Deed of Assignment
Deed of Assignment
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set
aside the Amended Decision,1 as well as the Resolutions2 of the Court of Appeals (CA), dated September 30, 2005, July 5,
2006 and August 28, 2006, respectively, in CA-G.R. CV No. 76388. The assailed Decision of the CA reversed and set aside
its earlier Decision, dated April 30, 2004, in favor of petitioners. The July 5, 2006 Resolution denied petitioners' Motion
for Reconsideration, while the August 28, 2006 Resolution denied petitioners' Second Motion for Reconsideration.
Subject of the instant controversy are twenty-four memorial lots located at the Holy Cross Memorial Park in Barangay
Bagbag, Novaliches, Quezon City. The property, more particularly described as "Lot: 24 lots, Block 213, Section: Plaza of
Heritage-Reg.," is covered by Transfer Certificate of Title (TCT) No. 342914. Respondent, together with her mother,
Florencia R. Calagos, own the disputed property. Their co-ownership is evidenced by a Deed of Sale and Certificate of
Perpetual Care, denominated as Contract No. 31760, which was executed on June 4, 1992. 3
On December 18, 1995, respondent borrowed from petitioner spouses the amount of ₱150,000.00. The loan was
secured by a real estate mortgage over the abovementioned property. Respondent committed to pay a monthly interest
of 8% and an additional 10% monthly interest in case of default. 4
Subsequently, without foreclosure of the mortgage, ownership of the subject lots were transferred in the name of
petitioners via a Deed of Transfer.5
On June 23, 1997, respondent filed with the Regional Trial Court (RTC) of Quezon City a Complaint against petitioners,
Manila Memorial Park Inc., the company which owns the Holy Cross Memorial Park, and the Register of Deeds of
Quezon City, praying for the annulment of the contract of mortgage between her and petitioners on the ground that the
interest rates imposed are unjust and exorbitant. Respondent also sought accounting to determine her liability under
the law. She likewise prayed that the Register of Deeds of Quezon City and Manila Memorial Park, Inc. be directed to
reconvey the disputed property to her. 6
On November 20, 1998, respondent moved for the amendment of her complaint to include the allegation that she later
discovered that ownership of the subject lots was transferred in the name of petitioners by virtue of a forged Deed of
Transfer and Affidavit of Warranty. Respondent prayed that the Deed of Transfer and Affidavit of Warranty be
annulled.7 In their Manifestation dated January 25, 1999, petitioners did not oppose respondent's motion. 8 Trial ensued.
After trial, the RTC of Quezon City rendered a Decision in favor of petitioners, the dispositive portion of which reads,
thus:
Wherefore, premises considered, judgment is hereby rendered against Menelia R. Chua and in favor of the Sps. Lehner
Martires and Ludy Martires; and Manila Memorial Park Cemetery, Inc. as follows:
a. Menelia R. Chua is ordered to pay the Sps. Martires the amount of ₱100,000.00 as moral damages;
the amount of ₱50,000.00 as exemplary damages; and the amount of ₱30,000.00 as reasonable
attorney’s fees plus costs of suit.
b. Menelia R. Chua is ordered to pay Manila Memorial Park Cemetery, Inc. the amount of ₱30,000.00 as
reasonable attorney's fees plus costs of suit.
SO ORDERED.9
On appeal, the CA affirmed, with modification, the judgment of the RTC, disposing as follows:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit, and the decision of the trial
court dated 03 August 2002 is hereby AFFIRMED with MODIFICATION as to the amount of moral and exemplary
damages, and attorney's fees. Plaintiff-appellant Menelia R. Chua is hereby ordered to pay the defendant-appellees
Spouses Martires the amount of ₱30,000.00 as moral damages; ₱20,000.00 as exemplary damages; and attorney's fees
of ₱10,000.00 plus costs of suit.
Insofar as defendant-appellee Manila Memorial Park Cemetery, Inc. is concerned, the attorney's fees awarded is
reduced to ₱10,000.00 plus costs of suit.
