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MEMORANDUM
(For The Plaintiff)
COMES NOW the Plaintiff by the undersigned Counsel and unto this
the Order dated May 28, 2005 and thereby avers that:
PRELIMINARY STATEMENT
This is a civil action for Annulment of Auction Sale and Reconveyance of Title
to Real Property with Damages filed by the plaintiff-spouses Arturo and Leticia
Aguirre against the defendants Far East Bank and Trust Co. (now Bank of the
Philippine Islands) and Faith and Word Mission Inc. The defendant Register of
and was formerly registered in the name of the plaintiff-spouses Aguirre. The said
property was allegedly mortgaged to the defendant Far East Bank by a certain
Vicente Jose Garcia on May 24, 1996 by virtue of a Special Power of Attorney dated
April 25, 1996. For failure of Mr. Garcia to pay his account, the defendant Far East
Bank caused the foreclosure of said property and eventually sold the same in favor of
When the plaintiffs learned of the foreclosure and the eventual sale of the
subject property for the first time in June, 2000, they immediately filed the instant
complaint on the ground that its mortgage and foreclosure thereof is invalid since it
is conjugal property but lacks the consent and participation of the spouse Leticia
Aguirre. Moreover, the foreclosure of the subject property was conducted without
any personal notice made upon the plaintiff-spouses thus violating their basic
constitutional rights to due process. Finally, the eventual sale of the subject property
on June 16, 2000 in favor of defendant Faith and Word Mission Inc. is highly
questionable as said organization was incorporated with the Securities and Exchange
Commission also on June 16, 2000 (see Exhibit “1” of Faith and Word Mission Inc.)
and at the time of incorporation, the registered capital of the said entity per its
that the sale by defendant Far East Bank of the subject property to defendant Faith
and Word Mission for the price of P375,000.00 was not only illegal but likewise
tainted with bad faith for two (2) out of five (5) of its officers/incorporators were in
fact very close relatives of Vicente Jose Garcia, the person who originally mortgaged
With the indulgence of the Honorable Court, the following enumerated facts
have been established during the trial proper of this case and remain to be
uncontroverted:
1. The real property subject matter of this case, is located at Manapla, Neg. Occ.
and was formerly registered in the name of the plaintiff-spouses Aguirre per
dated September 23, 1972 (see plaintiffs exhibit “B”) from the late Josefa A.
Garcia and her husband Vicente Garcia and in the said document, both the
3. Both the plaintiffs Arturo and Leticia Aguirre testified that the clear intention
of the late Josefa Garcia was to donate the subject property to the spouses not
only to Arturo Aguirre but also Leticia Aguirre (October 3, 2001 TSN pp. 21,
26, 41, October 5, 2001 TSN pp. 5-11, January 11, 2002 TSN pp. 12-14).
4. The subject property was mortgaged to the defendant Far East Bank by a
certain Vicente Jose Garcia on May 24, 1996 in order to secure his personal
loan of P1,000,000.00 using a Special Power of Attorney dated April 25, 1996
5. The plaintiff Leticia testified that she never was never a party nor did she sign
the Special Power of Attorney dated April 25, 1996 (October 3, 2001 TSN, p.
22, 36, 37, October 5, 2001 TSN p. 23) leading to the mortgage of the subject
property by Vicente Jose Garcia in favor of defendant Far East Bank. This
Head Office, Mr. Noel Cruz declaring categorically that the alleged signature
appearing as Leticia Aguirre found on the subject SPA was not the real
signature of the plaintiff Leticia Aguirre (see plaintiffs exhibit “L” and March
6. The defendant Far East Bank despite the court subpoena, never produced the
(January 6, 2003 TSN pp. 16-30) supposed to support its claim that it
Vicente Jose Garcia and which is essential to prove that it was in good faith at
the time of the execution of the alleged mortgage over the subject property.
7. For failure of Vicente Jose Garcia to pay his account, the defendant Far East
Bank caused the foreclosure of subject property to which said bank was also
was eventually sold in favor of defendant Faith and Word Mission Inc. on
8. The foreclosure of the subject property was conducted without any personal
notice made upon the plaintiff-spouses by the defendant Far East Bank as
admitted by former branch manager Gregoria Lauron III (January 6, 2003 TSN
9. The defendant Faith and Word Mission was incorporated with the Securities
and Exchange Commission (SEC) only on June 16, 2000 (see Exhibit “1” of
Faith and Word Mission Inc.) which was also the very same date the Deed of
Sale was executed in their favor by defendant Far East Bank and Trust Co. for
however, the total capital of defendant Faith and Word Mission Inc. with the
10. Two (2) out of five (5) officers/incorporators of defendant Faith and Word
Mission Inc. which eventually brought the subject property for P375,000.00,
were very close relatives of Vicente Jose Garcia, the person who originally
mortgaged the same property for P1,000,000.00. To be precise, Faith and Word
is in fact the brother in law of Vicente Jose Garcia (August 13, 2003 TSN pp.
