Spouses Benjamin Navarro and Rosita Fortea-Navarro, petitioners

vs.
Second Laguna Development Bank, spouses Isaac Guzman and VilmaEsporlasGuzman, 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.
DECISION
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 defendantsappellees 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 defendantsappellees 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).