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Puno, J.

- Narciso Valerio owned 6.5 hectares of land that tenant Alejandro Refresca cultivated since 1963. In 1975, Narciso executed a deed of sale transferring ownership of the land to his heirs and granting 511 sqm to Alejandro in recognition of his long tenure as tenant. - Petitioners claimed the transfer to Alejandro was void because he failed to fulfill his obligation to surrender his tenancy rights. However, the Court of Appeals upheld the transfer, finding the parties intended to be bound by the deed of sale, making it relatively simulated rather than absolutely simulated/void. - The Supreme Court affirmed, finding Narciso's true intent was to transfer ownership through

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Eunice Estera
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109 views2 pages

Puno, J.

- Narciso Valerio owned 6.5 hectares of land that tenant Alejandro Refresca cultivated since 1963. In 1975, Narciso executed a deed of sale transferring ownership of the land to his heirs and granting 511 sqm to Alejandro in recognition of his long tenure as tenant. - Petitioners claimed the transfer to Alejandro was void because he failed to fulfill his obligation to surrender his tenancy rights. However, the Court of Appeals upheld the transfer, finding the parties intended to be bound by the deed of sale, making it relatively simulated rather than absolutely simulated/void. - The Supreme Court affirmed, finding Narciso's true intent was to transfer ownership through

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Eunice Estera
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12. G.R. NO.

163687 March 28, 2006


TITLE: GAUDENCIO VALERIO FOR HIMSELF AND AS ATTORNEY-IN-FACT OF BIENVENIDO
VALERIO, CONRADO VALERIO, DIONISIO VALERIO, EFEPANIA PRESENT: VALERIO AND
CARLOTA DE LEON VALENZUELA
VS. VICENTA REFRESCA, MARIANO [1] REFRESCA, DOMINGO REFRESCA, REMEDIOS
REFRESCA, OLY REFRESCA, LALET REFRESCA AND BENITO REFRESCA
PUNO, J.:
FACTS:
Spouses Narciso and Nieves Valerio owned an agricultural lots in Calamba, Laguna with a
total area of 6.5 hectares. A portion thereof, consisting of 511 sq. m. and known as Lot 428-A,
is the subject of the petition in the case at bar.
Valerio acquired ownership over the land in 1968, while Spouses Alejandro and Vicenta
Refresca started cultivating the land as early as 1963. In 1974, the Valerios entered into a
leasehold contract with tenant Alejandro Refresca whereby the latter was allowed to continue
tilling the 6.5-hectare land in exchange for fixed rentals.
In 1975, Narciso, with the consent of his spouse, executed a Deed of Sale whereby he sold
his 6.5-hectare landholding to his heirs, namely: Susana de Leon, Leslie de Leon, petitioners
Carlota de Leon Valenzuela, and Bienvenido, Dionisio, Conrado, Gaudencio, and Efepania, all
surnamed Valerio. He also conveyed 511 sq.m. of his land in favor of his tenant Alejandro
Refresca in recognition of his long service and cultivation of the subject land.
After the death of Narciso, the parties to the Deed of Sale subdivided the 6.5 hectares of
land and executed a Deed of Agreement of Subdivision. The same 511 sq. m. of land was
granted to tenant Alejandro Refresca. Individual titles over the apportioned areas were
subsequently issued to the vendees.
Nieves Valerio then entered into another leasehold agreement with the Referescas over the
6.5 hectares landholding from 1984-1985 in exchange of rental payments.
Nieves died in 1987. Vicenta Refresca succeeded her late husband Alejandro by operation
of law in titling the land.
Petitioners demanded that the respondents vacate the land alleging that the 511 sq. m. lot
was given to the respondents in exchange of their tenancy rights over the entire land.
The Department of Agrarian Reform (DAR), recognized the right of respondent to continue
her possession and cultivation of the 6.5 hectares of land. But despite DAR’s ruling, petitioner
sent demand letter to respondents to vacate the land. Petitioners filed a complaint before the
Regional Trial Court (RTC) for the annulment of documents of transfer and title of Alejandro.
They insist that since Alejandro failed to fulfill his promise to surrender his tenancy rights, the
transfer of the 511 sq.m. lot given to them should be declared void as a contract without cause
or consideration produced no effect.
Refresca’s response states that the lot was given to them by the deceased Spouses Valerio
due to their generosity, that it was given to them in recognition of their long years of
cultivating the land. She also averred that even after her husband Alejandro died, she
faithfully paid the lease rentals and that only upon the death of the petitioner’s mother that
petitioner demanded the return of the subjected land. Respondents likewise invoked
prescription and estoppel in their defense. The respondents admitted that they did not pay
monetary consideration for the transfer of the specific portion of the land to them.
The RTC ruled in favor of petitioner, it held that the Deed of Sale is absolutely simulated or
fictitious thus making it null and void.
On appeal, the Court of Appeals (CA) reversed the decision of the RTC. It ruled that the
Deed of Sale was not absolutely, but relatively simulated as the parties intended to be bound
by it. It also ruled that the remedy of petitioners for breach of contract was to either ask for
rescission of the sale or specific performance within ten (10) years from the alleged breach of
contract. However, as petitioners' action was filed thirteen (13) years after the alleged breach,
their present action has prescribed.
ISSUE:
Whether or not the CA erred in not recognizing the agreement between Narciso Valerio and
Alejandro Refresca absolutely simulated and fictitious.
HELD:
No. Article 1345 of the Civil Code provides that the simulation of a contract may either be
absolute or relative. 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. However, if the parties state a false cause in the contract
to conceal their real agreement, the contract is 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.
The primary consideration in determining the true nature of a contract is the intention of
the parties.
In the case at bar, the clear intention of Narciso Valerio in executing the Deed of Sale was to
transfer ownership to his heirs (petitioners) and to his tenant Alejandro. Although there was
no monetary consideration it cannot be said that the contract was not supported by a cause or
consideration.
One of the most striking badges of absolute simulation is the complete absence of any
attempt on the part of a vendee to assert his right of dominion over the property. It was
evident in the case that neither of the Spouses Valerio during their lifetime exerted effort to
evict respondent when the latter allegedly failed to comply with the condition to surrender
their tenancy rights after the sale.
Clearly, Narciso was motivated by generosity when he divested himself of ownership over
the land. This was the true intent of the parties although they tried to conceal it with the
execution of a deed of sale, when the contract is in reality one of donation inter vivos.
Petition is DISMISSED

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