G.R. No. 200608 , February 10, 2021
Dioscoro Poliño Bacala, Substitute Judicial Guardian of Incompetent Aquilino O. Poliño, Petitioner, vs. Heirs of Spouses Juan Poliño and Corazon Rom, namely: Ruben R. Poliño, Brendo R. Poliño, Carlito R. Poliño, and Bandy R. Poliño, represented by Ruben R. Poliño, Respondents.

FACTS

The case originated from a complaint filed by Aproniana Poliño Balisalisa, as judicial guardian of her incompetent nephews Aquilino and Ducepino Poliño, against spouses Juan and Corazon Poliño. The subject was a parcel of land registered in the names of Anecito Poliño (father of Aquilino and Ducepino) and his wife Clara. After Anecito and Clara died, their sole heirs were their mentally incapacitated sons. A Deed of Sale dated April 13, 1992, surfaced, showing Anecito sold the land to his brother Juan for P15,000.00. An accompanying Agreement stipulated that Anecito would enjoy the usufruct during his lifetime, and after his death, Juan would support Aquilino and Ducepino, with breach rendering the sale nugatory. Aproniana, appointed guardian in 1996, challenged the sale as fictitious, lacking consideration, and a donation mortis causa not complying with legal formalities. She alleged Juan neglected the incompetent brothers. Juan claimed the sale was valid and he provided support. During proceedings, several parties died: Ducepino, Aproniana, Corazon, and Aproniana’s husband. Substitutions were made, with Dioscoro Poliño Bacala becoming the substitute guardian for Aquilino, and Juan’s children becoming respondents. The Regional Trial Court (RTC) nullified the Deed of Sale and Agreement, ordered reconveyance, and awarded accounting of fruits and attorney’s fees. The Court of Appeals (CA) reversed, upholding the validity of the sale and agreement. The Supreme Court granted the Petition for Review.

ISSUE

The core issue is whether the Deed of Sale dated April 13, 1992, and the accompanying Agreement are valid and binding contracts.

RULING

The Supreme Court REVERSED the Court of Appeals and REINSTATED the Regional Trial Court’s decision with modifications, declaring the Deed of Sale and Agreement null and void.
The Court held that the purported sale was an absolute simulation—a fictitious contract with no cause or consideration. The price of P15,000.00 was grossly inadequate compared to the property’s market value (P119,893.00 per 1993 tax declaration) and its income potential (P7,000.00 every three months). Juan never testified to having paid the price or possessing the financial capacity to pay. The Agreement’s condition for Juan to support the incompetent heirs indicated the true intent was a donation, not a sale. However, the transaction could not be a valid donation mortis causa as it lacked the solemnities of a will under Articles 804-806 of the Civil Code. Nor could it be a donation inter vivos, as the clear intent was for transfer upon Anecito’s death, a characteristic of mortis causa dispositions. The Agreement, being dependent on the void Deed of Sale, was also void. The Court found Juan failed to fulfill his support obligation under the Agreement, which further warranted the contract’s nullity. The subsequent Deed of Voluntary Transfer was likewise void. The Court ordered the respondents to reconvey the property to Aquilino through his guardian and account for its fruits, but deleted the monetary awards for damages and attorney’s fees due to lack of sufficient basis.