@ Republic of the Philippines Supreme Court Manila SECOND DIVISION PASTORA GANANCIAL, G.R. No. 203348 Petitioner, Present PERLAS-BERNABE, J, Chalrpevon, HERNANDO, vers INIING, DELOS SANTOS, and GAERLAN J. BETTY CABUGAO, 06 JUL el Respondent = DECISION HERNANDO, J. ‘This Petition for Review on Certiorar! under Rule 45 of the Rules of ‘Court assails the November 29, 2011 Decision? and the September 4, 2012 Resolution” of the Court of Appeals (CA) in CA-GR, CV No. 88212, 1 ecm oe esnnd Anglia cit — “ee‘The Antecedents Pastora Ganancial (Ganancial) owed Betty Cebugao (Cabugao) the amount of P130,000.00, agreed to be payable within three years, To guarantee her indebtedness, Ganancial entrusted to Cabugao the Transfer Certificate of Title (TCT) No. 168803 and Tax Declaration No, 641, both covering a 397- ssquare-meter parcel of land located in Balangobong, Binalonan, Pangasinan, which Ganancial owns in her name, The transaction later tamed sour and ended in the parties’ respective lawsuits against each other before the Regional Trial Court (RTC), Branches 45 and 48 of Urdaneta City, Pangasinan, On October 2, 2001, Cabugao filed ‘case for foreclosure of real estate mortgage against Ganancial, docketed as Civil Case No. U-7397 with Branch 45. On October 8, 2001, the ater, in tan, filed against the former a complaint for declaration ofthe deed of mortgage as null and void, with damages docketed as Civil Case No. U-7406 with Branch 48, These cases were eventually ordered consolidated before Branch 45. Cabugao alleged that on March 4, 1998, Ganancial executed a Deed of | Mortgage over the subject property a% collateral for her loan, Despite the lapse of three years fiom the date of the mortzage and repeated demande, Ganancial fled and refused to pay the amount she owed Cabugao. A final ‘demand having proved futile, Cabugao sought the judicial foreclosure of the teal estate mortgage, plus interest, and the award of attomey"s fees and litigation expenses, For her part, Gananeial assailed the authenticity of the Deed of Mortgage. While she entrusted TCT No. 168803 with Cabugso, Ganancial averted that she never executed the supposed Deed of Mortgage nor appeared for its notarization. Cabugao allegedly required Ganancial and her children to affix ther signatures on a blank bond paper, which Cabugao filled out only later, Ganancial learned ofthe existence ofthe Deed of Mortgage for the first time duting her confrontation with Cabugao before the barangay captain regarding her unpaid debt and where Cabugao threatened to foreclose the subject property. Ganancial thus prayed for the declaration of the Deed of Mortgage as null and void and claimed moral damages, exemplary damages, litigation expenses, and costs of suit, Ruling ofthe Regional Trial Court ‘The RTC ruled in favor of Cabugao. It declared that Ganancial’s contentions against the authenticity ofthe notarized Deed of Mortgage were “Recor (il Cae Na UVF 8Decision a GR. No. 203348 not proven by clear and convincing evidence. It also noted that the names of Ganancial and her children were so well-placed on the Deed of Mortgage for ‘the court to believe that they merely signed a blank bond paper. There being a finding of bad faith, the RTC also held Ganancial liable for moral damages, exemplary damages, attomey's fees, and litigation costs. The May 17, 2006 RIC Joint Decision? disposed ofthe consolidated cases inthe following tenor: WHEREFORE, PREMISES CONSIDERED, the Court readers Simmental INCIVILCASE NO.U-7397, 1). “The Cour onders the sale ofthe property in the name ofthe defendant, Pastra Ganancal, covered by Transfer Cetfeat of Title No, 468803 and Tax Declaration No. 41 and to pay to the plsintil BETTY [CIABUGAO ‘the monzage debt plus legal interest ‘tomy fees gation expenses, damages another enpentes; and 2). The Cour orders the defendant PASTORAGANANCIAL 9 ry the pin Bey Caboga the sum of P130,000 00 incling egal Interest fom the ime the money was taken by the former from the late, ‘th amount of 750,00.00 as moral damages and P20,00.00 ae atorney's fees CIVIL CASENO_ u-1496: 1D, The Cour onlor the DIEMIBSAL of thi case, for ack of sett; and 2). Fuhr, deste pai, Pastora Gana to pay the defendant Bony Cabygno the amount of P50,000,00 36 moral damages, 20,000 00 as exemplary damages al P10,00.00 a gation expenses SO ORDERED! Ganancial appealed” to the CA, stating that the RTC gravely ered in ruling in favor of Cabugao despite the glaring irregularities of the Deed of ‘Mortgage, The dates of the Deed of Mortgage and its notarization were dlissimilar, the former having been executed on March 4, 1998 and the latter ‘on January 15, 2001. Ganancial pointed out thatthe Office of the Clerk of ‘Court of the RTC of Undaneta City certified that the notarial entry under Doe. ‘No. 430, Page No. 87, Book No. LXXXIII, Series of2001 pertained oa deed ‘of sale of a motor vehicle and not tothe Deed of Mortgage. Ganancial also noted that different typewriters were used in the preparation ofthe Deed of Mortgage. 