Philippine National Bank Vs. Court Of Appeals 153 Scra 435

Philippine National Bank vs. Court of Appeals G.R. No. L-57757 31 August 1987

FACTS:

Donata Montemayor is the administrator of 30 parcels of land of her late

husband Clodualdo Vitug who died intestate. Several portions of such land (TCT-2289, TCT-2887, and TCT-2888) were mortgaged to PNB as security for certain loans availed by Salvador Vitug, Salvador Jaramilla and Pedro Bacani, respectively. The loans were never paid so the bank foreclosed all the mortgaged properties. PNB as the highest bidder, purchased the lots, and subsequently sold the same to the Vitugs and the Fajardos. Meanwhile, Donata executed a contract of lease for a lot covered by TCT-2887R to her sons Pragmacio and Maximo Vitug. After a few years, the same brothers filed an action for partition and reconveyance with damages in the CFI Pampanga against the PNB, the Vitugs, the Fajardos, and Marcelo Mendiola, the special administrator of Donata’s intestate estate. They claimed that the 30 parcels of land form part of the conjugal property of the spouses Donata and Clodualdo and they claim a share interest of 2/11 of 1/2 thereof. They assailed the mortgage of said properties to the PNB and the subsequent public auction. They invoked the Vitug vs. Montemayor case where the SC ruled on the conjugal nature of the 30 parcels of land.

ISSUES:

(1) Can the PNB rely merely on the Torrens Certificate of Title covering

Donata’s properties for the processing of the respective mortgage loan applications? (2) Is the earlier action for reconveyance and partition concerning the 30 lots real actions and binding upon the PNB by virtue of the Vitug vs. Montemayor decision?

RULING:

(1) Yes. The PNB had sufficient reason to rely on the Torrens Certificate

of Title of the mortgaged properties.

The SC ruled that in processing the loan

applications, the PNB had the right to rely upon the face of the certificate of title. Clearly, it appears that Donata (a widow) owns the properties and the PNB had no reason to doubt her status and ownership.

The PNB also found no liens or

encumbrances covering the properties. The clean facts reasonably cancel the need to make further inquiry.

The Court applied the well-known rule in jurisdiction that a person has a right to rely upon the face of the Torrens Certificate of Title when dealing with a registered land. It is not necessary to inquire beyond its face, except when such person has an actual knowledge of facts and circumstances that would prompt him to inquire further. The Court ruled that a Torrens title “concludes all controversy over ownership of the land covered by a final degree of registration” and upon such registration, the person is assured of ownership without going to court or sitting “at the veranda of his house” to avoid the fear of losing his land.

(2) No. The SC maintained that although actions for recovery of real property and for partition are real actions, they are actions in personam which are binding only upon the persons who are parties thereto. The PNB is not a party in the cited case and is therefore not bound by the decision. In addition, there is no showing that the PNB was aware of the case decision when it extended the mortgage loan involving the subject properties. The court settled that if the PNB knew that said properties were conjugal, it would not have approved the mortgage application without securing the consent of the its co-owners. Therefore, the PNB is considered as a purchaser for value in good faith when it sold the foreclosed properties at a public auction.

The complaint is dismissed.