View full case

VALENTINA S. CLEMENTE v. CA

FACTS:

Valentina Clemente filed a Petition for Review on Certiorari before the Supreme Court, questioning the Decision of the Court of Appeals (CA) and the Resolution affirming the Decision of the Regional Trial Court (RTC). The CA ruled that the Deeds of Absolute Sale executed by Clemente and her grandmother, Adela Shotwell, were void and inexistent due to simulation and lack of consideration. The disputed properties were three parcels of land owned by Adela in Quezon City. Adela simulated the transfer of two lots to her grandsons and later executed a deed of reconveyance with them. She also executed a deed of absolute sale in favor of Clemente and granted her special power of attorney to manage the properties. After Adela's death, Clemente sought to eject Adela's children who were staying on the properties. Adela's children filed a complaint for reconveyance, seeking nullification of the deeds of absolute sale. The RTC ruled in favor of Adela's children, and the CA affirmed the decision with modifications.

The petitioner then filed a motion for reconsideration, which was denied. She subsequently filed a petition with the Supreme Court, arguing that the CA erred in affirming the decision of the trial court. However, the Supreme Court denied the petition, stating that the main issue raised involved questions of fact, which are not within the scope of a petition for review on certiorari. Despite this, the Court still examined the records and concluded that the Deeds of Absolute Sale between the petitioner and her grandmother were null and void due to lack of consent and consideration. The Court found that the contracts were simulated, as the parties did not genuinely intend for the contracts to have any legal effect.

ISSUES:

  1. Whether there was a valid contract of sale between the petitioner and Adela.

  2. Whether the Deeds of Absolute Sale were simulated.

  3. Whether the transfers of the properties were intended to affect the juridical relation of the parties.

  4. Whether the execution of the Special Power of Attorney (SPA) is consistent with petitioner's claim of ownership over the properties.

  5. Whether the Deeds of Absolute Sale are simulated.

  6. Whether the number of contestants and the existence of other contracts in question are material to the validity of the sale.

  7. Whether the validity of other transactions is relevant to proving the validity of the conveyances in question.

  8. Whether the sale of the properties lacks consideration.

  9. Whether an implied trust can be generated by the simulated transfers.

RULING:

  1. There was no valid contract of sale between the petitioner and Adela because their consent was absent. The contract of sale was a mere simulation.

  2. The Deeds of Absolute Sale were absolutely simulated. In absolute simulation, there appears to be a valid contract but there is actually none because the element of consent is lacking. The parties did not intend to be bound by the terms of the contract.

  3. The transfers of the properties were never intended to affect the juridical relation of the parties. The lower courts considered the totality of the prior, contemporaneous, and subsequent acts of the parties to conclude that the Deeds of Absolute Sale were simulated.

  4. The execution of the SPA for the administration of the properties, along with other powers of administration given to petitioner, is antithetical to the relinquishment of ownership. Therefore, the lower courts did not err in holding that the SPA is inconsistent with petitioner's claim of ownership.

  5. The lower courts did not solely rely on the fact that Adela had previously feigned transfer of ownership to her other grandchildren. The totality of the evidence presented indicates that Adela's intention was merely to feign the transfer to petitioner. Thus, the Deeds of Absolute Sale are simulated.

  6. The number of contestants and the existence of other contracts in question are not material to the validity of the sale. Any person who is prejudiced by a simulated contract may set up its inexistence, regardless of the number of contestants. The existence of other contracts does not deter an action for the nullity of an instrument. The validity of the conveyances to petitioner cannot be proved by other alleged transactions made by Adela.

  7. The validity of other transactions is not relevant to proving the validity of the conveyances in question.

  8. The sale of the properties lacks consideration. The Deeds of Absolute Sale were found to be supported by superimposed consideration, with no money involved in the sale. Therefore, the contracts are null and void for lack of consideration.

  9. An implied trust cannot be generated by the simulated transfers. The transfers being fictitious or simulated were null and void ab initio. As such, no rights were vested in favor of the party claiming an implied trust. The transactions were considered inexistent and produce no effect.

PRINCIPLES:

  • Consent is necessary for a valid contract. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price.

  • Simulation takes place when the parties do not really want the contract they have executed to produce the legal effects expressed by its wordings. It may either be absolute or relative. In absolute simulation, the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. An absolutely simulated or fictitious contract is void.

  • In determining the true nature of a contract, the primary test is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. The intention is determined not only from the express terms of their agreement but also from the contemporaneous and subsequent acts of the parties.

  • The execution of a Special Power of Attorney (SPA) for the administration of properties, along with other powers of administration, is inconsistent with the relinquishment of ownership.

  • The simulation of a transfer of ownership can be proven by considering the totality of the evidence.

  • The number of contestants and the existence of other contracts are not determinative of the validity of a contract. The intention of the parties in a specific contract is relevant to that particular contract. The validity of a contract cannot be proven by the validity of other alleged transactions.

  • If the price stated in a deed of sale is simulated and has never been paid, the sale is void for lack of consideration. (Article 1471 of the Civil Code)

  • Resulting trusts arise from the nature or circumstances of the consideration involved in a transaction where one person holds legal title but is obligated to hold it for the benefit of another. Resulting trusts are based on the equitable doctrine that valuable consideration, not legal title, determines equitable title or interest. (Article 1453 of the Civil Code)

  • If a contract is null and void from the beginning, it produces no effect, and any transfer of title, both legal and beneficial, is not recognized.