PNB v.
VILLA
G.R. No. 213241
FACTS: Spouses Comista obationed a loan from Traders Bank. They mortgaged
to the bank a land, in order to secure the obligation.
The failed to pay the loan when it became due, thus Traders Bank
foreclosed the mortgaged property. Thereafter, the property was sold in a
public auction. During the public sale, respondent Villa was declared as the
highest bidde.
Villa immediately took possession of the property and paid real estate
taxes. After the expiration of one-year redemption period, a Certificate of Final
Sale was issued to Villa. But he was prevented from consolidating the
ownership of the property under his name because the owner’s copy of the CT
was not turned over.
Despite the lapse of the redemption period, the Spouses Comista were
nonetheless allowed to buy back the property.
Now, Villa contends that the Spouses already lost their right to redeem.
Thus, he filed an Action for Nullification of Redemtion.
Later on the RTC and CA ruled on the cancelation, however after the
Writ of Execution was issued, the sheriff could not successfully enforce it
because the CTC was no longer registered under the names of the Spouses
Comista.
Upon investigation, it was found that the Spouses Comista were able to
secure a loan from PNB, using the same property subject of litigation as security.
Eventually, the spouses defaulted in payment. Then, the bank emerged as the
highest bidder.
PNB contends it is a mortgagee in good faith that it is ownership of the
property and correct hat the TCT be under its name.
ISSUE:
(1) WON the PNB is a MORTGAGEE IN GOOD FAITH
(2) WON PNB is liable for DAMAGES
HELD:
(1) PNB IS NOT A MORTGAGEE IN GOOD FAITH
Ascertained of good faith or the lack of it, is a question of intention. In
ascertaining intention, courts are necessarily controlled by the evidence as to
the conduct and outward facts by which alone the inward motive may, with
safety, be determined.
PNB DID NOT EXERCISE PRUDENCE AND DUE DILIGENCE
The RTC found that PNB accepted outright the collateral offered by the
Spouse Cornsta without making further inquiry as to the real status of the
subject property. Had PNB beben prudent and diligent, it could have discovered
that the property was in the possession of Villa, who possessed a colourable tile
being a holder of a Final Certificate of Sale.
STANDARD OPERATING PRACTICE
Before approving a loan application, the SOP is to conduct an ocular
inspection of the property offered for mortgage and to verify the genuineness of
the tile to determine the real owner. The purpose of the ocular inspection is to
protect the “real owner” as well as innocent 3 rd parties with right, interest, or
claim from a usurper who may have acquired a fraudulent CT.
In the present case, PNB failed to exercise due diligence in ascetating
the status and condition of the property. It is a failure to observe standards
required of banking institutions to exercise greater care and prudence before
entering into a mortgage contract.
NO EVIDENCE OF INSPECTION
PNB failed to substantiate the claim that an ocular inspection was
conducted.
LBP v. Belle Corp. > rule on innocent purchaser is more strictly applied
The Court exhorted the banks to exercise the highest degree of
diligence in its dealing with properties offered as securities for loan obligation.
When the mortgage is a bank, the Rule on Innocent purchasers or
mortgagee for value is applied more strictly. Being in the business of extending
loans secured by mortgages, banks are presumed to be familiar with the rules
on land registration.
Banking business is is impressed with public interest, thus they are
expected to be more cautious. To exercise a higher degree of diligence, care, and
prudence, than private individual in their dealings.
Hence, they cannot just assume that the offered security just o its face.
They are expected to ascertain its status and condition.
YES, PNB IS LIABLE FOR DAMAGES>
moral damages, exemplary damages, attorney's fees and costs of litigation in
favor of Vila.