Jesus v. Grey
REITERATIONFacts
The Antecedents: Prudencio de Jesus (plaintiff-appellant) executed a power of attorney in favor of his son-in-law, Fernando Grey, Jr. (defendant-appellant), authorizing Grey to sell or mortgage two parcels of land. Grey, acting under this power of attorney, mortgaged the property for P12,000 to the Philippine Postal Savings Bank (defendant). From the mortgage proceeds, Grey paid P3,594.86 in unpaid taxes on the plaintiff's property. The plaintiff alleged that he never executed the power of attorney and that his signature was fraudulently obtained. Procedural History: The plaintiff filed an action against Grey and the Philippine Postal Savings Bank, seeking to declare the power of attorney and the mortgage void, and to recover damages. The trial court declared the power of attorney and the mortgage valid but ordered Grey to pay P12,000 in damages to the plaintiff, plus interest and any amount the bank might recover. The trial court also absolved the plaintiff from Grey's cross-complaint. The Appeal: Both the plaintiff and the defendant Grey appealed the trial court's decision. The plaintiff appealed the portion upholding the validity of the mortgage, while Grey appealed the award of damages against him and the dismissal of his cross-complaint. The Supreme Court reviewed the evidence presented by both parties.
Issue(s)
Whether the power of attorney executed by Prudencio de Jesus in favor of Fernando Grey, Jr. is null and void due to fraudulent obtainment of signature. Whether the mortgage deed executed by Fernando Grey, Jr. in favor of the Philippine Postal Savings Bank, by virtue of the power of attorney, is valid. Whether Fernando Grey, Jr. is entitled to 2% of the income from the Solis-Tondo Subdivision as per their agreement. Whether the promissory note for P150,000 executed in favor of Fernando Grey, Jr. is valid and enforceable.
Ruling
The Supreme Court affirmed the trial court's decision in declaring the power of attorney and the mortgage valid. However, it reversed the trial court's judgment regarding the award of damages against Grey, the payment of costs by Grey, and the absolving of the plaintiff from Grey's cross-complaint. The plaintiff was ordered to render an accounting of the income from the Solis-Tondo Subdivision and pay 2% of the gross income to Grey. The Court found the promissory note for P150,000 to be null and void due to lack of valuable consideration.
Ratio Decidendi
On Issue 1: The Supreme Court meticulously re-examined all the evidence, including witness testimonies, and arrived at a conclusion different from that of the trial court. The Court found convincing evidence that the plaintiff not only signed the power of attorney but was also duly informed of its contents and its purpose, which was to empower his son-in-law to mortgage his lands to raise funds for his personal obligations. While acknowledging the plaintiff's strained relationship with his son-in-law, the Court cautioned against accepting the plaintiff's testimony without reservation, especially when it was contradicted by the testimonies of instrumental witnesses and the notary public. The Court emphasized the strong evidentiary force of a notarized document, which cannot be easily destroyed by mere allegations, particularly when a witness (Venancio Cruz) had previously attested under oath to the plaintiff's voluntary signing. Thus, the plaintiff failed to overcome the presumption of regularity and validity of the power of attorney. On Issue 2: Inasmuch as the power of attorney was determined to be valid and effective, it necessarily follows that the mortgage deed executed by Fernando Grey, Jr. in favor of the Philippine Postal Savings Bank, which was done by virtue of the said power of attorney, is likewise valid. The validity of the mortgage directly hinges upon the validity of the underlying authorization, which the Supreme Court upheld after a thorough review of the evidence. Therefore, the portion of the trial court's judgment declaring the mortgage valid was affirmed. On Issue 3: The Supreme Court reviewed the evidence regarding defendant Grey's cross-complaint concerning the 2% share of income from the Solis-Tondo Subdivision. The Court found that the power of attorney (Exhibit 2) sufficiently supported Grey's contention that the plaintiff had bound himself to pay him 2% of the income from the subdivision in consideration of services rendered and profits obtained. Since the document establishing this agreement was found to be genuine and effective, the plaintiff was obligated to comply with its terms. Consequently, the Supreme Court ordered the plaintiff to render an accounting of the income and pay Grey his 2% share. On Issue 4: Regarding the promissory note for P150,000, the Supreme Court upheld the trial court's finding that this document was executed without any valuable consideration and was therefore null and void. The Court's review of the evidence showed that the alleged consideration, an economy or savings of 30,000 square meters of land valued at P10 per square meter due to Grey's efforts in preparing new subdivision plans, was not sufficiently substantiated. Grey's involvement was found to be minimal, limited to speaking with an architect for plan approval, which the Court deemed insufficient to merit such an exorbitant sum. The Court concluded that the services rendered, however meritorious, could not justify the P150,000 amount, thereby affirming the trial court's decision to deny the promissory note any legal effect.
Main Doctrine
The Supreme Court held that a power of attorney, duly executed and ratified before a notary public, possesses strong evidentiary value. The testimony of the instrumental witnesses and the notary public is generally given greater weight than the testimony of the principal, especially when the principal alleges fraud and their testimony is inconsistent or self-serving. Consequently, a mortgage executed under such a valid power of attorney is also deemed valid, unless the fraud is conclusively proven.