Carino vs Court of Appeals, GR No. 47661, July 31, 1987
Subject: Obligations and Contracts
FACTS
In
January 1954, Pablo Encabo formally applied with the Land Estates Division,
Bureau of Lands, to purchase a parcel of land which was a part of the Tuason
Estate purchased by the government, for resale to bona fide tenants or
occupants who are qualified to own public land in the Philippines.
Encabo,
through petitioner Cirila Vicencio, supposedly as "agent”, came to an
agreement with Josue Quesada transferring rights over the lot to the latter,
conditioned on approval by the Land Tenure Administration. The husband of
Cirila Vicencio (Juanito Cariño) is a relative of Quesada; Cirila Vicencio is
also a "comadre" of Quesada's wife. The transfer of rights by Encabo
to Quesada was not put in writing but payment of the price for the rights
transferred was evidenced by receipts on which Cirila Vicencio signed as a
witness.
On
30 July 1957, the LTA, unaware of the transfer of rights by Encabo to Quesada,
adjudicated the lot in favor of Encabo, and the LTA and Encabo signed an
"Agreement to Sell". LTA later came to know about the
"transfer" of rights from Encabo to Quesada. It disapproved the same
on the ground that Quesada was not qualified to acquire the lot because he is
already a lot of owners. However, before the LTA's disapproval of the transfer
of Encabo's rights to Quesada, the latter had entered possession of the lot in
question. Quesada had also allowed Cirila Vicencio to enter possession and
occupancy of the same lot.
In
November 1958, Encabo executed a Deed of Sale of House and Transfer of Rights,
purportedly conveying to herein petitioners (Juanito Cariño and Cirila
Vicencio), his rights over the lot, subject to approval of the LTA. In December
1958, Encabo wrote a letter to the LTA requesting permission to transfer his
rights. Another such request was made in April 1960 but without making mention
of who the transferee would be, just like in the first letter. In 1960,
however, Encabo and Quesada executed a document wherein the latter purportedly
resold to the former (Encabo) the house and the rights over the lot.
On
19 April 1960, Juanito Cariño filed a petition with the LTA seeking approval of
the transfer to herein petitioners of rights to the lot in question on the
basis of the Deed of Sale of House and Transfer of Rights executed by Pablo
Encabo.
The Cariños refused to give up the
possession of the lot despite the rulings of the LTA and the Office of the
President; thereafter, the Encabos filed an action in the CFI of Manila to
declare them as the owners of the lot and for the Cariños to deliver the
possession of the lot itself, and to pay rentals for their occupancy of the
properties plus attorney's fees. After hearing and trial, the lower court
rendered decision in favor of the plaintiffs therein the Encabos now private
respondents.
CFI rendered a decision in favor of
Encabo. The CA sustained the CFI. Hence this petition.
ISSUE
Whether or not the respondent Court
of Appeals committed grave abuse of discretion in concluding that the Deed of
Sale of House and Transfer of Rights (Exhibit D-1 "), on which the
petitioners have based their application over the questioned lot, is simulated
and, therefore, an inexistent deed of sale.
RULING
No, the respondent Court of Appeals
did not commit a grave abuse of discretion in concluding that the Deed of Sale
of House and Transfer of Rights, Exhibit “D-1 ", is simulated and
therefore inexistent.
Under the law (Art 1409, NCC), absolutely
simulated or fictitious contracts are inexistent and void from the very
beginning. These contracts cannot be ratified. Neither can the right be set up
the defense of illegality be waived.
The characteristic of simulation is
the fact that the apparent contract is not really desired or intended to
produce legal effects nor in any way alter the judicial situation of the
parties. Under the circumstances surrounding their transaction, the parties
knew that the document Exhibit "D-1" was at once fictitious and
simulated where none of the parties intended to be bound thereby.
Strongly indicative of the
simulated character of Exhibit "D-1" is the fact that the Cariños
could not produce the receipts evidencing their alleged payments to the Land
Authority for the disputed lot, nor were they able to produce the Agreement to
Sell. the simulated deed of sale in favor of the Cariños was executed in order
to protect the money Quesada invested in the purchase of the rights to the lot
in question, which transfer of said lot to his name was later on disapproved by
the LTA. there has been no legal transfer of rights in favor of the
Cariños because neither the LTA nor the Land Authority has approved or given
due course to such transfer of rights. Since no approval or due course has yet
been given by the LTA or LA to such transfer of rights, the document Exhibit
"D-1" is not enforceable against the LTA.
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