Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 150318 November 22, 2010
PHILIPPINE TRUST COMPANY (also known as Philtrust Bank), Petitioner,
vs.
HON. COURT OF APPEALS and FORFOM DEVELOPMENT CORPORATION, Respondents.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
This is a Petition for Certiorari assailing the Decision1 of the Court of Appeals dated June 15, 2001 and the subsequent Resolution2 denying reconsideration dated August 21, 2001.
The facts of the case, as determined by the Court of Appeals, are as follows:
Plaintiff Forfom Development Corporation is engaged in agricultural business and real estate development and owns several parcels of land in Pampanga. It is the registered owner of two (2) parcels of land subject of the present controversy, situated in Angeles City, Pampanga, under Transfer Certificate of Title Nos. 10896 and 64884 consisting of 1,126,530 and 571,014 square meters, respectively. Sometime in 1989, plaintiff received a letter from the Department of Agrarian Reform with the names Ma. Teresa Limcauco and Ellenora Limcauco as addressees. Upon verification with the DAR and the Register of Deeds made by plaintiff’s Vice-President at that time, Mr. Jose Marie L. Ramos, plaintiff discovered that the subject properties had already been transferred in the names of said Ma. Teresa Limcauco and Ellenora Limcauco who were never known to plaintiff or its employees. Plaintiff’s Board of Directors decided to seek the assistance of the National Bureau of Investigation (NBI) to conduct an investigation on the matter. On November 23, 1989, plaintiff caused the annotation of its adverse claim on TCT No. 75533 of the Registry of Deeds of Angeles City.
The results of the NBI Investigation and plaintiff’s own inquiry revealed the following acts through which the subject parcels of land were transferred in the names of Ma. Teresa Limcauco and Ellenora Vda. De Limcauco, fictitious names which were used by defendant Honorata Dizon in the questioned transactions:
(1) A "Deed of Absolute Sale" dated March 6, 1987 was executed over the lot covered by TCT No. 64884 in favor of Ellenora Vda. De Limcauco for the price of ₱500,000.00. A separate "Deed of Absolute Sale" dated October 5, 1987 was likewise executed over the property covered by TCT No. 10896 in favor of Ma. Teresa Limcauco in consideration of ₱500,000.00. In both instruments, the signature of the plaintiff’s President, Felix H. Limcauco was forged. Likewise, a certification to the effect that plaintiff’s Board of Directors had duly approved the sale contained the forged signature of plaintff’s President, Felix H. Limcauco.
(2) On July 7, 1987, a petition for issuance of owner’s duplicate copy was filed with the Regional Trial Court of Angeles City, Branch 57 by Ellenora Limcauco who allegedly lost said owner’s duplicate copy of TCT No. 64884, which was docketed as Cad. Case No. A-124-160. On January 10, 1989, a separate petition for the issuance of a new owner’s duplicate copy was filed with the same court by counsel for Ma. Teresa Limcauco who allegedly lost the owner’s duplicate copy of TCT No. 10896, which was docketed as Cad. Case No. A-124-280. After due hearing, the court in Cad. Case No. A-124-280 granted the petition in an Order dated February 1, 1989 which directed the Register of Deeds to issue another owner’s duplicate copy of TCT No. 10896 in place of the lost one.
(3) As a consequence of the court’s order in Cad. Case No. A-124-280, TCT No. 10896 was cancelled and TCT No. 82760/T-414 was issued in the name of Ma. Teresa Limcauco who had the property covered thereby subdivided into different lots for which TCT Nos. 85585, 85587, 85589 and 85591 were issued in the name of said Ma. Teresa Limcauco. As to TCT No. 64884, this was also cancelled by the Register of Deeds of Angeles City, Honesto G. Guarin, by virtue of a purported court order issued by Judge Eliodoro B. Guinto of RTC-Branch 57. Also appearing as Entry No. 1127 in TCT No. 64884 is the "Secretary’s Certificate" in favor of Felix H. Limcauco and Entry No. 1128 which is the sale in favor of Ellenora Limcauco. However, the copy of the court order in Cad. Case No. A-124-160 presented to said Register of Deeds was not signed by Judge Guinto who had denied before the NBI authorities having signed such order or having conducted hearing on said case. The copy submitted to the Register of Deeds was merely stamped "Original Signed." Another document certifying that the Order granting the petition in Cad. Case No. A-124-160 had become final and executory was also submitted to the Register of Deeds in connection with the cancellation of TCT No. 64884. However, then Branch Clerk of Court Benedicto A. Pineda testified that he did not sign said certification and neither had he been aware of the proceedings in Cad. Case No. A-124-160. Atty. Pineda’s signature on said certification appears to have been falsified by one Lorenzo San Andres.
