Valenzuela vs. Capala

A notarized document enjoys the prima facie presumption of authenticity and due execution, and to overturn this presumption, evidence must be clear, convincing, and more than merely preponderant to establish forgery. The Court also held that laches does not set in against a party whose obligation to pay is conditioned upon the delivery of the title, when such delivery occurred only shortly before the party asserted their rights.

The case involves Lot No. 995-B-2, a 64-square meter parcel of land located along Real St., Poblacion, Ormoc City, registered under the name of the late Teodorica Capala and covered by Transfer Certificate of Title (TCT) No. 34880. Teodorica died on November 1, 1982, and respondents Capala are her heirs and successors-in-interest. The dispute centers on a Contract to Buy dated December 1, 1978, purportedly executed by Teodorica and petitioner Brenda Valenzuela, where Teodorica committed to sell and Brenda to buy the subject property for P35,000.00, with P10,000.00 paid in advance and the balance payable upon delivery of the title. At the time of the contract's execution, the title to the property was still in the name of Pedro Codilla, and the property was subject to litigation between Teodorica and Esmeralda T. Madjus.

The subject matter of the case is Lot No. 995-B-2, a 64-square meter parcel of land located along Real St., Poblacion, Ormoc City, registered under the name of the late Teodorica Capala and covered by TCT No. 34880. Shortly after Teodorica's death on November 1, 1982, respondents Capala, as her heirs, searched for documents and titles of the real properties left by their mother. They discovered that the subject property was already occupied by Spouses Valenzuela, who claimed to be the owners or mortgagees thereof but did not show any document to prove their ownership. It was only in March 1996 when their aunt, Engr. Rosita Cabana, gave them a photocopy of a Contract to Buy dated December 1, 1978, purportedly executed by Teodorica and petitioner Brenda Valenzuela, the former committing to sell and the latter to buy the subject property for P35,000.00, with P10,000.00 allegedly paid in advance and the balance to be paid upon delivery of the title.

Spouses Valenzuela countered that they have been in open, continuous, and public possession of the property since the execution of the Contract to Buy on December 1, 1978. They averred that when Teodorica needed money in 1978, she sought Brenda's assistance for the sale of the subject property. As the land was the subject of litigation between Teodorica and Esmeralda T. Madjus, and the certificate of title was in the name of Pedro Codilla who mortgaged the land to a bank, no one was interested to buy the land. Teodorica offered to sell the property to Brenda for P35,000.00 with P10,000.00 as earnest money, and the balance of P25,000.00 to be paid upon delivery of the TCT. The Contract to Buy was notarized by Atty. Bruno A. Villamor, Teodorica's lawyer in the civil case against Madjus. At the time of execution, the certificate of title was still in the name of Pedro Codilla. After Teodorica obtained a favorable judgment in the civil case, it was agreed that Teodorica would work for the issuance and transfer of the certificate of title to her name, and the balance of P25,000.00 would be paid upon delivery of the title.

Years passed, and Teodorica was unable to deliver the title. Instead, she asked Brenda for additional money to pay her loan obligations to the Rural Bank of Ormoc City, the education of her children, and her family's daily subsistence. Spouses Valenzuela paid P17,500.00 to the Rural Bank of Ormoc City and gave Teodorica P10,000.00 for the education of her children, with the understanding that these amounts would be credited to the unpaid balance of the purchase price. For Spouses Valenzuela, they have fully paid the purchase price, and what remains is the delivery of the title and the execution of the Final Deed of Sale in their favor.

During the pre-trial on November 29, 1999, the parties admitted to the existence and execution of the Contract to Buy as notarized by Notary Public Bruno Villamor. On March 13, 2000, respondents Capala filed an Amended Complaint to emphasize that their principal cause of action was to declare the Contract to Buy null and void, Teodorica's signature therein being forged. One of the witnesses presented by respondents Capala was Romeo Varona, the Document Examiner of the Regional Crime Laboratory Office of Region VII, Cebu City, who concluded that the questioned signature of Teodorica in the Contract to Buy and the standard signatures appearing in the documents were written by two different persons. Varona testified that his comparative examination revealed 18 significant differences in letter formation, construction, and other individual handwriting characteristics. Petitioner Brenda Valenzuela testified that her copy of the Contract to Buy was lost when it was washed out by flood when typhoon Uring hit Ormoc City in November 1991, and the receipts evidencing payment of the balance of P25,000.00 were also washed out by the flood.

