G.R. No. 148280 . July 10, 2007.
LORETA AGUSTIN CHONG, also known as LORETA GARCIA AGUSTIN, Petitioner, vs. THE HONORABLE COURT OF APPEALS, SPOUSES PEDRO and ROSITA DE GUZMAN and FORTUNE DEVELOPMENT CORPORATION, Respondents.

FACTS

Petitioner Loreta Agustin Chong filed a complaint for annulment of contracts and recovery of possession. She alleged she purchased a parcel of land from respondent Fortune Development Corporation. By virtue of a special power of attorney she executed in favor of her common-law husband, Augusto Chong, the lot was sold to respondent-spouses De Guzman via a Transfer of Rights and Assumption of Obligation. Petitioner claimed this sale was void for lack of consideration, as she never received the purported payment. She also sought to annul a separate Deed of Sale covering a house on the lot, alleging it was a forgery as she was abroad when it was notarized. Furthermore, she claimed ownership of a house in Singalong, Manila, which the respondents allegedly rented out without her consent.
Respondent-spouses countered that both contracts were valid and supported by consideration. They asserted they paid ₱125,000.00 for the house and had satisfied various obligations for the lot, totaling significant sums. They claimed the Deed of Sale for the house was signed by petitioner before she departed, though notarized later. They also denied petitioner’s ownership of the Singalong property. The trial court dismissed petitioner’s complaint, finding her evidence insufficient and her testimonies inconsistent, while crediting the respondents’ evidence. The Court of Appeals affirmed this decision.

ISSUE

The core issue is whether the petitioner successfully proved by preponderance of evidence that the subject contracts were void for lack of consideration or due to forgery, warranting their annulment and the recovery of possession.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic rests on the burden of proof in civil cases and the substantive requirements for contract validity. In civil cases, the party making an affirmative allegation, such as the invalidity of a contract, must establish her case by a preponderance of evidence. The Court found that petitioner failed to discharge this burden. The trial court’s factual findings, affirmed by the Court of Appeals, concluded that the Transfer of Rights was supported by valuable consideration, as respondents proved payments exceeding the original obligations. Regarding the Deed of Sale for the house, the Court upheld the finding that petitioner signed it before leaving the country; the subsequent notarization did not invalidate the contract between the parties, as notarization merely confers public document status and is not a requirement for validity. The inconsistencies between petitioner’s testimony and that of her witness, Augusto Chong, further undermined her credibility. Consequently, without clear and convincing evidence to nullify the contracts, petitioner’s claims for annulment and recovery of possession must fail. The awards of moral damages and attorney’s fees to respondents were sustained due to the baseless nature of the suit.