6/19/2017 G.R.No.

164801

SPECIALFIRSTDIVISION


PHILIPPINENATIONALBANK,G.R.No.164801
Petitioner,
Present:
Quisumbing(Chairman),
versusYnaresSantiago,
Carpio,and
Azcuna,JJ.
HEIRSOFESTANISLAOMILITAR
ANDDEOGRACIASMILITAR,
representedbyTRANQUILINA
MILITAR,
Respondents.

xx

SPOUSESJOHNNYLUCEROG.R.No.165165
ANDNONAARIETE,
Petitioners,

versus

HEIRSOFESTANISLAOMILITAR,
DEOGRACIASMILITAR,and
TRANQUILINAMILITAR(deceased),
nowrepresentedbyAZUCENA
MILITAR,FREDDIEMILITAR,
EDUARDOMILITAR,ROMEOL.
MILITAR,NELLYLYBOLANIO,Promulgated:
LETICIALYandDELIALYSI
ASOYCO,
Respondents.June30,2006

xx

RESOLUTION


YNARESSANTIAGO,J.:


Before us are the motions for reconsideration filed by petitioners Philippine National Bank
(PNB)inG.R.No.164801andSpousesJohnnyLuceroandNonaAriete(LuceroSpouses)in
G.R. No. 165165 seeking a reconsideration of our August 18, 2005 Decision in these
consolidated cases which affirmed in toto the June 4, 2004 Decision and August 4, 2004
Resolution of the Court of Appeals in CAG.R. CV No. 54831 holding that both petitioners
PNBandtheLuceroSpouseswerenotmortgageeandbuyersingoodfaith,respectively.

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Intheirseparatemotionsforreconsideration,bothpetitionersPNBandtheLuceroSpousesin
themainassertthattheyweremortgageeandbuyersforvalueingoodfaith,respectively.Thus,
theLuceroSpousespraythatwetakeasecondhardlookatthefactsandcircumstancesofthe
case.RespondentshoweverarguethatPNBcannotbeconsideredamortgageeingoodfaithasit
failedtoinspectthedisputedpropertywhenofferedtoitassecurityfortheloan,whichcould
haveledittodiscovertheforgedinstrumentsofsale.Similarly,theLuceroSpousescannotbe
regardedasinnocentpurchasersforvalue,respondentsclaim,astheyfailedtoinquirefromthe
occupants of the disputed property the status of the property. Before revisiting the facts and
circumstances of the instant case, a review of existing jurisprudence may be expedient in
resolvingthetwinmotionsforreconsideration.

InCabuhatv.CourtofAppeals,wesaidthatitiswellsettledthateveniftheprocurementofa
certificateoftitlewastaintedwithfraudandmisrepresentation,suchdefectivetitlemaybethe
sourceofacompletelylegalandvalidtitleinthehandsofaninnocentpurchaserforvalue.Thus

Where innocent third persons, relying on the correctness of the certificate of title thus
issued,acquirerightsoverthepropertythecourtcannotdisregardsuchrightsandorderthetotal
cancellation of the certificate. The effect of such an outright cancellation would be to impair
publicconfidenceinthecertificateoftitle,foreveryonedealingwithpropertyregisteredunder
theTorrenssystemwouldhavetoinquireineveryinstancewhetherthetitlehasbeenregularlyor
irregularlyissued.Thisiscontrarytotheevidentpurposeofthelaw.Everypersondealingwith
registeredlandmaysafelyrelyonthecorrectnessofthecertificateoftitleissuedthereforandthe
law will in no way oblige him to go behind the certificate to determine the condition of the
[1]
property.

[2] [3]
Cabuhat was later invoked by Clemente v. Razo and Velasquez, Jr. v. Court of Appeals.
Accordingly,inLimv.Chuatocowesaidthatitisafamiliardoctrinethataforgedorfraudulent
documentmaybecometherootofavalidtitle,ifthepropertyhasalreadybeentransferredfrom
thenameoftheownertothatoftheforger.Thisdoctrineservestoemphasizethatapersonwho
deals with registered property in good faith will acquire good title from a forger and be
absolutelyprotectedbyaTorrenstitle.Inthefinalanalysis,theresolutionofthiscasedepends
[4]
onwhetherthepetitionersarepurchasersingoodfaith.

