G.R. No. 143370 - Mendezona vs. Ozamiz

Petitioners: spouses Mario J. and Teresita M. Mendezona; spouses Luis J. and Maricar L. Mendezona; and Teresita Adad Vda. de Mendezona.
Respondents: Julio H. Ozamiz, Roberto J. Montalvan, Jose Ma. Ozamiz, Carmen H. Ozamiz, Paz O. Montalvan, Ma. Teresa O.F. Zarraga, Carlos O. Fortich, Jose Luis O. Ros, Paulita O. Rodriguez, and Lourdes O. Lon.
Subject lands: three contiguous parcels in Banilad Estate, Lahug, Cebu City (approx. 3,462 m², 3,466 m², 3,468 m²) covered by TCT Nos. 116834–116836.

On April 28, 1989, vendor Carmen Ozamiz executed a notarized Deed of Absolute Sale conveying the three parcels to the petitioners for P 1,040,000.00, reserving usufructuary rights during her lifetime.
Petitioners paid the capital gains tax on May 5, 1989. Transfer certificates of title were issued in the names of Mario, Luis, and Antonio Mendezona; a partition agreement later retitled one-third share to Teresita Adad Vda. de Mendezona.

On January 15, 1991, respondents filed Special Proceeding No. 1250 in the RTC of Oroquieta City for guardianship over Carmen Ozamiz, alleging her mental disorientation since July 1987.
The court appointed Paz O. Montalvan guardian of her person, and Mario J. Mendezona together with respondents Roberto J. Montalvan and Julio H. Ozamiz as joint guardians of her properties.
On August 6, 1991, the guardians filed inventories and accounts listing the Lahug property; on August 13, 1991, they caused inscription of a notice of lis pendens on petitioners’ titles.

Petitioners filed suit on September 25, 1991 to remove the cloud on their titles (notice of lis pendens) and to quiet title.
Respondents’ answer contended the sale was void for lack of valid consideration, gross inadequacy of price, and Carmen Ozamiz’s alleged incapacity at the time of sale.
Pre-trial issues included the propriety of quieting of title; validity of the April 28, 1989 deed; maintenance or cancellation of titles; and damages and attorney’s fees.
Trial court heard petitioners, instrumental witnesses (Carmencita Cedeno, Martin Yungco), the notary (Atty. Asuncion Bernades), respondents’ witnesses (Paz O. Montalvan, Dr. Faith Go, et al.), and rebuttal experts.
Findings (Sept. 23, 1992): the Deed of Absolute Sale was validly executed by a sound-minded vendor for a sufficient consideration; tax was paid; titles duly transferred; lis pendens unfounded and ordered expunged.

The Court of Appeals (July 27, 1998) reversed, ruling the deed simulated (no proof of payment of consideration) and vendor mentally incapacitated; it ordered cancellation of petitioners’ titles.
Petitioners’ motions for reconsideration and for new trial/new evidence (Judge Durias’s testimony) were denied (May 19, 2000).
Petitioners filed a petition for certiorari before the Supreme Court, challenging the CA’s findings on simulation, mental capacity, and the denial of newly discovered evidence.

Whether the testimony of Judge Teodorico Durias constitutes newly discovered evidence warranting a new trial.
Whether the Court of Appeals gravely erred in:

Declaring the April 28, 1989 Deed of Absolute Sale a simulated contract for lack of proof of consideration.
Finding that Carmen Ozamiz’s mental faculties were seriously impaired at the time she executed the deed.