Chico-Pena et al v. Sucesion Gonzalez Collazo et al

Filing 36

MEMORANDUM AND ORDER. The Court AFFIRMS the bankruptcy court's September 11, 2008 Opinion & Order disposing of the Chicos' acquisitive prescription argument. It also AFFIRMS for different reasons the bankruptcy court's November 14, 2012 holding that the real estate properties at issue do not constitute part of Ms. Chico's bankruptcy estate. Judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 06/14/2013. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
IN RE:
AIDA LUZ CHICO PEÑA,
Debtor
______________________________
SUCESION GONZALEZ COLLAZO
COMPOSED OF EDA GONZALEZ
COLLAZO; BLANCA GONZALEZ
COLLAZO; BRENDA CONZALEZ
RAMOS; FELIZ GONZALEZ JIMENEZ;
MARTA M. GONZALEZ; AND SONIA
GONZALEZ BELTRAN,

Civil No. 12-1986 (FAB)

Plaintiffs-Appellees,
v.
AIDA LUZ CHICO PEÑA, et al.,
Defendants-Appellants.

MEMORANDUM AND ORDER
BESOSA, District Judge.
BACKGROUND
I.

Factual Background
The Court draws the following “uncontested material facts,”1

verbatim, from the bankruptcy court’s Opinion and Order (“O&O”)
dated September 8, 2011, (Docket No. 6-13 at pp. 8–10):

1

Both parties indicated that they agree with the bankruptcy
court’s version of the facts contained in the Opinion & Order, and
they adopted those facts as “uncontested facts” in their pre-trial
report. (See Docket No. 6-20 at pp. 4–5.)

Civil No. 12-1986 (FAB)

2

Appellant Aida Luz Chico-Peña (“Ms. Chico”) and the decedent
Mr. Felix Gonzalez-Figueroa (“Mr. Gonzalez”) were in a relationship
in

which

they

procreated

five

(5)

daughters out

of

wedlock.

Mr. Gonzalez was legally married to Ms. Juana Collazo-Gonzalez
(“Ms. Collazo”).
Mr. Gonzalez passed away on April 3, 2002 intestate.

He was

married to Ms. Collazo.
Mr. Gonzalez and Ms. Chico had a relationship in which they
procreated the following heirs:

Jannette Vanessa Gonzalez Chico;

Raquel Gonzalez Chico; Maria del Carmen Gonzalez Chico; Rosa
Milagros Gonzalez Chico; and Blanca Luz Gonzalez Chico.
Ms. Chico appears as the owner in the Property Registry[] of
the properties included in the state court case number LAC2002-0054
and in the bankruptcy petition in case number 09-05922(ESL).
A private document was executed on June 18, 1981 between
Ms. Chico and Mr. Gonzalez in which they both recognized that
Ms. Chico bought certain properties with monies received from
Mr. Gonzalez and registered the same under her name in the Property
Registry.

Ms. Chico bought the following real estate properties:

A.
Property located at #126 Comercio Street, Lares, 2
story small building with 4 apartments. 1-3 bedrooms and
1 bathroom; 2-2 bedrooms and 1 bathroom; 3-3 bedrooms and
1 bathroom; 4-3 bedrooms and 1 bathroom.
B.
Residential property located at #125 Comercio
Street, Lares, PR, consisting of a 2 story concrete house
with 4 bedrooms and 3 bathrooms, land of approximately 2
“cuerdas.”

Civil No. 12-1986 (FAB)

3

C.
Residential property located at #4 Echagaray Street,
Lares, PR, consisting of a concrete house with 3 bedrooms
and 1 bathroom.
D.
Residential Property located at #5 Echagaray Street,
Lares, PR, consisting of a concrete house with 4 bedrooms
and 2 bathrooms and car port.
The properties listed in the preceding paragraph are the
subject of the instant action.
In the above-referenced private document, Mr. Gonzalez and
Ms. Chico acknowledged that the properties that are registered
under

the

name

of

Ms.

Chico

were

acquired

with

monies

from

Mr. Gonzalez.
At the time the aforementioned private document was signed,
Mr. Gonzalez was married to Ms. Collazo.
In the FIFTH paragraph of the private document signed by
Mr. Gonzalez and Ms. Chico, the former expressed his intention that
the properties bought under Ms. Chico’s name be given to the
daughters they have in common in concept of their inheritance.
At the time the aforementioned private document was executed,
Mr. Gonzalez was married to Ms. Collazo.

Ms. Collazo never

appeared in this document to consent the transfer of property.

Civil No. 12-1986 (FAB)

4

The private document was signed by Mr. Gonzalez and Ms. Chico
before a Notary Public, in Lares, Puerto Rico.2
Ms. Collazo passed away on September 9, 1996.
Ms. Chico is in the physical (natural) possession of the
properties.
Ms. Chico has been uninterruptedly in possession of the
properties subject of this action since they were acquired under
her name through public deeds in 1980 and 1981.
Ms. Chico has been a resident of Lares, Puerto Rico all her
life.
Ms.

Chico

knows

from

first

hand

knowledge

that

both

Mr. Gonzalez and Ms. Collazo[], lived uninterruptedly in Lares,
Puerto Rico, until their respective deaths.
The state court case was filed in the year 2002.
In the state court case, Marta Miriam Gonzalez Collazo v.
Felix Gonzalez Collazo, et als., Num. LAC 2002-00054, Ms. Chico in

2

The bankruptcy court highlighted the following section from
the private document, noting that the admonition “turned into a
presage of the outcome of this case”:
SEVENTH: I, The Notary Public, having admonished the
deponents of the convenience and desirability of what is
herein expressed and accepted by them be done by Public
Writ and Last Will and Testament, which they decide not
to do at present, since Mr. Gonzalez wishes to reach an
agreement with his wife and other heirs as to the
properties that shall be adjudicated to each one of them
at his death.
(Docket No. 7-9 at p. 8.)

