G.R. No. 57757 - Philippine National Bank vs. Court of Appeals

On November 28, 1952, Donata Montemayor, through her son Salvador M. Vitug, mortgaged several parcels of land covered by Transfer Certificate of Title (TCT) No. 2289-Pampanga to the Philippine National Bank (PNB) to secure a loan amounting to P40,900.00; the mortgage was duly registered with the Office of the Register of Deeds of Pampanga.
On December 1, 1963, Donata Montemayor mortgaged additional properties covered by TCT Nos. 2887 and 2888-Pampanga in favor of the PNB to guarantee another loan of P35,200.00; these too were registered in the Register of Deeds of Pampanga.
Notably, all TCTs in question were issued in the name of Donata Montemayor—a legally qualified widow—who, at the time, held the properties free from liens and any other encumbrances.

Due to non-payment by Salvador Vitug, the PNB foreclosed the properties covered by TCT Nos. 2887 and 2888; these were sold at a public auction on May 20, 1968, where the bank emerged as the highest bidder. The titles were subsequently consolidated in the name of the PNB.
Similarly, properties covered by TCT No. 2889, mortgaged for Salvador Jaramilla and Pedro Bacani, were foreclosed, sold at public auction, and issued a certificate of sale on August 30, 1968, which eventually led to the issuance of a new title in the name of PNB.

Clodualdo Vitug, during his lifetime, had two marriages. His first marriage to Gervacia Flores produced three children, while his second marriage to Donata Montemayor produced eight children, including Pragmacio, Maximo, and others.
Clodualdo Vitug died intestate on May 20, 1929, with his estate settled in a special proceeding, wherein Donata Montemayor acted as the administratrix.
Questions about the nature of the properties arose when, during the life of Donata Montemayor, leasing transactions were executed. In May 1958, she leased Lot No. 24 (covered by TCT No. 2887) in favor of her children Pragmacio and Maximo Vitug, with subsequent renewals and a further lease executed by Pragmacio on behalf of Maximo in 1967.

On March 21, 1970, Pragmacio and Maximo Vitug filed an action for partition and reconveyance with damages in the Court of First Instance of Pampanga. They claimed that 30 parcels of land were conjugal property of the marriage of Donata Montemayor and Clodualdo Vitug, asserting a share of 2/11 of 1/2 of the property.
The plaintiffs challenged the mortgage transactions and public auction sale, invoking the earlier Supreme Court decision in Vitug vs. Montemayor (L-5297, 1953) that had classified the properties as conjugal.
The lower court initially dismissed the complaint and imposed attorney’s fees, a decision later reversed by the Court of Appeals on May 20, 1981—with modifications—upholding the validity of the public auction sale of part of the property.

The PNB, which had lent based solely on the Torrens certificates of title reflecting Donata Montemayor as the owner, found itself facing challenges to the title through claims of conjugal property.
It was emphasized that the PNB, as a purchaser for value and mortgagee in good faith, relied on the face of the Torrens title without any actual knowledge of the alleged conjugal rights or the parties’ disputes.

Whether the presumption of conjugality under Article 160 of the Civil Code applies to properties covered by Torrens certificates issued in the name of a widow.

The central question is if the presumption that property acquired during marriage belongs to the conjugal partnership holds when the title is solely in one spouse’s name and indicates that the property was acquired after the spouse became a widow.

Whether the PNB, having relied on the face of the Torrens title, can claim good faith in the mortgage transactions despite subsequent challenges on the grounds of conjugal property claims.

The issue also involves determining if the bank is bound by prior actions and if it may safely rely on the Torrens system’s conclusiveness.

Whether the actions of Pragmacio and Maximo Vitug, who leased the properties from their mother and later asserted their rights, constitute laches and estoppel, thereby barring them from attacking the title of Donata Montemayor.