De Guia v. Morte
REITERATIONFacts
The Antecedents: Primitiva Lejano Davis (Primitiva) owned a ½ undivided portion of two parcels of land (fishpond). She executed several documents concerning this property: a deed of mortgage (Exhibit "J") in favor of respondents Spouses Morte for ₱20,000.00 on August 8, 1973; a deed of sale (Exhibit "F") in favor of respondents Spouses Villarico for ₱33,000.00 on February 15, 1974; a deed of sale back to Primitiva (Exhibit "G") for ₱33,000.00 on February 14, 1977; a deed of sale (Exhibit "H") back to respondents Spouses Villarico for ₱180,000.00 on March 26, 1977; and a deed of mortgage (Exhibit "I") in favor of respondents Spouses Morte for ₱180,000.00 on March 28, 1977. On November 10, 1979, Primitiva, respondents Spouses Villarico, and Spouses Morte executed five documents: a mortgage (Exhibit "A") to Spouses Morte for ₱500,000.00; a General Power of Attorney (Exhibit "B") appointing Spouses Villarico as attorney-in-fact; a lease contract (Exhibit "C") for the fishpond to Spouses Villarico for ₱10,000.00 annually with ₱150,000.00 advance rental; a cancellation of the March 28, 1977 mortgage (Exhibit "D"); and a cancellation of earlier deeds of sale (Exhibit "E"). Primitiva failed to pay the ₱500,000.00 loan secured by Exhibit "A," leading Spouses Morte to file for extrajudicial foreclosure. A Notice of Sheriff's Sale was published. Procedural History: On February 17, 1986, petitioners filed an Amended Complaint with the RTC of Malolos, Bulacan, seeking to annul the mortgage (Exhibit "A") and lease contract (Exhibit "C"), alleging they were executed under threat and without valuable consideration. They also sought to enjoin the auction sale. Respondents argued the documents were for valuable consideration and that petitioner Renato Davis, an instrumental witness, did not deny the obligations. The RTC dismissed the complaint and declared Exhibits "A" and "C" valid, ordering the foreclosure of the mortgage and payment of attorney's fees. The Court of Appeals affirmed the RTC decision. Petitioners' motion for reconsideration was denied. The Petition: Petitioners filed a petition for review on certiorari, raising issues on whether the transactions on November 10, 1979, were void and simulated, and whether the real estate mortgage and lease contract were void for not being registered.
Issue(s)
Whether the Court of Appeals erred in declaring that the "transactions" executed on the same date, November 10, 1979, are not void and simulated. Whether the Court of Appeals erred in not declaring the real estate mortgage for ₱500,000.00 and the lease contract as void when both agreements were not registered and therefore not binding to third persons, including petitioner De Guia. Whether the instant petition involves a question of law well within the power of review by the Supreme Court.
Ruling
The petition is denied. The assailed Decision of the Court of Appeals, dated August 30, 2002, is affirmed.
Ratio Decidendi
On the issue of whether the transactions on November 10, 1979, are void and simulated: The Supreme Court affirmed the findings of the lower courts that the documents were valid. Petitioner Renato Davis admitted that his mother executed Exhibit "A" to restructure her indebtedness to Spouses Morte to avoid foreclosure. The Court held that a threat to enforce a just and legal claim through competent authority, such as the threat of foreclosure for a legitimate debt, does not vitiate consent under Article 1335 of the Civil Code. Furthermore, petitioners failed to adduce evidence that Exhibit "C" was simulated. Petitioner Renato's testimony confirmed he understood the contents of the documents before signing. On the issue of whether the real estate mortgage and lease contract are void for not being registered: The Court found no merit in this contention. The issue of petitioner De Guia being an innocent purchaser for value without notice of the mortgage was not raised in the trial court and thus could not be raised for the first time on appeal. The Court reiterated the rule that points of law not brought to the attention of the lower court will not be considered on appeal, citing basic considerations of due process. Therefore, the validity of the mortgage and lease contract as between the parties was upheld. On whether the instant petition involves a question of law: The Court ruled that the core issue of whether the Court of Appeals erred in upholding the RTC judgment declaring the mortgage and lease contract valid is a factual issue. As a general rule, a petition for review on certiorari under Rule 45 of the Rules of Court is limited to questions of law, and the Supreme Court is not a trier of facts. The Court found no exception to this rule in the present case, as the findings of the CA were not contrary to those of the RTC and were supported by the evidence on record.
Main Doctrine
A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent. Foreclosure of mortgaged properties in case of default in payment of a debtor is a legal remedy afforded by law to a creditor, and thus, a threat to foreclose the mortgage would not per se vitiate consent.