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QUILALA vs. ALCANTARA from the donor to the donee, and is perfected from the moment the donor knows of
G.R No. 132681 | Dec 3, 2001
PETITIONER: Ricky Q. Quilala,
RESPONDENTS: Gliceria Alcantara, Leonora Alcantara, Ines Reyes And Jose Reyes
TOPIC: making an acceptance of donation merely on a private instrument
DONOR: Catalina Quilala
DONEE: Violeta Quilala
FACTS: On February 20, 1981, Catalina Quilala (donor) executed a "Donation of
Real Property Inter Vivos" in favor of Violeta Quilala (donee) over a 94 sq m parcel of
land located in Sta. Cruz, Manila and registered in her name.
The "Donation of Real Property Inter Vivos" consists of two pages. The first
page contains the deed of donation itself, and is signed on the bottom portion by
Catalina Quilala and Violeta Quilala, and two instrumental witnesses.
The second page contains the Acknowledgment, which states merely that
Catalina Quilala personally appeared before the notary public and acknowledged that
the donation was her free and voluntary act and deed. There appear on the left-hand
margin of the second page the signatures of Catalina Quilala and one of the
witnesses, and on the right-hand margin the signatures of Violeta Quilala and the
other witness. The deed or donation was registered and a TCT was issued in the
name of Violeta.
On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on
May 22, 1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta
Quilala. Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes
and Juan Reyes, claiming to be Catalina's only surviving relatives within the fourth
civil degree of consanguinity instituted an action for the declaration of nullity of the
donation inter vivos, and for the cancellation of the TCT in the name of Violeta
Quilala.
The trial court rendered a decision declaring null and void the deed of donation
of real property inter vivos executed by Catalina Quilala in favor of Violeta Quilala.
The trial court found that since it was acknowledged before a notary public only by the
donor, Catalina, there was no acceptance by Violeta of the donation in a public
instrument. The decision was affirmed by the CA.
ISSUE: Whether or not the donation executed by Catalina in favor of Violeta is valid.
HELD: Valid.
Under Article 749 of the Civil Code, the donation of an immovable must be
made in a public instrument in order to be valid, specifying therein the property
donated and the value of the charges which the donee must satisfy. As a mode of
acquiring ownership, donation results in an effective transfer of title over the property
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the acceptance by the donee, provided the donee is not disqualified or prohibited by
law from accepting the donation.
Once the donation is accepted, it is generally considered irrevocable, and the
donee becomes the absolute owner of the property. The acceptance, to be valid,
must be made during the lifetime of both the donor and the donee. It may be made in
the same deed or in a separate public document, and the donor must know the
acceptance by the donee.
In the case at bar, The donees acceptance of the donation was explicitly
manifested in the penultimate paragraph of the deed, which reads:
That the DONEE hereby receives and accepts the gift and donation made in her
favor by the DONOR and she hereby expresses her appreciation and
gratefulness for the kindness and generosity of the DONOR.
Below the terms and stipulations of the donation, the donor, donee and their
witnesses affixed their signature. However, the Acknowledgment appearing on the
second page mentioned only the donor, Catalina Quilala. Thus, the trial court ruled
that for Violeta's failure to acknowledge her acceptance before the notary public, the
same was set forth merely on a private instrument, i.e. the first page of the
instrument. We disagree.
As provided for in Section 112, paragraph 2 of PD No. 1529, the second page
of the deed of donation, on which the Acknowledgment appears, was signed by the
donor and one witness on the left-hand margin.
The donee and the other witness signed on the right hand margin. Surely, the
requirement that the contracting parties and their witnesses should sign on the left-
hand margin of the instrument is not absolute. The intendment of the law merely is to
ensure that each and every page of the instrument is authenticated by the parties.
The requirement is designed to avoid the falsification of the contract after the
same has already been duly executed by the parties. Hence, a contracting party
affixes his signature on each page of the instrument to certify that he is agreeing to
everything that is written thereon at the time of signing.
Simply put, the specification of the location of the signature is merely directory.
The fact that one of the parties signs on the wrong side of the page does not
invalidate the document.
