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jabmenriquez in CASE DIGESTS December 10, 2016September 15, 2017 390 Words

Payongayong v. CA
G.R. No. 144576; 28 May 2004

Carpio Morales, J.

PRICE | Eect where price is simulated

FACTS:

Eduardo Mendoza was the registered owner of a parcel of land situated in Barrio San Bartolome,
Caloocan. He mortgaged the land to Meralco Employees Savings and Loan Association (MESALA) to
secure a loan of 81,700.00. Mendoza executed a Deed of Absolute Sale with Assumption of
Mortgage in favor of Spouses Isabelo and Erlinda Payongayong and bound themselves to pay the
mortgage indebtedness and consideration of 50,000.00. Without knowledge of petitioners, the same
property was mortgaged for a 2nd time to secure a loan of 758,000.00. Meanwhile, the subject
property was sold to Spouses Clemente and Rosalinda Salvador. Thus, complaint for annulment of
deed of absolute sale was filed by Spouses Payongayong. They contend that Spouses Mendoza
meticulously sold to respondents the property which was priorly sold to them and that respondents
acted in bad faith in acquiring it, having absolute knowledge of the Deed of Absolute Sale with
Assumption of Mortgage between petitioners and Mendoza. Further, the deed of sale was simulated
and therefore, null and void. Respondents claim that they are entitled to the protection accorded to
purchasers in good faith for they did not rely upon Mendozas title. Rosalia personally inspected the
property and verified with Registry of Deeds of Quezon City if Mendoza was indeed the registered
owner.

ISSUE:

Was the sale between Mendoza and Spouses Salvador simulated?

HELD:

No. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately
made by the agreement of the parties, in order to produce, for the purpose of deception, the
appearance of a juridical act which does not exist or is different from that which is executed. Its
requisites are: a) an outward declaration of will different from the will of the parties; b) the false
appearance must have been by mutual agreement; and c) the purpose is to deceive third persons. The
claim of simulation does not lie. The cancellation of Mendozas certificate of title over the property
and procurement of one in its stead in the name of respondents, which acts were directed towards the
fulfillment of the purpose of the contract unmistakably show the parties intention to give effect to
their agreement. However, the Court cannot come to petitioners succor at the expense of respondents
who are innocent purchasers in good faith.
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Tagged:
SALES AND LEASE

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