G.R. No. 155208 . March 27, 2007.
NENA LAZALITA TATING, Petitioner, vs. FELICIDAD TATING MARCELLA, represented by SALVADOR MARCELLA, CARLOS TATING, and the COURT OF APPEALS, Respondents.

FACTS

Daniela Solano Vda. de Tating owned a parcel of land in Cadiz City. On October 14, 1969, she executed a notarized Deed of Absolute Sale over the property in favor of her granddaughter, petitioner Nena Lazalita Tating. Title was subsequently transferred to Nena, who paid real estate taxes for several years. However, Daniela remained in possession of the land. On December 28, 1977, Daniela executed a sworn statement claiming the sale was simulated; the true agreement was merely to transfer title to Nena to enable her to mortgage the property for a loan to help Daniela’s business. Daniela alleged Nena never obtained the loan and she sought reconveyance. Daniela died in 1988. Her heirs, respondents Carlos and Felicidad Tating, discovered the sworn statement and demanded Nena return their shares. Upon Nena’s refusal, they filed a complaint for nullity of the deed, cancellation of title, and reconveyance.

ISSUE

Whether the Deed of Absolute Sale dated October 14, 1969, is a valid contract or a simulated one that should be declared null and void.

RULING

The Supreme Court affirmed the lower courts’ decisions declaring the deed null and void. The legal logic centers on the principle that a contract is simulated when the parties do not intend to be bound by its stipulations, rendering it void under Article 1346 of the Civil Code. Here, the sworn statement of Daniela, executed a mere eight years after the sale and while she was still alive, constituted a clear and credible repudiation of the contract’s validity. It established that the parties’ true intention was not a transfer of ownership but merely to use the title for a loan that never materialized. This documentary evidence outweighed Nena’s tax payments and registered title, which are not conclusive proof of a valid sale when a simulation is proven. The Court found no reason to doubt Daniela’s sworn statement, as it was against her own interest, having effectively disinherited her other heirs by the purported sale. The claim of simulation was further supported by Daniela’s continuous possession of the property until her death, conduct inconsistent with a true sale. Consequently, the contract, being a mere simulation without cause or consideration, produced no legal effect. The property rightly forms part of Daniela’s estate to be divided among her legal heirs, including Nena, who inherits a share in representation of her predeceased father.