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11/16/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 626

Trial Court of Hindang-Inopacan, Leyte in Civil Case No.


196 is REINSTATED. No pronouncement as to costs.
SO ORDERED.

Carpio-Morales (Chairperson), Bersamin, Abad**  and


Villarama, Jr., JJ., concur.

Judgment and resolution reversed and set aside.

Note.—As a matter of law, acquisitive prescription does


not apply nor set in against compulsory heirs insofar as
their pro indiviso share or legitime is concerned, unless
said heirs repudiate their share. (Monteroso vs. Court of
Appeals, 553 SCRA 66 [2008])
——o0o——

G.R. No. 159665. Aug. 3, 2010.*

ANSELMO TAGHOY and the late VICENTA T. APA,


substituted by her heirs, namely, MANUEL T. APA,
NICASIO T. APA, DELFIN T. APA, ALMA A. JACALAN,
ARLENE A. SUMALINOG, AIDA A. ARONG, ELENA A.
COSEP, ALFREDO T. APA, ISABELO T. APA, JR.,
ISABELO T. APA III, SHERWIN T. APA, and FLORITO T.
APA, petitioners, vs. SPS. FELIXBERTO TIGOL, JR. and
ROSITA TIGOL, respondents.

Civil Law; Contracts; Interpretation of Contracts; In the


interpretation of contracts, the intention of the parties is accorded
primordial consideration; when the parties do not intend to be
bound at all, the contract is absolutely simulated; if the parties
conceal their true

_______________

**  Designated additional Member of the Third Division, effective May 17,
2010, per Special Order No. 843 dated May 17, 2010.

* THIRD DIVISION.

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Taghoy vs. Tigol, Jr.

agreement, then the contract is relatively simulated; Characteristic


of Simulation.—In the interpretation of contracts, the intention of
the parties is accorded primordial consideration; such intention is
determined from the express terms of their agreement, as well as
their contemporaneous and subsequent acts. When the parties do
not intend to be bound at all, the contract is absolutely simulated;
if the parties conceal their true agreement, then the contract is
relatively simulated. An absolutely simulated conctract is void,
and the parties may recover from each other what they may have
given under the simulated contract, while a relatively simulated
contract is valid and enforceable as the parties’ real agreement
binds them. Characteristic of simulation is that the apparent
contract is not really desired or intended to produce legal effects,
or in any way, alter the juridical situation of the parties.
Same; Loans; Co-ownership; The failure of the other heirs to
reimburse the amounts advanced by the respondents in payment of
the loan did not entitle the latter to claim full ownership of the co-
owned property; It only gave them the right to claim
reimbursement of the amounts they advanced in behalf of the co-
ownership.—We find that the CA misappreciated Margarita’s
testimony that the respondents are entitled to the entire property
because they redeemed or paid the bank loan. The failure of the
other heirs to reimburse the amounts advanced by the
respondents in payment of the loan did not entitle the latter to
claim full ownership of the co-owned property. It only gave them
the right to claim reimbursement for the amounts they advanced
in behalf of the co-ownership. The respondents’ advance payments
are in the nature of necessary expenses for the preservation of the
co-ownership. Article 488 of the Civil Code provides that
necessary expenses may be incurred by one co-owner, subject to
his right to collect reimbursement from the remaining co-owners.
Until reimbursed, the respondents hold a lien upon the subject
property for the amount they advanced.
Remedial Law; Evidence; Admission against Interest; An
admission against interest is the best evidence that affords the
greatest certainty of the facts in dispute based on the presumption
that no man would declare anything against himself unless such
declaration is true.—The joint affifavits are very solid pieces of
evidence in the petitioners’ favor. They constitute admissions

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against interest made by the respondents under oath. An


admission against interest is the

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Taghoy vs. Tigol, Jr.

best evidence that affords the greatest certainty of the facts in


dispute, based on the presumption that no man would declare
anything against himself unless such declaration is true. It is fair
to presume that the declaration corresponds with the truth, and it
is his fault if it does not.

