Let’s pretend
Spouses Neo and Sally are the registered owners of a Quezon City property. Fina and Tina are their daughters.
Neo, with the consent of Sally, sold the property to Angie, who is the favorite niece of Neo. During the execution of the deed of absolute sale, Neo, in the presence of his nephew, Anjo, told Angie that they were executing the deed because they wanted her loan application to be approved. Angie gleefully left the place without handing a single centavo to her uncle.
A new transfer certificate was issued in the name of Angie. Despite the sale, Neo, Sally, Fina and Tina remained in the premises and continued paying real property taxes.
Years later, Neo and Sally joined their Creator. Fina and Tina continued staying in the premises, regularly paid the real estate taxes for the property, and even leased out portions of the Quezon City property.
One morning, Angie, with her hands folded, demanded Fina and Tina to leave the place. Fina and Tina immediately sought the cancellation of the sale. They claimed that Angie merely borrowed the title of the property to be used as a collateral for a loan, and that their father agreed to a simulated sale in order to help his favorite niece. Incensed by the claim, Angie insisted that the sale was a valid one for a consideration.
Q: What are the essential elements of a contract of sale?
A: a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b) determinate subject matter; and, c) price certain in money or its equivalent. (Heirs of Juan San Andres vs. Rodriguez, G.R. No. 135634 May 31, 2000)
Q: What is a simulated contract?
A: A simulated contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. (Arts. 1345 and 1346, Civil Code)
Q: Is the sale between spouses Neo and Sally and Angie an absolutely simulated contract or a relative one?
A: It is an absolutely simulated contract. There was no valid sale of the subject property that actually took place between the parties. There was simply no consideration and no intent to sell it. The fact that no payment was made shows that Neo had no intention to sell the property. Where there is no consideration, the sale is null and void ab initio. (Heirs of Intac vs. CA, G.R. No. 173211, October 11, 2012.)
Q: What other acts show that the sale was an absolutely simulated one?
A: The following acts militate against the claim of Angie: (a) Neo and his his family continued to be in physical possession of the subject property after the sale; (b) they even went as far as leasing the same and collecting rentals; (c) Angie did not assert her ownership immediately after the alleged sale took place; (d) Angie asserted her ownership only after the death of her uncle and aunt; and (e) Angie failed to show that she paid any real property tax after the sale. (Heirs of Intac vs. CA, G.R. No. 173211, October 11, 2012.)
Q: What is the legal significance of the transfer certificate title that was issued in favor of Angie?
A: It is also of no moment that a new title was issued in Angie’s name. Registration does not vest title. (Heirs of Intac vs. CA, G.R. No. 173211, October 11, 2012.)
Ma. Soledad Deriquito-Mawis is currently the Dean of College of Law, Lyceum of the Philippines University; and President of Philippine Association of Law Schools
