The Supreme Court ruled that a contract of sale for real property was invalid because the owner, Aquiles Riosa, was fraudulently misled into signing the document. The Court emphasized the necessity of genuine consent in property transactions, safeguarding individuals from losing ownership due to deceitful practices. This decision underscores the importance of due diligence and clear understanding in all contractual agreements, especially those involving real estate.

Unwitting Signature, Lost Property? Examining the Validity of Consent in Real Estate Sales

The case of Aquiles Riosa v. Tabaco La Suerte Corporation (G.R. No. 203786, October 23, 2013) revolves around a dispute over a commercial lot in Tabaco City, Albay. Aquiles Riosa claimed he was deceived into signing a deed of sale for his property, believing it was merely a receipt for a loan from Sia Ko Pio, the Chief Executive Officer of Tabaco La Suerte Corporation. Riosa sought to annul the sale, arguing fraud and lack of consent, while La Suerte Corporation maintained the sale was valid and enforceable. This case highlights the critical importance of consent in contract law, particularly in transactions involving real property. The central legal question is whether the deed of sale was valid given Riosa’s claim that his consent was obtained through fraud and misrepresentation.

The Regional Trial Court (RTC) initially sided with Riosa, annulling the sale and ordering the reconveyance of the property. The RTC emphasized that Riosa had been fraudulently induced to sign the document, believing it was related to his loan. This ruling was based on Article 1330 of the Civil Code, which states that a contract is voidable if consent is given through violence, intimidation, undue influence, or fraud. According to the RTC, La Suerte Corporation held the property under an implied trust for Riosa’s benefit and was obligated to reconvey it.

However, the Court of Appeals (CA) reversed the RTC’s decision, upholding the validity of the deed of sale and declaring La Suerte Corporation the lawful owner of the property. The CA reasoned that Riosa had failed to provide clear and convincing evidence of fraud and that tax declarations and realty tax payments were insufficient to defeat La Suerte’s certificate of title. The CA also noted that a certificate of title serves as an absolute and indefeasible evidence of ownership. This divergence in opinion between the RTC and CA necessitates a thorough examination of the facts and the applicable legal principles to determine whether a valid contract of sale existed.

The Supreme Court ultimately sided with the RTC, finding that no perfected contract of sale existed between Aquiles Riosa and Tabaco La Suerte Corporation. The Court reiterated the elements necessary for a valid contract of sale: consent or meeting of the minds, a determinate subject matter, and a price certain in money or its equivalent. The Court emphasized that there was no clear and convincing evidence that Aquiles Riosa definitively sold the subject property to La Suerte, nor was there evidence that La Suerte authorized its chief executive officer, Sia Ko Pio, to negotiate and conclude a purchase of the property. The absence of genuine consent was a crucial factor in the Court’s decision.

Riosa’s testimony clearly indicated that he never intended to transfer ownership of the property. He believed he was signing a receipt for his loan from Sia Ko Pio, not a deed of sale. The Supreme Court underscored the importance of consent in contracts, noting that without a meeting of the minds on the transfer of ownership, a valid contract of sale cannot exist. The Court also pointed out that the loan transactions were between Riosa and Sia Ko Pio personally, not between Riosa and La Suerte Corporation. This distinction was crucial because it highlighted the absence of an agreement between the parties.

Furthermore, the Court found that La Suerte Corporation failed to provide sufficient evidence that Sia Ko Pio was authorized to act on its behalf in purchasing the property. The absence of a board resolution authorizing Sia Ko Pio to purchase the property further weakened La Suerte’s claim. The Supreme Court cited the case of Spouses Firme v. Bukal Enterprises and Development Corporation, emphasizing that the power to purchase real property is vested in the board of directors or trustees of a corporation. Without proper authorization, Sia Ko Pio’s actions could not bind the corporation.

SEC. 23. The board of directors or trustees. — Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stock, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified. x x x

Moreover, the Supreme Court addressed the discrepancies in the dates appearing on the alleged deed of sale, which was notarized by Judge Arsenio Base. The document contained conflicting dates, raising doubts about its authenticity and regularity. The Court noted that Judge Base, acting as an ex-officio notary public, was not authorized to notarize documents unrelated to his official duties. This irregularity further undermined the validity of the deed of sale.

The Court explained that while an error in the notarial inscription does not automatically invalidate a sale, it does mean that the document cannot be treated as a notarial document and is not entitled to the presumption of regularity. In this case, the irregular notarization reduced the evidentiary value of the document, requiring La Suerte Corporation to provide additional proof of its due execution and authenticity, which they failed to do. The Supreme Court emphasized that the burden of proving the authenticity and due execution of the deed of sale rested on La Suerte Corporation, which they did not successfully discharge.

The significance of physical possession and continuous payment of real property taxes by Aquiles Riosa further supports the decision of the court, as these actions strongly imply that Riosa did not intend to transfer ownership of the property. Additionally, the substantial renovation costs incurred by Riosa’s daughter, Annie Lyn Riosa Zampelis, amounting to P300,000.00, and the fact that La Suerte did not demand the transfer of possession earlier, collectively indicate that Riosa had not relinquished ownership of the property. These factors provide a comprehensive view that Riosa’s actions were inconsistent with those of a seller who had transferred their rights.

FAQs

What was the key issue in this case?	The key issue was whether a valid contract of sale existed between Aquiles Riosa and Tabaco La Suerte Corporation for the commercial lot in question, considering Riosa’s claim of fraud and lack of consent.
What did Aquiles Riosa claim in his complaint?	Aquiles Riosa claimed that he was deceived into signing a deed of sale, believing it was a receipt for a loan. He sought the annulment of the sale and the reconveyance of the property.
What did Tabaco La Suerte Corporation argue?	Tabaco La Suerte Corporation argued that the sale was valid and enforceable, and that they were the rightful owners of the property based on the deed of sale and transfer certificate of title.
What does Article 1330 of the Civil Code state?	Article 1330 of the Civil Code states that a contract is voidable if consent is given through violence, intimidation, undue influence, or fraud.
What was the Supreme Court’s ruling?	The Supreme Court ruled that no perfected contract of sale existed because there was no genuine consent from Aquiles Riosa to transfer ownership of the property.
Why was the absence of a board resolution significant?	The absence of a board resolution authorizing Sia Ko Pio to purchase the property on behalf of La Suerte Corporation indicated that Sia Ko Pio was not authorized to bind the corporation in the transaction.
What was the effect of the irregularities in the notarization?	The irregularities in the notarization reduced the evidentiary value of the deed of sale, requiring La Suerte Corporation to provide additional proof of its due execution and authenticity, which they failed to do.
What is the practical implication of this ruling?	The ruling emphasizes the importance of genuine consent in property transactions, protecting individuals from losing ownership due to deceitful practices.

In conclusion, the Supreme Court’s decision in Aquiles Riosa v. Tabaco La Suerte Corporation serves as a crucial reminder of the necessity of genuine consent and clear understanding in all contractual agreements, particularly those involving real estate. This case highlights the importance of due diligence, transparency, and proper authorization in property transactions, safeguarding individuals from fraudulent and deceptive practices that could lead to the loss of their valuable assets.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Aquiles Riosa v. Tabaco La Suerte Corporation, G.R. No. 203786, October 23, 2013