Fictitious contract

Dear PAO, My sister lured my parents to sign certain documents for the purpose of processing the building permit of a house to be built on our farm in the province. It was discovered that the document, which was actually signed by my parents, is a deed of absolute sale; hence, the title of said property was cancelled and transferred in the name of my sister. Is the deed of sale valid?

Alicia

Dear Alicia,

The alleged deed of sale is simulated and it is void. This is in consonance with the following provisions of the New Civil Code of the Philippines, to wit:

“Article 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.”

“Article 1346. An absolutely SIMULATED OR fiCTITIOUS CONTRACT IS void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.”

The effect of absolute simulated contract was illustrated in the case of Rebusquillo and Orosco vs. Spouses Gualvez, et al. (G.R. No. 204029, June 4, 2014), where the Supreme Court, speaking through honorable former associate justice Presbitero Velasco Jr., stated that:

“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. (Emphasis supplied)”

Applying the above-quoted decision in your situation, the purported deed of sale signed by your parents is an absolutely simulated sale considering that the latter did not intend to transfer ownership of their land to your sister when they affixed their signature to the said documents. The documents were supposed to be for the processing of the building permit. The sale of the property was not their desire when they signed the documents, thus, the contract is void. Further, there is no valid contract between your parents and your sister because two of the essential requisites of a contract under Article 1318 of the New Civil Code are not present, namely: consent of the contracting parties and the cause of the obligation.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.