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check, but the bank rejected the request pursuant to its policy not to honor
such requests if the check is drawn against insufficient funds. 6
On 16 October 1980, Queao received a letter from Naguiats lawyer,
demanding settlement of the loan. Shortly thereafter, Queao and one Ruby
Ruebenfeldt (Ruebenfeldt) met with Naguiat. At the meeting, Queao told
Naguiat that she did not receive the proceeds of the loan, adding that the
checks were retained by Ruebenfeldt, who purportedly was Naguiats agent. 7
Naguiat applied for the extrajudicial foreclosure of the mortgage with the
Sheriff of Rizal Province, who then scheduled the foreclosure sale on 14
August 1981. Three days before the scheduled sale, Queao filed the case
before the Pasay City RTC,8 seeking the annulment of the mortgage deed.
The trial court eventually stopped the auction sale.9
On 8 March 1991, the RTC rendered judgment, declaring the Deed of Real
Estate Mortgage null and void, and ordering Naguiat to return to Queao the
owners duplicates of her titles to the mortgaged lots. 10 Naguiat appealed the
decision before the Court of Appeals, making no less than eleven
assignments of error. The Court of Appeals promulgated the decision now
assailed before us that affirmed in toto the RTC decision. Hence, the present
petition.
Naguiat questions the findings of facts made by the Court of Appeals,
especially on the issue of whether Queao had actually received the loan
proceeds which were supposed to be covered by the two checks Naguiat
had issued or indorsed. Naguiat claims that being a notarial instrument or
public document, the mortgage deed enjoys the presumption that the recitals
therein are true. Naguiat also questions the admissibility of various
representations and pronouncements of Ruebenfeldt, invoking the rule on
the non-binding effect of the admissions of third persons. 11
The resolution of the issues presented before this Court by Naguiat involves
the determination of facts, a function which this Court does not exercise in an
appeal by certiorari. Under Rule 45 which governs appeal by certiorari, only
questions of law may be raised 12 as the Supreme Court is not a trier of
facts.13 The resolution of factual issues is the function of lower courts, whose
findings on these matters are received with respect and are in fact generally
binding on the Supreme Court. 14 A question of law which the Court may pass
upon must not involve an examination of the probative value of the evidence
presented by the litigants. 15 There is a question of law in a given case when
the doubt or difference arises as to what the law is on a certain state of facts;
there is a question of fact when the doubt or difference arises as to the truth
or the falsehood of alleged facts.16
exception to the rule.22 Still, Naguiat insists that Ruebenfeldt was not her
agent.
Suffice to say, however, the existence of an agency relationship between
Naguiat and Ruebenfeldt is supported by ample evidence. As correctly
pointed out by the Court of Appeals, Ruebenfeldt was not a stranger or an
unauthorized person. Naguiat instructed Ruebenfeldt to withhold from
Queao the checks she issued or indorsed to Queao, pending delivery by
the latter of additional collateral. Ruebenfeldt served as agent of Naguiat on
the loan application of Queaos friend, Marilou Farralese, and it was in
connection with that transaction that Queao came to know Naguiat. 23 It was
also Ruebenfeldt who accompanied Queao in her meeting with Naguiat and
on that occasion, on her own and without Queao asking for it, Reubenfeldt
actually drew a check for the sum ofP220,000.00 payable to Naguiat, to
cover for Queaos alleged liability to Naguiat under the loan agreement. 24
The Court of Appeals recognized the existence of an "agency by
estoppel25 citing Article 1873 of the Civil Code.26 Apparently, it considered
that at the very least, as a consequence of the interaction between Naguiat
and Ruebenfeldt, Queao got the impression that Ruebenfeldt was the agent
of Naguiat, but Naguiat did nothing to correct Queaos impression. In that
situation, the rule is clear. One who clothes another with apparent authority
as his agent, and holds him out to the public as such, cannot be permitted to
deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith, and in the
honest belief that he is what he appears to be. 27 The Court of Appeals is
correct in invoking the said rule on agency by estoppel.1awphi1.nt
More fundamentally, whatever was the true relationship between Naguiat and
Ruebenfeldt is irrelevant in the face of the fact that the checks issued or
indorsed to Queao were never encashed or deposited to her account of
Naguiat.
All told, we find no compelling reason to disturb the finding of the courts a
quo that the lender did not remit and the borrower did not receive the
proceeds of the loan. That being the case, it follows that the mortgage which
is supposed to secure the loan is null and void. The consideration of the
mortgage contract is the same as that of the principal contract from which it
receives life, and without which it cannot exist as an independent
contract.28 A mortgage contract being a mere accessory contract, its validity
would depend on the validity of the loan secured by it. 29
WHEREFORE, the petition is denied and the assailed decision is affirmed.
Costs against petitioner. SO ORDERED.
Parcels I, II, IV, V, VII and VIII were all declared in the name of Rosario Igarta
for tax purposes. Parcel III was declared in the names of Rosario Igarta and
Emiliana Igarta, Parcel IX in the names of Rosario, Higino and Fernando
Igarta while Parcel X was in the name of Joaquin Igarta (Record, pp. 23-A
and 23-B).
