G.R. No. 199431 , August 31, 2016
STA. FE REALTY, INC. and VICTORIA SANDEJAS FABREGAS, Petitioners vs. JESUS M. SISON, Respondent

FACTS

The case stemmed from a Complaint for reconveyance of property filed by respondent Jesus M. Sison against petitioners Sta. Fe Realty, Inc. (SFRI) and Victoria Sandejas Fabregas, among others. The subject property is a 15,598-square-meter parcel of land, designated as Lot 1-B-1, a portion of the land covered by TCT No. 61132 originally owned by SFRI. On October 19, 1989, SFRI executed a Deed of Sale over the subject property to Fabregas for ₱10,918.00, and Fabregas then executed another deed of sale in favor of Sison for the same amount, authorized by an SFRI Board Resolution. Sison took possession, introduced improvements (fencing, fishpond, resort), and caused the segregation of the lot. However, he could not register the sale or secure a title because petitioners refused to pay the necessary taxes and surrender the owner’s copy of TCT No. 61132 and subdivision plan, forcing Sison to pay the taxes himself from 1979 to 1990. Subsequently, SFRI subdivided the entire property, resulting in the cancellation of TCT No. 61132 and the issuance of TCT No. T-255466 covering Lot 1-B-3-C in SFRI’s name. SFRI then sold Lot 1-B-3-C to Jose Orosa, who obtained a title (TCT No. T-297261). Sison claimed Lot 1-B-3-C was practically the same as Lot 1-B-1 sold to him, except for a 402-sq-m excess. Petitioners denied agreeing to sell to Sison, claimed the deeds were simulated to reduce capital gains tax with a true price of ₱700,000.00, asserted Sison did not pay, and that Fabregas unilaterally rescinded the sale. Orosa claimed he was a buyer in good faith. The Regional Trial Court ruled in favor of Sison, ordering reconveyance and awarding damages. The Court of Appeals affirmed with modification, reducing the damages.

ISSUE

Whether the Court of Appeals erred in affirming the decision of the Regional Trial Court reconveying the subject property to Sison.

RULING

The petition is denied. The Court of Appeals’ decision is affirmed. The core issue is whether Sison is entitled to reconveyance, which hinges on the validity of the deeds of sale. The Court found the deeds of absolute sale between SFRI and Fabregas, and between Fabregas and Sison, to be valid and enforceable, not simulated. All elements of a valid contract were present: meeting of minds on a determinate subject matter and a certain price. Petitioners’ claim of gross inadequacy of price (₱10,918.00 vs. alleged ₱700,000.00) does not invalidate the contract absent proof of fraud, mistake, or undue influence, and such a claim is incompatible with an allegation of simulation. Petitioners failed to prove simulation, and the presumption of contract validity stands. The alleged unilateral rescission by Fabregas was invalid, as rescission cannot be effected extrajudicially without a judicial or notarial act. Since the sale to Sison was valid, ownership was vested in him prior to the subsequent sale to Orosa. Therefore, reconveyance to Sison is proper. The award of damages to Sison is sustained due to the petitioners’ evident bad faith, which forced Sison to litigate to protect his interest.