Uy vs. Heirs of Julita Uy-Renales

A notarized deed of sale does not conclusively establish the existence of a valid contract of sale where the notarization is defective and the evidence demonstrates a lack of meeting of the minds between the parties, and a purported sale may be declared void ab initio when the essential element of consent is absent, even if the document appears regular on its face.

Eufronia Labnao owned Lot No. 43 in Catbalogan, Samar, covered by Transfer Certificate of Title No. T-1467, with a building erected thereon. Labnao had two children: Pablo Uy and Julita Uy-Renales. Julita predeceased Labnao, dying intestate on May 9, 1976, leaving behind three children: Jessica R. Rosero, Joselito Renales, and Janet U. Renales. Upon Labnao's death in 1995, Pablo Uy and the children of Julita (respondents) became the sole intestate heirs of Labnao's estate. The controversy arose when Pablo Uy discovered a Deed of Absolute Sale dated April 11, 1990, purporting to show that Labnao had sold the subject lot to the respondents during Labnao's lifetime.

• The Property and Parties: Lot No. 43 (198 square meters) with a building erected thereon, located in Catbalogan, Samar, registered under TCT No. T-1467 in the name of Eufronia Labnao. Labnao's heirs are Pablo Uy (son) and the respondents (grandchildren through deceased daughter Julita Uy-Renales).
• The Alleged Sale: A Deed of Absolute Sale dated April 11, 1990 purportedly conveyed the subject lot from Labnao to respondents. The document was acknowledged before Atty. Jose M. Mendiola, Notary Public.
• Prior Interpleader Action: Josefa I. Uy, lessee of the building, filed an interpleader case to determine who should receive rentals. The RTC initially adjudged respondents as exclusive owners, but the CA reversed, ordering equal sharing of rental proceeds without ruling definitively on ownership, directing that ownership be determined in a separate action.
• Petitioner's Position: Pablo Uy filed Civil Case No. 7400 alleging the Deed of Absolute Sale was fraudulent and that Labnao's signature was forged, as shown by PNP Crime Laboratory findings. He claimed half ownership as Labnao's heir.
• Respondents' Position: Respondents filed Civil Case No. 7408 claiming they purchased the lot from Labnao and that they owned the building by inheritance from their mother Julita, who allegedly constructed it. They cited the dismissal of a prior criminal case for falsification against them.
• Trial Court Proceedings:
  • For petitioner: Testimony of Pablo Uy, PNP Document Examiner Romeo Varona (regarding forgery), COA auditor, and MTC personnel.
  • For respondents: Testimony of respondent Jessica, witness Dionito Aban, and Atty. Mendiola (notary public).
  • The RTC found the Deed of Absolute Sale valid, noting courts are not bound by expert testimonies on handwriting and giving weight to the notarization. It declared respondents owners of the lot but recognized Pablo Uy's half share in the building as co-owner by inheritance.
  • Appellate Proceedings: The CA affirmed, holding that the notarized Deed of Absolute Sale enjoys the presumption of regularity and that forgery was not proved by clear, positive, and convincing evidence.
  • Critical Evidence on Notarization: Atty. Mendiola admitted during cross-examination that he did not ask Labnao for competent evidence of identity (residence certificate) and merely asked if she was the one who signed the document, failing to verify her identity.
  • Respondent Jessica's Testimony: She admitted that she and her siblings had no participation in drafting the Deed, were surprised when Labnao gave them the document in May 1990 (one month after the purported April execution), had no prior agreement to purchase the lot, and were not present during its execution or notarization. The RTC itself noted her lack of personal knowledge regarding the execution of the sale.

• Improper Notarization: Petitioner maintained that the Deed of Absolute Sale cannot be presumed regularly executed because the notary public failed to comply with the requirement under Act No. 2711, Section 251 to certify that parties presented their residence certificates or competent evidence of identity.
• Absence of Contract: Petitioner argued that no valid contract of sale existed because there was no meeting of the minds or consent between Labnao and the respondents, as evidenced by the testimony of respondent Jessica showing no offer or acceptance occurred.
• Forgery: The signature of Labnao in the Deed was a patent forgery based on the findings of the PNP Crime Laboratory.
• Simulation: The document was a simulated contract intended to disguise a donation, which nevertheless failed because it did not comply with the formalities for donation of immovable property under Article 749 of the Civil Code.

• Presumption of Regularity: Respondent countered that the Deed of Absolute Sale, being a notarized document, enjoys the presumption of regularity and is conclusive as to the truthfulness of its contents.
• Burden of Proof: Forgery cannot be presumed and must be proved by clear, positive, and convincing evidence, which petitioner failed to discharge.
• Prior Dismissal: The prior dismissal of a criminal case for falsification filed by petitioner against respondents belies the allegation that the Deed is fictitious.
• Ownership: They acquired ownership through the purchase from Labnao and inherited the building from their mother Julita, who constructed it during her lifetime.

