Case Digest (G.R. No. 243296)
Facts:
The case involves a Petition for Review on Certiorari filed by Ceferino Bautista (substituted by his son and legal representative, Philip de Vera Bautista), Felisa Bautista, and Nehemias Bautista (collectively referred to as the petitioners) against the Spouses Francis and Minda Balolong, Metropolitan Bank and Trust Company (Metrobank), and the Register of Deeds of Lingayen, Pangasinan (respondents). The events leading to the case began when the petitioners, who were the registered owners of two parcels of land in Lingayen, Pangasinan, migrated to Canada in the 1980s, leaving their properties in the care of their daughter, Minda. Minda later married Francis Balolong, and they built a home on the properties. On June 17, 2003, Philip Bautista received a call from a Metrobank branch manager informing him that the property mortgaged by Minda was due for foreclosure. Upon investigation, the petitioners discovered that their titles (TCT Nos. 139362 and 163938) had been canceled and...
Case Digest (G.R. No. 243296)
Facts:
Ownership and Migration
- Spouses Ceferino and Felisa Bautista (Spouses Bautista) were the registered owners of two parcels of land in Lingayen, Pangasinan, covered by Transfer Certificate of Title (TCT) Nos. 139362 and 163938.
- In the 1980s, Spouses Bautista and their son Nehemias migrated to Canada, leaving the properties under the care of their daughter, Minda Bautista, who later married Francis Balolong.
Fraudulent Sale and Mortgage
- In 2003, Philip Bautista (another son of Spouses Bautista) was informed by Metrobank that a property mortgaged by Minda was due for foreclosure.
- Upon investigation, it was discovered that TCT Nos. 139362 and 163938 were canceled, and the properties were subdivided into three lots:
- Lot 1 (TCT No. 262244) under the name of Minda and Francis Balolong.
- Lot 2 (TCT No. 262245) under the name of William Bautista (Minda’s brother).
- Lot 3 (TCT No. 262246) under the name of Nehemias Bautista.
- Minda and Francis obtained a P1,500,000.00 loan from Metrobank, secured by a mortgage on Lot 1.
Allegations of Fraud
- Petitioners alleged that Minda and Francis, through fraud and forgery, made it appear that Spouses Bautista sold Lot 1 to them. Spouses Bautista denied executing the Deed of Absolute Sale dated March 9, 2002, and provided proof that they were in Canada at the time.
- Minda denied involvement in the fraud, claiming that her husband made her sign documents under the belief that they were for a chattel mortgage of their vehicle. She also alleged that her signatures on the promissory notes and mortgage were forged.
- Francis did not file an answer and was declared in default by the RTC.
Metrobank’s Defense
- Metrobank claimed to be a mortgagee in good faith, having conducted due diligence before approving the loan. The bank verified the Certificate of Title and found no defects or indications of fraud.
Issue:
- (Unlock)
Ruling:
- (Unlock)
Ratio:
- Mortgagee in Good Faith: The Court ruled that Metrobank conducted the necessary due diligence, including an ocular inspection of the property, verification of the title with the Register of Deeds, and a neighborhood check. The bank had no reason to suspect fraud, as the title appeared genuine and the mortgagors (Spouses Balolong) were residing on the property.
- Higher Standard for Banks: While banks are expected to exercise a higher degree of diligence due to the public interest in their operations, Metrobank met this standard. The testimony of its branch manager, Marlon Magali, established that the bank followed standard operating procedures in approving the loan and mortgage.
- Protection of Mortgagees in Good Faith: The Court emphasized the public interest in protecting mortgagees in good faith, as it ensures the stability of land titles and transactions. A mortgagee has the right to rely on the Certificate of Title in the absence of any signs of fraud.
- No Misapprehension of Facts: The Court found no reason to overturn the factual findings of the RTC and CA, as they were supported by evidence and consistent with the principle of preponderance of evidence in civil cases.
Conclusion:
- The Supreme Court affirmed the CA’s decision, ruling that Metrobank is a mortgagee in good faith and that the mortgage and foreclosure of Lot 1 are valid. Francis Balolong was held liable for damages to the petitioners, while Minda and Metrobank were absolved of liability.