Adriano v. Pangilinan
REITERATIONFacts
The Antecedents: Guillermo Adriano, the registered owner of a parcel of land covered by Transfer Certificate of Title No. 337942, entrusted the owner's copy of the title to Angelina Salvador for the purpose of securing a mortgage loan. Without Adriano's knowledge or consent, Salvador mortgaged the property to Romulo Pangilinan for P60,000.00. Adriano discovered the annotation of the mortgage on his title and denied executing the deed or receiving the loan amount, asserting his signature was forged. He subsequently filed a civil suit to nullify the mortgage and a criminal case for estafa through falsification of public documents against Salvador and others involved. Procedural History: The Regional Trial Court (RTC) of San Mateo, Rizal, Branch 76, ruled in favor of Guillermo Adriano, declaring the real estate mortgage null and void and ordering Romulo Pangilinan to return the title. The RTC found Adriano's signature on the mortgage deed to be a forgery and that an impostor, not Adriano himself, had signed the contract. However, the Court of Appeals (CA) reversed the RTC's decision, setting aside the judgment and dismissing Adriano's complaint. The CA reasoned that as between two innocent parties, the one whose negligence made the fraud possible should bear the loss, implying Adriano's negligence in entrusting the title to Salvador. The Petition: Guillermo Adriano filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. He raises two main issues: (1) whether consent is a determining factor in nullifying a mortgage contract, and (2) whether his Motion for Reconsideration before the CA should have been dismissed. Adriano argues that since he did not consent to the mortgage, it is void pursuant to Article 2085 of the Civil Code, which requires the mortgagor to be the absolute owner. He further contends that the CA erred in applying the principle of innocent mortgagee for value, as Pangilinan failed to exercise due diligence in verifying the identity of the mortgagor and the authenticity of the transaction, making his own negligence the proximate cause of the loss.
Issue(s)
Whether the mortgage contract is null and void due to lack of consent, and who bears the loss. Whether the Court of Appeals erred in its assessment of negligence and the application of the bona fide purchaser for value principle.
Ruling
The Petition is GRANTED. The assailed Decision of the Court of Appeals is SET ASIDE, and the November 25, 1993 Decision of the RTC of San Mateo, Rizal (Branch 76) is REINSTATED.
Ratio Decidendi
On the issue of consent and nullity of the mortgage: The Court reiterated that Article 2085 of the Civil Code requires that the mortgagor must be the absolute owner of the property mortgaged. In this case, the RTC found, and the CA did not dispute, that Adriano's signature on the mortgage deed was forged, and an impostor appeared before the respondent. Therefore, the mortgagor was not the absolute owner, rendering the mortgage void. The Court affirmed the RTC's finding that the signature was a forgery, even to the naked eye, and that the person who appeared in court was not the same person who executed the mortgage. The principle that a Torrens title serves as evidence of indefeasible title does not protect a usurper or serve as a shield for fraud. On the issue of concurrent negligence and application of the bona fide purchaser for value principle: The Court found that while Adriano may have been negligent in entrusting his title to Angelina Salvador, this negligence was not sufficient to deprive him of his property. The CA erred in applying the bona fide purchaser for value principle, as the mortgagor in this case was an impostor, not the registered owner. The Court emphasized that respondent Pangilinan, engaged in the mortgage business, failed to exercise due diligence. His ocular inspection was cursory, lasting only 5-10 minutes, and he did not verify the identity of the person claiming to be the owner with the actual possessors or lessees of the property. He relied on the impostor's self-representation and a hasty appraisal. Therefore, as between two parties whose negligence contributed to the loss, the one who was in the immediate, primary, and overriding position to prevent it, and who possessed superior knowledge in the business, should bear the loss. Pangilinan's failure to verify essential facts was the immediate cause of his predicament, and his negligence was the primary reason for his loss, not Adriano's entrustment of the title for the purpose of finding a lender.
Main Doctrine
A mortgagee who fails to exercise due diligence in ascertaining the identity of the mortgagor and the status of the property, despite being engaged in the mortgage business, bears the loss arising from a forged mortgage, even if the registered owner was negligent in entrusting his title to a third party.