• Validity of Notarization: Whether the Deed of Absolute Sale was properly notarized so as to enjoy the presumption of regularity.
• Existence of Contract: Whether a valid contract of sale existed between Labnao and the respondents.
• Nature of Transaction: Whether the transaction could be considered a valid donation of immovable property.
• Ownership: Whether the subject lot and building are co-owned by petitioner and respondents.

• Defective Notarization: The Deed of Absolute Sale was not properly notarized because the notary public admitted he failed to verify Labnao's identity by requiring her residence certificate or other competent evidence of identity as mandated by Act No. 2711, Section 251. Consequently, the document cannot be accorded the presumption of regularity.
• No Valid Contract of Sale: No valid contract of sale existed because the essential element of consent was absent. Respondent Jessica's testimony established that the respondents never consented to purchase the property, had no participation in the document's preparation, and were surprised by its existence, demonstrating no meeting of the minds. Notarization does not guarantee the validity of the underlying contract or prove the parties' true agreement.
• Invalid Donation: Even construed as a donation, the transfer failed because Article 749 of the Civil Code requires donations of immovable property to be made in a public document with formal acceptance by the donee. The improperly notarized document was a private document, and no separate acceptance was manifested by the respondents.
• Co-ownership Established: Both the subject lot and building are declared under the co-ownership of petitioner Pablo Uy and the respondents Heirs of Julita Uy-Renales as intestate heirs of Labnao, with the parties entitled to partition the properties either judicially or extrajudicially.

• Requirements for Notarial Due Execution: Under notarial law, a notary public must certify that parties to a contract presented their residence certificates or competent evidence of identity to ascertain their identities and avoid impostors. Failure to verify identity negates the presumption of regularity accorded to notarized documents.
• Essential Elements of Sale: A contract of sale requires consent, object, and price. As a consensual contract, it is perfected upon meeting of the minds on the thing and price. The existence of a notarized written deed does not conclusively establish these elements; strong countervailing evidence showing want of consent negates the contract.
• Notarization and Contract Validity: Notarization of a document does not guarantee its validity, nor is it conclusive as to the nature of the transaction or the true agreement of the parties. It is not the function of a notary public to validate an instrument never intended by the parties to have binding legal effect.
• Formalities for Donation of Immovables: Article 749 of the Civil Code requires that donations of immovable property be made in a public document specifying the property donated, and that the donee accept the donation in the same instrument or a separate instrument with authentic notification to the donor. Absent these formalities, the donation is void.
• Collation: Donations made to compulsory heirs are subject to collation to determine the legitime. Even if valid, the donation would have been collated back to Labnao's estate and divided equally between Pablo Uy and the respondents (inheriting per stirpes).

• "Every contract, deed, or other document acknowledged before a notary public shall have certified thereon that the parties thereto have presented their proper (cedula) residence certificates or are exempt from the (cedula) residence tax x x x." — Referencing Act No. 2711, Section 251 regarding the duty of notaries to verify identity.
• "The presentation of competent evidence of identity is required where a document is acknowledged before a notary public to ascertain the identity/identities of the person/s appearing before him and to avoid impostors."
• "Simply stated, the existence, veracity, and authenticity of a notarized written deed of sale do not conclusively determine whether all the essential requisites of a contract are present."
• "A contract of sale is a consensual contract. Under Article 1475 of the Civil Code, the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. Because a contract of sale is a consensual contract, no particular form is required for its validity."
• "The donation of real property is void without the formalities stated in Article 749."

• Spouses Salonga v. Spouses Concepcion, 507 Phil. 287 (2005): Cited for the principle that notarization does not guarantee the validity of a document or conclusively establish the nature of the transaction or true agreement of the parties.
• Cabanilla v. Cristal-Tenorio, 461 Phil. 1 (2003): Applied regarding the requirement for notaries public to ascertain identity through competent evidence to avoid impostors.
• Dizon v. Court of Appeals, 361 Phil. 963 (1999): Cited for the definition and elements of a contract of sale.
• Sps. Dalion v. Court of Appeals, 261 Phil. 1033 (1990): Referenced for the rule that a contract of sale is consensual and requires no particular form for validity.
• Department of Education, Culture and Sports v. Del Rosario, 490 Phil. 193 (2005): Cited for the rule that donation of real property is void without the formalities required under Article 749 of the Civil Code.

• _Section 251, Act No. 2711 (The Administrative Code of 1917): Required certification that parties presented residence certificates or were exempt from residence tax.
• _Article 749, Civil Code: Governs the formal requirements for donation of immovable property (public document, acceptance).
• _Article 908, Civil Code: Provides for the collation of donations to determine the legitime.
• _Article 1064, Civil Code: Governs collation by grandchildren inheriting by right of representation.
• _Article 1305, Civil Code: Defines a contract as a meeting of minds.
• _Article 1458, Civil Code: Defines a contract of sale.
• _Article 1475, Civil Code: States that sale is perfected upon meeting of minds on the thing and price.

Peralta, C.J., J. Reyes, Jr., Lazaro-Javier, and Inting, JJ.