HEIRS OF NATALIA S. CAPILI, REPRESENTED BY THEIR ATTORNEY- IN-FACT, CESAR S. CAPILI, PLAINTIFFS-APPELLEES, VS. BMS RURAL BANK, INC. AND ASTRID MEDINA, DEFENDANTS-APPELLANTS.
DIMAAMPAO, J.:
The records unveil the following precursor facts:
Natalia Capili (Natalia) is the registered owner of Condominium Unit No. 403, located in San Juan, Metro Manila and covered by Condominium Certificate Title (CCT) No. 5551-R.[2]
Sometime in 2003, appellee Cesar Capili (Cesar), son of Natalia, received a call from an anonymous caller informing him that Condominium Unit No. 403 was illegally mortgaged to BMS Bank as security for a loan procured purportedly by Natalia in the sum of P1,235,000.00.[3] Cesar was astounded for he knew that his mother could not have possibly applied for a loan and signed the mortgage documents that year as she was then residing in the United States of America (USA), and that she last visited the Philippines in 1995.[4] The caller further relayed that this fraudulent scheme was contrived by Fe Manubay (Fe), Dina Vitor (Dina), Cecile dela Cruz (Cecile) and several bank personnel. Cesar only knew Fe who happened to be his former officemate and the godmother of his son.
Cesar recalled that he once lent Fe the original copy of CCT No. 5551-R upon the latter’s prodding that she had a prospective buyer who wanted to verify the authenticity of the title. Fe returned the title to him after a couple of days. Upon verification with the Registry of Deeds, Cesar learned that the copy of CCT No. 5551-R in his possession was spurious.
Apprehensive, Cesar wrote BMS Bank relating the foregoing circumstances. He requested the latter not to take further action to aggravate the matter on hand. BMS Bank refused to heed the request[5] and instead, proceeded with the foreclosure of the mortgage constituted on the realty.[6] BMS Bank emerged as the highest bidder at the public auction and a Certificate of Sale[7] was issued in its favor.
In an effort to recover the condominium, Natalia, represented by Cesar, filed a Complaint for Annulment of Mortgage with Damages against BMS Bank. Impleaded in the suit were defendant-appellant Astrid Medina, the head of the bank’s Loan Department, as well as Fe, Dina and Cecile who supposedly conspired to perpetrate this devious design.
Natalia adduced in evidence Questioned Documents Report No. 637-904[8] issued by the National Bureau of Investigation (NBI) which concluded that her alleged signature as appearing in the Real Estate Mortgage[9] was forged. NBI Examiner IV Rhoda Flores (Flores) likewise testified that she analyzed, evaluated and compared the questioned and standard signatures of Natalia. She noted significant differences thereon leading her to deduce that the signatures were not written by one and the same person.
To prove that her last visit to the Philippines was in 1995, Natalia proffered the Certification[10] of the Bureau of Immigration as well as various passports[11] indicating that she neither left the USA nor set foot in the Philippines since 2001.
In 2005, Natalia died in the USA and she was substituted by Cesar and her other heirs in the proceedings.[12]
BMS Bank, for its part, asserted that it exercised due diligence and acted in good faith in approving the loan. It observed its standard procedure in determining the identity of Natalia and in checking the authenticity of CTC No. 5551-R. BSM Bank theorized that the Natalia who applied for the loan was the real Natalia Capili, and not the plaintiff-appellee. Natalia was required to submit identification cards, business registration documents and mayor’s permit, as well as the certified true copy of CTC No. 5551-R, tax receipts and clearances. BMS Bank checked with the Registry of Deeds and confirmed the veracity of the condominium title in the name of Natalia.
