment of TCT No. T-62536, annulment of a deed of sale, recovery of ownership, and damages. She alleged that in June 1986 the Spouses Baguispas agreed to sell Lot No. 38‑B to her for P50,000 and executed a notarized Deed of Sale dated July 1, 1986; Antonio Baguispas died on March 3, 1987; on June 8, 1988 Isabel executed an affidavit of self-adjudication conveying the property to herself; without petitioner’s knowledge Isabel caused transfer of title and later executed a Deed of Absolute Sale dated May 8, 1998 selling the property to the Spouses Ytang, resulting in registration under TCT No. T-62536.

Respondents’ Answer and Allegations of Simulation

Respondents denied the sale’s validity, alleging the July 1, 1986 deed was fictitious and simulated, lacking consideration and executed merely to permit petitioner to show a title to the Social Security System (SSS) as collateral for a loan. They asserted the Spouses Baguispas never intended to sell and that petitioner refused later requests to reconvey because she claimed the deed had no force or effect.

Trial Court (RTC) Decision

On May 31, 2010, the Regional Trial Court (Branch 6, Dipolog City) ruled for petitioner. The RTC found by preponderance of evidence that a valid sale existed, declared TCT No. T-62536 and the May 8, 1998 Deed of Absolute Sale null and void, declared petitioner lawful owner of Lot No. 38‑B, and directed the Register of Deeds to reinstate TCT No. T-12461 and annotate the July 1, 1986 Deed of Sale upon registration.

Court of Appeals Reversal

On August 27, 2014 the Court of Appeals reversed the RTC. The CA held the July 1, 1986 Deed of Sale was void ab initio for lack of consideration and because the price was simulated under Article 1471 of the Civil Code. The CA concluded the parties did not intend to be bound by the sale and found petitioner’s long inaction from 1986 to 1999 to assert ownership a clear badge of simulation. Accordingly, the CA validated the subsequent sale between Isabel and the Spouses Ytang.

Supreme Court Proceedings and Procedural Issue

On petition for review under Rule 45, the Supreme Court observed the limited scope of Rule 45 to questions of law. The Court addressed an important procedural matter: counsel’s authority after a client’s death. The records reflected that petitioner had died on August 19, 2011. Petitioner’s counsel, Atty. Senen O. Angeles, filed the Rule 45 petition and only after the Court required proof of authority did he submit a Letter of Authority dated September 20, 2014 executed by an heir’s representative, Emma P. Saile. The Court noted that upon a client’s death a lawyer’s authority generally terminates except to inform the court and take steps to safeguard the decedent’s interest unless retained by substitute parties; the lawyer must give names/addresses of legal heirs and, where practicable, submit the death certificate. The Supreme Court held that Atty. Angeles lacked authority to file the petition and to sign the verification/certification of non‑forum shopping on behalf of the deceased petitioner, given that the lawyer‑client relationship had terminated upon death and the purported authority from heirs was obtained only after the Court required proof.

Issue Framed Before the Supreme Court

The Supreme Court identified the central issue as whether the Court of Appeals erred in ruling that the July 1, 1986 Deed of Sale was null and void for lack of consideration and for absence of intent to be bound.

Legal Standards Applied on the Merits

The Court reiterated the elements of a valid contract of sale under Article 1458 of the Civil Code: consent (meeting of the minds), a determinate subject matter, and a price certain in money or its equivalent. It narrated the doctrine on simulated contracts under Article 1345: absolute simulation occurs when parties do not intend to be bound at all (rendering the contract void), while relative simulation conceals a true agreement. Article 1471 was cited for the rule that a sale is void if the price is simulated, though the act may be shown to be in reality a donation or other contract.

Evidence and Court’s Factual Assessment (as Affirmed)

The Supreme Court accepted the Court of Appeals’ factual findings that the July 1, 1986 Deed of Sale was an absolutely simulated transaction. The CA’s

Case Syllabus (G.R. No. 214319)

Case Caption and Relief Sought

Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision dated August 27, 2014 of the Court of Appeals in CA-G.R. CV No. 02386-MIN.
Petitioner: Myrna C. Pasco; Respondents: Isabel Cuenca, Romeo M. Ytang, Jr., and Esther C. Ytang.
Relief sought in original action: cancellation of TCT No. T-62536 as spurious; declaration that the affidavit of self-adjudication and the Deed of Absolute Sale dated May 8, 1998 executed by Isabel in favor of Spouses Ytang are null and void; recovery of ownership and damages in the RTC complaint.

