Destreza vs. Riñoza-Plazo

A notarized deed of sale enjoys the presumption of regularity and due execution, and the burden to overcome such presumption by clear and convincing evidence lies on the party contesting the deed — not on the party relying on it. The notary public's failure to submit his notarial report does not destroy the presumption of regularity, since it is the act of acknowledgment before the notary and the latter's signing and sealing of the instrument that convert it into a public document.

Pedro L. Riñoza, a former mayor of Nasugbu, Batangas, died on November 16, 1989, leaving several heirs, including respondents Ma. Gracia R. Plazo and Ma. Fe R. Alaras. Among the properties in Riñoza's estate was a sugarland located at Barangay Utod, Nasugbu, Batangas, covered by Transfer Certificate of Title (TCT) No. 40353. In the course of settling the estate, respondents discovered that TCT 40353 had been cancelled and replaced by TCT 55396, issued in the name of petitioner Gregorio M. Destreza and his wife Bernarda Butiong, purportedly pursuant to a deed of absolute sale dated June 15, 1989. The dispute centers on whether that deed of sale and the resulting transfer of title were valid or attended by fraud and irregularity.

Pedro L. Riñoza, a former mayor of Nasugbu, Batangas, died on November 16, 1989, leaving heirs that included his daughters Ma. Gracia R. Plazo and Ma. Fe R. Alaras. During the settlement of his estate, Plazo wrote a letter dated April 30, 1991 to the Registry of Deeds of Nasugbu requesting certified true copies of all titles in Riñoza's name, including a sugarland at Barangay Utod covered by TCT 40353. She also asked to see the originals, but they were unavailable. The Register of Deeds, Atty. Alexander Bonuan, told her he kept the titles in his personal files and that there were no transactions involving them. On June 5, 1991, Plazo reiterated her request in writing. Bonuan was abroad, so the acting Register of Deeds furnished her with certified true copies of the titles — except that of TCT 40353, which was missing.

On the same day, Plazo discovered at the Assessor's Office another title, TCT 55396, covering the same Utod sugarland and cancelling the missing TCT 40353. The new title, entered on July 18, 1989, was in the name of Gregorio M. Destreza and his wife Bernarda Butiong. Plazo also inquired at the BIR in Batangas City about any record of sale of the sugarland, but on August 15, 1991, the Revenue District Officer certified that the BIR had no record of such a sale. Alaras, for her part, testified that on August 1, 1989, her father gave her the title to a land he wanted to mortgage to her uncle, describing it as about five hectares in Barangay Utod. She did not look at the title number. A week later, unable to secure the mortgage, she returned the title to her father and never saw it again.

Respondents Plazo and Alaras filed a complaint on December 26, 1991 — and an amended complaint on September 20, 1993 — against the Destreza spouses and the Register of Deeds before the RTC of Nasugbu, claiming serious irregularities in the issuance of TCT 55396. They sought nullification of TCT 55396, restoration of TCT 40353, and reconveyance of the land to the Riñoza estate. Register of Deeds Bonuan denied that TCT 40353 was missing, stating he had it in his office and that no transaction affected it. He explained that TCT 55396 had not yet been released to the Destrezas because they still needed to submit certain documents, but that during his lifetime Riñoza had asked him for a photocopy of TCT 55396, which Bonuan provided as a courtesy to the former mayor. In compliance with the RTC's order, Bonuan submitted certified copies of both TCTs and the duplicate original of a deed of absolute sale dated June 15, 1989 between Riñoza and the Destreza spouses.

Petitioner Gregorio Destreza testified that on June 16, 1989, he bought the Utod sugarland from Riñoza through Toribio Ogerio, a common kumpadre, paying ₱100,000.00. He did not obtain a copy of the deed of sale or a receipt, but Riñoza accompanied him to the Register of Deeds. About a month later, but not later than July 15, 1989, Destreza returned to the Register of Deeds and obtained a copy of TCT 55396 in his name. After the sale, Destreza immediately took possession of the land, plowing and planting on it continuously until the case was filed. No demand letter from the respondents disturbed his possession until he received the summons.