54-55).
ISSUES TO BE RESOLVED
Based on the proceedings from the Pre-Trial Conference and during the course
of the trial, the following are the major issues that need to be resolved in this case:
1. Whether or not the property located at Manapla, Neg. Occ. which is the
subject matter of the present civil action, is a conjugal property of the plaintiff-
2. Whether or not the Manapla property subject matter of this action was validly
mortgaged in favor of the defendant Far East Bank and Trust Co.
3. Whether or not the defendant Far East Bank and Trust Co. acted in good faith
4. Whether or not the defendant Faith and Word Mission Inc. is a buyer in good
of the Manapla property subject matter of this action as prayed for in the
complaint.
6. Whether or not the plaintiff-spouses are entitled to the damages prayed for in
their complaint against the defendants Far East Bank and Trust Co., (now
Bank of the Philippine Islands) and Faith and Word Mission Inc.
7. Whether or not the defendant Far East Bank and Trust Co. (now Bank of the
8. Whether or not the defendant Faith and Word Mission Inc. is entitled to
humble submission of the plaintiffs that the subject property in this case is truly their
conjugal property. To prove this very pivotal issue, the plaintiffs wish to point out
First and foremost, the testimonies of both plaintiffs clearly established that
the very intent of the late Josefa Garcia with her husband Vicente Garcia, was to
donate the subject property to both Arturo and Leticia Aguirre. In fact at the time of
the execution of the Deed of Donation, both plaintiffs personally met and signed the
subject document together with the donor Josefa Garcia upon request of the latter.
This simply indicates that the intention of the donor was to convey the subject
In relation thereto, the plaintiffs wish to cite Article 1370 of the New Civil
Code as the applicable provision on the matter at hand and which provides:
and the only surviving authorities (the donor being already deceased) for purposes
of determining what was the real intention of the late Josefa Garcia with regards to
whom the property was to be given to. As a matter of fact, the testimonies of the
plaintiff-spouses on the intention of the donor were consistent and were never
proven otherwise by the defendant bank nor the defendant Faith and Word Mission.
In fairness to the plaintiff-spouses Aguirre and the donor, none of them are
lawyers who are knowledgeable and well versed on how a Deed of Donation is
close scrutiny of the Deed of Donation dated September 23, 1972 even shows that the
“Donor” referred to in the subject document is not only Josefa Garcia but also her
husband Vicente Garcia and so in the same manner, the term “Donee” is not to be
limited only to Arturo Aguirre but must also cover Leticia Aguirre. At the very least,
Donation as to who is/are the “donees” referred to. Substance over form must
therefore be given consideration in this case so as not to frustrate the wishes and real
“Let us not interpret the law by the letter that killeth but by the spirit that giveth
life”.
Secondly, the defendant Far East Bank and Trust Co. has impliedly
acknowledged from the beginning that the subject property is conjugal property and
is actually estopped from saying otherwise. For starters, the said bank made use of
the Special Power of Attorney showing the forged signature of plaintiff Leticia
property with the Register of Deeds. Moreover, the defendant bank even went to the
extent of claiming and falsely representing that Leticia Aguirre personally went to
the office of Gregorio Lauron III to sign the subject Special Power of Attorney.
