Facts:

The case involves Socorro Taopo Banga (petitioner) and spouses Jose and Emeline Bello (respondents). The events leading to the case began when the petitioner and her husband, Nelson Banga, acquired a property located at 459 Boni Avenue, Mandaluyong City, which is covered by Transfer Certificate of Title (TCT) No. 62530. On June 19, 1987, Nelson mortgaged the property to Jose Bello for a loan of P200,000, with Socorro’s consent. This loan amount was later amended to P300,000 on July 28, 1987, and further increased to P500,000 on September 1, 1989. A Deed of Absolute Sale of the property was executed by Nelson in favor of Jose on December 11, 1989, alleging the consideration was P300,000. However, Socorro claimed that her consent was fabricated and that her signature on the deed was forged, as she had not been present when it was notarized. She later filed a complaint before the Regional Trial Court (RTC) of Pasig to declare the sale void and sought damages, alleging criminal cons

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Facts:

Property and Parties

• Spouses Socorro Taopo Banga and Nelson Banga acquired a real property located at 459 Boni Avenue, Mandaluyong City, originally covered by Transfer Certificate of Title (TCT) No. 62530.
• Respondents include spouses Jose V. Bello and Emeline Bello, whereas petitioner is Socorro Taopo Banga, wife of Nelson Banga.

Transaction History and Notarial Acts

• On June 19, 1987, Nelson Banga, with his wife’s consent, executed a Deed of Real Estate Mortgage in favor of respondent Jose Bello as security for a loan of P200,000.00.
• On July 28, 1987, an "Amendment to the Real Estate Mortgage" increased the loan to P300,000.00.
• On September 1, 1989, a Second Amendment of Real Estate Mortgage further increased the loan obligation to P500,000.00.
• A Deed of Absolute Sale was executed, purportedly on December 11, 1989, transferring the property in favor of Jose Bello for a consideration of P300,000.00.
• Subsequent to the sale, TCT No. 62530 was cancelled and replaced by TCT No. 3294 in the name of Jose Bello.
• All instruments—the mortgage, its amendments, and the deed of sale—were notarized by Notary Public Teodorico L. Baltazar in the presence of two witnesses.

Petition and Allegations

• Petitioner (Socorro Taopo Banga) filed a complaint for the declaration of nullity of the deed of absolute sale, alleging:
• Lack of genuine consent for the sale,
• Forgery of her signature,
• Absence of her appearance before the notary on the alleged execution date,
• That the sale consideration of P300,000.00 was unconscionably low for a property in a commercial area.
• Petitioner sought:
• Declaration of the deed of sale as null and void,
• Cancellation of TCT No. 3294,
• Damages including moral damages, exemplary damages, attorney’s fees, litigation expenses, and costs of suit.

Responses and Counterclaims

• Respondents (the Bello spouses) contended that the deed of sale was voluntarily executed by the parties, with genuine signatures, and that the transaction reflected a fair and reasonable consideration.
• Nelson Banga, in his answer, claimed that the document was in essence a third amendment to the mortgage (an equitable mortgage) and that he had already settled the indebtedness partly.
• Both respondents and Nelson raised additional issues regarding the cancellation of the original title and the legitimacy of the mortgage transactions.

Trial Court Proceedings and Findings

• The Regional Trial Court (RTC) of Pasig, Branch 71, in its pre-trial order and subsequent decision:
• Framed issues regarding the validity, genuineness, and adequacy of the sale consideration.
• Noted discrepancies in the dating of the deed of absolute sale – including typed dates and residence certificate dates that were inconsistent.
• Held that petitioner had waived the opportunity to prove a forgery of her signature.
• Concluded that the true intent of the parties was to use the deed of sale as additional security (i.e. as an equitable mortgage) for the loan, not a bona fide sale.
• Declared the deed of sale null and void ab initio, cancelled TCT No. 3294, awarded exemplary damages and attorney’s fees, and dismissed counterclaims and crossclaims.

Appellate Court Developments

• Respondents appealed to the Court of Appeals challenging:
• The nullification of the deed of sale,
• Order directing payment for the mortgage debt, and
• The imposition of exemplary damages alleging gross negligence.
• The Court of Appeals, in its decision:
• Emphasized the presumption of regularity in notarized documents,
• Held that the deed of sale, read in its clear and unambiguous language, indicated a contract of sale.
• Stressed that the petitioner’s allegations of forgery were not supported by clear and convincing evidence.
• Found that gross inadequacy of price did not render the sale void.
• Ultimately reversed the trial court on several counts, granting the respondents’ appeal.
• The Supreme Court later reviewed the matter, noting additional evidence pointing to:
• The anomalous preparation of the deed (e.g., use of 1987 residence certificates and superimposed numbers indicating a backdated notarization).
• The true transaction being one for securing the loan (an equitable mortgage) rather than an actual sale.
• That respondents’ delay in demanding vacation of the property further supported the view that their true intention was to secure a debt.
• As well as issues regarding the award of exemplary damages which were not properly sustained since no moral damage award was granted.
• The Supreme Court’s final disposition:
• Reversed and set aside the Court of Appeals decision.
• Reinstated the RTC decision with the modification that the award of exemplary damages was deleted.
• Remanded the case to the trial court to determine whether Nelson Banga had settled his mortgage obligations to the respondents.

Issue:

Validity and Genuine Nature of the Deed of Absolute Sale

• Whether the deed of absolute sale, ostensibly executed on December 11, 1989, was binding, valid, and reflective of the true agreement between the parties.
• Whether the inconsistencies in the document (such as contradictory dates and typed insertions) indicate that it was not a bona fide sale.

Intent of the Parties

• Whether the true intention of the parties was to consummate an absolute sale or to create an equitable mortgage to secure a loan.
• Whether the document was merely a guise to effect additional security over the loan advanced to Nelson Banga.

Alleged Forgery and Inadequate Consideration

• Whether the petitioner’s signature on the deed of sale was forged or not.
• Whether the sale consideration of P300,000.00 was grossly inadequate given the commercial nature and market value of the property.

Procedural and Evidentiary Issues

• The sufficiency of evidence presented by the petitioner to overcome the presumption of regularity of a notarized instrument.
• Whether the petitioner’s allegations, unsupported by expert testimony, were sufficient to nullify the deed.

Mortgage Obligation Settlement

• Whether, in light of the contract being an equitable mortgage, Nelson Banga had fully discharged his mortgage obligation to the respondents.
• The proper determination of the amount payable if the mortgage debt remained unsettled.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)