SO ORDERED.10
The CA ruled that respondent voluntarily entered into a contract of loan and that the execution of the Deed of Transfer
is sufficient evidence of petitioners' acquisition of ownership of the subject property.
On September 30, 2005, the CA promulgated its assailed Amended Decision with the following dispositive portion:
Accordingly, the decision of this Court dated April 30, 2004 in CA-G.R. CV No. 76388, which had affirmed the judgment of
the Regional Trial Court of Quezon City, Branch 221, in Civil Case No. Q-97-31408, is REVERSED and SET ASIDE, and it is
hereby declared that:
(1) The assailed decision dated August 3, 2002 of the Regional Trial Court of Quezon City Branch 221 in Civil Case No. Q-
97-31408 is hereby Reversed with the following MODIFICATIONS, to wit:
(1) The Deed of Transfer dated July 3, 1996, as well as the Affidavit of Warranty, are hereby declared void ab
initio;
(2) The loan of ₱150,000.00 is hereby subject to an interest of 12% per annum.
(3) The Manila Memorial Park Cemetery, Inc. and the Register of Deeds of Quezon City [are] hereby directed to
cancel the registration or annotation of ownership of the spouses Martires on Lot: 24 lots, Block 213, Section:
Plaza Heritage – Regular, Holy Cross Memorial Park, being a portion of Transfer Certificate of Title No. 342914
issued by the Register of Deeds of Quezon City, and revert registration of ownership over the same in the name
of appellant Menelia R. Chua, and Florencia R. Calagos.
(4) The movant, Menelia R. Chua, is hereby ordered to pay the spouses Martires the amount of ₱150,000.00 plus
interest of 12% per annum computed from December 18, 1995 up to the time of full payment thereof and, after
deducting payments made in the total amount of ₱80,000.00, the same shall be paid within ninety (90) days
from the finality of this decision. In case of failure to pay the aforesaid amount and the accrued interests from
the period hereinstated, the property shall be sold at public auction to satisfy the mortgage debt and costs, and
if there is an excess, the same is to be given to the owner.
No costs.
SO ORDERED.13
The CA reconsidered its findings and concluded that the Deed of Transfer which, on its face, transfers ownership of the
subject property to petitioners, is, in fact, an equitable mortgage. The CA held that the true intention of respondent was
merely to provide security for her loan and not to transfer ownership of the property to petitioners. The CA so ruled on
the basis of its findings that: (1) the consideration, amounting to ₱150,000.00, for the alleged Deed of Transfer is
unusually inadequate, considering that the subject property consists of 24 memorial lots; (2) the Deed of Transfer was
executed by reason of the same loan extended by petitioners to respondent; (3) the Deed of Transfer is incomplete and
defective; and (4) the lots subject of the Deed of Transfer are one and the same property used to secure respondent's
₱150,000.00 loan from petitioners.
Petitioners filed a Motion for Reconsideration,14 but the CA denied it in its Resolution dated July 5, 2006.
On July 26, 2006, petitioners filed a Second Motion for Reconsideration, 15 but again, the CA denied it via its Resolution
dated August 28, 2006.
Hence, the present petition based on the following grounds:
A. THE COURT OF APPEALS PATENTLY ERRED IN NOT UPHOLDING THE DEED OF TRANSFER EXECUTED BY THE
RESPONDENT IN FAVOR OF THE PETITIONERS BY RULING THAT:
1. The Deed of Transfer executed by respondent in favor of petitioners over the subject property was not
entered in the Notarial Book of Atty. Francisco Talampas and reported in the Notarial Section of the Regional
Trial Court of Makati City.
2. The Deed of Transfer was not duly notarized by Atty. Francisco Talampas inasmuch as there was no convincing
proof that respondent appeared before Notary Public Atty. Talampas.
B. THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT THE DEED OF TRANSFER EXECUTED BETWEEN THE
RESPONDENT AND THE PETITIONERS CONSTITUTED AN EQUITABLE MORTGAGE CONSIDERING THAT:
1. Said issue was not raised in any pleading in the appellate and trial courts.1âwphi1
2. Respondent herself admitted that a separate mortgage was executed to secure the loan. 16
At the outset, the instant petition should be denied for being filed out of time. Petitioners admit in the instant petition
that: (1) on July 18, 2006, they received a copy of the July 5, 2006 Resolution of the CA which denied their Motion for
Reconsideration of the assailed Amended Decision; (2) on July 26, 2006, they filed a Motion to Admit Second Motion for
Reconsideration attaching thereto the said Second Motion for Reconsideration; (3) on September 5, 2006, they received
a copy of the August 28, 2006 Resolution of the CA which denied their Motion to Admit as well as their Second Motion
for Reconsideration; and (4) they filed the instant petition on October 20, 2006.
Section 2, Rule 45 of the Rules of Court provides that a petition for review on certiorari under the said Rule "shall be filed
within fifteen (15) days from notice of the judgment or final order or resolution appealed from or of the denial of the
petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment." Relative thereto,
Section 2, Rule 52 of the same Rules provides that "no second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained." Based on the abovementioned dates, the start f the 15-day period
for the filing of this petition should have been reckoned from July 18, 2006, the time of petitioners' receipt of the CA
Resolution denying their Motion for Reconsideration, and not on September 5, 2006, the date when they received the
CA Resolution denying their Second Motion for Reconsideration. Thus, petitioners should have filed the instant petition
not later than August 2, 2006. It is wrong for petitioners to reckon the 15-day period for the filing of the instant petition
from the date when they received the copy of the CA Resolution denying their Second Motion for Reconsideration. Since
a second motion for reconsideration is not allowed, then unavoidably, its filing did not toll the running of the period to
file an appeal by certiorari.17 Petitioners made a critical mistake in waiting for the CA to resolve their second motion for
reconsideration before pursuing an appeal.
Perfection of an appeal within the reglementary period is not only mandatory but also jurisdictional. 18 For this reason,
petitioners' failure to file this petition within the 15-day period rendered the assailed Amended CA Decision and
Resolutions final and executory, thus, depriving this Court of jurisdiction to entertain an appeal therefrom. 19On this
ground alone, the instant petition should be dismissed.
In any case, even granting, arguendo, that the present petition is timely filed, the Court finds no cogent reason to depart
from the findings and conclusions of the CA in its disputed Amended Decision.
Anent the first assigned error, petitioners are correct in pointing out that notarized documents carry evidentiary weight
conferred upon them with respect to their due execution and enjoy the presumption of regularity which may only be
rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity. 20 However, the
presumptions that attach to notarized documents can be affirmed only so long as it is beyond dispute that the
notarization was regular.21 A defective notarization will strip the document of its public character and reduce it to a
private instrument.22 Consequently, when there is a defect in the notarization of a document, the clear and convincing
evidentiary standard normally attached to a duly-notarized document is dispensed with, and the measure to test the
validity of such document is preponderance of evidence. 23
In the present case, the CA has clearly pointed out the dubious circumstances and irregularities attendant in the alleged
notarization of the subject Deed of Transfer, to wit: (1) the Certification 24 issued by the Clerk of Court of the Notarial
Section of the RTC of Makati City which supposedly attested that a copy of the subject Deed of Transfer is on file with
the said court, was contradicted by the Certification 25 issued by the Administrative Officer of the Notarial Section of the
same office as well as by the testimony of the court employee who prepared the Certification issued by the Clerk of
Court, to the effect that the subject Deed of Transfer cannot, in fact, be found in their files; (2) respondent's categorical
denial that she executed the subject Deed of Transfer; and (3) the subject document did not state the date of execution
and lacks the marital consent of respondent's husband.