For the record, Leticia Aguirre never went to the bank to sign the Special
Power of Attorney nor met Mr. Lauron and this was matter was corroborated by no
less than the NBI which declared that the signature of Mrs. Aguirre on the subject
document is not her real signature. Now why would a reputable bank go to all the
trouble of involving Mrs. Aguirre in the mortgage process and even misrepresent
that she appeared in the office of Mr. Lauron if it truly believed that said person has
subsequent acts with third parties show that the subject property is indeed treated
and considered as conjugal. Several years after the donation of Josefa Garcia, the
plaintiffs subdivided the donated property into three (3) parts and which matter was
stated in the testimony of Mrs. Aguirre. One part was sold to Vicente Jose Garcia
wherein both spouses affixed their signatures. Another part was mortgaged in favor
of the Rural Bank of Manapla wherein again both spouses affixed their signatures. In
this regard, Article 1371 of the New Civil Code applies and which specifically states:
It was clearly established in this case that the plaintiff Leticia Aguirre did not
sign the Special Power of Attorney used to mortgage the subject property in favor of
defendant Far East Bank and Trust Co., thus, the said mortgage is null and void. The
witness in the person of Mr. Noel Cruz of the NBI who testified that the signature
found in the questioned Special Power of Attorney is not the authentic signature of
said plaintiff. Neither the defendant Far East Bank nor the defendant Faith and Word
Mission Inc. even seriously contested the findings of the NBI expert witness which
only proves to show that indeed Mrs. Aguirre was not a party to the invalid
Despite the subpoena of this Honorable Court, the defendant bank never
produced any of the credit investigation documents it claimed to have made before
releasing the loan to Vicente Jose Garcia as testified by its witness Gregorio Lauron,
III. This would have established the good faith of the bank which had the lawful duty
to investigate and determine whether or not the registered owners of the mortgaged
property were truly consenting to such transaction or not. In the recent case of DBP
vs. Court of Appeals (G.R. No. 129471, April 28, 2000), the Supreme Court had
Moreover, bank witness Gregorio Lauron III further admitted in his testimony
that the subject property was foreclosed without any personal notice made upon the
bank as its exhibits did not even consider the plaintiffs as a proper party thereof and
their constitutional right to due process. Had the plaintiffs only known of the status
of their property, their testimonies clearly stated that they would have redeemed
their property which was later on sold for only P375,000.00. Finally and for the
record, no single demand letter was presented by the defendant Far East Bank
All points considered, had the defendant Far East Bank only made the
necessary notification or verification with the plaintiffs, this present legal mess
would have been avoided. By totally disregarding the plaintiffs in the entire process
from the mortgage to the foreclosure and eventual sale of the subject property,
defendant Bank is undoubtedly in bad faith and has clearly deprived the spouses of
From the very start, the bad faith of defendant Faith and Word Mission Inc.
has been very obvious and apparent which in effect renders their purchase of the
subject property as null and void. First of all, the said defendant was incorporated
with the Securities and Exchange Commission (SEC) only on June 16, 2000 (see
Exhibit “1” of Faith and Word Mission Inc.) the very same date it bought the subject
property from defendant Far East Bank as per Deed of Sale. It therefore did not
possess any legal personality at the time it negotiated for the property purchase as
Secondly, the total capital of defendant Faith and Word Mission Inc. at the
time of its incorporation on June 16, 2004 was only P500.00 but surprisingly, it was
able to purchase the subject property on the same day for the price of P375,000.00.
Thirdly, it is very intriguing to note that two (2) out of five (5) officers/incorporators
of the defendant Faith and Word Mission Inc. were very close relatives of Vicente
Jose Garcia, the person who originally mortgaged the subject property. (Director
Albert Jo is in fact the brother in law of Vicente Jose Garcia). Fourth, Vicente Jose
Garcia mortgaged the subject property for P1,000,000.00 and the corporation where
his brother-in-law Albert Jo is a director, later bought the same property for only
P375,000.00. Finally, the officers/directors of defendant Faith and Word Mission Inc.
personally knew the plaintiff-spouses Aguirre for a long time already yet they
claimed that they did not know that said spouses were still in possession of the
subject property at the time they bought the same nor did they even personally
inquire with them as to the status of the said property prior to the sale.
defendant Faith and Word Mission Inc. and its directors/incorporators appear to be
very scheming and highly suspicious. At the very least, said collective acts manifestly
show the evident bad faith of said corporation. It is basic in our existing Torrens
system that a buyer of real property which is in the possession of persons other than
the seller should investigate the rights of those in possession. Otherwise, without
such inquiry, the buyer can hardly be regarded as a buyer in good faith. (Cardente v.
Intermediate Appellate Court, G.R. No. 73651, 27 November 1987, 155 SCRA 685,
690-691). Moreover, when a man proposes to buy or deal with realty, his first duty is
to read the public manuscript to look and see who is there upon it, and what are his
rights. The buyer who has failed to know or discover that the land sold to him is in
the adverse possession of another, is a buyer in bad faith. (J.M. Tuason & Co., Inc., v.
Court of Appeals, No. L-41233, 21 November 1979, 94 SCRA 413, 422-423; see also
Angelo v. Pacheco, 56 Phil. 70 [1931]; Andaya v. Manansala, 107 Phil. 1151 [1960]).
Finally, the decision of the high tribunal in DBP vs. Court of Appeals (G.R.