The RTC gave credence to Varona's testimony and found the signature a forgery, declaring the Contract to Buy null and void. The CA, however, after a visual examination of the sample signatures, found a striking resemblance and no distinguishing difference, declaring the Contract to Buy valid. The CA nonetheless ruled that Spouses Valenzuela have not proven payment of the balance of the full purchase price and that their claims are precluded by laches for waiting 17 years to assert their alleged rights. The TCT in the name of Teodorica was obtained by respondents Capala and issued only on June 4, 1999, and the complaint was filed on August 3, 1999.

• Laches: Spouses Valenzuela argued that the CA erred in stating that they are guilty of laches, pointing out that they took actual possession of the land after the execution of the Contract to Buy and even constructed a building thereon for their battery business, and for more than 20 years, respondents Capala and their mother did nothing to recover the land.
• Laches (Respondents' Delay): Spouses Valenzuela argued that long before Teodorica's death on November 1, 1982, respondents Capala had known that possession of the land had been delivered to them, and it was only on August 3, 1999, or 17 years from Teodorica's death, that respondents Capala filed the present action; hence, respondents are the ones guilty of laches.
• Obligation of Heirs: Spouses Valenzuela argued that the Contract to Buy clearly specified that Teodorica was under obligation to deliver the TCT, and when delivery is complied with, a Final Deed of Sale be executed in favor of Brenda. Heirs are bound to respect contracts entered into by their predecessors-in-interest, and obligations are transmitted to the heirs of the parties.
• Nominal Damages and Attorney's Fees: Spouses Valenzuela assailed the award of nominal damages for lack of legal basis and the imposition of attorney's fees, there being no bad faith on their part.

• Questions of Fact: Respondents Capala averred that the arguments presented by Spouses Valenzuela are questions of fact which take it out of the scope of the present petition under Rule 45.
• Laches: Respondents Capala argued that they only learned that the lot was subject to a Contract to Buy on March 1996, then filed the complaint three years thereafter; hence, they cannot be attributed with laches. On the contrary, Spouses Valenzuela knew of this Contract to Buy for more than 20 years already.
• Inconsistent Claim of Payment: Respondents Capala argued that if Spouses Valenzuela had indeed paid in full the purchase price, they should not have waited until 1999, when the case was filed, to act on their supposed right. The offer to give the rent from the subject property or buy the same if respondents decide to sell it ran counter to Brenda's assertion that she paid the full purchase price, leading to the conclusion that there was no payment and thus no vested right accrued to Spouses Valenzuela.
• Nominal Damages and Attorney's Fees: Respondents Capala posited that the CA did not err in awarding nominal damages and attorney's fees, as they were unduly deprived of their ownership over the subject property for several years, and despite the presence of title, such was not respected by Spouses Valenzuela.

• Validity of the Contract to Buy: Whether the CA was correct in ruling that the Contract to Buy was valid and binding, Teodorica's signature therein being genuine.
• Right to Possession: Whether Spouses Valenzuela failed to prove their right to remain in the subject property; consequently, they should turn over the possession thereof to respondents Capala, the successors-in-interest of Teodorica, the registered owner.
• Laches: Whether laches had precluded the claims of Spouses Valenzuela.

• Validity of the Contract to Buy: Yes. The Contract to Buy dated December 1, 1978 is valid and binding, Teodorica's signature therein being genuine. The notarized document enjoys the prima facie presumption of authenticity and due execution, and the evidence presented by respondents Capala was insufficient to overturn this presumption.
• Right to Possession: No. Spouses Valenzuela cannot be dispossessed from the subject property since the happening of the condition to pay the full purchase price did not take place yet. The obligation to pay the remaining balance of P25,000.00 did not arise because the title was not yet delivered.
• Laches: No. Spouses Valenzuela cannot be guilty of laches to assert their rights over the subject property, as a counterclaim in their Answer, since it was only in 1999 that the TCT to the property was issued in the name of Teodorica, and they immediately asserted their right on the same year.