During the credit investigation, one Eric Gonzales (Gonzales), a loan officer of BMS Bank visited the residence declared by Natalia in her application. Gonzales was able to talk to two of her employees who affirmed that it was Natalia who resided therein as well as “a lady outside”[13] who stated that Natalia was engaged in the fruit dealership business.[14]
Gonzales visited the North Harbor to check on Natalia’s business. He was able to procure a copy of the Butuan Banana Consignees Association Expense Report and noticed that the name of Natalia was the only name not typwritten therein, and that written on its left margin were the notations: “CCT No. 5551-R” and “1822 42nd Avenue San Francisco, California.”[15] Eric also noted that the business of Natalia was registered with the Department of Trade and Industry barely 11 days prior to the loan application.[16]
Gonzales and his team, along with Natalia, visited the condominium which was at that time vacant. Natalia talked to the building administrator who opened the unit for them.[17]
BSM Bank revealed that one of the purposes of Natalia’s loan was refinancing, which meant that the loan proceeds should be used to pay the previous obligation of the applicant. Thence, upon approval of the loan, Gonzales accompanied Natalia to the office of one Atty. Domingo Cruz, representative of a certain Dr. Jose Mendiola (Dr. Mendiola), and partially released a portion of the loan amounting to P500,000.00. Dr. Mendiola released CCT No. 5551-R which was in his possession.
Weighing the adverse postures of the parties, the court a quo rendered the impugned Decision, thusly:
“WHEREFORE, judgment is hereby rendered in favor of the (plaintiff Natalia, represented by her heirs) and against the defendant (BSM Bank), as follows:
- Declaring null and void the Real Estate Mortgage dated 08 July 2003, the foreclosure proceedings thereon, and the Certificate of Sale issued to defendant bank pursuant thereto;
- Ordering the (defendant BSM Bank) to:
2.1 Return to (plaintiff Natalia, represented by her heirs) the owner’s copy of Condominium Certificate of Title No. 5551-R;
2.2 Pay the amounts of P50,000.00 in moral damages, P50,000.00 in exemplary damages and P50,000.00 in attorney’s fees.
2.3 Pay the costs of suit.
- Ordering the Register of Deeds of San Juan to cancel the annotations on Condominium Certificate of Title No. 5551-R of the Real Estate Mortgage and the Certificate of Sale under entry nos. 52239 and 56890, respectively.
SO ORDERED.”[18]
Nonplussed, BSM Bank (now, appellant) comes to Us raising these assignment of errors:
I
THE TRIAL COURT ERRED IN FINDING THAT THE DEFENDANT-APPELLANT BANK DID NOT EXERCISE THE DILIGENCE REQUIRED OF BANKING INSTITUTIONS IN DEALING WITH REGISTERED OR TITLED PROPERTY.
II
THE TRIAL COURT ERRED IN FINDING THAT THE DEFENDANT-APPELLANT BANK IS NOT A MORTGAGEE IN GOOD FAITH.
III
THE TRIAL COURT ERRED IN FINDING THAT THE SIGNATURE “NATALIA S. CAPILI” IN THE REAL ESTATE MORTGAGE IS A FORGERY.
IV
THE TRIAL COURT ERRED IN FINDING THAT THERE IS NO VALID AND PERFECTED CONTRACT OF MORTGAGE BETWEEN NATALIA S. CAPILI AND THE DEFENDANT-APPELLANT BANK.
V
THE TRIAL COURT ERRED IN DECLARING THAT THE REAL ESTATE MORTGAGE BETWEEN NATALIA S. CAPILI AND THE DEFENDANT-APPELLANT BANK IS NULL AND VOID.
VI
THE TRIAL COURT ERRED IN ORDERING THE REGISTER OF DEEDS OF SAN JUAN TO CANCEL THE ANNOTATIONS ON CONDOMINIUM CERTIFICATE OF TITLE NO. 5551-R CONCERNING THE REAL ESTATE MORTGAGE AND THE CERTIFICATE OF SALE UNDER ENTRY NOS. 52239 AND 56890, RESPECTIVELY.
VII
THE TRIAL COURT ERRED IN AWARDING DAMAGES TO THE PLAINTIFFS-APPELLEES.
The Appeal lacks merit.
