Heirs of Intac V CA

CASE TITLE AUTHOR: LAST NAME
Heirs of Intac v CA NOTES: Art. 1305. A contract is a meeting of minds between two
[G.R. No. 17321 Date Oct.11, 2012] persons whereby one binds himself, with respect to the other, to give
something or to render some service.
TOPIC: Definitions
PONENTE:
CASE LAW/ DOCTRINE:
FACTS:
 Ireneo Mendoza, married to Salvacion Fermin, was the owner of the subject property located in Quezon city which he purchased in 1954.
(TCT No. 242655)
 Ireneo had two children: respondents Josefina and Martina (respondents), Salvacion being their stepmother.
 When he was still alive, Ireneo, also took care of his niece, Angelina, since she was three years old until she got married.
 On October 25, 1977, Ireneo, with the consent of Salvacion, executed a deed of absolute sale of the property in favor of Angelina and her
husband, Mario (Spouses Intac).
 Despite the sale, Ireneo and his family, including the respondents, continued staying in the premises and paying the realty taxes. After Ireneo
died intestate in 1982, his widow and the respondents remained in the premises. After Salvacion died, respondents still maintained their
residence there. Up to the present, they are in the premises, paying the real estate taxes thereon, leasing out portions of the property, and
collecting the rentals.
 The controversy arose when respondents sought the cancellation of TCT No. 242655, claiming that the sale was only simulated and,
therefore, void.
 The heirs of Ireneo, the respondents in this case, alleged that: 1. When Ireneo was still alive, Spouses Intac borrowed the title of the property
(TCT No. 106530) from him to be used as collateral for a loan from a financing institution; 2. they objected because the title would be placed
in the names of said spouses and it would then appear that the couple owned the property; that Ireneo, however, tried to appease them,
telling them not to worry because Angelina would not take advantage of the situation considering that he took care of her for a very long time;
that during his lifetime, he informed them that the subject property would be equally divided among them after his death; and 3. that
respondents were the ones paying the real estate taxes over said property.
 Spouses Intac countered, among others, that the subject property had been transferred to them based on a valid deed of absolute sale and
for a valuable consideration; that the action to annul the deed of absolute sale had already prescribed; that the stay of respondents in the
subject premises was only by tolerance during Ireneo’s lifetime because they were not yet in need of it at that time; and that despite
respondents’ knowledge about the sale that took place on October 25, 1977, respondents still filed an action against them.
 RTC ruled in favor of the respondents saying that the sale to the spouses Intac was null and void.
 The CA also ruled that there was no consideration in the sale to the spouses Intac and that the contract was one for equitable mortgage.

ISSUE(S): Whether or not the deed of absolute sale was a simulated contract or a valid agreement?
HELD: Simulated contract
Accordingly, for a contract to be valid, it must have three essential elements: (1) consent of the contracting parties; (2) objectcertain which is the subject
matter of the contract; and (3) cause of the obligation which is established. In a contract of sale, its perfection is consummated at the moment there is a
meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the
acceptance of the thing and the cause, which are to constitute the contract.
If the parties state a false cause in the contract to conceal their real agreement, the contract is only relatively simulated and the parties are still bound by
their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the
contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest.
In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of
an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of
the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given
under the contract.
In the case at bench, the Court is one with the courts below that no valid sale of the subject property actually took place between the alleged vendors,
Ireneo and Salvacion; and the alleged vendees, Spouses Intac. There was simply no consideration and no intent to sell it.
RATIO:

DISSENTING/CONCURRING OPINION(S):

Heirs of Intac V CA

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CASE TITLE AUTHOR: LAST NAME

HELD: Simulated contract

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