Philippine Supreme Court Jurisprudence > Year 2000 > February 2000 Decisions > G.R. No. 81524 February 4, 2000 - PHIL. NATIONAL BANK v. COURT OF APPEALS, ET AL.:

For consideration of this Court is a petition for review of the Decision, dated January 14, 1988, of the Court of Appeals which affirmed in toto the Decision, dated November 17, 1983, of the Regional Trial Court of Ilocos Norte, Branch 19, in Civil Case No. 192-XIX.chanrobles.com : virtuallawlibrary

The antecedent facts are undisputed: On February 20, 1974, Manuel de los Santos applied for, and was granted a loan in the amount of Three Thousand Pesos (P3,000.00) by herein petitioner Philippine National Bank (PNB, for brevity), thru its Laoag Branch. To secure said loan, Mr. de los Santos mortgaged a parcel of agricultural land consisting of Fifty Six Thousand Two Hundred Ninety Square Meters (56,290 sq. m.) located at Bangui, Ilocos Norte. Despite repeated demands for payment of his loan account when the same became due and demandable, Mr. de los Santos failed and refused to pay his outstanding obligation to the bank which amounted to Seven Thousand Five Hundred Fifteen Pesos and Eight Centavos (P7,515.08) with interest at the rate of 19% plus 2% service charge.

On July 17, 1982, herein private respondent Consuelo Yu (hereinafter referred to as respondent Yu) filed before the Regional Trial Court of Ilocos Norte a complaint against Manuel de los Santos and the PNB for ownership, annulment of mortgage contract and damages, alleging, among others, that she is the absolute owner of the parcel of land in question; that Manuel de los Santos, through fraud and misrepresentation, executed an affidavit (Exhibit C) on November 13, 1973 stating therein that although the land in question is declared in the name of his "Auntie" (referring to herein private respondent Yu), it was actually owned by his deceased father, Gregorio Chua; that on the basis of said affidavit, Tax Declaration No. 7591 in the name of private respondent was cancelled and another one, Tax Declaration No. 400551-a was issued by the Provincial Assessor in the name of Manuel de los Santos; that thereafter, Manuel de los Santos mortgaged said land to PNB; and, that PNB with bad faith, approved the mortgage in favor of said Manuel de los Santos.chanrobles virtual lawlibrary

The evidence for private respondent as found by the trial court is quoted as follows:chanrob1es virtual 1aw library

The evidence for the plaintiff consists of the testimonies of Dr. Leticia Go Garvida and Cresencia de los Santos as well as documentary evidence which are hereinafter cited.

In essence, plaintiffs evidence tends to establish that the land in question was originally owned by a certain Sy O who was the mother-in-law of the plaintiff. As such, the land was declared for taxation purposes in the name of said Sy O, per Tax Declaration No. 015521 in the year 1949 (Exhibit E). Evidently, the property was inherited by the plaintiff’s husband who transferred it to her, as per Tax Declaration No. 7591 (per Exhibit A). The plaintiff has consistently paid the realty taxes of the subject property per Exhibit D and D-1.chanrobles virtua| |aw |ibrary

As early as in 1952, the subject property has been under the administration of Dr. Leticia G. Garvida who collects the produce of the land in question from the tenants, namely: Evaristo Agustinez and Lazaro Baloaloa. Dr. Garvida either sells the owner’s share and remits the proceeds to Conchita Yu (sic) who resides in Manila or delivers them in kind.

Sometime in 1982, Dr. Garvida was informed by the tenants of the land in question that the Philippine National Bank is foreclosing it. Dr. Garvida verified the matter with the bank and found out that it was mortgaged by defendant Manuel de los Santos. She investigated further by verifying the papers in the office of the Provincial Assessor and found out that on December 13, 1973, Manuel de los Santos executed an affidavit (Exhibit C), stating therein that although the land is declared in the name of her (sic) "Auntie" his deceased father, Gregorio Chua, is the owner thereof. On the basis of the said affidavit, Tax Declaration No. 7591, in the name of plaintiff Consuelo Yu, was cancelled and another one, Tax Declaration No. 400551-a was issued by the Provincial Assessor in the name of Manuel de los Santos (Exhibit B). Dr. Garvida reported this matter to plaintiff Consuelo Yu.chanrobles.com : law library

