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REPUBLIC OF THE PHILIPPINES

Supreme Court
Manila

ERYKA REYANA F. CLASARA


and NOELLE GRACE B.
RILLON,
Petitioners

-versus-

C. A. G. R. CV No.
873505
RTC Civil Case No. 1517BG
Regional Trial Branch 1
Bauang, La Union

ATTY.
MARK
VALEROSO
substituted by his heirs namely:
JOSEPH VALEROSO,
et.al.,
SPOUSES PAMELA VALEROSO
and
ROMEO
VALEROSO,
RURAL BANK OF LUNA, LA
UNION, and BANK OF THE
PHILIPPINE ISLANDS
Respondents
x------------------------------------------x

PETITION FOR REVIEW ON CERTIORARI

PETITIONERS, by and through the undersigned counsel, unto


this Honourable Supreme Court, most respectfully state that:
NATURE OF THE PETITION
This is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court filed by Petitioners ERYKA REYANA F.
CLASARA and NOELLE GRACE B. RILLON to assail the Decision
dated September 29, 2015 of the Eighth Division of the Court of
Appeals which denied their appeal, and affirmed the Decision of the
Regional Trial Court-Branch 1 of Bauang, La Union in Civil Case No.
1517-BG, and the Resolution dated January 28, 2016 denying herein
Petitioners Motion for Reconsideration.

Page 1 of 31

The case C.A. G.R. CV No. 875303 is an appeal from the


Decision dated September 27, 2014 of the Regional Trial CourtBranch 37 of Bauang, La Union, dismissing the complaint filed by
herein Petitioners, the dispositive portion of which reads:
x

xx

WHEREFORE, after a thorough consideration of the


facts and pieces of evidence in this case, this Court finds
for defendants and against plaintiffs and thus, the
complaint is DISMISSED for lack of merit. Plaintiffs are
directed to pay:

1 Thirty thousand pesos [Php 30,000.00] in


attorneys fees and costs of suit to defendants
Prieto;
2 Thirty thousand pesos [Php 30,000.00] in
attorneys fees and costs of suit to defendant
BPI; and,
3 Thirty thousand pesos [Php 30,000.00] in
attorneys fees and costs of suit to defendant
Rural Bank of Luna, Inc.
SO ORDERED.
x

xx

On appeal, the Court of Appeals affirmed the said RTC


Decision, the dispositive portion of which reads:
WHEREFORE, the trial courts Decision
dated September 27, 2015 is affirmed.
SO ORDERED.

THE PARTIES
The Petitioners in this case are ERYKA REYANA F. CLASARA
and NOELLE GRACE B. RILLON, both of legal age, married,
Filipinos and residents of Sitio Magan, Calumbaya, Bauang, La
Union, Philippines.
On the other hand, Respondents are:
Page 2 of 31

1 ATTY. MARK VALEROSO, now deceased, and substituted


by his heirs namely: JOSEPH VALEROSO, et.al. JOSEPH
VALEROSO is of legal age, single, Filipino, and a resident of
Pindangan Ruins Village, San Fernando City, La Union,
Philippines;

2 SPOUSES PAMELA VALEROSO and ROMEO VALEROSO,


both of legal age, Filipinos, married to each other, and
residents of Pindangan Ruins Village, San Fernando City, La
Union, Philippines;

3 RURAL BANK OF LUNA LA UNION, a corporation organized


under Philippines laws but ceased operations as of January
20, 2014, and is currently under full control and receivership
of the Philippine Deposit Insurance Corporation (PDIC), with
address at 9th Floor, SSS Building, Ayala Avenue corner
Rufino Street, Makati City, Philippines; and

4 OF THE PHILIPPINE ISLANDS, a commercial banking


corporation duly organized and existing under Philippine
laws, with main office address at Ground Floor, BPI H.O.
Building, Ayala Avenue, Paseo de Roxas Street, Makati City,
Metro Manila, and with branch office at Quezon Avenue, San
Fernando City, La Union, Philippines

MATERIAL DATES
The Decision of the Court of Appeals which is being assailed in
the instant Petition was promulgated on September 29, 2015.
Petitioner timely filed a Motion for Reconsideration thereof on
October 24, 2015, but the same was denied by the Court of Appeals
in a Resolution dated January 28, 2016. Copies of the Decision and
the Resolution were received by the Petitioners through Counsel on
October 10, 2015 and April 18, 2016, respectively.
Attached, marked and made integral part hereof as ANNEX A
and ANNEX B, respectively, are clearly legible duplicate originals of
the Decision, and Resolution of the Court of Appeals.
Under Section 2 of Rule 45 of the Revised Rules of Court,
(t)he petition shall be filed within fifteen (15) days from notice of the
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judgment or final order or resolution appealed from, or of the denial of


the petitioners motion for new trial or reconsideration filed in due time
after notice of the judgment. Xxx xxx.
Pursuant to the above-quoted rule, Petitioners had fifteen
(15) days from April 17, 2016 or until May 2, 2016 within which to file
this Petition. On April 25, 2016, Petitioners through Counsel, filed a
Motion for Extension of Time to File Petition for Review on Certiorari
under Rule 45 of the Rules of Court, attaching therein postal money
orders in the total amount of Php 3,530.00 representing full payment
of filing / docket fees, and deposits for costs, further praying therein
that Petitioners be granted an extension of thirty (30) days from May
2, 2016, or until June 1, 2016, within which to file their Petition.

MATTERS INVOLVED
This Petition is being made primarily on pure questions of law
which shall be distinctly set forth and discussed. Questions of fact
shall also be raised only in so far as the circumstances warrant in the
light of prevailing law and jurisprudence. As shall be explicated in this
Petition, the Court of Appeals manifestly overlooked, ignored, or
misinterpreted certain facts and circumstances of weight and
significance which, if considered, would greatly alter the result of the
case. It has been held that when such an instance occurs, the
Honourable Supreme Court upon which this Petition is brought shall
exercise its power to review and rectify such findings. 1

STATEMENT OF FACTS AND OF THE CASE


The late Salud Andrada Santiago was the registered owner of a
parcel of land covered by Original Certificate of Title [OCT] No. FP15744 under a Free Patent Grant given on July 5, 1989, a copy of
which is hereto attached, marked and made an integral part hereof as
ANNEX C.
The said property was declared for taxation purposes at the
Municipal Assessors Office of Bauang, La Union, and was issued Tax
Declaration No. 27414 also in the name of Salud Andrada Santiago, a
copy of which is hereto attached, marked and made an integral part
hereof as ANNEX D.

1 See Government Service Insurance System vs. Court of Appeals, 222 SCRA 685 [1993]; Metro Manila
Transit Corporation vs. Court of Appeals, 233 SCRA 521 [1993]; De la Cruz vs. Sosing, 94 Phil. 26 [1953];
Cebu Shipyard and Engineering Works, Inc. vs. William Lines, Inc. 306 SCRA 762 [1999].

