Reyes V Asuncion 196083

Reyes v Asuncion 196083
FACTS:
Petitioner claimed that since the early 80s, she and her late husband were the owners,
with the right to occupy and possess a parcel of land (subject land), which is also a
sugarcane plantation, with an area of more or less 3.5 hectares located at Patling,
Capas, Tarlac and forms part of a U.S. Military Reservation. Sometime in 1986,
petitioner hired respondent as a caretaker of the subject land. In 1997, the Bases
Conversion and Development Authority (BCDA) launched a resettlement program for
the victims of the Mt. Pinatubo eruption and began to look for possible resettlement
sites in Tarlac and the subject lot was among those considered. Thereafter, according to
petitioner, in order to prevent the BCDA from converting her property into a
resettlement site, she and respondent executed a contract, antedated on June 15,
1993, transferring her rights over the subject land to the respondent.
ISSUE:
Whether or not petitioner can assail the validity of their contract invoking that what
they have executed is an absolute simulated contract.
RULING:
The court answered in the negative.
In an absolutely simulated contract is consent which is essential to a valid and

enforceable contract.13 Thus, where a person, in order to place his property beyond the
reach of his creditors, simulates a transfer of it to another, he does not really intend to
divest himself of his title and control of the property; hence, the deed of transfer is but
a sham.
Thereafter, according to petitioner, in order to prevent the BCDA from converting her
property into a resettlement site, she and respondent executed a contract, antedated
on June 15, 1993, transferring her rights over the subject land to the respondent.
The primary consideration in determining the true nature of a contract is the intention
of the parties. If the words of a contract appear to contravene the evident intention of
the parties, the latter shall prevail. Such intention is determined not only from the
express terms of their agreement, but also from the contemporaneous and subsequent
acts of the parties.15
The burden of proving the alleged simulation of a contract falls on those who impugn its
regularity and validity. A failure to discharge this duty will result in the upholding of the
contract. The primary consideration in determining whether a contract is simulated is
the intention of the parties as manifested by the express terms of the agreement itself,
as well as the contemporaneous and subsequent actions of the parties. The most
striking index of simulation is not the filial relationship between the purported seller and
buyer, but the complete absence of any attempt in any manner on the part of the latter
to assert rights of dominion over the disputed property.
petitioner failed to present evidence to prove that respondent acted in bad faith or
fraud in procuring her signature or that he violated their real intention, if any, in
executing it.
So far, appellant's averments evince an obvious knowledge and voluntariness on her

part to enter into the alleged simulated contract. Without the slightest doubt, appellant,
as plaintiff in the court below, utterly foiled to adduce any evidence of appellee's bad
faith or fraud in procuring her signature to the contract or that he violated their real
intention, if any, in executing it. It must be stressed that the determination of whether
one acted in bad faith is evidentiary in nature. Indeed, the unbroken jurisprudence is
that "[b]ad faith [or fraud] under the law cannot be presumed; it must be established
by clear and convincing evidence. The allegation of simulation of contract as well as
lack of consent and/or vitiated consent remains to be proven. As it stands, We perceive
that the contract by its very terms and conditions, on June 15, 1993, appellant simply
intended to transfer the subject land to appellee. It is a cardinal rule that if the terms of
a contract are clear and leave no doubt as to the intention of the contracting parties,
the literal meaning of its stipulation shall control.

Reyes V Asuncion 196083

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Reyes V Asuncion 196083

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Reyes v Asuncion 196083

The court answered in the negative.

In an absolutely simulated contract is consent which is essential to a valid and

So far, appellant's averments evince an obvious knowledge and voluntariness on her

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