• Validity of the Contract to Buy: The Court found that the factual findings of the trial court and appellate court were conflicting, warranting a re-examination of the facts. The Court disagreed with the CA that the admission as to the existence and due execution of the Contract to Buy stands, since when respondents Capala changed their cause of action in their amended complaint to forgery, said admission no longer applies in their favor. The Court affirmed the CA's finding that Teodorica's signature is genuine. The Court noted that the Contract to Buy examined by Varona was a mere photocopy, and the genuineness and due execution of a photocopy could not be competently established without a copy of the original. The original copy was not even presented in court. Varona did not make a categorical conclusion that the submitted signatures are the standard signatures of Teodorica, as he did not conduct an investigation whether the standard signatures in the documents submitted are genuine. The Contract to Buy is a notarized document, thus considered a public document, enjoying the prima facie presumption of authenticity and due execution. To overturn this legal presumption, evidence must be clear, convincing, and more than merely preponderant to establish that there was forgery. The notary public, Atty. Bruno A. Villamor, testified in court that he prepared and notarized the Contract to Buy and confirmed that Teodorica's signature therein is her signature. Respondents Capala are estopped to deny the contract entered into by their mother, as Teodorica allowed Spouses Valenzuela to possess the subject property and did not object when they constructed a building for their battery business. Heirs are bound by contracts entered into by their predecessors-in-interest.
• Right to Possession: The Court disagreed with the CA's ruling that Spouses Valenzuela are not entitled to ownership of the property or the execution of the final deed of sale for failure to prove payment of the balance. The Contract to Buy provides that the remaining balance of P25,000.00 shall be paid as soon as the TCT shall be delivered by Teodorica. Considering that the title to the property has not been delivered, Spouses Valenzuela's obligation to pay the remaining balance did not arise yet. Spouses Valenzuela cannot be dispossessed from the subject property since the happening of the condition to pay the full purchase price did not take place yet. The TCT in the name of Teodorica was obtained by respondents Capala and issued only on June 4, 1999, and the complaint was filed on August 3, 1999. The Court also noted that Spouses Valenzuela cannot be considered yet as the owner of the subject property, as in a contract to sell, the absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price.
• Laches: The Court defined laches as the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier. The elements of laches are: (a) conduct on the part of the defendant giving rise to the situation complained of; (b) delay in asserting complainant's rights after he had knowledge of defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. The Court found that Spouses Valenzuela took actual possession of the land after the execution of the Contract to Buy in 1978, and Teodorica did not object thereto. As provided in the contract, the obligation to deliver the title belongs to Teodorica, and Spouses Valenzuela had no obligation to pay the remaining balance absent the delivery of the title. It was only on June 4, 1999 that the TCT was issued in the name of Teodorica, and the complaint was filed on August 3, 1999. By way of counterclaim in their Answer, Spouses Valenzuela immediately asserted their right to have the title delivered to them. The Court also ruled that Brenda's offer to pay the amount of P25,000.00 during the barangay conciliation does not run counter to their claim of full payment, as an offer of compromise in a civil case is not an admission of liability and is not admissible in evidence against the offeror.

• Prima facie presumption of authenticity of notarized documents — A duly notarized document enjoys the prima facie presumption of authenticity and due execution, as well as the full faith and credence attached to a public instrument. To overturn this legal presumption, evidence must be clear, convincing, and more than merely preponderant to establish that there was forgery that gave rise to a spurious contract. The Court applied this doctrine in affirming the validity of the Contract to Buy, noting that the notary public himself testified to the genuineness of the signatures.
• Laches — Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier. The elements are: (a) conduct on the part of the defendant giving rise to the situation complained of; (b) delay in asserting complainant's rights after he had knowledge of defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. The Court applied this doctrine in ruling that Spouses Valenzuela were not guilty of laches, as they immediately asserted their rights upon the issuance of the TCT in 1999.
• Contract to sell — In a contract to sell, the absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price. The need to execute a deed of absolute sale upon completion of payment of the price generally indicates that it is a contract to sell, as it implies the reservation of title in the vendor until the vendee has completed the payment of the price. The Court applied this doctrine in ruling that Spouses Valenzuela cannot be considered owners of the subject property despite delivery, as ownership transfers only upon full payment.
• Offer of compromise in civil cases — An offer of compromise in a civil case is not an admission of liability and is not admissible in evidence against the offeror. The Court applied this doctrine in ruling that Brenda's offer to pay P25,000.00 during the barangay conciliation did not run counter to their claim of full payment.