Page 4 of 31

Salud Andrada Santiago mortgaged OCT No. FP-15344, along


with five [5] other parcels of land covered by tax declarations, with
herein Respondent Rural Bank of Luna, La Union sometime in
October 1992. When she failed to pay her loan obligation, mortgage
was foreclosed and the properties were sold by the Provincial ExOfficio Sheriff at public auction on August 2, 1993.
Since Respondent Atty. Mark Valeroso was the highest bidder,
he was awarded the properties. Soon thereafter, or on December
1993, he mortgaged the properties in favor of Tagumpay Lending
Investors.
On September 2, 1994, the Provincial Ex-Officio Sheriff of La
Union issued a Certificate of Definitive Deed of Sale in favor of
Defendant-Appellee Atty. Mark Valeroso. It was by virtue of this
document that Original Certificate of Title [OCT] No. FP-15344 was
cancelled and in lieu thereof a new title, Transfer Certificate of Title
[TCT] No. T-40223 was issued in the name of Defendant-Appellee
Atty. Mark Valeroso, a copy of which is hereto attached, marked and
made an integral part hereof as ANNEX E.
Thereafter, Respondent Atty. Mark Valeroso executed a Special
Power of Attorney in favor of his son, Joseph Valeroso authorizing the
latter to mortgage the property covered by OCT No. FP-1534 in favor
of herein Respondent Far East Bank and Trust Company [now Bank
of the Philippine Islands].
Pursuant to the Special Power of Attorney executed by his
father, Respondent Joseph Valeroso twice mortgaged the said
property to Respondent Far East Bank and Trust Company [now
Bank of the Philippine Islands], first in the amount of Php
1,000,000.00, and subsequently for Php 4,000,000.00. This in effect
burdened the property with unlawful encumbrances.
On August 13, 2002, Salud Andrada Santiago died. A copy of
her death certificate is hereto attached marked and made an integral
part hereof as ANNEX F.
In order to protect their rights and interests as lawful heirs of
Salud Andrada Santiago, Petitioners, on January 5, 2004, filed a
complaint for Declaration of Nullity of Contracts, Reconveyance of
Property and Damages against herein Respondents before the RTC
Branch 37 of Bauang, La Union, docketed as Civil Case No. 1815-Bg.
On January 30, 2004, herein Respondents Atty. Mark valeroso,
and Spouses Antonio and Monette Santiago filed their joint Answer to
the Complaint, alleging among others that herein Petitioners have
already lost the right to redeem or repurchase the property
mortgaged by their mother Salud Andrada Santiago.
Page 5 of 31

In February 2004 herein Respondents Far East Bank and Trust


Company [now Bank of the Philippine Islands], and Respondent
Rural Bank of Luna, La Union, filed their separate and respective
Answers to the Complaint, alleging among others that they acquired
the properties in good faith and for valuable consideration.
On September 28, 2005, the pre-trial conference was
conducted. As such, a pre-trial order was issued by RTC Branch 37,
a copy of which is hereto attached marked and made an integral part
hereof as ANNEX G.
Thereafter, trial ensued.
On September 27, 2012, RTC Branch 33, through the Hon.
Presiding Judge Rosemary Minog rendered a Decision dismissing the
instant complaint. A copy of the said decision is hereto attached
marked and made an integral part hereof as ANNEX H.
On appeal, the Honourable Court of Appeals, affirmed the
September 27, 2014 Decision of the RTC. It likewise denied the
Motion for Reconsideration filed by herein Petitioners.
Hence, the instant petition.

ASSIGNMENT OF ERRORS
I.
THE HONORABLE COURT OF APPEALS
ERRED WHEN IT AFFIRMED
THE
DECISION OF THE TRIAL COURT
DECLARING THAT THE MORTGAGE IN
FAVOR OF RURAL BANK OF LUNA, LA
UNION IS VALID DESPITE THE EXPRESS
PROHIBITION ON THE FACE OF ORIGINAL
CERTIFICATE OF TITLE [OCT] NO. FP15344 AGAINST ENCUMBRANCE.
II.

THE HONORABLE COURT OF APPEALS


ERRED WHEN IT DID NOT DECLARE THAT
ALL PROCEEDINGS AND CONTRACTS
WHICH
GAVE
RISE
TO
THE
CANCELLATION
OF
ORIGINAL
CERTIFICATE OF TITLE [OCT] NO. FPPage 6 of 31

15344
AND
ALL
SUBSEQUENT
TRANSACTIONS,
DOCUMENTS
AND
INSTRUMENTS INCLUDING, BUT NOT
LIMITED
TO,
THE
ISSUANCE
OF
TRANSFER CERTIFICATE OF TITLE [TCT]
NO. 40223 AND THE REAL ESTATE
MORTGAGES EXECUTED IN FAVOR OF
BANK OF THE PHILIPPINE ISLANDS AS
NULL AND VOID.
III.
THE HONORABLE COURT OF APPEALS
ERRED WHEN IT DID NOT RECONVEY
OWNERSHIP OVER THE PARCEL OF LAND
COVERED BY ORIGINAL CERTIFICATE OF
TITLE [OCT] NO. FP-15344 TO HEREIN
PETITIONERS.
IV.
THE HONORABLE COURT OF APPEALS
ERRONEOUSLY APPLIED THE RULING OF
THIS HONORABLE SUPREME COURT IN
THE CASE OF JOSE ABELGAS JR., ET.AL.
VS. SERVILLANO COMIA, ET.AL., 670
SCRA 7, APRIL 18, 2012 TO THE INSTANT
CASE DESPITE HAVING DISSIMILAR
FACTUAL SETTINGS.
V.
THE HONORABLE COURT OF APPEALS
ERRED WHEN IT DECLARED THAT
RESPONDENTS
ARE
ENTITLED
TO
ATTORNEY'S FEES.

ARGUMENTS AND DISCUSSIONS


As to the First, Second and Third Assignment of Errors
The mortgage contract executed by the late Salud Andrada
Santiago over the property covered by Original Certificate of Title
[OCT] No. FP-15744 in favor of Respondent Rural Bank of Luna
should be declared null and void ab initio. The latter failed to observe
the diligence required in the handling of its transactions and thus
made the fatal error of approving the loans secured by the mortgage
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of property that cannot, in the first place, be mortgaged. It deliberately


overlooked the fact that on the face of Original Certificate of Title
[OCT] No. FP-15744 the following restriction is set forth

SALUD A. SANTIAGO x xx possessing all


the qualifications and having fully complied
with all the conditions and requirements of
Republic Acts Nos. 782 and 3872, Chapter VII
of Commonwealth Act No. 141 as amended
and Batas Pambansa Blg. 223 is hereby
granted this Free Patent for land situated in
Calumbaya, Bauang, La Union with an area of
22,599 sq.m., more particularly bounded and
described at the back hereof subject,
however, to the provisions of Sections 118
which provide, among others that except
in favor of the Government or any of its
branches, units, or institutions, the land
hereby acquired shall be inalienable and
shall not be subject to encumbrance for a
period of five [5] years from date of this
patent x xx.

[Emphasis and Underscoring Supplied].