Subsequently, the plaintiffs filed a supplemental pleading enumerating the
following properties which are also all located in Sinait, Ilocos Sur as
included in the estate of Rosario Igarta:
(a) Cornland in Cortin, with an area of 1168 square meters and assessed at
P230.00
(1) Parcel I, an unirrigated riceland and forest land in Balingasa with an area
of 7,750 square meters and assessed at P780.00;
(b) Riceland in Sitio, with an area of 3740 square meters and assessed at
Pl,050.00;
(c) Cornland in Teppeng, with an area of 6023 square meters and assessed
at P1,200.00;
(3) Parcel III, an unirrigated riceland at Zapat with an area of 594 square
meters and assessed at P170.00;
(d) Riceland in Masadag, with an area of 578 square meters and assessed at
P160.00
(e) Riceland in Masadag, with an area of 1011 square meters and assessed
at P280.00;
(f) Riceland in Masadag, with an area of 578 square meters and assessed at
P160.00;
(6) Parcel VI, an unirrigated riceland, tobacco land and forest land in Cotin,
with an area of 36,271 and assessed at P4,540.00;
(7) Parcel VII, a residential land in the poblacion with an area of 275 square
meters and assessed at P1,350.00;
(8) Parcel VIII, a sugarland with an area of 3,380 square meters and
assessed at P680.00;
Properties (a) to (b)were declared for tax purposes in the name of Joaquin
Igarta while properties (c) to (h) were all declared in the names of Rosario
Igarta and Emiliana Ibe.
In their answer to the complaint, the defendants alleged that some of the
properties had been conveyed and transferred by Rosario to different
recipients, to wit: Parcels IV, VI and XI to Benjamin Ibe; Parcels V and X to
Ferdinand Ibe and Parcel VII to Corazon Ibe Lanario. Defendants did not
object to the partition of Parcels I, II, III and VIII although they averred that
Parcel III was co-owned by Emiliana Ibe and Rosario (Ibid., pp. 8-9). With
Florante Rosal who, as a witness during the trial, admitted having prepared
the questioned documents notarized by Atty. Ernesto Yalao.
The trial court also noted that Exhs. 1 and 3 conveying inter vivos certain
properties of Rosario Igarta to Benjamin Ibe and his children, were executed
"at different hours of the same day." In view thereof, the said court observed
that the "situation does not seem to jibe with the ordinary and natural course
of things because if it were true, as alleged, that the grantor freely, voluntarily
and intelligently disposed of her properties in favor of the Ibes in more than
one instance on the same day, the dispositions should have been embodied
in only one document" (Decision, p. 8; Rollo, p. 28).
Another "badge of anomaly" that the trial court noted is that Parcel IV is the
subject matter of both the deed of quitclaim and transfer of ownership of April
28, 1985 (Exh. 1) and the deed of quitclaim of December 20, 1985 (Exh. 2).
These documents both have Benjamin Ibe as recipient of the subject
properties. These findings led the trial court to conclude that there is a "clear,
strong and convincing evidence to prove that the documents notarized by
Atty. Yalao do not reflect the truth" (Ibid., p. 9).
The trial court, however, found as "lawful and regular" the deed of quitclaim
executed on January 16,1984 wherein Rosario renounced all her rights over
the properties described as parcels "d", "e", "f", "g", and "h" in favor of her
sister Emiliana Ibe because even the tax declarations indicate the coownership of Rosario and Emiliana over said properties. Thus, the trial court
concluded, said properties were not part of Rosario's hereditary estate.
However, Parcel No. III, which is also declared in the names of Rosario and
Emiliana, must be deemed the former's exclusive property as it was not
included in the deed of quitclaim. The trial court disposed of the case as
follows:
"WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:
"(1) Declaring all the parcels of land subject-matter of this suit, except
Parcels 'c', 'd', 'e', 'f', 'g', and 'h' under the Supplemental Pleading, as
comprising the hereditary' estate of the deceased, Rosario Igarta;
"(2) Ordering the partition of the same, except those indicated above,
between plaintiff Hermenegildo Agdeppa and defendant Benjamin Ibe, in
representation of their parents, Carmen Igarta-Agdeppa and Emiliana IgartaIbe, respectively, in equal shares;
"(3) Declaring Parcels "d", "e", "f', "g", and "h'" under the Supplemental
Pleading, as the exclusive properties of the late Emiliana Igarta-Ibe, subject
to such dispositions as the deceased owner might have made during her
lifetime;
"(4) Ordering plaintiff Hermenegildo Agdeppa and defendant Benjamin Ibe to
agree on the division of the properties subject of partition and to submit their
written agreement to the Court, for confirmation, within thirty (30) days after
the finality of this decision; otherwise, the Court shall appoint commissioners
to make the partition pursuant to Section 3, Rule 69, of the Rules of Court;
"(5) Ordering the defendants, Benjamin Ibe and Ferdinand Ibe, to render an
accounting of the fruits and income of the portions of the partible properties
that may be allotted to plaintiff Hermenegildo Agdeppa, and to vacate the
same in order that the said plaintiff may have peaceful possession thereof.
"No pronouncement as to costs, in the same manner that no damages and
attorney's fees are awarded either under the complaint or under the
counterclaim which is hereby dismissed for lack of merit.
"Let a copy of this decision be furnished the Revenue District Officer, Bureau
of Internal Revenue, Vigan, Ilocos Sur, for a determination of the tax aspect
of the case.
"SO ORDERED."
Only Hermenegildo Agdeppa appealed to the Court of Appeals as the lower
court had ruled that his co-plaintiffs, Joseph, Jefferson and Stevenson, the
sons of his brother Jose, "cannot be considered as heirs of the late Rosario
Igarta because in the collateral line, representation takes place only in favor
of the children of brothers and sisters (in this case, children of Carmen and
Emiliana) whether they be of the full or half blood" (Ibid., p. 2, Citing Art. 972,
Civil Code). While the appeal was pending resolution before the Court of
Appeals, Hermenegildo died on October 23, 1989.
On December 17, 1999, the Court of Appeals rendered its decision 2 finding
merit in the appeal. Giving full faith and credit to the documents involved, the
Court of Appeals said:
"The proof adduced by plaintiff-appellees is not sufficient to overcome the
presumption of regularity in favor of the questioned documents. Their attempt
to show that the residence certificates appearing on said documents
belonged to persons other than the late Rosario Igarta through the testimony
of Mrs. Ester T. Remos, Municipal Treasurer of Sinait, Ilocos Sur, and her
Certification to that effect dated October 15, 1988 do not impress Us. The
court a quo erred in considering said testimony and certification since they
were merely secondary evidences, and plaintiff-appellees have not laid the
basis for their presentation. The best evidence of the residence certificates
are the residence certificates themselves. in lieu thereof, certified true copies
of the residence certificates should have been presented since these are part
of the public record.