Civil No. 12-1986 (FAB)

5

a deposition (pg. 43 of the deposition transcript) regarding such
case[] testified on February 8, 2006, that she did not give
Mr. Gonzalez money and what she would do to help him (Mr. Gonzalez)
with the business was to “[t]hen pray to God so that everything
will go well.”
referenced

Mrs. Chico admitted on page 55 of the above-

deposition

that

Mr.

Gonzalez

paid

for

everything,

including utilities.
Ms. Chico mortgaged one of the properties in #126 Comercio
Street, Lares with Westernbank.
Westernbank

was

closed

by

the

Federal

Deposit

Insurance

Corporation on April 30, 2010.
II.

Procedural History
The Court takes the following facts regarding the case’s

procedural

history

from

the

bankruptcy

court’s

O&O

dated

November 14, 2012, (Docket No. 7-9 at pp. 2–8):
Ms. Chico filed a bankruptcy petition under Chapter 13 of the
Bankruptcy Code on July 17, 2009.

She included in her Schedule A

(Real Property) four (4) real estate properties.

In her Statement

of Financial Affairs, she disclosed that she was a party in the
court case No. LAC 2002-0054, Marta Miriam Gonzalez Collazo v.
Feliz Gonzalez Collazo, et als. v. Aida L. Chico Peña, and that the
nature

of

the

proceeding

was

a

civil

suit

regarding

distribution of the assets of a decedent’s estate.

the

On July 17,

2009, Ms. Chico filed her Chapter 13 Payment Plan, in which she

Civil No. 12-1986 (FAB)
proposed

to

sell

two

6
(2)

real

properties

—

described

as

#5

Echegaray St. and #4 Echegaray St. in Lares, Puerto Rico — to
partially fund the plan.

She amended her plan on November 25,

2009, and the Court confirmed the Amended Chapter 13 Payment Plan
on December 17, 2009.
On

April

23,

2010,

the

Gonzalez-Collazo

Sucesion

(“the

Sucesion”) filed an adversary proceeding before the bankruptcy
court to obtain a declaratory judgment and enforceable order
establishing that the real properties Ms. Chico included in her
bankruptcy petition are not property of the bankruptcy estate, but
rather are property of the Sucesion.

On December 21, 2010, the

Sucesion filed a motion for summary judgment in which they argued
that (1) the execution of the deeds of sale for the real properties
in controversy are invalid due to a simulated contract; and that
(2) Ms. Chico did not acquire the real properties in controversy
through prescription by possession with good faith and proper
title,

nor

without

good

faith

or

proper

title,

articles 1857 and 1859 of the Puerto Rico Civil Code.
Ann. tit. 31 §§ 5278, 5280.

pursuant

to

Laws of P.R.

The Chicos filed a motion to dismiss

the Sucesion’s motion for summary judgment as well as a cross
motion for summary judgment on February 2, 2011, contending that
the properties do indeed constitute part of Ms. Chico’s bankruptcy
estate because she acquired the properties via adverse prescription
pursuant to the Civil Code.

On February 23, 2011, the Sucesion

Civil No. 12-1986 (FAB)

7

opposed the Chicos’ cross motion for summary judgment, and one day
later the Chicos filed a second motion to dismiss the Sucesion’s
motion for summary judgment as well as a cross-motion for summary
judgment.
On September 8, 2011, the bankruptcy court entered an Opinion
and

Order

holding

that

the

acquisitive

prescription

tabulas doctrine was inapplicable to the Chicos’ claims.
No.

7-9

at

pp.

1–2.)

Addressing

the

rationale

secundum
(Docket

behind

the

acquisitive possession secundum tabulas doctrine, the bankruptcy
court found that the Chicos cannot satisfy the third element of the
claim requiring that Ms. Chico acquired the property from a non
dominus third party.

Id. at p. 14.

Accordingly, it granted in

part the Sucesion’s motion for summary judgment.

Id. at p. 2.

The

bankrutpcy court noted, however, that it was not in a position to
readily rule on the issue of the existence of a simulated contract
at that time.

Id. at p. 18.

On April 30, 2012 the bankruptcy court conducted a trial on
the issue of a simulated contract.

On November 14, 2012, the

bankruptcy court ruled on the issue of “whether the properties
presently under Ms. Chico’s name are property of the estate[,]
which in turn hinges on whether [the Sucesion] has established that
there was a relative simulated contract in the modality of the
identity or in the subjects of the contract in which Ms. Chico
interposed as a straw person between the seller and Mr. Gonzalez.”

Civil No. 12-1986 (FAB)

8

(Docket No. 7-9 at p. 6.)

Finding that Ms. Chico served as the

intermediary between the sellers of the real estate and the “real
party that purchased these properties[,] which was the conjugal
partnership

composed

of

Mr.

Gonzalez

and

Ms.

Collazo,”

the

bankruptcy court concluded that Mr. Gonzalez pursued an illicit and
ineffective inter-vivos donation of properties to Ms. Chico.

Id.

at

the

pp.

19–20.