In the same vein, the lack of an acknowledgment by the donee before the
notary public does not also render the donation null and void. The instrument should
be treated in its entirety. It cannot be considered a private document in part and a
public document in another part. The fact that it was acknowledged before a notary
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public converts the deed of donation in its entirety a public instrument. The fact that
the donee was not mentioned by the notary public in the acknowledgment is of no
moment. To be sure, it is the conveyance that should be acknowledged as a free and
voluntary act.
In any event, the donee signed on the second page, which contains the
Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of
the notarized deed of donation, was made in a public instrument. Petition is granted.
The appealed decision of the CA is reversed.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
appealed decision of the Court of Appeals is REVERSED and SET ASIDE, and a new
judgment is rendered dismissing Civil Case No. 84-26603.
SO ORDERED.
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Felomina Abellana v. Sps. Romeo Ponce and Lucila Ponce, and the Register of
Deeds of Butuan City
G.R. No. 160488 | Sept. 3, 2004
Doctrine: When the law requires that a contract be in some form in order that it may
be valid, that requirement is absolute and indispensable. Its non-observance renders
the contract void and of no effect.
Facts:
Petitioner’s version - Felomina (spinster, pharmacist, aunt of Lucila) purchased a
44,297 sqm agricultural lot in Los Angeles, Butuan City, intending to give it to her
niece. In the Deed of Sale, Lucila was designated as buyer. The total consideration of
the sale was P16,500, but the deed stated P4,500. Felomina applied for issuance of
title in her niece’s name, and a TCT was issued accordingly. The title remained in
Felomina’s possession, who developed it and paid real property taxes on it.
The relationship between Felomina and the spouses turned sour, as the latter
allegedly became disrespectful and ungrateful, hurling insults and even attempting to
physically hurt her. She filed an action for revocation of implied trust to recover legal
title.
Respondents’ version - Lucila (pharmacist) and Romeo (marine engineer), claimed
that the purchase price was only P4,500 and it was them who paid. The payment and
execution of the deed of sale allegedly took place in Atty. Emboy’s office in the
presence of the seller and her siblings. The spouses allowed Felomino to develop and
lease the lot, pad real property taxes through her, and demanded rentals from her
which she refused to pay when her agricultural endeavor was not profitable.
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Lucila learned a title in her name had already been issued, so she confronted
Felomina who claimed she had already given her the title. Lucila executed an affidavit
of loss, which led to another title in her name being issued.
TC – An implied trust existed between Felomina and Lucila, latter holding it for the
benefit of the former. Ordered reconveyance.
CA – Reversed. Felomina failed to prove existence of implied trust. Even if Felomina
paid the purchase price, Art. 1448 raises a disputable presumption that the property
was purchased as a gift to Lucila. MR denied.
Issue: W/N Felomina is the lawful owner
Held: YES. Petition Granted. CA Reversed. RTC Reinstated.
Ratio: The fact that Felomina bought the lot is bolstered by her possession of the
TCT and tax declarations in Lucila’s name, the receipts of real property taxes, the
survey plan, and testimonial evidence of the buyer’s brother, and the caretaker who
tilled the lot. It appears that Felomina, advanced age and with no family of her own,
purchased properties and gave them to her nieces, i.e., she gave 3 lots to Lucila’s
sister.
It is clear that what transpired between the parties was a donation of immovable
property. Such donation was not embodied in a public instrument. As an oral
donation, the transaction was void under Art. 739 of the NCC:
In order that the donation of an immovable property may be valid, it must be
made in a public document, specifying therein the property donated and the
value of the charges which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate
public document, but it shall not take effect unless it is done during the
lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be
notified thereof in an authentic form, and this step shall be noted in both
instruments.
General Rule – Contracts are obligatory in whatever form they were entered into,
provided all the essential requisites for validity are present. Exception – *See
Doctrine
No valid title passed regardless of Felomina’s intention to donate, because naked
intent without solemnities does not suffice for gratuitous alienations. Even if her
intention was to donate after her death, the conveyance is still a void donation
mortis causa, for non-compliance with the formalities of a will.
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IN THE MATTER OF THE PETITION FOR THE ALLOWANCE OF THE WILL OF
GREGORIO GATCHALIAN, PEDRO REYES GARCIA
vs.