Indeed, petitioners' heavy reliance on the Certification issued by the notary public who supposedly notarized the said
deed, as well as the Certification issued by the Clerk of Court of the Notarial Section of the RTC of Makati City, is
misplaced for the following reasons: first, the persons who issued these Certifications were not presented as witnesses
and, as such, they could not be cross-examined with respect to the truthfulness of the contents of their Certifications;
second, as mentioned above, these Certifications were contradicted by the Certification issued by the Administrative
Officer of the Notarial Section of the RTC of Makati City as well as by the admission, on cross-examination, of the clerk
who prepared the Certification of the Clerk of Court, that their office cannot, in fact, find a copy of the subject Deed of
Transfer in their files;26 and third, the further admission of the said clerk that the Certification, which was issued by the
clerk of court and relied upon by petitioners, was not based on documents existing in their files, but was simply based on
the Certification issued by the notary public who allegedly notarized the said Deed of Transfer. 27
Assuming further that the notarization of the disputed Deed of Transfer was regular, the Court, nonetheless, is not
persuaded by petitioners' argument that such Deed is a sufficient evidence of the validity of the agreement between
petitioners and respondent.
While indeed a notarized document enjoys the presumption of regularity, the fact that a deed is notarized is not a
guarantee of the validity of its contents. 28 The presumption is not absolute and may be rebutted by clear and convincing
evidence to the contrary.29 In the present case, the presumption cannot be made to apply, because aside from the
regularity of its notarization, the validity of the contents and execution of the subject Deed of Transfer was challenged in
the proceedings below where its prima facie validity was subsequently overthrown by the questionable circumstances
attendant in its supposed execution. These circumstances include: (1) the alleged agreement between the parties that
the ownership of the subject property be simply assigned to petitioners instead of foreclosure of the contract of
mortgage which was earlier entered into by them; (2) the Deed of Transfer was executed by reason of the loan extended
by petitioners to respondent, the amount of the latter's outstanding obligation being the same as the amount of the
consideration for the assignment of ownership over the subject property; (3) the inadequacy of the consideration; and
(4) the claim of respondent that she had no intention of transferring ownership of the subject property to petitioners.
Based on the foregoing, the Court finds no cogent reason to depart from the findings of the CA that the agreement
between petitioners and respondent is, in fact, an equitable mortgage.
An equitable mortgage has been defined as one which, although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security
for a debt, there being no impossibility nor anything contrary to law in this intent. 30
One of the circumstances provided for under Article 1602 of the Civil Code, where a contract shall be presumed to be an
equitable mortgage, is "where it may be fairly inferred that the real intention of the parties is that the transaction shall
secure the payment of a debt or the performance of any other obligation." In the instant case, it has been established
that the intent of both petitioners and respondent is that the subject property shall serve as security for the latter's
obligation to the former. As correctly pointed out by the CA, the circumstances surrounding the execution of the
disputed Deed of Transfer would show that the said document was executed to circumvent the terms of the original
agreement and deprive respondent of her mortgaged property without the requisite foreclosure.
With respect to the foregoing discussions, it bears to point out that in Misena v. Rongavilla, 31 a case which involves a
factual background similar to the present case, this Court arrived at the same ruling. In the said case, the respondent
mortgaged a parcel of land to the petitioner as security for the loan which the former obtained from the latter.
Subsequently, ownership of the property was conveyed to the petitioner via a Deed of Absolute Sale. Applying Article
1602 of the Civil Code, this Court ruled in favor of the respondent holding that the supposed sale of the property was, in
fact, an equitable mortgage as the real intention of the respondent was to provide security for the loan and not to
transfer ownership over the property.
Since the original transaction between the parties was a mortgage, the subsequent assignment of ownership of the
subject lots to petitioners without the benefit of foreclosure proceedings, partakes of the nature of a pactum
commissorium, as provided for under Article 2088 of the Civil Code.