"The presumption of validity of the questioned documents have not been
overcome by the circumstances surrounding its execution. There is no
showing that fraud, force or intimidation was perpetuated on Rosario Igarta in
the preparation of the documents. Neither have plaintiff-appellees shown that
the signature of Rosario Igarta appearing on said documents was forged.
Forgery cannot be presumed. It must be proved. Faced with the fact that the
signature of Rosario Igarta on said documents appears to be genuine, the
provisions of said documents must be upheld.
'Thus, the court a quo erred in disregarding the dispositions contained in the
questioned documents and tendering the partition of the properties covered
thereby. The decision appealed from is hereby modified declaring the
aforementioned properties, Parcels IV, V, VI, VII, IX, X and one-half of Parcel
III under paragraph 5 (a) of the Complaint and Parcel 'a' under the
Supplemental Pleading, the exclusive properties of the late Emiliana IgartaIbe and therefore, not subject to partition. We note that defendant appellants
admitted the partible nature of one-half of Parcel III, and thus partition should
take place only with regard to that half" (CA Decision, pp. 8-9, Rollo, pp. 5152).
The heirs of Hermenegildo Agdeppa filed the instant petition for review on
certiorari assailing the decision of the Court of Appeals for having set aside
the findings of the lower court that the three documents which conveyed to
the respondents parcels IV, V, VI, IX and X and property "a" were irregular
and not reflective of the truth, and for excluding from Rosario Igarta's estate
Parcels IV, V, VI, VII, IX and X.
From the foregoing, the resolution of this case revolves around the issue of
the validity of the documents executed by Rosario Igarta conveying certain
properties belonging to her to the herein respondents.
In a petition for certiorari under Rule 45 of the Rules of Court like the instant
petition, the jurisdiction of this Court is limited to the review of errors of law.
The findings of fact of the Court of Appeals are conclusive upon this Court
(Ronquillo vs. Court of Appeals, 195 SCRA 433 [1991]). However, there are
exceptions to this rule such as when there is a conflict between the factual
findings of the Court of Appeals and the trial court. The resolution of such
conflict requires the review of the same factual findings by this Court (Co vs.
Court of Appeals, 193 SCRA 198 [1991] citing Raneses vs. IAC, 187 SCRA
397(1990] and Remalante vs. Tibe, 158 SCRA 138[1988]). Thus, the
divergent findings of the trial court and the Court of Appeals on the validity of
the three documents executed by Rosario Igarta in favor of Benjamin Ibe and
his children Ferdinand and Corazon, necessitate this Court's scrutiny.
The trial court's objections to the documents are based on its finding that
residence certificates of other persons were used therein by Rosario Igarta.
The plaintiffs (now appellants) tried to prove this through the rebuttal
testimony of Mrs. Ester Y. Ramos, the Municipal Treasurer of Sinait. Mrs.
Ramos admitted having signed the certification marked as Exh. F and which
shows the names of the persons to whom the residence certificates
appearing in the questioned documents were issued. According to Mrs.
Ramos, the certification was based on the abstract of residence certificates
because one of their office clerks, a certain Florida Ines, could not find the
triplicates of the residence certificates subject of her certification (TSN, April
10,1989, pp. 5-6). Mrs. Ramos had with her "the abstract where Mrs. Ines
quoted the certification, but unluckily, the data are no longer available"
meaning the pages of the abstract where the three (3) residence certificate
numbers are found had been "lost" (Ibid., pp. 8-9). Mrs. Ramos could not
explain why and how they were lost (Ibid., p. 9).
A residence certificate, being a receipt prescribed by the government to be
issued upon receipt of money for public purposes (Moran, Comments on the
Rules of Court, Vol. 6, 1980 ed., p.101), is a public document. As such,
presentation of the same document would suffice to prove its contents. As
part of the public record, it may also be proved by the presentation of a copy
attested by the officer having legal custody of the duplicates (Sec. 25, Rule
132 Rules of Court)if, as in this case, a certified copy of the residence
certificate itself cannot be presented. Exhibit F, upon which the trial court
relied in nullifying the questioned documents, is, as correctly pointed out by
the Court of Appeals, merely a secondary evidence. It is even based on the
lost pages of an abstract of the residence certificates issued by the municipal
treasurer of Sinait. The evidentiary value of Exh. F. is therefore suspect.
The questioned deeds, being public documents as they are duly notarized
(Moran, Comments on the Rules of Court, supra), therefore retain the
presumption of validity in the absence of a full, clear and convincing evidence
to overcome such presumption (Favor vs. Court of Appeals, 194 SCRA 308
[1991] citing Antonio vs. Estrella, 156 SCRA 68 [1987]). Merely preponderant
evidence may not destroy such presumption because strong evidence is
required to prove a defect of a public instrument.
The petitioners never questioned the authenticity of the signature of Rosario
Igarta on the documents. Their due execution has been amply proved below.
The testimony of Florante Rosal who prepared them, was corroborated by
Atty. Ernesto Yalao who notarized all three documents. Yalao, who was a
citizens' attorney and who had become a municipal trial court judge by the
In the same manner, the deed of quitclaim and transfer of ownership of April
28,1985 and the deed of quitclaim of December 20, 1985 may not be nullified
just because they refer to the same Parcel IV with Benjamin Ibe as the
recipient in both instances. That Rosario Igarta conveyed the same property
to Benjamin Ibe in two different documents only shows that she favored
Benjamin over Hermenegildo. There is unrebutted evidence that it was
Benjamin who took care of Rosario. While Rosario Igarta had a house of her
own, Benjamin would fetch her in the afternoon and accompany her back to
the house in the morning from his own residence (TSN, November 17, 1988,
pp. 1-2). Further, according to the deputy public land inspector who testified,
Rosario Igarta even tried to delete the name of Hermenegildo from the space
indicating her nearest relatives in her application for free patent over Lot
9796 (Exh. 8-a) because Rosario believed that Hermenegildo had "another
woman in his life" (TSN, October 13, 1988, p. 9).
