FIDELA MANANZALA, PETITIONER, VS. COURT OF APPEALS, AND CORAZON ARAÑEZ, RESPONDENTS.

Mananzala versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Fidela Mananzala against the Court of Appeals and Corazon Arañez. The action below was one for specific performance, filed by Corazon Arañez to compel Fidela Mananzala to convey a parcel of land in Bagong Pagasa, Quezon City, on the strength of a deed of sale allegedly executed between them in March 1960. The case matters because it draws the line between a genuine contract of sale over a thing with potential existence and a sale that is void for want of consent, and because it shows how the Supreme Court treats factual findings on the genuineness of a signature and defenses that were pleaded but never pressed on appeal.

Procedural History

Corazon Arañez filed the complaint for specific performance in the Regional Trial Court of Quezon City, Branch 106. The trial court dismissed the complaint. It found that the petitioner's signature on the deed was genuine, but it ruled that no contract of sale had been perfected because the petitioner never really intended to sell the land. It also declared the contract null and void because, at the time of the sale, the petitioner was not yet the owner of the property.

Corazon Arañez appealed to the Court of Appeals. The appellate court reversed the trial court. It held that there was a meeting of the minds, as shown by the petitioner's signature on the deed, which the National Bureau of Investigation found to be genuine, and that the notarization of the deed gave rise to the presumption of its regularity. It further held that the petitioner could validly sell the land even before the actual award to her, pursuant to Article 1461 of the Civil Code on things having a potential existence. It accordingly ordered the petitioner to transfer ownership of the land to Corazon Arañez.

Fidela Mananzala then came to the Supreme Court by petition for review on certiorari, assigning two grounds: that the Court of Appeals erred in validating a contract executed in violation of law and public policy, and that the challenged notarial document does not enjoy the presumption of regularity.

Facts

Fidela Mananzala had been in actual possession of the land since 1955, by virtue of a conditional sale made in her favor by the Philippine Homesite and Housing Corporation, later the National Housing Authority. In 1960, however, the corporation awarded the land to Nestor and Elisea Mercado, who took possession that year. The petitioner contested the award in court, claiming precedence both in actual occupation and in her application to purchase. Her right was upheld by the Court of First Instance of Quezon City, whose decision was affirmed by the Intermediate Appellate Court, and the award to the Mercado spouses was cancelled.

On December 14, 1984, the petitioner paid in full the price of the land under the deed of conditional sale. The National Housing Authority executed a deed of sale in her favor on January 14, 1985, and the next day a transfer certificate of title was issued in her name.

Earlier, on March 22, 1960, a deed of sale over the same lot was allegedly executed between the petitioner and Corazon Arañez. It stipulated that title would be transferred to Corazon Arañez within thirty days after full payment of the purchase price by the petitioner to the corporation. The deed was notarized by Attorney Pio Lopez, who was the petitioner's counsel in her case against the Mercado spouses. Corazon Arañez alleged that the petitioner refused to comply despite repeated demands. The petitioner denied selling the land, claiming the deed was a forgery and that her signature was secured through fraud. In the alternative, she averred that the deed was void because it was made before the actual award of the land to her and in violation of the prohibition in the rules and regulations of the corporation against subsequent disposition of the land within one year of the issuance of the title.

Issues

• Whether or not the Court of Appeals erred in relying on the presumption of regularity of the notarized deed of sale in holding it valid.
• Whether or not the contract between the petitioner and the private respondent is valid and binding, considering the petitioner's claim that it violates the rules of the Philippine Homesite and Housing Corporation and the one-year prohibition against disposition.

Applicable Provisions

Article 1461 of the Civil Code provides:

Things having a potential existence may be the object of the contract of sale.

This is the provision the Court of Appeals applied in holding that the petitioner could validly sell the land even before the actual award to her, and it is the provision the Supreme Court leaves undisturbed.

Ruling

On the first issue, the Court held that the Court of Appeals did not rely on the presumption of regularity alone. The appellate court also took into account the evidence of the parties, particularly the report of the National Bureau of Investigation, which found the petitioner's signature on the questioned document to be genuine after comparing it with ten specimen signatures. The trial court itself arrived at the same conclusion as to the genuineness and due execution of the deed. The Court also noted that the petitioner's claim that her signature was procured through fraud was contradicted by her own testimony that the signature was not hers at all, for if it was not her signature, it could not have been procured by fraud. The Court held that the genuineness of the signature is a factual finding of both the trial court and the Court of Appeals which, absent very clear evidence to the contrary, it will not revise.

On the second issue, the Court held that the contract is valid and binding. The petitioner invoked the ruling in Ibay versus Intermediate Appellate Court, where the transfer of rights was disapproved by the corporation under a resolution prohibiting the sale of more than one lot per person. The Court distinguished that case: here there is no evidence that the sale to the private respondent was made in violation of any rule of the corporation, and this issue was never passed upon by either the trial court or the Court of Appeals.

As to the contention that the sale is void because it was made within one year after the title was issued in the petitioner's name, the Court held that the petitioner waived this ground. Although raised in her answer in the trial court, it was not passed upon, and she did not urge it on appeal. As appellee, she merely relied on the ruling of the trial court and did not press her original defenses. The appellate court considered only the issues raised by the trial court's decision: whether the signature was a forgery, whether there was a meeting of the minds, and whether there could be a sale of future property. The one-year prohibition was never briefed or argued below, so for all intents and purposes the petitioner waived it and cannot now urge it as a ground for reversing the Court of Appeals.

Doctrine

A notarized deed of sale is presumed regular, but the presumption is not the whole of the proof; it stands alongside the evidence of the parties, including a forensic finding that the signature is genuine. The genuineness and due execution of a deed, once established by the factual findings of both the trial court and the Court of Appeals, will not be revised by the Supreme Court absent very clear evidence to the contrary.

Under Article 1461 of the Civil Code, things having a potential existence may be the object of a contract of sale, so a seller may validly bind herself to convey land she does not yet own, provided the sale does not violate any rule of the awarding authority. A defense that is pleaded but never passed upon below and never urged on appeal is deemed waived and cannot be raised for the first time in the Supreme Court.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals, and Fidela Mananzala was ordered to convey the land to Corazon Arañez.

Remember This

Memorize this line: a notarized deed is presumed regular, but it is the evidence, including the forensic finding of a genuine signature, that carries the day, and a thing having a potential existence may be the object of a sale. Examiners use this case to test the interplay between the presumption of regularity of notarial documents and factual findings on appeal, and to test waiver of defenses not raised below.