Key Takeaway: A Contract Signed by Deceased Individuals is Void and Can Be Challenged at Any Time

City of Tanauan v. Gloria A. Millonte, G.R. No. 219292, June 28, 2021

Imagine inheriting a piece of property, only to discover that it was sold years ago by someone who had no right to do so—someone who was already deceased at the time of the sale. This is the real-world scenario faced by Gloria A. Millonte in her battle against the City of Tanauan. The central question in this case was whether a Deed of Absolute Sale, signed by individuals long dead, could be considered valid. The Supreme Court’s ruling not only resolved this dispute but also clarified the legal principles surrounding void contracts in the Philippines.

In this case, the Supreme Court of the Philippines ruled that a contract signed by deceased individuals is void and can be challenged at any time, regardless of how long it has been since the contract was executed. The ruling underscores the importance of verifying the authenticity and capacity of parties to a contract, particularly in real estate transactions.

Legal Context: Understanding Void Contracts and Forgery

In Philippine law, a contract is considered void if it lacks essential elements, such as the consent of the parties involved. Article 1410 of the Civil Code states that “the action or defense for the declaration of the inexistence of a contract does not prescribe.” This means that an action to declare a contract void can be brought at any time, as such contracts are considered null and void from the beginning.

Forgery, on the other hand, refers to the act of falsifying a document or signature with the intent to deceive. The burden of proving forgery lies with the party alleging it, and they must present clear, positive, and convincing evidence. In the context of real estate, verifying the identities and capacities of the parties involved is crucial to prevent fraudulent transactions.

Key provisions from the Civil Code relevant to this case include:

“If any one party to a supposed contract was already dead at the time of its execution, such contract is undoubtedly simulated and false and, therefore, null and void by reason of its having been made after the death of the party who appears as one of the contracting parties therein.”

This principle ensures that contracts signed by deceased individuals cannot be enforced, protecting the rights of heirs and preventing unjust enrichment.

Case Breakdown: The Journey of Gloria A. Millonte

Gloria A. Millonte discovered that the property she inherited from her grandfather, Lucio Gonzaga, had been sold to the City of Tanauan in 1970. The Deed of Absolute Sale was purportedly signed by Lucio and his siblings, but Millonte found evidence suggesting that all the signatories were already deceased at the time of the sale.

The case began in the Regional Trial Court (RTC) of Tanauan City, which ruled in favor of Millonte. The RTC found that the Gonzaga siblings were indeed dead at the time of the alleged sale, rendering the Deed of Absolute Sale void. The court ordered the cancellation of the Transfer Certificate of Title (TCT) issued to the City of Tanauan and the reinstatement of the Original Certificate of Title (OCT) in the names of the Gonzagas.

The City of Tanauan appealed to the Court of Appeals (CA), which upheld the RTC’s decision. The CA noted that Millonte had successfully proven the deaths of the Gonzaga siblings through a combination of certifications and witness testimonies, overcoming the presumption of regularity in the execution of the notarized deed.

The Supreme Court, in its final ruling, affirmed the decisions of the lower courts. The Court emphasized that:

“If any one party to a supposed contract was already dead at the time of its execution, such contract is undoubtedly simulated and false and, therefore, null and void by reason of its having been made after the death of the party who appears as one of the contracting parties therein.”

The Court also highlighted the importance of due diligence in verifying the identities and capacities of contracting parties:

“Petitioner could not even claim to be an innocent purchaser for value since it did not show that it fully ascertained the identities and genuineness of the signatures of the purported vendors.”

The procedural steps in this case included:

1. Millonte filed a complaint in the RTC to declare the Deed of Absolute Sale void.
2. The RTC granted the complaint, nullifying the Deed of Absolute Sale and reinstating the OCT.
3. The City of Tanauan appealed to the CA, which affirmed the RTC’s decision.
4. The Supreme Court upheld the rulings of the lower courts, emphasizing the void nature of the contract.

Practical Implications: Protecting Property Rights and Preventing Fraud

This ruling has significant implications for property transactions in the Philippines. It reinforces the principle that a contract signed by deceased individuals is void and can be challenged at any time. This is crucial for heirs who may discover fraudulent transactions years after the fact.

For businesses and individuals involved in real estate transactions, the ruling underscores the importance of thorough due diligence. Verifying the identities and capacities of all parties involved is essential to prevent disputes and potential legal challenges.

Key Lessons:

• Always verify the authenticity of signatures and the capacity of parties to a contract.
• Be aware that actions to declare a contract void due to forgery or the death of a signatory are imprescriptible.
• Maintain detailed records and documentation to support the legitimacy of transactions.

Frequently Asked Questions

What makes a contract void in the Philippines?

A contract is void if it lacks essential elements, such as consent of the parties, or if it is signed by someone who is deceased.

Can a void contract be challenged after many years?

Yes, an action to declare a contract void is imprescriptible, meaning it can be brought at any time.

What is the burden of proof in cases of forgery?

The party alleging forgery must provide clear, positive, and convincing evidence to prove it.

What should I do if I suspect a property transaction was fraudulent?

Seek legal advice immediately. Gather all relevant documentation and evidence to support your claim.

How can I protect myself from fraudulent real estate transactions?

Conduct thorough due diligence, verify the identities and capacities of all parties, and ensure all transactions are properly documented and notarized.

ASG Law specializes in real estate and property law. Contact us or email hello@asglawpartners.com to schedule a consultation.