G.R. No. 199766 - Sepe vs. Heirs of Kilang

Case Summary (G.R. No. 199766)

Factual Background

On November 18, 1992, Anastacia Kilang, with marital consent of her husband Fabian Solijon, executed a notarized Deed of Sale of a Registered Land (DOS) purportedly conveying a parcel covered by TCT T-10069 to spouses Generoso and Gaudencia Sepe for P15,000.00. On December 14, 1992, Anastacia executed a notarized Notice of Adverse Claim asserting the parcel was never sold and that a duplicate copy of TCT T-10069 was found in the possession of Generoso Sepe. On December 17, 1992, four of Anastacia’s children, excluding Dominga, executed a notarized Confirmation of Sale (COS) for P40,000.00, confirming the sale and waiving their rights. On January 14, 1993, Anastacia executed a notarized Notice of Withdrawal of Adverse Claim, stating she had sold the land to spouses Sepe on November 18, 1992, and on the same date TCT T-10069 was cancelled and TCT T-35367 was issued in the names of spouses Sepe. Anastacia died on October 20, 1993.

Procedural History

Respondents filed Civil Case No. 6703 on December 21, 1998 seeking nullification of the DOS, the COS, and TCT T-35367, and recovery of possession with damages. The first filing was dismissed for failure to prosecute on February 26, 2002, and respondents refiled the complaint in 2002. At trial, respondents presented oral testimony of family members and documentary evidence, including the DOS, COS, the Notices, the TCTs, and an NBI document examiner’s report. Petitioner filed a demurrer to evidence on July 13, 2006, alleging ratification and prescription. The RTC granted the demurrer and dismissed the case on August 7, 2006, and denied respondents’ motion for reconsideration on September 14, 2006. Respondents appealed to the Court of Appeals, which reversed and set aside the RTC orders in a Decision dated August 4, 2010 and denied petitioner’s motion for reconsideration in a Resolution dated October 27, 2011. Petitioner then filed this Petition under Rule 45, Rules of Court.

Trial Court Findings

The Regional Trial Court found respondents’ oral claims inadequate and unworthy of belief in the face of notarized documentary evidence favoring petitioner. The RTC emphasized the presumption of regularity attaching to public instruments and observed that respondents did not refute the due execution of the notarized documents. The RTC also held that, if fraud existed, the action for annulment had prescribed because the Notice of Adverse Claim dated December 14, 1992 put respondents on notice and the suit filed in December 1998 was beyond the four-year prescriptive period. The RTC therefore granted the demurrer to evidence and dismissed the complaint, awarding attorney’s fees against respondents.

Court of Appeals Ruling

The Court of Appeals reversed. The CA found the evidence showed no consideration had in fact been paid to Anastacia and concluded that the DOS was a false contract and therefore void. The CA interpreted the haste in executing the Notice of Adverse Claim and the circumstances surrounding the Notice of Withdrawal as indicia that the withdrawal was procured by petitioner’s machinations. The CA also reasoned that if petitioner had validly purchased the lot he would not have sought the subsequent Confirmation of Sale by the children. The appellate court awarded moral and exemplary damages and attorney’s fees to respondents, invoking Articles 19 and 21, Civil Code, as support for findings of bad faith and willful injury.

Issues Presented

The Petition presented principally whether the CA erred in finding that no consideration supported the DOS and in concluding the DOS and the resulting title were void. Related issues were whether the CA erred in construing the hasty execution of the Notice of Adverse Claim and the January 1993 withdrawal as proof that no sale occurred, whether it erred in finding the withdrawal was not done by Anastacia but procured by petitioner, whether it erred in finding petitioner took advantage of Anastacia’s ignorance, and whether it erred in reasoning that petitioner would not have sought the COS if he had valid title.

Parties’ Contentions

Petitioner maintained that the notarized DOS expressly recited P15,000.00 as consideration and that the law presumed the existence and legality of the cause of a contract under Article 1354, Civil Code, placing the burden on respondents to prove otherwise. Petitioner relied on the notarization and public-document status of the DOS, the subsequent notarized Withdrawal of Adverse Claim by Anastacia, the issuance of TCT T-35367, and the COS executed by four children as confirming and ratifying the sale. Respondents countered that no payment had been made, that the DOS was procured by fraud and misrepresentation, that the withdrawal was not genuine but the product of petitioner’s machinations, and that petitioner's conduct demonstrated bad faith warranting nullification of the sale and cancellation of title.

