THIRD DIVISION
[G.R. No. 184883. November 13, 2013.]
PHILIPPINE NATIONAL BANK, petitioner, vs. SPOUSES BERNABE DONQUE AND EVELINA RAÑISES and SPOUSES ROLAN AND HERELYN RAÑISES, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated November 13, 2013, which reads as follows:
"G.R. No. 184883 (Philippine National Bank vs. Spouses Bernabe Donque and Evelina Rañises and Spouses Rolan and Herelyn Rañises). — Before this Court is a Petition for Review on Certiorari 1 assailing the Decision of the Court of Appeals dated November 26, 2007 2 and its Resolution denying the Motion for Reconsideration dated September 26, 2008 3 filed by petitioner Philippine National Bank.
On November 17, 2008, this Court required respondents Spouses Bernabe Donque and Evelina Rañises (Spouses Donque) and Spouses Rolan and Herelyn Rañises (Spouses Rañises) to comment on the Petition. 4 In compliance with this Court's Order, respondents Spouses Donque filed their Comment on January 26, 2009, which was noted by this Court in a Resolution dated February 11, 2009. 5 On the other hand, Spouses Rañises have, up to the present, failed to file their Comment despite this Court's Orders requiring them to show cause why they should not be held in contempt 6 and imposing upon them fines totaling P2,000.00. 7 Due to the length of time that this Petition has been left pending and after giving Spouses Rañises almost four years to file their Comment on the Petition, this Court resolves to dispense with their Comment. TAECSD
The issue presented in this Petition is whether the Amended Complaint filed by respondents Spouses Donque before Branch 28 of the Regional Trial Court of Liloy, Zamboanga del Norte states a cause of action against petitioner.
Respondents Spouses Donque allegedly owned a parcel of land located in Liloy, Zamboanga del Norte (subject property). The subject property is covered by Original Certificate of Title No. P-27547. Respondents Spouses Donque alleged that in December 1994, they executed a Deed of Donation covering the subject property in favor of their daughter Maricel. However, the Certificate of Title of the property was not transferred in the name of Maricel.
After some time, Maricel allegedly decided to reconvey the subject property back to her parents, respondents Spouses Donque. When asked for the owner's duplicate copy of the Certificate of Title, Maricel said Rolan Rañises borrowed it. Upon query with the Registry of Deeds, respondents Spouses Donque discovered that the Original Certificate of Title covering the subject property was cancelled, and a new title (TCT No. T-51851) was issued in favor of Rolan on the basis of a Deed of Donation purportedly executed by respondents Spouses Donque in his favor.
Thus, respondents Spouses Donque filed a Complaint for "annulment of contract, title and other documents, reconveyance and damages" against Rolan Rañises and his wife Herelyn (Spouses Rañises) before Branch 28 of the Regional Trial Court of Liloy, Zamboanga del Norte. Respondents Spouses Donque amended the Complaint to implead petitioner and the Register of Deeds of Zamboanga City. Petitioner was impleaded as mortgagee of the subject property. The Amended Complaint alleged that the subject property was mortgaged by Rolan in favor of petitioner and was scheduled to be sold at an auction sale. DHCcST
Petitioner filed a Motion to Dismiss dated December 17, 1997 on the ground that the Complaint states no cause of action against it. 8 Petitioner argued that when the subject property was mortgaged to it, the Certificate of Title was in Rolan Rañise's name, free from any encumbrance or lien. 9 Further, respondents Spouses Donque were not parties to the mortgage contract. 10 Thus, they are not the proper parties to assail the invalidity of the mortgage contract. 11
The Regional Trial Court granted the Motion to Dismiss filed by petitioner ruling that the latter was an innocent mortgagee for value. The trial court applied the rule on conclusiveness of a Torrens title. Thus,
. . . there is no allegation that defendant PNB violated the rights of plaintiffs Bernabe Donque and Evelina Rañises [Spouses Donque]. . . .
Moreover, the herein defendant PNB is an innocent purchaser in good faith and for value because it accepted the property mortgaged by and in the name of the mortgagor and upon certification by the Register of Deeds concerned that the certificate of title was free from any lien or encumbrance and authentic. ASEIDH
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The rule is well settled that where the certificate of title is in the name of the mortgagor when the land is mortgaged, the innocent mortgagee for value has the right to rely on what appears on the certificate of title. In the absence of anything to excite or arouse suspicion, said mortgagee is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate, and there is no showing whatsoever, that is has knowledge of any act or omission committed by the herein mortgagor in violation to the primary rights of the plaintiffs. 12
Respondents Spouses Donque filed a Motion for Reconsideration of the trial court's Resolution. The Motion was denied by the trial court in its Resolution dated September 18, 1998. 13 Thus, respondents Spouses Donque filed an Appeal on the Decision of the trial court before the Court of Appeals.
