792 Phil. 54
DEL CASTILLO, J.:
The subject of the instant controversy is the one-half portion of a 155-square meter parcel of land known as Lot 13-A, Block 40 located at 109 Kapayapaan Street, Bagong Barrio, Caloocan City and covered by Transfer Certificate of Title No. (TCT) No. C-44249. The parcel of land is part of the National Housing Authority's (NHA) Bagong Barrio Project and built thereon is plaintiff-appellee Leonora Mariano's[5] five-unit apartment which she leases out to tenants.Ruling of the Regional Trial Court
hi 1972, Leonora Mariano filed with the NHA Application No. 99-02-0323 for a land grant under the Bagong Barrio Project. In 1978, the NHA approved the Application, thus, her institution as grantee of the foregoing parcel of land. The grant, however, is subject to a mortgage inscribed as Entry No. 98464/C-39393 on the dorsal side of TCT No. C-44249, viz[.]:and further subject to a proviso, proscribing any transfer or encumbrance of said parcel of land, viz[.]:— NATIONAL HOUSING AUTHORITY —
TO GUARANTEE A PRINCIPAL XXX (illegible) IN THE SUM OF P36,036.10 PAYABLE WITHIN TWENTY FIVE (25) YEARS WITH ANNUAL INTEREST OF TWELVE (12%) PERCENT UNTIL FULLY PAID IN THREE HUNDRED (300) EQUAL MONTHLY INSTALLMENTS.xxxDATE OF INSTRUMENT - Feb. 12, 1981
DATE OF INSCRIPTION - May 8, 1981"EXCEPT BY HEREDITARY SUCCESSION, THE HEREIN LOT OR ANY PART THEREOF CANNOT BE xxx (illegible), TRANSFERRED, OR ENCUMBERED WITHIN FIVE (5) YEARS FROM THE DATE OF RELEASE OF THE MORTGAGE INSCRIBED AT THE BACK HEREOF WITHOUT PRIOR WRITTEN CONSENT AND AUTHORITY FROM THE NATIONAL HOUSING AUTHORITY."Accordingly, the NHA withheld conveyance of the original TCT No. C-44249 to Leonora Mariano, furnishing her instead a photocopy thereof as the issuance of the original TCT in her name is conditioned upon her full payment of the mortgage loan. Leonora Mariano's last payment was in February 1999. The NHA's Statement of Account indicates that as of September 30, 2004, Leonora Mariano's outstanding obligation amounted to P37,679.70. Said obligation remained unpaid.
On January 28, 1998, Leonora Mariano obtained a P100,000.00 loan from defendant-appellant Luz Nicolas[6] with a payment term often (10) months at the monthly interest rate of 7%. To secure the loan, she executed a Mortgage Contract over the subject property, comprising the one-half portion of the parcel of land.
On February 22, 1999, Leonora Mariano, having defaulted in the payment of her obligation, executed in favor of Luz Nicolas a second mortgage deed denominated as Sanglaan ng Lupa at Bahay, this time mortgaging the subject property and the improvements thereon for a consideration of P552,000.00 inclusive of the original loan of P100,000.00. The Sanglaan ng Lupa at Bahay provides for a payment term of one (1) year and contains the following stipulations:On June 7, 2000, Leonora Mariano, similarly defaulting on the second obligation, executed a deed of Absolute Sale of Real Property, conveying to Luz Nicolas the ownership of the subject property and the improvements thereon for a purchase price of P600,000.00. A document denominated Pagtanggap ng Kabuang Halaga, executed before Punong Barangay Crispin C. Peña, Sr. attested to the full payment of the P600,000.00 to Leonora Mariano. It appears that from June 1999, the tenants of Leonora Mariano's five-unit apartment have been remitting monthly rentals to Luz Nicolas in the amount of P2,000.00, or P10,000.00 in the aggregate. From said period until June 2004, Luz Nicolas' rental collection amounted to P600,000.00.[7] (Emphasis in the original)xxx xxx xxx
1. Na kung sakali at mabayaran ng UNANG PAMG ang IKALAWANG PANIG o ang kahalili nito ang nabanggit na pagkakautang na halagang Limang Daan Limamput Dalawang Libong Piso (P552,000.00), salaping Pilipino, kasama ang interes o tubo, sa loob ng taning na panahon, ay mawalan ng bisa at saysay ang SANGLAANG ito;
2. Na kapag hindi nabayaran ng UNANG PANIG sa IKALAWANG PANIG ang buong halagang pagkakautang na nabanggit sa itaas, ay ituturing ng ma[g]kabilang panig na ang lupa at bahay na nakasangla ay nabili at pagmamay-ari na ng IKALAWANG PANIG at sumasang-ayon ang UNANG PANIG na magsagawa ng kaukulang Kasulatan ng Bilihan na wala nang karagdagang bayad o halagang ibinibigay sa nagsangla.xxx xxx xxx
