G.R. No. 189871 - Nacar vs. Gallery Frames

Petitioners Sofia Tabuada, Novee Yap, Ma. Loreta Nadal, and Gladys Evidente filed Civil Case No. 05-28420 before the Regional Trial Court (RTC), Branch 28, Iloilo City, seeking to declare the nullity of a mortgage and damages against respondents Spouses Bernan and Eleanor Certeza, Eleanor Tabuada, Julieta Trabuco, and Laureta Redondo.
The complaint included a prayer for the issuance of a Temporary Restraining Order (TRO) and preliminary injunction.
Summons and a copy of the complaint with annexes were served on respondents by January 31, 2005 through personal and substituted service, but several respondents either refused to acknowledge receipt or were represented by others.

Respondents failed to file their answers within the reglementary period, prompting petitioners to file a Motion to Declare Defendants in Default and for Judgment Based on Complaint on February 28, 2005.
The Spouses Certeza manifested their intention to file an answer but only submitted it on March 21, 2005, alongside responses from respondents Eleanor Tabuada, Trabuco, and Redondo seeking admission of their answers with counter-claims and cross-claims.
The RTC denied the Motion to Admit Answer and declared all respondents in default on May 11, 2005.
Respondents’ Motion to Set Aside the Order of Default was denied on June 30, 2005 due to their belated filings despite awareness of the pendency of the case.

In an ex parte hearing on September 9, 2005, petitioner Sofia Tabuada testified to the following:

Her late husband was Simeon Tabuada, son of Loreta Tabuada (the registered owner of the disputed property) and brother-in-law to defendant Eleanor Tabuada.
The disputed property known as Lot 4272-B-2 in Barangay Tacas, Jaro, Iloilo City had been inherited from Loreta Tabuada.
She received a notice from Spouses Certeza stating the property was mortgaged to them by Eleanor Tabuada and Julieta Trabuco.
The mortgage documents bore the signature of Loreta Tabuada despite her passing away in 1990, four years before the mortgage was executed.
She suffered emotional distress and incurred litigation expenses due to the mortgage and the ensuing legal dispute.

Death certificate of Loreta Yulo Tabuada dated April 16, 1990;
Transfer Certificate of Title No. T-82868 registered in Loreta Tabuada’s name;
Promissory Note dated July 4, 1994 and Mortgage of Real Rights dated July 1, 1994 executed purportedly by Loreta Tabuada;
Payment receipts and demand letter from Spouses Certeza.

On January 18, 2006, the RTC rendered judgment in favor of the petitioners, declaring the Mortgage of Real Rights and Promissory Note void.
The RTC found that Eleanor Tabuada was not the owner of the property, had no legal authority to mortgage the property, and had misrepresented herself as Loreta Tabuada to the Spouses Certeza.
Moral damages of Php 50,000.00, attorney’s fees of Php 10,000.00, and costs of suit were awarded to petitioners.

On September 30, 2009, the CA reversed and set aside the RTC’s decision and dismissed the complaint, reasoning that petitioners failed to prove a legal relationship to the deceased registered owner due to discrepancies in the death certificate and title name.
Petitioners’ motion for reconsideration was denied by the CA on March 7, 2011.

Whether the Court of Appeals erred in reversing the RTC's ruling, given the existence of competent evidence sufficiently proving the legal relationship between petitioner Sofia Tabuada and the late Loreta Tabuada, the registered owner of the mortgaged property.

Whether the award of moral damages to petitioners based on “disrespect to the dead” pursuant to Art. 309 of the Civil Code was proper under the circumstances.

Whether the real estate mortgage executed on the property was valid considering the mortgagor's status and authority over the property.

Whether the Spouses Certeza were mortgagees in good faith entitled to protection under the mortgage.