As

a

result

of

the

simulated

contract,

bankruptcy court held that the properties belong exclusively to the
conjugal partnership of Ms. Collazo and Mr. Gonzalez, and they do
not constitute part of Ms. Chico’s estate.

Id. at p. 20.

The

Chicos appeal both bankruptcy court decisions.
DISCUSSION
I.

Standards
A.

District Court Review of Bankruptcy Decisions
Pursuant to 28 U.S.C. § 158(a), a district court has

jurisdiction to hear appeals from judgments in bankruptcy.
appeal,

a

bankruptcy

district
court’s

further proceedings.

court

may

judgment,

or

affirm,
remand

modify,
with

Fed. R. Bkrtcy. P. 8013.

or

On

reverse

instructions

a

for

“The scope of this

task, however, varies depending on whether the appeal revolves
around findings of facts or conclusions of law.”

Segarra-Miranda

v. Perez-Padro, 482 B.R. 59, 67 (D.P.R. 2012).

In reviewing a

bankruptcy court’s decision, “[f]indings of fact, whether based on
oral or documentary evidence, shall not be set aside unless clearly

Civil No. 12-1986 (FAB)

9

erroneous, and due regard shall be given to the opportunity of the
bankruptcy court to judge the credibility of the witnesses.”
R. Bankr. P. 8013; see also Fed. R. Civ. P. 52(a)(6).

Fed.

Pursuant to

the “clear erroneous” standard, a reviewing court will only reverse
a prior decision if it has the “definite and firm conviction that
a mistake has been committed.”

In re the Bible Speaks, 869 F.2d

628, 630 (1st Cir. 1989) (citing Anderson v. Bessemer City, 470
U.S. 564, 573 (1985) (finding no clear error where the record
supported

the

bankruptcy

underlying

it)).

“This

court’s
standard

conclusion
plainly does

and
not

the

facts

entitle

a

reviewing court to reverse the finding of the trier of fact simply
because it is convinced that it would have decided the case
differently.”

Anderson, 470 U.S. at 573.

In contrast, a district court considers a bankruptcy
court’s conclusions of law de novo.

Palmacci v. Umpierrez, 121

F.3d 781, 785 (1st Cir. 1997). It must therefore analyze and solve
issues from the same perspective of the bankruptcy court, as if the
issues were to be decided for the first time. Segarra-Miranda, 482
B.R. at 67 (citing Water Keeper Alliance v. U.S. Dept. of Defense,
271 F.3d 21, 31 (1st Cir. 2001)).

Civil No. 12-1986 (FAB)
B.

10

Scope of the Appeal
The parties dispute the scope of the issues on appeal.

Pursuant to Bankruptcy Rule 8006,3 the Chicos-Appellants filed a
statement listing the following two issues for appellate review:
1. Whether the Bankruptcy Court erred when [it]
found that the doctrine of acquisitive prescription
is inapplicable in this case.
2. Whether the Bankruptcy Court erred when [it]
found that the real properties registered in the
Registry of Property in the name of the Debtor did
not belong to her, but to the conjugal partnership
which was composed of Mrs. Juana Collazo and Mr.
Felix Gonzalez Figueroa.4
The Chicos argue that the acquisitive prescription issue is not
appropriately before the Court, because the Chicos waited to appeal
the bankruptcy court’s September 8, 2011 O&O — which disposed of
the adverse possession issue — until too late, on November 30,
2012.

(Docket No. 23 at pp. 15–17.)

The Sucesion contends that

the bankruptcy court’s O&O became the law of the case, and is
“final[,] and inappealable” [sic].5

(Docket No. 23 at p. 17.)

In

3

Rule 8006 requires an appellant to furnish “a statement of
the issues to be presented” on appeal.
4

The Chicos re-phrase the issues for the Court’s
consideration into three topics: (1) whether a simulated contract
or an inter vivos gift of monies existed between Mr. Gonzalez and
Ms. Chico; (2) whether the cause of action to challenge Mr.
Gonzalez’s alleged “gift of monies” to Ms. Chico is time-barred;
and (3) whether Ms. Chico acquired title over the real properties
by ordinary acquisitive prescription. (Docket No. 21 at p. 11.)
5

They also cite the doctrines of res judicata and estoppel in
support of their contention that consideration of the adverse
possession issue is improper. (Docket No. 23 at pp. 15–17.)

Civil No. 12-1986 (FAB)

11

response, the Chicos contend that the Court has jurisdiction to
review

“the

entire

adversary

case[,]

including

all

the

interlocutory orders and final judgment entered by the Bankruptcy
Court that disposed of all the claims in this case.”

(Docket

No. 19 at p. 3.)
As a prior6 interlocutory order, the bankruptcy court’s
September

8,

2011

O&O

is

reviewable

on

appeal.

All

prior

interlocutory orders, opinions and non-final partial judgments are
subject to review along with the appealable judgment.

See Brandt

v. Wand Partners, 242 F.3d 6, 15 (1st Cir. 2001) (“Where the
district court has made interlocutory decisions before entering a
final judgment, an appeal from the final judgment brings up the
interlocutory decisions for review . . . .”).

