Spouses Rongavilla vs. Court of Appeals

A contract of sale is void ab initio where the vendor’s signature is obtained through fraudulent misrepresentation that the document is a loan acknowledgment, resulting in a complete absence of consent, and where no consideration is actually paid, making the deed simulated and inexistent; an action to declare the inexistence of such a void contract is imprescriptible under Article 1410 of the Civil Code.

Private respondents Mercedes de la Cruz and Florencia de la Cruz, spinster sisters of advanced age, owned a one-half pro-indiviso share in a 131-square-meter parcel of land in Las Piñas, Rizal (now Metro Manila), where their house stood. They were embroiderers and dressmakers, literate in Tagalog but unschooled in English. Their niece, petitioner Dolores Rongavilla, and her husband Narciso, the petitioners, lent them P2,000 in May 1976 to repair a leaking roof. A month later, Dolores and her sister Juanita Jimenez (co-owner of the other half of the property and custodian of the title) visited the aunts and presented a typewritten document in English. Told in Tagalog that the paper simply evidenced their P2,000 debt, the aunts signed. Four years later, petitioners demanded the aunts vacate, claiming ownership by virtue of the document, which turned out to be a Deed of Absolute Sale. The aunts discovered that their Original Certificate of Title had been cancelled and a new Transfer Certificate of Title issued to petitioners, who had subsequently mortgaged the property to a bank for P40,000.

• The Loan and Misrepresentation: In May 1976, private respondents, aged 60 and 71, borrowed P2,000 from petitioners to purchase G.I. sheets for roof repairs. In June 1976, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited private respondents’ home with a typewritten document in English. When Mercedes de la Cruz asked in Tagalog what it was, Dolores answered in Tagalog that it was merely a document showing their P2,000 debt. Relying on this representation, both sisters signed.
• Discovery of the Sale: In September 1980, petitioners demanded that private respondents vacate the land, claiming ownership. With assistance, private respondents verified at the Office of the Register of Deeds and found that their Original Certificate of Title had been canceled and TCT No. S-28903 issued in petitioners’ names. The property had also been mortgaged by petitioners to Cavite Development Bank for P40,000. Only then did the aunts realize the document was a deed of sale.
• Complaint and Allegations: On February 3, 1981, private respondents filed a complaint to declare the deed void and inexistent, alleging the sale was fictitious, simulated, and secured through fraud and misrepresentation; they never sold, never received consideration, and were damaged by the mortgage.
• Petitioners’ Defense: Petitioners answered that the sale was voluntary, with sufficient consideration, and that the notary public, Atty. Arcadio Espiritu, fully explained the document. They raised prescription and argued the deed could no longer be annulled. During trial, they claimed the true consideration was P7,800, not the P2,000 stated in the deed, the lower figure having been used to save on taxes.
• Trial Court Findings: The trial court found that private respondents were misled into signing, believing the document was a loan acknowledgment. It held there was no consideration for the sale; the P2,000 represented the loan amount. The gross inadequacy of the price (P2,000 versus a mortgage of P40,000 three years later) reinforced the conclusion that no sale was intended. The court declared the deed void and inexistent, simulated, and fictitious, and ordered reconveyance.
• Appellate Court’s Affirmance: The Court of Appeals affirmed in toto, emphasizing that the contract was void ab initio because consent was wholly absent—private respondents did not know they were signing a sale—and because there was no consideration. It distinguished the case from a voidable contract tainted by vitiated consent, holding that the action to declare inexistence does not prescribe under Article 1410.

• Validity of the Deed: Petitioners argued that the Deed of Absolute Sale was valid, executed voluntarily, and in due form; it was presumed genuine and supported by lawful consideration. They contended that private respondents’ consent, though perhaps vitiated, rendered the contract merely voidable and subject to annulment within four years.
• Consideration: They maintained that consideration existed—P7,800 had been paid—and that the P2,000 stated in the deed was merely for tax purposes, not invalidating the sale. A stipulation of even a nominal consideration suffices.
• Prescription: Petitioners asserted that the action to annul the deed had prescribed, as more than four years had elapsed from execution and registration, and that private respondents had ratified the sale by their inaction.
• Evidence and Presumption of Regularity: They contended that the appellate court erred in relying on a BIR certification not formally offered in evidence and that the truth of a notarized document could only be overcome by evidence of the clearest and most satisfactory character, which they claimed was lacking.

• Absence of Consent: Private respondents countered that they never consented to a sale; they were deceived into signing a document they were told evidenced a loan. Their signatures were obtained through fraud and misrepresentation, rendering the deed void ab initio, not merely voidable.
• No Consideration: They denied receiving any purchase price; the P2,000 was the loan amount. The deed lacked cause or consideration and was simulated and fictitious, producing no legal effect.
• Imprescriptibility: They argued that an action to declare the inexistence of a void contract does not prescribe under Article 1410, and the nullity could be raised at any time.
• Sufficiency of Evidence: They maintained that their evidence sufficiently overcame the presumption of regularity, and the BIR certification was properly testified to, subjected to cross-examination, and supported the finding that no genuine sale occurred.

