Tayco v. Tayco-Flores

G.R. No. 168692 (December 13, 2010)

Facts:

The case revolves around the inheritance of three parcels of land following the death of spouses Fortunato Tayco and Diega Regalado. The heirs, including petitioner Francisco Tayco and his sisters Concepcion Tayco-Flores and Consolacion Tayco, inherited the properties located in Kalibo, Aklan. In September 1972, Francisco and Consolacion executed a Deed of Extrajudicial Settlement of the Estate of Diega Regalado, transferring their shares in the properties to their sister Concepcion. This document was notarized, and later, in March 1991, Concepcion and Consolacion executed a Confirmation of Quitclaim of Shares in the same parcels of land.

After the deaths of Consolacion in 1996 and Concepcion in 1997, Francisco Tayco filed a case in the Regional Trial Court (RTC) of Kalibo, seeking to nullify the aforementioned documents and claiming his entitlement to his original shares in the properties. He argued that the Deed of Extrajudicial Settlement was executed under duress, as Concepcion needed money to mortgage the properties, which ultimately did not happen. He claimed that he was unaware of the Confirmation of Quitclaim executed by his sisters, which was intended to transfer the titles and tax declarations to Concepcion.

The RTC ruled in favor of Francisco, declaring both documents null and void, and ordered the properties to be co-owned by Francisco and the respondents, the heirs of Concepcion. The RTC found that the extrajudicial settlement was a simulated document meant to facilitate a loan that never materialized.

The respondents appealed to the Court of Appeals (CA), which reversed the RTC's decision, declaring the respondents as the absolute owners of the properties and dismissing Francisco's complaint. The CA reasoned that the genuineness and due execution of the extrajudicial settlement were not disputed, and the document clearly indicated the intention of the parties.

Legal Issues:

The primary legal issue in this case is whether the Deed of Extrajudicial Settlement of the Estate of Diega Regalado with Confirmation of Sale of Shares can divest co-heir and co-owner Francisco Tayco of his shares in the three parcels of land in question.

Arguments:

• Petitioner's Argument (Francisco Tayco):

  • The Deed of Extrajudicial Settlement was executed under duress and was intended only to facilitate a loan that never materialized.
  • He was not aware of the Confirmation of Quitclaim executed by his sisters, which he claims was done without his consent.
  • The documents are null and void as they do not reflect the true intent of the parties involved.

• Respondents' Argument (Heirs of Concepcion Tayco-Flores):

  • The extrajudicial settlement was duly executed, notarized, and signed by the parties, thus valid and binding.
  • The CA found no evidence to support Francisco's claims of duress or lack of consent.
  • The documents clearly indicate the intention to transfer ownership of the properties.

Court's Decision and Legal Reasoning:

The Supreme Court granted the petition for review on certiorari, reversing the CA's decision and reinstating the RTC's ruling. The Court emphasized that the findings of fact by the RTC should be respected, as it is in a better position to assess the credibility of witnesses and the evidence presented.

The Court reiterated that notarization of the extrajudicial settlement makes it a public document, binding on third parties. However, it also highlighted that the intent of the parties is paramount in interpreting contracts. The RTC's findings indicated that the extrajudicial settlement was a simulated document, executed merely to facilitate a loan that did not occur, thus rendering it void.

The Court also noted the lack of consideration in the sale of shares, as the amount stated was grossly disproportionate to the market value of the properties. This further supported the RTC's conclusion that the documents were not valid.

Significant Legal Principles Established:

1. Intent of the Parties: The intention behind the execution of a document is crucial in determining its validity, especially in cases involving extrajudicial settlements.
2. Notarization and Public Documents: While notarization lends a document public character, it does not override the substantive requirements of validity, including genuine consent and consideration.
3. Simulated Documents: Documents executed under false pretenses or for purposes other than what they purport to represent can be declared null and void.