No. 129471, April 28, 2000) also applies in this case. The high court ruled,
foreclosure of the subject property, the same was registered in the name of the
plaintiffs as per TCT No. T-181202. The lack of marital consent with respect to the
mortgage of said property in 1996 as earlier discussed, renders the transaction with
defendant Far East Bank as null and void applying the ruling of the Supreme Court
The defendant Faith and Word Mission Inc. later bought the subject property
from the defendant bank but said transaction was likewise tainted with evident
malice and bad faith. As admitted by Faith and Word Mission Inc. witnesses Wanda
Casper and Albert Jo in their respective testimonies, they did not even personally
inquire from the registered owners Arturo and Leticia Aguirre on the status of the
subject property or why they are still in possession of the same at the time of the
alleged sale. Had they done so, defendant Faith and Word Mission Inc. would have
discovered the utter defect in the mortgage and the highly suspicious arrangement
entered into by Vicente Jose Garcia with the defendant bank. On the other hand, it is
even possible that defendant Faith and Word Mission, Inc. all together ignored these
irregularities surrounding the subject property so that they may just proceed
hurriedly with the illegal titling thereof in their favor. In any case, there is evident
bad faith on the part of defendant Faith and Word Mission Inc. applying the earlier
herein plaintiffs that the legal effect of the lack of marital consent on the mortgage of
the subject property is that as if there was no mortgage at all and the subsequent
consolidation of title in favor of defendant bank was invalid. The bad faith of the
defendant Faith and Word Mission Inc. as purchaser of the same property, also
conveyance was actually effected as a result. By reason of the foregoing, the plaintiffs
now submit that they are entitled to the reconveyance of the subject property in their
favor since the mortgage in the first place was null and void and such utter defect
extends to the third part buyer defendant Faith and Word Mission Inc.
During the course of the trial, both plaintiffs testified that they were
personally affected by the unjustified taking of their property which has resulted to
their emotional and mental distress. Pertinent excerpts of the separate testimonies of
the plaintiffs on two separate occasions, illustrate their personal feelings on the
Moreover, the plaintiffs have also incurred legal costs as a result of bringing
their case in court which was confirmed by Arturo Aguirre in his testimony dated
It is evident from the records and testimonies presented that there was already
bad faith demonstrated from the very start by the defendants Far East Bank and
Faith and Word Mission Inc. resulting to the prejudice of the plaintiffs. By reason
thereof, the spouses Arturo and Leticia Aguirre who have considerably suffered in
the process, are therefore entitled to all the damages prayed for in their complaint.
With all due respect, the defendant Far East Bank has no other else to blame
for in this legal action but itself. Had it only exercised the necessary precautions and
observed the basic guidelines set out in its Manual of Regulations as mandated by
the Central Bank, this legal suit would have been avoided from the very beginning.
There were simply so many instances in this case that showed the glaring negligence
of the defendant bank in handling the alleged mortgage of the subject property - the
defective signing of the Special Power of Attorney and its illegal use thereof, the lack
or even absence of credit investigation support documents, the sale of the property
for P375,000.00 to a new corporation whose incorporators are relatives of the debtor
Vicente Jose Garcia (who got P1,000,000.00 for the mortgage of the same property a
several years back!), the total lack of any notice whatsoever to the registered owners
before foreclosure and consolidation of the subject property and many more.
the damages prayed in its counterclaim as the filing of the instant action by the
plaintiffs was undoubtedly justified and was in fact brought about by the very
negligence and bad faith of the defendant Far East Bank and Trust Co.
The plaintiffs respectfully submit that one of the principal causes to this
present legal mess is the defendant Faith and Word Mission Inc. More specifically,
incorporators/directors related to the Vicente Jose Garcia who on the other hand
property. The defendant Faith and Word Mission Inc. is undoubtedly in bad faith for
it later bought the same property at only P375,000.00 without exercising the
necessary diligence of a good buyer and considering that the plaintiffs were still in
possession thereof.
By reason of which, the damages prayed for by the defendant Faith and Word
Mission Inc. should be dismissed as said corporation is in fact even guilty of taking
advantage of the situation and is obviously in bad faith since the time of their
incorporation. The basic legal premise “those who go to court or ask for relief thereof
must do so with clean hands” should now come into play in this situation for the
PRAYER
Honorable Court to now render a decision awarding all the reliefs and remedies
prayed for by the plaintiff-spouses Aguirre in their complaint and denying all the
counterclaims of defendants Far East Bank and Trust Co. and Faith and Word
Respectfully Submitted.
Bacolod City for Silay City, Neg. Occ., Philippines, July 12, 2005.
BY: