Balingit v. Court of Appeals

Summary

This case involves a property dispute where Filomena Tejero successfully challenged the validity of a deed of sale executed in favor of spouses Velasquez, both lawyers, and subsequent transfer to their daughter. Tejero claimed the 1970 deed of sale was simulated, executed merely to facilitate a bank loan with an agreement to reconvey the property after loan approval. When the bank loan failed to materialize, the Velasquez spouses registered the property in their names and later transferred it to their daughter. The Supreme Court applied Civil Code provisions on simulation of contracts, finding the deed of sale absolutely simulated and void for lack of consideration. The Court noted that the execution of three documents on the same date - cancellation of mortgage, deed of sale, and repurchase agreement - supported Tejero's claim of simulation. The decision restored Tejero's ownership rights and declared all subsequent titles void, emphasizing that simulated contracts produce no legal effect and cannot ripen into valid titles.