Ineffective deed

Under Article 1332 of the Civil Code, there is a presumption of fraud or mistake in the execution of a document if the person who executed it is illiterate. But can such presumption be overcome? If so, how can it be overcome? This is answered and explained in this case.

This case involves two parcels of unregistered land belonging to Simon. When Simon died, he was survived by five children. About 50 years after Simon’s death, two of his children, Gina and Fred, executed a “Deed of Extrajudicial Settlement Among Heirs with Absolute Sale,” transferring said parcels of land in favor of the    grandchild Jun and his wife Lina. Consequently, tax declarations were issued in the name of Jun and Lina. When Gina signed said Deed she was already old and illiterate, so she only affixed her thumbmark on the document in lieu of her signature, as the spouses allowed her to continue residing in the parcels of land.

Three years later, however, Gina herself filed before the Regional Trial Court (RTC) a complaint to nullify said document she executed, alleging that the spouses took advantage of her old age and illiteracy and succeeded in making her affix her thumbmark on the Deed by employing deceit, false pretenses and misrepresentations.

She claimed that the spouses represented that the Deed was merely evidence of indebtedness to them, when in fact it transferred ownership of the parcels of land to them. She claimed that said Deed was null and void because: (1) it did not reflect the true agreement of the parties; (2) the parties are not the only surviving legal and compulsory heirs; (3) she was illiterate and did not understand the contents of the Deed; (4) she did not appear before the notary public who notarized the Deed, or before any notary public; (5) she has no community tax certificate contrary to what was indicated in the Deed and (6) she was in actual physical possession of the lands up to present.

In their answer, the spouses Jun and Lina contended that the Deed was valid and binding and does not appear to have been tainted with fraud and deceit, which are mere conjectures and surmises. They claimed that the Deed has complied with all the requirements of the law for the registration of the Deed of Extrajudicial Settlement of Estate and there were witnesses to the affixing of the thumbmark by Gina.

The Regional Trial Court (RTC) ruled in favor of Jun and Lina and did not grant the Petition of Gina. The RTC said that Gina failed to prove by preponderance of evidence that her thumbmark on the Deed was procured through deceit, false pretenses and fraudulent misrepresentation.

On appeal by Gina, the Court of Appeals (CA) reversed the RTC decision. It ruled that when a person is illiterate at the time of the execution of the Deed, there is a presumption of mistake or fraud (Article 1332 Civil Code). And this presumption has not been overcome since Jun and Lina did not show that the Deed and its contents were fully explained to Gina before she affixed her thumbmark. Was the CA correct?

The Supreme Court (SC) said yes. Gina was able to establish that she was illiterate or unable to read and write when she and her daughter testified in Court. Gina said none of her children was present to explain the contents of the Deed. The mere presence of Gina during the execution of the Deed does not mean that they explained to her the contents thereof when she affixed her thumbmark to the Deed. The fact that the Deed was notarized does not give rise to the presumption of regularity in its execution. This presumption is not applicable in this case precisely because the execution of the Deed was challenged. Therefore, the Deed, despite being notarized, was defective.

Since Gina was illiterate, there is a presumption of fraud or mistake, which the spouses were not able to overcome with clear and convincing evidence, so it should really be annulled (Spouses de Vera and Padilla, vs Fausta Catungal, etc., G.R 211687, Feb. 10, 2021).