Cirelos v. Hernandez
REITERATIONFacts
The Antecedents: Spouses Aniceto and Thelma Cirelos (petitioners) filed a complaint against spouses William G. Hernandez and Rosemarie Zafe (respondents) for Breach of Contract, Annulment of Sale, and Damages. Petitioners alleged that they obtained a loan from respondent William Hernandez, executing a Deed of Real Estate Mortgage over their property. They claimed that Hernandez asked petitioner Thelma Cirelos to sign a blank paper, which was later converted into a Deed of Absolute Sale without the consent of her husband, Aniceto. Petitioners further asserted that the Release of Real Estate Mortgage was fictitious as the loan had not been paid. Procedural History: The Regional Trial Court (RTC) of Quezon City dismissed the petitioners' complaint, finding the Deed of Absolute Sale to be genuine and not fabricated. The RTC noted that petitioner Thelma Cirelos's claim of signing a blank paper was unbelievable, especially since a notary public testified to the due execution of the deed. The Court of Appeals (CA) affirmed the RTC's decision, finding Cirelos's testimony not worthy of belief and upholding the presumption of regularity in the notarized deed. The CA also noted the petitioners' failure to pay the debt and take steps to reconstitute the burned title. The Petition: Petitioners seek review of the CA's decision, arguing that it is contrary to law and that the appellate court committed grave abuse of discretion in appreciating the evidence. They contend that the true agreement was a mortgage, not a sale, citing the inadequacy of the price (P450,000.00 for a property valued at P1.2 Million), their continued possession, and the alleged lack of written demand. Petitioners also claim the Deed of Absolute Sale is void due to lack of consideration and fraud in obtaining Cirelos's consent, as well as the absence of her husband's consent, alleging the Special Power of Attorney was tampered with. They argue that the notary public was a biased witness. The petition is filed under Rule 45 of the Rules of Court.
Issue(s)
Whether the Deed of Absolute Sale is void due to alleged fraud in its execution and lack of consent from the husband. Whether the transaction should be considered an equitable mortgage instead of an absolute sale, given the alleged inadequacy of price, continued possession by the vendors, and the parties' intent. Whether the Special Power of Attorney (SPA) was validly executed and contained the true intent of the parties.
Ruling
The petition is denied for lack of merit. The Court affirmed the decisions of the Court of Appeals and the Regional Trial Court, upholding the validity of the Deed of Absolute Sale.
Ratio Decidendi
On the validity of the Deed of Absolute Sale and alleged fraud/lack of consent: The Court held that the Deed of Absolute Sale, being a notarized public document, enjoys the presumption of regularity and due execution. Petitioners failed to present clear, convincing, and preponderant evidence to overcome this presumption. Thelma Cirelos's bare denial and claim of signing a blank paper were insufficient, especially since the CA found her testimony regarding the promissory note not credible. The Court also noted that the RTC, having observed the witnesses' demeanor, found her claim unbelievable. The claim of lack of Aniceto's consent was addressed by the finding that a Special Power of Attorney (SPA) was presented, authorizing Thelma to sell the property, and this SPA was annotated on the title prior to the transactions. On the classification as equitable mortgage: The Court found no merit in the claim that the transaction was an equitable mortgage. Petitioners failed to present proof of the property's market value to establish gross inadequacy of price. Their continued possession was deemed not to be with the acquiescence of the respondents, as evidenced by multiple demand letters sent to the petitioners. Furthermore, the petitioners' non-payment of real estate taxes since 1990 was considered inconsistent with their claim of continued ownership. The Court reiterated that the presence of even one circumstance under Article 1602 of the Civil Code can establish an equitable mortgage, but these circumstances were not sufficiently proven by the petitioners. On the validity and alteration of the Special Power of Attorney (SPA): The Court found that the respondents successfully accounted for the alterations in the SPA, as required by Rule 132, Section 31 of the Rules of Court. Atty. Campos testified that the SPA shown to him contained the words "sell," "absolute sale," and "sale," along with the initials "ABC." Crucially, an annotation on the Transfer Certificate of Title (TCT) itself, Entry No. 9115, dated July 10, 1990 (prior to the Deed of Sale), indicated that Aniceto Cirelos granted his wife, Thelma, the power to "SELL, MORTGAGE" the property. This annotation, inscribed on the title before the transactions in question, served as convincing evidence that the SPA presented by respondents was indeed the one authorized by Aniceto, with the power to sell included.
Main Doctrine
A notarized Deed of Absolute Sale carries the presumption of regularity and due execution, which can only be overcome by clear, convincing, and more than merely preponderant evidence. The burden of proof rests on the party alleging fraud or defect in the execution. Furthermore, alterations in a document presented as genuine must be accounted for by the party producing it, as mandated by Rule 132, Section 31 of the Rules of Court.