Taghoy v. Tigol
REITERATIONFacts
The Antecedents: Spouses Filomeno Taghoy and Margarita Amit owned an 11,067 sqm parcel of land (Lot 3635-B) in Barrio Agus, Lapu-Lapu City, Cebu, covered by TCT No. 6466. On August 6, 1975, they executed a Special Power of Attorney appointing Felixberto Tigol, Jr. (respondent) as attorney-in-fact, who then mortgaged the property to PNB for a P22,000 loan to finance their children's shellcraft business. Filomeno died intestate on February 12, 1976. On July 27, 1979, Margarita and their seven children (heirs: Vicenta, Felisa, Pantaleon, Gaudencio, Anselmo, Anastacia, Rosita) executed a Deed of Extrajudicial Settlement and Sale, adjudicating and selling the property to Rosita and Felixberto (respondents) for P1,000. On September 7, 1981, and August 10, 1982, the heirs executed Deeds of Confirmation of Sale, but simultaneously, respondents executed Joint Affidavits admitting the sale was without consideration, executed only to secure a loan in their name (to be shared among heirs), with obligation to reconvey upon full payment. TCT No. 13250 issued to respondents on March 9, 1983; they obtained P70,000 loan from Philippine Banking Corporation secured by the property on July 1, 1983. Procedural History: On April 17, 1990, Anselmo, Vicenta, Margarita, Felisa, Gaudencio, and Pantaleon's heir Annabel filed Civil Case No. 2247 against respondents and Anastacia for nullity of TCT and partition, alleging fictitious sale per affidavits. Respondents admitted affidavits but claimed valid sale with loan payment as consideration; heirs executed documents to reimburse respondents' advances. Some plaintiffs abandoned; amended complaint impleaded them as unwilling plaintiffs. RTC (Branch 27, Lapu-Lapu) ruled on February 23, 1994: sale absolutely simulated, nullify TCT, partition after reimbursement. Respondents' motion for new trial (new evidence of paraphernal property) denied; appealed to CA. CA reversed on August 26, 2002: relatively simulated, loan payment true consideration per Margarita's testimony; MR denied July 22, 2003. The Petition: Petitioners argue Extrajudicial Settlement lacked intent to divest shares due to no consideration, affirmed by respondents' affidavits; PNB loan unpaid at execution time, so no valid consideration. Respondents counter: Extrajudicial Settlement basis for title; affidavits mere generosity pending reimbursement; non-reimbursement justified registration.
Issue(s)
Whether the sale of the subject property was absolutely simulated (void) or relatively simulated (valid per true agreement). Whether respondents' payment of the PNB loan entitled them to full ownership of the co-owned property.
Ruling
The petition is meritorious. The CA Decision (Aug. 26, 2002) and Resolution (July 22, 2003) in CA-G.R. CV No. 54385 are REVERSED and SET ASIDE. RTC Decision (Feb. 23, 1994) in Civil Case No. 2247 is REINSTATED. No costs.
Ratio Decidendi
On Issue 1 (Absolute vs. Relative Simulation): Supreme Court exceptionally reviewed CA's factual findings as manifestly mistaken, per precedents like Heirs of Flores Restar v. Heirs of Dolores R. Cichon. Primordial in contract interpretation is parties' intention from express terms (Art. 1370, Civil Code) and contemporaneous/subsequent acts (Art. 1371). Absolute simulation under Art. 1345 occurs when no intent to be bound (void, recoverable); relative when concealing true agreement (enforceable). Here, respondents' Joint Affidavits (Sept. 7, 1981; Aug. 10, 1982), executed simultaneously with Deeds of Confirmation, explicitly admit: sale without consideration, solely for loan convenience, amount shared among heirs, obligation to reconvey upon payment—not absolute transfer. These admissions against interest are highest evidentiary value, presuming truth as no one self-damages falsely (Heirs of Miguel Franco v. CA; Republic v. Bautista). CA erred relying on Margarita's testimony; affidavits reveal no juridical alteration intended, confirming absolute simulation and void sale. On Issue 2 (Ownership via Loan Payment): Margarita's testimony that respondents 'redeemed' loan does not validate ownership; failure to reimburse advances does not divest co-owners' shares (Paulmitan v. CA; Adille v. CA). Advances are necessary expenses for preservation (Art. 488, Civil Code), entitling respondents to reimbursement pro-rata and lien until paid, but no full title. Respondents hold lien only, not ownership of co-owned property.
Main Doctrine
In interpreting contracts, the primordial consideration is the intention of the parties, determined from the express terms of their agreement as well as their contemporaneous and subsequent acts, per Articles 1370 and 1371 of the Civil Code. Simulation is absolute when parties do not intend to be bound at all, rendering the contract void and allowing recovery of what was given; it is relative when parties conceal their true agreement, making the real agreement enforceable. Characteristic of simulation is that the apparent contract does not produce intended legal effects or alter juridical situations. Admissions against interest, such as joint affidavits executed simultaneously with deeds admitting no consideration and purpose only for loan security with reconveyance obligation, constitute the best evidence of true intent, presuming truthfulness as no one declares against oneself unless true. In co-ownership, one co-owner's advance payment of loans or necessary expenses for property preservation grants right to reimbursement from other co-owners and a lien on the property until reimbursed, but does not confer full ownership even if unreimbursed.