G. R. No. 18292-4. May 30, 1967
CRESENTE PICHAY, ET AL., PLAINTIFFS-APPELLEES, VS. ISAIAS CELESTINO, ET AL., DEFENDANTS, THE PHILIPPINE NATIONAL BANK, (DAGUPAN BRANCH), DEFENDANT-APPELLANT.
DIZON, J.:
In the early months of the year 1957 four civil
actions – Civil Cases Nos. U-27, U-32, U-34 and U-36 – were commenced in
the Court of First Instance of Pangasinan. The first three were instituted by several
parties to rescind certain documents and deeds affecting registered lands situated in the province of Pangasinan;
the fourth was filed by the Philippine National Bank – hereinafter
referred to as the Bank – to
foreclose several real estate mortgages on said lands executed in its favor
by Isaias Celestino as
security for the payment of several loans obtained by him, some in his capacity
as attorney-in-fact of the plaintiffs in Civil Case No. U-27,
and the others in his own name
and right (Civil Cases Nos. U-32, and U-34). Because the cases involved common questions
of law and fact, they were jointly tried and, thereafter, the lower court
rendered judgment as follows:
“WHEREFORE, judgment is hereby rendered in the following
cases, to wit:
CIVIL CASE NO. U-27
(1) Declaring the deed of special power of attorney in which the
signatures and/or thumbmarks of Cresente
Pichay, Juana Larioza,
Esteban Renopa, Eugenia Agdoma,
Esteban Lariosa, Mercedes Agdoma
and Pedro Agdoma were found to have been forged, null
and void; (2) declaring the chattel mortgage on the standing crops of (Exhibit
F-3-bank), and the real estate mortgage upon the parcel of land described in
Transfer Certificate of Title No. 10795-P executed in favor of the Philippine
National Bank by defendant Celestino (Exh. G-1-bank) null and void; (3) ordering the Register of
Deeds to cancel the second owner’s duplicate copy of Transfer Certificate of
Title No. 10795-P, while the first owner’s duplicate copy thereof, is ordered
subsisting and valid; and (4) ordering defendant Isaias
Celestino to pay the plaintiffs Cresente
Pichay, et al, the sum of P1,300.00
as attorney’s fees and expenses of litigation.
CIVIL CASE NO. U-32
(1) Declaring the deed of sale (Exh. 11-Agdoma),
the deed of chattel mortgage (Exh. D-2),
and the deed of real estate mortgage (Exh. G-1) null
and void; (2) ordering Register of Deeds of this province to cancel Transfer
Certificate of Title No. 18925 which is in the name of Isaias
Celestino, while the first owner’s duplicate copy of
Original Certificate of Title No. 62507 is hereby ordered subsisting and valid;
(3) declaring plaintiffs the absolute owners pro-indiviso
of the parcel of land covered by said Original Certificate of Title No. 62507;
(4) ordering defendant Isaias Celestino
to pay plaintiffs, who are also cross-claimants in Civil Case No. U-36, the sum
of P143.00 representing the unrealized produce of the land for the agricultural
year, 1956-1957, plus P1,200.00 as attorney’s fees.
CIVIL CASE NO. U-34
(1) declaring the deed of sale (Exh. C-Papa) and the real estate mortgage (Exh. E-bank) null and void; (2) ordering the Register of
Deeds to cancel said Transfer Certificate of Title No. 19622 which is in the name of Isaias
Celestino while the first owner’s duplicate of said
Transfer Certificate of Title No. 16479 is hereby ordered subsisting and valid;
(3) ordering Isaias Celestino
to pay plaintiffs herein who are also cross-claimants in Civil Case No. U-36
the amount of P1,300.00 as attorney’s fees and expenses of the suit.
CIVIL CASE NO. U-36
Having declared all the mortgages executed in favor of the bank by
defendant Isaias Celestino
null and void, except the mortgages upon the property described in Transfer
Certificate of Title No. 18801 and on its standing crops, the complaint for
foreclosure of the property of Cresente Pichay, et al, of
Mercedes Agdoma, et al, and of Eugenio
Papa, et al, is hereby
dismissed, but ordering the defendant Isaias Celestino to pay the Philippine National Bank, Dagupan Branch, the various loans in the aggregate amount
of P2,825.00, together with the interest thereon at the rate of 6% per annum
from the date the corresponding promissory notes (Exhs.
