PHILIPPINE NATIONAL BANK v SPOUSES ANGEL AND BUENVENIDA ANAY, AND SPOUSES FRANCISCO AND DOLORES LEE G.R. No. 197831July 09, 2018

FACTS

The respondents, Spouses Francisco and Dolores Lee obtained a loan from Philippine National Bank (PNB) in which as a security has included a parcel of land registered in the name of the Spouses Anay. For this purpose, the Spouses Anay executed a Special Power of Attorney (SPA), authorizing the respondents to use the subject property as security for the loan. When Spouses Lee failed to pay their obligation, petitioner foreclosed the property, auctioned it and as the highest bidder, had transferred the certificate of title in the bank’s name. Spouses Anay filed a Complaint against the other spouses and PNB for annulment of the SPA, foreclosure proceedings and the Sheriffs Certificate of Sale on the ground of vitiated consent. It appeared that the daughter of the Spouses Anay was an employee of the Spouses Lee and the latter had urged her to let them borrow the property. At that time, the Spouses Anay were both of old age, weak, hard of hearing and could barely see. So much so that Marietta had to move her father's hand to sign and had to hold her mother's hand while affixing her thumbmark on the SPA. The Court held that the SPA is null and void and of no force and effect. Petitioner appealed and contends that nullity of the SPA is a collateral attack, but the Court ruled that the cancellation of PNB's title does not constitute an indirect or collateral attack because said title was irregularly and illegally issued to begin with, it has emanated from an annulled SPA. PNB maintains that it is a mortgagee in good faith and as such, its title cannot be subjected to collateral attack. In any case, PNB argues, the Spouses Lee should be made liable for damages and restitution to PNB for having acted in bad faith.

ISSUE
1. Whether or not PNB is a mortgagee in good faith.

RULING
The doctrine of mortgagee in good faith "presupposes that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining Torrens title over the property in his name and that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on the title”. Such is not the case here as the fact that the Spouses Anay were the registered owners of the subject property was never disputed.
Based on the testimonial evidence offered by PNB itself through PNB Inspector Marcial Abucay, when the Spouses Anay were made to sign the previously prepared SPA, the husband was already bedridden, half-blind, not able to recognize, cannot read the SPA, and his hand had to be moved by Marietta to approximate the act of signing. PNB Inspector Abucay further testified that he did not hear whether Marietta explained the contents of the document to the Spouses Anay before she made them sign. PNB's theory of being a mortgagee in good faith is therefore unavailing. On the contrary, what appears to be evident is that PNB itself connived with the Spouses Lee if only to ensure that the signatures of the Spouses Anay on the SPA were secured. Since PNB is not a mortgagee in good faith, it is not entitled to protection.