The above quoted restriction contained in Original Certificate of
Title [OCT] No. FP-15744 is valid, incontrovertible, and binding upon
the property and is conclusive upon all persons. It strictly disallows
the alienation or encumbrance of the property except in favor of the
Government or any of its branches, units, or institutions. It is worthy
to note that there is nothing mentioned there about the property
being susceptible to alienation or encumbrance in favor of a
private banking corporation such as herein Respondent Rural
Bank of Luna.
Lands acquired under free patent, just like those acquired
under the homestead provisions of the Public Land Act, cannot be
encumbered or alienated within five years from and after the date of
the issuance of the patent or grant, except in favor of the government
or any of its branches, units or institutions or legally constituted
banking corporations; nor shall they become liable to the satisfaction
of any debt contracted prior to the expiration of said period. 2Section
2 See Narciso Pena and Ed Vincent Albano, Philippine Law on Natural Resources, 1997 Revised Edition
[Manila: Rex Book Store, Inc., 1997].

Page 8 of 31

118 of Commonwealth Act No. 141, otherwise known as the Public


Land Act as Amended provides
Section 118. Except in favor of the
Government or any of its branches, units, or
institutions, or legally constituted banking
corporations, lands acquired under free patent
or homestead provisions shall not be subject
to encumbrance or alienation from the date of
the approval of the application and for a term
of five years from and after the date of
issuance of the patent or grant, nor shall they
become liable to the satisfaction of any debt
contracted prior to the expiration of said
period, but the improvements or crops on the
land may be mortgaged or pledged to
qualified
persons,
associations,
or
corporations.
No alienation, transfer, or conveyance of any
homestead after five years and before twentyfive years after issuance of title shall be valid
without the approval of the Secretary of
Agriculture and Natural Resources, which
approval shall not be denied except on
constitutional and legal grounds.
Contrary to its unfounded contentions, Respondent Rural Bank
of Luna does not fall under the exemptions set forth in Section 118 of
Commonwealth Act 141 as amended because it is a private bank
incorporated in accordance with the provisions of Section 4 of
Republic Act No. 720, otherwise known as the Rural Banks Act of
1952.
Under the principle of ejusdem generis, the term "legally
constituted banking corporation" clearly refers to a government
owned or controlled banking institution. Where a law lists specific
classes of persons or things and then refers to them in general, the
general statements only apply to the same kinds of persons or things
specifically listed.
In a fraught effort to support its stance, Respondent Rural Bank
of Luna contends that as per the rules and regulations supposedly
promulgated by the Land Registration Authority, [p]roperties acquired
through Homestead or Free Patents before expiration of restrictive
periods and Emancipation Patents under PD 27 may be mortgaged to
banking institutions such only, as the DBP, Rural Banks and PNB.

Page 9 of 31

But then such purported policy is highly untenable


because it is inconsistent with the current official rulings made
by the Supreme Court in a number of cases wherein it declared
the nullity of mortgages made in favor of the Philippine National
Bank in relation to the legally ordained prohibition against the
alienation or encumbrance of lands granted by patent for a
period of five years next following the date of the patent.
Now, if the Philippine National Bank itself cannot alienate or
encumber lands granted by free patent prior to the expiration of the
restrictive period, then it follows that Respondent Rural Bank of Luna
cannot also do so.
In the relatively recent case of Philippine National Bank v.
Banatao, et al, G. R. No. 149221, April 7, 2009, the Supreme Court
declared the mortgages made in favor of the Philippine National Bank
void in view of the proviso against the alienation or encumbrance of
lands granted by patent for a period of five years next following the
date of the patenta fact which was plainly evident upon a facial
examination of the Original Certificates of Title
A glaring fact that escaped the scrutiny of both
the trial and appellate courts, and which would
have led them to the quick and correct
disposition of the annulment issue x x x is
the proviso against alienation or encumbrance
of lands granted by homestead patent a fact
plainly evident upon a facial examination of
the OCTs involved.
We conclude from our own examination of
these OCTs that the mortgages cannot but be
void ab initio. On the faces of all the OCTs
secured through homestead patentsare
inscribed the following words that echo the
mandatory provisions of law:
TO HAVE AND TO HOLD the said tract of
land with the appurtenances thereunto x x x
subject to the provisions of Sections 118, 121,
122 and 124 of Commonwealth Act No. 141,
as amended, which provide that except in
favor of the Government or any of its
branches, units or institutions, THE LAND
HEREBY
ACQUIREDSHALLBE
INALIENABLE AND SHALL NOT BE
SUBJECT TO [E]NCUMBRANCE FOR A
PERIOD OF FIVE (5) YEARS NEXT
Page 10 of 31

FOLLOWING THE DATE OF THIS PATENT,


and shall not be liable for the satisfaction of
any debt contracted prior to the expiration of
that period; x xx
This inscription reproduces Section 118of the
Public Land Act, as amended, which contains
a proscription against the alienation or
encumbrance of homestead patents within
five years from issue.

xx

PNB cannot claim that it is a mortgagee in


good faith. The proscription against alienation
or encumbrance is unmistakable even on a
cursory reading of the OCTs. Thus, one who
contracts with a homestead patentee is
charged with knowledge of the law's
proscriptive provision that must necessarily be
read into the terms of any agreement involving
the homestead. Under the circumstances, the
PNB simply failed to observe the diligence
required in the handling of its transactions and
thus made the fatal error of approving the
loans secured by mortgages of properties that
cannot, in the first place, be mortgaged.
[Citations Omitted].
In the case of Republic v. Heirs of Alejaga, Sr., G.R. No.
146030, December 3, 2002, 393 SCRA 361, the Supreme Court also
declared a mortgage made in favor of the Philippine National Bank
null and void because it was constituted prior to the lapse of the
prescribed restrictive period
Assuming arguendo that the Alejagas title
was validly issued, there is another basis for
the cancellation of the grant and the
reversion of the land to the public domain.
Section 118 of Commonwealth Act No.
141[56] proscribes the encumbrance of a
parcel of land acquired under a free patent or
homestead within five years from its grant.
The prohibition against any alienation or
encumbrance of the land grant is a proviso
attached to the approval of every application.
Page 11 of 31

Further, corporations are expressly forbidden


by law to have any right or title to, or interest
in, lands that are granted under free or
homestead patents; or any improvements
thereon. They are forbidden from enjoying
such right, title or interest, if they have not
secured the consent of the grantee and the
approval of the secretary of the Department
of Agriculture and Natural Resources; and if
such lands are to be devoted to purposes
other than education, charity, or easement of
way.
In the case at bar, Free Patent No. (VI-2)
3358 was approved and issued on March 14,
1979. Corresponding Original Certificate of
Title No. P-15 was issued on the same date.
On August 18, 1981, or two (2) years after
the grant of the free patent, Felipe Alejaga Sr.
obtained from Respondent PNB a loan in the
amount of P100,000.Despite the statement
on the title certificate itself that the land
granted under the free patent shall be
inalienable for five (5) years from the grant, a
real estate mortgage was nonetheless
constituted on the parcel of land covered by
OCT No. P-15. In his testimony, Gabriel D.
Aranas Jr., then Cashier III of respondent
bank, even admitted that the PNB was aware
of such restriction.

