G.R. No. 232724-27 - Republic vs. Sandiganbayan

Petitioners Edilberto Cruz and Simplicio Cruz were brothers and the registered owners of a 33.9335-hectare parcel of agricultural land with improvements, located in Barangay Pulang Yantoc, Angat, Bulacan, covered by TCT No. 19587.
Norma Sulit, introduced to the petitioners by Candelaria Sanchez, offered to purchase the land in May 1978. Petitioners' asking price was P700,000, but Norma had only P25,000, which was accepted as earnest money, with the balance to be paid later.

Norma Sulit failed to pay the balance of the purchase price. She proposed a transfer of the property to her name, but petitioners refused since there was no trust.
Capitalizing on her relationship with petitioners, Norma had petitioners execute a document of sale in favor of Candelaria Sanchez, who then executed a Deed of Absolute Sale in favor of Norma Sulit on the same day, both reflecting a consideration of P150,000.
The land title was transferred to Norma under TCT No. T-248262. Despite the stated consideration, no money was actually paid to petitioners; Candelaria undertook to pay P655,000 (balance of the actual price). Norma assumed this obligation by a Special Agreement dated September 1, 1978.

Norma Sulit obtained a loan of P569,000 from Bancom Finance Corporation (now Union Bank of the Philippines), secured by a mortgage on the land titled in her name.
On account of Norma’s failure to pay under the special agreement and her disappearance, petitioners filed a complaint for reconveyance. Norma was declared in default for failing to appear.
Bancom intervened, claiming to be a mortgagee in good faith and asserted priority over petitioners’ claims. Norma defaulted on the loan, and Bancom foreclosed and became the highest bidder at the auction sale, acquiring a certificate of sale over the land.

The trial court ruled in favor of petitioners, declaring the contract of sale absolutely simulated and void, and held Bancom not a mortgagee in good faith.
The Court of Appeals reversed, finding the Deeds of Sale and Mortgage valid and binding, indicating petitioners intended to be bound by the contracts and that Bancom was a mortgagee in good faith with preferential rights to the land.

Whether the Court of Appeals erred in holding that petitioners intended to enter into valid sales contracts and that the Deeds of Sale were not simulated.

Whether the Court of Appeals erred in ruling that respondent Bancom Finance Corporation was a mortgagee in good faith despite facts indicating bad faith.

Whether the Court of Appeals erred in finding no irregularity on the face of the title and that Bancom had no reason to suspect any simulation or irregularity, despite circumstances that should have aroused its suspicion.

Whether the Court of Appeals erred in upholding Bancom’s preferential right over petitioners on the subject land as a mortgagee in good faith.