(4) Although the property covered by TCT No. 10896 has already been subdivided into different lots and covered by separate titles in the name of Ma. Teresa Limcauco, said lots were not yet transferred or conveyed to third parties. But as to the property covered by TCT No. 64884, said certificate of title was cancelled and a new certificate of title, TCT No. 75436/T-378 was issued in the name of Ellenora Vda. De Limcauco. On September 23, 1987, a Deed of Absolute Sale was executed by Ellenora Vda. De Limcauco in favor of defendant Raul P. Claveria whereby the property covered by TCT No. 64884 was supposedly sold to said defendant for the sum of ₱5,139,126.00. On September 24, 1987, TCT No. 75436/T-378 was cancelled and a new certificate of title, TCT No. 75533 was issued in the name of defendant Raul P. Claveria. On October 21, 1987, defendant spouses Raul and Elea Claveria mortgaged the property with the defendant Philippine Trust Company to guarantee a loan in the amount of ₱8,000,000.00, which mortgage was duly registered and annotated as Entry No. 2858 in TCT No. 75533.
On December 26, 1989, plaintiff instituted the present action against the defendants Ma. Teresa Limcauco, Ellenora D. Limcauco, spouses Raul P. Claveria and Elea R. Claveria, Philippine Trust Company and the Register of Deeds of Angeles City. The Complaint alleged conspiratorial acts committed by said defendants who succeeded in causing the fraudulent transfer of registration of plaintiff’s properties in the names of Ma. Teresa Limcauco and Ellenora D. Limcauco and the subdivision of the land covered by TCT No. 10896 over which separate titles have been issued. Plaintiff prayed that the trial court render judgment (a) declaring the deeds of sale of March 9, 1987, October 5, 1987 and September 23, 1987 as well as TCT Nos. 75436, 75533, 87269, 85585, 85587, 85589 and 85591, all of the Registry of Deeds of Angeles City as void ab initio, (b) directing the reconveyance of the aforesaid real property in the name of plaintiff corporation, and (c) sentencing defendants to pay plaintiff sums of ₱1,000,000.00 as moral damages, ₱100,000.00 plus daily appearance fee of ₱1,000.00 as attorney’s fees, and costs of suit. Defendant Philippine Trust Bank filed a motion for bill of particulars which was granted by the trial court, and accordingly plaintiff amended its Complaint to specifically allege the fraudulent acts and irregularities in the transfer of registration of its properties, in addition to those already specified in the Complaint. Thus plaintiff alleged in addition that (1) the supposed court Order directing the issuance of another owner’s duplicate copy actually did not exist, copy of said Order not bearing either the signature of the judge or his branch clerk of court as well as the court seal, and yet accepted at face value in conspiracy or at least negligently, by defendant Register of Deeds of Angeles City, not to mention the haste, among other signs of conspiracy, with which said new owner’s duplicate copy of the title was issued; (2) the mortgage executed by defendant-spouses Claveria in favor of defendant bank was characterized by irregularities, the bank having extended a loan in the amount of ₱8 million, far in excess of the property’s market value of ₱2,855,070.00, as well as the haste in which said loan was granted.
In its Answer, defendant Philippine Trust Company denied the allegations of the Complaint as to the irregularities in the granting of the ₱8 million loan to defendant-spouses Raul and Elea Claveria. According to said defendant, the Claveria spouses have been their clients since 1986 and on October 2, 1987, all their outstanding obligations in the amount of ₱7,300,000.00 were consolidated into one (1) account on clean basis. Defendant bank had required the Claveria spouses to secure their clean loan of ₱7,300,000.00 with a real estate mortgage, and hence on October 21, 1987, said spouses executed mortgage on real property covered by TCT No. 75533 for an obligation of ₱8 million after securing an advance from the defendant bank in the amount of ₱700,000.00. It had subjected the land offered as security to the usual bank appraisals and examined the genuineness and authenticity of TCT No. 75533 with the Register of Deeds of Angeles City and found the same to be in existence and in order. Thereupon, the deed of mortgage executed by the Claveria spouses was registered by the defendant bank with the Register of Deeds and had it annotated in the original copy of the title. Defendant bank thus prayed that after due hearing, the complaint against it be dismissed and a decision be rendered (a) holding as valid and legal the mortgage on the real property covered by TCT No. 75533 of the Registry of Deeds of Angeles City, and (b) on its counterclaim, ordering the plaintiff to pay to defendant bank the amounts of P50,000.00 as actual damages, ₱1,000,000.00 as moral damages, ₱100,000.00 as attorney’s fees, and the costs of suit.
