G.R. No. 107791 - Bernardo vs. Court of Appeals

Case Digest (G.R. No. 107791)
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Facts:

Background and ownership of the subject property

Private respondent Fructuoso Torres owned five (5) parcels of land in Sta. Rosa, Nueva Ecija, covered by Transfer Certificate of Title No. NT-21520, with a total area of 23.2922 hectares.
On January 24, 1957, Fructuoso Torres mortgaged the subject land to the Philippine National Bank for P1,500.00, and redeemed it on March 23, 1960.
On June 22, 1960, the land was again mortgaged to the Development Bank of the Philippines for P4,200.00.

Execution of the questioned instrument and transfer of possession

Two days after the DBP mortgage, on June 24, 1960, Fructuoso Torres and his wife Maura Jawili executed a Deed of Sale with Assumption of Mortgage in favor of the spouses Modesto Bernardo and Cecilia Buenavides, the predecessors-in-interest of petitioners.
The spouses Bernardo took possession of the subject land, and possession remained with them and their successors-in-interest, including petitioners herein.
The deed was notarized by Notary Public Pedro B. Binuya and had two instrumental witnesses.

Private respondent’s allegations and the filing of the civil action

On December 6, 1971, private respondent filed a Complaint for Annulment of Contract, Reconveyance with Damages and Preliminary Injunction against petitioners as heirs of the deceased spouses Bernardo, docketed as Civil Case No. 5735.
Private respondent alleged that he did not know how to read and write.
He alleged that neither he nor his wife knew the document they signed was a sale; they believed it was an agreement for “transfer of possession,” or lease, of the land to the spouses Bernardo for a period of ten (10) years, in exchange for P9,000.00.
He claimed that the P9,000.00 supposedly represented:

P4,800.00 that he loaned to the spouses Bernardo to redeem the land from the PNB; and
payment of their P4,200.00 loan from DBP, which the spouses Bernardo were to assume.

Private respondent claimed that the P9,000.00 was to be returned after ten (10) years, simultaneous with the return of possession.

Private respondent’s subsequent acts and petitioners’ dispute

Private respondent asserted that he and his wife believed they were signing a contract for “Hiraman ng Lupa.”
On June 3, 1970, private respondent obtained an agricultural loan from DBP for P4,900.00, using part of it to pay off the remaining balance of P1,600.00 left unpaid by the spouses Bernardo.
After the lapse of ten (10) years, instead of returning the land, petitioner Pepito Bernardo filed an Affidavit of Adverse Claim and a criminal complaint for estafa against private respondent, based on private respondent’s alleged additional DBP loan using the property as collateral despite ownership having allegedly transferred to the spouses Bernardo.

Petitioners’ defenses in the civil case

Petitioners insisted that the transaction was sale with assumption of mortgage, not lease.
They accused private respondent of bad faith in securing the P4,900.00 DBP loan after learning that the remaining balance of the original loan was only P1,600.00, and even as petitioners claimed they had no more right to derive any benefit from the land.
Petitioners claimed they filed an Affidavit of Adverse Claim with the Register of Deeds on October 16, 1970, followed by a criminal case for estafa filed on December 28, 1970.
Petitioners argued that private respondent filed the civil complaint to escape criminal liability after admitting the deed’s existence.
The estafa case filed by petitioners was held in abeyance until after the termination of Civil Case No. 5735.

Lower court proceedings and decision

After trial, the then Court of First Instance of Nueva Ecija, Branch 2, rendered a Decision dated December 28, 1978, dismissing the Complaint.
The court found that private respondent’s verbal allegations could not overcome the documentary and testimonial evidence presented by petitioners.
The court upheld the presumption of regularity of the notarized deed, noting that it was notarized by a PNB notary public who would not have allowed himself to be used to deceive private respondent and his wife.
The court considered:

No evidence showed any unusual interest by the spouses Bernardo in the land before the transaction, nor any circumstance showing private respondent’s dire need of money that would have caused the spouses Bernardo to take advantage;
Immediate transfer of the property to the spouses Bernardo, together with the DBP loan account passbook;
Private respondent never paid taxes on the land during the alleged ten-year “lending” period;
The consideration of P9,000.00 did not appear inadequate because the land was unirrigated and had a total assessed value of only P7,000.00; and
The lapse of eleven years between execution and filing of the Complaint.

Court of Appeals reversal and petitioners’ motion for reconsideration

The respondent Court of Appeals reversed the lower court’s Decision and annulled the Deed of Sale with Assumption of Mortgage.
The Court of Appeals ordered petitioners to vacate the land and to pay private respondent P5,000.00 as attorneys’ fees.
The Court of Appeals relied on private respondent’s and his wife’s illiteracy, invoking Articl...(Subscriber-Only)

Issues:

Whether the notarized Deed of Sale with Assumption of Mortgage could be overturned by private respondent’s denial of its nature and contents

Whether the presumption of regularity and due execution of a public notarized document could be defeated by mere denial.

Whether private respondent’s evidence met the required standard of being clear and convincing and more than merely preponderant.

Whether private respondent’s alleged illiteracy prevented enforcement of the deed against him and his wife

Whether the Court of Appeals correctly relied on Article 24 of the Civil Code due to private respondent’s and his wife’s inability to read and write.

Whether private respondent could credibly claim lack of knowledge of the deed’s nature in light of evidence of partial schooling and prior English-language documents.

Whether the deed’s contents could be challenged through parol or testimonial evidence

Whether private respondent’s verbal allegations and denial could prevail over the written terms of the document given that the agreement was reduced to writing.

Whether the deed’s provisions, including its explicit sale language and consideration clause, were negated by insufficient proof.

Whether the action was barred by prescription or the ...(Subscriber-Only)

Ruling:

(Subscriber-Only)

Ratio:

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Case Digest (G.R. No. 107791)
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Case Digest (G.R. No. 107791)
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