Cresencia de los Santos, testifying for the plaintiff, declared that she is 73 years old, widow, a resident of Sta. Rita, Bangui, Ilocos Norte and the mother of defendant Manuel de los Santos; that her husband was the late Gregorio Chua who died two years ago (sometime in 1981); that she had eight (8) children with Gregorio Chua, namely: Rogelio, Constante, Corazon, Carmen, Consuelo, Manuel, Amor and Carlos; that at present she does not know the whereabout (sic) of her son Manuel de los Santos; and finally, that she does not know the property in question. 1

Petitioner’s submission is summarized by the trial court in this wise:chanrob1es virtual 1aw library

On the other hand, the evidence of defendant PNB consists of documents which were submitted to the court upon stipulation of the parties. From the said documentary evidences, it appears that sometime in January 1974, defendant Manuel de los Santos applied for a loan with the defendant PNB, Laoag branch, in the amount of P3,500 (Exhibit 1), offering the subject property as collateral thereof. The bank conducted an inspection of the property and on February 9, 1974, an inspection report was submitted by Oscar F. Almazan and concurred in by Antonio E. Guerrero, Chief L & D (Exhibits 2 and 2-a). On the basis of the said inspection report, the bank granted defendant Manuel de los Santos a loan in the amount of P3,000. Accordingly, a credit agreement (Exhibit 3) and a real estate mortgage (Exhibit 4) have been executed by and between defendant PNB and Manuel de los Santos. Likewise, Manuel de los Santos executed a promissory note (Exhibit 5) for the same amount of P3,000. The loan was for a period of one year.

To support his claim of ownership over the property in question, defendant Manuel de los Santos submitted to the bank the following documents: affidavit denominated as "Affidavit of Principal Borrower/Co-maker" (Exhibit 6) wherein he stated, among other things, that he acquired the subject property by inheritance from his parents; a joint affidavit of adjoining owners, dated February 9, 1974 (Exhibit 7) purportedly executed by Andres Aguinaldo and Lazaro Baloaloa; a certification of payment of taxes prepared and signed by one Manuel Martinez, Clerk, Municipal Treasury of Bangui, Ilocos Norte (Exhibit 8); tax receipt for 1974 marked as Exhibit 9; tax declaration of the property for the year 1974, in the name of Manuel de los Santos, marked as Exhibit 10; a deed of confirmation of ownership purportedly executed by the brothers of Manuel de los Santos, namely: Carlos de los Santos and Constante de los Santos, marked Exhibit 11; and a "Notice of Adverse Claim of Ownership" executed by defendant Manuel de los Santos, marked Exhibit 13.chanrobles.com : chanrobles.com.ph

Upon the maturity of the loan, defendant Manuel de los Santos failed to pay it and so, the bank, on July 12, 1979, sent a telegram to him advising him to pay his account otherwise the property will be foreclosed (Exhibit 12). The telegram appears to have been received by Barangay Captain Esmeraldo Aguinaldo of Brgy. Abaca, Bangui, Ilocos Norte. A demand letter was likewise sent to defendant Manuel de los Santos to pay his account, marked as Exhibit 12-a. 2

On November 17, 1983, the Regional Trial Court rendered a decision, the dispositive portion of which reads as follows:jgc:chanrobles.com.ph

"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:jgc:chanrobles.com.ph

"1. Declaring plaintiff Consuelo Yu as the true and lawful owner of the land described in the complaint;

"2. Declaring the deed of mortgage (Exhibit 4) entered into by and between defendant Manuel de los Santos and defendant Philippine National Bank as null and void ab initio;chanrobles virtuallawlibrary

"3. Ordering defendant Manuel de los Santos to pay defendant Philippine National Bank the sum of THREE THOUSAND (P3,000.00) PESOS with interest at the rate of 12% per annum from February 20, 1975 until fully paid;

"4. Ordering defendants Manuel de los Santos and the Philippine National Bank, jointly and severally to pay the plaintiff reasonable attorney’s fees of P2,000.00 and to pay the costs.