Inalitanyofcases,wehavedefinedapurchaseringoodfaithasonewhobuysproperty
ofanotherwithoutnoticethatsomeotherpersonhasarightto,orinterestin,suchpropertyand
paysfullandfairpriceforthesameatthetimeofsuchpurchaseorbeforehehasnoticeofthe
[5]
claimorinterestofsomeotherpersonintheproperty.

Thus,asageneralrule,wherethelandsoldisinthepossessionofapersonotherthanthe
vendor,thepurchasermustgobeyondthecertificateoftitleandmakeinquiriesconcerningthe
actualpossessor.Abuyerofrealpropertywhichisinpossessionofanothermustbewaryand
investigatetherightsofthelatter.Otherwise,withoutsuchinquiry,thebuyercannotbesaidto
[6]
beingoodfaithandcannothaveanyrightovertheproperty. Weexplainedthisprinciplein
ConsolidatedRuralBank(CagayanValley),Inc.v.CourtofAppealsandalsoheldthereinthat
[7]
thisrulelikewiseappliestomortgageesofrealproperty
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AsthisCourtexplainedinthecaseofSpousesMathayv.CourtofAppeals:

Althoughitisarecognizedprinciplethatapersondealingonaregisteredlandneednot
gobeyonditscertificateoftitle,itisalsoafirmlysettledrulethatwheretherearecircumstances
which would put a party on guard and prompt him to investigate or inspect the property being
soldtohim,suchasthepresenceofoccupants/tenantsthereon,itisofcourse,expectedfromthe
purchaserofavaluedpieceoflandtoinquirefirstintothestatusornatureofpossessionofthe
occupants,i.e.,whetherornottheoccupantspossessthelandenconceptodedueo,intheconcept
oftheowner.Asisthecommonpracticeintherealestateindustry,anocularinspectionofthe
premisesinvolvedisasafeguardacautiousandprudentpurchaserusuallytakes.Shouldhefind
outthatthelandheintendstobuyisoccupiedbyanybodyelseotherthanthesellerwho,asin
thiscase,isnotinactualpossession,itwouldthenbeincumbentuponthepurchasertoverifythe
extent of the occupants possessory rights. The failure of a prospective buyer to take such
precautionary steps would mean negligence on his part and would thereby preclude him from
claimingorinvokingtherightsofapurchaseringoodfaith.

This Rule equally applies to mortgagees of real property. In the case of Crisostomo v.
CourtofAppealstheCourtheld

Itisawellsettledrulethatapurchaserormortgageecannotclosehiseyestofactswhich
shouldputareasonablemanuponhisguard,andthenclaimthatheactedingoodfaithunderthe
beliefthattherewasnodefectinthetitleofhisvendorormortgagor.Hismererefusaltobelieve
that such defect exists, or his willful closing of his eyes to the possibility of the existence of a
defectinthevendorsormortgagorstitle,willnotmakehimaninnocentpurchaserormortgagee
forvalue,ifitafterwardsdevelopsthatthetitlewasinfactdefective,anditappearsthathehad
suchnoticeofthedefectsaswouldhaveledtoitsdiscoveryhadheactedwiththemeasureofa
prudentmaninlikesituation.

Accordingly,forapurchaserofapropertyinthepossessionofanothertobeingoodfaith,
hemustexerciseduediligence,conductaninvestigation,andweighthesurroundingfactsand
circumstances like what any prudent man in a similar situation would do. In Domalanta v.
[8]
Commission on Elections we noted the use in other jurisdictions of the terms man of
[9] [10]
reasonable caution and ordinarily prudent and cautious man. These terms, we said, are
legally synonymous and their reference is not to a person with training in law such as a
prosecutororajudgebuttotheaveragemanonthestreet.It ought to be emphasized that the
averagemanweighsfactsandcircumstanceswithoutresortingtothecalibrationofourtechnical
rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common
sense of which all reasonable men have an abundance. And, [b]y law and jurisprudence, a
[11]
mistakeuponadoubtfulordifficultquestionoflawmayproperlybethebasisofgoodfaith.