On motion of plaintiff, the trial court ordered the service of summons by publication with respect to defendants Ma. Teresa Limcauco, Ellenora Limcauco, Raul P. Claveria and Elea Claveria, whose addresses could not be located by the Sheriff and even by the parties.
Defendant Register of Deeds of Angeles City filed his Answer denying that he conspired with the other defendants in effecting the transfer of registration of the subject properties and averring that it had issued the questioned transfer certificates of title to defendants Ma. Teresa Limcauco, Ellenora Vda. de Limcauco and the spouses Raul and Elea Claveria on the basis of documents filed with it and existing in the Office of the Register of Deeds of Angeles City. In his defense, defendant Register of Deeds maintained that he had no reason or basis to question the validity and legality of the documents presented before him for registration nor to question the genuineness of the signatures appearing therein, as well as the Orders of RTC-Angeles City, Branch 57, which contained a signature over and above the typewritten name of Judge Eliodoro B. Guinto. He had the right to assume that official functions were regularly performed. Plaintiff therefore has no cause of action against the defendant Register of Deeds as the latter merely performed his duties and functions embodied under Sec. 10 of P.D. No. 1529. By way of counterclaim, defendant Register of Deeds alleged bad faith and malice in plaintiff’s filing of the complaint against him, stating that (1) despite plaintiff’s knowledge that defendant Register of Deeds has not committed any act of malfeasance or misfeasance in the registration of the subject certificates of title, he was subjected to an investigation by NBI authorities at the instance of plaintiff and was compelled to give a sworn statement before said government authorities in order to clear his name; and (2) plaintiff’s former counsel had earlier manifested that the Register of Deeds was being impleaded merely as a nominal party; however, in a sudden and unexplained turnabout, plaintiff impleaded defendant Register of Deeds as a principal party in its Amended Complaint. Defendant Register of Deeds thus prayed for the dismissal of the complaint against him for utter lack of merit and on his counterclaim, that a decision be rendered ordering the plaintiff to pay the defendant Register of Deeds the following sums: ₱200,000.00 by way of moral damages, ₱100,000.00 by way of exemplary damages, ₱20,000.00 by way of attorney’s fees plus ₱500.00 per appearance, and costs of suit.
In an Order dated October 30, 1991, the trial court declared the defendants Ma. Teresa Limcauco, Ellenora Limcauco, Raul P. Claveria and Elea R. Claveria in default for their failure to file the necessary responsive pleadings despite the lapse of sixty (60) days from the last day of publication of summons, and accordingly allowed the plaintiff to present its evidence ex parte against the said defendants. During the pre-trial conference held on November 25, 1991, plaintiff’s counsel manifested that it was joining the defendant Register of Deeds only as a nominal party as the latter also waived his counterclaim against the plaintiff.