6

Accordingly, the

The Chicos are incorrect in referring to the September 8,
2011 O&O as an interlocutory order that is “not subject to
appellate review as of right until all the controversies in the
case have been ruled upon by the Bankruptcy Court.” (Docket No. 19
at p. 3.) The bankruptcy court’s September 8, 2011 O&O remained an
interlocutory decision only until the bankruptcy court entered
judgment on November 16, 2012.
At that time, it became final.
This distinction, however, is irrelevant to the Court’s ability to
review the O&O.
See John’s Insulation, Inc. v. L. Addison &
Assocs., Inc., 156 F.3d 101, 105 (1st Cir. 1998) (“It has been
uniformly held that a notice of appeal that designates the final
judgment encompasses not only that judgment, but also all earlier
interlocutory orders that merge in the judgment.”) (citing cases
from other circuits); see also EEOC v. Union Independiente De La
Autoridad De Acueductos, 279 F.3d 49, 54 (1st Cir. 2002) (citing
John’s Insulation); Picard v. Members of the Employ. Ret. Bd., 275
F.3d 139, 144 n.5 (1st Cir. 2001) (same); Tringali v. Hathaway
Mach., 796 F.2d 553, 559 (1st Cir. 1986) (indicating that entry of
a final, appealable order will enable an appellant to request
review of earlier nonfinal decisions upon which the final decision
rests).

Civil No. 12-1986 (FAB)

12

Court turns to the issues of acquisitive prescription and simulated
contract, in turn.
II.

Analysis
A.

Acquisitive Prescription
The Chicos appeal the bankruptcy court’s rejection of the

claim that Ms. Chico acquired the properties through ordinary
acquisitive prescription.

Claiming that Ms. Chico accepted the

title to the properties from Mr. Gonzalez in good faith, and that
she

possessed

the

properties

as

the

“owner

public

[sic],

peacefully[,] and interruptedly since 1979 to the present,” the
Chicos argue that Ms. Chico met all requirements under ordinary
acquisitive prescription, and that therefore she became the lawful
owner of the properties in question by June 16, 2002.
No. 21 at pp. 33–34; Docket No. 6-10 at p. 15.)

(Docket

They claim that

Mr. Gonzalez and Ms. Collazo were “present” for purposes of article
1857 of the Civil Code, P.R. Laws Ann. tit. 31 § 5278, and
therefore

that

“any

defects

that

Ms.

Chico’s

title

properties may have existed were cured by 1991 . . . .”
p. 16.

to

the

Id. at

They also claim that the provisions of article 106 of the

Mortgage Law, P.R. Laws Ann. tit. 30 § 2356, are not incompatible
with article 1854 of the Civil Code, P.R. Laws Ann. tit. 31 § 5275,
because in this case Ms. Chico “is the recorded title holder of the
properties in question.”

(Docket No. 6-12 at pp. 7–8.)

Civil No. 12-1986 (FAB)
In

contrast,

13
the

Sucesion

disputes

that

Ms.

Chico

fulfilled the uninterrupted and public possession requirements of
the adverse possession doctrine in Puerto Rico; accordingly, they
contend that the property belongs to the sucesion of Mr. Gonzalez
and Ms. Collazo.

They claim that Ms. Chico was not a good faith

possessor with proper title because she did not buy the properties;
rather, Mr. Gonzalez purchased the properties, possessed them, and
was their owner until he died on April 3, 2002.
at pp. 55–57.)

(Docket No. 6-11

They argue that Ms. Chico knew that Mr. Gonzalez

was in possession of the properties because she lived with him when
he bought the properties, and they admit only that Ms. Chico
possessed the properties merely “by an act of mere tolerance” —
with Mr. Gonzalez’s permission.7

(Docket No. 6-11 at p. 53.)

In its September 8, 2011 O&O, the bankruptcy court cited
the

pertinent

Civil

Code

articles

regarding

prescription

and

correctly reasoned that the various sections “must be read in
conjunction” with each other.

(Docket No. 6-13 at p. 13.)

In

Puerto Rico, a person may acquire ownership and other property
rights by prescription “in the manner and under the conditions
specified by law.”

P.R. Laws Ann. tit. 31 § 5241.

To acquire

ordinary prescription of ownership and other property rights,

7

The Court notes that Ms. Chico’s mere possession by
tolerance does not grant her ownership rights of the properties.
See P.R. Laws Ann. tit. 31 § 5263 (“Acts of a possessory character,
performed . . . by mere tolerance on the part of the owner, are of
no effect for establishing possession.”).

Civil No. 12-1986 (FAB)

14

possession in good faith and under a proper title are necessary for
a time specified by law.

P.R. Laws Ann. tit. 31 §§ 5261 & 5272.

“Possession must be in the capacity of an owner, public, peaceful,
and uninterrupted.”

P.R. Laws Ann. tit. 31 § 5262.

“Good faith”

possession “consists in his belief that the person from whom he
received the thing was the owner of the same, and could convey his
title.”

P.R. Laws Ann. tit. 31 § 5271.

Proper title is “that

which legally suffices to transfer the ownership or property right,
the prescription of which is in question.”
§ 5273.

P.R. Laws Ann. tit. 31

Articles 1853 and 1854 of the Civil Code require that

“[t]he title for prescription must be true and valid” and that
“proper title must be proven; it never can be presumed.”
Ann. tit. 31 §§ 5274–75.

P.R. Laws

The Civil Code also provides that

“[o]wnership and other property rights in real property shall
prescribe by possession for ten (10) years as to the persons
present, and for twenty (20) years with regard to those absent,
with good faith and with a proper title.”
§ 5278.

P.R. Laws Ann. tit. 31

They also prescribe “by uninterrupted possession of the

same for thirty (30) years without the necessity of title nor [sic]

Civil No. 12-1986 (FAB)

15

good faith and without distinction between present and absent
persons.”