On the other hand, a mortgagee, particularly a bank or financial institution whose
businessisimpressedwithpublicinterest,isexpectedtoexercisemorecareandprudencethana
[12]
privateindividualinitsdealings,eventhoseinvolvingregisteredlands. InSunshineFinance
and Investment Corp. v. Intermediate Appellate Court we presumed that an investment and
financingcorporationisexperiencedinitsbusiness.Ascertainmentofthestatusandconditionof
propertiesofferedtoitassecurityforloansitextendsmustbeastandardandindispensablepart
of its operations. Surely, it cannot simply rely on an examination of a Torrens certificate to
determinewhatthesubjectpropertylookslikeasitsconditionisnotapparentinthedocument.
The land might be in a depressed area. There might be squatters on it. It might be easily
inundated.Itmightbeaninteriorlot,withoutconvenientaccess.Theseandothersimilarfactors

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determinethevalueofthepropertyandsoshouldbeofpracticalconcerntothe(investmentand
[13]
financingcorporation).

In fine, the diligence with which the law requires the individual or a corporation at all
times to govern a particular conduct varies with the nature of the situation in which one is
[14]
placed,andtheimportanceoftheactwhichistobeperformed.

Similarly, in ascertaining good faith, or the lack of it, which is a question of intention,
courtsarenecessarilycontrolledbytheevidenceastotheconductandoutwardactsbywhich
alonetheinwardmotivemay,withsafety,bedetermined.Goodfaith,orwantofit,iscapableof
being ascertained only from the acts of one claiming its presence, for it is a condition of the
[15]
mindwhichcanbejudgedbyactualorfanciedtokenorsigns. Goodfaith,orwantofit,is
notavisible,tangiblefactthatcanbeseenortouched,butratherastateorconditionofmind
[16]
whichcanonlybejudgedbyactualorfanciedtokenorsigns. Goodfaithconnotesanhonest
[17]
intention to abstain from taking unconscientious advantage of another. Accordingly, in
UniversityoftheEastv.Jaderwesaidthat[g]oodfaithconnotesanhonestintentiontoabstain
from taking undue advantage of another, even though the forms and technicalities of law,
together with the absence of all information or belief of facts, would render the transaction
[18]
unconscientious.

Withal, in Sigaya v. Mayuga the Court said that good faith consists in the possessors
belief that the person from whom he received the thing was the owner of the same and could
convey his title. Good faith, while it is always to be presumed in the absence of proof to the
contrary, requires a well founded belief that the person from whom title was received was
himselftheowneroftheland,withtherighttoconveyit.Thereisgoodfaithwherethereisan
honest intention to abstain from taking any unconscientious advantage of another. Otherwise
stated,goodfaithistheoppositeoffraudanditreferstothestateofmindwhichismanifested
[19]
bytheactsoftheindividualconcerned.

Contrastingly,inMagat,Jr.v.CourtofAppealstheCourtexplainedthat[b]adfaithdoes
notsimplyconnotebadjudgmentornegligence.Itimportsadishonestpurposeorsomemoral
obliquity and conscious doing of wrong. It means a breach of a known duty through some
[20]
motive or interest or ill will that partakes of the nature of fraud. In Arenas v. Court of
AppealstheCourtheldthatthedeterminationofwhetheroneactedinbadfaithisevidentiaryin
[21] [22]
nature. Thus [s]uch acts (of bad faith) must be substantiated by evidence. Indeed, the
unbroken jurisprudence is that [b]ad faith under the law cannot be presumed it must be
[23]
establishedbyclearandconvincingevidence.

Alltold,theascertainmentofgoodfaith,orlackofit,andthedeterminationofwhether
duediligenceandprudencewereexercisedornot,arequestionsoffact.Andwhilesettledisthe
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[24]
principlethatthisCourtisnotatrieroffacts andthegeneralruleisthatthedeterminationof
whether or not a buyer or mortgagee is in good faith is generally outside the province of this
[25]
Court to determine in a petition for review, in Gabriel v. Spouses Mabanta we said that
[t]his rule, however, is not an ironclad rule. In Floro v. Llenado we enumerated the various
exceptions and one which finds application to the present case is when the findings of the
[26]
CourtofAppealsarecontrarytothoseofthetrialcourt. Thus,inClementev.Razo we
heldthattheissueofwhetherornotoneisaninnocentpurchaserforvalueisaquestionoffact
which, as a rule, is not for this Court to determine. In the same breath, however, there are
recognizedexceptionstosuchrule,nottheleastofwhichiswhen,asinthiscase,thefindingsof
[27]
theCourtofAppealsarecontrarytothatofthetrialcourt.

