Case Summary (G.R. No. 87135)
Relevant Events and Actions
On May 7, 1983, while Domingo and his spouse were abroad, Manuel Uy sought a loan from Planters Development Bank, offering the jointly owned land as collateral. A real estate mortgage required both Domingo and Manuel's signatures due to their joint ownership. However, on May 12, 1983, Manuel and his spouse executed a falsified deed of absolute sale, transferring Domingo's share in the properties to themselves for P50,000. Following this, they successfully obtained a P5 million loan from the bank with the properties as collateral after presenting the falsified titles.
Legal Proceedings Initiated
Upon failure to repay the loan, Planters Development Bank initiated extrajudicial foreclosure proceedings. The properties were auctioned, and the bank emerged as the highest bidder, leading to the issuance of a certificate of sale and eventual consolidation of ownership in favor of the bank after the failure of Manuel and Mely Tan to redeem within the statutory period. Subsequently, upon discovering the fraudulent sale, Domingo and Sy Siu Ken filed a complaint aimed at annulling the deed of sale and the mortgage against Manuel Uy, Mely Tan, and Planters Development Bank in the Regional Trial Court of Malolos, Bulacan.
Lower Court’s Decision
On August 28, 1987, the lower court ruled in favor of Domingo and Sy, declaring the falsified sale and subsequent mortgage contracts void. The court ordered the restoration of ownership in the property to Domingo and Sy and awarded them damages. The bank's involvement was also deemed part of the fraudulent transfer, as the bank was seen as relying on the falsified titles.
Appeals and Arguments Presented
Dissatisfied with the lower court’s ruling, Planters Development Bank appealed to the Court of Appeals, asserting its status as a mortgagee in good faith. The bank contested the finding that the sale and mortgage involving Domingo's interest were void, arguing that it acted based on the clean titles presented and that it was not privy to the fraudulent actions of the Uys.
Decision of the Court of Appeals
On May 30, 1990, the Court of Appeals affirmed the lower court's decision and dismissed the bank's appeal, leading to the bank filing a motion for reconsideration, which was subsequently denied. The bank then escalated the matter by petitioning for review on certiorari, alleging various errors in the appellate court’s judgment.
Supreme Court’s Rationale
The Supreme Court found merit in the petition, recognizing that the falsified deed of sale executed by Manuel and Mely Tan unjustly facilitated their wrongful registration as sole owners of the disputed pr
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Case Overview
- This case revolves around the determination of whether the mortgagee, in this instance, Planters Development Bank, acted in good faith concerning a loan secured by properties that were fraudulently transferred.
- The dispute involves two brothers, Domingo Uy and Manuel Uy, and their respective spouses, who are co-owners of the properties in question.
Parties Involved
- Petitioner: Planters Development Bank
- Respondents: Honorable Court of Appeals, Spouses Domingo P. Uy, and Sy Siu Ken
- Other Parties: Manuel Uy and Mely Tan, co-owners and representatives of Sonice Enterprises, Inc.
Facts of the Case
- Domingo Uy and Manuel Uy, as brothers, co-owned two parcels of land located in Barangay Lambakin, Marilao, Bulacan, covered by Transfer Certificate of Title Nos. T-228169 and T-229353.
- Manuel Uy, with his spouse Mely Tan, applied for a loan with Planters Development Bank while Domingo Uy was temporarily out of the country.
- The bank, aware of the co-ownership, required a real estate mortgage signed by both Domingo and Manuel Uy.
- Manuel Uy and Mely Tan executed a falsified deed of absolute sale, allegedly transferring Domingo's share to them, which was used to secure the loan.
- The loan of P5 Million was granted based on the fraudulent titles, and following a failure to pay, a foreclosure was initiated by the bank.
Procedural History
- The Regional Trial Court of Malolos, Bulacan, ruled in favor of Domingo Uy and S