The Court of Appeals in its Decision dated November 26, 2007 reversed the trial court's ruling. 14 The appellate court held that the Amended Complaint states a cause of action against petitioner and that the latter should be impleaded as a defendant, being a necessary party. 15 Thus:
In the case at bar, plaintiff-appellants [Spouses Donque] claimed to be the absolute owners of the property who were illegally deprived of the same through the machinations of Rolan. Considering that they are assailing the deed of donation for being null and void, necessarily, any subsequent contracts entered into by the party guilty of making such transaction void over the same property are likewise void pursuant to Article 1422 of the Civil Code . . . . IDSaTE
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PNB is, moreover, mistaken in saying that plaintiff-appellants [Spouses Donque] were not the proper party to assail the mortgage contract not being a party to the same as indeed they have every right to question the said transaction as they claim to be the absolute owners of the property.
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We likewise find that PNB, being a necessary party, should be impleaded as party defendant. aDSHIC
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To sustain the contention that PNB should not be impleaded as they did not violate the rights of plaintiff-appellants [Spouses Donque] would result to the absurdity that in the event plaintiff-appellants [Spouses Donque] should prevail in the case for the declaration of nullity of the deed of donation, although the deed of donation which gave rise to the mortgage contract is nullified, the mortgage contract remains valid and plaintiff-appellants [Spouses Donque] would again be exposed to the inconvenience and hassle of having the mortgage contract nullified which is contrary to the provisions of Article 1422 of the Civil Code. Such would render any victory that plaintiff-appellants [Spouses Donque] may obtain, hollow. 16
Petitioner filed a Motion for Reconsideration of the Decision of the Court of Appeals which was denied in a Resolution dated September 26, 2008. 17 Thus, this Petition for Review on Certiorari was filed assailing the Decision and Resolution issued by the Court of Appeals.
We resolve to deny the Petition finding no reversible error in the Decision and Resolution of the Court of Appeals.
The test to determine "the sufficiency of a complaint is whether, assuming the facts as they are alleged therein, a valid judgement can be rendered in accordance with the prayer in the complaint." 18 As correctly held by the Court of Appeals, the Amended Complaint filed by respondents Spouses Donque states a cause of action against petitioner. The allegations in the Amended Complaint are as follows: (1) respondents Spouses Donque are the absolute owners of the subject property; (2) Rolan Rañises has no authority or right to deal with the subject property; and (3) petitioner entered into a mortgage contract with Rolan Rañises over the subject property. The relevant provisions of the Amended Complaint are as follows: HCETDS
3. Plaintiffs [Spouses Donque] are the absolute owners and lawful possessors of a parcel of land more particularly described as follows:
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4. Plaintiffs [Spouses Donque] have been in actual, continious [sic], and uninterrupted possession and cultivation of the said land up to the present;
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9. . . . plaintiffs [Spouses Donque] discovered that their original certificate of title issued in their names had already been cancelled and a new transfer certificate of title No. T-51851 was issued in favor of defendant Rolan Rañises, . . . .
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11. Furthermore, it was discovered that the Deed of Donation which was made the basis for the issuance of a new owner's copy of Transfer Certificate of Title No. T-51851 in favor of defendant Rolan Rañises was falsified and/or forged because the Document of Donation alleged in Entry No. 5652 and docketed as Doc. No. 2072; Page No. 35; Book No. VI, Series of 1994 . . .;
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13. Apparently, therefore, the alleged Deed of Donation which was made the basis for the issuance of Transfer Certificate of Title No. T-51851 and the said certificate of title itself are all null and void because they were issued in accordance and on the basis of a falsified and/or forged instrument; EACTSH
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18[-A.] Just recently, plaintiffs [Spouses Donque] were surprised to read in the New Nandau Today about the intended auction sale of the land in question on the pretext that the same was mortgaged by defendant Rolan Rañises with the Philippine National Bank, Sindangan Branch, Sindangan, Zamboanga del Norte;
18-B. Defendant PNB-Sindangan Branch has no right to demand for the auction sale of the land in question because the person who mortgaged the said land to the said bank has no authority or right to do the same, he being not the rightful owner of the land in question;
18-C. Aside from this, it is discovered that the mortgage contract allegedly executed by the defendant Rolan Rañises in favor of the defendant — bank has not been registered nor annotated in the owner's copy of original copy of the same in the office of the Register of Deeds of Zamboanga del Norte hence, said mortgage contract could not bind nor affect plaintiffs herein; HSaIET
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Applying the test to determine whether a complaint states a cause of action, the Amended Complaint filed by respondents Spouses Donque indeed establishes a cause of action against petitioner.
Assuming that respondents Spouses Donque are the absolute owners over the subject property, petitioner has the correlative obligation to respect the right of ownership of respondents Spouses Donque. Petitioner's obligation includes, among others, the duty to verify ownership of properties it deals with in accordance with the standard provided for by law or jurisprudence. Also, petitioner cannot accept properties for mortgage in its favor if the mortgagor has no authority to mortgage the same or is not the owner thereof.