Intheinstantcase,thetrialcourtwhichhadthesoleopportunitytoobservefirsthandthe
demeanor of witnesses and consider the relative weight of the evidence presented, concluded
that Philippine National Bank and Spouses Johnny Lucero and Nona Ariete are purchasers in
good faith. Respondent appellate court however found that neither the PNB nor the Lucero
Spousescanberegardedasbuyersingoodfaithastheyfailedtoinquirefromthepossessorsthe
statusofthedisputedproperty.Wethusgobacktotherecordsofthecaseandthesubstantiated
allegations.

WebeginwithpetitionerPNB.Whileitmaybetruethatthebankcouldnothaveknown
theforgerycommittedbytheJalbunaSpousesatthetimethedisputedpropertywasmortgaged
to it, still it could not be completely exonerated from any liability arising from its apparent
omission,ifnotnegligence,tofurtherinvestigatethenatureofthepossessionorthetitleofthe
respondentswhoweretheallegedoccupantsoftheproperty.PNBdidnotpresentanywitness
beforethetrialcourtwhohadpersonalknowledgeofwhetherornotthebankhadconductedthe
requisiteocularinspectionorinvestigationbeforeacceptingthepropertyassecurityfortheloan
oftheJalbunaSpouses.

PerhapsPNBinordinatelyreliedonthepresumptionofregularityinitscompliancewith
the requirements for the Extrajudicial Foreclosure of Mortgage, such as the publication of the
notice of auction sale, and assumed that the burden of proof was on the respondents to prove
that the bank was remiss in its obligation. Perhaps too, the bank assumed that its presumed
compliancewiththeforegoingrequirementswassufficienttooperateasaconstructivenoticeto
all those claiming ownership of or a right to possess the mortgaged property, or those who
wouldbeadverselyaffectedbytheimpendingforeclosuresale.Itdoesnothoweveralterthefact
that the only witness presented by PNB merely inherited from his predecessor the records
relatingtotheaccountoftheJalbunaSpouses,andhencehadnopersonalknowledgeofwhether
ornotanocularinspectionwasinfactconductedontheproperty.Thus

Atty.Baares:

QDidyounotknowwhethertherewasaninspectorwhomadetheinspectionoftheproperty?

[28]
AIdonotknow.

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xxxx

QSo, is it safe to conclude now that you do not know whether Philippine National Bank sent
someinspectorstoLot3017Bbeforetheloan

Court:

Answered,hedidnotknow.Howwillheknow?

Atty.Baares:

[29]
Thatwillbeall,YourHonor.

Indeed, had petitioner PNB conducted an ocular inspection as it claims, it would have
foundoutthatthemortgagors,SpousesJalbuna,werenotinactualpossessionoftheproperty
buthereinrespondentsandtheirpredecessorsininterest,whichinformationshouldhaveputit
on inquiry as to the real status of the property. Consequently, petitioner PNB should have
inquiredintothecircumstancesofthepossessionbyhereinrespondentsandtheirpredecessors
ininterest.

Infine,thereisnoshowingthatpetitionerPNB,abankinginstitution,whichisexpected
to exercise more care and prudence in its dealings involving registered land, ascertained the
status and condition of the property being offered to it as a security for the loan before it
approvedtheloan.Hence,wethereforefindthatthereisnoreversibleerrorcommittedbythe
CourtofAppealsinfindingthatPNBcouldnotbeconsideredamortgageeingoodfaith.

We now go to petitioners Lucero Spouses. The Lucero Spouses knew from the very
beginningthatthedisputedpropertywasoccupiedbythirdparties.Theyresidedintheadjoining
property.Thus, they went beyond the title of petitioner PNB, and upon inquiry, were made to
believethatthepartialoccupationbyprivaterespondentsofthedisputedpropertywasmerely
being tolerated by the rightful owner. Accordingly, before the trial court, petitioner Nona A.
Lucerotestifiedthat

Atty.Posecion:

QDid your mother not tell you that the Militar family has been residing in the land so that it
wouldbedifficultifyoubuytheland?