On February 4, 1992, the trial court granted plaintiff’s motion to authenticate the signatures appearing in the Deeds of Sale of October 5, 1987 and March 6, 1987, and that of Josefina K. Limcauco appearing in the Secretary’s Certificate containing the supposed Board resolution of plaintiff approving the sale of the parcels of land covered by TCT Nos. 10896 and 64884. The said documents were ordered forwarded to the NBI for authentication. During the pre-trial conference conducted on August 25, 1992, the parties agreed on two (2) issues for resolution during the trial: (1) whether or not the Deeds of Absolute Sale purportedly executed by the plaintiff covering the subject real properties, as well as the titles issued thereat, TCT Nos. 75436, 75533, 87269, 85585, 85587, 85589 and 85591, all of the Registry of Deeds of Angeles City are genuine and valid; and (2) whether or not the mortgage on the real property covered by TCT No. 75533 of the Registry of Deeds of Angeles City is valid and legal. At the trial proper, plaintiff presented as its witnesses Jose Marie L. Ramos (Vice-President of plaintiff corporation), Alberto Ramos (NBI officer), Eliodoro Constantino (NBI handwriting expert), Felix H. Limcauco, Jr. (former President of plaintiff corporation) and Atty. Benedicto Pineda (former Branch Clerk of Court of RTC- Angeles City, Branch 57). Defendant Philippine Trust Company, on the other hand, presented the testimony of defendant Atty. Honesto Guarin (Register of Deeds of Angeles City). After the formal offer of the respective documentary evidence of the parties and submission of their memoranda, the case was submitted for decision. x x x.3
On December 29, 1993, the RTC rendered its Decision in favor of private respondent Forfom Development Corporation (Forfom):
WHEREFORE, all the [foregoing] considered, judgment is hereby rendered in favor of the plaintiff and against the defendants Philippine Trust Co., spouses Raul P. Claveria and Elea R. Claveria, Ma. Teresa Limcauco @ Honorata Dizon and Ellenora Vda. de Limcauco @ Honorata Dizon:
1. Declaring the Deeds of Sale of 9 March 1987, 23 September 1987 and 5 October 1987 as well as Transfer Certificates of Title Nos. 75436, 75533, 82760, 85585, 85587, 85589 and 85591 all of the Register of Deeds of Angeles City as void ab initio;
2. Ordering the Register of Deeds of Angeles City to reinstate Transfer Certificates of Title Nos. 10896 and 64884 in the name of the plaintiff or to issue new transfer certificate of title for the same parcels of land in the name of the plaintiff-corporation free from liens and encumbrances made subsequent to the cancellation of the said two (2) titles;
3. Ordering the defendants Philippine Trust Co., spouses Raul P. Claveria and Elea R. Claveria, Ma. Teresa Limcauco @ Honorata Dizon and Ellenora Vda. de Limcauco @ Honorata Dizon to pay jointly and severally the plaintiff the sum of ₱50,000.00 as actual damages in the form of attorney’s fees; and
4. To pay the costs of this suit.4
On January 21, 1994, petitioner Philippine Trust Company (Philtrust) filed a Notice of Appeal, alleging that the lower court erred in declaring Transfer Certificate of Title No. 75533-Angeles City void and in concluding that it was a mortgagee in bad faith. Philtrust further claims that Forfom was negligent with its property.
On June 15, 2001, the Court of Appeals rendered the assailed Decision affirming the Decision of the RTC:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED and the appealed Decision of the trial court in Civil Case No. 6087 is hereby AFFIRMED and REITERATED.5
According to the Court of Appeals, Philtrust was negligent in its credit investigation procedures and its standards for granting of loans, as shown by (a) its previously extending unsecured and uncollateralized loans to the spouses Raul and Elea Claveria, and (b) its failure to discover the latter’s statement of a fictitious address in the mortgage contract and being the subject of estafa cases. The Court of Appeals agreed with the trial court’s finding that Philtrust acted in haste in the execution of the mortgage and loan contracts, as the property, assessed only at more than ₱2 million and allegedly purchased at more than ₱5 million, was made to secure the principal loan obligation of ₱8 million.
The appellate court further took note of Philtrust’s refusal to present the records and details of its transactions with the spouses Claveria despite being pressed to do so by Forfom. The Court of Appeals found this circumstance cast serious doubt on Philtrust’s allegation that it was a mortgagee in good faith.
On August 21, 2001, the Court of Appeals denied Philtrust’s Motion for Reconsideration. Hence, this Petition for Certiorari, where Philtrust raises the following arguments:
1. The Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in finding there was lack of evidence that Philtrust was a mortgagee in good faith; hence, capriciously and wantonly ascribed bad faith to the latter;6
2. The Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in finding that Philtrust had actual knowledge of facts and circumstances pertaining to the fraudulent transfer of the registration of the subject property from the name of Forfom to the name of Ellenora Limcauco, when there was no iota of evidence to support such factual finding; hence, capriciously and wantonly ascribed bad faith to Philtrust as the mortgagee of the said property;7 and
3. The Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in completely disregarding the well-settled rule that a forged deed may be the root of a valid title; hence, capriciously and wantonly nullified the real estate mortgage executed by the spouses Claveria in favor of Philtrust.8
Contrary to the allegation in the third argument presented by Philtrust, the Court of Appeals did not seem to have disregarded the rule that a forged deed may be the root of a valid title. The appellate court clearly specified the circumstances allowing the application of such rule:
A forged deed may be the root of a valid title when an innocent purchaser for value intervenes. A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property. It has been held that where a mortgagee bank accepted the mortgage in good faith, the land involved being registered land, it is not bound to go [beyond] the certificate of title to look for flaws in the mortgagor’s title, the doctrine of innocent purchaser for value being applicable to an innocent mortgagee for value. A mortgagee in good faith and for value is entitled to protection. A bank is not required, before accepting a mortgage, to make an investigation of the title of the property being given as security. This is a consequence of the rule that a person dealing with registered land has a right to rely upon the face of the Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.9
Indeed, the presence of anything which excites or arouses suspicion should prompt the vendee or mortgagee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate.10 If the vendee or mortgagee failed to do so before the execution of the contract, the vendee or mortgagee is deemed to be in bad faith and therefore cannot acquire any title under the forged instrument.
