Short answer. Yes. A deed of sale that both parties never intended to take effect is an absolutely simulated contract, and the Civil Code declares it void. Because no real consent exists, the deed produces no legal effect and neither party can enforce it.
What the law says
An absolutely simulated or fictitious contract is void.
Civil Code, Article 1346 — Effect of Simulation. Read the full provision →
What makes a contract absolutely simulated
A contract is absolutely simulated when the parties agree on its outward form but share no intention of actually being bound by it. The deed is a pretense — executed to create the appearance of a transaction that will never really happen. Common scenarios include signing a deed of sale to keep property away from creditors, to make an asset look like it belongs to someone else for tax or probate purposes, or simply as a cover story, while everyone understands that no actual sale is taking place and no money will ever change hands.
The legal consequence: void from the start
Article 1346 of the Civil Code is direct: an absolutely simulated or fictitious contract is void. A void contract has no legal effect whatsoever. It does not transfer ownership, create obligations, or give either party any right they could enforce in court. The deed is as if it never existed. Importantly, the void status is not something a court imposes after you file a case — it exists from the moment the contract was made. A notarial seal or registration does not cure absolute simulation.
Relative simulation is different
Not all simulated contracts are absolutely void. Article 1346 also covers relative simulation — where the parties actually intend a different transaction from the one they put in writing. For example, a deed that calls a gift a "sale" to avoid gift taxes is relatively simulated: the real agreement (donation) is hidden behind a false label. If that hidden agreement does not harm any third party and is not illegal, immoral, or against public policy, the Civil Code says it binds the parties to their real agreement — the donation, not the paper sale. So the legal outcome turns on whether the parties intended no contract at all, or a different one.
Who can raise simulation, and what to watch for
Either party to an absolutely simulated contract can raise its void character, and third parties who are harmed by it can do so too. However, the fact that the deed is void does not automatically undo any registration or transfer already completed — you may still need to go to court to have the title cancelled and the property restored. There is also a risk: if one party later denies the simulation and insists the sale was real, proving the secret agreement requires evidence. Written communications, witness testimony, proof that no money was paid, and continued possession of the property by the supposed seller can all help establish what the parties truly intended.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Felix Chingkoe and Rosita Chingkoe vs. Faustino Chingkoe and Gloria Chingkoe, G.R. No. 244076, March 16, 2022 — read the decision on LawPhil →
- ATCI Overseas Corporation and Amalia G. Ikdal vs. Asset Pool A (SPV-AMC), Inc, G.R. No. 250523, June 28, 2021 — read the decision on LawPhil →
- Robert and Nenita De Leon vs. Gilbert and Analyn Dela Llana, G.R. No. 212277, February 11, 2015 — read the decision on LawPhil →
- Heirs of Dr. Mario S. Intac and Angelina Mendoza-Intac vs. Court of Appeals and Spouses Marcelo Roy, Jr. and Josefina Mendoza-Roy, et al, G.R. No. 173211, October 11, 2012 — read the decision on LawPhil →