Pactum commissorium is a stipulation empowering the creditor to appropriate the thing given as guaranty for the
fulfillment of the obligation in the event the obligor fails to live up to his undertakings, without further formality, such as
foreclosure proceedings, and a public sale. 32
In the instant case, evidence points to the fact that the sale of the subject property, as proven by the disputed Deed of
Transfer, was simulated to cover up the automatic transfer of ownership in petitioners' favor. While there was no
stipulation in the mortgage contract which provides for petitioners' automatic appropriation of the subject mortgaged
property in the event that respondent fails to pay her obligation, the subsequent acts of the parties and the
circumstances surrounding such acts point to no other conclusion than that petitioners were empowered to acquire
ownership of the disputed property without need of any foreclosure.
Indeed, the Court agrees with the CA in not giving credence to petitioners' contention in their Answer filed with the RTC
that respondent offered to transfer ownership of the subject property in their name as payment for her outstanding
obligation. As this Court has held, all persons in need of money are liable to enter into contractual relationships
whatever the condition if only to alleviate their financial burden albeit temporarily. 33
Hence, courts are duty-bound to exercise caution in the interpretation and resolution of contracts lest the lenders
devour the borrowers like vultures do with their prey. 34 Aside from this aforementioned reason, the Court cannot
fathom why respondent would agree to transfer ownership of the subject property, whose value is much higher than
her outstanding obligation to petitioners. Considering that the disputed property was mortgaged to secure the payment
of her obligation, the most logical and practical thing that she could have done, if she is unable to pay her debt, is to wait
for it to be foreclosed. She stands to lose less of the value of the subject property if the same is foreclosed, rather than if
the title thereto is directly transferred to petitioners. This is so because in foreclosure, unlike in the present case where
ownership of the property was assigned to petitioners, respondent can still claim the balance from the proceeds of the
foreclosure sale, if there be any. In such a case, she could still recover a portion of the value of the subject property
rather than losing it completely by assigning its ownership to petitioners.
As to the second assigned error, the Court is not persuaded by petitioners' contention that the issue of whether or not
the subject Deed of Transfer is, in fact, an equitable mortgage was not raised by the latter either in the RTC or the CA.
It is true that, as a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its
consideration.35 Higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during
the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. 36 However, as
with most procedural rules, this maxim is subject to exceptions. 37 In this regard, the Court's ruling in Mendoza v.
Bautista38 is instructive, to wit:
x x x Indeed, our rules recognize the broad discretionary power of an appellate court to waive the lack of proper
assignment of errors and to consider errors not assigned. Section 8 of Rule 51 of the Rules of Court provides:
SEC. 8 Questions that may be decided. - No error which does not affect the jurisdiction over the subject matter or the
validity of the judgment appealed from or the proceedings therein will be considered, unless stated in the assignment of
errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may
pass upon plain errors and clerical errors.
Thus, an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors in the
appeal in these instances: (a) grounds not assigned as errors but affecting jurisdiction over the subject matter; (b)
matters not assigned as errors on appeal but are evidently plain or clerical errors within contemplation of law; (c)
matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and
complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d) matters
not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing
on the issue submitted which the parties failed to raise or which the lower court ignored; (e) matters not assigned as
errors on appeal but closely related to an error assigned; and (f) matters not assigned as errors on appeal but upon
which the determination of a question properly assigned, is dependent. 39
In the present case, petitioners must be reminded that one of the main issues raised by respondent in her appeal with
the CA is the validity and due execution of the Deed of Transfer which she supposedly executed in petitioners' favor. The
Court agrees with respondent that, under the factual circumstances obtaining in the instant case, the determination of
the validity of the subject Deed of Transfer would necessarily entail or involve an examination of the true nature of the
said agreement. In other words, the matter of validity of the disputed Deed of Transfer and the question of whether the
agreement evidenced by such Deed was, in fact, an equitable mortgage are issues which are closely related, which can,
thus, be resolved jointly by the CA.
WHEREFORE, the instant petition is DENIED. The assailed Amended Decision and Resolutions of the Court of Appeals,
dated September 30, 2005, July 5, 2006 and August 28, 2006, respectively, in CA-G.R. CV No. 76388, are AFFIRMED.
SO ORDERED.