The Court is inclined to believe that what had been entered into by and between the parties was a mere contract of mortgage of real property and not a sale of real property.Ruling of the Court of Appeals
The Court could not uphold the validity of the Deed of Absolute Sale of Real Property dated June 7, 2000 because it is tainted with flaws and defects. There is no evidence that the parties have given their consent thereto. A careful scrutiny of the document will readily show that at the time of the execution thereof there was no consideration for the sale of the property. The alleged vendor, plaintiff herein, made it appear that she received the sum of Php600,000.00 in foil and in her complete satisfaction from the alleged vendee, herein defendant. The lack of consideration was likewise bolstered by the defendant's production of the handwritten memorandum or note of the various amounts allegedly received by the aforesaid defendant from the plaintiff on different occasions. It is important to stress, however, that even admitting arguendo that several amounts were received by the plaintiff from the defendant, there has not been any indication that the same were intended as consideration for the sale of the property in question. xxx It has been observed also that the alleged payments occurred long after the execution of the Deed of Sale, or a span of four (4) months to be more exact No less than the barangay captain had categorically declared that he did not see that the defendant even handed over the amount of Php600,000.00 to the plaintiff. Moreover, a scrutiny of the aforesaid fictitious Deed of Absolute Sale of Real Property will readily show that it did not even specifically described [sic] the subject-matter of the alleged sale.
There are two sets of mortgage contracts executed by the parties herein. One in the amount of Php100,000.00 with an interest of 7% payable in ten (10) month period and the other one in a jacked up price of Php552,000.00 payable within a period of one (1) year from its execution. The plaintiffs contention that the unpaid obligation in the amount of Php100,000.00 has already been consolidated to the jacked up amount of Php552,000.00 is tenable. Anent the claim of the defendant that the plaintiff never paid her, such alleged failure however could not be attributed to the fault of the plaintiff considering that the latter had been tendering her payments not only once but for several times and it was the defendant who refused to accept the payments for various reasons. It is crystal clear that the defendant's refusal to accept the payments which were tendered by the plaintiff was nothing but a malicious scheme devised by the defendant to make the plaintiffs obligation ballooned [sic] to Php552,000.00, which would make it more difficult for the plaintiff to pay the increased amount of Php552,000.00 in lump sum. Hie actuations displayed by the defendant is indeed a downright manifestation of bad faith on her part in her desire to own the property belonging to herein plaintiff, which is in brazen violation of Article 19 of the Civil Code, which provides among others that 'Every person must in the exercise of his right and in the performance of his duties act with justice, give everyone his due and observe honesty and good faith.' Be that as it may, the plaintiff, despite her vigorous protestation to the jacked up amount of Php552,000.00 had agreed to sign the second mortgage denominated as 'Sanglaan Ng Bahay At Lupa' payable within a period of one (1) year. Apparently, the defendant's consuming aspiration to push the plaintiff against the wall, had even accentuated when she demanded payment of the aforestated sum from the herein plaintiff even before its maturity.
It is important to stress however, that in plaintiffs sincere desire to settle her obligation, upon request of the defendant, had even executed a Special Power of Attorney in favor of the latter, authorizing the aforesaid defendant to collect the rentals from the five-door apartment belonging to the plaintiff, which commenced from June 1999 up to June 2004. Although the defendant assured the plaintiff that the payments by way of rentals would be applied to the indebtedness of the plaintiff, such verbal agreement was never reduced in writing in view of the trust and confidence reposed by the plaintiff upon the defendant.