5 Arata 81-5 pmedby Prin age oven Cosas senseDecision 4 GR No 203348 Ruling ofthe Court of Appeals ‘The CA denied Ganancial’s appeal. t concurred withthe disposition of the RTC that forgery or falsification cannot be presumed and must be proved with clear, postive, and convincing evidence by the party who alleges the same, The CA found that Ganancial failed in discharging such burden of Proof, especially that the deed in issue was a notarized document. The CA also ruled that mere irregularities inthe notarization do not affect the genuineness fand due execution of the document. Affirming the RTC in its assailed November 29, 2011 Decision, the CA thus hel WHEREFORE, premises considered, the instant Appeal is DENIED. Accordingly, dhe smiled Decision dated 17 May 2000 of the ‘court quo is hereby AFFIRMED in toto. so oRDERE ‘After the CA found no compelling reason to reverse itself and denied hher Motion for Reconsideration" in its September 4, 2012 Resolution," Ganancial proceeds to this Cour. Enrors Assigned Ganancial ies the following errors for this Court’s review: WHETHER THE [CA] ERRED IN AFFIRMING THE DECISION OF THE [RTC] FAVORING BETTY CABUGAO DESPITE THE GLARING. TRREGULARITY OF THE QUESTIONED DEED OF MORTGAGE. WHETHER THE [CA] ERRED IN AFFIRMING THE DECISION OF THE. (RICY'S AWARDING OF MORAL AND EXEMPLARY DAMAGES, LITIGATION EXPENSES AND ATTORNEY'S FEES IN FAVOR OF BETTY CABUGAO WITHOUT CITING THE BASIS THEREOE* ‘The Court's Ruling ‘The appeal is meritorious in part.Mere format infir the notarization of the instrument will not invalidate the mortgage Ganancial reiterates that she and her two sons were made to signa blank piece of paper as acknowledament of her indebtedness to Cabugao, and that thereafer, the latter supplied the particulars ofthe mortgage onthe same pisee ‘of paper. The following circumstances allegedly attest to the spuriousness of the Deed of Morigage: the document was supposedly executed rnd notarized ‘on March 4, 1998, but was entered in 2 2001 notarial book by a notary public ‘whose notarial commission ended in 2001; that the entry indicated in the notarial register actually pertained to a deed of sale of a motor vehicle; that ‘lfferent typewriters were used in typing the contents of the Deed of Mortgage and its notarization; and thatthe acknowledgment was writen on the back of the document, despite the considerable space allotted and remaining below the Deed of Mortgage. In fine, Ganancialasails the validity ofthe mortgage and not merely its notarial irregularities, We do not fi {or Ganancial, The CA was already on-point inciting Cameam ». Court of Appeals” 4s regards the issue on the notarization of the Deed of Mortgage, which We echo: [ln icgular notarizaton merly reduces the evdentny value of « Ahocument to that of a private document, which rues prot of is due fxsetion and autbenicity to be admissible as evidence. The eps otarization — or, for tat mater, the ack of notatization — doesnot thas necessarily affect he validity of the contact reflected inthe document. (Citaon omit) Errors in, or even absence of, notarization on a deed of mortgage will ‘not invalidate an already perfected mortgage agreement. If anything, these ‘would only depreciate the evidentiary valve ofthe said writen deed, 2s the same would be demoted from a public dacument toa private one 1 bears noting that Ganancial had alleged that fraud invalidated her ‘consent to the mortgage. While she had worded her arguments as an attack on the existence of the mortgage, vitition of consent by means of fraud is a ‘round for the annulment ofa voidable contract, and net for the nullification ‘of «void contract. Having raised lack of consent on the ground of fraud in her © seer 42 2008),complaint for “declaration of document as null and void plus damages,” her case is practically devoid of any factual basis. Even if the present ease is one for annulment of contract, the fraud alleged to have vitisted Ganancial's consent to the morigage must ll be proven by clear and convincing evidence. Clear and convincing evidence is less than proof beyond reasonable doubt but greater than preponderance of. evidence, The degree of believabilty upon an imputation of fiaud in a civil case is higher than that of an ordinary civil ease, the latter generally requiring only a preponderance of evidence to meet the required burden of proof. The ‘burden of proof rests on the party alleging fraud." Gananeial failed inthis regard. Again, the CA suceinetly declared s0 a5 follows: 'n he instemcas, the appellant miserably failed o discharge his thule. careful and judicious examination of th cords on hand revels ‘hat he evidenes presented bythe apelin soo weak to convince Ur tat ‘he subject document was fice asi Apt fom the testimonies of the appt ahr children, which ‘We fou tobe self-serving, thee ls nothing on teord which bases het sane, Kmust be siresed thi the deod in gestion ottized document Jarispradeniial rule dlcates tht to sucessfully inpign a toured ‘ocument, the party concemed must presnt a stones complete and ‘oncusive proof of ts fy et the validity thereof mus be sino! in Sl fee and effect. Sal in this ca, he appellant ale o support het lam (Citas omited Even assuming that Ganancial’s complaint forthe declaration of lity of the Deed of Mortgage sas truly grounded on its nonexistence or absolute simulation, it would stil have no basis in fact and in lav. Under Article 1409 of the Civil Code, absolute simulation voids a contract." In absolute simulation, there appears a colorable contract but there Ree (Ci Case No. 740). ot Rewer: Man, 11 PL S349 G07 ang Tech v Deep Banh Php, 720 it Ni) Mat. "Cv Cae tee te ies ‘ti 108 The hing cnc arenes an vod fom be being {0g eee a at lo ms ond ca, ir {G) Those hich arabes or tin (Gy Tae wns coer be eb beth wasn: {ithe eet eo fae (6) Ths wre enon ops ete toh iil obj th cna {yew eps poised or tna wid by ‘The connate cc eae: Nee cet pte dete fiat be ve tmp gpdactually is none, as the partes thereto have never intended to be bound by it In determining the true nature of a contrat, the primary test i te intention of the partes. Such intention is determinable not only from the expres terns of their agreement, but also from the contemporaneois and subsequent acts of the parties. ‘The totality of the circumstances negates the contention thatthe Deed ‘of Mortgage was absolutely simulated. Ganancial, having absolute ownership and fall disposal of the property in istue, admittedly conveyed TCT No, 168803 to secure her indebtedness to Cabugao in the amount of P130,000.00, ‘Their agreement was reduced into writing a3 a Deed of Mortgage, and Gananecial's stand that the signatures thereon were manipulated does not convince. As aptly noted by the RTC, the signatures of Gananeial and her children appear exactly above their typewritten names, lending weak support to the claim that they had been made to sign a blank picce of paper that Cabugao later completed as a Deed of Mortgage.” There is also the undisputed presumption of regularity enjoyed by notarized contracts, and the ‘mere fact that two public documents are covered by the same notarial entry neither identifies with sufficient definiteness which one of them was fake, not does it determine if any of them was spurious in the first place. It is also a setled fact that the mortgage in issue was properly registered and annotated ‘on TCT No, 168803. Moreover, contracts, in general, require no form to exist. Article 2085 ‘of the Civil Code specifies the elements of valid contracts of mortesge: (1) That they be consinted to secure the illness of a incpal obligation; 2) _Thathe xxx morgage be the ssl oer ofthe thing xxx montage (G)___Thatthe persons constnsing the x xxmorgage have the fee Aisposa of thee prope: and in the sbsence thereof, that they be lealy sutorize for the purpose Article 2125 ofthe same law adds a fourth requirement, the absence of which, however, shall not affect the validity of the agreement between the mortgagor and the mortgagee: ‘Aut, 2125. In udtion wo the equses tated in (Ah 2085, tis indispensable, in order that a mortgage maybe validly contd, that he o> 0 [Wee] dee any ees involved when you engage the services of layer? 