EVIDENCE

Evidence, when waived.

21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

FIRST DIVISION
January 30, 2017, G.R. No. 207786
SPOUSES MARCELIAN TAPAYAN and ALICE TAPAYAN, Petitioners,
vs. PONCEDA M. MARTINEZ, Respondent.

REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; PETITION FOR REVIEW ON

CERTIORARI; As a rule, only questions of law may be raised in petitions filed under
Rule 45, subject only to recognized exceptions.—As a rule, only questions of law may
be raised in petitions filed under Rule 45, subject only to recognized exceptions,
namely: (1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible;
(3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the
Court of Appeals manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.

SAME; EVIDENCE; DOCUMENTARY EVIDENCE; BEST EVIDENCE RULE; The best

evidence rule requires that the original document be produced whenever its contents
are the subject of inquiry, except in certain limited cases laid down in Section 3 of Rule
130.—The best evidence rule requires that the original document be produced
whenever its contents are the subject of inquiry, except in certain limited cases laid
down in Section 3 of Rule 130. However, to set this rule in motion, a proper and timely
objection is necessary. The Court’s ruling in Lorenzana v. Lelina, 800 SCRA 570 (2016),
is instructive: The best evidence rule requires that when the subject of inquiry is (sic)
the contents of a document, no evidence is admissible other than the original document
itself except in the instances mentioned in Section 3, Ru1e 130 of the Revised Rules of
Court. As such, mere photocopies of documents are inadmissible pursuant to the best
evidence rule. Nevertheless, evidence not objected to is deemed admitted and may be
validly considered by the court in arriving at its judgment. Courts are not precluded to
accept in evidence a mere photocopy of a document when no objection was raised
when it was formally offered. In order to exclude evidence, the objection to
admissibility of evidence must be made at the proper time, and the grounds specified.
Objection to evidence must be made at the time it is formally offered. In case of
documentary evidence, offer is made after all the witnesses of the party making the
offer have testified, specifying the purpose for which the evidence is being offered. It is
only at this time, and not at any other, that objection to the documentary evidence may
be made. And when a party failed to interpose a timely objection to evidence at the
time they were offered in evidence, such objection shall be considered as waived. This
is true even if by its nature the evidence is inadmissible and would have surely been
rejected if it had been challenged at the proper time. Moreover, grounds for objection
must be specified in any case. Grounds for objections not raised at the proper time
shall be considered waived, even if the evidence was objected to on some other
ground. Thus, even on appeal, the appellate court may not consider any other ground
of objection, except those that were raised at the proper time.

SAME; SAME; NOTARIZED DOCUMENTS; The Deed of Undertaking became a public

document by virtue of its acknowledgment before a notary public. Hence, it enjoys the
presumption of regularity, which can only be overcome by clear and convincing
evidence.—As correctly held by the RTC and CA, the Deed of Undertaking became a
public document by virtue of its acknowledgment before a notary public. Hence, it
enjoys the presumption of regularity, which can only be overcome by clear and
convincing evidence. Thus, in Spouses Santos v. Spouses Lumbao, 519 SCRA 408
(2007), this Court upheld the presumption of regularity, finding the bare denial of
petitioners therein insufficient to overcome the same: Furthermore, both “Bilihan ng
Lupa” documents dated 17 August 1979 and 9 January 1981 were duly notarized before
a notary public. It is well-settled that a document acknowledged before a notary public
is a public document that enjoys the presumption of regularity. It is a prima facie
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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

evidence of the truth of the facts stated therein and a conclusive presumption of its
existence and due execution. To overcome this presumption, there must be presented
evidence that is clear and convincing. Absent such evidence, the presumption must be
upheld. In addition, one who denies the due execution of a deed where one’s signature
appears has the burden of proving that contrary to the recital in the jurat, one never
appeared before the notary public and acknowledged the deed to be a voluntary act.
Nonetheless, in the present case petitioners’ denials without clear and convincing
evidence to support their claim of fraud and falsity were not sufficient to overthrow the
above mentioned presumption; hence, the authenticity, due execution and the truth of
the facts stated in the aforesaid “Bilihan ng Lupa” are upheld.

