Spouses Benjamin Navarro and Rosita Fortea-Navarro, petitionersvs.Second Laguna Development Bank, spouses Isaac Guzman and VilmaEsporlas-Guzman, respondents

GR No. 129428, 27 Feb. 2003

Ponente: Justice Sandoval-Gutierrez

Topics covered: Civil Law Mortgages, Civil Law - Estoppel

Facts:

Spouses Catalino Navarro and Consuelo Hernandez-Navarro, originally owned the 345-sq.m. Lot No. 1513-A in Alabang, Muntilupa City. On 4 December 1968, they sold 5/6 of the unsegregrated portion of that lot to their children Leticia, Esther, Benjamin, Luciana and Leoniza. Because of the sale, TCT 244200 was issued in their names. The petitioners Benjamin Navarro and his wife Rosita Fortea-Navarro are listed in that title as co-owners.

However, without Benjamin and Rositas knowledge, Donalito Velasco and his wife Esther Navarro-Velasco conspired with Luciana Navarro, where they made it appear via a falsified Deed of Absolute Sale that the entire lot was sold for PhP35,000 to the Velasco spouses. Thus, TCT 244200 was cancelled and TCT No. 114526 was issued in the names of the Velasco spouses. The Velascos subsequently mortgaged the property to the respondent Second Laguna Development Bank as security for a loan. However, the respondent bank had foreclosed the mortgage on 30 June 1987 when the Velascos failed to pay.

On 8 August 1988 and 5 January 1990, Benjamin and Rosita, who introduced themselves as Esthers attorneys-in-fact, wrote Second Laguna Devt Bank, where they offered redemption of that property for PhP450,000. However, they failed to redeem that property and ownership was consolidated in the name of the said bank under TCT 138320 issued on 1 February 1990.

On 26 March 1990, Benjamin and his wife Rosita (as the petitioners) filed a complaint with Makati City RTC Br. 148 against the Velasco spouses and the respondent bank (docked as Civil Case No. 90-849) which prayed for annulment of the Velasco mortgage, on the ground that the sale of the lot covered by TCT 168320 on March 1978 was void ab initio considering their signatures was falsified on the said Deed of Absolute Sale and likewise making the subsequent mortgage contract by the Velascos and the respondent bank void also.

The respondent bank subsequently sold the lot on 3 April 1990 to the respondents Isaac Guzman and his spouse VilmaEsporlas-Guzman. TCT No. 169929 was issued to the Guzmans on 18 May 1990, so the petitioners impleaded as additional defendant in the RTC civil case, alleging that the Guzmans knew the pending litigation of the property and hence, they are purchasers in bad faith. The trial court on 29 July 1991 declared the Velasco spouses in default upon their failure to file answer to the Navarros complaint.

The trial court on 29 September 1993 decided that the complaint of the petitioners Rosita and Benjamin Navarro praying for annulment of the mortgage and the subsequent foreclosure by Second Laguna Development Bank be dismissed. Also, it upheld the validity of the mortgage proceedings made by the bank and declared the Guzmans spouses lawful owners of 59-sq.m portion (1/6 share) in the 345-sq.m. parcel of land covered by TCT No. 244200 (registered in the Makati City Registry of Deeds) in Alabang, Muntilupa City.

The Court of Appeals through its decision CA GR CV No. 44240 on 21 April 1997, affirmed with modifications the decision of the lower RTC court. The said Appellate Court affirmed the Makati RTC decision dismissing the complaint of the Navarros and declaring the Guzmans spouses lawful owners of the land covered by TCT No. 244200 and TCT No. 169929. However, it deleted the award of actual and moral damages as well as attorneys fees to Isaac and Vilma Guzman, and award of attorneys fees in favor of Second Laguna Development Bank. The CA also held that Benjamin and Rosita Navarro were declared in laches and estoppel to question the mortgage and foreclosure proceedings, since they failed to question the Guzmans title to the said property for an unreasonable time, thus making presumptions that the petitioners abandoned their rights.