C, D, D-1, E, F, F-1, F-2 and G) were issued until the same are fully paid,
plus 10% of said amount as attorney’s
fees, as well as the sum of
P600.00 as expenses of litigation. Also ordering
defendant Celestino to pay the bank the sum of P1,000.00 as attorney’s
fees in Civil Case No. U-34.
In the case of defendant Vicente Libed, the
deed of chattel mortgage on standing crops of (Exh. A-2-bank), and real estate mortgage upon, the parcel of land
described in Transfer Certificate of Title No. 18801 (Exh.
B-1-bank), are hereby declared null and void insofar as the one-half eastern
portion pro-indiviso is concerned, of which Vicente Libed is declared absolute owner and therefore, the
complaint for foreclosure thereof is ordered dismissed.
It is further ordered that defendant Isaias Celestino to pay plaintiff bank the sum of P760.00 together
with the interest thereon at the rate of 6% per annum, from the date the
corresponding promissory notes were issued (Exhs. A,
A-1 and B) until the same are fully paid, plus 10% of said amount as attorney’s
fees, within a period of ninety (90) days from the date this decision becomes
final, and in default of such payment, the other half of the parcel of land described
in Transfer Certificate of Title No. 18801 be sold at public auction and the
proceeds thereof shall be applied to satisfy the above obligation of the
defendant Isaias Celestino.
Also ordering defendant Isaias Celestino to pay cross-claimant, Vicente Libed, the sum of P1,000.00 as
attorney’s fees.
Lastly, ordering defendant Celestino, to pay all
the costs of these suits.”
Hence, the present appeals
taken by the Bank from the portions of the aforesaid decision adverse to
it. The appeals,
however, do not affect Civil Case
No. U-32 in which the Bank was not a party.
Proper understanding of
the issue involved makes necessary a brief statement of the
main facts of each case, all of them either
admitted by all the parties or established by conclusive and uncontradicted
evidence.
(1) Civil Case
No. U-27 (G. R. No. L-18292)
The
spouses Crisente Pichay and
Juana Larioza, Esteban Renopa
and Eugenia Agdoma, Esteban Larioza
and Mercedes Agdoma, and Pedro Agdoma,
single, were owners pro-indiviso of a parcel of land
covered by Transfer Certificate of Title No. 10795-P of the Office of the
Register of Deeds of Pangasinan. On August
9, 1955, Celestino obtained from appellant Bank two
separate loans of P800.00 each and, as security therefor,
executed two real estate mortgages over said proÂperty. In executing said mortgages, Celestino forged the owners’ signatures in two special
powers of attorney, making it appear that they had authorized him to solicit
loans from the Bank, and to enable him to register said deeds, he filed a
verified petition ex-parte with the Court of First
Instance of Pangasinan, making it appear that Eugenia
Agdoma was asking for another owner’s duplicate
certificate of T.C.T. No. 10895-P to replace her copy thereof allegedly
destroyed. Plaintiffs became aware of
the fraudulent acts of Celestino only when they
received a letter of demand from the Bank.
Although Celestino filed his answer
denying all the material allegations of
the complaint and interposing a counterclaim
for damages in the amount of P100,000.00, he did not
appear at the trial. For its part, the
Bank’s answer denied the averments of
the complaint regarding the forgery of plaintiffs’ signatures in the
aforementioned special powers of attorney but presented no evidence to prove
the genuineness thereof. It relied
mainly on its defense that it granted the two loans in question relying in good
faith upon said powers of attorney presented by Celestino.
(2) Civil Case No. U-32
Appellant Bank was not a party-defendant in Civil Case No. U-32, but the action for
foreclosure (Civil Case No. U-36) instituted by it covers and affects the property involved in the
former.
Mercedes, Eugenia and Pedro, all surnamed Agdoma
and Isaias Celestino were
the forced heirs of the deceased spouses, Julian Agdoma
and Anastacia Cabatic – the
former being the registered owner
of a parcel of land situated in
barrio San Juan, municipality of Alcala, Pangasinan, covered by Original Certificate of Title No. 62507 of the office of the
Register of Deeds of Pangasinan. Upon
Julian Agdoma’s death, they became the co-owners pro-indiviso of said proÂperty.
Celestino, however, for valuable consideration
received, renounced his interest and participation therein in favor of the
other co-owners. On August 14, 1955 Celestino
fabricated a deed of sale making it appear therein that Julian Agdoma – who had been dead since July 23, 1945 – had sold the aforesaid parcel to
him. Thereafter, Celestino,
who was a lawyer and a notary public, filed a petition ex-Âparte with the Court of First Instance of Pangasinan for the issuance of a second owner’s duplicate
copy of Original Certificate of Title No.
