October 2009 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
G.R. No. 166383 - Associated Bank v. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al.
THIRD DIVISION
[G.R. NO. 166383 : October 16, 2009]
ASSOCIATED BANK,* Petitioner, v. SPOUSES JUSTINIANO S. MONTANO, SR., AND LIGAYA MONTANO and TRES CRUCES AGRO-INDUSTRIAL CORPORATION, Respondents.
D E C I S I O N
NACHURA, J.:
Petitioner filed this Rule 45 petition seeking the review of the October 27, 2003 Decision1 of the Court of Appeals (CA), as well as its December 13, 2004 Resolution,2 in CA-G.R. CV No. 61383. The CA, in its assailed decision and resolution, set aside the April 14, 1997 Order3 of the Regional Trial Court (RTC) dismissing the complaint filed by herein respondents for reconveyance of title over three parcels of land situated in Cavite.
Below are the facts.
In 1964, spouses Justiniano and Ligaya Montano (the Montanos) owned three (3) parcels of land situated in Tanza, Cavite with an aggregate area of 590,558 square meters, more or less,4 utilized as an integrated farm and as a stud farm used for raising horses.5 Justiniano was then serving as congressman for the lone district of Cavite and as minority floor leader. In 1972, when then President Ferdinand Marcos placed the country under martial law, Justiniano went on self-exile to the United States of America (USA) to avoid the harassment and threats made against him by the dictator.
Sometime in 1975, while still in the USA, the Montanos transferred the said properties to Tres Cruces Agro-Industrial Corporation (TCAIC) in exchange for shares of stock in the company,6 allowing the Montanos to control 98% of the stockholdings of TCAIC.7 Thus, on February 17, 1975, the certificates of title registered in the name of the Montanos were cancelled and were replaced with transfer certificates of title (TCTs) in TCAIC's name.8
A year later, in October 1976, TCAIC sold the properties to International Country Club, Inc. (ICCI) for P6,000,000.00.9 The sale resulted in the cancellation of the titles of TCAIC, and in their transfer to ICCI on May 27, 1977.10
After the transfer, ICCI immediately mortgaged the parcels of land to Citizens Bank and Trust Co. (later renamed as Associated Bank) for P2,000,000.00.11 The loan matured but remained unpaid, prompting Associated Bank to foreclose the mortgage on May 31, 1984.12 The properties were then put on public auction and were sold for P5,700,000.00 to Associated Bank, the sole and highest bidder.13 Ownership over the said properties was consolidated by Associated Bank and, on May 19, 1987, new TCTs were issued in its name.14
Meanwhile, in 1986, following the ouster of Marcos, the Montanos returned to the country. After discovering the transfer of the properties, the Montanos immediately took physical possession of the same and began cultivating the land.15 On September 15, 1989, the Montanos filed an action for reconveyance of title against herein petitioner, praying, in sum, that the transfer of the properties from TCAIC to ICCI, and from ICCI to Associated Bank, be declared null and void.16
In their complaint, respondents averred that the transfer of the parcels of land to TCAIC was done only to avoid the confiscatory acts being applied by the dictator against the Montanos' properties, in retaliation for the latter's open opposition to Marcos.17 They claimed that TCAIC was only forced to sell the properties to ICCI after the latter intimidated and threatened the relatives of the Montanos who were left in the country.18 They also argued that the mortgage by ICCI to Associated Bank was made to generate money for the latter's corporate officers as evidenced by the lack of any effort on the part of ICCI to service the loan.19
On October 11, 1989, Associated Bank filed an Answer20 setting forth affirmative defenses. Among its several pleas in avoidance were the arguments that the complaint did not state a cause of action; that the allegation of threat and intimidation was not averred with particularity; that the bank was an innocent purchaser for value; and that, even if the complaint stated a cause of action, the same had already prescribed or had been barred by estoppel and laches.21
On February 17, 1997, eight (8) years after Associated Bank filed its answer and while the case was still on its pretrial stage, the bank filed a Motion for Preliminary Hearing on the Affirmative Defenses and/or Motion to Dismiss22 focused on two crucial points, namely: that the complaint stated no cause of action; and that the case was already barred by the statute of limitations.23 Respondents prayed for and were given an additional 10 days within which to file an omnibus opposition to petitioner's motion.24 Respondents, however, failed to meet the trial court's deadline.25 ???�r?bl?�
