FIRST DIVISION
[G.R. No. 240567. August 31, 2022.]
SPOUSES JOVENTINO and MARIA LUISA RUIZ, petitioners, vs.GRACE DE LEON and THE REGISTER OF DEEDS OF NAGA CITY, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court's First Division issued a Resolution datedAugust 31, 2022which reads as follows:
"G.R. No. 240567 (Spouses Joventino and Maria Luisa Ruiz vs. Grace De Leon and the Register of Deeds of Naga City). — This is a Petition for Review on Certiorari1 under Rule 45 assailing the March 6, 2018 Decision 2 and the July 2, 2018 Resolution 3 of the Court of Appeals (CA) in CA-G.R. CV No. 104510, which affirmed the January 27, 2015 Decision 4 of the Regional Trial Court of Naga City, Branch 19 (RTC), in Civil Case No. RTC 2006-0073.
Antecedents
Spouses Joventino and Maria Luisa Ruiz (Joventino and Ma. Luisa; collectively, petitioners) were the registered owners of a parcel of land situated in Naga City consisting of 1,168 square meters (sq. m.) and covered by Transfer Certificate of Title (TCT) No. 36744 of the Register of Deeds of Naga City (subject property). 5
On July 14, 2006, petitioners filed a Complaint 6 praying, among others, for the annulment of registration of the deed of sale, for the cancellation of TCT No. 47633 covering the subject property issued in favor of Grace De Leon (respondent), for the re-issuance of TCT No. 36744, and for damages. 7
Petitioners alleged that sometime in December 2001, they obtained a loan in the amount of P700,000.00 from respondent in order to accommodate the financial needs of their uncle Rogelio Reyes (Rogelio). To guarantee the payment of said loan, petitioners executed, in favor of respondent, a Deed of Absolute Sale (DOAS) over the subject property and handed to respondent the owner's duplicate copy of TCT No. 36744. In 2002, said loan was fully paid and the copy of TCT No. 36744 was returned to petitioners while the DOAS remained with respondent. In March 2003, Ma. Luisa borrowed from respondent P70,000.00 at an agreed interest rate of 7% per month. Ma. Luisa again handed over to respondent their copy of TCT No. 36744 as guarantee for the said loan. Ma. Luisa was able to pay P112,000.00, including interest, leaving a balance of P23,000.00 as per computation made by respondent's secretary. Later, Ma. Luisa obtained an additional loan of P400,000.00 but received only P301,417.00 after deducting the interest due on their previous loan, as well as other charges and broker's commission. In October 2003, petitioners made a partial payment of P140,000.00. Despite the outstanding loan balance, respondent never bothered to demand or collect payments from them. 8 HcDSaT
In October 2005, petitioners received a letter from respondent's counsel demanding that they vacate the subject property because it had already been sold to respondent. Upon verification with the Register of Deeds, petitioners found out that respondent had already caused the transfer of title over the subject property to her name on the basis of the DOAS executed in 2001. The date on the DOAS was changed to December 28, 2004, and the document was notarized despite the fact that Joventino never appeared before the notary public indicated thereon. 9
Petitioners maintained that the DOAS should be nullified by reason of respondent's fraudulent registration of the said instrument with altered date of execution. Moreover, petitioners claimed that respondent's act of appropriating for herself the subject property, which was put up as a guarantee to secure their loan obligation, without the formalities provided for by law, constitutes pactum commissorium, which is void. 10
In her Answer with Counterclaim, 11 respondent vehemently denied petitioners' allegations, contending that Ma. Luisa offered her the subject property for P700,000.00 sometime in 2001. Ma. Luisa gave her their owner's duplicate copy of the TCT and the DOAS already signed by petitioners. Ma. Luisa also knew that respondent had no intention of having the property titled in her name to save on capital gains taxes because the latter planned to resell it anyway. Ma. Luisa requested that she be allowed to stay in the premises and continue receiving the rent of her boarders. Respondent agreed, but subject to the condition that Ma. Luisa would act as caretaker of the property. 12
After the sale, Ma. Luisa approached respondent on several occasions for the purpose of contracting loans. Petitioners were able to obtain a total of three loans, for which they gave postdated checks and promissory notes as guarantees of their indebtedness. By 2003, petitioners had an unpaid loan in the aggregate amount of P328,000.00. Respondent sent her secretary to demand full payment from petitioners, but to no avail. 13
Sometime in November 2004, respondent learned of the adverse claim on the subject property filed by petitioners' daughter, Marisa Ruiz Tolentino (Marisa), with the Register of Deeds on the basis of a Deed of Sale dated February 13, 2004, stating that she had purchased a portion of the subject property. This alarmed respondent who decided not to sell the property anymore but, instead, to register it in her own name. In December 2004, Ma. Luisa volunteered to have the DOAS notarized, as only the year indicated thereon would have to be changed. Respondent signed it and gave it to Ma. Luisa, who returned in January 2005 and handed over the already notarized DOAS back to respondent. 14
Respondent averred that Marisa acknowledged the sale of the subject property in her favor when the latter requested to buy from her the 195-sq. m. portion thereof, which petitioners allegedly sold to Marisa before they sold the whole property to her. Respondent agreed and sold said portion to Marisa for P50,000.00. 15
Ma. Luisa died on October 5, 2014, 16 prior to the promulgation of the RTC's decision. She was formally substituted by her children, Juvenal, Marisa, and Juventino Ruiz, Jr., as party-plaintiffs on February 27, 2015. 17 ASTcaE
The RTC Ruling
After trial, the RTC rendered its decision declaring that the parties' contract was one of sale, applying Article 1370 of the Civil Code, or the "plain meaning rule." It noted that Ma. Luisa, in testifying before the court, "had a conscious and deliberate intention to mislead this court by falsifying material facts. The discrepancies in her testimony are not merely inconsequential and immaterial but [go] to the very substance which served as the foundation of her claim that the deed of sale was merely a loan with a mortgage." 18
According to the RTC, the act of Marissa in paying respondent for a portion of the subject property can only be construed as an acknowledgment by petitioners' own daughter of respondent's title and right of ownership over the subject property. 19
Aggrieved, petitioners appealed the RTC decision before the CA.