• Validity of Contract: Whether the Deed of Absolute Sale was void and inexistent ab initio for lack of consent and want of consideration, or merely voidable.
• Prescription: Whether the action to declare the deed void had prescribed.
• Evidentiary Error: Whether the Court of Appeals committed reversible error in relying on a Bureau of Internal Revenue certification not formally offered in evidence.

• Validity of Contract: The deed was correctly declared void ab initio. Consent was altogether absent because private respondents were made to believe they were signing a loan document, not a deed of sale. The representation was fraudulent; thus, there was no meeting of the minds on a contract of sale. The trial court’s factual finding that no consideration was paid—the P2,000 being the loan, not the price—was binding. Petitioners’ own admission that the true consideration differed from the stated amount further destroyed the deed’s integrity. The contract was absolutely simulated and void, not merely voidable, conformably with Mapalo v. Mapalo, Ocejo, Perez & Co. vs. Flores, and Baranda v. Baranda.
• Prescription: An action to declare the inexistence of a void contract is imprescriptible under Article 1410 of the Civil Code. The defect is permanent and incurable; neither ratification nor the passage of time can validate a void contract. The case of Pangadil v. CFI of Cotabato was distinguished on the grounds that the document there was not fictitious and the plaintiffs had been inordinately inactive for 27 years, unlike the prompt and credible challenge here.
• Evidentiary Error: No reversible error was committed. Although the BIR certification was not formally offered, the matter of tax account numbers was thoroughly ventilated through testimony and cross-examination; the trial court’s assessment of credibility, adverse to petitioners, was not disturbed. The alleged error did not affect the core finding of lack of consent and consideration.

• Void Contract for Lack of Consent — Where a signatory is fraudulently misled as to the nature of the document, consent is entirely absent and the contract is void ab initio, not merely voidable. (Cf. Baranda v. Baranda, 150 SCRA 59; Rivero v. Court of Appeals, 80 SCRA 411)
• Absolute Simulation and Want of Consideration — A contract of sale that states a consideration never paid, and where the parties did not intend a true sale, is absolutely simulated and void for lack of cause. The presumption of validity of a notarized deed is rebuttable by clear and convincing evidence, including the parties’ own contradictory testimony. (Ocejo, Perez & Co. vs. Flores, 40 Phil. 921; Mapalo v. Mapalo, 17 SCRA 114)
• Imprescriptibility of Action for Declaration of Nullity — An action to declare the inexistence of a void contract does not prescribe. The defect of inexistence is permanent and incurable; no action to set aside is required, but an action to declare non-existence may be maintained, and the plaintiff may recover what was given under the void contract. (Art. 1410, Civil Code; Baranda v. Baranda, supra)
• Judicial Protection of the Disadvantaged — Article 24 of the Civil Code mandates courts to be vigilant in protecting parties who suffer from ignorance, indigence, moral dependence, mental weakness, or advanced age in contractual relations.

• “The defect of inexistence of a contract is permanent and incurable, hence it cannot be cured either by ratification or by prescription. … There is no need of an action to set aside a void or inexistent contract; in fact such action cannot logically exist. However, an action to declare the non-existence of the contract can be maintained; and in the same action, the plaintiff may recover what he has given by virtue of the contract.”
• “In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age, or other handicap, the courts must be vigilant for his protection. (Art. 24, Civil Code)”
• “The rule under the Civil Code, again be it the old or the new, is that contracts without a cause or consideration produce no effect whatsoever.” (quoting Mapalo v. Mapalo)
• “It is more reasonable to assume that the amount of P2,000.00 mentioned in the deed refers to the loan defendants extended to plaintiffs for the same amount.”

• Mapalo v. Mapalo, 17 SCRA 114 (1966): Followed. A deed of sale stating a consideration that was totally absent is void ab initio; it may be attacked at any time and prescription does not bar the action.
• Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920): Followed. A contract of sale where the purchase price was never paid is null and void, producing no effect.
• Rivero v. Court of Appeals, 80 SCRA 411 (1977): Followed. Consent obtained through fraudulent misrepresentation that the document was a mortgage, not a sale, rendered the deed void.
• Baranda v. Baranda, 150 SCRA 59 (1987): Followed. Deeds of sale signed without knowledge of their nature, resulting in absence of consent and consideration, are void ab initio, and the action to declare inexistence does not prescribe.
• Pangadil v. CFI of Cotabato, 116 SCRA 347 (1982): Distinguished. The document there was not fictitious, no circumstances contrary to public policy were alleged, and the petitioners’ 27-year inaction undermined their claim.

• Article 24, Civil Code: Applied to require heightened vigilance for elderly, unschooled, and financially disadvantaged parties.
• Article 1318, Civil Code: No consent, hence no contract; the consent element was entirely absent.
• Article 1345, Civil Code: The deed was absolutely simulated because the parties did not intend to be bound by a sale.
• Articles 1352, Civil Code / 1275, Old Civil Code: Contracts without cause or consideration produce no effect whatsoever.
• Article 1391, Civil Code: Distinguished; prescription of four years applies to voidable, not void, contracts.
• Article 1410, Civil Code: An action to declare the inexistence of a void contract does not prescribe; directly applied to defeat the defense of prescription.

Davide, Jr., Bellosillo, Vitug, and Panganiban, JJ., concurred.