Admissible but non-existent

When a contract has been declared null and void from the beginning, can it still be admissible as evidence to prove matters contained therein? This is the issue resolved in this case of the spouses Pepe and Mila.

During their marriage Pepe and Mila were able to buy a house and lot as their conjugal home with a Transfer Certificate of Title (No. 41239). After begetting a son, Pepe decided to work in Japan to sustain and support his family.

Later on however, while Pepe was still working in Japan, Mila sold their house and lot to Arsenio as evidenced by a deed of absolute sale executed by Mila in her own behalf and as attorney-in-fact of Pepe by virtue of a special power of attorney (SPA) supposedly signed by Pepe.

The deed of sale stated that the purchase price for the property was P200,000. After the sale, TCT No 41239 was cancelled and a new TCT No. 57146 was issued in the name of Arsenio.

It was only three years after the sale when Pepe learned they had no more conjugal home. His brother Benny told him about the sale which he learned from his nephew, the son of Pepe and Mila. Benny even confronted Mila that Pepe would get angry because of the sale. But Mila just retorted that she sold the property because she needed the money.

Pepe was furious when he learned of the sale and went back to the Philippines. He and his brother Benny verified from the Register of Deeds and discovered that the title covering the house and lot had indeed been transferred in the name of Arsenio already.

So Pepe filed a “Complaint for Annulment of Sale/ Cancellation of Title/ Reconveyance and Damages” against Mila, Arsenio and the Register of Deeds. Pepe averred that while he was working in Japan, Mila conspired with Arsenio to execute the SPA by forging his signature without his knowledge and consent thus making it appear that he had authorized her to sell the subject property to Arsenio.

Only Arsenio answered the complaint and maintained that he was a buyer in good faith because his lawyer friend told him that the title to the property was authentic and in order and that the SPA authorizing Mila was duly annotated at the back of said title. He even filed a cross claim against Mila for compensatory and moral damages, attorney’s fees and expenses of litigation, in the event that judgment be rendered in favor of Pepe. He claimed that he actually paid P700,000 for the property and not only P200,000 as stated in the deed of sale.

Mila did not file any answer and was thus declared in default. On the other hand, the complaint against the Register of Deeds was dismissed on the ground that it was only a nominal party.

After trial where the parties presented their own witnesses in the person of Benny for the plaintiff and Arsenio for the defendant, the RTC rendered a decision in favor of Pepe and nullified the Deed of Absolute Sale in favor of Arsenio on the ground that the SPA executed by Pepe in favor of Mila was indeed null and void. It also ordered Arsenio and Mila to pay P20,000 as temperate damages.

The Court of Appeals (CA), on appeal by Arsenio, affirmed the RTC decision that the deed of sale and SPA were void. However it deleted the award of temperate damages and instead ordered Pepe and Mila to reimburse Arsenio the purchase price of P200,000.

Arsenio questioned the CA ruling ordering Pepe and Mila, to reimburse him P200,000 only instead of P700,000 which he claimed to have paid Mila. He contended that all matters in the deed of sale particularly the purchase price of P200,000 cannot be used as evidence since it was declared null and void and was not specifically offered as evidence to prove the actual consideration. He also claimed that his testimony as to the payment of P700,000 was uncontroverted and that Pepe must return said amount under the principle of solutio indebiti or payment by mistake.

But the Supreme Court (SC) still affirmed the CA decision. Arsenio’s bare allegations that he paid P700,000 cannot be considered as proof of payment without any other evidence convincing to the court as it is worthier of belief than that which is offered in opposition thereto.

While the terms and provisions of the void and inexistent Deed of Sale cannot be enforced since it is deemed inexistent, the Deed is still admissible as evidence to prove matters that occurred in the course of executing it like what a party has paid as price of the sale. So the Deed of Sale may be used as documentary evidence to ascertain the truthfulness of the consideration stated therein and its actual payment.

Even if the Deed of sale was not specifically offered to prove the actual consideration of the sale, it was however offered to prove its regularity. Necessarily, the court can likewise determine the presence of the essential elements of the sale including the price paid. It is prima facie evidence of the truth of the facts stated therein since it is notarized and therefore a public document. Hence the consideration stated is said Deed remains sufficient evidence of the actual amount paid as against Arsenio’s sole testimony which is self serving. So under the principle of unjust enrichment embodied in Article 22 of the Civil Code the restoration of what has already been given or performed under a void contract is in order. (Tan, Jr. vs Hosana, G.R. 190846, February 3, 2016).

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