G.R. No. 180945 ; February 12, 2010
PHILIPPINE NATIONAL BANK, AS THE ATTORNEY-IN-FACT OF OPAL PORTFOLIO INVESTMENTS (SPV-AMC), INC., Petitioner, vs. MERCEDES CORPUZ, REPRESENTED BY HER ATTORNEY-IN-FACT VALENTINA CORPUZ, Respondent.

FACTS

Respondent Mercedes Corpuz left her owner’s duplicate copy of TCT No. 32815 with Dagupan City Rural Bank as security for her employment as cashier in 1974. After she left for the United States, the bank cancelled its lien in 1994, but its manager, Natividad Alano, without Corpuz’s knowledge, gave the title to Julita Camacho and Amparo Callejo. They conspired to falsify a deed of sale dated February 23, 1995, making it appear Corpuz sold the property to “Mary Bondoc” for ₱50,000, resulting in the issuance of TCT No. 63262 in Bondoc’s name. A second fictitious deed dated March 27, 1995 showed Bondoc selling the property to spouses Rufo and Teresa Palaganas for only ₱15,000, leading to TCT No. 63466. On April 5, 1995, the Palaganases sold the property to spouses Virgilio and Elena Songcuan for ₱50,000, resulting in TCT No. 63528. On August 10, 1995, the Songcuans obtained a ₱1.1 million loan from petitioner Philippine National Bank (PNB), secured by a real estate mortgage on the title. PNB conducted a credit investigation, property inspection, and title verification before approving the loan. On November 20, 1995, Corpuz filed a complaint seeking annulment of the deeds of sale, cancellation of the subsequent TCTs, and reinstatement of her original title. The Regional Trial Court ruled in favor of Corpuz, and the Court of Appeals affirmed the decision.

ISSUE

Whether petitioner PNB is a mortgagee in good faith, entitling it to a lien on the disputed property.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision, holding that PNB is not a mortgagee in good faith. While ordinary mortgagees are not required to exhaustively investigate a title’s history, banks are held to a higher standard of diligence due to their business being imbued with public interest. The Court noted that PNB, during its verification, was informed of the previous TCTs covering the property, which showed rapid transfers of ownership within a short period (less than three months) and mortgage to PNB within four months of the last transfer. The deeds of sale also reflected ridiculously low consideration (₱50,000, ₱15,000, and ₱50,000) compared to PNB’s appraised value of ₱781,760. These facts should have prompted PNB to exercise greater caution and investigate further. By ignoring these suspicious circumstances, PNB failed to act as a prudent bank and cannot be considered an innocent mortgagee for value.