Nazareno v. Court of Appeals
REITERATIONFacts
The Antecedents: This case concerns the ownership of several real properties in Quezon City, originally owned by the spouses Maximino Nazareno, Sr. and Aurea Poblete. Following their deaths, a dispute arose among their children, particularly between Natividad P. Nazareno and Maximino P. Nazareno, Jr. (petitioners) on one side, and Romeo P. Nazareno and his wife Eliza, representing the estate of Maximino Nazareno, Sr. (respondents), on the other. The core of the dispute revolves around the validity of deeds of sale executed by the parents in favor of Natividad, specifically a deed dated January 29, 1970, involving six lots, and a subsequent sale of one of these lots (Lot 3-B) by Natividad to Maximino, Jr. Romeo contends these sales were simulated and lacked consideration, intended merely to avoid inheritance taxes, while the petitioners assert their validity. Procedural History: The underlying dispute first manifested when Romeo, as administrator of his father's estate, discovered deeds of sale from Maximino, Sr. to Natividad. Subsequently, Maximino, Jr. filed an action for recovery of possession and damages against Romeo and Eliza concerning Lot 3-B, which Natividad had sold to Maximino, Jr. This action resulted in a favorable judgment for Maximino, Jr., affirmed by the Court of Appeals. Thereafter, Romeo, on behalf of the estate of Maximino, Sr., filed the present case for annulment of sale and damages against Natividad and Maximino, Jr. The Regional Trial Court initially declared the January 29, 1970 deed of sale null and void, with modifications regarding certain lots. Upon reconsideration, the trial court amended its decision to declare both the January 29, 1970 and July 31, 1982 deeds of sale null and void. The Court of Appeals affirmed this decision, modifying it to declare that certain lots should form part of the estate of Maximino Nazareno, Sr. Petitioners' motion for reconsideration was denied, leading to the present petition. The Petition: Petitioners Natividad P. Nazareno and Maximino P. Nazareno, Jr. seek review of the Court of Appeals' decision through a petition for review on certiorari under Rule 45 of the Rules of Court. They raise several issues, primarily questioning the validity of the Court of Appeals' decision in light of the uncorroborated testimony of Romeo P. Nazareno, arguing that it should not override the presumption of validity accorded to notarized documents like the Deed of Absolute Sale dated January 29, 1970. They also contend that the Court of Appeals grossly misappreciated the facts, citing documentary evidence, admissions by Maximino, Sr. during his lifetime, and admissions by Romeo himself in previous proceedings that purportedly support the validity of the sale. Furthermore, they argue that the Deed of Absolute Sale is an indivisible contract and thus cannot be annulled by the estate of only one of the deceased spouses. They also question the annulment of the sale of Lot 3 and the cancellation of Romeo's title to it, asserting that Natividad should have been recognized as the owner based on the deed of sale in her favor.
Issue(s)
Whether the uncorroborated testimony of Romeo P. Nazareno can destroy the full faith and credit accorded to notarized documents like the Deed of Absolute Sale dated January 29, 1970. Whether the Court of Appeals grossly misappreciated the facts of the case with respect to the validity of the Deed of Absolute Sale dated January 29, 1970, considering documentary evidence, an extra-judicial partition, admissions made by Maximino A. Nazareno, Sr., admissions made by Romeo P. Nazareno, and a partial project of partition; and the effect of the prior ruling in CA-G.R. CV No. 12932. Whether the Deed of Absolute Sale dated January 29, 1970, is an indivisible contract and if so, whether the estate of Maximino A. Nazareno, Sr. alone can seek its annulment; and on the alleged intention to dispose of properties and the validity of the Deed of Sale. Whether the sale of Lot 3 under the Deed of Absolute Sale dated January 29, 1970, in favor of Natividad P. Nazareno, is valid considering Romeo Nazareno's admission that he did not pay the consideration stated in a deed of sale in his favor; and on the ownership of Lot 3 and the existence of an implied trust. Whether the title issued in the name of Romeo P. Nazareno for Lot 3 should be cancelled and a new one issued in favor of Natividad P. Nazareno; and on the sale of Lots 13 and 14 to third persons.