The RTC found that TCT 55396 was inexistent on July 15, 1989, when Destreza claimed to have received a copy, and declared the deed of sale not a public document due to the notary's failure to submit his notarial report. It nullified the deed and TCT 55396, ordered restoration of TCT 40353, and directed the estate to pay the Destrezas ₱60,000.00. The CA affirmed with modification, holding that while the deed was admissible as a public document, the Destrezas themselves destroyed the presumption of regularity by failing to present additional evidence and by claiming they paid ₱100,000.00 when the deed stated only ₱60,000.00. The CA removed the payment order, and denied the Destrezas' motion for reconsideration.

• Presumption of Due Execution: Petitioner maintained that the presumption of due execution and authenticity of the notarized deed is not destroyed by their failure to present further witnesses and documents, since a notarized document is entitled to full faith and credit on its face and may be presented in evidence without further proof.
• Burden of Proof: Petitioner argued that respondents Plazo and Alaras had the burden to prove the invalidity of the deed of sale, as they were the ones contesting the presumption of regularity and due execution of the notarized instrument.
• Insufficiency of Respondents' Evidence: Petitioner insisted that respondents' evidence failed to overcome the presumption of authenticity and due execution of the notarized deed of absolute sale executed by Riñoza.

• Irregularities in Registration: Respondents claimed serious irregularities in the issuance of TCT 55396, pointing out that the title was entered into the registry only on July 18, 1989, yet Destreza claimed to have received a copy on July 15, 1989, and that the Register of Deeds testified the title had not yet been released to the Destrezas for lack of required documents.
• Continued Possession of Title by Riñoza: Respondents presented Alaras's testimony that on August 1, 1989 — months after the purported sale — Riñoza still had a title to land in Barangay Utod in his possession, which he sought to mortgage, suggesting TCT 40353 had not been cancelled.
• Discrepancy in Purchase Price: Respondents questioned the discrepancy between Destreza's testimony that he paid ₱100,000.00 and the consideration of ₱60,000.00 stated in the deed of sale, placing the veracity of the deed in doubt.
• Absence of Supporting Records: Respondents pointed to the BIR's certification that it had no record of any sale of the sugarland covered by TCT 40353, and the absence of tax receipts or tax declarations in the Destrezas' names.

• Validity of Notarized Deed Despite Notary's Failure to Report: Whether the notarized deed of sale remains valid and admissible despite the notary public's failure to submit his notarial report to the RTC notarial section.
• Burden of Proof: Whether the burden to prove the invalidity of a notarized deed lies on the party relying on the deed or on the party contesting it.
• Sufficiency of Evidence to Overcome Presumption: Whether respondents' evidence was clear and convincing enough to overcome the presumption of regularity and due execution of the notarized deed of sale.

• Validity of Notarized Deed Despite Notary's Failure to Report: Yes. The notarized deed remains admissible and valid; it is the act of acknowledgment before the notary and the latter's signing and sealing of the instrument that convert it into a public document, not the submission of the notarial report.
• Burden of Proof: The burden lies on the contesting party. Under the Rules of Court, a duly acknowledged and certified instrument may be presented in evidence without further proof, and the burden to overcome the presumption of regularity rests on the one contesting the deed.
• Sufficiency of Evidence to Overcome Presumption: No. Respondents' evidence — the premature release of a copy of the title, Alaras's testimony about her father's possession of a title, and the discrepancy in the purchase price — did not constitute clear and convincing evidence of fraud sufficient to nullify the notarized deed.

