Heirs of Ureta, Sr. v. Heirs of Ureta
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the ownership of six parcels of land originally belonging to Alfonso Ureta. Alfonso, during his lifetime, executed Deeds of Sale for these lands in favor of his son, Policronio M. Ureta, Sr., ostensibly for taxation purposes. However, no monetary consideration was exchanged, and Alfonso continued to possess and benefit from the lands until his death. After Alfonso's death, his heirs executed a Deed of Extra-Judicial Partition that included these same parcels of land, which Policronio's heirs later contested, asserting their ownership based on the earlier Deeds of Sale. 2. Procedural History: The Heirs of Policronio M. Ureta, Sr. filed a complaint for declaration of ownership and recovery of possession, among other claims, against the Heirs of Alfonso Ureta. The Regional Trial Court (RTC) dismissed the complaint, finding the Deed of Sale void and the Deed of Extra-Judicial Partition valid. Upon appeal, the Court of Appeals (CA) affirmed the voiding of the Deed of Sale but annulled the Deed of Extra-Judicial Partition, remanding the case for proper partition. Both sets of heirs filed petitions for review on certiorari with the Supreme Court. 3. The Petition: The petitions before the Supreme Court primarily challenge the CA's rulings on the validity of the Deed of Sale and the Deed of Extra-Judicial Partition. The Heirs of Policronio argue that the Deed of Sale is valid and that the CA erred in allowing parol evidence to invalidate it, asserting that prescription had set in. Conversely, the Heirs of Alfonso argue that the Deed of Sale is void and that the CA erred in annulling the Deed of Extra-Judicial Partition, contending it was validly ratified or, at minimum, should not have been annulled but rather corrected for any omissions. The core issues are whether the Deed of Sale was absolutely simulated and void, and whether the Deed of Extra-Judicial Partition was validly executed and binding on all heirs.
Issue(s)
Whether the 1969 Deed of Sale in favor of Policronio was void for being absolutely simulated. Whether the testimony of Amparo Castillo regarding the simulation was admissible under the Parol Evidence and Hearsay Rules. Whether the Deed of Extra-Judicial Partition is valid despite Conrado signing without a written Special Power of Attorney from his co-heirs.
Ruling
The petition in G.R. No. 165748 is DENIED. The petition in G.R. No. 165930 is GRANTED. The April 20, 2004 Decision and October 14, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 71399 are MODIFIED: (1) The Deed of Extra-Judicial Partition dated April 19, 1989 is declared VALID; and (2) The order to remand the case to the court of origin is DELETED. The Court affirmed that the Deed of Sale dated 25 October 1969 is void for being absolutely simulated and for lack of consideration.
Ratio Decidendi
On Issue 1: The Court ruled that the Deed of Sale was void for being absolutely simulated under Article 1346 of the Civil Code. Absolute simulation occurs when the parties do not intend to be bound at all; here, the evidence showed the sale was a mere tax-avoidance scheme with no actual monetary consideration. The Court identified 'badges of simulation': Alfonso remained in possession until his death, the tenants never attorned to Policronio, and Policronio never asserted ownership or paid taxes during his lifetime. Since the contract was void ab initio, the action to declare its inexistence is imprescriptible under Article 1410. The properties, therefore, remained part of Alfonso's estate. On Issue 2: The Court held that the Parol Evidence Rule did not bar the testimony of Amparo Castillo. Under Rule 130, Section 9, a party may present evidence to show that a written agreement fails to express the true intent of the parties or that the agreement's validity is in question. Furthermore, the Heirs of Policronio waived the benefit of the rule by failing to timely object to the testimony during the trial. Regarding the hearsay objection, the Court noted that while hearsay usually has no probative value, it may be considered if not objected to and if corroborated by other circumstances, such as the existence of similar simulated deeds to other siblings and the heirs' subsequent conduct. On Issue 3: The Court held that the Deed of Extra-Judicial Partition was valid. It clarified that a partition is not a conveyance or an act of strict dominion, but a confirmation of a pre-existing right; thus, a Special Power of Attorney under Article 1878 is not required. While Conrado initially lacked authority to bind his siblings, such a contract is 'unenforceable' under Article 1403, not 'voidable' under Article 1390. However, the Court found that the other heirs of Policronio had either given their consent or impliedly ratified the partition by accepting its benefits, such as using adjudicated lands as collateral for loans. Consequently, the partition became enforceable against all heirs.
Main Doctrine
A deed of sale that is absolutely simulated or lacks consideration is void and inexistent; parol evidence is admissible to prove such inexistence; an extra-judicial partition among heirs is not a conveyance requiring a special power of attorney and is valid where the heirs gave consent or are estopped to deny it.