The Navarro spouses filed for partial motion of reconsideration of the CA decision, but the Appellate Court denied that reconsideration through its Resolution on 11 June 1997. As a result, the Navarros filed a petition to review the CA decision, arguing that the CA erred in declaring them in laches and estoppel to question the mortgage and foreclosure proceedings and the lawful ownership of the Guzman spouses with respect to the land covered by TCT No. 244200 and TCT No. 169929.

Issues: (1) Whether or not the mortgage and foreclosure proceedings made by Second Laguna Development as well as the Guzmans ownership of the property under TCT No. 169929 was valid?(2) Whether the CA erred in declaring the petitioners in laches and estoppel to question the mortgage and foreclosure proceedings and the lawful ownership of the Guzman spouses?

Held and ruling of the SC: The SC dismissed the Navarros petition and affirmed the the Court Appeals decision CA GR CV No. 44240 on 21 April 1997. The SC agreed with the Court of Appeals finding that Benjamin and Rosita Navarro were declared in laches and estoppel to question the mortgage and foreclosure proceedings, since they failed to state in the two letters in 1988 and 1990, respectively, the issue of the Velascos falsification of their signature in the Deed of Absolute Sale as well as questioning the validity of subsequent mortgage and foreclosure .The respondent Second Laguna Development Bank was held by the SC that it did not act in bad faith. The Velasco spouses presented to the bank TCT No. 114526 which showed that they are the propertys absolute owner. Therefore, there were no circumstances or indications that aroused the banks suspicion that the said title was defective.

(full cases)

THIRD DIVISION

[G.R. No. 129428. February 27, 2003]

BENJAMIN NAVARRO and ROSITA FORTEA, petitioners, vs. SECOND LAGUNA DEVELOPMENT BANK, and SPOUSES ISAAC GUZMAN and VILMA ESPORLAS, respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari[1] assailing the Decision[2] of the Court of Appeals dated April 21, 1997 in CA-G.R. CV No. 44240 affirming with modification the Decision of the Regional Trial Court (RTC), Branch 148, Makati City in Civil Case No. 90-849, Spouses Benjamin Navarro and Rosita Fortea vs. Second Laguna Development Bank, spouses Domalito Velasco and Esther Navarro, Luciana Navarro and spouses Isaac Guzman and Vilma Esporlas, for annulment of foreclosure of mortgage and consolidation of ownership and damages.

Subject of this suit is the 1/6 portion of a parcel of land located in Alabang, Muntinlupa, known as Lot No. 1513-A, Plan Psd-51043, consisting of 345 square meters and covered by TCT No. (244200) 114525 of the Registry of Deeds of Makati City.

Records show that the late Catalino Navarro and his wife Consuelo Hernandez originally owned Lot No. 1513-A. On December 4, 1968, they sold 5/6 of the unsegregated portion of the lot to their children, namely, Leticia, Esther, Benjamin, Luciana and Leoniza, all surnamed Navarro. By virtue of the sale, TCT No. 244200 was issued in their names. Spouses Benjamin and Rosita Navarro, herein petitioners, are listed therein as co-owners of the property.

On March 18, 1978, without the knowledge and consent of petitioners, spouses Donalito Velasco and Esther Navarro, conspiring with the latters sister Luciana Navarro, executed a falsified Deed of Absolute Sale wherein they made it appear that the entire lot was sold to said spouses Velasco for P35,000.00. TCT No. 244200 was thus cancelled and in lieu thereof, TCT No. 114526 was issued in the names of spouses Velasco. Subsequently, they mortgaged the property to respondent Second Laguna Development Bank to secure payment of a loan.

On June 30, 1987, upon failure of spouses Velasco to pay their loan, respondent bank had the mortgage foreclosed. On August 8, 1988 and January 5, 1990, petitioners, introducing themselves as attorneys-in-fact of Esther Navarro-Velasco, wrote respondent bank, offering to redeem the property for P450,000.00. However, they failed to do so. Hence, ownership thereof was consolidated in the name of respondent bank under TCT No. 168230 issued on February 1, 1990.

On March 26, 1990, petitioners filed with the RTC a complaint against respondent bank and spouses Velasco (docketed as Civil Case No. 90-849) praying for the (a) annulment of the mortgage; (b) cancellation of TCT No. 168230 in the name of respondent bank; and (c) award of damages and attorneys fees. In their complaint, petitioners alleged that the sale of the lot with respect to their 1/6 share (59 square meters) is void ab initio considering that their signatures appearing in the Deed of Absolute Sale dated March 18, 1978 were falsified. Consequently, the mortgage contract involving their share executed by spouses Velasco and respondent bank is likewise void.

On April 3, 1990, respondent bank sold the lot to respondent spouses Isaac Guzman and Vilma Esporlas and on May 18, 1990, TCT No. 169929[3] was issued in their names. Thereupon, petitioners impleaded spouses Guzman as additional defendants in Civil Case No. 90-849. Petitioners alleged that said spouses were purchasers in bad faith because they knew of the pending litigation concerning the property.

On July 29, 1991, the trial court declared spouses Velasco in default for their failure to file an answer.

On September 29, 1993, the trial court rendered its Decision[4] dismissing petitioners complaint; upholding the validity of the foreclosure of mortgage and declaring respondent spouses Guzman the lawful owners of the property; ordering petitioners to pay said spouses P50,000.00 as actual damages, P30,000.00 as moral damages and P35,000.00 as attorneys fees; ordering petitioners to pay respondent bank P25,000.00 as attorneys fees; and ordering spouses Velasco to pay petitioners P268,000.00 corresponding to the value of the latters 1/6 share in the property and P20,000.00 as attorneys fees.

On appeal, the Court of Appeals affirmed with modification the RTC decision, thus:

WHEREFORE, the decision appealed from is hereby MODIFIED by deleting the awards of actual and moral damages as well as attorneys fees in favor of defendant spouses Vilma Esporlas Guzman and Isaac Guzman, and the award of attorneys fees in favor of defendant Second Laguna Development Bank.

With the above modifications, the judgment below is AFFIRMED in all other respects.

No pronouncement as to costs.

SO ORDERED.[5]

The Court of Appeals ratiocinated as follows:

Inevitably, the core of the controversy is the determination of whether or not defendant spouses Vilma Esporlas and Isaac Guzman are purchasers in good faith.

Apart from appellants bare assertion, we find no evidence to establish appellees bad faith. It is settled jurisprudence that whoever alleges bad faith in any transaction must substantiate his allegation, since it is presumed that a person takes ordinary care of his concerns and that private transactions have been entered in good faith.

Clearly, we find appellants wanting in this respect.

In this connection, it is essential to point out that prior to the foreclosure sale, appellants had the opportunity to object to the validity of the mortgage over the property in controversy.

It is beyond dispute, as disclosed by evidence, that on June 4, 1986, appellant Benjamin Navarro wrote a certain Oscar of defendant-appellee bank, asking for the Statement of Accounts of defendant Esther Navarro.

On August 8, 1988, appellant spouses wrote defendant-appellee bank, introducing themselves as the attorneys-in-fact of defendant Esther Navarro.

Again, on January 5, 1990, appellant Benjamin Valerio (believed to be Benjamin Navarro by the court a quo per his signature) wrote the Far East Bank & Trust Company, the owner of defendant bank, requesting the latter to allow redemption of the land for (P450,000.00).

On all these occasions, appellants did not even bother to question the validity of the purchasers title over the property. Hence, we agree with the court a quo that these acts of appellants were tainted with laches and estoppel. They failed for an unreasonable length of time to do that which by exercising due diligence could or should have been done earlier. They neglected or omitted to assert their right within a time reasonable under the premises, thereby warranting a presumption that they have abandoned such right.

However, we find no sufficient justification for the awards of actual and moral damages as well as attorneys fees by the court a quo.

Needless to emphasize, actual damages refer to those recoverable because of pecuniary loss, which include the value of the loss suffered and unrealized profits (8 Manresa 100). Actual damages must be proved and the amount of damages must possess at least some degree of certainty (Tomassi vs. Villa-Abrillee, L-7047, August 21, 1958, in relation to Chua Teck Hee vs. Philippine Publishing House, 34 Phil. 447).

Reviewing the records, we find no evidence whatsoever adduced by defendants-appellees to prove the actual loss suffered by them. All the court a quo did, in awarding actual damages in the amount of P50,000.00, is to state that defendants-appellees Isaac Guzman and Vilma Esporlas are entitled to actual damages for they were not able to enjoy their lawfully acquired property. This reason is simply not enough basis to award actual damages.

As regards the claim for moral damages and attorneys fees, the court a quo likewise erred in awarding them. In Dela Pena vs. Court of Appeals, 231 SCRA 456, it was held that it is improper to award them on the sole basis of an action later declared to be unfounded in the absence of deliberate intent to cause prejudice to the other. No proof has been introduced that the action filed by appellant spouses was deliberately intended to prejudice defendants-appellees. At the most, what we see here is appellants legitimate and genuine desire to seek redress through the judicial system and to obtain complete relief by including spouses Vilma Esporlas and Isaac Guzman and the Second Laguna Development Bank as party defendants.[6]

Petitioners filed a partial motion for reconsideration of the Court of Appeals Decision but it was denied in the Resolution[7] dated June 11, 1997.

Hence, the instant petition.

Petitioners contend that the Court of Appeals erred in upholding the validity of the sale of the property between respondent bank and spouses Guzman and declaring that they are estopped from questioning the validity of the mortgage and its foreclosure.

In their separate comments, respondents practically reiterated the findings and conclusion of the Court of Appeals in its assailed Decision.

The petition lacks merit.

In Rural Bank of Compostela vs. Court of Appeals,[8] this Court held that the rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks because their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence which amounts to lack of good faith. Thus, in Cruz vs. Bancom Finance Corporation,[9] this Court stressed that a mortgagee-bank is expected to exercise greater care and prudence before entering into a mortgage contract, even those involving registered lands. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations.

In entering into the mortgage contract with spouses Velasco, there was no indication that respondent bank acted in bad faith. Spouses Velasco presented to the bank their TCT No. 114256 showing they were then the absolute owners thereof. Indeed, there were no circumstances or indications that aroused respondent banks suspicion that the title was defective.

As to the validity of the sale of the property to respondent spouses Guzman, this Court agrees with the finding of the Court of Appeals that petitioners are estopped from assailing the same.

Article 1431 of the Civil Code states that through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another.[10]

It bears reiterating that in their two letters to respondent bank earlier mentioned, petitioners did not state that spouses Velasco falsified their signatures appearing in the Deed of Absolute Sale. Nor did they question the validity of the mortgage and its foreclosure. Indeed, those letters could have led respondent bank to believe that petitioners recognized the validity of the Deed of Absolute Sale and the mortgage as well as its subsequent foreclosure.

WHEREFORE, the instant petition is DISMISSED. The challenged Decision dated April 21, 1997 of the Court of Appeals in CA-G.R. CV No. 44240 is AFFIRMED.

SO ORDERED.

Puno, (Chairman), Panganiban and Carpio-Morales, JJ., concur.

Corona, J., on leave

FOOTNOTES

[1] Pursuant to Rule 45 of the 1997 Rules of Civil Procedure, as amended.

[2] Penned by Justice Artemio G. Tuquero, with Justices Artemon D. Luna and Hector L. Hofilea concurring (all had retired).

[3] RTC records at 35.

[4] Rollo at 65-91.

[5] Id. at 36.

[6] Id. at 35-36.

[7] Id. at 101.

[8] 271 SCRA 76, 88 (1997), citing Tomas vs. Tomas, 98 SCRA 280, 286 (1980).

[9] G.R. No. 147788, March 19, 2002 citing Cavite Development Bank vs. Lim, 324 SCRA 346 (2000), Development Bank of the Philippines vs. Court of Appeals, 331 SCRA 267 (2000), and Sunshine Finance and Investment Corp. vs. IAC, 203 SCRA 210 (1991).

[10] Padcom Condominium Corporation vs. Ortigas Center Association, Inc., G.R. No. 146807, May 9, 2002; Macahilig vs. Magalit, 344 SCRA 838, 851(2000); Cruz vs. Court of Appeals, 293 SCRA 239, 255-256 (1998).