Ruling
The petition is denied. The decision of the Court of Appeals is affirmed. The Deed of Absolute Sale dated January 29, 1970, and the Deed of Absolute Sale dated July 31, 1982, are declared null and void. Lots 3, 3-B, 10, and 11 shall form part of the estate of the deceased Maximino Nazareno, Sr., except for Lots 13 and 14, the ownership of which has passed to third persons. The Register of Deeds of Quezon City is ordered to restore TCT No. 140946 (Lot 3-B), TCT No. 132019 (Lot 3), TCT No. 118885 (Lot 10), and TCT No. 118886 (Lot 11) to the estate.
Ratio Decidendi
On the issue of the validity of the Deed of Absolute Sale dated January 29, 1970, and the sufficiency of Romeo's testimony: The Court held that the findings of fact of the Court of Appeals, which coincided with those of the trial court, are conclusive. The lone testimony of a witness, if credible, is sufficient. Romeo's testimony that no consideration was paid for the sale of the six lots to Natividad was found credible by both lower courts and was not successfully rebutted. The notarization of a deed of sale does not guarantee its validity; the intention of the parties is the primary consideration. The Court found badges of a simulated sale, indicating that the parties did not intend to be legally bound by the transaction, rendering the deed void. On the effect of the prior ruling in CA-G.R. CV No. 12932 and the misappreciation of facts: The Court clarified that the previous case, which involved Maximino, Jr. and the spouses Romeo and Eliza concerning Lot 3-B, did not bind the estate of Maximino, Sr. The estate of a deceased person is a juridical entity with a personality separate and distinct from its heirs. Therefore, the judgment in the prior case, which upheld Maximino, Jr.'s ownership of Lot 3-B, did not preclude the estate of Maximino, Sr. from recovering properties wrongfully disposed of. On the indivisibility of the contract and the standing of the estate of Maximino, Sr. to sue; and on the alleged intention to dispose of properties and the validity of the Deed of Sale: The Court explained that an obligation is indivisible when it cannot be validly performed in parts. The Deed of Sale, conveying multiple lots, was considered indivisible in its performance. However, the Court clarified that the validity of a contract can be questioned by anyone affected by it, and a void contract is inexistent from the beginning. Therefore, even if only the estate of Maximino, Sr. contested the validity, the outcome would bind the estate of Aurea as if no sale took place. The Court stated that the fact that other properties were sold by the spouses does not automatically validate the Deed of Sale in question. The crucial issue was whether these sales were made for a consideration. Both the trial court and the Court of Appeals found that the transfers were fictitious sales intended to avoid inheritance taxes. The Court also noted that Natividad lacked the financial means to purchase all the lots, and Romeo's admission of not paying consideration for other transfers suggested a family practice of simulated sales. On the sale of Lot 3 under the Deed of Absolute Sale dated January 29, 1970, in favor of Natividad P. Nazareno, is valid considering Romeo Nazareno's admission that he did not pay the consideration stated in a deed of sale in his favor; and on the ownership of Lot 3 and the existence of an implied trust: The Court affirmed the trial court's finding that the sale of Lot 3 to Natividad was void for lack of consideration. However, the Court also recognized that Maximino, Sr. intended to give the six lots to Natividad as a form of trust for her siblings. This constituted an implied trust under Article 1449 of the Civil Code. Consequently, the lots were subject to collation in accordance with Article 1061 of the Civil Code, meaning they must be brought back to the mass of the estate for proper distribution. On whether the title issued in the name of Romeo P. Nazareno for Lot 3 should be cancelled and a new one issued in favor of Natividad P. Nazareno; and on the sale of Lots 13 and 14 to third persons: The Court upheld the sale of Lots 13 and 14 to Ros-Alva Marketing Corp. because Ros-Alva Marketing was an innocent purchaser for value who relied on Natividad's title. The Court reiterated the rule that persons dealing with registered land may safely rely on the correctness of the certificate of title.
Main Doctrine
A deed of sale, though notarized, is void if it is simulated for lack of consideration, and the intention of the parties is the primary consideration in determining the true nature of a contract. Furthermore, properties transferred through simulated sales to avoid inheritance taxes may be subject to collation as part of the decedent's estate, unless they have passed to an innocent purchaser for value.