GR 144735; (October, 2001) (Digest)
G.R. No. 144735 ; October 18, 2001
YU BUN GUAN, petitioner, vs. ELVIRA ONG, respondent.
FACTS
Elvira Ong and Yu Bun Guan were married according to Chinese rites. Ong purchased a parcel of land in 1968 using her personal funds, registered under her name. During their marriage, they also acquired a conjugal property. In 1992, before their separation, Ong executed a Deed of Absolute Sale over her separate property in favor of Yu Bun Guan, allegedly based on his promise to construct a commercial building for their children and to later transfer the property to them. The stated consideration was P200,000, which was never paid. Instead, Ong paid the capital gains tax. A new title was issued in Yu Bun Guan’s name, but Ong retained the owner’s copy.
Yu Bun Guan filed a petition to replace the lost owner’s duplicate title, which was granted. Upon discovering this, Ong filed an affidavit of adverse claim and subsequently initiated an action to declare the deed of sale void. Yu Bun Guan claimed the 1992 sale merely corrected a prior simulated sale from 1972, where he used Ong as a “dummy” to purchase the property because he was then an alien, asserting he provided the funds.
ISSUE
The core issue is whether the 1992 Deed of Absolute Sale is valid and binding.
RULING
The Supreme Court denied the petition and affirmed the lower courts’ decisions, declaring the 1992 Deed of Sale void. The Court found the sale to be a complete simulation—a fictitious transaction where the parties did not intend to transfer ownership. The evidence showed no actual payment of the P200,000 consideration; Ong paid the taxes, retained the title, and the purported sale was conditioned on unfulfilled promises regarding their children. A simulated contract produces no legal effect. The defense of in pari delicto (equal fault) is inapplicable to void and inexistent contracts like this simulation; it cannot bar Ong from seeking relief. Consequently, the Transfer Certificate of Title issued to Yu Bun Guan, having no legal basis, was correctly ordered cancelled, and ownership was reinstated in favor of Elvira Ong. The award of damages and reimbursement for the capital gains tax paid by Ong was also upheld.