"SO ORDERED." 3

Petitioner PNB appealed the aforequoted decision to the Court of Appeals. On January 14, 1988, the appellate court rendered the assailed decision affirming in toto the decision of the court a quo. 4 Hence, the instant petition for review wherein petitioner PNB alleges that:chanrob1es virtual 1aw library

I. THE HONORABLE COURT OF APPEALS ERRED IN NOT CONSIDERING THE TESTIMONIES DURING THE TRIAL WHICH RAISED SOME DOUBTS.chanrobles virtual lawlibrary

II. THE HONORABLE COURT OF APPEALS ERRED IN NOT PASSING UPON THE ISSUE OF INHERITANCE OF SUBJECT PROPERTY BY THE HEREIN RESPONDENT’S HUSBAND, ELEUTERIO CHUA.

III. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING THE PHILIPPINE NATIONAL BANK A MORTGAGEE IN GOOD FAITH WITH THE RIGHTS OF AN INNOCENT PURCHASER (MORTGAGEE) FOR VALUE.

IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PNB JOINTLY AND SEVERALLY TO PAY THE ATTORNEY’S FEES OF P2,000.00, AND COSTS. 5

This case was archived by the Court in a Resolution, dated September 3, 1990, upon petitioner’s motion, to be reopened and revived upon appearance of private respondent or her counsel or heirs, successors-in-interest or legal representatives. 6

On March 11, 1998, this Court resolved to require the parties to move in the premises. 7

Petitioner PNB filed its Manifestation, 8 dated August 26, 1998, in compliance with the aforesaid resolution. It stated that after conducting an investigation to find the address of Consuelo Yu for the proper service of the petition, it obtained her address at 153 Kaliraya, Quezon City, at which place it caused personal service of a copy of the petition.

On January 8, 1999, private respondent Consuelo Yu filed her Opposition to Petition, 9 alleging therein that the instant petition actually raises questions of fact.

We go now to the merits of the case.

Petitioner PNB alleged that the testimony of witness Dr. Leticia G. Garvida engendered doubt because even as she testified that she collected the owner’s share of the produce of the subject land; and, that a certain Lazaro Baloaloa was a tenant of said land, she failed to state that Baloaloa had delivered to her the owner’s share.

Secondly, petitioner alleged that the Court of Appeals erred in declaring respondent as the true and lawful owner of the subject land when the fact of inheritance by respondent’s husband Eleuterio Chua of the subject land from his mother, Sy O, was not proven in the trial court.chanroblesvirtual|awlibrary

Thirdly, petitioner contended that the appellate court should have considered it a mortgagee in good faith since it not only made a careful scrutiny of the Tax Declaration No. 400551 offered as collateral for the land by Manuel De los Santos, but also made an "on the spot" investigation and inspection of the land itself and found that De los Santos was in actual and peaceful possession of the subject land.

Finally, petitioner averred that it should not have been made liable for attorney’s fees and costs because it was never a party to the fraud allegedly committed by De los Santos.

Petitioner’s arguments are untenable.

Well-settled is the rule that factual findings of the Court of Appeals, when supported by substantial evidence on record, are final and conclusive and may not be reviewed on appeal. 10 It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below, its jurisdiction being limited to reviewing only errors of law that may have been committed by the lower courts. 11

A perusal of the records will show that the conclusions reached by the trial court and affirmed by the appellate court are ably supported by evidence.

Anent the first and second issues, the trial court declared, thus:jgc:chanrobles.com.ph

". . . Not only has plaintiff proved her ownership and title over the property, she also has proved by clear and convincing evidence that she has been in actual possession thereof for more than thirty (30) years. The testimony of plaintiffs administrator, Dr. Leticia Go Garvida, remained uncontradicted to the effect that she has been the administrator of the property as early as in 1952, collecting the produce of the land in question from the tenants." 12

At this juncture, it is worthy to note that we are here dealing with unregistered land. 13 Thus, in the absence of a certificate of title, the trial court had to rely on the other pieces of evidence submitted by both parties to prove their respective claims of ownership.

Anent the documentary evidence presented by the defendant therein Manuel de los Santos, the trial court found these to be inconsistent and unworthy of belief.chanroblesvirtuallawlibrary

In his affidavit, Manuel de los Santos declared that the land in question was owned by his deceased father, Gregorio Chua, but that it was declared for taxation purposes in the name of his "Auntie," herein private respondent Consuelo Yu.