xx

Thus, the mortgage executed by Respondent


Felipe Alejaga Sr. falls squarely within the
term encumbrance proscribed by Section 118
of the Public Land Act.
Even assuming that Section 6 of the Rural Banks Act of 1992,
which is quoted hereunder, is a veritable provision of law, it may be
reasonably concluded that Respondent Rural Bank of Luna
deliberately violated it and should be accordingly sanctioned therefor.
This is because it willfully encumbered the free patent land of the late
Salud Andrada Santiago nearly three [3] years after the free patent
Page 12 of 31

had been issuednotwithstanding its awareness that it could only


lawfully do so prior to the issuance of the free patent.
Section 6. x x x Loans may be granted by
rural banks on the security of lands without
Torrens Title where the owner of private
property can show five (5) years or more of
peaceful, continuous and uninterrupted
possession in concept of owner; or of portions
of friar land estates or other lands
administered by the Bureau of Lands that are
covered by sales contracts and the
purchasers have paid at least five (5) years
installment thereon, without the necessity of
prior approval and consent by the Director of
Lands or of portions of other estates under the
administration of the Department of Agrarian
Reform or other governmental agency which
are likewise covered by sales contracts and
the purchasers have paid at least five (5)
years installment thereon, without the
necessity of prior approval and consent of the
Department
of
Agrarian
Reform
or
corresponding governmental agency; or of
homesteads or free patent lands pending
the issuance of titles but already approved,
the provisions or any law or regulations to
the contrary notwithstanding xxx.
[Emphasis and Underscoring Supplied].
A close reading of the above provision shows that the law
specifically permits the mortgage of "free patent lands pending the
issuance of titles but already approved." In other words, the mortgage
of a property is purportedly allowed only before the actual issuance of
the title but not within the five [5] year prohibited period which is
reckoned from the date of the issuance of the free patent. The
statutory construction principle that what the law does not include, it
excludes is applicable here.3
The auction sale of the property covered by Original Certificate
of Title [OCT] No. FP-15744 on August 2, 1993 should be cancelled
and nullified because it was undertaken on the basis of a mortgage
that was null and void from its inception. It is also evident that
Respondent Rural Bank of Luna failed to comply with all the
formalities for foreclosures prescribed by Act No. 3135 as Amended.
3 See Pearl and Dean [Phil.] Incorporated v. Shoemart, Incorporated et al., G.R. No. 148222,
August 15, 2003; Centeno v. Villalon-Pornillos, et al., G.R. No. 113092, September 1, 1994

Page 13 of 31

In the case of Sabas v. Garma, et al., 66 Phil. 471, the


Supreme Court held that an instrument constituting mortgage upon a
parcel of land for which an application for the issuance of a free
patent has been filed and approved, prior to the expiration of the five
years fixed by law from and after the issuance of the free patent, is
null and void ab initio and the notation thereof upon the original
certificate of Torrens title issued to the applicant does not give validity
to said mortgage, on the ground that it would subject said land to the
satisfaction of an obligation contracted prior to the expiration of the
above-stated period of five years. This pronouncement was reiterated
in the case of Philippine National Bank v. De Los Reyes, et al.,
G.R. Nos. 46898-99, November 28, 1989
Since the mortgage is absolutely null and void
and ineffective from its inception, petitioner, as
mortgagee, acquires no better rights, the
registration of the mortgage notwithstanding. 4
The illegality of the mortgage, the foreclosure proceedings and
the auction sale also effectively renders null and void Transfer
Certificate of Title [TCT] No. T-40223, which was issued in the name
of Defendant-Appellee Atty. DoloresV. Balagat in lieu of Original
Certificate of Title [OCT] No. FP-15744. Its cancellation is thus in
order. Besides, Respondent Atty. Dolores V. Balagat cannot truly be
considered to have validly bought the said property during the auction
sale. He cannot deny that when he learned that an auction sale was
going to be conducted, he exerted every effort to evaluate the
features and characteristics of the property as well as the veracity of
its corresponding title. And being an accomplished legal professional,
he could not have missed the fact that the title clearly indicated on its
face that the property could not be lawfully alienated or encumbered
as the restrictive period was still in force. He knew that the mortgage
and the subsequent foreclosure thereof were flawed and yet he
pressed on and tendered his bid. He is not an innocent purchaser for
value.
In the case of Michael Uy v. Court of Appeals, et al. G.R. No.
107439, July 20, 1995, the Supreme Court made the following
pronouncement
It is a well-settled rule that a purchaser or
mortgagee cannot close his eyes to facts
which should put a reasonable man upon his
guard, and then claim that he acted in good
faith under the belief that there was no defect
in the title of the vendor or mortgagor. His
mere refusal to believe that such defect exists,
4 See also Parqui v. Philippine National Bank, 96 Phil. 157 [1954].
Page 14 of 31

or his willful closing of his eyes to the


possibility of the existence of a defect in the
vendors or mortgagor's title, will not make him
an innocent purchaser or mortgagee for value,
if it afterwards develops that the title was in
fact defective, and it appears that he had such
notice of the defects as would have led to its
discovery had he acted with the measure of
precaution which may be required of a
prudent man in a like situation.5

In the case of Francisco Angeles v. Intermediate Appellate


Court et al., G.R. No. 75009, September 29, 1989, the Supreme
Court said
One who purchases real estate with
knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title
thereto in good faith, as against the true
owner of the land or of an interest therein; and
the same rule must be applied to one who has
knowledge of facts which should have put him
upon such inquiry and investigation as might
be necessary to acquaint him with the defects
in the title of his vendor.
FURTHERMORE, THE PROPERTY SUBJECT OF THIS
CASE WAS NEVER AWARDED TO RESPONDENT ATTY.
DOLORESV. BALAGAT. THE TRANSFER THEREOF IN HIS NAME
IS UNLAWFUL AND VOID AB INITIO BECAUSE IT WAS NOT
AMONG THE REALTIES COVERED BY THE WRIT OF
POSSESSION ISSUED IN HIS FAVOR AS PER THE
CERTIFICATION ISSUED BY THE CLERK OF COURT.
Respondent Atty. DoloresV. Balagat failed to observe honesty
and good faith. He knowingly and willfully exercised acts of ownership
over the property even though he was not lawfully entitled to own it.
He blatantly misrepresented that he had the right to mortgage it with
Tagumpay Lending Investors or that he had the power to validly
execute a Special Power of Attorney supposedly authorizing his son,
Respondent Antonio Balagat to enter into mortgage agreements
thereon with Respondent Far East Bank and Trust Company [now
Bank of the Philippine Islands].
5 See also Crisostomo v. Court of Appeals, 97 SCRA 833; Leung Yee v. Strong Machinery Co., 37
Phil. 644; RFC v. Janillonar, 57 O.G. 39 [1961]; C.N. Hodges v. DyBuncio and Co., Inc., 116 Phil 595;
Manacop v. Cansino, 61 O.G. 21, and Gaticana v. Gaffud, 27 SCRA 706.

Page 15 of 31

Respondent Bank of the Philippine Islands has no genuine


legal title or interest over the subject property because its
predecessors Respondents Rural Bank of Luna, Atty. DoloresV.
Balagat and Antonio Balagat -- never really had any legal or
equitable title over the subject land. 6 Whatever document or
instrument it purportedly now has over the property is a patent nullity
as it originated from a document that was likewise a patent nullity.
This is in line with the legal maxim that the spring cannot rise higher
than its source.7
Another reason why Respondent Bank of the Philippine Islands
cannot acquire title over the property is because it is proscribed from
owning land granted under a free patent. Section 121 of
Commonwealth Act No. 141 provides
Section 121. Except with the consent of the
grantee and the approval of the Secretary of
Agriculture and Natural Resources, and solely
for commercial, industrial, educational,
religious, or charitable purposes or for a right
of way, no corporation, association, or
partnership may acquire or have any right,
title, interest, or property right whatsoever
to any land granted under the free
patent,homestead,
or
individual
sale
provisions of this Act or to any permanent
improvement on such land.