PETITION for review on certiorari of the decision and


resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
  Elemergilio N. Ybalez for petitioners.
  Eriberto M. Suson for respondents.

BRION, J.:
We resolve the present petition for review on certiorari1
filed by petitioners Anselmo Taghoy and the heirs of
Vicenta T. Apa (petitioners) to challenge the decision2 and
the resolution3 of the Court of Appeals (CA) in CA-G.R. CV
No. 54385.4 The CA decision set aside the decision5 of the
Regional Trial Court (RTC), Branch 27, Lapu-Lapu City in
Civil Case No. 2247. The CA resolution denied the
petitioners’ subsequent motion for reconsideration.

Factual Background

The facts of the case, gathered from the records, are


briefly summarized below.

_______________

1 Filed under Rule 45 of the Rules of Court; Rollo, pp. 10-22.


2 Dated August 26, 2002. Penned by Associate Justice Rebecca de Guia-
Salvador, with Associate Justices Godardo A. Jacinto and Eloy R. Bello,
Jr., concurring; id., at pp. 23-32.
3 Dated July 22, 2003; id., at p. 33.
4 Entitled “Anselmo Taghoy and Vicenta T. Apa v. Sps. Felixberto Tigol,
Jr. and Rosita T. Tigol, Anastacia T. Pangatungan, Margarita A. Taghoy,
Felisa Taghoy, Gaudencio Taghoy and Annabel Taghoy, represented by
Margarita A. Taghoy.”
5 Dated February 23, 1994; Original Records, pp. 109-115.

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Taghoy vs. Tigol, Jr.

 
Spouses Filomeno Taghoy and Margarita Amit6 owned
an 11,067 square meter parcel of land, known as Lot 3635-
B of subdivision plan (LRC) Psd-212881 (subject property),
located in Barrio Agus, Lapu-Lapu City, Cebu under
Transfer Certificate of Title (TCT) No. 6466 of the Lapu-
Lapu City Register of Deeds.7
On August 6, 1975, Filomeno and Margarita8 executed a
special power of attorney, appointing Felixberto Tigol, Jr.
as their attorney-in-fact.9 On August 21, 1975, Felixberto,
as attorney-in-fact, executed a real estate mortgage over
the subject property to secure a loan of P22,000.00 with the
Philippine National Bank (PNB).10 Filomeno and
Margarita obtained the loan to finance the shellcraft
business of their children.11
Filomeno died intestate on February 12, 1976. On July
27, 1979, his widow, Margarita, and their seven children,
namely, Vicenta, Felisa, Pantaleon, Gaudencio, Anselmo,
Anastacia and Rosita, as heirs of the deceased, executed a
Deed of Extrajudicial Settlement and Sale, adjudicating to
themselves the subject property and selling the same to
Rosita and her husband Felixberto (respondents) for
P1,000.00.12
Subsequently, on September 7, 1981 and August 10,
1982, Filomeno’s heirs executed two (2) Deeds of
Confirmation of Sale, confirming the supposed sale of the
subject property by Filomeno and Margarita in favor of the
respondents for

_______________

6  Also known as “Rita A. Taghoy” in other parts of the records.


7  Original Records, pp. 20-22.
8    Also referred to in Transfer Certificate of Title No. 6466 as “Rita
Amit Taghoy.”
9    The Special Power of Attorney was duly annotated in the
Memorandum of Encumbrances of Transfer Certificate of Title No. 666;
Original Records, p. 21.
10 Ibid.
11 TSN of June 29, 1991, Testimony of Margarita Taghoy, p. 7; id., at
p. 69.
12 Id., at pp. 26-27.

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Taghoy vs. Tigol, Jr.