In Gevero vs. Intermediate Appellate Court (189 SCRA 201 [1990]), this court
held:
". . . it has long been settled that a public document executed and attested
through the intervention of the notary public is evidence of the facts in clear,
unequivocal manner therein expressed. It has the presumption of regularity
and to contradict all these, evidence must be clear, convincing and more than
merely preponderant (Rebuldela v. I.A.C. 155 SCRA 520-521 [1987]).
Forgery cannot be presumed, it must be proven (Siasat v. IAC No. 67889,
October 10, 1985). Likewise, petitioners' allegation of absence of
consideration of the deed was not substantiated. Under Art. 1354 of the Civil
Code, consideration is presumed unless the contrary is proven."
Similarly, in the case at bar, no clear and convincing evidence had been
adduced by petitioners to impugn the validity of the documents executed by
Rosario Igarta. Consequently, the validity of the said documents must be, as
they are hereby, upheld.
WHEREFORE, the decision of the Court of Appeals dated December 17,
1990 is Affirmed in toto.
SO ORDERED.
Feliciano, Davide
On April 23, 1985, or after the filing of Civil Case No. 5210 but before the
service of summons upon the defendants (herein private respondents), the
claims of the offended parties (plaintiffs in Civil Case No. 5210) were
amicably settled, to wit:
Cesar Dela Fuente received 15,016.79
Marcela Golding received 10,171.75
Maria Vergara received 7,674.96
BIDIN, J.:
Teresita Gerales received 15,000.00
This is a petition for review on certiorari which seeks to reverse and set
aside: (1) the decision of the Court of Appeals promulgated on September
26, 1988 in C.A.-G.R. S.P. No. 11811 entitled "Enrique E. Pimentel and
Leticia T. Fideldia v. Hon. Ruben T. Reyes, as Regional Trial Court Judge,
Branch 1, Balanga, Bataan and Teresita C. Gerales, Cesar Dela Fuente,
Marcela Gelding, Maria Vergara, and Perlito Trigero" dismissing Civil Case.
No. 5210 and reversing the decision of the trial court and (2) the resolution of
the Court of Appeals promulgated on November 15, 1988 denying the Motion
for Reconsideration.
The undisputed facts of the case are as follows:
On July 9, 1984, a car owned by Leticia Fideldia, then driven by Enrique E.
Pimentel, hit another car, owned by Teresita Gerales then driven by Cesar
Dela Fuente, with Marcela Golding, Maria Vergara and Perlito Trigero as
passengers at San Jose, San Fernando, Pampanga.
On August 17, 1984, private respondent Enrique E. Pimentel was charged
before the Municipal Trial Court of San Fernando, Pampanga with the crime
of Damage to Property with Multiple Physical Injuries thru Reckless
Imprudence, docketed as Criminal Case No. 84-9302 (Rollo, p. 18, Annex
"A", p. 1).
During the pendency of the criminal case, particularly on January 11, 1985,
private offended parties (now petitioners) Maria Vergara, Perlito Trigero,
Marcela del Rosario Golding, Cesar Dela Fuente, and Teresita Gerales filed
a civil case for Damages in the total amount of P400,000.00 docketed as
Civil Case No. 5210, in the Regional Trial Court of Bataan against Enrique E.
Pimentel and Leticia Fideldia. This civil case is based on the same incident
for which private respondent, Enrique E. Pimentel was charged in Criminal
Case No. 84-9302 (Rollo, p. 19, Annex "A", p. 2).
the civil case for damages on the sole basis of the "releases of claims," had
denied them procedural due process as they were not afforded the
opportunity to refute, assail, and overcome their/probative value (Rollo, pp.
10-12).
On the other hand, private respondents maintain that the trial court
committed grave abuse of discretion in not considering their letter dated
August 14, 1985 as their responsive pleading and in consequently declaring
them in default; in denying in its order dated February 20, 1987 their petition
for relief from judgment; and in issuing a writ of execution on March 6, 1987,
even before they received a copy of the order denying their petition for relief
from judgment.
An examination of the records of the case shows that the trial court, after
taking judicial notice of the letter of private respondents informing the court
that the parties have mutually settled the case, and that a Motion to Dismiss
was even filed by petitioners' counsel in the related criminal case, altogether
did not consider nor treat it as private respondents' responsive pleading to
the complaint for damages. In fact, on motion of petitioners, the private
respondents were declared in default and accordingly, a judgment by default
was rendered against them (private respondents).
Under the factual setting of the case, the trial court ought to have considered
the letter of respondent Enrique E. Pimentel as a responsive pleading even if
it lacks the formalities required by law. Undoubtedly, the letter made mention
of the fact that the parties mutually settled the case, which allegation may be
deemed as an averment of an affirmative defense and if proven
in a preliminary hearing pursuant to Section 5, Rule l6, would constitute a
meritorious defense of private respondents which would bar petitioners from
recovering damages from the former as the claim or demand set forth in
plaintiffs' (petitioners') pleading had been paid or extinguished.