Supreme Court Ruling

The Supreme Court granted the Petition. The Court reversed the CA Decision dated August 4, 2010 and its Resolution dated October 27, 2011, and reinstated and affirmed the RTC orders dismissing the complaint. The Court concluded that respondents failed to overcome the presumptions favoring the notarized documents and therefore failed to meet the standard necessary to invalidate a public instrument.

Legal Reasoning

The Court applied the disputable presumption of the existence and legality of cause in contracts under Article 1354, Civil Code, and the rule that the burden to prove lack of consideration rests upon the party alleging it. The Court cited Rule 131, Sec. 3(r) recognizing the presumption that there was sufficient consideration for a contract. The Court emphasized that a notarial document is a public document under Rule 132, Sec. 19, and that its certificate of acknowledgment is prima facie evidence of execution. To overcome the presumptions of authenticity and regularity attaching to notarial instruments, the Court reiterated the necessity of evidence that is clear, convincing and more than merely preponderant, relying on precedents including

Case Syllabus (G.R. No. 199766)

Parties and Posture

Generoso Sepe appeared as Petitioner before the Supreme Court in a Rule 45 petition contesting the Decision of the Court of Appeals and its Resolution denying reconsideration.
Heirs of Anastacia Kilang, represented by her children Maria, Donata, Feliciana, Dominga and Severo Solijon, appeared as Respondents in the underlying civil action for nullification of sale and recovery of possession.
The petition assailed the Court of Appeals Decision dated August 4, 2010 in C.A.-G.R. C.V. No. 01786 and its Resolution dated October 27, 2011.
The appealed rulings of the Court of Appeals had reversed the Regional Trial Court, Branch 3, Tagbilaran City’s Orders dated August 7, 2006 and September 14, 2006 dismissing Civil Case No. 6703.
The Supreme Court granted review under Rule 45, Rules of Court to determine the validity of the 1992 deed of sale and associated rulings.

Key Facts

Anastacia Kilang was described as an eighty-four-year-old, illiterate, rheumatic and bedridden owner of a parcel covered by TCT No. T-10069.
A Deed of Sale dated November 18, 1992 purportedly transferred the subject lot to spouses Generoso and Gaudencia Sepe for P15,000.00, with marital consent of Fabian Solijon.
On December 14, 1992, Anastacia executed a notarized Notice of Adverse Claim averring that a duplicate TCT was lost and found in the possession of Generoso Sepe, and that the parcel was never sold.
On December 17, 1992, four of Anastacia’s children, excluding Dominga, executed a Confirmation of Sale for P40,000.00 confirming and warranting the sale to spouses Sepe.
On January 14, 1993, Anastacia executed a notarized Notice of Withdrawal of Adverse Claim stating that she had already sold the land to spouses Sepe and requesting that the deed of sale be pushed through.
On January 14, 1993, TCT No. T-35367 was issued in the names of spouses Sepe, and Anastacia died on October 20, 1993.
Respondents first filed Civil Case No. 6703 on December 21, 1998, which was dismissed for failure to prosecute on February 26, 2002, and then refiled by Complaint dated March 25, 2002 and filed May 16, 2002.

Evidence Presented

Petitioner offered the notarized Deed of Sale dated November 18, 1992 stating receipt of P15,000.00 as consideration.
Petitioner relied on the notarized Notice of Withdrawal of Adverse Claim dated January 14, 1993 and the subsequently issued TCT T-35367.
Respondents offered the notarized Confirmation of Sale dated December 17, 1992 alleging P40,000.00 consideration to them from spouses Sepe.
Respondents presented oral testimonies from Feliciana, Maria, Julieta Solijon, and others asserting that no consideration was paid to Anastacia.
Documentary and expert evidence included records from the Tagbilaran Register of Deeds and the NBI document examiner who testified regarding signatures attributed to Generoso Sepe.

Trial Court Ruling

The Regional Trial Court granted petitioner’s Demurrer to Evidence and dismissed Civil Case No. 6703 in an Order dated August 7, 2006.
The RTC found respondents’ oral claims inadequate to overcome the presumption of regularity attaching to duly notarized public instruments.
The RTC further held that the action for annulment on the ground of fraud had prescribed because the discovery of fraud allegedly occurred on December 14, 1992.
The RTC imposed costs and awarded reasonable attorney’s fees in the amount of P10,000.00, and denied respondents’ motion for reconsideration on September 14, 2006.

Court of Appeals Ruling

The Court of Appeals reversed the RTC and held that the Deed of Sale was nu