The determination of the case at bar, therefore, hinges on the resolution of the first two issues, which deal with whether Philtrust is a mortgagee in good or bad faith. However, since what Philtrust filed with us is a Petition for Certiorari rather than a Petition for Review, a finding that Philtrust is in good faith is not enough for us to grant the Petition. A mere error in the judgment of the Court of Appeals in affirming the RTC Decision would not be enough; nothing less than grave abuse of discretion on the part of the Court of Appeals is required for the issuance of the Writ of Certiorari.
Philtrust claims that the loans secured by the mortgage on the subject property were granted to the spouses Claveria after Philtrust was satisfied regarding the spouses’ credit worthiness and capacity to pay.11 In fact, according to Philtrust, the spouses Claveria were able to maintain a satisfactory record of payment during the early period of their transactions with the bank.12 Philtrust insists that prior to the constitution of the mortgage, it followed the standard operating procedures in accepting property as security, including having investigators visit the subject property and appraise its value.13
When the Court of Appeals ruled that these claims by Philtrust were not supported by evidence, the latter countered before us that its allegations were supported by the following documents: (a) the Promissory Note;14 (b) the Deed of Mortgage;15 and (c) TCT No. 75533.16 Philtrust adds that it stated in the Answer to Interrogatories that it followed the standard operating procedures in accepting the property as security. Since said Answer to Interrogatories is a notarized document, Philtrust claims that it is a public document which is conclusive as to the truthfulness of its contents.17
It is settled that banks, their business being impressed with public interest, are expected to exercise more care and prudence than private individuals in their dealings, even those involving registered lands.18 The rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks.19 Consequently, Philtrust should prove that it exercised extraordinary diligence required of it in approving the mortgage contract in favor of the spouses Claveria.
It baffles us how Philtrust can argue that the promissory note and Deed of Mortgage executed by the spouses Claveria, and the TCT of the subject property, can prove its allegations that (a) the mortgage was granted after it was satisfied of the spouses’ credit worthiness; (b) the latter was able to maintain a satisfactory record of payment early on; or (c) it followed the standard operating procedures in accepting property as security, including having investigators visit the subject property and appraise its value. The mere fact that Philtrust accepted the subject property as security most certainly does not prove that it followed the standard operating procedure in doing so. As regards Philtrust’s claim that the Answer to Interrogatories, being a notarized document, is conclusive as to the truthfulness of its contents, we deem it necessary to clarify the doctrines cited by Philtrust on this matter.
Section 19, Rule 132 of the Rules of Court enumerates three kinds of public documents, to wit:
Sec. 19. Classes of Documents. — For the purpose of their presentation in evidence, documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills and testaments; and
(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.
All other writings are private.
