Case Summary (G.R. No. 272006)
Antecedents of the Case
Respondents filed a Complaint for annulment of the real estate mortgage in response to claims that Pilar was manipulated into signing documents which led to the encumbrance of the subject property as collateral for a loan by the Parada Consumer and Credit Cooperative, Inc. (PCCCI) to Petitioner Land Bank. The Respondents alleged that Juan was deceased at the time of the mortgage and that Pilar was misled into surrendering the title of the property in the process.
Proceedings in Trial Court
The Regional Trial Court (RTC) ruled in favor of the Respondents on December 26, 2011, declaring the Special Power of Attorney (SPA) and the Deed of Real Estate Mortgage void. The RTC criticized the authenticity of the documents, especially noting that Juan could not have legally signed them given his death prior to the transactions, and found that Petitioner failed to conduct adequate due diligence in verifying the documents prior to accepting the property as collateral.
Ruling of the Court of Appeals
The Court of Appeals (CA), in its Decision of October 31, 2018, affirmed the RTC's ruling but modified the judgment to include an award for exemplary damages. The CA determined that Petitioner acted in bad faith, failing to perform the requisite diligence mandated of banking institutions, especially in light of clear discrepancies regarding the ownership and authority associated with the property.
Grounds for the Petition
Petitioner contended that the CA erred in determining that it did not exercise due caution in approving the loan and security, and disputed the imposition of moral damages, exemplary damages, and attorney's fees. It was argued that reliance on the notarized SPA should have sufficed and that they were misled by Respondents.
Supreme Court's Analysis
The Supreme Court held that the issue of good faith in a mortgage context is predominantly factual and falls outside the purview of a petition for review under Rule 45, which typically addresses errors of law. The Court reinforced the banking sector’s responsibility to perform thorough due diligence, affirming the CA's findings that Petitioner did not meet these obligations, thereby classifying it as a mortgagee in bad faith.
Findings Pertaining to Good Faith
It was noted that obvious inconsistencies in the SPA—specifically the lack of two community tax certificates as required for both parties—should have prompted further inquiry by Petitioner. Furthermore, Petitioner’s failure to investigate the whereabouts of Juan and verify his participation prior to the execution of the mortgage indicated negligence. Thus, findings posite
...continue readingCase Syllabus (G.R. No. 272006)
Background of the Case
- The case involves a Petition for Review on Certiorari filed by the Land Bank of the Philippines (petitioner) against respondents, who are heirs of the late Juan C. Ramos and his spouse, Pilar L. Ramos.
- The controversy centers on a 500-square-meter parcel of land in Valenzuela City, covered by Transfer Certificate of Title (TCT) No. T-194323.
- The property was mortgaged by Juan and Pilar to Parada Consumer and Credit Cooperative, Inc. (PCCCI) to secure a loan that PCCCI had taken from the petitioner.
Factual Antecedents
- Respondent Pilar alleged that in 1998, she took a loan from PCCCI amounting to PHP 200,000.
- She claimed that PCCCI's management persuaded her to sign documents, including a Special Power of Attorney (SPA) dated December 5, 1998, which purportedly authorized PCCCI to mortgage the property.
- Respondents discovered that the SPA contained the signature of Juan, who had passed away in 1985, raising questions about its validity.
- Upon full repayment of her loan in November 2001, Pilar sought the return of the title but was informed it was mortgaged to the petitioner.
Proceedings Before the RTC
- The Regional Trial Court (RTC) ruled in favor of the respondents on December 26, 2011, declaring the SPA and the Deed of Real Es