ANo,becauseIwillmake(the)transaction(with)thePhilippineNationalBank,not(with)the
Militars.

QSothatyoudisregardedwhateverrighttheMilitarshaveovertheland,right?

[30]
ANo,becausethevendee/buyerhastheauthoritytomakeexpensesforallthesquatters.

TheLuceroSpousesalsoknewthatpetitionerPNBhadalreadyacquiredthepropertyina
foreclosuresaleandthatpetitionerPNBhadinfacttransferredthetitletoitsnameforalmost
fiveyearsalready.TheirbeliefthatpetitionerPNBthereafterhadtherighttotransfertitleover
the disputed property was strengthened by the fact that they similarly consolidated their
ownership over the adjoining property after buying it from respondent Romeo Militar and
[31]
assuminghisloanwithpetitionerPNB.
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The reliance of the Lucero Spouses, who never participated in the auction sale, on the
rightofpetitionerPNBwhichhadthetitleinitsnameforalmostfiveyearsalreadyisnottotally
misplaced.OnJune5,1975thedisputedpropertywasmortgagedtopetitionerPNB.Somethree
yearslater,onSeptember5,1978,themortgagedpropertywasextrajudiciallyforeclosedwhen
themortgagorsdefaultedinthepaymentoftheirloanobligation,withpetitionerPNBasthesole
and highest bidder for P119,961.36. Some four years thereafter, or on November 11, 1982, a
deedofsalewasexecutedinfavorofpetitionerPNBafterthemortgagorsfailedtoredeemthe
disputed property. On December 6, 1982, title over the disputed property was issued to
petitionerPNB.Thus,presentedduringtrialwere,amongothers,theAffidavitofPublicationof
SheriffsNoticeofSaleatPublicAuctionshowingthatpetitionerPNBcompliedwiththelawon
[32]
extrajudicialforeclosureofmortgage theCertificateofSaleatPublicAuctionofSeptember
5, 1978 issued in favor of petitioner PNB as the highest bidder in the auction sale of the lot
[33]
coveringthedisputedproperty andtheCertificationofSeptember27,1994issuedbythe
RegisterofDeedsofIloilostatingthattitletothelotcoveringthedisputedpropertywasissued
[34]
in favor of PNB. All told, it took almost eight years for petitioner PNB to consolidate its
titleoverthedisputedpropertyfromthetimeitwasmortgagedtoit.

TheLuceroSpousespurchasedthedisputedpropertyfrompetitionerPNBasanacquired
assetforP229,000.00andonlyonNovember9,1987,orsomenineyearsafteritextrajudicially
foreclosedtheproperty,andsomefiveyearsaftertitlewastransferredtoit.Hence, we cannot
reallysaythattheyacquiredthepropertyinbadfaithontheotherhand,wearemoreconvinced,
ifnotforfairness,equityandjustice,thattheyacquiredthedisputedpropertyingoodfaithand
foravaluableconsiderationonthebasisofthecleantitleofthebank.

And between the bank whose proof of ownership is the title acquired after years of
foreclosureproceedingsandsale,andthesupposedtoleratedoccupationofhereinrespondents
whose rights are dubious, and at best vague, petitioners Lucero Spouses cannot be faulted for
consideringpetitionerPNBashavingabetterrightoverhereinrespondentsandcouldverywell
relyonthetitleofthebank.Afterall,eventhisCourthastake(n)judicialnoticeoftheuniform
practiceoffinancinginstitutionstoinvestigate,examineandassesstherealpropertyofferedas
[35]
securityforanyloanapplication. Itmustberememberedthattheprudencerequiredofthe
LuceroSpousesisnotthatofapersonwithtraininginlaw,butratherthatofanaverageman
whoweighsfactsandcircumstanceswithoutresortingtothecalibrationofourtechnicalrulesof
[36]
evidence of which his knowledge is nil. Hence, petitioners Lucero Spouses bought the
disputed property with the honest belief that petitioner PNB was its rightful owner and could
convey title to the property. They can therefore be considered as buyers in good faith as they
haveexercisedduediligencerequiredunderthecircumstances.