62507 in lieu of the copy thereof which had been allegedly burned. After the Court had granted the petition, the
Register of Deeds of Pangasinan issued to Celestino a second owner’s
copy of Original Certificate of Title No. 62507. Upon the presentation of the forged deed of
sale and of the owner’s duplicate certificate of title just mentioned, the
Register of Deeds cancelled the latter and issued, in lieu thereof, Transfer Certificate of Title No. 18925 in Celestino’s
name. Then on August 18, 1955, Celestino mortgaged the property in favor of the Bank to
secure two loans in the sums of P425.00 and P215.00 each.
Although Celestino filed an answer
denying the material averments of the complaint and interposing a counterclaim for damages, he did
not appear at the trial.
(3) Civil Case No. U-34
The
spouses Eugenio Papa and Maria Mangaoang,
and Julia Libed were the registered owners of a
parcel of land situated in barrio Villanueva, municipality of Bautista, Pangasinan, covered by Transfer Certificate of Title No.
16479 of the Office of the Register of Deeds of Pangasinan. Upon the death of Julia on October 2, 1954,
her father, Rufino Libed,
inherited her rights and interest in said property. On December 6, 1955, Celestino
forged a document purporting to be a sale in his favor of the aforesaid property
by the deceased Julia Libed and the Papa
spouses. In the same month, Celestino (following the same fraudulent pattern as in the
transactions mentioned heretofore) was able to secure a second owner’s
duplicate copy of Transfer Certificate of Title No.16479 and, after causing the
registration of the falsified deed of sale above-mentioned, succeeded in
securing the cancellation of said certificate of title and the issuance of
another in his name (Transfer Certificate of Title No. 19622). Armed with said title, he subsequently
obtained from the Bank a loan in the amount of P800.00, secured by a mortgage
on the property aforesaid.
In
this as
in the
other case (Civil Case No. U-27) the Bank
relied mainly on its defense that it
was a mortgagee in good faith and for value.
(4) Civil Case No. U-36
On
March 11, 1957, the Bank filed an action in the Court of First Instance of Pangasinan against Isaias CelesÂtino, Vicente Libed,
Mercedes, Eugenia and Pedro, all surnamed
Agdoma, Eugenio Papa, Maria
Mangaoang and Rufino Libed, for the foreclosure of the mortgages constituted on
the properties covered by Transfer Certificates of Title Nos. 18801, 18925
(Civil Case No. U-32), 19622 (Civil Case No. U-34), and 10795 (Civil Case No. U-27),
all of the Office of the Register of Deeds of Pangasinan. The comÂplaint alleged that Celestino was the registered owner of the first three
parcels of land; that on the dates and for the amounts mentioned below, Celestino obtained from the Bank several loans for which he executed
the corresponding
promissory notes:
Dates of Loans Kind of Loan Amount
of Loans
July 27, 1955 Time
Loan P380.00
August 22, 1955 “ P210.00
January 6, 1956 “ P800.00
August 22, 1955
Crop Loan P155.00
October 25, 1955 “ P 60.00
July 27, 1955 “ P280.00
October 18, 1955 “ P100.00
that as security therefor, Celestino executed in
favor of the Bank the corresponding deeds of real estate mortgage over the above-mentioned properties which were registered in the office of the
Register of Deeds of Pangasinan and annotated on the corresponding
certificates of title; that the
above-mentioned loans have long become overdue and, despite repeated demands by
the mortgagee, Celestino had failed to pay the same.
The complaint further alleged that Vicente Libed
was included as a party-defendant because, long after the reÂgistration of the
mortgages in question, he registered an adverse claim over the parcel of land
described in Transfer Certificate of Title No. 18801; that Mercedes, Eugenia and Pedro,
all surnamed Agdoma, were likewise included as
party-defendants because, subsequent to the registration of the mortgages in
favor of the Bank, they registered a notice of Lis Pendens over the parcel of land described in Transfer Certificate of Title No.
18925, and that Eugenio Papa, Maria Mangaoang and Rufino Libed were also made party-defendants in the case on the
ground that they were claiming rights and interests in the parcel of land
described in Transfer Certificate of Title No. 19622.