P.R. Laws Ann. tit. 31 § 5280.8
After citing the Puerto Rico statutes, the bankruptcy

court held as “misplaced” the Chicos’ reliance on the doctrine of
acquisitive possession secundum tabulas.
p. 14.)

(Docket No. 6-13 at

It cited Spanish commentators Roca Sastre and Roca-Sastre

Muncunill as authority on the rationale behind the doctrine,
explaining that:
the reason [a]rticle 35 of the Mortgage Law of Spain
(which is equivalent to [a]rticle 106 of the Puerto Rico
Mortgage Law) was enacted is to enable the registered
titleholder [—] that acquired from a non dominus, meaning
a person who did not have ownership (property rights)
over the real property, and who is not protected by the
figure of the third party who acquired property in good
faith, better known as the “tercero registral” codified
in [a]rticle 34 of the Mortgage Law of Spain ([a]rticle
105 of the Puerto Rico Mortgage Law) [—] to acquire
acquisitive possession secundum tabulas of a real

8

The bankruptcy court also referred to article 106 of the
Puerto Rico Mortgage law:
With regard to adverse possession on behalf of the
recorded titleholder, the registration shall be the
legitimate title, and it shall be assumed that he has
owned it publicly, peacefully, uninterruptedly and in
good faith during the time the entry is in force, and
that of the predecessors from whom he acquired it.
P.R. Laws Ann. tit. 30, § 2356. The Chicos argue on appeal that
the bankruptcy court “erroneously interpreted and applied” the
prescription statutes by “add[ing] to the ordinary prescription of
ownership a requirement that the Civil Code does not provide.”
(Docket No. 21 at p. 29.) They argue that the bankruptcy court
improperly relied on article 106 of the Mortgage Law to find that
Ms. Chico did not acquire the real property by ordinary adverse
possession because she did not acquire the properties from a non
dominus. Id.

Civil No. 12-1986 (FAB)

16

property through ordinary prescription, meaning good
faith and proper title.
(Docket No. 6-13 at p. 14) (citing Roca Sastre & Roca-Sastre
Muncunill, Derecho Hipotecario, Vol. II, 9-12, Barcelona, Ed. Bosch
(7th ed. 1979)).

For the doctrine of acquisitive prescription

secundum tabulas to apply, the following three elements must be
met:

(1) the registered titleholder and the possessor of the real

property must converge in the same person; (2) the ownership and
property rights must be susceptible of possession; and (3) the
registered titleholder is an ad usucapionem possessor because he or
she acquired the property from a non dominus, and is not protected
by the figure of the “tercero registral” or the third party that
purchased a real property in good faith.

(Docket No. 6-13 at

p. 14) (citing Roca Sastre & Roca-Sastre Muncunill at 17-18).
Because Ms. Chico could not satisfy the third requirement
of the doctrine of acquisitive possession secundum tabulas, the
bankruptcy

court

ultimately

prescription defense.

dismissed

the

Chicos’

(Docket No. 6-13 at p. 15.)

adverse

Four sale and

purchase deeds were indeed recorded in the Property Registry naming
Ms. Chico as the registered titleholder.

Id.

Those deeds do not

demonstrate, however, that Ms. Chico purchased the properties from
their unrightful owners; each of the sellers had ownership rights
over the real properties that were duly registered in the Property
Registry.

Id.

Because Ms. Chico did not acquire title from a non

dominus — someone who lacks ownership or property rights over the

Civil No. 12-1986 (FAB)

17

property and who is not protected by the “tercero registral” — the
bankruptcy court found that the doctrine of acquisitive possession
secundum tabulas did not apply to the case before it.
The
analysis.

Court

fully

agrees

with

the

Id.

bankruptcy

court’s

In this case, the acquisitive possession secundum

tabulas does not apply.

Ms. Chico did not acquire the real estate

properties from a person who was not the properties’ owner, a non
dominus.

Because

she

did

not

acquire

by

adverse possession

(“usucapion”), article 106 of the Mortgage Law does not apply.
Article 106 is a vehicle which establishes a presumption in favor
of the registered owner who is in the process of acquiring a
property by adverse possession.

P.R. Laws Ann. tit. 30 § 2356.

The controversy between the Chicos and the Sucesion, therefore,
must be resolved using contractual figures such as contractual
simulation in any of its modalities.

Accordingly, the bankruptcy

court’s dismissal of the Chicos’ adverse possession claim is
AFFIRMED.
B.

Simulated Contract
1.

Litigation Background
In order to determine whether the properties claimed

by Ms. Chico constituted part of her bankruptcy estate, a trial was
held on April 30, 2012.

The determination of that issue hinged on

the question of whether a relative simulated contract in the
modality of the identity or in the subjects of the contract

Civil No. 12-1986 (FAB)
occurred.

18

(See Docket No. 7-9 at p. 6.)

Post-trial submissions by

the parties followed, and on November 14, 2012, the bankruptcy
court

issued

an

O&O

ultimately

determining

that

Ms.

Chico’s

bankruptcy estate did not include the real estate properties.
at

pp.

19–20.

Considering

the

two

witnesses’

Id.

testimony and

documentary evidence presented at trial9 as well as the undisputed
facts submitted by the parties, the bankruptcy court found that
Ms. Chico interposed as a “straw person” between the sellers of the
properties and the real buyer — Mr. Gonzalez — and that therefore
a relative simulated contract existed.

Id. at p. 19.