Pleadings as well as remedial laws should be liberally construed in order that
the litigant may have ample opportunity to prove their respective claims, and
possible denial of substantial justice, due to technicalities, may be avoided
(Cabutin, et al. v. Amacio, 170 SCRA 750 [1989], citing Quibuyen v. CA, 9
SCRA 741 [1963]). Litigations should as much as possible be decided on the
merits and not on technicality (Fonseca v. Court of Appeals, 165 SCRA 40
[1988], citing A-One Feeds, Inc. v. Court of Appeals, 100 SCRA 590, 594
[1980]). Technicality, when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant consideration
from courts (American Express International, Inc. v. Intermediate Appellate
Court, 167 SCRA 209 [1988] citing Alonso v. Villamor, 16 Phil. 315 (1910]),
and because there is no vested right in technicalities, in meritorious crises, a
liberal, not literal interpretation of the rules becomes imperative and
technicalities should not be resorted to in derogation of the intent and
purpose of the rules, which is the proper and just determination of a litigation
(Fonseca v. C.A., supra.).
In addition thereto, the trial court's denial of private respondents' petition for
relief from judgment, inspite of the fact that they raise the meritorious
defense of full settlement and/or payment of the claim is improper. The trial
judge should have granted the aforesaid petition as it would ultimately afford
both parties the opportunity to prove their respective claims by fully and fairly
laying before the Court, the facts in issue and seek justice upon the merits
thereof and that possible denial of justice due to legal technicalities may be
avoided.
The courts should be liberal in setting aside orders of default for default
judgment is frowned upon, and unless it clearly appears that the reopening of
the case is intended for delay, it is best that the trial courts give both parties
every chance to fight their case fairly and in the open, without resort to
technicality (Zenith Insurance Corporation v. Hon. Fidel Purisima, 114 SCRA
62 [1982], citing Pineda v. Court of Appeals, 67 SCRA 229 [1975]).
In the light of the foregoing, it is evident that indeed the trial court committed
grave abuse of discretion in declaring private respondents in default, and in
denying their petition for relief from judgment. Consequently, the validity of
the order of default and all the proceedings that transpired subsequent
thereto cannot be sustained.
A petition for Certiorari lies when any tribunal, board or officer exercising
judicial functions, has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion and there is no appeal, nor any plain, speedy,
and adequate remedy in the ordinary course of law (Section I of Rule 65 of
the Rules of Court). It is the inadequacy not the mere absence of all other
legal remedies and the danger of failure of justice without/such writ that
usually determines the propriety of certiorari(Philippine National Bank v.
Puno, 170 SCRA 229 [1989] citing Jaca v. Davao Lumber Co., 113 SCRA
107 (1982]).
Undoubtedly, Certiorari is a more speedy and efficacious remedy to have the
judgment by default be set aside as a nullity where a party has been illegally
declared in default. It will be noted that the trial court had already issued a
writ of execution even before respondents received a copy of the order
denying their petition for relief from judgment (Rollo, p. 20). Clearly therefore
even if appeal was available to private respondents, it was no longer speedy
and adequate.
Petitioners contend that respondent Court of Appeals, in dismissing the
complaint (Civil Case No. 5210) against private respondents on the basis
solely of the releases of claims, had denied them their right to procedural due
process. They claim that the settlements contained in the releases of claims
were not true; that patent irregularities attended their execution as petitioners
executed them because private respondents led them to believe that what
they were receiving were partial settlements only; and that the said
documents were more of a receipt rather than any document (Rollo, p. 12).
Conversely, private respondents contend that the releases of claims
executed and signed by petitioners show that full settlements were received
by the latter from private respondents and their insurer, F.E. Zuellig, Inc.; that
when petitioners executed these documents, they were assisted by their very
own counsel, Atty. Jaime C. Bueza; that the same was duly notarized and
that petitioners cannot now impugn the veracity of the documents upon the
self-serving argument that they were misled by their own counsel into
believing that the settlements were but partial.
It should be borne in mind that the petitioners do not deny at all their having
executed the releases of claims which are in the nature of quitclaims. Their
allegation that the execution thereof was attended by false pretenses is selfserving. Contrary thereto, petitioners, in executing these releases of claims,
were in fact assisted by their counsel, Atty. Bueza, and the document was
even notarized.
A notarized instrument is admissible in evidence without further proof of its
due execution and is conclusive as to the truthfulness of its contents,
although not absolute but rebuttable by clear and convincing evidence to the
contrary (Baranda v. Baranda, 150 SCRA 59 [1987], citing Antillon v.
Barcelon, 37 Phil. 148 [1917] and Mendezona v. Phil Sugar Estate
Development Corporation. 41 Phil. 475 [1921]). A public document executed
and attested through the intervention of the notary public is evidence of the
facts in clear, unequivocal manner therein expressed. It has in its favor the
presumption of regularity. To contradict all these, there must be evidence that
is clear and convincing more than merely preponderant (Collantes v.
Capuno, 123 SCRA 652 [1983]).
Petitioners can not now question the validity and/or veracity of the releases
of claims on the allegation that the same were executed on their belief that
what they received were only partial settlements and that they could not have
released them "forever from all actions arising from such vehicular accident."
If they did not release their claims against, respondents forever, why did they
cause the dismissal of the criminal case against Enrique Pimentel?
In essence, petitioners are varying the terms embodied in the releases of
claims, which is proscribed by Section 7 of Rule 130 of the Rules of Court. It
is a well-settled principle of law that proof of verbal agreements offered to
merits, i.e., the dismissal of petitioners' complaint on the ground that the
claim or demand of petitioners as plaintiffs had been paid or released.
WHEREFORE, the petition is hereby DISMISSED and the decision of the
Court of Appeals dismissing the complaint for damages against private
respondents is hereby AFFIRMED.
SO ORDERED.
The complaint filed on January 26, 1971 by petitioner Honesto Bonnevie with
the Court of First Instance of Rizal against respondent Philippine Bank of
Commerce sought the annulment of the Deed of Mortgage dated December
6, 1966 executed in favor of the Philippine Bank of Commerce by the
spouses Jose M. Lozano and Josefa P. Lozano as well as the extrajudicial
foreclosure made on September 4, 1968. It alleged among others that (a) the
Deed of Mortgage lacks consideration and (b) the mortgage was executed by
one who was not the owner of the mortgaged property. It further alleged that
the property in question was foreclosed pursuant to Act No. 3135 as
amended, without, however, complying with the condition imposed for a valid
foreclosure. Granting the validity of the mortgage and the extrajudicial
foreclosure, it finally alleged that respondent Bank should have accepted
petitioner's offer to redeem the property under the principle of equity said
justice.
