The Supreme Court affirmed the validity of a Deed of Absolute Sale, reinforcing the presumption of regularity for notarized documents. This decision clarifies that mere allegations of forgery, undue influence, or lack of consideration are insufficient to overturn a notarized contract. The burden of proof lies heavily on the party challenging the document, requiring clear and convincing evidence to overcome its presumed validity. This ruling underscores the importance of substantiating claims of contractual defects with concrete evidence, particularly when dealing with notarized agreements.

Family Feud or Fair Deal? Examining Claims Against a Decades-Old Property Transfer

In the case of Rafael Almeda, et al. v. Heirs of Ponciano Almeda, the petitioners, Rafael Almeda, Emerlina Almeda-Lirio, and others, sought to nullify a Deed of Absolute Sale executed in 1978 by their parents, Venancio and Leonila Almeda, in favor of their brother, Ponciano Almeda. The petitioners alleged that the signatures on the deed were forged, that their parents did not receive due consideration, and that Ponciano had exerted undue influence. The Regional Trial Court (RTC) dismissed the complaint, a decision later affirmed by the Court of Appeals (CA). The Supreme Court (SC) was then tasked with determining whether the lower courts erred in upholding the validity of the 1978 Deed of Absolute Sale.

The heart of the legal matter revolved around the burden of proof required to challenge a notarized document. The petitioners argued that the signatures on the deed were not their parents’ and that the transaction lacked adequate consideration. In their complaint, the petitioners stated:

VIII
That [petitioners’] parents did not sign said documents of sale purportedly to transfer rights, titles and interest in favor of defendants, and, in fact their signatures thereon may have been forged, and, that they did not receive due consideration thereof, and, said documents are merely simulated if ever defendant [Ponciano] succeeded in making them [sign] the same without knowledge of the import thereof, likewise, in making them appear as having executed and affixed their signatures on said controversial documents although the transactions were inexistent.

The Court emphasized that a notarized Deed of Absolute Sale carries a presumption of regularity, lending significant evidentiary weight to its due execution. This means the document is presumed to be authentic and valid unless proven otherwise. To successfully challenge a notarized document, the party making the challenge must present clear, strong, and convincing proof of its falsity or nullity. The burden of proof, therefore, rests on the petitioners to demonstrate that the 1978 Deed was indeed forged or invalid.

The Court scrutinized the evidence presented by the petitioners, particularly the testimony of Emerlina, who claimed the signatures were forged or that her parents did not understand the document’s implications. However, the Court found her testimony to be unclear and uncertain. As the Court stated:

Likewise, Emerlina’s testimony, upon which petitioners’ case was built, is unclear and uncertain as to the supposed forgery. Emerlina testified that the vendors’ signatures appearing on the 1978 Deed did not belong to her parents, Venancio and Leonila. Subsequently, however, she testified that if the latter did affix their signatures, they did not know what they signed. Still further to her testimony, Emerlina declared that she could not say if the signatures indeed belonged to her parents. Eventually, she conceded to having two alternative answers to the question of forgery: first, that Venancio and Leonila did not sign the document, and second, that it is possible that they signed it but without knowing the consequences of their action.

Moreover, the Court noted that Emerlina, as an heir, had a direct interest in the outcome of the case, making her testimony less reliable than objective, documentary evidence. The Court also pointed out that forgery cannot be presumed and must be proven by clear, positive, and convincing evidence. To establish forgery, it is necessary to demonstrate the extent, kind, and significance of the variations between genuine and disputed signatures. Petitioners failed to meet this burden, relying solely on Emerlina’s uncorroborated testimony.

The Court, invoking Section 22, Rule 132 of the Rules of Court, undertook its own visual comparison of the signatures on the 1978 Deed with those on the 1976 Power of Attorney, which the petitioners admitted bore the true signatures of their parents. The Court found prominent similarities between the signatures, indicating the habitual and characteristic writing of Venancio and Leonila. It was noted that Leonila’s signature in particular was almost identical in both documents. The Court did not see “wild strokes” as described by the petitioners and, therefore, concluded that the similarities were more pronounced than any apparent variance. The Court stated:

In fine, the apparent dissimilarities in the signatures are overshadowed by the striking similarities and, therefore, fail to overcome the presumption of validity in favor of a notarized document.