Notarized documents fall under the second classification of public documents. However, not all types of public documents are deemed prima facie evidence of the facts therein stated:
Sec. 23. Public documents as evidence. — Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the facts therein stated. All other public documents are evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter.20
"Public records made in the performance of a duty by a public officer" include those specified as public documents under Section 19(a), Rule 132 of the Rules of Court and the acknowledgement,21 affirmation or oath,22 or jurat23 portion of public documents under Section 19(c). Hence, under Section 23, notarized documents are merely proof of the fact which gave rise to their execution (e.g., the notarized Answer to Interrogatories in the case at bar is proof that Philtrust had been served with Written Interrogatories), and of the date of the latter (e.g., the notarized Answer to Interrogatories is proof that the same was executed on October 12, 1992, the date stated thereon),24 but is not prima facie evidence of the facts therein stated. Additionally, under Section 30 of the same Rule, the acknowledgement in notarized documents is prima facie evidence of the execution of the instrument or document involved (e.g., the notarized Answer to Interrogatories is prima facie proof that petitioner executed the same).25
The reason for the distinction lies with the respective official duties attending the execution of the different kinds of public instruments. Official duties are disputably presumed to have been regularly performed.26 As regards affidavits, including Answers to Interrogatories which are required to be sworn to by the person making them,27 the only portion thereof executed by the person authorized to take oaths is the jurat. The presumption that official duty has been regularly performed therefore applies only to the latter portion, wherein the notary public merely attests that the affidavit was subscribed and sworn to before him or her, on the date mentioned thereon. Thus, even though affidavits are notarized documents, we have ruled that affidavits, being self-serving, must be received with caution.28
Philtrust, therefore, presented no evidence rebutting the following badges of bad faith shown in the records of the case. Even though circumstantial, the following adequately prove by preponderance of evidence that Philtrust was aware of the fraudulent scheme perpetrated upon Forfom:
1. Within a period of less than one year, Philtrust extended unsecured loans amounting to ₱7,300,000.00 to the spouses Claveria as shown in its Answer wherein it declared:
Spouses Raul and Elea Claveria has been clients of the bank since 1986 and on October 2, 1987, all their outstanding obligations in the amount of ₱7,300,000.00 were consolidated into one account on a clean basis.29
All Philtrust can give is a very general explanation for these unsecured loans:
5. Why were the Claveria spouses granted loans without collaterals at the onset?30
[ANSWER:]
5. The Claveria spouses passed the standards set by the bank.31
2. Although the spouses Claveria had declared their residence to be in the plush subdivision in Ayala Alabang, Philtrust was content to receive as security a land outside Metro Manila, which was only recently acquired by the said spouses. When asked about this in the Request for Interrogatories, Philtrust merely responded evasively:
7. Did the bank not request from the Claveria spouses collateral within the Metro Manila area and if so what was the reply of the Claveria spouses?32
[ANSWER:]
7. The bank requested for collateral on the ₱8,300,000.00 loan preferably located in Metro Manila.33
3. It is presumed that evidence willfully suppressed would be adverse if produced.34 When pressed in the Request for Interrogatories for details of the investigation of the bank, and for the names of the persons who allegedly visited the subject property and the alleged home of the spouses Claveria, and the names of the bank officers who dealt with said spouses, Philtrust refused to do so:
10. Prior to the execution of the real estate mortgage by the Claveria spouses on the Angeles City property subject of the above-captioned case, what investigation, if any did the bank undertake for the physical examination of said property, what were the results, if any, of such physical examination of the property, and the name or names of the persons who visited the property?35
[ANSWER:]
10. The Angeles property was appraised in accordance with the usual procedure in the appraisal of property offered as collateral. The property was visited by the investigators of the Credit Department of the bank.36
15. Did an officer or employee of the bank actually visit the given residences of the Claveria spouses in Angeles City and Bacolod City, the result of such visit, and the name or names of the persons representing the bank who visited such places? 371avvphi1
[ANSWER:]
15. As stated above, the last known address of spouses was 406 Caliraya Street, New Alabang, Muntinlupa, M.M.38
17. Who was the particular bank officer who dealt directly with the Claveria spouses and handled their accounts?39
[ANSWER:]
17. The Loans and Discounts Department of the bank handled the accounts of the spouses.40
The RTC and the Court of Appeals considered these circumstances as circumstantial evidence of Philtrust’s awareness of the fraudulent scheme against Forfom. Nevertheless, Philtrust up to this date persists with suppressing these details:
Petitioner humbly believes and strongly maintains its position that the presentation of all documents pertaining to the loan transactions of Spouses Claveria is unnecessary, irrelevant, and immaterial in its defense of good faith before the court a quo. Nevertheless, as discussed above, Petitioner had sufficiently proved through its Answer to Interrogatories and loan documents extant in the records of the case that it prudently complied with the standard practice of banks in accepting mortgage.41
4. Philtrust persistently refused to cooperate with the National Bureau of Investigation (NBI) in its investigation of the fraudulent scheme perpetrated against Forfom, as testified by NBI agents Alberto V. Ramos and Pastor T. Pangan,42 and as shown in NBI Investigation Report NBI-NCR 10-11-90 90-2-5507.43
5. Had Philtrust properly conducted a credit investigation of the spouses Claveria, it would have easily discovered that they did not reside and never resided in the address declared by them, as revealed in the investigation by the NBI44 and declared by the association of homeowners in the New Alabang subdivision.45
All the foregoing considered, we find that the Court of Appeals did not even err in finding that Philtrust was in bad faith in the execution of the mortgage contract with the spouses Claveria. Consequently, Philtrust miserably failed to prove that the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in rendering the assailed Decision and Resolution.