On March 29, 1976, the lower court rendered its decision, the dispositive
portion of which reads as follows:
On the other hand, the answer of defendant Bank, now private respondent
herein, specifically denied most of the allegations in the complaint and raised
the following affirmative defenses: (a) that the defendant has not given its
consent, much less the requisite written consent, to the sale of the
mortgaged property to plaintiff and the assumption by the latter of the loan
secured thereby; (b) that the demand letters and notice of foreclosure were
sent to Jose Lozano at his address; (c) that it was notified for the first time
about the alleged sale after it had foreclosed the Lozano mortgage; (d) that
the law on contracts requires defendant's consent before Jose Lozano can
be released from his bilateral agreement with the former and doubly so,
before plaintiff may be substituted for Jose Lozano and Alfonso Lim; (e) that
the loan of P75,000.00 which was secured by mortgage, after two renewals
remain unpaid despite countless reminders and demands; of that the
2. The lower court erred in not finding that the auction sale
decide on August 19, 1968 was null and void;
3. The lower court erred in not allowing the plaintiff and the
intervenor to redeem the property;
4. The lower court erred in not finding that the defendant
acted in bad faith; and
5. The lower court erred in dismissing the complaint.
On August 11, 1978, the respondent court promulgated its decision affirming
the decision of the lower court, and on October 3. 1978 denied the motion for
reconsideration. Hence, the present petition for review.
II
III
Petitioners admit that they did not secure the consent of respondent Bank to
the sale with assumption of mortgage. Coupled with the fact that the
sale/assignment was not registered so that the title remained in the name of
the Lozano spouses, insofar as respondent Bank was concerned, the Lozano
spouses could rightfully and validly mortgage the property. Respondent Bank
had every right to rely on the certificate of title. It was not bound to go behind
the same to look for flaws in the mortgagor's title, the doctrine of innocent
purchaser for value being applicable to an innocent mortgagee for value.
(Roxas vs. Dinglasan, 28 SCRA 430; Mallorca vs. De Ocampo, 32 SCRA
48). Another argument for the respondent Bank is that a mortgage follows the
property whoever the possessor may be and subjects the fulfillment of the
obligation for whose security it was constituted. Finally, it can also be said
that petitioners voluntarily assumed the mortgage when they entered into the
Deed of Sale with Assumption of Mortgage. They are, therefore, estopped
from impugning its validity whether on the original loan or renewals thereof.
In the case at bar, the notice of sale was published in the Luzon Courier on
June 30, July 7 and July 14, 1968 and notices of the sale were posted for not
less than twenty days in at least three (3) public places in the Municipality
where the property is located. Petitioners were thus placed on constructive
notice.
Petitioners next assail the validity and legality of the extrajudicial foreclosure
on the following grounds:
a) petitioners were never notified of the foreclosure sale.
b) The notice of auction sale was not posted for the period
required by law.
c) publication of the notice of auction sale in the Luzon
Weekly Courier was not in accordance with law.
The lack of notice of the foreclosure sale on petitioners is a flimsy ground.
Respondent Bank not being a party to the Deed of Sale with Assumption of
Mortgage, it can validly claim that it was not aware of the same and hence, it
may not be obliged to notify petitioners. Secondly, petitioner Honesto
Bonnevie was not entitled to any notice because as of May 14, 1968, he had
transferred and assigned all his rights and interests over the property in favor
of intervenor Raoul Bonnevie and respondent Bank not likewise informed of
the same. For the same reason, Raoul Bonnevie is not entitled to notice.
Most importantly, Act No. 3135 does not require personal notice on the
mortgagor. The requirement on notice is that:
On August 13, 1965, the Monetary Board of the Central Bank, after finding
Island Savings Bank was suffering liquidity problems, issued Resolution No.
1049, which provides:
In view of the chronic reserve deficiencies of the Island
Savings Bank against its deposit liabilities, the Board, by
unanimous vote, decided as follows:
1) To prohibit the bank from making new loans and
investments [except investments in government securities]
excluding extensions or renewals of already approved loans,
provided that such extensions or renewals shall be subject to
review by the Superintendent of Banks, who may impose
such limitations as may be necessary to insure correction of
the bank's deficiency as soon as possible;
xxx xxx xxx
(p. 46, rec.).
On June 14, 1968, the Monetary Board, after finding thatIsland Savings Bank
failed to put up the required capital to restore its solvency, issued Resolution
No. 967 which prohibited Island Savings Bank from doing business in the
Philippines and instructed the Acting Superintendent of Banks to take charge
of the assets of Island Savings Bank (pp. 48-49, rec).
On August 1, 1968, Island Savings Bank, in view of non-payment of the
P17,000.00 covered by the promissory note, filed an application for the extrajudicial foreclosure of the real estate mortgage covering the 100-hectare land
of Sulpicio M. Tolentino; and the sheriff scheduled the auction for January 22,
1969.
On January 20, 1969, Sulpicio M. Tolentino filed a petition with the Court of
First Instance of Agusan for injunction, specific performance or rescission
and damages with preliminary injunction, alleging that since Island Savings
Bank failed to deliver the P63,000.00 balance of the P80,000.00 loan, he is
entitled to specific performance by ordering Island Savings Bank to deliver
the P63,000.00 with interest of 12% per annum from April 28, 1965, and if
said balance cannot be delivered, to rescind the real estate mortgage (pp.
32-43, rec.).
On January 21, 1969, the trial court, upon the filing of a P5,000.00 surety
bond, issued a temporary restraining order enjoining the Island Savings Bank
from continuing with the foreclosure of the mortgage (pp. 86-87, rec.).