Because

Mr. Gonzalez had disposed of monies which belonged to his conjugal
partnership with Ms. Collazo to pursue an illicit inter vivos
donation of real estate to his daughters with Ms. Chico, the real

9

Two witnesses testified at trial: Ms. Chico testified for
the Chicos, and Ms. Blanca Gonzalez-Collazo testified for the
Sucesion. (Docket No. 7-9 at pp. 4–6.) In its November 14, 2012
O&O, the bankruptcy court summarized both Ms. Chico’s and
Ms. Gonzalez’s testimony. It regarded their statements, however,
as inapposite to the controversy.
(Docket No. 7-9 at p. 4)
(“[T]heir credible testimony did not provide any significant
evidence in support of the issue before the court.”); See also id.
at p. 6 (“The testimony of [Ms. Gonzalez] does not add any material
evidence to the controversy before the court.”). The bankruptcy
court thus “substantially based” its findings on the uncontested
facts to which the parties agreed. Id. at p. 4.
“Findings of fact, whether based on oral or documentary
evidence, shall not be set aside unless clearly erroneous, and due
regard shall be given to the opportunity of the bankruptcy court to
judge the credibility of the witnesses.” See Fed. R. Bankr. P.
8013. Upon review of Ms. Chico’s and Ms. Gonzalez’s testimony, the
Court defers to the bankruptcy court’s findings regarding the
persuasiveness and relevance of the witnesses’ testimony because it
finds no clear error.

Civil No. 12-1986 (FAB)

19

estate properties belonged to that conjugal partnership, not to
Ms. Chico.

Id. at p. 20.
Unsatisfied with the bankruptcy court’s ruling, the

Chicos appeal.

(Docket No. 21 at p. 11.)

They rely on a private

document signed between Ms. Chico and Mr. Gonzalez to contend that
the parties’ intentions were for Mr. Gonzalez to give Ms. Chico a
gift “for the benefit of his minor daughters with her.”
p. 25.

Id. at

Mr. Gonzalez, they claim, had “no intention whatsoever of

[Mr. Gonzalez] buy[ing] the properties for himself and us[ing]
[Ms. Chico] as a straw person to hide the properties from his
wife.”

Id.

In response, the Sucesion contends that the trial

evidence established that Ms. Chico acted as a straw person for
Mr. Gonzalez in the transaction and that a simulated contract
consequently exists.
2.

(Docket No. 23.)

Legal Analysis of the Bankruptcy Appeal
The Court affirms the bankruptcy court’s finding

regarding the existence of a simulated contract.
court

correctly

identified

that

“the

doctrine

The bankruptcy
of

contractual

simulation in the modality pertaining to the identity of the
subjects in a contract is intricate in nature.”

(Docket No. 7-9 at

p. 12) (citing Martinez v. Colon Franco, 125 D.P.R. 15, 27–28
(1989)).

It then consulted extensive Puerto Rico case law and

treatises to grasp the legal concept thoroughly.
No.

7-9

at

pp.

11–20.)

As

Spanish

(See Docket

commentators

explain,

Civil No. 12-1986 (FAB)

20

contractual simulation through the interposition by a real person
that serves as an intermediary takes place when (1) one person acts
in his or her own name to form with a third party a contractual
relationship, which is of actual interest to a second person — who
remains hidden from the contract; (2) an agreement exists between
the

person

who

promotes

the

interposition

and

the

person

interposed; and (3) the agreement sets forth the manner in which
the intermediary is to employ the legal obligations or duties that
he or she has obtained in his or her own name.

(See Francisco

Ferrara, La Simulacion de los Negocios Juridicos 277, Madrid, Ed.
Revista de Derecho Privado (1960)).10

Moreover, pursuant to the

Supreme Court of Puerto Rico:
[s]imulation suggests the idea of concealment or
trickery (ingannare = to trick, conceal).
F. De
Castro y Bravo, El Negocio Juridico 338, sec. 116,
Madrid, Ed. Inst. Nac. Est. Jur. (1967) . . . . In
legal affairs, simulation in particular occurs when
the
parties
in
agreement
deliberately
make
statements different from the internal will, in
order to deceive third persons.’ L. Cariota
Ferrara, El Negocio Juridico 440-441 (M. Albaladejo
trans.) Madrid, Ed. Aguilar (1956). This implies
that, in simulated contracts, the contracting
parties fully agree to produce an appearance before
third persons.
There is an agreement or common
purpose to simulate.
II-1 J. Puig Brutau,
Fundamentos de Derecho Civil 486, Barcelona, Ed.
Bosch (2nd ed. 1978).

10

The Court notes that no official translation currently
exists for the Spanish treatises and commentaries discussed in this
case. The bankruptcy court provided the Spanish text in footnotes,
and in the interest of deciding the issue before it on appeal, the
Court fully adopts those translations.

Civil No. 12-1986 (FAB)

21

Reyes v. Jusino, 116 D.P.R. 275 (1985), 16 P.R. Offic. Trans. 338,
347 (Apr. 3, 1985).
In this case, a simulated contract in the modality
of the identity of the subjects occurred through the interposition
by a real person.

The private document between Mr. Gonzalez and

Ms. Chico reveals that Mr. Gonzalez gave money to Ms. Chico to
purchase four properties with the intention to make an inter vivos
donation to the five daughters he fathered with her.
No. 6-7 at pp. 32–33.)

(Docket

It is an uncontested fact that the real

properties in controversy are registered under Ms. Chico’s name —
not Mr. Gonzalez’s — but were acquired with Mr. Gonzalez’s funds.
(Docket No. 7-9 at pp. 7–9.)

