G.R. No. 179540 March 13, 2009
PERFECTA CAVILE, JOSE DE LA CRUZ and RURAL BANK OF BAYAWAN, INC., Petitioners, vs. JUSTINA LITANIA-HONG, accompanied and joined by her husband, LEOPOLDO HONG and GENOVEVA LITANIA, Respondents.
FACTS
On April 5, 1937, the heirs of spouses Bernardo Cavile and Tranquilina Galon executed a Deed of Partition covering several parcels of land. The heirs included their legitimate children Susana, Castor, and Benedicta, and Bernardo’s children from previous marriages, Simplicia, Fortunato, and Vevencia. The Deed stated that the other legal heirs sold their aliquot shares in the lots covered by Tax Declarations Nos. 7143, 7421, and 7956 to their co-heir Castor, making him the sole owner. On August 5, 1960, Castor and Susana executed a Confirmation of Extrajudicial Partition, wherein Castor recognized that the lots covered by Tax Declarations Nos. 2039 and 2040 were Susana’s lawful shares from their parents’ estate. The descriptions of these lots were strikingly close to those in the 1937 Deed for Tax Declarations Nos. 7421 and 7956. After Susana’s death in 1965, her daughters, respondents Justina Litania-Hong and Genoveva Litania, inherited these lots. Respondents alleged that Castor and later his daughter, petitioner Perfecta Cavile, and her husband, Jose de la Cruz, intruded upon and excluded them from the lots. In 1974, respondents discovered that Original Certificates of Title (OCTs) Nos. FV-4976, FV-4977, and FV-4978 covering the subject lots had been issued in Perfecta’s name on October 9, 1962, based on free patents. Respondents filed a Complaint for Reconveyance and Recovery of Property with Damages. Petitioners countered that Castor became the sole owner by virtue of the 1937 Deed of Partition and later sold the lots to Perfecta. They asserted the 1960 Confirmation was a nullity, executed merely to accommodate Susana’s loan application with the Rural Bank of Dumaguete City. The Regional Trial Court (RTC) dismissed the complaint, declaring petitioner spouses as absolute owners, finding the 1960 Confirmation was a simulated contract. The Court of Appeals reversed the RTC, declaring the 1960 Confirmation valid and ordering reconveyance.
ISSUE
The central issue is whether the Confirmation of Extrajudicial Partition dated August 5, 1960, is valid and binding, thereby establishing respondents’ ownership over the subject lots, or whether it is a simulated contract as found by the RTC.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the RTC Decision. The Court held that the Confirmation of Extrajudicial Partition dated August 5, 1960, was indeed a simulated contract, void and without legal effect. The Court found that the 1937 Deed of Partition was the operative document that governed the distribution of the estate. By its clear terms, Castor became the sole owner of the lots covered by Tax Declarations Nos. 7421 and 7956 (which correspond to the subject lots) after purchasing the shares of his co-heirs. The subsequent 1960 Confirmation, which purported to recognize Susana’s ownership of the same properties, was irreconcilable with the 1937 Deed. The evidence, including the unrebutted testimony of a tenant and the parties’ conduct, showed that Castor and later petitioners were in continuous possession of the lots since 1937, while Susana and respondents never were. Susana never applied for title, whereas Perfecta did and obtained free patents. The Court concluded the 1960 document was executed solely to accommodate Susana’s loan application, making it a simulated contract that produced no legal effect. Therefore, petitioner spouses were declared the absolute owners of the subject lots, and respondents’ complaint was dismissed.