De Joya v. Madlangbayan
REITERATIONFacts
The Antecedents: Petitioners, the heirs of spouses Eufronio Cordero and Tarcila C. Cordero, along with other co-owners, were the registered owners of two agricultural parcels of land in Batangas. They granted respondent Francisco P. Madlangbayan a special power of attorney to sell these properties. Subsequently, the petitioners alleged that Madlangbayan, despite their rejection of a counter-offer from respondents Spouses Dalida, et al., proceeded to execute a Deed of Absolute Sale dated April 8, 1996, for a lesser amount than initially discussed and without their full consent. This led to a dispute over the validity of the sale and Madlangbayan's authority. Procedural History: The petitioners filed a complaint for revocation of authority, later supplemented to implead other respondents and seek damages, alleging a conspiracy to execute a fake Deed of Absolute Sale. The Regional Trial Court (RTC) initially ruled in favor of the respondents, finding the buyers in good faith. However, the Court of Appeals (CA) granted a motion for new trial and ordered a trial de novo. After further proceedings, including the impleading of new parties and the discovery of subsequent sales, the RTC rendered a decision in favor of the petitioners, declaring the deeds of sale void. The CA, on appeal, reversed the RTC's decision, upholding the validity of the April 8, 1996 Deed of Absolute Sale. The petitioners then filed the instant petition for review on certiorari. The Petition: Petitioners seek review under Rule 45 of the Rules of Court, arguing that the CA erred in finding the April 8, 1996 Deed of Absolute Sale valid and in disregarding evidence suggesting the sale was simulated and lacked valid consideration. They contend that the CA overlooked the conflicting findings of fact between the RTC and the CA, the lack of actual payment, the irregular notarization of the deed, and the fact that the deed was executed after their rejection of the counter-offer and prior to the revocation of the power of attorney. The core issue is whether a valid contract of sale was perfected, given the alleged simulation and lack of essential elements.
Issue(s)
Whether the Deed of Absolute Sale dated April 8, 1996, is valid and supported by sufficient consideration. Whether the respondents Dalida, et al. and Go, et al. are buyers in good faith. Whether the revocation of the power of attorney effectively terminated Madlangbayan's authority to sell the subject properties.
Ruling
The Court finds the petition meritorious. The Decision of the Court of Appeals dated September 26, 2016, and its Resolution dated December 28, 2016, are REVERSED and SET ASIDE. The Judgment dated December 10, 2014, of the Regional Trial Court of Batangas City, Branch 84, is REINSTATED.
Ratio Decidendi
On the validity and consideration of the Deed of Absolute Sale dated April 8, 1996: The Court held that the Deed of Absolute Sale dated April 8, 1996, is absolutely simulated and void. While a Deed of Sale appears valid on its face and is presumed to have sufficient consideration, these presumptions are prima facie and can be rebutted. The Court found that the petitioners successfully discharged their burden of proof to establish that no contract of sale was perfected. This was evidenced by Madlangbayan's letter dated April 10, 1996, which rejected the counter-offer of respondents Dalida, et al., two days after the supposed execution of the Deed of Sale. The respondents failed to provide a satisfactory explanation for this temporal inconsistency. Furthermore, the Deed of Absolute Sale was not registered in the Notary Public's registry, casting doubt on its authenticity and reducing its evidentiary value to that of a private document. The Court emphasized that in absolute simulation, the parties have no intention to be bound by the contract, rendering it void and without legal effect. The absence of a meeting of the minds on the essential elements of object and price, or the non-payment of the purchase price, leads to the conclusion that the contract is simulated. On the good faith of respondents Dalida, et al. and Go, et al.: The Court ruled that respondents Dalida, et al. could not be considered buyers in good faith. They were aware they were dealing with Madlangbayan as an agent and were thus bound to ascertain the extent of his authority. They also did not controvert the contents of Madlangbayan's letter dated April 10, 1996, which indicated a lack of agreement. The temporal inconsistency between this letter and the Deed of Sale further undermined their claim of good faith. For respondents Go, et al., their claim of good faith was negated by the existence of a Notice of Lis Pendens annotated on the subject titles at the time of their purchase, and their awareness of a lease agreement between the petitioners and Diosdado Andal. Consequently, the subsequent sale to respondents Go, et al. was also deemed void as it stemmed from a simulated sale, and respondents Go, et al. stood in the shoes of their predecessors-in-interest, who had acquired no ownership rights. On the revocation of the power of attorney: The Court affirmed that a contract of agency is extinguished by its revocation, which can be express or implied. The petitioners expressly revoked Madlangbayan's authority on May 3, 1996. From that date, Madlangbayan no longer had any authority over the subject properties. The fact that Madlangbayan failed to inform the petitioners of the supposed sale to respondents Dalida, et al. after the revocation, and only brought it up in his Answer to the complaint, further supported the conclusion that the Deed of Sale was simulated. The Court noted that Madlangbayan's subsequent presentation of undated, unnotarized Memoranda of Agreement with a lower consideration than the Deed of Sale also created inconsistencies and doubts regarding the transaction's validity. The Court reiterated that an agent's acts beyond the scope of authority do not bind the principal unless ratified, and ratification requires the principal's full knowledge of material facts, which was absent here as petitioners denied knowledge of the sale.
Main Doctrine
A Deed of Absolute Sale is considered absolutely simulated and void if there is no meeting of the minds between the parties regarding the object and the price, or if the purchase price has never been actually paid. The presumption of validity of a deed of sale and its consideration can be rebutted by evidence to the contrary, and the failure to register a notarized document in the notarial registry casts doubt on its authenticity and reduces its evidentiary value to that of a private document.