• Validity of Notarized Deed Despite Notary's Failure to Report: The swearing of a person before the notary public and the notary's act of signing and affixing his seal on the deed are the material acts that convert a private document into a public document. Parties who appear before a notary public should not be expected to follow up on the submission of notarial reports and should not suffer the consequences of the notary's negligence. Thus, the deed of sale notarized by Atty. Crispulo Ducusin, which Riñoza acknowledged as his free act and deed on June 17, 1989, is admissible as evidence. The failure of the notary to submit his notarial report does not invalidate the notarization or render the deed a private document. The Court noted that there is independent evidence — specifically Bonuan's testimony that he furnished Riñoza with a copy of TCT 55396 — showing that Riñoza knew of and consented to the sale, negating any suggestion that the Destrezas fabricated the transaction.

• Burden of Proof: Under Rule 132, Section 30 of the Rules of Court, every instrument duly acknowledged or proved and certified as provided by law may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of execution. Since Riñoza, the executor of the deed, is already dead, the notarized deed is the best evidence of his consent to the sale. The burden of proof — the duty to present evidence on the facts in issue as the law deems necessary — rests on the party making the claim. Because respondents claim that grave and serious doubts plague TCT 55396 despite the Destrezas' evidence of title and open possession, the burden is on them to prove such claim. An allegation of fraud regarding the execution of a notarized deed is a grave allegation that cannot be declared on mere speculation; clear and convincing evidence is required to overcome the presumption of regularity, and the burden lies on the contesting party.

• Sufficiency of Evidence to Overcome Presumption: The Court examined each piece of respondents' evidence and found none sufficient. First, the premature release of a copy of TCT 55396 before its entry into the registry and before the Destrezas completed registration requirements did not touch the validity of the deed of sale itself. Under Section 57 of PD 1529, registration is the operative act that conveys or affects land only insofar as third persons are concerned; it does not add to the efficacy of the contract between buyer and seller. If a deed is not registered, it continues to operate as a contract between the parties. Moreover, Bonuan's testimony that he released a copy to Riñoza actually strengthened the Destrezas' case by showing Riñoza's knowledge of and consent to the sale. Second, Alaras's testimony that her father gave her a title to Utod land on August 1, 1989 did not prove the sale was void, because she admitted she did not see the title number and could not identify any specific title in court. She needed to testify that TCT 40353 remained uncancelled in her father's hands after the entry of TCT 55396, but she did not. Third, the discrepancy between the ₱100,000.00 Destreza testified he paid and the ₱60,000.00 stated in the deed was not sufficient ground to nullify the deed, since the fact remained that Riñoza sold the land and the Destrezas paid for it. The explanation for the difference could only come from Riñoza and Destreza, but Riñoza had died and respondents chose not to confront Destreza on the discrepancy when he testified. The Destrezas' open and continuous occupation and cultivation of the land for seven years before and after Riñoza's death further negated any scheme to steal the land.

• Presumption of Regularity of Notarized Documents — A notarized document is converted from a private to a public document by the act of acknowledgment before the notary public and the latter's signing and affixing of his notarial seal. As a public document, it is entitled to full faith and credit upon its face and enjoys the presumption of regularity and due execution. This presumption can only be overcome by clear and convincing evidence, and the burden to do so lies on the party contesting the document. In this case, the Court applied the doctrine by holding that the notarized deed of sale executed by Riñoza in favor of the Destrezas enjoyed this presumption, and respondents failed to present clear and convincing evidence to overcome it.

• Effect of Notary's Failure to Submit Notarial Report — The submission of the notarial report by the notary public is not the material act that gives a document its character as a public document; it is the acknowledgment before the notary and the notary's signing and sealing that matter. Parties who have their documents notarized should not be made to suffer the consequences of the notary's negligence in failing to submit notarial reports. The Court applied this principle by holding the deed admissible despite the notary's failure to submit his report.

• Registration as Operative Act Only as to Third Persons — Under Section 51 of PD 1529 (Property Registration Decree), registration serves as the operative act to convey or affect land only insofar as third persons are concerned. It does not add anything to the efficacy of the contract of sale between buyer and seller; an unregistered deed continues to operate as a contract between the parties. The Court relied on this doctrine to hold that irregularities in the registration process — such as the premature release of a copy of the title — did not affect the validity of the sale between Riñoza and the Destrezas.

