G.R. No. 243296. July 29, 2020
CEFERINO BAUTISTA (SUBSTITUTED BY HIS SON AND LEGAL REPRESENTATIVE, PHILIP DE VERA BAUTISTA), FELISA BAUTISTA, AND NEHEMIAS BAUTISTA, PETITIONERS, VS. SPOUSES FRANCIS AND MINDA BALOLONG, METROPOLITAN BANK AND TRUST COMPANY, AND THE REGISTER OF DEEDS, LINGAYEN, PANGASINAN, RESPONDENTS.

FACTS

Spouses Ceferino and Felisa Bautista, registered owners of two parcels of land in Lingayen, Pangasinan (TCT Nos. 139362 and 163938), migrated to Canada, leaving the properties in the care of their daughter, respondent Minda Balolong. Minda and her husband, respondent Francis Balolong, built their home on the properties. In 2003, the petitioners discovered that the original titles had been cancelled and the land subdivided into three lots. Lot 1 was issued under TCT No. 262244 in the names of Spouses Balolong, who then obtained a P1,500,000.00 loan from respondent Metropolitan Bank and Trust Company (Metrobank) secured by a mortgage on Lot 1. The petitioners alleged that the Deed of Absolute Sale dated March 9, 2002, which facilitated the transfer to the Balolongs, was forged, as the Spouses Bautista were in Canada at that time. Francis Balolong was subsequently convicted of Falsification of Public Documents for this deed. The petitioners filed a complaint for cancellation of title, declaration of nullity of mortgage, and damages. Minda denied participation, claiming her signatures were forged and she was misled into believing she was signing a chattel mortgage. Francis did not file an answer and was declared in default. Metrobank claimed it was a mortgagee in good faith, having conducted due diligence by verifying the title and inspecting the property.

ISSUE

Whether the Court of Appeals committed reversible error in ruling that Metrobank is a mortgagee in good faith and in upholding the validity of the mortgage and its foreclosure.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court held that the determination of good faith is a factual matter generally not reviewable in a Rule 45 petition, as the Court is not a trier of facts. It found no exceptional circumstances warranting a departure from this rule. The Court upheld the concurrent findings of the Regional Trial Court and the Court of Appeals that Metrobank exercised the required due diligence. Metrobank’s branch manager testified to conducting an ocular inspection, verifying the title’s authenticity with the Register of Deeds, and performing a neighborhood check. The Court ruled that testimonial evidence, which withstood cross-examination, was sufficient to establish good faith; there is no rule requiring corroboration by documentary evidence. As an innocent mortgagee in good faith, Metrobank is entitled to protection, and the real estate mortgage contract, as well as TCT No. 262244, were upheld as valid. The Court sustained the order for Francis Balolong to pay the petitioners actual damages equivalent to the loan principal, plus moral damages, exemplary damages, and attorney’s fees.