P1,000.00.13 Simultaneous with the execution of the deeds,


however, the respondents executed explanatory Joint
Affidavits attesting that the sale was without any
consideration, and was only executed to secure a loan.14
On March 9, 1983, TCT No. 13250 was issued in the
respondents’ names.15 On July 1, 1983, the respondents
obtained a P70,000.00 loan with the Philippine Banking
Corporation, secured by a real estate mortgage on the
subject property.16
Seven (7) years later, on April 17, 1990, Anselmo and
Vicenta, together with Margarita, Felisa, Gaudencio, and
Pantaleon’s surviving heir, Annabel, filed a complaint
against the respondents and Anastacia for declaration of
nullity of the respondents’ TCT and for judicial partition.17
They alleged that the deeds of confirmation of sale became
the bases for the transfer of the title in the respondents’
names, but the sale was fictitious or simulated, as
evidenced by the respondents’ own explanatory joint
affidavits attesting that the transfer was for the purpose
only of convenience in securing a loan, not for absolute
conveyance or sale.
The respondents admitted that they executed the joint
affidavits but countered that they acquired a valid title to
the subject property through the Extrajudicial Settlement
of Heirs and Sale. They claimed that when Filomeno died
without the PNB loan being paid, the heirs agreed that the
respondents will advance payment of the loan, subject to
reimbursement, to save the foreclosure of the subject
property; the heirs then executed the Extrajudicial
Settlement and Sale in

_______________

13 Id., at pp. 9-10.


14 Id., at pp. 11 and 48; with the mortgage to and loan from PNB duly
annotated in the Memorandum of Encumbrances of Transfer Certificate of
Title No. 6466.
15 Id., at p. 8.
16 Ibid. (backpage).
17 Id., at pp. 1-7.

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Taghoy vs. Tigol, Jr.

the respondents’ favor as their way of reimbursing the


amount the latter paid; the respondents executed the joint
affidavits out of generosity, expressing their willingness to
be reimbursed, but when the heirs failed to reimburse the
amounts advanced by them, then they caused the
registration of the title in their names.18
Margarita, Felisa, Gaudencio and Annabel failed to
appear at the initial hearing, prompting the petitioners’
counsel to manifest that, except for Anselmo and Vicenta,
they were abandoning the complaint.19 The petitioners
subsequently amended the complaint to implead
Margarita, Felisa, Gaudencio and Annabel as party
defendants or unwilling plaintiffs.20

The RTC Ruling

In its decision, the RTC found that the sale of the


subject property was absolutely simulated since the deeds
of confirmation of sale were executed only to accommodate
the respondents’ loan application using the subject
property as collateral. The lower court thus ordered the
nullification of the respondents’ title. It likewise ordered
the partition of the subject property after reimbursement of
the amount the respondents paid for the loan.21
Subsequently, the respondents filed a motion for new
trial, anchored on newly discovered evidence allegedly
proving that the subject property is Margarita’s
paraphernal property.22 When the RTC denied23 the motion
for new trial, the respondents filed an appeal with the CA,
under Rule 41 of the Rules of Court.

_______________

18 Id., at pp. 16-19.


19 Id., at p. 40.
20 Id., at pp. 41-47.
21 Supra note 5.
22 Id., at pp. 117-121.
23 Id., at pp. 185-186.

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The CA Ruling

The CA decided the appeal on August 26, 2002,


reversing the RTC decision. Relying upon Margarita’s
testimony that the respondents paid the loan, the CA found
that the contract between the parties was relatively
simulated; the respondents’ payment of the PNB loan was
the real consideration for the transfer of title.
After the CA denied24 the motion for reconsideration25
that followed, the petitioners filed the present petition.

The Petition

The petitioners argue that the heirs, in executing the


extrajudicial settlement, did not intend to divest
themselves of their respective rightful shares, interests and
participation in the subject property because it lacked a
consideration, as affirmed by the respondents’ own joint
affidavits; the payment of the PNB loan could not be a
valid consideration for the transfer since the lopan was still
unpaid and outstanding at the time of the execution of the
extrajudicial settlement.26

The Case for the Respondents

The respondents, on the other hand, maintain that the


Extrajudicial Settlement and Sale was the basis of their
registration of title, and their payment of the PNB loan
was the real consideration for the transfer; the joint
affidavits were executed only out of generosity and
kindness, subject to the heirs’ reimbursement of the
amounts they paid for the loan, such that when the heirs
did not reimburse the amounts paid, they then caused the
registration of title in their names.27

_______________

24 Supra note 3.
25 CA Rollo, pp. 76-82.
26 Rollo, pp. 106-119.
27 Id., at pp. 81-94.

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348 SUPREME COURT REPORTS ANNOTATED


Taghoy vs. Tigol, Jr.

