The Supreme Court, in Aliño v. Heirs of Lorenzo, ruled that a Deed of Absolute Sale can be declared null and void if proven to be a simulated sale, especially when the supposed vendor remains in continuous, open, and adverse possession of the property. This decision underscores that the true intent of parties, as evidenced by their actions, takes precedence over the mere existence of a document. Practically, this ruling protects individuals who, despite having signed a deed of sale, continue to act as the true owners of their property.

Empty Promises: Challenging a Sale When Ownership Never Truly Transferred

Lucia Carlos Aliño sought to nullify a Deed of Absolute Sale she executed in favor of her daughter, Angelica A. Lorenzo, years prior. Despite the sale, Lucia remained in possession of the land, paid its taxes, and acted as its owner. The question before the Court was: Does a formal deed of sale hold more weight than the actual conduct of the parties involved, particularly when it suggests the sale was never truly intended?

The heart of the matter lay in determining whether the sale was simulated. The Civil Code distinguishes between absolute simulation, where parties do not intend to be bound at all, and relative simulation, where they conceal their true agreement. In cases of absolute simulation, the apparent contract produces no legal effect.

Article 1345 of the Civil Code states: “Simulation of a 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.”

The Supreme Court emphasized that the intention of the parties is paramount, and this intention is to be gleaned not only from the express terms of the agreement but also from their contemporaneous and subsequent acts. Several factors pointed towards simulation in this case.

The Court noted the absence of any attempt by Angelica or her heirs to assert ownership rights over the property. Building on this principle, the Court cited Suntay v. Court of Appeals, highlighting that “the most protuberant index of simulation is the complete absence of an attempt in any manner on the part of the vendee to assert his rights of ownership over the disputed property.” Angelica never took possession of the land, nor did she exercise any act of dominion over it.

Furthermore, the Court gave significant weight to Lucia’s continued possession of the property and her payment of real estate taxes. She designated a caretaker, Vivian Losaria, who built a house on the land and managed it on Lucia’s behalf. The payment of real estate taxes, while not conclusive proof of ownership, provides strong evidence of a claim of title, especially when coupled with actual possession.

This approach contrasts with the heirs’ reliance on the notarized Deed of Absolute Sale. While such a document enjoys a presumption of regularity, this presumption can be overcome by clear and convincing evidence of simulation. The Court found that the heirs failed to present sufficient evidence to counter Lucia’s demonstrated acts of ownership.

The Court addressed the argument that Lucia’s action for reconveyance had prescribed, noting the well-established exception that the right to seek reconveyance does not prescribe when the claimant is in actual possession of the property. This principle recognizes that a person in possession may wait until their possession is disturbed before taking action to vindicate their rights.

The Court stated, “if the person claiming to be the owner of the property is in actual possession thereof, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.”

Having resolved the central issue of the deed’s validity, the Court deemed it unnecessary to delve into the inadequacy of the price, explaining that the presence of any actual consideration, however inadequate, negates the concept of simulation.

FAQs

What was the key issue in this case?	The central issue was whether a Deed of Absolute Sale was valid despite evidence suggesting it was a simulated sale, where the seller retained possession and control of the property.
What is a simulated sale?	A simulated sale is a contract that does not reflect the true intentions of the parties. It can be absolute, where no binding agreement is intended, or relative, where the true agreement is concealed.
What is the significance of continued possession in this case?	Lucia’s continued possession of the property was a crucial factor in the Court’s decision, indicating that the sale was not intended to transfer ownership.
Why was the payment of real estate taxes important?	The payment of real estate taxes by Lucia served as evidence of her claim of ownership and intention to treat the property as her own.
What does it mean for a right to “prescribe”?	Prescription refers to the lapse of time within which a legal action must be brought. After the prescriptive period, the right to bring the action is lost.
How did the Court address the issue of prescription in this case?	The Court ruled that since Lucia was in actual possession of the property, her right to seek reconveyance, which seeks to quiet title, did not prescribe.
What is the practical implication of this ruling?	The ruling protects individuals who, despite having signed a deed of sale, continue to act as the true owners of their property.
What evidence can prove a sale was simulated?	Evidence may include continued possession by the seller, failure of the buyer to assert ownership, and payment of taxes by the seller.
What is an action for reconveyance?	An action for reconveyance is a legal remedy sought when property has been wrongfully registered in another person’s name, seeking the transfer of the title to the rightful owner.

In conclusion, the Aliño v. Heirs of Lorenzo case serves as a reminder that the true intent of parties, as demonstrated by their actions, can outweigh the mere existence of a formal document like a Deed of Absolute Sale. The court’s emphasis on continued possession and other indicia of ownership provides a safeguard for individuals who may have entered into agreements that do not reflect their true intentions.

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: LUCIA CARLOS ALIÑO v. HEIRS OF ANGELICA A. LORENZO, G.R. No. 159550, June 27, 2008