Facts:

The case involves Remedios T. Banta (petitioner) against Equitable Bank, Inc. (now BDO Unibank, Inc.), Antonio Banta, Armando Banta, Sonia Banta, Erlinda Tan, and the Register of Deeds of Malabon City (respondents). The marriage between Remedios and Antonio Banta began in 1975, but they separated in 1991. In June 1997, Remedios discovered that Antonio had forged her signature to execute a Deed of Real Estate Mortgage on September 1, 1994, over properties in Malabon City, which were registered under their names and covered by Transfer Certificates of Title (TCT) Nos. M-10421, M-10422, and M-9155. This mortgage secured a loan of P1,000,000.00 from Equitable Bank. Furthermore, on May 11, 1995, Antonio, along with Armando, Sonia, and Erlinda, executed an "Amendment to Real Estate Mortgage" with additional collateral, again using Remedios' forged signature, covering properties under TCT Nos. M-1989, R-41303, R-49374, R-34869, and R-41682, securing loans amounting to ...

Facts:

Background and Transactional History

• The parties involved:
• Remedios T. Banta (petitioner) and Antonio Banta (her estranged husband, with whom she was married in 1975 but ceased cohabiting since 1991).
• Discovery of Forgery and Mortgage Documents:
• In June 1997, the petitioner discovered that Antonio, using her forged signature, executed a Deed of Real Estate Mortgage in favor of Equitable Bank, Inc. (now BDO Unibank, Inc.) dated September 1, 1994.
• This deed covered real properties in Malabon City registered under both their names with Transfer Certificates of Title (TCT) Nos. M-10421, M-10422, and M-9155, securing a loan amounting to P1,000,000.00.
• Additional Mortgage and Amendment:
• On May 11, 1995, Antonio together with Armando T. Banta, Sonia O. Banta, and Erlinda B. Tan executed an “Amendment to Real Estate Mortgage” using the petitioner’s forged signature, which covered five additional properties (identified by TCT Nos. M-1989, R-41303, R-49374, R-34869, and R-41682) to secure a loan of P4,500,000.00.

RTC (Regional Trial Court) Proceedings

• Filing of the Complaint:
• The petitioner initiated a complaint for the annulment of the deed mortgage with damages before the RTC of Malabon City against the Bank, Antonio Banta, Armando, Sonia, Erlinda Tan, and the Register of Deeds.
• RTC’s Ruling on the Mortgage Documents:
• The RTC dismissed the petition against Armando, Sonia, and Tan based on the property registrations indicating the properties were in the names of Armando and Tan.
• The “Amendment to Real Estate Mortgage” covering certain properties (TCT Nos. R-41303, R-41682, R-34869, R-49374, and M-1989) was declared null and void due to the petitioner’s forged signature.
• The forgery was substantiated by evidence from handwriting experts of the Philippine National Police and the National Bureau of Investigation.
• Findings Against the Bank:
• The RTC found the Bank negligent and remiss for failing to exercise extraordinary diligence by not verifying the authenticity of the petitioner’s signature on the mortgage documents.
• The RTC ordered the cancellation of the mortgage agreement and imposed joint and several liability on Antonio and the Bank for the payment of attorney’s fees amounting to P50,000.00.
• Appeal to the Court of Appeals (CA):
• Dissatisfied with the RTC ruling, both the Bank and the petitioner filed appeals before the CA.

Court of Appeals (CA) Proceedings

• CA Decision and Modifications:
• The CA partially granted the petitioner’s appeal, awarding moral damages, exemplary damages, and an increase in attorney’s fees.
• However, the CA modified the RTC ruling by absolving the Bank from joint and several liability with Antonio for damages and attorney’s fees.
• CA’s Findings:
• The CA noted that Antonio’s act of forging the petitioner’s signature clearly demonstrated bad faith.
• The petitioner’s psychological and mental trauma, as a consequence of Antonio’s actions, warranted the award of moral damages and exemplary damages.
• The Bank was relieved from liability on the ground that there was no evidence of its participation in the forgery or any bad faith.

Supreme Court Petition and Issues Raised

• The petitioner elevated the case to the Supreme Court via a petition for review under Rule 45.
• Central to her contention was the argument that Equitable Bank, by virtue of its status and the higher degree of diligence required in its operations, should be held jointly and severally liable with Antonio for the damages awarded.
• The petitioner challenged the CA’s exculpation of the Bank, asserting that its failure to verify the authenticity of the forged signature constitutes negligence tantamount to a quasi-delict.
• The Bank, in its defense, maintained that without evidence of bad faith or collusion in the forgery, mere negligence is insufficient to impose such joint liability.

Issue:

The primary issue raised:

• Whether Equitable Bank (now BDO Unibank, Inc.) should be held jointly and severally liable with Antonio Banta for the payment of moral damages, exemplary damages, and attorney’s fees awarded to the petitioner.

Sub-issues requiring resolution:

• Whether the bank’s failure to verify the authenticity of the petitioner’s signature, and its resultant negligence, are sufficient to establish its liability.
• Whether the absence of any showing of bad faith or conspiracy on the part of the Bank should preclude it from being held liable for damages under the theory of quasi-delict.
• How the established duty of extraordinary diligence expected of banking institutions factors into the imposition of joint liability.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)