Also, nowhere in the records does it show that the Lucero Spouses were in bad faith.
Neither were private respondents able to prove it, much less were they able to establish it by
clearandconvincingevidenceasrequiredbytherules.Onthecontrary,thetrialcourtfoundthat

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the Lucero Spouses acted in good faith since they bought the lot in question from defendant,
[37]
PhilippineNationalBank. TheycouldrelyonwhatappearsonthefaceoftheCertificateof
Titleinlightoftheattendantcircumstances,especiallyafterconsideringthattherequirements
fortheextrajudicialforeclosureofmortgagesuchaspublicationandnoticeappeartohavebeen
religiouslycompliedwithbyPNB.

Incontrast,wefind,afterameticulousscrutinyoftherecords,thattherespondentsarenot
entirelyblameless. They have not established their right or interest in the property aside from
their belated and unsubstantiated allegation that they were the successorsininterest of
Deogracias,Glicerio,TomasandCaridad,allsurnamedMilitar.DeograciasdiedonMarch 17,
1964,GlicerioonMarch22,1939,TomasonAugust20,1959,andCaridadonApril29,1957.
Sincethedeathsoftheirallegedpredecessorsininterest,respondentshavenotshownthatthey
havetakeneventheinitialstepstohavethepropertyregisteredintheirnames.Nor have they
evenallegedthattheypaidanyrealpropertytaxonthedisputedpropertylikeanyrealowner
shoulddo.Forthiswouldhaveputthemonnoticethatthesaidpropertyhasbeenregisteredin
thenameofathirdparty.

Thus, to reiterate for emphasis, the Deed of Sale which transferred the property to the
SpousesJalbunawasexecutedonApril 24, 1975. Clearly, respondents had more than enough
time and opportunity from the death of their ascendants to institute proceedings to have the
propertyadjudicatedtothem,ifindeeditwastruethattheywerethelawfulheirsofDeogracias,
Glicerio,TomasandCaridad,andwerethenewownersofthepropertybysuccession.This,they
didnotdo.Iftheydid,theforgeryallegedlycommittedbytheJalbunaSpouseswhichresulted
in the Deed of Absolute Sale of April 24, 1975 could not have been committed or pushed
through and the Lucero Spouses, as a consequence, would not have been induced to buy the
property.

TheJalbunaSpousesacquiredtitletothepropertyonApril29,1975.Fromthattimeon
thedoctrineofconstructivenoticewasalreadyineffectagainstallpersonsclaiminganytitleor
[38]
interestsinthepropertyadversetotheregisteredowners.

OnJune5,1975,theSpousesJalbunamortgagedthepropertytoPNB.Onthesamedate,
themortgagewasregisteredwiththeRegisterofDeedsofIloiloCity.Again,fromthatdate,the
respondentsweredeemedtohaveconstructivenoticeoftheregistration.

PhilippineNationalBankforeclosedthemortgageonSeptember5,1978.The Notice of
ExtrajudicialForeclosureofMortgagewaspublishedinanewspaperofgeneralcirculation.The
publication likewise operated as constructive notice to all persons who would be adversely
affected by the impending foreclosure of the property. A Certificate of Sale over the property
wasissuedinfavorofPNBasthehighestbidderintheauctionsale.TheCertificateofSalewas
again registered and annotated in the title of the property. Again, the respondents had
constructivenoticeoftheregistration.

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OnNovember11,1982,PNBconsolidateditstitletothepropertyandaDeedofSalewas
issuedinitsfavor.OnDecember6,1982,aTransferCertificateofTitlewasissuedinfavorof
PNB. Respondents should likewise be charged with notice of such fact. Since that time up to
November9,1987whenthepropertywassoldtotheLuceroSpouses,orforfive(5)longyears,
thepropertywasanacquiredassetofthebank.Duringthistimeitcanbededucedthatitwasthe
bankwhopaidtherealestatetaxesandwhoappearedasownerinthetaxdeclarationsandother
documentspertainingtotheproperty.