On January 29, 1969, the trial court admitted the answer in intervention
praying for the dismissal of the petition of Sulpicio M. Tolentino and the
setting aside of the restraining order, filed by the Central Bank and by the
Acting Superintendent of Banks (pp. 65-76, rec.).
On February 15, 1972, the trial court, after trial on the merits rendered its
decision, finding unmeritorious the petition of Sulpicio M. Tolentino, ordering
him to pay Island Savings Bank the amount of PI 7 000.00 plus legal interest
and legal charges due thereon, and lifting the restraining order so that the
sheriff may proceed with the foreclosure (pp. 135-136. rec.
On February 11, 1977, the Court of Appeals, on appeal by Sulpicio M.
Tolentino, modified the Court of First Instance decision by affirming the
dismissal of Sulpicio M. Tolentino's petition for specific performance, but it
ruled that Island Savings Bank can neither foreclose the real estate mortgage
nor collect the P17,000.00 loan pp. 30-:31. rec.).
Hence, this instant petition by the central Bank.
The issues are:
1. Can the action of Sulpicio M. Tolentino for specific
performance prosper?
2. Is Sulpicio M. Tolentino liable to pay the P17,000.00 debt
covered by the promissory note?
3. If Sulpicio M. Tolentino's liability to pay the P17,000.00
subsists, can his real estate mortgage be foreclosed to
satisfy said amount?
When Island Savings Bank and Sulpicio M. Tolentino entered into an
P80,000.00 loan agreement on April 28, 1965, they undertook reciprocal
obligations. In reciprocal obligations, the obligation or promise of each party
is the consideration for that of the other (Penaco vs. Ruaya, 110 SCRA 46
[1981]; Vda. de Quirino vs, Pelarca 29 SCRA 1 [1969]); and when one party
has performed or is ready and willing to perform his part of the contract, the
other party who has not performed or is not ready and willing to perform
incurs in delay (Art. 1169 of the Civil Code). The promise of Sulpicio M.
Tolentino to pay was the consideration for the obligation of Island Savings
Bank to furnish the P80,000.00 loan. When Sulpicio M. Tolentino executed a
real estate mortgage on April 28, 1965, he signified his willingness to pay the
P80,000.00 loan. From such date, the obligation of Island Savings Bank to
furnish the P80,000.00 loan accrued. Thus, the Bank's delay in furnishing the
entire loan started on April 28, 1965, and lasted for a period of 3 years or
when the Monetary Board of the Central Bank issued Resolution No. 967 on
June 14, 1968, which prohibited Island Savings Bank from doing further
business. Such prohibition made it legally impossible for Island Savings Bank
to furnish the P63,000.00 balance of the P80,000.00 loan. The power of the
Monetary Board to take over insolvent banks for the protection of the public
is recognized by Section 29 of R.A. No. 265, which took effect on June 15,
1948, the validity of which is not in question.
The Board Resolution No. 1049 issued on August 13,1965 cannot interrupt
the default of Island Savings Bank in complying with its obligation of
releasing the P63,000.00 balance because said resolution merely prohibited
the Bank from making new loans and investments, and nowhere did it
prohibit island Savings Bank from releasing the balance of loan agreements
previously contracted. Besides, the mere pecuniary inability to fulfill an
engagement does not discharge the obligation of the contract, nor does it
constitute any defense to a decree of specific performance (Gutierrez Repide
vs. Afzelius and Afzelius, 39 Phil. 190 [1918]). And, the mere fact of
insolvency of a debtor is never an excuse for the non-fulfillment of an
obligation but 'instead it is taken as a breach of the contract by him (vol. 17A,
1974 ed., CJS p. 650)
The fact that Sulpicio M. Tolentino demanded and accepted the refund of the
pre-deducted interest amounting to P4,800.00 for the supposed P80,000.00
loan covering a 6-month period cannot be taken as a waiver of his right to
collect the P63,000.00 balance. The act of Island Savings Bank, in asking the
advance interest for 6 months on the supposed P80,000.00 loan, was
improper considering that only P17,000.00 out of the P80,000.00 loan was
released. A person cannot be legally charged interest for a non-existing debt.
Thus, the receipt by Sulpicio M. 'Tolentino of the pre-deducted interest was
an exercise of his right to it, which right exist independently of his right to
demand the completion of the P80,000.00 loan. The exercise of one right
does not affect, much less neutralize, the exercise of the other.
The alleged discovery by Island Savings Bank of the over-valuation of the
loan collateral cannot exempt it from complying with its reciprocal obligation
to furnish the entire P80,000.00 loan. 'This Court previously ruled that bank
officials and employees are expected to exercise caution and prudence in the
discharge of their functions (Rural Bank of Caloocan, Inc. vs. C.A., 104
SCRA 151 [1981]). It is the obligation of the bank's officials and employees
that before they approve the loan application of their customers, they must
investigate the existence and evaluation of the properties being offered as a
loan security. The recent rush of events where collaterals for bank loans turn
out to be non-existent or grossly over-valued underscore the importance of
this responsibility. The mere reliance by bank officials and employees on their
customer's representation regarding the loan collateral being offered as loan
security is a patent non-performance of this responsibility. If ever bank
of Island Savings Bank for damages in not furnishing the entire loan is offset
by the liability of Sulpicio M. Tolentino for damages, in the form of penalties
and surcharges, for not paying his overdue P17,000.00 debt. The liability of
Sulpicio M. Tolentino for interest on his PI 7,000.00 debt shall not be included
in offsetting the liabilities of both parties. Since Sulpicio M. Tolentino derived
some benefit for his use of the P17,000.00, it is just that he should account
for the interest thereon.
WE hold, however, that the real estate mortgage of Sulpicio M. Tolentino
cannot be entirely foreclosed to satisfy his P 17,000.00 debt.