FELIPE GATCHALIAN, AURORA G. CAMINS, ANGELES G. COSCA, FEDERICO
G. TUBOG, VIRGINIA G. TALANAY and ANGELES G. TALANAY
Topic: Exceptions; Notarial Will
Doctrine: Notarial wills must be acknowledged before a notary public by the testator
and the instrumental witnesses for it to be valid.
Facts:
1. CFI Rizal denied the allowance of the will of Gregorio Gatchalian on the
ground that the attesting witnesses did not acknowledge it before a notary
public, as required by law.
2. On March 15, 1967, Gregorio Gatchalian, a widower of 71 years of age, died
in the municipality of Pasig, Province of Rizal, leaving no forced heirs.
Appellant then filed a petition for the probate of said will and he was
instituted as the sole heir.
3. Appellees opposed the petition on the ground, among others,
a. that the will was procured by fraud;
b. that the deceased did not intend the instrument signed by him to be as
his will;
c. and that the deceased was physically and mentally incapable of
making a will at the time of the alleged execution of said will.
 Lower court ruled that the will was authentic but it did not comply with the
mandatory requirements of Article 806 of the Civil Code- it was not
acknowledged before the notary public by the testator but not by the
instrumental witnesses.
Issue: Whether the instrumental witnesses must also acknowledge the contract (will)
before a notary public for it to be valid. [YES.]
Held:
 Article 806 of the New Civil Code reads as follows:
o Every will must be acknowledged before a notary public by the testator
and the witnesses. The notary public shall not be required to retain a
copy of the will, or file another with the office of the Clerk of Court.
 Compliance with the requirement contained in the above legal provision to
the effect that a will must be acknowledged before a notary public by the
testator and also by the witnesses is indispensable for its validity.
 As the document under consideration does not comply with this requirement,
it is obvious that the same may not be probated.
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FELIX AZUELA vs. COURT OF APPEALS, GERALDA AIDA CASTILLO
substituted by ERNESTO G. CASTILLO
Topic: Exceptions; Notarial Will
Doctrine: A notarial will must be acknowledged before a notary public for its validity.
Facts:
1. A petition for probate filed on April 10, 1984 with the Regional Trial Court
(RTC) of Manila. The petition filed by petitioner Felix Azuela (son of the
cousin of the decedent) sought to admit to probate the notarial will (2 pages)
of Eugenia E. Igsolo, which was notarized on June 10, 1981.
2. The three named witnesses to the will affixed their signatures on the
left-hand margin of both pages of the will, but not at the bottom of the
attestation clause.
3. In lieu of an acknowledgment, the notary public, Petronio Y. Bautista, wrote
"Nilagdaan ko at ninotario ko ngayong 10 ng Hunyo 10 (sic), 1981 dito sa
Lungsod ng Maynila."
4. The petition was opposed by Geralda Aida Castillo (Geralda Castillo), who
represented herself as the attorney-in-fact of "the 12 legitimate heirs" of the
decedent.
5. Geralda Castillo claimed that the will is a forgery, and that the true purpose
of its emergence was so it could be utilized as a defense in several court
cases filed by oppositor against petitioner, particularly for forcible entry and
usurpation of real property, all centering on petitioner’s right to occupy the
properties of the decedent. It also asserted that contrary to the
representations of petitioner, the decedent was actually survived by 12
legitimate heirs, namely her grandchildren, who were then residing abroad.
6. Castillo also argued that the will was not executed and attested to in
accordance with law. She pointed out that decedent’s signature did not
appear on the second page of the will, and the will was not properly
acknowledged.
7. Petitioner argues that the requirement under Article 805 of the Civil Code
that "the number of pages used in a notarial will be stated in the attestation
clause" is merely directory, rather than mandatory, and thus susceptible to
8. what he termed as "the substantial compliance rule."
RTC- there was substantial compliance and the will could be probated
CA- reversed the lower court. The attestation clause failed to state the number of
pages used in the will, thus rendering the will void and undeserving of probate.
Issue: Whether the will was fatally defective. [YES]
Held:
 The Court took note of several fatal defects that would render the will void.
1. The requirement under Article 806 that "every will must be acknowledged before a
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notary public by the testator and the witnesses" has not been complied with. (related
to topic)
 In lieu of an acknowledgment, the notary public, Petronio Y. Bautista, wrote
"Nilagdaan ko at ninotario ko ngayong 10 ng Hunyo 10 (sic), 1981 dito sa
Lungsod ng Maynila."
o By no manner of contemplation can those words be construed as
an acknowledgment.
