G.R. No. 114950, 19 December 1995


Federico Suntay, herein private respondent, was the registered owner of a parcel of land and a rice mill. He applied as a miller-contractor of NARIC. His application was denied because he was tied up with several unpaid loans. For purposes of circumvention, he thought of letting his nephew-layer, herein petitioner, to make the application for him. Rafael prepared the deed of sale, wherein Federico sold the parcel of land and the rice mill to Rafael. Three months later, the second deed of sale was made, wherein Rafael sold back the properties in question to Federico for a consideration of P20,000. A Certificate of Title in the name of Federico was canceled and a new was one was issued in the name of Rafael. In spite of this, Federico was remained in possession of the property and continued to exercise rights of absolute ownership over the property. Rafael, meanwhile, did not make any attempt to take possession thereof at any time. Federico requested Rafael to deliver his copy of the TCT so that Federico could have the counter-deed of sale in his favor registered in his name. Rafael declined and furthered contended that the second deed of sale was a counterfeit. Federico filed a complaint about reconveyance assailing the validity of the first deed of sale, interjecting that he has been in continuous possession of the properties in question. While the trial court favored the petitioner, the CA reversed the decision of the trial court by stating that the first deed of sale is absolutely simulated and fictitious.


WON the first Deed of Sale is simulated and therefore invalid.


Yes. It can be adduced by the facts that the first deed of sale stipulating a transfer of property from Federico to Rafael is absolutely simulated and fictitious. Rafael and Federico were relatives, whose blood relation was the foundation of their professional and business relationship. Rafael admits that he came into possession thereof in the course of rendering legal services to his uncle. Their close relationship, as considered by the CA, is a badge of simulation. Rafael further attempted to claim that the transfer was consideration for his attorney’s fees. The most protuberant index of simulation is the complete absence of an attempt in any manner on the part of the late Rafael to assert his rights of ownership over the land and rice mill in question. After the sale, he should have entered the land and occupied the premises thereof. He did not even attempt to. If he stood as owner, he would have collected rentals from Federico for the use and occupation of the land and its improvements. All that the late Rafael had was a title in his name.

* Case digest by Suzeyne Garcia,   LLB-1, Andres Bonifacio Law School, SY 2017-2018