The Supreme Court has clarified that an Affidavit of Self-Adjudication is only valid when the affiant is the sole heir of the deceased. Moreover, the Court reiterated that a Deed of Absolute Sale, intended merely to facilitate property titling and not to transfer ownership, is considered a simulated contract and is therefore void.

Unveiling Intent: When a Sale is Not a Sale in Disguise

This case revolves around a dispute over a parcel of land inherited from Eulalio Abarientos. His daughter, Avelina, along with her son-in-law and daughter, sought to title the land under the Torrens System. To streamline this process, Avelina executed an Affidavit of Self-Adjudication, claiming to be the sole heir, and a Deed of Absolute Sale in favor of her daughter and son-in-law. However, other heirs contested these actions, arguing that Avelina was not the sole heir and that the sale was merely a simulation to facilitate titling. The central legal question is whether these documents, executed under the guise of facilitating titling, validly transferred ownership of the property.

The Court emphasized the crucial requirement of sole heirship for a valid Affidavit of Self-Adjudication. The Rules of Court explicitly state:

Section 1. Extrajudicial settlement by agreement between heirs.––x x x If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the office of the register of deeds. x x x

Building on this principle, the Court noted that Avelina’s claim of being the sole heir was false, invalidating the Affidavit of Self-Adjudication. Because multiple heirs existed, including Salvador Orosco, the affidavit was deemed invalid from the outset. This highlights the importance of truthful representation when dealing with inheritance matters.

The Court also addressed the issue of the Deed of Absolute Sale, finding it to be a simulated contract. A key factor in this determination was the respondents’ own admission that the sale was intended solely to facilitate titling, and not to actually transfer ownership. The Civil Code distinguishes between absolute and relative simulation:

Art. 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.

Art. 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 Court reasoned that because the parties never intended to transfer ownership, the Deed of Absolute Sale was an absolutely simulated contract, rendering it void. This ruling aligns with the principle that contracts must reflect the true intentions of the parties involved. If a contract is merely a facade to achieve a different purpose, it cannot be upheld as a valid transfer of rights.

The Court further explained that the form of a contract does not guarantee its validity, especially when simulation is evident. The parole evidence rule, which generally prevents parties from introducing evidence to contradict a written agreement, has exceptions, as outlined in the Rules of Court:

Section 9. Evidence of written agreements.– x x x

However, a party may present evidence to modify, explain or add to the terms of written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the parties thereto;

(c) The validity of the written agreement; or

In this case, the failure of the Deed of Absolute Sale to reflect the parties’ true intent justified the admission of evidence to prove the simulation. The respondents’ admission, coupled with the lack of actual transfer of possession, provided strong evidence that the sale was never intended to be a genuine transfer of ownership. This underscored that courts will look beyond the written form of a contract to ascertain the true intent of the parties involved.

Moreover, the Court emphasized that the determination of heirship, while generally a matter for special proceedings, can be resolved in an ordinary civil action when circumstances warrant it. This exception applies when the parties have already presented evidence on heirship, and the court has assumed jurisdiction over the issue. The Supreme Court, in Portugal v. Portugal-Beltran, stated:

it is superfluous in light of the fact that the parties to the civil case – subject of the present case, could and had already in fact presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.

The appellate court observed that the Deed of Absolute Sale cannot be nullified as it is a notarized document that has in its favor the presumption of regularity and is entitled to full faith and credit upon its face. However, this presumption can be overturned by convincing evidence to the contrary. The essence of the matter is to discover the true intention of the parties and to prevent the use of legal documents to deceive or circumvent the law.

Applying this exception, the Court found that because the respondents admitted Avelina was not the sole heir and that Salvador was also an heir, a separate special proceeding was unnecessary. This ruling demonstrates the Court’s pragmatic approach to resolving inheritance disputes, avoiding unnecessary delays and expenses when the essential facts are already established before the court.

In summary, the Supreme Court’s decision reaffirms the importance of adhering to the requirements for validly executing an Affidavit of Self-Adjudication and highlights the consequences of entering into simulated contracts. The ruling serves as a cautionary tale for those seeking to manipulate legal processes for their own benefit, especially in matters of inheritance and property transfers. It also reinforces the principle that courts will prioritize substance over form, ensuring that contracts reflect the true intentions of the parties involved.

FAQs

What was the key issue in this case?	The key issues were whether the Affidavit of Self-Adjudication was valid given that Avelina was not the sole heir, and whether the Deed of Absolute Sale was a simulated contract. The Court ruled that both were invalid.
When is an Affidavit of Self-Adjudication valid?	An Affidavit of Self-Adjudication is valid only when the affiant is the sole heir of the deceased. This is because the affidavit is a means for a single heir to formally claim the entire estate.
What is a simulated contract?	A simulated contract is one where the parties do not intend to be bound by its terms. It is either absolute, where parties have no intention to be bound, or relative, where the true agreement is concealed.
What makes a contract absolutely simulated?	A contract is absolutely simulated when the parties do not intend to create any legal effect or alter their juridical situation. Such contracts are void and produce no legal consequences.
Can a notarized document be considered invalid?	Yes, a notarized document, while presumed regular, can be invalidated if evidence shows it does not reflect the true intentions of the parties or if it is proven to be a simulated contract. The parole evidence rule contains exceptions to this rule.
When can the issue of heirship be resolved in an ordinary civil action?	The issue of heirship can be resolved in an ordinary civil action if the parties have already presented evidence on the matter and the court has assumed jurisdiction over the issue, especially to avoid unnecessary delays. The determination of heirship is typically made in a special proceeding.
What is the effect of a void Affidavit of Self-Adjudication?	A void Affidavit of Self-Adjudication means that the affiant cannot validly claim sole ownership of the estate. This can lead to disputes among the rightful heirs.
What evidence can prove a contract is simulated?	Evidence such as admissions from the parties, lack of transfer of possession, and failure to act as the owner can prove that a contract is simulated. Any circumstance that contradicts the intention to be bound by the contract can be used.

This case highlights the importance of understanding the legal requirements for property transfers and the consequences of misrepresenting facts or entering into simulated contracts. The Supreme Court’s decision underscores the need for transparency and good faith in all legal transactions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Avelina Abarientos Rebusquillo vs. Spouses Domingo and Emelinda Rebusquillo Gualvez, G.R. No. 204029, June 04, 2014