The petitioners also argued that their parents lacked the capacity to contract due to their advanced age and forgetfulness. The Court, however, cited the legal principle that every person is presumed competent to enter into a contract until proven otherwise. The burden of proving incapacity rests on the party alleging it and requires clear and convincing evidence. The Court emphasized that mere forgetfulness, without evidence of an inability to protect one’s property rights, does not incapacitate a person from entering into contracts. The Court observed that the petitioners’ claim was not supported by medical evidence and, therefore, insufficient to overcome the presumption of competence.

Additionally, the petitioners alleged undue influence by Ponciano and a lack of consideration for the sale. The Court found these claims unsubstantiated. Undue influence must be established by full, clear, and convincing evidence, demonstrating that one party took improper advantage of their power over another, depriving them of reasonable freedom of choice. Other than a general allegation, the petitioners did not demonstrate any instances of Ponciano exerting undue influence. Concerning the lack of consideration, the Court noted that the notarized 1978 Deed itself stated that the properties were sold for P704,243.77. The Court also held that a simulated contract cannot be inferred from the mere non-production of checks, especially when a notarized deed shows that consideration was acknowledged.

The petitioners further claimed that the price paid by Ponciano was unconscionably low, pointing to a later sale of a portion of the property for a significantly higher price. However, the Court dismissed this argument, noting that the petitioners failed to demonstrate how the later sale in 1992 proved that the price paid in 1978 was unconscionable, considering the significant difference in time and market conditions. Based on the lack of evidence of forgery, mental incapacity, undue influence, or inadequate consideration, the Court affirmed the lower court’s ruling, upholding the validity of the 1978 Deed of Absolute Sale.

Building on this principle, the Court also addressed procedural issues raised by the petitioners, specifically regarding alleged defects in the notarization of the 1978 Deed. The petitioners argued that the Notary Public lacked jurisdiction because the property was located outside his territorial limits. However, the Court pointed out that these arguments were raised for the first time before the Supreme Court, violating the principle that issues not raised in the lower courts cannot be raised on appeal. Regardless, the Court noted that even if the acknowledgment was defective, it would merely strip the document of its public character, reducing it to a private instrument. It would still be incumbent upon the petitioners to prove their allegation of forgery by a preponderance of evidence.

FAQs

What was the key issue in this case?	The key issue was whether the petitioners presented sufficient evidence to overcome the presumption of regularity of a notarized Deed of Absolute Sale and prove forgery, lack of capacity, undue influence, or inadequate consideration.
What is the presumption of regularity for notarized documents?	A notarized document is presumed to be authentic and valid, with its due execution presumed unless proven otherwise by clear, strong, and convincing evidence. This places a heavy burden of proof on the party challenging the document.
What kind of evidence is required to prove forgery?	To prove forgery, one must demonstrate the extent, kind, and significance of the variations between genuine and disputed signatures, showing that the variations are due to a different personality and not merely natural variations in the same writer’s handwriting.
How does advanced age affect contractual capacity?	Advanced age alone does not invalidate contractual capacity unless it impairs the person’s mental faculties to the extent that they cannot understand the provisions of the contract or protect their property rights.
What constitutes undue influence in contract law?	Undue influence occurs when a person takes improper advantage of their power over another’s will, depriving the latter of reasonable freedom of choice. It must be proven by clear and convincing evidence.
What is the significance of consideration in a Deed of Absolute Sale?	Consideration is the price or reason that motivates a party to enter into a contract. A Deed of Absolute Sale must have valid consideration, but the inadequacy of the price alone does not necessarily invalidate the contract unless it indicates fraud or other defects.
What happens if a notarization is defective?	If a notarization is defective, the document loses its public character and is treated as a private instrument. The burden of proving the document’s validity shifts to the party relying on it.
Why did the Supreme Court reject the petitioners’ claim of inadequate consideration?	The Court rejected the claim because the petitioners failed to provide sufficient evidence that the price paid in 1978 was unconscionable, and the notarized deed itself stated that the consideration was received.

This case underscores the importance of thoroughness and precision in executing contracts, especially those involving significant property transfers. It also highlights the challenges in overturning notarized documents without substantial and convincing evidence. The ruling serves as a reminder that while family relationships can complicate transactions, legal principles of contract validity will prevail in the absence of clear and compelling proof of defects.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Rafael Almeda, et al. vs. Heirs of Ponciano Almeda, G.R. No. 194189, September 14, 2017