As alleged in the Amended Complaint, Rolan Rañises has no right whatsoever over the subject property or authority to deal with it. If this is accepted as a fact, petitioner has the obligation to respondents Spouses Donque to refrain from dealing with Rolan with regard to any matter concerning the subject property.
Petitioner, however, allegedly entered into a mortgage contract with Rolan Rañises where petitioner accepted the subject property as security for the loan obtained by the former. If we assume that this is true, then a judgment may be rendered granting the prayers of respondents Spouses Donque.
There is indeed no question that the Amended Complaint states a cause of action. However, petitioner insists that the Complaint against it should be dismissed on the following grounds: (1) the Amended Complaint does not allege that petitioner had anything to do with the "fraud in the Deed of Donation between respondents Spouses Donque and Rolan" and (2) it is a mortgagee in good faith.
An allegation that petitioner connived with Rolan Rañises in the execution of the Deed of Donation which resulted in the transfer of the subject property from respondents Spouses Donque to Rolan Rañises is not necessary to determine that the Amended Complaint states a cause of action. It must be noted that respondents Spouses Donque's cause of action against petitioner is based on the latter's failure to respect their right of ownership when it accepted the subject property as security for Rolan Rañises's loan. IcHAaS
The second ground propounded by petitioner is without merit. A resolution on a motion to dismiss on the ground of failure to state a cause of action cannot delve into the defense of good faith. ". . . the claim that a mortgagee is one in good faith is a matter of defense which should be determined during the trial. The dismissal of a complaint before resolution of that issue would certainly be precipitate . . . ." 20
Petitioner's defense of good faith is factual in nature and must be addressed in trial. At this point, we may not be amiss to remind petitioner of the standard of diligence required of banking institutions in dealing with the public. As its business is impressed with public interest, it is "expected to exercise more care and prudence than private individuals . . . ." 21 CcTIAH
Indeed, under the doctrine of a "mortgagee in good faith," the mortgagee, when dealing with property covered by the Torrens system, is "not required to go beyond what appears on the face of a title." 22 Thus, this is an exception to Article 2085 of the Civil Code where "despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy." 23
Development Bank of the Philippines v. Court of Appeals 24 is instructive. Thus,
. . . . Nonetheless, especially in the case of a banking institution, a mortgagee must exercise due diligence before entering into said contract. Judicial notice is taken of the standard practice for banks, before approving a loan, to send representatives to the premises of the land offered as collateral and to investigate who are the real owners thereof. 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. 25 EHcaAI
Petitioner's obligation is more pronounced especially when the land mortgaged is in possession of persons other than the mortgagors. 26 As alleged by respondents Spouses Donque, they have been in actual and continuous possession over the subject property. 27
Finally, the declaration of the Court of Appeals that petitioner is a necessary party to the Complaint is incorrect. A necessary party is one who "ought to be joined as a party if complete relief is to be accorded as to those already parties." 28 On the other hand, an indispensable party is one whom "no final determination can be had of an action." 29
Petitioner is an indispensable party to the Complaint. Respondents Spouses Donque are praying for reconveyance of the subject property and annulment of any contract entered into or executed by petitioner and Spouses Rañises affecting the land. Thus, petitioner must be joined as a party to the Complaint. Otherwise, a final adjudication of the case cannot be made without injuring petitioner's interest over the subject property.
In view of the foregoing, this Petition is hereby DENIED.
SO ORDERED." HTDcCE
Very truly yours,
(SGD.) LUCITA ABJELINA SORIANODivision Clerk of Court
Footnotes
1. Rollo, p. 3.
2. Id. at 30.
3. Id. at 43.
4. Id. at 156.
5. Id. at 202.
6. This Court's Resolutions were dated February 3, 2010 and December 12, 2011, rollo, pp. 241 and 258.
7. This Court's Resolutions were dated December 1, 2010 and July 23, 2012, rollo, pp. 243 and 259.
8. Rollo, p. 79.
9. Id. at 81.
10. Id. at 82.
11. Id. at 83.
12. Id. at 109-111.
13. Id. at 88.
14. Id. at 30.
15. Id. at 37-38.
16. Id. at 36-39.
17. Id. at 43.
18. Pabalan v. Santarin, 441 Phil. 462, 470 (2002).
19. Rollo, pp. 66-69.
20. Nacua-Jao v. China Banking Corporation, 535 Phil. 784, 794-795 (2006).
21. Philippine National Bank v. Heirs of Estanislao Militar and Deogracias Militar, 504 Phil. 634, 644 (2005).
22. Cavite Development Bank v. Spouses Lim, 381 Phil. 355, 368 (2000).
23. Id.
24. G.R. No. 129471, April 28, 2000, 331 SCRA 267.
25. Id. at 289.
26. Philippine National Bank v. Heirs of Estanislao Militar and Deogracias Militar, supra.
27. Rollo, p. 66.
28. RULES OF COURT, Rule 3, Sec. 8.
29. RULES OF COURT, Rule 3, Sec. 7.