 An acknowledgment is the act of one who has executed a deed in going
before some competent officer or court and declaring it to be his act or deed.
It involves an extra step undertaken whereby the signor actually declares to
the notary that the executor of a document has attested to the notary that the
same is his/her own free act and deed.
 It might be possible to construe the averment as a jurat, even though it does
not hew to the usual language thereof. A jurat is that part of an affidavit
where the notary certifies that before him/her, the document was subscribed
and sworn to by the executor.
 Yet even if we consider what was affixed by the notary public as a jurat, the
will would nonetheless remain invalid, as the express requirement of Article
806 is that the will be "acknowledged", and not merely subscribed and sworn
to.
 The acknowledgment coerces the testator and the instrumental witnesses to
declare before an officer of the law that they had executed and subscribed to
the will as their own free act or deed. Such declaration is under oath and
under pain of perjury, thus allowing for the criminal prosecution of persons
who participate in the execution of spurious wills, or those executed without
the free consent of the testator.
2. The attestation clause fails to state the number of pages of the will.
 The number of pages used in the will is not stated in any part of the Will.
The will does not even contain any notarial acknowledgment wherein the
number of pages of the will should be stated.
3.The attestation clause was not signed by the instrumental witnesses.
 While the signatures of the instrumental witnesses appear on the left-hand
margin of the will, they do not appear at the bottom of the attestation clause
which after all consists of their averments before the notary public.
 The attestation clause is "a memorandum of the facts attending the
execution of the will" required by law to be made by the attesting witnesses,
and it must necessarily bear their signatures. An unsigned attestation
clause cannot be considered as an act of the witnesses, since the omission
of their signatures at the bottom thereof negatives their participation.
 The signatures on the left-hand corner of every page signify, among others,
that the witnesses are aware that the page they are signing forms part of
the will. On the other hand, the signatures to the attestation clause
establish that the witnesses are referring to the statements contained in the
attestation clause itself. Indeed, the attestation clause is separate and apart
from the disposition of the will.
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Meneses v. Venturozo
Doctrine: #1 of Ratio
1. Venturozo claims to be the absolute owner of an untitled coconut land at
Pangasinan. She purchased the property from Spouses Basilio de Guzman
and Crescencia Abad.
2. Spouses Abad allegedly got the property from Adelaida Meneses, as
evidenced by a duly notarized deed of absolute sale dated June 20, 1966.
Said deed of sale was notarized and witnessed by 2 witnesses, one of which
was the notary public who notarized it.
3. While Venturozo was in possession of the land, Meneses, along with some
armed men, grabbed possession of the land and refused to vacate despite
repeated demands.
4. Rosario Venturozo filed a complaint for ownership, possession and damages
against Meneses.
5. Defenses of Meneses:
a. She never signed any deed of absolute sale dated June 20, 1966.
b. She showed specimen signatures and those appearing in her pleadings of
other cases filed against her, all of which are different from the signature in
the deed; hence, the deed is a forgery.
RTC: In favor of Meneses
CA: Reversed; in favor of Venturozo
Issue: W/N the notarized deed of sale is conclusive proof of the sale by Meneses –
NO.
Held: WHEREFORE, the petition is GRANTED. The Court of Appeals Decision dated
October 27, 2005 and its Resolution dated April 5, 2006 in CA-G.R. CV No. 78217 are
REVERSED and SET ASIDE, and the Decision of the Regional Trial Court of
Dagupan City, Branch 40 in Civil Case No. D-9040 is hereby REINSTATED.
Ratio
1. Notarized documents carry evidentiary weight conferred upon them with respect
to their due execution and enjoy the presumption of regularity which may only be
rebutted by clear, strong and convincing evidence. A defective notarization,
however, will strip the document of its public character and reduce it to a private
instrument. Consequently, the clear and convincing evidentiary standard is
dispensed with, and the measure to test the validity of such document is only
preponderance of evidence.