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The Issue

The core issue boils down to whether the sale of the


subject property between the parties was absolutely or
relatively simulated.

Our Ruling

We find the petition meritorious.


This Court is not a trier of facts. However, if the
inference drawn by the appellate court from the facts is
manifestly mistaken, as in the present case, we can review
the evidence to allow us to arrive at the correct factual
conclusions based on the record.28
In the interpretation of contracts, the intention of the
parties is accorded primordial consideration;29 such
intention is determined from the express terms of their
agreement,30 as well as their contemporaneous and
subsequent acts.31 When the parties do not intend to be
bound at all, the contract is absolutely simulated; if the
parties conceal their true agreement, then the contract is
relatively simulated.32 An abso-

_______________

28  Heirs of Flores Restar v. Heirs of Dolores R. Cichon, G.R. No.


161720, November 22, 2005, 475 SCRA 731, 739; Casol v. Purefoods
Corporation, G.R. No. 166550, September 22, 2005, 470 SCRA 585, 589;
Carpio v. Valmonte, 481 Phil. 352, 358; 438 SCRA 38, 48-49 (2004).
29  Valerio v. Refresca, G.R. No. 163687, March 28, 2006, 485 SCRA
494, 501; Ramos v. Heirs of Honorio Ramos, Sr., 431 Phil. 337, 345; 381
SCRA 594, 601-602 (2002).
30 CIVIL CODE, Art. 1370. If the terms of a contract are clear and leave
no doubt upon the intention of the contracting parties, the literal meaning
of its stipulations shall control.
31  CIVIL CODE, Art. 1371. In order to judge the intention of the
contracting parties, their contemporaneous and subsequent acts shall be
principally considered.
32 CIVIL CODE, Art. 1345. Simulation of a contract may be absolute or
relative. The former takes place when the parties do not

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VOL. 626, AUG. 3, 2010 349


Taghoy vs. Tigol, Jr.

lutely simulated conctract is void, and the parties may


recover from each other what they may have given under
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the simulated contract, while a relatively simulated


contract is valid and enforceable as the parties’ real
agreement binds them.33 Characteristic of simulation is
that the apparent contract is not really desired or intended
to produce legal effects, or in any way, alter the juridical
situation of the parties.34
In the present case, the parties never intended to be
bound by their agreement as revealed by the two (2) joint
affidavits executed by the respondents simultaneous with
the execution of the deeds of confirmation of sale. The
September 7, 1981 Joint Affidavit stated.

“2. That the truth of the matter is that the deed of sale and
the confirmation of said sale by the legal heirs are executed for
the purpose of securing a loan in our name but which amount
of said loan shall be divided equally among the legal heirs, and
that every heir shall pay his corresponding share in the
amortization poayment of said loan;
3. That said sale was without any consideration, and
that we executed this affidavit to establish the aforestated facts
for purposes of loan only but not for conveyance and transfer
in our name absolutely and forever but during the duration of
the terms of the loan;
4. That we executed this affidavit voluntarily and freely in
order to establish this facts (sic) above-mentioned and to
undertake to return the said land to the legal heirs of the
late spouse, Filomeno Taghoy, survived by his widow, Rita Amit-
Taghoy, upon full payment of our intended loan.”35

_______________

intend to be bound at all; the latter, when the parties conceal their true
agreement.

33  Heirs of the Late Spouses Balite v. Lim, 487 Phil. 281, 293; 446
SCRA 56, 67 (2004); Sps. Velasquez v. Court of Appeals, 399 Phil. 193,
200; 345 SCRA 468, 473 (2000).
34 Valerio v. Refresca, supra note 29, at 500; Loyola v. Court of Appeals,
383 Phil. 171, 182; 326 SCRA 285, 293 (2000).
35 Original Records, p. 48.