The CA Ruling
The CA sustained the RTC's ruling that the parties herein entered into a contract of sale and not an equitable mortgage. It held that petitioners failed to substantiate their claim as the records are bereft of proof that the agreement between them was a transaction other than sale. There is no indication in the DOAS that the parties executed it merely for the purpose of securing a loan obligation, as it clearly showed petitioners' intent to sell their property to respondent. 20
Moreover, the DOAS is a duly notarized instrument which carries with it not only the presumption of regularity in its due execution but also serves, in the absence of sufficiently contradictory evidence, as clear and convincing proof of the unequivocal facts stated therein. Petitioners failed to overcome such presumption. As to the time gap between execution and notarization of the DOAS, the same is immaterial as in fact, notarization or the requirement of a public document under the Civil Code is only for convenience and not for its validity or enforceability. Neither is the mere allegation of inadequate consideration sufficient for concluding that the contract is really an equitable mortgage, there being no evidence presented showing gross inadequacy of price. 21 The CA likewise noted the RTC's observation regarding Ma. Luisa's "conscious and deliberate intention to mislead it by falsifying material facts." 22
Petitioners' motion for reconsideration was denied by the CA, hence, this petition.
Issue
Whether the CA erred in not finding that the parties executed an equitable mortgage and in maintaining that they entered into a contract of sale. 23
Petitioners' Arguments
Petitioners point out that there was only one deed executed by the parties to secure the first loan, which was later paid in full. With the settlement of the first loan, the DOAS was supposed to be functus officio. 24 Petitioners maintain that the DOAS is actually an equitable mortgage. Art. 1602 of the Civil Code establishes instances where a contract shall be presumed to be an equitable mortgage. They allege that the first, second, and sixth paragraphs of Art. 1602 are present. 25
First, petitioners allege that there was gross inadequacy of the purchase price. This was supposedly established by respondent's own evidence — the capital gains tax return indicating that the tax paid by respondent for the property was computed based on the price of P1,868,800.00, instead of the P700,000.00 supposedly paid to petitioners. 26
Second, petitioners aver that they remained on the subject property even after the DOAS was signed. Respondent demanded from petitioners to vacate the property only after title thereto had been transferred in her name. 27 cDSAEI
Lastly, petitioners fault the CA for ignoring other circumstances showing that the real intention of the parties in executing the deed was to secure the payment of a debt: the duplicate copy of TCT No. 36744 was returned to petitioners after the first loan was paid, and again given to respondent by petitioners when the subsequent loans were contracted; the second and third loans were extended without any new collateral; respondent made no demand to pay the second and third loans; and, the DOAS was notarized only after three years from its execution. 28
In their Reply, 29 petitioners clarify that they are not disputing the facts as found by the RTC and CA, but merely seek the proper application of the law on the factual findings made by the said courts.
Respondent's Arguments
Respondent assails the petition for raising factual questions which are not allowed in a Rule 45 petition, and for not falling under the exceptions where the Court may delve into factual matters. Respondent argues that since the issues raised by petitioners are questions of fact, which are not reviewable by this Court, the present petition must perforce be dismissed. 30
Respondent maintains that the RTC and CA did not err in declaring that petitioners were not able to discharge their burden of proving by clear, convincing, and unequivocal evidence the supposed true intention of the parties to enter into an equitable mortgage. Said courts correctly disregarded the mere assertions of Ma. Luisa and the dubious documents she adduced. Respondent emphasizes that in order to resolve the issues raised in the petition, the Court would have to reevaluate all the evidence presented. 31
The Court's Ruling
The petition has no merit.
