Manzano vs. Perez Sr.

A party seeking to annul notarized deeds of sale on the ground that the true agreement was a commodatum must present clear and convincing evidence that is more than merely preponderant; bare oral testimony and self-serving tax payments cannot overcome the presumption of regularity of a notarial document and the presumption that a written contract is for a valuable consideration.

Emilia Manzano and Nieves Manzano were sisters; respondents are Nieves’s husband and children, who claim as her heirs. The subject is a residential house and lot in Siniloan, Laguna, which Emilia had inherited from their parents after her siblings waived their claims in her favor. The dispute concerns the legal character of the transfers Emilia later made over that property.

Emilia Manzano claimed ownership of a residential house and lot situated at General Luna Street, Siniloan, Laguna, consisting of Lots 1725 and 1726 of the Cadastral Survey of Siniloan, with an area of about 130 square meters, covered by Tax Declaration No. 9583 and assessed at P1,330.00, and a residential house of strong mixed materials with G.I. iron roofing and a floor area of about 40 square meters. She had inherited the property from her parents, with her siblings waiving their claims in her favor. In 1979, her sister Nieves Manzano, predecessor-in-interest of respondents, allegedly borrowed the property as collateral for a projected loan and promised to return it immediately upon payment of the loan. Pursuant to that understanding, Emilia executed two deeds of conveyance: one for the sale of the residential lot on January 22, 1979 (Exhibit “J”) and one for the sale of the house on February 2, 1979 (Exhibit “K”), both for a consideration of P1.00 plus other valuables allegedly received from Nieves.

On April 2, 1979, Nieves Manzano, her husband Miguel Perez Sr., and her son Macario Perez obtained a P30,000.00 loan from the Rural Bank of Infanta, Inc. To secure the indebtedness, they executed a Real Estate Mortgage (Exhibit “A”) over the subject property in favor of the bank. Nieves died on December 18, 1979, leaving her husband and children as heirs—the respondents in this case. According to Emilia, the respondents refused to return the property even after the loan with the Rural Bank had been paid (Exhibit “B”). She alleged that amicable settlement efforts failed and that the refusal caused her sleepless nights, mental shock, and social humiliation, forcing her to engage counsel. She sought annulment of the deeds of sale, reconveyance of the property, moral damages of not less than P50,000.00, exemplary damages of P10,000.00, attorney’s fees of P10,000.00 plus P500.00 per court appearance, and costs.

Respondents countered that they owned the property as the legal heirs of Nieves Manzano, who had purchased it from Emilia for value and in good faith, as shown by the deeds of sale containing the true agreement between the parties. They argued that, except for Emilia’s bare allegations, she failed to prove that the transaction was a loan rather than a sale. By way of special and affirmative defense, they claimed that the parties had agreed to resell the property to Emilia after payment of the Rural Bank loan, but that they refused to sell because the property was the only memory left by their predecessor-in-interest. They also invoked estoppel, asserting that Emilia was barred from questioning their ownership after seven years from the consummation of the sale. They prayed for moral damages, exemplary damages, attorney’s fees, and costs on their counterclaim.

The trial court ruled in Emilia’s favor after considering several circumstances: the property had been mortgaged to the Rural Bank after it was transferred to Nieves; the documents covering the property were returned by respondent Florencio Perez to Emilia after the loan was paid; respondents did not present evidence of real estate tax payments while Emilia had been paying the taxes; respondents did not file any action after Emilia hacked the stairs of the house; cadastral notices for the property were in Emilia’s name; respondents prepared but did not complete an extrajudicial partition with sale over the property because the other heirs did not sign; and the alleged consideration of P1.00 was denied by Emilia without contrary evidence from respondents.

The Court of Appeals found that Emilia was not in possession of the property, while respondents were in actual occupation and had even built a pigpen on the lot. It noted that Emilia began paying real estate taxes only in 1986, after the complaint had been instituted, making such payments self-serving. A Certificate of Tax Declaration issued on August 8, 1990 upon Emilia’s own request named Nieves Manzano as owner and possessor of the property. Tax Declaration No. 9589 in Nieves’s name indicated that the transfer was based on an Absolute Sale executed before Notary Public Alfonso Sanvictores and recorded as Document No. 3157, Page 157, Book No. II, while Tax Declarations Nos. 9633, 1994, and 1993 were also in Nieves’s name. The appellate court likewise considered that Emilia had allegedly agreed to reacquire one-half of the property for P10,000.00 (Exhibit “U-1”).

• Parol Evidence: Petitioner argued that the introduction of her evidence was proper under the parol evidence rule.
• Admission by Silence: Petitioner argued that the rules on admission by silence apply in the case.
• Reliefs: Petitioner maintained that she is entitled to the reliefs prayed for.
• Factual Findings: Petitioner argued that the Court of Appeals erred in reversing the trial court’s factual findings, which are entitled to great respect because the trial court was able to observe and evaluate the demeanor of the witnesses.
• Nature of Agreement: Petitioner maintained that the agreement between the parties was a commodatum, not an absolute sale.

• Ownership by Purchase: Respondents countered that they are the owners of the property as the legal heirs of Nieves Manzano, who purchased it from petitioner for value and in good faith, as shown by the deeds of sale containing the true agreements between the parties.
• Failure of Proof: Respondents argued that, except for petitioner’s bare allegations, she failed to show any proof that the transaction she entered into with her sister was a loan and not a sale.
• Agreement to Resell: Respondents argued that what the parties agreed upon was to resell the property to petitioner after payment of the loan with the Rural Bank, but that they refused to sell because the property was the only memory left by their predecessor-in-interest.
• Estoppel: Respondents argued that petitioner is estopped from questioning their ownership after seven years from the consummation of the sale.
• Counterclaim: Respondents prayed for moral damages, exemplary damages, attorney’s fees, and costs, alleging that the suit was baseless and malicious.

• Nature of Agreement: Whether the agreement between the parties was a commodatum or an absolute sale.
• Parol Evidence: Whether the Court of Appeals erred in failing to consider that the introduction of petitioner’s evidence was proper under the parol evidence rule.
• Factual Findings: Whether the Court of Appeals erred in reversing the trial court’s factual findings, which are entitled to great respect because the trial court observed and evaluated the demeanor of the witnesses.
• Preponderance of Evidence: Whether petitioner discharged her burden of proving her case by a preponderance of evidence.

• Nature of Agreement: No. The agreement was an absolute sale, not a commodatum; petitioner failed to prove her claim by a preponderance of evidence.
• Parol Evidence: No. The Court of Appeals did not reject petitioner’s evidence as improper under the parol evidence rule; it considered and weighed the evidence but found it unpersuasive.
• Factual Findings: No. The Court of Appeals’ factual findings, being contrary to the trial court’s, were reviewed; no cogent reason existed to disturb them.
• Preponderance of Evidence: No. Petitioner failed to discharge her burden; her oral testimony and self-serving tax payments could not overcome the notarized deeds of sale and respondents’ evidence.

• Nature of Agreement: The Court acknowledged that the issue involved a conflict in factual perception ordinarily not reviewable under Rule 45, but resolved it because the CA’s factual findings were contrary to the trial court’s. Petitioner failed to prove by preponderance that the transaction was a commodatum. Preponderance means evidence of greater weight or more convincing force, or probability of truth. Petitioner’s proof of continued ownership consisted mainly of her oral testimony and real estate tax payments made only after she filed her complaint; the latter were self-serving. Her claim that respondents’ possession was by mere tolerance was a bare allegation unsubstantiated by evidence. Respondents, on the other hand, presented two notarized deeds of sale executed by petitioner in favor of Nieves for the lot and house, each for P1.00 plus other valuables; being notarized, they were presumed duly executed. Tax Declaration No. 9589 was issued in Nieves’s name the day after the sale. Petitioner’s own alleged facts—that the property was mortgaged by Nieves and her husband and son, that a reconveyance of one-half was prepared for P10,000, and that she hacked the stairs without any case being filed—did not establish her ownership and even supported respondents’ claim. Oral testimony cannot, as a rule, prevail over a written agreement. To contradict the facts in a notarial document and the presumption of regularity, clear and convincing evidence more than merely preponderant is required; petitioner failed even to meet the preponderance standard. The evidence thus pointed to a sale, not a commodatum.
• Parol Evidence: The CA’s discussion of the parol evidence rule and its exceptions was merely a preface. The CA did not rule that petitioner’s evidence was improper under that rule; it considered and weighed each piece of evidence but was not persuaded. No error was committed on this ground.
• Factual Findings: Because the CA’s factual findings were contrary to those of the trial court, the Court was constrained to review the facts despite the general rule under Rule 45. Upon close examination, no cogent reason appeared to disturb the CA’s findings and conclusions. The CA correctly assessed the evidence on possession, tax payments, and tax declarations.
• Preponderance of Evidence: Petitioner bore the burden of proving her case by preponderance. She failed to present convincing proof of continued ownership. Her evidence was pitted against respondents’ notarized deeds and tax declarations and was found sadly lacking. The Court could not decide on the basis of compassion alone, as that would be contrary to the rule of law and the judicial system.

• Preponderance of Evidence — In civil cases, the party with evidence of greater weight or more convincing force prevails; it means probability of truth. The Court applied this standard and found petitioner failed to prove that the transaction was a commodatum rather than a sale.
• Presumption of Regularity of Notarized Documents — A notarized deed is presumed duly executed. To contradict the facts stated in a notarial document and the presumption of regularity, the party alleging a different agreement must present clear and convincing evidence that is more than merely preponderant. Petitioner failed to do so.
• Presumption of Valuable Consideration — A written contract is presumed to be for a valuable consideration; the execution of a deed purporting to convey ownership of realty is prima facie evidence of valuable consideration, and the party alleging lack of consideration bears the burden of proof. The CA applied this to the deeds of sale.
• Inadequacy of Consideration — Inadequacy of the monetary consideration does not render a conveyance null and void; the vendor’s liberality may be a sufficient cause for a valid contract. The Court noted the P1.00 consideration plus other valuables did not invalidate the sale.
• Oral Testimony vs. Written Agreement — Oral testimony cannot, as a rule, prevail over a written agreement of the parties. Petitioner’s oral claim of commodatum did not overcome the notarized deeds of sale.
• Tax Receipts as Evidence of Ownership — Realty tax payment is not conclusive evidence of ownership; tax receipts become strong evidence only when accompanied by proof of actual possession. Petitioner’s tax payments, made after suit and without possession, were self-serving.
• Commodatum vs. Absolute Sale — The Court found the evidence established an absolute sale, not a commodatum. The burden was on petitioner to prove the alleged commodatum, and she failed to meet it.

• "In civil cases, the party that presents a preponderance of convincing evidence wins." — This states the standard governing the civil dispute and frames the Court’s conclusion that petitioner failed to meet it.
• "In order to contradict the facts contained in a notarial document, such as the two 'Kasulatan ng Bilihang Tuluyan' in this case, as well as the presumption of regularity in the execution thereof, there must be clear and convincing evidence that is more than merely preponderant." — This is the ratio decidendi on the evidentiary burden required to overcome notarized deeds of sale.
• "Oral testimony cannot, as a rule, prevail over a written agreement of the parties." — This articulates the rule that defeated petitioner’s oral claim that the transaction was merely a commodatum.
• "We reiterate, the evidence offered by petitioner to prove her claim is sadly lacking. Jurisprudence on the subject matter, when applied thereto, points to the existence of a sale, not a commodatum over the subject house and lot." — This summarizes the Court’s ultimate factual and legal conclusion on the nature of the agreement.

• Director of Lands vs. Intermediate Appellate Court, 195 SCRA 38 — Cited by the CA for the rule that realty tax payment is not conclusive evidence of ownership.
• Tabuena vs. Court of Appeals, 196 SCRA 650 — Cited for the rule that tax receipts become strong evidence of ownership only when accompanied by proof of actual possession.
• Gamaitan vs. Court of Appeals, 200 SCRA 37 — Cited for the presumption that a written contract is for a valuable consideration.
• Caballero, et al. vs. Caballero, et al., C.A. 45 O.G. 2536 — Cited for the rule that the party alleging lack of consideration has the burden of proving such allegation.
• Ong vs. Ong, 139 SCRA 133 — Cited for the rule that inadequacy of monetary consideration does not render a conveyance null and void, as the vendor’s liberality may be a sufficient cause for a valid contract.
• Castro vs. Court of Appeals, 169 SCRA 383; Rebuldela vs. IAC, 155 SCRA 520; De Leon vs. Court of Appeals, 205 SCRA 612 — Cited for the rule that oral testimony cannot, as a rule, prevail over a written agreement.
• Calahat vs. IAC, 241 SCRA 356; Jison vs. CA, 286 SCRA 495 — Cited for the requirement of clear and convincing evidence to contradict a notarial document and the presumption of regularity.
• Philippine National Bank vs. Court of Appeals, 266 SCRA 136; Martinez vs. National Labor Relations Commission, 272 SCRA 793 — Cited for the rule that bare allegations unsubstantiated by evidence are not equivalent to proof.
• Sison vs. Court of Appeals, 286 SCRA 495 — Cited for the concept of preponderance of evidence.

• Rule 45, Rules of Court — The case reached the Supreme Court via a Petition for Review on Certiorari under Rule 45. The Court noted that factual issues are ordinarily not reviewable under Rule 45, but resolved the factual conflict because the CA’s findings were contrary to the trial court’s.
• Section 5(r), Rule 131, Rules of Court — A written contract is presumed to be for a valuable consideration. The CA cited this provision in upholding the deeds of sale; the party alleging lack of consideration bears the burden of proof.

Melo, Vitug, and Gonzaga-Reyes, JJ., concurred. Sandoval-Gutierrez, J., was on leave.