Dela Cruz v. Dumasig
REITERATIONFacts
The Antecedents: Petitioners Candelario S. Dela Cruz, et al., and respondent Rosalinda D. Epe are siblings and heirs of the deceased Spouses Eniego P. Dela Cruz and Silvestra Dela Cruz. During their parents' lifetime, the Spouses Dela Cruz owned a parcel of agricultural land covered by Transfer Certificate of Title (TCT) No. EP-250. In 1987, the Spouses Dela Cruz mortgaged this property, along with others, to secure a loan which they failed to pay, leading to foreclosure. To redeem the property, Rosalinda paid the loan, with the understanding that the property would be her inheritance. Subsequently, a Deed of Sale with Assumption of Mortgage was executed in 2003. The Spouses Dela Cruz later re-mortgaged the property in 2004. After their parents' deaths, Rosalinda mortgaged the property to respondent Alejandro Dumasig in 2011 to pay off existing loans. Petitioners claim they continued to till the land and discovered Dumasig's occupation without their consent, leading to a demand for return of the property. Procedural History: The dispute was initially brought before the barangay level but no settlement was reached. Petitioners then filed a complaint for accion reivindicatoria with damages before the Regional Trial Court (RTC) of Lanao del Norte, Branch 21. The RTC ruled in favor of the petitioners, declaring them co-owners, ordering partition, and directing Dumasig to vacate the mortgaged portion, finding the sale to Rosalinda void due to lack of intent and violation of Presidential Decree No. 27. The Court of Appeals (CA) reversed the RTC's decision, upholding the validity of the sale to Rosalinda and the subsequent mortgage to Dumasig, declaring them the rightful owners and possessors. The CA denied petitioners' motion for reconsideration. The Petition: Petitioners seek review on certiorari under Rule 45 of the Revised Rules of Court, assailing the CA's decision and resolution. They argue that the sale between their parents and Rosalinda is void for lack of consideration and intent to sell, evidenced by their continued possession and re-mortgaging of the property. They also contend the sale violated Presidential Decree No. 27, as the transfer was by sale and not by hereditary succession. Petitioners pray for the reversal of the CA's rulings and the reinstatement of the RTC's decision, which declared them co-owners and ordered the return of the property.
Issue(s)
Whether the sale between Spouses Dela Cruz and Rosalinda is void for absolute simulation (lack of consideration and intent to be bound). Whether the sale between Spouses Dela Cruz and Rosalinda is void for violating Presidential Decree No. 27. Whether the mortgage between Rosalinda and Dumasig is valid.
Ruling
The Petition is GRANTED. The Decision dated October 29, 2020, and Resolution dated June 8, 2022, of the Court of Appeals are REVERSED. The Decision dated August 14, 2019, of the Regional Trial Court, Branch 21, Lanao del Norte, in Civil Case No. 21-508 is REINSTATED.
Ratio Decidendi
On the validity of the sale between Spouses Dela Cruz and Rosalinda: The Court found that the sale was absolutely simulated and therefore void. The Court considered the totality of the parties' acts, both prior and subsequent to the purported sale. Several circumstances indicated a lack of intent to sell: Rosalinda used proceeds from a loan, collateralized by the subject property, to pay the initial loan; the Spouses Dela Cruz continued to possess, cultivate, and exercise rights of ownership over the property, even re-mortgaging it; Rosalinda only possessed the land for one cropping season and returned it; the Spouses Dela Cruz executed an Amended Waiver of Rights in favor of Diego; and Rosalinda only took over the land and mortgaged it after their deaths. These actions demonstrated that the apparent contract of sale had no substance and was not intended to produce legal effects, meaning there was no consideration and no intent to sell. On the violation of Presidential Decree No. 27: The Court held that the sale was void for violating PD 27. The law clearly states that title to land acquired under PD 27 is not transferable except by hereditary succession or to the government. The Court clarified that while Rosalinda is an heir, the transfer to her was by sale, not by hereditary succession, thus falling outside the exceptions. The Court reiterated that sales in violation of PD 27 are null and void, citing Abella v. Heirs of Francisca C. San Juan and Estate of the Late Encarnacion Vda. De Panililio v. Dizon. The exceptions are limited to transfers to the government, to heirs via hereditary succession, or to the actual tenant-tiller, none of which applied here since the Spouses Dela Cruz, not Rosalinda, were the tillers at the time of sale. On the validity of the mortgage between Rosalinda and Dumasig: Since the sale to Rosalinda was declared void, her subsequent mortgage of the property to Dumasig was also void. A contract of mortgage requires the mortgagor to be the absolute owner of the property, which Rosalinda was not. Consequently, Dumasig's claim of ownership and possession based on this void mortgage was also invalidated. The Court concluded that the petitioners and Rosalinda are co-owners of the subject property as heirs of the Spouses Dela Cruz, pursuant to Article 1078 of the Civil Code.
Main Doctrine
A sale is considered absolutely simulated and thus void if there is no consideration and no intent to be bound by the agreement, as evidenced by the totality of the parties' acts. Furthermore, a sale of land acquired under Presidential Decree No. 27 is void if it is not by hereditary succession, to the government, or to the actual tenant-tiller.