G.R. No. 76245 December 20, 1991
AVELINO BANAAG, ROSABEL B. BANAAG and ROWENA B. BANAAG, petitioners, vs. MANUEL S. BARTOLOME, ESTANISLAO S. BARTOLOME, EXPEDITA S. BARTOLOME and PETER S. BARTOLOME and THE INTERMEDIATE APPELLATE COURT, respondents.

FACTS

Spouses Ildefonso Bartolome and Adelaida Jaro acquired two parcels of land in 1946. In 1949, they executed a Deed of Absolute Sale over these properties in favor of their daughter, Rosaura Bartolome, for a consideration of one peso (P1.00). Rosaura obtained a transfer certificate of title. Subsequently, in guardianship proceedings for the incompetent Adelaida, Rosaura, as guardian, included the lots in the inventory of her mother’s estate and later sold portions of them. Upon Rosaura’s death, her heirs (petitioners Avelino Banaag and their children) filed an action concerning the property, which was settled by a compromise agreement recognizing the children’s ownership but granting a usufruct to the spouses Bartolome.
After Ildefonso’s death, private respondents, claiming to be his illegitimate children, filed an action to declare the 1949 deed of sale null and void for being simulated, arguing it was executed without consideration to defraud Ildefonso’s other heirs. The trial court and the Court of Appeals ruled in their favor, declaring the sale void.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s finding that the 1949 deed of sale was a simulated or fictitious transaction.

RULING

The Supreme Court affirmed the decision. The legal logic centers on the nature of a simulated contract. A contract is simulated when the parties do not intend to be bound by its stipulations, making it void. The evidence established that the sale for a nominal sum of P1.00 was not a true conveyance. Critical facts demonstrated the absence of a genuine transfer: the vendors, the spouses Bartolome, continued to exercise acts of ownership over the properties long after the purported sale. They declared the lots for taxation, paid realty taxes, and, most significantly, included them in the inventory of Adelaida’s estate in the guardianship proceedings where Rosaura herself, as the alleged absolute owner, sought court authority to sell portions of the property as part of her mother’s estate. These acts are utterly inconsistent with a prior absolute sale and conclusively prove that the parties did not intend the deed to produce any legal effect on ownership. The petitioners’ claim of ownership, derived from the void deed, thus fails.