WHEREFORE, the instant Petition for Certiorari is DISMISSED. The Decision of the Court of Appeals dated June 15, 2001 and the subsequent Resolution denying reconsideration dated August 21, 2001 are AFFIRMED.
Costs against petitioner Philippine Trust Company.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice |
DIOSDADO M. PERALTA
Associate Justice |
JOSE PORTUGAL PEREZ
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
Footnotes
* Per Special Order No. 913 dated November 2, 2010.
1 Rollo, pp. 155-163; penned by Associate Justice Martin S. Villarama, Jr. (now a member of this Court) with Associate Justices Conrado M. Vasquez, Jr. and Alicia L. Santos, concurring.
2 Id. at 165.
3 Id. at 156-160.
4 Id. at 177.
5 Id. at 163.
6 Id. at 693.
7 Id. at 704-705.
8 Id. at 713.
9 Id. at 161, citing the following cases: Diaz-Duarte v. Ong, 358 Phil. 876 (1998); Rural Bank of Compostela v. Court of Appeals, 337 Phil. 521 (1997); Gonzales v. Intermediate Appellate Court, 241 Phil. 630 (1988); Mallorca v. De Ocampo, 145 Phil. 17 (1970); Director of Lands v. Abache, 73 Phil. 606 (1942); De la Cruz v. Fabie, 35 Phil. 144 (1916).
10 Sandoval v. Court of Appeals, 329 Phil. 48, 60 (1996), citing Pino v. Court of Appeals, G.R. No. 94114, June 19, 1991, 198 SCRA 434, 440; Centeno v. Court of Appeals, 224 Phil. 91, 102 (1985).
11 Rollo, p. 693.
12 Id.
13 Id. at 694.
14 Exhibit "A"; Rollo, p. 727.
15 Exhibit "B"; Id. at 728-729.
16 Exhibit "C"; Id. at 730-732.
17 Rollo, pp. 694-695.
18 Development Bank of the Philippines v. Court of Appeals, 387 Phil. 283, 302 (2000); Cavite Development Bank v. Lim, 381 Phil. 355, 368-369 (2000); Tomas v. Philippine National Bank, 187 Phil. 183, 187-188 (1980).
19 Ursal v. Court of Appeals, G.R. No. 142411, October 14, 2005, 473 SCRA 52, 63-64; Rural Bank of Compostela v. Court of Appeals, supra note 9.
20 Rules of Court, Rule 132, Section 23.
21 See 2004 Rules on Notarial Practice, Rule II, Section 1.
22 Id. at Section 2.
23 Id. at Section 6.
24 Records, p. 638.
25 Sec. 30. Proof of notarial documents. — Every instrument duly acknowledged or proved and certified as provided by law, may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of the execution of the instrument or document involved. (Rules of Court, Rule 132.)
26 Rules of Court, Rule 131, Section 3(m).
27 Rules of Court, Rule 25, Section 2 provides:
Sec. 2. Answer to interrogatories. The interrogatories shall be answered fully in writing and shall be signed and sworn to by the person making them. The party upon whom the interrogatories have been served shall file and serve a copy of the answers on the party submitting the interrogatories within fifteen (15) days after service thereof, unless the court, on motion and for good cause shown, extends or shortens the time.
28 Philippine Long Distance Telephone Company, Inc. v. Tiamson, G.R. Nos. 164684-85, November 11, 2005, 474 SCRA 761, 776.
29 Records, p. 127.
30 Id. at 633.
31 Id. at 636.
32 Id. at 633.
33 Id. at 636.
34 Rules of Court, Rule 131, Section 3(e).
35 Records, pp. 633-634.
36 Id. at 637.
37 Id. at 634.
38 Id. at 637.
39 Id. at 634.
40 Id. at 637.
41 Petitioner’s Memorandum, p. 10; rollo, p. 695.
42 TSN, October 6, 1992, pp. 12, 31 and 41.
43 Exhibit C, records, p. 728, 741 (No. 42).
44 TSN, October 6, 1992, p. 11.
45 TSN, September 16, 1992, pp. 23-24; 28-29.
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