CLEMENTE v.

CA 772 SCRA 339

1345-1346 – Simulation of Contracts

FACTS: Adela owned three parcels of land in Quezon. During her lifetime, she allowed her children to use and possess such. Sometime in
1985 and
1987 Adela simulated the transfer of Lots 32 and 34 to her two grandsons Carlos and Dennis, thus a TCT was issued.

It is undisputed that the transfers were never intended to vest title to Carlos and Dennis who shall return such to Adela upon request.

Prior to Clemente and Adela’s departure for US. Adela requested the both to execute a Deed of Reconveyance. In 1989, Adela executed a
Deed of Absolute Sale in favor of Clemente and on the same day an SPA in favor of Clemente giving her to power to administer and manage
all her real and personal properties in the Philippines.

Adela died in the United States and was succeeded by her four children. Clemente sought to eject private respondents who were staying in the
properties.

The private respondents averred that Adela only wanted to help Clemente travel to the US by making it appear that Clemente has ownership
of the Properties. They further alleged that similar to the previous simulated transfers to Carlos Jr. and Dennis, petitioner also undertook and
warranted to execute a deed of reconveyance in favor of the deceased over the Properties, if and when Adela should demand the same. They
finally alleged that no consideration was given by petitioner to Adela in exchange for the simulated conveyances.

RTC ruled in favor of the private respondents. CA affirmed that the Deeds were simulated and without consideration and no intention to have
legal effect because the contemporaneous and subsequent acts of Clemente are enough to render conveyances null and void of being simulated
for Adela retained dominion.

ISSUE: WON the contract is absolutely or relatively simulated.

RULING: The Deeds of Absolute Sale between the late Adela Shot well and Clemente are null and void for lack of consent and
consideration.

There is simulation when parties do not really want the contract they have executed to produce the legal effects expressed by its wordings.

In short, in absolute simulation there appears to be a valid contract but there is actually none because the element of consent is lacking. This is
so because the parties do not actually intend to be bound by the terms of the contract.

In determining the true value of the contract, the intention of the parties is tested. If words of the contract contravene intention, intention
prevails. Such intention is determined not only from the express terms of their agreement but also from the contemporaneous and subsequent
acts of the parties. This is especially true in a claim of absolute simulation where a colorable contract is executed.

Here, the lower courts considered the totality of the prior, contemporaneous and subsequent acts of the parties.

1. No indication of alienation of properties;

2. Adela continued exercising acts of dominion;

3. SPA appoints Clemente as administratix;

4. The previous sales with Carlos and Dennis were simulated.

There were letters supporting that indeed Adela still executed dominion over her property.

Although on their face, the Deeds of Absolute Sale appear to be supported by valuable consideration, the RTC and the CA found that there
was no money involved in the sale. The consideration in the Deeds of Absolute Sale was superimposed on the spaces therein, bearing a font
type different from that used in the rest of the document. The lower courts also found that the duplicate originals of the Deeds of Absolute
Sale bear a different entry with regard to the price.