CIVIL LAW; OBLIGATIONS; Since the proceeds of the Development Bank of the
Philippines (DBP) Loan redounded to Petitioners’ benefit, they must bear the liability
arising from its nonpayment, and comply with the obligations imposed by the Deed of
Undertaking executed in connection therewith.—Petitioners’ payment of the interest on
the DBP Loan, the insurance premiums corresponding to the Pingol Property, and other
incidental fees solely on their account, without seeking reimbursement from the alleged
Joint Venturers, establishes Petitioners’ direct interest in the DBP Loan, and negates the
claim that they are mere accommodation borrowers. Since the proceeds of the DBP
Loan redounded to Petitioners’ benefit, they must bear the liability arising from its
nonpayment, and comply with the obligations imposed by the Deed of Undertaking
executed in connection therewith. Tapayan vs. Martinez, 816 SCRA 178, G.R. No.
207786 January 30, 2017

DECISION

CAGUIOA, J.:

This is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court (Petition),
seeking the reversal of the Decision dated May 30, 2013 2 (assailed Decision) rendered
by the Court of Appeals, Cagayan de Oro City - Twenty-First Division (CA). The assailed
Decision stems from a complaint filed before the Regional Trial Court of Ozamiz City
(RTC), by respondent Ponceda Martinez (Respondent) against petitioners, spouses
Marcelian and Alice Tapayan (Petitioners), for Specific Performance with Damages. 3

THE FACTS

The parties herein are relatives by affinity. Petitioner Alice Tapayan is the sister of Clark
Martinez's (Clark) wife. Clark is Respondent's son.

Respondent is the registered owner of a parcel of land situated along Pingol Street,
Ozamiz City, covered by Original Certificate of Title (OCT) No. P-1223 (Pingol
Property).4 Based on the records, it appears that two (2) mortgages were constituted
over this property - the first in favor of Philippine National Bank (PNB Mortgage ), and
the second in favor of Development Bank of the Philippines (DBP Mortgage). The
particulars of these mortgages are summarized as follows:

Mortgage Parties Purpose

PNB Mortgage Respondent as mortgagor To secure a One Hundred
and Philippine National Thousand Peso
Bank, Ozamiz Branch (₱100,000.00) loan in the
(PNB) as mortgagee name of Respondent5
DBP Mortgage Respondent as mortgagor To secure a One Million
and Development Bank of Peso (₱1,000,000.00)
the Philippines, Ozamiz renewable credit line in
Branch (DBP) as the name of Petitioners
mortgagee (DBP Loan)6

The records further show that Respondent agreed to constitute the DBP Mortgage upon
Clark's request,7 and that, in order to release the Pingol Property from the PNB
Mortgage, the Petitioners and Respondent agreed to utilize a portion of the proceeds of
the DBP Loan to settle the remaining balance of Respondent's PNB Loan, then
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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

amounting to Sixty-Five Thousand Three Hundred Twenty Pesos and 55/100

(₱65,320.55).8

Subsequently, the parties herein executed a Deed of Undertaking dated August 29,
1998 (Deed of Undertaking) in reference to the DBP Mortgage. The Deed of
Undertaking bears the following stipulations, to wit:

1. that the "Second Party [Respondent] has no liability whatsoever insofar as the
aforesaid loan contracted by the First Party [Petitioners] concerned;"

2. that "to secure the aforesaid amount, the First Party [Petitioners] shall execute a
second mortgage in favor of the Second Party [Respondent] over his House and Lot
covered by TCT No. T-10143, situated at Carangan, Ozami[z] City x x x" 9

3. x x x

4. [t]hat in the event the First Party [Petitioners] could not pay the loan and
consequently, the property of the Second Party [Respondent] is foreclosed and is not
redeemed by the First Party [Petitioners] with[in] the one (1) year redemption period;
or in case the loan shall be paid by the Second Party [Respondent] just to save the
property from being foreclosed, the First Party [Petitioners] shall acknowledge as his
indebtedness the amount due to the Development Bank of the Philippines upon
foreclosure or the amount paid by the Second Party [Respondent] in paying the loan,
but in either case shall be deducted therefrom the amount of P65,320.55 plus interests
and fees paid by the First [P]arty [Petitioners] to PNB, Ozamiz City[.] 10 (Emphasis and
underscoring omitted)

The DBP Loan was not paid when it fell due.