In sum, the defendant was able to collect the total amount of Php612,000.00 from the tenants of the plaintiff, which evidently tremendously exceeded the amount of the alleged indebtedness of the plaintiff to the defendant in the increased amount of Php552,000.00.xxx xxx xxx
There is no doubt that the plaintiff has suffered mental anguish and injury due to the wrongful act done by the defendant against the plaintiff. Hence, the latter is entitled to an award of moral damages inasmuch as the sufferings and injuries suffered by the plaintiff are the proximate result of the defendant's wrongful act or omission (Art. 2217, Civil Code of the Philippines). However, the amount of moral damages suffered by the plaintiff in the amount of Php400,000.00 is unconscionable which must have to be reduced by the court.
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant by:SO ORDERED.[11]
- Ordering the cancellation of the two (2) mortgages denominated as Mortgage Contract and the Sanglaan Ng Lupa At Bahay, thus releasing the plaintiff from her obligation relative thereto;
- Ordering the defendant, to stop collecting further monthly rentals on the five-door apartment belonging to the plaintiff from the tenants of the latter; and,
- To pay moral damages in the amount of Php100,000.00, and,
- To pay the costs of suit.
Aggrieved, Luz Nicolas interposed this appeal, raising the following assignment of errors:Nicolas moved to reconsider, but in its assailed March 1, 2012 Resolution, the CA held its ground. Hence, the present Petition.The pivotal issue in this appeal is whether xxx the RTC committed reversible error in (1) declaring the Absolute Sale of Real Property invalid, (2) cancelling the Mortgage Contract and Sanglaan ng Lupa at Bahay, and (3) awarding moral damages to Leonora Mariano.I
THE TRIAL COURT ERRED IN DECLARING THE DEED OF SALE AS NULL AND VOID FOR LACK OF CONSIDERATION;II
THE TRIAL COURT ERRED IN RELEASING THE APPELLEE FROM HER OBLIGATION TO THE APPELLANT AND CANCELING THE TWO MORTGAGES; [and]III
THE TRIAL COURT ERRED IN AWARDING THE APPELLEE MORAL DAMAGES AND COST OF SUIT.
xxxx
Luz Nicolas maintains that the Absolute Sale of Real Property is valid on the grounds: (1) that the same is Leonora Mariano's free and voluntary act in settlement of her mortgage liability of P552,000.00; (2) it pertains to the subject property for the valid consideration of P600,000.00, P552,000.00 of which Leonora Mariano had already received by way of the mortgage debt; and (3) that the Pagtanggap ng Kabuuang Halaga is conclusive evidence of Leonora Mariano's fall receipt of the P600,000.00. She further avers that the RTC erred in declaring Leonora Mariano's release from liability on the basis of the purported special power of attorney, contending that the special power was never formally offered in evidence and that assuming arguendo it exists, the Absolute Sale of Real Property superseded the same, making her rental collection one in the concept of an owner. She finally theorizes that the Absolute Sale of Real Property novated the mortgage contracts because it converted Leonora Mariano's mortgage obligation of P552,000.00 into partial consideration for the subject property and that it is Leonora Mariano who is instead liable for moral damages, having maliciously filed the fraudulent complaint against her who entered into the foregoing contracts in good faith.
For her part, Leonora Mariano, reiterates the grounds raised in her Motion to Dismiss Notice to Appeal by Expunging and further avers the appeal is procedurally infirm for non-compliance with Sections 5 and 6, Rule 41 of the Rules of Court. She maintains the propriety of the RTC's Decision, stressing that being the trial court's factual conclusion, the same must be accorded great respect xxx.
The appeal is partly meritorious.
xxxx
As regards the merits of this appeal, we are one with the RTC in declaring the Absolute Sale of Real Property invalid, but we cannot uphold that the invalidity thereof due to lack of the essential requisites of consent, object, and consideration. Indeed, the Absolute Sale of Real Property contains all the foregoing requisites and nothing in the records proves, or at least suggests, that the same was executed through fraud or under duress. Hence, by no stretch of the imagination can we sustain the RTC's declaration of invalidity on said ground.
We declare the Absolute Sale of Real Property is invalid on the ground that Leonora Mariano, the supposed vendor of the subject property, is not the owner thereof. For a sale to be valid, it is imperative that the vendor is the owner of the property sold. The records show that Leonora Mariano, to debunk Luz Nicolas' claim of ownership of the subject property, openly admitted that she has not fully paid the grant thereof to the NHA. Leonora Mariano, as mere grantee of the subject property who failed to fulfil the conditions of the grant, never acquired ownership thereof, hence, was without any right to dispose or alienate the same. "Nemo dat quod non habet." One cannot give what he does not own. Hence, not being the owner of the subject property, Leonora Mariano could have not transferred the ownership thereof to Luz Nicolas.[12]
Furthermore, the Absolute Sale of Real Property is a clear violation of the express proviso, prohibiting "any transfer or encumbrance of subject property within five (5)-years from the release of the mortgage." Said violation rendered the Absolute Sale void ab initio, thus, the Republic's retention of ownership over the subject property.[13] A buyer acquires no better title to the property sold than the seller had. Necessarily, Luz Nicolas cannot invoke the Absolute Sale as basis of her right to collect rentals.
