GR 214939; (June, 2020) (Digest)
G.R. No. 214939 , June 08, 2020
BPI FAMILY SAVINGS BANK, INC., PETITIONER, vs. SPOUSES JACINTO SERVO SORIANO AND ROSITA FERNANDEZ SORIANO AS REPRESENTED BY THEIR ATTORNEY-IN-FACT, GLORIA SORIANO CRUZ, RESPONDENTS.
FACTS
Respondent spouses Soriano owned two parcels of land in Baguio City. A certain Rey Viado, through a series of fraudulent acts, forged the spouses’ signatures on an Affidavit of Loss and a Special Power of Attorney. Using these forged documents, Viado secured a court order for the re-issuance of the owners’ duplicate certificates of title, which were then used to transfer the properties. One property was transferred to Jessica Jose, who mortgaged it to Maria Luzviminda Patimo. The other property was transferred to Vanessa Hufana, who used it as collateral to secure a loan from petitioner BPI Family Savings Bank.
The spouses Soriano, upon discovering the fraudulent transfers, filed separate complaints for annulment of sale and reconveyance. The Regional Trial Court (RTC) ruled in favor of the spouses, declaring the deeds of conveyance null and void and ordering the cancellation of the derived titles. However, the RTC upheld the mortgage lien of BPI Family Bank, finding it to be a mortgagee in good faith. The Court of Appeals (CA) affirmed the RTC’s decision but reversed the finding regarding BPI, declaring its mortgage lien void and ordering it to pay damages to the spouses.
ISSUE
Whether the Court of Appeals erred in declaring BPI Family Savings Bank’s mortgage lien null and void and in holding it liable for damages.
RULING
The Supreme Court denied the petition and affirmed the CA decision. The Court held that BPI could not be considered a mortgagee in good faith. The legal logic rests on the principle that a mortgagee is expected to exercise due diligence in examining the title of the mortgagor. BPI failed in this duty. Hufana’s title was derived from a deed of absolute sale executed pursuant to a forged Special Power of Attorney, which was a void document. A forged deed conveys no title.
The Court emphasized that the bank’s loan officer was negligent for failing to conduct a thorough investigation. The officer did not verify the identity of the purported sellers (the spouses Soriano) or the authenticity of their signatures against available specimen signatures. Furthermore, the transaction exhibited suspicious circumstances, such as the recent issuance of the reconstituted title and the immediate sale to Hufana, which should have prompted a higher degree of caution. Since the mortgagor, Hufana, had no valid title to the property, she could not have validly mortgaged it. Consequently, BPI acquired no lien, and its mortgage was correctly declared void. The award of damages was sustained due to the bank’s negligence which contributed to the spouses’ injury.