This Court has repeatedly held that it is not a trier of facts and parties may raise only questions of law in petitions for review on certiorari under Rule 45 of the Rules of Court. The jurisdiction of the Court is limited to reviewing errors of law, and findings of fact of the CA are conclusive because it is not the Court's function to review, examine, and evaluate or weigh the evidence all over again. 32 While there are recognized exceptions 33 to this rule, none of those exceptions are present in this case.
While petitioners claim that the petition raises only questions of law and not of fact, they failed to elucidate any further. Contrary to petitioners' assertion, the issues they raised concerning the nature of the DOAS as an equitable mortgage would necessitate a review and re-evaluation of the evidence proffered by the parties.
In any case, the Court finds the evidence on record as insufficient to support the allegation that in executing the DOAS, the parties intended the same to serve as security for petitioners' loan obligation, and was not actually a contract of sale.
In Spouses Martires v. Chua, 34 the Court defines an equitable mortgage as one which, although lacking in some formality, or form or words, or other requisites demanded by a statute, nonetheless shows the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything contrary to law in this intent. 35
Art. 1602 of the Civil Code enumerates the instances when a contract — regardless of its nomenclature — may be presumed to be an equitable mortgage:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. 36 (Emphases supplied)
In addition, Art. 1604 of the Civil Code specifically provides that Art. 1602 shall also apply to contracts purporting to be an absolute sale.
For the presumption of an equitable mortgage to arise under Art. 1602, two requisites must concur: (1) that the parties entered into a contract denominated as a sale; and (2) that their intention was to secure an existing debt by way of a mortgage. 37 It is settled in jurisprudence that the existence of any of the circumstances defined in Art. 1602, not the concurrence nor an overwhelming number of such circumstances, is sufficient for a contract of sale to be presumed an equitable mortgage. 38 cDCEIA
True, there is no conclusive test to determine whether a deed absolute on its face is really a simple loan accommodation secured by a mortgage. It must be stressed, however, that the decisive factor in evaluating such deed is the intention of the parties as shown by all the surrounding circumstances, such as the relative situation of the parties at that time, the attitude, acts, conduct, and declarations of the parties before, during and after the execution of said deed, and generally all pertinent facts having a tendency to determine the real nature of their design and understanding. 39
Conversely, the presumption that a contract is an equitable mortgage may be rebutted by clear evidence to the contrary. The party challenging the prima facie presumption may overthrow it by adducing substantial and credible evidence. 40
On the allegation of gross inadequacy of the sale price, the CA correctly ruled that mere allegation is not enough, as it must be clearly shown from the evidence presented that the consideration was in fact grossly inadequate at the time the sale was executed. 41 Both the RTC and the CA were one in holding that petitioners were not able to establish the actual value of the subject property when it was sold. There was no data on comparative sales of real properties in the area or any other document showing the fair market value of the property to prove the allegation of unusually inadequate purchase price paid. Even the Capital Gains Tax Return 42 pointed to by petitioners is not sufficient to establish an inadequacy of the price at the time of the sale, as the sale was perfected in 2001 and said tax return was accomplished only in 2004.
As to the circumstance that petitioners remained in possession of the property even after execution of the DOAS, respondent amply explained that it was Ma. Luisa who requested that she be allowed to remain on the subject property for a six-month period to give the latter's boarders sufficient time to find a new place to stay. Ma. Luisa's request to continue collecting the rent of her boarders was even granted by respondent subject to the condition that she act as caretaker of the property during the said period. 43 This was further corroborated by the October 28, 2005 Letter demanding petitioners to vacate the subject property, which petitioners themselves offered as evidence. 44 The demand was premised on the fact that Ma. Luisa had verbally requested, and was in fact granted, a sufficient period to remain on the subject property, and that such period had lapsed without petitioners vacating the same.
Aside from bare allegations, petitioners failed to substantiate by any documentary evidence their claim that the amount of P700,000.00 given by respondent was in the nature of a loan. While petitioners alleged that interest was charged on the loan, nowhere in the records does it show that any such interest was actually paid or deducted from the P700,000.00. Neither were petitioners able to present receipts or any other documentary evidence to show that they had in fact paid back or settled in full the alleged P700,000.00 loan.
On the other hand, respondent presented two Receipts 45 for P60,000.00 and P640,000.00 as partial payment and full payment, respectively, "for the sale of a parcel of land as per attached TCT #36744." These receipts bore Ma. Luisa's signature, 46 and were acknowledged by Ma. Luisa herself on the witness stand. 47 Likewise, while petitioners allege that the P700,000.00 amount was loaned for the account of their uncle Rogelio and had been paid in full, respondent was able to present a Promissory Note and Check 48 issued by Rogelio to establish that he entered into a separate transaction with her, and that the same had not yet been fully paid as of September 2002.