Leonora Mariano, being not the owner of the subject property, we declare that both the Mortgage Contract and the Sanglaan ng Lupa at Bahay she executed are void ab initio. For a person to validly constitute a mortgage on real estate, he must be the absolute owner of the property mortgaged as required by Article 2085 of the New Civil Code. Otherwise stated, the mortgagor must be the owner of the property subject of the mortgage; otherwise, the mortgage is void.
Thus, having declared the Absolute Sale of Real Property and the two mortgages, i.e. the Mortgage Contract and the Sanglaan ng Lupa at Bahay, void, all rights and obligations created thereunder are effectively obliterated and rendered ineffective. Luz Nicolas' supposed ownership of the subject property and her right to collect rentals on Leonora Mariano's five-unit apartment, on the one hand, and the latter's mortgage debt of P552,000.00, on the other hand, are necessarily void, hence, without force and effect. A void contract is equivalent to nothing; it produces no civil effect. It does not create, modify, or extinguish a juridical relation. Parties to a void agreement cannot expect the aid of the law. The courts leave them as they are, because they are deemed in pari delicto or in equal fault. It follows, therefore, that the award of moral damages must also be vacated. The rule is no damages may be recovered on the basis of a void contract since being inexistent, it produces no juridical tie between the parties involved.
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated August 26, 2009 of the RTC, Branch 121, Caloocan City, in Civil Case No. C-20937 is AFFIRMED with MODIFICATION, deleting the award of moral damages of P100,000.00 to Leonora Mariano.
SO ORDERED.[14]
Arguments of NicolasI.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN APPLYING THE RULINGS IN HEIRS OF SALVADOR HERMOSILLA VS. REMOQUILLO (513 SCRA 409-410) AND MAGOYAG VS. MARUHOM (626 SCRA 247, 257 [2010]) WHICH ARE INAPPLICABLE TO THE CASE AT BAR SINCE RESPONDENT LEONORA C. MARIANO ALIENATED THE SAID PROPERTY WHEN SHE WAS THE ABSOLUTE OWNER OF THE PROPERTY.
a) THE TRANSFER CERTIFICATE OF TITLE ISSUED IN FAVOR OF RESPONDENT MARIANO IS AN EVIDENCE OF HER OWNERSHIP OVER THE SUBJECT PROPERTY. b) ARTICLE 1477 OF THE NEW CIVIL CODE BOLSTERS RESPONDENT'S OWNERSHIP OVER THE SUBJECT PROPERTY WHICH NECESSARILY CAPACITATES HER TO ALIENATE THE SAID PROPERTY IN FAVOR OF PETITIONER.II.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT RESPONDENT WAS NOT THE ABSOLUTE OWNER AT THE TIME THE DEED OF ABSOLUTE SALE WAS EXECUTED.III.
THE PROVISO IN THE TRANSFER CERTIFICATE OF TITLE THAT PROHIBITS APPELLEE LEONORA C. MARIANO TO TRANSFER OR ENCUMBER THE SUBJECT PROPERTY IS A STIPULATION CONTRARY TO LAW SINCE THE SAID PROVISO YIELDS TO R.A. 6552 (AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS [MACEDA LAW]).IV.
THE DEED OF SALE OVER THE SUBJECT PROPERTY BETWEEN THE PARTIES IS VALID AND BINDING.[19]
xxx By title, the law refers to ownership which is represented by that document. Petitioner apparently confuses certificate with title. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title. The TCT is only the best proof of ownership of a piece of land. Besides, the certificate cannot always be considered as conclusive evidence of ownership. xxx[22] (Emphasissupplied)Indeed, the Torrens system of land registration "merely confirms ownership and does not create it. It cannot be used to divest lawful owners of their title for the purpose of transferring it to another one who has not acquired it by any of the modes allowed or recognized by law."[23]