G.R. No. 152266 - Heirs of De Guzman vs. Perona

Pedro de Guzman filed a Complaint with an application for a temporary restraining order and a preliminary injunction on April 15, 1985, before the Regional Trial Court (RTC) of Bataan (Civil Case No. 5247).
The complaint sought reconveyance of a parcel of land measuring approximately 300 square meters, where Pedro’s house is situated, from the heirs of Rosauro de Guzman and his surviving spouse, Angelina Perona.
Pedro alleged that through unlawful machination, fraud, deceit, and evident bad faith, the respondent spouses had caused the cancellation of Original Certificate of Title (OCT) No. 10075 and subdivided the property into three parcels under separate Transfer Certificate of Titles (TCTs).

OCT No. 10075, issued on July 25, 1933, originally covered an area of about 3,242 square meters and was registered partly in the name of Andrea de Guzman and partly in the names of Servando de Guzman’s children.
Following deaths and a petition for a duplicate issued on July 26, 1950 by Jose de Guzman, the title was reissued pursuant to the order of the Court of First Instance of Bataan on August 22, 1950.
An Extrajudicial Settlement of Estate was executed on October 16, 1952 by several heirs (including Pablo, Jose, Canuto, Veronica Cruz as legal administrator, Rogelio, and Maximino) resulting in the cancellation of OCT No. 10075 and the issuance of TCT No. T-3885.
TCT No. T-3885 was later divided into three parts:

TCT No. 78181 registered in the name of spouses Rosauro and Angelina, which later became the subject of a mortgage transaction.
TCT No. 78182 sold to Carlito Pangilinan and Candida Ramos by virtue of a Kasulatan ng Bilihang Tuluyan dated August 12, 1982, subsequently canceled and replaced by TCT No. 105347.
TCT No. 78183 originally in the names of multiple De Guzman heirs, canceled and superseded by TCT No. T-92048, later registered in the name of the spouses Rosauro and Angelina.

TCT No. 78181 was mortgaged by the spouses to Bataan Development Bank (BD Bank) on March 25, 1980.
Due to non-payment of indebtedness, BD Bank foreclosed and sold the mortgaged property.
Separately, TCT No. T-92048 (arising from the cancellation of TCT No. 78183) was mortgaged to Republic Planters Bank (RP Bank) on August 11, 1982, through the action of Rita A. Paguio as attorney-in-fact for the spouses.

Pedro claimed to be the grandson of Zacarias de Guzman (brother of Servando), and thus a rightful co-heir of Andrea.
He alleged that during Andrea’s lifetime a document transferred the property to him and that he had continuously occupied and taken care of Andrea, thereby entitling him to ownership of the 300-square meter parcel.
It was further alleged that both BD Bank and RP Bank failed in their due diligence: BD Bank by accepting the property as collateral without verifying its true status, and RP Bank by acting on a title that was allegedly the result of fraudulent cancellation of OCT No. 10075.
Respondents Angelina and the heirs of Rosauro did not answer the complaint (leading to their default) while BD Bank and RP Bank submitted defenses asserting the absence of a valid cause of action and confirmed the regularity of the transactions, respectively.

The RTC dismissed the complaint on April 14, 1994.
Pedro filed a Notice of Appeal, which was later dismissed by the Court of Appeals (CA) in resolutions dated May 30, 2001 and January 25, 2002.
After Pedro’s death, his heirs and successors-in-interest petitioned the Supreme Court for review on certiorari under Rule 45 of the Rules of Court, raising issues pertaining to an alleged oral partition and the good faith of the mortgagee (BD Bank).

Whether petitioners have acquired the land covered by TCT No. 78181 against Angelina Perona and the heirs of Rosauro de Guzman through an oral partition.
Whether respondent BD Bank is a mortgagee in bad faith due to purported lapses in investigating and verifying the status of the property when accepting it as collateral.