Loyola v. CA

Facts:

In dispute is a parcel of land in Binan, originally owned in common by siblings Mariano and Gaudencia Zarraga. Mariano predeceased her sister, who died without offspring on August 5, 1983, at the age of 97. Victorina and Cecilia, sisters of Mariano and Gaudencia, are the original plaintiffs in this case, and when they died, they were substituted by the petitioners who are heirs of Victorina. Cecilia died childless. Private respondents, some are children of Mariano and some are heirs of Jose Zarraga, are first cousins of petitioners. Repondents allege that they are the lawful owners of the land, the one-half share inherited by their father, and the other half purchased from their aunt Gaudencia.

On August 24, 1980, Gaudencia allegedly sold her share to private respondents, evidenced by a notarised document entitled “Bilihang Tuluyan ng Kalahati ng Isang Lagay na Lupa”. A TCT was eventually issued. On January 31, 1985, Victorina and Cecilia filed a complaint for the purpose of annulling the sale and the TCT. The trial court rendered judgment in their favor, but such was reversed by the Court of Appeals.

Issue:

Whether the alleged sale between Gaudencia and respondents is valid

Held:

Petitioners vigorously assail the validity of the execution of the deed of absolute sale suggesting that since the notary public who prepared and acknowledged the questioned Bilihan did not personally know Gaudencia, the execution of the deed was suspect. The rule is that a notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and documents acknowledged before a notary public have in their favor the presumption of regularity. By their failure to overcome this presumption, with clear and convincing evidence, petitioners are estopped from questioning the regularity of the execution of the deed.

Petitioners suggest that all the circumstances lead to the conclusion that the deed of sale was simulated. Simulation is "the declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purposes of deception, the appearances of a juridical act which does not exist or is different what that which was really executed." Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. Perusal of the questioned deed will show that the sale of the property would convert the co-owners to vendors and vendees, a clear alteration of the juridical relationships. This is contrary to the requisite of simulation that the apparent contract was not really meant to produce any legal effect. Also in a simulated contract, the parties have no intention to be bound by the contract. But in this case, the parties clearly intended to be bound by the contract of sale, an intention they did not deny.The requisites for simulation are: (a) an outward declaration of will different from the will of the parties; (b) the false appearance must have been intended by mutual agreement; and (c) the purpose is to deceive third persons. None of these are present in the assailed transaction.

Petitioners fault the Court of Appeals for not considering that at the time of the sale in 1980, Gaudencia was already 94 years old; that she was already weak; that she was living with private respondent Romana; and was dependent upon the latter for her daily needs, such that under these circumstances, fraud or undue influence was exercised by Romana to obtain Gaudencia's consent to the sale. The rule on fraud is that it is never presumed, but must be both alleged and proved. For a contract to be annulled on the ground of fraud, it must be shown that the vendor never gave consent to its execution. If a competent person has assented to a contract freely and fairly, said person is bound. There also is a disputable presumption, that private transactions have been fair and regular. Applied to contracts, the presumption is in favor of validity and regularity. In this case, the allegation of fraud was unsupported, and the presumption stands that the contract Gaudencia entered into was fair and regular.

Petitioners also claim that since Gaudencia was old and senile, she was incapable of independent and clear judgment. However, a person is not incapacitated to contract merely because of advanced years or by reason of physical infirmities. Only when such age or infirmities impair his mental faculties to such extent as to prevent him from properly, intelligently, and fairly protecting his property rights, is he considered incapacitated. Petitioners show no proof that Gaudencia had lost control of her mental faculties at the time of the sale. The notary public who interviewed her, testified that when he talked to Gaudencia before preparing the deed of sale, she answered correctly and he was convinced that Gaudencia was mentally fit and knew what she was doing.