In the sixth cause of action alleged in the complaint, the Bank
alleged that on or about August 9, 1955, Celestino,
by virtue of
a special power of attorney which appeared to have been executed and acknowledged in his
favor by Crisente Pichay,
Juana Larioza and Mercedes Agdoma,
obtained from it two loans in the total amount of P1,600.00 and executed two
deeds of real estate mortgage as attorney-in-fact of the aforementioned
parties over the property belonging to the latter described in Transfer
Certificate of Title No. 10795-P of the Registry of Deeds of Pangasinan;
and that, despite repeated demands therefor, Celestino had failed to pay said loans.
After the defendants had filed their answers to the complaint and after
a joint trial with the other cases mentioned heretofore – at which Celestino did not appear – the lower court rendered the
appealed judgment.
The case before Us, reduced into its
simplest terms, is this: the owners of
the registered lands mortgaged to the Bank did not execute the Powers of
Attorney and Deeds of Sale mentioned heretofore. Without their knowledge and consent, and without even a
trace of negligence on their part, said documents were forged and used
by Isaias Celestino to
secure the loans in question from, and to execute the corresponding deeds of
mortgage in favor of the Bank. Julio B. Pequet, the Notary Public before whom the documents
mentioned heretofore were supposedly acknowledged, was a “non-existing”
person (Partial Stipulation of Facts
submitted by the parties, Record on Appeal p. 175), and his supposed signatures appearing thereon were forged by Celestino.
On the other hand, regarding the Bank’s claim that it granted the
loans and accepted the mortgages
in question in good faith, the following observations of the trial court seem
to be appropriate and conclusive:
xxx x x x x x x
‘As between two innocent persons, one of whom must suffer the
consequence of a breach of trust, the one who made it possible by his act of
confidence must bear the loss.
‘When a mortgagee relies upon a Torrens
title and loans money in all good faith on the basis of the title standing in the name of the mortgagor,
only thereafter to discover one defendant
to be an alleged forger and the other defendant to have by his negligence or acquiescence made it possible
for the fraud to transpire, as between the innocent persons, the mortgagee and
one of the mortgagors, the latter who made the fraud possible by his act of
confidence must bear the loss.’
“This court believes that the aforecited doctrine could not be applied to the bank’s
contention that it is an innocent mortgagee for value. The court has made the observation that, in
granting several loans to the defendant Isaias Celestino, the Philippine National Bank did not exercise
due diligence in determining the authority of the defendant Isaias
Celestino to borrow money for the plaintiffs, Cresente Pichay and his co-owners
as well as the true ownership of the defendant Isaias
Celestino over the property described in Transfer
Certificates of Title Nos. 18925 and 19622.
This conclusion is arrived at in view of the fact that the date of the
execution of the chattel mortgage (Exh. H-Pichay; 6-bank) as well as the two real estate mortgages (Exhs. C & 1-Pichay; 5 & 7-bank)
and the date of the issuance of the second owner’s duplicate copy of Transfer
Certificate of Title No. 10795-P (Exh. E-Pichay & 3-bank) borne the
same date, that is, August 8, 1955. Aside from this, the special power of attorney (Exh.
B-Pichay) was made on August 3, 1955, that is five
days before the execution of the aforementioned mortgages.
“In the case of Agdoma, et
al. (Civil Case No. U-32), although there is
no means to determine the date of the issuance of Transfer Certificate of Title
No. 18925, which cancelled Original Certificate of Title No. 62507 because it
was not preÂsented in evidence, it is safe to assume that certificate of title
No. 18925 was issued a
day before the execution of the real estate
mortgage upon the property covered by the same.
This is so because the order of the court for the
issuance of second owner’s duplicate copy of Original Certificate of
Title No. 62507 which was issued
only on August 17, 1955, while the real estate mortgage was made on August 18,
1955.
“With respect to the
case of Papa and his co-owners (Civil Case No. U-34),
it appears that the loan to the defendant, Isaias Celestino, which was secured by a real estate mortgage upon the
property previously described in Transfer Certificate of Title No.
16479, was only granted a few days after
the issuance of Transfer Certificate of Title No. 19622. This is
so because the ex-parte
petition for the issuance of another owner’s duplicate copy of Transfer
Certificate of Title No. 16479 was presented in court on December 23, 1955 and the real estate mortgage was executed on January 5, 1956.
“It is therefore obvious that the
approval of these transactions by the bank was characterized with undue
haste. It is of public knowledge, though
not of judicial notice, that the common practice of banking institution, before
approving a loan, is to send its representative to the premises of the land
offered as collateral and to investigate who are the true owners thereÂof. But in these cases, this court holds that
there is no such investigation made by the bank because, if a representative of the bank had made such investigation,
such fraudulent transfers of ownership of the land, as well as want of
authority of defendant Celestino to execute the
mortgage over the property described in Transfer Certificate of Title No.
