properties mortgaged, including that of Leonardo.

Leonardo and the rest of their

relatives could not have just blindly ceded their respective TCTs to Leon. It is likewise
ridiculous how Leonardo seemed to have been totally oblivious to the status of his
property for eight long years, and would only find out about the mortgage and
foreclosure from a nephew who himself had consented to the mortgage of his own lot.
Considering the lapse of time from the alleged forgery on May 5, 1993 and the
mortgage on August 5, 1994, to the foreclosure on July 29, 1999, and to the supposed
discovery in 2001, it appears that the suit is a mere afterthought or a last-ditch effort on
Leonardos part to extend his hold over his property and to prevent SBC from
consolidating ownership over the same. More importantly, Leonardo himself admitted on
cross-examination that he granted Leon authority to mortgage, only that, according to
him, he thought it was going to be with China Bank, and not SBC. But as the CA noted,
there is no mention of a certain bank in the subject SPA with which Leon must
specifically deal. Leon, therefore, was simply acting within the bounds of the SPAs
authority when he mortgaged the lot to SBC.
True, banks and other financing institutions, in entering into mortgage contracts, are
expected to exercise due diligence. The ascertainment of the status of condition of a
property offered to it as security for a loan must be a standard and indispensable part of
its operations. In this case, however, no evidence was presented to show that SBC was
remiss in the exercise of the standard care and prudence required of it or that it was
negligent in accepting the mortgage. SBC could not likewise be faulted for relying on the
presumption of regularity of the notarized SPA when it entered into the subject mortgage
agreement.
Heirs of Reynaldo Dela Rosa, Namely: Teofista Dela Rosa, Josephine Santiago
and Joseph Dela Rosa Vs. Mario A. Batongbacal, at al. G.R. No. 179205, July 30,
2014
An equitable mortgage is defined as one although lacking in some formality, or form or
words, or other requisites demanded by a statue, nevertheless reveals the intention of
the parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law. For the presumption of an equitable mortgage to arise two
requisites must concur; (1) that the parties entered into a contract denominated as a
sale; and (2) the intention was to secure an existing debt by way of mortgage sell the
property and apply the proceeds of the sale for the satisfaction of the loan obligation.
While there is no single test to determine whether the deed of absolute scale on its face
is really a simple loan accommodation secured by a mortgage, the Civil Code, however,
enumerates several instances when a contract is presumed to be an equitable
mortgage, to wit:

Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:

(1) When the price of a sale with right to

(2) When the vendor remains in possession as
(3) When upon or after the expiration of the
(4) When the purchaser retains for himself a
(6) In any other case where it may be fairly

In any of the foregoing cases, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to the
usury laws.
A perusal of the contract denominated as Resibo reveals the utter frailty of petitioners
position because nothing therein suggests, even remotely that the subject property was
given to secure a monetary obligation. The terms of the contract set forth in no
uncertain terms that the instrument was executed with the intention of transferring the
ownership or the subject property to the buyer in exchange for the price. Nowhere in the
deed is it indicated that the transfer was merely intended to secure a debt obligation. On
the contrary, the document clearly indicates the intent of Reynaldo to sell his share in
the property. The primary consideration in determining the true nature of a contract is
the intention of transferring the ownership or the subject property to the buyer in
exchange for the price. Nowhere in the deed is it indicated that the transfer was merely
intended to secure a debt obligation. On the contrary, the document clearly indicates the
intent of Reynaldo to sell his share in the property. The primary consideration in
determining the true nature of a contract is the intention of the parties. If the words of a
contract appear to contravene the evident intention of the parties, the latter shall prevail.
Such intention is determined not only from the express terms of their agreement, but
also from the contemporaneous and subsequent acts of the parties. That the parties
intended some other acts or contracts apart from the express terms of the agreement,
was not proven by Reynaldo during the trial or by his heirs herein. Beyond their bare
and uncorroborated asseverations that the contract failed to express the true Intention
of the parties, the record is bereft of any evidence indicative that there was an equitable
mortgage.
Neither could the allegation of gross inadequacy of the price carry the day for the
petitioners. It must be underscored at the point that the subject of the Contract to Sell
was limited only to pro-indiviso share of share of Reynaldo consisting an area of
3,750 square meter and not the entire 15,001-square meter parcel of land. As a coowner of the subject property, Reynaldos right to sell, assign or mortgage his ideal
share in the property held in common is sanctioned by law. The applicable law is Article
493 of the New Civil Code, which spells out the rights of co-owners over a co-owned
property,

Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in the coowned property even without the consent of his co-owners. This right is absolute and in
accordance with the well-settled doctrine that a co-owner has a full ownership of his
pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute
another person for its enjoyment. In other words the law does not prohibit a co-owner
from selling, alienating, mortgaging his ideal share in the property held in common.
In the same breadth, co-owner cannot be compelled by the court to give their consent to
the sale of his share in co-owned property.
Thus, even if the impression of the Court of Appeals were true, i.e., that the entire
property has been sold to thirds persons, such sale could not have affected the right of
Mario and Guillermo to recover the property from Reynaldo. In view of the nature of coownership, the Court of Appeals correctly ruled that the terms in the Contract to Sell,
which limited the subject to Reynaldos ideal share in the property held in common is
perfectly valid and binding. In fact, no authority from the other co-owners is necessary
for such disposition to be valid as he is afforded by the law full-ownership of his part and
of the fruits and benefits pertaining thereto. A condition set forth in a sale contract
requiring a co-owner to secure an authority from his share, as seemingly indicated in
this case, should be considered mere surplusage and docs not, in any way, affect the
validity or the enforceability of the contract. Nor should such a condition indicate an
Intention to sell the whole because the contrary Intention has been clearly written:
x x x Ang bahaging aking ipinagbibili ay ang l.ole No.1 may sukat na 3,750 sq.m. na
makikita sa nakakalip na sketch plan na aking ding nilagdaan sa ikaliliwanag ng
kasulatang ito.
Indeed, the intention clearly written, settles the issue regarding the purchase price. A
contract of sale is a consensual contract, which becomes valid and binding upon the
meeting of minds of the parties on the price and the object parties arc in a position to
form the independent judgement concerning the transaction unless fraud, mistake or
undue influence indicative of a defect in consent is present. A contract may
consequently be annulled on the ground of vitiated consent and not due to the
inadequacy of the price. In the case at bar, however, no evidence to prove fraud,
mistake or undue influence indicative of vitiated consent is attendant.
As the parties invoking equitable mortgage, the Heirs of Reynaldo did not even come
close to proving that the parties intended to charge the property as security for debt,
leaving us with no other choice but to uphold the stipulations in the contract. Basic is the
rule that if the terms of the contract are clear and leave no doubt upon the intention of
the parties, the literal meaning of its stipulations shall control, we find that the Court of
control, we find that the Court of Appeals cannot be faulted for ruling, in modification of
its original judgement, that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable.

Rural Bank of Cabadbaran, Inc. Vs. Jorgita A. Melecio-Yap, et al. G.R. No. 178451.
July 30, 2014
The essential issues for the Courts resolution are whether or not (a) the presumption of
regularity accorded to the notarized SPA and Extra-Judicial Adjudication Documents
was rebutted by clear and convincing evidence; (b) respondents are guilty of laches
and, thus, estopped from questioning the validity of the real estate mortgage and
subsequent foreclosure proceedings; and (c) RBCI can be considered as a mortgagee
in good faith.
The settled rule is that persons constituting a mortgage must be legally authorized for
the purpose. In the present case, while Erna appears to be a co-owner of the
mortgaged properties, she made it appear that she was duly authorized to sell the entire
properties by virtue of the notarized SPA dated August 24, 1990.
Generally, a notarized document carries the evidentiary weight conferred upon it with
respect to its due execution, and documents acknowledged before a notary public have
in their favor the presumption of regularity which may only be rebutted by clear and
convincing evidence.
However, the presumptions that attach to notarized documents can be affirmed only so
long as it is beyond dispute that the notarization was regular. A defective notarization
will strip the document of its public character and reduce it to a private document.
Hence, when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard normally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance
of evidence.
In the present case, RCBI failed to show that the subject SPA which it relied upon as
proof of Ernas ostensible authority to mortgage the entirety of the subject properties
was regularly notarized. Aside from the respondents who denied having participated in
the execution and notarization of the subject SPA, the witnesses to the instrument, i.e.,
Guendelyn Lopez Salas-Montaus and Carmelita Cayeta Bunga, categorically denied
having appeared before Notary Public Alan M. Famador (Atty. Famador) on August 24,
1990 to witness the respondents sign the SPA in the notary publics presence. Despite
this irregularity, RBCI did not present Atty. Famador to refute the same and establish the
authencity of the contested SPA. It may not be amiss to point out that the principal
function of a notary public is to authenticate documents. When a notary public certifies
to the due execution and delivery of a document under his hand and seal, he gives the
document the force of evidence.
Thus, having failed to sufficiently establish the regularity in the execution of the SPA, the
presumption of regularity accorded by law to notarize documents can no longer apply
and the questioned SPA is to be examined under the parameters of Section 20, Rule
132 of the Rules of Court, which provides that before any private document offered as
authentic is received in evidence, its due execution and authenticity must be proved

either by anyone who saw the document executed or written, or by evidence of the
genuineness of the signature or handwriting of the maker.
To be clear, the above-stated conclusion is only made with respect to the subject SPA
and not the Extra-Judicial Adjudication Documents as the latter should be excluded from
any forgery analysis since they were not among those documents sought to be nullified
by respondents in its complaint. Nevertheless, this observation bears little significance
to the resolution of the ultimate issue at hand. This is because the forged status of the
subject SPA alone is already enough for the Court to declare the real estate mortgage
contract null and void but only with respect to the shares of the other co-owners
(i.e., respondents) whose consent thereto was not actually procured by Erna. While
Erna, as herself a co-owner, by virtue of Article 493 of the Civil Code, had the right to
mortgage or even sell her undivided interest in the said properties, she, could not,
however, dispose of or mortgage the subject properties in their entirety without the
consent of the other co-owners. Accordingly, the validity of the subject real estate
mortgage and the subsequent foreclosure proceedings therefor conducted in favor of
RCBI should be limited only to the portion which may be allotted to it (as the
successor-in-interest of Erna) in the event of partition. In this relation, the CAs
directive to remand the case to the RTC in order to determine the exact extent of the
respective rights, interests, shares and participation of respondents and RCBI over the
subject properties, and thereafter, effect a final division, adjudication and partition in
accordance with law remains in order. Meanwhile, the writ of possession issued in favor
of RCBI, and all proceedings relative thereto should be set aside considering that the
latters specific possessory rights to the said properties remain undetermined.
Based on the foregoing, the partial invalidity of the subject real estate mortgage brought
about by the forged status of the subject SPA would not, therefore, result into the partial
invalidation of the loan obligation principally entered into by RCBI and Sps. Mantala;
thus, absent any cogent reason to hold otherwise, the need for the recomputation of
said loan obligation should be dispensed with.
As for RCBIs claim that it should be deemed a mortagee in good faith for having
conducted exhaustive investigations on the history of the mortgagors title, the Court
finds the same untenable. Two reasons impel this conclusion: first, the doctrine of
mortgagee in good faith applies only to lands registered under the Torrens system and
not to unregistered lands, as the properties in suit; and second, the principle is
inapplicable to banking institutions which are behooved to exercise greater care and
prudence before entering into a mortgage contract. Hence, the ascertainment of the
status or condition of properties offered as security for loans must be a standard and an
indispensable part of its operations.
In this case, RCBI failed to observe the required level of caution in ascertaining the
genuineness of the SPA considering that Erna owns only an aliquot part of the
properties offered as security for the loan. It should have not simply relied on the face of
the documents submitted since its undertaking to lend a considerable amount of money

as a banking institution requires a greater degree of diligence. Hence, its rights as

mortgagee and, now, as co-owner, should only be limited to Ernas share to the subject
properties and not, absent the other co-owners consent, to its entirety.

Finally, the Court cannot subscribe to RCBIs contention that respondents are barred by
laches from laying claim over the subject properties in view of their inexplicable inaction
from the time they learned of the falsification. Laches is principally a doctrine of equity. It
is negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned or declined to
assert it. In this case, the complaint for nullification of the SPA was filed before the RTC
on April 17, 1996 or barely three years from respondents discovery of the averred
forgery in 1993, which is within the four-year prescriptive period provided under Article
1146 of the Civil Code to institute an action upon the inquiry to their rights over the
subject properties. A delay within the prescriptive period is sanctioned by law and is not
considered to be delay that would bar relief. Laches applies only in the absence of a
statutory prescriptive period. Furthermore, the doctrine of laches cannot be used to
defeat justice or perpetrate fraud and injustice. It is the more prudent rule that courts,
under the principle of equity, will not be guided or bound strictly by the statute of
limitations or the doctrine of laches when by doing so, manifest wrong or injustice would
result, as in this case.
Neither is there estoppel. Under Article 1431 of the Civil Code, an essential element of
estoppel is that the person invoking it has been influenced and has relied on the
representations or conduct of the person sought to be estopped. Said element is,
however, wanting in this case.
Midway Maritime and Technological Foundation, represented by its
Chairman/President PhD in Education, Dr. Sabino M. Manglicmot Vs. Marissa E.
Castro, et.al. G.R. No. 189061. August 6, 2014.
Given the existence of the lease, the petitioners claim denying the respondents
ownership of the residential house must be rejected. According to the petitioner, it is
Adoracion who actually owns the residential building having bought the same, together
with the two parcels of land, from her father Tomas, who, in turn, bought it in an auction
sale.
It is settled that once a contract of lease is shown to exist between the parties, the
lessee cannot by any proof, however strong, overturn the conclusive presumption that
the lessor has a valid title to or a better right of possession to the subject premises than
the lessee. Section 2(b), Rule 131, of the Rules of Court prohibits a tenant from denying
the title of his landlord at the time of the commencement of the relation of landlord and
tenant between them. In Santos v. National Statistics Office, the Court expounded on
the rule on estoppel against a tenant and further clarified that what a tenant is estopped

from denying is the title of his landlord at the time of the commencement of the
landlord-tenant relation. If the title