• "A duly notarized document enjoys the prima facie presumption of authenticity and due execution, as well as the full faith and credence attached to a public instrument. To overturn this legal presumption, evidence must be clear, convincing, and more than merely preponderant to establish that there was forgery that gave rise to a spurious contract." — This passage articulates the controlling doctrine on the evidentiary weight of notarized documents, which was central to the Court's finding that the Contract to Buy was valid.
• "Laches is defined as the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert his right either has abandoned or declined to assert it." — This passage defines the doctrine of laches and was applied by the Court in ruling that Spouses Valenzuela were not guilty of laches.
• "In a contract to sell, such as the subject Contract to Buy, the absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price." — This passage distinguishes a contract to sell from a contract of sale, which was crucial in determining that Spouses Valenzuela could not be considered owners until full payment.

• Gepulle-Garbo vs. Sps. Garabato, 750 Phil. 846 (2015) — Cited for the principle that the authenticity of a questioned signature cannot be determined solely upon its general characteristics, similarities, or dissimilarities with the genuine signature, and that the results of examinations of questioned handwriting are, at best, inconclusive.
• Trans-Pacific Industrial Supplies, Inc. vs. Court of Appeals, 305 Phil. 534 (1994) — Cited for the rule that to determine the admissibility of an offer to compromise, the circumstances of the case and the intent of the party making the offer should be considered.
• Sps. Tumibay vs. Sps. Lopez, 710 Phil. 19, 28 (2013) — Cited for the exception to the general rule that the Court does not disturb factual findings of the appellate court, when the factual findings of the trial court and appellate court are conflicting.
• Heirs of Donton vs. Stier, 817 Phil. 165, 179 (2017) — Cited for the principle that the opinions of handwriting experts are not necessarily binding upon the court, the expert's function being to place before the court data upon which the court can form its own opinion.
• Lamsen vs. People, 821 Phil. 651, 662 (2017) — Cited for the rule that the genuineness and due execution of a photocopy could not be competently established without a copy of the original.
• Gatan vs. Vinarao, 820 Phil. 257, 267 (2017) — Cited for the principle that a duly notarized document enjoys the prima facie presumption of authenticity and due execution.
• Naranja vs. Court of Appeals, 603 Phil. 779, 790 (2009) — Cited for the principle that heirs are bound by contracts entered into by their predecessors-in-interest.
• Republic vs. Sundiam, G.R. No. 236381, August 27, 2020 — Cited for the definition of laches and its elements.
• Go Chi Gun vs. Co Cho, 96 Phil. 622, 637 (1955) — Cited for the elements of laches.
• Diego vs. Diego, 704 Phil. 373, 388 (2013) — Cited for the principle that in a contract to sell, the absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership.
• Chua vs. Court of Appeals, 449 Phil. 25, 42 (2003) — Cited for the same principle on contract to sell.
• Heirs of Cayetano vs. Spouses Perreras, 613 Phil. 615, 625 (2009) — Cited for the same principle on contract to sell.

• Section 27, Rule 130, Revised Rules on Evidence — Provides that an offer of compromise in a civil case is not an admission of liability and is not admissible in evidence against the offeror. The Court applied this provision in ruling that Brenda's offer to pay P25,000.00 during the barangay conciliation did not run counter to their claim of full payment.
• Rule 45, Rules of Court — Governs Petitions for Review on Certiorari, which limit the Court's review to questions of law. The Court noted this rule but applied the recognized exception where the factual findings of the trial court and appellate court are conflicting.

Gesmundo, C.J. (Chairperson), Zalameda, and Gaerlan, JJ., concurred. Caguioa, J., filed a separate Concurring and Dissenting Opinion.

• Caguioa, J. (Concurring and Dissenting) — The text of the decision indicates that Justice Caguioa filed a separate Concurring and Dissenting Opinion, but the substance of that opinion is not provided in the case text. Accordingly, the specific points of disagreement or alternative reasoning cannot be summarized from the available text.