Rafael Suntay VS CA, Federico Suntay

Rafael Suntay VS CA
FACTS: Respondent Federico Suntay was the registered owner of a parcel of land situated in Hagonoy,
Bulacan. Federico applied as a miller-contractor of the then National Rice and Corn Corporation
(NARIC). His application, although prepared by his nephew-lawyer, Rafael Suntay, was disapproved,
because at that time, Federico was tied up with several unpaid loans.
For purposes of circumvention, he had thought of allowing Rafael to make the application for him.
Rafael prepared an absolute deed of sale whereby Federico, for and in consideration of P20,000.00
conveyed to Rafael said parcel of land with all its existing structures. The deed was notarized and
recorded.
Less than three months after this conveyance, a counter sale was prepared and signed by Rafael
who also caused its delivery to Federico. Through this counter conveyance, the same parcel of land
with all its existing structures was sold by Rafael back to Federico for the same consideration of
P20,000.00. Although on its face, the second deed appears to have been notarized and recorded, an
examination thereof will show that it is not a deed of sale, but a real estate mortgage of a parcel of land
to secure a loan of 3,500.00 in favor of Hagonoy Rural Bank.
Federico then requested Rafael to deliver his copy of the TCT for the subject land so that he can have
the counter deed of sale in his favor registered in his name, but Rafael refused such request. As a result,
Federico filed a complaint for reconveyance and damages against Rafael.
Federico alleged that, the Deed of Absolute Sale is an absolutely simulated or fictitious transaction with
clear and express understanding that ownership, possession, use, and enjoyment and all other incidents
would remain vested to Federico and that at any time Federico needed or desired that the titled be
restored to his name, Rafael would execute whatever deed and take whatever steps necessary to do so.
Rafael,however, contends that said property was absolutely sold and conveyed for a consideration of
20,000.00. Further, he insisted that the sale to him of his uncle's property was in fact a "dacion en pago"
in satisfaction of Federico's unpaid attorney's fees. Rafael also alleged that the lapse of 7 years before
Federico’s sought the issuance of the new title in his name makes Federico’s claim stale and
unenforceable.
RTC ruled in favor of Rafael resolving that the Deed of Absolute sale is not a simulated or fictitious
document, but a genuine one. It ruled that mere allegation of Federico that the sale is simulated cannot
prevail over his admissions. It also ruled that the counter-deed executed by Rafael in favor of Federico
was simulated and without consideration, hence, null and void ab initio since the deed was signed by
Rafael but at the time it was handed to Federico, it was not dated, notarized, and is without
consideration since Federico did not pay 20,000.00, Meanwhile, although subsequently notarized, the
fact remained that Rafael did not appear and acknowledge the same before the Notary public.
The CA initially affirmed the RTC but it reversed itself.
ISSUE: Whether or not there was a valid sale between Federico and Rafael?
HELD: The SC Affirmed the ruling of the CA favoring Federico Suntay. There was no perfected sale
between Federico and Rafael.
1
In this case, the SC considered the following facts in rendering the Deed of Sale as simulated:
(1) That the 2 instruments were executed closely one the other involving transfer and re-
transfer of the same property at exactly the same price;
(2) The existing close relationship between the parties; Rafael Suntay and Federico Suntay were
relatives whose blood relation was the foundation of their professional and business relationship. It
was precisely because of this relationship that Federico consented to what he alleged as a loan of title
over his land and rice mill in favor of the late Rafael. The record is replete with circumstances that
establish the closeness, mutual trust and business and professional interdependence between the
Rafael and Federico. The history and relationship of trust, interdependence and intimacy between
the late Rafael and Federico is an unmistakable token of simulation. It has been observed that
fraud is generally accompanied by trust.
(3) The inadequacy of the price in relation to the location and nature of the property, the Deed
of Sale is found to be a mere accommodation arrangement executed without any consideration
and therefore a simulated contract of sale. It is provided by law that a contract of purchase and sale
is void and produces no effect whatsoever where the same is without cause or consideration in that the
purchase price, which appears in the said contract, has in fact never been paid by the purchaser to the
vendor.
Furthermore, the complete absence of an attempt in any manner on the part of Rafael to assert
his rights of ownership over the land and the ricemill is a clear badge of fraud. Rafael never
assumed the benefits, and burden of ownership to the land. He did not even include the property in his
SALN. Federico remained in actual possession, cultivation and occupation of the disputed lot further
proves the fictitiousness of the transfer.
The issuance of TCTNo. T-1346 did not operate to vest upon the ownership over the Federico's
property. That act has never been recognized as a mode of acquiring ownership. As a matter of fact,
even the original registration of immovable property does not vest title thereto; it is merely evidence of
such title over a particular property. The Torrens system of land registration should not be used as a
means to perpetrate fraud against the rightful owner of real property.
Though the notarization of the deed of sale in question vests in its favor the presumption of
regularity, it is not the intention nor the function of the notary public to validate and make
binding an instrument never, in the first place, intended to have any binding legal effect upon
the parties thereto. The intention of the parties still and always is the primary consideration in
determining the true nature of a contract.
The deed of sale executed by Federico in favor of Rafael, is absolutely simulated and fictitious. Hence,
null and void, said parties having entered into a sale transaction to which they did not intend to be
legally bound. As no property was validly conveyed under the deed, the second deed of sale executed
by the Rafael in favor of his uncle, should be considered ineffective and unavailing.

Rafael Suntay VS CA, Federico Suntay

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Rafael Suntay VS CA, Federico Suntay

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Rafael Suntay VS CA

The CA initially affirmed the RTC but it reversed itself.

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