1 id P30,00.00 fr his atorneys es pis P1,00.00 appearance fx for chery hsring sit ow about damages sufre hy you, Madam Witness? ‘Yes sir suffered ansety and tsp nigh, Q _tfyou wit quan hat wo an amount of mosey hoo much wil hat be? A 100.0000, sn ‘These statements were the only tangible proof in the records in support ‘of Cabugao’s claim for damages. The RTC readily acceded to her monetary pleas and granted her a total of P100,000,00 as moral damages, P20,000.00 as exemplary damages, and a full P30,000.00 as attomey’s fees and litigation expenses, all atibuted to and payable by Ganancial. We, however find these Judicial awards legally unsound, A robotic allegation that one “suffered anxiety and sleepless nights,” oF 8 seemingly haphazard conversion of these disturbed feelings into some Pecuniary equivalent, without more, will not automatically entitle a party 10 ‘moral damages. On the other hand, Gananeial’s refusal to pay het indebtedness was grounded on her firm belief that the subject Deed of Mortgage was fake. She was unwavering in her claim that she had a sound ‘cause against Cabugao, and the honesty in her legal pursuit is reflected in the consistency of her allegations throughout the proceedings. To the Court, Gananeial's actuations as testified to by Cabugao eannot be seen as being ‘motivated by a corrupt purpose, some moral abliquity and conscious doing of ‘wrong, or breach of known duty through some other motive or interest or ill will that parakes of the nature of fraud?” to merit an award of moral damages. As the evidence on record militates against Cabugao’s claim for moral damages, 2 grant of exemplary damages is necessarily uncalled for. Article 2234 of the Civil Code is already clear in requiring a prior determination of entitlement to moral, temperate, or compensatory damages before the Court ‘may consider the question of whether or not exemplary damages should be awarded, See ddian toa 19 Pas 818420 2013).Desison 1s GR No. 203048 With respect to the RTC's initial award of attorney's fees and reimbursement of litigation costs, an adverse decision does not ipso facto justify the award thereof to the winning party. "J" Marketing Corporation ¥ Sia, Jr has ruled that “no attorney's fees and litigation expenses can automatically be recovered even [if a party wins), as itis not the fact of ‘inning alone that entitles recovery of suc items, but rather the attendance of special circumstances — the enumerated exceptions in Article 2208 of the New Civil Code. Needless to state, Cabugao failed to demonstie that her ‘egal victory against Ganancial qualified under any of the instances under Atiele 2208 of the Civil Cade. Substantial justice trumps over procedural rigidities. If @ stict pplication of the rule of procedure wil frustrate rather than serve the broader imerests of justice under the prevailing circumstances of the case, such as here strong considerations of substantive justice are manifest inte petition, the Court may relax the strict application of the rules of procedure in the exercise of its equity jurisiction.*' As declared in. Alonso». Villamor,® technicality, when it desert its proper office as an aid to justice and ‘becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested rights in technicalities ™ Litgants ‘cannot relish in their legal winnings which they are clearly undeserving of under the law by scoring undue advantage over the procedural mistakes ofthe ‘opponent, WHEREFORE, the appeal is GRANTED in PART. The assed November 29, 2011 Decision and the September 4, 2012 Resolution of the Court of Appeals in CA-G.R. CV No, 88212 ‘are AFFIRMED with MODIFICATION, in thatthe award of moral damages, exemplary damages, attomey’s fees, and reimbursement of litigation expenses as originally granted by the Regional Trial Court, Branch 45 of Urdaneta City, Pengasinan in favor of respondent Betty Cabugto is DELETED. Cones» Pea, 79 Mil 575,51 216, cing CHIT buemanl ars Coerin ‘Bhagat! ing Cmprtan 00TH SP Siem sts,Decision 16 GR No. 203548 SO ORDERED. WE CONCUR: esreca HES orpvane Shor Assets aipeon HENRIGEAN PAUCT. INTING —_ EDGARDO L. DELOS SANTOS Associate Justice ‘Associate Justice Ssrunr eecan ‘Associate lusticeDecision ” GR No. 203048 ATTESTATION | attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer ofthe opinion af the Court's Division as esrevaltl Hkcas-nenNane cathe eae come CERTIFICATION Pursuant to Section 13, Article VII of the Constitution and the Division (Chaiperson’s Attestation, I certify that the conclusions inthe above Decision ‘were reached in consultation befote the case was assigned tothe writer ofthe ‘opinion ofthe Court's Division \ DIOSDADOM. PERALTA Chief lustice