It is also an uncontested fact that

in the private document11 signed by Mr. Gonzalez and Ms. Chico, the
former expressed his intention that the properties bought under
Ms. Chico’s name be given to the daughters they have in common as
“an advance on the[ir] inheritance.”
Docket No. 7-9 at p. 8.)

(Docket No. 6-7 at p. 33;

The private agreement, as the bankruptcy

court rightfully reasoned, “is the agreement by which the role of
Ms. Chico as an intermediary is clearly established and defined,
and establishes that she had the obligation to transfer these real

11

The bankruptcy court correctly noted that the private
agreement between Ms. Chico and Mr. Gonzalez serves as a
counterdocument that is properly considered by the court as
evidentiary in nature.
See Reyes, 16 P.R. Offic. Trans. 338
(citing A. Rodríguez-Adrados, Escrituras, Contraescrituras y
Terceros, XXII Anales de la Academia Matritense del Notariado 229
et seq. (1978)).

Civil No. 12-1986 (FAB)
estate properties to her five (5) daughters.”
p. 16.)

22
(Docket No. 7-9 at

It is clear from the uncontested facts, therefore, that

(1) Ms. Chico acted in her own name to buy real estate property,
which is of actual interest to Mr. Gonzalez — who remained hidden
from the contract — from a third party; (2) the private document
constitutes an agreement between Ms. Chico and Mr. Gonzalez; and
(3) the private agreement sets forth the manner in which Ms. Chico
is to employ the legal obligations or duties that she obtained in
her own name.

Accordingly, Ms. Chico served as the real person

interposed between the sellers of the properties and the real party
in interest, and the elements of a contractual simulation through
the interposition by a real person are met.
Furthermore, Mr. Gonzalez’s omission from the assetpurchase agreements regarding the real estate properties, coupled
with Ms. Chico’s trial testimony that the private agreement was
signed to “avoid problems,” demonstrates the type of “concealment
or trickery” inherent to simulated contracts.

See Reyes, 16 P.R.

Offic. Trans. 338 (“[I]n the relative modality[,] the apparent
transaction conceals a real transaction which the contracting
parties wish to withdraw from the curiosity or indiscretion of
third persons.”).

Ms. Chico also explained in open court that she

knew Mr. Gonzalez had another family with Ms. Collazo and that
Mr. Gonzalez was married to Ms. Collazo, but she clarified that she
believed Mr. Gonzalez was in fact Ms. Chico’s husband because he

Civil No. 12-1986 (FAB)

23

had five children with Ms. Chico and had lived with her for so many
years.

(Docket

No.

8-1

at

p.

31.)

She

indicated

that

Mr. Gonzalez’s family with Ms. Collazo did not like Ms. Chico or
her daughters, and that consequently Ms. Chico and Mr. Gonzalez
signed

the

private

agreement

to

“avoid

problems.”

Id.

at

pp. 25–26.

That admission supports the conclusion that Ms. Chico

served

an

as

intermediary

to

help

“circumvent

various

legal

dispositions regarding the disposition of conjugal assets by a
spouse

and

illicit

(ineffective)

inter-vivos

donations

to

(forced/‘legitimarios’) heirs by Mr. Gonzalez.” (Docket No. 7-9 at
p. 18.)
The bankruptcy court also correctly turned to the
question of whether Ms. Chico’s interposition in the purchase of
the real properties occurred for a legal consideration.
Docket No. 7-9 at p. 17.)

(See

In Puerto Rico, an interposed person is

vested with all of the contractual rights and obligations derived
from the contract only as long as the cause of the interposition is
lawful.

(Docket No. 14-2 at 5) (official translation of Martinez

v. Colon-Franco, 125 D.P.R. 15 (1989)); See also Francisco Ferrara,
La Simulacion de los Negocios Juridicos 277, Madrid, Ed. Revista de
Derecho Privado (1960).12

Although the Court agrees with the

bankruptcy court’s ultimate holding that the properties in question

12

Again, the Court finds the bankruptcy court’s translations
of the Spanish Commentator’s text to be accurate.
(See Docket
No. 7-9 at p. 17 nn.8–9.)

Civil No. 12-1986 (FAB)

24

do not constitute part of Ms. Chico’s bankruptcy estate, it does
not agree with the bankruptcy court’s finding that it is because
the properties belong to Ms. Collazo and Mr. Gonzalez’s conjugal
partnership.
The bankruptcy court intertwined two concepts from
the Puerto Rico Civil Code in order to draw the conclusion that the
real estate properties included in the private document belonged to
Mr. Gonzalez’s conjugal partnership with Ms. Collazo.

First, it

identified articles that discuss the effects of contracts that
either

lack

consideration

or

have

an

illicit

consideration.

“Contracts without consideration or with an illicit one have no
effect

whatsoever.”

P.R.

Laws

Ann.

tit.

31

§

3432.

“A

consideration is illicit when it is contrary to law and good
morals,” id., and “[t]he statement of false consideration in
contracts shall render them void, unless it be proven that they
were based on another and real and licit one.”

Id. at § 3433.

The

bankruptcy court then discussed a spouse’s inability to alienate
community property in Puerto Rico on his or her own.
property

of

the

marriage

shall

be

considered

as

“All the

partnership

property until it is proven that it belongs exclusively to the
husband or to the wife.”

P.R. Laws Ann. tit. 31 § 3647.