[Emphasis and Underscoring Supplied].


Respondent Bank of the Philippine Islands cannot consider
itself to be an innocent purchaser for value. It failed to observe the
diligence required in the handling of its transactions and hence, just
like Respondent Rural Bank of Luna, it made the fatal error of
approving the loans secured by the mortgage of property that cannot,
in the first place, be mortgaged. It has only itself to blame for the
situation it is in now.
In the case of Philippine National Bank v. Ciriaco Jumamoy
et al., G.R. No. 169901, August 3, 2011, the Supreme Court held

6 See PVC Investment and Management Corporation v. Jose Borcena et al, G. R. No. 155225,
September 23, 2005.

7 See Virginia Calalang v. Register of Deeds of Quezon City, et al., G.R. No. 76265, March 11, 1994;
De Santos v. Intermediate Appellate Court, 157 SCRA 295 [1988].

Page 16 of 31

that banks must take the necessary precautions to ascertain if there


was any flaw in the title sought to be mortgaged
Here, we agree with the disposition of the
RTC and the CA that PNB is not an innocent
purchaser for value. As we have already
declared: A banking institution is expected
to exercise due diligence before entering
into
a
mortgage
contract.
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.
PNBs contention that Ciriaco failed to allege
in his complaint that PNB failed to take the
necessary precautions before accepting the
mortgage is of no moment. It is undisputed
that the 2.5002-hectare portion of the
mortgaged property has been adjudged in
favor of Ciriacos predecessor-in-interest in
Civil Case No. 2514. Hence, PNB has the
burden of evidence that it acted in good faith
from the time the land was offered as
collateral. However, PNB miserably failed to
overcome this burden. There was no showing
at all that it conducted an investigation; that it
observed due diligence and prudence by
checking for flaws in the title; that it verified
the identity of the true owner and possessor of
the land; and, that it visited subject premises
to determine its actual condition before
accepting the same as collateral.
[Emphasis and Underscoring Supplied].
In the case of Sunshine Finance and Investment
Corporation v. Intermediate Appellate Court et al, G.R. Nos.
74070-71, October 28, 1991, the Supreme Court stated
A mortgagee has the right to rely on what
appears in the certificate of title, and in the
absence of anything to excite suspicion, is
under no obligation to look beyond the
certificate and investigate the title of the
mortgagor appearing on the face of the
certificate.

Page 17 of 31

Nevertheless, we have to deviate from the


general rule because of the failure of the
petitioner in this case to take the necessary
precautions to ascertain if there was any flaw
in the title of the Nolascos and to examine the
condition of the property they sought to
mortgage. The petitioner is an investment and
financing corporation. We presume it is
experienced in its business.

Ascertainment of the status and condition of


properties offered to it as security for the loans
it extends must be a standard and
indispensable part of its operations.
Respondent Bank of the Philippine Islands expressed its
concern that it may incur significant losses as a consequence of the
reconveyance of the property in favor of the Petitioners. In the same
case of Philippine National Bank v. Banatao, et al, G. R. No.
149221, April 7, 2009, the Supreme Court mentioned that a saving
factor for [a] bank under the situation is that a mortgage is merely an
accessory agreement and does not affect the principal contract of
loan. Thus the mortgages, while void, can still be considered as
instruments evidencing the indebtedness of Respondents Atty.
DoloresV. Balagat and, Spouses Antonio Balagat and Monette
Balagat to Respondent Bank of the Philippine Islands in a proper
case for collection.
Petitioners are not barred from pursuing this present civil
action. She has already become a real-party-in-interestthat is, by
virtue of succession, she now has the right of action and legal
standing to enforce her claims; and second, res judicata had not yet
set in, because the final order dismissing the original complaint was
not in the nature of a judgment on the merits. 8
8 The essential requisites for the existence of res judicata are: [1] the former judgment must be final; [2]
it must have been rendered by a court having jurisdiction of the subject matter and the parties; [3] it must
be a judgment on the merits; and [4] there must be, between the first and second actions; [a] identity of
parties; [b] identity of subject matter; and, [c] identity of cause of action. See David v. Spouses
Navarro, G. R. No. 145284, February 11, 2004; Manila Electric Company v. Atty. Pangilalo Gaerlan
and Court of Industrial Relations, 97 SCRA 840; Eusebio Mendoza v. Ala Mallorca Bus Company,
82 SCRA 243; Philippine Commercial and Industrial Bank, Administrator of the Testate Estate of
Charles Newton Hodges v. William Pfleider, and the Honourable Court of Appeals, 65 SCRA 13;
Navarro v. Director of Lands, L-18814, July 31, 1982; Aring v. Original, L-18464, December 29, 1962;
Severo Romero, et. al., v. Isabelo Delos Reyes, et. al., 14 SCRA 115; Manuel Suarez v. The
Municipality of Naujan, Oriental Mindoro, et. al., 18 SCRA 682; Francisco Malvar and Natividad
Flores v. Pablo Pallingayan and Catalino Chua, 18 SCRA 121; See also Urbana Velasco Aroc v.
Peoples Homesite and Housing Corporation, Cirillo B. Garcia, and Feliciana Bito, 81 SCRA 350;
Juan Dacasinet. al, v. Court of Appeals, 80 SCRA 90; San Diego v. Cardona, 70 Phil. 281; Lapid v.
Lawan, 101 Phil. 1243; Aguillar v. Gamboa, 103 Phil. ___; Planas v. Castelo, 100 Phil. 379; Florendo v.
Vda de Gonzales, 87 Phil. 631; Municipality of Hagonoy, Bulacan v. Secretary of Agriculture and
Natural Resources, Director of Lands and Jose B. Santos, 73 SCRA 507.