ItwouldappearthatitwasPNBwhoexercisedactsofownershipoverthepropertyduring
thefiveyearperiod,nottherespondentswhoarenowclaimingtobetheowners.There is no
evidence of any act of ownership exercised by the respondents, such as payment of taxes and
introduction of improvements which would have shown, by preponderance of evidence, the
right of ownership to or interest in the property, aside form their occupation thereof by mere
tolerance. Since the death of their predecessors, there has not even been a showing that
respondentsverified,inquiredorinvestigatedwiththeRegisterofDeedsortheAssessorsOffice
astothestatusoftheproperty.Ifonlyrespondentshavebeenmorevigilantintheenforcement
oftheirallegedrightsandinterests,thepropertywouldnothavebeensoldtothirdpersonswho
paidvaluableconsiderationthereto.Farfrombeingvigilant,however,respondentshaveshown
sheerdisinterestintheirclaimtotheproperty,thusleadingtothewellfoundedconclusionthat
their claimed ownership rights are not anchored in reality. Vigilantibus sed non dormientibus
jurasubveniunt.Thelawaidsthevigilant,notthosewhoslumberontheirrights.

More. On November 9, 1987, the property was sold by PNB to the petitioners Lucero
SpousesandaTransferCertificateofTitlewasissuedintheirnameonNovember11,1987.The
respondents however filed their Complaint for reconveyance and damages only on October 2,
1989, or nearly two (2) years after title to the property was issued in favor of the Lucero
Spouses.Respondentsinfactamendedtheircomplaintthree(3)times,thelastoneonDecember
26,1994.Clearly,theactuationsofrespondentswerenotnormalforthoseclaimingingoodfaith
legitimateownershipoveraparceloflandsufficienttomakethirdpersonsconcludethattheir
claim is wellfounded as against the registered owner, in this case, PNB. Indeed, respondents
werefrozenintheshacklesofinactivityfortoolong.Theybestirredthemselvesfortheirlong
slumberaftertheLuceroSpousesstartedtorecoverpossessionofthepropertywhichisamere
incident to the ownership that they have already gained. In essence, the respondents slept on
theirrights,andhence,mustsuffertheconsequencesoftheirpassivityandinaction.
WHEREFORE,theAugust18,2005DecisionofthisCourtisherebyMODIFIED.The
Motion for Reconsideration of the Philippine National Bank is DENIED WITH FINALITY.
However, the Motion for Reconsideration of the Spouses Johnny Lucero and Nona Ariete is
GRANTED,andtheOctober18,1995DecisionoftheRegionalTrialCourtofIloilo,Br.38,in
CivilCaseNo.18836insofarasitholdsSpousesJohnnyLuceroandNonaArieteasinnocent
purchasersforvalueingoodfaithisREINSTATED and their title to Lot 3017B under TCT
No.76938issuedonNovember11,1987isdeclaredandsoconfirmedasVALID.

SOORDERED.

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CONSUELOYNARESSANTIAGO
AssociateJustice

WECONCUR:



LEONARDOA.QUISUMBING
AssociateJustice


ANTONIOT.CARPIOADOLFOS.AZCUNA
AssociateJusticeAssociateJustice



ATTESTATION

Iattestthattheconclusionsintheaboveresolutionwerereachedinconsultationbeforethecase
wasassignedtothewriteroftheopinionoftheCourtsDivision.



LEONARDOA.QUISUMBING
AssociateJustice
Chairman,SpecialFirstDivision


CERTIFICATION


PursuanttoSection13,ArticleVIIIoftheConstitution,itisherebycertifiedthattheconclusions
in the above Resolution were reached in consultation before the cases were assigned to the
writeroftheopinionoftheCourtsDivision.