10795-P, could have been discovered.
Under these circumstances, the bank may not be considered a
mortgagee in good faith. This is in
consonance with the doctrine enunciated by the Supreme Court, to wit:
‘One who purchases real estate with knowledge
of a defect or lack of title in his vendor cannot claim that he has acquired
title thereto in good faith as against the true owner of the land of an
interest therein; and the same rule must be applied to one who has knowledge of
facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor. A purchaser
cannot close his eyes to facts which should put a reasonable man upon his
guard, and the claim that he acted in good faith under the belief that there
was no defect in the title of the vendor.
His mere refusal to believe that such defect exists, or his willful
closing of his eyes to the possibility of the existence of a defect in his
vendor’s title, will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective, and it appears that
he had such notice of the defect as would have led to its discovery had he
acted with that measure of precaution which may reasonably be required of a
prudent man in a like situation. x x x’
“Even assuming for the sake of argument that the Philippine National
Bank is an innocent mortgagee, the legal maxim – as between two innocent
persons, one of whom must suffer the consequence of the breach of trust, the one who made it possible by his act
of confidence must bear the loss – could not be invoked by the Philippine
National Bank. The court finds that the
records are replete with irrefutable evidence showing that the true owners of
the parcel of land mortgaged have not in any way contributed to the commission
of fraud. Neither were they guilty of
negligence nor had there been an acquiescence on their part as to make it
possible for the fraud to happen, because, as above-stated, the first owner’s
duplicate copies of Certificates of Title Nos. 10795-P, 16479 and 62507 were
not lost, it appearing that same, except the last one which was submitted in
the Supreme Court in connection with Administrative Case No. 289, were
presented in evidence (Exhs. E-Pichay, et al; E & 5-Papa, et al). Even in the filing of ex-parte
petitions for the issuance of a second
owner’s duplicate copy of the above-mentioned certificates of title in lieu of
lost ones, the true owners had no hand in the preparation and presentation of
the same but all was done at the instance of the defendant Isaias
Celestino. In
fact, Cresente Pichay and
his co-owners, upon learnÂing thru a letter of demand sent by the bank to them
of the said fraudulent transaction filed Civil Case No. U-27 on January 19, 1957. Mercedes Agdoma and
his co-owners also filed a complaint for annulment of document on February 7, 1957 (Civil
Case No. U-32), after having verified in the office of the
register of Deeds the claim of defendant Celestino of
the alleged sale of their land. Eugenio Papa and his co-owners, after disÂcovering the
fraudulent transaction of Celestino which was checked
up by their lawyer in the office of the Register of Deeds on January 1957, filed
a complaint against Celestino and the bank (Civil
Case No. U-34), when their demand upon defendants to cancel or cause the
cancellation of Transfer Certificates of Title No. 19622, as well as the
mortgage, was not complied with.
“All the above circumstances being considered, this court finds and
so holds that the Philippine National Bank, and not the true owners of the
property described in Transfer Certificates of Title Nos. 10795-P, 18925 and
19622, should suffer the consequence of these fraudulent transÂactions. Under this situation the recourse of the bank
as against the doer, Isaias Celestino,
inasmuch as Isaias Celestino
is now a party defendant in this foreclosure proceedings and against whom
evidence was introduced, he shall be held liable for the payment of various
loans in the aggregate amount of P2,825.00, together with the interest thereon
at the rate 6%, per annum from the date the corresponding promissory notes were
issued, plus 10% of said amount as attorney’s fees for which he obligated
himself under the terms of the various mortgages.”
Very little need be added to the above. Suffice it to say that while it is true that
a party who deals with registered land is not required to go beyond what
appears upon the face of the certificate of title, it is likewise true that
“once a title is registered
the owner may rest secure, without the necessity of waiting in the portals of
the court, or sitting in the ‘mirador de su casa’, to avoid the possibility of losing his
land.” (Legarda et al., vs. Saleeby 31 Phil.
590, 593).
It is obvious to Us, on the basis of the
proven facts, that all proper considerations of justice and equity militate in
favor of the appellees, for were we to sustain the
Bank’s contention, said appellees, without fault of
any kind on their part, would lose their lands.
On the other hand, the evidence of record shows that the Bank is not
entirely without blame. It must
therefore suffer the loss.
WHEREFORE, the decision appealed from is affirmed, with
costs.
Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez,
and Castro, JJ.,
concur.