• Best Evidence When Executor Is Dead — When the executor of a notarized deed is already dead, the notarized deed itself constitutes the best evidence of his consent to the transaction. The Court applied this principle by treating the notarized deed of absolute sale as the best evidence of Riñoza's consent to the sale, since Riñoza had died before the litigation.

• "It is the swearing of a person before the Notary Public and the latter's act of signing and affixing his seal on the deed that is material and not the submission of the notarial report." — This passage articulates the ratio decidendi on the validity of notarized documents despite a notary's failure to submit notarial reports, establishing that the act of acknowledgment and notarization — not the report — is what converts a private document into a public one.

• "No rule requires a party, who relies on a notarized deed of sale for establishing his ownership, to present further evidence of such deed's genuineness lest the presumption of its due execution be for naught." — This passage defines the doctrinal allocation of the burden of proof: the party relying on a notarized document need not present additional evidence; the burden to overcome the presumption rests on the contesting party.

• "Registration only serves as the operative act to convey or affect the land insofar as third persons are concerned. It does not add anything to the efficacy of the contract of sale between the buyer and the seller. In fact, if a deed is not registered, the deed will continue to operate as a contract between the parties." — This passage states the canonical formulation of the doctrine that registration affects third-party rights but not the contractual efficacy between the parties, a principle frequently cited in property law jurisprudence.

• "An allegation of fraud with regard to the execution of a notarized deed of absolute sale is a grave allegation. It cannot be declared on mere speculations. In fact, to overcome the presumption of regularity and due execution of a notarized deed, there must be clear and convincing evidence showing otherwise." — This passage establishes the evidentiary standard required to overturn the presumption of regularity of notarized documents, a standard central to the Court's disposition.

• Gonzales vs. Ramos, 499 Phil. 345 (2005) — Cited for the proposition that the act of a notary public in signing and affixing his notarial seal on a deed converts it from a private document to a public document. Followed as controlling authority on the nature of notarized instruments.

• Dela Cruz vs. Spouses Sison, 492 Phil. 139 (2005) — Cited for the rule that to overcome the presumption of regularity and due execution of a notarized deed, there must be clear and convincing evidence, and the burden of proof lies on the contesting party. Followed as controlling authority on the evidentiary standard.

• Ceballos vs. Intestate Estate of the Late Emigdio Mercado, G.R. No. 155856, May 28, 2004, 430 SCRA 323 — Cited for the principle that without clear and convincing evidence to overcome the presumption of regularity, the presumption remains undiminished. Followed as supporting authority.

• Rule 132, Section 30, Rules of Court — Provides that every instrument duly acknowledged or proved and certified as provided by law may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of execution. Applied to hold that the notarized deed of sale was admissible without further proof and enjoyed the presumption of due execution.

• Rule 131, Section 1, Rules of Court — Defines burden of proof as the duty of a party to present evidence on the facts in issue as the law deems necessary for the establishment of his claim. Applied to allocate the burden to respondents, who contested the validity of the notarized deed.

• Section 51, Presidential Decree No. 1529 (Property Registration Decree) — Provides that registration is the operative act that conveys or affects land insofar as third persons are concerned. Applied to hold that irregularities in registration did not affect the validity of the contract of sale between Riñoza and the Destrezas.

• Section 57, Presidential Decree No. 1529 (Property Registration Decree) — Sets out the procedure for conveyance of registered land: the owner executes and registers a deed, the Register of Deeds issues a new certificate of title, and the grantor's certificate is stamped "canceled." Applied in analyzing the registration process and the premature release of a copy of TCT 55396.

Leonardo A. Quisumbing (Chairperson, Second Division), Antonio T. Carpio, Minita V. Chico-Nazario, and Arturo D. Brion concurred. No separate concurring opinions were written.