The consideration of the accessory contract of real estate mortgage is the
same as that of the principal contract (Banco de Oro vs. Bayuga, 93 SCRA
443 [1979]). For the debtor, the consideration of his obligation to pay is the
existence of a debt. Thus, in the accessory contract of real estate mortgage,
the consideration of the debtor in furnishing the mortgage is the existence of
a valid, voidable, or unenforceable debt (Art. 2086, in relation to Art, 2052, of
the Civil Code).
The fact that when Sulpicio M. 'Tolentino executed his real estate mortgage,
no consideration was then in existence, as there was no debt yet because
Island Savings Bank had not made any release on the loan, does not make
the real estate mortgage void for lack of consideration. It is not necessary
that any consideration should pass at the time of the execution of the
contract of real mortgage (Bonnevie vs. C.A., 125 SCRA 122 [1983]). lt may
either be a prior or subsequent matter. But when the consideration is
subsequent to the mortgage, the mortgage can take effect only when the
debt secured by it is created as a binding contract to pay (Parks vs,
Sherman, Vol. 176 N.W. p. 583, cited in the 8th ed., Jones on Mortgage, Vol.
2, pp. 5-6). And, when there is partial failure of consideration, the mortgage
becomes unenforceable to the extent of such failure (Dow. et al. vs. Poore,
Vol. 172 N.E. p. 82, cited in Vol. 59, 1974 ed. CJS, p. 138). Where the
indebtedness actually owing to the holder of the mortgage is less than the
sum named in the mortgage, the mortgage cannot be enforced for more than
the actual sum due (Metropolitan Life Ins. Co. vs. Peterson, Vol. 19, F(2d) p.
88, cited in 5th ed., Wiltsie on Mortgage, Vol. 1, P. 180).
Since Island Savings Bank failed to furnish the P63,000.00 balance of the
P8O,000.00 loan, the real estate mortgage of Sulpicio M. Tolentino became
unenforceable to such extent. P63,000.00 is 78.75% of P80,000.00, hence
the real estate mortgage covering 100 hectares is unenforceable to the
extent of 78.75 hectares. The mortgage covering the remainder of 21.25
hectares subsists as a security for the P17,000.00 debt. 21.25 hectares is
more than sufficient to secure a P17,000.00 debt.
The rule of indivisibility of a real estate mortgage provided for by Article 2089
of the Civil Code is inapplicable to the facts of this case.
Article 2089 provides:
A pledge or mortgage is indivisible even though the debt
may be divided among the successors in interest of the
debtor or creditor.
Therefore, the debtor's heirs who has paid a part of the debt
can not ask for the proportionate extinguishment of the
pledge or mortgage as long as the debt is not completely
satisfied.
Neither can the creditor's heir who have received his share
of the debt return the pledge or cancel the mortgage, to the
prejudice of other heirs who have not been paid.
The rule of indivisibility of the mortgage as outlined by Article 2089 abovequoted presupposes several heirs of the debtor or creditor which does not
obtain in this case. Hence, the rule of indivisibility of a mortgage cannot apply
WHEREFORE, THE DECISION OF THE COURT OF APPEALS DATED
FEBRUARY 11, 1977 IS HEREBY MODIFIED, AND
1. SULPICIO M. TOLENTINO IS HEREBY ORDERED TO PAY IN FAVOR
OF HEREIN PETITIONERS THE SUM OF P17.000.00, PLUS P41,210.00
REPRESENTING 12% INTEREST PER ANNUM COVERING THE PERIOD
FROM MAY 22, 1965 TO AUGUST 22, 1985, AND 12% INTEREST ON THE
TOTAL AMOUNT COUNTED FROM AUGUST 22, 1985 UNTIL PAID;
2. IN CASE SULPICIO M. TOLENTINO FAILS TO PAY, HIS REAL ESTATE
MORTGAGE COVERING 21.25 HECTARES SHALL BE FORECLOSED TO
SATISFY HIS TOTAL INDEBTEDNESS; AND
3. THE REAL ESTATE MORTGAGE COVERING 78.75 HECTARES IS
HEREBY DECLARED UNEN FORCEABLE AND IS HEREBY ORDERED
RELEASED IN FAVOR OF SULPICIO M. TOLENTINO.
NO COSTS. SO ORDERED.
in advance by paying the eight years rentals, and it was for this advance
payment that it was getting a rebate or discount.
for all of twenty eight years. That is absurd. It is not normal for a person to
agree to a reduction corresponding to twenty eight years advance rentals
when all he is receiving in advance rentals is for only eight years.
The deduction shall be for only eight years because that was plainly what the
parties intended at the time they signed the lease agreement. "Simplistic" it
may be, as the Solicitor General describes it, but that is how the lessor
understood the arrangement. In fact, the Court will reject his subsequent
modification that the interest should be limited to only seven years because
the first year rental was not being paid in advance. The agreement was for
auniform deduction for the advance rentals for each of the eight years, and
neither of the parties can deviate from it now.
On the annual rental of P35,168.40, the deducted 12% discount was
P4,220.21; and for eight years, the total rental was P281,347.20 from which
was deducted the total discount of P33,761.68, leaving a difference of
P247,585.52. Subtracting from this amount, the sum of P182,471.17 already
paid will leave a balance of P65,114.35 still due the plaintiff-appellant.
The above computation is based on the more reasonable interpretation of the
contract as a whole rather on the single stipulation invoked by the
respondent for the flat reduction of P130,288.47.
WHEREFORE, the decision of the trial court is hereby modified, and the
defendant-appellee Petrophil Corporation is ordered to pay plaintiff-appellant
the amount of Sixty Five Thousand One Hundred Fourteen pesos and ThirtyFive Centavos (P65,114.35), with interest at the legal rate until fully paid, plus
Ten Thousand Pesos (P10,000.00) as attorney's fees. Costs against the
defendant-appellee.
SO ORDERED.