RAFAEL G. SUNTAY, substituted by his heirs, namely: ROSARIO, RAFAEL, JR.

, APOLINARIO,
RAYMUND, MARIA VICTORIA, MARIA ROSARIO and MARIA LOURDES, all surnamed SUNTAY,
petitioners, vs. THE HON. COURT OF APPEALS and FEDERICO C. SUNTAY, respondents.
G.R. No. 114950 December 19, 1995

Facts:

Federico owns a rice mill property in Bulacan. He wanted to become a contractor-miller of

National Rice and Com Corporation (NARIC). His application was rejected due to pending unpaid
loans. To circumvent it, he allowed his nephew respondent to make the application in his behalf.
They executed a deed of sale wherein the rice mill property was transferred to respondent for P
20,000.00. After 3 months, it was repurchase by Federico. However, the document for the repurchase
was not a deed of sale but a real estate mortgage. When Federico demanded respondent to transfer
the title, he refused alleging that the reconveyance was a dacion en pago in lieu of attorney’s fees in
consideration of the legal services rendered by respondent as legal counsel for his uncle’s business.
Federico contends that the sale was merely simulated for the purpose of accommodation.

Issue: WON the contract was simulated

Held: Yes.

The Court held that the deed of sale was simulated and thus null and void. The sale that was
made was never intended to have a binding and legal effect between them. The Court
considered the history, relationship of trust, intimacy, and interdependence between the
parties, which would point out an unmistakable token of simulation. There was also the case
that the sale and repurchase was closely executed at exactly the same price. In addition, the
amount in consideration was grossly inadequate given the location and value of the property .
It also considered that Federico was liquid enough to pay Rafael for his legal fees that he doesn’t need
to transfer an income-producing property. Also, Raphael did not take exclusive possession of the
property as alleged and did not declare it as part of his assets in his statement of assets and
liabilities.