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350 SUPREME COURT REPORTS ANNOTATED


Taghoy vs. Tigol, Jr.

The August 10, 1982 Joint Affidavit, on the other hand,


averred:

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“3. That the truth of the matter is that said Lot No. 3635-B
was sold without any purchase price or consideration paid
to said Filomeno Taghoy, but for the purpose of securing a
loan in our name but which amount of said loan shall be divided
equally among us, the legal heirs of Filomeno Taghoy;
4. That in case the loan will be fully paid, we shall obligate
ourselves to resell, reconvey the said Lot No. 3635-B in favor of
the Heirs of Filomeno Taghoy and Rita Amit, and in case, the said
loan will not be post (sic) through.
5. That we executed this affidavit voluntarily and freely in
order to establish the aforestated facts and to attest the fact that
said deed of confirmation of sale is only for purposes of
convenience in securing the loan and not for absolute
conveyance or sale.”36

The joint affifavits are very solid pieces of evidence in


the petitioners’ favor. They constitute admissions against
interest made by the respondents under oath. An
admission against interest is the best evidence that affords
the greatest certainty of the facts in dispute,37 based on the
presumption that no man would declare anything against
himself unless such declaration is true.38 It is fair to
presume that the declaration corresponds with the truth,
and it is his fault if it does not.39
Thus, by the respondents’ own admissions, they never
intended to be bound by the sale; they merely executed the

_______________

36 Id., at p. 11.
37 Heirs of Miguel Franco v. Court of Appeals, 463 Phil. 417, 428; 418
SCRA 60, 67 (2003); Yuliongsiu v. PNB, 130 Phil. 575, 580; 22 SCRA 585,
588-589 (1968).
38  Republic v. Bautista, G.R. No. 169801, September 11, 2007, 532
SCRA 598, 609; Bon v. People, 464 Phil. 125, 138; 419 SCRA 101, 111
(2004).
39 Rufina Patis Factory v. Alusitain, 478 Phil. 544, 558; 434 SCRA 418,
429 (2004).

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Taghoy vs. Tigol, Jr.

documents for convenience in securing a bank loan, and


they agreed to reconvey the subject property upon payment
of the loan. The sale was absolutely simulated and,
therefore, void.
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We find that the CA misappreciated Margarita’s


testimony that the respondents are entitled to the entire
property because they redeemed or paid the bank loan.40
The failure of the other heirs to reimburse the amounts
advanced by the respondents in payment of the loan did not
entitle the latter to claim full ownership of the co-owned
property.41 It only gave them the right to claim
reimbursement for the amounts they advanced in behalf of
the co-ownership. The respondents’ advance payments are
in the nature of necessary expenses for the preservation of
the co-ownership. Article 488 of the Civil Code provides
that necessary expenses may be incurred by one co-owner,
subject to his right to collect reimbursement from the
remaining co-owners.42 Until reimbursed, the respondents
hold a lien upon the subject property for the amount they
advanced.
Based on the foregoing, we find that the CA erred in
setting aside the decision of the RTC and in dismissing the
petitioners’ complaint against the respondents.
WHEREFORE, we hereby REVERSE and SET ASIDE
the decision dated August 26, 2002 and the resolution
dated July 22, 2003 of the Court of Appeals in CA-G.R. CV
No. 54385.

_______________

40  TSN of June 29, 1991, Testimony of Margarita Taghoy, p. 8;


Original Records, p. 70.
41  See Paulmitan v. Court of Appeals, G.R. No. 61584, November 25,
1992, 215 SCRA 866, 873-874; Adille v. Court of Appeals, 241 Phil. 487,
493; 157 SCRA 455, 460 (1988).
42 CIVIL CODE, Art. 488. Each co-owner shall have a right to compel
the other co-owners to contribute to the expenses of preservation of the
thing or right owned in common and to the taxes. Any one of the latter
may exempt himself from this obligation by renouncing so much of his
undivided interests as may be equivalent to his share of the expenses and
taxes. No such waiver shall be made if it is prejudicial to the co-
ownership.

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