REYNATOS.PUNO
ActingChiefJustice

[1]
G.R.No.122425,September28,2001,366SCRA176,182(citationstherein,omitted).
[2]
G.R.No.151245,March4,2005,452SCRA769,779.
[3]
G.R.No.138480(consolidatedwithAyalaLand,Inc.v.Velasquez,Jr.,G.R.No.139449),March25,2004,426SCRA309,315.
[4]
G.R.No.161861,March11,2005,453SCRA308,317.
[5]
SeeSigayav.Mayuga,G.R.No.143254,August18,2005,467SCRA341,354355SanLorenzoDevelopmentCorp.v.Courtof
Appeals, G.R. No. 124242, January 21, 2005, 449 SCRA 99, 117 Sps. Occea v. Esponilla, G.R. No. 156973, June 4, 2004, 431
SCRA116,124SpousesCastrov.Miat,G.R.No.143297,February11,2003,397SCRA271,284AFPMutualBenefitAssociation,
Inc.v.CourtofAppeals,G.R.No.104769(consolidatedwithSolidHomes,Inc.v.Investco,Inc.,G.R.No.135016),September 10,
2001,364SCRA768,771RepublicofthePhilippinesv.CourtofAppeals,G.R.No.99331,April21,1999,306SCRA81,87
Sandovalv.CourtofAppeals,G.R.No.106657,August1,1996,260SCRA283,296297.
[6]
SeeSps.Castrov.Miat,supranote5Luv.Manipon,G.R.No.147072,May7,2002,381SCRA788,798799Republicofthe
Philippinesv.DeGuzman,G.R.No.105630,February23,2000,326SCRA267,277Davidv.Malay,G.R.No.132644,November
19,1999,318SCRA711,724Embradov.CourtofAppeals,G.R.No.51457,June27,1994,233SCRA335,346.
[7]
G.R.No.132161,January17,2005,448SCRA347,366367(citationstherein,omitted).
[8]
G.R.No.125586,June29,2000,334SCRA555.

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[9]
CitingBrinegarv.US,338US160(1949).
[10]
CitingDelCarmen,CriminalProcedure,LawandPractice,3rd ed.,p.86.
[11]
DevelopmentBankofthePhilippinesv.CourtofAppeals,G.R.No.111737,October13,1999,316SCRA650,664.
[12]
ConsolidatedRuralBank(CagayanValley),Inc.v.CourtofAppeals,supranote7at367.
[13]
G.R.Nos.7407071,October28,1991,203SCRA210,216.
[14]
SeeCruzv.JudgeGangan,G.R.No.143403,January22,2003,395SCRA711,717(citationstherein,omitted)andBulilanv.
CommissiononAudit,G.R.No.130057,December22,1998,300SCRA445,453.
[15]
ExpresscreditFinancingv.SpousesVelasco,G.R.No.156033,October20,2005,473SCRA570,577578,citingLeungYeev.
FLStrongMachinery,37Phil.644,651(1918).
[16]
Balatbatv.CourtofAppeals,G.R.No.109410,August28,1996,261SCRA128,143,citingBautistav.CourtofAppeals,G.R.
No.106042,February28,1994,230SCRA446,454455.
[17]
EquatorialRealtyDevelopment,Inc.v.MayfairTheater,Inc.,G.R.No.106063,November21,1996,264SCRA483,508.
[18]
G.R.No.132344,February17,2000,325SCRA804,811.
[19]
Supranote5at355,citingLimv.Chuatoco,supranote4.
[20]
G.R.No.124221,August4,2000,337SCRA298,307.
[21]
G.R.No.126640,345SCRA617,629.
[22]
ABSCBNBroadcastingCorp.v.CourtofAppeals,G.R.No.128690,January21,1999,301SCRA572,604.
[23]
PhilippineAirlinesv.Miano,G.R.No.106664,March8,1995,242SCRA235,240LBCExpress,Inc.v.CourtofAppeals,G.R.
No.108670,September21,1994,236SCRA602,608,citingPeoplesBankandTrustCo.v.SyvelsInc.,L29280,August11,1988,
164SCRA247.
[24]
Alipoonv.CourtofAppeals,G.R.No.127523,March22,1999,305SCRA118.
[25]
Sigayav.Mayuga,supranote5Orquiolav.CA,G.R.No.141463,August6,2002,386SCRA301,309SpousesUyv.Courtof
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[26]
G.R.No.142403,March26,2003,399SCRA573(citationstherein,omitted).
[27]
Supranote2at775.
[28]
TSN,July12,1995,p.23.
[29]
Id.at26.
[30]
TSN,July19,1995,p.10.
[31]
Id.at2627.
[32]
Exhibit5.
[33]
Exhibit6.
[34]
Exhibit8.
[35]
StateInvestmentHouse,Inc.v.CourtofAppeals,G.R.No.115548,March5,1996,254SCRA368,375.
[36]
SeeDomalantav.CommissiononElections,supranote8.
[37]
Decisionofthetrialcourt,p.9.
[38]
Sec.51,P.D.1959.

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