G.R. No. 144576 - Spouses Payongayong vs. Court of Appeals

Eduardo Mendoza was the registered owner of a 200-square-meter parcel of land in Barrio San Bartolome, Caloocan, evidenced by Transfer Certificate of Title No. 329509.
On April 18, 1985, Mendoza mortgaged the property to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan of P81,700.00, with the mortgage duly annotated on the title on April 23, 1985 as Primary Entry No. 2872.

On July 11, 1987, Mendoza executed a Deed of Sale with Assumption of Mortgage in favor of spouses Isabelo and Erlinda Payongayong (petitioners) for P50,000.00.
The deed expressly provided that the petitioners would assume the balance of Mendoza’s mortgage indebtedness to MESALA.

On December 7, 1987, without the knowledge of petitioners, Mendoza mortgaged the same property again to MESALA, this time for a loan amounting to P758,000.00.
This second mortgage was similarly recorded on the title as Primary Entry No. 8697.

On November 28, 1991, Mendoza executed a Deed of Absolute Sale in favor of spouses Clemente and Rosalia Salvador (respondents) for P50,000.00.
The sale was recorded (annotated as Primary Entry No. 1005) on Mendoza’s title after MESALA issued a Cancellation of Mortgage (annotated as Primary Entry No. 1003) and the title was subsequently cancelled and reissued as Transfer Certificate Title No. 67432 in the respondents’ name.

Petitioners filed a complaint on July 16, 1993, before the Quezon City Regional Trial Court (RTC) seeking annulment of the deed of absolute sale, cancellation of the transfer certificate, recovery of possession, and damages.
They alleged that the property had previously been sold to them by Mendoza and that the subsequent sale to respondents was executed in bad faith and as a result of a simulated transaction.
The RTC initially archived the case in December 1993 due to the inability to locate the spouses Mendoza but later revived the case against respondents, ultimately finding for respondents in a February 5, 1996 decision.

Petitioners appealed the RTC decision to the Court of Appeals (CA), which affirmed the RTC’s decision.
After a failed motion for reconsideration by petitioners on August 25, 2000, the petition for review under Rule 45 of the Rules of Court was filed.

Allegation that the CA committed grave abuse of discretion by not ruling that the deed of sale executed by Mendoza to the respondents was simulated, thus null and void.
Allegation that the CA erred in giving credence to the theory that the respondents were innocent purchasers for value.
Allegation that the CA abused its discretion by holding that petitioners were barred by the doctrine of laches.

The petition was filed by registered mail without a written explanation for failing to file in person, contravening Section 11, Rule 13 of the Revised Rules of Court which mandates personal service unless a valid explanation is provided.
The lack of explanation for the non-personal service was deemed a critical procedural defect that could result in the petition being considered as not duly filed.

Whether the petition’s service and filing mode, being by registered mail without a written explanation, renders it procedurally defective under Section 11, Rule 13 of the Revised Rules of Court.

Whether the deed of absolute sale executed by Mendoza in favor of the respondents was a simulated transaction, and thus null and void, as alleged by petitioners.
Whether the outward declaration of will in the deed differed from the actual intent of the parties, and if the purported simulation was intended to deceive third persons.

Whether respondents qualify as innocent purchasers for value based on the Torrens system and the reliance on the correctness of the certificate of title.
Whether the respondents’ subsequent verification of the title and inspection of the property support their claim of having acquired the property in good faith.

Whether petitioners are barred by the doctrine of laches given the delay and the circumstances surrounding the filing of the claim.