Proceedings before the RTC

On September 14, 1999, Respondent filed a complaint for Specific Performance with
Damages (Complaint) against Petitioners before the RTC. 11 The Complaint sought to
compel Petitioners to constitute a mortgage over their house and lot situated in
Carangan, Ozamiz City covered by Transfer Certificate of Title (TCT) No. T-10143
(Carangan Property), in accordance with the provisions of the Deed of Undertaking. 12

Respondent averred that Petitioners used the proceeds of the DBP Loan exclusively for
their own purposes, 13 and that since Petitioners failed to pay the DBP Loan, she and
her children were constrained to pay DBP the sum of One Million One Hundred Eighty
Thousand Two Hundred Pesos and 10/100 (₱1,180,200.10) to save the Pingol Property
from foreclosure. 14 Notwithstanding this, Petitioners have neither paid their
indebtedness nor executed a mortgage over the Carangan Property to secure the
same. 15

The Petitioners denied Respondent's allegations and claimed that the Deed of
Undertaking "is a falsity." 16

Petitioners argued that the proceeds of the DBP Loan were primarily used as capital for
the construction business that petitioner Marcelian put up with Clark, Mario Delos
Reyes, and Richard Sevilla (collectively, Joint Venturers). 17 Petitioners supposedly
applied for the DBP Loan in furtherance of the verbal agreement among the Joint
Venturers, while Respondent freely agreed to constitute the DBP Mortgage to secure
said loan upon Clark's request. 18 Petitioners further emphasized that a portion of the
proceeds of the DBP Loan was used to pay off the balance of Respondent's PNB
Loan. 19 Moreover, while the DBP Loan was in the nature of a renewable credit line, it
was not renewed since Respondent refused to give her written consent for this
purpose. 20

On the procedural aspect, Petitioners argued that Respondent's Complaint was

premature and should have been be dismissed outright, since she failed to resort to
barangay conciliation proceedings before filing her Complaint with the RTC. 21

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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

To support their allegations, Petitioners presented a Joint Affidavit executed by Mario

Delos Reyes and Richard Sevilla, attesting to the formation of the joint venture and the
conclusion of the verbal agreement to apply for the DBP Loan in the interest of the Joint
Venturers.22

After trial, the RTC rendered a decision dated September 28, 2009 in favor of
Respondent (RTC Decision), the dispositive portion of which reads:

WHEREFORE premises considered, judgment is hereby rendered ordering defendant

spouses Atty. Marcelian and Alice Tapayan to execute the second mortgage of (sic)
their lot and house covered by Transfer Certificate of Title No. T-10143 located at
Carangan, Ozamiz City in favor of plaintiff Mrs. Ponceda Martinez, unless they
reimburse the latter of the total amount of P 1, 180,200.10 paid by her to the
Development Bank of the Philippines, Ozamiz Branch for the redemption of the
mortgage, and requiring defendants to pay to plaintiff the amount of P20,000.00 for
attorney's fees. SO ORDERED.23

In so ruling, the RTC noted that the Deed of Undertaking was acknowledged before
Atty. Emmanuel V. Chiong, a notary public, and reasoned that since the latter enjoys
the presumption of having performed his duties regularly, Petitioners' claim that the
Deed of Undertaking was a falsity must be rejected. 24 On such basis, the RTC held that
the Deed of Undertaking constitutes a valid and binding contract, which Petitioners are
bound to respect. 25

Proceedings before the CA

Aggrieved, Petitioners elevated the case to the CA. In their appeal, Petitioners prayed
that the CA determine (i) whether the RTC validly acquired jurisdiction over the
Complaint notwithstanding Respondent's failure to comply with the
Revised Katarungang Pambarangay Law, (ii) whether Respondent is an accommodation
mortgagor, and (iii) whether the Petitioners may be compelled to constitute a mortgage
over the Carangan Property in Respondent's favor. 26

On May 30, 2013, the CA rendered the assailed Decision denying the Petitioners'
appeal. The dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered, the instant appeal is hereby DENIED. The

