De Guzman v. Perona
REITERATIONFacts
The Antecedents: Pedro de Guzman filed a complaint against the heirs of Rosauro de Guzman and Angelina Perona, and two banks, seeking reconveyance of a parcel of land approximately 300 square meters. Pedro alleged that Rosauro and Angelina fraudulently caused the cancellation of Original Certificate of Title (OCT) No. 10075 and the subdivision of the property into three parcels, with titles issued in their names. Pedro claimed he was entitled to a share of the estate of Andrea de Guzman, a sibling of his grandfather, and that the house he occupied had been adjudicated to him. He asserted that Bataan Development Bank (BD Bank) accepted land as collateral without proper investigation, and sought cancellation of titles affecting his property, along with damages. Procedural History: The Regional Trial Court (RTC) dismissed Pedro de Guzman's complaint. The Court of Appeals (CA) affirmed this dismissal, first in a Resolution dated May 30, 2001, and subsequently denied a motion for reconsideration in a Resolution dated January 25, 2002. Pedro de Guzman died during the pendency of the appeal, and his heirs and successors-in-interest, the petitioners, pursued the case. The Petition: Petitioners, as heirs of Pedro de Guzman, filed a petition for review on certiorari under Rule 45 of the Rules of Court. They seek to reverse the CA's decision, arguing that the CA erred in not ruling that they acquired the land covered by TCT No. 78181 through oral partition and in not holding that the respondent banks were mortgagees in bad faith. The petitioners also contend that Pedro acquired ownership through a document from Andrea and are asking for reconveyance of the land where Pedro's house stands. BD Bank countered that the issue of bad faith is a question of fact, improper for a Rule 45 appeal.
Issue(s)
Whether the Court of Appeals erred in not ruling that petitioners acquired the land covered by TCT No. 78181 through oral partition. Whether the Court of Appeals erred in not holding that the respondent banks are mortgagees in bad faith. Whether Pedro de Guzman acquired ownership over the property by virtue of a document executed by Andrea transferring ownership to him; and whether the allegation of fraud in the cancellation of OCT No. 10075 is supported by evidence. Whether petitioners are entitled to the reconveyance of a parcel of land where Pedro's house is situated; and on the effect of the default order against respondents Angelina and heirs of Rosauro.
Ruling
The petition is denied. The Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of oral partition: The Supreme Court held that the allegation of acquiring the property through oral partition could not be taken cognizance of as it was never raised before the RTC. Pedro's theory in the trial court was based on a document executed by Andrea transferring ownership to him. The Court reiterated the well-settled rule that issues and arguments not brought before the trial court cannot be raised for the first time on appeal, citing basic considerations of due process. Therefore, this claim was deemed procedurally barred. On the issue of BD Bank being a mortgagee in bad faith: The Supreme Court reiterated that petitions for review under Rule 45 are limited to questions of law, not fact. The question of whether BD Bank was a mortgagee in bad faith is a question of fact, making it improper for appeal under Rule 45. Moreover, the trial court found that BD Bank conducted an inspection of the property before accepting it as collateral, which contradicted petitioners' claim of lack of due diligence. The Court gave weight to the trial court's factual findings, supported by documentary evidence showing that BD Bank's appraiser inspected and appraised the property, leading to the approval of the loan and execution of the mortgage. Therefore, no fraud could be attributed to BD Bank. On the issue of ownership transfer from Andrea and Pedro's claim to the land; and on the allegation of fraud in the cancellation of OCT No. 10075: The Supreme Court found that Pedro's claim that Andrea transferred the parcel of land to him was not substantiated by evidence. The records showed that Pedro only paid real property taxes for the properties in 1984 and 1985, prior to filing his complaint. The Court concluded that these payments were an afterthought to create a semblance of right over the property. Furthermore, the Court emphasized that a certificate of title is superior to tax declarations and receipts, which are not conclusive evidence of ownership. Thus, Pedro failed to prove his alleged ownership or right to the property. The Supreme Court found Pedro's allegation that spouses Rosauro and Angelina committed fraud in canceling OCT No. 10075 and issuing new titles to be unsupported by evidence. The Court stressed that mere allegations of fraud are insufficient; intentional acts to deceive and deprive another of their right must be specifically alleged and proven by clear and convincing evidence. Since Pedro failed to prove his title and the fact of fraud, his action for reconveyance based on fraud could not prosper. On whether petitioners are entitled to the reconveyance of a parcel of land where Pedro's house is situated; and on the effect of the default order against respondents Angelina and heirs of Rosauro: The Supreme Court clarified that a default order does not automatically mean an admission of the plaintiff's allegations. The party making allegations still bears the burden of proving them by a preponderance of evidence. Relying on jurisprudence, the Court stated that parties must rely on the strength of their own evidence, not the weakness of the defense. A judgment by default does not imply a waiver of rights beyond being heard and presenting evidence, nor does it mean the defendant admits the plaintiff's cause of action or entitlement to the relief prayed for. Favorable relief can only be granted after the court ascertains it is warranted by the evidence offered and facts proven.
Main Doctrine
Tax declarations and tax receipts are not conclusive evidence of ownership. A certificate of title is superior and binding upon the whole world. Allegations of fraud must be proven by clear and convincing evidence. A judgment by default does not automatically admit the plaintiff's allegations; the plaintiff must still prove their case by a preponderance of evidence.