However, in the "Deed of Confirmation of Ownership" purportedly executed by Mr. de los Santos’ brothers, namely, Carlos de los Santos and Constante de los Santos, the latter claimed that Consuelo Yu is their mother who died in 1970, and that the subject property is Manuel’s share of her estate.

Clearly, the two documents are contradictory to each other. Interestingly, the trial court found both claims to be untruthful, for Consuelo Yu is neither the mother nor the aunt of Manuel de los Santos and his brothers Carlos and Constante. Their real mother is one Cresencia de los Santos, a laundrywoman, who even testified for the plaintiff thus: that she was the mother of Manuel de los Santos; and, that she did not even know of the existence of the land in suit. 14

On the other hand, a perusal of the records will show that the testimony of Dr. Leticia Go Garvida is both consistent, and convincing.

She testified that she is a physician employed as Medical Officer III, Rural Health Unit; that she is 50 years of age, a widow, and a resident of Bangui, Ilocos Norte; that she is the niece of herein private respondent Consuelo Yu, the latter being the wife of her mother’s brother, Eleuterio Chua; that she is familiar with the land in question and knows it to be the property of Consuelo Yu; that she is, in fact, the administrator of said land, and has been since 1952; that as the administrator, she collects the owner’s share of the produce of the land from the tenants, namely, Evaristo Agustines and Lazaro Baloaloa; that she knows Manuel de los Santos because he is her neighbor; and, that she does not know of any relationship between said Manuel de los Santos and her aunt, Consuelo Yu. 15

With regard to the Tax Declaration submitted by Manuel de los Santos, the trial court found this to be dubious and unreliable. Said court noted that on its face, said document "appears to be newly issued to him (De los Santos) in the year 1974, and that the name of the previous owner, Consuelo Yu, was clearly typewritten thereon."cralaw virtua1aw library

It is clear that the trial court, and correctly so, chose to give credence to the testimony of Dr. Leticia Go Garvida as against the documents submitted to support De los Santos’ claim of ownership over the subject property.chanrobles.com : virtual law library

It is doctrinally settled that the evaluation of the testimony of the witnesses by the trial court is reviewed on appeal with the highest respect, because it had the direct opportunity to observe the witnesses on the stand and detect if they were telling the truth. 16 In the appreciation of the evidence, the appellate court accords due deference to the trial court’s views on who should be given credence, since the latter is in a better position to observe their demeanor as well as their deportment and manner of testifying during the trial. 17

With regard to petitioner’s claim of good faith, we quote with approval the trial court’s findings on the issue:chanrob1es virtual 1aw library



The theory of defendant PNB is that it acted in good faith in accepting the land in question as collateral for the loan obtained by defendant Manuel de los Santos. A cursory examination, however, of the documents submitted by defendant Manuel de los Santos to the defendant PNB would not justify such claim of good faith. The documents are by themselves dubious in nature and unreliable. Thus only one Tax Declaration (Exhibit 10) in the name of defendant Manuel de los Santos was submitted to the defendant PNB which, on its face, appears to be newly issued to him in the year 1974. In said Exhibit 10, it is indicated that it cancelled Tax Declaration No. 7591, (Exhibit A) and the name of the previous owner, Consuelo Yu, was clearly typewritten thereon. This circumstance alone would put a reasonable man to inquire into the basis of the cancellation of the previous declared owner’s tax declaration or at least to require the defendant Manuel de los Santos to produce the document of conveyance of the property by the previous declared owner, Consuelo Yu, to him (de los Santos). Defendant PNB apparently failed to do this. Had it investigated the matter, it could have easily known that the issuance of Tax Declaration No. 40055 (Exhibit 10) in the name of Manuel de los Santos was upon the latter’s self-serving affidavit, dated December 13, 1973, (Exhibit C) which is basically not a mode of conveyance of title or ownership over the property to defendant Manuel de los Santos, nor could it operate to divest the owner of her title and ownership thereof. By legal presumption, defendant PNB is bound to know that which he has failed to find out due to his inaction or improvidence.chanrobles virtual lawlibrary