Page 18 of 31

One of the requisites of res judicata is that the judgment must


be on the merits. A judgment on the merit is one rendered after a
determination of which party is right, as distinguished from a
judgment rendered upon a preliminary or formal or technical point. 9
The original complaint was dismissed only on the ground that the
Plaintiff-Appellant had no standing to sue. There was no trial or
hearing on the issues raised and no factual findings and conclusions
were made by the court. The earlier judgment did not delve into the
substantial matters alleged. Thus, there was no bar to the re-filing of
the case. It has been held that if a case is dismissed without
prejudice, the action may be resuscitated or revived by the institution
of a subsequent action through the re-filing of the complaint. 10
Contrary to Defendant-Appellee Bank of the Philippine Islands
assertions, the Doctrine of Pari Delicto is inapplicable when the
contract is prohibited by law.
Plaintiff-Appellant understands that should the subject property
be declared to have been encumbered and alienated in violation of
Section 118 of Commonwealth Act No. 141, the same may be
reverted to the State.11It is respectfully submitted, however, that
should the transactions, documents and contracts be nullified, there
would be no automatic reversion as the process has to be initiated
and carried out by the state through the office of the solicitor general.
In the meantime, Plaintiff-Appellant shall be entitled to the property
pending the conduct of reversion proceedings.
Then again, even if the property is reverted, Plaintiff-Appellant
retains her interest in the same. The established rule is that open,
exclusive and undisputed possession of alienable public land for the
period prescribed by law creates the legal fiction whereby the land,
upon completion of the requisite period ipso jure and without the need
of judicial or other sanctions, ceases to be public land and becomes
private property. And the possessor is deemed to have acquired by
operation of law, a right to a grant, a government grant, without the
necessity of a certificate of title being issued. 12
As to the Fourth Assignment of Error
9 See Ruben E. Agpalo, Handbook on Civil Procedure [1997 Rules of Civil Procedure], Quezon City: Rex
Book Store, Inc., 2004. A judgment is upon the merits when it amounts to a declaration of the law as to the
respective rights and duties of the parties, based upon the ultimate facts or state of facts disclosed by the
pleadings and evidence, and upon which the right of recovery depends, irrespective of formal, technical or
dilatory objection or contentions. See American Inter-Fashion Corporation v. Office of the President,
197 SCRA 409 [1991]; De Ramos v. Court of Appeals, 213 SCRA 207 [1992]; Allied Banking
Corporation v. Court of Appeals, 229 SCRA 252 [1994]. See also Dela Cruz v. Mercado, 211 SCRA 235
[1992]; Mendiola v. Court of Appeals, 258 SCRA 492 [1996].

10See Ortigas and Co. v. Velasco, 277 SCRA 342; Baares v. Balising, et al., 328 SCRA 36.
11 See Republic of the Philippines v. Court of Appeals, G.R. No. 100709, November 14, 1997.
Page 19 of 31

In support of its ruling that rural banks are now allowed to accept free
patents as security for loan obligations, the Honourable Court of
Appeals cited the case of Jose Abelgas Jr., et.al. vs. Servillano
Comia, et.al., 670 SCRA 7, April 18, 2012 .
Petitioners most respectfully submit that the ruling in the abovestated Abelgas case is inapplicable to the case at bar, as they have
different factual settings. In the case of Abelgas, the antecedent
facts are as follows:
On 4 April 1971, Servillano Comia
obtained a free patent over Lot No. 919-B
situated in Pinamalayan, Oriental Mindoro
with an area of 6,790 square meters. Pursuant
to this free patent, Lot No. 919-B was
originally registered on 26 April 1976 as
Original Certificate of Title (OCT) No. P-8553.
Subsequently, on 1 May 1971, by virtue
of a notarized Deed of Relinquishment,
Renunciation of Rights and Quitclaim, Comia
voluntarily conveyed a 3,000-square-meter
(3,000-sqm) portion of Lot No. 919-B to the
Spouses Abelgas. It was stated in the said
Deed that the subject portion was the sole
property of the spouses; and that it had only
been included in the title of Comia for it
adjoined his land. Indeed, based on the
Subdivision Survey, the 3,000-sqm portion of
Lot No. 919-B bordered Lot No. 919-E owned
by Jose Abelgas, Jr.
By virtue of this subsequent voluntary
dealing over the property, the Register of
Deeds cancelled OCT No. P-8553 in the
name of Comia and Transfer Certificate of
Title (TCT) No. T-46030 was issued on 3 May
1971 in the names of CO-OWNERS, (1)
SERVILLANO COMIA, married to Estelita
Amaria, and (2) SPS. JOSE ABELGAS, JR.
AND LETECIA JUSAYAN DE ABELGAS as
co-owners of Lot No. 919-B. There is no
explanation in the records on how TCT No. T46030 came about to be recorded in the
names of these people when the subject
portion should have been, as a consequence
12 See Director of Lands v. Bengzon, 152 SCRA 369, 376 [1987]; Herico v. DAR, 95 SCRA 437 [1980];
Director of Lands v. IAC and ACME, 146 SCRA 509 [1980].

Page 20 of 31

of the 1971 Deed of Relinquishment,


Renunciation of Rights and Quitclaim, in the
name of the spouses Abelgas only.
Thereafter, the spouses subdivided their
3,000-sqm portion into twelve (12) lots as
evidenced by TCT Nos. T-46374 to 46375.
Using their TCTs, they used the lots to secure
their loan obligations with Rural Bank of
Pinamalayan, Inc. (RBPI), Rural Bank of
Socorro, Inc. (RBSI), and the Philippine
National Bank (PNB).
Of these properties, lots covered by TCT
Nos. 46369 and 46370 had certificates that
were cancelled and a new one, TCT No.
71198, was issued in RBSIs name.
Comia contested the issuance of these
titles. He claimed that he was the sole owner
of Lot No. 919-B; and that the Deed of
Relinquishment, Renunciation of Rights and
Quitclaim, which resulted in the issuance of
TCT Nos. T-46030, and T-4634 to 46375, is
fictitious and non-existing. Thus, Comia
demanded the recovery of Lot No. 919-B
under OCT No. P-8553 and the cancellation of
the subsequent titles.
Whereas in the case at bar, Salud Santiago is the registered
free patent title holder, and she was the same person who mortgaged
her property to Rural Bank of Luna La Union three (3) years after the
issuance of her free patent title, or within the five (5) year prohibitory
period.
The instant case and the case of Abelgas, however revolves
around the same issue, that, is, whether the mortgages executed in
favor of the mortgagee banks are null and void for being contrary to
the provisions of C.A. 141 and its amendatory laws.
In ruling in favor of the Spouses Abelgas, the Honourable
Supreme Court held that Section 118 of C.A .141 requires that before
the five year prohibition applies, there should be an alienation or
encumbrance of the land acquired under free patent or
homestead. It further held that in real property law, alienation is
defined as the transfer of the property and possession of lands,
tenements, or other things from one person to another. It is the act
by which the title to real estate is voluntarily resigned by one person
to another and accepted by the latter, in the forms prescribed by
Page 21 of 31

law. In this case, Comia did not transfer, convey or cede the
property; but rather, he relinquished, renounced and quitclaimed the
property considering that the property already belonged to the
spouses. The voluntary renunciation by Comia of that portion was not
an act of alienation, but an act of correcting the inclusion of the
property in his free patent.
In the same case of Abelgas, the Honourable Supreme Court
also ruled that for the prohibition in Section 118 of CA 141 to apply,
the subject property must be acquired by virtue of either a free patent
or a homestead patent. In Abelgas, the 3,000-sq.m. portion
subdivided into twelve (12) lots as evidenced by TCT Nos. T-4634 to
46375 has not been shown to be under a free patent. As it appears,
what was submitted to the mortgagee banks were TCTs not derived
from a free patent.

As could be gleaned from above, the title mortgaged by the


Spouses Abelgas was not derived from a free patent, hence the
prohibition provided in Section 118 of C.A. 141 does not apply.
Whereas, in the case at bar, Salud Santiago mortgaged not her
free patent application which was granted, but her free patent
title containing an express prohibition against alienations and/or
or encumbrances of the property for a period of five [5] years
from date of the issuance of the patent. Clearly, the prohibition
applies to Salud Santiago.
Furthermore, the ruling of the Supreme Court in the case of
Abelgas that, in any event, at the time of the mortgage, the Rural
Banks Act (Republic Act No. 720), as amended by Republic Act No.
5939, already allows banks to accept free patents as security for loan
obligations is not absolute, as there is no express provision in
R.A. 7353 that rural banks are allowed to accept free patents as
security for loan obligations even within the 5-year prohibitory
period.
Petitioners most respectfully submit that in applying Section 6
of R.A. 7353 otherwise known as the Rural Banks Act of 1992 to the
instant case, the Honourable Court of Appeals misinterpreted the
said provision, which states that:
Xxx xxx

xxx.

