Tapayan v. Martinez
REITERATIONFacts
The Antecedents: Respondent Ponceda Martinez (Respondent) is the owner of a parcel of land (Pingol Property) mortgaged to PNB and DBP. The DBP mortgage was constituted to secure a loan for Petitioners Spouses Marcelian and Alice Tapayan (Petitioners), with a portion of the loan proceeds used to settle Respondent's PNB loan. Subsequently, the parties executed a Deed of Undertaking wherein Petitioners agreed to execute a second mortgage over their property (Carangan Property) in favor of Respondent to secure the DBP loan, or to acknowledge the indebtedness if Respondent paid the loan to save the Pingol Property from foreclosure. The Deed stipulated that any amount paid by Respondent to DBP would be acknowledged as indebtedness, with a deduction for the amount paid to PNB. The DBP loan was not paid. Procedural History: Respondent filed a complaint for Specific Performance with Damages against Petitioners, seeking to compel them to execute the mortgage over the Carangan Property as per the Deed of Undertaking. The RTC ruled in favor of Respondent, ordering Petitioners to execute the mortgage or reimburse the amount paid to DBP, plus attorney's fees. The CA affirmed the RTC Decision. The Petition: Petitioners filed a Petition for Review on Certiorari, assailing the CA's affirmation of the RTC's findings, particularly regarding the validity of the Deed of Undertaking, their status as accommodation borrowers, and their obligation to constitute the mortgage.
Issue(s)
Whether the CA erred in affirming the RTC Decision directing Petitioners to execute a mortgage over the Carangan Property in favor of Respondent. Whether the Deed of Undertaking is a genuine and binding contract. Whether Petitioners are accommodation borrowers. Whether the amount to be reimbursed should be subject to deductions as stipulated in the Deed of Undertaking.
Ruling
The Petition for Review is GRANTED IN PART. The Decision of the Court of Appeals is AFFIRMED WITH MODIFICATION. Petitioners are directed to execute a mortgage on their house and lot covered by TCT No. T-10143 in favor of Respondent, unless they reimburse the latter the amount of PHP 1,114,879.55. Petitioners are also directed to pay Respondent attorney's fees in the amount of PHP 20,000.00.
Ratio Decidendi
On whether the CA erred in affirming the RTC Decision: The Court held that Petitioners waived their right to object to the admission of the Deed of Undertaking based on the best evidence rule because they failed to interpose a timely objection when it was formally offered as evidence before the RTC. The objection was raised for the first time before the Court of Appeals, which is considered a waiver. Evidence not objected to is deemed admitted and may be validly considered by the court. Therefore, the plain copy of the Deed of Undertaking was admissible and could be considered by the court. On whether the Deed of Undertaking is a genuine and binding contract: The Court found that Petitioners failed to rebut the presumption of regularity ascribed to the Deed of Undertaking as a notarized public document. Acknowledged before a notary public, the document enjoys the presumption of regularity and is prima facie evidence of the truth of the facts stated therein. To overcome this presumption, clear and convincing evidence is required. Petitioners' bare denial of participation and claim of forgery, without supporting evidence, were insufficient to overthrow this presumption. Thus, the authenticity and due execution of the Deed were upheld. On whether Petitioners are accommodation borrowers: The Court found that Petitioners' claim of being mere accommodation borrowers was not supported by sufficient evidence. Their own allegations and documentary exhibits showed that they paid the interests and fees related to the DBP Loan and insurance premiums for the mortgaged property solely on their account, without seeking reimbursement from the alleged joint venturers. This established their direct interest in the loan and negated their claim of being accommodation borrowers. Consequently, they must bear the liability arising from the non-payment. On whether the amount to be reimbursed should be subject to deductions as stipulated in the Deed of Undertaking: The Court agreed with Petitioners that the amount to be reimbursed should be subject to deductions as stipulated in the Deed of Undertaking. The RTC and CA erred in disregarding the provision requiring the deduction of the amount paid to PNB (₱65,320.55 plus interests and fees) from Petitioners' total liability. Respondent anchored her cause of action on the Deed of Undertaking, and it would be unjust to allow her to selectively invoke provisions that favor her while disregarding those that operate against her interests. Therefore, the amount to be reimbursed was modified to P1,114,879.55.
Main Doctrine
A party who fails to timely object to the admission of documentary evidence, such as a photocopy of a deed of undertaking, at the time it is formally offered before the trial court waives their right to question its admissibility on appeal. Furthermore, a notarized document enjoys the presumption of regularity, which can only be overcome by clear and convincing evidence, and not by bare denials.