Dilag v. Intermediate Appellate Court
GR No. 72727
July 30, 1987
Facts
Herminio Arellano died in a vehicular accident on July 1, 1968 involving a truck owned by spouses Pablo and Socorro Dilag. His father, Marciano Arellano, was awarded by the trial court money damages, and the decision became final and executory. A writ of execution was issued on February 16, 1979.
The Dilag spouses and Arellano came into a compromise agreement but the same was disapproved by the court for failure of the Dilags to sign it. Pursuant to the writ of execution, a notice of Levy on Execution was annotated on a parcel of land owned by the Dilags. An examination of the title shows that there is an adverse claim inscribed therein, dated March 11, 1974 filed by the Dilag spouses’ children. The children had a Deed of Absolute Sale executed on November 21, 1973. The adverse claim also stated that the owner’s duplicate certificate was then in the possession of the Development Bank of the Philippines, to which the property had been mortgaged. The title further shows an inscription on July 25, 1979 of a Contract of Lease executed on February 9, 1979. The lease was in favor of David and Erlinda Diancin.
But pursuant to the writ of execution, the provincial sheriff sold at a public auction to Marciano Arellano the parcel of land. This was on August 26, 1981. The next day, a corresponding Certificate of Sale was inscribed to the title, subject to the right of redemption. However, on the same date of the sale (August 26, 1981), another inscription appears bearing a Deed of Absolute Sale executed by the Dilag spouses in favor of their children. The land was supposedly sold for Php30,000.
A year after the Certificate of Sale was inscribed in favor or Arellano, the Dilag spouses failed to exercise their right of redemption. Thus, a Definite Deed of Sale was executed. According to the Sheriff’s Return of Service, the delivery was made to Arellano, who executed a Delivery Receipt. Later on, Arellano sold the parcel of land to Marcelino Florete Jr. and Leon Coo for Php150,000.
David Diancin, the lessee, executed a deed giving up his claim or interest as a lessee over the land in favor of Arellano in consideration of Php38,000 as payment for his fish fry in the fish pond in the property. Because of this, Sussie Dilag, one of the Dilag children, executed a Notarial Rescission of the Lease Contract effective July 2, 1983.
Issue
Was the sale of the land in 1973 by the Dilag spouses in favor of their children valid?
Ruling
No. Clearly, the Deed of Absolute Sale in favor of the Dilag children executed in 1973 was a simulated and fictitious transaction to defraud Arellano who obtained a money judgment against the Dilag spouses. First of all, the consideration was insufficient. Second, the Dilag spouses continued exercising acts of ownership over the land as evidenced by the fact that they leased it to Diancin in 1979. Third, the Dilag children relied on the Deed of Absolute Sale executed in 1981 instead of the one in 1974 when they secured the cancellation of the title. Fourth, even assuming that the children became the valid owners of the land by virtue of the 1981 Deed of Absolute Sale, they failed to exercise their right to redemption within the period provided by law.
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