First off, appellant takes umbrage at the finding that it was not a mortgagee in good faith as it did not exercise the diligence required of banks before approving the loan. It contends that a thorough investigation was conducted on Natalia, represented by her heirs, (collectively now, appellees) as well as the real status of the mortgaged property.
The doctrine of “mortgagee in good faith” is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title are not required to go beyond what appears on the face of the title. This is in deference to the public interest in upholding the indefeasibility of a certificate of title as evidence of lawful ownership of the land or of any encumbrance thereon. In the case of banks and other financial institutions, however, greater care and due diligence are required since they are imbued with public interest, failing which renders the mortgagees in bad faith.[19]
A perspicacious review of the records convinced Us that appellant failed to exercise extraordinary diligence in approving the loan and in allowing the mortgage of appellees’ property. There is no gainsaying that Gonzales, the bank officer who spearheaded the credit investigation, admitted that one, he did not verify whether the passport and other documents shown by the impostor were genuine;[20] two, he never bothered to investigate the alleged mortgage previously executed in favor of Dr. Mendiola which could have shed light on how a copy of CCT No. 5551-R was in the latter’s possession;[21] three, he did not inquire why the impostor’s business registration with the DTI was barely 11 days old from the time the loan application was filed;[22] and, four, he did not probe into whether the person he visited was truly appellee Natalia by asking neighbors or barangay officials who may attest to her identity, but merely relied on the mere say-so of two of her employees and a certain lady outside of the house.[23]
Had appellant exerted prudent efforts to ascertain the identity of the person transacting with it, the devious design of the impostor would not have succeeded and this legal scuffle would not have ensued. We thus give Our approbation to the well-reasoned discourse of the court a quo—
“There are circumstances in this case that tend to prove that (appellant) bank failed to exercise that degree of diligence required of it in dealing with the bank contract of mortgage with that person who disguised herself as Natalia Capili.
Per the testimony of (appellant) bank loan officer Eric V. Gonzales, based on his record, the purposes of the loan application was for refinancing and permanent working capital. There was refinancing because it would appear that CCT No. 5551-R was allegedly mortgaged to Dr. Jose F. Mendiola who had possession of the owner’s duplicate copy of the said title. This explains why when the first voucher in the amount of P500,000.00 was released by the bank, the said mortgagor had to pay Atty. Domingo S. Cruz, the attorney-in-fact of Dr. Jose F. Mendiola the previous loan so that said owner’s duplicate copy of title could be released. In fact, it was after the release of said title that the remaining balance of the loan was released by the bank to the purported mortgagor.
On this score, the court is bothered about why (appellant) bank failed to inquire about the alleged previous mortgage or secure documents pertaining to said transaction despite knowing that the owner’s duplicate copy of said CCT No. 5551-R was not in the possession of the loan applicant. This is supposed to be material and important in screening said loan application. Interestingly, even Dr. Jose F. Mendiola failed to produce a copy of the said prior mortgage contract by simply claiming that said documents were lost.
Another purpose of the loan was for permanent working capital of the applicant. On this score again, (appellant) bank failed to exercise that degree of diligence required in verifying the loan applicant’s business and other personal circumstance material in screening her loan application.
Eric Gonzales testified that to ascertain the personality of the true person applying for a loan, the alleged mortgagor showed her passport and SSS ID card. This appears to be an insufficient requirement. Said witness even admits that he did not bother to check with the Department of Foreign Affairs if said passport was authentic as the bank personnel themselves merely made such determination that it was genuine which turned out to be a mistaken judgment.
There are other circumstances that constituted warning signs that should have reminded the bank that it should have been more circumspect and strict in screening the loan application. For one, upon verification, the business was supposed to have been in existence for years but it was registered with the Department of Trade and Industry (DTI) only on 19 June 2003, barely 11 days before contracting the loan. For another, from the photocopy of the Butuan Banana Consignee Association taken by the bank representatives, it is observed that the name of Natalia S. Capili is the only name not in typewritten form on the Expense Report given by the association, an intriguing circumstance. Another discrepancy is that on the left margin of the title, the address of Natalia Capili was 1822 24nd (sic) Avenue, San Francisco, California and not at Lot 10, Block 16, Cedar Street, Bacoor, Cavite.