2. Land Registration Act (Act No. 496), Sec. 127. Deeds, conveyances, mortgages,
leases, releases, and discharges affecting lands, whether registered under this
Act or unregistered, shall be sufficient in law when made substantially in
accordance with the following forms, and shall be as effective to convey,
encumber, lease, release, discharge, or bind the lands as though made in
accordance with the more prolix form heretofore in use: Provided, That every
such instrument shall be signed by the person or persons executing the same, in
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the presence of two witnesses, who shall sign the instrument as witnesses to
the execution thereof, and shall be acknowledged to be his or their free act and
deed by the person or persons executing the same, before the judge of a court of
record or clerk of a court of record, or a notary public, or a justice of the peace,
who shall certify to such acknowledgment x x x.
3. The deed of sale purportedly made by Meneses did not comply with the
formalities required by Sec. 127.
a. In the deed, the notary public signed his name as one of the witnesses;
hence, there was actually only one witness thereto.
b. The residence certificate of Meneses was issued to her and then given to the
notary public only after the execution of the deed of sale and notarization
4. Considering the defect in the notarization, the deed cannot be considered a
public document, but only a private document. Hence, the evidentiary standard of
its validity shall be based only on preponderance of evidence.
5. Now applying preponderance of evidence as the degree required to dispute the
deed, the signature of Meneses in the deed is very much different from her
specimen signatures and those appearing in the pleadings of other cases filed
against her. Hence, the signature of Meneses on the deed is a forgery. The deed
thus transmits no right of Meneses over the subject land, rendering Venturozo
without rights to such land.
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PERFECTO DY, JR. vs. COURT OF APPEALS, GELAC TRADING INC., and
ANTONIO V. GONZALES
GR No. 92989 | July 8, 1991
DOCTRINE
There was constructive delivery already upon the execution of the public instrument
pursuant to Art. 1498 and upon the consent or agreement of the parties when thing
sold cannot be immediately transferred to the possession of the vendee under Art.
1499.
FACTS
 Perfecto Dy (petitioner) and Wilfredo Dy are brothers. Wilfredo purchased a
truck and a farm tractor through a financing extended by Libra Finance and
Ivestment Corp. (LIBRA). Both truck and tractor were mortgaged to Libra as
security for the loan.
 Perfecto wanted to buy the tractor from his brother so he wrote a letter to
Libra requesting that he be allowed to purchase from Wilfredo the said
tractor and assume the mortgage debt of his brother. Libra approved the
request.
 Pursuant to this, Wilfredo executed a deed of absolute sale in favor of the
petitioner over the tractor in question. At this time, the subject tractor was in
the possession of Libra due to Wilfredo’s failure to pay the amortizations.
 The immediate release could not be effected because the financing covers
both truck and tractor to which Libra inssited full payment. Perfecto
convinced their sister to purchase the truck so that full payment could be
made. A PNB check was issued in the amount of P22,000 in favor of Libra.
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Payment being effected, Libra insisted that the check be cleared first before
it releases the chattels in question.
 Meanwhile on Dec. 27, 1979, another case was filed by GELAC Trading
against Wilfredo for sum of money amounting to P12,269 which was pending
on a different court. A writ of execution was issued by said court and the
tractor was subsequently sold at a public auction where Gelac was the lone
bidder. Later on, Gelac sold the tractor to one of its stockholders.
 The check was cleared on Jan. 17, 1980 and the petitioners learned of the
auction sale effected to Gelac. Thus, Perfecto filed an action to recover the
property before the RTC.
 RTC rendered judgment in favor of Perfecto which directed GELAC to return
the subject tractor to petitioner.
 CA reversed RTC’s decision and held that the tractor in question still
belonged to Wilfredo when it was seized and levied by the sheriff by virtue of
alias writ of execution.
ISSUE/S
1. W/N the sale between the Dy brothers valid?
2. W/N the tractor was validly delivered to Perfecto Dy?
HELD/RATIO
YES the sale was valid and there was a constructive delivery to Perfecto Dy.
1. Respondent’s claim that at the time of the execution of the deed of sale, no
constructive delivery was effected since the consummation of the sale
depended upon the clearance and encashment of the check which was
issued in payment of the tractor—this is untenable.
2. The mortgagor who gave the property as security under a chattel mortgage
did not part with the ownership over the same; he had the right to sell it
although he was under the obligation to secure the written consent of the
mortgagee and even if no consent was obtained from the mortgagee, the
validity of the sale would still not be affected.