Both

spouses act as administrators of the community property, and
purchases made by the spouses out of that community property is
valid “when they comprise things or articles for personal or family

Civil No. 12-1986 (FAB)

25

use in accordance with the social and economic standing of the
family.”

P.R. Laws Ann. tit. 31 § 284.

“[E]xcept with the written

consent of both spouses,” neither party may alienate or encumber
the real property of the conjugal community.

Id.

Furthermore,

“[n]otwithstanding the provisions of section 284 of this title,
neither of the two spouses may donate, alienate or bind for a
consideration the personal or real property of the community
property without the written consent of the other spouse . . . .”
P.R. Laws Ann. tit. 31 § 3672.
The Court agrees with the bankruptcy court that the
private agreement sets forth Mr. Gonzalez’s reasons for wanting
Ms. Chico to act as an intermediary:

so that the purchase of the

real properties would constitute an advancement of their five
daughters’ inheritance.

Those funds did indeed constitute part of

Mr. Gonzalez’s and Ms. Collazo’s conjugal assets and, pursuant to
Puerto Rico law, they could not be alienated from the community
property without Ms. Collazo’s written permission. The uncontested
material facts reveal that Ms. Collazo never appeared in the
private document to consent to the transfer of the properties. The
Court departs from the bankruptcy court’s holding, however, that as
a result (1) the private agreement was void as an illicit inter
vivos donation; and accordingly that (2) the properties belong to
Mr. Gonzalez’s conjugal partnership Ms. Collazo.

Civil No. 12-1986 (FAB)

26

As the Chicos argue, a “[d]ispositive contract of
property of the conjugal partnership without the consent of one of
the spouses is annulable, not null and void.
p. 26) (emphasis in original).

(Docket No. 21 at

Pursuant to Puerto Rico law, a

contract is “voidable” when the defect can be cured or ratified by
an effected [sic] party, while a “void” contract is not curable for
reasons of public policy.

In re J. Gus Lallande, Inc., 167 B.R.

742 (Bankr. D.P.R. 1994) (citing Supreme Court of Puerto Rico case
law as well as a Spanish treatise).

Although the Supreme Court of

Puerto Rico recognizes “as a general rule” that both spouses must
provide

their

written

consent

to

alienate

the

conjugal

partnership’s property, it has explicitly stated that an “act of
disposition of community property done without the initial consent
of [a wife is] not void . . . but voidable.”

Trabal-Morales v.

Ruiz-Rodriguez, 125 D.P.R. 340 (1990); (Docket No. 20-2 at pp. 4–5)
(providing
Article

official

1253

of

the

English
Civil

translation
Code

sets

a

of

four-year

limitations for a civil action of annulability.
tit. 31 § 3512.

Trabal-Morales).
statute

of

P.R. Laws Ann.

Because the private agreement is a merely a

voidable one, the party who claims the defect — in this case
Ms. Collazo — had four years from the execution of the contract to
raise the action of annulability. See Besosa v. Corp. Azucarera de
P.R., 137 D.P.R. 939 (1995); (Docket No. 34-2 at p. 4) (providing
official

English

translation

of

Besosa);

Arrieta-Gimenez

v.

Civil No. 12-1986 (FAB)

27

Arrieta-Negron, 672 F. Supp. 46, 49-50 (D.P.R. 1987) (“[S]uch an
action cannot be brought once four years have passed since the
execution of the contract.

No reasonable period for discovery is

given, nor will any other event toll the statute of limitations.”).
It was not until 2002 — that is, twenty-one (21) years after
Mr. Gonzalez and Ms. Chico executed their private agreement — that
the Sucesion initiated the action of annulability.

The private

agreement, therefore, “was confirmed by the passage of time and by
the inaction of those whose responsibility it was to exercise the
annulment action.” See Besosa, 137 D.P.R. 939; (Docket No. 34-2 at
p. 4).
that

Accordingly, the bankruptcy court based its final holding

the

properties

do

not

constitute

part

of

Ms.

Chico’s

bankruptcy estate on the erroneous conclusion that the omission of
Ms. Collazo’s written consent rendered the private agreement null
and void. An issue remains about the enforceability of the private
agreement’s provision that the funds Mr. Gonzalez provided “[were]
an advance on the inheritance that at his passing shall go to his
five daughters who bear the GONZALEZ-CHICO last name, mentioned in
the First paragraph . . . .”

(Docket No. 7-9 at p. 10 n. 1.)

Although the bankruptcy court took a stance on the issue,13 whether
the property belongs to the Sucesion or to Ms. Chico’s daughters
does not affect the Court’s holding here that the properties are

13

As discussed above, the bankruptcy court held that the real
properties belonged to the conjugal partnership of Ms. Collazo and
Mr. Rodriguez, not to the children of Ms. Chico.

Civil No. 12-1986 (FAB)

28

not included in Ms. Chico’s bankruptcy estate. Thus, that issue is
not for the Court to decide, and the bankruptcy court’s decision is
AFFIRMED.
CONCLUSION
For

the

reasons

discussed

above,

the

Court

AFFIRMS

the

bankruptcy court’s September 11, 2008 O&O disposing of the Chicos’
acquisitive prescription argument.

It also AFFIRMS for different

reasons the bankruptcy court’s November 14, 2012 holding that the
real

estate

properties

at

issue

do

not

constitute

part

Ms. Chico’s bankruptcy estate.
Judgment shall be entered accordingly.
IT IS SO ORDERED.
San Juan, Puerto Rico, June 14, 2013.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
United States District Judge

of