YU BUN GUAN, petitioner, vs. ELVIRA ONG, respondent.
RTC declared that the property was the paraphernal property
G.R. No. 144735. October 18, 2001
PANGANIBAN, J.
Facts:
Yu Bun Guan (P) and Elviro Ong (R) were married on April 30,
1961. Before their separation in 1992, they executed a simulated
Deed of Sale on a property located at J.P. Rizal. This property (Title
No. 26795) was bought by Elvira Ong out of her personal fund in
1968. She agreed to execute the Deed of Sale on Yu Buns promise
that he would construct a commercial building for the benefit of the
children. The consideration for the simulated sale was that, after its
execution in which he would represent himself as single, a Deed of
Absolute Sale would be executed in favor of the three (3) children
and that he would pay the Allied Bank, Inc. the loan he obtained. He
did not pay the consideration of PhP 200,000.00, which was the
ostensible valuable consideration. On the contrary, she paid for the
capital gains tax and all the other assessments even amounting to
not less than P60, 000.00, out of her personal funds. Because of the
sale, a new title (TCT No. 181033) was issued in his name, but to
insure that he would comply with his commitment, she did not
deliver the owners copy of the title to him.
However, Yu Bun refused to perform his promise and
threatens Elvira on delivering to him the owners copy of the title,
which she averred. Petitioner filed a Petition for Replacement of
owners duplicate title. He made it appear that the title was lost or
misplaced. The Court granted the petition and a new copy of the
title was issued. Upon discovery, Elvira immediately executed an
Affidavit of Adverse Claim and asked the Court that the sale of the
property be declared null and void.
Petitioner avers his wifes claim and contends that property
was bought with his own money. He was not allowed to purchase it
due to his nationality, as such, they simulated a sale to reflect the
true ownership. He also asserted that respondent was in pari
delicto* being privy to the simulated sale.
of respondent and that the rule of in pari delicto was not applicable
in the case as it would apply only to existing contracts with an illegal
cause or object, not to simulated or fictitious contracts or to those
that were inexistent due to lack of an essential requisite such as
cause or consideration. It declared the Deed of Sale void for having
it simulated and executed during the marriage of the parties. CA
uphold the ruling of the RTC.
Issue: WON the Deed of Sale was valid contract
Held: No.
The Court affirmed the ruling of the RTC and CA that the
property was a paraphernal property of Elvira Ong and the Deed of
Sale executed between them was void. Citing Rongavilla vs CA, the
Court ruled that a deed of sale, in which the stated consideration
had not in fact been paid, is null and void. A contract of purchase
and sale is null and void and produces no effect whatsoever where
the same is without cause or consideration in that the purchase
price which appears thereon as paid has in fact never been paid by
the purchaser to vendor.
It is clear that the Deed of Sale was completely
simulated and hence, void and without legal effect. No
portion of the PhP 200,000.00 consideration stated in the
contract was ever paid. The Deed of Sale was executed
merely to facilitate the transfer of the property to petitioner
pursuant to an agreement between the parties to enable
him to construct a commercial building and to sell the Juno
property to their children. Being merely a subterfuge, that
agreement cannot be taken as the consideration for the
sale.
Moreover, the principle of in pari delicto does not apply in
this case because the Deed of Sale was void.
* in pari delicto-when two parties are equally at fault, the law leaves
them as they are and denies recovery by either one of them