Cadungog v. Yap
REITERATIONFacts
The Antecedents: Virgilio Cadungog executed a Deed of Sale with Right of Repurchase in favor of Franklin Ong for six parcels of land. Virgilio failed to redeem the property within the 10-year period. Subsequently, Virgilio executed a Deed of Absolute Sale over three of these parcels in favor of Jocelyn Yap, for which Franklin Ong acted as a witness. Later, Cresenciano Ong executed a Deed of Absolute Sale of one parcel in favor of APC Group, Inc., and Virgilio executed a Deed of Absolute Sale of another parcel to the same company. Upon learning of these sales, Franklin objected, and Virgilio paid him ₱50,000.00, which Franklin claimed was for the refund of Parcel Nos. 5 and 6. Jocelyn filed an estafa complaint against Virgilio for selling Parcel No. 1 to APC Group, Inc. In defense, Virgilio filed a complaint to declare the Deed of Absolute Sale in favor of Jocelyn null and void, alleging it was executed without consideration and for tax reduction purposes, and that the acknowledgment page was added without their signatures. Procedural History: The Regional Trial Court (RTC) declared the Deed of Absolute Sale dated September 30, 1991, null and void, finding it to be without consideration and thus void ab initio. The RTC reasoned that Franklin's failure to consolidate title extended the redemption period, and the ₱50,000.00 payment was for repurchase. The Court of Appeals (CA) reversed the RTC decision, declaring the Deed of Absolute Sale valid and binding, holding that the redemption period had elapsed, Jocelyn acquired ownership, and the ₱50,000.00 was a refund for other lots. The CA also found the inadequacy of price insufficient to invalidate the sale and upheld the notarized deed's evidentiary weight. The Petition: Virgilio appealed to the Supreme Court, arguing that the CA erred in reversing the RTC decision and in not considering that the Deed of Absolute Sale was fictitious, simulated, without consideration, and obtained through deceit. He also questioned the notarization process and Jocelyn's failure to consolidate ownership.
Issue(s)
Whether the Deed of Absolute Sale dated September 30, 1991, executed by Virgilio Cadungog in favor of Jocelyn Yap is valid and binding. Whether the Deed of Absolute Sale was fictitious, simulated, and without consideration. Whether the consent of Virgilio Cadungog was obtained through deceit. Whether the failure of Jocelyn Yap to consolidate her ownership over the disputed land affects the validity of the sale. Whether the findings of the RTC should prevail over the findings of the CA.
Ruling
The petition is granted. The decision of the Court of Appeals is reversed and set aside. The decision of the Regional Trial Court nullifying the September 30, 1991 Deed of Absolute Sale is reinstated.
Ratio Decidendi
On the validity of the Deed of Absolute Sale dated September 30, 1991: The Supreme Court ruled that the Deed of Absolute Sale dated September 30, 1991, executed by Virgilio Cadungog in favor of Jocelyn Yap is erroneous. The Court found that Virgilio, as the vendor a retro, failed to repurchase the property within the 10-year period stipulated in the Deed of Sale with Right of Repurchase dated August 17, 1979. Consequently, Franklin Ong, the vendee a retro, acquired absolute title and ownership over the six parcels of land by operation of law after August 17, 1979. Therefore, Virgilio had no right to mortgage or sell the property to Jocelyn on September 30, 1991, as he was no longer the owner, invoking the principle of NEMO DAT QUOD NON HABET. On whether the Deed of Absolute Sale was fictitious, simulated, and without consideration: The Court was not convinced that Virgilio and Jocelyn had agreed to the sale of Parcel Nos. 1, 2, and 3 for ₱5,000.00. It noted that Jocelyn was a resident of Canada on September 30, 1991, and there was no evidence of prior communication between her and Virgilio regarding the sale. The Court found it suspicious that Franklin, a law graduate, induced Virgilio to execute a deed of sale in favor of his sister despite Franklin being the lawful owner of the property. Franklin's declaration that Virgilio was the owner in the deed was considered false. The Court also found no evidence that the ₱50,000.00 paid by Virgilio to Franklin was a refund for Parcel Nos. 5 and 6, as claimed by Franklin and the CA. On whether the consent of Virgilio Cadungog was obtained through deceit: The Court highlighted that Franklin, despite being the owner of the parcels of land, induced Virgilio to execute a deed of sale in favor of Jocelyn. Franklin falsely declared in the deed that Virgilio was the owner, knowing this to be untrue. This act of inducing Virgilio to sell property he no longer owned, under false pretenses regarding ownership, constitutes deceitful conduct. On whether the failure of Jocelyn Yap to consolidate her ownership affects the validity of the sale: The Court reiterated that the failure of the vendee a retro to consolidate their title under Article 1607 of the Civil Code does not impair their acquired title and ownership. The method prescribed is merely for the purpose of registering and consolidating titles. Therefore, Jocelyn's alleged failure to consolidate ownership does not, in itself, invalidate the sale if it were otherwise valid. However, in this case, the sale itself was deemed invalid because Virgilio was not the owner. On whether the findings of the RTC should prevail over the findings of the CA: The Supreme Court found that the findings of fact and conclusions of the RTC were inconsistent with those of the CA. The RTC found the deed void for lack of consideration and simulated, while the CA found it valid. The Supreme Court, in exceptional cases where such findings are contradictory, can delve into factual issues. In this instance, the Supreme Court found the RTC's conclusion that the deed was void to be more in line with the evidence presented, particularly regarding the ownership of the property at the time of the alleged sale.
Main Doctrine
Failure of a vendor a retro to repurchase the property within the stipulated period vests absolute title and ownership in the vendee a retro by operation of law. The failure of the vendee a retro to consolidate title under Article 1607 of the Civil Code does not impair such title and ownership, as the method prescribed is merely for registration and consolidation.