Case Digest (G.R. No. 247868)
Facts:
Land Bank of the Philippines accepted the 500-square-meter parcel of land covered by TCT No. T-194323 in the name of late Juan C. Ramos and Pilar L. Ramos as collateral for loans of Parada Consumer and Credit Cooperative, Inc. (PCCCI). Through a Deed of Real Estate Mortgage dated January 11, 1999, PCCCI officers secured the mortgage before petitioner relied on a Special Power of Attorney (SPA) dated December 5, 1998 purportedly executed by Juan and Pilar, but Juan had died on November 10, 1985.
Pilar and her children (respondents) sued for annulment of real estate mortgage and damages, alleging that PCCCI induced Pilar to sign documents and surrender the title, and that the SPA was forged and used to mortgage the property to Land Bank. The RTC, Branch 171, Valenzuela City declared the SPA and REM null and void, ordered Land Bank to cease and desist from foreclosure and release the title, and held both PCCCI and Land Bank liable for moral damages, exemplary damages, attorney’s fees, and litigation expenses, reasoning that Land Bank was not a mortgagee in good faith. The Court of Appeals affirmed with modification and awarded exemplary damages.
Issues:
- Whether the Court of Appeals erred in holding Land Bank failed to observe the required degree of caution in approving the loan and collateral of PCCCI.
- Whether the Court of Appeals erred in holding Land Bank solidarily liable with PCCCI.
- Whether the Court of Appeals erred in granting moral damages, exemplary damages, attorney’s fees, and litigation expenses.
Ruling:
The petition was denied, and the Court of Appeals decision and resolution were affirmed.
The Court sustained the findings that Land Bank acted in bad faith and failed to exercise the diligence expected of a banking institution, and it upheld the awards of damages and attorney’s fees as affirmed by the Court of Appeals.
Ratio:
The Court held that whether a mortgagee is in good faith generally involves factual determinations, which are not reviewable under Rule 45, absent recognized exceptions; none applied, since the CA’s conclusion was consistent with the RTC’s supported factual findings.
On the merits, the Court found that Land Bank was not a mortgagee in good faith because the SPA’s facial irregularities should have prompted further inquiry, and because Land Bank’s ocular inspection was not thorough. It also noted that Land Bank did not verify the whereabouts of Juan despite both Juan and Pilar being listed as mortgagors, and Land Bank admitted that it no longer required Juan to sign once it saw Pilar’s signature, although Juan could not have executed the SPA. Given these circumstances and the rule that banks must exercise the highest degree of diligence when dealing with registered lands, Land Bank’s reliance on the SPA did not excuse its lack of investigation; thus, the damages awarded to respondents were properly affirmed.
Doctrine:
- The question of mortgagee in good faith is generally a factual issue not reviewable under Rule 45.
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