Sepe vs. Heirs of Kilang

A party alleging lack of consideration in a notarized deed of sale must present clear and convincing evidence to overcome the disputable presumption of sufficient consideration under Article 1354 of the Civil Code and the prima facie evidence of truth afforded to notarized documents under the Rules of Court; mere oral assertions by non-parties to the contract are insufficient to defeat the presumption of regularity of public documents.

Anastacia Kilang, an 84-year-old illiterate and bedridden woman, allegedly agreed to have her land in Cabawan District, Tagbilaran City subdivided by petitioner Generoso Sepe in exchange for one lot and preference to buy other portions. Respondents, her children, claimed that petitioner misled them into executing a Deed of Sale (DOS) on November 18, 1992, by making them believe it was a subdivision instrument. The DOS purported to sell Anastacia's paraphernal property covered by TCT T-10069 to spouses Sepe for P15,000.00. Three days later, four of Anastacia's five children executed a Confirmation of Sale (COS) acknowledging receipt of P40,000.00. Anastacia initially executed a Notice of Adverse Claim on December 14, 1992, alleging the title was in petitioner's possession without her consent and the land was never sold, but withdrew this claim on January 14, 1993, stating she remembered having sold the property. TCT T-35367 was subsequently issued in favor of spouses Sepe. Anastacia died on October 20, 1993.

• Anastacia Kilang was an 84-year-old, illiterate, rheumatic and bedridden mother when she allegedly entered into a transaction with petitioner Generoso Sepe regarding the subdivision of her land in Cabawan District, Tagbilaran City covered by TCT T-10069.
• On November 18, 1992, Anastacia executed a Deed of Sale of a Registered Land (DOS) in favor of spouses Generoso Sepe and Gaudencia D. Sepe, purportedly selling her paraphernal property consisting of 18,163 square meters at Barrio Gaboc, Tagbilaran City for P15,000.00, with her husband Fabian Solijon's marital consent.
• Respondents alleged that petitioner misled Anastacia and her children into believing that the DOS was merely an instrument of subdivision, taking advantage of their ignorance.
• On December 14, 1992, Anastacia executed a notarized Notice of Adverse Claim stating that the duplicate copy of TCT T-10069 was lost and found in petitioner's possession without her knowledge or consent, and that the parcel of land was never sold nor encumbered.
• On December 17, 1992, respondents (except Dominga) executed a Confirmation of Sale (COS) for a consideration of P40,000.00, confirming absolutely and irrevocably the sale made by their parents in favor of spouses Sepe and warranting to defend their rights and peaceful possession.
• On January 14, 1993, Anastacia executed a notarized Notice of Withdrawal of Adverse Claim, alleging that she was made to sign the adverse claim by Dominga and Donata without understanding its contents, and that she remembered having already sold the land to spouses Sepe on November 18, 1992.
• On the same day, January 14, 1993, TCT T-10069 was cancelled and TCT T-35367 was issued in the names of spouses Sepe.
• Anastacia died on October 20, 1993.
• On December 21, 1998, respondents filed Civil Case No. 6703 for nullification of the sale and recovery of title, which was dismissed without prejudice on February 26, 2002 for failure to prosecute.
• Respondents refiled the case on May 16, 2002, presenting testimonies of Feliciana Solijon (65 years old), Maria Solijon (63 years old), Julieta Solijon, Eufronio Tanupan Bayot, Remedios Lamoste, and NBI Document Examiner Rhoda B. Flores who confirmed that petitioner's signature on the Notice of Withdrawal of Adverse Claim matched his standard signatures.
• Petitioner filed a demurrer to evidence on July 13, 2006 interposing grounds of ratification and prescription of action.

• The Deed of Sale (DOS) is a duly notarized public document containing a statement that P15,000.00 was paid to Anastacia Kilang as consideration, which constitutes prima facie evidence of the truth of the facts stated therein.
• The Confirmation of Sale (COS) executed by four of Anastacia's children for P40,000.00 constitutes ratification of the voidable DOS and proof that a valid sale occurred.
• The presumption of sufficient consideration under Article 1354 of the Civil Code and Section 3(r), Rule 131 of the Rules of Court applies, placing the burden on respondents to prove lack of consideration by clear and convincing evidence.
• Respondents failed to present clear and convincing evidence to overcome the presumption of regularity of the notarized documents; mere oral assertions by respondents that no consideration was paid are insufficient.
• The execution of the Notice of Adverse Claim does not necessarily mean no sale occurred, as Anastacia could no longer testify as to her reasons for executing it.
• Respondents should have questioned the DOS during Anastacia's lifetime when she could have confirmed or refuted its genuineness.
• The RTC correctly dismissed the case as respondents' evidence was inadequate and unworthy of belief compared to the documentary evidence consisting of duly notarized public instruments.

• No consideration was actually paid to Anastacia Kilang for the sale of the subject property, as established by the testimonies of Anastacia's daughters.
• The haste with which Anastacia executed the Notice of Adverse Claim on December 14, 1992 (three days after the DOS) demonstrates that she did not intend to sell the property and discovered the fraud immediately.
• The withdrawal of the adverse claim on January 14, 1993 was not executed by Anastacia but was the result of the illegal machinations of petitioner, evidenced by NBI findings that petitioner's signature appeared on the Community Tax Certificate related to the withdrawal.
• Petitioner took advantage of the ignorance of Anastacia and her children by making them believe that the DOS referred to a partition or subdivision of the subject lot rather than an absolute sale.
• If petitioner had validly purchased the subject lot, he would not have exerted effort to cause the execution of the Confirmation of Sale by the children.
• The DOS is void for lack of consideration and because it was procured through fraud and misrepresentation.

• Procedural: Whether the Supreme Court may re-examine the evidence presented by the parties in a Rule 45 petition where the findings of the Court of Appeals are contrary to those of the Regional Trial Court.
• Substantive Issues:
  • Whether the Deed of Sale dated November 18, 1992 is supported by sufficient consideration.
  • Whether respondents presented clear and convincing evidence to overcome the presumption of regularity and truth of the notarized documents.
  • Whether the Confirmation of Sale constitutes ratification of the Deed of Sale.

• Procedural: The Court held that while generally only questions of law are raised in Rule 45 petitions, re-examination of evidence is warranted when the findings of the Court of Appeals are contrary to those of the trial court, which is a recognized exception to the rule that CA findings of fact are conclusive and binding upon the Court.
• Substantive: The Court granted the petition and reversed the Court of Appeals, reinstating the RTC dismissal. The Court held that: (1) The DOS being a duly notarized document enjoys the presumption of regularity and constitutes prima facie evidence of the truth of the facts stated therein, including the receipt of P15,000.00 consideration; (2) Under Article 1354 of the Civil Code and Section 3(r), Rule 131 of the Rules of Court, there is a disputable presumption of sufficient consideration in every contract, which can only be overcome by clear and convincing evidence, not merely by preponderance of evidence or bare assertions; (3) Respondents' mere oral declarations that no consideration was paid to their mother are insufficient to overcome the presumption; they failed to reach the threshold of clear and convincing evidence required to contradict facts stated in a notarial document; (4) The COS executed by four of the five children of Anastacia, supported by valuable consideration of P40,000.00, bolsters petitioner's cause and constitutes ratification of the sale; (5) The claim that the amounts received were Christmas gifts is incredible and insufficient to overcome the facts stated in the COS; (6) Respondents should have questioned the DOS during the lifetime of Anastacia when she could have confirmed or refuted its genuineness; oral declarations by non-parties contradicting notarial documents should be evaluated with extreme caution.

• Presumption of Sufficient Consideration — Under Article 1354 of the Civil Code and Section 3(r), Rule 131 of the Rules of Court, a contract is presumed to be supported by sufficient consideration. This presumption can only be overcome by clear and convincing evidence, not merely by preponderance of evidence or bare assertions.
• Prima Facie Evidence of Notarized Documents — Documents acknowledged before a notary public are public documents that constitute prima facie evidence of the truth of the facts stated therein and enjoy a presumption of regularity. To contradict facts in a notarial document, the evidence must be clear, convincing, and more than merely preponderant.
• Burden of Proof in Challenging Public Documents — The burden to prove lack of consideration or falsity of a notarized document rests upon the party impugning the contract, who must present evidence that is clear and convincing to overcome the presumption of regularity.

• "A contract is presumed to be supported by cause or consideration. The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration. To overcome the presumption, the alleged lack of consideration must be shown by preponderance of evidence."
• "To contradict facts in a notarial document and the presumption of regularity in its favor, the evidence must be clear, convincing and more than merely preponderant."
• "Oral declarations by non-parties which contradict the contents of notarial documents should be evaluated and admitted with extreme caution in order not to erode their status and significance as public documents."

• Mangahas v. Brobio — Cited for the principle that the presumption of sufficient consideration cannot be overthrown by mere assertion and that the burden to prove lack of consideration rests upon whoever alleges it.
• Alcantara-Daus v. Sps. De Leon — Cited for the rule that to contradict facts in a notarial document and the presumption of regularity in its favor, the evidence must be clear, convincing and more than merely preponderant.
• Spouses Santos v. Spouses Lumbao — Cited for the principle that a document acknowledged before a notary public is a public document enjoying the presumption of regularity, and that to overcome this presumption, there must be presented evidence that is clear and convincing.
• Spouses Saguid v. Security Finance, Inc. — Cited in relation to the presumption of sufficient consideration.
• Medina v. Greenfield Development Corporation — Cited for the presumption of regularity of notarized documents.
• Agasen v. Court of Appeals — Cited for the presumption of regularity of notarized documents.
• Lao v. Villones-Lao — Cited for the standard of evidence required to contradict notarial documents.
• Calahat v. Intermediate Appellate Court — Cited for the standard of evidence required to contradict notarial documents.
• Yturralde v. Azurin — Cited for the standard of evidence required to contradict notarial documents.

• Article 1354, Civil Code of the Philippines — Provides that although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary.
• Article 19, Civil Code of the Philippines — Cited by the Court of Appeals regarding the principle that every person must act with justice, give everyone his due, and observe honesty and good faith.
• Article 21, Civil Code of the Philippines — Cited by the Court of Appeals regarding damages for causing loss or injury in a manner contrary to morals, good customs or public policy.
• Section 3(r), Rule 131, Rules of Court — Establishes the disputable presumption that there was sufficient consideration for a contract.
• Section 19, Rule 132, Rules of Court — Provides that documents acknowledged before a notary public are public documents.
• Section 23, Rule 132, Rules of Court — Provides that public documents are evidence even against third persons of the fact which gave rise to their execution and of the date of the latter.
• Section 30, Rule 132, Rules of Court — Provides that the certificate of acknowledgment in a notarial document is prima facie evidence of the execution of the instrument or document involved.
• Rule 45, Section 1, Rules of Court — Governs petitions for review on certiorari and the general rule that only questions of law may be raised.