Jesus and Rosemarie Campos, petitioners vs. Carlito Buenavida and Nenita Buenavida-Pastrana,

respondents

GR No. 175994, 8 December 2009

Type of Case/Appeal

The petitioners filed petition for certiorari so that the decision of Court of Appeals dated 23 November

2005 be set aside.

Doctrines stated by the Supreme Court

Commercial Law Sales, Badge of Simulation in sale contracts: Failure of vendee to take exclusive possession of the property which allegedly sold to him/her or alternatively collect rentals is contrary to

the principle of ownership and a clear badge of simulation that renders the whole sale/transaction null

and void, in pursuance of Article 1409 of the New Civil Code.

Civil Law Property and Land Titles, Registration of title as means to vest property ownership: The Torrens System does not create or vest title, but only to confirm title that already exists and vested in

the owner or possessor. The Torrens System cannot shield commission of fraud and protect usurpers

against actions filed by the propertys true owner/s.

Legal Provisions

The New Civil Code states contracts that are rescissible:

(1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by

more than one-fourth of the value of the things which are the object thereof;

(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the

preceding number;

(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims

due them;

(4) Those which refer to things under litigation if they have been entered into by the defendant without

the knowledge and approval of the litigants or of competent judicial authority;

(5) All other contracts specially declared by law to be subject to rescission.1

Moreover, contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have

been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts

contracted before the donation.2

The following are void and inexistent contracts:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or

public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men;

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the contract cannot be

1 Article 1381, RA 386 (The New Civil Code, referred afterwards as NCC).

2 Article 1387, NCC.

ascertained;

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.3

Meanwhile, any defense or action to declare a contract inexistent does not prescribe.4

Facts

The case above arose when the petitioners father Carlito Campos refused to vacate the fishpond that he

leased from the respondents mother Salvacion Buenavida despite the lease contracts expiration in

1980. He filed an agrarian lease case in against his lessor Salvacion in RTC Roxas City Br. 14 where

he alleged that as an agricultural lessee, he cannot be evicted from the said fishpond. But the said RTC

rendered a judgment against him, so he appealed that trial courts judgment to Court of Appeals (CA)

and Supreme Court, but he was unsuccessful.

While the agrarian case was pending before the CA, Salvacions heirs Carlito Buenavida and Nenita

Buenavida-Pastrana filed a case to recover possession of the fishpond and the trial court decided on 27

November 1990 that Carlito illegally retained that property. It ordered him to pay rentals and value of

produce to Salvacions heirs. The writ of execution issued on 7 February 1995 became final and

executory.

On and prior to execution writs issuance, the Campos spouses owned residential lots 3715-A and

3715-B-2 with total area of 1,393 sq.m. as well as agricultural lots 850 and 852 with total area of 7,972

sq.m.

The respondents learned later on that the Campos spouses sold via Absolute Deed of Sale the said lots

to their children Jose and Rosemarie. As a result, they instituted on 18 February 1997 a case to declare

the complaint to declare the deed of absolute sale of Carlito Campos and Margarita Arduo to their

children Jose and Rosemarie void on the ground of simulation. However, on 21 August 2000, the RTC

Roxas City Br. 14 dismissed the respondents complaint. It upheld findings from evidence that as early

as 1981 that Jesus Campos was already leasing a fishpond in Brgy. Majanlud, Sapi-an, Capiz from

Victorino Jumpay while Rosemarie Campos was engaged in the sari-sari store business starting 1985 so

that they were able to purchase the said properties of their parents.

The Buenavidas appealed the dismissal of their case to the C.A. Through its decision dated 23

November 2005, the C.A. reversed the lower courts decision. It held that the Deeds of Absolute Sale

executed by spouses Carlito Campos and Margarita Arduo to their children were done evidently to

prevent these properties to be levied upon by the respondents. As seen in the abovementioned deeds,

the alleged sale of the properties happened on 18 October 1985 and 2 November 1988 for residential

3 Article 1409, ibid.

4 Article 1410, ibid.

lots sold to Rosemarie and the rice lands sold to Jesus respectively. However, it appears that these

documents were registered with the Register of Deeds only on 25 October 1990 and 25 September

1990. Thus, these events conclude that such deeds were antedated and the conveyance was only made

only in 1990. Also, the notary who acknowledged the said deeds of absolute sale had no valid notarial

commission at the time when the deeds were notarized.

Lastly, the Campos spouses continued in actual possession of the residential and rice lands. One of

respondents witnesses, Rolando Azoro, had an unrebutted testimony saying that Rosemaries parents

still live with her in the house on the residential lots. The Campos spouses continued to cultivate the

rice lands supposedly sold to their son Jesus, and that Jesus Campos has relocated to Bulacan where he

worked as security guard.

Issues raised by parties and ruled by the Supreme Court

In their petition for certiorari to the Supreme Court, the petitioners raised the following issues:

1. Whether the Court of Appeals was correct to rule that the sale contracts made by the Campos

spouses to their children and petitioners herein are void and without effect?

The Supreme Court affirmed the findings of Court of Appeals above. Therefore, the Buenavidas

argument that Articles 1409 and 1410 of the New Civil Code applies to the sale contracts is

upheld, not Article 1381 and 1307 as argued by the petitioners.

2. Whether the subsequent registration of the said properties to the petitioners name is void

because of the nullity and invalidity of the sale contract?

The Supreme Court held that since the Court of Appeals found that the deed of absolute sale is

void on the ground of simulation, it also held that the registration of the said lands is also void

and without effect.

The petition of Rosemarie and Jesus Campos is DENIED.