Loans may be granted by rural banks on the


security of lands without Torrens Title where the
owner of private property can show five (5) years
or
more
of
peaceful,
continuous
and
uninterrupted possession in concept of owner; or
Page 22 of 31

of portions of friar land estates or other lands


administered by the Bureau of Lands that are
covered by sales contracts and the purchasers
have paid at least five (5) years installment
thereon, without the necessity of prior approval
and consent by the Director of Lands, or of
portions of other estates under the administration
of the Department of Agrarian Reform or other
governmental agency which are likewise covered
by sales contracts and the purchasers have paid
at least five (5) years installment thereon, without
the necessity of prior approval and consent of the
Department of Agrarian Reform or corresponding
governmental agency; or of homesteads or free
patent lands pending the issuance of titles but
already approved, the provisions of any law or
regulations to the contrary notwithstanding:
Provided, when the corresponding titles are
issued, the same shall be delivered to the
Register of Deeds of the province where such
lands are situated for the annotation of the
encumbrance: provided, further, that in the case
of lands pending homestead or free patent titles,
copies of the notices for the presentation of the
final proof shall also be furnished the creditor
rural bank and, if the borrower applicants fail to
present the final proof within thirty (30) days from
date of notice, the creditor rural bank may do so
for then at their expense: provided, furthermore,
that the applicant for homestead or free patent
has already made improvements on the land and
the loan applied for is to be used for further
development of the same or for other productive
economic activities: provided, finally, that the
appraisal and verification of the status of a land is
a full responsibility of the rural bank and any loan
granted on any land which shall be found later to
be within the forest zone shall be for the sole
account of the rural bank. (emphasis supplied)

A closer scrutiny of Section 6 of R.A. 7353 states that rural


banks may grant loans and accept free patents as security for the
loan obligation if and when the application for free patent has
already been granted, but pending the issuance of the free patent
title.

Page 23 of 31

The scenario contemplated by the law is that, at the time a


person applies for a loan at the rural bank, such person can use as
security or guaranty, his free patent application which has already
been granted, but no free patent title has yet been issued. Clearly,
the said provision is not applicable to the instant case. At the time
Salud Santiago executed the mortgage to Rural Bank of Luna- La
Union sometime in October 1992, her free patent application was
already granted, and her free patent title was already issued.
The intention of the framers of the law is further elucidated
when the law continues to state that, when the corresponding
titles are issued, the same shall be delivered to the Register of
Deeds of the province where such lands are situated for the
annotation of the encumbrance. This only means that once the
loan has been granted, and during the subsistence of the loan, the
free patent title was subsequently issued, it shall be the obligation of
the parties to deliver the free patent title to the Office of the Register
of Deeds where such land is situated for the annotation of the
encumbrance. Based on this provision, one could validly
conclude that rural banks are allowed to grant loans and accept
free patents as security for the loan only if the free patent title
has not yet been issued.

As to the Fifth Assignment of Error


Petitioners cannot be made liable vis--vis Respondents
respective Counter-Claims. Respondents are not at all entitled to
damages and attorneys fees. It has been held that to warrant the
recovery for damages in any case, there must be a right of action for
a wrong inflicted by the Petitioners, and damages resulting to the
Respondents therefrom.13 Herein Petitioners did not do anything in
violation of the Respondents rights.
Respondents are not entitled to attorneys fees because: [a]
they were not compelled to litigate by reason of Petitioners acts but
rather because they want to suppress or distort the truth to foster
their own ends;14 [b] their alleged sufferings, if any, are not the result
13 See Ma-aw Sugar Central vs. Barrios, 76 Phil. 666.
14 See Rolando A. Suarez, Torts and Damages, Manila: Rex Book Store, Inc., 1995, Page 132, 135-136;
See also Article 2208 Civil Code; See Edgardo L. Paras, Civil Code of the Philippines Annotated,
Volume Five [Articles 1458-2270: Special Contracts], Fourteenth Edition, Manila: Rex Book Store, Inc.,
2000, Pages 1162-1175; See Lagon v. HoovenComalco Industries, Inc., G. R. No. 135657, January 17,
2001; Yang v. Court of Appeals, G. R. No. 138074, August 15, 2003; Industrial Insurance Company,
Inc., v. Bondad, G. R. No. 136722, April 12, 2000; Producers Bank of the Philippines v. Court of
Appeals, G. R. No. 111584, September 17, 2001; Occidental Mindoro National College v. Macaraig,
G. R. No. 152017, January 15, 2004; GSIS v. Spouses Gonzalo, G. R. No. 135644, September 17. 2001;
Hemedes v. Court of Appeals, G. R. No. 107132, October 8, 1999.

Page 24 of 31

of the acts of Petitioners but are in fact the result of their own
acts;15and, [c] their counter-claims are invalid, unjust and nondemandable and are solely meant to harass, annoy, and defame
herein Petitioners.16

PRAYER
WHEREFORE, premises considered, it is respectfully prayed of
this Honourable Supreme Court to grant the instant PETITION FOR
REVIEW ON CERTIORARI, and to cancel, reverse and set aside the
assailed Decision of the Honourable Court of Appeals dated
September 29, 2015, thereby reversing and setting aside also the
Decision of the Regional Trial CourtBranch 37 of Bauang, La Union,
and issuing a new one
1 Declaring the nullity of all proceedings,
contracts, and documents which gave rise
to the cancellation of Original Certificate of
Title [OCT] No. FP-15744 and the
subsequent issuance of Transfer Certificate
of Title [TCT] No. 40223;

2 Declaring the nullity of the Real Estate


Mortgage
constituted
in
favor
of
Respondent Rural Bank of Luna, La Union,
as well as the Real Estate Mortgages
constituted in favor of Respondent Far East
Bank and Trust Company [now Bank of the
Philippine Islands] as a result of the
Special Power of Attorney executed by
Respondent Atty. Mark Valeroso in favor
ofJoseph Valeroso; and,

3 Awarding Petitioners moral damages in the


amount
of
P100,000.00,
exemplary
damages of P100,000.00, attorney's fees
15 Ibid.
16 Ibid.
Page 25 of 31

of P 20,000.00 and litigation expenses of


P30,000.00.

Other reliefs just and equitable are likewise prayed for.


RESPECTFULLY SUBMITTED.
Baguio City for Manila, Philippines, April 27, 2016.
ATTY. ROSSANA T. ROSE
PTR No. 38492 / 1-4-16 / Baguio City
Roll of Attorney No. 68352 / 1-4-16 / Baguio City
IBP Lifetime Membership No. 03923 / Baguio-Benguet
MCLE Compliance No. III-006 / 1-10-16
REPUBLIC OF THE PHILIPPINES|

S. S.

DONE: IN THE CITY OF BAGUIO |

VERIFICATION AND CERTIFICATION


AGAINST FORUM SHOPPING

We, ERYKA REYANA F. CLASARA and NOELLE GRACE B.


