Art. 1409.

The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order, or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce ofmen;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative tothe principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void bylaw.
These contracts cannot be ratifi ed. Neither can the rightto set up the defense of illegality be waived.

URETA v. URETA
G.R. No. 165748, 14 September 2011

FACTS

In his lifetime, Alfonso Ureta begot 14 children. The children of Policronio (Heirs of Policronio), are
opposed to the rest of Alfonso’schildren and their descendants.

Alfonso was financially well-off during his lifetime. He owned several fishpens, a fishpond, asari-sari
store, a passenger jeep, and was engaged in the buying and selling of copra. Policronio, the eldest, was
the only child of Alfonso who failed to finish schooling and instead worked on his father’s lands.

Sometime in October 1969, Alfonso and four of his children, namely, Policronio, Liberato,Prudencia, and
Francisco, met at the house of Liberato. Francisco, who was then a municipal judge, suggested that in
order to reduce the inheritance taxes, their father should make it appear that he had sold some of his
lands to his children. Accordingly, Alfonso executed 4Deeds of Sale covering several parcels of land in
favor of Policronio, Liberato, Prudencia, and his common-law wife, ValerianaDela Cruz. The Deed of Sale
executed on October 25, 1969, in favor of Policronio, covered 6 parcels of land, which are the properties
in dispute in this case.

Since the sales were only made for taxation purposes and no monetary consideration was given, Alfonso
continued to own, possess and enjoy the lands and their produce.

When Alfonso died on October 11, 1972, Liberato acted as the administrator of his father’sestate. He
was later succeeded by his sister Prudencia, and then by her daughter, CarmencitaPerlas. Except for a
portion of parcel 5, the rest of the parcels transferred to Policronio weretenanted by the Fernandez
Family. These tenants never turned over the produce of the lands toPolicronio or any of his heirs, but to
Alfonso and, later, to the administrators of his estate.

Policronio died on November 22, 1974. Except for the said portion of parcel 5, neitherPolicronio nor his
heirs ever took possession of the subject lands.

On April 19, 1989, Alfonso’s heirs executed a Deed of Extra-Judicial Partition, which included all the
lands that were covered by the 4 deeds of sale that were previously executed byAlfonso for taxation
purposes. Conrado, Policronio’s eldest son, representing the Heirs of Policronio, signed the Deed of
Extra-Judicial Partition in behalf of his co-heirs.

After their father’s death, the Heirs of Policronio found tax declarations in his name covering the6
parcels of land. On June 15, 1995, they obtained a copy of the Deed of Sale executed onOctober 25,
1969 by Alfonso in favor of Policronio.Not long after, on July 30, 1995, the Heirs of Policronio allegedly
learned about the Deed of Extra-Judicial Partition involving Alfonso’s estate.

ISSUE
Whether or not the Deed of Extra-Judicial Partition was valid.

RULING
Yes.It has been held in several cases that partition among heirs is not legally deemed a conveyanceof
real property resulting in change of ownership. It is not a transfer of property from one tothe other, but
rather, it is a confirmation or ratification of title or right of property that an heiris renouncing in favor of
another heir who accepts and receives the inheritance. It is merely adesignation and segregation of that
part which belongs to each heir. The Deed of Extra-JudicialPartition cannot, therefore, be considered as
an act of strict dominion. Hence, a special powerof attorney is not necessary.In fact, as between the
parties, even an oral partition by the heirs is valid if no creditors areaffected. The requirement of
a written memorandum under the statute of frauds does notapply to partitions effected by the heirs
where no creditors are involved considering that suchtransaction is not a conveyance of property
resulting in change of ownership but merely adesignation and segregation of that part which belongs to
each heir.A contract entered into in the name of another by one who has no authority or
legalrepresentation, or who has acted beyond his powers, shall be unenforceable, unless it isratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it isrevoked by the
other contracting party.

Therefore, Conrado’s failure to obtain authority from his co-heirs to sign the Deed of Extra-Judicial
Partition in their behalf did not result in his incapacity to give consent so as to renderthe contract
voidable, but rather, it rendered the contract valid but unenforceable againstConrado’s co-heirs for
having been entered into without their authority.

..where the essential requisites of a contract are present and the simulation refers only to the content or
terms of the contract, the agreement is absolutely binding and enforceable between the parties and their
successors in interest. Lacking, therefore, in an absolutely simulated contract is consent which is essential
to a valid and enforceable contract. 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. Similarly, in this case,
Alfonso simulated a transfer to Policronio purely for taxation purposes, without intending to transfer
ownership over the subject lands.