The fact that Ma. Luisa subsequently obtained loans from respondent is of no moment since these transactions were separate and distinct from the DOAS. The allegation that there was no demand for payment of the subsequent loans — notably, disputed by respondent — has no bearing on the status of the DOAS even if proven to be true.
Neither may the late notarization of the DOAS, some three years after, be taken against respondent. Delay in transferring title is not one of the instances in which an equitable mortgage can be presumed. 49 DHESca
Finally, the RTC noted the fact that no less than petitioners' daughter, Marisa, acknowledged the transfer of ownership of the subject property to respondent. She had earlier bought a portion of the subject property measuring 195 sq. m. from her parents, and while she was in the process of registering the said portion in her name, she discovered that the certificate of title was no longer with petitioners. Marisa testified that she asked petitioners about it, and discovered that they sold the entire property to respondent. Respondent acceded to Marisa's request to purchase the 195-sq. m. portion for P154,000.00, but the latter was only able to pay P50,000.00. 50 Notably, with Marisa having substituted Ma. Luisa as party to the case by way of the RTC Order 51 dated February 27, 2015, Marisa's foregoing testimony may be treated as an admission by petitioners.
In sum, the evidence on record fail to support petitioners' claim that the DOAS was executed merely to secure their loan with respondent. The RTC and CA correctly held that there is nothing in the DOAS to indicate that the parties intended it to be a loan with mortgage, as its clear terms evince petitioners' intention to transfer ownership of the subject property to respondent.
WHEREFORE, the petition is DENIED. The March 6, 2018 Decision and the July 2, 2018 Resolution of the Court of Appeals in CA-G.R. CV No. 104510, are hereby AFFIRMED. cDTACE
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 8-19.
2.Id. at 25-39; penned by Associate Justice Carmelita Salandanan Manahan and concurred in by Presiding Justice Romeo F. Barza and Associate Justice Stephen C. Cruz.
3.Id. at 40-42.
4. Records, pp. 336-340; penned by Judge Zeida Aurora B. Garfin.
5.Id. at 15.
6.Id. at 1-11.
7.Id. at 10.
8.Id. at 1-3.
9.Id. at 3-4.
10.Id. at 4-5.
11.Id. at 31-34.
12.Id. at 31-32.
13.Id. at 32.
14.Id. at 32-33.
15.Id. at 33.
16.Id. at 344-345.
17.Id. at 355.
18.Id. at 339.
19.Id. at 340.
20.Rollo, pp. 33-34.
21.Id. at 37.
22.Id. at 38.
23.Id. at 12.
24.Id. at 16.
25.Id. at 16-17.
26.Id. at 15.
27.Id. at 15-16.
28.Id.
29.Id. at 92-94.
30.Id. at 81-83.
31.Id. at 82.
32.Adriano v. Lasala, 719 Phil. 408, 416 (2013).
33. (1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures x x x; (2) When the inference made is manifestly mistaken, absurd or impossible x x x; (3) Where there is a grave abuse of discretion x x x; (4) When the judgment is based on a misapprehension of facts x x x; (5) When the findings of fact are conflicting x x x; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee x x x; (7) The findings of the Court of Appeals are contrary to those of the trial court x x x; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based x x x; (9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents x x x; and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record x x x. (Medina v. Mayor Asistio, Jr., 269 Phil. 225, 232 [1990]).
34. 707 Phil. 34 (2013).
35.Id. at 48.
36.Ceballos v. Intestate Estate of the Late Mercado, 474 Phil. 363, 375 (2004).
37.San Pedro v. Lee, 474 Phil. 379, 391 (2004), citing Spouses Reyes v. Court of Appeals, 393 Phil. 479, 490 (2000).
38.Spouses Sy v. De Vera-Navarro, 851 Phil. 276, 288 (2019), citing Spouses Salonga v. Spouses Concepcion, 507 Phil. 287, 303 (2005).
39.Saclolo v. Marquito, G.R. No. 229243, June 26, 2019, 906 SCRA 355, 362, citing Spouses Salonga v. Spouses Concepcion, supra at 303.
40. See Ramos v. Sarao, 491 Phil. 288, 302 (2005).
41.Olivares v. Sarmiento, 577 Phil. 260, 271 (2008).
42. Records, p. 279.
43.Id. at 233.
44.Id. at 17.
45.Id. at 35 and 36.
46. TSN, July 25, 2006, pp. 5-7.
47.Id. at 16-18.
48. Records, p. 270.
49.Ceballos v. Intestate Estate of the Late Mercado, supra note 36 at 377.
50. TSN, May 17, 2010, pp. 7-15.
51. Records, p. 355.