In Exhibit C, defendant Manuel de los Santos stated that the land in question was owned by his deceased father, Gregorio Chua, but it was declared for taxation purposes in the name of her (sic) "Auntie", obviously referring to Consuelo Yu. However, in the "Deed of Confirmation of Ownership" (Exhibit 11) dated January 15, 1974, purportedly executed by Carlos de los Santos and Constante de los Santos, brothers of defendant Manuel de los Santos, it was stated that Consuelo Yu is their mother who died in 1970 and that she owned the property in question which was given to defendant Manuel de los Santos as his share from the estate of said Consuelo Yu. The contents of the two documents are contradictory to each other. Of course the statements in both documents, Exhibit C and Exhibit 10, are untruthful for Consuelo Yu is neither the aunt nor mother of defendant Manuel de los Santos and his brothers Carlos and Constante. Their real mother is Cresencia de los Santos who testified before the court in this case. Besides the documents aforecited which were admittedly submitted by defendant Manuel de los Santos to support his title and ownership over the land in question were recently dated at the time he filed his loan application. All these circumstances are sufficient to put defendant PNB on guard or excite it to suspect the flaw of defendant de los Santos’ title over the property as to cause a thorough investigation on the matter especially so it is dealing on an unregistered land. Defendant PNB did not exercise due diligence to ascertain the title of defendant Manuel de los Santos when it granted him the subject loan.

The principle which protects "innocent purchaser for value" which include innocent lessee, mortgagee or other encumbrancers for value applies where the land involved is registered under the Torrens system (Section 39, Act 496 now Section 32, P.D. No. 1529). This is so because the certificate of title, after one year from the decree of registration, is incontrovertible, and any person dealing in it has the right to rely on what appears thereon and is under no obligation to look beyond the certificate and investigate the person appearing on the face thereof. (Blanco v. Esquierdo, 110 Phil. 494). Certainly, this cannot be so in the case of unregistered land, as the property in suit. 18

Anent the last issue, the Court of Appeals correctly affirmed the trial court’s finding of liability of petitioner for attorney’s fees and costs. The appellate court held thus:chanrob1es virtual 1aw library

. . . the court a quo merely acted as a matter of course in consequence of its determination that appellant PNB was in bad faith when it executed the contract of mortgage with its co-defendant de los Santos covering the property in question which turned out to be owned by the appellee. With these facts spread on the face of the decision, we find it superfluous for the court a quo to state in categorical terms the rationale for the award of attorney’s fees not only against de los Santos but also against the PNB in solidum. 19

Finally, it is worthy to note that this case has dragged on for seventeen (17) years, more or less, from the time of institution of the action in June 18, 1982 to the present. It is high time the issues raised be resolved with finality. Public policy and sound practice demand that at the risk of occasional errors, judgment of courts should become final at some definite date. 20 The Court frowns upon frivolous appeals and any dilatory maneuver calculated to defeat or frustrate the ends of justice and fair play.

WHEREFORE, in view of the foregoing, the Court hereby resolves to DENY the instant petition for review.chanrobles virtuallawlibrary:red

SO ORDERED.

Davide, Jr., C.J., Puno, Pardo and Santiago, JJ., concur.

Endnotes:

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1. Records, pp. 146-147.

2. Id., at 147-148.

3. Id., at 150-151.

4. Rollo, p 73.

5. Id., at 18, 19, 20 and 23.

6. Id., at 101.

7. Id., at 104.

8. Id., at 110.

9. Id., at 134.

10. Atillo III v. Court of Appeals, 266 SCRA 596 (1997).

11. Navarro v. Court of Appeals, 209 SCRA 612 (1992).

12. Rollo, p. 70.

13. Id., at 71-73.

14. TSN, April 26, 1983, pp. 38-39.

15. TSN, April 11, 1983, pp. 1-8.

16. People v. Dinglasan, 267 SCRA 26 (1997).

17. People v. Topaguen, 269 SCRA 601 (1997).

18. Records, pp. 149-150.

19. Rollo, p. 73.

20. Calalang v. Register of Deeds of Quezon City, 231 SCRA 88 (1994).