Case Digest (G.R. No. 167848)
Facts:
The case is Bank of Commerce v. Spouses Prudencio San Pablo and Natividad O. San Pablo, G.R. No. 167848, April 27, 2007, Supreme Court Third Division, Chico-Nazario, J., writing for the Court.The dispute began when Melencio Santos obtained a loan from Direct Funders Management and Consultancy, Inc. on 20 December 1994 secured by a Special Power of Attorney (SPA) executed by Natividad San Pablo and a Deed of Real Estate Mortgage over TCT No. (26469)-7561 (the subject property). Prudencio and Natividad San Pablo allegedly signed the initial mortgage only to accommodate Santos, who was the actual borrower and later repaid Direct Funders.
Sometime in 1995 the spouses discovered that Santos had again used the same property as collateral to obtain a loan from Bank of Commerce. The Register of Deeds reflected an SPA dated 29 March 1995 and a Deed of Real Estate Mortgage in favor of the Bank, documents the spouses denied having executed and later claimed were forged. The Bank foreclosed the mortgage, became the highest bidder at auction, and was issued a Certificate of Sale.
On 22 December 1995 the spouses filed a complaint in the Municipal Trial Court (MTC) of Mandaue City, Branch 2, for quieting of title and annulment of the SPA, the mortgage, and the foreclosure sale, alleging forgery. During trial the Bank’s branch manager testified the spouses signed the mortgage, but a handwriting expert testified the spouses’ signatures were forged.
On 10 July 2001 the MTC dismissed the spouses’ complaint for lack of merit, finding the Bank to be a mortgagee in good faith despite the forgery. The spouses appealed to the Regional Trial Court (RTC) of Mandaue City, Branch 56, which on 25 June 2002 affirmed the MTC decision. The spouses then filed a Petition for Review under Rule 42 with the Court of Appeals, which on 10 September 2004 reversed the MTC and RTC, declaring the SPA, mortgage and foreclosure null and void ab initio and awarding various damages.
The Bank of Commerce sought relief from the Supreme Court by a Petition for Review on Certiorari under Rule 45. The main contested poin...(Pro-only)
Issues:
- Did the MTC have jurisdiction to hear the spouses San Pablo’s action for quieting title and annulment of the SPA, mortgage and foreclosure?
- Can a forged SPA and Deed of Real Estate Mortgage become a valid source of a right to foreclose?
- Are the awards of moral damages, exemplary damages, attorney’s fees and litigation ex...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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