Decision of the RTC dated 28 September 2009 is hereby AFFIRMED. Defendants-
appellants are ordered to execute the Second Mortgage on their house and lot covered
by Transfer Certificate of Title (TCT) No. T-10143 in favor [of] plaintiff-appellee. Costs
against appellants. SO ORDERED.27

Contrary to the Petitioners' claim, the CA found that the requirements of

the Katarungang Pambarangay Law were complied with, as evidenced by the Certificate
to File Action filed by the Lupon Tagapamayapa before the RTC on August 16, 2000.28

Moreover, the CA held that the Deed of Undertaking merits consideration, since
Petitioners failed to overcome the presumption of regularity ascribed to it as a public
document.29 Thus, on the basis of the stipulations in the Deed of Undertaking, the CA
concluded that Respondent indeed stood as Petitioners' accommodation mortgagor.
Hence, Respondent possesses the right to enforce the Deed of Undertaking and compel
Petitioners to comply with its stipulations. 30

Petitioners received a copy of the assailed Decision on June 13, 2013. 31

On June 27, 2013, Petitioners filed a motion praying for an additional period of thirty
(30) days within which to file a petition for review on certiorari before this
Court.32 Thereafter, on July 26, 2013, Petitioners filed this Petition, ascribing multiple
errors to the CA.

Respondent filed her Comment to the Petition on May 30, 2014. 33 Petitioners filed their
Reply on October 17, 2014.34

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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

On February 26, 2015, the Court received a notice from Respondent's counsel of
record, informing the Court of Respondent's death. The notice identified the
Respondent's eight (8) children as her legal representatives, namely: Clark, Jeff
Martinez, Rock Martinez, Gary Martinez, Patricia Martinez Olson, Eleanor Martinez
Fassnacht, Treccie Martinez Kappes, and Sheila Martinez Sachs. 35

ISSUE

The sole issue for this Court's resolution is whether the CA erred in affirming the R TC
Decision directing Petitioners to execute a mortgage over the Carangan Property in
favor of Respondent.

THE COURT'S RULING

As a rule, only questions of law may be raised in petitions filed under Rule 45, 36 subject
only to recognized exceptions, namely:

(1) when the findings are grounded entirely on speculation, surmises or conjectures;
(2) when the inference made is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner's main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the
Court of Appeals manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion. x x
x37 (Emphasis supplied; citations omitted)

The Petition invokes the fourth exception above, and calls on this Court to review the
factual findings of the RTC, which were later affirmed by the CA.

In sum, Petitioners pose that the CA erred when it affirmed the following factual
findings of the RTC:

1. The Deed of Undertaking presented by Respondent is genuine, and constitutes

a valid and binding contract enforceable against Petitioners;

2. Petitioners applied for the DBP Loan for their own interest and sole account;

3. Petitioners are bound to reimburse Respondent One Million One Hundred

Eighty Thousand Two Hundred Pesos and 10/100 (₱l,180,200.10) representing
the amount she and her daughters paid to avert the foreclosure of the DBP
Mortgage; and

4. To secure the full amount due Respondent, Petitioners are bound to constitute
a mortgage over the Carangan Property, pursuant to the provisions of the Deed
of Undertaking.

The Court holds that no misapprehension of facts was committed by both the RTC and
the CA so as to justify deviation from their findings, except only as to the RTC's finding
regarding the amount that Petitioners are bound to reimburse to Respondent.

Petitioners waived their right to object

to the admission of the Deed of
Undertaking on the basis of the best
evidence rule.

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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

In this Petition, Petitioners assert that the R TC and CA erred in ruling that the plain
copy of the Deed of Undertaking was admissible as proof of its contents, in violation of
the best evidence rule under Rule 130 of the Rules of Court.

Petitioners' assertion is erroneous.

The best evidence rule requires that the original document be produced whenever its
contents are the subject of inquiry, 38 except in certain limited cases laid down in Section
3 of Rule 130. However, to set this rule in motion, a proper and timely objection is
necessary. The Court's ruling in Lorenzana v. Lelina39is instructive:

The best evidence rule requires that when the subject of inquiry is (sic) the contents of
a document, no evidence is admissible other than the original document itself except in
the instances mentioned in Section 3, Rule 130 of the Revised Rules of Court. As such,
mere photocopies of documents are inadmissible pursuant to the best evidence
rule. Nevertheless, evidence not objected to is deemed admitted and may be
validly considered by the court in arriving at its judgment. Courts are not
precluded to accept in evidence a mere photocopy of a document when no
objection was raised when it was formally offered.

In order to exclude evidence, the objection to admissibility of evidence must be made

at the proper time, and the grounds specified. Objection to evidence must be made at
the time it is formally offered. In case of documentary evidence, offer is made
after all the witnesses of the party making the offer have testified, specifying
the purpose for which the evidence is being offered. It is only at this time, and
not at any other, that objection to the documentary evidence may be
made. And when a party failed to interpose a timely objection to evidence at
the time they were offered in evidence, such objection shall be considered as
waived. This is true even if by its nature the evidence is inadmissible and would have
surely been rejected if it had been challenged at the proper time. Moreover, grounds for
objection must be specified in any case. Grounds for objections not raised at the
proper time shall be considered waived, even if the evidence was objected to
on some other ground. Thus, even on appeal, the appellate court may not
consider any other ground of objection, except those that were raised at the
proper time.40 (Emphasis and underscoring supplied; citations omitted)

The Court notes that Petitioners failed to object to the admission of the plain copy of
the Deed of Undertaking at the time it was formally offered in evidence before the RTC.
In fact, in their Reply, Petitioners admit that they only raised this objection for the  first
time  before the CA. The relevant portions of said Reply state:

Instead of arguing against the truth of this established fact, the respondent made an
implied admission of the truth thereof when she shifted instead to raise the argument
that petitioner cannot raise this issue for the first time in this petition. Respondent said:

"I That petitioners have raised issues of facts before this Honorable Court not otherwise
raised in the court a quo."

xxxx

NOTHING CAN BE MORE WRONG!

Petitioner certainly raised the issue covered by Ground I of this Petition in the lower
[c]ourt. Unfortunately, with utmost due respect, it inadvertently escaped the attention
of the Honorable Court of Appeals. It was only very unfortunate that petitioner failed to
give it a superlative emphasis adequate enough so as not to be ignored by the lower
court. It can also be reasonably surmised that the new counsel of
respondent may not have perused in detail the appellant's brief in the Court of
Appeals, of which brief brought this issue under the Issue No

"E.1 THERE WERE CIRCUMSTANTIAL EVIDENCE THAT THE DEED OF UNDERTAKING

WAS FALSIFIED."

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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

For easy reference, the averments on pages 31 to 33 of the Appellant's Brief in

the Court of Appeals are hereby repleaded and reiterated as follows:

xxxx

"Aside from the obtaining circumstances earlier discussed herein that the Deed of
Undertaking (Exh. "K") is a falsified document, the records will show that plaintiff
caused only a temporary marking of a machine copy of the same, placed as an annex
to the Complaint and in a review of the records, defendants could not find that plaintiff
caused a substitution of the temporarily marked machine copy with an original thereof,
then subsequently marked after being identified by plaintiff witness Ponceda Martinez. x
xx

x x x x"

Verily, it is crystal clear that Ground I is not raised for the first time in this petition.  It
is admitted, however, that there was no highest emphasis given to the same
as it was placed in the last pages of the discussion in the appellant's
brief. Albeit the inadvertence, it is now given the greatest emphasis and significance by
placing it under Ground I of this Petition because petitioners rationally and realistically
believe that it goes into the heart of this Petition. 41 (Emphasis and underscoring
supplied)

Having failed to timely raise their objection when the Formal Offer of Evidence was filed
in the RTC, Petitioners are deemed to have waived the same. Hence, they are
precluded from assailing the probative value of the plain copy of the Deed of
Undertaking.

Petitioners failed to rebut the

presumption of regularity ascribed to
the Deed of Undertaking as a notarized
public document.

Notwithstanding the findings of the RTC and CA, Petitioners still assail the genuineness
and due execution of the Deed of Undertaking before this Court. Petitioners insist that
the Deed of Undertaking is a falsity and should not be given credence.

The Court disagrees.

As correctly held by the R TC and CA, the Deed of Undertaking became a public
document by virtue of its acknowledgment before a notary public. Hence, it enjoys the
presumption of regularity, which can only be overcome by clear and convincing
evidence. Thus, in Spouses Santos v. Spouses Lumbao,  42 this Court upheld the
presumption of regularity, finding the bare denial of petitioners therein insufficient to
overcome the same:

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January
1981 were duly notarized before a notary public. It is well-settled that a document
acknowledged before a notary public is a public document that enjoys the
presumption of regularity. It is a prima facie evidence of the truth of the facts
stated therein and a conclusive presumption of its existence and due
execution. To overcome this presumption, there must be presented evidence
that is clear and convincing. Absent such evidence, the presumption must be
upheld. In addition, one who denies the due execution of a deed where one's signature
appears has the burden of proving that contrary to the recital in the jurat,  one never
appeared before the notary public and acknowledged the deed to be a voluntary
act. Nonetheless, in the present case petitioners' denials without clear and
convincing evidence to support their claim of fraud and falsity were not
sufficient to overthrow the above-mentioned presumption; hence, the
authenticity, due execution and the truth of the facts stated in the aforesaid "Bilihan ng
Lupa" are upheld.43 (Emphasis and underscoring supplied; citations omitted)

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 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

While Petitioners vehemently deny participation in the execution of the Deed of

Undertaking, they did not present any evidence to support their claim that their
signatures thereon were forged. Hence, consistent with the ruling of the RTC and CA,
the Court upholds the presumption of regularity ascribed to the Deed of Undertaking.

Petitioners ' claim that they are

accommodation borrowers is
supported by sufficient evidence.

Petitioners claim that they are mere accommodation borrowers who applied for the DBP
Loan for and on behalf of the Joint Venturers, in furtherance of the verbal agreement
between and among petitioner Marcelian and the Joint Venturers. Thus, Petitioners aver
that the liability arising from the non-payment of the DBP Loan should be assumed not
by Petitioners Marcelian and Alice, but by Petitioner Marcelian and the rest of the Joint
Venturers - Clark, Mario Delos Reyes and Richard Sevilla. 44

To support this claim, Petitioners rely on the Joint Affidavit executed by two (2) of the
alleged Joint Venturers - Mario Delos Reyes and Richard Sevilla, 45 the pertinent portions
of which read:

1. That we entered into a business venture with Atty. Marcelian C. Tapayan and Clark
Martinez, engaging in the construction business;

2. That the loan obtained by Atty. Marcelian [T]apayan and Mr. Clark Martinez for Pl
Million from DBP, Ozamiz City, was used partly to liquidate the loan of Mrs. Ponceda
Martinez for about P65 thousand and the balance was used to finance as additional
capital in the construction business [.]46

Curiously, however, only Mario Delos Reyes testified before the RTC to affirm the
statements in the Joint Affidavit, as Richard Sevilla had allegedly fled to the United
States as an undocumented alien.47

Hence, apart from the statements in the Joint Affidavit affirmed solely by the testimony
of Mario Delos Reyes, which is in turn corroborated only by petitioner Marcelian's self-
serving declarations, the Court finds no other evidence on record to support the
existence of the alleged joint venture, and the verbal agreement of the Joint Venturers
in respect of the DBP Loan.

In fact, the theory that Petitioners acted as mere accommodation borrowers is belied by
their own allegations respecting the payment of fees relating to the DBP Loan, which
the Court quotes hereunder:

[P]etitioner Marcelian Tapayan endeavored in good faith to fully pay the interests and
fees of the Pl Million loan with the DBP, Ozamiz City.1avvphi1 The loan is in the nature
of a one-year credit line drawable against 60 to 150-day promissory notes, and is
renewable yearly as long as the interests were paid. The first release of the loan was on
December 27, 1996 via a promissory note 96/109 for P400,000.00 for 150 days
(Exhibit "6") which was extended for another 150 days via an Addendum to Promissory
Note (Exh "7"). The second release was on February 4, 1997 via Promissory Note No.
97-010 for P600,000.00 (Exh "8") for a term of 150 days extended for another 150
days via an Addendum to Promissory Note (Exh "9"). The admitted documentary
exhibits of petitioners evidently show that the interests and other fees (doc.
stamps) were fully paid by petitioners covering the period from the date of the
first loan release on December 27, 1996 and until the date of the extensions
and even beyond the one-year term of the credit line as interests were paid up
to February 28, 1998 as per Exhibits "10" to "27". Further, petitioners also
paid the premium on the insurance coverage of the mortgaged property from
May 15, 1997 to May 15, 1998, and in anticipation of the renewal of the credit
line, petitioners also paid the insurance premium covering the period from May
15, 1998 to May 15, 1999, as can be gleaned from Exhibits "28" to "31".  The
foregoing facts sufficiently indicated that amid the hard times, petitioners were up-to-
date in the payments of interests and fees covering the promissory notes and
extensions (Exhs. "6" to "9"), which is a basic requirement in the consideration of the
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Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

renewal of the credit line. In sum, petitioners exercised utmost good faith in complying
with the terms and conditions of the credit line. 48 (Emphasis supplied)

Petitioners' payment of the interest on the DBP Loan, the insurance premiums
corresponding to the Pingol Property, and other incidental fees solely on their
account,49 without seeking reimbursement from the alleged Joint Venturers, establishes
Petitioners' direct interest in the DBP Loan, and negates the claim that they are mere
accommodation borrowers. Since the proceeds of the DBP Loan redounded to
Petitioners' benefit, they must bear the liability arising from its non-payment, and
comply with the obligations imposed by the Deed of Undertaking executed in
connection therewith.

The amount paid to PNB must be

deducted from Petitioners' total liability
in accordance with the provisions of the
Deed.

Petitioners aver that the RTC's determination respecting the amount due Respondent is
erroneous, since it failed to consider the deductions stipulated in the Deed of
Undertaking. Hence, Petitioners submit that should the Court order the execution of a
mortgage over the Carangan Property, such mortgage should only be made to secure
the amount of One Million One Hundred Fourteen Thousand Eight Hundred Seventy-
Nine Pesos and 55/100 (₱1,114,879.55),49-a which represents the amount paid by
Respondent to DBP to avert the foreclosure of the DBP Mortgage, net of the deductions
stipulated in the Deed of Undertaking.

The Court agrees.

The RTC Decision directed Petitioners to execute a mortgage in favor of Respondent to

secure the amount of One Million One Hundred Eighty Thousand Two Hundred Pesos
and 10/100 (₱1,180,200.10), unless  Petitioners reimburse Respondent said amount in
full.

In so ruling, the RTC completely disregarded the fourth paragraph of the Deed of
Undertaking, which specifically requires Respondent to deduct all prior payments made
in favor of PNB from Petitioners' total liability, thus:

That in the event the First Party could not pay the loan and consequently, the property
of the Second Party is foreclosed and is not redeemed by the First Party with[ in] the
one (1) year redemption period; or in case the loan shall be paid by the Second Party
just to save the property from being foreclosed, the First Party shall acknowledge
as his indebtedness the amount due to the Development Bank of the
Philippines upon foreclosure or the amount paid by the Second Party in paying
the loan, but in either case shall be deducted therefrom the amount of
P65,320.55 plus interests and fees paid by the First [P]arty to PNB, Ozamiz
City[.]50 (Emphasis supplied)

This oversight was adopted by the CA when it affirmed the RTC Decision in toto.  The
Court now corrects this error.

Respondent anchors her cause of action on the Deed of Undertaking in its entirety. To
allow Respondent to selectively invoke the validity and enforceability of the provisions
that support her cause, and disregard those that operate against her interests would
promote injustice at the expense of Petitioners.

Notably, Respondent does not deny that a portion of the DBP Loan was in fact utilized
to settle part of her PNB Loan.1âwphi1 Respondent merely avers that such payment
was necessary to clear the title of the Pingol Property, and that the resolution of such
issue would be inconsequential to the ultimate disposition of the assailed Decision:

Grounds 2 and 3 relied upon by [P]etitioners raise questions of fact so insubstantial that
they do not affect the ultimate disposition of the action that [P]etitioners execute a
mortgage on their propert[y] in favor of [R]espondent. It is an admitted fact x x x that
Page 9 of 10
 EVIDENCE
Evidence, when waived.
21. TAPAYAN VS. MARTINEZ
G.R. No. 207786 [816 SCRA 178] 30 January 2017

[R]espondent obtained a One Million Peso bank loan as capital for [P]etitioners'
construction business. If [P]etitioners needed to clear [R]espondent's title of an existing
minor lien to be able to use it for their purpose, expenses incurred for the process were
par for the course. 51

This argument is specious, as the actual amount Petitioners are bound to reimburse
constitutes the very same obligation Respondent seeks to secure through the execution
of the mortgage subject of this dispute.

Thus, the Court modifies the assailed Decision, and rules that Sixty-Five Thousand
Three Hundred Twenty Pesos and 55/100 (₱65,320.55) should be deducted from
Petitioners' total liability, representing the reimbursement to be paid by the latter to
PNB.52 Consequently, the amount Petitioners should reimburse to Respondent is One
Million One Hundred Fourteen Thousand Eight Hundred Seventy-Nine Pesos and 55/100
(₱1,114,879.55).

WHEREFORE, premises considered, the Petition for Review is GRANTED IN

PART. The Decision dated May 30, 2013 of the Court of Appeals in CA-G.R. CV No.
02081-MIN is hereby AFFIRMED WITH MODIFICATION. Petitioners Marcelian and
Alice Tapayan are directed to execute a mortgage on their house and lot covered by
TCT No. T-10143 located at Carangan, Ozamiz City in favor of Respondent Ponceda
Martinez, unless they reimburse the latter the amount of One Million One Hundred
Fourteen Thousand Eight Hundred Seventy-Nine Pesos and 55/100 (₱1,114,879.55).
Petitioners are likewise directed to pay Respondent attorney's fees in the amount of
Twenty Thousand Pesos (₱20,000.00), in accordance with the Decision dated
September 28, 2009 rendered by the Regional Trial Court in Civil Case No. OZC-99-38.
SO ORDERED.

Footnotes 26
 Id. at 64.
1
 Rollo, pp. 10-57. 27
 Id. at 72.
2
 Id. at 59-72. Penned by Associate Justice Renato C. 28
 Id. at 65.
Francisco, with Associate Justices Romulo V. Borja 29
 Id. at 71-72.
and Oscar V. Badelles concurring. 30
 Id. at 66-67, 69-70.
3
 Id. at 15, 60. 31
 Id. at 4.
4
 Id. at 59. 32
 Id. at 4-7.
5
 Id. at 32. 33
 Id. at 93-98.
6
 Id. at 12-13, 59-60. 34
 Id. at 104-110.
7
 Id. at 13, 42. 35
 Id. at 113-114.
8
 Id. at 32-33. 36
 RULES OF COURT, Rule 45, Section 1.
9
 Id. at 60. 37
 Ambray and Ambray, Jr. v. Tsourous, et al., G.R.
10
 Id. at 31-32. No. 209264, July 5, 2016, pp. 6-7.
11
 Id. at 60. 38
 Country Bankers Insurance Corporation v.
12
 Id. at 60-61. Lagman, 669 Phil. 205, 215 (2011).
13
 Id. at 60. 39
 G.R. No. 187850, August 17, 2016.
14
 See id. at 61. 40
 Id. at 6-7.
15
 See id. 41
 Rollo, pp. 105-107.
16
 Id. at 62. 42
 548 Phil. 332 (2007).
17
 Id. at 12, 62, 67. 43
 Id. at 349.
18
 See id. at 62. 44
 See rollo, pp. 36-37.
19
 See id. 45
 Id. at 38-39.
20
 Id. 46
 Id. at 38.
21
 Id. at 64. 47
 See id. at 15, 29.
22
 Id. at 38-39. 48
 Id. at 45-46.
23
 Id. at 62-63. 49
 Id.
24
 Id. at 63. 49-a
 One Million One Hundred Eighty Thousand Two
25
 Id. at 63-64. Hundred Pesos and 10/100 (₱1,180,200.10)
representing the amount paid by Respondent to DBP, 50
 Rollo, pp. 31-32.
less Sixty-Five Thousand Three Hundred Twenty 51
 Id. at 94-95.
Pesos and 55/100 (₱65,320.55) representing the 52
 Id. at 33-35.
amount paid by Petitioners to PNB on Respondent's
behalf. (See rollo, pp. 31-32.)

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