Subject Property

Lot No. 38-B, Municipality of Katipunan, Province of Zamboanga del Norte.
Area: 336 square meters.
Formerly registered under Transfer Certificate of Title (TCT) No. T-12461 in the names of Spouses Antonio Baguispas and Isabel Cuenca-A-Baguispas (Spouses Baguispas).
Later registered under TCT No. T-62536 in the names of respondents (Spouses Ytang) following a Deed of Absolute Sale dated May 8, 1998.

Antecedent Facts (as pleaded by petitioner)

In June 1986, Spouses Baguispas allegedly offered to sell Lot No. 38-B to petitioner for P50,000.00; petitioner agreed.
A Deed of Sale of Real Property dated July 1, 1986 in favor of petitioner was allegedly executed and notarized.
Antonio Baguispas died on March 3, 1987, leaving no compulsory heir except his wife Isabel.
On June 8, 1988, more than one year after Antonio's death, Isabel executed an affidavit of self-adjudication conveying Lot No. 38-B to herself.
Without petitioner’s knowledge, Isabel purportedly caused transfer of title to her name and subsequently sold the property to Spouses Ytang by a Deed of Absolute Sale dated May 8, 1998.
Consequence alleged: TCT No. T-62536 was issued in respondents’ names.

Respondents’ Allegations (as pleaded in answer)

The July 1, 1986 Deed of Sale was fictitious and simulated, unsupported by any consideration.
The Deed of Sale was executed only to enable petitioner to present a deed to the Social Security System (SSS) as collateral for her loan application.
Isabel later asked petitioner to execute a deed conveying the property back to Isabel; petitioner refused, asserting the deed of sale had no force and effect.

Evidence and Testimony Summarized in the Records

Isabel (one of the Spouses Baguispas) testified that she and Antonio signed the July 1, 1986 deed only to accommodate petitioner’s need to secure an SSS loan and that they did not receive P50,000.00.
Rene Pasco, petitioner’s brother, testified that petitioner went home in 1986 and arranged with Aunt Isabel to have the house "loaned" for a loan in Manila, with the title to be subsequently transferred to petitioner — indicating the use of the property as collateral rather than an actual sale.
The record reflects that petitioner did not attempt to assert ownership or control over Lot No. 38-B from execution of the 1986 deed until filing suit on September 9, 1999.

Trial Court (RTC) Ruling

Date: May 31, 2010.
Findings: By preponderance of evidence, the RTC found in favor of petitioner.
Relief granted by RTC:
- Declared TCT No. T-62536 issued in respondents’ names as null and void, and declared the Absolute Deed of Sale of a Registered Land executed on May 8, 1998 by Isabel in favor of Romeo Ytang null and void.
- Declared petitioner as the lawful owner of Lot 38-B (336 sq.m.) identified in the subject TCT.
- Directed the Register of Deeds of Zamboanga del Norte to reinstate TCT No. T-12461 issued in the name of Spouses Antonio Baguispas and Isabel Cuenca and annotate thereon the July 1, 1986 Deed of Sale in the event plaintiff causes its registration.
RTC’s reasoning: There was a valid sale between Spouses Baguispas and petitioner; respondents’ claim of simulation was rejected.
Respondents moved for reconsideration; RTC denied the motion for lack of merit.

Court of Appeals Ruling

Decision dated August 27, 2014 (CA-G.R. CV No. 02386-MIN).
CA reversed and set aside the RTC Decision.
CA’s holdings:
- The July 1, 1986 Deed of Sale between Spouses Baguispas and petitioner is void ab initio for lack of consideration.
- The sale is void under Article 1471 of the Civil Code because the price is simulated.
- The parties had no intention of binding themselves to the deed of sale; hence, the deed was an absolute simulation.
CA’s observations supporting simulation:
- Petitioner made no attempt, from execution of the deed in 1986 until filing suit in 1999, to assert ownership — a “clear badge of simulation.”
- Testimony of Isabel and Rene Pasco indicating the deed was executed to facilitate petitioner’s loan application with SSS and no consideration was paid.
Consequence: CA declared the subsequent sale between Isabel and Spouses Ytang valid.

Proceedings before the Supreme Court (Rule 45 Petition)

Petitioner filed a Rule 45 petition, invoking only questions of law.
The Supreme Court directed proof of authority of Atty. Senen O. Angeles to sign the verification/certification of non-forum-shopping on petitioner’s behalf (Resolution dated January 28, 2015).
Compliance and Manifestation (June 1, 2015): Atty. Angeles reported petitioner had died on August 19, 2011 and that petitioner’s estate was under possession of her heirs, represented by Emma P. Saile; he alleged the petition was filed in good faith by the heirs believing they would be directly affected.
A Letter of Authority (dated September 20, 2014) signed by Saile was submitted, authorizing Atty. Angeles to file a petition for review before the Court and to sign required verifications.
Respondents’ Comment: Argued counsel lacked valid authority to commence the petition and could not p