RILLON (herein represented by his Attorney-in-Fact, SUMMERS
DAOWAN) both of legal age, Filipinos, and residents of Sitio Magan,
Calumbaya, Bauang, La Union, after being sworn in accordance with
law, hereby depose and state

1 We are the Petitioners in the above-entitled case. We


caused the preparation of the foregoing Petition for Review
on Certiorari. We have read and understood its contents. We
attest to the truth of all the allegations therein based on our
own personal knowledge, and based on authentic
documents and records.

2 We certify that we have not heretofore commenced any


other action or proceedings, or filed any claim involving the
Page 26 of 31

same issues in the Supreme Court or in any other tribunal or


quasi-judicial agency. And if we should thereafter learn that a
same or similar action or claim has been filed or is pending,
we undertake to report such fact within five (5) days
therefrom to the Supreme Court, and to the court or agency
wherein the said complaints / original pleadings have been
filed.

3 We are executing this affidavit to attest to the truth of all the


foregoing, based on our own personal knowledge, and
based on authentic documents and records. We are likewise
executing this affidavit for all legal intents and purposes it
may serve.

IN WITNESS WHEREOF, we set our hands this 27th day of


April 2016 at Baguio City, Philippines.

ERYKA REYANA F. CLASARA

NOELLE GRACE B. RILLON

Affiant

Affiant

Senior Citizens I.D. No.2773

PhilHealth I.D. No. 19-007777758-7

Issued at Bauang, La Union

Issued at Bauang, La Union


By:
SUMMERS DAOWAN
Attorney-in-fact

Page 27 of 31

SUBSCRIBED AND SWORN to before me this 27th day of


April 2016 at Baguio City, Philippines, affiant ERYKA REYANA F.
CLASARA and NOELLE GRACE B. RILLON exhibiting a competent
evidence of their identity as indicated below their name, in their
personal capacity, and as attorney-in-fact of SUMMERS DAOWAN.

MYLANNIE P. MINOG
Notary Public
Until 31 December 2016
2008 2/F Maharlika Livelihood
Complex

Doc. No. 377


Page No. 072
Book No. 77
Series of 2016

Abanao Street, Baguio City 2600


N.A. No. 73-NC-15-R
Attorneys Roll No. 67254
IBP No. 107714 01.07.16 B.C.
PTR No. 2017774 01.07.16 B.C.
MCLE Compliance No. IV0007879 07.17.16

Copy Furnished by Registered Mail:

COURT OF APPEALS
Maria Orosa Street,
Ermita, Manila

Registry Receipt No. ____________


Date of Mailing: 27 April 2016
Place of Mailing: Baguio City

ATTY. ROSSANA T. ROSE


Counsel for the Heirs of Atty. Mark Valeroso
Registry Receipt No. ____________
3/F MFSWD [MLUWD] Building, Quezon AvenueDate of Mailing: 27 April 2016
Place of Mailing: Baguio City

Page 28 of 31

San Fernando City, La Union


SPOUSES PAMELA AND ROMEO VALEROSO Registry Receipt No. ____________
Date of Mailing: 27 April 2016
Rome Ruins Village
Place of Mailing: Baguio City
San Fernando City, La Union
ATTY. AJ GERONIMO
The Law Firm of GERONIMO
Counsel for Bank of the Philippine Islands (BPI)
142 Dangwa Street, Cresencia Village
Guisad, Baguio City
ATTY. GILBERT M. MASACAY
Counsel for Rural Bank of Luna La Union
Litigation Department, PDIC
8th Floor, SSS Building, Ayala Avenue
corner Rufino Street, Makati City

Registry Receipt No. ____________


Date of Mailing: 27 April 2016
Place of Mailing: Baguio City

Registry Receipt No. ____________


Date of Mailing: 27 April 2016
Place of Mailing: Baguio City

EXPLANATION
Five (5) printed copies of the foregoing PETITION FOR
REVIEW including one (1) marked as original, are being filed before
this Honourable Supreme Court, through Registered Mail, and a copy
of the same was served to the Respondents and/or Respondents
through their respective counsels, also through Registered Mail, due
to time, distance and cost constraints.
ROSSANA T. ROSE
Counsel

REPUBLIC OF THE PHILIPPINES


DONE: IN THE CITY OF BAGUIO |

S. S.

AFFIDAVIT OF FILING AND SERVICE

I, ALBERTO F. AVIS, of legal age, single, Filipino, and with


address at No. 311 Lower Ferguson, Upper Quirino Hill, Baguio
Page 29 of 31

City, Philippines, after being sworn in accordance with law hereby


depose and state:

1 That, on April 27, 2016, upon instructions of Atty. Rossana


T. Rose, I filed five (5) printed copies of the foregoing
PETITION FOR REVIEW, including one (1) marked
original, with clearly legible duplicate originals of the
assailed decision and resolution of the Court of Appeals,
and two (2) sets of annexes, one of which is attached to
the original, and another as extra copy, to the Honorable
Supreme Court, through Registered Mail with Return
Card;

2 That, further, I served one copy of the said PETITION


FOR REVIEW to the each of the following persons
through Registered Mail with Return Card:
COURT OF APPEALS
Maria Orosa Street,
Ermita, Manila
ATTY. AURA Y. MALABANAN
Counsel for the Heirs of Atty. DoloresBalagat
3/F MFSWD [MLUWD] Building, Quezon Avenue
San Fernando City, La Union
SPOUSES PAMELA AND ROMEO VALEROSO
Rome Ruins Village
San Fernando City, La Union
ATTY. ROSSAJ GERONIMO
The Law Firm of Geronimo
Counsel for Bank of the Philippine Islands (BPI)
142 Dangwa Street, Cresencia Village
Guisad, Baguio City
ATTY. GILBERT M. MASACAY
Counsel for Rural Bank of Luna La Union
Litigation Department, PDIC
8th Floor, SSS Building, Ayala Avenue corner
Rufino Street, Makati City

Page 30 of 31

by depositing said copies at the Post Office of Baguio City in


sealed envelopes, with instructions to the postmaster who
received the same to return the mail to the office of Atty.
Rossana T. Rose after ten [10] days if undelivered. As proof
of service, the original copy of said Petition for Review \bear
the registry receipts;

3 That, I attest to the truth of all the foregoing to the best of


my own personal knowledge and belief, and based on
authentic documents or records. I am executing this
affidavit for all legal intents and purposes it may serve.

IN WITNESS WHEREOF, I set my hand this 27th day of April


2016 at Baguio City, Philippines.

ALBERTO D. AVIS
Affiant
Passport No. EB778041
Issued on: 11.17.14 at DFASFCLU

SUBSCRIBED AND SWORN to before me this 27th day of


April 2016 at Baguio City, Philippines, affiant exhibiting a
competent evidence of identity as indicated below his name.

FLOR-ANN A. CAJAYON
Notary Public

Doc. No. ____;


Page No. ____;
Book No. ____;

3F Piao Yan Bldg., Bonifacio St.,


Baguio City
Page 31 of 31 Tel. No.:(074) 434-9870
PTR No. 98765; 1/03/2013; Baguio City

Series of 2013

Page 32 of 31