This last discrepancy even led the vice president of the defendant to instruct the witness to confirm the status of the citizenship of the borrower. Yet the latter merely relied on the two identification cards produced which were unverified.
The procedure conducted by the bank in verifying the identification of the loan applicant also appears insufficient. Eric Gonzales testified that before he went to Natalia Capili’s house, he texted her, and upon arriving there and meeting Ms. Capili at her residence, he was able to talk to two men inside the house who claimed to be her employees, and one lady outside. He did not even bother to get the identification of these persons. Nor did he verify from the barangay chairman whether the alleged Natalia Capili was really residing in that place. He also failed to verify if the electric meter was registered under the name of Natalia Capili. These omissions on his part are hardly indicative of good faith on the part of the (appellant) bank.[24]
Next, appellant refuses to concede that there was forgery. As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof lies on the party alleging forgery. The best evidence of a forged signature in the instrument is the instrument itself reflecting the alleged forged signature. The fact of forgery can only be established by comparison between the alleged forged signature and the authentic and genuine signature of the person whose signature is theorized upon to have been forged.[25]
To Our mind, the assertion of forgery has been duly established. The testimony of NBI Examiner IV (Flores) bears the earmarks of clear and convincing proof of forgery. Using instruments such as the magnifying lenses, stereoscopic microscope, and photographic enlargement device,[26] she effectively demonstrated the peculiar differences in the handwriting characteristics existing between the sample and the disputed signatures. She positively declared that the disputed signatures were forgeries.[27]
Juxtaposed with the evidence that appellee Natalia had not left the USA since 2001, the concrete finding of the NBI that there was forgery becomes even more relevant. It is downright impossible for appellee Natalia to personally appear before appellant and apply for the loan, let alone sign the mortgage document in 2003.
In light of the foregoing disquisition, We discern no justification to doubt the conclusions reached by the court a quo. With these explications, there lies no reason to delve into the other issues raised by appellant.
WHEREFORE, the Appeal is hereby DENIED. The Decision dated 28 September 2012 of the Regional Trial Court of Pasig City, Branch 160, in Civil Case No. 70066, is AFFIRMED.
SO ORDERED.
C E R T I F I C A T I O N
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
Ybañez and Sadang, JJ., concur.
[1] Original Records, Vol. II, pp. 185-194.
[2] Id., Vol. I, p. 16.
[3] Original Records, Vol. I, pp. 14-15.
[4] Id., pp. 276.
[5] Id., pp. 17B-17C.
[6] Id., pp. 248-250.
[7] Id., p. 253.
[8] Id., pp. 108-109, 129-140.
[9] Original Records, Vol. I, pp. 14-15.
[10] Id., p. 276.
[11] Id., pp. 277-285.
[12] Id., p. 256.
[13] TSN, 8 March 2007, p. 11.
[14] Id., 3 August 2006, pp. 4-14.
[15] TSN, 8 March 2007, pp. 19-21.
[16] Id., 27 September 2007, p. 9.
[17] Id., 8 March 2007, pp. 24-26.
[18] Original Records, Vol. II, pp. 185, 193-194.
[19] See Philippine Banking Corporation v. Dy, 685 SCRA 567, 575 (14 November 2012).
[20] TSN, 8 March, 2007, pp. 29-30.
[21] Id., 8 March 2007, pp. 27-28; TSN,, 31 January 2008, pp. 14-15.
[22] Id., 27 September 2007, pp. 9, 13.
[23] Id., 8 March 2007, p. 11.
[24] Original Records, Vol. II, pp. 192-193.
[25] Heirs of the Late Felix Bucton v. Spouses Go, G.R. No. 188395 (20 November 2013).
[26] TSN, 17 February 2005, p. 25.
[27] Id., p. 30.