Ganancial v. Cabugao G.R. No. 203348 06 July 2020 Hernando, J.

Ganancial v. Cabugao

G.R. No. 203348

06 July 2020

Hernando, J.:

Second Division

 

Nature of the Action: This is a petition for review on certiorari assailing the Court of Appeals’ decision and resolution.

Facts:

Ganancial owed Cabugao the amount of P130,000.00 agreed to be payable within three years and to guarantee such loan, Ganancial entrusted to Cabugao the TCT and Tax Declaration both covering a parcel of land which Ganncial owns in her name. However, Cabugao filed a case for foreclosure of real estate mortgage against Ganancial before the Regional Trial Court. The latter filed a complaint for declaration of the deed of mortgage as null and void.

The RTC ruled in favor of Cabugao. On appeal, the CA denied Ganancial’s appeal. Thus, the latter moved for reconsideration but CA likewise denied the same. Hence, this present case.

Issue:

Whether there is a valid and perfected deed of mortgage between the parties in this case.

Ruling:

We do not find for Ganancial.

The CA was already on-point in citing Camcam v. Court of Appeals as regards the issue on the notarization of the Deed of Mortgage, which We echo:

[A]n irregular notarization merely reduces the evidentiary value of a document to that of a private document, which requires proof of its due execution and authenticity to be admissible as evidence. The irregular notarization — or, for that matter, the lack of notarization — does not thus necessarily affect the validity of the contract reflected in the document. (Citation omitted)

Errors in, or even absence of, notarization on a deed of mortgage will not invalidate an already perfected mortgage agreement.1âшphi1 If anything, these would only depreciate the evidentiary value of the said written deed, as the same would be demoted from a public document to a private one.

It bears noting that Ganancial had alleged that fraud invalidated her consent to the mortgage. While she had worded her arguments as an attack on the existence of the mortgage, vitiation of consent by means of fraud is a ground for the annulment of a voidable contract, and not for the nullification of a void contract. Having raised lack of consent on the ground of fraud in her complaint for "declaration of document as null and void plus damages," her case is practically devoid of any factual basis.

Even if the present case is one for annulment of contract, the fraud alleged to have vitiated Ganancial's consent to the mortgage must still be proven by clear and convincing evidence. Clear and convincing evidence is less than proof beyond reasonable doubt but greater than preponderance of evidence. The degree of believability upon an imputation of fraud in a civil case is higher than that of an ordinary civil case, the latter generally requiring only a preponderance of evidence to meet the required burden of proof. The burden of proof rests on the party alleging fraud.

Ganancial failed in this regard. Again, the CA succinctly declared so as follows:

In the instant case, the appellant miserably failed to discharge this burden. A careful and judicious examination of the records on hand reveals that the evidence presented by the appellant is too weak to convince Us that the subject document was fabricated or falsified.

Apart from the testimonies of the appellant and her children, which We found to be self-serving, there is nothing on record which bolsters her stance. It must be stressed that the deed in question is a notarized document. Jurisprudential rule dictates that to successfully impugn a notarized document, the party concerned must present a strong, complete and conclusive proof of its falsity, lest the validity thereof must be sustained in full force and effect. Sadly, in this case, the appellant failed to support her claim.17 (Citations omitted.)

Even assuming that Ganancial's complaint for the declaration of nullity of the Deed of Mortgage was truly grounded on its nonexistence or absolute simulation, it would still have no basis in fact and in law.

Under Article 1409 of the Civil Code, absolute simulation voids a contract. In absolute simulation, there appears a colorable contract but there actually is none, as the parties thereto have never intended to be bound by it. In determining the true nature of a contract, the primary test is the intention of the parties. Such intention is determinable not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties.

The totality of the circumstances negates the contention that the Deed of Mortgage was absolutely simulated. Ganancial, having absolute ownership and full disposal of the property in issue, admittedly conveyed TCT No. 168803 to secure her indebtedness to Cabugao in the amount of P130,000.00. Their agreement was reduced into writing as a Deed of Mortgage, and Ganancial's stand that the signatures thereon were manipulated does not convince. As aptly noted by the RTC, the signatures of Ganancial and her children appear exactly above their typewritten names, lending weak support to the claim that they had been made to sign a blank piece of paper that Cabugao later completed as a Deed of Mortgage. There is also the undisputed presumption of regularity enjoyed by notarized contracts, and the mere fact that two public documents are covered by the same notarial entry neither identifies with sufficient definiteness which one of them was fake, nor does it determine if any of them was spurious in the first place. It is also a settled fact that the mortgage in issue was properly registered and annotated on TCT No. 168803.

Moreover, contracts, in general, require no form to exist. Article 2085 of the Civil Code specifies the elements of valid contracts of mortgage:

(1)  That they be constituted to secure the fulfillment of a principal obligation;

(2)  That the x x x mortgagor be the absolute owner of the thing x x x mortgaged;

(3)  That the persons constituting the x x x mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.

Article 2125 of the same law adds a fourth requirement, the absence of which, however, shall not affect the validity of the agreement between the mortgagor and the mortgagee:

Art. 2125. In addition to the requisites stated in [A]rticle 2085, it is indispensable, in order that a mortgage may be validly constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not recorded, the mortgage is nevertheless binding between the parties. 

Unfortunately for Ganancial, her contract of mortgage with Cabugao is already fully compliant with the foregoing provisions, as earlier discussed. The notarization issues are rendered irrelevant. All of the foregoing leads to the inevitable conclusion that their mortgage contract was perfected, valid, and effective, and Ganancial and Cabugao were far from having absolutely no intention to be bound thereunder.