G.R. No. L-6310 November 26, 1954
ROSARIO PARQUI, plaintiff-appellee, vs. PHILIPPINE NATIONAL BANK, defendant-appellant.

FACTS

The land in question was originally registered in the name of plaintiff Rosario Parqui under Original Certificate of Title No. 2109. During the war in 1944, Parqui entrusted his owner’s duplicate certificate of title to Feliciana Ordoñez for safekeeping. After liberation, Ordoñez informed Parqui that the title was lost. In August 1950, Parqui discovered from the Municipal Treasurer that his land already belonged to the Philippine National Bank (PNB). Investigation revealed that his land had been mortgaged in his name to secure a loan from PNB, the mortgage was foreclosed due to non-payment, and the land was adjudicated to PNB as the highest bidder at the auction sale. Original Certificate of Title No. 2109 was cancelled and Transfer Certificate of Title No. 358 was issued in PNB’s name. Parqui filed an action to annul the mortgage, sale, and transfer certificate of title, and to recover damages.
The evidence established that in March 1946, Feliciana Ordoñez, with the help of Nestor Ruedas, persuaded Roman Oliver to forge Parqui’s signature on a loan application, mortgage deed, and check from PNB. Ruedas, identified as a chief clerk of the municipal treasurer at Tigaon and a sub-agent of the Bank, assured Oliver that the land’s owner was dead and that he would handle the loan negotiation. Oliver signed Parqui’s name on the documents, and the loan was granted based on the sub-agent’s favorable recommendation and inspection report, which positively identified Oliver as Rosario Parqui. The mortgage was registered, foreclosed for non-payment, and the land was sold at public auction to PNB.

ISSUE

Whether or not the Philippine National Bank acquired good title to the parcel of land covered by Original Certificate No. 2109, despite the forgery of the owner’s signature to the mortgage deed.

RULING

No, the Philippine National Bank did not acquire good title. The mortgage was declared null and void because one of the essential requisites of a valid mortgage under the Civil Code is that the person mortgaging the property must be the owner or duly authorized, and Roman Oliver, who mortgaged the property, was not the owner. The Court affirmed the trial court’s decision annulling the mortgage deed and foreclosure proceedings, ordering the cancellation of Transfer Certificate of Title No. 358 in PNB’s name, and the revival of the original certificate of title in Parqui’s name.
The Court rejected PNB’s argument that as a bona fide purchaser relying on a registered mortgage, it acquired good title under the Torrens system, stating that PNB could acquire no better rights as purchaser than it had as mortgagee. The Court distinguished the cited case of Cruz vs. Fabie, which involved a forged sale, not a mortgage. The Court also found the case of Blondeau vs. Nano inapplicable because there the mortgage deed was not forged, and the owner’s negligence contributed to the fraud. Instead, the Court applied the precedent in Lara vs. Ayroso, where a mortgage executed by an impostor was annulled, holding that registration procured by a forged deed is null and void.
The Court noted that Parqui’s failure to notify the Register of Deeds of the loss of his title, as required by law, was not a material defense because it was not shown that this failure contributed to the Bank’s deception, especially since the mortgage was accomplished before Parqui knew of the loss. The Court emphasized that the Bank’s approval of the mortgage was primarily based on its agent’s inspection report, which falsely identified Oliver as Parqui. Furthermore, the Court pointed out that Nestor Ruedas, a principal actor in the fraud, was a sub-agent of the Bank, and his knowledge of the impersonation was imputable to the Bank.