3. Thus, Wilfredo Dy, as the chattel mortgagor, can validly sell the subject
tractor. Libra’s consent was obtained through a letter sent by Perfecto to the
former. Thus, the sale was valid.
4. As to delivery: Art. 1496 states that ownership of the thing sold is acquired
by the vendee from the moment it is delivered to him in any ways specified in
Art. 1497 to Art. 1501 or in any manner signifying an agreement that the
possession is transferred from the vendor to the vendee. Arts. 1498 1 and
14992 applies in this case.
1 Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred.
2 Article 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or
if the latter already had it in his possession for any other reason. (1463a)
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5. In the instant case, actual delivery of the subject tractor could not be made.
However, there was constructive delivery made upon the execution of the
public instrument pursuant to Art. 1498 and upon the consent or agreement
of the parties when the thing sold cannot be immediately transferred to the
possession of the vendee. [doctrine]
6. The sale of the subject tractor was consummated upon the execution of the
public instrument on Sept. 4, 1979 (the deed of absolute sale). Hence, the
subject tractor was no longer owned by Wilfredo Dy when it was levied upon
by the sheriff.
7. Gelac Trading’s actuations in buying the subject tractor were indeed a
violation of the human relation provisions. It very well knew the transfer of
the property to the petitioner on July 4, 1980 when it received summons
based on the complaint filed with the RTC. Notwithstanding the said
summons, it continued to sell the subject property to one of its stockholders.
Petition was DENIED. CA decision was SET ASIDE. RTC Decision is REINSTATED.
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Aurelio Litonjua Jr v. Eduardo Litonjua Sr. et. al.
FACTS:
Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered into
a contract of partnership with him. Aurelio showed as evidence a letter sent to him by
Eduardo that the latter is allowing Aurelio to manage their family business (if
Eduardo’s away) and in exchange thereof he will be giving Aurelio P1 million or 10%
equity, whichever is higher. A memorandum was subsequently made for the said
partnership agreement. The memorandum this time stated that in exchange of
Aurelio, who just got married, retaining his share in the family business (movie
theatres, shipping and land development) and some other immovable properties, he
will be given P1 Million or 10% equity in all these businesses and those to be
subsequently acquired by them whichever is greater.
In 1992 however, the relationship between the brothers went sour. And so Aurelio
demanded an accounting and the liquidation of his share in the partnership. Eduardo
did not heed and so Aurelio sued Eduardo.
ISSUE: Whether or not there exists a partnership.
HELD: No. The partnership is void and legally nonexistent. The documentary
evidence presented by Aurelio, i.e. the letter from Eduardo and the Memorandum, did
not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in
tone, but is unsigned and undated. As an unsigned document, there can be no
quibbling that said letter does not meet the public instrumentation requirements
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exacted under Article 1771 (how partnership is constituted) of the Civil Code.
Moreover, being unsigned and doubtless referring to a partnership involving more
than P3,000.00 in money or property, said letter cannot be presented for notarization,
let alone registered with the Securities and Exchange Commission (SEC), as called
for under the Article 1772 (capitalization of a partnership) of the Code. And inasmuch
as the inventory requirement under the succeeding Article 1773 goes into the matter
of validity when immovable property is contributed to the partnership, the next logical
point of inquiry turns on the nature of Aurelio’s contribution, if any, to the supposed
partnership.
The Memorandum is also not a proof of the partnership for the same is not a public
instrument and again, no inventory was made of the immovable property and no
inventory was attached to the Memorandum. Article 1773 of the Civil Code requires
that if immovable property is contributed to the partnership an inventory shall be had
and attached to the contract.
PETITIONER: Emilia Santiago
RESPONDENT: Pioneer Savings and Loan Bank, et al.
GR No. 77502 | January 15, 1988
FACTS: Petitioner Emilia Santiago is the registered owner of a parcel of land
(TCT No. B-41669) with an area of 39,007 sq m. in Caloocan City. She executed a
Special Power of Attorney in favor of Construction Resources Corporation of the
Philippines (CRCP), authorizing and empowering CRCP, among others to execute
mortgages of real estate over the property she owned.
CRCP executed a Real Estate Mortgage over the Disputed Property in favor of
FINASIA Investment and Finance Corporation to secure a loan of P1 million. The
mortgage contract specifically provided that in the even of default in payment, the
mortgagee may immediately foreclose the mortgage judicially or extrajudicially.
The SPA by Emilia Santiago in CRCP’s favor, REM by CRCP in FINASIA’s
favor and the Board Resolution of CRCP authorizing its president to sign in behalf of
CRCP, were duly annotated on the Title of the property.
Later, FINASIA executed a document entitled “Outright Sale of Receivables
without Recourse” in favor of respondent Pioneer Savings & Loan Bank, Inc., which
includes the receivable of Php 610, 752.59. FINASIA confirmed and ratified the
assignment by executing a “Supplemental Deed of Assignment” in favor of the bank
the receivable of Php 610, 752.59 from CRCP and the mortgage constituted by CRCP
over the disputed property.
CRCP failed to settle its obligation and Pioneer Savings opted for extrajudicial
foreclosure of the mortgage. Emilia Santiago, through a notice of auction sale,
learned of the intended sale and filed for an action of Declaration of Nullity of the real
estate mortgage with an application for a Writ of Preliminary Injunction. She claims
that she had not authorized anyone to execute any document for the extrajudicial
foreclosure of the real estate mortgage constituted n the Disputed Property and since
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the notice of Sheriff’s sale did not include her as a party to the foreclosure
proceedings, it is not binding on her nor on her property.
Pioneer Savings opposed the Preliminary Injunction and asserted its right to
extrajudicially foreclose the mortgage on the Disputed Property based on recorded
public documents.
Trial Court granted the petition for Preliminary Injunction enjoining the public
auction sale of the disputed property upon Emilia’s posting of a Php 100, 000 bond.
Pioneer Savings filed a Motion to Dismiss the main case on the ground that
the complaint did not state a cause of action. The TC dissolved the Writ of Preliminary
Injunction and ordered the dismissal of the case for lack of cause of action.
FINASIA had sold its receivables including that of CRCP to Defendant Bank; and that
she was not informed by CRCP of the scheduled foreclosure sale will not tilt the
scales of justice in her favor in the face of incontrovertible documentary evidence
before the Court.
Plaintiff-appellant's recourse is against CRCP, specially considering her
allegation that the latter had failed to observe their agreement.
WHEREFORE, the Order appealed from is hereby AFFIRMED, with costs
against plaintiff- appellant.
SO ORDERED.

Emilia appealed to the Court of Appeals which certified the case to the SC for
being a pure question of law. In the mean time, Pioneer Savings completed its
extrajudicial foreclosure and sold the property at a public auction.

ISSUE: Whether or not Emilia must be given a “real day in court” because the
TC only heard her in her Application for a Writ of Preliminary Injunction and not on
Motion to Dismiss against her Petition for Declaration of Nullity of the REM.

DECISION: Although the evidence of the parties was presented on the

question granting or denying Emilia’s application for a Writ of Preliminary Injunction,
the TC correctly applied said evidence in the resolution of the Motion to Dismiss.

When an evidence is before the Court and has been stipulated upon, a Court
can go “beyond the disclosure in the complaint.” The rule is explicit that “rules of
procedure are not to be applied in a very rigid technical sense; rules of procedure are
used only to help secure substantial justice.”

The evidence on record sufficiently defeats Emilia’s claim for relief from
extrajudicial foreclosure. Her Special Power of Attorney in favor of CRCP specifically
included the authority to mortgage the Disputed Property. The Real Estate Mortgage
in favor of FINASIA explicitly authorized foreclosure in the event of default. Indeed,
foreclosure is but a necessary consequence of non-payment of a mortgage
indebtedness. Plaintiff-appellant, therefore, cannot rightfully claim that FINASIA, as
the assignee of the mortgagee, cannot extrajudicially foreclose the mortgaged
property. A mortgage directly and immediately subjects the property upon which it is
imposed to the fulfillment of the obligation for whose security it was constituted.

While notice may not have been given to plaintiff- appellant personally, the
publication of the Notice of Sheriff's Sale, as required by law, is notice to the whole
world.

The full-dress hearing that plaintiff-appellant prays for wherein she intends to
prove that she tried to contact the President of CRCP to urge him to pay the mortgage
loan, that she had failed to do so despite several attempts; that she did not know that
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